TheChek News Flow

U.S. has become a lucrative market for makers of renewable-energy products

SINGAPORE—The U.S. broadened its trade dispute with China by imposing steep tariffs on solar imports from four Southeast Asian countries where mainland manufacturers have set up factories in recent years.

Tariffs of up to 3,521% on imports of solar cells from Cambodia, Thailand, Vietnam and Malaysia would effectively make the products unmarketable to U.S. consumers. That follows a yearlong investigation by the U.S. Department of Commerce into claims by American producers that Chinese companies in those countries were dumping solar cells and panels in the U.S. at artificially low prices.

China has become the biggest target in a trade war that the U.S. launched this year over what it sees as unfair trade practices used by most trading partners, including many of Washington’s allies. Tit-for-tat tariff responses by the White House and Beijing are threatening to make much of the trade between the world’s two biggest economies grind to a halt.

The solar tariffs announced Monday illustrate concern in the U.S. that China could avoid paying punitive tariffs by raising exports from a global network of factories that it has expanded in recent years.

The American Alliance for Solar Manufacturing Trade Committee last year filed a petition for protection from what it said were China’s “harmful trade practices.” The industry group alleged that Beijing’s industrial policy has led to massive subsidization in the solar sector in China and Southeast Asia, threatening the U.S. solar manufacturing industry.

The new duties reflect the commerce department’s findings that some Chinese producers have been shipping solar products through Southeast Asian countries to avoid paying tariffs imposed in the past.

The U.S. has become a lucrative market for makers of renewable-energy products, fanned partly by policies introduced by the Biden administration, such as the Inflation Reduction Act. Solar energy accounts for more than 15% of electricity generated in states including California and Massachusetts.

Last year, the Biden administration issued preliminary decisions to set countervailing duties on solar panels and cells produced in the four Southeast Asian countries, ranging from 0%-300%.

The new duties imposed by the Trump administration apply to several companies in Southeast Asia. Some producers in Cambodia face tariffs of more than 3,500%.

That comes at a challenging time for the solar industry broadly.

Since regaining office, President Trump has begun implementing an energy policy that could jolt demand for solar panels, including by lifting certain barriers to mining coal that some analysts think will slow the closure of coal-fired power plants. Recently introduced tariffs on most U.S. trading partners are expected to drive up costs of new clean-energy projects, including solar.

Canadian pension funds are increasingly favouring partnerships with buyout firms

Top pension funds are stepping back from competing head-on with private equity groups to buy up companies, instead opting to invest alongside them to secure access to the best deals.

Caisse de dépôt et placement du Québec (CDPQ) and the Ontario Municipal Employees Retirement System (Omers) are scaling back the proportion of their funds exposed to directly owned private companies, while Ontario Teachers’ Pension Plan has said it is eyeing more strategic partnerships.

A tough period for exiting investments over the past two years has encouraged the Canadian pension groups to back more companies alongside huge private equity managers as direct ownership has become increasingly challenging, requiring big in-house teams and a higher risk appetite.

“The private equity downturn is making the direct investing model harder as we are facing a shortage of viable projects and difficulty in exiting from our existing investments,” said an executive at one of the funds.

There are three main ways pension funds allocate to private equity: direct investing, where they buy a stake in a company on their own; through a private equity fund; or through co-investments, where they invest in companies alongside a private equity fund but without having to pay the fund fees.

Canada’s $3.2tn pension system is a major private equity investor with 22 per cent of its public sector funds’ assets allocated to the asset class, according to think-tank New Financial.

At present, the nine biggest Canadian pension funds have about half of their private equity exposure in buyout funds and half through direct holdings and co-investments, according to analysis from CEM Benchmarking.

But that balance has shifted as pension funds have come under pressure to invest in buyout funds to secure access to the best co-invest deals, where they get to invest alongside the firms but without having to pay fund fees.

CDPQ is in the second year of a five-year plan to lower the proportion of direct private equity investments from 75 per cent to 65 per cent, while Omers pivoted from allocating very little to private equity funds to announcing last September it would no longer invest directly in European opportunities.

Ontario Teachers’ has said it is “tactically looking to invest more with other partners in areas where it makes sense as the portfolio and market evolves”, though direct investments are still a core part of its strategy.

The shift comes as the private equity industry has ballooned in size, resulting in fierce competition for both assets and talent — and as some Canadian pension funds are also rethinking their US exposure.

