Big Trump card could hit Indian IT, pharma! Five takeaways from presser
The Economic Times
The first presser of US President-elect Donald Trump could put IT and pharma stocks in a tight spot when the domestic market opens for trading on Thursday. Dow Jones, which was trading near the 20,000 mark ahead of the press conference, quickly pared gains towards the end of the session. However, SGX Nifty was trading with a slight positive bias at the time of writing of this report.
Need for competitive drug pricing: Trump said pharmaceutical companies were "getting away with murder" in drug pricing and promised that it would all be changed. He emphasised bringing back drug industries to the US. “We are the largest buyer of drugs in the world, and yet, we do not bid properly,” he said. Trump said US firms were going to start bidding and going to save billions of dollars over time.
Replacement of Obamacare: Commenting on the Obamacare, Trump said he would repeal and replace Obamacare shortly after price approved, which could impact pharma companies. He vowed to make healthcare less expensive and far better. “Replacement of Obamacare will in some way impact Indian pharma sector,” Ajay Dua, former DIPP secretary, said in an interview with ETNow. He said anybody doing business with the US needs to be guarded against Trump's policies
Outsourcing: The much-awaited news for Indian investors was Trump’s view on outsourcing. The word is now out that outsourcing of jobs by US firms is not going happen anymore. Earlier in the month, US Congressmen had reintroduced a bill that tried to up the ante on H1B visas. The bill seeks to raise the H1B salary benchmark from $60,000 to a minimum of $100,000 to be able to work in America, which would hit the Indian IT industry and a lot of non-IT workers. Nasscom president was quick to react on Trump’s statement, saying: “Trump’s policies may not be all bad for Indian IT firms doing biz in the US.” He said India needs to communicate how much business the IT companies bring to the US economy.
Border Tax: The US President-elect said he would like to be known as the greatest job creator that the god ever created. One such measure in that direction would be to impose border tax to discourage companies from moving their factories outside the US. Trump praised Fiat Chrysler and thanked Ford Motor for building plants in the US. Earlier this week, Fiat Chrysler announced plans to invest in US plants and create jobs, while Ford said it would expand in Michigan rather than build a plant in Mexico. “I appreciate that from Ford. I appreciate it very much from Fiat Chrysler. I hope General Motors will be following suit,” Trump said.
Avoid conflict of interest: Trump said he would hand over control of Trump Organisation to his two eldest sons, but will not fully divest or create a blind trust, as the Office of Government Ethics and former White House ethics lawyers have called for him to do.
BHIM app: 'A technology ecosystem for the poor'
The Economic Times
IT is hard to gauge BHIM’s identity as a consumer app without understanding the Unified Payment Interface (UPI) platform that powers it. The UPI concept itself was made possible by the National Payments Corporation of India (NPCI), an umbrella organisation set up in 2006 at the behest of the Reserve Bank of India for all retail payment systems of the land. It is singularly responsible for paving the way for tech startups to work with commercial banks on one hand and serve customers like you and me on the other. UPI needed all banks to become interoperable with the UPI technology (between February and June 2016), which is no mean task. NPCI took two extra months to ensure as many banks as possible were on board a compact system. UPI is how apps like PhonePe — built in less than a year — help make the inter-banking experience as simple as email for customers. It is a living and breathing platform that enables immediate payments. And it was a wake-up call for banks to get their technology act together. Bharat Interface for Money (or BHIM) is another of UPI’s progeny and applications. The buzz in the tech sphere is that it is the shape of things to come — read, technology and micro-lending. If BHIM has had something other apps don’t, it is Prime Minister Narendra Modi’s voluntary endorsement. This counts for a lot in a land where banking access is abysmally low and faith in technology stillborn for more than 500 million people. Unsurprisingly, Modi’s endorsement helped BHIM achieve the same number of downloads in 10 days that a slicker PhonePe app clocked in five months. But here’s the thing: PhonePe is a standalone business and business enabler for parent company Flipkart. Paytm is a red-blooded digital wallet business. What’s the Prime Minister doing evangelising an app, especially a basic app and “balancing wheel” for starters? He is helping spawn a technology ecosystem for the poor.
Top level exits plague Apple in India
The Economic Times
Eight senior managers at the local operations of Apple have resigned in the past two months. Industry executives cited dissatisfaction among some employees, with new country head Sanjay Kaul giving more emphasis on recruiting talent from consulting background and huge pressure on sales target, for the series of rare exits at the managerial level of the iPhone maker. Among the exits, two executives were in the select group of Apple’s country leadership for the Indian market. V Anandkumar was the head of sales planning and support, while Vickram Bedi was heading sales with focus on consumers, small and medium businesses, corporate resellers and distribution. Anandkumar has taken an early retirement, while Bedi is serving notice period, two senior industry executives said. Two national business managers, Pavan Kareti and Samidha Gupta, have also quit. Kareti used to manage all the franchisee partners for Apple Premium Resellers, which is a global initiative wherein select Apple exclusive stores are designed and operated as per global parameters and benchmarks. Gupta was responsible for accessories and the Apple TV business. Others who have put in their papers include Vineet Kumar, who was account manager for monobrand retail that includes the franchise-led Apple exclusive stores, and Raja Basu, who was heading sales for South and North. Rajesh Marwaha, the head of mentor training that involves training sales staff at the store level, and Aparna Sareen who led new store development and marketing programmes for the Apple exclusive brand stores, have also quit. The industry executives said some six more people at the mid-management level had resigned and several others were looking for a change. “Apple is one of the good pay masters in the Indian consumer electronics sector. While some more senior executives are on the lookout, the problem they are facing is matching salary levels, more so now when the market itself is down,” one of them added. Apple India didn’t respond until press time Wednesday to an email seeking comment.
Swiss chemicals maker Clariant may buy Mumbai’s Galaxy Surfactants
Swiss speciality chemicals maker Clariant AG is in advanced talks to acquire Mumbai-based chemical manufacturer Galaxy Surfactants Ltd, two people aware of the development said. The deal is potentially worth Rs1,300-1,500 crore, the two said on condition of anonymity. Galaxy had hired Mumbai-based investment bank Avendus Capital to find a buyer, one of the two people said. Galaxy supplies a wide range of speciality chemicals including surfactants (compounds that go into detergents, wetting and foaming agents, and emulsifiers), preservatives and coating additives. Its customers include personal care and home care products makers such as Colgate-Palmolive Co., Unilever Plc., and Reckitt Benckiser Group Plc . Established in 1980 as Galaxy Chemicals, it has presence in Latin America, Europe, North America, Africa and the Middle East.
