TheChek News Flow

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Eur$ 1,0897 CNH 6,3786 CNY 6,3693 JPY 123,89 GBP 1,3070 CHF 0,9308 RUB 83,8514 TRY 14,7322 WTI$ 101,85 Gold 1,923,36 BTC 45,180 -1,5% ETH 3,339,41 -2,60%

S&P +0,09% Nasdaq +0,04% EuroStoxx -0,26%% FTSE +0,02% Dax -0,25% SMI +0,08%

Macro :

- Germany Grid Body Warns of ‘Terrible’ Choices in Gas Plan: HB

- Draghi Plans 10 Billion Euros of Fresh Debt as Cost of War Soars

- Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

- U.K. Covid Cases at Highest Level as Immunity Wanes, Study Finds

- Ex-Oligarch Says Putin Sees War With the West Already Underway

Keep an eye on :

- AIR FP : Unkown Airbus Holder Raises $393 Million From Stake Sale

- ALLFG NA : Allfunds to Buy Web Financial Group for EU145m

- CS FP : *AXA, OMERS CONSORTIUMS FINAL BIDDERS FOR LYNTIA NETWORKS: CONFI

- BP/ LN : BP to Issue 165m Shares in Connection With Midstream Merger

- CARLB DC : Carlsberg Talks With Possible Buyers of Russian Unit: Berlingske

- EDF FP : EDF Completes Capital Increase With French State Backing

- ECV GY : Encavis Buys 11.5 MW Danish Wind Farm

- ERICB SS : Handelsbanken Analysts Adjust View on CFIUS, Ericsson and Vonage

- FTCH US : Farfetch Alliance Gives Its Tech ‘Stamp of Legitimacy’: Analyst

- GSK LN : Vir Plunges After FDA Cancels U.S. Sotrovimab Authorization

- HYVE LN : Hyve Agrees to Sell Russia Operations for About GBP100M: Sky

- KEYW BB : Keyware Agrees to Settlement in Probe of Market Manipulation

- LAT FP : Confirms it continues to progress discussions with multiple potential targets in North America.

- FB US : Instagram Cuts Payments to Influencers for Short Videos: FT

- ORSTED DC : Russia to Cut Danish Gas If Orsted Doesn’t Pay in Ruble: Borsen

- SPM IM : Saipem Gets Over $400m in Middle East, West Africa Contracts

- SALME NO : Salmon Evolution Offering of 33.3m Shares Prices at NOK9/Share

- SUN SW : Sulzer 1Q Orders CHF858.5M Vs. CHF749.7M Y/y

- TKA GY : Thyssenkrupp Under Immense Pressure Because of Ukraine War: CEO

- VWS DC : Vestas Will Gradually Withdraw From Russia, Borsen Says

- VOW GY : VW to Scrap Dozens of Models, Focus on Premium Market: FT

- WBD IM : Webuild Says CDP, Intesa, UniCredit, BPM Have Acquired Stakes

VW to scrap dozens of models and focus on premium market

‘People’s car’ pioneer will prioritise more expensive vehicles such as its Audi and Porsche models

Volkswagen, the pioneer of the “people’s car” that epitomised the auto industry’s obsession with expansion, will axe dozens of combustion engine models by the end of the decade and sell fewer cars overall to concentrate on producing more profitable, premium vehicles.

“The key target is not growth,” said Arno Antlitz, chief financial officer, in a reversal of the stance taken by former VW executives.

“We are [more focused] on quality and on margins, rather than on volume and market share.” VW, he said, would reduce its line-up of petrol and diesel cars — which consists of at least 100 models across several brands — by 60 per cent in Europe over the next eight years.

VW’s new strategy is a sign of profound changes in the wider auto sector, which for decades has attempted to increase profits by selling more cars each year, even if that required heavy discounting.

Former VW chief executive Martin Winterkorn, who resigned in the wake of the diesel emissions scandal, had made it his goal to beat Toyota and General Motors to the title of “volume number one” by 2018.

In pursuit of global dominance, the Wolfsburg-based group retained a large presence in unprofitable north and south American markets, flooding the region with new models even as it sustained heavy losses.

However, a severe chip shortage caused by the pandemic forced carmakers to cut production last year in the face of surging demand. This allowed brands such as Mercedes and BMW to charge more for their models and make record profits in 2021 despite selling far fewer vehicles.

A similar strategy catapulted VW to the top of the earnings table in Germany’s Dax index, posting more than €20bn in pre-tax profits. The company prioritised more expensive vehicles produced by its Audi and Porsche brands, which account for the bulk of the group’s profits.

Executives at all three automakers have been keen to stress that this practice will persist even after supply-chain bottlenecks subside. “I would like to really emphasise that we are not driving a volume strategy,” Oliver Zipse, BMW’s chief executive, said last year.

Antlitz said that even VW, which prided itself on being the world’s largest carmaker before losing the “volume crown” to Toyota and whose executives privately used to target selling 11m vehicles in a single year, was no longer seeking to expand for the sake of size.

“We have [a significantly] lower fixed-cost base, so we are less dependent on volume and less dependent on growth,” he said, pointing to the fact that VW had managed to reduce fixed costs of €41bn in 2019 by 10 per cent ahead of schedule, while investing in software development and new units.

Even VW’s €52bn push into electric vehicles — the largest investment package of its kind — would not add unnecessary volume, Antlitz added. “We are not adding capacity: we rework factory by factory,” he said, referring to plants in Zwickau and Emden, where combustion engine production lines have been converted to construct electric cars, while workers have been retrained.

But he also admitted calculations that electric vehicles would soon be as profitable for VW as combustion engine models had been thrown into doubt by the soaring cost of raw materials for batteries.

