2024-07-05 07:42

BEIJING, July 5 (Reuters) - China's SAIC Motor (600104.SS) New Tab, opens new tab will request a hearing from the European Commission on the extra duties it faces, the company said on Friday, as the European Union's provisional tariffs on made-in-China EVs took effect. "The European Commission overlooked some of the information and counter-arguments submitted by SAIC during the investigation," the state-owned automaker said in a statement. SAIC's request comes a day after the Commission published findings New Tab, opens new tab from its nine-month investigation into China's EV market, giving insight into the evidence it collected to support Brussels' largest trade case yet. The provisional duties of between 17.4% and 37.6% are designed to prevent what the Commission's president Ursula von der Leyen has described as a threatened flood of cheap EVs built with state subsidies. The report details reluctance by the Chinese government and SAIC to cooperate with the investigation, justifying slapping SAIC with the highest tariff rate of 37.6%. Fellow Chinese automakers BYD (002594.SZ) New Tab, opens new tab and Geely [RIC:RIC:GEELY.UL] face lower tariffs of 17.4% and 19.9%, respectively. These are on top of the EU's standard 10% duty on car imports. There is, however, a four-month window during which the tariffs are provisional and intensive talks are expected to continue between the two sides as Beijing threatens wide-ranging retaliation. After the announcement of provisional duties in the EU official journal, interested parties such as China and EV makers have until July 18 to comment. They can also request a hearing. While negotiations continue, automakers are re-evaluating their pricing strategies based on the provisional rates. "What's been creating the most anxiety for China EV Inc has been the uncertainty of how their products will be received in these international markets," said Tu Le, founder of consultancy Sino Auto Insights. "But it now seems like with the U.S. and EU settled on tariffs and rates, they can now adjust their global strategies to include this new normal." A spokesman for SAIC subsidiary MG in France told Reuters the automaker had enough MG4 vehicles in stock "to last until November without increasing prices." Sign up here. https://www.reuters.com/business/autos-transportation/chinas-saic-motor-seeks-european-commission-hearings-ev-tariffs-2024-07-05/

