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APAC equity markets closed mixed, while the US and European
indices were lower. US government bonds closed modestly higher and
benchmark European bonds were mixed. European iTraxx and CDX-NA
closed wider across IG and high yield. WTI and the US dollar closed
higher, while Brent, gold, silver, and copper closed lower.
Americas
US equity markets closed sharply lower and near the nadir of
the session; S&P 500/Nasdaq -2.6%, DJIA -2.1%, and Russell 2000
-1.9%.
Major stock indexes suffered their sharpest one-day losses
since October on Wednesday amid concerns about COVID-19 vaccine
distribution, while traders were also captivated by the frenzied
trading in GameStop and other heavily shorted stocks. GameStop
surged $199.53, or 135%, to $347.51 and AMC Entertainment Holdings
soared $14.94, or 301%, to $19.90, part of a battle between day
traders and short sellers. Both stocks are up more than 800% in
January. Until Wednesday, the broader market's moves had been
relatively muted in recent sessions, despite the wild swings in a
handful of individual stocks. (WSJ)
10yr US govt bonds closed -2bps/1.02% yield and 30yr bonds
-1bp/1.78% yield, with both bonds' yields slightly below the 6
January closing levels (which was the day after the dual democrat
victories in the US Senate run-off elections in Georgia).
The Federal Open Market Committee (FOMC) concluded its
scheduled two-day policy meeting this afternoon (27 January). The
statement released at the conclusion of today's meeting contained
no surprises. There was unanimous support among the 11 voting
members for the current stance of policy, which includes
maintaining the target for the federal funds rate at a range of
0.00-0.25% and continuing large-scale asset purchases at a rate of
approximately $120 billion per month. The Committee met amid
concern about near-term weakness related to the intensification of
the COVID-19 pandemic and cautious optimism for a stronger recovery
in the second half of the year as efforts continue toward
widespread vaccination. (IHS Markit Economists Ken Matheny and
Kathleen Navin)
CDX-NAIG closed +3bps/55bps and CDX-NAHY +10bps/320bps.
DXY US dollar index closed +0.5%/90.65.
Gold closed -0.3%/$1,845 per ounce, silver -0.6%/$25.39 per
ounce, and copper -1.7%/$3.56 per pound.
Crude oil closed +0.5%/$52.85 per barrel.
Global renewable energy capital expenditure is set to increase
14% in the five years ending 2025, compared with spending in the
2015-2019 period, according to IHS Markit. At the same time,
overall global energy sector capex is set to decrease 8%, research
published in January shows. (IHS Markit Climate and Sustainability
News' Keiron Greenhalgh)
Renewables' share of energy sector capex will average about 20%
over the forecast period, in line with 2020 levels, but an increase
of 4 percentage points compared with 2015-2019.
"The renewables investment boom is reshaping the global power
landscape. We expect combined global wind and solar PV installed
capacity to surpass global installed natural gas-fired capacity in
2023 and coal-fired capacity in 2024," said Roger Diwan, IHS Markit
vice president, research and analysis, adding that cost deflation
is super-charging that boom.
"Policy choices in the near term can boost these numbers.
Countries and companies are accelerating their renewables
ambitions, often anchored in net-zero emission targets, and a
number of key countries are likely to focus post-COVID crisis
spending on new green initiatives," said Diwan, one of the analysts
behind the research.
In 2021-2025, IHS Markit expects global energy sector capex to
nudge slightly higher than 2020 levels, reaching around $1.3
trillion/year over the period.
The decrease in overall capex in 2021-2025 relative to
2015-2019 is predicated on a slump in spending across the fossil
fuel sector, with investment in the upstream and downstream oil and
natural gas sectors, coal mining, and fossil fuel-fired power
generation (coal and gas) in the 2021-2025 period declining 20%
compared with 2015-2019 levels, according to the analysis.
With renewable generation and related industries becoming more
attractive than the oil and gas sector for investors, the energy
transition is poised to speed up, a trend illustrated by stock
market valuations.
Over the past five years, the stock price of Florida-based
generator and utility owner NextEra Energy has trebled to more than
$80/share. Its market capitalization is now above $160 billion,
surpassing ExxonMobil's at one point in 2020. Although ExxonMobil
re-asserted its position as the US' largest energy company in
recent months, with its share price hovering either side of $50 in
recent days after falling below $32 in late October, that is still
just over half the $95 valuation seen in July 2016 and nearly $90
as recently as January 2018.
