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The Caixin services purchasing managers index came in at 51.5 in November, edging down from 52.0 in October

A private gauge of China’s services activity suggests that the sector has continued to expand, with firms’ optimism at a seven-month high as Beijing’s policy support boosted market confidence.

The Caixin services purchasing managers index came in at 51.5 in November, edging down from 52.0 in October but continuing to signal growth for a 23rd consecutive month, said Caixin Media Co. and S&P Global on Wednesday.

The index has remained above the 50 mark that separates contraction from expansion since January 2023.

Both supply and demand in the sector continued to grow, but at a marginally slower pace, according to Caixin. Business activity and total new orders followed suit, while overseas demand growth decelerated for a second straight month, the data indicated.

Employment in the services sector grew for a third consecutive month in November, but was limited despite continued increases in total new orders.

As Beijing’s more aggressive stimulus efforts start to kick in, sentiment among service providers has improved markedly, with the gauge for future expectations rising for a second month.

“Service providers generally expressed confidence in market improvement amid policy support, although some were concerned about the future trade environment,” said Wang Zhe, senior economist at Caixin Insight Group.

Possible tariff hikes from the U.S. under a second Trump administration have worried corporate China, fueling hopes of more policy support from Beijing next year as domestic challenges including a protracted property-market slump continue to weigh on economic growth.

“The structural and cyclical pressures facing the economy are expected to continue, coupled with the likelihood of continued accumulation of external uncertainties, which requires sufficient policy buffers,” said Wang.

Wednesday’s readings are in line with the official gauge released previously. China’s official nonmanufacturing PMI, which covers both service and construction activity, fell to 50.0 in November from 50.2 in October. The subindex tracking service activity stayed unchanged at 50.1, suggesting continued expansion.

Both the official and Caixin PMI readings for the manufacturing sector came in stronger in November, pointing to a solid burst of activity, which may have been aided in part by the front-loading of shipments ahead of potential U.S. tariffs.

Overall, the surveys suggest that the Chinese economy continued to regain momentum in November, Capital Economics said in a note.

Its average of the official and Caixin composite PMIs touched a five-month high for November, consistent with its expectation for an acceleration in on-quarter gross domestic product growth this quarter, economist Gabriel Ng said.

However, the boost from policy support is likely to be short-lived, Ng said, expecting foreign protectionism and domestic structural problems to weigh on growth over the coming years.

EDF to keep 4 UK nuclear power stations open longer than planned

Latest extensions to plants’ working lives could see some sites keep running into next decade

French state-owned energy giant EDF will keep four ageing nuclear power stations in Britain open for longer than planned, in a boost to the UK’s energy security.

The company said two stations currently due to close in March 2026 — Hartlepool and Heysham 1 — will now remain online until March 2027, while Heysham 2 and Torness, that were scheduled to close in March 2028, will stay open until March 2030. 

The plants, three in northern England and one in southern Scotland, were built in the 1980s and were originally meant to close in 2023, but their working lives have already been extended once. 

The latest extension will help make up for the delay to the Hinkley Point C power plant that EDF is building in Somerset. It is currently due to start generating in 2029 at the earliest, four years later than its original date.

The government needs to find ways to meet rising demand for low-carbon power as part of the push to cut carbon emissions. The government of Prime Minister Sir Keir Starmer is aiming to decarbonise the UK’s electricity system by 2030.

In a report last month on how this goal could be reached, the government-owned National Energy System Operator (NESO) said it assumed at least one of the four nuclear power plants would still be available in 2030. 

Under the new timeline, all four will have closed by March 2030, but EDF’s ambition is to keep generation running for longer depending on plant inspections and regulatory oversight.

The new dates represent the “most likely” view of how long the stations would stay open, the company added, though it cautioned there was “a risk” they could close sooner. It announced the move on Tuesday following a board meeting in Paris. 

Mark Hartley, managing director of EDF’s nuclear operations, said the company had invested about £8bn in its British nuclear fleet since 2009, and planned to invest a further £1.3bn between 2025 and 2027.

