Most major APAC equity indices closed higher, while European and
US markets closed mixed. US government bonds closed almost flat on
the day, while benchmark European bonds closed sharply higher.
CDX-NA closed slighter tighter across IG and high yield, while
European iTraxx was close to unchanged on the day. The US dollar
closed lower, while natural gas, oil, gold, silver, and copper all
closed higher on the day.
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Americas
- Major US equity indices closed mixed; Russell 2000 +0.1%,
S&P 500 +0.1%, Nasdaq -0.1%, and DJIA -0.2%.
- 10yr US govt bonds closed -1bp/2.04% yield and 30yr bonds
flat/2.36% yield.
- CDX-NAIG closed -1bp/65bps and CDX-NAHY -4bps/356bps.
- DXY US dollar index closed -0.3%/95.7.
- Gold closed +0.8%/$1,872 per troy oz, silver +1.1%/$23.61 per
troy oz, and copper +0.1%/$4.54 per pound.
- Crude oil closed +1.7%/$93.66 per barrel and natural gas closed
+9.5%/$4.72 per mmbtu.
- The minutes of the last meeting of the Federal Open Market
Committee (FOMC), held on 25-26 January, were released this
afternoon (16 February). The minutes reflect widespread consensus
that it will soon be appropriate to begin the process of removing
monetary stimulus implemented during the pandemic, with increases
in interest rates likely to be followed within a few months by a
plan to begin shrinking the Federal Reserve's securities portfolio
primarily through run-off—that is, through limits on the
reinvestment of principal payments. The minutes provide no clear
signal about whether the first increase in the target for the
federal funds rate will be the "usual" increase of 25 basis points
or a larger increase of 50 basis points. Differences of opinion
among policymakers about the scope for further gains in labor
supply and about how quickly inflation might recede suggest a high
bar for an increase of 50 basis points in March. The minutes are
consistent with IHS Markit analysts' expectation that rate hikes
will be front-loaded this spring, then slow later in the year as
inflation moderates and to allow for balance-sheet shrinkage by the
Fed. (IHS Markit Economists Ken
Matheny and Lawrence Nelson)
- US total retail trade and food services sales jumped 3.8% in
January, a stronger reading than expected. Nonautomotive sales rose
3.3%, while core sales rose 3.8%. (IHS Markit Economists Kathleen
Navin and William Magee)
- The surge in January followed a sharp decline in December, as
news reports of supply chain issues and delays in shipping likely
shifted sales forward into October and November. Seasonal factors,
which anticipated a pop in December for holiday shopping and a
reversal in January, are now playing a role in the data,
contributing to the sharp decline in December and the jump in
January.
- Sales at nonstore retailers, which are particularly sensitive
to shipping delays, help illustrate this story. These sales, which
make up less than one-sixth of total sales, rose 14.5% on the month
and accounted for roughly half of the increase in total retail
trade and food services sales in January. IHS Markit analysts had
anticipated this swing after observing the same pattern last
year.
- Elsewhere in today's (16 February) report, sales for food
services and drinking places declined 0.9% in January. The weakness
in January was previewed by soft readings from the OpenTable data
as would-be diners became more cautious upon Omicron concerns.
These data have since turned up, suggesting restaurant sales will
improve in February.
- Meanwhile, retail sales at building materials stores continued
to strengthen in January, with an increase of 4.1%. The strength in
January came even as weather turned more severe.
- While some reversal in retail sales is expected in February,
IHS Markit analysts continue to anticipate that solid fundamentals,
including wages and net worth, will remain supportive of consumer
spending in the near term.

- Total US industrial production (IP) rose 1.4% in January,
reflecting increases in manufacturing (0.2%) and mining (1.0%), and
a record-high gain in utilities IP (9.9%). Total IP is 2.1% above
its pre-pandemic (February 2020) level and 4.1% higher than it was
a year ago. (IHS Markit Economists Ben
Herzon and Akshat Goel)
- The output of utilities leaped 9.9% in January owing to
significantly colder-than-normal temperatures following
unseasonably mild temperatures in December. Natural gas
distribution recorded a large gain of 24.2% due to a surge in the
demand for heating. The outsized gain in utilities IP accounted for
most of the increase in total IP in January.
- Manufacturing IP rose 0.2% in January as marginal gains were
recorded in the production of both durable and nondurable goods.
