Author: ashton

Paris Agreement will reward signatories with GDP boost

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If the EU achieves a smooth transition to a low-carbon economy by 2030, as set out in the 2015 Paris climate agreement, the bloc will be rewarded with increased GDP and reduced unemployment, a report by Cambridge Econometrics and Eurofound’s European Jobs Monitor, released February 12, has said.

The EU’s GDP could increase by 1.1 percent and unemployment fall by 0.5 percent if the terms of the agreement are met

In total, the EU’s GDP could increase by 1.1 percent and unemployment fall by 0.5 percent if the terms of the agreement are met. China is expected to reap similar rewards, with a predicted 4.7 percent growth in GDP and a 2.3 percent boost to employment.

The US, on the other hand, would experience a 3.4 percent contraction in GDP and a 1.6 percent increase in unemployment if it transitioned to a low-carbon economy. Such figures are likely to gratify US President Donald Trump, who pulled the country from the Paris agreement in 2017.

Within the EU, Latvia, Malta and Belgium are among the countries likely to experience the most positive effects of implementing cleaner energy. The report predicts that Latvia would see a nearly six percent increase in GDP, over double the 2.5 percent increase Malta looks to experience.

Belgium meanwhile, would see approximately a 0.9 percent boost to employment. Countries such as Denmark, which are already at an advanced stage of implementing sustainable reforms, will see less of an impact.

Miguel Arias Cañete, EU Energy and Climate Action Commissioner, tweeted: “The Juncker Commission is sparing no effort in making Europe a modern, competitive and socially fair Paris-aligned economy. Here’s why: Implementation of the #ParisAgreement could boost EU GDP by 1.1%.”

Globally, the economy could expand by 0.1 percent if the terms of the Paris Agreement are met. The report cites large variations between countries, especially the poor figures predicted for the US, as the reason for this small overall figure.

China, the planet’s biggest polluter, has stepped up to shrink its environmental impact by reducing its reliance on coal and investing in renewable energy.

Fiat Chrysler pays $77m penalty for breaching fuel regulations

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Italian-American carmaker Fiat Chrysler Automobiles (FCA) revealed to Reuters on February 8 that it paid $77m in US civil penalties last year, after failing to meet Corporate Average Fuel Economy (CAFE) requirements for the 2016 model year.

Paid in the final quarter of 2018, it was the largest fine amassed by a single company for at least five years. Compared to previous years, recent civil penalties have resulted in far larger charges for the industry. In 2014, for example, the automobile sector paid just $2.3m in total.

Chrysler’s fine provides the first signal that carmakers are struggling to meet more stringent emission rules

FCA, along with fellow US carmakers, had appealed to the Trump administration to freeze 2020 model year requirements until 2026. In particular, it argued that a fall in petrol prices and a rise in demand for SUVs have made the existing regulations, which came into effect in 2012, no longer appropriate for current market conditions.

Shane Karr, Head of External Affairs at FCA for North America, said in a statement: “We at FCA are committed to improving the fuel efficiency of our fleet and expanding our US manufacturing footprint. Ultimately, both goals are better served by a CAFE programme more closely aligned to the US market, than by requiring companies to make large compliance payments because assumptions made in 2011 turned out to be wrong.”

In 2012, the Obama administration approved a policy requiring car manufacturers to almost double their fleet-wide fuel efficiency to more than 50 miles per gallon by 2025. US President Donald Trump has proposed relaxing future regulations, and last August the Environmental Protection Agency and the National Highway Traffic Safety Administration suggested capping efficiency standards at a fleet average of 37 miles per gallon between 2020 and 2026. Environmental groups have threatened a legal challenge in response.

Chrysler’s fine provides the first signal that carmakers are struggling to meet more stringent emission rules. However, with Trump ever sceptical of the risks posed by climate change and pressure from US automakers building, a loosening of environmental standards could be on the horizon.

Hellman & Friedman agrees $11bn acquisition of Ultimate Software

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On February 4, an investment group led by Hellman & Friedman confirmed that it had agreed to purchase cloud-based HR developer Ultimate Software in an $11bn deal. The group, which also includes Blackstone, CPPIB, GIC and JMI Equity, has committed to a cash transaction that values Ultimate Software at $331.50 per share.

Reuters reported that the agreement will be heavily financed with equity and will use a moderately small quantity of debt compared with typical leveraged buyouts. Ultimate Software, which generated over $1.1bn in revenue last year, expects the deal to close in mid-2019.

