China Finance – Aisa Net http://aisa-net.com/ Wed, 23 Nov 2022 04:07:58 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://aisa-net.com/wp-content/uploads/2021/05/aisa-net-icon-150x150.png China Finance – Aisa Net http://aisa-net.com/ 32 32 Korean media stocks rise as China resumes online streaming https://aisa-net.com/korean-media-stocks-rise-as-china-resumes-online-streaming/ Wed, 23 Nov 2022 03:23:06 +0000 https://aisa-net.com/korean-media-stocks-rise-as-china-resumes-online-streaming/

(Bloomberg) – Shares of South Korean companies that produce or distribute dramas and movies rallied as China resumed streaming a Korean movie after a six-year ban, raising hopes that more content will be allowed.

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Film distributor and producer Showbox Corp. climbed as much as 26% on Wednesday, causing a brief halt in trading due to the sharp swing in the stock price at the market open. KidariStudio Inc., a producer of online comics and other content, exceeded the daily limit by 30%. Other media stocks including Studio Dragon Co., CJ ENM Co., Astory Co. and ContentreeJoongAng Corp. also jumped.

The recovery, if broadened, would allow Korean cultural content producers to tap into the region’s largest consumer market, potentially boost their profits and further boost the appeal of Korean entertainment stocks. The country’s content producers and distributors have been in high demand after a number of blockbuster hits and the growing appeal of its pop culture.

Chinese regulators review content before it is allowed on online streaming platforms and it may take some time for recent series to be distributed on these sites.

However, “works that have already been produced may not take much time and that’s why we see Studio Dragon and ContentreeJoongAng’s shares trading higher” as the two companies have many old dramas and movie titles, said Kim Hoi Jae, an analyst at Daishin Securities Co.

Tencent’s online streaming platform began distributing “Hotel By the River” in November, local media including Korea Economic Daily reported earlier this month. The film, produced by independent director Hong Sang Soo in 2018, is the first Korean film to be released online in China after a six-year hiatus following the deployment of a US missile defense system in South Korea that created a diplomatic row between the two. Asian countries.

President Yoon Suk Yeol’s office confirmed on Tuesday that China had authorized the online streaming service amid the G-20 summit in Indonesia last week.

Yoon and President Xi Jinping agreed to boost cultural exchanges between the two countries at the summit where Xi acknowledged that “such a halt in exchanges does not benefit anyone and we look forward to working towards a full resumption,” said Yoon’s office.

“Although this is a small beginning, we would like to believe that it will become a future of great significance,” Kim Eun-hye, Yoon’s publicist, said during a press briefing on Tuesday. .

–With the help of Shinhye Kang.

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©2022 Bloomberg LP

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Six takeaways from the China Finance Forum https://aisa-net.com/six-takeaways-from-the-china-finance-forum/ Fri, 18 Nov 2022 07:55:42 +0000 https://aisa-net.com/six-takeaways-from-the-china-finance-forum/

From pandemic recovery to political decoupling, the conference covered a wide range of topics, six of which stood out.

1. The development of EU-China relations is essential

This sentiment ran through the entire speech, but was presented most concisely by the founder and director of the Peterson Institute for International Economics, Dr. Fred Bergsten. Setting the context for relations between China, the United States and Europe, the professor explained that while China and the United States are vying for the role of supreme economic power, the EU should not follow the United States. United in their efforts to dissociate themselves from the United States.

“Functional decoupling”, as he called it, would allow the EU and China to cooperate on financial and economic issues even if there were still problems on the political front. The EU must continue to develop its relations with China, was his message.

2. The Chinese Comeback Gene

As with other global economies, the gradual easing of pandemic measures also appears to be making its way to China. Too late to allow the country to reach its initial target of 5.5% for 2022 – HSBC’s chief economist for Asia, Frederic Neumann, estimated it at 3 to 3.5% – the easing sanitary measures could not only encourage consumers to buy more, but also improve sentiment in the financial sphere. Unlike Western economies, which could face a recession due to Russia’s war in Ukraine and the energy crisis, China is expected to grow by 5.2% for the coming year, Neumann said. “China will remain the game in town,” he concluded.