Marlene Puffer, former chief investment officer at Alberta Investment Management Corporation, said Canadian pension funds were “in the boat of having to add more value into every holding because exits are more challenging now — they have to do more hands on management and it becomes increasingly complex”. 

She added that pension plans allocated money to private equity funds on the understanding that they would be invited to invest in many of the co-investment opportunities that arise with them.

It was “difficult for Canadian pension funds to compete for talent with Apollo that pays much better”, another fund executive said.

Martin Longchamps, CDPQ’s head of private equity and credit, said the rationale behind its shift towards more partnerships was to “drive access to deal flow through those relationships”. Omers’ chief investment officer, Ralph Berg, said the pension fund had “evolved our investment strategy over the last couple of years to explore different models and use funds where it is complementary”.

Canada Pension Plan Investment Board, the country’s largest pension fund with C$699bn (US$504bn) in assets, said it had “always pursued a partnership strategy and continue to be committed to that approach”.

Pension funds likely to have offloaded US bonds because of tumble in Wall Street stocks, investors say

Japanese investors offloaded more than $20bn in international bonds as Donald Trump’s tariffs shook markets early this month, in a sign of how the Wall Street turbulence cascaded around the world.

Private institutions, including banks and pension funds, sold $17.5bn of long-dated foreign bonds in the week to April 4 and another $3.6bn over the next seven days, according to preliminary data from Japan’s Ministry of Finance.

Japan holds $1.1tn in US Treasuries across the public and private sectors — the biggest international stockpile in the world — so its transactions are closely monitored and considered a proxy for buying or selling of US government debt.

The recent sell-off marks one of the biggest outflows over any two-week period since records began in 2005.

The shift out of international bonds came after Trump’s “liberation day” tariff announcement on April 2 caused tumult in global stock and bond markets, with the US at the centre of the tremors.

Wall Street’s S&P 500 index plunged 12 per cent in the four trading days after April 2, and then recovered somewhat after Trump paused most of his steep “reciprocal” tariffs for 90 days.

US Treasuries also sustained a severe bout of selling during the market volatility, with yields on 10-year notes surging in the week of April 11 by the most since 2001.

The report from Japan’s finance ministry does not provide details on which long-term bonds were traded by the country’s financial institutions.

But Tomoaki Shishido, senior rates strategist at Japanese bank Nomura, said that “a substantial proportion of [Japan’s] selling is probably either US Treasuries or US agency bonds”. The latter refers to mortgage-backed securities guaranteed by the US government.

“Some selling of foreign bonds could be from Japanese pension funds rebalancing . . . or it could be banks or life insurers reducing their interest rate risk,” he added.

Sales by US asset managers and the unwinding of leverage trades by US and international hedge funds are also likely to have contributed to this month’s sell-off in Treasuries.

But the flurry of international bond sales by Japan is a sign of how the Wall Street turbulence rippled across global markets.

According to several investors, the fall in US equities would have knocked Japanese pension funds’ allocations to international debt and equity out of balance.

As a result, the funds would have been under pressure to sell Treasuries and other US government-backed debt to bring their portfolios back into alignment, they said.

Some of the selling by private Japanese investors could also have been the result of unwinding of hedging strategies employed by Japanese banks, according to analysts.

In these so-called “carry trades”, investors borrow in low-yielding markets to make bets in ones with higher returns. Because of its relatively low yields, Japan is a common “funding” market for the trades.

But Stefan Angrick, Japan economist at Moody’s Analytics, said although the volume of Treasuries sold by Japanese funds was substantial, it would not be large enough to fully account for the yield spikes in the first two weeks of April.

“The headline figures may look chunky, but in bond market terms, they’re barely a ripple,” said Angrick, who noted that the US Treasury market turns over close to $1tn on an average day.

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Bertelsmann chief seeks to revive €3.6bn French TV merger

Thomas Rabe hopes that softening EU regulation will allow him to revisit a tie-up between broadcasters M6 and TF1

The head of Europe’s largest media company wants to revive an aborted merger between French broadcasters M6 and TF1, as the bloc’s regulators consider taking a less stringent approach to corporate consolidation.

Thomas Rabe, chief executive of German conglomerate Bertelsmann, told the Financial Times he hoped to revisit his plan to merge France’s two biggest privately owned broadcasters, which was abandoned in 2022 as a result of stiff regulatory opposition.

Rabe said a tie-up between Bertelsmann-owned M6 and its larger rival TF1, owned by French conglomerate Bouygues, would be “highly” synergistic.

