TheChek News Flow

China’s Foreign Direct Investment Falls Further in May

Foreign direct investment fell 28.2% for the January to May period

China’s foreign direct investment fell further in May, extending a streak of declines for the 12th straight month, official data showed.

China attracted 412.51 billion yuan ($56.81 billion) worth of foreign direct investment in the January to May period, down 28.2% from the same period last year, the Ministry of Commerce said late Friday.

That widened from the 27.9% drop recorded for the first four months of the year. The metric has been falling since June 2023.

China’s commerce ministry said the wider decline was mainly due to a high comparison base last year, adding that the actual scale of foreign investment is still at a historically high level.

“Currently the expectations and confidence of foreign investors are generally stable,” the ministry said after releasing the data.

The commerce ministry also highlighted an increase in the number of newly established foreign-invested firms in China, which rose 17.4% to 21,764 firms in the first five months.

The decline in FDI comes amid escalating tensions between China and the West, as more punitive measures have soured trade and economic relations. The U.S. and the European Union have introduced higher tariffs on Chinese electric vehicles, while Beijing has opened an antidumping probe into pork imports from the EU.

Bulk of UK renewables projects fail to get beyond planning stage

Analysis shows challenges the country faces in hitting clean energy targets

The majority of Britain’s onshore renewable energy projects are failing to get beyond the planning stage, according to analysis that highlights the challenges the country still faces in hitting its clean energy targets. 

Sixty-three per cent of the roughly 4,000 applications submitted for wind, solar and battery projects between 2018 and 2023 have been refused, abandoned, withdrawn, or had their planning permission expire, according to Cornwall Insight, an energy consultancy. 

A further 18 per cent have been sent back for revision, leaving only a fifth of projects either waiting for a planning decision or ready to be built.

Both the Conservative and Labour parties have promised planning reforms ahead of the general election on July 4, with the Tories pledging to cut from four years to one the typical time it takes to sign off major infrastructure projects. 

“The UK has set ambitious targets to boost renewable energy capacity,” said Lucy Dolton, assets and infrastructure manager at Cornwall Insight. “These figures reveal a substantial shortfall in meeting these targets, something which is largely driven by the slow pace of progress in deploying renewable energy projects.”

The findings, shared with the Financial Times, come as the UK is under pressure to rapidly increase renewable energy capacity to meet its legally binding goal of cutting carbon emissions to net zero by 2050, and decarbonising the electricity system well before then. 

The low rate of successful projects partly reflects a surge in speculative applications, according to researchers at Cornwall Insight, as developers submit multiple plans on the expectation that not all will succeed. 

Developers complain that the planning system does not have enough resources to deal with the rising number of applications, while lengthy waits to get connections to electricity grids can stall projects’ progress through the approval process. 

Nathan Bennett, at trade group RenewableUK, added: “There is a UK-wide resourcing challenge, a lack of people able to process consents in a timely manner.” 

The analysis, which covers England, Scotland and Wales, showed a sharp annual rise in planning applications for renewable projects in recent years, with 66 per cent more applications in 2023 than in 2022. 

At a regional level, 37 per cent of battery projects that applied for planning permission in the north-west were either waiting for a decision or ready to be built, compared with 19 per cent in the south-east. For solar projects in the south-west, the figure was 68 per cent.

The Labour party, which has a lead of around 20 points in opinion polls, wants to double onshore wind capacity, triple solar power capacity and quadruple offshore wind capacity by 2030 to meet its interim goal of decarbonising the electricity system by then. The Conservatives want to decarbonise the electricity system by 2035. 

Labour has promised to make “major projects faster and cheaper by slashing red tape and to hire 300 planning officers. More than 3,000 left the profession between 2010 and 2020. 

The Conservatives have also pledged to reform “outdated EU red tape” and “end frivolous legal challenges” to development.

National Grid and other electricity network owners have been working to try and speed up the grid connections queue. The National Grid’s electricity system operator said its latest proposals could halve the size of the queue. The government declined to comment.

Stéphane Boujnah says both far-right and leftwing alliance would struggle to implement their plans in government

The French chief executive of Europe’s biggest stock exchange group has appealed for business leaders to stay “calm” ahead of the country’s looming snap elections, saying that neither the far-right party or a new leftwing alliance would be able to enact their policy pledges.

