Per reporter: Li Menglin Gao Han
This week, the London Metal Exchange (LME) nickel price rose 250% in two trading days, setting a new record high. Previously, Glencore denied to the "Daily Economic News" reporter several times that it forced Qingshan Holdings. The latest exposure is that Morgan Chase, the largest opponent of Qingshan's short position, said in the face of each reporter's verification, "no comment." ”
On Friday, Chinese stocks collectively fell sharply, with Didi falling more than 40%. At the close, the NASDAQ China Golden Dragon index plunged 10%. Earlier, the U.S. Securities and Exchange Commission (SEC) released news that under the Foreign Company Accountability Act, five listed companies in the United States were identified as "relevant issuers" with delisting risks.
In addition, the United States, britain, and the European Union have successively announced embargoes or restrictions on Russian energy exports, and how to find alternative sources of crude oil and natural imports and stabilize oil and gas prices has become a serious challenge for the US and European governments. Every reporter was contacted by Rystad Energy, Norway's largest independent energy consultancy, to conduct an analysis.
The United States announced the cancellation of Russia's "most-favored-nation treatment", Japan followed; the United States CPI "exploded" again in February, and eurozone inflation also hit a record... More content, all in the "Week of International Finance".
Behind The Lun Nickel's "Epic Emptying":
Who is Aoyama's opponent?
Image source: Photo Network - 500608299
From March 7 to 8, the London Metal Exchange (LME) nickel price frenzy continued to stage, with a cumulative increase of 250% in two trading days, setting a new record high.
Extreme market conditions led to an emergency suspension of nickel trading in LME, and before the suspension, the nickel price was quoted at $80,000 / ton. LME also delayed the delivery of all spot nickel contracts originally scheduled for delivery on March 9. In order to prevent abnormal fluctuations from continuing to occur after the resumption of LME nickel trading, LME also stipulates that after the restart of trading, LME nickel trading will set a 10% daily price fluctuation limit.
The market rumors that Tsingshan Holdings, which holds 200,000 tons of nickel short orders, was forced short by foreign investors, and the potential short position loss may be as high as 6 billion US dollars to 12 billion US dollars, and the short side is likely to be Glencore.
On March 10, the Daily Economic News reporter exclusively interviewed an anonymous person with knowledge of the relevant situation on the side of Glencore, who pointed out that the statements about Glencore forcing the warehouse to qingshan and Glencore being the driving force behind the soaring nickel price are incorrect.
The anonymous person said: "I don't know where these claims come from. What I can tell you is that Glencore is not involved in the recent nickel price spike. The person stressed to every reporter: "Aoyama is glencore's long-term partner, so it is not us (who forced Aoyama on LME nickel). ”
On March 12, events seemed to have taken a new look.
According to foreign media reports, JPMorgan is the largest counterparty to Tsingshan Holdings' short position. About 50,000 of the more than 150,000 tons of short positions held by Tsingshan Holdings are over-the-counter positions traded with JPMorgan Chase, the sources said. According to that figure, Tsingshan Holdings was supposed to owe JPMorgan about $1 billion in margin on Monday.
For the above report, JPMorgan Chase said in response to the Daily Economic News reporter's request for comment, "No comment." A person from JPMorgan Chase China's corporate communications and marketing department told every reporter, "There is no information sharing at present. As of press time, Tsingshan Holdings has not responded to every reporter's request for comment.
In addition to the above-mentioned short-selling rumors, the "demon nickel" market is also considered to be related to the current situation in Russia and Ukraine.
"In a world with almost no spare capacity and extremely low inventories, any disruption in the supply of raw materials in Russia can have a huge impact on prices." TD Securities Canada wrote in a report.
Russia produces 10% of the world's nickel, of which high-purity primary nickel accounts for nearly 20% of the global market, and nickel is mainly used in the production of stainless steel and electric vehicle batteries. Founder medium-term futures data show that Russia is an important producer and exporter of nickel, its nickel ore reserves rank fifth in the world, nickel plate exports rank first in the world, Russian nickel plate is the main nickel delivery product of LME.
Data from the Nickel Industry Branch of the China Nonferrous Metals Industry Association shows that the nickel production of LME registered brands shows a downward trend. In 2021, global primary nickel production was 2.611 million tons, an increase of 4.9% year-on-year. Under the trend of continuous growth in nickel production, the growth is the NPI (containing nickel pig iron) in the secondary nickel, while the tradable primary nickel is declining.
