MELBOURNE — Serena Williams took the first step on what she hopes will be the path to a record-equalling 24th Grand Slam title in some style on Monday with a 6-1 6-1 thrashing of Germany’s Laura Siegemund at the Australian Open.
The 39-year-old American, who had never failed to get through the first round in 19 previous visits to Melbourne Park, made a faltering start with a double fault on the first point and gave up her serve in the first game.
Williams lost just one more game over the one-hour contest, however, overpowering her hapless opponent with thumping serves and howitzer forehands in front of a small but enthusiastic crowd of unmasked fans on Rod Laver Arena.
Next up for the seven-times Australian Open champion in her quest to match Australian Margaret Court’s record tally of Grand Slam titles is a second round tie against Serbian Nina Stojanović.
OSAKA Naomi Osaka made a stunning start in the Australian Open on Monday by demolishing triple quarter-finalist Anastasia Pavlyuchenkova (6-1, 6-2) to reach the second round.
Russian veteran Pavlyuchenkova was seen as a potential banana skin for Osaka, but was reduced to roadkill as the Japanese third seed steamrolled her in the opening match at Rod Laver Arena.
Osaka pulled out of the semi-final of the Gippsland Trophy with a shoulder niggle, but betrayed no sign of injury to the smattering of spectators in the centre court terraces.
Osaka next faces the winner of Caroline Garcia and Polona Hercog for a place in the third round. — Reuters
JIMMY Butler scored eight points in the fourth quarter and hit the tie-breaking jumper with 4:18 left Sunday afternoon as the visiting Miami Heat held off the New York Knicks in a 109-103 win.
Butler (17 points, 10 rebounds and nine assists) just missed a triple-double, while Bam Adebayo (24 points and 11 rebounds) also had a double-double for the Heat, which has won two straight for just the second time this season. Kendrick Nunn and Tyler Herro each scored 16 points, while Kelly Olynyk (15 points) and Duncan Robinson (12 points) each got into double digits.
Julius Randle had 26 points and 13 rebounds for the Knicks, whose two-game winning streak was snapped. Reggie Bullock hit seven 3-pointers on his way to 21 points, while Alec Burks had 13 points off the bench.
Bullock drained a trio of 3-pointers as the Knicks opened the game on a 15-5 run. The Heat responded with a 16-3 run — Bullock hit another 3-pointer for New York’s only points — in which Nunn hit two 3-pointers, including the tie-breaking trey that gave Miami a 21-18 lead. — Reuters
Apple and Hyundai first started talks over a car partnership in 2018, another person familiar with the matter previously told Reuters. But progress was hampered by the South Korean automaker’s reticence on working with outsiders, the person said.
SEOUL — South Korea’s Hyundai Motor Co. said on Monday it is not now in talks with Apple Inc. on autonomous electric cars, just a month after it confirmed early-stage talks with the tech giant, sending the automaker’s shares skidding.
Wiping $3 billion off its market value, Hyundai’s stock slid 6.2%. Shares in its affiliate Kia Corp., which had been tipped in local media reports as the likely operational partner for Apple, tumbled 15%—a $5.5 billion hit.
The announcement brings the curtain down on weeks of internal divisions at Hyundai Motor Co Group—parent to both automakers—about the potential tie-up, with some executives raising concerns about becoming a contract manufacturer for the US tech giant in a tie-up reminiscent of electronics firm Foxconn’s role in making device for Apple like the iPhone.
“We are receiving requests for cooperation in joint development of autonomous electric vehicles from various companies, but they are at early stage and nothing has been decided,” the automakers said on Monday, in compliance with stock market rules requiring regular updates to investors regarding market rumors.
“We are not having talks with Apple on developing autonomous vehicles.”
Kia shares had jumped 61% since Hyundai initially confirmed a local media report early in January that Apple and Hyundai were in discussions to develop self-driving electric vehicles by 2027 and develop batteries at U.S. factories operated by either Hyundai or Kia.
“Apple and Hyundai are in discussion, but as it is at early stage, nothing has been decided,” Hyundai said, before releasing subsequent statements that removed all mentions of Apple but said Hyundai was receiving electric car cooperation requests from parties it didn’t identify.
As recently as last week, media outlets including CNBC reported that a deal was close to being finalized. One South Korean report said the two companies were set to sign the deal on Feb. 17.
‘AGONIZING’ Hyundai is traditionally known for its reluctance to work with outsiders, making engines, transmissions, and even its own steel in-house in a vertically integrated supply chain as South Korea’s second-largest conglomerate.
Although shares in Kia and Hyundai had surged on news of the talks, internal opposition to becoming an Apple contract manufacturer was considerable, according to people familiar with the matter.
“We are agonizing over how to do it, whether it is good to do it or not,” a Hyundai executive aware of internal discussions on the tie-up told Reuters in January. “We are not a company which manufactures cars for others,” he said, speaking on condition of anonymity.
Apple and Hyundai first started talks over a car partnership in 2018, another person familiar with the matter previously told Reuters. But progress was hampered by the South Korean automaker’s reticence on working with outsiders, the person said.