3. Invest in local partners

Chinese speakers at the event stressed that to successfully enter the Chinese market, international players need to find suitable local partners. “We see the importance of having a local partner,” said Desiree Wang, managing director of JP Morgan Asset Management China. “China has so many things that need to be respected.”

A word of advice from these participants: do not apply international strategies to Chinese markets if you want to attract Chinese flows.

4. The retail landscape in China is changing

“We know that younger generations are more tech-savvy,” said Alfi’s Marc-André Bechet, who identified that this would likely impact banks’ role in bond distribution. In China, confirm the experts invited to the moderated Bechet panel, more millennials and Generation Z are investing and they are more likely to do so through smartphone apps and online platforms than through a bank. “It’s no longer a bank-run business,” said David Guo, CEO of Schroders in China. The country’s tech companies have joined the companies, leading banks to counter by introducing their own digital services.

5. Secondary markets in Asia are still underdeveloped

“If you look globally, the secondary [market] accounts for around 15% of global consumption [market]said Frederic Azemard of TR Capital. In China, it’s only about 3% of the whole pie. Investing in quality assets in secondary markets is one way to generate cash, Azemard said. The challenges however are the different dynamics in Asian countries, the political consensus not to invest in China and the uncertainty regarding the easing of covid-19 related restrictions in China.

6. Retail investors are pushing for more sustainable portfolios

“We don’t understand in China among retail investors the mindset on sustainable finance issues,” Bechet pointed out. But, according to Guo, as asset management has reached its 3.0 era, many investors have started learning about sustainable investments. “For many retail investors, after ten years of evolution, sustainable investments have been associated with long-term investments, and this has made investors aware of environmental protection and social responsibilities.” The last two years in particular have seen retail investors focus on all components of ESG criteria.

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Stocks faltered as key inflation measures cool https://aisa-net.com/stocks-faltered-as-key-inflation-measures-cool/ Tue, 15 Nov 2022 18:41:13 +0000 https://aisa-net.com/stocks-faltered-as-key-inflation-measures-cool/

Fresh geopolitical tensions halted a major stock market rally on Wall Street on Tuesday as investors weighed reports that Russian missiles had entered Poland.

The S&P 500 (^GSPC) trimmed early morning gains, slightly higher by 0.2% during midday trading, while the Dow Jones Industrial Average (^ DJI) down 0.2%. The technology-intensive Nasdaq composite (^IXIC) also lost some early gains but remained up 0.7% in the afternoon.

Polish Prime Minister Mateusz Morawieck called a meeting on security. According to the Associated Pressa senior US intelligence official said Russian missiles entered Poland, killing two people.

The stock market deceleration came after Wall Street rallied on fresh signs of optimism that inflation could cool. October’s producer price index (PPI) fell to 8% a year from 8.5% in September, after economists polled by Bloomberg had forecast 8.3%.

The annual core PPI also surprised at 6.7% year-over-year, versus a consensus estimate of 7.2%. The PPI report comes next other key data on inflation Last Thursday, consumer prices rose 0.4% in October and core prices rose 0.3%.

“The Core PPI and the deflator core PCE are following very similar paths, although the surge in rents this year has driven an unusually wide wedge between them,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note following publication of the PPI. “But the pace of rent increases has peaked, and our chart suggests that the sharp decline we expect to see in core PPI inflation will cause the core PCE measure to fall faster than markets and the Fed don’t expect it.”

Yields on the benchmark 10-year Treasury rose on Tuesday to around 3.8%, while the dollar index, which measures the currency against six peers including the yen and euro, gained 107 $.09.

The early rise resumed a rally after stocks finished lower On Monday, investors digested new comments from Federal Reserve officials on the outlook for interest rate hikes. Fed Vice Chair Lael Brainard said Monday that she thinks it will be “appropriate soon to move to a slower rate of increase.”

Some strategists argued that Monday’s lows weren’t due to Brainard’s comment, but rather a signal of what might be to come.

“The latest in a growing wave of evidence that the FOMC will move 50 basis points in December instead of the 75 basis point pace it has been at since June,” Bespoke Investments strategists wrote in a note to clients. .