Stéphane Boujnah, head of Paris-based Euronext, told the Financial Times that the plans of both Marine Le Pen’s Rassemblement National (RN) party — which polls suggest will win the first round vote next week — and the leftwing Nouveau Front Populaire (NFP) are “a concern for the future of the French economy”.

But he added: “I suggest that everyone keep calm and wait until July 7 or July 8 to analyse the results.

“I can hardly imagine that in the event one of these two forces get into the office that they will be able to implement everything they promise because of the combination of rating agencies, unions”, pressure from the EU and the president’s power, which would “mitigate the impact of any outlier or [inexperienced] party” doing what they want.

His comments come as investors fret over the potential impact of the RN or the NFP if they were to come to power, since both promise a break with President Emmanuel Macron’s pro-business policies. 

France’s Cac 40 stock index has fallen about 5 per cent while the gap between French and German benchmark borrowing costs — a market barometer for French political risks — has soared since Macron’s announcement earlier this month.

French executives are privately seeking to court the RN, which is yet to issue a formal economic programme, but has said it wants to cut value added tax on energy and potentially lower the retirement age. Both moves would add to France’s already heavy public debt.

Meanwhile the leftist NFP, currently second in the polls, has put forward a radical tax-and-spend agenda, which includes raising wealth and inheritance taxes and increasing income tax for top earners. The NFP is a group that includes the far-left party known as La France Insoumise (LFI), centre-left Socialists, Greens and Communists.

Boujnah, who has led Euronext since 2015 and previously worked as a banker at Santander and Deutsche Bank, said the key question for both the NFP and the RN “is how long will it take for them to water down explicitly their ambition”. It was one thing “to propose things that sound [and] smell extreme to be voted; another one . . . to run a country and be confronted with complexity”, he said. 

“The risk of a Liz Truss mini budget, forex crisis does not exist because of the euro,” Boujnah said, referring to the gilt market chaos triggered by the former UK Prime Minister in 2022. France’s finance minister last week warned the country could face a similar crisis if the RN wins the election.

The European Central Bank’s chief economist last week dismissed the idea that intervention would be required in France’s government debt market after the sell-off.

Boujnah, whose company runs trading and listing venues in cities including Paris, Amsterdam and Lisbon, added that either outcome “is definitely less good than with the incumbent Macron because Macron is definitely one of the most pro-Europe, pro-business presidents that France ever had, and I believe that it will be different”.

“There are two unknowns: how much time it would take both of them to work down their programmes when they face reality, and second, whether they mean what they say,” he added.

At a press conference in Paris on Friday, the NFP outlined plans to increase spending by €25bn this year and then take the total to €150bn by 2027, which is the end of Macron’s term. The spending will go to boost spending power for households, fight climate change, and invest in public services.

“Our spending will be covered by our revenue,” said LFI’s Éric Coquerel, referring to planned tax hikes. He pledged they would not increase France’s budget deficit.

The RN has not costed its policies but party chief Jordan Bardella, its potential prime minister, said on Thursday that immediate measures to lower VAT on fuel and electricity from 20 to 5.5 per cent would cost €12bn. 

Proposals by both parties to repeal Macron’s pension reform and reduce the age of retirement from 64 to 62 for most citizens would cost €13bn, based on expected savings from Macron’s reform. 

Investment manager has doubled in size in four years and is now considering IPO or merger

HPS Investment Partners has raised one of the largest private credit funds on record, confirming its spot as one of the leaders in the industry as the firm debates a possible public listing or merger.

HPS amassed $21.1bn for its flagship Specialty Loan Fund VI, its largest fundraising since the firm was founded in 2007. The mammoth fund received $14.3bn of commitments from investors, one of the largest sums ever raised by a traditional direct lending fund, according to data provider Preqin. The $21.1bn figure also includes billions of dollars of bank loans, which increase its ability to invest.

The fundraising, following on the heels of a string of large hauls last year, comes as leaders at HPS consider options that could see the firm go public or merge with a rival private investment group, according to people briefed on the matter. The firm manages $114bn, more than double its size from the start of 2020.

