By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF -Siemens Energy on Monday blamed a 200 million euro ($204 million) charge related to the wind-down of its Russian business for a wider net loss in 2022, but said it was still prepared to maintain turbines for the Nord Stream 1 Russian gas pipeline.

The supplier of equipment to the power sector said that its Russian business activities could be sold or wound down and the company was in touch with public authorities to work out the details.

“Of course implementing this is not trivial in the current environment,” Siemens Energy Chief Executive Christian Bruch said.

Shares in the company were down 2.8% by 0855 GMT, having pared earlier losses, but were still underperforming the broader sector.

Siemens Energy said its 2022 net loss would exceed last year’s 560 million euro loss by the 200 million euro charge, which is reported as a special item. It previously expected its 2022 net loss to be similar to last year’s.

The group, which was spun off from Siemens, said in March it would stop all new business in Russia following Moscow’s invasion of Ukraine that began on Feb. 24.

Sales in Russia accounted for a low single-digit percentage share of Siemens Energy’s total sales last year of 28.48 billion euros, it has said.

Despite the planned exit from Russia, Bruch said Siemens Energy was prepared to keep maintaining the turbines in operation at the Nord Stream 1 Portovaya compressor station, if customer Gazprom wanted it.

Siemens Energy is in talks with the Russian state company over the transport of a turbine that is stuck in Germany following maintenance, carried out by Siemens Energy, because of disagreements between Berlin and Moscow over the documents needed to move it.

Nord Stream 1, which usually transports a third of Russia’s gas exports to Europe, is running at just 20% capacity as a result, Moscow has said, of faulty or delayed equipment.

Bruch also said ongoing weakness at wind turbine divisions Siemens Gamesa were a drag on quarterly results and that he expected the company’s new leadership to implement a rigorous turnaround plan.

Sources told Reuters a week ago that Siemens Gamesa https://www.reuters.com/business/exclusive-siemens-gamesa-weighs-around-2500-job-cuts-sources-2022-08-01 was considering cutting around 2,500 jobs, or around 9% of its total workforce, to combat higher raw material prices and product delays that have caused it to issue profit warnings.

To tighten its control over the group’s issues, Siemens Energy announced a 4.05 billion euro cash bid for the 33% it does not already own in the Spanish-listed company, plans it expects to be confirmed by local regulators in the coming weeks.

($1 = 0.9799 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; editing by John Stonestreet, Miranda Murray and Barbara Lewis)

(Corrects typo in headline)

TAIPEI -Taiwan’s exports rose in July on sustained demand for technology products with shipments to China picking up, and while the government said the outlook was good for semiconductors it warned of growing uncertainly for the global economy.

Exports rose 14.2% in July from a year earlier to $43.32 billion, the Ministry of Finance said on Monday, the second highest monthly figure on record and up for the 25th consecutive month.

That was slightly slower than the 15.2% rise recorded in June, but better than the 11.65% expansion forecast from a Reuters poll.

The ministry attributed the growth pace to strong technology demand, especially for chips ahead of the year-end holiday shopping season, with supply chain problems easing.

July exports to China, Taiwan’s largest trading partner, rose an annual 3% to $16.04 billion, after a 4.5% contraction in June, suggesting an easing of disruptions caused by COVID-19 outbreaks in the country.

Overall exports of electronics components in July rose 15.6% to $16.96 billion, with semiconductor exports jumping 17.4% from a year earlier.

Many companies expect global chip shortages to last at least for the rest of the year, which will continue to bolster Taiwanese semiconductor firms’ order books.

Firms such as TSMC, the world’s largest contract chipmaker, are major suppliers to Apple Inc and other global tech giants, as well as providers of chips for auto companies and lower-end consumer electronics.

The finance ministry warned of a “high degree of uncertainty” for the global economy due the war in Ukraine and inflationary pressures, even with sustained chip demand.

“The growth momentum is gradually becoming conservative, which is bound to affect our country’s foreign trade situation,” it added.

However, ministry official Beatrice Tsai said total exports this year should still be able to exceed $500 billion.

July exports to the United States were up 24.8%, slower than a 27.9% jump recorded the previous month.

China’s export growth unexpectedly picked up speed in July, offering an encouraging boost to the economy as its struggles to recover from a COVID-induced slump, but weakening global demand could start to drag on shipments in coming months.

Taiwan’s July imports rose 19.4% to $38.29 billion, the third highest figure on record, better than economists’ expectations of a 15.85% jump, after an increase of 19.2% in June.

