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The rise of Mamedyarov

Shakhriyar Mamedyarov (born April 12, 1985 in Sumqayit, Azerbaijan) will be playing in the Candidates Tournament this March in Berlin. He has a lot of credentials, for example he has experience playing in Candidates’ tournaments, having participated in 2011 and 2014. Shakh is also a two-time World Junior Champion and was World Rapid Champion in 2013. For some reason though few people give him the respect he deserves. The Web site chess.com put up a reader’s survey on who they think will win the 2018 Candidates Tournament and the results were:

Levon Aronian 37%

Fabiano Caruana 16%

Sergey Karjakin 14%

Wesley So 12%

Vladimir Kramnik 7%

Shakhriyar Mamedyarov 5%

Alexander Grischuk 5%

Ding Liren 4%

As you can see Aronian is the runaway choice as the top seed. But I don’t agree. He has been in the world chess elite since 2005 when he won the World Cup and was ranked no. 5 in the world. There is no doubt that he is a powerful chess player and perhaps at some time arguably the strongest player in the world, however, to become world champion you have to win the world championship cycle, and he has choked in the events which mattered most.

Caruana is another very strong player, but he does not seem to be in good form lately.

I am, of course, rooting for Wesley So, but I think the favorite to win the Candidates would be Sergey Karjakin. He has two strengths which I find very important: no. 1 Karjakin gets stronger as the tournament progresses, just when everyone is tiring he is thriving. No. 2, and more importantly, he always seems to find the inner strength to excel when he has to. Remember the 2015 World Cup? In the finals, a 4 game match, Peter Svidler won the first two games to go 2-0 and only needed a draw to win, but Karjakin won the next two to tie and bring to match to tie-breaks. Karjakin eventually won the match 5.0-4.0. And he was given little chance in the world championship against Magnus Carlsen but he almost won that as well.

And don’t forget Shakhriyar Mamedyarov. Yes, that guy who only 5% of the voters supported is in roaring hot form now. In Moscow last December there was the traditional “Nutcracker” tournament where a team of experienced players, called the “Kings” play an opposing team of rising stars, called the “Princes.” The format is a scheveningen where the “Kings” play everybody from the “Princes” once. Mamedyarov finished with 3.5/4 (draw with Artemiev and wins against Daniil Yuffa, Andrey Esipenko and Grigory Oparin). I’d like to show you two of those games.

Haven’t heard of GM Yuffa before? He is 20 years old, just became a GM in 2016 and is regarded as a very promising player although he has not yet come up with a big tournament win. In September 2017 Daniil gave a blindfold simul against 3 strong players in front of a live audience. And he did so while playing Chopin on a concert piano! Stuff like that sticks to your mind.

Mamedyarov, Shakhriyar (2799) — Yuffa, Daniil (2522) [A49]
Nutcracker Classical 2017 Moscow RUS (3.3), 21.12.2017

1.Nf3 Nf6 2.g3 g6 3.b3 d6 4.d4 Bg7 5.Bb2 0–0 6.Bg2

According to the Chessbase opening book, this opening for White is known as the “Anti-King’s Indian System”.

6…a5 7.c4 Ne4 8.Qc2 Bf5 9.g4 Nxf2 10.gxf5 Nxh1 11.Bxh1 a4 12.b4 Nd7 13.Nbd2 a3 14.Bc3

What to do about the long diagonal? If Black wants to keep it closed he will play 14…c6 followed by 14…d5. If he wants to open it he can play 14…c5 right away.

14…c5

This position is hard to evaluate but since White’s king is stuck in the center it has to be correct to open up the position.

15.dxc5 Bxc3 16.Qxc3 dxc5 17.b5 Qa5 18.Qe3 Nf6 19.h3

Preparing to play Kf2, which cannot be done now because of …Ng4+

19…Rad8 20.Kf2 Rd6 21.Rg1 Rfd8 22.Qxe7

Is this greed? No. White is looking at the possibility of a combination starting fxg6 followed by Rxg6+

22…Qc3 23.Ne4 Nxe4+ 24.Qxe4

Black should solidify his position with b6, Kg7, etc. Instead, he underestimates Shakh’s tactical resources.

24…Rd1 25.Qe7 Kg7?

[25…R1d7]

26.fxg6 hxg6 27.Rxg6+! Kxg6 28.Ne5+ 1–0

After 28.Ne5+ Black has to give up his queen or be mated. For example: 28…Kh6 (28…Kh5 29.Qxf7+ is the same thing; 28…Kf5 29.e4+ Kf4 30.Qf6#) 29.Qf6+ Kh5 30.Qxf7+ Kh4 31.Qf6+ Kh5 32.Qf5+ Kh6 33.Qg6#.

Andrey Esipenko is still listed as a FIDE Master (FM) but he has already fulfilled all the requirements for a full Grandmaster title and is just waiting for the official announcement of new titles granted to come out. Born March 22, 2002, he is only 15 years of age but already has many accomplishments. In 2017 he won both the European U16 and World U16 Chess Championship, and recently made waves at the World Rapid Championships by defeating Sergey Karjakin with a tremendous queen sacrifice.

Karjakin, Sergey (2760) — Esipenko, Andrey (2564) [B11]
World Rapid 2017 Riyadh KSA (8.9), 27.12.2017

1.e4 c6 2.Nf3 d5 3.Nc3 Bg4 4.h3 Bxf3 5.Qxf3 Nf6 6.d3 e6 7.Bd2 Qb6 8.0–0–0 d4 9.Ne2 c5 10.e5 Nd5 11.Nf4 Nb4 12.Kb1 Nd7 13.Qe4 Nc6 14.Nh5 0–0–0 15.f4 c4 16.dxc4 Ba3 17.Bc1 Nc5 18.Qf3 d3 19.cxd3 Na4 20.Rd2 Nd4 21.Qf2 Nc3+ 22.Ka1 Qb3! 23.bxc3 Qxc3+ 24.Bb2 Bxb2+ 25.Rxb2 Qc1+ 26.Rb1 Nc2+ 27.Qxc2 Qxc2 28.g3 b5 29.cxb5 Rd4 0–1

He is so tactically gifted and (department of bad puns!) makes it all look “esi” (from GM Jan Gustafsson).

