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Chinese internet giant Tencent posts lowest annual profit since 2019

Company's total net profit for 2023 stood at $16.0b

By - Mar 20,2024 - Last updated at Mar 20,2024

This photo taken on July 10, 2022 shows people walking past the Tencent headquarters in Shenzhen in China's southern Guangdong province (AFP photo)

BEIJING — Chinese internet giant Tencent on Wednesday posted its lowest annual profit since 2019, despite slight improvements recently in China's economy and a more lenient attitude taken by regulators towards the tech sector.

Tencent's total net profit for 2023 stood at 115.2 billion yuan ($16 billion), according to a filing of annual results at the Hong Kong Stock Exchange.

Decades of meteoric growth that turned China's tech industry into one of the most dynamic in the world came to an abrupt halt in 2020, when Beijing introduced more stringent oversight measures.

Authorities have since relaxed their approach to regulating the vital domestic tech sector as broader concerns about the health of China's economy mount.

Tencent — one of the world's leading gaming firms and developer of China's ubiquitous messaging and services app WeChat — announced Wednesday 609 billion yuan ($84.6 billion) in total revenue in 2023, up 10 per cent year-on-year.

The Shenzhen-based firm also announced plans to increase the size of its share repurchasing scheme, more than doubling in 2024 from last year to "over HKD100 billion" ($12.8 billion), the filing said.

In 2022, Tencent saw its annual profit fall 16 per cent on the heels of a fresh crackdown by officials on video game addiction among youth.

And despite more recent signs of vigour in the sector, the regulatory hurdle for new games remains "relatively large", Li Chengdong, founder of Beijing-based tech consultancy Dolphin, told AFP.

New games in China must first obtain formal approval from authorities before being released.

The issuance of all new game licences was frozen for nine months in 2021, and approvals have not since returned to the speed and reliability of previous years.

"Even if [Tencent] develops new games, there's no guarantee it can distribute them," Li said.

AI push 

 

Tencent and several of its domestic competitors — including Alibaba, Huawei and Baidu — are now eyeing the promising field of artificial intelligence (AI).

Last September, Tencent unveiled Hunyuan, an AI-powered chatbot intended to compete with the US's ChatGPT, whose services are not accessible in China.

Wednesday's filing hailed Hunyuan as a "top-tier foundation model with superior performance in numerical reasoning, logical inference, and multiturn conversations".

Tencent's President Martin Lau on Wednesday said on an earnings call that artificial intelligence "will serve as our growth multiplier going forward".

"Hunyuan is now achieving top tier Chinese language performance among large language models in China and worldwide," he said, adding: "We are rapidly improving the model's text-to-picture and text-to-video capabilities."

However, despite the push into AI, gaming still represents Tencent's most important business, Li said.

"In the short term, there's not much expectation that the revenue from AI products could cover the costs."

As many Chinese tech giants rush into AI, Tencent remains cautious about making big moves, Beijing-based tech expert Kevin Zhou told AFP.

"[Tencent is] slower in pouring investment and could be up to one or two years behind the first movers," Zhou said.

The firm is seeking to enhance its position in the video games sector by acquiring stakes in emerging studios, particularly in Europe.

Tencent, founded in 1998 in the midst of China's rapid economic development, is a key player in the country's tech sector as the parent of the WeChat "super-app".

WeChat is on most mobile phones in China, where it is used for a wide range of purposes including messaging, calling, digital payment and social media.

German investor confidence soars on rate-cut optimism

By - Mar 19,2024 - Last updated at Mar 19,2024

FRANKFURT, Germany — German investor confidence surged in March, a key survey showed on Tuesday, on growing expectations that the European Central Bank (ECB) will start cutting interest rates soon.

The ZEW institute's economic expectations index rose for the eighth consecutive time, climbing by 11.8 points month-on-month to reach 31.7 points.

The increase was larger than expected, with analysts surveyed by FactSet predicting a reading of 20 points.

"Economic expectations for Germany are significantly improving," said ZEW president Achim Wambach.

