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The major European and APAC equity markets closed lower, while
US markets were modestly higher after starting the day in negative
territory. Benchmark European government bonds closed mixed, while
US bonds and the dollar were close to flat on the day. Credit was
weaker across IG and high yield, with iTraxx closing sharply lower
on the day. CDX-NAHY began the day an additional 16bps wider after
yesterday's significant sell-off, but retraced most of the widening
to close only modestly lower. Silver, gold, and oil all closed
higher on the day.
Americas
US equity market closed modestly higher on a rollercoaster of a
day; Nasdaq +0.4%, S&P 500 +0.3%, DJIA +0.2%, and Russell 2000
flat.
10yr US govt bonds closed -1bp/0.67% yield and 30yr bonds
-1bp/1.41% yield.
Seasonally adjusted (SA) US initial claims for unemployment
insurance rose by 4,000 to 870,000 in the week ended 19 September
and remain at historically high levels, although well below the
all-time high of 6,867,000 in the week ended 28 March. The not
seasonally adjusted (NSA) tally of initial claims rose by 28,527 to
824,542. (IHS Markit Economist Akshat Goel)
Seasonally adjusted continuing claims (in regular state
programs), which lag initial claims by a week, fell by 167,000 to
12,580,000 in the week ended 12 September. Prior to seasonal
adjustment, continuing claims fell by 176,510 to 12,264,351, the
largest decline in four months. The insured unemployment rate in
the week ended 12 September inched down 0.1 percentage point to
8.6%.
There were 630,080 unadjusted initial claims for Pandemic
Unemployment Assistance (PUA) in the week ended 19 September. In
the week ended 5 September, continuing claims for PUA fell by
2,956,176 to 11,510,888.
In the week ended 5 September, there were 1,631,645 claims for
Pandemic Emergency Unemployment Compensation (PEUC) benefits.
The Department of Labor provides the total number of claims for
benefits under all its programs with a two-week lag. In the week
ended 5 September, the unadjusted total fell by 3,723,513 to
26,044,952.
CDX-NAIG closed +1bp/58bps and CDX-NAHY +1bps, but were as wide
as +3bps and +16bps, respectively, during the morning.
DXY US dollar index closed close to flat/94.35.
Gold closed +0.5%/$1,876 per ounce and silver +0.4%/$23.20 per
ounce.
Crude oil closed +1.0%/$40.31 per barrel.
New US home sales sizzled again in August, rising 4.8% (+/-
10.5%) to a seasonally adjusted annual rate of 1,011,000—the
highest level since September 2006. The reading was not
statistically significant, however (90% confidence intervals). (IHS
Markit Economist Patrick Newport)
a. Sales in the South shot up 13.4% (+/- 15.3%) from
July—up 50% from August 2019 and the fourth straight
double-digit monthly increase, as sales increased to a 636,000
rate, the highest since December 2005 (the reading also was not
statistically significant, however).
Sales for the prior three months were revised up a cumulative
whopping 125,000.
The number of units for sale dropped 9,000 to 282,000;
completed homes for sale came in at 54,000, down 5,000.
The months' supply of un
Although most of the numbers in this report fail the
statistical significance threshold, they are consistent with other
housing data in showing activity rising to levels last seen in the
mid-2000s. 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.
Three items things stand out in this impressive report:"
The stunning sales numbers. True, the headline number is not
statistically significant (mainly because the sample is too small).
But a three-month moving average, which is more trustworthy than a
single monthly estimate, is at levels last seen in January
2007.
The cumulative 125,000 upward revision to sales in the previous
three months (we do not recall an upward revision this large). Over
a quarter of new home sales are imputed to account for homes sold
before a builder takes out a permit. The monthly revisions mainly
replace imputed data with actual data.
The months' supply, which is at an all-time low. This will
drive up new home prices, incentivizing builders to ramp up on
single-family housing starts.
