AUTOMAKERS
Renault dumping AvtoVAZ
Renault SA plans to sell its majority stake in automaker AvtoVAZ to a Russian science institute, the French company said yesterday, adding that the deal includes a six-year option to buy back the stake. Renault said that its holding of nearly 67.69 percent in AvtoVAZ would be sold to the Russian central research and development automobile and engine institute NAMI. Its 100 percent shares in Renault Russia are to go to the city of Moscow. “Today, we have taken a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia,” Renault chief executive officer Luca de Meo said. The move preserves the group’s ability to later return to the country in a different context, he added.
CEMENT MAKERS
Holcim to sell India interests
Holcim Ltd has agreed to sell its Indian operations to local billionaire Gautam Adani, another step in chief executive officer Jan Jenisch’s pivot away from traditional cement. The Swiss company is to sell its 63 percent stake in Mumbai-listed Ambuja Cements Ltd to Adani Group, it said in a statement on Sunday. Adani said that it plans to spend about US$10.5 billion on the stake purchases and open offer consideration for Ambuja and related entities. As part of the deal, Adani is to inherit Ambuja’s controlling stake in another publicly traded cement producer, ACC Ltd, and buy Holcim’s direct 4.5 percent holding in the unit. Holcim expects to receive 6.4 billion Swiss francs (US$6.37 billion) of cash proceeds from the sale, the statement said. “We have quite a list of businesses we would like to acquire, so I think we can put this money here very well to use,” Jenisch said in an interview on Sunday. “At the moment, we’re working on more than 10 deals.”
ENERGY
Aramco profits spike 82%
Saudi Arabian Oil Co (Aramco) on Sunday posted an 82 percent jump in first-quarter profits, buoyed by a global surge in oil prices that has made it the world’s most valuable company. The company’s net income of US$39.5 billion was up from US$21.7 billion from the same period last year, it said in a news release. Its net income for the first quarter was a record for the company since its initial public offering in 2019. Also on Sunday, Aramco announced that it was issuing 20 billion bonus shares to shareholders — one share for every 10 shares already owned. A dividend of US$18.8 billion would be paid in the second quarter, the company said. Aramco is Saudi Arabia’s “crown jewel” and primary source of revenue.
UNITED STATES
Blankfein warns of recession
Goldman Sachs Group Inc senior chairman Lloyd Blankfein urged companies and consumers to prepare for a recession, saying that it is a “very, very high risk.” “If I were running a big company, I would be very prepared for it,” Blankfein said on CBS’ Face the Nation on Sunday. “If I was a consumer, I’d be prepared for it.” A recession is “not baked in the cake” and there is a “narrow path” to avoid it, he said. The Federal Reserve has “very powerful tools” to tamp down inflation and has been “responding well,” he said. Goldman’s economic team now expects the US’ GDP to expand 2.4 percent this year, down from 2.6 percent. It reduced its estimate for next year to 1.6 percent from 2.2 percent.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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