August 9, 2017    4 minute read

SoftBank into Ride-Sharing, Aluminium Price up and Trade Figures Falter

Your Breakfast Briefing    August 9, 2017    4 minute read

SoftBank into Ride-Sharing, Aluminium Price up and Trade Figures Falter

SoftBank into US Ride-Sharing

The founder of the Japanese technology giant is considering investing in the US ride-sharing market and is looking at both Uber and Lyft.

Editor’s Remarks: SoftbBank already has significant investments in emerging market ride-sharing platforms, but now it is looking at the US. Masayoshi Son, the SoftBank founder, grabbed headlines in December by promising Donald Trump that he would invest $50bn in the US over the next four years, but the real story here is SoftBank’s increasingly deep investments in global ride-sharing. SoftBank is a significant shareholder in China’s Didi Chuxing, which pushed Uber out of China, and has holdings in India’s Ola, Brazil’s 99 and SE Asia-focused Grab. Didi, in turn, is already a Lyft shareholder and it has partnered with Softbank to invest in Ola. Uber’s management has been in turmoil in recent months, while Lyft has been gaining market share and collaborating with car manufacturers in autonomous car tech development. Masayoshi Son will have an interesting choice to make as to where he parks his cash.

China and Germany Trade Figures Disappoint

Poor data has increased worries that global growth is flagging into the second half of 2017.

Editor’s Remarks: China posted July export growth of 7.2%, down from May’s 11.3% and well below forecasts of 11%, and import growth of 11%, lower than last month’s 17.2% and forecasts of 16%. This was the slowest trade month since March and export growth to the US fell ten percentage points to 8.9% while those to the EU fell five percentage points to 10.1%. Germany’s June trade figures showed exports slowing 2.8% and imports down 4.5% compared to forecasts of drops of only 0.2% and 0.3%. Global growth estimates have been upgraded over recent weeks on strong first half data out of China and Europe and both the US and European Central Banks have been looking at monetary tightening in the face of improved growth. But this might reverse if the latest China and Germany readings continue.

Aluminium Price Hits Two and a Half-Year High

The commodity has climbed to above $2000 per tonne as China closes capacity compared to previous prices below $1500 in 2016.

Editor’s Remarks: China accounts for over 60% of global aluminium supply, but its smelting industry has been plagued by overcapacity, inefficient energy usage and pollution. The Chinese government has been suspending licences for new capacity and the government of Shandong Province, one of the largest aluminium producing areas in China, has now announced that it has ordered the closure of over three million tonnes of illegal smelting capacity. This is significant as it represents approximately 9% of China’s total production in 2017. China Hongqiao Group, the largest producer, has already said that it will cut two million tonnes of capacity and shares in aluminium producers Chalco and Yunnan Aluminium have risen around 50% year-to-date on the anticipation of tighter supplies of the metal.

UK’s EU Contribution Not So High

A major argument by the Brexit Leave campaign was that the UK is sending £350m per week to the EU.

Editor’s Remarks: The UK Treasury has released figures showing that net contributions to the EU budget by the UK for the 12 months to March 2017 were £8.1bn, equal to approximately £156m a week. The figures show that the UK’s gross contribution to the EU was £16.9bn, but after the deduction of its rebate of £4.1bn and EU payments to the UK public sector, the contribution has fallen to its lowest level in over five years. As autumn approaches, the UK’s political debate over the financial implications of Brexit is going to get more heated, and we have already seen the beginning of this with the floating of a final Brexit bill figure of £37bn to be paid to the EU. Theresa May’s minority government has a number of Brexit bills to get through parliament and “remainers” will have some more figures to fight back with.

Marriot Hotels to Tap Chinese Tourists

The US hotel group is entering a joint venture with Chinese tech behemoth Alibaba for worldwide hotel bookings.

Editor’s Remarks: Chinese outbound tourists are set to take over 700 million overseas trips in the next five years, and Marriott Group wants a chunk of that business. The group owns 30 worldwide hotel brands including JW Marriott, Ritz-Carlton and Renaissance, and its new JV with Alibaba will allow Chinese travellers to book rooms, access Marriott’s rewards programme and get cut-price deals through Alibaba’s travel service platform Fliggy. Tourists will also be able to pay for hotel rooms through Alipay, the Chinese e-commerce company’s online payments platform. Marriott already has close to 300 hotels in China, with another 300 planned, but this JV will allow the group to grab a larger share of the outbound market as well as China’s online travel business which is estimated to be as large as $90bn per year.

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