WeChat's growth shows why messaging apps attract big valuations 

For an idea of why messaging applications are attracting valuations in the tens of billions of dollars, look no further than WeChat, a 600 million-user messaging application that's part of Tencent Holdings. 

PHOTO: REUTERS

AUG 13, 20158:28 AM

[BEIJING] For an idea of why messaging applications are attracting valuations in the tens of billions of dollars, look no further than WeChat, a 600 million-user messaging application that's part of Tencent Holdings.

WeChat, a smartphone instant-messenger, digital wallet and car-booking service rolled up into one, is probably worth US$83.6 billion, according to HSBC. As people spend more and more time sending short messages to each other-instead of, say, browsing websites or shopping online-such services have become some of the hottest technology businesses around.

As a result, valuations of other messaging apps, which are racing to amass users, are reaching lofty heights. Facebook paid US$18 billion last year for WhatsApp, which currently boasts more than 800 million users. Snapchat, a startup that lets people share disappearing pictures, was valued at US$16 billion in May. Even though few of these generate any income, they're seen as the building blocks for an ecosystem that will include e-commerce, transport, advertising and other opportunities.

"There's not many categories of technologies that are going to consume a mass number of people, and messaging appears to be one of these now," said Brian Blau, social-media analyst at Gartner. "That's probably one of the most attractive parts for these investors, which is driving those valuations." WeChat's user count jumped by 37 per cent in the latest quarter, according to Tencent's results-and it isn't even the Internet company's biggest messaging product. That honor goes to QQ, which has 843 million users. Facebook's own Messenger has 700 million users. Skype, the Internet calling service operated by Microsoft, also lets people exchange messages and boasts 300 million users. By comparison, Twitter, which is projected to generate US$2.24 billion in revenue this year, only has 316 million users.

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When it comes to innovation, however, WeChat may be far ahead of the pack in terms of money-making opportunities. It already includes shopping and in-app games, features that other services are rushing to replicate, according to Adley Bowden, senior director of analysis at Pitchbook Inc.

"WeChat's success is a little bit of a game-changer in the take on messaging as a platform," Mr Bowden said.

Line, a messaging app popular in Japan, may soon offer a better picture of how investors are valuing messaging apps. The company, controlled by South Korean search portal Naver Corp., is preparing for a dual listing in Tokyo and New York next month, people with knowledge of the matter said in May. Line, which makes money by selling teddy bear icons and games to its 211 million users, had US$223.9 million in revenue in the latest quarter.

Competition for users remains fierce. Viber, a popular messaging app, has 249 million users. Kik, a Canadian messaging service, has more than 200 million, while South Korea's KakaoTalk has 48 million people exchanging messages and photos.

Eventually, within three to five years, there will be a few winners that survive, said Gartner's Blau. That will probably involve more acquisitions by the biggest messaging service providers, with the main question being how much further valuations can go.

"There are probably going to be more of these top-line companies that aren't going to be satisfied to grow organically," Mr Blau said. "What we're seeing today is a race toward an ecosystem, which is more powerful than a single- function app and will serve as a conduit to other types of engagement." That estimate would make WeChat bigger than American Express, Ford Motor or Target.

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India seeks US$100m in damages from Nestle 

India's government is seeking damages of nearly US$100 million from Nestle for "unfair trade practices" after the food safety watchdog banned its hugely popular Maggi noodles brand. 

PHOTO: AFP

AUG 12, 20152:29 PM

[NEW DELHI] India's government is seeking damages of nearly US$100 million from Nestle for "unfair trade practices" after the food safety watchdog banned its hugely popular Maggi noodles brand.

The government said Wednesday it has filed a suit with the country's top consumer court for 6,400 million rupees (S$139.4 million) in damages from the Indian arm of the Swiss food giant.

India's food safety watchdog in June banned Nestle from making or selling noodles in the country after tests by some states found lead levels exceeded statutory limits.

Nestle has withdrawn the product in India but continues to sell it elsewhere, and has always denied the charge.

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"We filed the complaint with the National Consumer Disputes Redressal Commission (NCDRC) yesterday and have sought around 6,400 million rupees in damages," G Gurcharan, Additional Secretary at the Ministry of Consumer Affairs, told AFP.

"Our complaint is over their unfair trade practices and the court will now issue them notices to hear their response," Mr Gurcharan added.

A Nestle India spokesman said the company had not yet received official notice about the complaint with the NCDRC, a semi-judicial body that has the power to fine companies.

