Monday, April 12, 2021 Headlines

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China’s Record Fine to Alibaba
Powell: ”U.S. Economy at an Inflection Point.”
Egypt to Detain Ever Given in Suez Canal until Owners Pay $1 billion for Chaos.

China has hit Alibaba, one of the country’s biggest online retailers, with a record $2.8 billion (18.2 billion yuan) fine after an investigation found the e-commerce giant violated China’s anti-monopoly law.

State Market Regulatory Authority (SAMR) stated that Alibaba limits competition and abuses its dominant position in the market by preventing the free movement of goods. On Monday, Chinese tech giant Alibaba said it accepted a record penalty imposed by the country’s anti-monopoly regulator.

SAMR announced on March 12 that 12 companies, including Tencent, Chinese search engine Baidu Inc, Didi Mobility, and Softbank, were fined $77,000 each for violating the anti-trust law.

China introduced new regulations on February 8 to prevent monopolistic practices by large technology companies.

E-commerce giant Alibaba Group “thanked” the regulators in an open letter after the Chinese regulators gave the company a record $2.8 billion fine.

The company wrote in an open letter on the issue ‘we wouldn’t have achieved this growth without the harsh regulations of the government, the tolerance and critical oversight of our support groups played an important role in our development. For this, we are grateful”.

With such penalties, Beijing regulators send the country’s largest companies and leaders the message that their anti-competitive behavior will have inevitable consequences.

The penalty of $2.8 billion, less than expected, helped dissolve dark clouds over its founder Jack Ma’s internet empire. The penalty corresponded to 4 % of Alibaba’s income in China in 2019. Besides, Alibaba shares rose 5.5 % in Hong Kong this morning.

Alibaba Group’s executive vice-chairman, Joe Tsai, indicated that regulators had been interested in platforms like Alibaba as they grew in importance.

“We’re happy to get the matter behind us, but the tendency is that regulators will be keen to look at some of the areas where you might have unfair competition,” he told an investor call on Monday

The company added that it was not aware of any further anti-monopoly investigations by Chinese regulators. However, it signaled that Alibaba and its competitors would remain under review in China over mergers and acquisitions.

”Powell: ”U.S. Economy at an Inflection Point.”

Federal Reserve Chair Jerome Powell said the U.S. economy is at an “inflection point” with stronger growth and hiring ahead thanks to rising vaccinations and powerful policy support, but Covid-19 remains a threat.

“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly,” Powell told CBS’s “60 Minutes” in an interview conducted Wednesday, according to a transcript of the interview that aired on Sunday.

Stating that the widespread vaccination against Covid-19 and strong fiscal and monetary policy support was effective in this, Powell said that they expect the economy to grow much faster and employment to accelerate.

Pointing out that the outlook has improved significantly, Powell said, “The main risk for our economy right now is the re-spread of the disease. It’s going to be smart if people can continue to socially distance and wear masks.”

Powell stated that they expect solid growth in the second half of this year.

Stating that they have seen a remarkable recovery, Powell noted that some parts of the economy have entirely recovered, and the travel and entertainment sectors have not recovered much yet.

Powell, who also made evaluations about inflation, stated that they could afford to wait for inflation to emerge before increasing interest rates.

“When we achieve this, we will raise interest rates then,” Powell said, recalling the average inflation target of 2% over time.

“We don’t want inflation to go up materially above 2% and go back to…the bad, old inflation days,” of the 1970s, Powell said.

“I think it is unlikely that we will raise interest rates this year,” Powell said on a question about interest rates.

Egypt to Detain Ever Given in Suez Canal until Owners Pay $1 Billion for Chaos

The head of the Suez Canal Administration, Osama Rabie, told the “ON” channel of Egypt that deciphering the voyage data recorder (VDR) of the container ship that crashed in the Suez Canal had been completed.

“The vessel will remain here until investigations are complete and compensation is paid,” Lt. Gen. Osama Rabie, who leads the Suez Canal Authority, told a local news station on Thursday, according to the Wall Street Journal.

“We hope for a speedy agreement,” he said, adding that the “minute they agree to compensation, the vessel will be allowed to move.”

Rabie said that Egyptian authorities would demand $1 billion to cover the costs of freeing the vessel. According to Rabei, the sum would cover the cost of the equipment and machinery used to clear the route and damage to the canal caused by the dredging and compensation for about 800 people who helped free the 200,000-ton ship.

It would also reimburse the canal blockage costs, which resulted in a massive traffic jam involving over 400 ships on both sides of the channel.

Rabie said that he would prefer to settle the matter of compensation outside of court, although he didn’t rule out a lawsuit. “We could agree on a certain compensation, or it goes to court,” he said, according to CNBC. “If they decide to go to court, then the ship should be held.”

The 1,300-foot Ever Given made headlines on March 23 when an unexpected wind storm caused it to steer off course and get lodged in the Suez Canal sandbanks, disrupting global trade. It was freed six days later

In this process, it is estimated that Egypt suffered about 12-14 million dollars a day. Simultaneously, the daily damage of The Ever Given, which withdrew to the lakes region after the accident, was around 10 billion dollars per day.

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