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Briefs: Temasek to invest in new fund under Bill Gates-backed Breakthrough Energy Ventures; gold hits three-week low

The Edge Singapore
The Edge Singapore10/20/2022 10:51 PM GMT+08  • 7 min read
Briefs: Temasek to invest in new fund under Bill Gates-backed Breakthrough Energy Ventures; gold hits three-week low
Aston Martin has suffered a number of setbacks since its IPO in 2018. Photo: Bloomberg
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Quoteworthy: "I think it is a shambles and a disgrace." — Senior British MP Charles Walker says referring to the current UK government.

Gold hits three-week low as yields soar on hawkish Fed

Gold fell to the lowest in more than three weeks as Treasury yields and the US dollar surged on expectations that the Federal Reserve will keep an aggressive pace of interest-rate hikes.

The precious metal joined a selloff in equities and bonds as bearish sentiment took hold against a backdrop of high global inflation data. Gold traders were also on edge after Minneapolis Fed President Neel Kashkari’s remarks on Oct 20 that the US central bank cannot pause its tightening campaign once its benchmark rate hits 4.5% to 4.75% if “underlying” inflation is still accelerating.

The Fed’s relentless monetary tightening to fight stubbornly high inflation led to a rally in the US dollar and higher bond yields. That has sent gold down about 20% from a March peak.

“Gold is struggling as hawkish Fedspeak continues to push the persistently hawkish regime,” said TD Securities commodity strategists led by Bart Melek. “Inflation’s increasing persistence is a constraint for the Fed, which suggests that a restrictive rates regime may persist for longer than historical precedents.”

See also: China recalibrates its policies: What does that mean?

CPI gauges from Canada and the UK both came in hotter than predicted on Oct 19, underscoring the global nature of the ongoing inflation problem.

Gold traded 1.4% lower at US$1,628.41 ($2,323) an ounce at 1.58pm in New York after sliding as much as 1.5% earlier to the lowest intraday level since Sept 28. Bullion for December delivery fell 1.3% to settle at US$1,634.20 on the Comex. Silver, platinum and palladium all declined. — Bloomberg

Geely’s Chinese billionaire eyes bigger Aston Martin stake

See also: Chris Hipkins sworn in as New Zealand's 41st Prime Minister

Chinese billionaire Li Shufu is considering boosting his stake in Aston Martin Lagonda Global Holdings over time to foster collaboration with the struggling luxury carmaker, according to people familiar with the matter.

Li, whose Zhejiang Geely Holding Group acquired a 7.6% stake in the quintessentially British brand last month, is interested in raising that shareholding close to 10% in the future, the people said, asking not to be identified as discussions are private. Such a move could pave the way for more sharing of technology and electrification know-how.

Geely’s considerations are early stage and it could opt to stay at the current shareholding level, the people said. Any attempt to gain too much control could run into opposition from existing shareholders including Saudi Arabia’s Public Investment Fund and Canadian billionaire Lawrence Stroll.

Geely currently has no plans to raise its stake in Aston Martin, the company said in a statement. A representative for Aston Martin declined to comment.

Once touted as a peer to Ferrari NV, Aston Martin has suffered a number of setbacks since its IPO in 2018. With dwindling cash and rising debt, the manufacturer sought a rescue in 2020 from Stroll, who injected cash and forged closer ties with Mercedes-Benz Group.

At the time of the investment on Sept 30, Geely said it saw potential opportunities to collaborate with Aston Martin. A move on the manufacturer synonymous with James Bond films may precipitate Geely seeking to tap into the carmaker’s brand appeal and expand into new markets.

Geely, which owns Volvo Car and a plethora of shareholdings in major automotive companies including Mercedes, also took control of British roadster maker Lotus in 2017. Earlier this year, Lotus unveiled an electric SUV that will be built in China and spearhead a broader model line-up with a plan to boost production to 150,000 cars, up from fewer than 2,000.

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In July, Aston Martin said it had rejected a proposal by Geely and Investindustrial for an equity investment of as much as GBP1.3 billion ($2.1 billion). Since then, its shares have slumped almost 40%.

