Tuesday, August 4, 2015

Two trains derail in India, at least 12 dead

AUG 5, 20158:30 AM

[MUMBAI] At least twelve people were killed when several carriages of two passenger trains derailed in central India overnight, a railways official said Wednesday.

“There are 12 casualties,” West Central Railway spokesman Piyush Mathur told the CNN-IBN network, adding that the death toll could rise.

One of the trains was on its way to Mumbai when the accident happened in Madhya Pradesh state, while the other was travelling in the opposite direction, the Press Trust of India (PTI) news agency reported.

PTI reported that the river below the bridge crossing had been swollen and there had been water on the tracks.

"Rushing emergency medical and other relief personnel to spot, darkness, water creating hurdles but ordered all possible help. Trying our best," India's Railway Minister Suresh Prabhu said on Twitter.

India's railway network, one of the world's largest, is still the main form of long-distance travel in the vast country, but it is poorly funded and deadly accidents are frequent.

In 2012, a government report said almost 15,000 people were killed every year on India's railways, describing the deaths as an annual "massacre" due mainly to poor safety standards.

India's government has pledged to invest US$137 billion to modernise its crumbling railways, making them safer, faster and more efficient.

AFP

Chinese airlines benefit as oil prices fall to six-month low

AUG 5, 20158:58 AM

[SINGAPORE] After many airlines were burned because of slumping fuel prices in 2008 and 2009, Chinese carriers stopped hedging their fuel purchases - even when prices soared above US$100 a barrel. Now they're having the last laugh.

Air China, China Eastern Airlines and other Chinese carriers are expected to benefit the most after oil prices in London fell below US$50 a barrel on Monday to their lowest closing price in more than six months. On Tuesday, Brent crude futures for September settlement inched up to US$49.99.

More airlines in Asia are looking to reduce the amount of fuel they buy under hedges, or at least sign shorter hedging contracts, according to Malayan Banking Bhd. Fuel costs are the biggest expense for Asian carriers, accounting for about 40 per cent of the total.

"Hedges have come off," said Mohshin Aziz, an analyst at Malayan Banking in Kuala Lumpur. "A lot of airlines have decided not to hedge, or to hedge less." Lessons of 2008 Air China, China Eastern and China Southern Airlines, the country's three biggest carriers, all said they don't hedge on fuel purchases. They're expecting first-half net income to jump - by as much as 743 per cent in the case of Air China.

In 2008, when crude prices plunged more than 50 per cent, hedges that locked in fuel at higher prices pushed Cathay Pacific Airways into its first annual loss in more than a decade. Air China and China Eastern also reported paper losses from fuel hedging in 2008.

Chinese airlines "haven't hedged for a long time after they suffered a big loss during the 2008-2009 financial crisis, and they've been very restrained since," said Geoffrey Cheng, a Hong Kong-based analyst at BOCOM International Holdings Co. "As a result, they're benefiting now." AirAsia, South-east Asia's biggest budget carrier, and its AirAsia X unit have gone completely unhedged for 2016, according to group chief executive officer Tony Fernandes. About 50 per cent of AirAsia's fuel needs for this year are hedged.

"Nice to wake up and see Brent below US$50," Mr Fernandes tweeted on Tuesday. "That's a magical number for us in the airline business." Some Asian airlines have continued hedging despite the decline in fuel prices.

Singapore Airlines, South-east Asia's biggest carrier, said last month that its savings from lower fuel prices were partially offset by hedging losses and a stronger US dollar in the quarter ended in June.

Before hedging, Singapore Air's fuel costs dropped 33 per cent because of lower prices. With almost 60 per cent of its fuel requirements for the quarter hedged at an average of US$110 per barrel, the carrier lost S$263 million on its hedges.

Singapore Air said it had hedged 55 per cent of its jet fuel needs for the July-September quarter at an average price of US$104 a barrel. Jet fuel closed at US$60.06 a barrel yesterday in Singapore, according to data compiled by Bloomberg, the lowest level since the prices were first compiled in July 2011.

Cathay will give an update on its hedging strategies when it announces first-half earnings on Aug 19, the carrier said in an e-mailed response on Tuesday.

In March, after Cathay announced it lost HK$911 million (S$162.3 million) from fuel hedges last year, the carrier said it still considered it prudent to hedge against a steep rise in fuel prices - though it hoped to lock in future hedges at lower levels.

Hedging is an important part of the airline's risk management, chief executive officer Ivan Chu told Bloomberg TV at the time.

