HBO Chief Executive Richard Plepler to resign from company


FILE PHOTO: Richard Plepler chairman and CEO of Home Box Office Inc. speaks at the WSJD Live conference in Laguna Beach, California, U.S., October 25, 2016. REUTERS/Mike Blake

(Reuters) – HBO Chief Executive Richard Plepler will leave the premium television network owned by U.S. wireless carrier AT&T Inc after nearly 28 years at the company, Plepler said in a memo to HBO employees on Thursday.

The move comes after AT&T won an appeals court decision on Tuesday for its purchase of media company Time Warner, which included HBO and the Turner TV networks.

“Hard as it is to think about leaving the company I love, and the people I love in it, it is the right time for me to do so,” Plepler wrote in the memo seen by Reuters.

Plepler oversaw many successes at HBO such as hit shows like “Game of Thrones” and “Girls.”

Reporting by Sheila Dang; Editing by Bill Berkrot



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Japan jobless rate 2.5 percent in January: government By Reuters


© Reuters. Job seekers stand outside a job fair event room at a commercial building in Tokyo

TOKYO (Reuters) – Japan’s jobless rate rose slightly in January while the availability of jobs held steady, government data showed on Friday, underlining a tight labor market despite recent signs of deterioration in the economy.

The seasonally adjusted unemployment rate rose to 2.5 percent from 2.4 percent in December, and compared with economists’ median forecast of 2.4 percent, figures from the Ministry of Internal Affairs and Communications showed.

The jobs-to-applicants ratio stood at 1.63, unchanged from December and matching economists’ median estimate.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Pertamina in talks with Petronas for Malaysian crude processing deal – Business News



Pertamina said on Thursday it plans to process its share of Malaysian and Iraqi crude oil production at Petronas’ refineries in Malaysia in return for gasoline as Indonesia strives to reduce oil imports

“We’re approaching (Petronas) on whether we can utilize Petronas refinery to process our crude (produced) from Malaysia’s fields,” Heru Setiawan, director of investment planning and risk management at Pertamina told reporters





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China’s fledgling junk bond market spawns new breed of vulture funds By Reuters


© Reuters. An evening view of the financial Central district in Hong Kong

By Samuel Shen and Noah Sin

SHANGHAI/HONG KONG(Reuters) – When the Shanghai-traded bonds of conglomerate China Minsheng Investment Group plunged 40 percent over two days in January after news it had missed a repayment, Beijing-based hedge fund manager Jash Zhang smelled blood.

As the private investors in the bond rushed to sell, Zhang snapped up CMIG’s dumped bonds at about 50 yuan ($7.48) apiece, or half their face value, betting that the 300-billion-yuan company would eventually repay the debt.

The strategy,she said, is simply to pounce when faint-hearted investors are wavering.

“When bad news breaks about an issuer, some funds will scramble to sell the bonds,” said Liu Xiaofang, head of investment research at Shanghai Fengshi Asset Management Ltd, which launched its first vulture fund in September. But the bonds’ underlying problem might be “not that big,” creating opportunities.

Zhang and Liu are among a new flock of vulture investors that have emerged in China’s corporate bond market in the last year, seeking to profit from steep sell-offs.

The risky but potentially lucrative business of trading in bonds on the verge of default is in its infancy in China, almost as new as the phenomenon of corporate defaults in the state-run economy.

A regulatory source said only a handful of other hedge funds have entered the trade, including Lanjing Investment, Colight Asset Management, Jing Tang Investment and Yongle Fund Management. The source declined to be named because of the sensitivity of the matter.

By some estimates, the market in such distressed bonds is worth just 10 billion yuan ($1.5 billion), a tiny fraction of the $472 billion corporate bond market.

But analysts expect it to grow rapidly as the country’s default wave, driven by funding squeezes in the private sector, claims more victims.

‘FALLEN ANGELS’

The strategy of trading in distressed bonds is more commonplace in mature markets, with recognisable names such as Elliot Management and Aurelius Capital known for their aggressive recovery tactics.

The emergence of vultures in China, spurred by a record number of delinquencies in 2018, could help improve liquidity in a corporate bond market that has traditionally been dominated by low-risk investors such as mutual funds, brokers and insurers.

In all, 45 companies in sectors ranging from real estate to industrials and mining defaulted on 117 bonds with a total principal amount of 110.5 billion yuan in 2018, according to ratings agency Fitch.