The below table is this year's M&A activity in the animal
health sector tracked by IHS Markit's Animal Health team:
Lion Electric will deliver 10 battery electric trucks to
Amazon, with the first two to be delivered in 2020. The trucks are
planned for use in Amazon's middle-mile trucking operations,
transporting items within the company's distribution network. Lion
Electric will also provide one-time training to Amazon and the
drivers operating the trucks, and establish a maintenance program
for the vehicles. According to a Lion company statement, the trucks
will be manufactured at the company's Canadian facility, which it
says has capacity for 2,500 units per year. The Lion electric
vehicles (EVs) have a range of up to 250 miles, are agnostic on
charging technology and vehicle-to-grid enabled. Marc Bedard, CEO
and founder of Lion, said in the statement, "This vehicle delivery
for Amazon represents a very significant milestone for Lion. Amazon
is a leader in adopting decarbonizing technologies that can improve
sustainability among their trucking fleet. Our all-electric trucks
will be a valuable addition to Amazon's trucking operations as they
work to deliver on their sustainability goals… Designing and
manufacturing all-electric vehicles is a challenging and lengthy
process. We've been at it for more than 10 years now; we know what
works in practice, but also what only works on paper. We are in a
unique position to disrupt the heavy-duty truck segment by offering
an unmatched all-electric product, as we have already done in the
school bus segment." In addition, Fleet Owner reports that Lion
Electric has a new deal with ABB, an electric charging
infrastructure provider, to supply charging equipment for
customers. A Lion Electric energy specialist, Christopher Ralph, is
cited as saying that the move enables Lion to provide an end-to-end
charging infrastructure solution; Lion Energy can develop, design
and install an area for fleets to park and charge. "We can
customize and project manage the solution from end to end. When I
say customize, we know your vehicles. We know that they have
different operational requirements and that they have different
needs, different routes, different tasks, and they are all doing
different things on a day-to-day basis," Ralph is quoted as saying.
Lion's experience includes more than 300 electric school buses in
the US and Canada, and this Amazon deal provides a more
high-profile contract. Amazon has made a pledge to decarbonize its
transportation operations across its global business by 2040, and
Amazon has been making good on those efforts with purchases of EV
trucks and vans from a variety of automakers. Amazon's partnership
with Rivian garnered the most headlines. (IHS Markit
AutoIntelligence's Stephanie Brinley)
Mexico's National Committee of Banks and Securities (Comisión
Nacional Bancaria y de Valores: CNBV) on 23 September announced a
second loan restructuring program. The new program either extends
measures taken in March 2020 or introduces new regulatory easing.
(IHS Markit Banking Risk's Alejandro Duran-Carrete)
The capital conservation buffer requirement will be maintained
at zero until the end of 2021, rather than the previously
introduced limit of the end of 2020, while banks' liquidity
coverage ratios may now remain temporarily below 100% until March
2021.
New regulatory processes permit the reduction of specific
reserve requirements for restructured loans and allow banks to
treat additional provisioning as capital. These measures reflect a
request from the Mexican Banking Association (Asociación de Bancos
de México: ABM) for such regulatory relief.
The measures will be supported by the Central Bank of Mexico
(Banco de México: Banxico), which stated on 15 September that it
will extend its COVID-19 liquidity facilities until February
2021.
The new program reflects the slower-than-expected recovery in
Mexico's economy. Mexico's recession is now likely to extend, at
least, until the first quarter of 2021, increasing pressure on
borrowers. Credit deterioration will also be increased by the
government's decision to not offer a fiscal package to aid
corporations (and has even increased tax burdens this year).
Roughly one-quarter of the sector's total lending was deferred
between March and April 2020, and IHS Markit expects a substantial
proportion of deferred loans to be renegotiated. This indicates
severe distress in the sector, which is likely to translate into
high impairment when forbearance measures are ended. We assess that
the second wave of renegotiations is risk positive for banks,
giving them time to increase their provisioning, set strategies to
reduce losses, and start screening for more distressed loans.
The sector started the pandemic from a strong position to
resist credit deterioration. In June 2020, non-performing loans
(NPLs) constituted 1.9% of total loans and the coverage ratio was
158%. Net NPLs made up 5.2% of shareholders' equity. The capital
adequacy ratio was 16.5%, its highest level since 2013, aided by a
tier-1 ratio of 14.8%.
Moody's Investors Service has downgraded Bolivia's sovereign
risk rating from B1 to B2 (57.5 on IHS Markit's generic scale) as a
result of recent social and political unrest, which clouds the
economic outlook, as well as a rapid deterioration of external
buffers. (IHS Markit Economist Rafael Amiel)
The deterioration in Bolivia's foreign reserves is of
particular concern given the economy's reliance on commodity
exports and its stabilized exchange rate of BOB6.9:USD1.00, which
IHS Markit considers significantly overvalued.