Malaysia Airlines has no hedges in place but would like to have some - if it could afford to, chief executive officer Christoph Mueller said on Tuesday at a conference in Sydney.

"It's less speculative" to have hedges in place, Mr Mueller said. "A fuel hedge does not come for free, and our financial means are quite constrained right now." The airline, which was taken private last year by Malaysian sovereign wealth fund Khazanah Nasional, is undergoing a restructuring after it lost two planes in disasters last year.

For now, at least, airlines that haven't hedged will report lower costs. They're also expected to benefit as lower oil prices have led carriers to reduce fuel surcharges, making air travel more affordable.

Travel demand in the Asia Pacific region has increased more than 6 per cent this year, outpacing the annual average of 4.2 per cent, according to Malayan Banking's Mr Mohshin.

"For airlines, anything below US$80, life is good," Mr Mohshin said. "Below US$50, there's no need to think. Everyone makes money."

BLOOMBERG

Official China paper says investor sentiment has rebounded after stock rout

AUG 5, 201510:13 AM

[SHANGHAI] Investor confidence in China's stock market improved in July after the government stepped in to halt a share price slide, China's official Shanghai Securities News reported on Wednesday.

The newspaper cited a survey by China Securities Investor Protection Fund Corporation, a state-owned fund set up to protect the rights of securities investors, which said investor confidence in the stock market rose in July to 59.6, up 1.9 per cent from June.

The index is measured on a scale of 1 to 100, where a level above 50 signifies confidence.

Since China's stock markets started crashing in mid-June, Beijing has rolled out an unprecedented series of support measures, including cajoling brokerages and pension funds to buy stocks, cracking down on short-selling and negative reports about the market and encouraging media to write reports that"stabilise the market".

That follows past practice, in which Chinese regulators were routinely quoted in state media talking up the market, even going so far as to highlight buying opportunities in certain sectors.

Such commentaries were common in recent years when Chinese stock markets were among the world's worst performing, but added to perceptions in the most recent rally that Beijing was prepared to let the market run-up for some time, which drew in even more speculators.

China's main indexes have tumbled about 25 per cent since mid-June. While they have clawed back some ground from early July lows, analysts said shares remain vulnerable to sharp daily corrections and warn that many investors who were badly burnt by the slide will not return any time soon.

The July result shows the 14th consecutive month of positive sentiment, the paper said.

The survey also showed that the number of investors who have confident in the future of the stock market has increased, while buying sentiment has improved.

The survey polls 1,295 investors and 186 institutional investors and had 1405 responses as at July 27, the paper said.

REUTERS

Gold struggles near multi-year low as Fed comments buoy dollar

AUG 5, 201510:59 AM

[MANILA] Gold slipped toward a 5-1/2-year low on Wednesday as the dollar strengthened after comments from a Federal Reserve official backed expectations that the US central bank would hike interest rates as early as next month.

Atlanta Federal Reserve President Dennis Lockhart has said it would take "significant deterioration" in the US economy for him to not support a rate hike in September, according to the Wall Street Journal.

Gold, an asset that does not earn interest, has taken a hit given rising risks of a US rate hike. The Fed looks intent on lifting rates this year for the first time since 2006 as the US economy strengthens, particularly its labour market.

Spot gold was down 0.2 per cent at US$1,085.10 an ounce by 0218 GMT. Bullion has stayed largely below US$1,100 since breaching that key support level in a late July rout that pulled it to as low as US$1,077, its weakest since February 2010.

US gold for delivery in December slipped 0.6 per cent to US$1,084.70 an ounce. "We suspect that we will see a steady grind lower across most commodity complexes, including gold, largely attributable to the strength of the dollar and poor technicals that will only encourage more funds to further increase their short side exposure," INTL FCStone analyst Edward Meir said.

In fresh evidence of a recovering US economy, new orders for US factory goods rebounded strongly in June on robust demand for transportation equipment and other goods. The dollar index was hovering near a more than three-month peak of 98.218.

Gold may languish below US$1,100 as investors wait out Friday's US nonfarm payrolls, said MKS Group dealer Samuel Laughlin.

Bullion could test US$1,080 on Wednesday, he said, following Lockhart's comments although some Chinese demand where onshore premium is around US$2 an ounce over the global benchmark is providing some support.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped further on Tuesday to 21.56 million ounces, the lowest since September 2008.

Spot platinum and palladium wallowed near multi-year lows on a global glut and weak demand from the automotive sector.

