>>> What to look at today - 31st of July 2023

Equities in Asia rose Monday following a rally on Wall Street as investors embraced fresh signs that inflation is easing further. Chinese stock gauges led gains on expectations of more government stimulus.  Shares in Japan and Korea also rose, helping to push a regional index toward the highest closing level of the year. Gains for Chinese equities pushed the MSCI Emerging Markets Index as much as 1% higher, headed to levels not seen since June last year. US equity futures fell in Asia amid a rally Friday that pushed the Nasdaq 100 nearly 2% higher. The demand for risk assets comes after further easing in key US inflation gauges, signaling fresh optimism that a soft landing for the world’s biggest economy is within reach. Federal Reserve Bank of Minneapolis President Neel Kashkari described the inflation outlook as “quite positive,” despite the likelihood of job losses and slower growth. The Bank of Japan announced unscheduled bond-purchase operations to buy debt, seeking to contain a selloff after it said Friday it will allow yields to rise above a 0.5% cap. The yen swung to a loss against the dollar. 
Friday’s move by the BOJ is “possibly a very small step towards the end of YCC,” Joey Chew, head of Asia FX research for HSBC said on Bloomberg Television. “They could very well give up YCC but I think that could be something more for next year.” July manufacturing PMI data for China remained in contraction but beat estimates. More government efforts to shore up the economy emerged on Friday, including a plan to boost consumer industries and steps to grow an exchange dedicated to helping small firms get access to funds. Chinese stocks rose from Monday’s open, extending last week’s gains. The CSI 300 Index climbed as much as 1.8%, taking its monthly gains to 5.8%, the most since January. The Hang Seng China Enterprises Index, which tracks mainland stocks listed in Hong Kong, rose over 3%. Currency and bond markets face the risk of continued volatility as investors weigh whether rate hikes from the Federal Reserve and European Central Bank last week mark the end of their tightening cycles. On Friday, Meta Platforms Inc. and Tesla Inc. each climbed more than 4%, while Intel Corp. rallied about 6.5% on a bullish sales forecast. The Golden Dragon Index of US-traded Chinese stocks gained 7%. Elsewhere in markets, oil was slightly lower Monday but headed for a monthly gain, supported by signs the market is tightening amid estimates that crude demand is running at a record clip just as OPEC+ cuts back supplies.

Nikkei +0.92% Hang Seng +0.89% CSI +0.38% Shanghai +0.27% Shenzen +0.63%

Eur$ 1.1007 CNH 7.1508 CNY 7.1504 JPY 141.90 GBP 1.2847 CHF 0.8717 RUB 91.8665 TRY 26.9549 WTI$ 80.27 Gold 1954 -0.29% BTC 29,413 +0.49% ETH 1865 -0.01%

S&P -0.10% Nasdaq -0.14% EuroStoxx -0.40% FTSE -0.33% Dax -0.20% SMI -0.35%

Macro :
- EU Banks Resist €500 Billion Hit to Pass EBA's 2023 Stress Test
- *KASHKARI SAYS SAYS FED WILLING TO CONTINUE RAISING RATES
- Most European Banks Fare Better in Key Test for Payouts
- BlackRock, Worldcoin, Ripple: Novogratz Talks Crypto and More
- China Urges US to Stop Arming Taiwan After Biden Approves Aid

Keep an eye on :
- BNP FP : *BNP PARIBAS STRESS TEST CET1 EROSION 392 BPS VS 440 IN 2021
- BMPS IM : Paschi: Stress Test Result Would Be Better Considering Cost Cuts
- ACA FP : *CREDIT AGRICOLE STRESS TEST CET1 HIT 731 BPS VS 634 IN 2021
- BOL FP : Bollore 1H Ebita EU462M Vs. EU549M Y/y
- CO FP : Casino Issues Clarification on Revolving Credit Line Waiver
- CLNX SM : Cellnex CFO Aisa to Resign Effective Oct. 31
- DOCS LN : Activist Sparta Capital Buys Stake in Dr Martens, Sky Reports
- EBS AV : Erste 2Q Net Income Beats Estimates
- EBS AV : Erste Raises Profit Guidance on Solid East Europe Growth Outlook
- FLTR LN : Fox, Flutter to Close Their Fox Bet Online Gambling Business
- GLEN LN : Glencore Said to Be in Advanced Talks for Argentina Copper Stake
- HEIA NA : Heineken Lowers Earnings Forecast as Beer Consumption Drops
- INGA NA : *ING STRESS TEST CET1 EROSION 554 BPS VS 443 IN 2021
- LR FP : Legrand 1H Adjusted Operating Margin Beats Estimates (1)
- LDO IM : Leonardo 2Q Revenue Beats Estimates
- NWG LN : NatWest’s New Boss Weathers a Tough Start Amid Farage Fallout
- NEM GY : Nemetschek 2Q Ebitda Misses Estimates
- RWE GY : Handelsblatt: RWE wants to build an 800 megawatt gas power plant in Weisweiler
- SAVE IM : Venice Airport Chairman Is Said to Plan Takeover, Corriere Says
- GLE FP : *SOCGEN STRESS TEST CET1 EROSION 513 BPS VS 562 IN 2021
- STM GY : Stabilus Amends FY Adjusted Ebit Margin Forecast, Misses Ests.
- UBSG SW : UBS Seeks to Cut Risky Russian Credit Suisse Clients, NZZ Says
- VOLVB SS : Volvo Recalls 55,012 Trucks in US Over Wiper Issue, NHTSA Says

