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Global equity markets closed mixed, while benchmark government
bonds ended the day lower across Europe and the US. iTraxx credit
indices widened modestly, while CDX IG was flat and high yield was
tighter on the day. Oil prices were higher on the day, as US Gulf
Coast production and refining is being halted as two major storms
begin to approach the region. All eyes will be on Fed Chairman
Powell's speech tomorrow at the virtual Jackson Hole Economic
Policy Symposium, as he is expected to outline changes to the
Federal Reserve's monetary policy approach to confronting inflation
risk.
Americas
Most US equity markets closed modestly higher except for DJIA
-0.2% and the S&P 500 closed at a new record high; Nasdaq
+0.8%, S&P 500 +0.4%, and Russell 2000 +0.2%.
10yr US govt bonds closed +3bps/0.69% yield and 30yr bonds
closed +4bps/1.40% yield.
Fed Chairman Powell is expected to open the Kansas City Fed's
annual economic policy conference (usually held in Jackson Hole,
WY) tomorrow with an update on the U.S. central bank's plans to
refit its monetary policy approach to a world where persistently
low inflation and low interest rates numb the effects of the Fed's
recession-fighting stimulus measures. (Reuters)
CDX-NAIG closed flat/66bps and CDX-NAHY -6bps/377bps.
Gold closed -0.8%/$1,923 per ounce and is now -6.6% from its
all-time high close of $2,069 per ounce on 6 August.
Crude oil closed +1.7%/$43.35 per barrel.
Seadrill Limited reported a net loss attributable to
shareholders of USD181 million and an operating loss of USD88
million for the second quarter of 2020, compared to a net loss of
USD1,564 million and an operating loss of USD1,284 million for the
first quarter of 2020 after making material asset impairments.
Seadrill is continuing to evaluate capital structure proposals from
its financial stakeholders. While no agreement has been reached at
this point, the company expects that potential solutions will lead
to significant equitization of debt which is likely to result in
minimal or no recovery for Seadrill's current shareholders.
Seadrill had previously announced plans to scrap up to 10 rigs
within its fleet. The company has stated that it does not believe
that the reactivation of cold-stacked assets in the current
environment represents an appropriate use of cash nor return on
investment. Seadrill currently has two drillships, four jackups,
three tender rigs and 10 semisubmersibles cold stacked. (IHS Markit
Upstream Costs and Technology's Matthew Donovan)
A large chunk of oil and natural gas production in the Gulf of
Mexico will be offline for several days as operators wait for
Hurricane Laura to move inland. Offshore production shut-ins
started over the weekend as Tropical Storm Marco, which has now
fizzled out, moved through the region. According to the latest
report from the Bureau of Safety and Environmental Enforcement,
84.3% of Gulf crude production—or 1.56 million b/d—has been
taken offline. Operators have also shut in 1.65 Bcf/d of natural
gas production, or 60.9% of all Gulf gas output. In addition, BSEE
reports that personnel have been evacuated from a total of 299
production platforms, or 46.5% of the 643 manned platforms in the
Gulf. All of the 16 dynamically positioned rigs operating in the
Gulf have been moved out of the storms' project paths as a
precaution. (IHS Markit Plays and Basins' Jeff Gosmano)
The US Conference Board Consumer Confidence Index fell 6.9
points (7.5%) to 84.8 in August after a similar decline in July,
bringing the index to a new COVID-19-era low at a level last seen
in May 2014. The August reading is consistent with our continued
expectation for sharply slower growth of consumer spending in the
fourth quarter. (IHS Markit Economists David Deull and James
Bohnaker)
The present situation index led the decline, falling 11.7
points to 84.2, while the expectations index fell 3.7 points to
85.2. The two measures have essentially converged, suggesting that
even as economic activity has partly recovered after the business
closures during the spring, consumers have lowered their
expectations about the pace of recovery going forward.
The labor index (the percentage of respondents viewing jobs as
plentiful minus the percentage viewing jobs as hard to get)
returned to negative territory in its first drop since April,
falling 5.9 points to -3.7%. A net 7.2% of respondents expected
employment conditions to improve six months hence, down from 24.0%
in June.
Purchasing plans dipped in August. The share of respondents
planning to buy autos in the next six months fell 2.8 percentage
points to 9.7%, while the share planning to buy major appliances
fell 3.4 points to 44.8%. The share planning to buy homes fell 1.8
percentage points to 5.9%.
