News Archive

Glencore leads European share rebound, but China hits Asia

NEW YORK European stocks rose on Monday, lifted by mining and commodities giant Glencore after it pledged to slash its debt by a third, and countering a fall in Asian markets led by weakness in China following a four-day break there.

Trading was lighter than usual with U.S. markets closed for the Labor Day holiday, while investors across all asset classes continued to digest the implications of last week’s U.S. jobs data for the timing of the first U.S. interest rate hike since 2006.

The FTSEuroFirst index of leading 300 shares closed up 0.48 percent at 1,399.34 .FTEU3 and Britain’s mining-heavy FTSE 100 index finished up 0.52 percent at 6,074.52 .FTSE.

Both indexes had been up well over 1 percent earlier . Glencore (GLEN.L) shares rose as much as 12 percent after it said it will suspend dividends, sell assets and raise $2.5 billion in a new share issue as it aims to cut its debt to $20 billion by the end of next year.

“The news was well-received by the market,” said David Papier at ETX Capital in London.

Glencore closed up 7 percent at 131.8 pence.

The rally in Europe was broad-based, marking a rebound from Friday’s steep losses of almost 3 percent after investors marginally upped their bets that the Federal Reserve could raise U.S. interest rates later this month.

Germany’s DAX was up 0.7 percent .GDAXI at 10,108.61 points and France’s CAC 40 was up 0.59 percent at 4,549.64 points .FCHI, both halving their opening gains.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1 percent, driven by stocks in China where markets reopened after closing over Thursday and Friday as Beijing marked 70 years since the end of World War Two.

Shanghai shares .SSEC initially rose as much as 1.8 percent after weekend remarks by regulators aimed at calming the market, but reversed course to close down 2.6 percent.

China’s policymakers and regulators promised deeper financial market reforms. They emphasized signs that the economy was stabilizing, but trimmed 2014 growth figures and said foreign exchange reserves fell in August by $93.9 billion – the largest monthly fall on record – to $3.55 trillion.

Chinese exchanges announced steps on Monday to try and reduce the recent volatility in stock markets and would introduce a ‘circuit breaker’ on one of the country’s benchmark stock indexes to “stabilize the market.”

“It prevents a degree of very unhealthy volatility from impacting the market and at the same time allows investors to trade their conviction but not to the point where it becomes dysfunctional and counterproductive,” said Peter Kenny, chief market strategist at Clearpool Group in New York.

“This could actually help global markets quite a bit just in terms of investor psychology.”


Financial leaders from the world’s 20 biggest economies agreed on Saturday to step up reform efforts to boost growth, saying reliance on ultra-low interest rates would not be enough to accelerate economic expansion.

But they also said they were confident growth would pick up and, as a result, interest rates in “some advanced economies” – code for the United States – would have to rise.

Investors are uncertain whether rates will rise this month but that scepticism was diluted a little on Friday after figures showed nonfarm payrolls increased 173,000 last month and the unemployment rate dropped to 5.1 percent, its lowest in more than seven years.

“With Fed ‘liftoff’ coming soon and the U.S. recovery on track, we expect to see the 10-year yield close to 3 percent by the end of 2016. And that will be good news!” wrote Societe General strategists in a note to clients.

The 10-year Treasury yield closed at 2.13 percent on Friday US10YT=RR, the lower end of its range over the last two weeks.

Core European government bonds were slightly weaker on Monday, with the 10-year German yield up half a basis point at 0.674 percent DE10YT=RR and the 30-year yield up 12 basis points at 1.415 percent DE30YT=RR.

The dollar was mostly stronger against its main rivals, up 0.3 percent against the yen at 119.40 yen JPY=, and steady against the euro, which was changing hands at $1.1143 EUR=.

The euro had dipped below $1.11 on Monday and on Friday after the U.S. jobs data.

Crude oil fell on a lingering supply glut. U.S. crude oil futures CLc1 were down 3.9 percent at $44.25 a barrel and Brent crude dropped 3.7 percent to $47.76 a barrel LCOc1.

