Business

SEOUL — Samsung Electronics flagged a leap of nearly 60 per cent in third-quarter operating profits Thursday, as its mobile and chip business were boosted by US sanctions against its Chinese rival Huawei.

The South Korean tech giant said in an earnings estimate that it expected operating profit to reach 12.3 trillion won ($10.6 billion) for July to September, up from 7.8 trillion won in the same period last year.

The prediction would represent the firm's biggest operating profit of any quarter for two years and was also ahead of analyst forecasts.

Samsung Electronics is crucial to South Korea's economic health. It is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled conglomerates known as chaebols that dominate business in the world's 12th-largest economy.

Its overall turnover is equivalent to a fifth of the country's gross domestic product.

James Kang, senior analyst at Euromonitor International Korea, said Samsung's rollout of its latest premium handset devices -- the Galaxy Note 20 and the Galaxy Z Fold 2 -- in August, coupled with strong sales of mid-range phones, led the firm's third-quarter performance.

A Washington ban on foreign companies providing Huawei with US-origin technology, that came into effect on September 15 -- cutting off essential supplies of semiconductors and software needed for making smartphones and 5G equipment -- also provided a boost.

Kang Min-soo, an analyst at Counterpoint Research, said US sanctions against Huawei were becoming "a big factor" affecting the global smartphone market.

"For Samsung, it will be a good opportunity to increase market share in Europe, where it has been competing with Huawei in various price bands," he added.

The firm's memory business also benefited from the feud after Huawei rushed to stock up on Samsung-made semiconductors before the US restrictions kicked in.

"Huawei has stocked about six months' worth of extra inventory before the US ban took effect on September 15," MS Hwang, an analyst at Samsung Securities, told Bloomberg News.

"Huawei's purchases are offsetting weakness in server-use demand and are devouring market inventory, which should affect prices down the road."

'New lows' 

But analysts said falling chip prices could put a damper on Samsung's performance in the final quarter of the year.

Samsung is the world's biggest manufacturer of memory chips and led the DRAM market with a 43.5-per cent share in April-June, according to market researcher TrendForce.

Server DRAM chips enjoyed a boost as the pandemic prompted working from home and online classes -- but were now experiencing "significant oversupply", it said in a report.

"Therefore, contract prices of server DRAM products continue to descend to new lows," it went on, forecasting a 13-18 per cent drop in the fourth quarter.

Despite the optimistic forecast, Samsung Electronics shares closed down 0.3 per cent on Thursday.

Shares in LG Electronics, South Korea's second-largest appliance firm after Samsung, also closed lower Thursday, down 2.9 per cent, despite forecasting third-quarter operating profits would jump 22.7 per cent on-year to 959 billion won, a record for any quarter.

Samsung withholds net profit and sector-by-sector business performance data until it releases its final earnings report, expected later this month.

Adding to the company's challenges, vice-chairman and de facto leader Lee Jae-yong is being retried over a sprawling corruption scandal that could see him return to prison. 

He is not being held in custody during the proceedings, but a guilty verdict could deprive the firm of its top decision-maker.

WASHINGTON — A House of Representatives panel in a report on Tuesday accused four Big Tech firms of acting as "monopolies", calling for sweeping changes to antitrust laws and enforcement that could potentially lead to breakups of the giant firms.

But the report by the House Judiciary Committee failed to win the endorsement of Republican members, highlighting a partisan divide despite widespread criticism of the tech giants.

The 449-page document concluded that Amazon, Apple, Facebook and Google "engage in a form of their own private quasi regulation that is unaccountable to anyone but themselves".

"Companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," the report said.

The report follows an investigation of more than 15 months and hearings this year with the top executives of the four firms, in parallel to antitrust probes being led by federal and state enforcers.

Judiciary Committee chairman Jerrold Nadler and antitrust subcommittee chairman David Cicilline said in a joint statement that the tech firms "each possess significant market power over large swaths of our economy" and have "exploited their power of the marketplace in anticompetitive ways".

The report suggests moves which could lead to breakups of the big firms, calling for "structural separations" to prohibit companies from competing on platforms they operate.

Also recommended was a requirement that platforms allow "interoperability" with competitors and regulations aimed at preventing acquisitions that hurt competition.

Amazon pushed back in a blog post, arguing that "the presumption that success can only be the result of anti-competitive behavior is simply wrong".

