Lies, damn lies...
...and Sino statistics
Apparently, reports of China's imminent decline have been greatly exaggerated. Industrial production within the People's Republic grew at its fastest pace since February, rising 9.7 per cent in July, according to official statistics. The surge in industrial production compared to an 8.9 per cent gain in June, and exceeded forecasts for a 9 per cent advance in separate economic surveys published by Reuters and Dow Jones. However, all this is at odds with HSBC's latest Purchasing Managers Index (PMI), which declined by 3.2 points from the previous month to 47.7 – indicating contraction within the economy.
Nestlé looks east
Shandong blend
Nestlé, the world's largest consumer food group, revealed that sales and profits are being held back by weak demand across its traditional market base. Overall sales growth slowed from 4.6 per cent to 4.1 per cent throughout the half, with Europe delivering the worst regional performance. The Swiss foodmaker intends to tap into the growth of China's consumer sector by opening a coffee plant in the eastern province of Shandong, and another food factory with Chinese partner Yinlu Foods Group. Despite struggling with sales in other emerging markets, Nestlé more than doubled its sales in China last year to SFr 5.16bn (£3.88bn).
Slim pickings
Carlos goes Dutch
In one of the biggest proposed deals of recent years, Mexican telecommunications giant America Movil SAB has announced its intention to make a €7.2bn (£6.17bn) buy-out offer for Dutch carrier Royal KPN NV. America Movil, controlled by Mexican billionaire Carlos Slim, plans to increase its footprint in the European market, which it entered last year after snapping-up minority stakes in KPN and Telekom Austria AG – the latter having grown to 24 per cent. The move comes on the heels of another deal involving Spain's Telefónica that could point to increased consolidation across the European sector, although this wouldn't play well with regulators.
Basel shortfalls
A capital idea
Small banks across Europe will have to undergo a major transformation by 2018 to meet the new Basel III regulations, according to research by the Royal Bank of Scotland. Up to €2.6tn will need to be cut from the balance sheets of smaller banks in Europe, which could undermine lending to small and medium-sized businesses. Europe's largest banks will also have to raise an additional €47bn of capital to meet the regulations, with Barclays, Crédit Agricole and Deutsche Bank bearing the greatest shortfalls. Barclays confirmed that it will sell up to £80bn of additional assets and retain more of its earnings to make-up its £12.8bn capital deficit.
All at sea
A Maersk warning
In a sobering warning to the container shipping industry, Søren Skou, the chief executive of Denmark's giant Maersk Line, has predicted that growth in demand could fall well below the levels seen over the past two decades. The container shipping industry has already been suffering due to overcapacity and highly volatile freight rates in recent years, but the remarks of Maersk's skipper may prove unsettling for international exporters given that the sector is often seen as a barometer for the global economy. Meanwhile, The Baltic Dry index, which tracks rates for ships carrying dry bulk commodities, fell below 1,000 points this week – its lowest rate since June.
To Hellas and back
Surplus to requirements
According to latest budget data, it looks as if the embattled Greek government has turned last year's deficit into a surplus, bolstering the case for further debt relief ahead of the German elections in September. However, it's highly debatable whether Greece's fiscal strictures are doing anything to revive the wider economy. The Greek economy contracted by 4.6 per cent during the second quarter, dragging out a recession that began six years ago, government figures revealed. Athens has predicted that the economy will move into growth next year, but with youth unemployment running at a staggering 65 per cent, it is little wonder that Greek prime minister Antonis Samaras held talks with Barack Obama to try and secure stimulus measures.
