Fourth vaccine supply deadline

September 8, 2021 (Wednesday) Cloudy; rain at night

• China tightens state control.

In addition to criticism of business leaders, interventions in fields such as entertainment and education that influence the formation of youth’s thoughts have continued, giving China an unmistakable sense of a “Cultural Revolution.”

If a economic powerhouse like China turns inward, the world cannot remain unscathed.

Social control through culture caused the economy to suffer a negative growth during three of the ten years of the Cultural Revolution in the 1960s and 70s.

• Toyota <7203> [Close 10,005 yen] on the 7th, will invest 1.5 trillion yen in vehicle batteries by 2030.

Of that, 1 trillion yen will increase production capacity to 200 million kWh, 33 times the current level.

They raised the previous target by a little over 1/10; they will also invest 500 billion yen in R&D, and set a goal to reduce the cost of batteries per electric vehicle to less than half.

• Sanae Takai of the Liberal Democratic Party announced on the 8th at a press conference that she will run for the party leadership.

Takai has the support of former Prime Minister Shinzo Abe, as well as the Hosoda faction and other conservative lawmakers to whom she once belonged.

Shigeru Ishiba, who is considering running, held a meeting of his faction on the 7th but postponed a conclusion.

Kishida Fumio, who has declared his candidacy, will announce his economic policy on the 8th.

Taro Kono is coordinating for an official announcement within the week.

• The cumulative production of novel coronavirus vaccines will exceed 12 billion doses by the end of 2021, according to a report compiled by a British research company on the 7th.

As production increases, by year-end there is a risk that vaccines will exceed demand in advanced nations.

• Amazon.com in the United States will partner with Mitsubishi Corporation <8058> [Close 3,447.0 yen] to create a network of more than 450 solar power plants domestically.

Mitsubishi will lead development and supply large amounts of power for data centers and other facilities for a decade.

Direct contracts with operators for renewable energy procurement are rare in Japan; Amazon can procure long-term, stable energy without going through power companies.

Prices will be higher than standard, but by procuring renewable energy in large quantities, it can meet the needs of customers who prioritize the environment, such as those in customer relationship management (CRM) and consumer requests.

Major solar power developer West Holdings <1407> [Close 5,450 yen] has been contracted to develop and install more than 450 solar power facilities in the Tokyo metropolitan area and Tohoku region.

The facilities will come online progressively by 2023.

(Nikkei, front page)

• The Ministry of Health, Labour and Welfare announced on the 7th that it has secured a foothold for supplying a fourth domestic COVID-19 vaccine.

Regarding the U.S. bio-pharmaceutical company Novavax vaccine, Takeda Pharmaceutical <4502> [Close 3,778 yen] has signed a supply agreement for 150 million doses in Japan.

They are also considering a third booster for individuals, and will coordinate with ongoing supplies from Pfizer, Moderna, and AstraZeneca to ensure a stable system.

Novavax’s vaccine is still under development, and supply is expected no earlier than early 2022.

• On the Tokyo stock market on the 7th, the Nikkei Stock Average temporarily recovered to the 30,000 level for the first time in about five months since April.

Expectations for economic measures by the new government following the Liberal Democratic Party leadership election persisted.

Foreign investors are also increasing purchases, reassessing previously sluggish Japanese stocks.

• At Europe’s largest automobile show, the Munich International Motor Show, most announcements were for electric vehicles (EVs).

The EU aims to effectively ban the sale of petrol cars and similar vehicles by 2035.

Beyond “decarbonization,” the EU intends to gain an advantage in the development race for next-generation vehicles, chiefly EVs.

Even by changing the rules, they intend to funnel investments into EVs by European companies. Rapid shifts to EVs could have serious effects on employment.

• Consumer spending has been weak.

Although July’s consumption rose due to more holidays, August brought a renewed downturn.

With the end of the pandemic not yet in sight, a prolonged decline in personal consumption is a concern.

July’s family budget survey shows spending by two-or-more-person households at 267,710 yen; year-on-year real increase of 0.7%, a positive for the second month in a row.

• The Cabinet Office on the 7th released the July coincident index of the Leading Economic Index, which indicates current economic health, at 94.5, down 0.1 point from the previous month.

This marks a decline for the second consecutive month. The basic assessment remains that conditions are improving.

• SOMPO Holdings <8630> [Close 5,087 yen] President Kenji Sode, aims to make subscription-based software services a profit pillar.

They will start with disaster prevention and caregiving, and expand into a 500 billion yen business over the medium to long term.

They expect profit margins of 30% and see this as a catalyst for transforming the core business toward a property and casualty insurance-centric model.

The plan is to commercialize in-house software by selling it externally as a pillar, with revenues to be recognized by fiscal year 2023.

• In Europe’s bond markets, government bond yields have risen again.

Improved regional economic sentiment and rising inflation have made the exit from large-scale monetary easing gradually visible.

The yield on Germany’s 10-year government bond rose from a trough around -0.52% in early August to around -0.3% (bond prices fell).

Yields on southern European bonds (Italy, Spain, Greece, etc.) rose in tandem, narrowing the yield gap with the U.S. 10-year Treasuries, which remained flat.

On the 6th, France’s 10-year yield briefly moved back into positive territory for the first time in about a month and a half.

• Emerging market currencies are on a rising trend in the foreign exchange market.

South Africa’s rand touched around 14 per dollar in the early part of the 7th, a high not seen since early July, about two months ago.

The Turkish lira also reached its highest level since early May on the 3rd, and stayed near that level on the 7th.

As expectations of U.S. rate hikes faded, risk-taking by investors increased, and funds flowed from the dollar into emerging market currencies.

• Prices of exchange-traded funds (ETFs) that target water-related companies worldwide have surged.

Demand for clean water is rising. Water scarcity due to droughts could also impact semiconductor production and other sectors.

• The spread of COVID-19 in Vietnam threatens the operations of foreign companies such as Intel and Samsung Electronics.

The government is strictly enforcing “factory dormitory isolation” where employees sleep on-site in major southern cities like Ho Chi Minh City.

The trend of expanding into factories, driven by tensions with China, faces turning points.

• Hyundai Motor Company Korea announced on the 7th that all upcoming commercial vehicles will be electric or fuel-cell vehicles (EVs/FCVs).

Compact delivery vehicles will be EVs, while large trucks and buses will mainly use FCVs.

• The number of new coronavirus infection cases worldwide (plus deaths) as of 4:00 PM on 9/7, summarized by Johns Hopkins University: World total 410,000 (7,667 deaths)

United States 73,267 (531) India 31,222 (290) Brazil 9,154 (182) United Kingdom 40,976 (45) Russia 17,487 (776) France 3,050 (162)

Turkey 0 (0) Argentina 3,893 (162) Iran 27,579 (583) Colombia 1,124 (53) Spain 9,357 (133) Italy 3,347 (52)

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