TOP NEWS SUMMARY: Olaf Scholz set to lead German coalition government

(Alliance News) - The following is a summary of top news stories ...

Alliance News 24 November, 2021 | 10:47AM
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(Alliance News) - The following is a summary of top news stories Wednesday.

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COMPANIES

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Samsung Electronics said it will invest USD17 billion on a new manufacturing site in Texas as it eyes boosting its chip-making capacity. Construction on the site, located in the city of Taylor, is to begin in the second half of next year. Mass production is penned to start two years later. The total investment, which includes construction and equipment, is earmarked at USD17 billion. Texas Governor Greg Abbott said the plans will create "thousands of new jobs". It will be the "largest foreign direct investment in the state of Texas ever", he tweeted.

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Enel brought forward its net zero carbon aim, announced hefty investment plans up to 2030, but also promised a "simple, predictable and attractive" payout. The Rome-headquartered distributor of electricity said it plans to "mobilise" EUR210 billion worth of investments between 2021 and 2030, saying EUR170 billion of that will come directly from the company and EUR40 billion from third parties. Earnings will grow too. Enel predicts between 2020 and 2030, its earnings before interest, tax, depreciation and amortisation compound annual growth rate will be between 5% and 6%. Enel's dividend in 2020 amounted to EUR0.36 per share. It estimates an increase of 5.6% to EUR0.38 in 2021, before further hikes to EUR0.40 in 2022 and EUR0.43 in 2023. The dividend is forecast to remain unchanged at EUR0.43 in 2024. Looking further ahead, Enel brought forward its net-zero carbon aim to 2040 from 2050.

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Johnson Matthey sought to placate investors disappointed by its surprise decision to exit its Battery Materials business, for which the firm had once held out so much hope. The London-based speciality chemicals company said it has approved a GBP200 million share buyback, after sales in the first half of its financial year benefited from higher average precious metal prices. Johnson Matthey sank to a pretax loss of GBP9 million in the six months to September 30, compared to a profit of GBP26 million a year earlier. Johnson booked GBP314 million in major impairment and restructuring charges in the period, sharply higher from GBP78 million a year before - largely attributed to its intention to exit Battery Materials. Revenue surged 23% to GBP8.59 billion from GBP6.98 billion, with sales excluding precious metals 15% higher to GBP1.94 billion from GBP1.68 billion. Johnson declared an interim dividend of 22.0 pence, up 10% from 20.0p a year earlier, and it has approved a GBP200 million share buyback - expected to start in 2022.

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UK water works United Utilities said it has continued its "great" progress with profit aided by its digital transformation and investment in long-term sustainable performance. In the six months to September 30, pretax profit improved 5.8% to GBP212.7 million from GBP201.1 million a year before. Revenue in the first half rose 4.2% to GBP932.3 million from GBP894.4 million. United Utilities noted it has reduced typical water bills for households by 6%. United declared an interim dividend of 14.50 pence, up 0.6% from 14.41p a year before. Chief Executive Steve Mogford said: "We've continued with the great start that we've made to AMP7, benefiting from the acceleration of our capital programme and investment in Systems Thinking. Our strong operational performance delivers efficiency gains and improvements to outcome delivery incentives, and is enabling us to drive further value for our shareholders."

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Quality assurance provider Intertek said it has made "strong progress" so far in the second half of 2021. Revenue rose by 4.8% in July and August, picking up to 8.5% in September and October. Like-for-like revenue growth in July to October was 5.0%, 6.2% when adjusted for trading days. Intertek said it is on track for "robust LFL revenue growth" in 2021.

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MARKETS

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Oil prices were rising on Wednesday despite a coordinated effort led by the US on Tuesday to flood the market with supply. "This move was unlikely to have a long-term effect on prices...and after a brief pull-back which saw prices drop by around 4.5%, the move was reversed," commented Walid Koudmani, a market analyst at XTB. "Furthermore, we are seeing a faster-than-expected recovery in oil prices as Brent is trading above USD80 once again and WTI hovers in the USD78 range; this may worry markets once again as governments begin to run out of options to control the ongoing situation on the oil market."

