FT : Evergrande shares jump as indebted developer confirms asset sale talks

Evergrande shares jump as indebted developer confirms asset sale talks
Chinese group in negotiations to offload stakes in electric vehicle and property management units

Shares in China Evergrande jumped almost 13 per cent in Hong Kong after the country’s most indebted property developer confirmed it was in talks to sell stakes in its electric vehicle and property management businesses.

Evergrande’s towering debts and the risk of potential financial contagion have led to volatile trading of the company’s shares and bonds in recent months.

The stock jumped as much as 12.6 per cent on Wednesday and has risen almost 25 per cent this week. But the value of Evergrande shares has fallen by more than half this year.

The latest uptick in shares followed a statement by Hui Ka Yan, Evergrande’s founder and chair, to the Hong Kong stock exchange on Tuesday night, in which he sought to address “recent increases in the price and trading volume of the shares” and “many confusing news” reports.

Hui, formerly China’s richest man, said the company was “in discussions with several independent third party investors” on asset sales, including its electric vehicle and property management groups.

Iris Chen, an analyst at Nomura, noted that while the asset sales might help near-term liquidity, they were “unlikely to support a repayment of offshore bonds”.

“Overall, the news flow reinforces our previous expectation that Evergrande continues to struggle in its vicious cycle as confidence has collapsed across almost all stakeholders and they are trying to front-run each other,” Chen wrote in a note.

Hui is under pressure to avoid breaching Beijing’s “three red lines” rules on the amount of debt developers are permitted to hold. The rules also require developers to retain enough cash to match short-term debts.

Evergrande’s non-property holdings were estimated at $82bn as of June but the quality of its fringe assets has also come under scrutiny. The electric vehicle unit was once worth more than Ford, despite have never sold a single car.

Evergrande, which as of March had total interest-bearing liabilities of Rmb674bn ($104bn), has outlined plans to cut its debt pile by almost half to Rmb350bn by June 2023.

But last week, S&P Global Ratings downgraded Evergrande deeper into speculative grade and said the company’s liquidity position was “eroding more quickly and by more than we previously expected”.

The company’s offshore bonds are being closely tracked by investors and rating agencies amid a surge in short selling bets against them.

As part of its efforts to raise cash, Evergrande this month also sold a stake in Netflix-style streaming service HengTen Networks Group for $420m.

More uncertainty was added to the outlook for bondholders inside China this week when investor eligibility for Evergrande’s onshore bonds was changed from “qualified investors” to “qualified institutional investors”, according to a notice on the Shanghai Stock Exchange. Chen said this was “a step to limit individual investor participation and prepare for potential restructuring in the future”.

>>> Stoxx 600 Pre-Market Indications

  • CD Projekt (7CD TH) +2%
  • BAT (BMT TH) +1.4%
  • MTU Aero (MTX TH) +1.2%
    • MTU Remains Focused on Costs as Margins Drop Amid Slow Recovery
  • Lanxess (LXS TH) +0.7%
    • Lanxess Boosts FY Adjusted Ebitda Forecast
  • Vodafone (VODI TH) +0.7%
  • ING (INN1 TH) +0.6%
    • ING Raised to Reduce at AlphaValue/Baader
  • Nel (D7G TH) -1%
  • Fortum (FOT TH) -1%
  • TUI (TUI1 TH) -1%
  • Campari (58H TH) -1.3%
  • OMV (OMV TH) -1.4%
  • Vestas (VWSB TH) -3.5%
    • Vestas Cuts FY Revenue, Ebit Margin Forecasts as 2Q Misses
  • Thyssenkrupp (TKA TH) -4%
    • Thyssenkrupp Earnings Get a Boost From Soaring Metal Prices
  • Flutter (PPB TH) -5.9%
    • Flutter Offering by Holder Prices at GBP134.50/Share, Terms Show