In the case of the continuous decline in LME nickel stocks, the increase in sanctions against Russia has further hindered the trading and transportation of Russian nickel, exacerbating the european nickel spot tension.
The latest institutional opinion from the Office of the Investment Director (CIO) of UBS Wealth Management said that nickel prices are expected to fall back to $34,000/mt at the end of June, and move further down to $28,000 next March. However, due to the continuous rise in demand for primary nickel for electric vehicle batteries, global nickel inventories have been declining, and the interference of geopolitical factors will cause prices to fluctuate significantly.
Where to find alternative supplies for energy sanctions imposed by the United States and Europe on Russia?
Image source: Visual China - VCG41527525403
According to CCTV News, on March 8, local time, US President Biden officially signed an executive order prohibiting the United States from importing energy from Russia. The British government has also officially announced that it will gradually stop importing Russian oil and related products by the end of 2022.
In addition, the European Commission has proposed a proposal called REPowerEU that plans to gradually wean itself off dependence on Russian fossil fuels by 2030, in which imports of Russian gas will be reduced by two-thirds by the end of 2022.
At the close of the day, WTI crude oil futures rose 3.6% to $123.7 a barrel, and Brent crude futures rose 5.08% to $129.47 a barrel, both of which hit a new high since 2008. TTF benchmark Dutch natural gas futures rose 33% intraday.
On the 9th, the United Arab Emirates expressed its support for OPEC+ (OPEC and non-OPEC oil producers) to increase the speed of production, which alleviated the tension in the market to a certain extent. WTI crude oil and Brent crude oil closed down 12.21% and 12.92% respectively on the day. It continued to fall on the 10th, but began to rise back on the 11th, smoothing out the previous day's decline.
Louise Dickson, senior analyst of the energy and oil market at Ruistech, told the Daily Economic News that the UAE's statement triggered a decline in oil prices, because the market speculated that OPEC members with a large amount of spare capacity such as Saudi Arabia and Kuwait may also choose to increase production. Although subsequent indications have shown that other member countries have no intention of increasing production, oil prices continue to fall, possibly because some short-term speculators have stopped buying after seeing oil prices fall below the key point of $120/bbl.
Louise Dickson pointed out that the four core members of OPEC, Saudi Arabia, Iraq, the United Arab Emirates and Kuwait, are the only sources that can withstand the risk of Russian crude oil supply. A total of 4 million bpd of spare capacity is available in shikoku, which can be supplied to the international market in 3 to 6 months. In addition, these countries have large reserves of crude oil that can be exported quickly.
"However, without the participation of OPEC leader Saudi Arabia, the UAE's unilateral increase in production cannot fill the actual or expected market gap." So unless OPEC+ is on the same page, oil prices will recover their losses," Louise Dickson added.
While the United States and Europe implement the latest sanctions and restrictions on Russia, they are also facing different degrees of impact, and seeking alternative supplies is a problem that cannot be ignored in front of the United States and Europe.
The United States pressed OPEC+ to increase production long before the Outbreak of the Russian-Ukrainian conflict, but last week's OPEC+ meeting ended in a record-breaking 13 minutes, still maintaining the plan set last July to increase production capacity by 400,000 barrels per month, refusing to increase capacity further.
Today, the United States is facing the highest level of inflation in 40 years, and domestic gasoline prices have risen to their highest levels in 2008. In order to stabilize oil prices, in addition to putting pressure on OPEC+, the US government also hopes that Iranian crude oil can return to the international market after the resumption of the Iran nuclear agreement. According to CCTV News, on March 11, Iran's Foreign Ministry said that the Iran Nuclear Association talks, which had been held in Vienna for 11 months, would be suspended, which put a question mark on whether the agreement could finally be reached.
In addition, the U.S. government is encouraging domestic shale oil companies to increase production, seeking to lift oil import restrictions on Venezuela. There has been no substantial progress on either side this week.
Compared with the United States, Europe is much more dependent on Russia's energy, and the imposition of sanctions on Russian energy exports will make Europe suffer a greater impact.
Since Russia launched a special military operation against Ukraine on February 24, the highest closing price of the Dutch TTF gas futures, the benchmark for European gas prices, was 227.2 euros/MWh on March 7, up 169%, and the closing price of British gas futures also reached a peak on March 7 at 539.53 pence/kcal, up 152%.
Affected by the news of the EU's announcement of the new energy safety framework, the Dutch TTF natural gas futures fell 27% on the 9th and fell by 19% on the 10th. On the 11th, it rebounded by 3.82% to 131.229 euros / MWh, down 42.3% from its recent high.
