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SM readies mall expansion in north and south Luzon

By Arra B. Francia, Reporter
SM INVESTMENTS Corp. is looking at areas in northern and southern Luzon for the next stage of expansion of its shopping mall business, a top official of the Sy-led holding firm said.
Wala pa kaming northern Luzon, wala pa kaming southern Luzon. Wala pa kaming pababa doon,” SM Chairman Jose T. Sio told reporters after the Sharephil Summit 2018 at Dusit Thani Manila last Friday.
He added that the holding firm of the country’s richest man Henry Sy, Sr. is also planning to further its presence in Mindanao “at the right time.”
Even with a target to have 75 malls in the country by the end of 2018, Mr. Sio said the Philippines is not yet saturated with shopping malls.
The company is opening malls mostly in the provinces in the next three years, with SM City Urdaneta Central, SM City Telabastagan, SM City Legaspi, SM City Ormoc and SM City Dagupan set for opening this year.
In 2019, SM’s property unit SM Prime Holdings, Inc. expects to open SM Daet, SM Butuan, SM Olongapo Central, SM Balanga Bataan, SM Sorsogon, SM Tagum, SM City Tuguegarao, SM Mindoro and SM Grand Central in Caloocan.
SM Prime will also be opening SM City Roxas, SM Calamba Turbina, SM Tanza, SM San Fernando, La Union, SM Laoag, SM Zamboanga and SM Malolos in 2020.
This year alone, the listed conglomerate is spending P75-90 billion to finance its expansion.
Mr. Sio said SM is also interested in buying more retailing brands, as long as they are in a “good location, right time, at the right price.”
The company currently operates more than 2,000 retail brands, after folding over a thousand specialty retail store brands into SM Retail, Inc. such as Ace Hardware, Watsons, Toy Kingdom, and Pet Express in 2016.
Meanwhile, the SM chairman noted the current impacts of technology on the general business environment, citing that disruptions like artificial intelligence could hamper sectors like the business process outsourcing industry in the near future.
“Call centers are not sustainable, they are stagnating. Now they are no longer signing long-term contracts… they only want to sign (for building leases) every year,” Mr. Sio said.
Should BPOs weaken in the coming years, Mr. Sio said office buildings can be converted to other uses.
The company has a combined gross floor area of 464,000 square meters (sq.m.) for its commercial properties group, which it looks to expand by 130,000 sq.m. with the launch of a third office building in the Mall of Asia complex this year.
SM’s core businesses include property, retail, and banking, with its portfolio now expanding to Belle Corp., Atlas Consolidated Mining and Development Corp., CityMall Commercial Centers, Inc., Philippine Urban Living Solutions, Inc., the Net buildings, and 2Go Group, Inc.
SM’s consolidated net income grew 10% to P8.5 billion in the first quarter of 2018, boosted by an 11% increase in consolidated revenues to P95 billion during the period.

