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Stocks rally in Asia, China property sector worries dampen sentiment

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October 26, 2021

By Kane Wu

HONG KONG (Reuters) – Asian stocks largely rallied on Tuesday, following Wall Street’s record highs overnight, though fresh worries about China’s property sector weighed on investors’ sentiments.

Europe and U.S. markets look set to keep the upward momentum as FTSE futures and E-mini futures for the S&P 500 index were up 0.06% and 0.24% respectively at 0531 GMT.

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MSCI’s gauge of Asia Pacific stocks outside Japan rose 0.15% and briefly touched its highest in six weeks on Tuesday, after gaining throughout October.

The Asian regional benchmark however is down about 11% from its February high compared to the MSCI world equity index which is in sight of its record high hit six weeks ago.

“Equity prices are likely to be driven by technical positioning this week, as trade enters the final week of the month,” said Anderson Alves, an equities trader at global online trading platform ActivTrades.

Japan’s benchmark Nikkei average gained nearly 1.8%, while Australia’s S&P/ASX 200 closed 0.03% higher.

The CSI300 index inched 0.05% higher led by information technology stocks, but the Hong Kong benchmark Hang Seng Index eased 0.4%.

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China property stocks extended their losses in the afternoon sessions as another developer, Modern land, defaulted on a payment, adding to worries about spiralling effects of the debt crisis at China Evergrande Group.

An index of Hong Kong-listed mainland property firms dropped 4.7% and the mainland’s CSI 300 Real Estate Index was down 2.4%.

China has said it will roll out a pilot real estate tax in some regions, adding to existing investor concerns about real estate in the mainland.

Edison Pun, Senior Market Analyst at Saxo Markets in Hong Kong noted that markets remained on a strong trend, having begun digesting the prospect that the U.S. Federal Reserve will begin tapering its monetary stimulus in November.

“However, we need to watch whether it will put on extra pressure on the Chinese property market when the property tax is rolled out. It could hurt consumption in the end if we are seeing an overall downturn in Chinese property prices,” he said.

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A large proportion of S&P 500 companies are due to report results this week, including technology heavyweights Facebook, Apple Inc, Amazon, Microsoft, and Alphabet, which have been the drivers of the market rally this year.

“Of the S&P 500 firms that have reported this season, the net surprise on earnings has been 13%. So it is easy to understand the optimism percolating through risk appetite despite inflation fears,” said ANZ Research in a note.

“The economy remains very strong. We expect the recovery will re-accelerate once bottlenecks and COVID concerns subside.”

The European Central Bank and Bank of Japan are both set to hold monetary policy meetings on Thursday, although neither are expected to take major action on interest rates.

The Dow Jones Industrials and S&P 500 closed at record highs on Monday. Tesla, which jumped 12.66% and breached $1 trillion in market capitalisation, also provided the biggest boost to the S&P 500 and the Nasdaq.

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Benchmark 10-year U.S. Treasury notes were steady at 1.6397% off last week’s five month top of 1.7% as uncertainty about when the Federal Reserve would raise rates to curb rising inflation weighed on market sentiment.

The dollar rose 0.1% on Tuesday, recovering from a near one-month trough hit during the previous session.

Already nudging multi-year highs, oil prices rose marginally in a market gripped by tight global supply and strengthening fuel demand in the United States and beyond.

Brent crude futures pared earlier losses to stand at$86.11 a barrel, up 0.14%, while the U.S. West Texas Intermediate (WTI) crude futures edged 0.01% higher to $83.76 a barrel.

Spot gold was down nearly 0.2% to around $1,804 per ounce.

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(Reporting by Kane Wu; additional reporting by Alun John; Editing by Sam Holmes & Simon Cameron-Moore)

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Amazon asks India antitrust body to revoke Reliance-Future deal approval

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November 28, 2021

By Aditya Kalra and Abhirup Roy

NEW DELHI (Reuters) – Amazon has asked India’s antitrust regulator to revoke its approval for Future Retail’s $3.4 billion sale of retail assets to Reliance, saying it was “illegally obtained”, violating an order suspending the deal, a letter seen by Reuters shows.

The approval for the deal was a “nullity in the eyes of law” as an arbitrator’s order was still in force, according to the letter sent by Amazon.com Inc to the Competition Commission of India (CCI) last week.

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The battle between two of the world’s richest men, Amazon founder Jeff Bezos and Reliance Industries Ltd boss Mukesh Ambani, marks a contest for preeminence in India’s booming, nearly trillion-dollar retail market.

The winner in the fight for Future Retail Ltd, India’s second-largest retailer and Amazon’s estranged local partner, will get pole position in the race to meet the daily needs of more than a billion people.

The CCI, Amazon, Future Group and Reliance did not respond to requests for comment.

Future has said the arbitrator’s suspension order was invalid but Indian courts have declined to overturn it.

If the regulator agrees with the previously unreported letter, it would be a major setback for oil-to-telecom conglomerate Reliance.

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Amazon won an injunction against the deal from a Singapore arbitrator last year, alleging Future had violated contracts that prevented it from selling the assets to entities including Reliance.

But the CCI later cleared the deal.

Future misled the CCI and continued to seek approval for the deal, Amazon said in the letter dated Wednesday, calling the injunction a “brazen attempt to subvert the rule of law”.

Amazon asked for a personal hearing from the CCI to make its case.

The letter comes as Amazon is also battling allegations that it misrepresented facts and concealed information while seeking antitrust clearance for a 2019 deal with Future Group.

