US oil prices fall to over 6-yr lows as demand outlook weakens

AUG 18, 20153:26 PM

[SINGAPORE] US oil prices fell to their lowest in more than six years on Tuesday as traders braced for lower refinery consumption after the US summer, while Asia's weakening economies and high global production stoked concerns about oversupply.

Both crude oil benchmarks are now almost a third below their last peak in May, with data showing speculators have taken huge bets on further falls. "Fundamentals suggest downside risks still remain in key markets - particularly iron ore and crude oil - in the months ahead," ANZ bank said on Tuesday, expecting US stockpiles to rise in coming months as refiners reduce operations for maintenance.

US crude futures were 36 cents lower at US$41.51 per barrel, their lowest since early 2009, at 0657 GMT. A brief blip below that level on Friday was not considered representative of the market.

Brent futures were at US$48.45 a barrel, down 29 cents but still some way from their 2015 lows of US$45.19.

BMI Research, a subsidiary of Fitch Ratings, said the market may have overshot to the downside, expecting a modest recovery in prices towards the fourth quarter. "The downward move has been largely speculative, driven by the Iranian nuclear accord, economic uncertainties surrounding China and bearish repositioning in the futures market," BMI Research analysts said.

Many oil traders are positioning themselves to profit from a further drop in US prices. As well as betting on further outright falls, traders have been aggressively taking up put options - an option to sell a contract once it has fallen to a certain level - at prices as low as US$35 and even US$30 per barrel. "The amount of queries we've received recently about leveraging bets on further price falls has been astonishing,"one broker said.

Underscoring the bearish sentiment, money managers and hedge funds cut their net long holdings of Brent crude futures for a fourth straight week, exchange data showed on Monday.

The long-term outlook also remained bearish, with BMI Research expecting "oil prices will remain anchored until 2018". "The return of Iranian oil to the market, coupled with strong project pipelines in North America, the Middle East, West Africa and Kazakhstan, will see global supply growth outstrip the growth in global consumption for the next two years," they said.

The firm forecasts Brent to average US$56 and US$55 in 2016 and 2017 respectively, with US crude averaging $53 in both years.

REUTERS

    

Citi lowers gold price forecasts for 2015, 2016

Citi on Tuesday lowered its average gold price forecasts for this year and next, citing weak economic conditions and fundamentals. 

PHOTO: REUTERS

AUG 18, 20155:06 PM

[SINGAPORE] Citi on Tuesday lowered its average gold price forecasts for this year and next, citing weak economic conditions and fundamentals.

The bank lowered its 2015 average gold price forecast to US$1,140 from US$1,180 per ounce and 2016 to US$1,050 from US$1,195.

Citi said it expects continued dollar strength as the US Federal Reserve begins tightening financial stimulus measures over the next several quarters.

Funds and institutional investors have piled into bullion over the past decade, looking for protection against inflation and betting on a weaker dollar as the US Fed pumped money into the system as part of its stimulus efforts.

As that programme comes to an end, gold's appeal has waned. "If this (dollar) appreciation manifests, then we are likely to be in for more pain in gold markets even after the first hike takes place." Citi also reduced its 2015 third and fourth quarter forecasts to US$1,090 per ounce and US$1,050 per ounce, respectively.

Spot gold was trading at around US$1,119 per ounce as of 0850 GMT on Tuesday.

REUTERS

    

Twitter says to accelerate push for content partnerships in Asia

Twitter Inc said on Tuesday it plans to accelerate its push for content partnerships in Asia Pacific and the Middle East. 

PHOTO: BLOOMBERG

AUG 18, 20156:32 PM

[SINGAPORE] Twitter Inc said on Tuesday it plans to accelerate its push for content partnerships in Asia Pacific and the Middle East.

It has appointed a Singapore-based executive, Rishi Jaitly, to boost teams in major markets such as Australia, India, and Japan as well as to expand into Greater China and Southeast Asia, the company said in a statement. Jaitly was previously Twitter's market director for India and Southeast Asia.

Twitter has been aggressively expanding its capabilities to carry pictures, video and interactive content.

REUTERS

Taiwan's Foxconn to invest US$200m in India's Snapdeal

Taiwan electronics giant Foxconn said Tuesday it would invest US$200 million in leading Indian online marketplace Snapdeal as part of efforts to tap a huge potential market. 

PHOTO: REUTERS

AUG 18, 20158:50 PM

[TAIPEI] Taiwan electronics giant Foxconn said Tuesday it would invest US$200 million in leading Indian online marketplace Snapdeal as part of efforts to tap a huge potential market.