No more man in a barrel


AN IVATAN-made watch for dad, a stylish bayong (market bag woven from dried leaves) for mom, wooden carabao and jeepney models for the children, a scarf printed with local flowers for the winter, and Filipino snacks for unexpected cravings — shopping for notably Filipino items is now possible just before a flight abroad.
Go Lokal!, the concept store of the Department of Trade and Industry (DTI), opened its latest branch at the Kiss and Fly area of the Ninoy Aquino International Airport (NAIA) Terminal 3. This is the first Go Lokal! at the airport.
The concept store, aimed at promoting local micro, small, and medium enterprises (MSMEs) and Filipinos designers, partnered with the craft store Common Room and Team Manila Graphic Design for exclusive lines in the new souvenir collection.
At the launch on July 19, DTI secretary Ramon M. Lopez said that they further aim “to mainstream MSMEs” so that it may “no longer be limited to a trade fair type of activity” held on weekends.
Modern designs and quality are valued.
“We are trying to elevate the quality of Philippine products, especially the souvenir line of the Philippines. [We’re trying to] veer away from the usual products that we see in resorts which have outdated designs. [We’re trying to] come up with better and a wider collection of items making use of local materials,” Romleah Juliet P. Ocampo, Go Lokal! program manager, told BusinessWorld.
The exclusive souvenir collection includes Team Manila’s “Habi Hiraya” collection of shirts, Philippine-themed stickers by Cheryl Owen, Filipino dessert-themed bracelets by Catherine Limson, and flower-themed designs by Alessandra Lanot.
“[DTI] tapped me to create an exclusive souvenir collection for Go Lokal! But as a designer who has been around the Philippines, I said that one person cannot really capture the entire Philippines through his or her design. So, as a partner of Common Room, I decided to invite the Common Room team to join me in developing the whole collection,” Alessandra Lanot, the pattern designer behind lifeafterbreakfast.ph, told BusinessWorld of her participation in the project.
“We tapped 16 artists, including myself, to create a line of souvenirs based on the theme: ‘The things that we love about the Philippines.’ It’s up to the designer to interpret the theme and execute it in their own products,” Ms. Lanot said.
For this collection, Ms. Lanot incorporated flowers in scarves and caps. “I call it ‘Playtime in the Garden,’ because they’re composed of flowers that we used to play with when we were kids like gumamela, santan, kalachuchi, [and] makahiya (hibiscus, west Indian jasmine, plumeria, and Mimosa pudica),” she said.
As an artist, Ms. Lanot values the opportunity to create Philippine-themed designs. “It’s really an honor to have that opportunity to showcase your design and to create something for the Philippines. It’s my personal dream to really do something on this scale as a designer. I always try to incorporate Filipino elements in my design as my way of bringing the Philippines to the bigger stage,” she said.
The DTI is currently planning to open more store branches in the other NAIA terminals, to target Cebu city in the expansion of operations in provincial terminals, and to test market the products in Japan and the USA.
“We plan to go abroad and bring the business template of Go Lokal!, which is basically a partnership with retail operators. The first project will be in Tokyo, and the next will be in San Francisco or in New York. We’re targeting the two major export markets of the Philippines (Japan and USA),” she said.
The Go Lokal! concept store is located at Kiss and Fly, Level 3, Departure Area, NAIA Terminal 3, Pasay City. Store hours are from 9 a.m. to 9 p.m. — Michelle Anne P. Soliman

Mapping technology being touted to develop mussel farming industry

THE Department of Science and Technology (DoST) and the University of the Philippines (UP) are seeking to develop the mussel farming industry using geolocation technology.
In a statement by Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development (DoST-PCAARRD), its Industry Strategic Science and Technology program hopes to use geographic information system (GIS)-based mapping to identify suitable sites for mussel culture.
“The advent of recent geospatial technologies such as GIS and remote sensing can provide quick and reliable information that can be displayed visually for better management of aquaculture areas,” DoST- PCAARRD said.
“It can also identify sites where both hydrographic and biophysical conditions favor mussel growth.”
The development of the mussel farming industry can aid the government’s goal of ensuring food security.
Mapping systems can be used by farmers, government agencies, academics and private individuals seeking to invest in mussel culture, the agency said.
According to DoST-PCAARRD, mapping systems can determine salinity, temperatures and chlorophyll content in any given area, with the data to be made available monthly in a web-based interactive map.
The project was initiated by University of the Philippines-Visayas (UPV) Institute of Aquaculture professor Carlos C. Baylon, UPV Institute of Aquaculture instructor Armi May T. Guzman, and UP Diliman Institute of Environmental Science and Meteorology College of Science Program Leader Gay Jane P. Perez.
Earlier this year, DoST-PCAARRD identified 14 sites where mussel culture can be developed.
The Philippine Statistics Authority estimates that mussel production in the first quarter of 2018 rose 54.18% year on year to 9,200 metric tons due to the opening of new culture sites and resumption of harvesting activities at other locations.
Other regions, such as Western Visayas and, the Bicol region, posted declines due to low demand and siltation. — Anna Gabriela A. Mogato