"Amazon accounts for less than 1 per cent of the $25 trillion global retail market and less than 4 per cent of retail in the US. Unlike industries that are winner-take-all, retail has ample space for many winners," the e-commerce giant said.

The report's findings reflect a growing backlash against the firms, which have extended their market dominance even during the coronavirus pandemic.

But while Democrats have assailed the growing power of tech platforms, Republicans have decried what they consider bias by the Silicon Valley firms against conservatives.

Highlighting the partisan divide on tech regulation, Republican panel members declined to endorse the committee's findings this week.

"Big Tech is out to get conservatives," Representative Jim Jordan said as the report was issued.

"Unfortunately the Democrats' partisan report ignores this fundamental problem and instead advances radical proposals that would refashion antitrust law in the vision of the far left."

Matt Schruers of the Computer & Communications Industry Association, a trade group which includes some of the large tech firms, said the lawmakers had failed to understand the digital economy.

"If the goal is simply to knock down successful US businesses, then perhaps this plan would score a hit," he said.

"But if the goal is to benefit consumers, which has until now been the standard for antitrust policy, it is hard to see how this would do anything but invite regulators to micromanage business models."

LONDON — Stock markets gained ground on Tuesday while investors mulled the level of US electoral uncertainty after President Donald Trump returned to the White House following treatment for COVID-19.

As Trump was discharged from hospital, political concerns persisted ahead of the presidential election on November 3.

Tokyo stocks opened higher, extending Wall Street rallies.

The benchmark Nikkei 225 index was up 0.44 per cent or 103.36 points at 23,415.50 in early trade, while the broader Topix index advanced 0.43 per cent or 6.99 points to 1,644.24.

Japanese shares are supported by a "receding sense of uncertainty with the news of President Trump's discharge from hospital, and expectations for additional US economic stimulus", Mizuho Securities said in a commentary.

As for oil prices, they shot higher amid strikes on Norwegian offshore platforms and a hurricane heading towards US installations.

In afternoon exchanges, the FTSE 100 index was 0.2 per cent higher in London, while the Dow Jones index had gained the same in early New York trades.

Global equities had rebounded on Monday on reports of Trump's improving health, and as US lawmakers appeared to edge towards agreeing on a new stimulus package.

The election was still a big question mark, however.

"This is still going to be a controversial, drawn-out election with the potential added uncertainty of a challenge to the result," according to OANDA analyst Craig Erlam.

Investors were also unclear over the chances of a new US stimulus package that would help counteract fallout from the pandemic in the world's biggest economy, dealers said.

Analysts said Trump's positive test for COVID-19 could be the jolt US lawmakers needed to finally agree a deal.

Stimulus talks have revived with a series of mostly phone meetings between Treasury Secretary Steven Mnuchin and Democrat House leader Nancy Pelosi.

"As far as traders are concerned, talking is preferable to being in a stand-off and not engaging with each other", noted David Madden, analyst at CMC Markets UK. 

WASHINGTON — Public investment should play a "central role" in the recovery of both emerging and advanced economies from the coronavirus downturn, the International Monetary Fund (IMF) said on Monday ahead of its fall meetings.

Stepping up such spending with interest rates low globally could "create millions of jobs directly in the short term and millions more indirectly over a longer period", officials with the International Monetary Fund wrote in a blog post.

Assuming investments are of "high quality", the Washington-based crisis lender said increasing public investment by 1 per cent of gross domestic product (GDP) could raise private investment by 10 per cent, employment by 1.2 per cent, GDP by 2.7 per cent along with overall confidence in the recovery.

The coronavirus pandemic has caused a sharp economic downturn globally, but even before the pandemic the IMF said public investment "had been weak for over a decade, despite crumbling roads and bridges in some advanced economies and massive infrastructure needs for transportation, clean water, sanitation" in poorer countries.

The time to invest is now, officials said, with many countries still fighting off COVID-19 and people who lost their job amid the downturn looking for work.

The IMF estimates two to eight jobs are created for every $1 million spent on traditional infrastructure, and 5 to 14 for every $1 million spent on research, development and green technology.

While encouraging countries to maintain existing infrastructure, the IMF encouraged governments to take a second look at projects that had been delayed in the past and plan new ones focused on their needs after the pandemic is over.

LONDON — The coronavirus pandemic that has slammed oil demand and prices is forcing energy majors to tighten their belts on exploration, even if finding new deposits remain essential to their existence.

While the sector is increasingly diversifying into greener energies such as electricity and wind power, its core business remains oil and gas.