(Editing by Ruth Pitchford and Nick Zieminski; To read Reuters Global Investing Blog click here; for the MacroScope Blog click on; for Hedge Fund Blog Hub click on

Article source:

China forex reserves in record fall as Beijing tries to calm markets

SHANGHAI/BEIJING China’s foreign exchange reserves posted their biggest monthly fall on record in August, reflecting Beijing’s attempts to halt a slide in the yuan and stabilize financial markets following its surprise move to devalue the currency last month.

China’s reserves, the world’s largest, fell by $93.9 billion last month to $3.557 trillion, central bank data showed on Monday.

The drop left market watchers questioning how sustainable China’s efforts to support the yuan are, as capital flows out of the country due to fears of an economic slowdown and prospects of rising U.S. interest rates.

“Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity,” said Zhou Hao, senior economist at Commerzbank in Singapore.

The offshore yuan weakened following the data release to trade at a record discount to the onshore rate, suggesting investors believe the official rate is being kept too high.

There was relief, though, that the dip in reserves had not been larger, with some commentators predicting in the run-up to the announcement that the drop could be as much as $200 billion.

The decline in reserves has quickened following China’s near 2 percent devaluation of the yuan on Aug. 11, which stoked fresh concerns about the economy and heavy selling of the currency.

China was so surprised by the reaction to the devaluation that it is likely to keep the yuan on a tight leash in the near-term to head off fears of a global currency war, policy insiders have told Reuters.


Chinese policymakers are now determined to show their financial markets are back to normal, after the devaluation of the yuan, or renminbi, coupled with wild swings in its stock markets caused jitters in markets around the world.

China’s Central Bank Governor Zhou Xiaochuan told financial leaders from the world’s 20 biggest economies over the weekend that Chinese financial markets had almost completed their correction after a steep run up in stock prices in the first half of the year.

Zhou’s comments, coupled with pledges from regulators to deepen financial market reforms, had limited impact in stabilizing China’s stock markets on Monday, which closed before the release of the reserves data.

The CSI300 index of the biggest stocks in Shanghai and Shenzhen closed down 3.4 percent, while the Shanghai Composite Index was 2.5 percent lower, in the first day of trading following a four-day long weekend.

Chinese equity markets have fallen 40 percent since mid-June, despite the authorities unleashing a volley of policy responses to try and stem the falls.

On Monday, China unveiled changes to taxes on share dividends aimed at encouraging longer term investment as opposed to short-term speculation. The measures are due to come into effect on Tuesday.

Hours earlier, the Shanghai stock exchange said the Shanghai and Shenzhen Stock Exchanges and the China Financial Futures Exchange planned to introduce a “circuit breaker” on the CSI300 index to stabilize the market.

The exchanges are seeking comment from market participants before Sept. 21 on proposals to suspend trade in the country’s equity indexes if it moves sharply either way.

There is no guarantee that Beijing will adopt the proposals.

However, while seeking to reduce volatility in equities, if enacted, they could prove a disincentive to short-term investors by restricting the market’s potential to rise as well as fall.

Initial reaction among economists was skeptical.

“What’s the point? It merely delays the pace of the market fall,” said Liu Ligang, China economist at ANZ in Hong Kong.


Last week the China-based investment community was put on edge following media reports that the China chairwoman of Man Group Plc, Li Yifei, had been taken into custody to help with a police probe into stock market volatility.

However, Li told Reuters on Monday that the reports were incorrect, saying she spent last week in industry meetings and then took a 5-6 day trip to meditate.

China’s government is also pushing on with attempts to ease concerns about the country’s slowing economic growth.

Finance Minister Lou Jiwei was quoted in a central bank statement as saying that central government spending would rise by 10 percent this year, up from the 7 percent growth budgeted at the start of 2015.

A string of soft economic data has made it harder for Chinese regulators to bring stability back to their markets, as fears grow of a hard landing for the world’s second-biggest economy.

