Yum Brands is blaming tension in the South China Sea for its bad quarter

• Akin Oyedele
 

• 18h
• 2,070
 
• 3
 

REUTERS/Wilson Chu

Yum Brands on Wednesday reported third-quarter profits and revenues that were weaker than analysts expected. 

The fast-food giant, which owns chains including KFC and Taco Bell, also reported a drop in sales in China, as it prepares to spin off its business in the country.

Same-store sales — at locations open for at least one year — fell by 1% in China, missing analysts' forecast for a gain by 4.1%, according to Bloomberg. 

And the company says the tension in the South China Sea is mostly to blame. An international tribunal in the Hague ruled in favor of the Philippines in a lawsuit brought over China's territorial claim to the waters. 

Here's CEO Greg Creed commenting in the earnings statement (our emphasis):

"Sales were off to a good start in the first six weeks of the quarter in the China Division. However, anticipated tougher laps in the second half of the third quarter were compounded by an international court ruling on claims regarding the South China Sea, which triggered a series of regional protests and negative sentiment against a few international companies with well-known Western brands.

If not for this event, we believe the China Division would have delivered its fifth consecutive quarter of positive same-store sales growth. The good news is the incident was short-lived and the sales impact continued to dissipate through August and September. Despite the protests, Pizza Hut Casual Dining continued its trend of quarterly sequential improvement."

Yum Brands said it is on track to finalize the separation of Yum China Holdings, and expects trading on the New York Stock Exchange to begin on November 1 with the ticker "YUMC".  Last November, the company announced the spin off after it struggled to grow sales for reasons ranging from China's economy to Pizza Hut's marketing strategy. 

In the past, Yum Brands' performance in China has been used as a gauge of consumer spending in the world's number-two economy.

Shares of Yum Brands fell by as much as 4.5% after regular trading hours. The company's adjusted earnings per share (EPS) of $1.09 was one cent short of the median estimate among analysts. Revenue totaled $3.32 billion, missing the forecast for $3.49 billion. 

SEE ALSO: JPMorgan's comprehensive guide to markets heading into the final quarter of the year

NOW WATCH: We did a blind taste test of KFC and Popeyes fried chicken — here's the verdict

h

More: Yum Brands Earnings South China Sea South China Sea Dispute

• F

Deutsche Bank's rally is rolling on

• Will Martin
 

• 2h
• 1,551

DaMongMan/Flickr

Deutsche Bank shares are climbing on Thursday, after the bank announced 1,000 new jobs cuts in its German homeland.

Shares have rallied more than 20% in less than one week, and on Thursday have continued to bounce, gaining around 0.75% as of 2:05 p.m. BST (9:05 a.m. ET).

Deutsche Bank's shares had been hit in the past few weeks after reports that the US Department of Justice is planning to hit the bank with a $14 billion (£11 billion , €12.4 billion) fine for misselling mortgage-backed securities in the run-up to the financial crisis.

That fine is almost as big as the bank's market value and led to fears late last week thatGermany may have to bail out the bank, something Berlin denied.

However, the bank has bounced back in the markets, with shares gaining on Friday last week, Tuesday, and Wednesday. In early trade on Thursday, the company's stock hit €12.38, its highest level since September 16. That extended the near 3% rise shares saw in trade on Wednesday, and meant that shares have gained more than 22% since hitting a more than 30-year low on September 30.

The main driver of Thursday's early rally appeared to be a report from Reuters late on Wednesday that the German government is pursuing talks with US authorities to help the bank settle its enormous fine as quickly as possible. Late in the morning it pared those gains, before climbing again on the news of the new job cuts.

Here's the chart show Deutsche's stock has performed so far:

Investing.com

Deutsche's initial rally was driven by rumours in the markets that the bank had managed to settle its DoJ fine for around $5.4 billion, less than half the sum first mooted by the US government. While that rumour has not been officially confirmed, it has boosted confidence in Deutsche massively.

Shares may have jumped in recent weeks, but Deutsche's problems are still very real. Just yesterday, Peter Dattels, a senior figure within the International Monetary Fund's capital markets division, raised concerns about the bank's long-term viability, saying: "Deutsche Bank . . . is among banks that need to continue to adjust to convince investors that its business model is viable and has addressed the issues of operational risk arising from litigation." 

As part of a report into global financial stability, the fund said that European banks in general need to take "urgent and comprehensive action" to deal with problems in the sector.

"Weak profitability could erode banks’ buffers over time and undermine their ability to support growth," the IMF said in its October report on financial stability. 

NOW WATCH: Nobel prize-winning economist Stiglitz rates Yellen’s performance as Fed chair

h

More: Deutsche Bank Department of Justice Stocks

Twitter stock plunges 19% on report that Google and Disney won't make a bid

• Biz Carson
 
•   

• 27m
• 8,452
 
• 5
 

AP Images

Twitter stock plunged 19% on Thursday morning following reports that Google and Disney would not pursue a formal bid for the social network.

Sources cited by Recode's Kara Swisher and Kurt Wagner say Google does not currently plan to make a bid and was not moving forward with any effort to do so. Apple making an acquisition offer was also "unlikely," according to Recode.

Twitter has reportedly told potential acquirers that it wants to conclude selling negotiations by its third quarter earnings report on Oct. 27. Google was one of the top names on the potential acquirer list, along with Salesforce and Disney. 

Twitter stock rose early on Wednesday on a WSJ report that Salesforce's CEO Marc Benioffconsidered the company to be an "unpolished jewel." It closed up 5.74% on Wednesday, but nose-dived in after-hours trading and Thursday morning on the reports that Google would be out of the running.

Google

Despite the talk of the acquisition, Twitter CEO Jack Dorsey has remained steadfast in his desire to keep it an independent company.

According to people familiar with the matter who spoke with Bloomberg's Sarah Frier , Dorsey was opposed to selling Twitter as recently as September 8, when Twitter held a board meeting to discuss the company's future.

According to the piece, there isn't a consensus within the company as to what should happen in the coming weeks and months. Dorsey wants Twitter to "remain on its current course and work to capitalize on recent product improvements and success in streaming live video," according to Bloomberg. 

SEE ALSO: Salesforce is getting killed after reports of CEO Marc Benioff being serious about buying Twitter

NOW WATCH: Apple just accidentally leaked this iPhone 7 video on Twitter

h

More: Twitter Google Alphabet

A fake painting that sold for £8.4 million signals a highly skilled forger in the arts market

• Thomas Colson
 

• 5h
• 1,908

'An Unknown Man', the £8.4 million fake The Weiss Gallery

A painting sold by auction house Sotheby's for £8.4 million ($10.6 million) has been assessed as fake, raising fears that more multimillion pound forgeries are on the market, according to a report in the Financial Times.

The work, by Dutch artist Frans Hals, was sold to an anonymous US buyer in 2011.

However, it was taken back by Sotheby's after the auction house discovered its connection to another alleged fake.

The scandal goes back to earlier this year. It started in March, when a painting by German painter Lucas Cranach was seized by the French authorities at an exhibition in the south of France.

That painting, called 'Venus,' dated from 1531. It sold in London for £6 million, but is now under assessment at the Louvre, and is believed to be fake.

When Sotheby's linked the £8.4 million Hals painting to the same source as the French fake, it was sent back to the auction house, whose experts used pigmentation tests to determine that it was "undoubtedly" a fake.

A spokesperson from Sotheby's told Business Insider: "With the consent of the seller, we informed the buyer of a possible issue with the authenticity of the painting.

"We then worked together to commission an in-depth technical analysis which established that the work was undoubtedly a forgery, after which we rescinded the sale and reimbursed the client in full.

"Clients transact with us because they know Sotheby's will keep its promises when problems arise, and we were very pleased to do that in this case."

In an interview with the Daily Mail, art dealer Bob Haboldt described the episode as "the biggest art scandal in a century."

He described the person behind the fakes as the 'Moriarty of the Old Master', in a reference to the mastermind villain in the Sherlock Holmes books. An Old Master is any painter from Europe who painted before 1800.

There are now concerns that the market has up to 25 other fakes in it. The Daily Mail reports that the scandal could cost art investors £200 million.

It also says that Sotheby's are threatening legal action against the art dealer who sold supplied the Hals painting.

NOW WATCH: London is building Europe's tallest residential skyscraper

h

More: Sotheby's Art Forgery Art Market

The world now has $152 trillion in debt — the highest amount ever

• Bob Bryan
 

• 22h
• 7,546
 
• 15

 More Charts

 
•  
 

The world has never been more in debt.

According to the International Monetary Fund, total nonfinancial sector debt has hit $152 trillion worldwide, the highest gross debt ever recorded. The debt-to-GDP ratio is also at an all-time high of 225%, up from 200% 14 years ago.

