China In-Focus — Shanghai stocks up; EV makers post weaker April sales; Services activity falls

China In-Focus — Shanghai stocks up; EV makers post weaker April sales; Services activity falls
China’s services sector activity contracted at the second-steepest rate on record in April, as COVID-19 curbs halted the industry. (Shutterstock)
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Updated 05 May 2022

China In-Focus — Shanghai stocks up; EV makers post weaker April sales; Services activity falls

China In-Focus — Shanghai stocks up; EV makers post weaker April sales; Services activity falls
  • Three of China’s most prominent electric-car makers posted a steep drop in April sales after strict measures to combat COVID-19 disrupted production and deliveries

BEIJING: Shanghai stocks rose in a holiday-shortened week, with consumers leading the gains on Thursday after the central bank pledged support to ensure ample liquidity.

However, sentiment was weak as surveys showed China’s economic activity had shrunk last month.

The Shanghai Composite Index closed 0.7 percent higher at 3,067.76 points, while the blue-chip CSI300 index fell 0.2 percent to 4,010.21.

Chinese EV makers post weaker April sales due to Covid disruptions

Three of China’s most prominent electric-car makers posted a steep drop in April sales after strict measures to combat COVID-19 disrupted production and deliveries, dampening one of the world’s fastest-growing markets for the vehicles.

Xpeng Inc., NIO Inc. and Li Auto Inc. plunged by 41.6 percent, 49 percent and 62 percent respectively in April versus March, data released by the companies this week showed.

Li Auto said its manufacturing took a major hit in April because 80 percent of its part suppliers are in Shanghai and surrounding areas, where the resurgence of COVID-19 disrupted the supply chain, logistics and production.

NIO said it had paused production at its factory in Hefei on April 9 because of supply chain disruptions.

Xpeng fared better than its rivals because its factory is in China’s southern province of Guangdong, where the COVID-19 situation has been stable and restrictions lighter than in Shanghai and Jilin.

But Xpeng Chief Executive He Xiaopeng warned last month that automakers across the country might have to suspend production if suppliers in Shanghai and surrounding areas were not able to resume work.

The Chinese government has said it is trying to solve transportation bottlenecks. Shanghai authorities have drafted a list of nearly 2,000 firms, including Tesla Inc. and SAIC Motor Corp. that have priority to resume production under so-called “closed-loop” management where workers are housed at the factory sites.

However, the output from firms on the Shanghai list remains low because of a lack of workers, said Chen Yudong, the president of auto supplier Bosch China.

Toyota Motor Corp. is due to release its April sales data from China on Monday, while Tesla’s China sales are set to be disclosed next week through industry association data.

China's services activity falls at second sharpest rate on record 

China’s services sector activity contracted at the second-steepest rate on record in April, as COVID-19 curbs halted the industry, leading to sharper reductions in new business and employment, a private-sector survey showed on Thursday.

The Caixin services purchasing managers’ index stood at 36.2 in April, the second-lowest since the survey began in November 2005 and down from 42 in March. The index hit a record low of 26.5 in February 2020 during the onset of the pandemic.

The 50-point mark separates growth from contraction on a monthly basis.

The pessimistic findings from the survey, which focuses more on small firms in coastal regions, are in line with the government’s official PMI, pointing to the fast deterioration in a key sector that accounts for about 60 percent of the economy and half of the urban jobs.

A sub-index for new business stood at 38.4, also the second-lowest on record and down from 45.9 the previous month, with services firms reporting the escalation of measures to contain the spread of COVID cases weighed heavily on customer demand at the start of the second quarter.

Employment also declined for the fourth straight month in April, although the drop was marginal, compared with sizeable falls in activity.

Input costs meanwhile rose at a solid pace but efforts by services firms to attract more business amid lacklustre demand drove a drop in prices charged, highlighting rising cost pressures facing services providers.

“Demand was under pressure, external demand deteriorated, supply shrank, supply chains were disrupted, delivery times were prolonged, backlogs of work grew, workers found it difficult to return to their jobs, inflationary pressures lingered, and market confidence remained below the long-term average,” said Wang Zhe, senior economist at Caixin Insight Group.

