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Saudis urge crude oil cooperation

4 hours 22 min ago
Saudi Energy Minister Khaled al-Faleh talks to journalists during the 7th Meeting of the Joint Ministerial Monitoring Committee in Muscat yesterday. Faleh called for extending cooperation between OPEC and non-OPEC oil producers beyond 2018 after a deal to shore up crude prices. The call, the first explicit invitation by Riyadh for long-term cooperation between oil producers, came with oil prices topping US$70 a barrel thanks to the deal, after they dove below US$30 a barrel in early 2016.

Slower but sustainable growth for Chinese economy in 2018

4 hours 22 min ago
CHINA’S economic performance beat market expectations in 2017, but will the bullish momentum continue into the new year? A moderation in GDP growth is the popular view among global investors given a high comparison base, while a more balanced and sustainable economy is expected to take shape faster. China’s economy totaled 82.7 trillion yuan (US$13 trillion) in 2017, expanding 6.9 percent as it picked up pace for the first time in seven years. Stronger-than-expected growth data may indicate a further tightening of macro-prudential policy, but that does not change Japanese securities trader Nomura’s economic view for China this year. It has raised its 2018 GDP growth forecast by 0.1 percentage point to 6.5 percent, with a gradual growth slowdown in coming quarters. Global investment banks JP Morgan and UBS expect China’s economy to expand about 6.7 percent and 6.4 percent this year respectively. The property sector remains one of the major uncertainties facing China’s economic growth in 2018. No collapse or major loosening of property market management is in sight this year, but government policies including supporting rental housing and a faster-than-expected legislative progress for property tax might complicate market sentiment, according to Zhu Haibin, JP Morgan chief China economist. UBS China economist Wang Tao estimated that property sales might lose momentum in 2018, while property investment and construction growth stay robust or soften only modestly until late this year. Meanwhile, as the government’s ongoing environmental protection and clean-up efforts kick into full swing through the peak heating season, industrial production and related investment activities should soften more visibly this quarter, Wang pointed out. Externally, the normalization of monetary policies in developed economies might weigh upon the exchange rate and capital flow balance while more protectionist practices from the United States might dampen China’s exports. China’s cross-border capital flows hit a turning point in 2017 as foreign currency reserves stabilized after two years of decline. Zhu estimated that the basic equilibrium of capital flow will continue in 2018 with a stronger yuan, steady economy and improved market sentiment due to financial risk control efforts and other reforms. Better manufacturing investment and robust external demand due to the recovering global economy may help to partly offset some upstream sector weakness, according to UBS. Iris Pang, economist at ING, believes 2018 will be another good year for China, supported by consumption of goods and services and infrastructure investments. ING expects manufacturing of high-tech products and parts to grow by more than 50 percent this year, cushioning the loss of production from overcapacity cuts in non-ferrous metals, shipbuilding and building materials. Data from December and fourth quarter point to resilient growth momentum, which Nomura believes was driven by a robust expansion of the services sector, as it continued to benefit from China’s economic rebalancing toward consumption and the Internet-led “new economy.”

Germany recalls 127,000 Audi models

4 hours 22 min ago
GERMANY’S KBA automotive watchdog has detected illicit emission-control software in Audi’s latest Euro-6 diesel models and has ordered a recall of 127,000 vehicles, Bild am Sonntag reported. Audi, a unit of Volkswagen, said in a statement that the models had been included in a voluntary recall of 850,000 diesel vehicles with V6 and V8 TDI engines announced in July. “The engine control software for the vehicles in question will be completely revised, tested and submitted to the KBA for approval,” Audi said in its statement. It did not confirm more details of KBA’s request. Bild am Sonntag said KBA had told Audi to respond by February 2 on how it plans to update vehicle software controlling emissions, making sure the cars are unable to illegally manipulate emission controls. Audi said it has been examining its diesel-fueled cars for potential irregularities for months in close cooperation with KBA. “As part of this systematic and detailed assessment, the KBA has now also issued a notice regarding Audi models with V6 TDI engines,” the carmaker added. In November, Audi announced a recall of 5,000 cars in Europe for a software fix after discovering they emitted too much nitrogen oxide, the polluting gas that parent Volkswagen concealed from US regulators in its devastating 2015 “dieselgate” scandal. Volkswagen was found in 2015 to have illegally manipulated engine software so that vehicles would meet nitrogen oxide emissions standards in laboratory testing but not in real-world conditions, where they could emit up to 40 times the permitted levels. Several Audi models were affected and Audi has been accused in media reports of having devised the so-called defeat devices years earlier.

SPDB branch in Chengdu fined US$72m

4 hours 22 min ago
CHINA’S top banking regulator has fined a Chengdu branch of Shanghai Pudong Development Bank 462 million yuan (US$72.19 million) for offering huge credit to bogus firms, as part of the country’s latest crackdown on financial irregularities. The head of the Chengdu branch will be banned from working in the banking sector for life, according to the China Banking Regulatory Commission. The Chengdu branch was found to have offered credit worth 77.5 billion yuan to 1,493 bogus firms via illegal means in a bid to cover bad loans. The organized malpractice reveals poor internal regulations, low compliance and over-the-top focus on business expansion, according to the CBRC. Local banking regulatory officials and the Shanghai bank senior management were also punished for their negligence of duty. Last month, China Guangfa Bank was fined 722 million yuan for offering illegal guarantees for defaulted corporate bonds. Risk control will be enhanced in interbank activities, financial products and off-balance sheet business, while violations in corporate governance, property loans, disposal of non-performing assets, and other key areas will also face stricter punishment, the CBRC said last week.

