US Business

Asian markets were mostly lower on Wednesday as investors await news on the next US interest rate hikes.

With the Jackson Hole meeting of central bankers this week, focus is on what US Federal Reserve chief Jerome Powell will say about plans to tackle high prices — with many fearing officials could send the economy into recession in its battle to rein in inflation.

The Fed “is probably going to use this weekend to reiterate the fact that rates have more room to climb because they really want to bring inflation down,” Kelvin Tay, Asia-Pacific chief investment officer at UBS Global Wealth Management, told Bloomberg TV.

Central banks face a delicate balancing act between battling inflation, with Russia’s war in Ukraine sending energy prices soaring, and avoiding recession.

“With European gas prices continuing to trade at record highs, investor anxiety is growing that a combination of central banks raising rates and higher energy prices will tip the global economy into a long recession,” said CMC Markets analyst Michael Hewson.

Wall Street ended mostly lower, and key markets in Asia followed suit.

Tokyo started in positive territory but the upward drive was short-lived.

“Lingering worries over US rate hike plans weighed on the market,” said Hiromi Kanamaru, senior strategist at Daiwa Securities.

Tokyo closed down 0.5 percent and Hong Kong, Shanghai and Taipei also fell while Seoul, Sydney and Wellington rose.

The decline continued in Europe, with London down 0.4 percent in opening deals while Frankfurt and Paris were both off 0.2 percent.

“Asian markets have turned risk-averse ahead of the Jackson Hole meeting,” Natixis economist Gary Ng said.

“Hong Kong and China stock markets continue to perform weaker than Asian peers as they face higher uncertainties.” 

– Euro hits new 20-year low –

The euro tumbled to $0.9901 — a new two-decade low — on Tuesday but later clawed back losses as the greenback was hit by poor US economic data.

The dollar had strengthened this week ahead of a speech Friday by Powell, as markets speculate that the Fed will continue to tighten its monetary policy.

Higher interest rates boost the American currency as they make dollar-denominated debt more attractive to investors.

But the euro also has been weighed down by a gloomy outlook for the eurozone economy with energy prices soaring.

– Key figures at around 0830 GMT –

Tokyo – Nikkei 225: DOWN 0.5 percent at 28,313.47 (close)

Hong Kong – Hang Seng Index: DOWN 1.2 percent at 19,268.74 (close)

Shanghai – Composite: DOWN 1.9 percent at 3,215.20 (close)

London – FTSE 100: DOWN 0.5 percent at 7,446.95 

Euro/dollar: DOWN at 0.9947 from 0.9951 

Pound/dollar: UP at 1.1824 from 1.1813

Euro/pound: DOWN at 84.12 pence from 84.23 pence

Dollar/yen: DOWN at 136.49 yen from 136.79 yen

West Texas Intermediate: UP 1.16 percent at $94.82 per barrel

Brent North Sea crude: UP 1.37 percent at $101.49

New York – Dow: DOWN 0.5 percent at 32,909.59 points (close)

China has announced it is investigating several executives at state-owned property companies, in another blow to a key sector already struggling with slowing sales, angry customers and heavily indebted developers.

Authorities said in separate notices on Tuesday that they were investigating Zhuang Yuekai, chairman of C&D Real Estate, and Shi Zhen, chairman of C&D Urban Services.

They are also looking into Liu Hui, deputy general manager of Shenzhen Talents Housing Group, and Tang Yong, a former chairman at China Resources Land.

All four were “suspected of serious violations of discipline and law”, the notices said, providing few details.

The language used in the announcements, however, typically indicates impending graft charges.

“This is a continuation of China’s crackdown on corruption, from government agencies to financial institutions, and to state-owned enterprises,” said Ting Meng, senior Asia credit strategist at ANZ Bank.

As sentiment in the sector is already weak, this news will “further suppress market confidence” and increase concerns about the internal governance of some state-owned firms, she told AFP.

The investigations come ahead of the ruling Communist Party’s 20th National Congress, at which President Xi Jinping is widely expected to be anointed for an unprecedented third term.

