Japan warns about risks to economy as outbreak toll mounts

Chinese tourists wearing protective face masks wait to board a Tokyo train. Japanese exporters are worried the virus outbreak will hit earnings. (AP)
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Updated 29 January 2020

Japan warns about risks to economy as outbreak toll mounts

  • China is Japan’s second-largest export destination

TOKYO: Japanese Economy Minister Yasutoshi Nishimura on Tuesday warned that corporate profits and factory production might take a hit from the coronavirus outbreak in China that has rattled global markets and chilled confidence.

Asian stocks extended a global selloff as the outbreak in China, which has killed 106 people and spread to many countries, fueled concern over the damage to the world’s second-largest economy — an engine of global growth.

“There are concerns over the impact to the global economy from the spread of infection in China, transportation disruptions, cancelation of group tours from China and an extention in the lunar holiday,” Nishimura said.

“If the situation takes longer to subside, we’re worried it could hurt Japanese exports, output and corporate profits via the impact on Chinese consumption and production.”

China is Japan’s second-largest export destination and a huge market for its retailers. The Chinese make up 30 percent of all tourists visiting Japan and spent nearly 40 percent of the total sum foreign tourists used last year, an industry survey showed.

The outbreak could hit Japanese retailers and hotels, which count on a boost to sales from an inflow of Chinese tourists visiting during the lunar holiday.

Automaker Honda Motor, which has three plants in Wuhan, the epicenter of the outbreak, plans to evacuate some staff. Economists at SMBC Nikko Securities estimate that if a ban China has imposed on overseas group tours lasts another six months, it could hurt Japan’s economic growth by 0.05 percent.

Some expect the potential damage could be much worse.

Hideo Kumano, chief economist at Dai-ichi Life Research Institute, said the decline in tourists from China could hurt Japan’s GDP growth by up to 0.2 percent.

“The biggest worry is the risk the negative impact from the outbreak persists and hits (the economy) during the Tokyo Olympic Games,” when a huge number of Chinese tourists are expected to visit Japan, he said.


Saudi Arabia’s Burgerizzr to begin IPO in August

Updated 10 sec ago

Saudi Arabia’s Burgerizzr to begin IPO in August

  • Company to begin share offering on August 15
  • 29 percent of share capital to be offered

RIYADH: Saudi burger chain Burgerizzr said it plans as share offering next month with the aim of listing on the Tadawul’s parallel stock market Nomu in September.

Burgerrizr, which was founded in 2009 by Mohammad Al-Ruwaigh, says it is Saudi Arabia’s largest burger chain and has more than 80 outlets across the Kingdom.

The company plans to offer 725,000 shares, representing 29 percent of its SR25 million capital, it said in its prospectus on Thursday.

The subscription period will be from August 15 through August 23, while the final allocation of the offering shares will be announced on September 1, 2021, it said.

The offering process is being led by Emirates NBD Capital Saudi Arabia as financial adviser and lead manager, while AlSaleh and AlSahli Law Firm provides the services of legal adviser for the offering.

The Saudi Capital Market Authority (CMA) announced last June that it had approved the offering of Burgerizzr shares on the Nomu parallel market.

“The offering is a major step toward moving the company to new horizons and markets,” Chairman Mohammed Al-Ruwaigh said, according to the chain’s website.


Egyptian transport start-up Swvl to list on Nasdaq after $1.5bn SPAC merger

Updated 57 min 11 sec ago

Egyptian transport start-up Swvl to list on Nasdaq after $1.5bn SPAC merger

  • Investors including Zain, Agility, Luxor Capital inject $100 million
  • Proceeds to be used to expand to 20 countries by 2025

CAIRO: Egyptian mass transit start-up Swvl said it plans to list of the Nasdaq stock exchange through a merger with US special purpose acquisition company (SPAC) Queen’s Gambit Growth Capital.

Swvl will be valued at $1.5 billion in the deal, which will generate proceeds of as much as $445 million, including $100 million from investors including Kuwaiti logistics company Agility, Saudi telecoms company Zain and Luxor Capital Group, it said in a statement.

The proceeds will be used to fund expansion of the company’s business to 20 countries by 2025, it said. Swvl operates buses along fixed routes and allows customers to reserve and pay for them using an app in 10 countries including Egypt, Saudi Arabia, the UAE, Jordan, Kenya, and Pakistan.

More than 1.4 million riders have booked more than 46 million rides to date, it said.

“We have succeeded in executing our business plan in some of the most challenging emerging markets, where inefficiencies in infrastructure and related mass transit systems represent a universal problem, and have now reached a critical inflection point where we are ready to share our expertise and technology with the rest of the world,” said Mostafa Kandil, Swvl founder and CEO.


Saudi Arabia Plans $15bn technology fund with private investors

Updated 29 July 2021

Saudi Arabia Plans $15bn technology fund with private investors

  • Investments in the fourth industrial technology expected to reach $200 billion in the Kingdom
  • Fund to invest in robotics, artificial intelligence, and wireless technology

RIYADH: A Saudi public-private partnership will launch a $15 billion technology fund to advance the digital infrastructure in the Kingdom, Haytham AlOhali, vice minister of the Ministry of Communications & Information Technology (MCIT) announced on Wednesday, during the Saudi 4th Industrial Revolution conference held in Riyadh.