The output for durable goods (up 0.2%) was supported by a large
gain in the production of machinery (up 1.1%), even as the
production of vehicles and parts remained weak (down 1.3%).
Nondurable manufacturing also edged higher (up 0.2%), helped by
gains in its two major components—food, beverage, and tobacco
products (up 0.9%) and chemicals (up 0.2%).
- Motor vehicle production and assemblies over the past few
months have been above averages from earlier in the year when
manufacturers first started cutting production due to a shortage of
chips used in vehicle components. While the worst of production
cuts may be over, IP for motor vehicles and parts is still 6.3%
below the February 2020 level as production continues to be
constrained by the global chip shortage.
- Mining activity increased 1.0% in January, helped by a 0.6%
increase in oil and gas extraction.
- The headline US Housing Market Index moved down 1 point in
February to a still solid 82. A reading above 50 indicates that
more builders view conditions as good rather than poor. The current
sales conditions index edged up a point to 90, the third-highest
reading on record; the index measuring sales prospects over the
next six months dropped 2 points to 82; the traffic of prospective
buyers' index lost 4 points and now stands at 65. (IHS Markit
Economist Patrick
Newport)
- By region and three-month averages, the South, West, and
Midwest each lost a point, while the Northeast, which accounted for
only 6% of single-family housing starts last year, gained 3
points.
- "Production disruptions are so severe that many builders are
waiting months to receive cabinets, garage doors, countertops and
appliances. These delivery delays are raising construction costs
and pricing prospective buyers out of the market. Residential
construction costs are up 21% on a year over year basis. Higher
interest rates in 2022 will further reduce housing affordability
even as demand remains solid due to a lack of resale
inventory."
- The reality is that builders are facing stiff, pandemic-fueled
headwinds—rising material costs, labor shortages, and issues
with the supply chain for building materials—on top of the
pre-pandemic headwinds—lack of buildable lots and skilled labor
and the forces of Not in my Backyard (NIMBYism). Another
headwind—higher mortgage rates, which have moved up 64 basis
points in the past seven weeks—is picking up.
- All this adds up to declining rates of single-family new
construction over the course of this year. We expect single-family
housing starts to move down from 1.13 million in 2021 to 1.05
million in 2022.
- US-based upcycling start-up Novoloop has received funding that
brings it nearer to commercializing its polyethylene (PE)-to-
thermoplastic polyurethane (TPU) technology, the company announced
late-Tuesday. (IHS Markit Chemical Market Advisory Service's Chuan
Ong)
- The company said it received $11 million in Series A funding
that will allow it to complete crucial pilot scale-ups and
commercialize its technology.
- Novoloop did not detail where and when it plans to construct
pilot plants for its process.
- The company said its proprietary process technology, termed
'Accelerated Thermal Oxidative Decomposition', is a form of
chemical recycling that breaks down PE into chemical building
blocks for synthesis into high-value products.
- According to Novoloop, PE is the most widely used plastic today
but only 9% is recycled, and virtually none is upcycled. The
company aims to increase commercial demand for waste PE, believing
its technology can upcycle carbon content found in common plastic
waste like grocery bags, packaging, and agricultural plastics that
are too low value for material recovery facilities and instead sent
into landfills or incinerators.
- Novoloop's first product based on its advanced recycling
technology is a TPU, which can be used in footwear, apparel,
sporting goods, automotive, and electronics. The company says its
TPU is the first made from post-consumer PE waste that matches the
performance characteristics of virgin TPU made from petrochemicals.
Novoloop says its TPU has a carbon footprint 46% smaller than
conventional TPUs.
