FT : China challenges Brussels’ electric car tariffs with WTO complaint

China challenges Brussels’ electric car tariffs with WTO complaint
Beijing says EU trade measures undermine global co-operation on climate

Beijing has hit back against EU tariffs on Chinese electric vehicle exporters, filing a complaint with the World Trade Organization in an escalation of the trade dispute with Brussels.

In early June, the European Commission announced it would sharply increase its tariffs on Chinese-made electric vehicles following a months-long investigation which found that Beijing was unfairly subsidising its car industry.

The measure is still provisional, pending a vote by EU member states in November. The EU’s trade chief Valdis Dombrovskis told the Financial Times last week that he expected them to approve the tariffs.

The levies vary across companies, which include Geely and BYD, the world’s largest electric vehicle maker, but could be close to 50 per cent for carmakers judged not to have co-operated with the EU probe.

In announcing Beijing’s WTO complaint on Friday, China’s ministry of commerce said that the EU’s findings seriously violated WTO rules and undermined global co-operation on climate change.

The ministry urged the EU to “immediately correct its wrong practices”, safeguard economic and trade co-operation and the stability of the electric vehicle industry.

The European Commission said it was “carefully studying” the details of the Chinese complaint and would “will react to the Chinese authorities in due course according to the WTO procedures”.

“The commission is confident of the WTO-compatibility of its investigation and provisional measures,” it added.

Dombrovskis has defended the tariffs, arguing that they were not “prohibitive”.

The WTO complaint marks the latest in a series of mild retaliatory measures against what Beijing describes as against rising European protectionism. Some China trade experts have warned Beijing against stronger measures that could damage the world’s second-biggest economy which is already struggling from slower growth.

In January, China launched an anti-dumping probe into French cognac imports, a move targeted at punishing France for championing the electric vehicle probe. And in mid-June, less than a week after Brussels said it would impose tariffs on electric vehicle shipments from China, Beijing opened an anti-dumping investigation into EU pork imports in a move the European agricultural industry said would hit farmers in Spain, the Netherlands, Denmark, Germany and Belgium.

For the EU, the electric vehicle tariffs mark part of a more aggressive stance on trade as it seeks to protect its industry, which is subject to more stringent environmental standards, from cheaper international imports.

This year, Brussels has also launched trade probes into wind turbine and solar manufacturers and announced anti-dumping measures against imports of Chinese biofuels, which will come into effect next week.

FT : Abu Dhabi’s ADQ buys stake in Patrick Drahi’s Sotheby’s

Abu Dhabi’s ADQ buys stake in Patrick Drahi’s Sotheby’s
The $1bn cash injection comes as entrepreneur’s telco empire is struggling with mounting debts

Abu Dhabi-based sovereign wealth fund ADQ is to take a stake in Sotheby’s as part of a $1bn capital injection alongside existing owner Patrick Drahi as the auction house seeks to cut debt and fund growth.

ADQ and Sotheby’s said in a joint statement on Friday that the investment fund had “signed a definitive agreement” to buy a minority stake via newly issued shares. No valuation for the company was given.

Drahi acquired Sotheby’s in 2019 in a deal that valued the auction house at $3.7bn, including debt. That the Franco-Israeli entrepreneur is now willing to accept a partner represents a change in position from what people close to him said in December, namely that he did not need to sell nor bring in outside investors.

The bulk of Drahi’s holdings are in telecoms and owned by his Altice group, although Sotheby’s sits in his personal holding company.

The deal with ADQ is expected to close before the end of the year. The fund’s involvement is a reflection of how many rich buyers of artwork and collectors’ items increasingly hail from the oil-rich Gulf states.

Founded in 2018, the sovereign wealth fund is tasked with fuelling development in the oil-rich emirate of Abu Dhabi. Chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan, ADQ also invests abroad, and earlier this year announced $35bn investment plans in Egypt.

The Sotheby’s stake falls outside ADQ’s priority sectors, which span energy to agriculture, healthcare and logistics. However, a person close to the fund said it could lead to a Sotheby’s opening in Abu Dhabi, which has invested heavily in bringing art and culture to the emirate. The Louvre Abu Dhabi opened in 2017, and construction on a Guggenheim gallery has begun.

Drahi has been selling off assets lately as a wall of debt starts looms. His holding company Altice was built during an acquisition spree starting around 2014 that splashed out about €50bn and was partly funded with cheap borrowing. It expanded to include US cable companies, French telecom operator SFR, and other smaller communications groups from Portugal to Israel.

