Friday, July 1, 2016

UK factory output grows despite Brexit; BMW, Intel to develop robot cars; 'Powerful storm' seen likely to hit Asian banking

1 UK factory output grows despite Brexit (Phillip Inman in The Guardian) UK factory output made tentative gains in June after a slump in the spring, but firms still shed jobs amid fears over the referendum vote last week.

The survey of manufacturers, which was mostly conducted ahead of the decision to quit the EU, found that most of the gains came from solid growth in new orders, which rose at the fastest pace since last October. The Markit/CIPS purchasing managers’ index (PMI) increased to 52.1, from a revised reading of 50.4 in May, its highest level since January.

Rob Dobson, senior economist at survey compilers Markit, said the rise in new orders reflected the continuing strength of domestic business with a little support from the export sector, which remained tough.

However, he warned that manufacturers, who have yet to regain the level of output before the 2008 crash, remained wary of economic and political developments. “Whether this growth recovery can be sustained will depend heavily on whether the current financial and political volatility spills over to the real economy.

Surveys of eurozone manufacturers by Markit found that only France continued to struggle as the other 18 members of the currency bloc moved ahead, including Greece. The eurozone PMI posted a six-month high of 52.8 in June, up from 51.5 in May and above the earlier flash estimate of 52.6.


2 BMW, Intel to develop robot cars (BBC) BMW, Intel and computer vision firm Mobileye have signed a deal to develop autonomous vehicles. The three firms will collaborate on the systems needed to make cars that can navigate without any help from a human driver.

The vehicles will be capable of driving safely along major roads as well as in suburban and inner city areas. BMW said it hoped the collaboration would mean it could put robot cars into production by 2021.

The research partnership was announced on the day when US officials begin an investigation into a fatal car crash involving a Tesla Model S, to which self-driving technology could have contributed.
BMW said the trio would develop computer and sensor systems that gradually reduce the part humans play in driving a car. Ultimately, it said, it hoped to produce vehicles that could operate entirely autonomously without any people onboard.

The autonomous car that emerges from the partnership would be likely to be electric and called the iNext, it said. Other vehicles in the i-range include the i8 hybrid and the i3 all-electric vehicle. Before now, BMW has shown off concept cars that use autonomous technology and it is already working with Baidu in China to produce a self-driving car suited to that market.


3 ‘Powerful storm’ seen likely to hit Asian banking (Straits Times) Slowing global growth, the emergence of innovative finance start-ups and an increasing volume of bad loans are combining to create a "powerful storm" for the Asia Pacific banking industry, consulting firm McKinsey & Company has said in its latest annual banking review.

Over the past decade, banks in Asia Pacific have grown to amass a profit pool that hit more than $1 trillion last year, the firm noted. However, this "golden decade" is ending and the financial industry should be prepared to face an era of slower growth rates and increased challenges in generating profits, it added.

The industry faces three main threats: First, the economic slowdown rolling across the region will affect banks and their customers, especially in the corporate sector, McKinsey noted. As a result, it expects banking profit growth to slow from 10 per cent annually between 2011 and 2014 to 3 per cent between 2016 and 2021.

Second, financial technology, or fintech, start-ups offering financial products such as payment systems and lending platforms, as well as established companies from outside the industry, such as Chinese e-commerce giant Alibaba, are encroaching into traditional banking territory.

Third, an increasing volume of non-performing loans is putting added stress on banks, as interest-coverage ratios are declining at large companies throughout the region, especially in China and India, McKinsey said.

McKinsey analysis indicates banks in Asia need to raise $400 billion to $600 billion in additional capital by 2020 to cover losses from non-performing loans while maintaining capital adequacy ratios.
The coming storm is potent and is a clear threat to most banks in Asia Pacific, but it may also provide the kind of significant industry disruption that creates opportunity for those that recognise it, McKinsey said.


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