“[These] $50,000 nickel prices per tonne were not basically priced in, because we expect, hopefully, the war will end soon, and then the raw material prices will at least go a little bit more back,” Antlitz said.

He added that the principle of costs declining over time remained “intact”, and that new battery technology would bring prices down in the long run.

FTX and Binance set up operations in the Gulf state after securing approval under new licensing regime

Crypto firms are rushing to set up shop in Dubai after it started to offer virtual asset licences, making the Gulf state the latest jurisdiction to seek to become a haven for the global crypto industry.

Exchange ByBit, which last week said it would relocate its global headquarters from Singapore to Dubai, joins major industry players Crypto.com, FTX and Binance in establishing a foothold in the city.

Enthusiasm for Dubai among crypto companies comes as their hopes for Singapore as a digital asset hub have faded. While Singapore has approved just a handful of crypto groups that applied for licences, Dubai has attracted several industry heavyweights in the few weeks since launching its licensing scheme.

Singapore had been viewed as a budding crypto hub in Asia, after China cracked down on digital assets last year. Now, the crypto caravan has moved on as some companies turn their sights to a more receptive regulatory regime in the Gulf.

Changpeng Zhao, chief executive of Binance, who has moved from Singapore to Dubai, said the Gulf state’s government has attracted crypto companies with its “open mindset and a business friendly attitude”.

Binance, the world’s largest crypto exchange by trading volume, consulted on the rules under which it will now be regulated in Dubai. In December, Binance signed an agreement with Dubai World Trade Centre, a tax-free business park, to advise on the regulatory landscape of cryptocurrencies in the emirate. The Virtual Asset Regulatory Authority, which was launched earlier this month, has issued Binance a licence.

Zhao said Binance had lobbied for the formation of a bespoke regulator, describing the decision as “very excellent”, and praising Dubai authorities as “the smartest regulators and government officials any place in the world”.

However, Dubai’s enthusiastic adoption of virtual assets has raised alarm in some financial circles, given the recent decision of the Financial Action Task Force, a global money laundering watchdog, to place the United Arab Emirates on its so-called “grey list” of enhanced monitoring of procedures for preventing the flow of dirty money.

UK and US lawyers and former regulators said a licence from the emirate will probably do little to convince western regulators that crypto exchanges are under proper supervision.

The UK has also lodged a push to become a “global hub” for crypto, after City minister John Glen declared in a speech on Monday that the country wants to be attractive to “firms that don’t yet have a settled base”. However, lawyers note the government will need to induce British regulators including the FCA to be more receptive to crypto operators.

Dubai’s crypto charm offensive has quickly attracted several companies. FTX Europe, the Swiss-based arm of the exchange, in March said it would establish regional headquarters in Dubai after being granted a licence there. Singapore-headquartered Crypto.com added a Middle East office in the city last week. BitOasis, a Dubai-based crypto exchange also received a provisional licence last week.

Binance has chosen Dubai, where it already has about 200 staff across three offices, to be its regional headquarters, Zhao said. In comparison, he said: “The Singapore government takes a slightly more cautious approach.”

Binance’s Singapore unit in December dropped its application for a licence to run a crypto business in the country after regulators ordered Binance Singapore to stop all crypto transfers with the global exchange binance.com, which the regulator placed on an investor alert list and said “may be in breach” of local law.

Overall, the Monetary Authority of Singapore (MAS), has granted just four crypto licences, after receiving 176 applications for oversight. More than a hundred companies have been turned away, while about several dozen are still hoping for the green light.

“The very low success rate at MAS is discouraging the crypto sector in Singapore,” said Chia-Ling Koh, director at law firm Osborne Clarke, who compiled the figures.

The MAS also earlier this year instituted a sweeping ban on advertising for cryptocurrency, which has been interpreted as a “strong discouragement by MAS for offering crypto to consumers,” according to Nizam Ismail, chief executive of crypto consultancy Ethikom. “That seemed a little harsh. It was announced and implemented overnight.”

In a move ministers said would protect Singapore from “reputational risks”, lawmakers also tightened controls this week by passing new rules that will prevent crypto companies in the city-state from doing overseas business without a licence.

Xue Kai Pang, chief executive of Tokocrypto, a crypto exchange in nearby Indonesia said: “Singapore is definitely losing some of its shine and attractiveness . . . There are more open countries like Dubai.”

- baseline projection assumes significant fiscal easing in 2022, and we see further monetary easing in terms of rate cuts and a 50bp reduction in banks’ required reserve ratio

Chinese banks as a whole reported profit growth of 13% in 2021, due in part to a low base in 2020 (when profits fell by 2.7%) and declining impairment charges amid China's robust post-pandemic recovery. The strong performance last year came despite the intensification of property-market stress during 2H21, but was in line with our expectations, as we had an 'improving' sector outlook in 2021. Our sector outlook for 2022 is 'neutral'. The sector resolved around CNY3 trillion of non-performing loans (NPLs) in 2021. This partially explained the slight decline in its reported NPL ratio, to 1.7% by end-2021 from 1.8% at end-2020. Nonetheless, reported property-development NPL ratios jumped - for our rated banks, the ratio rose to 2.7% by end-2021 from 1.8% at end-2020, based on available disclosure. In addition to the continued resolution of bad debts, banks' moderate direct exposure to property development (at around 7% of total lending) helped to cushion the impact on their overall NPL ratios. There may also have been recognition issues, especially for smaller banks.

property-sector stress so far this year has been more severe than we previously expected. Sales volumes and homebuyer confidence have yet to fully recover, and we assume that there will not be significant improvement in capital-market access for most developers in the next three to six months