The head of South Korea’s flag carrier, Korean Air — whose family has been embroiled in multiple scandals including one involving a “nut rage” tantrum — lost his board seat after shareholders voted against extending his term as director, the airline said yesterday.Cho Yang-ho, who is on trial for corruption, failed to secure a required two-thirds majority, becoming the first controlling shareholder of a South Korean conglomerate to be forced off the board.The super-wealthy owners of chaebols — the sprawling conglomerates that dominate the world’s 11th-largest economy — are no strangers to controversy, but a string of high-profile scandals have vaulted the Cho family to notoriety in South Korea, even sparking protests by their employees.The 70-year-old tycoon is the chairman of the Hanjin Group, which used to own the now-bankrupt Hanjin Shipping.Cho controls around 30 percent of Korean Air through its parent company Hanjin Kal.But the National Pension Service, the airline’s second-biggest shareholder, said on Tuesday it will oppose Cho’s reelection, citing his record of “undermining corporate value and infringing upon shareholder rights.”“It is correct that he has lost his seat as the director of the board,” a Korean Air spokeswoman said.His troubles began after Cho’s eldest daughter, Heather Cho, made headlines in 2014 when she lost her temper over the way she was served nuts in first class and ordered the Korean Air plane to return to its gate at a New York airport in what became known as the “nut rage” incident.The vote had put “slight brakes” on Cho’s management of the airliner, she said, but stressed that he still had control over the company.
The US trade deficit tumbled nearly 15 percent in January as imports fell and exports rose. Shipments of American goods to China skidded to the lowest level in more than eight years as the world’s two biggest economies remained locked in a trade dispute.The Commerce Department said yesterday that the gap between the goods and services that the United States sells and what it buys from other countries dropped by 14.6 percent to US$51.1 billion in January from US$59.9 billion in December. Exports rose 0.9 percent to US$207.3 billion, and imports dropped 2.6 percent to US$258.5 billion.The deficit in the trade of goods with China narrowed by 6.4 percent to US$34.5 billion. US goods exports to China dropped 22.3 percent to US$7.1 billion, lowest since September 2010; imports from China dropped 9.6 percent to US$41.6 billion.The US also reported a sharp increase in exports of cars, trucks and auto parts in January.President Donald Trump campaigned on a pledge to reduce America’s long-standing trade deficit with the rest of the world. He sees the gap as a sign of economic weakness and as the result of bad trade deals and abusive practices by America’s trading partners.Trump has also aggressively slapped tariffs on imported steel, aluminum, dishwashers and solar panels.But last year, the overall trade gap hit the highest level since 2008, and the deficit in the trade of goods with China hit a record.Mainstream economists view trade deficits as the result of an economic reality unlikely to yield to changes in trade policy: Americans buy more than they produce, and imports fill the gap. The strong US economy also encourages Americans to buy more foreign products.US exports are also hurt by the American dollar’s role as the world’s currency. That means the dollar is persistently strong, raising prices of US products.In January, the deficit in the trade of goods with the rest of the world dropped to US$73.3 billion from US$81.5 billion in December. But the US ran US$22.1 billion surplus in trade of services, up from US$21.6 billion in December.
An external committee reviewing governance at Nissan Motor Co said yesterday there was enough evidence to suspect violations of laws and the private use of company funds by ousted chairman Carlos Ghosn.Following a three-month audit of Nissan’s governance after a scandal that shook the global auto industry, the committee put the blame squarely on what it called Ghosn’s concentration of power. It also acknowledged Nissan CEO Hiroto Saikawa’s role in Ghosn’s salary arrangement at the heart of the scandal.Twenty years to the day since French automaker Renault SA agreed to rescue Nissan, the committee described a corporate culture at Nissan “in which no one can make any objections to Mr Ghosn,” who was “in a way deified within Nissan as a savior who had redeemed Nissan from collapse.”The group issued 38 recommendations to bolster Nissan’s governance, including that top executive positions at the Japanese carmaker should not be held by people serving in executive positions at Renault or junior partner Mitsubishi Motors Corp.Retooling the allianceIt also proposed that the majority of directors, including the chairman of the board, be independent outside directors and that the role of company chairman be abolished.The recommendations from the external, seven-member committee come weeks after Nissan and Renault said they would retool their alliance, one of the world’s biggest automakers, to break up the all-powerful chairmanship previously held by Ghosn.“There are facts sufficient to suspect violations of laws and regulations, violation of internal rules and private use of company funds and expenses ... by Mr Ghosn,” the committee said in its report.It also singled out Nissan director Greg Kelly, who too has been indicted, for his alleged role in helping Ghosn avoid oversight, and said that Saikawa had signed documents regarding compensation Ghosn would receive after retirement.“It is clear that there are issues requiring improvement with respect to Nissan’s governance as it could not prevent the misconduct.”