Brainard’s comments came after Fed Governor Christopher Waller reiterated Fed Chairman Jerome Powell’s recent comments that policymakers have “some way to go” before the central bank stops. to raise rates.

“The inflation conversation so far fits the soft landing narrative,” said Thomas Kennedy, chief investment strategist at JP Morgan Global Wealth Management. Yahoo Finance Live tuesday.

But “inflation is only sequentially trending lower than expected. And the real question will be what level of inflation the Fed is actually fighting,” Kennedy added.

Stock sentiment and global growth among fund managers interviewed by Bank of America remained “ultra-bearish” with a macro outlook of “92% predicting ‘stagflation’ in 2023,” the strategists led by Michael Hartnett wrote in a note on Tuesday.

US President Joe Biden’s meeting with Chinese President Xi Jinping, the first between the leaders of the world’s two largest economies since Biden took office, was also on the investors’ agenda.

“As leaders of our two nations, we share a responsibility, in my view, to show that China and the United States can manage our differences, prevent competition from becoming conflict, and find ways to work together on pressing global issues that require our mutual cooperation,” Biden said at the opening of the meeting.

U.S. President Joe Biden shakes hands with Chinese President Xi Jinping as they meet on the sidelines of the G20 leaders summit in Bali, Indonesia November 14, 2022. REUTERS/Kevin Lamarque

In company news, Home Depot (HD) kicked off a major retail earnings week by reporting that sales rose 5.6% in the third quarter, beating analysts’ expectations as higher prices offset a slowdown in transactions. Walmart (WMT) also beat Wall Street expectations for the quarter and raised its outlook as the retailer “significantly improved” its excess inventory. The discounter’s inventory rose 13% year-over-year in the third quarter, compared with 25% in the prior quarter.

With inflation still high, Walmart’s results also showed that those who had bigger wallets are also in a hurry.

“We continued to gain grocery market share among households across all income demographics, with nearly three-quarters of the share gain coming from those exceeding $100,000 in annual income,” John David Rainey said. , executive vice president and chief financial officer of Walmart. the results call on Tuesday.

Target (TGT), Lowe’s (DOWN), and TJMaxx (TJX) are also expected to release their results on Wednesday.

Elsewhere, cryptocurrency prices stabilized after last week filing for bankruptcy by FTX. bitcoin (BTC) was trading at $16,969.78 as of midday Tuesday, while Ethereum (ETH), the second most popular cryptocurrency, traded at $1,264.22.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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Global debt levels increased “substantially” in 2021 https://aisa-net.com/global-debt-levels-increased-substantially-in-2021/ Sat, 12 Nov 2022 18:43:26 +0000 https://aisa-net.com/global-debt-levels-increased-substantially-in-2021/

By Andrea Shalal

WASHINGTON (Reuters) – Debt levels in low- and middle-income countries rose sharply in 2021, with China accounting for 66% of lending from official bilateral creditors, World Bank President David Malpass said, stressing the need to reduce the debt of the poorest countries. .

The World Bank’s annual report on global debt statistics, due out next month, makes clear that private sector creditors should also participate in debt reductions, Malpass told Reuters in an interview on Friday.

The Group of 20 major economies and the Paris Club of official creditors have created a common framework for the treatment of debt at the end of 2020 to help countries deal with the fallout from the COVID-19 pandemic, but its implementation s is stopped.

Chad’s creditors this week reached the first deal negotiated under the framework, but it leaves the country’s longer-term debt sustainability in question as it does not include actual debt reduction, Malpass warned. Friday.

The World Bank, International Monetary Fund and Western officials are increasingly expressing frustration with China, now the world’s largest official bilateral creditor, and private sector lenders for not moving faster.

Preliminary data released by the World Bank in June showed that the stock of external debt of low- and middle-income countries increased by an average of 6.9% in 2021 to reach $9.3 trillion, surpassing the 5.3% growth observed in 2020.

Malpass said the bank’s upcoming report on international debt statistics was troubling, but gave no specific numbers.

“It shows that the amount of debt has increased significantly … and the amount owed to China is about 66% of the total for official bilateral creditors,” he said, adding that Chinese entities were also big creditors. commercial.