His deals often used creative financing methods and leverage: the purchase of a 24.5 per cent stake in BT was built through substantial loans and derivatives financing, allowing Altice to borrow heavily against the shares, according to people familiar with the situation and loan documents seen by the Financial Times.

In November, Altice struck a deal to sell a majority stake in its data centre business in France, valued at €764mn, to a Morgan Stanley infrastructure fund. 

In March, Drahi agreed to sell French 24-hour news channel BFM and RMC radio to Rodolphe Saadé, the billionaire owner of CMA-CGM shipping group, for €1.55bn in cash. This month, Altice sold an online video advertising group called Teads to digital marketing group Outbrain for about $1bn.

Other assets like Portugal Telecom have been on the block for more than a year, but have not found buyers. In Portugal, Altice was rocked by a corruption probe in which one of Drahi’s long-standing lieutenants was alleged to have embezzled money through procurement contracts.

The company has said it did not know of the problems, and is co-operating with prosecutors.

>>> US Insider Trading: notable purchases -- COO adds to MP; notable sales -- CI

Insider Trading: notable purchases -- COO adds to MP; notable sales -- CIO active in PAYC
Buyers:
  • AMBC Chief Executive Officer, Executive VP - Chief Financial Officer & Treasurer, Sr. MD & General Counsel, Executive VP & Chief Strategy Officer, and two (2) Directors bought 149,112 shares at combined worth approx. $1.65 mln.
  • ATMU Director bought 8,250 shares at $31.56 worth approx. $260K.
  • BECN Chief Financial Officer bought 5,000 shares at $82.29 worth approx. $411K.
  • BXMT Director bought 10,000 shares at $17.51 - $17.52 worth approx. $175K.
  • CLAR Director bought 26,500 shares at $4.88 worth approx. $129K.
  • ECVT President, Advanced Materials & Catalysts bought 7,800 shares at $6.505 worth about $51K.
  • EHTH Chief Executive Officer, SVP - Chief Financial Officer, SVP - General Counsel & Secretary bought 80,365 shares combined worth approx. $330K.
  • FPI Director bought 24,000 shares at $10.1485 - $10.1492 worth approx. $244K.
  • OEC Chief Executive Officer bought 20,000 shares at $16.85 - $18.16 worth approx. $350K.
  • OI Director bought 15,000 shares at $11.11 - $11.435 worth approx. $169K.
  • ORN President / Chief Executive Officer bought 3,700 shares at $6.749 - $6.85 worth about $25K.
  • MP Chief Operating Officer bought 30,000 shares at $10.80 - $10.85 worth approx. $325K.
  • SNBR Director bought 43,000 shares at $12.02 - $12.67 worth approx. $531K.
  • SQ Director bought 434,405 shares at $56.25 - $58.00 worth more than $25 mln.
Sellers:
  • PAYC Chief Information Officer sold 1,524 shares at $157.615 worth approx. $240K.
  • SNEX Subsidiary Chief Executive Officer sold 4,000 shares at an average price of $75.88.98 worth approx. $304K.
  • WGS 10% owner Opko Health (OPK) sold 112,994 shares at $29.00 - $32.50 worth nearly $3.6 mln.

CrunchBase : US Series A And B Funding Picked Up in H1. What Does That Mean For

US Series A And B Funding Picked Up in H1. What Does That Mean For Funding In 2024?

Although Series A and B funding for U.S.-based companies picked up in H1 2024 — up 34% year over year — the uptick may be deceiving.

While total funding reached $31.5 billion — the highest amount invested at this stage in two years — that increase was concentrated in larger fundings and in two leading sectors — healthcare/biotech and AI.

That includes a $6 billion Series B to xAI, which accounts for much of the increase. Still, if we remove that funding, H1 2024 is still above the half-year funding amounts in 2023.

Bottleneck at Series A
Since the second half of 2022, we found a Series A bottleneck based on an analysis of Crunchbase data. As the market tightened, seed-stage companies faced a more challenging environment in which to raise a Series A round. While all companies face this crunch, seed represents the largest absolute number of companies funded, as well as the stage with the least funding and lower revenues to manage through a tightened funding environment.

The recent uptick in Series A and Series B funding does not address that bottleneck.

Large rounds boost early stage
The increase at Series A and Series B fundings in the first half of 2024 was concentrated in larger funding at these stages. We looked at fundings by half-year both below and above the $50 million mark since 2018.

Large Series A rounds picked up in 2021 — the peak market. Those large rounds slowed every half year since, but increased in 2024.

Close to two-thirds of these large Series A companies in H1 2024 are in healthcare/biotech. The runner-up industry for large Series A rounds is artificial intelligence. Other sectors with large fundings in the low- to mid-single digits include Web3, energy and hardware.


