Today - Friday, August 22, 2014
- An estimated $1.4B, or 45% of portfolio inflow into emerging markets went into China - which represents only 20% of the MSCI Emerging Markets Index (ETF: EEM) - according to EPFR Global.
- It's the 4th straight week of inflows for the country, and comes amid a 3rd quarter bull market, with FXI up 9%, MCHI up 8.4%, and EWH ahead 6.8%. The EEM rose just 2.8% and the iShares MSCI Asia ex-Japan ETF (NASDAQ:AAXJ) gained only 3.7%.
- ETFs: FXI, PGJ, GXC, YINN, FXP, YANG, MCHI, XPP, YAO, YXI, CHXF, CN, FCA, ASHR, PEK, CHNA, KBA
- Rosneft (OTC:RNFTF) will take a 30% stake in North Atlantic Drilling (NYSE:NADL) at $9.25 a share in exchange for 150 of its drilling rigs, building on a preliminary agreement discussed in May.
- The deal represents a deepening of the already strong relationship between Rosneft and Seadrill (NYSE:SDRL), which owns 70% of North Atlantic Drilling.
- Last month, Rosneft agreed to lease six offshore drilling rigs from North Atlantic Drilling by 2022, in a contract worth $4.25B.
- Previously: Rosneft to acquire shares in North Atlantic Drilling
7:23 AMOMV next to pull staff from Kurdistan, waits on Crimea OMV next to pull staff from Kurdistan, waits on Crimea OMV next to pull staff from Kurdistan, waits on Crimea
- OMV (OTC:OMVJF) is now the latest energy group to withdraw its staff from Iraqi Kurdistan, as violence continues to escalate in the region.
- "We were able to book a gas find in Kurdistan but are not active at the moment. All the staff that were there have left," says CEO Gerhard Roiss. "We are also waiting and seeing (what happens) south of Crimea, where we had plans together with Exxon (NYSE:XOM)."
- The International Swaps and Derivatives Association has set Sept. 3 as the auction date to settle Argentina's CDSs.
- After a 14-to-1 vote yesterday, the ISDA determined that the auction will include the two controversial yen-denominated bonds in the list of deliverable securities.
- The auction, run by Creditex and Markit, will establish the payout that holders of protection on Argentine bonds will receive as a result of the country's recent default.
- Previously: Argentina CDS auction delayed until September
- ETFs: ARGT
- Rosneft (OTC:RNFTF) has agreed to acquire shares in North Atlantic Drilling (NYSE:NADL) through an asset swap and investments into the company's share capital.
- "The final parameters of the deal, including the amount of Rosneft's cash contribution in NADL's charter capital, will be defined upon receiving corporate and accountant's approvals which is expected till the end of the 2014," says Rosneft.
- The status of Kurdish crude oil will come to a head today, as the high-stakes dispute over a tanker carrying 1M barrels of Kurdish crude still situated in the Gulf of Mexico will be determined by a federal court in Texas.
- The ruling will define the status of importing the controversial crude, as the Iraqi Oil Ministry and the Kurdistan Regional Government wrangle over the latter’s right to produce and sell its natural resources.
- Previously: Kurds petition U.S. court to let tanker enter Texas
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
- BP (NYSE:BP) is planning to spend A$10B ($9.3B) over the next decade on expanding its gas station network and developing oil and gas projects in Australia.
- The new objective is fueled by BP's new focus on expanding its retail business on the continent, while scaling back on refining operations.
- "The big opportunities we’re after is at the customer end of the business," says President Andy Holmes "Filling stations...that’s the area where we’re turning up our focus."
- CEO of the Japan Exchange Group (OTC:JPXGY), Atsushi Saito, says he supports the proposal for longer trading hours for the exchange and a decision over the long-debated issue will be made this year.
- Currently, JPX closes its trading day at 3pm, making its 5-hour trading day the shortest among major world exchanges.
- In an emergency hearing held yesterday due to Argentina's newly proposed debt swap, Judge Thomas Griesa declared that the attempt to dodge his rulings was "lawless", but stopped short of finding the country in contempt of court.
- Meanwhile, a group of Argentina's exchange bondholders is working with Deutsche Bank to eliminate the "RUFO clause" preventing the sovereign from offering holdout creditors better terms than those of its 2005 and 2010 restructurings.
- ETFs: ARGT
Thursday, August 21, 2014
- "Relative to the norm," the market is overexposed to the greenback and to U.S. stocks, says Saxo Bank CIO Steen Jakobsen, expecting the dollar to "significantly weaken" beginning in mid-Q3.
- Behind his call is his disagreement with the conventional wisdom that U.S. growth is set to accelerate. While Q3 may be decent, he says, "the real damage will come in Q4."
- The dollar index hit its highest level in nearly a year this week, showing particular strength over the past few weeks against the euro, the pound, and the loonie.
