Business

TOKYO — Confidence among major Japanese manufacturers has recovered further after plunging on pandemic woes to its worst level since the global financial crisis, a key survey showed on Monday.

The Bank of Japan's (BoJ’s) December Tankan business survey — a quarterly poll of about 10,000 companies — showed a reading of minus 10 among big manufacturers, after recording minus 27 in the previous survey and minus 34 in the June survey.

The latest figure compared with a market consensus estimate of minus 15.

The June figure was the lowest since June 2009 when worldwide financial shocks hammered the planet's third-largest economy.

The short-term business sentiment survey reports the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.

A negative reading means more companies are pessimistic than optimistic. It is considered to be the broadest indicator of how Japan Inc. is faring.

The latest reading comes after the government last week approved more than $700 billion in fresh stimulus to fund projects from anti-coronavirus measures to green tech, the country's third such package this financial year.

"The sharp rebound in the Q4 Tankan supports our view that Japan's economy will rebound relatively swiftly from the dislocation caused by the pandemic," said Tom Learmouth, Economist at Capital Economics in a commentary.

Japan officially exited recession last month after three quarters of contraction, but the world's third-largest economy now faces a spike in COVID-19 infections, with record numbers of new cases reported in recent weeks.

The latest survey also comes ahead of the Bank of Japan's two-day monetary policy meeting from Thursday, which is widely expected to keep the current monetary easing tools but also likely to extend its special measures in response to COVID-19.

"We think the BoJ will explain that the economy continues to need policy support, especially with higher uncertainty due to the arrival of a third wave of infections," UBS economists Masamichi Adachi and Go Kurihara said in a report.

Confidence among big non-manufacturers improved to minus 5 — against a market consensus of minus 6 — after logging minus 12 in September.

The latest figures show a steady recovery from the low of minus 17 in June, but are still well below the March figure of plus 8.

Japan was struggling with the effects of natural disasters and a hike in consumption tax even before the pandemic crippled the global economy.

Once it hit, there were no mandatory lockdowns in the country, with the government instead asking people to stay at home — a request that was largely heeded.

But that, coupled with a shuttering of the country's borders, battered tourism and consumer spending, with the hospitality industry hit particularly hard.

KUALA LUMPUR — Bangladeshi migrant worker Sheikh Kibria recalls the filthy, overcrowded dormitory where he was housed by the world's biggest rubber glove manufacturer when a coronavirus outbreak erupted and infected thousands.

Malaysia's Top Glove saw profits soar, and its stock price jump as much as 400 per cent this year as countries worldwide rushed to buy protective gear as the pandemic intensified.

But in interviews with AFP, the south Asian migrants working flat out to make the gloves — who typically earn around $300 a month — described appalling living conditions, in cramped dormitories where up to 25 people sleep in bunk beds in a single room.

Some claim the company did not do enough to protect them despite repeated warnings.

The scandal has added to growing pressure on the firm, already under scrutiny after the United States banned the import of some of its gloves over allegations of forced labour earlier this year.

The infections also prompted factory closures and look set to have an impact on global supply.

Top Glove, which commands about a quarter of the world's market, has warned of delays to deliveries and rising prices.

'Didn't keep workers safe' 

More than 5,000 workers — almost a quarter of the firm's workforce — have tested positive after the outbreak at an industrial area housing factories and dormitories outside the capital Kuala Lumpur.

"The accommodation is so overcrowded," said the Bangladeshi worker Kibria.

"The room itself is a bare minimum. It is quite impossible to maintain cleanliness when so many people live in a single room. It is like an army barracks — only less maintained."

When the situation escalated last month, Top Glove began shifting infected workers to hospital and their close contacts to quarantine centres, reducing the numbers in dormitories.

Kibria, 24, was suspected of having COVID-19 so was first put in hospital, although he later tested negative and was moved to a hotel.

But critics say the actions were too little too late.

"The company had discussed decreasing people in the rooms before infections began but it never happened," a Nepali production line worker, Karan Shrestha, told AFP.

"The rooms stayed crowded — and in the end coronavirus cases started to increase."

"The company didn't keep the workers safe. They are greedy and were more concerned about their income and profits," he added.

AFP used pseudonyms to protect the workers' identities, as they were fearful about speaking out.

'Really scared' 

As cases spiralled, the government ordered 28 Top Glove factories to close, out of the 41 it operates in Malaysia.

Authorities are planning legal action against the company over poor worker accommodation, which could result in heavy fines.

The firm, which has 21,000 staff and can produce 90 billion gloves a year, insists it is making improvements.

It has spent 20 million ringgit ($5 million) purchasing new worker accommodations in the past two months, and plans to build "mega-hostels" kitted out with modern facilities that can house up to 7,300 people.

