China’s exports tumble in May as global demand falters 

China’s exports tumble in May as global demand falters 
China’s official purchasing managers’ index released last week showed factory activity shrank faster than expected in May. (Shutterstock)
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Updated 07 June 2023
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China’s exports tumble in May as global demand falters 

China’s exports tumble in May as global demand falters 

BEIJING: China’s exports shrank much faster than expected in May while imports extended declines with a grim outlook for global demand, especially from developed markets, raising doubts about the fragile economic recovery. 

The world’s second-largest economy grew faster than expected in the first quarter thanks to robust services consumption and a backlog of orders following years of COVID disruptions, but factory output has slowed as rising interest rates and inflation squeeze demand in the US and Europe. 

Exports slumped 7.5 percent year-on-year in May, data from China’s Customs Bureau showed on Wednesday, much larger than the forecast 0.4 percent fall and the biggest decline since January. Imports contracted 4.5 percent, slower than an expected 8.0 percent decline and April’s 7.9 percent fall. 

“The weak exports confirm that China needs to rely on domestic demand as the global economy slows,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “There is more pressure for the government to boost domestic consumption in the rest of the year, as global demand will likely weaken further in the second half.” 

Highlighting the extent of the weakness, the data shows trade was worse even than when the port of Shanghai, China’s busiest, was shut down due to strict COVID curbs a year earlier. 

The figures also add to a growing list of indicators that suggest China’s post-COVID economic recovery is quickly losing steam, bolstering the case for more policy stimulus. 

Demand Squeeze  

Asian stocks fell into the red after the data as did the yuan and the Australian dollar, a commodity currency that is highly sensitive to swings in Chinese demand. 

China’s post-pandemic stock rally has faded as small-time investors turn bearish on equities and double down instead on safer assets amid a stuttering economic recovery. 

The economy has been hit by a double whammy of faltering demand at home and abroad with the ripple effects felt across the region. 

South Korean data last week showed shipments to China slid 20.8 percent in May, marking a full year of monthly declines, with Korean semiconductor exports dropping 36.2 percent, suggesting weak demand for components for final manufacture. Chinese imports of semiconductors fell 15.3 percent, as the market for the consumer electronics exports that include such parts softened. 

Demand for raw materials broadly weakened with coal imports pulling back from the 15-month high hit in March, amid soft appetite from the power and steel sectors. Copper imports slid 4.6 percent in May from a year ago. 

China’s official purchasing managers’ index released last week showed factory activity shrank faster than expected in May. 

The PMI’s subindexes also showed factory output swung to contraction from expansion while new orders, including new exports, fell for a second month. 

While economic growth beat expectations in the first quarter, analysts are now downgrading their forecasts for the rest of the year, as factory output slows. 

The government has set a modest gross domestic product growth target of around 5 percent for this year, after badly missing the 2022 goal. 

“Looking forward, we think exports will fall further before bottoming out later this year,” said Julian Evans-Pritchard, head of China economics at Capital Economics. 

“Although interest rates outside of China are near a peak, the lagged impact from the sharp rate hikes is set to weaken activity in developed economies later this year, triggering mild recessions in most cases.”  


Islamic banks set to flourish in GCC: Moody’s

Islamic banks set to flourish in GCC: Moody’s
Updated 9 min 45 sec ago
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Islamic banks set to flourish in GCC: Moody’s

Islamic banks set to flourish in GCC: Moody’s

RIYADH: Against the backdrop of Gulf Cooperation Council countries’ economic diversification efforts, Islamic banks are poised to outperform their conventional counterparts in profit margins, as per a recent report by Moody’s Investors Service.

Fueled by stable oil prices and steadfast economic agendas, increased business activities within Islamic financial institutions over the next 12 to 18 months are anticipated in the GCC region.

In its latest report, the global credit rating agency forecast that the profitability margins of these Shariah-compliant banks will surpass those of traditional outfits in 2024, largely attributed to their inherent margin advantage.