- Dollar ETFs: UUP, UDN, FORX, UDNT, UUPT, USDU
- Norway's $880B sovereign wealth fund has been boosting investments in emerging markets since the government in 2012 approved a plan to cut holdings in Europe to 41% from 54% of the portfolio. "We are gradually picking up some new markets, but at a less rapid pace than we did at the beginning of the year," says Yngve Slyngstad, the fund's CEO.
- China, however, remains a key target, says Slyngstad, noting the fund's investment relative to the size of that country's economy is "miniscule."
- The fund - which owns 1.3% of the world's stocks - has missed its 4% real return target since its inception in the late 90s. It reported a 3.3% return in Q2, in part because of a strong rally in emerging markets.
- ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, ADRE, EET, EUM, GMM, EEME, DBEM, EMCR, FEM, EWEM, EMLB, EMSA, EMFT, EMDR
- Petrovietnam has entered talks with banks to secure financing for a seven-year loan of up to $1.8B for its bid to buy a stake in Murphy Oil's (NYSE:MUR) Malaysian oil and gas assets.
- The $1.8B offer tops a $1.5B bid previously made by India's Oil & Natural Gas and Oil India. Mitsubishi (OTCPK:MSBHY) is also bidding on the assets.
- In response to the NY Department of Financial Services' proposed "BitLicense", three of the biggest Bitcoin (COIN, OTCQB:BTCS) exchanges in China (BTCChina, Huobi and OKCoin) have released a joint letter addressed to NY regulators which warns of far-reaching consequences due to their pending legislation.
- On July 17, the Department of Financial Services proposed issuing a BitLicense which would protect consumers, prevent money laundering and enforce cyber security, but the exchanges see too many restrictions in the proposed license.
- At issue are enhanced customer checks and that restrictions in NY could lead to limitations in other jurisdictions.
- Chinese antitrust officials have reached out to South Korea's regulatory commission in order to talk over Qualcomm's (NASDAQ:QCOM) violations of a 2008 anti-monopoly law.
- South Korea previously fined Qualcomm more than $200M in 2009 for abusing its dominant market position and China is looking for ways to handle the violations back home.
- China's anti-trust regulator can issue a fine of as much as a tenth of a company's annual revenue, which was $25B for Qualcomm this past year.
- In yet another decision to tighten foreign currency sales, Ukraine's central bank has announced that it is now mandatory for companies to sell all of their foreign currency income on the domestic market.
- The new move is aimed at offsetting the pressure of a pro-Russian separatist revolt on the Ukrainian currency and requires banks to sell their foreign currency earnings the day after receiving the funds from companies.
- The rule will apply until Nov. 21, but the central bank has extended similar regulations in the past.
- ETFs: RSX, RUSL, RSXJ, ERUS, RUSS, RBL, RUDR
- After a year-long blockade, Libya has restarted oil exports from its largest port, resolving some mistrust between rebel leaders and the government.
- Despite the ongoing clashes and violence still raging in main cities, the OPEC member's oil production has risen in the past few weeks to around 560K barrels a day.
- The new production is well above the 100K bpd seen earlier this year, but still short of the 1.4M bpd a year ago.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
- Toyota (NYSE:TM) is now the latest automaker to cut its auto parts prices in China, reducing parts on its Lexus models by an average of 26%.
- In recent months, many foreign automakers have lowered price tags due to the ongoing anti-trust investigation in the country's auto sector.
- Toyota's price cuts come just one day after China's anti-monopoly regulator issued a $201M fine on 12 Japanese companies over price manipulation.
- TM -0.4% AH
- Russia's food safety regulator Rospotrebnadzor says it is now conducting spot checks at McDonald's (NYSE:MCD) restaurants in the Sverdlovsk region of the country.
- Yesterday, Russia temporarily closed four McDonald's restaurants in Moscow, stating possible sanitary violations.
- The closures come amid tensions between Russia and the West, and an extensive ban on agricultural imports in retaliation over U.S. sanctions.
- Thailand's military junta General Prayuth Chan-ocha has been nominated prime minister by a legislature he hand-picked, nearly three months after he seized power in a coup d'état.
- Political analysts say the army is now likely to create a much more limited form of democracy before allowing elections, which Prayuth has planned for the end of 2015.
- ETFs: THD
Wednesday, August 20, 2014
- For the second time in three weeks, the Central Bank of Brazil injects billions into the banking system as the government grasps for ways to boost the slumping economy ahead of October elections.
- "It is hoped that the measures will improve small businesses’ access to credit and strengthen foreign trade,” says the bank.
- Analysts doubt the moves will do a whole lot as the issue, they say, isn't liquidity in the system - there's plenty of that - but that banks are unwilling to lend and borrowers are reluctant to borrow. "No one knows who is going to be president so if you are a businessman why not just wait until November," says Nomura economist Tony Volpon.
- The Bovespa is ahead 0.5% today.
- ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRZU, BRAZ, BZQ, BRAF, UBR, BRZS, DBBR, FBZ