China In-Focus — Asian giant’s stocks rise; Shandong port trader secures rare Russian oil deal; Toyota’s revenue slides

China In-Focus — Asian giant’s stocks rise; Shandong port trader secures rare Russian oil deal; Toyota’s revenue slides
The slower rise in the PPI was driven by government measures to stabilize commodity prices and increase supply
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Updated 11 May 2022

China In-Focus — Asian giant’s stocks rise; Shandong port trader secures rare Russian oil deal; Toyota’s revenue slides

China In-Focus — Asian giant’s stocks rise; Shandong port trader secures rare Russian oil deal; Toyota’s revenue slides
  • Tight restrictions have taken a toll on China’s economy with export growth slowing to its weakest in almost two years

BEIJING: China stocks rose on Wednesday as investors took comfort in signs of lower domestic COVID-19 infections, while US President Joe Biden’s decision to consider eliminating Trump-era tariffs on Beijing further stoked risk appetite.

The CSI300 index was up 2 percent at 4,000.00 points, by the end of the morning session, while the Shanghai Composite Index gained 1.6 percent to 3,085.43 points.

The Hang Seng index added 1.7 percent to 19,971.18 points. The Hong Kong China Enterprises Index gained 2.4 percent to 6,818.91.

China's Shandong port trader secures Russian oil deal

China’s Shandong Port International Trade Group, a provincial government-backed commodities and oil trader, has secured a rare shipment of Russian crude oil for arrival into east China this month, according to traders and a company statement.

This marks the first such deal under which a Chinese firm other than Beijing’s national oil giants has directly bought oil from a Russian supplier, as global oil majors and traders phase-out dealing in Russian oil to pressure Moscow over its invasion of Ukraine, which Moscow has called a “special operation.”

In a statement posted on the Shandong Port group’s official Wechat account on Tuesday, the company said a 100,000 ton (730,000 barrel) crude oil shipment loaded in recent days was scheduled to arrive at Shandong province in the middle of this month.

Trading sources who closely monitor Russian oil sales to China said the cargo size and the shipping voyage would indicate it is a cargo of ESPO blend, Russia’s flagship export-grade from its Far East port Kozmino.

A company representative declined to comment but said it had secured $85.5 million worth of credit from a Shanghai-based financial institution for the purchase, without mentioning the name of the lender.

Toyota's revenue dips

Toyota Motor Corp. on Wednesday reported a 33 percent fall in quarterly profit, as a sliding yen and solid demand failed to offset the impact of production disruptions caused by a global shortage of chips and China’s COVID restrictions.

The world’s biggest automaker by sales posted an operating profit of 463.8 billion yen ($3.56 billion) in the January-March quarter, well below an average estimate of 521.1 billion yen from seven analysts surveyed by Refinitiv.

It compares with a 689.8 billion yen profit in the same period a year earlier.

Cobalt, nickel, and lithium demand lowering in China

China’s COVID-19 outbreak is suppressing the country’s consumption of cobalt, nickel and lithium by disrupting transportation and cutting battery manufacturing, state-backed research house Antaike said.

Across China, automobile plants have reduced or even suspended production, Antaike said, as cities across the country battled to control the virus.

“There has been a relatively large impact on demand, partly because of a fall in battery orders and restrictions on domestic transportation,” said the research house.

One measure to control infection has been a limitation on movement of trucks.

Some producers of battery materials had slashed production by 15-40 percent, strongly reducing demand for their inputs, such as lithium, according to Antaike.

Production for other materials had also declined, it said. 

Output of refined cobalt in April was down 7 percent on March and Nickel cathode output last month was down 5.9 percent from March.

Despite current difficulties, the consultancy expects demand for the minerals to recover because factory activity will gradually return and because most vehicle producers are maintaining annual production targets.

It sees London Metal Exchange nickel prices in the near term fluctuating in the range of $26,000-35,000 per ton and lithium prices recovering from current lows.

China's factory inflation defies global surge

China’s factory-gate inflation eased to a one-year low in April as state-driven production efforts supported supply and COVID-19 lockdowns in key industries cooled demand.

Consumer prices rose at their fastest pace in five months as widespread lockdowns across major cities hit supplies of household items.

The producer price index rose 8.0 percent year-on-year, the National Bureau of Statistics said in a statement on Wednesday, slower than the 8.3 percent rise in March but faster than the 7.7 percent growth tipped by a Reuters poll.

“Producer price inflation will continue to drop back over the coming quarters,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

The slower rise in the PPI was driven by government measures to stabilize commodity prices and increase supply, NBS official Dong Lijuan said in a separate statement.

China’s state planner on Tuesday called for stabilising energy prices and an acceleration in oil and gas exploration and development.

Beijing has targeted daily coal production at 12.6 million tons this year and prioritized energy security in the wake of geopolitical uncertainties caused by the Ukraine conflict.