“The report makes it clear that debt reduction needs to expand broadly to include the private sector and China,” Malpass said, adding that the overall debt issue would be an important topic at the next meeting of leaders of the G20.

“There will be recognition of the seriousness of the problem,” Malpass said, although he said there had been “little uptake” of his push for an immediate freeze on debt payments when countries called for relief under the common G20 framework and other reforms aimed at accelerating debt restructuring efforts.

IMF and World Bank officials say 25% of emerging and developing economies are in or near debt distress, and that figure jumps to 60% for low- and middle-income countries. Weather shocks, interest rate hikes and inflation have increased pressures on economies still recovering from COVID.

Malpass said China had been a reluctant player in the slow process so far. “They are mostly observers,” he said.

Malpass also called for speeding up work on a debt restructuring for Zambia, which first requested aid under the common framework in early 2021.

“There is an urgent need to do this so that debt reduction can take place and Zambia can start attracting the new investments needed,” he said.

For Chad and Zambia, it was essential to speed up the process and adopt real debt reductions, he said. “The longer the process takes, the harder it is for the country and the people of the country to get back on their feet.”

(Reporting by Andrea Shalal, editing by Franklin Paul)

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Tokyo Electron cuts outlook on U.S. chip restrictions and memory meltdown https://aisa-net.com/tokyo-electron-cuts-outlook-on-u-s-chip-restrictions-and-memory-meltdown/ Thu, 10 Nov 2022 07:33:28 +0000 https://aisa-net.com/tokyo-electron-cuts-outlook-on-u-s-chip-restrictions-and-memory-meltdown/

(Bloomberg) – Leading chip equipment supplier Tokyo Electron Ltd. cut its full-year outlook after memory makers cut spending and the United States tightened restrictions on edge chip exports to China.

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The Tokyo-based company now reports annual operating profit of 546 billion yen ($3.7 billion), down 24% from its previous forecast, despite quarterly revenue growth worldwide. His caution echoes pessimism among U.S. rivals such as Applied Materials Inc. and Lam Research Corp.

Tokyo Electron will not try to take advantage of an opportunity created by U.S. restrictions on its U.S. peers, Hiroshi Kawamoto, general manager of the company’s finance unit, said at a press conference on Thursday.

“We understand that US manufacturers may have difficulty doing business with Chinese customers. We will not try to fill the void they leave,” he said. , with waiting times of several months for the delivery of the equipment.

With a client list that includes Semiconductor Manufacturing International Corp. and Yangtze Memory Technologies Co., Tokyo Electron does about a quarter of its revenue in China, though that number includes foreign companies that have factories there.

Japan’s exports of chip gear to China have hit record highs so far this year, up more than 20% in the September quarter from a year earlier.

“U.S. sanctions will cause Chinese manufacturers to cut capital expenditures, leading to delivery delays,” Kawamoto said.

US President Joe Biden’s administration has announced sweeping regulations to limit sales of its advanced semiconductors and chipmaking equipment to China, upending the $550 billion globally interconnected industry.

While the move dealt a blow to China’s chip industry, it imposed tough restrictions on US semiconductor equipment companies that will cost them billions of dollars in revenue. This was in addition to spending cuts announced by memory makers from SK Hynix Inc. to Micron Technology Inc.

Washington has signaled to its allies its desire that they follow suit on export controls to restrict China’s access to critical chip technologies. US officials have said that if allies do not align with US efforts, their rules will lose their effectiveness over time.

–With help from Debby Wu, James Mayger and Ian King.

(Adds comment from company press conference to fourth paragraph; earlier version corrected SMIC name in fifth paragraph)

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©2022 Bloomberg LP

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UPDATE 2-China pledges to continue its “dynamic cleaning” COVID strategy https://aisa-net.com/update-2-china-pledges-to-continue-its-dynamic-cleaning-covid-strategy/ Sat, 05 Nov 2022 08:35:12 +0000 https://aisa-net.com/update-2-china-pledges-to-continue-its-dynamic-cleaning-covid-strategy/

(Add details)

BEIJING, Nov 5 (Reuters) – China will continue its “dynamic elimination” approach to COVID-19 cases as soon as they emerge, health officials said on Saturday, adding that measures need to be implemented more precisely and meet the needs of vulnerable people. people.