2024-07-05 07:38

LONDON, July 5 (Reuters) - Britain's next prime minister Keir Starmer spent the election campaign accusing Rishi Sunak's Conservatives of "14 years of economic failure", but he has no obvious quick fix to lift the country out of its slow-growth rut. Living standards have stagnated since Conservatives took power in 2010 and Britain's recovery from the COVID pandemic has been the weakest among big rich nations after Germany. Starmer will be under pressure to use Labour's huge majority in parliament to end the sense of decline, from creaking public services and inflation-hit personal finances to a shortage of housing and weak business investment. But with public debt at almost 100% of gross domestic product and taxes at their highest since just after World War Two, Starmer stresses the turnaround will take time. "We're going to have to do really tough things to move the country forward," he told voters days before the election. "There is no magic wand." Unlike in 1997, when Labour under Tony Blair ousted the Conservatives with the economy expanding by almost 5% that year, Starmer might struggle to get British annual growth above 2% in the foreseeable future, in line with much of a sluggish Europe. Britain's economy is expected to grow by less than 1% this year. The 2007-08 global financial crisis which hit Britain particularly hard, cuts to many areas of public spending and the shocks of Brexit, COVID and surging energy prices have combined to weigh on the world's sixth-biggest economy. But Starmer and his likely choice of finance minister Rachel Reeves say they will not go on a borrowing binge to fund a growth push, with memories still fresh of the 2022 bond market rout under former Conservative prime minister Liz Truss. They have also promised no major tax increases, leaving the new government with little room in the budget. "The fiscal inheritance will be a difficult one and there are a lot of challenges to address," Lizzy Galbraith, a political economist with investment firm abrdn, said. Unlike in 1997, when Labour stunned financial markets by handing operational independence to the Bank of England, its first economic policy move is likely to be low key. It plans to move quickly to reform Britain's archaic planning system to speed up investment in house-building and infrastructure, part of a plan to improve the country's weak productivity, support growth and generate more tax revenues to invest in health and other strained public services. The Conservatives balked at upsetting core supporters in suburban areas where much of any surge in residential construction is likely to happen. Starmer promises to be hard-headed about breaking down the barriers to growth, but the challenge will be big. "We've been here before with an incoming government promising planning reform and it gets watered down in office," Galbraith at abrdn said. Jack Paris, chief executive of InfraRed, an international infrastructure asset manager, expects Labour will turn more to private investment for green energy and speed up transportation projects. "The new UK government should provide increased clarity and visibility to investors with a long-term infrastructure strategy representing a catalyst to making the UK again one of the most attractive destinations for long-term investors," he said. DROP-OUT BRITAIN Also on Starmer's to-do list is reversing the post-pandemic rise in people dropping out of the jobs market due to sickness, something other rich economies have already done. The Boston Consulting Group and the NHS Confederation, representing much of the health service, estimate that getting three-quarters of workforce dropouts since 2020 back into the jobs market could boost tax revenues by as much as 57 billion pounds in total over the next five years. For context, Britain spends around 11 billion pounds a year running its justice system. Starmer's growth plan also includes lowering some of the barriers to trade with the European Union. But he has ruled out a major reworking of Britain's Brexit deal. Economists say Labour's policies to date are unlikely to make a big difference, much less meet Starmer's goal of turning Britain into the Group of Seven leader for sustainable economic growth, something it has barely managed since World War Two. Higher public investment would be growth-positive but Labour pledges to cut immigration could have the opposite effect. Analysts at Goldman Sachs say Labour's reforms will boost Britain's economic growth in 2025 and 2026 by just 0.1 percentage point each year. Economists polled by Reuters last month expected the economy would grow by 1.2% in 2025 and 1.4% in 2026, less than half its pace in the 10 years before 2007. But in some ways Labour is inheriting an economy that is turning a corner, a point Sunak tried in vain to sell to voters. After a recession in 2023, a recovery is under way and high inflation has now abated, allowing the Bank of England to start cutting interest rates possibly as soon as next month. Business and consumer confidence are on the rise. Starmer says - and many business leaders agree - that political stability will help attract investment to Britain after a turbulent eight years in which the country was run by five different Conservative prime ministers. Investors are already warming to the UK's lower risk profile in the light of rising populism in France and the United States. Laura Foll, a portfolio manager at Janus Henderson Investors, linked a recent out-performance of UK shares to that shift in perception. "Relatively, the UK, from a political standpoint, is looking in far better shape," she said. Sign up here. https://www.reuters.com/world/uk/uk-election-winner-starmer-inherits-weak-economy-with-no-magic-wand-2024-07-05/

2024-07-05 07:23

Silver set for best week since May 17 Gold up over 2% for the week Dollar slips to three-week low July 5 (Reuters) - Gold prices extended gains on Friday to their highest level in over a month following key U.S. jobs data that showed the labor market was softening, lifting expectations around a Federal Reserve interest rate cut in September. Spot gold was up 1.3% at $2,385.63 per ounce as of 2:10 p.m. (1810 GMT). Bullion is up more than 2% for the week so far. U.S. gold futures settled 1.2% higher to $2,397.7. "Gold is trading at one-month highs as lower payroll revisions and yet another uptick in the unemployment rate help 'cement' a September rate cut," said Tai Wong, a New York-based independent metals trader. "Bulls are eyeing a return to $2,450 all-time highs if the Fed starts openly hinting at September," he added. Data showed U.S. non-farm payrolls grew by 206,000 jobs in June, slightly higher than the 190,000 new jobs estimated by economists polled by Reuters. Meanwhile, estimated job growth for May was revised down to 218,000 new jobs from 272,000, while April's job growth was revised down to 108,000 new jobs from a previous 165,000. The unemployment rate rose to 4.1%, slightly higher than the estimated 4.0%. Following the data, U.S. interest-rate futures prices reflected continued market confidence in a September rate cut, with the implied probability remaining at about 72%. Traders are also pricing in a rising chance of a second rate cut in December. Lower rates reduce the opportunity cost of holding non-yielding gold. The dollar slipped to a three-week low against its rivals after the jobs data, making gold less expensive for other currency holders, while yield on the benchmark U.S. 10-year Treasury note crept lower. Elsewhere, spot silver rose 2.7% to $31.25 per ounce and is on track for its best week since May 17. Platinum rose 2.6% to $1,028.62 per ounce and palladium gained 0.2% to $1,019.75. Sign up here. https://www.reuters.com/markets/commodities/gold-eyes-second-straight-weekly-rise-spotlight-us-payrolls-2024-07-05/

