Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
All major European and most US equity indices closed lower,
while APAC was mixed. US government bonds closed sharply higher,
and most benchmark European bonds were also higher. CDX-NA closed
slightly wider across IG and high yield, and European iTraxx was
closed to flat on the day. Natural gas, silver, and gold closed
higher, while the US dollar, oil, and copper were lower on the
day.
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
Major US equity indices closed lower except for Nasdaq flat;
S&P 500 -0.5%, DJIA -0.7%, and Russell 2000 -1.9%.
10yr US govt bonds closed -7bps/1.54% yield and 30yr bonds
-9bps/1.95% yield.
CDX-NAIG closed +1bp/52bps and CDX-NAHY +3bps/301bps.
DXY US dollar index closed -0.2%/93.8.
Gold closed +0.3%/$1,799 per troy oz, silver +0.4%/$24.19 per
troy oz, and copper -2.1%/$4.39 per pound.
Crude oil closed -2.4%/$82.66 per barrel and natural gas closed
+5.4%/$6.20 per mmbtu.
Oil prices find path higher at the intersection of fear and
greed. The oil market is gripped by fears: fear of stronger demand
as the economic recovery powers through Delta stumbles, fear of
contagion from frenzied gas and power markets, and the fear to rule
them all - global supply's inability to quickly douse the nascent
bullish fire. Combined, these forces have cleared the path for
higher prices, breaching out of the short-term band that has held
relatively firmly since spring and, more critically, untethering
oil from the 2014-2019 range (or the "shale band") and ushering in
a new phase of price discovery at higher levels. This process in
itself has fueled price upside by creating a fear of missing out on
a generational multi-year rally. Unlike the more speculative and
anticipation-driven rally of early 2021, this rally is anchored in
real signs of accelerating physical tightening due to short-term
(temporary) conditions that are perceived as the opening salvo of a
structurally tighter environment through the medium-term, with
capital (paper) abundance bridging the vision and prices. (IHS
Markit Energy Advisory's Roger
Diwan, Karim
Fawaz, Ian Stewart, and Sean Karst)
A series of bullish events upend short- and medium-term oil
market narratives. A couple of months ago, oil markets were looking
at a markedly less rosy fall and winter amid intensifying Delta
variant outbreaks and OPEC+ initiating a year-long process of
production restoration that could see renewed bouts of oversupply,
especially in 2022.
Four major developments have unfolded since to definitively
shift the trajectory of the market: 1) Disruption-led acceleration
in global crude and product inventory draws (especially Hurricane
Ida); 2) Contagion from gas and power to oil via demand
substitution, shattering perceptions of oil being insulated from
broader energy tailwinds; 3) A string of supply disappointments
around the world reflecting the impact of under-investment eroding
productive capacity, including within OPEC+; and 4) US E&P
restraint appears to have weathered its first real-world price test
in the face of surging oil and gas prices (so far).
Physical shortage risks still low but easing of physical market
conditions necessary to release some bullish steam. Unlike the gas
situation in Europe, we still see supply buffers in oil. OECD
inventories have fallen below 5-year averages but remain above
2010-2014 levels, while OPEC+ productive capacity, even with
under-investment-induced woes in many smaller countries, remains
comfortably above pre-pandemic levels. But OPEC+ producers with
spare capacity have been reactive rather than proactive and have
not deviated from their slow and methodical approach even after the
latest rally.
From supply complacency to supply anxiety. Despite
significantly higher oil (and gas) prices, we have left our US
supply forecast for 2022 largely unchanged. Behind that relatively
tame revision to supply however lies one of the most significant
changes to oil price formation. The past seven years have been
defined by the combination of resource abundance and
hyper-reactivity, the combination of which have served to anchor
the "resource complacency" price regime, with hyper-reactive
short-cycle barrels offsetting any investment risks from long-cycle
projects into a decelerating demand world.
We have raised our oil price outlook significantly to reflect
the shift in the price regime. Our 4Q2021 ICE Brent price outlook
is $84/bbl in our base case compared with $68bbl in our July
outlook. We have lifted our price outlooks throughout 2022 to
reflect this environment, with Brent and WTI revised to $77.25/bbl
and $73.25/bbl, respectively. Our 2023 initial forecast has Brent
and WTI set at $70.50/bbl and $67.50/bbl, respectively.
How effectively can Saudi Arabia manage scarcity going forward?
The post-COVID demand outlook remains full of uncertainties as
supply chain disruptions, consumption, and travel patterns have
significantly shifted from their previous patterns. This winter
global energy crisis is likely to extend the exceptional and keep
markets on a volatile path.
