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Tag: asia

  • Lippo-Sponsored Investment Trusts to Acquire Property Assets in Yogya, Bali

    Lippo-Sponsored Investment Trusts to Acquire Property Assets in Yogya, Bali

    They are held under one “right to build” title certificate as the local government is not allowed to subdivide the property and issue separate strata title certificates.

    Siloam Hospitals Yogyakarta offers 240 hospital beds, while Lippo Plaza Yogya offers a 66,098-square-meter gross floor area (35,965 square meters for the mall area and 30,133 square meters for parking), which is already occupied by various tenants, including a movie theater operator, food sellers and a hypermarket. This mall has been in operational since June 2015.

    Separately, LMIRT alone will acquire Lippo Mall Kuta, a retail mall component worth Rp 800 billion, situated on Bali Island, Indonesia’s most popular tourism destination.

    Lippo Mall Kuta has been in operation since 2013, offering 21,132 square meters of commercial space occupied by tenants selling international and local brands such as Nike, Bata, Quiksilver, Planet Sports, Matahari Department Store, Hypermart and Cinemaxx.

    “I’m pleased to report that we have signed a contractual sales and purchase agreement for two of our malls and one of our hospitals to our REITs, which will yield up to Rp 1.7 trillion [worth of transactions],” Ketut B. Wijaya, president director of Lippo Karawaci, said in the company’s statement.

    REITs are investment funds that own, operate and profit from real estate through property or mortgages.

    They are also traded on exchanges, such as the Singapore Stock Exchange.

    The move, according to Ketut, is part of the company’s “light assets program” in which the property developer recycles capital that has achieved sustainable income in order to reduce operating costs and maximize profits.

    Since the funds are listed in Singapore, the plans are still pending approval from regulators in Singapore, the Monetary Authority of Singapore and Singapore Exchange Securities Trading Limited, according ot the statement.

    The Jakarta Globe is affiliated with LMIRT and First Reit through the Lippo Group.

  • Downturn won’t dent H&M China confidence

    Downturn won’t dent H&M China confidence

    Despite feeling the pinch from an economic slowdown in China, Swedish fashion giant Hennes & Mauritz (H&M) says it plans to continue to bet big on the country.

    It blames an 11 per cent drop in quarterly net profit on adverse currency swings and mild November weather across several divisions, especially H&M China.

    This fell to 5.53 billion Swedish kronor (US$649 million) for the three months to November 30 from 6.22 billion kronor for the same period a year earlier. Revenue grew 14 per cent to 56.5 billion kronor in the fiscal quarter from 49.7 billion kronor. Excluding value-added tax, sales totaled 48.7 billion kronor.

    While acknowledging that sales growth in China has slowed dramatically – coming in a 4 per cent in local currencies for the quarter compared with 34 per cent – CEO Karl-Johan Persson says his faith in the country’s long-term prospect is unshaken.

    “We will open most new stores in China this year,” he says. The company plans 425 new stores globally in the fiscal year, with China and the US its main expansion markets.

    Persson says his confidence in China is based on the belief that the country will gradually pivot toward a consumer-driven economy, creating vast opportunities for retailers.

    Affluent shoppers 35 years and younger as well as internet users are still propelling the consumer market there, which is expected to jump to $6.5 trillion in sales by 2020, an increase of 54 per cent from last year, according to the Boston Consulting Group.

    H&M also plans to continue online expansion, with plans to open online stores in Japan and in eight other markets this year.

    The group’s gross margin has slipped to 57.5 per cent from 60.4 per cent, mainly because of the stronger dollar. H&M sources most of its clothes in Asia, where it pays in dollars.

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  • Foodpanda answer to rumors

    Foodpanda answer to rumors

    Foodpanda India has rubbished reports it will close down, parent Rocket Internet saying the market is one of its fastest growing internationally.

    “We are extremely happy with the development of our business in India,” Saurabh Kochhar, CEO, Foodpanda India said in a statement emailed to Inside Retail Asia.

    “We are a global player in food ordering business, backed by a group of renowned investors. Whenever we have felt the need for investments we have invested and we will continue to do so.”

    Kochhar said the company is market leader in India’s online food sector.

    “We have achieved an outstanding rate of automation in India and have built incredible technological innovations that have dramatically improved our order processing, vendor management and delivery rider allocation.

    “Marketplace businesses generally require many years to turn profitable,” he continued. “We are happy to see this happening even faster at Foodpanda. Online food ordering is one of the most profitable internet business models and we are proving so in India as well.”

