Major International Business Headlines Brief::: 05 January 2021
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Major International Business Headlines Brief::: 05 January 2021
ü EU firms refuse UK deliveries over Brexit tax changes
ü NYSE does a U-turn on Chinese telecoms delistings
ü Google workers form tech giant's first labour union
ü Supermarket websites feel the strain of new lockdown
ü Amazon plots a course into the healthcare industry
ü FTSE 100 rallies amid Covid vaccine rollout
ü Volatility in U.S. stocks jumps as investors brace for Senate 'blue sweep'
ü Drugmakers kick off 2021 with 500 U.S. price hikes
ü Fiat Chrysler, Peugeot get green light for $52 billion carmaker
ü Wall Street places bet on solid revenue growth for Airbnb, DoorDash
ü Jack Ma's disappearing act fuels speculation about billionaire's whereabouts
ü China's Alibaba to shut down Xiami music app next month
ü Nigeria Owes Eurobond, World Bank, Others U.S.$31.985 Billion
ü Nigeria Misses 2020 Target to End Gas Flaring
ü South Africa: Petrol Price to Increase
EU firms refuse UK deliveries over Brexit tax changes
Some EU specialist online retailers have said they will no longer deliver to the UK because of tax changes which came into force on 1 January.
Bicycle part firm Dutch Bike Bits said from now on, it would ship to every country in the world except the UK.
"We are forced by British policy to stop dealing with British customers," it said on its website.
Another firm, Belgium-based Beer On Web, said it was now shunning the UK "due to the new Brexit measures".
The companies are angry because they now face higher costs and increased bureaucracy in order to comply with UK tax authorities.
However, it is unclear how many have taken the drastic step of refusing all UK orders.
At the same time, international shipping companies including Federal Express and TNT have said they are levying additional charges on shipments between the UK and the EU.
They said this reflected the increased investment they had had to make in adjusting their systems to cope with Brexit.
The moves follow changes in VAT rules brought in by HM Revenue and Customs on 1 January.
VAT is now being collected at the point of sale rather than at the point of importation.
This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).
A government spokesperson said: "The new VAT model ensures goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT-free imports.
"The new system also addresses the problem of overseas sellers failing to pay the right amount of VAT on sales of goods already in the UK at the point of sale, raising an anticipated £300m every year.
"Many EU businesses which currently sell goods to UK customers will have already registered for UK VAT under existing rules and HMRC is working very closely with those who haven't to ensure they can comply with the changes."
Tackling evasion
Adam French, Which? consumer rights expert, said consumers would be "frustrated" if the new VAT rules were applied in a way that causes significant inconvenience.
"It's vital the government makes it clear to consumers as well as traders what the changes as a result of Brexit mean for them and how they shop. It should also work to ensure UK consumers can retain access to a wide range of competitively priced and quality goods."
Campaigner Richard Allen, founder of Retailers Against VAT Abuse Schemes, told the BBC that the massive increase in international online shopping had led to VAT evasion on a huge scale.
He said the new HMRC rules were aimed at tackling that, but it was unclear how firms who failed to register for UK VAT would be dealt with.
"Why should a phonograph spares manufacturer in Idaho bother to register for VAT in the UK and how are you going to make them do it?" he said. "And if they send the package anyway, what are you going to do?"
'Not what we wanted'
"For providing this service, [HMRC] intend to charge a fee to every company in the world in every country in the world which exports to the UK," said Dutch Bike Bits on its website.
"Clearly this is ludicrous for one country, but imagine if every country in the world had the same idea.
"If every country decided to behave in the same way, then we would have to pay 195 fees every year, keep up with the changes in taxation law for 195 different countries, keep accounts on behalf of 195 different countries and submit payments to 195 tax offices in 195 different countries, and jump through whatever hoops were required to prove that we were doing all of this honestly and without any error."
Dutch Bike Bits said it had many customers within the UK and would like to be able to trade with them.
"Not being able to send parcels to the UK does not work in any way in our favour and it is not what we wanted," the firm added.
"If you're angry about this, and you may well be so, please contact your elected representative in the UK."
Temporary?
Other firms held out the hope that their ban on exports to the UK might prove to be temporary.
Scandinavian Outdoor, which is based in Finland and sells outdoor clothing and equipment, posted a message on its homepage saying: "No delivery to UK just now."
In a further message explaining its decision, it said: "Due to Brexit, we have temporarily closed our store from UK-based customers. Ordering will be possible as soon as our UK VAT registration and the overall process of selling to the UK post-Brexit has been sorted out."
Meanwhile, mail and freight company TNT has said it is now imposing a surcharge of £4.31 on all shipments between the UK and the EU.
TNT is now owned by Federal Express, which has also "updated" its charges, a spokesperson for the two companies said.
"FedEx/TNT has been making incremental investments to adjust our systems, processes, resourcing and customer-facing solutions to ensure readiness for the change on 1 January 2021," the spokesperson added.
"To reflect these investments and the incremental cost of customs clearance, we are increasing transportation rates for shipments from UK to EU, and EU to UK."