FT : European car industry can withstand cheap Chinese EVs, Bruno Le Maire says

European car industry can withstand cheap Chinese EVs, Bruno Le Maire says
French finance minister backs new subsidies that will take into account producers’ emissions

France’s new automotive subsidies are “paving the way” for Europe’s car industry to withstand the threat of an influx of cheaper Chinese electric vehicle imports, according to finance minister Bruno Le Maire.

Under a package of measures outlined in May to support green industries, the French government will only pay subsidies for new electric vehicles based on the emissions of their producers. That will hit manufacturers from China, where the industry relies on electricity largely powered by coal.

Speaking in Beijing, where he met Chinese leaders to discuss trade and investment this weekend, Le Maire said he was “not concerned” about the threat to Europe’s carmakers from Chinese electric vehicle imports.

“I think with our new legislative decisions, we pave the way in Europe for a less naive approach, taking into account the level of emissions of the industry,” he said.

European manufacturers are alarmed by Chinese advances in EVs, with the country taking the lead in battery production and its carmakers outselling western rivals in China’s domestic market. 

While Chinese EV sales are still at an early stage in Europe, they could reach 1.5mn vehicles by 2030, equivalent to 13.5 per cent of the EU’s 2022 sales, according to Allianz.

For European carmakers, the simultaneous loss of market share at home and in China would have a severe impact. The groups face additional pressure from an EU policy requiring the phasing out of internal combustion engines by 2035.

Under the new French law, which is due to be fully adopted by parliament by year-end, however, Chinese-made electric vehicles would probably not qualify for incentives, which are worth between €5,000 and €7,000 per car for new electric vehicles.

“Each year I’m spending €1.2bn to support the green industry and to support the EVs, never mind whether they have been produced by industry which is emitting a lot of CO₂ or by industry that is emitting less CO₂,” Le Maire said, explaining why he was changing the policy.

“I’m determined to support the European car industry and the French car industry.”

But Le Maire said he would welcome more Chinese direct investment in Europe’s EV industry. China’s XTC New Energy Materials recently announced joint ventures with French nuclear group Orano to produce battery materials.

China’s EV leader, BYD, based in the southern technology hub Shenzhen, is considering building a factory in Europe, while China’s Envision is building a battery plant in the north of France as part of a partnership with Renault.

“We expect to have more Chinese investments in France more specifically in the field of green transition and green mobility,” said Le Maire, who also travelled to Shenzhen on Sunday to meet the chief executives of BYD and XTC.

The finance minister, whose visit followed a meeting in China this year between Emmanuel Macron and Xi Jinping, on Saturday met vice-premier He Lifeng, who oversees economic policy.

“We need China as a key partner for global growth,” Le Maire said.

He added that the two sides had reached an agreement to resolve what France calls “regulatory discrepancies in the cosmetics sector”.

French exporters are concerned that China’s regulatory standards may require them to hand over trade secrets, Bloomberg has reported.

“The total amount of trade of cosmetic goods to China is around €3bn a year,” Le Maire said, noting that the Chinese market represented between 30 and 35 per cent of total revenues for many French cosmetic companies. “So I’m not talking about peanuts.”

FT : UK’s nuclear power ambitions for 2050 lack clear plan, say MPs

UK’s nuclear power ambitions for 2050 lack clear plan, say MPs
Witnesses to Commons science committee’s inquiry describe strategy as more of ‘wish list’

The UK government’s ambition to more than triple Britain’s nuclear power generation capacity by 2050 badly lacks of a strategic plan to achieve it, according to a report published on Monday.

The “stretching” government target on nuclear energy is the right direction but ministers need to be clear on how they propose to get there in order to encourage investment, MPs on the House of Commons science, innovation and technology committee said.

Their report is the latest criticism of the government over its progress towards meeting the UK’s net zero carbon emissions goal by 2050. 

The Climate Change Committee, which advises ministers, said in June that the UK’s progress on cutting emissions was “worryingly slow”. 

In 2022, then prime minister Boris Johnson announced that the government wanted the UK to have about 24 gigawatts of nuclear power generation capacity by 2050 — supplying about a quarter of the country’s electricity. That compares to less than 7GW now. 

The target was set partly in response to surging energy prices connected to Russia’s full-scale invasion of Ukraine — with the UK government keen to cut reliance on imported gas.

However, the committee said this had not been followed up with a strategic plan.