>>> TradeGate Pre-Market Indications

DAX:
  • No major movers
MDAX:
  • Lanxess (LXS TH) +1.4%
    • Lanxess Boosts FY Adjusted Ebitda Forecast
  • Aixtron (AIXA TH) +1.2%
  • Evotec SE (EVT TH) +1.2%
    • Evotec SE 1H Adjusted Ebitda EU36.2M Vs. EU47.3M Y/y
  • Thyssenkrupp (TKA TH) -2.9%
    • Thyssenkrupp Earnings Get a Boost From Soaring Metal Prices
  • Hella (HLE TH) -4.8%
    • Stock up about 6% so far this week on M&A reports
SDAX:
  • DIC Asset (DIC TH) +3.2%
    • DIC Asset 1H FFO EU53.0M Vs. EU50.6M Y/y
  • Jenoptik (JEN TH) +1.9%
    • Jenoptik 1H Revenue Beats Estimates
  • Bilfinger (GBF TH) +1.2%
  • Vantage Towers (VTWR TH) -1.4%
  • Salzgitter (SZG TH) -2%
    • Salzgitter 2Q Pretax Profit EU188.4M Vs. Loss EU96.4M Y/y

Business Of Fashion : Instagram Begins Testing Ads in Shop Function

Instagram Begins Testing Ads in Shop Function
The Instagram Checkout process for Gray Matters.
The new feature is the latest sign that the social media app is inching closer to becoming a commerce platform. Instagram announced the feature would roll out in the US first, before making its way to other regions.
The new addition allows brands to purchase ad space in Instagram’s Shop tab, which encourages in-app purchases or redirects users to a brand’s own e-commerce site. Instagram sponsored posts are now available on nearly every tool the platform offers, including feed posts, Stories and Reels. For brands, there are still some hiccups when using Instagram’s in-app shopping tool compared to direct sales through their own channels. But Instagram and parent-company Facebook are pushing for a greater share of the digital retail ecosystem.

WWD : Is Moncler’s New Collab in Soccer?

Is Moncler’s New Collab in Soccer?
Rumors are swirling around a collaboration developed with the Milanese soccer team F.C. Internazionale Milano.

IT’S A MATCH: There’s no such thing as too many collaborations.
Moncler knows it best, having invited designers to team up with the brand and give their reinterpretation of its codes as part of the Moncler Genius project since 2018.
But what if the next genius could play soccer, too?
On Monday, speculation swirled around a possible capsule collection developed by Moncler with F.C. Internazionale Milano, best known as Inter and one of the two big soccer teams of Milan.

The speculation was initiated by an Instagram Story that showed a card featuring both parties’ logos posted by Mirko Borsche, founder of renowned graphic design studio Bureau Borsche. The Munich-based company offers design and communication consultancy for clients including the likes of Balenciaga, Givenchy, New Guards Group, Rimowa, Supreme and F.C. Internazionale Milano, for which the studio developed a new logo and fresh brand identity.


In another Instagram story, Borsche also shared a football scarf of the Milanese soccer club bearing a Moncler logo on one end. Tags on the image included Moncler, Borsche’s design studio and Federico Faldella, brand consultant at F.C. Internazionale Milano.
One of the Instagram stories shared by Mirko Borsche. @mirkoborsche
The speculation was reinforced by a similar post showing both logos shared by Federico Romeo, who, according to his LinkedIn page, serves as designer and material researcher at Sportswear Company SpA. Owner of the Stone Island brand, Sportswear Company was acquired by Moncler in December 2020 in a deal valued at 1.15 billion euros.

The news then popped up on a selection of Italian sports pages on Instagram, including the @surfasport account, which additionally wondered if the capsule collection will be unveiled during Milan Fashion Week, running Sept. 21 to 27.
As reported, last week the Italian fashion chamber unveiled a preliminary schedule of the event. Listed among the 42 IRL shows out of 61 total expected to be staged during the week, Moncler is slated to present its collections on Sept. 25.
Neither Moncler nor F.C. Internazionale Milano was reachable for comments on Monday evening as well as at press time on Tuesday.
If confirmed, the collaboration would follow Stone Island’s chairman and chief executive officer Carlo Rivetti‘s acquisition of Italian soccer club Modena F.C. in 2018 through his Rivetex Srl company. With the deal the Rivetti family wanted to reiterate its commitment to the city of Modena — in Italy’s Emilia-Romagna region — and its territory, considering that Sportswear Company SpA is headquartered in Ravarino, a 30-minute drive from Modena.
Rivetti joined a pool of Italian entrepreneurs venturing into soccer, including OTB founder Renzo Rosso, who took over the Vicenza Calcio SpA soccer club in 2018. Tod’s SpA’s chairman Diego Della Valle purchased Florence’s ACF Fiorentina soccer team in 2002 but sold the club in 2019.