Axiom Asia to invest up to 15% of new $1 billion fund in India
Singapore-based private equity firm Axiom Asia Private Capital plans to invest up to 15% of its new $1.03 billion fund in India, a top executive said. The fund—Axiom Asia IV, its fourth private equity fund of funds—recently marked its final close, against a target of $750 million. It seeks to invest in buyout, venture capital (VC), growth capital and other private equity funds. Axiom Asia has invested in India in all of its last three funds and will invest up to 15% of the new fund in the country, said Chris Loh, managing partner of Axiom Asia. The firm is looking for suitable investment opportunities, said Loh, who also focuses on VC investments in Asia and PE investments in India at Axiom Asia. “We have turned bullish on India since 2011... The number of Internet and mobile Internet users is rapidly rising. This creates the potential for high-tech start-ups to create products and services that meet their needs. It is a new angle that was never there in the past. The quality of entrepreneurs has risen in tandem with this trend. The conditions may be right for venture to create very large investment outcomes,” Loh said. Founded in 2006 as an independent fund management firm, the Asia-focused fund of funds is led by Chris Loh, Alex Lee, Marc Lau and Edmond Ng. It has offices in Singapore and Hong Kong.
Aggressive EaseMyTrip flies into top league
When Nishant and Rikant used to book flight tickets for their father’s frequent business trips a decade back, little did the Pitti brothers know that they would start a business with annual revenues of several hundred crores. EaseMyTrip, their online travel company, has projected revenues of Rs 2,500 crore by the end of this financial year (2016-17). Founded in 2008, it could well occupy the third or fourth position in the sector dominated by MakeMyTrip and partner ibibo. Last financial year (2015-16), the company — founded by Nishant, Rikant and Prashant — clocked a revenue of Rs 855 crore. With a growing hotel and travel business, they set a revenue target of Rs 1,400 crore for FY17. “But we have already crossed Rs 2,000 crore,” said Prashant Pitti, the eldest of the three and a director in the company. He said the company is set to get more than expected revenues, thanks to higher than expected growth in flights and hotels business. Flight transactions also got a major boost since October last year, when EaseMyTrip started powering flight transactions at e-commerce major Paytm. The company is entirely owned by the three brothers. “There is no fourth owner in EaseMyTrip,” said Prashant, an IIT alumnus who quit his job with HSBC in the US to join his two younger brothers to set up what was primary a B2B travel company. Small travel agents in the company were made partners and EaseMyTrip gave them a one-stop platform to book air tickets for their clients. These agents earlier used to have multiple accounts with different airlines, blocking capital. Pitty brothers shared a part of the commission earned from airlines with agents. With a business of Rs 33 crore in the first year, the brothers approached more than a dozen investors with their growth plans. “We were told that we are a late entrant. No investor was ready to bet on us,” said Prashant. Companies such as MakeMyTrip and Yatra were already in the online travel space. But EaseMyTrip continued to grow. Nishant said the company was run frugally, managing to earn margins of approximately seven% as profits. None of the top companies in this space are making profits. EaseMyTrip, with close to 300 employees, operates from a building in East Delhi’s Patparganj Industrial Area. The brothers bought the building to save the recurring cost of rent. Unlike leading online travel brands, EaseMyTrip has not yet spent significantly on national-level marketing activities. “We did not spend a single penny to acquire customers. Our USP was that we have never charged a convenience fee on flights and therefore our business grew by word of mouth,” said Nishant. About 80% of the company’s business comes from air tickets. The B2B business has grown but its contribution to the revenue has shrunk. During the first half of this financial year, only 30% revenue came from B2B.
Withdraw tricolour doormats or face visa ban: Sushma Swaraj to Amazon
India’s external affairs minister Sushma Swaraj has threatened Amazon that the country will not issue visa to company officials if it does not stop selling doormats sporting the Indian tricolour on its platform in Canada. The late evening tweetstorm on Wednesday by Swaraj came after a Twitter user sought action against Amazon for selling the doormats online. “Amazon must tender unconditional apology. They must withdraw all products insulting our national flag immediately,” the External Affairs minister said in her tweet. “If this is not done forthwith, we will not grant Indian Visa to any Amazon official. We will also rescind the Visas issued earlier.” An Amazon spokesperson said the company would revert on the issue soon. The Twitter outrage that sparked Swaraj to go on the offensive against Amazon, caught on as a trend on the microblogging platform asking Indians to boycott the e-commerce platform and its app. Amazon must tender unconditional apology. They must withdraw all products insulting our national flag immediately. /1— Sushma Swaraj (@SushmaSwaraj) January 11, 2017 Previously, Twitter users from India had been outraged by Amazon’s US website selling doormats with figures of Hindu gods on them, resulting in a similar movement to boycott the US retailer’s India service. Amazon responded by taking down the listings from its website. Indian High Commission in Canada : This is unacceptable. Please take this up with Amazon at the highest level.— Sushma Swaraj (@SushmaSwaraj) January 11, 2017. The latest development could pose a setback for Amazon in India, which has written a $5 billion cheque to score over local leader Flipkart. Sachin Bansal, the co-founder of Flipkart last month had raised concerns of Amazon indulging in capital dumping to win the Indian market unfairly and urged the government to introduce policies curbing this. He had sought the government to adopt the China model of protecting local firms of taking foreign money but boycotting foreign companies to dominate the market. Amazon, like many other technology firms from the US, is expected to drive massive foreign direct investments in India as they look to sell their products and services to the country’s 1.3 billion people. Moreover, the government is wary of acting harshly against any large foreign technology investor as doing so could spook investors across the globe, a yardstick used by several of these firms for negotiating favourable deals.
Cyrus Mistry asks tribunal to block his removal from Tata Sons board
Cyrus Mistry, the ousted chairman of India’s Tata Sons, sought to block the company from removing him from its board in a petition filed with a national tribunal on Wednesday. Tata Sons has called an extraordinary general meeting on February 6 to remove Mistry from its board. The $100 billion conglomerate ousted Mistry as chairman in October, sparking a bitter public spat, but he remains a director. Tata Sons is the holding company of listed Tata group companies in a business empire ranging from Jaguar Land Rover and steel mills to aviation and salt pans. Mistry contested his removal from the board in the National Company Law Tribunal (NCLT), a quasi-judicial body that deals with corporate grievances in India. In a filing seen by Reuters, Mistry said that, by moving to remove him from the board, Tata Sons was violating an NCLT order asking both sides not to take any action until a preliminary ruling on Feb. 1. In the document, Mistry also seeks the imprisonment of his fellow Tata Sons board members, including interim Chairman Ratan Tata, over his allegation that they violated the tribunal’s order. Tata Sons denied being in contempt of the NCLT order and said it would give its response to the tribunal. Ratan Tata, patriarch of one of India’s most influential families, took over as interim chairman of Tata Sons after the ousting of Mistry, who had sought to shake up the firm’s management. While the board gave no detailed reason for the change of chairman, some media reports said there has been discontent with some of Mistry’s actions, including asset sales.