Fossil fuel demand is estimated to have dropped by about 7% in
2020 compared with 2019, with oil demand alone falling 10%,
according to IHS Markit data.
Still, the picture is not all gloom and doom for hydrocarbon
producers, with stronger-than-expected oil and gas investment in
the near-term remaining plausible, especially as a price increase
to the $60-$70/bbl range for Brent in 2023-2024 is possible, the
analysts say.
Average consumer credit- and debit-card spending surged during
the first half of January, according to the Opportunity Insights
Economic Tracker. The jump in spending corresponded to, and was
likely driven by, the second round of economic stimulus payments,
disbursements of which began 4 January. Meanwhile, the IHS Markit
GDP-weighted US weekly containment index declined this week by 2.1
points to 49.7, as several states eased restrictions on social and
economic activity (California, Illinois, Ohio, Michigan, and
Oregon). (IHS Markit Economists Ben Herzon and Joel Prakken)
US manufacturers' orders for durable goods rose 0.2% in
December following a run of solid increases in recent months that
has raised orders back to the pre-pandemic trend. Shipments of
durable goods rose 1.4% in December, while inventories of durable
goods declined 0.2%. (IHS Markit Economists Ben Herzon and Lawrence
Nelson)
Orders and shipments of core capital goods continued to push
higher through December. They have both shot past their
pre-pandemic trends, suggesting robust growth of equipment spending
in both the fourth and first quarters; we estimate 25.1% annualized
growth in the fourth quarter and 10.9% annualized growth in the
first quarter.
This projection would leave equipment spending in the first
quarter roughly 6% above its level at the close of 2019. Businesses
appear to be catching up on equipment investment that was put on
hold during the early stages of the pandemic.
Resumed deliveries of Boeing's 737 MAX line of aircraft in
December boosted overall shipments. Following an extended
suspension, Boeing delivered 27 of these aircraft to US and
overseas customers in December.
Relatedly, inventories of durable goods declined 0.2% in
December. This was more than accounted for by a sharp decline in
inventories of civilian aircraft, reflecting resumed 737 MAX
deliveries at Boeing.
We had assumed a deceleration in inventories, but not a
decline, lowering our estimate of fourth-quarter inventory
investment.
US President Joe Biden has issued an executive order aimed at
more stringent adherence to 'Made in America Laws' applicable to
federal government purchases, as well as changes to processes for
waivers and increased transparency. The president said that he
would like to see the full government fleet move to zero-emission
alternatives and EVs. While the executive order sets the policy and
direction and is likely to have an impact on sourcing decisions at
the federal level, it does not specify new waiver requirements. The
president did not set any particular timeframe for the shift to EVs
within the government fleet. A barrier for a quick shift to EVs is
that the current federal fleet mix by vehicle type is not aligned
with available EV alternatives. (IHS Markit AutoIntelligence's
Stephanie Brinley)
As per IHS Markit's Commodities at Sea, total agribulk
shipments from the USA during December 2020 stood at 17mt (versus
9.1mt during December 2019). For the said period, shipments from
USG, WC North America, and EC North America stood at 12mt (versus
6mt during December 2019), 4.7mt (versus 3mt), and 0.2mt (versus
0.1mt), respectively. (IHS Markit Maritime and Trades' Pranay
Shukla)
Soybeans exports from the USA terminals continued their strong
momentum for the fourth consecutive month and during December
shipments stood at 9.1mt (up 106% y/y). Shipments of corn and wheat
stood at 3.2mt (up 80% y/y) and 1.2mt (down 9%), respectively.
In terms of import countries, USA agribulk shipments to China
during December 2020 stood at 8.7mt (up 238% y/y) and was largely
responsible for strong monthly exports from the country.
Overall, during full 2020, USA agribulk shipments stood at
134.5mt (up 29% y/y). In terms of regions, from USG, WC North
America and EC North America shipments stood at 90.9mt (up 36%
y/y), 41.7mt (up 18% y/y), and 1.9mt (up 28% y/y),
respectively.
In terms of agribulk cargoes, during 2020, shipments of
soybeans, corn, and wheat stood at 51mt (up 35% y/y), 41.7mt (up
40%), and 20mt (at almost the previous year levels),
respectively.
In terms of import countries, USA agribulk shipments to China
during the full year 2020 stood at 47mt (up 118% y/y) and comprised
35% of all agribulk exports from the country (versus 21% during
2019).