China’s economy slowed sharply at the beginning of the second quarter, as authorities imposed restrictions to stamp out COVID-19 outbreaks, with Shanghai currently in its sixth week of lockdown.

This led to a rise in the consumer price index, according to Dong.

The CPI gained 2.1 percent from a year earlier, the fastest pace in five months, partly due to food prices, which grew 1.9 percent from a year earlier, compared with a 1.5 percent drop in March.

Annual CPI growth remains well below the government’s annual target of 3 percent this year, a sign consumer price pressures remain relatively contained.

Tight restrictions have taken a toll on China’s economy with export growth slowing to its weakest in almost two years and factory activity contracting at a steeper pace in April.

The central bank said on Monday it would step up support for the real economy, while closely watching domestic inflation and monetary policy adjustments in developed economies. 

The PBOC cut the amount of cash that banks must hold as reserves in April with more modest easing steps expected.


Saudi Hail Cement’s shareholders approve treasury holding of 4.9m shares

Saudi Hail Cement’s shareholders approve treasury holding of 4.9m shares
Updated 10 sec ago

Saudi Hail Cement’s shareholders approve treasury holding of 4.9m shares

Saudi Hail Cement’s shareholders approve treasury holding of 4.9m shares

RIYADH: Saudi Hail Cement Co.’s shareholders approved the buyback of 4.9 million shares to keep them as treasury shares.

The shares will be held in treasury for up to 10 years, the cement producer said in a bourse filing.

The company said the financing of the purchase process will be done through its own resources, as well as its credit facilities.

 


SAIB closes issuance of $533m Sukuk aimed at fulfilling financial needs

SAIB closes issuance of $533m Sukuk aimed at fulfilling financial needs
Updated 14 min 13 sec ago

SAIB closes issuance of $533m Sukuk aimed at fulfilling financial needs

SAIB closes issuance of $533m Sukuk aimed at fulfilling financial needs

RIYADH: The Saudi Investment Bank, known as SAIB, has completed a private placement of Tier 1 Sukuk worth SR2 billion ($533 million) in a bid to meet the lender’s financial needs.

Denominated in Saudi Riyals, the Shariah-compliant bond is perpetual and has a rate of return of 6 percent to be paid semi-annually from the issue date, according to a bourse filing.

Alistithmar Capital acted as the lead manager and bookrunner of the offering, which aims to fulfill the bank’s financial and strategic needs and support its capital base.


SABIC Agri-Nutrients declares $508m dividends for H1

SABIC Agri-Nutrients declares $508m dividends for H1
Updated 40 min 43 sec ago

SABIC Agri-Nutrients declares $508m dividends for H1

SABIC Agri-Nutrients declares $508m dividends for H1

RIYADH: Saudi petrochemical firm SABIC Agri-Nutrients Co.’s board has decided to distribute SR1.9 billion ($508 million) in dividends for the first half of 2022.

The dividend payout will be SR4 per share, to be paid on Aug. 1 with almost 476 million shares eligible for dividends, the homegrown company revealed in a bourse filing.

Half owned by chemical giant SABIC, SABIC Agri-Nutrients had earlier posted a near six-fold jump in its quarterly profits, buoyed by a surge in sales.

Despite global logistic hurdles, net profit soared to SR2.5 billion in the first quarter of the year, compared to SR423 million in the same period a year ago.


Saudi Derayah REIT to restructure $200m financing for cost reduction

Saudi Derayah REIT to restructure $200m financing for cost reduction
Updated 47 min 14 sec ago

Saudi Derayah REIT to restructure $200m financing for cost reduction

Saudi Derayah REIT to restructure $200m financing for cost reduction

RIYADH: Derayah REIT’s board has approved restructuring the fund’s outstanding financing facility, which was valued at SR748 million ($200 million) by 2021-end.

According to a bourse filing, the fund manager, Derayah Financial, has agreed with a local bank to reschedule existing financing, with maturity staggered in 2026 and 2027.

As per the agreed terms, the profit spread will be reduced by 20 percent and the maturity will be extended to seven years from the restructuring date.

The move is aimed at cutting Derayah REIT’s financing expenses, which will have a positive impact on its financial results for the second half of the ongoing year.


SADAFCO shareholders approve $26m half-year dividend

SADAFCO shareholders approve $26m half-year dividend
Updated 54 min 10 sec ago

SADAFCO shareholders approve $26m half-year dividend

SADAFCO shareholders approve $26m half-year dividend

RIYADH: Saudia Dairy and Foodstuff Co.’s shareholders have approved the board proposal to distribute SR96 million ($26 million) in cash dividends for the second half of the fiscal year ended March 31, 2022.

Shareholders are set to receive SR3 for each share, the company said in a bourse filing

The dairy firm’s payout remained unchanged from the same period last year.

SADAFCO, based in Jeddah, operates sales and distribution centers in 24 locations across Saudi Arabia, Bahrain, Qatar, Jordan, and Kuwait.