2023-11-17 10:57

HONG KONG, Nov 17 (Reuters) - Investors wiped out some $20 billion off Alibaba Group's (9988.HK) market value on Friday after it scrapped plans to spin off its cloud business, citing uncertainties over U.S. curbs on exports to China of chips used in artificial intelligence applications. Alibaba Group's Hong Kong shares closed down 10%, their biggest single-day drop in more than a year. It was the first market reaction in Asia since the stunning strategy reversal was announced late on Thursday, after which the company's U.S. listed securities closed down 9%. "The shelving is a surprise and makes us wonder if there are issues behind the scenes that we aren't aware of," said Jon Withaar, the Singapore-based head of Asia special situations at Pictet Asset Management. Alibaba's concerns over the U.S. export curbs announced by Washington in October come on the heels of similar worries raised this week by Chinese social media and gaming company Tencent Holdings (0700.HK) which said the restrictions would force it to seek domestically produced alternatives. Alibaba, once Asia's most valuable stock, was worth around $830 billion at its peak in October 2020 but is now valued at less than a quarter of that amount, as the e-commerce company took centre-stage in Beijing's technology sector crackdown and as the Chinese economy slowed. Asked if there were any other reasons behind shelving the IPO, Alibaba referred Reuters to remarks chairman Joseph Tsai made during an earnings call on Thursday on how the company planned to invest in its cloud business. The latest Alibaba news underscores broader hurdles facing China's tech companies, with the export curbs making it harder for them to get crucial chip supplies from U.S. companies. In March, Alibaba announced plans to carve out the cloud business as part of a restructuring, the biggest in its 24-year history, that broke the company up into six units. Analysts had estimated then the cloud division could be worth $41-$60 billion but had warned that its listing could attract scrutiny from both Chinese and overseas regulators due to the reams of data it manages. The Hangzhou-based company, in announcing its quarterly earnings on Thursday, also put on hold a listing plan for its Freshippo groceries business. Analysts also said that news that the family trust of Alibaba co-founder and former chief Jack Ma planned to sell 10 million American Depository Shares in Alibaba was likely impacting shares. "Despite no longer being involved in operations, we believe (Ma's) selling Alibaba at a depressed valuation may hurt sentiment," UBS analyst Kenneth Fong said in a note. FOCUS ON AI On Thursday, Alibaba Chairman Joseph Tsai told a post-earnings call that the company would now focus on growing the cloud business and providing investment for its artificial intelligence (AI) drivers. Some analysts said keeping the cloud unit could assist Alibaba's AI push. "The company believes the chip ban might materially and adversely affect its ability to offer products and services in the longer term. But (it) also points to the increasing importance of retaining the cloud unit given the surging demand for AI computing in China," said US Tiger Research analyst Bo Pei. Alibaba reported second-quarter revenue of 224.79 billion yuan ($31.01 billion), in line with the 224.32 billion expected by analysts, LSEG data showed. Eddie Wu, chief executive of Alibaba, detailed the company's future strategy on the call, saying that each of its businesses would face the market more independently and that they would conduct a strategic review to distinguish between "core" and "non-core" businesses. Some analysts said they viewed Wu's strategy positively and said it was to be expected that he would reassess decisions made by his predecessor, Daniel Zhang, who abruptly quit in September just two months after focusing on cloud computing. "Giving away the cloud business clearly isn't the best way to enhance shareholder value any more, given depressed market valuations and the fact that the share price has barely moved since the announcement," said analyst Vey-Sern Ling from Union Bancaire Privée. The company also said it will press ahead with a listing of Alibaba's logistics arm, Cainiao, which applied for a Hong Kong initial public offering in September. It is also preparing for external fundraising for its international digital commerce unit that houses overseas platforms such as Lazada and Alibaba.com. https://www.reuters.com/technology/alibaba-shares-set-slide-8-after-it-shelves-cloud-unit-spin-off-2023-11-17/

2023-11-17 10:42

Nov 17 (Reuters) - Volkswagen on Friday said group deliveries rose by 10.7% in October and were at 765,500 vehicles thanks to strong demand in North America and Europe. Throughout the month, its sales in North America jumped by more than a quarter, while in Western Europe they added 11.3%, and 8.1% in Central and Eastern Europe. In China, the deliveries added only 5% https://www.reuters.com/business/autos-transportation/volkswagen-october-deliveries-up-107-boosted-by-north-america-europe-2023-11-17/

