US: Wall St dips as Apple adds to fears of weakening demand

PHOTO: REUTERS

NOV 10, 201511:02 PM

[WASHINGTON] US stocks were lower on Tuesday morning, dragged down by Apple, as investors worried about China's economic health and braced for an interest rate hike by the Federal Reserve next month.

At 9.35 am ET (1435 GMT), the Dow Jones industrial average was down 28.73 points, or 0.16 per cent, at 17,701.75.

The S&P 500 was down 1.96 points, or 0.09 per cent, at 2,076.62 and the Nasdaq Composite index was down 24.39 points, or 0.48 per cent, at 5,070.92.

Seven of the 10 major S&P sectors were lower, with the information technology sector's 0.74 per cent fall leading the decliners.

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Apple's shares fell 2.5 per cent to US$117.52 after Credit Suisse said the iPhone maker had lowered component orders by as much as 10 per cent. The stock was the biggest drag on the three major indexes.

The report on Apple added to fears of a slowdown in global growth, especially in China, a key market for many US companies including Apple, ahead of the crucial holiday shopping season.

China's October inflation data on Tuesday showed persisting, if not intensifying, deflationary pressure. That followed disappointing trade data out of the world's second-largest economy over the weekend.

US stocks closed lower on Monday, with the Dow Jones industrial average slipping into negative territory for the year.

The three major U.S. indexes are coming off a six-week rally buoyed by better-than-expected earnings reports that helped lift Wall Street sentiments. "Being that the market is not on firm footing, this market is susceptible to profit taking and a consolidation period after this quite impressive rally off of the lows in late September,"said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

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Police freeze shares held by mother of China hedge fund boss Xu

Chinese police slapped a two-year freeze on more than US$670 million of shares owned by the mother of Xu Xiang, the Shanghai hedge fund boss under investigation for alleged insider trading and stock manipulation.

PHOTO: INTERNET

NOV 10, 201511:41 AM

[SHANGHAI] Chinese police slapped a two-year freeze on more than US$670 million of shares owned by the mother of Xu Xiang, the Shanghai hedge fund boss under investigation for alleged insider trading and stock manipulation.

Two companies, one in Beijing and one in Nantong in Jiangsu province, reported the freeze on stakes held by Xu's mother, Zheng Suzhen, in statements to the Shanghai stock exchange on Monday night. Zheng hasn't been named by authorities as being under investigation.

Xu, one of China's highest-profile and top-performing money managers, is among the targets of a Chinese government crackdown that spans executives at brokerage Citic Securities and officials at the China Securities Regulatory Commission after a US$5 trillion summer stock market rout.

The police detained Xu, who's known in China as "hedge fund brother No 1" on the highway between Shanghai and Ningbo on Nov 1, China National Radio reported. Xu, the general manager of Zexi Investment, didn't answer a call to his mobile phone on Tuesday and calls to Zexi's Shanghai and Beijing offices weren't answered.

His mother Zheng's 275 million shares in retailing firm Wenfeng Great World Chain Development Corp. in Nantong were worth 2.16 billion yuan (S$483 million) at Monday's closing price. The company's stock jumped as much as the maximum 10 per cent on Tuesday.

At technology firm Daheng New Epoch Technology in Beijing, Zheng is the biggest shareholder with 129.96 million shares valued at 2.14 billion yuan on Monday. That firm's stock also rose by as much as 10 per cent on Tuesday.

Cheng Min, Wenfeng's securities affairs representative, said the company didn't have any contact information for Zheng. At Daheng, two officials - the board secretary and the securities affairs representative - didn't answer phone calls.

Xu's Zexi managed four of China's top-10 performing hedge funds between June and August, according to Shenzhen Rongzhi Investment Consultant Co. The average return of Zexi's five stock funds has ranked in China's top three each year since the firm was founded five years ago, according to the Economic Daily's website.

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Google seeks developers in the desert at Dubai's tech hub

Google headquarters on Sept 2, 2015 in Mountain View, California. 