"More than 80 per cent of those surveyed anticipate that the ECB will cut interest rates in the next six months," he added.

Hopes that borrowing costs will start coming down in the near future had contributed to a "more optimistic outlook for the German construction industry" in particular, he noted.

Germany's crucial export sector meanwhile was seen benefiting from "increased economic expectations for China as well as the expected depreciation of the dollar against the euro", he added.

German inflation slowed to 2.5 per cent in February to reach the lowest level since June 2021.

The ECB has kept borrowing costs on hold since October, following an unprecedented streak of rate hikes to combat rising consumer prices.

With eurozone inflation steadily falling, many observers expect the first rate cut to come in June.

The ZEW survey also found that investors' assessment of Germany's current economic situation remained bleak, rising by just 1.2 points month-on-month to minus 80.5 points.

The German economy shrank by 0.3 per cent last year, battered by high interest rates, elevated inflation and an industrial slowdown.

Europe's largest economy is forecast to return to modest growth this year as inflation eases and demand picks up.

Bank of Japan hikes rates for first time since 2007

By - Mar 19,2024 - Last updated at Mar 19,2024

The Japanese flag flies over part of the Bank of Japan (BoJ) headquarters complex in central Tokyo on Tuesday (AFP file photo)

TOKYO — Japan's central bank pulled the plug on Tuesday on its ultra-aggressive monetary stimulus programme, hiking rates for the first time since the global financial crisis.

The Bank of Japan's (BoJ) outlier policy of negative rates and massive asset purchases was aimed at jump-starting economic growth and price rises after the "lost decades" of stagnation and deflation.

But on Tuesday, following months of speculation, the BoJ finally changed its policy rate range from -0.1 per cent to between zero and 0.1 per cent, in its first hike since 2007.

Officials "assessed the virtuous cycle between wages and prices" and concluded that "the price stability target of 2 per cent would be achieved in a sustainable and stable manner", it said.

The move will make loans more expensive for consumers and businesses, but banks will be able to earn more money from lending.

It will also increase Japan's bill for servicing the national debt, which at around 260 per cent of national output is one of the world's highest.

The BoJ also called an end to other unorthodox policies including its yield curve control programme, which allows bonds to move in a tight band, and the purchase of exchange-traded funds because they had "fulfilled their roles".

But it said it would keep buying long-term government bonds.

Taro Saito, senior economist at NLI Research Institute, told AFP that the move was a "great step for the BoJ towards normalisation of its monetary policy it has long craved for".

The US Federal Reserve and other central banks yanked up rates to rein in inflation after Russia's 2022 invasion of Ukraine.

But despite inflation also exceeding four per cent at one point, the BoJ kept its main rate below zero, where it has been since 2016.

Because negative interest rates mean banks lose out by parking capital with the BoJ, the policy was aimed at encouraging them to lend to businesses.

The policy has sharply weakened the yen against the dollar, which is good news for exporters but not for consumers as it made imports more expensive.

The yen fell past 150 per dollar and stocks gained as the BoJ's comment that conditions would remain accomodative poured cold water on expectations of more hikes.

"For the BoJ to take a next step, which will probably be a rate hike, a hurdle is high — it has to have clearer signs that the economy is improving," said Saito.

Wage hikes

 

Inflation has been at or above the BoJ's target of two per cent for almost two years.

But the BoJ wanted more evidence of rising wages and that inflation was driven by demand instead of temporary factors.

The final piece of the jigsaw appears to have come on Friday when Japan's largest trade union secured its biggest wage hike since 1991.

BoJ chief Kazuo Ueda told a news conference on Tuesday that the outcome was "an important factor in making our decision".

But Stefan Angrick at Moody's said since there is no certainty there will be broader pay gains or stronger domestic demand, adding that the BoJ "is rushing".

"In the past, when the BoJ has been too eager to tighten policy, a downturn soon followed. Although (Tuesday's) change is not large enough to do Japan's economy in, it wouldn't take much to do further damage," he said.