Moody's assesses that the current level of reserves is no
longer sufficient by all metrics; furthermore, the economy is at
risk of capital flight. Reserves amounted to USD3.6 billion in
July, down from USD13 billion in 2014. In relative terms,
foreign-exchange reserves have come down from 40% of GDP to 9% of
GDP.
Bolivia's creditworthiness was also based on fiscal buffers,
which Moody's reports declined from 27% of GDP in 2013 to 10% of
GDP in 2019. During this period, public debt increased from 38% of
GDP to 57.7%.
The current account has been in deficit since 2015 because of
expansive public spending during a time of falling hydrocarbon
revenues, due mainly to low prices.
Moody's forecasts that the fiscal deficit and public debt will
amount to 13.5% of GDP and 72% of GDP, respectively, in 2020,
driven by the COVID-19 virus outbreak and relatively weak
hydrocarbon sector revenues.
Colombian imports of consumer goods, intermediate goods, and
capital goods began to recover month on month (m/m) in July after
hitting a low in May and barely moving in June. (IHS Markit
Economist Lindsay Jagla)
Overall imports increased 25.8% m/m in July, according to data
from the Colombian National Administrative Department of Statistics
(Departamento Administrativo Nacional de Estadística: DANE).
Imports of consumer goods (+28.8%), intermediate goods and primary
materials (+21.6%), and capital goods and construction materials
(+28.9%) all expanded compared with June.
Exports, which have gradually been increasing since reaching a
trough in April, grew 11.9% m/m in July, driven primarily by slowly
increasing oil prices and recovering external demand as economies
began to reopen globally.
The recovery of imports in July, especially consumer,
intermediate, and capital goods, reflects some reactivation of the
Colombian economy in terms of consumption and investment as well as
a resumption of production as isolation measures imposed to stem
the coronavirus disease 2019 (COVID-19) virus outbreak were
gradually lifted throughout the summer. The Purchasing Managers'
Index (PMI) also shows this increase in economic activity,
remaining in expansionary territory in May, June, and July as
output and quantity of purchases grew.
Brazil's pigmeat industry is enjoying a bumper year. Favored by
the exchange rate and soaring external demand, the sector is
largely unscathed by the Covid-19 pandemic - with new records being
set for both export volumes and domestic pig prices. Pork exports
in the first eight working days of September performed well, as
shown by the data of the Secretariat of Foreign Trade (Secex) and
in line with expectations that the country will benefit from the
African Swine Fever (ASF) outbreak in Germany. Daily shipments of
unprocessed pork reached 4,123 tons, up 54.61% year-on-year. The
price paid per ton averaged USD2,316.8/ton, down 0.2% y/y but 3.6%
higher than in August. From January and August, Brazil shipped
599,213 tons of fresh pork, and if shipments continue at the daily
pace for the entire month of this month, Brazil will have exported
more in the first nine months of 2020 than during the all year of
2019, when 656,992 tons were exported. With many key markets now
closed to German pork, Brazilian exporters can expect to make
further gains in Asia - although the US may be the biggest winner
in China. On the animal supply side, live hog prices remain at
record high levels - although markets were little changed last
week. Wholesale pork prices also held onto recent gains but may be
nearing the limit of what is affordable to many Brazilian
consumers. In the state of Santa Catarina, wholesale pork quotes
remained at BRL12.40 (USD2.31)/kg* for the week ending 18 September
while live hogs stayed at BRL7.10 (USD1.32)/kg*. (IHS Markit Food
and Agricultural Commodities' Ana Andrade)
As per IHS Markit's Commodities at Sea, Chilean iron ore and
concentrates shipments during the first eight months of 2020 are
calculated at 9.1mt, up 67% from previous year levels. The rebound
in Chilean iron ore shipments this year is on the back of
resumption in loading activities from Huasco' s Guacolda Terminal 2
and strong Chinese demand for high-grade iron ore cargoes. Compañía
Minera del Pacífico (CMP) iron ore & concentrates shipments
were significantly impacted since Nov 2018, because of an accident
due to which ship loader at the Huasco's Guacolda Terminal 2 went
unavailable for the entire 2019. In absence of this major loading
facility, CMP had to shift operations to its other terminals (like
Las Losas Terminal). During 2019, the company had to incur
additional operational as well as freight costs due to the
unavailability of Guacolda Terminal 2 but benefited from the surge
in international iron ore prices after high-grade Fe ore
availability tightened because of the Vale's Brumadinho dam
disaster. Huasco's Guacolda Terminal 2 resumed operations from
January 2020 this year. Total Chilean iron ore and concentrates
shipments in terms of import countries, in the first eight months
of this year were 92% to China (versus 88% a year ago), and the
rest were shipped to Japan, Algeria, USA, and South Korea. In terms
of vessel segments, Newcastlemax and Capesize for the same duration
garnered share of 27% (versus 15% a year ago) and 68% (versus 72% a
year ago), respectively in the total tonnage shipped outside Chile.
