Italian consumer groups file EU complaint against McDonald's

Three Italian consumer organisations have accused U.S. fast food chain McDonald's of operating an anti-competitive system in Europe, with restrictive clauses imposed on franchise operators that may breach the bloc's antitrust rules. 

PHOTO: REUTERS

JAN 12, 20164:50 PM

[BRUSSELS] Three Italian consumer organisations have accused U.S. fast food chain McDonald's of operating an anti-competitive system in Europe, with restrictive clauses imposed on franchise operators that may breach the bloc's antitrust rules.

Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva filed a complaint with the European Commission on Monday, urging the EU competition enforcer to step in. "The system construed by McDonald's raises strong concerns under antitrust laws," the group said in its complaint seen by Reuters.

At issue are franchise contracts, which on average last 20 years and so are twice as long as most other franchises, a requirement on licensees to lease premises from McDonald's at above-market rates and conditions hindering them from switching to competitors, the group says.

"McDonald's exercises an excessive and disproportionate control on its franchisees by implementing conditions that exceed without justification what is required for the protection of its system, its know-how and reputation," the group said.

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It said the restrictions hurt competition, resulting in consumers paying higher prices.

Franchisees operate about 75 per cent of McDonald's outlets in Europe.

It is far from certain that the Commission will open a second probe into the company. Complaints are usually followed by questionnaires sent to companies, after which the regulator determines whether there is cause for further action.

The European Commission said in December that it had opened an investigation into McDonald's tax deals with Luxembourg, saying these enabled the company to escape paying taxes on its European royalties both in Luxembourg and in the United States.

REUTERS

      

Starbucks says aims to open 500 new stores in China in 2016

Starbucks Corp, the world's largest coffee chain, said on Tuesday it aims to open 500 stores in China this year, shrugging off a slowdown in the world's second-largest economy that has hit global retailers. 

PHOTO: REUTERS

JAN 12, 20162:13 PM

[HONG KONG] Starbucks Corp, the world's largest coffee chain, said on Tuesday it aims to open 500 stores in China this year, shrugging off a slowdown in the world's second-largest economy that has hit global retailers.

Starbucks executives have said they have not seen a systemic slowdown in China, even as the country's cooling economy has been blamed for soft results by the likes of KFC and Pizza Hut parent Yum Brands.

The company said in a statement it aims to create 10,000 jobs in China every year through 2019 as it continues to expand in its largest market outside the United States.

REUTERS

Job openings in US rose by 82,000 in November to 5.43 million

JAN 13, 201612:02 AM

[WASHINGTON] Job openings increased in November, a sign the US labour market was bolstering the world's largest economy toward the end of 2015.  

The number of positions waiting to be filled rose by 82,000 to 5.43 million, from a revised 5.35 million in the prior month, a report from the Labour Department showed Tuesday. Hiring climbed and the most Americans since April 2008 quit their jobs.

Elevated vacancies and subdued dismissals represent robust demand for labour that may eventually lead to faster wage growth. The report, which includes some measures tracked by Federal Reserve Chair Janet Yellen, is in sync with the central bank's view of progress in the job market.

"The labour market is chugging along, doing quite well," Thomas Simons, a money-market economist at Jefferies Group LLC in New York, said before the report. "We're at a point now where we should see sustained wage growth." The median forecast in a Bloomberg survey projected 5.45 million openings after a previously reported 5.38 million the month before.

The Job Openings and Labour Turnover Survey, or JOLTS, adds context to monthly payrolls data by measuring dynamics such as resignations, help-wanted ads and the pace of hiring. Although it lags the Labour Department's other jobs figures by a month, Yellen follows the report as a measure of labour-market tightness and worker confidence.

The report showed job openings picked up at professional and business services, construction companies, restaurants and health-care providers, while manufacturers and retailers showed a decline.

The number of people hired rose to 5.2 million in November from 5.17 million the prior month. The hiring rate held at 3.6 per cent. The gauge calculates the number of hires during the month divided by the number who worked or received pay during that period.

Some 2.83 million people quit their jobs in November, up from 2.78 million the prior month. The pickup reflected more departures in construction and at hotels and restaurants. The quits rate, which shows the willingness of workers to leave their jobs, was unchanged at 2 per cent, where it was when the recession started at the end of 2007.

Total dismissals, which exclude retirements and those who left their job voluntarily, decreased to 1.69 million from 1.7 million a month before. There were about 1.5 unemployed people vying for every opening, compared with about 1.8 when the 18- month recession began.

In the 12 months ended in November, the economy created a net 2.6 million jobs, representing 61.2 million hires and 58.6 million separations.

The JOLTS data follows on the heels of the December payrolls report from the Labour Department, which showed job creation ended 2015 on a strong note while wages stagnated. The US added 292,000 workers last month and payrolls for the previous two months were revised higher. The jobless rate held at 5 per cent, a more than seven-year low. Average hourly earnings at private employers were unchanged from November.

Fed policy makers, who raised interest rates last month for the first time in almost a decade and signalled further moves would be gradual, are counting on tighter labour conditions to lead to a pickup in wages and inflation.

"Members agreed that a range of recent labour market indicators, including ongoing job gains and declining unemployment, showed further improvement and confirmed that underutilization of labour resources had diminished appreciably since early this year," according to the minutes of the Fed meeting released on Jan 6.