Foxconn's fully-owned subsidiary in Singapore Wonderful Stars will acquire a 4.27 per cent stake in Snapdeal, according to a statement released by Foxconn.

The investment came after Terry Gou, founder of the Foxconn group, signed a memorandum of understanding with Devendra Fadnavis, chief minister of the western Indian state of Maharashtra, early this month to invest US$5 billion in a new plant.

Foxconn, the supplier to Apple also known as Hon Hai Precision Industry, is the world's largest computer components manufacturer and also assembles products for Sony and Nokia.

Setting up a facility in India could help cut Foxconn's labour costs and boost sales of iPhones in a country that boasts 952 million mobile connections.

Foxconn's decision to invest US$5 billion in India has sparked media concerns in China, where the economy is slowing.

The group employs about a million workers in China, roughly half of them based at its main facility in the southern city of Shenzhen.

The group has production facilities in more than 10 countries, including Vietnam, Brazil and Mexico.

AFP

OCBC to issue S$500m capital securities as additional Tier 1 capital

By

Anita Gabrielanitag@sph.com.sg@AnitaGabrielBT

AUG 18, 20159:26 PM

OCBC Bank has priced the issue of S$500 million non-cumulative non-convertible perpetual capital securities at 100 per cent with a distribution at a fixed rate of 3.80 per cent per annum to holders of the instrument.

The capital securities, net proceeds of which will be used for general corporate purposes, are intended to qualify as the bank's additional Tier 1 capital under the Monetary Authority of Singapore's Basel III framework.

OCBC Bank is the sole bookrunner for the issue while Citigroup Global Markets Singapore and JP Morgan (SEA) are joint lead managers, said the bank in a statement .

The instrument to be issued on Aug 25 is expected to be rated A3 by Moody's Investors Service, BBB- by Standard & Poor's Rating Services and BBB by Fitch Ratings
.

European banks to sell a record US$154 billion of loans, PwC says

AUG 18, 20157:02 PM

[LONDON] European banks are set to divest a record 139 billion euros (S$216 billion) of loans this year, led by the UK, as the industry accelerates asset sales to meet new rules, according to PricewaterhouseCoopers LLP.

Banks have offloaded 54.5 billion euros of debt and a further 84 billion euros of loans are in the process of being sold, PwC said in a report Tuesday. The UK and Ireland account for more than 60 per cent of deals in progress this year, after disposing of 125 billion euros in the five years through 2014.

"It is no surprise the UK and Ireland, followed by Spain, have been the most active portfolio transaction markets in Europe given that banks locally have been very active in cleaning up their balance sheets," said Richard Thompson, chairman of PwC's European portfolio advisory group.

"Italy has seen a large increase in activity in 2015 and is one of the main focus areas for international investors and funds."

Banks have been shrinking their balance sheets since the financial crisis to comply with a raft of regulations that require them to maintain capital buffers as a proportion of assets, to absorb losses and protect taxpayers from bailouts.

Hedge funds and private-equity firms are among buyers of the loans as they seek to gain exposure to the recovering British and European economies, which has boosted competition and prices this year, PwC said.

Commercial real estate debt and secured mortgages accounted for 83 per cent, or 45 billion euros, of loans sold by banks so far this year, the data show.

Bolster Capital Last month, Commerzbank AG and Royal Bank of Scotland Group Plc sold about US$1.4 billion of unwanted assets, including ships and real-estate loans, to bolster capital. In April, RBS also divested US$5.6 billion of North American corporate loans to Japan's Mizuho Financial Group Inc.

Goldman Sachs Group Inc, CarVal Investors LLC and Bank of Ireland Plc bought loans with a face value of 2.6 billion pounds from Lloyds Banking Group Plc in July.

UK banks are expected to sell another 42.5 billion euros this year, raising the total for 2015 to 56 billion euros, PwC estimated. Ireland may account for 18.5 billion euros of sales. Spanish lenders, with about 15 deals in progress, will dispose of about 20 billion euros in total, with German and Italian banks expected to sell 22 billion euros and 16 billion euros respectively.

BLOOMBERG

    

China: Stocks slump 6 per cent on fears of further yuan depreciation 

Chinese stocks plunged on Tuesday as the yuan weakened against the dollar, reigniting fears that Beijing may be intent on a deeper devaluation of the currency despite the central bank's comments that it sees no reason for a further slide. 

PHOTO: EPA

AUG 18, 20153:36 PM

[HONG KONG] Chinese stocks plunged on Tuesday as the yuan weakened against the dollar, reigniting fears that Beijing may be intent on a deeper devaluation of the currency despite the central bank's comments that it sees no reason for a further slide.