    Further, Kochhar told the Times of India the country is expected to be one of its top three globally by 2019.  Currently, its top markets are Russia, Singapore, Hong Kong, Saudi Arabia, India and Malaysia.

    “We have no plans to exit from the Indian market. We are best placed to grow and consolidate our leadership in the Indian market,” Kochhar said.

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  • Tata Group sees Vietnam, Myanmar as potential markets to power growth

    Tata Group sees Vietnam, Myanmar as potential markets to power growth

    At least seven companies of India’s oldest conglomerate, Tata Sons, have zeroed in on Vietnam and Myanmar as markets that need to be penetrated into. Growing economies and an expanding middle class, as well as pacts with global powers and tax incentives have made these countries important for firms that seek to reach out further into the Asean and global markets.

    “The demographics and the economic development stage of these countries represent a market for several products and services from the Tata group,” a Tata Sons spokesperson said. “Tata companies like Tata Power, Tata Projects, Tata Chemicals, Titan, Tata Motors, Rallis (and) Tata International among others are either active or are exploring opportunities in the Vietnam and Myanmar markets,” the spokesperson said in an e-mail, responding to ET’s queries.

    For the business house, Singapore is the nodal country for its Asean markets that include more than 660 million people with a $2 trillion economy. Asean members include Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Myanmar, Cambodia, Laos and Vietnam.

    “The region has recorded more than 5% GDP growth on average since the year 2000 and, when combined, Asean nations would represent the world’s seventh largest economy. The region is therefore regarded by many as the third pillar of economic growth within Asia, after China and India,” said Shashank Tripathi, leader at PwC’s strategy&.

    In an interview to its quarterly in-house magazine, Tata Group Resident Director for the Asean region KV Rao said: “From a group perspective, we have identified two focus markets: Vietnam and Myanmar.” The group has a memorandum of understanding each in the two countries for power projects. “We are now working on deepening the engagement with these markets from a strategic and operational point of view,” he added.

    The Vietnam-EU Free Trade Agreement (VEFTA), signed in Brussels on December 2 after nearly three years with 14 rounds of negotiation, will remove nearly all tariffs between the Southeast Asian country and the EU once implemented by 2018. The country becoming a global trade partner for the US, EU and China in exports makes it important for Indian firms.

    While recent years have been a bit sluggish for many Asean countries affected by global economic conditions, Vietnam was among the few to record robust GDP growth – 6.0% in 2014. Recently released government figures further estimate 6.7% growth in 2015, its highest since 2007, due to a significant increase in industrial production and a strong push by the government to improve the business environment and reform its state-owned enterprises.

    Indian companies have been investing in sectors such as oil and gas exploration, mineral exploration and processing, sugar manufacturing, agrochemicals, IT and agricultural processing in Vietnam. Some of the companies that have a foothold there include ONGC Videsh, Tata Power, KCP Industries and Tech Mahindra.

    Coming out of junta rule with promises of economic reforms has made Myanmar an important geography for businesses. Major Indian companies there include ONGC Videsh, Jubilant Oil and Gas, CenturyPly, Tata Motors, Essar Energy, RITES, Escorts, Sonalika Tractors, Zydus Pharmaceuticals, Sun Pharmaceutical Industries, Cadila Healthcare, Shree Balaji Enterprises, Shree Cements, Dr Reddy’s Laboratories, Cipla, Gati Shipping, TCI Seaways, Apollo and AMRI Hospital.

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  • Asia drives Jimmy Choo sales

    Asia drives Jimmy Choo sales

    Shoe label Jimmy Choo has reported a 7 per cent increase in 2015 sales – all on the back of strong Asian growth.

    The British-based shoemaker, which has been actively increasing its Asian footprint during the past year,  said it remains “confident” it can grow even faster in the market despite the slowdown in China’s economy.

    While a large share of the growth has come from Japan, the company says it does not expect a slowdown in China to affect its performance.

    Men’s footwear was the fastest growing category in the last quarter, but it still accounts for just 7 per cent of Jimmy Choo sales.

    The company’s net revenue rose 7 per cent to £318 million. Retail sales rose 9 per cent to £208million, while wholesale sales rose one per cent to £100 million on a constant currency basis.

    “Jimmy Choo continues to outpace the sector despite the challenging competitive environment,” said chairman Peter Hard.

    “The company successfully reversed the first half decline in wholesale revenues and is on track with growth forecasts in Asia and Japan where brand awareness continues to grow strongly.”

