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Author: Tan KW   |   Latest post: Sat, 17 Aug 2019, 10:23 PM

 

AirAsia removes processing fee for Malaysian bookings from Oct 1

Author: Tan KW   |  Publish date: Sat, 17 Aug 2019, 10:23 PM


KUALA LUMPUR, Aug 17 — AirAsia Bhd will be removing the processing fee for Malaysia for bookings made from October 1, 2019 to keep air travel affordable for all.
 
The fee is a charge related to the ongoing administrative, maintenance and developmental costs of AirAsia’s online systems to ensure a secure and safe booking environment, which the airline will fully absorb going forward, it said in a statement here.
 
“AirAsia is synonymous with affordable air travel, and by doing this, we will stay true to our promise — now everyone can fly. We feel this is especially relevant now with higher passenger service charges (PSC) at KLIA2. We want to cut travel costs so our guests don’t suffer, and we believe every little helps, said AirAsia Group President (Airlines), Bo Lingam.
 
With Visit Malaysia 2020 coming up next year, the airline hoped this would also encourage more people to travel to and within Malaysia.
 
 
“We want to make it an incredible success. This will be great for the tourism industry as well as the Malaysian economy, and it’s one of the ways we want to give back to the country,” said Bo Lingam.
 
 
AirAsia will also be removing the processing fee for Thailand, Indonesia and the Philippines by December 31, 2019. — Bernama
Labels: AIRASIA
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Britain’s inverted yield curve is nothing like America’s

Author: Tan KW   |  Publish date: Sat, 17 Aug 2019, 10:23 PM


INVERTED yield curves are the hot topic of the summer, especially as UK gilts have followed US treasuries by offering more interest on two-year maturities than you’ll get on 10-year notes.
 
When the sovereign bond world is flipped on its head like this it’s often seen as an indicator of looming recession as investors scramble for the relative safety of longer-term debt, which in turn pushes down its yields. The phenomenon has been seen before the last seven recessions in the United States.
 
But what happens in America doesn’t necessarily always apply in Britain. As I’ve written before on yield curve inversions, they tend to be more of a harbinger of doom the longer they hang around. Briefer periods of things going topsy-turvy aren’t as troubling, and we haven’t moved beyond that stage yet.
 
Another thing to bear in mind this time around, particularly in the smaller UK market, is the hugely distorting impact of quantitative easing (QE) over the past decade and the sheer volume of bonds snapped up by the Bank of England (BoE) and other central banks.
 
The BoE owns about one-third of all gilts, which makes it very difficult to read any economic signal from how the UK bond market is working. That’s proportionately a much higher holding than the QE programmes undertaken by the Federal Reserve or the European Central Bank. If Threadneedle Street buys up lots of long-dated bonds because of monetary policy then that will push down their yields without telling you much about the expectations of a downturn among general investors.
 
Neither does British market history show much evidence of briefly inverted curves leading to recession. Other than the tumult of 2008 and 2009, there hasn’t been a recession in the United Kingdom since 1991. The global financial crisis was indeed preceded by an inversion of the gilt curve between two and 10-year bonds but that’s the only clear-cut example in recent years.
 
While there was a long period of yield curve inversion between 1997 and 2002, the economy kept growing although it did slow up after the deepest points of the inversion. But there was also a sharp drop in gilt issuance at that time.
 
The UK economy is holding up pretty well despite the 0.2% drop in the three months to June. The third quarter should see a bounce back of 0.3%, according to Dan Hanson of Bloomberg Economics, while his forecast for 1.2% growth in 2019 is unchanged. July retail sales growth of 0.2%, and an upward revision to the June data to 0.9%, shows consumer spending is holding up.
 
With the spectre of a no-deal Brexit hanging over the UK economy it’s tough to draw a conclusion about the future. Only when Brexit is resolved will any fiscal boost or further BoE stimulus be determined. The UK’s yield curve inversion is worthy of concern but it’s as much about a shortage of available bonds than any sure sign of trouble ahead. 
 
 
 - Bloomberg 
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AI startup plans IPO at value of over US$1bil in China

Author: Tan KW   |  Publish date: Sat, 17 Aug 2019, 10:23 PM


BEIJING: The promise of artificial intelligence has yet to translate into big business. Now Kai-Fu Lee, a prominent venture capitalist in China and founder of Sinovation Ventures, says his firm’s new startup should be able to reach US$100mil in revenue next year and go public the year after.
 
AInnovation, established in March 2018, develops artificial intelligence products for companies in industries such as retail, manufacturing, and finance.
 
