The Chinese yuan fell against the dollar to its lowest level since 2008 amid signals from Beijing weakening support for the currency.
The yuan, which trades on the territory of mainland China, fell to 7.2235/$1 compared to 7.176/$1 at the close of the previous session. The value is at the lowest level in 14 years.
The People’s Bank of China (PBOC, the country’s central bank) signaled it was prepared to allow the yuan to weaken, setting a reference rate of 7.1107 yuan/$1, the lowest level in more than two years. The market rate of the yuan may deviate from the reference rate by no more than 2% in one direction or another during the session.
The offshore yuan (traded in Hong Kong) fell to a record low since the introduction of the separate trading system in 2010 and stands at 7.2298 yuan/$1 by 09:00 Moscow time against 7.1795 yuan/$1.
Meanwhile, the US dollar is actively growing against other currencies on Wednesday morning. The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), adds 0.38% in the course of trading. The broader WSJ Dollar is up 0.3%.
The EUR/USD pair is trading at $0.9564 as of 9:10 Moscow time, compared to $0.9596 at the close of the previous session.
The pound sterling depreciates in the course of trading to $1.0696 compared to $1.0734 the day before.
And only the yen slightly rises against the dollar and is 144.67 yen at 09:11 Moscow time against 144.81 yen following the results of the previous session.
Experts believe that the US currency will continue to strengthen against the background of the rapid tightening of monetary policy by the Federal Reserve System (FRS). In addition, the dollar is supported by a decrease in risk appetite in world markets.
A further increase in volatility in financial markets will help strengthen the dollar due to its status as a “safe haven” currency, said Carol Kong, an analyst for the CBA foreign exchange market.
Stock indices of the largest states of the Asia-Pacific region show a significant decline on Wednesday, while the value of the Hong Kong Hang Seng fell to its lowest level in more than 13 years.
Investors fear that aggressive measures by the Federal Reserve System aimed at curbing inflation could push the US economy into recession, according to Trading Economics. The American Standard & Poor’s 500 index dropped to a low of this year a day earlier.
The value of the Japanese index Nikkei 225 to 8:32 quarter decreased by 2%.
Nippon Sheet Glass Co., a glass manufacturer, was the drop leader. (-6.3%), automotive Mitsubishi Motors Corp. (-5.9%), transport Kawasaki Kisen Kaisha Ltd. (-5.4%).
In addition, the price of securities of investment and technology SoftBank Group (-2.8%), console manufacturer Nintendo (-2.3%), retailers J. Front Retailing Co. is declining. (-4.7%) and Fast Retailing Co. (-4.6%).
The leading economic index in Japan in July fell to a 2.5-year low (since January 2021) and amounted to 98.9 points compared to 100.3 points in the previous month.
The Chinese Shanghai Composite index fell by 1.3% by 08:37 Moscow time. The Hong Kong Hang Seng lost 2.7%, while the shares of all companies included in the calculation of the indicator show a decrease in value.
Among the leaders in the reduction of quotations on the Hong Kong Stock Exchange are securities of real estate developers Country Garden Holdings Co. (-11.1%) and Longfor Group Holdings Ltd. (-5.4%), automaker Geely (-6.1%),
solar panel manufacturer Xinyi Solar Holdings Ltd. (-5.7%).
Shares of Internet retailers Alibaba Group fell 2.2% and JD.com – 4.5%, Internet giant Tencent Holdings Ltd. – by 1.2%.
The South Korean index Kospi by 08:33 Moscow time fell by 2.8%.
Quotes of securities of one of the world’s largest manufacturers of chips and consumer electronics Samsung Electronics Co. dropped by 2.4%, automaker Hyundai Motor – by 4.3%.
KR Motors Co., a motorcycle and auto parts maker, was the leader of the increase, with prices soaring 30%.
The Australian S&P/ASX 200 has dropped 0.8% since the market opened.
