BEIJING: Growth at China's big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened, an official survey showed on Saturday, reinforcing views that the economy needs more stimulus as it faces fresh risks from a stock market slump.
The official Purchasing Managers' Index (PMI) stood at 50.0 in July, compared to the previous month's 50.2. The 50-point mark separates growth from contraction on a monthly basis.
Analysts polled by Reuters had predicted another tepid reading of 50.2, pointing to expansion, albeit a sluggish one.
However, both export and domestic orders shrank for the large firms covered by the survey, and in response they continued to cut jobs.
It did not mention any impact from a savage 30 percent drop in stock markets since mid-June, though analysts said wild price swings could hit consumer and business confidence and investment decisions, adding pressure on the already cooling economy.
"It warrants more concrete policy measures to stabilize the real economy. Perhaps the funds used to prop up the share market could be used to support the real economy," ANZ economists Li-Gang Liu and Louis Lam said in a research note.
ANZ maintained its forecast that the central bank will cut interest rates by another 25 basis points (bps) this quarter and reduce banks' reserve requirements by 50 bps by year-end.
The government has rolled out a flurry of steps since last year to try to put a floor beneath sputtering economic growth, including accelerating infrastructure spending and repeated reductions in interest rates and banks' reserve ratio. But growth is still expected to moderate this year to around 7 percent, the slowest in a quarter of a century.
The statistics bureau said the weaker reading was partly due to the weather, as hot temperatures and heavy rain led some firms to reduce production and carry out maintenance.
"The recent fall in prices of oil and other commodity products also affected related industries," it added.
A preliminary, private Caixin/Markit survey last month showed activity at smaller factories contracted by the most in 15 months.
China's slowdown has already become a sharp reality check for many foreign companies doing business there and for its export-reliant Asian neighbors.
Volkswagen lowered its global sales forecast on Wednesday and said it was braced for stagnant volumes in China, after years of double-digit growth in its biggest market.
South Korea on Saturday reported exports to China, its biggest customer, fell 6.4 percent in July from a year earlier, the sharpest decline in five months.
The stock market plunge has stoked fears among global investors about further damage to the Chinese economy, while Beijing's unprecedented but so far unconvincing efforts to hold up share prices have led to doubts about its ability to ensure financial stability.
Market watchers fear that some companies may be facing heavy losses after speculating in stocks, although the overall amount of leverage is hard to quantify.
Still, economists at Nomura said this week that China was "far from being in a crisis scenario", and believe the share sell-off "should only have a limited negative impact on the real economy."
A similar activity survey on Saturday suggested strength in the services sector continued to offset some of the persistent weakness at factories, but there were worrying signs on that front, too.
The official non-manufacturing Purchasing Managers' Index (PMI) edged up to 53.9 in July, compared with the previous month's reading of 53.8 and pointing to solid expansion.
But services companies also reported softer orders, with the new orders sub-index falling to 50.1 in July from 51.3 in June, and firms cut jobs at a slightly faster pace.
The services sector has accounted for the bigger part of China's economic output for at least two years, with its share rising to 48.2 percent last year, compared with the 42.6 percent contribution from manufacturing and construction.
China's Politburo has promised to step up "targeted" adjustments to economic policy to foster stable growth in the world's second-largest economy, media said on Thursday.
In a rare acknowledgement of the challenges ahead, state radio quoted the decision-making body of the Communist Party as saying that China had yet to find new drivers to power its economy at a time when old engines are flagging.
Chinese manufacturing growth stalls in July
Chinese manufacturing growth stalls in July
Saudi minister and US counterpart agree road map for cooperation in energy sector
- During meeting in Riyadh, Prince Abdulaziz bin Salman and Jennifer Granholm discuss ways to enhance energy-related collaborations
- They also review Kingdom’s efforts to tackle climate change through local and regional initiatives, including the Saudi and the Middle East green initiatives
RIYADH: The Saudi minister of energy, Prince Abdulaziz bin Salman, and the US secretary of energy, Jennifer Granholm, on Wednesday agreed a road map for cooperation between the countries in the sector.
During a meeting in Riyadh, they also discussed ways in which collaborations might be enhanced in energy-related fields such as carbon management, clean hydrogen, nuclear energy, electricity and renewables, innovation, energy-sector supply chain resilience, and energy efficiency. The two countries signed a Partnership Framework for Advancing Clean Energy in July, 2022.
The officials also reviewed the Kingdom’s efforts to tackle climate change through local and regional initiatives based on a circular carbon economy, including the Saudi and the Middle East green initiatives, the ministry said.
The new road map represents a joint plan for energy cooperation that establishes a timeline and outlines critical projects for collaboration, officials said.