Esipenko, Andrey (2564) — Mamedyarov, Shakhriyar (2799) [D46]
Nutcracker Classical 2017 Moscow RUS (2.3), 20.12.2017

1.d4 Nf6 2.c4 e6 3.Nf3 d5 4.Nc3 c6 5.e3 Nbd7 6.Qc2 Bd6 7.Bd3

Since we are living in an age of g2–g4 opening thrusts, I should point out here that 7.g4 is quite an acceptable gambit. After 7…Nxg4 8.Rg1 h5 9.h3 Nh6 10.e4 White has good compensation. But not 10.Rxg7? I met GM Pavel Kotsur during the 1999 Asian Team Championship and he impressed me very much with his quick sight of the board and theoretical knowledge. Which makes it all the more remarkable that he makes this blunder even more so because it has occurred before. After 10…Qf6 the rook and f3–knight are en prise 11.Rh7 Rxh7 12.Qxh7 Nf8 0–1. Kotsur,P (2586)-Barua,D (2541) Doha 2003. It is now White’s queen and f3–knight which are simultaneously attacked.

7…0–0

Here is another tactic that Black should be familiar with. After 7…dxc4 8.Bxc4 e5 9.0–0 exd4 10.exd4 0–0 11.h3?! is a psychological trap, trying to induce Black to play 11…h6? (falls into the trap. Correct is Nd7–b6–d5) 12.Bxh6! gxh6 13.Qg6+ the point 13…Kh8 14.Qxh6+ Nh7 (14…Kg8 15.Ng5 Bf4 16.Nce4 Bxg5 17.Nxg5 Qa5 18.Qg6+ Kh8 19.Bxf7+– is clearly winning for White) 15.Qxd6 Nb6 16.Qxd8 Rxd8 17.Bxf7 Nf8 18.Ne5 1–0. Farago,I (2502)-Sentef,N (2171) Baden Baden 2002.

8.0–0 dxc4 9.Bxc4 a6 10.Rd1 b5 11.Bf1

This bishop usually goes to e2 or d3. Esipenko took 10 minutes here and went for a relatively rare line, so I guess he is out of his preparation already here.

11…Qc7 12.e4 e5

Mamedyarov was 15 minutes ahead of his opponent at this point and in the following moves steadily increases his time advantage.

13.g3 Re8 14.Bg2 h6 15.h3 c5 16.dxe5 Nxe5 17.Nh4?! <D>

POSITION AFTER 17.NH4

Now Mamedyarov attacks.

17…g5! 18.Nf5

[18.Nf3 loses a pawn to 18…Nxf3+ 19.Bxf3 Bxh3 so the knight is forced to go to f5]

18…Bxf5 19.exf5 Rad8

Getting the rook out from the g2–bishop’s firing zone. Now Black intends …c5–c4, …Nd3 and possibly …Nxf2. This is the beauty of the Semi-Slav — once Black’s pieces start rolling they take over the position like an avalanche.

20.a4 b4 21.Nd5 Nxd5!

Nice. Then the other knight will go …Ne5–d7–f6 and take over from where its counterpart left off.

22.Rxd5 Nd7! 23.f6

Esipenko couldn’t find any other way to generate counterchances, so he jettisons the f5 pawn to make way for his rook or queen to take a threatening position on f5.

23…Nxf6 24.Rf5 Re1+!

White expected 24…Kg7 when 25.b3 Be5 26.Bb2 still keeps the game going.

25.Kh2 Nh5

Threatening 26…Bxg3+ 27.fxg3 Qxg3 checkmate.

26.Qb3 Ng7 27.Rf6 c4!

Aside from threatening the queen this move also leaves the c5 square open for queen or bishop.

28.Qf3 h5 29.Rh6

[29.Qb7 forces the exchange of queens but leads to a lost game. For example 29…Ne6! 30.Qxc7 Bxc7 White is defenseless against 31…h4 32.Rf5 hxg3+ 33.fxg3 Rd3 34.Rf3 Nd4 35.Rxd3 cxd3 hopeless]

29…h4 30.Qg4 hxg3+ 31.fxg3 Qc5 32.h4 Bxg3+ 33.Qxg3

Taking with the King leads to mate 33.Kxg3 Rd3+ 34.Bf3 Qg1+ etc.

33…Qg1+ 34.Kh3 Rd3 35.Bf3 Rxf3 36.Qxf3 g4+ 37.Qxg4 Qh1+ 38.Kg3 Rg1+ 0–1

Yes, “Shakh” is in red hot form and I expect him to finish well in the ongoing Tata Steel tournament. We will report on the final results next week.

 

Bobby Ang is a founding member of the National Chess Federation of the Philippines and its first Executive Director. A Certified Public Accountant, he taught accounting in the University of Santo Tomas for 25 years and is currently Chief Audit Executive of the Equicom Group of Companies.

bobby@cpamd.net

Connecting the dots

The revocation of the Securities and Exchange Commission (SEC) registration of online news site Rappler is being passed off as a simple case of an independent government agency implementing the Constitutional ban on foreign ownership of a media organization. It has nothing to do with media freedom. It has no implications to other media outfits. And most important of all, the Duterte administration claims it has nothing to do with it.

The facts and circumstances surrounding the SEC decision, however, are in glaring contravention to such a benign argumentation. Duterte wants to shut down Rappler because he cannot stand its criticism of his regime.

