AFS Morning note 24/02/2023
Financials and Regulation
Banks:
- Credit Suisse, Mizuho Join Banks on $1 Billion Olam Agri IPO -- Credit Suisse Group AG and Mizuho Financial Group Inc. have
joined the lineup of banks working on the listing of Olam Group’s agricultural business in Singapore and Saudi Arabia, according to
people with knowledge of the matter. EFG Hermes and SNB Capital have also been added as joint bookrunners on Olam Agri’s
planned dual-listing that could raise as much as $1 billion, the people said, asking not to be identified as the information isn’t public.
Singapore-headquartered Olam, one of Asia’s biggest agricultural commodity traders, plans to announce its intention to float the
agricultural business in the first half, the people said.
Citigroup Inc., DBS Group Holdings Ltd., HSBC Holdings Plc and Morgan Stanley are already working on the deal, Bloomberg News
reported in January. Representatives for Olam, Credit Suisse, EFG Hermes, Mizuho and SNB Capital declined to comment. Olam
Agri is set to be the first global company to list in Riyadh in what would be a win for the kingdom’s stock exchange, which has been
seeking to attract international firms. Last year, Americana Restaurants International Plc. raised $1.8 billion in the first dual-listing in
Saudi Arabia and the United Arab Emirates. (BN)
- Trump Subpoenas Ex-Deutsche Bank Private Banker in NY Case -- Former President Donald Trump subpoenaed his longtime
private banker for documents and testimony in New York Attorney General Letitia James’s suit accusing him and his real estate
company of using false asset valuations to dupe banks and insurers. Rosemary Vrablic, a former Deutsche Bank managing director
who arranged hundreds of millions of dollars in loans to Trump’s company, was subpoenaed last week, according to a Wednesday
court filing by James. Trump also subpoenaed Donald Bender, a partner at his former accounting firm Mazars.
James said in the filing that Trump waited too long to start deposing witnesses and suggested that he was trying to delay a trial set
for October in Manhattan by dragging his feet. Her filing was in response to an earlier request by Trump to extend a March 20
discovery deadline. “It is remarkable that Defendants sat on their rights to conduct discovery for months, waiting until the past week
to serve their first subpoenas,” James said. Vrablic’s and Bender’s “roles in the transactions at issue have been known to
Defendants for years.”
Trump, three of his adult children and his company were sued by New York in September 2022 for allegedly manipulating the value
of the former president’s assets and reaping $250 million in ill-gotten financial benefits as a result. The case is among the biggest
legal threats to Trump as he campaigns for a return to the White House in 2024. Trump has claimed the lenders and others knew to
take his own valuations with a grain of salt and conduct their own analyses. He’s also accused James, a Democrat, of conducting a
political “witch hunt.” (BN)
Deutsche Bank Studied Credit Suisse Deal Options Before Overhaul -- Deutsche Bank AG looked at buying parts of Credit
Suisse Group AG assets as recently as last fall after the Swiss firm became engulfed by a series of scandals and financial hits,
according to people with knowledge of the matter. The German lender analyzed individual businesses such as the Swiss firm’s
asset management and wealth management units, people familiar with the matter said.
The plan inside Deutsche Bank was to be able to move should attractive parts of the bank come on the market, the people said. The
project has been on hold since Credit Suisse announced an overhaul in October, though could get reactivated if the Swiss bank
again considers disposals, the people said. They asked not to be identified as the deliberations are private. It’s at least the second
time in recent years Deutsche Bank Chief Executive Officer Christian Sewing has brainstormed about a potential move on the Swiss
firm. Representatives for Deutsche Bank and Credit Suisse declined to comment.
Deutsche Bank’s scenario planning towards the end of 2022 came as Credit Suisse assessed disposals in the run-up to its strategy
announcement. A key pillar of the plan is divesting its securitized products business to investment firm Apollo, while spinning off its
capital markets business into a new company, though it stopped short of further significant sales. (BN)
Regulation/Other: No stories
Fintech:
- Bankman-Fried Prosecutors Allege Plot to Shape Crypto Policy -- A fresh indictment of FTX co-founder Sam Bankman-Fried
features a pair of co-conspirators the US says helped illegally seek to influence the regulation of cryptocurrency by donating millions
of dollars to Democrats and Republicans alike. Bankman-Fried is accused of a massive fraud that led to last year’s implosion of the
crypto exchange. The new charges, unsealed on Thursday in federal court in Manhattan, refer to two people the government says
participated in the alleged campaign finance scheme.
The campaign cash from him and other top FTX executives, which prosecutors say “involved flooding the political system with tens
of millions of dollars in illegal contributions,” has the potential to be the biggest infusion of illegal money into US politics in decades.
In addition to Bankman-Fried, Ryan Salame, former co-chief executive officer of FTX Digital Markets, and Nishad Singh, FTX’s
former director of engineering, were among the largest political donors in the FTX universe. Together they gave $70.5 million in the
2022 midterm elections.
Bankman-Fried previously donated $5.6 million in the election cycle. The US didn’t identify the co-conspirators, or cite Salame or
Singh in the indictment, nor has either been charged. Lawyers for both didn’t respond to calls and emails seeking comment. A
spokesman for Bankman-Fried declined to comment. Beyond Bankman-Fried’s own fate, there are the dozens of candidates and
political committees that received the donations. The charges could pull a wide swath of Republicans and Democrats, super-PACs
and other fundraising groups into complicated legal proceedings and force them to pay the money back, with interest, just as they’re
working to raise funds for the 2024 presidential election cycle.
The new indictment provides a much more granular narrative of the government’s case against the 30-year-old entrepreneur, who
has pleaded not guilty and is due to face trial in October. It outlines in specific detail how he allegedly misappropriated billions of
dollars of customer deposits and used them to support his empire — making speculative investments, donating to charity, trying to
influence crypto policy in Washington and enriching himself along the way. (BN)
- Fed Again Denies Crypto Bank Custodia’s Bid for Payments Access -- The US Federal Reserve rejected a request by crypto-
friendly Custodia Bank Inc. to reconsider a January denial to become a Fed member, a step toward gaining access to the central
bank’s payment system. The Fed’s move follows its earlier findings that the lender’s application was “inconsistent with the required
factors under the law,” the regulator said in a statement Thursday. Custodia asked for reconsideration earlier this month. Wyoming-
based Custodia has been fighting the Fed decision to restrict access to its payment system. This week, a US District Court judge in
Wyoming allowed Custodia to file an amended lawsuit against the Federal Reserve, with the bank alleging that Fed officials
collaborated with other regulators and the White House to deny its application to be a member of the Federal Reserve System and
for a master account.
The Fed had previously flagged Custodia’s risk-management framework, saying it wasn’t sufficient to address concerns “regarding
the heightened risks associated with its proposed crypto activities, including its ability to mitigate money laundering and terrorism
financing risks.” Read more: Fed Balks at Custodia’s Bid for Membership in Payment System Banking regulators have ramped up
scrutiny of ties between the crypto industry and traditional lending following the spectacular failure of FTX — once among the
world’s largest digital-asset exchanges — amid concerns that crypto-related risks could eventually affect the stability of the country’s
banking system. Earlier on Thursday, the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance
Corp. jointly warned banks to scrutinize crypto-related deposits, specifically the liquidity risks tied to stablecoin-related reserves.
