A trader accused by the US of market manipulation failed to persuade a court on Friday to postpone his extradition hearing.]]> |||
London - A London-based day-trader accused by the United States of market manipulation that contributed to the Wall Street “flash crash” in 2010, failed to persuade a court on Friday to postpone his extradition hearing.
Navinder Sarao, who lives with his parents in a small house near London's Heathrow Airport, was arrested by British police on a US extradition warrant in April after being charged with wire fraud, commodities fraud and market manipulation by the U.S. Justice Department.
He was freed on bail on August 14 after spending four months in prison.
On Friday , his defence lawyer James Lewis told Westminster Magistrates Court he needed more time to obtain expert evidence about trading and how the market worked to help address the issue of whether Sarao had made false representations through his trading activity.
But District Judge Quentin Purdy rejected the application, saying he did not think expert evidence would be relevant to what he had to decide - which was not the facts of the case but rather whether the US charges would also be offences under English law.
The full extradition hearing remained set for September 25.
The flash crash saw the Dow Jones Industrial Average briefly plunge more than 1 000 points on May 6, 2010, temporarily wiping out nearly $1 trillion in market value.
Sarao, 36, is accused of using an automated programme to “spoof” markets by generating large sell orders that pushed down prices. He then cancelled those trades and bought the contracts at the lower prices, reaping a roughly $40 million profit on his trading, US authorities allege.
He has denied wrongdoing, telling the Westminster court in May: “I've not done anything wrong apart from being good at my job.”
The dollar pared its weekly advance against the euro as European stocks and US equity-index futures failed to sustain a recovery.]]> |||
New York - The dollar pared its weekly advance against the euro as European stocks and US equity-index futures failed to sustain a recovery from a worldwide selloff.
Even with Friday’s drop, the greenback was higher versus all its Group-of-10 peers except the yen this week as stocks recovered some ground from the rout, and accelerating growth fueled speculation the US economy will be resilient to a slowdown in China. Traders rebuilt bets that the Federal Reserve will raise interest rates by the end of 2015.
The currencies of New Zealand and Australia, which have China as their biggest trading partner, led declines among major counterparts this week as Chinese equities suffered their biggest losses since 1996.
“Currently the euro benefits from a nervous market,” said Esther Reichelt, a currency strategist at Commerzbank in Frankfurt. For the dollar, “following the Chinese stock market crash, it lost quite substantially due to the market pricing out a September rate hike. But in the end we got some encouraging data from the U.S. stressing that fundamentally, much speaks in favor of dollar.”
The dollar fell 0.2 percent $1.1269 per euro as of 6:54 a.m. in New York, paring its weekly advance to 1 percent. That was still the biggest gain since July 17. The greenback weakened 0.1 percent on Friday to 120.90 yen, deepening its depreciation since Aug. 21 to 0.9 percent.
The Stoxx Europe 600 Index of shares slid 0.5 percent, erasing its advance for the week. Futures on the Standard & Poor’s 500 Index fell after the US benchmark’s biggest two-day gain since the beginning of the bull market in 2009.
New Zealand’s dollar has fallen 3.3 percent this week to 64.64 US cents, and Australia’s has declined 2.3 percent to 71.49 cents.
Kansas City Fed president Esther George said Thursday it was too soon to tell whether market volatility will affect the US economy, and every policy-setting meeting is a live option to start raising rates.
“At this point, for me, I have not seen something that would change my own sense of how the economy is doing,” George said from Jackson Hole, Wyoming. “I thought there was scope to consider rate increases before now, but we’ll wait and see what the committee’s thoughts are.”
A JPMorgan Chase & C. measure of currency volatility climbed to the highest level since March on August 24.
The US economy expanded at a 3.7 percent annualised rate last quarter, exceeding all estimates of economists surveyed by Bloomberg, a report showed Thursday. Amid the stock-market price swings, Fed Bank of New York President William Dudley said on August 26 the case for raising US interest rates in September was less compelling.
