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UK automakers report drop in investment, production – Yahoo Canada Finance

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LONDON — British auto production dropped for a third straight year in 2019, as carmakers continued to hold off on investment amid uncertainty over the country’s departure from the European Union.

The anemic figures announced Thursday by the Society of Motor Manufacturers and Traders will increase the pressure on Prime Minister Boris Johnson to work out a favourable trade deal with the EU because the industry directly employs 168,000 people and contributes 6 billion pounds ($7.8 billion) a year to the economy. There are fears things will only get worse if carmakers, who rely on just-in-time supply chains, lose the ability to participate on an equal footing in the European single market.

After more than three years of protracted negotiations about how to leave the EU following the June 2016 referendum, Britain is finally set to do so on Friday. Though it won’t be an EU member after, it enters a so-called transition period that will allow current trading rules to remain in effect until the end of the year. Auto executives are pushing for a free-trade deal as soon as possible to prevent them from closing plants and moving elsewhere.

Figures released Thursday show total production fell 14.2% last year to 1.3 million vehicles, the lowest since 2010. Production for export markets declined 14.7% to 1.06 million vehicles — the majority of which went to the EU.

Though investment in the industry almost doubled to 1.1 billion pounds, the figure was less than half the 2.7 billion pound average over the past seven years. A single large investment by Jaguar Land Rover, which is building electric cars in the Midlands, accounted for most of the 2019 figure, the SMMT said.

Mike Hawes, CEO of the trade organization, said the decline in manufacturing was a “grave concern.”

“Given the uncertainty the sector has experienced, it is essential we re-establish our global competitiveness,” he said. ”And that starts with an ambitious free-trade deal agreement with Europe — one that guarantees all automotive products can be bought and sold without tariffs or additional burdens.”

The figures come as the car industry convulses with change — and it isn’t just about Brexit, which has weighed on the industry since the 2016 vote.

The growth in electric cars, the shift away from diesel and increasing competition from countries like China is causing turmoil as people think about making big changes to their plants and supply lines.

David Bailey, an auto industry expert at the University of Birmingham and author of “Carmaggeddon? Brexit & Beyond for UK Auto,” said the government needs to clarify its plans for an EU trade deal, or risk losing even more investment.

“The clock is ticking,” he said. “There’s a real danger we will be timed out.”

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Follow AP’s full coverage of Brexit and British politics at: https://www.apnews.com/Brexit

Danica Kirka, The Associated Press

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Bank of Montreal CEO sees growth in U.S. share of earnings

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Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.

“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”

($1 = 1.2145 Canadian dollars)

 

(Reporting by Nichola Saminather; Editing by Leslie Adler)

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GameStop falls 27% on potential share sale

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Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.

The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.

“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”

Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.

Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.

Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.

AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.

“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”

Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.

GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.

GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.

The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.

In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.

 

(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)

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U.S. to work with allies to secure electric vehicle metals

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The United States must work with allies to secure the minerals needed for electric vehicle batteries and process them domestically in light of environmental and other competing interests, the White House said on Tuesday.

The strategy, first reported by Reuters in late May, will include new funding to expand international investments in electric vehicles (EV) metal projects through the U.S. Development Finance Corporation, as well as new efforts to boost supply from recycling batteries.

The U.S. has been working to secure minerals from allied countries, including Canada and Finland. The 250-page report outlining policy recommendations mentioned large lithium supplies in Chile and Australia, the world’s two largest producers of the white battery metal.

President Joe Biden‘s administration will also launch a working group to identify where minerals used in EV batteries and other technologies can be produced and processed domestically.

Securing enough copper, lithium and other raw materials to make EV batteries is a major obstacle to Biden’s aggressive EV adoption plans, with domestic mines facing extensive regulatory hurdles and environmental opposition.

The White House acknowledged China’s role as the world’s largest processor of EV metals and said it would expand efforts to lessen that dependency.

“The United States cannot and does not need to mine and process all critical battery inputs at home. It can and should work with allies and partners to expand global production and to ensure secure global supplies,” it said in the report.

The White House also said the Department of the Interior and others agencies will work to identify gaps in mine permitting laws to ensure any new production “meets strong standards” in terms of both the environment and community input.

The report noted Native American opposition to Lithium Americas Corp’s Thacker Pass lithium project in Nevada, as well as plans by automaker Tesla Inc to produce its own lithium.

The steps come after Biden, who has made fighting climate change and competing with China centerpieces of his agenda, ordered a 100-day review of gaps in supply chains in key areas, including EVs.

Democrats are pushing aggressive climate goals to have a majority of U.S.-manufactured cars be electric by 2030 and every car on the road to be electric by 2040.

As part of the recommendations from four executive branch agencies, Biden is being advised to take steps to restore the country’s strategic mineral stockpile and expand funding to map the mineral resources available domestically.

Some of those steps would require the support of Congress, where Biden’s fellow Democrats have only slim majorities.

The Energy Department already has $17 billion in authority through its Advanced Technology Vehicles Manufacturing Loan program to fund some investments.

The program’s administrators will focus on financing battery manufacturers and companies that refine, recycle and process critical minerals, the White House said.

(Reporting by Trevor Hunnicutt in Washington and Ernest Scheyder in Houston; Editing by Mary Milliken, Aurora Ellis and Sonya Hepinstall)

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