Posts in category Business and finance


ApprovedBusiness and financeFINANCEFinance and economics

China’s stockmarket plunge: this time it’s different

A CHINESE new-year message from the American embassy in Beijing looked innocuous. It welcomed the Year of the Dog on Weibo, a microblog, with photos of the embassy staff’s pooches and a video greeting from the ambassador and his wife, each with a dog in hand. But it soon attracted 10,000 angry responses. The post had become an unlikely lightning rod for public discontent about the stockmarket.

A plunge on February 9th had left Chinese shares down by 10% on the week, their steepest fall in two years. Some punters found solace in blaming the American embassy for the rout, which started on Wall Street. For others it was a matter of convenience, because their real target, the Chinese securities regulator, knew to disable comments on its Weibo account on such a grim day for stocks.

Even so, their protests seem to have been heard. Before the market reopened this week, Chinese officials urged big shareholders to buy stocks to restore confidence. The Shanghai Stock Exchange warned…Continue reading

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ApprovedBusinessBusiness and finance

Going out need no longer be a headache for teetotallers

BARS and pubs have not usually been the non-drinker’s friend. Knocking back pint after pint of juice or fizzy drink quickly gets boring. But beverage manufacturers are now showing more sympathy for their plight. Many companies regard non-alcoholic drinks as the “biggest opportunity in the market”, says Frank Lampen, who runs Distill Ventures, which helps small producers with investment and advice, and is backed by Diageo, a British drinks giant.

One of the fund’s recent investments, for example, is in Seedlip, a British firm that makes distilled, non-alcoholic “spirits” flavoured with botanicals, and which last year launched in America. Low-alcohol beer, once maligned for its paucity of flavour, is also in fashion. Technological advances mean alcohol can be filtered out of the beer without ruining its taste; other breweries use “lazy” yeast, which produces less alcohol to start with. Over the past couple of years, non-alcoholic craft breweries, such as Nirvana Brewery in London, or…Continue reading

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ApprovedBusinessBusiness and finance

The best—and worst—places to be a working woman

“PRESS for progress” is the theme of this year’s International Women’s Day on March 8th. As our sixth glass-ceiling index shows, disparity between countries remains wide. But women have made some progress towards equality in the workplace in the past year.

The index ranks the best and worst countries to be a working woman. Each score is based on average performance in ten indicators: educational attainment, labour-market attachment, pay, child-care costs, maternity and paternity rights, business-school applications and representation in senior jobs (in managerial positions, on company boards and in parliament).

Equality-conscious Nordics typically do well while workplace parity for women in Japan, South Korea and Turkey still lags badly. America under President Donald Trump rose from 20th to 19th place thanks in part to a higher female labour-force participation rate. This year Sweden ranks first, scoring well in female labour-force participation, which is over 80%, and the share of…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

The markets still have plenty to fret about

BULL markets always climb a wall of worry, or so the saying goes. For much of 2017, the main concerns were political and the markets seemed to surmount them as easily as a robot dog opens doors (the latest internet sensation).

But February has shown that the market is still vulnerable. The immediate trigger seems to have been the fear that inflationary pressures would cause bond yields to rise and central banks to push up interest rates; this week’s surprisingly high American inflation numbers will only add to the worries. In a narrow sense, that makes bonds look cheaper, compared with equities. In a broader sense, it increases the discount rate investors apply to future profits, lowering the present value of shares. (A caveat is needed: if higher rates reflect stronger growth, then estimates of future profits should rise, offsetting the discount-rate effect.)

The immediate effect has been to create uncertainty for investors about the direction of central-bank policy, after many years in which it could reliably be assumed that rates would stay low. This translates into a more volatile market, as illustrated by the sharp jump in the Vix, or volatility index, in early February.

The danger is that many investors seem to have treated volatility as an asset class, and have organised their portfolios accordingly. Eric Lonergan of M&G, a…Continue reading

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ApprovedBusinessBusiness and finance

Google embraces ad-blocking via Chrome

FROM quantum computing and smartphones to self-driving cars, home thermostats and delivering the internet by balloon, Google or, technically, Alphabet, the holding company that the firm established in 2015, has its fingers in many pies. But the company’s main business, which pays for all of its dabblings elsewhere, is digital advertising, which in 2017 accounted for more than 86% of its $111bn revenue. It may seem odd, then, that Google’s latest move is to aid ad-blocking. On February 15th Chrome, its web browser, which has a 59% market share, switched on code to block certain online advertisements. 9

In doing so it joins an established trend. By last year around 27% of American internet users had installed ad-blockers, according to eMarketer, a research firm (see chart). Third-party ad-blocking software is available already for Chrome but only for its desktop version. As well as being built in and thus on by default, the new blocker will work on smartphones.