Weak peso drags Isuzu truck sales

ISUZU Philippines Corp. posted lackluster truck sales in the first half due to the depreciating peso, but demand could recover in the second half with the government’s jeepney modernization program and heightened safety standards, a company official said.
“For the first half, medyo down kami dahil sa BP (body parts) namin . . . The whole industry naman nag-down noong first half. Maraming factors kasi a lot of players are coming in. We’re affected by forex,” Mario M. Ojales, head of Isuzu’s fleet sales department, said in an interview in Pasay City.
(For the first half, sales were slightly down because of body parts . . . The whole industry is down in the first half. The factors include a lot of players are coming in. We’re affected by foreign exchange.)
The components of the company’s auto production are sourced mostly from Japan, and a weak peso means spending more to import these parts, he said.
However, for the second semester, Isuzu expects to bounce back to normal levels as it pins its hopes on the government’s broader promotion for safety.
Mr. Ojales said the government had become stricter when it comes to safety. He said end-users such as trucking companies had learned after using used vehicles without warranty and available spare parts.
The company official said prices of brand new units are close to matching those of second-hand or used trucks unlike before when the price difference could go as wide as half that of a brand new unit.
Isuzu is also taking the opportunity of supplying the government with electric jeepneys.
“We’re eyeing around 400 units for this year,” Mr. Ojales said about the company’s current focus.
But he said there are “hindrances” such as payment for the vehicles. He said the company wants to be assured that it will be paid. He said there is a big demand for the vehicles, but there is no assurance that the banks will approve the government program.
He said the company is ready to supply the vehicles, but it wants more clarity on the part of the government. He added that once the rules are clear, the 400 units can easily be delivered.
Mr. Ojales said that although Isuzu’s pricing may be higher, it compensates by including as part of the sales package its services and a three-year warranty.
Isuzu targets to sell 9,000 units of trucks this year, higher by 10% compared with last year’s level. The bulk of the sales target is expected to come from light-duty, medium-duty and heavy-duty vehicles.

T-bill rates to move in tight range

By Karl Angelo N. Vidal, Reporter
YIELDS ON Treasury bills (T-bill) on offer this week will likely move sideways as the market looks for firmer leads amid hints of another interest rate hike from the local central bank.
The Bureau of the Treasury is offering P15 billion worth of Treasury bills today. Broken down, the Treasury plans to raise P4 billion and P5 billion through the three-and six-month papers, respectively, and another P6 billion in one-year T-bills.
On Friday, traders said rates on the T-bills will move sideways during today’s auction, with one saying yields could move five basis points higher or lower from the previous auction.
Last week, the government decided to partially award the T-bills on offer, borrowing only P12.1 billion out of the P28.2 billion offered by investors and the programmed P15 billion.
The government made a full award of the 91-day papers but accepted just P3.4 billion out of the P5 billion it intended to raise via the 182-day debt papers.
The Treasury also partially awarded the 364-day bills, raising only P4.7 billion out of the P6-billion offer.
Rates of the three-month paper slid to 3.291%, while the average yields on the six-month and one-year securities climbed to 4.185% and 4.767%, respectively.
At the secondary market on Friday, yields on the 91-day, 182-day and 364-day T-bills settled at 3.2552%, 4.3583% and 4.6988%, respectively.
The trader said the T-bills on offer will likely move sideways as the rate of the 91-day papers are already “too low” for investors, while yields of the 364-day benchmark have been “too high.”
“For the three-month tenor, we believe that the rate is already too low because it has been slipping for the past few auctions. For the one-year papers, it’s already too high. So we think it’s going to move sideways,” the trader said in a phone interview on Friday.
The trader added that the market is waiting for firmer leads for now.
“The market is still looking for fresh catalysts and firmer leads. Most of which will be released in August such as the July inflation and the possible local rate hike.”
On Friday, the Bangko Sentral ng Pilipinas (BSP) said it is “considering” another hike in interest rates to temper inflation expectations.
“Let me say that the BSP is considering strong follow-through monetary adjustment at the next meeting of the Monetary Board in August,” BSP Governor Nestor A. Espenilla, Jr. said in a speech.
The BSP added it will take into consideration potential price pressures arising from excessive volatility in the foreign exchange market.
“While we believe that our fundamentals remain solid and healthy, sustained pressures on the peso could adversely affect inflation expectations,” Mr. Espenilla added.
The government reported earlier this month that the country’s inflation accelerated to a fresh five-year high of 5.2% in June.
Last month’s inflation print surged from May’s 4.6% figure and beyond the 4.3-5.1% estimate range by the BSP and the 4.9% estimate of the Department of Finance.
The monetary authority has already raised borrowing costs twice this year. Rates now stand at a 3-4% range.
“The market is still waiting for fresh leads that’s why most players are just on the sidelines for now,” the trader said.
The government is looking to raise P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds.
The state plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