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  • SGX flags potential trading fraud in Zhongmin Baihui Retail Group

    SGX flags potential trading fraud in Zhongmin Baihui Retail Group

    Over 90% of trading volume came from a small group of investors.

    Singapore Exchange (SGX) urged investors and potential investors to exercise caution when dealing in the shares of Zhongmin Baihui Retail Group Limited (ZMBH).

    The SGX said that the share price of ZMBH remained steady from 26 October 2015 to 4 February 2016, despite a decline in the broad market. In particular, despite the STI falling 11.25% between 4 January 2016 and 4 February 2016 (relevant period), ZMBH’s share price remained relatively stable.

    SGX’s review of the trades in ZMBH shares during the relevant period showed that a small group of individuals was responsible for over 90% of the on-market buy volume of ZMBH shares. This group of individuals appears to be connected to each other.

    SGX is currently reviewing the trades in ZMBH shares and will take the necessary actions.

  • Ofee jewellery enters Asia

    Ofee jewellery enters Asia

    Established in 2006, French jewellery brand Ofee has launched its first boutique store for Asia, in Hong Kong.

    Ofee Earring Bar - Hong Kong boutique

    Featuring gold and diamond creations, the store has more than 30 outlets in its home country. The opening of its flagship store in Causeway Bay was attended by its designer and founder, Anne Bougon-Scelo, who built the brand alongside Valerie de Mazieres, who has a background in interior design.

    Ofee Hong Kong - Grace and Anne

    Bringing a touch of Paris to Hong Kong, the store has a facade of charcoal grey with white moulding. A feature is an earring bar where women can buy single earrings rather than pairs, offering up to 8000 potential combinations.

    Ofee Hong Kong - jewelry

    Often encrusted with pure white diamond, Ofee jewellery uses 18-carat gold in four rare colours: yellow, rose, white and black.

    Ofee has 50 retail outlets worldwide.

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  • Shinsegae Group in massive expansion plan

    Shinsegae Group in massive expansion plan

    Shinsegae Group says it will invest 4.1 trillion won ($3.4 billion) this year and hire 14,400 new staff to expand its retail business and revitalise the “sagging domestic economy”.

    “The overall retail sector has been struggling to deal with continued sluggish domestic consumption,” a Shinsegae Group official said. “But we decided to invest more and hire more workers to find new growth engines and help inject vigor into the stagnant domestic market.”

    Shinsegae, Korea’s largest retail group, will open 10 shopping centres across the country in 2016, including the massive Hanam Union Square southeast of Seoul, built on a 117,000 sqm site and employing 5000 staff. That project is worth 1 trillion won alone,  (US$832 million).

    The company’s discount arm E-Mart, is building a logistics centre in Gimpo, in the Gyeonggi province, to support an expanded online business as it ramps up competition with rivals including Coupang. It also plans to increase the size of many of its existing stores as well as opening new shops in Vietnam and other Southeast asian markets.

    Three new Shinsegae department stores will open their doors – in Hanam, Gimhae (in South Gyeongsang Province) and in Daegu. Stores in southern Seoul and downtown Busan will be expanded.

    And the company’s Shinsegae Duty Free operation is putting the finishing touches on an upmarket duty free store inside its downtown Seoul department store. That shop is scheduled to open in May.

    “Business conditions at home and abroad have largely been unfavorable for us,” said Shinsegae Group vice chairman Chung Yong-jin.

    “We expect to bear fruits this year from our investments in multipurpose shopping centers, duty free shops and department stores. We will continue to invest and hire workers as a leading retailer to help bolster the domestic economy,” he said.

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  • H&M Mong Kok flagship opens doors

    H&M Mong Kok flagship opens doors

    Fashion fans formed a queue outside the new H&M Mong Kok flagship store before it opened its doors for the first time on Friday.

    H&M Gala Place Mongkok HK-Ribbon Cutting - Fish Chan, Magnus Olsson, Anna Rathsmann (Left To Right)

    And as our photos show, it’s an eye-catching design for the fast fashion giant.

    H&M Gala Place Mongkok HK-Ladies Department (1)

    H&M Gala Place Mongkok HK-Ladies Department (2)

    Staff members of the Hennes & Mauritz store gathered outside to welcome the early visitors, who applauded as Greater China country manager Magnus Olsson cut the ribbon to open the 3700 sqm store. In attendance were regional sales manager for Hong Kong, Taiwan and Macau, Anna Rathsmann, and Gala Place Mong Kok store manager Fish Chan.