With consumer spending on durable goods in June and sales of
new and existing homes in July well exceeding their pre-pandemic
levels, the decline in purchasing plans is likely driven at least
in part by consumers now having conducted the purchasing they had
previously planned.
The share of respondents planning a vacation in six months, at
35.6%, was slightly higher than in June, but the share planning
such a trip specifically by airplane (12.4%) was the lowest since
early 1975.
Federal income support is flagging and the COVID-19 pandemic
wears on. Although economic activity is greater than at its
springtime depths, consumers are now reconciling themselves to a
new, more socially distant normal.
US carrier American Airlines has said it will cut 19,000 jobs
at the beginning of October as a result of its reduced flight
schedule during the coronavirus pandemic and the expiration of
federal aid. American said on Tuesday the reductions include
furloughs of 17,500 employees and 1,500 management job cuts.
(FT)
Over the past week, chicken wings were once again trading over
$2. How could that be? Unemployment is over 10%. The traditional
autumn start of wing season still is more than a month away. Most
potentially, televised sporting events have been cancelled or
postponed so as not to imperil fans or athletes with COVID-19
infection. Those sports bars keeping their doors open do so with
severe seating capacity limits and their myriad TV screens tuned
mostly to re-runs. Casual dining traffic flow is at a trickle. Even
at fire sale price levels, domestic dark meat interest flounders,
global broiler meat exports appear to be losing momentum, and the
USDA national weighted average cutout has struggled below $0.75 per
pound since March. However, wing prices imply defiance. (IHS Markit
Food and Agricultural Commodities' Roger Bernard)
US new home sales sizzled again in July, rising 13.9% (±20.0%)
to a seasonally adjusted annual rate of 901,000—the highest
since December 2006. The reading, like the previous one, was not
statistically significant, however (90% confidence intervals). (IHS
Markit Economist Patrick Newport)
Sales in the South and Midwest skyrocketed to 13-year highs
(the reading for the Midwest was statistically significant; that
for the South was not).
Sales for the prior three months were revised up a cumulative
19,000.
The number of units for sale dropped 5,000 to 299,000;
completed homes for sale came in at 61,000, down 5,000.
The months' supply of unsold homes fell 0.6 months to 4.0
months.
The median price in the second quarter fell to 330,600—7.2%
above the year-earlier level; the average price was up 4.8% year on
year at $391,300.
Although most of the numbers in this report fail the
statistical significance threshold, they are consistent with other
housing data, including existing home sales numbers, in showing
activity rising above pre-pandemic levels in July.
The housing market is reaping the benefits of record-low
interest rates and pent-up demand. But low inventory levels, which
have led to bidding wars, are also fanning the flames.
For the fourth month in a row, S&P CoreLogic Case-Shiller
composite data in June were limited to only 19 cities as opposed to
20 under normal circumstances. Data for Wayne County, Michigan,
were unavailable and as a result, there are no data for Detroit in
this release. (IHS Markit Economist Troy Walters)
The 10-city index slipped 0.1% month over month (m/m) in June
while the 20-city index was flat.
Home prices were up month on month (m/m) in 12 of the 19 cities
reported. Gains ranged from 0.7% in Charlotte to just 0.1% in
Miami.
On an annual basis, home price growth slowed slightly again in
June. The 10-city index was up 2.8% year on year (y/y), slower than
May's reading of 3.0%. The 20-city index was up 3.5% y/y compared
with 3.6% in May.
Despite decelerating, y/y price growth in June remained well
into positive territory, with prices higher than one year ago in
all 19 cities reporting. Increases ranged from 9.0% in Phoenix to
just 0.6% in Chicago.
Growth in the national index held steady at 4.3% y/y in
June.
The Federal Housing Finance Agency (FHFA) House Price Index
(HPI) increased 5.4% from a year earlier. This is slower than the
first quarter's 5.9% gain—but that comparison is misleading.
Prices accelerated in June, after dipping in May, and all signs
indicate that the housing market heated up in July. (IHS Markit
Economist Patrick Newport)
Quarterly house prices rose in all 50 states, with Idaho (up
10.8%), Arizona (up 9.1%), Washington (up 8.6%), Utah (up 8.1%),
and New Mexico (up 7.7%) leading the way; West Virginia and North
Dakota, where prices increased 1.1%, were the two laggards.
