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WPP set for its best day in a decade after earnings beat

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Advertising giant WPP posted better-than-expected earnings for its first quarter, as it looks to an uncertain future in the wake of its CEO Martin Sorrell stepping down.

Net sales were down 0.1 percent like-for like, it said Monday, but this beat estimates of a 1 percent drop.

WPP’s Executive Chairman Roberto Quarta said in a statement that the figures were “in line with our expectations” while adding that the company’s 2018 full-year guidance would remain unchanged.

The earnings report follows a flat like-for-like result for the year 2017, the news of which led to a sharp drop in share prices and $2.6 billion wiped off its market cap at the start of March. Former CEO and founder Sorrell described it as “not a pretty year.”

Sorrell stepped down from the company’s leadership in mid-April amid allegations of misconduct, leaving WPP without the man who built it and led with what some described as a cult of personality for 33 years.

“He’s literally Mr. WPP,” one media analyst said. Questions over succession are key to the company’s future, industry analysts broadly agreed. In the meantime, WPP veterans Mark Read and Andrew Scott are serving as joint chief operating officers.

The developments come against the backdrop of a rapidly changing environment for advertisers, as digital giants Facebook and Amazon disrupt traditional industry juggernauts and capture a consistently increasing proportion of market share. Technological changes have also led to greater consolidation among companies and service providers.

WPP shares were up 9 percent as the market opened Monday morning. They were set for their best day in a decade, according to Reuters data.

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Facebook ex-HR boss worries grads will miss out due to coronavirus

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Fiona Mullan, former vice president of global human resources at Facebook.

Fiona Mullan

LONDON — Graduates are likely to find the workplace “much more challenging” in the wake of the coronavirus pandemic, according to the former vice president of global human resources at Facebook, who said companies are finding it harder to offer them a satisfactory experience.

Fiona Mullan, who spent almost six years at Facebook, said she is particularly concerned that graduates won’t be able to form the same kinds of relationships with their colleagues that they normally would when they enter the world of work.

“We made some of our best friends in that first job,” Mullan told CNBC via Zoom last week. “We did that because we went on holiday together or we went on boozy nights together or … we learned together. That cohort experience for graduates is going to be much more challenging.”

Mullan, who is now chief people officer at cellphone top-up company Ding, said she’s interested to see whether the pandemic ends up diluting company cultures or whether there’s a difference in job satisfaction levels between employees who joined pre-Covid and post-Covid. “How will it be for people who have never been inside an office or met a physical person of the company that they’re going to work for?”

While some industries such as travel and retail have been decimated by the pandemic, tech on the whole has continued to grow, albeit slightly slower than before, said Mullan.

“The tech industry will be better positioned to continue to invest in graduate hiring than other industries,” Mullan said. However, she highlighted that there likely will be fewer graduate roles available at tech companies this year as a result of the virus.

Engineers, moderators and software developers

In terms of recruitment, Mullan said social media platforms will continue to focus on hiring engineering talent, moderators, and people with the skills to develop software that can automate moderation.

“They’re building for the future and their appetite for the market’s best technical talent is always a strategic plan,” she said. “If they miss a year, they feel the negative impact of that in future years so they will be keen to continue to invest there.”

Indeed, The Telegraph newspaper on Monday reported that TikTok was hiring a new “university relations recruiter” at its London office to find at least nine people to start work at the company next year. Some of the new recruits will reportedly work on developing the company’s machine-learning software that underpins the app’s recommendation algorithm, while others will work in marketing, content development and creative strategy.

Focus on efficiencies

Looking ahead, Mullan said tech firms would likely look to make their finance, legal, and HR teams more “efficient” in the pandemic.

Chris Bray, a recruiter at Heidrick & Struggles who helps U.S. tech giants to find talent in Europe, agreed that strategic decisions around recruitment were now being made, after a difficult period earlier in the year. 

“At the outset of Covid, we witnessed a semi-paralysis amongst many large players, with spending reined in and recruitment strategies put on hold,” he told CNBC.

However, he added: “Over the past quarter, a definite pattern has emerged now that uncertainty is the new-normal and a number of companies have thrived during their first six months in a Covid economy, they are starting to make braver moves and we are seeing a lot of more strategic decision making.”

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China is a competitor to the U.S. — not an adversary, professor says

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A man wearing a face mask as a preventive measure against the Covid-19 coronavirus walks along a pedestrian street in Shanghai on October 23, 2020.

Hector Retamal | AFP | Getty Images

SINGAPORE — Democratic presidential candidate Joe Biden is right in characterizing China as a competitor rather than an adversary, a professor told CNBC this week.

Anthony Arend of Georgetown University made these comments after both Biden and U.S. President Donald Trump’s gave separate interviews on 60 Minutes by CBS News.

Both men said they considered China a competitor, but Trump also said the Asian country is “a foe in many ways” and an “adversary,” according to CBS.

“I think Biden has it correct, it is much more of a competition rather than an adversarial relationship,” Arend told CNBC’s “Street Signs Asia” on Tuesday.

We can’t defeat China. We have to engage China. We have to criticize where necessary, but we have to try to cooperate where possible.

Anthony Arend

Georgetown University

The U.S. has to recognize that, whether they like it or not, China is a “great power,” he said. At the same time, China is violating human rights and making “ridiculous assertions of jurisdictional claims” in the South China Sea, he added.

“So you have to hold them to task for that, but respect the fact that they are a great power and that we can’t just ignore them or deal with them as if they were a minor actor in the international system,” said Arend.

He added that the term “adversary” is wrong because it conveys the idea that China can be defeated.

“We can’t defeat China. We have to engage China,” he said. “We have to criticize where necessary, but we have to try to cooperate where possible.”

The U.S. and China have been locked in a trade war with both countries slapping tariffs on the other country’s goods. Technology is also becoming a battleground for the two countries.

While China is not an adversary, it is the “greatest” threat to the U.S. where geopolitics is concerned, Arend said.

“I would say China presents the broadest geopolitical threat because of their power, their influence and their ability to extend globally,” he said.

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Japan yen won’t strengthen sharply unless there’s negative shock: Nikko Asset Management

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SINGAPORE — The Japanese currency will not likely strengthen significantly unless there’s a “negative shock,” according to Nikko Asset Management’s John Vail.

As of Tuesday morning Singapore time, the Japanese yen traded at 104.70 per U.S. dollar.

“It would take quite a shock to get (dollar- yen) down to say the 100 level, a negative shock. It’s been very steady in the 104 to 106 region for quite some time and seems like people are satisfied with that level,” said Vail, who is chief global strategist at Nikko Asset Management.

Japan’s economic leadership is also very averse to a strong yen, Vail told CNBC’s “Squawk Box Asia” on Monday.

Japan’s central bank governor Haruhiko Kuroda is “extremely against yen strength” while incumbent Finance Minister Taro Aso is also “very much against” a strong Japanese currency, he pointed out.

Furthermore, any appreciation in the Japanese currency is “not good” for the country’s exporters, the strategist said.

A stronger currency makes a country’s exports more expensive and less competitive in international markets.

“If (the yen) went down to 100 for some reason … and there wasn’t a massive reaction from the Japanese officialdom, then it would … tend to hurt exporters,” Vail explained.

Foreign confidence in Suga

Japan has also seen a recent return of foreigners into its equity markets, according to Vail.

“In the last couple of weeks (foreigners have) actually become quite more engaged and that’s helping boost the stock market,” he said.

Part of that could be credited to confidence in the country’s prime minister, Yoshihide Suga.

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