That is more than all the previous years’ sums combined. China’s first bond default occurred in 2014.

“The (Chinese) government did not really allow defaults to happen until about four years ago,” said Ben Zhu, a Hong Kong-based distressed debt investor. “As defaults spread, the bad apples get picked out. These companies will lose access to financing, and that’s a good thing.”

For Liu of Fengshi Asset Management, the game of hunting for “fallen angels” has been highly profitable.

Last November, when Kangmei Pharmaceutical Co’s debt instruments dived on a wave of negative reports suggesting reckless fundraising and insider trading by the firm, Liu bought for 70 cents on the dollar one of its bonds that would mature soon.

“The market consensus was that this company was cooking books. But we didn’t think the problem was big enough to lead to an imminent default,” Liu said.

Kangmei paid investors in full the next month.

“On an annualized basis, it’s a return of several hundred percent. On an absolute basis, it was a gain of around 40 percent. And we bet heavily,” he said.

More audacious investors like to buy bonds that have failed to repay investors on time.

“There’s too much panic around defaults,” said Zhou Li, president of Rationalstone Investment. “Whenever a company defaults, people would assume the (bond) value would be wiped out to naught. But that’s not the case.”

He added that not all technical defaults – such as a delay in payment – would lead to genuine defaults. And some or all of the money can be recovered, he said, making bargain hunting profitable.

‘LUCK REQUIRED’

Distressed asset specialists previously active only in lending markets are now venturing into troubled bonds. Guoho AMC, a bad-loan company in eastern Anhui province, is one example.

“We see mutual funds dumping them in the market. They have to. For them, it’s toxic,” said Liu Zhenhua, Guoho’s Shanghai general manager. “But as a bad-loan company, we’re good at assessing its value. You need an eye to in a junk market.”

Skeptics say this money-making model will falter in China.

Desmond Kuang, portfolio manager at Income Partners Asset Management in Hong Kong, said the typical strategy would be to buy into cheap bonds after thorough research and with some conviction that the investment can be recovered. That may not work in China, he said, where there is a lack of transparency in company disclosures.

“There will be a lot of luck required onshore,” he said.

Fengshi Asset Management’s Liu said the risks could be big, and such a strategy would typically require clients with strong nerves to commit their funds for three to five years.

“It’s a gamble. And you’re betting against professional institutions, not layman retail investors,” Liu said. “This game is very demanding in your ability to identify and assess risks.”



China Debt Defaults Put Focus on Key Gauge of Industrial Strains By Bloomberg


© Bloomberg. A Chinese national flag flies as skyscrapers of the Pudong Lujiazui Financial District stand across the Huangpu River in Shanghai, China, on Friday, Dec. 28, 2018. China announced plans to rein in the expansion of lending by the nation’s regional banks to areas beyond their home bases, the latest step policy makers have taken to defend against financial risk in the world’s second-biggest economy. Photographer: Qilai Shen/Bloomberg

(Bloomberg) — China’s mounting pile of distressed debt has elevated market players’ attention to one of the nation’s less obvious economic data points: the producer-price index.

With many of the debtors that ran into trouble in the past year coming from the industrial world, gauges of manufacturing strain are particularly important. Some analysts point to the PPI as a forward indicator of industrial profits, which in turn show the direction of manufacturers’ and miners’ financial strength.

The next PPI reading comes March 9, forecast to show factory-gate prices barely rose for a second straight month from a year before, in what would be the weakest two months since China emerged from industrial-sector deflation in 2016. Bloomberg’s factory inflation tracker is already negative.

“The near-deflationary PPI in January will feed directly into weaker earnings,” said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group in Singapore. “Lower rated companies such as single-Bs will provide plenty of defaults in 2019.”

While President Xi Jinping’s administration has called for credit support to the private sector, which has traditionally had a tougher time getting bank loans in the state-dominated financial system, some borrowers are finding help not forthcoming. Some 13.6 billion yuan ($2 billion) of local currency bonds have gone sour this year, keeping pace with last year’s record tally of 120 billion yuan.

And a further total of $29.5 billion worth of bonds are facing pressures on repayment, according to company and ratings-agency statements compiled by Bloomberg.

“PPI deflation means it is harder for companies to pay back their debt — it is going to weigh on earnings growth,” said Larry Hu, head of China Economics at Macquarie Securities Ltd. in Hong Kong. “What is more important is how the government responds.”

