Shanghai Daily Business
Updated: 1 hour 52 min ago
AEROSPACE firms are setting out products from luxury jets to lethal drones at back-to-back British air shows this week, hoping trade tensions will not deter airlines from buying jetliners even as geopolitical uncertainty allows them to sell more weapons.
The quintessentially English atmosphere of the Royal International Air Tattoo, where straw-hatted VIPs watch fighters thunder over picturesque Cotswolds villages, gives way on Monday to the Farnborough Airshow, where the hard-nose business deals in the US$800 billion aerospace and defence sector will be done.
Trade tensions between the United States and both China and Europe, disputes over the consequences of Britain’s exit from the European Union and an increase in global protectionist rhetoric have barely dented a prolonged industry boom.
“The overall environment will reflect industry health, despite the dark clouds of Brexit and other global trade setbacks in the background,” said analyst Richard Aboulafia of Teal Group.
“In short, we’ll see more of what we’ve seen for years: aviation remaining a strangely protected and happy corner of a turbulent world.”
Boeing is expected to confirm demand for air transport is rising after Airbus lifted forecasts last week, citing strong economic growth in emerging markets and the need to replace older planes in Western markets.
The bullish outlook was underscored ahead of the show by forecasters Flightglobal Ascend.
The two giants will add to record orders for benchmark narrowbody jets, whose waiting lists underpin their near-record share prices, while seeking a recovery in sales of bigger jets.
After a lull, Boeing will be looking for a boost to its largest twinjet, the future 777X. Sources said recently it is in talks for an eye-catching deal with Saudi Arabia.
Airbus will hope to end uncertainty over AirAsia’s support for its A330neo jet after a showdown on prices. That could also involve a deal for smaller planes, though doubts have been expressed over financial commitments to Airbus.
Farnborough is the first such event since Airbus and Boeing shook up the industry by agreeing to absorb key commercial programs of smaller rivals Canada’s Bombardier and Brazil’s Embraer as they prepare for competition from China.
The result should be a fierce contest for sales in the 100-150-seat sector even before Boeing closes its Embraer deal.
A new airline, Moxy, is expected to confirm a large order for the rebranded Airbus A220, the former Bombardier CSeries.
The event is also expected to provide new evidence of strong demand for freight planes as e-commerce drives up shippers’ profits.
Analyst predictions for total commercial orders and commitments vary from last year’s 900 to about half that. While high fuel prices make efficient new planes attractive, they hurt the bottom line of buyers, delaying some decisions.
“We are not blind: there are things that need to remain on watch,” the head of major engine-maker CFM said.
BRITISH jet engine maker Rolls-Royce has designed a propulsion system for a flying taxi and is starting a search for partners to help develop a project it hopes could take to the skies as soon as early next decade.
Rolls-Royce said yesterday it had drawn up plans for an electric vertical take-off and landing vehicle, or flying taxi, which could carry four to five people at speeds of up to 400 kilometersper hour for approximately 800 kilometers.
The company, which makes engines for planes, helicopters and ships, joins a variety of companies racing to develop flying taxis, which could revolutionise the way people travel.
Long the stuff of science fiction and futuristic cartoons such as “The Jetsons”, aviation and technology leaders are working to make electric-powered flying taxis a reality, including Airbus, US ride- sharing firm Uber and a range of start-ups including one backed by Google co-founder Larry Page, called Kitty Hawk.
Rolls-Royce’s design will be showcased in digital form at the Farnborough Airshow, which starts today. The company is looking for an airframer and a partner to provide aspects of the electrical system to help commercialise the project.
Rolls-Royce said it was well-placed to play a leading role in the “personal air mobility” market.
“The initial concept vehicle uses gas turbine technology to generate electricity to power six electric propulsors specially designed to have a low noise profile,” the company said, adding the design used its existing M250 gas turbine. Rolls’ design would not require re-charging because the battery is charged by the gas turbine.
