Why did Alibaba invest $215 million in Tango when no one in China uses Tango?

In yet another boon to the mobile messaging race, Chinese ecommerce giant Alibaba has led a $280 million investment round in the Mountain View-based mobile messaging company Tango, as first reported by Forbes. Representatives from the Hangzhou-based company have confirmed with Tech In Asia that it will inject $215 million of its own money into the round in exchange for a minority stake and a seat on Tango’s board of directors. According to Forbes, the new funding might value Tango at approximately $1.1 billion. The company disclosed that it now has over 200 million registered users on its app (up from 150 million last September), 70 million of whom are active on a monthly basis. Tango managed to stand out from its like-minded peers with an early focus on video messaging, and later went on to introduce games, and add music thanks to a tie-in with Spotify. The investment marks the latest milestone in the mobile messaging wars, following Facebook’s $19 billion dollar acquisition of WhatsApp and Rakuten’s purchase of Cyprus-based Viber for $900 million. It takes $215 million to tango. It’s tempting to consider the investment in light of Alibaba’s business in China. There, the company is attempting to transform itself from a desktop-oriented ecommerce firm to a mobile oriented ecommerce firm as it faces competition from Tencent, which continues to dictate consumer behavior on smartphones with its ubiquitous WeChat (or Weixin, as it’s known domestically) messenger. However, given that Tango’s strongest markets are the US, Western Europe and the Middle East, the investment likely has little to do with Alibaba’s mobile bid in China, and everything to do with its steady encroachment into markets abroad – specifically the United States. There, Alibaba’s business operations have traditionally been focused on business-to-business sourcing, but recently it’s made several investments in mobile-oriented or consumer-facing companies. Last October it led a $50 million round in mobile search firm Quixey, along with a $206 million round for Amazon-rival Shoprunner. It’s also helping fund the launch of 11 Main, a new ecommerce venture that looks set to be a less trendy version of Fab. As a result, backing a California-based chat app gives Alibaba a potential springboard for experiments in mobile shopping abroad. This was explicitly one of the reasons behind Rakuten’s purchase of Viber – the Japanese ecommerce firm  saw dollar signs after WeChat and Line proved that the stickiness of chat apps could translate to big bucks for retailers. If past investments are any indication, however, it will take some time before Alibaba-blessed ecommerce startups make their way onto Tango. 11 Main hasn’t even launched yet, and Alibaba’s investments and Quixey and Shoprunner haven’t yielded any fruits covered in Alibaba’s fingerprints. It seems Alibaba’s strategy for cracking the US consumer market is to finance emerging projects and let them marinate. There’s also the question of how the investment might relate to Laiwang, Alibaba’s struggling chat app for Chinese smartphone owners. While catching up to WeChat in China is no longer an option – Tencent just revealed the app is up to 355 million monthly active users – it’s possible that the Tango team could apply its proven know-how to Laiwang in an effort to give it a much needed boost. But even then it would still seem to late to bring any meaningful impact.
Alibaba’s mobile strong points for the moment remain its Taobao app and Alipay Wallet, the latter of which has processed a total of over $150 billion in mobile payments to date. It also owns a stake in UCBrowser, China’s most popular mobile browser.

Source: TECHINASIA

Xiaomi confirms its first phablet, the Redmi Note, will make its way to customers in May

 Source: TECHINASIA

Xiaomi’s Hugo Barra announced on his Google+ page that the Redmi Note, Xiaomi’s first-ever phablet device, will ship to customers in May. Xiaomi had teased the device on Sina Weibo and Google+ over the course of last week, though today the final specs have been revealed to include (according to the post): Octa-core MediaTek MTK6592 chipset Choice of two configurations — 1.4GHz with 1GB of RAM or 1.7GH with 2GB of RAM 5.5-inch 720p IPS display with full lamination TP Dual-SIM and dual-standby 3200mAh battery 13MP back / 5MP front camera   The 1.4GHz/1GB version will retail for US $129 (converted to local currencies, of course), and the 1.7Ghz/2GB version will retail for $159. Customers based in mainland China, Hong Kong, Taiwan, and Singapore will be the first to get their hands on the Redmi Note. Barra also wrote in the post that the device would make its way to other markets following its initial launch. At Xiaomi’s official Singapore launch last February, India and Indonesia were names as likely destinations for the company, and earlier this week Xiaomi hinted that Latin America might not be far off.

