Oil rises above $62 on hopes for US-China trade deal

Women walk past a wall displaying Chinese and Western graffitis outside a shopping mall in Shenzhen, China’s Guangdong province. (AP)
Updated 08 November 2019

Oil rises above $62 on hopes for US-China trade deal

  • Hopes rise for end to tariff dispute that has weighed on economic growth and demand for fuel

LONDON: Oil rose above $62 a barrel on Thursday after China hinted at progress toward a trade deal with the US, raising hopes for an end to a long dispute that has weighed on economic growth and demand for fuel.

China and the US have agreed in the past two weeks to cancel tariffs in different phases, the Chinese Commerce Ministry said on Thursday.

The trade dispute has
prompted analysts to lower forecasts for oil demand and raised concerns that a supply glut could develop in 2020. Oil fell on Wednesday, partly because of worries that a US-China trade deal might be delayed.

“Today we start with a different set of headlines that they came to some agreement on the framework,” said Olivier Jakob, oil analyst at Petromatrix. “That is definitely what is supporting prices.”

Brent crude, the global benchmark, rose 76 cents to $62.50 a barrel by 1444 GMT after settling down $1.22 on Wednesday. West Texas Intermediate crude climbed 92 cents to $57.27.

Beijing’s comments boosted market sentiment, which had also been ruffled by Wednesday’s US government supply report showing crude inventories rose last week by 7.9 million barrels, much more than expected by analysts.

Brent has rallied 15 percent in 2019, supported by a deal between the Organization of the Petroleum Exporting Counties and allies such as Russia to limit supplies until March next year. The producers meet on Dec. 5-6 in Vienna to review the policy.

OPEC Secretary-General Mohammad Barkindo said this week he was more optimistic about the outlook for 2020 because of developments on trade disputes, appearing to downplay any need to cut output more deeply.

Still, doubts about a trade deal could resurface, analysts said. Reuters reported on Wednesday a meeting between US President Donald Trump and Chinese President Xi Jinping to sign the deal could be delayed to December, contributing to oil’s decline.

“Doubts are not yet turning into full-blown concerns,” said Craig Erlam, analyst at brokerage OANDA. “If a date isn’t set in stone soon though, that may come.”


Alibaba confirms huge Hong Kong public listing worth at least $13bn

Updated 19 min 55 sec ago

Alibaba confirms huge Hong Kong public listing worth at least $13bn

  • Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade
  • Alibaba Chief Executive Officer said the group wanted to participate in Hong Kong’s future

HONG KONG: Chinese technology giant Alibaba on Friday confirmed plans to list in Hong Kong in what it called a $13 billion vote of confidence in the turbulent city’s markets and a step forward in its plans to go global.
The enormous IPO, which Hong Kong had lobbied for, will come as a boost for authorities wrestling with pro-democracy protests that have tarnished the financial hub’s image for order and security and hammered its stock market.
Alibaba will offer 500 million shares at a maximum of HK$188 apiece to retail investors, the company said. The number eight is considered auspicious in China.
Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade after insurance giant AIA raised $20.5 billion in 2010.
Alibaba had planned to list in the summer but called it off owing to the city’s long-running pro-democracy protests and the China-US trade war. The US and China are now working on sealing a partial trade deal.
Daniel Zhang, Alibaba Chief Executive Officer, said the group wanted to “contribute, in our small way, and participate in the future of Hong Kong.”
“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” he said.
The firm’s shares are already traded in New York. A second listing in Hong Kong is expected to curry favor with Beijing, which has sought to encourage its current and future big tech firms to list nearer to home after the loss of companies such as Baidu to Wall Street.
In the statement, Zhang said that when Alibaba went public in 2014 it “missed out on Hong Kong with regret.”
Mainland authorities have also stepped up moves to attract such listings, including launching a new technology board in Shanghai in July.
The listing comes after the city’s exchange tweaked the rules to allow double listings, while Chief Executive Carrie Lam had also been pushing Alibaba’s billionaire founder Jack Ma to sell shares in the city.
“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said.
It has long been expected to launch a multibillion-dollar stock listing in Hong Kong but appeared to postpone the offering because of political and economic turmoil.
Hong Kong’s key Hang Seng Index rose 0.48 percent in morning trading following the announcement
Chinese shoppers set new records for spending on Monday’s annual 24-hour “Singles’ Day” buying spree, despite an economic slowdown in the country and the worries over the US trade war.
It said consumers spent $38.3 billion on its platforms over that stretch, up 26 percent from the previous all-time high mark set last year.
Alibaba also said it saw record amounts of cross-border sales, underlining its plans to expand globally.
“Globalization is the future of Alibaba Group. We firmly believe the marriage of digital technology and commerce will bring about unprecedented change that will not be limited by borders,” Zhang said.