Reuters reported in December that Apple was moving forward with autonomous car technology and aimed to produce a passenger vehicle that could include its own breakthrough battery technology as early as 2024.
Apple, known to keep product plans under tight wraps, has never acknowledged talks with the automaker about building vehicles, and wasn’t immediately available for comment outside business hours in the United States.
Analysts said talks might have collapsed over leaks of the partnership plan to media, or over possible insistence by Apple that Hyundai’s role in any tie-up would be that of an equipment manufacturer, rather than a strategic partner.
“With numerous news reports over discussions between the two companies, which should have been held to non-disclosure agreements, it would have been uncomfortable” said Kwon Soon-woo, an analyst at SK Securities.
Kevin Yoo, an analyst at eBEST Investment & Securities, said, “It seems clear that Hyundai Motor Group has not been too happy with dealing with Apple… They made it clear that they do not want to be treated just as Apple’s supplier or manufacturer.” — Heekyong Yang and Joyce Lee/Reuters
In the longer term, however, technology stocks remain a first choice for many investors. Historically, they’ve dominated global stock markets and continue to grow at a remarkable rate.
By Angel Zhong and Banita Bissoondoyal-Bheenick
These days people trading on the stock market want more than just a strong financial return. They’re increasingly opting for investments that will also have a positive societal impact.
The coronavirus pandemic showed us even established tech companies can suffer downturns in the short term. Apple, a tech behemoth, was left reeling when Chinese manufacturing hubs were temporarily shut down last year.
In the longer term, however, technology stocks remain a first choice for many investors. Historically, they’ve dominated global stock markets and continue to grow at a remarkable rate.
Even during the downward spiral of the pandemic, tech stocks such as Zoom and Microsoft soared in value as an influx of people started working from home. The question for many investors now is: how can one find profitable investments without supporting unethical activity?
GROWTH OF TECH STOCKS According to investment advisers Morningstar, technology stocks account for 24.2% of the top 500 stocks in the United States. Facebook, Apple, Amazon, Netflix and Alphabet (which owns Google) dominate the market, with a combined value of more than US$4 trillion.
Tech stocks also take center stage in Australia. We’ve seen the rapid rise of “buy now, pay later” companies such as Australian-owned Afterpay and Zip.
At the same time, we’ve seen an increase in the number of Australians moving to ethical superannuation funds and ethically-managed investment schemes. The latter lets investors contribute money (to be managed by professional fund managers) which is pooled for investment to produce collective gain.
It’s estimated indirect investment through these schemes has increased by 79% over the past six years.
WHAT IS ETHICAL INVESTING? While ethical investing is a broad concept, it can be understood simply as putting your money towards something that helps improve the world. This can range from companies that advocate for animal rights, to those aiming to limit the societal prevalence of gambling, alcohol, or tobacco.
Although there is no strict definition of ethical investment in Australia, many managed funds and super funds seek accreditation by the Responsible Investment Association Australasia. The “ethical” aspect can be grouped into three broad categories:
1. environmental — such as developing clean technology or engaging in carbon-neutral manufacturing
2. social — such as supporting innovative technology, reducing social harms such as poverty or gambling, boosting gender equality, protecting human and consumer rights, or supporting animal welfare
3. corporate governance — such as being anti-corruption, promoting healthy employee relations, or institutional transparency.
As investors, we must be very careful about the fine print of the companies we invest in. For example, accreditation guidelines dictate that a managed investment fund excluding companies with “significant” ties to fossil fuels could still include one that earns up to a certain amount of revenue from fossil fuels.
So while investment manager AMP Capital is accredited, it can still include companies earning up to 10% of their revenue from fossil fuel distribution and services.
5 TIPS FOR ETHICAL TECH INVESTMENT
Many technology stocks are well placed for ethical investment and you can choose to invest on your own, or indirectly via a managed investment fund. In either case, you should do some basic homework first.
1. Monitor the fund or company to ensure standards are maintained
For a company to be listed with the Australian Securities Exchange (ASX) it has to be publicly listed. It is therefore required to submit an annual audit report (audited by third-party auditors) to the Australian Securities and Investments Commission (ASIC), as per the Corporations Act 2001.
You can also contact ASIC for further information about a company listed on the ASX. The equivalent body for American companies is the US Securities and Exchange Commission.
If a company backtracks on the very ethical standards that prompted your initial investing, you should consider withdrawing your investment.
2. Stay updated on reported ethical breaches
Reputable news reports are useful on this front. Amazon, Facebook, and Alphabet are recurring names in reports about unethical practices in the tech sector.
While you can access plenty of information about a tech company from its own website and distribution channels, this is usually embellished and/or handpicked by the company itself. Make sure your information comes from diverse sources.
3. Consider how employees rate the company and why
Keep in mind a technology company might be environmentally ethical but still fall down on other issues, such as gender pay parity, for instance. It’s important to listen to employees’ claims about a company’s internal workings as such insight may otherwise be unavailable.
There are a number of independent sites reporting on corporate culture ratings, including Glassdoor.