Averaged over the last seven days, and after seasonal
adjustment, passenger throughput at US airports was 100.3% of the
January 2020 level. Air travel had been on a flat trend since July
but has risen steadily in recent weeks, perhaps reflecting
increasing comfort associated with declining COVID-19 new case
counts. (IHS Markit Economists Ben
Herzon and Joel
Prakken)
US manufacturers' orders for durable goods declined 0.4% in
September, while shipments rose 0.4% and inventories rose 0.9%. The
decline in orders was smaller than the consensus expected. (IHS
Markit Economists Ben
Herzon and Lawrence Nelson)
Orders for durable goods remain well above pre-pandemic levels,
but that almost entirely reflects higher prices for manufactured
durable goods.
Year to date, orders for durable goods are up 10.0%, while
prices for manufactured durable goods are up 9.9%.
After adjusting for price gains, real orders for durable goods
completed essentially a full recovery by last November but have
made essentially no progress since.
Firming manufacturing prices and the recent flat trend in real
orders for durable goods reflect the effect of supply constraints
on manufacturing activity. These constraints are likely to persist
into next year.
An area of strength in this report was inventories, which were
revised higher for August and rose more than IHS Markit experts had
assumed in September. This added about $15 billion to the IHS
Markit estimate of third-quarter inventory investment.
The US nominal goods deficit widened in September by $8.1
billion to $96.3 billion, while the combined inventories of
wholesalers and retailers rose 0.5%. We had assumed a stronger
trade balance and weaker inventories. (IHS Markit Economists Ben
Herzon and Lawrence Nelson)
The widening of the trade deficit reflected a sharp decline in
exports and a moderate increase in imports. The decline in exports
reversed steady gains in exports since spring, and could be related
to increasing congestion at ports.
Even after accounting for the sharp decline in September,
exports remained above pre-pandemic levels, but this is not
necessarily good news. Much of the recent strength in nominal
exports is in export prices, which have surged lately. After
adjusting for price gains, exports of goods in September were below
the February 2020 level.
Import prices have risen sharply as well (both including and
excluding petroleum and fuels). But real imports have, indeed,
risen past pre-pandemic levels, reflecting elevated domestic demand
for goods.
An area of strength in the report was a sharp increase in net
imports of capital goods. This accounted for roughly one-half of
the widening of the trade deficit, and indicates a willingness of
domestic business to invest in capital equipment.
Vertex Pharmaceuticals and Mammoth Biosciences (both US) have
jointly announced a new partnership to develop in vivo gene-editing
therapies for two genetic diseases using Mammoth's next-generation
CRISPR (clustered regularly interspaced short palindromic repeats)
systems. Mammoth's CRISPR platform is driven by its protein
discovery engine and consists of a proprietary toolbox of novel,
ultra-compact Cas enzymes, including Cas14 and Casɸ. According to
the two companies, the small size of Mammoth's systems could
potentially play a key role in increasing the scope of in vivo
gene-editing for genetic diseases. Under the terms of the
agreement, Mammoth will receive USD41 million upfront, and is
eligible to receive up to USD650 million in potential future
payments based on the successful achievement of pre-specified
research, development, and commercial milestones across two
potential programs. In addition, Vertex will pay tiered royalties
on future net sales on any products resulting from the
collaboration. For Vertex, its deal with Mammoth is the latest in a
series of CRISPR gene-editing collaborations, including its
partnership with Arbor Biotechnologies (US) in late August. (IHS
Markit Life Sciences' Milena
Izmirlieva)
In a news-filled day, General Motors announced a plan to add
40,000 "community-based" charging stations in the US and Canada,
working with its dealership network. GM also announced plans to
resume some Bolt EV production and revealed a new 2.6-second
0-to-60 mph V8 for the 2023 Corvette Z06. The new EV charging
station installation program is part of a planned investment of
USD740 million announced earlier to expand home, workplace and
public charging, and is designed to help address EV needs in
underserved areas with Level 2 chargers. The resumption of Bolt EV
production is against the backdrop of the company working to ensure
optimal battery production and supply-chain logistics following the
recall of all Bolt EVs. The Corvette Z06 V8 could end up being the
last clean-sheet V8 developed for light vehicles by GM and reflects
that, although EVs may be the future, today's market requires the
meeting of customer demand with the performance of traditional ICE
vehicles as well. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Electric vehicle (EV) startup Canoo has announced a battery
supply deal with Panasonic, ahead of the planned beginning of
production by the startup in the fourth quarter of 2022. Under the
new deal, Panasonic will supply batteries for Canoo's upcoming
Lifestyle Vehicle to be manufactured by VDL Nedcar, according to
the EV startup's statement. The batteries to be supplied will be
sufficient for both Canoo's European and US production, the
statement says. Canoo did not provide details of the Panasonic
arrangement, in terms of the battery technology, the quantity of
batteries to be supplied, or the expected value of the deal. As a
startup, Canoo does not have the level of funding that traditional
automakers are currently putting toward new battery production, and
so it needs to ensure flexibility of supply. (IHS Markit
AutoIntelligence's Stephanie
Brinley)