China Mobile’s telco in Pakistan reaches 25 million subscribers, but still an also-ran

Zong is Pakistan’s fourth biggest mobile telco. While that’s not remarkable in itself, it’s notable that it’s actually owned and operated by China Mobile, the biggest telco in the world by subscriber count. This week Zong hit a major milestone, surpassing 25 million customers, according to a company announcement spotted by ProPakistani. That’s out of a total of 125 million mobile subscribers in Pakistan. China Mobile has driven Zong to that figure in just under six years. The Chinese giant acquired Paktel in early 2007 when it only had about a million subscribers, and that became the basis of Zong as it rebranded and reenergized in April 2008.

While the rate of growth seems strong, China Mobile hasn’t met the tough targets it set for itself in Pakistan, which was the carrier’s first attempt at reaching an overseas market. In December 2012, China Mobile Pakistan CEO Fan Yunjun told Pakistan’s Tribune newspaper that Zong was aiming to be number two in Pakistan by 2014. That seems unlikely by the end of the year as the telco’s experienced rivals keep ahead. At the time of that interview, Zong was still fourth, with 17 million customers. Mr. Fan’s aim for the number two spot was likely based on a much-heralded merger with smaller rival Warid. However, China Mobile decided not to bid for Warid and pulled out of contention in October 2013. Mobiilink remains number one with over 38 million subscribers, Telenor is second with 33 million, and Ufone is third with 26 million. Warid is down in fifth with 13 million.

Source: TECHINASIA

China Mobile says most of its 4G subscribers are using iPhones

“Most of our 1.34 million 4G users are using an iPhone,” said China Mobile chairman Xi Guohua today. He was speaking in the post-earnings conference call after China Mobile (NYSE:CHL; HKG:0941) released its Q4 financials, reports Reuters. China Mobile rolled out 4G on December 18. On that day Mr. Xi said that the telco giant aims to sell 100 million 4G on-contract phones in 2014 thanks to greater subsidies. However, this 1.34 million number shows that target will be tough to hit – perhaps even an impossible task. Apple’s (NASDAQ:AAPL) long-awaited deal for the iPhone with China Mobile arrived a week after the 4G launch. Tim Cook and Xi visited a China Mobile store in Beijing to celebrate the new partnership.

China Mobile now has 776 million users, of whom 28 percent are signed up for 3G. The telco could find it tough to persuade its 3G subscribers to shift to 4G without offering lower data package prices. In other news from China Mobile’s Q4 earnings, the company saw a shock drop in profit, falling to $4.89 billion in that quarter. The huge costs of its 4G rollout were the likely cause.

Source: TECHINASIA

Russia's Sberbank delays forum, banks uneasy over Ukraine. March 12, 2014.

 Russia's largest bank Sberbank has postponed one of the country's highest profile investment conferences due to volatility stemming from the situation in Ukraine, the bank said on Wednesday.

The move underscores increasing nervousness in Moscow's banking sector in the face of Western threats of economic sanctions in response to Russia's seizure of Crimea.

Leaders in Washington and Western Europe have signaled they are prepared to impose asset freezes and other sanctions against those responsible for violating the sovereignty of Ukraine.

"In capital markets everything is on hold," said one Moscow-based investment banker who added that deals are now being scrutinised at banks' highest levels.

"Banks are trying to work in something in the legal language and documentation that if there were sanctions imposed, what would that mean," the banker said.

State-controlled Sberbank had scheduled its Russia Forum event for April 10 to 12, but said in a statement it had decided to change the timing to the autumn following feedback from companies and investors.

The forum, held in Moscow, is a major annual event in Russia's business community. It has drawn top Russian and international business people and economists as speakers, as well as top politicians including President Vladimir Putin.

The decision to postpone was made in light of the "lack of short-term visibility around the Ukraine situation (and) uncertain economic dynamics and elevated volatility on capital markets," Sberbank said.

The move comes a week after VTB Capital, the investment banking arm of Russia's second-largest bank VTB, postponed an investment forum scheduled for April 8 to 9 in New York.

"We have rescheduled our NY event in order to ensure the availability of keynote speakers and to confirm those dates that will be convenient for the forum's target audience," VTB Capital said in a statement.

Russia's moves in Ukraine's Crimea region have led to a sharp fall in the rouble and predictions from some economists that Russia could fall into recession.

U.S. Secretary of State John Kerry said on Wednesday that nothing justified Russia's takeover in the Black Sea peninsula but he declined to get into details about the administration's plans to impose sanctions on Moscow if a solution is not found.

"I don't want to go into all of the detail except to say ... it can get ugly fast if the wrong choices are made, and it can get ugly in multiple directions," Kerry said. "So, our hope is that indeed there is a way to have a reasonable outcome, here."

