2025-01-21 19:19

Trump's EV order not seen slowing critical metals demand Global EV demand on the rise, especially in China Lithium industry executives bullish on growth prospects Jan 21 (Reuters) - U.S. President Donald Trump's rollback of electric vehicle targets may temporarily slow demand for lithium and other critical minerals, but is unlikely to hamper the mining industry amid surging global EV demand, analysts and industry leaders said. Trump on Tuesday revoked predecessor Joe Biden's 2021 executive order that sought to ensure half of all new vehicles sold in the U.S. by 2030 are electric. Automakers had been positioning for a jump in EV demand due largely to that Biden move. Trump's order caused shares of Japanese automakers, South Korean battery makers and Australian, U.S. and Chinese lithium miners to slip. But even if EV demand cools in the world's second-biggest auto market, analysts and industry experts expect traction elsewhere to more than compensate. Trump has planned other regulatory changes to cut off support for EVs and charging stations. He also aims to strengthen measures blocking imports of automobiles and battery materials from China. "Every time people take away subsidies or benefits ... it's a dent to the demand scenario," said analyst Glyn Lawcock at Barrenjoey, an Australian investment bank. "(But) ultimately demand will still grow even if the U.S. is a bit slower under Trump." Australian lithium producer Liontown Resources (LTR.AX) , opens new tab said the global transition to EVs was underway, with or without the United States. "Longer term, I just don't think it will be an issue on demand," Antonino Ottaviano, Liontown's CEO, said on a Tuesday analyst call. Much of the EV industry's growth happens in China, accounting for 11 million sales or 65% of the market, compared with North America, which accounts for 10% of the market, Liontown executives said on the call. Meanwhile, the rest of the world already accounts for 1.3 million EV sales and is growing at 27% year on year, a trajectory that will see it become more meaningful than the entire North American market in less than two years, the Liontown executives added. That growth potential is something Chinese EV manufacturers are chasing given they are locked out of the U.S. market due to 100% EV tariffs imposed by Biden. Grid-scale batteries that store days' worth of electricity are rising in popularity across the world, for example. Critical metals are also used to build many consumer electronics as well as computer servers needed to power the artificial intelligence industry. Albemarle (ALB.N) , opens new tab, the world's largest lithium company, declined to comment on Trump's order. Arcadium (ALTM.N) , opens new tab, a lithium producer about to be bought by Rio Tinto (RIO.AX) , opens new tab and the International Lithium Association trade group, was not immediately available for comment. Rio Tinto also declined to comment on Trump's order, but its CEO Jakob Stausholm told the World Economic Forum on Tuesday that he is bullish on the white metal. "Lithium demand will probably go up another five times over the next 15 years, so a lot more lithium projects will have to be built," Stausholm told the forum in Davos, Switzerland, adding that he has owned an EV for more than nine years. "It's just a better car" than an internal combustion engine, Stausholm added. David Klanecky, CEO of privately held battery recycler Cirba Solutions, expects U.S. demand for critical minerals to jump by 2030 due to the demand not just for EVs, but for myriad electronics. Beyond any target rollbacks, miners said they believe measures to wean Western manufacturers off Chinese supplies will underpin support for their metals. "We expect measures taken to build supply chain independence from China ... to have a much greater impact than the rollback of a formal target for EV sales," said Darryl Cuzzubbo, CEO of Australian rare earths developer Arafura (ARU.AX) , opens new tab. "There is a tipping point looming for electric vehicles at which targets and incentives won't be required to encourage take-up." (This story has been corrected to fix North America's share of the global EV market to 10% from 20% in paragraph 8) Sign up here. https://www.reuters.com/markets/commodities/trumps-ev-rollback-not-expected-suppress-appetite-critical-minerals-2025-01-21/