Young buyers propel luxury sales in 2017

4 hours 22 min ago
CHINA’S luxury product sales rebounded in 2017 after three years of moderation as more young consumers spent on global brand cosmetics and jewelry. Sales of luxury goods in China hit 142 billion yuan (US$22.2 billion) last year, up about 20 percent year on year, the biggest growth since 2011, said a report by Bain and Co. Bain attributed the rebound to the Chinese government encouragement for domestic consumption, lower import tariffs and moves by global luxury brands to adjust prices. A survey of 1,170 respondents showed that those aged between 20 and 34 were the major contributors to the warming market due to their tech savviness and deeper understanding of the luxury market with a preference for street casual and fashionable design. Online shopping for luxury products grew robustly last year despite a limited share in overall sales. More luxury brands launched official online shopping sites and spent more on digital marketing. Bain sees China’s luxury products sales to keep a strong pace this year.

Consumers do care if a car is black or white

4 hours 22 min ago
FANCY gadgetry and sleek styling, color matters when Chinese consumers go to buy a car. Gong Xiaoyu, who works in an educational institute, recently bought a pearl white car. She said she loves the sparkling effect that distinguishes her car from standard white. Indeed, when we look at a car, the first thing we usually notice is its color, and automakers are well aware of that fact. Pearl white is becoming more popular in China, even though the exterior paint and coating process cost more than standard white vehicles. The color is often used in mid- to high-end models. The Tesla Model X, for example, has a pearl white option and General Motor’s Cadillac has a color option called crystal white. According to a report released by US-based Axalta Coating Systems, 62 percent of new cars sold in China in 2017 are in white color. The color has been the favorite for more than 10 years. Within the white segment, 15 percent of car buyers voted for pearl white in 2017. This all means that for every 10 cars sold in China, six are white color. After white, Chinese car buyers prefer black, brown and silver. Yellow, red, blue, grey and green are down the list of favorites. But there is white. Whoever thought such a neutral color could have so many variations? And why do Chinese like white so much in the first place? For one thing, white is a highly reflective color, making cars more visible at night. It also makes a smaller car look larger and tends to keep cars look cleaner for longer periods of time. Using white paint may enable manufacturers to downsize a car’s air conditioner system and raise fuel efficiency. Gong said a friend of hers suggested she buy a white car. Black, she was told, gets dirty more quickly and shows water spots and dust more readily. Her friend has two cars, one is black and one white, so Gong figured she knew what she was talking about. Consumers may take a short time to choose a car color, but for manufacturers, color decisions require long discussions and testing. “The development cycle is three years ahead of the target launch in a model year,” said Annie You, an Axalta color designer in China. “In 2018, we are working on colors for vehicles that will hit the streets in 2021.” You said automotive coating suppliers have to keep in close touch with car designers, who have to decide if the latest colors are compatible with their visions of what kinds of cars consumers want. “The development cycle for exterior colors is longer than for interior colors,” You said. “Both need to complement one another as well.” For Chinese consumers, brown is a popular color for interior seats. German carmaker Mercedes-Benz has a customized brown color for seats of its E-class models in China. Colors for the young Younger Chinese consumers pay more attention to vehicle appearance than their parents. Their tastes in color have become increasingly important because the youth market is a big money-spinner for automakers. While 1980s generation tends to be focused on success in their chosen career paths more than the colors of their cars, the post-90s group are much more picky and uncompromising, according to German automotive coating supplier BASF. “Chinese young people prefer car colors that show off their individual tastes and style,” the company said. “They are also more focused on design and quality. That is reflected in the popularity of pearl white and sophisticated greyish browns.” Axalta’s You said the young generation is perfectly willing to change car brands if carmakers fail to offer colors it likes. “Automakers need to have a deep understanding of young Chinese consumers,” she said. “Carmakers need to be aware that young people are impatient. In a fast-changing society, color preferences change fast as well. In some global markets, car buyers may wait three to five years to get the car they want. But for Chinese consumers, if the color isn’t right, they won’t wait. They want it now.” But as anyone in the fashion industry will attest, the hot color of one season or two can quickly become passé. Car colors go through the same cycle of changing tastes. Industry insiders say blue is a promising color of the future in China. And not just the standard dark navy blue of the past. They want new trendy, chromatic hues like Tiffany blue, sapphire blue, cesium blue and royal blue. “After a new model in blue is launched, it shows good sales performance in a month or two,” said Zhang Xiaofeng, an independent market observer. “It means that rich, vibrant blues have caught on with a certain group of consumers.” China’s biggest carmaker, Shanghai Automotive Industry Co, applied BASF’s starlight sapphire blue coating on its Roewe Vision-E concept car that debuted at the Shanghai Auto Show last year. BASF said the hue is a new interpretation of the classic klein blue color, with an additional purple effect. The unique blue is meant to highlight the futuristic and high-tech features of the electric coupe sport-utility vehicle. UK premium carmaker Jaguar Land Rover launched its XEL model in cesium blue, whose color is designed and supplied by Axalta, targeting Chinese consumers born in the 1990s or later. The color is meant to convey style and dynamism, and is designed to resonate with Chinese consumers. People who used to view Jaguar Land Rover as a traditional British-style company with conventional colors have now been put on notice that things are changing.

