China's output growth slows; inflation fears mount in the US and UK: Economic wrap

China's output growth slows; inflation fears mount in the US and UK: Economic wrap
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Updated 18 October 2021

China's output growth slows; inflation fears mount in the US and UK: Economic wrap

China's output growth slows; inflation fears mount in the US and UK: Economic wrap

China's GDP annual growth in the third quarter fell to its lowest level in a year, with the powerhouse recording a 4.9 percent increase compared to 7.9 percent in the previous three months, according to official data.

This was mainly due to the impact of energy shortages, supply chain bottlenecks, major fluctuations in the real estate market and increased pressures on policy makers. 

Meanwhile, the January-September annual growth rate was a remarkable 9.8 percent.

China’s industrial production

The country’s industrial production growth also slowed to a 3.1 percent annual rate in September, compared to the 5.3 percent jump in the previous month. Official data showed that production declined noticeably for cements and automobiles as they fell by 13 percent and 13.7 percent respectively.

For the first 9 months of 2021, industrial output went up by a significant 11.8 percent year-on-year.

Chinese unemployment

China’s urban unemployment rate recorded its lowest level in 33 months as it declined to 4.9 percent in September down from 5.1 percent in August, data from China’s National Bureau of Statistics revealed.

In the first 3 quarters of this year, China has created 10.45 million jobs, slightly below its 11-million target for the whole year.

Supply chain disruptions and inflation fears in the UK and US

A survey of chief financial officers in major British companies revealed that supply chain problems could well persist beyond 2021. 

A majority of the surveyed CFOs think the annual price inflation will continue to be above 2.5 percent in the next two years.

Moreover, a survey of economists in the United States, carried out by The Wall Street Journal, showed that they expect the country to grapple with mounting inflationary pressures into 2022. Again, this is fuelled by global supply chain bottlenecks.

They expect inflation to reach around 5.25 percent in December.

Singapore's non-oil domestic exports

Singapore's non-oil domestic exports increased by 12.3 percent year-on-year in September 2021, jumping steeply from a 2.7 percent growth in the previous month, Statistics Singapore said. 

This was the tenth consecutive month of increase in non-oil domestic exports and was driven by a noticeable recovery in sales of non-electronic products while sales of electronic products continued their increasing trend.


Saudi Aramco invests $5.5m in fintech startup Lamaa

Saudi Aramco invests $5.5m in fintech startup Lamaa
Updated 11 sec ago

Saudi Aramco invests $5.5m in fintech startup Lamaa

Saudi Aramco invests $5.5m in fintech startup Lamaa

RIYADH: Fintech startup Lamaa secured a $5.5M seed round led by Raed Ventures and Saudi Aramco’s entrepreneurship arm Wa’ed, according to a statement.

Lamaa, a Riyadh-based fintech startup which provides invoice financing solutions for small and medium sized enterprises, has announced it has secured one of the largest seed funding rounds in the Kingdom.


Grab’s $40bn Nasdaq debut to set tone for Southeast Asian tech listings

Grab’s $40bn Nasdaq debut to set tone for Southeast Asian tech listings
Image: Shutterstock
Updated 02 December 2021

Grab’s $40bn Nasdaq debut to set tone for Southeast Asian tech listings

Grab’s $40bn Nasdaq debut to set tone for Southeast Asian tech listings
  • Grab’s listing brings a payday bonanza to early backers such as Japan’s SoftBank and Chinese ride-hailing giant Didi Chuxing

Grab, Southeast Asia’s biggest ride-hailing and delivery firm, makes its market debut on Thursday after a record $40 billion merger with a special purpose acquisition company (SPAC), in a listing that will set the tone for other regional offerings.


The backdoor listing on Nasdaq marks the high point for the nine-year-old Singapore company that began as a ride-hailing app and now operates across 465 cities in eight countries, offering food deliveries, payments, insurance and investment products.


The biggest US listing by a Southeast Asian company follows Grab’s April agreement to merge with US tech investor Altimeter Capital Management’s SPAC, Altimeter Growth Corp. and raise $4.5 billion, including $750 million from Altimeter.


There is scope for many players in the fragmented food delivery and financial services markets in Southeast Asia, a region of 650 million people, but the road to profitability could be a long one, analysts say.


Grab’s flotation “will provide a bigger cash buffer” to its “cash burn,” S&P Global Ratings said in a note. But the company’s “credit quality continues to be constrained by its loss-making operations, and free operating cash flows could be negative over the next 12 months.”


Southeast Asia’s Internet economy is forecast to double to $360 billion in gross merchandise value by 2025, prompting Grab’s rivals, including regional Internet firm Sea Ltd. and Indonesia’s GoTo Group, to bulk up.


GoTo plans a local IPO in 2022 after completing an expected $2 billion private fundraising, sources have told Reuters. A US listing will follow the Jakarta offering.