2025-01-21 18:42

Hedge funds position for Trump 2.0 Hedge funds bet on strong dollar continuing EM stocks dumped ahead of Trump inauguration - Goldman note LONDON, Jan 21 (Reuters) - Hedge funds have positioned for Donald Trump's U.S. presidency with their highest levels of borrowing since 2010, while betting the dollar would continue to rise, according to bank research and industry data. U.S. stock trading hedge funds kicked off the week with gross leverage levels in their highest range since 2010, a note from Morgan Stanley's (MS.N) , opens new tab prime brokerage seen by Reuters showed. Gross leverage reflects how much a hedge fund has increased its market positioning. European stock traders wagered that European equities would rise, especially in financial, tech and energy companies, said the note. Lower taxes, deregulation and higher tariffs might create tailwinds for some U.S. stocks, but tariffs and added volatility would deter gains more widely, said an investment letter by James Hanbury and Jamie Grimston, portfolio managers of the two funds at Lancaster Investment Management in London overseeing roughly $1.4 billion in assets. "This will be going on whilst the U.S. fiscal deficit is at greater than 6% with the economy currently at full employment," said the letter. Higher volatility and lower regulation "should be beneficial for Plus500 (PLUSP.L) , opens new tab and IG Group where we have a smaller holding," it added, referring to financial firms in which the hedge fund held long positions. AMERICA FIRST Trump kicked off his White House tenure with several protectionist policies to hoist American economic interests over trade partners. Going into the inauguration, hedge funds dumped emerging markets stocks outside of China in the largest net selling since October, said a separate note from Goldman Sachs (GS.N) , opens new tab on Friday. Hedge funds' China trades have fallen to five-year lows, said the note. Hedge funds trading macroeconomic signals, including systematic trend followers, continue to bet on a strong dollar, a separate weekly note from JPMorgan said on Jan. 13. Barclays said in a separate note that CTAs' - commodity trading adviser funds that trade futures and other derivatives - long dollar bets are "stretched, especially versus the euro." "Looking at markets going forward ... we are strong proponents of the Trump trade in currency markets, strongly long the dollar in the G10, especially against sterling and the euro," said Russel Matthews, a senior portfolio manager in global macro at RBC BlueBay Asset Management, in London. Russel said the investment manager was short the pound against the dollar "quite aggressively," given how deeply the UK Labour Party's policies have been "picked over and criticised." A short position implies an asset will weaken in value. While RBC BlueBay has taken some if its trade off the table, the firm expects continuing dollar strength to push the euro to $1 or below. "We know there will be punitive measures taken against Europe ... we have yet to see what these will be, but this is coming," said Matthews. Some portfolio managers are looking at the impact a stronger greenback may have on businesses and countries with dollar debt. "You may see a strengthening dollar that could lead to problems for many emerging market companies that have debt issued in dollar terms," said Sina Toussi, chief investment officer at special situations hedge fund Two Seas Capital, with $1 billion in assets under management. He added that countries with high external debt in dollars could also struggle. "We haven't seen any real dislocations yet in the market, but we're spending some time trying to anticipate where some of those dislocations can happen." Hedge funds trading China expect near-term volatility, particularly after Trump on Tuesday said his administration was discussing a 10% punitive duty on Chinese imports. Stanley Tao, CIO at Golden Nest Capital, a Hong Kong-based hedge fund managing $250 million, remains cautious for the first half of the year, given it takes time to see what action Trump will take and how China will respond. "If the Trump administration is harsh on China, China may roll out unconventional stimulus measures, which could actually benefit the stock market," Tao said. He favours stocks driven by domestic demand and exporters focusing on non-U.S. countries, while he said he would stay away from the auto sector, companies with overcapacity issues and manufacturers directly exposed to tariff risk. Sign up here. https://www.reuters.com/markets/us/hedge-funds-ante-up-big-bets-kick-off-trumps-second-term-2025-01-21/

2025-01-21 18:35

Andre Correa do Lago to lead COP30 in Belem, Brazil Correa do Lago has extensive climate diplomacy experience Brazil faces challenges preparing Amazonian city of Belem for COP30 summit BRASILIA, Jan 20 (Reuters) - Brazil's newly nominated head of the planned 2025 COP30 climate summit in the Amazonian city of Belem warned on Tuesday that President Donald Trump's decision to withdraw the United States from the Paris Agreement would cast a shadow over the talks. "We are still analyzing President Trump's announcements, but there is no doubt they will have a significant impact on preparation for COP30," Ambassador Andre Correa do Lago told reporters on Tuesday shortly after he was named to the post. Trump withdrew the U.S. from the 2015 pact right after taking office for a second non-consecutive term on Monday, removing the world's biggest historic emitter of greenhouse gases from global efforts to fight climate change for the second time in a decade. The move adds to challenges Brazil was already set to face as COP30 host, including tough disputes over financing the energy transition in developing countries and the new pledges to reduce emissions countries have vowed to make. Correa do Lago said "there are still many paths of dialogue" with the U.S., despite Trump's latest move, noting the country is still a member of the United Nations climate convention, a forum of dialogue between nations about global climate policy. The announcement of the COP30 head is the starting point for the Brazilian government to set up the leadership structure that will carry out negotiations for what likely will be one of the most difficult conferences in recent years. In his new role, Correa do Lago will serve as the main facilitator and mediator between country delegations at the November summit. The presidency is considered essential to the success of the conference, in which leaders from almost every nation on the planet will negotiate how to keep global warming below catastrophic levels, after two years of record heat. Correa do Lago's pick by President Luiz Inacio Lula da Silva marks a return of the conference's leadership to the hands of officials with a history of working in climate policy. He has been Brazil's negotiator at global climate summits since 2023, a role he also had between 2011 and 2013, and has worked in climate diplomacy and sustainable development since 2001. Both Azerbaijan, which hosted the conference last year, and the UAE, the host in 2023, appointed officials who worked in state-owned oil companies to lead the summit. Brazil is also facing steep challenges to get the city of Belem, in the Amazon rainforest, ready to welcome tens of thousands of people in November. In the next few months, the city will need to at least double the number of beds available in hotels and other accommodation. Lula, who has vowed to end deforestation in the Amazon, has attached much of his political capital on the global stage to the success of the conference in Belem, the second most populous city in the region. Sources in the government told Reuters that Correa do Lago was the best candidate for the position, since he is not only familiar with all climate negotiations but also has connections with all sectors involved within the government itself. He was responsible, for example, for resolving the impasse between rich countries and developing ones in the G20 climate negotiations in Rio de Janeiro, which threatened to paralyze the summit communique last year. Sign up here. https://www.reuters.com/business/environment/lula-expected-announce-brazils-top-climate-diplomat-cop30-president-2025-01-21/