Taiwan could see August exports increase by 8% to 12% from a year earlier, the finance ministry said.

(Reporting by Jeanny Kao; Writing by Ben Blanchard; Editing by Jacqueline Wong and Louise Heavens)

BERLIN – Germany would face costs almost six times as high as Brexit if it and the European Union were to shut China out of their economies, the Ifo institute said on Monday, citing the results of a study.

The biggest losers of a trade war with China would be the automotive industry with a 8.47% loss of value-added, manufacturers of transport equipment with a 5.14% loss and mechanical engineering with a 4.34% loss, the Ifo said.

The authors of the study, commissioned by the vbw industry association, said companies should pivot towards other countries to reduce dependency on certain markets and authoritarian regimes.

The goal of German and EU economic policy should be “to establish strategic partnerships and free trade agreements with like-minded nations such as the U.S.,” co-author Florian Dorn said.

The analysis simulated five scenarios, including a decoupling of Western economies from China combined with a trade agreement between the EU and the United States.

While such an agreement could cushion the effects of a trade war with China, it would not offset them entirely. Rather, it would result in the net costs of a trade war equalling roughly the expected costs of Brexit, Ifo said.

(Writing by Rachel More; Editing by Alex Richardson)

By Huw Jones

LONDON – Britain’s accounting watchdog said on Monday it had fined auditor PwC 1.75 million pounds ($2.12 million) after it failed to properly challenge UK telecoms group BT once a half-a-billion pound fraud was discovered in BT’s Italian operations.

BT’s full-year financial statement for the year ended March 31, 2017, had to be adjusted by 513 million pounds due to the fraud, the Financial Reporting Council (FRC) said.

“The sanctions imposed in this case, where certain elements of the adjustments following a fraud were not subject to the required level of professional scepticism, underscore this message and will serve as a timely reminder to the profession,” Claudia Mortimore, deputy executive counsel at the FRC, said in a statement.

PwC said it was sorry that aspects of its audit of BT Group for the year ended March 31, 2017, were not of the required standard, adding the FRC had not found the accounts were misstated or that the sum of the BT Italy adjustments was wrong.

“We have made significant investment in strengthening audit quality in recent years, which has been recognised in improved quality inspection results,” PwC said.

The fine would have been 2.5 million pounds had PwC not admitted to the breaches and settled early.

Richard Hughes, the partner who led the BT audit, was fined 42,000 pounds, avoiding a 60,000 pound fine after admitting to the breach, the FRC said.

PwC and Hughes also failed to have a sufficient trail of documents that would allow any experienced auditor to understand the nature, timing and extent of the audit procedures performed, the FRC said.

($1 = 0.8255 pounds)

(Reporting by Huw Jones; Editing by Louise Heavens and Mark Potter)

(Reuters) -Latest U.S. inflation numbers are in markets’ sight, especially since Federal Reserve policymakers have come out in force to correct any misconception about their determination to slay decades-high inflation with big rate hikes.

The fallout from Nancy Pelosi’s high-profile visit to Taiwan will be watched closely, as will Chinese and UK data while Ukraine is hoping for a debt payment freeze from international investors.

Here’s your week ahead in markets from Kevin Buckland in Ottawa, Ira Iosebashvili in New York and Andy Bruce, Karin Strohecker, Dhara Ranasinghe and Vincent Flasseur in London.

1/ RED-HOT FOR MUCH LONGER?

Wednesday’s July U.S. inflation print is shaping up as a key test for a summer rally in U.S. stocks that has lifted the S&P 500 to multi-week highs. 

The benchmark index is up 14% from its mid-June low, supported in part by expectations that the Federal Reserve will be less hawkish than previously anticipated.

Fed officials have pushed back against the idea that they will be less aggressive in a so-called dovish pivot.

Any signs that inflation is not yet peaking after the Fed’s 225 bps worth of rate hikes could provide a reality check to markets hopeful of a soft landing for the economy.

Analysts polled by Reuters forecast annual inflation at 8.9% in July versus 9.1% in June, which was the largest increase since 1981.

2/ TROUBLE IN THE EAST

U.S. House of Representatives Speaker Nancy Pelosi’s visit to Taiwan, which China claims as its own territory, means U.S.-China tensions are rising again.

To be fair, the selloff in world stocks and the Taiwan dollar as well as the rush to safe havens such as U.S. Treasuries quickly subsided.

Still, market sensitivity to political risk is high since Russia’s invasion of Ukraine in February. China announced fresh military drills on Monday in the seas and airspace around Taiwan. It launched unprecedented live-fire military drills in areas that ring Taiwan following Pelosi’s visit. Taiwan says this violates United Nations rules and invades its territorial space.

Scalded by Russia, investment funds have already started to tread carefully in China. No doubt, investors will remain alert to further signs of trouble in the East.

3/ CHEAP CASH

    Cash is cheap in China, because of an abundance of it sloshing around amid government measures to support an economy scarred by zero-COVID policies.

    The key money rate, the overnight repo rate, is languishing at a 1-1/2-year low below 1%, and data due as early as Wednesday will show the state of new loans and total money supply.

    Conditions need to be easy, with the country set to miss its original growth target of 5.5%. Beijing has shifted to trying to keep economic expansion within a “reasonable range”.

    Thankfully, consumer price inflation has been manageable at 2.5%, well below the official 3% target, even if it is at nearly two-year highs. The latest reading is also due Wednesday.

    COVID, though, has been more temperamental, with a new flare-up in the port city of Yiwu threatening further supply chain snarls.

4/ RECESSION WATCH

How close is Britain to falling into recession? That’s the big question ahead of economic growth figures next Friday, following dismal Bank of England forecasts.

The BoE reckons a new slump will begin at the end of this year but other top forecasters, such as the National Institute of Economic and Social Research, think it might start in the current quarter.

A darkening economy is impinging increasingly on Britain’s leadership race, casting doubt on the merits of the feel-good tax-cutting pitch offered by front-runner Liz Truss, and calls for fiscal discipline from opponent Rishi Sunak.

Any nasty surprises in Friday’s data – which cover monthly GDP for June and the second quarter as a whole – could further alter the tenor of the debate.

5/ SEEKING RELIEF

Holders of Ukraine’s international bonds have until August 9 to vote on whether to support Kyiv’s request for a two-year debt payment freeze as the country’s battered economy buckles under war there now in its sixth month.

The government is facing a $1 billion bond maturing on Sept. 1 as policymakers struggle to plug a $5 billion-a-month fiscal gap with GDP expected to contract by 35-45% this year.

Meanwhile there are tentative signs that grain shipments could resume after the first vessel to leave a Ukrainian port in wartime passed through the Bosphorus Strait on Wednesday. Hopes are high that it will be the first of many to help ease a global food crisis and provide much needed FX revenue for Ukraine.

Chicago wheat futures have slipped to their lowest since early February.

(Compiled by Dhara Ranasinghe; editing by Jason Neely)

JAKARTA – U.S. carmaker Tesla has signed contracts worth about $5 billion to buy materials for their batteries from nickel processing companies in Indonesia, a senior cabinet minister told CNBC Indonesia.

Southeast Asia’s biggest economy has been trying to get Tesla to set up a production facility in the country, which has major nickel reserves. President Joko Widodo met with Tesla founder Elon Musk earlier this year to drum up investment.

“We are still in constant negotiation with Tesla … but they have started buying two excellent products from Indonesia,” Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan said in an interview broadcast on Monday.

He said Tesla signed a five-year contract with nickel processing companies operating out of Morowali in Sulawesi island. The nickel materials will be used in Tesla’s lithium batteries.

Tesla did not immediately respond to a Reuters email seeking comment.

Indonesia is keen to develop electric vehicles and batteries industries at home and had stopped exports of nickel ore to ensure supply for investors. The move had successfully attracted investments from Chinese steel giants and South Korean companies like LG and Hyundai.

However, most nickel investment so far have gone to production of crude metal such as nickel pig iron and ferronickel.

The government plans to impose export tax on these metals to boost revenue while encouraging more domestic production of higher-value products, a senior official told Reuters last week.

(Reporting by Fransiska Nangoy; Editing by Kanupriya Kapoor)

By Federica Urso and Mark John

(Reuters) – Degrowth – the idea that a finite planet cannot sustain ever-increasing consumption – is about the closest you can get to a heresy in economics, where growth is widely held as the best route to prosperity.

But, as climate change accelerates and supply chain disruptions offer rich-world consumers an unaccustomed taste of scarcity, the theory is becoming less taboo and some have started to ponder what a degrowth world might look like.

After the U.N. climate science agency this year called for cuts in consumer demand – a core degrowth premise – the think tank that runs the Davos forum published a degrowth primer in June and the issue has even begun to crop up in investment notes.

“It is a provocative term,” Aniket Shah, Global Head of ESG and Sustainability Strategy at Jefferies said of the New York-based bank’s June 13 note on the “Degrowth Opportunity”.

“But it’s not about going to a low-income country saying ‘You can’t grow anymore’,” he said. “It’s saying: We need to look at the entire system and see how do we over time decrease total consumption and production in aggregate.”

First coined in its French guise “décroissance” in 1972, the theory gained backers after the “Limits To Growth” report in the same year described a computer simulation by MIT scientists of a world destabilised by growing material consumption.

Controversial from the start, that simulation has been attacked as flawed by some and applauded by others as uncannily prescient in its prediction of accelerating planetary stress.

In recent decades, the world’s economy has grown faster than the carbon emissions it generates. But this partial decoupling has been nowhere near enough to halt or reverse those emissions, allowing them to drive global warming further.

In April, the Intergovernmental Panel on Climate Change (IPCC) concluded that outright cuts https://www.reuters.com/business/environment/now-or-never-only-severe-emissions-cuts-will-avoid-climate-extremes-un-report-2022-04-04 to consumer demand were needed to reduce carbon emissions, a shift from a previous focus on the promise of sustainable fuel technology. (Graphic: World GDP and carbon emissions – a partial decoupling, https://graphics.reuters.com/GLOBAL-ENVIRONMENT/znpnerbdjvl/chart.png)

The IPCC’s biodiversity counterpart IPBES last month included degrowth among a number of alternative economic models with insights that could help to arrest environmental degradation.

“In the plenary, even the word ‘degrowth’ wasn’t challenged. That’s very interesting,” IPBES report co-chair Unai Pascual told Reuters of conclusions that won approval from 139 member countries, including China, India, Russia and the United States.

The article on degrowth published in June by Davos-organiser the World Economic Forum hinted at degrowth impacts, suggesting “it might mean people in rich countries changing their diets, living in smaller houses and driving and travelling less”.

GUNG-HO ON GROWTH

For Jefferies’ Shah, it is such behavioural changes that could inspire a degrowth-aligned investment portfolio.

“Would Zoom for example ever want to be called a degrowth stock? I doubt it. But I can certainly see how a world that uses more web-conferencing … means less travel, which is a very high-carbon-intensive way of transportation,” said Shah.

It is easy to see how other products and services, such as mobility- and fashion-sharing, technologies that allow a transition from fossil fuel to renewable energy, or even just bicycles, could find a place in a hypothetical degrowth fund.

But how far ESG funds and the companies in which they invest are ready to align with degrowth is open to question given how the theory explicitly prioritises societal, environmental and other non-financial values over profit-making.

“Degrowth is really about true sustainability,” Jennifer Wilkins, a researcher on emerging business sustainability issues whose work was featured in the Jefferies note, told Reuters.

“It’s about delivering what is needed in terms of meeting human needs, within planetary boundaries. And current ESG investors don’t really understand planetary boundaries,” she said, adding their focus remained “what impacts the business”.

That perhaps is not surprising.

Some countries have tried to measure economic outcomes differently – the tiny Himalayan kingdom of Bhutan famously devised a “gross national happiness” index and Japan is looking into developing a “green GDP” measurement.

But still, economic policy and markets overwhelmingly run on the dual track of increasing consumption and production.

Tim Jackson, an economist who has long critiqued that model, said the current debate on growth was “very, very confused”, with different strands of thought vying for supremacy.

He pointed to the UK Conservative Party leadership contest – a race that will decide who replaces Boris Johnson as prime minister – as an example of what he called a “gung-ho” focus on economic growth as an unchallenged priority.

On the other hand, he said, more ecologically-minded politicians across Europe and beyond were receptive in private to arguments around limits to growth but “want to find other ways to talk about it that don’t scare the horses”.

Jackson, author of the 2009 book “Prosperity Without Growth”, said the pandemic lockdowns of 2020 and this year’s Western sanctions on Russia had both challenged consumption with other priorities, namely health safety or geopolitical goals.

At the same time, some countries – for a variety of reasons ranging from demographic ageing to trade protectionism or lack of reform – could enter something akin to a “post-growth” state where their economies show little if any expansion.

That is a fate Japan has experienced with its “lost decades” and which some analysts see as a risk for Germany unless it quickly revamps its decades-old export-led economic model and shores up its vulnerability to energy shocks.

“Particularly in the advanced economies we are moving into a situation where to all intents and purposes, we’re pretty much not looking at continued growth already,” said Jackson.

“If we haven’t got an economics that will deal with that .. then we’ve got very little chance of managing it successfully.”

(Additional reporting by Gloria Dickie and Vincent Flasseur in London; Kantaro Komiya and Daniel Leussink in Tokyo; editing by Barbara Lewis)