Chinese Business

World stock markets mostly sank Thursday on intensifying recession fears, while oil prices receded after an OPEC decision to proceed with a limited boost to output.

London ended the day down two percent, with both Frankfurt and Paris close behind.

That followed a largely downbeat performance in Asia, although Shanghai rose after data showed a forecast-beating improvement in China’s services sector on easing Covid restrictions.

Later on, Wall Street joined the sell-off, with major indices falling around one percent, concluding the S&P 500’s worst first six months of a year since 1970.

Crude futures slumped as major oil producers led by Saudi Arabia and Russia kept to a decision on a limited boost to output despite the risk that high oil prices may help push the global economy into recession.

– ‘Terrible mood’ –

“Stock markets have fallen heavily in June so it seems only fitting that they’re ending the month with big losses as reality continues to bite,” said Craig Erlam, senior market analyst at trading platform OANDA.

Stock markets are “in a terrible mood across Europe,” said AJ Bell investment director Russ Mould.

“There really is a lack of good news for investors to cling onto, and the near-term outlook looks bleak.”

The threat of an extended period of elevated inflation and painful interest rate hikes has left traders fretting over the threat of a prolonged economic downturn, while the Ukraine war continues to sow uncertainty.

The surge in inflation to multi-decade highs has forced central banks to swiftly raise interest rates, dealing a hefty blow to equities as companies faces higher borrowing costs.

Sweden’s central bank on Thursday announced its biggest hike in 22 years, raising its main rate by 50 basis points to 0.75 percent.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

US data released Thursday showed that a key annual inflation measure held steady at 6.3 percent in May, but spending rose just 0.2 percent in May, less than half the increase in April and part of a steady downward drift as consumers pull back amid surging prices.

But when inflation is taken into account, the data show a decline in real consumer spending, analysts said.

Two weeks ago, the Federal Reserve enacted a supersized three-quarters of a point interest rate hike, the biggest increase in nearly 30 years. Markets are weighing whether to expect the same thing in July.

“Inflation came in a little bit better than expected today but probably not good enough to prevent the Federal Reserve to raise interest rates 75 basis at the next meeting,” said Tom Cahill of Ventura Wealth Management. 

“At the same time we had the personal spending coming in negative for the month in real terms,” Cahill said. “People are starting to get the sense that perhaps the Federal Reserve is going to push the economy into recession.”

– Key figures at around 2050 GMT –

New York – Dow: DOWN 0.8 percent at 30,775.43 (close)

New York – S&P 500: DOWN 0.9 percent at 11,028.74 (close)

New York – Nasdaq: DOWN 1.3 percent at 11,028.74 (close)

London – FTSE 100: DOWN 2.0 percent at 7,169.28 (close) 

Frankfurt – DAX: DOWN 1.7 percent at 12,783.77 (close)

Paris – CAC 40: DOWN 1.8 percent at 5,922.86 (close)

EURO STOXX 50: DOWN 1.7 percent at 3,443.86 (close)

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,393.04 (close)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 21,859.79 (close)

Shanghai – Composite: UP 1.1 percent at 3,398.62 (close)

Brent North Sea crude: DOWN 1.5 percent at $116.26 per barrel

West Texas Intermediate: DOWN 1.8 percent at $109.78 per barrel

Euro/dollar: DOWN at $1.0487 from $1.0442 Wednesday

Pound/dollar: UP at $1.2177 from $1.2124

Euro/pound: DOWN at 86.08 pence from 86.12 pence

Dollar/yen: DOWN at 135.75 yen from 136.59 yen

burs-jmb/st

World stock markets mostly sank Thursday on intensifying recession fears, while oil prices receded after an OPEC decision to proceed with a limited boost to output.

London ended the day down two percent, with both Frankfurt and Paris close behind.

That followed a largely downbeat performance in Asia, although Shanghai rose after data showed a forecast-beating improvement in China’s services sector on easing Covid restrictions.

Wall Street’s main indices also fell, with the Dow down 0.9 percent in late morning trading.

Crude futures slumped as major oil producers led by Saudi Arabia and Russia kept to a decision on a limited boost to output despite the risk that high oil prices may help push the global economy into recession.

– ‘Terrible mood’ –

“Stock markets have fallen heavily in June so it seems only fitting that they’re ending the month with big losses as reality continues to bite,” said Craig Erlam, senior market analyst at trading platform OANDA.