The country’s strict COVID containment approach is still able to control the virus, despite the high transmissibility of COVID variants and asymptomatic carriers, an official with China’s National Health Commission told a press conference. .

China’s zero-COVID policy includes rigorous lockdowns, quarantines and testing, aimed at stopping the spread of the coronavirus.

When asked if there would be a policy change in the near term, disease control official Hu Xiang said China’s measures were “completely correct, as well as the most economical and most effective”.

“We must adhere to the principle of putting people and lives first, and the broader strategy of preventing imports from outside and rebounds within,” she said.

The briefing followed a week in which markets surged on hopes China would ease restrictions, tightened on Friday when a former disease control official told a banking conference that China would make changes “substantial” to COVID policy in the coming months.

Some areas had been guilty of “one size fits all” unscientific closures, officials said, citing the southwestern cities of Nanchong and Bijie, and officials in Zhengzhou city in central Henan province, for deliberately turning the health codes of thousands of citizens red. .

“We attach great importance to these issues and are fixing them,” said Tuo Jia, another disease control official.

Epidemic-hit areas should meet the needs of the elderly, sick, disabled, young and pregnant, Tuo said.

Officials said they would start pushing to increase vaccinations among the elderly, noting that while 86.35% of citizens aged 60 and over are fully vaccinated, fewer people aged 80 and over have been vaccinated and received reminders.

China reported 3,837 new COVID-19 infections on Friday, including 657 symptomatic and 3,180 asymptomatic, down slightly from the six-month high of 4,045 new COVID-19 infections reported the previous day.

Guangzhou officials said on Saturday the southern megacity was facing its worst and most complicated outbreak in three years of the virus, with 111 new locally transmitted symptomatic cases and 635 asymptomatic cases reported a day earlier. (Reporting by Ryan Woo in Beijing and David Kirton in Shenzhen; Editing by Michael Perry and William Mallard)

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Exodus of auditors from struggling Chinese property companies raises governance concerns https://aisa-net.com/exodus-of-auditors-from-struggling-chinese-property-companies-raises-governance-concerns/ Tue, 01 Nov 2022 23:13:12 +0000 https://aisa-net.com/exodus-of-auditors-from-struggling-chinese-property-companies-raises-governance-concerns/

By Claire Jim

HONG KONG (Reuters) – Auditors of at least 14 Hong Kong-listed Chinese property companies withdrew this year, securities filings showed, raising governance concerns about indebted developers, several of whom have not not yet released long-standing financial results.

Embattled developers including Sunac China, Shimao Group and Kaisa Group are among those whose listeners have parted ways in recent months. In many cases, firms outside the big four accounting firms have been recruited to replace them.

The trend, which accelerated earlier this year, saw auditors, including the world’s biggest audit firms PricewaterhouseCoopers (PwC) and Deloitte, resign from their roles.

It comes as the real estate sector, which accounts for around a quarter of China’s economy, has been beset by multiple headwinds after regulators clamped down on excessive borrowing since mid-2020.

A string of indebted developers defaulted on their offshore bond payments from late last year, a growing number of homebuyers halted mortgage payments on stalled projects and pandemic restrictions continued to undermine demand.

Analysts and Hong Kong’s audit watchdog say the growing list of auditors leaving developers highlights transparency and governance issues, especially as many exits occurred just before the announcement of the results.

The audit watchdog in Hong Kong, where most of China’s top developers are listed, said in an open letter to members last week that it had growing concerns that audit quality could be jeopardized due to changes close to the earnings period.

S&P Global Ratings director Edward Chan said many of these developers are already struggling and the market is watching what new auditors may reveal in upcoming financial statements.

“Investors and creditors would like to know more about whether there are debts hidden in financial reports,” Chan said, adding that it could help them calculate their asset recovery rate.

Although the auditors gave no reason for their exit, the developers blamed this decision on factors such as the inability to reach agreements with their respective auditors to complete the auditing process.

Deloitte in Hong Kong declined to comment on the reasons for the termination of their audit mandates for some Chinese property developers. PwC did not respond to requests for comment from Reuters.