Siemens Gamesa has struck an agreement with the State of
Virginia, United States, to establish the first offshore wind
turbine blade facility in the country. A USD200 million blade
factory, producing the company's Offshore IntegralBlade, will be
built at the Portsmouth Marine Terminal to support the delivery of
Siemens Gamesa's 15 MW offshore wind turbines to Dominion Energy's
2.6 GW Coastal Virginia Offshore Wind Commercial (CVOW-C) project.
The 32-hectare facility will be built on land leased from the
Virginia Port Authority and will perform finishing of the offshore
blades. Around 310 jobs will be created to support this function,
including 50 to provide operations and maintenance services. The
announcement comes shortly after Dominion Energy signed an
agreement with the Port of Virginia to lease 29 hectares in the
same area to use as a staging and pre-assembly area for foundations
and wind turbines. The Bureau of Ocean Energy Management (BOEM) is
currently performing the environmental review for the CVOW-C
project. (IHS Markit Upstream Costs and Technology's Melvin
Leong)
On October 25, the New York Power Authority (NYPA)—on
behalf of project partners the Electric Power Research Institute
(EPRI), General Electric (GE), Airgas, Sargent & Lundy and
Fresh Meadow Power—said it will commence a demonstration
project in November to assess the potential of substituting
renewable hydrogen for a portion of the natural gas used at its
Brentwood Power Station on Long Island. (IHS Markit PointLogic's
Barry Cassell)
The effort to study renewable hydrogen in this application is a
part of the state's decarbonization strategy as outlined in New
York's nation-leading Climate Leadership and Community Protection
Act. Representatives from the project partners were on-site in
Brentwood on October 25 to view progress.
This first-of-its-kind demonstration will evaluate the effects
of different concentrations of hydrogen blended with natural gas at
regular intervals to assess the blend's effect on reducing
greenhouse gas emissions and its overall system and environmental
impacts, including NOx emissions. At the close of this project,
peer-reviewed results will be shared with the industry and public
to better inform what efforts can help New York State reach its
goal of reducing carbon emissions 85% by 2050. The project is
expected to last six to eight weeks.
NYPA's Brentwood Power Station, which is equipped with a GE
LM-6000 combustion turbine fueled by natural gas, was commissioned
in 2001 to increase power generation capacity for Long Island and
New York City in anticipation of shortages. As the gas turbine
original equipment manufacturer, GE will supply a hydrogen/natural
gas blending system and support the project's planning and
execution. Sargent & Lundy, acting as the engineer of record,
will provide overall engineering and safety reviews. Airgas is the
supplier of renewable hydrogen and Fresh Meadow Power is providing
piping system design, material procurement and installation
services.
FDA's regulatory process for biotech animals is inhibiting the
development and commercialization of livestock that have been
gene-edited to provide resistance to costly diseases, witnesses
told members of the House Agriculture Committee on Tuesday (October
26). (IHS Markit Food and Agricultural Policy's JR Pegg)
"The current US regulatory approach for [biotech] animals is
not fit for purpose," said Elena Rice, chief scientific officer of
Genus, an animal genetics company. "We need a practical, less
expensive, risk- and science-based regulatory system that provides
a safe and predictable path to market … and certainty for
innovators, investors, producers and consumers."
Testifying before two House Agriculture subcommittees, Rice
backed the proposal to shift authority for genetically engineered
livestock from FDA to USDA, saying the plan has "strong support"
from industry stakeholders.
At present USDA is on the sidelines when it comes to biotech
animals. FDA retains sole authority over GE animals—including
those made with new gene-editing tools—and regulates them as
new animal drugs under the Federal Food, Drug and Cosmetic Act. The
regime requires multiple generation safety and efficacy studies
that biotech advocates argue are onerous and unnecessary for
changes that could occur through nature or conventional breeding.
So far, FDA has only approved two biotech food animals—
AquaBounty's salmon and Revivicor's "GalSafe" pig.
Led by pork producers, the ag industry has railed against the
regulatory framework, voicing concerns it is impeding innovation by
deterring ag biotech researchers from trying to commercialize in
the US and prompting some to seek opportunities in other
countries—notably Argentina, Brazil and Canada—that have
laid out friendlier regulatory regimes.
