Business

HONG KONG — Hong Kong's richest households now earn 80 times as much as the poorest, a figure that more than doubled in five years as the city grappled with an ageing population, Oxfam said in a report on Wednesday.

The Chinese finance hub regularly tops the charts of the most expensive cities to live in and has struggled for years to rein in wealth inequality.

City officials have vowed to conduct "targeted poverty alleviation" after Chinese President Xi Jinping ordered Hong Kong to solve livelihood issues and boost socioeconomic mobility.

But Oxfam's Hong Kong branch on Wednesday noted a continued rise in the number of elderly poor and a widening wealth gap post-pandemic.

The poorest 10 per cent of households earned just HK$1,600 ($206) a month in the first quarter of this year — while the wealthiest 10 per cent raked in 81.9 times that.

By comparison in 2019, the wealthiest 10 per cent of households earned 34.3 times the poorest 10 per cent, Oxfam said, citing calculations based on government data.

That five-year period also saw a "staggering" rise in elderly people living in poverty, with the latest figure being 580,000 people in a city of 7.5 million.

More than 1.39 million people in Hong Kong live in poverty as of the first quarter of this year, Oxfam added.

"The data show that wealth inequality caused by an ageing population is getting worse," said Kalina Tsang, director of Oxfam Hong Kong, at a press conference.

"Hong Kong's poor population and the poverty rate are on the rise. We think this should ring alarm bells for society."

Hong Kong's labour and welfare chief said this year that median household income will no longer be used to gauge poverty levels, effectively scrapping the poverty line as a social indicator.

Officials are working on an analytical framework that would include "macro indicators for long-term monitoring and key performance indicators on a micro level", a government spokesperson told AFP on Wednesday.

Tsang of Oxfam called for policies to bring retirees and women back into the job market, as well as greater support for the elderly and child care.

FRANKFURT, Germany — German chemicals group Covestro said on Tuesday it had accepted a takeover bid from UAE state energy company ADNOC, as one of the key sectors in Europe's largest economy is gripped by crisis.

Elevated energy costs in the wake of Russia's 2022 invasion of Ukraine have weighed heavily on chemicals producers, which account for around five percent of Germany's GDP.

The deal valued Covestro, a maker of plastics, at some 12 billion euros ($13.3 billion), the German group said in a statement.

Under the terms of the agreement, valid until the end of 2028, the Abu Dhabi National Oil Company (ADNOC) will make an offer for all remaining Covestro stock at a price of 62 euros per share.

The state energy company of the United Arab Emirates will also inject around 1.2 billion euros into the chemicals firm through the issuance of new shares, once the deal is completed.

With ADNOC onboard, Covestro would have "an even stronger foundation for sustainable growth", the German group's CEO Markus Steilemann said in a statement.

ADNOC was a "financially strong and long-term oriented partner", Steilemann said.

The takeover offer was subject to a minimum acceptance threshold of "50 per cent plus one share", as well as regulatory controls, Covestro said.

Chemicals crisis

ADNOC's bid for Covestro comes while the challenges facing the Germany's energy-intensive chemicals industry show no signs of abating.

The sector was "struggling in a difficult environment", the German chemical industry association VCI said in a report last month.

Weak demand and high energy costs in the wake of the Russian invasion of Ukraine were weighing on producers and leading them to cut back on production in Germany.

BASF, the world's largest chemicals group, said last month would cut costs and refocus on its "core businesses", while some of its German plants lacked competitiveness.

For its part, Covestro said it was "making significant progress in its strategic transformation".

The group, which makes chemicals used in everything from building insulation to electric vehicles, unveiled savings plan in June amid ongoing takeover talks with ADNOC.

Leverkusen-based Covestro, which was spun off from chemicals giant Bayer in 2015, said it would cut material and personal costs in the hopes of saving some 400 million euros annually.

With ADNOC's support, Covestro could grow in "highly attractive sectors and can make an even greater contribution to the green transformation", Steilemann said.

Covestro's board said it would recommend shareholders accept ADNOC's offer under the terms of the agreement.

Diversification move 

The deal was a coup for ADNOC as it seeks to expand its operations beyond oil, and if completed, would mark the first takeover of a company in Germany's blue-chip DAX index by a Gulf state-owned firm.