Series B rounds show a similar trajectory. Around the market peak, larger rounds of $50 million and above increased and slowed since the second half of 2022. Recently, they’ve begun to pick up.

Alongside the xAI megaround, the pick-up this year is led by healthcare/biotech as the leading industry followed by AI. Hardware, including semiconductor and robotics, is the third-largest sector for large Series B rounds.

Concentrated bets
The increase in Series A and B fundings in H1 were concentrated in larger fundings and in two leading sectors; healthcare/biotech and AI.

Other sectors got short shrift.

There is a big gap between these two leading sectors and others. Financial services, e-commerce and shopping, and transportation sector amounts, for instance, were significantly down.

Despite the fact that funding was concentrated, there was a noticeable increase in large Series A round counts. That could be seen as a sign of optimism.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:
  • AVD -30.2%, MITK -27.5%, PUBM -27.3%, FIVN -14.1% (also to acquire Acqueon), ARRY -12.2%, NFE -7.8%, ELF -7.7%, LAW -7.1%, TTGT -7%, SATS -6.1%, FNKO -6% (also names new CFO), ACHR -5.8% (also to launch a Los Angeles air mobility network; also announces key terms of contract manufacturing relationship with STLA), LPRO -4.9%, FNA -4.8%, ZNTL -4.8%, CPRI -4.1%, XENE -4.1%, CPK -3.6%, SVV -3.1%, CRNX -2.7%, BTG -2.5%, ALRM -2.4%, WBTN -2.3%, WEST -2.1%, ARWR -2.1% (also announces $500 mln financing facility), PODD -1.9%, AMN -1.9%, NTRA -1.7%, DEI -1.7%, SOUN -1.2%, SMR -1.2%, CYTK -1.2%, PBR -1.2%, PTCT -1.1%
Other news:
  • EB -23.9% (appoints CFO to the expanded role of COO and CFO)
  • SCSC -14.7% (acquires Resourcive)
  • ZVRA -10.7% (prices offering of 9,230,770 shares of its common stock at $6.50 per share)
  • MNMD -4.9% (announces proposed public offering)
  • PLMR -3.1% (prices offering of 1.2 mln shares of common stock at $88.00 per share)
  • GOLF -3% (Fila Holdings' Magnus sold 1,110,000 shares of common stock of Acushnet; plans to retain its majority stake in the company)
  • AILE -2.5% (strategic partnership with Techvantage Systems)
  • ALKT -2.1% (files mixed shelf securities offering; also files for common stock offering by selling shareholders)
  • WT -1.8% ($300 mln convertible notes offering; also reports July AUM)
  • EYPT -1.7% (files $400 mln mixed shelf securities offering)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:
  • DOCS +32.5%, SG +25.3%, PBI +24.1% (also announces exit path for ecommerce segment), EVH +22.2%, IOVA +21.4%, PRTA +20.5%, ADMA +19.4%, TARS +17.6%, RKLB +12.8%, HNST +12.7%, CARG +11.6%, ONTO +11.2%, BLND +10.8%, EMBC +10.1%, IAG +9.8%, EXPE +9.6%, RXT +8.5%, PBPB +8.2%, BE +8%, WOW +7.9%, FREY +7.9%, AKAM +7.8%, VRRM +7.6%, PAY +7.6%, DXC +6.9%, TTWO +6.8%, PGY +6.8% (also, Pagaya and Castlelake announce an agreement for Castlelake to purchase, subject to certain terms and conditions, an aggregate amount of up to $1 bln in consumer loans through the Pagaya network; also Q2 results) G +6.5%, SLVM +6.5%, DIOD +6.3%, LIF +6.2% (also updated its agreements with partners Arity and Placer.ai), QNST +5.9%, NUS +5.8%, PARA +5.7% (also reducing its US-based workforce by 15%), TTD +5.7%, ATSG +5.2%, CLMT +5.2%, CNNE +5%, RICK +4.7%, DBX +4.6%, COLL +4.5%, CENX +4.1%, NWSA +4%, LEGN +3.7%, DOCN +3.6%, RCUS +3.5%, STEP +3.5%, SANA +3.2%, RVNC +3.1%, ROAD +2.9%, YELP +2.7%, GRND +2.4%, TSM +2.4% (July sales), TXG +2.3% (also CFO to resign, names new CFO), LGF.A +2.3%, GDOT +2.3%, CLDX +1.9%, AVPT +1.6%, SOLV +1.4%, CGC +1.4%, GILD +0.9%, SYNA +0.9%, ASX +0.9% (July sales)
Other news:
  • ITI +63.1% (to be acquired by Almaviva for $7.20 per share)
  • RNA +31.4% (announces positive AOC 1044 data)
  • INOD +20.3% (files $50 mln mixed shelf securities offering)
  • HEAR +9.6% (CFO to retire)
  • BLZE +6% (names new CFO)
  • AMBC +6% (following several insider buy disclosures)
  • EHTH +4.4% (following executuve insider buy disclosure)
  • ASTS +3.7% (first five commercial satellites arrive ahead of planned orbital launch)
  • BTDR +2.5% (Tether Holdings increased active stake to 27.2% inclusive of the 5,000,000 Warrant Shares (prior 25.1%))
  • HZO +2% (MCFT will transfer the rights to its Aviara brand of luxury dayboats to HZO)
  • MP +1.9% (COO discloses the purchase of 30K shares)
  • CLSK +1.6% (postpones JunQ earnings report)
  • DNN +1.3% (CEO Highlights Phoenix Post-Feasibility Study Progress and Company Reports Financial and Operational Results for Q2'2024)
  • BITF +1.3% (Riot Platforms (RIOT) increased active stake to 18% (prior 16.9%))
  • GCT +1.1% (CFO to resign)
  • SQ +1% (following insider buy disclosure)
  • RIOT +1% (Riot Platforms (RIOT) increased active stake to 18% (prior 16.9%))