Goal: ‘zero emissions, crashes, congestion’

4 hours 22 min ago
The automobile is fast becoming an Internet, mobile phone and general factotum on wheels, thanks to new technologies that connect car interiors with mobile platforms.It’s all called “connectivity,” and it promises smart, safe driving experiences for car owners. Systems can now connect cars to the city’s smart transit system so that drivers can tap into driving conditions and traffic alerts. Connected cars access the Internet, send and receive signals, and “sense” the physical environment around them.“If we compare today with the first time I came to Shanghai in 1995, we can see connectivity is becoming a more popular feature,” Matt Tsien, president of General Motors China, told Shanghai Daily in an interview.Tsien said General Motors attaches great importance to vehicle connectivity, noting that the carmaker was a pioneer in the field by bringing its OnStar service to China in 2008. OnStar offers on-board communications and vehicle security features now used by more than a million Chinese. It provides connections to a call center where a driver can turn for assistance. It offers cloud-based services and a mobile app that monitors fuel consumption and driving behavior. All Cadillac, Buick and Chevrolet models will be equipped with connectivity features by 2020, the company said. General Motors is not alone in focusing on a new generation of smart cars. Many automakers have announced plans to provide vehicle connectivity technology to the world’s largest auto market. Ford and Volkswagen have both said all their new vehicles sold in China will be “connected” by the end of 2019.According to China’s industrial roadmap for 2025, 80 percent of locally produced vehicles will be equipped with telematics and 30 percent of the vehicles will apply V2X, or “vehicle of everything” technology. That means cars will have the capability to talk with one another, with outside infrastructure and with the Internet.Shanghai is a leader in the development of intelligent, connected vehicles in China. Last November, the city government promulgated what it called the “Shanghai Declaration,” which calls for more international cooperation and efforts in the development of smart cars. The city is seeking to build a transport system with zero emissions, zero crashes and zero congestion.Shanghai has advantages in the development. Its testing base, called the National Intelligent Connected Vehicle Shanghai Pilot Zone, is a 100 square-kilometer site in the Jiading District that is the first of its kind in China.Rong Wenwei, general manager of Shanghai International Automobile City, said the city plans to accelerate research, development and application of intelligent and connected vehicles.Mega-cities like Shanghai must now cope with increased traffic congestions, vehicle emissions and more road accidents. A smarter, cleaner and safer transportation system is obviously needed. Automakers play a role in these plans of the future. Most of them are actively shifting from mere manufacturers to mobility services providers to help solve problems caused by urban development.General Motors said connected vehicles could help the city to achieve the goal of zero congestion. Vehicle-to-infrastructure technology, for example, can provide information on traffic accidents or backed up traffic and suggest alternative routes to drivers. Last November, GM demonstrated its vehicle-to-infrastructure capability on public roads in Shanghai. The test vehicles received real-time data from traffic lights on signal timing to enable a smoother flow of traffic. “Shanghai is in a great position to become a leader linking connectivity technology with traffic management, which will greatly aid the flow of vehicles in dense urban settings,” said Tsien. Chinese consumers seem to like the new trend.A survey of 8,500 consumers from 13 countries published by Kantar TNS, showed that 65 percent of Chinese consumers are willing to accept connectivity features inside vehicles. That was higher than 40 percent in Europe and 32 percent in North America.A report from PwC showed that 40 percent of Chinese car buyers are willing to switch car brands to obtain connected technology. Chinese consumers rank safety-related features such as collision prevention, danger warnings and emergency calling highest on the list of what they want from a connected car, the report said.Zhang Haoran, who works at a Shanghai-based consulting firm, is an OnStar user. “This service really solves many of my driving problems,” Zhang said. “I use the navigation function most often. I just press a button in the car, connect to the call center and customer service sends navigation information back to me. I don’t need to check the route on my mobile phone. I can also discuss vehicle issues and basic maintenance with the OnStar advisor.”Analysts said full connectivity is some time off. Installation costs are high and there is still insufficient funding for further research and development.“The sector needs cooperation and the joint efforts of the government, automakers, Internet providers and insurance companies,” said David Zhang, an independent automotive consultant.“General Motor’s OnStar and SAIC Motor’s Inkanet have been the leaders in terms of connectivity in China,” he added. “These two companies have sufficient funding to develop new features, but not all providers do.”