Xi Nan, vice president of the natural gas and electricity market at Norwegian Rystad Energy, told the Daily Economic News that since Russia's natural gas supply to Europe is still stable and there is no further escalation trend in the Russian-Ukrainian conflict, natural gas prices may begin to return to the fundamental trend, "however, as long as there is any sign of escalation in the situation between Russia and Ukraine, TTF may soar again."
However, gas prices are still high, and the EU will almost double the high price to fully store gas reserves by 2022. According to nikos Tsafos, an energy analyst at the Center for Strategic and International Studies, a U.S. think tank, according to the price of 80 euros / MWh in February, the EU gas reserves will pay 55 billion euros, while according to the closing price on the 11th, this figure will rise to 90.06 billion euros.
After cutting Russian supplies, seaborne imports of liquefied natural gas (LNG) will be the EU's main source of imports. The Bruegel Institute noted that due to the tight supply of pipeline gas in Algeria and Norway, the EU's diversified gas scheme will be more dependent on LNG imports. Since LNG is mostly long-term contracts for 20 to 25 years, most of them have been signed by Asian countries early, and the number of major LNG exporters that can flexibly move is limited.
The International Energy Agency (IEA) believes that the EU can "theoretically" increase its recent LNG imports by about 60 billion cubic meters, and that the global competition for supply will lead to an unusually tight and expensive LNG market.
Note: The content of the interview only represents the views of the interviewee, does not represent the position of the Daily Economic News, and does not constitute investment advice.
Soaring inflation in the US and Europe has pushed up stagflation concerns
Image source: Xinhua News Agency, Shen Ting, photo
On March 10, data released by the U.S. Bureau of Labor Statistics showed that the U.S. unseasonal consumer price index (CPI) rose 7.9% year-on-year in February, and the core CPI after excluding volatile food and energy prices rose 6.4% year-on-year, both of which hit the largest increase in 1982, which is also the 21st consecutive month of CPI year-on-year growth.
The market generally expects this to be not yet the culmination of inflation. Inflation is expected to continue to climb in March due to higher prices of commodities such as energy, food, and metals caused by the Russian-Ukrainian conflict. A few days ago, US Treasury Secretary Yellen said in an interview with foreign media, "I don't want to make a definite prediction of what will happen in the second half of this year, we are likely to see this year's inflation data remain at a 'disturbing' high."
The CPI is one of a series of important economic data ahead of the Fed's March interest rate meeting. The University of Michigan Consumer Confidence Index released on the 11th fell further, hitting the lowest point since 2011, which means that consumers will suppress the level of spending, thus affecting the economic recovery. The initial value of the 1-year inflation forecast rose sharply to 5.4%.
Fed Chairman Jerome Powell had already expressed support for a 25 basis point rate hike in March at a congressional hearing last week, and the February CPI data reinforced the need for a rate hike. For the subsequent pace of interest rate hikes and balance sheet reductions, Powell said that in view of the uncertainty of the international situation, the Fed will proceed cautiously.
While easing inflation, how to avoid a slowdown in economic growth has become a common problem faced by central bank policymakers around the world. JPMorgan's latest forecast for March 8 has already cut global economic growth by 0.8 percentage points in 2022 and raised inflation by 0.9 percentage points. The upward trend of inflation superimposed on the slowdown in economic growth is called "stagflation".
Claudia Sahm, the former head of the Board of Directors of the Federal Reserve System, previously said in an interview with the Daily Economic News that if there are signs of a slowdown in the US economy, the Fed may reduce the frequency of interest rate hikes. In addition, the United States can also avoid a recession through a new fiscal stimulus program.
The Russian-Ukrainian conflict led to a rise in energy prices and a sharp increase in inflationary pressures in Europe, with eurozone inflation reaching a record 5.8% in February and likely to continue to rise in March. ECB President Christine Lagarde said at a press conference on March 10 that "the Russian-Ukrainian conflict is a watershed in Europe", which has had a negative impact on the eurozone economy in the short term and significantly increased uncertainty, but the upside risk of inflation is significantly more serious.
Due to the relatively slow recovery in the eurozone, the ECB has been significantly more dovish than the US central bank. The ECB meeting on the 10th unexpectedly released a hawkish signal, saying that it will reduce the purchase scale under the asset purchase plan (APP) in the second quarter, and the scale of bond purchases in the third quarter will be flexibly adjusted according to the situation, indicating that the ECB's policy focus in the short term has been on curbing inflation.
