Breaking News
Home / Business (page 3)

Business

Fearing Brexit, Irish cheesemakers mull a switch to mozzarella

THE herd of water buffalo ambling over rolling hills may look like a scene from southern Italy. In fact the beasts roam in southern Ireland. Johnny Lynch, who owns a 150-acre farm in County Cork, makes plump balls of mozzarella from their milk, and bids customers a cheerful, Irish-accented “Buongiorno!” in online advertisements for his produce.

Of the 200,000 tonnes of cheese made each year in Ireland, 90% is cheddar. That could soon become a problem. Apart from America, which has plenty of cheesemakers of its own, the only country with a big appetite for cheddar is Britain. It buys more than half of Ireland’s cheddar exports, for upwards of €250m ($300m) a year. But its impending exit from the European Union could cause the dairy trade to turn sour.

If Britain leaves the EU’s single market and customs union, as it intends to, Irish exporters can expect to face regulatory hurdles and perhaps tariffs. Conor Mulvihill of Dairy Industry Ireland, a lobby...Continue reading

Read More »

The euro area’s economy loses momentum

20180428_FNC332.png

ECONOMISTS have spent the past decade wringing their hands over the health of the euro area’s economy. Last year, in a welcome respite, it expanded by a robust 2.3%, outstripping forecasts and matching America’s growth rate. But it has appeared less rosy-cheeked since.

Symptoms include moderation in a number of monthly indicators. Industrial production fell in January and February, as did business confidence; retail-sales growth was disappointing. The purchasing managers’ index (PMI), an output survey regarded as a good early indicator of GDP growth, has fallen from exuberant—and perhaps unsustainable—levels at the turn of the year, though it still points to decent growth (see chart).

Germany, the bloc’s largest economy, has not been immune. A summary indicator compiled by the Macroeconomic Policy Institute, a German think-tank, which includes production, sentiment and interest-rate data, suggests that the probability of a recession has risen, from 7% in March to 32% in April. A...Continue reading

Read More »

America’s antitrust apparatus prepares to act against big tech

THE rise of the big tech firms is easy to spot in downtown Chicago. Apple’s minimalist store looms over the riverfront, close to a skyscraper carrying the name of another omnipresent brand—Trump. At a bus stop a Facebook advertisement promises that its new algorithm will combat fake news. On the Magnificent Mile’s digital hoardings Google urges pedestrians to swoon into the arms of its voice-activated assistant.

Inside the University of Chicago, a bastion of free-market thinkers and of free speech, tech has become more prominent, too. On April 19th and 20th most of America’s antitrust establishment—officials, economists and lawyers—as well as a smattering of Silicon Valley types, gathered to discuss whether big tech needed to be tamed. The conclave came just days after Mark Zuckerberg, Facebook’s chief, testified before Congress.

One Facebook executive was brave enough to show his face in Chicago, bearing the smile of someone stuck at the dentist for two days without...Continue reading

Read More »

The best books on finance and economics

THE late Hans Rosling is best known for his Ted talks (here is one on the wonders of the washing machine). Sadly he died last year. But before he did so, he worked with his son and daughter-in-law to write “Factfulness: Ten Reasons Why We’re Wrong About the World—And Why Things Are Better Than You Think.” It is a wonderful book, full of humour and humility, and it paints an optimistic picture of progress.

Take his 13-question test and you will probably be surprised. For example, has the proportion of people in the world living in extreme poverty over the last 20 years almost doubled, stayed the same, or almost halved? Over the last 100 years, has the number of deaths per year from natural disasters more than doubled, stayed the same or more than halved? In both cases, the answer is the most optimistic one; the latter statistic is particularly remarkable given the increase in the size of the population over the past century. 

Perhaps...Continue reading

Read More »

Korean Air’s “nut rage” sisters step down

FOUR years ago, Cho Hyun-ah, an executive at Korean Air made headlines around the world when she threw a fit because she was served macadamia nuts in their packaging rather than on a serving dish in first class on the airline. She reportedly insulted the cabin crew, threw documents at them, and forced them to kneel and beg forgiveness. At the time, she was a company vice president, and she made the plane return to its gate in order to remove the offending flight attendant. After spending several months in prison for breaking aviation-safety laws, Cho Hyun-Ah was able to return to her father’s conglomerate, this time managing hotels rather than Korean Air. But a new scandal may have finally accomplished what “nut rage” could not.

This month, police opened an investigation into Hyun-ah’s younger sister, Hyun-min, a marketing executive at Korean Air....Continue reading

Read More »

An American ban puts China’s ZTE in peril

TALK of restricting the use of Chinese telecoms equipment in the West is growing. This week the curbs went the other way, when America banned its companies from selling hardware and software for seven years to one of China’s state-owned tech champions, ZTE. On April 16th America’s Department of Commerce said that China’s second-largest telecoms firm had trampled on a settlement reached in March 2017 over ZTE’s illegal shipments since 2010 of American-made technology—telecommunications equipment to Iran, and routers, servers and microprocessors to North Korea—in known violation of trade sanctions.