Suedzucker CEO sees sugar market normalizing

THE CEO of Suedzucker, Europe’s largest sugar refiner, said on Thursday trading conditions remain tough but that he sees potential for a recovery in depressed global sugar prices.
“In the sugar segment we are currently operating in a difficult environment with worldwide production overcapacity and extremely low prices with which hardly any sugar producer can operate profitably,” CEO Wolfgang Heer told the annual meeting of Suedzucker shareholders.
“We are convinced that the situation will normalize after a transition phase and that the market and price structure will again reach a sustainable and profitable level.”
An essential pre-condition for this would be that overcapacity in sugar production is reduced in the current and next sugar season as expected by analysts, he said.
This would be achieved by an expected 2% increase in annual global sugar consumption, by closing production capacity or by a combination of these two trends, he said.
Suedzucker on July 12 reported a 49% drop in first-quarter operating profit reflecting the slump in sugar prices.
The European Union liberalized its sugar market in September 2017, ending its system of guaranteed minimum prices and protected production quotas. This gave producers freedom to expand and export more and linked EU prices to world markets.
But a worst-case scenario emerged, with European producers exposed to global prices which have fallen about 40% since early 2017 hurt by oversupply. EU sugar prices have fallen by more than 12% since market deregulation.
“We cannot simply wait for an improvement in the sugar market,” Heer said.
“In such a market situation we will of course urgently have to optimize our cost structure in order to generate a relative competitive advantage for ourselves.”
“In addition, we see it as our task to reconsider and re-assess all conceivable options for the adaption of our previous strategy in the sugar segment.”
The company is continuing efforts to expand outside Europe, with its last financial year showing a sales increase in Asia of over 60% and a 30% increase in the Americas, he said. — Reuters

Tweaking the classics


TINY SUNGLASSES that sit below the nose bridge and barely cover the eyes, according to fashion arbiters, are about to bid their farewell. Unsurprising: fads come and go. Choosing a classic style, after all, is still the best investment in fashion. But what if I tell you that an icon can still level up its A-game?
Ray-Ban, the eyewear brand associated with classic aviators and Wayfarers, tweaks some of its hall of famers in its #IconsReinvented collection. The new pieces are now available in selected stores. There are, however, no major overhauls in the newest collection, just tiny upgrades here and there.
The beloved aviators, for instance, now have lines called “active lifestyle” and “evolve.” The former, especially made for the people who are always on the move, have rubber-injected flat temples for a touch of sport luxe. Meanwhile, the latter upgrades the classic tear-shaped lenses with lenses that provide visibility in any light exposure.
The round and hexagon-shaped lenses have also been tweaked and now come with better visibility powers and in flat lenses.
Then there is the Clubmaster, another icon. The new line, called “Clubmaster Metal,” uses the classic lenses but upgrades them with matte or shiny all-metal frames that come in black, white, and Havana finishes. The “Clubmaster Polarized,” on the other hand, has crystal polarized lenses, which give the classic a modern touch.
Flat lenses have also found their way to the classic Round and Clubmaster lines.
The Wayfarers, another iconic Ray-Ban legend, have new siblings: the “new Wayfarers,” which have smaller frames, gradient lenses, and a softer eye shape.
Wayfarers, according to Jandy Sarmiento, brand manager of Branded Lifestyle Inc., “are supposedly the easiest to fake” because they are simple. So how do you spot a fake Wayfarer? Look for the joints — a genuine Wayfarer has seven metal hinge screws in each joint. But then again, there is no need to look out for the fake ones if we invest in the genuine article.
Ray-Ban glasses are available at Eye Society, Vision Express Philippines, department stores, and optical stores nationwide. — Nickky Faustine P. De Guzman