(BN)
Insurers: No stories
Research Updates
Stifel raised Accor to Hold from Sell.
Credit Rating Changes
Global raised Costa Rica to B+ from B. Moody’s raised Regeneron to Baa2 from Baa3.
Technology, Telecommunications and Media
Tech:
- U.S. likely to cap level of S.Korean chips made in China -- The United States will likely limit the level of advanced
semiconductors made by South Korean companies in China, a senior U.S. official said. In October, South Koreas Samsung
Electronics and SK Hynix, the world's top memory chip makers, received an one-year reprieve from U.S. export restrictions aimed at
thwarting Beijing's technological ambitions and blocking its military advances. What will likely be is a cap on the levels that they can
grow to in China; said Alan Estevez, the U.S. Commerce Department's under secretary for industry and security, when asked what
would happen after the waiver ended.
Estevez, who oversees restrictions on tech exports to China, made the comments on Thursday during a forum hosted by the Center
for Strategic and International Studies, a Washington-based think tank. You're at whatever layer of NAND, we will stop it
somewhere in that range Estevez said, referring to a flash memory product manufactured by Samsung and SK. He added that the
U.S. government was in deep dialogue with the South Korean chipmakers. We work with them to ensure that we aren't going to
harm our allies; companies. At the same time, we're going to impede the Chinese capability of building capabilities that are going to
threaten us collectively, he said.
South Korea's industry ministry on Friday said there have been no specific discussions between South Korea and the United States
on setting a cap on the technology level. Both South Korea and the United States have formed a consensus that current operations
and future investment by South Korean chip makers should not be disrupted, the industry ministry said in a statement, adding that
the South Korean government plans to closely discuss the extension of chip-making equipment imports to China. Samsung
Electronics did not have comment. SK Hynix was not immediately available for comment. (R)
- TikTok Is Probed by Canada Over Data Collection From Young Users -- Four privacy regulators in Canada are launching an
investigation into TikTok over its collection, use and disclosure of personal information — including whether it’s complying with laws
when dealing with younger users. The probe into the social media platform, which is owned by China’s ByteDance Ltd., is being
conducted by privacy watchdogs from the federal government and the provinces of Quebec, Alberta and British Columbia. It follows
settled class action lawsuits in the US and Canada, the regulators said in a statement.
“An important proportion of TikTok users are younger users,” the regulators said. “The joint investigation will have a particular focus
on TikTok’s privacy practices as they relate to younger users, including whether the company obtained valid and meaningful consent
from these users for the collection, use and disclosure of their personal information.” The popular video-sharing platform finds itself
under increasing scrutiny from politicians and regulators for its handling of user data, amid fears that the Chinese government could
force the company to share that data. TikTok has also been accused of providing inappropriate content to minors, and was sued in
December year by the state of Indiana for doing so.
“The privacy and safety of the TikTok community, particularly our younger users, is always a top priority, and we are committed to
operating with transparency to earn and maintain the trust of the many Canadians who create and find joy on our platform,” a TikTok
spokesperson said in an emailed statement. “We welcome the opportunity to work with the federal and provincial privacy protection
authorities to set the record straight on how we protect the privacy of Canadians.” The Canadian investigation will also determine if
the company is meeting its transparency obligations when collecting personal information, the statement said. (BN)
- China Prepares to Police AI as ChatGPT Frenzy Spreads -- China will introduce rules to govern the use of artificial intelligence
across a swath of industries, moving to regulate emergent spheres as ChatGPT fever sweeps the world’s No. 2 economy. The
government will push for the safe and controllable application of AI services, which it considers a strategic industry, officials from the
Ministry of Science and Technology told reporters on Friday. And it will continue to monitor its evolution over the longer term to gain
a better understanding of the ethical concerns surrounding AI and other transformative technologies, Science Minister Wang
Zhigang said.
San Francisco-based OpenAI’s conversational bot has captivated users since its rollout months ago, prompting a plethora of
American and Chinese corporations to unveil similar projects and inflaming AI-linked stocks. Wang’s remarks follow reports that
regulators have forced Chinese apps and websites to terminate services that route users to ChatGPT, in part because of content
and data security concerns. The introduction of regulations may be intended to ensure ChatGPT-like services hew to the Communist
Party’s non- negotiable censorship of controversial or undesirable content online. But it could also be a boon to companies like
Baidu Inc., providing clearer ground rules for future services. (BN)
- US Takes Security-First Focus for $39 Billion Chip Aid -- As President Joe Biden’s administration prepares to accept requests
for $39 billion in funding to jumpstart US production of microchips, his commerce chief emphasized the program’s focus is
strengthening national security rather than boosting struggling chipmakers. The US next Tuesday will unveil applications for the
manufacturing part of the funding under the Chips and Science Act passed last year and will be “crystal clear” in its selection criteria,
Commerce Secretary Gina Raimondo said. “I expect there will be many disappointed companies who feel that they should have a
certain amount of money. The reality is the return on our investment here is the achievement of our national-security goal,”
Raimondo told reporters. She spoke ahead of a speech in Washington on Thursday where she laid out the broad vision for the
program through 2030.
The plan is to try to return manufacturing to the US by building at least two new clusters of leading-edge logic-chip manufacturing,
with a supplier ecosystem and research and development facilities, employing thousands of workers. US defense capabilities —
from hypersonic weapons, drones and satellites — depend on the supply of chips that currently aren’t produced in the US, she said
in the speech. The US share of global chip manufacturing is down to 12% from 37% in 1990, Raimondo said. “America needs to
design and produce the world’s most advanced chips right here in America,” she said. Congress passed the law last year after
pandemic lockdowns and supply-chain disruption laid bare US reliance on chips from Asia and particularly Taiwan, the target of
frequent threats from China. The shift arose over decades of companies focusing on peak efficiency, making the US reliant on other
countries for chips used in everything from cars to military equipment. (BN)
- TSMC’s Second Japan Plant to Cost Over $7.4b: Nikkan Kogyo -- Taiwan Semiconductor Manufacturing Co. plans to build its
second chipmaking plant in Japan in southwestern Kumamoto prefecture, with total investment expected to be more than 1 trillion
yen ($7.4 billion), Nikkan Kogyo reports without attribution. The Taiwanese company’s second plant is expected to be completed in
late 2020s and could use more advanced 5 nanometer or 10 nm manufacturing processes, the newspaper reported. TSMC’s first
plant in Japan, set to come online in late 2024, is also in Kumamoto.