Rivals DHL and UPS have also taken similar measures.--BBC
NYSE does a U-turn on Chinese telecoms delistings
The New York Stock Exchange (NYSE) has scrapped its decision to delist three Chinese telecoms companies.
President Donald Trump signed an executive order in November barring American investments in Chinese firms owned or controlled by the military.
The NYSE announced on 31 December that it would delist China Mobile, China Telecom and China Unicom as a result.
Now, it has U-turned its decision based on "further consultation" with regulatory authorities.
"I suspect that the NYSE never wanted to delist these stocks in the first place. They acted on guidance regarding the executive order," Jeffrey Halley, a senior market analyst from Oanda told the BBC.
"That interpretation has clearly changed and the NYSE has moved quickly to change course," he added.
The US exchange had planned to delist all three companies as early as this week.
Shares of all three companies surged on the Hong Kong stock market - where the companies are also listed - bouncing back after from punishing sessions in both New York and Hong Kong.
China Unicom rose by 8.5%, while China Telecom jumped 8% and China Mobile rebounded by 7% on the news.
The NYSE indicated that it might revisit the decision, saying it would continue to evaluate the applicability of Mr Trump's Executive Order to the three companies and their continued listing status.
Dual listings
The three companies earn all of their revenue in China and have no significant presence in the US
Like many other large Chinese companies, they have a dual listing in the US and Hong Kong.
There are currently more than 200 Chinese companies listed on US stock markets with a total market capitalization of $2.2tn (£1.6tn).
In some cases, however, their share listings have became tangled in ongoing diplomatic and trade friction between the US and China.
Mr Trump has not only pushed for companies to be delisted, but has targeted a number of Chinese companies including TikTok, Huawei and Tencent on the grounds of national security.
China responded with its own blacklist of US companies as tensions between the economic giants escalate.
On Monday a spokeswoman for China's foreign ministry Hua Chunying had criticised the initial decision to delist the companies as "unwise" and reflective of how "random, arbitrary and uncertain" US rules can be.
Some analysts expect the end of the Trump administration might lead to a lull in the trade dispute, as the Chinese government waits to see what approach incoming President Joe Biden might take to US-Chinese relations.
"These are the acts of a dying administration and China will probably be content to await President Biden, and more clarity then over the general path of US China relations from the new administration," said Mr Halley.--BBC
Google workers form tech giant's first labour union
More than 200 workers at Google-parent Alphabet have taken steps to form a labour union in a rare development for an American tech giant.
They said the organisation will give staff greater power to voice concerns about discriminatory work practices at the firm and how it handles issues like online hate speech.
The move follows walkouts and other actions by staff in recent years.
Google said it would "continue engaging directly with all our employees".
"We've always worked hard to create a supportive and rewarding workplace for our workforce," Kara Silverstein, director of people operations, said in a statement.
"Of course our employees have protected labour rights that we support. But as we've always done, we'll continue engaging directly with all our employees".
The announcement of the Alphabet Workers Union comes weeks after Google's firing of a high-profile black artificial intelligence and ethics researcher generated uproar.
The US National Labor Relations Board also recently ruled the firm had unlawfully fired employees for attempting to organise a union.
Staff have also mobilised against the firm's "Project Maven" work with the Department of Defense and the company's handling of sexual harassment complaints.
"This union builds upon years of courageous organizing by Google workers," Nicki Anselmo, program manager, said in the announcement.
"From fighting the 'real names' policy, to opposing Project Maven, to protesting the egregious, multi-million dollar payouts that have been given to executives who've committed sexual harassment, we've seen first-hand that Alphabet responds when we act collectively.
"Our new union provides a sustainable structure to ensure that our shared values as Alphabet employees are respected even after the headlines fade."
The group was organised by software engineers but is open to all ranks at the company's US and Canadian workforce, including temporary workers and contractors.
It is affiliated with the larger labour group, Communication Workers of America, but is not seeking formal recognition from the federal government, limiting its bargaining power.
It represents a small fraction of Alphabet's workforce, which includes more than 130,000 people as of September and roughly as many contractors, vendors and temporary staff.
Members who join will contribute about 1% of their compensation to the effort.
"We want Alphabet to be a company where workers have a meaningful say in decisions that affect us and the societies we live in," organisers wrote on Twitter.--BBC
Supermarket websites feel the strain of new lockdown
Supermarkets' online shopping operations came under strain as customers rushed to book deliveries ahead of the new coronavirus lockdown.
Within a couple of hours of Prime Minister Boris Johnson's speech to the nation on Monday, shoppers reported problems with Sainsbury's and Tesco.
Sainsbury's grocery app went down for a time, and soon after the announcement, 5,311 Ocado shoppers were in a queue.
The surge in demand echoes consumers' reaction at the start of the pandemic.
After the first lockdown in March, supermarkets reported panic buying and a rush to book online delivery slots despite grocers insisting there would be no shortages if consumers shopped sensibly.