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CAC 40: down 0.2% at 7,032.26

DAX 40: down 0.4% at 15,881.25

FTSE 100: marginally higher, up 3.07 points at 7,269.76

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Hang Seng: closed up 0.1% at 24,685.50

Nikkei 225: closed down 1.6% at 29,302.66

S&P/ASX 200: closed down 0.2% at 7,399.40

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DJIA: called down 0.3%

S&P 500: called down 0.3%

Nasdaq Composite: called down 0.2%

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EUR: down at USD1.1210 (USD1.1262)

GBP: flat at USD1.3362 (USD1.3363)

USD: up at JPY115.01 (JPY114.96)

Gold: up at USD1,790.90 per ounce (USD1,784.01)

Oil (Brent): up at USD81.96 a barrel (USD81.49)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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The three parties set to make up Germany's next government - the Social Democrats (SPD), Greens and Free Democrats (FDP) - are presenting their coalition agreement on Wednesday, as political power in the country shifts to the left. About eight weeks after national elections, the "marriage contract" will be made public at a joint press conference held by all three parties. The conference is scheduled to take place in Berlin at 3 pm local time, after the negotiating parties hold their final session. The Social Democrat finance minister and deputy chancellor, Olaf Scholz, is expected to succeed Angela Merkel as chancellor. After over a decade and a half in power, Merkel's conservative bloc is heading into opposition. The SPD, Greens and FDP's agreement must be put to party members. If they okay the deal, Germany will get its first "traffic light" coalition at federal level, named after the colours of the three parties.

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Economic sentiment in Germany "has taken a downward turn", Munich-based researchers Ifo Institute warned. Conversely, France has seen sentiment improve, according to figures from statistics agency Insee. Ifo's business climate index for Germany fell to 96.5 points from 97.7 points in October. "Companies were less satisfied with their current business situation, and expectations became more pessimistic. Supply bottlenecks and the fourth wave of the coronavirus are challenging German companies," Ifo said. According to INSEE, the French business climate was more promising. Its indicator improved to 109 points, from 107 in October, inching further above the long-term average tally of 100.

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Taiwan thanked US President Joe Biden for his invitation to a democracy summit, saying the event would allow the self-ruled island to show off its credentials on the world stage. "Through this summit, Taiwan can share its democratic success story," Presidential Office spokesman Xavier Chang said in a statement to reporters. In response, China, which wasn't invited, said it was "firmly opposed" to Taiwan joining the US-led event. The conference was a campaign pledge by Biden, who has placed the struggle between democracies and "autocratic governments" at the heart of his foreign policy. The 'Summit for Democracy' will take place online on December 9 and 10 ahead of an in-person meeting at its second edition next year. The meeting was long advertised, but the guest list – published Tuesday on the State Department's website – will be closely scrutinized. Russia also wasn't invited.

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Oil majors have raised gasoline prices for the sake of their own profit, Biden said Tuesday, as his administration looked for ways to lower prices at pumps nationwide at the beginning of the holiday travel season. The White House has upped the pressure on oil markets amid a spike in energy prices that has driven overall US inflation to record levels. Biden had earlier in the day announced the US would release crude from its national stockpile along with China, India, Japan, South Korea and the UK in a bid to drive global prices lower, while again taking aim at oil majors he accused of unfairly raising prices. "The price of gasoline in the wholesale market has fallen by about 10% in the last few years but the price at the pump hasn't budged a penny," Biden said at the White House.

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The Indian government is set to introduce a bill to ban all private cryptocurrencies, with a few exceptions, as well as create a framework to regulate digital currency issued by the country's central bank. The Cryptocurrency & Regulation of Official Digital Currency Bill has been listed for introduction in the parliamentary session beginning Monday next week, state-run broadcasting service Prasar Bharati said citing the official agenda released Tuesday evening. The bill seeks to "create a facilitative framework for the creation of official digital currency to be issued by the Reserve Bank of India. It also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency."

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By Tom Waite; thomaslwaite@alliancenews.com

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