Platinum slipped 0.4 per cent to US$947.50 an ounce, after sinking to US$940.50 on Tuesday, its lowest since February 2009. Palladium was steady at US$594.05 after hitting US$586.33 overnight, its weakest since October 2012.

REUTERS

India's multi-billion dollar e-commerce battle heats up

AUG 5, 201511:14 AM

[MUMBAI] The battle for supremacy in India's bulging e-commerce market between Amazon, Flipkart and Snapdeal is rapidly heating up with multi-billion-dollar investments, trolling on Twitter and squabbling over exclusive selling rights.

Gaining ground after entering India in 2013, Amazon has been embroiled in rounds of one-upmanship with its local counterparts as competition intensifies for a greater slice of the lucrative market.

"In such a crowded marketplace it is difficult to distinguish between the firms based solely on the products they sell or the customer service provided," industry analyst Shriram Subramanian told AFP.

"It's brutally competitive so there's a strong itch to take a dig at the opposition in an attempt to stand out to customers," added Subramanian, head of Indian corporate advisory firm InGovern.

Flipkart, India's largest e-commerce firm, and US behemoth Amazon exchanged barbed comments on Twitter recently when portal Reddit India tweeted a photo showing an Amazon delivery box sitting at Flipkart's reception.

The tweet suggested Flipkart staff preferred to order from Amazon. The Indian company hit back, posting "We recycled said packaging as our reception's dustbin." Amazon then weighed in, tweeting: "There is a bit of Amazon in every eCommerce company #justsaying," - an apparent reference to the fact that Flipkart's founders used to work for the American company.

Internet entrepreneurs Sachin Bansal and Binny Bansal, who are not related, quit Amazon to start Flipkart in 2007, with the Bangalore-headquartered company rapidly establishing itself as India's largest online store.

Mr Sachin and Snapdeal co-founder Rohit Bansal, again no relation, traded jibes on their personal Twitter accounts recently over the latter's purported comments that it was difficult to find good staff in India.

"Don't blame India for your failure to hire great engineers. They join for culture and challenge," Mr Sachin wrote to Mr Rohit.

The Snapdeal chief operating officer responded saying his company had been voted one of the best places to work in India.

Flipkart is estimated to be worth US$15 billion and commands up to 44 per cent of market share, well ahead of Snapdeal, which was launched in 2010 and enjoys around 22 per cent of sales, according to analysts.

Amazon occupies around 12 to 14 per cent, insiders say, and has its rivals firmly in its sights despite coming to the party in India late.

"Amazon has done very well in the two years since launching in India because already it has managed to start challenging market leaders who had early movers' advantage," retail analyst with Technopak Pragya Singh told AFP.

India's e-commerce market, although small in comparison to China's or the United States', is expected to rise swiftly to be worth over US$32 billion by the end of the decade.

According to recent local newspaper reports, Amazon plans to invest US$5 billion in India to turn the country into its biggest market outside of the US, while Flipkart and Snapdeal are spending big just to stay ahead.

Flipkart raised US$1 billion in funding last year while Bloomberg reported on Monday that Snapdeal is set to receive a US$500 million war chest from Chinese e-commerce giant Alibaba and Taiwanese electronics manufacturer Foxconn.

The investment, which may also include Japan's SoftBank Group according to Bloomberg, values Snapdeal at around US$5 billion, the report said.

Amazon India's vice president and country manager Amit Agarwal refused to comment on how much the company was spending to capitalise on India's growing middle class but claimed its website was receiving more hits than Flipkart's.

"We are today the largest online store in India with over 25 million products," he told AFP in an email.

"Not only that we have the largest in-stock selection of about 800,000 products available for guaranteed next-day delivery. This is by far multiple times higher than what anyone else in the same space offers," he added.

Amazon and Flipkart have also tussled over exclusive selling rights with both accused of alleged infringement in two separate cases, one of which is before the High Court in Delhi.

Flipkart reportedly sold novelist Amish Tripathi's latest book when Amazon had sole rights. The US company faced a similar allegation over author Chetan Bhagat's "Half Girlfriend", which only Flipkart was apparently allowed to distribute.

Both companies rejected any violation, saying they were open marketplaces connecting sellers with buyers, according to the Economic Times.

While analyst Mr Subramanian welcomes the bullishness currently on show, he suggested the "brashness" should be tempered down.

"Ultimately it's business cycles that will separate the men from the boys in the e-commerce sector," he said.

AFP

Tuesday, August 4, 2015