Shoppers used social media to vent their frustration on Monday, with Twitter user Auld Bryan saying: "Ocado have already introduced their virtual queue process on their app. It's March 2020 all over again."
Another tweet, by Karl Dyson, said of Ocado: "You'd think ~10 months in to this, they'd have worked on scalable infrastructure for the website?"
Ocado website
There were also reports of people having problems with the Tesco app and website, including when trying to check out and complete payment.
However, a spokesman for Britain's biggest supermarket said on Monday evening that there had been no reports from Tesco's technical department of any website problems.
The supermarket had increased the number of slots available for online delivery before the latest lockdown measures.
An email from Tesco UK boss Jason Tarry already sent to customers said: "Since March, we have more than doubled home delivery and Click+Collect slots to 1.5 million a week, with over 760,000 vulnerable customers registered with us who are eligible for priority slots."
sainsbury's app
Complaints about the Sainsbury's app continued long after the prime minister's announcement.
Twitter user Francesca Balgobind wrote: "What's happening with the Sainsbury's shopping app tonight? Website is down too?"
Another social media user, Matt, said simply some 40 minutes after Mr Johnson had finished speaking: "Sainsbury's app and website down".
A spokeswoman for the supermarket said on Monday evening that it would investigate the issue and may have more details on Tuesday.
Morrisons
Morrisons also reported a jump in the number of shoppers using its website after the announcement.
However, despite the longer waiting queues, the grocer said it continued to have "good slot availability" for home deliveries.
Throughout the pandemic, supermarkets have urged people to shop normally.
Before Christmas, in the run-up to the end of the Brexit transition period, some grocers reported temporary shortages of fresh goods due to congestion at UK shipping ports.--BBC
Amazon plots a course into the healthcare industry
"I think the impact would be huge," says Ahsan Bhatti, owner of online pharmacy Quick Meds.
He is concerned about the prospect of online giant Amazon moving into the pharmacy business in the UK.
"I'm worried. They'll have a massive marketing budget, and they'll definitely take a sizeable chunk out of every other pharmacy on the market. There will be closures as a direct result of it," he says.
Mr Bhatti will be closely watching developments in the US where Amazon Pharmacy launched in November.
The service allows customers to make pharmacy transactions through Amazon and receive unlimited, free, two-day deliveries if they have a Prime membership.
Investors have taken note, with pharmacy chains like Walgreens and CVS seeing their share prices fall.
Although Amazon hasn't yet announced plans for other countries, chemists in the UK are preparing themselves for a new competitor.
Mr Bhatti is one of a growing number of pharmacists to sell products online, but Amazon's entry would also be likely to affect High Street pharmacies as well.
"What is lacking in every other pharmacy across the UK is the logistics and Amazon do that exceptionally well. It's exactly what consumers want - having a prescription by 10am and dispensed by Amazon to them in the evening. The likes of Lloyds Pharmacy and Boots can't do that, and independent pharmacies can only do this on a local level," says Mr Bhatti.
Mr Bhatti opened Quick Meds in March, after putting in an application to the NHS 11 months earlier. It offers products online, as well as consultations over phone, WhatsApp, email, live chat and video, and even offers same day services locally.
However, for nationwide orders, the company relies on Royal Mail - and this is where Mr Bhatti believes Amazon has the edge over online pharmacies as it has proven it can be relied upon for speedy deliveries.
"As great as Royal Mail are, occasionally things go wrong or missing and these delays might not be a big deal for online shopping but if we're talking about a heart or diabetes medication, all of a sudden, it's a problem," he says.
It's not just logistics that Amazon has on its side - the sheer size of the company enables it to have an advantage at the negotiating table.
"In the US, companies like CVS and Walmart negotiate drug prices all the time, and they have a fairly significant amount of market power. They've been able to create monopolies on certain drugs, making it more difficult for consumers to access drugs if you're not shopping with them. If Amazon enters, it disrupts this because they have much more sizeable purchase power," says Kate McCarthy, healthcare analyst at research company Gartner.
Jeff Bezos, Amazon's chief executive, once said "your margin is my opportunity", implying that Amazon delivered better prices by removing the costs added by the middlemen in the supply chain. The pharmaceutical and healthcare sectors have complex and inefficient supply chains that he would look to cut out.
This ultimately means that Amazon may negotiate better prices, and potentially offer discounted rates to consumers to get them through the online door of Amazon Pharmacy.
According to Scott Galloway, professor of marketing at NYU Stern, serial entrepreneur and author of Post Corona: From Crisis to Opportunity, consumers will be the winners over the short and medium term.
"For the most part of Amazon's history, as a consumer you're getting products for near cost or sometimes even below cost and that has just been an incredible boon for consumers and shareholders," he says.
Amazon Pharmacy is not just about the technology company entering the pharmaceutical retail market; it has been readying itself for the entire healthcare sector.