4. Assess the environmental, social, and corporate governance (ESG) score
One benefit of investing in large to medium-sized tech companies is the ability to analyze their ESG score, issued by agencies such as Refinitiv. This score reflects how well the company adheres to ethical practice across environmental, social, and corporate governance-related matters.
5. Watch out for buzzwords
If you’re looking to invest in clean technology, watch out for buzzwords used in company reports. These are terms which at face value may seem to align with your own ethical investment values, without actually delivering.
For instance, “carbon net zero” and “carbon neutral” are not the same thing. This is an important distinction to consider if you’re wanting to make environmentally-responsible investments. — The Conversation
Angel Zhong is senior lecturer in finance at RMIT University, Australia.
Banita Bissoondoyal-Bheenick is associate professor and associate dean in finance at RMIT University, Australia.
Normally, oil producers would ramp up production as prices increase, but a move by environmentally focused investors from fossil fuels to renewables and caution by lenders leaves them hard-pressed to respond, hedge funds and other investors say. Image via Reuters
TORONTO — Hedge funds are turning bullish on oil once again, betting the pandemic and investors’ environmental focus has severely damaged companies’ ability to ramp up production.
Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said.
The view is a reversal for hedge funds, which shorted the oil sector in the lead-up to global shutdowns, landing energy-focused hedge funds gains of 26.8% in 2020, according to data from eVestment. By virtue of their fast-moving strategies, hedge funds are quick to spot new trends.
Global oil benchmark Brent has jumped 59% since early November when news of successful vaccines emerged, after COVID-19 travel curbs and lockdowns last year hammered fuel demand and collapsed oil prices. Last week it hit pre-pandemic levels close to $60 a barrel.
US crude has climbed 54% to around $57 per barrel during the same period.
“By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” said David D. Tawil, co-founder at New York-based event-driven hedge fund, Maglan Capital, and interim CEO of Centaurus Energy.
Mr. Tawil predicted prices of $70 to $80 a barrel for Brent by the end of 2021 and is investing long independent oil and gas producers.
Hedge funds’ bullish bets come despite the International Energy Agency warning in January a spike in new coronavirus cases will hamper oil demand this year, and a slow economic recovery would delay a full rebound in world energy demand to 2025.
Normally, oil producers would ramp up production as prices increase, but a move by environmentally focused investors from fossil fuels to renewables and caution by lenders leaves them hard-pressed to respond, hedge funds and other investors say.
The pace of output recovery in the United States, the world’s No. 1 oil producer, is forecast to be slow and will not top its 2019 record of 12.25 million barrels per day (bpd) until 2023. Production in 2020 tumbled 6.4% to 11.47 million bpd.
The Organization of the Petroleum Exporting Countries, which has also revised down demand growth, however, still expects output cuts to keep the market in deficit throughout 2021.
“We are going to see some incredible oil prices over the next couple of years, incredibly hot,” said Mr. Tawil.
‘BULL MARKET’ Global crude and condensate production was down 8% in December from February 2020, prior to the pandemic’s spread accelerating, according to Rystad Energy.
North America’s output was down 9.5% and Europe’s production declined just 1% over the same time period.
US sanctions against Venezuela and declining oilfields in Mexico have kept oil output from Latin America sluggish.
Some banks are forecasting the United States, which leads with the number of COVID-19 cases, to reach herd immunity by July, which would greatly stimulate oil demand, said Jean-Louis Le Mee, head of London-based hedge fund Westbeck Capital Management, which is long a mix of oil futures and equities.
“Oil companies, for the first time in a long time, are likely to make a big comeback,” he said. “We have all the ingredients for an extraordinary bull market in oil for the next few years.”
In the United States, hedge funds increased their allocation to Exxon Mobil Corp by 21,314 shares in the third quarter, the most recent U.S. filings compiled by Symmetric.io showed.
Hedge funds added another 9,070 shares of US majors ConocoPhillips and 4,144 to Chevron Corp over the same time period.
Elsewhere, shorting activity in BP PLC fell by 16 million shares on Feb. 4 but increased slightly in European oil major Royal Dutch Shell Plc by 1.9 million shares, data from FIS’ Astec Analytics showed.
Some investors remain skeptical on Canadian oil companies, among the world’s most carbon-intensive producers, though they are bouncing back faster from the pandemic than the United States.
Current short positions rose in 10 out of 14 Canadian oil companies in the Toronto energy index during the second two weeks of January, according to filings reviewed by Reuters.
US shale production will not quickly rebound, given the capital required and debt producers are carrying, lending oil prices support, said Rafi Tahmazian, senior portfolio manager at Calgary-based Canoe Financial LP.
North America’s oilfield services sector, which producers rely on to drill new wells, has been decimated, he said.
“They’re decapitated from being able to grow,” Tahmazian said. “The supply side is broken.” — Maiya Keidan and Rod Nickel/Reuters
Aung San Suu Kyi has been kept incommunicado since army chief Min Aung Hlaing seized power in the early hours of Feb. 1 to counter what the military said was widespread election fraud. The 75-year-old faces charges of illegally importing six walkie-talkies and is being held in police detention for investigation until Feb. 15. Image via Reuters
Police fired a water cannon at protesters in the Myanmar capital on Monday as tens of thousands of people across the country joined a third day of demonstrations against the military’s removal of elected leader Aung San Suu Kyi a week ago.