According to the IMF report, much of this is private-sector debt from companies and households. Much of the increase came before the financial crisis began in 2007. Since then, there has been some deleveraging, but not on a substantial global scale.

"On average, private debt ratios in advanced economies reached a turning point in 2012, with the largest reductions since then registered in those countries that entered the crisis with high debt levels," the IMF report said. "In some cases, however, private debt has continued to accumulate at a fast pace — notably, Australia, Canada, and Singapore."

The IMF also noted that cheap borrowing costs have lead to a debt "boom" in emerging markets since the financial crisis.

IMF

Additionally, government debt had been decreasing in the lead-up to financial crisis, but has since exploded. Here's the IMF breakdown (emphasis added):

"As private debt started to retrench, public debt picked up, increasing by 25 percent of GDP over 2008-15. The realization of contingent liabilities with respect to the private sector played an important role accounting for about a quarter of the change. General government financial balance sheets also deteriorated, in some cases significantly, in part reflecting the assumption of private sector liabilities as a result of bank bailouts. Only about one-third of advanced economies have made inroads in improving general government net financial worth since 2012 and, on average, these inroads have been small."

A combination of slow growth preventing deleveraging, easy access to credit, and governments' need to stimulate economies following the financial crisis have caused these developments, according to the IMF.

Going forward, however, the IMF said it is unclear how the large mountain of debt would affect the global economy, especially since there is no "set level" at which debt becomes a problem. According to the report, there is reason to believe that if balance sheets are not cleaned up, the situation could be dire.

"The empirical evidence in this chapter confirms that financial crises tend to be associated with excessive private debt levels in both advanced and emerging market economies," the report concluded.

"Nevertheless, entering a financial crisis with a weak fiscal position exacerbates the depth and duration of the ensuing recession, as the ability to conduct countercyclical fiscal policy is significantly curtailed in that case."

Essentially, the rise in debt is not a problem yet — but it could become one very quickly.

SEE ALSO: Only 22% of everyday investors know the most basic principle of bonds

Japan's Asahi to bid for SABMiller's East Europe beer brands - Nikkei

left

right

2/2

left

right

A man walks past the logo of Asahi Group Holdings at the company's headquarters in Tokyo, Japan, May 17, 2016. REUTERS/Toru Hanai

1/2

left

right

2/2

left

right

1/2

Tokyo-based brewer Asahi Group Holdings (2502.T) plans to offer more than 500 billion yen ($4.87 billion) for SABMiller Plc's (SAB.L) beer business in five Eastern European countries, the Nikkei business daily said.

SABMiller's business in the Czech Republic, Poland, Hungary, Slovakia and Romania will be opened up to bidding after Anheuser-Busch InBev (ABI.BR) acquires the company next week, the Nikkei said.

Asked to comment on the report, an Asahi spokeswoman said the company was not currently taking any steps towards proposing an acquisition or bidding for SABMiller's assets.

ADVERTISING

inRead invented by Teads

Asahi Group President Akiyoshi Koji told Reuters in May that the company will not bid for the Eastern European assets that SABMiller is selling to appease anti-monopoly regulators.

SABMiller could not be reached outside business hours.

The Japanese brewer has already agreed to buy brands such as Italy's Peroni from SABMiller for 2.55 billion euros ($2.84 billion).

(Reporting by Gayathree Ganesan in Bengaluru and Thomas Wilson in Tokyo; Editing by Don Sebastian and Kenneth Maxwell)

NEXT IN BUSINESS NEWS 

Bank of England faces quandary as UK weathers early Brexit hit

LONDON The Bank of England, which signalled a few weeks ago that a fresh interest rate cut was likely next month, has been put on the spot by signs that Britain's economy has weathered the initial shock of the Brexit vote better than expected.

Pound down, stocks up, economy flat: What do Brexit swings mean for you?

LONDON Sterling has tumbled to a 31-year low, but British stocks are near a record high and, contrary to many expert forecasts, the shock of Brexit has not pushed the British economy off a cliff.

Germany plans to cut taxes by 6.3 billion euros a year - sources

BERLIN Annual German tax breaks of 6.3 billion euros (5.5 billion pounds) could take effect as early as January 2017 after the conservative Christian Democrats reached agreement with the centre-left Social Democrats, junior partners in the ruling coalition, government sources said on Wednesday.