Traders have increased to 56 percent the odds the Federal Reserve will raise interest rates by or at its December meeting from as low as 46 percent on Tuesday. The probability for the September meeting was 30 percent. The calculation is based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.
The dollar was the best performer after the yen among 10 developed-nation peers this week, according to Bloomberg Correlation-Weighted Indexes.
“If the US economic data continue to come in strong, and if equity markets continue to stabilize, you’d have to think that rate hikes are back on the table, which should be positive for the dollar,” said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group in Singapore.
Gold headed for the biggest weekly drop in more than a month as investors waited on economic data next week.]]> |||
London - Gold headed for the biggest weekly drop in more than a month as investors waited on economic data next week for guidance on when the Federal Reserve will raise interest rates.
Bullion added 0.2 percent in London on Friday after falling the previous four days. Prices retreated from the highest in almost seven weeks on Monday, when a rout in global markets boosted demand for a haven and cast doubt on whether US policy makers would increase borrowing costs in September. US jobs and manufacturing reports are due next week.
Data released Thursday showed the US economy grew more than previously estimated in the second quarter. Traders are pricing in a 30 percent chance the Fed will raise rates next month, up from 24 percent two days ago. Market turmoil has pushed the Fed’s plan for a rate increase to December, according to Mohamed El-Erian, a Bloomberg View columnist and chief economic adviser at Allianz.
“Gold’s sensitivity to data could become more heightened as September’s meeting comes nearer,” Joni Teves, a precious metals analyst at UBS Group in London, said by phone Friday. “If the picture is convincing enough for people to shift their expectations on the Fed, that will have a big impact on gold.”
Gold for immediate delivery traded at $1 127.67 an ounce by 11:51 a.m. in London, according to Bloomberg generic pricing. Prices are down 2.9 percent this week. Futures for December delivery rose 0.4 percent to $1 126.70 on the Comex in New York.
Investors bought 1.8 metric tons through gold-backed funds as of Thursday, data compiled by Bloomberg show. Holdings are at 1 529.4 tons, the highest since July 30.
Silver for immediate delivery fell 0.5 percent to $14.427 an ounce in London, heading for a 5.8 percent drop this week, the most since February. Palladium climbed 1.6 percent to $571.60 an ounce, still set for a 5.2 percent weekly decline. Platinum added 0.3 percent to $1,003 an ounce.
Count Samsonite International among those seeking to take advantage of the weaker yuan.]]> |||
Hong Kong - Count Samsonite International among those seeking to take advantage of the weaker yuan.
The world’s largest luggage maker, which farms out about 70 percent of its production to companies in China, is asking those suppliers to cut their prices, Samsonite Chairman Tim Parker said in an interview in Hong Kong this week, without providing specific figures. The company pays in US dollars, meaning suppliers have room to lower what they charge since their costs are in yuan.
“The policy changes do have the desired effect that a customer is going to the manufacturer and saying, ‘Look, obviously you are getting more renminbi, so can we actually see if there’s a way of getting some benefits to us?” the executive said.
While the biggest devaluation of the yuan in two decades contributed to the recent rout that evaporated of trillions of dollars in market value worldwide, Parker’s comments help illustrate how the move is making it cheaper for global brands - for example, most of Apple’s iPhones are made in China - to manufacture their products in the world’s factory floor. The former economist said he expects other companies to take advantage of the currency movements.
Sales in China during the first six months rose almost 30 percent from a year earlier to $130.4 million, driving the company’s growth. Overall sales for the crucial months of July and August are so encouraging that Parker is more confident about the second-half outlook than he was a few months ago, he said.
“If you look at global economic prospects, Europe is looking up, America is still recovering,” while the medium-term prospects for China are still “very good," he said.
Not everyone shares Parker’s optimism in China. Prada SpA and Yum! Brands Inc. are among companies that have recently voiced concern about falling sales in the world’s second-largest economy, which is headed for its slowest expansion in a quarter century.
