US Business

Elon Musk has sold nearly $7 billion worth of Tesla shares, according to legal filings, amid a high-stakes legal battle with Twitter over a $44 billion buyout deal.

The Tesla boss sold some 7.9 million shares between August 5 and 9, according to filings published on the Securities and Exchange Commission’s website on Tuesday.

“In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” Musk, the world’s richest man, wrote on Twitter late Tuesday.

Twitter is locked in a legal battle with the mercurial Tesla boss over his effort to walk away from the April agreement to buy the company, and a judge has ordered that a trial will begin in October.

Musk has filed a countersuit, accusing Twitter of fraud and alleging the social media platform misled him about key aspects of its business before he agreed to a $44 billion buyout.

The move comes after Musk sold around $8.5 billion worth of shares in the electric carmaker in April as he was preparing to finance the Twitter deal. He tweeted at the time: “No further TSLA sales planned after today.”

Tesla rose 3.4 percent to $879 before the start of regular trading Wednesday, while Twitter jumped 4.3 percent to $44.69, Bloomberg reported.

Musk has now sold about $32 billion worth of Tesla shares since November.

“He is cashing up for Twitter,” Charu Chanana, a strategist at Saxo Capital Markets told Bloomberg News. 

Chanana said she believed Musk may be attempting to take advantage of a Tesla share price rebound of about 35 percent since late May.

“The bear market rally has started to falter, and further repricing of Fed expectations could mean more pain for equities ahead, especially in tech.”

Analysts say Musk may continue selling Tesla stock.

“Musk said at the Tesla shareholder meeting that any weakness in the share price was a buying opportunity, and then 24 hours later started selling stock himself,” Jim Dixon, a senior equity sales trader at Mirabaud Securities, told Bloomberg News. 

Dixon added that it was “very unlikely” that Musk was finished selling Tesla stock.

Tesla share prices have been tied to the fate of Musk’s Twitter deal in recent weeks, first slumping over concerns that pursuing the deal could distract him and lead to unnecessary financial risk, and then rebounding when he said he wanted to abandon the takeover.

Musk’s deal to buy Twitter included a provision that if it fell apart, the party breaking the agreement would pay a termination fee of $1 billion under certain circumstances.

At a net worth of $250 billion, Musk tops the Bloomberg Billionaires Index, although he has lost $20.1 billion since the start of the year, mainly due to the decline in Tesla’s stock price.

— Bloomberg News contributed to this story —

Germany will offer tax relief worth 10 billion euros ($10.2 billion) to help workers cope with soaring inflation, Finance Minister Christian Lindner said Wednesday.

The package will raise base tax-free allowance as well as bring up the level from which the top income tax rate of 42 percent will apply. Families will also benefit from higher tax exemptions for dependent children.

Inflation in Germany reached 7.5 percent in July, fractionally lower than the 7.6 percent recorded in June, fuelled mainly by energy prices that soared following Russia’s invasion of Ukraine.

Lindner said his plan is aimed primarily at fighting the problem of employees who find themselves with a higher tax burden because they have received a pay increase to combat inflation.

As a result, the gain the workers have received is wiped out essentially by the higher taxes due.

The phenomenon, called “cold progression”, also typically hits lower incomes harder.

Lindner said 48 million Germans would be facing higher taxes from January 2023 if no relief was offered.

“For the state to benefit at a time when daily life is becoming more expensive… that is not fair and also dangerous for economic development,” said Lindner.

– Double whammy –

The tax relief measures come on top of a 30 billion euro package unleashed by Chancellor Olaf Scholz earlier this year to help consumers beat inflation.

The earlier package included a fuel tax cut and a public transport ticket valid across Germany priced at just 9 euros a month for June, July and August.

But it is clear that the clouds hanging over Europe’s biggest economy are only darkening as the country heads into the colder months.

The Ukraine conflict has derailed Germany’s hopes of finally shaking off the coronavirus pandemic and roaring back to growth.

With its export-oriented industries, Germany has been particularly vulnerable to the supply chain bottlenecks and raw material shortages caused by the pandemic. 

But now, Germans are also staring down the barrel of doubling energy bills, after Russia drastically curtailed its supply following its invasion of Ukraine.

The power crunch is not only nibbling away at consumers’ purchasing power but also hurting German industry, much of which relies on cheap energy supplies to manufacture exports.

Employees in Europe’s biggest economy are therefore facing the double whammy of higher costs and a growing threat of job losses as major companies mull idling some factories because it may no longer be cost effective to keep production lines running.

German growth stagnated in the second quarter of the year, but analysts have warned that a recession in the second half will be inevitable.

