June 20, 2023
- Ontario’s pension fund for government workers is investing $400 million in Northvolt AB, a Swedish sustainable battery company that’s exploring setting up shop in Canada. The company, which already produces electric-vehicle batteries in Sweden, will use the money from Investment Management Corp. of Ontario to help fund its expansion in Europe, the fund said. The investment is consistent with IMCO’s view of global trends it believes will persist, Chief Investment Officer Rossitsa Stoyanova said in an interview. “Energy transition is happening and we want to capitalize on it,” she said. Northvolt is currently in talks with the Canadian and Quebec governments on a potential multibillion-dollar plant near Montreal that could include a cathode factory, a battery cell assembly line and a recycling facility, according to people familiar with the matter. If that deal happens, it may follow a similar structure to a proposed Volkswagen AG battery plant in Ontario, which has been promised billions in government financial help.
- Brookfield Infrastructure and Ontario Teachers’ Pension Plan agreed to buy Compass Datacenters from RedBird Capital Partners and the Azrieli Group. Financial terms of the deal weren’t disclosed. Compass Datacenters Founder and CEO Chris Crosby and the current management team will continue to lead the company post transaction closing
- European stocks slipped for a second day as worries about the Chinese economy curbed risk appetite, while a profit warning from specialty chemicals company Lanxess AG pulled the entire sector lower. The Stoxx 600 Index was down 0.4% as of 8:07 a.m. in London after a 1% drop on Monday. Chemicals was by far the worst-performing subindex as Lanxess fell 11%, while autos and technology firms also underperformed. Stocks have gained in June, albeit in muted trading, as investors have been betting on stimulus measures from China while continuing to monitor on the monetary policy outlook after the Federal Reserve paused its interest-rate hikes.
- Stocks ticked lower on Tuesday as the second-quarter rally met resistance from economic headwinds and signs that positioning is overbought. Investors caught between fear of missing out and concerns markets have run too far, too fast are contending with overblown valuations and economic headwinds. Bullish positioning in US equity futures grew last week, taking it to the most extended levels for the S&P 500 and Nasdaq 100 in data going back to 2010, according to Citigroup strategists. The path of US monetary policy is another wild card. Federal Reserve Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Policymakers at the Fed kept interest rates unchanged at their latest meeting but warned of more tightening ahead. Investors also await the outcome of policy meetings in Turkey, the UK and Switzerland.
- Equities across Asia Pacific dropped for a second straight day, after a smaller-than-expected reduction in China’s bank lending rate sparked fresh worries about the largest economy in the region. The MSCI Asia Pacific Index slipped as much as 0.9%, with measures in Hong Kong leading declines in the region after Chinese banks decided for a relatively modest reduction to the mortgage reference rate, disappointing investors that were expecting more monetary stimulus. The mainland’s CSI 300 fell by a lower magnitude. Benchmarks in Japan, South Korea and Taiwan also extended recent declines amid uncertainty about China’s growth rebound, although Australian shares held up. All sectors barring utilities were in the red, led by consumer discretionary and health care stocks.
- Oil switched between narrow gains and losses in London, fluctuating with wider markets after China began a gradual roll-out of measures to aid its economy. Brent futures added 0.4% to trade near $76, after earlier edging lower. While China reduced lending rates on Tuesday, its gradual roll-out of broader measures for its ailing economy is fueling a debate among traders over how far authorities will go to aid growth. The nation is the top crude importer. Oil has struggled for direction in recent weeks. A flood of supply from Russia and Iran has kept availability of crude elevated. Last month China imported a record volume of oil from Russia and the cargo-transfer hub of Malaysia.
- Gold steadied as prospects for more tightening from major central banks and ebbing haven demand kept prices contained. Bullion has mainly traded in a fairly narrow range between $1,940 and $1,980 an ounce this month, after dropping in May from a near record high. With the US debt-ceiling standoff resolved, traders are waiting for new catalysts to drive the precious metal. The Federal Reserve paused tightening last week, but indicated more hikes are likely and that interest rates would go higher than previously expected. The European Central Bank also said it wasn’t done with raising borrowing costs. Higher rates are usually negative for non-interest-bearing bullion. Spot gold was little changed at $1,952.09 an ounce as of 12:23 p.m. in London. The Bloomberg Dollar Spot Index was also little changed. Silver, palladium and platinum fell.