2023-11-17 10:40

Nov 17 (Reuters) - Global equity funds saw significant inflows in the week ending Nov. 15, buoyed by investor hopes that cooler-than-expected U.S. inflation would prompt the Federal Reserve to pause interest rate hikes. The MSCI World Equity Index (.MIWD00000PUS) hit a two-month peak of 686.32 this week, propelled by U.S. data on Tuesday indicating that consumer prices in October remained steady, defying expectations of a 0.1% increase. The core Consumer Price Index (CPI), rising only 0.2%, also fell short of the anticipated 0.3% hike. Investors pumped in a net $11.48 billion into global equity funds during the week, marking the biggest weekly net purchase since June 14, LSEG data showed. U.S. equity funds alone attracted $9.33 billion, a significant rise from the $1.84 billion in net purchases a week earlier. European and Asian equity funds also saw inflows, attracting $1.24 billion and $431 million, respectively. The technology sector, in particular, witnessed a notable surge in interest, with a net $2.15 billion poured into the sector -- the highest since Dec. 15, 2021. Gold, precious metals and communication services sectors attracted $534 million and $237 million, respectively. Global bond funds continued to attract capital, with approximately $3.5 billion channeled into them, marking the second consecutive week of net buying. High-yield bond funds recorded net purchases of around $5.01 billion, building on the previous week's $6.43 billion inflow. However, government bond funds saw a drastic reduction in inflows, receiving only $140 million, a 95% decrease from the $2.77 billion net buying in the week prior. In the commodities market, energy funds remained popular for the fourth week in a row, securing about $77 million in inflows. Precious metal funds experienced modest inflows of $53 million, the smallest in three weeks. Emerging market (EM) data, encompassing 29,658 funds, highlighted a net sell-off of $1.3 billion in EM bond funds during the week, a stark contrast to the $745 million net purchases seen a week earlier. EM equity funds continued to face headwinds, with a net $554 million exiting in a 14th consecutive week of outflows. https://www.reuters.com/markets/global-markets-flows-graphic-2023-11-17/

2023-11-17 10:37

BERLIN, Nov 17 (Reuters) - A German court ruling that forced Berlin to freeze 60 billion euros ($65 billion) in planned green investment spending could have a negative impact on growth in Europe's biggest economy, an economy ministry source told Reuters on Friday. "According to initial rough estimates, a loss of investment funds could cause growth in 2024 to be about half a percentage point lower," the source, who is familiar with the economy ministry's forecasts, said. "So the ruling could have a negative impact on economic growth," the source added. Last month, the economy ministry predicted 1.3% growth for next year. It had no immediate comment on Friday. Chancellor Olaf Scholz's coalition is scrambling to fix a big hole in its finances after a court ruling on Wednesday blocked it from transferring 60 billion euros in unused funds from the pandemic towards green projects and industry support. The ruling has already raised tensions within the awkward coalition. The economy ministry is run by the Greens, who share power with Scholz's Social Democrats (SPD) and the pro-business Free Democrats (FDP). The FDP's Christian Lindner is in charge of the finance ministry. The finance ministry also had no immediate comment. ($1 = 0.9213 euros) https://www.reuters.com/markets/europe/german-court-ruling-could-hit-growth-next-year-econ-ministry-source-2023-11-17/

2023-11-17 10:34

SHANGHAI, Nov 17 (Reuters) - Miner Anglo American (AAL.L) is identifying opportunities to secure off-take lithium materials amid increasing demand for battery metals, a company executive said. Lithium is a key metal used in electric vehicle (EV) batteries and demand for the metal has been growing strongly in the past few years as economies transition to green energy. The company does not own lithium mines but produces copper, nickel and iron ore, other raw materials needed to manufacture batteries, electric cars (EVs) and renewable infrastructure that will help the world transition. "We don't have a lithium mine and we don't trade it, but we are on the lookout for lithium," said Paul Ward, head of marketing for base metals at Anglo American. Anglo American's customers are asking for more types of metals including battery materials nickel and lithium, said Ward on the sidelines of the CRU World Copper Conference Asia in Shanghai this week. The miner looks to provide debt financing for brown-field or green-field projects, with the objective of getting hold of off-take material for battery metals, Ward said. "It's a very competitive market, but we're very engaged in and then we put resources and investment behind it to find the right opportunity," he said. "If there are opportunities to secure lithium that's already been mined, that we feel comfortable with, and that is in the right form that we can sell directly to our customers, then that's also of interest," he said. As the auto industry gears up to shift to making only EVs - spurred on by likely bans on fossil-fuel cars over time - the pressure to produce environmentally and socially responsible batteries has increased. Ward said there was strong interest across the supply chain to declare the carbon content, or information about human rights, of the material and Anglo American has had about 100 customers joining its blockchain-based technology platform Valutrax. https://www.reuters.com/markets/commodities/asia-copper-week-anglo-american-lookout-lithium-ev-metals-demand-grows-2023-11-17/