Continuing strains mean an opportunity for the government to tackle the moral hazard of government-orchestrated bailouts, said Cui Li, head of macro research at CCB International Holdings Ltd. in Hong Kong. The People’s Bank of China has said that a certain amount of defaults can help improve pricing in the country’s bond market, the world’s third-largest.

Read more: Why China’s Bonds Are Defaulting at a Record Pace: QuickTake

Policy makers have championed fiscal steps to support growth, which may pay off in time and alleviate some of the disinflationary pressures coming through. Yet they may still carry seeds of financial pain down the road.

If “industry laggards manage to survive longer in an accommodative environment, then defaults may decline in the near-term but rise later,” Cui Li said. “In my view, corporate defaults will continue to rise,” she said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



India’s diesel demand to hit record highs in 2019 as country goes to polls By Reuters


© Reuters. A worker fills a car with diesel at a fuel station in Jammu

By Koustav Samanta and Nidhi Verma

SINGAPORE/NEW DELHI (Reuters) – India’s diesel consumption may rise to a record this year on increasing infrastructure spending by the current government as it tries to hold off challengers in general elections that will be held over April and May.

Surging diesel consumption in India, the world’s third-largest oil user, underscores the country’s importance as a driver of global oil demand. Amid increasing concerns that crude demand growth may slip in 2019 because of slowing economic growth, India’s burgeoning fuel consumption may help underpin oil and fuel prices.

Analysts at Fitch Solutions and consultants Wood Mackenzie forecast India’s diesel demand to rise in 2019 by 5.7 percent and 6.4 percent, respectively, from 2018. The country consumed a record 6.9 million tonnes of diesel a month in 2018, or about 1.7 million barrels per day (bpd), data from the Ministry of Petroleum showed.

“There is strong energy demand which is bound to happen because of different sectors… We are a diesel driven economy,” said Sanjiv Singh, chairman of Indian Oil Corp, the country’s top refiner.

“The bottom-line remains that energy demand is bound to grow. We’re seeing GDP at more than 7 percent, (and) … a lot of urbanization,” Singh added.

India’s economy is expected to grow by 7.2 percent in the 2018/2019 financial year, which runs from April to March, versus 6.7 percent the previous year, according to government data.

“Tied to a constructive GDP outlook – and alongside the country’s positive demographics, low vehicle penetration and loose monetary policy – is our forecast for rapid growth in vehicle sales, which again will be positive for diesel,” said Peter Lee, an analyst at Fitch Solutions, adding that diesel cars account for nearly a quarter of new vehicles in India.

According to 2015 data, the latest available, from the International Organization of Motor Vehicle Manufacturers, India held 22 cars per 1,000 people versus 821 cars per 1,000 people in the United States.

(GRAPHIC: India diesel demand – https://tmsnrt.rs/2U7z8yP)

ELECTION BOOM

Election rallies, the deployment of polling officers and security officers will add to the diesel demand boost from infrastructure projects that the ruling Bharatiya Janata Party have planned ahead of the polls.

The country’s interim budget unveiled earlier this month allocated 190 billion rupees ($2.67 billion) for building roads in the countryside, where two-thirds of Indians live.

“Increased travel activity for campaigning and implementation of infrastructure projects ahead of the elections will bolster diesel demand in the first half of 2019,” said Aman Verma, a research analyst at Wood Mackenzie.

During the last general elections in 2014, monthly diesel sales averaged 6.2 million tonnes during the polling months, 7 percent higher than the monthly average sales that year.

The implementation of a nationwide goods and services tax (GST) has also been beneficial for diesel demand.

“The GST has led to the removal of interstate taxes. This is a structural shift, resulting in increased demand for heavy and medium-duty trucks to achieve economies of scale and operational efficiency,” Wood Mackenzie’s Verma said.

Indian sales of commercial vehicles, which largely run on diesel, rose to a record last year, and Jan. 2019 sales climbed to 87,600, a record high for this time of the year, according to data on Refinitiv Eikon.

India’s diesel expansion will likely continue despite rising air pollution concerns, especially in the capital of New Delhi. The country’s fuel standards have improved, removing much of the sulfur from the diesel pool.

By April, the New Delhi capital region will adopt the so-called Bharat VI standard that is equal to the most stringent European standard, which the rest of the country will adopt next year.

Diesel consumption also faces increasing competition from electric vehicles (EV). The Indian government has set a target of EVs making up 30 percent of new car and motorcycle sales by 2030 from less than 1 percent today.

