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Most major European and US equity indices closed lower, while
APAC was mixed. US and most benchmark European government bonds
closed higher. CDX-NA and European iTraxx closed slightly wider on
the day across IG and high yield. The US dollar, gold, and silver
closed higher, while copper, oil, and natural gas closed lower.
Please note that we are now including a link to the profiles of
contributing authors who are available for one-on-one discussions
through our Experts
by IHS Markit platform.
Americas
Most major US equity indices closed lower except for Russell
2000 +1.0%; Nasdaq -0.1%, S&P 500 -1.0%, and DJIA -1.5%.
10yr US govt bonds closed -1bp/1.41% yield and 30yr bonds
-5bps/1.81% yield.
CDX-NAIG closed +1bp/53bps and CDX-NAHY+1bp/308bps, which is
flat and +3bps week-over-week, respectively.
DXY US dollar index closed +0.5%/96.57.
Gold closed +0.4%/$1,805 per troy oz, silver +0.2%/$22.53 per
troy oz, and copper -0.2%/$4.30 per pound.
Crude oil closed -2.0%/$70.72 per barrel and natural gas closed
-2.0%/$3.69 per mmbtu.
Global coal demand is on track to exceed pre-pandemic levels
this year and could reach an all-time high in 2022, putting global
efforts to counter climate change in jeopardy, the International
Energy Agency (IEA) said in its annual report for the most
carbon-intensive fossil fuel. (IHS Markit Net-Zero Business Daily's
Max Lin)
This year has seen a strong rebound in coal consumption driven
by record electricity generation using the fuel, even as many
governments are promising to phase out coal from their power
mix.
"Coal is the single largest source of global carbon emissions,
and this year's historically high level of coal power generation is
a worrying sign of how far off track the world is in its efforts to
put emissions into decline towards net zero," IEA Executive
Director Fatih Birol said 17 December.
Birol added that "30% of the entire global CO2 emissions come
from coal electricity generation."
For the world to reach net-zero emissions by 2050 and avoid
climate disasters, the IEA estimates that coal usage needs to fall
by 24% in 2020-2030 before a further decrease of 73.7% in the
following 20 years.
The world's coal consumption will instead grow by 6% to reach
nearly 7.91 billion metric tons (mt) this year, before increasing
to 8.03 billion mt in 2022, according to the IEA's Coal 2021
report. This compares with the previous record of 8 billion mt in
2013.
China's coal consumption, which accounts for more than half the
global total, is expected to increase by 4% to 4.13 billion mt in
2021. India, the world's second largest consumer, is forecast to
register a 13.4% increase to 1.06 billion mt.
The IEA also expects coal usage to rise by 74 million mt in the
US and 45 million mt in the EU.
On December 17, New York Gov. Kathy Hochul announced a
framework for the state to achieve at least 10 GW of distributed
solar by 2030, enough to annually power nearly 700,000 homes. The
roadmap, submitted by the New York State Energy Research and
Development Authority (NYSERDA) and the New York State Department
of Public Service (DPS) to the state Public Service Commission for
public comment and approval, proposes a comprehensive strategy to
expand the state's NY-Sun initiative The plant will spur
approximately $4.4 billion in private investment and create 6,000
additional solar jobs across the state - including with the state's
first application of prevailing wage for solar projects between one
and five MW in size. This announcement supports the state's Climate
Leadership and Community Protection Act (Climate Act) mandate to
generate 70% of the state's electricity from renewables by 2030 as
part of a resilient and equitable transition to a clean energy
economy. The Roadmap proposes (IHS Markit PointLogic's Barry
Cassell):
At least 1,600 MW of new solar capacity to benefit
disadvantaged communities and low-to-moderate income New Yorkers,
with an estimated $600 million in investments serving these
communities;
At least 450 MW to be built in the Consolidated Edison electric
service area (covering New York City and parts of Westchester),
increasing the installed solar capacity in this area to over 1 GW
by the end of decade; and
At least 560 MW to be advanced through the Long Island Power
Authority.
