SINGAPORE (May 20):
“The sheer size of China’s reserves, and that this is even becoming a conversation, means the market should take it seriously.” — Torsten Slok, chief international economist at Deutsche Bank. Many clients have been asking him whether China, the largest holder of US Treasuries, is starting to dump its holdings, estimated at US$1.12 trillion.
US should accept China’s rise, says Singapore
Singapore Foreign Minister Vivian Balakrishnan has urged the US to allow China to have a greater say in shaping global rules, so as to avoid a prolonged clash that could force smaller countries to choose between the two superpowers.
“For us in the middle, especially for small countries, we do not wish to be forced into making invidious choices,” Balakrishnan said in Washington DC. “So, we hope that both sides will work out a strategic response and take into account China’s increasing influence and weight in the international arena, and that both sides will find a way to accommodate each other’s legitimate interests.”
The view that China is an adversary and must be “contained” will not work; rather, there should be “constructive competition” between the two countries, according to Balakrishnan. “My appeal to the United States is to double down, reap the rewards together. Singapore wants both a sustained US presence, which we believe is positive, and we also want China to be able to assume its rightful place as it develops and becomes a superpower in its own right.”
Trump bans foreign telecoms gear that poses security risk
US President Donald Trump has declared a national emergency, prohibiting US companies from using foreign telecoms equipment that poses a security risk.
The move appears aimed at Chinese telecommunications giant Huawei Technologies, although the White House has insisted that no particular country or company has been targeted.
The US has been pressuring allies to prevent China from building 5G mobile networks, with warnings that it would result in information sharing restrictions with the US.
The Chinese government has responded by calling on the US to stop discrediting and suppressing Chinese enterprises, and to stop using the pretext of national security to undermine a fair and non-discriminatory business environment.
Separately, China has formally arrested two Canadians who have been detained for months, reported The Globe and Mail. Neither Michael Kovrig, a former diplomat, nor entrepreneur Michael Spavor, have been charged, though.
The two men have been held in China since December. The move was seen as retaliation for the arrest of Huawei’s chief financial officer Meng Wanzhou in Vancouver at the request of the US.
Cisco pares back manufacturing in China to ease tariff impact
US network equipment maker Cisco Systems has cut its manufacturing in China as it anticipates higher import tariffs in the US. Cisco has been one of the companies most affected by the tariffs, with its data centre equipment imported from China subjected to a higher 25% tariff. The company had begun planning for higher tariffs since last summer, when its equipment was slapped with a 10% levy, with a threat to raise it to 25% later, according to the Financial Times.
Cisco has manufacturing facilities in 13 countries with a distributed supply chain, according to CEO Chuck Robbins, giving it the flexibility to move production between plants to escape the brunt of the tariffs. Any price increases Cisco would have to impose as a result of the tariffs would then be minimal.
Uber shares tank after listing
Ride-hailing start-up Uber’s IPO has seen its shares tank after listing on May 10, falling to US$36.90 less than two days after going public. It is now hovering around the US$41 mark, lower than its US$45 offering price of US$42.
Uber’s market cap currently is around US$62.2 billion ($85.2 billion), a far cry from the US$120 billion valuation that was leaked last year after Uber’s discussion with its bankers and the US$82.4 billion valuation it had for its IPO.
Investors had raised questions after Uber’s IPO prospectus was released with no promise of ever making money. Uber recorded a revenue of US$11.3 billion last year and incurred losses of US$3.04 billion, with total operating losses over US$10 billion in the last three years.
WeWork moderates losses as it works towards an IPO
WeWork has broken its pattern of increasing losses for 1Q2019 as the company
begins the road to an IPO. Adam Neumann, founder of the co-working start-up, and other executives have shifted their pitch from a start-up with strong growth
to a company with investor-friendly
This comes in the wake of ride-hailing start-ups Uber and Lyft’s declining share performance since their recent listing.
The We Company, parent of WeWork, has seen revenue doubling to US$728 million y-o-y and membership growing from 220,000 to 466,000. Capital expenditures have also been pared back, leading to lower losses.
Singapore, Malaysia meet on maritime boundary delimitation
The committee set up by Singapore and Malaysia to discuss boundary delineation in the waters between Singapore and Malaysia held its first meeting on May 13. The committee, established after a meeting between the foreign ministers of Singapore and Malaysia in March, is co-chaired by the permanent secretary of Singapore’s ministry of foreign affairs, Chee Wee Kiong, and Muhammad Shahrul Ikram Yaakob, Malaysia’s secretary-general of the ministry of foreign affairs.
The two countries were in a marine territorial dispute late last year, trading accusations of over-stepping water boundaries at the Straits of Johor. “Constructive discussions” were held during the May 13 meeting, according to Singapore’s MFA. — Compiled by Benjamin Cher