"Questions abound over whether it is still profitable to look for oil given subdued demand growth prospects and a low-price environment," Stephen Brennock, analyst at oil brokers PVM, indicated.

"The answer seems not, judging by the recent spate of massive hydrocarbon asset writedowns.”

"Set against this backdrop, I don't expect a rebound in drilling in the medium-term. 

"Instead, oil majors will be forced to beef up their green energy portfolios in order to survive," Brennock said.

Slashed projects 

Compared to pre-virus plans, the energy sector has slashed exploration projects in UK North Sea waters by 70 per cent and by 30 per cent off the coast of Norway, according to research group Westwood.

US oil giant ExxonMobil has cut its total exploration plans by 30 per cent, or an investment reduction of $10 billion (8.4 billion euros).

European rivals ENI, BP and Equinor have carried out similar moves, which have in turn hurt subcontractors including French oil services group CGG, which expects revenue to slump 40 per cent this year.

In the United States, more than 30 oil exploration and production companies have this year filed for bankruptcy, according to Texan law firm Haynes & Boone.

If oil prices remain stuck around the current $40 per barrel level, a further 150 such companies could be lost by 2022, estimates research group Rystad Energy.

"Drilling programmes will be hampered in the near-term, in particular in US shale areas but also elsewhere, because of immediate cost-cutting measures," said JBC Energy analyst Raphaela Hein.

"In the past, we have seen that massive capital expenditure cuts to majors' budgets did not really impact their future production.” 

"As such, we think that they will continue to look for new fields — maybe to a slightly lesser extent... and keep production within their long-term plans. 

"Of course this will contribute to ensuring their survival," she added. 

Hein, however, said that Arctic projects appeared to be "economically unviable".

This despite the vast area forecast to have 13 per cent of the world's oil reserves and 30 per cent of its undiscovered natural gas.

In July, Russia's Gazprom Neft and Anglo-Dutch giant Shell announced a partnership to explore in the Arctic.

'Markets don't believe' 

While oil prices rebounded strongly after briefly turning negative in the early days of the coronavirus pandemic, the world's main oil contracts Brent North Sea and West Texas Intermediate have failed to build on those gains — and last week fell heavily to under $40.

"Markets right now do not believe there is a future for oil," said SEB analyst Bjarne Schieldrop. 

"For how long we'll have reduced drilling depends on the oil price," he added.

Even so, the administration of US President Donald Trump in August approved oil and gas drilling in Alaska's Arctic National Wildlife Refuge, angering environmentalists in the process.

While the oil price crisis is making the realisation of such projects unlikely, "political will may still trump" that, said Hein of JBC energy.

NEW YORK — Wall Street stocks fell on Friday following a weak US jobs report and President Donald Trump's shock announcement that he tested positive for coronavirus.

Those negatives were offset somewhat by more encouraging commentary from Washington policymakers about a long-anticipated stimulus package, limiting equity market losses.

The Dow Jones Industrial Average finished down 0.5 per cent at 27,682.81.

The broad-based S&P 500 dropped 1 per cent to 3,348.44, while the tech-rich Nasdaq Composite Index tumbled 2.2 per cent to 11,075.02.

US stock futures plunged on Trump announcement's of the positive COVID-19 test early Friday morning, but recovered somewhat during the session.

Trump experienced only "mild symptoms" on Friday after contracting COVID-19, a top aide said, but the Republican's already struggling reelection campaign was grounded.

The Labour Department reported that the United States added 661,000 jobs in September, below expectations and less than half of the gains seen in August, even as the unemployment rate dipped to 7.9 per cent.

"It's a bad jobs report and likely there's a much worse one coming next month," said Art Hogan, chief market strategist at National Securities, who noted lay-off announcements this week from Disney, Allstate and other companies that were not counted for September.

Hogan said upbeat comments from House Speaker Nancy Pelosi about ongoing talks with Treasury Secretary Steven Mnuchin had lifted hopes that Washington may still be able to produce a meaningful stimulus package.

In September, stocks fell as the stimulus odds receded, but would benefit if a major fiscal package picked up momentum, Hogan said.

MEXICO CITY — Latin America's e-commerce industry is booming as millions of shoppers across the region venture online during the pandemic, many for the first time, forcing traditional businesses to adapt to survive.

The sector has been one of the big winners of the coronavirus outbreak as fears of infection and lockdown measures keep people at home.

