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China money back into commodities

Posted on 29 November 2016 by VRS  |  Email |Print

In China, money flow is tightly controlled and capital markets are relatively underdeveloped, meaning the economy works like squeezing a balloon. You press it in one place, and it bulges in another. Policy-maker moves to cool one expansion only serve to inflate another.
Now that “gyration of bubbles,” according to Société Générale SA’s chief China economist Wei Yao, has been heating up the commodities market again. Earlier this month, thermal and coking coal futures hit a record high since their debut in 2013 while zinc soared to the highest since 2011. Steel rebar, nickel, tin, iron ore and rubber futures also climbed to multi-year highs………………………………………..Full Article: Source

As the money men return to metals, is it a sign the cycle has turned?

Posted on 25 November 2016 by VRS  |  Email |Print

The money men are returning to the base metals markets. The speculative surges on China’s mainland commodity exchanges may be grabbing the headlines as the authorities tweak trading and margin rates to try and cool the animal spirits of the retail investment crowd.
However, outside of China, managed money is flooding into the likes of copper, nickel and aluminum. Some of it is “hot” money, computer trading programs reacting to rapidly changing chart pictures and riding the resulting momentum. That has been particularly true of copper, which earlier this month punched upwards out of the $4,320-5,130 range that had defined the London market for a year………………………………….Full Article: Source

New Swiss rules to force commodities groups to disclose payments to officials

Posted on 24 November 2016 by VRS  |  Email |Print

Big commodities groups in Switzerland will have to publish any six-figure payments to public officials under draft anti-corruption legislation announced on Wednesday. Switzerland, which hosts some of the world’s biggest commodities trading groups, aims to make financial flows in the sector more transparent as a way to promote “responsible corporate behaviour”, the government said after a cabinet meeting that approved legislation amending corporate law.
The cabinet submitted a bill requiring commodity groups reveal payments to public officials of more than 100,000 Swiss francs ($98,863) per fiscal year…………………………………Full Article: Source

U.S. Reflation and the Commodities Market (Video)

Posted on 23 November 2016 by VRS  |  Email |Print

Krishna Memani, chief investment officer at OppenheimerFunds, discusses the issues driving the rise of the commodities market, re-inflating the U.S. economy, and the risks of the Japanese-style stagnation in the U.S. He speaks on “Bloomberg Daybreak: Americas.”.…………………………………….Full Article: Source

Top banks’ nine-month commodities revenue down 22 percent

Posted on 18 November 2016 by VRS  |  Email |Print

Commodities-related revenue at the 12 biggest investment banks fell 22 percent in the first nine months due to weak industrial metals trading and lackluster investor interest, a report by financial industry analytics firm Coalition said.
Revenue from commodity trading, selling derivatives to investors and other activities in the sector slid to $3.1 billion between January to September from $4 billion in the same period in 2015, the report published on Thursday found……………………………………..Full Article: Source

Central Banks Gold Buying Picks Up In September To 13 Tonnes

Posted on 04 November 2016 by VRS  |  Email |Print

Although central bank gold purchase has been uninspiring this year, one research firm remains optimistic that this segment of the market will continue to grow. According to Capital Economics, quoting data from the World Gold Council, central banks, were net gold buyers last month, purchases totaling 13 tonnes.
Once again, a prevalent theme for the las three years, the Russian central bank was the biggest gold buyer, purchasing 16 tonnes last month. The People’s Bank of China bought almost 5 tonnes of gold last month and Kazakhstan bought slightly more than 4 tonnes………………………………………Full Article: Source

Glencore Raises Profit Forecast for Commodity-Trading

Posted on 04 November 2016 by VRS  |  Email |Print

Glencore Plc, the world’s biggest commodity trader, improved its earnings forecast for its trading division after coal and zinc prices rallied to the highest in at least four years.
Earnings before interest and tax will be $2.5 billion to $2.7 billion for this year, Baar, Switzerland-based Glencore said in a third-quarter production statement Thursday. That’s a slight improvement on its previous estimate of $2.4 billion to $2.7 billion. The company didn’t give a reason for the revised forecast………………………………………Full Article: Source