Stock markets are “in a terrible mood across Europe”, said AJ Bell investment director Russ Mould.

“There really is a lack of good news for investors to cling onto, and the near-term outlook looks bleak.”

The threat of an extended period of elevated inflation and painful interest rate hikes has left traders fretting over the threat of a prolonged economic downturn, while the Ukraine war continues to sow uncertainty.

“Recession continues to be the primary concern at the moment… as countries continue to grapple with spiralling inflation and cost-of-living crises,” said Mihir Kapadia, head of Sun Global Investments.

The surge in inflation to multi-decade highs has forced central banks to swiftly raise interest rates, dealing a hefty blow to equities as companies faces higher borrowing costs.

The Federal Reserve is next month expected to announce a successive 75-basis-point hike in US interest rates.

Sweden’s central bank on Thursday announced its biggest hike in 22 years, raising its main rate by 50 basis points to 0.75 percent.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

– Risk of ‘going too far’ –

Fed boss Jerome Powell, speaking at a European Central Bank conference Wednesday, hinted again that such hikes could lead to economic contraction.

“Is there a risk that we would go too far? Certainly there’s a risk,” Powell said.

“The bigger mistake to make… would be to fail to restore price stability,” he insisted.

ECB President Christine Lagarde stated this week that the guardian of the euro would go “as far as necessary” to fight inflation that was set to remain “undesirably high” for “some time to come”.

US data released Thursday showed that a key annual inflation measure held steady at 6.3 percent in May, but real spending by consumers declined by 0.4 percent month-over-month.

Briefing.com analyst Patrick O’Hare said the decline “will fuel concerns about the Fed continuing to tighten into a slowing economic environment.”

– Key figures at around 1530 GMT –

New York – Dow: DOWN 0.9 percent at 30,754.90 points

EURO STOXX 50: DOWN 1.6 percent at 3,449.46

London – FTSE 100: DOWN 2.0 percent at 7,169.28 (close) 

Frankfurt – DAX: DOWN 1.7 percent at 12,783.77 (close)

Paris – CAC 40: DOWN 1.8 percent at 5,922.86 (close)

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,393.04 (close)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 21,859.79 (close)

Shanghai – Composite: UP 1.1 percent at 3,398.62 (close)

Brent North Sea crude: DOWN 1.2 percent at $114.87 per barrel

West Texas Intermediate: DOWN 2.7 percent at $106.85 per barrel

Euro/dollar: DOWN at $1.0457 from $1.0442 Wednesday

Pound/dollar: UP at $1.2152 from $1.2124

Euro/pound: DOWN at 86.06 pence from 86.12 pence

Dollar/yen: DOWN at 135.89 yen from 136.59 yen

burs/rl/lth

Major oil producers led by Saudi Arabia and Russia stuck to a previously decided output boost on Thursday, despite calls for bigger increases to tame crude prices.

Russia’s invasion of Ukraine has exacerbated concerns about oil supplies, sending prices to record highs this year.

Oil prices fell following the announcement by the 13-nation Organization of the Petroleum Exporting Countries led by Saudia Arabia and its 10 partners headed by Russia.

In their monthly video conference, which lasted about an hour, the 23 members of OPEC+ agreed to add another 648,000 barrels per day in August, the same as for July.

“As expected, OPEC+ stuck to its planned 648,000 barrel increase in August and refrained from any decision beyond then,” said Craig Erlam, a senior market analyst at OANDA trading platform.

This “could add an element of uncertainty to future targets, particularly given recent reports that even Saudi Arabia and UAE are running near capacity,” Erlam added.

– ‘Symbolic’ –

Tamas Varga, an analyst with PVM Energy, said the decision seemed “symbolic” as most OPEC+ members have been failing to meet their output quotas.

“Now all eyes will be on Saudi Arabia and the United Arab Emirates,” Varga said. “Any hint that they also struggle to increase output will probably be met with a fresh wave of buying.”

The 13 members of OPEC, chaired by Saudi Arabia, and their 10 partners, led by Russia, drastically slashed output in 2020 as the coronavirus pandemic and the resulting lockdowns sent demand plummeting.

Since last year, they have been gradually increasing output again. In recent months, the United States and other top oil consumers urged OPEC+ to open the tabs more widely.

The group finally decided at its last meeting in early June to add 648,000 barrels per day to the market in July, up from 432,000 in previous months. 

But the larger-than-expected boost failed to cool prices.

