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More U.S. companies in China cut forecasts, scale back investments as Covid persists

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Truck drivers, such as the one pictured here in Shanghai in late April, typically need to show valid negative virus tests in order to move goods between cities in China. The American Chamber of Commerce in China said members have reported varying implementation of Covid controls depending on city and province.

Vcg | Visual China Group | Getty Images

BEIJING — More U.S. businesses in China are cutting revenue expectations and plans for future investment as Covid controls drag on, a new survey found.

Between late March and late April, the share of respondents reporting an impact from Covid restrictions rose by 4 percentage points to 58%, according to an American Chamber of Commerce in China survey released Monday.

While that’s not a large increase, 4 or 5 percentage points every month could be “very significant” if Covid controls persist for another five months, Michael Hart, AmCham president, told CNBC in a phone interview.

Asked what impact Covid restrictions will have if they last for the next year, more than 70% of respondents said their revenue or profit would be cut.

The latest study, conducted from April 29 to May 5, covered 121 companies with operations in China. That time period included the latest Covid restrictions in the capital city of Beijing.

Two, three, four years from now, I predict a massive decline in investment in China because no new projects are being teed up, because people can’t come in and look at space.

Michael Hart

president, AmCham China

The prior survey was conducted with AmCham Shanghai in late March, just as Shanghai’s original plan for a two-part lockdown were starting. Those measures have lasted for far longer than the initial week.

In the last few days, Beijing city postponed the reopening of schools until further notice, and ordered all non-essential businesses in a major business district to close temporarily or have their staff work from home.

“There are very few aspects of the economy which seem to be functioning,” a survey respondent said in the report, which withheld the respondent’s name and location. “[While] COVID-19 restrictions can be managed, what [will be increasingly difficult to] manage is lack in overall growth of the economy and what appear to be growing economic headwinds.”

Companies cut China investment plans

The prolonged Covid controls — as mainland China tackles its worst virus outbreak since early 2020 — have further discouraged U.S. businesses from investing in the country, the AmCham survey found.

The percentage of respondents reporting decreased investments as a result of the latest outbreak and restrictions rose to 26% versus 17% a month earlier.

Those reporting a delay in investments fell slightly to 26%, versus 29% in the previous survey. The proportion who said it’s too early to predict or haven’t decided on the impact on investment plans rose to 44% in the latest survey, up from 30% in the prior study.

Official figures show a steady increase in foreign direct investment from all countries into China, up by 31.7% year-on-year in the first quarter to $59.01 billion.

China’s Ministry of Commerce did not have a comment ahead of its regular press conference on Thursday. When asked in late April about foreign businesses’ challenges, the ministry said it would make all effort to ensure resumption of work and production.

Since China tightened border restrictions in 2020 to control the transmission of Covid from travelers into the country, foreign business organizations have said it is hard to bring in staff. That’s because there’s a lack of international flights into China and quarantine times upon arrival of at least two weeks, if not longer.

“If you want investment you have to allow for travel,” Hart said, noting the impact will be felt in the long term.

“Two, three, four years from now I predict a massive decline in investment in China because no new projects are being teed up, because people can’t come in and look at space,” he said.

If Covid controls persist for the next year, 53% of respondents to AmCham’s latest survey said they would reduce investment in China.

Read more about China from CNBC Pro

By industry, the tech and research and development businesses reported the highest impact of Covid controls on their investment plans, with 53% of those surveyed in the sector expecting delays or reductions.

On the other hand, consumer businesses were the only ones to report plans to increase investment, albeit just 4% of members in the sector. For the industry, 36% planned to reduce investment, while 29% said they would delay investment as a result of the latest outbreak.

The consumer sector was also the only one to report some increase in yearly revenue projections despite the Covid impact, at 3% of respondents. However, the majority of consumer businesses, or 69%, said they were cutting revenue expectations for the year.

Business hasn’t fully resumed

Just based on our own companies’ experience in the U.S. and Europe and other markets, we have seen that other countries have taken a different strategy. We’re just asking for a bit more of a balance.

Michael Hart

president, AmCham China

This Article was first live here.

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EPFO adds 15.32 lakh net subscribers in March

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Retirement fund body EPFO has added 15.32 lakh subscribers in March 2022, over 19 per cent more than 12.85 lakh enrolled in February this year.
The provisional EPFO payroll data released on Friday highlighted that it has added 15.32 lakh net subscribers in March 2022, a labour ministry statement said.

According to the statement, a month-on-month comparison of payroll data shows an increase of 2.47 lakh net subscribers in March 2022 compared to the net additions during February 2022.

Of the total 15.32 lakh net subscribers added during the month (of March), around 9.68 lakh new members have been covered under the provisions of EPF & MP Act, 1952 for the first time.