Is Virat Kohli signing up as brand ambassador for Puma?
Indian cricket captain Virat Kohli may tie up with sportswear brand Puma following the end of his three-year endorsement deal with rival Adidas. Kohli and Adidas parted ways amicably in November 2016 and highly placed sources say the cricketer has been on the lookout for a sportswear sponsorship since then. As things stand, Kohli has 16 brands in his endorsement portfolio, including bat sponsor MRF. A potential sportswear deal then with Kohli will include one which involves other parts of his kit, namely his shoes, pads and gloves. Even then, Kohli is unlikely to go below the Rs 10 crore a year that Adidas paid him for three years. A mail sent to Puma India elicited no response till the time of going to press. Kohli’s manager Bunty Sajdeh, who is chief executive officer of Cornerstone Sports and Entertainment, said the news was speculative and there was no truth in it. While Puma has had a brand endorser in cricketer Yuvraj Singh since November 2011, the last few months has not seen much activity from the two. Apart from wearing Puma shoes, pads and gloves, the brand features on Singh’s bat, considered the most prized asset in a sportswear deal. But the Puma sticker was missing from Singh's bat in India's warm-up match with England on Tuesday, increasing buzz of the two having parted ways. Up until last year, Puma paid Singh Rs 4 crore for having its sticker on his bat. This was the third-highest after Kohli and M S Dhoni, who were paid Rs 8 crore and Rs 6 crore for having stickers of MRF and Spartan respectively on their bats. Kohli and Dhoni are also among the top two endorsers in the cricketing world, charging Rs 2 crore and Rs 1.5 crore respectively per day as endorsement fees. While Kohli is amongst the biggest cricketing sensations at the moment, sportswear will not be the only gap that he will have to fill in his endorsement kitty. Sources in the know say Kohli's 18-month endorsement deal with Audi is up for renewal, implying that a four-wheeler slot is also open. And the big gap in smartphones was filled on Monday, with Kohli being appointed as brand ambassador of Gionee. Last month, Kohli also signed up with luggage major American Tourister, which will see him feature in campaigns not only in India, but also markets such as Bangladesh, Pakistan, Sri Lanka and West Asia from March this year.
Capital Float achieves 400% growth in Delhi-NCR in 2016
The Economic Times
Digital lending platform Capital Float has achieved a mammoth growth in Delhi-NCR in 2016. Buoyed by the support of over 1,000 SMBs which availed its online credit products as well as strategic partnerships with companies like Snapdeal and PayTM, the company delivered 400% growth - both in terms of the number of customers as well as the value of loans disbursed. "Our disbursal volumes and values have skyrocketed in Delhi-NCR in 2016," says co-founder and MD of Capital Float, Gaurav Hinduja. "Going forward, we expect 500% rise in disbursals for all our products, while increasing our customer base by 600%," he adds. Total loan disbursals of the company's products rose steeply, with Pay Later and Unsecured Business Loan being the top performing products. The company has also opened a new office in Karol Bagh, New Delhi. "Since our reach in this market has grown exponentially, we felt the need to open a new office with a strong team to better serve our customers," says Hinduja. According to the company, the SME lending market in India is worth $300 billion today and the digital finance segment constitutes 10% of it. The northern region - which includes the top four states showing tremendous growth rates, that is Delhi, Punjab, Rajasthan and Haryana - makes up about 35-38% of the total addressable market, which is worth about $10 billion, the company said in a statement. "The growing population in this region is fueling demand for various products and services which makes this market highly potential," says Hinduja. "We hope to build on this momentum in the coming year, not just in this market, but across India," he concludes.
Snapdeal brings ex-Housing CEO Jason Kothari on board as chief strategy and investment officer
The Economic Times
Online marketplace Snapdeal has appointed Housing.com's CEO Jason Kothari as its chief strategy and investment officer, said a company statement issued on Wednesday. Kothari will work alongside co-founders Kunal Bahl and Rohit Bansal in this key leadership role and will be joining Snapdeal on January 16, 2017. His responsibilities will include leading strategy, corporate development, including all investments and strategic partnerships, raising new capital for the company, and portfolio management, overseeing companies Snapdeal wholly owns or has invested in. Most recently, Kothari was CEO of SoftBank-backed online real estate company Housing.com, where he led the successful turnaround of the company from a position of distress to a market leader in one and a half years using organic and inorganic growth. Prior to joining Housing.com, Kothari was CEO and vice-chairman of character-based entertainment company Valiant Entertainment. He holds a Bachelor of Science degree from the University of Pennsylvania's The Wharton School and has also been an investor. "Jason is a strong business leader and entrepreneur who has already been the CEO of two successful companies. Rohit and I warmly welcome him to the Snapdeal family and believe we will achieve even greater heights with his addition," said Kunal Bahl, co-founder and CEO, Snapdeal. "I'm excited to join Kunal and Rohit at Snapdeal during a defining period in Indian e-commerce that will shape the future of the Indian internet space. Snapdeal is on its way to building one of India's best companies, and I look forward to helping in making that potential a reality," said Kothari on his appointment. In its journey till now, Snapdeal has partnered with several global marquee investors and individuals such as SoftBank, BlackRock, Temasek, Foxconn, Alibaba, eBay Inc., Premji Invest, Intel Capital, Bessemer Venture Partners, Ratan Tata, among others.
Hansel raises $1.35 million to power growth and expand overseas operations
Mobile application management platform, Hansel.io, has raised $1.35 million in a funding round led by IDG Ventures, the company said in a statement on Wednesday. Existing investor, Endiya Partners also participated in the round. The company will use the funds for team expansion, product development and growth in overseas markets. The firm had previously raised seed funding from Endiya Partners, Tracxn Labs, along with a group of angel investors. Hansel Software Pvt. Ltd. was started by former Flipkart employees, Varun Ramamurthy, Parminder Singh and Mudit Mathur in 2015; each having worked on product and mobile development roles. On 4 January, Mint published a story of how start-ups such as Flipkart, Snapdeal and Ola have fostered entrepreneurs in India. According to data from start-up and venture capital tracker Tracxn, former Flipkart’s employees have founded 177 start-ups so far. A platform that is available on both Android and iOS, Hansel.io allows mobile developers to fix bugs, update configurations, edit user interfaces, and manage security policies of mobile apps. “Despite the abundance of use cases the product provides for, for the developer it is a simple configure-and-deploy product, where companies can go live in less than 15 minutes. We have built the product to be as intuitive and effortless to use as possible,” said Singh in a statement. The company claims to manage a total installed base of 140 million, across clients such as fashion e-commerce Voonik, bus ticketing platform redBus, education mobile app Toppr, among others. As per the statement, Hansel.io platform has impacted more than 20 million devices by fixing a bug, change user interface and making app security fixes. “With this round of funding, the focus will be to go global, go cross-platform, and help mobile developers be as responsive to their end users as possible,” added Ramamurthy.