Xi has championed an anti-corruption drive since coming to power, taking down big-name detractors, and observers expect him to use the months leading up to the meeting to cement his grip on power.

The probes follow a regulatory crackdown on some of China’s biggest tech firms.

Authorities have also in recent months announced investigations into figures in the semiconductor industry, including minister for industry and information technology Xiao Yaqing.

Regulatory chiefs, insurance giants, security officials and financiers have faced censure or prosecution under the anti-corruption drive, but it is rare for a minister to be targeted while still in office.

The vast majority of people who have been investigated for corruption in China were eventually convicted.

Fox News boss Lachlan Murdoch has sued a small Australian media outlet for defamation over an opinion piece that linked his media empire to the US Capitol riots.

The scion of the Murdoch media empire is seeking damages, accusing Crikey staff of tarnishing his reputation and “covertly using another media organisation to harass” him.

Murdoch — whose Fox News Channel regularly rails at threats to free speech — also asked the court to permanently ban the site from publishing anything suggesting he “illegally conspired with Donald Trump” around the events of January 6.

The lawsuit was filed late Tuesday in Australia’s federal court, and came after Crikey published letters from Murdoch’s lawyers and dared him to sue. 

Crikey even took out an advertisement in the New York Times on Monday, publishing an open letter that welcomed the opportunity to “test this important issue of freedom of public interest journalism in a courtroom”.

Murdoch is chief executive of media behemoth Fox Corporation, which owns Fox News, and co-chairman of News Corp.

He is the eldest son of billionaire media tycoon Rupert Murdoch, owner of scores of outlets including The Wall Street Journal and the New York Post.

– ‘Unindicted co-conspirator’ –

The lawsuit was sparked by a June 29 article written by Crikey’s political editor Bernard Keane, headlined: “Trump is a confirmed unhinged traitor. And Murdoch is his unindicted co-conspirator”.

The original piece did not name the younger Murdoch directly, referring only to the “Murdochs and their slew of poisonous Fox News commentators”.

In legal correspondence with Murdoch, Crikey’s lawyers argued readers would more likely think the article referred to his father.

However, Murdoch’s lawyers argued in documents filed to the federal court Tuesday that their client was defamed 14 times by the article.

The legal filing also refers extensively to an article published in the Sydney Morning Herald — a major Australian newspaper — about Murdoch threatening to sue Crikey.

Murdoch’s lawyers alleged that Crikey tipped off the Sydney Morning Herald, and has since used the saga to drive subscriptions.

The Fox executive has retained high-profile barrister Sue Chrysanthou, who previously represented actor Geoffrey Rush in his defamation case against another Australian media organisation.

– Crikey stands by story –

The legal tussle pits an upstart website, with subscriber numbers in the low tens of thousands, against one of the world’s largest media empires.

Crikey editor-in-chief Peter Fray and chairman Eric Beecher said Wednesday that the site “stands by its story”.

“We look forward to defending our independent public interest journalism in court against the considerable resources of Lachlan Murdoch,” the pair said in a statement published by the site.

“We believe that coverage of the events of January 6 at the US Capitol, and the role of Fox News in those events, is absolutely legitimate.”

Murdoch’s representatives told AFP he would not be commenting as the matter was before the court.

– ‘The defamation capital’ –

The story has made waves in Australia, where the Murdoch family remains a major player in the local media despite its global expansion.

Former Australian Prime Minister Malcolm Turnbull weighed into the saga Wednesday, saying he was “very surprised” by Murdoch’s decision.

“I think it’s hypocritical,” he told public broadcaster ABC, adding that the Murdochs were “always bleating about freedom of speech, and how the defamation laws are too harsh”.

Australia’s tough libel laws offer few protections to the media and have earned the country the nickname “the defamation capital of the world”.

Sri Lanka tightened import restrictions Wednesday with a ban on more than 300 additional items, as an economic crisis that has created months of shortages and toppled a president refuses to abate.

President Ranil Wickremesinghe, who replaced Gotabaya Rajapaksa after his ouster in July, slapped a ban on goods including home appliances, tools and sports gear.

The South Asian island nation of 22 million people has been suffering dire shortages of many essentials due to a lack of foreign currency.