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Strong US dollar inflicts more pain on oil as bearish options bets build

A stronger US dollar is compounding an oil market rout that has seen crude prices fall by almost 20 per cent this month, and options trades suggest the market is preparing for deeper losses ahead. 

PHOTO: AFP

JAN 12, 20162:27 PM

[SINGAPORE] A stronger US dollar is compounding an oil market rout that has seen crude prices fall by almost 20 per cent this month, and options trades suggest the market is preparing for deeper losses ahead.

The accelerated oil price drop since the beginning of the year has been largely blamed on China's stock market turmoil and its slowing economy, yet the dollar's strength is emerging as another important bearish factor, traders and analysts said.

The US dollar index has risen more than 20 per cent since mid-2014 as a relatively robust US economy attracted investor flows from other regions. The Federal Reserve's first increase in US interest rates in a decade in December and the prospect for further rises are expected to continue underpinning the greenback going forward.

Since oil is traded in dollars, a stronger greenback makes it more expensive for countries using other currencies to buy fuel, potentially denting demand.

"No doubt, US dollar is a key factor that is driving the oil price down," said Oystein Berentsen, managing director of crude oil at trading company Strong Petroleum in Singapore, although he said there were many reasons for the price collapse, "the basic one being overproduction."

Crude oil futures have fallen more than 70 per cent since mid-2014 as soaring global production leaves hundreds of thousands of barrels every day without buyers, creating an overhang that storage facilities around the world are struggling to cope with.

Compounding this, analysts say that the robust dollar has been playing an increasing role in crude price falls since last November. "There is an FX problem, and it may get worse," Morgan Stanley said in a note to clients this week. "When we assess the over 30 per cent decline in oil since early November, much of it is attributable to the appreciation in the trade-weighted USD," Morgan Stanley said.

CLOSE DOLLAR/OIL PRICE LINK

Market data suggests that the dollar and US crude are indeed closely linked.

Since the start of 2015 the rolling one-year correlation between US crude and the dollar weighted against a basket of currencies has had an average negative correlation of around 94 per cent as the greenback strengthened and oil fell.

Morgan Stanley said this trend could intensify if Chinese policymakers continue to steer the yuan lower in a bid to spur economic activity. "If rapid devaluation occurs, a 15 per cent CNY (Chinese yuan) depreciation alone could send oil into the US$20s."

US crude West Texas Intermediate (WTI) and Brent crude futures are now hovering close to the US$30 a barrel mark and a recent surge in bearish options market activity points to further falls.

Put positions tied to a US$20 strike price in December Brent crude oil futures have risen more than 700 per cent since the start of the year, and WTI put open interest is up more than a third at the March US$20 strike.

Put option positions and prices tied to other major strike prices below current Brent and WTI futures levels have also increased sharply so far in 2016. "Price moves are always exaggerated and go further than logic says, so a crude oil price below US$20 and down to US$10 is not impossible technically," oil trader Berentsen said.

Analyst downgrades have also fueled bearish sentiment, with several banks cutting their 2016 oil price forecasts this week, including Standard Chartered, which said prices could drop as low as US$10 a barrel.

REUTERS

    
 

China brokerages' 2015 profits soar despite mid-year stocks slump

JAN 12, 20166:33 PM

[SHANGHAI] Some of China's brokerages have reported that their preliminary net profit growth for 2015 more than doubled from the previous year, demonstrating they were able to successfully negotiate the months-long stock market turmoil that began in mid-June.

Since the Chinese stock market tumbled more than 40 per cent in summer last year, brokerages have faced a clampdown on margin financing, a temporary suspension of listings and regulator probes for allegedly illegal activities.

But these have not weighed down broker profits, which have risen on new account openings and margin finance gains, according to the preliminary 2015 results this week of some brokers.

Shenwan Hongyuan and Founder Securities , both among China's top-ten listed brokerages by market capitalisation, said their unaudited 2015 net profit was up 168.2 per cent and between 100 to 160 per cent, respectively, compared to the prior year.

Smaller outfits Guoyuan Securities, Northeast Securities, Guolian Securities and Changjiang Securities reported preliminary unaudited profits of between 100 to 148 per cent.

Guolian said on Monday its profit growth was partly due to the use of the Internet, significant account growth and margin trading profits.

China's largest broker CITIC Securities is one brokerage which has been under increased scrutiny after the stocks slump. In December, CITIC said was unable to contact two top executives, following media reports they had been asked by authorities to assist in an investigation.

In August, the official Xinhua news agency reported four senior CITIC officials had confessed to insider dealing.

CITIC said in December its profit for 2015 will be lower due to bad-debt losses.

The brokerages usually release final results in the weeks after the preliminary results are disclosed.

REUTERS

    
 

China allows six more foreign institutions into interbank FX market

JAN 12, 20166:23 PM

[BEIJING] China has allowed a second batch of foreign institutions to enter China's interbank foreign exchange market, the country's central bank said on Tuesday.

Six central banks and international financial institutions, including Reserve Bank of India, Monetary Authority of Singapore and Bank of International Settlements, are now allowed to trade spot products, forwards, swaps, currency swaps and options in China's domestic foreign exchange market, it said.

Last November, the first seven foreign institutions had been registered to enter the interbank foreign exchange market.

REUTERS