2025-01-21 18:25

Khazanah continues rebalancing portfolio amid Trump risks Khazanah sees opportunities in developed markets Malaysia attracts FDI with stable economy, digital investments boost growth DAVOS, Switzerland, Jan 21 (Reuters) - Malaysia's sovereign wealth fund Khazanah Nasional Bhd is rebalancing its portfolio to invest more in developed markets, with an eye on managing expected risks from the new Donald Trump presidency in the U.S., its top official said. Khazanah [RIC:RIC:KHAZA.UL] invests heavily in Malaysia, with domestic investments amounting to 59.1% of its portfolio, followed by North America at 15.5%. The fund invests in sectors ranging from energy and healthcare to information technology and real estate, according to its website. In an interview at the World Economic Forum's annual gathering in Davos, Khazanah Managing Director Amirul Feisal Wan Zahir said the potential for less regulation, lower taxes, cheap energy, inflationary pressures and a strong dollar, due to the Trump administration's expected policies, provided opportunities to invest in developed markets. "We do need to move still into developed markets ... we look at U.S., Europe and Japan. U.S. still is an attractive market," Amirul Feisal told the Reuters Global Markets Forum , opens new tab on Monday. Amirul Feisal, however, said Khazanah could face challenges in China. Trump, who was sworn in on Monday, has threatened to slap tariffs of 10% to 60% on Chinese goods. Khazanah will hold its investments in China and manage its risks, as the country's growing middle-income demographic and vibrant technology sector continue to make it appealing, Amirul Feisal said. Investments in China amount to 8% of Khazanah's portfolio. He also said Khazanah was bullish about its investments in India due to good returns in public and private markets. CAPITAL RETURNING TO MALAYSIA Amirul Feisal was positive on Malaysia's growth prospects due to increasing foreign direct investments, a solid domestic economy, and higher household spending. "Malaysia is a bit unique because it's a market people have forgotten for a while, and what we saw in 2024 was a lot more capital flowing back into Malaysia," he said. Amirul Feisal said while market volatility is expected, the Malaysian government's policies will continue to attract FDI and drive domestic direct investments through Khazanah and the Employees Provident Fund. Malaysia is fast becoming a haven in Southeast Asia, with foreign investors returning, as improving growth and a stable currency set it apart from peers grappling with political flux and economic uncertainty. The country received a slew of digital investments from tech firms last year, including Alphabet's Google, Microsoft and Oracle , helping propel its economy above market expectations in the second and third quarters, and making the ringgit one of Asia's top performing currencies in 2024. (Join GMF, a chat room hosted on LSEG Messenger, for live interviews: https://lseg.group/4ajdDTy , opens new tab) Sign up here. https://www.reuters.com/business/finance/davos-malaysias-khazanah-looks-developed-market-investments-tame-trump-risks-2025-01-21/