China’s central bank is taking measures to ban businesses refusing or discriminating against cash payments to deal with the over-hype of a cashless society.Some consumers have complained about being denied using cash in places like tourist areas, restaurants, and retail stores, which harms the legal status of the Chinese yuan as well as consumers’ rights to choose means of payment, according to a statement released Friday by the People’s Bank of China.Banking institutions and non-banking payment platforms should not require or induce business entities or individuals to refuse or take discriminatory measures against cash payments, and these practices should be rectified within one month, the statement said.Mobile payments are popular across the country with a growing community of consumers using WeChat Pay, Alipay, and other mobile payment tools.A report from global market research firm Ipsos showed that China reached about 890 million mobile payment users in the first half of this year. For sales from online or unstaffed stores, cashless payment only is allowed if cash payments are impossible.
MALTA and Chinese technology giant Huawei signed a memorandum of understand on Saturday that will improve Maltese businesses via 5G, especially digital infrastructure for smart cities.
The agreement, which was signed by Huawei Technologies Italia CEO Miao Xiaoyang and Maltese Parliamentary Secretary for Digital Economy Silvio Schembri, comes two years after Malta and Huawei signed another MOU that had seen the company test its flagship 5G Internet connectivity in Malta.
Miao said that the technology would offer greater bandwidth and facilitated mass connections that could eventually be harnessed to create smart cities.
Schembri said Huawei would commit to sustaining academic research with a focus on addressing real world challenges related to public safety, video analytics, data processing and IT systems.
The MOU would also create opportunities through education, starting with an ICT training program for Maltese students at Huawei’s training center in China. Schembri said he was happy that Huawei had selected Malta to test its “avant garde 5G technology.
CLOSE to 70 percent of US companies doing business in China opposed tariffs, according to a survey by the American Chamber of Commerce in Shanghai.
The survey also pointed out that most US companies operating in China expected to raise investment in 2018
China and the US are engaged in a tit-for-tat retaliatory tariff battle but 69 percent of the 434 respondents in the survey opposed tariffs while only 8.5 percent supported them. Another 22.6 percent were unsure how they felt, the report released by AmCham today showed.
“Opposition to retaliatory tariffs was firmest in sectors likely to be targeted by Chinese counter-retaliatory tariffs, including non-consumer electronics (95 percent), chemicals (85 percent) and agriculture and food companies (78 percent),” said Kenneth Jarrett, president of AmCham Shanghai.
Faint support for tariffs was concentrated in services, led by education and training as well as legal services because these businesses felt they had little to lose, Jarrett added.
On a slightly brighter note, the survey also highlighted that 61.6 percent of US companies operating in China would increase their investment in 2018, led by those in the technology, services, and aviation sectors. This more optimistic note came despite a mild drop in investment growth in 2017.
More companies are also beginning to prioritize China in their investment strategies.
Companies whose first investment priority was China rose 3 percent to 27 percent, while 30 percent said it was their second to third priority, the survey revealed.
Overall 80 percent of the companies were optimistic, identical to last year, the chamber said.
Companies also believe that in the past few years Chinese government policies and regulations toward foreign companies have improved slightly with 34 percent of the respondents seeing improvements, a 6 percent rise from a year earlier, according to the survey.
Meanwhile a clear majority of respondents hailed China’s increasing consumption for the opportunities afforded to them over the next three to five years. Companies also welcomed innovations in technology, media, telecommunications and urbanization, according to the survey.
But 44 percent of the companies reported that policies and regulations had remained the same. Over 20 percent of the respondents said the environment had worsened, according to the survey.
In the next three to five years, companies will face the top three challenges of labor cost concerns, domestic competition, and an economic slowdown, the survey showed.
Also noteworthy, respondents said that lack of intellectual property rights protection and enforcement as well as obtaining licenses were seen as the top two regulatory obstacles.