GM vows to tap new technologies

4 hours 22 min ago
Matt Tsien, president of General Motors China, has been with the US-based carmaker for 37 years. He has held the post since January 2014.Based in Shanghai, he oversees the operations of GM’s 10 joint ventures in China.Tsien has a master’s degree in electrical engineering from Stanford University and a master’s in management from the Massachusetts Institute of Technology. He began his professional career as an electrical engineer at Delco Electronics in 1976.In September 2017, he received the Magnolia Gold Award from the Shanghai municipal government for his contributions to the economic and social development of the city.Tsien sat down recently with Shanghai Daily and talked about his views on Shanghai auto industry to discuss industry trends in China.Q: What’s your overview on the development of Shanghai’s automotive industry?A: Over the past few years, Shanghai has become a pilot city for new-energy vehicle promotion and development of intelligent and connected vehicles, as well as home to a number of automotive startups. Shanghai’s automotive industry, like the city itself, embodies what I believe locals call the “inclusive Shanghai spirit.” Fair competition backed by supportive government policies will bring the best out of every player. We plan to remain a leader in driving the automotive industry in Shanghai and China forward.Q: So, what are GM’s plans for this year?A: China has been GM’s biggest retail market for six consecutive years, and it will play an important role in the company’s global move toward a future of zero emissions, zero crashes and zero congestion. We will continue to work with our partners to introduce the best electrification solutions and advanced technologies to benefit our customers in China. This year, we will have more new products coming to market. We are also really looking forward to the opening of our Pan Asia Technical Automotive Center, a new facility in Shanghai that will further enhance our local research and development capability. We are also building a Cadillac “experience center” that will open later this year in Shanghai. Q: China is actively promoting the development of new-energy vehicles. Will you unveil more green cars in China in the next two years, and will they target specific consumer groups? A: China will continue to play an important role in GM’s global move toward an all-electric future. We are on track to expand our new-energy vehicle product portfolio with more electric vehicles and plug-in hybrids, which will include up to 10 models by 2020. When we look at new-energy vehicle strategy, we are really looking across the entire range of vehicles, from entry-level to luxury brand. Our new energy vehicles will be produced in China through our local joint ventures.Q: Does GM have any plans to test intelligent and connected vehicles in the National Intelligent Connected Vehicle Shanghai Pilot Zone?A: We really enjoy a good relationship with the Jiading pilot zone. We think there will be continuing opportunities to work with Jiading, either on V2X technology and maybe in the future, even on autonomous driving features. We think it’s a good place to some testing and demonstration.

Detroit auto show offers nostalgia, glamor

4 hours 22 min ago
THE car industry tied its latest offerings to American nostalgia and Hollywood glamor at the ongoing Detroit auto show, which will end this Sunday. But on the sidelines, there were lingering questions about policy and politics.  Arnold Schwarzenegger emerged from a Mercedes-Benz G-Class SUV. The granddaughter of screen legend Steve McQueen arrived in the latest version of the Ford Mustang he immortalized on film.  In a keynote address, US Transportation Secretary Elaine Chao touted just-enacted US tax cuts, which reduced the US corporate tax rate from 35 to 21 percent, saying the move will attract more US investment. There were also cautious statements about ongoing renegotiations of the North American Free Trade Agreement, on which the North American car industry heavily relies.   But the auto show is about the cars, and automakers did their best to stay focused on their products.  With Americans’ appetite for trucks and SUVs expected to remain robust in 2018, brands highlighted a number of new offerings in that category.  Mercedes-Benz debuted a redesigned G-Class SUV, significantly updating the interior with new technologies. The vehicles were made to climb steep ramps as flames shot up from the ground and confetti cannons blasted. As one finally stopped, Schwarzenegger emerged from a passenger seat.  Star-studded show “I have driven G-Wagens now for 25 years,” glowed the actor of Austrian heritage.  “I think this car became so historic,” he said, “because of its look.” Ford unveiled its own nostalgic offering, showing off a new mid-sized Ranger pickup, redesigned and reintroduced to the North American market.  It also offered a new sports trim of its Edge SUV, as well a third iteration of a “Bullitt” special edition of its Mustang sports car.  Actor McQueen drove a 1968 Mustang in the thriller film “Bullitt,” creating an indelible link between the car and American pop culture. His granddaughter Molly McQueen emerged from the latest special edition, comparing it favorably with the original.  “It is fun. It’s fast and effortlessly cool,” she said.  In a break from most of the big launches, Volkswagen highlighted a sedan, releasing its updated version of the Jetta, the German automaker’s top-selling vehicle in the US. The base price of US$18,545 won especially loud applause at a glitzy launch, and was a counterpoint to the pricey SUVs and trucks that can easily cost twice that amount and more. “As a full-line automaker... you need to have a competitive, strong sedan,” VW North American chief executive Hinrich Woebcken told reporters after the launch. Tariffs matter On the sidelines of the flashy announcements, industry insiders were taking a wait-and-see attitude toward talks to revamp the North American Free Trade Agreement, which has generated fears of huge tariffs on Mexican-made imports to the US. Negotiations have been ongoing for months at the insistence of US President Donald Trump, who has threatened to abandon the agreement if a beneficial deal is not struck. “There’s good conversation going on to modernize NAFTA,” said Mary Barra, CEO of General Motors. “We’re going to continue to interact constructively to make sure people understand the very complex nature of our business.”  Ray Tanguay, automotive advisor to the Canadian government, highlighted his country’s close ties to the Michigan car industry, and cautioned that losing NAFTA could cost American car buyers higher prices.  “The integration is so much that if you try to break that, you’re going to hurt the consumer,” he said.  Analysts were less certain about potential impacts.  ‘Post-peak’ period “There continues to be the debate — ‘Is the president using hyperbole to get something less severe because he’s a skilled negotiator, or does he seriously think that we need to be exiting NAFTA,’” said Cox Automotive economist Jonathan Smoke. Meanwhile, the effects of the recently enacted US$1.5 trillion in tax cuts were expected to be varied by region and income level. Among the clearest winners will be luxury vehicles because of the tax bill’s bounty to those with incomes over US$150,000 a year, said Smoke. Highlighting the tax changes, which reduced corporate rates, Chao pointed to Fiat Chrysler’s decision to move production of its Ram trucks from Mexico to an assembly plant near Detroit. The car maker said it would invest US$1 billion and add 2,500 jobs. “This is just one example of the positive impact that the tax cuts and jobs act will have on workers, job creators, employers and our country,” Chao said. But analysts said many households still don’t have a clear sense of how much they will benefit from the complex changes to tax laws. “There’s some people that are probably putting off purchases because they don’t really know... what our paychecks are going to look like,” said industry analyst Rebecca Lindland of Kelley Blue Book. 