Fashion e-commerce firm Fynd targets southeast Asia amid expansion plans
Come April, fashion e-commerce platform Fynd is going on an expansion drive. It will start servicing some international markets in Southeast Asia from April and expand beyond clothing, footwear and accessories to kidswear, décor and furnishing. Fynd is run by Shopsense Technologies Pvt. Ltd, which counts Facebook Inc executive Anand Chandrasekaran, Arvind Sports chief executive Rajiv Mehta and Snapdeal founders Kunal Bahl and Rohit Bansal and Kae capital as investors. The company, which claims a pan-India presence, currently offers same or next day delivery in 11 cities and has tied up with about 250 brands for Fynd, its app-and webpage-based e-commerce platform. Earlier this month, Fynd also deployed an omni-channel in-store product called Fynd Store that allows customers to browse through all products of a particular brand on screens placed inside the brand’s physical outlet. In case a customer cannot find a product or a size at that outlet, it can be ordered from the nearest outlet and delivered to the customer via Fynd Store. And it is Fynd Store that the company plans to take to international markets from April onwards. “If you look at Middle East or Southeast Asia, they have very similar structures in terms of how retail organisations are—they’ll have a master franchisee and their own systems. We’ll start off with Southeast Asia first because delivery in-store infrastructure is much more well-developed there than in Middle East. Middle East also we’re talking to a couple of players,” said Harsh Shah, co-founder, Fynd. Founded by Farooq Adam and Sreeraman MG along with Shah, Fynd first began operations in India in 2012 as an in-store engagement provider and then branched out to an e-commerce platform and, more recently, into an omni-channel or online-to-offline retail firm. “This model would work in the international market, primarily in the areas where the customer is brand conscious and is clear that he wants a particular product—whether it be size or colour. Many times when customers shop and cannot find products in their size they settle for something which is one level lower in their liking hierarchy. Fynd is trying to solve this problem. Brand conscious customers and mid- to high-value retail products customers - these are the areas where this could work well,” said Sreedhar Prasad, partner, e-commerce and start-ups at KPMG in India. The company’s strategy for international markets is going to be the opposite of what it did in India—that is, it will first deploy its omni-channel Fynd Store product abroad before launching its e-commerce Fynd app. “In India we started first with e-commerce and then got into omni-channel and the reasoning was (that) with the retailer, sales is the Holy Grail. With e-commerce you can immediately show sales. With omni-channel you need to build it up, there’s the training in store and things like that. Internationally we’ll start with Fynd Store because we need to develop delivery infrastructure and then get onto Fynd app,” said Harsh. The company currently only retails fashion but plans to open up its Fynd Store product to all categories from March onwards in India. It claimed to have clocked gross sales of about Rs25 crore in 2016 and expects a three-fold growth in 2017 on the back of its expansion plan.
Paytm Wallet to transfer to payments bank, but m-wallets will keep working
Digital payments firm Paytm on Tuesday said its wallet business will soon be transferred to its payments bank but quashed social media rumours that the m-wallets will stop working after January 15. "There are some rumours circulating that you will not be able to use the Paytm Wallet after 15th January! Nothing could be farther from the truth. On the contrary, Paytm Wallet users will soon enjoy additional benefits through Paytm Payments Bank Account," Paytm said in a blog post. The hoax message claims that since Paytm is converting into a payments bank post January 15, users will not be able to transact with their Paytm wallet money, it said. The company noted that the Paytm Wallet will soon be transferred to the newly incorporated Paytm Payments Bank automatically but added that the m-wallets will work even after January 15. Stating that this is just a "transfer of ownership of wallet to a new company called Paytm Payments Bank Ltd", Paytm said customers will be given an option to open a separate bank account when the bank launches its services. Paytm further said: "You are not required to open an account with Paytm Payments Bank to use the wallet." "After the movement, we will be able to offer our customers a host of new services and features such as savings accounts where they will earn interest as well in addition to being able to avail all the current services," a Paytm spokesperson said. Also, login details, wallet balance and user experience will remain the same. In case users choose to discontinue their Paytm wallets, they can send an email to care@paytm.Com or log in to Paytm.Com/care to notify the choice of opting out and redeeming the balance by a one-time transfer to their own bank account. In case a user's wallet has been inactive for the last six months and has zero balance, it will not be transferred to the Paytm Payments Bank Wallet unless they specifically give consent for the same while logging into the app, web or by e-mail.
Amazon to Launch Credit Card for Prime Members
The Wall Street Journal
Amazon.com Inc. is trying to ring up more sales with a new credit card aimed at its most loyal customers. The online retailer is introducing a new card for Prime customers offering 5% back on all Amazon.com purchases. The card, issued by J.P. Morgan Chase & Co. and branded with the Visa Inc. logo, doesn’t have an annual fee or foreign-transaction fees.The card represents the latest in many offers that are increasingly popular with consumers because they provide cash or discounts on future purchases. “We are adding even more value to Prime by offering rewards on Amazon and everywhere else you shop,” Max Bardon, Amazon vice president said in a press release. Amazon doesn’t disclose how many customers are members of its Prime service, which typically costs $99 a year in exchange for free two-day shipping on eligible purchases, video streaming and other features. Amazon already offers a Chase-Visa rewards card. Existing cardholders who have Prime membership will be upgraded to the new card. In addition to the 5% cash back on Amazon.com purchases, cardholders will get 2% back at restaurants, gas stations and drugstores and 1% back on all other purchases. The Amazon rewards are deposited as points in a customer’s account and can be redeemed for Amazon items. Customers can also choose to receive a credit against items purchased. Chase and other issuers previously have offered as much as 10% cash back on Amazon.com purchases in limited promotions. Amazon said it is also eliminating foreign-transaction fees on its basic rewards card. Amazon also offers so-called store cards that can only be used on its products.