The new bans come despite the central bank announcing last week that the foreign exchange shortage was easing thanks to better inflows.

However, Sri Lanka’s economy is projected to contract this year by a worse-than-expected 8.0 percent, according to the bank, with inflation forecast to peak at a record 65 percent by September.

The lack of foreign currency pushed Sri Lanka into defaulting on some of its $51 billion external debt pile in April.

A delegation from the International Monetary Fund was due on Wednesday to continue talks with Sri Lankan officials on a bailout.

But IMF assistance could be delayed if Sri Lanka’s creditors, the biggest being China, refuse to restructure some of their loans.

Beijing has not publicly shifted from its offer of issuing more loans rather than taking a haircut on existing credit.

Worker remittances, a key source of foreign exchange for Sri Lanka, have dropped by more than 50 percent to $1.6 billion in the six months to June compared to the same period last year.

Rajapaksa, 73, fled to Singapore after months of protests culminated in demonstrators storming his official residence in July. He has since flown to Thailand but wants to return home, according to his party.

China has announced it is investigating several executives at state-owned property companies over allegations of “serious violations of discipline and law”.

The probes are another blow to a key sector, which is already struggling with slowing sales, angry customers and heavily indebted developers.

Authorities said in separate notices on Tuesday that they were investigating Zhuang Yuekai, chairman of C&D Real Estate, and Shi Zhen, chairman of C&D Urban Services.

They are also looking into Liu Hui, deputy general manager of Shenzhen Talents Housing Group, and Tang Yong, a former chairman at China Resources Land.

All four were “suspected of serious violations of discipline and law”, the notices said, providing few details.

The language used in the announcements, however, typically indicates impending graft charges.

These investigations may “deal a further blow to investor confidence and cause market worries about the internal governance of some state-owned enterprises”, ANZ’s Ting Meng told Bloomberg News.

The investigations come ahead of the ruling Communist Party’s 20th National Congress, at which President Xi Jinping is widely expected to be anointed for an unprecedented third term.

Xi has championed an anti-corruption drive since coming to power, taking down big-name detractors, and observers expect him to use the months leading up to the meeting to cement his grip on power.

The probes follow a regulatory crackdown on some of China’s biggest tech firms.

Authorities have also in recent months announced investigations into figures in the semiconductor industry, including minister for industry and information technology Xiao Yaqing.

Regulatory chiefs, insurance giants, security officials and financiers have faced censure or prosecution under the anti-corruption drive, but it is rare for a minister to be targeted while still in office.

The vast majority of people who have been investigated for corruption in China were eventually convicted.

Germany on Wednesday will inaugurate a railway line powered entirely by hydrogen, a “world first” and a major step forward for green train transport despite nagging supply challenges.

A fleet of 14 trains provided by French industrial giant Alstom to the German state Lower Saxony will replace the diesel locomotives on the 100 kilometres (60 miles) of track connecting the cities of Cuxhaven, Bremerhaven, Bremervoerde and Buxtehude near Hamburg.

“Whatever the time of day, passengers will travel on this route thanks to hydrogen”, Stefan Schrank, project manager at Alstom, told AFP, hailing a “world first”. 

Hydrogen trains have become a promising way to decarbonise the rail sector and replace diesel, which still powers 20 percent of journeys in Germany.

Billed as a “zero emission” mode of transport, the trains mix hydrogen on board with oxygen present in the ambient air, thanks to a fuel cell installed in the roof. This produces the electricity needed to pull the train.

– Run for its money –

Designed in the southern French town of Tarbes and assembled in Salzgitter in central Germany, Alstom’s trains — called Coradia iLint — are trailblazers in the sector.

The project drew investment of “several tens of millions of euros” and created jobs for up to 80 employees in the two countries, according to Alstom. 

Commercial trials have been carried out since 2018 on the line with two hydrogen trains but now the entire fleet is adopting the ground-breaking technology.

The French group has inked four contracts for several dozen trains between Germany, France and Italy, with no sign of demand waning. 

In Germany alone “between 2,500 and 3,000 diesel trains could be replaced by hydrogen models”, Schrank estimates. 