Crass Is King: How Philipp Plein made bad taste big business

ON THE terrace of Philipp Plein’s marble-clad aerie overlooking Cannes, a line of women snakes past the swimming pool showing off the German designer’s 2019 cruise collection of crystal-studded bikinis, thigh-high stilettos and leopard-print ballgowns. Next comes a parade of men in dollar-bill-printed button-ups and blue python jackets winding around a fountain filled with bottles of Plein-logo Champagne and a fire-engine-red statue of a gorilla. Mirrored lettering on the wall welcomes visitors to “the Jungle of the King.”
As master of a realm that’s a world apart from established fashion royalty, Plein leaves little doubt as to who he thinks is king. The iconoclastic entrepreneur has made tacky taste big business, barnstorming the fashion world with blazing spectacles featuring tuxedoed models on jetskis or a burlesque dancer writhing in a giant martini glass.
While luxury brands such as Hermes or Louis Vuitton have spent more than a century honing their soft-leather-lined reputations, in the nine years since Plein opened his first boutique he has attracted a devoted following for his $600 sneakers and $1,000 hoodies — and even a $100,000 crocodile trenchcoat — a price that would make even devotees of Balenciaga or Louis Vuitton blanch.
“Philipp Plein is a brand that’s very polarizing — you either hate it or you love it,” the Munich-born designer says at a long marble table on his terrace, where his handlers sip Coke Zero and the rapper Tyga has been summoned for a lunch of grilled chicken and cherry tomatoes.
Plein is targeting rapid expansion as other independent luxury houses have found it harder to grow in the shadow of LVMH and Kering. He aims to open two stores a month and build up secondary brands such as Plein Sport, Plein Kids, and Billionaire, a line for older men that he took over two years ago.
He calls himself an underdog, but Plein has bulldozed his way into the industry with help from the establishment. Carine Roitfeld, a longtime Tom Ford collaborator and former editor-in-chief Vogue Paris, consults for the brand, and was busy backstage making last-minute adjustments before the show in Cannes. His public relations are handled by Karla Otto, whose army of guest-list approvers and quote-checkers are charged with shaping the image of prestigious brands such as LVMH’s Givenchy, Berluti, and Rimowa.
Yet some in the fashion set are tiring of his over-the-top antics. While last year’s resort collection turned out stars such as Paris Hilton and Eva Longoria, VIP attendance was sparse this time around, and a Vogue critic called recent collections “icky” and “tired.”
And with the #MeToo movement exposing allegations of sexual abuse by top photographers and heightening the industry’s sensitivity to gender issues, the raunch factor in Plein’s advertisements and shows risks becoming a liability. His “retrograde” image feels out of touch with the times, says Elodie Nowinski, professor of fashion studies at EM Lyon Business School.
Plein’s “portrayal of women is so clearly oversexualized and blatantly shows them in a submissive role,” Nowinski says. “All the imagery is focused on the commodification of women’s bodies within the male gaze.”
Plein’s fast-cars-and-chrome image might seem anathema to the stalwarts of Paris’s Avenue Montaigne that have long posed as the gatekeepers of good taste, but he’s emblematic of luxury’s shift toward a pop-culture sensibility that fetishizes the new and flashy and downplays old style craftsmanship. Even the most staid brands are pushing the envelope in a bid to hold the spotlight: Chanel erected a life-size rocket for one recent show, and Gucci models carried baby dragons and replicas of their own severed heads down a runway.
Established brands have similarly picked up on the notion of extending their designers’ aesthetic to every aspect of their image, from store renovations to social-media posts — a game Plein has been playing for years. His 1.1 million Instagram followers see him shuttling in a fleet of luxury cars from stores to showrooms to homes dripping with crystal chandeliers, walls and furniture plated with mirrors and covered in crocodile leather. It’s difficult to see where Philipp Plein, the person, stops and Philipp Plein, the brand, begins.
“We’re very authentic, whereas most brands have become impersonal,” he says. “We have real fans who love Philipp Plein. Someone invites them to a Hugo Boss show, they’ll say “Who’s Hugo? Who’s Boss?”
Plein has set himself apart from flash-in-the-pan fashion outsiders like Ed Hardy and Von Dutch by recruiting top-quality Italian suppliers and investing in his own boutiques. He says he’s always found ways to self-finance growth and avoid debt, calling his Swiss-based company “100% independent.” And Plein has been happy to share the risk when he can, for instance recruiting franchisees to run 70 of his 120 stores. Plein says sales approached $300 million last year, in the same ballpark as LVMH’s Kenzo or Kering’s Alexander McQueen, according to MainFirst Bank AG.
With ad campaigns that show models bloodied on the floor or splayed across the hood of a car, Plein might not seem like an obvious brand to associate with children. Yet in 2011 he introduced Plein Kids, and in June the children’s lineup got its first standalone store, in Amsterdam. The broader Plein image doesn’t deter clients like Ivana Ilic-Labia, a Russian TV journalist living in Monte Carlo who came to the Cannes show with her two daughters and her mother: three generations dressed head-to-toe in Philipp Plein, with the seven-year-old twins turned out in pink-and blue-leather bombers and carrying crystal-studded miniature pocketbooks.
“Even when she’s a little girl, a woman loves everything that sparkles,” says Ilic-Labia, huddling from the rain in the garage where Plein’s Instagram followers are accustomed to seeing him park his Bentley and his Rolls-Royce. “Philipp is the No. 1 in fashion, but he’s so down to Earth.” — Bloomberg