TSMC is thought to be in negotiations for government subsidies and investment from customers, according to the report. Details are
expected to be determined by year-end. TSMC, the most advanced chipmaker in the world, has been courted by governments
around the world, including the US and Japan, as they seek more domestic production of semiconductors. Washington has offered
more than $50 billion in incentives for chipmakers to set up operations in the US, while Japan is expected to provide similiar
subsidies. TSMC has said it will work with Sony Group Corp. on its new facilities in Japan. (BN)
- Tencent’s Top Risk Control Official for Fintech to Leave: Caixin -- An executive overseeing risk control at Tencent’s fintech
operation is set to leave as the firm moves closer to revamping its financial businesses to meet regulatory requirements, Caixin
Global reports, citing unidentified people. * Yang Jun, vice president in charge of risk control at Tencent Financial Technology and
general manager of Tencent’s wealth management arm Tengan Fund Sales, is likely to return to traditional financial services sector
(BN)
-Alibaba Pushes Cost Cuts as Revenue Growth Remains Sluggish -- Alibaba Group Holding Ltd. is pushing aggressive cost-
cutting to boost profit as growth in its domestic China market remains anemic, a conservative shift for a tech giant that once spent
aggressively to dominate wide swaths of the economy. The online retailer reported net income rose a better-than- anticipated 69%
to 46.8 billion yuan ($6.8 billion), but revenue rose just 2.1% to 247.76 billion yuan in the December quarter, slightly ahead of
projections. Alibaba’s shares closed down slightly after climbing 6% in early New York trading. The anemic sales growth
underscores tricky economic conditions after China abolished Covid restrictions in December. Its core Chinese commerce business
slid 1% in the quarter — the third straight decline for the unit that underpins the broader empire.
Cloud computing revenue, typically one of the company’s fastest-growing divisions, inched up a disappointing 3% to 20.2 billion
yuan. Beijing has cracked down on the country’s tech giants over the last two years, forcing fundamental changes in the business
models of companies including Alibaba. The e-commerce pioneer is also navigating increasingly tough competition from arch-rival
JD.com Inc. as well as up-and-comers such as PDD Holdings Inc. and ByteDance Ltd. Persistent declines in business on Alibaba’s
commerce platforms “raises the risk that Alibaba will struggle to retain shoppers and merchants if rivals such as JD.com and
ByteDance’s Douyin offer them more subsidies in the next 10 months,” Bloomberg Intelligence analysts Catherine Lim and Tiffany
Tam wrote after the results. (BN)
Spying and hacking: No stories
Telecoms, media and other:
- Netflix cuts prices in some countries to boost subscriptions, shares drop -- Netflix Inc said on Thursday it has cut prices of its
subscription plans in some countries as the streaming giant looks to maintain subscriber growth amid stiff competition and strained
consumer spending. The stock fell nearly 5%, underperforming the broader market and on course for its worst day in more than two
months. The past year has seen intense competition in the streaming industry as a pandemic-driven boom fades and consumers
curtail spending over fears of a possible recession, forcing companies to rethink their strategies. The price cuts took place in some
countries in the Middle East, sub-Saharan African, Latin America and Asia.
The cuts apply to certain tiers of Netflix in those markets - in some cases, the cost of a subscription was halved, the Journal
reported. Netflix, which operates in over 190 countries, has been looking to grow its share in newer international regions as the U.S.
and Canada markets saturate. Earlier this month, it laid out plans to crack down on password sharing for accounts on its streaming
platform. The company added about 7.6 million subscribers in the fourth quarter after bleeding subscribers in the first half of 2022 as
rivals such as Paramount+ and Disney+ raked in subscribers. But average revenue per membership declined across regions in the
last three months of 2022. We're always exploring ways to improve our members&experience. We can confirm that we are updating
the pricing of our plans in certain countries, a spokesperson for the company said. (R)
Environmental Markets, Energy and Commodities
Renewables and environmental markets:
- Offshore Wind Halt Urged By Native Americans Seeking Sway -- The National Congress of American Indians on Thursday
called for a moratorium on offshore wind development along US coasts, insisting the Biden administration do a better job protecting
tribal interests. The decision by the largest lobbying group for tribes in the US follows a plea Tuesday by 30 New Jersey governors
to halt offshore wind activity so government officials can investigate recent whale deaths. And even before those moves, developers
were confronting a slew of economic challenges, from inflation- stoked costs to supply chain woes, that are making it harder to build
the nation’s first large commercial wind farms.
Native Americans have complained about being cut out of the planning, permitting and contracting process as developers seek to
build more than a dozen wind projects along both the West and East coasts, despite vows by President Joe Biden and top
administration officials to consider indigenous knowledge in government decision making. Interior Secretary Deb Haaland, the
nation’s first Native American cabinet secretary, also has put a new focus on environmental justice and indigenous rights as head of
the department that oversees offshore wind. Representatives for the Interior Department and its Bureau of Ocean Energy
Management did not immediately respond to emailed requests for comment.
But recognizing that many Native Americans live near and use areas where offshore energy projects are planned, the bureau has
emphasized its commitment “to maintaining open and transparent communications” with tribal governments and native
organizations. In its resolution, the National Congress of American Indians urges the agencies to halt all scoping and permitting of
offshore wind projects until a “comprehensive and transparent procedure adequately protecting tribal environmental and sovereign
interests” has been implemented. The resolution, adopted by NCAI’s general assembly during a just-concluded winter meeting in
Washington, D.C., stressed tribal nations “must be included in the management, permitting and development of power purchase
agreements.” That includes determining the terms and conditions of those deals — including protections for their environmental and
cultural heritage as well as “negotiating fair compensation for the use of their lands and resources.” (BN)
Utilities/Power Markets: No stories
Oil/NatGas:
- Eni to Buy Back a Further $2.3 Billion of Shares This Year -- Eni SpA will buy back as much as €2.2 billion ($2.3 billion) of its
shares this year, while focusing increasingly on the exploration and production of natural gas. The announcement from the Italian
energy giant on Thursday underscores how the push to boost Europe’s energy security since Russia’s invasion of Ukraine is proving
lucrative for investors in oil and gas companies. Eni also raised its dividend for 2023 by 7% to €0.94 per share. “Financial
robustness enables us today to create increasing value for our shareholders and to enhance the remuneration policy,” Chief
Executive Officer Claudio Descalzi said in a statement.
Eni intends to distribute between 25%-30% of annual cash flow from operations through a combination of dividends and share
buyback. The new remuneration policy implies a return to shareholders over the plan period of around 40% of the company’s current
market capitalization, giving shareholders a total yield of 11% in 2023. The company decided to change its remuneration policy,
linking to cash flow instead of the oil price. That’s because Eni is becoming a broader energy company, according to Descalzi.
“Business units are expanding besides oil and gas and are giving positive results,” he said during a press conference in Rome, citing
a biorefinery and Eni’s green-energy unit, Plenitude. (BN)
Commodities:
- Peabody Energy Faces Shareholder Scrutiny Over Mine Fire -- Peabody Energy Corp. was sued Wednesday in the Delaware
Chancery Court for making allegedly misleading statements about an Australian coal mine fire. P. David Pollard, a Peabody
shareholder, asked to inspect books and records of Peabody’s board meetings. The shareholder accused the company of
misleading investors and failing to disclose material adverse facts about the mine. Peabody didn’t immediately announce the 2018
fire at Peabody’s North Goonyella mine to investors, the lawsuit said, and the company didn’t mention any fire or smoke at the mine
in a securities filing issued a few days later.