6.9% GDP increase beats forecasts

Thu, 01/18/2018 - 17:01
CHINA'S economy expanded by a more-than-expected 6.9 percent last year, amid the deepening of supply-side reforms, the National Bureau of Statistics said yesterday. The annual growth of GDP was above the government's official target of 6.5 percent and marked a recovery from a 26-year low of 6.7 percent in 2016. GDP growth in the fourth quarter was 6.8 percent, the same as the third quarter but slower than the 6.9 percent growth in the first two quarters. The services sector led growth with an increase of 8 percent, outpacing the industrial sector's 6.1 percent and the agricultural industries' 3.9 percent. Services continued to make up 51.6 percent of the countryÕs 82.71 trillion yuan (US$12.85 trillion) GDP. Industrial value-added output expanded 6.6 percent year on year in 2017, up from 2016Õs 6 percent led by high technology and equipment manufacturers. ÒThe domestic economy was steady, positive, and above expectations,Ó the statistics bureau said. ÒEconomic dynamism, momentum, and potential have been released and the stability, coordination and sustainability have significantly enhanced.Ó Ning Jizhe, the bureauÕs head, said in a briefing that structural reforms achieved important progress last year with capacity reduction in high energy consumption industries, lower debt burden of industrial companies, and greater investment in agriculture and environment protection. Momentum gathered in the Ònew economyÓ Ñ referring to new skills, new products, new industries, and new business models. Ning highlighted that 13 million new jobs were created last year, and the foreign exchange reserves rose to US$3.14 trillion. YesterdayÕs figures showed retail sales up 10.2 percent year on year, slightly lower than the 10.4 percent increase in 2016. ÔNew momentumÕ Fixed-asset investment rose 7.2 percent year-on-year, down 0.9 percentage points from 2016. Specially, private investment reached 38.15 trillion yuan, up 6 percent year on year, 2.8 percentage points faster than the previous year, accounting for 60.4 percent of the total investment. Online sales of physical goods rose 32.2 percent to 7.18 trillion yuan, amounting to 15 percent of total retail sales, 2.6 percentage points higher than 2016. Cheng Shi, chief economist of ICBC International, attributed the faster-than-expected economic growth last year to emergence of new momentum instead of government stimulus in investment. ÒThe year 2017 concluded in a steady way after surprising recovery in the first half,Ó said Cheng. ÒBenefits of supply-side have been released, and macro-economic policies in the new age are expected to support and accelerate the shift from traditional industries to new momentum, creating new room for high quality development in China.Ó The institute said ChinaÕs GDP growth could still reach 6.9 percent this year as a long-term recovery trend is consolidated. Earlier data showed ChinaÕs consumer inflation was 1.6 percent last year, cooler than the 2 percent for 2016, while the factory-gate prices rose for the first time in six years. Foreign trade recorded its first expansion in three years under strong domestic and external demand. Standard Chartered Bank forecast ChinaÕs GDP will be ÒmoderateÓ this year, up to 6.5 percent, with greater emphasis on reforms in pursuit of higher quality of development. ÒWhile the government has continuously emphasized stability in the process of moving forward, we sense a tilt in the balance toward faster reforms and increased risk-taking in 2018, which marks the 40th anniversary of the launch of ChinaÕs reform and opening up,Ó the bank said in a note. The bank said potential risks to the economy include smaller property investment, lower growth and higher inflation, as well as escalating trade friction with the United States.

Shanghai shares hit 2-year high, HK at new record

Thu, 01/18/2018 - 17:01
SHANGHAI shares rose to a two-year high yesterday when Hong Kong stocks climbed to a fresh record as investors tracked another milestone on Wall Street, but Asia-wide markets struggled to keep up the recent momentum. But while the afternoon saw a slight wobble across the region and some analysts warned of a possible correction, traders remain bullish on equities thanks to a healthy global economic outlook, optimism over the impact of Donald trump’s tax cuts and strong corporate earnings. The Shanghai Composite Index gained 0.87 percent to 3,474.75 points, the highest close since the end of 2015. After the market closed, data showed the Chinese economy grew a forecast-beating 6.9 percent in 2017, the first annual improvement since 2010. The GDP reading follows strong trade data last week, which showed the humming global economy had propelled China’s export machine. “This momentum, especially the part fueled by external demand, may carry on well into 2018,” said Wei Yao, chief China economist at Societe Generale. Hong Kong’s Hang Seng Index ended 0.4 percent higher at 32,121.94, holding above the 32,000 mark it broke in the morning for the first time in its history. The market has fallen only once in the past 17 trading days. Seoul was slightly higher, while Bangkok and Jakarta also rose. However, Tokyo dipped 0.4 after a late sell-off on profit-taking but still sits at 26-year highs, while Sydney was marginally lower and Singapore shed 0.5 percent. Wellington and Manila were also down. A survey by Bank of America found fund managers were upbeat about the outlook and see equities continuing to rise into next year. And Lucy MacDonald, chief investment officer for global equities at Allianz Global Investors, told Bloomberg Television: “It’s time for relative caution but we’re still overall pro-equity.” However, she added: “Nominal returns in markets are liable to be lower than they’ve been in the recent past.” There was also a word of caution from Joachim Fels at Pacific Investment Management, who said: “The fact that the fear is gone is the main reason why we should be worried.” Traders started on the front foot after Apple said it will pay almost US$40 billion in taxes to repatriate US$350 billion following Trump’s tax cuts, adding that it will also boost jobs, hike wages and spend more on innovation. “This is exactly the encouragement that Trump’s tax policy constructed for. The move by Apple will influence and at the same time impose pressure on other multinationals to follow suit,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers. The pound held gains against the US dollar after climbing on Wednesday on comments from European Commission chief Jean-Claude Juncker that he would welcome any British attempt to rejoin the EU after it leaves. The remarks raised hopes Britain could exit on more favorable terms than have been expected and follow speculation about a possible second referendum. “Some smooth-talking from Jean-Claude Juncker helped propel the pound ... as he appeared to not only suggest that the UK could come back after they leave but equally in the change of tone reflects that a ‘soft’ Brexit is now becoming a high probability,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader. Bitcoin rose above 10 percent to US$11,000, according to Bloomberg data, a day after falling through the US$10,000 mark for the first time since mid-December.