Prices also rose in 99 of the largest 100 metropolitan areas
(San Francisco witnessed a 0.3% decline).
The monthly index jumped 0.9% month on month (m/m) in
June—the largest gain in seven years. In May, this index fell
for the first time in over three years. The monthly index was up
5.7% from a year earlier.
Eight of nine divisions posted solid monthly gains; the index
for the South Atlantic Division fell 0.1% for the second straight
month. All nine divisions registered solid year-on-year quarterly
gains.
Autonomous vehicle (AV) sensor manufacturer Luminar
Technologies is planning to go public through a merger agreement
with Gores Metropoulos, a special-purpose acquisition company
(SPAC). This will bring Luminar's market value to USD3.4 billion,
reports Reuters. The deal includes USD400 million of cash from
Gores Metropoulos and USD170 million of financing from investors
including Alec Gores, Van Tuyl Companies, Peter Thiel, Volvo Cars
Tech Fund, Crescent Cove, Moore Strategic Ventures, GoPro founder
Nick Woodman, and VectoIQ. As part of the agreement, the combined
company will retain the name Luminar Technologies Inc and will be
listed on the NASDAQ stock exchange under the ticker symbol LAZR.
The deal is expected to be closed in the fourth quarter of this
year. (IHS Markit Automotive Mobility's Surabhi Rajpal)
The Utah Department of Transportation (UDOT) has launched a
five-year program to test vehicle-to-everything (V2X) communication
technology in the US state. UDOT is working with Panasonic to
deploy 80 roadside radio units that can receive and transmit data
from cars that have 5.9-GHz radio transmitters. The radio units
gather data from passing vehicles and process it using artificial
intelligence technologies to send out important information,
including warning drivers of unsafe conditions and road closures
due to accidents or hazards in the road such as potholes or rocks.
Blaine Leonard, UDOT engineer, said, "The real key is the long-term
plan to improve safety on our roads. This is a technology that is
unique in that while we're still waiting for coming autonomous
vehicles, V2X is here now, usable now and ready to give us a
benefit." V2X technology is designed to allow vehicles to
communicate directly with other vehicles, pedestrians, devices, and
roadside infrastructure, and assists the operation of advanced
driver assistance systems (ADAS). Utah is among eight US states
that have participated in an initiative to make available data on
autonomous vehicle (AV) testing through an online and public-facing
platform (see United States: 16 June 2020: US regulator launches
initiative to make nationwide data available on autonomous vehicle
testing). Last year, UDOT and the Utah Transit Authority (UTA)
teamed up to launch a pilot project using French company EasyMile's
autonomous shuttle. (IHS Markit Automotive Mobility's Surabhi
Rajpal)
Patrick Collignon has launched startup TrovaCV, based in the US
state of Virginia. The new company will "focus on the engineering,
design and production of fully electric commercial vehicles with
the goal of achieving mass production cost-effectively," the
company press statement says. Collignon is quoted as saying, "This
is an exciting time as the electric commercial vehicle market is
being reshaped. While technology and innovation have made it
possible to convert fuel-powered commercial vehicles into electric
vehicles, we haven't seen a production model capable of producing
the required volume of fully electric commercial vehicles to meet
the demand. We believe that our engineering approach will offer
OEMs the opportunity to build a higher volume of electric vehicles
at a lower cost. At the same time, we will utilize our chassis
design experience to achieve a complete EV build design from the
ground up." The new company's website opens with the tag "Get Your
Fleet Moving: Your Partner into Alternative Drive-Line Vehicles."
Trova aims to offer product cost reduction services, industrial and
manufacturing engineering services, launch management, on-site
full-service management and complete vehicle manufacturing,
according to its web site. TrovaCV appears to be largely aimed at
supplying expertise, knowledge and engineering support, compared to
a company like Nikola, which is focused on vehicle production. (IHS
Markit AutoIntelligence's Stephanie Brinley)
Brazil's crude steel production rose 21% in July to 2.59 mt
from 2.14 mt in June, according to Brazilian Steel Institute data.
July volume was also 3% higher than 2.51 mt produced in the same
month last year, after operations restarted at three of 13 blast
furnaces that have been idled. Brazil's big steel makers --
Usiminas, Companhia Siderúrgica Nacional (CSN) and ArcelorMittal --
are working at nearly 70% capacity. Some of those 13 units have
been under maintenance since the end of last year and have not
restarted, while others were idled during the peak of the pandemic.