The filing did disclose elevated gas levels at the mine. Shares fell 13.5% when the company issued a press release about the fire a
few days after the securities filing was released, the lawsuit said. Peabody then said it had a plan to reopen the mine. Pollard
argued, however, that the company didn’t disclose that there would likely be delays, and that the low-cost plan had “unreasonable
environmental and safety risks.” The company’s stock fell repeatedly in 2019 after further delays were announced, the lawsuit said.
(BN)
- Lithium Producers Defy Mining Sector Slump With Surging Profits -- Lithium producers in Australia saw profits surge on the
back of high prices last year, avoiding a slump in earnings by other metal miners. Pilbara Minerals Ltd., one of the nation’s top
producers, and Allkem Ltd. both said net income jumped more than 10-fold in the second half of 2022 from a year earlier. Price
gains in the period helped them to offset the inflationary pressures and tight labor market that saw mining giants Rio Tinto Group
and BHP Group Ltd. report sharp drops in profit earlier this week.
Most commodities fell in the second half of 2022 from the highs in the immediate aftermath of Russia’s invasion of Ukraine while
lithium’s gains held through most of the year, boosted by surging demand from carmakers rushing to meet ambitious electric vehicle
targets. But, lithium carbonate prices in China have tumbled 24% this year, with Goldman Sachs Group Inc. this week warning that
the slump has further to run. Pilbara Minerals said net profit rose to A$1.24 billion ($844 million) in the six months through December
as production rose 86%. The main driver was a fourfold increase in the price it received for its spodumene concentrate, a lithium
ore, the company said. Allkem Ltd., which produces lithium in Australia and Argentina, said net profit surged on the back of “strong
lithium carbonate and spodumene concentrate pricing.” Mineral Resources Ltd., which mines lithium and iron ore, also posted
record earnings from its lithium business. (BN)
- [Yday] LME Nickel to Trade in Asian Hours for First Time Since Crisis -- The London Metal Exchange will reopen nickel trading
during Asian trading hours from March 20, in what is likely to provide an important liquidity boost for the market that has struggled to
recover after last year’s crisis. The LME halted trading for a week and canceled billions of dollars of transactions in the nickel market
in March 2022 in an effort to rein a runaway short squeeze centered on top producer Tsingshan Holding Group Co. Trading has
remained suspended during Asian hours, which was when prices spiked most sharply during the squeeze, and currently opens at 8
a.m. London time.
The nickel contract has been dogged by low levels of liquidity since the squeeze, contributing to erratic trading conditions that have
cast doubts about its viability as the world’s benchmark pricing mechanism for the metal used in batteries and stainless steel. The
crisis — which brought several members to the brink of default — has also sparked regulatory investigations and lawsuits, with
some major investors vowing never to trade on the bourse again. The LME has been seeking to restart trading during Asian hours
for several months, and it said on Thursday that it hopes the resumption will “further contribute to liquidity rebuilding in the nickel
Netherlands and AEX
- Galapagos FY Revenue Misses Estimates -- Galapagos reported revenue for the full year that missed the average analyst
estimate. 2022 YEAR RESULTS * Revenue EU505.3 million, estimate EU539.7 million (Bloomberg Consensus) * Operating loss
EU267.5 million, estimate loss EU192.7 million * Net loss EU218.0 million, estimate loss EU202.3 million (2 estimates)
COMMENTARY AND CONTEXT * "We anticipate our full year 2023 operating cash burn to decline to a range of €380 to €420
million." * "For 2023, we anticipate net Jyseleca sales in a range between €140 and €160 million." * "For the full year 2023, we
anticipate further reduction of our cash burn and anticipate landing between €380 and €420 million (compared to €514 million for the
full year 2022), including the acceleration in oncology.
Financial guidance For the full year 2023, we anticipate further reduction of our cash burn and anticipate landing between €380 and
€420 million (compared to €514 million for the full year 2022), including the acceleration in oncology. Based on the topline results
from the Phase 3 DIVERSITY study of filgotinib in Crohns disease, Galapagos decided not to submit a Marketing Authorization
Application in Europe in this indication. On the other hand, following the positive opinion from the Committee for Medicinal
Products for Human Use on the Type II variation application based on the safety data on semen parameters from the MANTA and
MANTA-RAy studies, the European label for RA and UC has been updated, potentially broadening access for European patients
who may benefit from this treatment.; (BN)
- IMCD FY Revenue Beats Estimates -- IMCD reported revenue for the full year that beat the average analyst estimate. 2022 YEAR
RESULTS * Revenue EU4.60 billion, +34% y/y, estimate EU4.53 billion (Bloomberg Consensus) * Gross income EU1.15 billion,
+37% y/y * Operating Ebita EU554.5 million, +48% y/y * Dividend per share EU2.37 vs. EU1.62 y/y, estimate EU2.11
COMMENTARY AND CONTEXT *IMCD sees interesting opportunities to further increase its global footprint and expand its
product portfolio both organically and by acquisitions." (BN)
Stock Markets and Other Corporate News
Stock markets:
- Asian markets led lower by China, but relief over Ueda ruling out BOJ tightening -- Asian share markets were dragged lower
by the slide in Chinese stocks on Friday, though investors took heart from the incoming head of Japan's central bank ruling out an
early end to super-easy monetary policy, nudging bond yields lower globally. European share markets are set to open higher, with
the pan region Euro Stoxx 50 futures up 0.4%. The P 500 futures , however, was flat, while Nasdaq futures were off 0.2%. The
Nikkei share index was up 1.1%. Meantime, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%, heading for a
hefty weekly drop of 2.0%. In particular, Chinese blue chips tumbled 1.0% and Hong Kong's Hang Seng Index dropped 1.3% while
Australia's resources-rich shares edged up 0.3%. (R)
- U.S. Stocks Rebound After Dayslong 500 Selloff -- U.S. stocks rebounded from early losses Thursday, snapping a dayslong
selloff in the 500 that was driven by concerns about the trajectory of interest rates. The S&P 500 climbed 21.27 points, or 0.5%,
to 4012.32, breaking its longest losing streak this year. The Dow Jones Industrial Average rose 108.82 points, or 0.3%, to 33153.91
after initial declines. The Nasdaq Composite gained 83.33 points, or 0.7%, to 11590.40. Nvidia, one of the biggest
constituents, surged $29.10, or 14%, to $236.64. The semiconductor company said late Wednesday that it is expecting an AI-driven
boom and a recovery in its videogame business. (DJ)
- European stocks may advance early Friday, as investor continue to parse economic data and weigh the outlook for future rate
increases by the Federal Reserve. (BN)
- Nio Plans to Build New Battery Plant in China: Reuters -- Nio plans to build its first battery plant in China to produce big
cylindrical cells similar to those used by Tesla, Reuters reports, citing two unidentified people familiar with the matter. * Plant will
have annual capacity to produce 40 gigawatt hours of batteries that can power ~400,000 units of long-range EVs * Will be located
next to Nio’s main manufacturing hub in Hefei city * Nio didn’t immediately respond to a request for comment: Reuters (BN)
Other corporate news:
- Adler Says Bondholder Termination of €193m Notes Is Ineffective -- Adler Group SA bondholders terminated €192.8 million
($204 million) of notes, the real estate firm said Thursday in a statement. * The notes are held by two members of a minority group
and form part of a €800 million bond due 2029, Adler said * “The termination is ineffective and serves primarily to disrupt the
stabilization process that is supported by a large majority of noteholders,” Adler said * AGPS BondCo and Adler “reserve all rights in
connection with the invalid termination, in particular any claims for injunctive relief and damages,” according to the statement (BN)
- World’s Richest Woman Hires McKinsey Partner at Investment Firm -- Francoise Bettencourt Meyers, the world’s richest
woman, is bolstering her family’s investment company with a hire from McKinsey & Co. amid a surge in the value of L’Oreal SA, the
cosmetics giant founded by her grandfather. The heiress’s Tethys Invest SAS has named Cyrielle Villepelet as managing director to
work alongside Chief Executive Officer Alexandre Benais, according to a statement Thursday. Villepelet was most recently a partner
in the Paris office of consultant McKinsey, working in luxury, fashion and the consumer goods industries. Tethys invests in areas
that don’t compete with L’Oreal.