At their last forecast in March, the German government’s economic advisers estimated that gross domestic product will expand by 1.8 percent for 2022. 

Equities fell Wednesday, tracking a drop on Wall Street ahead of a crucial US inflation report later in the day, which could have a huge bearing on the Federal Reserve’s plans for raising interest rates.

Investors are preparing for the consumer price figures with a sense of dread as analysts warn a forecast-beating reading would ramp up bets on another big Federal Reserve hike and reinforce recession expectations.

The US central bank has said its decision on when and by how much to tighten monetary policy will be driven by data as it struggles to walk a fine line between bringing inflation down from four-decade highs and trying not to damage the economy.

There had been hope that recent indicators showing activity slowing would give the Fed room to be less hawkish. But a bigger-than-predicted jump in jobs last month revived talk of a third straight three-quarter-point hike in September.

“The (Fed policy board) will need to make sure inflation moves back towards target sustainably before contemplating pausing its tightening cycle,” Carol Kong, of Commonwealth Bank of Australia, said.

“A strong inflation outcome today will likely reinforce the (board) is still some way away from that point yet, and see markets readjust higher their expectations for US interest rates.”

Wednesday’s figures come at a sensitive time for world markets, which have been buffeted by a range of other issues including the war in Ukraine, supply chain snarls and rising China-US tensions over Taiwan.

While the latest earning season has been less painful than feared, there are increasing signs that the economic slowdown is beginning to impact companies, with some major firms — including Apple and Amazon — providing downbeat outlooks.

Chip-maker Micron became the latest, saying revenue would likely come in at the low end of its forecasts in the fourth quarter owing to weak demand. That came a day after rival Nvidia unveiled disappointing results.

Tech firms led losses in New York, with the Nasdaq off more than one percent, and they did so in early Asian trade.

Hong Kong led losses, shedding two percent, while Shanghai, Tokyo, Sydney, Seoul, Mumbai, Wellington, Taipei, Bangkok and Jakarta also dropped.

Traders were unmoved by the news that China’s consumer price index rose last month to a two-year high but came in below expectations.

London, Paris and Frankfurt were also down in the morning.

Oil prices sank and remain stuck around six-month lows, even after news that supplies from Russia to three European countries through Ukraine had been halted as sanctions prohibited the processing of the transit payment.

The cost of the commodity has essentially wiped out all the gains seen since Russia’s invasion of its neighbour in February as expectations of a recession hit demand forecasts, while consumers are put off buying petrol owing to rising prices.

But OANDA’s Edward Moya said the market would not likely weaken further.

“Whatever crude demand destruction that occurs from a weakening global economy won’t be able to drag down oil prices much lower given how low the supply outlook remains,” he said in a note. 

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,819.33 (close)

Hong Kong – Hang Seng Index: DOWN 2.0 percent at 19,610.84 (close)

Shanghai – Composite: DOWN 0.5 percent at 3,230.02 (close)

London – FTSE 100: DOWN 0.1 percent at 7,4478.76

Euro/dollar: DOWN at $1.0203 from $1.0213 Tuesday

Pound/dollar: UP at $1.2083 from $1.2071

Euro/pound: DOWN at 84.44 pence from 84.57 pence

Dollar/yen: DOWN at 135.00 yen from 135.12 yen

West Texas Intermediate: DOWN 0.8 percent at $89.79 per barrel

Brent North Sea crude: DOWN 0.6 percent at $95.69 per barrel

New York – Dow: DOWN 0.2 percent at 32,774.41 (close)

Deliveroo, the international delivery food app, announced Wednesday a big increase in losses as investment costs ate into rising revenues, adding it planned to exit its struggling Netherlands market.

Loss after tax jumped 41 percent to £153.8 million ($186 million) compared with the first six months of last year, the British group said in a statement.

Revenue grew 12 percent to £1 billion despite easing Covid curbs and controversy over treatment of its riders.

Deliveroo said the outlook was clouded by strong inflation and the Ukraine war. 

However, company founder and chief executive Will Shu expressed confidence in the company’s ability “to adapt financially to any further changes in the macroeconomic environment”. 

– Netherlands exit –

Deliveroo said it “proposes to consult on ending its operations in the Netherlands”, noting it did “not hold a strong local position” in the country.

The company added that it “would require a disproportionate level of investment, with uncertain returns, to reach and sustain a top tier market position”.

A planned exit from the Netherlands towards the end of November follows Deliveroo’s departure from Spain last year, although the group on Wednesday said it had gained market share in the UK and Italy.

It added that overall marketing and other investment costs, including spend on technology, jumped 29 percent to almost £369 million in the first half.