Concerns that companies may pull more money out of China as the economy slows and speculation that the government may begin to scale back its massive support for the country's stock markets also prompted investors to take profits after a run-up in prices over the last few weeks, traders said.

The Shanghai Composite Index closed down 6.1 per cent at 3,749.12 points in its biggest daily decline since July 27, snapping a three-day winning streak.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 6.2 per cent at 3,825.41.

Volatility in both indexes spiked in the afternoon in what is becoming a mysteriously recurring pattern in China's stock markets since Beijing stepped in to avert a full-blown price crash in early summer.

The yuan fell against the dollar on Tuesday despite a slightly stronger midpoint set by the central bank, and traders expect the currency to remain under downward pressure as the economy struggles.

The People's Bank of China devalued the currency last week by nearly 2 per cent, triggering an avalanche of selling by investors who feared Beijing wanted to engineer a much sharper decline to support weak exports. The PBOC was later forced to step into the market and tell state banks to support the currency.

Shares of importers and firms with high US dollar-denominated debt have been under pressure along with Chinese airlines which face higher fuel bills following the devaluation.

The central bank made its biggest injection of funds into money markets in more than six months early on Tuesday, adding to worries that liquidity was tightening as investors moved more capital out of the country.

Minsheng Securities estimated 800 billion yuan (S$176 billion) had flowed out in July and August alone.

Investors have also grown more concerned that Beijing may begin to withdraw its unprecedented support for share prices.

China's securities regulator said last Friday that the government will allow market forces to play a bigger role in determining stock prices, the first official signal from Beijing that it could be moderating its efforts to prop up its equity markets via state-backed financial institutions. "The CSRC made it clear last week that the state will withdraw from regular market intervention to support share prices," said a senior trader at a major Chinese brokerage in Shanghai. "Because sentiment has been weak since the sharp fall that began in June, people believe the market itself cannot support current share price levels without the state's support." Selling was broad based. The CSI 300 infrastructure index fell 8.4 per cent, the energy index dropped 6.1 per cent, and the real estate index tumbled 7.3 per cent despite data which showed Chinese home prices rose for the third month in a row in July.

REUTERS

      

Hot stock: Noble Group shares erase early gains, hit 6-1/2 year low

Singapore-listed shares of Noble Group Ltd on Tuesday dropped as much as 6.6 per cent to an intra-day low of S$0.425, their lowest since Nov 2008, erasing earlier gains. 

PHOTO: REUTERS

AUG 18, 20154:46 PM

[SINGAPORE] Singapore-listed shares of Noble Group Ltd on Tuesday dropped as much as 6.6 per cent to an intra-day low of S$0.425, their lowest since Nov 2008, erasing earlier gains.

Shares in Noble, Asia's largest commodity trader, had rallied more than 5 per cent in early trade, a day after its chief executive said the company was open to selling core businesses during a meeting with investors that lasted more than four hours.

Noble, already under pressure in a weak commodities market, hit the spotlight in February when blogger Iceberg Research alleged the company was inflating its assets by billions of dollars by not fairly representing the value of its commodity contracts. The company has rejected the claims.

REUTERS

US: Equities decline on Walmart, China stock plunge 

AUG 18, 201510:14 PM

[NEW YORK] US stocks dropped early Tuesday following disappointing earnings from Walmart Stores and another big drop in the Chinese equity market.

About 25 minutes into trade, the Dow Jones Industrial Average stood at 17,506.37, down 38.81 points (0.22 per cent).

The broad-based S&P 500 lost 4.45 (0.21 per cent) at 2,097.99, while the tech-rich Nasdaq Composite Index shed 17.23 (0.34 per cent) to 5,074.47.

Retail behemoth Walmart, a Dow component, fell 2.3 per cent after slashing its full-year earnings forecast as second-quarter earnings were dented by the strong dollar, higher operating costs and other issues.

The Shanghai index tumbled 6.15 per cent amid worries about the Chinese economy following last week's surprise devaluation of the yuan currency. Equity markets in Japan, Korea and Thailand also fell as jitters about China spread across the region.

AFP

China calls on Thailand to fully investigate blast, punish perpetrators

China on Tuesday urged Thai authorities to fully investigate a bomb blast in Bangkok that killed 22 people, including four Chinese tourists, and to severely punish the perpetrators. 

PHOTO: EPA

AUG 18, 20155:04 PM

[BEIJING] China on Tuesday urged Thai authorities to fully investigate a bomb blast in Bangkok that killed 22 people, including four Chinese tourists, and to severely punish the perpetrators.