1
Chinese stocks collectively fell, Didi fell 40% a day
Five Chinese companies are on the tentative list
According to CCTV News, recently, the US Securities and Exchange Commission (SEC) released a message saying that according to the Foreign Company Accountability Law, five listed companies in the United States have been identified as "relevant issuers" with delisting risks.
The five companies, namely BeiGene, Yum China, Zaiding Pharma, Sheng Mei Semiconductor, and Huang Pharma, have recently filed their annual reports with the SEC. The SEC said it could provide evidence to the SEC by March 29 that it was not eligible to be delisted. If it cannot be proved, it will be included in the "confirmed delisting list".
Affected by this news, the stock prices of the five companies fell sharply, closing on March 10, BeiGene shenzhou fell 5.87%, Yum China fell 10.94%, Zaiding Pharmaceutical fell 9.02%, Shengmei Semiconductor fell 22.05%, and Huang Pharmaceutical fell 6.53%. At the close of trading on the 11th, BeiGene, Yum China and Zaiding Pharmaceutical all fell by more than 10%, Shengmei Semiconductor fell 5.4%, and Huang Pharmaceutical fell by 7.52%.
The news also triggered a collective plunge in Chinese stocks, with the NASDAQ China Golden Dragon Index closing down 10.01% on March 10, the biggest one-day decline since October 2008. Leading Alibaba and Tencent ADR fell 7.94% and 6.98% respectively, NetEase fell 7.31%, and Pinduoduo fell 17.49%, after jd.com, which had fallen less than expected, fell 15.83%, Bilibili fell 14.10%, and JinkoSolar and Weilai also fell by more than 10%.
On Friday, Chinese stocks continued Thursday's downward trend, with some companies' stock prices slashing, including Didi plunging more than 40% (it has fallen more than 10% on Thursday). In addition, Ali fell nearly 7%, Tencent ADR fell more than 5%, NetEase fell 3.23%, Pinduoduo fell 10.15%, JD.com fell 8.63%, and Bilibili fell 12.27%. Xiaopeng Automobile fell more than 12%, and Ideal Automobile fell more than 14%. At Friday's close, the Nasdaq China Golden Dragon plunged 10 percent.
It is understood that the Foreign Company Accountability Act is a bill passed by the US Congress in 2020, the main content of which is to put forward additional information disclosure requirements for foreign companies listed in the United States. At the end of 2021, the SEC passed the amendments.
This has a greater impact on the listed companies, and there is even a risk of delisting. According to the Foreign Companies Accountability Act, if a listed company fails to meet the inspection requirements of the U.S. Public Corporation Accounting Oversight Board (PCAOB) for three consecutive years, its securities are prohibited from trading in the United States.
Under the bill, foreign companies listed in the U.S. must file documents with the SEC certifying that the company is not owned or controlled by a foreign government and require these companies to comply with PCAOB's auditing standards.
The amendment also requires foreign listed companies to provide certain additional disclosures in their annual reports for themselves and any merged foreign operating entities.
BeiGene, Zaiding Pharma and Simy Semiconductor responded that they would seek solutions to meet the requirements of the SEC, and Huang Pharma said it would pay attention to market developments and evaluate all options, while Yum China said that under the current provisions of the bill, unless the bill is amended to exclude the company, or the Accounting Oversight Committee of public companies in the United States is able to conduct a full audit of the company's auditors within a specified time, the company's common stock will be delisted from the New York Stock Exchange in early 2024.
In response to the risk of delisting of five companies, the CSRC responded in the early morning of March 11, and the head of the relevant department said: We have noticed this situation. This is a normal step for U.S. regulators to enforce the Foreign Companies Accountability Act and related implementing rules. We have made our position on the implementation of the Foreign Companies Accountability Act on many occasions before. We respect the supervision of relevant accounting firms by foreign regulatory authorities in order to improve the quality of financial information of listed companies, but we resolutely oppose the erroneous practices of some forces to politicize securities supervision. We have always adhered to the spirit of openness and cooperation, and are willing to solve the problem of inspection and investigation of relevant firms by US regulatory authorities through regulatory cooperation, which is also in line with international practice.
2
Sanctions Escalate Again, U.S. Announces Cancellation of Russia's "Most-Favored-Nation Status"
According to CCTV News, on March 11, local time, US President Joe Biden announced a new round of sanctions against Russia, focusing on the abolition of PNTR treatment, that is, "most-favored-nation treatment", with the Group of Seven (G7) and EU members.
