Major International Business Headlines Brief::: 09 March 2021

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Major International Business Headlines Brief::: 09 March 2021

 


 

 


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ü  Fears for 5,000 UK steel jobs as lender collapses

ü  Mark & Spencer launches online operations in 46 markets

ü  Zoom founder Eric Yuan transfers $6bn of his shares

ü  BP staff set to work from home two days a week

ü  Sales of school uniforms surge ahead of reopening

ü  Sweden leads way in using tech to boost rural retailing

ü  Thailand launches yacht quarantine for tourists

ü  Deliveroo boss Will Shu: 'I was never into start-ups'

ü  Exclusive: Chinese EV trio eye Hong Kong listings this year to raise
combined $5 billion - sources

ü  Tesla loses a third of its value for the third time in a year

ü  Asian stocks recover on firmer futures, retreat in U.S. yields

ü  How Toyota thrives when the chips are down

ü  Oil prices rise on expected economic recovery, likely drawdown in oil
stocks

ü  Jet leasing shake-up looms as AerCap and GE unit discuss tie-up

ü  Investors seek $1.2 billion in damages from Vivendi in fraud lawsuit

 

 

 


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Fears for 5,000 UK steel jobs as lender collapses

The principal financial backer of one of the UK's largest industrial groups
has fallen into administration.

 

Specialist bank Greensill Capital was the main lender to businessman Sanjeev
Gupta's sprawling empire, which includes Liberty Steel.

 

The appointment of administrators to Greensill puts 5,000 jobs at risk at
Liberty Steel and other firms.

 

In a court filing, Greensill said Mr Gupta's operations were in "financial
difficulty" and defaulting on debt.

 

Mr Gupta declined to comment on the claims, but his business GFG Alliance
earlier said that it had adequate funding for its current needs.

 

Union officials held crisis talks with the steel magnate on Tuesday. Liberty
owns 12 steel plants in the UK including in Rotherham, Motherwell,
Stocksbridge, Newport and Hartlepool.

 

Afterwards the Community union said: "Sanjeev Gupta needs to tell us exactly
what the administration means for Liberty's UK businesses and how he plans
to protect jobs. The future of Liberty's strategic steel assets must be
secured and we are ready to work with all stakeholders to find a solution."

 

A spokesperson for Grant Thornton said its insolvency practitioners Chris
Laverty, Trevor O'Sullivan and Will Stagg had been appointed as joint
administrators of Greensill Capital and Greensill Capital Management
Company.

 

"The joint administrators are in continued discussion with an interested
party in relation to the purchase of certain Greensill Capital assets. As
these discussions remain ongoing, it would be inappropriate to comment
further at this time," the spokesperson added.

 

Mr Gupta, who has been called the "saviour of steel", has defied pessimists
in the industry for years by buying up seemingly unloved industrial assets.

 

These included steel and aluminium plants that many thought could not be run
profitably in the face of cut price competition from China.

 

What are the latest developments?

The BBC understands that Business Secretary Kwasi Kwarteng held an emergency
meeting on Sunday with the chief executive of Liberty Steel UK, John
Ferriman.

 

They discussed contingency plans in the event that Greensill went bust.

 

It is understood the options did not include nationalisation. Further
meetings are expected later on Monday.

 

Mr Kwarteng also chaired a meeting of UK steel executives on Friday at which
the future of Liberty, owned by Mr Gupta's GFG Alliance, was brought up,

 

However, it was not discussed in any detail with this wider group, which
included union bosses.

 

How serious is this for the steel industry?

Liberty Steel is the UK's third-largest steelmaker, employing 3,000 people
at 11 sites. Another 2,000 people in engineering businesses within the group
are also involved.

 

That's a substantial chunk of the 32,000 people who work in the industry.

 

Employment and output have fallen significantly for the steel industry over
the last four decades. In its heyday as the state-owned British Steel
Corporation in the early 1970s, it had 10 times as many workers.

 

The whole UK steel industry has gone through a chequered period of ownership
since it was privatised in the 1980s.

 

However, the sector is still considered important by government ministers,
regional politicians and business leaders.

 

So what's gone wrong?

Many of Liberty Steel's assets were part of Tata Steel's UK business until
they changed hands for £100m in 2017.

 

When Mr Gupta's GFG Alliance snapped them up, he was hailed as saving
thousands of UK jobs. But his empire has often been criticised for its
complicated structure and lack of transparent accounting.

 

With news of the financial problems facing Greensill Capital, one of Mr
Gupta's key sources of finance, those criticisms are now coming home to
roost.

 

Greensill, run by former investment banker Lex Greensill, counts former
Prime Minister David Cameron among its paid advisers. The BBC has approached
Mr Cameron for comment.

 

The company specialises in short-term supply chain financing to provide
capital for businesses around the world. However, it too has been accused of
opaque accounting.

 

How bad are those financial problems?

Greensill's heavy exposure to Mr Gupta's business has prompted Swiss
investment bank Credit Suisse to freeze withdrawals from up to £10bn worth
of funds held as security.

 

Their heavy exposure to each other has proved disastrous for both Greensill
and Gupta. Mr Gupta's financing requirements constituted more than 50% of
Greensill's lending volumes.

 

While figures are not available for the proportion of his funding that Mr
Gupta raised from Greensill, sources close to Greensill put his funding
needs from the firm at $70m a day.

 

A spokesman for Mr Gupta said Liberty's operations were "running as normal",
had adequate funding for their current needs and that the refinancing plans
were progressing. It added that a recent upturn in global steel prices was
beneficial for the company's prospects.

 

Liberty is a major supplier to the public, including hydro-power contracts
in Scotland and steel contracts for the Ministry of Defence. The government
said it was "monitoring the situation closely".