“Performance attracts capital,” Michael Patterson, a governing partner of HPS, said in an interview. “You then have to put that capital to work [while] maintaining that performance. This is a big, very public demonstration that’s what is happening at HPS.”

The firm and several of its rivals have over the past four years become some of the most important players on Wall Street, lending to a growing list of blue-chip companies, buying loan books that banks are keen to shed and taking on risks that traditional lenders have retreated from.

Their ascension has been driven by strong performance and a fundraising prowess that has helped the industry accumulate hundreds of billions of dollars in recent years, boosting managers such as Ares, Apollo, KKR, Blackstone and Sixth Street. Many have become go-to portfolio managers for insurance companies — including insurers they own themselves — replacing traditional corporate bond and loan investors.

Patterson said HPS saw “significant” areas to grow the company’s business, including in the fast-growing area of private investment grade and asset-backed debt. The areas have been a focus for competitors who are now financing aircraft leases, music royalty streams and even semiconductor manufacturing plants.

HPS was formed in 2007 by Scott Kapnick, Scot French and Patterson, before the financial crisis and resulting regulation prompted many banks to scale back the types of lending they were doing. All three had worked at Goldman Sachs during their careers before starting the new firm, which they built within JPMorgan Chase’s asset management business.

But as post-crisis regulation bit and JPMorgan’s commitment to the unit wavered, they moved to exit the bank. Top executives ultimately bought the business in 2016, separating HPS from JPMorgan with new investors Dyal Capital and Guardian Life purchasing stakes in the firm.

The firm is now debating its next steps. It has filed documents with securities regulators in preparation for a potential initial public offering, according to people briefed on the matter. A listing would allow HPS to reward senior staff or pay for the acquisition of a rival. The firm could also merge with a rival private investment group looking to bolster its private credit bona fides. Insiders caution that no decision has been made and HPS could remain independent. HPS declined to comment on its business plans.

The new Speciality Loan Fund VI lends to relatively risky companies in need of capital, and the fund often steps in ahead of restructurings or difficult refinancings. The typical loan the fund offers carries an interest rate 7 percentage points above Sofr, the floating interest rate benchmark. That can yield between 12 and 13 per cent today.

HPS last year provided a €1.5bn loan to finance the buyout of packaging maker Constantia by One Rock Capital as well as an $800mn loan to medical device manufacturer Tecomet.

Ipsos survey for the FT finds high levels of volatility in electorate ahead of July 4 ballot

The Conservatives have lost up to a third of voters who planned to back the party just four months ago, according to an Ipsos poll for the Financial Times that points to high levels of volatility ahead of the UK election on July 4.

The survey, conducted on the same cohort of almost 16,000 voters at the end of January and the start of June, found that 32 per cent of people who had said initially they would vote Conservative have since changed their minds.

Rightwing party Reform UK has attracted 8 per cent of the Tory voters polled, 6 per cent switched to Labour, while 7 per cent said they were now undecided and 9 per cent said they were less likely to vote at all.

Despite the high rate of switching, the poll showed little change in the overall support for each of the main political parties, with the Tories’ share of those polled falling from 14 to 13 per cent and Labour increasing its share over the period from 26 to 27 per cent.

While the Conservatives lost voters to Labour and Reform, they also gained backers among those who had previously said they were undecided. This group has commonly turned out for the Conservatives in recent elections.

Labour — which opinion polls suggest is likely to sweep to power on July 4 — also experienced high levels of turnover, losing a quarter of people who previously said they were planning to vote for the party, of which 3 per cent said they were now undecided and 9 per cent less likely to vote.

The party lost 4 per cent of its voters to the Lib Dems, some of which are likely to be tactical switchers trying to oust Tory candidates, but Labour gained 16 per cent of those who had previously been planning to vote Lib Dem.

Rob Ford, professor of political science at Manchester university, said the Ipsos findings demonstrated that “surface stability has a lot of churn underneath it”.

“We’re likely to see a lot more churn than in previous elections because partisanship is lower than we’ve seen in the past and fragmentation between different parties is higher,” Ford said.

The proportion of British voters who switch their preferred party between general elections has shifted from about 13 per cent in 1960 to closer to 60 per cent today, according to research from Oxford and Manchester universities.