Deliveroo has enjoyed strong sales growth in a short space of time but faces questions over its sustainability, highlighted by its failed stock market debut which took place in London last year.

Its initial public offering was the capital’s biggest stock market launch for a decade, valuing the group at £7.6 billion.

But its share price tumbled on launch day by almost a third from the IPO price of £3.90 as investors questioned Deliveroo’s treatment of its self-employed riders.

A French court of appeal last month found Deliveroo guilty of “undeclared work” for classifying a courier as an independent contractor instead of an employee.

In early London trading following Wednesday’s earnings update, Deliveroo’s share price rose 0.8 percent at 92 pence.

“Stay-at-home stocks like Deliveroo fared extremely well during the pandemic when restaurants and bars were shut and households were forced into lockdown,” noted Victoria Scholar, head of investment at Interactive Investor. 

“However, the reopening of the economy combined with stiff competition from the likes of Just Eat and Uber Eats and q-commerce (quick-commerce) players like Gorillas and Go Puff, as well as the cost-of-living crisis, have created an extremely challenging environment.”

Hong Kong carrier Cathay Pacific on Wednesday reported losses had narrowed in the first half after an “extremely difficult start” to the year, but said its capacity will improve in coming months as travel sentiment improves.

The US$637 million loss in January-June was narrower than the US$968 million deficit suffered in the same period last year, as the airline benefited from strong cargo demand and cost-cutting measures.

Chairman Patrick Healey said in a statement that the first few months were “particularly unfavourable” as pandemic-related travel restrictions severely constrained Cathay’s flight operations and greatly affected demand for travel.

But he added that the airline was gearing up for borders reopening and expected a stronger second-half.

Cathay aims to boost passenger flight capacity to a quarter of pre-pandemic levels by the end of 2022, while it is looking to lift cargo capacity to 65 percent, Healey said.

The airline carried 335,000 passengers in the first half of the year, more than double that of the same period in 2021, bringing in US$263 million in revenue. Income from the cargo unit jumped 9.3 percent to US$1.5 billion.

Total revenue was up 17 percent on-year at US$2.4 billion.

Hong Kong has taken tentative steps toward reopening its borders after being internationally isolated for two and a half years owing to strict Covid rules for travellers.

On Monday authorities said visitors would now have to spend just three days in hotel quarantine, down from seven and much lower than the three weeks earlier in the year.

Cathay praised the adjustments as “positive steps” but pressed the government to “urgently provide a clear roadmap” to remove all pandemic-related restrictions on passengers and aircrew.

The firm’s ability to operate more flights “continues to be severely constrained by a bottleneck on crewing resources under the existing quarantine requirements”, Healey said on Wednesday.

Last month, Hong Kong also suspended a circuit-breaker mechanism that penalised airlines for bringing in coronavirus cases — which had affected numerous Cathay routes, including for key markets such as the United States and Britain.

The airline operated just 29 destinations in January, compared with more than 100 before the pandemic.

Hong Kong authorities are hinting at a potential international reopening in November, timed to coincide with the high-profile Rugby Sevens tournament and a banking summit.

Cathay is bringing aircraft parked overseas back to Hong Kong and is aiming to hire more than 4,000 front-line employees over the next 18 to 24 months, Healey said.

In June, Hong Kong also extended the drawdown period of a US$1 billion bridge loan to Cathay — the second time in two years — as part of a US$5 billion government bailout to help the airline weather the pandemic.

Hong Kong’s home carrier suffered a reputational blow earlier this year when a coronavirus outbreak was traced to two of its flight attendants who breached their quarantine rules. They were fired and later prosecuted.

Is inflation finally slowing down in the United States?

Inflation data due to be released Wednesday is expected to show at least a partial cooling down of consumer prices and bring a breath of fresh air for US President Joe Biden just months before crucial midterm elections.

Fueled by aggressive consumer spending of pandemic savings, global supply chain snarls, domestic worker shortages, and Russia’s war on Ukraine, inflation reached 9.1 percent in June, year over year, the highest in 40 years.

But it is expected to fall to 8.6 percent in July, according to MarketWatch.

White House spokeswoman Karine Jean-Pierre said that although the administration has not seen the fresh statistics yet, “We know that gas prices have fallen.”

“And we hope those gas price declines will factor into the CPI inflation data,” Jean-Pierre told reporters Tuesday.

Consumer prices have continued to climb in the United States, squeezing family budgets and, and by extension, Biden’s popularity.

His opponents accuse Biden of precipitating inflation with his gigantic $1.9 trillion coronavirus relief package, which he enacted in March last year, shortly after assuming office.