The timing for resumption of the remaining idled operations is
uncertain. Crude steel production in January-July 2020 was 17.07
mt, down 14% year on year from 19.75 mt in January-July 2019,
falling on reduced steel demand from the automotive industry and
infrastructure. Brazil will see its real GDP decrease by 7.4% in
2020, according to IHS Markit data. Crude steel output during the
first seven months of the year annualizes at 29.27 mt, which would
be a drop of 9% of last year's total of 32.34 mt.
Europe/Middle East/Africa
European equity markets closed mixed; UK -1.1%, Italy -0.4%,
and Germany/France/Spain flat.
10yr European govt bonds closed sharply lower across the
region; Italy +9bps, France/Spain +7bps, Germany +6bps, and UK
+5bps.
iTraxx-Europe closed +1bp/55bps and iTraxx-Xover
+3bps/329bps.
Brent crude closed +1.6%/$45.86 per barrel.
Germany's headline Ifo index, which reflects business
confidence in industry, services, trade, and construction combined,
has posted an increase for the fourth consecutive month, rising
from 90.4 to 92.6 in August. (IHS Markit Economist Timo Klein)
This level means that business confidence has not quite
returned to February's pre-COVID-19 pandemic reading of 95.8.
However, the March level of 86.1, which already reflected the
beginning of the COVID-19 lockdown, has been surpassed for the past
three months now.
The long-term average of 97.2 is coming in sight, and the Ifo
institute summarizes the results by saying that "the German economy
is on the road to recovery".
Expectations were no longer the driving component in August's
survey, only edging up by 0.8 points from 96.7 to 97.5. However,
this is the highest reading since November 2018. Expectations
improved the most in the manufacturing and services sectors. The
same applies to current conditions, the overall index for which has
increased by a robust 3.4 points to 87.9.
The breakdown by sector also reveals that, while the loosening
of lockdown restrictions during May and June initially benefited
the retail and service sectors the most, the previously somewhat
lagging manufacturing sector is now catching up.
German GDP declined by 9.7% quarter on quarter (q/q) in the
second quarter of the year, slightly less than the 10.1% released
with the flash data on 30 July. (IHS Markit Economist Timo Klein)
The detailed breakdown now available for the first time reveals
that the largest burden came from private consumption, followed by
net exports and investment in equipment.
Although exports dropped by one-fifth from first-quarter
levels, imports were not far behind, limiting the external burden
on GDP growth.
Net exports subtracted 2.8% from quarterly GDP growth and final
domestic demand (excluding inventories) about 7.2%. This was
slightly offset by an increase in stocks that added 0.3% to overall
growth.
The stock increase in the second quarter should be seen as
involuntary, reflecting the plunge in final demand due to the
March-April lockdown.
At -20.3% q/q, exports declined at almost twice the pace of the
previous record during the global financial market crisis in early
2009. Indeed, even the cumulative export decline between mid-2008
and mid-2009 was smaller, at about -19%.
As already in the first quarter, imports held up better than
exports, but at -16.0% q/q they also dropped in extreme fashion,
twice the previous low recorded in the first quarter of 1993.
Switzerland's employment barometer for the second quarter,
published by the Federal Statistical Office, reveals the marked
deterioration that was expected in view of the COVID-19 virus
outbreak and the lockdown conditions it triggered during
March-April. (IHS Markit Economist Timo Klein)
The so-called BESTA statistics - based on a comprehensive
picture of the corporate landscape, using pension system statistics
that also include many micro firms and employees with less than six
weekly work hours - shows that seasonally adjusted employment
declined by 1.1% quarter on quarter (q/q) in the second quarter,
following a slight slippage already in the first quarter
(-0.1%).
This contrasts sharply with an average quarterly increase of
0.4% q/q during 2019. Having reached an all-time high of 5.15
million at the end of 2019, employment has now returned to its
early-2019 level.
In year-on-year (y/y) terms, employment growth has also become
negative now, posting -0.6% y/y in the second quarter after 0.9% in
the preceding quarter and 1.6% on average during 2019.
A comparable annual decline last occurred in mid-2009 during
the recession caused by the global financial market crisis.