"We are mindful there is much more to be done to uplift the standard of our employee welfare and promise to rectify shortcomings immediately," said managing director Lee Kim Meow.

His comments came this week as the company announced a 20-fold jump in quarterly net profit to 2.4 billion ringgit ($590 million).

For those campaigning for low-paid migrants, the controversy highlights how companies continue to put profits before people.

"The company, its investors and its buyers have prioritised the delivery of more gloves, more quickly and at higher profitability over the welfare of its mainly migrant worker labour force," said Andy Hall, a migrant labour specialist who focuses on Asia.

Malaysia, a relatively affluent southeast Asian country of 32 million, has long attracted migrants from poorer parts of the region to work in industries ranging from manufacturing to agriculture.

Top Glove says the vast majority of workers who tested positive have already been released from hospital, and some factories are now reopening.

But some workers remain terrified at the prospect of returning to the production line, despite the company trying to enforce social distancing and providing protective gear.

"If we work in the factory, I would be really scared," said Salman from Bangladesh, speaking from his hostel.

"Even with extra safety, it is really tough to prevent an outbreak."

NEW YORK — Stock markets and the pound stumbled on Friday after London and Brussels warned that a no-deal Brexit was now a strong possibility.

When closing bells rang, London stocks had fallen by a collective 0.8 per cent, while Frankfurt gave up 1.4 per cent and Paris was off by 0.8 per cent.

Wall Street also had a lackluster day, with both the S&P 500 and Nasdaq retreating even as the Dow eked out a gain.

"We are starting to see the first meaningful de-risking from investors amid concern over Brexit," remarked Stephen Innes, chief global markets strategist at AXI. 

Rabobank analyst Jane Foley added: "In the past few weeks, the market consensus has gone from being reasonably confident that the EU and the UK would agree on a skinny deal to fearing that no deal may now be the mostly likely outcome."

'Low expectations' 

EU chief Ursula von der Leyen has told the bloc's leaders there were "low expectations" that a post-Brexit trade deal could be struck with Britain, EU sources said. 

The clock was ticking down to the latest deadline, on Sunday, to make a call on prolonging negotiations or give up.

British Prime Minister Boris Johnson said the chances of not reaching a deal were "very, very likely", in which case Britain would trade with the EU on terms established by the World Trade Organisation.

Talks continued on Friday between EU and British negotiators but they were struggling to break deadlocks on issues that included fishing rights and fair trade regulations.

The possibility that Britain will leave the EU without a deal weighed on pound sterling as investors contemplated cross-Channel trade being subject to tariffs and quotas from January 1.

The Bank of England said Friday that financial services faced "some disruption" when the deadline passes, but added that UK commercial lenders — already dealing with effects of the coronavirus pandemic — were well-prepared.

Back in the United States, analysts cited disappointment at the lack of progress in congressional stimulus talks as a factor in the market's sluggish performance.

The US Senate approved a one-week budget stopgap that avoids a government shutdown, but the outlook for a long-awaited coronavirus relief package, without which analysts fear a renewed downturn in economic activity, remained uncertain.

Among individual stocks, Disney jumped 13.6 per cent after reporting that the company's year-old streaming TV service Disney+ had passed 86.8 million subscribers, beating its "wildest expectations," the company's CEO said.

The growth in Disney+ has helped offset weakness in other company businesses during the pandemic, especially theme parks.

SANTA CRUZ, United States — Uber will sell off its air transport unit to flying taxi maker Joby Aviation, the company said, as it streamlines operations to navigate a ride-share market scuttled by the pandemic.

The deal will see Joby acquire Uber expertise and software, and able to offer its all-electric, vertical take-off and landing passenger aircraft on the ride-hailing giant's app.

While financial terms of the deal were not disclosed, they include Uber investing $75 million into Santa Cruz-based Joby, which has said it hopes to have its flying taxis in operation as early as 2023.

The sale of Uber Elevate — dedicated to electric aircraft and delivery drones — to Joby will "accelerate the path to market" for flying taxis, Uber Chief Executive Dara Khosrowshahi said in a joint release on Tuesday.

Founded in 2009, Joby Aviation is developing a four-passenger electric aircraft that takes off and lands vertically, like a helicopter, though it has multiple rotors.

The firm envisions the aircraft as a mode of commercial transport, rather than for sale to individuals, with its pilots ferrying commuters around.

Uber said it had already invested $50 million in Joby during a fundraising round early this year.

News of the sale came shortly after Uber announced an agreement to sell its autonomous car division to Amazon and Hyundai-backed Aurora in a deal that gives it a 26 per cent stake in the startup developing self-driving technology.

As part of the deal, Uber will invest $400 million in Aurora to merge the teams from both firms seeking to advance the technology for driverless ride-hailing.

The companies expect the self-driving technology to be initially put to use for long-haul trucking.