Adjusted for seasonal factors, the IHS Markit Flash US
Composite PMI Output Index posted 56.9 in December, down slightly
from 57.2 in November, but still signaling a strong rise in private
sector business activity. Although slower than rates seen earlier
in the year, the pace of output growth was faster than the historic
trend. (IHS Markit Economist Chris
Williamson)
Supporting the upturn in activity was a quicker increase in new
orders during December. The pace of expansion was the sharpest for
five months, and largely driven by a faster rise in service sector
new business. New order inflows to the manufacturing sector eased
to the slowest since October 2020, however. Meanwhile, new export
orders increased at the strongest pace since September.
The seasonally adjusted IHS Markit Flash US Services PMI™
Business Activity Index fell to 57.5 in December, down slightly
from 58.0 in November. The upturn in business activity remained
sharp despite slowing to a three-month low as demand conditions
strengthened at the end of the year. The pace of new business
growth accelerated to the fastest for five months. Foreign client
demand also rose.
Operating conditions improved in December, as highlighted by
the IHS Markit Flash US Manufacturing Purchasing Managers' Index™
(PMI™)1 posting at 57.8 in December, down from 58.3 in November.
That said, the health of the sector improved at the slowest pace
for a year as output growth remained subdued. The headline index is
also continuing to reflect a severe deterioration in input delivery
times, with longer supplier lead times ordinarily signaling a
stronger sector performance.
US electric vehicle (EV) maker Rivian Automotive has announced
its financial results for the third quarter, reporting a loss as
production of the R1T electric truck started during the quarter. In
addition, Rivian provided a fairly detailed overview of its vehicle
production and development to date, and confirmed that the location
of the company's planned second manufacturing plant is to be the US
state of Georgia. Construction of the plant in Georgia is due to
begin in 2022 and vehicle production at the facility is scheduled
to start in 2024. In terms of financial results, the company's
expenses increased with model launches and the launch of
manufacturing of the electric delivery van (EDV) and the R1-based
products, the R1T truck and the R1S sport utility vehicle (SUV).
Rivian's financial results in the third quarter seem to be in line
with the company's manufacturing and launch activities during the
quarter. The EV manufacturer is positioned with a notable amount of
available funding to continue ramping up production. Rivian did not
provide any specific guidance on its 2022 financial performance,
focusing on providing an update on its efforts to ramp up
production of its consumer truck and SUV, as well as confirming the
second EDV product. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Logistics company DHL Supply Chain has ordered 100 trucks
equipped with TuSimple's self-driving technology. The trucks are to
be built by Navistar and delivered between 2024 and 2025. According
to an Automotive News report, citing company executives, these
trucks are to be installed with TuSimple's self-driving equipment
during production by Navistar, and DHL is to obtain the
self-driving technology on a subscription basis as part of
TuSimple's long-term business plan. TuSimple CEO Cheng Lu
reportedly said, "Retrofitting a truck is simply not scalable."
(IHS Markit AutoIntelligence's Stephanie
Brinley)
Motional has partnered with Uber Technologies to deliver food
orders using autonomous vehicles (AVs) in California (US).
According to a company statement, Motional will begin delivering
meals from select restaurants on Uber's food delivery app Eats in
Santa Monica in early 2022. Motional will deploy its
next-generation electric Hyundai IONIQ 5-based robotaxi, which is
capable of Level 4 autonomous functions, for the delivery service.