 

"This is a deeply concerning situation and a very worrying time for Liberty
Steel workers," said Lucy Powell, Labour's shadow minister for business and
consumers.

 

"It's vital that the government acts with the urgency required and doesn't
wash their hands of the situation."--BBC

 

 

 

 

Mark & Spencer launches online operations in 46 markets

Marks & Spencer is to launch 46 new websites in overseas markets from
Iceland to Uzbekistan, as part of moves to grow its online business.

 

It expands the retailer's online reach to more than 100 countries, offering
M&S clothing and homeware.

 

The firm said the expansion would enable it to capitalise on growth without
considerable upfront costs.

 

Last year, M&S posted its first loss in its 94 years as a publicly-listed
company as coronavirus hit store sales.

 

"Our international business has seen strong online growth since the start of
the pandemic as increasing numbers of customers choose to shop through our
range of flagship websites," said Paul Friston, international director at
M&S.

 

Online e-commerce sales were up 75% according to its latest interim results,
as overall losses across the business reached £87.6m in the six months to 26
September.

 

M&S is in the midst of a wide-reaching transformation programme which last
year saw 7,000 job cuts across stores and management.

 

"Under our Never the Same Again programme we're focused on turbo-charging
our online business both in the UK and internationally, and as part of this
we see a real opportunity in extending the number of countries where we run
an online channel further," Mr Friston said.

 

The expansion has been achieved using a "low-cost approach", the retailer
added.

 

Digital brand

Using an "adaptable" website platform designed for international sales,
orders are fulfilled through M&S' distribution network.

 

"This means that ongoing costs mirror customer demand, and by having an
adaptable website platform M&S can further increase the localisation of its
offer quickly and efficiently in response," the company said.

 

M&S' international online channels have been translated into 10 more
languages and additional currencies.

 

Steve Rowe, chief executive of M&S, has previously said his goal is to
deliver long-term transformation and build a brand that is more digital "in
a world that will never be the same again".

 

The latest move follows a joint venture with Ocado last year which allows
customers to order M&S food through the online supermarket for home
delivery.

 

M&S created more than 750 new lines, including in grocery and homecare to
broaden its appeal on the Ocado platform.--BBC

 

 

 

Zoom founder Eric Yuan transfers $6bn of his shares

Zoom founder Eric Yuan has transferred about 18 million of his shares worth
more than $6bn (£4.4bn), according to a regulatory filing.

 

Mr Yuan, who is also chief executive of the video-conferencing platform,
moved roughly 40% of his stake in the company last week.

 

The shares were shown as gifts to unspecified beneficiaries last week.

 

Mr Yuan has seen his personal wealth rocket as Zoom became a household name
during pandemic lockdowns.

 

An increasing number of students and professionals connected online boosting
the fortunes of Zoom and its founder.

 

Mr Yuan started Zoom in 2011 and listed it on the US stock market in 2019,
making him a billionaire. He is currently worth $13.7bn, according to
Forbes.

 

A Zoom spokesperson said the transfers were related to Mr Yuan's estate
planning practices. "The distributions were made in accordance with the
terms of Eric Yuan and his wife's trusts."

 

Zoom's shares have nearly tripled in the past 12 months and the company has
a market valuation of around $100bn.

 

"Zoom founder Eric Yuan's decision to transfer more than a third of his
stake will raise some eyebrows," Edward Moya, at trading firm Oanda, told
the BBC.

 

"While a Zoom spokesperson noted that the transfer is consistent with the
Yuans' typical estate planning practices, investors will be nervous until we
find out who is the recipient of the stock," he added.

 

"Yuan is only 51, married and has three children, so the distribution of his
wealth could be viewed as rushed."

 

 

Here to stay

Mr Yuan said working from home is here to stay even as lockdowns eased and
vaccines are rolled out across the globe.

 

During Zoom's annual results last week, Zoom executives said they expected
strong growth to continue this year.

 

"The future is here with the rise of remote and work from anywhere change.
We recognise this new reality, " Mr Yuan said.

 

The video conferencing company expects sales to rise more than 40% this
year, reaching more than $3.7bn.

 

However, Zoom said it did not expect growth to continue at the pace it
enjoyed last year.

 

Chinese-American Mr Yuan was named the 2020 Time Businessperson of the Year
and was included in its annual list of the 100 most influential people.--BBC

 

 

 

BP staff set to work from home two days a week

BP has told office-based staff they will be expected to spend two days a
week working from home after lockdown restrictions ease.

 

The oil giant said in meetings last month that most would be asked to work
from home 40% of the time, or two days a week for full-time employees.

 

The new "hybrid" work model will affect 25,000 BP staff, with 6,000 in the
UK.

 

It comes as part of a cost-cutting drive for the firm, which saw thousands
of job cuts announced last year.

 

BP informed staff of the changes in "town hall" meetings in February, and
suggested that it would offer a "more flexible, engaging and dynamic way of
working".

 

Many of its office-based UK employees have been working from home full-time
since the start of the pandemic. They were also expected to bear the brunt
of redundancies announced in last June.

 

In the government's roadmap for ending coronavirus restrictions, it
recommends that people in England continue to work from home where possible.

 

It is hoped, however, that all legal limits on social contact can be removed
from 21 June.

 

BP's new policy is expected to come into force this summer, after teams have
discussed on a case-by-case basis how often and which days they will commute
in.--BBC

 

 

 

Sales of school uniforms surge ahead of reopening

Sales of goods such as school uniforms and computers surged in February
after the government published its plans to ease lockdown.

 

The British Retail Consortium said it contributed to total UK retail sales
rising by 9.5% year-on-year during the month, following a tough January.

