POWER: Eon Raises Concerns Over NEST Reform
Nov-12 12:56
Eon expressed concerns that the new network reform may not provide sufficient compensation for their financing efforts, CFO Nadia Jakobi said, cited by Reuters.
- Germany’s new network reform – NEST – is expected to enter into force by the end of this year and will apply to electricity grids from 2029 and gas networks from 2028, Handelsblatt reported recently.
- "The current draft of the framework does not fairly reflect grid operators' financing cost," Jakobi said.
- The finance chief added that there was a possibility that the firm would assess legal options if the final proposal was too far off expectations.
- Transmission system operators such as Amprion argued that current equity returns are insufficient to fund the large-scale grid expansion required for the renewable energy transition.
- "The Federal Network Agency is not including certain parts of its plans in its calculations that have negative consequences for the operators," VKU CEO Ingbert Liebing said to the latest draft reform in October.
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INTERNATIONAL TRADE: EU’s Share Of Chinese Exports May Have Bottomed Out
Oct-13 12:44
Chinese exports to the EU rose 14.2% Y/Y in USD terms in September, an acceleration from 10.4% in August for the highest rate since July 2022. On a 3mma basis, exports to the EU are up 11.3% (vs 9.1% in August). While a slow-moving process, the EU’s share of total Chinese exports (12m rolling sum) appears to have bottomed out and is starting to rise again, currently at 14.7% after plateauing at 14.4% last year.
- While some ECB officials have downplayed the impact of tariff-related Chinese trade diversion on the near-term inflation outlook in recent months, increased Chinese penetration in Eurozone/EU markets remains a longer-running disinflationary force.
- This medium-term theme may factor into discussions at the ECB’s December decision, where an updated set of macroeconomic projections incorporating 2028 will be provided. In September, ECB President Lagarde sought to downplay the relevance of the 2027 headline HICP projection undershooting the 2% target by tenth. Should this gap-to-target widen, it will provide doves with stronger arguments to deliver one more rate cut to 1.75%.
- Chinese export growth to the US remains sharply negative, falling 27.3% on a 3mma Y/Y basis in September (vs -23.6% in August). While some of this decline can be explained by increased transhipments via ASEAN countries (e.g. Vietnam), this year’s increase in effective tariff rates is still unsurprisingly suppressing trade flows. Chinese import growth from the US is also deeply negative (-16.8% 3mma Y/Y in September). The renewal of Trump administration tariff threats against China in recent days has reminder markets that trade policy uncertainty remains a key theme.
