Poland

July CPI has been revised to 15.6% year-on-year, the highest level so far in 2022. Yet the inflation peak is still ahead of us and we expect it in the autumn as the heating season begins and drives up prices. The Monetary Policy Council (MPC) will be forced to hike rates further We are continuing to see high price growth in restaurants and hotels in Poland New inflation record for 2022 The July inflation estimate has been revised to 15.6% year-on-year, from the 15.5% YoY reported previously. Thus, consumer inflation set a new record this year. Goods prices rose by 16.9% YoY, while services prices increased by 11.7% YoY, up from 16.8% YoY and 11.5% YoY, respectively, a month earlier.   On a monthly basis, prices rose by 0.5%, the slowest rise since February, when indirect tax cuts under the Anti-Inflation Shield, including lower VAT on food, took effect. Fuel prices fell by 2.6% month-on-month in July, while pr

What Might it Take for the Fed to Deliver a Hawkish Tapering Announcement?

What Might it Take for the Fed to Deliver a Hawkish Tapering Announcement?

Marc Chandler Marc Chandler 03.11.2021 14:43
Overview: With the FOMC's decision several hours away, the dollar is trading lower against nearly all the major currencies.  The Antipodeans and Norwegian krone are leading.  The euro, yen, and sterling are posting minor gains (less than 0.1%).  Most of the freely liquid and accessible emerging market currencies are also firmer.  The Turkish lira is a notable exception.  The decline in the core inflation and a smaller than expected rise in the headline pace embolden officials for another rate cut when the central bank meets on November 18.  The JP Morgan Emerging Market Currency Index is rising for the second consecutive session after falling in the previous four sessions.  Equities are lower.  The MSCI Asia Pacific Index fell for the fifth session in the past six.  Among the large markets, Taiwan and Australia bucked the trend.  The four-day advance of the Stoxx 600 in Europe is at risk, and US futures are weaker.   Benchmark 10 year yields are mostly two-four basis points lower across most high-income countries today.  That puts the US 10-year Treasury yield near 1.52%.  Australia's two-year yield fell almost 10 bp to 0.55%.  It had peaked above 0.71% last week.   The three-year yield is off nearly 30 bp in recent days.  Gold continues to chop within the range set last Friday (~$1772-$1801).  Ahead of the OPEC+ meeting tomorrow amid talk that the US may seek to coordinate sales for a coalition of strategic reserves and a build of US inventories reported by API weigh on oil prices.  December WTI has approached the 20-day moving average (~$82), which has not closed below since late August. Base metals are higher as iron ore snapped a five-day slide during which it lost over 20%.  Copper is also recovering after forging a base in the $432-$433 area.  It is up around 1.5% today.  If sustained, it would be the largest gain in three weeks.   Asia Pacific China's Caixin services unexpectedly rose to 53.8 from 53.4 in September.  Recall that the manufacturing reading had improved to 50.6 from 50.0.  The net effect was that the composite edged up to 51.5 from 51.4.  The composite has converged with the "official" PMI, which stands at 50.8.  Separately, note that China is experiencing a broad spread of the virus into a dozen provinces, and the number of new cases is the highest in a couple of months. Inter-provincial travel has been restricted, and new social protocols are being introduced.  According to reports, the government advised households to stock up in necessities and ensure adequate food supplies for local authorities.  Australia's service and composite PMI shows the recovery was not quite as strong as the preliminary data suggested.  The service PMI rose to 51.8, not 52.0  from 45.5.  The composite stands at 52.1 rather than 52.2.  It was at 46 in September.   Tomorrow Australia reports Q3 real retail sales, but it will still be picking up the weakness of the lockdown.  September trade figures will also be reported.  Weaker exports and stronger imports are expected to have narrowed the trade surplus by almost 20% to A$12.4 bln. Ahead of the weekend, the central bank will make its Monetary Policy Statement.  The swaps market is pricing in 70 bp, down from 80 bp, of tightening over the next 12 months.  The dollar has been confined to a narrow quarter yen range through the Asian session and most of the European morning.  Softer yields and equities would be expected to give the yen a bit of support.  The 20-day moving average is near JPY113.65, and the greenback has not closed below it since the September FOMC meeting.  In the bigger picture, we have suggested the dollar-yen rally from mid-September through mid-October puts the dollar in a new range.  We suspected JPY114.50-JPY115.00 marks the upper end and JPY113.00 may be the lower end.  The Australian dollar fell almost 1.4% yesterday, its largest decline since May.  It reached $0.7420 yesterday, just above the $0.7410 (38.2% retracement objective of last month's rally).  It has stabilized today and has (so far) been capped near $0.7450.  Resistance is seen in the $0.7460-$0.7470 area.   For two weeks, the Chinese yuan has been alternating between advances and declines, and net-net little changed over the period.  Yesterday, the yuan slipped (0.04%), and today it is firmer (0.06%).  The PBOC has consistently set the dollar's reference rate above model projections, and today's fix was at CNY6.4079 compared with median expectations (Bloomberg) for CNY6.4068.  The PBOC was unexpectedly generous in its open market operations, injecting CNY50 bln. As a result, the overnight repo rate fell 12 bp to 1.99%.   Europe Norway's central bank meets tomorrow.  It was the first of the high-income countries to raise rates this year, so far, followed only by New Zealand.  We overstated the case for Norway to hike rates at the meeting, but don't be mistaken. The case for a rate hike exists, but the pattern is not to move at these "off-meetings" (without updated formal policy path guidance).  Instead, officials will likely confirm their intentions to raise rates in December. The swaps market is pricing in almost three hikes next year.   The dollar trended lower against the Nokkie since August 20. The downward momentum stalled in late October.  Yesterday it rose above NOK8.50 for the first time since mid-October.  The momentum indicators have turned up.  The 200-day moving average is slightly below NOK8.55 and near NOK8.60 is the (38.2%) retracement of the down move.  The UK is emerging from the economic soft patch in the June-August period.  The final service and composite PMI report today showed stronger activity than the preliminary estimates.  The service PMI rose to 59.1 from 55.4 in September.  The flash estimate had put it at 58.0.  The composite stands at 57.8, up from the preliminary projection of 56.8 and September 54.9.    The Bank of England meets tomorrow.  There does not seem to be much conviction, and the market appears divided. In the Bloomberg survey, 22 out of 45 economists expect a hike that seems to have been largely discounted by the markets (15 bp).  Three of the largest UK banks do not expect a hike.  Some observers argue that what is the point of stopping now when it would end next month. We often think the signaling channel of QE is under-appreciated.  Stopping the bond-buying now adds to the seriousness of the moment if it does not lift rates. Sterling has retreated by 2.3 cents since last week's high to approach $1.36 yesterday in the US. The euro reached its lowest level against sterling since March 2020 in late October near GBP0.8400, and yesterday rose to above GBP0.8500 for the first time since October 12.   Poland's central bank is expected to hike the base rate 25 bp today to 0.75%.  Recall that it hiked 40 bp last month to begin the cycle.  It started later than Czech and Hungary.  Preliminary October CPI rose 1% on the month, accelerating the year-over-year pace to 6.8% (from 5.9% in September.  It was at 5% as recently as July.  The Czech central bank meets Friday and is expected to hike the repo rate 75 bp to 2.25%.  After two quarter-point hikes (June and August), it hiked by 75 bp in September. Inflation (CPI) rose to 4.9% in September from 4.1% in August.  It is the highest since 2008.  Turkey's CPI rose by 2.39% last month to bring the year-over-year rate to 19.89% (19.58% in September), slightly lower than expected.  The core rate slipped slightly to 16.82% from 16.98%.   The euro has been confined to about a quarter of a cent range above $1.1575 so far.  It stalled yesterday near $1.1615, the (50%) retracement of the pre-weekend slide from almost $1.1700 to $1.1535.  It is making session highs in the European morning, but we look for a less friendly North American session.  There are options for about 530 mln euros at $1.16 that expire today.  A hawkish Fed (see below) could bring option expirations tomorrow at $1.1525 (~825 mln euros ) and $1.1550 (~900 mln euros) into play.  Sterling tested $1.36 yesterday, the lowest level since October 13.  It has hardly managed to distance itself from the lows.  It found new offers near $1.3635.   There is a GBP675 mln option expiring today at $1.3650.  A larger one (~GBP820) is at $1.3615 also expires but has liked been neutralized.   America It seems well appreciated that the Federal Reserve will announce it will begin slowing the bond purchases. Most expect a reduction of $10 bln of Treasuries and $5 bln of Agency MBS.  Investors appear to be anticipating the monthly reduction of these amounts through June 2022.  Even with yesterday's upticks, the June Fed funds futures contract continues to discount a rate hike then.  If the effective Fed funds rate is steady in the first half of June at eight basis points and then rises to 33 bp for the second half of the month (25 bp rate hike on June 15), the average effective rate is about 20.5 bp.  The contract settled at an implied rate of 20 bp yesterday.   Since this is already in the market, the tapering announcement itself may not be hawkish.  There are two steps the Fed could take if it wanted to drive home the point.  First, the FOMC statement has been referring to inflation as largely "transitory."  It could simply drop this qualifier or modify it.  The Chair has already acknowledged that it will likely persist longer than initially anticipated.  Indeed, next week's CPI report is expected (Bloomberg survey median) is expected to have risen by 0.5%, which, given the 0.1% increase in October 2020, means the 12-month rate will accelerate to around 5.8%.   Second, after the last press conference, Powell was asked about needing to reduce monetary stimulus while the Fed was still engaged in QE.  The Bank of England said it would hike if necessary while it was still buying bonds.  Powell said in that situation, the Fed would not send contradictory signals but accelerate the tapering process.  Quicker tapering would be a hawkish signal, and reaction by the market would likely bring forward the first hike.   The Democratic Party lost the Virginia gubernatorial context.  Biden had carried the state by 10 percentage points last year, and the preliminary results suggest a loss of suburban voters, a key part of the new Democratic coalition.  New Jersey's governor contest is very close, and the Democratic incumbent is trailing. The results play on ideas that the Democrats are likely to lose both houses of Congress in next year's mid-term election, in which it is common for the party in the White House to lose seats.  Some in the press have been critical that Xi and Putin are not attending COP-26, but their leadership was always in doubt.  The election results may undermine US leadership because Biden's commitments may not get legislative support, and executive decisions could be reversed in 2024.   Today could be the first day since October 13 that the US dollar does not trade below CAD1.2400.  Still, note that the greenback remains in the CAD1.2300-CAD1.2435 range set last Wednesday when the Bank of Canada turned more hawkish.  Yesterday, the US dollar closed above its 20-day moving average for the first time since late September.  We suspect corrective forces could lift the exchange rate toward CAD1.2475, where the (38.2%) retracement of last month's decline is found, and the 200-day moving average (~CAD1.2485).  However, in its way stands the $920 mln option at CAD1.2450 that expires today.  The greenback reached almost MXN20.92120 yesterday, a new eight-month high. Sellers emerged, and the dollar closed lower to snap a five-day advance.  It is softer today but holding above yesterday's low (~MXN20.71).  Ahead of the FOMC outcome, the market may be cautious about taking the dollar below the MXN20.66-MXN20.70 area.   Disclaimer
The more environmentally friendly, the more comfortable to work in

The more environmentally friendly, the more comfortable to work in

Finance Press Release Finance Press Release 08.11.2021 13:03
Office buildings that have solutions to limit the negative impact on the environment and reduce operating costs, at the same time provide a friendlier, safer and better organized work space. What do they offer? The change in the way of thinking about the work environment that has taken place since last spring did not ultimately affect the status of offices. On the contrary, after several months of hibernation, offices experience a renaissance. They are still a strong support in building the organizational culture of companies and a base for the development and cooperation of teams, training new employees, and a meeting place with clients. However, the expectations of the users of office buildings have changed. In addition, issues concerning the way buildings affect the natural environment and the people working in them have come to the fore. - Decision-making processes aimed at environmental protection are gaining momentum, which more and more often carry specific declarations of investors and developers, in which they undertake to reduce carbon dioxide emissions by buildings to zero in a specific time perspective - says Bartłomiej Zagrodnik, Managing Partner/CEO of Walter Herz. It became necessary to reevaluate the previously adopted standards and expand the scale of pro-ecological solutions, especially in the context of the climate change, which brings unexpected and dangerous weather phenomena. - The development of the market is focused on the implementation of intelligent, environmentally neutral buildings and the creation of innovative solutions that support the decarbonisation of the existing resources and adapting them to the current requirements in the field of sustainable development - explains Bartłomiej Zagrodnik. - The changes are also stimulated by such factors as rising electricity prices, costs of water consumption, heating and waste disposal. Office buildings are switching to green energy derived only from renewable sources, which not only has positive environmental effects, but also reduces operating costs. Hence, we also see the growing interest of tenants in real estate equipped with environmentally friendly solutions - says Bartłomiej Zagrodnik. Green energy and water saving The most modern buildings not only draw energy from renewable sources, but also use technologies that reduce its consumption by automating space management. There are also more and more common solutions enabling water retention, which is of key importance in the face of the water crisis. Facility owners are serious about the problem of shrinking water resources. They invest in gray water filtering and reuse systems and rainwater management, fittings and showers based on motion sensors to reduce network water consumption, as well as various types of water retention solutions. They create green roofs, terraces and rain gardens. Companies are also more likely to choose buildings that meet certain standards in this area, in order to take advantage of the possibility of reducing costs. In Poland, proper management of water resources is particularly important because in terms of our resources, we are on one of the last places in Europe, ahead of the Czech Republic, Cyprus and Malta. Unfortunately, the level of water consumption in the world is constantly increasing. Over the last century, it has increased sixfold. Crystal clear air, green enclaves and ecological crops There are many more factors that influence the efficiency of the office buildings. There are, among others, ventilation and air circulation systems that control and supply air of better quality than specified in the standards in high-class facilities, specialized filters and humidifiers, as well as carbon free finishing materials and solutions optimizing acoustics. Modern buildings expand the spectrum of solutions to become more work-friendly and environmentally friendly. Here, green also plays one of the main roles. We observe the creation of green enclaves around the buildings, the arrangement of courtyards, squares and recreation areas immersed in greenery, also with green concrete pavements that purify the air. Vegetation is usually selected in terms of low water demand and the possibility of producing a large amount of oxygen and absorbing toxins, and vines in the context of protecting the walls of the building from heating up. The complexes include refuges for birds and insects, as well as city apiaries and gardens for organic farming. Specially designed blocks, facades and roofs of buildings with elements reflecting sunlight are used to reduce the effect of the so-called urban heat islands. The interiors of office buildings are arranged in such a way as to activate users. For example, the central location of the stairs is to encourage the movement of pedestrians between the floors, which reduces the use of elevators. The promotion of infrastructure for cyclists in the office buildings is also conducive to the pro-health activity of employees and reducing the burden on the environment. Technologies that facilitate work organization The well-being of employees, so widely discussed today, is supported by the use of hybrid office management platforms in the most modern buildings, thanks to which the facilities can offer the so-called smart office. Applications available on smartphones improve the daily work organization. With their use, one can, among others, book an office arrival time or a parking space, enter the garage and take a lift to the selected floor avoiding contact with the other office users, book a conference room for a team or client meeting, and even report a printer issue. The key challenge was to provide people in the office environment with the greatest possible comfort and safety. It is to be guaranteed not only by generally available basic disinfectants, masks and gloves, but also by changes in the arrangement of offices. Such arrangement of office spaces, so that they are comfortable for everyone and provide various types of zones adapted to the new work profile. Therefore, companies most often decide to increase the distance between work stations, limit the number of large conference rooms that replace dedicated smaller rooms, boxes and booths for talks, as well as stands for creative team work. There are social zones, chill out rooms to rest, green terraces and winter gardens. The ambition of the office environment is also to create ecological spaces. Using as many recycled or reusable office supplies as possible, such as filter bottles instead of disposable plastic packaging. Undoubtedly, the reduction of the carbon footprint is also facilitated by the popularization of videoconferences, which significantly reduced business trips. Just as the already sanctioned electronic document flow previously contributed to minimizing the use of paper. Good service in the buildings is also increasingly important. The offer of additional services, similar to those provided by hotels, for example concierge service, is gaining in importance. The key condition is also direct access to the gastronomic offer, basic services and shops, preferably on the premises of the building. The changes taking place in the office market are generally aimed at perceiving space as a service. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
Half a Dozen Things You Should Know about FX

Half a Dozen Things You Should Know about FX

Marc Chandler Marc Chandler 12.11.2021 13:11
1.  The market is still digesting the implications of Wednesday's CPI shock. The dollar has strengthened, yields have risen, the stock market wobbled after a long advancing streak, and in any event, stabilized in light trading during the US and Canadian holidays. However, given the low year-ago reading, there is a significant risk that inflation (including the core rate) will accelerate over the next few months. As a result, the Federal Reserve needs greater flexibility to raise rates sooner than it has envisioned.   The main restraint now is the pace of tapering.  The FOMC committed to reducing its bond-buying by $15 bln in November and December.  Its statement indicated that it anticipated maintaining the rate afterward, but the FOMC also reserved the right to adjust the pace if necessary. Thus, accelerating the tapering is the most likely course of action.  Bullard had suggested completing the tapering by the end of Q1.  If this is to become the majority view, there may be some effort to prepare the market.   Recently a rally in US bonds was attributed to talk that Governor Brainard could replace Powell as Fed chair.  The argument was that Brainard was more dovish.  Is this really relevant now?  Does it count as a strike against her?  With Yellen's apparent support, Powell is most likely to get re-appointed, and given that CPI is at 30-year highs, conventional thinking favors maintaining a stable hand at the helm. 2.    The dollar's gains accelerated since the higher than expected CPI report.  The euro was in a $1.15-$1.17 range last month and broke out on Wednesday.  Follow-through selling Thursday brought to about $1.1445.  We have suggested the next target is a little below $1.1300.   The jump in yields helped lift the greenback from below JPY112.80 above JPY114.00.  The five-year high set on October 20 was around JPY114.70, while we project the upper end of the likely range closer to JPY115.00. 3.  Disappointing economic data contributed to the losses of sterling and the Australian dollar.   Economists (Bloomberg survey) expected Australia to have created 50k jobs in October, but, instead, it lost 46.3k jobs for the third consecutive monthly decline.  The bulk of the loss (40.4k) were full-time positions, which reversed the 26.7k increase reported in September.  The unemployment rate jumped to 5.2% from 4.6%, the highest since April.  The Australian dollar peaked near $0.7550 in late October and fell below $0.7300 on Thursday, for the first time in a month.  The next target is around $0.7240-$0.7260.   The UK reported a significant slow down in Q3 GDP to 1.3% from 5.5% in Q2. Expectations for a 1.5% quarter-over-quarter expansion  (Bloomberg survey) seemed on the high side.  However, the September monthly GDP rose 0.6%, and the better than expected rise was offset but a reduction in the August GDP to 0.2% from 0.4%. The industrial output contracted in September. The trade deficit deteriorated after a dramatic revision in the August balance (to -GBP1.880 bln from -GBP3.716 bln, while services accelerated (0.7% from a revised 0.1% gain that had initially reported at 0.3%).  Sterling, which had been pushing near $1.36 before the Bank of England's meeting and slipped to a marginal new low for the year on Wednesday but still held above $1.34 (barely).  It fell to $1.3360 on Thursday. The next chart support area is seen around $1.3165-$1.3185. 4.  The joint US-China statement at COP-26 is promising.  It was the key to the Paris Agreement in 2015.  There was a commitment to boost efforts to cut emissions and illegal deforestation.  The gap between current policies and what is necessary was acknowledged, and there appeared to be an agreement in principle to reach an agreement on climate finances and rules for a carbon market.  The joint statement must have been in the works even as Biden criticized Xi for the lack of commitment for not attending COP-26.  There is still much speculation about a "virtual summit," which is supposed to signal something more than two phone calls the leaders have held this year.  The environment was also recognized where cooperation was possible.  Still, Beijing refused to join the US-EU commitment to cut methane admissions and opted for its own plan.   The geopolitical competition is unaffected by the joint statement. Meanwhile, the more pressing geopolitical threat is coming from the movement of Russian forces to the Ukraine border.  Reports suggest the US has briefed Europe on a possible Russian invasion of Ukraine.  Hostilities are said to have escalated recently.  Recall that Russia had amassed forces (~100k soldiers, tanks, and aircraft) in the Spring too.  It triggered a flurry of talks, and Moscow removed (redeployed) its forces.  Russia defended the troop movement within the country as an internal affair but has accused the US of provocation for sailing warships into the Black Sea, close to its territory last week.  Putin also reportedly was critical of Ukraine's alleged use of drones, which violated a previous agreement.  Meanwhile, tensions on the Polish-Belarus border remain tense.  Merkel sought Putin's help recently to defuse the situation, but he refused.   Belarus is thought to be instigating a migration crisis and has threatened to shut down a critical gas pipeline to the EU if Poland keeps its border closed.  These developments may have contributed to some pressure on the euro.   5.  The Mexican peso fell by around 0.5% after the central bank lifted the overnight rate to 5.00%. It is the third quarter-point move in the cycle that began in June.   The swaps market has nearly 90 bp of tightening discounted over the next three months and almost 220 bp in the next 12 months.  Banxico lifted its Q4 inflation forecast to 6.8% from 6.2%.  The one dissent (Esquivel, again) was to stand pat.  There was no vote for a 50 bp move, which contributed to the dovish read of the rate hike.  October CPI, reported earlier this week, is at 6.24% year-over-year,  6.   Friday's economic calendar is light.  Little new data from the large Asia Pacific and European countries.  The North American calendar is minimal.  The US JOLTS report on job openings and the University of Michigan's preliminary estimate of November sentiment and inflation expectations.   NY Fed's Williams is the lone speaker from the central bank and may not address monetary policy directly.  There are three sets of chunky options that expire tomorrow that may be relevant:  1.23 bln euros at $1.1460, $1.75 bln at JPY114.00, and GBP690 mln at $1.3320.   Disclaimer
The Greenback Slips at the Start the New Week