Nearly half of those who switched from Labour to the Lib Dems said they were switching to try to keep another party out. There are many seats — particularly in the south and south-west of England — that have never returned a Labour MP and where the battle is viewed as a two-horse race between the Tories and Lib Dems.

Reform was the only party to significantly increase its total vote share in the longitudinal survey, from 3 to 7 per cent. Reform founder Nigel Farage seized the party leadership on June 3, near the end of the second data-collection period of May 29 to June 5, meaning that the data will not fully reflect the impact of his move.

Of those voters who switched from the Conservatives to Reform, 80 per cent said they were unhappy with Rishi Sunak’s performance as prime minister, while about three-quarters said they were influenced by policy towards asylum seekers.

“The data helps us understand the importance to Conservative-to-Reform switchers of dissatisfaction with the government and prime minister,” said Gideon Skinner, head of politics at Ipsos.

A little over a decade ago, the luxury industry was gripped by the “handbag war” between LVMH and Hermès when Bernard Arnault’s group tried to seize control of the maker of the prized Birkin handbags and was eventually forced to give up. Now a watch war could be afoot.

The two luxury powerhouses are bidding for Vaucher Manufacture Fleurier, the Parmigiani watch brand and other suppliers part of the watchmaking hub put up for sale several months ago by their owner, the Sandoz Family Foundation, industry sources say. Cartier owner Richemont has also expressed interest, they say, but the Swiss group is much less motivated than LVMH and Hermès because it has sufficient production capacity and strong ties with suppliers.

Earlier this month, executives from LVMH, Hermès and Richemont met with the management of the businesses put up for sale, one by one, industry sources say. “Initial bids are expected to be made this month and hopefully a deal will be announced before the end of the summer,” one person with knowledge of the sale process said. Deloitte is advising the Sandoz Foundation. LVMH and Hermès declined to comment. Richemont could not be reached for comment.

For many weeks, Hermès appeared to be the best positioned since it already owned 25 percent of Vaucher, a highly regarded provider of watch movements. Hermès is said to have ploughed more than €120 million into the company since it became a shareholder in 2006. The French luxury company has right of first refusal to buy the shares it does not already own in Vaucher.

Publicly, Hermès has never denied its interest in buying the whole company. In an interview with Swiss daily Le Temps in April, Guillaume de Seynes, a member of the Hermès family who has been in charge of the group’s investments in watchmaking since the beginning, said: “I can confirm that we are not uninterested with what will happen to Vaucher.” Vaucher supplies all the mechanical movements of Hermès’ watches, de Seynes told the newspaper. For him, letting go of Vaucher is not an option. Hermès has spent a lot of time and money trying to keep this company financially afloat and building a relationship with it. Losing ties with Vaucher would be unthinkable for de Seynes. It’s his battle.

Vaucher is vital because it gives Hermès legitimacy in watchmaking and plays an important part in the narrative. If LVMH were to win control, Hermès would find itself in a difficult position. It’s not clear how the two would work together. While Vaucher is part of the Sandoz Foundation, the French luxury company can say that its movements are made in-house. If LVMH took charge, it may not allow the company to say they are made in-house and even worse, it may not agree to supply Hermès with movements.

There is still quite a lot of bad blood between the two groups. Memories of the acrimonious 2010-2014 “handbag war” are still fresh. Hermès fought tooth and nail to rebuff LVMH’s attempt to gobble up the luxury company. “I think Hermès is going to do all that it can to prevent LVMH from taking control of Vaucher,” the executive of one major watch brand told Miss Tweed on condition of anonymity.

If LVMH succeeded in buying the whole watchmaking hub of the Sandoz Foundation, Hermès could take the group to court on the basis that its right of first refusal was not honored, some industry sources say. The two groups would cross swords again. That would not be good news for investors as it would create an unwelcome distraction for both groups’ management at a time when the industry is facing an unprecedented downturn and everyone needs to be on deck to navigate the storm as best as they can.

Hermès is not the only one concerned about LVMH’s interest in Vaucher. Audemars Piguet and Richard Mille are also worried. LVMH calling the shots at Vaucher is not a particularly palatable option for them either since they are major customers of the movement provider.

