China: Consumer Prices Rise in August, PPI Stuck in Deflation

A woman shops in a supermarket, Beijing, China, Sept. 9, 2024 (EPA)
A woman shops in a supermarket, Beijing, China, Sept. 9, 2024 (EPA)
TT

China: Consumer Prices Rise in August, PPI Stuck in Deflation

A woman shops in a supermarket, Beijing, China, Sept. 9, 2024 (EPA)
A woman shops in a supermarket, Beijing, China, Sept. 9, 2024 (EPA)

China's consumer inflation accelerated in August to the fastest pace in half a year but the uptick was due more to higher food costs from weather disruptions than a recovery in domestic demand as producer price deflation worsened.

A sputtering start in the second half is mounting pressure on the world's second-largest economy to roll out more policies amid a prolonged housing downturn, persistent joblessness, debt woes and rising trade tensions.

The consumer price index (CPI) rose 0.6% from a year earlier last month, versus a 0.5% rise in July, data from the National Bureau of Statistics (NBS) showed on Monday, but less than a 0.7% increase forecast in a Reuters poll of economists.

Extreme weather this summer from deadly floods to scorching heat has pushed up farm produce prices, contributing to faster inflation, Reuters reported.

China's affected crops due to various natural disasters totaled 1.46 million hectares in August, state media reported on Monday.

“The higher CPI in August was due to high temperatures and the rainy weather,” NBS statistician Dong Lijuan said in a statement.

Food prices jumped 2.8% on year in August from an unchanged outcome in July, while non-food inflation was 0.2%, easing from 0.7% in July.

“But the rebound was softer than expected and did little to ease deflation concerns. Much of the improvement has been food reflation, which is susceptible to fluctuating weather conditions and capacity changes,” said Junyu Tan, North Asia Economist at Coface.

Core inflation, excluding volatile food and fuel prices, was 0.3% in August - the lowest in nearly three and a half years - down from 0.4% in July.

The consumer inflation gauge was up 0.4% month-on-month, compared with a 0.5% increase in July and missing economists' expectations of a 0.5% gain.

In unusually strong comments, China's ex-central bank governor Yi Gang urged efforts to fight deflationary pressure at the Bund Summit in Shanghai last week.

A national campaign to earmark $41 billion in ultra-long treasury bonds to support equipment upgrades and trade-in of consumer goods has proven lukewarm in spurring consumer confidence, with domestic car sales extending declines for a fourth month in July.

“These policies will take time to filter through, so a demand-led reflation is obviously not yet on the horizon,” Tan said.

Meanwhile, the producer price index (PPI) in August slid 1.8% from a year earlier, the largest fall in four months. That was worse than a 0.8% decline in July and below a forecast 1.4% fall.

“The ongoing deflationary pressures boil down into a broader problem of production surplus, which is still outstripping demand,” said Tan.

China's yuan dipped against the dollar on Monday as long-dated yields hit record lows after monthly inflation data added to economic worries and calls for fresh easing.



Saudi Arabia Moves to Strengthen Stability and Development in the Region

Saudi Arabia continues its initiatives to promote security and peace in the region... The Saudi flag is seen at a site in the city of Jazan (SPA).
Saudi Arabia continues its initiatives to promote security and peace in the region... The Saudi flag is seen at a site in the city of Jazan (SPA).
TT

Saudi Arabia Moves to Strengthen Stability and Development in the Region

Saudi Arabia continues its initiatives to promote security and peace in the region... The Saudi flag is seen at a site in the city of Jazan (SPA).
Saudi Arabia continues its initiatives to promote security and peace in the region... The Saudi flag is seen at a site in the city of Jazan (SPA).

At a time of growing uncertainty surrounding the global economy, amid the repercussions of the US-Iranian war, tensions related to the Strait of Hormuz, and risks facing shipping through several vital maritime routes, Saudi Arabia is intensifying its regional initiatives aimed at strengthening security and stability. The approach is based on a vision that links reducing geopolitical risks with creating the conditions necessary for growth, development, and attracting investment.