- Global securities finance revenues totaled $836 million in
January, a 15% YoY decline. January saw the lowest global equity
revenue since February 2021 which can be attributed to narrower
EMEA and Americas equity spreads. The general rise in borrow demand
seen last year for ETPs, Corporate Bonds and ADRs took a turn for
the worse for ADRs, as revenues fell by 58% YoY. In this note we
will discuss the drivers of January revenue. (IHS Markit Securities
Finance's Paul
Wilson)

- Municipal bond retail and institutional investors continue to
navigate subdued new issue supply levels after last week's calendar
presented $8.7Bn of new issue deals, with the majority of bonds
offered marked as tax-exempt, supporting greater activity among
retail accounts. The Port of Portland, Oregon (-/AA-/-) witnessed
stagnant investor demand last week, with cuts of 2-32bps registered
across the scale, with the widest spread noted in the 2047
maturity, falling +100bps off the interpolated MAC curve. The State
of Ohio (Aa3/A+/A+) also came to market last week with maturities
spanning 2/2024-2/2039 and bumps of 4bps distributed across the
scale as a result of investor demand, with the 2039 tranche
presenting allotted investors a yield of 2.53% or (+85bps to the
interpolated MAC). This week's calendar is expected to throttle
down to $6Bn across 163 new issues with $1.3Bn of day-to-day deals
as issuers stand on the sidelines amid increased volatility
market-wide. The National Finance Authority of New Hampshire
(-/BBB/-) will lead this week's negotiated calendar, offering an
aggregate $1.3Bn across two separate 2037 tranches with a
corresponding social certificate selling on Wednesday 02/16 and
lead managed by Citigroup. The Pennsylvania Housing Finance Agency
(Aa1/AA+/-) will also tap into the negotiated arena to offer $255mm
single family mortgage revenue bonds, spanning across
10/2022-10/2052, selling today 16 February. This week's competitive
calendar will span across 84 new issues for a total of $1.7
billion, led by the State of Delaware (Aaa/AAA/AAA) auctioning $252
million of general obligation bonds across 3/2023-3/2042 maturities
on Wednesday. (IHS Markit Global Market Group's Matthew
Gerstenfeld)
- The flavor and essential oil processor IFF, listed on the New
York Exchange, has reported that it net sales reached $3.03 billion
(+139% y/y) in Q4 2021, bringing 2021 sales to $11.65 billion, 129%
more y/y, once the company has completed the merger with Nutrition
& Biosciences (N&B). (IHS Markit Food and Agricultural
Commodities'
Jose Gutierrez)
- The operating profit increased by 3% y/y to $585 million.
- Inventories totaled $2.51 billion in 2021, up from $1.13
billion in 2020.
- Nourish and Scent were the drivers of growth.
- Nourish sales rose by 9% on a combined currency-neutral
(non-GAAP) basis to $2.6 billion due to robust activity in the
ingredients industry. Scent grew by 8% to $2.25 billion thanks to
strong demand for fine fragrances and cosmetic actives.
- The company projects that sales ranged between $12.3-12.7
billion in 2022.
- US electric vehicle (EV) maker Fisker Inc started taking orders
for its second product, the Pear, on 15 February, according to a
company announcement. Fisker has begun taking reservations for the
Pear even though it has not yet started deliveries of its first
model, the Ocean electric sport utility vehicle (SUV). According to
a Fisker statement, the Pear is a compact, five-passenger electric
utility vehicle and deliveries are expected to start in 2024.
Fisker says the Pear - standing for Personal Electric Automotive
Revolution - will have a starting price of USD29,900 before taxes
and incentives in the United States. This will make it one of the
more-affordable EVs in the market and potentially making it strong
competition for General Motors (GM)'s Chevrolet Equinox EV, which
the automaker has not yet shown. GM has said the price of the
Chevrolet Equinox EV will start at USD30,000, and it is due on the
market in 2024 as well. In a statement, Fisker Inc CEO Henrik
Fisker said, "PEAR will feature the very latest technology in a
beautifully designed, affordable urban mobility device. It's an
exciting vehicle and an exciting time for the company as we expand
our lineup." The Pear is to be produced for Fisker by Foxconn at a
former GM facility in Ohio (US), acquired by Foxconn through
Lordstown Motors. Meanwhile, the upcoming Ocean is being produced
for Fisker by Magna. Fisker states that reservations for the Pear
can be made for USD250 for a first reservation, or USD100 for a
second reservation. (IHS Markit AutoIntelligence's Stephanie
Brinley)
- The monthly jumps in Canada's consumer prices were quick at
0.6% month on month (m/m) on a seasonally adjusted basis (SA) and
0.9% m/m on a non-seasonally adjusted basis (NSA). (IHS Markit
Economist Arlene
Kish)
- Annual inflation was 5.0% year on year (y/y) SA and 5.1% y/y
NSA.
- Two of the three Bank of Canada preferred core inflation rates
were above 3.0% y/y, averaging 3.2%.
