Shanghai: Shares produce largest weekly rise in 2 months

Shanghai's benchmark stock index edged up on Friday and had its biggest weekly rise in more than two months, as investors turned bullish after concerns about the yuan's depreciation eased. 

PHOTO: EPA

AUG 14, 20153:24 PM

[SHANGHAI] Shanghai's benchmark stock index edged up on Friday and had its biggest weekly rise in more than two months, as investors turned bullish after concerns about the yuan's depreciation eased.

The Shanghai Composite Index rose 0.3 per cent on Friday, to 3,965.33 points, bringing this week's gain to 5.9 per cent, the largest since early June.

But the CSI300 index of the largest listed companies in Shanghai and Shenzhen dipped 0.1 per cent, to 4,073.54. It posted a weekly gain of 4.3 per cent.

Following three days of falls, the yuan held steady against the dollar after suspected intervention by the central bank, who said on Thursday there was no reason for it to fall further.

China's central bank stunned markets on Tuesday by devaluing the yuan by nearly 2 per cent. "Yuan devaluation suddenly became a concern for stock investors earlier this week, but now this issue is fading out of their radar," said Qi Yifeng, analyst at consultancy CEBM.

Waigaoqiao FTZ surged 10 per cent, the daily limit, after the Shanghai government-controlled company announced a major restructuring.

Investor interest in listed state-owned companies was also rekindled by a stock ownership incentive plan announced by Chinese liquor maker Wuliangye Yibin.

Reform expectations pushed up prices of state firms including Luoyang Glass and Guangdong Electric Power.

Many Tianjin-based companies, which slumped on Thursday following explosions in the northeastern port city, rebounded. Nearly a dozen companies issued statements saying their losses were limited.

The companies included Tianjin Port Holdings Co, Tianjin Economic-technological Development Area Ltd and Binghai Energy.

REUTERS

    

Oil's worst-ever summer signals price rout is nowhere near done

If crude's slump back to a six-year low looks bad, it's even worse when you reflect that summer is supposed to be peak season for oil. 

PHOTO: BLOOMBERG

AUG 14, 201511:11 PM

[NEW YORK] If crude's slump back to a six-year low looks bad, it's even worse when you reflect that summer is supposed to be peak season for oil.

US crude futures have lost 30 per cent since the start of June, set for the biggest drop since the West Texas Intermediate crude contract started trading in 1983. That beats the summer plunges during the global financial crisis of 2008, the Asian economic slump in 1998 and the global supply glut of 1986.

It even surpasses the decline of 2011, when prices fell as much as 21 per cent over the summer as the US and other large oil-importing nations released 60 million barrels of oil from emergency stockpiles to make up for the disruption of Libyan exports during the uprising against Muammar Qaddafi.

WTI, the US benchmark, fell to a six-year low of US$41.35 a barrel Friday. It may slide further, according to Citigroup Inc.

"Summer is when refineries are all running hard, so actual demand for crude is as good as it gets," Seth Kleinman, London- based head of energy strategy at Citigroup Inc, said by e-mail.

Opec's biggest members are pumping near record levels to defend their market share and US production is withstanding the collapse in prices and drilling. The oil market is still clearly oversupplied and "it will get more so as refiners go into maintenance," Kleinman said.

Oil demand usually climbs in the summer as US vacation driving boosts purchases of gasoline and Middle Eastern nations turn up air-conditioning.  Crude has sunk this year even US gasoline demand expanded, stimulated by a growing economy and low prices. Total gasoline supplied to the US market rose to an eight-year high of 9.7 million barrels a day last month, according to US Department of Energy data.

Crude could fall to US$10 a barrel as Opec engages in a "price war" with rival producers, testing who will cut output first, Gary Shilling, president of A. Gary Shilling Co, said in an interview on Bloomberg Television on Friday.

"Opec is basically saying we're not going to cut production, we're going to see who can stand lower prices longest," Shilling said. "Oil is headed for US$10 to US$20 a barrel." 

BLOOMBERG

    

Gold price spike keeps Asian buyers at bay

PHOTO: REUTERS

AUG 14, 20152:29 PM

[MANILA] Gold's longest run of price gains in three months kept Asian buyers on the sidelines this week, steadying physical premiums in top consumers China and India.

Yuan-denominated gold prices in China, the world's biggest consumer of the metal, spiked more than 5 per cent this week, boosted in part by investors seeking a secure store of value after Beijing devalued the yuan, traders said.

But gold's upturn stalled as the yuan firmed after China's central bank said there was no reason for it to fall further given the country's strong economic fundamentals.

Spot gold slipped from a three-week high of US$1,126 an ounce on Thursday after a five-day rally that was its longest since May. "At the moment, there are more sellers than buyers in Hong Kong or in China," said William Wong, assistant head of dealing at Wing Fung Precious Metals in Hong Kong.

Gold is sold in Hong Kong at a premium of US$1-$1.20 an ounce over the global spot benchmark, unchanged from last week, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers.

There was some physical buying when gold breached US$1,100 an ounce, but it fizzled when the price rose to US$1,120, said Leung. "The (yuan) devaluation is making people uncertain about the economy," said Leung. "If gold prices hold at current levels, maybe some physical demand will come back a bit." China's gold demand this year is expected to at least hold steady with last year at just under 1,000 tonnes and is unlikely be dented by the yuan devaluation, the World Gold Council (WGC) said on Thursday.