Calls to join protests and to back a campaign of civil disobedience have grown louder and more organized since last Monday’s coup, which drew widespread international condemnation.
“We health workers are leading this campaign to urge all government staff to join the (civil disobedience movement)”, Aye Misan, a nurse at a government hospital said at a protest in the biggest city of Yangon. “Our message to the public is that we aim to completely abolish this military regime and we have to fight for our destiny.”
Weekend protests were the biggest since the “Saffron Revolution” led by Buddhist monks in 2007 that helped prompt democratic reforms that were upended by the Feb. 1 coup.
Police in the capital Naypyidaw fired brief bursts of a water cannon against a group of the thousands of protesters who had gathered on Monday, video from the scene showed.
In Yangon, a group of saffron-robed monks marched in the vanguard of protests with workers and students. They flew multicolored Buddhist flags alongside red banners in the color of Ms. Suu Kyi’s National League for Democracy (NLD), which won a landslide election in November.
“Release Our Leaders, Respect Our Votes, Reject Military Coup,” said one sign. Other signs read “Save democracy” and “Say No to Dictatorship”.
Thousands marched in the coastal city of Dawei, in the southeast, and in the Kachin state capital in the far north, where they were dressed head to toe in black.
So far gatherings have been peaceful, unlike bloody crackdowns during previous widespread protests in 1988 and 2007. A convoy of military trucks was seen passing into Yangon late on Sunday, raising fears that could change.
Reuters has been unable to contact the junta for comment on the protests and state television has not mentioned them.
CALLS FOR WORK STOPPAGES The government lifted a day-long Internet ban at the weekend that prompted even more anger in a country fearful of returning to the isolation and even greater poverty before a transition to democracy began in 2011.
In addition to the street protests, a campaign of civil disobedience has begun, first with doctors and joined by some teachers and other government workers.
“We request government staff from all departments not to attend work from Monday,” said activist Min Ko Naing, a veteran of the demonstrations in 1988 that first brought Suu Kyi to prominence.
Ms. Suu Kyi won the Nobel Peace Prize in 1991 for campaigning for democracy, and spent nearly 15 years under house arrest during decades of struggling to end almost half a century of army rule.
The 75-year-old has been kept incommunicado since army chief Min Aung Hlaing seized power in the early hours of Feb. 1 to counter what the military said was widespread election fraud. Myanmar’s electoral commission has rejected those claims.
Ms. Suu Kyi faces charges of illegally importing six walkie-talkies and is being held in police detention for investigation until Feb. 15. Her lawyer said he has not been allowed to see her.
The United Nations Security Council called for the release of Suu Kyi and other detainees last week and the United States is considering targeted sanctions.
Australia, which has condemned the coup, demanded the immediate release of a citizen who was working as an economic adviser to the Suu Kyi government and was arrested over the weekend.
The United Nations continued to press for a restoration of democracy.
“Protesters in Myanmar continue to inspire the world as actions spread throughout the country,” Thomas Andrews, the United Nations special rapporteur on Myanmar said on Twitter. “Myanmar is rising up to free all who have been detained and reject military dictatorship once and for all. We are with you.” — Reuters
The ease with which many shoppers can make purchases is worrying some regulators around the world, who fear consumers may be spending more than they can afford.
When Leondra Garrett wanted to stock up on three new pairs of shoes early last year, the North Carolina resident split a $161 online purchase into four installments through a “buy now, pay later” service, in what seemed like a convenient deal.
Now, she admits she should have read the small print about missed payments.
When the buy now, pay later (BNPL) provider tried to withdraw a payment from Ms. Garrett’s bank account a few months later, she didn’t have enough funds to cover it. Soon after, the 42-year-old was charged $40 in penalties and her credit score dropped 10 points to 650, a reading generally classified as “fair.”
“It’s important for consumers to always read the fine print and we don’t always do it,” said Ms. Garrett, a community organizer from Charlotte.
So-called buy now, pay later services—offered by providers such as Affirm Holdings Inc., Klarna, Afterpay Ltd. and PayPal Holding Inc.’s “Pay In 4”—have blossomed across retail websites during the coronavirus pandemic as people have turned more to shopping online.
Yet the ease with which many shoppers can make purchases is worrying some regulators around the world, who fear consumers may be spending more than they can afford.
Nearly 40% of US consumers who used “buy now, pay later” have missed more than one payment, and 72% of those saw their credit score decline, according to a study by Credit Karma, which offers customers credit score checking for free.
The study, conducted for Reuters, surveyed 1,038 adult consumers in the United States to gauge interest in “buy now, pay later” and found 42% of respondents had used the service before.
“The percentage of consumers missing payments is remarkable and not as low as you would expect,” said Gannesh Bharadhwaj, general manager for credit cards at Credit Karma.
“When you make something so convenient, people may not be really thinking, ‘Do I have the budget? Can I afford this payment?’ You get more of that impulse-shopping behavior that leads to realizing they may not be able to make the payment.”