Firstly, President Rodrigo Duterte had repeatedly threatened Rappler, along with ABS-CBN and the Philippine Daily Inquirer, for being unfairly critical of his administration, imputing various motives.

In the case of Rappler, that it is “fully owned by Americans” and is part of a CIA plot to bring him down. Duterte has not been able to disguise his utter contempt for these three media organizations and his intention of going after them to stop what he considers scurrilous, slanted if not fabricated, reportage meant to undermine his presidency.

Secondly, it was Duterte-appointed Solicitor General Calida who got the SEC to conduct its investigation against Rappler.

In record time, the SEC handed down its decision canceling Rappler’s corporate registration on the basis of a legal technicality without giving Rappler the opportunity to correct its ownership structure as it had done for other business entities similarly situated.

Thirdly, it is hypocritical of the Duterte administration to utilize the Constitutional ban on foreign media ownership to silence Rappler while it pushes for Charter Change that will do the exact opposite — allow 100% ownership of public utilities, mass media, and educational institutions by removing the remaining protectionist provisions in the 1987 Charter.

As pointed out by many legal experts, the Philippine Depository Receipts (PDR) held by Rappler’s foreign investors (Omidyar Network and North Base Media) does not vest them with ownership over Rappler or Rappler Holdings. In fact, PDRs are resorted to by companies seeking substantial foreign investment in order to precisely skirt such strict prohibitions against foreign ownership.

Duterte poses as the one who is aggrieved in all this. That his administration is merely defending itself from unfair criticism by an intemperate and elitist media outfit with a hidden agenda, that of toppling him. But in truth the Duterte regime is using the instrumentalities of the state to shut down, one by one, those media outlets it considers to be inherently biased against his regime.

Some say there is nothing wrong with this. That the state, helmed by Duterte, is justified in defending itself from irresponsible media and other kinds of destabilizers.

Unfortunately for Duterte, the Philippine Constitution states: “No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the Government for redress of grievances.” Duterte is wrong in saying press freedom is a “privilege.” It is a right on the level of freedom of speech and expression, that the state can only curtail in cases of libel or proven use for seditious purposes.

Therefore, this SEC ruling, no matter how Duterte denies shaping or influencing it, is itself unconstitutional. There can be no justification for government closing down a media outlet, no matter under what alibi, just because the President doesn’t like what it publishes.

In truth, the Duterte regime is not without less obviously tyrannical means to counter Rappler.

Duterte and his minions, including his social media horde, have blasted Rappler nonstop for publishing supposed “fake news” (while expertly churning out fabrications packaged as news themselves). He has also used paid hacks masquerading as veteran journalists to mount a more sophisticated smear campaign against Rappler.

If a substantial number of people can be convinced then they will stop reading Rappler, its advertising and other revenue will go down alongside its declining credibility, and Rappler will find itself struggling to survive. Libel cases can always be resorted to and in fact the National Bureau of Investigation is handling a current cyber libel case against Rappler.

The SEC decision on Rappler steps up the Duterte regime’s attempts to gag mass media. It is intended to have a demonstration effect on the rest of the mass media organizations from owners to editors to reporters.

Meanwhile the regime perseveres in going after its staunchest critics through a squeeze on franchises, corporate takeovers by businessmen allied with the President, and always, the resort to harassment suits, while turning a blind eye to the unflagging killings of media practitioners.

Recently, Duterte was positively frothing in the mouth when he was asked by Rappler reporter Pia Ranada regarding his hand in the SEC decision. Apparently whatever satisfaction he derived from it was drowned out by the Rappler expose on his right hand man, Bong Go, “intervening” in a P15.5-B project to acquire the Command Management System (CMS) to be installed in brand new Philippine Navy warships.

It is not as if the story has no basis. A note tacked on to an alleged white paper favoring a certain CMS supplier that was forwarded by Defense Secretary Lorenzana to Navy Chief Vice-Admiral Mercado cites Bong Go as the source. This was denied by Go then also later denied by Lorenzana who said he was mistaken about the paper’s source.

But there are plenty of suspicious facts and circumstances, enough to raise serious doubts about Malacañang’s intervention in the project.

This is the proverbial “whiff of corruption” that Duterte promised he would not tolerate.

Instead of initiating an investigation, checking the paper trail for this document, finding out who from the Presidential Management Staff met with the Navy official in charge of the project and what was discussed, Duterte mysteriously fired Vice-Admiral Mercado for “insubordination,” exonerates Go with a non sequitur comment that Go is already a billionaire (ergo he can’t be corrupt) and then goes ballistic in denouncing Rappler for throwing “shit” at his regime.

Or perhaps Duterte is so incensed he could not control his rant against Rappler and Ranada because this is the sort of “whiff of corruption” that could generate disgruntlement in the military. Well this time, Duterte can blame no one but himself.

 

Carol Pagaduan-Araullo is a medical doctor by training, social activist by choice, columnist by accident, happy partner to a liberated spouse and proud mother of two.

carol_araullo@yahoo.com

Emerging economies free of ‘original sin’; firms not forgiven

LONDON — Most developing nations have been absolved of the “original sin” that blocked them using their own currencies to raise money abroad, but their companies’ sins have still not been forgiven, as the huge debt they have racked up in “hard” currency attests.

Original sin, which is how economists Barry Eichengreen and Ricardo Hausmann described the dilemma for emerging market (EM) economies that were unable to borrow abroad in their own currencies, is now largely a thing of the past for sovereign debt.

Corporate borrowing in local currencies has not taken off, however. For one thing, much of the debt is not easily accessible to foreign investors; for another, borrowing in dollars, pounds or euros is usually cheaper, especially since the crash in Western interest rates after 2009.

Above all, investors see these securities as inherently riskier than government debt.