Since Russia invaded Ukraine on February 24, the international benchmark, Brent North Sea Crude, has added around 17 percent, while the US benchmark WTI has jumped more than 18 percent.

Analysts have warned that only a recession may be able to bring down prices.

“The prices will likely push higher unless the recession fears take the upper hand,” said Ipek Ozkardeskaya, an analyst at Swissquote Bank.

“All the talk of a summer of discontent is likely to spill over into the autumn and winter as high oil and gas prices remain a feature of markets,” said Jamie Maddock, an equity research analyst at Quilter Cheviot.

“Attention will now inevitably turn to what OPEC+ does from September,” Maddock added.

– Biden heading to Saudi Arabia –

Production will be back to pre-pandemic levels after August, at least on paper.

Several OPEC+ members have been failing to meet the output quotas, while Iran and Venezuela — and now also Russia — are blocked by sanctions. 

The United Arab Emirates said this week it was close to its oil output ceiling, ahead of a regional visit by US President Joe Biden, who is expected to lobby for increased production.

Biden will visit neighbouring Saudi Arabia, the world’s biggest oil exporter, as part of his tour next month, but analysts doubt it will convince OPEC+ to boost output.

On Monday, at the meeting of the G7 club of industrialised nations in Germany, French President Emmanuel Macron was caught on camera telling Biden details of a conversation with UAE leader Sheikh Mohamed bin Zayed Al-Nahyan.

According to Macron, Sheikh Mohamed said the UAE was at its “maximum” capacity and Saudi Arabia also faced a limit for raising production.

European Commission chief Ursula von der Leyen said Thursday the EU and New Zealand had sealed a free trade deal after four years of talks, promising it would deepen ties.

“This is a historic moment in our cooperation,” von der Leyen told reporters at a joint press statement with New Zealand’s Prime Minister Jacinda Ardern, adding that the deal had come after “tough negotiations”. 

Ardern hailed a “historic further milestone in the strong partnership between two closely-connected like-minded friends.”

The pact brings economies of vastly different sizes closer together: New Zealand has a population of just five million people against the EU’s 450 million.

Once it has survived a long ratification process, the EU said the deal would eliminate all tariffs on its exports to New Zealand and will open markets in key sectors such as financial services, telecommunications, maritime transport and delivery services.

Both sides underlined environmental issues, amid concern in some corners of Europe that trade deals are a threat to climate goals and upholding rights of workers.

“This free trade agreement includes high ambition outcomes in areas related to the Paris Agreement, climate action, labour rights, gender equality, and harmful fishery subsidies,” New Zealand Trade Minister Damien O’Connor told reporters after a final round of talks in Brussels.

His EU counterpart Valdis Dombrovskis called the deal “a state of the art trade deal for the EU” that had “shared values with sustainability at its core.”

The New Zealand agreement, which will be legally finalised over the next months, will have to be agreed by the bloc’s member states as well as European Parliament.

The deal with New Zealand will lend comfort to European countries that had grown increasingly frustrated with the lack of progress on opening new trade ties with international partners.

The EU has struggled in recent years to secure the backing of all 27 member states as well as the European Parliament on trade deals, which were once a central policy for the bloc.

France has led the doubters on the wisdom of trade pacts, and French farmers have voiced concerns that the accord with New Zealand would unfairly open their market to New Zealand imports.

The EU is currently also engaged in talks with India, Indonesia, New Zealand and Australia.

Of particular concern in France is a negotiated deal with the South American trade bloc Mercosur that has yet to be signed as several countries demand concrete commitments from Brazil against the deforestation of the Amazon.

Major oil producers led by Saudi Arabia and Russia stuck to a previously decided output boost on Thursday, despite calls for bigger increases to tame crude prices.

Russia’s invasion of Ukraine has exacerbated concerns about oil supplies, sending prices to record highs this year.

But a respite is not in sight.

In their monthly video conference, which lasted about an hour, the 23 members of OPEC+ agreed to add another 648,000 barrels per day in August, the same as for July.

Analysts had widely expected the move, calling the gathering of the Vienna-based Organization of the Petroleum Exporting Countries and their partners a “rubber stamp” meeting.

Jeffrey Halley, analyst at OANDA trading platform, said before the meeting that he did not expect surprises as “OPEC+ can’t even meet its present targets, and hasn’t for a long time.” 

The 13 members of OPEC, chaired by Saudi Arabia, and their 10 partners, led by Russia, drastically slashed output in 2020 as the coronavirus pandemic and the resulting lockdowns sent demand plummeting.

