MEF BUSINESS NEWS 6 SEPTEMBER 2024 Investors reacted positively to Michel Barnier’s appointment as France’s new prime minister, ending a political stalemate and allowing the government to focus on financial reforms. French stocks recovered some losses, and bond yields improved, with the 10-year spread over German bonds briefly dropping below 70 basis points. The turmoil began after a snap election in June left France with a hung parliament, halting fiscal progress and triggering market instability. Barnier’s appointment has renewed hope for budget discussions, but questions remain about the long-term stability of the new government. ————————————— European automakers like Volkswagen and Volvo are scaling back electric vehicle (EV) plans amid falling demand and fewer government incentives — according to a Bloomberg News analysis. In July, EV sales dropped over 10% across Europe, with a 37% decline in Germany. Tesla and Chinese competitors are pulling ahead, while Europe’s high production costs and lack of affordable EV models hinder growth. Chinese automakers, such as BYD, are gaining ground with cheaper alternatives. Economic pressures and high interest rates are also cooling demand, prompting European governments to reconsider aggressive climate goals. ———————————————- The European Central Bank (ECB) is not expected to lower interest rates more quickly, despite signs of a weakening eurozone economy, according to a Bloomberg survey of analysts. The ECB is forecasted to continue quarterly rate cuts, reaching 2.5% by September 2025, and keeping borrowing costs steady through 2026. Economic fragility, particularly in Germany, contrasts with persistent inflation, forcing the ECB to tread cautiously. President Christine Lagarde is expected to maintain a data-driven approach without committing to a specific rate path, amid differing views within the ECB’s Governing Council. Economists expect a slight downgrade to the ECB’s 2024 growth forecast. —————————————— The August U.S. employment report, out today, is crucial for the Federal Reserve’s upcoming interest rate decision. A strong report might lead to a modest quarter-point cut, while weak hiring or rising unemployment could prompt a larger half-point reduction. The report will also be the last chance for Fed officials to discuss rates before their pre-meeting quiet period. —————————————- UK house prices rose by 4.3% in August, the highest annual growth since November 2022, according to Halifax. The average price reached over £292,000 with a 0.3% increase from the previous month. Both figures exceeded economists’ forecasts. Lower mortgage rates have boosted market confidence, with Halifax’s head of mortgages, Amanda Bryden, noting a positive summer for the housing market as interest rates ease. ——————————————- 7-Eleven has rejected a $39 billion cash offer from Alimentation Couche-Tard, claiming it undervalues the company and overlooks regulatory hurdles. The bid of $14.86 per share was deemed inadequate for shareholders and faced significant U.S. competition law challenges. The holding Seven & i’s stock fell just 1.8% after the rejection, with investors speculating on a potential improved offer. —— —— MEF MOBILE NEWS 6 SEPTEMBER 2024 Verizon’s $20 billion acquisition of Frontier Communications signals the company’s expensive shift toward fiber, a move unlikely to thrill telco investors, the Financial Times Lex Column reads today. The deal, which offers a 30% premium on Frontier’s equity, adds 2 million fiber subscribers to Verizon’s existing 7 million. Verizon, like others in the industry, is betting on the convergence of mobile, internet, and TV services to reignite growth, as its core mobile business has stagnated. However, this high-cost strategy may not appeal to investors who have seen telecoms spend heavily on infrastructure without consistent returns, the FT article say. Frontier, a legacy telecom provider, previously went bankrupt due to unsustainable debt, partly from its earlier acquisition of Verizon’s regional wireline assets. The refinancing deal, which repays $11 billion of Frontier’s debt, is a win for its creditors but raises concerns for Verizon shareholders. Despite hopes that fiber will eventually deliver pricing power, investors are wary of the long-term financial strain of such capital-intensive ventures, especially with Verizon’s stock already down a third since pre-pandemic levels. According to Lex, for telco investors, Verizon’s costly fiber push might feel like déjà vu—another expensive gamble in a sector where returns have yet to justify the massive infrastructure investments. ——————————————— Apple approved a new version of Tencent’s WeChat for the upcoming iPhone 16, but the companies are still negotiating a potential revenue-sharing deal and the use of external payment links within WeChat’s mini games. According to Bloomberg, Apple wants Tencent to prevent developers from directing users to outside payment portals, which avoids Apple’s 30% fee, and disable in-game messaging, but Tencent has resisted. Despite the lack of a revenue-sharing agreement, Apple approved the WeChat update for iOS. Tencent previously confirmed ongoing discussions with Apple about fair and sustainable revenue-sharing terms. ——————————————- Apple’s upcoming iPhone launch is critical for the company, which relies heavily on the product for over half its revenue. Despite efforts to diversify, the iPhone business alone rivals major companies like Chevron and GM, according to a Wall Street Journal analysis. iPhone sales have slowed, with revenue down 2% last fiscal year and a slight decline expected this year. High hopes rest on the new phone, which will be launched on September 9 and incorporates Apple’s AI technology, though analysts are divided on its immediate impact, with some AI features delayed until later in the year. —— —— MEF TECH NEWS 6 SEPTEMBER 2024 Chinese cloud providers offer Nvidia’s AI chips at lower rates than in the U.S., despite U.S. export restrictions, The Financial Times reports citing companies and customers. While the A100 and H100 chips are banned from direct sales to China, smaller vendors circumvent the ban, charging $6 an hour compared to $10 in the U.S. These chips, essential for AI development, are widely available through resellers and smuggling. Large operators like Alibaba charge more due to compliance concerns, while smaller firms exploit cheaper labor and power to offset smuggling costs, challenging U.S. efforts to restrict China’s AI access. —————————- Nvidia is participating in a $160 million funding round for Applied Digital, a company that operates data centers and leases computing power for AI. Other investors include Related Companies. Applied Digital, valued at over $500 million, will use the funds to expand its AI cloud-computing operations and finance a North Dakota data center project. Nvidia’s investment aligns with its strategy to support companies utilizing its AI chips. Applied Digital will issue around 49 million shares at $3.24 each in this private placement deal. Despite recent volatility, the company’s shares rose nearly 3% after the announcement. —————————- Ilya Sutskever, co-founder of OpenAI, has launched a new AI startup called Safe Superintelligence (SSI) and raised $1 billion from investors, including Andreessen Horowitz, Sequoia Capital, and DST Global. SSI, founded in June 2023, focuses on building AI models with an emphasis on safety. Sutskever left OpenAI in May after previously helping to oust CEO Sam Altman, a decision he later expressed regret over. ——————————————— Tesla’s share of China’s electric vehicle (EV) market has dropped from 9% to 6.5% as local competitors flood the market with more advanced models. Despite strong EV sales growth in China, Tesla’s first-half sales fell to $9.2 billion, down from $10.6 billion last year. The company has not launched a new EV in China since 2019, while over 100 new models have hit the market in 2024 alone. Experts say Tesla’s ability to compete without introducing new products is increasingly difficult. Plug-in hybrids, which saw a 90% sales surge, are driving the market’s growth. ————————- The Adani Group, led by Indian billionaire Gautam Adani, plans to invest $10 billion in partnership with Israel’s Tower Semiconductor to build a semiconductor fabrication plant near Mumbai, India. The project aims to enhance India’s chipmaking capabilities amid rising global demand for semiconductors. The facility will initially produce 40,000 wafers in its first phase and 80,000 in the second. The project will be developed over three to five years, primarily funded through Adani Enterprises’ internal resources and some debt. —— ——

MEF BUSINESS NEWS 6 SEPTEMBER 2024 Investors reacted positively to Michel Barnier’s appointment as France’s new prime minister, ending a political stalemate and allowing the government to focus on financial reforms. French stocks recovered some losses, and bond yields improved, with the 10-year spread over German bonds briefly dropping below 70 basis points. The turmoil began after a snap election in June left France with a hung parliament, halting fiscal progress and triggering market instability. Barnier’s appointment has renewed hope for budget discussions, but questions remain about the long-term stability of the new government. ————————————— European automakers like Volkswagen and Volvo are scaling back electric vehicle (EV) plans amid falling demand and fewer government incentives — according to a Bloomberg News analysis. In July, EV sales dropped over 10% across Europe, with a 37% decline in Germany. Tesla and Chinese competitors are pulling ahead, while Europe’s high production costs and lack of affordable EV models hinder growth. Chinese automakers, such as BYD, are gaining ground with cheaper alternatives. Economic pressures and high interest rates are also cooling demand, prompting European governments to reconsider aggressive climate goals. ———————————————- The European Central Bank (ECB) is not expected to lower interest rates more quickly, despite signs of a weakening eurozone economy, according to a Bloomberg survey of analysts. The ECB is forecasted to continue quarterly rate cuts, reaching 2.5% by September 2025, and keeping borrowing costs steady through 2026. Economic fragility, particularly in Germany, contrasts with persistent inflation, forcing the ECB to tread cautiously. President Christine Lagarde is expected to maintain a data-driven approach without committing to a specific rate path, amid differing views within the ECB’s Governing Council. Economists expect a slight downgrade to the ECB’s 2024 growth forecast. —————————————— The August U.S. employment report, out today, is crucial for the Federal Reserve’s upcoming interest rate decision. A strong report might lead to a modest quarter-point cut, while weak hiring or rising unemployment could prompt a larger half-point reduction. The report will also be the last chance for Fed officials to discuss rates before their pre-meeting quiet period. —————————————- UK house prices rose by 4.3% in August, the highest annual growth since November 2022, according to Halifax. The average price reached over £292,000 with a 0.3% increase from the previous month. Both figures exceeded economists’ forecasts. Lower mortgage rates have boosted market confidence, with Halifax’s head of mortgages, Amanda Bryden, noting a positive summer for the housing market as interest rates ease. ——————————————- 7-Eleven has rejected a $39 billion cash offer from Alimentation Couche-Tard, claiming it undervalues the company and overlooks regulatory hurdles. The bid of $14.86 per share was deemed inadequate for shareholders and faced significant U.S. competition law challenges. The holding Seven & i’s stock fell just 1.8% after the rejection, with investors speculating on a potential improved offer. —— —— MEF MOBILE NEWS 6 SEPTEMBER 2024 Verizon’s $20 billion acquisition of Frontier Communications signals the company’s expensive shift toward fiber, a move unlikely to thrill telco investors, the Financial Times Lex Column reads today. The deal, which offers a 30% premium on Frontier’s equity, adds 2 million fiber subscribers to Verizon’s existing 7 million. Verizon, like others in the industry, is betting on the convergence of mobile, internet, and TV services to reignite growth, as its core mobile business has stagnated. However, this high-cost strategy may not appeal to investors who have seen telecoms spend heavily on infrastructure without consistent returns, the FT article say. Frontier, a legacy telecom provider, previously went bankrupt due to unsustainable debt, partly from its earlier acquisition of Verizon’s regional wireline assets. The refinancing deal, which repays $11 billion of Frontier’s debt, is a win for its creditors but raises concerns for Verizon shareholders. Despite hopes that fiber will eventually deliver pricing power, investors are wary of the long-term financial strain of such capital-intensive ventures, especially with Verizon’s stock already down a third since pre-pandemic levels. According to Lex, for telco investors, Verizon’s costly fiber push might feel like déjà vu—another expensive gamble in a sector where returns have yet to justify the massive infrastructure investments. ——————————————— Apple approved a new version of Tencent’s WeChat for the upcoming iPhone 16, but the companies are still negotiating a potential revenue-sharing deal and the use of external payment links within WeChat’s mini games. According to Bloomberg, Apple wants Tencent to prevent developers from directing users to outside payment portals, which avoids Apple’s 30% fee, and disable in-game messaging, but Tencent has resisted. Despite the lack of a revenue-sharing agreement, Apple approved the WeChat update for iOS. Tencent previously confirmed ongoing discussions with Apple about fair and sustainable revenue-sharing terms. ——————————————- Apple’s upcoming iPhone launch is critical for the company, which relies heavily on the product for over half its revenue. Despite efforts to diversify, the iPhone business alone rivals major companies like Chevron and GM, according to a Wall Street Journal analysis. iPhone sales have slowed, with revenue down 2% last fiscal year and a slight decline expected this year. High hopes rest on the new phone, which will be launched on September 9 and incorporates Apple’s AI technology, though analysts are divided on its immediate impact, with some AI features delayed until later in the year. —— —— MEF TECH NEWS 6 SEPTEMBER 2024 Chinese cloud providers offer Nvidia’s AI chips at lower rates than in the U.S., despite U.S. export restrictions, The Financial Times reports citing companies and customers. While the A100 and H100 chips are banned from direct sales to China, smaller vendors circumvent the ban, charging $6 an hour compared to $10 in the U.S. These chips, essential for AI development, are widely available through resellers and smuggling. Large operators like Alibaba charge more due to compliance concerns, while smaller firms exploit cheaper labor and power to offset smuggling costs, challenging U.S. efforts to restrict China’s AI access. —————————- Nvidia is participating in a $160 million funding round for Applied Digital, a company that operates data centers and leases computing power for AI. Other investors include Related Companies. Applied Digital, valued at over $500 million, will use the funds to expand its AI cloud-computing operations and finance a North Dakota data center project. Nvidia’s investment aligns with its strategy to support companies utilizing its AI chips. Applied Digital will issue around 49 million shares at $3.24 each in this private placement deal. Despite recent volatility, the company’s shares rose nearly 3% after the announcement. —————————- Ilya Sutskever, co-founder of OpenAI, has launched a new AI startup called Safe Superintelligence (SSI) and raised $1 billion from investors, including Andreessen Horowitz, Sequoia Capital, and DST Global. SSI, founded in June 2023, focuses on building AI models with an emphasis on safety. Sutskever left OpenAI in May after previously helping to oust CEO Sam Altman, a decision he later expressed regret over. ——————————————— Tesla’s share of China’s electric vehicle (EV) market has dropped from 9% to 6.5% as local competitors flood the market with more advanced models. Despite strong EV sales growth in China, Tesla’s first-half sales fell to $9.2 billion, down from $10.6 billion last year. The company has not launched a new EV in China since 2019, while over 100 new models have hit the market in 2024 alone. Experts say Tesla’s ability to compete without introducing new products is increasingly difficult. Plug-in hybrids, which saw a 90% sales surge, are driving the market’s growth. ————————- The Adani Group, led by Indian billionaire Gautam Adani, plans to invest $10 billion in partnership with Israel’s Tower Semiconductor to build a semiconductor fabrication plant near Mumbai, India. The project aims to enhance India’s chipmaking capabilities amid rising global demand for semiconductors. The facility will initially produce 40,000 wafers in its first phase and 80,000 in the second. The project will be developed over three to five years, primarily funded through Adani Enterprises’ internal resources and some debt. —— ——