 

Valentine's Day also boosted the figures as locked-down couples splashed out
at their local supermarkets.

 

But the BRC warned the coming months would be challenging.

 

"Many retail businesses will be hoping that customers will return to shops,
and have spent hundreds of millions on making their premises Covid-secure,
but previous reopenings have shown that demand can be slow to come back,"
said BRC chief executive Helen Dickinson OBE.

 

According to the Office for National Statistics, retail sales were 5.5%
lower in January than they were before the pandemic began as swathes of
shops remained shut due to Covid restrictions.

 

But the BRC said the prime minister's roadmap to reopening the economy,
published on 22 February, had prompted a "burst in spending" last month.

 

Its indicative figures suggest sales of non-food items jumped by 82% online
during the month, although they fell sharply in stores due to closures.

 

Demand for technology, furniture and home accessories climbed, while sales
of school uniforms rose as parents prepared to send their children back to
school.

 

Food sales also continued to grow as supermarkets and grocers picked up
business from non-essential shops that remained shut. Sales were up 7.6% in
the three months to February.

 

'Light at the end of the tunnel'

KPMG, which helped produce the figures, said the vaccination rollout and
lockdown roadmap offered a "light at the end of the tunnel" for
non-essential retailers.

 

"High streets will be counting down the weeks until they can finally open
their doors and hoping consumers swap their slippers for trainers as they
start to hit the shops," said Paul Martin, KPMG's head of retail.

 

"Although the Budget threw retailers a short-term lifeline with the
extension of Covid support packages until after the summer, conditions will
continue to be incredibly challenging as they face subdued demand, thinner
margins and rising logistics costs, alongside the accelerated structural
changes to the sector.

 

"All hopes will be pinned on consumers wanting to break free from home to
browse the stores that have been out of bounds for months."--BBC

 

 

 

Sweden leads way in using tech to boost rural retailing

Dark clouds loom over the pine forest surrounding Hummelsta, a town of 1,000
people that hasn't had any local shops for a decade.

 

Since December, a red wooden container, about the size of a mobile home, has
offered a lifeline. It's a mini supermarket that locals can access
round-the-clock.

 

"We haven't had any shops here during the time we have been here, and
getting this now is perfect," says 31-year-old Emma Lundqvist who moved to
Hummelsta with her boyfriend three years ago. "You don't need to get into
the city to buy this small stuff," she adds, pointing to the packet of bacon
she's popped in for.

 

There's a wide assortment of groceries available, from fresh fruit and
vegetables to Swedish household staples like frozen meatballs, crisp breads
and wafer bars. But there are no staff or checkouts here.

 

You open the doors using the company's app, which works in conjunction with
BankID, a secure national identification app operated by Sweden's banks.
Then, you can scan barcodes using your smartphone and the bill is
automatically charged to a pre-registered bank card.

 

The store is part of the Lifvs chain, a Stockholm-based start-up that
launched in 2018 with the goal of returning stores to remote rural locations
where shops had closed down because they'd struggled to stay profitable.

 

In Asia several companies including Alibaba are testing unstaffed stores in
more urban locations. Amazon has also opened supermarkets in US cities and
this month in the UK, which use sensors and cameras to work out what you've
bought, so there's not even the need for self-scanning.

 

But Lifvs co-founder Daniel Lundh saw the opportunity in rural locations:
"There were food deserts where people had to travel to the next town or city
to pick up their groceries and so we definitely saw that there was a need."

 

Alongside skipping the need to pay cashiers, the firm also avoids pricey
long-term rental leases. And if there's less footfall than expected in one
location, the wooden containers can easily be picked up and tested
elsewhere.

 

Sweden has a tech-savvy population that isn't known for small-talk, so it's
easy to see why the model has taken off here, despite critics warning that
it would make shopping a less sociable experience. And, during the pandemic
when people have been encouraged to limit contact with others, its lack of
staff has been a major bonus. The chain has opened 20 new shops in rural
neighbourhoods since March last year.

 

"It's very safe during corona times," says Alexander Vidlund, 29, who works
for a fishing company and regularly stops off to buy his favourite spicy
sausage snack. "It's a good way to keep a further distance from people. And
there's not the same kind of crowding here as in our big cities."

 

Since January, all Swedish supermarkets have, by law, had to limit customer
numbers to ensure there's at least 10 square metres available per person.
Lifvs' technology guarantees that only two people are let into the store at
any time.

 

"Customers like to shop in our store because for one, they can be by
themselves. They can come in the middle of the night. And the most important
thing is it has less touch points," says Mr Lundh.--BBC

 

 

 

Thailand launches yacht quarantine for tourists

Visitors to Thailand can now spend their mandatory two-week coronavirus
quarantine on a yacht.

 

The government is hoping that the new initiative will bring 1.8 billion baht
(£42m, $58m) in yacht tourism revenue.

 

The move is aimed at reviving the country's struggling tourism industry,
which was hit hard by the pandemic.

 

Previously, in January, the country had announced a scheme to allow visitors
to spend their quarantine on a golf course.

 

The South East Asian nation relies heavily on tourists, but banned them last
year to limit the virus spreading.

 

Announced on Monday, the yacht quarantine programme will allow visitors with
a negative coronavirus test to spend their time on board a yacht or small
cruise ship in Phuket.

 

The pandemic saw the number of tourists on the popular tourist destination
plummet from 40,000-50,000 a day to just hundreds.

 

The programme has already begun accepting yachters for a trial run, and
around 100 yachts are expected to take part once it gets off the ground.

 

Travellers are required to wear a smart wristband that monitors vital signs
including temperature and blood pressure, as well as tracking the wearer's
location via GPS.

 

The device can transmit information even at sea, within a 10 km radius, the
government said.

