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Euro zone inflation to remain above ECB’s target next year – Reuters poll

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November 12, 2021

By Shrutee Sarkar

BENGALURU (Reuters) – Euro zone inflation expectations are at risk of continuing to overshoot the European Central Bank’s 2% target next year, according to a Reuters poll of economists who raised their outlook for consumer prices for a fifth consecutive month.

While inflation rose above 4% last month, more than twice the ECB’s target, the Bank – unlike most other central banks – has pushed back on calls for tighter policy, calling the rise in inflation transitory and arguing it would subside next year.

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But pandemic-led supply chain disruptions and rising oil prices challenge those views. Surging house prices https://www.reuters.com/article/ecb-policy-idUSKBN2HU22B are putting further pressure on the ECB, which has undershot its inflation target for nearly a decade, to act.

“The inflation story is getting more difficult to navigate for the ECB,” said Peter Vanden Houte, chief economist at ING.

“Even though we don’t believe oil and natural gas prices will continue to increase at the same pace in 2022 – we are actually forecasting a decline – the upward inflation impact might last a bit longer. The same holds true for goods price inflation, which has been pushed upwards by high commodity prices and shortages.”

Euro zone inflation was forecast to average 2.2% next year after rising to 2.4% this year versus 1.8% and 2.3% predicted in October. Those forecasts are higher than the ECB’s projections of 2.2% and 1.7%, respectively.

On a quarterly basis, inflation was predicted to average 4.1% and 3.1% this quarter and next. It was forecast at 3.5% and 2.5% in last month’s poll. Inflation in October https://www.reuters.com/world/europe/euro-zone-inflation-equals-all-time-high-growth-accelerates-2021-10-29 was 4.1%, matching the all-time high set in July 2008.

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Although a higher base from this year led economists to expect a slower increase in prices in 2022, inflation was still expected to remain above the ECB’s target.

The ECB is forecast to keep its key interest rates on hold through to end-2023 at least, with the deposit rate at -0.50% and its refinancing rate at zero.

A smaller sample of economists in the Nov. 8-11 poll willing to look beyond end-2023 showed a deposit rate hike to -0.25% the following year.

But a like-for-like analysis showed fewer analysts now expect a hike in 2024 compared to the October poll. Only two forecast a rate hike next year.

“Despite the pushback from the ECB, markets continue to think the central bank is behind the curve, but we agree with the central bank’s assessment and do not expect a rate hike next year,” said Angel Talavera, head of Europe economics at Oxford Economics.

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Euro zone GDP will reach its pre-COVID-19 level this quarter, according to over 85% of respondents, 27 of 31, who answered an extra question. The bloc’s growth outlook remained steady and largely unchanged from October.

The ECB’s Asset Purchase Programme (APP), currently set at 20 billion euros per month, is set to rise to 40 billion after the Pandemic Emergency Purchase Programme ends on March 31. The highest forecast in the poll was 60 billion euros.

Nearly 70% of economists, 16 of 23, who responded to another question said the APP would finish by end-2023. The rest said it would end in 2024.

Thirteen of 22 respondents said if the ECB approves an APP increase, there would be an envelope covering a longer period. The others said it would be a set monthly volume.

“With other major central banks raising rates in 2022 – and thereby leading to potentially ‘unwarranted’ tighter conditions for the euro area too via spillover effects – we think the ECB will prefer to reserve capacity to buy more, if needed and flexibly over time in 2022,” said George Buckley, chief UK and euro area economist at Nomura.

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(For other stories from the Reuters global long-term economic outlook polls package)

(Reporting by Shrutee Sarkar; Additional reporting by Indradip Ghosh; Analysis and Polling by Sujith Pai and Vijayalakshmi Srinivasan; Editing by Ross Finley and Bernadette Baum)

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Tesla sold 52,859 China-made vehicles in November – CPCA

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December 8, 2021

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc sold 52,859 China-made vehicles in November, including 21,127 for export, the China Passenger Car Association (CPCA) said on Wednesday.

Tesla, which is making Model 3 sedans and Model Y sport-utility vehicles in Shanghai, sold 54,391 China-made vehicles in October, including 40,666 that were exported.

Chinese EV makers Nio Inc 10,878 cars last month, a monthly record high, and Xpeng Inc delivered 15,613 vehicles. Volkswagen AG said it sold over 14,000 ID. series EVs in China in November.

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CPCA said passenger car sales in November in China totalled 1.85 million, down 12.5% from a year earlier.