Karl Iagnemma, president and CEO of Motional, said, "We're proud
that our first delivery partner is Uber and are eager to begin
using our trusted driverless technology to offer efficient and
convenient deliveries to customers in California. We're confident
this will be a successful collaboration with Uber and see many
long-term opportunities for further deploying Motional's technology
across the Uber platform." (IHS Markit Automotive Mobility's
Surabhi Rajpal)
The Bank of Mexico (Banco de México: Banxico) on 16 September
increased the policy rate by 50 basis points to 5.50%. At its
previous four meetings, it had increased the rate by 25 basis
points. By accelerating the pace of the increases, Banxico is
signaling its heightened concern about high inflation and a firm
stance against it. (IHS Markit Economist Rafael
Amiel)
Inflation in Mexico amounted to 7.4% at the end of November,
very high by most standards and well above the central bank's
target of 3% +/- 1 percentage point. As in most countries in the
world, the drivers of inflation are high energy prices, high food
prices, supply-chain disruptions, and shortages. The most
concerning part of the inflationary picture is that inflation in
services is also increasing, which implies that there have been
second-round effects or contagion from the price escalation that
started in the energy and food sectors.
The bank points out that inflationary expectations for 2022
have increased and that markets are reacting to this inflationary
environment: long-term interest rates are increasing, and the
exchange rate is depreciating.
In terms of risks, the bank highlights several upside risks:
external inflationary pressures, a further depreciation of the
exchange rate, increases in costs, persistently high core
inflation, and higher energy and food prices.
It also highlights downside risks to inflation: the widening of
the slack in the economy, the appreciation of the Mexican peso, and
possible social distancing measures that may reduce further demand
for services.
Europe/Middle East/Africa
Most major European equity indices closed lower except for UK
+0.1%; Italy -0.6%, Germany -0.7%, Spain -0.8%, and France
-1.1%.
Most 10yr European govt bonds closed higher except for UK flat;
Italy -6bps, Spain -4bps, and France/Germany -3bps.
iTraxx-Europe closed +1bp/51bps and iTraxx-Xover +3bps/253bps,
which is -1bp and -7bps week-over-week, respectively.
Brent crude closed -2.0%/$73.52 per barrel.
Despite the sooner-than-expected interest rate rise and
although inflation is likely to climb even further above target in
early 2022, the Bank of England (BoE) is unlikely to resort to a
flurry of rate increases. The Monetary Policy Committee (MPC)
believes that the appropriate policy stance "will as always focus
on the medium-term prospects for inflation, including medium-term
inflation expectations, rather than factors that are likely to be
transient". (IHS Markit Economist Raj
Badiani)
The MPC voted 8-1 to increase the Bank Rate by 15 basis points
to 0.25% at its meeting that ended on 15 December. The dissenting
voice was Silvana Tenreyro who voted against this proposition,
preferring to maintain the Bank Rate at 0.1%.
The BoE last raised its policy rate in August 2018, by 25 basis
points to 0.75%.
However, the MPC voted unanimously to maintain the stock of
sterling non-financial investment-grade corporate bond purchases at
GBP20 billion (USD28 billion), financed by the issuance of central
bank reserves.
Meanwhile, the MPC voted 9-0 in favor of the BoE maintaining
the stock of UK government bond purchases, financed by the issuance
of central bank reserves, at GBP875 billion, and thus the total
target stock of asset purchases at GBP895 billion.
As of 15 December, the total stock of assets held in the Asset
Purchase Facility had reached GBP893 billion, including GBP149
billion of the GBP150-billion program of UK government bond
purchases announced on 5 November 2020. The BoE announced that its
final gilt purchase auction took place on 15 December, ensuring
that the program was complete by the time of the MPC's December
policy rate decision.
The MPC sanctioned an immediate rise in the Bank Rate in the
face of stronger-than-expected inflation developments since its
November meeting. The 12-month rate of increase in the consumer
price index (CPI) climbed to 5.1% in November, and it is now likely
to peak at an even higher 6.0% by around April 2022, the highest
rate for 30 years.
Furthermore, the MPC stated that policy inaction "when CPI
inflation was materially above the 2% target and the output gap
appeared to be closed might cause medium-term inflation
expectations to drift up further".
Another trigger for the policy rate rise was the MPC receiving
further evidence that the end of the Coronavirus Job Retention
Scheme (CJRS) on 30 September and the subsequent release of 1.1
million furloughed workers had a limited impact on the labor
market. Specifically, the Labour Force Survey (LFS) unemployment
rate fell to 4.2% in the three months to October, while the number
of payrolled employees continued to rise briskly in November.
