Asia Pacific (APAC), Global Politics

Cross-strait News Daily Round-up for Dec. 15

Delta spent US$530 million merging Eltek ASA

Delta Electronics (TPE: 2308) announced on Dec. 15 that it has merged Eltek ASA (OTCMKTS: EEKAF), a Norwegian global power conversion specialist that develops and markets energy systems for telecom and industrial applications, with US$530 million.

“We have closed the bid and the process of the merger will begin once the Oslo Stock Exchange approves the deal,” said Yancey Hai (海英俊), chairman for Delta.

Hai made his remarks during a press conference in Taipei on Dec. 15. He said that Delta will possess 100% shares of Eltek after the deal, which will be accomplished in mid-2015.

Hai said that Eltek’s expertise will fit in Delta’s future needs. While Eltek’s major markets are in the Europe and the U.S. and Delta’s in Asia, the merger will make the company invincible to occupy the global market, needless to say that Eltek and Delta were both established in 1971.

Smartphone prices continue to drop as South Asia, South America and Eastern Europe become major markets for the future: DisplaySearch

DisplaySearch said on Dec. 15 that the average price for smartphones will continue to go down, now that future major markets will be those regions with lower income.

DisplaySearch’s latest research said that the business growth in China will begin to slow down in 2016, while major markets will gradually transfer to South Asia, South America and Eastern Europe, where average income is lower than other regions.

For the time being, DisplaySearch said, the mainstream method for smartphone makers to make profits is to sell their high-end products with cheaper prices in China. Under the circumstance, major brand names such as Apple and Samsung have been constantly challenged by local Chinese brand names.

As of now, DisplaySearch estimated that an additional of 120 million smartphones were sold in 2014, but another 137 million smartphones will be sold before the end of 2015, which will be approximately 14% more than the previous year.

But, for the period between 2012 and 2013, the global smartphone business grew 40%. Between 2013 and 2014, it grew 23%.

China plans to establish free trade zones in Guangdong, Fujian and Tianjin

China’s State Council announced its plan to launch three new free trade zones in Guangdong, Fujian and Tianjin, as the nation is boosting its sluggish economy.

For Shanghai, the nation’s first free trade zone, despite being heralded as a laboratory for free market reforms, it has mostly disappointed foreign investors, as it provided almost no advantages for foreign or domestic companies operating there, although some reforms introduced in the zone have since been adopted nationwide.

China Construction Bank to issue preferred stock

China Construction Bank said that it is planning to raise up to US$11 billion by issuing preferred stock, to comply with strict capital requirements.

Among the amount, approximately US$8 billion will be sold in the domestic market while the rest of them will be sold in foreign counterparts. All proceeds will be used to replenish the bank’s Tier 1 capital ratio, which the China Banking Regulatory Commission is requiring systemically important lenders to be at a minimum of 9.5% by the end of 2018.