Earlier on Monday, China revised down its reading for growth in 2014, saying the economy expanded by 7.3 percent, a notch below the previous estimate of 7.4 percent.

This year the economy is headed for its slowest expansion in 25 years, and concerns have been building that it may miss the official growth forecast of around 7 percent.

However, analysts say increased government spending, combined with five interest rate cuts since last November, mean that risk has diminished.

“We remain of the view that the considerable monetary, fiscal and macro prudential policy stimulus already in place and expected will put full-year growth in the ‘about 7 percent’ range,” said Tim Condon, head of research for Asia at ING Bank in Singapore.

China’s top economic planning agency tried to back up that view, saying on Monday that the country’s power usage, rail freight and property market have all shown improvements since August, indicating the economy is stabilizing.

“The economy is expected to maintain steady growth and we are able to achieve annual economic growth target,” the NDRC said.

(Additional reporting by Pete Sweeney, Samuel Shen, and Lu Jianxin in Shanghai; Writing by Rachel Armstrong; Editing by Neil Fullick and Mike Collett-White)

Article source:

Glencore reins in debt as commodity price slump persists

Mining and trading company Glencore acknowledged on Monday the severity of the global commodity market slump as it suspended dividends and said it would sell assets and new shares to cut heavy debts built up through years of rapid expansion.

The London-listed company came under pressure to cut its net debt of $30 billion, one of the largest in the industry, as prices for its key products, copper and coal, sank to more than six-year lows.

Despite the rout in commodity prices, Glencore had said only last month that its cashflow was “comfortable” to service the debt, return cash to shareholders and support growth.

The market did not share this view, especially after Swiss-based Glencore lowered its earnings forecast for its trading division, an unusual step given the company’s track record for winning bets on trends in raw material prices.

Glencore’s shares tumbled last week, leaving them down 59 percent this year and adding to pressure on the team around Chief Executive Ivan Glasenberg, architect of its transformation from low-profile trading house to global commodities giant.

Glencore said on Monday it would cut net debt by a third by the end of 2016. It will sell assets and raise $2.5 billion in a share sale, with its billionaire directors diverting part of their wealth back into the business.

Shares in the company were up nearly 7 percent at 131.4 pence by 1254 GMT, having fallen almost 60 percent this year to a record low, a worse performance than rival miners like BHP Billiton and Rio Tinto.

In a sign of how pessimistic the market has become over the commodities outlook, most analysts praised Glencore’s decision to secure its balance sheet. Glasenberg said it followed “recent stakeholder engagement” – suggesting the share sale and other measures had been called for by shareholders.

“The move is entirely about preserving the group’s credit rating,” said an analyst at an institution holding Glencore stock. “Without a solid investment grade rating, the group’s marketing business could not participate effectively in its markets.”

Last week, credit rating agency Standard Poor’s affirmed its long and short-term ratings on Glencore at BBB and A-2, but revised its outlook to negative from stable. It warned that it would lower its rating if Glencore were perceived as having a weaker commitment to defend the rating or if commodity prices fell further.


Glencore labors under a higher debt load than its mining peers in part because its trading unit uses borrowed money to take large positions that generate tight margins. Its net debt to EBITDA ratio of 4.5 times compares to a ratio of 1.4 times at BHP Billiton and 0.9 times at Rio Tinto, according to Thomson Reuters data.

Formerly just a commodities trader, Glencore surfed a boom in raw materials prices since the start of the 2000s driven by accelerating emerging economies to become a global mining giant. A 2011 flotation made multi-billionaires of several Glencore directors. In 2013, Glencore bought peer Xstrata for $41 billion.

Its biggest mining industry rivals have little trading presence and Glencore’s strength was seen to lie in a more diversified earnings stream.

So it surprised investors last month when it said first-half profit had slumped and tough market conditions were hurting its trading business. The company had previously said trading would meet earnings targets whatever happened to commodity prices.