Switch Mobility has announced that is establishing a battery
electric bus manufacturing facility in Spain. According to a
statement, the company will invest EUR100 million into a site in
Valladolid over a 10-year period. The plan is to install two
production lines, and the first vehicles are set to be built during
the fourth quarter of 2022. Initially vehicles built at this
factory will be for the European market, but that it will also have
the capacity to serve other regions, including South America. The
site is also planned to undertake research and development
(R&D) of the company's next-generation buses and light
commercial vehicles (LCVs). It is anticipated that the investment
will eventually create 2,000 direct jobs and another 5,000 indirect
roles. Ashok Leyland renamed its UK-based bus business Optare Group
to Switch Mobility during November 2020. Reflecting a shift in
trends and the expected growth in the electric bus and LCV globally
during the coming decade, the move represented a pivot towards
"Electric and Green Mobility". Following the implementation of this
new name, it also set up a new subsidiary in India, Switch Mobility
Automotive Limited, that will support its battery electric vehicle
(BEV) strategy in the country and is already moving forward with
plans to begin production of such vehicles in India. The company
has also outlined a strategy to invest around USD200 million in
Switch Mobility during the next few years. Although USD130 million
is said to have already been spent, the beginning of production at
this site in Valladolid is also likely to form part of this
expenditure as it scales up this business. (IHS Markit
AutoIntelligence's Ian Fletcher)
November's jump in eurozone Harmonised Index of Consumer Prices
(HICP) inflation from 4.1% to 4.9% has been confirmed in Eurostat's
final release. As a reminder, this surpasses both the historical
high (of 4.1% in 2008) and the initial market consensus expectation
(of 4.4%) by some distance. (IHS Markit Economist Ken
Wattret)
Energy inflation was again pivotal to the increase in November,
rising to yet another new (and slightly upwardly revised) record
high of 27.5% (see table below). Remarkably, the recent surge in
energy inflation has surpassed the previous high from 2008 by more
than 10 percentage points. Despite having a weight of just over 9%
in the HICP, energy inflation contributed more than half of
November's inflation rate (2.6 percentage points.
The eurozone HICP inflation rate excluding food, energy,
alcohol, and tobacco prices has been confirmed at 2.6% in November,
up from 2.0% and also a record high. Inflation rates for services
(2.7%) and non-energy industrial goods (NEIG, 2.4%), accounting for
around 60% and 40% of the core index, respectively, increased
sharply in November.
Germany's headline Ifo index, which reflects business
confidence in industry, services, trade, and construction combined,
has declined at a somewhat accelerated pace in December, from 96.6
in November to 94.7. This is the lowest level since February and
equally undershoots both the pre-pandemic level of February 2020
(96.4) and the long-term average of 97.1. The Ifo institute wryly
commented that "the German economy isn't getting any presents this
year". (IHS Markit Economist Timo
Klein)
Business expectations have worsened only slightly less than the
headline measure in December, slipping from 94.2 to an 11-month low
of 92.6. This is nearly five points below the long-term average
(97.5), although still well above the all-time low of 71.7 in April
2020. The retail and service sectors are the driving elements to
the downside in December, although construction firms have also
turned a lot more pessimistic about the next six months. Only the
manufacturing sector has gone against the trend, for the second
consecutive month, confirming that concerns about the persistence
of supply chain issues seem to be easing somewhat. This makes
itself felt in the automotive industry in particular.
Meanwhile, the assessment of current conditions has worsened at
its fastest pace since the initial pandemic shock in March-April
2020. It has fallen from 99.0 last month to a seven-month low of
96.9, which is almost even with its long-term average of 96.7 and
now clearly below its pre-pandemic level of 99.1 in February 2020.