"The BoJ is treading on thin ice."

Jordanian exports to Saudi Arabia rose by 17.1% in 2023

By - Mar 19,2024 - Last updated at Mar 19,2024

Jordanian exports to Saudi Arabia rose in 2023 to JD984 million by an increase of 7.1 per cent (JT file photo)

AMMAN — Jordanian exports to Saudi Arabia rose in 2023 to JD984 million, by an increase of 7.1 per cent, compared to JD840 million in 2022, topping the list of Jordanian exports to countries of the Greater Arab Free Trade Area.

Jordan's imports from Saudi Arabia decreased in 2023 by 11.6 per cent to reach JD2.591 billion, compared to JD2.932 billion in 2022, Al Mamlaka TV, reported.

According to data issued by the Department of Statistics, the trade volume between Jordan and Saudi Arabia reached about JD3.575 billion in 2023, compared to JD3.772 billion in 2022. Jordan's trade deficit with Saudi Arabia decreased in 2023 to reach about JD1.607 billion, compared to JD2.092 billion in 2022.

Chairman of the Jordan Chamber of Commerce Khalil Hajj Tawfiq said that Jordan enjoys significant opportunities in Saudi Arabia, through participation in several economic sectors, including information technology, construction, and services. 

He noted that these opportunities come within the framework of the economic renaissance, witnessed by Riyadh and other cities, such as the NEOM city project.

Haj Tawfiq said that an official visit to Tabuk will take place after the blessed month of Ramadan to explore cooperation and networking opportunities between Aqaba and NEOM cities, in addition to meetings on the sidelines of the Arab Businessmen and Investors Conference in Riyadh, which will bring together large economic delegations from both countries.

He pointed out that within the framework of enhancing bilateral cooperation, a twining agreement will be signed between some major chambers of commerce, such as the Riyadh Chamber, to exchange experiences and explore joint investment opportunities. He noted that Saudi Arabia was in 2022 Jordan's largest trading partner.

He also mentioned that the completion of the formation of the Saudi-Jordanian Business Council, which includes representatives of various economic sectors in both countries, will be announced soon.

Jordan exports to Saudi Arabia include meat, poultry eggs, and roasted coffee, while Saudi imports include petroleum products and derivatives, various types of milk and dried dates.

Red Sea crisis reduces Ramadan cheer for war-torn Yemen

By - Mar 17,2024 - Last updated at Mar 17,2024

TAEZ, Yemen — Months of missile attacks across the Red Sea are casting a shadow over Ramadan in war-torn Yemen, contributing to rising prices as many struggle to afford the holy month's traditional daily feasts.

In Taez, a city that has been besieged for years by Yemen's Houthi rebels, father-of-five Amin Ghaleb leaves a grocery store empty-handed after haggling fruitlessly with the shopkeeper.

"I can't afford to buy anything," the 50-year-old tells AFP, frowning as he folds his money into his pocket.

It's a familiar tale in the Arabian Peninsula's poorest country, already brought to its knees by nine years of war between the Iran-backed Houthis and a Saudi-led coalition.

Over the past four months, the Houthis have been harassing shipping in the Red Sea in protest at Israel's war against Hamas, triggering American and British reprisal strikes.

The conflict in the commercially vital seaway has pushed up the cost of importing goods, exacerbating runaway inflation and raising fears that, after years of economic crisis, food supplies could run out.

"Prices have doubled and goods are priced either in Saudi riyal or the dollar," said Ghaleb, a government employee who earns about $35 a month.

"How am I supposed to pay rent, electricity, gas, water, food, breakfast, dinner, lunch or clothing for the children?" he asked.

 

Slow sales

 

Ramadan, when Muslims break their day-long fasts with large evening meals, usually means brisk business for Yemen's shops.

But in a Taez market, customers were few and far between. Shopkeepers were standing idly by, displaying vegetables, herbs and grains in straw baskets outside their stores.

"We are being affected by the poor sales," said Yousif Abduljaleel, a Taez merchant. "Some of our products are spoiling."