 

Having banned foreign tourists in March last year, Thailand has been
gradually reopening its borders since October.

 

Last week, Thailand's tourism minister said he would propose a plan for
foreigners to undertake quarantine in popular tourist areas, including beach
resorts.

 

The hotel quarantine plan is expected to start in April or May in popular
provinces including Phuket, Krabi and Chiang Mai.--BBC

 

 

 

Deliveroo boss Will Shu: 'I was never into start-ups'

"I never set out to be a founder or a CEO. I was never into start-ups," says
Will Shu, founder of food delivery chain, Deliveroo.

 

His comments came as the firm set out plans to issue shares to the public
which could value it at about £7bn.

 

Deliveroo has not yet made a profit and it reported a £223.7m loss for last
year, despite a surge in sales.

 

The float will see the busiest riders share in a £16m fund, and customers
will also get the chance to buy shares.

 

Deliveroo is making £50m worth of shares available to customers who will be
given the opportunity to buy up to £1,000 worth of shares each, although if
demand if high they may see their orders scaled back.

 

Mr Shu's letter, contained in the official notice of the intention to float,
also says: "I'm not one of those Silicon Valley types with a million ideas.
I had one idea.

 

"At the end of the day, I started the business because I wanted something
better than what was available to me.

 

"Today, the business is so, so much bigger than I ever would have thought
possible."

 

Deliveroo said that last year, its gross transaction value - the total
amount of transactions it processes on its platform - jumped by 64.3% to
£4.1bn from £2.5bn in 2019.

 

However, the business remains loss-making, although its underlying loss for
2020 reduced to £223.7m from £317.3m in 2019.

 

Demand for takeaway meals has soared during the coronavirus pandemic, after
lockdown measures were first implemented a year ago and restaurants have
been forced to close.

 

Restrictions on hospitality businesses in England are currently set to start
to ease on 12 April at the earliest.

 

Anna Macdonald, fund manager at Amati Global Investors, told the BBC's Today
programme: "Losses have actually been mounting at Deliveroo over the last
few years, but given the environment for tech listings at the moment, that
doesn't seem to put too many investors off who are prescribing quite a hefty
valuation for the company.

 

"There's no doubt that it's done tremendously well during lockdown and the
founder Will Shu says in the last six months to the end of 2020 it was
operating profitably. But, yes, there's a good deal of hope in the share
price valuation."

 

As part of the flotation, riders in Deliveroo's 12 markets who have worked
with the firm for at least a year will be paid a bonus of either £10,000,
£1,000, £500 and £200 depending on the number of orders they have delivered.

 

How can a company that lost over £200m in a year when trading conditions
could not have been more favourable be worth so many billions?

 

That's the question many will be asking when trying to work out why
Deliveroo is expected to hit that valuation when it makes its stock market
debut in London.

 

The answer, of course, is that stock markets are all about pricing future
profits, or at least in Deliveroo's case, the hope of future profits. The
online food delivery service has grown quickly during the pandemic - sales
last year were more than £4bn, nearly two-thirds up on 2019 - and it has
been able to reduce its annual loss.

 

It is also investing heavily in technology and geographical expansion, and
is eager to show investors that it has now honed its model and operating
systems to the point that they can be quickly introduced into many more
markets.

 

This promise of rapid growth and eventual bumper profits is what will drive
Deliveroo's share price when it eventually comes to market. The challenge
for its management team, led by founder Will Shu, is turning the promise
into reality.

 

The shares will be listed on the London Stock Exchange, where Will Shu is
planning to maintain a firmer grip on how the company is run than has been
traditional for London-listed companies.

 

Under a proposed dual-class share structure, each share Mr Shu will hold
will carry 20 times the voting power of ordinary shares.

 

A recent government-commissioned review of the UK's listing rules
recommended a number of measures to make the country a more attractive place
for companies to float.

 

The review, led by former European Commissioner Lord Hill, recommended
allowing companies with dual-class share structures to be allowed in the
premium listing segment of the London Stock Exchange, which allows them to
be included in FTSE indexes. A decision on any changes to the current system
will be made by the Financial Conduct Authority but will not come until the
end of this year.

 

Major tech companies such as Facebook and Google-owner Alphabet have
so-called dual-class shares.

 

Susannah Streeter, share analyst for stockbrokers Hargreaves Lansdown, said
that because of the proposed dual-class share structure, people "need to be
aware if they invest under these terms they don't have the same voting
rights as they would do if they owned shares in other companies listed on
the London market".

 

She added that there were other factors for potential investors to consider.

 

"Competition in the sector is fierce, and Deliveroo competes with Uber Eats,
Just Eat and a host of others," she said.

 

"Profitability can be tough and margins tend to be slim thanks to
competition and high variable costs.

 

"There is of course a risk that demand for home deliveries will wane once
the pandemic has eased. It's likely that the public will be desperate to eat
out as soon as they can."--BBC

 

 

 

Exclusive: Chinese EV trio eye Hong Kong listings this year to raise
combined $5 billion - sources

HONG KONG/BEIJING (Reuters) - U.S.-listed Chinese electric vehicle (EV)
makers Li Auto Inc, Nio Inc and Xpeng Inc plan to list in Hong Kong as soon
as this year, to tap an investor base closer to home, said three people with
direct knowledge of the matter.

 

The trio each aim to sell at least 5% of their enlarged share capital in the
Asian finiancial hub, the people said. Based on their New York market
capitalisation on Monday, proceeds could total around $5 billion.

 

The EV makers have been working with advisors on the sales which could begin
as early as mid-year, one of the people said. The three are looking to take
advantage of growing demand from prospective investors in Asia, said another
of the people, who declined to be identified due to confidentiality
constraints.