And Republicans renewed their criticism of Biden’s economic policy, saying Sunday’s passage in the Senate of his massive climate and healthcare bill titled the “Inflation Reduction Act,” does the opposite of its stated purpose.

– Larger issue –

But the devil is in the details. 

Experts worry that the inflation slowdown linked to the drop in gasoline prices could be outweighed by rising rent and real estate prices.

“The larger issue is what happens to home ownership costs & rents,” Diane Swonk, chief economist for KPMG, wrote on Twitter.

Similar to other economists, Swonk expects to see a rise in the so-called underlying inflation rate that excludes food and energy, which had risen to 5.9 percent in June, year over year.

The question now facing Washington is whether it will be possible to bring inflation down sustainably, without plunging the world’s largest economy into recession, after two quarters of economic contraction.

In a bid to tamp down inflation, the US Federal Reserve has already hiked the interest rate four times to a range of 2.25 to 2.5 percent.

On the bright side, the US labor market remains dynamic and in July the unemployment rate fell to the pre-pandemic level of 3.5 percent.

But there are still nearly two jobs open for every available worker, which pushes wages up and contributes to inflation.

Inflation data will be released Wednesday at 8:30am local time (1230 GMT).

One of India’s biggest stars is banking on a remake of Hollywood feelgood hit “Forrest Gump” to revive the fortunes of Hindi-language Bollywood, after a string of weak box-office showings.

Aamir Khan’s “Laal Singh Chaddha”, an adaptation of the 1994 US classic starring Tom Hanks, hits cinemas on Thursday ahead of India’s 75th independence celebrations.

Disappointing takings for other Bollywood A-listers have cast a pall over an industry still recovering from Covid-19 lockdown losses when many in movie-mad India turned to streaming giants like Netflix and Disney+ Hotstar.

The adaptation keeps several iconic scenes from the original — which netted six Oscars, including for Best Picture — such as a floating white feather, ping-pong playing and lots of running.

– Box of golgappas –

But there are several changes, with Gump’s “box of chocolates” line becoming “Life is just like a golgappa. Your tummy might feel full, but your heart always craves more.”

Golgappa is a popular Indian snack, while the second half of the saying — “you never know what you’re gonna get” in the original —  draws from a common Hindi phrase.

The film promises to take people through India’s history in the same way Gump stumbled through and influenced major US events like the Vietnam War.

This could irk Indian right-wing critics who have already called for a boycott of the film because of comments made by Khan in 2015 that were deemed to be unpatriotic.

Khan, the star of megahit “Dangal” (2016), and screenwriter Atul Kulkarni were coy in sharing what Indian historical settings would be featured.

Kulkarni would only say that his script was a “beautiful story about a beautiful country called India through a beautiful person called Laal Singh”.

– Remaking a ‘classic’ –

Khan, 57, admitted that he initially put off reading Kulkarni’s script, uncertain it would be possible to adapt such a “cult classic”.

“It’s like saying we are remaking ‘Mughal-e-Azam’ and ‘Mother India’. It’s not a wise thing to do,” he said, referring to two Indian classics.

“But when I heard the script, I understood he’s done it. It was a moving experience for me. I really loved it. The moment I heard it I wanted to do this.”

Bollywood star Kareena Kapoor, 41, who plays Singh’s lifelong friend Rupa, based on Robin Wright’s Jenny Curran, said the plot was “timeless” with a love story at its core.

“I wondered how they would play around with such an iconic film,” added Naga Chaitanya, a Telugu-language star from the southern film industry “Tollywood” who plays Bala, an adaptation of Gump’s shrimp-fishing Vietnam comrade Bubba.

“But the way they have conceived the film for Indian cinema is unique.”

– Competition –

Recent silver-screen hits have not come from Hindi-language Bollywood but are in other Indian languages, such as action flicks “Pushpa”, “KGF: Chapter 2” and “RRR”.

“RRR”, released in March, raked in $87 million domestically, while “KGF: Chapter 2”, which debuted a few weeks later, took in $106 million, media analyst Karan Taurani of Mumbai-based Elara Capital told AFP.

Action film “Shamshera”, released on July 22 and starring Bollywood actor Ranbir Kapoor, has so far only made $5.6 million, dashing hopes it would lure audiences back to Hindi cinema.

A rare Bollywood hit this year has been comedy horror “Bhool Bhulaiyaa 2” released on May 20 and featuring rising star Kartik Aryan, which has brought in $24 million so far.

Now, all eyes are on “Laal Singh Chaddha” and family dramedy “Raksha Bandhan” with Bollywood megastar Akshay Kumar — which also releases on Thursday.