Both sides agreed to engage in various activities to implement the road map, including: exchanges of knowledge on policies related to the joint plans, such as standards and regulatory frameworks; enhancement of joint research and development, especially in the field of new technologies; and the building of human capital through training and exchanges of expertise.
Speed of Saudi innovation ‘wowing’ UK, says British trade campaign executive
RIYADH: UK delegates at the GREAT Futures Initiative Conference have been “wowed” by Saudi Arabia's business landscape, according to a senior British trade executive.
Speaking during an interview with Arab News, Kate Taylor Tett, director of the GREAT Britain and Northern Ireland Campaign, noted that the event served as a catalyst for change and progress by facilitating cross-sectoral collaboration and dialogue between counterparts from both nations.
She also stressed the fast pace of innovation observed in Saudi Arabia, which has left a strong impression.
“I think what this event has done is put Saudi right at the top of that list. So at the moment, you know, Saudi is the 24th biggest trading partner for the UK,” Tett said.
She added: “I think this top event will really accelerate that because people see it as an opportunity that they need to address right now, not at some point in the future, and hopefully that’s really exciting for businesses.”
Tett also stated that the event attendees were impressed by what they experienced in Saudi Arabia, which led to a shift in their opinions about the market.
“I haven’t spoken to a single person at this event who hasn’t been wowed by what they’ve seen when they’ve come here. I think their opinions have shifted, and that in itself is a huge opportunity,” she said.
Tett also explained that the event is not just a two-day gathering; it is a program that extends over a year and involves various collaborations between UK businesses and counterparts in Saudi Arabia.
“I know there’ll be lots of sort of cross-fertilization in that way, so this, these two days are very much a catalyst for initially a year-long program. But I think what you’ll see is that then that becomes a leap pad for things beyond that,” she said.
Commenting on the UK-Saudi partnerships, Tett emphasized the significance of innovation in collaboration between countries that are actively engaged in progressive undertakings.
She also stressed the fast pace of innovation observed in Saudi Arabia, which has left a strong impression.
“Everybody I’ve spoken to here has just been wowed by the pace of innovation in Saudi. And clearly bringing that innovation together and companies working together just creates these huge opportunities which have an economic benefit on both sides of the partnership,” Tett underscored.
She added: “I think what really hit me has been the energy and the positivity of everybody that I’ve met. I spent some time working in the world of startups, and I think Saudi feels like a huge startup. Everything feels possible.”
She concluded by expressing her enthusiasm among the participants and describing their collective drive to make progress as “really infectious.”
Saudi property forum to enhance local real estate supply chain access
RIYADH: Saudi real estate firms are poised to gain improved access to the supply chain with major industry players set to gather in Riyadh for an event designed to enhance cooperation and forge partnerships.
Under the patronage of the Minister of Municipal and Rural Affairs and Housing Majid bin Abdullah Al-Hogail, the National Housing Co. will host the Real Estate Supply Chain Forum from May 20 to 21 at the JW Marriot Hotel Riyadh, with the aim of fostering the growth of the property sector.
The event will gather a diverse array of local and international companies, consultants, contractors, and manufacturers to explore collaborative opportunities aimed at delivering integrated housing projects focused on quality and affordability, according to the Saudi Press Agency.
The forum will also provide promising investment opportunities, facilitate the signing of investment agreements and strategic partnerships, establish new standards, and find innovative solutions for real estate development.
Additionally, the gathering will unveil the latest agreements to secure supply chains between the NHC and a range of local and global partners.
Several scheduled dialogue sessions will showcase the latest technologies in the building materials industries. These talks will facilitate the exchange of expertise between local and international companies, aiming to enhance the supply chain network.
On May 5, the NHC signed a deal with China’s leading firm, CITIC Construction Group, to establish an industrial city and logistic zones for building materials, comprising 12 factories, with the objective of securing supply chains for the NHC’s housing projects.
NHC CEO Mohammad Al-Buty finalized the deal during Al-Hogail’s official visit to China.
The NHC said the agreement with the Chinese construction group is part of its efforts to secure supply chains for its housing projects and ensure their timely completion and high quality.
The Saudi company highlighted that the deal includes the construction of 12 factories specializing in building materials, harnessing Chinese expertise, and involving local factories to uplift business standards.
It added that the agreement also aims to draw top-tier service providers across various company sectors, its subsidiaries, and other projects.
The firm pointed out that the pact is expected to maximize the economic and developmental impact of the real estate sector in the Kingdom, develop housing projects, enhance their quality, and promote national transformation in the construction sector through these industrial cities and logistic zones.