 

Li Auto, Nio and Xpeng declined to comment.

 

The plans come as the trio increase capital raising efforts to fund
technology development and expand sales networks, to better compete in the
world’s biggest EV market where U.S. peer Tesla Inc is boosting sales of its
China-made vehicles.

 

Auto executives have marked 2021 as a crucial year for EV makers to seize
market share as the industry expects Chinese sales of new-energy vehicles
(NEVs) to jump almost 40% from last year to 1.8 million units.

 

Selling shares in Hong Kong would also add the trio to a slew of New
York-listed Chinese firms seeking a presence on more local exchanges against
a backdrop of political tension between the United States and China.

 

TRACK RECORD

Under Hong Kong rules, an issuer seeking a secondary listing must have had
at least two financial years of good regulatory compliance on another
qualifying exchange.

 

Li Auto and Xpeng went public in the United States in the middle of last
year so will likely apply in Hong Kong for a dual primary listing, said two
of the people as well as a separate person with direct knowledge of the
matter.

 

As per Hong Kong’s dual primary listing rules, firms are subject to full
bourse requirements in Hong Kong and a second exchange, but are not bound by
the two-year rule.

 

Xpeng is also considering a third listing on Shanghai’s STAR Market for
new-economy firms, said two other people.

 

“In the long run, it’s helpful for consumer-focused companies like us to
connect with domestic capital markets and domestic investors,” Xpeng
President Brian Gu told Reuters last week when asked about local listing
plans.

 

“This is the direction we should pay attention to,” he said, declining to
comment on any Hong Kong listing plan.

 

GOING GREEN

China’s government has heavily promoted NEVs - such as battery-powered,
plug-in petrol-electric hybrid and hydrogen fuel cell cars - to help reduce
chronic air pollution, spurring interest from technology companies and
investors alike.

 

Last month, Reuters reported telecommunications firm Huawei Technologies Co
Ltd plans to market EVs as early as this year.

 

China forecasts NEVs will make up 20% of the country’s annual auto sales by
2025 from around 5% in 2020.

 

Domestic vehicle deliveries last year totalled 32,624 by Li Auto, 43,728 by
Nio and 27,041 by Xpeng. That compared with 147,445 vehicles by Tesla,
industry data showed.

 

 

 

Tesla loses a third of its value for the third time in a year

(Reuters) - Tesla Inc’s stock extended losses on Monday and is now down by a
third from its January record high, making it the third time in about a year
that the electric car maker’s shares have corrected that dramatically.

 

With investors worried about rising interest rates and dumping
high-valuation stocks in recent weeks, Tesla’s market capitalization has
fallen by almost $300 billion since its Jan. 26 record high to $550 billion,
moving behind Facebook Inc, which it overtook in December after joining the
S&P 500.

 

Tesla shares fell over 4% on Monday and were down almost 35% from their peak
on Jan. 26. The ARK Innovation ETF, which has 10% of its assets invested
ark-funds.com/arkk#holdings in Tesla, fell 6%.

 

Technology and other growth stocks have fallen broadly since Feb. 12, when
the Nadsaq closed at its most recent record high. However, Tesla’s decline
during that time has been much deeper than Wall Street’s other heavyweights.

 

Tesla’s surge in recent months is rooted in expectations it will expand car
production quickly and profitably. The stock’s latest dip follows a tweet by
Chief Executive Elon Musk on Saturday that an update on Tesla’s planned
Cybertruck pickup would likely be provided in the second quarter. Musk
unveiled the Cybertruck in 2019.

 

The most volatile among Wall Street’s largest companies, Tesla’s shares have
fallen by amounts similar to or greater than the current selloff twice since
early 2020. The stock slumped over 60% in February and March last year, when
the coronavirus pandemic shocked global markets. After soaring to new highs
in August, it dropped 33% before resuming its meteoric rise.

 

Tesla is now down almost 30% since the Nasdaq peaked on Feb. 12, reducing
its gain in the past six months to about 43%. Since Feb. 12, Apple Inc is
down about 13%, with Amazon.com Inc, Microsoft Corp and Facebook Inc down
less than 10%.

 

Since Tesla announced on Feb. 8 that it bought $1.5 billion worth of
bitcoins, its stock has steadily fallen, while the price of bitcoin has
climbed over 10%. Tesla said it bought the bitcoins during January, and if
it hypothetically bought them at the mid-point price of about $45,000 for
that month, its investment could now be worth around $1.7 billion, according
to Reuters calculations.

 

 

 

Asian stocks recover on firmer futures, retreat in U.S. yields

SYDNEY (Reuters) - Asian stocks recovered from earlier losses on Tuesday,
lifted by firmer U.S. equity futures and central bank comments aimed at
soothing fears about rising bond yields and inflation.

 

A pullback in U.S. bond yields also buoyed equity markets.

 

Japan’s Nikkei rallied 1.02% on Tuesday afternoon, while MSCI’s broadest
index of Asia-Pacific shares outside Japan was 0.10% higher.

 

Chinese blue chips added 0.03%, after earlier hitting their lowest level
this year.

 

People's Bank of China Vice Governor Chen Yulu told Yicai Global that
China's money supply would grow only to match GDP growth and the country's
central bank did not see a need for major stimulus support in the next five
years. [bit.ly/3btQ11P]

 

NASDAQ futures bounced 1.1% and S&P 500 futures 0.73%. European futures were
slightly lower, however, with EUROSTOXX 50 futures down 0.13% and FTSE
futures 0.25% lower.

 

“I suspect that is what’s leading the better tone in Asia,” Stephen Miller,
market strategist for GSFM Funds Management, referring to U.S. futures and
the central banker’s remarks.