Hyundai Motor Co’s labor union said yesterday that steep auto tariffs the US is considering could cost tens of thousands of American jobs, echoing concerns of the global auto industry as spiraling trade conflicts between the US and other major economies heat up.The labor union at South Korea’s largest auto company said in a statement that if President Donald Trump goes ahead with imposing 25 percent auto tariffs, it will hurt Hyundai’s US sales and jeopardize some 20,000 jobs at a Hyundai factory in Alabama.The labor union, which has 51,000 members in South Korea, said its contracts with Hyundai Motor mandate Hyundai to shut down overseas factories first before closing its plants in South Korea in the event that restructuring becomes inevitable.“If South Korean car exports to the US get blocked and hurt sales, the US factory in Alabama that went into operation in May 2005 could be the first one to be shut down, putting some 20,000 American workers at risk of layoffs,” the statement said. The union said it expects South Korea to win an exemption from auto tariffs.The union also said that South Korean carmakers were already penalized during the renegotiations of the bilateral trade agreement. Seoul and Washington agreed to postpone the removal of tariffs on Korean pickup trucks by another 20 years, a measure that the auto industry was unhappy with but won South Korea an exemption from US steel tariffs.Hyundai Motor is the world’s fifth-largest automaker along with Kia Motors.The US Department of Commerce is investigating whether auto imports pose enough national security threats to justify tariffs. While there are views that the threat of auto tariffs is a negotiating ploy, there are also concerns that the Trump administration could deliver on the threats.The move has already met pushback from global automakers. The Association of Global Automakers, a coalition representing major global automakers including Toyota Motor Corp, Volkswagen AG, BMW AG and Hyundai Motor Co, warned last month that high tariffs on imported vehicles and auto components could slash hundreds of thousands of jobs in the US auto sector and dramatically raise vehicle prices for consumers.
EIGHT firms, including several Chinese tech startups, started trading in the Hong Kong market yesterday, cementing the city as a destination for mainland technology initial public offerings.
Inke, a live streaming service provider, Qeeka, an online home decoration platform and game developer Zhijian-Yd are among the firms.
Inke, which has grown quickly during China’s live streaming frenzy since 2016, closed at HK$4.65 (59 US cents) in its first trading day yesterday, up 10.65 percent from the IPO price. Qeeka, however, tumbled 6.39 percent to close at HK$4.54 yesterday.
On Monday, Xiaomi become the first listed firm in Hong Kong to sell shares with a dual-class structure after the city changed listing rules to allow company founders to keep outsized voting rights.
Shares of Xiaomi, which was valued at US$54.3 billion in its IPO, fell 6 percent from its IPO price of HK$17 on its debut in Hong Kong on Monday. But Xiaomi rebounded by 1.37 percent to close at HK$19.26 yesterday.
Hong Kong is now a popular destination for technology IPOs from the mainland and in the past two years, the market has seen IPOs from online health care platform Ping An Good Doctor, game gadget vendor Razer, online car-financing provider Yixin Group and online finance payment service provider ChinaPnR.
Internet giant Meituan-Dianping, online education platform Hujiang and online housing platform E-House all have plans to list in Hong Kong.
AIHUISHOU, an online second-hand consumer electronics trading platform, said yesterday that it raised US$150 million in the latest round of financing, giving the company a market value of US$1.5 billion.
Tiger Global Management and JD.com led the latest investment. Previously, Aihuishou had secured four rounds of financing valued at a total of US$132 million, with investors including Morningside, JD.com, IFC, Cathay Capital, Tiantu Capital and Greenwoods Investment.
Aihuishou will use the US$150 million to invest in information security. The company will open more directly-owned outlets in China, said Chen Xuefeng, founder and CEO of Aihuishou.
Founded in 2011, Aihuishou pays consumers for used smartphones and iPads and re-sells them for profit.
Its 100,000 outlets in China generate an annual trade volume of 4 billion yuan (US$6.06 billion).