Oil industry teetered ‘close to bankruptcy,’ but experts see signs of hope

Posted on 02 November 2016 by VRS  |  Email |Print

‘The industry doesn’t work under $50 oil,’ says veteran energy investor who sees better days ahead. As the Canadian oilpatch slowly emerges from a two-year price collapse, one investor suggests the industry would have gone belly up if the downturn dragged on for another year.
Energy financier Rick Grafton is confident the worst is over. “The last two years has been among the most challenging in the history of the Canadian oil and gas industry. The energy business was close to bankruptcy,” said Grafton, the CEO of Grafton Asset Management and co-founder of FirstEnergy……………………………………Full Article: Source

Copper industry turns to bond sales to boost expansion

Posted on 01 November 2016 by VRS  |  Email |Print

As the copper industry continues to grow, its biggest players are turning to bond sales to back expansion. Having managed this successfully, Southern Copper is an example for other firms.
As time marches on, the copper industry is continuing to develop, improve and become more sophisticated than in years gone by. Over the past few years, there has been a clear trend towards lower costs, which has significantly reduced the average cash cost for the industry. This transition has also heralded a significant improvement in the competitiveness of overall mining costs…………………………………….Full Article: Source

India and China’s love affair with gold turns financial

Posted on 26 October 2016 by VRS  |  Email |Print

Questions remain as to how quickly demand for gold as an investment in Asia will grow. Gold may have rallied 20 per cent in US dollar terms, putting it on course for its first annual rise in four years. For the Indian market, though, that has contributed to a fall in demand for the physical metal.
Gold’s status in India, from its role in weddings to use in rural savings, has helped make the country the biggest buyer of bullion globally, so any slowdown in appetite is a worry for the industry…………………………………..Full Article: Source

Should you go for gold exchange traded fund or gold bond?

Posted on 18 October 2016 by VRS  |  Email |Print

As Indians, we love our gold. Not just to display, gift and bequeath, but also as an investment. For investment, we have been used to buying physical gold, but that has changed over the past few years. Just when we got used to owning gold through the exchange-traded fund (ETF) route, the government introduced another way to buy and hold gold: through gold bonds.
Gold ETFs track the price of domestic gold. You make a profit if the selling price is higher than buying price, minus costs. An ETF’s net asset value is expressed in terms of per unit cost of gold and returns closely correspond to gold price returns less adjustment for cash held in the fund. In a gold bond, returns are linked to gold price, and you get a sweetener of 2.75% interest per year…………………………………..Full Article: Source

The last thing a global economy in peril needs is the spectre of rising trade protectionism

Posted on 18 October 2016 by VRS  |  Email |Print

The release of cash to the financial sector must be properly channelled to consumers and business, and not hoarded by the banks for balance sheet purposes. It is part of the indomitable human spirit, the sense of heady optimism that hopes for the best outcome when the chips are down.
Policymakers are no different in hoping for the happy ending after all their hard efforts in pulling the world back from the brink after the 2008 financial crash…………………………………..Full Article: Source

Iran Is Stuck With China to Finance Its Oil Dreams

Posted on 14 October 2016 by VRS  |  Email |Print

Amid the snake-infested marshlands on Iran’s border with Iraq, the control room monitoring North Azadegan oil field is manned entirely by Chinese technicians. In central Tehran, hundreds of Chinese pour out at noon from the telecommunications company Huawei to its canteen.
There are now so many Chinese expatriates here, some say they outnumber all other nationalities combined. A decade of international sanctions aimed at blocking Iran’s nuclear program has left China the country’s dominant investor and trade partner……………………………………Full Article: Source

Macquarie tipped to become new owner of Green Investment Bank

Posted on 11 October 2016 by VRS  |  Email |Print

Australian investment bank Macquarie is poised to become the first private owner of the Green Investment Bank (GIB), according to reports this weekend that it has become the preferred bidder in the £2bn privatisation process.
Macquarie is understood to have made a higher bid for the bank than its rival in the process, a consortium by the name of Sustainable Development Capital (SDC) comprising the Japanese trading house Mitsui, General Electric and insurance firm John Hancock………………………………….Full Article: Source

Why commodity-linked sukuks should be introduced?