Chinese steel mills are scouting for ownership in iron ore mines as
far as in South America as prices of iron ore remain strong. Iron
ore is the main steel-making ingredient for the steel mills. In
August 2020, HBIS Resources, a unit of China's second-biggest
steelmaker HBIS Group, signed an initial deal to develop the Pampa
de Pongo iron ore mine in Peru alongside current license-holder
Zhongrong Xinda. Both companies to jointly develop mine as well as
construct the port. This is the first investment from HBIS Group in
South America. Overall, during 3Q20 and full 2020, Chilean iron ore
and concentrates shipments are forecasted at 3.5mt and 13.9mt,
respectively. An increase in shipments to employ 17 Newcastlemax
(versus eight last year) and 85 Capesize vessels (versus 52 last
year). (IHS Markit Maritime & Trade's Rahul Kapoor and Pranay
Shukla)
Europe/Middle East/Africa
European equity markets closed lower; UK -1.3%, France -0.8%,
Germany -0.3%, Spain -0.2%, and Italy -0.1%.
10yr European govt bonds closed mixed; Italy +3bps,
France/Spain +1bp, and UK/Germany flat.
iTraxx-Europe closed +3bps/61bps and iTraxx-Xover
+23bps/355bps.
Germany's headline Ifo index, which reflects business
confidence in industry, services, trade, and construction combined,
has increased for the fifth consecutive month, from 92.5 in August
to 93.4 in September. This means that business confidence has not
regained February's pre-pandemic level of 95.9 yet, let alone the
long-term average of 97.1. The Ifo Institute summarized the results
by saying that "the German economy is stabilizing despite rising
infection numbers". (IHS Markit Economist Timo Klein)
Expectations increased by 0.5 point to 97.7, which is now the
highest level since November 2018. Expectations improved the most
in the wholesale sector, as well as in manufacturing and
construction. Services-sector expectations, in contrast,
experienced a small setback after their major rebound during
May-August. Meanwhile, the overall current conditions index
improved from 87.9 to 89.2, which is a smaller margin than the
average monthly increase by 3.0 points during June-August. The
latest level remains well below February's 98.8 prior to the
COVID-19 virus outbreak.
The breakdown of overall indices by sector, which combines
expectations and current conditions, also reveals that
wholesale-sector confidence improved the most in September,
followed by manufacturing and construction. In contrast, the retail
and service sectors, which had benefitted the most in May-June from
the loosening of lockdown restrictions, only stagnated or even
slipped slightly. Nevertheless, service-sector confidence remains
ahead of the others in level terms, followed by construction.
The Ifo graph portraying the cyclical position of the diffusion
index of the headline measure - setting the current conditions and
expectations balances against each other - signals that the economy
has returned firmly to boom territory because both components are
clearly positive now. The assessment of current conditions improved
anew from 0.4 to 3.2, while expectations increased from 3.9 to 4.9.
That said, as these levels are only in single rather than double
digits, confidence remains at risk of turning negative again if
COVID-19 cases extend their recent increase, leading to a renewed
tightening of administrative restrictions that would harm economic
activity.
September's Ifo survey results signal that the German economy
remains on an upward path but that recovery momentum is slowing and
a return to pre-pandemic activity levels will take considerable
time.