The Bank of Canada kept the overnight rate at the lower
effective bound of 0.25%, but made a small adjustment to its
extraordinary forward guidance. Quantitative easing ends and as
noted in earlier communiques, the Bank is transitioning to the
reinvestment phase in which Government of Canada bonds will be
purchased to replace maturing bonds on the Bank's balance sheet.
(IHS Markit Economist Arlene
Kish)
The Bank lowered its global and domestic growth outlooks for
this year and next in the October Monetary Policy Report (MPR).
Canada's real GDP growth was cut 0.9 percentage point to 5.1% this
year and 0.3 percentage point to 4.3% in 2022. Growth was revised
up 0.4 percentage point in 2023 to 3.7%.
The new inflation outlook is 3.4% for 2021, 3.4% for 2022, and
2.3% for 2023.
The Bank projects that the 2% inflation target will be
sustainably achieved "sometime in the middle quarters of 2022."
Given persistent excess capacity amid a backdrop of supply-chain
shortage and transportation delays, the Bank's current estimate of
the output gap is narrower than forecast in July. As such, IHS
Markit experts are revising the Bank of Canada's monetary policy
tightening cycle to begin in July 2022.
IHS Markit has analyzed the main banking indicators for Costa
Rica, El Salvador, Guatemala, Honduras, and Nicaragua for the third
quarter of 2021. Our key findings indicate that credit growth
remains contained in most of the region; non-performing loans
(NPLs) are still slightly rising compared with June 2021, in line
with our previous assessment. All averaged figures presented here
are calculated using simple (non-weighted) averages. Due to
availability, data for Honduras are as of August 2021. (IHS Markit
Banking Risk's
Alejandro Duran-Carrete)
Credit growth stayed at low levels, although it is still
recovering from the 2020 decline. In the third quarter of 2021, the
sectors' credit growth levels averaged 4.4% year on year (y/y),
slightly above the 3.8% displayed in June. This was mostly led by
Guatemala's strong loan growth at 8.9% y/y, primarily driven by a
strong economic recovery during the second quarter of 2021.
NPLs are increasing slowly, and we expect them to edge up
slightly at the end of 2021. Averaging 2.6% in September 2021, the
sectors' NPL ratio remains contained and relatively close to the
2.4% displayed in June. However, some deterioration in the quality
of assets can be observed in other reported metrics, such as Costa
Rica's, whose low-quality loans have risen sharply through this
quarter, representing 9.9% of total loans, compared with 6.9% in
the first quarter of 2020.
Deposit growth is starting to stall, but liquidity ratios
remain stable. The region has continued to display strong levels of
deposit growth, although they are slowly returning to normal ratios
because of a return of consumer spending. This, in turn, has led to
banks increasing their holdings of liquid assets, decreasing the
regional average of the loan-to-deposit ratio (LDR) from a high
87.9% in March 2020 to a very moderate 75.7% in September
2021.
Capitalization remains high and is likely to retain its
stability. Shareholders' equity to total assets ratio remained very
stable in all the sectors, averaging 11.8% in September.
Europe/Middle East/Africa
All major European equity indices closed lower; France -0.2%,
UK/Germany/Spain -0.3%, and Italy -0.6%.
Most 10yr European govt bonds closed higher; UK -13bps, Germany
-6bps, France/Spain -5bps, and Italy flat.
iTraxx-Europe closed flat/49bps and iTraxx-Xover
+1bp/254bps.
Brent crude closed -2.1%/$83.87 per barrel.
Jaguar Land Rover (JLR) has joined the European CO2 emissions
passenger car pool with electric vehicle (EV) maker Tesla. As part
of the arrangement, JLR is paying to pool emissions from its
vehicles with Tesla's EVs. This will help JLR to lower its average
figures and avoid paying fines for missing its targets. The
financial terms of the deal are unknown, reports the Financial
Times. JLR is joining Honda, which reached a pooling deal with
Tesla almost a year ago. JLR had provisioned GBP35 million (USD48
million) in fines from failing to meet EU rules in 2020, and had
previously announced that it expects to meet its target for CO2
emissions this year. Finding a competitor to work with in this way
is likely to be more cost-effective than paying the fine of EUR95
per gram over their fleet average target per car sold in the
region. This pooling arrangement is also a revenue boost for Tesla,
which lost its pooling deal with Fiat Chrysler Automobiles in May.