Unlike expectations, the current situation index has declined
across all sectors - only modestly so in manufacturing and
construction, but quite sharply in the service sector and
especially among retailers. This pattern is closely linked to the
renewed tightening of administrative restrictions in an attempt to
regain control over the pandemic. This has greatly reduced the
access of unvaccinated people to most shops (except those for
essential day-to-day needs) and services.
Pulling current conditions and expectations together,
December's sectoral breakdown96 confirms that the retail sector has
experienced the sharpest drop in confidence towards the end of
2021. This is followed by services, which had already declined
quite strongly in November. The deterioration is more limited in
construction and the wholesale sector, while the overall
manufacturing climate has edged up for the first time since June as
companies have built up a considerable stock of orders and as they
appear to be seeing light at the end of the tunnel with respect to
supply chain bottlenecks.
Daimler has said that one of the biggest challenges the company
currently faces for its move to electrification is the ethical
sourcing of battery materials, according to a Bloomberg report.
Commenting in the report Daimler's head of integrity and legal
affairs Renata Jungo Brüngger said that cobalt and lithium are the
most difficult to source ethically as a result of the
well-documented issue of them coming from countries with poor human
rights records or a history of child labor. The obvious example of
this is the world's biggest supplier of Cobalt, the Democratic
Republic of Congo (DRC). Daimler is planning to become an
all-electric brand by 2030, where market conditions allow, and
battery material sourcing is therefore a primary concern for
Daimler and other OEMs. Jungo Brüngger said, "Cobalt, lithium,
nickel, rare earths, those will remain the problematic cases. You
have got long supply lines in parts and countries with significant
challenges." Brüngger also said that the company is coming under
increasing investor scrutiny in terms of how it sources battery
materials, with investors increasingly aware of the huge
reputational harm a misstep in this area could lead to. She said
that investors are now grilling the company in-depth, bringing
along specialists to discuss supply chains and human rights to
investor meetings and calls to ask detailed questions about
materials sourcing. The ethical sourcing of battery materials is
one of the biggest issues that the automotive industry faces in its
shift to electrification. The issue of cobalt procurement is
well-known and one of the steps carmakers are looking at is
eliminating the use of the material in future battery technologies.
While cobalt is prevalent as a cathode material in current battery
technology, it is not required for EV batteries. There are already
battery chemistries that do not require cobalt, such as those that
use nickel-ion-aluminum cathodes, or lithium-ion phosphate. Tesla's
current batteries contain less than 5% cobalt and the company
announced in September 2020 that it was developing its own
batteries that would be cobalt-free, with other OEMs following
suit. (IHS Markit AutoIntelligence's Tim Urquhart)
As anticipated, the Turkish central bank cut its main policy
rates by 100 basis points on 16 December despite rising inflation
that is well above the current one-week repo rate. Predictably, the
lira's depreciation intensified immediately after the cut. Although
the central bank has indicated that this should be the last cut for
now, risks are high that President Recep Tayyip Erdoğan will force
more cuts. Already in crisis, lira losses would further intensify
should rate cuts continue, jeopardizing 2022 external obligations.
As widely anticipated, the Central Bank of the Republic of
Turkey (TCMB) cut its main policy rate, the one-week repo rate, by
100 basis points at its regularly scheduled, 16 December Monetary
Policy Committee meeting. The rate now stands at 14.0%, down by 500
basis points since this current rate-cutting cycle began at the
September meeting.
Previously, TCMB Governor Şahap Kavcıoğlu had suggested that
the room for further rate cutting was narrowing, leading IHS Markit
to consider that this cut might have been smaller than the previous
ones in the current cycle. However, since those comments,
continuous rhetoric from President Recept Tayyip Erdoğan made clear
that no such moderation in TCMB actions would occur in
December.
The TCMB continues to cut interest rates even as the prevailing
rate of inflation remains far above the policy rate. In November,
the headline consumer price inflation rate was 21.3%, now 730 basis
points above the main policy rate. The core inflation rate - which,
previously, Kavcıoğlu had suggested was the more important figure
to consider in setting the rates - is now 360 basis points above
the main policy rate, at 17.6% as of November.
