Business

HONG KONG — Asian markets were marginally higher on Wednesday while oil began recovering after the International Monetary Fund (IMF) downgraded global growth forecast for 2022 had sent crude prices plunging.

The IMF slashed its outlook by 0.8 percentage points, largely over inflationary crises linked to the Ukraine war and the coronavirus pandemic — prompting a 5 per cent dive in oil prices on Tuesday. 

"The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake," IMF chief economist Pierre-Olivier Gourinchas said in a report.

Oil prices began to recover on Wednesday, however, and Asian stocks also mostly rose following a positive lead from Wall Street, where US stocks rallied on the back of promising housing-starts data and solid corporate earnings.

Both main contracts climbed, but crude has suffered major shocks this year, from the war in Ukraine to the raging coronavirus outbreak in China, where the economy has been battered by anti-COVID restrictions.

Tens of millions are still barred from leaving home in economic centre Shanghai and tech hub Shenzhen, where a COVID-19 outbreak has broken down supply lines and shuttered businesses.

"China continues to stay wedded to deleveraging parts of the economy while attempting to add stimulus in a targeted sector manner," said Jeffrey Haley, senior market analyst at Oanda. 

"However, the Shanghai lockdown and fears its COVID-zero policy will crimp growth this year continue to weigh on markets that clearly want more of the usual cast-of-thousands stimulus measures from years past."

Netflix shares plunge 

The Shanghai Composite Index was the biggest loser among major Asian markets, dropping 1.35 per cent at the close.

Hong Kong — which plummeted on Tuesday over concerns about Beijing's ongoing tech-sector crackdown — also ended down, with Chinese banks keeping lending rates unchanged.

"China disappointed markets that were looking for more comprehensive stimulus measures as it left both its one and five-year Loan prime Rates (LPR) unchanged," Haley said. 

Tokyo gained 0.86 percent, buoyed by a cheaper yen. Jakarta, Sydney and Taipei all inched upward while Seoul was flat.

Despite the rally on Wall Street, there are concerns about the impact of the earnings report from Netflix showing a drop in subscriptions in the first quarter of the year.

This was the first such drop for Netflix in a decade and hammered the streaming giant's shares, which dropped by a quarter of their value in after-market trading. 

Analysts have said this could dent Tuesday's gains when US markets open.

After closing lower on Tuesday over the IMF announcement, Europe's major markets opened the day in positive territory, with London, Paris and Frankfurt all slightly up.

PARIS — The war in Ukraine will heavily weigh down on economic growth in the eurozone, the International Monetary Fund (IMF) said on Tuesday, as the conflict wreaks havoc on energy prices and the manufacturing sector.

The IMF revised its eurozone growth forecast for 2022 to 2.8 per cent, down from 3.9 per cent in its January estimate, with the region's biggest economy, Germany, taking a heavier hit.

"The main channel through which the war in Ukraine and sanctions on Russia affect the euro area economy is rising global energy prices and energy security," the IMF said in its World Economic Outlook report.

The war has hurt some countries like Italy and Germany more than other European nations because they had "relatively large manufacturing sectors and greater dependence on energy imports from Russia", the IMF said.

Germany's economy is now expected to grow by 2.1 per cent this year, down from 3.8 per cent previously. Italy will also take a heavy hit, with growth of 2.3 per cent compared to an earlier forecast of 3.8 per cent.

After Moscow's invasion in February, the West including eurozone countries unleashed sanctions on Russia, affecting its financial system, aviation sector and other major parts of its economy.

Nearly two months later, prices are rising. Oil remains above 100 dollar per barrel after reaching historic highs in March, while the price of gas, wheat, aluminium, nickel and other raw materials have soared.

As a result, consumer prices in the eurozone have surged to 7.5 per cent, an all-time high.

ECB holds steady 

The global economy was pummelled by the pandemic in 2020, but it began to recover last year. 

The IMF had predicted last October that eurozone growth would be 4.3 per cent in 2022 before lowering the forecast in January due to a global supply chain crisis and the emergence of the Omicron variant of the coronavirus.

The IMF's latest report also lowered the eurozone's growth outlook for 2023 to 2.3 per cent, down from 2.5 per cent previously.

But it slightly increased its forecast for Germany to 2.7 per cent. Italy's growth, however, will slow further to 1.7 per cent.

The war was "severely affecting the euro area economy", European Central Bank (ECB) Chief Christine Lagarde said last week, pointing to a fall in economic confidence and persistently high energy costs for households and businesses.

The ECB last month slashed its growth forecast for 2022 to 3.7 per cent from 4.2 per cent previously predicted, and warned inflation would soar in the eurozone area, but it has yet to follow the US Federal Reserve in raising rates to tame prices.