- The runup in consumer prices, particularly for goods, validates
the necessary unwinding of monetary policy stimulus in Canada. The
Bank of Canada is expected to raise interest rates 25 basis points
at the next policy announcement on 2 March.
- The IHS Markit inflation forecast for the month was higher than
consensus for several reasons. Inflation drivers continued their
upward trend, particularly for food. The acceleration in meat
prices at 10.1% was a main upside contribution to inflation this
month.

- The Canadian Pest Management Regulatory Agency (PMRA) has
proposed the cancellation of most uses of the fungicide,
chlorothalonil, and products containing the active ingredient, to
mitigate dietary and environmental risks associated with its use.
It is proposing continued registration of the ai and products
derived from it for use on greenhouse ornamentals. (IHS Markit Crop
Science's Akashpratim Mukhopadhyay)
- The move to cancel most uses of the ai was prompted by concerns
over its carcinogenicity and the potential toxicity of its
metabolites, besides its exposure to certain metabolites through
groundwater. Risks were also flagged concerning chlorothalonil's
potential harm to amphibians and fishes, with the Agency expanding
its review to include the effects of the ai's transformation
products on the environment.
- Dietary risks posed by chlorothalonil were concluded to be
unacceptable when used in accordance with its registration
conditions, with the PMRA proposing to revoke all maximum residue
limits (MRLs) and cancelling all food uses. It arrived at a similar
conclusion regarding the fungicide's effects on the environment,
noting that risks posed by chlorothalonil to aquatic organisms were
not acceptable under the conditions of registration.
- As far as greenhouse uses are concerned, the use of
chlorothalonil-based products has been allowed in mushroom houses.
Risks in such settings were shown to be "acceptable", provided
mitigation measures were implemented. In greenhouses with closed
recirculation systems such as closed chemigation setups, a
third-party audit has been proposed to validate that the facility's
closed recirculation system and other measures are "sufficient" to
prevent run-off containing the products from reaching lakes,
streams, ponds or other waterbodies.
Europe/Middle East/Africa
- Major European equity markets closed mixed; Spain +0.2%, Italy
flat, UK -0.1%, France -0.2%, and Germany -0.3%.
- 10yr European govt bonds closed higher; Italy -7bps,
France/Spain/UK -5bps, and Germany -4bps.
- iTraxx-Europe closed flat/66bps and iTraxx-Xover
-2bps/322bps.
- Brent crude closed +1.6%/$94.81 per barrel.
- The UK Office for National Statistics (ONS) has reported that
the UK's 12-month rate of consumer price index (CPI) inflation
increased from 5.4% in December 2021 to 5.5% in January, the
highest rate since the series began in January 1997, and since
March 1992 (7.1%) when using the historical-modelled data. (IHS
Markit Economist Raj
Badiani)
- During 2020 and 2021, CPI inflation averaged 0.9% and 2.6%,
respectively.
- Meanwhile, the CPI including owner-occupiers' housing (CPIH)
costs rose by 4.9% in the 12 months to January, up from an increase
of 4.8% in December 2021.
- In addition, the 12-month rate of the retail price index
increased to a 30-year high of 7.8% during the same month.
- Energy-related prices continued to rise at a blistering pace on
an annual basis during January, with transport fuel and lubricant
prices growing by 23.6% year on year (y/y), the 10th successive
double-digit increase. This was in line with global crude oil
prices rising by 57.9% y/y to average USD86.5 per barrel (pb) in
January, the 13th successive y/y gain.
- The ONS also reported an acute rise in household energy bills
during January after the increased regulatory price cap on domestic
natural gas and electricity from 1 October 2021. Natural gas and
electricity prices increased by 28.3% y/y and 19.2% y/y in January,
respectively.
- Restaurant and café prices increased by 4.7% y/y in January,
compared with a gain of 6.0% y/y in December 2021.
- Food and non-alcoholic beverage prices rose at a brisker rate,
increasing by a nine-year high of 4.3% y/y in January from 4.2% y/y
in December 2021. This is a worrying development, adding to the
cost-of-living crisis facing many UK households.