"Amazon have been working on ways to ensure their platform is dynamic and secure for healthcare organisations in order to partner with them - you see many organisations looking at things like Alexa for healthcare skills, and building healthcare apps on Amazon Web Services, or leveraging Amazon's cloud storage. Now, Amazon is focusing on the actual consumer services," says Ms McCarthy.
Eventually, the company could use data from its different arms to build a picture of each consumer's health, and use this to provide them with products and services.
"With their new wearable Amazon Halo, the company can build a 3D image of their consumers and they can then combine this with the foods you eat through Whole Foods, data from Amazon Prime and Alexa, and information such as your post code, relationship status, demographic data," says Mr Galloway.
Currently, the healthcare system is largely reactive - consumers seek medication and other healthcare services when they need them but Mr Galloway believes that Amazon could change this dynamic and even offer Prime members special recommendations around exercise products, nutrition and medicines.
"They can use this to offer proactive healthcare services," he says.
It wouldn't be unfeasible for Amazon to enter the health insurance market considering the amount of data - and technological capabilities - at its disposal to assess risk.
Mr Galloway says that over the medium to long term, Amazon will put a number of healthcare companies out of business. At the same time, healthcare start-ups may struggle to get a foothold in a market that Amazon has entered.
"It's very difficult to get funding now for an e-commerce company because the general assumption is that Amazon is unassailable," he says.
Amazon counters that, saying it has plenty of competition: "Amazon Pharmacy operates in a competitive environment with other US pharmacies, and we know our customers have a choice. We are working hard to earn their business," a company spokesperson told the BBC.
Ms McCarthy says that Amazon typically brings improvement to the industries it enters but says it doesn't typically unseat industry incumbents, and she says the same will be true for healthcare companies.
"It's more a case of how everyone adapts," she says.
Mr Bhatti suggests that pharmacies should adapt by going online and diversifying their income.
"You can't rely on NHS income, you have to start developing private services and require that personal touch through face-to-face interactions," he says, adding that they should also be prepared to partner with Amazon.
Leyla Hannbeck, chief executive of the Association of Independent Multiple Pharmacies (AIMp), claims pharmacies are "not trying to maximise potential sales" and are instead focusing on "caring for the health of their patients".
"The pharmacy network is already under threat due to the lack of funding and a multi-national player such as Amazon could be the final blow for many and disrupt this valued network. When the choice, and that personal interaction and care in the community is gone, the consumers are not the winners," she says.
But Amazon is taking its foray into healthcare seriously - it's not just expanding its already vast retail network. According to Ms McCarthy, Amazon has put out job posts for clinicians both for Amazon Pharmacy and for other areas of its business.
This suggests that it may eventually be able to offer this same personalised service as existing pharmacies.--BBC
FTSE 100 rallies amid Covid vaccine rollout
Shares in London have risen sharply on the first day of trading in 2021 amid optimism stemming from the rollout of the second coronavirus vaccine.
The FTSE 100 index of larger companies closed up 1.7% at 6,571.88, while the more UK-focused FTSE 250 rose 0.24%.
The main market was led by a surge from Ladbrokes owner Entain, which jumped 25% after a bid from rival MGM Resorts.
The pound also gained against the dollar, rising to $1.37 for the first time since May 2018.
"The FTSE 100 has begun the new trading year on the front foot," said Susannah Streeter, senior investment and markets analyst at stockbroker Hargreaves Lansdown.
The gains came amid a backdrop of "optimism for global growth as vaccine roll outs gather pace," she said.
Dialysis patient Brian Pinker, 82, became the first person to receive the Oxford-AstraZeneca Covid-19 vaccine at 7:30 GMT at Oxford's Churchill Hospital.
More than half a million doses of the vaccine are ready for use in the UK on Monday.
In 2020, the FTSE 100 lagged other major stock indexes around the world.
indexes
While the US's Nasdaq and Japan's Nikkei 225 finished the year higher than they started, the FTSE 100 is yet to regain the heights it reached of more than 7,600 last January.
While most Britons may not directly invest in the stock markets by buying shares from a stockbroker, many pensions are invested in stock markets around the world.
For instance, more than nine million people are enrolled in Nest, the private pension scheme set up by the government.
Not all shares have fared well. Banks and homebuilders have had a bad day amid concern over the UK economy and whether further lockdowns could harm household finances.
Hope and relief are the flavours of the start of 2021 trading: hope that the rollout of the Oxford/AstraZeneca vaccine will bring forward the end of restrictions, and relief that there is - as yet - no sign of visible disruption from the new trading arrangements with the EU.
But while London stocks comfortably outpaced their European rivals, there are a couple of caveats.
First, it will be a while before we know the impact of the new trading rules.
A survey of manufacturers found a surge in activity in factories in December as they rushed to fill and ship orders ahead of the changes; it may be some weeks before the business gets back to normal.
And second, the economy has a long way to go. The FTSE 100, in contrast to its Wall Street counterpart, is more than 10% below the level it was a year ago, while the UK economy is likely to have finished 2020 at least 10% smaller.
In addition, the potential for more school closures and lockdowns means that not only is the economy inevitably in the second dip of recession - but recovery is further off.