In this context, the "Makkah Agreement" between Saudi Arabia, Türkiye, and Pakistan stands out as one of the initiatives that specialists believe could contribute to strengthening regional stability and increasing confidence in the economic and investment environment in a region that occupies a pivotal position in global energy markets, trade, and supply chains.

Specialists who spoke to Asharq Al-Awsat said Saudi initiatives are part of a broader strategy aimed at building a more stable regional environment capable of withstanding shocks. They emphasized that strengthening security has a direct impact on the sustainability of energy supplies, the safety of shipping routes, and the movement of trade and investment, while also paving the way for broader economic integration and joint projects among countries in the region.

They also noted that the significance of Saudi initiatives extends beyond immediate security considerations to supporting development by reducing risk levels, strengthening investor confidence, and creating opportunities for new partnerships in energy, industry, technology, mining, logistics, and defense industries.

Stable Energy Supplies and Shipping

Fadl bin Saad Al-Bouainain, a member of the Shura Council, told Asharq Al-Awsat that the initiatives adopted by Saudi Arabia, foremost among them the "Makkah Agreement for Joint Defense" between Saudi Arabia, Pakistan, and Türkiye, could have an impact on the global economy, food security, and international trade, given the region's economic and strategic weight.

He added that the region exports nearly one-fifth of the world's oil needs, in addition to gas and agricultural nutrients, making its stability and security essential to ensuring the continuity of energy supplies and the safety of maritime shipping routes.

Al-Bouainain explained that Crown Prince Mohammed bin Salman places great importance on economic development as a foundation for the prosperity of peoples and states, with a focus on investment flows as one of the drivers of development, alongside strengthening the Kingdom's capabilities in the energy sector and maintaining its influential position within the global supply system.

He said Saudi efforts seek to achieve security and stability in the region in ways that positively affect both the Saudi economy and the economies of neighboring countries. Development, he noted, requires a stable foundation on which to build, while the defense agreement contributes to strengthening deterrence and reducing risks that could affect economic activity.

He pointed out that investors consider the stability of the investment environment a priority when making decisions. Accordingly, strengthening regional security and providing greater clarity over the economic outlook are factors that support the attractiveness of the Saudi market, given the diverse investment opportunities it offers.

According to Al-Bouainain, the "Makkah Agreement" sends reassuring messages to local and foreign investors and strengthens confidence in the sustainability of energy supplies and the protection of critical infrastructure. This could, in turn, affect the pace of projects, investment flows, and trade.

He stressed that Saudi Arabia is relying on "Vision 2030" and its development programs, which require substantial investment, making greater economic certainty and reduced geopolitical uncertainty important factors in supporting capital flows and project implementation.

He added that strengthening the regional security system could encourage investors to seize opportunities and participate in development projects, with the positive effects extending to the economies of the region as a whole, not just Saudi Arabia.

Al-Bouainain noted that the signing of the agreement after years of negotiations reflects the depth of relations between Saudi Arabia, Türkiye, and Pakistan and opens the way for a broader phase of cooperation, supporting efforts to establish security, stability, and prosperity.

He said the initiatives led by the Saudi Crown Prince have helped strengthen the role of diplomacy and political dialogue in addressing regional crises, alongside efforts to unify responses to challenges. This supports security and stability and provides a stronger foundation for economic and development programs.

Economic Integration Takes Shape

Saudi businessman Abdullah bin Zaid Al-Mulaihi, CEO of Saudi technology holding company Al-Tamayoz, said Saudi Arabia continues to work to strengthen confidence in both the domestic and regional economies. He noted that the "Makkah Agreement" is among the initiatives that could enhance the Kingdom's regional and international standing and open the way for a new phase of economic cooperation and integration.