Posted on 29 September 2016 by VRS  |  Email |Print

A sukuk is a sharia-based hybrid instrument that can have the features of both a conventional debt instrument and of equity. An example of equity is the stock of an enterprise. The stock’s value depends on the performance of the company and can be held in perpetuity; the stocks are neither paid (pre-fixed) dividends at set future times nor are they guaranteed capital appreciation.
The stock-holders share in the risk of the enterprise, and both the return and timing of the return on their investment depend on the performance of the enterprise. In contrast to a stock, a conventional bond is a debt instrument; it has a fixed duration, with the principal usually paid at maturity. Coupons of a prefixed amount are paid at set future times. …………………………………..Full Article: Source

Global banking watchdog warns over Chinese banks

Posted on 20 September 2016 by VRS  |  Email |Print

Risks of a Chinese banking crisis are mounting, according to a warning indicator from the banking industry’s global watchdog. A key gauge of stress in the banking sector is now more than three times above the danger level, the Bank for International Settlements (BIS) said in its latest quarterly review.
China’s credit-to-GDP gap hit 30.1 in the first quarter of 2016, it said. The BIS considers a credit-to-GDP gap of 10 to be a sign of potential danger. A year ago the BIS quarterly review put the figure for China at 25.4………………………………………..Full Article: Source

Commodities attract record $54bn of inflows

Posted on 16 September 2016 by VRS  |  Email |Print

Is the sun shining again on commodity investments? With inflows of $54bn during January and August, investment flows into the asset class are at an all-time high for the first eight months of any year, according to Barclays.
In its latest report on investment flows into commodities, the bank says investments into commodities are supported by three factors: Worries about global economic growth have fuelled money into gold, the desire of investors to benefit from volatility in individual commodities, and lastly, the revival of commodities as a diversification and inflation hedging tool……………………………………….Full Article: Source

Fed asks Congress to limit bank commodity activities

Posted on 09 September 2016 by VRS  |  Email |Print

Two U.S. financial regulators on Thursday made a significant push to impose new limits on banks’ commodity-market activities, which have been under scrutiny for years. The Federal Reserve asked Congress to repeal banks’ authority to make a range of investments in nonfinancial businesses, saying the businesses put the firms’ safety and soundness at risk.
Separately, the Office of the Comptroller of the Currency, which regulates federally chartered national banks, proposed to prevent national banks from dealing or investing in metals such as copper. That reversed a previous regulatory policy that had allowed copper trading………………………………………..Full Article: Source

Fed: Get Goldman, Morgan Stanley out of commodities business

Posted on 09 September 2016 by VRS  |  Email |Print

The Federal Reserve recommended Thursday that Congress act to get megabanks Goldman Sachs and Morgan Stanley out of the business of managing physical commodities and more generally to eliminate the practice of “merchant banking” in which banks invest or outright own nonfinancial firms.
In a report mandated by the 2010 Dodd-Frank financial reform law, the agency officially called on Congress to repeal the wrinkle in the law that allows just two banks, Goldman Sachs and Morgan Stanley, to store, transport and extract commodities, saying that those practices raise “safety and soundness concerns as well as competitive issues.”……………………………………….Full Article: Source

Banks’ Commodity Woes Deepen as Energy and Metals Earnings Hit

Posted on 06 September 2016 by VRS  |  Email |Print

It’s looking like another bad year for the biggest banks when it comes to commodities. Revenue from raw materials at Goldman Sachs Group Inc., JPMorgan Chase & Co. and 10 other top banks slid 25 percent in the first half to $2.2 billion from a year earlier, according to analytics firm Coalition Development Ltd.
That was the lowest first-half amount in at least half a decade amid a “lackluster” performance across energy and industrial metals, the company said in a report on Tuesday………………………………………..Full Article: Source