At the moment though EVs are not making much of an impact in India. Electric car sales actually declined by 40 percent to a mere 1,200 units in financial year 2018 over financial year 2017, although electric two-wheeler sales rose 138 percent to 54,800 units during the same period, according to Wood Mackenzie.

(GRAPHIC: India commercial vehicle sales – https://tmsnrt.rs/2EB66lP)



Tesla to close many stores as $35,000 Model 3 goes on sale


SAN FRANCISCO (Reuters) – Tesla Inc said on Thursday it would offer a $35,000 version of its Model 3 sedan with a delivery time of two to four weeks, while closing many of its retail stores worldwide, steps designed to increase demand and cut overhead costs for the electric vehicle maker.

FILE PHOTO: A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, U.S. March 31, 2016. REUTERS/Joe White/File Photo

Chief Executive Elon Musk on a conference call said the company would not turn a profit in the first quarter but would return to profitability in the second, CNBC reported. In its fourth-quarter shareholder letter, Tesla had said its “optimistic target” was for a “very small” net profit in the first quarter.

Shares of Tesla fell 3.4 percent after hours. Investors have regularly voiced concerns about whether Tesla would be able to maintain profit margins through cost cutting and efficiency as it cut prices.

The price drop could quell concerns from some analysts that demand for the higher-priced versions of the Model 3 was beginning to dry up, especially after a federal tax credit was cut in half this year.

The announcement comes nearly three years after Musk promised the car at that price to appeal to the mass market. Tesla said its sales would now be online-only around the world and it would close many stores.

“Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6 percent on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected,” Tesla said in a blog on its website bit.ly/2IHjLw4.

This is the third time this year that Tesla has lowered the price on the Model 3, which recently started at $42,900.

The new $35,000 version has a top speed of 130 miles per hour (209 km per hour) and can go from zero to 60 mph in 5.6 seconds, Tesla said. For $2,000 more, Tesla offers a version with a range of 240 miles (386 km) and a top speed of 140 mph.

A $35,000 Model 3 is a major shot in the arm for Tesla during a period of major challenges for the Silicon Valley company and could put to rest concerns among some analysts that demand for Tesla’s vehicles might be constrained in 2019. Besides the Model 3, Tesla is developing a new Model Y SUV for 2020 production, while beginning to build a factory in Shanghai.

“This is a game changer,” Wedbush Securities analyst Daniel Ives said in a telephone interview. “Especially at this juncture when they’re going through such a difficult period as the EV (electric vehicle) tax credit rolls off in the U.S., this is really exactly what the doctor ordered.”

He warned, however, there could be “more speed bumps ahead,” with a new influx of buyers potentially exacerbating prior problems with deliveries and service to customers.

Some analysts have questioned how a $35,000 version of the car could affect gross margins, which were above 20 percent in the fourth quarter. Offering the car, while at the same time cutting overhead costs, could alleviate concerns.

Musk said last month that service and quality were two main priorities for the company. Many customers have complained on social media and online forums of long waits for repairs on their vehicles.

As of the fourth quarter, Tesla had 378 stores and service centers across the world, generally in upscale malls.

WAITING FOR YEARS

Tesla stunned the automotive world after its reservations list for the promised $35,000 Model 3 ballooned to over half a million orders in 2017. Tesla no longer discloses the number of reservations, but many analysts believe those on the list are still waiting for this cheaper version.

The news comes three days after renewed tensions between Musk and U.S. Securities and Exchange Commission. The agency petitioned a judge this week to have Tesla’s CEO found in contempt of an October settlement between the parties. The SEC accuses Musk of having made material statements about production levels on Twitter without first having them vetted internally.

Slideshow (2 Images)

That settlement between Musk, Tesla and the SEC concerned Musk’s August Twitter post in which he claimed to have “funding secured” to take Tesla private at $420 per share. As part of the settlement, Musk stepped down from his chairmanship role and he and Tesla agreed to pay $20 million each in fines.

On Friday, Tesla is due to repay a $920 million convertible bond. Convertible issues give bondholders the right to trade their debt for equity after shares rise over a certain price. Tesla shares are currently about $40 below the $359.87 conversion price.

Tesla had $3.7 billion in cash and cash equivalents at the end of December.

