Profit growth for China’s industrial firms cooled for a third straight month in July in a further indication that demand in the world’s second-biggest economy is cooling even as U.S. trade pressure mounts.
Industrial profits in July rose 16.2 percent from a year earlier to 515.12 billion yuan ($74.94 billion), slowing from a 20 percent increase in June, the National Bureau of Statistics (NBS) said on Monday.
Profit growth eased in July as producer price inflation moderates, He Ping of the statistics bureau said in a statement accompanying the data.
For the first seven months of the year, industrial firms have reported profits of 3.9 trillion yuan, up 17.1 percent from the same period last year.
The People’s Bank of China is tackling a problem it rarely had to worry about until recently — persuading banks to lend the money they have.
Thanks to the central bank turning on the liquidity taps, the cost for banks to borrow from one another is now lower than the cost to borrow from the PBOC, but a large chunk of those funds is sitting idle. That money isn’t feeding into the wider economy, especially not to cash-strapped smaller firms, as lenders are unwilling to make loans or buy risky bonds.
With China in a worsening trade war with the U.S. and also trying to control already large debts, ensuring funds get to needy companies is vital to sustain growth. Since the start of August, the central bank has begun softening rules to encourage lending, and a top-level meeting chaired by Vice Premier Liu He called for more efforts in “unclogging” the transmission mechanism, underlining the government’s sense of urgency.
China’s factory price inflation cooled in July but not as much as expected, amid a wider slowdown in economic growth as Beijing remains locked in a heated trade dispute with Washington.
However, consumer inflation picked up from the previous month, largely due to a rise in non-food prices, official data showed on Thursday.
The July inflation data is the first official reading on the impact on prices from China’s retaliatory tariffs on $34 billion of U.S. good that went into effect on July 6 and apply to a range of products from soybeans, to mixed nuts and whiskey.
While policymakers are watching price pressures, the central bank is likely to give priority to policies that help shore up the slowing economy.
The producer price index (PPI) — a gauge of factory gate inflation — rose 4.6 percent in July from a year earlier, compared with an acceleration to 4.7 percent in June, according to the National Bureau of Statistics
Industry Minister Airlangga Hartarto said the manufacturing industry grew 4.41 percent year-on-year (yoy) in the second quarter of 2018, higher than 3.93 percent growth in the corresponding period, last year.
He said the manufacturing sector contributed 19.33 percent to the country’s gross domestic product (GDP), the largest contributor to the economic expansion.
“The manufacturing sector is the backbone to the country’s economy. Its contribution is between 18 to 19 percent. So, the economic growth depends on the manufacturing sector,” Airlangga said in a press release received by The Jakarta Post on Wednesday.
He explained with its contribution of 11.85 percent, the rubber industry and its related products were the largest contributor to the non-oil and gas sector, followed by the leather and footwear industry (11.38 percent), food and beverage (8.67 percent) as well as textile and garments (6.39 percent).
He said the Idul Fitri holiday and the regional elections had boosted domestic consumption to a number of products like food and beverage, textile and textile products, footwear and printing.
He believed domestic consumption would continue to grow next year thanks to the implementation of both presidential and legislative elections.
According to the Central Statistics Agency (BPS), large- and medium-scale industries grew 4.36 percent yoy in the second quarter, while the small and micro manufacturing sector grew 4.93 percent yoy.
Meanwhile, the purchasing managers index (PMI) of the Indonesian manufacturing sector in July increased to 50.5 from 50.3 in June, indicating faster manufacturing sector expansion.
(Source: The Jakarta Post)
OCBC Bank is pursuing the idea of a “digital bank” in Indonesia, said its chief executive officer Samuel Tsien yesterday at its results briefing, as Singapore’s second-largest bank looks to join its peers in launching banking for mobile-savvy customers in this region.
The bank said it was unable to share more details at this early stage, though it is likely that this digital bank will not be a standalone unit, which is the model used by DBS Bank.
OCBC yesterday reported a net profit of $1.21 billion for the second quarter, up 16 per cent, even as Mr Tsien warned that the operating environment was becoming “increasingly challenging and we are watchful of the severe implications to the global economy and financial markets from the escalating trade and political tensions”.
The higher earnings were driven by the strong performance across each of its banking, wealth management and insurance businesses.
Strong loan growth and higher net interest margin (NIM) drove second-quarter net interest income to a new high of $1.45 billion, which was 8 per cent above the $1.35 billion a year ago.
Average customer loans grew 11 per cent, driven by broad-based growth across most industries and geographical segments.
(read more: The Strait Times)
Middle-market firms in Singapore are brimming with optimism this year, with nine in 10 expecting growth in excess of the global average growth rate of 6 per cent, according to the annual EY Growth Barometer released on Wednesday (July 25).
Middle-market firms are those with sizeable annual revenues that fall centrally within the market in which they operate. Thus, they straddle the middle market between smaller companies and the billion-dollar giants.
Singapore ranked fourth for growth expectations in Ernst & Young’s survey of 2,766 middle-market executives across 21 countries, including 103 from Singapore.
Just under two-fifths of the Singapore respondents are aiming for growth of more than 10 per cent for the year, compared with about a quarter of respondents globally. Another 51 per cent of Singapore respondents are targeting growth of 6 per cent to 10 per cent.
For Singapore respondents, the most-cited growth strategies were overseas expansion (30 per cent) and mergers and acquisitions (19 per cent). However, a quarter of respondents also plan to divest part of their business.
(Read more: The Strait Times)