Similarly, the Organisation for Economic Cooperation and Development said in March that eurozone growth risked being cut by up to 1.4 percentage points while inflation would increase by 2.5 percentage points over a year if the war's impact proves to be lasting.

BEIJING — China's economic growth accelerated in the first quarter of the year to 4.8 per cent, official data showed on Monday, but the government warned of "significant challenges" ahead while massive COVID-19 lockdowns started to bite.

The world's second-biggest economy had lost steam in the latter half of last year with a property slump and regulatory crackdowns, pulling down growth.

But it exceeded expectations in the first three months of 2022, growing 4.8 per cent  on-year, the National Bureau of Statistics (NBS) said, with Lunar New Year spending and factory production cajoling growth.

The weeks ahead, however, appear treacherous for the economy with Beijing's unrelenting zero-COVID approach to outbreaks clogging supply chains and locking down tens of millions of people — including in the economic dynamos of Shanghai and Shenzhen as well as the northeastern grain basket of Jilin.

Virus restrictions in March have already gouged at retail sales, as consumers shied away from shopping, and drove up unemployment.

"With the domestic and international environment becoming increasingly complicated and uncertain, economic development is facing significant difficulties and challenges," NBS spokesman Fu Linghui said on Monday.

The pandemic rebound — as well as the sanctions binding Russia's economy — ups the ante on officials to deliver Beijing's full-year growth target of around 5.5 per cent.

The target comes in a pivotal political year for President Xi Jinping who is eyeing another term in power at the Party Congress to be held this autumn.

The current virus outbreak is the worst since the peak of the first wave which emerged in Wuhan in late 2019, and the economy is beginning to weaken. 

Industrial production growth eased to 5 per cent in March, NBS data showed, down from the January-February period.

Meanwhile, retail sales sank 3.5 per cent and the urban unemployment rate ticked up to a 22-month high of 5.8 per cent last month.

"March activity data suggests that China's economy slowed, especially in household consumption," Tommy Wu, lead China economist at Oxford Economics, said in a note.

'Worse to come' 

China's government is trying to balance "minimising disruption against controlling the latest wave of COVID infections", Wu said, but he warned of a drag on economic activity into May or beyond.

Last week, carmakers including XPeng and Volkswagen warned of severe disruptions to supply chains and possibly even a halt on production completely if the lockdown on Shanghai's 25 million inhabitants persisted.

Already, goods are piling up at the world's busiest container port in Shanghai, prompting shipping giant Maersk to say it will stop taking new bookings for refrigerated containers into the city.

"Further impacts from lockdowns are imminent," said Iris Pang, chief economist for Greater China at ING.

As Shanghai struggles to rein in an outbreak that has seen tens of thousands of daily cases, Pang said other cities may attempt to replicate Shenzhen's success in reopening swiftly by resorting to strict measures with just a few COVID patients.

The southern tech powerhouse went into full lockdown for almost a week in March, but has since eased restrictions.

Julian Evans-Pritchard of Capital Economics cautioned that "the worst is still to come".

Fu of the NBS warned of high commodity prices on Monday with the Russia-Ukraine conflict leading to a decline in the availability of commodities such as corn and wheat.

Although China's central bank has announced a reserve ratio cut, lowering the amount of cash banks must hold in a push to support small businesses, experts say officials were taking a restrained approach to stimulus.

But economists expect officials will eventually publish a growth figure consistent with official targets, as part of doubts that the numbers may be massaged for political reasons.

NEFTA, Tunisia — Najet unravels an old pair of jeans, raw material for a designer carpet: Traditional, eco-friendly crafts are being adapted for new markets thanks to a project born in the Tunisian desert.

"I learned to weave at a young age, from my mother," said the 52-year-old from the oasis town of Nefta, 500 kilometres south of Tunis.

Now, she is making a living from it.

She is selling her Turkish-style kilim rugs via Shanti, a social enterprise that helps artisans from across the North African country reach buyers and bring vital revenue into some of its most marginalised communities.

Shanti is the brainchild of Najet's Franco-Tunisian nephew Mehdi Baccouche.

"Unstitching old jumpers, tearing up old cotton garments, making rugs out of them, it's a folk art found in all Tunisian homes," he said.

While the skill "has been around forever", reaching buyers is a challenge, he added. 

Back in 2014, he had asked his aunt to weave carpets for his friends, soon moving to selling them via Facebook.

Seeing the potential, two years later he created Shanti, which buys carpets and takes charge of getting them to consumers.

It also employs designers who work with artisans to improve their design skills and make their products more marketable.

"These are my creations, they come out of my imagination and Shanti approved them," Najet said.