It highlighted continuing uncertainty over, among other things, what mix of nuclear technologies the government intends to meet the target and the shape of state support. 

The committee said the UK’s nuclear workforce of about 65,000 will “need to more than double”.

The MPs said: “Witnesses to our inquiry characterised the government’s energy security strategy, published in April 2022, as more of a ‘wish list’ than a strategy to achieve those ambitions.”

The committee called on government to develop a “comprehensive nuclear strategic plan” by the end of this parliament. 

Tom Greatrex, chair of the Nuclear Industry Association, a trade body, welcomed the recommendation, adding: “The UK is well positioned to become a global hub for nuclear investment . . . If we don’t act now, we will lose out on energy security, environmental sustainability and jobs for our people.”

The energy department highlighted this month’s launch of Great British Nuclear, a government body to oversee nuclear development “which will help generate billions for the UK economy and support thousands of jobs”.

It added: “We have already made clear we will publish a nuclear road map . . . Nuclear has a vital role to play in reaching net zero and boosting energy security.”

FT : Altice fraud arrests throw spotlight on Patrick Drahi’s elusive right-hand

Altice fraud arrests throw spotlight on Patrick Drahi’s elusive right-hand man
Co-founder and key troubleshooter Armando Pereira was kept away from investors

Telecoms tycoon Patrick Drahi has always turned to one man to tackle problems within his sprawling Altice empire: Armando Pereira.

The Portuguese executive has maintained a low profile after helping Drahi found the group two decades ago. But behind the scenes he was considered the Franco-Israeli billionaire’s right-hand man, according to people familiar with their relationship.

“Whenever there was an issue in a country, he sent in Armando to deal with it,” said one person who has known the two men for years. “He was Patrick’s partner; nothing happened on the operational side without Armando.”

Now Pereira’s role at Altice has been thrust into the limelight after he was placed under house arrest in Portugal as prosecutors investigate corruption allegations against him.

Altice has briefed investors and rating agencies that it may have fallen victim to a long-running fraud that allegedly siphoned hundreds of millions of euros from its payments to suppliers.

Altice has not commented on Pereira but pointed to alleged “harmful practices and misconduct of certain individuals and external entities”. It has suspended high-level executives and is conducting an internal investigation.

The imbroglio has come at a delicate time for the web of companies that Drahi pieced together through leveraged acquisitions, rattling bond investors who were concerned about the sustainability of Altice’s $60bn debt pile.

The fact the scandal has centred on Altice’s procurement division has further damaged its reputation, given it hailed its expertise in managing supply chains as one of the central tenets of its “Altice Way” of overhauling telecoms companies.

Pereira’s status as Drahi’s most-trusted confidant could hurt Altice’s majority owner, who has taken on substantial personal debt backing investments that, outside of his core telecoms businesses, include Sotheby’s auction house.

“They built their careers and fortunes together,” said another person who has long worked with the two men. “They are very close.”

Drahi will appear on Altice’s earnings calls next month to field bondholders’ questions. “It’s the first time in forever he’ll be on one of these calls,” said one credit fund manager. “The key question everyone will be asking is how much did Drahi know? And either answer is bad in different ways.”

Early triumphs
Drahi’s first significant encounter with international bond investors almost a decade ago came at a moment of triumph.

In an era of ultra-low interest rates, Altice channelled the money flooding into junk bond markets to transform itself from an obscure French cable player into a major global telecoms group.

In 2014 Drahi pulled off his biggest score, raising $16.7bn in the largest ever high-yield bond deal to finance a takeover of SFR, one of France’s main telecoms providers.

Two people present at the deal’s London investor meeting recall Drahi regaling a packed room with a story of his struggle obtaining a small loan from a regional bank for his first deal, before quipping that borrowing nearly $17bn from the assembled bankers and fund managers was “easy” in comparison.

Hiring junk bond market stalwarts helped, with Drahi enlisting as top executives the likes of Morgan Stanley’s former top telecoms banker Dexter Goei and Dennis Okhuijsen, previously treasurer of “cable cowboy” John Malone’s Liberty Global.

Pereira, however, was always kept away from investors.

“We never got to meet Armando,” said one longtime Altice bondholder. “But they always mentioned that they were sending in him and his Swat team to overhaul each new acquisition.”

When Altice listed its shares in 2014, Pereira’s name did not appear in the nearly 800-page prospectus. The document does not indicate he had a stake in Altice, although four people familiar with the group’s corporate structure said he had at times held a large equity interest. 

Altice said Pereira is “not an Altice or any Altice affiliate’s shareholder”, declining to comment further. A person close to Pereira’s legal defence said the executive “sees no point in revealing Altice’s shareholder structure at this time, either currently or in the past”, but confirmed that the 71-year-old’s wealth stood at about €1.6bn.

In his autobiography The Barefoot Billionaire, Pereira recounted how he was born into abject poverty in northern Portugal before leaving for France as a teenager in search of a better life. By the 1980s, he had “found his calling” as a budding telecoms entrepreneur, making his first millions establishing a company that assisted with the buildout of cable networks across France.