“By 2035, around 15 to 20 percent of the regional European market could run on hydrogen,” Alexandre Charpentier, rail expert at consultancy Roland Berger, told AFP.

Hydrogen trains are particularly attractive on short regional lines where the cost of a transition to electric outstrips the profitability of the route. 

Currently, around one out of two regional trains in Europe runs on diesel.

But Alstom’s competitors are ready to give it a run for its money. German behemoth Siemens unveiled a prototype hydrogen train with national rail company Deutsche Bahn in May, with a view to a roll-out in 2024.

But, despite the attractive prospects, “there are real barriers” to a big expansion with hydrogen, Charpentier said.

For starters, trains are not the only means of transport hungry for the fuel.

The entire sector, whether it be road vehicles or aircraft, not to mention heavy industry such as steel and chemicals, are eyeing hydrogen to slash CO2 emissions.

– Colossal investment –

Although Germany announced in 2020 an ambitious seven-billion-euro (-dollar) plan to become a leader in hydrogen technologies within a decade, the infrastructure is still lacking in Europe’s top economy.

It is a problem seen across the continent, where colossal investment would be needed for a real shift to hydrogen.

“For this reason, we do not foresee a 100-percent replacement of diesel trains with hydrogen,” Charpentier said.

Furthermore, hydrogen is not necessarily carbon-free: only “green hydrogen”, produced using renewable energy, is considered sustainable by experts. 

Other, more common manufacturing methods exist, but they emit greenhouse gases because they are made from fossil fuels. 

The Lower Saxony line will in the beginning have to use a hydrogen by-product of certain industries such as the chemical sector.

The French research institute IFP specialising in energy issues says that hydrogen is currently “95 percent derived from the transformation of fossil fuels, almost half of which come from natural gas”. 

Europe’s enduring reliance on gas from Russia amid massive tensions over the Kremlin’s invasion of Ukraine poses major challenges for the development of hydrogen in rail transport.

“Political leaders will have to decide which sector to prioritise when determining what the production of hydrogen will or won’t go to,” Charpentier said. 

Germany will also have to import massively to meet its needs. 

Partnerships have recently been signed with India and Morocco, and an agreement to import hydrogen from Canada was on the agenda this week during a visit by Chancellor Olaf Scholz.

China’s autumn harvest is under “severe threat” from high temperatures and drought, authorities have warned, urging action to protect crops in the face of the country’s hottest summer on record.

The world’s second-largest economy has been hit by record temperatures, flash floods and droughts this summer — phenomena that scientists have warned are becoming more frequent and intense due to climate change.

Southern China in particular has recorded its longest sustained period of high temperatures and sparse rain since records began more than 60 years ago, the agriculture ministry said.

Four government departments issued a notice on Tuesday urging the conservation of “every unit of water” to protect crops.

“The rapid development of drought superimposed with high temperatures and heat damage has caused a severe threat to autumn crop production,” the statement said.

Multiple Chinese provinces have announced power cuts to cope with a surge in demand driven partly by people cranking up the air conditioning to cope with temperatures as high as 45 degrees Celsius (113 degrees Fahrenheit).

The megacities of Shanghai and Chongqing have cut outdoor decorative lighting, while authorities in southwestern Sichuan province have imposed industrial power cuts as water levels drop at key hydroelectric plants.

More than 1,500 people in the area surrounding Chongqing were evacuated on Monday after hot and dry conditions sparked multiple wildfires, according to state news agency Xinhua.

The national meteorological service renewed its warnings for drought and high temperatures on Tuesday, calling for 11 provincial governments to “activate” emergency responses.

Authorities have already turned to cloud seeding — a method to induce rainfall — in parts of the country. 

State broadcaster CCTV published footage earlier this month showing meteorological staff shooting catalyst rockets into the sky and firefighters transporting water to farmers in need.

“This is the worst heat wave ever recorded,” climate and energy expert Liu Junyan of Greenpeace East Asia told AFP.

“Climate science shows extreme heat is becoming exponentially worse,” she said.

“So it’s more likely that next year will have record-breaking heat.”