    H&M Gala Place Mongkok HK-Ladies Department - Divided

    To mark the grand opening, the three-level H&M Mong Kok store’s opening hours have been extended from 10am until midnight on Friday, and 11am until midnight on Saturday and Sunday. Normal hours (11am-11pm seven days a week) resume from Monday.

    H&M Gala Place Mongkok HK-Mens Department

    H&M Gala Place Mongkok HK -Kids Department (1)

    The second and largest H&M home store for Hong Kong, if offers not only clothing but also Scandinavian-designed homewares such as bed linen, tableware, cushions and decorations.

    H&M Gala Place Mong Kok Flagship Store-Home Department (1)

    H&M Gala Place Mong Kok Flagship Store-Home Department (2)

    The first 100 customers in the queue on Friday were awarded a HKD100 ($12.85) H&M gift card and a limited-edition giveaway.

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  • China’s cross-border e-commerce boom is a boon for small retailers abroad

    China’s cross-border e-commerce boom is a boon for small retailers abroad

    After years of tepid growth, sales at several Australian vitamins, minerals, and supplements companies suddenly shot up by 20, 30, or even 40% in 2015. For those who know what happened that in China in late 2014 the source of this growth probably isn’t a big mystery: Regulators expanded a tax exemption to cross-border e-commerce.

    The resulting growth in trade has been dramatic, and for firms who have long eyed the big Chinese market but are too small to invest in finding a distribution partner or building a physical presence on their own, the boom of 2015 has delivered a revelation: They, too, can access the mainland market.

    E-commerce has of course been big in China for years, and in 2014 online retail sales totaled nearly US$430 billion, accounting for roughly 10% of all retail sales.  (The same figures for the United States were US$300 billion and 6.4%, respectively.)  Until recently, however, this activity was nearly all domestic – i.e., goods produced in or already shipped to China being sold to Chinese consumers.

    That makes perfect sense in light of the retail explosion of recent years:  China has more than 300,000 pharmacies, more than 2,000 mid-to-high end department stores, and supermarket catchment areas in urban areas are even smaller compared with the United States because of smaller formats and the lack of parking (and, until recently, widespread car ownership). Within this rapidly-developing retail landscape, however, some factors are driving consumers to prefer foreign products, whether bought once in China or ordered from abroad.

    Driving demand

    Food scandals are well-known and heavily publicized, from the baby-killing melamine-laced formula scandal of 2008 to the discovery this year of decades-old “vampire” meat.  In September, fake rice made from tiny pieces of rolled-up paper was even uncovered in Guangdong.  In light of such underhanded tactics, it is understandable that consumers might perceive foreign brands as safer and of higher quality.

    Price pressures pushing up consumer prices is another key issue.  Commercial rents, especially in first-tier cities such as Shanghai and Beijing, rival those in developed nations.  At the end of 2014, rents in Beijing’s Wangfujing averaged $480 per square foot per year vs. $360 for Singapore’s Orchard Road.  Wages, while still lower compared to western economies, are also rising quickly.

    Finally, Chinese consumers are becoming more sophisticated and better able to differentiate between local brands trying to pass themselves off as foreign and the real thing.  With travel increasing and the transparency in commerce that the internet can bring, tastes in products are becoming more global.

    Historic developments

    By as early as 2005, a Chinese consumer could order an album on Amazon and wait a few weeks for it to arrive—though naturally taxes and shipping often added to the price of the CD itself. But it wasn’t until the fourth quarter of 2014 that cross-border e-commerce really exploded.  The impetus was the application of a previously obscure piece of the tax code to cross-border e-commerce, implemented in a number of pilot cities.

    The personal effects tax originally targeted Chinese travelers who had emigrated abroad and were bringing back gifts – such as small appliances – for relatives.  Small items were exempt, but the tax was set at 10% for nearly everything else.  In late 2014, though, the government proclaimed that this personal effects tax also applied to cross-border e-commerce in certain pilot areas.  The effect was dramatic, as can be seen in the price differentials illustrated below.

    Obviously some costs, such as freight and insurance, are incurred whether selling through physical stores or cross-border e-commerce.  However, the price differential can be observed in following key areas, demonstrated with VMS products as an example:

    The nuts and bolts

    Business models for cross-border e-commerce can be viewed across two main dimensions: Whether the site serves as a platform that aggregates multiple sellers or sells its own products, and whether delivery to the consumer is made from the source country or from a bonded warehouse.

