2024-11-13 07:06

Trump's trade overhaul seen boosting risks to the forint Tariffs could hit car sector vital for Hungarian economy Orban's government has pressured central bank to cut rates BUDAPEST/LONDON, Nov 13 (Reuters) - Donald Trump's victory may be a political boon for Hungarian leader Viktor Orban but on the economy, Trump is bad news for Hungary - adding to inflationary risks due to a weak forint and lower output due to possible tariffs on Europe's auto sector. With the forint already on the back foot since the Hungarian central bank's latest rate cut in September, Trump's stunning win sent central Europe's worst-performing currency to levels last seen in 2022, when the bank launched emergency rate hikes. Some strategists and fund managers say that could be just a prelude to bigger falls if Trump, who has described tariffs as "the most beautiful word in the dictionary", makes good on his campaign pledges of higher tariffs on China and Europe. "The Trump election victory adds fresh risks for Hungary," said Roger Mark, an analyst at fund manager Ninety One, adding however that the forint's moves following the U.S. election have been "a lot better than expected" despite initial falls. "As a very open economy heavily linked to the European auto sector, HUF could come under renewed pressure," Mark said. "This could preclude rate cuts and even lead to possible rate hikes in the months ahead." The European Commission has already begun modelling the impact on the bloc as a whole and on those nations likely to be hardest hit. They could include major car producer Germany and Italy, the second largest EU exporter to the United States. Central Europe has deep trade ties to Germany and its car sector, with the region sending 20% to 30% of its exports to Europe's biggest economy, which Nomura says is likely to be more affected by U.S. tariffs than other euro area members. By Nov. 7, investors had priced out nearly all rate easing in Hungary on a 12-month horizon compared with cuts worth some 140 basis points projected in late-September, based on J.P. Morgan data - by far the biggest pullback in central Europe. Societe Generale strategist Marek Drimal said despite still running the EU's highest base rate at 6.5%, Hungary's central bank had probably overdone rate easing amid uncertainties related to the U.S. election and a leadership change due at the bank. CREDIBILITY TEST Faced with a weak economy, Orban's government has repeatedly piled pressure on the central bank to cut rates sharply as Orban gears up for what could be a closely fought 2026 election. Finance Minister Mihaly Varga, who is widely expected to succeed Orban critic Gyorgy Matolcsy as governor next March, has said inflation should be the bank's top priority, but it also needs to "co-operate" with the government on economic policy. Some investors are concerned that an Orban-aligned majority of policymakers could lead to sharper rate cuts to boost growth ahead of the election, hitting the forint and stoking inflation, which scaled the EU's highest levels of more than 25% last year. "The next governor will have to make the choice between reinforcing the credibility and independence of the central bank by focusing on its core objective, achieving price stability, or cave in to mounting political pressures to support economic growth," Viktor Szabo, a fund manager at abrdn, said. UniCredit says the forint could test its late-2022 record lows, with the weak economy posing additional risks. "We expect the HUF to remain under pressure over the forecast horizon due to the risk of U.S. tariffs, local geopolitics and weak economic performance," economists at Barclays said in a note. "The forint remains the most vulnerable CEE currency to risks associated with global trade amid its focus on car manufacturing and high exposure to Chinese investment." Sign up here. https://www.reuters.com/markets/trump-win-could-be-double-whammy-hungarys-economy-2024-11-13/