China cuts US debt holdings

Thu, 01/18/2018 - 17:01
China cuts its holdings of US Treasury securities in November, after adding US$8.4 billion in October.China’s holdings of US Treasuries dropped by US$12.6 billion to nearly US$1.18 trillion in November. China remained the largest holder of US Treasuries.Japan, the second-largest holder of US Treasuries, also cut its holdings by US$9.9 billion to US$1.08 trillion in the month. Japan has cut its Treasuries holdings for four straight months.By the end of November, overall foreign holdings of US Treasury securities slightly fell to US$6.34 trillion from October’s revised US$6.35 trillion.The State Administration of Foreign Exchange, China’s top forex regulator, recently dismissed a foreign media report that China was considering slowing down or even halting its purchase of US securities.China’s forex reserves have been invested in a diverse and decentralized manner to keep assets safe and ensure they grow in value steadily, the SAFE said in a statement. Like other investment moves, the purchase of US Treasuries is market-based behavior and is subject to professional management based on market conditions and investment targets, said the statement. China’s forex reserves rose for 11 months to US$3.14 trillion at the end of December, as the economy got on a firmer footing and the government stepped up regulation of illegal capital transfers and overseas investment.

Stable home markets in 15 major cities indicate policy effectiveness

Thu, 01/18/2018 - 17:01
Housing markets in China’s 15 major cities were generally stable for another month in December as differentiated rein-in policies to curb speculation continued to take effect, data released yesterday by the National Bureau of Statistics showed.Four of the 15 cities, including first-tier ones and key second-tier cities, saw decline in new home prices from November. Prices in three cities were flat from a month earlier, and the remaining eight posted month-on-month growth, according to the bureau, which monitors property prices in 70 Chinese cities.In the four first-tier cities, new home prices in Shanghai added 0.3 percent from November, the only gainer among the four. Prices in Beijing were flat while those in Guangzhou and Shenzhen fell 0.2 percent and 0.3 percent, respectively.On an annual basis, prices in nine cities retreated between 0.2 percent and 3 percent while those in the remaining six cities rose by between 0.1 percent and 5.5 percent from a year earlier, according to the bureau.“Price fluctuations on a monthly basis in the 15 major cities were all within a moderate range, indicating a largely stable housing market,” said Liu Jianwei, a senior statistician at the bureau.“On an annual basis, the majority of these cities recorded lower prices.”Nationwide, new and pre-owned home prices in the four first-tier cities fell year on year for 15 consecutive months in December.Meanwhile, lower-tier cities were showing some signs of picking up, the bureau’s data suggested.New home prices in second and third-tier cities rose 0.6 percent and 0.5 percent month on month, respectively, both 0.1 percentage points faster than that in November.In the pre-owned housing market, prices in second and third-tier cities both climbed 0.3 percent, the same pace from a month earlier.In a separate statement yesterday, the bureau released annual property sales and investment data for 2017.Sales of new homes, excluding government-subsidized affordable housing, rose 11.3 percent last year to 11.02 trillion yuan (US$1.7 trillion), up from the 9.9 percent growth in the first 11 months of 2017.By area, new homes sold last year climbed 5.3 percent from 2016 to 1.45 billion square meters, slowing from a 5.4 percent gain in the first 11 months.By investment, about 7.5 trillion yuan were invested in residential development nationwide last year, an annual increase of 9.4 percent, 0.3 percentage points slower than that in the first 11 months.

Emirates throws A380 a lifeline

Thu, 01/18/2018 - 17:01
An Airbus A380 of Emirates Airlines lands at Dubai’s International Airport. Emirates yesterday said it has struck a US$16 billion deal to buy 36 A380 aircraft just days after Airbus said it would have to halt production without new orders. Emirates placed firm orders for 20 of the aircraft with options for a further 16. Deliveries are scheduled to start in 2020. Emirates is already the world’s biggest customer for A380 with 101 in its fleet and 41 more firm orders previously placed.