“It would create a true French TV and streaming champion, able to compete with the US platforms,” he said, referring to streaming services including Netflix and Apple TV+.

The two companies had combined revenues of €3.7bn in 2024, and a combined market capitalisation of €3.6bn.

Bouygues said on Thursday that it shared Rabe’s view that a combination of TF1 and M6 still had merit. “We can see putting such a project back on the table when the legal and regulatory conditions permit it,” it said.

In 2022, Bertelsmann and Bouygues argued that regulators should expand their definition of the TV and advertising markets, as part of their efforts to gain approval for the merger. They wanted US streaming services to be deemed direct competitors to traditional broadcasters.

France’s competition authority acknowledged the threat posed by streamers, but argued that television remained “a very powerful medium”.

The regulator found that the deal could create “major competitive risks” in the TV advertising market and said the combined company would need to sell one of its main channels to win approval. That stipulation ultimately killed the deal.

Rabe said he has since been encouraged by a change in mindset in Brussels after what he described as years of excessively stringent competition rules.

“We’ve been the victims of these rules more than once . . . we have tried to create European champions in media and we were blocked by the regulators — I believe for no good reason,” he said. “Now the European Commission talks about the necessity to reform and promote European champions. Fantastic. Let’s do it.”

In his report on EU competitiveness last year, Mario Draghi, former president of the European Central Bank, called on regulators to approve mergers that would drive innovation and boost economic growth.

Teresa Ribera, the new EU competition commissioner, has since been tasked with examining whether regulations are “fit for the new realities” of global competition.

Rabe said he would be willing to revisit the TF1-M6 merger “as soon as regulators indicate they are willing to take a more open-minded approach”.

The chief executive of Bertelsmann, which also owns broadcaster RTL and publisher Penguin Random House, hopes that will come within two to three years.

M6 may attract interest from other suitors, including billionaire Rodolphe Saadé, who already owns a 10 per cent stake. A deal with Saadé would not face the same level of regulatory scrutiny as a tie-up with TF1.

London summit will focus on security of supply and lessons of crisis that followed Russian invasion of Ukraine

The lessons of the energy crisis following Russia’s invasion of Ukraine have not been fully learned, the International Energy Agency has said, as more than 60 global leaders are set to arrive in London for discussions on energy security. 

Sir Keir Starmer, the UK prime minister, will this week host Ursula von der Leyen, president of the European Commission, as well as ministers from the US, Japan, France, Germany and India, and the heads of dozens of energy companies, for a two-day summit on how to ensure resilient supplies of energy in a volatile global market.

Referring to the crisis caused by the loss of Russian pipeline gas from Europe and the rush to source alternative supplies of energy, Fatih Birol, the head of the IEA, said he thought the “lessons from Ukraine have not yet been fully understood”.

Birol, who organised the summit jointly with the UK government, added that there were “three golden rules” for energy security: a diversification of energy supplies, enough political predictability to allow companies to make huge long-term investments, and global co-operation. 

By contrast, Europe remains dependent on imported gas, there have been widespread changes to energy subsidies and regulations in both Europe and the US, and the trade war unleashed by US President Donald Trump is likely to reduce, rather than enhance, co-operation.

Birol said the trade war had caused “uncertainty which will affect demand for oil and gas for some time to come”.

Meanwhile, the risks to energy supplies are proliferating, including the wars in Europe and the Middle East, extreme weather, attacks on undersea cables, cyber attacks and more. “There are traditional risks and emerging risks and these have to be more in the international debate,” he said.

Birol highlighted the balance of summit attendees from fossil fuel companies, which have recently started to invoke the need for energy security as a justification for stepping up oil and gas exploration, and from renewable energy specialists. Shell, BP, ExxonMobil, TotalEnergies, Eni and Equinor will all attend, alongside the wind energy companies Ørsted and Vestas, and utilities EDF, Enel, Octopus and Iberdrola.   

“We are going to look at traditional energy security risks, such as [the loss] of oil and gas, but also emerging risks such as supply chain [disruption] and [the loss of] critical minerals,” said Birol.

Asked if the UK should reverse its decision not to issue any new exploration licences for oil and gas in the North Sea, Birol said that was “completely up to the UK government and the UK industry to decide whether or not it is a profitable investment and whether it will really improve energy security in the short and the long term”. 

One notable absence at the summit will be China. “We invited China, but unfortunately they were not able to accept due to calendar reasons,” said Birol. “We wish everybody was at the table, but the countries attending the meeting make up three-quarters of the world’s GDP, which in my view is not bad at all.”