A lower credit score signals to lenders that a consumer may be higher risk and makes it harder for the consumer to borrow, whether to secure a mortgage or a new credit card. It can even make it more difficult for a consumer to set up utility accounts or find housing, as landlords will generally conduct credit score checks before renting out apartments.
Management consultants Oliver Wyman estimate BNPL firms facilitated between $20 billion–$25 billion in transactions in the United States last year, although analyst estimates on the size of the BNPL industry vary because it is relatively new and some of the companies are private. Individually, they described explosive growth last year as their services became more prevalent.
Australia-based Afterpay said it saw active US customers more than double to 6.5 million in the fiscal year ended June 30, 2020, and its sales more than tripled in the July–September quarter from a year earlier.
Over half of Afterpay’s customers in the United States are millennials, aged 25 to 40 years-old, it said.
BNPL models vary, with some companies earning most profits by collecting fees from merchants at the point of sale, and others charging interest and late fees to consumers. They say their services help merchants to boost sales and consumers to buy things they need, and cause less financial damage than credit cards because of restrictions they impose.
Nonetheless, regulators in Britain and Australia are reviewing or tightening rules around the industry. BNPL service providers, classified as fintech companies, should be subject to stricter rules more like banks, some regulators say.
It is unclear how buy now, pay later fits into US regulations because the companies that offer these services do not have bank charters, some do not charge interest and laws vary by state. However, some experts expect the sector to come under more scrutiny during the Biden administration.
“One of the questions with the new administration is, what stance will the Consumer Financial Protection Bureau take going forward?—which we expect to be more aggressive,” said Mark Palmer, financials analyst at BTIG Research.
San Francisco–based Affirm saw its revenue rise 93%, to $509.5 million, in the fiscal year that ended in June. It allows shoppers to split up purchases in terms ranging from six weeks to four years, with interest rates of 0 to 30%.
Affirm shows customers how much a loan will cost in dollar terms and does not charge late fees or compound interest. Although missed payments can affect credit scores, Affirm says it has been working with borrowers who fell on hard times during the pandemic.
“We approve borrowers only for what they can comfortably afford to repay,” said Silvija Martincevic, Affirm’s chief commercial officer. “The reason our technology is significant is that we use machine learning to make underwriting decisions.”
At Australia’s Afterpay, customers are barred from using its services after they miss a payment.
The company says 95% of its transactions globally are paid back on time and late fees contribute less than 14% of the company’s total income.
PayPal “Pay in 4” service, launched widely across the United States in November, allows customers to split purchases ranging from $30 to $600 in four interest-free payments. Late fees may apply for missed payments, depending on the user’s state of residency, according to its website.
The PayPal “Pay in 4” product in the United States does not report trades or late fees to the credit bureaus, said Greg Lisiewski, PayPal’s global vice president of Global Pay Later.
“We are working with the industry and the consumer credit bureaus to develop the appropriate framework,” he said.
Sweden-based Klarna saw fast growth over the past year, especially purchases in the $100–$200 range, said its US head, David Sykes.
Most of Klarna’s loans are small, of short duration and interest-free, which is safer for customers than credit cards, he said. Customers can delay one payment without a penalty. Late fees vary by state in line with regulation, up to a maximum of $21 and the company is rolling out a 25% cap.
“No one is getting buried in debt with Klarna,” Mr. Sykes said. “We aren’t making multi-year loans on a car or a house.”
Smaller loans with shorter durations do have benefits, but they are not risk-free, experts said. Customers may be taking on more debt than they can handle, even if it comes in bite-sized portions.
Tamika Rivera, a 35-year old insurance agent from Springfield, Massachusetts, uses multiple buy now, pay later services, and has missed payments. In one case, she did not have enough money to cover a $43 sweater purchase, which resulted in a $35 overdraft fee from her bank.
“These services are convenient but there are some negative things that can happen,” Ms. Rivera said.
Alan McIntyre, head of Accenture’s global banking practice, says the credit impact of the buy now, pay later trend remains to be seen.
“The optimistic take is that millennials don’t want to get into debt and they want to build a budget better—this is deferred debit and you are not tempted to roll it over,” he said.
“The pessimistic view is that around 40% of people using it are doing so because they couldn’t get access to traditional credit—either because they’ve maxed out their credit limit or because of a poor or non-existent credit history—and some of these loans might not season well.” — Anna Irrera/Reuters
The Philippines and the United States will meet this month to iron out differences over a two-decade-old Visiting Forces Agreement (VFA), Manila’s top diplomat said, amid renewed concerns in the region over China’s assertive maritime agenda.
The Philippines in November suspended its decision to terminate the VFA for a second time to allow it to work with Washington on a long-term mutual defense pact.
“The suspension was intended that we should continue working and I am narrowing down the issues and soon we will meet… and iron out whatever differences we have,” Foreign Affairs Secretary Teodoro L. Locsin, Jr., told ANC news channel on Monday, adding a meeting was likely in the last week of February.
He declined to elaborate on the terms of a potential agreement.