“Sovereigns can issue debt in hard currency or local currency, but that’s a luxury which is not there yet for most corporates,” said Abhishek Kumar, lead portfolio manager for emerging markets at State Street Global Advisors.

Outstanding emerging corporate debt denominated in hard currencies has doubled since 2007 to $7 trillion, according to the financial industry body, the Institute of International Finance (IIF), nearly 7 times than EM governments’ at around $1.1 trillion.

Governments are now using currencies such as the rand and rouble for more than 80% of their borrowing. Hard currency movements still affect the price at which they borrow but their vulnerability to exchange rate swings is far less than it was.

The shift towards greater acceptance of emerging currencies was highlighted recently when several central banks confirmed they now hold China’s yuan in their forex reserves.

Like emerging markets economies that suffered currency crises in the 1990s, companies risk a strengthening in the dollar or euro against the currencies in which they earn revenues, which can make debt repayment significantly costlier.

Also, with US interest rates rising, investors could demand higher and higher yields to “roll over” maturing debt.

The IIF and the Bank for International Settlements have repeatedly warned of these risks. Earlier this month, the IIF said the borrowing binge of the past decade meant large amounts of hard currency debt would need to be rolled over in coming years, with around $450 billion due for repayment in 2018.

“Rising global interest rates will add to worries about the debt servicing capacity of highly indebted firms and governments,” it said.

Emerging market companies also have up to $30 trillion in domestic currency debt but this is mostly in bank loans and almost all is held locally. Most bonds issued in domestic currencies are not eligible for processing through Euroclear, the international post-trade services system which increases convenience and transparency.

GROWING MARKET
Prospects for emerging currency corporate bonds looked bright in 2014, when Bank of America Merrill Lynch launched a special index with around 250 “Euroclearable” securities.

But more than three years later, the index is still not tracked by any passive funds, according to the ICE exchange, which took over BAML indices in 2017. JPMorgan, which runs the most widely used emerging debt indexes, still does not have a local corporate bond benchmark.

One of the few active funds in the sector is run by Brent David, a portfolio manager at BlueBay Asset Management. He says the market is improving and estimates up to $500 billion of corporate local bonds are now Euroclearable, twice the amount in 2014.

While that’s less than a tenth of outstanding bonds, he expects the number will rise as Chinese and Indian firms issue yuan and rupee debt in Hong Kong, Singapore or London.

“More and more corporates are feeling the need to shift to issuing in their own currencies. They are trying to diversify their investor base, and to tap foreign investors they have to issue in Euroclearable format,” David said.

For David, a key attraction is that the BAML index’s average yield is roughly two percentage points above JPMorgan’s GBI-EM sovereign debt benchmark, after taking into account its shorter duration.

It also offers exposure to the Indian and Chinese currencies, which are not part of the GBI-EM, he said.

ILLIQUID
For the market to really take off, however, foreign funds need bigger sizes and trading volumes, which will be difficult to achieve without developing pension and asset management industries within emerging markets.

Not all companies will be keen to undertake the disclosures and operational complexities that Euroclear involves.

Even when bonds are Euroclearable, investors are wary. Russian lender Sberbank estimates foreigners own less than 5 percent of the corporate rouble bond market, which has over $100 billion outstanding and has been Euroclearable since 2013.

In contrast, they hold a third of rouble government debt.

“You have to weigh up: do you get compensated enough if you go into a non-sovereign instrument?” said Paul Greer, assistant portfolio manager at Fidelity International.

“With local corporate bonds, you get a small amount of spread over the sovereign curve but you have to deal with FX risk, credit risk and interest rate risk.”

Irresistibly cheap global borrowing costs may also have hampered the market’s development — dollar-denominated emerging corporate bonds yield an average 5.2%, according to the CEMBI Global index. That’s well below what firms from Brazil or India would pay to borrow in their own currencies.

That’s an incentive to keep borrowing in hard currency, said Guy Stear, co-head of fixed income research at Societe Generale.

“Companies might think ‘I am taking risks here in terms of original sin, but on the other hand I am happy today because my overall funding cost is low,’” Stear said. — Reuters

Protesters greet North Korean Olympic delegation touring Seoul

SEOUL — Small but vocal groups of South Korean demonstrators on Monday protested North Korea’s participation in next month’s Winter Olympics, as a delegation of North Korean officials led by star singer Hyon Song-wol visited Seoul and inspected Games’ venues.

South Korean police intervened when one group of conservative critics burned a picture of North Korean leader Kim Jong Un on the steps of Seoul’s central train station where Ms. Hyon and the rest of her team had earlier arrived from Gangwon province, where the Olympics will be held from Feb. 9-25.

In a diplomatic breakthrough after a year of escalating tension over the North’s nuclear and missile program, the International Olympic Committee announced on Saturday that North Korea will send 22 athletes to the Winter Games and compete in three sports and five disciplines.

Holding a sign saying “We’re opposed to Kim Jong Un’s Pyongyang Olympics!”, the protesters chanted that the North had “snatched” attention from South Korea’s long-awaited hosting of the Winter Olympics.

“The Pyeongchang Olympics is degrading to a Pyongyang Olympics of Kim Jong Un who is propagating the North Korean system and trying to make its nuclear weapons a done deal,” said Cho Won-jin, an ultra-conservative lawmaker who led the rally, according to a video footage.

Overall, a majority of South Koreans say they welcome North Korea participating in the Games, and South Korean officials hope to use the thaw in relations to make a larger diplomatic breakthrough over the North’s rogue nuclear weapons program.

A series of events including concerts, joint training exercises and sporting demonstrations are planned around Olympics.

Ms. Hyon, a wildly popular entertainer in the North, smiled and waved to residents who gathered to greet her as she arrived at a train station near the main Olympic village of Pyeongchang earlier in the day.

