Multinationals fret of weak demand in China

Good morning. Today we’re covering:

• Hindenburg’s allegations against the chair of India’s market regulator

• The Australian wine sector’s worst-ever crisis

• Scandal at the world’s oldest bank

But first, multinational groups from Volkswagen to L’Oréal have sounded the alarm about demand in China, with the effects of a slowing economy exacerbated by shrinking appetite for foreign brands and intensifying domestic competition.

Weak demand in China has been a feature of half-year earnings across much of the global consumer goods sector.

L’Oréal estimated that sales growth in the country fell by about 2 to 3 per cent in the first half of the year, while VW-owned Porsche said Chinese sales in the six months to June had dropped by a third on the previous year.

China’s heavily indebted real estate industry has been in a prolonged slowdown since late 2021, which has sapped confidence, as well as demand for consumer goods. In the wake of the pandemic, many businesses exposed to China — local and overseas — expected consumer-focused stimulus to boost growth. But that has not happened.

“The only part of the world where consumer confidence remains very low is China,” said L’Oréal chief executive Nicolas Hieronimus. “The job market is not healthy and many of the Chinese have put their savings into real estate, which has lost a lot of its value.”

Here’s what I’m keeping tabs on today:

• Economic data: India reports CPI inflation figures for July.

• Reports: Opec publishes its August oil market report.

• Holidays: Financial markets are closed in Japan (Mountain Day) and Thailand (Queen Mother’s Birthday).

Five more top stories

1. The chair of India’s capital markets regulator held stakes in an offshore fund structure used by Vinod Adani, holding the agency back in investigating fraud charges against the powerful eponymous conglomerate run by his billionaire brother, according to fresh allegations levelled by US short seller Hindenburg Research.

2. More Americans trust Kamala Harris to handle the US economy than Donald Trump, according to a new FT Michigan Ross poll. It is the first monthly poll to show the Democratic presidential candidate leading Trump on the economy since it began tracking voter sentiment on the issue nearly a year ago.

• Trump: The Republican candidate’s campaign has said a number of its internal emails have been hacked, blaming Iran for the breach.

3. Russia has failed to push back Ukrainian troops in the Kursk region despite sending in reinforcements as the incursion enters its sixth day, Ukrainian soldiers involved in its army’s operation told the FT yesterday. Verified videos and photographs show Ukrainian troops have advanced 30km inside Russia since the operation began last Tuesday.

4. The Israeli military has ordered tens of thousands of Palestinians to leave shelters in parts of southern Gaza, in preparation for another raid on areas from which it says Hamas fighters are operating. The forced evacuation order comes as the death toll from Saturday’s air strike on a school in Gaza City was confirmed to be at least 80.

5. Indian motorcycle brand Royal Enfield is in the “advanced” stages of developing its first electric bike for a launch next year. Falling costs for electric vehicles has helped the company push into two-wheel EV market, Royal Enfield’s chief executive told the FT.

News in-depth

The Australian wine industry is suffering its worst-ever crisis, winemakers say, as global consumers turn away from the lower-priced “commercial” brands that drove the country’s emergence as a wine powerhouse. The sector endured punitive Chinese tariffs on Australian fine wine in 2020 while a global decline in wine consumption has also hit producers.

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