President Rodrigo R. Duterte notified Washington in February last year that he was canceling the deal amid outrage over a senator and ally being denied a US visa.
But he has extended the termination process, which has now reached US President Joseph R. Biden, Jr.’s term.
The VFA provides the legal framework under which US troops can operate on a rotational basis in the country and experts say without it their other bilateral defense agreements, including the Mutual Defence Treaty (MDT), cannot be implemented.
Last month, US Secretary of State Antony Blinken stressed the importance of the MDT and its clear application if Manila came under attack in the South China Sea.
Mr. Blinken’s comments came as Manila had filed a diplomatic protest over China’s passing of a law allowing its coastguard to open fire on foreign vessels, describing it as a “threat of war.”
China claims almost all of the South China Sea, which is a major trade route. The Philippines, Brunei, Vietnam, Malaysia and Taiwan have overlapping claims.
Mr. Locsin said he would continue to press for a code of conduct in the disputed waters that “will never exclude” the United States to ensure the balance of power between Washington and Beijing in the region. — Reuters
South Africa will pause its rollout of the AstraZeneca coronavirus disease 2019 (COVID-19) vaccine after a small study suggested it offers minimal protection against mild and moderate infection from the South African coronavirus strain known as B.1.351.
The South African health minister said the government was waiting for scientific advice on next steps.
A media release issued overnight by the University of Oxford said a study of about 2,000 volunteers with an average age of 31 found a two-dose regimen of the AstraZeneca vaccine (officially known as ChAdOx1 nCov-19):
provides minimal protection against mild-moderate COVID-19 infection from the B.1.351 coronavirus variant first identified in South Africa. Efficacy against severe COVID-19 infection from this variant was not assessed.
The analysis is yet to be peer-reviewed or published.
The AstraZeneca vaccine, sometimes also called “the Oxford vaccine,” is a core plank in Australia’s coronavirus vaccine plan, with the Australian government securing 53.8 million doses. It’s worth remembering, though, that it’s just one of the vaccines that will be made available in Australia—and that vaccines are just one of a range of responses we will need to get the pandemic under control.
So what’s all this mean for you? There’s no doubt this news is disappointing—but it’s also no great surprise given how quickly this virus mutates. And it doesn’t yet mean Australia should abandon its plan to rollout the AstraZeneca vaccine.
The sobering reality is setbacks such as these are to be expected in vaccine development, especially when dealing with an agile, fast-mutating virus such as this coronavirus.
STILL BETTER FOR AUSTRALIA TO HAVE ASTRAZENECA THAN NOT
It’s reasonable for the South African government to pause while it reflects on what these new data mean.
For Australia, it’s too early to bin the AstraZeneca vaccine as part of our rollout, especially as the South African variant is not yet prevalent here. If we did that every time we got new data, we would never get any vaccines out. I think, at this point, it is still better to have the AstraZeneca vaccine in Australia than to not have it.
Based on Australia’s current circumstances, I think it’s reasonable to say we just need anything that will help reduce the risk of severe disease. That will help ease the burden on healthcare systems.
We will get better vaccines coming out all the time. It’s an iterative process.
Encouragingly, Oxford said in its press release that:
Work is already underway at the University of Oxford and in conjunction with partners to produce a second generation of the vaccine which has been adapted to target variants of the coronavirus with mutations similar to B.1.351, if it should prove necessary to do so.
SUCH AN AGILE VIRUS DEMANDS A RANGE OF RESPONSES
These new developments highlight how quickly this incredibly agile coronavirus adapts and changes. While the level of infection remains so high, we must get used to the idea that new strains will be appearing all the time.
Vaccines are best suited to stationary targets and currently, SARS-CoV-2 is anything but—with so much human infection occurring, the virus has huge opportunity to mutate and generate variants.
Having said that, the newest vaccine technologies such as mRNA vaccines (including what’s commonly known as the Pfizer vaccine) can rapidly update and reformulate to keep up with mutant viruses.
Of course, it still takes some time to manufacture and distribute new vaccines so there will inevitably be a lag of months between identifying a new virus variant and making and distributing an updated vaccine.
A month is a long time in a pandemic. That underscores how critical treatments addressing these gaps are going to be if we are to have any chance of bringing this pandemic to an end within the next couple of years. Those responses will likely include antivirals that reduce duration of infection and other treatments that provide rapid, broad-spectrum protection against viruses by directly boosting innate immunity in the airways.
MANAGING EXPECTATIONS
Vaccines can have amazing efficacy in clinical trials but things may be different in the real world when you are dealing with different populations and exposure to different virus strains. That is a normal part of vaccine development and global rollout, and we must manage expectations around this.
We always knew the first generation vaccines would be far from perfect, and certainly not a magic bullet. As scientists have said all along, this is a long game with incremental gains. And with so much research focused on beating this pandemic, there is huge reason for optimism.
We don’t want people to be discouraged from getting vaccines. Based on current circumstances and the fact the South African variant is not yet prevalent in Australia, the AstraZeneca vaccine will be one of a suite of responses that will help bring a reduction in serious disease in the first place—and ultimately prevent transmission as vaccines become more effective and supported by other treatments.