Qualcomm Technologies will supply a range of chips for General
Motors's (GM)'s next-generation vehicles to power digital cockpits,
telematics systems, and advanced driver assistance systems (ADAS).
GM will use Qualcomm's third-generation Snapdragon Automotive
Cockpit Platforms to enable artificial intelligence (AI)-powered
capabilities such as in-car virtual assistance and natural
interactions between the vehicle and driver. Separately, Qualcomm
has signed a collaboration deal with Veoneer to develop a software
and chip platform for ADAS. Veoneer has announced the launch of
Arriver, a software unit for the development of perception and
drive policy software stack, which will be integrated with
Qualcomm's Snapdragon Ride Platform. Nakul Duggal, senior
vice-president and general manager of automotive at Qualcomm
Technologies, said, "This collaboration expands our joint value
proposition and focuses on solving the increasing complexity of
ADAS and autonomous driving platform deployment faced by automakers
and Tier-1 suppliers." Qualcomm is best known for its support of
mobile-phone applications, but the company is expanding its
footprint to the automotive industry. Its expertise in wireless
technologies through its 9150 C-V2X chipsets enables an enhanced
vehicle-to-everything connectivity experience, according to the
company. Last year, Qualcomm unveiled a new platform, Snapdragon
Ride, which supports functions for all levels of automated vehicle
operations. (IHS Markit Automotive Mobility's Surabhi Rajpal)
Cargill has added to its value-added protein portfolio with the
acquisition of ProPortion Foods - a manufacturer of cooked meat
products, along with plant-based proteins. The purchase, which
closed in December, gives Cargill two more further-processed
protein plants in Round Rock, Texas and Vernon, California. "Our
agreement with ProPortion Foods is an exciting next step as we
continue to execute our growth strategy and build our value-added
cooked business," said Rob Stewart, managing director for growth
ventures in Cargill's North American protein business. In 2019,
ProPortion Foods made and sold protein products including beef,
pork, chicken, turkey, and plant-based proteins. The facilities
capabilities range from single-serve and family-sized,
ready-to-cook and ready-to-eat meals to value-added proteins for
quick-service, casual-dining, and other national and regional
restaurant chains. Cargill has a long history of operating in both
California and Texas. In California, the company's Fresno-Sanger
complex produces beef, ground beef, case-ready protein solutions
and pet treats. In Texas, Cargill's Fort Worth facility has both
cooked and grind capabilities along with a cooked facility in Waco
and a primary processing facility in Friona. (IHS Markit Food and
Agricultural Commodities' Max Green)
General Motors (GM) issued a statement announcing it will begin
a new round of investment into its Brazilian facilities.
Specifically, the company will invest BRL10 billion in the São
Caetano do Sul and São Jose dos Campos plants. According to a GM
statement, the investment supports unnamed new vehicles as well as
expanding deployment of OnStar and Wi-Fi connectivity in its
Brazil-market vehicles. GM's announcement is a counterpoint to
Ford's decision earlier in January to exit manufacturing in Brazil.
In 2020, Chevrolet was Brazil's best-selling car brand, and the
Chevrolet Onix the best-selling vehicle. Overall, however, Fiat
Chrysler Automobile (FCA; now Stellantis) is the top automaker in
the country, with success from Jeep and Fiat brands. IHS Markit
forecasts that the São Caetano do Sul plant will build a new
generation of Chevrolet Montana in 2022 as well as a new Spin; both
are set to shift to GM's VSS-F B/C architecture. Production of the
Tracker at this plant, on the same platform, started in early 2020.
The São Jose dos Campos plant produces the Colorado and
Brazil-market Trailblazer, with minor changes anticipated. Although
GM's output in 2020 fell, like all other automakers, on the
coronavirus disease 2019 (COVID-19) virus pandemic and ongoing
effects, IHS Markit forecasts that Chevrolet's Brazil production
will break the 500,000-unit mark again as soon as 2022. In 2019,
Chevrolet produced 509,601 vehicles in Brazil; in 2022 this is
forecast to reach 526,000 units. (IHS Markit AutoIntelligence's
Stephanie Brinley)
The government of Colombia expects the first quarter of 2021 to
see a significant ramping up of the country's energy transition,
with details of its latest renewable energy auction on the way
before the end of March, as well the unveiling of a 30-year
hydrogen roadmap, a senior official said 20 January. (IHS Markit
Climate and Sustainability News' Keiron Greenhalgh)
Speaking at the Davos Energy Week 2021 conference, Minister of
Mines and Energy Diego Rosa said the government's clean energy 2021
focus will include hydrogen, offshore wind and battery storage. The
Marquez administration will also launch energy efficiency policies,
he said.