2024-07-05 06:50

BEIJING, July 5 (Reuters) - China announced on Friday the next step in its anti-dumping investigation into European brandy imports, ramping up tension on the same day the European Commission's provisional tariffs on Chinese-made electric vehicles take effect. While a commerce ministry spokesperson stressed at a news conference on Thursday that Brussels and Beijing should stay at the negotiating table ahead of the bloc confirming tariffs of up to 37.6% on Chinese-made EVs, the prospect of retaliation was kept alive by a reference to another probe into EU pork imports. On Friday, the commerce ministry said it would hold a hearing on July 18 to discuss an investigation into claims that European brandy producers are selling into China at below market rates. The hearing was requested by brandy houses Martell, Societe Jas Hennessy & Co., Remy Martin and other stakeholders, the ministry said in a statement. China has repeatedly urged the EU to cancel its EV tariffs, expressing a willingness to negotiate. It has said it does not want to be embroiled in another tariff war, with U.S. tariffs on its goods continuing to sting, but would take all steps to protect its firms. There is a four-month window during which the EV tariffs are provisional and intensive talks are expected to continue between the two sides as Beijing threatens wide-ranging retaliation. In January Beijing opened a tit-for-tat anti-dumping investigation into European brandy imports and in June launched a second probe into pork shipments from the bloc of 27 countries, while Brussels looked into whether China's EV makers benefited from unfair subsidies. The state-backed Global Times newspaper has reported that officials are also considering opening an anti-subsidy probe into European dairy imports and imposing tariffs on large-engined petrol cars made in Europe. Authorities have previously dropped hints about what they might do next through state media commentaries and interviews with industry figures. Analysts say China chose brandy and pork to persuade France and Spain, which have been among the firmest backers of EU curbs, to join the likes of Germany, whose automakers made a third of their sales in China last year and reportedly wants to lobby the Commission to stop the tariffs. Italy, which has also indicated it would back tariffs, sent Adolfo Urso, its economic development minister, to Beijing, where China's industry ministry said he met his counterpart Jin Zhuanglong on Friday. Jin told Urso China was willing to work with Italy in areas such as automobiles, ships and small and medium-sized enterprises, the ministry said in a statement. 'SHOW SINCERITY' After the Commission confirmed the provisional tariffs would take effect from Friday, the Global Times published an editorial urging Brussels to consider European automakers' opposition to the curbs, as well as a separate article calling on Brussels to "show sincerity" in talks to find a negotiated settlement. The newspaper also called attention to American EV maker Tesla's (TSLA.O) New Tab, opens new tab manufacturing plant in Shanghai, broadening its call to protest against the tariffs. Beijing had hoped Brussels would scrap plans to impose the curbs ahead of July 4, but the Commission said at the time China would need to come to the talks with a roadmap "addressing the injurious subsidisation" of its EV industry. China has also accused the Commission of using its anti-dumping probe to snoop on Chinese companies' supply chains, the efficiency of which Beijing maintains gives it the upper hand in cheaply turning out electric cars, among other reasons. In a statement on Friday, SAIC Motors said it would officially request a Commission hearing on its provisional tariffs, adding that Brussels' investigation involved commercially sensitive information. Geely and BYD did not immediately respond to a request for comment on whether they would also seek a hearing with the Commission. Chinese EV makers' Hong Kong-listed shares fell on Friday, led by Geely Automobile (0175.HK) New Tab, opens new tab, which dropped 4.1% to HK$8.34, its lowest since March 7. Geely Automobile's unlisted parent, Geely, faces additional duties of 19.9%, on top of the EU's standard 10% duty on car imports. Chinese brands MG and NIO suggested on Thursday they might raise prices in Europe this year, in response to the curbs. Sign up here. https://www.reuters.com/business/autos-transportation/china-urges-eu-take-talks-seriously-ev-tariffs-go-into-effect-2024-07-05/