2024-11-13 07:05

Nigeria floods cause mass displacement, destroy crops Nation of 200 million facing severe economic hardship Over 33 million at risk of acute food insecurity Conflict also a factor in ballooning food crisis GUBIO, Nigeria, Nov 13 (Reuters) - Unrelenting price rises and a brutal insurgency had already made it hard for Nigerians in northeastern Borno State to feed their families. When a dam collapsed in September, flooding the state capital and surrounding farmland, many people ran out of options. Now they queue for handouts in camps for those displaced by fighting between extremist Boko Haram rebels and the military. When those run out, they seek work on local farms where they risk being killed or raped by local bandits. "I can't even cry anymore. I'm too tired," said Indo Usman, who tried to start again in the state capital Maiduguri, rearing animals for the two annual Muslim holy days, after years of repeatedly fleeing rebel attacks in rural Borno. The flood washed that all away, driving her, her husband and their six children to a bare room at Gubio, an unfinished housing project about 96 km (60 miles) northwest of Maiduguri that has become a displacement camp. Torrential rains and floods in 29 of Nigeria's 36 states this year have destroyed more than 1.5 million hectares of cropland, affecting more than nine million people, according to the Food and Agriculture Organization of the United Nations. Climate change is a factor, as is Nigeria's poorly maintained or non-existent infrastructure as well as vulnerabilities caused by the weakening Naira currency and the scrapping of a government fuel subsidy. The cost of staples like rice and beans has doubled, tripled or even quadrupled in a year, depending on location -- an unmanageable shock for millions of poor families. Mass kidnappings for ransom in the northwest and conflict between farmers and pastoralists in the central belt, traditionally the nation's bread basket, have also disrupted agriculture and squeezed food supplies. 'HUNGRIEST OF THE HUNGRY' Roughly 40% of Nigeria's more than 200 million people live below the international poverty line of $2.15 per person per day, the World Bank estimates. Already, 25 million people live in acute food and nutrition insecurity - putting their lives or livelihoods in immediate danger, according to a joint analysis by the government and U.N. agencies. That number is expected to rise to 33 million by next June-August. "The food crisis in Nigeria is immense because what we are seeing is a crisis within a crisis within a crisis," said Trust Mlambo, head of programme for the northeast at the World Food Programme, in an interview with Reuters in Maiduguri. With international donors focused on emergencies in Gaza, Ukraine and Sudan, Mlambo said there was not enough funding to fully meet Nigeria's growing need for food aid. "We are really prioritising the hungriest of the hungry," he said. In Borno, the Alau dam, upriver from Maiduguri, gave way on Sept. 9, four days after state officials had told the public it was secure. Local residents and engineers had been warning that it was under strain. Hundreds of people were killed in the resulting flood, according to aid workers who did not wish to be identified for fear of offending the state government. A spokesperson for the state government did not respond to requests for comment. Zainab Abubakar, a self-employed tailor in the city who lived in relative comfort with her husband and six children in a house with a refrigerator, was awoken at midnight by water rushing into her bedroom. They ran for their lives while the flood destroyed their house and carried everything away, including her sewing machine. Now, they are sheltering at Gubio and collecting rice from aid agencies in a plastic bucket. "There is no alternative," she said. In Banki, on Nigeria's border with Cameroon about 133 km (83 miles) southeast of Maiduguri, Mariam Hassan lost crops of maize, pepper and then okra in repeated flooding of her subsistence farm this year, leaving her with nothing to eat or sell. "I beg the neighbours or relatives to give me food, not even for me but for my children, for us to survive," said Hassan, who has eight children. "The situation has turned me into a beggar." Sign up here. https://www.reuters.com/world/africa/millions-nigerians-go-hungry-floods-compound-hardship-2024-11-13/