Colombia wants to be Latin America's energy transition leader,
raising renewable energy's share of the country's generation mix to
12% from about 1% currently, a target set during Mesa's time as
deputy energy minister between 2018 and 2020. The country's target
is 2.5 GW of operating renewable capacity by 2022.
Details of the 2021 renewable generation tender will be
published within the "next two months," Rosa said during a webcast
presentation.
In 2019, Colombia held what Rosa called the first
"double-sided" auction for renewable capacity, offering standard
15-year power purchase agreements in an effort to attract
investment and interest in the tender. The tender price was 35%
below the existing level, which Rosa said was a surprise to oil and
natural gas companies, which had expressed concern that prices
would rise.
Rosa expects 2021's auction-the country's second-to be similar,
although "obviously we have some refinements because we also had
some lessons learned from 2019, but we're still in the process of
developing" such changes.
By the end of Q1 2021, the government will also have laid out
the plans for the first large-scale battery capacity auction in
Latin America, Rosa said.
Along that same timeline, the government will have issued the
30-year hydrogen roadmap.
Colombia is looking into both green and blue hydrogen
development, Rosa said, which he believes will be "key for our
transportation sector." Other countries in Latin America have
expressed interest in importing hydrogen from Colombia, he
said.
The country has agreed a green hydrogen research program deal
with Chile. Columbia's neighbor to the south wants to produce the
cheapest green hydrogen in the world by 2030 and to be among the
world's three largest hydrogen exporters by 2040.
Columbia is in the process of formalizing a deal with Germany
and is working with the European nation on the roadmap. The
government is also working on a hydrogen deal with the country's
largest oil and gas company, Ecopetrol, he added.
Europe/Middle East/Africa
European equity markets closed lower; Germany -1.8%, Italy
-1.5%, Spain -1.4%, UK -1.3%, and France -1.2%.
10yr European govt bonds closed mixed; Italy +1bp, Spain/UK
flat, and Germany/France -1bp.
iTraxx-Europe closed +2bps/52bps and iTraxx-Xover
+9bps/269bps.
Brent crude closed -0.2%/$55.53 per barrel.
HSBC has issued a green trade finance facility raising USD48
million for Lamprell's fabrication work on the Seagreen Offshore
Wind Farm project off the coast of Scotland. This is a first green
guarantee in the MENA region and is also in line with Lamprell's
recently announced reorganization to focus on renewables. Lamprell
is a subcontractor on the Seagreen Offshore Wind Farm project in
the North Sea in Scotland and it is mandated to deliver 30 of the
114 jackets and suction base foundations for the generators. (IHS
Markit Upstream Costs and Technology's Neeraj Kumar Tiwari)
Germany is the world's second-largest organic market with good
prospects for US organic products, such as tree nuts, fruits and
vegetables, and processed food products, according to the latest
USDA report. Germany's organic food sales increased rapidly in
recent years, to EUR12 billion (USD15 billion) in 2019. The
government reported that sales reached EUR14 billion in 2020. This
represents about a third of the EU's total organic food sales and
6% of Germany's total food sales. Organic food sales tripled
between 2000 and 2020. Consumer demand far exceeds domestic
supplies, which has led to higher imports. The USDA reported that
imported organic food is taking a rising market share in German
total food imports. Conventional product prices are increasing
along with the rising land prices and lingering uncertainty about
the financial support for organic farming. German consumers'
organic purchase rose 17% year-on-year through September 2020.
Foodservice closures partially drove organic retail sales. The
country is Europe's largest organic producer and consumer. There
are insufficient domestic supplies for potatoes, fruits,
vegetables, dairy products and meat. The German agriculture
ministry has developed a strategy to grow its organic sector
further by aiming to convert 20% of its agricultural land to
organic by 2030, which includes 24 actions across the supply chain.