DoTr to decide on proposed regional airports by third quarter

By Denise A. Valdez
THE Department of Transportation (DoTr) said it might decide by the third quarter whether to grant original proponent status to the three companies planning to develop, operate and manage regional airports, all of which have resubmitted their proposals earlier this year.
Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo said the review of the proposals submitted by Chelsea Logistics Holdings Corp. (CLC), Aboitiz InfraCapital, Inc. and Mega7 Construction Corp. are now in advanced stages. They are proposing to build Davao International Airport, New Bohol (Panglao) International Airport and Kalibo International Airport, respectively.
Lalo Davao minamadali natin. [Third quarter], hopefully. Sabay-sabay with Bohol, Kalibo. Lahat advanced stage na (We’re trying to fast-track Davao. [Third quarter], hopefully, together with Bohol and Kalibo. All of them are in advanced stages),” he said in a recent interview.
Transportation Undersecretary for Planning Ruben S. Reinoso, Jr. said CLC and Aboitiz InfraCapital both initially submitted four bundled proposals for multiple regional airports, but were advised by the DoTr to resubmit separately to avoid “monopolizing” control of the airports.
Dennis A. Uy’s CLC chose to resubmit its proposal for the Davao airport, while Aboitiz InfraCapital picked the Bohol airport.
For Mega7, Mr. Reinoso said the group’s first proposal for the Kalibo airport was rejected in March for lack of information, hence the need for a new submission, which now has complete documentation.
“We’re looking at the proposal, we’re looking at the numbers, and we’re looking at the performance of [the airports] when [the Civil Aviation Authority of the Philippines] is running it. If at net present value they give us a better offer than [with] government doing it, then we will turn it over,” he said.
Mr. Reinoso also said that for airports with no unsolicited proposals such as Iloilo, Bacolod and Laguindingan, chances are the DoTr will have to bid out contracts for their expansion and operations and management.
“But right now we’re concentrating on all of these unsolicited [proposals] kasi may timetable ‘yon (because they have a timetable),” he said.
Mr. Tamayo said the bidding of contracts for the airports is set “as soon as possible,” but some feasibility studies may have to be redone because the information are “not relevant anymore.”
He noted that in a year or two, airports may be filled up as the demand for movement increases. For instance, the new Puerto Princesa airport is nearing overcapacity after it was opened for commercial use only last year, he added.