Hence, Audemars Piguet and Richard Mille could likely join the fray against LVMH. Audemars Piguet owns a minority stake in Richard Mille, which means that their interests are aligned.

Part of the Sandoz watchmaking hub is Atokalpa, a provider of key elements such as balance wheels and springs, and its sister company Elwin, which supplies hardware for mechanical movements. Patek Philippe and Chopard are shareholders in both companies.

“It’s pretty clear to me that Atokalpa is strategic also for Patek Philippe and Chopard,” another senior watch executive said. “They will not want to let LVMH get control of it.”

Hence, a consortium opposing LVMH’s bid to buy the whole watchmaking hub of the Sandoz Foundation is forming. Watchmakers are more relaxed working with Hermès than with LVMH, Swiss watch industry sources say. The latter group’s financial resources are gigantic. Bernard Arnault’s philosophy is that the end justifies the means. It’s nearly impossible to counter LVMH’s might and plans.

Unlike LVMH, Hermès is not on the prowl to expand its empire. The French luxury company is working on securing its supply chain and continuing to build its watch business. Rival big brands feel more comfortable with that strategy than with LVMH’s ambitions.

In the past few years, Hermès has been introducing more high-end pieces costing more than €12,000, paying great attention to design. “I think Hermès really defined its soul in watchmaking,” the CEO of one medium-sized Swiss watch brand told Miss Tweed. “They have found their place in the watchmaking industry and created very nice products.”

De Seynes told Le Temps that the average price of its watches had risen from €3,000 to €10,000 in the past five to six years. At the Watches & Wonders trade fair last April, Hermès presented a new genderless model called the Hermès Cut, with a new movement designed specifically for it, as well as a triple-axis tourbillon coupled with a minute repeater called Arceau Duc Attelé costing €400,000.

Hermès is a rising star in the Swiss watch industry. Last year, it made €611 million in watch sales, up 23 percent at constant exchange rates, higher than the brand’s overall sales growth of 21 percent. In the first quarter, watch sales were up 4 percent – a feat in a declining market. Hermès makes around 75,000 watches a year. A significant proportion are still equipped with quartz movements and they cost between €2,000 and €3,000. Its timepieces are sold in its more than 300 stores and at some 100 wholesalers, the brand says.

Hermès has been trying to buy Vaucher Manufacture for years. But now it has to counter competition from LVMH, which is also keen to invest in movement providers. The French group harbors great ambitions in watchmaking. Several industry sources said LVMH was on the lookout for more suppliers than just Vaucher.

“We see a lot of LVMH people in Switzerland attending fairs, bonding with key players and their M&A teams are scouting for acquisition opportunities,” the head of one small independent brand told Miss Tweed. “They are in ‘attack’ mode.”

Industry sources said LVMH offered €4 billion for Swatch Group’s Breguet a few years ago but the Hayek family would not let go of it. LVMH and Swatch Group never commented on this fact.

Frédéric Arnault, CEO of LVMH’s watchmaking division and third son of the group’s chairman and CEO Bernard Arnault, is looking for ways to increase production and the quality of movements, particularly that of TAG Heuer. LVMH also owns Zenith and Hublot which, like TAG, have their own in-house movement providers.

Carole Forestier-Kasapi, in charge of movement development at TAG Heuer, told Le Temps in May that Vaucher was the “best provider” of movements with complications – additional functions than the time. At Watches & Wonders, TAG Heuer presented a new MonacoSplit-Seconds Chronograph supplied by Vaucher. Some industry experts argue that this watch was more a marketing coup than a timepiece aimed to be produced in large quantities. Priced at 165,000 Swiss francs, every item will be numbered, the brand said at the time of its presentation.

TAG Heuer’s spokeswoman did not reply to a request to comment on that point. Jean Arnault, Bernard Arnault’s fourth and youngest son, is in charge of watches for Louis Vuitton and relaunching the brands Gérald Genta and Daniel Roth, using the group’s plant La Fabrique du Temps. Jean and Frédéric Arnault may be keen to grow further Parmigiani, which is also for sale and part of the Sandoz Foundation watchmaking hub.

Parmigiani is not a big player in the industry. Last year, it is estimated to have generated just over 65 million Swiss francs in revenue in 2023 – up from 26 million Swiss francs in 2019 – and aiming for further steady growth this year. The watchmaker is still burning a little cash but at least it is breaking even, several sources said.