With figures from the Bank of England suggesting households are sitting, on average, on more money, that recovery could be emphatic - but only once restrictions are lifted; the spectre of uncertainty continues to hover.
Presentational grey line
Betting company Entain was the biggest share riser by far in London on Monday following the $11bn (£8.1bn) takeover offer from MGM Resorts.
Entain has said the approach undervalues the company, leading to speculation that MGM will come back with a higher offer.
The move is the latest attempt by a casino operator to move into the online gambling business.
In addition to Ladbrokes, UK-based Entain also owns a number of online sports betting and gambling brands, including Bwin, Partypoker, Coral, Eurobet, Gala and Foxy Bingo.
It had recently rebuffed an earlier $10bn all-cash approach from MGM, the newspaper said.--BBC
Volatility in U.S. stocks jumps as investors brace for Senate 'blue sweep'
NEW YORK (Reuters) - Expectations for market gyrations are rising as investors face U.S. Senate runoffs in Georgia on Tuesday that will determine which party controls Congress, amid a resurgence in coronavirus cases.
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” on Monday notched its highest closing level since Nov. 5, at 26.97, while posting its biggest one-day gain since late October.
The VIX futures curve, which reflects longer-term expectations for market volatility, has also inverted for the first time since early November. An inversion of the curve suggests investors view the short-term outlook as more uncertain than the longer-term.
If either of the incumbents, Senators Kelly Loeffler and David Perdue, wins in Georgia, Republicans will maintain control of the Senate. But victories by challengers Raphael Warnock and Jon Ossoff would give control of the Senate - and Congress - to the Democratic party via a tiebreaker vote from Vice President-elect Kamala Harris.
While a “blue sweep” of Congress could usher in greater fiscal stimulus to aid the coronavirus-ravaged economy, it could also pave the way for President-elect Joe Biden to push through a more aggressive policy agenda, including greater corporate regulation and higher taxes. That prospect has troubled some investors on Wall Street.
“The ‘blue sweep’ does create some policy implications that need to be addressed,” said Arnim Holzer, macro and correlation defense strategist at EAB Investment Group. “Those two barbells are keeping vol elevated.”
Overall, implied volatility - the measure of anticipated market moves embedded in options prices - has jumped far ahead of realized volatility, or actual stock movements.
According to data from Susquehanna Financial Group, the gap between implied and realized volatility is near its highest level in two years for the SPDR S&P 500 Trust, which tracks the benchmark U.S. stock index.
The gap is similarly wide for several U.S. exchange-traded funds in technology and healthcare, sectors seen as prime targets for stricter regulation under a Democratic Congress.
Christopher Murphy, Susquehanna’s co-head of derivatives strategy, anticipates implied volatility will decline soon after the Georgia runoffs, as it did after the presidential election.
Yet this time around, concerns about the COVID-19 resurgence may keep volatility elevated even after the runoff, said Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets.
“A ‘blue sweep’ would certainly have implications for the market, but I don’t see current volatility as specifically having to do with an administration change,” she wrote in an email to Reuters.
Drugmakers kick off 2021 with 500 U.S. price hikes
NEW YORK (Reuters) - Drugmakers including Abbvie Inc and Bristol Myers Squibb raised U.S. list prices on more than 500 drugs to kick off 2021, according to an analysis by health care research firm 46brooklyn.
The hikes come as drugmakers are reeling from effects of the COVID-19 pandemic, which has reduced doctor visits and demand for some drugs. They are also fighting new drug price-cutting rules from the Trump administration, which would reduce the industry’s profitability.
They include more than 300 price increases from companies like Pfizer and GlaxoSmithKline reported by Reuters late last week.
Nearly all the increases were below 10%, and the median hike was 4.8%, down slightly from last year, 46brooklyn said here. The firm's analysis is based on data from Elsevier's Gold Standard Drug Database.
Abbvie raised prices on around 40 drugs including a 7.4% hike on rheumatoid arthritis treatment Humira, the world’s top-selling drug. Revenue from Humira is expected to top $20 billion next year.
Bristol Myers hiked prices on around a dozen drugs, including cancer drugs Revlimid and Opdivo by 4.5 percent and 1.5 percent, respectively. It hiked the price of blood thinner Eliquis by 6 percent.
It said in a statement that it only raised prices on drugs with ongoing clinical research. It expects net prices, which include rebates and other discounts, to fall this year.
Drug price increases have slowed substantially since 2015, both in terms of the size of the hikes and the number of drugs affected.
However, 46brooklyn said its analysis of Medicaid data shows the average cost per branded drug is still ticking up.
“Over time, we end up cycling out cheaper brands designed to treat large populations, and replacing them with expensive brands designed to treat smaller populations,” wrote Eric Pachman, president of 46brooklyn. “With price increases losing their impact, launch prices will be the primary driver of U.S. drug list price inflation.”