While working on its turnaround, Aston Martin has seen key models delayed, leading to further measures to prop up the company. This included a GBP654 million capital raise to improve its balance sheet, bringing in Saudi Arabia’s Public Investment Fund.

“Aston Martin is a strategic top brand” and Geely should be able to utilise the relationship to further penetrate Europe or leverage its technology, Kelvin Lau, an analyst at Daiwa Capital Markets, said. — Bloomberg

US chip curbs can have ‘wide ramifications’: PM Lee

Singapore’s Prime Minister Lee Hsien Loong warned that the US decision to curb the supply of microchips to Chinese companies could have widespread consequences and greater decoupling between the top two economies may create a “less stable world”.

“The Biden administration’s latest move is a very serious one, I’m sure they have considered it carefully,” Lee said at a press conference in Canberra where he is meeting with his Australian counterpart. “It can have very wide ramifications.”

Last week, the US Commerce Department placed sweeping restrictions on technology exports to China, including semiconductors and chip-making equipment — a move which will hamper Beijing’s domestic research and technology industry. The Chinese government slammed the move, describing the curbs as political and arbitrary and warning they would “further weaken” the global economy.

Lee said in Australia that restrictive trade decisions based on valid national security concerns could result in “less economic cooperation, less interdependency, less trust and possibly ultimately a less stable world”.

The Singapore government has for a long time worked to balance its relationship between the US and China as tensions have risen between the two superpowers in the Asia-Pacific region. The city-state’s deputy prime minister Lawrence Wong told Bloomberg News in August he was worried the US and China could “sleepwalk into conflict” over the democratically run island of Taiwan.

At the press conference in Canberra with Lee, Australian Prime Minister Anthony Albanese said the Covid-19 pandemic had shown the importance of securing supply chains and prioritising “national resilience.”

“National security is not just about our defence systems. It’s also about our capacity to make things here in Australia, to be less vulnerable to shocks of whatever form, be it a future pandemic, trade, cybersecurity shocks or whether it be international conflict,” he said. — Bloomberg

Temasek to invest in new fund under Bill Gates-backed Breakthrough Energy Ventures

Temasek Holdings is taking part in a new fund under Breakthrough Energy Ventures, a climate-focused investor founded by Microsoft’s Bill Gates.

Temasek, already an existing co-investor to several other Gates-backed ventures, is deepening its partnership, as Breakthrough Energy Ventures adds adaption to its investment categories.

This new fund by Breakthrough Energy Ventures is called Select, and is focused on helping late-stage clean-tech start-ups scale and build new facilities, with an eye on markets including Asia.

The size of Select has yet to be announced. Besides Temasek, other investors are expected.

To date, Breakthrough Energy Ventures has already raised more than US$2 billion ($2.85 billion) via three funds, as indicated on its website.

They are BEV I, which has a size of US$1 billion, and BEV II, which has US$1.25 billion. There is also BEV Europe, which has a size of €100 million ($139.6 million).

The money has been put to work in more than 90 “cutting-edge companies”.

Temasek, besides holding stakes in various large public companies in the traditional industries of finance and transportation, has in recent years been an active investor in deep-tech startups across the world.

Some of these investments are in companies in nuclear energy, artificial intelligence, quantum computing, hydrogen and nanotechnologies.

In an interview with the MIT Technology Review, Eric Toone, technical lead for Breakthrough Energy Ventures’ investment committee, says it is “increasingly clear that adaptation will need to play a major role as global emissions continue to rise and the planet continues to warm”.

“Mitigation’s just not going to get us there fast enough, and suffering is unacceptable,” he says. Toone is referencing John Holdren, former president Barack Obama’s former science advisor, who said that there are three ways to respond to climate change: mitigation, adaptation, and suffering.

“So while our focus will continue to be on mitigation, we will expand our scope to include adaptation,” Toone adds.

The new fund, Select, will mainly provide “large-scale, follow-on” funds to enable companies to move ahead with demonstration projects. These are built to test and optimise technologies on larger scales, though not yet commercial ones.

According to Toone, the funding will go mostly, but not exclusively, to Breakthrough’s existing portfolio companies. — The Edge Singapore

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