Telecom and technology operators invest between $3 billion and $4 billion annually in digital infrastructure, fiber infrastructure, Internet networks and 5G services, and this is not enough for the Kingdom to take a lead, said AlOhali.

"We will transform in Saudi Arabia into an economy based on technology, information, capabilities and skills, and it will bear fruit for the future with huge investments from more than 10,000 industrial facilities worth $25 billion," he said, during the two-day-conference.

The investments in the fourth industrial technology are expected to reach $200 billion in the Kingdom, with value creation coming from improved efficiency and reduction in cost over a 10 year period, said AlOhali.

There are 13,000 solar energy centers that rely on 5G to implement their services, with 10 million smart meters in the Kingdom, while 60 percent of cities are covered by 5G and 45 percent of the Kingdom's populated areas receive 5G, he said.

Saudi Arabia has invested in the mobile infrastructure leading the Kingdom from rank 105 in terms of speed to the 4th in the world, he said.

Advanced technology from the Fourth Industrial Revolution (4IR) is expected to generate around $1 trillion for the Saudi economy in new revenue streams, a senior Saudi official said on Wednesday.

The Kingdom will enjoy economic boosts from robotics, artificial intelligence, and wireless production models as it pushes for more smarter cities and infrastructure.

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Saudi Arabia suspended world’s largest desalination and power plant privatization due to pandemic — official

Updated 29 July 2021

Saudi Arabia suspended world’s largest desalination and power plant privatization due to pandemic — official

  • Tender process began in summer of 2020
  • National Center for Privatization & PPP CEO Rayyan Nagadi spoke

RIYADH: Saudi Arabia has suspended the privatization of Ras Al Khair Desalination and Power Plant due to the repercussions of the coronavirus pandemic, which slowed the responses it got from bidders, National Center for Privatization & PPP CEO Rayyan Nagadi said.

“It is clear that the pandemic repercussions affected the response of companies in the world to a project of the size of the Ras Al-Khair plant,” he said.

Suspension of the world’s biggest desalination and power plant privatization was announced by the Privatization Supervisory Committee for the Environment, Water and Agriculture on Monday.

This decision was made to capitalize on knowledge and capacity built in the Kingdom as a result of many years of experience in the areas of water desalination, new technologies, R&D and supply chains, the committee said at the time.

Reaching the decision to cancel the project had passed through stages that took into account that the desalination assets had developed their own strategies for a long time, and the tender process began in the summer of 2020 through the development of studies, with the interest of local and international developers, he told Al Arabiya on Wednesday.

The country aims at launching such major projects with efficiency, and will resume privatization of other projects in other sectors, including the education sector, said Nagadi.

Several ministries are working on initiatives aimed at facilitating the process of establishing companies, and facilitating the process of participation from the private sector, all in the context of strengthening the privatization environment in the Kingdom, he said.


Volkswagen lifts margin outlook again after record profit

Updated 29 July 2021

Volkswagen lifts margin outlook again after record profit

  • H1 operating profit reached 11.4 billion euros
  • Lowers outlook for deliveries on chip shortage

FRANKFURT: Europe’s largest carmaker Volkswagen on Thursday raised its profit margin target for the second time in less than three months, pointing to record earnings in the first half of 2021 that even blew past pre-pandemic levels.
The company said it now expected an operating return on sales of 6.0-7.5 percent, having previously guided for 5.5-7 percent and nudged up its forecast for net cash flow at its automotive division, now expected to be much stronger in 2021.
First-half operating profit before special items reached 11.4 billion euros ($13.5 billion), above the previous record of 10 billion euros achieved in 2019, before the coronavirus pandemic wreaked havoc in the global economy.
The strong increase was in part driven by high demand for high-margin luxury Porsches and Audis.
“We’re keeping up our high pace, both operationally and strategically,” Chief Executive Herbert Diess said in a statement, published only hours after the carmaker, along with partners, launched a bid for French-listed Europcar.
“Our electric offensive is picking up momentum and we will keep on increasing its pace in the months to come,” said Diess, who aims for Volkswagen to overtake Tesla as the world’s largest electric vehicle player by 2025.
Porsche SE, Volkswagen’s largest shareholder, also raised it outlook following the carmaker’s result, now forecasting profit after tax of 3.4 billion to 4.9 billion euros in 2021.
Shares in Volkswagen were indicated to open 0.7 percent higher in pre-market trade.
The global car sector has been hit by a shortage of crucial semiconductors, with numerous rivals, including Daimler , BMW and GM, adjusting or halting production, and Volkswagen accounted for that in its deliveries forecast.
“The risk of bottlenecks and disruption in the supply of semiconductor components has intensified throughout the industry,” the company said, lowering the outlook for deliveries to customers.
It now expects deliveries to be up noticeably in 2021 from the 9.3 million last year, having previously expected them to rise “significantly.”