DERIVATIVES
Clearinghouses to be rated
The financial health of the firms that form the backbone of the US$630 trillion derivatives market are being assessed for the first time. Moody’s Investors Service last week announced a new methodology for assigning credit ratings to the clearinghouses that guarantee derivative and security trades. The agency previously only graded the clearinghouses’ parent companies. Clearinghouses are meant to lessen the damage when a bank or investor becomes unable to make good their trades because they have gone bankrupt. They collect margin to cushion any future loss, monitor positions daily and require losses to be made up so that risk does not build.
CHINA
Vehicle sales growth slows
Industrywide vehicle sales rose at the slowest pace in three years even after a fourth-quarter tax cut by the government, as businesses put off purchases with the slowing economy and turmoil in the stock market battered consumer confidence. Wholesale deliveries of passenger and commercial vehicles climbed 4.7 percent to 24.6 million units last year, the smallest rate of increase since 2012, according to the China Association of Automobile Manufacturers. By comparison, US sales of new cars and light trucks rose 5.7 percent to 17.5 million, according to Autodata Corp. Automakers appealed for government support after the slowest economic growth in a quarter century combined with registration curbs in major cities to slow vehicle sales. At one point, Ford Motor Co suggested that the industry might see a fall in deliveries for the year, before the government’s tax cut on Oct. 1 revived demand.
RETAIL
Metro expects profit boost
German retail and distribution giant Metro yesterday said that it expects to have achieved a “significant” increase in quarterly profits, thanks to “very good” Christmas business and gains from the sale of its cash-and-carry business in Vietnam. Metro, which runs its business year from October to September, said in a statement that “we can look back on a very good Christmas business, particularly in our domestic market, Germany… We remain confident for financial year 2015-16, despite the difficult environment, and expect positive development thanks to the range of measures introduced in our sales lines. We retain our original forecast,” chief executive Olaf Koch said. Metro said it had completed the sale of its Vietnam unit at the end of last month. The proceeds were expected to boost underlying or operating profit by “more than 400 million euros” (US$435 million), which would be included in the first-quarter accounts.
FAST FOOD
Critics slam McDonald’s
A group of McDonald’s Corp’s critics urged the EU to rein in alleged antitrust abuses by the world’s largest restaurant chain in a complaint just weeks after regulators added the company to a growing list of US firms facing a clampdown on tax loopholes. McDonald’s was accused by a coalition of Italian consumer groups and European and US trade unions of distorting competition and harming franchisees and consumers. McDonald’s “hurts everyone: franchisees, consumers, and workers,” said Scott Courtney, an official at the Service Employees International Union, which backs the antitrust complaint filed with the European Commission on Monday. The accusation adds to an EU probe opened last month into suspicions the company unfairly exploited a pact with Luxembourg to avoid tax for more than half a decade.
PROTECTIONISM: China hopes to help domestic chipmakers gain more market share while preparing local tech companies for the possibility of more US sanctions Beijing is stepping up pressure on Chinese companies to buy locally produced artificial intelligence (AI) chips instead of Nvidia Corp products, part of the nation’s effort to expand its semiconductor industry and counter US sanctions. Chinese regulators have been discouraging companies from purchasing Nvidia’s H20 chips, which are used to develop and run AI models, sources familiar with the matter said. The policy has taken the form of guidance rather than an outright ban, as Beijing wants to avoid handicapping its own AI start-ups and escalating tensions with the US, said the sources, who asked not to be identified because the
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
CHEMICAL FIRE: 10 Indian employees were injured by smoke inhalation at a Tata Electronics plant in Tamil Nadu state that produces components for Apple Inc At least 10 people received medical treatment, with two hospitalized after a major fire on Saturday disrupted production at a key Tata Electronics Pvt Ltd plant in southern India that makes Apple Inc’s iPhone components. The fire occurred at the plant in the city of Hosur in Tamil Nadu state that makes some iPhone components. It broke out near another building inside the Tata complex, which was to begin producing complete iPhones in the coming months. The fire was contained to one building and has been extinguished fully, top district administrative official K.M. Sarayu said. No decision has been made on when
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