“Longer term, we’re really excited about Grab Financial Group,” a unit of the company, said Chris Conforti, partner at Altimeter Capital. “I think the bell curve on that is much wider in terms of what the outcome could be, but it could be extremely large.”

Grab was founded by Anthony Tan, its chief executive, and Tan Hooi Ling, who developed the firm from an idea for a Harvard Business School venture competition in 2011. The two Tans are not related.


CEO Tan, 39, expanded Grab into a regional operation with a range of services, after launching it as a taxi app in Malaysia in 2012.

It later moved its headquarters to Singapore.


“What we have shown to the world is that home grown tech companies can develop great technology that can compete globally, even when international players are in town,” Tan told Reuters in an interview on Wednesday. “We can compete and win.”


He will end up with 60.4 percent voting rights along with Grab’s co-founder, and president Ming Maa, but control only 3.3 percent stake with them.


To mark the New York listing, Grab and Nasdaq will hold a bell-ringing in a luxury hotel in Singapore in the middle of the Asian night. About 250 people, including executives from the exchange, Grab’s investors and other partners are to attend.


Grab’s listing brings a payday bonanza to early backers such as Japan’s SoftBank and Chinese ride-hailing giant Didi Chuxing, which invested as early as 2014.


They were later joined by the likes of Toyota Motor Corp. , Microsoft Corp. and Japanese megabank MUFG .

Uber became a Grab shareholder in 2018 after selling its Southeast Asian business to Grab following a five-year battle.


In September, Grab cut its full-year adjusted net sales forecasts, citing renewed uncertainty over pandemic curbs on movement.


Third-quarter revenue fell 9 percent from a year earlier and its adjusted loss before interest, taxes, depreciation, and amortization (EBITDA) widened 66 percent to $212 million.

GMV in the quarter rose to a record $4 billion.


It aims to turn profitable on an EBITDA basis in 2023.


JPMorgan and Morgan Stanley were the lead placement agents on the fundraising, while Evercore and UBS were the co-placement agents.


Outlook for the Saudi market seems uncertain as first Saudi omicron case confirmed: Pre-market

Outlook for the Saudi market seems uncertain as first Saudi omicron case confirmed: Pre-market
Updated 02 December 2021

Outlook for the Saudi market seems uncertain as first Saudi omicron case confirmed: Pre-market

Outlook for the Saudi market seems uncertain as first Saudi omicron case confirmed: Pre-market

RIYADH: COVID’s new variant has left the Saudi stock market prone to volatility in response to adverse headlines.

On the confirmation of the first Saudi omicron case, Saudi’s main indexes, TASI and Nomu, are expected to see a decline in gains after increasing slightly yesterday.

Saudi Tadawul Group’s IPO subscription period ends today. Price ranges from SR95 ($25) to SR105 per share.

Sadr Logistics’ shareholders approved the board of directors’ recommendation to raise SR175 million through a rights issue worth SR150 million to expand its logistics services, according to a bourse filing.

Sadr’s announcement is expected to lead the shares even higher, after increasing by 8.66 percent yesterday.

Wafrah for Industry and Development Co. announced the submission of the increase of the Company’s capital SR154 million by offering rights issues to the Capital Market Authority.

Saudi Fransi Capital revised the terms and conditions of Bonyan REIT, allowing subscription of non-Saudi investors.

Al Gassim Investment Holding Co. announced the amendment of the company’s zakat returns for the years 2014 to 2018 to settle income disputes in Riyadh.

Saudi’s HSBC rebalanced the bank’s MSCI Tadawul 30 ETF Fund’s basket.

Saudi Paper Manufacturing Co.’s board of directors appointed Alinma Investment Company as the financial advisor for its previously announced right issues offering.

Al Sagr Insurance narrowed its net losses to SR69.2 million in the first 9 months of 2021, in contrast to SR80.9 million in the prior year.

Banan Real Estate signed a full lease contract worth SR10 million for a company-owned property in an effort to grow the company’s revenue.


Russia gas no quick fix for European spot market: Analysts

Russia gas no quick fix for European spot market: Analysts
Updated 02 December 2021