- United Kingdom-based battery manufacturing startup Britishvolt
will open a third round of funding, with mining heavyweight
Glencore committing GBP40 million (USD54 million). Britishvolt is
aiming to raise GBP200 million towards building its planned battery
factory in Blyth, in the northeast of England, while there will
also be a research and development (R&D) center attached to
this project. Britishvolt has so far raised GBP100 million in
funding for its factory and R&D center, which will initially
supply battery electric vehicle (BEV) manufacturers operating in
the UK. (IHS Markit AutoIntelligence's Tim Urquhart)
- Eurozone retail sales volumes plunged by 3.0% month on month
(m/m) in December 2021, the largest decline in eight months. The
weakness was much more pronounced than expected, undershooting the
market consensus expectation of a 0.5% m/m decline by some
distance. (IHS Markit Economist Ken
Wattret)
- Although retail sales in the fourth quarter of 2021 as a whole
rose by 0.3% quarter on quarter (q/q), this was the weakest rate of
increase for three quarters and given the December 2021 drop,
carryover effects for sales growth in the first quarter of 2022
will be unfavorable.
- The eurozone trade balance swung into the red in November 2021
for the first time in over a decade and the deficit increased
markedly in December 2021, jumping from EUR1.8 billion to EUR9.7
billion, the highest since July 2008 amid the global financial
crisis.
- By way of comparison, the eurozone's monthly trade surpluses
peaked at over EUR25 billion prior to the pandemic.
- Eurozone exports (in value terms) fell by 0.6% m/m in December
2021. This followed consecutive strong increases in the two prior
months, however, meaning that in the fourth quarter of 2021 as a
whole, exports rose by 4.2%, the highest growth rate for four
quarters. Relative to their pre-pandemic level, exports were up by
6.7% in December 2021.
- Imports (again in value terms) rose by 3.1% m/m in December
2021, the 11th straight increase, and surged by over 10% q/q in the
fourth quarter of 2021 overall. Imports were up by over 27% in
December 2021 relative to their pre-pandemic level.
- Eurozone industrial production rose by a much
stronger-than-expected 1.2% m/m in December 2021. Given the
November 2021 initial 2.3% m/m increase (subsequently revised up to
2.4%), the market consensus expectation had been for a modest 0.3%
m/m gain. For the first time in five months, industrial production
exceeded its pre-pandemic level, by 1%.
- The breakdown of the December 2021 output data by type of goods
showed a mixed picture, with production of capital goods
outperforming (2.6% m/m). Production of capital goods surpassed its
pre-pandemic level in December last year for the first time in five
months, although it continues to lag the recovery in output of
consumer goods.
- Despite back-to-back strong increases, industrial production
contracted by 0.5% q/q in the fourth quarter of 2021, the third
consecutive q/q decline, with supply chain disruptions having
hindered the sector since early in 2021. Carryover effects for
growth in the first quarter of 2022 are very positive, however,
given the very strong end to last year, while leading indicators
have been improving in recent months.

- On 11 February, EU regulatory body for securities markets the
European Securities and Markets Authority (ESMA) published its
environmental, social, and governance (ESG) work agenda to 2024,
the 'Sustainable Finance Roadmap 2022-2024'. The roadmap specifies
three core focus areas. First, the risk of "greenwashing", whereby
disclosure relating to an instrument (or issuer) fails to reflect
"underlying sustainability risks", assessing that such problems can
reflect issues relating to the value chain, inadequate data and
disclosure, and "regulatory arbitrage" reflecting uneven EU
standards, and can lead to a misallocation of resources by
ESG-oriented investors. ESMA will seek to investigate and define
the problem and seek "coordinated action" and "common solutions
across the EU". Given the growing use of ESG-based finance, the
second core focus flagged that national regulators also need to
expand capacity beyond traditional financial regulation. ESMA plans
the active sharing of experience and a multi-year training program
to strengthen national ESG financial regulatory capacity. Lastly,
it plans ongoing work in "monitoring, assessing and analyzing" ESG
risk, including climate stress-testing for central counterparties,
climate "scenario analysis" for investment funds, and developing
common methodology for climate-risk analysis together with other
public bodies. (IHS Markit Country Risk's Brian
Lawson)
- According to the latest Trend Indicator of Output published by
Statistics Finland, total output in the economy in December 2021
increased by a reaccelerated annual rate of 4.5%, adjusted for
variation in the number of working days. Seasonally adjusted
figures suggest an expansion of 0.7% month on month (m/m). (IHS
Markit Economist Venla
Sipilä)
- Details of the output indicator signal significant recovery in
secondary production in December, comprising manufacturing and
construction, whereas the service sector is estimated to have grown
more modestly. Conversely, primary production, which includes
agriculture, contracted year on year.
- On the basis of the monthly output indicator, Statistics
Finland constructed a preliminary estimate for fourth-quarter GDP,
which showed growth of 0.6% quarter on quarter (q/q) in seasonally
adjusted terms and a calendar-adjusted expansion of 3.7% y/y.
- As measured by surveys conducted by the Confederation of
Finnish Industries (Elinkeinoelämän keskusliitto: EK), business
confidence in the manufacturing industry edged up by one point in
January and remains clearly above its long-term average. Both
construction and service sector sentiment indicators have
deteriorated, while retail sector confidence remains unchanged; all
of them, however, remain positive and above their long-term
averages.
- The latest industrial output figures suggest strengthening
performance within the last quarter, with working-day adjusted
year-on-year growth sharply accelerating to 11.5% y/y in December
and to 3.1% m/m adjusted seasonally. Moreover, unlike the GDP
estimates, the preliminary industrial output figures also signal
strengthening momentum in the final quarter compared with the third
quarter.
- TotalEnergies and Norwegian engineering consultant Semar have
entered into a research and development partnership to further
develop the latter's Honeymooring solution for floating offshore
wind. The Honeymooring technology appears to use a system of
floating buoys to allow the floating platforms to anchor to in an
anchor-sharing configuration. The pattern of the mooring lines and
buoy nodes resemble a honeycomb network. TotalEnergies has stated
that the method will reduce the cost of mooring hardware and
floater structure by reducing peak load on the mooring system, and
lower the cost of marine operations partly due to lower mooring
line pre-tension and line weight. TotalEnergies has partnered Norsk
Havvind and Iberdrola to bid in the latest 4.5 GW tenders for the
Utsira Nord and Southern North Sea II areas. (IHS Markit Upstream
Costs and Technology's Melvin Leong)
- Samsung Engineering signs contract for petrochemical project in
Russia. This would be Samsung Engineering's first petrochemical
project in Russia. The scope of activity includes engineering and
procurement for an ethane cracker unit with total capacity of 2.8
million t/y, which would be the core process element of the
petrochemical plant and will be producing ethylene from separated
C2 out of natural gas. Baltic Chemical Complex LLC (BCC) is the
owner of the contract and the project is located at the Gulf of
Finland near the seaport of Ust-Luga, which is 110 km southwest of
St. Petersburg, Russia. This project is a key step in Samsung
Engineering's plans to advance into the Russian market by further
diversifying their overseas markets. (IHS Markit Upstream Costs and
Technology's Pranay Gaur)
- Mozambique's real GDP grew by 2.2% during 2021. The recovery in
real GDP is expected to continue during 2022, supported by the
starting up of liquefied natural gas (LNG) production, lower
inflation, and an International Monetary Fund (IMF) Extended Credit
Facility. (IHS Markit Economist Thea
Fourie)
- Mozambique's real GDP strengthened further by 3.3% year-on-year
(y/y) during the fourth quarter of 2021, marginally down from a
3.4% y/y expansion recorded in the previous quarter. This leaves
average real GDP up by 2.2% in 2021, from a 1.2% contraction
recorded in 2020 - in line with IHS Markit's expectation.
- Sub-sectors showing the strongest recovery during the fourth
quarter of 2021 included hotels and restaurants (up 7.2% y/y),
mining production (up 6.9% y/y), and transport and communication
(up 4.9% y/y).
- Output in the sub-sectors with the largest contributions to
Mozambique's overall economic activity also strengthened during the
fourth quarter. Production in the agriculture, forestry and fishing
sector increased by 3.9% y/y, trade activity increased by 2.4% y/y,
and output in the other services sector (including government
services) rose by 2.8% y/y.
- The electricity and water sector was the only sector in the
Mozambican economy that recorded lower output during the fourth
quarter, contracting by 2.2% y/y.
Asia-Pacific
- Most major APAC equity markets closed higher except for India
-0.3%; Japan +2.2%, South Korea +2.0%, Hong Kong +1.5%, Australia
+1.1%, and Mainland China +0.6%.