>>> What to look at today - 11th of August 2021

Asian stocks were mixed Wednesday as investors awaited a key report on U.S. inflation. Treasuries and the dollar were steady. Shares rose in Japan and saw modest gains in Australia and Hong Kong. China was little changed, while stocks in South Korea retreated after the country posted a record number of coronavirus cases. U.S. futures fluctuated. Earlier, the S&P 500 climbed to an all-time high, while the tech-heavy Nasdaq 100 declined. Crude oil was steady after bouncing from a three-week low as a report showed shrinking inventories. Data out Wednesday are expected to show prices paid by U.S. consumers grew in July at the slowest pace in five months, though remain elevated. Asia’s economies are already showing a hit from the surging delta variant of Covid-19. Hong Kong extended until March regulations that allow it to enact pandemic-related curbs such as restrictions on group gatherings and compulsory quarantine of visitors.
The delta Covid-19 variant is sweeping across the U.S. with hospitals parceling out beds for patients, and hunting for doctors and nurses. The outbreak is also growing in China, with more than 100 symptomatic cases reported on Tuesday.
Meanwhile, the Senate passed a $550 billion infrastructure plan, sending the legislation to the House for a vote, though investors believe it will take years for the impact of the spending to be felt.
Elsewhere, Bitcoin was back above $45,000 amid renewed fervor for the digital coin. A change to cryptocurrency reporting rules in the infrastructure bill was blocked in the Senate, leaving language for broad oversight of virtual currencies in the legislation.
US After Hours UPST +17.8%, FUBO +11.5%, MCFE +3.7%, DOCS +3.5% higher on earnings; WW -22.3%, ONTF -17.6%, EPAY -8%, POSH -7% lower on earnings; NLOK +3.9% on deal to acquire Avast

Nikkei +0.50% Hang Seng +0.24% CSI -0.25% Shanghai +0.09% Shenzen +0.24%

Eur$ 1.1721 CNH 6.4854 CNY 6.4818 JPY 110.65 GBP 1.3832 CHF 0.9228 RUB 73.9059 TRY 8.6111 WTI$ 68.11 -0.26% Gold 1,732.88 +0.22% BTC 45,770 +127 ETH 3180 +23

S&P -0.09% Nasdaq -0.05% EuroStoxx +0.02% FTSE +0.14 Dax -0.01 SMI

Macro :
- Senate Passes $550 Billion Infrastructure Plan in Biden Win
- Saudi Arabia’s Social Revolution Arrives at Riyadh Dining Tables
- Oil Steadies With Report Pointing to Shrinking U.S. Inventories

Spacs :
- Wilbur Ross’s SPAC Said to Be in Talks to Merge With GaN Systems
- OppFi Falls to Post-SPAC Low Ahead of Quarterly Results

Keep an eye on :
- ABN NA : ABN Amro to Pay Final 2019 Dividend of EU0.68/Share in October
- AED BB : Aedifica Boosts FY Rental Income Forecast, Beats Estimates
- AGS BB : Ageas to Initiate New Share Buyback Program for EU150m
- AD NA : Ahold Delhaize Boosts FY Adjusted Operating Margin Forecast
- AIR FP : U.S. Mulls 2050 Airline Target of 100% Renewable Jet Fuel: Rtrs
- AIR FP : Boeing Max Takes to China’s Skies Amid Test to End Flight Ban
- ALKB DC : ALK-Abello 2Q Revenue Rises 13% on Year to DKK868m
- AVST LN : NortonLifeLock to Buy Avast for as Much as $8.6 Billion
- CCAP GY : Corestate Maintains FY Adjusted Ebitda EU90M to EU115M
- CSGN SW : Credit Suisse Renewables, Energy Bankers Resign to Join Evercore
- DAE SW : Daetwyler 1H Ebit CHF98.9M Vs. Loss CHF399.4M Y/y
- DIC GY : DIC Asset 1H FFO EU53.0M Vs. EU50.6M Y/y
- EKT SM : Cnmv to Suspend Trading of Euskaltel as of Aug. 17 Market Close
- EQT SS : Australian Data Firm Iress Backs $2.2 Billion EQT Takeover Offer
- EOAN GY : Germany’s EON Raises Outlook as Stronger Demand Boosts Earnings
- EVT GY : Evotec SE 1H Adjusted Ebitda EU36.2M Vs. EU47.3M Y/y
- FLTR LN : Flutter Holder Fastball Offers 3m Shares: Terms
- HEI GY : Cementa Says Swedish Government’s Permit Extension Isn’t Enough
- ISS DC : ISS 1H Revenue Meets Estimates
- KAL NO : Kalera as to Acquire &ever in Cash, Share Deal
- LXS GY : Lanxess Boosts FY Adjusted Ebitda Forecast
- LEO GY : Leoni 2Q Sales Beat Estimates
- LLOY LN : New Lloyds CEO Nunn Has Wealth at Top of a Packed To-Do List
- NVDA US : SoftBank’s Arm Deal Gets More Enticing, Even With Major Hurdles
- RDSA LN : Shell Needs No ‘Direct’ Government Funds for Alberta CCS Project
- SZG GY : Salzgitter 2Q Pretax Profit EU188.4M Vs. Loss EU96.4M Y/y
- SRBNK NO : SR-Bank 2Q Net Interest Income NOK1.00B
- STLN SW : Swiss Steel Group Sees FY Adjusted Ebitda EU150M to EU180M
- TLX GY : Talanx Boosts FY Net Income Forecast
- TEG GY : TAG Immobilien 2Q FFO Per Share EU0.31
- TKA GY : Thyssenkrupp 3Q Adjusted Ebit EU266M Vs. Loss EU693.0M Y/y
- UN01 GY : Uniper’s First-Half Profit Tumbles 16% on Record Carbon Prices
- VEC LN : Carlyle Says Vectura Bid Is Final, Opens Path for Philip Morris
- VWS DC : Vestas 2Q Ebit Before Significant Items Misses Estimates, Vestas Cuts FY Revenue Forecast
- VIV FP : Vivendi Sells 7.1% of UMG to Pershing Square Holdings for $2.8B
- VOW3 GY : Audi’s Latest Concept Is an Electric Car That Expands, Contracts
- VZN SW : VZ Holding 1H Net Income CHF68.4M
- WIE AV : Wienerberger 2Q Revenue Beats Estimates