Subsequently, the Group of Seven said it was considering abolishing Russia's most-favored-nation status and imposing punitive tariffs on Russian trade. The Japanese government followed up on the decision of the Group of Seven, decided to abolish Russia's most-favored-nation treatment, and took measures such as strengthening restrictions on trading crypto assets with Russia.
As early as March 3, the EU began seeking to abolish Russia's most-favored-nation status within the framework of the World Trade Organization (WTO).
The so-called most-favoured-nation treatment means that one WTO member shall give preferential treatment to any other country in the field of trade in goods, trade in services and intellectual property rights, and shall be immediately and unconditionally granted to the other members.
The removal of MFN status means that Russian exports will not be able to enjoy low tariff rates and their competitiveness will be greatly reduced. Taking the United States as an example, according to the analysis of the Peterson Institute of Economics, after the United States canceled the most-favored-nation treatment for Russia, the average tariff rate on Russian exports to the United States will be raised from about 3% to about 32%.
At the same time, Biden also announced that it will impose new sanctions on Russian imports and exports, including a ban on the import of alcohol and seafood products from Russia, including vodka and caviar. The United States will also be barred from exporting luxury goods to Russia, including tobacco, clothing, jewelry, cars, and antiques.
The United States is not Russia's main export market, ranking outside the top 10, so the removal of the most-favored-nation treatment by the United States has limited impact on Russia. However, the EU is Russia's largest trading partner, and according to 2019 data, the Netherlands and Germany rank in the top two and three of Russia's export markets respectively. At present, the EUROPEAN Union has decided to gradually get rid of Russia's energy supply, and after the abolition of most-favored-nation treatment, Russia's trade with Europe will undoubtedly be further affected.
3
"Digital dollars" are coming? Biden ordered a study of cryptocurrency risks
Image source: Photo.com - 500785783
U.S. President Joe Biden signed an executive order on March 9 directing federal regulators to assess the potential risks that cryptocurrencies pose to consumers, investors, and the macroeconomy. A senior administration official said agencies will prepare reports on the results of the assessment within 60 to 180 days, and the Biden administration will develop new regulatory policies based on these reports.
The main elements of the assessment include whether cryptocurrencies have weakened the ability of the United States to impose sanctions and combat money laundering, and the climate impact of the high-energy cryptocurrency mining industry.
In addition, the Biden administration will formally consider whether to create a U.S. central bank digital currency (CBDC) and encourage the Fed to continue its research work. The Fed has brought the issue of digital currencies to Congress in January. U.S. administration officials say it could take years to develop and introduce a "digital dollar." Given the role of the U.S. dollar as the world's major reserve currency, the United States has been very cautious in its approach to developing digital currencies.
Due to the positive statement in the executive order on the inclusion of cryptocurrencies in incubating innovation and expanding financial services, coupled with the lack of immediate proposed new regulatory measures, the price of Bitcoin rose by more than 9% to $42540.9 on the 9th, and other cryptocurrencies such as Ethereum also rose sharply.
Image source: Screenshot of Ying Wei's financial situation
4
Amazon announced a 1-20 split and repurchased $10 billion in shares
After U.S. stock marketing on March 9, e-commerce giant Amazon announced its first stock split since 1999, and its board of directors approved a 1-20 split of the company's common stock and authorized a $10 billion share repurchase program.
After the news was released, Amazon rushed up to 10.2% after hours on the day, and closed up 5.41% on the 10th.
The share split plan is also subject to approval by the annual general meeting of shareholders held on May 25, after which Amazon shares will complete the split at the close of trading on May 27 and begin trading on a split-adjusted basis on June 6.
Stock splitting is to lower the threshold for stock investment. At the closing price of $2910.49 on the 11th, Amazon's share price after the split was about $145.52 per share. Previously, Google's parent company Alphabet, Apple, and Tesla have all carried out stock splits.
Before the announcement of the split, Amazon's stock price had fallen by 18% since 2022, surpassing the 16% decline of the Nasdaq. Analysts believe that the share buyback is expected to lift Amazon's stock price out of the downturn.
Jared Woodard, an analyst at Bank of America, said historically, the average return on the stock after a one-year split was 25 percent, compared to the market's average return of 9 percent. Morgan Stanley analyst Brian Nowak said Amazon's buybacks have historically been a positive signal, with an average return of 42 percent in the 6 months since.
Image source: Per Warp Mapping
Reporter: Li Menglin Gao Han
Edit: Gao Han
Vision: Liu Qingyan
Typography: Gao Han Wang Shujie
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