From the Securities Lending Trading Desk

In the Americas, SQM is expected to be a long term focus of demand as they are one of the top four companies controlling the roughly $3 billion global lithium market. In Asia, analysts predict that shares in the smartphone manufacturer, Xiaomi Corp, could fall further if the company loses market share to Huawei. In Europe, A mixed week for UK energy firm Ophir as it loses a key exploration license and then receives a takeover offer.

Americas

Tesla rival Nio Inc. (NIO) sold a record number of vehicles in 2018, but the shadow of Elon Musk hasn’t allowed NIO into the spotlight. After partnering with JAC Motors, NIO has become the first Chinese electric-car startup to record 10,000 sales in 2018. While they look to set up their own factory in Shanghai, they await Tesla’s completion of its own manufacturing facility as new industry rules require existing projects to be completed prior to starting new ones. NIO went public back in September at $6.26 and quickly spiked to $11.60, however, the newly public company struggled to maintain that valuation and has averaged closer to $7.00. Investors now question if NIO’s more affordable models can compete with TSLA amid recent tariff reductions on new Teslas.

Sociedad Quimica y Minera de Chile SA (SQM) has been a focus of demand amid price volatility and directional interest. SQM’s share price fell to 52-week low on 12/24 but has rebounded roughly 14%. There was a sell-off of lithium stocks, including SQM, amid reports that demand in China was cooling. In addition, SQM had been facing fines from Chilean authorities for environmental breaches. However, the stock price began to climb as SQM and authorities in Chile reached a compliance plan on the environmental charges. New reports recently surfaced that demand for lithium, which is used in lithium-ion batteries used to power electric vehicles, is actually on the rise. SQM is expected to be a long term focus of demand as they are one of the top four companies controlling the roughly $3 billion global lithium market.

Asia Pacific

Shares in Xiaomi Corp tumbled after a six-month lockup period for IPO shares expired and three billion shares were made available for sale. Many investors chose to sell despite Xiaomi Corp trading at almost half of its listing price. Shares sank by more than 6.9% as the lockup ended and the fall came in addition to the USD 14 billion in market cap that the company has lost since its IPO. Analysts predict that shares in the smartphone manufacturer could fall further if the company loses market share to Huawei. We have seen strong long term securities lending demand for Xiaomi Corp.

Shares in Byd Co Ltd fell in Hong Kong trading after the government announced plans to further open up the Chinese new-energy sector to foreign competition. Media reports that an NDRC official signaled China is planning to implement foreign-funded projects in new-energy vehicles and batteries this year, plus allow foreigners to invest more broadly, placed downward pressure on Byd Co Ltd shares. Investors continue to speculate that China will cut subsidies in the new energy sector in 2019. We have seen strong long term lending demand for Byd Co Ltd.

Europe

The UK high street continues to dominate the headlines into the new year as the bad news for Debenhams continues. Lending demand for Debenhams (DEB LN) continued as the company suffered another torrid week, with the stock 35% down on the week and near record lows, as news emerged that the re-election of the retailer’s chairman and CEO was blocked. News reports suggested that the change had been driven by majority shareholder, Mike Ashley (Sports Direct), who has historically been a vocal critic of the board. The group announced that like-for-like sales fell 3.4 per cent in the six weeks to January 5, and that it was in initial stages of a further reduction of costs as it seeks to improve financial performance. Short interest in DEB LN remains high at 13% of outstanding shares.

A mixed week for UK energy firm Ophir as it loses a key exploration license and then receives a takeover offer. Oil and Gas exploration company Ophir (OPHR LN) began the week by announcing that it had been unable to receive an extension for its key Fortuna gas field in Equatorial Guinea. Ophir said the loss of the license would likely result in a write off of $300M in assets in its full-year results. Late in the week, Indonesia’s Medco Energi Internasional (MEDC IJ) announced the it would make a 48p per share bid for Ophir Energy Plc. The offer represents a 46.1 percent premium to Ophir’s closing price of 33.20 pence as of Dec. 28. Talks between the two companies are ongoing.