Fri, Dec 07, 2018 - Page 10 News List

World Business Quick Take

Agencies

PHARMACEUTICALS

Chinese stocks drop steeply

Chinese drug stocks headed for their worst drop in almost a decade amid concern the government is driving down prices for their products via a centralized procurement program. The MSCI China Health Care Index plunged 8.1 percent at 2:34pm in Hong Kong, with Sino Biopharmaceutical Ltd (中國生物製藥) sliding 14 percent. Much of the declines came after the midday break. Prices on drugs that made a government procurement list were cut substantially, the Shanghai Securities News reported, citing preliminary tender results. The price for one hepatitis B drug was cut by 90 percent and the price of another made by Jiangsu Hengrui Medicine Co (江蘇恆瑞醫藥) was reduced by 60 percent, the report said. The selloff is caused by speculation that a company had to lower their price by up to 90 percent to win a government bid, a Bocom International (交銀國際控股) analyst said. That triggered concern that companies involved in the bulk purchase scheme will have to massively cut prices to win orders.

ENERGY

OPEC to curb crude output

A meeting of Saudi Arabia, Russia and other members of the “OPEC plus” group recommended a production cut, without a formal agreement on how much oil should be removed from the market. The group secured the participation of Russia in six months of output curbs starting next month, Omani Minister of Oil Mohammed al-Rumhy told reporters in Vienna on Wednesday. There is still time to agree the numbers in the coming days and members could eventually agree to remove about 1 million barrels a day from the market, al-Rumhy said. On the eve of a critical OPEC summit, most producers made clear that they agree on the need for a cut in oil production, without nailing down the details of how they would turn that desire into a reality. The stakes are high after prices last month experienced their largest monthly drop since the financial crisis.

AUTOMAKERS

China lending curbs loom

Beijing’s plan to escalate its crackdown on peer-to-peer (P2P) lending could hardly have come at a worse time for China’s slumping car market. P2P platforms, many of which are likely to wind down under a Chinese plan to shrink the industry, facilitated 248 billion yuan (US$35.99 billion) of auto loans last year, or more than one-fifth of the total, data compiled by 01Caijing (零壹財經) and Askci Corp (中商情報網) showed. P2P auto lending dropped 20 percent in the first half of the year, the figures showed, and they could shrink even further as policymakers push small and medium-sized operators to close. The drag on car sales, which might post an annual decline for the first time since at least 1998, highlights the dilemma for policymakers as they try to rein in the shadow finance sector without stifling economic growth.

REAL ESTATE

Chair makes bid for Hopewell

The family of Hopewell Holdings Ltd (合和實業) chairman Gordon Wu (胡應湘) aims to take the Hong Kong developer private for HK$21.3 billion (US$2.73 billion). The bidding group is offering HK$38.80 per share, 47 percent more than the last trading price, the firm told the Hong Kong Stock Exchange late on Wednesday. A “year of recession” is among the bearish forecasts for China’s housing market next year, while a slide in home prices is already underway in Hong Kong. The firm’s stock has fallen 20 percent from a January peak. Wu and his family already own a 36.9 percent stake.

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