Fiat Chrysler, Peugeot get green light for $52 billion carmaker
PARIS/MILAN (Reuters) - Fiat Chrysler (FCA) and PSA said on Monday that investors had given their blessing to a $52 billion merger to create the world’s fourth largest automaker, and shares in the new company, named Stellantis, would start trading in two weeks.
With annual production of around 8 million vehicles worldwide and revenues of more than 165 billion euros ($203 billion), the newly-formed firm is expected to play a key role in the auto industry’s jump into the new era of electrification.
Stellantis will have 14 brands, from FCA’s Fiat, Maserati and U.S.-focused Jeep, Dodge and Ram to PSA’s traditionally Europe-focused Peugeot, Citroen, Opel and DS.
FCA and PSA said they expected to complete their tie-up on Jan. 16, ahead of an earlier indication which aimed for a closing within the first quarter of this year.
Stellantis shares will start trading in Milan and Paris on Jan. 18, and in New York the following day, the two automakers said in a joint statement.
At two separate extraordinary shareholder meetings, held virtually earlier on Monday due to the coronavirus pandemic, investors in each group backed the merger with approval rates above 99% of the votes cast.
“We are ready for this merger,” PSA Chief Executive and Stellantis future CEO Carlos Tavares said.
Tavares will have to revive the carmaker’s fortunes in China, rationalise a sprawling empire and address massive overcapacity, as well as focus like its rivals on creating cleaner cars.
FCA Chairman John Elkann, the future chairman of Stellantis, said the new automaker would “play a leading role as the next decade redefines mobility”.
And FCA CEO Mike Manley - who will head Stellantis’ key north American operations - said 40% of the expected synergies form the merger - projected at more than 5 billion euros, will come from convergence of platforms and powertrains and from optimising R&D investments.
Manley said 35% of synergies would be driven by savings on purchases, while another 7% would come from savings on sales operations and general expenses.
The remainder of the synergies are expected from the optimization of other functions including logistics, supply chain, quality and after-market operations, he added.
FCA said in a separate statement it would pay its shareholders a planned 2.9 billion euro special dividend as soon as possible after merger completion.
PSA and FCA have pledged not to close any plants.
($1 = 0.8140 euros)
Wall Street places bet on solid revenue growth for Airbnb, DoorDash
(Reuters) - A slew of brokerages initiated coverage of Airbnb Inc and DoorDash Inc on Monday, having high hopes for their revenue growth and supporting eye-popping valuations obtained by both last month in stock market launches.
Home rental firm Airbnb was valued at just over $100 billion at the time of its market debut in the biggest U.S. initial public offering (IPO) of 2020, while food delivery company DoorDash was valued at more than four times its worth at an earlier fundraising round.
The IPOs underscored investor appetite for technology firms, with both being app-based, and analysts are predicting steady growth as travel restrictions ease and the global food delivery business continues to expand.
More than 25 brokerages initiated coverage on the two companies. Banks that worked on both firms’ IPOs had been required by industry practice to refrain from initiating coverage until Monday.
Morgan Stanley, Goldman Sachs, BofA and others led a 37-firm underwriting group for Airbnb’s IPO, while Goldman Sachs and JP Morgan led a syndicate of 12 firms on DoorDash’s offering.
Credit Suisse expects pandemic-driven changes in behavior to speed up the shift away from hotels to alternative accommodations and the analysts see ample opportunity for Airbnb to increase monetization in the long term.
Jefferies analysts expect a return to 2019 bookings and revenue levels by the second half of 2021 and double-digit growth through 2025, with annual profits expected by 2022.
Airbnb’s revenue fell 18% in the third quarter of 2020, but it turned a profit, helped mainly by cost cuts.
Piper Sandler analysts were similarly bullish on DoorDash.
“We think DoorDash has a shot at achieving “super app” status in the doorstep delivery market, with a better business model (in our view) than Neutral-rated Uber” Piper Sandler analysts said.
TEMPERED EXPECTATIONS
Analysts at BofA, however, expressed concern over Airbnb’s valuation.
“We see Airbnb’s valuation (versus) peers as the biggest stock concern given that Airbnb services are not new ... and competitors Booking and VRBO have solid positions in their “home” markets,” the analysts said.
BofA also said DoorDash’s premium multiples are warranted given its greater scale and share gains, but warned of slowing growth pressuring valuation in 2021.
Brokerages not involved in the IPOs had earlier downgraded the stocks, based on their valuations, with Citron Research saying that DoorDash’s IPO “was the most ridiculous IPO of 2020”.
Shares of Airbnb were down 3.1% on the Nasdaq, while DoorDash’s stock was down 2.45% on the New York Stock Exchange.
Jack Ma's disappearing act fuels speculation about billionaire's whereabouts
BEIJING (Reuters) - Alibaba founder Jack Ma’s absence from public view in the past two months, including missing the final episode of a TV show on which he was to appear as a judge, has fueled social media speculation over his whereabouts amid a Chinese regulatory clampdown on his sprawling business empire.