2023-11-17 10:18

Nov 17 (Reuters) - U.S. retailers are gearing up for Black Friday, marking the start of the shopping season that follows the Thanksgiving holiday, while business activity data should gauge the temperature elsewhere. Britain's budget update is in the spotlight, while the yen might get some breathing space and Argentina heads for a key election. Here's your week ahead in world markets from Lewis Krauskopf in New York, Kevin Buckland in Tokyo, and Naomi Rovnick, Dhara Ranasinghe and Karin Strohecker in London. 1/ BARGAIN HUNTING The crucial holiday shopping season kicks off with Black Friday on Nov. 24 at a time when investors are questioning whether the consumer-driven U.S. economy can remain resilient. This year's Black Friday comes as Americans grapple with soaring interest rates and inflation that, while easing, remains above the Federal Reserve's 2% target. Already, data for October showed U.S. retail sales fell, pointing to slowing demand, although the decline was less than expected. There's also likely to be plenty of interest in chip company Nvidia, which releases its latest earnings report on Nov. 21. It is the last of the results in the earnings season from the Magnificent 7 megacap companies, whose massive share gains this year have led equity indexes higher. 2/ SOFT VS HARD Soft or hard landing? For sure, compelling arguments can be made for both. The European Commission expects the euro zone will avoid technical recession; Britain just sidestepped the start of one. The forward-looking flash November PMIs due out globally should help investors assess recession risks and how quickly rate cuts will begin. The euro zone PMI is already below the 50 number, suggesting economic activity is contracting. It is the same in Britain, while the U.S. Oct manufacturing PMI contracted sharply. Bond heavyweight PIMCO sees the probability of a U.S. recession within one year at 50%. Market pricing for rate cuts suggests traders reckon economic growth will slow fast enough for the Fed and European Central Bank to switch to easing mode. And of course soft landing hopes could vanish fast if inflation eases more quickly and unemployment rises fast. 3/ 11 DOWNING STREET UK politics has been dramatic, with Prime Minister Rishi Sunak having fired his interior minister, moved former leader David Cameron back into government and reshuffled other top roles. Finance minister Jeremy Hunt will now change gear with his Nov. 22 Autumn Statement, focusing on boosting growth ahead of an expected 2024 election. Analysts predict the government, hamstrung by a stagnant economy and high debt, won't make big investment pledges. Still, Hunt looks set to trim taxes for voters and businesses, offering some relief to the many Conservative lawmakers alarmed at the opposition Labour Party's big opinion poll lead. He could also downgrade near-term borrowing expectations, temporarily boosting gilts. Natwest says the UK may issue 10% more debt in 2024-2025 than in this fiscal year - a development that would amplify long-term concerns about gilt market oversupply. 4/ DEATH, TAXES, WEAK YEN There's an air of inevitability about a weaker yen, even with the Bank of Japan increasingly hinting at an end to ultra-loose policy and greater investor certainty that the Fed is done tightening. After pulling back from the brink of 152 per dollar at the start of the week, receiving a lifeline from cooling U.S. inflation data, the yen was back to the weaker side of 151 a day later. It's déjà vu for traders, who saw support from weak U.S. payrolls numbers on Nov. 3 last only as long as the weekend. While gaping Japan-U.S. rate differentials do not bode well for the yen, the shift in policy directions should at least give forward-thinking markets some pause. As long as that's not the case, pressure is on the Kishida cabinet since a weak yen is unpopular politically. And that means Tokyo is never too far from the intervention trigger. 5/ PHOTO FINISH? Argentines elect a new president on Sunday in a closely fought race pitching center-left Peronist economy chief Sergio Massa against libertarian outsider Javier Milei and polls suggest a likely photo finish. They offer two wildly different visions for South America's No. 2 economy: Milei's potentially painful shock therapy for the embattled country that has run out of FX reserves, inflation running at over 140% and faces recession. Pragmatist Massa pledges a unity government and more gradual change to solve the crisis that has worsened on his watch. Investors are bracing for rocky times, with Argentina's crucial $44 billion IMF programme on the ropes and international bonds priced at deeply distressed levels. And there's more election-induced volatility ahead in emerging markets with Egypt, Taiwan, South Africa and India just some facing key ballots in coming months. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2023-11-17/