Khosrowshahi will also join the Aurora board of directors as part of the deal. The merged firm will work on the technology to be known as Aurora Driver.

Last month Uber reported that it lost $1.1 billion in the recently ended quarter as the pandemic walloped its ride-hailing business, while boosting its food delivery service.

BEIJING — China's consumer prices dropped more than expected in November on falling food costs, with a key gauge turning negative for the first time in 11 years due to pork prices, according to official data released on Wednesday.

The consumer price index (CPI), a key gauge of retail inflation, fell 0.5 per cent on-year due to a high base of comparison in the same period last year, said Beijing's National Bureau of Statistics (NBS).

This continued a recent slide driven by easing prices of pork — a staple meat in the world's second-largest economy whose prices rocketed after an African swine fever outbreak ravaged stocks.

Pork prices dropped 12.5 per cent, widening October's fall and dragging the headline figure down, while other food items such as eggs, chicken and duck also saw a slide in prices compared with last year.

But core CPI, which strips out food and energy prices, "continued to remain stable", rising 0.5 per cent from a year ago, official data showed.

Capital Economics' senior China economist Julian Evans-Pritchard said November's headline figure was "almost entirely driven by improvements in pork supply and isn't evidence of faltering demand". 

"To the contrary, broader price pressures are starting to pick up on the back of the improvement in economic activity," he added.

There was improvement in factory-gate prices, however, with the producer price index (PPI) falling 1.5 per cent on-year last month — a smaller drop than the 1.8 per cent fall a Bloomberg poll of analysts expected.

NBS Senior Statistician Dong Lijuan said "market demand continued to pick up, and industrial product prices continued to rise" in November.

PPI measures the cost of goods at the factory gate, and prices have been dragged by the coronavirus fallout.

OCBC Bank's head of Greater China research Tommy Xie said: "The improving PPI definitely reinforces the expectation that the Chinese [economic] recovery is on track."

LONDON — Stock markets dipped on Tuesday in cautious trade amid vaccine rollouts and US stimulus hopes.

The pound slumped for a second day running with post-Brexit trade talks on a knife-edge.

The yen dipped against the dollar but soon recovered after Japan's government approved more than $700 billion in fresh stimulus to fund projects from anti-coronavirus measures to green tech.

Meanwhile, the euro climbed on data showing German investor confidence rebounded in December, buoyed by hopes that vaccines — expected to win approval for general use in the EU imminently — could help end the coronavirus pandemic.

"Risk appetite is struggling to find direction amid Brexit headlines, rising COVID-19 case counts, and possible further US sanctions on China on the one hand and hopes for US fiscal stimulus and US vaccine approval," said Axi strategist Stephen Innes.

"Investors are pinning their hopes on the ultimate holiday stocking stuffer, which is the capacity for [US] stimulus overwhelming a near-term downturn."

Nurses on Tuesday cheered as an elderly British grandmother became the first person in the Western world to receive an approved vaccine against COVID-19, at the start of a marathon campaign health officials hope heralds a fight-back against the global pandemic.

Last week, UK regulators became the first in the world to approve the Pfizer-BioNTech vaccine for general use, and the first jabs were administered across the country from early Tuesday.

It comes as the outcome for a post-Brexit trade deal remains up in the air, with British Prime Minister Boris Johnson preparing to visit Brussels for talks with EU chief Ursula von der Leyen.

With the two sides divided over fishing rights, rules for fair trade and an enforcement mechanism for regulatory standards, there is a growing fear a deal will not be done before the December 31 deadline. 

Analysts, meanwhile, said that the next leg-up for equities would be news that US lawmakers had finally reached an agreement on a new rescue package for the battered economy.

Democrats have largely thrown their support behind a bipartisan proposal worth $908 billion while there is optimism Republicans will eventually come on board.

But US stocks opened lower, with the Dow slipping 0.2 per cent in the first couple minutes of trading.

"After a recent rally to record highs, US stocks continue to retreat as the markets assess the likelihood of further fiscal relief as talks appeared to have stalled," said analysts at Charles Schwab brokerage.

LONDON — The pound slumped around 1 per cent against the dollar and euro on Monday as post-Brexit trade talks between Britain and the European Union hung in the balance.

Major stock markets dropped except for London, as the sliding pound helped boost share prices of multinationals trading on the benchmark FTSE 100 index.

Around 14:30 GMT, the pound was down by 0.8 per cent against the dollar, while the euro jumped by 1 per cent versus the British currency.

The FTSE held steady, while oil prices retreated by about 0.8 per cent.

Down by around half-a-per cent, sterling's losses widened sharply after Britain's Sun newspaper said Prime Minister Boris Johnson was willing to abandon post-Brexit trade talks with the European Union.

Johnson is set to have a phone call with EU Chief Ursula von der Leyen at 16:00 GMT, an EU spokesman said, with time running out to strike a deal before Britain leaves the EU single market on December 31.