(IHS Markit Food and Agricultural Commodities' Hope Lee)
The German used car trading platform AUTO1 is launching an
initial public offering (IPO) which it hopes will raise in the
region of EUR1.5 billion (USD1.83 million), according to a Reuters
report. The company, which is Germany's biggest used car trading
platform, said it would issue 31.25 million new shares, worth at
least EUR1 billion, and will invest 75% of that into its Autohero
brand, which it wants to expand into becoming Europe's leading
digital car selling platform. The subscription period for the offer
starts tomorrow (28 January) and runs until 2 February, opening
this year's IPO market in Germany. AUTO1's first day of trading on
the Frankfurt Stock Exchange will be 4 February. The European used
car market is set to undergo significant changes over the next few
years as the market adjusts to the residuals offered by the
increasing number of alternative powertrain vehicles on the
second-hand market and a changing retail model, which will
gradually reduce the number of physical dealers. AUTO1 wants to be
at the forefront of driving this change in the second-hand market.
(IHS Markit AutoIntelligence's Tim Urquhart)
Electric vehicle (EV) charging network provider Ubitricity has
announced that energy company Shell has agreed to acquire the
business. According to the statement, if the deal is completed,
Ubitricity will become a wholly owned subsidiary of Shell. The deal
is subject to regulatory clearance, but is expected to be completed
later this year. Since its founding in Berlin (Germany), Ubitricity
has broadened its reach in to several European markets, including
the UK, where it says it is the largest public EV charging
infrastructure provider in the country with 2,700 points or a 13%
market share. Ubitricity's business model is to work with local
authorities to integrate EV charging into existing street
infrastructure, such as lamp posts and bollards. This solution
helps customers without a private driveway to transition to the
plug-in EV technology. Ubitricity also provides private charging
capability for fleet customers. The deal will be a big step for
Shell, which is better known for its traditional fuel stations. It
has already had an eye on the transition to plug-in vehicle
technologies though, with the provision of over 1,000 ultra-fast
and fast charging points at approximately 430 Shell retail sites,
as well as offering customers worldwide access to over 185,000
third-party EV charging points through partnerships and affiliation
at a range of public locations including forecourts, motorway
service stations, and destinations. Shell's backing is likely to
help accelerate Ubitricity's model and support more customers in
moving to electrification. (IHS Markit AutoIntelligence's Ian
Fletcher)
Morocco's High Planning Commission (HCP) has published its
provisional economic budget for 2021, highlighting its expected
economic performance for 2021. (IHS Markit Economist Ralf Wiegert)
After a steep economic contraction of 6.9% year on year (y/y)
in 2020 with the collapse of tourism revenue, lower exports of
manufactured goods, and a poor agriculture harvest, the budget
projects that GDP will grow by 4.6% y/y in 2021, slightly more
positive than the World Bank's economic forecast of 4.0%.
In value terms, GDP is forecast to register growth of 5.8% y/y
as inflation will be picking up at 1.1% in 2021, from -0.1% in
2020. The value added in the non-agriculture sector is expected to
increase to 3.6% in 2021 after a projected downturn of 6.6% in
2020, while the primary sector (agriculture) is expected to expand
to 11% in 2021 after a 7.1% contraction projected for 2020.
Domestic demand should rebound by 5% y/y in 2021 after it
sharply declined by 6.7% y/y in 2020, with a positive contribution
of 5.4% to economic growth instead of a negative contribution of
7.3% in 2020.
Exports of goods and services in volume terms are expected to
grow 7.6% and imports of goods and services are expected to improve
by 8.0%, compared to a sharp decline of 12.2% in 2020. Thus, net
external demand should entail a negative contribution of 0.7 point,
marking a decline of one point compared to its contribution in
2020.
The budget deficit should reach 6.4% of GDP, after 7.4%
estimated for the year 2020. The domestic government debt stock
should increase by nearly 0.6 point as a percentage of GDP, to
reach 78.3% of GDP following 77.7% of GDP in 2020. Including the
external debt stock, total government debt would amount to 95.6% of
GDP after 94.6% in 2020.
IHS Markit expects slightly slower GDP growth of 4.2% in 2021
owing to weaker expected performance in the agricultural sector. We
expect the fiscal deficit to narrow to 5.4% of GDP in 2021 as
revenue recovers, although the deficit will not return to
pre-crisis (2019) levels of 3.7% of GDP until 2024.
The International Monetary Fund (IMF) expects Central African
regional GDP to rebound in 2021, growing at 2.7%. Adverse COVID-19
virus-related impacts are likely to have long-lasting economic
effects, with medium-term economic growth forecast at just 3.5%, as
reforms targeted to improve governance and the business environment
begin to yield positive results. (IHS Markit Economist Archbold
Macheka)
After deteriorating to an estimated deficit of 6.5% of GDP in
2020, the external current-account gap is forecast to improve to
around 4.8% of GDP in 2021, driven by the anticipated pick-up in
oil exports. The IMF expects that a sustained recovery in oil
exports and imports substitution measures will help bring the
current-account deficit back to around 3% of GDP by 2023.
