China’s
Evergrande saga threatens to cast a shadow on one of the economic engines of recovery: global trade.The growth pace of South Korea’s exports almost halved in the first 20 days of September from the same period last month as shipments to China and semiconductor sales to rest of the world slowed significantly. Read the full story here.
While the momentum in overall trade stayed largely alive and calendar differences made the figures look worse than they may actually be, the data came after manufacturing activity slowed in China and as new risks are rising in the world’s second-largest economy, including the potential default of one of its biggest real estate developers.
“The Evergrande issue increases the risk of a cooling in the Chinese economy in the fourth quarter for trade,” said Park Sang-hyun, an economist at HI Investment & Securities.
Read More: Evergrande Debt Crisis Is Financial Stress Test No One Wanted
Other threats to global commerce: the delta variant of the coronavirus, which has already led to shutdowns of some key ports and factories, and the tightening of regulations on tech firms in China, which could hurt demand for South Korean chips, he added.
Export Bellwether Slows
South Korea's 20-day exports are weaking on slower shipments to China
Source: Ministry of Trade, Industry and Energy
Evergrande’s trouble has weighed on global financial markets in recent weeks and a further worsening of the situation may dent the sentiment among Chinese consumers, who will think twice before spending their yuan if the value of their properties — and wealth — is impacted. That’s a concern for many countries whose fortunes are tied to those of China or stand to feel any shockwaves from a bigger crisis.
South Korea’s exports to China rose 19.7% in the first 20 days of September from a year earlier, down from 37.3% in August’s preliminary report. Total chip sales advanced just 7.7%, compared with almost 40% reported last month.
Korea’s total exports rose 22.9%, down from 40.8% in the same period in August, according to the customs office.
—Sam Kim in Seoul
Charted Territory
Shots for Sailors
Foreign cargo-ship workers vaccinated in the U.S. passed 50,000
Source: North American Maritime Ministry Association
The number of foreign-born seafarers who’ve been vaccinated in American ports eclipsed 50,000 last month, according to figures from the North American Maritime Ministry Association. Most of crews working on cargo ships are getting the J&J shots, though some two-dose vaccines are available, according to Jason Zuidema, the group’s executive director. The jabs are being administered by local welfare agencies, labor advocates and community health providers. Read more here.
Today’s Must Reads
- Holding back growth | The economic recovery in Europe’s two largest economies lost steam in September, held back by supply-chain problems and a slowdown in the services sector following an initial rebound from coronavirus restrictions.
- Pumping gas | A British government-brokered solution to a carbon-dioxide shortage that’s roiled the U.K. food industry comes at a cost — prices for the gas will rise sharply, adding to a raft of pressures already squeezing the sector.
- Hitting revenue | The cost of the intractable semiconductor shortage has ballooned by more than 90%, pushing the total hit to 2021 revenue for the world’s automakers to $210 billion. For more on why the world is short on chips, read Bloomberg’s QuickTake here.
- Diversity boost | Three of every five workers Amazon added to its rolls in the U.S. during the year ended October 2020 were people of color in laborer jobs, suggesting the company weathered the pandemic’s surge in online shopping thanks to members of racial groups that are underrepresented in the retailer’s corporate ranks.
- Stuck at ports | The most popular toys for kids this holiday season, from nostalgic favorites to cheap items popularized by TikTok, may sell out much sooner as a result of global supply-chain hangups.
- Contract closings | Sales of previously owned U.S. homes fell in August, suggesting that demand is moderating as lean inventory and high prices squeezed out some buyers.
- Team transitory | Federal Reserve Chair Jerome Powell said the central bank could begin scaling back asset purchases as soon as November and complete the process by mid-2022, with many Fed officials seeing inflation returning to around 2% after temporary supply-chain disruptions resulting from the pandemic have been resolved.
Save the Date: Join Bloomberg Intelligence for a discussion on Sept. 29 about the opportunities and challenges in the supply chain. The webinar will cover the outlook for the railroad, trucking, air-freight, parcel, marine shipping, airfreight and logistics sectors. Register here.
On the Bloomberg Terminal
- Tough competition | Maersk, the world’s largest container carrier, could lose that position in 2021 as capital discipline takes preference over new orders, which Bloomberg Intelligence expects to bode well for longer-term profitability. MSC, CMA CGM and Cosco are unlikely to follow Maersk’s strategy and will keep ordering ships to narrow the capacity gap.
- Taper risks | It wouldn’t take much to knock the U.S. recovery off course and send Fed policy makers back to the drawing board, with sustained supply-chain snarls among candidates to do this, Bloomberg Economics says.
- Use the AHOY function to track global commodities trade flows.
- Click HERE for automated stories about supply chains.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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