PHOTO: AFP

NOV 10, 201512:26 PM

[DUBAI] When Arab explorers traversed the deserts and seas centuries ago, they relied on an astrolabe, an astronomical navigation tool, to find their way.

Technology entrepreneurs finding their way through the complexities of the Middle East are turning to a modern-day version of the ancient instrument: AstroLabs, a startup accelerator in Dubai.

The Google-backed technology hub opened for business in October, with 42 startups plucked from among 250 applicants calling the sprawling ground-level space their home. Inside, there's a cafe, desks, video-conference rooms, access to blazing-fast Internet and a "coding cave" - a scene straight out of Silicon Valley or San Francisco. A device lab designed by Google is littered with iPhones, Android smartphones, tablets and computers, used by startups to test their mobile applications and content.

One of the aspiring entrepreneurs is Lamia Tabbaa-Bibi, creator of IReadArabic.com, a digital library with more than 100 books for children. She got a business license, work space and access to mentors at AstroLabs. About 30 schools in Jordan, Saudi Arabia and the United Arab Emirates have subscribed to the website, which has its roots in videos that Tabbaa-Bibi began producing to teach her toddler son Arabic.

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Ms Tabaa-Bibi is trying to address what she sees as an unmet need in the Middle East: insufficient educational Web content in Arabic at a time when many private schools in the region are putting more emphasis on English.

"I'm trying to hire now, and can't find someone who can write an e-mail in Arabic," Ms Tabbaa-Bibi said. "It's quite tragic." While the Middle East and North Africa have about 200 million Internet users spending an average of six hours a day online, they mostly turn to providers outside the Middle East to access apps, content and business tools, according to Mohamad Mourad, managing director of Google Middle East and North Africa. AstroLabs' goal is to remove some of the barriers that startups face so they can create new homegrown businesses and target customers globally.

"It's very simple: supply and demand," Mr Mourad said in a speech last month. "The MENA region requires a lot of products and services, just to satisfy the demand in the region." A bronze astrolabe hangs in the entrance of the new accelerator, located near Dubai's media and technology hub, just off its main highway, Sheikh Zayed Road.

"We've used that symbol really to symbolize the journey of the entrepreneur and the type of help we try to provide," said Muhammed Mekki, who co-founded AstroLabs with Louis Lebbos. The duo are behind Namshi, a Dubai-based online shopping portal with about US$100 million in annual sales. They ran startup workshops across the region for several years before teaming up with Google to open the tech hub last month.

Launching a startup in the Middle East isn't easy. Entrepreneurs can face a mountain of legal and regulatory red tape. Workspace is expensive and it's hard to find skilled staff. Funding is also scarce because of the lack of a developed venture capital industry.  Entrepreneurs from 27 countries, from Morocco and Australia to India and the Philippines, have signed up. AstroLabs and Google were especially interested in startups with ambitions beyond Dubai, Mr Mekki said. Among them: Deliveroo, a UK-based online food delivery portal, which recently received US$70 million in a funding round and is looking to expand in the Middle East. The Irish founders of Lovin Dublin are replicating their popular online publication featuring restaurant reviews and lifestyle content for their new site, Lovin Dubai.

Startups pay for packages that range from a "moonlighter" deal that includes access to work space for 1,000 dirhams (S$387.27) a month, to a one-year contract with perks such as a company license, a mailing address and reserved desks and storage, for 3,500 dirhams a month. All have access to mentors. The space is inside a free zone, which allows foreign ownership and doesn't impose taxes.

AstroLabs helps alleviate some of the hurdles of opening a business in Dubai, which has transformed itself into a regional hub for trade, finance and commerce. Tarig El Sheikh, a former investment banker and founder of Beneple, a cloud-based human resources management platform, said the cost of failure is still too high in the region.

"If you're in the Middle East, you're really putting yourself out there." said El Sheikh, who recently sold his startup. While the infrastructure to help entrepreneurs is rapidly evolving, he said there's more to be done.

