Month: August 2015

Asian stocks mixed; Shanghai Comp opens down nearly 1%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stocks opened mixed on Thursday, tracking modest offshore gains.

Overnight, the S&P 500 and Nasdaq Composite broke a three-day losing streak, while the Dow Jones Industrial Average inched down amid disappointment from Disney’s earnings.

Mainland markets down

China’s Shanghai Composite index opened down nearly 1 percent, extending a 1.6 percent fall from Wednesday.

Among other indexes, the CSI300 index sagged 0.2 percent, while the smaller Shenzhen Composite slipped by the same margin.

In Hong Kong, the Hang Seng index shed 0.4 percent, with Wison Engineering Services in focus. The a supplier to PetroChina has been found guilty of bribery after an investigation by the Chinese government and ordered t pay a fine of 30 million yuan.

Wison Engineering Services slumped 2.3 percent, while PetroChina receded nearly 1 percent both in Shanghai and Hong Kong.

ASX drops 0.7 percent

A sharp plunge among the major lenders sent Australia’s S&P ASX 200 index down to a one-week low.

Westpac, Commonwealth Bank of Australia and National Australia Bank slumped 2 percent each, following news that Australia and New Zealand Banking Group will beraising USD 2.2 billion through a share placement.

As gold and energy prices settled lower overnight, Evolution Mining and Newcrest Mining dropped 1 and 0.6 percent, respectively, whileSantos and Woodside Petroleum lost 0.9 and 0.7 percent, respectively.

Rio Tinto drifted 0.6 percent higher ahead of its earnings report, which is expected after the market close.

The market will be looking intently at Rio’s ability to continue its expenditure cutting. Rio previously set its cost-cutting target at $750 million, and any further
increases to this would be most welcomed by investors,” IG’s market analyst Angus Nicholson wrote in a note. “There will also be a keen focus on RIO’s iron ore output and its ability to continue further growth.”

The Australian dollar ticked up briefly to USD 0.7373 against the greenback after employment data beat market forecasts by almost four times, but soon fell back to USD 0.7335.

Nikkei gains 0.7 percent

Japan’s Nikkei 225 index bounced up to a more than two-week high, as the Bank of Japan kicks off its monthly two-day policy meeting.

Shares of NTT DoCoMo rallied nearly 3 percent on the back of news that the Japanese mobile operator will be working with IntelandQualcomm as part of its development of 5G mobile communicationstechnologies.

Index heavyweights also helped to prop up the bourse, with Fanuc and Softbank piling on 3.6 and 1 percent, respectively. Fast Retailing, which suffered a 4.7 percent slump on Wednesday due to a fall in July same-store sales, ticked up 0.2 percent at the start of trade.

Meanwhile, airbag manufacturer Takata Corp rose 1 percent ahead of the release of quarterly results later in the day.

Kospi slips 0.3 percent

South Korea’s Kospi index fell into negative territory on the back of losses among heavyweight components.

Hyundai Motor eased 1 percent, while Samsung Electronics and Posco opened down 0.7 and 0.5 percent, respectively. Korea Electric Power Corp. (KEPCO) outperformed its blue-chip peers to rise 1.2 percent, after the state-run power company said Wednesday its second-quarter net profit jumped seven-fold from a year earlier on the back of reduced fuel costs.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Caixin China services PMI rises to 53.8, 11-month high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Relax, China’s choppy markets are just growing pains

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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More than a month after Chinese regulators began rolling out measures to stem a rout in mainland equities, markets remain underwater. But that’s not necessarily a bad thing, experts say.

Since regulators first started supporting the market on June 27—in the form of a surprise interest rate cute by the People’s Bank of China—Shenzhen and Shanghai shares have tumbled 18 and 15 percent respectively.

“In a way, the failure of these circuit breakers, the ongoing market correction, is a good sign. I’d be worried if these support acts caused the market to rebound further into bubble territory,” Chong Yoon Chou, investment director at Aberdeen Asset Management Asia, told CNBC on Tuesday.

“I’d be concerned that the higher the market goes, the harder it crashes.”

Those fears are shared by Beijing too, according to market players. The government’s efforts to staunch the equity market correction that started in mid-June have been aimed to inject stability, indicating a tolerance for losses.

Read More: How this billionaire investor is playing China volatility

“The government does not wish to create another speculative bubble; its objective is not for the Shanghai index to move back to 5,000 points, but rather to stabilize the market at 3,500 or 4,000 points so that the normalization process can unfold,” noted David Gaud, senior fund manager and global investment specialist at Edmond de Rothschild Asset Management, in a Tuesday report.