China "expresses strong condemnation" of the bombing, Chinese Foreign Ministry spokeswoman Hua Chunying said in a statement posted on its website.

Hua said four Chinese tourists were killed, including two Hong Kong residents, and that more than 20 Chinese tourists were wounded in the blast.

REUTERS

    

Bangkok blast: CCTV footage retraces footage of suspect

      

AUG 18, 20157:05 PM

[BANGKOK] Closed-circuit television (CCTV) footage of a man who entered a Bangkok temple shortly before a blast that killed 22 people could shed light on who was behind the unprecedented attack.

The video, taken from cameras near the glittering Hindu shrine in the city's bustling commercial hub on Monday, shows the young man, who authorities have identified as a suspect, in a bright yellow T-shirt and shorts going into the tourist attraction with a backpack and then sitting down.

Moments later, he takes the backpack off and walks out holding only a blue plastic bag and what appears to be a mobile phone. The rucksack is left by a fence as tourists mill around, taking photographs of a statue of the Hindu god Brahma.

Footage taken from a different angle shows the man, with shaggy, black hair, leaving the temple and heading towards the upscale Grand Hyatt Erawan hotel, just yards away. The time stamp on the video at that point is just after 6.40 pm.

The bomb went off during rush hour on Monday as tourists prayed at the shrine and office workers were commuting home.

The explosion, which was heard just before 7.00 pm, unleashed havoc. Early responders and journalists who arrived at the scene were confronted with scenes of blood-smeared pavements, shattered glass and pieces of human flesh.

No group has come forward to claim responsibility for the attack. The military government said it had not ruled out any group but has yet to publicly offer any plausible answers.

REUTERS

      

Indonesia central bank holds key rate at 7.50%, as expected

Indonesia's central bank held its benchmark interest rate steady on Tuesday, saying its focus was to maintain stability in the rupiah. 

PHOTO: BLOOMBERG

AUG 18, 20154:32 PM

[JAKARTA] Indonesia's central bank held its benchmark interest rate steady on Tuesday, saying its focus was to maintain stability in the rupiah.

Bank Indonesia has held the policy rate at 7.50 per cent since February when it last cut rates by 25 basis points. Analysts in a Reuters poll had expected the central bank to keep all interest rates unchanged.

Annual inflation in July was at 7.26 per cent, virtually identical with June, the highest this year.

The rupiah is the second-worst performing currency in emerging Asia after Malaysia's ringgit, trading at a level not seen since mid-1998.

REUTERS

    

Melbourne keeps crown as world's most liveable city

Melbourne is the world's most liveable city but conflict and terrorism have led to a fall in global urban living conditions more generally, according to a respected British study published Tuesday. 

PHOTO: BLOOMBERG

AUG 18, 201510:48 PM

[LONDON] Melbourne is the world's most liveable city but conflict and terrorism have led to a fall in global urban living conditions more generally, according to a respected British study published Tuesday.

For the fifth year running, the Australian city came out on top of the annual Liveability Ranking study of 140 cities, conducted by the Economist Intelligence Unit, ahead of Austrian capital Vienna and Vancouver which came out top in 2011.

The survey scores cities on five broad categories: stability; healthcare; culture and environment; education and infrastructure.

It found that mid-sized cities in wealthier countries with a relatively low population density scored highly, with Canada and Australia accounting for seven of the top ten cities.

Although offering a "big city buzz", the study concluded that global centres such as London, New York, Paris and Tokyo suffered overstretched infrastructure and higher crime rates as a result of their size.

Tokyo was ranked at 15, Paris at 29, London at 53 and New York at 55.

Although the top five cities remain unchanged, more than a third overall saw a change in their score, with the majority of those suffering a fall in standards "reflecting a deterioration in stability in many cities around the world." "High-profile terrorist shootings in France and Tunisia and the ongoing actions of Islamic State (IS) in the Middle East have created a further heightened threat of terrorism in many countries," said the report.

"Meanwhile, protests over matters like police brutality, democracy and austerity have also raised the threat of civil unrest in many countries, notably the US," it added.

Hong Kong also slipped down the rankings in the wake of mass protests and clashes with the police last year.

The three cities falling furthest in the rankings were Libyan capital Tripoli, Ukrainian capital Kiev and Syrian capital Damascus, all as the result of ongoing conflicts.

In contrast, Harare in Zimbabwe, Nepal's capital Kathmandu and desert metropolis Dubai recorded the most improved scores.

AFP