(IHS Markit AutoIntelligence's Tim Urquhart)
The ECB's quarterly bank lending survey (BLS) for the third
quarter was compiled between 20 September and 5 October, based on
the responses of 146 banks across the eurozone's member states. The
ECB has also released actual loan data for September. Looking first
at developments in bank lending to households, the key takeaways
from the latest data include the following (IHS Markit Economist Ken
Wattret):
Banks adopted a more cautious attitude towards lending to
households for house purchase. The net percentage of banks
reporting a tightening of credit standards for this type of loan
rose to +8, the highest for four quarters (-1 in the second
quarter's survey). For consumer credit, credit standards remained
broadly unchanged (net percentage of -1 versus 0 in the second
quarter).
For housing-related loans, the net tightening was related to
lower risk tolerance among banks, plus the cost of funds and
balance-sheet constraints.
Banks reported another increase in demand for loans from
households for house purchase, although the net percentage of banks
reporting an increase in demand for this type of loan moderated in
the third quarter (to +11, versus +36 in the second quarter).
Demand for consumer credit increased in the second quarter,
although the net percentage also moderated (to +7, versus +11 in
the second quarter).
Elevated consumer confidence, the low level of interest rates,
and positive housing market prospects all contributed positively to
household loan demand.
September's ECB data on actual bank lending growth to eurozone
households for house purchases showed the first deceleration in
eight months, from 5.8% to 5.5% y/y. Still, the recent growth rates
are the highest since 2008.
Growth in other types of lending to households, including
consumer credit, remained weak.
Banks again reported broadly unchanged credit standards on
loans to enterprises in the third quarter. The net percentage of
banks reporting a tightening edged up to +1 (versus -1 in the
second quarter's survey), close to what was expected in the prior
survey (+2).
Credit standards remained unchanged for both SMEs (net
percentage 0, versus -1 in the second quarter) and larger firms (0,
versus -3 in the second quarter). The fact that credit standards
for loans to enterprises were unchanged irrespective of the size of
firm is indicative of the beneficial impact of government support
measures. There was also little difference in credit standards for
short-term loans (net percentage +1, versus -2) and long-term loans
(+1, versus 0).
A new survey found that 73% of Europeans think EU legislation
should ensure all products sold in the EU are sustainable and do
not lead to biodiversity loss. Commissioned by the World Wildlife
Fund (WWF), the survey showed most European adults want the EU to
step up its commitment to protect forests and other ecosystems
(76%) and set its own sustainability criteria for food imported
into the bloc (74%). (IHS Markit Food and Agricultural Policy's
Steve Gillman)
Anke Schulmeister-Oldenhove, senior forest policy officer at
WWF's European Policy Office, said the survey shows consumers
understand the direct link between what they eat and nature
destruction. "They want clear rules that keep all nature
destruction off their plates. The EU must listen to its citizens,"
she said.
The survey was conducted by Savanta ComRes, a market research
consultancy, in April 2021. Responses were collected from 11,439
adults in nine European countries: Austria (1,032), Belgium
(1,028), Estonia (1,044), Finland (1,031), France (2,098), Greece
(1,017), Portugal (1,052), Sweden (1,074) and the UK (2,063).
Anti-deforestation support was greatest in Portugal (88%) and
Greece (84%) and the lowest in Belgium (55%).
The survey also found that consumers place the biggest
responsibility for reducing the environmental impact of food
production on national governments (51%), manufacturers (49%) and
the EU (41%).
On 17 November, the European Commission is expected to present
new legislation to curb the impact of EU consumption on worldwide
deforestation and forest degradation, which the EU executive says
is responsible for around 10% of total forest loss.
BASF swung to a net profit of €1.25 billion ($1.45 billion) in
the third quarter from a net loss of €2.12 billion in the same
period last year, on a 42% surge in sales to €19.67 billion. EBIT
before special items more than tripled year on year (YOY) to €1.86
billion. The company has raised its full-year earnings and sales
outlook for the second time following the results. (IHS Markit
Chemical Advisory)
Higher prices in all business segments, especially chemicals,
surface technologies, and materials, drove BASF's third-quarter
revenue increase, as did the big rise in volumes, which was in
"almost all segments," the company says.
The huge hike in EBIT before special items was mainly driven by
the performance of BASF's upstream commodity-type businesses. The
chemicals segment was the biggest driver of earnings growth with
major contributions from the materials and industrial solutions
segments, the company says. EBITDA before special items at the
chemicals segment more than quadrupled YOY to €1.04 billion on a
more than doubling in sales to €3.69 billion, and EBITDA before
special items at the materials business jumped 90% YOY to €832
million on sales up 50% to €3.97 billion.
However, the earnings contributions of downstream
specialty-type businesses such as agricultural solutions, surface
technologies, and nutrition and care declined considerably on
higher costs. EBITDA before special items at the surface
technologies segment dropped 24% YOY to €245 million on sales up
36%, to €5.63 billion, and EBITDA before special items in the ag
solutions business fell 63% to €74 million on sales up 8%, to €1.59
billion.