Mitsubishi Sees Three Years Needed for Shift From Commodities

Posted on 29 August 2016 by VRS  |  Email |Print

Japan’s biggest-trading house has had its fill of commodities. After posting the first annual loss in its post-World War II history amid the collapse in commodity prices, Mitsubishi Corp. is shifting away from raw materials to make sure it never happens again. That process is going to take at least three years, according to Chief Financial Officer Kazuyuki Masu.
“We can’t post a second net loss,” Masu said in an interview in Tokyo. “We are balancing our portfolio so that if the price of resources fall again, we won’t be seeing red. To put it simply, we aren’t going to boost our current balance of resources assets” over the next three years………………………………………..Full Article: Source

Commodities on upswing in FY17 as funds return

Posted on 23 August 2016 by VRS  |  Email |Print

International commodities markets are on a boil since beginning of the current financial year and most commodities are up be that metals, crude oil or agri commodities. While so far US has refrained from raising rate after last December hike which has attracted global financial investors to commodities again, the decision will continue to be a biggest headwind for commodity rally to continue.
Bloomberg all commodity index is up 9.4 per cent from April while LME metal index (up 6.3 per cent) and Bloomberg agri index (4.6 per cent) has followed………………………………………..Full Article: Source

How to Hedge Against Inflation With Commodities

Posted on 22 August 2016 by VRS  |  Email |Print

Investors in search of an inflation hedge may want to consider commodities. Commodities are an insurance policy, says Vic Sperandeo, president and CEO of EAM Partners, which developed the Trader Vic Index, a collection of futures contracts in commodities, currencies and U.S. interest rates.
A broad basket of commodities offers a hedge against inflation, and gold in particular is a hedge against both inflation and geopolitical chaos, Sperandeo says. “If you’re a typical retail investor, you must have commodities in your portfolio,” he says………………………………………..Full Article: Source

BHP makes record loss after commodity rout and Brazil disaster

Posted on 17 August 2016 by VRS  |  Email |Print

BHP Billiton, the world’s biggest miner, has reported a record loss of $6.4bn (£4.9bn) following a fatal dam disaster in Brazil, a slump in the price of commodities, and a bet on fracking in the US. Miners are struggling due to a sharp fall in commodity prices, sparked by concerns that a slowdown in the Chinese economy could leave a surplus of raw materials.
Andrew Mackenzie, chief executive of the London-listed company, said the last 12 months have been challenging and that commodity prices are likely to remain volatile, even if long-term demand remained robust………………………………………..Full Article: Source

Central banks are printing money as though the global economy is in freefall

Posted on 11 August 2016 by VRS  |  Email |Print

Central banks around the world are now spending $200 billion a month on emergency economic stimulus measures, pumping this money into their economies by buying bonds. The current pace of purchases is higher than ever before, even during the depths of the financial crisis in 2009.
And yet, despite the extraordinary support of so-called quantitative easing (QE), the global economy is not in great shape. What was supposed to bolster economies temporarily during times of crisis has become a routine tool for policymakers, who long ago cut interest rates to zero (or below) but haven’t seen the pick-up in activity they would have hoped………………………………………..Full Article: Source

Good and Services Tax (GST): All you need to know about the most important tax reform in India in 25 years

Posted on 04 August 2016 by VRS  |  Email |Print

The long-awaited Good and Services Tax (GST) Bill was deliberated in Rajya Sabha (Upper House of the Parliament) on Wednesday. This Bill is the 122nd Constitutional Amendment and will have to be passed by both the houses of the Parliament with a two-third majority. Its is being hailed as the most important tax reform in the country since 1991. The government argues that the passage of GST would add up to 2 per cent to the economic growth.
GST is based on the same principles as the Value Added Tax (VAT). It is a consumption-based tax, which means instead of being imposed at the point of manufacture, it will be imposed at the point of consumption. Moreover, it does not differentiate between goods and services………………………………………..Full Article: Source

Commodities-focused trusts top Q2 performers

Posted on 02 August 2016 by VRS  |  Email |Print

The best performing trusts in Q2 focused on commodities and natural resources, Vietnam and Latin America, according to QuotedData. Quoted Data does a quarterly report on investment companies listed in the United Kingdom, including performance figures on a price and NAV basis.
This quarter was different in that it was affected by the major macroeconomic event of the Brexit vote. Several sectors, mainly property and UK mid & small cap were affected by the referendum, and private equity was one of the sectors that was hit the most. The median discount within the private equity sector moved from -25.34% on the day of the vote to -32.21% one week later………………………………………..Full Article: Source