Last year it bought into decade-old retailer Sezane alongside private equity firm General Atlantic, and in 2017 invested in French
private hospital operator Elsan. The firm is partly funded by L’Oreal dividends. Bettencourt Meyers, 69, is the biggest single
shareholder in L’Oreal with a nearly 35% stake. She’s one of a trio of French luxury titans whose companies have benefited from
demand for high-end makeup, clothes and jewelery. The ultra-rich group also includes Bernard Arnault, the world’s richest person
and founder of fashion empire LVMH, and rival Francois Pinault, who started Kering SA, owner of brands like Gucci and Balenciaga.
Arnault is worth $188.5 billion, according to the Bloomberg Billionaires Index, while Bettencourt Meyers is No. 11 in the ranking with
an estimated $81.5 billion and Pinault comes in at No. 30 with $41.3 billion. With a reclusive reputation, Bettencourt Meyers is on the
board of L’Oreal along with her two sons, Jean-Victor Meyers and Nicolas Meyers. She has written two books — a five-volume study
of the Bible and a genealogy of the Greek gods — and is known for playing piano for hours every day. She came into her fortune
following the death in 2017 of her mother, Liliane Bettencourt. (BN)
- Fnac Darty FY Current Operating Income Beats Estimates -- Fnac Darty reported current operating income for the full year that
beat the average analyst estimate. 2022 YEAR RESULTS * Current operating income EU230.6 million, -15% y/y, estimate EU222
million (Bloomberg Consensus) * Ebitda EU580 million, -6.6% y/y, estimate EU568.3 million * Net loss EU32 million vs. profit EU160
million y/y * Dividend per share EU1.40 vs. EU2 y/y * Revenue EU7.95 billion, -1.2% y/y, estimate EU7.94 billion * Like-for-like sales
-1.9% YEAR FORECAST * Sees current operating income about EU200 million, estimate EU220.7 million.
COMMENTARY AND CONTEXT * Expects to post slight lower sales in 1H23, coupled with a sharp rise in costs, particularly for
energy, but should benefit from less unfavorable market conditions in 2H * Targets cumulative free cash-flow from operations of
~€500 million over the 2021–2024 period, and a free cash-flow from operations of at least €240 million on an annual basis from
2025 * Sees 2023 energy costs rising sharply with energy prices higher than last year and taking into account the group’s different
sources of supply * Sees increase in energy-related costs estimated at between €30 million and €50 million in 2023 * The Group
therefore expects current operating income for 2023 to be around €200 million, in line with or higher than 2022 excluding the impact
of the expected increase in energy costs. (BN)
- BASF Sees 2023 Adjusted Ebit EU4.8B to EU5.4B, Est. EU5.08B -- BASF forecast adjusted Ebit for 2023 of EU4.8 billion to
EU5.4 billion. YEAR FORECAST * Sees adjusted Ebit EU4.8 billion to EU5.4 billion, estimate EU5.08 billion (Bloomberg
Consensus) * Sees sales EU84 billion to EU87 billion, estimate EU81.79 billion FOURTH QUARTER RESULTS * Adjusted Ebit
EU373 million, -70% y/y, estimate EU420.2 million ** Chemicals adjusted Ebit loss EU79 million, estimate profit EU79.4 million **
Materials adjusted Ebit EU144 million, estimate EU163.3 million ** Industrial Solutions adjusted Ebit EU120 million, estimate
EU168.9 million ** Surface Technologies adjusted Ebit EU170 million, estimate EU161.8 million ** Nutrition & Care adjusted Ebit
loss EU19 million, estimate profit EU122.3 million ** Agricultural Solutions adjusted Ebit EU122 million, estimate EU56 million *
Sales EU19.32 billion, -2.3% y/y, estimate EU20.1 billion.
Chemicals revenue EU2.75 billion, -26% y/y, estimate EU3.33 billion ** Materials sales EU4.05 billion, -0.2% y/y, estimate EU4.17
billion ** Industrial Solutions sales EU2.17 billion, -1.6% y/y, estimate EU2.37 billion ** Surface Technologies sales EU5.05 billion, -
2.7% y/y, estimate EU5.11 billion ** Nutrition & Care sales EU1.90 billion, +9.9% y/y, estimate EU1.98 billion ** Agricultural
Solutions sales EU2.28 billion, +30% y/y, estimate EU2.22 billion * Adjusted Ebitda EU1.40 billion, estimate EU1.53 billion *
Adjusted EPS EU0.090 vs. EU1.17 y/y, estimate EU0.30 * Net debt at period end EU16.27 billion, estimate EU17.26 billion * Free
cash flow EU2.60 billion, +41% y/y * Net loss EU4.85 billion, estimate profit EU784.4 million *expenses EU617 million,
estimate EU560.9 million
2022 YEAR RESULTS * Dividend per share EU3.40 vs. EU3.40 y/y, estimate EU3.46 COMMENTARY AND CONTEXT *
Terminates Share Buyback Program Ahead of Schedule * Bought Back About 25.8M Shares Through Feb. 17, 2023 * Says
Purchase Price for Shares Totaled About €1.4B * In line with the company’s priorities for the use of cash and in view of the profound
changes in the global economy in the course of 2022, the Board of Executive Directors of BASF SE has decided to terminate the
share buyback program ahead of schedule. On January 11, 2022, BASF SE disclosed pursuant to art. 5 para. 1 lit. a of the
Regulation EU no. 596/2014 and art. 2 para. 1 of the Delegated Regulation EU no. 2016/1052 the start of the share buyback on
January 11, 2022 * The share buyback program was intended to reach a volume of up to €3 billion and be concluded by December
31, 2023, at the latest.