Pereira met Drahi in the early 1990s, when the Portuguese immigrant’s company became a subcontractor to the Morocco-born businessman’s early cable ventures. When Drahi set up Altice a decade later in 2001, he named Pereira one of the group’s three founders.

Pereira’s operational knowhow complemented Drahi’s flair for financial engineering. The self-taught Portuguese telecoms expert became known for employing hardball tactics to wring savings out of the group’s suppliers at operating businesses spanning from Israel and the US to the Dominican Republic.

“His main skill is cost-cutting,” paired with toughness, said the second person who has worked with Drahi and Pereira.

Pereira was “still quite involved” in Altice, according to one person briefed by the group’s management on their crisis, who said he had been working “one to two days a week in Paris”.

Altice’s centralised procurement for its European operations ran through a Portuguese unit established by Pereira, the person said, adding his son-in-law Yossi Benchetrit — who has been placed on leave by Altice — was in charge of procurement for its US unit.

Benchetrit did not respond to a LinkedIn message seeking comment. Altice USA’s chair Alexandre Fonseca has also stepped back.

The UAE connection
While Portuguese authorities have not fully detailed the allegations against Pereira, rating agency S&P this week wrote that it understood Altice’s suppliers “may have been forced to work through intermediaries in a manner that ultimately benefited the implicated parties”.

Senior executives have told staff and investors they were “stunned” by the allegations, said two people familiar with the matter.

Authorities are probing upwards of 60 companies allegedly linked to Pereira and another businessman, Hernâni Vaz Antunes, in jurisdictions including the United Arab Emirates, people briefed by the company said. Hundreds of millions of euros were allegedly siphoned from such companies, they added.

The Luxembourg business register shows Pereira and Antunes, who was also placed under house arrest, jointly established a company called Shar Holdings in 2014. Antunes listed his residence as the UAE.

There is no evidence Pereira is the ultimate beneficial owner of any other offshore companies under investigation, the person close to his legal defence said, noting that local teams handled Altice’s procurement processes with no need for instructions from Pereira.

The businessmen’s relationship has made headlines before. In 2015 Antunes’s Dubai-based company Jana General Trading unsuccessfully sued Brazilian telecoms firm Oi, claiming he was due a €69mn fee from Altice’s acquisition of Portugal Telecom. Pereira testified to the existence of a commission, although he did not comment on its amount, said the person close to his defence.

One of Altice’s advisers recalled that some of the group’s investors had asked questions about the unusual arrangement.

Antunes’s lawyer declined to comment citing judicial secrecy.

‘Near-death’ experiences
While Altice’s internal investigation is in its early stages, the bond market has delivered its verdict on the damage to the group.

Prices on the $60bn of debt across Altice’s three main entities — Altice France, Altice International and Altice USA — have plunged to distressed levels. Unsecured bonds at its French unit are trading at little more than a third of face value.

Several bankers noted BNP Paribas had stepped up in recent years to become lender-of-choice for Drahi’s riskiest deals, while US banks have trimmed their exposure. A loan of more than €1bn to one of Altice’s European holding companies, which was provided by Goldman Sachs, JPMorgan and BNP, was repaid in 2021. BNP agreed a €700mn credit facility the following year.

The French bank has also backed Drahi’s personal vehicles, acting as the sole lender for his deals to take private Sotheby’s in 2019 and Altice Europe in 2021.

Luxembourg filings show BNP also lent money to an aviation subsidiary Altice created in 2021, when the group agreed to purchase a Bombardier private jet for more than $21mn.

BNP declined to comment.

Altice has pushed out the due dates across its debt stack, however, and does not face substantial maturities until 2027, according to bondholders.

The company has also severed linkages between its debt silos to reduce contagion following a market panic in 2017, several investors said. Drahi has removed shares in Altice Europe and Altice USA as collateral for a loan backing Sotheby’s.

“Every few years Altice seems to have a near-death experience and every time Drahi manages to pull off a feat of financial engineering to keep the music going,” said one bond investor. “Options are looking tighter and tighter but I wouldn’t bet against him having another roll of the dice left in him.”

FT : SEC asked Coinbase to halt trading in everything except bitcoin, CEO says

SEC asked Coinbase to halt trading in everything except bitcoin, CEO says
Request would have meant ‘the end of the crypto industry in the US’, according to Brian Armstrong

The US Securities and Exchange Commission asked Coinbase to halt trading in all cryptocurrencies other than bitcoin prior to suing the exchange, in a sign of the agency’s intent to assert regulatory authority over a broader slice of the market.

Coinbase chief executive Brian Armstrong told the Financial Times that the SEC made the recommendation before launching legal action against the Nasdaq-listed company last month for failing to register as a broker.

The SEC’s case identified 13 mostly lightly traded cryptocurrencies on Coinbase’s platform as securities, asserting that by offering them to customers the exchange fell under the regulator’s remit. 