Covestro was a "natural fit" for ADNOC's growth strategy, the energy giant's CEO Sultan Al Jaber said in a statement.

Al Jaber, who served as president of last year's COP28 climate talks in Dubai, said the acquisition represented a step towards "diversifying ADNOC's portfolio".

The deal aligned with ADNOC's "future-proofing strategy and our vision to become a top five global chemicals company", he said.

Under the terms of the deal, Covestro said ADNOC had committed to maintain the group's "corporate governance and organisational business structure".

ADNOC would also respect existing agreements with workers' unions, while "there are no plans to sell, close or significantly reduce Covestro's business activities".

DUBAI — A record 2.5 million jobs were created in the renewable energy sector in 2023, most of them in China, the International Renewable Energy Agency and International Labour Organisation (ILO) said on Tuesday.

Nearly two-thirds of the world's new solar and wind power capacity was installed in China, which added a total of 1.84 million renewable energy jobs, they said.

Global employment in the industry rose 18 per cent from 13.7 million to 16.2 million, Abu Dhabi-based IRENA and the ILO, a United Nations agency, said in a joint report.

But the report raised concerns about an "uneven global picture" with China accounting for 7.4 million jobs or 46 per cent of the total.

The sector employs 1.8 million people in the European Union, 1.56 million in Brazil and nearly a million in the United States and India.

However, "despite immense resource potential", Africa had only 324,000 renewable energy jobs as of last year, the report said.

"The story of the energy transition and its socio-economic gains should not be about one or two regions," IRENA director-general Francesco La Camera was quoted as saying.

"If we are all to fulfil our collective pledge to triple renewable power capacity by 2030, the world must step up its game and support marginalised regions in addressing barriers impeding their transitions progress."

The goal of tripling renewable energy capacity by 2030 was set at last year's COP28 UN climate talks in Dubai.

The report said solar panels, or solar photovoltaics, are the biggest employer with 7.2 million jobs globally, including 4.6 million in China.

Liquid biofuels employ 2.8 million, one-third of them in Brazil, while hydropower jobs shrank slightly from 2.5 million in 2022 to 2.3 million last year.

China and Europe accounted for 52 and 21 per cent respectively of the world's 1.5 million wind-power jobs, the report said.

PARIS — Shares in Jeep-maker Stellantis and Britain's Aston Martin tumbled on Monday after both companies joined European rivals in cutting their profit forecasts.

European auto giant Stellantis, whose other top brands include Peugeot, Ram and Fiat, cited efforts to improve its US business as well as competition from Chinese automakers.

The company, which also makes Maserati, Dodge and Chrysler cars, said it now expects an adjusted operating income margin ranging between 5.5 and 7.0 per cent.

It had previously expected double-digit growth.

Stellantis shares sank by almost 13 per cent to 12.74 euros ($14.26) in late morning deals on the Paris stock exchange.

"While this is a highly anticipated profit warning ..., the magnitude surprises," UBS bank analysts said in a note.

In a statement, the company said efforts to improve its business in North America accounted for about two thirds of the revision of its financial guidance for the year.

Stellantis said it brought forward to the end of this year plans to reduce its dealer inventory levels to 330,000 units in the United States.

Stellantis offered promotional deals as US dealerships have struggled to reduce their inventories.

The company, which previously expected a positive cash flow, also said it now forecasts negative cash flow ranging between five billion and 10 billion euros.

"Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition," it said.

European car companies have struggled to keep up with competition from Chinese electric vehicles.

German auto giants Volkswagen, Mercedes and BMW have also cut their guidance in recent weeks, all partly due to weakness in China.

China effect

Aston Martin also cited the Chinese market as it trimmed its financial guidance for 2024, saying its core profit is now expected to be "slightly below" the previous year's.

The company's shares were down more than 20 per cent to 1.27 pounds ($1.70) in late morning deals in London.

Aston Martin, famous for being James Bond's favourite car, said in a statement that it would cut production by 1,000 units this year "to address disruption in its supply chain and continued macroeconomic weakness in China".

Delays in receiving components from suppliers has hit the car maker's output and postponed deliveries.

The company, however, said its "fully reinvigorated portfolio of ultra-luxury high performance models" would support future growth.