BRITAIN yesterday cleared the way for Rupert Murdoch’s 21st Century Fox to take full control of pan-European TV giant Sky after Fox agreed to address media plurality concerns.
Despite the clearance, satellite pay-TV group Sky could still end up being bought by Comcast or Disney amid a US media industry tug-of-war.
“It is now a matter for the Sky shareholders to decide whether to accept 21CF’s bid,” Britain’s Culture Secretary Jeremy Wright said in a statement.
Fox’s long-running pursuit for all of Sky had been plagued by UK government fears over media plurality and broadcasting standards — and the influence of Australian-born US citizen Murdoch.
Critics say that allowing Murdoch — who owns major British newspaper titles The Times and The Sun — full control of Sky News would give him too much influence in the UK news business.
To remedy this, Fox has proposed to sell the rolling TV news channel to Disney should it win full control of Sky.
The UK government’s statement meanwhile comes one day after both Comcast and 21st Century Fox raised their bids for Sky, escalating a takeover battle as media giants reposition themselves for the streaming era.
Comcast lifted its offer to 26 billion pounds (US$34.3 billion) only hours after Fox boosted its offer for the 61 percent of Sky it does not own.
Fox’s latest bid values Sky at 24.5 billion pounds.
The battle for Sky comes as Comcast is also embroiled in a takeover battle with Disney for Fox entertainment assets that are being split off from Murdoch’s empire.
Some analysts have said Comcast could drop its bid for the Fox assets should it win Sky.
Media giants such as Disney and Comcast have been looking to beef up their creative offerings to compete with Netflix and other streaming services that are eroding the value of conventional cable television assets.
Sky’s jewel in the crown is its live coverage of English Premier League football, while the group also provides broadband Internet and telephone services.
“The stock market continues to believe that the winner of the Sky takeover battle will pay more than has currently been offered,” said Russ Mould, investment director at AJ Bell.
“Takeover battles don’t go on forever and at some point one of the competing parties will have to admit defeat,” he added.
Sky changed its name from BSkyB after agreeing in 2014 to purchase Sky Italia and a majority holding in Sky Deutschland.
PIZZA chain Papa John’s International Inc said on Wednesday its founder and former chief executive, John Schnatter, resigned as chairman of the board.
The company said Olivia Kirtley would act as lead independent director, and added it would appoint a new chairman in the coming weeks.
The resignation comes after Forbes reported earlier in the day that Schnatter used a racial slur on a conference call.
“Papa John’s condemns racism and any insensitive language, no matter the situation or setting ... We take great pride in the diversity of the Papa John’s family, though diversity and inclusion is an area we will continue to strive to do better,” the company said in a separate statement.
Schnatter, who founded the company in 1984, resigned as chief executive in December last year, after drawing criticism for comments he made at the National Football League leadership.
SOUTH Korea’s financial regulator said yesterday it had found intentional breaches of accounting rules at Samsung Biologics, the drugmaking unit once seen as Samsung’s future growth engine.
The Financial Services Commission said it will bring the case to prosecutors and ask Samsung Biologics to dismiss executives in charge of accounting breaches. It will also penalize an accounting firm that audited Samsung.
The FSC said the company failed to notify investors of crucial information related to its joint venture agreement with Biogen, a US biotechnology company. The missing information affected the valuation of Samsung Biologics and its subsidiary, allowing Samsung Biologics to suddenly become profitable for the first time in 2015 before its listing on a Seoul stock market in 2016.
The FSC said Samsung Biologics was aware that leaving out such information could violate accounting rules.
CHINA’S centrally-administered state-owned enterprises reported fast profit growth in the first half of the year with a lower debt-asset ratio, data showed yesterday.
Combined profits of China’s central SOEs totaled 887.79 billion yuan (US$133.1 billion) in the first six months, up 23 percent from a year earlier, the State-owned Assets Supervision and Administration Commission said.