 

“From time to time soothing comments coming from officials - whether PBOC
officials, whether Fed Reserve, ECB or the Reserve Bank of Australia
officials - might calm markets but I think all of those things would prove
ephemeral if U.S. bond yields continue to march higher, and I think there’s
a significant risk of that.”

 

Miller added that an easing in U.S. 10-year Treasury bond yields also helped
sentiment.

 

U.S. Treasury Secretary Janet Yellen said on Monday that President Joe
Biden’s coronavirus aid package would provide enough resources to fuel a
“very strong” U.S. economic recovery, and noted “there are tools” to deal
with inflation.

 

Despite the positive cues, investors remain conflicted over whether the
stimulus will help global growth rebound faster from the COVID-19 downturn
or cause the world’s biggest economy to overheat and lead to runaway
inflation.

 

“The chance of our seeing more inflation in the economy is meaningfully
increased by the monetary policy actions and the fiscal policy actions that
we’re seeing around the world,” Goldman Sachs Chief Executive Officer David
Solomon told a conference in Sydney via webcast.

 

“There is certainly a reasonable outcome where inflation accelerates more
quickly than people are expecting, and that will obviously have an impact on
markets and volatility.”

 

The technology sector and other richly valued companies have been highly
susceptible to the rising rates.

 

Australian shares tracked overnight gains on Wall Street with the main
S&P/ASX 200 index climbing as much as 1.04% on Tuesday. However, Australian
tech stocks slid for the sixth straight session in line with their U.S.
peers.

 

The index gave back those gains to be only 0.48% higher in afternoon trading
following the tech declines. Hong Kong’s Hang Seng advanced 1.4%, while
South Korea’s KOSPI fell 0.74%.

 

U.S. economic data pointed to a continued recovery, as the Commerce
Department said wholesale inventories increased solidly in January despite a
surge in sales, suggesting inventory investment could again contribute to
growth in the first quarter.

 

On Wall Street, the Dow advanced overnight while the Nasdaq shed over 2%,
marking a more than 10% fall since its Feb. 12 closing high and confirming a
correction in the index’s value.

 

The Dow Jones Industrial Average rose 0.97%, the S&P 500 lost 0.54%, and the
Nasdaq Composite dropped 2.41%.

 

 

“If rates are grinding higher because people are getting optimistic about
what economic growth looks like, that is still supportive for equity
prices,” said Tom Hainlin, global investment strategist at U.S. Bank Wealth
Management’s Ascent Private Wealth Group in Minneapolis.

 

U.S. Treasury yields have been advancing as investors price in higher
inflation and more upbeat prospects for the U.S. economy as it emerges from
the coronavirus pandemic.

 

On foreign exchange markets, the dollar index held near a 3-1/2-month high
against its rivals as expectations of a faster economic normalisation from
the pandemic in the United States put the currency at an advantage. The euro
was up 0.1% at $1.185.

 

Oil prices rose on Tuesday, helped by a likely drawdown in crude oil
inventories in the United States, the world’s biggest fuel consumer.

 

Brent crude futures were up 56 cents, or 0.82%, at $68.80 per barrel. U.S.
crude futures were 50 cents, or 0.75% higher at $65.55.

 

Spot gold added 0.4% to $1,687.66 an ounce.

 

 

 

How Toyota thrives when the chips are down

(Reuters) - Toyota may have pioneered the just-in-time manufacturing
strategy but when it comes to chips, its decision to stockpile what have
become key components in cars goes back a decade to the Fukushima disaster.

 

After the catastrophe severed Toyota’s supply chains on March 11, 2011, the
world’s biggest automaker realised the lead-time for semiconductors was way
too long to cope with devastating shocks such as natural disasters.

 

That’s why Toyota came up with a business continuity plan (BCP) that
required suppliers to stockpile anywhere from two to six months’ worth of
chips for the Japanese carmaker, depending on the time it takes from order
to delivery, four sources said.

 

And that’s why Toyota has so far been largely unscathed by a global shortage
of semiconductors following a surge in demand for electrical goods under
coronavirus lockdowns that has forced many rival automakers to suspend
production, the sources said.

 

“Toyota was, as far as we can tell, the only automaker properly equipped to
deal with chip shortages,” said a person familiar with Harman International,
which specialises in car audio systems, displays and driver assistance
technology.

 

Two of the sources who spoke to Reuters are Toyota engineers and the others
are at companies involved in the chip business.

 

Toyota surprised rivals and investors last month when it said its output
would not be disrupted significantly by chip shortages even as Volkswagen,
General Motors, Ford, Honda and Stellantis, among others, have been forced
to slow or suspend some production.

 

Toyota, meanwhile, has raised its vehicle output for the fiscal year ending
this month and jacked up its full-year earnings forecast by 54%.

 

CLASSIC LEAN SOLUTION

The source familiar with Harman said the company, part of South Korea’s
Samsung Electronics, was experiencing shortages of central processing units
(CPUs) and power management integrated circuits as early as November last
year.

 

While Harman doesn’t make chips, because of its continuity deal with Toyota,
it was obliged to prioritise the carmaker and ensure it had enough
semiconductors to maintain supplies of its digital systems for four months,
or more, the source said.

 

The chips in especially short supply now are microcontroller units (MCUs)
which control an array of functions such as braking, acceleration, steering,
ignition, combustion, tire pressure gauges and rain sensors, the four
sources told Reuters.

 

However, Toyota changed the way it buys MCUs and other microchips after the
2011 earthquake, which caused a tsunami that killed more than 22,000 people
and triggered a deadly meltdown at Fukushima’s nuclear power plant.