In its press release alongside the move, the Monetary Policy
Committee of the TCMB stated that despite elevated inflation
globally, in general, advanced economies were maintaining
supportive monetary policy. The Committee ignores, however that
across the emerging market economies, monetary policy has indeed
begun to tighten across the board, leaving Turkey alone in moving
the opposite direction.
Once again, the Bank suggested that current inflationary
pressures within Turkey were from "transitory effects of
supply-side factors and factors beyond monetary policy' control".
As such, the TCMB decided to make use of what it called the
remaining room to make the rate cut. A narrowing current-account
deficit, according to the Bank, would contribute to the slowdown of
inflation in the first quarter 2022.
The impact on the lira of the rate cuts in the face of rising
inflation and tightening monetary policy across the rest of the
emerging market world has been severe. Despite the clearly
telegraphed rate cut, the lira dropped by 3.9% against the US
dollar by the close of trading after the announcement, falling to
TRY15.23/USD1.00.
Intel's Mobileye is expanding its autonomous vehicle (AV)
testing program to Paris (France), according to a company
statement. Mobileye, in partnership with public transport operator
RATP Group, will launch an autonomous on-demand service in the
city. Employees of Galeries Lafayette Paris Haussmann will be able
to hail an AV to transport them to work using the Moovit app four
days a week. The vehicles will have a safety driver behind the
wheel to monitor operations. Côme Berbain, director of Innovation
for RATP Group, said, "As a leading operator of autonomous
mobility, we are very happy to offer to our client Galeries
Lafayette a new mobility service by associating our know-how with
Mobileye. This is an opportunity for the RATP Group to test a new
use case, an autonomous car service for companies, but also to test
the vehicle's autonomous technology for possible integration on
other transport modes such as a bus or minibus." (IHS Markit
Automotive Mobility's Surabhi Rajpal)
Asia-Pacific
Major APAC equity indices closed mixed; South Korea +0.4%,
Australia +0.1%, Mainland China -1.2%, Hong Kong -1.2%, India
-1.5%, and Japan -1.8%.
China's fledgling national emissions market enjoyed a trading
boom in recent weeks, but industry experts say Beijing needs to
push ahead with further regulatory reforms to achieve
decarbonization targets. (IHS Markit Net-Zero Business Daily's Max
Lin)
Trading volume in China Emissions Allowances (CEA) is up to
nearly 87.4 million metric tons (mt) of CO2e in December, according
to the Shanghai Environment and Energy Exchange, which manages the
national market.
Daily volume hit 20.5 million mt of CO2e 16 December, the
current record high.
Since trading started 16 July, cumulative volume has totaled
131 million mt of CO2e. Those CEAs changed hands for CNY 5.36
billion ($840 million).
Observers said the recent buoyancy comes as electricity firms
rush to acquire carbon credits to meet their year-end emissions
targets.
The national emissions trading scheme (ETS) covers 2,162
Chinese utilities that reported at least 26,000 mt/year of CO2 for
any calendar year from 2013 through 2019. Each company has an
emissions quota calculated every year based on carbon intensity
rules in China.
According to the government's regulatory design, Refinitiv
estimates that 95% of the power companies had to hold sufficient
allowances to stay compliant in their yearly cycle by 15 December,
while the rest need to do so by 31 December.
Yuan Lin, lead carbon research analyst at Refinitiv, said the
Chinese carbon market is off to a strong start despite utilities
only being allowed to carry out spot trades in the current
iteration.
But the increase in demand failed to provide much of a boost to
carbon pricing. CEA closed at CNY 44.20/mt ($6.93/mt) 16 December,
compared with an opening price of CNY 48/mt on the first day of
trading.