>>> Europe : Brokers Uprades & Downgrades - 11th of August 2021

>>> Up
* ING Raised to Reduce at AlphaValue/Baader
* MTU Aero Raised to Overweight at Barclays; PT 241 euros

>>> Down
* JDE PEET'S CUT TO HOLD VS BUY AT BERENBERG, PT EU32
* Virgin Galactic Cut to Underweight at Morgan Stanley; PT $25

>>> Initiation
* Corp Acciona Energias Renovables Rated New Buy at Stifel
* M&G Cut to Hold at Berenberg; PT 250 pence
* Strix Rated New Buy at Liberum; PT 460 pence

>>> Call
* Duerr Upgraded at Berenberg on Homag’s Positive Momentum
* JDE Peet’s Cut to Hold on Commodity Price Pressures: Berenberg
* NortonLifeLock-Avast Deal Should Help Drive Revenue Growth: RBC

FT : Switzerland’s ‘Silicon Valley of smell’ prospers in age of big data

Switzerland’s ‘Silicon Valley of smell’ prospers in age of big data
The pandemic has changed how people want themselves, their clothes and their homes to smell

Is artificial intelligence already deciding how you smell? 

Before the pandemic, it was popular in America to smell sweet: a growing trend for fruit — even caramel — scents in consumer products such as shampoo or detergent had become notable. Quite what was driving this unpleasantness is not clear.

But there are signs of a shift. The Covid-19 pandemic has changed how people want themselves, their clothes and their homes to smell — and not just in America. Now people want to believe everything they touch is squeaky clean — even antiseptically so. The astringent ubiquity of rubbing alcohol has lodged itself in the public smell consciousness, sitting alongside citruses, menthols and such as a signifier of hygiene. 

What people like to smell changes all the time — more gradually than seismically but with huge business consequences. Rarely do we stop to think about how much of our environment — and the products we consume in it — is scented. But almost everything is. 

On the outskirts of Geneva, between the suburbs of Vernier and Satigny, is proof of how lucrative scent (and flavour) can be. This is the “Silicon Valley of smell”, says Gilbert Ghostine, the chief executive of Firmenich, one of two companies based here that dominate the way the world smells. The other is Givaudan. (IFF, a third giant of the sector, is based in New York). 

Both Givaudan and Firmenich have a 10-year, compound annual growth rate in revenues of around 5 per cent. The pandemic barely dented this.

The two are fiercely competitive. Smell espionage is real and a code of silence surrounds the companies’ clientele. Both Givaudan and Firmenich like to boast about their technological prowess and the clever things they do. (This extends to food, where the world’s vegans have a lot to thank them for. So do the world’s dieters — Firmenich likes to boast it removed 1.2trn calories from food products in 2020 thanks to its sweeteners and flavour enhancers). 