The growth rate was 2.1 percentage points higher than the pace in the first quarter.
In June, central SOEs’ profits rose 26.4 percent year on year to a historic high of 201.88 billion yuan, said SASAC spokesperson Peng Huagang .
The total revenues of central SOEs stood at 13.7 trillion yuan in the first half, up 10.1 percent year on year.
“Such strong performance was partly due to China’s ongoing supply-side structural reform,” Peng said.
From January to June, central SOEs in the industrial sector raked in 515.28 billion yuan in profits, up 33.9 percent year on year, 10.9 percentage points higher than the average level.
Strategic emerging industries and new growth drivers contributed to the fast growth, with revenues of new businesses including Internet applications taking up over 50 percent of total revenues.
Central SOEs’ debt-asset ratio declined in the first half due to government deleveraging efforts.
FOREIGN direct investment into the Chinese mainland rose 1.1 percent year on year to 446.29 billion yuan (US$66.9 billion) in the first six months of 2018, official data showed yesterday.
In dollar terms, FDI inflow grew 4.1 percent to US$68.32 billion in the first half, Gao Feng, spokesman with the Ministry of Commerce, said at a press conference.
In June, FDI inflow added 0.3 percent year on year to 100.7 billion yuan.
The number of new overseas-funded companies set up in the first half surged 96.6 percent from a year earlier to 29,591, Gao said.
Investment into high-tech industries rose 1.6 percent and accounted for 20.9 percent of the total FDI, with the high-tech manufacturing sector attracting 43.37 billion yuan in overseas investment, up 25.3 percent. FDI into the instrument and apparatus sector jumped 179.6 percent.
In the six-month period, China’s 11 pilot free trade zones saw FDI inflow rise 32.6 percent to 57.84 billion yuan, with 4,281 new overseas-funded companies established.
Regions in western China used 28.84 billion yuan of overseas investment, up 13.2 percent in the same period.
Investment from countries along the Belt and Road surged 24.9 percent, while other major FDI sources also grew sreadily, Gao said.
China has rolled out a number of measures to significantly broaden market access since the beginning of 2018, a year that marks the 40th anniversary of the country’s reform and opening-up policy.
In late June, China unveiled a shortened negative list for foreign investment, which cuts the number of items on the list to 48 from 63 in the previous version and detailed 22 opening-up measures in several sectors. Enditem
THE second prototype of China’s domestically made narrow-body passenger aircraft, the C919, completed its first long-distance flight yesterday.
The single-aisle aircraft, labeled No. 102, took off from Pudong International Airport in Shanghai at 2:57pm and arrived at the Dongying Testing Base in east China’s Shandong Province at 4:43pm after covering a distance of more than 750 kilometers.
The Commercial Aircraft Corp of China (COMAC), C919’s developer, said it was the start of intensive flying tests. It will be tested for complicated weather conditions and high-risk test flying.
The second C919 aircraft, which rolled out from the assembly line on November 28 and had its first test flight in December, has completed a series of inspections on operation stability and flying performance before flying to Shandong, COMAC said.
The aircraft will test C919’s power unit as well as fuel, electrical and environment control systems.
The first and second prototypes of C919 will carry out a series of experiments simultaneously. The first C919, which made its maiden flight from Shanghai on May 5, 2017, is currently in Yanliang Testing Base in Xi’an, northwest China’s Shaanxi Province.
Some modifications have been made on the trailing cones and other systems of the first C919 prototype, COMAC said.
The company said there will be six C919 planes for various flight tests, and two others for static and fatigue tests on the ground, before the aircraft begins commercial operation around 2020. They will carry out more than 1,000 ground and air tests on power, performance, stability, flying control, frozen, high and low temperatures to acquire the airworthiness certificate.
During one of the ground tests, the aircraft was tested for extreme plate load. The test has been deemed as a major challenge for C919 because the ARJ21, China’s first domestically developed regional jet, had failed its first extreme plate load test in December 2009.
