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APAC Edition
17th April 2024
 
THE HOT STORY
Securities firms in China slash bonuses and lay off analysts
Securities firms in China are cutting bonuses and laying off analysts as the market slump reduces demand for research. Brokerages are facing reduced trading commissions and tighter restrictions on research analysts. This is a stark contrast to a few years ago when firms were aggressively hiring and offering high compensation to star analysts. The industry's retrenchment is based on conversations with analysts and former analysts. The number of sell-side research analysts in China grew almost 70% over the past decade, but now the tide is turning. China's stock-market rescue measures and weaker demand for equity research have led to cost-cutting efforts and reduced profits for brokerages. Analysts in China rarely issue negative ratings on stocks and have to be careful about what they say and write in research reports. The quality of brokerage research in China has diminished, according to money managers. The challenges for brokerages are compounded by tighter scrutiny over the financial sector and cost-cutting efforts across the industry.
LEGAL
Thai public urged to give feedback on proposed amendments to labour relations law
Thai citizens are being encouraged to provide feedback on the proposed amendments to the labour relations law. The amendments cover various aspects such as the right of state workers to gather or strike, methods of settling labour disputes, and penalties for unlawful work stoppages. One of the proposed changes is to enact a law that recognizes the right of state officials, employees, and workers in public organisations and state enterprise agencies to gather without a political agenda. The definition of "employer" will also be redefined to align with the labour protection law, aiming to protect sub-contracted workers. In case of a work stoppage, workers are required to inform their employers 24 hours in advance, unless it affects core public services. A contingency plan must be prepared for maintaining basic services in such cases. The public has until May 8 to provide their input on the proposed amendments.
Australian energy union's fight for better wages escalates to Federal Court
Australia's Electrical Trades Union has taken Transgrid to the Federal Court, accusing the Sydney-headquartered energy company of improperly standing workers down without pay during protected industrial action. The union claims that Transgrid breached employment law by neglecting to pay its members for 12 days during the protests. According to court documents, a notice sent by Transgrid regarding the non-payment of wages was deemed "defective" as it was not delivered personally to workers. The union is seeking compensation, interest, and pecuniary penalties against Transgrid. The energy company denies the allegations and will defend the claim in court. The case is yet to be heard in the Federal Court.
WORKFORCE
Hong Kong lawmakers express concerns over proposed taxi fare rise
Hong Kong lawmakers have expressed concerns about a proposed taxi fare rise, questioning the size of the increase and whether service will improve, while the government has promised to balance the interests of the industry and the public. Commissioner for Transport Angela Lee Chung-yan on Friday told legislators that authorities would strike a balance between the financial sustainability of the taxi sector and the public's acceptance of an increase when considering the proposal. The industry has proposed fare rises of up to almost 17%, including a higher flag-fall rate for red cabs in urban areas from HK$27 (US$3.45) to HK$32, on the grounds of heavier operating expenses and lacklustre business. "Frankly speaking, since the fare increase in July 2022, our taxi drivers already have a certain amount of growth in terms of their income," lawmaker Kitson Yang Wing-kit told a meeting of the Legislative Council's transport panel. "Looking at a lot of our low-income residents, their income might even have decreased compared with 2019."
STRATEGY
Tesla's China sales team hit by job cuts
Tesla's job cuts are impacting its China sales team, with more than 10% of the staff losing their jobs. The layoffs come as Tesla faces increasing competition in China's auto market and grapples with falling sales. The company's largest plant is based in Shanghai, while its China head office is in Beijing. Analysts attribute the global job cuts to cost pressures as Tesla invests in new models and artificial intelligence. Tesla reported a decline in global vehicle deliveries in the first quarter, marking the first drop in nearly four years.
HSBC lays off Asia dealmakers
HSBC is laying off more than a dozen of its investment banking staff in Asia as dealmaking in the region slows. Bankers in Hong Kong and Singapore will be affected as the lender cuts costs.
CORPORATE
PwC to investigate allegations over collapse of Evergrande
PwC is planning to investigate an anonymous letter that accuses the firm of turning a blind eye to its audit of Chinese property giant Evergrande. The letter, signed by unnamed partners, claims the Big Four auditor failed to address the financial fraud at Evergrande for over a decade. PwC Hong Kong has rejected the allegations, stating that the letter contains inaccurate statements. The firm has reported the incident to the relevant authorities and is taking it seriously. Evergrande, which filed for bankruptcy last year, has been accused of fraudulently inflating its revenues. Chinese authorities are now scrutinising PwC's role in the alleged accounting fraud. PwC resigned as Evergrande's auditor in 2021 due to disagreements over the developer's accounts. The investigation is ongoing.