- Investors added money to exchange-traded funds that buy emerging market stocks and bonds last week. This was the second straight week of inflows. Inflows to U.S.-listed emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $867.4 million in the week ended June 16, compared with gains of $1.59 billion in the previous week, according to data compiled by Bloomberg. So far this year, inflows have totalled $9.84 billion.
- China agreed another decades-long liquefied natural gas deal with Qatar in a further move to safeguard its energy security. China National Petroleum Corp. signed a 27-year LNG purchase agreement for 4 million tons annually with QatarEnergy on Tuesday. Supply will begin in 2026 and CNPC will take a 5% equity stake in a production train at Qatar’s North Field East expansion project, the country’s energy minister and boss of QatarEnergy Saad al-Kaabi said at a signing ceremony in Doha. CNPC is looking to strengthen energy cooperation with Qatar during Chairman Dai Houliang’s visit to the Middle East this week. China is on track to be the world’s largest LNG importer this year, with Shell Plc saying the nation’s demand could nearly double through 2040.
- Buybacks are the best avenue for Barclays Plc to boost its flagging share price, according to Jefferies analysts. With the UK bank said to be hiring Boston Consulting Group for a strategy review to address longstanding weakness in its shares, Jefferies predicted that Barclays will return almost £10 billion ($12.8 billion) to investors via dividends and stock repurchases through fiscal 2025. Analyst Joseph Dickerson and colleagues lifted their buyback estimates to £2.2 billion for both fiscal 2024 and 2025, saying that’s more than 60% above analyst consensus. They’re already predicting a £1.5 billion payout this year.
- Blackstone Infrastructure Partners agreed to acquire a minority stake in NIPSCO, one of Indiana’s largest gas and electricity providers, from NiSource Inc. for $2.15 billion. The private equity firm will also commit $250 million to fund ongoing capital requirements as part of the deal for 19.9% of NIPSCO, according to a statement Tuesday. “This agreement underscores Blackstone’s commitment to decarbonization to create value for our investors and our desire to help facilitate the reindustrialization of the Midwest,” said Sean Klimczak, global head of infrastructure at Blackstone Inc.
- Federal Reserve Chair Jerome Powell will have an opportunity this week to clarify what many found a confusing message on the path of interest rates, with the added task of assuring Democrats and Republicans the economy is on track. The Fed chief will face questions from lawmakers on Wednesday and Thursday, his first testimony on Capitol Hill since early March, before banking-sector turmoil prompted sharp criticism of the Fed and forced officials to rethink their policy strategy. Since then, the most acute financial strains have eased, but questions remain about the extent to which tighter credit will weigh on the economy, and what that means for the Fed. Powell will need to reassure Republicans the Fed is not backing down from its campaign to contain price pressures, while pointing Democrats to the resilience of the economy as officials prepare to raise rates further this year.
- Five people are on board a submersible vessel that has gone missing in the North Atlantic during an expedition to the Titanic shipwreck. The group includes Hamish Harding, founder of investment firm Action Group and an avid adventurer. The 58-year-old Briton holds three Guinness World Records, including the longest time spent traversing the deepest part of the ocean — the Mariana Trench — on a single dive, and the fastest navigation of Earth via the North and South Poles by plane. Others on the missing Titan vessel include Stockton Rush, founder of OceanGate Expeditions, the company that put on the trip to the Titanic. Shahzada Dawood and his son Suleman, members of one of the most prominent business families in Pakistan, are also on board, their relatives confirmed in a statement. The pilot of the sub is Frenchman Paul Henry Nargeolet, according to reports.