As already observed in the first quarter, the breakdown by
economic sector for the seasonally adjusted data shows that
employment growth deteriorated to a greater extent in the service
sector (-1.1% q/q) than in industry (-0.5% q/q). This unusual
occurrence is linked to specifics of the pandemic, as any services
in the entertainment and recreation sectors - usually related to
large public gatherings - are affected the most by the need for
physical distancing.
Within manufacturing, employment in the car industry was hurt
the most in the second quarter (-6.7% q/q), while among services
the temporary employment sector (-18.9%) and the hotel/restaurant
industry (-7.8% q/q) were hit the hardest.
Vacancies, which had already plummeted to -13.3% y/y in the
first quarter, plunged to -26.9% y/y in the second quarter.
The annual change of the indicator of employment prospects for
the next quarter broadly stabilized, but at -3.4% y/y this remains
very low.
The indicator measuring the degree of perceived skill shortages
deteriorated anew from -3.9% to -5.0% y/y. This meant that the
share of firms (weighted by the size of their workforce) reporting
difficulties in finding qualified personnel broadly remained at the
first quarter's already low level (28.2%).
Nissan has delayed the restart of vehicle production at its
Barcelona (Spain) facility and at two other locations in the city
after supplier Acciona cancelled its contract with the company,
reports El Economista. Although the automaker had plans to resume
yesterday (24 August), the automaker said in a statement published
on 21 August that this was down to "external reasons beyond its
control". However, workers not able to work from home were expected
to go to the facilities to undergo training under new protection
protocols. The company now expects production of the e-NV200 to
resume on Line 1 at the site on 31 August, while manufacture of the
Nissan Navarra and Mercedes X-Class will follow on 7 September.
(IHS Markit AutoIntelligence's Ian Fletcher)
Czechia's automotive industry association Sdružení
automobilového průmyslu (AutoSAP) has said that it expects vehicle
production in the country to fall by 20% in 2020. This coincided
with the trade group revealing that passenger car registrations in
the country are now down by 29.7% y/y during the first seven months
of the year to 586,333 units, with a decline in July of 5.2% y/y to
82,718 units. At the same time, bus production in the country has
fallen by 8.3% y/y during to the year to date (YTD) to 2,728 units,
with a 11.7% y/y improvement recorded in July to 497 units. (IHS
Markit AutoIntelligence's Ian Fletcher)
On 21 August, Fitch Ratings downgraded the outlook on its
long-term issuer default ratings for Turkey from Stable to
Negative. The new outlook suggests that the current rating of BB-
could be revised downward within the next 12 months. (IHS Markit
Economist Andrew Birch)
The deterioration of the country's external financing position
was the primary reason cited by Fitch in its press release
alongside the move. Specifically, the evaporation of foreign
currency reserves, poor monetary policy, negative real interest
rates, and a large (and growing) current-account deficit are all
fueling increased risks.
On the other hand, Fitch points at several points of resiliency
to the country's sovereign risk position - including manageable
government and private debt, the ability of banks and corporates to
roll over existing debts and ongoing foreign currency
deleveraging.
With the move, Fitch's rating remains stronger than IHS Markit
or the other major rating agencies. S&P Global Ratings
(S&P) rates Turkey at B+ and Moody's rates the sovereign risks
at B1 - both one notch worse than does Fitch. IHS Markit is one
notch lower than those, at 60.
The UAE's gross domestic product declined by 0.3% in
year-on-year (y/y) terms in the first quarter of 2020, the Federal
Competitiveness and Statistics Authority (FCSA) announced. This was
the first annual decline since 2017, reflecting the impact of the
COVID-19 pandemic to a limited extent. (IHS Markit Economist Ralf
Wiegert)
Gross value added in the non-oil, non-financial sector declined
by 3.1% at the same time. The sector includes all of manufacturing,
construction, and services (except for banks and insurance) as well
as agriculture and fishing. Since the UAE had implemented lockdown
measures at the beginning of March, the effect on tourism revenues,
the hospitality sector, and aviation has already been partly
reflected in the released data.
Mining (mainly oil production), by contrast, surged ahead by
3.3% as oil output was boosted following the inconclusive OPEC
meeting in early March, which led the Arabian Gulf producers, led
by Saudi Arabia, to open taps and glut global markets.