Since last year, they have been gradually increasing output again. In recent months, the United States and other top oil consumers urged OPEC+ to open the tabs more widely.

The group finally decided at its last meeting in early June to add 648,000 barrels per day to the market in July, up from 432,000 in previous months.

But the larger-than-expected boost failed to cool prices.

– Biden heading to Saudi Arabia –

Since Russia invaded Ukraine on February 24, the international benchmark, Brent North Sea Crude, has added around 17 percent, while the US benchmark WTI has jumped more than 18 percent.

Analysts have warned that only a recession may be able to bring down prices.

“The prices will likely push higher unless the recession fears take the upper hand,” said Ipek Ozkardeskaya, an analyst at Swissquote Bank.

Several OPEC+ members have been failing to meet the output quotas, while Iran and Venezuela — and now also Russia — are blocked by sanctions. 

The United Arab Emirates said this week it was close to its oil output ceiling, ahead of a regional visit by US President Joe Biden, who is expected to lobby for increased production.

Biden will visit neighbouring Saudi Arabia, the world’s biggest oil exporter, as part of his tour next month, but analysts doubt it will convince OPEC+ to boost output.

On Monday, at the meeting of the G7 club of industrialised nations in Germany, French President Emmanuel Macron was caught on camera telling Biden details of a conversation with UAE leader Sheikh Mohamed bin Zayed Al-Nahyan.

According to Macron, Sheikh Mohamed said the UAE was at its “maximum” capacity and Saudi Arabia also faced a limit for raising production.

World stock markets mostly sank Thursday on intensifying recession fears, while oil prices receded before an OPEC output decision.

Frankfurt and Paris each tumbled 2.7 percent in early afternoon eurozone deals, and London shed 1.9 percent.

That followed a largely downbeat performance in Asia, although Shanghai rose after data showed a forecast-beating improvement in China’s services sector on easing Covid restrictions.

Crude futures drifted lower as major oil producers led by Saudi Arabia and Russia were Thursday expected to keep to a decision on a limited boost to output despite the risk of high oil prices may help push the global economy into recession.

– ‘Terrible mood’ –

Stock markets are “in a terrible mood across Europe”, said AJ Bell investment director Russ Mould.

“There really is a lack of good news for investors to cling onto, and the near-term outlook looks bleak.”

The threat of an extended period of elevated inflation and painful interest rate hikes has left traders fretting over the threat of a prolonged economic downturn, while the Ukraine war continues to sow uncertainty.

“Recession continues to be the primary concern at the moment… as countries continue to grapple with spiralling inflation and cost-of-living crises,” said Mihir Kapadia, head of Sun Global Investments.

The surge in inflation to multi-decade highs has forced central banks to swiftly raise interest rates, dealing a hefty blow to equities as companies faces higher borrowing costs.

The Federal Reserve is next month expected to announce a successive 75-basis-point hike in US interest rates.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

– Risk of ‘going too far’ –

Fed boss Jerome Powell, speaking at a European Central Bank conference Wednesday, hinted again that such hikes could lead to economic contraction.

“Is there a risk that we would go too far? Certainly there’s a risk,” Powell said.

“The bigger mistake to make… would be to fail to restore price stability,” he insisted.

ECB President Christine Lagarde stated this week that the guardian of the euro would go “as far as necessary” to fight inflation that was set to remain “undesirably high” for “some time to come”.

Wall Street’s Dow index closed up slightly Wednesday after plunging the previous session.

– Key figures at around 1100 GMT –

London – FTSE 100: DOWN 1.9 percent at 7,171.11 points

Frankfurt – DAX: DOWN 2.7 percent at 12,654.35

Paris – CAC 40: DOWN 2.7 percent at 5,867.61

EURO STOXX 50: DOWN 2.6 percent at 3,423.46

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,393.04 (close)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 21,859.79 (close)

Shanghai – Composite: UP 1.1 percent at 3,398.62 (close)

New York – Dow: UP 0.3 percent at 31,029.31 (close)

Brent North Sea crude: DOWN 0.5 percent at $115.63 per barrel

West Texas Intermediate: DOWN 0.5 percent at $109.25 per barrel

Euro/dollar: DOWN at $1.0416 from $1.0442 Wednesday

Pound/dollar: UP at $1.2125 from $1.2124

Euro/pound: DOWN at 85.92 pence from 86.12 pence

Dollar/yen: DOWN at 136.38 yen from 136.59 yen

Most markets fell again Thursday as traders fear that hefty rate hikes to rein in soaring inflation will spark a recession, though a slight improvement in Chinese data provided a little cheer.