'Recycle clothes' 

Najet uses an eclectic array of old pullovers, socks and assorted pass-me-downs from the local flea market, giving them a new life as rugs.

She has little fear of running out of raw materials. 

Despite a lean patch, the Tunisian clothes industry still keeps 1,600 firms in business, providing 100 times that many jobs.

In Nefta, a town of some 22,000 people, Shanti has also set up a haberdashery where weavers have free access to balls of wool recycled from second-hand clothes.

The association's local coordinator Fatima Alhamal, Najet's daughter, says the store makes "a huge difference".

Previously, "craftswomen had to go and find materials, which they had to pay for, then earned 12-15 euros for a kilim".

Now Shanti pays them 40 euros ($43) apiece, up to a maximum of four a month each to avoid pressuring them into overwork.

It then sells them in Tunisia and abroad.

The association also helps the workers improve their work spaces, for example with air conditioning — a necessity in southern Tunisia's blistering summer heat.

The work has changed the social standing of the women involved.

"People see them completely differently now," Fatma said.

Najet says she is happy to be making a living from home.

"I don't have to go out for anything, I can cook and eat here, I can work comfortably."

Eco-friendly 

Baccouche said at first people teased him for getting involved in "an old ladies' craft".

But the project fills a valuable niche in an area where women are disproportionately underemployed, and which has faced an ever-worsening economic crisis since before the revolt that sparked the Arab Spring uprisings of 2011.

"It was important to show that you can be an old woman who never went to school and doesn't know how to use the Internet, but you can still do something and earn a living from it," he said.

Yet, the association also tries to avoid creating conflicts within families.

It pays the women not in cash but in post office accounts where their husbands can't see how much they are making — or use it to pay household bills.

Using its system of ordering in advance, Shanti runs a boutique in the capital Tunis.

"L'Artisanerie" also acts as a space for coordinators who train artisans from other rural areas, making bamboo furniture, poetry and embroidery.

In four years, more than 200 producers have been able to find a market for their work. Sixty work every day for L'Artisanerie.

"We're trying to show that you can make something 100 per cent Tunisian, with Tunisian materials and skills, but with a design that fits current tastes," Baccouche said.

Some products, joint creations by artisans and Shanti designers, are sold to design-conscious Tunisians.

Others are exported or sold to bigger firms — such as Indigo, a manufacturer for Zara, or Mango, which recently bought 164 rugs made from recycled jeans.

For now, the system still relies on some support from non-profits such as Oxfam or on Danish development aid.

But Baccouche has big ambitions, with Shanti expanding into sustainable agriculture and eco-tourism.

"We're trying to set up an entire, eco-friendly production and logistics chain," he said.

WASHINGTON — Twitter moved on Friday to defend itself against Elon Musk's $43 billion "hostile" takeover bid, announcing a "poison pill" plan that would make it harder for the billionaire to get a controlling stake.

Musk's proposed buyout faces several hazards, including possible rejection and the challenge of assembling the money, but could have significant impacts on the key social media service if consummated.

Twitter said its board unanimously adopted a so-called shareholder rights plan, also known as a "poison pill", which kicks in if an investor buys more than 15 per cent in shares without the directors' agreement. Musk holds 9 per cent.

The maneuver makes it harder for a buyer to build too big of a stake without board approval, by triggering an option that allows other investors to buy more of a company's shares at a discount.

Twitter said the plan, which experts consider a potent tool against corporate raiders, does not prevent discussing or even agreeing to an acquisition.

Musk sent shockwaves through the tech world on Thursday with an unsolicited bid to buy the company, stating the promotion of freedom of speech on Twitter as a key motive for what he called his "best and final offer".

The world's richest person offered $54.20 a share, which values the social media firm at some $43 billion, in a filing with the Securities and Exchange Commission.

He has not directly addressed the poison pill, but tweeted after his bid was announced that the board would face "titanic" legal liability if it goes against the interests of shareholders in rejecting his offer.

Analyst Dan Ives predicted that the board's move would "not be viewed positively by shareholders" given both the potential dilution of stock and the signal it sends of hostility towards being bought. He foresaw a "likely" court challenge.

Musk has already acknowledged he was "not sure" he would succeed and refused to elaborate on a "plan B", though in the filing he noted a rejection would make him consider selling his existing shares.

He also said he "could technically afford" the buyout while offering no information on financing, though he would likely need to borrow money or part with some of his mountain of Tesla or SpaceX shares. 

Some investors had already spoken against the proposal, including businessman and Saudi Prince Alwaleed Bin Talal.

Morningstar Research analysts echoed that perspective, saying, "While the board will take the Tesla CEO's offer into consideration, we believe the probability of Twitter accepting it is likely below 50 per cent."