2025-01-21 17:53

LONDON, Jan 21 (Reuters) - British government borrowing costs fell on Tuesday to their lowest since before the start of this month's selloff as investors on both sides of the Atlantic breathed a sigh of relief about Donald Trump's first moves as U.S. president. Thirty-year gilt yields - which were hit hardest in this month's selloff - sank to their lowest since Jan. 3 at 5.139%, extending their recent fall into a fifth day. Ten-year yields also touched a post-Jan. 3 low at 4.582%. Investors offloaded UK government bonds heavily in the first half of January amid a broader selloff of state debt on worries about U.S. inflation pressures resulting from Trump's policies. The increase in UK borrowing costs had threatened to knock finance minister Rachel Reeves off track for meeting her fiscal rules, possibly requiring her to cut spending as soon as March to get back on track. Trump only briefly mentioned import tariffs in his inauguration speech on Monday and U.S. Treasury yields - which influence British gilts - fell to their lowest since early January on Tuesday. Also on Tuesday, Britain's debt office attracted record orders for its syndicated sale of a 15-year conventional gilt. Two-year British government borrowing costs - which are particularly sensitive to speculation about interest rate cuts - fell to their lowest since Dec. 16 at 4.307%. Investors were putting the chance of a quarter-point Bank of England interest rate cut on Feb. 6, after its February monetary policy meeting, at about 86%. Sign up here. https://www.reuters.com/world/uk/uk-borrowing-costs-return-pre-selloff-levels-trump-relief-2025-01-21/

2025-01-21 16:03

Trump declares national energy emergency to accelerate permitting of oil, gas and power projects President also likely to repeal Biden's actions promoting electric vehicles and withdraw U.S. from climate pact Environmental groups say they intend to challenge the orders WASHINGTON, Jan 20 (Reuters) - President Donald Trump on Monday laid out a sweeping plan to maximize oil and gas production, including by declaring a national energy emergency to speed permitting, rolling back environmental protections, and withdrawing the U.S. from an international pact to fight climate change. The moves signal a dramatic U-turn in Washington’s energy policy after former President Joe Biden sought for four years to encourage a transition away from fossil fuels in the world's largest economy. But it remains to be seen if Trump's measures will have any impact on U.S. production, already at record levels as drillers chase high prices in the wake of sanctions on Russia after its 2022 invasion of Ukraine. "America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth," Trump said during his inauguration speech. "And we are going to use it." Trump later signed executive orders declaring a national energy emergency and withdrawing the United States from the 2015 Paris climate deal, the international pact to fight global warming. He also signed orders aimed at promoting oil and gas development in Alaska, reversing Biden's efforts to protect Arctic lands and U.S. coastal waters from drilling, revoking Biden's target for EV adoption, suspending offshore wind lease sales, and lifting a freeze on LNG export permitting. Trump said he expects the orders to help reduce consumer energy prices and improve U.S. national security, by expanding domestic supplies and also bolstering allies. "We will bring prices down, fill our strategic reserves up again right to the top, and export American energy all over the world," he said. Environmental groups have said they intend to challenge the executive orders in court. The Biden administration had seen electric vehicle and wind energy technologies as crucial to efforts to decarbonize the transportation and power sectors, which together make up around half of U.S. carbon dioxide emissions. Biden's administration sought to encourage electric vehicle use by offering a consumer subsidy for new EV purchases, and by imposing tougher tailpipe emissions standards on automakers. It also sought to encourage clean energy technologies like wind and solar through tax credits that have drawn billions of dollars in new manufacturing and project investments. The Democratic National Committee called Trump's day one agenda a "disaster for working families". "Killing manufacturing jobs and giving a free pass to polluters that make people sick is hardly putting ‘America first,'" said Alex Floyd, DNC spokesperson. POWER INDUSTRY OVERHAUL Trump had said repeatedly during his campaign he intends to declare a national energy emergency, arguing the U.S. should produce more fossil fuels and also ramp up power generation to meet rising demand. U.S. data center power use, a major driver of growing electricity demand, could nearly triple in the next three years, and consume as much as 12% of the country's power to fuel artificial intelligence and other technologies, according to the Department of Energy. Trump's declaration seeks to ease environmental restrictions on power plants to meet that demand, speed up construction of new plants, and ease permitting for transmission and pipeline projects. "It allows you to do whatever you’ve got to do to get ahead of that problem," Trump told reporters while signing the order. "And we do have that kind of an emergency." Sam Sankar, senior vice president for programs at Earthjustice, a non-profit group which is gearing up to fight Trump policies in the courts, said the declaration of an energy emergency in a non-war period is rare and untested, creating a potential legal vulnerability. The first Trump administration had considered using emergency powers under the Federal Power Act to attempt to carry out a pledge to rescue the declining coal industry, but never followed through. Trump's promise to refill strategic reserves, meanwhile, has the potential to lift oil prices by boosting demand for U.S. crude oil. After the invasion of Ukraine, Biden had sold more than 180 million barrels of crude oil from the U.S. Strategic Petroleum Reserve, a record amount. The sales helped keep gasoline prices in check, but sank the reserve - designed to buffer the United States from a potential supply shock - to the lowest level in 40 years. Sign up here. https://www.reuters.com/business/energy/trump-says-he-will-immediately-declare-national-energy-emergency-2025-01-20/