Taez's residents have suffered shortages of water, food and humanitarian aid since the Huthis blocked all major roads connecting the city with the rest of the country in 2015. 

Concern is now spreading among its inhabitants about the impact of the Red Sea attacks on bringing goods into Yemen, which imports 90 per cent of its food and has one of the world's most malnourished populations.

"Yemeni ports could stop receiving goods because of the high risk" of Houthi attacks, said Abdulwase Al Fatki, a Taez resident.

"This has created fears that food stocks will run out," Fatki added. 

Mohammed Al Basha, a Yemen expert for the US-based Navanti research group, said staple goods have become more expensive during Ramadan in areas controlled by Yemen's internationally recognised government.

The price hikes are "affected by the ongoing Red Sea crisis" but also linked to higher demand during Ramadan, reduced humanitarian assistance and a worsening economy, Basha said.

 

'No purchasing power' 

 

In the rebel-held port city of Hodeida, northwest of Taez, which has been hit by several US and UK reprisal strikes, residents are also worried.

"There is no purchasing power," said Abdulrahman Salam, a Hodeida merchant. 

"If the crisis escalates the prices are going to rise even more," he warned. 

Meanwhile for Hodeidah's fishermen, their job has become a deadly trade. 

Moussa Kulaim, a 50-year-old father of two has been catching fish since he was 12, earning between $4 and $40 for a day's catch.

But these days he is mostly coming up dry due to difficulty navigating Yemen's highly militarised waters.

"It is the only source of livelihood for me and my children," Kulaim told AFP.

"Despite the problems we are facing at sea, we enter for the sake of our livelihood and the livelihood of our children," he said.

"We don't want war, we don't want trouble."

Jordanian companies mark 4.1 per cent growth in QFC

By - Mar 17,2024 - Last updated at Mar 17,2024

A total of 125 Jordanian companies are currently operating under the Qatar Financial Centre umbrella, marking a growth rate of 4.1 per cent compared with the close of 2023 (Petra photo)

AMMAN — A total of 125 Jordanian companies are currently operating under the Qatar Financial Centre (QFC) umbrella, marking a growth rate of 4.1 per cent compared with the close of 2023.

The QFC, recognised as one of the largest and most distinguished financial and trade hubs in the Middle East and North Africa, continues to see an expanding presence of Jordanian companies, as reported by the Jordan News Agency, Petra.

These Jordanian entities, spanning a broad array of industries such as services, fintech, banking, asset management, IT, hospitality, professional services and trade, are actively engaged with the centre.

The Kingdom's prominence within the QFC landscape is evident, where it ranks second after Qatar in the number of companies operating within the Gulf nation's centre.

The QFC offers strategic advantages that have enhanced its appeal to Jordanian businesses seeking to expand abroad, including 100 per cent foreign ownership, streamlined licensing procedures via a unified e-platform, and a favourable corporate tax system.

The QFC fosters an environment conducive to international trade and investment, providing seamless profit repatriation, transparent regulatory frameworks, and efficient dispute resolution mechanisms.

Currently, the QFC oversees assets exceed 120 billion Qatari riyals ($32.9 billion). The centre boasts a diverse ecosystem of approximately 2,000 local and international companies, collectively employing over 12,000 professionals across various sectors.

The QFC’s activities encompass critical sectors such as health, education, investment, media, sports, retail, logistics, digital services, finance, real estate, and energy, according to Petra.

El Salvador stashes $406m in Bitcoin in 'cold wallet' — Bukele

Total of investment is 5,689.7 Bitcoin

By - Mar 17,2024 - Last updated at Mar 17,2024

As the coronavirus pandemic has caused a surge in online payments, central banks are mulling virtual currencies to rival cryptocurrencies like Bitcoin (AFP file photo)

SAN SALVADOR — El Salvador's President Nayib Bukele said recently that his country has stored more than $400 million in Bitcoin in an offline "cold wallet" as the cryptocurrency forges new record highs. 