Reserves are projected to be rebuilt at a slower pace than
previously envisaged but should reach the equivalent of 5 months of
imports by 2025. Annual inflation in the region is expected to
accelerate to an average of 2.8% in 2021, driven by both demand and
supply side pressures on the back of COVID-19 virus-related
disruptions.
The IMF envisages that fiscal consolidation efforts, mostly
through expenditure compression, would support the reduction of the
overall fiscal deficit to 3.4% of GDP (excluding grants) in 2021.
In the medium term, it foresees balanced consolidation efforts to
increase non-oil revenues and contain expenditure. Accordingly, the
IMF expects the public-debt-to-GDP ratio to gradually fall to about
50% of GDP in 2024.
The Economic and Monetary Community of Central Africa
(Communauté Économique et Monétaire de l'Afrique Centrale: CEMAC)
region's economy continues to be significantly affected by the
COVID-19 virus pandemic, with a second wave of infections currently
hitting most member countries. The regional macroeconomic outlook
through the short term remains challenging, with substantial risks
emanating from the economic and social impacts caused by the
pandemic.
IHS Markit expects growth for the region to come in at around
3.4% in 2021, constrained by COVID-19 virus-related containment
measures, as well as the sluggishness of investment in a context of
economic uncertainty and softer commodity prices, particularly for
oil. We expect growth to remain lethargic in the medium term and
well below its potential level as member countries embark on fiscal
consolidation policies to curtail public-debt growth.
Asia-Pacific
APAC equity markets closed mixed; India -1.9%, Australia -0.7%,
South Korea -0.6%, Hong Kong -0.3%, Mainland China +0.1%, and Japan
+0.3%.
Mainland China's industrial profits registered growth of 20.1%
year on year (y/y) in December 2020, up by 4.6 percentage points
from November, according to the data released from the National
Bureau of Statistics. Accompanied by the continued recovery in
operating revenue and profitability, industrial profits managed to
sustain the double-digit rate of expansion for the seventh
consecutive month. Cumulatively, full-year industrial profits for
2020 increased by 4.1% y/y, faster than the 2.8% y/y expansion in
industrial value-added and the 1.8% y/y deflation in producer price
index (PPI). (IHS Markit Economist Lei Yi)
By sector, the manufacturing sector continued to lead the
headline improvement in profits. While the strength in equipment
manufacturing sustained, the recovery in global commodity prices
also accelerated profits recovery in industries relating to raw
materials like chemicals and metal processing. Meanwhile, high-tech
manufacturing maintained faster-than-average growth and profits in
consumption-related manufacturing continued to recover. However,
profits in the auto sector decelerated in December on moderated
sales. Profits improvement of the mining sector remained sluggish,
with the 83.2% y/y contraction in petroleum and natural gas
exploration sector being the major drag.
By ownership, private firms reported 3.1% y/y increase in
profits through December, accelerating from 1.8% y/y a month ago.
Contraction in profits of state-owned enterprises (SOEs) narrowed
to 2.9% y/y by year-end, partially due to a disproportionate share
of upstream mining companies. Average liability-to-asset ratio
reached 56.1 by the end of 2020, down by 0.5 percentage point from
year-ago.
By the end of 2020, inventory of finished goods had been up by
7.5% y/y, edging up from 7.3% y/y at November end.
As nationwide economic recovery gathers momentum entering 2021,
rising producer prices and the low base effect are expected to
further sustain the recovery in industrial profits. Global vaccine
rollout could also add tailwinds for overseas demand, therefore
sustaining the exports strength in the near term and help balance
domestic supply and demand.
China's Ministry of Industry and Information Technology (MIIT)
has urged electric vehicle (EV) manufacturers in the country to
address consumer complaints over range loss in winter conditions.