Shares of the world’s largest mining company BHP traded at the close of the previous session, while the price of securities of another representative of the industry Rio Tinto decreased by 0.6%.
The capitalization of the oil company Santos fell by 1.7%.
Retail sales in Australia in August, according to preliminary data, rose by 0.6% compared to the previous month and reached a record 34.88 billion Australian dollars ($22.3 billion). The increase was noted for the eighth month in a row.
Analysts had expected an average less significant rise of 0.4%.
The Cabinet of Ministers of Ukraine has agreed on the signing of an agreement between the government of the country and the Food and Agriculture Organization of the United Nations (FAO) on the establishment of a project office in the country to provide it with technical and humanitarian assistance in the face of Russian military aggression.
As reported on the website of the Ministry of Economy of Ukraine on Tuesday, the Cabinet of Ministers on September 27 authorized First Vice Prime Minister – Minister of Economy Yulia Sviridenko to sign this agreement.
“Ukraine has long and fruitfully cooperated with the FAO, an organization whose mission is to fight hunger around the world. Our state has been and remains the breadbasket of Europe and the world, but because of the war unleashed by Russia, we already need help. FAO provides it, in in particular, by implementing jointly with the governments of the partner countries programs to support Ukrainian farmers,” Sviridenko was quoted as saying by the ministry.
It is specified that with the start of a full-scale invasion of the Russian Federation into Ukraine, FAO has updated a rapid response plan to help Ukrainian small and medium-sized farmers and agricultural producers. As of mid-August, the organization provided emergency assistance in the form of seed material and cash for 80,000 people in 13 regions of Ukraine.
In addition, FAO and the Government of Ukraine, with the financial support of Japan and Canada, are implementing projects to restore grain storage capacities in the warring country, which provide for the supply of equipment for loading and unloading grain, modular storage containers, etc. to Ukrainian farmers from 10 regions.
According to the Ministry of Economy, the implementation of a rapid response plan and a strategy to increase grain storage capacity in Ukraine will cost FAO and its partners a total of $180.4 million.
“The adoption of the Agreement and the creation of an FAO office in Ukraine will allow raising cooperation to a higher level … We expect closer coordination in matters of grain exports. Ukraine will continue to help countries where the issue of food is acute. In the future, cooperation will contribute to the growth of Ukrainian exports and the achievement of our the goal is to create an export-oriented economy with high added value,” Sviridenko summed up in the message of the Ministry of Economy.
FAO is a UN agency dedicated to ensuring world food security, improving nutrition and living standards in its member countries. The organization consists of 194 countries, Ukraine joined it in 2003.
FAO, food organization, KYIV, OFFICE, UN
The international rating agency Fitch Ratings has affirmed the long-term issuer default rating (IDR) in foreign and national currencies and the senior unsecured rating of Metinvest Mining and Metallurgical Group at ‘ССС’, the recovery rating is ‘RR4’.
“Metinvest’s ratings reflect the company’s sufficient funding over the next six months, supported by cash flow generation from its international asset base, few significant short-term maturities and existing cash position. This also reflects increased operational risk for the company following the military invasion Russia to Ukraine, including the occupation or damage of some of its assets, as well as severe logistical restrictions,” Fitch explained in a press release on Tuesday.
At the same time, it is noted that about a third of the company’s EBITDA in 2022 will be generated by its international assets.
The ‘CCC’ rating reflects Metinvest’s increased operational and financial risks. Ferrexpo plc has a higher ‘CCC+’ rating due to its lack of financial debt. Metinvest’s business profile benefits from upstream assets outside of Ukraine, maintaining its rating above Interpipe Holdings plc (CCC-), whose assets are wholly concentrated in Ukraine,” the agency explains.
Analysts predict that Metinvest’s sales will be around 50% of 2022 levels, with a gradual recovery between 2023 and 2025.
In addition, experts suggest that Metinvest will be considered an operating company in the event of bankruptcy and will be reorganized, but not liquidated.