A series of other load tests will be conducted to ensure the C919 can meet the most advanced international airworthiness standard, COMAC said.
Also, another testing base for C919 will be set up in Nanchang in east China’s Jiangxi Province. The prototype jets will then have their main testing base at Shanghai’s Pudong Airport along with three supportive bases in Yanliang, Dongying and Nanchang. The prototypes will also conduct test flights to other domestic airports in special weather conditions.
The European Aviation Safety Agency has said it is in the process of certifying the C919, a key step for the single-aisle aircraft to get access to the European market.
Global access for the C919 will also be boosted by a Sino-US aircraft certification agreement signed in October, according to COMAC. The agreement between the Civil Aviation Administration of China and the US Federal Aviation Administration aims to widen mutual recognition of each country’s aviation products.
The C919, with 168 seats and a range of 5,555km, will compete for orders with the updated A320 (A320neo) and the new-generation Boeing 737 (737Max).
COMAC has secured 815 orders from 28 foreign and domestic airlines. Overseas buyers include Germany’s PuRen Airlines and Thailand’s City Airways, as well as Asia-Pacific and African carriers.
Rupert Murdoch’s 21st Century Fox has raised its offer for Britain’s Sky in an agreed deal valuing the pay-TV group at US$32.5 billion, seeing off rival bidder Comcast for now.Fox, which has been trying to buy the pan-European group since December 2016, offered to pay 14 pounds per share, a 12 percent premium to Comcast’s offer, but below the 15 pounds Sky shares were trading at yesterday.Analysts said the bid threw down the gauntlet for Comcast, the world’s biggest entertainment company, to return with a higher offer.The US cable group gatecrashed Murdoch’s attempt to buy the 61 percent of Sky his group did not already own in February, when Fox was still firmly stuck in the regulatory process.One top-40 Sky shareholder said they expected Comcast to come back with a counter bid for Sky.“The end price really depends on the appetite of those companies and how much they are willing to take their leverage up and at what stage their shareholders say enough is enough,” the shareholder, who did not wish to be identified, said.The fight for Britain’s leading pay-TV group is part of a bigger battle being waged in the entertainment industry as the world’s media giants offer tens of billions of dollars in deals to be able to compete with Netflix and Amazon.Comcast and Walt Disney are locked in a separate US$70 billion-plus battle to buy most of Fox’s assets, which would include Sky.Disney secured conditional US approval to buy the assets last month, giving it an edge over Comcast’s bid.Hong Kong-based hedge fund Case Equity Partners, a Sky investor, said the fact Disney was in a slightly more favorable position for Fox’s US media assets meant Comcast would fight even harder to get Sky.“Today’s Fox bid is unlikely to be the end game as we see a final Sky deal outcome at well over 15 pounds per share,” said managing partner Michael Wegener.Comcast declined to comment on Fox’s new offer.Present in 23 million homes across Europe, Sky is a prized asset, with a direct relationship with its customers and a slate of top sport and original drama content.“This transformative transaction will position Sky so that it can continue to compete within an environment that now includes some of the largest companies in the world,” Fox said.Its offer represents an 82 percent premium to Sky’s shares in 2016 before the takeover drama started, and a multiple of 21 times 2017 earnings per share.Sky’s senior independent director Martin Gilbert welcomed the move. “This offer reflects the strong position the business is in and is an attractive premium for shareholders,” he said.However, British regulators have indicated that if Disney succeeds in buying Fox, including the 39 percent stake in Sky, it would be required to offer the same price for the remainder of Sky. According to some shareholders, that has set an implied higher floor for Sky’s shares.Hedge funds including Elliott have bought into Sky in recent months and other vocal shareholders such as Crispin Odey have demanded that the independent directors secure a better deal.“It’s too low,” Odey, a former son-in-law of Murdoch whose eponymous hedge fund is a Sky shareholder, said of the sweetened Fox offer.“Disney’s internal forecasts now, on the basis of the cash flows they’ve published for Sky, would value it at 16 pounds,” he said.Investors argue that Sky’s continued strong trading performance, and its deal this year to secure the rights to English Premier League football at a lower than expected price, meant it warranted a higher offer.Fox said the performance of Sky since 2016 justified its new bid. Analysts said it was not a knock-out, and Fox did not say it was its final offer.“Fox coming back in for Sky isn’t a surprise in itself, but the fact the offer is slightly behind what some had anticipated brings another twist,” said George Salmon, equity analyst at Hargreaves Lansdown.The British government is expected to finally allow Fox to buy Sky this week, after the US group agreed to sell Sky’s award-winning news channel to Disney to prevent Murdoch from owning too much of the British media.Fox, run by Rupert’s son James who is also the chairman of Sky, has made a string of guarantees to help secure backing for its deal, including investment in British TV production, technology and protection for Sky News.Murdoch had previously tried and failed to buy Sky in 2011.