According to MIIT spokesperson Huang Libin, the ministry recently
organized expert panels to discuss the issue and called on
automakers and their battery suppliers to work together to improve
EV battery performance in cold weather conditions. The ministry
also asked EV manufacturers to offer consumers specific guidance
for winter driving and said that regulators would accelerate the
rollout of related standards and technology requirements. The
MIIT's comments come amid surging complaints regarding substantial
range loss for EVs during low temperatures. The problem has
affected a wide range of electric models on the market, although
some suffer less from the issue than others. The shortened driving
range of EVs in cold conditions causes consumers to doubt the
practicality of EVs as it means that the driver has to charge the
battery more frequently than usual. If not addressed properly
through technology improvements and clear technology standards,
this issue may hinder EV adoption in northern Chinese cities where
temperatures can drop below 15˚C in winter. (IHS Markit
AutoIntelligence's Abby Chun Tu)
BlackBerry expands partnership with Baidu to power connected
autonomous cars in China. Under this partnership, Baidu's
high-definition maps will be integrated into Blackberry's QNX
Neutrino Real-Time Operating System (RTOS). The system will be
embedded, and mass produced in the upcoming GAC New Energy Aion
models from the electric vehicle (EV) arm of GAC Group. Dhiraj
Handa, vice-president of BlackBerry Technology Solutions APAC,
said, "We look forward to continuing to work closely with Baidu to
help develop and deploy leading edge autonomous driving and
connected vehicle technologies to meet the ever increasing
mission-critical and security requirements of the automotive
industry." This partnership builds on the two companies' January
2018 agreement to make BlackBerry QNX operating system the
foundation for Baidu's autonomous vehicle (AV) platform, Apollo.
Baidu has launched version 5.5 of Apollo, which has attracted more
than 200 partners. The company has obtained more than 190 licenses
to test AVs and has conducted road tests in 27 cities, covering
more than 7 million km. (IHS Markit Automotive Mobility's Surabhi
Rajpal)
Didi Chuxing's (DiDi) on-demand logistics service unit, known
as Didi Freight, is reportedly close to raising USD1.5 billion in
funding. Temasek Holdings Pte, Yunfeng Capital, and IDG Capital
will join the financing for Didi Freight. Other investors include
the investment arm of real-estate giant Country Garden Holdings
Company, a unit of CITIC and Hidden Hill Capital, reports
Bloomberg. Last month, Didi Freight was reported to be seeking a
debut funding round, with plans to raise capital of between USD300
million and USD400 million. If this deal is realized, the total
funding amount will easily exceed the company's target. DiDi
launched on-demand trucking services in June 2020 in a bid to seize
opportunities from growing demand for logistics services due to the
COVID-19 virus pandemic in China. The company's logistics services
are currently available in eight cities, serving more than 100,000
orders each day on average. (IHS Markit Automotive Mobility's
Surabhi Rajpal)
Taiwan's export orders, representing a leading indicator of
actual exports, surged 38.3% year on year (y/y) in December,
accelerating from an already-strong 29.7% y/y increase in November.
The rate of gain was the fastest since March 2010 when export
orders jumped 43.7% y/y. The strong readings in the final two
months brought the average growth to 25.3% y/y in the fourth
quarter and to 10.1% y/y for 2020 as a whole. This reversed a 5.3%
drop posted in 2019. (IHS Markit Economist Ling-Wei Chung)
Export orders from all major markets recorded sharp surges in
December 2020, led by a 54.3% y/y jump in orders from mainland
China and Hong Kong SAR as orders of electronic products from there
soared 93.7% y/y during the month, marking the strongest gain since
January 2010. Orders from mainland China and Hong Kong were also
boosted by strong expansions in orders of transport equipment,
machinery, electrical machinery, and optical products, ranging from
about 30% y/y to 70% y/y.
Export orders from the US strengthened further, surging 40.5%
y/y in December 2020, marking the seventh straight month of
double-digit expansions. Although decelerating from a 50.2% y/y
jump in November, orders from Europe remained strong (up 35% y/y).
Orders from ASEAN and Japan both jumped about 31% y/y in December.
Strong orders from these markets were driven by surging demand for
information and communication products and orders of electronics
products.
By products, electronic products and information and
communication products remained the pillar of export orders.
Electronics orders continued to surge at the double-digit pace for
11 consecutive months (up 58.4% y/y), boosted by surging demand for
smartphones and computers amid the application of 5G communication
and other technology innovations.
Orders of information and communication products climbed 38.2%
y/y, bolstered by demand related to remote working and learning.
Supported by increasing panel demand, orders of optical products
jumped 37.7% y/y. With the boost of strong growth during the final
four months, optical orders returned to growth with a 7.5% increase
in 2020 as a whole, after contracting for two straight years.
