Korea Exchange says it checking Merrill Lynch trades because of public concerns

SEOUL (Reuters): The Korea Exchange (KRX) said on Tuesday it was monitoring Merrill Lynch’s (BAC.N) Seoul operations after media reports and petitions regarding the investment bank’s trades. A KRX official said his team was closely monitoring of Merrill Lynch’s Seoul operations “as there are public concerns about its high-speed trading”.  He declined to comment when asked whether other investment banks’ or brokerages’ trades were also being monitored. KRX officials declined to be identified, citing internal policies.  Petitions on the website of the South Korean president’s office have called for an investigation of the Merrill Lynch’s trading of Seoul shares, saying its high-frequency algorithm trading could destabilize markets and leave individual investors at a disadvantage.  Merrill Lynch declined to comment on the KRX’s checks.  Merrill Lynch International Incorporated, Seoul Branch, is a subsidiary of Bank of America Merrill Lynch (BAC.N). 

PepsiCo taps healthier drinks market with SodaStream deal

NEW YORK (AFP):  Going after consumers concerned about health and the environment, PepsiCo has announced the purchase of Israeli company SodaStream to tap its command of the homemade fizzy water market. With the $3.2 billion purchase, the US beverage giant continues its effort to contend with falling demand for sugar-laden soft drinks, especially sodas. SodaStream makes machines that carbonate home tap water. PepsiCo and arch-rival Coca-Cola have been diversifying away from their mainstay sodas in part to counter the onset of anti-obesity sugar taxes around the world. The acquisition also is a pitch to consumers concerned about mounting waste from soda cans and plastics in landfills around the world, since SodaStream employs reusable bottles. PepsiCo chief executive Indra Nooyi, who is stepping down following 12 years at the helm, the purchase of Tel Aviv-based SodaStream fit in with the US company's sustainability push, which involves pledges on producing healthier goods, more efficient use of water and reducing waste.

"Together, we can advance our shared vision of a healthier, more-sustainable planet," Nooyi said.

SodaStream Chief Executive Daniel Birnbaum said the deal would open new markets to his company through PepsiCo's global distribution and marketing network, adding that the company would keep its operations in Israel.

"Nobody has come here to obtain, to take, to close down and build a copy anywhere else," Birnbaum said at a news conference in Tel Aviv that was attended by incoming PepsiCo Chief Executive Ramon Laguarta.

The company's website celebrated the news with a 20 percent discount offer using the code "PEPSICO" -- but it's only good for 24 hours.

- Staying in Israel -

Laguarta said PepsiCo committed to keeping Israel the headquarters for 15 years, praising the company's infrastructure and the "amazing" knowhow of factory staff.

Israeli Prime Minister Benjamin Netanyahu welcomed PepsiCo's commitment to the country, saying "recent large acquisitions of Israeli companies prove not only their technological abilities but also the business abilities which have been developed in Israel."

SodaStream, which is listed on the New York and Tel Aviv stock exchanges, has not been immune to the complex politics in its home region.

In 2015, SodaStream shut down a plant in the West Bank following a boycott campaign that included targeting Hollywood actress Scarlett Johansson after she advertised its product.

Under the cash deal, PepsiCo is to pay $144 a share for the fizzy water makers outstanding stock, a premium of 11 percent over its closing price on Friday.

SodaStream's revenues were $543.4 million, while PepsiCo had revenues of $63.5 billion.

SodaStream shares jumped 9.4 percent to close at $142.11 in New York, while PepsiCo slipped 0.1 percent to $114.94.

Morningstar analyst Sonia Vora said acquisition fit well with PepsiCo's push for "more natural and nutritious offerings," but added that it was unlikely to significantly boost earnings because of SodaStream's small size.

- Healthier options -

Under Nooyi's vision to move away from traditional sugary sodas, PepsiCo launched Drinkfinity this year, a new beverage based on tap water. Consumers buy flavored pods to inject a choice of tastes into a reusable bottle, such as acai berry, coconut-watermelon and elderflower.

Coca-Cola, for its part, said last week that it was buying a stake in BodyArmor, a maker of sports drinks that is endorsed by retired basketball star Kobe Bryant and offers a diet version of the drink is naturally sweetened.

Matthew Barry, senior analyst of beverages at Euromonitor International, said deals like the SodaStream purchase were vital for PepsiCo as it passes to new management.

"With sugary carbonates and juices struggling and no turnaround in sight, mitigating the losses through newer and healthier products will be essential for PepsiCo," he said in a research note.

"Consumers around the world are more and more interested in low-sugar beverage options. Sugar taxes also represent a prominent threat."

 ECB fines France's Credit Agricole over capital reserves

FRANKFURT AM MAIN (AFP): The European Central Bank said it had fined French lender Credit Agricole a total of 4.8 million euros ($5.5 million) over past irregularities in the way it declared its capital reserves. The ECB said in a statement it slapped Credit Agricole (CA) itself with a 4.3-million-euro fine. Meanwhile its corporate and investment banking arm must pay 300,000 euros and its consumer finance unit 200,000 euros. The fines relate to CA classifying some of its assets under the "CET1" heading in public statements during 2015 and 2016. CA failed to first secure permission for the move from supervisors, the ECB said. Banks must hold a certain amount of so-called CET1 capital in relation to their exposure to financial risks, as a buffer to absorb potential losses. Regulators from around the world introduced tougher targets for the capital cushions in the wake of the financial crisis, most recently in the "Basel III" package of rules finalised last December.

CA has the option of challenging the ECB's ruling at the Court of Justice of the European Union.

"Credit Agricole has taken note of the complaints... and reserves the option of appealing," the group said.

It is the third time that the ECB's banking supervisory arm, the Single Supervisory Mechanism, has imposed such fines.

Last year, it fined Italy's Banco Popolare di Vicenza 11.2 million euros and Ireland's Permanent TSB 2.5 million euros.

 South Korean minister vows support for grim job market

SEJONG (Yonhap/APP): South Korea's industry minister said Monday that restructuring in the shipbuilding and auto industry has affected the nation's job market, vowing support for the manufacturing sector's innovation efforts and incentives to boost domestic demand. Paik Un-gyu, minister of trade, industry and energy, expressed concerns over the dim employment numbers in the manufacturing sector, days after Asia's fourth-largest economy logged the smallest number of jobs created in more than eight years in July. "As the minister in charge of the real economy, I feel grave responsibility (over the grim job market)," Paik said in a meeting with reporters. Paik pledged to expand support for the shipbuilding and auto industries to help their restructuring efforts and foster new growth drivers in emerging sectors, such as eco-friendly ships and autonomous vehicles. "We have world-class technology in making eco-friendly ships. If we focus on that sector, I think the shipbuiding industry could enjoy a second renaissance," Paik said.

"The government plans to increase orders in the public sector and allocate more budget funds into research and development in shipbuilding and related areas."

In regards to the slumping auto sector, Paik said the government will push for extending individual consumption tax breaks on vehicles by six months to boost domestic consumption. Last month, the government decided to cut the individual automobile tax from 5 percent to 3.5 percent until the end of this year.

"We are mulling extending the favorable individual tax rate to the latter half of next year considering the tough situation facing the auto industry," Paik said.

The latest measure comes as the grim job market has been a hard blow to the Moon Jae-in administration, which has staked its reputation on creating employment opportunities that can generate balanced and sustainable growth.

The number of newly added jobs has stayed slightly above 100,000 per month over the past sixth months. The manufacturing sector shed 127,000 jobs last month, marking the fourth straight month of decline, according to Statistics Korea.