Because that recovery process will take time, he warns that rebounds like Tuesday’s 3.7 percent rally are excessive.

“The measures implemented over the past few weeks are not able to generate a massive and sudden rise – which is not what is needed,” Gaud added.

Indeed, the faltering nature of the recovery is an indication the market is maturing, Chong said: “This is a sign that the country is growing, they are trying out different things. During the Asian Financial Crisis, we also did little circuit breakers, we stopped short selling – it didn’t work, we moved on, and so will China.”

“The key thing is that China’s bubble has pricked, and stocks are coming back down to correct valuations, it gives us time to look at the market in a saner manner.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Birinyi: S&P 500 can hit 3,200 by 2017

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Alibaba borrows bigger brand to crack US market

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Brands are everything to retailers, and Alibaba has found one that should do wonders for its marketability: Goldman Sachs.

The Chinese e-commerce group has hired former investment banking stalwart Michael Evans to grow its overseas business.

It’s bad practice, since Evans had already been an independent director since Alibaba floated last year – but good politics.

Canadian rowing champ Evans, who took home a gold medal in 1984, may not be ideally equipped to run an online retail platform, but he knows about hard selling.

Evans ran Goldman’s Asia business for almost 10 years, starting in the year the Wall Street outfit opened its brokerage business in the People’s Republic. In that capacity he helped pick up and schmooze clients like Alibaba founder Jack Ma. 

The contacts acquired on the way to the near-top Evans was once seen as a possible successor to Goldman chief Lloyd Blankfein are likely to come in useful if US politicians start quizzing Alibaba’s presence in the American market.

Amazon, Wal-Mart Stores and eBay are unlikely to sit quietly by if the company starts taking them on directly.

If Ma decides to spend some of his USD 20 billion cash pile on acquisitions in the United States – eBay and Yahoo would both have logic – Evans may offer an acceptable face to lawmakers giving a deal the once-over.

Read More: Alibaba names ex-Goldman exec to head global expansion

What’s not encouraging is the message Evans’ appointment sends about Alibaba’s clubby insider culture.

His prominent role at long-standing Alibaba adviser Goldman already made Evans less suited to holding Ma and his cohort to account.

Turning him from an independent director into an executive reinforces the sense that the checks and balances on Alibaba’s founders are weak.

Such trifles as corporate governance matter more now, with Alibaba shares 15 percent above their IPO price, than they did in November, when the shares were 76 percent above their debut.

But investors probably care less about who does what and more about where and how quickly it gets done. On that score, Evans is worth more on the inside.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

In the oil market, $30 is the new $50

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Even as oil bounces back, analysts say market fundamentals are very bearish, and it would not be surprising to see crude take a temporary dive into the $30s per barrel in the next several months.

“There’s no reason why oil won’t go down to the $30s. That’s the level that will really shut in current production and have a bigger edge than current capex (cuts) will have on the oversupply,” said Edward Morse, global head of commodities research at Citigroup.

“I don’t think it would stay there long but it can’t be dismissed as a range for the fourth quarter of this year or first quarter of next year,” he said in an interview. While Citigroup has said this previously, Morse made the comment while Brent crude traded around the key $50 level, which it broke below for the first time in seven months Monday.

Morse said if oil were to hit the $30s per barrel, it would be for a very brief period.

The slowdown in China that’s hit other commodities has sent oil sliding, but the crude market also has been oversupplied and there are no signs of a letup. In fact, the prospect of new oil from Iran and increasing output form Iraq and Saudi Arabia has also helped push prices lower. There are also no indications that the Organization of the Petroleum Exporting Countries will change its latest policy of allowing the market to set the price.

There are two catalysts on the market’s radar this week. The most important is July nonfarm payrolls on Friday, and the other is weekly inventory data from the Energy Information Administration on Wednesday morning.

Platts expects a decline in US commercial crude stocks of 1.6 million barrels in the week ended July 31.

“I’m looking for a rise,” said John Kilduff, partner at Again Capital. “I think it will be a mixed bag. The distillates will grow markedly. Gasoline will show up as a modest increase, and what crude does doesn’t matter because it will be viewed as bearish. And we could potentially test new lows by the end of the week.”

WTI crude’s low for the year was $42.03, set in March, and Brent was at its low for the year when it reached $45 in January. Kilduff said a strong jobs report Friday could send oil lower, but so could a weaker report.

