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Sony to launch a ride-hailing app in Japan; Uber to expand into market

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Sony’s announcement adds another player to the already fiercely competitive Japanese taxi app market.

Shortly after the announcement, Khosrowshahi spoke of Uber’s plans to push further into the market by striking its own partnerships.

“It’s clear to me that we need to come in with partnership in mind, and in particular a partnership with the taxi industry here, which actually has a very, very strong product,” Khosrowshahi said on his first trip to Asia as Uber CEO, according to comments reported by Bloomberg. “But that product hasn’t kept up with technological change.”

Further expansion in Japan comes as Uber has retreated from some key international markets and is consideringwhether to sell its Southeast Asia unit to Singapore-based rival Grab.

Japan, with its mature smartphone market, could provide an opportunity for growth.

Tough rules legislate ride-hailing apps in Japan. Non-professional drivers are effectively barred from offering taxi services, so apps like Uber have to link riders with existing taxi fleets. That means its core service, that it offers in major markets like the U.S. and U.K., is not in full operation in Japan.

A partnership, as Khosrowshahi hinted at, could help Uber push further into the market.

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what Italian stocks to buy as Draghi prepares new reforms

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A man wears a protective mask as he sits near the Colosseum, as the spread of the coronavirus disease (COVID-19) continues, in Rome, Italy November 12, 2020.

Guglielmo Mangiapane | Reuters

LONDON — Mario Draghi‘s new government could be good for financials and consumer recovery plays, an analyst told CNBC, as investors turn more bullish on Italian stocks.

The former European Central Bank chief has ambitious plans to reform the country, including Italy’s judiciary, public administration and tax system — an agenda welcomed by market players who have been tentative on Italy as multiple governments struggled to pass through any meaningful reforms in recent years.

“Accomplishing structural reform will be difficult. But after a long period of Italian underperformance, expectations are low. So any signs that Draghi may succeed in achieving growth-boosting structural reforms could lead to an upward rerating of Italian assets,” analysts at investment research firm Gavekal Research said in a note. 

The FTSE MIB, Italy’s main stock market index, has risen about 7% from a low on Jan. 29 on the back of Draghi’s appointment. But experts believe there is further room to grow.

Strategists at UniCredit last week forecast that large and mid-cap segments of the Italian market could have “an absolute performance potential of about 10% from current level” in 2021.

Shifting the tax burden away from the workforce by reducing income taxes and employers’ social security contributions would reduce employment costs, boosting corporate productivity.

Italy has taken measures to support firms and citizens in the wake of the Covid crisis, including through tax deferrals. However, it is also set to benefit from more than 200 billion euros ($243 billion) in European funds, which are due to start coming in later this year.

Financial stocks

Mislav Matejka, head of global and European equity strategy at JPMorgan, said that Draghi’s policies are “bullish for the Italian equity market, through tighter peripheral spreads, greater policy credibility and the bottoming out in activity momentum, helped by the strong fiscal support.”

“At sector level, this is especially positive for Financials, as well as for consumer recovery plays,” Matejka said.

Financials  are the biggest sector among Italian large and mid-cap firms and consumer discretionary stocks make up the third-largest sector.

Draghi, who was called to take on the country’s leadership after a political crisis emerged in January, told lawmakers that he will be dealing with some problems “that have been open for decades.”

Analysts are particularly bullish about potential changes to the tax system.

“Shifting the tax burden away from the workforce by reducing income taxes and employers’ social security contributions would reduce employment costs, boosting corporate productivity,” Gavekal analysts said.

Draghi has also pledged to use the upcoming European funds to focus on digitalization, reskilling and to speed up plans for the country to transition away from fossil fuels.

“This reform agenda will find its counterpart in the selection of investment projects associated with the EU-wide facilities,” Marco Protopapa, economist at JPMorgan, said in note.

Last year, “Draghi emphasized the importance of the Recovery Fund resources for Italy by distinguishing between good debt, linked to targeted, productivity-enhancing spending in the form of investment with a high social rate of return, versus bad debt resulting from scattered policy measures,” Protopapa said.

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Hong Kong’s trading tax hike spurred market correction

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Hong Kong’s tax hike on share trading was a “convenient catalyst” that helped spur a healthy correction for the city’s markets, says Tim Moe from Goldman Sachs.