Taurani estimates that “Laal Singh Chaddha” will make $19 million, falling short of Khan’s per-film average of $35 million.

Khan, who co-produced “Laal Singh Chaddha”, believes Bollywood hasn’t lost its mojo, blaming the early release of movies on streaming services for lower box-office takings.

“I feel that perhaps we — I’m including myself in this — as Hindi filmmakers, need to… also pick topics which are relevant to a larger audience, as opposed to picking topics which are relevant to a smaller audience,” he said.

When video game designer Mark Venturelli was asked to speak at Brazil’s biggest gaming festival, he submitted a generic-sounding title for his presentation — “The Future of Game Design” — but that was not the talk he gave.

Instead, he launched into a 30-minute diatribe against the blockchain technology that underpins cryptocurrencies and the games it has spawned, mostly very basic smartphone apps that lure players with the promise of earning money.

“Everything that is done in this space right now is just bad — actually it’s terrible,” he told AFP.

He is genuinely worried for the industry he loves, particularly because big gaming studios are also sniffing around the technology.

To crypto enthusiasts, blockchain will allow players to grab back some of the money they spend on games and make for higher-stakes enjoyment.

Critics say the opposite is true — game makers will capture more profits while sidestepping laws on gambling and trading, and the profit motive will kill all enjoyment.

The battle lines are drawn for what could be a long confrontation over an industry worth some $300 billion a year, according to Accenture.

– ‘Ecologically mortifying’ –

Gamers like Venturelli might feel that they have triumphed in the early sorties.

Cryptocurrencies have crashed recently and dragged down the in-game tokens that had initially attracted players.

“Nobody is playing blockchain games right now,” Mihai Vicol of Newzoo told AFP, saying between 90 and 95 percent of games had been affected by the crash. 

Ubisoft, one of the world’s biggest gaming firms, last year tried to introduce a marketplace to one of its hit games for trading NFTs, the digital tokens that act as receipts for anything from art to video game avatars. 

But gamers’ forums, many already scattered with anti-crypto sentiment, lit up in opposition.

Even French trade union IT Solidarity got involved, labelling blockchain “useless, costly, ecologically mortifying tech” — a reference to the long-held criticism that blockchain networks are hugely power hungry.

Ubisoft quickly ditched the NFT marketplace in Tom Clancy Ghost Recon Breakpoint.

Last month, Minecraft, a world-building game hugely popular with children and teenagers, announced it would not allow blockchain technology. 

The firm criticised the “speculative pricing and investment mentality” around NFTs and said introducing them would be “inconsistent with the long-term joy and success of our players”.

The wider sector also has a serious image problem after a spectacular theft earlier this year of almost $600 million from Axie Infinity, a blockchain game popular in the Philippines. 

Analyst firm NonFungible last week revealed that the NFT gaming sector crashed in the second quarter of this year with the number of sales plunging 22 percent.

All of this points to a bleak time for crypto enthusiasts, but blockchain entrepreneurs are not giving up. 

– ‘Revolutionise’ gaming –

Sekip Can Gokalp, whose firms Infinite Arcade and Coda help developers introduce blockchain to their games, argues it is still “very early days”.

He told AFP some of the attention-grabbing play-to-earn games had been “misguided” and he was convinced the technology still had the potential to “revolutionise” gaming.

Reports of a culture clash between gamers and crypto fans, he said, were overplayed and his research suggested there was substantial overlap between the two communities.

Gokalp can take heart from recent announcements by gaming giants such as Sega and Roblox, a popular platform mostly used by children, indicating they are still exploring blockchain. 

And Ubisoft, despite abandoning its most high-profile blockchain effort, still has several crypto-related projects on the go. 

Among the many benefits trumpeted by crypto enthusiasts are that the blockchain allows players to take items from one game to another, gives them ownership of those items and stores their progress across platforms. 

Vicol, though, reckons blockchain gaming needs to find other selling points to succeed.

“It could be the future,” he said, “but it’s going to be different to how people envisage it today”. 

Brazilian Venturelli, whose games include the award-winning Relic Hunters, used his talk at the BIG Festival in Sao Paulo to dismiss all the benefits trumpeted by crypto fans as either unworkable, undesirable or already available. 

And he told AFP that play-to-earn games risked real-world damage in Latin America — a particular target for the industry — by enticing young people away from occupations that bring benefits to society.

He said many people he knows, including venture capitalists and the heads of billion-dollar corporations, shared his point of view.

“They came to congratulate me on my talk,” he said. 

But with new blockchain games emerging every day, he accepts that the battle is far from over.