"Sterling is in the firing line because of the nerves surrounding the stand-off, and that is the reason why the FTSE 100 is outperforming against its eurozone counterparts," said David Madden, analyst at CMC Markets UK. 

"International stocks like British American Tobacco, AstraZeneca, Unilever, Diageo and Imperial Brands are all helping the index.

"Those companies benefit from the slide in sterling as they earn a large portion of their revenue overseas," Madden added.

The threat of a wrenching "no-deal" comes after Brussels' Chief Negotiator Michel Barnier briefed ambassadors from EU member states at a pre-dawn crisis meeting, warning that divisions were still stark after talks with his UK counterpart David Frost broke up overnight.

Vaccine stimulus 

Market focus was also firmly on COVID-19 vaccine developments as the new trading week got underway.

Traders are keeping tabs on the deployment of vaccines around the world, with Britain in line to start giving jabs this week.

US approval of its first drug could come as soon as Friday. Belgium, France and Spain have said jabs will begin in January for the most vulnerable.

There is optimism also that US lawmakers will finally agree on a long-awaited stimulus package.

Senators and their teams worked all weekend on a detailed bill, which "will probably come out early this week", Republican Senator Bill Cassidy told "Fox News Sunday".

Wall Street opened mixed with the Dow slipping by 0.3 per cent however, after the three major indices all posted record highs on Friday.

BRUSSELS — British and EU negotiators embarked on probably their final two-day scramble to secure a post-Brexit trade deal on Sunday, after failing for eight months to reach agreement. 

David Frost and Michel Barnier took up from where they left off in EU headquarters in Brussels, ending a two-day pause after a fruitless week of late-night wrangling in London.

"We're working very hard to try to get a deal. We'll see what happens in the negotiations today," Frost told reporters as he arrived at the city's Gare de Midi train station.

Talks were expected to go late on Sunday and into Monday, as a small team of the most senior negotiators haggled over the last remaining, but most contentious issues.

Meanwhile, UK Prime Minister Boris Johnson will reportedly lobby European leaders, after a call with EU chief Ursula von der Leyen on Saturday ended with the sides still wide apart.

The pair's next call will be on Monday evening and then the 27 EU leaders will gather in Brussels on Thursday for a two-day summit planned to tackle their own budget dispute, but which will now once again be clouded by Brexit worries.

Johnson and von der Leyen issued a downbeat joint statement after their call, with divisions still wide over fishing rights, fair trade rules and an enforcement mechanism to govern any deal.

"Whilst recognising the seriousness of these differences, we agreed that a further effort should be undertaken... to assess whether they can be resolved," they said.

'No sense' 

Ireland would be the EU member worst hit by a failure to strike a deal and Foreign Minister Simon Coveney insisted agreement was crucial to avoid more damage to an economy already reeling from the COVID-19 pandemic.

Failure "doesn't make any political sense and it certainly doesn't make any economic or social sense either", he told RTE news.

"And for all those reasons, I think that the negotiating teams and senior politicians will find a way of getting a deal here, but at the moment we're in a difficult place as we try to close it out," he said.

Britain formally left the EU in January, nearly four years after a referendum on membership that split the nation down the middle and two months after Johnson won an election touting what he claimed was an "oven ready" Brexit deal.

The UK is bound to the EU's tariff-free single market until a post-Brexit transition period expires at the end of the year — an immovable deadline by which time the two sides must try to agree on new terms for their future relationship.

"It's in a very difficult position, there's no point denying that," British Environment Minister George Eustice told Sky News.

"We're going continue to work on these negotiations until there's no point in doing so any further."

Without a deal, the bulk of cross-Channel trade will revert to World Trade Organisation terms, a return to tariffs and quotas after almost five decades of close economic and political integration.

Johnson has insisted Britain will "prosper mightily" whatever the outcome of the talks, but he will face severe political and economic fallout if he cannot seal a deal.

"If there is no deal now, I see huge international implications... because we would be in an economic war with Europe that would cost us very dearly," former Labour prime minister Gordon Brown told Sky News.

European capitals have remained remarkably united behind Barnier through the fraught Brexit process, but some internal fractures have now begun to surface.

On Friday, France threatened to veto any deal that falls short of their demands on ensuring fair trade and access to UK fishing waters, where they have demanded a durable agreement, whereas Britain wants frequent renegotiations.

"We know that 100-per cent access to fishing waters in the UK maritime zone is finished," European Affairs Minister Clement Beaune told French weekly le Journal du Dimanche.

"But we need lasting access. The British can't have total access to our EU single market and exclude fish."

Barnier was to brief envoys from the bloc member states early on Monday with several countries sharing Paris's concerns that the EU side could give too much ground, especially on fair trade rules.