UBER Technologies Inc’s Chief People Officer Liane Hornsey resigned in an email to staff on Tuesday, following an investigation into how she handled allegations of racial discrimination at the ride-hailing firm.
The resignation comes after Reuters contacted Uber on Monday about the previously unreported investigation into accusations from anonymous whistleblowers that Hornsey had systematically dismissed internal complaints of racial discrimination.
Hornsey is head of Uber’s human resources department and one of the firm’s top spokespeople on diversity and discrimination issues. She had been in the role for about 18 months, as the company was rocked by claims of widespread issues of gender discrimination and sexual harassment.
The allegations raise questions about Chief Executive Dara Khosrowshahi’s efforts to change the toxic culture of the firm after he took over in August last year from former CEO Travis Kalanick following a series of scandals.
Khosrowshahi praised Hornsey in an email to employees, which was seen by Reuters, as “incredibly talented, creative, and hard-working.” He gave no reason for her departure.
Hornsey acknowledged in a separate email to her team at Uber, also seen by Reuters, that her exit “comes a little out of the blue for some of you, but I have been thinking about this for a while.”
She also gave no reason for her resignation and has not responded to requests for comment about the investigation.
The allegations against her and Uber’s human resources department more broadly were made by an anonymous group that claims to be Uber employees of color, members of the group told Reuters.
They alleged Hornsey had used discriminatory language and made derogatory comments about Uber Global Head of Diversity and Inclusion Bernard Coleman, and had denigrated and threatened former Uber executive Bozoma Saint John, who left the company in June.
US producer prices increased slightly more than expected in June amid gains in the cost of services and motor vehicles, leading to the biggest annual increase in 6-1/2 years.
The report published by the Labor Department yesterday also showed a pickup in underlying producer inflation last month. The data supports views of steadily rising price pressures, which will probably allow the Federal Reserve to increase interest rates two more times this year.
Tariffs imposed by the Trump administration on imports of lumber, steel and aluminum pushed up prices last month.
“Tariffs are negative for economic growth but they are also inflationary,” said John Ryding, chief economist at RDQ Economics in New York. “We expect these price pressures will flow through into higher core inflation at the consumer level as the year unfolds.”
The producer price index for final demand added 0.3 percent last month after rising 0.5 percent in May. In the 12 months through June, the PPI rose 3.4 percent, the largest gain since November 2011. Producer prices added 3.1 percent year on year in May.
Economists polled by Reuters had forecast the PPI gaining 0.2 percent in June and rising 3.2 percent year on year.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.3 percent last month. The so-called core PPI edged up 0.1 percent in May.
In the 12 months through June, the core PPI rose 2.7 percent after adding 2.6 percent in May.
SALES of pre-occupied homes stayed above the 15,000-unit threshold in Shanghai for the second straight month, while the existing housing index continued to fall, according to recent market data.
