Economy

Still, the pace of contraction was a bit milder than in the previous month, while manufacturers were also seen preparing for a brighter future ahead. The S&P Global (NYSE:SPGI)’s seasonally adjusted purchasing managers’ index (PMI) for South Korean manufacturers stood at 48.5 in January, slightly higher than 48.2 in December but remaining below the neutral 50-mark for the seventh month in a row.The 50-mark separates expansion from contraction. Higher levels indicate faster rates of change from a month earlier.New orders shrank for the seventh straight month in January, although the rate of decline was a little slower than a month earlier. The rate of contraction for new orders from overseas also eased, but it was still the second-fastest in their 11-month falling streak.Lower demand from international clients reflected rising COVID-19 cases across mainland China as well as the impact of interest rate rises on the exchange rate, according to the survey.Reflecting the fall in new orders, output fell by its sharpest rate in three months and stocks of finished goods rose for the first time in four months, sub-indexes also showed.”The immediate outlook for the South Korean manufacturing sector appears challenging,” said Usamah Bhatti, economist at S&P Global Market Intelligence.”That said, firms remained confident that global economic conditions would improve and stimulate demand.”Employment increased for the first time in five months and by the fastest pace since March 2022, with panel members in the survey attributing it to hiring in advance of a return to growth in new orders.Also providing support to businesses, the rising pace of input prices softened to the weakest level since December 2020, while worsening of suppliers’ delivery times also eased significantly from the preceding month when they were hit by a truckers’ strike. Manufacturers’ optimism about the future output over the coming year significantly improved in January to the highest level in four months, rebounding from a near 2-1/2-year low in December. More

LONDON (Reuters) – A consortium including Hydrogen truck startup HVS and supermarket chain Asda said on Wednesday it had been awarded a 6.6 million pound ($8.1 million) UK government grant to develop autonomous hydrogen heavy goods vehicles.The project is one of seven backed by Britain’s Centre for Connected and Autonomous Vehicles (CCAV) to showcase the potential of self-driving vehicle technology and must demonstrate a sustainable commercial service by 2025.Glasgow-based Hydrogen Vehicle Systems (HVS) leads the “Hub2Hub” consortium that will produce two prototype self-driving hydrogen fuel cell vehicles – one with a driver cab and one without – for testing starting in 2024. The third member of the consortium is UK self-driving technology firm Fusion Processing.”This project will feed back to the government’s understanding of what the legislation should be to introduce safe self-driving vehicles,” said HVS CEO Jawad Khursheed.HVS has received around 52 million pounds in private and government funding, including 30 million pounds from British petrol station and food retail business EG Group. Billionaire brothers Zuber and Mohsin Issa and private equity group TDR Capital own both EG Group and Asda.HVS has developed a prototype hydrogen van. The startup’s head of design Pete Clarke said the self-driving heavy goods vehicle with a driver cab will be tested mostly on motorways with a human safety driver between Asda hub stores. “We’re going to focus on… driving predictable routes that’s repeated and highly controlled as a good means of introducing this technology first,” Clarke said.The self-driving vehicle without a cab will be operated on test tracks by a remote human driver. ($1 = 0.8121 pounds) More

SEOUL (Reuters) -South Korean chipmaker SK Hynix Inc said the industry downturn will worsen in the first half of 2023, as it posted a record quarterly operating loss on Wednesday.The world’s No.2 memory chipmaker, however, said it expects market conditions to gradually improve later in the year as chipmakers reduce supply in response to a deepening downturn in global tech demand and clients buy chips again at low prices. “Industry experts do not expect an increase in supply of memory chips as market players are planning to reduce investments and production, which will lead inventories to peak within the first half,” SK Hynix said in a statement.For the quarter ended December, SK Hynix swung to a 1.7 trillion won ($1.38 billion) operating loss, from 4.2 trillion won profit a year earlier. The quarterly loss is the biggest since SK Group acquired Hynix in 2012. This compares with expectations for a 1.3 trillion won operating loss, according to estimates from 21 analysts compiled by Refinitiv SmartEstimate and weighted toward analysts that are more consistently accurate. Revenue fell 38% year-on-year to 7.7 trillion won. The global technology industry has been battling a sharp and sudden downturn in demand since late last year, as companies cut spending on tech products and services while consumers spend less on discretionary goods in the face of surging inflation.BLEAK Q1Analysts expects SK Hynix’s losses to deepen in the current quarter as chip prices fall further and shipments contract. To offload piling inventory, SK Hynix, like other chipmakers, looked to sell chips at modest prices during the fourth quarter, hitting earnings and leading to depreciation in asset value of its NAND Flash chip inventory, analysts said. But with clients wary of buying due to economic uncertainty and opting to use their own inventory instead, data as of the fourth quarter shows it took 46.1 weeks for SK Hynix’s products to be sold from time of production, according to Nam Dae-jong, analyst at eBest Investment & Securities. Although this is expected to be shortened to 39.9 weeks in the first quarter, “it’s still too much… Active production adjustments are needed”, Nam said. On Tuesday, the world’s No.1 memory chipmaker Samsung Electronics (OTC:SSNLF) reported a 69% plunge in its operating profit, although it retained a profit for its chip business during the fourth quarter. SK Hynix said in October it plans to reduce its 2023 investment by more than 50% versus 2022, after warning of an “unprecedented deterioration” in memory chip demand. ($1 = 1,232.4700 won) More