Samsonite shares gained 1.5 percent to close at HK$23.85 in Hong Kong Friday, the highest level in a week. The city’s benchmark Hang Seng Index dropped 1 percent.
Robert Diamond is scolded by investors for failing to buy back shares that are trading at less than book value.]]> |||
London - Robert Diamond, whose Atlas Mara has plunged 48 percent since going public in 2013, was scolded by investors for failing to buy back shares that are trading at less than book value.
“I would like to see less dialog and optimism and more action to capitalize on the inefficiency that seems to exist in the stock price,” Leon Cooperman, CEO of Omega Advisors, told Diamond on a conference call Thursday. “I don’t see any attempt to do something to show the market that you really believe what you’re saying.”
Diamond, co-founder of British Virgin Islands-based Atlas, created the firm to acquire African banks, using his expertise as the former CEO of Barclays to help the continent’s financial-services industry become more sophisticated. The shares have tumbled as losses mounted and economic growth in sub-Saharan Africa slowed. He said on the call that Atlas is “leaving no stone unturned” to improve the company’s prospects.
“It seems the more upbeat you guys get, the lower your stock price goes,” Cooperman said. “I have confidence in you. The market doesn’t. I want to capitalize on this market’s lack of confidence. I wish you good luck."
A caller identified as working for Janus Capital Group said Diamond and other executives should be buying back stock or explain why they can’t.
Atlas Mara’s largest investors are constrained by lack of liquidity from buying more stock, said the caller from Janus, the firm’s largest shareholder according to data compiled by Bloomberg. "That leaves two gaps - the company finds incremental buyers to capitalize on this or the company takes its destiny into its own hands,” he said.
Diamond said the current price offered investors a good opportunity to buy into Atlas, while he and his colleagues were restricted from purchasing more shares.
“We can’t say why we’re prohibited,” said Diamond, 64. “We’re very bullish."
Atlas still wants to create the region’s “premier bank,” even amid falling currencies and slowing economic growth this year, Diamond said on the call from Lusaka, Zambia’s capital.
Atlas shares fell 0.2 percent to $5.69 as of 11:05 a.m. in London trading, extending Thursday’s decline, when the company announced its first half-year profit.
"I can hear the frustration coming through the line and we share your frustration on multiple levels,” Brad Gibbs, a member of the Atlas Mara executive committee, said on the call. The firm has looked into providing investors a more detailed explanation of why buybacks aren’t possible, and decided “it wouldn’t be prudent,” he said. “We’re doing everything in our power to get out of this period.”
Net income for the company, which operates in seven sub- Saharan African countries from Nigeria to Zimbabwe, was $4.1 million in the first half, up from a loss of $17.3 million in the year-earlier period, Atlas said in a statement. The company is targeting a presence in 10 to 15 countries in the medium- term, it said.
Book value per share, the amount investors would get if all assets were sold and debts repaid, was $9.13 at the end of June, according to the statement. Profit rose as impairments dropped to $6.1 million from $17.2 million in the same period of 2014.
Emerging-market stocks headed for the first weekly advance in more than a month as investors searched for bargains.]]> |||
Shanghai - Emerging-market stocks headed for the first weekly advance in more than a month as investors searched for bargains amid speculation China has resumed its intervention in the market.
South Africa’s rand led currencies to the longest streak of weekly losses since the Asian financial crisis in 1997. The rout that deepened after China’s surprise decision August 11 to devalue the yuan is slowing as investors said funds linked to the government in Beijing are buying equities.
Policy makers want to stabilise shares before President Xi Jingping appears at a military parade next week to celebrate the 70th anniversary of the World War II victory over Japan, people familiar with the matter said. A 28 percent decline in emerging-market stocks from an April peak pushed valuations to the lowest level since January 2014 before a mini rebound took effect this week.
Still, most investors and analysts are betting on gains fizzling out, with attention focused on a potential interest-rate increase by the Federal Reserve.
The Chinese rally will be short-lived because state intervention is too costly to continue and valuations are still not justified given the slowing economy, according to Bank of America. “China has its problems, lots of them, but they are by now priced into the market and they are well known to the investors,” Leopold Quell, a co-fund manager at Raiffeisen Capital Management in Vienna, said by e-mail. Stocks are “at attractive levels” after the selloff, he said.
A gauge of 20 emerging-market currencies headed for the 10th weekly loss. As the Federal Reserve moves toward its first rate increase in almost a decade, concern has grown that the dollar’s strength will drain capital away from developing-nation assets.
The yuan depreciation also spurred countries such as Kazakhstan and Vietnam to cheapen their managed currencies to regain export competitiveness. China’s economic growth is projected to slow by half a percentage point to 6.9 percent this year.
Even after losing more than a third of their value since June 12, the nation’s shares trade at 51 times reported earnings, according to data compiled by Bloomberg. That’s the most among the 10 largest markets and more than twice the multiple for the Standard & Poor’s 500 Index.
The MSCI Emerging Markets Index rose 0.6 percent to 817.84 at 12:08 pm in London, following a 3.3 percent gain Thursday. The gauge is set for a weekly advance of 0.7 percent, the first increase since July 17. Even so, the benchmark is heading for the worst monthly loss since May 2012 as China, Colombia and Peru sustain some of the biggest slumps following the yuan devaluation.
The Shanghai Composite climbed, taking its two-day increase to more than 10 percent. The latest speculation about market intervention by China follows a halt to an unprecedented government effort to prop up equity prices that had prompted a debate among officials over the merits of such a programme.
“We can see the Chinese government’s intervention to support equities market has yielded results,” Jeffrosenberg Tan, a portfolio manager at PT Sinarmas Asset Management, said by phone. “We are still cautiously optimistic.”
The MSCI developing-nations measure is still down 7.9 percent since the yuan devaluation, with the price-to-earnings ratio for the next 12 months at 10.7 times, a 30 percent discount to the MSCI World Index of advanced-nation stocks. The yuan climbed the most since March after the central bank boosted the currency’s reference rate in the biggest increase in five months.
The ruble weakened after surging 4.2 percent on Thursday. Brent crude slid 0.9 percent. Malaysia’s ringgit headed for a 10th weekly decline, its longest losing streak since 2013, as thousands of protesters prepared for a weekend march to demand Prime Minister Najib Razak’s resignation.
Before BHP Billiton cut its forecast for China’s peak steel output this week, CEO Andrew Mackenzie had people count air con units.]]> |||
Sydney - Before BHP Billiton cut its forecast for China’s peak steel output this week, CEO Andrew Mackenzie said he had his people go out to count air conditioning units, calculate the depths of basements and work out the amount of steel in each building.
Citing the acceleration of China’s transition to a consumer-driven economy, BHP trimmed its forecast by as much as 15 percent after a regular six-month review of its data, including surveys in cities from Xi’an to Guangzhou. BHP and rival iron ore producers will probably need to make further cuts to forecasts on Chinese steel output, according to Platypus Asset Management and CMC Markets Asia.
“Potentially the growth outlook for China is worse than people are thinking at the moment,” said Don Williams, Sydney-based chief investment officer at Platypus, which oversees about A$1.6 billion ($1.1 billion). Platypus began exiting holdings in BHP and Rio Tinto Group in 2012, judging the outlook for iron ore producers was weakening, he said.
Miners have been slow to recognise and respond to China’s weaker growth, reflected in both their forecasts and in the continued expansions of iron ore output, according to Williams. China is the world’s biggest steelmaker.