British Airways to resume Jeddah operations, enhancing UK-Saudi connectivity
RIYADH: British Airways is set to resume operations in Jeddah after a five-year hiatus, aiming to enhance connectivity to the Kingdom, the airline said.
Announced at the GREAT Futures Initiative Conference held in Riyadh, the route is scheduled to commence on Nov. 4, offering year-round service to the Saudi city from London Heathrow, according to a press release.
The new service, operated by the Boeing 787 fleet, will total four flights per week, and sit alongside the daily operations between Riyadh and Heathrow.
Speaking at the event, Colm Lacy, British Airways’ chief commercial officer, said: “We have a long history of connecting families, friends and businesses in the Kingdom of Saudi Arabia with our home in London.”
He added: “There are significant opportunities for businesses in both countries, so we’re pleased we can re-build our connectivity and strengthen links between the two kingdoms.”
In a joint statement, Mazen Johar, CEO of Jeddah Airports, and Majid Khan, CEO of Saudi Air Connectivity Program, said: “The return of the UK’s flag carrier to Jeddah, with new flights from London Heathrow, will further strengthen our air connectivity from the capital.”
They added: "With British Airways’ leading network in the UK, Europe, and onwards to North America, travelers can experience an untouched wonder, Saudi Arabia, through one of the leading global carriers, further supporting our growing inbound tourism and aviation market.”
Earlier this week, the Kingdom’s General Authority of Civil Aviation released a statement revealing that an ambitious roadmap outlining Saudi Arabia’s tenfold growth in the aviation sector into a $2 billion industry is on track to be unveiled at the Future Aviation Forum in May.
The plans encompass the business jet segment, including charter, private, and corporate aircraft, and aim to bolster Saudi Arabia’s development as a global high-value enterprise and tourist destination, the statement noted at the time.
It also highlighted that the plan comes after Saudi Arabia revised its 2030 tourism target upward from 100 million to 150 million visitors in October 2023.
Also earlier this week, the Kingdom’s Minister of Commerce announced that partnerships between Saudi Arabia and the UK encompass over 60 initiatives across 13 sectors, with trade between the countries up by a third since 2018.
During the opening remarks of the GREAT Futures Initiative Conference, Majid Al-Qasabi noted that bilateral trade surged between 2018 and 2023, exceeding £79 billion ($99.12 billion).
With over 1,100 active licenses for UK investors, developments such as the giga-projects in the Kingdom and policy reforms are enhancing business opportunities, the minister emphasized.
Closing Bell: Saudi main index dips for the second consecutive day
RIYADH: Saudi Arabia’s Tadawul All Share Index continued its downward movement for the second consecutive day, as it shed 17.71 points to close at 12,103.20.
The total trading turnover of the benchmark index on Wednesday was SR6.30 billion ($1.68 billion), with 128 stocks advancing and 96 declining.
On the other hand, Nomu, the parallel market, marginally went up by 0.03 percent to 26,666.16.
However, the MSCI Tadawul Index edged down by 0.47 percent to close at 1,512.30.
Saudi Industrial Development Co. was the best-performing stock on the main index. The company’s share price surged by 9.95 percent to SR9.61.
Other top performers were Wafrah for Industry and Development Co. and Al-Baha Investment and Development Co., whose share prices soared by 9.9 percent and 7.69 percent respectively.
The worst-performing stock was Basic Chemical Industries Co., as its share price slipped by 7.57 percent to SR33.60.
On the announcements front, Seera Group Holding revealed that its net profit rose to SR61 million in the first quarter of this year, representing a rise of 7.01 percent compared to the same period of the previous year.
In a Tadawul statement, the travel firm noted its total revenue for the first quarter stood at SR1.07 billion year on year driven by continued growth in the car rental and travel platform segments and the new acquisitions within Portman Travel Group.
Lumi Rental Co. also announced its financial results. The company said that its net profit fell by 11.15 percent to SR44.71 million in the first quarter of this year compared to the same period in 2023.
Zamil Industrial Investment Co., which reported its earnings, revealed that it swung to a net profit of SR5.42 million in the first three months of this year, compared to a net loss of 13.81 million in the same period of the preceding year.
Zamil attributed the rise in profits to its sales growth, which went up by 25.5 percent, along with higher operating income in the steel and insulation sectors.
Meanwhile, Shatirah House Restaurant Co., also known as Burgerizzr, reported a net profit of SR5.3 million in the first quarter of this year, compared to the SR1.4 million net loss it incurred in the same quarter of 2023.
In a Tadawul statement, Burgerizzr said that the rise in net profit was driven by higher same-store sales and an increased number of guests.
