26/07/2025

BIZ & FINANCE SATURDAY | JULY 26, 2025

14

‘Instant retail’ price war in China shows no let-up

HK’s OSL Group completes US$300m equity financing HONG KONG: Hong Kong-based digital asset platform OSL Group said yesterday it had completed US$300 million (RM1.3 billion) of equity financing, the latest sign of feverish investor interest in cryptocurrencies. The deal, which the company said was the biggest publicly disclosed equity raise in Asia’s digital asset space, comes days before Hong Kong’s stablecoin bill takes effect on Aug 1, and could add fuel to a rally in shares related to virtual assets. OSL shares have surged 120% so far this year. Hong Kong’s de facto central bank on Wednesday cautioned against growing frothiness of the market around stablecoins, saying the hype had led to “excessive exuberance”. Proceeds from the share sale would be used to support global initiatives including stablecoin development, licensing efforts, and the build-out of a digital payment network, OSL said in a statement. “The funding will accelerate our global build-out – particularly in regulated stablecoin infrastructure and compliant payment rails,“ said Ivan Wong, chief financial officer of OSL Group. In a statement to the Hong Kong bourse, OSL said the share placing price is HK$14.90 (RM8) per share, representing a 15.3% discount to its closing price on Thursday, and a 16.2% discount to the average closing price in the last five trading days. Shares of OSL opened down more than 10% in Hong Kong yesterday, as the market reacted to the dilution impact and the discounted placing price. Since transforming last year into a company fully dedicated to digital assets, OSL has secured an exchange licence in Australia and completed acquisitions in Japan and Europe. OSL has also said it would step up investment in the so-called Real-World-Assets business, converting traditional assets into digital tokens. – Reuters Amazon shuts down Shanghai AI lab SHANGHAI: US tech giant Amazon has shut down its artificial intelligence research lab in Shanghai, a source with direct knowledge of the matter confirmed to AFP. News that the lab, part of cloud division Amazon Web Services (AWS), has closed comes with AI at the forefront of a tech race between China and the US. In a screenshot of a WeChat post widely circulated on Chinese social media this week, Wang Minjie, a scientist at the lab, said its disbanding was “due to the strategic adjustment between China and the US”. AWS announced job cuts across its operations last week, with some reports putting the losses at hundreds. Amazon declined to confirm the Shanghai lab’s closure directly when contacted by AFP. “We’ve made the difficult business decision to eliminate some roles across particular teams in AWS,“ spokesman Brad Glasser said in a similar statement to the one released in response to the broader job losses. “These decisions are necessary as we continue to invest, hire, and optimize resources to deliver innovation for our customers.” A dedicated AWS China webpage for the lab seen on Wednesday by AFP was no longer accessible yesterday. According to an archive of the page, the lab was established in autumn 2018, with part of its remit to “actively foster collaboration with the research community”.

has become unrealistic and at times toxic. Government intervention has become necessary for the sake of the greater good,” he said. The regulatory attention is different to that given to the electric vehicle sector, where price wars stemmed in part from overcapacity. One issued raised by the regulator at the Friday meeting was food waste from unconsumed zero-yuan orders, said the person familiar with the matter, who was not authorised to speak with media and so declined to be identified. “Everything points in the direction that they (regulators) are not happy with this, definitely not happy with a lot of tech companies just burning money by handing out all of those consumer discounts that will have no long-term effect,” Sander said. The appeal of instant retail battle is difficult to ignore for e-commerce firms that have struggled to unlock growth in the consumer spending slowdown since the Covid-19 pandemic. The instant retail sector is growing around 2.5 times faster than conventional e-commerce and is set to surpass 2 trillion yuan in sales by 2030, showed data from the Chinese Academy of International Trade and Economic Cooperation. While consumers may enjoy the low prices, merchants complain on social media that price wars all but eliminate profit margins and restaurateurs bemoan a fall in profitable in person custom. “From a regulatory perspective, authorities are generally in favour of competition, what they oppose most is monopoly,” said catering industry analyst Wang Hongdong, founder of catering data research institute NCBD. “So, a complete halt to the delivery war is unlikely (though) they are likely to address some current issues, such as the impact on dine-in restaurants.” – Reuters