"We've decided to transfer a big chunk of our bitcoin to a cold wallet, and store that cold wallet in a physical vault within our national territory," Bukele said on social media site X. 

"You can call it our first bitcoin piggy bank," he added.

The cold wallet protects cryptocurrency investments by keeping them offline to prevent hacking attacks.

Bukele shared a screenshot of the investment showing a total of 5,689.7 Bitcoin, with a valuation of $406.6 million.

El Salvador became the first country in the world to legally circulate Bitcoin as legal tender on par with the US dollar in September 2021. 

"It's not much, but it's honest work," Bukele said about the cold wallet initiative. 

Bitcoin surpassed $73,000 this week — before shedding some of its gains — in a rampant rise after US authorities eased mainstream investor access to the cryptocurrency. 

Other cryptocurrencies such as ether or ethereum have also registered increases in their price. 

Eighty-eight per cent of Salvadorans did not use Bitcoin in their transactions in 2023, according to a survey by the private Central American University in January. 

Bukele has sought to use Bitcoin to pull in overseas remittances at a lower cost, and for Salvadorans, 70 per cent of whom operate outside the financial system, to become more banked.

Industrial Policy 2024-2028 outlines series of targets to revitalise industrial sector

By - Mar 17,2024 - Last updated at Mar 17,2024

The 2024-2028 Industrial Policy Document, approves by the government last month, has outlined a series of targets aimed at revitalising the country’s industrial sector (Petra photo)

AMMAN — The 2024-2028 Industrial Policy Document, approved by the government last month, has outlined a series of targets aimed at revitalising the country’s industrial sector. These include achieving an annual growth rate of 2.03 per cent in value-added and a 3.4 per cent increase in employment opportunities for Jordanians in the industrial sector.

The strategic plan also sets a goal to expand the number of exported products to more than $5 million and diversify the export portfolio to include 66 distinct products by 2028, as reported by the Jordan News Agency, Petra.

The plan also aims to diversify product offerings, enhance value-added manufacturing processes, and bolster competitiveness and productivity. Key strategies include optimising the use of raw materials, fortifying national value chains, and elevating quality standards across industries.

The document also highlighted the industrial sector’s growth of 10.2 per cent between 2000 and 2008, followed by a slowdown between 2009 and 2019, with the annual growth rate plummeting to a mere 1.8 per cent. This decline resulted in the manufacturing sector’s share of the national economy shrinking to 17.4 per cent by 2022, down from 21.2 per cent in 2008.

The document also addressed the challenges faced by the sector over the past 15 years, including the struggle to meet the rising domestic demand for manufactured goods, which has led to a widening trade deficit, in addition to the global financial crisis, regional instability, and the COVID-19 pandemic.

The document also noted that while employment in the industrial sector increased by 2.5 per cent between 2010 and 2019, this growth was insufficient to accommodate the influx of new entrants into the labour market.

It also reported that the textile and clothing sector emerged as the largest contributor to job creation among the industrial sectors, although 70 per cent of these jobs were filled by foreign workers.

Despite these hurdles, the sector has succeeded in reducing the energy intensity of production, positioning Jordan as a regional leader in this regard. Carbon dioxide emissions decreased from 2,075 kilotonnes in 2011 to 1,573 kilotonnes in 2019, despite the growth in value-added manufacturing.

The document also highlights the concentration of industrial exports in a limited number of products and markets. In 2010, 66 per cent of the sector’s exports were destined for markets in the MENA region by 46 per cent and the US by 20 per cent.

AstraZeneca buys French biotech firm Amolyt for $1b

By - Mar 14,2024 - Last updated at Mar 14,2024

The offices of British-Swedish multinational pharmaceutical and biopharmaceutical company AstraZeneca Plc. in Macclesfield, England, on July 21, 2020 (AFP file photo)

LONDON — Anglo-Swedish pharmaceuticals giant AstraZeneca on Thursday agreed to buy French biotech specialist Amolyt Pharma for about $1 billion, expanding further into the field of rare drugs.