“Seeing the citizens here welcoming us, I feel we will be able to successfully complete the concert,” Ms. Hyon was quoted as saying by a Seoul official, according to a South Korean media pool report.

Monday’s protests were small but highlighted the mixed reaction to the fragile detente between the two Koreas.

Some specific Olympic plans, including marching under a unity flag and forming a joint women’s ice hockey team, have proven controversial, with criticism coming from both traditional conservative detractors as well as younger South Koreans upset that an unchastened North Korea is stealing the spotlight.

Seoul’s Unification Ministry said the lodging and transportation costs for Ms. Hyon’s delegation were paid for by a South Korean government fund for cross-border cooperation.

“We are making accommodations for each other’s convenience, based on the principle of inter-Korean reciprocity,” ministry spokesman Baik Tae-hyun told a news briefing on Monday. — Reuters

ARMM addresses land disputes in Maguindanao with survey for titles

THE DEPARTMENT of Environment and Natural Resources in the Autonomous Region in Muslim Mindanao (DENR-ARMM) has started to survey lands in preparation for free distribution of land titles in conflict-affected towns in Maguindanao, a first step towards settling land disputes in the province. “Land dispute hinders development. This project will provide bigger opportunities for our people,” said Mayor Datu Zamzamin Ampatuan of Rajah Buayan in a statement released by the ARMM government. “This is the people’s hope for a fully secured land ownership,” he added. The P42-million “free land titling and survey” project of the DENR-ARMM was formally launched on January 5 in Rajah Buayan, one of the 15 municipalities that will benefit from the project. DENR-ARMM Secretary Kahal Kedtag said the massive distribution of land titles will also help in combating poverty and stimulating progress and development in the province. The project is under the region’s Humanitarian Development and Assistance Program (HDAP), which is aimed at demarcating properties of landowners in the region. The project also covers livelihood programs that will promote peace and help calamity-affected communities. — Mindanao Bureau

To ICO or not to ICO? That is the question for today’s start-ups

AUNG KYAW MOE and Jun Hasegawa have a lot in common.

Both are entrepreneurs. Both left home to seek their fortunes. Both are now working on digital-payment projects with operations in Southeast Asia.

But when it came to collecting money to fund their start-ups, they took opposite paths. Aung, 42, is raising as much as $30 million in venture capital with the goal of perhaps going public in a few years. Hasegawa, 36, brought in $25 million through a so-called initial coin offering, an unregulated sale process that’s exploded in popularity in the last year. His company’s tokens, OmiseGO, are already worth more than $2 billion.

“It’s been crazy,” says Hasegawa, co-founder and chief executive officer of the start-up Omise. “It took only six months to get here.”

Aung watched Omise’s rocket ride with wonder and a touch of envy. Should he try an ICO too? While venture money can be harder to get, he ultimately decided on that route and said ICOs are too shaky a foundation to build a business on.

“If it all came crashing down one day, you would have no control,’’ said Aung, whose start-up is called 2C2P, for Cash and Card Payment Processor. “I like to go to bed with peace of mind.’’

The rivals illustrate a dilemma startups are now facing the world over. Should they pursue traditional venture capital with its predictability and limitations or turn to ICOs where there is quick money, volatility and innumerable unknowns?

ICOs are winning support with fund raisings jumping to more than $6.8 billion in 2017, up from $151 million in 2014, 2015 and 2016 combined, according to research firm Smith + Crown. Telegram Inc., an encrypted messaging service, is planning to raise at least $1.2 billion through an initial coin offering, which would be by far the largest ever. Many people buy into ICOs for a simple reason: The coins have soared in the past year, driven in part by a surge in Bitcoin of more than 10 fold.

Omise and 2C2P took different routes to their decisions. Aung, a Myanmar-born computer programmer, founded his start-up in 2003 in Bangkok. He helps customers like Thai Airways, Lazada and Zara handle online payments with credit or debit cards — or cash payments at convenience stores from people without bank access.

The Japanese Hasegawa and Thai co-founder Ezra Don Harinsut started Omise in Bangkok a decade later as an e-commerce firm, then pivoted to payments. Their OmiseGO network aims to let anyone carry out financial transactions with cryptocurrencies such as ethereum and Bitcoin, as well as fiat money like the dollar. They want to move people from traditional banking into the decentralized world of digital currencies.

They may not have been able to raise venture money even if they tried — their crypto service hadn’t launched last year when they were seeking funds. The ICO was also easier because they didn’t have to give up equity in the company. People who buy OmiseGO tokens — or just OMG — don’t get shares in Omise; rather they get currency they’ll be able to use on the company’s network.

Hasegawa said some of his existing investors were reluctant to back the project. But because the company wasn’t selling equity, they didn’t need shareholder signoff. They posted the ICO whitepaper — essentially a fundraising plan — online in June without any detailed financials. A few weeks later, they had more than enough interest.

“When we told them we got more than $200 million in commitments, they were like, ‘Whaaaat?,’” said Hasegawa. Omise owns 30% of the tokens, now worth more than $500 million.

The ICO money was aimed at helping the company launch an ethereum-based technology for digital wallets by the fourth quarter, but the project hasn’t started yet. Hasegawa says a limited version of the network is on track for mid-2018.

Aung tries to avoid making promises he can’t keep. His company hands out T-shirts to employees emblazoned with “Say Less, Do More.”

Dmitry Levit, the first venture capitalist to back 2C2P, recalls that when his firm was scouting for deals in Southeast Asia in 2011, many potential online sales for airline tickets, e-commerce goods and bookings for services got canceled due to unreliable payment options. He quickly decided 2C2P had the best shot at a solution.

“We realized that what Aung was building is a very good fit,’’ said Levit, a partner at Cento Ventures.