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Amazon has so far successfully used this deal’s contracts to block Future’s deal with Reliance.

(Reporting by Aditya Kalra and Abhirup Roy in New Delhi; Additional reporting by Zeba Siddiqui; Editing by William Mallard)

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Exclusive-Visa complains to U.S. govt about India backing for local rival RuPay

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November 28, 2021

By Aditya Kalra

NEW DELHI (Reuters) – Visa Inc has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay hurts the U.S. giant in a key market, memos seen by Reuters show.

In public Visa has downplayed concerns about the rise of RuPay, which has been supported by public lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.

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But U.S. government memos show Visa raised concerns about a “level playing field” in India during an Aug. 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.

Mastercard Inc has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company had lodged a protest https://reut.rs/3cQA2La with the USTR that Modi was using nationalism to promote the local network.

“Visa remains concerned about India’s informal and formal policies that appear to favour the business of National Payments Corporation of India” (NPCI), the non-profit that runs RuPay, “over other domestic and foreign electronic payments companies,” said a USTR memo prepared for Tai ahead of the meeting.

Visa, USTR, Modi’s office and the NPCI did not respond to requests for comment.

Modi has promoted homegrown RuPay for years, posing a challenge to Visa and Mastercard in the fast-growing payments market. RuPay accounted for 63% of India’s 952 million debit and credit cards as of November 2020, according to the most recent regulatory data on the company, up from just 15% in 2017.

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Publicly, Kelly said in May that for years there was “a lot of concern” that the likes of RuPay could be “potentially problematic” for Visa, but he stressed that his company remained India’s market leader.

“That’s going to be something we’re going to continually deal with and have dealt with for years. So there’s nothing new there,” he told an industry event.

‘NOT SO SUBTLE PRESSURE’

Modi, in a 2018 speech, portrayed the use of RuPay as patriotic, saying that since “everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation.”

When Visa raised its concerns during the USTR gathering on Aug. 9, it cited the Indian leader’s “speech where he basically called on India to use RuPay as a show of service to the country,” according to an email U.S. officials exchanged on the meeting’s readout.

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Finance Minister Nirmala Sitharaman said last year that “RuPay is the only card” banks should promote. The government has also promoted a RuPay-based card for public transportation payments.

While RuPay dominates the number of cards in India, most transactions still go through Visa and Mastercard as most RuPay cards were simply issued by banks under Modi’s financial inclusion programme, industry sources say.

Visa told the U.S. government it was concerned India’s “push to use transit cards linked to RuPay” and “the not so subtle pressure on banks to issue” RuPay cards, the USTR email showed.

Mastercard and Visa count India as a key growth market, but have been jolted by a 2018 central bank directive for them to store payments data “only in India” for “unfettered supervisory access”.

Mastercard faces an indefinite ban on issuing new cards in India after the central bank said it was not complying with the 2018 rules. A USTR official privately called the Mastercard ban “draconian”, Reuters reported in September.

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(Reporting by Aditya Kalra in New Delhi; Editing by William Mallard)

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‘Flash mob’ thieves target U.S. retail stores on Black Friday

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November 28, 2021

By Steve Gorman

LOS ANGELES (Reuters) – Black Friday shoppers weren’t the only ones out hunting for bargains on the day after Thanksgiving. Thieves were busy as well.

Police in Los Angeles and cities elsewhere across the country spent much of their holiday weekend patrols looking for suspects in a spate of “flash mob” robberies on Friday, part of a surging U.S. crime trend in which groups of thieves swarm a store, ransack the shelves and flee.

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Authorities also have used the term “smash-and-grab” to describe the trend.

At least two such robberies were reported on Saturday by the Los Angeles Police Department (LAPD) and the Los Angeles County Sheriff’s Department. A local television station, KCAL-TV, counted a total of six smash-and-grab heists on the city’s west side alone on Friday.

In one incident, a group of eight men entered a Home Depot outlet at a shopping mall in Lakewood, south of downtown Los Angeles, walked directly to the tool aisle and snatched a bunch of hammers, sledgehammers and crowbars valued at about $400 before making their getaway, the sheriff’s office said.

According to L.A. television station KTTV, the Home Depot robbery on Friday night involved up to 20 suspects who pulled up to the store in as many as 10 cars and donned ski masks before raiding the tool aisle.

“We tried to stop them,” store employee Luis Romo told KTTV. “We closed the front entrance, and they put their sledgehammers up and whoever got in the way, they were going to hurt them.”

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The Los Angeles City News Service said four suspects in that robbery were arrested on Saturday by Beverly Hills police.

In a similar incident Friday afternoon, a group of 10 men or more invaded a store in the city’s Fairfax district and started grabbing merchandise without paying for it, pushing employees out of the way before fleeing the scene, according to LAPD.

Police are investigating possible ties between that incident and a flurry of other robberies and retail thefts on Friday and earlier in the week, including two smash-and-grabs reported on Wednesday, an LAPD spokesperson said.

The rash of retail crime prompted the LAPD to place its officers on a citywide tactical alert on Friday afternoon.

Mass robberies also were reported on Friday at two Best Buy electronics stores in the Minneapolis-St. Paul area, one of them involving as many as 30 suspects, while a spree of pre-dawn retail burglaries were under investigation in Chicago.

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In one of the biggest flash-mob robberies reported on the West Coast in recent days, police in the San Francisco suburb of Walnut Creek were seeking about 80 suspects who swarmed and ransacked a department store last Saturday.

(Reporting by Steve Gorman in Los Angeles; Editing by Paul Simao)

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