The rally enjoyed across the world last week appears to have given way to nervousness about the economic outlook, while the Ukraine war continues to sow uncertainty.

The surge in inflation to multi-decade highs has forced central banks to swiftly tighten pandemic-era monetary policies, dealing a hefty blow to equities, particularly tech firms who are susceptible to higher borrowing costs.

The Federal Reserve has already sharply lifted rates and is expected to announce a second successive 75-basis-point lift next month.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

Fed boss Jerome Powell this month admitted the moves could lead to a contraction.

On Wednesday, Cleveland Fed chief Loretta Mester said she was keen to see the benchmark rate hit 3-3.5 percent this year and “a little bit above four percent next year”.

“There are risks of recession,” she told CNBC. “We’re tightening monetary policy. My baseline forecast is for growth to be slower this year.”

The threat of an extended period of elevated inflation and rate hikes has left traders weary, and markets in the red.

“With rapidly slowing US growth momentum and a Fed committed to restoring price stability, a mild recession, starting in the fourth quarter of 2022, is now most likely,” Nomura’s Andrew Ticehurst said.

“High US inflation appears to be a political as well as economic problem, and we don’t expect the Fed to be quick to blink as risk assets wobble.”

– China support hope –

Wall Street ended on a tepid note Wednesday, unable to bounce back from the previous day’s plunge.

And Asia also struggled, with Hong Kong, Tokyo, Sydney, Seoul, Singapore, Taipei, Manila and Wellington all down. London, Paris and Frankfurt tumbled.

However, Shanghai ended more than one percent higher. That came after official figures showed a forecast-beating improvement in China’s services sector thanks to the easing of painful Covid-19 restrictions in major cities including Shanghai and Beijing.

The non-manufacturing Purchasing Managers’ Index surged to 54.7 points in June, the first time it has been above the 50-point growth mark since February.

The manufacturing gauge hit 50.2, which was also its first time in growth since February and provided some hope that the world’s number two economy could be picking up after the pain caused by lockdowns.

SPI Asset Management strategist Stephen Innes added that the government and People’s Bank of China could now have some room to provide growth support.

“With (consumer price) inflation low in China relative to its peers, there is plenty of scope for monetary and fiscal conditions to loosen in the second half of the year, supporting activity,” he said in a note.

Crude extended Wednesday’s loss as data showed demand in the United States appeared to be softening even as the driving season gets under way, and as recession fears begin to kick in.

“The higher price environment appears to be doing its job when it comes to demand,” Warren Patterson, of ING Group NV, said.

The drop comes as OPEC and other major producers including Russia prepare to meet on their output agreement, with most predicting they are unlikely to open the taps further.

“I am not expecting any surprises from the group. I would imagine it will be a fairly quick meeting,” Patterson said.

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,393.04 (close)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 21,859.79 (close)

Shanghai – Composite: UP 1.1 percent at 3,398.62 (close)

London – FTSE 100: DOWN 1.7 percent at 7,190.99

West Texas Intermediate: DOWN 0.2 percent at $109.57 per barrel

Brent North Sea crude: DOWN 0.8 percent at $115.35 per barrel

Dollar/yen: DOWN at 136.23 yen from 136.66 yen Wednesday

Euro/dollar: UP at $1.0445 from $1.0444 

Pound/dollar: UP at $1.2154 from $1.2119

Euro/pound: DOWN at 85.95 pence from 86.15 pence

New York – Dow: UP 0.3 percent at 31,029.31 (close)

Japanese drinks giant Kirin said Thursday it has agreed to a buyout of its shares in a Myanmar joint venture with a junta-linked conglomerate as it seeks to exit the market after the 2021 coup.

Days after the putsch in February last year, Kirin announced it would end its joint venture Myanmar Brewery with the junta-linked MEHPCL, saying it was “deeply concerned by the recent actions of the military in Myanmar”.

But it struggled to disentangle itself from the secretive conglomerate and contested a bid by MEHPCL to dissolve the joint venture as it feared liquidation proceedings would not be fair.

Kirin said Thursday it has agreed a share buyback worth about 22.4 billion yen ($164 million) to transfer its 51 percent stake back into the subsidiary, ending the joint venture.

The deal remains to be approved and a date for the share transfer has not yet been set.