Charles Stanley analyst Tom Gidley-Kitchin said Glencore’s reputation has taken a hit because they spent too much on expansion. He said it made some wrong trading calls and some poor investments such as Optimum Coal and Caracal Energy. But Glencore did not have the monopoly on bad decisions:

“They may not be good at running or developing production businesses – but look at BHP’s investment in shale, Rio Tinto’s investment in aluminum, Anglo’s investment in Minas Rio for much worse mistakes,” said Gidley-Kitchin.


As it grappled with the downturn, cash generated by Glencore operations before working capital changes fell to $4 billion in the first half of 2015 from $5.6 billion a year earlier.

Glencore has already disposed of some non-core mining assets it inherited through its Xstrata takeover and has trimmed capital spending plans for this year and 2016.. But analysts had expected more cost savings.

Glencore said 78 percent of its proposed share issue was underwritten by Citi and Morgan Stanley, while its senior management have committed to take up the remaining 22 percent.

“It could be a rights issue, a placement or other forms of potential equity raising. Post discussion with our shareholders, we will have a structure that makes sense and it will be priced accordingly,” Chief Financial Officer Steve Kalmin told Reuters.

Glencore also said it had suspended dividends until further notice. It would not pay a final dividend for 2015, which would save about $1.6 billion, while around $800 million would be saved from the suspension of the 2016 interim dividend.

The company said it expected to raise about $2 billion from the sale of assets – including minority stakes in its agriculture business – and to save some $500 million to $1 billion from further cuts in capital spending by the end of 2016. It expects to reduce working capital by an additional $1.5 billion by the end of next June.

Glencore will also suspend some African copper production operations at its Katanga Mining unit in Democratic Republic of Congo and Mopani Copper Mines in Zambia for 18 months, removing 400,000 tonnes of cathode product from the market. Glasenberg said this move should have an effect on copper prices.

The company stuck to its forecast for the trading division to make an operating profit (EBIT) this year of $2.5 billion to $2.6 billion, adding: “(we) remain confident of our long-term guidance range of $2.7 billion to $3.7 billion”.

But there were calls for Glencore to reveal more of the workings of its powerful trading arm. It does not say how much trading profit comes from arbitrage, supply chain activities or directional bets and only discloses volumes marketed and overall profits, said Morningstar analyst David Wang.

“As such, we can’t distinguish what portion of the profits of the division are correlated with prices or the activities that should be less correlated with commodity prices,” he added.

(Additional reporting by Pratima Desai, Atul Prakash, Carolyn Cohn and Tom Bergin in London; Writing by Olivia Kumwenda-Mtambo and Tom Pfeiffer; Editing by Gareth Jones)

Article source:

Tesco sells South Korean arm to private equity group for $6.1 billion

LONDON/SEOUL Tesco is selling its South Korean arm to a group led by private equity firm MBK Partners for $6.1 billion, it said on Monday, as the British supermarket retreats from foreign markets to focus on reviving its troubled domestic business.

The sale of Homeplus, its largest overseas asset, represents the first large divestment by Tesco boss Dave Lewis, who wants to slash debt and rid the firm of its junk credit rating after its profits were battered by market share losses to discounters Aldi and Lidl in Britain and by an accounting scandal.

It follows Tesco’s costly exits from Japan and the United States, as well as a reduction of its exposure to China, under previous management and highlights the difficulty Western retailers have had away from their home markets.

Tesco has agreed to sell Homeplus to investors led by MBK and including the Canada Pension Plan Investment Board, Public Sector Pension Investment Board and Temasek Holdings.

“This sale realizes material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet,” said Lewis, a former Unilever executive who was hired last September to lead Tesco’s turnaround.

Under the terms of the largest-ever private equity transaction in Asia, Tesco will receive 4 billion pounds ($6.1 billion) in cash. After adjustments for tax and transaction costs, the net cash proceeds, to be received in a combination of U.S. dollars and Korean won, will be around 3.35 billion pounds.

Tesco said the Homeplus disposal would reduce its total indebtedness, which stood at 21.7 billion pounds as of end-February 2015, by 4.225 billion pounds.