China’s stock markets rose yesterday, with the Shanghai Composite Index rebounding to above 3,000 points.Led by the strong performance in pharmaceuticals and biomedicine, the index rose 0.85 percent or 25.62 points to finish at 3,022.72.The Shenzhen Component Index rose 1.01 percent to end at 9,609.44 points, while the ChiNext Index gained 0.46 percent to finish at 1,637.77 points.North China Pharmaceutical Group Corp, a leading pharmaceutical manufacturer based in Hebei Province, saw its shares up by the daily 10 percent cap to close at 5.34 yuan (79 US cents).Food and beverage makers, leisure services providers and building materials manufacturers were among the top gainers.On Tuesday, the Ministry of Finance, together with three other ministries issued a notice which proposed to reduce subsides for new energy passenger cars, new energy buses and new energy trucks.Gu Yongtao, a strategy analyst at Cinda Securities, told Caixin.com that the move will speed up further consolidation within the new energy automobile industry and companies with core technologies and technological barriers will have more room for development in the future.Guoyuan Securities advises investors to focus on sectors such as computers and medicine that offer high-quality growth potential and leading players with good business performances.Overnight on Wall Street, stocks recovered while the US benchmark 10-year Treasury yield rose. The market was hit hard on Friday and flat on Monday as a US Treasury yield curve inversion raised worries about a recession.European stocks were under pressure yesterday morning, as investors took a cautious stance about a potential recession in the US economy.
China remains a major engine and stabilizer for global growth and has provided inspiration for the world during the past 70 years of development, delegates from around the world have said during the ongoing Boao Forum for Asia on China’s southern island province of Hainan.As this year marks the 70th anniversary of the founding of the People’s Republic of China, Gloria Macapagal Arroyo, speaker of the Philippines House of Representatives and a former Philippine president, told a panel discussion that China has made huge contributions to the world in the past 70 years, becoming the world’s second-largest economy.Arroyo said China has proved to the world that every country can achieve success by following its own development approach suitable to its conditions, and the reform and opening-up policy is the key to China’s economic miracle.China’s visionary mode of development featuring openness, innovation and win-win cooperation has not only benefited itself, but has also contributed to the world economy as well, former French President Francois Hollande told a panel discussion themed “70 and 40 Years in Retrospect: China in a New Era.”Noting that China has achieved unprecedented development in the past 40 years, unseen in human history, Hollande said one of the major reasons is that China has been constantly adjusting and redefining itself to keep up with the changing international landscape.Despite weakening global growth and increasing uncertainties in the world, Asia has promising economic prospects and is expected to become the world’s largest regional cooperation block, said a BFA report released on Tuesday.Acknowledging that Asia remains the most dynamic region in the world and has great growth potentials in the future, Hiroshi Nakaso, former deputy governor of the Bank of Japan, said he is looking forward to seeing the two major powers of Asia set successful examples of bilateral economic cooperation in a third country so as to energize more cooperation.The past several decades have also witnessed Japan’s increasingly extensive engagement in China’s reform and opening-up process. As protectionism and unilateralism are spreading across the world, Nakaso said “we can’t use protectionism to fight protectionism. Emerging economies should further improve their investment climate to make themselves more attractive to foreign capital. A case in point is China’s newly-adopted foreign investment law which is a major measure to upgrade its investment environment.”President of US real estate and financial services firm Lennar International Chris Marlin said China’s growth rate was the envy of the world.“The Chinese consumer gets stronger every month and every year,” he said.“The advances that China has made in the areas of big data, artificial intelligence and machine learning are the envy of the world in many ways. So, the Chinese economy is very productive and providing stimulus for the overall global economy.”The BFA, known as Asia’s Davos, is a non-governmental and non-profit international organization that started the annual conference in 2002.