    Each model has its own quirks (see graphic below), and it is not yet clear whether there is an obvious winner.  It is likely that multiple models will co-exist –for example, a self-run, bonded import model could work for goods with the highest turnover (such as diapers and infant formula), while direct shipment models might better suit the long tail of less-frequently ordered items.

    In terms of product flow, though, the bonded import model has the clear advantage in terms of speed.  Consumers can receive product within days – sometimes only one or two – rather than weeks.

    With both models the seller can choose how much to take on internally, and how much to either outsource or hand over to a partner.  Hundreds of cross-border e-commerce companies have already sprung up in China, providing services that run the gamut from simple customs clearance all the way to a full consignment model.

    Local interests

    While e-commerce, including the cross-border variety, is here to stay, the advantages that it has over traditional imports may not last forever, depending on the product category.  In June of 2015, for example, China’s government lowered import duties on skin care products, which harmonized online and offline prices to an extent.  In 2016, import duties on additional products including handbags and suitcases are also slated to be slashed.

    Regulatory vacuums will likely be filled step-by-step as well.  For example, vitamin potency levels are regulated for products registered and sold in China, but currently these rules are not applied for cross-border e-commerce imports.  Local players are crying foul, and regulators will no doubt feel pressured to act.

    For now, though, cross-border e-commerce is helping to level the playing field by allowing smaller-scale companies to profitably access the vast China market while providing a huge boon in the form of savings and product diversity to Chinese consumers as well. Chalk one up for the little guys on both sides of the border.

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  • Lush ends ‘exceptional’ year

    Lush ends ‘exceptional’ year

    Ethical cosmetic brand Lush has reported exceptional results for their 2014-15 financial year, with brand sales accelerating 26 per cent to £574 million.

    Strong like-for-like growth of 22 per cent has been achieved via the combination of its store estate and digital outlet, driving sales growth of 21.4 per cent and 27.8 per cent respectively. Despite Lush’s sales growth, profit figures were negatively influenced by currency volatility, particularly in Brazil – profit before tax dropped £900,000 on last year. Further dampening profits, exceptional costs in Japan heavily impacted group operating profit, plummeting by £9.2 million on last year.

    Store portfolio management remains a key focus of its strategic initiative, focusing on prime sites with larger selling space. The brand increased its store numbers to 933 in the financial year, having opened 93 shops and closed 58 throughout the year – UK current store numbers stand at 106, including its 9500 sqft flagship on Oxford St which opened in April 2015. Striving for higher turnover and basket sizes, 115 of its stores now have the ability to generate annual sales of over £1m, a 46 per cent increase in two years.

    Lush’s triumph stems from the growing number of consumers requiring cruelty-free and sustainably sourced cosmetics and skincare, which is in-turn enhanced by Lush’s capability in ensuring its staff can offer a high level of product knowledge and customer service in store.

    Lush has a way to go before reaching its 25 per cent online penetration rate, having increased marginally by 0.1 per cent to 8 per cent in its full year 2015-16, marginally outperforming the UK health & beauty market in 2015 estimated at 7 per cent. Online growth is far more challenging compared to sectors such as clothing, with lower prices and the essential nature of products driving traffic to stores, while consumers also like the instore experience and customer service element – especially in skincare items.

    While its two largest markets, US and UK, experienced resilient like-for-like growth of 37.2 per cent and 38.8 per cent respectively, its performance in Japan continued to disappoint at -11.2 per cent for the full year, with its turnaround remaining Lush’s greatest challenge. However, group sales for Q1 2015-16 have continued with an outstanding performance in both physical and digital outlets, up 21.7 per cent and 26.5 per cent, demonstrating the brand’s growing appeal among its loyal shoppers and strength in acquiring new customers.

  • Parkson Retail Asia profit down 71.6% in Q2

    Parkson Retail Asia profit down 71.6% in Q2

    Department store operator Parkson Retail Asia has posted a second quarter net profit of $2.9 million, down 71.6 per cent from the same period a year ago.

    Revenue in the three months to Dec 31 fell 12 per cent to $103.5 million, driven by a 7.3 per cent fall in same store sales growth in Malaysia and 5.2 per cent fall in same store sales growth in Myanmar.

    Some new stores were also in their first year of operations, which is an initial loss-making period, the group said.

    Earnings per share stood at 0.43 cents, down from 1.51 cents a year ago.

    Net asset value per share was 27 cents as at Dec 31, up from 22 cents as at June 30 last year.

