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ARABIAN POST SPECIAL

Beijing is preparing to roll out limited fiscal and monetary support as China faces weakening growth, dimming export demand and a fragile property sector. Analysts expect modest interest-rate cuts and additional spending, but size and scope will be constrained by a heavy debt burden and local government financing risks.

Official data shows industrial output rose 5.2% year-on-year in August, the slowest since August 2024, while retail sales grew just 3.4%, their weakest since November 2024. Fixed-asset investment across the first eight months of the year is up only 0.5%. Economic indicators like rising unemployment and falling home prices underscore growing domestic stress. Export demand, especially to the United States, has softened sharply.

Finance Minister Lan Fo’an has asserted that China’s debt remains at a “controllable and reasonable level,” while promising further fiscal reform to bolster consumption and investment. Hidden local government debt is being addressed, with over 60% of local government financing vehicles having mitigated their undisclosed obligations. Beijing has issued about 4 trillion yuan in special bonds out of a 6 trillion‐yuan quota allocated under its 2024-2026 framework.

Despite these assurances, fiscal options appear limited. Local governments, heavily dependent on land sales and property development for revenue, are seeing income dwindle amid the property slump. Many of them carry large off-balance-sheet debts, which limit their ability to borrow further without risking financial instability. Analysts warn that fiscal expansion beyond existing special bond quotas could trigger credit risk and undermine monetary policy transmission.

Monetary policy tools are seen as more flexible. The central bank is expected to pursue cuts in policy interest rates and perhaps reduced reserve requirement ratios for banks. Some targeted measures, such as support for housing and subsidised consumer loans, are under discussion. But reliance on monetary easing brings its own challenges—lower rates may offer limited stimulus when private sector demand is weak and households are wary of debt.

The property sector remains a key drag on growth. Unsold homes, delayed or incomplete projects, and tightly controlled borrowing rules for developers all erode confidence and investment. Local governments, deprived of revenue from land sales due to the real-estate slowdown, face pressures both to stabilize the housing market and to reduce their contingent liabilities.

HSBC has opened a dedicated wealth centre in Dubai aimed at serving affluent clients, stepping up efforts to capture a growing share of the UAE’s expanding wealth and asset management sector. It comes as the bank’s Swiss private arm moves to cut ties with over 1,000 wealthy clients from the Middle East under regulatory pressure.

The Dubai centre, housed in HSBC’s flagship Jumeirah branch, will offer Premier and high-net-worth clients access to relationship managers in a specialist space. Dinesh Sharma, HSBC’s head of International Wealth and Premier Banking for Middle East, North Africa and Turkey, said the UAE is among HSBC’s top five global markets, and the investment in infrastructure, people, capabilities and marketing over the next three to four years represents its largest in two decades. Singapore is cited as a model for how the UAE could develop into a global wealth hub.

In parallel, HSBC Private Bank has informed more than 1,000 clients in Saudi Arabia, Lebanon, Egypt and Qatar—many with assets exceeding US$100 million—that it will terminate its relationships with them. The bank is classifying these clients as high risk, following findings by Swiss regulator FINMA that it failed to meet anti-money laundering obligations in past transactions involving politically exposed persons.

HSBC has emphasised its continued commitment to both its Middle East and Swiss wealth business units. Barry O’Byrne, CEO of International Wealth and Premier Banking, maintains that Switzerland remains one of HSBC’s “core wealth hubs.” HSBC is structuring its strategy to grow where it has “a clear competitive advantage.”

The bank notes that personal financial assets in the UAE have surged over the past few years, exceeding US$700 billion, with more than 130,000 millionaires now in the country. Migrants of wealth are drawn by favourable investment policies, tax incentives and regulatory reforms. Regions contributing large shares of incoming wealth include India, other Middle Eastern markets, Russia and the Commonwealth of Independent States, and a growing number from the UK, Europe and China.

HSBC’s move to reduce exposure to high-risk clients comes after FINMA’s rulings in 2024, which identified breaches in anti-money laundering duties in connection with transactions involving politically exposed persons between 2002 and 2015. The regulator prohibited HSBC Private Bank from onboarding new relationships with such individuals until its compliance practices were overhauled. The bank is now working under those rules, winding down existing relationships judged to pose compliance risk.

Hesai Group’s shares surged in their Hong Kong debut, trading above its IPO price after the lidar‐sensor maker raised approximately HK$4.16 billion in its secondary listing.

Trading under code 2525, the stock opened at HK$229.20, about 7.7 per cent above the offer price of HK$212.80. Demand was strong: the international tranche was oversubscribed around 14 times, while the Hong Kong public tranche drew nearly 168.65 times subscription. Six cornerstone investors including HHLR Advisors, Taikang Life, and WT Asset Management committed some US$148 million worth of shares, agreeing to hold them for at least six months.