Major automotive OEMs are monitoring the ongoing cyber-attacks
on the German component supplier Eberspächer Group, reports
Automotive News. No production disruption has been reported so far
due to this. The supplier's website has been inaccessible since
Monday evening (25 October) and a message from the company says,
"The Eberspächer Group was the target of an organized cyber-attack.
The IT infrastructure is impaired". According to the reports, the
supplier's IT specialists are working with external cyber security
experts to eliminate the threat and bring operations back to
normal. Cyber-attacks like these have become more frequent in the
last few years. In June last year, Honda was forced to interrupt
its production in North America, Europe, Asia, and South America
following a global computer network problem. (IHS Markit
AutoIntelligence's Nitin Budhiraja)
France's consumer confidence headline index has fallen from 101
in September to 99 in October, according to figures released by the
National Institute of Statistics and Economic Studies (Institut
national de la statistique et des études économiques: INSEE). (IHS
Markit Economist Diego
Iscaro)
The consumer confidence index peaked at 102 in June 2012,
slightly above its long-term average of 100, but has now declined
in three out of the last four months. October's reading was also
below a consensus of 101 as pooled by Reuters.
The deterioration of the headline index was driven by
households' less upbeat assessment of their future financial
situation and the general economic outlook. The number of
households considering making a major purchase over the coming 12
months has also declined to its lowest level since March.
The fall in these indices is likely to be linked to higher
expected inflation, as the index measuring households' views on
consumer prices over the coming year has risen to its highest level
since April 2012.
On a more positive note for the outlook, the index measuring
unemployment expectations has continued to decline substantially in
September. It now stands at a level not seen since just the start
of the pandemic.
October's decline in confidence was expected given the sharp
increase in energy prices recorded in France and most other
European countries.
The government has frozen natural gas prices, which increased
by 12.1% in October, until April 2022. Furthermore, authorities
have announced a EUR100 (USD116) grant (to be paid in December) for
those earning less than EUR2,000 per month to mitigate the impact
of higher energy prices.
One of Europe's largest pension funds, the Netherlands-based
ABP, announced 26 October it will divest more than €15 billion
(approximately $17.4 billion) of equity and debt investments in 80
oil, natural gas, and coal companies, saying international reports
on the dire need to reduce CO2 emissions played a crucial role in
changing its strategy. (IHS Markit Net-Zero Business Daily's Kevin
Adler)
"ABP will divest from the fossil fuel producers in phases; the
majority of which is expected to be sold by the first quarter of
2023," the pension fund said in a statement.
The divestment represents about 3% of ABP's total assets of
about €493 billion.
The May report of the International Energy Agency (IEA) and the
August report of the Intergovernmental Panel on Climate Change
(IPCC) prompted the portfolio shake-up by the pension fund, which
invests on behalf of Dutch teachers and civil servants, a
spokeswoman told OPIS on 26 October. "It's these reports that made
us think about if we want to contribute to minimizing global
warming, then more radical steps are necessary," she said.
Saipem, AGNES and QINT'X have made an application to the
Italian authorities for the development of an offshore energy hub
including two wind farms, and a floating solar installation. The
energy hub, to be named AGNES, will consist of the 200 MW Romagna 1
and 400 MW Romagna 2 wind farms projects located 33 km off the
coast of Ravenna in the Adriatic Sea. The wind farms will feature a
total of 75, 8 MW turbines installed on either jacket or monopile
foundations in water depths of between 30 to 35 meters. The
turbines will have a hub height of up to 170 meters and rotor
diameters of up to 260 meters. The AGNES hub will also feature a
floating photovoltaic system with a total capacity of 100 MW plus
offshore transformer platforms. No construction timeline has been
stated for the potential projects. In August this year, Saipem
signed a memorandum of understanding (MoU) with AGNES and QINT'X
for the development of one of the first wind farms in the Adriatic.
(IHS Markit Upstream Costs and Technology's Lopamudra De)
Asia-Pacific
Major APAC equity indices closed mixed; Australia +0.1%, Japan
flat, India -0.3%, South Korea -0.8%, Mainland China -1.0%, and
Hong Kong -1.6%.
Mainland China's industrial profits expanded by 44.7% year on
year (y/y) through September, down by 4.8 percentage points from
the first eight months. On a two-year (2020-21) average basis,
industrial profits increased by 18.8% y/y in the first three
quarters, 0.7 percentage point lower than the August reading. For
September alone, industrial profits recorded growth of 16.3% y/y,
ticking up from 10.1% y/y in August, according to the National
Bureau of Statistics (NBS). (IHS Markit Economist Lei Yi)
The cumulative profitability ratio, although still high at
6.96%, has edged down for a third consecutive month through
September. While the profitability ratio of the upstream mining
sector continued to rise by 0.36 percentage point to 18.25%, that
of the manufacturing and utility sectors further declined, falling
by 0.05 and 0.43 percentage point to reach 6.58% and 5.09%,
respectively.
