After Tesla deal, Shanghai to speed up cancelation of foreign ownership limits

Tesla Inc Chief Executive Officer Elon Musk and Shanghai Mayor Ying Yong attend a signing ceremony in Shanghai, China July 10, 2018. (Reuters)
Updated 11 July 2018
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After Tesla deal, Shanghai to speed up cancelation of foreign ownership limits

SHANGHAI: Shanghai will accelerate efforts to cancel restrictions on foreign investment in the auto manufacturing sector, a government official said on Wednesday, a day after Tesla said it would build a wholly owned auto plant in the city.
Earlier this year, China said it would scrap foreign ownership caps for companies making fully electric or plug-in hybrid vehicles in 2018 and all automotive ventures by 2022. The announcement marked a major policy shift in the world’s top car market that has capped foreign ownership in the sector at 50 percent for over two decades.
Huang Ou, deputy director of the Shanghai Commission of Economy and Information Technology, told reporters at a press conference that the city government was engaged in preparations to support the Tesla project, set to be Shanghai’s biggest foreign-invested project.
“The next step is for the city government to do the support work to allow the project to go into operation as quickly as possible,” he said.
“In line with state plans, we will speed up the cancelation of foreign ownership restrictions in the car manufacturing sector,” he said.
Huang declined to comment, however, on the size of the project or when the construction of a plant with capacity to produce 500,000 Tesla battery electric cars a year — large by auto industry standards — would start.
Tesla Inc. Chief Executive Officer Elon Musk landed a deal on Tuesday to build a new and wholly owned auto plant in Shanghai, the company’s first factory outside the United States. It would double the size of the electric car maker’s global manufacturing.
The deal was announced as Tesla raised prices on US-made vehicles it sells in China to offset the cost of tariffs imposed by the Chinese government on US imports in retaliation for US President Donald Trump’s heavier duties on Chinese goods.
An auto assembly plant half the size of the envisioned Tesla Shanghai plant would normally cost $1 billion to build, according to automotive industry officials and experts.
The Shanghai government said in a statement on Tuesday it welcomed Tesla’s move to invest not only in a new factory in the city but in research and development.
Chinese magazine Caijing, citing sources close to the project, reported on Tuesday that the plant’s exact location had not been decided and construction would start early next year.


Egypt stock market plunges as retail investors take flight

Updated 19 September 2018
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Egypt stock market plunges as retail investors take flight

  • Biggest index drop in Egypt since mid-2016
  • Saudi Arabia outperforms in Gulf

LONDON: Egyptian stocks tumbled to their lowest level this year on Wednesday as retail investors took flight.
A sharp rise in Suez Canal revenues, a major foreign exchange earner for the country, was not enough to quell investors concerns about the strength of the currency.
The main Egyptian stock index lost 3.8 percent which some fund managers blamed on generally negative sentiment toward emerging markets worldwide as well as more local speculation about possible currency devaluation.
“Our channel checks suggest the sell-off in the Egyptian market is local retail and institutions driven, on currency fears and speculation over a further round of devaluation,” said Vrajesh Bhandari, portfolio manager at Al Mal in Dubai, Reuters reported.
“Selling is further intensified as margin calls are triggered and technical support levels break down. The country canceled three consecutive Treasury auctions, citing investors’ unrealistic yield demands.”
Egypt’s Suez Canal revenues rose to $502.2 million in August up 6.7 percent from a year earlier according to official data released on Wednesday.
Elsewhere regional stock markets closed mostly lower with the exceptions of Abu Dhabi which edged 0.2 percent higher and Saudi Arabia, the best regional performer, which rose by 1.1 percent.
Saudi stocks are benefiting from the strong oil price which eased slightly yesterday but still hovered just under $79.
OPEC and some other oil producers including Russia will meet in Algeria on Sept. 23 to discuss how to allocate supply increases within their quota framework to offset the loss of oil exports from Iran following the introduction of sanctions by the US.
Those measures will come into force on Nov. 4 and data suggests that buyers are already retreating from Iranian crude purchases.
A key question for the oil price as well as regional stock markets in the weeks ahead will be the extent to which other Gulf oil exporters can compenaste for the loss of Iranian supplies by pumping more.