Today, 2C2P counts Facebook Inc. and some 30 airlines among its 350 large customers. In 2017, the firm’s revenue growth hit 111%, up from 99% in 2016, as it processed almost $6 billion of payments, according to Aung. His backers include GMO Venture Partners, part of Japan’s GMO Internet Inc., SafeCharge International Group Ltd. and Amun Capital in Hong Kong.

With large customers and a fast-growing business, Aung won’t jeopardize his prospects by experimenting with a new form of financing. “2C2P will become profitable this year,” he said. “That’s what I’m going to focus on.”

It’s a global debate. China banned ICOs in September, part of a broader crackdown on cryptocurrencies. Regulators in Hong Kong and Singapore have also warned against ICOs, citing fraud concerns and money laundering risks. In the U.S., the securities regulator has stopped coin offerings it deems too similar to stock sales.

“Is it really better to have an unregulated, open system where anything can happen?’’ said Damian Adams, a Singapore-based partner at law firm Simmons & Simmons.

Omise’s Hasegawa believes ICOs are the beginning of a financial revolution. “All the great companies in the world, they always changed and pivoted their business models,” he said.

Aung isn’t convinced. “If it sounds too good to be true, it usually is,” he said. — Bloomberg

Vietnam to sell Habeco stake at market price, official says

CARLSBERG A/S, the Danish brewer negotiating to buy a majority stake in Hanoi Beer Alcohol Beverage Corp., must pay market price if it wants to acquire Vietnam’s second-largest beer maker.

Carlsberg and the Hanoi-based beer maker, also known as Habeco, are working out “issues” in negotiations for the European company’s efforts to expand its stake in the brewer, Deputy Prime Minister Vuong Dinh Hue said in an interview. The European beer maker wants to increase its Habeco stake to 61.79% from 17.51% in the Hanoi brewer, Tayfun Uner, former chief executive officer of Carlsberg Vietnam, said in late 2016.

Vietnam is accelerating efforts to offload stakes in companies it owns to narrow a fiscal deficit. The sale of shares in Habeco comes after Thai Beverage Pcl partnered with a local company to buy a $4.8 billion majority stake in the nation’s top brewer Saigon Beer Alcohol Beverage Corp., or Sabeco, in December.

“To set the initial prices for these stake sales, the government will base the prices on the 20 most-recent trading sessions of the shares,” Hue said in Hanoi. “These companies are not allowed to sell below the floor prices that the government set.”

The European brewer’s negotiations with the government and Habeco “have been characterized by good faith on all sides,” Carlsberg Vietnam said in a statement.

“Carlsberg is supportive of the government’s privatization agenda and has endeavored to serve as a partner for the government as it has worked through the Habeco divestment process, which is substantial and legally complex,” it said. “Accordingly, Carlsberg would reaffirm its support for the divestment goals and principles put forward by the government, which includes divestment at a fair price.”

Uner said in 2016, when he was running Carlsberg’s Vietnam operations, that the Hanoi brewer’s price on the regulated over-the-counter exchange didn’t accurately reflect the underlying value of the company because of speculative buying on a small volume. Habeco is now traded on the Ho Chi Minh City Stock Exchange.

Carlsberg is also seeking to acquire a further 20% stake that the government will sell at an auction, Uner said. Foreign investors can have a stake of no more than 49% in conditional sectors, which include alcohol companies, unless the government grants an exception. Carlsberg said Uner’s comments were outdated and declined to disclose further details on current talks.

Habeco did not immediately respond to a request for comment.

Habeco shares have risen 57% in the past six months, exceeding the 38% gain in Vietnam’s benchmark VN Index. The brewer trades at 41 times estimated earnings for the next 12 months, compared with 33 times for Sabeco — and about twice the valuations of Carlsberg and other global brands including Kirin Holdings Co. and Heineken NV.

The Danish brewer is looking to expand its presence in Vietnam, whose growing middle class and youthful population helped drive a 300% surge in beer demand since 2002, according to Euromonitor International.

Vietnam plans to sell its stake in Habeco in the first quarter this year, according to Ministry of Industry and Trade. The ministry is expected to submit the central government a detailed plan on the price, size of the stake and the timing for the sale after concluding talks with Carlsberg, Hue said.

“We have planned to sell Habeco since last year, but there are some issues between Habeco and its current strategic investor,” Hue said. “Habeco and Carlsberg are going through terms in their strategic partnership contract to properly resolve the issues and to make sure the deal must follow market mechanism while also complying with the signed contract” between the two, he added. Bloomberg

Producers Guild names The Shape of Water the best film ahead of Oscars

LOS ANGELES — Guillermo del Toro’s fantasy romance The Shape of Water took home best movie at the Producers Guild Awards on Saturday, putting it in pole position for Oscars glory in March.

The movie bested leading Academy Awards contenders including Call Me by Your Name, Dunkirk, Get Out, I, Tonya, and Lady Bird.

In a crowded field, it also saw off The Big Sick, Molly’s Game, The Post, Three Billboards Outside Ebbing, Missouri, and Wonder Woman.

The 1960s-set fairy tale about a mute government laboratory janitor falling in love with a merman-like creature won best director for Del Toro at the Golden Globes, considered a dry-run for the Oscars.

It also has 12 nominations for February’s BAFTAs, Britain’s version of the Oscars, and is expected to do well when nominees for the actual Academy Awards are announced on Tuesday.

The 53-year-old filmmaker, who co-produced alongside J. Miles Dale, was not there to pick up his trophy due to having gone to his sick father’s bedside in Mexico.

In one of the ceremony’s highlights, Get Out director and producer Jordan Peele was recognized for making a film that raises awareness of social issues and talked about “the sunken place,” the term used for the hypnotic, brainwashed state that traps victims in his movie.