HNA chairman confident group will turn corner

Thu, 01/18/2018 - 17:01
HNA Group Chairman Chen Feng has expressed confidence that China’s aviation-to-financial service conglomerate will manage its cash crunch, and continue to receive support from banks and other financial institutions this year. The liquidity problem exists “because we made a big number of mergers,” even as the external environment became more challenging and China’s economy “transitioned from rapid to moderate growth,” impacting the group’s access to new financing, Chen said. “Rate hikes by the Federal Reserve and deleveraging in China caused a liquidity shortage at the end of the year for many Chinese enterprises,” Chen said. “We’re confident we’ll move past these difficulties and maintain sustained, healthy and stable development.” It was a rare acknowledgment by a top company official that HNA is facing financing problems. In recent weeks, local banks have privately and publicly voiced concern after HNA failed to repay some obligations, including aircraft lease payments, and as surging debt drove up the cost of the group’s short-term fundraising to new highs. Significant moves are expected. HNA’s flagship Hainan Airlines Holding Co, Bohai Capital Holding Co, the parent of aircraft leasing firm Avolon, and Tianjin Tianhai Investment, which controls California-based Ingram Micro, all have suspended trading pending major announcements. Ingram Micro, which HNA bought for roughly US$6 billion, is part of the US$50 billion worth of transactions the conglomerate announced over the last two years. They also included big stakes in Hilton Hotels Worldwide Holdings and Deutsche Bank. HNA’s Chief Executive Adam Tan said in November that the company was selling some real estate and other assets to improve liquidity and comply with national policy. Chen, speaking at his office in Haikou, Hainan Province, where HNA has its headquarters, said he wasn’t involved in decision making for any transactions and declined to comment on fundraising plans. After years of “extraordinary development,” Chen said HNA was now focused more on integrating operations, creating synergies between resources at home and overseas, and improving group management. “Our business has become so big that we need to improve efficiency,” said Chen. “The long-term goal remains unchanged, which is to become a world-class enterprise,” he said. “2018 is our year of effectiveness.” HNA’s leverage has alarmed some analysts and its “aggressive financing policy” caused S&P Global Ratings in November to downgrade its assessment of the company’s creditworthiness. HNA in recent weeks also has raised additional financing by selling expensive short-term debt and pledging more of its shares for loans. Group borrowing, including bank loans and bonds, surged by more than a third over the first 11 months of last year to 637.5 billion yuan (US$99.3 billion), according to a China bond market filing. Group assets reached 1.2 trillion yuan at the end of June, according to a separate bond market filing. In December, HNA said it received pledges of support for 2018 from eight big domestic policy and commercial banks, including China Development Bank, the Export and Import Bank of China, and the Industrial and Commercial Bank of China. The company also said it still had 310 billion yuan in unused credit facilities from financial institutions. Chen said financial institutions continued to support HNA because of the quality of its assets and projects. “We provide local employment, tax revenue and development,” he said. HNA’s financing troubles have been exacerbated by regulatory investigations in multiple countries after the group announced changes to its shareholding structure in July. While securing clearances from German, Irish and UK authorities, the group also has experienced setbacks in Switzerland and New Zealand. Australia and New Zealand Banking Group this month dropped plans to sell its UDC finance unit to HNA after the New Zealand regulator blocked HNA’s application, citing uncertainty about the group’s ownership and controlling interests. China’s going abroad, change in its foreign exchange policy and the doubts of foreign governments presented challenges, Chen said. “Some people are uncomfortable.” He said HNA still faces a problem of experience, which has been tested by a complex global environment. “Our young leadership team, including myself, hasn’t managed a global enterprise,” Chen said.

PPDai to invest in research institute

Thu, 01/18/2018 - 17:01
PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said yesterday that it will invest 1 billion yuan (US$156 million) within three years to set up a new research institute.The money invested in the new PPDai Smart Finance Institute will be used to fund artificial intelligence, blockchain, finance cloud and Big Data sectors, said Zhang Jun, co-founder and chief executive of Shanghai-based PPDai.“It’s the first company to invest more than the ‘1 billion yuan’ line in the P2P industry to develop intelligent and secure online finance services in China,” Zhang said.PPDai, which launched an initial public offering in New York in November, has also formed a consultant team consisting of executives and researchers from FICO and CalTech. It is also cooperating on AI with research institutes under the Ministry of Industry and Information Technology, Zhejiang University and the National University of Singapore.

Sony bullish over business in China

Thu, 01/18/2018 - 17:01
SONY Corp expects its business in China to grow strongly this year amid a market of 230 million middle-class consumers who are upgrading their consumption patterns, the company’s China president said yesterday in Shanghai. In the first half of Sony’s fiscal year ended on September 30, the Japanese company’s revenue jumped 40 percent year on year in China on brisk sales of new-technology TVs, professional cameras, sensors used in smartphones and game devices and services. Sony still managed to expand even as the entire domestic TV and smartphone markets faced sluggish growth close to saturation points, industry insiders said. “It’s one of the best fiscal years for Sony China recently thanks to our products and strategies,” Takahashi Hiroshi, Sony China’s president, said in Chinese. Sony China will continue to focus on middle or high-end users as China has “enough market space” with 230 million middle-class consumers and a “big trend” for consumption upgrade, said Hiroshi.