However, the deal will remove a business that contributed around 150 million pounds to annual earnings.

“(The) price looks OK,” said one major Tesco shareholder.

“I suspect that despite the earnings dilution the market will take a positive view of the deal as it strengthens the balance sheet.”


Shares in Tesco, down 19 percent over the last year, slipped 0.3 percent by 0951 GMT after an initial rise of up to 2 percent.

Tesco will use the proceeds to redeem upcoming bond and commercial paper maturities over the next 18 months. It will also consider the purchase of some UK leasehold stores.

The sale comes after the 96-year-old group announced in April one of the biggest losses in British corporate history, hit by a 7 billion pounds write-down.

Bernstein analyst Bruno Monteyne, a former senior Tesco supply chain executive, said the deal should allay fears the firm will need to ask shareholders for cash to secure its balance sheet.

He said it would only have a small impact on the net debt to core earnings ratio, moving it from 6.2 times to 6.0 times for the 2015-16 financial year.

But he said it would enable Tesco to get below the 4.5 times ratio needed by ratings agency Moody’s for an investment grade credit rating in 2017-18.

Completion of the disposal, which requires the approval of Tesco shareholders and regulators, is expected during the fourth quarter of 2015.

Lewis will now turn his attention to the sale of Tesco’s customer data business Dunnhumby, which he put on the block in January.

Reuters had previously reported that MBK was the preferred bidder for Homeplus, which has 140 hypermarkets, 375 supermarkets and 327 convenience stores.

The MBK consortium said it planned to invest 1 trillion Korean won ($831 million) in Homeplus over the next two years to boost its competitiveness.

HSBC Bank acted as Tesco’s lead financial adviser and Barclays Bank as financial adviser and sponsor. Deutsche and CitiGroup advised MBK.

(Additional reporting by Elzio Barreto, Denny Thomas and Kate Holton; Editing by Keith Weir and Mark Potter)

Article source:

Lufthansa cancels dozens of long-haul flights due to strike Tuesday

BERLIN Lufthansa canceled just under half of its long-haul flights planned for Tuesday after pilots’ union Vereinigung Cockpit (VC) called an all-day strike in a long-running dispute over pay, retirement benefits and cost cuts.

The union said on Monday the strike, the 13th walkout in 18 months, would affect long-haul passenger flights and cargo flights out of Germany from 0600 GMT to 2159 GMT on Tuesday.

However, Lufthansa said it would operate 90 out of about 170 planned long-haul flights for Tuesday and all seven cargo flights thanks to pilots volunteering to work.

Lufthansa is trying to cut costs as it battles to maintain market share against budget rivals such as Ryanair.

Relations between the union, which represents around 5,000 Lufthansa and Germanwings pilots, and management broke down again last week. The union has offered concessions, including increasing the average retirement age to 60 and looking at ways to bring costs down to a level comparable with easyJet.

“With our offer, we made it clear that the pilots are not against the necessary adjustments,” VC spokesman Markus Wahl said on Monday.

As a precondition for talks, VC wants Lufthansa to halt the process of employing staff on non-German contracts for the expansion of its budget Eurowings division, which has an Austrian operating license.

In an interview with Reuters on Friday, Lufthansa Chief Executive Carsten Spohr said over 1,000 pilots from within the group and outside had applied for jobs at Eurowings.

“To create an airline’s operating certificate in another country is something the other low-cost carriers do and we copied that model for our low-cost operation,” he said.

Spohr’s hard line with the pilots is reminiscent of peer Willie Walsh’s stance with crew at British Airways and Iberia, with the cost cuts achieved helping parent group IAG to report stronger profits than Lufthansa or Air France-KLM.

However, analysts point out Walsh was negotiating during the financial crisis and when oil prices were high, whereas Spohr has a tougher job, given the backdrop of low oil prices and rising passenger numbers.

IAG is this year aiming for operating profit in excess of 2.2 billion euros ($2.3 billion), while Spohr said on Friday Lufthansa would “comfortably” achieve its target for adjusted earnings before interest and tax of over 1.5 billion euros this year. That target does not include the impact of strikes, which have cost Lufthansa around 100 million euros this year already.