The one at risk of being crippled by an embargo is now ZTE. In 2016 UBS, a bank, estimated that 80-90% of its products relied on American parts. Jean Baptiste Su of Atherton Research, an American technology-research outfit, described the ban as “devastating” for ZTE, especially the loss of chips made by America’s Qualcomm used in about 70% of ZTE’s smartphones. Although ZTE...Continue reading

Read More »

How Heineken beer survives in Congo

THE Bralima brewery in Kinshasa, the capital of the Democratic Republic of Congo (DRC), is an island of modernity in a city where chaos is the norm. Inside a building near the docks where barges begin the journey up the Congo river, conveyor belts rattle as thousands of glass bottles are washed and filled with amber liquid. A generator hums to power the new brewing machinery, creating enough booze to fill 28,000 crates every two days.

Yet the real achievement of Bralima, which is owned by Heineken, a Dutch brewer, is not making the beer. It is what happens when it leaves the factory. Congo is one of the worst-connected, most dysfunctional countries on Earth. Four times the size of France, it has almost no all-weather roads. In large parts of eastern DRC, the state is a fiction and rebels control the roads. Yet there is scarcely a village where it is impossible to get a beer.

Bralima was founded in 1923. Its main competitors, Bracongo and Brasimba, both owned by Castel, a...Continue reading

Read More »

Sir Martin Sorrell leaves WPP in a sorry state

20180421_WBC269.png

DURING his spectacular rise from London beancounter to the globe-trotting boss of WPP, the advertising powerhouse he created out of a backstreet wire-basket and trolley company, Sir Martin Sorrell was rarely sentimental. The man who helped turn a ramshackle but chic industry into a global force poached accounts mercilessly and often pitted his own firms against each other in the quest for clients.

Not for nothing did the late David Ogilvy, one of the industry’s founding patriarchs, reputedly describe him as an “odious little shit” when WPP came after the Ogilvy Group in the late 1980s at the dawn of its decades-long acquisition spree (see chart). But Ogilvy later became WPP’s non-executive chairman, and the company turned into the world’s largest marketing conglomerate with more than $20bn in annual revenues. In business, Sir Martin charmed as well as cajoled.

Read More »

Coco bonds have not lived up to their promise

20180421_FNC296.png

DURING the financial crisis, Western governments poured hundreds of billions of dollars into their banks to avert collapse. The search for ways to avoid future bail-outs started before the turmoil ended. One of the niftiest proposals was the “contingent convertible” (coco) bond, which turns into equity when the ratio of a bank’s equity to risk-weighted assets falls below a predetermined danger point (since set at a minimum of 5.125% for cocos, although it can be up to around 7%). The ambition was grand. As the Squam Lake Group, composed of mostly American academics, put it in 2009, the automatic conversion of cocos would “transform an undercapitalised or insolvent bank into a well-capitalised bank at no cost to taxpayers”.

At first, regulators were keen. In 2010 Mervyn King, then the governor of the Bank of England, said he wanted contingent capital to be a “major part of the liability structure of the banking system”. Swiss regulators, too, pushed for coco issuance. The hybrid nature of cocos seemed a way to satisfy both regulators, who wanted banks to have bigger safety buffers, and bankers, who were reluctant to issue new shares because of the high cost of capital. The hope was that investors, too, might see the appeal of an asset that offered a higher yield than bank bonds but lower risk than bank shares.

Nine years after the first cocos...Continue reading

Read More »

Hong Kong defends its dollar peg in both directions

20180421_FNC294.png

THE Hong Kong dollar is one of the most and least manipulated monies in the world. For over 34 years the territory’s monetary authority, the HKMA, has kept it pegged to America’s currency at around HK$7.80 to the dollar, resisting all temptations to let it fall or rise. In 2005 it refined the peg with two promises: to buy dollars at the price of HK$7.75 and to sell them for HK$7.85.

The strength of the Hong Kong dollar has obliged the HKMA to keep the first promise many times since. Its purchases of American dollars have even drawn the accusation that it manipulates its currency for competitive advantage.

In fact, the HKMA has always been ready to manipulate its currency upwards, too. But since 2005 it has had no occasion to, until last week. On April 12th the Hong Kong dollar weakened to HK$7.85, forcing the authority to buy HK$51bn over the next few days in exchange for American dollars.

The Hong Kong dollar’s weakness reflects the gap between rising American interest rates and...Continue reading

Read More »