Facebook risks breaking its business model
Facebook has a tortured but financially advantageous relationship with the people and firms that keep it stocked with posts, photos and videos. They make Facebook an entertaining hangout. And it essentially keeps all the money. But that’s about to change. Facebook will start to test slotting commercials into the middle of videos that media and entertainment companies publish on the social network, tech news site Recode reported on Monday. And the company has agreed to let the video creators keep 55% of the money from those video ads, just as YouTube does. Facebook executives until now haven’t been wild about slotting in ads before or within videos. People will fixate on Facebook’s flip-flop, but the much, much bigger deal is the compensation change for the media and entertainment companies that helped Facebook become the place where the world spends a huge share of its leisure hours. And the shift could damage the best business model in technology. All those articles and cooking videos keep users hanging out on Facebook, and the company keeps all the money it makes from selling advertisements that fill in gaps between those posts and videos they paid nothing to publish. It may not be fair, but it has made for a wildly successful and profitable business. If Facebook is now willing to give 55% of ad dollars from those video ads, that means cracks are emerging in Facebook’s free ride with its army of content suppliers. (Facebook also has experimented with splitting ad dollars with semi-professional video stars who have attracted TV-sized audiences on YouTube.)
Samsung Heir Named as Bribery Suspect in Influence-Peddling Investigation
The Wall Street Journal
The third-generation heir of the Samsung conglomerate will be investigated as a bribery suspect by South Korean prosecutors, drawing the country’s biggest business group deeper into an unfolding political scandal that led to the president’s impeachment. Lee Jae-yong will be summoned for questioning Thursday morning as a suspect, a spokesman for the special prosecutors’ office said Wednesday. The special prosecutors’ office, which was created by the National Assembly after allegations last year of high-level corruption involving a longtime confidante of impeached President Park Geun-hye and the country’s biggest conglomerates, is looking into whether there was influence peddling occurring between government and business. Prosecutors have alleged that conglomerates like Samsung, Hyundai and LG donated millions of dollars to foundations controlled by Ms. Park’s friend, in exchange for political favors. In Samsung’s case, prosecutors have raised questions about whether the government-controlled National Pension Service, the world’s third-largest pension fund, helped Samsung win approval for a key merger of two affiliates in 2015 in exchange for donations. A Samsung spokeswoman declined to comment or make Mr. Lee available for comment.
The Wall Street Trader Behind SoftBank’s $100 Billion Fund
The Wall Street Journal
After SoftBank Group Corp. bought control of Sprint Corp. in 2013, the business went further downhill, losing ground to Verizon Communications Inc. and AT&T Inc. and running dangerously low on cash. Within SoftBank, executive Rajeev Misra was working to limit the damage. The former derivatives trader helped design a series of deals, pledging Sprint’s handset leases, network equipment and eventually some of its airwaves to raise billions of dollars in fresh debt and blunt fears the struggling wireless carrier was headed toward bankruptcy. Now, Mr. Misra is a top lieutenant to SoftBank chief Masayoshi Son for the entrepreneur’s next big thing: a $100 billion fund to invest in futuristic technologies like artificial intelligence, robotics and other “Jetsons”-like inventions. Mr. Misra, who built Deutsche Bank AG’s large credit-derivatives business in the last decade, is leading a crew of ex-bond traders and Wall Street salespeople helping Mr. Son raise and manage the SoftBank Vision Fund. Others include a trio of Deutsche and Goldman Sachs Group Inc. alums well-connected among Middle Eastern royals. Their knack for financial structuring and ties to ultrarich investors are key as the 59-year-old Mr. Son reinvents SoftBank as an incubator of next-generation technologies. The fund is set to launch in coming weeks with money from SoftBank itself, several Middle East sovereign-wealth funds, and Silicon Valley luminaries including Apple Inc.,Qualcomm Inc. and Oracle Corp.’s Larry Ellison, The Wall Street Journal has reported. Of course, the fund is Mr. Son’s show. He is its sole “key man”—a formal designation for a fund’s top decision maker—and has tapped some of his longstanding relationships in the technology world to fill its coffers. Mr. Son also has a record as a technology investor, albeit owing more to gut than careful study. He famously decided to invest in Chinese entrepreneur Jack Ma five minutes after meeting him. That $20 million investment was valued at $58 billion when Mr. Ma’s company, Alibaba Group Holding Ltd., went public in 2014. But his empire building has hit its limits. SoftBank carries more than $100 billion in debt and “can’t leverage too much anymore,” Mr. Son told VentureBeat in October. The Vision Fund gives him billions of dollars to expand further using other people’s money. Not that there aren’t practical challenges.
Can Revlon Regain Some of Its Lost Luster?
The Wall Street Journal
When Revlon Inc. said last spring it had tapped Colgate executive Fabian Garcia as its new chief executive, shares of the beauty giant plunged. Investors had been hoping the long-struggling New York firm would be sold off. For two decades, the company had a revolving door of CEOs who were unable to stem market-share declines. The last thing investors wanted was another one. The decision to go with Mr. Garcia rather than with a sale represents a big bet on Revlon’s revival by the company’s chairman and controlling shareholder, financier Ronald O. Perelman. In coming days, Mr. Garcia is set to lay out plans to revive the company, known for its brassy, sexy lipsticks and nail polishes. He plans to shake up Revlon’s management structure, bring development and manufacturing in-house and reverse a decision Revlon made three years ago to withdraw from China. “We used to be a company of firsts,” Mr. Garcia said in a recent interview. “We will become better at trend-setting. We must.” Revlon in September completed its $420 million purchase of Elizabeth Arden Inc. The deal rounds out Revlon’s portfolio—dominated by color cosmetics—with Arden’s fragrances and skin-care products. It also gives the company a more global scope. The newly combined company has annual sales of roughly $3 billion. It is managing a heavy debt load, having borrowed $2.6 billion to buy Elizabeth Arden and to refinance the two companies’ existing debt. Revlon plans to cut 350 jobs, roughly 5% of its workforce, by 2020. The company is making progress. Sales have risen for six straight quarters and are up 3.1% for the first nine months of 2016 on a pro forma basis, which assumes Revlon and Elizabeth Arden were combined for the entire period and adjusts for currency swings. But rivals have grown at a much faster clip in recent years, resulting in lost market share for Revlon across a range of products. The company’s U.S. market share fell from 2.2% in 2006 to 1.9% in 2015, the most recent year for which data is available, according to Euromonitor. Revlon shares dropped 9% after the March 2016 announcement that Mr. Garcia would take over as CEO, but the stock recovered that same day. Two months earlier, when Mr. Perelman disclosed in a regulatory filing that he may pursue “strategic alternatives” for Revlon—a phrase that often indicates a sale—the company’s share price jumped 9%. Through Monday’s close, Revlon shares are up 20% in the past 52 weeks.
