Quoteworthy: "A union leader will do what it takes to save jobs and in every way possible. And when jobs cannot be saved, union leaders will support workers through the tough times and help them seek new opportunities." –— NTUC secretary general Ng Chee Meng after Resorts World Sentosa, one of Singapore’s biggest private–sector employers, has started retrenching workers even though it has resumed operations following the lockdown.
Majority of Southeast Asia firms plan divestment to reposition for growth: EY
A large proportion of companies in Asia Pacific say they are planning to divest to reposition for growth, according to the EY 2020 Global Corporate Divestment Study.
The annual study surveyed over 400 executives in the Asia Pacific (APAC) region, including close to 100 in Southeast Asia (SEA) in the period before and after the onset of the Covid–19 outbreak.
The study found that some 79% of SEA executives and 75% of APAC executives have indicated that they are planning to divest within the next two years. The figures came in higher than the 70% and 74% registered just before the pandemic set in.
Some 53% of SEA executives and 56% of APAC executives also indicate that they are more likely to divest to fund investments in technology. This is an increase from the 37% of respondents (30% for APAC) before the Covid–19 crisis.
“This study comes at a pivotal moment when business executives are facing unprecedent[ed] disruption,” said Abhay Bangi, Asean sell and separate co–lead at EY.
“Sellers are also looking to fund new technology investments, especially digital enablers, as they reimagine their business models and prepare for the new normal,” he added.
According to EY, companies with more constrained access to capital markets due to the Covid–19 outbreak may need to turn to divestments. Over half of the respondents — 53% in SEA and 54% in APAC — say they will need to raise capital in response to the potential impact of Covid–19 on their businesses.
The respondents indicate that they are also reducing debt through divestments and reshaping their portfolio for a post– crisis world. Respondents also say they may also expect to see an increase in distressed divestitures over the next 12 months for companies that have been hard–hit by the pandemic. — Felicia Tan
Twitter hack hits Obama and Biden in Bitcoin scam
The Twitter accounts of some of the most prominent US political and business leaders, from Barack Obama, Joe Biden to Amazon CEO Jeff Bezos and American investor Warren Buffett, were hacked on July 15 in an apparent effort to promote a Bitcoin scam.
The attacks were stunning in scope and almost certainly coordinated. Others whose Twitter accounts were caught up in the security incident included Bill Gates, Elon Musk, Kanye West, Uber Technologies, Apple and the founder and majority owner of Bloomberg LP Michael Bloomberg. The accounts sent out tweets promising to double the money of anyone sending funds via Bitcoin within 30 minutes.
Twitter said it was aware of the incident impacting its accounts and is investigating. The company’s shares declined more than 3% in extended trading. CEO Jack Dorsey tweeted on July 15 that the San Francisco– based company was “working hard to make this right”.
“Tough day for us at Twitter,” Dorsey wrote. “We’re diagnosing and will share everything we can when we have a more complete understanding of exactly what happened.”
So far, the Bitcoin address tweeted by the hackers has been sent over 12 Bitcoins, worth more than US$110,000 ($153,109). The popular Bitcoin exchange Coinbase has blocked its users from sending money to the address. — Bloomberg
Apple wins fight over EUR13 billion tax bill in blow to EU
Apple won its court fight over a record EUR13 billion ($20.6 billion) Irish tax bill in a crushing blow to European Union (EU) Competition Commissioner Margrethe Vestager’s crackdown on preferential fiscal deals for companies.
The judgment by the EU’s lower court on July 15 vindicates Apple CEO Tim Cook’s challenge against a decision he labelled as “political crap”.
While the EU General Court’s ruling can still be appealed, judges delivered a stinging attack on the European Commission for failing to show “to the requisite legal standard” that Ireland’s tax deal broke state–aid law by giving Apple an unfair advantage.
The Apple case is the hallmark of Vestager’s five–year campaign to get rid of allegedly unfair tax deals that some EU governments dole out to favoured multinationals including the likes of Amazon. Apple’s fury at its 2016 tax bill led Cook to blast the EU move.
The EU will consider its next steps after studying the Luxembourg–based court’s judgment, Vestager said in a statement. “If member states give certain multinational companies tax advantages not available to their rivals, this harms fair competition,” she said, adding that the EU “will continue to look at aggressive tax planning measures under EU state aid rules.”
Apple’s huge sales — like those of other US tech giants — have attracted particular scrutiny in Europe, focusing on complicated company structures for transferring profits generated from intellectual property. — Bloomberg
China economy returned to growth last quarter as virus eased
The Chinese economy returned to growth in the second quarter, marking an important milestone in the global struggle to recover from the Covid-19 pandemic (see chart).
China’s GDP expanded 3.2% in the three months to June from a year ago, reversing a 6.8% decline in the first quarter and beating the median forecast of 2.4%. In the first half however, output is still down 1.6% on the same period in 2019.
“The recovery in 2Q is strong, but also highly uneven” as the supply recovery is stronger than demand, and investment is stronger than consumption, according to Larry Hu, chief China economist at Macquarie Bank. “Looking ahead, while the growth momentum would slow inevitably, GDP growth could rebound to around 5% on year in the second half” of this year, he said.
The data, released on July 16, showed the recovery is still largely industry–driven, while consumer sentiment is weaker than expected. A raft of measures have been rolled out since the pandemic to shore up the economy, including tax and fee cuts, cheaper loans, and increased fiscal spending. Stimulus has still fallen far short of the policies offered in developed economies, out of concern for debt build–up and financial stability.
“China’s economy has gradually overcome the negative impact brought by the virus in the first half, showing recovery momentum,” said Liu Aihua, China’s National Bureau of Statistics spokesperson. “The recovery of the domestic economic recovery still faces pressure amid rising external challenges, as the coronavirus continues to impact the global economy,” he said.
A major headwind to the recovery is the level of unemployment created by the collapse in manufacturing in the first quarter. The surveyed unemployment rate does not capture the full impact, and tens of millions may still be out of work due to the pandemic.
Policy makers are also signalling that monetary and fiscal policy will not become much more supportive, as long as credit growth continues its upward trend.
“Not out of the woods,” is how Helen Qiao, Bank of America Merrill Lynch’s chief economist for Greater China, described the numbers. She told Bloomberg Television that retail sales are clearly lagging the recovery in other parts of the economy.
“People still hold a fear against going out and travelling,” and the service sector is continuing to feel pain, she added. — Bloomberg
Corrections In our story
“Intellex saves lawyers from ‘reinventing the wheel’” (Issue 941, July 13), the company name is “Intelllex”, and Ellery Sutanto wasn’t previously an investment banker. And not all Big Four local law firms are its clients.
