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 tourism ministry signs deals to boost localization program

 Saudi Arabia’s Ministry of Tourism signs two agreements. (Twitter/@Saudi_MT)
Saudi Arabia’s Ministry of Tourism signs two agreements. (Twitter/@Saudi_MT)
Updated 20 May 2022

Saudi tourism ministry signs deals to boost localization program

 Saudi Arabia’s Ministry of Tourism signs two agreements. (Twitter/@Saudi_MT)

RIYADH: Saudi Arabia’s Ministry of Tourism has signed two agreements to enhance joint cooperation and support training and localization programs to qualify those wishing to work in the hospitality sector.
The move, which aims to support workers in the food, beverage and accommodation sectors, in support of achieving the Kingdom’s’ tourism human capacity development strategy.
Bandar bin Mohammed Al-Safir, director general of training and localization at the ministry, stressed that these two agreements aim to develop human resources in the tourism sector through quality training programs that will contribute to developing localized skills in the tourism sector.
Under the two agreements, which were signed with Kempinski Al-Othman Hotel and Carlton Al-Moaibed Hotel, the ministry will support dualifying Saudi nationals in the tourism sector within the “Your Future has Arrived” initiative.


Venture capital and microfinance firms should focus on startups, says Al Ahli Holding Group CEO

Venture capital and microfinance firms should focus on startups, says Al Ahli Holding Group CEO
Updated 19 May 2022

Venture capital and microfinance firms should focus on startups, says Al Ahli Holding Group CEO

Venture capital and microfinance firms should focus on startups, says Al Ahli Holding Group CEO

DUBAI: Mohamed Khammas, CEO of Al Ahli Holding Group, said that startup businesses are an excellent opportunity for investment in venture capital funds and microfinance banks.

During an interview with Arab News at the Top CEO event in Dubai, Khammas Mohamed Khammas, CEO of Al Ahli Holding Group, highlighted that startups are a good investment idea because the “ticket size is smaller, and the product ranges are higher.”

Khammas pointed out the risks that arise for startups are not in their early stages but rather when they become successful.

“The challenge is not when they’re trying to have a major impact on the economy; the problems occur when they become successful. All of those are calculated risks,” he said.

Khammas continued to add that regardless of these risks, investing in new, innovative startups is “absolutely the best opportunity.”

Also, during his talk at the event, Khammas  urged banks to fund new and innovative products and ideas in the area after he shed light on how banks are hesitant to invest in creative ideas.


Futurist says ‘virtual economies are already worth $130 billion'

Futurist says ‘virtual economies are already worth $130 billion'
Updated 20 May 2022

Futurist says ‘virtual economies are already worth $130 billion'

Futurist says ‘virtual economies are already worth $130 billion'
  • Investing in video games more rewarding than Metaverse: Raford

DUBAI: Even though the business world is increasingly fascinated by the Metaverse, Noah Raford, futurist-in-chief and chief of Global Affairs at Dubai Future Foundation, claimed games, Web3 and virtual economies is where the smart money is.

While speaking at the Top CEO event in Dubai, Raford argued that people should invest in video games, as it is the only successful digital economy so far.
In a statement to Arab News a day after the event, he said: “The metaverse has extraordinary potential and Dubai is moving rapidly to take advantage of it. Virtual assets and digital economies are a huge growth area. There is a lot of hype and wasted investment, but the best examples at the moment are video games and in-game virtual economies – especially connected to NFTs & Web3.”
Fady Kassatly, partner of Enterprise Solutions and Cloud, KPMG, said the Metaverse is nothing but the next evolution, which will make people live differently.

He also added the Metaverse is going to evolve quickly in different directions, and this is just the beginning of the journey.

On his part, Philippe Blanchard, founder of Futurous, stated the Metaverse will change the relationship between humans and nature.

Predicting an inevitable Metaverse future, Valerie Hawley, director of Sorbonne Center for Artificial Intelligence, said every business will look at the Metaverse space and consider using it in the coming years.

She also added the Metaverse is a projection of the world that humans would like to live in.


Egypt’s central bank, citing inflation, hikes interest rates 200 bps

Egypt’s central bank, citing inflation, hikes interest rates 200 bps
Updated 19 May 2022

Egypt’s central bank, citing inflation, hikes interest rates 200 bps

Egypt’s central bank, citing inflation, hikes interest rates 200 bps

CAIRO: The Central Bank of Egypt on Thursday raised its overnight interest rates by 200 basis points, seeking to contain inflation expectations after prices soared by their quickest in three years.

The bank’s Monetary Policy Committee increased the deposit rate to 11.25 percent from 9.25 percent and the lending rate to 12.25 percent from 10.25 percent, it said in a statement accompanying the decision.

It cited an increase in annual urban inflation to 13.1 percent in April from 10.5 percent in March, its highest since May 2019.

Prices were pushed up in part by a currency depreciation and higher wheat prices after the Ukraine crisis, the statement added.

“The MPC decided that raising policy rates is necessary to contain inflationary pressures which is consistent with achieving price stability over the medium term,” it said.

“The elevated annual headline inflation rate will be temporarily tolerated relative to the CBE’s pre-announced target” of between 5 percent and 9 percent before declining after the fourth quarter, it said.

Eighteen analysts polled by Reuters had expected the bank to raise the median deposit rate to 11 percent and its lending rate to 12.25 percent.


Eight injured in S. Korea’s S-Oil Ulsan refinery

Eight injured in S. Korea’s S-Oil Ulsan refinery
Updated 19 May 2022

Eight injured in S. Korea’s S-Oil Ulsan refinery

Eight injured in S. Korea’s S-Oil Ulsan refinery
  • Aramco Overseas Co., a subsidiary of Saudi Aramco, is S-Oil’s major shareholder

RIYADH: At least eight workers were injured in an explosion at an S-Oil refinery in Ulsan on Thursday, reported The Korean Herald.

Aramco Overseas Co., a subsidiary of Saudi Aramco, is S-Oil’s major shareholder. According to the local media, firefighters were notified of an explosion at the S-Oil refinery at 8:52 p.m. The facility is situated some 400 km southeast of Seoul.

The injured workers were shifted to a nearby hospital. The exact cause of the accident has yet to be determined. The Korean Herald quoted fire authorities as saying “the accident occurred inside S-Oil’s refinery at Onsan industrial park while crude oil was being processed into petroleum.”

The injured workers who were transferred to the hospital are being treated for second-degree burns to the face and the palms, according to authorities. S-Oil is the third-largest oil refiner in Korea.

The firefighters at the refinery appeared to be having trouble fighting the blaze, according to local reports.