Although relatively stable recent oil revenues, in combination
with the cautious recovery of the oil price, provide some
re-assurance for the UAE, it leaves still quite a few open
questions for the pace and the timing of the recovery of the
economy, including the non-oil services part, which is mainly
centered in Dubai.
Hitherto unreported, in May 2020 Hexicon AB announced that it
and Genesis Eco-Energy Developments had established a joint venture
(GenesisHexicon (Pty) Ltd) to explore South Africa's offshore wind
potential. GenesisHexicon (Pty) Ltd aims to develop large scale
floating wind projects, contribute to the Oceans Economy and clean
energy targets for South Africa, and transfer the Hexicon
intellectual property for deep water deployment to the South
African market. Hexicon has formed at least two other joint
ventures: in South Korea Hexicon's joint venture CoensHexicon is
together with Shell developing a floating wind farm with the
ambition to make it the world's first large scale floating wind
farm. WunderHexicon is Hexicon's joint venture with WunderSight,
with the aim of developing, installing and operating a demonstrator
semi-submersible floating platfom situated off the coast of Gran
Canaria with a similar project in Portugal. There are currently no
offshore windfarms in South Africa however, the potential for
offshore floating wind farms is significant. Henrik Baltscheffsky,
CEO of Hexicon mentioned that South Africa is one of the top ten
long term markets for deep water deployment. (IHS Markit Plays and
Basins' Justin Cochrane)
Asia-Pacific
APAC equity markets closed mixed; South Korea +1.6%, Japan
+1.4%, Australia +0.5%, India +0.1%, Hong Kong -0.3%, and Mainland
China -0.4%.
On 24 August, Wuhan City, the capital city of Hubei Province,
introduced eight measures to support business recovery in local
culture and tourism sector. (IHS Markit Economist Lei Yi)
Four measures focus on alleviating financial burden of tourism
enterprises in the near term. Interest discounts up to CNY500,000
will be provided to major tourism and hospitality enterprises,
applying to their new loans starting from 2019 and lasting into
2020. To help cover pandemic-incurred losses, cash subsidies will
be offered to travel agencies that experienced cancelation surges,
hotels that have been transferred to designated quarantine
facilities, tour guides that are still employed, and
non-state-owned museums that have reopened, etc. Local government
will also organize free vocational training programs for tourism
professionals.
Three measures aim to push for long-term upgrade of the local
tourism industry. Local government plans to use various incentives
for tourism enterprises to work on brand building and to further
integrate with other industries like high-end manufacturing and
digital content.
To boost tourism activities from the demand side, shopping
vouchers worth of CNY80 million will be distributed. This comes on
top of the province-wide free-entry policy for all A-level tourist
sites, which was introduced in early-August and will last until the
year end.
The municipal government of Shanghai published an action plan
on 20 August to guide the development of Lingang New Area in the
next three years, the same day that marks the first anniversary of
this newly expanded area of Shanghai free-trade zone. (IHS Markit
Economist Lei Yi)
Specific growth targets for 2020-22 were set in the action
plan, including gross regional value-added to expand on average at
25% year on year, three-year cumulative industrial output to reach
CNY600 billion, and total value of imports and exports to top
CNY115 billion by 2022.
Local government will lower corporate income tax rate to 15%
(compared with 25% nationwide) in the first five years of setup to
attract enterprises and form business clusters for key cutting-edge
industries, including integrated circuit, artificial intelligence,
biomedicine, and civil aviation. Over 1,500 high-tech companies and
innovative institutions should be set up in the area, with over 20
regional headquarters and 200 financial firms by the end of
2022.
Efforts will also be made to improve funding conditions, as the
local government required that funds used for supporting the real
economy should top CNY150 billion by 2022, and enterprises'
cross-border financing should expand at above 50% year on
year.
Additionally, local government will increase the coverage of 5G
network to 100%, public transport network density by 20%, and total
residential construction area by 9 million square meters for urban
function enhancement.
The unveiled plan aims to make better use of existing
preferential policies to develop the Lingang New Area into a new
growth engine for Shanghai. Despite the pandemic impact, Lingang's
total industrial output is estimated to have expanded at 26% year
on year through the end of July, with industrial investment up by
69.8% year on year.