Cross-border capital flow seen balanced

Thu, 01/18/2018 - 17:01
CHINA saw more balanced cross-border capital flow in 2017 as willingness to purchase the greenback waned thanks to rising confidence in the yuan and the domestic economy. Chinese banks’ net forex settlement deficit fell significantly last year, according to the State Administration of Foreign Exchange. Commercial banks bought US$1.64 trillion worth of foreign currencies, up 14 percent year on year, while selling US$1.76 trillion, down 1 percent compared with 2016. This resulted in a net forex settlement deficit of US$111.6 billion, down by a whopping 67 percent year on year. SAFE pointed out that the forex market has seen more balanced demand and supply, with the fourth quarter of last year reporting a settlement surplus of US$1.2 billion. An index weighing bank clients’ willingness to purchase forex fell 9 percent year on year, while individual cross-border remittances and deposits also shrank significantly compared with 2016. “The year 2017 marked the threshold when China’s cross-border capital flow transited from net outflow to general balance,” said SAFE spokeswoman Wang Chunying. China’s forex reserves ended the downward trajectory of the previous two years to gain US$129.4 billion in 2017, while its current account surplus remained in a reasonable range and the financial account saw net capital inflow in the first three quarters of last year. Wang attributed the more balanced forex supply and demand to steady domestic economic expansion, acceleration of the financial sector’s opening as well as a recovering global economy. Cross-border capital flow will continue to remain generally stable as China’s emphasis on high-quality growth will boost market confidence and more opening-up efforts will lure more capital, said Wang.

6.9 percent GDP rise beats forecasts

Thu, 01/18/2018 - 17:01
CHINA’S economy expanded by a more-than-expected 6.9 percent last year, amid the deepening of supply-side reforms, the National Bureau of Statistics said yesterday. The annual growth of GDP was above the government’s official target of 6.5 percent and marked a recovery from a 26-year low of 6.7 percent in 2016. GDP growth in the fourth quarter was 6.8 percent, the same as the third quarter but slower than the 6.9 percent growth in the first two quarters. The services sector led growth with an increase of 8 percent, outpacing the industrial sector’s 6.1 percent and the agricultural industries’ 3.9 percent. Services continued to make up 51.6 percent of the country’s 82.71 trillion yuan (US$12.85 trillion) GDP. Industrial value-added output expanded 6.6 percent year on year in 2017, up from 2016’s 6 percent led by high technology and equipment manufacturers. “The domestic economy was steady, positive, and above expectations,” the statistics bureau said. “Economic dynamism, momentum, and potential have been released and the stability, coordination and sustainability have significantly enhanced.” Ning Jizhe, the bureau’s head, said in a briefing that structural reforms achieved important progress last year with capacity reduction in high energy consumption industries, lower debt burden of industrial companies, and greater investment in agriculture and environment protection. Momentum gathered in the “new economy” — referring to new skills, new products, new industries, and new business models. Ning highlighted that 13 million new jobs were created last year, and the foreign exchange reserves rose to US$3.14 trillion. Yesterday’s figures showed retail sales up 10.2 percent year on year, slightly lower than the 10.4 percent increase in 2016. ‘New momentum’ Fixed-asset investment rose 7.2 percent year-on-year, down 0.9 percentage points from 2016. Specially, private investment reached 38.15 trillion yuan, up 6 percent year on year, 2.8 percentage points faster than the previous year, accounting for 60.4 percent of the total investment. Online sales of physical goods rose 32.2 percent to 7.18 trillion yuan, amounting to 15 percent of total retail sales, 2.6 percentage points higher than 2016. Cheng Shi, chief economist of ICBC International, attributed the faster-than-expected economic growth last year to emergence of new momentum instead of government stimulus in investment. “The year 2017 concluded in a steady way after surprising recovery in the first half,” said Cheng. “Benefits of supply-side have been released, and macro-economic policies in the new age are expected to support and accelerate the shift from traditional industries to new momentum, creating new room for high quality development in China.” The institute said China’s GDP growth could still reach 6.9 percent this year as a long-term recovery trend is consolidated. Earlier data showed China’s consumer inflation was 1.6 percent last year, cooler than the 2 percent for 2016, while the factory-gate prices rose for the first time in six years. Foreign trade recorded its first expansion in three years under strong domestic and external demand. Standard Chartered Bank forecast China’s GDP will be “moderate” this year, up to 6.5 percent, with greater emphasis on reforms in pursuit of higher quality of development. “While the government has continuously emphasized stability in the process of moving forward, we sense a tilt in the balance toward faster reforms and increased risk-taking in 2018, which marks the 40th anniversary of the launch of China’s reform and opening up,” the bank said in a note. The bank said potential risks to the economy include smaller property investment, lower growth and higher inflation, as well as escalating trade friction with the United States.

More money in people’s pockets

Thu, 01/18/2018 - 17:01
CHINA’S per capita disposable income stood at 25,974 yuan (US$4,033) in 2017, up 7.3 percent year-on-year in real terms, official data showed yesterday. The increase was 1 percentage point faster than the 6.3 percent rise registered in 2016. Separately, urban and rural per capita disposable income reached 36,396 yuan and 13,432 yuan, respectively, in 2017, up 6.5 percent and 7.3 percent in real terms after deducting price factors, according to the National Bureau of Statistics. In 2017, China had 286.52 million rural migrant workers, up 1.7 percent from 2016. Their average monthly income was 3,485 yuan, up 6.4 percent year on year. By 2020, China aims to double the per capita income of its urban and rural residents from 2010 levels, to build a moderately prosperous society.

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