- KKR & Co. agreed to purchase as much as €40 billion ($44 billion) of buy-now-pay-later loan receivables from PayPal Holdings Inc. in a deal that frees up the payments giant to do more share repurchases. The agreement is part of a €3 billion loan commitment that allows private credit funds and accounts managed by KKR to purchase loans originated by PayPal in France, Germany, Italy, Spain, and the UK, according to a statement. PayPal expects the transaction to generate $1.8 billion in proceeds, allowing it to repurchase an additional $1 billion of shares this year. Buy-now-pay-later loans have become increasingly popular, especially among younger consumers, as a way to split up larger purchases and pay them off in installments. PayPal joined the fray in 2020 and has since issued more than 200 million of the loans to more than 30 million customers around the world.
- Spotify Technology SA is planning a more expensive subscription option that’s expected to include high-fidelity audio in an effort to drive more revenue and placate investors who’ve been saying the company should raise its prices. Dubbed “Supremium” internally, according to people familiar with the strategy, the new tier will be Spotify’s most expensive plan and likely offer a HiFi feature the company first announced it was working on in 2021. Spotify delayed that product’s rollout after two of its competitors, Apple Music and Amazon Music, began offering the feature for free as part of their standard plans. The new tier will launch this year in non-US markets first. To augment its current “Premium” tier, Spotify will give subscribers expanded access to audiobooks, either through a specific number of hours free per month or a specific number of titles. There will be an option to purchase more. Currently, the company only sells audiobooks a la carte through its app. Spotify plans to introduce that feature in the US in October, after first launching in markets abroad.
- Carlos Ghosn, the former head of Nissan Motor Co., sued the Japanese automaker and connected individuals for ousting him in 2018 and arranging his arrest for alleged financial misconduct, claiming more than $1 billion for “deep damage” to his finances and reputation. The former auto executive, who forged Nissan’s carmaking alliance with Renault SA and Mitsubishi Motors Corp., filed his claims with the public prosecutor in the Court of Cassation in Lebanon, where he has lived since his dramatic escape from Japan in late 2019 to flee trial. The lawsuit, seen by Bloomberg News, was submitted on May 18 and translated into English from Arabic. The arrest of Ghosn, 69, sent shockwaves through the global auto industry and unleashed turmoil within Nissan that continues to this day. Ghosn has minced few words criticizing Nissan and Japan’s legal authorities for removing him from the world’s biggest automaking alliance. He still faces criminal charges in Japan for what prosecutors describe as a plot to underreport his compensation, as well as a civil lawsuit filed by Nissan in a court in Yokohama seeking monetary damages.
- Saudi Arabia’s Public Investment Fund is emerging as the leading bidder to acquire a stake in Vale SA’s multibillion-dollar nickel and copper operations, people with knowledge of the matter said. PIF is in advanced discussions with the Brazilian miner about a deal for a roughly 10% holding in its base metals unit, according to the people, who asked not to be identified discussing confidential information. The stake could be valued at around $2.5 billion, they said. The wealth fund is poised to beat out rival bidders including Japanese trading house Mitsui & Co. and the Qatar Investment Authority, the people said. It may take at least several weeks to hash out a formal agreement, the people said.
- Alibaba Group Holding Ltd. is bringing back two of Jack Ma’s longest-serving lieutenants to try and turn around a company that’s struggled to regain its footing since Beijing’s regulatory assault against the internet sector in 2021. Yet investors remain uncertain what they can do to restore an icon of Chinese private enterprise to its former glory. Alibaba surprised markets by declaring Eddie Wu and Joseph Tsai will replace eight-year veteran CEO Daniel Zhang at the helm. Both men are business heavyweights of their generation, credited with steering the technology and strategy that underpinned China’s erstwhile most valuable corporation — before Xi Jinping’s tech crackdown obliterated growth across swaths of the industry and nixed once-aggressive expansion plans.
- Bitcoin struggled to sustain a brief climb past $27,000 on Tuesday as the tailwind from BlackRock Inc.’s application to start a US exchange-traded fund investing in the token began to flag. The largest digital asset at one point added 1.7% to hit a two-week high before paring the gain to trade at $26,740 as of 9:50 a.m. in London. Smaller coins such as Ether and BNB posted relatively small gyrations. BlackRock filed for a spot Bitcoin ETF with the Securities and Exchange Commission on June 15. The SEC has resisted allowing such spot funds but the latest attempt carries the heft of the world’s largest asset manager.