Under the leadership of Guido Terreni since early 2021, Parmigiani has enjoyed a revival. The brand has narrowed its focus on its best-selling model, the Tonda PF, which has a minimalist and recognizable integrated design. Steel models start at around 20,000 Swiss francs.

Parmigiani has benefited from a shortage of popular models such as AP’s Royal Oak and Patek Philippe’s Nautilus which cost about the same and have similar designs. Consumers bought a Parmigiani Tonda PF instead, watch retailers say. Parmigiani is distributed mainly by third-party retailers. It has not invested in its own network of boutiques.

One element complicating the sale of the Parmigiani brand is the fact that it does not own the intellectual property (IP) of its movements. Those belong to Vaucher Manufacture. This means that whoever buys Parmigiani, is buying a brand without the IP of its movements. Hence, if LVMH wanted to invest in Parmigiani, it would not make sense for it not to buy Vaucher.

Hermès, on the other hand, may not be that interested in Parmigiani since its strategy is to focus on growing its own watch business. However, both Hermès and LVMH have the means to write big cheques. At the end of 2023, Hermès was sitting on a net cash pile of more than €10 billion while LVMH had €7.7 billion. Comparatively, Richemont had a net cash position of €7.4 billion as of March 31.

In the course of the past decade, most major watch brands have been investing in the development of their own movements and production capacity. Having your own movement makes your timepiece more unique and allows you to charge more for it. Watchmaking is very capital-intensive. It requires a lot of money and time to develop a movement, often several years.

Also part of the Sandoz Foundation’s watch producing hub is Quadrance & Habillage, a specialist maker of watch dials with expertise in guilloche and engraving. The watch suppliers work for many of the world’s top watch brands. Together with Vaucher Manufacture and the other suppliers part of the hub, they employ more than 500 people, spread between Alle in the canton of Jura, La Chaux-de-Fonds and the Vallée de Joux, three of Switzerland’s most important watchmaking clusters.

The Foundation already tried to find a buyer for its watchmaking hub several times, including once three years ago, but discussions failed to produce a deal. The Foundation is understood to have lost more than 1 billion Swiss francs since it started investing in Parmigiani and its various suppliers 30 years ago. The descendants of the family behind the Foundation are keen to get as much back as possible.

Larry Ellison’s ‘extreme sailing’ returns to New York as it plots expansion

Oracle co-founder’s professional sailing league wants to become the global Formula 1 of water sports

Billionaire Larry Ellison’s SailGP predicts it will break even as early as next year as it steps up a global expansion aimed at establishing the professional sailing league as the Formula 1 of the water.

The competition that the Oracle co-founder started in 2019 returned to New York’s harbour for its second race in the city on Saturday. Amid light winds, SailGP’s 10-boat New York harbour race was forced to cancel its third and final heat of the day. Racing resumes on Sunday afternoon.

The league’s 50ft catamarans are designed to lift out of the water — or foil — which reduces drag and allows the sailboats to accelerate to almost 100km. 

These speeds — combined with an occasional capsize — give the event the look of a Formula 1 auto race, an appeal the league hopes will broaden its reach beyond sailing aficionados. 

On Friday, SailGP announced that Mubadala, the Abu Dhabi sovereign wealth fund and one of the league’s biggest sponsors, will launch a Brazilian team that will compete alongside nine other boats in the league’s fifth season. The deal underscores the league’s effort to grow into profitability as soon as next year, according to officials. 

“We have taken the view that we want to keep pushing the value of the league by that growth,” said Andrew Thompson, SailGP’s managing director. “We are forecasted to break even, I would say, likely at the end of next season if not season six,” he said. “We got there sooner than anticipated, which is great.”

“Some host venues pay a large sum as well as sponsorship directly for that race. Others are really sponsorship-driven,” he said. “We are getting to the stage where many of our events are now profitable, but there are a significant portion of them that aren’t.”

Media revenue “is not a significant sum today”, Thompson said. SailGP races are broadcast on CBS and online.

Ellison, a longtime funder of the America’s Cup sailing race and chair at Oracle, remains a big backer of the league. His software company has given SailGP $2.3mn in exchange for sponsorship, according to a regulatory filing last year.