Traton Group and TuSimple announced a global partnership
regarding autonomous trucks, which will involve Scania trucks
testing the technology. According to a joint statement, the
partnership is the first of its kind in Europe, with a global OEM
working with an SAE Level 4 autonomous technology company. The two
are launching a development program to operate the first SAE Level
4 autonomous hub-to-hub route from Södertälje to Jönköping in
Sweden. The route will use Scania trucks. Although financial
details were not disclosed, it was confirmed that Traton will take
a minority stake in TuSimple. Matthias Gründler, Chief Executive
Officer of Traton, said in the statement, "The global partnership
with TuSimple is another step towards becoming a Global Champion.
Innovative future technologies that provide additional value to our
customers represent a key part of our strategy." Cheng Lu,
president of TuSimple, said "Our partnership with TRATON GROUP
accelerates the introduction of autonomous truck technology to new
international markets, and we look forward to our global
partnership." This agreement moves Traton forward on testing
autonomous technology in Europe, and the stake in TuSimple could
prove to be valuable for Traton independently if TuSimple grows and
its technology is commercialized. Although it was not referenced in
the announcement, TuSimple also has a partnership with US
commercial truck-maker Navistar, and Traton and Navistar are in
negotiations on Traton acquiring Navistar. (IHS Markit
AutoIntelligence's Stephanie Brinley)
BMW's Leipzig plant will start battery module production in
2021, with the company planning investment of more than EUR100
million by 2020 in e-drive production at the plant. The investment
will expand BMW's Germany-based production capacity for electric
drivetrains. BMW head of planning and production engines and
e-drives, Michael Nikolaides, said in a statement announcing the
investment, "We are consistently ramping up the production of
e-drives to meet our ambitious electric mobility targets. Just
recently, we opened our Competence Center for E-drive Production in
Dingolfing and doubled the production capacity for high-voltage
batteries at BMW Brilliance Automotive in China by opening another
battery center. Now we are also stepping up our battery production
output in Germany." With this investment, Leipzig will join BMW's
locations in Dingolfing (Germany), Spartanburg (US), and Shenyang
(China) as part of BMW's in-house battery production network. BMW
also noted that by 2025, one in three BMW vehicles sold in Europe
will have an electrified drivetrain. (IHS Markit AutoIntelligence's
Stephanie Brinley)
A survey shows that the majority of Germans would buy
cell-cultured meat. As consumer attitudes change in Europe, a new
survey shows the majority Germans are limiting their consumption of
conventionally-produced meat - with more than half also open to the
concept of eating cell-cultured alternatives. The research,
published in the journal Foods by an international research team
from the University of Bath (UK), Université Bourgogne
Franche-Comté (France), and Ipsos (Germany), finds that there is
growing acceptance of non-meat diets, both in Germany and France -
although a strong sense of tradition and culture still hold sway in
terms of attitudes, particularly in France. For the study,
researchers surveyed 1,000 people in each country, asking them a
series of questions about their current and intended dietary
habits, as well as about their thoughts on cultured meat, which is
produced without raising and slaughtering animals. Their analysis
found that just 45% of German respondents identified as full
meat-eaters, with a further 31% now actively following flexitarian
or reduced-meat diets. Meat consumption was more common in France,
where 69% identified as full meat-eaters, with 26% following a
flexitarian diet. The research also reveals promising markets for
cultured meat in both countries. Although the majority of consumers
in France and Germany had still not heard of cultured meat, 44% of
French respondents and 58% of German respondents said that they
would be willing to try it, with 37% of French consumers and 56% of
Germans willing to buy it themselves. The publication notes that
per-capita meat consumption has been trending down in Germany for
several decades. Now, for the first time, evidence suggests that
German consumers who are not deliberately limiting their meat
consumption are in the minority. In France, almost half of
meat-eaters aim to cut down on their consumption of animal-based
products in the future, although attitudes in the population as a
whole are harder to shift. (IHS Markit Food and Agricultural
Commodities' Max Green)
The French business confidence indicator has improved from 90
in August to 92 in September, its highest level since March. The
indicator has recovered strongly since hitting 53 in April, but
remains well below its level of 105 during the first two months of
2020. (IHS Markit Economist Diego Iscaro)
Confidence has improved in all the sectors included in the
composite index (manufacturing, services, wholesale/retail trade,
and construction). However, these improvements have mainly been
driven by large increases in the indices measuring past activity,
while more forward-looking indices are less rosy.