Caixin’s April composite PMI, which includes both manufacturing and services activity, slumped to 37.2 from 43.9 from the previous month.

The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.

(With input from Reuters) 


Abu Dhabi power transmission project secures $3.2bn financing

Abu Dhabi power transmission project secures $3.2bn financing
Updated 29 September 2022

Abu Dhabi power transmission project secures $3.2bn financing

Abu Dhabi power transmission project secures $3.2bn financing

DUBAI: Abu Dhabi Offshore Power Transmission Company has secured more than $3.2 billion in financing with export credit agencies and banks for an offshore electricity transmission project, the Japan Bank for International Cooperation said in a statement.

The financing is to build and operate a high-voltage direct current offshore power transmission system linking two offshore production facilities owned by state-controlled oil giant Abu Dhabi National Oil Company to Abu Dhabi’s onshore grid.

Japan Bank for International Cooperation provided $1.201 billion for the direct current transmission project. The remaining $2 billion was financed by Export-Import Bank of Korea, Mizuho, Sumitomo Mitsui Banking Corporation, BNP Paribas Fortis and Standard Chartered, JBIC said in the statement on Wednesday.

“The project will receive payment of power transmission charges from ADNOC for 35 years after the construction has been completed,” JBIC said.

ADNOC and JBIC signed a memorandum of understanding in November to cooperate on decarbonization, energy transmission and energy efficiency.

JBIC said the project was in line with the United Arab Emirates’ commitment in October last year to cut carbon dioxide emissions to net zero by 2050.


OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters

OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters
Updated 49 min 46 sec ago

OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters

OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters

DUBAI: Leading members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have begun discussions about an oil output cut when the group meets on Oct. 5, according to Reuters.

One OPEC source told Reuters a cut is “likely” and two other OPEC+ sources said key members had spoken about the topic. 

A source familiar with Russian thinking told Reuters earlier this week that Moscow could suggest a cut of up to 1 million barrels per day.

The latest comments suggest that key OPEC members have started communicating over the matter, although the volume of any potential cut is still unclear.

Next week’s meeting takes place against a backdrop of falling oil prices from multi-year highs hit in March, and severe market volatility.

OPEC+, which combines OPEC countries and allies such as Russia, agreed a small oil output cut of 100,000 barrels a day at its September meeting to bolster prices.

Top OPEC producer Saudi Arabia flagged in August the possibility of output cuts to address market volatility. 

Also at the group’s last meeting, OPEC+ members agreed to stick to their forecasts for robust global oil demand growth in 2022 and 2023, citing signs that major economies were faring better than expected despite headwinds such as surging inflation.

Oil demand will increase by 3.1 million barrels per day in 2022 and by 2.7 million bpd in 2023, unchanged from last month, OPEC said in its monthly report.

 


TASI extends gain as global recession fears fizzle out: Opening bell

TASI extends gain as global recession fears fizzle out: Opening bell
Updated 29 September 2022

TASI extends gain as global recession fears fizzle out: Opening bell

TASI extends gain as global recession fears fizzle out: Opening bell

RIYADH: Saudi Arabia’s main index rose in early trade on Thursday, extending gains from the previous session as investors brushed off fears of a global recession.

The Tadawul All-Share Index grew 1.22 percent to reach 11,306, while the parallel market Nomu started flat at 19,922, as of 10:08 a.m. Saudi time.

Saudi oil giant Aramco began with a 1.29 percent gain, while Rabigh Refining and Petrochemical Co. climbed 1.15 percent.

The Saudi National Bank, the Kingdom’s largest lender, increased by 1.46 percent, while Saudi British Bank rose 4.18 percent.

The Kingdom’s highest valued bank, Al Rajhi, went up 0.88 percent, while Alinma Bank gained 1.57 percent.

Saudi Basic Industries Corp. rose 0.34 percent, as it announced the resignation of its CEO Yousef Al-Benyan to serve as Education Minister, and appointed Abdulrahman Al-Fageeh as acting CEO.