LONDON — Gold reached record-breaking levels in September, buoyed by a bumper US interest rate cut, fears of rising geopolitical conflict, and an import tax cut in India that has galvanised local demand.

India, the world's second largest consumer of gold jewellery, cut the import tax on gold in July to six per cent from 15 per cent, sparking a significant increase in appetite for gold jewellery, bars and coins.

The legislation has led to "soaring" local imports of the metal which has given "fresh impetus" to its upwards price, explained Han Tan, chief market analyst at Exinity in an interview with AFP.

Gold has been smashing records throughout September, reaching a new high of $2,685.58 an ounce on Thursday, up around 30 per cent from the start of the year.

The sky-high prices have also been buoyed by gold's status as a safe haven investment during times of economic and political uncertainty.

Investors have increasingly turned to the metal as conflicts in Ukraine and the Middle East unsettled markets for raw materials.

It's also been lifted by the Federal Reserve's jumbo 50 basis point interest rate cut in September.

With falling returns on dollar deposits, major central banks have shifted reserves from the greenback to gold, in a process of "de-dollarization".

The same dynamic has also benefited silver, which reached $32.71 per ounce on Thursday — its highest price since December 2012 — after soaring by around 35 per cent in the first nine months of 2024.

Festival Season

India's resurgence in demand has revived excitement for the metal, after the market for gold jewellery had previously cooled as buyers were put off by high-prices.

Purchases of jewellery, which represent three-quarters of the Indian gold market, fell 17 per cent in the second quarter of 2024 compared to that of the previous year.

To stimulate demand, India's government cut the customs levy for gold.

Gold imports into India more than tripled in August from the previous month, doubling from a year earlier to $10.1 billion, according to calculations by the World Gold Council (WGC).

The reduction "boosted demand for gold in India as expected, as it makes the metal cheaper for buyers there", Frank Watson, market analyst at Kinesis Money told AFP.

The boost took full effect at the start of September as India's festival season began, which includes the Hindu festival of Diwali — synonymous with purchases of gold bars, necklaces, rings and bracelets.

"After recent import duty cuts, retailers are restocking ahead of the festive and wedding season," noted analysts at ANZ bank.

"Rising per capita income, a young population and urbanisation are supporting jewellery buying," ANZ analysts added in a second report shared with AFP.

Demand has also been reignited in India's rural areas, driven by favourable monsoons which should "improve crop yields and help support the economy, boosting demand for gold as a portable store of value," Watson told AFP.

Meanwhile, the world's biggest gold buyer, China, continues to face a weak gold jewellery market in the context of the country's ailing economy.

However, the country's authorities announced measures this week aimed at stimulating demand.

BERLIN — Germany's economy is expected to shrink slightly in 2024, leading economic institutes said on recently, as the traditional manufacturing powerhouse continues to stagnate.

Output in Europe's largest economy will decline by 0.1 per cent this year, five think tanks said in a joint statement, after it shrank by 0.3 per cent in 2023.

The new figure was a small but significant downgrade on the institutes' previous estimate of 0.1 per cent growth for 2024, made earlier this year.

"The German economy has been stagnating for more than two years," the institutes — DIW, Ifo, IfW Kiel, IWH and RWI — said in the joint statement.

"A slow recovery is likely to set in next year, but economic growth will not return to its pre-coronavirus trend for the foreseeable future," they said.

The institutes forecast growth to reach 0.8 per cent in 2025, a downward revision on their previous estimate of 1.4 per cent.

For 2026, they predicted the German economy to grow by 1.3 per cent.

The general downturn was driven by "structural change" weighing on the economy, DIW's head of forecasting Geraldine Dany-Knedlik said in the statement.

Decarbonisation and demographic change as well as stronger competition from key market China were "dampening the long-term growth prospects", Dany-Knedlik said.

The effects were being felt particularly keenly in Germany's key manufacturing sector, the institutes said.

Manufacturing industries were hard hit by the increase in energy costs, following the Russian invasion of Ukraine in 2022, and a sharp rise in inflation.

The rise of competitors in China making high-quality goods for export is "displacing German exports on world markets", the institutes said.

A tentative recovery next year would be "driven by a revival in private consumption" on the back of rising incomes, they said.

"The upturn in key sales markets, such as neighbouring European countries, will support German foreign trade," they said.