The Greenback Slips at the Start the New Week

Marc Chandler Marc Chandler 15.11.2021 12:19
Overview:  While the Belarus-Poland border remains an intense standoff, there have been a couple other diplomatic developments that may be exciting risk appetites today.  First, Biden and Xi will talk by phone later today.  Second, reports suggest the UK has toned down its rhetoric making progress on talks on the implementation of the Northern Ireland Protocol.  Equities in the Asia Pacific region were mostly firmer, with China a notable exception among the large markets, even though the October data was generally stronger than expected.  Europe's Stoxx 600, which has fallen only once this month, is edging higher to new records, while US futures are enjoying a firmer bias.  Benchmark 10-year yields are 1-2 bp lower, which puts the Treasury yield near 1.55%.  The European periphery is outperforming the core.  The dollar is soft.  The Scandis and Antipodeans lead the move, while the euro, yen, and British pound are little changed.  Emerging market currencies are also mostly stronger.  Here the Philippine peso is notable as it falls the most in seven weeks as corporates bought dollars.  After falling by 0.65% last week, the JP Morgan Emerging Market Currency Index is edging higher today.  Gold is snapping a seven-day rally, stalling near $1868.  Support is seen in the $1842-$1845 area.  January WTI  was sold again as it poked above $80.  It is pinned near last week's lows (~$78.65) as the US response is awaited.  European natural gas futures are firm as the capacity auction results are awaited, and Europe faces its first cold snap of the season.  Iron ore and copper prices are posting small losses.   Asia Pacific Japan's Q3 GDP disappointed, but it is old news and will likely spur Prime Minister Kishida to support a large supplemental budget, which could be unveiled by the end of the week.  Economic growth in the world's third-largest economy contracted for the fifth quarter in the past eight.  The 0.8% loss of output in Q3 was more than the 0.2% expected by the median forecast in Bloomberg's survey.  Consumption (-1.1%), business spending (-3.8%), and public investment (-1.5%) did the most damage.  The GDP deflator was unchanged from Q2 at -1.1%.  The Japanese economy is recovering here in Q4.  Talk of the size of the supplemental budget has increased to around JPY40 trillion (~$350 bln) from JPY30 trillion.  It is expected to include a cash payment for 18-year olds and younger, a tax break for companies that boost wages, a new subsidy for domestic travel, snd pay hikes for caregivers. China's October data was stronger than expected but does not shake off concern that the world's second-largest economy is struggling.  The year-over-year pace of retail sales rose for the second consecutive month in the face of expectations for a decline.  The 4.9% increase follows the 4.4% gain in September and 2.5% in August. In October 2020, it rose 4.3% year-over-year.  Industrial output rose 3.5% from a year ago. It was the first increase since March. Last October, it had increased by 6.9%. The surveyed joblessness was steady at 4.9%.  Fixed asset investment and property investment slowed.  Chinese officials have not addressed the economic slowdown with large-scale fiscal or monetary initiatives.   We have suggested that the dollar-yen exchange rate has entered a new range after trending higher from mid-September through mid-October.  That new range is likely JPY113-JPY115, and to find the floor, the dollar briefly traded below JPY112.80 last week. After spiking back to JPY114.00 on the US CPI surprise, the greenback continues to hover around there, the middle of the range.  Tomorrow's expiring options ($830 mln at JPY113.40 and $1.6 bln at JPY114.30) may mark the near-term range.  The Australian dollar is building on its pre-weekend recovery.  It saw a low slightly above $0.7275 on Friday and settled on its highs (a little above $0.7330).  It has risen to $0.7365, and the intraday momentum is getting stretched.  Look for resistance near $0.7375.  The greenback edged slightly lower against the Chinese yuan to record a new six-month low (~CNY6.3785) before recovering within a narrow range.  It is trading slightly above CNY6.3830 in late dealings. The PBOC set the dollar's reference rate at CNY6.3896, a little below the median forecast of CNY6.3896 (Bloomberg survey).  The PBOC rolled over in full the policy loans (CNY1 trillion) coming due this month, and the overnight repo rate fell by seven basis points to 1.78%, the lowest in three weeks.   Europe Tensions between the UK and EU appear to have taken a step away from the brink.  A deal on medicine supplies from other parts of Great Britain to Northern Ireland may have been the critical catalyst.  Reports suggest a de-escalation of UK rhetoric threatening to invoke Article 16, which allows for unilateral over-riding of the Northern Ireland Protocol under certain circumstances of serious economic, environmental, or societal risks.  Separately, two polls have begun showing Labour is edging ahead of the Tories. The Opinium poll (published in the Guardian) gave Labour a one percentage point lead, the first since January.  The Savanta Com Res poll (for the Daily Mail) put Labour ahead by six percentage points at 40%.  The main issue appears to be Prime Minister Johnson's handling of several ethics issues.  His personal support has also waned.    The US was warning at the end of last week that Russian may be preparing to invade Ukraine. Moscow seems to be acting out of fear, fear of the US and Europe creeping presence in Ukraine.  If Ukraine is going to remain independent, Russia insists it can only be a (weak) buffer state.  US rhetoric seemed aggressive in Moscow.  Last month US Defense Secretary Austin argued that no third country [i.e., Russia] has a veto over NATO membership decision[i.e., Ukraine].    Poland, Lithuania, and Latvia are considering formally requesting NATO consultations, while the EU is expected to announce new sanctions on Belarus later today.  Separately, we note reports that India has begun taking delivery of the S-400 air defense missile system from Russia (part of a $5.5 bln deal), which is the same that earned Turkey American sanctions.   The euro edged above the pre-weekend high, but the tone remains fragile, and for the third consecutive session has been unable to resurface above old support at $1.1500.  Since the US CPI report in the middle of last week, it has fallen, and the sideways movement could alleviate the overextended technical condition.  Sterling extended its pre-weekend recovery to reach $1.3440 before sellers reemerged to knock it to the session low of almost $1.3400.  We suspect it can move higher in North America today and target the $1.3480 area.   America The US seems more eager for the Biden-Xi call than Beijing  Expectations should be low, and with no actionable outcome likely (not even a statement), there appears to be little reason to spin it as a virtual summit. The top officials and the senior staff of the two largest economies should talk.  Previously, there were high-level meetings regularly.  Since their last call, a new US-UK-Australian alliance was announced that will result in Australia acquiring nuclear-powered submarines, and it was confirmed that the US has had military personnel in Taiwan since last November.  China continues with its intimidation campaign of repeatedly entering Taiwan's air-identification zone. China's assessment of the US is unlikely to have changed.  Beijing sees the same thing many others do.  Biden's approval rating has fallen to near 41%, and less than that has a favorable view of his handling of the economy.  At the end of last week, the Univerity of Michigan's consumer sentiment measure (preliminary November) fell to its lowest in a decade.  Surveys continue to point to the likelihood that the Democratic Party will lose both houses of Congress in next year's mid-term.  And to underscore the pressure on Biden, the US Court of Appeals (5th Circuit) sustained a block on OSHA's ordered vaccine mandate (or weekly test).  With the sixth plenum over,  Xi has, by all accounts, confirmed his ascendancy and domination of Chinese politics for years to come.   The week's economic calendar for the US begins off slowly.  The November Empire State manufacturing survey is on tap.  It has been in a sawtooth pattern, alternating between gains and losses for the past five months.  It fell sharply (19.8 from 34.3) in October and is expected to have turned up in November.  The US reports October retail sales and industrial production figures tomorrow. Fed officials begin taking to the public stage starting tomorrow.  Over the course of the week, around 11 officials are scheduled to speak.  In addition to US bills, the Treasury Dept sells 20-year bonds, whose auctions have been among the most challenging for coupons, and 10-year TIPS at the end of the week.   Canada reports September manufacturing and wholesale sales today, but the October existing home sales may be more important.  Tomorrow Canada reports housing starts, but the highlight of the week is Wednesday's October CPI.  Price pressures are accelerating in Canada, and the headline CPI is likely to move toward 5% (4.4% in September).  The swaps market is pricing in about 65 bp of tightening in six months.  This week, Mexico has a light economic diary after last week's higher than expected CPI (6.24%) and Banxcio's 25 bp rate hike (to 5%).  Brazil also has a light economic calendar this week.  Last week featured a further rise in (IPCA) CPI (10.67% vs. 10.25%) and weak September retail sales (-1.3% vs. -0.6% median forecast in Bloomberg's survey after a revised -4.3% fall in August). Last week's US CPI shocker saw the greenback jump from around CAD1.24 to slightly above CAD1.26, roughly the 50% retracement of the slump from CAD1.2900 on September 20.  It settled last week on a soft note, and some follow-through selling has seen the US dollar eased to about CAD1.2525.  A break here sees CAD1.2500 and then possibly CAD1.2470.  Since last September, the greenback has moved into a new and higher range against the Mexican peso.  It has not traded much below MN20.12.  Nor has it spent much time above MXN20.90.  It is in the pre-weekend range (~MXN20.45-MXN20.72).  Look for the consolidative day to continue through the local session.  The Brazil real was the strongest emerging market currency last week, rising almost 1.6% against the US dollar.  The US dollar found support around BRK5.40. Trendline support (from June, August, and September lows) and the 200-day moving average are near BRL5.36.   Disclaimer
European Gas Jumps, while the Euro and Yen Slump

European Gas Jumps, while the Euro and Yen Slump

Marc Chandler Marc Chandler 17.11.2021 15:31
Overview: The prospects that the 6.2% CPI will prompt the Fed to move quicker continue to underpin the dollar.  The euro fell to about $1.1265, its lowest level since last September, and the Japanese yen slumped to a fresh four-year low.  The JP Morgan Emerging Market Currency Index tumbled 1% yesterday, the largest decline since February.  A more stable tone is evident in Europe, as the euro has recovered above $1.13, and the JP Morgan Index is paring yesterday's losses.  The dollar is holding just below JPY115.00.  Asia Pacific equities did not fare well.  Only China and Taiwan markets, among the large regional markets, managed to rise.  Europe's Stoxx 600 is edging higher for the sixth consecutive session.  Recall it has fallen only once since October 27.  US futures are narrowly mixed. The bond market is quiet, with the US 10-year hovering around 1.62%.  European yields are a little softer.  Gold slid below $1850 yesterday but has snapped back today to test the $1860 area.  Crude oil is heavy, with the January WTI contract around $78.80, unable to resurface above $80 amid talk that the US and China may coordinate the release of strategic holdings.  Gas prices are up another 7% in Europe today after surging 16% yesterday and 9% on Monday. Due to "unplanned maintenance," a Belarus pipeline to Poland has been shut down, which may last three days.  Iron ore prices are giving back around half of yesterday's 1.2% gain, for the third loss in four sessions.  Copper is off for a third session, losing after dropping 2.2% in the past two sessions.   Asia Pacific Japan's October trade data disappointed.  Exports and imports were weaker than expected, and this resulted in a smaller deficit. Exports slowed to 9.4% year-over-year, down from 13% in September, defying expectations for a small double-digit increase.  Imports were up 26.7% from a year ago, off the heady 38.2% pace seen in September and below the 31.8% projected.  The resulting trade deficit of JPY67.4 bln was about a fifth of what economists anticipated (Bloomberg survey).  It is the third consecutive monthly deficit.  In the first seven months of the year, Japan recorded two deficits.  A year ago, Japan recorded a JPY840 bln surplus.   Reports suggesting that the possibility that the US and China coordinate the drawdown of strategic oil reserves are light on details, but the suggestion itself is enough to weigh on prices.  Still, the International Energy Agency yesterday echoed the broad assessment of America's EIA in anticipating that the tightness of the oil market could ease shortly.   Increased output in the US, Saudi Arabia, and Russia may account for half of the 1.5 mln barrel a day anticipated increase in supply. Nevertheless, the acting head of the EIA warned tapping the US Strategic Petroleum Reserve would have a short-term impact, for which other dynamics would quickly overshadow it.  Separately, note that the API estimated a slight build of 655k barrels in US stocks this past week, while gasoline inventories fell.   In other regional developments, Australia's wage price index rose a modest 0.6% in Q3 for a year-over-year pace of 2.2%.  This was in line with expectations.  It would seem to support the RBA's argument that it need not be in a hurry to raise rates.  The June 2022 T-bill yield settled last month at 69 bp and is now near 40 bp.  Separately, China appears to be allowing "high quality" property developments to return to the asset-backed securities market to raise capital after a three-month hiatus. Lastly, reports suggest Beijing is moving ahead with its import substitution plans to reduce dependency on foreign technology.    The dollar approached JPY115.00, where an option for almost $610 mln expires today.  The dollar has not traded above there since March 2017.  Since the dollar broke above JPY112.00, we have suggested that JPY114.50-JPY115.00 may mark the top of the new range.  While this has worked for the past month, the risk is on the upside.  A convincing break of around JPY115.50 would target the JPY118.00 area.  Initial support is now seen near JPY114.70.  Note that the upper Bollinger Band is slightly below JPY114.80.  The Australian dollar is trading near its lowest level since October 6, near $0.7265.  It is holding above a trendline connecting the August and September lows, which is found near $0.7250 today, but little stands in the way of a test on the $0.7200 in the coming days.  An option for a little more than A$800 mln at $0.7300 is set to expire today.  After posting a key upside reversal yesterday, the US dollar consolidated against the Chinese yuan today, and no follow-through buying materialized.  Instead, it seemed that the local market took advantage of the pop above CNY6.39 to sell the greenback, which is straddling CNY6.38 in late dealings.  The reference rate was set at CNY6.3935, just below the bank projections (CNY6.3936, according to the median in the Bloomberg survey).  We note that the yuan is also at its best level since 2015 against the trade-weighted CFETS basket the PBOC uses.   Europe On the heels of a strong employment report, the UK reported a larger than expected increase in the October CPI.  The preferred measure, which includes owner-equivalent housing costs, jumped to 3.8% from 2.9%.  The older measure rose to 4.2% from 3.1%.  On the month, consumer prices rose 1.1% rather than the 0.8% economists forecast (Bloomberg median). Flattered by increasing gas and electricity prices.  Core prices rose 3.4% year-over-year, accelerating from 2.9% in September and defying forecasts for a 3.1% pace.  Separately, producer prices, both input and output, also rose more than expected.  Lastly, UK house prices rose 11.8% year-over-year in September, up from a revised 10.2% in August.  The recent peak was 12.6% in June, which was the highest since 2004.    European gas prices are at one-month highs.  Belarus has stopped its pipeline to Poland, claiming unplanned maintenance issues, while the border tensions and earlier threats raise suspicions of a political move.  Separately, the German regulator suspended the certification process of the controversial Nord Stream 2 pipeline as corporate assets are rearranged.  Separately, a German court yesterday dismissed an environmental challenge to the pipeline.  Lastly, we note that the virus flare-up continues in Europe, and Germany and the Czech Republic reported a record number of cases. The euro surpassed our $1.1290 Fibonacci target and did not find bids until the $1.1265 area in Asian turnover.  The single currency has been in a tight range in Europe, holding above $1.1300.  Initial resistance is seen around $1.1330 now.  A move above yesterday's high, near $1.1385, is needed to lift the tone. We suspect the near big target is closer to $1.10.  Sterling slipped to a three-day low, slightly below $1.34, but shot up to the session high near $1.3375 on the inflation news. However, the momentum was not sustained, and sterling is little changed in late morning European turnover near $1.3430. The euro briefly traded below GBP0.8400 for the first time since March 2020 but snapped back.  An 840 mln euro option at GBP0.8445 expires today and another for about 620 mln euros at GBP0.8450 expires tomorrow.   America US retail sales surged last month, and the 1.7% rise was the best since March.  After slowing in Q3, consumption is off to a strong start in Q4.  Industrial production was also much stronger than expected, rising 1.6% compared with the 0.9% gain anticipated by economists (median, Bloomberg survey).  The US reports October housing starts today, and they are expected to have recovered from the 1.6% decline seen in September. Housing starts fell in Q3 but are seen rising in Q4, encouraged by an easing of some supply chain issues.   In fact, on several fronts, there are preliminary signs that the disruptions are dissipating.  Some reports suggest that the shortage of semiconductor chips may be passed, and US auto sales rose in October for the first time in six months.  Both the EIA and IEA have forecast a more balanced oil market, and some measures of shipping costs have moderated. The Los Angeles port has reportedly reduced the number of empty containers by around a quarter this month as six new sweeper ships have been brought into operation.  In addition, we note that the re-opening of US borders means immigrant workers may begin returning.  There is still much debate, of course, on the extent that the elevated price pressures are the result of supply chain disruptions.  A report by the Bank for International Settlements estimates that without the supply problems, US inflation would be closer to 2.5% and eurozone inflation near 1.5%. President Biden is expected to make his Fed announcements in the next few days, according to reports, but it could slip into early next week.  Powell is still the favorite, and he has Treasury Secretary Yellen's in support.  Yellen warns that action is needed soon on the debt ceiling.  Her efforts may be exhausted early next month.  Lastly, San Francisco Fed President Daly opined she was more bullish on the economy than a year ago.  This seems backward to us.  A year ago, the vaccine was announced, and fiscal stimulus was anticipated after the US election. Going forward, there will be less monetary and fiscal stimulus.  The pent-up demand ("excess savings") is projected to be exhausted by early next year, and, as we have noted, the doubling of the price of oil has preceded the last three recessions in the US. We suspect that there is sufficient stimulus and need to rebuild inventories to sustain reasonably strong growth for the next few quarters, but by the second half of next year, sub-3% growth will return as the norm.  Canada reports October CPI figures today.  The headline is likely to rise to 4.7% from 4.4% in September (Bloomberg median).  However, the base effect points to a further rise this month and December, when in 2020, the CPI rose 0.1% and fell 0.2%, respectively.   The underlying core rates are also increasing.  The Deputy Governor of the Bank of Canada cautioned about the high degree of uncertainty around potential structural shifts in the labor market that make it challenging to gauge full employment with any degree of confidence.  He pointed to economic areas that still show slack.  The market is expecting the first hike next March/April.  Note that tomorrow, the "Three Amigos" (Biden, Trudeau, and AMLO) meet in the US amid concern that the US "Build Back Better" has strong nationalistic elements, including for electric vehicles.     The US dollar posted an outside up day against the Canadian dollar yesterday, and follow-through buying has lifted it to around CAD1.2585.  At the end of last week, the high set was slightly above CAD1.2600, which close approximates the (50%) retracement of the greenback's decline since the September 20 high near CAD1.29.  The next retracement (61.8%) is found by CAD1.2665.  Still, we expect that a firm CPI report will lend the Loonie some support.  The session low, set in late Asia, near CAD1.2540, may be protected a CAD1.2545 option for $600 mln that expires today.  The greenback is consolidating against the Mexican peso today after rallying yesterday from about MXN20.56 to nearly MXN20.85.  The high from earlier this month was near MXN20.98.  It has not been above MXN21.00 since March.  Initial support is seen around MXN20.60.   Disclaimer
Poland is doing well in the European warehouse race

Poland is doing well in the European warehouse race

Finance Press Release Finance Press Release 19.11.2021 14:06
From quarter to quarter, more and more warehouses are built in our country, resulting in Poland ranking second in Europe in terms of resources under construction. New players are also entering our market Despite the record-high amount of space under construction, new supply on the warehouse market in our country is not keeping up with the ever-growing demand. Lease volume recorded in the first half of this year, was three times larger than the amount of the commissioned space. The largest number of warehouses appeared in Upper Silesia, Warsaw and the Tri-City. The amount of warehouse space under construction is similar to the level of lease recorded in the first 6 months of this year. In the second quarter, the warehouse space under construction increased by a third compared to the previous quarter. According to Walter Herz, most logistics facilities remain in Upper Silesia, in Western Poland and in Poznan. A total of over 1.5 million sq m. of space is under construction in these three regions. The scale of the increase in warehouse resources ranks Poland second in Europe, after Germany. New investors The group of investors active on our market in the warehouse sector is also growing. Recently, Scandinavian fund NREP started its expansion in Poland, finalizing the purchase of logistics portfolio of 130 thousand sq m. of space and planning activities in the segment of warehouses and apartments. LCube company, after starting the investment in Jasionka near Rzeszow, recently launched its second warehouse project near Wroclaw. - Developers are also taking up speculative ventures today, because the demand for warehouses remains at a record high level. Recently, facilities in the area of city logistics have been very popular. Nevertheless, all segments of the warehouse market remain on the path of growth. The largest transactions are concluded by companies from the e-commerce sector, logistics operators are also invariably in high demand - informs BartÅ‚omiej Zagrodnik, Managing Partner/CEO of Walter Herz. - Market observers agree that the demand for warehouses in our country, as in Europe, will continue to grow. First of all, thanks to the forecasted, further increase in online sales and the development of e-commerce, as well as the expected expansion of tenants from the manufacturing industry - adds BartÅ‚omiej Zagrodnik. Emerging warehouse centers Warsaw remains the largest logistics hub in the country, where demand for warehouse space in 2020 reached 1.2 million sq m. and resources exceed 5 million sq m. The second, largest warehouse center in Poland is Upper Silesia, with stock reaching almost 4 million sq m. of space. The next position is occupied by the warehouse hub located in the central part of Poland, where approximately 3.3 million sq m. of space is located. Wroclaw and Poznan also belong to the group of the largest logistics centers. The potential of the largest warehouse markets in our country is constantly growing, but smaller logistics centers are also experiencing intense growth. The Tri-City, Szczecin and the center in Western Poland will join the centers offering over 1 million sq m. of warehouse space after the completion of the current construction projects. New warehouse investments are multiplying all over the country. In Lower Silesia, on the 20 ha plot, Panattoni has started the construction of Panattoni Park GÅ‚ogów investment, which will provide a total of 111 thousand sq m. of space. The first of the two scheduled buildings will provide 78 thousand sq m. of space. The developer is also starting the implementation of another project in this region - Panattoni Park BolesÅ‚awiec, which will bring 50 thousand sq m. of warehouses. In addition, Panattoni has started the next stage of construction of their largest investment in Lower Silesia - WrocÅ‚aw Campus 39 - in Wierzbice near Wroclaw. It will offer a total of 150 thousand sq m. of space. Large facilities near Wroclaw GLP is building WrocÅ‚aw V Logistics Center, the largest warehouse project currently under construction in the Wroclaw agglomeration. 5 buildings of approximately 240 thousand sq m. are to be erected on 50 ha of land. Moreover, the construction of a facility offering 41 thousand sq m. has already started in Magnice near Wroclaw. Hillwood Polska is also building in Lower Silesia. Nearly 90 thousand sq m. of warehouses will be built in Sycow. The first building will bring over 44 thousand sq m. of space. Mountpark Logistics has also started construction. The first phase of the investment will provide 35 thousand sq m. of space, and the entire warehouse and logistics complex Mountpark WrocÅ‚aw will offer 140 thousand sq m. of warehouses. In Gorzow Wielkopolski, MLP Group purchased a 12 ha plot designated for a modern logistics and distribution center MLP Gorzów Wielkopolski with a lease area of 52 thousand sq m. Accolade company has also invested in the expansion of warehouses in this city, acquiring further investment areas. The company is planning on constructing industrial warehouses of almost 100 thousand sq m. At the western border, by the national road No. 24, Hillwood Rokitno logistics center of 112 thousand sq m. is also being built. The company is currently also implementing Hillwood Bydgoszcz investment of a similar size. Also in Swiebodzin, in Lubuskie Province, Amazon has recently opened its tenth logistics center in Poland, providing 193 thousand sq m. Szczecin under development New warehouse facilities are also emerging in Szczecin. Accolade company has acquired two industrial properties there. Modern warehouse spaces with a total of 73 thousand sq m. will be built on the land. The currently implemented stage of the project at Kniewska Street in Szczecin will include 31 thousand sq m. of space. In Goleniow, Panattoni Park Goleniów with a target area of 54 thousand sq m. is under construction. Nearly 20 thousand sq m. has been built so far. Pruszcz Logistics is preparing an investment in Bedzieszyn, which will bring about 50 thousand sq m. Apart from the warehouse hall, the project will include an office building. GLP, in turn, plans to implement the next stage of the Pomeranian Logistics Center in Gdansk. Another 39 thousand sq m. of warehouse and production space is to be built in the vicinity of the DCT Gdansk container terminal. Further investments in Poznan MLP Group is expanding the MLP PoznaÅ„ West project near Poznan. Another 43,000 sq m. of warehouses will be built in the complex in DÄ…brówka. P3 is going to build a building providing 82.5 thousand square meters in P3 PoznaÅ„ park for Westwing, The company offers the possibility of extension with additional 27 thousand sq m. In addition, Panattoni Park PoznaÅ„ East Gate with 45 thousand sq m. will be built on a plot of 10 hectares in SwarzÄ™dz minicipality near Poznan. Good Point, a Real Management brand, is also planning the construction of warehouses and technology parks near Warsaw, on land in the municipalities of Gora Kalwaria and Karczew. In Strykow in the Lodz province, in the vicinity of the junction connecting the A1 and A2 motorways, Mountpark Logistics is preparing a warehouse and logistics center which will provide 245 thousand sq m. New warehouses in Upper Silesia The largest warehouse investment in Upper Silesia is GLP LÄ™dziny Logistics Center, where 111 thousand sq m. is to be delivered. In Gliwice, MDC2 company has purchased a plot of 13.4 ha designated for a warehouse and logistics facility. MDC2 Park Gliwice complex is to consist of three buildings with 52 thousand sq m. of warehouse space. In addition, European Logistics Investment has started the construction of a second warehouse building in Silesia. The implementation of Park Tychy II investment is to bring 43 thousand sq m. of space. In Miedzyrzecze, 7R company will also build a specialized warehouse with about 20 thousand sq m. for the production company Aluprof. Retailers are building facilities Chain brands are also investing in logistics. Jeronimo Martins is already building the seventeenth distribution center for Biedronka in our country. A complex of warehouse and logistics halls with 54 thousand sq m., will be built in Stawiguda near Olsztyn on a 9 hectare plot. ALDI chain, which plans to open 40 stores in Poland, is to have a new distribution center located near Bydgoszcz, with over 43 thousand sq m. Recently, Lublin province also issued a building permit for the largest logistics park in Europe. In Malaszewicze, a modern cargo transshipment hub between Asia and Europe is to be built in the current dry port, which after the expansion will quadruple its capacity. The construction of the logistics park, which will occupy a key place on the New Silk Road route, is planned to start in 2022, and its implementation will take 5 to 6 years. The investment will cost over PLN 3 billion. Half of the funds are to come from the state budget. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
December Monthly