“We are relieved to settle this matter within the announced deadline by the most appropriate means among several options,” Yoshinori Isozaki, Kirin’s president and CEO, said in a statement.

But activists said the decision to sell the shares in Myanmar Brewery and the smaller Mandalay Brewery back to the company effectively hands control and revenue to the junta.

Justice for Myanmar spokeswoman Yadanar Maung called the deal “a windfall for the Myanmar military”, warning it would “ensure a continued stream of revenue to finance atrocity crimes”.

“Kirin must reverse this deplorable decision or be held accountable for aiding and abetting the military’s ongoing international crimes,” she added.

According to figures published by Kirin in 2018, Myanmar Brewery — whose beverages include the ubiquitous Myanmar Beer brand — boasted a market share of nearly 80 percent.

Investors piled into Myanmar after the military relaxed its iron grip in 2011, paving the way for democratic reforms and economic liberalisation.

But a raft of foreign companies have exited the market since the military seized power from Aung San Suu Kyi’s government, including oil giants TotalEnergies and Chevron and Norwegian telecoms operator Telenor.

Kirin’s Myanmar business generated 32.6 billion yen ($240 million at today’s rates) in revenue in 2019-20, less than two percent of the firm’s annual sales.

The Japanese giant had been under pressure even before the coup over its ties to the military, and launched an investigation after rights groups called for transparency into whether money from its joint venture had funded rights abuses.

Samsung Electronics became the first chipmaker in the world to mass produce advanced 3-nanometre microchips, the company said Thursday, as it seeks to catch up with Taiwan’s TSMC.

The new chips will be smaller, more powerful and efficient, and will be used in high-performance computing applications before being put into gadgets such as mobile phones.

“Compared to 5nm process, the first-generation 3nm process can reduce power consumption by up to 45%, improve performance by 23% and reduce area by 16%,” Samsung said in a statement.

The South Korean conglomerate last month announced a five-year plan to invest 450 trillion won (US$356 billion), saying it would “bring forward the mass production of chips based on the 3-nanometer process”.

The vast majority of the world’s most advanced microchips are made by just two companies — Samsung and Taiwan’s TSMC — both of which are running at full capacity to alleviate a global shortage.

Samsung is the market leader in memory chips but it has been scrambling to catch up with TSMC in the advanced foundry business.

TSMC dominates more than half of the global foundry market, with clients including Apple and Qualcomm, while Samsung trails with around 16 percent market share, according to TrendForce.

TSMC plans to begin volume production of 3-nanometre technology in the second half of this year, and entered the development stage of 2-nanometre technology last year, according to the company’s 2021 annual report.

Japanese drinks giant Kirin said Thursday it has agreed to a buyout of its shares in a Myanmar joint venture with a junta-linked conglomerate, completing its exit from the market over the 2021 coup.

Days after the putsch in February 2021, Kirin announced it would end its joint venture Myanmar Brewery with the junta-linked MEHPCL, saying it was “deeply concerned by the recent actions of the military in Myanmar”.

But it struggled to disentangle itself from the secretive conglomerate and contested a bid by MEHPCL to dissolve the joint venture as it feared liquidation proceedings would not be fair.

Kirin said Thursday that a share buyback agreement worth about 22.4 billion yen ($164 million) had been reached to transfer its 51 percent stake back into the subsidiary, ending the joint venture.

“We are relieved to settle this matter within the announced deadline by the most appropriate means among several options,” Yoshinori Isozaki, Kirin’s president and CEO, said in a statement.

According to figures published by Kirin in 2018, Myanmar Brewery — whose beverages include the ubiquitous Myanmar Beer brand — boasted a market share of nearly 80 percent.

But Kirin had been under pressure even before the coup over its ties to the military, and launched an investigation after rights groups called for transparency into whether money from its joint venture had funded rights abuses.

Investors piled into Myanmar after the military relaxed its iron grip in 2011, paving the way for democratic reforms and economic liberalisation.

They poured money into telecoms, infrastructure, manufacturing and construction projects — before the coup upended the democratic interlude and damaged the economy.

But a raft of foreign companies have exited the market since the military seized power from Aung San Suu Kyi’s government, including oil giants TotalEnergies and Chevron and Norwegian telecoms operator Telenor.

Kirin’s Myanmar business generated 32.6 billion yen ($240 million at today’s rates) in revenue in 2019-20, less than two percent of the firm’s annual sales.