HSBC in Asia shift and Tesla dragged down by Bitcoin as rival Lucid agrees merger
"We will move the heart of the business to Asia, including leadership ... The bank will continue to be domiciled in London but I think it is important for some of the executive team to be closer to the growth opportunities, particularly those in front-line roles." The CEO of HSBC, Noel Quinn, revealed a further strategic shift eastwards for Europe's biggest lender, while reporting that profits for the bank fell 34 percent last year.
HSBC is pledging a $6 billion expansion in East Asia, largely through the growth of its wealth management business. In a significant overhaul, it is to relocate key senior staff to its base in Hong Kong, while pulling out of its U.S. retail and French consumer operations.
Elsewhere, Facebook and Australia seem to have tentatively "refriended" each other, after last-minute changes were made to the planned "News Media and Digital Platforms Bill," ensuring new terms for the sharing of advertising revenue. Other governments around the world, increasingly skeptical about the merits of "Big Tech," have been closely watching developments.
Elon Musk may now be pondering the wisdom of endorsing Bitcoin so heavily in recent weeks. The swings in the value of the virtual currency since the weekend are now weighing on Tesla, too, with shares in the market-leading electric car maker down a quarter on last month.
Meanwhile, as expected, Tesla's new rival Lucid Motors seems to be heading for a multi-billion-dollar flotion after agreeing merger terms with the special purpose acquisition company (SPAC) Churchill Capital IV Corp (CCIV).
And rapper Jay-Z may have raked in a few more million dollars by selling a stake in his premium Armand de Brignac champagne brand, but figures from the industry (see graphic) show how badly the COVID-19 pandemic hit bubbly sales last year. With heavy discounting now looking certain, no doubt we'll be swimming in the stuff come the summer!
Read on for this and more of the day's business news in full.
Europe's largest bank, HSBC says it will resume paying a dividend and move more jobs to Asia, despite a 34 percent drop in annual profits. The bank posted a 50 percent fall in the fourth quarter alone.
Overall, profits before tax were $8.8 billion for 2020, down from $13.4 billion the previous year, while provisions for bad loans rose 96 percent ahead of a swathe of anticipated business failures arising from the COVID-19 pandemic.
The bank has warned that its bad debt book may run to $13 billion for the year and says it will "accelerate" planned job cuts of 35,000. Rather than quarterly dividends in 2021, HSBC is considering an interim payout at its half-year results in August.
HSBC has also said it plans to cut 40 percent from its property portfolio costs, abandoning some of its more expensive properties in premier locations. "We have got to face reality, the world has changed," said CEO Noel Quinn. "Our travel and premises costs will be a lot less than they were pre-COVID."
Describing Asia as "by far the most profitable region," the lender has outlined plans to invest around $6 billion in its Hong Kong base, with a focus on wealth management, wholesale funding and a greener investment agenda. Hinting at disappointing returns in core European markets, HSBC's group chief financial officer Ewen Stevenson described "a big structural shift ... in interest rates down toward zero in most markets that we do business in."
The case is being closely monitored by other governments around the world seeking greater curbs on "Big Tech" and Facebook's dominance of the advertising market, with Frydenberg describing events in Australia as a "proxy battle for the world." The new terms include changes to the arbitration system used when the tech platforms fail to agree payment terms with publishers and a longer dispute process. Media analysts, however, warn that uncertainties remain over how the rules will play out.
Meanwhile, Microsoft and European media groups are pushing EU regulators for new arbitration rules over the use of content. They claim changes to copyright law, made in 2019, which force Google parent Alphabet and other online platforms to sign licensing agreements with content creators, are no longer sufficient.
Damage to a fan blade, consistent with metal fatigue, has been found on an engine of the United Airlines Boeing 777 flight that failed over Denver at the weekend. According to investigators. The Pratt & Whitney PW4000 engine burst aflame with a "loud bang" four minutes after take-off from Denver International, according to preliminary enquiries by the U.S. National Transportation Safety Board. The engine is used on 128 planes, less than 10 percent of the global fleet of 777 wide-body jets, with authorities warning it is too early to compare the incident in Denver with other events worldwide.
Meanwhile, the Republic of Korea (ROK) has ordered all its airlines to inspect Boeing 777 jets with similar Pratt & Whitney PW4000 engines. Korean Air, Asiana Airlines and low-cost carrier Jin Air have 16, nine and four of these planes respectively, the transport ministry said in a statement.
As predicted, luxury electric car maker Lucid is set to float on the New York markets after merging with the special purpose acquisition company (SPAC) Churchill Capital IV Corp (CCIV). The deal gives the combined group an equity value of around $24 billion. California-based Lucid says it plans to start production of its "Air" sedan model by the summer, with a target of delivering 20,000 vehicles from its factory in Arizona next year. Shares in CCIV fell 30 percent in pre-market trading on the news.
