China’s factory and services activity picked up in June, official data showed Thursday, fuelled by the easing of Covid-19 restrictions in major cities such as Shanghai and Beijing.
The non-manufacturing Purchasing Managers’ Index (PMI), a key gauge of activity in the world’s second-biggest economy, defied expectations and surged to 54.7 points in June after three months of sluggish performance.
It was the first time since February that the reading was above the 50-point mark separating growth from contraction, and this marked an improvement from the reading of 47.8 in May.
“As the situation of domestic epidemic prevention and control continued to improve and a package of policies… to stabilise the economy was implemented at a quicker pace, the overall recovery of our country’s economy has accelerated,” National Bureau of Statistics (NBS) senior statistician Zhao Qinghe said in a statement.
In particular, business activity in industries severely hit by the pandemic such as rail and air transport picked up in June, the statement said.
Manufacturing PMI rose to 50.2 points in June — in line with analyst expectations — up from 49.6 in May.
As work resumed after Covid lockdowns, production and demand in the sector picked up and delivery times improved, according to the NBS.
China is the only major economy still pursuing a zero-Covid approach of eliminating outbreaks as they emerge, using snap lockdowns and mass testing.
While the country is shortening quarantine times for new international arrivals, President Xi Jinping warned Wednesday that China “would have faced unimaginable consequences” had it adopted a herd immunity or hands-off approach, signalling the government would persist with its current policy.
The approach has taken a harsh toll on the economy, with shops and factories forced to stop operations and supply chains strained.
“It is taking time for production to return to normal,” said Moody’s Analytics in a note this week.
“Logistics remain under pressure; large ports are seeing bottlenecks and some factories are slowing production because of worker shortages.”
Musk, Twitter get Oct. 17 trial in buyout fight
Twitter’s lawsuit to force Elon Musk to complete his $44 billion buyout bid is set to go to trial on October 17, a US judge has ordered, in a case with major stakes for both sides.
The trial is due to open in a court in the eastern state of Delaware and is set to last five days to decide whether Musk can walk away from the deal.
The Tesla boss wooed Twitter’s board with a $54.20 per-share offer, but then in July announced he was “terminating” their agreement on accusations the firm misled him regarding its tally of fake and spam accounts.
Twitter has countered by saying Musk already agreed to the deal and can’t back out now.
An order from the judge handling the case, Kathaleen McCormick, lays out an expedited schedule to resolve a fight that has left Twitter in limbo.
She reminds both sides that they “shall cooperate in good faith” on matters like handing over information to each other, a key topic that can result in delays.
Billions of dollars are at stake, but so is the future of Twitter, which Musk has said should allow any legal speech — an absolutist position that has sparked fears the network could be used to incite violence.
Twitter blamed disappointing results last week on “headwinds,” including the uncertainty imposed on the company by Musk’s chaotic buyout bid.
What’s with the slowdown in Canada’s tech ecosystems this year?￼
Canadian venture funding cooled in Q2 2022, but Alberta is still seeing record-level funding.
As BetaKit reported at the end of 2021, that year was “undoubtedly a landmark year” for Canada’s tech scene. The sector broke an all-time venture capital funding record previously set in 2019, with firms raising a staggering $11.8 billion in Q3 alone.
So what’s with the slowdown this year?
BetaKit is reporting that the BC, Waterloo Region, and Toronto tech sectors are all showing signs of cooling in Q2, as tracked by briefed.in.
On the west coast, BC’s venture funding and deal volume dropped to a six-quarter low, with startups raising $204.3 million collectively — a decrease of 62% compared to Q1 2022. Toronto saw a 69% drop from Q1 — a fairly dramatic drop after the banner year that was 2021.
Waterloo is a bit of a different story. While the region did see its lowest quarter for deal volume in three years, there was still an increase in investment over Q1. That said, most of this (96% according to BetaKit) was from one $537.7 million Series G extension closed by Faire, a retail startup.