This is particularly true in the services sector, where the
index measuring past activity has jumped from -25 to +1, while the
indices related to expected activity (down by 3 points), demand
(-2), and the general outlook (-2) have all deteriorated in
September.
In the manufacturing sector, the indices measuring orders
overall and foreign order books have improved by 4 and 9 points,
respectively, while the general production expectations index has
also improved by 2 points. Both indices remain well below their
long-term average. On the other hand, the index measuring personal
production expectations has declined for the second consecutive
month, by 10 points.
Although the increasing number of COVID-19 cases since August
has not resulted in a reversal in business confidence, the impact
on the more forward-looking parts of the survey is clear. The risk
is that increasing concerns about the outlook may take their toll
on firms' hiring and investment decisions, with negative
implications for activity.
The Swiss National Bank (SNB) in its regular quarterly review
has not changed the policy or deposit rates but stressed that it
will continue to provide the banking system with "ample" liquidity
via its COVID-19 refinancing facility (CRF) and occasionally also
via the repo market. It also emphasized its motivation to buffer
the negative consequences of the pandemic on the business cycle and
inflation, stating that the CRF together with government loan
guarantees have substantially helped to provide the economy with
credit and liquidity. (IHS Markit Economist Timo Klein)
Both the Swiss average rate overnight (SARON), the key policy
rate, and the sight deposit rate are kept at -0.75%. The SNB is
also maintaining the higher exemption thresholds (compared with
pre-pandemic levels) up to which banks do not need to pay any
negative interest on their sight deposits at the SNB (an allowance
factor of 30). This has reduced banks' payments to the central bank
and thus their cost burden despite the persistence of a deeply
negative interest rate environment. Furthermore, the SNB is
maintaining the deactivation of the counter-cyclical (equity)
capital buffer that banks are normally required to keep in order to
counteract asset overvaluation risks in the Swiss mortgage and
real-estate market.
The SNB currently calls the Swiss franc "persistently highly
valued" (refraining, as in the March and June reviews, from using
the term "overvalued") and said that it is "prepared" to intervene
more strongly in the currency market, taking into account the
"overall" situation in the foreign exchange markets.
The central bank repeats anew that there currently is an
unusually large degree of uncertainty with respect to growth and
inflation predictions. It highlights that GDP levels worldwide
declined by between 10% and 20% in the second quarter compared with
the end of 2019, but also that short-time work programs in many
countries have limited the increase in unemployment and that GDP
will rebound strongly in the third quarter of 2020 owing to a
loosening of COVID-19 virus-related restrictions.
The basic assumption that the SNB makes for its projections is
that it will be possible to keep the pandemic under control without
having to return to the severe lockdown conditions observed in most
countries during March-April. The central bank stresses the
important supportive role played by monetary and fiscal easing
worldwide, although this will still not prevent the
underutilization of capacity and low inflation "for an extended
period".
Total says it will invest more than €500 million ($584 million)
converting its Grandpuits refinery in France into a facility for
the production of bioplastics, biofuels, and the chemical recycling
of plastics. Crude oil refining at the facility will stop in the
first quarter of 2021, with the storage of petroleum products to
cease in 2023, it says. The conversion will be complete by 2024,
Total says. An audit conducted over several months on a
260-kilometer pipeline carrying oil from the port of Le Havre to
the refinery found that replacing it would cost nearly €600
million. The refinery was unable to operate for five months last
year due to leaks from the pipeline, it says. The planned
100,000-metric tons/year polylactic acid (PLA) bioplastics plant
will be constructed by Total Corbion PLA (Gorinchem, Netherlands),
an equal joint venture (JV) between Total and Corbion, and start
operations in 2024. It will be Europe's first PLA manufacturing
plant, according to Total. PLA is produced entirely from sugar, is
biodegradable and recyclable, with a market growing at up to 15%
per year, Total says. "Demand is rising fast, particularly in the
markets for film wrap and rigid packaging and in numerous
industrial applications," it says. The JV launched its first
75,000-metric tons/year PLA production plant in Rayong, Thailand,
in 2018, with the second unit set to make Total Corbion the world's
largest producer of PLA, it adds. The planned plastics recycling
plant will be France's first chemical recycling facility, with the
unit to be majority owned by Total with a 60% share and UK-based
partner Plastic Energy holding 40%. The facility will convert
plastic waste using pyrolysis into a liquid known as Tacoil, which
will then be used as feedstock for the production of polymers. The
new unit will help Total meet its objective of producing 30% of its
polymers from recycled materials by 2030, it says. The planned
biorefinery will feature a renewable diesel unit, primarily
producing sustainable aviation fuel. To be commissioned in 2024, it
will produce up to 170,000 metric tons/year of aviation fuel and
120,000 metric tons/year of renewable diesel. Up to 50,000 metric
tons/year of renewable naphtha will be produced for bioplastics
manufacturing. The unit will process primarily animal fats from
Europe and used cooking oil, supplemented with other vegetable
oils.
According to Statistics Finland, Finland's current account in
the second quarter turned into a deficit of EUR807 million
(USD942.6 million), which marks a narrowing of nearly 80% year on
year (y/y) and 50% quarter on quarter (q/q). The first-half-2020
shortfall of EUR2.4 billion is 34% lower than in the first half of
2019. (IHS Markit Economist Venla Sipilä)
After registering a deficit in the second quarter of 2019, the
goods trade balance turned into a surplus of EUR994 million in the
second quarter of 2020, as imports fell faster than exports.
Meanwhile, the fall in services imports was not able to keep up
with the contraction of 28% y/y in services exports, and the
services account deficit widened y/y.
Primary income outflows fell particularly sharply and the
primary-income-account deficit narrowed y/y, although the deficit
represents a deterioration compared with the first quarter's
surplus. Interests and dividends on portfolio investments account
for the most important category of primary income outflows, while
property income flows related to direct investments were important
in determining inflows.
In the second quarter, there was a net capital inflow of EUR2.2
billion, which was mostly driven by inflows of portfolio
investments, in the form of liabilities in bonds and money market
instruments. Meanwhile, there was a net capital outflow of other
investments of EUR5.2 billion, and a net foreign direct investment
(FDI) outflow of EUR1.6 billion.
At the end of the second quarter, Finland's net international
investment position was negative by EUR2.0 billion, with its gross
foreign assets standing at EUR844.6 billion and liabilities at
EUR846.6 billion. The net international investment position fell
compared with the previous quarter, when it had stood at EUR3.8
billion, mostly owing to falling stocks of derivatives and other
investments.
The results for second-quarter external finances reflect the
impact of the COVID-19 virus crisis. Finland's current account
strengthened as the fall in imports, which reflects weakness in
domestic demand, offset the effect of decreased exports.
Mobileye has signed a memorandum of understanding (MOU) with Al
Habtoor Group (AHG) for strategic co-operation to bring mapping
technologies for advanced driver assistance systems (ADAS),
autonomous vehicles (AVs), and smart city solutions to the United
Arab Emirates, reports Khaleej Times. The partnership aims to
create a fleet of autonomous 'robotaxis' that can run in Dubai by
the end of 2022. Amnon Shashua, senior vice-president at Intel
Corporation and president and CEO of Mobileye, said, "This historic
collaboration between Mobileye and Al Habtoor Group presents an
opportunity to transform UAE cities by accelerating smart city
development and advancing transportation services with cutting edge
technology. The insights Mobileye mapping technology will unlock
for Al Habtoor, combined [with] future self-driving mobility
solutions, together have the potential to greatly enhance the daily
lives of citizens in the region." As part of the agreement,
vehicles equipped with Mobileye technology will be deployed in the
region and will gather smart city data to gain valuable insights to
improve road safety and help in the development of driverless
Mobility-as-a-Service (MaaS) solutions. In the starting phase,
1,000 vehicles will be equipped with Mobileye's system to map Dubai
and collect data. The collaboration will include smart city
solutions, equipping vehicles with Mobileye 8 Connect (a
collision-avoidance system that also collects data for safer
driving, AV mapping, and city planning); AV testing, which is
scheduled to start in 2021, where Mobileye-powered AVs are expected
to be deployed in Dubai for public-road testing; MaaS testing,
which is expected to start in 2022, with final validation to
prepare for a commercialized service; and autonomous MaaS launch
and scaling, which will include the assimilation of all insights
gained in the first three phases of the collaboration to launch a
Mobileye-powered autonomous mobility service for UAE consumers in
2023. (IHS Markit Automotive Mobility's Tarun Thakur)
Asia-Pacific
APAC equity markets closed lower; India -3.0%, South Korea
-2.6%, Hong Kong -1.8%, Mainland China -1.7%, Japan -1.1%, and
Australia -0.8%.
The Bank of Thailand (BOT) has left its monetary policy
unchanged. Although the Thai economy has picked up, the bank's
outlook for weaker recovery could mean that its extra accommodative
monetary policy will continue. (IHS Markit Economist Harumi
Taguchi)
The BOT maintained its monetary policy rate at 0.5% at its
monetary policy committee (MPC) meeting on 23 September. The bank
is now anticipating a slightly softer contraction for the Thai
economy in 2020 than in its previous projection, but it expects
weaker recovery in 2021 because of difficulties in returning
figures for foreign tourists to previous levels.
The BOT maintained its view that economic recovery would vary
significantly among sectors, and that it would take at least two
years to return to pre-pandemic levels. While its inflation
outlooks were revised up slightly on the back of increasing energy
prices in line with improved demand, the bank assesses that
headline inflation will rise gradually close to the lower bound of
its 1-3% target range in 2021, as previously expected.
The BOT also maintained its views that its extra accommodative
monetary policy, as well as fiscal, financial, and credit measures,
has helped mitigate the adverse effects of the pandemic. That said,
risks remain to the downside as the bank is concerned about the
second wave of outbreaks, the vulnerability of financial stability
under the weak economic outlook, and the appreciation for the Thai
baht (although it has depreciated since the August MPC).
BOT's decision was in line with IHS Markit expectations, given
that economic indicators show more signs of improvements in
economic activities. While the low inflation outlook will enable
the bank to maintain its extra accommodative monetary policy, the
bank appears to be anticipating an upside from the government's
targeted and timely measures rather than a lower policy rate,
reflecting its view that economic recovery would vary significantly
among sectors.
The BOT is concerned about the deterioration of household debt
service capability and ineffective liquidity distribution to
businesses and households, although high levels of liquidity in the
financial system will remain effective to support businesses and
employment. Whether financial institutions can expedite debt
restructuring for households and businesses as the BOT anticipates
could be a key for lowering risks to financial stability.
South Korean tire manufacturer, Hankook Tire, has announced its
collaboration with data and testing firm, SK Planet. According to a
Hankook statement, the companies will create a solution called the
Road Risk Detection Solution that is capable of pre-emptively
detecting potentially hazardous risks on the road. This new system
can analyze road noise acquired from a moving vehicle through
artificial intelligence (AI) and deep learning technology to
identify potential risk factors on the road such as rain, snow,
black ice, accidents, and other factors that may contribute to
hazardous situations. This information is then transferred in
real-time to various public departments related to road safety and
maintenance for a response such as removing excess snow or
repairing potholes. Hankook will provide diverse noise data to SK
Planet and contribute to improving the accuracy of this AI-based
technology by collecting data from its test driving tracks in
Geumsan (South Korea), and in Ivalo (Finland). (IHS Markit
AutoIntelligence's Jamal Amir)
Kia has returned to normal production operations at the two
plants in Gwangmyeong (South Korea), following days of suspension
due to COVID-19 cases, reports the Yonhap News Agency. The number 1
plant in Gwangmyeong resumed operations on 22 September and the
number 2 plant on 23 September, as no more infections were reported
at the plants, according to an unnamed Kia spokesperson. The two
plants in Gwangmyeong have a combined vehicle production capacity
of 320,000 units a year. Kia produces the Carnival multi-purpose
vehicle (MPV), K9 sedan, and Stinger sports sedan at the number 1
plant, while it produces the Pride hatchback and Stonic sport
utility vehicle (SUV) at the number 2 plant. Kia halted production
operations at the two plants in Gwangmyeong from 16 September, with
all of the 6,000 plant workers staying at home, after some of its
workers were confirmed to have contracted COVID-19. The report
highlights that 11 assembly line workers were confirmed to have
been infected. The number of related cases reached 18, as their
family members and acquaintances also caught it. (IHS Markit
AutoIntelligence's Jamal Amir)
Posted 24 September 2020 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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