December Monthly

Marc Chandler Marc Chandler 02.12.2021 15:00
December 01, 2021  $USD, Macro The pandemic is still with us as the year winds down and has not yet become endemic, like the seasonal flu.  Even before the new Omicron variant was sequenced, Europe was being particularly hard hit, and social restrictions, especially among the unvaccinated, were spurring social strife.  US cases, notably in the Midwest, were rising, and there is fear that it is 4-6 weeks behind Europe in experiencing the surge.  Whatever herd immunity is, it has not been achieved.  Moreover, despite plenty of vaccines in high-income countries, inoculation efforts in many low-income countries won't begin in earnest until next year.   That said, the new variant has injected a new element into the mix, and it is with a heightened degree of uncertainty that we share our December outlook.  Given the unknowns, policymakers can choose the kind of error they are willing to make. They are trying to minimize their maximum regret.  The utmost regret is that the mutation is dangerous and renders the existing vaccines and treatment significantly less effective.  This will leave them vulnerable to accusations of over-reacting if the Omicron turns out to be a contagious but less deadly variation.   Meanwhile, there has been some relief to the supply chain disruptions.  Covid-related factory closures in Asia, the energy shortage, and port congestion are easing. Large US retailers have stocked up for the holiday shopping season, some of which chartered their own ships to ensure delivery. There are also preliminary signs that the semiconductor chip shortage may be past its worst.  Indeed, the recovery of the auto sector and rebuilding of inventories will help extend the economic expansion well into next year, even though fiscal and monetary policy are less supportive for most high-income countries.  The flash November US manufacturing PMI saw supplier delivery delays fall to six-month lows.   We assume that the US macabre debt ceiling ritual will not lead to a default, and even though it distorted some bill auctions, some resolution is highly probable.  The debate over the Build Back Better initiative, approved by the House of Representatives, will likely be scaled back by moderate Democratic Senators and Republicans.  Besides assessing the risks posed by the new variant, the focus in December is back on monetary policy.  Four large central banks stand out.  The Chinese economy has slowed the People's Bank of China quarterly monetary report modified language that signals more monetary support may be forthcoming.  Many observers see another reduction in reserve requirements as a reasonable step.  Unlike in the US and Europe, which saw bank lending dry-up in the housing market crisis (2008-2009), Beijing is pressing state-owned banks to maintain lending, including the property sector.   The Federal Reserve meets on December 15.  There are two key issues.  First, we expect the FOMC to accelerate the pace of tapering to allow it to have the option to raise rates in Q2 22.  The Fed's commitment to the sequence (tapering, hikes, letting balance sheet run-off) and the current pace of tapering deny the central bank the needed flexibility.  The November CPI will be reported on December 10.  The headline will likely rise to around 6.7%, while the core rate may approach 5%.  Second, the new "Summary of Economic Projections" will probably show more Fed officials seeing the need to hike rates in 2022.  In September, only half did.  The rhetoric of the Fed's leadership has changed.  It will not refer to inflation as transitory and is signaling its intention to act.  The European Central Bank and the Bank of England meet the day after the FOMC.  The ECB staff will update its forecasts, and the key here is where it sees inflation at the end of the forecasting period.  In September, it anticipated that CPI would be at 1.5% at the end of 2023.  Some ECB members argued it was too low.   It may be revised higher, but the key for the policy outlook is whether it is above the 2% target.  We doubt that this will be the case.  While the ECB will likely announce that it intends on respecting the current end of the Pandemic Emergency Purchase Program next March, its QE will persist. The pre-crisis Asset Purchase Program is expected to continue and perhaps even expand in Q2 22.  The "modalities" of the post-emergency bond-buying program, size, duration, and flexibility (self-imposed limits) will be debated between the hawks and doves.  With eurozone inflation approaching 5% and Germany CPI at 6%, the hard-money camp will have a new ally at the German Finance Ministry as the FDP leader Linder takes the post.  On the other hand, the Social Democrats will name a Weidmann's replacement at the head of the Bundesbank, and nearly anyone will be less hawkish.   While we correctly anticipated that the Bank of England would defy market expectations and stand pat in November, the December meeting is trickier.  The decision could ultimately turn on the next employment and CPI reports due 1-2 days before the BOE meeting.  The risk is that inflation will continue to accelerate into early next year and that the labor market is healing after the furlough program ended in September.  On balance, we suspect it will wait until next year to hike rates and finish its bonds purchases next month as planned.   Having been caught wrong-footed in November, many market participants are reluctant to be bitten by the same dog twice. As a result, the swaps market appears to be rising in about a 35% chance of a 15 bp move that would bring the base rate up to 25 bp.  Sterling dropped almost 1.4% (or nearly two cents) on November 4, the most since September 2020 when the BOE failed to deliver the hike that the market thought the BOE had signaled.   The combination of a strong dollar and the Fed tapering weighed emerging market currencies as a whole.  The JP Morgan Emerging Market Currency Index fell by about 4.5% in November, its third consecutive monthly decline, bringing the year-to-date loss to almost 10%.  It fell roughly 5.7% in 2020.  Turkey took the cake, though, with the lira falling nearly 30% on the month.  It had depreciated by 15% in the first ten months of the year.  This follows a 20% depreciation last year.  Ten years ago, a dollar would buy about 1.9 lira.  Now it can buy more than 13 lira.  The euro's weakness was a drag, and the geopolitical developments (e.g., Ukraine, Belarus) weighed on central European currencies. The central bank of Hungary turned more aggressive by hiking the one-week deposit rate by 110 bp (in two steps) after the 30 bp hike in the base rate failed to have much impact.  The forint's 3.1% loss was the most among EU members.   Colombian peso was the weakest currency in Latam, depreciating by almost 5%. It was not rewarded for delivering a larger than expected 50 bp rate hike in late October.  Bannockburn's GDP-weighted global currency index (BWCI) fell by nearly 1% in November, the largest monthly decline since June.  It reflected the decline of the world's largest currencies against the dollar.  Three currencies in the index proved resilient  On the GDP-weighted basis, China has immense gravity, with a 21.8% weighting (the six largest EM economies, including China, account for a 32.5% of the BWCI). It appreciated by about two-thirds of a percent. The Brazilian real managed to rise (~0.25%) too.  Since the day before the Omicron variant was sequenced, the Japanese yen gained a little more than 2%, reversing the earlier decline that had brought it to four-year lows.  It rose by  0.7% in November, making it the strongest currency in the index.  Among the major currencies, the Australian dollar fell the most, declining about 5.2%.  The Canadian dollar was next, with around a 3% loss.   As it turns out, the dollar (Dollar Index) recorded its low for the year as shocking events were unfolding in Washington on January 6.  The bottomed against the yen and euro the same day.   The greenback did not bottom against the Australian dollar until February, but it took it until early June to put in a low against sterling and the Canadian dollar.  The BWCI peaked in early June and, by the end of last month, had retreated by about 2.7%.  We suspect it may decline by another 2%, which would return it the levels of late 2019.  That, in turn, implies the risk of a stronger dollar into the first part of next year.     Dollar:  The jump in US CPI to above 6%, and a strong sense that it is not the peak, spurred speculation that the Federal Reserve would likely accelerate the pace of tapering at the December meeting. Several Fed officials seemed sympathetic, including San Francisco President Daly, who is perceived to be a dove. The minutes of the November meeting underscored the central bank's flexibility over the pace of tapering.  At the same time, most of the high-frequency data for October came in stronger than expected, lending credence to ideas that after a disappointing Q3, the world's largest economy is accelerating again in Q4.  The divergence of monetary policy and the subsequent widening interest rate differentials is the primary driver of expectations for dollar appreciation against the euro and yen.  The market had been leaning toward three rates hikes in 2022 before news of the new Covid mutation emerged and trimmed the odds.  Powell was renominated for a second term at the helm of the Federal Reserve, Brainard was nominated to be Vice-Chairman.  There is still the Vice-Chair for supervision and an empty governor seat for President to Biden to fill.  In addition to the changes in leadership, the rotation of the voting members of the FOMC brings in a somewhat more hawkish bias next year.   Euro:  In contrast with the US, eurozone growth is set to slow in Q4. After two quarters that growth exceeded 2% quarter-over-quarter, growth is likely to moderate to below 1% in Q4 21 and Q1 22.  Food and energy are driving inflation higher.  The EC continues to negotiate with the UK over changes to the Northern Ireland Protocol.  The dispute over fishing licenses and migrant crossing of the channel are also unresolved sources of tension with the UK. Tensions between the EC and Poland/Hungary over the rule of law, judicial independence, and civil liberties have also not been settled.  As was the case in the spring, Russia's troop and artillery movement threatened Ukraine, though the tension on the Poland/Belarus border has eased.  The ECB's leadership continues to maintain the price pressures are related to the unusual set of circumstances but are ultimately temporary.  Its December 16 meeting, the last one before Bundesbank President Weidmann steps down, is critical. In addition to confirming the end of the Pandemic Emergency Purchase Program in March 2022, and the expansion of the Asset Purchase Program, the ECB staff will update its inflation forecasts.  The focus here is on the 2023 CPI projection of 1.5%.  There was a push back against it in September, and a slight upward revision is likely. Nevertheless, it will probably remain below the 2% target.  The swaps market is pricing in a 25 bp hike in 2023.   (November indicative closing prices, previous in parentheses)   Spot: $1.1335 ($1.1560) Median Bloomberg One-month Forecast $1.1375 ($1.1579)  One-month forward  $1.1350 ($1.1568)    One-month implied vol  7.1%  (5.1%)         Japanese Yen:  Japan has a new prime minister who has put together a large fiscal stimulus package that will help fuel the economic recovery that had begun getting traction since the formal state of emergency was lifted at the end of September.  After a frustratingly slow start, the inoculation efforts have started bearing fruit, with vaccination rates surpassing the US and many European countries.  Unlike most other high-income countries, Japan continues to experience deflationary pressures.  Food and energy prices may be concealing it in the CPI measure, but the GDP deflator in Q2 and Q3 was  -1.1%. However, the BOJ does not seem inclined to take additional measures and has reduced its equity and bond-buying efforts.  The exchange rate remains sensitive to the movement of the US 10-year note yield, which has chopped mostly between 1.50% and 1.70%. With a couple of exceptions in both directions, the greenback has traded in a JPY113-JPY115 range.  The emergence of the new Covid mutation turned the dollar back after threatening to break higher.  A convincing move above the JPY115.50 area would likely coincide with higher US rates and initially target the JPY118 area.    Spot: JPY113.10 (JPY113.95)       Median Bloomberg One-month Forecast JPY113.30 (JPY112.98)      One-month forward JPY113.00 (JPY113.90)    One-month implied vol  8.2% (6.4%)   British Pound:  Sterling never fully recovered from disappointment that the Bank of England did not hike rates in early November.  Market participants had understood the hawkish rhetoric, including by Governor Bailey, to signal a hike.  The implied yield of the December 2021 short-sterling interest rate futures plummeted by 30 bp by the end of the month, and sterling has not seen $1.36, let alone $1.37, since then.  Indeed, sterling chopped lower and recorded new lows for the year in late November near $1.3200.  Growth in the UK peaked in Q2 at 5.5% as it recovered from the Q1 contraction.  It slowed to a 1.3% pace in Q3 and looks to be slowing a bit more here in Q4.  The petty corruption scandals and ill-conceived speeches by Prime Minister Johnson have seen Labour move ahead in some recent polls.  An election does not need to be called until May 2024, but the flagging support may spur a cabinet reshuffle.  The next important chart point is not until around $1.3165 and then the $1.30 area, which holds primarily psychological significance.       Spot: $1.3300 ($1.3682)    Median Bloomberg One-month Forecast $1.3375 ($1.3691)  One-month forward $1.3315 ($1.3680)   One-month implied vol 7.5% (6.8%)      Canadian Dollar:  The Canadian dollar appreciated by almost 2.4% in October and gave it all back, plus some in November.  Indeed, the loss was sufficient to push it fractionally lower for the year (-0.4%), though it remains the best performing major currency against the US dollar.   The three major drivers of the exchange rate moved against the Canadian dollar last month.  First, its two-year premium over the US narrowed by 17 bp, the most in four years.  Second, the price of January WTI tumbled by around 18.2%.  Commodity prices fell more broadly, and the CRB Index snapped a seven-month rally with a 7.8% decline.  Third, the risk appetites faltered is reflected in the equity markets. The Delta Wave coupled with the new variant may disrupt growth.  Still, the swaps market has a little more than two hikes discounted over the next six months.   The government is winding down its emergency fiscal measures, but the spring budget and election promises mean that the fiscal consolidation next year will be soft.     Spot: CAD1.2775 (CAD 1.2388)  Median Bloomberg One-month Forecast CAD1.2685 (CAD1.2395) One-month forward CAD1.2770 (CAD1.2389)    One-month implied vol 7.2% (6.2%)      Australian Dollar:  The Australian dollar fell by more than 5% last month, slightly less than it did in March 2020.  It did not have an advancing week in November after rallying every week in October.  Australia's two-year premium over the US was chopped to less than 10 bp in November from nearly 28 bp at the end of October.  The Reserve Bank of Australia pushed back against aggressive rate hike speculation.   The unexpected loss of jobs in October for the third consecutive month took a toll on the Australian dollar, which proceeded to trend lower and recorded the low for the year on November 30, slightly below $0.7065.  A break of $0.7050 would initially target $0.7000, but convincing penetration could spur another 2-2.5-cent drop.  The 60-day rolling correlation between- changes in the Australian dollar and the CRB commodity index weakened from over 0.6% in October to below 0.4% in November. The correlation had begun recovering as the month drew to a close.       Spot:  $0.7125 ($0.7518)        Median Bloomberg One-Month Forecast $0.7195 ($0.7409)      One-month forward  $0.7135 ($0.7525)     One-month implied vol 9.7%  (9.1%)        Mexican Peso:  The broadly stronger US dollar and the prospects of more accelerated tapering weighed on emerging market currencies in November, but domestic considerations also weighed on the peso.   The Mexican peso fell by around 4.1%, the most since March 2020.  The economy unexpectedly contracted by 0.4% in Q3.  There is little fiscal support to speak of, while monetary policy is becoming less accommodative too slowly compared with some other emerging markets, such as Brazil.  Price pressures are still accelerating, and the bi-weekly CPI rose above 7% in mid-November. The swaps market discounts nearly a 25 bp hike a month for the next six months.  The government's policies, especially in the energy and service sectors, are not attractive to investors.  President AMLO dealt another blow to investor confidence by retracting the appointment of former Finance Minister Herrera for his deputy to head up the central bank starting in January.  This is seen potentially undermining one of the most credible institutions in Mexico.  Lastly, Mexico's trade balance has deteriorated sharply in recent months and through October has recorded an average monthly trade deficit of nearly $1.2 bln this year.  In the same period, in 2020, it enjoyed an average monthly surplus of almost $2.5 bln, and in the first ten months of 2019, the average monthly trade surplus was a little more than $150 mln.     Spot: MXN21.46 (MXN20.56)   Median Bloomberg One-Month Forecast  MXN21.23 (MXN20.42)   One-month forward  MXN21.60 (MXN20.65)     One-month implied vol 14.9% (9.6%)      Chinese Yuan:  The Chinese yuan has been remarkably stable against the US dollar, and given the greenback's strength, it means the yuan has appreciated sharply on a trade-weighted basis.  Going into the last month of the year, the yuan's 2.6% gain this year is the best in the world.  Chinese officials have signaled their displeasure with what it sees as a one-way market.  At best, it has orchestrated a broadly sideways exchange rate against the dollar, mainly between CNY6.37 and CNY6.40. The lower end of the dollar's range was under pressure as November drew to a close.   Even though the Chinese economy is likely to accelerate from the near-stagnation in Q3 (0.2% quarter-over-quarter GDP), it remains sufficiently weak that the PBOC is expected to consider new stimulative measures.  It last reduced reserves requirements in July, and this seems to be the preferred avenue rather than rate cuts.  Yet, given the interest rate premium (the 10-year yield is around 2.85%), record trade surpluses ($84.5 bln in October), portfolio inflows, and limited outflows, one would normally expect a stronger upward pressure on the exchange rate.    Spot: CNY6.3645 (CNY6.4055) Median Bloomberg One-month Forecast  CNY6.38 (CNY6.4430)  One-month forward CNY6.3860 (CNY6.4230)    One-month implied vol  3.5% (3.5%)    Disclaimer
Animal Spirits Roar Back

Animal Spirits Roar Back

Marc Chandler Marc Chandler 07.12.2021 16:47
December 07, 2021  $USD, Canada, China, Currency Movement, Germany, Hungary, Japan, Mexico, RBA, Russia, US Overview:  A return of risk appetites can be seen through the capital markets today, arguably encouraged by ideas that Omicron is manageable and China's stimulus.  Led by Hong Kong and Japan, the MSCI Asia Pacific rose by the most in three months, while Europe's Stoxx 600 gapped higher, leaving a potentially bullish island bottom in its wake.  US futures point to a gap higher opening when the local session begins.  The bond market is taking it in stride.  The US 10-year Treasury is slightly firmer at 1.44%, while European yields are 1-3 bp higher.  The dollar-bloc currencies and Norway are leading the move higher among most major currencies.  The yen and euro are softer.  Sterling struggles to sustain upticks. Among emerging markets currencies, the Turkish lira is bouncing, while most central European currencies are being dragged lower by the weaker euros.  The JP Morgan Emerging Market Currency Index is slightly higher after four consecutive losses.  Gold is trading within yesterday's narrow range.  Oil continues to recover, and the January WTI contract is up around 2.5% (after yesterday's 4.9% advance) and is above $71.50 a barrel.  US natgas prices dropped 11.5% yesterday and have come back firmer today, while the European benchmark (Dutch) is up 7% today (~+0.5% yesterday) to near last week's highs.  Iron ore prices jumped 7.7% today after 2.5% yesterday, perhaps encouraged by strong Chinese import figures.  Copper prices are also firm.    Asia Pacific The Reserve Bank of Australia stuck to its stance. It may take two years to reach the 2-3% inflation target, and the uncertainties surrounding the Omicron variant also favor a cautious approach. This was in line with expectations.  The swaps market still has about 75 bp of higher rates discounted next year.   The Australian dollar's gains reflect the risk-on mood.   Japan's economy is on the mend.  Household spending rose 3.4% month-over-month in October.  Paradoxically, outlays on medical care actually fell (-5.7%) year-over-year in October.  Meanwhile, Labor cash earnings rose by 0.2% year-over-year, the same as in September, but less than expected.  Households headed by a worker rose 0.5% year-over-year.   China's trade surplus fell to $71.7 bln in November from $84.5 bln in October.  The US accounted for a little more than 50% of the surplus (~$37 bln).  Exports rose by 22% year-over-year, less than the 27.1% increase in October.  But, what really stood out were China's imports.  They surged, jumping 31.7% from a year ago after a 20.6% increase in October.  Commodity imports were robust.  The 35 mln tons of coal imported was the most this year. Oil imports were at three-month highs.  Iron ore imports reached a 13-month high,  Gas purchases were the highest since January.  Copper imports appear to be a record.  Separately, China reported that the value of its foreign exchange reserves rose by a minor $4.7 bln to $3.222 trillion.  Economists (Bloomberg survey median) had expected around an $11 bln decline.   The dollar has forged what appears to be a solid base now around JPY112.55.  So far, today is the first session since November 26 that the greenback has held above JPY113.00.  It has been confined to a narrow range between JPY113.40 and JPY113.75.  The dollar looks poised to move higher but may stall around JPY114.00, where an option for around $865 mln expires today.  The Australian dollar rose about half of a cent yesterday and is up around another half-cent today to test $0.7100.  An option for A$1.04 bln expires today there ($0.7100).  It is also the (61.8%) retracement objective of last week's drop.  A move above there would target the $0.7130 area and possibly $0.7200.  The reduction in Chinese banks' reserve requirements and the divergence with the direction the Fed appears headed did not deter the yuan from strengthening.  The dollar held CNY6.38 yesterday and is near CNY6.3660 now.  The low for the year was set at the end of May near CNY6.3570.  The dollar's reference rate was set at CNY6.3738, a touch higher than the models (Bloomberg survey) projected of CNY6.3734.   Europe According to the proverb, for want of a nail, a kingdom was lost.  US intelligence warns that Russia is poised to invade Ukraine.  Beijing continues to act as a bully in the South China Sea.  US President Biden is hosting a "Summit for Democracy" December 9-10.   Reportedly 110 countries will be represented, even Taiwan, which the US officially does not recognize as a country.  All of the EU members have been invited but Hungary.  Hungary, like Poland, is in a serious fight with the EC over the rule of law.  It is being fined for failing to comply with the European Court of Justice over its harsh treatment of asylum seekers.  Poland, which is invited to the summit, is also being fined a record 1 mln euros a day for deviations from the EU standards of the rule of law.   Yet Hungary's exclusion is needlessly antagonistic.  Hungary will hold parliamentary elections in April (though possibly May), and the opposition is united behind the center-right Marki-Zay.  Most polls show him ahead of Orban.   It is an insult to the EU, and Orban used his veto to block the EU from formally participating and prevented it from submitting a position paper.  It is a vulnerable position for the US to be the judge and jury about democracy and the rule of law.   Laura Thorton, director of the Alliance for Securing Democracy of the German Marshall Fund of the United States, expressed shock and dismay in a recent Washington Post op-ed over developments in Wisconsin. She wrote, "If this [where the GOP is seeking to replace the bipartisan oversight of elections with just its party's control] occurred in any of the countries where the US provides aid, it would immediately be called out as a threat to democracy.  US diplomats would be writing furious cables, and decision-makers would be threatening to cut off the flow of assistance."  Separately, the US embassy in Tokyo warned Japan about "racially profiling incidents" following the closure of its borders to new foreign entries into the country.   The US response to the Russian aggression in Georgia in 2008 and the annexation of Crimea in 2014 was soft.  Despite bringing NATO to Russia's door in the Baltics, the US recognized by its actions that it is difficult to defend what Russia calls its near-abroad. Ukraine is different.  When Ukraine gave up its nuclear weapons, the Budapest Memorandum  (1994), Russia, the US, and the UK committed to respecting its independence and territorial integrity.  Russia clearly violated the agreement, but the US says it is not legally binding.  Nevertheless, reports indicate that the Biden administration is contemplating new sanctions against Russia and Putin's inner circle.  Reportedly under consideration is removing Russia from the SWIFT payment system and new sanctions of Russia's energy companies, banks, and sovereign debt.  In late April, the European Parliament approved a non-binding resolution to exclude Russia from the SWIFT if it attacked Ukraine.  Russia is a heavy user of SWIFT, as few foreign banks, including the Chinese, are willing to use Russia's own payment system.  After a dismal factory orders report, the market had been prepared for a poor industrial output report today.  Instead, Germany surprised with its strongest gain for the year.  Industrial output surged 2.8% in October.   It is only the third monthly gain this year.  Moreover, September's decline of 1.1% was halved to 0.5%.  It appears auto production (capital goods) may be behind the improvement in activity.  Separately, the ZEW survey was mixed.  The expectations component was stronger than expected, but still, at 29.9, lower than November's 31.7 reading.  The assessment of the current situation deteriorated sharply to -7.4 from 12.5.  It has been declining since September, but this is the lowest since June.  On November 30, the euro spiked higher and has subsequently worked its way lower.  Today, it reached almost $1.1250, its lowest level since November 30, low near $1.1235. The 20-day moving average (~$1.1320) continues to block the upside.  It has not closed above it for a little more than a month.  The low for the year so far was recorded on November 24 near $1.1185.  For its part, sterling remains in its trough. The low for the year was set on November 30, slightly below $1.32.  Before the weekend, it was in a roughly $1.3210-$1.3310 range and remains well within that range yesterday and today.  It has been blocked ahead of $1.3300.  There is an option for about GBP450 mln at $1.3250 that expires today.   America The US is expected to report that productivity fell in Q3 by 4.9% rather than the 5% that was initially reported.  Productivity increased by 2.4% in Q2 and 4.3% in Q1.  It averaged 2.6% last year and 2.3% in 2019.  Unit labor costs are the most holistic measure, including wages, benefits, and output.  Looking at a four-quarter moving average, unit labor costs rose 1.6% in 2018 and 1.45% in 2019.  They jumped to 6.25% last year and fell by an average of 0.85% in H1 21.  The initial estimate for Q3 was an 8.3% surge.   The US also reports the October trade balance.  The preliminary goods balance signaled a likely improvement from the $80.9 bln deficit in September.  The median forecast (Bloomberg) sees a deficit of slightly less than $67 bln.  Through September, the monthly average was nearly $71 bln, up from $53.3 bln in the same period last year and less than a $50 bln average in the first nine months of 2019. Late in the session, the US reports October consumer credit, and another substantial increase is expected.  It jumped almost $30 bln in September.  It has averaged $20.275 bln a month through September.  Last year was too distorted, but in the first three quarters of 2019, consumer credit rose by an average of $15.3 bln a month.    Canada reports its October merchandise trade figures today, ahead of the Bank of Canada meeting tomorrow  The median forecast in Bloomberg's survey call for a C$2.08 bln surplus, which, if accurate, would the be third largest surplus since 2008.  The June surplus was larger at C$2.26, as was the December 2011 surplus of C$2.12 bln.   Canada's goods trade balance through September swung into surplus with an average of C$703 mln.  In the same period in 2020, the monthly deficit averaged C$3.1 bln and  C$1.4 bln in 2019.  The merchandise surplus may be sufficient to lift the current account too.  Canada has been running a current account deficit since 2009.   The OECD forecasts a surplus this year of 0.3% of GDP and projects it to be in balance next year.  Canada and Mexico have expressed concerns about the credits for electric vehicles in the Build Back Better US initiative.  They claim it violates the USMCA.  Europe has expressed similar problems, and the EU Trade Commissioner Dombrovskis has reportedly sent a formal letter warning that the Biden administration's efforts may also violate WTO rules.  Meanwhile, there is talk that the initiative may be blocked this year.  If this is the case, the odds of passage next year seem even slimmer.  On a different front, Mexico's controversial energy reforms, which expand the state sector, over some objections by US energy companies, look to be delayed due to lack of support.  The US dollar posted an outside up day against the Canadian dollar before the weekend, despite Canada's strong employment report.  There was no follow-through yesterday, and the greenback recorded an inside day and settled on its lows.  The US dollar has been sold to around CAD1.2700 today.  Initial support is around CAD1.2675, but the more significant test is near CAD1.2640.  A break would strengthen the conviction that a high is in place.  Meanwhile, the greenback continues to consolidate against the Mexican peso.  It remains within the range set last Wednesday (~MXN21.1180-MXN21.5150).  Thus far today, it is holding above yesterday's low (~MXN21.1720), which was- above the pre-weekend low (~MXN21.1625).            Disclaimer
Markets Calmer, Awaiting Fresh Incentives