automated warehouses will make instant retail increasingly profitable to the extent it will cannibalise conventional e-commerce, he said. Examples of instant retail and attendant price war include coupons from Alibaba covering the cost of breakfast delivered within 60 minutes, or from Meituan offering free tea. JD Takeaway offers 10 yuan coupons for orders as little as 11 yuan. Alibaba, JD.com and Meituan did not respond to requests for comment. Authorities in China typically take a sustained and firm-handed approach toward practices they deem unfavourable to healthy and rational market development, making dissent rare. State media agency Xinhua was unequivocal in a Wednesday editorial about the negative impact of “zero yuan purchases”. “On the surface, platform companies engage in ‘price wars’ to compete for the instant retail market, but their essence is to use subsidies to give birth to a ‘bubble market,’” the editorial read. “To put it bluntly, there is no winner.” China’s US$19 trillion (RM80 trillion) economy grew 5.3% in the first half of 2025. Hinting at what may be to come, however, retail sales growth slowed to 4.8% in June from 6.4% in May. Moreover, ANZ economists estimated a 0.1% decline this year in the consumer price index and 3% decline in the producer price index, for what would be the first annual deflation since 2009. “A price war is never in the interest of businesses. Consumers gain of course, but from a macroeconomic point of view (it leads) price expectations to keep decreasing,” said economics professor Bala Ramasamy at the China Europe International Business School in Shanghai. “The level of competition we have in China

Of 12 analysts Reuters polled, six expect the Monetary Authority of Singapore to loosen its currency-based monetary policy at the review on July 30 to counter an expected negative output gap in the economy. The other six expect no change in policy. The MAS eased monetary policy twice this year in January and April on growth concerns due to US tariffs after holding settings since a tightening in October 2022. The economy, however, is posting better-than-expected results due to frontloading activity. Singapore avoided a technical recession after the economy grew 1.4% quarter-on-quarter in the second quarter, according to preliminary government data released last week. Instead of using interest rates, Singapore manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band, known as the Singapore dollar nominal effective exchange rate, or S$NEER. It adjusts policy via three levers: the slope, mid-point and width of the policy band. Maybank economists expect MAS to maintain policy given the improved economic outlook. The analysts also upgraded their forecast for 2025 GDP to 3.2% from 2.4%. OCBC analyst Christopher Wong also expects SHANGHAI: China’s largest e-commerce platforms show no signs of halting an ‘instant retail’ price war that has proven unusually resilient to state criticism, underscoring the near-existential importance placed on instant retail as the future of e-commerce. Their fight in instant retail, where delivery can be as quick as half an hour, risks the wrath of authorities not averse to crackdowns and wary that aggressive price-cutting could entrench deflationary pressure in an economy already under fire from US tariffs and restrictions on tech exports to China. Alibaba, JD.com and Meituan have pledged almost 200 billion yuan (RM118 billion) combined to subsidise one-hour delivery in recent months, leading to customers who order beverages, for instance, effectively receiving them for free. So extreme is the strategy that the trio was summoned for the second time last week to the State Administration of Market Regulation which called for “rational competition” aligned with the government agenda, said a person familiar with the matter. “It’s really a battle that takes place now but is much more related to the expectations for five to 10 years down the road. (The platforms believe this is) life or death, it might mean the future or the lack of a future for their company,” said Ed Sander, tech analyst at Tech Buzz China. The adoption of artificial intelligence and o E-commerce giants risk wrath of authorities wary of deflationary effects from aggressive undercutting

Economists split on S’pore policy path after surprise growth SINGAPORE: Economists are split on whether Singapore’s central bank will loosen monetary policy or leave settings unchanged in its scheduled review next week as the economy remains resilient despite weakening global growth.

With GDP up in Q2, analysts debate whether growth can hold without more support. – UNSPLASH PIX

2025 – while the more pernicious effects of uncertainty on investment will likely also take time to show up,“ they said. Central banks globally are taking a wait-and-see approach. The Fed is expected to hold its benchmark rate steady at its July meeting, while the European Central Bank left rates unchanged on Thursday after eight consecutive interest rate cuts. Authorities in Singapore have warned that growth is likely to slow in the second half of 2025 as frontloading activity tapers off amid global trade uncertainties. In April, the government reduced its GDP forecast to 0% to 2% from 1% to 3%. – Reuters

the MAS to hold policy. “Having implemented two consecutive easings in the first half of 2025 by reducing the policy slope, a pause at this juncture will allow policymakers to evaluate the effects of earlier easing measures and await greater clarity on tariff-related uncertainties,“ he said. However, Barclays analysts think MAS will flatten the S$NEER slope. “The MAS knows better than to celebrate any upside surprises to second quarter GDP too early: frontloading implies an eventual payback – which is likely to manifest in second half of