Chinese automaker GAC Motor Corporation (GAC) has started
deliveries of the Aion V electric sport utility vehicle (SUV) in
the Chinese market. Consumers in Shanghai are among the first ones
to take their Aion V home. Deliveries to customers in Chongqing,
Beijing and Guangzhou are expected to begin on 29 August. The Aion
V is the third model in GAC's Aion electric vehicle (EV) line-up.
The model provides four variants with different battery sizes. The
long-range version with a 80-kWh battery pack can deliver a NEDC
range of 600km. The standard-range version, with a 70-kWh battery
pack, provides a NEDC range of 500km. The Aion V starts from
CNY159,600(USD23,097) after subsidies. (IHS Markit
AutoIntelligence's Abby Chun Tu)
Zero sugar is the health theme in China, incorporated in all
sorts of beverages. Wahaha reported that its fizzy water sales rose
by 41% in H1 compared with the same period of last year. Its
zero-sugar water with was first introduced in 2010. By end of July
2020, it had sold two billion bottles. In 2019, Wahaha launched its
pH 9.0 alkaline water within the carbonated water line, following
two years of research and development. It contains no sugar or
carbon dioxide. The sales of its alkaline water increased 235% in
H1 2020. Wahaha is planning to launch new products, including
bubble tea, to attract younger consumers. Wahaha has over 7,000
distributors in China and has recently attracted analysts'
attention by its expansion into e-commerce and the rumor that it
will seek a public listing in the next couple of years. At JD.com,
Wahaha pH 9.0 lightly alkaline water, lemon flavor, zero sugar,
sells CNY58 (USD8.38) for 500ml*15 bottles. Coca-Cola's Schweppes,
carbonated water, zero sugar, lemon flavor, 330ml*8 bottles at
CNY48.8. According to a Frost & Sullivan report, China's soft
drinks retail sales amounted to USD142 billion in 2019, with a CAGR
of 5.9% from 2014 to 2019. The market is expected to reach USD190
billion by 2024. The soft drinks industry in the east and the south
is slowing down. There is still a window of opportunity to develop
health and wellness beverages. (IHS Markit Food and Agricultural
Commodities' Hope Lee)
South Korean vehicle registrations stood at 24.02 million units
at the end of June, up 1.4% from 23.68 million units at the end of
2019, according to data released by the South Korean Ministry of
Land, Infrastructure, and Transport (MOLIT) and reported by the
Maeil Business Newspaper. The numbers translate into one vehicle
for every 2.16 people living in the country. "The number of car
registrations is likely to continue to grow for the time being,
though not rapidly, due to growing demand for hydrogen fuel-cell
electric and other less emitting models," said an unnamed MOLIT
official. Meanwhile, of the total at the end of June, locally
produced vehicles accounted for 89.4%, while imports made up for
the rest. Furthermore, the report also highlights that
alternative-powertrain vehicles accounted for 2.9% at a tally of
689,495 with 111,307 electric vehicles (EVs; up 52.9%), 570,506
hybrids (up 25.3%) and 7,682 fuel-cell electric vehicles (up
226.5%). Alternative-powertrain vehicles' share has been on a rise
from 0.5% in 2013, 0.7% in 2014, 0.9% in 2015, 1.1% in 2016, 1.5%
in 2017, 1.9% in 2018, and 2.5% in 2019, highlights the report.
(IHS Markit AutoIntelligence's Jamal Amir)
Thai vehicle production - including passenger vehicles and
light, medium, and heavy commercial vehicles - plunged by 47.7%
year on year (y/y) to 89,336 units in July, according to data
released by the Thailand Automotive Institute (TAI). Exports of
completely built-up (CBU) units fell by 39.7% y/y to 49,564 units
during the month. In the year to date (YTD), vehicle production in
the country is down 43.8% y/y at 695,468 units, while exports of
CBU units have declined by 37.7% y/y to 400,114 units. During July,
most OEMs present in Thailand have returned to normal two-shift
operation with higher outputs in the wake of revived domestic and
export demand following the relaxation of the COVID-19 virus
pandemic-related lockdown restrictions as well as improved consumer
confidence. Furthermore, OEMs received around 18,381 units of new
orders during the Bangkok International Motor Show 2020 that ran
from 15 to 26 July, showing a glimpse of auto market recovery from
the third quarter. (IHS Markit AutoIntelligence's Jamal Amir)
Posted 25 August 2020 by Chris Fenske, Head of Fixed Income Research, Americas, IHS Markit
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