China’s highest-profile entrepreneur has not appeared in a public setting since a late October forum in Shanghai where he blasted China’s regulatory system in a speech that put him on a collision course with officials, resulting in the suspension of a $37 billion IPO of Alibaba’s Ant Group fintech arm.
The Financial Times reported on Friday that Ma was replaced as a judge in the final episode in November of a game show for entrepreneurs called Africa’s Business Heroes.
An Alibaba spokeswoman told Reuters on Monday that the change was due to a scheduling conflict, declining further comment.
While news coverage of Ma’s absence from public view triggered speculation on Twitter, which is blocked in China, it was not a significant trending topic on social media in mainland China, where sensitive topics are subject to censorship.
Chinese regulators have zeroed in on Ma’s businesses since his October speech including launching an antitrust probe into Alibaba and ordering Ant to shake up its lending and other consumer finance businesses including the creation of a separate holding company to meet capital requirements.
“I think he’s been told to lay low,” said Duncan Clark, chairman of Beijing-based tech consultancy BDA China. “This is a pretty unique situation, more linked to the sheer scale of Ant and the sensitivities over financial regulation,” he said.
Alibaba’s Hong Kong-listed shares fell 2.15% on Monday.
China's Alibaba to shut down Xiami music app next month
BEIJING/SHANGHAI (Reuters) - Alibaba Group will close its music streaming platform Xiami Music next month, in a move that marks a step back from its ambitions to push into China’s entertainment industry.
“Due to operational adjustments, we will stop the service of Xiami Music,” the online music arm of the Chinese e-commerce giant said on Tuesday on its Weibo account, adding that the closure will occur on Feb. 5.
“It’s hard to say goodbye after being with you for 12 years.”
Alibaba acquired the music service in 2013, and invested millions of yuan to compete in China’s online music market, which is dominated by Tencent Holdings. Its efforts however have not paid off and the app currently only has 2% of China’s music streaming market, behind KuGou Music, QQ Music, KuWo, and NetEase Cloud Music, according to Beijing-headquartered data intelligence company TalkingData.
Xiami’s closure also comes after Chinese regulators announced that they had launched an antitrust investigation into Alibaba, which beyond its core e-commerce business also operates in sectors such as financial services, cloud computing and artificial intelligence.
However, it does not mark the end to Alibaba’s participation in the online streaming market. In September 2019, Alibaba invested $700 million in one of Xiami’s competitors, NetEase Cloud Music.
Nigeria Owes Eurobond, World Bank, Others U.S.$31.985 Billion
At least 67 per cent of the $31.985 billion (N12.193 trillion) outstanding external debt of Nigeria is for loans taken as Eurobond, a commercial loan, and from the International Development Association (IDA) as of September 2020.
According to records released by the Debt Management Office (DMO) recently for September 2020, loans from these two sources accounted for $21.201bn (N8.082tr) of the $31.985bn external debt.
Nigeria has an outstanding $10.868bn (N4.413tr) to pay for the Eurobond issued at commercial rate, while the country will repay $10.332m (N3.939tr) for the IDA loan, the breakdown showed.
Eurobond is issued by the European Central Bank (ECB) for the European Union and the European member countries on the international markets to generate funds. However, the IDA is a branch of the World Bank Group offering long-term development funding.
The balance of $10.783bn (N4.111tr) loan is to be paid to 15 other international lenders.
An analysis of other debts indicates that Nigeria owes the International Monetary Fund (IMF) $3.454bn (N1.317tr).
Still under the World Bank Group, there is an outstanding debt of $409,000 (N156bn) to be paid to the International Bank for Reconstruction and Development (IBRD).
Three entities of the African Development Bank (AfDB) Group expect Nigeria to repay $2.247bn (N856.6bn) debt: AfDB will get $1.315bn (N501.3bn), Africa Growing Together Fund $0.14 (N53.4m) as outstanding; while African Development Fund (ADF) has $932,000 (355.3bn).
Also, Nigeria will pay $295,003 (N112.5bn) to four other international lenders. These are Arab Bank for Economic Development in Africa has $5,000.88 (N1.91bn); European Development Fund $53,000.92 (N20.2bn); Islamic Development Bank $30,000.66 (N11.4bn); while the International Fund for Agricultural Development will get $207,000.66 (N78.91bn).
The country also took $4.075m (N1.553tr) bilateral (country to country) loans from five countries with the highest from China. This is 12.74 per cent of the $32bn external debt of Nigeria.
According to the breakdown, $3.264m (N1.244tr) is for the Export Import (Exim) Bank of China; Agence Francaise Development (AFD) of France has $502,000.38 (N191.4bn); Japan International Cooperation Agency (JICA) $78,000.20 (N29.7bn); Exim Bank of India $37,000 (N14.1bn) and Kreditanstalt Fur Wiederaufbua of Germany will be paid $193,000.26 (N73.6bn) debt.
Aside from the Eurobonds commercial loan, Nigeria has another $300,000 (N114.4bn) commercial loan to pay as the Diaspora Bond.