FT : Kolanovic redeemed?

Kolanovic redeemed?
JPMorgan loves to say they told you so

Doctor of theoretical high-energy physics and erstwhile JPMorgan chief strategist Marko Kolanovic spent the months before his departure warning that overcrowded momentum trades, like all things, tend towards disorder. After the events of this past week, you’d forgive the man a moment of quiet self-satisfaction.

Kolanovic’s former team, now led by Dubravko Lakos-Bujas (who may be adopting a Horus / Northman Alexander Skarsgård / Inigo Montoya stance) had this to say about equity rotation, Japan and the carry trade unwind in a note published on Thursday:

Equities no longer a one-way upside trade, instead increasingly a two-sided debate on growth downside risks, Fed timing, crowded positioning, rich valuation, and rising election and geopolitical uncertainties.  While the market focus in 1H was largely tied to the path of inflation, 2H focus is quickly turning to growth risks given elevated earnings expectations for 2H24 (+9%) and 2025 (+14%). In our prior strategy reports... we highlighted extreme positioning and momentum crowding that historically led to violent unwinds. We stressed the importance of portfolio diversification and emphasized the abandoned Low Vol equity complex (i.e. defensives such as Utilities) offering attractive orthogonal properties and superior risk/reward (see Figure 6). The current market pullback, in our view, was primarily driven by fears tied to weakening growth and the repricing of recession probabilities. Additionally, divergent central bank policies (i.e. Fed / BOJ) further amplified market volatility, disrupting crowded trades such as the G10 FX Carry (~7 STDev event) with USD/JPY at the epicenter (~5 STDev event). This shock reverberated across asset classes with record 1-day spike in VIX, vanishing liquidity, and forced deleveraging by volatility sensitive and trend-following strategies. While the recent market flush took out some of the froth, equity positioning and valuation still remain at risk especially if growth continues to decelerate and the Fed does not show urgency.

More investment institutions and shrinking stock markets mean the most lucrative trades are becoming increasingly crowded, according to Ludwig Chincarini, professor of finance at the University of San Francisco and author of The Crisis of Crowding, a 2012 book (recommended to FTAV by two traders this week) on the dangers posed by strategies that neglect to account for their own popularity.

“Arbitrageurs trading to exploit anomalies tend to follow the same academic recipe and exhibit correlated trades,” Chincarini wrote in a prescient paper published in April:

This situation and the frequent use of leverage may exacerbate crash risk in anomaly stocks . . . The time it will take to exit the room will depend on both the number of people in the room and the size of the exit door.