2024-11-13 06:48

Korea Zinc bows to watchdogs', investors' concerns Co-founders' takeover battle shifts to shareholder meeting Korea Zinc shares down 7% SEOUL, Nov 13 (Reuters) - Korea Zinc (010130.KS) , opens new tab said on Wednesday it has decided to withdraw its plan to issue new shares worth $1.8 billion after the proposal sparked an investigation by the financial watchdog and a sell-off in the company's stock. The world's biggest zinc refiner is now bracing for a major showdown with Young Poong and private equity firm MBK Partners at a shareholder meeting in an escalating takeover battle between the two founding family members of Korea Zinc. "We have decided to humbly accept concerns from the market and shareholders," Korea Zinc said in a statement. "Our company will win at a shareholder meeting by putting forward the company's long-term ... vision." The share sale withdrawal marks a setback for Korea Zinc Chairman Yun B. Choi, who was seen backing the issue plan to ward off a takeover attempt by Young Poong and MBK, who have increased their stake to nearly 40% after a tender offer, versus about 35% stake held by Choi and his friendly groups. Korea Zinc said in a regulatory filing it has decided not to pursue the share issue in view of concerns among investors and regulatory scrutiny. Korea Zinc shares initially rose 6% after the withdrawal of the plan, but fell 7% in afternoon trade. On Oct. 30, Korea Zinc announced a plan to issue new shares equivalent to nearly 20% of its total shares just two days after it bought back stock at a higher price. South Korea's financial market watchdog launched an investigation into whether Korea Zinc's decision to issue new shares involved any unfair practice. The Financial Supervisory Service (FSS) also put brakes on the plan by ordering the company to revise its stock exchange filing on the share issuance. "As the biggest shareholders of Korea Zinc, it is regrettable that Korea Zinc belatedly withdrew the plan only after causing major confusion in the capital market, and inflicting damage on existing shareholders," MBK Partners and Young Poong said in a joint statement. BOARD BATTLE Young Poong and MBK Partners asked a court to allow Korea Zinc to hold a special shareholder meeting, which is expected to take place early next year. They nominated 14 new directors for the firm, which currently has 13 board members, to represent more than half the board. Choi is also expected to nominate new independent directors to woo investors including the National Pension Service, which holds a more than 5% stake in the company, said Park Ju-gun, head of corporate analysis firm Leaders Index. Korea Zinc said it will "actively push for" plans to enhance the independence of the board and improve governance, without elaborating. Choi, a grandson of the company's co-founder and a Columbia law school graduate, will hold a news conference later in the day. Sign up here. https://www.reuters.com/markets/commodities/korea-zinc-withdraws-plan-issue-18-bln-new-shares-2024-11-13/

2024-11-13 06:08

MADRID, Nov 13 (Reuters) - Spanish oil storage infrastructure company Exolum has kicked off a pilot project in Britain this week to test using existing oil infrastructure to transport and store green hydrogen on a commercial scale. The test uses liquid organic hydrogen carriers (LOHC) - organic compounds that can absorb and release hydrogen through chemical reactions - to transport and store hydrogen in liquid form, the company said on Wednesday, in what it says is a world first. The aim is to tackle a key issue of the hydrogen economy: how to safely transport it to end users at reasonable cost. Reusing existing fossil fuel storage and pipelines would help speed up the deployment of green hydrogen, the company said. So-called green hydrogen is produced using renewable energy. Exolum, partly owned by buyout fund CVC, Australian asset manager Macquarie, Canadian pension fund OMERS, and French bank Credit Agricole (CAGR.PA) , opens new tab, will use its infrastructure at the British freight port of Immingham. Under the project, which the British government supported with 505,000 pounds ($647,000), some 400 cubic metres of LOHC containing 20 metric tons of hydrogen will be transported through a 1.5 kilometre (0.9 mile) pipeline. Early next year, the company plans to publish a report with potential costs and benefits of the system. ($1 = 0.7804 pounds) Sign up here. https://www.reuters.com/business/energy/spains-exolum-tests-using-oil-infrastructure-green-hydrogen-britain-2024-11-13/