Google is betting that its investment in Dubai's startup scene will help entrepreneurs connect with venture investors, and each other. Members of AstroLabs also get access to more than 20 other Google-backed tech hubs around the world with similar facilities. Next month, Google is bringing a dozen startups focusing on travel and hospitality from across the world to Dubai for an immersive program on how to access new markets.

Bigger technology companies are starting to take notice, said Yasar Jarrar, an adviser at Bain & Co in Dubai.

"They identify places where there has been a small trend over the last five years of new startups making some money," Mr Jarrar said. Success stories include Dubai-based Souq.com, co-founded in 2005 by Ronaldo Mouchawar and two Jordanian colleagues, which says it's the largest e-commerce site in the Arab world with more than 30 million visitors a month.

Iran, on the other side of the Gulf, could prove to be another potential market for startups, after an accord with world powersin July paved the way for the end of sanctions on its economy. Faranak Askari, founder of ToIran.com, a tourism portal for hotels and transportation in Iran, said demand on her site from hedge funds, retailers and other businesses traveling to scope out the country has seen "the hugest jump ever."  "Tourism is becoming so huge because it's a mysterious country-and that's our slogan," said Mr Askari, who has a team in Iran, consultants in the UK, web operations in Singapore and an office at AstroLabs.

The US$25 billion initial public offering of Chinese e-commerce giant Alibaba Group Holding last year was a wake-up call for global investors, who saw a non-Western tech company make history with the largest-ever US IPO. Alibaba proved how companies with local knowledge and regional expertise have the potential to make it big, according to Christopher Schroeder, a US venture investor and author of Startup Rising: the Entrepreneurial Revolution Remaking the Middle East. The number of Silicon Valley investors seeking advice on breaking into emerging markets, including Iran and the Middle East, has climbed in the past year, he said.

"People are trying to figure out how they might have to play in these markets," Mr Schroeder said. "That's where the future economy and where new technology and innovation will come from."

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China major cities' October land revenues rise 24% y-o-y

A general view shows the Shanghai city skyline on a sunny day in Shanghai, China. 

PHOTO: REUTERS

NOV 10, 20151:04 PM

[BEIJING] Local government revenue from land sales in China's 10 biggest cities rose 24 percent in October from a year earlier, a private survey showed, pointing to early signs of price stabilisation in the property market.

But land revenues were still down 17.9 per cent in the first 10 months in the cities, which include Beijing and Shanghai, data from real estate services firm E-House China showed.

Selling land to developers is a major source of income for China's local governments, but a cooldown in the housing market since last year has crimped developers' demand for land.

The 10 biggest Chinese cities earned 588.9 billion yuan (S$131.6 billion) from land sales in the January to October period, including 73.1 billion yuan in October, according to E-House.

Following a year-long slump, home sales and prices have increased in bigger cities over recent months, helped by a barrage of government measures aimed at reviving the key sector to arrest an economic slowdown.

Still, analysts do not expect a full-blown turnaround any time soon in the housing market, as a huge overhang of unsold homes discourages new construction and investment.

REUTERS

    
 

Rising food prices to hit rural India in 2016

India's villages face a sharp spike in food prices in 2016, as a second year of drought drives up the cost of ingredients such as sugar and milk, and poor transport infrastructure stops falling global prices from reaching rural areas. 

PHOTO: REUTERS

NOV 10, 20155:38 PM

[MUMBAI] India's villages face a sharp spike in food prices in 2016, as a second year of drought drives up the cost of ingredients such as sugar and milk, and poor transport infrastructure stops falling global prices from reaching rural areas.

India's first back-to-back drought in three decades also complicates government spending calculations as Prime Minister Narendra Modi tries to prune a subsidy regime that has long propped up the rural economy, and he can ill afford to alienate rural voters after a bruising weekend electoral defeat in the northeastern sate of Bihar.