Al-Mulaihi told Asharq Al-Awsat that Saudi steps to strengthen security and stability have a direct impact on the economic and investment environment. He said Saudi-Turkish-Pakistani rapprochement provides a foundation for developing joint political, economic, defense, and human cooperation.

He added that the Kingdom has established itself as an influential political and economic power by building strategic partnerships aimed at achieving shared interests and supporting regional security and stability.

Al-Mulaihi believes that Saudi Arabia's strategy of strengthening stability and building long-term partnerships helps create a more attractive environment for investment and opens opportunities for the private sector in industry, technology, energy, mining, logistics, defense industries, and trade.

He noted that Saudi Arabia has a large economy, a strategic geographic location, and ambitious transformation programs under "Vision 2030."

He said political and security rapprochement could develop into broader economic partnerships benefiting investors and business leaders, particularly through joint projects, knowledge and technology transfer, localization of industries, and increased trade.

Al-Mulaihi emphasized that the economy, development, and citizens are the direct beneficiaries of regional stability. He noted that the Kingdom's political strength and balanced partnerships give the private sector greater confidence and strengthen its ability to attract capital, technologies, and international partnerships.

He concluded that Saudi Arabia is pursuing a vision that combines protecting its interests, strengthening its security, and building the economy of the future. He considered the "Makkah Agreement" a factor that strengthens the Kingdom's position in shaping the region's security, development, and cooperation framework.

The Path to Sustainable Development

Abdulrahman Baashen, head of the Al-Shorouq Center for Economic Studies in Jazan, told Asharq Al-Awsat that Saudi Arabia is strengthening its international credibility by adopting initiatives aimed at reducing risks and supporting stability, including the "Makkah Agreement for Joint Defense." He believes the agreement could help increase economic certainty in the region following the repercussions of the US-Iranian war and tensions in the Strait of Hormuz.

Baashen added that the Saudi approach, which combines political, security, and economic action, supports regional balance and strengthens confidence in the Saudi economy and the region's business environment. This could be reflected in trade, investment, and international partnerships, particularly given the Kingdom's central role in global energy markets.

He expects the next phase to see increased trade and investment activity, particularly in defense-related technology industries, alongside the expansion of strategic partnerships with countries possessing advanced expertise and capabilities in these fields.

Baashen believes the agreement could provide a supportive framework for launching high-value economic projects and initiatives between Saudi Arabia, Türkiye, and Pakistan, with their impact extending to their international partners and laying broader foundations for economic integration and sustainable development among Riyadh, Ankara, and Islamabad.

He noted that developing partnerships in industry, technology, energy, supply chains, infrastructure, and transportation could turn the strategic rapprochement among the three countries into tangible economic opportunities and increase the region's ability to withstand external disruptions.

He stressed that the essence of Saudi initiatives lies in linking security with development. Reducing tensions and strengthening regional stability do not affect only the political sphere, but also extend to protecting trade flows and energy supplies, improving the investment environment, and providing a more sustainable foundation for regional economic growth.


Alphabet's Investment in SpaceX Multiplies 100-Fold to $94 Billion

The letters of the word "Alphabet" on a computer screen featuring a Google search page in an illustration (Reuters)
The letters of the word "Alphabet" on a computer screen featuring a Google search page in an illustration (Reuters)
TT

Alphabet's Investment in SpaceX Multiplies 100-Fold to $94 Billion

The letters of the word "Alphabet" on a computer screen featuring a Google search page in an illustration (Reuters)
The letters of the word "Alphabet" on a computer screen featuring a Google search page in an illustration (Reuters)

Alphabet's early bet on SpaceX has multiplied more than 100-fold, with the Google parent disclosing a stake worth about $94 billion at the end of June compared with the $900 million investment it said it made in Elon Musk's rocket company in 2015.

Alphabet has emerged as by far the largest single institutional holder of SpaceX following its $86 billion IPO in June, according to a Reuters analysis of quarterly filings made public so far.

