Thursday, 15 August, 2019
China’S eCOnOMy ShOwS new SignS Of weakneSS with SOft data BEIJING
Oil prices fall on weak global economic data LONDON AGenCieS
Oil prices fell on Wednesday on weak global economic data and a rise in US crude inventories, almost erasing the previous session’s strong gains which followed the United States’ move to delay tariffs on some Chinese products. Brent crude LCOc1 was down $1.81, or 3pc, at $59.49 a barrel at 1323 GMT, after rising 4.7pc on Tuesday, the biggest percentage gain in a day since December. US West Texas Intermediate (WTI) crude futures CLc1 were down $1.80, or 3.1pc, at $55.30 a barrel, having risen 4pc the previous session, the most in just over a month. China reported a raft of unexpectedly weak data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies. “Oil is giving up most of Tuesday’s gain as it was reminded of economic realities with China’s industrial output falling to a 17-year low,” said Harry Tchilinguirian, global oil strategist at BNP Paribas in London. “Yesterday and today’s price action goes to show just how focused and twitchy the oil market is on current and future economic conditions these days and far less so on supply-side developments.” The global slowdown amplified by tariff conflicts and uncertainty over Brexit is also pressuring European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed. The euro zone’s GDP barely grew in the second quarter of 2019. The US Treasury bond yield curve inverted for the first time since 2007, in a sign of investor concern that the world’s biggest economy could be heading for recession. Profit taking after Tuesday’s gains also weighed on crude prices on Wednesday, analysts said. “We do expect Brent to continue recovering to $65 per barrel in the coming months,” Commerzbank analyst Carsten Fritsch said. “Oil demand in China and the United States is unlikely to weaken noticeably as a result of the trade conflict, though if this were to happen Saudi Arabia would further reduce its output.” Benchmark crude prices surged on Tuesday after US President Donald Trump backed off his Sept 1 deadline for 10pc tariffs on some products, affecting about half of the $300 billion target list of Chinese goods. Data from industry group the American Petroleum Institute (API) showed US crude stocks unexpectedly rose last week. Crude inventories increased by 3.7 million barrels to 443 million, compared with analyst expectations for a decrease of 2.8 million barrels, the API said.
HINA's economy showed further signs of strain in July with output at its factories falling to its lowest level in 17 years, while investment and retail sales also slowed, official data showed Wednesday. The figures are the latest to highlight how the world's second-largest economy is being battered by an escalating trade war with the United States and weak global demand. Industrial output increased 4.8pc on-year in July, down from 6.3pc in June and marking the weakest pace since 2002. It was also well below the 6.0pc forecast by economists in a Bloomberg News survey. "Given the complicated and grave external environment and the mounting downward pressure on the economy at home, the foundation for sustainable and healthy growth of the economy still needs to be consolidated," said Liu Aihua, a spokeswoman for the National Bureau of Statistics, which released the data. The data also suggested China's billionstrong army of consumers were showing signs of increasing thriftiness. Retail sales -- which have long been a bright spot for the economy -- rose 7.6pc last month, sharply down from 9.8pc in June. 'ECONOMIC CONDITIONS WORSENED': Liu attributed the weaker July numbers to a reversal in car sales as consumers snapped up cutrate autos in June ahead of new emissions standards -- and claimed retail sales were normal after factoring out the impact. But Julian Evans-Pritchard, an analyst at
‘GIVEN THE GRAVE EXTERNAL ENVIRONMENT AND MOUNTING DOWNWARD PRESSURE ON ECONOMY AT HOME, THE FOUNDATION FOR SUSTAINABLE AND HEALTHY GROWTH STILL NEEDS TO BE CONSOLIDATED’ Capital Economics, said the reversal only partly explained the slowdown. The new figures highlight the battle Beijing has in trying to navigate the country's economy from exports and credit-fuelled investment to one driven by domestic consumption. The unemployment rate notched upwards to 5.3pc in July from 5.1pc in June. Fixed-asset investment was up 5.7pc in January-July, slowing from 5.8pc in JanuaryJune. Spending on highways, high-speed trains and airports rose 3.8pc, down from years of near 20pc increases. "Economic conditions worsened across the board last month," said Evans-Pritchard. Growth of China's electricity generation sector slowed to 0.6pc on-year in July, down from 2.8pc growth in June, Lu Ting of Nomura bank said. "The previous period with close to zero power production was mid-2014 to mid-2016 when the Chinese economy significantly slowed," Lu told AFP. "It's not a good sign." 'WAKE-UP CALL': China's gross domestic
product growth slowed to 6.2pc in the second quarter of the year -- the weakest pace in almost three decades. The economic malaise makes it more difficult for President Xi Jinping to fight back forcefully against Washington, which is using tariffs as leverage to try to force Beijing into opening up its markets. Chinese exporters and US retailers did get a boost Tuesday as President Donald Trump's administration announced it was delaying tariffs on key consumer electronic goods imported from China, which had been slated for a 10pc duty on September 1. News that top US and Chinese trade officials spoke by telephone early Tuesday offered further signs of a possible letup in the trade war that had been escalating in recent weeks. "It doesn't really change the outlook on the trade tensions," said Louis Kuijs of Oxford Economics, noting "a US-China trade deal remains unlikely any time soon." "Meanwhile, rising tariffs and high uncertainty will take their toll on China's exports and investment," Kuijs said in a note. China's central bank last week allowed the yuan currency to fall below seven to the dollar for the first time in more than a decade, helping make 'Made in China' products cheaper around the world. But markets have been waiting for more stimulus from Beijing and further monetary easing to boost the flagging economy. Surveying the latest data, Stephen Innes, managing partner at VM Markets said: "If this isn't a wake-up call to the (People's Bank of China), I'm not sure what is."