The US Senate passed legislation to ban imports from China's
Xinjiang region over concerns about forced labor, part of
Washington's continued pushback against Beijing's treatment of its
Uyghur Muslim minority. The measure approved by the Senate had been
cleared earlier in the week by the US House of Representatives
after lawmakers agreed on a compromise that eliminated differences
between bills introduced in the two chambers. The compromise keeps
a provision creating a "rebuttable presumption" that all goods from
Xinjiang, where the Chinese government has set up a network of
detention camps for Uyghurs and other Muslim groups, were made with
forced labor, in order to bar such imports, Reuters states. The
measure now heads to President Joe Biden for his signature. (IHS
Markit Food and Agricultural Commodities' Hope Lee)
Xinjiang, ranked fourth by per capita of arable land, is
China's largest landed province/autonomous region, accounting for
one-sixth of the country's land area, IHS Markit previously
reported.
Following over 50 years of cultivation, the state-owned
Xinjiang Production and Construction Corps (the Corps) now owns
large amount of arable land, with major crops including tomato,
corn, cotton, wheat, walnuts, grapes, melons, chili, pears, apples,
dates/jujube and goji. In 2020, the Corps had 1.4 million hectares
of cultivated area, 2.2% up y/y; fruit 190,920 ha, 3.1% down
y/y.
The Corps' total fruit production was 4.65 million tons in
2020, 9.3% up y/y, according to the Corps' 2020 annual report.
Grain sat top of the agricultural and food commodities at 2.41
million tons in 2020, 4.8% up y/y.
Industrial tomatoes reached over two million tons while pears
amounted to 520,000 tons, 34% up y/y, the fastest growth among main
products.
Cotton generated the second largest production at 2.13 million
tons, 5.2% up y/y. The Corps contributed about 36.1% of national
cotton production in 2020.
It is noted that other privately owned entities or farmers also
actively operate in the agriculture sector. However, it is known
that the Corps contributes a big chunk of the agricultural
activities.
The sector also hires seasonal farm labor from other provinces
(i.e Sichuan and Henan) which have limited arable land and large
rural population.
In line with the "earlier supportive policy" vowed by President
Xi Jinping during the 2021 Central Economic Working Conference
(CEWC), mainland China's top legislature recently approved the 2022
quota for local government borrowing, ahead of the timetable set in
March next year. (IHS Markit Economist Yating
Xu)
As reported by the 21st Century Business Herald,
provincial-level governments have received their allocation for
local government bond issuance in 2022, a quarter earlier than the
allocation for this year. Quotas of both special-purpose bond (SPB)
and general-purpose bond (GPB) have been allocated.
According to the authorization by the Standing Committee of the
National People's Congress (NPC), the amount of early allocation of
local government bond could reach CNY2.19 trillion for 2022. The
quota of this batch of early allocation has not been released
yet.
Niutron, an electric vehicle (EV) startup launched its auto
brand, Niutron, on 15 December. The company, founded by Li Yinan,
also the founder of electric scooter company, Niu Technology, plans
to reveal its first model, the Niutron NV, in the first half of
2022. Deliveries for the new model are slated to begin in
September. Local media reports indicate that Niutron has been
engaged in research and development (R&D) activities on vehicle
development in 2018. Its manufacturing plant located in Changzhou,
Jiangsu province, is said to have a capacity of 180,000 units per
year. The company already has a team of 1,000 people, of which
mostly focus on R&D-related activities. It also shared some
information on its platform to give a glimpse of what to expect
from its first model. The Niutron NV, a larger sport utility
vehicle (SUV), will be based on the company's Gemini platform,
which can accommodate production of both battery electric vehicles
(BEVs) and extended-range electric vehicles (EREVs). The model is
likely to be positioned in the premium EV segment, although its
pricing strategy has yet to be confirmed by the company. (IHS
Markit AutoIntelligence's Abby Chun Tu)
The BoJ left its monetary policy unchanged during the 16 and 17
December monetary policy meeting (MPM). The bank will continue
quantitative and qualitative monetary easing (QQE) with yield curve
control (YCC). The BoJ also maintained its commitment to increase
the monetary base until the year-on-year (y/y) rate of rise in the
observed Consumer Price Index (CPI) exceeds 2% and stays above this
target in a stable manner. (IHS Markit Economist Harumi
Taguchi)
Regarding the special program to support financing in response
to COVID-19, the BoJ decided to end its additional purchases of
commercial paper (CP) and corporate bonds at the end of March 2022
as scheduled. The bank will gradually decrease the amounts
outstanding of these assets to the pre-pandemic levels. The
decision reflected improved financial conditions and favorable
issuance conditions for CP and corporate bonds.