In New York, SailGP is also benefiting from Wall Street cash, for example, from Ken Griffin’s financial firm Citadel, which sponsored waterside lounges for employees. Some VIPs enjoyed a ride in chaser boats alongside the catamarans as the races were going on.

SailGP is one of nearly a dozen emerging sports leagues that is drawing private equity investments, according to a report this month from JPMorgan. Others include drone racing, lacrosse, pickleball and US women’s basketball.

“There’s a risk that rising valuations in emerging sports result from investors having been priced out of major sports leagues whose valuations are soaring,” JPMorgan said.

In November, billionaire investor Marc Lasry led the acquisition of the US SailGP team. Other teams are still owned by SailGP, but Thompson said: “I would expect by the end of season five that none of the teams will be owned by SailGP and they will all be in third-party hands.”

Ryan McKillen, an investor in the US SailGP team and a former founding engineer at Uber, said in an interview that traditional sailing can be “incredibly boring to watch”.

But with the speed of SailGP, “we have an extreme sport”, he said. “It is not sailing any more.”

China agrees to talks with EU over EV tariffs

German minister Robert Habeck welcomes the move during visit to Beijing to soothe tensions

China has agreed to enter talks with the EU over its decision to impose higher tariffs on imports of Chinese electric vehicles, during a visit to Beijing by Germany’s vice-chancellor aimed at soothing tensions.

Robert Habeck, minister for economic affairs and climate action, welcomed the move by China to enter discussions with Brussels on EU tariffs but said it was “a first step and many more will be necessary”.

His comments came after China’s ministry of commerce said Beijing and Brussels had agreed to launch consultations on an anti-subsidy investigation launched by the EU last year. The probe led to a decision this month to increase tariffs on Chinese EVs to as high as 48 per cent.

The announcement followed a video conference between China’s minister of commerce Wang Wentao and EU executive vice-president and trade commissioner Valdis Dombrovskis.

Germany was critical of the EU’s decision to increase tariffs on imports of Chinese EVs and Habeck is the first senior European politician to visit the country since the extra duties were announced.

The Chinese market is crucially important for Germany’s vast carmaking industry, making Berlin particularly vulnerable to any retaliatory measures by Beijing, which has already announced its own anti-dumping investigation into EU pork products.

While he struck a conciliatory tone on tariffs, which are yet to be finalised, Habeck was critical of China’s growing exports to Russia and cited Germany’s efforts to stop exports of “dual-use” goods with potential military applications.

“I looked at the trade figures and Chinese trade with Russia increased more than 40 per cent last year,” he said. “Of course energy is a high part [of] it, but something like half of it is related to dual-use goods.”

“These are technically goods that can be used on the battlefield and this has to stop,” he said.

China is one of Germany’s largest trading partners and Berlin has sought to carefully navigate rising tensions between Beijing and Washington that increased sharply following Russia’s invasion of Ukraine in 2022.

Habeck also visited Beijing where he met Wang Wentao and Zheng Shenjie, head of the National Development and Reform Commission. He said they spoke about energy and climate issues as well as human rights with Chinese officials as part of “intense discussions”. An anticipated meeting with Premier Li Qiang did not materialise.

On Sunday, the German vice-chancellor said China should find a safe alternative to coal after the country ramped up production of the carbon-intensive fuel source. “Without China it would not be possible to meet the climate targets globally,” he said during a visit to Hangzhou, according to a Reuters report.

President Joe Biden imposed tariffs of 100 per cent on Chinese electric vehicles this year, higher than the EU, though the US imports much smaller volumes.

Olaf Scholz, Germany’s chancellor, met President Xi Jinping in April and encouraged China’s president to pressure Russia to end its campaign in Ukraine. Scholz has also petitioned Li for greater market access for German companies in the mainland.

Xi and his Russian counterpart Vladimir Putin have trumpeted their close relationship and sworn to increase trade. Russia became China’s fifth-biggest single-country trading partner last year, up from ninth in 2020, as trade reached $240bn. Chinese exports to Russia rose 46.9 per cent in 2023 year on year, according to official data.