The volume of shares which have been bought back within the framework of the share buyback program in the period from January
11, 2022, until and including February 17, 2023, amounts to a number of 25,804,062 shares; this corresponds to 2.8 percent of the
share capital on announcement of the program. The purchase price for these own shares totaled around €1.4 billion. The purchase
of the shares was carried out by the banks that had been commissioned by BASF SE via the electronic trading platform of the
Frankfurt Stock Exchange.
Cost savings program is expected to generate annual cost savings of more than €500 million in non-production areas, that is in
service, operating and research & development (R&D) divisions as well as the corporate center. Roughly half of the cost savings are
expected to be realized at the Ludwigshafen site * Globally, the measures are expected to have a net effect on around 2,600
positions * Adaptations to the Verbund structures in Ludwigshafen are expected to lower fixed costs by over €200 million annually by
the end of 2026 * BASF to close caprolactam plant, one of the two ammonia plants and associated fertilizer facilities in
Ludwigshafen (BN)
- Holcim FY Dividend per Share Beats Estimates -- Holcim reported dividend per share for the full year that beat the average
analyst estimate. 2022 YEAR RESULTS * Dividend per share CHF2.50, estimate CHF2.27 (Bloomberg Consensus) * Recurring
EBIT CHF4.75 billion, +3% y/y * Sales CHF29.19 billion, +8.8% y/y, estimate CHF29.35 billion ** Asia Pacific revenue CHF4.84
billion, -19% y/y, estimate CHF5.12 billion ** Europe sales CHF8.39 billion, +4.5% y/y, estimate CHF8.4 billion ** North America
revenue CHF10.00 billion, +37% y/y, estimate CHF9.74 billion ** Latin America revenue CHF2.93 billion, +12% y/y, estimate
CHF2.94 billion ** Middle East and Africa revenue CHF2.40 billion, -1.2% y/y, estimate CHF2.47 billion * Net income CHF3.31
billion, +44% y/y * Free cash flow CHF3.54 billion, +8.6% y/y.
FOURTH QUARTER RESULTS * Sales CHF6.46 billion, -7.6% y/y, estimate CHF6.64 billion * Recurring EBIT CHF1.03 billion, -
6.2% y/y, estimate CHF962 million * Recurring Ebit margin +15.9% vs. +15.7% y/y COMMENTARY AND CONTEXT * Holcim’s
Board Intends to Propose Jan Jenisch as New Chairman * Expects Net Sales Growth of 3%-5% Like-for-Like * Expects Over-
Proportional Growth in Recurring Ebit (Lfl) * Expects Free Cash Flow After Leases of Around Chf3 Bln (BN)
- Saint-Gobain FY Operating Income Beats Estimates -- Saint-Gobain reported operating income for the full year that beat the
average analyst estimate. 2022 YEAR RESULTS * Operating income EU5.34 billion, +18% y/y, estimate EU5.11 billion (Bloomberg
Consensus) * Operating margin 10.4% * Ebitda EU7.12 billion, +15% y/y, estimate EU6.94 billion * Sales EU51.20 billion, +16% y/y,
estimate EU51.14 billion * Like-for-like sales +13.3%, estimate +13.7% * Recurring net income EU3.34 billion, +18% y/y, estimate
EU3.25 billion * Recurring EPS EU6.48 vs. EU5.35 y/y, estimate EU6.20. Net income EU3.00 billion, +19% y/y, estimate EU3.08
billion * Dividend per share EU2.00 * Free cash flow EU3.79 billion, +31% y/y * Net debt EU8.23 billion, +13% y/y, estimate EU8.2
billion FOURTH QUARTER RESULTS * Sales EU12.80 billion, +14% y/y, estimate EU12.64 billion YEAR FORECAST * Sees
operating margin 9% to 11% COMMENTARY AND CONTEXT * Expects a moderate slowdown in its markets in 2023, with
contrastingtrends: a decline in new construction in certain regions but good resilience overall in renovation * To allocate at least
€400 million for share buybacks in 2023 (BN)
- Valeo FY Ebitda Beats Estimates -- Valeo reported Ebitda for the full year that beat the average analyst estimate. 2022 YEAR
RESULTS * Ebitda EU2.40 billion, +4% y/y, estimate EU2.32 billion (Bloomberg Consensus) * Ebitda margin 12% vs. 13.4% y/y,
estimate 12% * Net income EU230 million, +31% y/y, estimate EU210.1 million * Free cash flow EU388 million, +33% y/y * Dividend
per share EU0.38, estimate EU0.40 FOURTH QUARTER RESULTS * Revenue EU5.36 billion, estimate EU5.25 billion ** Comfort &
driving assistance sales EU1.16 billion, estimate EU1.04 billion ** Powertrain systems sales EU1.56 billion, estimate EU1.31 billion
** Thermal systems sales EU1.18 billion, estimate EU1.14 billion ** Visibility systems sales EU1.40 billion, estimate EU1.44 billion *
Organic revenue +15% YEAR FORECAST * Sees revenue EU22.0 billion to EU23.0 billion, estimate EU21.95 billion * Sees free
cash flow above EU320 million * Sees operating margin 3.2% to 4% * Sees Ebitda margin 11.5% to 12.3%, estimate 12.2%
COMMENTARY AND CONTEXT * Expects strong growth in 2023, with an improved operating margin in line with the Move
Upstrategic plan (BN)
Central Banks, Macro and Geopolitics
ECB: No stories
Eurozone (member states): No stories
UK: No stories
Switzerland: No stories
Fed/North America:
- Summers Sees Signals of a Sharp Drop-Off in Economic Activity -- Former Treasury Secretary Lawrence Summers said
worrying signals of a potential sharp drop-off in activity combined with strength in other indicators point toward an uncertain
economic outlook. “We’ve got an extremely difficult economy to read,” Summers said on Bloomberg Television’s “Wall Street Week”
with David Westin. “People may be reading a bit too much into the moment in terms of economic strength — relative to the way
things could look very differently in a quarter or two.” Recent indicators have shown a strong start for the economy in 2023, with job
growth, retail sales and service-sector activity all accelerating in January.
The monthly pace of consumer-price gains also picked up last month. Coincident indicators “look very strong,” said Summers, a
Harvard University professor and paid contributor to Bloomberg Television. But “there are a variety of leading indicators that are
more troubling,” he said. Among the signs of concern: * Inventories “look to be building up relative to sales.” * Companies are
“reporting concerns about their order books.” * The business sector appears to have a high payroll head-count relative to “the level
of output they’re producing.” * “Consumer savings are being depleted, with a low savings rate.” “There is stuff when you look down
the road a bit that has to be substantially concerning about the Wile E. Coyote kind of moment,” Summers said, reiterating his
reference to the cartoon character that falls off a cliff.
