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Explainer-What are investors focused on for the next Fed chair?

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November 12, 2021

NEW YORK (Reuters) – A lack of news over U.S. President Joe Biden’s pick for Federal Reserve chair is introducing unpredictability for investors at a crucial time, as the central bank prepares to taper its asset purchases and start hiking rates.

Many investors have been expecting that Fed Chair Jerome Powell, who was nominated for the role by President Donald Trump in 2017, would be renominated for another four-year stint.

Still, it is not seen as a done deal. Biden is still weighing whether to keep Powell as chair or elevate Fed Governor Lael Brainard to the post, an administration official said on Wednesday.

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Here are some questions investors may have:

Who, when, how?

Online betting website PredictIt gave Powell a 74% chance of being confirmed by the U.S. Senate as of Thursday while the odds that Brainard would be nominated were 26%.

Based on recent historical announcements, a pick should have been made by now. Prior announcements had come earlier in the calendar. Powell was nominated by Trump on Nov. 2, 2017, Janet Yellen, now U.S. Treasury Secretary, was nominated by President Barack Obama on Oct. 9, 2013 and Ben Bernanke was nominated by President George W. Bush on Oct. 25, 2005 and renominated on Aug. 25, 2009.

Whoever Biden nominates will first be vetted by the Senate Banking Committee before going to a vote in the full Senate, where a simple majority would be needed.

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Powell, a Republican, has done more than any recent Fed chair to cultivate relationships on Capitol Hill, meeting regularly with members of both parties. At least one Democratic member of the Senate Banking Committee, Jon Tester of Montana, has endorsed Powell for a second term, while one other Democrat, Elizabeth Warren of Massachusetts, has said she would oppose him. Most observers believe Powell would get the backing of most, if not all, of the Republicans.

Why is it important for markets?

While the leadership of the U.S. central bank is always important to markets, Biden’s decision takes on heightened significance this year as the Fed has announced plans to start tapering its $120 billion in monthly bond purchases. At the same time, the Fed is monitoring a historic surge of inflation as global supply chains remain disrupted by the coronavirus pandemic. Some investors have said they would like to keep the status quo to ensure predictability.

Moreover, Powell’s current term, due to run out in February 2022, has proven positive for risk assets, with the S&P gaining 74.5% since his appointment on Feb. 5, 2018 and hitting a series of new records in part helped by emergency measures the Fed launched in response to the coronavirus pandemic.

What will it mean for monetary policy?

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Brainard, who was nominated to the Fed board by former President Obama in 2014, is widely seen as more dovish, or favoring looser monetary policy, than Powell in part because of her push to retain super-easy monetary policy until there is more progress on job recovery.

However, while more dovish policies may be better for riskier assets like stocks, investors have expressed caution about changing the horses at this point in the race to recover from the pandemic. Some thought that a change at the helm risked a misinterpretation of Fed policy and could increase volatility.

What else could change?

A change at the top would also have consequences for Wall Street regulation on a slew of issues from bank capital and fair lending to climate-change risks and cryptocurrencies. Over the past four years Brainard opposed many de-regulatory changes led by Vice Chair for Supervision Randal Quarles and backed by Powell, and many on Wall Street expect her to be much tougher on the industry if she gets the job.

“Replacing one dove by another would not necessarily change the outlook for monetary policy but would place greater emphasis on aspects like bank regulation and climate change,” wrote analysts at Societe Generale.

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(Reporting by David Randall; Additional reporting by Michelle Price; Writing by Megan Davies; Editing by Andrea Ricci)

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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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