Hesai’s second quarter performance helped set the stage. Its revenue rose by 54 per cent year-on-year, shipments more than tripled, and the company reported a net profit of roughly RMB 44.1 million, reversing a loss from the year before. These results support its strategy to scale lidar sensor shipments, especially for advanced driver-assistance systems and autonomous driving applications.

A key driver is Hesai’s plan to cut manufacturing costs and selling prices. CEO David Li stated that the company is working to reduce the cost of its sensors dramatically, targeting a price of about US$200 per unit from previous models that sold for tens of thousands of dollars. To assist this, production expansion is underway, and Hesai is also pursuing international customers and counterparties in the autonomous vehicle and robotics sectors.

Geopolitical and regulatory pressures are also shaping Hesai’s approach. The dual listing in Hong Kong while retaining its U. S. listing on Nasdaq reflects efforts to strengthen capital access amid U. S.-China tensions. Hesai had earlier denied accusations of misleading investors over revenue and alleged military links; the company stated its operations are independent and compliant with regulations.

Haitham Al Ghais, Secretary General of the Organization of the Petroleum Exporting Countries, has affirmed that OPEC will remain a pillar of market stability and a critical voice for oil’s role in the world for decades. Delivered to coincide with OPEC’s 65th anniversary, his remarks emphasised the organisation’s long‐standing mission and future direction.

OPEC projects oil demand to reach around 123 million barrels per day by 2050, driven by economic expansion and growing populations. Al Ghais warned that predictions of a near-term decline in relevance or “peak oil” should be viewed with scepticism in light of long‐term demand forecasts and OPEC’s historical resilience.

He noted that oil remains indispensable across many spheres of daily life: transportation, construction, food production and healthcare. Oils and petroleum derivatives, he said, are foundational not just for consumers but for societal and economic prosperity more broadly. Without them, critical infrastructure and supply chains could be severely disrupted.

Al Ghais described OPEC’s foundation in 1960 as a unifying vision for oil-producing nations, asserting sovereign control over production, supporting regular supply to consuming nations, and ensuring a fair return for investors. He reflected on the group’s evolution, including its expansion and the formation of the OPEC+ framework in 2016, which he said strengthened its ability to respond to global shocks such as those caused by the COVID-19 pandemic.

The 65-year mark, he argued, is not simply an anniversary but a reaffirmation of core objectives: balancing producer and consumer interests; dialogue and cooperation with non-OPEC producers; and emphasizing a holistic, multi-technology approach to energy security and poverty alleviation in developing regions.

He also stressed that energy security is “inconceivable without oil,” especially for societies coping with energy poverty. For OPEC, the challenge ahead involves ensuring that growth in demand is met “in a sustainable way” that incorporates environmental, social and economic considerations, while keeping market stabilisation efforts front and centre.

Singapore is gearing up to reveal a comprehensive “value unlock” package by the end of the year aimed at reviving the nation’s stock market, regulators said. Key initiatives will likely build on the Equity Market Development Programme, stronger listing incentives, streamlined regulations and enhanced shareholder rights, intended to improve liquidity, listings and investor confidence.

The EQDP, a S$5 billion programme announced earlier in the year, will see its first tranche of S$1.1 billion allocated to three asset managers—Avanda Investment Management, JP Morgan Asset Management and Fullerton Fund Management—to invest in Singapore-listed equities. These selections were made partly based on alignment with objectives to broaden participation beyond large-cap stocks and strengthen asset-management capabilities.

Alongside co-investment funding, tax incentives are being offered for primary and secondary listings. A 20 per cent corporate income tax rebate applies for qualifying new primary listings, and a 10 per cent rebate for secondary ones. There is also pressure to ease regulatory requirements around prospectus disclosures, shorten IPO-approval timelines, and allow earlier investor outreach in IPOs.

Regulatory reforms under consideration include reducing the profit requirement for Mainboard listings, aligning secondary listing rules with international disclosure standards, and possibly removing the financial watch-list mechanism for loss-making firms while increasing the role of disclosure over prescriptive reporting.

Market analysts welcome the measures but caution that they may not address deeper structural weaknesses. Singapore’s exchange has seen more delistings than IPOs in many months, a low number of growth-stage listings, a prevalence of companies with weak profitability, and low free floats among many issued shares. These factors have limited trading depth and made it harder for mid-caps to attract institutional investors.

Insolvency reform is also part of the picture. Proposed changes to Singapore’s Companies Act would broaden the so-called cross-class “cram-down” powers, letting restructuring plans be imposed even over dissenting shareholders in certain cases. The proposals include streamlining processes for issuing new shares or disposing of assets during restructuring, and revising compensation frameworks for restructuring managers.

Regulatory agencies such as the Monetary Authority of Singapore, Singapore Exchange Regulation, and the Equities Market Review Group are all involved in shaping the yet-to-be-announced package. Public consultations on many proposals have taken place or are underway, especially around IPO rules, listing thresholds, and listing admission criteria.