Factory orders dip further
Factory orders continued to decline in September, adding to concerns that Europe’s largest economy is slipping into recession as it struggles with surging energy costs. Demand fell 4 percent from the previous month, a steeper drop than the 0.5 percent median estimate in a Bloomberg poll of economists, and accelerating from a revised 2 percent decrease in August. The worse-than-expected decline was driven by foreign orders, which slumped 7 percent, the Federal Statistics Office said in a statement yesterday. “The outlook for manufacturing activity remains gloomy in light of high energy prices, which are increasingly affecting consumers,” the Ministry for Economic Affairs and Climate Action said in a statement. “After the surprisingly positive development of gross domestic product in the third quarter, a weak fourth quarter looms.”
Lagarde hints at more hikes
European Central Bank President (ECB) Christine Lagarde on Thursday said there is “still a way to go” on raising interest rates to counter record inflation. Price growth in the eurozone, which hit 10.7 percent last month, is “way too high,” she said in an interview with Latvian television. Lagarde said the ECB would use all of its instruments to return it to the 2 percent target. ECB officials are doubling down on their inflation-fighting rhetoric, even as a downturn looms over the eurozone. Lagarde said earlier on Thursday at a conference in Riga that while a “mild recession” is possible, that would not be sufficient to tame inflation. She said the ECB’s price-stability mandate and meeting its inflation target remain the priorities.
Morgan Stanley mulls cuts
Morgan Stanley is considering cutting about 50 investment banking jobs in the Asia-Pacific region after dealmaking plunged this year, people familiar with the matter said. The New York-based bank plans to reduce a significant number of its China-focused banking roles, mostly from sector teams, and might involve a handful of capital markets positions, the people said, asking not to be identified because the matter is private. The cuts could start this month, they said. The staff reductions would be among the highest for Wall Street firms in Asia, more than the roughly 30 staff let go by rival Goldman Sachs Group Inc in September, the people said. Morgan Stanley CEO James Gorman last month hinted that job cuts might be coming as senior executives assess headcount, while Goldman Sachs CEO David Solomon recently resumed the firm’s practice of periodically culling underperformers.
Lenovo profit rises 6%
Lenovo Group Ltd’s (聯想) earnings climbed 6 percent after China’s top PC maker relied on cost reductions and new businesses to weather an unprecedented slump in global computing demand. Net income rose to US$541 million in the quarter ended September, the company said on Thursday. The average analyst estimate was US$473 million. Sales declined for the first time in more than two years to US$17.1 billion, but still beat the US$16.8 billion analysts predicted. Lenovo and rivals Dell Technologies Inc and HP Inc are struggling with a global PC market that saw its steepest quarterly drop on record — the fourth straight decline in shipments. An extended macroeconomic overhang is likely to lead to another down year for the PC market next year, though there is scope for a rebound later in the year and potential for a return to growth in 2024, Bloomberg Intelligence said.
More than 20,000 employees at Apple Inc supplier Foxconn Technology Group’s (富士康) huge Chinese plant, mostly new hires not yet working on production lines, have left, a Foxconn source familiar with the matter said yesterday. The departures from the world’s largest iPhone factory dealt a fresh blow to the Taiwanese company, which has been grappling with strict COVID-19 restrictions that have fueled worker discontent and disrupted production ahead of Christmas and January’s Lunar New Year holiday. Concerns are mounting over Apple’s ability to deliver products for the busy holiday period as the worker unrest lingers at the Zhengzhou plant, which produces the
FACTORY TUMULT: The departure of new workers impact production less than the quarantines imposed on existing employees, a worker at China’s ‘iPhone city’ said Turmoil at Apple Inc’s key manufacturing hub in Zhengzhou is likely to result in a production shortfall of almost 6 million iPhone Pro units this year, a person familiar with assembly operations said. The situation remains fluid at the plant and the estimate of lost production could change, the person said, asking not to be named discussing private information. Much depends on how quickly Hon Hai Precision Industry Co (鴻海精密), the Taiwanese company that operates the facility, can get people back to assembly lines after violent protests against COVID-19 restrictions. If lockdowns continue in the weeks ahead, production could be set further
Alibaba Group Holding Ltd (阿里巴巴) founder Jack Ma (馬雲) has been living in Tokyo for almost six months after disappearing from public view following China’s crackdown on the tech sector, the Financial Times reported yesterday, citing multiple unnamed sources. The billionaire has kept a low profile since the crackdown, which has included Chinese regulators scrapping the initial public offering of Ma’s Ant Group Co (螞蟻集團) and issuing Alibaba with record fines. However, the Times said he has spent much of the past six months with his family in Tokyo and other parts of Japan, along with visits to the US and Israel. The
’INHERENT VULNERABILITIES’: The country has been working with the US to build its own lithium and rare earth mines in a bid to curb China’s dominance in the market Australia is vowing more assertive scrutiny of foreign investments in key commodities tied to electric vehicles and clean energy, in a potential warning to China which dominates the market. Australian Treasurer Jim Chalmers has asked the country’s Treasury to work with the Australian Foreign Investment Review Board and other stakeholders to undertake a review of foreign investment in sectors such as lithium and rare earths, he told a conference in Sydney yesterday. “We’ll need to be more assertive about encouraging investment that clearly aligns with our national interest in the longer term,” Chalmers said. Although Chalmers did not directly identify China investment as