In Moscow, bankers said they hoped that the situation does not deteriorate so far that the U.S. and Europe detonate the 'nuclear option' of freezing dollars held in corresponding overseas accounts resulting in foreign banks being forced out of Russia and trade being disrupted.

"It's a gun where one barrel is pointed at the enemy and the other back at you," said the Moscow-based banking advisor. "If you pull the trigger you'll shoot yourself in the face as well as your opponent. It is nuclear, because trade stops in any direction."

Obama extends sanctions against Russia to include wealthy Putin allies

President Obama has extended financial sanctions against Russia to include wealthy supporters of Vladimir Putin and a bank close to the Kremlin, in a bid to deter Russian military incursions into eastern and southern Ukraine.

Amid growing pressure for a tougher US response to the crisis, the White House also issued a new executive order authorising a co-ordinated economic blockade with the European Union against key Russian industries if the situation escalates.

White House officials also revealed the Pentagon was providing “non-lethal” assistance to the Ukrainian military .

The additional financial sanctions target 20 new individuals, including eight officials previously identified by the European Union. They extend an initial list announced on Monday to add what the White House calls “Putin’s cronies”.

The previous blacklist of 11 officials shied away from touching top figures or oligarchs.

Most significantly, the new blacklist targets several influential businessmen known to be close to Putin.

Gennady Timchenko, who controls the Gunvor Group, the fourth-largest crude oil trader in the world, has a net worth of $15.3bn and was said by Forbes to be “one of the most powerful people in Russia.”

Arkady and Boris Rotenberg, judo friends of Putin and co-owners of SMP Bank and SGM Group, which provide construction services to state-controlled gas giant Gazprom, were among the elites said to have profited from the Sochi Olympics.

Companies controlled by Arkady Rotenberg won at least $7.4bn worth of contracts related to the Games, Bloomberg reported. He is one of the most influential businessmen in the country, according to Forbes.

The new list also targets Bank Rossiya, which the US claims is the personal bank for senior officials of the Russian Federation.

Among the new Kremlin officials who will face asset freezes are Sergei Ivanov, Putin’s chief of staff, and state Duma chairman Sergei Naryshkin, who has vocally supported Russian intervention in Ukraine. Vladimir Yakunin, the head of state-owned Russian Railways, was also on the list.

All those included will have any US assets frozen and a ban placed on any dealings with US companies, which the White House claims will affect their ability to do business globally.

Several Russian politicians openly mocked earlier White House sanctions against government officials, claiming they did not have any assets that could be hurt by the move and would not deter their policy in Crimea.

But officials in Washington insisted the new steps – together with the threat of co-ordinated action with the EU against Russian industry – were intended to send a signal to deter possible Russian military incursions in eastern and southern Ukraine.

“We are concerned by recent Russian military movements. It would be a significant escalation for Russia to move into southern and eastern Ukraine,” a senior US administration official told reporters. “That is part of the context [of these sanctions]; to send a signal that these key sectors of the Russian economy are in play for sanctions.”

Source: theguardian

S&P's on Thursday revised the outlook of Russia to negative

Standard & Poor's on Thursday revised the outlook for the Russian Federation to negative from stable on rising geopolitical and economic risks.

The rating agency affirmed Russia's BBB foreign currency rating.

"The outlook revision reflects our view of the material and unanticipated economic and financial consequences that EU and U.S. sanctions could have on Russia's creditworthiness following Russia's incorporation of Crimea, which the international community currently considers legally to be a part of Ukraine," S&P said in a statement.

Source: Reuters

U.S. : leading economic index rose 0.5% in February

 The Conference Board's leading economic index rose 0.5% in February, after a 0.1% rise in January and a 0.1% decline in December. "The U.S. LEI increased sharply in February, suggesting that any weather-related volatility will be short lived and the economy should continue to improve into the second half of the year," said Ataman Ozyildirim, economist at The Conference Board

Source:  marketwatch

U.S. : Existing homes declined 0.4% in February

Sales of existing homes declined 0.4% in February to a seasonally adjusted annual rate of 4.6 million, the slowest pace since July 2012, theNational Association of Realtors reported Thursday. Sales rates have trended down since the summer as rising mortgage rates and home prices cut affordability. Constrained inventory and unusually poor weather may have also a played a role in weak buying, NAR said. Economists polled by MarketWatch had expected a February sales rate of 4.58 million, compared with a January rate of 4.62 million. The median sales price of used homes hit $189,000 in February, up 9.1% from the year-earlier period, supported by low inventory. February's inventory was 2 million existing homes for sale, a 5.2-month supply at the current sales pace.

Source;  Marketwatch

WSJ: Janet Yellen surprised Investors by saying interest rates will start to go up in Spring 2015

             The Wall Street Journal reports, "Janet Yellen surprised investors in her first press conference at the helm of the Federal Reserve when she tried to specify when the central bank would begin raising interest rates. The Fed, in its policy statement, said the benchmark federal-funds rate will remain near zero for a “considerable time” after its signature bond-buying program ends".

But at the press conference when Ms. Yellen was asked to clarify that timing, she said it is “hard to define” but that it “probably means something on the order of around six months.”

That means the Fed could potentially raise rates sometime in the first half of 2015, assuming it keeps dialing back the bond-buying program at the current pace.

Such a timetable didn’t sit too well with investors.

The Dow Jones Industrial Average fell as many as 210 points before finishing the day down 114 points. Late Wednesday the benchmark 10-year Treasury yield rose to 2.770%, according to Tradeweb, up from 2.714% right before the Fed’s statement. The yield remained at that raised level this morning, while stock markets across Europe and Asia fell.

“It is hard to know if Yellen wanted the market (which has taken it hard on the chin following that particular remark) to start thinking of a mid-2015 hike, but that is what was implied by her statement,” said Millan Mulraine, director of U.S. research and strategy at TD Securities.

The Fed’s latest projections showed most officials—13 of 16—expect to start raising short-term rates in 2015. Just one official expected to begin lifting rates this year and two expected the Fed will wait until 2016. Those projections don’t deviate much from Ms. Yellen’s off-the-cuff remark at the press conference.

But as U.S. stock prices fell and Treasury bond yields rose, many market participants interpreted the projections and Ms. Yellen’s comments as possibly indicating that interest rates could rise sooner and higher than initially expected.

China: Cash flow problems could lead to developers defaulting

A headline-making debt woe afflicting a small Chinese property developer has highlighted an ongoing cash-flow headache in the sector. Industry analysts said they expected some smaller companies to default and home prices to decline in third- and fourth-tier cities.

Zhejiang Xingrun Real Estate Co., a privately-owned small developer in east China's Ningbo City, is struggling to pay a 3.5-billion-yuan (573.8 million U.S. dollars) debt after its capital chain snapped.

Of the debt, some 2.4 billion yuan was borrowed from banks, who are working with local governments to find solutions. Two owners of the real estate firm have been detained by police on suspicion of illegal fundraising.

A preliminary investigation showed that plummeting land prices was one of the major contributors to the money crunch. It is estimated that the company has lost about 1.4 billion yuan from its purchased land because of shrinking value.

Most of Zhejiang Xingrun's business was in Fenghua, a small city under Ningbo. Fenghua has a population of about 500,000. Its land price at the end of 2013 was approximately halved compared with that in early 2010.

"There are high stockpiles in medium and small cities, and the performance of developers based in third- and fourth-tier cities was sluggish in the first two months of 2014," said Zhang Dawei, chief analyst with property agent Centaline.

A possible default by Zhejiang Xingrun is "symptomatic of major themes in the industry -- polarization in favor of larger, better funded homebuilders; oversupply in smaller cities; and significantly slower growth rates and profit margins," Fitch Ratings said in a note.

Zhejiang Xingrun had run into trouble since, firstly, it is a privately owned company, meaning it has limited access to equity funding. Chinese regulations limit the ability of homebuilders to use bank borrowings to purchase land, Fitch said.

Private companies are likely to be more reliant on non-traditional sources like trust funding, which come with high costs.

Second, its core market, Fenghua, is showing signs of overbuilding. Finally, key shareholders of Zhejiang Xingrun were arrested relating to illegal fundraising, which suggests a significant corporate governance lapse.

"We believe there will be further defaults in this industry as these themes will persist, but they will be limited to smaller companies like Zhejiang Xingrun," Fitch said.

Zhang Zhiwei, chief China economist with Japan's Nomura Securities, shared similar views.

Zhejiang Xingrun is the largest property developer in recent years that is at risk of bankruptcy, Zhang said.

"More property developers will face similar pressures as transaction volumes slow and cash flow conditions tighten, and expect this problem to be more severe for unlisted developers in third- and fourth-tier cities with limited access to financing," he said in a research note.

Zhang maintained that China's property sector suffers from overinvestment and has a significant oversupply problem.

The risk is particularly high in third- and fourth-tier cities, which accounted for 67 percent of housing under construction in China in 2013, he said.