The one Canadian ecosystem that’s still flying high? Alberta. In Q2, companies raised $268.6 million through 12 deals – a 31% increase quarter-over-quarter, BetaKit reports. It remains to be seen if they’ll be hit with the same cooling as other ecosystems.
Speaking to BetaKit, Golden Ventures partner Ameet Shah explained “if 2021 was the party, then 2022 stands to be a sobering experience for founders, employees, and investors alike.”
What contributed to this slowdown? Unsurprisingly, stock market slumps, the cryptocurrency rollercoaster, inflation, and overseas conflict all play factors in the current volatility. After the booming decade of the 2010s, this year seems to be an overall bust for the global tech sector, including Silicon Valley, with repeated announcements of layoffs.
According to global labor trends aggregator Layoffs.fyi, 140,388 workers lost tech jobs since the start of the COVID-19 pandemic, as reported by BNN Bloomberg.
The Canadian tech sector is also facing layoffs — including the news that Shopify is letting go of approximately 10% of its workforce. Back in June, Wealthsimple laid off 13% of its staff.
As Deena Shakir, a partner at Silicon Valley-based VC firm Lux Capital explained to CBC News at June’s Collision Conference, “right now everyone who is innovating and/or investing in tech or in startups is trying to understand what exactly is happening in this moment.”
“We’re the topic of conversation at every partner meeting, and every lunch and coffee.”
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
Sony trims annual profit forecast after Bungie purchase
Sony trimmed its annual net profit forecast on Friday, partly due to acquisition expenses including the purchase of US game studio Bungie, creator of hits like “Halo” and “Destiny”.
The PlayStation maker announced in February it would buy Bungie for $3.6 billion, weeks after rival Microsoft unveiled a landmark pact to acquire “Call of Duty” maker Activision Blizzard.
Microsoft says its massive merger, valued at around $69 billion, will make it the third-largest gaming company by revenue, behind Tencent and Sony — marking a major shift in the booming gaming world.
Sony Group now predicts net profit for 2022-23 will total 800 billion yen ($6 billion), down from the 830 billion yen previously forecast.
It said the expected increase in acquisition expenses was “mainly due to the acquisition of Bungie, Inc. being completed earlier than the assumed timing”.
Lower sales of games by non-house developers will likely dent its overall sales figures this financial year, it said, but this would be “partially offset” by a weaker yen.
Exchange rates also boosted the conglomerate’s movie segment, chief financial officer Hiroki Totoki told reporters.
Customer traffic at US theatres has returned to pre-pandemic levels in some weeks, and Sony Pictures is hoping to score another box-office win after the runaway success of “Spider-Man: No Way Home”.
“We have high hopes for ‘Bullet Train’ featuring Brad Pitt,” Totoki said.
The movie division expects higher sales for anime streaming, “including the impact of the acquisition of Crunchyroll”, the world’s largest online library of Japanese animation.
– PlayStation 5 sales steady –
In the April to June quarter, the Japanese conglomerate posted a three percent year-on-year rise in net profit to 218 billion yen, with sales up around two percent to 2.3 trillion yen.
Sony has faced challenges rolling out its PlayStation 5 console, which remains difficult to get hold of more than 18 months since its launch in November 2020, in part due to pandemic supply chain disruption and the global chip shortage.
Sony sold 11.5 million PS5s last year, and in May Totoki said the firm was adapting to try and weather ongoing supply chain issues, including Covid-19 lockdowns in China.
For the PS5, “the problem is more about supply than demand. The company is also facing problems transporting its products,” Hideki Yasuda, senior analyst at Toyo Securities, told AFP before the earnings release.
Meanwhile “the yen has turned lower in this quarter. This should be positive for the company,” he said, adding that a US economic slowdown could open up shipping spots, even though it poses risks overall for businesses like Sony.
In the first quarter of this financial year, Sony sold 2.4 million PS5 units, similar to the same period last year when it sold 2.3 million.
Sony also said last month it is launching a new brand that will offer PC gaming gear.
The gaming peripherals market of items used by players was valued at $3.88 billion globally in 2019 according to Grand View Research.
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