“No matter what the jobs number does on Friday. If it’s weak, it will be negative for crude oil because it will take away hopes of good demand. If it goes up, there’s interest rate policy. Either way, it should be bearish for oil.”

He expects oil to take a run into the $30s as early as September or October when refinery demand drops, as the industry prepares to produce winter-grade fuel.

West Texas Intermediate crude futures Tuesday rallied nearly 1.3 percent to just below $46, after Monday’s heavy selling. Brent crude was flat at $50.10..

Read More: Analysts: Commodities dip derails Fed rate hike

“I think for the short term, you (Brent) could always correct to around $47. If you get through there, you have a level of $49.50 and then you have a very big top around $54,” said Peter Amandio of Chicago Energies on “Power Lunch.” He noted that crude lost $12 very quickly on fundamentals and word of Iran returning to market

Amandio said a catalyst to push oil lower could be a rate hike by the Fed, which would also drive the dollar higher. “Forty-two dollars is a very big level, and if we do go through those levels, you could see the low 30s,” he said.

Read More: Oil craters, set to retest lows

Morse said the global oil market is oversupplied by about 1 million barrels a day, and ultimately it will be rebalanced.

“Something clearly has to give at some point on the supply side. we’re not seeing either enough of a demand pickup or a supply slowdown to get the market into a more positive mode,” Morse said.

“A prudent analysis would say the market turned on a hair, and it will turn on a hair again. It’s at a rough spot right now especially since financial markets are bearish. Their expectations are bearish and they’ll help to drive the price down,” he said.

Strategists watch the EIA weekly report for clues on the U.S. oil industry, which has become a swing producer of sorts. Last week’s reports showed a decline to 9.4 million barrels a day in U.S. production from a recent high of 9.6 million.
But Morse said that doesn’t mean the U.S. industry is curbing production yet, and it’s not been apparent in monthly data. In fact, analysts say the shale industry has been able to maximize production despite the sharp cutback in wells.

“I don’t know of any evidence to say there’s rolling over,” he said. “Even the more recent drop in production is more related to the maintenance in the Gulf of Mexico. … There are a lot of things other than shale happening in the U.S.”

Morse said he will be watching the crude import levels in the government inventory report Wednesday, amid signs Saudi Arabia has been sending more crude into the U.S., after its imports dipped down to 825,000 in December and January from more than 1.2 million barrels a day.

He noted that Saudi Arabia is losing its leadership in market share in Asia. In Japan, the United Arab Emirates overtook it as the lead exporter, and in May, its sales were second in both India and China.

“If I were they, I would feel anxious about a market share strategy that didn’t succeed. Their production policy is more opaque than it used to be,” Morse said. Saudi Arabia is now exporting a record 10.5 million barrels a day, and is also exporting more refined product from new refining capacity.

Saudi Arabia orchestrated OPEC’s decision to end output quotas at its November meeting, which sent already falling prices much lower.

“There’s close to a zero chance OPEC is going to act the way it used to,” said Morse, noting neither Iran nor Iraq would cut back on production.

“Why would they relinquish a market share they can’t easily get back, when demand rises again,” Morse said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian shares mostly edge up on oil rebound, China data

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian shares turned mostly higher early Wednesday, as a stabilization in energy prices helped to offset the uninspiring lead from Wall Street.

Overnight, US stocks chalked up a three-session losing streak as investors worried about an eventual hike in US interest rates, while Apple’s shares hit their lowest in over six months. The blue-chip Dow shed 0.3 percent, while the S&P 500 and Nasdaq Composite slipped 0.2 percent each.
For the day, investors may turn their attention to the China Caixin General Services Purchasing Managers Index (PMI) due at 9.45 local time.

Meanwhile, Indonesia’s growth report card for the April-June quarter could spell further trouble for Southeast Asia’s largest economy as the rupiah hovers near 17-year lows. A Reuters poll of economists estimated annual gross domestic product (GDP) around 4.6 percent, weaker than the 4.7 percent in the first three months of the year. That would mark the country’s slowest pace of growth since the third quarter of 2009, during the Global Financial Crisis.

Shanghai Comp slips 0.2 percent

China’s Shanghai Composite index inched down at the open even as data showed activity in China’s services sector expanded to its fastest pace in 11 months in July.

The Caixin/Markit Purchasing Managers’ Index (PMI) rose to 53.8 from June’s reading of 51.8, hitting the highest level since August 2014 and marking the 12th straight month of expansion.

