China trade surplus surges despite economic weakness

Updated 10 January 2013

China trade surplus surges despite economic weakness

BEIJING: China’s trade surplus surged in 2012, but total imports and exports grew slowly owing to weakness at home and abroad, official data showed Thursday, while analysts warned of another tough year ahead.
The trade surplus in the world’s second-largest economy jumped 48.1 percent from the year before to a four-year high of $231.1 billion, the national customs bureau announced.
The increase was largely due to low growth in imports as a result of commodity prices declining last year. Total imports increased just 4.3 percent to $1.82 trillion, while exports rose 7.9 percent to $2.05 trillion.
And China’s total trade grew just 6.2 percent last year, well below the government target of about 10 percent.
Customs spokesman Zheng Yuesheng told reporters that “a sharply slowing world economic recovery, weak international market demand and rather big downside pressure on the domestic economy” weighed on the results.
China’s economic growth slowed for seven straight quarters to the end of September, while the broader global economy also faced weakness in 2012.
Data for the three months to the end of December are due at the weekend, while inflation figures will be released on Friday.
The European Union — China’s biggest trade partner — continued to suffer a prolonged debt crisis, and economic recovery in the United States, Beijing’s number two commercial counterpart, remained subdued.
Zheng added the negative factors hurting trade last year remain in place in 2013, though he still saw some reason for optimism, citing efforts to boost growth by China and other major economies.
“We expect trade growth in 2013 to be slightly better than 2012.”
The jump in the trade surplus — which in the past has been a source of friction with China’s commerce partners — was mostly a result of better terms of trade “due to lower commodity prices,” RBS economist Louis Kuijs said in a research note.
One bright spot was that exports and imports hit new single-month highs in December, rising 14.1 percent to $199.2 billion and six percent to $167.6 billion respectively, the figures showed.
Analysts, however, attributed the strong performance largely to one-off factors including better US data in the fourth quarter and rushed shipments by Chinese exporters at the year-end.
“Economic growth in developed economies may remain slow, so we think the challenges to China’s exports remain,” Sun Junwei, a Beijing-based economist with HSBC, told AFP.
“China’s economic recovery will depend on whether domestic demand will turn for the better.”
Analysts have expressed growing optimism that China’s economic growth accelerated in the final three months of last year, citing stronger recent data including retail sales, while manufacturing activity has also picked up.
Chinese authorities have said they are committed to rebalancing their economy more toward domestic demand factors such as consumer spending and away from exports.
Ren Xianfang and Alistair Thornton, economists with IHS Global Insight, said Chinese exporters could have another difficult year due to extended weakness abroad.
“With our projection for continued contraction in the eurozone and continued slowdown in the US economy, we believe China’s export sector will face another uphill battle this year — an even tougher one than 2012,” they said in a research note.
Total trade with Japan, the world’s third-largest economy, fell 3.9 percent to $329.45 billion in 2012, Zheng said, blaming most of the decrease on a weak Japanese economy.
But he added that a dispute between Beijing and Tokyo over small islands in the East China Sea that both claim but Japan controls “to some extent also had negative impact on the healthy development of China-Japan bilateral trade.”

NMC Health’s $450 million bond to boost Saudi expansion

Updated 10 min 50 sec ago

NMC Health’s $450 million bond to boost Saudi expansion

LONDON: The UAE-based private health care operator NMC Health has launched a $450 million senior unsecured guaranteed bond to help pay off an existing $1 billion bridge facility and support its expansion plans into Saudi Arabia.

The earlier bridging loan was part of the $2 billion capital structure refinancing put in place at the start of the year, the company said.

The bond is due in 2025 and is convertible into ordinary shares. JP Morgan is the sole bookrunner on the issuance. Bonds will have a fixed coupon rate of 1.875 percent, paid semi-annually.

The new capital structure — which will feature a mixture of unsecured bank and bond financing — will aid the company’s continued growth into Saudi Arabia, with NMC having been one of the first private health care providers to capitalize on the Saudi government’s health care privatization plans.

The company first secured a foothold in the Kingdom in 2016 after acquiring a 70 percent stake in As Salama Hospital in Al-Khobar.

Since then, NMC won regulatory approval last September for a new long-term care facility, the Chronic Care Specialty Medical Center, in Jeddah. It is though to be the first greenfield medical facility in the Kingdom to be set up by a non-Saudi company.

Earlier this year, NMC said it acquired an 80 percent stake in the Riyadh-based Al-Salam Medical Group.

NMC’s acquisition-led expansion strategy aims to ensure the company retains its recently-won place on London’s FTSE 100 index. It was one of the first Middle Eastern companies to join the index when it qualified last September. It first listed on the London Stock Exchange in 2012.

The company posted strong growth in the last year, reporting $209.3 million in net profit for 2017, an increase of 38.2 percent on the previous year. The company paid out a total of $641 million in acquisitions last year.

“2017 proved to be a year of tremendous achievements for NMC,” said the firm’s chief executive Prasanth Manghat, in a statement in March.

NMC also secured secured its first public ratings of BB+ with a stable outlook from S&P on April 20, while Moody’s gave the firm rating of Ba1 with a stable outlook on April 20, 2018. The bonds are not expected to be rated.

“The company continues to strive to meet self-imposed standards that are higher when compared to what is expected of it by various regulators. This approach supports in turn its resilient business model, loyal customer base, strong brand recognition and market leading position,” according to a statement from Moody’s Investors Service.

Investors are so far reacting favorably to NMC’s strategy, with the company closing at a record high on April 20, according to Bloomberg reports, with a market value of $10.8 billion.

The company is now one of 24 equities in the region to have achieved a market capitalization of more than $10 billion, the report said.

Healthcare is seen as a lucrative sector in the Gulf due to its relatively wealthy population becoming increasingly at risk of problems related to obesity and diseases such as type 2 diabetes.