But the prior request for Coinbase to delist every one of the more than 200 tokens it offers — with the exception of flagship token bitcoin — indicates that the SEC, under chair Gary Gensler, has pushed for wider authority over the crypto industry.

“They came back to us, and they said . . . we believe every asset other than bitcoin is a security,” Armstrong said. “And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin.” 

If Coinbase had agreed, that could have set a precedent that would have left the vast majority of the American crypto businesses operating outside the law unless they registered with the commission.

“We really didn’t have a choice at that point, delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US,” he said. “It kind of made it an easy choice . . . let’s go to court and find out what the court says.”


Oversight of the crypto industry has hitherto been a grey area, with the SEC and the Commodity Futures Trading Commission jockeying for control.

The CFTC sued the largest crypto exchange, Binance, in March of this year, three months before the SEC launched its own legal action against the company. 

Gensler has previously said he believes most cryptocurrencies with the exception of bitcoin are securities.
However, the recommendation to Coinbase signals that the SEC has adopted this interpretation in its attempts to regulate the industry.

Ether, the second-largest cryptocurrency, which is fundamental to many industry projects, was absent from the regulator’s case against the exchange. It also did not feature in the list of 12 “crypto asset securities” specified in the SEC’s lawsuit against Binance.

The SEC said its enforcement division did not make formal requests for “companies to delist crypto assets”.

“In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the commission under the securities laws,” it added.

Stocks, bonds and other traditional financial instruments fall under the SEC’s remit, but US authorities remain locked in debate as to whether all — or any — crypto tokens should fall under its purview.

Oversight by the SEC would bring far more stringent compliance standards. Crypto exchanges typically also provide custody services, and borrow and lend to customers, a mix of practices that is not possible for SEC-regulated companies.

“There are a bunch of American companies who have built business models on the assumption that these crypto tokens aren’t securities,” said Charley Cooper, former CFTC chief of staff. “If they’re told otherwise, many of them will have to stop operations immediately.” 

“It’s very difficult to see how there could be any public offerings or retail trading of tokens without some sort of intervention from Congress,” said Peter Fox, partner at law firm Scoolidge, Peters, Russotti & Fox. 

The SEC declined to comment on the implications for the rest of the industry of a settlement involving Coinbase delisting every token other than bitcoin.

FT : Luxshare’s wins with Apple make it Foxconn’s biggest challenger

Luxshare’s wins with Apple make it Foxconn’s biggest challenger
Chinese contract manufacturer is sole assembler of Vision Pro mixed-reality headset

When Apple unveiled its Vision Pro mixed-reality headset to the world’s media in June, few were aware of the significant role played by a little-known contract manufacturer in China in creating the revolutionary device.

Shenzhen-based Luxshare Precision Industry has won favour and increasing business with the iPhone maker in part by being prepared to test “crazy” ideas in its factories, according to an Apple supply chain employee.

It is the sole assembler of the Vision Pro and has been seeing it through the initial manufacturing problems of integrating its complex electronics and the setbacks of too-frequent flaws in a crucial component — its micro-OLED displays. Apple has been forced to scale back production expectations for next year, with two people close to Apple and Luxshare saying it was preparing to make fewer than 400,000 units in 2024.

Still, the company and its chief have come a long way to be now manufacturing the “most complex consumer device anyone has ever made”, according to analysts, and taking on Taiwan’s Foxconn, the world's biggest contract electronics manufacturer.

When Foxconn started out in China with the opening of a new factory in Shenzhen in 1988, 21-year-old Grace Wang was one of the first migrant workers to be employed on its production lines. Wang displayed enough ingenuity and skills to earn a quick promotion to manager, as her employer began a decades-long dominance over the making of tech gadgets.

Thirty-five years on, the factory girl is now chair of her own contract electronics maker, after co-founding and building up Luxshare to be Foxconn’s most serious challenger.

Working its way up from being a subcontractor supplying connectors in 1999, Luxshare grew to become a public company, listing in the southern city of Shenzhen in 2010 and selling directly to Apple from 2011. Revenues have surged from Rmb2.5bn ($350mn) in 2011 to Rmb214bn last year.


Wang has been instrumental in its rise, say those who have worked with her. “She’s the hero behind Luxshare, learning a lot from Foxconn about factory management and business expansion,” said one longtime employee who did not wish to be named.

“She is like a big sister or a mum in day-to-day management — attentive and strong.”

While Foxconn is best known as the maker of the iPhone, Luxshare has also been steadily expanding its business with Apple, becoming an important partner and alternative supplier of services.
While revenues and profits remain far below Foxconn’s level, its high-growth profile led to its market capitalisation overtaking its rival’s at one point in early 2021.

Apple’s high opinion of its capabilities can be measured by the level of difficulty in the assignments awarded — from setting up factories outside China as geopolitical tensions increase to producing higher-end phones.