Soaring coal prices further dragged on industrial profits of
the utility sector, which posted a wider contraction of 15.2% y/y
through September. Notably, the profits of the subsector of power
and heat production and supply dropped by 24.6% y/y, compared with
the decline of 15.3% y/y in the prior month. The coal mining and
dressing sector, on the other hand, recorded an even larger jump of
172.2% y/y in profit growth through September, up by 26.9
percentage points from the first eight months.
Regarding the broader picture, 29 out of the 41 (70.7%)
industrial subsectors reported industrial profits exceeding the
pre-pandemic level in the third quarter. Profit strength in the
high-tech and raw material manufacturing sectors persisted, and
profits of consumer goods manufacturing also posted steady
recovery, registering a two-year average growth of 12.0% y/y in the
third quarter.
China's State Council has released a new action plan with the
aim to curb carbon dioxide emissions before 2030, reports Gasgoo.
As per the plan, China will promote the use of low-carbon options
for transportation such as electricity, hydrogen, natural gas, and
advanced biology liquid fuel. In order to achieve that goal, the
country plans to gradually lower the proportion of traditional fuel
cars in new vehicle production and focus on the replacement of
oil-fueled public service vehicles with electric ones. China also
aims at speeding up the setting up of electric vehicle (EV)
charging piles, supporting power grids, and gas and hydrogen
filling stations in order to improve transport infrastructure.
China has been aggressively pushing for the use of new energy
vehicles (NEVs) in both the private and public transport domains.
NEV sales have increased significantly in the past five years in
China, thanks to the generous subsidies offered by the government.
Despite the impact of the COVID-19 virus pandemic on vehicle sales,
the Chinese NEV market continued to expand during 2020. Sales of
NEVs increased by 10.9% to 1.37 million units last year. In the
first nine months of this year, NEV sales in China rose by 185.3%
y/y to 2.157 million units and are anticipated to increase by more
than 40% each year for the next five years. (IHS Markit
AutoIntelligence's Nitin Budhiraja)
Chinese ride-hailing firm T3 has raised CNY7.7 billion (USD1.2
billion) in funding to support its expansion. Investors
participating in this funding include Yingtong Technology, online
travel platform Tongcheng, and Virtue Capital, an investment
company led by Dong Yang, former head of China Association of
Automobile Manufacturers. T3 did not disclose its valuation after
the funding, reports Automotive News. T3 was established by three
major Chinese automakers - FAW Group, Dongfeng Group, and Changan
Auto - along with technology giants Tencent and Alibaba. In April
2019, T3 received CNY5 billion from its angel investors and the
platform went online three months later. The new investment comes
at a time when Chinese ride-hailing giant Didi Chuxing (DiDi) is
undergoing a data security investigation following its initial
public offering (IPO) in the United States. (IHS Markit Automotive
Mobility's Surabhi Rajpal)
Shin-Etsu Chemical reports 57.4% higher net profit for the
fiscal first half ended 30 September, to ¥220.9 billion ($1.9
billion), compared with ¥140.0 billion in the same period of the
previous year. Operating income increased by 62.0% year on year
(YOY) to ¥298.4 billion and sales grew by 32.5% YOY to ¥941.3
billion. Quarterly figures have not been disclosed. (IHS Markit
Chemical Advisory)
Operating income at Shin-Etsu's infrastructure materials
business grew threefold to ¥123.2 billion, compared with ¥38.1
billion in the year-earlier quarter, on sales of ¥364.0 billion, up
65.0% YOY. The company says that sales prices for polyvinyl
chloride (PVC) grew, supported by strong global demand. It adds
that market conditions for caustic soda have improved steadily
since June. Increased production at Shintech, the company's
US-based PVC business, also contributed to the higher
earnings.
Shin-Etsu's electronics materials business recorded a 12.6% YOY
increase in operating income to ¥118.7 billion, on sales that rose
14.7% YOY to ¥335.5 billion. Products including semiconductor
silicon, photoresists, and photomask blanks continued to be shipped
at high levels for semiconductor device applications. Demand for
rare-earth magnets has been strong in all applications, including
automobiles, factory automation, and hard disk drives, despite the
restrictions on operations in Malaysia, it adds.