    “The Malaysia operations for the next reporting quarter may encounter muted consumer sentiment, however, this drag will be buffered by progressive normalisation of sales post-GST (Goods and Services Tax ),” the group said in a statement to shareholders after market close on Feb 3.

    It said that it expects Vietnam’s retail environment to improve in the second half, while demand from Indonesia’s middle class will remain robust.

    “The Myanmar operations may be affected by the possible closure of FMI Centre, where the store is located, for re-development. However, the landlord has not confirm on the timing for the redevelopment,” the group added.

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  • South Korean home shopping channel to launch in Thai market

    South Korean home shopping channel to launch in Thai market

    South Korean High Shopping Co, a joint venture between InTouch Media and Hyundai Home Shopping, is set to become the third South Korean home shopping operator to enter the Thai market, with a launch in Vietnam slated for the second quarter of 2016.

    High Shopping’s goal is to be among the top three players in Thailand’s 20-billion-baht home shopping market by 2020, according to the Bangkok Post. “Thailand’s home shopping market has a lot of potential, with annual 20 percent growth to reach 20 billion baht in 2020, double the revenue last year,” explained Lee Hae-seung, High Shopping’s Chief Executive.

    Home Shopping currently represents just 0.5 percent of Thailand’s retail industry, compared to 4 percent in South Korea. High Shopping is predicting that, of the 2,500 products it will offer for sale by mid-2016, cosmetics and kitchenware will be the best-sellers.

    The inventory will initially be made up of premium Korean brands, with international brands once the channel is established. The shopping channel is hoping to achieve sales of THB4.5 billion by 2020, with a 25 percent market share.

    The company is planning to broadcast on satellite TV platforms initially before expanding to cable and mobile devices.

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  • Alibaba Beats, Changyou Beats on Earnings

    Alibaba Beats, Changyou Beats on Earnings

    Markets experienced another volatile week, gaining and losing on alternate days ahead of the Lunar New Year holidays next week. The Shanghai Composite Index declined on Monday after the official purchasing managers index suffered its sixth consecutive monthly fall. The benchmark index increased on Tuesday, moving up 2.3% after the People’s Bank of China moved to raise liquidity in the financial system.

    The Shanghai Composite Index moved lower on Wednesday as investors turned cautious and oil prices declined heavily. The benchmark index increased 1.5% on Thursday closing at its highest level since Jan 25.

    Alibaba Group Holding Ltd. reported third-quarter fiscal 2016 (ended Dec 30, 2015) earnings of 73 cents per share, which exceeded the Zacks Consensus Estimate of 70 cents. Changyou.com Ltd. reported adjusted fourth-quarter 2015 earnings of 73 cents per share, which exceeded the Zacks Consensus Estimate of 54 cents.

    Last Week’s Developments

    Last Friday, the Shanghai Composite Index surged 3.1%, reducing its monthly loss to 23%. Despite the day’s gains, the decline for the month was the worst since Oct 2008. Stocks moved up for the first time in four days following speculation that the worst selloff in over a month was excessive in nature. Industrial and financial stocks led gains.

    Additionally, China’s central bank announced it will undertake open market operations on every working day around the Lunar New Year holiday. The number of these operations will be increased from their normal biweekly pace to increase liquidity in the banking system ahead of the holiday. This statement also boosted stocks.

    The CSI 300 added 3.2%. A gauge of brokerages and banks increased 3.2%. A measure of industrial shares increased 3.6%, the highest among the 10 industrial sectors. The Hang Seng increased for a third day, moving up 2.5%. The Hang Seng China Enterprises Index increased 2.7%. The H-share index increased after the Bank of Japan lowered interest rates into the negative zone in order to stimulate its flagging economy.

    Markets and the Economy This Week

    The Shanghai Composite Index declined 1.8% on Monday, increasing January’s selloff. The official purchasing managers index declined to 49.4, the sixth consecutive monthly fall. This is the lowest level experienced in three years. Additionally, the country’s most established companies issued warnings about a fall in earnings.

    Among other economic reports, official non-manufacturing PMI fell from 54.4 in December to 53.5 in January. In contrast, Caixin China Manufacturing PMI increased from 48.2 to 48.4 in January.

    The CSI 300 declined 1.5%. A sub index of energy stocks declined 2.8%, emerging as the largest decliner among the 10 industry groups. PetroChina Co. lktglost 2.8% after stating that falling crude and gas prices would hurt full year earnings.  The Hang Seng declined for the first time in four days, falling 0.5%. The Hang Seng China Enterprises Index moved down 1.2%.