Retal Urban Development Co. fell 0.14 percent, after it sold its 50 percent stake in a land plot in Al Khobar for SR113 million ($30 million).

Arriyadh Development Co. added 0.29 percent, after it declared a cash dividend of SR0.25 per share for the first half of 2022.

Ladun Investment Co. gained 0.78 percent, after it completed the process of acquiring raw lands in Riyadh.


Here’s what you need to know before Tadawul trading on Thursday

Here’s what you need to know before Tadawul trading on Thursday
Updated 29 September 2022

Here’s what you need to know before Tadawul trading on Thursday

Here’s what you need to know before Tadawul trading on Thursday

RIYADH: Saudi Arabia’s main index ended higher for a second session following a sharp drop earlier in the week sparked by economic concerns.

The Tadawul All-Share Index rose 1.39 percent to reach 11,120 at the end of Wednesday, while the parallel market Nomu rose 1 percent to 19,916.

Abu Dhabi’s main followed the Saudi trend to close 0.4 percent up to 9,740 on Wednesday.

In a different direction, Dubai’s and Kuwait’s indexes ended Wednesday in red, shedding 0.9 percent and 1.51 percent, respectively.

In energy trading, Brent crude traded at $88.35 a barrel and WTI crude reached $81.34 a barrel, as of 9:15 a.m. Saudi time.

Stock news

Yousef Al-Benyan, the CEO of SABIC, has resigned after being appointed Minister of Education by Royal Decree; accordingly, Abdulrahman Al-Fageeh was appointed as acting CEO for six months effective Sep. 28, 2022.

Saudi Azm for Communication and Information Technology Co. reported SR19 million ($5 million) in profit for the fiscal year ending June 30, 2022, an increase of 23 percent.

Alkhorayef Water and Power Technologies Co. raised credit facilities with Saudi British Bank to SR509 million.

Sumou Real Estate Co. signed an agreement with National Housing Co. to develop an area in Dammam for a total of SR305 million.

Leen Alkhair Trading Co. was approved by the Capital Markets Authority to register and offer 958,750 shares on the Nomu-Parallel Market.

Meshkati Trading Co. received approval from the CMA to offer 900,000 shares on the Nomu-Parallel Market.

Arriyadh Development Co. has declared a cash dividend of SR0.25 per share for the first half of 2022.

National Fertilizer Co. will distribute an interim cash dividend of SR1.5 to shareholders in the first half of 2022.

Retal Urban Development Co. has sold its 50 percent stake in a land plot in Al-Khobar for SR113 million.

Ladun Investment Co. said it completed the process of acquiring raw lands in Riyadh.


Saudi unemployment rate drops to 9.7% in Q2: GASTAT

Saudi unemployment rate drops to 9.7% in Q2: GASTAT
Updated 29 September 2022

Saudi unemployment rate drops to 9.7% in Q2: GASTAT

Saudi unemployment rate drops to 9.7% in Q2: GASTAT

RIYADH: The unemployment rate for Saudis decreased to 9.7 percent in the second quarter of 2022, a drop of 0.4 percentage points compared to the first quarter of 2022, according to data released by the General Authority for Statistics.

This comes as the labor force participation rate of Saudis increased by 1.7 percentage points to reach 51.8 percent, and the employment-to-population ratio of Saudis increased by 1.7 percentage points, reaching 46.8 percent compared to the last year, the GASTAT report added.

The unemployment rate among Saudi males decreased to reach 4.7 percent, dropping down by 0.3 pp from the first quarter of 2022.

“The decrease in the unemployment rate of Saudi males this quarter coincided with both an expansion of labor market participation and employment growth, where the participation rate went up by 1.5 percentage points to 67.5 percent and the employment-to-population ratio increased by 1.6 percentage points reaching 64.3 percent,” GASTAT said in the report.

In the second quarter of 2022, the unemployment rate of the Saudi Arabian total population was recorded at 5.8 percent, a drop of 0.2 percentage points compared to the first quarter of 2021, and down 0.8 percentage points compared to the second quarter of 2021.