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ON Holding AG’s shares surged after the Swiss sneaker maker lifted its sales and earnings forecasts following an unexpectedly strong second quarter that saw buyers in Europe and Asia snap up its high-priced footwear.

The Roger Federer-backed company now sees revenue growing at least 31% on a constant currency basis this financial year, above analyst estimates and three percentage points higher than the previous target. It translates to net sales of 2.91 billion Swiss francs ($3.6 billion) at current spot rates, On said Tuesday.

Zurich-based On has become one of the top performers in the sneaker world, expanding from its core running shoes to other areas like tennis, training and apparel. The brand has grown rapidly since its 2010 founding, eating into market share of bigger players including Nike Inc. and Puma SE.

The company’s shares rose as much as 14% in early trading in New York. That was the most on an intraday basis since April 9, a time of market volatility as traders reacted to US trade tariffs that have weighed on the sneaker sector.

On expects its gross profit margin to reach a range of 60.5% to 61% for the year, slightly up from its previous target. It cited better-than-expected growth at its expanding network of company-owned stores and its e-commerce channels.

“The energy everywhere is so high,” Chief Executive Officer Martin Hoffmann said in an interview. “We are in a really strong position and the whole ecosystem is supporting our aspirations.”

More Stores

On expects to open another five to 10 stores later this year, including one in its home of Zurich, another in Palo Alto, California, and a couple of locations in South Korea, Hoffmann said.  

Second-quarter sales rose more than analysts expected to 749 million Swiss francs, up 38% from a year ago in constant currency terms. The gross profit margin reached 61.5%, also better than analysts’ estimates. 

Still, On unexpectedly swung to a loss of 40.9 million Swiss francs in the second quarter, driven by currency fluctuations as the dollar weakened.

On has the most expensive running shoes in the industry on average and began edging prices higher in the US last month, especially on lifestyle products. 

That approach hasn’t scared off consumers so far, with strong early demand for On’s new highly cushioned Cloudsurfer Max model which came to market in July, according to Hoffmann.

On’s sales, margin and outlook boost “show that enduring robust demand and innovations are driving strong full-price sell-through,” Bloomberg Intelligence analyst Abigail Gilmartin said in a note.

Revenue in the second quarter jumped 43% in Europe, the Middle East and Africa and 101% in the Asia-Pacific region, significantly outperforming estimates. Growth of about 17% in the Americas was just shy of expectations, though Hoffmann said demand in the US remained “exceptionally strong.”

On’s new store in Singapore generated some of the best opening-weekend business that the company has seen anywhere in the world, Hoffmann said.

“The demand there is so strong,” he said of the Asia-Pacific region. “Much stronger than what we are willing to supply to the market.” –BLOOMBERG

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GENEVA — Foreign ministers from 24 countries and senior European Union (EU) officials on Tuesday warned that the humanitarian crisis in Gaza has reached “unimaginable levels” and urged Israel to lift restrictions on aid and international non-governmental organisations (NGOs) operating in the territory.

“The humanitarian suffering in Gaza has reached unimaginable levels. Famine is unfolding before our eyes. Urgent action is needed now to halt and reverse starvation.

“Humanitarian space must be protected, and aid should never be politicised,” they said in a joint statement issued by the EU, Anadolu Ajansi (AA) reported.

The signatories included the foreign ministers of Australia, Belgium, Canada, Cyprus, Denmark, Estonia, Finland, France, Greece, Iceland, Ireland, Japan, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom (UK), as well as top EU officials.

They warned that “due to restrictive new registration requirements, essential international NGOs may be forced to leave the occupied Palestinian territories imminently, which would worsen the humanitarian situation still further.”

“We call on the government of Israel to provide authorisation for all international NGO aid shipments and to unblock essential humanitarian actors from operating. Immediate, permanent and concrete steps must be taken to facilitate safe, large-scale access for the UN, international NGOs and humanitarian partners,” the statement said.

The statement urged that “all crossings and routes must be used to allow a flood of aid into Gaza, including food, nutrition supplies, shelter, fuel, clean water, medicine and medical equipment. Lethal force must not be used at distribution sites, and civilians, humanitarians and medical workers must be protected.”

The ministers and EU officials also expressed appreciation for ongoing mediation efforts.

“We are grateful to the US, Qatar and Egypt for their efforts in pushing for a ceasefire and pursuing peace. We need a ceasefire that can end the war, for hostages to be released and aid to enter Gaza by land unhindered,” they said. — BERNAMA-AA

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ROBUST demand growth from data centers is expected to accelerate a potential supply shortage in the global copper market in the second half of this decade, with the shortfall likely reaching 6 million tons by 2035, according to BloombergNEF.

More copper is needed in the buildout of artificial intelligence data centers just as supply of the metal — a key component in everything from plumbing to power cables to electric vehicles — is constrained due to years of underinvestment, BNEF analysts said in a report Tuesday.

“AI capacity additions are adding pressure to an already tight market,” the analysts said. “While use of the metal in sectors like power transmission and wind energy is set to almost double by 2035, supply is expanding more slowly.”

Copper demand from new data centers is set to average around 400,000 metric tons a year over the next decade and peak at 572,000 tons in 2028, according to the report. 

The cumulative volume of copper in use in data centers over the next decade is on track to exceed 4.3 million tons. Meanwhile, supply is likely to reach 29 million tons by 2035, which means that it still falls 6 million tons short of forecast demand, the report said.

Copper could account for nearly 6% of the capital expenditure of a data center project, with the metal’s prices likely peaking at $13,500 by 2028, according to the report. –BLOOMBERG

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CHINA said it will cease engagement with Czech President Petr Pavel over his meeting with the Dalai Lama, escalating diplomatic tensions between the two countries.

Pavel met the 14th Dalai Lama in India in July despite strong opposition from Beijing, which considers the Tibetan spiritual leader a separatist. The Czech presidential office said the meeting with the Dalai Lama, who celebrated his 90th birthday last month, took place in a private capacity.

“China strongly deplores and firmly opposes this, and has lodged serious protests with the Czech side,” Beijing’s Foreign Ministry spokesperson Lin Jian said in written remarks on Tuesday. “In light of the severity of Pavel’s provocative action, China decides to cease all engagement with him.”

The central European country’s vocal criticism of human-rights violations in China, as well as active diplomatic and business ties with Taiwan, have repeatedly angered the government in Beijing. In May, Czechs blamed state-linked Chinese hackers for cyberattack against Foreign Ministry’s unclassified networks. The Chinese Embassy in Prague then rejected the allegations as “unsubstantiated.”

Pavel, a former high-ranking Czech military and NATO official, won the presidency two years ago. He replaced Milos Zeman, a strong advocate for closer economic ties with China.

The Dalai Lama had a close relationship with the first Czech post-communist President Vaclav Havel, who repeatedly hosted him in Prague. –BLOOMBERG

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THE revenue-for-exports deal between the US government and two of the world’s biggest chipmakers opens a new front in a trading regime turned upside down by Donald Trump.

Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay the US government 15% of revenue from some chip sales to China. The chips — Nvidia’s H20 AI accelerator and AMD’s MI308 chips — were earlier banned by the Trump administration and require export licenses to sell. 

“To call this unusual or unprecedented would be a staggering understatement,” said Stephen Olson, a former US trade negotiator now with the Singapore-based ISEAS — Yusof Ishak Institute. “What we are seeing is in effect the monetization of US trade policy in which US companies must pay the US government for permission to export. If that’s the case, we’ve entered into a new and dangerous world.”

The chip-payment arrangement may face legal challenges because it could be construed as an export tax, something that’s not allowed under the constitution, trade experts said. The proposal is the latest direct government intervention into business and finance since Trump returned to the Oval Office in January. As well as a chaotic tariff campaign and persistent criticism of a sitting Federal Reserve chairman, Trump has used his Truth Social platform for everything from calling on CEOs to resign to offering commentary on corporate advertising campaigns. 

Nvidia’s sales will also face hurdles in China, as Beijing has urged local companies to avoid using its H20 processors, particularly for government-related purposes, as it pressures them to purchase domestic chips instead.

Trump’s transactional policy approach saw him approve the sale of United States Steel Corp. to Japan’s Nippon Steel Corp. in a $14.1 billion deal that included caveats such as agreeing to US national security rules and a “golden share” for the US government. Japan, South Korea and the European Union all pledged to invest billions in the US, helping secure tariff rates of 15%, while companies such as Apple Inc. have also skirted levies by promising to invest hundreds of billions of dollars.

Trump signaled on Monday that he’d be open to allowing Nvidia to sell a scaled-back version of its most advanced AI chip to China. Trump said he would consider a deal that would allow Nvidia to ship its Blackwell chips to China if the company could design it to be less advanced. 

“It’s possible I’d make a deal” on a “somewhat enhanced — in a negative way — Blackwell” processor, he said in a briefing with reporters. “In other words, take 30% to 50% off of it.”

The Nvidia and AMD revenue-sharing deals may now prompt the White House to target other industries and goods, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. 

“The sky is the limit,” she said. “You could come up with all sorts of company-specific, country-specific combinations that would say, ‘No one else can trade, but if you pay us directly, then you get the ability to trade.’”

Although Nvidia and AMD agreed to the terms, there are questions about the legality of the agreement, Elms said. The arrangement looks like an export tax, which is forbidden by the US Constitution.

The Trump administration is already in the midst of a lawsuit related to his use of the International Emergency Economic Powers Act to levy what he called “reciprocal” tariffs on the world. On Friday, Trump warned of a “GREAT DEPRESSION” if US courts ruled that his tariffs were illegal. 

Chips are at the heart of the US-China battle to dominate industries of the future such as AI and automation. The Biden administration restricted the sale of advanced chips to China, prompting Nvidia to develop the H20 to comply with those restrictions. Trump administration officials tightened export controls in April by barring Nvidia from selling the chips without a permit. 

Last month, however, the White House decided to allow Nvidia and AMD to resume sales of chips designed specifically for the Chinese market, which are several rungs below the most advanced artificial intelligence accelerators. Commerce Secretary Howard Lutnick said the administration wanted Chinese developers “addicted” to American technology.

China has grown increasingly hostile to the idea of Chinese firms deploying the H20, particularly after the US called for the chips to be installed with tracking technology to better enforce export controls. Yuyuantantian, a social media account affiliated with state-run China Central Television that regularly signals Beijing’s thinking about trade, on Sunday slammed the chip’s supposed security vulnerabilities and inefficiency.

Still, Chinese companies could use the H20s because domestic firms can’t produce enough AI chips to meet demand. That potentially provides an opportunity for Nvidia and AMD to sell more — and now for the US government to earn additional revenue as well. 

Trump extended a pause of sky-high tariffs on Chinese goods for another 90 days into early November, stabilizing trade ties between the world’s two largest economies.

“There’s clearly a shift by the administration to take a lighter national security stance as these negotiations are ongoing,” said Drew DeLong, lead in geopolitical dynamics practice at Kearney, a global strategy and management consulting firm. 

While the US has intervened before, including by taking stakes in private companies after the 2008 financial crisis, a similar deal like the one struck with Nvidia and AMD is hard to remember and — without proper oversight — could lead to a “crony capitalism state,” according to Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington. 

“It represents a huge shift in the way the American economy is supposed to operate,” Kennedy said. “It won’t make anyone happy except maybe the Chinese, who will get their chips and watch the US political system go through gyration and domestic tensions.” –BLOOMBERG

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INDIA and China are set to resume direct flight connections as soon as next month, people familiar with the negotiations said, as the world’s two most populous countries seek to reset their political ties. 

Airlines in India have been asked by the government to prepare flights to China at short notice, with a possible official announcement as soon as the Shanghai Cooperation Organisation summit at the end of August in China, said the people, asking not to be identified because the negotiations are ongoing.

Passenger flights between India and China were suspended after the Covid-19 pandemic, forcing travelers from the two neighboring countries to pass through hubs like through Hong Kong or Singapore. The renewed push to rebuild a direct link comes at a time when India’s relations with the US have come under considerable strain, after US President Donald Trump doubled tariffs on Indian goods to 50% as a penalty for its purchases of Russian oil. 

On Monday, Air India announced it would suspend its direct link to Washington, DC, next month, citing “operational factors” as the reason. The carrier still flies to New York and San Francisco.

Diplomatic ties between the two Asian heavyweights hit a low point in 2020, when border clashes left 20 Indian fighters and an unknown number of Chinese soldiers dead. India recently allowed tourist visas for Chinese nationals after years of curbs. Prime Minister Narendra Modi will attend the SCO summit in Tianjin starting Aug. 31, where he may meet Chinese President Xi Jinping.

India’s aviation ministry, the Directorate General of Civil Aviation, and the country’s press information bureau did not respond to requests for comment. The exact timing of any flight resumption remains fluid, and talks might still hit a snag, the people cautioned.

Before the suspension, Indian carriers including Air India and IndiGo, as well as Chinese airlines such as Air China, China Southern and China Eastern ran services between key cities of the two countries. A resumption is likely to see both Air India and IndiGo restarting flights to China, the people said.

Air India and IndiGo did not respond to emails seeking comment.

India and China had first agreed in January to resume direct flights, before relations between the two countries cooled again amid India’s limited war with Pakistan. The two countries then announced a takeup of direct connections once more in June, though without any visible progress. 

Plans to rebuild direct links only gained pace in the past two weeks, and the airlines involved have also been informed about the proposal, the people said. 

The number of direct flights between the US and China has dwindled by nearly three-quarters since 2019 to a scheduled 9,726 this year, based on data from Cirium. Airlines plan to offer just more than 3 million seats on such flights in 2025, up 15% from 2024 levels. –BLOOMBERG

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EIGHT of Taiwan’s southern and eastern regional governments decided to shut down schools and offices because of typhoon Podul, which is expected to reach the island on Wednesday, bringing heavy rain and damaging wind gusts.

The typhoon was 460 kilometers (286 miles) southeast of Taitung City, packing top sustained winds of 126 kilometers an hour as of 7 p.m., according to Taiwan’s Central Weather Administration. The relatively compact system is set to strengthen and expand its wind field slightly as it moves toward land, the agency added. 

Local governments including Kaohsiung, Tainan, and six other cities and counties announced late Tuesday that schools and offices will be closed on Wednesday, while Taipei will be operating normally, including financial markets. 

Authorities issued a land warning covering southern and eastern parts of Taiwan — including Kaohsiung and Tainan, where Taiwan Semiconductor Manufacturing Co. has plants — Tuesday afternoon, adding to a sea warning issued earlier in the day.

Podul is forecast to cross the southeastern coast, but its exact path may become “erratic” prior to coming ashore as the system interacts with Taiwan’s mountains, according to the US Navy’s Joint Typhoon Warning Center. 

“Irregular track motion may occur immediately prior to landfall,” the center said in a bulletin on Monday. Taiwan’s eastern coast is “known for track deflection” that has historically “resulted in unusual looping and curving of tropical cyclones approaching coastal Taiwan,” it said.

Warm sea surface temperatures will also lead to a strengthening of Podul to a peak intensity of 157 kilometers an hour, equivalent to a Category 2 hurricane in the five-step Saffir-Simpson scale, the center added. 

Podul is then forecast to track across the island and re-emerge in the relatively cooler waters of the Taiwan Strait, which will weaken the system before it makes a second landfall on mainland China. The storm is set to bring heavy rains to parts of the country from Wednesday, including Fujian and Guangdong provinces, according to the China Meteorological Administration. –BLOOMBERG

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CHINA Evergrande Group said its Hong Kong stock will be delisted, marking the end of an era for the former high-flying developer whose demise came to symbolize the country’s property bust. 

The Guangzhou-based company said the stock exchange has decided to cancel its listing, according to a filing to the Hong Kong bourse on Tuesday. The shares will be removed on Aug. 25 and the company won’t apply for a review of the exchange’s decision, it added. 

Evergrande’s collapse was by far the biggest in a crisis that dragged down China’s economic growth and led to a record spate of distress among builders. The company, which first defaulted on a dollar bond in December 2021, was once the country’s largest developer by sales, and was worth more than $50 billion in 2017 at its peak. 

In a separate filing Tuesday, court-appointed liquidators said Evergrande’s debt load is far bigger than earlier estimated, and any “holistic” restructuring is out of reach.

The clock started ticking for the delisting in late January last year, when Evergrande received a liquidation order from a Hong Kong court and trading of its shares was suspended. It has remained halted since then, having failed to meet requirements for a resumption of trading. In Hong Kong, a stock can be delisted if suspension lasts 18 months or longer. 

The move will further diminish hopes for any recovery for Evergrande’s shareholders, who have seen the value of their investment evaporate in recent years. 

Shares of Evergrande last traded at less than 20 Hong Kong cents on Jan. 29, 2024, giving it a market value of HK$2.15 billion ($274 million). The stock has had a low free float, with its founder Hui Ka Yan owning a roughly 60% stake.

“Whether or not there’s a delisting, Evergrande’s shareholders will likely have to prepare for near-total loss,” Kristy Hung, a Bloomberg Intelligence analyst, said before the announcement. “The developer’s liquidation and substantial claims from creditors who are ahead in the order suggests equity holders face material risk of getting nothing.”

Delisting Risks

Several other Chinese developers face similar delisting risks, according to the latest tally by the bourse. They include mid-sized builders Modern Land (China) Co., which has been suspended for more than 16 months, and Dexin China Holdings Co., which received a liquidation order in June last year. 

To resume trading, some of them will have to file more updated audited results, have winding-up petitions withdrawn or dismissed, or have any liquidators discharged.

“The golden era of real estate is gone,” said Glen Ho, Asia-Pacific contingency planning and insolvency leader at Deloitte. “The business model for builders has totally changed.”

Evergrande still has two other units listed in Hong Kong — a property service provider and an electric vehicle maker. China Evergrande New Energy Vehicle Group Ltd., which has been suspended since April, could be delisted, Bloomberg Intelligence analysts Andrew Chan and Daniel Fan wrote in a recent note. 

Following its 2009 listing under the ticker 3333, Evergrande rose to become one of China’s hottest stocks in its heyday, powering founder and chairman Hui to become Asia’s second-richest person. Much of Hui’s known wealth was derived from his controlling stake in Evergrande and the cash dividends he received from the company. 

Beijing’s crackdown on the property sector since 2020 capped the developer’s borrowing capacity, effectively cutting it off from credit markets. Following failed restructuring attempts, Evergrande was given a winding-up order in Hong Kong in 2024. Later that year, a mainland Chinese court accepted a liquidation application filed against one of its major onshore units.

Evergrande’s debt pile amounts to $45 billion, according to the developer’s court-appointed liquidators.

The company is facing 187 debt claims, with the total amount far exceeding the $27.5 billion of liabilities disclosed in its financial statement in December 2022, the liquidators said in a progress report released on Tuesday. The new figure isn’t to be taken as final since additional claims could emerge and all are subject to formal review.

The liquidators said the realization of assets has so far been “modest” at $255 million. Some $167 million has been “upstreamed” and linked to Evergrande. Stakeholders shouldn’t assume that all of the money will be available to the company due to complex ownership structures, they said.  –BLOOMBERG

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