The filings shed new light on the scale of positions acquired by SpaceX's backers as the company transitioned from a closely held startup to a publicly traded giant. Together with separate public disclosures on early investments, including Alphabet's, they also highlight how dramatically the value of some early investments in SpaceX has grown.

Because the 13F filing data is compiled once ⁠per quarter and disclosed ⁠within six weeks of quarter-end, the information is dated and will not capture any buying or selling done by these large investors since June 30.

There are other limitations as well, given the vast universe of SpaceX investments and the evolving schedule of when they stand to become eligible to be sold in public markets.

"It's very, very difficult to tease out which of these institutions were holding pre-IPO shares," said Steve Sosnick, market strategist at Interactive Brokers.

Alphabet is an exception because the company publicly disclosed that it invested $900 million in SpaceX ⁠in 2015, providing a rare benchmark against which to compare the value of its current holding.

Alphabet did not immediately respond to a request for comment. Sosnick added that the 13F filings did not reveal investors' lockup status or intentions with respect to realizing profits on pre-IPO positions.

FILE - The SpaceX logo is displayed on a building, May 26, 2020, at the Kennedy Space Center in Cape Canaveral, Fla. (AP Photo/David J. Phillip, File)

Alphabet held 551.2 million SpaceX shares at the end of the second quarter, according to the firm's filing, worth about $94.2 billion at SpaceX's June 30 share price of $170.86.

At Thursday's price, Alphabet's disclosed position would be worth about $77.9 billion, still about 86.5 times the size of Google's original investment. Fidelity Investments was the second-largest reported institutional holder, with 302.6 million SpaceX shares, followed by Gigafund Management with 171.8 million, Baillie Gifford with 51.4 million and BlackRock with 51.0 million.

Alphabet, Fidelity, Gigafund Management, Baillie Gifford and BlackRock, the five largest reported holders in the data, accounted for nearly three quarters ⁠of reported SpaceX ⁠shares, highlighting the concentration of reported institutional ownership among a handful of investors.

Separately, SpaceX said in a regulatory filing that Musk owned a 48.4% stake in the company. SpaceX went public on June 12 at $135 a share. Its shares have since retreated from their end-June level. SpaceX closed at $141.29 on Thursday, 4.7% above its IPO price but 17.3% below the June 30 close.

Sosnick told Reuters that SpaceX remains one of the most actively traded stocks among customers at Interactive Brokers, receiving a "fresh jolt of buying last week when market fears about what would happen when the first lockup expiry arrived proved to be unfounded."

Retail owners of SpaceX shares, who do not have to submit their holdings to the SEC, turned into net sellers of the stock on Friday for the first time since the IPO, according to data from Vanda Research.

The research firm, which tracks the activity of self-directed individual investors, calculated that this group sold a net $4.5 million on that day. SpaceX shares were down 3% on Thursday but have risen 30% since August 5.


Iraqi Daily Oil Exports in August Highest since Start of War

A view across Shatt al-Arab of the 'Bin Omar' oil field north of Basra, Iraq (Reuters)
A view across Shatt al-Arab of the 'Bin Omar' oil field north of Basra, Iraq (Reuters)
TT

Iraqi Daily Oil Exports in August Highest since Start of War

A view across Shatt al-Arab of the 'Bin Omar' oil field north of Basra, Iraq (Reuters)
A view across Shatt al-Arab of the 'Bin Omar' oil field north of Basra, Iraq (Reuters)

Iraq's average daily oil exports since the beginning of August are the highest since the outbreak of the Middle East war between Iran and the United States, which has choked off the Strait of Hormuz, the oil ministry said Friday.

Iraqi Oil Minister Bassem Mohammed Khudair told a press conference that "exports since the beginning of the month have reached a rate of two million barrels" per day, for a total of around 26 million barrels, saying the daily rate was achieved "for the first time since the crisis began".