In the company's functional materials segment, operating income
rose by 39.4% YOY to ¥22.7 billion, with sales growing 25.3% YOY to
¥188.4 billion. The company executed price revisions to counter
higher prices of raw materials. Higher demand boosted the
profitability of this sector.
Shin-Etsu's processing and specialized services business
reported operating income 44.3% higher YOY at ¥10.4 billion, on
sales of ¥53.3 billion, up 13.3% YOY. Shipments of semiconductor
wafer containers were strong, both for transporting use and for
manufacturing processes.
Sumitomo Chemical reports net profit of ¥88.8 billion ($778.5
million) in the fiscal first half ended 30 September, compared with
a net loss of ¥2.2 billion a year earlier. Sales increased 26.5%
year on year (YOY) to ¥1.3 trillion. Operating income more than
doubled to ¥144.2 billion, compared with ¥50.1 billion in the
year-ago period. (IHS Markit Chemical Advisory)
Sales at Sumitomo's petrochemicals and plastics business
segment, the company's largest, rose by 64.0% YOY to ¥399.4
billion. The unit swung to an operating profit of ¥42.0 billion
from an operating loss of ¥31.2 billion a year earlier. The company
adds that market prices for petchem products, synthetic resins, and
synthetic fibers increased owing to demand recovery and a rise in
raw material costs. Margins also improved.
At the energy and functional materials segment, operating
income more than doubled to ¥12.5 billion from ¥4.7 billion in the
same period of the previous year, and sales rose 41.0% YOY to
¥148.4 billion.
Revenue at Sumitomo's IT-related chemicals segment rose 6.7%
YOY to ¥227.6 billion and operating income grew by 33.5% YOY to
¥29.5 billion. Shipments of processing materials for
semiconductors, including high-purity chemicals and photoresists,
increased, driven by growing demand. Shipments of materials for
display applications grew because of stay-at-home demand, and
telework demand continued.
Operating profit at the health and crop-science business almost
doubled to ¥18.5 billion, up by 98.0% YOY, against an operating
profit of ¥9.3 billion a year earlier. Revenue at the business rose
12.5% YOY to ¥209.4 billion. Shipments of crop-protection products
in North America, South America, and India stayed firm. Market
prices for methionine increased YOY.
The joint venture (JV) between SK Telecom's T Map Mobility and
Uber will begin offering a ride-hailing service in South Korea,
starting from 1 November. The JV, named UT, is targeting around
10,000 franchise taxis by the end of this year. The company also
aims to expand into carpooling early next year, once a new bill
allowing taxi providers to offer the service takes effect in late
January, reports Bloomberg. In 2020, T Map Mobility, SK Telecom's
mobility spin-off, announced its intention to form a JV with Uber
that will invest USD100 million for a 51% stake. The JV - named UT
- aims to launch a new taxi-hailing service based on existing
services offered by Uber and T Map Mobility. (IHS Markit Automotive
Mobility's Surabhi Rajpal)
Indian online bus ticketing startup Chalo has acquired Shuttl,
a bus aggregator for office commutes, in an all-cash deal. The
amount was not disclosed, reports TechCrunch. Chalo founder and
chief executive Mohit Dubey said the acquisition of Shuttl will
help his company expand across the country including metropolitan
areas, increase its technology and product offerings, and
accelerate its international development plans. Dubey said, "Shuttl
and Chalo, these are the firms that are positioned to become the
largest mobility firms in the world. I wish the pandemic had not
happened, but it has allowed the two companies with a similar focus
to come together". This development comes days after Chalo
announced a USD40-million Series C round of funding. Chalo's app,
which has more than 7 million downloads as of July 2021, provides
live tracking of over 15,000 buses in 21 Indian cities. (IHS Markit
Automotive Mobility's Surabhi Rajpal)
Thalamus Irwine, an India-based technology conglomerate with a
heavy emphasis on artificial intelligence (AI) and Blockchain, has
partnered with US-based electric vehicle (EV) manufacturer Triton
EV to accelerate India's autonomous vehicle (AV) future, reports
The Economic Times. The memorandum of understanding (MoU) signed by
the two companies outlines a three-phase strategy in which Thalamus
Irwine and Triton will roll out AI systems over a three-year
period, with Thalamus Irwine's AI technology being deployed in
Triton's EVs. "Thalamus Irwine will install AI based safety system
for Triton EV drivers in the first phase. We plan to use data
generated from Triton EV and use it for developing autonomous
vehicles. We have plans to upgrade the same car into an autonomous
vehicle in phase 2 through a firmware update," said Thalamus Irwine
CEO Rishabh Sharma. (IHS Markit AutoIntelligence's Jamal Amir)
Posted 27 October 2021 by Chris Fenske, Head of Fixed Income Research, Americas
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.