OPAQUE PRACTICES

S&P’s Chan, which pulled the ratings of many Chinese property developers this year citing insufficient disclosure, believes some auditors have pushed back against opaque practices in the real estate industry such as the use of off-balance sheet debt.

Shimao announced in late March – days before the 2021 financial reporting deadline – that it would appoint Zhonghui Anda CPA Ltd as its auditor, while in July Beijing-based Sunac changed its auditor to BDO Ltd. In both cases, PwC had resigned as auditor. Listener.

Both developers cited the inability to reach an agreement with PwC on the timeline for completing the audit procedures as the reason for the change, as they were unable to provide the required information to the auditor on time due to COVID-19 induced restrictions in China and other markets. The factors.

Shares of Hong Kong-listed Shimao and Sunac have been suspended since April due to the inability to release their financial results for the year 2021, and they risk being delisted if they remain suspended for 18 months.

Hong Kong’s audit watchdog, Accounting and Financial Reporting Council (AFRC), said in its letter last week that the majority of new appointments at companies with significant operations in mainland China or overseas concerned auditors who have “disproportionate” relevant experience and available resources.

“We have concerns about whether the incoming auditors had the necessary skills and adequate capabilities to perform quality audits in a limited time frame,” he said.

(Editing by Sumeet Chatterjee and Muralikumar Anantharaman)

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UPDATE 1-Chinese cities brace for surge of Foxconn workers from COVID-hit Zhengzhou https://aisa-net.com/update-1-chinese-cities-brace-for-surge-of-foxconn-workers-from-covid-hit-zhengzhou/ Sun, 30 Oct 2022 11:23:41 +0000 https://aisa-net.com/update-1-chinese-cities-brace-for-surge-of-foxconn-workers-from-covid-hit-zhengzhou/

(Adds comments from Foxconn)

By Ryan Woo and Ziyi Tang

BEIJING, Oct 30 (Reuters) – Cities in central China have hastily drawn up plans to isolate migrant workers fleeing to their hometowns from a sprawling assembly facility at iPhone maker Foxconn in hit Zhengzhou. by COVID, fearing they could trigger outbreaks of coronavirus.

Zhengzhou, capital of central Henan province, reported 167 locally transmitted COVID-19 cases in the seven days to Oct. 29, compared with 97 infections in the previous seven days.

Taiwan-based Apple supplier Foxconn currently has around 200,000 workers at its Zhengzhou complex and did not disclose the number of infected workers, but said on Sunday it would not stop workers from leaving.

Late Saturday, towns near Zhengzhou, including Yuzhou, Changge and Qinyang, urged Foxconn workers to report to local authorities in advance before returning home.

Returning workers must travel “point-to-point” in pre-arranged vehicles and must quarantine upon arrival, they said in separate letters on their respective social media accounts addressed to Zhengzhou Foxconn workers.

Under China’s ultra-strict zero COVID policy, cities are required to act quickly to quell any outbreaks, with measures that could include large-scale lockdowns. On October 19, Foxconn banned all canteen dining and required workers to eat in their dormitories.

“The government has agreed to resume restaurant dining to improve employee convenience and life satisfaction,” Foxconn told Reuters in an email response to questions on Sunday.

“At the same time, for some employees who wish to return home, the factory is cooperating with the government to organize personnel and vehicles to provide orderly point-to-point return service for employees from today. .”

Disruptions to China’s COVID policies on trade and industry have intensified in recent weeks as cases have mounted.

Shanghai Disneyland

said on Saturday it would operate at reduced capacity. Wednesday,

Universal Beijing Resort

was suspended after a visit from an infected person.

“We are very aware that in the current situation, this is a protracted battle,” Foxconn said.

But the situation was gradually being brought under control, he said, and Foxconn would coordinate backup production capacity with its other factories to reduce any potential impact.

Apple did not immediately respond to a request for comment from Reuters on Foxconn’s situation.

“I COULDN’T HELP MYSELF BUT FEEL SAD”

Foxconn did not respond to questions from Reuters about the number of cases detected at its Zhengzhou plant and the number of workers leaving.