Luxshare first produced simple connectors for the iPhone and MacBook laptop through one of its acquisitions, before extending production to critical components in other Apple products, including AirPods, Apple Watch, and then the iPhone.
In 2022, Luxshare generated more than 70 per cent of its revenues from Apple, compared with a proportion of less than 50 per cent at Foxconn, according to annual reports and analysts’ interpretations.

Apple’s strict requirements for its suppliers tend to boost their credentials with other clients. Luxshare was crowned “gold supplier” by Huawei in 2018.

Industry experts say Luxshare’s rapid rise has been helped by Apple chief executive Tim Cook’s enthusiasm for the Chinese company, whose facilities he has visited.
It has also benefited from being selected to help Apple’s efforts to diversify its supply chain beyond China.


Analyst Tony Zhang from CLSA says this represents a challenge, with the need to adapt from centralised production to decentralised management of factories worldwide and to train local workers in different territories.

One such market is India, where Luxshare established an office in 2019 and bought two well-established production plants in Chennai from the former mobile-phone maker Nokia, and Motorola. It has also applied for permission to build a factory in India with a domestic partner, according to people close to the company and Indian government officials.

But it has been cautious on expansion, with Wang hinting at an event in February that the supply chain in India was not mature enough. Eddie Han, an analyst at Isaiah Research, says strained relations between China and India may also be limiting Luxshare’s business development. The company said in May it would “only invest [in India] with sufficient guarantees” for the business environment.

Instead, Vietnam has emerged as a better bet, with a similar culture to China and smoother transportation links. Wang said in February that Vietnam was “the best option” for manufacturing relocation.

The company has been building plants there since 2016 and has already started to migrate Apple production work. Luxshare’s management team said in April that the Vietnam plants were focused on making mature products, while the more challenging tasks, such as mobile phones and new product assembly, were still being carried out in China.

Next for Luxshare is the iPhone 15 series, which will begin production in China in August ahead of its official launch event. The company has received a record share of Apple orders to assemble the new version of the smartphone, according to two people close to Apple and Luxshare. It will also assemble premium models for the first time, breaking Foxconn’s stranglehold on producing the iPhone Pro series, the Financial Times has reported.

Luxshare’s ability to produce enough qualified handsets “quickly and efficiently” will determine its success in gaining a larger share of smartphone production, said Ivan Lam, a senior analyst at Counterpoint.

Offering lower prices and greater flexibility has made the company an attractive option for Apple, which is considering giving it an even more significant role in producing the iPhone 16 series, dependent on performance in delivering the 15, the two people said.

Wang will be the one pushing the company to maintain its standards and prove itself as a supplier that can continue to rival Foxconn on quality and reliability.

“One must be a handsome bird in order to fly with the phoenix,” she has often said of the relationship with Apple, citing an old Chinese proverb.

FT : Worldcoin’s premise is a disturbing one

Worldcoin’s premise is a disturbing one
Sam Altman’s dystopian cryptocurrency project has several core problems

Last week, I joined a group of 2mn people and counting who have given up their irises to Sam Altman’s dystopian cryptocurrency project, Worldcoin.

OpenAI chief executive Altman, who has already had a busy year with ChatGPT, started the global rollout of his latest venture last week, scanning eyeballs in 35 cities across 20 countries.

At its core, Worldcoin is a private company embarking on mass biometric data gathering. It is based in San Francisco and Berlin, and backed by venture capitalists including Andreessen Horowitz. In some countries, in exchange for a scan of your eyeball, Worldcoin will issue you some of its cryptocurrency tokens (currently participants receive 25 but that number has fluctuated), which can be traded on crypto markets and at the time of writing were worth $2.18 each. 

Altman claims that Worldcoin is a tool for a near-future in which OpenAI’s artificial intelligence surpasses human intelligence, rendering most jobs redundant and meaning global society has to be restructured around a universal basic income model. 

Its iris-scanning technology — carried out using “the Orb”, a bowling ball-sized chrome device — can deduce that you are a human and not a robot, issuing you a kind of digital passport called a “World ID” through which you can, in theory, receive your share of the economic growth produced by a society in which robots do all the hard work. 

Many of the finer details, such as how Worldcoin would work with governments, and how the company makes money, remain unclear.

Altman, and Worldcoin’s 29-year-old co-founder and chief executive Alex Blania freely assert that their lofty goal is to have 8bn users. Their company aims to solve a problem that doesn’t yet exist and the likelihood of which will seem absurd to most. And that’s just the start of Worldcoin’s potential problems. I arrived for my eye scan at a shared working space in Shoreditch, London, aware of several core issues with the company’s plans. 

First, its mission is extremely contradictory. Digital currencies were created as a rejection of centralised finance and to stop governments and corporations from having total control of personal data — an aim that seems ideologically opposite to Worldcoin’s goal of uniting citizens and their governments through its crypto token. In the same vein, eye scanning will be complete anathema to most crypto libertarians.