The largest mining companies have been wrong-footed on slower growth in China, Glencore Plc CEO Ivan Glasenberg said last week, with demand getting tricky to call. Concern over the faltering growth has sent iron prices tumbling 24 percent this year, eroding profits for the largest producers, including BHP and Rio. Ore with 62 percent content rose 0.5 percent to $53.93 a dry metric ton on Thursday, according to Metal Bulletin.
BHP, which supplies coking coal as well as iron ore to China’s steel mills, now forecasts Chinese steel output will probably peak in the mid 2020s at between 935 million tons and 985 million tons.
It had said as recently as May that production would reach as much as 1.1 billion tons by the middle of the next decade. Responding on an earnings call this week to the prospect of making further cuts, Mackenzie was confident about the revision, saying the company had taken a realistic view after “bottom-up” analysis in “incredible detail.”
Rio, the second-largest miner, recently also revisited its forecast that China will produce 1 billion tons by 2030 and is sticking by the figure, CEO Sam Walsh said Aug. 6. "Let me assure you, it’s gone through robust review." The forecast remains current, Rio Tinto confirmed Wednesday.
“The miners remain well north of many of the other forecasts on China’s steel output," Ric Spooner, Sydney-based chief market analyst at CMC Markets Asia, said by phone. “Investors will need to have their own view on what the right pathway is.”
Both BHP and Rio forecast the world’s Number 2 economy will meet its growth goal of 7 percent this year. “Our data today would say that they are pretty much growing at 7 percent, and therefore you can trust their numbers,“ Mackenzie said Tuesday in a Bloomberg Television interview with Erik Schatzker on ‘Market Makers.’
“We have been in China for a long time, we have a lot of data that we build from the bottom up to see what is actually really happening,” he said.
Further cuts to steel forecasts aren’t inevitable and even if the biggest miners are wrong in their estimates, weaker demand will impact higher cost iron ore producers more than BHP or Rio, Chris Drew, a Sydney-based analyst with RBC Capital Markets, said by phone. “Even if they turn out to have been a little optimistic, ultimately they are doing the right thing - not putting in any significant extra capital.”
China’s steel output fell 1.3 percent in the first half after peaking last year, according to the China Iron & Steel Association, which sees production declining to about 807 million tons this year. Slowing steel output in China will be among factors that’ll see demand for domestic and imported iron ore fall by about 60 million tons between 2018 to 2025, Citigroup said in May. Independent economist Andy Xie forecasts steel output may drop below 500 million tons in the next decade.
“It’s difficult to see steel output rising further in the long term as demand has been so weak,” Wu Zhili, a steel analyst at Shenhua Futures in Shenzhen, said by phone on Wednesday. “Mining companies will probably influence each other in terms of their outlook.”
While it’s conceivable China could reach steel output of 1.1 billion tons, miners were slow to respond to China’s booming demand for iron ore from 2003, and may also be misjudging its slowdown, according to Philip Kirchlechner, director of Iron Ore Research Pty and a former head of marketing at Fortescue Metals Group.
“They reacted after China started taking off,” Kirchlechner said by phone from Perth, Australia, “Again, it’s a reaction and if they were wrong then, why are they right today?”
China’s flagship airline benefits from lower fuel prices and higher passenger numbers.]]> |||
Beijing - Air China, the country's flag carrier, said its net profit surged more than 720 percent year-on-year in the first half of 2015, supported by lower fuel prices.
The company made net profits of 4.19 billion yuan ($655 million) in the first half, up strongly from 510.37 million yuan in the same period last year, it said in a statement filed to the Hong Kong stock exchange late on Thursday.
“The global aviation industry was generally healthy with sustained growth in demand and relatively low fuel prices,” Air China said, adding a recovery in the world economy and a “steady” Chinese economy supported the company.
China's growth is actually slowing. The economy expanded 7.0 percent in each of the first two quarters of this year, lower than the 7.4 percent growth last year, which was its weakest since 1990.
The airline said its operations benefited from lower oil prices, which contributed to a near 30 percent reduction in fuel costs for the first half.