Photographs and videos circulating on Chinese social media since Saturday show Foxconn workers, apparently on their way home, walking through fields by day and along roads by night. Reuters could not immediately verify the authenticity of the messages.

In a show of support, nearby residents left bottled water and groceries beside the roads with signs such as: “For Foxconn workers going home,” according to social media posts.

“Some people were walking in the middle of the wheat fields with their luggage, blankets and quilts,” one WeChat user wrote in a post on the social media images.

“I couldn’t help but be sad.” (Reporting by Ryan Woo and Ziyi Tang; Editing by Edmund Klamann and Nick Macfie)

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Apple says it faces ‘significant’ headwinds from strong US dollar https://aisa-net.com/apple-says-it-faces-significant-headwinds-from-strong-us-dollar/ Thu, 27 Oct 2022 23:11:04 +0000 https://aisa-net.com/apple-says-it-faces-significant-headwinds-from-strong-us-dollar/

Apple said it faced a tough December quarter as it faced “significant” headwinds in the currency market and supply issues for its latest iPhone models.

“Overall, we believe the company’s year-over-year total revenue performance will slow in the December quarter compared to the September quarter,” Chief Financial Officer Luca Maestri said during an interview. of an earnings call on Thursday.

The cautious outlook came as Apple reported revenue of $90.1 billion in the September quarter, an 8% year-over-year increase. That beat forecast by $88.9 billion and compared to $83.4 billion a year ago, according to Refinitiv.

Apple posted a slight increase in net profit to $20.7 billion from estimates of $20.5 billion in a quarter that otherwise hurt Big Tech’s profits. In contrast, Amazon’s net income fell by 9%, Microsoft’s by 14%, Alphabet’s by 27% and Meta’s by 52%.

Earnings per share rose 4% to $1.29, higher than expected, despite nearly 6 percentage points of currency headwinds on the strength of the dollar and fears that demand consumers will not weaken in the event of an economic downturn.

Revenue from its services division, which includes App Store purchases and has been Apple’s main growth driver in recent years, fell short of forecasts, rising just 5% for reach $19.2 billion. Analysts were expecting more than $20 billion.

Maestri reported a headwind of “nearly 10 percentage points,” or about $12 billion, based on current revenue estimates, due to dollar currency effects.

He said the company expects Mac computer revenue to “decline significantly year-over-year” in the current quarter, after jumping 25% last quarter to 11, $5 billion.

“The strong dollar is so strong that it will hurt Apple’s next quarter as much as what Nike sees in an entire quarter of sales,” said Mirabaud analyst Neil Campling.

iPhone sales, which accounted for 47% of all revenue last quarter, rose 10% to $42.6 billion, below estimates of $43.2 billion. Analysts have been watching closely to see how the new iPhone 14 lineup fared ahead of the important holiday quarter.

CEO Tim Cook says customer demand for the latest line of iPhones is strong, but Apple’s supply of the more expensive Pro and Pro Max models has been “limited” since launch .

“We continue to be limited today so we are working very hard to meet demand,” he said.

The services division will also face challenges around “currency exchange, digital advertising and gaming,” Maestri said. This division now has more than 900 million people paying recurring fees for digital subscriptions. Margins fell about 1% from the previous quarter to 70.5%, “mainly due to exchange rates”, according to Maestri.

Apple the shares fell as much as 5% in after-hours trading after the release, before reversing to end up 0.4%. Its stock has fallen by more than a fifth this year, against a 32% drop in the tech-heavy Nasdaq index.

Total revenue was “better than we expected at the start of the quarter despite the exchange rate being a significant headwind,” Maestri said.

Apple’s sales in China last quarter rose 6% to $15.5 billion. In the Americas, its largest region, revenue rose 8% to $39.8 billion.

Prior to the results, some analysts had expressed concern about Supply Chain woes, which were in the spotlight this week when China’s zero-Covid policy wreaked havoc at supplier Foxconn’s Zhengzhou factory. They were also concerned that consumer demand could decline as persistent inflation bites into discretionary spending.

Maestri acknowledged that the macro environment “is definitely not as good as it was a year ago.”