The falling price of land in Fenghua is consistent with the deceleration of home price growth in China over the past few months.

Last month, new home prices in 70 major cities tracked by the National Bureau of Statistics rose by an average of 11.1 percent year on year, slowing by 1.3 percentage points from January.

Prices for existing homes rose 6.4 percent year on year, compared with an average growth of 7.4 percent in January. On a month-to-month basis, 57 out of the 70 cities saw rises in new home prices, fewer than 62 cities in January.

Deceleration of home price growth has changed the psychology between home buyers and property developers and boosted a wait-and-see sentiment, even in first-tier cities with a sizzling housing market like China's capital Beijing.

As of March 16, sales of new homes and existing homes in Beijing plunged 57.5 percent and 66 percent year on year, respectively, official data revealed.

Meanwhile, a lackluster property sector has made banks more cautious of offering credit to property developers.

With eyes on cash flow, some developers have chosen to cut prices to cash in. Two local developers in Hangzhou, capital of Zhejiang Province, announced sales promotions in late February.

Combined sales revenue of 30 monitored home developers stood at 66.5 billion yuan, nosediving by 39 percent from January, according to Zhang Dawei.

Major home developers, especially listed ones, are eager to publish impressive financial results. A business slump could cause their stocks to drop.

Li Tiegang, director of the real estate research center of Shandong University, said sales promotions in big cities could lead to similar actions in smaller cities

"We may see some price cuts in two or three months," said Li.

Source:  Xinhua

China : 2014 NPC & CPPCC Sessions

 Premier Li Keqiang addressed the issue of foreign trade. The premier noted China and the US made 100 million US dollars of trade per working hour, and the potential will be huge, as the two sides are negotiating on investment deal.

Regarding China's economic relationship with Europe, premier says as long as they talk to each other with respect, conflicts can be solved. And the investment talks between China and Europe will create favourable conditions for companies from both sides.

When talking about economic cooperation between the mainland and Taiwan, Li expresses his hope of after talks of ECFA can bear fruits to benefit people and firms across the Taiwan Strait. Meanwhile, the premier urges Chinese exporters to upgrade their product and improve the quality.

Source: Xinhua

Sudden collapse of iron ore price casts shadow on Australian economic prospect

The Australian Bureau of Statistics (ABS) on Thursday posted the biggest monthly full-time payroll surge since 1991. Although the jobless rate held still at 6 percent, the number of full-time jobs increased by 80,500 across the country in February. This is surprisingly good data, showing that the economy is recovering and the central bank's low interest policy has worked.

However, the sudden plunge of iron ore and copper prices cast a shadow on the Australian economic outlook. There are concerns that the slowdown in Australia's biggest trading partner, China, will eventually hurt Aussie economy, especially the mining sector.

On Thursday, China released economic data of fixed-asset investment and industrial output of first two months of 2014. Both figures missed targets with fixed-asset investment growth at 17.9 percent and industrial output growth at five-year low, 8.6 percent.

The commodities market has already anticipated the weak economic data from China. Both iron ore and copper suffered sudden price crash in the past week. In north China, the price of iron ore has already fallen from 135 U.S. dollars a ton at the beginning of the year to 105 U.S. dollars now, almost 20 percent off.

Many explanations have been brought out for the iron ore price drop -- unexpected Chinese trade deficit in February, record stockpiles of iron ore in Chinese major ports, government's decision of tightening credit for underperforming steel mills.

Also China is determined to fight against air pollution, particularly around capital city of Beijing, by means of cutting steel production capacity in Hebei province which accounts for a quarter of total steel production in China.

Price fall and shrinking demands from China will surely put more pressure on the mining companies.

"Rio Tinto, BHP and Fortescue, the three big producers here in Australia, have invested an enormous amount of time and money in expanding their production capacity over the last few years and they're just starting to deliver the biggest lift in those programs last year and this year, so they'd be a little bit troubled by this," said Tom Price, UBS commodity analyst.

But the iron ore bosses are not as worried as the analysts. On the contrary, they are undeterred with the long-term prospect of the commodity.

"There will be short-term volatility, proof of which you are seeing this week. The longer term is still intact and I can't see any indication that would change my mind, we still see good growth in the market through to the 2020s," Rio Tinto's head of iron ore, Andrew Harding, said at the AJM annual global iron ore and steel forecast conference in Perth.

This view is shared by BHP Billiton head of iron ore, Jimmy Wilson, who said at the same conference that "our view that Chinese crude steel production is expected to peak at 1.1 billion tons, around 2025, is unchanged".

Source: Xinhua