The second week of September began in similar fashion to the first as an announcement by China shook international markets. Onshore Renminbi fell 1.2% against the dollar on Monday before stumbling towards $0.1528 at the end of the week, as the government removed two laws designed to bolster the currency against the Dollar. This followed a period in which the Yuan had gained as much as 4% in just five weeks, and the law change perhaps signals the growing confidence Chinese authorities have that the Renminbi will remain firm in the face of natural supply and demand trends.
In the same week, the Chinese government also announced plans to end production of all internal combustion engine cars and set a timetable towards achieving this goal. This follows a global trend that has seen both the UK and France set targets to end petrol and diesel vehicle production by 2040.
As perhaps expected, given its significance in battery production, this latest announcement has rocketed the price of Lithium. The ETF Global X Lithium reported a 5.1% jump in share price on Monday alone, and so far this year has delivered a 41% return. It is estimated that by 2030, lithium production would have to increase by over 300% just to support the electric vehicle market. This sounds like an exciting prospect, however, it remains to be seen whether or not mining companies can bring on production quick enough to meet rising demand.
Currently, it can take anywhere from two to 15 years to open a new lithium mine, meaning the question of how quickly companies will be able to scale up production is especially prevalent. If Global X Lithium performance is anything to go by – more than tripling its assets to $441m this year – it could be a lucrative decade for the metal.
A Sterling performance
The UK economy continued its gradual resurgence last week as inflation figures for August exceeded expectations by 0.1%, up 0.3% from July. This compounded the already robust performance of Sterling against the Dollar and, coupled with strong hints from the Bank of England of a rate hike before the end of the year, the Pound rocketed to $1.36 by Friday – the highest it has been since the Brexit vote.
In the world of technology, UK fintech was given a hefty boost on Tuesday as Goldman Sachs announced a £115m backing of Nayber, a consumer lender that provides loans via employers to firms that include Bupa, London City Airport and some public services, such as the NHS. This comes following strong performances from UK fintech firms, with new figures suggesting that over one-third of startups in the sector expect to IPO within the next five years.
Certainly, companies such as Revolut, Transferwise and World Remit, to name just three, all have ambitious plans to go public in the near future, and there seems to be no let up to the rapid progression of the industry in the UK over the previous few years. Having recently closed successful rounds with fintech companies such as Squirrel and Showroom, naturally, this comes as exciting news for us at SyndicateRoom.
Perhaps in relation to the high winds the UK has been experiencing recently, reports on Monday suggested that the cost of electricity produced by wind farms has more than halved in the past two years. The price of government subsidies last week fell to as low as £57.50 per megawatt hour – more than 50% lower than the £117.14/MWh just two years ago.
This fall in cost has on the most part been attributed to the increase in size of turbines, the biggest of which stand 195m tall and produce 8MW of energy per hour. Dong Energy, a Dutch company that won the contract to produce 1.386 GWs at Hornsea 2 in Yorkshire by 2023, projected that its turbines could be as powerful as 15/MWh. This is nearly twice the amount that the whole of the world’s first offshore windfarm – Vindeby in Denmark – was able to produce.
With the falling costs and vast increases in output, it is hard to think wind power will not continue its trajectory into the heart of the UK mainstream energy supply and those with contracts seem set to benefit.