As the regional economy expands, the asset quality of GCC Islamic banks is expected to remain robust.

Additionally, their strong capital and liquidity positions will better equip them to meet the growing regional demand for Islamic banking services, as outlined in the report.

The stable asset quality is set to be supported by the Islamic banks’ focus on household financing, which is expected to remain strong. Moreover, a large proportion of the banks’ activity is in the retail sector, which is likely to continue with a steady performance.

 “While Islamic banks focus mainly on the retail market, corporate financing remains a significant component of their credit exposure, including to the historically cyclical and confidence-sensitive construction, contracting and real estate sectors,” the report added.

The review stated that Saudi Arabia is set to maintain its dominant position in market penetration while highlighting significant growth potential in other regions.  

Elevated oil prices are rendering valuable ripple effects across the GCC region, resulting in consistent government spending, especially in the Kingdom.  

This will lead to a surge in confidence among businesses, consumers, and investors in non-oil sectors, such as in the UAE, where banks primarily lend, the report indicated.

Meanwhile, Moody’s predicts that inflation across GCC banking markets will remain relative to advanced economies, primarily driven by the substantial subsidies governments provide.

“As of March 2023, the market penetration of Islamic banks in Saudi Arabia, which is 83 percent, and Bahrain, 69 percent, were the highest in the region, while room for growth is more significant in the UAE, with a penetration rate of 28 percent, Qatar, 31 percent, and Oman, 19 percent,” the report stated.


Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business
Updated 28 September 2023
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Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

Saudi Aramco acquires stake in MidOcean Energy amid efforts to enter the global LNG business

RIYADH: Energy giant Saudi Aramco is on track to enter the global liquefied natural gas market thanks to a new agreement.

The leading intergraded energy and chemicals firm has agreed to acquire a strategic minority stake in MidOcean Energy for $500 million, according to a statement.

This move aligns well with the company's goal of becoming a prominent LNG player, according to Aramco Upstream President Nasir Al-Naimi.


UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy
Updated 28 September 2023
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UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

UAE-Thailand economic agreement to strengthen bilateral trade, says envoy

RIYADH: Trade and economic relationships between the UAE and Thailand are poised for significant growth as both nations prepare to sign a Comprehensive Economic Partnership Agreement amid ongoing negotiations, according to a senior envoy. 

Sorayut Chasombat, ambassador of Thailand to the UAE, stated during a media briefing that the CEPA is expected to contribute $300 million to the country’s gross domestic product. 

“We want to be a strong partner of the UAE in this region. We recognize the UAE’s role in this part of the world in promoting peace, stability, and prosperity within the region,” said Chasombat during the briefing at the Royal Thai embassy.  

He added: “With the completion of CEPA, it will add at least $300 million to the Thai GDP. It will add at least $250 million to the bilateral trade between the two countries.”  

Negotiations for the free trade CEPA between Thailand and the UAE began in May, and the latest round of negotiations, currently taking place in Bangkok, is scheduled to conclude on Sept. 28. 

The UAE is Thailand’s sixth-largest trading partner globally and holds the first position in the Middle East. Bilateral trade between the two countries reached $11.1 billion in the first seven months of 2023. 

As of July 2023, Thailand exported goods worth $1.81 billion to the UAE, while imports from the Arab nation amounted to $9.3 billion. 

Chasombat also affirmed Thailand’s robust participation in COP28, given the country’s commitment to becoming carbon neutral by 2050 and achieving net-zero emissions by 2065. 

“Thailand is well known for sustainable development. We plan to have strong participation at the upcoming COP28, next year’s World Government Summit, and the World Trade Organization Ministerial Conference. We would give our utmost support to the UAE,” he noted.  

COP28, the UN Climate Change Conference, is scheduled to take place in Dubai from Nov. 30 to Dec. 12 this year. 

Highlighting tourism ties, Chasombat disclosed that the UAE is second only to Saudi Arabia in terms of the number of tourists visiting Thailand. 


QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 

QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 
Updated 28 September 2023
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QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 

QatarEnergy inks $3.9bn deal with Hyundai for 17 LNG carriers 

RIYADH: QatarEnergy has signed a contract with South Korea’s Hyundai Heavy Industries to construct 17 new liquefied natural gas carriers, marking the beginning of the second phase of the energy firm’s maritime fleet expansion program. 

Valued at 14.2 billion Qatari riyals ($3.9 billion), this deal, according to Qatar News Agency, aims to support increased LNG production from the North Field Expansion and Golden Pass projects while addressing long-term fleet modernization needs. 

In addition to the 60 carriers contracted during the first phase of the program, which were constructed in Korean and Chinese shipyards, this agreement will raise the total number of new LNG carriers to be delivered to QatarEnergy and its subsidiaries to 77. 

Furthermore, there are plans for additional carriers in the future, as reported by QNA. 

The agreement was signed by Saad bin Sherida Al-Kaabi, the minister of state for energy affairs and the CEO of QatarEnergy, and Sam Hyun Ka, vice chairman at Korea Shipbuilding & Offshore Engineering Co. Ltd. 

Al-Kaabi stated that the agreement represents another milestone in the relationship with Hyundai Heavy Industries and the Korean shipbuilding industry.

He added: “Hyundai Heavy Industries will construct these 17 LNG carriers to the highest technical, environmental, and quality standards, ensuring optimal fuel efficiency and significant reductions in carbon emissions. This underscores our ongoing commitment to leadership in sustainability, innovation, and growth in the LNG industry.” 

Hyun Ka said: “We take pride in our partnership with Qatar and participation in one of the world's largest LNG projects. We have strong faith that this opportunity will enhance the long-term cooperation between our two companies and our nations.” 

QatarEnergy’s LNG carrier fleet expansion program plays a crucial role in meeting future shipping demands as the country expands its production capacity from the North Field.


Shura Council urges reevaluation of housing support policies for homebuyers

Shura Council urges reevaluation of housing support policies for homebuyers
Updated 28 September 2023
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Shura Council urges reevaluation of housing support policies for homebuyers

Shura Council urges reevaluation of housing support policies for homebuyers

RIYADH: Saudi Arabia’s homebuyers would soon be able to cope with the undue strain of buying a house, with the Shura Council calling upon the Real Estate Development Fund to reevaluate its policies in favor of the people. 

According to El-Ekhbariya TV, the council urged the fund to consider encouraging real estate developers to sell residential units with affordable installments. 

In a resolution passed during the joint session on Wednesday, the council also requested a study to explore the possibility of increasing the nonrefundable amount provided by the fund to citizens, aiding them in acquiring their homes. 

Furthermore, the council encouraged the fund to explore diverse investment opportunities to ensure long-term financial sustainability. 

The potential changes in support mechanisms and increased investment opportunities also signal a commitment to bolstering the country’s property market while developing financial sustainability for citizens and the fund. 

This development is expected to significantly impact the housing market and potentially open new avenues for citizens to achieve their homeownership dreams. 

It remains to be seen how the fund will respond to the Shura Council’s call for reevaluating its housing support policies. Still, this move marks a positive step toward addressing housing issues in Saudi Arabia. 

In June, the fund deposited SR916 million ($244.1 million) in the accounts of affordable housing beneficiaries. 

According to the Saudi Press Agency, the total amount deposited from June 2017 to June 2023 surpassed SR49.3 billion. 

Additionally, the fund approved over 115,000 requests out of the 148,000 submitted to get clearance on the various stages of house construction, which included people seeking to build their own homes. 

To streamline the process, the fund set up electronic channels to enable people to update the construction phases of their homes, ensuring the required engineering and technical standards are met. 

The Kingdom aims to increase the proportion of Saudi households that own a house from 47 percent in 2016 to 70 percent by 2030. 

The fund’s Sakani program is a significant initiative in collaboration with other government entities to provide affordable housing solutions to Saudi citizens.   

It aims to address the housing needs of the population by offering various housing options, financing programs and support services.