Wal-Mart Plans New Round of Job Cuts
The Wall Street Journal
Wal-Mart Stores Inc. is preparing to cut nearly 1,000 corporate jobs before the end of the month, according to an executive familiar with the situation, as the world’s biggest retailer works to cut costs and shift its focus to e-commerce. It plans to eliminate the jobs before the end of its fiscal year on Jan. 31, the person said. The cuts will fall broadly but are expected to focus on Wal-Mart’s U.S. operations, including the human resources department, as well as the technology and e-commerce divisions. The plans mark one of Wal-Mart’s largest rounds of corporate job cuts as it works to preserve profits while making the company more efficient and responsive to fast-changing consumer behaviors. “We are always looking for ways to operate more efficiently and effectively,” said Wal-Mart spokesman Greg Hitt. “While we continually look at our corporate structure, we have not made any announcements.” Many of the cuts will affect Wal-Mart’s human resources department, a large team that some senior executives believe should be leaner or whose duties could be handled by outside consultants, say other people familiar with the plans. Wal-Mart’s chief information officer, Karenann Terrell, will leave the company on Feb. 24, Chief Executive Doug McMillon said in a memo to staff Tuesday. The company didn’t name a successor or Ms. Terrell’s future plans. In late 2015 Wal-Mart laid off hundreds of workers at its Bentonville, Ark., headquarters. In September, it cut about 7,000 back-office jobs in its stores, automating some tasks by adding cash recyclers that count money. “We need to manage expenses even better, which includes changing how we do work inside the company,” Mr. McMillon said during an investor presentation in October. Wal-Mart has predicted that per-share adjusted earnings in fiscal 2018 will be flat compared with fiscal 2017, then fall at the low end of its 2019 target of 5% to 10% growth. Other retailers have recently moved to slash jobs and close stores as they battle sluggish sales and try to save money to invest in their e-commerce efforts. Last week, Macy’s Inc. said it would close stores, cutting 10,000 jobs and streamlining operations. Wal-Mart closed more than 150 U.S. stores last January, then in October said new-store openings would slow, but hasn’t announced plans for another round of large-scale closures. In late 2015, Wal-Mart hired Jacqui Canney, an executive who had spent decades with Accenture Ltd., to lead its human-resources department. Some employees in the department have been told to find other jobs internally or externally by the end of the month, said one of the people familiar with the situation. Wal-Mart employees roughly 18,000 Bentonville-based staff. But the series of reductions show how the retailer is working to maintain profits at a time of change in the industry. Wal-Mart has spent heavily over the past two years to fend off Amazon.com Inc. and smaller, fast-growing discounters like Aldi. In the investor presentation last fall, executives said Wal-Mart would steer more of its $11 billion in annual budget toward boosting e-commerce sales, technology used in stores and on customer services. In September, Wal-Mart spent $3.3 billion to purchase Jet.com Inc., an unprofitable e-commerce startup. “We have a plan to win with customers and drive growth. We will be disciplined with our cost and capital as we do it,” said Mr. McMillon during the presentation.
Forget Ireland. Snapchat picks London as its international HQ
Snap, the company behind the app, has picked London as its international headquarters instead of more traditional destinations for major U.S. tech firms including Ireland and Luxembourg. The move is in keeping with Snap's identity: Its U.S. headquarters is located roughly 300 miles south of Silicon Valley in the colorful beach town of Venice, California. "The U.K. is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we've already begun to hire talent," said Claire Valoti, General Manager of Snap. Snap said its U.K. arm will book revenue from sales in the U.K. and other countries where it has no local entity or sales team. The startup has only a few offices outside the U.S.: Paris, Sydney, Toronto and Odessa, Ukraine. At 20%, the U.K. already has one of the lowest corporate tax rates in Europe. The government has hinted at cutting the rate even further in a bit to attract more businesses head of its departure from the European Union. Ireland, meanwhile, has a 12.5% corporate tax rate. The international headquarters of Apple, Google, Facebook, Twitter and LinkedIn are all located in the country. While the U.K. is on its way out of the EU, Ireland will remain a member of the bloc. A huge chunk of Snapchat's European audience is in the U.K. The company said that one fifth of its daily active users in Europe are in Britain, and so are many of its biggest advertisers. The company has more than 75 staffers in the U.K., up from just six this time last year. It plans to open an additional workspace near its offices in Soho in central London. Snapchat launched just over five years ago and is estimated to be worth between $20 billion and $25 billion. The company famously turned down a $3 billion buyout offer from Facebook in 2013 and has plans to go public.
David Plouffe joins Mark Zuckerberg's philanthropy project
David Plouffe, a former senior White House adviser and Barack Obama's 2008 campaign manager, is joining Zuckerberg's philanthropic project as head of policy and advocacy efforts. The organization is also bringing on Ken Mehlman, a former campaign manager for President George W. Bush, to head a newly created policy advisory board. The high-profile roles highlight the unique approach of the Chan Zuckerberg Initiative, founded by the Facebook CEO and his wife Dr. Priscilla Chan. Rather than simply cut a check to charities, the project aims to "build movements" and lobby government officials around its desired science and education initiatives. Plouffe most recently worked as a chief adviser and board member at Uber. He was hired by the ride-hailing company in 2014 to sell policymakers and the public on the benefits of the service. "I'm excited to work with David on this," Zuckerberg wrote in a Facebook post announcing the hire. "He has great experience building movements as part of companies like Uber and as campaign manager for Barack Obama's presidential campaign." Zuckerberg pledged in late 2015 to give away 99% of his Facebook shares, then valued at about $45 billion, to the philanthropic organization. The focus was said to be on personalized learning, curing diseases, connecting people and community building. Since then, the Chan Zuckerberg Initiative has pledged to invest $3 billion over the next decade to build tools with the lofty goal of curing all diseases. It has also invested smaller sums in Byju, an education startup based in India, and Andela, a startup that trains software developers in Africa. Plouffe, an informal adviser for Hillary Clinton's presidential campaign, made headlines after the election for admitting he'd been wrong about Donald Trump's ability to win. "Never been as wrong on anything on my life," Plouffe tweeted after results came in on election night. "I'm sorry everyone," he wrote in another tweet.