Second, Worldcoin is not available in the US, where uncertainty persists over the treatment of crypto assets as securities and regulation is expected to become far stricter in the aftermath of the FTX collapse. This seems like an existential catastrophe for Worldcoin’s ambitions. “We didn’t think it would end up as ‘world minus the US coin’,” Altman told the Financial Times last week.

Third, there are unanswered privacy concerns in this project. Imagine a world where criminals use biometric data leaks to steal identities rather than credit card details. (Worldcoin says it converts scans to code before deleting the raw data but there is little information available about how this works.)

Yet I left my three-minute appointment with no more clarity regarding what my iris data would be used for, and convinced of a far more simple roadblock to the company’s success: most people won’t care enough to sign up.

Worldcoin lives or dies on its ability to persuade people to go and get their eyes scanned. Even for those who regularly buy and sell crypto, free tokens currently worth around $50 are unlikely to bring hundreds of millions of people through the door. Videos of people queueing up for scans just after the launch circulated online but the diehard fans, the curious and journalists won’t make for the sort of numbers the company wants.

Worldcoin is already under scrutiny for the way it incentivises participants in developing countries, where it has offered people free cash and gifts such as AirPods in exchange for a scan. That scrutiny will increase as the company expands.

No one could accuse Altman of a lack of ambition. The problem is that Worldcoin’s success hinges on OpenAI bringing about a reality that is an unpleasant thought for most. Creating both the problem and the solution is an uncomfortable premise, even if Worldcoin turns out to be a damp squib. Until that is more clear, the question remains: even if you feel comfortable giving up your biometric data to a Silicon Valley start-up whose founder is working to bring about robot super intelligence, should you?

Miss Tweed : Mayhoola uses Valentino to secure partnership with Kering

Mayhoola uses Valentino to secure partnership with Kering
By Astrid Wendlandt

Mayhoola for Investments, the secretive holding company controlled by Qatar’s royal family, appears to have given up on its ambition of building a major luxury group alone after striking a partnership with Kering and agreeing to sell it Valentino. Such a deal is a first in the luxury industry wherein a major French group agrees to align its interests with that of a smaller foreign company in exchange for allowing the former to invest in its biggest asset.

The Doha-based company is betting Kering will open doors and help it with issues such as recruiting talents and securing good locations for boutiques. They could also make investments together. The transaction announced on Thursday, overshadowed Kering’s disappointing second-quarter results.

Mayhoola, owner of brands Balmain and Pal Zileri, has always said it wished to continue making more acquisitions. Before the pandemic, it aimed to conduct an initial public offering (IPO) for Valentino. Last year, the information platform MergerMarket reported that it was in early-stage talks to invest in Giorgio Armani. But that deal never happened.

This week, Kering agreed to buy a 30 percent stake in Valentino for €1.7 billion with an option to acquire the balance no later than in 2028. It said Valentino, known for its Haute Couture and red carpet cocktail dresses, was complimentary to its portfolio of brands. The French group has declined to give details on which performance targets Valentino would have to meet as part of the agreement or how the final price for the remaining controlling stake would be calculated.

Kering said that it may settle part of the balance for Valentino in shares. It stressed they would not be new but existing shares purchased on the open market. Analysts said such initiative will help support the group’s stock price, which has underperformed peers such as LVMH, Prada and Hermès.

It is interesting to note that Kering was not able to buy the whole company at once. Mayhoola used Valentino as bait to secure an alliance with Kering. It regards the French group as a respected partner that will boost its own credibility in the fashion and luxury industry. Industry sources say that because it has a very small portfolio of brands, Mayhoola is struggling to secure good locations for boutiques, particularly at luxury malls in Asia. Mayhoola declined to comment.

For years, Mayhoola refused to sell Valentino. Every time interested buyers knocked on the door, it said “no.” However, Mayhoola CEO Rachid Mohamed Rachid has come to understand that there are not that many brands for sale and Mayhoola would be better equipped to grow those it already owns with Kering’s help.

“Time will tell what will come out of this partnership,” one source close to Mayhoola told Miss Tweed on Friday on condition of anonymity. “This deal is in the interest of all parties.” For many years Kering has been under pressure from the investment community to use its cash pile to make a significant acquisition. It has just signed two in a month. Earlier in July, Kering acquired the high-end perfume maker Creed for more than €3 billion. Quite the shopping spree.

The group this week rejected allegations that the perfumer took off in the 1970s and had little to do with a tailoring business dating back to 1760– as it says on its website– a story explained in the self-published bookThe Ghost Perfumer: Creed, Lies and the Scent of the Century.Many “noses” and perfume industry managers know that the arguments presented in the book are valid, as some of them are old enough to have witnessed Creed’s ascent themselves. Yet Kering stuck to the brand’s official version of its story. “The House of Creed has an incredibly rich history dating back to 1760 when it was founded as a tailoring house. The brand has evolved and grown into the success it is today because of its focus on the highest quality ingredients and the creation of some of the world’s most iconic and renowned fragrances,” Kering told Miss Tweed.