2024-07-05 06:38

SHANGHAI, July 5 (Reuters) - China's central bank has hundreds of billions of yuan worth of bonds at its disposal to borrow, and will sell them depending on market conditions, the bank told Reuters on Friday, part of a plan markets see as an effort to cool a powerful bond rally. The People's Bank of China (PBOC) will borrow the medium- and long-term bonds on an open-ended unsecured basis and sell them depending on market conditions, as it has signed agreements with several major financial institutions regarding bond borrowing, according to the bank. The official remarks come at a time China's sovereign bonds have performed strongly this year, with yields hitting record lows, as a wobbly economy and volatile stock markets pushed savers into fixed-income safe haven investments. China's treasury bond futures fell across the board on Friday, while bond yields, which move inversely to prices, went up. Ming Ming, chief economist at CITIC Securities, said the comments further clarified the central bank's borrowing and subsequent selling of treasury bonds. "With the size of the treasury bonds at the central bank's disposal reaching hundreds of billions of yuan, a single day of concentrated selling will have a significant impact on the market," Ming said. China's central bank said earlier this week it would borrow treasury bonds from some primary dealers soon, outlining the specifics of a plan analysts say is aimed at putting a floor under plunging domestic interest rates. The PBOC's borrowing of treasury bonds will set the stage for possible treasury bond selling, a new tool that will help it control the flow of credit and market yields. "Without wider monetary tightening, which doesn't appear to be on the cards, the best the PBOC can probably hope to achieve is to engineer a short-term pause to the bond rally," said Julian Evans-Pritchard, head of China economics at Capital Economics. PBOC Governor Pan Gongsheng hinted at the Lujiazui Forum last month that the central bank might soon start trading in the secondary bond market. The central bank said in May it would sell low risk debt including government bonds when necessary, while paying close attention to current bond market changes and potential risks. Bloomberg News first reported on the PBOC's bond borrowing agreement. Sign up here. https://www.reuters.com/markets/asia/chinas-central-bank-has-hundreds-billions-yuan-bonds-its-disposal-cool-long-2024-07-05/

2024-07-05 06:37

July 5 (Reuters) - Ecuador have sacked head coach Felix Sanchez in the wake of Thursday's Copa America quarter-final defeat by Argentina, the country's football federation (FEF) said. Ecuador reached the last eight for the third time in the last four editions but were knocked out by the defending champions in a penalty shootout after the match ended 1-1. The Spaniard, who guided Qatar to their maiden Asian Cup title in 2019, had signed a four-year contract in March last year. "We thank Felix and his coaching staff for their work and professionalism, and wish him success in his future endeavours," the FEF said. The 48-year-old coach said after the game that although they had exited the Copa America he was looking forward to September's World Cup qualifiers where Ecuador are fifth in the standings, adding that he did not want to address his future. "We managed to advance from the group stage to the knockouts. I have congratulated the players even if we weren't able to progress," he told reporters. "I think they deserve the credit, that is my opinion, but I think that in the next edition of this tournament, we'll get here with a more experienced team. "These are very young players. Maybe the results were unfair, but I know that we have to believe in this group of players." Sign up here. https://www.reuters.com/sports/soccer/ecuador-sack-coach-sanchez-after-copa-america-exit-2024-07-05/