Markets Calmer, Awaiting Fresh Incentives

Marc Chandler Marc Chandler 08.12.2021 13:51
December 08, 2021  $USD, Bank of Canada, Currency Movement, Germany, India, Japan, Poland, Russia Overview:  The capital markets are calmer today, and the fear that was evident at the end of last week remains mostly scar tissue. Led by gains in Japan, China, Australia, New Zealand, and India, the MSCI Asia Pacific Index extended yesterday's gains.  Europe's Stoxx and US futures are firm.  The US 10-year yield is softer, around 1.43%, while European yields are mostly 1-2 bp lower.  The Norwegian krone and euro lead major currencies higher against the greenback, but the New Zealand dollar and sterling are underperforming. Most of the emerging market currencies are enjoying an upside bias. The Turkish lira is giving back a little more than half of yesterday's 2.25% bounce.  Gold is edging higher and is near the 200-day moving average (~$1792).  January WTI is off $1 around  $71 after rallying around 8% in the past two sessions.  API reported a three million barrel drawdown in inventories but a big jump in Cushing.   US natural gas is consolidating and paring Monday's 11.5% drop.  Europe (Dutch) natural gas prices are rising for the third consecutive session and around 10% this week.  Iron ore has extended this week's rally and is at the highs since October.  Copper is flat.   Asia Pacific Australia has joined the US in the diplomat boycott of the winter Olympics in Beijing.  South Korea and Japan have not formally decided yet.  China's quarantine policies made it difficult for many diplomats to attend in any event, and many apparently will not attend.  Beijing threatens unspecified retaliation.   Japan reported an increase in its October current account, rising to JPY1.18 trillion from JPY1.03 trillion in September.  The swing in the trade balance from a JPY230 bln deficit to a JPY167 bln surplus more than accounted for it.  Japan also revised Q3 GDP to a 0.9% contraction (from -0.8%).  The composition changed.  Consumption was a greater drag (-1.3% quarter-over-quarter rather than -1.1%), and inventories contributed less (0.1% vs. 0.3%) and net exports were flat (rather than contribute 0.1 percentage points).  Business investment was less a drag (-2.3% vs. -3.8%).  Still, there is reason to be more optimistic about the outlook for the world's third-largest economy.  Social restrictions have eased, the vaccination rate is among the best, and the government is providing fresh stimulus.  The Kishida government is expected to finalize its fiscal efforts toward the end of the week. A key issue is the tax incentive (subsidy) for companies that boost wages by 3%, which has not happened since 1997.   India left its key rate corridor on hold today.  The repo rate is 4%, and the reverse repo rate is 3.35%.  Some observers saw the possibility of a hike in the reverse repo rate.  The monetary policy committee voted unanimously to keep the repo rate steady.  The reverse repo rate is a broader issue decided by the central bank, not the MPC.  The emergence of Omicron may have encouraged the central bank to maintain a steady hand, while the cut in the excise duty and VAT for petrol and diesel may help ease price pressures.  It made some technical changes in its liquidity management, which some see as a prelude to a hike in February 2022, when the central bank meets again.   The dollar is consolidating in a narrow 30-point range above JPY113.35 against the Japanese yen.  Yesterday's high was just below JPY113.80.  An option for about $550 mln will roll off today at JPY114.25, while there is a nearly $1.5 bln option at JPY114.00 that expires tomorrow.  The JPY114 area also holds the 20-day moving average, which the dollar has not closed above since November 25. The Australian dollar began the week flirting with the $0.7000 area.  It is rising for its third consecutive session and has reached almost $0.7145 today.  Last week's highs were set a little above $0.7170.  Despite words of caution by Chinese officials and the cut in reserve requirements, the yuan continues to march higher.  It is at new three-year highs today.  The dollar has been sold down to almost CNY6.3455.  Local dollar bonds and bonds below investment grade have rallied as officials signal a focus on supporting the economy.  Today the rate for re-lending to rural and small businesses was cut by 25 bp.  The PBOC has also been generous with its liquidity provisions.  The reference rate for the dollar was set at CNY6.3677, a little firmer than expected (CNY6.3665, Bloomberg survey).    Europe An era is formally over today as Germany's new government takes office.  The challenges it faces are profound.  The virus was surging even before the Omicron variant was detected.  The economy has been hobbled.  Inflation is high (6% on the harmonized measure in November) and without the fiscal stimulus seen in the US, where CPI is up 6.2% from a year ago (October).  This year, the German deficit is estimated to be about 5.8% and seen falling to 2.5% next year.  The US deficit is around 12.5% this year and is expected to fall to around 6.5% in 2022. Russia is amassing troops, and fears that it will invade Ukraine early next year are running high.  Germany reportedly will nix the controversial Nord Stream II pipeline if Russia carries through with its threat as part of the economic sanctions being considered.  Italy's Draghi has had a bit of a honeymoon, but that will change.  Two of the three largest unions will strike on December 16 to protest Draghi's budget, which must be passed by the end of the month.   Moreover, the selection of a new Italian president in January may mark the beginning of the political process that will lead to a new parliamentary election by the middle of 2023.  The president of Itlay is chosen by the Italian Parliament and regional representatives.  The current president, Mattarella, has declined to run for a second term.  Draghi does lead any political party, but the latest surveys show the center-left Democratic Party is in first place, polling a couple percentage points higher than it got in the last election at 21.4% support.  The Brothers of Italy on the right are in second place with slightly less than 20% support.  The Five Star Movement has seen its fortunes slip to about 15%.  Poland's central bank is set to hike its base rate today.  It will be the third consecutive increase.  The base rate was slashed from 1.50% last year to 10 bp.  It was hiked by 40 bp in October and 75 bp last month to stand at 1.25%. The headline CPI surged from 2.4% at the end of last year to 7.7% in November. Czech and Hungary have been more aggressive in raising rates.  Last month, Czech's central bank delivered a 125 bp increase to lift its key two-week repo rate to 2.75%.   It was at 25 bp to start the year.  Its CPI is near 6%.  Hungary has raised its base rate every month since June and taken it from 60 bp to 2.10%.  It has also taken its one-week deposit rate from 75 bp to 3.10%, with 130 bp delivered in the past three weeks. Earlier today, it reported that CPI rose to 7.4% last month from 6.5%.  Most look for a 50 bp increase from Poland's central bank today.   The euro briefly dipped below $1.1230 yesterday but recovered in the North American afternoon.  It is extending the recovery today and traded $1.1300 in the European morning.  The $1.1310-$1.1320 offers nearby resistance.  The UK government is being embarrassed by reports about its holiday party a year ago in violation of the social restrictions in place at the time.  It adds to the sleaze factor that has weakened it.  The latest polls show that the Labour Party is extending its lead.  Also, ideas that the BOE could raise rates next week have diminished and been pushed into next February.  Sterling is heavy, near $1.3200.  We have warned of near-term risk toward $1.3165, the (38.2%) retracement objective of the rally from the March 2020 low near $1.14.   America A deal appears in the works to lift the US debt ceiling.  The maneuver requires 60 votes to allow the debt ceiling to pass with a simple majority.  The Republican leadership appears willing to go along with this.  It will likely set a new precedent that will be used and possibly expanded when control of Congress changes.  PredictIt.Org shows that the Republicans are favored to win control of both houses in next year's mid-term election.   The US calendar today features the JOLTS report on job openings.  The week's highlight, the November CPI, is out on Friday, and both the headline and core rates are expected to accelerate.  Fed officials are in the blackout period ahead of next week's FOMC meeting.  Today's North American feature is the Bank of Canada meeting.  No one expects a change in rates.  It is more about the rhetoric.  Despite the uncertainty surrounding the Omicron variant, Bank of Canada officials are likely to be more confident about the strength of the recovery.  Last week's jobs data adds to the positive impulses.  Moreover, the government is providing more fiscal support.  The biggest challenge is that the market has discounted five hikes over the next 12 months.  This is aggressive and difficult for the central bank to get ahead of market expectations. Even after the strong Canadian jobs data at the end of last week, the US dollar closed firmly above CAD1.28, showing the Loonie's vulnerability to the risk-off wave.  However, as cooler heads have prevailed, the Canadian dollar has bounced back.  The US dollar closed below the 20-day moving average yesterday (~CAD1.2670) for the first time in a month and was sold to about CAD1.2620 today. The (38.2%) retracement of the greenback's rally since the October 21 low (below CAD1.23) is found near CAD1.2640. The next retracement (50%) is around CAD1.2570.  Initial resistance now is likely by CAD1.2680.  The greenback also closed below its 20-day moving average against the Mexican peso yesterday for the first time since November 9.  It has slipped below MN21.00 today for the first time in about two-and-a-half weeks.  With today's loss, the US dollar has retraced (61.8%) of its rally from November 9 low (~MXN20.2750). The move seems exaggerated, and consolidation is likely.  Nearby resistance is seen in the MXN20.05-MXN20.10 area.  Disclaimer
Market Quick Take - December 10, 2021

Market Quick Take - December 10, 2021

Saxo Strategy Team Saxo Strategy Team 10.12.2021 12:10
Macro 2021-12-10 08:30 6 minutes to read Summary:  Risk sentiment has consolidated after sharp gains earlier this week as the market nervously eyes the US November CPI release today from the US and whether this will trigger a more hawkish FOMC meeting next week. The US White House has already been out attempting damage control from the inflation headlines today, saying that the data will not reflect recent declines in gasoline and other prices.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities and particularly tech stocks consolidated a significant chunk of the sharp gains from earlier this week, with speculative sectors getting the worst of it on the day, although most stocks were down on the day. A high US November CPI release today could spook investors as it would raise the anticipation of an even more hawkish FOMC meeting next week. EURUSD – The EURUSD rally attempt from Wednesday faltered in what now looks a mere tactical squeeze ahead of today’s US November CPI report (more below). Given that the slide in EURUSD has largely tracked with the rise in Fed expectations, the degree to which those expectations are adjusted higher or lower in the wake of today’s US CPI data and then next week in the wake of the FOMC meeting Wednesday and ECB meeting Thursday will likely correlate with EURUSD direction, where the focus is on the cycle lows just below 1.1200 for a possible run at 1.1000 on a break lower and the tactical pivot high near 1.1380. USDJPY and JPY crosses – the omicron variant news of some two weeks ago triggered a huge slide in USDJPY just after it was trying to engineer a break above multi-year highs near 114-50. Similar to developments in crude oil and longer US yields, USDJPY has failed to get back to the upper reaches of the recent range since that sell-off, which bottomed out near the 112.50 area – the current trigger zone for a possible further sell-off wave (most like in a scenario of cratering risk sentiment and US treasuries serving as a safe-haven) that could poke at the important 111.00-50 downside pivot zone. Elsewhere, JPY crosses backed up very sharply this week on hopes that the omicron variant will prove mild and won’t impact the growth outlook, but the scale of the rally or squeeze has been modest relative to the prior sell-off. Watching areas like 127.50-128.00 in EURJPY and 79.00 in AUDJPY in coming sessions for whether another wave of JPY strength is in the cards. Crude oil’s (OILUKFEB22 & OILUSJAN22) week-long rally hit the buffers yesterday with Brent and WTI retracing back towards support at their 200-day moving averages at $73 and $69.80 respectively. A study finding the omicron variant is 4.2 times more transmissible than the delta combined with new restrictions among several nations helped weaken the sentiment, and with end of year approaching many traders are increasingly becoming more risk adverse, potentially leading to more fluctuations. Focus today on omicron news, US inflation data and whether the mentioned support level can be maintained. Wheat (WHEATMAR22 & ZWH2) trades near five-week low following three days of losses which accelerated yesterday after the USDA raised its outlook for global stocks. The 3% drop in Chicago also helped drag down the recent highflyers futures for Kansas and Paris milling wheat. Global stock levels at the end of the 2022-23 season received a boost from production upgrades in Russian (1mt) and Australian (2.5mt) while US export slowed with high prices curbing demand. US Treasuries (TLH, TLT).  Yesterday’s 30-year auction showed that the market is not willing to buy long-term US Treasuries at current low yields. The 30-year auction was priced with a high yield of 1.895%, tailing by 3.2bps. Although the tail was smaller than last month’s 5.2bps, it would have been enough to cause a selloff in long-term Treasuries. However, covid distortions kept yields compressed, hence volatility in rates was avoided. Today’s CPI numbers are in focus as a high number is likely to contribute to more upward pressure in the yield curve. What is going on? The US White House was already out attempting damage control on inflation before today’s CPI release. A White House official, economic adviser Brian Deese, was out late yesterday saying that today’s US November CPI release won’t reflect recent drops in the price of key commodities, especially gasoline and natural gas as it is “backward looking”. China property developers formally declared to have defaulted - as Fitch Ratings noted missed interest payments on Evergrande and Kaisa Group Holdings USD bonds as it downgraded these issues to restricted default. USDCNY and USDCNH bounce sharply a day after posting new low for the year - China fixed the USDCNY level at a far weaker level than expected and announced an FX reserve ratio increase to 9%, forcing domestic banks to maintain higher reserves of foreign currencies.  These are rather obvious signals that China would like to avoid a further rise in its currency after a powerful and broad rally that saw both the offshore and onshore yuan posting new highs for the US dollar for the year just this Wednesday. Bitcoin and other cryptocurrencies close sharply lower – with Bitcoin closing at its lowest levels on a weekday since September. Technically, the 40-45k zone looks important for avoiding a more significant capitulation lower after the recent weekend meltdown that took the price some 20% lower to below 43k before support was found. According to coinmarketcap.com, the market cap of the nearly 15.5k cryptocurrencies is currently near $2.26 trillion after peaking near $2.93 trillion in November, a drawdown of over 22%. What are we watching next? US November CPI data release today, expected at 6.8% year-on-year for the headline number and 4.9% at the core, both of which would be the highest readings in decades. Given that expectations are so high, would a slightly hotter than expected number move the needle on a Friday ahead of next week’s important FOMC meeting? A significant beat to the upside just might make a difference, given that the Fed has clearly made a shift toward fighting inflation and would probably need to bring a March 2022 rate hike possibility into its forward guidance. Fed rate expectations for next year are poised near the high for the cycle, suggesting a 0.8% Fed Funds rate (vs. currently 0-0.25%) is priced in through the December 2022 Fed meeting. The EU is set to decide by December 22 whether investments in gas and nuclear energy should be labelled climate friendly. The design of the EU green investment classification system is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition, especially given the need to reduce the usage of coal, the biggest polluter. Economic calendar highlights for today (times GMT) 0905 – ECB President Lagarde, others speaking at panel discussion1300 - Poland National Bank of Poland meeting minutes1330 – US Nov. CPI1500 – US Dec. Preliminary University of Michigan Sentiment Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple Spotify Soundcloud Sticher
Why Isn’t Gold Rallying Along With Inflation?

Why Isn’t Gold Rallying Along With Inflation?

Arkadiusz Sieron Arkadiusz Sieron 05.11.2021 16:20
  Inflation is high and doesn’t seem to be going away anytime soon. However, gold is not rising. The question is – what does the Fed have to do with it? Inflation is not merely transitory, and that’s a fact. Why then isn’t gold rallying? Isn’t it an inflation-hedge? Well, it is - but gold is a lazy employee. It shows up at work only when inflation is high and accelerating; otherwise, it refuses to get its golden butt up and do its job. All right, fine, but inflation is relatively high! So, there have to be other reasons why gold remains stuck around $1,800. First of all, central banks are shifting their monetary policy. Global easing has ended, global tightening is coming! Actually, several central banks have already tightened their stance. For example, among developed countries, New Zealand, Norway, and South Korea have raised interest rates. Brazil, the Czech Republic, Hungary, Mexico, Poland, Romania, and Russia are in the club of monetary policy hawks as well. Even the bank of England could hike its policy rate this year, while the Fed has only announced tapering of its asset purchases. So, although central banks will likely maintain their dovish bias and real interest rates will stay negative, the era of epidemic ultra-loose monetary policy is coming to an end. We all know that neither the interest rates nor the central banks’ balance sheets will return to the pre-pandemic level, but the direction is clear: central banks are starting tightening cycles, no matter how gentle and gradual they will be. This means that monetary policy is no longer supportive of gold. The same applies to fiscal policy. It remains historically lax despite fiscal stimulus being pulled back. Even though Uncle Sam ran a fiscal deficit of $2.8 trillion in fiscal year 2021 - almost three times that of fiscal year 2019 ($0.98 trillion) - it was 12% lower than in fiscal year 2020 ($3.1 trillion). This implies that the fiscal policy is also tightening (despite the fact that it remains extravagantly accommodative), which is quite a headwind for gold. Investors should always look at directional changes, not at absolute levels. What’s more, we are still far from stagflation. We still experience both high inflation and fast GDP growth, as well as an improving labor market. As a reminder, the unemployment rate declined from 5.2% in August to 4.8% in September. The fact that the labor market continues to hold up relatively well is the reason why the so-called Misery Index, i.e., the sum of inflation and unemployment rates, remains moderate despite high inflation. It amounted to 10.19 in September, much below the range of 12.5-20 seen during the Great Inflation of the 1970s (see the chart below). So, the dominant narrative is about both inflation and growth. When people got vaccines, markets ceased to worry about coronavirus and started to expect a strong recovery. Commodity and equity prices are rising, as well as real interest rates. These market trends reflect expectations of more growth than inflation – expectations that hurt gold and made it get stuck around $1,800. Having said that, the case for gold is not lost. Gold bulls should be patient. The growth is going to slow down, and when inflation persists for several months, the pace of real growth will decline even further, shifting the market narrative to worrying about inflation’s negative effects and stagflation. Gold should shine then. Wait, when? Soon. The Fed’s tightening cycle could be a turning point. The US central bank has already announced tapering of quantitative easing, which could erase some downward pressure on gold resulting from the anticipation of this event. Additionally, please remember that every notable market correction coincided with the end of QE, and every recession coincided with the Fed’s tightening cycle. Moreover, don’t forget that gold bottomed in December 2015, just when the Fed started hiking the federal funds rate for the first time since the Great Recession, as the chart below shows. However, when it comes to tapering, the situation is more complicated. The previous tapering was announced in December 2013, started in January 2014, and ended in October 2014. As one can see in the chart above, the price of gold initially increased, but it remained in its downward trend until December 2015 when the Fed started hiking interest rates. Hence, if history is any guide, there are high odds that gold may struggle further for a while before starting to rally next year, which could happen even as soon as June 2022, when the markets expect the first hike in interest rates. Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Retail parks in Poland is good business

Retail parks in Poland is good business

Finance Press Release Finance Press Release 20.12.2021 14:51
PRESS INFO Warsaw, December 20th, 2021 A record year is ahead for the sector of the smaller commercial facilities The growing trend of local awareness and the evolution of shopping habits increased the popularity of commercial convenience stores. Retail parks and small shopping centers have grown in importance, which in result motivates developers to undertake more intense actions. Each quarter, there are more and more investors who are planning to use this format and build commercial facilities. Apart from the flexibility of space and lower rental rates, the advantage of retail parks is their proximity to customers, a key factor in today’s world. - The popularity of smaller retail facilities is best evidenced by the fact that some brands prepare concepts specifically tailored for retail parks and everyday shopping centers. Chain stores have returned to their expansion plans and are starting the talks about leasing space in new locations. The discount sector, by locating its new outlets in retail parks, strengthens its position. Also, fashion brands, which previously limited their activity only to stores in galleries, started to look for new sales channels and thus have been turning up in smaller facilities. New brands are also entering our market, such as the DIY store Hipper.pl, with plans to locate a chain of it’s stores in retail parks - informs Agata Karolina Lasota, Managing Director at LBC Invest. The first three quarters of this year has already brought a greater increase in space in the retail sector than the entire previous year. During this time, the domestic resources increased by almost 330.000 m2 and according to the estimated data, throughout the 2021 the retail space market will be supplied by around 500.000 m2 of new retail space. – Currently, over 460.000 m2 of retail space is under construction nationwide, including 40 retail parks and convenience centers. In this format, over 200.000 m2 of new space will appear on the market this year, making it a historically record result. And developers are still turning up the heat. Retail parks and small shopping centers already account for over 60 percent of investments projects launched in the last quarter. They are usually built in cities with less than 100.000 residents, where there is a shortage of commercial space and cheaper land. It is a good way for the investors to strategically expand their investment portfolio or diversify their real estate portfolio - says Agata Karolina Lasota. New investment groups, with new brands of everyday shopping facilities started to appear on our market, such as the Polish-German investment group 4FI, which debuted with it’s first center called Mozaika in Krakow. Furniture and construction stores remain active and constantly develop their potential. This year, Agata Meble has commissioned new commercial warehouses in Bydgoszcz, while IKEA commissioned it’s one in Szczecin. Castorama in Zary and Leroy Merlin in Bydgoszcz, as well as Leroy Merlin in Kutno, were opened in buildings previously used by Tesco. A former Tesco facility in Warsaw is also being adapted for Leroy Merlin. The Atut Ruczaj Center in Krakow and Galeria Bawóchanka in Belchatow are expanding and building extensions. Andrychow Gallery was opened in December this year. New parks will be brought out to the market, including Saller Park Lipnik retail and service park, Premium Park Lubrza, Zabkowice Slaskie retail park, Sierpc Retail Park, Tuchola Park, S1 Center in Zlotoryja, Multishop Suwalki, Swinoujscie retail park and Stop Shop Zielona Gora. DS Retail Park is planning to open a retail park in Sosnowiec and Rembelszczyzna, and this year the company wants to commission a retail park in Reda. Fortis Investments is preparing further projects, with a total area of ​​17.000 m2, to be built, i.e., in Opoczno, Ciechocinek, Leczyca and Lowicz. The new retail park from DL Invest Group is being built in Mikolow. - Higher capitalization rates in our country, as compared to the European ones, in some cases reaching 7 %, is a strong impulse to invest in this real estate sector. - Agata Karolina Lasota informs. – Recently in the commercial sector, we have mainly seen transactions involving small real properties. Retail parks and convenience centers are attractive assets for investors. This is also confirmed by the large number of the ongoing negotiations regarding this format of the real properties. We are also talking about projects that are currently only at the stage of preparation for construction - comments the director of LBC Invest. - We have recently concluded contracts for the implementation of comprehensive investment processes, including commercialization of retail parks located in Krakow and two smaller cities in Lesser Poland and Pomerania regions. We are planning to start the implementation of the projects next year, and the design works are currently underway. Investors are both the clients from the African continent and Polish companies with whom we have been working successfully for many years - she adds. The growing demand for convenience real properties has resulted in over a dozen transactions this year, involving smaller shopping centers, mainly located in small towns. LCN, the American fund has acquired a number retail parks, as well as leased Auchan hypermarket chains with a total area of 107.600 m2 and located in Szczecin, Rybnik, Slupsk, Gdansk, Nowy Sacz and Lublin. Other facilities, such as Galeria Malta, Galeria Rumia, and Galeria Pestka, despite requiring a modernization, have also changed their owners.
RETAIL INVESTING ACROSS EUROPE  IS SET TO GET COMPETITIVE IN 2022, SAYS SAVILLS

RETAIL INVESTING ACROSS EUROPE IS SET TO GET COMPETITIVE IN 2022, SAYS SAVILLS

Finance Press Release Finance Press Release 22.12.2021 11:03
22 December 2021 Following years of turmoil in retail, 2022 will bring rental growth and increased investment capital to the sector across Europe, according to Savills. The international real estate advisor said that the retail sector is better prepared for changes in consumer habits, while strong retail repricing - which has moved +80bps on average in Europe in the past four years - means retail assets are one of the most competitive real estate sectors. Savills’ European Investment Outlook 2022 identifies best-performing supermarkets and retail warehouses as the most sought-after investment deals, followed by convenience stores, commuting hubs and high street units in strong footfall areas. The report forecasts that prime retail warehouse yields will compress further by 5-10bps on average during the next 12 months, following a 4bps compression in the average prime retail warehouse yield in the last two quarters (to 5.2%). It added that shopping centre yields may start stabilising during 2022, after a 3bps increase to 5.3%. These retail trends are unfolding as investment into European commercial and residential property is on the rise, reaching €78.9bn in Q3 - the highest level recorded in a third-quarter over the past five years. Meanwhile €201.6bn of investment was transacted during the first three quarters of 2021 - a 13.5% jump on last year and a 7.7% increase on the past 5-year average. Savills estimates that the end-year volume will be around €288bn, a 9% increase year-on-year, and a similar total volume of around €290bn in 2022. “These are some stand out figures given the current circumstances,” said Oliver Fraser-Looen, joint head of Regional Investment Advisory EMEA, Savills. “Strong investment activity will continue until the end of the year.” The UK, Germany and France will remain the preferred investment destinations, but as increasing amounts of cross-border capital is invested in the Nordics, the region’s share in the total European volume could continue to expand. Despite growing deal volumes, investors will remain focussed on quality in 2022, particularly in the office sector, and with greater ESG imperatives ahead, property owners will be forced to renovate stock to achieve greener standards or repurpose buildings to embrace social values. Leila Packett, associate director, Regional Investment Advisory EMEA, Savills, said: “This will eventually provide some opportunities for value-add investors. Yet, we do not expect a significant return of the value-add investors at least until 2023, after a significant repricing in secondary asset classes. Historically, we have seen the interest of value-add investors rising in periods when the prime and secondary office yield gap is above 90bps, and during Q3 2021 it was 88bps.” Savills also said greater portfolio diversification would be a theme for years to come, in terms of assets, locations and strategies. The logistics and living sectors will also remain highly sought-after in 2022 and supply and demand imbalances in both sectors will create rental growth. But interest in the alternative sector will further increase as investors seek higher returns in a very low yield environment, said the firm. “Hospitals, universities, data centres, life sciences and urban farming are slowly growing on investors' radars,” said Lydia Brissy, director, Europe research, Savills. “We expect these sectors to gradually emerge as an asset class in the next five years.” Similarly, prime yields may harden by up to 15bps on average in European logistics, while the living sectors may see a 5-10bps yield compression. Michal Stepien, Associate, Investment, Savills Poland, said: “The resumed investor activity is also evident in Poland, where investors follow global trends and growth patterns, looking for stable returns and growth opportunities in order to protect the capital against inflation, as well as for ESG compliance. Industrial is still in the spotlight with offices right behind. There is also a recovering interest in retail, with a particular focus on convenience, standalone supermarkets and retail warehousing, nevertheless, due to limited supply of relevant investment product, the retail sector accounts for less than 14% of the investment volume. A balanced position of shopping centers and more attractive shopping centre yields are conducive to the return of investment capital to the retail sector, however, rising costs of energy and anti-inflation measures of the Central Bank may slow down consumer demand next year, which may adversely affect the turnover of popular chain stores and extend the ‘wait-and-see’ approach to this asset class.”
The battle for commerce with express deliveries

The battle for commerce with express deliveries

Finance Press Release Finance Press Release 16.12.2021 09:58
Warsaw, 15.12.2021 Several companies on our market are already developing their dark store networks, which allow for the delivery of food products within a dozen or so minutes from the order, and new shopping platforms announce their entry onto the Polish market. Things are getting very competitive in the quick commerce segment Quick commerce, which is a segment of express deliveries of basic food products, beverages, sweets, household chemicals and cosmetics, is a format that is now enjoying popularity, both in our country and around the world. Dark stores, distribution microcenters used only to handle orders placed on-line, already operate in the seven largest cities in our country. Due to the limited selection, covering from 1000 to 2000 products, they can’t compete with large retail chains and standard on-line shops offering a huge range of goods. However, they constitute direct competition to small local stores intended for quick, spontaneous shopping to meet the immediate needs. Even so, competition is difficult here due to the narrow range of products. - The development of this form of retail, which guarantees instant deliveries to the customer, favors the strong trend of convenience, related to the expectation of comfortable and easy access to goods. This trend became even more popular during the lockdown. The formula for deliveries within 10-15 minutes, however, requires the creation of a network of properly profiled distribution facilities scattered throughout the city. Dark stores resemble supermarkets measuring several hundred meters, usually from 200 sq m. up to 400 sq m, which are arranged in such a way that the individuals completing the order can efficiently move between the shelves and collect the products in the shortest possible time. They resemble shops, but act as warehouses for storing goods - explains Piotr Szymonski, Director Office Agency at Walter Herz. Free delivery up to 2:00 am Q-commerce on a larger scale began to develop in Poland only this year. The service is popular with a large group of customers. Dark stores offer goods at prices similar to traditional retail outlets. Orders are delivered 7 days a week, also on non-trading Sundays. Lisek, operating in Warsaw, Cracow, Wroclaw, Gdansk, Poznan and Katowice, ensures delivery up to 10 minutes. Completely free delivery is available at JOKR. At Jush, orders over PLN 35 get delivery free of charge. Recent months have brought not only a rapid development of this format in Poland, but also announcements of new large players entering our market. From week to week, companies operating in this segment are expanding their range of activities, providing their service to further city districts. Meanwhile, the express delivery market is already getting crowded. Dark store chains of the first platforms that appeared in Poland, such as Lisek, Jokr, and GetnowX, are growing. The number of Biedronka's distribution points for the Biedronka Express BIEK service, which from this October is being offered in collaboration with Glovo, is growing at a fast pace. This is the second platform that, just like the Lisek App, also functions outside the capital. Deliveries from dark stores scattered in Warsaw, Lodz, Cracow, Gdansk, Poznan and Wroclaw are made within a 2 km radius in a quarter of an hour. Distribution microcenters work throughout the week from 8am to 11pm, and in Warsaw on Fridays and Saturdays even until 2 am. Zabka Future Group chose the Lite E-Commerce start-up, which aims to create new modern convenience solutions. The company has recently decided to launch dark stores and fast food deliveries via the Jush app. This October, Zabka Jush launched in Warsaw. They also plan expansion into the other cities. New purchasing platforms are getting ready to take off in Poland Although the Swyft platform has temporarily suspended its operations after six months, the companies present on our market will soon gain considerable competition. Such companies as Gorillas and Grovy have announced their debuts in Poland. Gorillas, a German start-up specializing in instant deliveries from its own stores-warehouses, forms a project management team in our country. The company, with value that exceeding USD 1 billion just a few months after its establishment, is expanding in Europe. It operates in 15 cities in Germany, as well as in the Netherlands, Great Britain, France, Italy and Belgium. It also made its debut in New York, which will become a hub for the development of the network in the United States. Grovy is also getting ready to enter the Polish market. The platform has already been offering services in the largest cities in Germany and Romania. Now the start-up plans to enter the Polish, Czech and Hungarian markets. Glovo and Wolt specialize in deliveries from various stores. On our market, Glovo cooperates with Biedronka, and in its native Spain, Italy, Portugal, Romania and Ukraine, it operates on the basis of its own distribution facilities. Wolt, on the other hand, wants to launch its Wolt Market, a network of independent virtual supermarkets, in Poland, as it has in the Czech Republic, Denmark and Hungary. Wolt Market is intended to operate only as a dark store and fulfill online orders placed via the Wolt app. The company has launched their first virtual stores in Finland and Greece. One of the first Wolt Market stores also operates in the center of Warsaw. The market is open from 8 am to 11 pm, 7 days a week, and orders over PLN 150 are delivered free of charge within a 1.5 km radius. Soon, Bolt's dark stores are to open in Warsaw. Bolt is another company to offer delivery of goods purchased online within 15 minutes of placing the order. So far, the premiere Bolt Market has been launched only in Tallinn, the capital of Estonia. Pyszne.pl, belonging to the Dutch group Just Eat Takeaway, is also considering extending its services to delivering groceries. However, they do not plan to create their own network of dark stores, but to cooperate with the other stores. Dark stores not in every location - Creating a network of distribution microcenters is a big challenge. The facilities must meet the appropriate location conditions that allow for the rapid shipping of goods. They have to enable express completion of the order from its submission to delivery to the customer's door. Developers of dark stores are looking for space located next to large residential areas in most districts of Warsaw, also in those more distant from the center and in other large cities. They are located not only in commercial buildings, but also on the ground floors of office buildings. The format's potential is best demonstrated by the interest shown by many companies that plan to implement projects on our market - says Piotr SzymoÅ„ski. - The selection of location for dark stores should be based on an analysis of the range and availability of the location, as well as the demographic and transportation aspect. Prospective regions for distribution networks are also those city areas where the implementation of a large number of residential projects is scheduled in the near future. Of course, the technical aspects of the premises should also be taken into account, such as the load-bearing capacity of the ceiling or the ability to charge electric vehicles, which are often used by couriers - adds Piotr SzymoÅ„ski. Market analysis concludes that the constantly growing popularity of online purchases will mean that by 2026, in just 6 years, the value of online sales in Poland will double. Forecasts indicate that the e-commerce sector is facing a period of regular growth. There is still a lot of space for the development of e-commerce in our country. The segment will increase its market share, not only by disseminating new sales formats, but also by increasing the number of online stores operating in our country. In Poland, there are even several times less of them per 1000 inhabitants, compared to some EU countries. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
Warsaw office market with good prospects for the future

Warsaw office market with good prospects for the future

Finance Press Release Finance Press Release 25.11.2021 15:53
More expensive offices in Warsaw, is it possible in a pandemic? - There are over 370 thousand sq m. of office space under construction in Warsaw. They are to be commissioned in the period between 2021 and 2024. This is less than half of the offices built in the recent years, before 2020. The Warsaw market slowed down significantly. Moreover, the level of new office construction is at a record low, while more than twice as much office space is being built on the regional markets. It should not be expected that this will change in the next 2-3 years. Developers have not been announcing the implementation of new projects - says Mateusz Strzelecki, Partner / Head of Regional Markets w Walter Herz. – According to our estimates, in 2021 in total almost 340 thousand sq m. of offices will be completed. In 2022, if the deadlines are met, the office resources in Warsaw have a chance to increase by just over 220 thousand sq m. of space. In the years 2023-2024, the first stage of Studio project by Skanska and The Bridge investment by Ghelamco are to be commissioned. They are among the few investments that investors have decided to build this year – adds Mateusz Strzelecki. Meanwhile, as Mateusz Strzelecki points out, in recent months we have been able to observe the resurgence of tenant activity, which in the third quarter of this year, resulted in a one third higher lease volume than in the same period last year. - This bodes well for the Warsaw market, the future of which looks bright. What is more, there is a noticeable increase in interest in renting by companies from the modern business services sector and those operating in the modern technology segment. The decisions of most companies to lease larger space than previously occupied are also a good prognosis. Only every tenth tenant has decided to reduce space this year - says Mateusz Strzelecki. The expert notes that if the demand continues in an upward trend, and developers continue to withhold further projects in the next two years, we can expect not only a decrease in the level of office vacancies in Warsaw, but also an increase in market rates. – In the upcoming quarters, we may have to deal with an increase in prices of flexible space operators due to their current high occupancy - adds Mateusz Strzelecki. Today, the Warsaw market offers 6.16 million sq m. of modern office space. As a result of its pre-pandemic, rapid growth, modern office buildings are now being completed. This year, over a dozen investments have been commissioned, including Warsaw Unit by Ghelamco (59 thousand sq m.), Skyliner by Karimpol (48,9 thousand sq m.), Generation Park Y by Skanska (47,6 thousand sq m.), Galwan and Plater office buildings in Fabryka Norblina belonging to Capital Park Group (40 thousand sq m.) as well as Widok Towers by Commerz Real and S+B Gruppe (28,6 thousand sq m.). Over 12 per cent of offices are awaiting tenants in Warsaw. The vacancy rate increased by less than 3 percent during this year. Noteworthy, however, is the high level of commercialization of modern facilities that entered the market. According to Walter Herz, three-quarters of space in the office buildings is secured with pre-let contracts, which indicates a high demand for work space of the highest standard. Companies are making decisions more and more boldly, as evidenced by the overwhelming share of new contracts in the total lease volume. In addition, as much as 60 per cent of space contracted in Warsaw in the first three quarters of this year, has been leased in buildings located in the very center of the city, which hosts top-class office buildings. This goes hand in hand with the increase in the social function of offices. Despite the consolidation of new work models, the offices retained the status of the central place of management. After a year and a half of experience with remote work, employers opt for a traditional, stationary model of work. It turned out that working in teams and exchanging knowledge between people is much more effective in direct contact than in a remote system. In addition, the office is irreplaceable when it comes to building relationships and community, as well as a sense of belonging to the team. In order to convince employees to return to their offices, companies must, however, remodel the space so that it provides the greatest possible comfort, friendly atmosphere and diversity, and is more flexible. The analysis shows that Warsaw offices are now about 40-50 per cent full. The next months will bring further changes in the way of using the workspace. Certainly, the is a visible trend to limit permanent workstations, so that one can use the entire office freely and stay in constant contact with other people. It will also become very important to use digital solutions to increase efficiency and support the well-being of employees. The key will be, among others, using appropriate applications and creating special zones dedicated to remote communication, which will guarantee high-quality, stable connection. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
SAVILLS: PROPERTY MARKET HAS ADJUSTED TO THE NEW REALITY AND REGAINS MOMENTUM

SAVILLS: PROPERTY MARKET HAS ADJUSTED TO THE NEW REALITY AND REGAINS MOMENTUM

Finance Press Release Finance Press Release 15.12.2021 10:30
SAVILLS: PROPERTY MARKET HAS ADJUSTED TO THE NEW REALITY AND REGAINS MOMENTUM 14 December 2021 Real estate advisory firm Savills presents a preliminary summary of 2021 and predicts trends for the coming months. The commercial real estate market in Poland is regaining momentum but has changed significantly, reveals Savills. Key trends expected to dominate in the year ahead include rental growth, increasing ESG awareness and a focus on innovation. As expected, the vaccine roll-out has had a positive impact on the commercial property market in 2021. With investors remaining active, this year’s investment is likely to hit EUR 5 billion. Savills expects recent investment trends to continue and industrial assets to account for close to half of the total transaction volume by the end of the year. “Although the real estate market has undoubtedly bounced back in 2021, it has remained mired in uncertainty. In addition to concerns about the course of the pandemic, there were also geopolitical and economic risks. This did not however prevent tenants and investors from gradually resuming activity. Key metrics for the past 12 months illustrating investment volumes and office take-up are likely to remain close to last year’s levels amid a positive outlook for the future. A bright exception is the warehouse sector, which - undeterred by the pandemic - is already setting new highs. The commercial real estate market has adjusted to the new reality and is beginning to return to form,” says Tomasz Buras, CEO, Savills Poland. 2021 was the year of searching for an optimal work model on the office market. Many tenants decided to introduce a permanent hybrid scheme combining in-office work and working from home. According to Savills data, Poland’s total office stock topped 12,315,000 sq m. Flexible offices continued to gain traction with flexible office providers shifting their focus to expansion in regional cities. The Build-to-Rent (multifamily) sector is gradually gaining ground on the Polish market. According to Savills, at the end of 2021 there were close to 40 BtR developments in Poland. Projects that are currently under construction will soon double the stock of rental apartments. As high-tech and e-commerce companies continue to enjoy brisk expansion, these sectors are seeing their headcount grow. According to Savills, even though this has not translated directly into more demand for offices yet, there will be a growing requirement for modern housing as the trend of hybrid working intensifies. The online penetration rate (share of total retail sales) has risen from around 5% pre-pandemic to close to 9% in 2021. The development of omnichannel strategies combining online and offline shopping has gathered pace. The growth of e-commerce remains one of the key drivers of demand for logistics space. Retail has also seen the rise of dark stores - small in-town distribution centres helping shorten delivery times. In 2021, this format was launched in Poland, among others, by Å»abka. Such platforms are also operated by Lisek, Jokr and Swyft, while Biedronka has teamed up with Glovo. According to Savills, 2022 is expected to see another spike in construction costs and land prices, as well as an upward pressure on wages amid a risk of rising inflation. This will, first of all, push service charges up. Tenants will also be affected by exchange rate differences as euro-denominated rents remain a market standard. In addition, 2022 is likely to be the first year in many to witness warehouse and office rental rates go up. “There is potential for the investment market to see more buying in 2022. Investor demand for industrial assets will remain strong while the PRS will increase its market share. Several spectacular office projects are likely to change hands. Next year’s investment volume is expected to come close to pre-pandemic levels. Commercial real estate is considered a safe haven in times of high volatility on currency, stock exchange and bond markets, driving investor activity,” adds Tomasz Buras, Savills Poland. Next year is also shaping up to be a time when ESG strategies will begin to gain prominence on the real estate market. The importance of ESG is rising as a result of the European Union’s taxonomy, or the change of regulations on non-financial sustainability reporting and the entry into force of the CSRD, as well as tenants’ preferences. ESG is not only about a concern for the environment, but also for the human being. According to Savills, this will be visible on the warehouse market, where developers wanting to stand out will also begin to focus on the second social pillar of ESG, i.e. the human aspect, in addition to investing in energy efficiency. On the office market there will be marked differences between ESG compliant buildings and those whose owners will fail to take action in this period of change. Today, both older office buildings and properties in non-central locations are faced with refinancing challenges. Prospective buyers are, however, beginning to look for existing buildings with an intention to upgrade or sometimes repurpose them, or even to pull them down. This is true not only for office assets. Warehouse developers have also become keener to engage in brownfield projects in order to secure good locations. A dichotomy or division of properties into buildings that may soon have to be repurposed for lack of other options and those that have been upgraded will become visible for example in Warsaw’s SÅ‚użewiec district. Office buildings in that area meeting high standards will be able to attract cost-sensitive tenants with an opportunity to bring rents down. Such buildings may, therefore, become the big winners of the pandemic, says Savills. In 2022, the Warsaw office market is likely to begin to slowly switch to a landlord’s market. The office development pipeline is currently at its lowest in 10 years. Savills forecasts that as office buildings whose construction began before the pandemic are gradually filling up with tenants, the second half of the year may see the first signs of an undersupply and landlords gaining the upper hand in negotiations. This trend is already apparent in prime office buildings in Warsaw. Another top trend for 2022 according to Savills is innovation comprising the implementation of new technologies in real estate (proptech) and the use of big data in property management. The drive towards more automation is expected in manufacturing facilities, office buildings and autonomous retail stores. Looking ahead, modern data analytics tools will be used for a growing number of tasks in property management and valuation.
Real estate with a breath of fresh air

Real estate with a breath of fresh air

Finance Press Release Finance Press Release 12.01.2022 14:30
PRESS RELEASE Warsaw, 11.01.2021 Commercial real estate market in Poland has come a long way since the spring of 2020. Never before have so many changes been made in such a short time. Adaptation to new conditions turned out to be the most difficult for hotels and retail. For the warehouse market, in turn, the reshuffling of sales and deliveries became a springboard for a series of records. The offices returned in a new form. Nowadays, the new trends that will shape the market in the upcoming years, lead the way for the real estate sector. Experts from Walter Herz consulting company comment on what is changing. Offices in demand - Despite the popularization of home office and the hybrid work system, we cannot speak of a revolution on the office market. The situation in the sector is quite stable. However, the way the space is used is changing. Tenants decide to extend contracts and change the arrangement of space, adapting it to the needs of employees in the new market environment. Some companies reduce space and maximize its use. Co-working is trending. Companies create more space for team work, integration and meetings - informs Mateusz Strzelecki, Partner / Head of Regional Markets at Walter Herz. Mateusz Strzelecki expects an explosion of relocation to flexible offices this year. - This tendency was already visible last year, but we expect an increase in the activity of companies this year. This is due to the fact that nowadays, tenants need more time to decide on the new office, even a year or a year and a half - admits Mateusz Strzelecki. Mateusz Strzelecki also points to a positive symptom visible on the market related to the return of foreign companies that have been actively looking for locations for their headquarters in our country since autumn last year. Strzelecki also speaks of the great boom seen on the flex space market segment. - Tenants now prefer shorter, flexible contracts with different options of space. Hence, the growing demand for instant offices and co-working spaces is growing. They offer a full range of services and short lease terms, which attracts tenants. They are most often complementary to traditional spaces. The resources of flexible space are growing rapidly and are already provided by the majority of the most modern facilities. In 2022, the potential of this segment will increase – predicts Mateusz Strzelecki. Frozen projects However, Mateusz Strzelecki no longer speaks of an increase in the resources of traditional office space on the market with such great optimism - The amount of space under construction, especially on the Warsaw market, is the lowest in a decade and there are no signs that this will change in the near future. The situation is better on the regional markets, while in Warsaw most of the large office investments have already been completed, and the remaining construction projects are nearly finished. Almost half of the space in the projects under construction already has tenants. Over time, the free space will shrink and the market offer will become smaller. There is a supply gap on the horizon in the next two years, as only a small number of projects is under implementation. Low supply with higher expected demand may translate into optimization of lease terms on the part of building owners, and even an increase in rental rates in the best buildings in central locations, which are currently the most popular. Increasingly higher utility prices will, in turn, affect the increase in service charges - notes Mateusz Strzelecki. - The growing construction costs related to high inflation and an increase in interest rates do not encourage investors to act. Prices for building materials, services, land and wages are rising. We can expect this trend to continue this year. Estimates show that the cost of delivering an office building to the market has increased by over 30 per cent, since the beginning of the pandemic. In addition, there are difficulties related to the timely delivery of materials - says Mateusz Strzelecki. Warehouse sector is hot BartÅ‚omiej Zagrodnik, Managing Partner/CEO of Walter Herz, points out that thanks to the large-scale office buildings that have been commissioned last year and which constitute attractive assets, this year's value of transactions on the investment market may reach the level seen in Poland before the pandemic. - In 2021, the transaction volume will probably be similar to the one recorded last year. The warehouse and industrial sector will account for almost a half of the total value. The demand for logistics real estate is breaking records not only on our market. In Poland, convenience-type facilities, retail parks and local daily service centers providing access to everyday goods are also gaining importance. Investors also appreciate more and more projects offering flats for institutional rental, student dormitories, retirement homes and nursing homes, which guarantee lasting capital security and an attractive level of return - informs BartÅ‚omiej Zagrodnik. - The pandemic has significantly boosted the development of the warehouse real estate market. A record amount of space is under construction all over the country. The historically high new supply is followed by an equally high demand, which was a third higher in the first three quarters of 2021 than in the corresponding period a year earlier. This is a trend that will continue also this year due to the further development of e-commerce and nearshoring, locating production closer to the outlet zone and striving to shorten the supply chain – explains BartÅ‚omiej Zagrodnik. New concepts BartÅ‚omiej Zagrodnik points out that more and more warehouses built in the new standard will enter the market. They will reach the height of 12 m. - Developers are also noticing great interest in last mile logistics facilities, located close to large urban agglomerations, and will implement more such projects. These types of facilities are particularly popular among distributors and delivery companies, which are associated with the boom in the e-commerce sector. This year, the dark store concept, which debuted on our market in 2021, will also be popularized in Poland. Networks of distribution microcenters, resembling shops, but created exclusively to handle online orders with express delivery in several minutes, will be expanded, which are already operating in the seven largest cities in the country – informs BartÅ‚omiej Zagrodnik. Walter Herz specialists agree that commercial investments in Poland have chosen the multiple functionality course. Among the projects prepared for construction, mixed-use complexes implemented in several stages predominate. The purpose of designing part of the investment is also to supplement the development with additional functions, as is the case with the office building in SÅ‚użewiec in Warsaw. - We could observe the implementation of investments with residential, commercial, service, entertainment and hotel functions in major cities in the country even before the pandemic. Now, such facilities have dominated the sphere of new investments. Projects built in line with sustainable development meet not only the expectations of today's investors, but also the needs of office users who appreciate the advantages of the local area even more, but expect a comprehensive offer - says Piotr SzymoÅ„ski, Director Office Agency at Walter Herz. - In Warsaw, the implementation of new, large-scale mixed-use investments is scheduled, among others, in the districts of Bielany and Å»eraÅ„. Complexes of this type will also be built in Kabaty and OkÄ™cie – says Piotr SzymoÅ„ski. More and more green - When outlining outstanding trends, it is impossible not to mention the ESG (Environmental, Social and Corporate Governance) standards, which are becoming an increasingly important criterion in assessing the value of commercial real estate. The building's efficiency, emissivity and the comfort it provides to its users, confirmed by certificates, have become a key issue for investors. The environmental aspect related to projects in the face of climate change is already as important as the financial profit and, in the context of EU directives, to a large extent influences business decisions. Sustainable investments achieve higher market valuations and are better rated by financial institutions - says Piotr SzymoÅ„ski. Piotr SzymoÅ„ski expects further, more and more detailed regulations on ESG. - We are observing an increasing desire to reduce operating costs and minimize the impact on the planet through the use of energy-saving solutions. Facilities that take into account the convenience of users are also more popular among tenants. Companies pay attention to how the space in which they work affects the natural environment. Some organizations only work with entities that represent similar standards in this field. Therefore, it can be expected that year to year there will be more "green" buildings on the market. We can also expect an increase in market competitiveness in this respect – adds Piotr SzymoÅ„ski. Aboout Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
GWENT Masters Season 3 Concludes! New GWENT Update Coming Tomorrow!

GWENT Masters Season 3 Concludes! New GWENT Update Coming Tomorrow!

Finance Press Release Finance Press Release 06.12.2021 14:27
CD PROJEKT RED announces that Alexander "TLG_Cyberz" Schmidt has claimed the ultimate victory in the Season 3 GWENT World Masters tournament this past weekend, earning the title of GWENT World Champion in the official Witcher Card Game esports series. The season's grand finale tournament played out over the course of Saturday and Sunday, December 4th-5th. Streamed live on Twitch in its entirety, it saw 8 of the best GWENT players from around the world competing in high-stakes battles for a share of the $71,000 prize pool and the title of GWENT World Champion. Relive GWENT World Masters on the official CD PROJEKT RED Twitch channel. The final tournament prize pool distribution and standings are as follows: WINNERAlexander "TLG_Cyberz" Schmidt (Germany)FINALISTSAlexander "TLG_Cyberz" Schmidt (Germany) — $36,140Ilya "BigKuKuRUzina35" Lyapin (Russia) — $9,230SEMIFINALISTSZhang "lord-triss" Yusheng (China) — $8,305Oleg "Akela114" Nikolaev (Russia) — $7,455QUARTERFINALISTSAleksander "TLG_Pajabol" Owczarek (Poland) — $3,480PaweÅ‚ "kams134" Skoroda (Poland) — $2,840Damian "TailBot" Kaźmierczak (Poland) — $1,775Elias "theshaggynuts" Sagmeister (Austria) — $1,775 During the event, before the final match, CD PROJEKT RED also revealed that a new content update for GWENT is coming Tuesday, December 7th. The update will add 12 new cards (2 per each faction), while also introducing a number of regular balance changes. The video overview for the update is available on Twitch, via the GWENT World Masters tournament recording, as well as on GWENT's official YouTube channel. CD PROJEKT RED would like to thank all participants and everyone who watched live to help make GWENT World Masters such a fantastic event.For a complete overview of GWENT Masters — the official esports series for GWENT: The Witcher Card Game — including the ruleset, format, and tournament dates, visit masters.playgwent.com.GWENT: The Witcher Card Game is available for free on PC via GOG.COM and Steam, Apple M1 Macs running macOS, as well as on Android and iOS. For more information on GWENT, visit playgwent.com.   Source: CD Projekt
Hotels increase their accommodation base

Hotels increase their accommodation base

Finance Press Release Finance Press Release 21.01.2022 11:08
PRESS RELEASE Warsaw, 17.01.2022 The growing interest in domestic tourism is conducive to the development of accommodation facilities in resorts. Interesting city hotels are also opening. The current year should bring stabilization in the hotel industry as more countries move from treating the covid as pandemic to endemic - Speaking of the current shape of the hotel sector, it is difficult to treat the market as a whole. Today we are dealing with two markets. The first of them - the city hotel market, considered safer before the pandemic, due to a more balanced structure of guests, as well as less seasonality than the second hotel market, that is tourist hotels. Currently, it is the latter market that is doing much better and is recovering from losses. City hotels, on the other hand, largely focus on maintaining the current profitability, however, in the fall, there was a recovery in demand from business guests and MICE. The results that the industry finished 2021 with are far from those before the market changes, but last year we could already see a recovery in demand and average prices on the market - says Katarzyna Tencza, Associate Director Investment & Hospitality at Walter Herz. Although there were fewer foreign guests, the hunger for travel and the uncertainty associated with overseas travel meant that in July and August last year, about 190 thousand more Poles stayed in hotels than in the summer of 2019. Demand accumulated in the summer as a result of, among others, the restrictions that hotels were subject to in the winter and spring months. The summer season in the resorts was very successful. The beginning of autumn in the resorts brought a sustained high demand for leisure and group stays. In November and December, the situation was clearly worse, with the exception of the holiday season, which was another opportunity for hotels in holiday destinations to increase revenues. - Good results obtained by resort facilities during the summer do not mean that the entire year 2021 can be considered successful by the industry. The turnover in the entire sector was lower than that achieved before the pandemic. The year 2022 should bring a continuation of the recovery in demand in the city markets - says Katarzyna Tencza. Ownership changes Despite the difficulties faced by hotels, so far we have not dealt with many transactions on our market. Especially that the largest market players mostly refrain from acquiring assets in this segment. The mass bankruptcies which were to happen in 2021, did not take place. Hotels for sale are not very attractive to investors due to location or other factors. The transactions took place mainly on regional markets. For example, NK Rysy company purchased Hotel Rysy, located in the very center of Zakopane. The unfinished Ewerdin hotel in Swinoujscie was also sold. In the second half of the year, a 100-room hotel located in the center of Cracow was also sold. We could also observe transactions concerning hotel facilities intended for other functions. Orbis has signed a preliminary agreement for the sale of the Ibis Hotel in Kielce, which is to be transformed into a different function facility. The deserted Astoria hotel in Klodzko was sold to a developer from Cracow, who after the renovation, will probably offer retail and service space. Polkomtel bought the Ossa hotel located in Ossa near Rawa Mazowiecka, in order to build a rehabilitation center. Polski Holding Hotelowy is also active on the market, which carries out the process of consolidation of facilities providing hotel services, owned by state-owned companies. PHH concluded a conditional agreement for the purchase of Geovita SA, part of the Polish Oil and Gas Mining Group, which manages several recreational facilities throughout Poland. The holding has also signed a conditional agreement with PGE Polska Grupa Energetyczna for the purchase of ten hotels and facilities belonging to Elbest, one of its companies that owns hotels, including in Krynica, MiÄ™dzyzdroje, Myczkowce nad Solina as well as facilities in Krasnobrod and Szklarska Poreba. Polski Holding Hotelowy has also signed conditional agreements for the purchase of a controlling stake in Interferie and shares in Interferie Medical SPA, companies belonging to the KGHM Group, thanks to which it will receive another six properties. New, high-class facilities in resorts In 2021, holiday resorts expanded their offer of high-quality hotel facilities. The recent openings are, of course, the result of investment processes initiated before the market turmoil. Tourist accommodation resources in the country increased, among others, thanks to the opening of the Radisson Resort hotel in Kolobrzeg with 209 rooms and an aquapark, the five-star Crystal Mountain hotel in WisÅ‚a with almost 500 rooms and an aquapark, and the 124-room Tremonti Ski&Bike Resort complex in Karpacz. Despite the difficulties, the hotel market continues to expand its resource base. New seaside hotel investments, as in previous years, are mostly located on the line between Swinoujscie and Kolobrzeg. Hotel investments in this region are mostly condo hotels. The largest projects include the Wave MiÄ™dzyzdroje Resort & SPA hotel with 393 suites, Aqua Resort in Miedzyzdroje with 300 rooms and an aquapark, 435-room Radisson Blu Resort in Miedzywodzie, Hotel GoÅ‚Ä™biewski in Pobierowo with approximately 1400 rooms, PINEA Resort & Apartments in Pobierowo with 138 apartments, 266-room Mövenpick in Kolobrzeg, Baltic Wave in Kolobrzeg which is to offer 468 suites. Polish mountains offer interesting hotel investments, also largely sold in the condo system, Among the most interesting projects are Elements Hotel & SPA in Swieradow Zdroj with 289 rooms, Sanssouci Karpacz MGallery Hotel Collection with 110 rooms, Movenpick in Karpacz with 126 rooms, Mövenpick Zakopane Imperial Hotel with 130 rooms, Infinity Zieleniec Ski & SPA in Duszniki Zdroj with 328 apartments, and Linden Hotel & Resort in Szklarska Poreba with 137 rooms. New city hotels - Hotel chains previously focused mainly on municipal investments, are now very active also in the holiday destinations. In addition, smaller regional cities are gaining in importance. Unfortunately, high prices of investment plots and fierce competition in the fight for land from investors developing apartments for rent and dormitories, as well as rising construction costs make it more and more difficult to budget for the new hotel projects. Banks are still very cautious about financing hotel investments - informs Katarzyna Tencza. The investment interest in the sector is mainly in tourist destinations, but urban locations can also offer visitors new, interesting facilities. Last year saw the opening of such facilities as the ibis Styles Kraków Centrum hotel with 259 rooms, NYX Hotel Warsaw of the Leonardo Hotels chain with 331 rooms, located in the Varso Place complex near the Warsaw Central Station, Tulip Residences Warsaw Targowa hotel with 110 units, and Mercure Katowice Centrum with 268 rooms. In addition, the 195-room Mercure Kraków Fabryczna City hotel appeared on the Cracow market, 300-room AC Hotel by Marriott Kraków and Courtyard by Marriott Szczecin City hotel was opened in the Posejdon complex in Szczecin. It offers134 rooms. In WrocÅ‚aw, guests were welcomed by the Jazz aparthotel with 62 rooms and Hotel Herbal with 66 rooms, and at the end of last year, Dwór Uphagena Arche Hotel GdaÅ„sk with 145 rooms was opened in Gdansk. The Olsztyn market welcomed the 105-room Hampton by Hilton Olsztyn hotel. This year, the city hotel market will be supplied with a dozen or so new facilities under the brands of international and Polish brands. Most of them are hotels for which investment decisions were made before the pandemic. The Warsaw market is to be supplied, among others, by 238-room Focus Hotel Premium Warszawa located in Mokotow, 192-room Staybridge Suites Warszawa Ursynów, 448-room Royal Tulip Warsaw Apartments in Unique Tower building on Grzybowska Street, 96-room Autograph Collection by Marriott International in Warsaw's Old Town, or 66-room Flaner Hotel WorldHotels Crafted Collection. In Cracow, a 216-room Hyatt Place Kraków hotel, 125-room Autograph Collection by Marriott International, 116-room Curio Collection by Hilton Hotel Saski Kraków, 53-room Garamond Boutique Hotel Tribute Portfolio, and 173-room Hampton by Hilton Krakow Airport hotel are to open next year. A 130-room B&B hotel is to welcome guests in Lublin, and a 122-room Hampton by Hilton BiaÅ‚ystok is to be commissioned in Bialystok. The 201-room Q Hotel Plus WrocÅ‚aw Bielany will open in Wroclaw and the former Sofitel Wroclaw Old Town hotel with 205 rooms will reopen under the Wyndham brand. More challenges The rapidly changing market conditions mean that the industry is facing new challenges. The greatest difficulties that hotels will have to grapple with in the near future are the rising costs of living and the lack of employees. Problems are also related to the recovery of demand from corporate guests, the MICE sector and foreign tourists. Rises in energy, gas and garbage disposal prices, and rising labor costs, are making it difficult for the sector to recover. Growing inflation driving the costs of maintaining facilities is forcing a rise in accommodation prices. We can expect an increase in accommodation prices in the upcoming months, both in holiday destinations and urban locations. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
2022: The office market in transition

2022: The office market in transition

Finance Press Release Finance Press Release 31.01.2022 15:40
PRESS RELEASE Warsaw, 31.01.2022 Bartłomiej Zagrodnik, Managing Partner/CEO of Walter Herz In the upcoming time, modern workplaces, full of new technologies and creating a friendly environment for users, will gain more and more importance. Office buildings operating in accordance with ESG principles, new environmental, social and corporate governance, especially those located in the city centers will take the leading position. Further changes on the office market will be largely determined by the pace of adaptation of the hybrid work model in companies. If we look at today's market, we can see that hybrid work is slowly becoming the norm. Companies are open to this model, which is related to the preferences of employees, who more and more often expect employers to be more flexible in the choice of the form of work and working hours. Many young people base their interest in the job offer and the willingness to take part in the recruitment on it. Therefore, in the upcoming years, offices will evolve into spaces adapted to the rotational work model. Clearly, it is not possible to introduce a division into remote and office work in all sectors. However, for example, in the area of IT, finance, administration and accounting, or services for business, marketing, customer service and HR, we can expect a gradual spread of the hybrid work model. Flexible rental option In the upcoming years, some companies will probably decide to reduce the amount of office space they occupy. Although the scale of this phenomenon so far, contrary to appearances, is not as large as it may be assumed, the tendency is visible. Certainly, tenants will also look for increasingly flexible solutions, thanks to which they will be able to use office space in many ways, adapting it on an ongoing basis to the changing needs of the company. The number of companies that will decide on the core & flex option, assuming a combination of traditional space and the use of flexible space, will increase. This direction in the selection of space for work by entrepreneurs is noticed by the owners of office real estate, who include flexible spaces in the pool of amenities in their buildings. It is also grist to the mill to the companies offering flex space. The segment is systematically growing. This year, more coworking spaces are scheduled to be opened all over Poland. It is likely that an increasingly popular option will also be subscriptions to access coworking networks with space available in various locations. It should be noted that buildings located in central parts of the cities are now even more popular than before. This is visible in, for example, last year's lease structure in Warsaw, where most of the leased space was located in the city center. The offices themselves are also changing. Their space is even more adapted to interactive group work. It gains open space, which, with low office occupancy, gives employees a sense of greater comfort. At the same time, access to quiet working areas and social areas is also important. New investors We are glad that many entities are planning to enter the Polish market. It will result in spaces potentially reduced by some industries, gaining new occupants. One of the main sectors that has been dynamically developing in Poland for years, and is the tenant of a large part of offices is the industry that provides modern services for business. Growing employment in this segment is related to the constant influx of new investors to our country and the development of organizations already present on the Polish market. Large-scale recruitment is taking place in the sector. Most jobs are offered today by companies from Great Britain, Switzerland, the Netherlands, Belgium and Germany, which have recently decided to transfer their services to our country. Sector companies are constantly opening new recruitment processes, but there are fewer candidates than job positions. Also in this industry, the expectations of employees and employers differ. Most of the employees, who are generally flooded with job offers, expect to work in a hybrid or fully remote system, while the employers want to return to the offices. I believe that this year we can expect more tenant activity, which will translate into a decline in the office vacancy rate in the country. Across the world, we can already observe a great return to offices. Symptoms of the reversal of the downward trend in the office sector could already be observed on our market in the last quarter of 2021. In Warsaw, in the last three months of last year, tenant activity returned to the level seen before the pandemic. Only the fourth quarter of last year was responsible for as much as 40 per cent of space leased on the Warsaw market throughout all of 2021. Last year, the demand for Warsaw offices reached almost 650 thousand sq m. of space, while almost 325 thousand sq m. of new offices were launched onto the market. Almost 80 per cent of the commissioned space is located in the center. Similarly, most of the contracted offices are located centrally. Demand is rising, supply is dropping Unfortunately, most office investments are still frozen. Developers are cautious about building new projects. In Warsaw, half as much office space is under construction compared to 2019. Investments are being slowed down by the rapidly growing costs of real estate development, amidst unstable market conditions. If the situation does not change and new projects are not launched in the next 2-3 years, we may have a shortage of space in the main office markets in the country. On the other hand, the activity of investors is growing, but they have more and more requirements in terms of the quality of buildings, including ESG. There is a growing demand for modern office buildings that meet restrictive requirements related to ecological parameters, located in the largest cities in the country. The estimated value of the transaction volume on the investment market in Poland in 2021, is similar to the level achieved in 2020. However, we expect an increase in the dynamics of the investment market in the upcoming months and a greater inflow of capital to Poland. There are many transactions concerning projects from the office segment that have recently entered the market that are being negotiated nowadays, therefore this year should bring an improvement in results. Critical ESG ESG issues will be of key importance for investors' decisions. It is not only about the growing general awareness of sustainable development and the impact of construction and buildings on the environment, but also about the adopted requirements and the related need to report on ESG activities. Investment strategies will be closely connected to the acquisition of assets and cooperation with companies that offer a product that meets environmental requirements. It will have a significant impact on the real estate market in the upcoming years and the value of assets. Investors and tenants will expect low-emission office buildings, or plans to achieve that goal. Facilities offering solutions in the area of ​​climate technologies will gain a competitive advantage. Trends related to the certification of buildings in terms of user-friendly impact and guaranteeing their full safety, will also become stronger. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
Rise.pl opens a branch in Lublin

Rise.pl opens a branch in Lublin

Finance Press Release Finance Press Release 02.02.2022 11:13
PRESS RELESE Warsaw, 02.02.2022 Rise.pl company has leased 1 600 sq m. of space in the CZ Office Park complex located at the intersection of Aleja KraÅ›nicka and NaÅ‚Ä™czowska Streets in Lublin. In June 2022, the provider of flexible workplaces solutions will offer a modern flex office space in the new location. Walter Herz supported the operator in the process of selecting space and negotiating lease terms. Rise.pl will launch instant offices and coworking spaces in CZ Office Park, an A-class office complex in Lublin. Tenants will also be able to use event spaces, 11 conference rooms, a chillout zone with a pool table and game systems, as well as an internal bar and cafeteria, kitchen and reception. The Lublin branch is the 13th location of Rise.pl in Poland, which also operates under the Chillispaces brand. The provider of flexible work solutions offers flex space in seven offices in Cracow, two offices in Lodz and branches located in Wroclaw and Rzeszow. Each office is tailored to the needs of the local businesses and allows for quick expansion. - We chose Lublin because we see great potential in this city for our industry, among others due to the fact that many companies from the IT sector and the outsourcing industry operate there. Moreover, Lublin is a very open business center that encourages companies to invest - says Katarzyna Augustyn, Sales and Marketing Director at Rise.pl. - When choosing the building in which we would open our first office in Lublin, we realized that the first location in the city is very important for the brand and will become a showcase and a point of reference for our further development. Therefore, entering the Lublin market required the selection of an outstanding property to display the quality and style we want to be identified with - says Katarzyna Augustyn. The operator ensures that the offices under the Rise.pl brand are arranged in such a way that they are not only comfortable places to work, with high technical standards and parameters related to safety, but also original spaces, with tasteful interiors, where one can not only work comfortably, but also spend quality time. Rise.pl has extensive development plans. The company intends to gradually expand the network of services so that the flexible offices offered by the company are available in all regions of the country. Lublin is the second location in Eastern Poland, after Rzeszow, for which Rise.pl has had extensive expansion plans for a long time. In the next two years, the company plans on launching flexible offices also in Szczecin, Poznan, Wroclaw, Opole, Katowice, Gliwice and Warsaw. - The concluded lease transaction is an important step for the development of Lublin's office infrastructure. Thanks to this decision, the city will gain the first modern flex office space. Due to the changes in ​​tenant preferences that have taken place on the market over the last two years, instant offices is a sector that will now develop even faster. Adoption of the long-term operating strategies by companies from the industry is confirmed by a 10-year lease period in CZ Office Park in Lublin. We are glad that we can contribute to the growth of the flexible work space market and participate in the transformation process that is currently taking place in the office segment in our country. Thanks to the wide range of office solutions and an increasingly extensive network of services offered by operators of flexible office spaces, tenants can work in a convenient place, time and form all over Poland - says Mateusz Strzelecki, Partner/Head of Regional Markets at Walter Herz. - Rise.pl was looking for a mixed-use space that would combine both a coworking space and independent offices for larger office segments, as well as full conference and event services. The lease of space in CZ Office Park was determined primarily by the unrivaled quality of the offered space, which allows for any configuration of office zones and the vicinity of key transport hubs in the city - informs Mateusz Dembski-Kornaga, Senior Negotiator at Walter Herz. - We are very pleased with Rise.pl’s investment, which is an important element of the city's economic ecosystem. The presence of such a valued brand in Lublin is a clear signal that the city's investment potential remains high, despite the economic turmoil on a national scale. Over the last several months, we have observed an increasing interest in flexible space on the market, which is reflected in the profile of the projects we handle. The space offered by Rise.pl will certainly become an important point on the map of business events in Lublin - says Igor Niewiadomski, coordinator of the Investor Assistance Office of the Lublin City Office, which supported the project. CZ Office Park D is a prestigious A-class office and retail building, located at the intersection of Aleja KraÅ›nicka and NaÅ‚Ä™czowska Streets in Lublin. One of the most modern properties in the city is located near the main transportation routes and academic centers. The total lease area offered by the complex is over 40,4 thousand sq m. The buildings were made in a modern, energy-saving facade technology with the use of the latest air-conditioning and ventilation solutions, guaranteeing comfortable working conditions. CZ Office Park is a place that attracts high-profile events, engaging both tenants and the business and cultural environment of the city. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
Ukrainian Tensions and Oil - Is Russia Really the Bad Guy?

Ukrainian Tensions and Oil - Is Russia Really the Bad Guy?

Finance Press Release Finance Press Release 04.02.2022 18:04
While everyone is criticizing Russia, it’s easy to follow the US ‘savior’ narrative. However, what if we looked at what’s happening with oil in mind?Disclaimer to today’s article: I’m providing this analysis from a pure energy-focused perspective. I do not claim it represents THE right view, but rather one of those that won’t be as visible in the mainstream. It is interesting to add different views as pieces of the same puzzle. I am looking forward to reading yours in the comments!Picture Source: MemedroidSeveral port facilities in Germany, the Netherlands and Belgium have been the target of cyberattacks, prompting the judicial authorities to investigate the suspicions of extortion of funds at the expense of German operators in the oil sector. Indeed, it would appear that this series of computer hackings that began several days ago primarily concerns oil terminals. This is disrupting deliveries in several major European ports against a backdrop of soaring energy prices.After jumping the day before, thanks to the strengthening of the euro against the US dollar induced by ECB President Lagarde, oil prices continued to rise during the European session on Friday. Consequently, the fall in the greenback came on top of the recovery in demand, the fall in US crude inventories and the disruptions in supply to boost the price of black gold on the climb, the two crude benchmarks evolving above the psychological mark of 90 dollars a barrel, galvanized by solid demand and tensions on the offer coming from (geo-)political risks.Who is Provoking Who?The situation is rather complex on the geopolitical scene, with the US claiming that Russia is planning an invasion in Ukraine, whereas the US under NATO cover sent additional troops to Eastern Europe. The question that may arise here is: who is provoking who? So far, we haven’t seen Russia placing troops in Mexico, on the border with the United States. On the other hand, the Biden administration may encounter difficulties in accepting that the Kremlin can agree to various partnerships with its European neighbors, especially regarding more favorable energy supplies. Instead, it’s in the US interest to weaken those diplomatic relations, potentially leading to additional partnerships that may arise between the EU and Putin.And as we see the US-led narrative getting through the Western mainstream media with more aggressive, suspicious, and tense tones towards Russia, this obviously has the effect of pouring some oil on the Russian-Ukrainian fire. Furthermore, the US needs reasons to demonstrate that NATO is still alive and relevant while a number of countries are now questioning their own participation in the US-led military organisation created in 1949, even going so far as to show some doubts regarding its current motivations.Isolating the Russian BearBy maintaining a hostile tone towards Russia’s intentions, the US is consequently trying to isolate the Russian bear and push their European partners to blindly follow the “official narrative” (as the EU being part of NATO), which could possibly lead to new sanctions on Russia, the latter being able to retaliate by using its energy assets and capacities to deprive the EU of the Russian supplies, which currently on the gas side represent between 30% and 40% of total gas imports for Europe. Then, as a result, the Americans could start exporting more gas into Europe via Liquefied Natural Gas (LNG) shipping – which again could benefit their energy-led commercial balance – the Europeans thus becoming the losing players in this game.As an example, we saw this week that a tanker loaded with LNG from the US will arrive at the LNG terminal in Świnoujście (Poland) at the end of this month, since Poland has LNG import capabilities which could be used to deliver US gas to Ukraine. Apparently, this is the second time (after the first one took place two years ago) that such gas deliveries are made by PGNiG, the Polish state-controlled oil and gas company, in cooperation with ERU (their strategic trading partner on the Ukrainian market).Actually, Ukraine suspended imports of Russian gas at the end of 2015. After relying on Russian gas imports for decades, they currently increasingly depend on imports from Europe. Since Ukraine has no LNG import capabilities, such US gas deliveries have been organized via a pipeline from the Polish terminal (through re-gasified LNG).WTI Crude Oil (CLH22) Futures (March contract, daily chart)Brent Crude Oil (BRJH22) Futures (April contract, daily chart)RBOB Gasoline (RBH22) Futures (March contract, daily chart)Henry Hub Natural Gas (NGG22) Futures (February contract, daily chart)In summary, geopolitics is always complex because it relies on individual economic and strategic interests of countries. The readings also depend on different views, and since there is always a lot of noise, it often helps to take some steps back in order to analyze the global situation from a different angle.Have a nice weekend! And remember to chime in on the conversation.Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Sebastien BischeriOil & Gas Trading Strategist* * * * *The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
The shopping spree on the investment land market continues

The shopping spree on the investment land market continues

Finance Press Release Finance Press Release 14.02.2022 14:32
The battle for investment land is still going on, and the lack of attractive assets feels more and more severe. This applies to all large cities in Poland. For a long time, no matter the place, the investment land has not been easily available. In contrast, there are both plenty of people willing to buy land, as well as free funds to finance these purchases. The money surplus is enormous. Investors are trying to invest their capital in land as soon as possible, for fears of inflation. Although the peak shopping spree, often associated with really risky decisions, has already passed, the situation continues to bear resemblance to the one we remember from the years 2007-2008, when everything was selling like hot cakes, at rapidly rising prices. The appearance of new investors has shortened the sale process of attractive lands, which now usually closes within 3 months. In turn, the difficulty is the highly overestimated value of many plots of land or the unregulated ownership status of the property. The owners of land are also very reluctant to reserve the land through conditional or preliminary purchase agreements without deposit (earnest money). Maximizing profits through investments in land There are many companies willing to invest in land, despite the prices of land in some locations are growing in a blistering pace. The greatest shortage occurs in case of large plots for housing development in well-connected parts of cities. When the interesting plots of up to 5,000 m2 of residential and usage space appear on the market, even several companies compete for it. The larger the plot, the lower the number of competitors. Over the last two years, rates on the investment land market have increased by several dozen percent, depending on the location. Prices for 1 m2 of residential and usage space in attractive places in Warsaw or Krakow jumped by as much as 60 percent. Investors, for fear of further increases, buy land to increase their future profits. They are not deterred by soaring construction costs and time-consuming administrative procedures. The purchase of land can be financed in a number of ways. Many transactions are based on loans, many is financed from ongoing development activities, and some from issuance of bonds.   The pro-ecological, high standard housing estates, in unique location, turned out to be a hit among housing investments in the last year. The recent changes have translated into the demand for flats in recreational and tourist-attractive locations. The demand for land for residential buildings is further increased by the investments into premises for institutional quality lease. More and more development companies are involved in this type of projects, despite the lower margin. The share of the Private Rented Sector (PRS) in the sale of apartments as registered in 2021 by listed entities has already increased to over a dozen percent. Warehouses, warehouses everywhere As in case of housing developments, we can talk about very high demand for land for the planned warehouse and industrial investments. Wherever we see changes, road infrastructure improvements or express roads planned for construction, the land is immediately secured with preliminary contracts. It is easier to find plots for logistics projects, as investments in this sector are also carried out in greenfield areas located outside the administrative borders of cities. Therefore, both the greater supply and less competition from investors looking for land for investments in residential or service and commercial sectors. The land in required for both large-format investments with an area of ​​several dozen or over 100 thousand m2, as well as the so-called last mile warehouses and smaller municipal facilities. Investors from the warehouse sector are primarily interested in plots located near logistics hubs and in the vicinity of the largest cities, as well as plots located in smaller towns due to the rapidly growing online sales. The warehouse market is currently experiencing a period of the development of speculative investments. The companies are not afraid to perform such projects, as the demand for warehouse space has never been growing so fast as now, and there is practically no free warehouses space available. This is largely related to the growth of the e-commerce market, which is expected to grow further in value in the coming years, at the average rate of several per cent per annum. Moreover, the change of the transport structure, shortening the supply chains or the growing demand for buffer areas, where inventories are stored, also affect this demand. Similarly, the warehouses generate over half of the transaction volume on the investment market in Poland. Year by year, the logistics and industrial sectors are increasing their market share, reaching new highs. Our market is the point of interest of foreign capital from Europe, mainly from Germany, as well as North American and Asian companies. Shares of small shopping centers are going up Developers also share a keen interest in the construction of retail parks. The format now brings together as many as three-quarters of new investments in the retail sector. Retail parks, just like warehouses, have attracted more and more attention of funds and capital groups as investment assets. Although in Poland in 2021 the retail space has increased by 300,000 m2, with the same amount currently under construction, 70 percent of which being the retail parks, unfortunately there is still a shortage of this commodity. Hence, one-third of transactions for the purchase of commercial real properties from the last year concerned older-generation properties, dominated by properties owned by Tesco. The recent popularity of retail parks and convenience centers has resulted in the increased interest of the investors to perform such projects. Investors often enter into these investments in order to diversify their real properties portfolio. However, of course there are also entities on the market that specialize only in this format. The advantage of projects related to the construction of retail parks is that their construction process can be completed within 18 months, and the entry threshold is much lower in comparison to larger projects. In case of these projects, investors are looking for land mostly in smaller cities up to 100,000 or even 50,000 residents, in which market saturation is not too high. Land in such locations is much cheaper than in the largest cities, which also translates into higher investment profitability. The most attractive plots of land for new projects are located in areas which can potentially be visited also by residents of the surrounding boroughs. In case of retail parks, the key to ensuring satisfactory returns on investment is to include in the list of tenants a popular foodstuff chainstore. This is not only one of the most important reasons for visiting a shopping center, but also influences the image of the facility. An interesting trend that we can observe recently is the appearance of new brands in retail parks, often boutique brands, that have never been present in such facilities before. Land - the star of the investment market The high activity on the investment land market is also evidenced by the transactions carried out in 2021 by LBC Invest, most of which concerned land real properties. In WrocÅ‚aw and Kraków, we have supported our clients with comprehensive customer services for contracting of land in the implementation of development projects in the residential segment for over 45.000 m2 of residential and usable area. Some of them are under construction, and some are in the phase of obtaining building permits. We also closed a few speculative transactions last year. We are currently performing activities on over 70 ha of land. In the last quarter of 2021, we also signed contracts for the performance of comprehensive investment processes, including commercialization for retail parks located in Krakow and two smaller cities – in Lesser Poland and Pomeranian regions, with investors both from Africa and Poland. Last year, we also managed transactions for the purchase of commercialized land, together with construction designs and a building permit, and at the same time concluding general contracting agreements with previously selected companies. Concluding the contract of sale in this form was a condition for the purchase of investment areas, especially those for retail parks and located in attractive locations, with a built-up area of ​​2,500 to 8,000 GLA.
Still Taking The Conflict Into Consideration, What's Not A Big Surprise

Still Taking The Conflict Into Consideration, What's Not A Big Surprise

Walid Koudmani Walid Koudmani 18.02.2022 12:48
While US indices plunged yesterday as the situation near the Ukraine-Russia border remained tense with the S & P 500 dropping 2.12%, Nasdaq falling 2.88% and Dow Jones pulling back 1.78%, reports of shelling in Luhansk and Donetsk Oblasts in eastern Ukraine continue. However, the US President will host a meeting with leaders of Canada, France, Germany, Poland, Italy, Romania, UK, EU and NATO today which along with an announced meeting between US secretary Blinken and Russia's Lavrov next week has helped moods stabilize slightly. Oil prices pulled back noticeably with Brent dropping below $90 and gold gave up some gains after benefiting from the significant risk-off moods seen this week which saw it reach the highest level since mid 2021. With a lack of data releases and with a long weekend ahead in the US, we could be seeing significant volatility across markets as investors and traders adjust their positions to limit risk exposure and in anticipation of a potential escalation of the conflict. On the other hand, any sign of easing of tensions has been received positively from markets and further indication could lead to a return of risk appetite across asset classes, which could favor stocks as well as the cryptocurrency market, which have struggled to maintain gains lately. UK retail sales point to continued post pandemic recovery Today's retail sales figures continue to provide encouraging signs as the economy recovers from the pandemic and as businesses as well as consumers begin to adjust to rising inflation. While these figures indicated a rise of retail sales volumes by 1.9% in January 2022 following a fall of 4.0% in December 2021, an interesting thing to note is that the proportion of retail sales online fell to 25.3% in January 2022, its lowest level since March 2020 (22.7%). Ultimately, it remains to be seen how the Bank of England's policy will facilitate this trend moving forward in order to avoid a stagnation situation and as rising prices across sectors continue to add pressure.
Warsaw Chamber of Tax Administration is moving the headquarters of the Customs Department VI and two organizational units of the Masovian Customs and Tax Office to Żerań, to the OKAM investment

Warsaw Chamber of Tax Administration is moving the headquarters of the Customs Department VI and two organizational units of the Masovian Customs and Tax Office to Żerań, to the OKAM investment

Finance Press Release Finance Press Release 23.02.2022 15:53
PRESS RELEASE Warsaw, 23.02.2022Warsaw Chamber of Tax Administration has leased over 640 sq m. of office space with a 2000 sq m. square located next to the office building for its subordinate unit in the OKAM investment in Warsaw district of Żerań.The Chamber was looking for a location that would allow for the lease of both office space and a suitable area for customs clearance for the Customs Department VI in Warsaw, currently located in the Targówek district.These conditions were met by the warehouse, production and office complex located on the site of the former car factory at Jagiellońska Street in Warsaw.- The Chamber planned to relocate to a new office. However, the property also had to guarantee efficient logistics related to the customs clearance of goods. The infrastructure of the mixed-use complex in Żerań, its unique character on the scale of the entire Warsaw agglomeration, made it possible to fully meet the tenant's requirements. The profile of the investment allowed for a full consolidation and concentration the activities of the institution and its administration in one place - informs Piotr Szymoński, Director Office Agency at Walter Herz, the company which represented the landlord during the transaction.The new headquarters of the Customs Department VI in Warsaw and two organizational units of MCTO, they plan to move into next month, is located in a four-storey building, with a total of over 3100 sq m. of space.- Warsaw market offers many attractive spaces, which is why we feel all the more distinguished by the choice of our investment in Żerań by the Warsaw Chamber of Tax Administration. We hope that the office space leased by the Chamber along with the adjacent square will meet all of the current and future expectations of the organization. Our project in Żerań will also actively develop with our tenants and their needs in mind – says Arie Koren, CEO of OKAM City.OKAM investment in Żerań provides both office, retail and commercial space, as well as warehouse space, the height of which exceeds even 20 meters. It also has paved areas of high load capacity, intended for exhibition squares and parking lots.Most of the lease space in the complex is characterized by a great variety in terms of the offered parameters. - This makes the location a great choice for customers looking for space with different functions and non-standard dimensions in one investment - says Piotr Szymoński. The location provides direct access to the S8 route. The center of Warsaw can be reached within 20 minutes from the OKAM investment. Bus and tram stops as well as bicycle paths are located 250 m from the entrance to the complex. About Walter HerzWalter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects.In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice. About OKAMOKAM Capital has been a leader among the real estate development companies for over 17 years. The company specializes in residential and commercial construction. OKAM portfolio includes 25 projects in 7 cities in Poland, such as Strefa PROGRESS in Łódź, INCITY and CITYFLOW in Warsaw district of Wola, MOKKA, VISTA and CENTRAL HOUSE in Mokotów, ARLET HOUSE in Ochota, ŻOLI ŻOLI in Żoliborz, BOHEMA - Strefa Praga in Praga Północ and 62 ha in Warsaw district of Żerań. In Katowice, the company is implementing investments in Dolina Trzech Stawów: DOM W DOLINIE TRZECH STAWÓW and INSPIRE. The assets of OKAM also include historic tenement houses in the center of Katowice as well as in Cracow.At the end of 2018, OKAM introduced the New Quality Policy as an expression of corporate social responsibility. Starting with the CENTRAL HOUSE investment, all OKAM residential investments will be equipped with pro-ecological and functional solutions supporting climate protection and improving the comfort of living, such as electric vehicle rental, bicycle rental, air purifiers, solar panels, systems for reusing rainwater, etc.
Fed And BoE Ahead Of Interest Rates Decisions. Having A Look At Nasdaq, S&P 500 and Dow Jones Charts

SAVILLS: E-COMMERCE BOOM CONTINUES TO DRIVE RECORD LEVELS OF INVESTMENT & LEASING ACTIVITY ACROSS EUROPE’S LOGISTICS MARKET

Finance Press Release Finance Press Release 24.02.2022 12:24
According to Savills, the e-commerce boom is continuing to drive demand for industrial and logistics assets across Europe, as new records were set for both levels of investment and leasing activity in 2021. In Poland, take-up in 2021 reached an all-time high and industrial assets accounted for over a half of the total investment volume. Some EUR 62bn was invested into industrial real estate across Europe, marking a 79% increase on the previous five year average. The UK (EUR 19.5bn) outperformed the rest of the continent and accounted for 31% of total investment activity. Germany (EUR 8.6bn), France (EUR 6.5bn) and Sweden (EUR 5.8bn) and the Netherlands (EUR 5.7bn) also recorded strong levels. Savills research also noted that investment into industrial assets accounted for 66% of European omnichannel investment in 2021, up from 47% in 2019, as investors were willing to pay premiums to gain exposure to the sector. “The trend for customers shifting to online shopping throughout the pandemic triggered the e-commerce boom, which has been a major catalyst for this sector’s growth,” comments Mike Barnes, Savills European Research. “So far it has shown little sign of slowing, even as restrictions have lifted and, as a result, the significant weight of capital targeting these assets has compressed prime yields by an average of 27bps to 4.20% over the last six months. Portugal, Spain and Finland have hardened by 50 bps each.” This demand is clearly represented by the unprecedented levels of leasing activity in the industrial sector across Europe last year, with take up reaching 38m sq m, 28% ahead of the previous five year average. Germany (8.6m sq m), the Netherlands (6.9m sq m) and the UK (5.1m sq m) drove the lion’s share of leasing activity, whilst Romania (+63%), France (+63%) and Spain (+62%) performed the strongest above their five year averages. Savills has observed that the record shortage of prime stock has driven upward pressure on rents, rising an average of 5% year on year. London (+25%), Dublin (+17%) and Prague (12%) were the fastest growing markets in 2021. Marcus de Minckwitz, Head of Industrial & Logistics, Savills EMEA, suggests, “Market fundamentals have been hugely favourable for the sector in recent years, and they will continue to underpin another strong performance for the year ahead. Our European Logistics Census last year indicated that 46% of occupiers anticipate that they will increase their warehouse floor space over the next 12 months, among the highest in the online retail sector. With such constrained supply, we expect to see increased development in the sector, despite rising construction costs, as well as appetite for assets in non-core locations as investors move up the risk curve in search of higher returns.” In Poland, take-up of industrial space in 2021 reached an all-time high of 7.35 million sq m with an 84% year on year increase in net absorption. Under construction space is 55% pre-leased before completion and vacancy rates have fallen to under 4%. With EUR 2.96 billion transacted, industrial assets accounted for over a half of the total investment volume recorded in 2021, representing a 15% increase year-on-year. John Palmer, Head of industrial Investment, Savills Poland, says: “The warehouse market in Poland is recording record-breaking figures. This trend is set to continue if not accelerate in 2022 and beyond. Investor appetite remains strong for both income producing assets and portfolios and forward funding of new developments.. Poland offers competitive labour rates, FDI incentives, an efficient planning and building permitting system; and all this is backed by growing domestic consumer spending. The dynamics of the occupier is changing with requirements increasingly focused on quality, sustainable and ESG focused properties, professionally managed by long-term landlords”.
Markets Situation In Times Of Russia Vs Ukraine, ECB Interest Rate Decision, EU Leaders Summits And US Core CPI Are Events To Watch Next Week

Markets Situation In Times Of Russia Vs Ukraine, ECB Interest Rate Decision, EU Leaders Summits And US Core CPI Are Events To Watch Next Week

Mikołaj Marcinowski Mikołaj Marcinowski 04.03.2022 16:27
Monday seems to be a calm beginning of the week (despite the Russia-Ukraine conflict) as there’s no any major event planned. The rest of the week 7/03-11/03 will surely arouse more interest. What to follow? Have a look at Economic Calendar by FXMAG.COM Tuesday – Japan and Poland The first important indicator of the week is the Japanese GDP (QoQ) (Q4) which is released very lately on Tuesday at 11:40 p.m. The previous value – 1.3% As tensions rise, the country which lies closely to Ukraine has its currency (PLN) weakened, so the Interest Rate Decision of National Bank released on Tuesday as well is worth a look as well. Wednesday - USA On Wednesday we focus on USA, where JOLTs Job Openings (3 p.m.) and US Crude Oil Inventories (3:30 p.m.) are released. Thursday – European Union and USA Thursday is full of Europe-targeted events. According to Investing.com, at 10 a.m., EU Leaders meet at the Summit and shortly after midday ECB releases its Marginal Lending Facility its Interest Rate Decision. At 1.30 p.m. there is a Press Conference planned. The same time ECB speaks to media, US Bureau Of Labor Statistics releases Core CPI (MoM) of February which previously hit 0.6% Friday – UK, EU And Canada Who’s going to wake up early on Friday? The answer is UK Office of National Statistics which releases GDP (MoM) and Manufacturing Production (MoM) at 7 a.m. EU Leaders will rest a little longer as they meet at the another Summit at 10 a.m. According to Investing.com the latest “triple-star” event of 11/03 is the release of Employment Change indicator in Canada, which hit -200.1K in the month before. Data: Investing.com Time: GMT
Walter Herz is expanding Tenant Representation department

Walter Herz is expanding Tenant Representation department

Finance Press Release Finance Press Release 17.03.2022 12:26
2021 was a period of intense work, development of a new organizational structure and expanding the team for Walter Herz. The company is operating in the commercial real estate sector, providing comprehensive consulting services across Poland. Consistent expansion of services and the need to provide clients with integrated service and comprehensive support, resulted in a new role emerging in the company. Mateusz Strzelecki, a long-term market expert who has been associated with Walter Herz for 9 years, was appointed Head of Tenant Representation. The promotion opened up even greater opportunities for him to further develop the spectrum of consulting services provided by the company to its clients and to vastly expand its operations in the area of office tenant representation on the largest business markets in the country. - The office market is still the primary focus of ​​Walter Herz's operations. However, the sector has become more demanding due to the intense process of changes and the emerging new directions of its development. Contrary to some predictions, stationary offices have kept their position. A lot is happening in the office market and clients need comprehensive support. Companies still invest heavily in workspace, some even more than before. In order to ensure the highest standard of consulting and full process security in the context of the constant evolution of the market, we must constantly develop. This is what makes our job very interesting, and customer satisfaction is a great motivation for us. Tenant's rights are a field I specialize in. I am pleased to share my knowledge with our business partners and clients, as well as with the participants of Tenant Academy, where I am a lecturer - says Mateusz Strzelecki, Head of Tenant Representation/Partner at Walter Herz. - We have been providing consulting for clients investing in the commercial real estate sector in Poland for a decade. This past year, despite the difficult situation on the market, brought progress for the company, both in terms of the scale of operations and employment growth. We focused on the development of the Office Tenant Representation department. Mateusz Strzelecki, who has been promoted to the position of Head of Tenant Representation, has been responsible for managing the team of advisers and for providing comprehensive support to clients – says BartÅ‚omiej Zagrodnik, Managing Partner/CEO at Walter Herz. An important event for the company was the recent opening of a branch in Lodz. Apart from Warsaw and Cracow, Lodz is the third stationary Walter Herz branch in the country. Therefore, Magdalena Góra has joined the Lodz branch as a Senior Business Development Specialist. - Magda will support our Tenant Representation team in acquiring customers. He has been working in the commercial real estate market for many years. So far, she has advised office tenants, working in the furnishing industry. At Walter Herz, she will have the opportunity to see the market from a different angle. We believe that the combination of our diverse experiences and competences will allow us to raise the standard and comprehensiveness of our consulting, thanks to a broader view of the entire process - says Mateusz Strzelecki, Head of Tenant Representation / Partner at Walter Herz. - We are expanding the scope of strategic consulting services, flexibly changing the employment structure. The expansion of the team allowed us to improve our qualifications in all areas of the commercial real estate market. Last year, employment in the company increased by 30 per cent. We are constantly investing in the development of our organization, including through regular, personalized training that allows to improve the expertise and skills of the employees. We care for the development of our staff and professional fulfillment of all people in the team. Among them, we have numerous long-term employees who take up new functions and are successively being promoted. The company is still actively looking for specialists with experience in consulting concerning all sectors of the real estate market for project teams, in order to be able to effectively develop partner relations with clients and provide them with the necessary knowledge - says Magdalena Zagrodnik, Head of HR & Business Partner at Walter Herz. In everyday work with clients, the company’s motto is - We care & We share. This goal is also a guideline for the further implementation of Walter Herz’s Tenant Academy - a proprietary training project designed to educate tenants of commercial space across the country. Last year, during the fifth edition of the event, we organized five specialized webinars and one hybrid panel. Almost 1000 participants signed up for it. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For ten years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners across the country. Walter Herz experts assist investors, property owners and tenants. They provide full service, to companies from the private as well as public sectors. Walter Herz advisors support clients in finding and leasing space, and provide consulting in the implementation of investment projects in the warehouse, office, retail and hotel sectors. The company is based in Warsaw and runs regional branches in Cracow and Łódź. Walter Herz has created the Tenant Academy, the first project in Poland, which supports and educates commercial tenants from all over Poland by organizing specialized training meetings. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
The office market is getting back on track

The office market is getting back on track

Finance Press Release Finance Press Release 17.03.2022 12:26
There are still fewer leased and built offices than two years ago, but there is an upward trend in the office sector. Last year, some regional markets saw a sizable increase in demand, even compared to 2019 In 2021, 325 thousand sq m of office space was delivered on the Warsaw market. Such a high result was last seen in 2016. Several spectacular buildings, the implementation of which began before the pandemic, have been commissioned. Skyliner, Warsaw Unit, Generation Park Y and Fabryka Norblina have been completed in the vicinity of DaszyÅ„skiego roundabout. The construction of X20 building and Moje Miejsce II in the district of Mokotów have been completed. Warsaw office resources, which already exceed 6.15 million sq m. have also gained two office buildings in Centrum Praskie Koneser complex, as well as the EQ2 building and Baletowa Business Park. Warsaw with a negligible amount of new projects On the other hand, there is over a half less offices under construction in Warsaw than in recent years, when about 700-800 thousand sq m. of space was commissioned annually. According to Walter Herz, almost 330 thousand sq m. of offices is currently under construction. The last time there has been so little of them built in the city was a decade ago. Most of the projects will be completed this and next year. The office buildings under construction include, among others, Varso Tower, SkySawa, The Bridge, P180 and Bohema. The high level of new supply in 2021 and lower demand caused the vacancy rate to increase in the Warsaw market by 2.8 pp. to 12.7 per cent and become the highest in six years. - The activity of tenants in the office market is still lower than before the pandemic, but its gradual increase is noticeable. The total volume of lease in the office sector in Poland in 2021 was several percent higher than in the previous year. In Warsaw, the volume of lease transactions increased by over 7% year on year. Over 646 thousand sq m. of space has been leased. This result is significantly lower than in 2015-2019, when tenants leased an average of about 830 thousand sq m. of offices - says BartÅ‚omiej Zagrodnik, Managing Partner/CEO of Walter Herz. - However, offices still remain an important element of companies' business activities and interesting assets for investors. So far, rental rates are at the same level as before, but a significant increase in construction costs is putting pressure to increase them – adds BartÅ‚omiej Zagrodnik. The Tri-City with the largest number of new offices In the regions, the highest increase in resources was recorded in the Tri-City. The offer of the Tri-City office market, which is the fourth in the country, will soon reach 1 million sq m. of space, due to the completion of construction of 73 thousand sq m. of offices in 3T Office Park, Palio, LPP Fashion Lab and Gato projects. Cracow, the second largest office market in Poland, increased its offer last year to over 1.6 million sq m. of space. The supply increased by over 60 thousand sq m. of space, due to the completion of Equal Business Park D, Ocean Office Park A, Tertium Business Park B and Aleja Pokoju 81. Over 37 thousand sq m. of offices has been delivered to the office market in Poznan in Nowy Rynek D building. As a result, the resources exceeded 620 thousand sq m. of space. In Wroclaw, Krakowska 35 and Nowa Strzegomska projects were commissioned, offering a total of 22 thousand sq m. of space. As a result, the offer increased to 1.25 million sq m. In Katowice (600 thousand sq m.), over 13 thousand sq m. of space entered the market last year, and in Lodz (583 thousand sq m.) - 3.6 thousand sq m. Katowice market with the largest development Katowice clearly stands out in the regions with the number of offices under construction. There are as many as 200 thousand sq m. of space under construction on the Katowice market, which accounts for nearly a third of the city's current resources. Most of the projects are to be completed this year. The Cracow market is also growing, with 165 thousand sq m. of office space under construction. - If the macroeconomic conditions and the economic situation are favorable, this value may increase in the upcoming quarters with projects that are being prepared for implementation in Cracow - says Mateusz Strzelecki, Head of Tenant Representation/Partner at Walter Herz. - Another office market that is also expanding is Wroclaw with 150 thousand sq m. of space under construction, among others in the Brama OÅ‚awska project, Quorum Office Park and another building in the Centrum PoÅ‚udnie and Tri-City complex with 120 thousand sq m. of offices that are implemented mainly in Gdansk - informs Mateusz Strzelecki. Nearly 80 thousand sq m. of office space is under construction in Poznan and almost 90 thousand sq m. of offices in Lodz. The largest investment on the Poznan market is Andersia Silver, which upon completion will deliver the tallest building in the city. In the near future, Lodz will offer modern space in Manufaktura Widzewska, Fuzja and React projects. Demand in the regions is at a fair level According to Walter Herz, the lease level in regional markets was over a dozen per cent lower last year than in 2019. - While the office sector has seen a significant recovery in the second half of 2021, the annual transaction value is still below the pre-pandemic average. However, the high demand for offices registered last year in Wroclaw, the Tri-City and Poznan, where more space was contracted than in 2019 is noteworthy - says Mateusz Strzelecki. Last year, we could observe the greatest demand for offices in Cracow, where approximately 156 thousand sq m. of space was leased and in Wroclaw, which showed absorption at the level of 153 thousand sq m. While the demand on the Cracow market was slightly lower than in the previous years, in Wroclaw the result was several per cent higher, both in comparison to 2020 and 2019. The Tri-City and Poznan markets also showed an increase in demand last year. The rental volume in the Tri-City amounted to 108 thousand sq m. of office space and was 23 per cent higher than the year before, and nearly 7 per cent higher than in 2019. Poznan, on the other hand, where lease agreements for 73 thousand sq m of offices were signed, recorded over 80 per cent increase in demand for offices, compared to 2019. The demand on the Katowice market dropped to 53 thousand sq m. of space, that’s 16 per cent lower than a year earlier. In Lodz, 51 thousand sq m. of offices were contracted, which is also less than in previous years. Over the last year, the vacancy rate in regional markets increased slightly. Only in Poznan, due to the jump in demand, it slightly decreased. It is currently at the level of 10.5 per cent in Katowice to 16.7 per cent in Wroclaw. Experts point out that the model of arranging office space is changing. More rooms for meetings and videoconferences are now being designed. A larger number of desks also function as workstations, which, depending on the needs, can be used by various people in the hybrid system. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For ten years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners across the country. Walter Herz experts assist investors, property owners and tenants. They provide full service, to companies from the private as well as public sectors. Walter Herz advisors support clients in finding and leasing space, and provide consulting in the implementation of investment projects in the warehouse, office, retail and hotel sectors. The company is based in Warsaw and runs regional branches in Cracow and Łódź. Walter Herz has created the Tenant Academy, the first project in Poland, which supports and educates commercial tenants from all over Poland by organizing specialized training meetings. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
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SAVILLS: STRONG Q1 EXPECTED FOR EUROPEAN REAL ESTATE INVESTMENT DESPITE GEOPOLITICAL EVENTS

Finance Press Release Finance Press Release 21.03.2022 11:27
  Preliminary figures compiled by Savills suggest that the total real estate investment volume in Europe for the first quarter of the year will reach approximately €70bn, a 19.5% increase year-on-year. Despite geopolitical events, the real estate advisor expects solid European investment activity for the remainder of the year, notably fuelled by large portfolio and entity deals. Savills anticipates total European real estate investment volumes for 2022 to reach between €300bn and €330bn, which would be 5-10% above the five-year average, as long as the Russia/Ukraine crisis doesn’t last too long and doesn’t have a long-term impact on the European economy. Lydia Brissy, Director, European Research at Savills, says: “Given the current context, we expect most of the investment activity this year will focus on Western Europe and particularly, the core countries of UK, Germany and France. Our preliminary Q1 figures suggest that those three countries have received 66.6% of the total European investment volume this quarter, up from 61.4% last year.” Tomasz Buras, CEO, Savills Poland, says: “The hostilities in Ukraine are having a stronger impact on the Polish real estate market than on Western European markets. Developers are facing severe disruptions to supplies of building materials and reduced availability of construction workers. Tenants have already suffered from rising inflation and energy charges, further fuelled by the weakening Polish zÅ‚oty relative to the euro, a currency in which rents are denominated. We are, however, seeing a surge in demand on the residential rental market and more enquiries for office and warehouse space from companies wanting or forced to relocate operations to Poland. Cross-border investors are likely to remain more cautious in the coming weeks, leading to a short-term dip in real estate investment volumes, albeit with a potential for a strong rebound if the armed conflict is quickly resolved peacefully.” James Burke, Director, Regional Investment Advisory EMEA at Savills, says: “For perhaps the first time since the Covid-19 pandemic, prime offices are looking like an increasingly attractive defensive investment as they are relatively protected from higher inflation due to the indexation of rents across core European cities. Based on our preliminary figures, prime office yields compressed further by an average of 17 bps year on year to 3.40% in Q1 2022. Office yield spreads to risk-free rates continue to illustrate the sector’s attractiveness despite some more recent increases in bond yields. Given this, we believe the potential for further yield compression is less likely, and we forecast a stable outlook on pricing throughout 2022.”
(INPST) InPost’s new headquarters in Cracow | Walter Hertz

(INPST) InPost’s new headquarters in Cracow | Walter Hertz

Finance Press Release Finance Press Release 16.05.2022 11:10
InPost, the leader of the modern logistics services market in Poland, is moving its headquarters to Ocean Office Park complex in Cracow. The company has leased 8,300 sq m. of space in building B, implemented in this investment. Walter Herz company supported the company in the process of searching for a location and negotiating lease terms. Amsterdam Stock Exchange, decided to relocate the office to the Cavatina investment located at Pana Tadeusza Street in the Zablocie district of Cracow The international company listed on EURONEXT – Amsterdam Stock Exchange, decided to relocate the office to the Cavatina investment located at Pana Tadeusza Street in the Zablocie district of Cracow, with a view to create the best conditions for the development of the organization and to provide the team with comfortable working conditions in a modern environment. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM - Changing the headquarters is aimed at meeting our current expectations in terms of the quality of office space, as well as the needs related to the intense growth of the organization. We chose Ocean Office Park because it offers the highest standard of office space and common areas, which ensures comfort and safety at work. Attractive architectural and technical solutions that distinguish this project were the main aspects that determined the choice of location. Green areas and recreational zones arranged within the complex were also of great importance - says Marcin Pulchny, Vice President of the Management Board of InPost. - Environmental protection and ESG policy is of great importance to us. The company was listed first in the Electromobility-Friendly Companies 2022 ranking. It is important for us to achieve synergy, combining corporate governance and natural and social environment. All employees working in the complex will have access to parcel lockers, the most eco-friendly for of delivery for on-line shopping, located on the OOP premises. - adds Marcin Pulchny. It is a great satisfaction for us that InPost has once more benefited from the experience of our team specializing in servicing the office sector - informs BartÅ‚omiej Zagrodnik, Managing Partner/CEO at Walter Herz - We are very pleased that once again, we had the opportunity to support InPost in the search for space. This time, our task was to carry out the relocation process of the company's headquarters, including financial, legal and technical negotiations. We advised the company on various levels, both in terms of searching for offices and space for logistics activities, which is related to the expansion of the e-commerce delivery platform throughout Poland. InPost, as one of the largest logistics operators in Poland, is also one of the most active entities on the logistics space market. It is a great satisfaction for us that InPost has once more benefited from the experience of our team specializing in servicing the office sector - informs BartÅ‚omiej Zagrodnik, Managing Partner/CEO at Walter Herz. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM InPost enjoys a leading position on the logistics market in Poland. The operator has created the first in the country network of parcel lockers, self-service points of sending and receiving parcels, open 24/7. The company has been present on the market for 22 years and has almost 17 thousand parcel lockers that form the largest business structure of this type on our market. Moreover, the application used to operate the lockers, has over 9 million users. - Searching for a new office for InPost, it was crucial to provide the company with optimal development opportunities within the selected building and to protect the client against an increase in construction costs. Comprehensive services related to the relocation also included securing the tenant's interests when it comes to Project Management, and above all Cost Management. The basis for choosing Ocean Office Park was a very good relation of the quality and technical standard of the offered space in relation to the financial conditions and the location of the facility in the vicinity of key transport hubs in the city - informs Mateusz Strzelecki, Head of Tenant Representation / Partner at Walter Herz. - Ocean Office Park is our third office project that we are implementing in Cracow. The confirmation of the success of this project, in which we commissioned the first office building, is among others, the main Prime Property Prize in the category of Investment of the Year in the Office Space Market, which it has recently won. So far, we have completed six office buildings on the Cracow market. In addition to building A in the Ocean Office Park investment, our portfolio of completed projects includes four office buildings in the Equal Business Park complex located at Wielicka Street and Tischnera Office project. We are happy that InPost is relocating its headquarters to our newest investment in Cracow. We plan to complete the construction of the second office building in the Zablocie district before the end of the year and we hope that the tenants will move into the offices at the beginning of next year – says Natalia JagliÅ„ska, Leasing Director, Cavatina Holding. Cavatina Capital Group is a leader on the Polish real estate market, it has a portfolio of mixed-use properties with a total of 0.5 million sq m. The company independently manages all key investment processes. About Walter Herz Walter Herz company is a leading Polish entity operating in the commercial real estate sector across the country. For ten years, the company has provided comprehensive and strategic investment consulting services for tenants, investors, and real estate owners across the country. Walter Herz experts assist investors, property owners, and tenants. They provide full service to companies from the private and public sectors. Walter Herz advisors support clients in finding and leasing space and provide consulting in implementing investment projects in the warehouse, office, retail, and hotel sectors. The company is based in Warsaw and runs regional branches in Cracow and Łódź. Walter Herz has created the Tenant Academy, the first project in Poland, which supports and educates commercial tenants from all over Poland by organizing specialized training meetings. To ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice. 
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Inflation - Poland: Consumption boom and upward price pressures continue | ING Economics

ING Economics ING Economics 23.05.2022 16:30
April retail sales growth was supported by low base effects, “consumption smoothing” by domestic consumers as well as purchases by and for refugees from Ukraine. Construction output growth eased and has serious headwinds ahead. In June, the MPC may hike the main policy rate by 100bp in order to curb inflationary pressure A tight labour market should keep CPI inflation elevated in Poland Strong retail sales from a low reference base The consumer boom continues. In April, retail sales jumped by 19.0% year-on-year (ING: 16.7% YoY; consensus: 16.1% YoY). Such a strong annual growth was facilitated by a low reference base from April 2021, but that is not the only explanation for the strong reading. Retail sales, %YoY Source: GUS.   Buoyant consumer spending is supported by solid domestic demand. Soaring prices have not significantly reduced purchases as consumers continue to spend despite higher price levels. The monthly seasonally-adjusted real data for different sales categories looks robust. This is all happening despite high inflation, very poor consumer sentiment, and uncertainty caused by war. Demand for goods is fuelled by rising wages and fiscal expansion, including tax cuts.   The inflow of refugees from Ukraine is an additional boost to consumption, particularly in sales of clothing and footwear (up by 121.4% YoY). The high volatility of sales in this category is also linked to the lifting of Covid-19 restrictions.   Implied retail sales deflator increased to 12.1% YoY in April from 11.3% YoY in March. Consumer demand remains robust and high price pressures persist. Construction activity slows amid declining home sales Signs from construction are clearly less optimistic as activity softened visibly last month. Construction output rose by 9.3% YoY vs. an increase of 27.6% YoY in March (ING: 16.6%YoY; consensus: 18.7%YoY). Seasonally-adjusted data points to a 5.1% MoM decline. The decline in activity was broad-based, however, the smallest monthly drop was reported in civil engineering, due to ongoing spending of local and EU funds on infrastructure. The coming months will be tough for residential construction due to: (1) the hit to housing demand from higher interest rates and more restrictive regulations, (2) the sharp upswing in prices of materials, (3) mounting shortages of labour, including outflows of Ukrainian workers and (4) elevated uncertainty linked to the war in Ukraine. Construction output, 2015=100 (S.A.) Source: GUS. Bottom line The beginning of 2Q22 brings buoyant consumer demand and persistently high price pressures. Retail sales data, although somewhat distorted by a low reference base, points to strong consumer demand. This could fuel second-round effects (producers passing higher costs onto output prices). The scale of upward pressure on producers’ costs is reflected in the PPI index, which jumped by 23% YoY in April, so companies have higher costs, which should drive up inflation in coming months.   Data on retail sales, PPI and wages provide strong arguments for further interest rate hikes. The MPC should take further policy action in order to prevent inflation from spiralling. In June, the MPC may hike the main policy rate by 100bp. We still see the NBP reference rate at 7.5% this year and the terminal rate at 8.5%, with upside risk. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Poland: CPI Breaks Record! ING Economics Says The Peak Is Still Ahead!

Poland: CPI Breaks Record! ING Economics Says The Peak Is Still Ahead!

ING Economics ING Economics 12.08.2022 13:09
July CPI has been revised to 15.6% year-on-year, the highest level so far in 2022. Yet the inflation peak is still ahead of us and we expect it in the autumn as the heating season begins and drives up prices. The Monetary Policy Council (MPC) will be forced to hike rates further We are continuing to see high price growth in restaurants and hotels in Poland New inflation record for 2022 The July inflation estimate has been revised to 15.6% year-on-year, from the 15.5% YoY reported previously. Thus, consumer inflation set a new record this year. Goods prices rose by 16.9% YoY, while services prices increased by 11.7% YoY, up from 16.8% YoY and 11.5% YoY, respectively, a month earlier.   On a monthly basis, prices rose by 0.5%, the slowest rise since February, when indirect tax cuts under the Anti-Inflation Shield, including lower VAT on food, took effect. Fuel prices fell by 2.6% month-on-month in July, while prices of energy carriers increased by 1.6% MoM, mainly driven by a further increase in the price of heating fuels (5.0% MoM). Food price increases were slightly lower (0.5% MoM) than those seen in June. The upward pressure on meat prices has eased somewhat in recent months. There are also seasonal reductions in the prices of fruit and vegetables. On the other hand, sugar prices rose strongly (7% MoM).   On the basis of detailed July CPI data, we estimate that core inflation rose to around 9.2% YoY last month from 9.1% YoY in June. Among the underlying categories, the significant price increase in the 'recreation and culture' category is noteworthy, boosted by increases in package holidays (especially abroad) and increases in radio and TV charges. We are continuing to see high price growth in restaurants and hotels as well. Compared to July 2021, prices in this category were 16.4% higher. CPI inflation and its composition, %YoY, percentage points Source: GUS. Inflation to rise further in the autumn The scale of the price increase in July does not give room for complacency for the MPC. Although the holiday period brings a deceleration in inflation and we may even witness a slight decline in August (thanks to cheaper gasoline), we set another record this year, with prices rising by double-digit levels on an annual basis. Furthermore, we expect that this year's peak in inflation is still ahead of us. Our forecasts indicate that upward pressure on prices will intensify again in the autumn, driven by factors including (1) the end of the summer promotion at the largest fuel distributor, (2) further increases in fuel prices as the heating season begins, and (3) increases in regulated prices, including electricity, heating, water and sewerage charges. Food prices are also likely to rise. High electricity and fuel costs are driving up the cost of storing and transporting goods (logistics), prompting retail chains to raise prices. Moreover, another significant increase in regulated prices is expected in early 2023. More rate hikes ahead Inflation, therefore, is far from being under control and the MPC will be forced to hike interest rates further, albeit on a much smaller scale than we saw in the first half of this year. The National Bank of Poland is unlikely to hike rates to the 8.5% level we expected earlier this year. In the context of still high inflation risks, declarations by some policymakers that the end of the interest rate hiking cycle is near, and that rate cuts may come in 2023, are in our view premature and may result in zloty depreciation.  Read this article on THINK TagsZloty NBP National Bank of Poland CPI Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more