The index, which monitors month-over-month price changes in 130 areas citywide, fell 0.35 percent, or 12 points, from May to 3,928 in June, extending weakness for the seventh straight month, Shanghai Existing House Index Office said in a report released yesterday.
Around the city, some 15,500 pre-used homes changed hands last month, down 3.5 percent from May and an increase of 30.7 percent from the same period a year earlier. By sales price, those costing below 3 million yuan (US$447,961) took up 61.1 percent of the total, and pre-used homes costing over 5 million yuan made up about 14.6 percent.
“The city’s existing housing market remained generally stable, backed by above-15,000 unit monthly transactions as well as a slower pace of decrease in the price index,” the office said. “Looking forward, as the market has entered its traditional low season for property sales, we expect to see some fluctuation in sales but probably no big ups or downs in home prices.”
Prices of pre-owned homes climbed in 33 areas, fell in 79 areas, and were flat in 18 areas, according to the office.
Citywide, the three most sought-after areas were Pujiang in Minhang District, Sanlin in the Pudong New Area, and Nanqiao New City in Fengxian District, where 433, 383 and 364 pre-owned homes were sold, respectively, last month.
On the inventory side, the city had 84,800 pre-occupied homes available for sale as of the end of June, a month-over-month drop of 2.3 percent and a year-on-year plunge of 50 percent, according to data compiled by the office.
Between January and June, transactions of pre-occupied homes totaled 81,100 units across the city, slightly higher than the 77,900 units sold during the first six months of 2017, according to a separate report released earlier by Shanghai Homelink Real Estate Agency Co.
SHANGHAI expects to implement over 90 percent of the newly-released 100 measures aimed at promoting opening up by the end of 2018.
The city will ensure that the 100 measures, which it unveiled on Tuesday, will be put in practice in accordance with the central government’s plans while local issues not related to the central government will be launched immediately from the date of the release, Zhou Bo, Shanghai’s executive vice mayor, said at a press conference yesterday.
“In principle, most of the measures are planned to be implemented in the third quarter,” Zhou said, adding that the measures relating to the central government are mainly in the financial field.
“Among the 100 measures, 34 need to have the nation’s support, accounting for one-third of the total number,” Zhou said.
The city’s Free Trade Zone will be encouraged to innovate further, and the municipal government will support districts to open wider and promote the development of four brands — Shanghai Manufacturing, Shanghai Services, Shanghai Shopping and Shanghai Culture.
Li Jun, vice director of the Shanghai Financial Service Office, said that the city government will expend efforts to ensure the Shanghai-London Stock Connect go live this year. The stock connect program is planned to link the markets of the two cities through depositary receipts, Li said. Shanghai unveiled the 100 measures on Tuesday in finance, advanced industries, intellectual property, supportive platforms for imports, and business environment.
SHANGHAI’S Grade A office market will see abundant new supply in the second half of this year, leaving upward pressure on vacancy rates, according to recent forecasts by global real estate services provider Savills.
During the six months through December, nearly 1.4 million square meters of Grade A office space will be launched across the city in both core and decentralized locations, Savills’ research showed.
“The second half of 2018 will remain tough for landlords, especially those of older projects which are confronted with increasing competition from new supply,” said Chester Zhang, associate director at Savills China research.
“These landlords are more open to discussion during renewal negotiation with existing tenants, while large space occupiers will have more room to bargain on their rental prices.”
Between April and June, five new Grade A office projects totaling 426,300 square meters were launched in core locations, raising vacancy rates by 2.2 percentage points to 12.4 percent. In the decentralized market, new supply of Grade A office space reached 563,400 square meters during the same period, pushing up vacancy rates by 1.7 percentage points to 35.5 percent, the highest over the last three years, according to Savills.
A separate report released by global property adviser JLL said that Grade A office rents edged up in both CBD and decentralized areas in the second quarter of this year amid continuously robust leasing demand mainly from co-working operators, TMT (technology, media and telecom) and financial service companies.