Kuroda urges tariff restraint, eyes stable currency

BUENOS AIRES — Bank of Japan (BoJ) Governor Haruhiko Kuroda issued a plea on Saturday for leaders of major economies to step back from a tariff war, and said stable currency markets were to everyone’s benefit.
Kuroda spoke on arrival at a meeting of Group of 20 finance leaders, in response to questions on assertions from US President Donald Trump that Europe and China were manipulating their currencies in favor of their economies.“It is most desirable for currencies to move stably and reflect economic fundamentals,” Kuroda said. “This is something we have already reached agreement about at Group of 7 and at G20 (level).”
Kuroda also sent hoped debate at the G20 would lead to an easing of retaliatory tariff increases between the United States and China.
“Trade protectionism poses merits to no one involved. I think restraint will eventually take hold,” he said.
Trump has broken with precedent in his presidential role in recent days with comments criticizing the dollar’s strength and the monetary policies of the US Federal Reserve and central banks in China and Europe,
He tweeted on Friday that Fed rate hikes were taking away the US’ “competitive edge” in exports.
Trump’s comments have sparked concern that currencies will become a new battle ground in the simmering trade war.
But, arriving in Buenos Aires, US Treasury Secretary Steven Mnuchin told reporters that Trump was not trying to intervene in currency markets.
The subject is particularly sensitive for Japan because its central bank, under Kuroda’s leadership, has pursued a massive quantitative easing program to spur inflation.
The United States this month imposed 25% tariffs on $34 billion of Chinese goods to lower the US trade deficit, and China quickly retaliated with an increase in tariffs on US goods.
Trump has imposed tariffs on imported steel and aluminum, a blow to Japanese exporters, and has also criticized Japan for its trade surplus and the small number of American vehicles it imports.
Asked about reports that the BoJ would debate at this month’s rate review whether to make its yield curve control policy more flexible, Kuroda said: “It’s inappropriate to say anything predictive on the outcome of the meeting.”
Reuters reported that the BoJ is in unusually active discussions before this month’s policy decision, with changes to its interest-rate targets and stock-buying techniques on the table. — Reuters

As wheat harvest heads to parched north, Europe braces for more losses

PARIS — Europe’s grain market is bracing for more downgrades to the size of this year’s wheat crop as harvesting reaches the northern regions that have been worst hit by exceptional drought and heat since spring.
Germany, the European Union’s second-largest wheat grower, has been a focus of concern, and comments this week by the country’s farming association saying it could not forecast the crop because of uncertainty about weather damage have added to market jitters.
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Harvesting is under way in south and central Germany and is spreading north to the regions most badly damaged by dryness.
“I think it pretty likely that the association will cut its forecast of the wheat crop in coming weeks as the harvest results arrive,” one German analyst said.
“The association cut its forecast of the winter barley sharply after the final northern and eastern areas were gathered where the damage was severest.”
The DBV farming association already forecast on July 5 that Germany’s winter wheat harvest will fall 15% from 2017 to 20.5 million tons. It declined to update the number this week but sharply lowered its winter barley crop estimate.
Neighboring Poland is also expected to see a significant drought impact, while harvest rain was now slowing field work.
Poland’s wheat output may fall 10% from 2017 to about 10 million tons, Sparks Polska forecasts.
“The winter wheat harvest started 2-3 weeks earlier than normal, but now it has been hampered by wet weather,” Wojtek Sabaranski of the analyst firm said.
As well as slowing field work, rain around harvest time can damage wheat quality, and downpours in southeastern Europe have raised concern that exporting EU members Romania and Bulgaria may have less milling-grade wheat than usual.
In Britain, the wheat harvest has just got underway earlier than normal, with a smaller crop widely anticipated.
Crop analysts expect production to fall below 14 million tons, well down on last year’s 14.8 million and the lowest since 2013.
“The continued decline in the UK wheat area, lack of rainfall and higher than usual temperatures in June could lead to a prospective tightening of the UK wheat supply,” the Agriculture and Horticulture Development Board said in a report.
France, the EU’s top wheat grower, is expected to play its part in the reduced European supply after torrential rain hurt crops earlier in the year, although recent hot, dry weather may have boosted grain quality.
Consultancy Agritel on Friday forecast the French soft wheat crop, excluding durum, at 34.2 million tons, more than 6% below last year’s crop.
Agritel’s estimate was toward the low end of current market expectations as market participants struggle to extrapolate varying local yields. But with a rapid harvest already two-thirds complete, results may become clearer in the week ahead.
Traders and analysts have widely reported good quality readings, notably for test weights and protein content, which could help French export prospects this season. — Reuters

