Finimize - 🇬🇧 Oil's well in Britain

What’s going on here?

Data showed that China’s economy is still in hot water – but government stimulus measures could help soup things up.

What does this mean?

China’s economy has been as weak as water of late, and it seems that wishy-washy energy has spilled into the second half of the year too. After all, with demand still on shaky ground, it’s no surprise that companies are playing it safe when it comes to production. And that might explain why the manufacturing sector shrank again in July, though not as much as the number-crunchers thought it would. And while services and construction were still in growth territory, they actually fell short of expectations. Don’t despair just yet, though: the government has announced a slew of measures to boost consumption and lend a helping hand to a range of industries, from real estate to automobiles and services.

Why should I care?

For markets: Taking stock of the situation.

Authorities are taking steps to put that talk into practice, and that’s warming investor sentiment – with Chinese stocks in Hong Kong on track for their best month since January, and inflows into Chinese stocks back in the black. As long as policymakers keep the support coming, this could mark the start of a market revival. Some analysts reckon that while there will be some turbulence, the dips should get progressively higher. After all, China isn’t grappling with rampant inflation like its Western counterparts, and valuations are discounted heavily compared to other major markets.

The bigger picture: Weathering the (literal) storm.

In the short term, China’s extreme weather is set to throw a wrench in the works, stimulus or no stimulus. With heatwaves and floods playing havoc with infrastructure and logistics, production is likely to take a hit. And when one of the fiercest storms in years has Beijing residents hunkering down indoors, it’s clear that demand isn’t exactly going to be booming.

What’s going on here?

The UK’s polishing its oil and gas industry to a high shine – but not everyone’s cheering.

What does this mean?

Ever since Russia’s Ukraine invasion sparked an oil and gas crisis, energy security has been a hot topic. The US has already poured vast sums into it – and now the UK’s doing its bit, announcing plans for new licenses for oil and gas production in the North Sea. Green advocates aren’t thrilled, but the government insists it’s a step towards its 2050 net-zero emissions goal. See, even when that milestone is hit, the UK will still source a quarter of its energy from oil and gas – and the government argues that homegrown energy is better (and cheaper) than imports. To sweeten the deal for the eco-conscious, the UK’s also backing two new carbon capture projects and reaffirming its commitment to ban new diesel and petrol car sales by 2030.

Why should I care?

The bigger picture: Elective affinities.

With an election potentially looming next year, the ruling Conservatives are fine-tuning their policies, including their stance on energy. After all, the party’s sole recent victory in local special elections was chalked up to voter opposition to pricey green policies, which threaten to squeeze household finances even tighter. So now the government’s likely hoping a more balanced approach – including cheaper energy and job creation – will keep the opposing Labour Party at bay.

Zooming out: Capturing carbon – or just capturing the imagination.

Even with a renewable energy boom, hitting net-zero will depend on capturing emissions from hard-to-decarbonize activities like cement production. That’s where carbon capture technology comes in – but it’s not without its hurdles: the tech’s seriously expensive and yet to be proven at scale. And Greenpeace has even warned that leaning on this unproven tech could serve as an excuse to continue burning fossil fuels, rather than shifting to renewables.