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Sunday, January 24, 2016

Update: Keppel Corp to merge S$26b in asset management businesses in major restructuring

Nisha Ramchandaninishar@sph.com.sg@Nisha_BT

JAN 25, 20168:36 AM

IN a major restructuring exercise, Keppel Corporation is planning to merge S$26 billion worth of its asset management businesses under wholly-owned subsidiary Keppel Capital to grow the contributions from its investment division.

This will involve Keppel Infrastructure Fund Management (the trustee-manager of Keppel Infrastructure Trust), Keppel DC Reit Management (the manager of Keppel DC Reit), Keppel Reit Management (the manager of Keppel Reit), and fund manager Alpha Investment Partners.

Keppel's asset management businesses currently manage S$26 billion of quality assets and contributed S$60 million of profits last year.

Keppel Corp chief Loh Chin Hua said: "Creating and developing high quality real estate and infrastructure assets as well as stabilizing and monetizing them to generate strong cash flow and recurring income are integral parts of Keppel's business model. The consolidation under Keppel Capital is part of our continuing plan to grow our assets under management and expand our capital platform for co-investing."

The proposed consolidation will strengthen the group's capital recycling platform and ability to make prudent and timely investments with an expanded capital base and without relying solely on its balance sheet, Keppel said. It added that this will also improve the performance of the subsidiaries, the funds, Reits and business trusts that they manage through centralising certain non-regulated support functions and creating a larger platform which will enhance recruitment and retention of talent, and sharing of best practices.

This will improve the returns to the Keppel Group, and to other investors and unitholders, from their investments in the funds and unitholdings in the Reits and business trust.

The proposed consolidation is also expected to improve the group's stable, recurring income from management fees.

The proposed consolidation does not change the unitholdings in the Reits and business trust or investments in the funds, Keppel clarified.

Keppel will report the entities under a new consolidated reporting segment, together with its investments.

"The proposed consolidation will also include the centralisation of certain non-regulated support functions in Keppel Capital, namely legal and compliance support services, human resource and general administrative support services, information technology support services and general accounting support services," Keppel said in an earlier release. After the restructuring has been completed, it may increase the scope of support functions to include regulated activities relating to investments and asset management. However, this would require the necessary licences and approvals from the Monetary Authority of Singapore.

Christina Tan, the present managing director of Alpha, will be appointed the CEO-designate of Keppel Capital. Ms Tan has over 20 years of experience in investing and fund management in the US, Europe and Asia. With Ms Tan at the helm, Alpha has grown its assets under management to over S$12 billion.

Keppel Corp aims to complete the proposed consolidation by the second half of this year, subject to the relevant approvals
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SGX seeks to break LNG's price link to oil with Singapore SLInG

JAN 25, 20168:47 AM

[TOKYO] Singapore Exchange Ltd wants to break the liquefied natural gas market's reliance on oil as a pricing peg as the city-state seeks to solidify its role as Asia's energy trading hub.

The exchange, known as SGX, plans to launch on Monday futures and swaps linked to its index of spot prices for LNG traded in Asia. Final settlement for the contracts will be determined by average weekly assessments gathered from producers, consumers and traders in the physical LNG market.

Natural gas can be supercooled and liquefied to transport it on tankers between areas difficult to link by pipeline. LNG traded in Asia - where sellers such as Qatar and Indonesia ship fuel to buyers including Japan or China - has traditionally been pegged to crude prices. That's because the region lacks a benchmark similar to Henry Hub in the US, which the country's burgeoning LNG exporters use in sales contracts.

For Singapore to become Asia's LNG pricing hub, it will need greater physical supplies and expanded storage facilities in addition to swaps and futures, according to Wood Mackenzie Ltd.

"When Singapore talks about being a pricing hub, it is talking more about being a physical hub for gas where as a buyer and seller you can put gas in and take gas out," Gavin Thompson, Wood Mackenzie's vice president for China and Northeast Asia gas and power, said in an interview. "That price for the physical commodity is then priced into the short-term spot and long-term contracts, potentially the same way Henry Hub is priced into long-term LNG contracts." While both oil and LNG prices have tumbled since 2014, a forecast decrease in global crude output in the medium-term contrasts with LNG's "tsunami" of new production, according to Adrian Lunt, an associate director of commodities at SGX. These divergent supply situations, and the growing share of LNG in global energy markets, "will likely reveal the increasingly blatant flaws" of pricing the fuel off oil, he said.