- Despite less stringent pandemic restrictions than the year-ago
Spring Festival holiday supporting mild improvement in service
prices, overall consumer demand remained weak. With the continued
zero-COVID-19 stance amid more frequent regional outbreaks, further
policy easing remains likely to counter the growth headwinds. (IHS
Markit Economist Lei Yi)
- Mainland China's consumer price index (CPI) increased by 0.9%
year on year (y/y) in January, down by 0.6 percentage point from
the December 2021 reading, according to the National Bureau of
Statistics (NBS). Month-on-month (m/m) CPI inflation came in at
0.4%, bouncing back from the month-ago deflation of 0.3% m/m, owing
to the seasonal demand pickup ahead of Spring Festival holiday (31
January—6 February) as well as the recent rise in oil
prices.
- The headline CPI disinflation, on the other hand, was again
largely driven by the falling food prices, which recorded deflation
of 3.8% y/y in January compared with a 1.2% y/y decline in the
prior month. In particular, pork price deflation widened further by
4.9 percentage points to 41.6% y/y owing to the relatively high
base; while fresh vegetable prices slid into deflation territory,
logging a 4.1% y/y decrease in January from the 10.6% y/y increase
in the month before. Regarding the non-food components, service
price inflation ticked up by 0.2 percentage point to 1.7% y/y
thanks to eased travel restrictions ahead of the Spring Festival
holiday than in 2021, with air ticket prices notably higher by
20.8% y/y. Excluding the volatile food and energy components, core
CPI inflation kept unchanged at 1.2% y/y.
- The producer price index (PPI) rose by 9.1% y/y in January,
lower by 1.2 percentage points from December 2021 and marking a
third month of moderation thanks to government interventions.
Month-on-month PPI deflation narrowed by 1.0 percentage point to
0.2%, which was almost entirely led by the 0.2% m/m decline in the
means of production subindex; while the PPI subindex of consumer
goods reported no change in January.
- By sector, coal and steel-related sectors including coal mining
and dressing and ferrous metal smelting and pressing continued to
register month-on-month price deflation in January. However, higher
crude oil and nonferrous metal prices—partially contributed by
the geopolitical tensions in Eastern Europe—led to
month-on-month re-inflation in prices of petroleum and natural gas
extraction as well as nonferrous metal smelting and pressing
sectors.

- The Chinese city of Suzhou has stepped up control measures amid
a recent outbreak of the COVID-19 virus, affecting the operations
of companies such as Robert Bosch. The city, 90 kilometers from
Shanghai, closed more than 30 access points from highways as of
Tuesday (15 February), after its daily new cases soared to eight on
Monday. Local media reports suggest that 18 new cases were reported
on Tuesday, increasing risks of further community spreading of the
COVID-19 virus. According to a Reuters report, the operations of
companies such as Robert Bosch have been affected by control
measures such as mass testing. Reuters reports a statement by Bosch
on Monday as saying, "We expect a short-term impact on our
manufacturing and logistics operations in Suzhou." The statement
added that local office staff were working from home. (IHS Markit
AutoIntelligence's Abby Chun Tu)
- Chinese autonomous truck startup Trunk.Tech has announced the
completion of its Series B financing round led by BAIC Capital,
reports Gasgoo. According to the source, the funding will aid
Trunk.Tech in its business development in the digital, intelligent,
and autonomous commercial vehicle field. In November 2021, Chinese
autonomous truck startup Trunk.Tech announced that it had raised
hundreds of millions of yuan in its latest round of Series B
financing. The funding was led jointly by Yuexiu Industrial Fund,
ZWC Partners, and BHCP; the company plans to put the infused
capital towards research and development (R&D), and mass
production of its new-generation autonomous trucks. (IHS Markit
Automotive Mobility's Tarun Thakur)
- Chinese electric vehicle (EV) startup Hozon New Energy
Automobile has chosen banks including China International Capital
Corp. and Citic Securities Co. for an IPO in Hong Kong, reports
Bloomberg, citing people familiar with the matter. The Chinese EV
firm is also working with Morgan Stanley and UBS Group AG on the
planned IPO, which could take place as soon as this year. The IPO
could raise about USD1 billion, according to the source. The
Zhejiang-based company is seeking to raise about USD500 million
ahead of the IPO at a valuation of about USD7 billion, according to
Bloomberg. In October 2021, Hozon announced that it had raised CNY4
billion (USD631 million) in its D1 funding round, led by the
Chinese internet safety giant 360 Security. (IHS Markit
AutoIntelligence's Abby Chun Tu)
- Taiwan Semiconductor Manufacturing Company (TSMC) is planning
to increase its investment in a new chip manufacturing plant in
Japan after Denso was confirmed to be an investor in the project.