Reporting by Alexandria Sage; Additional reporting by Ben Klayman in Detroit and Vibhuti Sharma in Bengaluru; Editing by Lisa Shumaker



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Starboard joins opposition to Bristol-Myers’ US$74bil Celgene deal – Business News



Activist hedge fund Starboard Value LP followed Bristol-Myers Squibb Co’s second-largest investor, Wellington Management, in opposing the drugmaker’s $74 billion purchase of biotech Celgene Corp on Thursday, sowing further doubt on what would be the largest pharmaceutical takeover ever.

The shareholder unrest raises the stakes for Bristol-Myers and Chief Executive Giovanni Caforio, who is turning to dealmaking to revive the New York-based company’s fortunes after its most important growth driver, the cancer immunotherapy Opdivo, fell behind Merck & Co rival Keytruda in overall sales and the most lucrative lung cancer arena.





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Gap to separate Old Navy, close stores; shares jump By Reuters


© Reuters. Customers arrive to shop at an Old Navy store in the Brooklyn borough of New York

(Reuters) – Gap Inc (NYSE:) said on Thursday it would separate its Old Navy brand into a publicly traded company, to focus on its struggling namesake apparel business, sending its shares up 18 percent.

Old Navy has had a better success than the Gap brand in recent years as a wide range of budget apparel has made it more appealing to a broader base of consumers.

“It’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time,” Gap’s Chairman Robert Fisher said.

The company also said it plans to close 230 Gap specialty stores over the next two years.

Gap’s overall same-store sales fell 1 percent in the fourth quarter ended Feb. 2, compared to analysts’ average estimate of 0.3 percent rise, according to IBES data from Refinitiv.

Gap, Athleta, Banana Republic and the remaining brands will be part of a yet-to-be-named company. The separation is expected to be completed by 2020, Gap said.

The company’s shares were up 17.7 percent at $29.89 in extended trading.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Tesla starts selling $35,000 Model 3 for delivery in two-four weeks


SAN FRANCISCO (Reuters) – Tesla Inc said on Thursday it would offer a $35,000 version of its Model 3 sedan with a delivery time of two to four weeks, nearly two years after the company originally promised the car at that price.

FILE PHOTO: A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, U.S. March 31, 2016. REUTERS/Joe White/File Photo

The Model 3, when first shown off by Chief Executive Elon Musk in March 2016, was promised to be a $35,000 car – before incentives – to appeal to the mass market. But Tesla had never managed to sell the car at that price. Musk said last month he hoped the lowest price version would be available in mid-2019.

Tesla has twice this year lowered the price on the Model 3, which currently starts at $42,900. A U.S. federal tax credit began phasing out for Tesla in January, effectively raising the price of cars by $3,750.

The new $35,000 version has a top speed of 130 miles per hour and can go from zero to 60 mph in 5.6 seconds, Tesla said. For $2,000 more, Tesla offers a version with 240 miles of range and a top speed of 140 mph.

Tesla said its sales would now be online-only around the world and it would close many stores.

A $35,000 Model 3 is a major shot in the arm for Tesla during a period of major challenges for the Silicon Valley company and could put to rest concerns among some analysts that demand for Tesla’s vehicles might be constrained in 2019. Besides the Model 3, Tesla is developing a new Model Y SUV for 2020 production, while beginning to build a factory in Shanghai.

Tesla stunned the automotive world after its reservations list for the promised $35,000 Model 3 ballooned to over half a million orders in 2017. Tesla no longer discloses the number of reservations, but many analysts believe those on the list are still waiting for this cheaper version.

The news comes three days after renewed tensions between Musk and U.S. Securities and Exchange Commission. The agency petitioned a judge this week to have Tesla’s CEO found in contempt of an October settlement between the parties. The SEC accuses Musk of having made material statements about production levels on Twitter without first having them vetted internally.

That settlement between Musk, Tesla and the SEC concerned Musk’s August Twitter post in which he claimed to have “funding secured” to take Tesla private at $420 per share. As part of the settlement, Musk stepped down from his chairmanship role and he and Tesla agreed to pay $20 million each in fines.

On Friday, Tesla is due to repay a $920 million convertible bond. Convertible issues give bondholders the right to trade their debt for equity after shares rise over a certain price. Tesla shares are currently about $40 below the $359.87 conversion price.

Tesla had $3.7 billion in cash and cash equivalents at the end of December.

Reporting by Alexandria Sage; Additional reporting by Vibhuti Sharma in Bengaluru; Editing by Lisa Shumaker



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