    The benchmark index increased on Tuesday, moving up 2.3% after the People’s Bank of China moved to raise liquidity in the financial system. The central bank injected 100 billion yuan ($15 billion) into the country’s banks via reverse repurchase agreements ahead of the new year holidays.

    Tech and industrial stocks led gains. A measure of tech stocks rose to its highest level in seven days. The CSI 300 advanced 2.1%. All of its sub-indexes increased while measures of tech and industrial stocks increased by a minimum of 2.7%.  The Hang Seng declined 0.8% The Hang Seng China Enterprises Index moved down 1.1%.

    The Shanghai Composite Index lost 0.4% on Wednesday as investors turned cautious and oil prices declined heavily. A measure of energy stocks declined 1.6% as oil prices moved to around $30 a barrel following the steepest two day decline in seven years. PetroChina declined by 1.4% in Shanghai and lost 4.2% in Hong Kong.

    Positive economic data provided little comfort to investors. The Caixin China Services PMI increased to 52.4 in January from 50.2 in December. This was the highest level witnessed since July. A measure of energy stocks declined 1.6% due to the drop in oil prices.

    A sub-index of property stocks increased 0.4% on the Shanghai exchange. This was primarily due to the central bank’s decision to reduce down payments on mortgages for first time home buyers. The CSI 300 declined 0.4%. The Hang Seng fell for a third successive day, declining 2.3%. The Hang Seng China Enterprises Index sank, losing 2.5 percent, to its lowest point in more than a year.

    The benchmark index increased 1.5% on Thursday closing at its highest level since Jan 25. Commodity stocks surged and the People’s Bank of China intensified its efforts to reduce shortage of cash before markets close for the new year holidays. A gauge of energy stocks moved up from record low levels following the longest rally in crude futures in nearly two weeks.

    The central bank pumped 80 billion yuan ($12 billion) into the monetary system utilizing reverse repurchase agreements lasting 14 days. This open market operation is part of the monetary authority’s efforts to control rising borrowing costs even as capital outflows and demand for funds rise.  Meanwhile the People’s Bank of China increased yuan fixing by the highest extent in two months.

    The CSI 300 added 1.2%. A sub-index of material stocks within the CSI 300 gained 2.8%, the highest among its industry groups. PetroChina gained 0.6% during the session. The Hang Seng China Enterprises Index rebounded, moving up 1.5%.

    Stocks in the News

    Alibaba Group Holding Limited reported third-quarter fiscal 2016 (ended Dec 30, 2015) earnings of 73 cents per share, which exceeded the Zacks Consensus Estimate of 70 cents. The adjusted figure excludes one-time items but includes stock-based compensation expense.

    Alibaba reported revenues of RMB34.54 billion (US$5.3 billion), up 55.8% sequentially and 31.9% year over year, driven by strong mobile revenues. Also, revenues surpassed the Zacks Consensus Estimate of $5.08 billion.

    Total China retail marketplaces GMV came in at RMB964.0 billion (US$149.0 billion), up 23% year over year. China retail marketplaces had 407 million annual active buyers in the 12-month period ended Dec 31, 2015, representing a 22% year-over-year growth.

    Mobile GMV was RMB651.0 billion (US$101.0 billion), a 99% year-over-year surge. Mobile GMV accounted for 68% of total China retail marketplaces GMV as against 62% last quarter and 42% in the previous year. Mobile MAUs grew to 393 million, improving 48% year over year, driven by increased promotion of mobile apps.

    Changyou.com Ltd. reported adjusted fourth-quarter 2015 earnings of 73 cents per share, which exceeded the Zacks Consensus Estimate of 54 cents. This was also a significant improvement over earnings of 21 cents per share reported in the same period last year. However, this was lower than the adjusted earnings of $1.55 cents reported in the third quarter of 2015.

    Changyou.com reported revenues of $162 million, down 14% from third quarter 2015. Additionally, revenues declined 25% compared to the same period last year. Revenues from online games came in at $127 million, falling 31% on a year-over-year basis.

    For fiscal year 2015, Changyou.com reported revenues of $762 million, an improvement over 2014’s figure of $755 million. Revenues from online games came in at $637 million, declining from $652 million reported in 2014. .

    TAL Education Group reported adjusted third-quarter 2015 earnings of 12 cents per share, in line with the Zacks Consensus Estimate. This is marginally lower than the 13 cents reported in the year-ago period. However, this is significantly lower than the adjusted earnings of 72 cents reported in the second quarter of 2015.