The government announced in its budget on Wednesday that stamp duty on stock transfers will be raised to 0.13% from 0.1%.

The move sparked a sharp sell-off in the broader markets on Wednesday, but stock prices bounced back partially on Thursday.

The Hang Seng index rose around 1.5% in Thursday afternoon trade, after falling about 3% a day earlier.

Meanwhile, Hong Kong Exchanges and Clearing saw more losses as it slipped by about 1.4%, declining further after the previous day’s plunge of more than 8%. The HKEX operates the city’s stock exchange and on Wednesday posted a more than 20% year-on-year surge in its 2020 profit attributable to shareholders.

“I think it’s important to note that the overall increase, I mean yes it sounds like 30%’s a big number, but it’s really 3 cents on every hundred dollars of trading — that’s hardly gonna be the only or sufficient fundamental reason for people to make an investment decision,” said Moe, co-head of Asia macro-research and chief Asia-Pacific equity strategist at the U.S. investment bank.

Our view is that the increase in stamp duty was sort of a convenient catalyst for a market that had done very, very well.

Timothy Moe

Chief Asia-Pacific Equity Strategist, Goldman Sachs

“Our view is that the increase in stamp duty was sort of a convenient catalyst for a market that had done very, very well. It’s probably a bit over its skis in terms of positioning, in valuation and we’ve had what you might call a healthy correction,” he told CNBC’s “Squawk Box Asia” on Thursday.

Despite Wednesday’s sharp losses, the Hang Seng index is still more than 9% higher for the year, as of its Wednesday close.

In January, Moe told CNBC that mainland Chinese investors have contributed significantly to the “very strong start” of Hong Kong stocks in 2021.

Looking ahead, the Goldman Sachs strategist said Hong Kong’s markets will likely continue their upward trek once this period of selling subsides.

“What we would view things as is kind of a healthy cleaning out of some over-extended positioning, some of the heavily-owned favorite stocks sold off,” Moe said. “We think once we get through this kind of positioning clear out, that the market … can continue to make some further upward gains later this year.”

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Netflix (NFLX) to spend $500 million in South Korea in 2021

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In this photo illustration the Netflix logo is seen displayed on a smartphone.

Rafael Henrique | SOPA Images | Getty Images

Netflix said Thursday that it will spend $500 million this year on films and series produced in South Korea to broaden its growing slate of content from the country.

Korean filmmakers and stars gathered in Seoul where the U.S. streaming giant announced its investment plans and also previewed images from its upcoming slate of local-language series.

Netflix disclosed that as of the end of last year, the streaming service had 3.8 million paid subscribers in South Korea.

Over the last two years, we’ve seen the world falling in love with incredible Korean content, made in Korea and watched by the world on Netflix.

Ted Sarandos

co-CEO and chief content officer, Netflix

In the last five years — from 2015 to 2020 — Netflix invested $700 million to expand its slate of Korean content and established two purpose-built production facilities in the country. Besides acquiring rights to existing Korean content, Netflix has made more than 80 original shows and films locally, including the popular zombie thriller “Kingdom” from creator Kim Eun-hee.

“Over the last two years, we’ve seen the world falling in love with incredible Korean content, made in Korea and watched by the world on Netflix,” Ted Sarandos, co-CEO and chief content officer at Netflix, said via video at the event.

“Our commitment towards Korea is strong. We will continue to invest and collaborate with Korean storytellers across a wealth of genres and formats,” he added.

On Thursday, Netflix also announced two new original films out of South Korea.

South Korean cinema has gained international prominence in recent years.

Filmmaker Bong Joon-ho shot to global fame last year when his critically acclaimed movie “Parasite” dominated the awards season. It made history to become the first non-English language film to win the best picture Oscar at the Academy Awards.

Netflix, for its part, has turned its focus on Asia-Pacific in recent years as new subscriber growth in other parts of the world slowed on account of many people already having paid memberships.

The California-headquartered streaming giant is betting big on markets like South Korea, India and the whole Southeast Asia region to drive its future growth momentum. Netflix has created more than 200 Asian original series and films since 2016, according to Sarandos.

As of December 2020, Netflix reported more than 25 million paid memberships in the Asia-Pacific region compared to more than 200 million globally.

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