Commenting on the implications of taking commercial loans like the Eurobond, a professor of Economics and Chairman of the Foundation for Economic Research and Training (FERT) in Lagos, Akpan Horgan Ekpo, said: "The excuse that the World Bank or the IMF give too many conditions is not germane for taking very expensive commercial loans.
"We met those conditions in the past with Dr. Ngozi Okonjo Iweala, and we can still do the same."
Prof. Ekpo argued that studies had shown that the preference for fast commercial loans also created the risk of not deploying the loans in the projects they were meant for because there were no strict preconditions for borrowing and therefore left room for poor accountability.
Equally, professor of Capital Market, Uche Uwaleke, cautioned against the loan saying, "The appreciation of the dollar compared to the Naira also has implications for Nigeria's growing external debts profile.
"The risk is heightened by the growing proportion of commercial debts relative to concessional loans."-Daily Trust.
Nigeria Misses 2020 Target to End Gas Flaring
Nigeria has once more missed the target it voluntary set to end gas flaring in 2020, THISDAY's investigation has revealed.
The development also coincides with data obtained from the country's flare tracker currently managed by the National Oil Spill Detection and Response Agency (NOSDRA), which showed that between 2012 and 2020, the country flared 1.7 billion cubic feet of gas.
In total, the NOSDRA data explained that the flared gas captured from eight locations - Abia, Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Lagos and Rivers- were valued at $6 billion. It added that if the country fined oil companies who flared the gas, it would have earned $3.4 billion as well.
NOSDRA stated that at the end of 2020, a total of 318 million standard feet (mmscf) of gas was flared in Nigeria.
It explained from the data, 17 million tonnes of carbon monoxide (CO2) were emitted into the atmosphere contributing to global warming, gas valued at $1.12 billion burnt by the oil industry and an equivalent of $637 million worth of fine, most of which are not collected recorded.
Several laws had been enacted by the country in the past to curtail gas flaring.
It had created the Associated Gas Reinjection Act in 1979 to re-inject all gas produced in association with oil production but utilised and further revoked licences of defaulters in fields where gas is flared.
The country also created the Nigeria Gas Masterplan in 2008 to end gas flaring in the same year through improved domestic consumption of gas.
In 2016, the country launched the Nigerian Gas Flare Commercialisation Programme (NGFCP) to monetise flared gas and end routine flaring.
At the launch of the NGFCP, the federal government had noted that "our strategy is to provide a commercial approach to the elimination of routine gas flares by 2020."
It had also stated that it would through the NGFCP, "drive positive social, environmental and economic impacts in the Niger Delta, by mobilising private sector capital towards gas flare capture projects."
Adopting a phased implementation strategy for the NGFCP, the government identified over 170 flare sites, which collectively flare approximately 330bscf of gas annually to monetise.
It stated that "if harnessed, this Associated Gas (AG) could provide approximately 450,000 metric tonnes of liquefied petroleum gas (LPG) to over four million Nigerian households.
"With an investment of approximately $3.5 billion, the NGFCP could generate approximately 2.5 gigawatts (GW) (2500 megawatts) of power and create approximately 300,000 direct and indirect jobs, whilst also having a positive impact on the environment by eliminating approximately 20 million tonnes of CO2 emissions per year and providing clean energy to six million households.
"The NGFCP will reduce the risk of sabotage to facilities in the Niger Delta region, by improving the quality of life and standards of living in the area and involving the local communities with the gas utilisation projects."
It also listed the NGFCP as part of its national intended programme in its obligation to the Paris Climate Change Pact but has so far largely delayed its implementation of the NGFCP.
The Programme Manager for NGFCP, Justice Derefaka, had told THISDAY that the government was committed to ending gas flare in 2020.
"I have said this severally and I will repeat again. The policy position of the federal government of Nigeria is that gas flaring is unacceptable, and the government has initiated a number of actions to reaffirm its commitment to ending the practice of gas flaring in our oil fields.
"Specifically, the government has ratified the Paris Climate Change Agreement and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030 whilst committing to a national flare-out target by the year 2020," Derefaka had explained then while relying on the planned implementation of the NGFCP.-This Day.
South Africa: Petrol Price to Increase
The price of petrol is set to increase by between 40 and 43 cents a litre this week.
In a statement on Monday, the Department of Mineral Resources and Energy (DMRE) said the price of 93 (ULP and LRP) will go up by 43 cents, while that of 95 (ULP and LRP) will increase by 40 cents.
>From Wednesday onwards, a litre of 95 ULP in Gauteng, which currently costs R14.46, will increase to R14.86 a litre.
Meanwhile, diesel (0.05% Sulphur) will increase by 55 cents a litre, while the price of diesel (0.005% Sulphur) will increase by 54 cents a litre.
The price of illuminating paraffin (wholesale) will increase by 55 cents.
The price of illuminating paraffin (SMNRP) will increase by 74 cents, while the Maximum Retail Price for LPGAS will decrease by 44 cents per kilogram.
The DMRE said the average international product prices for petrol, diesel and illuminating paraffin increased during the period under review.
-SAnews.gov.za.
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