Its customers include Mars Inc, Carlsberg A/S, Nestle SA, Foxconn Technology Group, China Everbright Bank Co and Postal Savings Bank of China Co.
 
Chief executive officer Hocking Xu, a veteran of International Business Machines Corp and SAP SE, has hired staff that work with traditional companies to figure out how to take advantage of AI in their operations.
 
AInnovation is on track to hit US$100mil in revenue within two years of its founding, the fastest pace yet for such a startup, Lee said.
 
“We took the approach of ‘Let’s take some of the best business people and let’s target the industries which need AI the most’, ” he said.
 
Lee figures AInnovation will be able to go public in less than two years at a valuation of US$1bil to US$2bil. The firm has raised about US$70mil so far from Sinovation, CICC ALPHA and Chengwei Capital. Since the company was funded with yuan, it would most likely list domestically, either on China’s new NASDAQ-like Star market, or on the country’s ChiNext.
 
For retail companies, AInnovation sells products including a smart vending machine that opens with facial recognition and software that monitors retail shelves with image recognition.
 
It’s created computer vision technology that detects defects on the production line for manufacturers and underwriting software and natural language processing technology for financial firms.
 
There’s a large market in particular for technology to catch flaws early in the manufacturing process, said Jeffrey Ding, a researcher with Oxford’s Center for the Governance of AI.
 
That effort “aligns with the Chinese government’s priorities to upgrade smart manufacturing capabilities to compete with countries like Germany and Switzerland, ” he said in an email.
 
The former president of Google China, Kai-Fu Lee founded Sinovation Ventures in 2009. It manages more than US$2bil across seven funds in US and Chinese currencies.
 
It holds shares in more than 300 companies, most of which are in China.
 
Its investments include autonomous driving company Momenta, consumer AI chip firm Horizon Robotics Inc and bitcoin mining and AI chip company Bitmain Technologies Ltd.
 
In artificial intelligence, “we’re still at a very early stage in the commercialisation, ” Lee said. “We’re still at the equivalent of early Internet portals, back when everybody was using Yahoo and there wasn’t even a Google, Amazon, or Facebook.”
 
Global economic ructions, however, may present short-term challenges. Venture deals in China have been plummeting as investors pull back amid escalating trade tensions and slowing economic growth.
 
The value of investments in the country tumbled 77% to US$9.4bil in the second quarter from a year earlier.
 
“In an economy that’s slowing down, everything slows, including venture capital.
 
There will definitely be a shakeout, ” Lee said. “The positive side is that if the economy is challenging, and valuations are down, it’s a good time for us to go shopping.”
 
Sinovation was one of the first Chinese venture capital firms with a presence in the US.
 
With the trade war and the Trump administration’s tighter scrutiny of foreign investments, the firm has scaled back investments and no longer has an office in the US, Lee said, adding that investments in America have always been a small fraction of its overall investments.
 
“In the long term, it’s a pity if we have to cause a total separation of two countries because one could argue that AI got to where it got because the whole world has been able to work together.” 
 
 - Bloomberg 
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Tesla service criticised in BMW’s backyard

Author: Tan KW   |  Publish date: Sat, 17 Aug 2019, 10:23 PM


FRANKFURT: Stefan Moeller began this year with an ambitious target: to make his car-rental company Nextmove the biggest Tesla Inc customer in Germany by adding 100 Model 3s to its fleet. He likened the electric car’s arrival on Europe’s shores to a tsunami washing over a region that’s been slow to embrace battery-powered autos.
 
But the powerful wave Moeller expected has collapsed to a trickle. After weeks of back and forth over unfulfilled repair work and quality issues involving the initial 15 sedans that Tesla delivered - from scratched bumpers to moisture trapped behind the headlights - the order of the remaining 85 Model 3s was called off.
 
Tesla also tried to deliver cars that had been previously registered, which would have locked Nextmove out of Germany’s electric-car incentive program and potential tax refunds, Moeller said.
 
“The Model 3 is a fantastic car. Some of our customers totally fell in love with it, ” said Moeller, whose Leipzig-based company has more than 300 electric vehicles in its fleet, including 38 Model S and a dozen Model X.
 
“But the organization behind it doesn’t match that. It’s really sobering.”
 
Subpar service could be a barrier to Tesla making more of an impact in Germany, where exacting car owners value how painstakingly their BMWs and Mercedes are cared for just as much as the speed of the Autobahn.
 
Chief executive officer Elon Musk, who’s famously inimical to Twitter critiques, acknowledged earlier this year that a lack of service centers in Germany was hampering the company’s growth there.
 