2024-11-13 06:07

CPI meets expectations Bitcoin tops $93,000 US yields off earlier lows NEW YORK, Nov 13 (Reuters) - A gauge of global stocks fell for a second straight session on Wednesday and longer-dated U.S. Treasury yields rose in choppy trading as investors assessed the latest U.S. inflation data and the path of interest rates from the Federal Reserve. The Labor Department said the consumer price index rose 0.2% for the fourth straight month, in line with expectations of economists polled by Reuters. In the 12 months through October, the CPI advanced 2.6%, also matching forecasts, after climbing 2.4% in September. Treasury yields fell after the news, but rebounded to pressure equities. The benchmark U.S. 10-year note yield rose 1.6 basis points to 4.449% after falling as low as 4.361% after the CPI report. "A good portion of the move higher in yields reflects continued economic resilience and strength and the view that the Fed doesn't need to reduce rates as much as previously thought to support what the summer looked like - a slowing economy," said Matt Bush, U.S. economist at Guggenheim Investments in New York. "There's a lot of uncertainty though around that view, particularly given the potential for policy changes post-election, so the market right now is making a lot of assumptions and what the policy mix will look like but nobody really knows where things will stand a year or two from now." On Wall Street, stocks closed slightly higher as the inflation data likely kept the Fed on track to cut rates in December. The Dow Jones Industrial Average (.DJI) , opens new tab rose 47.21 points, or 0.11%, to 43,958.19, the S&P 500 (.SPX) , opens new tab advanced 1.39 points, or 0.02%, to 5,985.38 and the Nasdaq Composite (.IXIC) , opens new tab fell 50.66 points, or 0.26%, to 19,230.74. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 2.46 points, or 0.29%, to 854.38, on track for a second straight decline after five sessions of gains. In Europe, the STOXX 600 (.STOXX) , opens new tab index closed down 0.13% to a three-month low. Investors have swarmed toward assets expected to benefit from Donald Trump's policies in his second term as U.S. president, after he pledged to impose high tariffs on imports from key trading partners, lower taxes and loosen government regulations. Bitcoin, the world's biggest cryptocurrency, has shot up more than 30% since the Nov. 5 election, above $93,000 to a record. Trump promised during his campaign to make the United States the "crypto capital of the planet." Bitcoin was last up 0.82% to $89,030. The S&P 500 closed at a record on Monday, partly driven by a jump in banks (.SPXBK) , opens new tab, which are likely to benefit from less regulation. Domestically focused small-cap stocks have jumped on expectations tariffs will reduce competition for their goods and lower taxes, with the Russell 2000 (.RUT) , opens new tab vaulting to a three-year high on Monday. But bond yields have also surged on concerns that while Trump's policies will spur growth, they also could rekindle inflation after a long battle against price pressures following the COVID-19 pandemic. In addition, tariffs could lead to increased government borrowing, further ballooning the fiscal deficit. Expectations for more Fed rate cuts have been dialed back over the past few weeks, but the bets have become more volatile recently. Expectations for a 25 bps cut at the Fed's December meeting were at 82.3%, up from 58.7% on Tuesday and just below the 84.4% a month ago, according to CME's FedWatch Tool , opens new tab. Comments from several Fed officials on Wednesday indicated that after a scare earlier this year that the labor market might be cooling too fast, they are refocusing on inflation risks as they weigh when, and how fast and far, to cut interest rates. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, gained 0.47% to 106.49, with the euro down 0.56% at $1.0564. The dollar is on track for a fourth straight session of gains after hitting 106.53, its highest since Nov. 1, 2023. Republicans on Wednesday clinched a majority in the House of Representatives and with it full control of Congress, which would give Trump power to advance his agenda of tax cuts for businesses, workers and retirees. Early priorities are expected to include extending Trump's 2017 tax cuts, funding the U.S.-Mexico border wall, cutting unspent funds allocated by Democrats, eliminating the Department of Education and curbing the powers of agencies. Against the Japanese yen , the dollar strengthened 0.63% to 155.57 while sterling weakened 0.31% to $1.2707. The dollar's strength has recently weighed on commodities. However, U.S. crude settled up 0.46% to $68.43 a barrel and Brent rose to $72.28 per barrel, up 0.54% on the day, on short covering after prices dropped to a two-week low. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-11-13/

2024-11-13 06:04

SINGAPORE, Nov 13 (Reuters) - Sinopec said on Wednesday it has successfully started up a new ethylene complex in northern China, part of China's recent additions of large-scale petrochemical plants. Sinopec began operating a 1.2 million tons per year (tpy) ethylene plant that is designed to provide 4 million tons annually of high-end chemical products and fine chemical feedstocks, the state firm said in a statement. The new project, built in the Nangang industrial zone of port city Tianjin, near Beijing, brings the total ethylene capacity at Sinopec Tianjin subsidiary to 2.5 million tpy, Sinopec said. There are 13 downstream projects including linear low-density polyethylene, a high-performing plastics used for packaging, and polyolefin elastomers (POE), a new chemical with the characteristics of both rubber and plastics that widely used in vehicles, medical appliances and toys. The new ethylene complex, partly powered by solar and designed as an energy and water efficient project, is integrated with Sinopec Tianjin's 320,000 barrels per day refinery, Sinopec added. Sign up here. https://www.reuters.com/markets/commodities/sinopec-starts-up-ethylene-complex-north-chinas-tianjin-2024-11-13/