Federal Reserve policymakers will need to “stay nimble and flexible” given the uncertainty, Summers said. The central bank should
“resist the pressure to be giving strong signals about what it’s going to do next,” he said. The former Treasury chief also reiterated
the lack of past examples in which the US managed to avoid a recession when the unemployment rate dropped below 4% and
inflation went above 4%. “That’s a powerful historical truth and I think it’s one that’s relevant to our current situation,” Summers said.
The latest unemployment-rate reading was 3.4%, while the consumer price index climbed 6.4% in January on a year-on-year basis.
(BN)
- Biden to Nominate Fed Vice Chair in ‘Near Future’: White House -- President Biden will nominate a Vice Chair for the Federal
Reserve in the “near future,” says White House Press Secretary Karine Jean-Pierre. (BN)
Japan/China:
- Bank of Japan Governor Nominee Predicts Inflation Rate Will Fall Soon -- Japan core inflation rate hit a four-decade high of
4.2% in January, but the nominee to lead the Bank of Japan said he expects it to fall and doesn't think an interest-rate increase is
needed. Core consumer prices -- which Japan defines as all prices excluding fresh food -- rose at the fastest pace since September
1981 but came in slightly below the consensus forecast. It was the 10th consecutive month that inflation exceeded the Bank of
Japan 2% target. On another measure of inflation that excludes fresh food and energy prices, the inflation rate was 3.2% in
January. Kazuo Ueda, who was nominated by the government this month as the next governor of the Bank of Japan, said Friday he
didn't think the relatively high inflation rate would last, and he said the central bank should continue its loose monetary policy.
This should be the peak for now, Mr. Ueda told a parliamentary committee. He said he expects inflation to fall below 2% around
the middle of the next fiscal year, which begins in April. Mr. Ueda said he feels the effects of inflation himself because the price of a
bento lunch box that he often buys at a convenience store rose to Yen500 from Yen450, equivalent to rising to $3.71 from $3.34.
The BOJ monetary policy currently includes a negative short-term interest rate and a cap of 0.5% on the yield of 10-year
government bonds, which was raised from 0.25% in December. The low rates are aimed at encouraging borrowing and investment
by companies. Giving his first extended remarks since his nomination, Mr. Ueda said Japan's price rises were caused by external
factors such as higher energy prices.
He observed that the pace of increase of import prices has started to slow. Mr. Ueda, a former economics professor at the University
of Tokyo who served on the Bank of Japan's policy board from 1998 to 2005, was nominated for a five-year term to succeed Gov.
Haruhiko Kuroda, whose term expires in April. In his parliamentary testimony, Mr. Ueda said Japan still needed more time to reach
sustainable 2% inflation. He said it has made progress under Mr. Kuroda. I would like to make these five years a time to carry out
the final completion of the mission of achieving stable prices, which has been a project of many years both for the Bank of Japan
and for myself,Mr. Ueda said.
While Mr. Ueda said it is still too early to discuss an exit from monetary easing, he gave some hints as to what he would do if the
BOJ were to change its policy -- which many analysts expect this year. If the achievement of 2% inflation comes in sight, the bank
can take a step toward normalizing its monetary policy,=Mr. Ueda said. Options would include raising the interest paid on some
reserves that commercial banks hold at the BOJ and targeting the yield of government bonds with a shorter term than the current 10
years, he said.
Mr. Kuroda took office at a time of high expectations for a central banker's power to lift Japan's long-sluggish economy, but those
expectations have faded. Mr. Ueda said he isn't a magician who can invent special policies, but a technician with the mission of
reading price trends and adjusting interest rates accordingly. My biggest mission would be to make such a judgment with no
mistakes, depending on economic developments, he said. (DJ)
- China Set to Overhaul Financial System Giving Xi More Control -- Chinese President Xi Jinping is set to bring decision-making
of the financial system further under his control with the likely revival of a powerful committee to coordinate financial policy and the
possible appointment of a key ally in a top position at the central bank. Authorities are considering reviving the long-disbanded
Central Financial Work Commission to allow the ruling Communist Party to assert more control over financial policy, according to
people familiar with the matter. Ding Xuexiang, Xi’s chief of staff, is set to become the head of the entity, one of the people said,
asking not to be identified discussing a private matter.
He Lifeng — who is expected to replace Liu He as China’s vice premier responsible for economic policy in a government reshuffle
next month — is also being considered for the role of party secretary at the People’s Bank of China, the Wall Street Journal
reported. The appointment and potential overhaul of China’s financial regulatory regime would put decision-making over key
economic policies in fewer hands and centralize it under Xi, while also highlighting the strategic importance of China’s $60 trillion
financial sector. A vice premier holding a senior position at the PBOC would also elevate its role in financial regulation. Xi has
consolidated his power since taking control in 2012, stacking the party’s leadership with loyalists. He secured a precedent-breaking
third term in power at the party’s congress in October last year. (BN)
Asia Pacific excluding Japan & China:
- U.S. looks to expand Taiwan military training -- The United States is set to expand the number of troops helping train Taiwanese
forces, two U.S. officials said on Thursday, at a time of heightened tensions between Washington and Beijing. Reuters reported in
2021 that a small number of U.S. special operations forces have been rotating into Taiwan on a temporary basis to train their forces.
The officials, speaking on condition of anonymity, said that the Pentagon was expected to increase that number in the coming
months. One of the officials said the exact number of increased troops was unclear, but the move was unrelated to recent tensions
over the shootdown of a Chinese spy balloon which flew across the United States.
The balloon caused a political uproar in Washington and prompted Secretary of State Antony Blinken to cancel a trip to Beijing that
both countries had hoped would steady their rocky relations. We don't have a comment on specific operations, engagements, or
training, but I would highlight that our support for, and defense relationship with, Taiwan remains aligned against the current threat
posed by the People Republic of China a Pentagon spokesman said. Speaking to reporters in Taipei on Friday, Taiwan Defense
Minister Chiu Kuo-cheng said he didn't know the source of the information about expanded training. He added Taiwan and the
United States had a lot of military interaction, and declined further comment. (R)
- North Korea test-fires cruise missiles to demonstrate nuclear counterattack -- North Korea test-fired four strategic cruise
missiles during a drill designed to demonstrate its ability to conduct a nuclear counterattack against hostile forces, its state media
said on Friday. The exercise on Thursday involved an apparently operational strategic cruise missile unit of the Korean People's
Army, which fired the four "Hwasal-2" missiles in the area of Kim Chaek City, North Hamgyong Province, towards the sea off the
east coast of the Korean Peninsula, state news agency KCNA said. Other units conducted firepower training at hardened sites
without live firing, it added.
The four strategic cruise missiles hit a preset target after travelling the "2,000km-long (1,243 mile) elliptical and eight-shaped flight
orbits for 10,208 seconds to 10,224 seconds the report said. The drill demonstrated "the war posture of the DPRK nuclear combat
force bolstering up in every way its deadly nuclear counterattack capability against the hostile forces, KCNA said, using the initials
of North Korea's official name, the Democratic People's Republic of Korea. The missile launches were not announced by South
Korea or Japan, which are often the first to detect and publicly report such launches. South Korea's defence ministry said the launch
was monitored but there were between what it and the United States detected and the North's statement, without
elaborating.