Web publishers will not…Continue reading

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ApprovedBusinessBusiness and finance

Opportunities are opening for electrified commercial vehicles

Pulls a heavy weight of expectation

ELECTRIC commercial vehicles were once a common sight in Britain’s towns and cities. A fleet of 25,000 battery-powered milk floats roved the early-morning streets delivering a crucial part of the nation’s breakfast. Short ranges and low top speed were unimportant for a milk round but near-silent running meant customers could sleep. Their demise came as supermarkets expanded, but electrification of business vehicles is gathering pace anew.

Just as better battery technology is bringing down the cost and boosting the range of passenger electric vehicles (EVs), those advances are making electrification of commercial vehicles more appealing. The purchase price is still far higher than a comparable vehicle with an internal combustion engine (ICE). But businesses are more focused than ordinary motorists on the total costs of ownership, and on other reasons to shift to electric power.

Much attention has been paid to…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Recent tax reforms in America will hurt charities

DESPITE its oft-professed pro-market orthodoxy, America has always had an unusually large non-profit sector. Americans gave $390bn to charity in 2016, with the bulk of contributions coming from individual donors. Historically, revenues at non-profits tend to track GDP growth. The recent tax reforms imply that despite strong economic growth, charitable contributions in America are poised to fall for the first time since the financial crisis.

The most significant threat to charities comes from changes to income tax. American taxpayers can choose either to “itemise” specific expenses, such as charitable gifts or mortgage payments, or take a “standard deduction”. In an effort both to simplify the tax code and to lower overall tax rates, the Republican-led Congress almost doubled the standard deduction to $12,000 for individuals and $24,000 for married couples. This will make filing taxes a lot easier for many. But it also means that far fewer Americans will have a financial incentive…Continue reading

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ApprovedBusinessBusiness and finance

Ten years on from the first quota for women on corporate boards

THE centrepiece of the opening-bell ritual at the London Stock Exchange on February 2nd was a roll call to honour 27 global investors. They were lauded for pledging allegiance to the “30% Club”, a group which campaigns for precisely that proportion of women on corporate boards globally. Membership is a hot ticket, judging by the club’s expansion. Behemoths including BlackRock, J.P. Morgan Asset Management and Standard Life have joined, and are voting against boards that fail to appoint more women.

In much of western Europe, such efforts follow a decade-long push by governments. In 2008 Norway obliged listed companies to reserve at least 40% of their director seats for women on pain of dissolution. In the following five years more than a dozen countries set similar quotas at 30% to 40%. In Belgium, France and Italy, too, firms that fail to comply can be fined, dissolved or banned from paying existing directors. Germany, Spain and the Netherlands prefer soft-law quotas, with no sanctions….Continue reading

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ApprovedBusinessBusiness and finance

Will Comcast try to outbid Disney for Fox?

WHEN Disney struck a deal just before Christmas to buy much of 21st Century Fox for $66bn, it was a career-defining moment for the two firms’ bosses, Bob Iger and Rupert Murdoch. A third media mogul, Brian Roberts of Comcast, was left out in the cold. Having tried and failed last autumn to get Mr Murdoch to take a higher offer, Mr Roberts may now be preparing a still richer bid to upend the deal.

It is not hard to understand his motivation. Comcast is in an awkward position at a time when the media landscape is shifting. With millions of consumers dropping pay-TV for the likes of Netflix, media companies have suddenly become either buyers, to achieve scale, or sellers, to exit. Mr Roberts has always been a buyer, building the cable business his father started into a diversified empire through acquisitions, including AT&T’s broadband business in 2002 and NBC Universal in 2011. Comcast now has heft in a number of businesses—broadband and cable, television networks, a film studio…Continue reading

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ApprovedBusinessBusiness and finance

The world’s largest-ever tech deal now depends on Qualcomm

Hock Tan hones the art of the deal

VALENTINE’S DAY might seem like a good time to discuss a proposal. But whether it brought luck to Broadcom’s attempt to woo its rival chipmaker, Qualcomm, is still unclear. As The Economist went to press, a meeting between the boards of both firms to discuss Broadcom’s bid of $146bn (including debt) proved inconclusive. Having rejected an initial approach in November, Qualcomm’s board will soon meet to discuss next steps.

Should the board reject Broadcom’s offer, the fate of the largest-ever tech acquisition would then lie with Qualcomm’s shareholders. The deal could still proceed if they elect a majority of Broadcom’s nominees to the board at Qualcomm’s annual investor meeting on March 6th. But it would have a complicated course to run.