    TAL Education Group reported revenues of $142.2 million, representing a 43.1% increase over the same period last year. However, revenues declined significantly from the $173 million reported in second quarter 2015.

    For the nine months ended Nov 2015, TAL Education reported revenues of $ 444.9 million, which represents a 43.2% improvement on a yearly basis. During this period, total student enrollments increased by 53.4% on a yearly basis.

    JD.com, Inc. has inked an agreement with DHL per which they will collaborate across a number of cross border supply chain activities. These initiatives will utilize each company’s unique capabilities, of ecommerce and logistics and widen their existing relationship.

    Earlier, in July last year the two companies had revealed that DHL was becoming the preferred logistics service provider for delivery of certain orders made on the Chinese ecommerce giant’s U.S. Mall. The agreement related to deliveries would pertain to those products delivered to China as well as across that country.

    DHL will be the preferred logistics provider for JD.com’s International Business Group per the terms of the new agreement. This unit concentrates on consumers placing orders from outside China. Further, JD.com will now be a strategic customer per the Fast Growing Enterprises initiative of DHL. This will provide the ecommerce company access to a number of logistics solutions from all of DHL’s business units.

    CNOOC Ltd. said it has started production at two offshore projects. These are the Weizhou 12-2 oilfield joint development project and the Weizhou 11-4 North oilfield Phase II project. Both of these projects are located in South China Sea’s Beibu Gulf Basin.

    With an average water depth of around 36 meters, the Weizhou 12-2 project has three oilfields. Production facilities include three wellhead platforms, including 18 wells on all of which production has started. Total production has touched a daily rate of 16,000 barrels, achieving the peak production of its overall developing plan.

    The Weizhou 11-4 North Project’s average water depth is around 40 meters. It has two wellhead platforms and 15 producing wells. At present, one well is producing oil at a daily rate of 500 barrels and is projected to touch peak production of 8,000 bpd by end 2016.

    Performance of Most Actively Traded US-Listed Chinese Stocks                              

    The table given below shows the price movements of 10 Chinese companies with the highest three-month average trading volume on U.S. exchanges. Price movements over the last five days and during the last six months have been included.

    Ticker Last 5 Day’s Performance 6-Month Performance
    BABA -9.2% -19.6%
    JD -7.2% -30%
    VIPS -6.4% -41.3%
    CTRP -5% +1.6%
    SFUN -5.3% -19.2%
    BIDU -5.5% -10.1%
    YOKU -0.1% +41.3%
    JMEI -8% -67.9%
    QIHU -0.8% +12.4%
    TSL +1.2% +4.6%

     

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  • IFC to provide $25m funding for Myanmar’s largest retail group City Mart

    IFC to provide $25m funding for Myanmar’s largest retail group City Mart

    The International Finance Corporation, the World Bank Group’s private lending arm has signed for a $25 million loan to be provided to City Mart Holding Company Limited, the largest private retail group in Myanmar, to finance the expansion of the retail business in the country.

    Currently, CMHL has over 150 retail outlets in the country and plans to construct about 20 more supermarkets and hypermarkets over the next three years.

    Its plans are “to increase its purchases from domestic suppliers six fold, reaching around $150 million by 2021, and create nearly 4000 new jobs, half of which will be for women,” according to the filing.

    IFC hopes that CMHL’s expansion in the retail sector in the country, will help create jobs, develop supply chain and logistics infrastructure and support smaller businesses.

    “With our global expertise and industry knowledge, we will be delighted to work with CMHL to improve efficiency and standards to become a model retailer in Myanmar,” said Vivek Pathak, IFC’s regional director for East Asia and Pacific.

    CMHL’s shareholders are Win Win Tint, the founder and managing director and her relatives.

    “IFC’s investment is a sign of confidence in our business plan as well as in Myanmar’s retail sector potential,” said Win Win Tint. “In addition to funding, IFC’s expertise and advice on food safety, good social and environmental practices and corporate governance will also help us take the company to the next level.”

    Myanmar has a $12 billion retail sector that is predominantly informal with formal retailers holding less than 10 per cent of the market, according to the filing.

    IFC is supporting reforms and investments in Myanmar, to strengthen the private sector and create new jobs for poverty reduction and boost shared prosperity. IFC works together with the government, private sector to improve the investment climate, access to finance and infrastructure. Their initial focus is on power and telecommunications.

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