Tesla believes Nextmove’s decision to cancel its remaining Model 3 order wasn’t entirely due to quality issues, and was largely influenced by frustration with an unrelated dispute earlier in the year, according to a spokesperson.
 
The carmaker was in the process of making repairs and had provided loaner vehicles to the customer at the time the order was canceled.
 
The Tesla spokesperson blamed the registration issue that Nextmove described on a temporary issue with matching identification numbers to vehicles and said the issue was resolved for impacted customers.
 
Norway woes
 
Poor service is an issue that’s already plagued Tesla in Norway, Europe’s largest electric-car market per capita. Dented and sloppily painted vehicles have fuelled the highest level of complaints per unit among all automakers, according to the nation’s consumer watchdog.
 
In Europe, Tesla is racing against time as more established players wake up to the electric future. The continent is projected to be the world’s second-largest driver of electric cars in the next decade, trailing only China.
 
Customers can already choose between a growing number of battery-powered models from the likes of Mercedes-Benz, Jaguar and Audi. Moeller said the remainder of Nextmove’s Model 3 order was canceled after he demanded an improved process for handovers and fixes. And he says the carmaker’s issues extend beyond the Model 3.
 
He spent two years waiting for the carmaker to replace a seat in a Model X that was delivered in July 2017 with a hole in it. A Model 3 arrived more recently with a protruding bulge on one tire. Moeller shared with Bloomberg News his email correspondence with Tesla and photos of the blemished vehicles.
 
The Tesla spokesperson said the company’s data doesn’t indicate any unusual vehicle quality issues specific to Germany or anywhere else in the world. The company said there’s a small chance cars are blemished during transport to customers and that it addresses those issues quickly.
 
Nextmove isn’t an isolated case. German social-media platforms and online forums are abuzz with customers airing complaints about faulty parts from sensors to suspensions. Many also describe Tesla’s sales organization in the country as unresponsive.
 
“I’m still thrilled by the car, because it’s just so much better than anything I’ve driven before, but the quality of the service and some technical parts are seriously worrying, ” Rouven Volk, who said by email that he ordered his Model 3 in February and was slated to take delivery less than a month later.
 
Volk chronicled an odyssey with Tesla that began with a car that couldn’t be handed over because of a defective main display.
 
The company opted to source another Model 3 from its European pool and set a new handover date for a month later.
 
Then, the car had stains on the outside and in the interior, and a cable dangled from where there should have been a light for the back seats. The charging cables and winter tires he ordered were nowhere to be found.
 
The Tesla spokesperson said unhappy customers can return their cars for a full refund up to seven days after purchase. The company’s data shows German customers have largely been satisfied with their vehicles, including the quality and condition of cars upon delivery.
 
Climbing the charts
 
Sales of the Model 3, Tesla’s most affordable model, helped make the brand the fastest-growing in Germany in the first seven months of the year, according to data from the nation’s auto industry watchdog KBA. While 6, 816 registrations is still well behind market leaders, Tesla outsold brands including Jaguar and Alfa Romeo.
 
Tesla is in the process of doubling the number of service centers in Germany to 17 locations, with a focus largely on urban areas including Berlin, Hamburg and Munich, according to the company’s website.
 
The carmaker is also branching out into mid-size cities such as Kiel, Ulm and Mannheim, and separately lists 16 retail stores in the country.
 
The brick-and-mortar presence is still a far cry from the sprawling infrastructure that established carmakers have built in Germany over decades.
 
Volkswagen AG, the top-selling automaker in the country, has hundreds of dedicated sales and repair outlets.
 
Then again, Musk is betting the looming shift toward electric cars and digital services will upend the retail and after-sale business.
 
Battery-powered autos have fewer components that are at risk of breaking down.
 
Tesla also plans to expand its fleet of mobile service vehicles by 50% and increase mobile service coverage by fivefold this year in Europe, according to the spokesperson.
 
For Volk, rust started showing between the front fender and the driver’s door of his Model 3 after about 100 days and 15, 000 kilometers, which he attributes to friction of sheet metal that wasn’t properly sloped. 
 
 - Bloomberg 
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Oil heads for weekly gain as trade war headlines whipsaw market

Author: Tan KW   |  Publish date: Sat, 17 Aug 2019, 10:23 PM


SINGAPORE: Oil headed for its first weekly gain this month as trade war news continued to whipsaw the market against the backdrop of rising US stockpiles and a weakening global demand outlook.
 
Futures added as much as 1.7% in New York after falling 1.4% Thursday. President Donald Trump said he had a call coming soon with his Chinese counterpart Xi Jinping after a pledge from Beijing to retaliate against planned US tariffs.
 