Neither firm may be a household name like Intel or Samsung, but a merger would create the world’s third-largest chipmaker. Scale is critical in an…Continue reading

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ApprovedBusinessBusiness and finance

Japanese businesses are struggling to keep up standards

KUMIKO HIRANO has noticed a disquieting change when she goes to her neighbourhood konbini, one of Japan’s ubiquitous convenience stores. “No one is around and I have to use a loud voice to get someone to serve me,” says the 48-year-old worker in Tokyo. “It irritates me.”

This might not seem a big problem, but Japan prides itself on the standard of customer service, which approaches the level of bespoke attention elsewhere. Taxi drivers, who often wear white gloves, sometimes get out to bow when they drop off a passenger. Staff in shops and restaurants are unfailingly polite. Shoppers can order on Amazon and take delivery reliably the same day. Now Japanese are having slowly to adapt to levels of service long suffered by the rest of the world.

The human touch is becoming rarer. Lawson, another konbini chain, is automating payment during the small hours at selected stores. Some restaurants and supermarkets are following suit….Continue reading

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ApprovedBusinessBusiness and finance

Indian teaching startups make work for idle thumbs

TO ANY outsider it looks as if the children have been hypnotised by yet another smartphone game. As the spying elders in a TV ad try to break the spell, the sprogs flash a grin at their screens. “It’s maths, dad,” giggles a fifth-grader to her father. The company behind the ad, Byju’s, sells an educational smartphone app which has been downloaded 14m times since its launch in 2015.

Byju’s is one of many education technology (or “edtech”) startups that have emerged in India in the past few years. Their target is vast—some 260m pupils in schools and over 30m graduates who train in order to pass entrance tests for a seat in medical, engineering and elite management institutes. KPMG, a consultancy, reckons the industry will grow eightfold to be worth around $2bn by 2021.

Much of the expected growth is due to India’s woeful record in primary-school education, where teachers are scarce, infrastructure crumbling and the culture one of rote learning. Almost half of…Continue reading

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Business and financeGulliver

How to ensure Ryanair foots the bill for flight delays

THERE is little doubt that Ryanair takes umbrage at EU261, a piece of European law that guarantees passengers compensation in the event of most flight delays and cancellations. Michael O’Leary, the low-cost carrier’s boss, insists that he complies with the “ridiculous” piece of legislation. But many say otherwise. Indeed, Mr O’Leary seems to revel in refusing to give out compensation; he once told a customer who dared to ask for one “you’re not getting a refund so fuck off”. Last year, when a pilot-rostering mishap grounded thousands of Ryanair flights, Britain’s Civil Aviation Authority (CAA) accused it of “persistently misleading” customers about their rights. Which?, a British consumer group, agreed that Ryanair fell “woefully short” of its obligations. Media reports exposing poor treatment of passengers abounded. Yet, in the past five months, Gulliver has received two EU261 pay-outs from Ryanair. The circumstances surrounding them…Continue reading

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Business and financeButtonwood's notebook

Those Brexit clichés explained

Ever since February 2016, when David Cameron, the British prime minister, called a referendum on the UK leaving the EU, the debate has been clouded by catchphrases, similes and confusing metaphors. If you haven’t followed the debate religiously, or you are unfamiliar with British idioms, these may be mysterious. So as the negotiations reach a critical stage, here is your cut-out-and-keep guide to some of the most notable.

Project Fear

This was how the Leave campaign dubbed the economic forecasts made by the Treasury and bodies like the OECD and IMF about the potential adverse impact of a Brexit vote. George Osborne, the chancellor, certainly went over the top with his threats of a “punishment Budget” after a Leave vote. So far, the UK has not fallen into recession, a fact that Brexiters cite when pooh-poohing negative forecasts of the longer-term impact. But the Continue reading

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Business and financeGulliver

A hamster is the latest victim in the row over emotional-support animals

THE roster of emotional-support animals that are and are not allowed onto flights in America can sound, at times, like a retelling of the story of Noah’s Ark. Although the number allowed on for nothing has grown in recent years, airlines—which believe that the loophole is being abused by those not wanting to pay to transport their pets—are fighting back. Only last month a peacock was barred from a United Airlines flight for bending the rules, and for not even being the right size for a normal plane seat. But the debate has now taken a deadly twist. The victim is a hamster.

Belen Aldecosea, a college student, booked a flight on Spirit Airlines, a low-cost carrier, from Baltimore to her home in Florida in November for medical treatment, according to the Miami Herald, a local paper. Concern about a growth on her neck had led her to buy a hamster, whom she named Pebbles, for comfort. She called Spirit to ask if she could bring Pebbles on…Continue reading

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