Japan's Jera Co, a joint venture between Tokyo Electric Power Co and Chubu Electric Power Co that's poised to become one of the world's biggest LNG buyers, may use the Singapore index in its term contracts, according to the company. Korea Gas Corp isn't actively using the index because its not purchasing LNG on a spot basis, according to spokesman Song Kyu Cheol.

Indian Oil Corp isn't planning to use the swaps and futures and prefers indexing its contracts to Brent, said Debasis Sen, director of planning and business development.

"Given the nascent stage of market development for LNG, the majority, if not all" of the new contracts will be traded over the counter and cleared by SGX, Lily Chia, the company's head of product management for commodities, said in an e-mail. The exchange sees SLInG - shorthand for its FOB Singapore SGX LNG Index Group- as a pricing tool for traders, financial institutions and power companies, she said.

Singapore is home to more than 25 LNG trading desks and its estimated that about 2,000 cargoes transit near the country each year, according to the company. Singapore LNG Corp, which operates the city-state's first receiving terminal, has three storage tanks at its Jurong Island facility.

"As with all new markets, it takes time to develop the necessary conditions for growth," said Chia. "These would include more spot and short-term transactions, transition to index pricing in sales and purchase contracts and a working understanding of hedging and price risk management, amongst a critical mass of market participants."

BLOOMBER
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China bears descend on Alibaba as investors fret about economy

JAN 25, 20167:24 AM

[NEW YORK] US short sellers have pushed bets against Alibaba Group Holding Ltd. to the highest in more than 14 months on concern that China's deepest economic slowdown since 1990 will only get worse.

Short interest in China's biggest online retailer surged to 7.5 per cent of shares outstanding on Jan 21, the highest since November 2014, according to data compiled by Markit and Bloomberg. That is more than double from a Dec 1 low. Bearish bets on rival JD.com Inc.have hovered around 2 per cent since last month.

Pessimists are once again taking aim at Alibaba - a bellwether for US investor sentiment on China - as mainland stocks entered a bear market last week. Those wagers are already starting to pay off as a selloff since the start of the year sent the American depositary receipts of Alibaba down more than 13 per cent.

Investors see Alibaba as a stock that reflects the state of the Chinese economy, said Henry Guo, a San Francisco-based analyst at Summit Research Partners LLC, who has a buy rating on the stock.

"With China's economic outlook worsening, that's just an easy way for people to have short China exposure," China's top leadership has signaled it may accommodate more economic slackness as officials tackle delicate tasks such as reducing excess capacity. The world's second-largest economy will slow to 6.5 per cent this year and 6.3 per cent next year, according to the median of economist estimates.

At a corporate level, counterfeit products and accounting frauds of Alibaba are also on the mind of investors since the company's record 2014 debut on the New York Stock Exchange. Kynikos Associates LP founder Jim Chanoswarned against the stock in November, according to a CNBC report. In December, Russian billionaire Alisher Usmanov said he has started to sell his stake in the e-commerce giant.

Alibaba declined to comment on market speculation in an e- mailed statement.

The company is scheduled to report third-quarter earnings on Jan 28. Revenue is expected to hit 33 billion yuan (S$7.1 billion), according to the average estimates of 26 analysts surveyed by Bloomberg. That compares with 26.2 billion yuan in the same period a year ago.

BLOOMBERG

Sunday, January 24, 2016

Update: Keppel Corp to merge S$26b in asset management businesses in major restructuring

Update: Keppel Corp to merge S$26b in asset management businesses in major restructuring

SGX seeks to break LNG's price link to oil with Singapore SLInG

SGX seeks to break LNG's price link to oil with Singapore SLInG

China bears descend on Alibaba as investors fret about economy

China bears descend on Alibaba as investors fret about economy

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