A proposal for a corn mill, which had been welcomed as an economic development success, reflects just how much things have changed with Chinese investment proposals in the U.S.After more than a year of debate about whether a Chinese company’s plan to build a corn mill in North Dakota was an economic boon or a geopolitical risk, an assistant secretary of the Air Force has weighed in with a warning that the “project presents a significant threat to national security.”The letter from Assistant Secretary Andrew P. Hunter, released publicly on Tuesday by North Dakota’s senators, noted the proximity of Grand Forks Air Force Base to the proposed mill and said the project raised “near- and long-term risks of significant impacts to our operations in the area.”The debate over Fufeng USA’s plan to build a giant milling facility on the edge of Grand Forks, less than 15 miles from the Air Force base, divided the Republican power structure in North Dakota and showed just how swiftly the economic relationship between the United States and China had changed.Though the Air Force letter did not name specific threats, residents had voiced numerous concerns. Some in town said it was unwise to deepen economic ties with China, while others speculated that the mill could be used for spying on the Air Force, which the company denied.The city’s Republican mayor, Brandon Bochenski, a former supporter of the project, said on Tuesday that because of the federal guidance, he would move to block construction by trying to deny building permits and by refusing to connect city infrastructure to the building site.More on U.S. Armed ForcesKorean War Wall of Remembrance: Many names of American service members who died in the conflict are misspelled or missing from the new memorial wall in Washington, relatives and researchers say.Parental Leave: The Pentagon announced a new policy that would double the amount of leave that is available to military service members.Defense Bill: Congress passed a $858 billion defense bill that would rescind the coronavirus vaccine mandate for troops and increase the defense budget $45 billion over President Biden’s request.A Boost for the N.R.A.: Instructors in military-sponsored J.R.O.T.C. classes have offered to promote the gun rights organization in high schools in exchange for money for their marksmanship programs.“The Air Force left ambiguity off the table,” the state’s two senators, John Hoeven and Kevin Cramer, both Republicans, said in a joint statement that called for Grand Forks officials to work with them “to find an American company to develop the agriculture project.”The corn mill was the sort of job-creating opportunity that cities have long fought over, and one that just a few years ago would have been seen by most as an unambiguous win. Both Mr. Bochenski and North Dakota’s Republican governor, Doug Burgum, celebrated in late 2021 when Grand Forks landed the project, which would have been the city’s largest economic development project in recent history.But within months after Fufeng chose Grand Forks, a college and military city with 59,000 residents, many in town began speaking out against the project. While some of the opposition focused on property rights and water use, the company’s ties to China and the perceived national security risks became the focus of pushback. Still, the city moved forward, annexing the field where the mill would be built and entering into a development agreement with the company.Mr. Bochenski, a first-term mayor and a former professional hockey player, said in an interview last year that the shifting geopolitical winds had been a challenge for the city. “Are we going to be the first one to basically say no to globalism?” he asked at the time.But on Tuesday, in light of the Air Force’s letter, Mr. Bochenski said he would seek the City Council’s help to block construction, though he noted that Fufeng USA, the American subsidiary of a Chinese company, would still own the land where it had hoped to build.Work on the project had been paused in recent months while the federal government’s Committee on Foreign Investment in the United States reviewed the company’s plans. That committee ultimately decided that it did not have jurisdiction.“The response from the federal government during this process can only be viewed as slow and contradictory,” Mr. Bochenski said. “This directive leaves open the question of other entities with Chinese connections across the nation,” he added, including a Chinese-owned aviation company in Grand Forks “and Chinese students and professors at the University of North Dakota.”Mr. Burgum, who once called the Fufeng mill a “huge opportunity” for his state, said in a statement that he supported the mayor’s decision to stop cooperating with the company given the concerns voiced by the Air Force.The turnabout in North Dakota comes as the United States rethinks its longstanding trade relationship with China, and as politicians in both parties have come to view the country more as a threat than as an attractive economic partner. Several states are considering bills this year that would limit or ban Chinese land ownership.Eric Chutorash, Fufeng USA’s chief operating officer, has repeatedly denied that the mill would be used to spy on or harm the United States. He did not immediately respond to requests for comment about the Air Force’s letter. China’s embassy in Washington declined to comment. More

