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Hyundai Motor’s Q3 profit misses estimates as chip shortage takes a toll

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October 26, 2021

By Heekyong Yang and Joyce Lee

SEOUL (Reuters) -South Korea’s Hyundai Motor Co slightly missed analysts’ profit estimates as the global chip crisis drove down vehicle shipments and it said it expects it will take a long time to get back to normal chip supplies.

Hyundai, which together with affiliate Kia Corp is among the world’s top 10 automakers by sales, reported a net profit of 1.3 trillion won ($1.10 billion) for the July-September quarter.

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In the same period a year earlier it posted a loss of 336 billion won when it was hit by a one-time expense related to engine quality issues and recalls.

The profit was just shy of an average analyst forecast of 1.4 trillion won compiled by Refinitiv SmartEstimate.

“Hyundai Motor expects that on-year sales growth might slow down for the rest of 2021 amid adverse business conditions caused by the unstable supply of semiconductor chips,” Hyundai Motor said in a statement.

The automaker said the global chip shortage would last until the end of this year or into next year, and it expected it would take a long time to get back to normal.

“The chip shortage will likely continue into the fourth quarter but supply conditions would partially improve in the fourth quarter compared with the third,” Hyundai Motor’s Executive Vice President Seo Gang Hyun said in a call with analysts.

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The global chip crisis https://www.reuters.com/article/chips-shortage-explainer-int-idUSKBN2BN30J, triggered partly by surging demand for laptops and consumer electronics during the pandemic, has shuttered auto production lines globally and forced automakers to slash shipment forecasts.

Hyundai previously said its on-year sales growth might slow in the second half of 2021 due to challenging business conditions, including the unstable supply of automotive chips.

The company said it had cut this year’s capital expenditure spending by more than 10% to 8 trillion won to better respond to uncertainties, including the coronavirus pandemic.

It revised up this year’s auto-business operating margin profit to 4.5%-5.5% from a previously announced a 4%-5%, citing strong sales of its high-margin sport-utility vehicles (SUVs) and its premium Genesis cars.

“Based on Hyundai’s revision of its operating margin targets, the upcoming fourth quarter results would likely mark the most profitable quarter this year as the company seems to expect that the chip supply issues would likely improve,” said Lee Jae-il, analyst at Eugene Investment & Securities.

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Hyundai had turned in its best quarterly profit in about six years in the April-June quarter thanks to its conservative supply chain management that helped it to navigate the chip shortage better than other automakers.

But the prolonged crisis forced Hyundai to suspend production in the third quarter.

This month, Hyundai’s global chief operating officer Jose Munoz said the automaker wanted to develop its own chips https://www.reuters.com/technology/hyundai-motor-says-it-wants-develop-chips-cut-reliance-chipmakers-2021-10-13 to reduce reliance on others.

Shares of Hyundai Motor were trading up 0.7% after the firm published its earnings results, compared with a 0.8% rise in the broader market KOSPI.

($1 = 1,177.2300 won)

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(Reporting by Heekyong Yang and Joyce Lee; Editing by Christopher Cushing, Robert Birsel)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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