DZ Bank analyst Dirk Schlamp said the costs of Tuesday’s strike could be under 10 million euros but that it was difficult to predict.

Lufthansa said on Monday it had offered talks over the weekend. VC said the offer provided no basis for talks.

(Additional reporting by Peter Maushagen and Ludwig Burger; Editing by Thomas Atkins and Mark Potter)

Article source:

Exclusive: Apple ups hiring, but faces obstacles to making phones smarter

Apple has ramped up its hiring of artificial intelligence experts, recruiting from PhD programs, posting dozens of job listings and greatly increasing the size of its AI staff, a review of hiring sites suggests and numerous sources confirm.

The goal is to challenge Google in an area the Internet search giant has long dominated: smartphone features that give users what they want before they ask.

As part of its push, the company is currently trying to hire at least 86 more employees with expertise in the branch of artificial intelligence known as machine learning, according to a recent analysis of Apple job postings. The company has also stepped up its courtship of machine-learning PhD’s, joining Google, Amazon, Facebook and others in a fierce contest, leading academics say.

But some experts say the iPhone maker’s strict stance on privacy is likely to undermine its ability to compete in the rapidly progressing field.

Machine learning, which helps devices infer from experience what users are likely to want next, relies on crunching vast troves of data to provide unprompted services, such as the scores for a favorite sports team or reminders of when to leave for an appointment based on traffic.

The larger the universe of users providing data about their habits, the better predictions can be about what an individual might want. But Apple analyzes its users’ behavior under self-imposed constraints to better protect their data from outsiders.

That means Apple largely relies on analyzing the data on each user’s iPhone rather than sending it to the cloud, where it can be studied alongside information from millions of others.

“They want to make a phone that responds to you very quickly without knowledge of the rest of the world,” said Joseph Gonzalez, co-founder of Dato, a machine learning startup. “It’s harder to do that.”


The Cupertino-based tech titan’s strategy will come into clearer focus on Sept. 9, when it is expected to reveal its new iPhones and latest mobile operating system, iOS 9. Apple has promised the release will include a variety of intelligent reminders, which analysts expect will rival the offerings from Google’s Android.

While Apple helped pioneer mobile intelligence -it’s Siri introduced the concept of a digital assistant to consumers in 2011 – the company has since lost ground to Google and Microsoft, whose digital assistants have become more adept at learning about users and helping them with their daily routines.

As users increasingly demand phones that understand them and tailor services accordingly, Apple cannot afford to let the gap persist, experts say. The iPhone generated almost two-thirds of Apple’s revenue in the most recent quarter, so even a small advantage for Android poses a threat.

“What seemed like science fiction only four years ago has become an expectation,” said venture capitalist Gary Morgenthaler, who was one of the original investors in Siri before it was acquired by Apple in 2010.


While Apple got off to a slow start on hiring for machine learning jobs, it is closing in on its competitors, said Oren Etzioni, who is CEO of the Allen Institute for Artificial Intelligence and a professor at the University of Washington.

“In the past, Apple has not been at the vanguard of machine learning and cutting edge artificial intelligence work, but that is rapidly changing,” he said. “They are after the best and the brightest, just like everybody else.”

Acquisitions of startups such as podcasting app Swell, social media analytics firm Topsy and personal assistant app Cue have also expanded Apple’s pool of experts in the field.

Apple does not reveal the number of people working on its machine learning efforts.

But one former Apple employee in the area, who asked not to be named to protect professional relationships, estimated the number of machine learning experts had tripled or quadrupled in the past few years.

Many of the currently posted positions are slated for software efforts, from building on Siri’s smarts to the burgeoning search features in iOS. The company is also hiring machine learning experts for divisions such as product marketing and retail, suggesting a broad-based effort to capitalize on data.

