Finance

China retail sales strengthen at start of 2025, industrial data beats

Published

3 months ago

March 16, 2025

Business Finance News

Pictured here is a Shanghai development under construction on Nov. 4, 2024.

Cfoto | Future Publishing | Getty Images

China’s economy showed a modest pickup for the first two months of the year, according to data published Monday by the National Bureau of Statistics, as Beijing reiterated its plan to bolster domestic consumption.

Retail sales rose by 4.0% in the January-February period from a year ago, compared with the 3.7% year-on-year growth in December and in line with Reuters estimates.

Industrial production climbed 5.9% in the first two months of the year from a year ago, slower than the 6.2% growth in December, but faster than a 5.3% expansion forecast by analysts in a Reuters poll.

Fixed asset investment, reported on a year-to-date basis, rose by 4.1%, beating the 3.6% growth estimated by economists, a notable jump from the 3.2% increase last year.

The data comes shortly after Chinese policymakers unveiled a wide-ranging plan to stimulate domestic consumption, reiterating Beijing’s pledges to bolster residents’ income and household spending.

The notice, published Sunday, repeated Beijing’s plan to stabilize the stock market, establish a childcare subsidy scheme as well as boosting tourism.

While the high-level document appears to lack concrete implementation details, it provides a glance into Beijing’s stance toward addressing some deep-seated issues, such as the slowing income growth and insufficient social safety net, Lynn Song, chief China economist at ING, told CNBC via email.

“Directionally it is quite encouraging that policymakers are taking a sober look at these themes, and it should help the longer term transition to a consumption driven economy,” he added.

Growth target

Chinese leadership took on a hefty task by keeping a growth target of “around 5%” this year, a target seen harder to reach given rising trade tensions with the U.S. and entrenched deflationary pressure for the economy.

Economists say Beijing will likely need to provide stronger stimulus to achieve this year’s growth target and bolster domestic consumption to fill the hole left by potentially slowing exports. Exports contributed nearly a quarter of China’s GDP last year.

In a sign of a persistent drop in demand, China’s consumer price inflation in February fell below zero for the first time in over a year. Beijing revised down its annual inflation target to “around 2%” — the lowest in more than two decades — from above 3% in prior years, a move seen to show a degree of official acceptance of the current deflationary environment.

As part of an expanded fiscal package, Chinese leaders pledged at an annual parliamentary meeting earlier this month an additional 300 billion yuan ($41.5 billion) of ultra-long special treasury bonds for consumers’ subsidy support.

Still, beyond the trade-in program, the existing stimulus measures have barely targeted consumers directly.

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

1 day ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”