Premiums on the Shanghai Gold Exchange recovered to about US$4 an ounce, around the same level as last week, after diving into a deep discount shortly after China's yuan devaluation on Tuesday.

Premiums in India, the world's No. 2 gold consumer, hovered between US$1.10 to US$2 an ounce over global spot, from US$1.30-$2.10 last week, as supply outstripped demand. "The spike in prices moderated retail jewellery demand. Investment demand is negligible right now," said Daman Prakash Rathod, director with Chennai-based wholesaler MNC Bullion.

Gold prices in India have risen more than 6 per cent since hitting their lowest level in four years in late July. "The depreciating rupee is making buyers nervous. They don't know how the rupee will behave in coming weeks," Rathod said. The Indian rupee fell to its lowest level in nearly two years on Thursday.

India's gold demand in the second half of 2015 could rise by more than a quarter from a year before as lower prices encourage buying during the peak festival season towards year-end, the WGC said. "Jewellers have healthy inventory due to higher purchases made since the last week of July. Now they are waiting for prices to correct before large-scale buying," said a Mumbai-based bank dealer.

REUTERS

    

Nine banks agree to pay US$2b to settle forex rigging suit

US banking giant JPMorgan Chase agreed to pay US$99.5 million in January, followed by Bank of America at US$180 million, Citigroup at US$394 million and Swiss UBS at US$135 million. 

PHOTO: REUTERS

AUG 14, 20151:44 PM

[NEW YORK] Nine major banks accused of foreign-exchange rigging have agreed to pay more than US$2 billion to investors in settlements, a law firm involved in the process said Thursday.

Plaintiffs have "reached settlements totaling more than US$2 billion with Bank of America, Barclays, BNP Paribas, Citi, Goldman Sachs, HSBC, JPMorgan, RBS and UBS," legal firm Hausfeld said in a statement published after a hearing in New York.

Hausfeld, which represented investors, gave no indication how the sum would be divided between the banks and said that the agreements were preliminary and must still be approved by US District Judge Lorna Schofield.

In June, sources close to the situation reported that Barclays would pay US$375 million, HSBC US$285 million, BNP Paribas nearly US$100 million and Goldman Sachs about US$130 million. But they also specified that the amounts were subject to change.

None of the banks responded immediately when contacted by AFP.

Some of the banks in Thursday's announcement had already agreed to specific sums.

US banking giant JPMorgan Chase agreed to pay US$99.5 million in January, followed by Bank of America at US$180 million, Citigroup at US$394 million and Swiss UBS at US$135 million.

"In addition to the billions of dollars in compensation, these settling banks have agreed to cooperate with investors in their continuing litigation" against other institutions, Hausfeld said.

Thursday's agreements are distinct from proceedings led by US and British regulators, which in May ordered US$6 billion in fines on six major banks - Barclays, JPMorgan Chase, Citigroup, Royal Bank of Scotland, UBS and Bank of America - for rigging foreign exchange market and Libor interest rates.

Barclays, JPMorgan Chase, Citigroup and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market.

"While the recoveries here are tremendous, they are just the beginning," said Hausfeld chairman Michael Hausfeld.

"Investors around the world should take note of the significant recoveries secured in the United States and recognise that these settlements cover a fraction of the world's largest financial market," he said.

The firm also noted that it was considering "concerted action" in London.

AFP

    

US: Stocks dip as wholesale inflation edges up  

PHOTO: REUTERS

AUG 14, 201510:03 PM

[NEW YORK] Wall Street stocks opened slightly lower Friday following US data that showed slightly stronger-than-expected wholesale inflation.

Five minutes into trade, the Dow Jones Industrial Average stood at 17,405.72, down 2.53 points (0.01 per cent).

The broad-based S&P 500 dipped 0.34 (0.02 per cent) to 2,083.05, while the tech-rich Nasdaq Composite Index fell 6.58 (0.13 per cent) to 5,026.98.

The Labour Department said its producer price index (PPI) rose 0.2 per cent in July, just above the 0.1 per cent increase projected by analysts.

The Federal Reserve has spotlighted the need for stronger inflation as a leading condition to hike interest rates.

The inflation report came in "a bit stronger than expected," said Briefing.com analyst Patrick O'Hare.

"The headline is really the sentiment issue for the market, which thinks the Federal Reserve is looking for any excuse to raise the fed funds rate soon."

AFP

      

Global M&A activity surges towards record high

AUG 14, 20158:39 PM

[LONDON] Global mergers and acquisitions (M&A) have climbed close to a record high this year, accelerated by a trio of multibillion-dollar deals in the US, Thomson Reuters data showed.

The largest of these was Warren Buffet's US$30 billion-plus purchase of Precision Castparts, announced on Monday. The takeover is the biggest by Buffet's Berkshire Hathaway .

So far this year, US$2.9 trillion in deals have been announced globally, only 3 per cent below the US$3 trillion record peak in 2007.

Domestic M&A in the US has reached a total of US$1.4 trillion, a 62 per cent increase on this time last year.

Acquisitions of US companies account for almost half of the total worldwide value of deals in dollars terms.

In the Asia Pacific region, dealmaking is off to its best start for the year since records began, outpacing Europe for the first time and making up 23 per cent of global dealmaking.

But on Tuesday, the Chinese central bank devalued its currency, causing volatility across global financial markets.

It is unclear yet whether these measures, coupled with a slowdown in China, could diminish the appetite for takeovers in the region.

REUTERS