 

In the aftermath of the quake, Toyota estimated its procurement of more than
1,200 parts and materials might be affected and it drew up a list of 500
priority items that would need secure supply in the future, including
semiconductors made by key Japanese chip supplier Renesas Electronics.

 

The repercussions of the disaster were so severe it took six months for
Toyota to get production outside Japan back to normal levels, having done so
at home two months earlier.

 

It was a big shock to Toyota’s just-in-time system because a smooth flow of
components from suppliers to factories to assembly lines - as well as lean
inventories - were central to its emergence as an industry leader for
efficiency and quality.

 

At a time when supply chain risk is now front and centre in almost every
industry, the move shows how Toyota was ready to throw out its own rule book
when it came to semiconductors - and is reaping the rewards.

 

A Toyota spokesman said one of the goals of its lean inventories strategy
was to become sensitive to inefficiencies and risks in supply chains,
identify the most potentially damaging bottlenecks and figure out how to
avoid them.

 

“The BCP for us was a classic lean solution,” he said.

 

NO BLACK BOXES

Toyota pays for its stockpiling arrangement with chip suppliers by returning
a portion of the cost cuts it demands from them each year during the life
cycle of any car model under so-called annual cost-down programmes, the
sources said.

 

Inventories of MCU chips - which often combine multiple technologies, CPUs,
flash memory and other devices - are held for Toyota by parts suppliers such
as Denso, which is partially owned by Toyota Group, chip makers like Renesas
and Taiwan Semiconductor Manufacturing, and chip traders.

 

While there are different kinds of MCUs, those in short supply now are not
cutting-edge chips but more mainstream ones with semiconductor nodes ranging
from 28 to 40 nanometres, the sources said.

 

Toyota’s continuity plans for chips has also cushioned it from the impact of
natural disasters exacerbated by climate change, such as fiercer typhoons
and rain storms which often cause floods and landslides across Japan,
including the southern Kyushu region manufacturing hub where Renesas also
makes chips.

 

One of the sources involved in semiconductor supply, said Toyota and its
affiliates had become “extra risk averse and sensitive” to the impact of
climate change. But natural disasters and are not the only threat on the
horizon.

 

Automakers fear there will be more disruptions to chip supplies because of
rising demand as cars become more digital and electric, as well as fierce
rivalry for chips from makers of smart phones to computers to aircraft to
industrial robots.

 

The sources said Toyota has another advantage over some rivals when it comes
to chips thanks to its long-standing policy of ensuring it understands all
the technology used in its cars, rather than relying on suppliers to provide
“black boxes”.

 

“This basic approach sets us apart,” said one of the sources, a Toyota
engineer.

 

“From what causes flaws in semiconductors to gory details about production
processes like what gases and chemicals you use to make the process work, we
understand the technology inside and out. It’s a different level of
knowledge that you can’t simply gain if you’re just buying those
technologies.”

 

‘LOSING OUR GRIP?’

 

There has been an explosion in the use of semiconductors and digital
technologies by automakers this century thanks to the rise of hybrid and
fully electric vehicles, as well as autonomous driving and connected car
functions.

 

Those innovations require even more computing power and use in part a new
category of semiconductors called system on a chip, or SoC, which roughly
speaking combines multiple CPUs on one logic board.

 

The technology is so new and specialised many carmakers have left it to big
parts suppliers to manage the risks.

 

In keeping with its no black box approach, however, Toyota developed a deep
in-house understanding of semiconductors to prepare for the launch of its
successful Prius hybrid in 1997.

 

Years before, it poached engineering talent from the chip industry and
opened a semiconductor plant in 1989 to help design and manufacture MCUs
used to control Prius powertrain systems.

 

Toyota designed and manufactured its own MCUs and other chips for three
decades until it transferred its chip-making plant to Denso in 2019 to
consolidate the supplier’s operations.

 

The four sources said Toyota’s early drive to develop a deep understanding
of semiconductor design and manufacturing processes was a major reason why
it has managed to avoid being hit by the shortages, in addition to its
continuity contracts.

 

Two of the sources, however, said they were worried the Denso deal might
indicate that Toyota was finally willing to ditch its no black box approach,
even though the supplier is part of the broader Toyota Group.

 

“We were okay this time, but who knows what awaits us in the future?” one
source said. “We may be losing our grip on technology in the name of
technological development efficiency.”

 

 

 

Oil prices rise on expected economic recovery, likely drawdown in oil stocks

SINGAPORE (Reuters) - Oil prices rose on Tuesday on expectations of a
recovery in the global economy after the U.S. Senate approved a $1.9
trillion stimulus bill and on a likely drawdown in crude oil inventories in
the United States, the world’s biggest fuel consumer.

 

But a stronger dollar and receding fears of a supply disruption from Saudi
Arabia, the world’s biggest oil exporter, after an attack on its export
facilities capped price gains.

 

Brent crude futures for May rose by 53 cents, or 0.8 %, to $68.77 a barrel
by 0436 GMT, while U.S. West Texas Intermediate (WTI) crude for April rose
44 cents, or 0.7%, to $65.49.

 

“Fundamentals remain incredibly supportive, especially with Saudi Arabia in
full control pursuing a tight oil policy,” Stephen Innes, chief global
markets strategist at Axi said in a note.

 

On Monday, Brent crude oil prices rose above $70 a barrel after Yemen’s
Houthi forces fired drones and missiles at the heart of the Saudi oil
industry, including a Saudi Aramco facility at Ras Tanura vital to petroleum
exports.

 

Riyadh said there were no casualties or loss of property and prices ended
the day lower.

 

Still, the United States expressed alarm at “genuine security threats” to
Saudi Arabia from Yemen’s Iran-aligned Houthis and elsewhere in the region,
and said it would look at improving support for Saudi defences.