The four advanced gas-cooled reactors are among five nuclear power plants still running in the UK after several closures over the past few years due to their age.

The fifth, Sizewell B in Suffolk, a pressurised water reactor, started generating in 1995. It is due to close in 2035, but could be extended for another 20 years.

Nuclear power accounted for around 14 per cent of the UK’s electricity generation last year, down from about 20 per cent in 2013, according to UK government figures. 

But despite efforts to replace dwindling capacity, Hinkley Point C is the only new nuclear power plant currently being built in Britain.

EDF and the UK government have yet to take a final investment decision on a second planned plant, Sizewell C, as they try to attract external investors to the project. 

Responding to EDF’s announcement, Fintan Slye, chief executive of NESO, said nuclear power “has an important role to play” in the electricity system.

Ed Miliband, the secretary of state for energy, said the extensions were “a win for our energy independence”.  

China’s ties with Saudi Arabia buoyed by green tech

Warming relations between Xi Jinping and Saudi crown prince complicate outlook for Trump administration

Chinese exports and investment are pouring into Saudi Arabia as the kingdom’s demand for green tech deepens a relationship once defined by oil sales and challenges business ties with its traditional western partners.

Bilateral trade has for many years been almost totally dominated by Chinese purchases of Saudi oil. But now, Chinese exports to Saudi Arabia are tracking towards a record high, at $40.2bn in the first 10 months of the year, up from $34.9bn for the same period last year, according to Chinese government data.

China has also become the kingdom’s largest source of greenfield foreign direct investment, with investments from 2021 to October this year totalling $21.6bn, about a third of which were in clean technologies such as batteries, solar and wind, according to investments tracked by fDi Markets. This compares with $12.5bn from the US, the next highest.

The figures herald a sea change, with China eclipsing the kingdom’s traditional investment partners, the US and France. Many of the Chinese deals have yet to show up in official Saudi figures, indicating the capital has yet to be deployed.

A “major shift” was under way, said Camille Lons, an expert on China and the Middle East and policy fellow at the European Council on Foreign Relations.

“When the Saudis look at the map of the world, they increasingly see themselves as this ‘middle power’,” she said. “They try to be less dependent on the US. Deepening their relationship with China is a way to do exactly that.”

Stronger Saudi-China ties could complicate the outlook for the incoming Trump administration in any dealings with Riyadh, said Lons. “If Trump decides not to deliver what they really want in terms of security guarantees, tech co-operation, they can agitate with the Chinese ‘card’, saying ‘we have other options’.”

Analysts said the deepening economic co-operation followed high-level political and diplomatic efforts, including Chinese President Xi Jinping’s late 2022 trip to Riyadh, his talks with Saudi Arabia’s Crown Prince Mohammed bin Salman and Beijing’s intervention in March 2023 to help restore ties between Saudi Arabia and Iran.

“The [2022] meeting of the two heads of government basically triggered meetings down the chain,” said Charles Chang, greater China lead for corporate ratings at S&P Global Ratings. “The relationship between China and Saudi Arabia began to diversify very rapidly.”

For Xi, trade with Saudi Arabia is strategically important to deepen China’s influence outside the US and Europe, where it faces rising threats of sanctions and tariffs, analysts said. China’s focus on trade and investment also marks a change from the debt-led Belt and Road infrastructure plan.

For Prince Mohammed, the kingdom’s day-to-day ruler who co-chairs the China-Saudi Arabia High-Level Joint Committee, Chinese investment supports his efforts in achieving his so-called Vision 2030 modernisation drive, designed to diversify the economy, transition to cleaner energy and project the kingdom on to the global stage.

Riyadh has so far been careful to balance relations with the US, its most important military partner, and has limited trade with China in sensitive industries such as defence and artificial intelligence, according to Saudi officials.

Saudi investment in China’s oil and gas industry as well as Chinese investment in the Saudi renewable energy sector is powering the expansion of trade. Ken Liu, head of China renewables, utilities and energy research at UBS, forecasts $432bn in additional energy-related annual trade between the Middle East and China by 2030.

There has been a flurry of new deals in recent months highlighting the deepening ties. Backed by Saudi investment, ageing Chinese oil refineries are diversifying towards more downstream petrochemical products including diesel, methanol and ammonia.

Saudi Aramco in September expanded its Chinese refinery and chemical partnerships with Rongsheng and Hengli, two of China’s biggest petrochemical groups. Saudi Aramco also announced a plan with China National Building Material Group to build clean tech manufacturing facilities in Saudi Arabia.

Investment group EWPartners, which is backed by the kingdom’s sovereign wealth fund PIF, in mid-October announced a $2bn plan for a so-called KSA-Sino special economic zone at Riyadh’s King Salman International Airport and for more Chinese companies to localise manufacturing there.

A bid to better integrate the two countries’ financial systems is also gaining traction. In June, China approved exchange traded funds that track the performance of the FTSE Saudi Arabia Index, allowing Chinese investors to gain exposure to top-tier Saudi stocks, including Saudi Aramco and Saudi National Bank. In return, Saudi Arabia’s Capital Market Authority allowed the listing of the country’s inaugural ETF tracking Hong Kong-listed Chinese stocks.

In August, PIF signed memorandums of understanding worth a total of $50bn with six of China’s biggest state-owned banks. And in November, China picked Saudi Arabia as the venue for its first sale of US dollar sovereign bonds in three years.

Beijing is also trying to leverage deeper Saudi ties to promote broader international use of the Chinese currency. The kingdom, like most other international oil producers, has long been reluctant to accept payment in renminbi because of a limited ability to use the proceeds.

Still, in a research note, S&P analysts pointed out that while meaningful renminbi-denominated oil trading between China and Saudi Arabia might still be decades away, the more comprehensive Saudi-China ties could over time support the so-called petroyuan.

Ultimately, said Chang of S&P, the ground was prepared for the relationship to increasingly “go beyond oil”. “If Saudi Arabia looks for countries that have been able to industrialise in a centrally planned way very rapidly, China is probably the best example. That puts the long-term interests of the two countries in alignment.”

Activist investor targets HarbourVest investment trust’s 45% discount

London-based Metage Capital says FTSE 250 trust not delivering value for its shareholders

An activist investor, which successfully campaigned to overhaul the management of the Hipgnosis Song Fund last year, has taken aim at a FTSE 250 investment trust, claiming it is not delivering value for its shareholders. 

London-based Metage Capital has written to the board of HarbourVest Global Private Equity Limited (HVPE), demanding it revamp its strategy to close the share price’s wide 45 per cent discount to net asset value (NAV) at the end of October.

Metage argued that since chair Ed Warner took over in July 2020 the performance of the trust’s shares has trailed well behind the value of its underlying investments. The percentage difference between the value of its NAV per share and the investment trust’s share price has doubled. Closing this gap would be worth £1.3bn to shareholders.

Among Metage’s proposals are that HVPE spend more available cash on share buybacks. The activist points to a system used by the open-ended investment vehicle HarbourVest Global Private Solution SICAV SA (HGPS), designed for European markets, which launched in January 2023.

“Metage recommends that the board brings forward formal proposals to align the investment portfolio of HVPE with that of HGPS and institutes quarterly tenders for 5 per cent of the company’s outstanding shares,” wrote Tom Sharp, Metage’s chief investment officer, in the letter.

HGPS has already raised assets under management of $1.3bn as of September.

HVPE would not comment on the Metage letter. Its share price has done well for shareholders over a long period. The investment company’s NAV per share growth over the past 10 years of 242 per cent has far outpaced the 151 per cent of the FTSE All-World Total Return index.

Although the majority of private equity investment trusts trade at market prices well below their net asset values, HVPE has trailed this group. Against its peer group of listed private equity trusts, HVPE’s differential has expanded in the last three years to 12 per cent from 3 per cent, according to data from Investec.

HVPE has made efforts to close the gap with net asset value, including buying back its shares. Since the investment company started buying back shares in September 2022, it has acquired over $120mn of shares, according to the company. HVPE has a market value of £1.85bn.

Metage would like to see more cash used for buybacks and less for new private investments. HVPE has also bolstered its debt to prepare for a surge in merger and acquisition activity in the coming year. It believes the investment trust will have more opportunities to sell some of its portfolio holdings and distribute profits to its shareholders.

Some analysts see this debt level as high. “There has been a material increase in the risk profile, with the [debt relative to NAV] having increased from 6.8 per cent to 20.6 per cent in the past two years,” the highest in the sector, according to Alan Brierley at Investec. Metage disagrees with adding to this debt.

Activist investors have taken more interest in the UK investment trust sector in the past two years. Elliott Management of the US took a 5 per cent stake in Scottish Mortgage Trust, managed by Baillie Gifford, using derivatives earlier this year.

Another US fund, Saba Capital, has targeted investment trusts. Saba raised its stake this month to 29 per cent in the European Smaller Companies Trust after demanding buybacks worth as much as half of the outstanding shares.

Metage holds 342,849 shares of HVPE and another 330,000 using a share swap.

Claridge’s owner to triple its number of hotels as luxury travel booms

Maybourne wants to create a portfolio of properties, from Paris to New York and Dubai, in a decade

Claridge’s owner Maybourne is planning to nearly triple its number of hotels in the next decade, expanding into Paris, New York, Miami and Dubai to tap into booming demand for luxury travel.

The company, which owns and operates six hotels — four in London and one each in Beverly Hills and the French Riviera — is looking to have 15 to 17 by 2035, according to co-chief executives Gianluca Muzzi and Marc Socker. Half of these would be management contract only, rather than under Maybourne’s ownership.

“Before, [our focus] was mostly around the hotels . . . to preserve their identity, but what we are doing now is to establish and strengthen the presence of the management company, Maybourne itself,” Muzzi told the Financial Times in an interview at the Emory, the group’s new London hotel.

Maybourne, which is ultimately owned by Qatari royals Sheikh Hamad bin Jassim bin Jaber al-Thani and Sheikh Hamad bin Khalifa al-Thani, will open a hotel and serviced apartments in Saint-Germain-des-Prés in Paris, renovating the former Defence Ministry building. Muzzi said it would be “another historical landmark hotel, similar to the Connaught and Claridge’s in London”.

It is also planning another UK hotel in a historic building in Hampshire, while Dubai and New York hotels will be newly built. “We would end up being, probably by the end of the decade, at maybe 15, 16 or 17 hotels . . . mainly in urban gateway cities,” said Socker.

He added there were also plans to expand into Asia further into the future, in places such as Singapore and Tokyo.

The expansion by the owner of some of London’s best known hotels comes as luxury travel continues to benefit from a post-pandemic boom.

In London, average daily room rates for luxury hotels rose by 42 per cent between 2019 and 2023, compared with a 27 per cent increase for the whole market, according to real estate company CBRE.

In Paris and Milan, rates increased by 42 and 60 per cent respectively, compared with 37 per cent growth for all hotels in these cities.

“Given the golden age of travel and [that] people are looking for new experiences, we want to create a strong management company and a strong lifestyle brand,” Socker said. “Maybourne before was more a [business to business] brand. Now we’re coming out with the consumer brand, and are prepared to enter into these new commercial ventures.”

Socker said that Maybourne would launch a “membership community” next year. This would give exclusive access to some services and parts of its hotels. It will also license its spa and wellness brand to be operated elsewhere.

Maybourne has been in expansion mode following the pandemic. The Emory, its first London hotel in 50 years, added to its two international properties, the Maybourne Beverly Hills and the Maybourne Riviera on the Côte d’Azur.

The company, whose Qatari owner has been in a dispute with Irish property developer and previous shareholder Paddy McKillen over the value of a stake in the business, reported turnover of £29.1mn for the year ended December 2023, up 40 per cent year-on-year. Its pre-tax losses were £11.1mn, widening from £6.1mn the previous year, owing to interest expenses from intercompany loans. Claridge’s recorded a pre-tax profit of £7.2mn for 2023.