China fixes yuan rate more than 1% lower vs US dollar

China set the reference rate for its currency more than one per cent lower against the US dollar on Thursday, the operator of the national foreign exchange market said, its third consecutive reduction. 

PHOTO: EPA

AUG 13, 20159:59 AM

[SHANGHAI] China set the reference rate for its currency more than one per cent lower against the US dollar on Thursday, the operator of the national foreign exchange market said, its third consecutive reduction.  

The central bank put the yuan’s central parity rate at 6.4010 yuan for US$1, the China Foreign Exchange Trade System said, a drop of 1.11 per cent from the previous day’s 6.3306.  

It was also lower than Wednesday’s close, and comes after China adopted a more market-oriented method of calculating the currency rate in a move widely seen as a devaluation.  The cuts have put financial markets on edge, sparking worries of a “currency war” as other countries feel pressure to devalue and raising questions about the health of the world’s second-largest economy, where growth is already slowing.  

China keeps a tight grip on the yuan, allowing it to fluctuate up or down just two percent on either side of the reference rate, which it sets daily.  The People’s Bank of China (PBoC) on Tuesday announced a “one-time correction” of nearly two percent in the yuan’s value against the greenback as it changed the mechanism.  It has since lowered the central rate twice more, and the week’s combined drop is the biggest since China set up its modern foreign exchange system in 1994, when it devalued the yuan by 33 per cent at a stroke.  

Analysts viewed the move as a way for China to both boost exports by making its goods cheaper abroad and push economic reforms as it seeks to become one of the reserve currencies in the International Monetary Fund’s SDR (special drawing rights) group.  

But the volatility in the normally unusually stable unit has raised concerns, and Bloomberg News reported on Wednesday the central bank had intervened in the market to prop it up.  PBoC economist Ma Jun on Wednesday said China could stabilise the yuan through direct market intervention.  

“The central bank, if necessary, is fully capable of stabilising the exchange rate through direct intervention in the foreign exchange market to avoid (the) herd mentality resulting in irrational movements of the rate,” Mr Ma was quoted as saying by the official Xinhua news agency.

AFP

      

Amazon lures investors back from Alibaba   

China is no longer in vogue with e-commerce investors, as money returns to the US and Amazon.com following a brief fling with Alibaba Group Holding and its 367 million customers. 

PHOTO: AFP

AUG 13, 20157:04 AM

[SAN FRANCISCO] China is no longer in vogue with e-commerce investors, as money returns to the US and Amazon.com following a brief fling with Alibaba Group Holding and its 367 million customers.

With a market value of more than US$240 billion, Amazon is once again the world's most valuable e-commerce company, a spot it lost after Alibaba's record-setting US$25 billion initial public offering in September. Alibaba's current market capitalisation is at about US$180 billion, down more than 30 per cent from its peak in November.

Alibaba reported earnings on Wednesday showing that quarterly sales grew at their slowest pace in three years, with transaction volume falling short of estimates.

Investors viewed Alibaba as a profitable alternative to the free-spending ways of Jeff Bezos, Amazon's chief executive officer. Now, concerns are focused on China's cooling economy and slower consumer spending, as well as Alibaba's reluctance to aggressively pursue business in the US. Meanwhile, Amazon impressed investors last month when it reported a surprise second-quarter profit, thanks to its fast-growing cloud-computing business and spending discipline.

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"You can't overlook the China slowdown," said RJ Hottovy, an analyst at Morningstar Inc. in Chicago. "Chinese consumer spending trends are in a slowdown."  Among investors, JPMorgan Chase & Co, Wellington Management Group and TIAA-CREF Investment Management reduced their share holdings in Alibaba by an average of 42 per cent in the past three quarters, while increasing their holdings in Amazon by 65 per cent, according to data compiled by Bloomberg.

For now, the e-commerce giants are mostly steering clear of each other's home turf. Amazon is focusing its overseas growth ambitions on India after investments in China failed to gain traction. Alibaba in June announced plans to sell its US website 11 Main, and is looking to Russia and Brazil to expand. Rather than sell Chinese goods in the US, Alibaba is focused on encouraging American businesses to sell into China.

While Alibaba initially benefited from interest in a new investment opportunity at its market debut, Amazon has the advantage of being publicly traded for almost two decades, said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University.

"Familiarity creates a big advantage for Amazon," Mr Kalyanam said. "This is Wall Street saying, 'If you think Alibaba is going to come into the US and take on Amazon, think again.'"

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Intel says on target to exceed diversity hiring goals for 2015 

Intel, the world's largest chipmaker, said it's hiring under-represented minorities at a faster pace than targeted as the company works toward increasing diversity in its workforce. 

PHOTO: REUTERS

AUG 13, 20157:22 AM

[SAN FRANCISCO] Intel, the world's largest chipmaker, said it's hiring under-represented minorities at a faster pace than targeted as the company works toward increasing diversity in its workforce.

Intel hired 1,035 women, 139 blacks, 222 Hispanics and 9 Native Americans in the first six months of the year, the company said in a report posted online. In total, 43.3 per cent of its US hires in 2015 were women or under-represented minorities compared with an annual target of 40 per cent, Intel said.

Like other Silicon Valley companies, Intel has come under increasing scrutiny for its lack of women and black employees. Chief executive officer Brian Krzanich has responded by promising to spend US$300 million to make the gender and ethnicity of his workforce representative of the US population by 2020. He's also said he'll tie executive pay to that goal and announced an investment fund for startups run by minorities.

"Our early strides encourage us, yet we know many challenges remain in achieving our 2020 goals," Intel said in the report.

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Intel, one of the first companies to publish details on the makeup of its employee base in 2002, said its US staff was 24.1 per cent female, 3.5 per cent black and 8.3 per cent Hispanic as of July. About 0.5 per cent were Native Americans, the company said.

Intel said about 54 per cent of its 53,702 US employees were white and about 32 per cent were Asian as of July. The company had 104,302 employees worldwide.

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