The efforts they go to are exacting, almost Willy Wonka-like. In their laboratories outside Geneva are whole rooms filled with dozens of washing machines, in which different detergents and scents are trialled on regulation sets of undergarments, towels and T-shirts. Others are full of drying racks to see what new scents smell like as laundry dries.

But the real edge these companies have is in knowing what their customers want. When it comes to staying ahead of slow, hidden shifts in the smell-desires of global consumers, data are invaluable. 

Last month, Firmenich launched its “scentmate” portal. Customers no longer need to liaise with an expensive perfumer to work out what they want their new candle, washing powder or moisturiser to smell like. They can simply upload their preferences to the portal — Something fresh? Something heady? — and an algorithm will churn out recommendations.

This is particularly powerful as the world globalises, an important driver of sector growth. The extent to which products need to be adapted to local cultural tastes and expectations is more and more important. Fragrances that evoke air-dried clothing and urban-escapism might be very different in England than say Thailand.

So the portal allows customers to specify other factors such as geography and price, too, in order to recommend scents to suit needs. It is backed up by a constant stream of consumer data, gathered from testing panels across the world. Givaudan has also identified data and digitisation as vital to transforming how they pitch and sell their scents.

This big data of smell might show, for example, that clove is becoming a more popular aroma among east London hipsters in high-end cosmetics — and that historically that market has led scent preferences in Berlin among a similar demographic, with perhaps a two-year lag time before take-up in broader consumer markets.

All of which is not to say that the perfumers’ art is over. In fine fragrance, the noses of scent’s Silicon Valley are being asked to source evermore unusual and aggressive smells. Uniqueness and originality are the signifiers of elite status. So much so that even ‘animalistic’ and ‘faecal’ smells are making their way — albeit in small amounts — into expensive new fragrances, one perfumer told me. Scentmate could not predict that.

This could also tell us something about the way AI and big data will impact our lives more broadly. The big social divide in the future may be between those who can afford to be original, and those whose tastes are shaped by algorithms.

FT : European investors pour nearly $1bn into gold ETFs in July

European investors pour nearly $1bn into gold ETFs in July
Inflows stand in marked contrast to continued net selling from US funds suggesting a divergence in sentiment

European investors poured nearly $1bn into exchange traded funds that invest directly in gold in July, more than offsetting outflows from US funds and indicating the emergence of divergent views on inflation, the global economy and future direction of the precious metal.

European funds attracted net inflows of $999m, equivalent to 17.1 tonnes of gold, while ETFs domiciled in North America, led by large US funds, saw net outflows of $402m or 7.3 tonnes, according to the World Gold Council, an industry body. Overall, WGC data showed a 0.3 per cent rise in assets under management in gold ETFs in July, driven mostly by the buying in Europe, although Asia also recorded net inflows.

“Gold is currently in transition,” said Mobeen Tahir, associate director of research at WisdomTree in Europe, which manages a range of gold exchange traded products.

He said gold was primarily used as a safe haven last year to hedge against the risks from the global downturn and the pandemic. That prompted a surge in interest in the metal driving its price to a record $2,067 an ounce in August 2020. “With the economic recovery under way and risk sentiment improving, this safe-haven demand has reduced,” he said.


Only Asia showed positive inflows into physical gold ETFs, which invest directly in the metal, in the first half of this year. Global gold ETF assets under management remain $6bn down on the beginning of the year.

This waning of interest in the precious metal had “caused a great deal of head scratching among participants”, said Saxo Bank analyst Ole Hansen.

He pointed to the “historical strong inverse correlation between real yields and gold”. In other words, when real yields — a measure of the returns bond investors can expect once inflation is taken into account — move higher gold moves lower and vice versa. Real yields hit a record low on growth concerns at the end of July.

Tahir said views between European and US investors were diverging partly because of different opinions over whether gold was a good hedge against inflation.

“Potentially, in the US the recognition that gold could be a good inflation hedge hasn’t quite taken hold,” Tahir said. He added that gold typically performed particularly well when there were sharp spikes in inflation, but when inflation was more moderate broad baskets of commodities were often a better bet.

Tahir said the US Federal Reserve was “continuing to endorse the idea that inflation will be transitory”, adding that if inflation persisted at a high level that idea might change.