The new member addition has increased by 81,327 in March 2022 as compared to the previous month. Approximately 5.64 lakh net subscribers exited but re-joined the establishments covered under the EPFO by transferring their funds from the previous PF account to the current account, instead of opting for final withdrawal.

Age-wise comparison of payroll data showed that the age group of 22-25 years has been on the forefront by registering the highest number of net enrolments, with 4.11 lakh additions during March 2022.

This is followed by the age group of 29-35 with an addition of 3.17 lakh net subscribers. The age group of 18-21 years also added around 2.93 lakh net subscribers during the month.

The age group of 18-25 years constitutes around 45.96 per cent of net subscribers addition during the month.
Age-wise payroll data also indicated that many first-time job seekers are joining the organised sector workforce in large numbers.

State-wise comparison of payroll figures highlighted that the establishments covered in Maharashtra, Karnataka, Tamil Nadu, Gujarat, Haryana and Delhi remain in lead by adding approximately 10.14 lakh net subscribers during the month, which is 66.18 per cent of the total net payroll addition across all age groups.

Gender-wise analysis showed that net female payroll addition is approximately 3.48 lakh during the month. The share of female enrolment is 22.70 per cent of total net subscribers addition during March 2022, with an increase of 65,224 net enrolments over February 2022.
The participation of women in the organised workforce is showing a positive trend from October 2021.

Industry-wise payroll data indicates that mainly two categories of ‘expert services’ (consisting of manpower agencies, private security agencies and small contractors etc) and ‘trading-commercial establishments’ constitute 47.76 per cent of total subscriber addition during the month.
A growing trend in net payroll addition has been noted in industries like textiles, heavy-fine chemicals, hotels & restaurants etc in March 2022 compared to net subscriber addition in February 2022.

The payroll data is provisional since the data generation is a continuous exercise and the process of updating employee records is done on a regular basis.
Hence, the statement said that the previous data gets updated every month. Since April 2018, EPFO has been releasing payroll data, covering the period September 2017 onwards.

EPFO is the country’s principal organisation responsible for providing social security benefits to the organised/semi-organised sector workforce covered under the the purview of EPF & MP Act, 1952.

It offers members a myriad of services, which includes provident fund, insurance and pension both for members and their families.

This Article was first live here.

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Tech View: Nifty forms bullish candle; enjoy the rally till it lasts, say analysts

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NEW DELHI: Nifty50 on Friday capitalised on a strong gap-up start as the index ended almost at day’s higher. In the process, it breached its immediate resistance level of 16,150 and formed a bullish candle both daily and weekly scales. Analysts said more upside is in the offing and advised traders to be cautiously bullish for the week ahead.

The steep decline of May 19 was arrested near the swing low of 15,735, said Gaurav Ratnaparkhi of Sharekhan, who added that the March low of 15,671 offered additional support on the downside.

“With this, it filled up the recently created gap area on the daily chart. Going ahead, the index is set to test the upper end of a reverse falling channel and the swing high of 16,400, which is a key barrier to watch out for. On the flip side, 16,100-16,000 will act as a near term support zone,” Ratnaparkhi said.



For the day, the index closed at 16,266.15, up 456.75 points (2.89%).

The daily timeframe of the Nifty50 indicates that the index has made a double bottom around the 15,735 levels, said Subash Gangadharan, Senior Technical and Derivative Analyst, HDFC Securities.

“While we remain open to further pullback rallies in the very near term, we must remember that the intermediate trend remains down. The bears would gain more control once the recent intermediate low of 15,735 is broken. Till then, enjoy the rally till it lasts,” he said.

Despite the rebound, we feel the market has not reached its bottom, since price patterns on the Nifty50 show that the uptrend has been significantly harmed, said Yesha Shah, Head of Equity Research, Samco Securities.

“Similarly, a Head and Shoulder breakdown has been seen on the weekly chart of the S&P500 index. Having said this, a short-term rebound cannot be ruled out and at this point it is unclear if the bounce will be a relief rally or the start of a fresh bullish surge. Taking all of this into account, we recommend that traders keep a cautiously bullish stance for the coming week as long as the Nifty does not break below 15,700 levels,” Yesha said.

Nifty Bank
Bank Nifty has formed a Bullish candle on daily and weekly scale and a small follow up could trigger some more bounce to higher zones, said Chandan

of Securities.

“It has to hold above 34,000 to extend this move towards 34,500 and 34,750 while on the downside support exists at 33,666 and 33,500 zone,” Taparia said.


(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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UPST, NOVN and BURL among pre market losers

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UPST, NOVN and BURL among pre market losers

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