Apple’s hiring mirrors a larger hunt in Silicon Valley for people who can help companies make sense of their huge stashes of data, said Ali Behnam, managing partner of Riviera Partners, an executive search firm. Data scientists are the most sought-after experts in the market, he noted.

Asked for comment about Apple’s strategy, a company spokeswoman pointed to statements from Craig Federighi, senior vice president of Software Engineering, who described the release at a developers’ conference in June as “adding intelligence throughout the user experience in a way that enhances how you use your device but without compromising your privacy, things like improving the apps that you use most.”

But Google and others have an edge in spotting larger trends, meaning Apple’s predictions may not be as good, said Gonzalez, echoing a commonly held view among machine learning experts.

What’s more, there are some features for which Apple has yet to find an answer, such as Now on Tap, which Google will release this fall. When users press the home button, Google will scan their screens to deliver helpful information – a user reading about an upcoming movie, for example, might receive reviews or a list of showtimes. It would be difficult to deliver such services without sending data to the cloud, experts say.


Some techniques Apple and Google are investing in – such as deep learning, a hot field of machine learning that roughly simulates the human brain so that computers can spot patterns and classify information – require massive amounts of data that typically cannot be crunched on the device alone.

For machine learning experts at Apple, access to data complicates the work at every turn, former employees said. Siri enjoys some of Apple’s most liberal privacy policies, holding onto user information for up to six months. Other services, such as Apple Maps, retain information for as little as 15 minutes, the former employee said.

Machine learning experts who want unfettered access to data tend to shy away from jobs at Apple, former employees say.

But Apple is strengthening ties to academia to find the talent it will need, attending more industry conferences and discussing its use of tools emerging from university labs, academics say.

“They are gradually engaging a little more openly,” said Michael Franklin, who directs UC Berkeley’s Algorithms, Machines and People Lab, which Apple sponsors.

And some machine learning experts might be enticed by the challenge of matching Google’s smarts amid privacy constraints, suggested John Duchi, an assistant professor at Stanford University.

“New flavors of problems are exciting,” he said.

If Apple succeeds without compromising privacy, its Mountain View rival may face questions about its approach to analyzing users’ data.

“People might start to ask Google for more privacy,” Gonzalez said.

(Reporting by Julia Love; Editing by Steve Trousdale and Sue Horton)

Article source:

Toshiba posts net loss, plans restructuring to put scandal behind it

TOKYO Japan’s Toshiba Corp booked a net loss for the past financial year and pledged a bold restructuring, raising hopes it was finally moving beyond a $1.3 billion accounting scandal.

The submission of its books, twice postponed due to its accounting woes, helped to allay concerns among some investors that the laptops-to-nuclear power conglomerate risked a delisting if it had missed its latest filing deadline.

Shares in Toshiba rose 1.8 percent on Monday, but they are still down around 30 percent since its accounting issues were disclosed in early April. Analysts, however, said the company still had to tackle deep-rooted problems.

“Toshiba is still facing a number of daunting issues, such as what to do with its unprofitable PC and TV businesses,” said Hiroyasu Nishikawa, a senior analyst at IwaiCosmo Securities Co, adding that its accounting woes were set to drag on due to shareholder lawsuits.

For the past financial year, it reported a 37.8 billion yen ($318 million) net loss. It had at one time expected a 120 billion yen net profit before pulling that estimate in May when it announced the accounting probe was being expanded.

The weaker assessment included a more conservative estimate on the value of its investment in South Texas Project, a U.S. power plant project. The company, however, denied speculation that it would need to draw down deferred tax assets on Westinghouse, its U.S.-based nuclear business.

All in all, Toshiba said it had overstated profits going back to fiscal 2008/09 by 155 billion yen ($1.3 billion).

The accounting probe found in July that Toshiba suffered from dysfunctions in governance and a culture of discouraging employees from questioning their superiors, prompting previous CEO Hisao Tanaka and several other board members to step down.

The company’s new Chief Executive, Masashi Muromachi, promised on Monday to announce a restructuring plan for its semiconductor, PC and TV businesses by the year-end. He also said it was reconsidering plans by his predecessor, who stepped down amid the scandal in July, to grow the healthcare unit through acquisitions.