 

The attacks came after the Organization of the Petroleum Exporting Countries
(OPEC), Russia and their oil producing allies, known as OPEC+, agreed last
week agree on broadly sticking with output cuts despite rising crude prices.

 

Investor focus, meanwhile, remains on the prospects for a global economic
recovery.

 

U.S. Treasury Secretary Janet Yellen said on Monday that President Joe
Biden’s $1.9 trillion coronavirus aid package will provide enough resources
to fuel a “very strong” U.S. economic recovery. The House of Representatives
must still pass the Senate version of the package for it to become law.

 

U.S. crude oil and refined product stockpiles likely fell last week, with
distillate inventories seen drawing down for fifth straight week, a
preliminary Reuters poll showed on Monday.

 

“The fundamentals have not changed at all for oil and some investors might
be automatically buying crude on any dip,” said Edward Moya, senior market
analyst at OANDA.

 

 

 

Jet leasing shake-up looms as AerCap and GE unit discuss tie-up

PARIS (Reuters) - Aircraft leasing is poised for its biggest shake-up in
almost a decade as its top two players, AerCap Holdings and General Electric
Co’s GECAS, discuss a deal to forge an industry titan with more than 2,000
jets, people familiar with the matter said on Monday.

 

Talks over a tie-up follow years of speculation over a sale of GECAS and
come as COVID-19 is expected to shift more of the world’s jetliner fleet
from the balance sheets of debt-laden airlines into the arms of the $60
billion leasing industry.

 

Aircraft lessors, who typically rent out aircraft for up to 12 years at a
time, already account for about half of deliveries of jets built by Airbus
SE and Boeing Co.

 

The two sides have been in discussions since late last year, one of the
sources said. If the negotiations conclude successfully, an all-stock deal
could come as early as this week, another of the sources added.

 

The Wall Street Journal, which first reported the possible deal, said the
transaction could be worth $30 billion.

 

GE said it did not comment on speculation. AerCap did not respond to
requests for comment.

 

New York-listed shares in Ireland’s AerCap ended trading on Monday with a
gain of 13.2%. Shares of GE closed up 4.2%, compared with a decline of 0.5%
in the S&P 500 Index.

 

AMBITIOUS EXPANSION

AerCap is the world’s largest owner of commercial aircraft, with 1,080 jets
directly on its books or managed on behalf of others. GECAS has 984 aircraft
owned or under management, according to UK-based consultancy IBA Group.

 

The proposed tie-up would mark AerCap’s most ambitious expansion under
tenacious Chief Executive Aengus Kelly, who in 2013 struck a deal to buy its
largest rival, Los Angeles-based International Lease Finance Corp, after the
financial crisis.

 

It would also involve the latest move by GE Chief Executive Larry Culp to
offload businesses and reduce debt since he took the reins of the struggling
conglomerate in 2018. GE has already taken steps to reduce its exposure to
aircraft financing.

 

Vertical Research Partners analyst Rob Stallard said the resulting behemoth
would be the “mother of all leasing companies.”

 

However, if a deal goes ahead, its sheer size could attract attention from
antitrust regulators because AerCap and GECAS are already almost twice as
big in fleet terms as the sector’s third-largest player, Dublin-based
Avolon, analysts said.

 

“The main question mark will be around the antitrust implications,” said
Bertrand Grabowski, a former senior aviation banker turned independent
adviser.

 

“One option for AerCap will be to dispose of several hundred airplanes over
time to comply with possible antitrust requirements,” he added.

 

CONSOLIDATION

A mega-merger in leasing could also spur further consolidation in a sector
that has featured multiple takeovers in recent years.

 

“They will all be thinking there’s probably going to be more consolidation,”
IBA Group President Phil Seymour said of smaller lessors, adding that this
was the “natural impact of a down cycle.”

 

Major leasing companies are eyeing growth as airlines focus on repairing
balance sheets wrecked by the drop in air travel during the COVID-19
pandemic, even though vaccines have prompted some talk of recovery.

 

Singapore bank DBS Group said it expected aircraft lessors would largely
emerge stronger from the crisis, but it warned that the weak finances of
airlines meant some lessors would face extra problems collecting money from
carriers or be forced to accept payment delays.

 

Kelly last week told investors that the vast majority of AerCap’s customers
were paying their bills.

 

 

 

Investors seek $1.2 billion in damages from Vivendi in fraud lawsuit

PARIS (Reuters) - A group of investors will urge a French court on Tuesday
to back its claim for 1 billion euros ($1.2 billion) in damages from
Vivendi, alleging the media giant made false financial statements during a
merger deal two decades ago.

 

In their lawsuit, the 90 investors, represented by law firm Soffer Avocats,
allege top executives at the time failed to fully disclose the extent of
Vivendi’s debt as the group oversaw a $46 billion three-way tie-up with
Seagram Co and Canal Plus.

 

Vivendi’s boss at the time was Jean-Marie Messier.

 

“The investor group contends that Messier and other Vivendi executives
presented fake financials to conceal the existence of a severe liquidity
crisis at the company,” a spokesman for the investors’ group said in a
written statement.

 

Vivendi’s lawyer told Reuters the claim was groundless, citing a previous
decision by a French criminal court that ruled Messier and other Vivendi
executives didn’t issue false information at the time.

 

“This case has already been judged several times in France, in particular by
the criminal judge, who ruled out that Vivendi issued any false
information,” said Hervé Pisani, managing partner of Freshfields in Paris.

 

The case will be heard at Paris’s commercial court from 1300 GMT. The court
can take several weeks or months before announcing a decision.

 

($1 = 0.8435 euros)

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

Dairibord

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


(c) 2021 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
344 1674

 


 

 

 

 

 

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