LONDON (Reuters) – Most traders believe global inflation has peaked, while potential recession has emerged as the main risk to markets this year, according to a survey released on Wednesday. JPMorgan (NYSE:JPM)’s annual survey of institutional and professional trading clients found that 44% of the 835 respondents predicted inflation will decrease in 2023. A further 37% forecast that price rises would level off.Asked which factor would have the most impact on markets this year, the largest group of traders in the study, representing 30% of those surveyed, placed a global downturn as their top concern. This was up from just 5% of respondents to the same survey in 2022, when JPMorgan’s trading clients made the accurate bet that inflation would dominate the market mood for the remainder of last year. “Inflation was the number one concern for the market for quite a while,” said Scott Wacker, head of FICC e-commerce sales at JPMorgan. “The concern for most traders is with high interest rates in response to inflation,” he added, and whether central banks had “gone too far” in their efforts to cool price rises.The U.S. Federal Reserve, which concludes its latest monetary policy meeting on Wednesday, is widely expected to raise benchmark borrowing costs by a quarter of a percentage point to a range of 4.5%-4.75%. That would represent the Fed’s smallest hike in its 10-month tightening cycle so far, after inflation moderated, although money markets are also tipping the world’s most influential central bank to keep raising rates until the summer. In the euro zone, the European Central Bank is forecast on Thursday to lift its main deposit rate by 50 basis points to 2.5%, even after data this week showed the German economy unexpectedly shrank at the end of last year. The majority of JPMorgan’s survey respondents in Europe, where price rises are running at around 9%, believed inflation rates would decrease. Traders in the U.S., where headline consumer prices rose at a rate of to 6.5% in the year to December, mostly thought inflation would plateau from here, the survey showed. More

(Reuters) – Mondelez International Inc (NASDAQ:MDLZ) topped market expectations for quarterly results on Tuesday, boosted by resilient demand for chocolates and snacks, but warned its European business could take a hit in the current quarter from price hikes.Packaged food makers have steadily raised prices to protect their profits from rising costs amid little to no pushback from consumers, who are willing to pay more for their favorite brands instead of trading down to cheaper alternatives.While that helped Mondelez record a surge in quarterly revenue from North America and Latin America, its European business took a hit from soaring energy costs in the region.The Cadbury chocolate maker said it had announced another round of price hikes in Europe, which could hurt its first-quarter margins as retailers push back against the move and the disruption “might also continue” into the second quarter. Still, the company forecast its 2023 adjusted per-share profit would grow in the high single-digit range on a constant currency basis. Analysts on average had expected it to rise 6.1% to $3.11, according to Refinitiv data. Chicago-based Mondelez recorded a 23.3% surge in revenues from its emerging markets amid strong demand in countries including Brazil, China and India, while its developed market revenues jumped 8.2% in the fourth quarter.The Toblerone maker projected 2023 organic net revenue growth of 5% to 7%, also benefiting from its recent acquisitions of energy bar maker Clif Bar and Greek food firm Chipita. “It was a good quarter, with better-than-expected sales growth across all geographies… Consumers appear to be accepting the higher prices, given the healthy increase in the number of products sold,” said Edward Jones analyst Brittany Quatrochi. Net revenues rose 13.5% to about $8.70 billion in the three months ended Dec. 31, beating Refinitiv estimates of $8.33 billion, while adjusted profit of 73 cents per share also topped expectations. More