Tesla stock has fallen in early U.S. trading, weighed down by the recent losses in the value of Bitcoin. Shares were trading at around $673 each in pre-market transactions, down from $900 on January 25 and having lost 25 percent from their peak. Analysts are warning that Tesla's recent $1.5 billion investment in the cryptocurrency could backfire. Last month, Tesla founder Elon Musk suggested Tesla may accept Bitcoin as a form of payment for his vehicles in the near future.
The UK jobless rate rose to 5.1 percent in the three months to December, up 0.4 percent from the previous quarter. Although the figures show a five-year high for the number of people out of work, they are largely in line with expectations. Official statistics show 541,000 fewer people were in employment in the third quarter, suggesting the government's furlough scheme has helped to limit the damage caused by the COVID-19 pandemic. The country's Office for National Statistics said there are "tentative early signs" of the labor market stabilizing.
Travel and leisure stocks have surged on the London markets as plans were revealed by the UK government for the reopening of the economy. Shares in budget carrier easyJet rose 12 percent after it said ticket sales had more than quadrupled on Prime Minister Boris Johnson outlining a return to air travel. Hungary's Wizz Air jumped almost 6 percent, with similar gains for Ireland's Ryanair. A stalwart of the train station and airport departure lounge, the retailer WH Smith was up more than 8 percent and there were gains for food and drink providers with a strong presence at transport hubs.
A Nordic venture group, backed by Sweden's H&M and IKEA, is to build a plant in Sweden to develop a new, wood-based textile fiber for use in consumer goods. The group part-owned by Finnish forestry group Stora Enso, said the aim is to reduce the climate footprint and pollution from large apparel and furniture brands, by seeking sustainable alternatives to traditional cotton, traditional viscose and polyester. The group, TreeToTextile, says the plant aims for a production capacity of 1,500 tons, with the owners funding the bulk of the $42.6 million investment.
Shares in Spotify have eased slightly after hitting record highs on Monday after the company announced plans to nearly double its market presence by launching in 85 new markets. Shares were trading at $349 by midday in London after hitting a record of $371 after theSwedish streaming giant announced massive roll-out plans for Africa and Asia.
Spotify is currently available in 93 countries with 345 million monthly active users but is seeking to close the gap on rivals Apple Music and Amazon Music and is investing heavily in its podcast offer. Chief Premium Business Officer Alex Norstrom has stated: "Some of the places we're going like Bangladesh, Pakistan and Nigeria have the fastest-growing internet populations in the world."
Dutch authorities are still investigating the cause of a fire on a Boeing 747 cargo plane, which dropped engine parts shortly after take-off from Maastricht on Saturday. It follows a similar incident in the U.S. at the weekend, when the engine of a Boeing 777 passenger plane also caught fire, causing debris to fall on a residential district of Denver. Boeing has been in the spotlight since it's 737 Max planes were grounded for 18 months, following two fatal crashes that killed 346 people.
CGTN Europe spoke to aviation analyst Sally Gethin, and asked her about the implications of these two new events.
It was a very close call [in Denver], and when you consider there were over 200 passengers on board, how catastrophic that would have been and also it could have involved bystanders on the ground as well as we've seen, the debris was spread over a wide area. Very, very concerning and awful news for Boeing, which is struggling to create a better safety record after the Boeing 737 Max.
What's been the reaction from Boeing and from the companies operating the planes?
Boeing, in fact, issued a recommendation to have this particular aircraft type with this particular Pratt & Whitney engines to be grounded. Boeing's safety record has already been under scrutiny, after the 18-month grounding of its entire 737 Max fleet over safety concerns. Recently that was cleared for take-off again and has been seen back up in the skies. So Boeing really doesn't need another incident like this. Attention and concerns are being placed on the engine and the engine manufacturer, particularly the components of the engine, the fan blades. So it may be an engine issue. But having said that, you know, it's the entire aircraft that is the focal point in this.
What will the impact be on the company itself?
Long-haul travel has been absolutely decimated and is likely to be the slowest to return in the form of air travel recovering in the future. So in that sense, the Boeing 777 won't be a huge loss at this point. But Boeing itself has agreed to pay $2.5 billion in compensation over the 737 Max. It haemorrhaged billions of dollars last year. So it's really not in great financial shape to come out of this pandemic in the commercial air transport sector.
WATCH: UK Prime Minister Boris Johnson said the world must learn to live with the threat of COVID-19 as he announced a four-step roadmap to lift the current COVID-19 lockdown in England. Speaking to parliament, Johnson said he hopes to see all restrictions lifted between March 8 and June 21, along with acceleration of the vaccination roll-out.
And finally, millionaire rapper Jay-Z, has sold a 50 percent stake in his Armand de Brignac champagne brand. The celebrity bubbly, known by its "Ace of Spades" nickname, can cost hundreds of pounds a bottle. Meanwhile, with parties and celebrations on hold, the industry says champagne sales slumped in 2020 and heavy discounting could lead to bargain buys later this year.