According to Taiwan News, the facility will be set up in Kumamoto
Prefecture as a joint venture (JV) between TSMC, Sony Semiconductor
Solutions Corporation (SSS), and Denso. The JV, called the Japan
Advanced Semiconductor Manufacturing (JASM), will invest over
USD350 million and will take a 10% stake, while Sony will invest
USD500 million for a share of up to 20% and TSMC will be the
majority stakeholder. Total planned investment in the plant has
been increased from USD7 billion to USD8.6 billion, with production
slated to begin by the end of 2024. The new plant will focus on
production of chips, which are currently in short supply because of
high demand from automakers and technology companies. In addition
to the earlier plan to produce 22-nm and 28-nm chips at the plant,
there will now be a production line for 12-nm and 16-nm chips. (IHS
Markit AutoIntelligence's Nitin Budhiraja)
- Tata Motors's president of passenger vehicles and electric
vehicles (EV) Shailesh Chandra expects compressed natural gas (CNG)
and EVs to account for a higher share of its sales in the next
three to five years, reports the Times of India. The share of both
CNG-powered vehicles and EVs are expected to increase to 20% each
of the overall sales. According to the automaker, the share of
diesel cars in its overall sales currently stands at 15%, gasoline
vehicles at 66%, CNG vehicles at 12%, and EVs at 7%. "I think CNG
is a segment which is going to grow in the coming years. This will
be a subset of, I would say, the petrol, because this is being more
triggered with the rising cost of petrol. It uses a petrol engine…
and therefore, it will mostly cannibalize petrol and to a great
extent, also diesel, replacing diesel, replacing diesel in the
entry segment," said Chandra. The automaker plans to add the CNG
option to more hatchback and compact sedan models. (IHS Markit
AutoIntelligence's Isha Sharma)
- German aviation startup Volocopter plans to launch air taxi
services in Singapore in 2024 and is also in talks to offer flights
to nearby destinations in Indonesia and Malaysia, reports the
Automotive News Europe. The company plans to operate a fleet of 10
to 20 air taxis around the popular tourist destinations of Marina
Bay and Sentosa, according to Volocopter chief commercial officer
Christian Bauer. It also plans to set up maintenance operations in
Singapore and is carrying out a feasibility study to manufacture
electric vertical take-off and landing (eVTOL) aircraft in Asia,
including in the city-state. "Volocopter is one of the first eVTOL
partners in Singapore," said Bauer, adding, "On manufacturing, we
are assessing that and we're giving us the next 12 months to see if
we should do it or if there are other potentials." To support its
expansion in Asia, the company plans to increase its staff to 500
by 2030 from about 10 currently in Singapore. (IHS Markit
AutoIntelligence's Jamal Amir)
- The Malaysian Transport Ministry, together with the Road
Transport Department (JPJ), has started offering road tax exemption
for electric vehicles (EVs) and vehicles for people with
disabilities, reports Malay Mail, citing Malaysian transport
minister Datuk Seri Wee Ka Siong. The exemption for EVs, which
applies to battery electric vehicles and fuel-cell electric
vehicles but not hybrid vehicles, will be valid from 1 January 2022
to 31 December 2025. Meanwhile, the exemption given to vehicles for
people with disabilities, which also applies to parents, guardians,
and spouses, is valid to all vehicles that have been specially
modified for use by disabled people. (IHS Markit AutoIntelligence's
Jamal Amir)
- Tesla has signed a five-year agreement with Australia's
Liontown Resources for the supply of lithium spodumene concentrate.
According to Reuters, the automaker will procure 100,000 dry metric
tonnes (DMT) of the concentrate from the Australian supplier in the
first year starting 2024, increasing to 150,000 DMT per year in
subsequent years. As per the report, Liontown already has a lithium
supply deal with the battery unit of South Korea's LG Chem from its
flagship Kathleen Valley Lithium project. (IHS Markit
AutoIntelligence's Nitin Budhiraja)

Posted 16 February 2022 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.