Environmentalists and sceptical locals threaten key element of US plans for green energy

One of the Biden administration’s flagship projects to derive energy from hydrogen faces an uncertain future due to strong community opposition, underscoring the difficulty in rolling out a technology once hailed as key to the green transition.

The Appalachian Regional Clean Hydrogen Hub (ARCH2), spanning the prolific Marcellus shale basin in West Virginia, Ohio and Pennsylvania, is designed to produce hydrogen using primarily gas and carbon capture by mid-2030. But the $6bn project, which includes fossil fuel companies EQT, CNX and Marathon Petroleum as developers, faces opposition from local communities and green groups over its environmental footprint and doubts over its commercial viability.

Last month more than 50 local environmental groups urged the Department of Energy in a letter to suspend negotiations on ARCH2 until more clarity was provided on the project.

“This is just the latest reinvention of the [oil and gas] industry in an attempt to stay relevant and reposition themselves as a solution to a problem that they created, the climate crisis,” said Tom Torres, hydrogen campaign co-ordinator for the Ohio River Valley Institute, and one of the letter’s signatories.

Clean hydrogen has been touted for its potential to green hard-to-abate sectors such as shipping and cement production. America’s abundant cheap gas resources have made it an attractive destination for projects such as ARCH2, which use gas and carbon capture, also known as blue hydrogen.

But the rollout of blue hydrogen is controversial because it generates emissions and relies on carbon capture technology, which has yet to be proven cost-efficient at scale. A study by researchers at Stanford and Cornell found that the emissions footprint of blue hydrogen was 20 per cent greater than burning gas or coal for heat.

Green groups claim blue hydrogen projects hand the fossil fuel industry a lifeline and funds should instead be directed towards green hydrogen, which is produced using renewables.

Kat Finneran, a doctoral student in geography from Findlay, Ohio, the headquarters of Marathon Petroleum, warned the hydrogen hub would “prolong fracking operations for decades”. 

“It doesn’t just prolong them, it validates and greenwashes them,” said Finneran, who also testified in a Department of Energy listening session in March with nearly 200 participants.

By 2030, the US is expected to become the world’s largest clean hydrogen producer, with blue hydrogen making up more than three-quarters of production, according to consultancy BloombergNEF. Green hydrogen, generated using renewable electricity, will make up the remaining fifth.

Shawn Bennett, project leader for ARCH2 and former deputy assistant secretary for oil and gas under the Trump administration, has defended the hub’s environmental credentials and commercial viability.

He said the hub would not “cause new [gas] wells to be spudded” and attributed local pushback to a “misunderstanding” about the project’s stage of development. ARCH2 was in negotiations with the DOE and had not finalised sites for its hydrogen facilities to begin serious community engagement, said Bennett.

“In lieu of funding it’s very difficult . . . to start making promises and commitments to communities,” said Bennett, who testified at a Pennsylvania house hearing on June 17 on hydrogen hubs, where environmental groups and lawmakers raised concerns over blue hydrogen’s carbon footprint. 

A Department of Energy spokesperson said that clean hydrogen was “essential” to a strong green energy economy and that hydrogen hubs “will help unlock the full potential of this versatile fuel”. 

The Biden administration has set a goal of producing 10mn metric tonnes of clean hydrogen annually by 2030, up from virtually zero today and the same size as the “dirty” hydrogen industry, which is derived from fossil fuels and produces a significant amount of emissions

Community pushback has plagued other hydrogen projects, with France-based CMG Cleantech moving its $113mn renewable technology park in Osceola County, Florida to another site after locals opposed its green hydrogen plans. The move delayed the project by 8 months.

Analysts say hydrogen projects face a struggle to secure funding and customers, with BNEF estimating that only 6 per cent of US projects have secured binding supply agreements. 

“There’s a real lack of trust that there will be a real hydrogen market with competitive prices,” said Elina Teplinsky, partner at Pillsbury Law. “A lot of companies are waiting on the sidelines before they make any serious investment.”

The lack of final rules for the Inflation Reduction Act’s controversial clean hydrogen production tax credit has also hampered the sector’s rollout.

In February, all seven hydrogen hubs penned a letter to Treasury warning that “investments and jobs will not fully materialise” unless the rules are “significantly revised”.