Crowding is associated with stronger expected returns but higher liquidity risks, Chincarini notes. Echoing this, JPM write that aggressive deleveraging by volatility targeting strategies stuck in the same handful of trades almost certainly contributed to the market sell-off. And positioning remains extreme even after the recent rush for the exit:


Lakos-Bujas et al (typos theirs):

Momentum is experiencing its third and most impactful unwind in the past year and contributing to the global equity rout ( Figure 5). We have been cautioning investors of a significant market pullback in an event of a momentum unwind (see Risk for Active Managers, AI Halo Effect, and Right-tail Crowding). The rationale behind the argument being—(a) Momentum and Market downside risks are tied together—Momentum mix was and still is dominated by index-moving Mega-caps (i.e. size factor crowding still at 96%ile, Figure 4) and index-sensitive High Beta stocks; (b) Setup ripe for reversal—Momentum had an extreme right tail non-linear crowding one month ago that receached 35-year record high (100%ile), which after this correction has fallen to 89%ile, Figure 3; (c) AI Halo effect now working in reverse —Momentum’s outsize moves this year were supported by FOMO in AI / LLM related trade that were expected to deliever productivity boosts for businesses almost immediately. During this earnings season, however, some of this enthusiam was partially corrected as revenue ramps from new services were pushed forward. The AI Halo effect is now working in reverse with LLM stocks on average down ~17% from their peaks; and (d) Positioning remains inconsistent with the cycle and recent risks —Investors are still not positioned for a softening macro backdrop with ample upside opportunity in Defensives ( Figure 6), Low Vol ( Figure 7) and Low Beta ( Figure 8). The current unwind has only partially corrected these extreme dislocations and far from completely mitigating the Momentum tail risk.


Tech momentum trades have only partially unwound, the team warn, meaning there’s plenty of trouble stored up if and when a real growth scare sparks another violent capitulation into “defensives, bond proxies and low vol”.

Historical analysis suggests a complete Momentum unwind—typical of full cycle resets—results in ~30% drawdown on average based on Long vs Short, cap-wtd sector neutral quintiles of S&P 500. This would imply the current rotation is only ~34% complete. However, we believe we are not yet at the end of the cycle, so expect only a partial unwind in Momentum and not a full flush, although we are gradually approaching towards it.

Vindication for Daddy Bear? US and Japanese stocks may have clawed back the bulk of their losses, but it’s clear that wherever he may be now, Kolanovic’s shadow continues to loom large over Wall Street…

Electrek : BYD undercuts Tesla Model 3 prices by nearly $10K with the new 2025 S

BYD undercuts Tesla Model 3 prices by nearly $10K with the new 2025 Seal EV

BYD officially launched the 2025 Seal EV, its Tesla Model 3-like electric sedan, on Thursday. Starting under $25,000, the new BYD Seal EV undercuts Tesla’s Model 3 by nearly $10,000 in China.

After Tesla launched the new Model 3 Highland in China almost a year ago, BYD is upping the ante. China’s leading EV maker launched an updated version of the Seal EV for the 2025 model year.

The 2025 Seal is BYD’s first electric sedan powered by its upgraded e-Platform 3.0 Evo platform. BYD’s new platform debuted with the Sea Lion 07 in May, a mid-size electric SUV seen as a potential rival to Tesla’s best-selling Model Y.

BYD improved the platform with more range and power, faster charging, and advanced software for intelligent driving.

The upgraded Seal EV made its first appearance earlier this month after BYD revealed images on its social media. One of the most noticeable changes is the added LiDAR on the roof, which will unlock new ADAS capabilities.

BYD also swapped its signature “Build Your Dreams” badge on the back for a bold, red “BYD” logo. The move mirrors the new Model 3, which has new “TESLA” badging on the back.

How the new BYD Seal EV compares to the Tesla Model 3
More recently, BYD unveiled the 2025 Seal EV’s interior with a new “trendy” Coral Orange color. The interior is similar to the Model 3, but there are noticeable differences.

BYD’s Seal includes a driver display screen and many more physical buttons and control knobs than the Model 3. The interior features BYD’s signature 15.6″ rotating infotainment screen. As part of its Ocean series, the seats have a wave-like pattern.

At 4,800 mm long, 1,875 mm wide, and 1,460 mm tall with a wheelbase of 2,920 mm, BYD’s new Seal is roughly the same size as the Model 3 (4,720 mm long x 1,848 mm wide x 1,442 mm tall).

After launching the new model on Thursday, we learned the 2025 Seal EV will start at 175,800 yuan, or about $24,500.

In comparison, the new Tesla Model 3 starts at 231,900 yuan, or around $32,300. That’s about a $7,800 difference.

BYD’s base Seal EV features up to 317 miles (510 km) CLTC range. The base RWD Model 3 is rated with up to 377 miles (606 km) range in China.

The 2025 Seal EV is available in four trims, with prices ranging from 175,800 yuan ($24,500) to 239,800 yuan ($33,500).

The 2025 Seal is hitting the market just five months after BYD launched the Seal EV Honor Edition in March.

BYD’s 2025 model is slightly cheaper than the Honor Edition, which starts at 179,800 yuan, or about $25,000.

The new Seal model comes after Tesla launched the new Model 3 Performance in China in June.