The BoJ also decided to end fund-provisioning against eligible
loans to support large firms, as well as fund-provisioning against
private debt pledged as collateral, which was mainly to large firms
and housing loans, at the end of March as scheduled. While
financial conditions in Japan have picked up, improved business
conditions since the easing of COVID-19 containment measures and
progress in vaccinations were also a reason behind the
decision.
However, the BoJ decided to extend its special fund-supplying
operation, which facilitates financing mainly to SMEs, until the
end of September 2022. The extension reflected persistent severe
business conditions for SMEs, particularly for those in
face-to-face-services and as the December Tankan survey
indicated.
The BoJ's assessment remained largely unchanged in that Japan's
economy has picked up as a trend with gradual improvement in
private consumption. Its economic and inflation outlooks also
remained unchanged.
Samsung Electronics has unveiled a line-up of automotive memory
chips designed for next-generation autonomous electric vehicles
(EVs), according to a company statement. This includes a
256-gigabyte (GB) PCIe Gen3 NVMe ball grid array (BGA) SSD, a 2GB
GDDR6 DRAM, and a 2GB DDR4 DRAM for high-performance infotainment
systems. The company has also launched a 2GB GDDR6 DRAM and a 128GB
Universal Flash Storage (UFS) to support autonomous vehicle (AV)
systems. These new automotive memory products are currently in mass
production and meet the AEC-Q100 qualification - the global
automotive reliability standard. Jinman Han, executive
vice-president and head of memory global sales and marketing at
Samsung Electronics, said, "With the recent proliferation of
electric vehicles and the rapid advancement of infotainment and
autonomous driving systems, the semiconductor automotive platform
is facing a paradigm shift. What used to be a seven to eight-year
replacement cycle is now being compressed into a three to four-year
cycle, and at the same time, performance and capacity requirements
are advancing to levels commonly found in servers. Samsung's
reinforced lineup of memory solutions will act as a major catalyst
in further accelerating the shift toward the 'Server on Wheels'
era". (IHS Markit Automotive Mobility's Surabhi Rajpal)
The Delhi state government will deregister all diesel vehicles
that are 10 years old on 1 January 2022 in compliance with a
previous directive by the National Green Tribunal (NGT), reports
the Times of India. A no objection certificate (NOC) will be issued
for vehicles outside Delhi-National Capital Region (NCR), but this
excludes diesel vehicles 15 years old or more on the date of
application. The report cites an official from the Delhi government
as saying, "We have been taking action against old diesel vehicles,
and till date, around 100,000 such vehicles have been deregistered.
Now all such vehicles will be stringently de-registered from 01
January 2022. Around 200,000 diesel vehicles that are at least 10
years old will be deregistered from 01 January." (IHS Markit
AutoIntelligence's Isha Sharma)
Indian ride-hailing company Ola has raised USD500 million
through a term loan from international institutional investors,
reports the Economic Times. Ola says that the loan issuance
received a "staggering response" from investors, with commitments
and interest of approximately USD1.5 billion. Bhavish Aggarwal,
founder and chief executive of Ola, said, "The overwhelming
response to our Term Loan B is a reflection of the strength of our
business and our continued focus on improving unit economics
alongside rapid growth." This comes as Ola prepares to go public in
the first half of 2022 and is expected to raise up to USD1 billion
through an IPO. (IHS Markit Automotive Mobility's Surabhi
Rajpal)
Posted 17 December 2021 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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