BALMAIN

Kering said it was not contemplating buying Mayhoola’s other major fashion and luxury asset Balmain. The French brand is on track to make around €300 million this year, up from around €275 million, industry sources say. In spite of designer Olivier Rousteing’s high-octane fashion shows and theatrics, the business is not enjoying the success of an “it” bag and making leather goods a significant part of its business, they say.

Mayhoola bought Balmain for €460 million in 2016. Some investment bankers said they did not expect it would be put up for sale any time soon. The Qatari company may be hoping that Kering could help it expand that business as well.

Kering is also certainly not keen on buying Mayhoola’s third fashion brand, the tailor Pal Zileri, which has been lossmaking for nearly the whole decade the Qatari firm has owned it. “Zileri is a disaster,” one industry source said, adding that the brand has been closing shops and is now mainly sold through wholesalers.

Mayhoola also experienced disappointment with British leather goods brand Anya Hindmarch, a British label known for its Smiley, Corn Flakes, Sprite and other zany bag designs. After seven years of mopping up tens of millions of pounds in losses, it sold its 75 percent stake in 2019 to the Marandi family, which owns the Soho House chain of private clubs.

In 2015, Mayhoola was in talks to invest in Lanvin but its approach was torpedoed by the company’s Taiwanese shareholder who preferred to sell control to China’s Fosun a few years later, in 2018. Mayhoola had been invited to put money in the company by the late ex-Lanvin designer Alber Elbaz himself.

Some industry observers believe that had Mayhoola been the chosen partner, invested significant sums in Lanvin and hired an experienced team of managers, the brand would not be the sad story it is now under Chinese ownership.

OIL AND GAS

The Qatari royal family has been plowing money into fashion and luxury to reduce its dependence on oil, gas and hospitality. However, its forays into the sector have not always been a success, to say the least. Let’s remember that in 2011, Sheikha Mozah bint Nasser, the glamorous wife of the then-Emir of Qatar, launched a luxury brand called Qela on which French designer Stephane Rolland worked as a consultant.

Despite grand ambitions, the brand never took off and the country’s attempt at building a luxury consortium called Qatar Luxury Group never materialized. The Qatar Luxury Group also sold its controlling stake in the French leather goods maker Le Tanneur to the French company Tolomei in 2017. Since then, Qatar Luxury Group appears to have ceased to exist. There are few traces of it on the Internet.

VALENTINO

Mayhoola may have made a few bad investments in luxury, but these have been more than compensated by the impressive success of Valentino. The Doha firm bought it from private equity firm Permira in 2012 for €858 million. It’s now worth €5.7 billion on paper. Mayhoola has multiplied its investment by 6-7 times – a sizeable profit. Before the deal was agreed, Mayhoola had asked Banca Intesa Sanpaolo and JP Morgan Chase for their opinion regarding the fair valuation of Valentino, two industry sources said.

In a conference call about its half-year results, Kering said that it could pay for the remainder of Valentino in Kering stock and the transaction would not be dilutive. Kering will buy shares in the open market in order to give them to Mayhoola when it decides to complete the acquisition. “The transaction is part of a broader strategic partnership between Kering and Mayhoola, which could lead to Mayhoola becoming a shareholder in Kering,” the two companies said in a statement.

Earlier this week, Valentino announced internal promotions to strengthen its leadership following the departure of the brand’s Chief Brand Officer Alessio Vannetti, ex-Gucci, who decided to pursue new career opportunities. Valentino is led by Jacopo Venturini, who was Gucci’s chief merchandising officer and worked closely with designer Alessandro Michele.

Last year, Valentino made a recurring underlying profit of €350 million on turnover of €1.4 billion. It has 211 directly operated stores.

BIDAYAT

Mayhoola is led by Rachid Mohamed Rachid, who was president of Unilever North Africa and Egypt’s minister of trade, industry and investment for seven years until 2011. On top of his obligations at Mayhoola, Rachid makes investments through his family office Alsara Investment Group. Based in Switzerland, it has over $2 billion in assets under management and focuses primarily on markets in the Middle East, North Africa and Europe. The group has invested in many companies, including Japanese luxury eyewear maker Akoni which works for Valentino and Balmain.

Two years ago, Rachid created Bidayat, a company that invests in young fashion, jewelry and accessories brands from around the Mediterranean Basin, putting in from $500,000 to $10 million. Bidayat is also planning to relaunch the Walter Albini brand with help from ex-Gucci designer Michele, as Miss Tweed reported in May.

Though he did not live long enough for many people to remember him outside of Italy, Albini, is considered one of the founding fathers of Italian ready-to-wear.A brilliant dandy designer who shot to fame in the late 1960s and 1970s, he died of AIDS in 1983, at the age of 42. For fashion insiders, Albini is ripe for a revival – and Michele is a great fit. In recent months, Rachid and his team have been busy interviewing people and building the brand’s teams. Rachid is making a huge bet on this revival and knows that he cannot afford to make a mistake.

You can bet he will call on his new friends at Kering to help him take this project off the ground and ensure its success.