According to analysts, Metinvest has limited liquidity: the company keeps most of its cash in offshore zones. The company continues to generate significant cash flows from its coal assets in the US, as well as its steel mills in Europe, and its iron ore and steel assets in Ukraine. This has helped offset the outflow of working capital in recent months.
Metinvest has minor upcoming maturities in 2022: its next significant maturity is $176 million due in April 2023 in connection with the redemption of its bonds, according to a press release.
As Yury Ryzhenkov, general director of Metinvest, said, the company is servicing its credit obligations, including Eurobonds, and intends to continue doing so in the future.
“We have not declared force majeure on debt. Unlike many Ukrainian issuers, we continue to service our entire loan portfolio, including planned payments on Eurobonds. And I think that we should have enough strength to do this,” he said. he.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Lugansk, Zaporozhye and Dnepropetrovsk regions, in European countries. In particular, in Bulgaria there is a Promet Steel plant with a capacity of 500 thousand tons of rolled metal per year, in Italy – Metinvest Trametal and Ferriera Valsider with a total capacity of 1.2 million tons per year. In the UK, the company owns the Spartan UK plant, which can produce 200 thousand tons of rolled steel per year.
The main shareholders of the holding are the SKM group (71.24%) and Smart Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of the Metinvest group.
If the war drags on, the maximum number of emigrants from Ukraine may reach 5 million citizens, said Ella Libanova, director of the Institute of Demography and Social Research of the National Academy of Sciences of Ukraine.
“(…) In addition to the 1.2 million who are already abroad, Ukraine may additionally lose at least 500-600 thousand people. The maximum number of emigrants can reach 5 million. This scenario will become real if the war drags on. Under such conditions, there is the risk that after the lifting of martial law, men will start moving in with Ukrainian women with children,” Libanova said during a seminar on Tuesday.
It is noted that in the period from February 24 to September 19, about 8.4 million people left Ukraine. During the same period of time, 7.2 million people entered. At the moment, 1.2 million people from Ukraine are abroad.
“A significant part of them, except for women with children, are small border traffic, business trips, vacations, the departure of foreigners in the first days of the war, crossing borders for the purpose of preferential import of cars, etc.,” said the director of the Institute of Demography and Social Research.
She also noted that “if this wave of emigrants stays in Europe for more than a year, there is a risk that the majority will not return home,” due to the fact that a significant part of the Ukrainians who left are children, and “there is fierce competition for labor resources in the world. Europe is aging more than Ukraine and is compensating for this aging with emigrants.”
“People should feel like Ukrainians and maintain ties with Ukraine. This requires efforts both at the level of the state and local communities, communities, gardens, employers. It is important that employers keep the employment of workers who left Ukraine. Otherwise, after the war, we will lose labor force” , – emphasize at the Institute of Demography and Social Research.
The American company Amsted Rail intends to open the production of bearings and components for railcars in Lviv. According to the press service of the Lviv Regional Military Administration, this was announced today at a meeting with the head of the LOVA Maxim Kozitsky, Amsted Rail global business director Eric Luhmann.
“We intend to open the production of bearings and components for cars in Lviv. This can be either the construction of a plant or cooperation with a company that is already operating on the market,” the press service of the Lviv Regional Military Administration quoted Luman as saying.
According to Luman, the company is now looking for a territory, a warehouse of one of the factories in the Lviv region, in order to transfer equipment there.
As stated in the press service, Amsted Rail plans to “return to the Ukrainian market part of the railway components, the production of which ceased due to the Russian invasion.”
“The Lviv region is ready to work with international partners – the favorable location of the region will allow everyone who wants to work in the region to cooperate with Europe. I am sure that the cooperation between Amsted Rail and the plant in the Lviv region,” the press service quotes the words of the head of LOV Maxim Kozitsky.
According to the Lviv OVA, Amsted Rail has been operating in Ukraine since 2004 and manufactures products related to the road industry.