"AstraZeneca... has entered into a definitive agreement to acquire Amolyt Pharma, a clinical-stage biotechnology company focused on developing novel treatments for rare endocrine diseases," it said in a statement.

The London-listed group added that the transaction would bolster its rare diseases division Alexion.

It will pay $800 million upfront for the Lyon-based company, plus an additional payment of $250 million payable after a specified regulatory milestone is reached.

"We enthusiastically welcome the proposed acquisition of Amolyt by AstraZeneca, an organisation that shares our dedication to delivering life-changing treatments to people living with rare diseases," added Amolyt Pharma Chief Executive Thierry Abribat. "This agreement offers the opportunity to meaningfully advance our pipeline therapies."

AstraZeneca's share price was up 0.1 per cent in early morning London trading following the news.

"The deal adds weight behind Astra's rare disease division," said Sophie Lund-Yates, lead equity analyst at stockbroker Hargreaves Lansdown, noting that Amoly is developing a treatment for an endocrine disorder which is in the final phase of clinical trials.

"This addition to the pipeline looks to be potentially lucrative."

The transaction is expected to close by the end of the third quarter.

Zara owner Inditex posts record profit

By - Mar 13,2024 - Last updated at Mar 13,2024

People pass by a Zara shop announcing discounts on the first day of the winter sales in Barcelona on January 7, 2017 (AFP photo)

ARTEIXO, Spain — Zara owner Inditex, the world's biggest fashion retailer, promised shareholders a record dividend on Wednesday after posting its highest-ever profits last year despite a complicated global backdrop.

The fashion giant, which has seen a strong performance on Spain's stock market over the past year, posted net profits of 5.4 billion euros ($5.9 billion), up 30 per cent from 4.1 billion euros in 2022 which was also a record.

The figure, which follows a solid fourth quarter, was in line with the expectations of analysts polled by financial data firm FactSet, who predicted profits of 5.36 billion euros.

Inditex has been able "to take advantage of the opportunities to keep growing profitably", said Oscar Garcia Maceiras, chief executive of the company which is based in the northwestern Galicia region.

The group, which since early 2022 has been headed by Marta Ortega, daughter of multi-billionaire founder Amancio Ortega, pointed to dynamic sales which hit a record 35.9 billion euros in 2023, a 10.4 per cent increase from the previous year.

Inditex, whose eight brands include Pull&Bear and upmarket label Massimo Dutti, notably benefited from consumers' taste for shopping online which rose by 16 per cent to reach 9.1 billion euros.

Given the results, the retail giant said it would pay shareholders a dividend of 1.54 euros, a 28 per cent increase from 2022, and the highest in the group's history.

It also expressed optimism about 2024, given that sales have continued to grow in recent weeks, up 11 per cent year-on-year for the period from February 1 to March 11.

Inditex's results are at odds with the difficulties experienced by many other fast fashion retailers, some of which have been forced to close or lay off staff in recent months, notably in France, like Kookai and Paris fashion brand Naf Naf.

The sector is facing heightened competition from the rise of ultra-low-cost brands like Chinese platform Shein and Ireland's Primark which have unsettled traditional low-cost clothing chains.

It has also been hit by geopolitical tensions, notably in the Red Sea where global shipping has been disrupted by Houthi rebel attacks and by persistently high inflation, which has weighed on purchasing power.

But such pressures seem to have had little impact on Inditex which has posted a string of records and performed well on Madrid's Ibex 35 stock exchange.

The fashion giant — which launched its "Pre-Owned" second-hand clothes platform in around 15 countries in December — has seen its share value grow by more than 40 per cent to reach 40 euros over the past year.

That has raised its market capitalisation to more than 127 billion euros, confirming its position as global leader ahead of Japan's Fast Retailing, owner of Uniqlo and Sweden's H&M, currently in a rocky period after a disappointing 2023.

"The group's domination of the apparel retail market is more visible than ever," Bank of America analysts said late last year, saying retailer had entered "a virtuous cycle fuelling significant market share gain at industry leading margins".

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