Air China carried 43.67 million passengers in the first half, up 8.79 percent from the same period last year, it said.
The airline's stock gained 8.90 percent in Shanghai trading but closed 4.00 percent down in Hong Kong on Friday after the results announcement.
Another of the country's biggest carriers, China Southern Airlines, on Friday reported a net profit in the first half of 3.48 billion yuan, according to a statement to the Hong Kong stock exchange, having made a net loss of 1.06 billion yuan in the same period last year.
The airline, based in the southern city of Guangzhou, credited lower fuel and economic improvements for the turnaround.
China Southern shares jumped 8.05 percent in Shanghai but dropped 1.95 percent in Hong Kong before the results announcement.
President Jacob Zuma will launch commercial operation of Medupi’s Unit 6 on Sunday.]]> |||
Pretoria – The coming into full commercial operation of Unit 6 of the Medupi Power Station at Lephalale in Limpopo has been welcomed by Cabinet.
President Jacob Zuma is expected to launch the unit on August 30.
The Medupi Power Station Project is a greenfield coal-fired power plant comprising six units rated in total at 4 764 MW installed capacity.
The construction of the Medupi Power Station started in May 2007. The power station is contributing 800 megawatts (MW) of power into the national grid.
In a statement released on Friday following its ordinary meeting this week, Cabinet said the commercial operation of Unit 6 of the Medupi Power Station was a critical milestone in government’s effort to build new generating capacity.
Unit 6 was first synchronised to the national grid on March 2, 2015 and has been supplying electricity to the national grid intermittently while undergoing regular optimisation tests.
“During this period Unit 6 has been able to alleviate pressure on the national electricity system, helping to either avoid load shedding altogether or minimise its severity.
“The unit’s commercial operation has been achieved well within the normally stipulated period of six months after first synchronisation,” Cabinet said.
Cabinet said that all six units are expected to be operational in the first half of 2019.
Once completed, it will be the fourth largest coal-fired plant and the largest dry-cooled power station in the world. The planned operational life of the power station is 50 years.
Koeberg shut down for maintenance
Cabinet also announced that on Monday, Unit 2 of the Koeberg Power Station in the Western Cape will be shut down for planned maintenance.
The unit is expected to return to service after three months.
“The scheduled shutdown of Koeberg Unit 2 is part of Eskom’s overall maintenance programme for its fleet of power stations.
“Every 16 to 18 months, each of the two units at Koeberg is shut down for refueling, inspection and maintenance,” said Cabinet.
It added that the routine shutdowns are scheduled so as to avoid having both units out of service at the same time and to avoid the winter months in each year.
“Cabinet further appreciated the current constraints the country still faces on the power supply. While loadshedding is regrettable, Eskom is committed to perform the necessary maintenance to improve the long-term health of our plants with reasonable disruptions.”
Cabinet called on South Africans to continue using electricity sparingly while the country continues to make progress in improving electricity generation capacity.
First Quantum Minerals launches production at its $2.1 billion copper Sentinel mine which has been under construction since June 2012.]]> |||
Lusaka - Canada's First Quantum Minerals on Friday launched production at its $2.1 billion copper Sentinel mine which has been under construction since June 2012.
The mine would produce 280 000 to 300 000 tons of copper per year at full production from one large low-grade ore body containing 0.51 percent copper, First Quantum said.
Ramp up to commercial production levels at Sentinel was expected to begin after state power utility Zesco connected electricity to the mine by September, it said.
Although this year and next would be challenging for many mines in Zambia and globally due to low commodity prices, First Quantum hoped to overcome that by improving efficiency, it said.
“The planned 55 000 000 tons per annum ore throughput at the new Sentinel mine necessitates the latest in modern mining methods,” it said.
At full production Sentinel would employ 1 788 employees directly through First Quantum subsidiary Kalumbila Minerals and a further 1 276 contractor jobs created by the new mine, it said.