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HSBC takes surprise succession move as forecast reaches equities https://aisa-net.com/hsbc-takes-surprise-succession-move-as-forecast-reaches-equities/ Tue, 25 Oct 2022 11:59:00 +0000 https://aisa-net.com/hsbc-takes-surprise-succession-move-as-forecast-reaches-equities/
  • Banks ousts CFO Ewen Stevenson in surprise move
  • Move is about succession planning, says CEO
  • The new CFO had just returned from a sabbatical
  • Q3 profit fell 42%, hit by asset sales and rising loan losses
  • Stocks slide on murky outlook, surprise CFO change

LONDON/SINGAPORE, October 25 (Reuters) – HSBC (HSBA.L) named Georges Elhedery as chief financial officer on Tuesday in a surprise move that puts the former head of its investment bank in pole position to eventually succeed Noel Quinn as CEO.

The change came as HSBC shares were hit by a 42% drop in third-quarter profits, the result of loan losses and charges related to the sale of its French business as it seeks to appease investors. , including the Chinese group Ping An Insurance Group. (601318.SS).

HSBC stock, which fell 8%, was on course for its worst one-day performance since April 2020 as investors digested the sudden change in chief financial officer and lowered performance expectations.

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Elhedery, of Lebanese descent and holder of a French passport, took a six-month sabbatical from HSBC in January, citing a desire to travel with his family and explore his personal interests.

Quinn said that although outgoing chief financial officer Ewen Stevenson had done a good job of restructuring over three years, the London-based bank had succession in mind, effectively putting Elhedery, 48, at the top of the list to become CEO.

“There is no change in strategy as a result of these leadership changes,” Quinn, 60, said. “This is the position of the group executive committee with potential succession options for the future,” he told Reuters.

The former investment banker Stevenson, 56, who will leave HSBC next year, told Reuters he was “looking forward to some time off and considering future options”.

“Stevenson was undoubtedly seen as doing a great job among the investment community,” said Goodbody analyst John Cronin.

“Its exit is most certainly a surprise and it smacks of fallout at the highest management level in terms of the direction of travel for HSBC – which will raise many questions,” he said.

UNDER PRESSURE

HSBC reported pre-tax profit of $3.15 billion for the three months ended September 30, although this was down from $5.4 billion a year ago, it was well above forecasts analysts.

However, HSBC spooked analysts by saying its net interest income in 2023 would be lower than previous forecasts, despite a favorable interest rate environment, due to the weak pound.

The results also included a $2.4 billion drop in the sale of HSBC’s business in France, as part of a broader strategy to excise parts of its once-global empire to boost profits.

Quinn said regulatory approval had been filed for the sale of its Russia business, which Reuters said in July it would sell to Expobank.

HSBC has come under pressure from its largest shareholder, Ping An, to explore options including spinning off and listing its core business in Asia to boost returns. Read more

HSBC’s top turnover partly reflects the challenges of improving profits at a sprawling bank whose fortunes are closely tied to global interest rates and the Asian economy where it makes most of its money. profits.

Rising rates traditionally support banks’ profits as they can draw more from loans than they pay out to savers, but the current situation is clouded by the threat of an economic slowdown that could lead to heavy losses for investors. lenders.

HSBC’s net interest income rose 30% to $8.6 billion, the highest in eight years, mainly due to higher interest rates, but the bank said the NII in 2023 would be over $36 billion, below previous forecasts of over $37 billion.

HSBC also said performance was hurt by credit provisions of $1.1 billion, more than expected and compared to the release of $659 million in cash reserves set aside for expected credit losses. in the same quarter a year ago.

The bank also faces a darkening outlook in its key market of China, after President Xi Jinping’s nomination of loyalists sparked a sell-off in stocks this week on fears that Beijing will continue its stifling zero-COVID strategy. the growth.

“China is an important market not just for HSBC but for the world, and we want to see the economy continue to grow,” Quinn told Reuters when asked how COVID lockdowns were hurting growth. and HSBC business.

Quinn later told a press conference that the reshuffle had no impact on his own desire to stay on as CEO, saying he hoped to be at the helm for “many years”.

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Reporting by Anshuman Daga and Lawrence White; Editing by Kenneth Maxwell and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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