Just like you get a new flu shot every year, so it may be in the future you get a new coronavirus jab as better and more targeted vaccines become available.
New treatments will become available to support better and better vaccines, which will slowly but surely bring an end to this pandemic. — The Conversation
Nathan Bartlett is an associate professor in the School of Biomedical Sciences and Pharmacy, University of Newcastle, Australia.
Because of GameStop Corp.’s wild roller coaster ride on the New York Stock Exchange, people have been talking about retail investing and how social media is changing the game.
The video game retailer’s stock price hit a high of $483 in what has been framed as a battle between “the little guys” of Reddit against the suits of Wall Street who had heavily shorted GameStop shares.
In this episode of B-Side, Edward K. Lee, chairman and founder of COL Financial Group, Inc., speaks with BusinessWorld reporter Revin Mikhael D. Ochave about short selling, GameStop shares, and the Philippine stock market.
TAKEAWAYS
Know the rules of the game.
“Whatever it is you are doing, you have to know the rules of the game—how it should really be done,” said Mr. Lee.
“People are opening accounts just to speculate. They are just gambling, without understanding how they do it,” he said. “Are you a passive investor, an active investor, or an active trader? A person should understand the rules clearly. You should know and apply the rules because if not, you can make so much money in one day, but it can all disappear in a snap.”
Be wary of ‘the madness of the crowd.’
A majority of people who trade in penny stocks lose money, said Mr. Lee. “People go with the trend without even knowing what they are buying. As long as the stock price goes up, they just buy stocks and go with it. Yes, you can win a lot. But eventually, you can lose a lot also. So they have to really be careful,” Mr. Lee said, who warned against the “madness of the crowd.”
Keep an open mind and an optimistic mindset.
“If you have time, the stock market is a good thing to learn,” Mr. Lee said, who advised those who are interested to open their minds, read up, and trade systematically. Trading and investing in the stock market is a skill, he added, that can “put the world at your fingertips.”
“What is important for most investors is that they have to keep an open mind. They have to use this pandemic as a means of opportunity. Those planning to invest or trade need to have an optimistic mindset. If you do not have an optimistic mindset, nothing will happen to you,” he said.
Related story: The Philippine Stock Exchange (PSE) will allow short selling as soon as issues on borrowing and lending of securities before the Securities and Exchange Commission and tax bureau are resolved. “The probability of a GameStop incident happening in the Philippines is quite small, if not nil,” said PSE President Ramon Monzon said.
The Philippines is eyeing foreign loans to fund its coronavirus disease 2019 (COVID-19) immunization program this year. — PHILIPPINE STAR/MICHAEL VARCAS
THE Philippines is planning to borrow $23.71 billion (P1.14 trillion) from foreign lenders this year to plug its ballooning deficit amid the pandemic, a Finance official said over the weekend.
“We are planning to source a total of $7.67 billion (P369 billion) in loans and grants from multilateral institutions, $10.54 billion (P507 billion) from our bilateral partners; and raise $5.5 billion (P264 billion) from the commercial markets this year,” Finance Undersecretary Mark Dennis Y.C. Joven said in a statement over the weekend.
Around 66% or $15.65 billion of the loans will be in the form of project financing, while 34% or $8.06 billion will support the national budget.
The Asian Development Bank (ADB) has set a $3.568-billion (P172-billion) lending program for the Philippines this year. Half of the amount or $1.75 billion (P84 billion) will go to the first phase of the South Commuter Railway Project, and the rest for other infrastructure projects.
The World Bank is also looking to grant $1.588 billion (P76 billion) in loans to the Philippines this year, after lending $1.87 billion (P90 billion) in 2020.
The government has tapped the World Bank for a $500-million loan to fund its mass vaccination drive against the coronavirus disease 2019 (COVID-19), while the ADB committed to lend at least $350 million.
This year, the government is planning to raise P3 trillion from domestic and external lenders to help fund the budget deficit that is seen to hit 8.9% of gross domestic product.
“The government has consistently availed debt for budget support, recognizing that program loans and global bonds provide more flexibility in terms of utilization,” Mr. Joven, who heads the Department of Finance’s International Finance Group (IFG), said.
In 2020, the government obtained $17.06 billion (P820 billion) in loans from external sources, of which $7.73 billion (P372 billion) came from multilateral lenders.
“Because of a higher emergency funding requirement in light of COVID-19, the amount of external financing contracted in 2020 increased by 75.43% year on year. This also represents an overall 33% expansion of the external borrowing program from 2016 to 2020,” Mr. Joven was quoted as saying in the statement.
The $17.06-billion foreign loans last year consisted of 85% or $14.52 billion in budget support and the rest worth $2.54 billion were in project loans meant to cover the funding needs of multi-year projects rolled out in 2020.
Around 90% or $15.44 billion (P742 billion) was used for the pandemic response, while $1.62 billion (P78 billion) went to infrastructure projects. — Beatrice M. Laforga
The central bank is likely to keep policy rates steady despite a spike in inflation in January. — PHILIPPINE STAR/MICHAEL VARCAS
By Luz Wendy T. Noble, Reporter
THE central bank is widely expected to maintain key policy rates at record low levels on Thursday, as it waits for fiscal policy to do its part in quelling the recent spike in inflation.