The company also announced on Monday that former Shiseido president Shinzo Maeda would be the head of a revamped 11-member board, the majority of which are external directors, pending approval at an extraordinary shareholders’ meeting on Sept. 30.

The accounting scandal is Japan’s biggest since 2011 when camera and medical device maker Olympus Corp was found to have been involved in a $1.7 billion scheme to conceal two decades of investment losses.

(Additional reporting by Chang-Ran Kim and Yoshiyuki Osada; Editing by Edwina Gibbs and Muralikumar Anantharaman)

Article source:

BlackRock sees new opportunity in China real estate

HONG KONG BlackRock Inc is ready to increase its China real estate portfolio exposure as it sees good entry points following the weakness in the nation’s economy and credit environment, a senior executive of the U.S. money manager said on Monday.

John Saunders, Head of Asia-Pacific Real Estate at BlackRock, told Reuters the fund would target mass-affluent shopping malls and grade “A” and “B” offices in China’s first- tier and selective second-tier cities for investments.

“We see the current malaise as a good entry point that we believe will throw up some good opportunities,” Saunders said in an interview at his office in Hong Kong’s central business district.

New York-based BlackRock, the world’s biggest asset manager, oversees about $8 billion in property investments in Asia.

“For a period in time we didn’t do a lot in China, because the pricing didn’t seem conducive for us to make returns, whilst underwriting reasonable levels of growth. Now that picture has changed and China has become our key market for sure. It has been softening for the past 18 to 24 months,” Saunders added.

Yields in Chinese retail real estate investment markets have compressed to around 6 percent in the first half of this year due to expensive land cost and excess supply, according to property consultancy Colliers. They were about 9 percent a decade ago.

But yields are holding up relatively well for them even as capital values have weakened, Saunders said. BlackRock said it owns a shopping mall in the southwestern city of Chengdu.

Saunders, who joined from Singapore-based property investment firm MGPA when it was acquired by BlackRock in 2013, also saw opportunities in distressed residential projects in the mainland.

China, the world’s second largest economy, is forecast to grow at its slowest pace in 25 years hurt by soft demand, over-capacity and falling investment. It has been further buffeted by a recent stock market slide and surprise yuan devaluation.

Currency depreciation, in fact, can make real estate investment favorable, if a firm hedges its currency exposure early, he said.

“When a currency depreciates, hard assets tend to appreciate, because people take flight from paper currency deprecation into hard asset.”

Other than China, Saunders said he is also upbeat on Japan, and Australia in the near term, adding that Hong Kong appeared “pricey”.

(Reporting by Clare Jim and Denny Thomas; Editing by Anne Marie Roantree and Muralikumar Anantharaman)

Article source:

ESM’s Regling says confident IMF will participate in Greek program

LJUBLJANA The head of the European Stability Mechanism (ESM) Klaus Regling said he was confident the International Monetary Fund would participate in the third aid program to Greece.

The IMF has yet to make clear if it will participate in the new bailout, having argued in favor of a partial writedown of Greece’s debt burden which it considers unsustainable in its current form.

“It has not been defined to what extent the IMF will contribute but I’m confident that they will participate later this year,” Regling, boss of the euro zone’s permanent bailout fund, told a conference in Ljubljana.

In the first two programs, which lasted from 2010 until the end of June, the IMF loaned 31.8 billion euros to Greece out of the total joint value of the two programs of 226.5 billion euros.

Regling said that although the share of IMF in help to Greece is declining the IMF “will never get out completely” of helping EU states because EU states are its members.

He also pointed out that the IMF extended more help to EU states in the past five years than to all other world countries combined.

Regling said that he was confident that monetary union in the euro zone could work well without full fiscal union.

“I don’t think we need to go a lot further for a good functioning of the euro zone area,” he said.

(Reporting By Marja Novak; Editing by Toby Chopra)

Article source: