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APAC and US equity markets closed mixed, while European markets
were sharply lower. iTraxx and CDX indices closed wider, with CDX
closing near the best levels of the day alongside a rally in the US
equity market. The US dollar and gold closed higher, while oil and
silver were lower on the day. The US initial claims for
unemployment insurance came in higher than expected and even
increased versus the prior week, which had set a somber tone at the
open of the US markets.
Americas
US equity markets closed mixed, with all beginning the session
lower and closing near the higher end of the day's range; Russell
2000 +1.1%, Nasdaq -0.5%, S&P 500 -0.2%, and DJIA -0.1%.
10yr US govt bonds closed +1bp/0.74% yield and 30yr bonds
closed +1bp/1.52% yield.
CDX-NAIG closed +1bp/57bps and CDX-NAHY +3bps/372bps, with
CDX-NAHY as wide as +14bps at 9:15am EST.
DXY US dollar index closed +0.5%/93.82.
Gold closed +0.1%/$1,909 per ounce and silver -0.7%/$24.22 per
ounce.
Crude oil closed -0.2%/$40.96 per barrel.
The chart below shows the number of bonds in IHS Markit's iBoxx
USD Investment grade index that were quoted by 10 or more dealers
versus CDX-NAIG spreads. The data shows the degradation of
liquidity in mid-March for bonds as CDX-NAIG spreads widened
significantly, but the chart also highlights that dealer quote
depth had improved to the best levels since February during the
week of 28 September.
The average rate for a 30-year, fixed US mortgage loan dropped
to 2.81%, down from 2.87% last week and the lowest in almost 50
years of data-keeping, Freddie Mac said in a statement Thursday. It
was the 10th record low this year. The previous record low rate of
2.86% held for about a month. (Bloomberg)
US seasonally adjusted (SA) initial claims for unemployment
insurance rose by 53,000 to 898,000 in the week ended 10 October.
The not seasonally adjusted (NSA) tally of initial claims rose by
76,670 to 885,885. (IHS Markit Economist Akshat Goel)
Seasonally adjusted continuing claims (in regular state
programs), which lag initial claims by a week, fell by 1,165,000 to
10,018,000 in the week ended 3 October. Prior to seasonal
adjustment, continuing claims fell by 1,188,202 to 9,631,588,
marking the largest decline since mid-May. The insured unemployment
rate in the week ended 3 October was down 0.9 percentage point to
6.8%.
There were 372,891 unadjusted initial claims for Pandemic
Unemployment Assistance (PUA) in the week ended 10 October. In the
week ended 26 September, continuing claims for PUA fell by 222,497
to 11,172,335.
In the week ended 26 September, there were 2,778,007 such
claims for Pandemic Emergency Unemployment Compensation (PEUC)
benefits.
The Department of Labor provides the total number of claims for
benefits under all its programs with a two-week lag. In the week
ended 26 September, the unadjusted total fell by 215,270 to
25,290,325.
Import price growth throttled down to 0.3% m/m in September as
fuel import price growth finally turned negative, to -2.9% m/m,
after a four-month hot streak. (IHS Markit Economist Gordon Greer)
The index of nonfuel import prices increased 0.6% m/m in
September, while its 12-month growth rate was 1.5%.
Fuel import price growth fell into the red after a strong
four-month streak, dropping 2.9% in September after a 3.9% increase
in August. The cost of imported fuel was down 25.2% versus
September in the prior year.
Among imported fuel price categories, the contribution from
natural gas price growth, coming in at 26.2% m/m, was dragged down
by a 4.2% m/m drop in petroleum prices, its first drop since
September. Excluding petroleum, import prices rose 0.7% m/m in
September.
Export prices advanced 0.6% m/m in September, with the 12-month
growth rate rising 0.9 percentage point to -1.8%. Monthly growth of
both agricultural and nonagricultural exports remained
positive.
According to the Bureau of Labor Statistics (BLS), the
collection method for data in the September report was unchanged.
The response rate for surveyed firms was 5.6 percentage points
lower than in September 2019. While top-level price indices were
determined to be representative of total trade, several detailed
indices were not published because of insufficient data.
IHS Markit's Dividends Forecasting analysts are forecasting a
10% year-over-year decline in the Russell 2000's Dividend Index
Points (DIPs), with the real estate sector being the biggest driver
of the decline (
https://cdn.ihsmarkit.com/www/pdf/1020/Russell-2000-DIPs-pdf.pdf).
The below chart highlights the sector level drivers of the
forecast.
Electric vehicle (EV) maker Lucid Motors has announced a
USD77,400, 480-hp version of the Air sedan, which is available to
reserve for a USD300 fee. Lucid states that, after the US federal
tax credit of USD7,500, the price is USD69,900. In a statement
announcing the new version of the Air, Peter Rawlinson, CEO and
chief technology officer, said, "The Lucid Air is a vehicle that
thrills me personally because it delivers a level of performance,
efficiency, and luxury that is currently unseen in today's EVs. Our
vision from the beginning - what drives this company - is creating
the world's best EV technology while making it progressively more
attainable over time. With the starting price of the Lucid Air
range announced today, we are setting the stage for broader
adoption of the latest, game-changing EV technology." The company
says this new version of the Air will deliver 406 miles of range.
It has a single-motor powertrain, with a dual-motor,
all-wheel-drive configuration optional, and has a 900+ ultra-high
voltage electrical architecture with DC fast-charging capability.
Customers making a reservation will also receive three years of
complimentary charging using the Electrify America charging
network. As standard, it will have a PurLuxe animal-free interior
trim and a 34-inch Lucid glass cockpit curved floating display.
Additionally, it is available with the DreamDrive advanced
driver-assistance technologies. Lucid is announcing this
more-accessible model about a month after announcing the top trims
of the Air. The Dream Edition will have a price of USD139,000 and
the price of the Air Touring starts at USD95,000, both before the
US tax credit. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Car-sharing company Getaround has raised USD140 million in a
Series E funding round led by PeopleFund, reports TechCrunch. The
latest funding round saw participation from new investors including
Reinvent Capital, Henry McGovern, Pennant Investors, Steve Girsky,
Mary Chan, and Julia Steyn, as well as existing investors including
SoftBank Vision Fund, Menlo Ventures, and more. The company plans
to use the infused capital to develop connected car technology that
enables a fully contactless experience. In addition, the funds will
be used by the company to collaborate with strategic partners,
expand its offerings, and strengthen its position. Sam Zaid,
founder & CEO of Getaround, said, "As we work to continue to
scale our marketplace, we are proud to have the support of our
world-class investors. Closing a round of funding negotiated in
such challenging times amidst the pandemic underlines their belief
that Getaround is truly the future of mobility." Getaround allows
private vehicle owners to rent out their cars through its platform
and the service is available in more than 100 US cities and more
than 170 European locations. The company has raised funding of
nearly USD600 million since it was founded in 2009. (IHS Markit
Automotive Mobility's Surabhi Rajpal)
Local Motors will trial the second generation of its connected
electric autonomous shuttle, the Olli 2.0, in Toronto (Canada),
reports TechCrunch. These trials will be conducted for a 6-12-month
period carrying passengers on a fixed route starting in 2021. These
shuttles aim to enhance Toronto's mass transit system by connecting
the West Rouge neighborhood with its local Go train station. This
deployment is a result of Local Motor's partnership with Pacific
Western Transportation, TTC, and Metrolinx, with funding from
Transport Canada. The shuttle has seating capacity for up to eight
passengers and includes accessibility features such as a wheelchair
ramp and securing points. An on-board safety operator will oversee
vehicle operations manually in case of emergency. Two staff
members, a certified operator from Pacific Western Transportation,
and one customer service ambassador from either TTC or Metrolinx,
will be on board to study each trip. Local Motors uses multiple
micro-factories to design high-technology vehicles and developed
the Olli autonomous electric shuttle, which made its debut at the
National Harbor in Maryland (US) in 2016. The Olli is designed to
provide last-mile transportation in low-speed environments,
including campuses, hospitals, military bases, and universities.
(IHS Markit Automotive Mobility's Surabhi Rajpal)
Domestic steel demand continued to remain strong in China
(Mainland), leading to also increase in steel imports into the
country. In September 2020, Chinese steel imports increased 29%
over the month to 2.9 metric tons(mt). It was the highest import
level last seen one and a half-decade ago in April 2004. In the
nine months of this year, China steel imports stood at 15.1mt, up
72 % over the year. In another significant development, Tangshan
regional government recently issued seasonal winter production
control measures on emissions from blast furnaces and sintering
operations at the steel mills in the region. This year the control
measures are less stringent as air quality in the region is better
compared to the last couple of years as mills added emission
control measures. This time the control measures will run from 01
Oct 2020 until 31 March 2021, and the mills will be required to cut
output basis a five-tier approach. A-category steel mills that have
adequate emission control measures could undertake self-imposed
production cuts. While B-category, B-Minus, C& D category mills
to impose 10%, 20%, 35%, and 45%, respectively. This year
production cuts in the Tangshan region are expected to run for
2.3weeks more, however, due to eased emission control measures, it
will impact 3.5-4mt less production capacity. The announcement is
anticipated to increase the usage of high-grade iron ore fines and
lumps compared to previous winter demand. As a result of continued
strong demand from China iron ore and pellets shipments from
various Brazilian ports continued to remain strong. As per IHS
Markit's Commodities at Sea, during September 2020, Brazilian iron
ore and pellet shipments are calculated at 33.8mt, up 9% over the
year. (IHS Markit Maritime & Trade's Rahul Kapoor and Pranay
Shukla)
Europe/Middle East/Africa
European equity markets closed sharply lower; Italy -2.8%,
Germany -2.5%, France -2.1%, UK -1.7%, and Spain -1.4%.
10yr European govt bonds closed mixed; Italy +4bps, Spain
+2bps, France/Germany -3bps and UK -4bps.
iTraxx-Europe closed +3bps/56bps and iTraxx-Xover
+9bps/336bps.
Brent crude closed -0.4%/$43.16 per barrel.
British electric commercial vehicle (CV) start-up Arrival has
announced that it has raised a further USD118 million of funding
for its project. According to a statement, this comes from funds
managed by investor BlackRock. The company said that this
investment will be used to support its growth plans including the
launch of a microfactory in York County (South Carolina, US). The
company adds that investment into this location will be USD46
million and will create 240 jobs. Operations are expected to begin
there in the second quarter of 2021, before production begins in
the fourth quarter of the same year. Arrival has been developing a
"flexible skateboard platform" model for its products, which will
allow it to not only create core van and bus products for
customers, but also allow for more bespoke offerings depending on
customer needs. However, another key part of its strategy is the
establishment of relatively small microfactories for the assembly
of its vehicles, building either 10,000 vans or 1,000 buses per
year. These require low initial capital expenditure that can be
located around the world and are rapidly scalable, while the use of
such production facilities would also reduce the emissions for
shipping such vehicles when completed. (IHS Markit
AutoIntelligence's Ian Fletcher)
The Volkswagen (VW) passenger car brand has announced that it
is accelerating its plant investments relating to readying its
production facilities for electric vehicle (EV) production.
According to a company statement, the VW brand has now ordered more
than 1,400 robots from Japanese manufacturer FANUC for its
production facilities at Chattanooga (US) and Emden. VW Commercial
Vehicles has also ordered another 800 robots for its Hanover plant
from ABB of Switzerland. The robots will be mainly used for body
production and battery assembly. Christian Vollmer, VW passenger
cars' member of the board of management responsible for Production
and Logistics, said, "At Emden and Chattanooga, we are developing
two of the most advanced production facilities in the automotive
industry for the transformation to e-mobility. We are investing in
the latest technologies such as digitalization and automation for
this purpose even in the present situation." (IHS Markit
AutoIntelligence's Tim Urquhart)
The BMW Group has outlined the technology offering behind the
charging infrastructure of its fifth generation of electrified
vehicles, according to a company statement. The company has built
on its previous experience with this area having launched its first
electric vehicle (EV), the BMW i3, in 2013. It is now offering the
latest version of the BMW Flexible Fast Charger with the new iX3
battery electric vehicle (BEV), the third full EV in the company's
range. The Flexible Fast Charger adjusts to the charging
infrastructure available, while the high-performance BMW Wallbox
with a charging capacity of up to 22 kW can be purchased as an
option. This would allow the iX3 to receive a full charge in a
domestic environment in about 3.5 hours. BMW has worked to make its
domestic charging offering as straightforward and practical as
possible, and to this end the wallbox can be controlled through
cloud services. All charging solutions can be combined with a
comprehensive installation package for a set price (as long as
structural requirements are met). A green electricity tariff is
also included in the service. For the public charging offering,
BMW's charging card gives BMW BEV drivers access to one of the
world's largest charging networks, with around 450,000 charging
points. This includes 24,000 charging points in Germany and 160,000
across Europe, with charging points displayed in the vehicle's
navigation system. (IHS Markit AutoIntelligence's Tim
Urquhart)
Porsche CEO Oliver Blume has said that he expects that fully
synthetic fuels will be available for use in production vehicles in
about a decade. Blume made the statement at a summit for the
automotive sector organized by the Institute of Automotive
Economics in Nürtingen, near Stuttgart (Germany). Porsche is
devoting resources to its synthetic fuel development program. Blume
said that synthetic fuels "do not compete with electric mobility,
but complement it". He added, "If you think about the fact that we
have billions of vehicles driving around the world, we have to look
in both directions: both forward, clearly electromobility, but also
backwards, synthetic fuels." Porsche recently announced a major
research project to develop synthetic fuels. Although the company
is heavily invested in electric vehicles (EVs), as evidenced by the
launch of the Taycan last year, battery vehicles are limited in
their ability as track vehicles and electric motorsport also has
obvious limitations regarding range capability. These are both
fields in which Porsche has a major involvement and in which it has
traditionally excelled. (IHS Markit AutoIntelligence's Tim
Urquhart)
Dyno Therapeutics (US) has announced a new collaboration and
license agreement with Roche (Switzerland) for the development of
next-generation adeno-associated virus (AAV) vectors for gene
therapies for central nervous system (CNS) diseases and
liver-directed therapies. Under the terms of the agreement, Dyno
will design the novel AAV capsids for gene therapy, and Roche and
its subsidiary Spark Therapeutics will conduct all preclinical,
clinical, and commercialization activities related to these
candidates. In exchange, Dyno will receive an undisclosed upfront
payment from Roche, and will be eligible for additional research,
clinical, and sales milestone payments exceeding USD1.8 billion, as
well as royalties for resulting products. The promising new gene
therapy candidates developed under this partnership would likely
strengthen Roche's and Spark Therapeutics' portfolios. The
collaboration will leverage Dyno's artificial intelligence
(AI)-powered proprietary CapsidMap platform technology, which
utilizes novel AAV capsids or the cell-targeting protein shell of
viral vectors that are optimized to target tissue and evade the
immune system, while providing improved packaging capacity and
manufacturability, according to Dyno. These next-generation gene
therapies overcome some of the limitations of gene therapies
currently on the market or in development, which are confined to
naturally occurring AAV vectors. (IHS Markit Life Sciences'
Margaret Labban)
EasyMile has deployed an EZ10 autonomous shuttle in the city of
Louvain-La-Neuve (Belgium) for a six-month trial period. The
autonomous shuttle will be deployed in mixed traffic, connecting
riders to a train station and a business park in the city. This
deployment is a result of EasyMile's partnership with Ush, an
autonomous shared mobility provider, and Le TEC, a local transport
operator, to ensure the smooth running of the service. The trial is
part of the Navajo project, which aims to offer a new mobility
service and test autonomous vehicles in a complex environment. The
trial will be conducted over three evolving phases to analyze the
acceptance levels of passengers and other road users. EasyMile has
developed autonomous mobility solutions and has built the EZ10, a
fully electric shuttle bus that is capable of Level 4 autonomous
operation. The shuttle is deployed with LiDAR, cameras, and GPS to
ensure safety. The company has deployed 200 EZ10 shuttles on public
and private roads in more than 30 countries to improve last-mile
transport. (IHS Markit Automotive Mobility's Surabhi Rajpal)
Miratorg, one of Russia's largest meat producers, has announced
three new investment projects while at the same time launching an
initiative to start selling its products through an online delivery
service. The investments - worth a combined RUB18.4 billion (USD235
million) will be covered by a new mechanism, known as an SZPK,
which provides certain guarantees and stability of the legal regime
for large-scale projects. In the Kaliningrad region, Miratorg said
it plans to implement a RUB4.9 billion project to expand the
production of frozen semi-finished meat products. The increase in
capacity will make it possible to produce 71,000 tons of finished
products per year. In the Moscow region, the group aims to invest a
further RUB10 billion in a project involving the development of
centers for wholesale distribution and food innovation. Another
RUB3.5 billion will be invested in a project for the production and
processing of oilseeds - some of which will be used for animal
feed. Located in the Oryol region, the facility will have the
capacity to process 420,000 tons of raw materials per year.
Meanwhile, the group is making it easier for Russian consumers to
access its products by linking up with Delivery Club, Russia's
largest ready-to-eat food delivery service. At the first stage,
Delivery Club couriers will deliver orders to four districts of
Moscow and St. Petersburg. By the end of 2020, it is planned to
connect to the service a total of 60 Miratorg stores in all cities
where the chain is present. (IHS Markit Food and Agricultural
Commodities' Max Green)
UAE-based smart transportation company ION has completed the
trial of autonomous shuttles at Sharjah University City, reports
Trade Arabia. During the trials, the company used French driverless
technology firm NAVYA's Autonom shuttles to ferry students around
the university. These shuttles are wheelchair accessible and can
carry up to 15 passengers per journey. Khalid bin Butti Al Hajri,
director general of Sharjah University City, said, "Our campus was
selected as a site for the pilot trial because it is a leading
education and research and development hub in the Middle East. Our
mandate at the University City is to improve the quality of the
educational experience, while focusing on creativity and
innovation. As part of this quest, it is vital to conduct advanced
research and development projects and adopt future technologies
that ensure we keep pace with modern trends. This mindset ensures
that our educational district competes with prestigious
universities globally." NAVYA's Autonom shuttle is already
operating in Masdar City. Earlier this year, ION and NAVYA
partnered to develop autonomous transportation in the Gulf
Cooperation Council (GCC) region. The GCC region is scaling up
operations in the field of autonomous vehicles, with Volkswagen
(VW) announcing recently that it plans to integrate Level 4
autonomous electric shuttles and buses into the public transport
network by 2022 in Qatar's capital city Doha. (IHS Markit
Automotive Mobility's Surabhi Rajpal)
Zambia is at risk of defaulting on its USD3-billion Eurobond
interest rate commitment to the amount of USD42 million within 30
days if a debt-service suspension agreement is not in place, the
Zambian authorities have reported. A group of bondholders rejected
the government's request for a six-month suspension of interest
payments on 30 September. (IHS Markit Economist Thea Fourie)
The decision to reject the Zambian authorities' request follows
in the wake of insufficient disclosure of information on the
Zambian authorities' Chinese debt holdings and uncertainty over a
sustainable fiscal path for the future. "Two big concerns we have
are the lack of clarity on what debt relief they are getting from
other creditors, and the lack of a medium-term fiscal framework to
put the debt back on a sustainable path," said investor Kevin Daly,
a fund manager at Aberdeen Standard Investments, reports the
Financial Times.
The Zambian authorities confirmed, however, that they intend to
continue servicing debt for a few priority projects that have an
immediate economic and social impact. A list of these projects is
to be circulated at a later stage.
A collapse of import demand and stronger terms of trade left
Zambia's current account in surplus by USD658 million during the
first half of 2020, from a deficit of USD4.9 million for the same
period a year earlier. COVID-19 virus outbreak-related lockdown
measures and supply-chain disruptions during the second quarter of
the year curtailed domestic spending and ultimately overall imports
over the period.
External debt-servicing costs, however, will average 147.5% of
total foreign-reserves holdings in 2020, IHS Markit's estimates
show. Zambia's high external-debt burden, slowing GDP growth rate,
and lack of fiscal consolidation in recent years underline the
weaker solvency position of the country.
IHS Markit's medium-term sovereign risk rating for Zambia is
currently set at 65/100 (CCC on the generic scale), with a Negative
outlook. A default on debt interest payments would push our
medium-term sovereign risk rating to 75/100 (or C on the generic
scale).
The Bank of Botswana decided to slash the key policy rate by 50
basis points to 3.75% at the 8 October meeting of its monetary
policy committee (MPC), as overall risks to the medium-term
inflation outlook remain firmly tilted to the downside. (IHS Markit
Economists Archbold Macheka)
The COVID-19 pandemic containment measures implemented since
April 2020 continue to disrupt consumption and spending patterns in
Botswana, keeping domestic demand pressures and foreign prices
contained through the short term.
The latest official consumer price index data from Statistics
Botswana show inflation remained below the lower bound of the
central bank's objective range of 3-6%, although up marginally from
0.9% year on year (y/y) in July to 1.0% y/y in August. Upside risks
to the inflation outlook emanate from higher-than-anticipated
international commodity price increments and pressures caused by
supply constraints due to travel restrictions and lockdowns.
The central bank's MPC noted that the COVID-19 pandemic
containment measures have severely dampened economic activity not
just in Botswana, but also globally, impacting on production,
supply chains, project implementation, and provision of goods and
services.
Revised estimates from the International Monetary Fund (IMF)
show Botswana's economy shrinking by 9.6% in 2020, before
rebounding to 8.6% growth in 2021. New projections by the Ministry
of Finance and Economic Development (MFED) show a GDP contraction
of 8.6% in 2020, and a recovery of 7.7% in 2021.
IHS Markit's October estimations put Botswana's average annual
inflation for 2020 and 2021 at 1.8% and 2.9%, respectively. We
expect food prices to continue to soften, largely reflecting
favorable agriculture yields and inflation trends in neighbor South
Africa, were most of the food is imported from. Furthermore,
transport costs are likely to experience soft growth in line with
our benign short- to medium-term global Brent oil-price outlook of
USD40.95 and USD46.78 per barrel in 2020 and 2021,
respectively.
IHS Markit now expects Botswana's economy to contract by about
10.6% in 2020 (downgraded from our September 2020 forecast of an
8.8% decline), largely due to the disruptive impact of the COVID-19
pandemic on both the domestic and external sectors and weak global
demand for diamonds, the country's major export commodity.
Asia-Pacific
Most APAC equity markets closed lower except for Australia
+0.5%; India -2.6%, Hong Kong -2.1%, South Korea -0.8%, Japan
-0.5%, and Mainland China -0.3%.
China raised $6 billion with its latest international bond
sale, matching a record set last year, ahead of economic data that
is likely to show growth is recovering toward pre-pandemic levels.
U.S. buyers snapped up large chunks of the four-part deal,
including 47% of a $500 million offering of 30-year debt, according
to one of the banks that handled the sale. (WSJ)
Falling pork prices will likely further drive down Mainland
China's Consumer Price Index (CPI) inflation in fourth-quarter
2020; moderate recovery in the PPI is expected to continue. (IHS
Markit Economist Lei Yi)
Mainland China's CPI increased 1.7% year on year (y/y) in
September, down 0.7 percentage point from August, according to the
National Bureau of Statistics. Month-on-month (m/m) CPI inflation
came in at 0.2% compared with August's reading of 0.4%, staying in
positive territory for the third straight month.
By component, slowing food price inflation—driven by
declining pork prices in particular—remains the main
contributor to the headline decline in CPI inflation in
September.
Although non-food price inflation continues to be weak,
services prices strengthened back into inflation territory in
September, rising 0.2% y/y.
With schools restarting nationwide and offline activities
resuming, education, culture, and recreation prices rose 0.7% y/y
in September compared with 0.0% y/y in the preceding month.
The core CPI, which excludes food and crude oil prices, rose
0.5% y/y, unchanged from August's reading.
Mainland China's Producer Price Index (PPI) fell 2.1% y/y in
September, edging down slightly from a 2.0% y/y decline in August
as the economy recovered at a slower pace entering into the third
quarter.
In m/m terms, PPI inflation fell by 0.2 percentage point to
0.1% m/m in September, with 15 out of 40 surveyed industrial
sectors reporting m/m price gains and 19 experiencing m/m price
declines.
As expected, swings in global commodity prices during September
weighed on the PPI's continued recovery. Prices in oil-related
sectors, including petroleum and natural gas exploration and fuel
processing, fell m/m, while m/m inflation continued to slow in
ferrous metals and non-ferrous metals smelting and pressing. All
sub-categories of consumer goods manufacturing reported weaker y/y
inflation in September, resulting in a producer price deflation of
0.1% y/y in overall consumer goods, compared with a 0.6% y/y
inflation in the preceding month.
Cumulatively, CPI had been up by 3.3% through the end of
third-quarter 2020, down from 3.5% y/y in the first eight months of
the year; the PPI fell by 2.0% through September, unchanged from
the first eight months.
The latest release is in line with our annual CPI forecast,
which currently stands at 3.0% y/y for 2020. Despite the tailwinds
generated by sustained economic recovery and a pickup in services
consumption, CPI inflation is expected to decline towards the end
of the year.
SAIC Motor Corporation's sales grew 9.5% year on year (y/y) to
602,318 units in September. This sales figure includes the group's
joint ventures (JVs) and subsidiaries. (IHS Markit
AutoIntelligence's Abby Chun Tu)
In the year to date (YTD), SAIC's sales have fallen by 18.14%
y/y to around 3.61 million units.
Sales of SAIC-VW, SAIC's JV with Volkswagen (VW), contracted by
1.2% y/y to 175,000 units last month; in the YTD, SAIC-VW's sales
have fallen by 25.9% y/y to 1.03 million units.
Sales of SAIC-GM, SAIC's JV with General Motors (GM), increased
by 9.5% y/y to 153,326 units in September; the JV's YTD sales are
down 22.0% y/y at 951,561 units.
Sales of the SAIC-GM-Wuling JV grew by 19.7% y/y to 176,000
units in September; in the YTD, its sales are down 12.6% y/y at
985,040 units.
SAIC Maxus, SAIC's commercial vehicle (CV) company, sold 21,199
units in September, up 40.3% y/y; in the YTD, SAIC Maxus's sales
are up 19.1% y/y at 121,454 units.
Sales of SAIC's wholly owned brands, Roewe and MG, managed by
SAIC Passenger Car Company, totaled 60,366 units last month, up
5.9% y/y; sales of the two brands have fallen 14.5% y/y to 403,268
units in the YTD.
Sales of SAIC's Indian subsidiary, MG India, stood at 2,745
units in September, down 0.2% y/y; in the YTD, a total of 17,893
vehicles have been sold in India.
SAIC subsidiary SAIC-GM-Wuling Indonesia sold 511 vehicles in
September, compared with 2,750 units in the same month last
year.
According to the Reserve Bank of India (RBI)'s "FAQs on
Resolution Framework for Covid-19 related stress", which appeared
on its website on 14 October, the RBI has clarified several matters
related to the recently introduced resolution framework. First,
only loans that were not default by more than 30 days on 1 March
are eligible; no additional loans after that date are included.
Second, the loans that had started being repaid but were overdue by
30 days on 1 March will not be eligible for the resolution
framework. Third, the definition of micro, small and medium
enterprises (MSMEs) for the benefit of this resolution framework
will be the narrower definition of MSMEs as of 1 March, which is
based on investments, rather than the revised definition based on
turnover as of June. (IHS Markit Banking Risk's Angus Lam)
The Supreme Court has granted an extension on the loan
moratorium because of the uncertainty surrounding the one-off loan
restructuring under this resolution framework.
The clarification by the RBI serves as a timely reminder that
borrowers are keen to be included in the resolution framework to
lower their repayment pressure, as commercial banks have started
introducing generous restructuring schemes.
From a banking risk perspective, by disallowing loans that are
already in arrears by 30 days by 1 March, this will reduce the
chance of bad loans appearing as performing. However, considering
the generous provisioning for restructured loans under this scheme
(0.4-1.0%, as per normal loans, compared with 15.0% for bad loans),
this tighter definition will reduce banks' savings on provisioning
and increase their capital needs.
However, it is unclear whether there will be further petitions
to the Supreme Court that will place further delay on the
implementation. There have been several instances in the past 12
months where the Indian court system has stopped RBI policies, and
that includes the classification of overdue loans to non-banking
financial companies (NBFCs) as non-performing, which reduces RBI's
effectiveness as a banking regulator.
POSCO has won an order for electric vehicle (EV) parts from
Vietnamese automaker VinFast in partnership with South Korean parts
firm Erae AMS, reports the Korea Herald. The companies will supply
halfshafts, which act as a driveshaft in an EV, to VinFast. The
products will be supplied from 2021, after detailed adjustment and
testing, according to the report. POSCO will supply the components
for the 100,000 EVs that VinFast is seeking to manufacture. "This
order is to supply parts to VinFast's first electric vehicle. By
winning orders for electric vehicle parts, which are future
strategic models, it [has] laid the foundation for expanding
businesses such as localization and investment in the future," the
firm said. Erae AMS is a component manufacturer that specializes in
producing automotive parts such as driving, braking, and steering
components. The company began its co-operation with POSCO in 2011
and currently supplies driving parts to Fiat Chrysler Automobiles
(FCA) in North America. (IHS Markit AutoIntelligence's Jamal
Amir)
Covestro has added a new production line for polycarbonate
films at its plant in Map Ta Phut Industrial Estate (Thailand),
according to a company press release. It has invested more than
EUR100 million (USD117.4 million) in the expansion, which is
expected to add 100 new jobs. "With this additional production line
using state-of-the-art technology, we are investing in future
growth in the Asia-Pacific markets, which are very important to us.
At the same time, we are responding to the rapidly growing demand
for specialty films in this region and are supporting the expansion
of promising technologies and industries," said Covestro chief
commercial officer Sucheta Govil. Covestro has been operating a
production facility for specialty films in Thailand since 2007. The
films are used in several industries including automotive. The
range comprises polycarbonate films from the 'Makrofol' range and
'Bayfol' products made from polycarbonate blends. (IHS Markit
AutoIntelligence's Jamal Amir)
Posted 15 October 2020 by Chris Fenske, Head of Fixed Income Research, Americas
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