Didi Chuxing bets against Uber in Brazil
In a move that renews its rivalry with Uber, China's Didi Chuxing announced a "strategic investment" in Brazilian startup 99 on Thursday. Didi is lead investor in the funding round worth over $100 million. The move pits old foes Didi and Uber against each other in Brazil, a market that the U.S. app company has targeted for expansion. It's also the latest in a long line of investments that have created a tangled web of alliances in the ride hailing industry. Uber and Didi fought each other for years in China before Uber sold its business in the country to Didi in 2016. Uber became Didi's largest shareholder as part of the deal. Didi took a minority stake in Uber, too. Now the companies appear to be renewing their battle in Brazil. In a press release announcing the investment, the CEO of 99 praised Didi and appeared to take a swipe at global industry leader Uber. "99 is incredibly excited to partner with Didi, the world's largest and best ride-sharing platform," Peter Fernandez said. After retreating in China, Uber shifted its attention and resources to Latin America. The company has been operating in Brazil since 2014 and Sao Paulo is Uber's second-busiest city in the world after Mexico City. The investment in 99 is Didi's first major foray in Latin America. The Latin America triangle is just the latest oddity in Uber and Didi's complicated relationship. Before Didi bought Uber's Chinese operations, it struck up a strategic partnership with Lyft -- Uber's main competitor in the U.S.
Alibaba's 1 million American jobs promise isn't realistic
That is a vague and misleading promise. Ma is not going to build factories. He is not planning to set up Alibaba operations centers that would employ tech savvy Americans. And he is not touting a big investment in the U.S. In other words, Ma isn't promising what most experts and economists would define as job creation. He's talking about stimulating trade by helping one million small businesses sell American goods to consumers in China and Asia. To create one million jobs would require each of those businesses to hire one new worker. So far so good. But U.S. trade on Alibaba's Taobao and Tmall shopping sites is relatively small at the moment. More than 7,000 U.S. brands sold $15 billion worth of goods to Chinese consumers last year, according to Alibaba spokesperson Rico Ngai. (Alibaba did $17.8 billion in sales in 24 hours during its online shopping bonanza in November.) Ma has been pushing since 2015 to increase U.S. sales to China on Alibaba. But getting one million American brands onto its platforms would require a 142-fold increase in business. Realistically, what will likely happen is Mom and Pop stores will set up e-commerce stores on Alibaba as a side business to tap into the China market, says Ben Cavender, director with China Market Research Group. "I don't see a lot of job creation happening," Cavender said. While Ma did not present any concrete plans for job creation, his meeting with Trump was a good "lobby photo opp," says Duncan Clark, chairman of consultancy firm BDA China and author of "Alibaba: The House That Jack Ma Built". It could also be seen as a way to curry favor with U.S. regulators. The U.S. Trade Representative put Taobao back on its "notorious markets" list last month, citing an "unacceptably high" level of fake goods. Analysts say sophisticated, middle class Chinese consumers have a growing appetite for foreign goods that are more trustworthy than Asian products. Small U.S. companies that specialize in nutrition, supplements, and baby products should do well on Alibaba's platforms, said Cavender. Milk and milk formula products from Australia, New Zealand and Germany were extremely popular during Alibaba's Singles Day shopping blitz last November, said Clark. Ma's reported focus on America's Midwest "makes me think of opportunities for, say, Wisconsin dairy farmers," Clark said. But unless those farmers understand Chinese, they would have to hire a third party to help them set up shop on Taobao or Tmall. Alibaba could also open warehouses in the U.S. where companies could deliver their products, and Alibaba would take care of listing and shipping them to Asia. That would create a few jobs, but Alibaba warehouses are for the most part heavily automated logistics hubs.
Valeant to sell $2.1 billion in assets to pay down debt
The Economic Times
Valeant Pharmaceuticals International Inc agreed to sell about $2.1 billion in assets as the embattled Canadian drugmaker seeks to streamline its businesses and ease its debt burden. L'Oreal SA will pay Valeant $1.3 billion for three skincare brands, the Paris-based company on Tuesday said in a statement. Earlier in the day, Valeant agreed to sell its Dendreon Pharmaceuticals unit to closely held Chinese conglomerate Sanpower Group Co for about $820 million. The agreements mark a start to Valeant's efforts to pay down about $30 billion in debt. The LavalBSE 0.11 %, Quebec-based company has been embroiled in scandals about its high prices and accounting that led to legal and regulatory investigations along with declines in its share price. The three brands being sold to L'Oreal — CerAve, AcneFree and Ambi — have combined annual sales of about $168 million, the buyer said. The products will become part of L'Oreal's Active Cosmetics Division, which includes brands such as La Roche-Posay, Vichy and SkinCeuticals, it said. Skincare is the largest category in the cosmetics industry, accounting for more than one-third of the global market, according to data tracker MarketResearch.com. The Sanpower transaction gives the Chinese company control over Provenge, an immunotherapy treatment for prostate cancer that is the unit's only commercialised medicine. Valeant had talks to sell its Salix gastrointestinal drugs business to Takeda Pharmaceutical Co., although those discussions later broke down because of disagreements over the price, Bloomberg News reported last year, citing people familiar with the matter.
Regulators criticize Wall Street banks over $1.15 billion Uber loan
Federal regulators criticized several Wall Street banks over the handling of a $1.15 billion loan they helped arrange for Uber Technologies Inc this past summer, according to people with knowledge of the matter. Led by Morgan Stanley, the banks helped the ride-sharing network tap the leveraged loan market in July for the first time, persuading institutional investors to focus on its lofty valuation and established markets rather than its losses in countries such as China and India. The Federal Reserve and the Office of the Comptroller of the Currency (OCC), which are trying to reign in risky lending across Wall Street, took issue with the way in which the banks carved out Uber’s more mature operations from the rest of the business, the people said, declining to be named because talks with the regulators are private. This so-called “ring-fencing” of certain markets makes companies appear a safer bet because it strips out the parts of their business that are loss-making. Scrutiny of the Uber loan by regulators was not a surprise because it is rare for young, unprofitable technology firms to tap the leveraged loan market which is traditionally restricted to companies with long histories of generating cash. Regulators have said that loans with more than six times leverage may receive a closer look. Goldman Sachs Group Inc, Barclays PLC and Citigroup also helped arranged Uber’s loan. Representatives of the banks declined to comment. Uber was immediately not available to comment. Representatives for the Federal Reserve and the OCC declined to comment. Uber does not disclose its financials but chief executive officer Travis Kalanick has said that the company is profitable in its most developed markets in the United States and Europe. The company is losing money in regions such as China, where it has been locked in a battle with rival Didi Chuxing. Last August, Uber said it would sell its China operations to Didi. Uber spends millions of dollars to attract riders and drivers and lost more than $800 million in the third quarter, according to Bloomberg. But Uber proved a popular draw for investors because of their familiarity with its business and because it had recently closed a $3.5 billion round of financing from Saudi Arabia’s sovereign wealth fund, giving it a valuation of $62.5 billion, dwarfing that of blue-chip companies such as General Motors Company. Debt investors usually focus on a company’s ability to generate cash, or EBITDA, relative to its debt when they are deciding whether to lend money. Uber, however, was analysed on a loan-to-value metric, which focussed on its equity valuation relative to its debt, investors said. This is not the first time that regulators have scrutinized Wall Street banks for leveraged loan transactions. Regulators have been clamping down on risky lending in the wake of the financial crisis. Last year, regulators cautioned Goldman over risks involved in two loans totalling $1.8 billion that backed a $4 billion buyout of Ultimate Fighting Championship. Regulators had focussed on accounting adjustments that inflated the mixed martial arts group’s future profitability. So far, these warnings have not resulted in any fines but banks may avoid riskier lending in the future to avoid the possibility of any punishment from regulators. “Increased scrutiny from the federal regulators could certainly prompt banks to reduce the supply of credit in the leveraged loan markets,” said Shawn Thomas, a professor at the University of Pittsburgh’s business school who has written about leveraged lending. Banks are often willing to help raise debt for high profile companies, even if the deal risks regulatory scrutiny, because they hope to land a role in their eventual initial public offerings.