In a BusinessWorld poll held last week, 17 out of 18 analysts said they expect the Monetary Board (MB) to leave interest rates unchanged at its first policy-setting review this year on Feb. 11.
Analysts said any change in benchmark rates will come later this year or in 2022, as the Bangko Sentral ng Pilipinas (BSP) reserves its ammunition in supporting the economy during the crisis.
“We think they will maintain all settings (in the) next meeting as inflation is on the rise and this year’s target is at risk of being breached. A rate cut would be excessively aggressive and subject markets to unhealthy degree of volatility,” Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said.
Consumer prices surged for a fourth straight month to a two-year record in January. Headline inflation soared to 4.2%, surpassing the 2-4% annual target set by the central bank. The BSP expects headline inflation to average 3.2% this year.
Rates for the overnight reverse repurchase, lending, and deposit facilities are currently at record lows of 2%, 2.5%, and 1.5%, respectively, after the BSP slashed rates by a total of 200 basis points (bps) in 2020.
BSP Governor Benjamin E. Diokno on Friday said the projected uptrend in inflation is temporary. “The sources of near-term inflation pressures are supply-side shocks in nature that should not require a monetary policy response unless they lead to further second-round effects,” he added.
Mr. Neri said another rate cut at this point may mean more damage given some home prices have started to pick up.
“Rising property prices (townhouses, etc.) is an indication that deflation is not a big risk, [and] that more rate cuts can translate to higher rental rates,” he said.
Prices of townhomes and single detached/attached houses rose by 12% and 7.4% year on year, respectively, in the third quarter last year, based on BSP data.
Meanwhile, the implementation of a 60-day price ceiling on selected meat and chicken products in Metro Manila will address “first-round effects” of inflation that affect commodity prices.
“It looks like BSP is willing to accommodate the so-called ‘first round effects’ and only look to act should signs of ‘second round effects’ such as wage or transport fare adjustments become apparent,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said.
Asian Institute of Management economist John Paolo R. Rivera, on the other hand, is pricing in another rate cut on Thursday.
“Given the economic contraction we had in 2020 and rising inflation (cost push inflation), BSP might slightly cut off rates further by a few percentage points. This is to induce spending among consumers that will boost domestic consumption and investment expenditures,” Mr. Rivera said.
The country’s gross domestic product (GDP) contracted by a record 9.5% last year, as it struggled to contain the fallout from the coronavirus disease 2019 pandemic.
Some analysts said the BSP will go for a pause on Thursday, but will likely resume easing later this year.
“If by end of the first quarter the real economic indicators do not show improvement and government spending remains lackluster, the central bank will likely go for another 25 bps rate cut in March,” ANZ Research economist Kanika Bhatnagar said. The MB’s next policy-setting meeting is on March 25.
Alex Holmes, an economist at Capital Economics, said the BSP may consider the continued need to support the economy with recovery likely to underwhelm in the next quarters.
“[W]hile the current trend in inflation is likely to delay the central bank from easing further, it is unlikely to stop it. We are sticking with our forecast for 50 bps of cuts this year,” Mr. Holmes said.
HSBC Global Research economist Noelan Arbis expects the central bank to pause easing this year but raise policy rates by a total of 75 bps in 2022, “assuming the virus is contained at that time.”
“Long periods of negative interest rates could have a negative impact on the economy, not just on inflation but also in terms of financial stability. Persistently low interest rates could add to the risks to the banking sector, as it incentivizes a buildup in household debt,” Mr. Arbis said.
Meanwhile, analysts said there is still room for cutting the reserve requirement ratio (RRR) of banks, although this could come later in the months ahead.
“Ample liquidity remains so there is no need to cut reserve requirements at this time. [RRR cut will] most likely occur towards the second half of the year,” BDO Unibank, Inc. Chief Market Strategist Jonathan L. Ravelas said.
The BSP slashed RRR of big banks by 200 bps last year, while reserve requirements of thrift and rural lenders were cut by 100 bps to 3% and 2%, respectively. Mr. Diokno said policy measures last year have infused about P2 trillion in liquidity. However, data show banks are not utilizing this to expand credit.
In December, outstanding loans by big banks dropped 0.7% year on year, the first decline in over 14 years. Previous months showed tepid lending growth, as banks tightened credit standards and borrower confidence remained weak.
“We believe that reviving loan growth at this point is more dependent on government initiatives that improve the cash flow of businesses such as CREATE (Corporate Recovery and Tax Incentives for Enterprises) and FIST (Financial Institutions and Strategic Transfer) [bills],” said Alvin Joseph A. Arogo, vice-president and head of equity research division at Philippine National Bank.
CREATE will bring down corporate income tax immediately to 25% from 30%, while FIST will allow financial institutions to transfer their nonperforming assets to asset management companies. Both measures are now up for President Rodrigo R. Duterte’s signature.
Prior to the pandemic, Mr. Diokno vowed to bring down the RRR to a single digit by the end of his term in mid-2023.