Climate activists target Japan's top banks
A coalition of climate groups, including Australia's Market Forces and Japan's Kiko Network, have filed shareholder proposals with Japan's top three banks, calling for stricter board oversight of climate-related risk. The proposals focus on board oversight of climate-related business risks and seek to make the banks disclose how they evaluate director competency for such oversight. This marks a strategy shift from last year when the climate groups sought to mandate banks to disclose credible transition plans to meet 2050 carbon neutral targets.
INTERNATIONAL
Google workers stage sit-ins to protest company's work with Israel
Google employees in two different US offices protested the company’s work with the Israeli government on Tuesday, objecting to a $1.2bn contract it signed with the US ally three years ago.  Dozens of employees began occupying company offices in New York City and Sunnyvale, California. The contract, known as Nimbus, that Google shares with Amazon provides cloud computing services to the Israeli government. The contract has faced backlash from employees and activists since it was signed in 2021, but the objections have grown amid Israel’s ongoing military campaign in Gaza. “I would not like to lose my job,” explained Google Software engineer Emaan Haseem. “But I think that it is impossible for me to continue coming into work every week without acknowledging and loudly condemning Project Nimbus and any support for the Israeli government.”
Italian prosecutors seize €64.7m from Carrefour unit in VAT fraud probe
Italian prosecutors have seized €64.7m from Carrefour's Italian unit, GS spa, as part of an investigation into VAT fraud and labour exploitation. The supermarket chain and four of its directors are accused of evading €64.72m in VAT between 2018 and 2022. The alleged fraud involved outsourcing logistics and transport services to "false cooperatives" that do not pay taxes or social security contributions. The practice has been the focus of previous investigations by Milan prosecutors. Other companies mentioned in the investigation include DHL Supply Chain, Uber, UPS, Fiera Milano, and Esselunga. The investigation claims that GS spa illegally deducted over €64m in VAT, while the cooperatives evaded tax and social security payments worth around €110m. The probe states that GS spa's conduct has resulted in the exploitation of workers and significant damage to the inland revenue. Carrefour Italia, the parent company, has not yet commented on the matter.
Multinationals need to read fine print on employee secondment to the UAE
The introduction of the UAE's corporate tax and a withholding tax regime in the near future has put the spotlight on cross-border employee secondments, writes Pankaj S. Jain for Gulf News. Until last year, multinationals were not worried about employees from group entities being deputed to work in the UAE at one of their subsidiary companies. The physical presence of such employees in the UAE did not expose the overseas entity's profits to any local tax risks. But now, shifting employees from any of an organisation's global operations to the UAE can trigger tax rules.
Non-doms could exit UK over tax changes
Experts say wealthy non-doms are considering leaving the UK due to plans to abolish the regime which allows them to avoid paying tax on their overseas income. Finance minister Jeremy Hunt has announced that the regime will end in April 2025 and that new arrivals will only be able to avoid tax on overseas income for the first four years of living in the UK. Opposition shadow finance minister Rachel Reeves, meanwhile, says her Labour party will close a loophole that gives non-doms until April next year to put overseas funds into a trust.  Nimesh Shah, chief executive of Blick Rothenberg, said: "People are jumping on planes right now and leaving . . . I am not being dramatic, they are leaving right now." The Treasury insists that the new system will remain internationally competitive and that there will be transitional arrangements in place for current non-doms. Labour believes the policy will make the tax system fairer and says it does not expect an exodus of non-doms. 
OTHER
Calls for stricter beer labelling regulations in Hong Kong
Hong Kong's Consumer Council is calling for stricter beer labelling regulations after finding that one in five brands tested had a "considerable discrepancy" between their advertised alcohol content and actual levels. The council found that local regulations do not require beers to specify the number of calories they contain, making it difficult for consumers to determine their caloric intake. The watchdog tested 30 beer products and found six brands with a significant difference in alcohol content. The council warned that drinking two beers with over 200 calories per can each day for three months without adequate exercise could result in gaining 2.27kg. The tested products also contained biogenic amines, which can lead to various health issues. The council gave a five-star rating to 11 brands, including Guinness Draught and Snow Beer. The lowest-scoring brand, Harbin wheat beer, was found to contain deoxynivalenol, or “vomitoxin", which develops when improperly stored barley – a key ingredient in beer – develops mould. The council has called for better regulation and legislation to govern alcohol content in Hong Kong.
 


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