Twitter stock closed down nearly 2 per cent Thursday.

Musk's move throws another curve into the roller-coaster ride of his volatile relationship with the global social media service, and raises many questions about what comes next.

He was offered a seat on the board but turned it down over the weekend.

Musk's shock offer to buy Twitter drew worries — and some cheers — over putting the platform in the hands of a mercurial billionaire who advocates generally for few limits on what users can post.

He provided some detail on Thursday on his vision, saying he would like to lift the veil on the algorithm that runs on the platform, even allowing people to look through it and suggest changes.

He also reiterated his support for a more hands-off approach to policing the platform, a thorny matter particularly in high-profile cases such as Donald Trump who was banned after the assault on the US Capitol last year.

Critics argued that free speech absolutism on social media can be very messy in the real world.

"I am frightened by the impact on society and politics if Elon Musk acquires Twitter," tweeted Max Boot, a Washington Post columnist, on Thursday.

"He seems to believe that on social media anything goes. For democracy to survive, we need more content moderation, not less," Boot added.

Still Musk was rallying support on Twitter, where he has over 81 million followers, for the fight ahead.

"Thanks for the support!" he tweeted in reply to a poll that overwhelming backed his bid.

FRANKFURT — German auto giant Volkswagen (VW) said on Thursday its first quarter operating profit increased significantly in 2022, while warning that the "first effects" of the war in Ukraine were beginning to be felt. 

The group's operating profit, a measure of profitability closely watched by investors, rose to 8.5 billion euros ($9.3 billion) over the first three months of the year from 4.8 billion euros in the same period last year, according to preliminary figures.

The boost was down to strong "operating performance" and a positive effect of 3.5 billion euros thanks to hedges against the changing price of raw materials.

The turbulence on commodities markets could be traced back to the "ongoing war in Ukraine", which has pushed up prices, Volkswagen said in a statement.

Supply chain impacts could also be seen, with deliveries from suppliers in Ukraine being limited.

The lack of critical car parts has already forced Volkswagen, along with other German carmakers, to curtail production at some plants, while exports to Russia have been halted.

The course of the war and the impact on Volkswagen "cannot be predicted with sufficient certainty" but risked having a "negative impact" on the Wolfsburg-based group.

Volkswagen also said it delivered some 500,000 fewer cars in the first quarter of 2022 than in the previous year, a 22-per cent drop. 

The continued impact of the coronavirus pandemic, which has recently led to widespread lockdowns in China, a key market, also loomed over the auto manufacturer's future performance.

As did the possibility of further disruption to supply chains "especially for semiconductors", a key component in both conventional and electric vehicles.

The two effects already conspired to make business difficult for Volkswagen in 2021. Despite net profits rising by 75 per cent to 15.4 billion euros, the 12-brand group delivered 600,000 fewer units last year, as lockdowns and shortages caused interruptions in production.

LONDON — Eurozone stock markets and the euro rose on Thursday awaiting the outcome of the European Central Bank (ECB) latest monetary policy meeting, as traders seek more information on when it will start to raise interest rates to fight the bloc's record-high inflation.

Oil prices, whose recent surge has contributed to inflation around the globe reaching the highest levels in decades, came off the boil on Thursday.

Investors were keeping a watch also on earnings updates due from more US banks, a day after JPMorgan Chase reported a sharp drop in profit and warned of downside risks from the Ukraine war and surging inflation.

Elsewhere on the corporate front, Tesla chief Elon Musk has launched a "hostile" takeover bid for Twitter, offering to buy 100 per cent of its stock and take it private, according to a stock exchange filing on Wednesday.

"Several big US banks are due to report... while the latest brush strokes in the global interest rate picture will be painted by the ECB later as it meets to decide whether to follow the Bank of England and US Federal Reserve in hiking rates," noted Danni Hewson, financial analyst at AJ Bell.

"The expectation is that ECB chief Christine Lagarde and her colleagues will sit on their hands but the runaway nature of inflation in the eurozone is bringing considerable pressure to bear on the central bank."

The ECB and investors at large remain cautious about the financial fallout caused by the war in Ukraine.

Prices were already soaring in major economies when Russia's invasion in late February sent shockwaves through the global energy, food and commodity markets.

Data this week from the United States — the world's biggest economy — showed inflation at a level not seen in 40 years.

Analysts said, however, that markets had welcomed an indication that US inflation may be approaching its peak.

Despite falling on Thursday, both main oil contracts stayed firmly above the $100 per barrel mark, with fears swirling about global supply constraints over the invasion of Ukraine by Russia — a major producer of oil and gas.