Rishi Sunak is facing a big test of his authority as he agonises over whether he can sell an outline deal on the Northern Ireland protocol to pro-UK unionist politicians in the region and Eurosceptic Tory MPs.After months of talks, negotiators have briefed Sunak, the UK prime minister, that a deal is taking shape to resolve the dispute over post-Brexit trading arrangements in Northern Ireland. “It’s getting close,” said one person briefed on the talks.Downing Street insisted on Tuesday that no deal had been reached and said “intensive scoping discussions” were still taking place. Number 10 said ministers and Sunak had been briefed on the progress.Tory Eurosceptics warned they would not accept any deal that left the European Court of Justice with any role in UK territory: under the protocol Northern Ireland remains part of the EU single market for goods.One Tory MP said Boris Johnson would be at the forefront of a rebellion if Sunak gave too much ground. Johnson’s spokesperson insisted the former premier was “fully supporting the government”. Several people close to the negotiations said the EU had agreed in principle to a system of “red and green lanes” to reduce the need for checks on goods travelling from Great Britain to Northern Ireland but that discussions were continuing over crucial details covering the scope and operation of the lanes.Goods crossing the Irish Sea and intended for sale on UK territory in Northern Ireland would pass through a green lane with reduced physical checks, backed by real-time customs data. Goods destined for the Republic of Ireland and the EU would enter via a red lane and face full customs and regulatory checks. British officials have indicated the UK could be prepared to accept some continuing but reduced role for the European Court of Justice in Northern Ireland. Some have noted that it is uncontroversial for French border officials to conduct checks on passengers at Eurostar and ferry terminals in Britain. Despite the upbeat reports, three EU officials said a deal was still a significant way off. An internal briefing of EU diplomats in Brussels was told on Tuesday that all the outstanding areas of discussion between the two sides were still under review, including VAT rules, customs, state aid, the role of the ECJ and the terms of operation for the “red and green” lanes.According to an EU official, a meeting of the UK Working Party in Brussels at which EU member state diplomats were briefed by European Commission officials on the progress of the negotiations was told that “real difficulties persist” between the two sides. EU diplomatic sources said another initiative being considered, in order to help the Democratic Unionist party accept the deal, is that the Northern Ireland Assembly could be included in the UK-EU Parliamentary Partnership Assembly (PPA) that was set up in order to give the UK and European parliaments a role in the institutional structures governing the post-Brexit UK-EU relationship.One person briefed on the talks told the Financial Times a compromise had been reached that would entail disputes concerning the EU single market being heard firstly in Northern Ireland’s courts, with the possibility that they be referred up to the ECJ.However, Downing Street insiders said the proposal, first reported by The Times on Tuesday night, was not under consideration.But some on the British side insist any compromise could leave the ECJ with a role, albeit reduced because any new customs agreement would “cut the amount of EU law” in Northern Ireland.One diplomat said: “To solve this, both sides have got to focus on what really matters to people. Most people in Northern Ireland are not worrying on a daily basis about the role of the ECJ.”

British officials are confident the outline deal will meet the “seven tests” laid down in 2021 by the DUP, which hates the protocol because it imposes an internal trade border in the UK.The DUP, which is boycotting Northern Ireland’s elected assembly in protest over the protocol, did not explicitly demand the ending of ECJ jurisdiction in its seven tests for assessing any changes to the protocol.However, Tory Eurosceptic MPs in the European Research Group say the DUP’s demands, which include removing “a border in the Irish Sea”, imply the ending of EU law and the role of the ECJ.Sunak, weakened by the Nadhim Zahawi scandal, will have to make a big judgment call on whether the putative deal can persuade the DUP to re-enter the Stormont power-sharing executive and avoid splitting his own party.The prime minister wants to end the corrosive dispute with the EU, which has damaged relations between the two sides, including blocking British scientists participating in the €95bn Horizon Europe research project. More

BOSTON (Reuters) – The founder of a defunct cryptocurrency business was sentenced on Tuesday to more than eight years in prison for defrauding investors and customers out of millions of dollars by marketing a virtual currency called My Big Coin with lies and half-truths.Federal prosecutors had urged U.S. District Judge Denise Casper in Boston to impose a 13-year prison term on Randall Crater to send a message to others in the first sentencing of a cryptocurrency company founder for a marketing fraud.While Casper concluded that that request went too far, she rejected Crater’s contention that a 30-month prison term was sufficient to punish him for his false claims, including that My Big Coin was a real cryptocurrency backed by gold.”Certainly cryptocurrency is a newer enterprise, a newer market, a 21st Century market,” Casper said. “But the scheme at its core was age-old, and that was fraud.”Crater, who was sentenced to 100 months in total and ordered to forfeit nearly $7.7 million, is expected to appeal. In court, he apologized but said he never meant to defraud anyone.”I did not set out to steal money from anyone,” he said. “That does not mean I am not remorseful.”A jury in July found Crater, 52, guilty of committing wire fraud and making unlawful monetary transactions in a prosecution that spilled out of a precedent-setting case by the U.S. Commodity Futures Trading Commission.The CFTC’s 2018 lawsuit against Crater and his failed company, Nevada-based My Big Coin Inc, led to one of the first court rulings holding that a virtual currency could be considered a commodity within the regulator’s jurisdiction.Prosecutors subsequently secured Crater’s indictment in 2019 and accused him of causing investors and customers to lose $7.5 million from 2014 to 2017 with lies about My Big Coin, whose name sounded similar to the popular virtual currency bitcoin.Prosecutors said those false claims included that My Big Coin was a real virtual currency, was backed by gold and had a partnership with MasterCard. Prosecutors said he used the money to buy cars, jewelry, artwork and antique coins. More