“The sunken place is the system that silences the voice of women, minorities, and of other people,” he said in politically charged speech condemning President Donald Trump for derogatory comments about Haiti, Africa, and black football stars kneeling during the national anthem.

“Every day there is proof that we are in the sunken place,” he added.

Coco — Pixar’s love letter to Mexico based on the country’s Day of the Dead festival — won best animated picture, the first prize of the night handed out at the Beverly Hilton.

“Now is the time for more diversity in our culture and in our world,” said producer Darla K. Anderson, dedicating the award to the people of Mexico.

In the TV section, Hulu’s The Handmaid’s Tale won best television drama, while fellow Internet streaming service Amazon bagged best episodic comedy for The Marvelous Mrs. Maisel.

The Handmaid’s Tale, based on Margaret Atwood’s dystopian 1985 novel of the same name, has been the darling of recent awards ceremonies, winning eight Emmys and two Golden Globes.

The PGA has boasted a solid record of giving top honors to movies that go on to earn best picture honors at the Oscars.

The trend has been bucked somewhat recently, however, with last year’s best film award going to La La Land, which lost out to Moonlight at the Oscars.

Financial crisis comedy The Big Short took the top prize at 2016’s PGAs, but lost out to Spotlight for the Academy Award. The Oscars ceremony is staged on March 4, hosted by late night funnyman Jimmy Kimmel. — AFP

Throwing hand

In the aftermath of the 54th come-from-behind victory of his career, Tom Brady admitted what he refused to even acknowledge publicly during the week: The injury to his throwing hand affected — even scared — him. “I’ve never had anything like it,” he of 18 seasons’ worth of bruising battles said after the Patriots booked a ticket to Super Bowl LII. I’ve had a couple of crazy injuries, but this was pretty crazy. I didn’t know how I was going to do.”

Indeed, Brady understood the irony. He was about to compete in the American Football Conference title match, a testament to his longevity and continued competitiveness. At the same time, he was suffering from a gash to his dominant hand that required 12 stitches to close, the type of freak contact persistent flirtations with danger at an advanced age courted.

When the battlesmoke cleared, however, all the fretting proved to be for nothing. Brady netted 290 yards and two touchdowns on an efficient 26-of-38 clip, leading the Patriots to victory after being behind 10 points in the fourth quarter. And considering how he cut up the vaunted Jaguars defense with trademark precision in the crunch, the black bandage covering his wound looked to be the only manifestation something was even wrong with him.

Brady doesn’t believe he deserves undue praise for overcoming his ailment. “I think it sounds kind of arrogant to say, ‘Oh, yeah, it bothered me” when you have a pretty good game.” Added head coach Bill Belichick, “it’s not open-heart surgery.” Nonetheless, there can be no denying his toughness. Not when he’s 40 and still spearheading the Patriots’ cause. Up next is a date with the Eagles in the role of favorite. A sixth Super Bowl title awaits, and his hand is exactly what it should be: a footnote.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

Manila Bay dev’t plan deal signed with Dutch gov’t

THE PHILIPPINES and the Netherlands signed a memorandum of understanding for a sustainable development and management master plan for the Manila Bay area.

The two governments agreed to work together to draft the Manila Bay Sustainable Development Master Plan, which will guide future decisions on programs or projects such as coastal protection works, solid waste and water resources management, transport, and reclamation activities.

The plan also includes the development of slums and the relocation of informal settlers along Manila Bay.

“The Philippine Development Plan (PDP) 2017-2022 recognizes the crucial importance of the environment and natural resources in the country’s development. We must strike a balance between the growth of the economy and the environment sustainability,” Socioeconomic Planning Secretary Ernesto M. Pernia said during the singing ceremony yesterday at the National Economic and Development Authority headquarters in Pasig city.

“Thus, the PDP outlines aggressive strategies to rehabilitate and restore degraded natural resources and to protect fragile ecosystems while improving the welfare of resource-dependent communities,” he added.

Netherlands Ambassador to the Philippines Marion Derckx said: “The government has so many plans for infrastructure, and the Netherlands already has quite some experience in the Philippines in this field. The agency that is going to assist NEDA in making this plan is our knowledge institute for water (resources).”

NEDA Undersecretary Rolando G. Tungpalan said that there is an “enormous opportunity” for the private sector to take part in the program, as he expects a number of unsolicited proposals to surface.

“There’s a lot of real property development potential alongside Manila Bay,” he said.

“Largely, those that are revenue generating. Property development, and the transportation around them,” he added.

Mr. Tungpalan said that proposals are expected to emerge when the master plan develops, noting that no reclamation bids from the Philippine Reclamation Authority have been submitted to NEDA.

Aside from the Manila Bay, the rehabilitation of the Pasig river will also be considered as it is a connected body of water.

He said that one of the initiatives of the government includes reviving the ferry service along the Pasig river.

“So the service can not only serve the Laguna de Bay area, but also along the coastal part of Manila Bay. But that is in the planning works. But I think you have that compatibility between the Pasig River as well as Manila Bay. It’s a program that were excited about,” Mr. Tungpalan said.

“So hopefully, this output, this exercise will give us a plan. We have coastal defense, of course storm surges, but we also look at the different infrastructure sectors and environmental performance that will ensure sustainable Manila Bay development,” he added. — Elijah Joseph C. Tubayan

Luck has something to do with it

It seems being hardworking isn’t enough to achieve success. The workaholic is only noticed after he has already reached the top, thereby ascribing to long office hours (what does he really do?) the rise of his hefty net worth. What about the grunt who accompanies him even to the gym? He’s still struggling.

Gamblers and tycoons happen to be a superstitious lot. The uncertainty of the market or the randomness of chance invites the belief that not all the planning, hard work, and card counting are sure to bring in big winnings.