Orders of non-technology products also improved with overseas
demand recovering and commodity prices rebounding. After
contracting for two straight years, orders of chemicals resumed
growth in December 2020 for the first time since November 2018, up
15.4% y/y. Coupled with double-digit expansions in orders of
machinery, plastics, and base metal, they helped offset the
continued plunge in orders of mineral products (down 46.7%
y/y).
Industrial production (IP) increased by 9.9% y/y in December,
accelerating from a 7.6% y/y gain in November. For 2020 as a whole,
IP expanded 6.8%, reversing a 0.4% fall in 2019. The key driving
force continued to come from surging technology production, while
production of non-technology production also returned to
growth.
Output of the electronic component industry climbed 16.4% y/y
in December, marking the 13th consecutive month of the double-digit
increase. It was mainly bolstered by a 19.1% y/y jump in production
of integrated circuits amid demand related to 5G application and
high-performance computing. Increasing demand for laptops, tablets,
and televisions also boosted panel output by 24.9% y/y in
December.
Export orders and IP concluded 2020 on a surprisingly strong
footing as they shrugged off the adverse effect of the pandemic and
the dampening effect of mainland China-US tensions in previous
years. After hitting the bottom in the first quarter of 2020
because of the global pandemic-related lockdowns, export orders
resumed growth in the second quarter and the recovering pace has
since accelerated.
Nissan plans to electrify all of its new vehicle offerings in
key markets such as Japan, China, the United States, and Europe by
the early 2030s, with a broader aim to achieve carbon neutrality in
the entire vehicle lifecycle by 2050, according to a company
statement. In order to achieve this goal, the automaker plans to
focus on innovation in battery technology, including
all-solid-state batteries, for the development of more
cost-competitive and efficient electric vehicles (EVs); development
of a new e-POWER system with further improved energy efficiency;
development of a battery ecosystem that contributes to distributed
power generation using renewable energy; strengthening co-operation
with the energy sector, contributing to the decarbonization of the
power grid; and promoting innovations that improve production
efficiency when assembling vehicles, such as the Nissan Intelligent
Factory. (IHS Markit AutoIntelligence's Nitin Budhiraja)
Beximco Pharmaceuticals (Bangladesh), a manufacturer of generic
pharmaceuticals and active pharmaceutical ingredients, has entered
into a binding commitment to acquire a 54.6% stake in Sanofi
(France)'s subsidiary in Bangladesh, Sanofi Bangladesh. The
acquisition has reportedly been agreed for USD48.48 million, and
the deal comes after Beximco was selected as the preferred bidder
in a competitive process. The remaining 45.4% stake in the former
Sanofi subsidiary is owned by the government of Bangladesh through
the Bangladesh Chemical Industries Corporation and the Ministry of
Industries. The acquisition will further strengthen Beximco's
prominent position in the domestic pharmaceutical sector by
expanding its manufacturing capabilities and product portfolio. The
acquisition deal comes after Sanofi initially announced plans to
wind up its Bangladesh operations in 2019. (IHS Markit Life
Sciences' Sacha Baggili)
New research shows New Zealand dairy industry has the world's
lowest carbon footprint - at nearly half the emissions of other
international dairy hubs. AgResearch analysis confirmed New Zealand
retained first position in low-emission dairy milk production, with
an on-farm carbon footprint of 46% less than the average of 18
countries studied. The research analyzed 55% of global milk
production, including major milk-producing countries. New Zealand
was the most efficient producer at 0.74 kg CO2e per kg FPCM (fat
and protein corrected milk). The average was 1.37 kg CO2e per kg
FPCM. New Zealand was followed by Uruguay at 0.85 kg CO2e per kg
FPCM, Portugal at 0.86, Denmark at 0.9 and Sweden at 1. Peru
clocked in as the highest emissions producer among the studied
countries, at 3.29 kg CO2e per kg FPCM. Peru was followed by Costa
Rica at 2.96 and Kenya at 2.54. The carbon footprint was measured
in total greenhouse (GHG) emissions per kg of product. The research
compared carbon dioxide equivalent (CO2e) emissions per kilogram of
milk (fat and protein corrected milk - the nutritional content
recognized in the study as CO2e per kg FPCM). The countries
selected had published research that enabled a like-for-like
comparison. Commissioned by DairyNZ, the study was independently
produced by AgResearch and peer-reviewed by an international
specialist in Ireland. (IHS Markit Food and Agricultural
Commodities' Jana Sutenko)
Posted 27 January 2021 by Chris Fenske, Head of Fixed Income Research, Americas
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