(Reporting by Sophie Yu, Brenda Goh; editing by Jason Neely)

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Renault Zoe goes from hero to zero in European safety agency rating

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December 8, 2021

By Nick Carey

LONDON (Reuters) – French carmaker Renault on Wednesday received a blow for its popular Zoe electric model, as the European New Car Assessment Programme (NCAP) gave it a zero-star safety rating in tests that are standards for Europe.

The carmaker, which is cutting costs and working to turn around its performance after overstretching itself over years of ambitious global expansion, also received a one-star rating for its electric Dacia Spring model.

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Euro NCAP said the latest Zoe had a worse seat-mounted side airbag than earlier versions. Euro NCAP noted the Renault Laguna had been the first car ever to receive a five-star rating in 2001.

“Renault was once synonymous with safety,” Euro NCAP secretary general Michiel van Ratingen said in a statement. “But these disappointing results for the ZOE and the Dacia Spring show that safety has now become collateral damage in the group’s transition to electric cars.”

In the year through October, the Zoe was the third top-selling fully-electric car in Europe, behind Tesla’s Model 3 in top place and Volkswagen’s ID.3.

In a press release titled “Hero to Zero,” UK insurance group Thatcham Research noted the Zoe had initially received a five-star rating back in 2013.

“It’s a shame to see Renault threaten a safety pedigree built from the inception of the rating,” said Matthew Avery, Thatcham’s chief research strategy officer and a Euro NCAP board member.

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Eleven cars received ratings in Euro NCAP’s final round of tests for 2021, which did not include Tesla models.

A number of other vehicles received five-star ratings, including BMW’s electric iX, Daimler’s electric Mercedes-Benz EQS, Nissan’s Qashqai and Volkswagen’s VW Caddy.

(Reporting By Nick Carey; Editing by Bernadette Baum)

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Weibo shares close down 7.2% in Hong Kong debut

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December 8, 2021

By Scott Murdoch

HONG KONG (Reuters) -Chinese social media giant Weibo Corp’s shares closed 7.2% below their issue price in Hong Kong on Wednesday, as it became the latest U.S.-listed China stock to seek out a secondary listing closer to home.

The Hong Kong debut was in line with a fall in Weibo’s primary listing in New York after a torrid week for U.S.-listed China shares, which are facing greater U.S. regulatory scrutiny and also under pressure from Chinese authorities.

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Weibo, which raised $385 million for its Hong Kong listing, opened at $256.20 and closed at HK$253.2 after a volatile debut session.

The stock had been priced at HK$272.80 each in its secondary listing in which 11 million shares were sold.

“For Weibo, it’s a matter of timing. The Hong Kong market had started to rebound this week and now we are seeing some softness emerging in the market,” said Louis Tse, Wealthy Securities director in Hong Kong.

Weibo’s fall came as Hong Kong’s Hang Seng Index closed Wednesday up 0.06% while the Tech Index was 0.03% higher.

Some major stocks such as Alibaba Group Holdings, down 4.35%, were off sharply as sentiment towards tech majors remains fragile.

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“The listing market in Hong Kong is very lukewarm right now,” said Dickie Wong, Kingston Securities executive director.

“Plus, there is regulatory pressure from the (U.S. Securities and Exchange Commission) on Chinese companies to disclose basically everything within three years.

“So there is a major trend that most of the U.S.-listed Chinese companies will seek secondary or dual primary in Hong Kong so they can exit the U.S. market if they need to.”

Ride-hailing giant Didi Global decided last week to delist from New York https://www.reuters.com/technology/didi-global-start-work-delisting-new-york-pursue-ipo-hong-kong-2021-12-03, succumbing to pressure from Chinese regulators concerned about data security and denting sentiment toward Chinese stocks.

Hong Kong and China’s mainland STAR Market have attracted $15.2 billion worth of secondary listings from U.S. listed Chinese companies so far this year, according to Refinitiv data.

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“The moves are probably based on the increasing recognition that the U.S.-China decoupling will not stop and will proceed steadily,” said LightStream Research analyst Mio Kato, who publishes on Smartkarma.

“I would expect a continuous flow of listings from New York to Hong Kong over the next year or two.”

The U.S administration is progressing plans to delist Chinese companies if they do not meet the country’s auditing rules, which could affect more than 200 companies.

Chinese companies https://www.reuters.com/business/us-sec-mandates-foreign-companies-spell-out-ownership-structure-disclose-2021-12-02 that list on U.S. stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their auditing inspections, the Securities and Exchange Commission (SEC) said last week.

(Reporting by Scott Murdoch and Donny Kwok; editing by Richard Pullin and Louise Heavens)

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