About this time, the overweight men in silk jackets pontificate on the impact of the earth dog. What are the hottest businesses to get into? How will the cocks, rams, and moneys fare in the coming lunar new year?

When moving to new offices, tycoons are known to employ feng shui masters to guide them on where their office should be and where to put the door. Paintings cannot be depicting desolate beaches.

Horoscopes for one are regular features of magazines. Those born under different signs have separate though sometimes similar fortunes. You can read any sign and it will seem to refer to your personal circumstances — you have been losing money at the stock market. Next week, your stock tip on an obscure paging company shooting up will bear fruit.

While a semblance of science is affected with charts and numbers, even questions on the hour of the day one was born, the result still comes out a lot like good-news-bad-news stuff… and how to improve one’s aura by wearing a red shirt to lunch.

Do hard-nosed tycoons steeped in “costs and benefits” analysis really postpone a construction during the ghost month when beset by stern warnings of “a financial storm headed in his direction?” If the warnings are ignored and ill fortune befalls the project, the unlucky one may well regret not heeding his astrological consultant. And why is the stock market thinly traded at this time? Maybe the expats are on their usual vacation leaves.

Anticipation of bad news can be a self-fulfilling prophecy. Indecision and wavering before taking the plunge can result in unfortunate results. Is the hesitation a foreboding of ill fortune or just a case of undigested pork belly?

Reading of one’s good fortune in the coming year creates its own problems. The false sense of security can lead to smugness that challenges the gods (or the writers of the horoscope) to back up their promise. They don’t guarantee results. And anyway, their forecasts from last year are seldom checked.

The idea that a certain group of people sharing an accident of birth dates will undergo a common fate may be hard to rationalize, given their different situations.

Horoscope readers tend to be self-centered and see the prediction as intended only for them. “Someone who has crossed you and derailed you out of a promotion will see her good fortune flip. You will be given a chance to include her name in a redundancy program. She will be screaming your name as she is led out the door and not allowed to bring along her cactus plant.” Such gory details are usually left out.

Classmates who may have been born under the same astrological sign and starting off from the same career line may digress in wealth and fame. Of course the successful one is seen to have been in the “low-bat” category in school. The one headed to the rutted service road of life will always believe — it is better to be lucky than smart.

Military leaders, who understand the randomness of battle, with the unpredictability of weather, momentum, and fatigue, rely on good fortune to bring them victory. They too are a superstitious lot. Are there really lucky generals?

Life presents random events that favor or derail us. Often one man’s luck is another one’s misfortune. The little speed bumps along the way to seeming success can be jarring, as when you are promised a cushy job which a few months later is unexpectedly eliminated.

There are surely lucky streaks that carry some along their path. But, like all streaks, they sometimes abruptly end… just when all the chips are on the table.

 

A. R. Samson is chair and CEO of Touch DDB.

ar.samson@yahoo.com

Bourse closes at fresh peak ahead of Q4 GDP report

THE BOURSE extended gains for a second straight trading day to finish at the year’s fifth record high ahead of today’s fourth-quarter 2017 gross domestic product (GDP) report that is widely expected to have kept the full-year pace within the government’s target.

The Philippine Stock Exchange index (PSEi) edged up 34.70 points or 0.38% to finish 8,950.62, while the all-shares index gained 21.94 points or 0.42% to close at 5,173.01.

This marks PSEi’s fifth all-time high finish for 2018, following its close of 8,923.72 last Jan. 9.

Four of the six sectoral indices closed with gains, while foreigners remained net buyers for the seventh straight trading day.

9,000 IN SIGHT
“Philippine markets bought up the index once more right before the release of fourth quarter (GDP report) tomorrow,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message, while Astrolito Romulo C. del Castillo, First Grade Finance, Inc. president and managing director, noted that “[i]nvestors are expecting better GDP results tomorrow.”

“Reports and news from analysts, Moody’s, also encouraged buying today, allowing investors to position themselves ahead of the announcement,” Mr. Del Castillo added, referring to the 6.7% fourth-quarter GDP growth expectation of Moody’s Analytics that was also the median in BusinessWorld’s poll of 12 economists.

If realized, that pace would put full-year growth at 6.7% against the government’s 6.5-7.5% target for 2017.

RCBC Securities, Inc. on Monday noted that expected fast economic growth is lifting the market’s current growth, saying that the PSEi could rise to the 9,500 level by the end of 2018.

“The market continues to gain momentum. We may breach the 9,000 in the coming days, especially if there’s a favorable outcome,” Mr. Del Castillo said.

Several other Asian bourses joined a region-wide rally, with Japan’s Nikkei 225 and Topix Index, Hong Kong’s Hang Seng index, the Shanghai Composite Index, the Straits Times Index and the Jakarta Composite Index rising 0.03%, 0.12%, 0.43%, 0.39%, 0.54% and 0.41%, respectively, though South Korea’s KOSPI sank by 0.72%

Locally, services led the four indices that gained, rising 17.98 points or 1.09% to close 1,656.75; followed by property that increased by 20.69 points or 0.51% to close 4,056.13; holdings that edged up by 37.30 points or 0.40% to finish 9,181.20; and industrials that added 16.33 points or 0.13% to 11,882.86. 

The two sectors that weighed on the bourse were mining and oil, which fell by 136.71 points or 1.13% to finish 11,891.11 and financials which ceded 1.36 points or 0.05% to end 2,286.87.

Monday saw stocks that declined outnumber those that gained 128 to 99, while 52 others were unchanged.

Some 890.17 million stocks worth P8.14 billion changed hands, compared to Friday’s 914.34 million stocks worth P10.02 billion.

Foreigners remained predominantly buyers for a seventh straight trading day, with net buying growing nearly fivefold to P448.38 million on Monday from Friday’s P92.10 million. Arra B. Francia