In the previous session, the Shanghai bourse more than doubled gains in late-hour trading to chalk up the bourse’s biggest daily gain since July 10, encouraged by news that authorities have stepped up their crackdown on short-selling of shares.

Nikkei adds 0.3 percent

Japan’s Nikkei 225 index reversed course to edge up, as gains in other heavyweight components such as Softbank and Fanuc helped to offset the sharp plunge in Fast Retailing.

The stock receded more than 4 percent from the get-go, after posting a second straight month of decline for sales at its Uniqlo clothing outlets in Japan. Same-store sales fell 1.5 percent in July from a year earlier, following an 11.7 percent slide in June.

Softbank and Fanuc surged more than 2 percent each.

Toyota Motor sagged 2.3 percent despite topping market estimates to deliver the company’s third straight year of record first-quarter net profit late Tuesday.

ASX drops 0.7 percent

Australia’s S&P ASX 200 index headed south amid a lower open in the financial sector.

Westpac led losses among major lenders, slumping 1 percent, while National Australia Bank and Commonwealth Bank of Australia dropped 0.9 percent each.

Despite energy prices recoveringto about $50 a barrel overnight, oil-related counters remained downbeat. Woodside Petroleum reversed a brief positive start to slip 0.3 percent, while Santos and Oil Search eased 0.6 and 1.1 percent, respectively.

Kospi flat

South Korea’s Kospi index struggled near the flatline early Wednesday.

Automakers and airlines were among the gainers in early trade; Hyundai Motor and Kia Motors opened up more than 1 percent each, while Korean Air Lines and Asiana Airlines rallied 2.2 and 2.8 percent, respectively. Airline shares rocketed in the previous session on expectations of an increase in travel demand after the government declared South Korea effectively out of Middle East Respiratory Syndrome (MERS).

However, losses among blue chips capped the bourse’s advances. Posco tanked 1 percent, while Samsung Electronics and KB Financial Group shed 0.4 percent, respectively.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mobius: Oil’s fall is purely sentimental

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fragile China? Don’t be too sure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With earnings season now in full swing, China remains the buzzword – but for all the wrong reasons. As analysts and investors who have questioned the strength of the world’s second-largest economy start to look a lot less like Cassandras wailing in the wind – the question remains: When will the Asian powerhouse stabilize?

Short answer: it’s tough to tell at this stage. You only have to look at the recent accelerated selloff in commodities markets to appreciate that. But as we hear more concerns and downgrades to the outlook tied to weakening growth in China in the coming weeks, and even more headlines regarding Chinese market volatility, it is important to remember that some people see this is as merely the growing pains of an economy that could very quickly turn around and surprise us.

Firms like Peugeot, Volkswagen, Phillps and in the US United Technologies continue to highlight the challenges of doing business in a slowing Chinese economy.

No one should be surprised. Most analysts and investors have been questioning the strength of reported growth for several quarters – nonetheless last week’s 15-month low in factory activity felt pretty startling. We can also add in the latest China PMI this weekend falling to a 2 year low in July.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China stock exchanges step up crackdown on short-selling

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Chinese authorities have stepped up their crackdown on short-selling of shares, with the two main stock exchanges unveiling new rules that would make it even more difficult for speculators to profit from hourly gyrations in stock prices.

The Shanghai and Shenzhen exchanges said in separate statements on Monday night that the rules, effective immediately, would prevent traders from borrowing and repaying stocks within a day.

China’s exchanges and markets watchdogs are cracking down on short-selling as part of a broad government-orchestrated effort to prevent a collapse in its markets, which have already lost about 30 percent of their value since peaking in June.

“This is apparently aimed at increasing the cost of shorting and easing selling pressure on the market,” said Samuel Chien, a partner of Shanghai-based hedge fund manager BoomTrend Investment Management.

He added, though, that short-selling was already difficult, referring to other efforts to limit the practice. These include a move by Chinese brokerages to limit short-selling business.

Read More: Asian stocks fall on China worries, lower energy prices

“The government is doing whatever it can to prevent the market from falling further,” Chien said.

The sell-off, which followed a dizzying rally, has shattered investor confidence in Chinese stocks and shaken the faith of some foreign investors in the ability of the ruling Communist Party to maintain stability of the financial system.

The market turmoil, and Beijing’s unconvincing efforts to restore stability, are also playing out against the backdrop of slowing economic growth and worries over high corporate indebtedness.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow