GERMANY
Industrial output disappoints
Industrial production declined in June, disappointing analysts’ expectations, official data showed yesterday. Production fell 1.1 percent sequentially after a 1.2 percent rise in May, according to figures adjusted for price, seasonal and calendar effects from federal statistics authority Destatis. The June figure fell short of the 0.25 percent growth predicted by analysts surveyed by Factset. Capital goods makers’ output fell 1.9 percent, while producer goods slid 1.2 percent and consumer goods production declined 0.7 percent. Construction output fell 1 percent, while the energy sector was the only one to report increased production, 1.4 percent higher than in May.
MINING
Lonmin to preserve cash
Platinum miner Lonmin PLC said it would cut costs and monetize select assets, including the sale of excess processing capacity of up to 500,000 platinum ounces per year, to maximize cash from processing operations and preserve cash. The measures are in response to a subdued South African economy and inflationary pressures on the platinum mining industry, the firm said yesterday. Lonmin said its cash position made it hard to sustain capital expenditure into its Rowland unit, and that it would look for funding partners and “preserve” about 5,000 jobs. Lonmin added that it plans to reduce annual overhead costs by at least 500 million rands (US$37.2 million) by Sept. 30 next year through right-sizing of operations.
UNITED KINGDOM
Spending at four-year low
Consumers cut back on spending for a third month last month, putting them in their worst slump in more than four years and dealing another blow to the economy at the start of the quarter. The 0.8 percent year-on-year drop in spending was broad-ranging, with clothing, household goods, food and transport among the worst hit, IHS Markit and Visa said in a report published yesterday. The decline is being driven by a squeeze on pockets as inflation outpaces wage growth, as well as concerns among shoppers about the broader outlook after the economy slowed dramatically in the first half of the year.
CURRENCIES
Yuan dips on US jobs report
The People’s Bank of China yesterday set the yuan midpoint at 6.7228 per US dollar, 0.14 percent weaker than the previous fix at 6.7132 per dollar on Friday, dragged down by gains in the greenback following an upbeat US jobs report. The move was the biggest one-day weakening in percentage terms since July 4. The dollar stood tall in early Asian trading after the US jobs report lifted it off 15-month lows. Closely watched data released on Friday showed non-farm payrolls rose by a bigger-than-forecast 209,000 jobs last month, while average hourly earnings increased 0.3 percent to match expectations after rising 0.2 percent in June.
HONG KONG
Home affordability still low
The mortgage-payment-to-income ratio rose to 54.2 percent in June, the highest since 1998, figures from Centaline Property Agency show. The low affordability is a result of the steep rise in home prices, which have kept soaring despite efforts by the territory’s leaders to impose restrictions to cool the market. A gauge of existing home prices, Centaline Property’s (中原地產代理有限公司) Centa-City Leading Index, on Friday broke previous records to reach 160.3. The index has climbed 11 percent this year and has surged more than 50 percent in the past five years.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy