Key Takeaways
- Foxconn (2354.TW) is selling its Ohio electric vehicle (EV) plant for US$375 million to CRESCENT DUNE LLC, redirecting its U.S. investment focus towards modular AI data centers, a strategic move aligned with SoftBank's (SFTBY) US$500 billion Stargate Project.
- Private equity firm Carlyle (CG) is reportedly preparing to take full ownership of UK digital retailer The Very Group, having already provided a significant portion of a £125 million funding package earlier this year.
- Rolls-Royce Power Systems (RR, RYCEY) has launched a new mtu Series 2000 G06 engine in China, produced at its expanded MTU Yuchai Power joint venture, marking a key milestone in its localization strategy for critical power applications.
- A weakening U.S. dollar is easing pressure on Asian currencies, with the Indian rupee, Singapore dollar, New Taiwan dollar, and Thai baht showing appreciation, leading some central banks to scale back currency interventions.
- Bank of America (BAC) forecasts a 0.24% month-over-month increase in headline Consumer Price Index (CPI) and a 0.31% rise in core CPI for July, signaling persistent inflationary trends.
Corporate Developments
Foxconn Pivots from EVs to AI with Ohio Plant Sale
Hon Hai Precision Industry Co. Ltd., better known as Foxconn (2354.TW), has announced the sale of its Ohio electric vehicle manufacturing plant's land, buildings, and equipment for US$375 million to CRESCENT DUNE LLC. This divestment is expected to yield a disposal profit of US$169 million for Foxconn. Despite the sale, Foxconn intends to continue utilizing the facilities and maintain its commitment to the U.S. automotive market. The proceeds from the sale will be reinvested in the U.S., specifically targeting modular AI data centers, in collaboration with Taiwanese industrial electric motor manufacturer TECO Electric & Machinery. This strategic shift aligns with President Donald Trump's Stargate Project, a massive US$500 billion initiative jointly funded by SoftBank (SFTBY), OpenAI, and Oracle. The Ohio plant was initially acquired by Foxconn from Lordstown Motors (RIDEQ) in November 2021. Earlier discussions in 2023 had involved SoftBank and Foxconn potentially investing $170 million to take Lordstown private and develop a new EV platform, though this plan did not materialize.
Carlyle Readies Takeover of The Very Group
Global investment firm Carlyle (CG) is reportedly preparing to assume ownership of The Very Group, a prominent UK digital retailer previously owned by the Barclay family. This development comes after Carlyle emerged as the largest lender to The Very Group. In February 2024, The Very Group announced a new long-term partnership with Carlyle and Abu Dhabi-based IMI, which included a £125 million funding package. Of this, approximately £85 million was provided by Carlyle Global Credit and was made immediately available to the company. As part of that agreement, both Carlyle and IMI secured seats on The Very Group's board. The Very Group reported a half-year pre-tax loss of £2 million for the period ending December 30, 2023, a decline from a £2.1 million profit in the prior year, primarily due to higher interest costs. However, the company's pre-exceptional EBITDA saw a 10.1% increase, reaching £130.7 million. The online retail group is currently valued around £2.5 billion.
Rolls-Royce Power Systems Expands China Footprint
Rolls-Royce Power Systems (RR, RYCEY) has marked a significant step in its localization strategy in China with the launch of its new mtu Series 2000 G06 engine. The engine is being produced at its expanded joint venture, MTU Yuchai Power (MYP), located in Suzhou, China. This new product is specifically designed for mission-critical applications, including main backup power for data centers, industrial parks, and power stations, emphasizing high power density, fuel efficiency, and reliability. At the launch ceremony, Rolls-Royce signed agreements with over ten power generation Original Equipment Manufacturers (OEMs). The MTU Yuchai Power joint venture, established in 2014, is expanding its manufacturing capabilities to include more variants of the mtu Series 2000 and 4000 engines for both power generation and the oil and gas industry, as well as the Yuchai VC engine, with production slated to commence in the second half of 2025. Both partners are committed to increasing investment in MYP and expanding its research and development initiatives. Since 2018, MYP has produced more than 2,000 mtu engines, which are vital for emergency power supply in critical sectors like data centers and semiconductor factories across China, South Korea, Singapore, and Indonesia.
Economic and Market Trends
UK 10-Year Real Yields Reach Weekly High
The UK 10-Year Real Yields are poised to conclude the week at their highest level in seven days, reflecting movements in the bond market.
Bank of America Releases July CPI Forecasts
Bank of America (BAC) has released its inflation forecasts for July, projecting that the headline Consumer Price Index (CPI) rose by 0.24% month-over-month. Concurrently, core CPI, which excludes volatile food and energy prices, is anticipated to have increased by 0.31% month-over-month. These figures contribute to the ongoing discussion about inflationary pressures in the economy.
Dollar Weakness Eases Pressure on Asian Currencies
The recent weakening of the U.S. dollar is providing relief to Asian currency markets, easing the pressure on central banks that have been actively defending their currencies. The U.S. dollar's depreciation against key Asian currencies, including the Indian rupee (INR), Singapore dollar (SGD), and New Taiwan dollar (TWD), is attributed to shifts in Federal Reserve policy and the underlying resilience of Asian economies. This trend has led some Asian central banks to reduce their currency intervention efforts. The Thai baht has also shown an appreciating trend against the U.S. dollar, primarily driven by weaker-than-expected U.S. employment data, which has fueled speculation of more aggressive interest rate cuts by the Federal Reserve. This marks a shift from earlier periods in late 2024 and early 2025, when a strong dollar prompted significant intervention from Asian central banks to stabilize their currencies.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.