Self-destructive behavior: Burberry is not alone

PARIS — BURBERRY, which has been in the crosshairs for burning tens of millions of dollars of its products, is far from the only firm to destroy unsold goods to maintain the exclusivity and luxury mystique of their brands.
In its annual report the British fashion firm acknowledged that it had burned unsold clothes, accessories and perfume worth £28.6 million ($37 million).
More than a third of the products destroyed were perfumes, which the company said was due to the rupture of its licence with US fragrances manufacturer Coty.
Since Thursday, when that piece of information buried in its 200-page report came to light, Burberry has come under scrutiny on social and news media for the practice.
But industry experts say Burberry is far from alone.
“It is a widespread practice in the fashion industry, it’s commonplace,” said Arnaud Cadart, a portfolio manager at Flornoy and Associates who has previously followed the luxury industry as an analyst.
He said very few luxury brands hold sales to get rid of stock and instead destroy unsold products. Fashion items with short cycles increases the amount of leftover stock and items destroyed.
“Once you do some private sales to employees and journalists, it’s dumping,” he said.
Burberry said Thursday it had measures in place to minimize its amount of excess stock, that it takes its environmental obligations seriously and harnesses the energy from burning the items.
“On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste,” the firm said.
The destruction of goods is reflected in financial accounts, but in a manner “difficult to comprehend, often under an entry ‘impairment of inventories’”, said Cadart.
French luxury giant LVMH said in its latest annual report that “provisions for impairment of inventories are…, generally required because of product obsolescence (end of season or collection, expiration date approaching, etc.) or lack of sales prospects.”
Hermes’ annual report also spoke of product “obsolescence (notably finished seasons or collections).”
Clear indications of the amount of products destroyed were not provided.
‘NOT SOCIALLY RESPONSIBLE’
“It’s clear this isn’t going well” in terms of public opinion “because this isn’t a ‘green’ practice and perhaps not socially responsible as there are people who don’t have clothes to put on their backs,” said Cadart.
“Yes, there is a moral, ethical question as well as protecting the environment,” said Boriana Guimberteau, a specialist on intellectual property law at the FTPA law firm.
“But from a legal point of view, the brands are destroying genuine products which they own, products that are at the end of their life or the season, and they can do what they want” with them, she said.
Guimberteau said a tenet of maintaining brand image is that exclusive products should be sold in exclusive distribution networks and that markets shouldn’t be flooded with end of season products.
The manufacturers association Unifab, which defends intellectual property rights and combats counterfeiting, said there are different reasons firms destroy their unsold goods.
These can include a desire to ensure they don’t enter other sales channels, while products such as perfumes and cosmetics have sell-by dates after which firms destroy them to ensure consumer safety.
Firms also destroy unsold goods “to protect its intellectual property, which is an asset,” said Delphine Sarfati-Sobreira, Unifab’s general director.
She deplored the witch hunt against Burberry, saying that a “firm which destroys its products will certainly produce others, thus giving work to some of its staff.” — AFP