Speculation of a rival bid, which could now be accepted during a 50-day shopping period, saw the company’s shares surge by 19.5 percent

Speculation of a rival bid, which could now be accepted during a 50-day shopping period, saw the company’s shares surge by 19.5 percent.

Ultimate Software CEO Scott Scherr said, “Our customers will benefit from our ability to bring new features and services to market more quickly. Hellman & Friedman is in full alignment with our vision to serve the global HR market, while preserving our unique company culture and mission.”

Scherr and his senior management team will stay in their positions following the acquisition.

Florida-based Ultimate Software was founded in 1990 and is the second-fastest growing provider in its sector. The company’s customers include Subway and Red Roof Inn. It offers packages to manage payroll and benefits, as well as subscription-based analytics tools that track a full range of HR solutions.

Hellman & Friedman makes regular market ventures in the communications, technology, health care and industrial sectors. The private equity fund already owns another HR software firm, Massachusetts-based Kronos, suggesting that it views workforce management as a potentially lucrative market.

The cloud computing sector looks set for continued growth. The technology has applications far beyond HR and has been embraced by numerous business seeking flexibility, efficiency and scalability benefits.

Goldman Sachs leads $20m investment in fintech app Bud

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Goldman Sachs, along with HSBC, has led a $20m investment in British fintech app Bud. The investment takes Bud’s total backing to date to $32m.

In addition to the financing, HSBC’s head of digital banking, Raman Bhatia, will join Bud’s board.

Other lenders include Australia’s ANZ, South Africa’s Investec, Spain’s Banco Sabadell and Silicon Valley’s 9Yards Capital.

The start-up is one of a number of companies taking advantage of Britain’s newly introduced Open Banking rules

Bud enables banks to more easily integrate products and services into their mobile apps, giving customers a network of world-class digital products to choose from. The technology also allows banks to better analyse customer spending data, helping them come up with cost-effective business strategies.

The start-up is one of a number of companies taking advantage of Britain’s newly introduced Open Banking rules, which are designed to promote competition while allowing users to view all their financial services in one place.

Bud co-founder Edward Maslaveckas wrote: “This investment by HSBC, Goldman Sachs, Banco Sabadell, ANZ and Investec – as well as some fantastic VC partners in the form of 9Yards Capital and Lord Fink, the former CEO of the hedge fund Man Group – is proof that we’re going in the right direction.”

The fintech industry is currently enjoying a boom in funding. Last year saw the largest growth in fintech investment since 2014, with financial firms increasingly looking to provide their customers with new flexible services.

Bud has confirmed that it will use the latest cash injection to double its staff numbers from 62 to more than 120 by the end of the year. With a wide geographical spread of seasoned investors, Bud has access to a broad spectrum of expertise that will surely prove vital as the start-up looks to expand into global markets.

Hyundai Heavy Industries to acquire majority stake in rival Daewoo

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Hyundai Heavy Industries, the world’s largest shipbuilder, has signed a conditional share swap agreement to take over second-ranked Daewoo Marine, creating an industry behemoth with a near 20 percent market share.

State-funded Korea Development Bank (KDB), which owns 55.7 percent of Daewoo, announced on January 31 that it had signed a memorandum of understanding signalling that it will transfer its entire stake, worth an estimated $1.94bn, to Hyundai.

The global shipbuilding industry is in the midst of recovery from an economic downturn that led to mass losses and widespread job cuts

In exchange for its Daewoo shares, KDB will receive new shares issued by Hyundai, which will provide $1.3bn in liquidity to Daewoo.

The combination of these two shipbuilding heavyweights will ease competition and excess capacity, which have dragged down ship prices in recent years, KDB Chairman Lee Dong-gull said at a news conference.

The deal will “raise the fundamental competitiveness of Daewoo, at a time when the threat from latecomers in China and Singapore is growing”, Lee added.

Hyundai, Daewoo and Samsung Heavy Industries currently dominate the shipping industry, which accounts for around seven percent of both exports and employment in South Korea.

KDB added that it would contact Samsung to evaluate its interest in purchasing Daewoo before signing sale terms with Hyundai.

Hyundai, along with its affiliate Hyundai Samho Heavy Industries, occupied around 11.5 percent of the global shipbuilding market last year, according to figures from market research firm Clarksons. Daewoo, meanwhile, held 6.3 percent, while Samsung Heavy’s market share stood at 3.4 percent.

The global shipbuilding industry is in the midst of recovery from an economic downturn that led to mass losses and widespread job cuts, culminating in 2017 with the $2.6bn bailout of Daewoo Marine by two of South Korea’s state-run banks.

Korea’s top three shipbuilders have undertaken extensive restructuring programmes over the past few years, cutting thousands of jobs, but all are expected to return to profitability in 2019.

Their recovery has been aided by a growing demand for high-end vessels, of which Korean shipbuilders are the leading makers, capturing 42 percent of new commercial orders between them in the first three quarters of 2018. While the triad faces some competition from low-cost Chinese firms, they are miles ahead in terms of ecological and environmental capabilities, which has allowed them to retain a strong market position.

Yahoo’s proposed data breach settlement rejected by judge

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Yahoo’s proposed compensation package for millions of customers who had their email addresses stolen has been rejected by a US judge.

The internet services provider has been seeking to put an end to action relating to three data breaches it experienced between 2013 and 2016. It had suggested a $50m payout plus two years of free credit monitoring for around 200 million people in the US and Israel who were affected by the breaches. These funds would be paid out to lawyers acting on behalf of the users.

Under the terms of the agreement, lawyers acting on behalf of the plaintiffs could claim up to $35m in fees

The plan, however, was rejected by US District Judge Lucy Koh, who said she could not declare it “fundamentally fair, adequate and reasonable” as it did not clarify exactly how much victims could expect to reclaim.

Under the terms of the agreement, lawyers acting on behalf of the plaintiffs could claim up to $35m in fees, which the court said “may be unreasonably high”. The exact amount that would be paid out to victims, along with the costs of ongoing credit monitoring, was also slated for being too vague.

Yahoo has been criticised for being too slow to disclose data breaches in 2013, 2014 and 2015-16, which resulted in users’ email addresses and other personal information being compromised. The 2013 event allowed hackers to gain access to all three billion Yahoo accounts, while the 2014 attack affected 500 million users. In the most recent breach, plaintiffs are alleging that data collected in the earlier hacks was used to access specific accounts.

The full scale of all breaches was revealed in July 2016, after Yahoo’s internet business was sold to Verizon for $4.48bn. Two Russian intelligence agents and two hackers were charged, with one hacker later pleading guilty to having carried out the cyber attack.

Koh cited this history of secrecy as one of the reasons for rejecting the deal, saying: “Yahoo’s history of non-disclosure and lack of transparency related to the data breaches are egregious.”

“While preliminary approval of the settlement was not granted, we’re confident that we can achieve a viable path forward,” a spokesperson for Verizon told Reuters.

Yahoo must now draw up a new agreement with the plaintiffs to settle the case.

All Nippon Airways set to order Boeing and Airbus aircraft

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All Nippon Airways (ANA), Japan’s largest airline, announced plans to order 20 Boeing 737 MAX aircraft on January 29, as part of the company’s new growth strategy. ANA also placed an order for 18 Airbus A320neos to be used by its budget subsidiary Peach Aviation and confirmed that it had an option to purchase another 10 Boeing 737 MAX jets.

The announcement comes at a good time, with President Donald Trump recently increasing pressure on Japan to reduce its trade surplus with the US.

ANA’s order of Boeing’s latest 737 model is the first to come from Japan.

In a press release, ANA – which operates a mixture of Airbus and Boeing narrow-body jets – said: “The decision was based on the economic growth of Asia and emerging countries, with demand in the Asian aviation market and inbound demand on the rise. ANA HD and Peach Aviation Limited each selected its optimum aircraft to fit its strategy to further grow.”

With Japan’s industrial output decreasing in recent years, the order of the Boeing aircraft will come as welcome news to the country’s aerospace firms

With Japan’s industrial output decreasing in recent years, the order of the Boeing aircraft will come as welcome news to the country’s aerospace firms, such as Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Subaru, which currently build major portions of Boeing’s jets.

After the US agreed a trade truce with China, the US president’s crosshairs turned to Japan. In December 2018, Trump claimed: “I tell [Shinzō Abe] all the time that Japan doesn’t treat the United States fairly on trade: They send in millions of cars at a very low tax. They don’t take our cars.”

The Boeing purchase is a smart move by ANA. While the company vice-president Hideki Mineguchi said the deal “has nothing to do with trade friction”, it will undoubtedly impress the US president.

In addition, the involvement of Japanese companies in building Boeing jets will provide a boost for the domestic economy.

Indonesian e-commerce company Tokopedia secures $1.1bn funding

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In its latest funding round Indonesian tech company Tokopedia obtained $1.1bn from Chinese e-commerce giant Alibaba and Japan’s SoftBank, the company announced on December 12. Softbank Vision Fund, Softbank Ventures Korea and Sequoia Capital have also invested in the company. To date, the Indonesian firm has raised $2.4bn from investors.

Tokopedia has not commented on its valuation, but TechCrunch understands the deal brings the company’s value to $7bn. In an email to TechCrunch, Tokopedia outlined its plan to use the funds to invest in technology and infrastructure, with CEO William Tanuwijaya stating the investment would help “broaden Tokopedia’s scale and reach”.

As growth slows in China, Alibaba and its rival JD.com have rapidly expanded into South-East Asia

Tanuwijaya added that the firm will continue to focus on the Indonesian market: “We will double down on the Indonesia market to reach every corner of our beautiful 17,000-island archipelago.”

In 2017, Tokopedia ran a funding round that Alibaba also led with a $1.1bn investment, but the Chinese firm has also supported Lazada, Tokopedia’s main competitor, and is a majority stakeholder in the rival company.

As growth slows in China, Alibaba and its rival JD.com have rapidly expanded into South-East Asia, with Indonesia increasingly becoming a battleground for the two companies.

The Indonesian e-commerce market is experiencing fast-paced growth, with management consulting firm McKinsey estimating the market will expand nearly eightfold between 2017 and 2022.

Founded in 2009, Tokopedia has capitalised on Indonesia’s rapid adoption of smartphones, with the company’s sales quadrupling in 2018. With a population of 268 billion, Indonesia is the world’s fourth most populated country and the largest economy in South-East Asia, meaning Tokopedia has a great deal to gain if it can continue to dominate the market.

Google+ shutdown brought forward following second data breach

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Following the second data leak in 2018, Google has announced it will shut down the consumer version of its flailing Google+ social network four months earlier than planned. Originally scheduled to cease operating in August 2019, the network will now close in April next year, with application planning interfaces due to lose access in 90 days.

An estimated 52.5 million users have been affected by the latest breach, according to the US tech giant. Names, email addresses and other personal information were visible to developers for six days during November, even if profiles were set to private.

Google has assured users that no financial information or passwords were visible and no third-party apps had access to the data

Google has assured users that no financial information or passwords were visible and no third-party apps had access to the data.

Back in October, Google acknowledged a privacy flaw that affected more than 500,000 users, leading to the initial announcement of the cessation of the Google+ service. The Wall Street Journal reported that Google withheld the discovery for six months, fearing reputational damage. CEO Sundar Pichai was aware of the plan not to disclose the data breach.

On December 11, Pichai was set to appear before the US House of Representatives for the first time, with data privacy likely to be high on the agenda. Governments around the globe have contemplated tougher regulations on tech giants such as Google and Facebook.

Accusations that Silicon Valley is a hostile place for conservative viewpoints will also need to be answered by the CEO. According to Pichai’s pre-prepared written testimony, the chief executive will argue that he leads the company “without political bias”.

While the most recent data breach has not caused significant damage, it represents another embarrassing incident for the Google+ service, widely regarded as one of the company’s greatest failures.

Launched in 2011 to rival Facebook, use of the service had fallen to near zero, one of the reasons cited by Google when it initially announced the shutdown. However, developing Google+ for businesses remains a priority, the company said.

How AI is reshaping marketing and sales

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The large-scale analysis of data has become customary in most areas of sales and marketing. Now, a new feature of AI, machine learning, is making its mark on corporate operations. With increasingly sophisticated techniques coming into play, marketing and sales teams have the opportunity to deliver massive value if they can translate AI’s potential into concrete change.

AI is the ability of a machine to perform cognitive functions we associate with human minds, such as perceiving, reasoning, learning, interacting with the environment, problem solving and even exercising creativity. Examples of technologies that enable AI to solve business problems are robotics and autonomous vehicles, computer vision, virtual agents and machine learning.

The more data a company has, the more AI applications are possible and the more specialists are needed to develop them

AI is already used in numerous sectors, particularly consumer businesses that have been collecting large volumes of diverse customer data for a considerable time, allowing the development of particularly effective AI systems.

Emerging trends
AI is driving three megatrends in sales and marketing: automation, forecasting and personalisation. These are the areas where marketing leaders should focus their energies to build capabilities

Automation allows machines to make decisions, or at least to assist human decision-makers. Typical examples include dynamic pricing and systems for product recommendations. Automation is currently particularly relevant in online retail and has clear disruptive potential. This will only become more pronounced as technology evolves to make completely independent decisions.

Forecasting depends on having a strong set of historical data to feed AI, which can then find patterns and develop models for future scenarios. In this way, we can predict typical customer behaviour, such as purchase decisions or patterns of fraud. These systems are not static; they are always learning and adapting to new data contexts.

Personalisation refers to the application of forecast results to tailored customer segments and individuals. Using comprehensive customer information, the system analyses each person to make carefully targeted, personalised promotions, products and price offerings.

Real-world application
One application of AI might work as follows: a department store chain wants to boost sales in its cosmetic department and decides to provide more tailored information about the offering to its customers.

Using data gathered from loyalty cards, it develops an AI system to identify purchase patterns for each customer and predict their future needs. For example, a customer might tend to buy a certain perfume if they have selected their shower gel shortly beforehand.

Using this information, the company could send the customer a newsletter featuring products that are tailored to their purchase behaviour. AI systems then learn from customer responses and adjust messages and subsequent offers accordingly.

This results in more relevant offerings for customers and an increase in customer satisfaction, leading to higher sales.

AI is particularly powerful in this context because it is able to execute such a scenario on a large scale, meaning it can deliver personalised marketing to every consumer.

Reaping rewards
To exploit the benefits of AI, organisations should focus on three areas: data strategy, data expertise, and marketing and commercial talent management.

First, it’s important to develop a clear data strategy. It is only possible to develop effective AI systems when we have a sufficient volume of data. As such, key questions must be answered: how can we collect more customer data even faster? How can we safeguard data quality and eliminate bias? How can we achieve this without breaching compliance or data protection regulations?

Second, we must look at the recruitment of AI and data experts. The more data a company has, the more AI applications are possible and the more specialists are needed to develop them. Businesses should hire experts in a range of fields, such as data engineering, data science and software development, to be sure that AI systems function effectively and produce useable results.

Third, we must consider the initial training and ongoing professional development of ‘traditional’ sales and marketing staff. It is up to these employees to convert the results produced by AI systems into added value.

This is often the point at which employees are not motivated to exploit the opportunities offered by AI systems. An important goal should be to train marketing and sales teams so they understand enough about data analysis to translate entrepreneurial problems into AI questions and can then convert the corresponding results into better decisions and actions.

As processing power and data harvesting develop, AI systems will become smarter. But how effective those systems are depends on how well organisations can generate answers and act on them to build commercial value.

Top 5 considerations for SMEs adopting end-to-end business management solutions

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Agile SMEs pose a real threat to larger businesses because they can adapt quickly to change. However, they are often held back by the complex spreadsheets and unimaginative accounting software they use to track financial and operational data.

But digital developments and cheaper, more user-friendly cloud solutions are enabling SMEs to create smarter business processes.

The need to change business management systems often stems from a combination of pain points, but one common denominator is growth

The need to change business management systems often stems from a combination of pain points, but one common denominator is growth. SMEs regularly outgrow their existing systems because they cannot be scaled in line with growth or support increasing numbers of users.

Vendors are now tailoring their end-to-end business management solutions to fit the growth needs of SMEs. In doing so, they are introducing more advanced capabilities focused on unlocking greater insights and minimising deployment costs.

As a result, cost-effective solutions that can take on additional users and scale up to handle larger volumes of data are not just an aspiration, but a possibility. To help turn that possibility into a reality for SMEs, The New Economy outlines five key features to consider when selecting an end-to-end solution.

1. The Internet of Things
The average cost of Internet of Things (IoT) sensors is falling year-on-year and is set to continue to drop. In the past, IoT technology was associated with larger enterprises, but SMEs are starting to reap the benefits too.

In the manufacturing sector, for example, the implementation of IoT sensors on equipment enables employees to monitor the conditions of assets, uptime and operational efficiency. These sensors generate data streams that can be analysed to point out when equipment is likely to malfunction and proactively arrange maintenance.

As a result, maintenance is only carried out when necessary, avoiding the cost of scheduled maintenance and downtime caused by equipment breakdown.

2. Cloud software
Cloud-hosted business management solutions accelerate deployment and reduce the burden of managing and adapting infrastructure. This allows SMEs to focus on day-to-day processes and customer service, while also minimising the risk of disruption to ongoing business operations.

Cloud-based solutions can be deployed in the space of just 10 days – this includes training, implementation and going live – but offers more than just a quick rollout. Extensions can be added to the core platform in minutes.

This is beneficial to SMEs if they require sales orders to be presented in a specific format or need to quickly introduce cross-sell functionality.

3. Business intelligence tools
The evolution of business management systems has taken away the need for time-consuming spreadsheet analysis to identify patterns and trends, causing the gap between large businesses and SMEs to narrow.

Business intelligence (BI) tools can be embedded into customer relationship management, sales and marketing systems and enable decisions to be made in real time.

Integrated BI and advanced data analytics deliver insights to business leaders, helping them make informed choices or quickly respond to changes in the business environment. Data-driven decisions made by SMEs are now on par with their larger competitors.

4. Support growth
As businesses grow, supporting infrastructure must scale accordingly or a breakdown in operations becomes a real risk. Scalability cannot be underestimated by SMEs, meaning subscription-based models are becoming a popular choice.

This eliminates the need to continually purchase, transfer or renew licences to guarantee the workforce has access to the necessary business software. It takes away the risk of overspending on licences and allows new users to be added and removed quickly and easily.

5. Work with your budget
A subscription-based business management solution delivered from the cloud presents a risk-free alternative to spreadsheets and old-fashioned financial systems. SMEs with stricter budgets are not limited in terms of reaching their potential, providing they are willing to embrace this technology.

Today’s business management solutions offer rich feature sets and high adaptability for minimal outlay, meaning SMEs can compete with corporate powerhouses. Actively connecting people, processes and systems allows important decision-makers to boost productivity and take a hands-on approach to business management.

Choose wisely
To keep up with digital developments and maintain a competitive edge, businesses should steer clear of selecting multiple systems to address different business areas. The chosen end-to-end solution needs to meet multiple business needs, structuring processes and workflows.

The five factors detailed are key to choosing a business solution that maps on to your business rather than one your business has to fit into. If SMEs are to take advantage of disruptive technologies, compete and be successful, a comprehensive business management solution is essential.

Huawei CFO arrested in Canada following US extradition request

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On December 5, Canadian officials confirmed they had arrested Meng Wanzhou, the CFO of technology firm Huawei, following a US extradition request. Despite the fact that US President Donald Trump and his Chinese counterpart Xi Jinping recently agreed a 90-day trade truce, the arrest has sparked fears that economic conflict between Washington and Beijing could be reignited.

Meng, who is the daughter of Huawei founder Ren Zhengfei, was detained while changing flights in Vancouver on December 1. Details of the arrest haven’t been released yet, but sources told Reuters that US authorities have been probing Huawei since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanction laws.

US authorities have been probing Huawei since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanction laws

In a statement released on Twitter, Huawei said: “The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng. Huawei complies with all applicable regulations where it operates, including applicable export control and sanction law and regulations of the UN, US and EU.” The company added that it believes the Canadian and US legal systems will ultimately reach a just conclusion.

A spokesperson for the Chinese foreign ministry appealed to both the US and Canada for clarification on the reasons for detention. They stated that they “resolutely opposed the arrest” and called for Meng’s immediate release. Canada’s Department of Justice confirmed that a court hearing has been set for December 7.

Meng joined Huawei in 1993 and serves as a deputy chair alongside her CFO role. Her arrest comes days after Australia and New Zealand blocked the use of the Shenzhen-based firm’s equipment for new 5G mobile networks following pressure from the US.

Ren had previously been a People’s Liberation Army soldier before founding Huawei. The US fears he has retained close ties with China’s security services, an accusation the firm has strenuously denied.

US stock futures and shares in Asia plunged as news of Meng’s detention circulated. With the US and China now having 90 days to formulate an agreement on trade, the arrest comes at a sensitive time for global markets, which had briefly experienced an upturn as a result of the truce.

Potential sanctions on the world’s second largest smartphone maker, however, could have major repercussions for global technology supply chains.