"We shall be able to provide substantive response after we receive the official papers," said Himanshu Manglik.

Nestle India is challenging the ban on Maggi noodles in the Mumbai high court.

It had been selling the brand for over three decades in India, and had 80 percent of the country's instant noodle market before the ban.

Several celebrities have endorsed Maggi over the years, including Bollywood superstar Amitabh Bachchan.

AFP

US dollar falls as China move seen delaying Fed rate hike

A file photo dated Sep 13, 2010, showing a man walking past oversized Chinese yuan (RMB) notes, US bank notes and other foreign currency seen out side a foreign exchange in Hong Kong, China. 

PHOTO: REUTERS

AUG 13, 20156:57 AM

[NEW YORK] The dollar fell against the euro and other currencies on Wednesday on speculation that the US Federal Reserve will delay hiking interest rates following China's devaluation of the yuan.

"The dollar took it on the chin," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Beijing on Tuesday surprised global financial markets by devaluing its currency, the yuan, by nearly two per cent against the US dollar.

A second cut on Wednesday brought reductions this week in the yuan to 3.5 percent against the dollar.

The dollar had advanced against most rival currencies on Tuesday. But on Wednesday, the greenback declined against the euro, the British pound and the Japanese yen.

"China's cheapening of its currency opened a messy can of worms for markets and suggested the global economy may be worse off than previously thought," Mr Manimbo said.

"Consequently, expectations have diminished for the Fed to raise rates amid fears that slowing growth in China could reach US shores."

Currency traders are closely eyeing US data the rest of the week, especially Thursday's report on US retail sales for July.

A strong report could strengthen confidence that the Fed will hike rates in 2015, perhaps as soon as September.

AFP

    

17 dead, 400 hurt as huge blasts hits China's Tianjin; Xi urges full efforts to rescue injured

A series of massive explosions at a warehouse in the northern Chinese port city of Tianjin killed 17 people, state media reported on Thursday, as witnesses described a fireball from the blasts ripping through the night sky. 

PHOTO: EPA

AUG 13, 20157:57 AM

[TIANJIN] A series of massive explosions at a warehouse in the northern Chinese port city of Tianjin killed 17 people, state media reported on Thursday, as witnesses described a fireball from the blasts ripping through the night sky.

An AFP reporter at the scene saw shattered glass up to three kilometres (two miles) from the blast site, after a shipment of explosives detonated in an industrial zone raining debris on the city.

Plumes of smoke still billowed over buildings six hours after the explosion, which occurred around 11.30 pm local time.

"The fireball was huge, maybe as much as 100 metres tall," said 27-year-old Huang Shiting, whose house is close to the port area of the city where the explosion took place.

"I heard the first explosion and everyone went outside, then there was a series of more explosions, windows shattered and a lot of people who were inside were hurt and came running out, bleeding," he told AFP.

State broadcaster CCTV reported that 17 people had been killed and more than 400 hospitalised, adding in a Twitter posted that President Xi Jinping had urged "all-out efforts to rescue victims and extinguish fire".

Communist Party newspaper the People's Daily said in a post on Chinese social network Weibo that more people remained trapped by a huge fire unleashed by the explosives.

Images obtained by AFP showed residents, some partially clothed, running for shelter on a street strewn with debris.

Between 300 and 400 injured people had arrived at a single hospital, according to the Beijing News, which also cited a worker at another healthy facility saying there were too many new patients to count.

The magnitude of the first explosion was the equivalent of detonating three tonnes of TNT, the China Earthquake Networks Centre said on its verified Weibo account, and was followed by a second stronger blast equal to detonating 21 tonnes of the explosive.

Two firefighters called to the scene were missing, state news agency Xinhua reported, as 10 emergency teams and 35 fire trucks battled the blaze.

Much of the area surrounding the explosion is made up of construction sites for residential and office buildings. Worker dormitories, built of flimsy sheets of thin metal, were torn apart by the blast.

At the city's TEDA hospital, close to the blast site, Zhang Hongjie, 50, sat with his head wrapped in bandages, his arms covered with small cuts from flying glass.

"The explosion was terrifying, and I almost passed out," he told AFP. "I'm sorry, I still can't think straight, I'm a bit confused," he said.

Hospital staff said most of those that arrived overnight had been discharged.

China has a dismal industrial safety record as some owners evade regulations to save money and pay off corrupt officials to look the other way.

In July, 15 people were killed and more than a dozen injured when an illegal fireworks warehouse exploded in northern Hebei province.