Russia gas no quick fix for European spot market: Analysts

Russia gas no quick fix for European spot market: Analysts

MOSCOW: The longer the prices for natural gas remain at record high levels in Europe this year, the stronger the markets feel that Russian gas should not be seen as a quick fix to the problem, at least not before this winter ends.
“Overall gas production in Russia over the three quarters of 2021 was 12 percent and 2.6 percent higher than a year ago and in 2019. But it was not adequate to raise the supply to the EU immediately,” analysts at Bloomberg NEF said in a note dated Oct. 12.
The fundamentals have changed now. Ronald Smith, executive director and senior oil and gas analyst at Moscow-based BCS Global Markets, explained to Arab News in an emailed message: “In 2021, domestic demand in Russia has gone up substantially on a year-on-year basis. This is at least partially due to the weather, as 2020 was perhaps the warmest year on record, and 2021 has been pretty close to the 10-year norm.”
“There was a strong request to refill domestic storage in Russia before the heating season starts on Nov.1,” Smith added.
Given the pandemic circumstances, Putin’s administration didn’t want to take any chances. As a result, Russia turned up among “bottom 5" gas exporters whose shipments abroad in the third quarter of 2021 fell the most in absolute terms from the same quarter of 2019, according to a presentation by US-based Cheniere Energy, Inc. at an EIA event on Nov. 16.
Gazprom is also facing capacity constraints. “The company is currently producing 1.5 billion cubic meters per day. That is effectively 100 percent of the capacity. They might be able to manage 1.55 bcm/d, but not for very long, and that needs to be reserved for when the weather actually gets cold, say, -20C in Moscow and -5C in Frankfurt,” Smith told Arab News.
Responding to Arab News question how big the size of the increase in Gazprom shipments to Europe could have been over the next 3 months, had Nord Stream 2 regulatory issues been resolved, the analyst said: “Not much at this point unless Gazprom is willing to take gas out of Russian storage, which is full at this time.”
There seems to be a consensus view among industry experts that high gas prices in Europe this year is a result of a confluence of multiple things such as abnormal weather, a drop in European production, competition with Asia over the limited supply of LNG and the “green push.”
Spot prices for natural gas in Europe rose 41 percent during November. On Nov. 30, the front-month Dutch TTF Gas Futures, a European price benchmark, with delivery during January 2022, closed down 1 percent from the previous day at €92.5 after it jumped by more than 5 percent in early morning trading, according to data on Intercontinental Exchange, Inc. website.


US oil pares gains after weekly fuel stockpiles jump

US oil pares gains after weekly fuel stockpiles jump
Updated 01 December 2021

US oil pares gains after weekly fuel stockpiles jump

US oil pares gains after weekly fuel stockpiles jump
  • A new coronavirus variant triggered fresh travel restrictions that could dampen oil demand
  • White House was still studying proposals from Democratic lawmakers to ban crude oil exports to keep US prices down

DUBAI: West Texas Intermediate (WTI) crude oil futures slipped on Wednesday, reversing course from early gains after a US official said the country was still considering tools to lower energy prices, and as government data pointed to weaker gasoline demand.
Also pressuring oil prices, a new coronavirus variant triggered fresh travel restrictions that could dampen oil demand. Also, an OPEC+ document showed the group lifting its forecast for an oil surplus in the new year.
WTI US crude futures were down 51 cents, or 0.76 percent, at $65.77 a barrel at 1:49 p.m. ET (1849 GMT). During the session, they were up as much as 4 percent.
Global benchmark Brent crude was down 24 cents, or 0.36 percent, at $68.99 a barrel.
US Deputy Energy Secretary David Turk said the Biden administration could adjust the timing of its planned release of strategic crude oil stockpiles if global energy prices drop substantially.
He added that the White House was still studying proposals from Democratic lawmakers to ban crude oil exports to keep US prices down.
US gasoline stocks rose 4 million barrels last week to 215.4 million barrels, government data showed, far surpassing analysts’ expectations in a Reuters poll for 29,000-barrel rise. Distillate stockpiles increased 2.2 million barrels to 123.9 million barrels, versus expectations for a 462,000-barrel build.
Crude inventories fell 910,000 barrels in the week, data showed, compared with forecasts for a 1.2 million-barrel drop.
The Organization of the Petroleum Exporting Countries concluded its meeting without a decision on whether to release more oil into the market.
The OPEC+ alliance, which includes Russia and other producers, will likely take a policy decision on Thursday. Reports and analysts suggested that expectations were growing that the group will take a pause due to the threat from a new virus variant.
“There is much to suggest that OPEC+ will not initially step up its oil production any further in an effort to maintain current prices at around $70/bbl,” PVM analyst Stephen Brennock said.
OPEC+ sees the oil surplus growing to 2 million barrels per day (bpd) in January, 3.4 million bpd in February and 3.8 million bpd in March next year, an internal report seen by Reuters showed.
Several OPEC+ ministers, though, have said there is no need to change course. But even if OPEC+ agrees to go ahead with its planned supply increase in January, producers may struggle to add that much.
Both Brent and WTI front-month contracts in November posted their steepest monthly falls in percentage terms since March 2020, down 16 percent and 21 percent respectively.
Analysts at Goldman Sachs called the decline in oil prices “excessive,” saying “the market has far overshot the likely impact of the latest variant on oil demand with the structural repricing higher due to the dramatic change in the oil supply reaction function still ahead of us.”