"Covid-19 has been an accelerator of trends, and in electronic commerce it has been very powerful," said Oscar Silva, an expert in global strategies with the consultancy firm KPMG in Mexico.

"More than 10 million Latin Americans who had never bought online now do so regularly," he said.

The dominant regional force is not Amazon or eBay but Mercado Libre, which has a similar business model and is present in 18 countries.

Despite the economic turmoil unleashed by the pandemic, the Argentinian company doubled its sales in the second quarter of this year thanks to a 45 per cent rise in the number of customers to 51.1 million.

Its market capitalisation reached $55 billion, challenging Brazilian mining giant Vale for the title of Latin America's most valuable company.

The tectonic shift in consumer habits is likely to endure, said Silva.

"People were afraid of fraud or that the product wouldn't be what they expected. It's very likely that a large percentage of these customers will stay after realizing how easy and efficient online commerce is," he said.

 Survival of the fittest 

David Geisen, head of Mercado Libre's Mexican arm, said that "loyal users now buy in 12 days what they bought before in 17, frequent users in 24 days what they bought in 79, and sporadic users in 29 days what they bought in almost a year."

At the start of the pandemic, top sellers included face masks, antibacterial gel, thermometers and oximeters, but demand gradually spread to other goods and services.

The boom even reached Cuba's tightly controlled economy, with sales soaring on the government's tuenvio.com platform, which struggled to meet the expectations of some customers.

"I've made around 40 purchases and I've had about 40 problems," Jorge Noris, a 34-year-old IT worker, told AFP in Havana.

There have also been hiccups in Mexico.

One man who tried to buy a cellphone online complained he received a soft drink instead, although the store -- part of Mexican magnate Carlos Slim's empire -- eventually sent him the right order.

Many businesses have gone bankrupt because they had a poor online offering or none at all, Silva said.

"The big platforms are the winners, but we also see neighborhood businesses that keep their customers or win new ones using something as simple as WhatsApp," he said.

Boost to jobs 

According to the firm AppsFlyer, downloads of e-commerce mobile applications grew 93 per cent in the second quarter of the year in Latin America, with Brazil and Mexico leading the way.

Brazil, the region's biggest economy, saw online commerce grow nearly 57 per cent between January and August, with 135,000 new stores, according to the Brazilian Association of Electronic Commerce.

Governments in the region are eyeing the online boom as a source of tax income to fund increased public spending during the pandemic.

New jobs are also being created, replacing some of those lost during the economic downturn.

While unemployment stalks millions around the region, Sergio Garcia is optimistic about his future after a year as a parcel courier for a global e-commerce giant.

"Demand has grown a lot during the pandemic," said the 60-year-old, who earns the equivalent of about $0.30 for each package he delivers on foot.

"It doesn't sound like much, but it's more than other jobs," he said.

LONDON — European stock markets fell back on Wednesday as investors left the chaotic US presidential debate behind, while strong US jobs data helped the mood on Wall Street.

With the debate out of the way, the markets could switch their focus to more concrete topics, several analysts stated.

In London, investors had to digest data that confirmed Britain's virus-hit economy collapsed by almost a fifth in the second quarter.

They pushed the FTSE 100 index into negative territory at the close of the day.

In New York, the Dow Jones index was 1.6 per cent higher in midday exchanges following the release of positive job numbers in the private sector.

The payroll services firm ADP said that private US employers added 749,000 jobs in September as employment continues to rebound from the economic hit caused by the coronavirus.

Economists view the ADP data as a preview of the monthly Labour Department employment report due Friday that encompasses both private and government hiring.

ADP said that private-sector hiring was seen in businesses of all sizes, with services accounting for most of it.

"Traders are likely to key on economic data more than political developments, with the focus shifting to Friday's highly-anticipated Non-Farm Payrolls report sooner rather than later," noted Matt Weller, head of market research at GAIN Capital.

"The [US] jobs report on Friday will be very interesting, particularly against the backdrop of an exhaustive battle in Congress over the next installment of critical economic aid," agreed Craig Erlam, an analyst at the online brokerage Oanda.

Markets were encouraged by news that US Democratic House Speaker Nancy Pelosi had spoken for a second straight day with Treasury Secretary Steven Mnuchin over a much-anticipated stimulus package to rescue the battered US economy.

The pair have agreed to continue negotiating. 

Earlier in the day, a Chinese purchasing managers index also showed improvement in both manufacturing and services in September.

But that produced only mixed results in Asia, as the persistent gloom of rising virus infections continued to dampen the mood.