And at least 71 were killed in an explosion at a car parts factory in Kunshan, near Shanghai, in August last year.

Tianjin, which lies about 140 kilometres south-east of Beijing, is one of China's biggest cities, with a population of nearly 15 million people according to 2013 figures.

A manufacturing centre and major port for northern China, it is closely linked to Beijing, with a high-speed train line cutting the travel time between them to only 30 minutes.

Like Shanghai, several countries were granted trading "concessions" there during the 19th and early 20th centuries - settlements which were administered by a foreign power - starting with Britain and France in 1860.

Tianjin's city centre retains a legacy of historic colonial architecture, along with more recent skyscrapers.

It is one of only four cities in China - along with Beijing, Shanghai and Chongqing - to have the status of a province.

AFP

      

Singapore interest rates surge as Singdollar sinks on yuan devaluation

Sibor, used to price home loans, rises 6.3% while SOR, for pricing commercial loans, soars 7.8%

By

Siow Li Senlisen@sph.com.sg@SiowLiSenBT

Singapore's key lending rates jumped on Wednesday as the Singapore dollar fell sharply to a five-year low on two days of yuan devaluation.

PHOTO: EPA

 Getting a lift

 Forecasts

AUG 13, 20155:50 AM

Singapore

SINGAPORE's key lending rates jumped on Wednesday as the Singapore dollar fell sharply to a five-year low on two days of yuan devaluation.

The three-month Sibor or Singapore interbank offered rate, which is used to price home loans, jumped to 0.93450, up 0.05542 from Tuesday's 0.87908. The gain was 6.3 per cent and took the key interest rate nearer to the year-high of 1.02705 on April 9.

The three-month SOR or swap offer rate surged 0.07782 to 1.07461 per cent. The gain was a bigger 7.8 per cent; SOR is used typically to price commercial loans. The SOR year-high was 1.13207 on March 24.

Analysts said that local interest rates and the Singdollar are in overshoot mode as they react to the shocking yuan devaluations of the past two days.

While the Sibor and SOR were expected to rise in line with a move to higher US interest rates - slated to happen this quarter - which would have caused the Singdollar to weaken, the yuan devaluation has short-circuited the process.

But the long-term rise in Sibor and SOR remains intact as local interest rate movements depend on the US rates as determined by the Federal Open Market Committee (FOMC) and the Singdollar, said analysts.

"There may be a knee-jerk reaction higher for Sibor and SOR," said Eugene Leow, DBS Bank economist. "While these short-term interest rate fluctuations depend on the SGD's performance versus the USD, the longer term trajectory for SGD rates still depends on how high and how fast USD rates are going to rise over the next few years."

"To a certain extent," said Selena Ling, OCBC Bank economist, "the CNY (yuan) moves may have pre-empted the FOMC liftoff bout of volatility. Have to remember financial markets are prone to over-shooting - classic example is Shanghai Composite Index falling by 1.06 per cent today and STI slumping by 2.9 per cent, which is telling that market confidence is very fragile right now. So, got to wait for the dust to settle a bit."

The three-month Sibor spiked by around 20 basis points in January and then by around 35 points in March in the run-up to the April monetary policy statement (MPS), noted Ms Ling. The Monetary Authority of Singapore has two scheduled MPS - one in April and the other in October - when it reviews the exchange rate.

"So the current episode," Ms Ling said, "is eerily reminiscent of another 'tantrum' since the SOR has moved more substantially due to the SGD weakness, and market speculation of further MAS monetary policy easing is rising again. Where SOR goes, Sibor may follow with a lag."

United Overseas Bank said in a research note that higher interest rates would come from further Singdollar weakness and the speculation for an October easing.

"Further SGD weakness due to RMB volatility or increase in MAS policy speculation could trigger greater USD hedging requirements akin to what was observed in Q1 2015, and we recognise this risk by increasing our Q3 forecasts of SOR while keeping our projections from Q4 onwards intact."

The Singdollar is likely to weaken to S$1.45 this quarter before recovering a little to S$1.43 in Q4 and then fall further to S$1.46 by Q2 next year, said UOB.

Its forecast for three-month Sibor is to hit 1.25 per cent this quarter before pulling back to 1.15 per cent in Q4. But the rate will resume moving higher to 1.27 per cent by Q2 2016.

SOR is forecast to reach 1.35 per cent this quarter and easing to 1.25 per cent in Q4; it will rise back to 1.35 per cent in Q2 2016
.