Ascena Suffers During Holiday, American Eagle Muddles Through
It’s still rough out there for specialty chains. Ascena Retail Group Inc. is the latest to issue a holiday mea culpa — following in the footsteps of Macy’s Inc., Sears Holdings Corp., Kohl’s Corp., J.C. Penney Co. Inc. and others — citing sales declines and cutting profit forecasts. American Eagle Outfitters Inc. seems to have fared somewhat better than most in the holiday season, but executives at the annual ICR retail conference acknowledged they could be shrinking the company’s store base even as they hyped the Aerie brand as a growth vehicle. Ascena said its combined November and December comparable sales fell 4.4 percent, with a slightly smaller 3.1 percent drop for the Nov. 19 to Jan. 2 holiday period. Investors sent shares of the company down 10 percent to $5.41. The company, which is working to remake its operations, is assuming that sales trend continues and is focusing on expense management to help get through the lean days. Holiday comps were hit hardest at the Ann Taylor division, which fell 8.2 percent, while its sister business, Loft, declined just 1.8 percent. The stronger performers in the company were plus-size chain Catherines, up 1.6 percent, and kids’ fashion, ahead 2.7 percent. For the second fiscal quarter, ending Jan. 28, the company now expects adjusted losses per share of 8 cents to 11 cents, down from the 5 cent loss to break-even performance projected earlier. “Outside of discrete peaks during the holiday season, we experienced stronger-than-expected store traffic headwinds,” said David Jaffe, president and chief executive officer. “As a result, we were forced into a more highly promotional stance in order to move through inventory in the face of softer overall consumer demand.” Retailers across the spectrum have complained that shoppers simply weren’t coming out to stores. American Eagle has about 33 doors in locations that have a Macy’s closing and an opportunity to exit those stores in the near-term if necessary. American Eagle, which has more than 1,000 stores, saw its stock inch up 1.8 percent to $15.24 on Tuesday.
Amazon to Begin Collecting Sales Taxes in South Dakota
Online retail giant Amazon has agreed to begin collecting state and local sales taxes on purchases in South Dakota, Gov. Dennis Daugaard announced Tuesday in his State of the State address. That is a win for state government, which is heavily dependent on sales tax collections. It comes as a lacklustre fiscal outlook is forcing officials to address a shortfall this year and tamp down spending increases for the next budget cycle. "It's not going to fix everything, but it's a good start," House Republican leader Lee Qualm said. "Hopefully other companies will jump on the bandwagon." The news follows recent moves by Amazon in Utah, Iowa and Nebraska as more states push to collect taxes on Internet purchases. The company's website says purchases shipped to over 30 states are subject to sales taxes. Amazon will begin voluntarily collecting state and local sales taxes Feb. 1 and will remit them starting in late March, Daugaard said. "Their decision to collect sales tax doesn't solve the sales tax issue for online purchases, but it's a big step in the right direction," Daugaard said during his speech to the Republican-held Legislature on the opening day of the 2017 legislative session. It is difficult to project how much money the agreement will mean for the state budget until there is a year's worth of history, Daugaard said. He said the company has declined to give the state such information. Lawmakers will work with economists to project how much money the state can anticipate moving forward, said Republican Sen. Deb Peters, a member of the Senate Committee on Appropriations. "It's going to alleviate some of the consternation we have with the current budget," she said.
Robust Demand For Shopping Malls in Thailand Seen Continuing
The market for shopping malls in Thailand will remain robust this year, according to a new research report from Nomura. The Japanese bank’s findings tap into a broader trend with the rise of Southeast Asia as a hot destination for fashion brands and retailers. The region has seen a spate of recent store openings, which industry watchers expect to continue. The growth of domestic demand for retail rental space will continue to outpace supply growth in Thailand, while the Southeast Asian country’s physical retail structures are better placed to withstand the e-commerce threat relative to those in other markets, wrote Nomura analyst Peerawat Dentananan. “We anticipate a rise in shopping mall-related investments driving near-term growth, and environmental improvements set in motion to boost longer-term growth,” Dentananan said, reiterating a positive outlook and Buy rating on Central Pattana, Thailand’s largest shopping mall developer, and initiating a Buy rating on wholesale specialist mall developer Platinum Group. Nomura said it believes occupancy rates in Thailand and other key markets will remain resilient despite a consistent growth in the retail space on offer. The bank estimates that Bangkok’s retail occupancy rate will stay above 97 percent- it has held steady at that level since the start of 2011. Meanwhile, the supply of retail space in Bangkok has registered 6 percent compound annual growth between 2007 and 2015. Malls provide a special type of environment for Thai consumers- an aspect worth noting when thinking about the potential impact of e-commerce in the country, Nomura said. “Despite rapid growth, we believe e- commerce in Thailand is unlikely to overtake malls as reversing the trend in China, the [U.S.] and Singapore, given that malls in Bangkok are better developed and are usually located close to home,” Dentananan wrote. “We see shopping malls as a choice for [socializing] and/or taking care of personal lifestyle needs for Thai people, due to year-round hot weather (driving the demand for air conditioning) and the lack of nature parks.”