Earlier in the week, oil surged the most in more than a month after the Trump administration said it would delay levies on some products.
 
Oil has swung between gains and losses this month as concerns about the impact of the US-China trade war compete with a pledge from Saudi Arabia to stem the price rout.
 
While tensions with Iran linger, a second weekly surprise increase in American crude inventories compounded demand fears after weak economic data from Germany and China stoked negative sentiment.
 
“Investors are still hopeful about the possibility of further trade talks and Trump is likely pressured by the tumultuous sessions seen on Wall Street, ” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc.
 
There’s upside for oil due to potentially easing trade conflicts and geopolitical risks, he said.
 
West Texas Intermediate crude for September delivery rose 61 US cents, or 1.1%, to US$55.08 a barrel on the New York Mercantile Exchange as of 7:44 am in London. The contract is up 1.1% this week.
 
Brent for October settlement added 59 cents, or 1%, to US$58.82 on the ICE Futures Europe Exchange, taking its weekly advance to 0.5%.
 
The global benchmark traded at a US$3.85 premium to WTI for the same month.
 
Plans by the United States for 10% tariffs on an additional US$300bil in Chinese imports have taken the two nations off the track of resolving their dispute through negotiation, China’s State Council Tariff Committee said in a statement on Thursday.
 
Trump told reporters in Morristown, New Jersey, that he has a call scheduled “very soon” with Xi on trade.
 
 - Bloomberg 
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Wall Street ends sharply higher on German stimulus optimism

Author: Tan KW   |  Publish date: Sat, 17 Aug 2019, 10:23 PM


NEW YORK: U.S. stocks rebounded on Friday as an ebbing bond rally and news of potential German economic stimulus brought buyers back to the equities market, closing the book on a tumultuous week.
 
While all three major U.S. stock averages ended the session higher, they still logged their third consecutive weekly losses, having been rattled since Monday by growing U.S.-China trade animosity, simmering geopolitical tensions and signals from the bond market that sparked fears of impending recession.
 
Germany's coalition government is willing to suspend its balanced budget rule and take on debt, according to Der Spiegel magazine, raising hopes that Europe's largest economy could steer itself away from recession and cooling worries over a global economic slowdown.
 
"The market is looking for some positive news to take into the weekend, " said Mark Kepner, equity trader at Themis Trading in Chatham, New Jersey.
 
David Carter, chief investment officer at Lenox Wealth Advisors in New York, agreed, but added that underlying anxieties remain.
 
"(It was a) great headline but further analysis may eventually create uncertainty and weaken markets, " Carter said. "The level of uncertainty around the world is rising significantly, with no clear end in sight."
 
German stimulus hopes helped the benchmark 10-year U.S. Treasury yield rise from three-year lows, closing the book on a fraught week which saw 10-year yields dip below those of two-year notes, a classic recessionary red flag.
 
Rising bond yields gave a boost to rate-sensitive banks, sending the S&P 500 Banks index <.SPXBK> up 2.6%
 
The Dow Jones Industrial Average rose 306.62 points, or 1.2%, to 25, 886.01, the S&P 500 gained 41.09 points, or 1.44%, to 2, 888.69 and the Nasdaq Composite added 129.38 points, or 1.67%, to 7, 895.99.
 
All 11 major sectors of the S&P 500 closed firmly in the black, with industrials, technology and financials enjoying the largest percentage gains.
 
Nvidia Corp jumped 7.3% after the chipmaker's quarterly results bested analyst estimates, helping the Philadelphia chip index <.SOX> gain 2.8%.
 
Deere & Co cut its earnings forecast after missing Street profit estimates in the face of the ongoing U.S.-China trade war. Still, the farm equipment maker's decision to cut costs sent the stock up 3.8%.
 
General Electric Co surged by 9.7% after Chief Executive Officer Larry Culp bought nearly $2 million in shares in the wake of the conglomerate's worst one-day percentage drop in 11 years.
 
The second-quarter earnings season approaches the finish line, with 459 of the companies in the S&P 500 having posted results. Of those, 73% beat Street estimates, according to Refinitiv data.
 
Analysts now see S&P 500 second-quarter earnings growth of 2.9% year-on-year, per Refinitiv.
 
Advancing issues outnumbered declining ones on the NYSE by a 3.36-to-1 ratio; on Nasdaq, a 3.69-to-1 ratio favored advancers.
 
The S&P 500 posted 32 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 39 new highs and 106 new lows.
 
Volume on U.S. exchanges was 6.61 billion shares, compared with the 7.54 billion average over the last 20 trading days.
 
 
 - Reuters
 
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