Hong Kong flag carrier Cathay Pacific said yesterday it will buy budget airline HK Express for more than US$600 million as it moves to counter competition from the increasing number of low-cost carriers in the region.The move is its first foray into the budget sector and will leave Cathay controlling three of the four airlines at one of Asia’s busiest airports at a time of huge growth in the region’s air industry.It comes weeks after the carrier said it had swung back into the black in 2018 following two years of losses and will help ease concerns after an embarrassing data breach that dented the firm’s reputation and could prove costly.“HK Express captures a unique market segment,” Cathay said in a statement. “This represents an attractive and practical way for the Cathay Group to support the long-term development and growth of our aviation business and to enhance the competitiveness of the Hong Kong hub during a time of intense regional competition.”Cathay will stump up HK$4.93 billion (US$628.15 million) for the airline in a deal that is expected to be completed by December, according to a filing announcement.The firm said it will continue to operate HK Express as a “standalone airline using the low-cost carrier business model.”“The transaction is expected to generate synergies as the businesses and business models of Cathay Pacific and HKE are largely complementary,” it added.Cathay shares rose almost 3 percent after the announcement but later retreated to end the day almost 2.5 percent lower at HK$13.34.HK Express is the city’s sole budget carrier — a sector that premium-focused Cathay has struggled to compete against despite rivals such as Singapore Airlines making inroads years ago.But analyst Dickie Wong of Kingston Securities said it is now rectifying its “shortcoming.”“I think Cathay has said goodbye to its worst time when it lost money from fuel-hedging contracts, faced an unclear business outlook and competition with budget airlines.”Wong said the falling share price was “just a normal pullback after a recent gain.”HK Express is owned by HNA Group, a struggling Chinese conglomerate that has been looking to lower its debt pile. The group also owns Hong Kong Airlines, another Cathay competitor that has found itself in financial difficulties in recent months.HK Express flies to several regional cities including in Japan, South Korea, Chinese mainland, Thailand and Vietnam.Cathay has been overhauling its business after posting its first losses for eight years in 2016, firing more than 600 workers and paring overseas offices and crew stations as it faces stiff competition from budget rivals in China.It has also added international routes and better on-board services in a bid to compete with well-heeled Middle Eastern long-distance carriers.
CHINA’S major industrial firms reported falling profits in the January-February period, due to price and seasonal factors, but continued to see progress in structural upgrading and deleveraging, data showed yesterday.
Combined profit of industrial companies with annual revenue of more than 20 million yuan (US$3 million) dropped 14 percent year on year in the first two months of this year to 708.01 billion yuan, compared with the 16.1 percent growth in the same period of last year, the National Bureau of Statistics said.
Compared with the first two months in 2018, this year’s Spring Festival holiday had a longer impact on industrial production as it came earlier this year, said Zhu Hong, a senior statistician at the bureau. “After being adjusted for the Spring Festival factor, the profits of major industrial firms were basically flat or slightly down from the same period of last year,” Zhu said.
The automobile, petroleum processing, steel and chemical industries saw profits markedly pared by falling product prices, dragging the overall industrial profit growth down 14.2 percentage points, Zhu said.
In January and February, the factory-gate prices fell 0.4 percent year on year in the auto industry. The prices also dropped 1.3 percent in the petroleum-processing industry, 2.5 percent in the steel sector and 2.3 percent in the chemical industry.
Excluding the four industries, the overall industrial profit could have posted an increase of 0.2 percent year on year, according to the statistics bureau.
Apart from those factors, the profit decline was also a result of adjustments in the official statistical caliber and stronger efforts to ensure data quality, Huatai Securities said in a research note.
On the positive side, consumer product manufacturers and equipment producers maintained relatively fast profit growth, reflecting structural improvement.
Profits of major consumer goods manufacturers rose 5.8 percent year on year. Major special-purpose equipment producers recorded a 14 percent profit growth, while electrical machinery and device producers’ profits climbed 10.9 percent.
The structural change was in line with a shift in the country’s economic growth drivers from exports and investment to domestic consumption and high-end industries.
Yesterday’s data also showed progress in China’s bid to help reduce corporate leverage through supply-side structural reform. The leverage ratio continued to fall as the debt-to-asset ratio fell 0.2 percentage points to 56.9 percent at the end of February.
Among them, the debt-to-asset ratio of state-owned industrial companies slipped 1 percentage point from a year earlier to 58.6 percent, indicating that the deleveraging of state-owned enterprises has achieved remarkable results, Zhu said.
Chinese authorities have pledged to stick with supply-side structural reform and rolled out a raft of measures to cut taxes and fees for companies.