It is bad news for the central bank, too, which faces a conundrum achieving its 4 per cent inflation target for the medium term as levels diverge in town and country, and infrastructure development would take years to fix it.

India's overall retail inflation eased to 4.41 per cent in September, helped by falling commodity prices, but rural inflation was at 5.05 per cent, mostly due to food prices. That, some analysts argue, could worsen, despite the dampening effect of lower wages and sluggish growth in the agricultural sector. "The impact of this year's drought will cut supplies of sugar, milk and vegetables, which the market hasn't factored in yet fully," said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives and Commodities. "The first half (of next year) will be more painful than the second half." While urban dwellers have seen some cheaper imported food products, benefiting from global deflation, that has not filtered through to rural areas, given poor roads, rail and a lack of storage facilities for perishable goods.

Prices of vegetables like onions, tomatoes and potatoes have already been rising, with some staples up as much as 20 per cent in a month. Palm oil prices have also climbed in the last two months, while milk prices have risen by 10 per cent.

REUTERS

    
 

Gadget hungry China to drive 'lifestyle' metal gains, PwC says

In this photo taken on Sept 21, 2015, a couple both use their phones in the subway in Beijing. 

PHOTO: AFP

NOV 10, 20157:22 AM

[MELBOURNE] China's swelling middle class is poised to drive long-term demand gains for metals including copper, zinc and nickel as the world's second-largest economy transitions to consumer-driven growth, according to PricewaterhouseCoopers Australia.

The urbanization of the world's most populous nation, which moved about 300 million people to cities in the past 20 years, promises to herald an increased need for metals required to make every kind of consumer product from smartphones to refrigerators, PwC Australia's Melbourne-based national mining leader Chris Dodd said in an interview.

"We're heading towards the period in China for the lifestyle metals to really come to the fore," Mr Dodd said by phone.

"If you currently have a mobile phone in your hand you are not going to tolerate a scenario where you don't have one in the future. If you've ever put an air conditioner in your house, you are not going to live without one."

While metals prices have tumbled this year as the Chinese economy expands at the slowest pace in two decades, copper and nickel are likely to be the first to emerge from the rout in commodities, according to T Rowe Price. Rising populations and growing wealth in emerging economies will be the primary driver of longer term demand and in particular, for industrial metals, energy and fertilizers, BHP Billiton said in February.

The Bloomberg Commodities Index touched the lowest since 1999 last week amid China's cooling economy. China's gross domestic product increased in the third quarter by the least in six years and October trade data released Sunday showed imports slid for the 12th month in a row.

Still, China's urban population will probably increase by a further 170 million people in the next decade, while globally about 70 million people a year are entering the world's middle class and boosting demand for materials, according to Rio Tinto Group.

Copper wire is used in appliances, including washing machines and refrigerators, while nickel is needed for phones, computers and vehicles. Minerals supplied by the biggest miners are required in everything from Apple's iPhones to automobiles, Rio's chief executive officer Sam Walsh said in September.

Producers are positioning to meet demand driven by consumers and also to swoop on distressed assets and companies amid cratering commodity prices, Mr Dodd said on Monday in the interview, before addressing the International Mining and Resources Conference in Melbourne on Tuesday, alongside executives from MMG and Antofagasta.

"I get the feeling that there's a bit of a glint in the eye of some of senior players in the industry who see this as their next opportunity," Mr Dodd said.

Rio flagged in May it's prepared to look for a deal if it can secure the right asset and win investor backing, while BHP has said it could be tempted by copper to petroleum acquisitions. Glencore has flagged the potential sales of two copper mines as it seeks to cut debt, while Anglo American agreed in August to sell two Chile copper projects for as much as US$500 million.

Chinese homes will use 800 million air conditioners by 2025, double the number in 2013, according to Rio estimates. Retail sales of telephones in China jumped 42 per cent in September compared to a year earlier, spurred by the launch of the iPhone 6S, Bloomberg Intelligence said last month.

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