US aviation regulator bans select MacBook Pro laptops from flights US Federal Aviation Administration (FAA) has banned certain models of Apple Inc’s MacBook Pro laptops on flights, after the company recalled select units which had batteries posing fire risks. “The FAA is aware of the recalled batteries that are used in some Apple MacBook Pro laptops,” the agency’s spokesman said in an emailed statement on Monday, adding that the agency has “alerted airlines about the recall.” Apple said in June it would recall a limited number of 15-inch MacBook Pro units as their batteries were susceptible to overheating. The units were sold between September 2015 and February 2017. Apple did not immediately respond to a Reuters’ request for comment. AGenCieS
LAHORE: People purchase national flags, shirts and other independence day-related accessories from a roadside vendor near Urdu Bazaar. online
Tencent Q2 earnings beat estimates on gaming growth SHANGHAI AGenCieS
Chinese internet giant Tencent said on Wednesday its net profit jumped 35pc in the second quarter, as the company continued to wriggle out of Beijing's crackdown on online gaming and build mobile game growth. Shenzhen-based Tencent said net profit was 24.1 billion yuan ($3.5 billion) in the three months ending June 30, beating an average estimate from Bloomberg analysts of 21.1 billion yuan. Total revenues were up 21pc at 88.8 billion yuan, primarily driven by mobile game growth, commercial payment services, and digital content businesses. Tencent's smartphone games rev-
enues climbed 26 percent in the three months. But Tencent was hammered by a Chinese government crackdown on gaming which launched last year and led to a months-long license approval freeze. The tech giant maintained revenue growth from the likes of popular game "Honour of Kings", and began charging users for newer title "Peacekeeper Elite" -- a toned-downed version of its nowdropped hit game "PlayerUnknown's Battlegrounds" -- clocking up more than 50 million daily active users since its launch in May. Tencent said it has dropped the original title entirely and the new version, which won government approval, was developed in conjunction with China's air force.
Although it was showing signs of recovery, the gaming crackdown shaved around $250 billion off Tencent's stock market value by the end of last year and battered profits towards the end of 2018. "We expect gaming revenue to re-accelerate starting from the second quarter onward," David Dai, a Hong Kong-based analyst at Bernstein told Bloomberg News. Shares in the Hong Kong-listed company rose 1.80pc Wednesday ahead of the update. With China's economy slowing down, major tech giants such as Tencent and Alibaba are increasingly looking overseas for growth, often competing with each other in key areas like cloud computing and FinTech. The company's FinTech business rev-
enues soared 37pc compared to the second quarter in 2018, to reach 22.9 billion yuan as payment methods in China become increasingly digital. Tencent's social networks revenues grew by 23pc as China's largest social media platform WeChat's monthly active user base of more than one billion continued to climb. Facing fierce competition from short video operator ByteDance, Tencent has lined up new investment in China's Quora-like online Q&A platform Zhihu. It also announced a fiveyear partnership extension with professional sports league the National Basketball Association (NBA), which is extremely popular in China. But its media advertising revenues
were down 7 percent due to "unexpected delays to airing certain top-tier drama series and the absence of the FIFA World Cup this year." "Amid the evolving macro-economic and competitive challenges, we continue to invest in enhancing our platforms, services and technologies, for better supporting our users and enterprise customers," said Ma Huateng, the company's Chairman and CEO. Tencent and Alibaba, China's two largest companies, have lost a combined $140 billion in market value since the escalation of the trade war in May, according to Bloomberg News. Alibaba and Baidu are expected to release their results on Thursday and next Monday, respectively.