The launch came as U.S. and South Korean officials took part in a tabletop, or simulated, exercise that focused on the possibility of
North Korea using a nuclear weapon. In a separate dispatch, Pyongyang's foreign ministry criticised Washington and its allies for
calling a meeting of the UN Security Council over its spate of recent missile tests. North Korea has accused the United Nations has
been on its military activities while keeping mum about U.S. and South Korean joint military exercises. Kwon Jog Gun, the
ministry's director general for U.S. affairs, reiterated North Korea would consider strong countermeasures if the United Nations
continues to serve as a U.S. tool to pressure Pyongyang.
If the Security Council becomes a venue that judges justice for injustice and legal for illegal, under the influence of the United
States and its followers, it would only cause negative results that further exacerbate military tension, Kwon said in a statement
carried by KCNA. North Korea has forged ahead in developing and mass producing new missiles, despite sanctions imposed by
United Nations Security Council resolutions that ban the nuclear-armed country's missile activities. Many launches, including an
intercontinental ballistic missile (ICBM) on Saturday, have been reported by state media as drills designed to improve the
capabilities of the troops operating the weapons. North Korea could test-fire ICBMs on a lower, longer trajectory and conduct its
seventh nuclear test this year to perfect its weapons capabilities, South Korean lawmakers said on Wednesday, citing intelligence
officials. (R)
Nordics: No stories
Eastern Europe:
- Yellen Says Ending War Most Important Thing for Global Economy -- US Treasury Secretary Janet Yellen said Russia ending
the war was “the most important thing” for the global economy as she accused officials from Moscow attending a Group of 20
meeting of being complicit in atrocities taking place in Ukraine. Speaking in a closed-door meeting Friday in Bengaluru, India, where
G-20 finance ministers and central bank governors are gathered, Yellen reiterated calls to her counterparts to redouble efforts to
restrict Russia’s capacity to wage war. “This war has its most devastating effects in Ukraine, but Putin’s weaponization of food and
energy has harmed developing countries and created global economic headwinds that have hurt every nation represented in this
room,” Yellen said, according to remarks prepared for delivery.
Her comments on the one-year anniversary of Russia’s invasion of Ukraine come as she doubled down on calls to increase financial
support to the war-torn nation during her discussions in Bengaluru, formerly known as Bangalore. The US has provided over $46
billion in security, economic and humanitarian assistance to Ukraine and expects to provide around $10 billion in additional
economic support over the coming months. Financial aid, used to support critical public services and help keep the government
running, is one of several ways in which the US and its allies are helping Ukraine. Yellen has also called for the IMF to move swiftly
toward a fully-financed program for Ukraine. On Friday she warned Russian officials attending the G-20 meetings that they are
“complicit in Putin’s atrocities.” “They bear responsibility for the lives and livelihoods being taken in Ukraine and the harm caused
globally,” she said. (BN)
- China Calls for Cease-Fire as War in Ukraine Enters Second Year -- China called for a cease-fire between Russia and Ukraine
in a 12-point proposal for ending the war that appears to have little chance of winning support from those backing the government in
Kyiv. The position paper issued by the Foreign Ministry in Beijing on Friday called for ending hostilities, protecting nuclear plants,
resuming peace talks and eliminating unilateral sanctions — a provision the US has consistently rejected. “All parties should support
Russia and Ukraine in working in the same direction and resuming direct dialogue as quickly as possible, so as to gradually
deescalate the situation and ultimately reach a comprehensive cease-fire,” the ministry said.
The blueprint, which listed many of China’s long-held foreign-policy positions in dealing with the US on issues like Taiwan, avoided
the question of land that Russia has seized in eastern Ukraine. President Volodymyr Zelenskiy’s government in Kyiv has said it
would fight until Russia leaves its borders, and Moscow has shown no sign of stopping its attacks. Ukraine and other countries are
also unlikely to view China as an impartial mediator to end a war that has killed tens of thousands of people and driven millions from
their homes. On Thursday, China abstained from a United Nations resolution calling for an end to the war.
The measure passed 141-7, with 32 abstentions. China’s plans to release a peace proposal were met with skepticism by some
European officials beforehand. German Foreign Minister Annalena Baerbock said a Russian troop withdrawal must be a condition of
any peace deal. “A just peace cannot mean that the aggressor gets rewarded,” she said at a recent security forum in Munich. (BN)
- Russia Launches Rescue Ship to Space Station Astronaut Trio -- An uncrewed Russian spacecraft launched from Kazakhstan
early Friday local time, serving as a lifeboat for three astronauts currently on board the International Space Station that will allow
them to return to Earth safely after a delayed homecoming. The trio, NASA astronaut Frank Rubio and Russian cosmonauts Sergey
Prokopyev and Dmitri Petelin, flew to the station in September and were slated to come back this spring before their return ship was
damaged. The incoming Russian Soyuz craft will bring them back to Earth possibly in September of this year.
This new craft, which launched at 6:24 a.m. local time from Baikonur Cosmodrome in Kazakhstan, will effectively replace another
Soyuz currently docked to the space station that suffered a coolant leak in December. NASA and Russia’s state space corporation
Roscosmos decided to extend the crew’s stay after the leak and perform the Soyuz swap. NASA and Roscosmos both say the
damaged Soyuz has performed well since the incident; however, the two were concerned about the possibility of the capsule
overheating if the astronauts returned in it. The entities plan to bring the damaged Soyuz back to Earth empty in March.
The coolant leak was discovered as Prokopyev and Petelin were preparing to conduct a spacewalk on the outside of the ISS. Before
they left the station, flight controllers noticed that the Soyuz capsule docked on the ISS was spewing liquid coolant particles. The
spacewalk was ultimately called off as NASA and Roscosmos sought to better understand the situation. (BN)
Rest of the world:
- RBNZ’s Silk Says There Are Upside Risks to Inflation Outlook -- Reserve Bank of New Zealand Assistant Governor Karen Silk
said there are still upside risks to the inflation outlook and the forecast peak in the bank’s cash rate is “not set in stone.” “This is still
an economy that has excess demand, a tight labor market, and as a consequence both headline inflation and core inflation at levels
that are well outside the (target) band,” Silk said in an interview with Bloomberg News Friday in Wellington, adding that short-term
inflation expectations are also too high. “So there’s still more work to do here.” The RBNZ this week increased the Official Cash Rate
by 50 basis points to 4.75% and projected it will need to rise to a peak of 5.5% later this year to bring inflation back within its 1-3%
target band over the medium term.
The hike was a step down in the pace of tightening after a 75-point move in November, but Silk wouldn’t be drawn on whether a
further slowing could come at the next policy meeting in April. “All levels are on the table for discussion at every meeting,” she said.
“I’m not going to turn round and comment on whether we would be looking at 25, 50 or 75, they will all be on the table for discussion
and they will depend on the information at hand.” A pause in tightening is “certainty not something that we’re contemplating at this
point in time,” she said. (BN)