Mind the gap between oil prices and commodity-sector bonds

Posted on 29 July 2016 by VRS  |  Email |Print

A recent divergence between commodity prices and spreads for bonds of companies in the commodity sector is flashing “mind-the-gap” warnings for the market. After a strong advance earlier in the year, oil prices recently plunged to a three-month low, pulling down the shares of energy companies and even weighing on the broader equity benchmarks.
But bonds of companies in energy, metals, mining and steel seem unaffected by oil’s decline — a trend that baffles analysts and suggests that bonds might actually be mispriced………………………………………..Full Article: Source

Hedge funds suffer $20.7bn net outflows in June

Posted on 27 July 2016 by VRS  |  Email |Print

Industry endures its longest sequence of quarterly withdrawals since 2009. Global hedge funds suffered net outflows of $20.7bn in June, as investors pulled more of their money out despite improved performance from most managers.
After inflows in April and May, the withdrawals took total aggregate net redemptions for the second quarter to $10.7bn, according to data from eVestment, marking the third consecutive quarter in which money has left the sector………………………………………..Full Article: Source

How to Add Some “Oomph” to Your Commodities Market Gains

Posted on 21 July 2016 by VRS  |  Email |Print

The big, bad commodity bear died in June. That’s when, after five years, commodities officially entered a bull market. Unofficially, though, the good news started months ago. Prices of oil, gold, zinc and many other “hard assets” have trended higher since early in the year.
Just look at this chart and you’ll see what I mean. Commodity prices move in cycles. This pattern is the result of a time lag between supply and demand. Supply needs time to react to changes in demand and vice versa………………………………………..Full Article: Source

OPEC’s Pain Is Only Getting Worse As Revenues Continue To Fall

Posted on 28 June 2016 by VRS  |  Email |Print

OPEC lost $349 billion in revenue last year because of low oil prices, cutting revenues almost in half from the year before. A report from the EIA in mid-June estimated 2015 revenues for OPEC countries at $404 billion, down 46 percent from the $753 billion the member countries earned in 2014. Revenues last year fell to their lowest level in eleven years.
Worse still for OPEC is the fact that revenues could fall even further this year, as low oil prices sank to new depths, particularly in the first quarter of 2016. The EIA projects OPEC revenues this year to drop to $341 billion. That will result in per capita oil export revenues in OPEC countries falling from $606 in 2015 to $503 this year………………………………………..Full Article: Source

OPEC oil revenues slump to 10-year low

Posted on 24 June 2016 by VRS  |  Email |Print

OPEC’s 13 member countries saw oil export revenues slump to their lowest level in a decade last year. Crude revenues fell nearly 46% to $518 billion in 2015, according to OPEC’s annual bulletin published Wednesday.
Collapsing world oil prices also meant that OPEC countries spent more importing goods than they raised from exports for the first time in 17 years. The cartel posted a combined current account deficit of just under $100 billion in 2015, compared with a surplus of $238 billion in 2014………………………………………..Full Article: Source

OPEC Registers First Collective Deficit Since 1998

Posted on 23 June 2016 by VRS  |  Email |Print

OPEC member countries last year registered their first collective budget deficit since 1998, the group said Wednesday, the result of an oil-price slump that dropped government petroleum-export revenue to a 10-year low.
In its annual statistical report, the Organization of the Petroleum Exporting Countries illustrated how an oil rout that has cut prices in half since 2014 has weighed on the economies of crude-dependent states. OPEC members ran a combined deficit of $99.6 billion in 2015, compared with a surplus of $238.1 billion in 2014………………………………………..Full Article: Source

OPEC Says Its Oil Revenue Plunges $438 Billion to 10-Year Low

Posted on 23 June 2016 by VRS  |  Email |Print

OPEC said its oil revenue plunged by $438 billion to a 10-year low last year, as an increase in export volumes failed to compensate for the collapse in prices. The Organization of Petroleum Exporting Countries earned $518.2 billion in 2015 from the sale of crude and refined fuels, the lowest figure since 2005, the group’s Vienna-based secretariat said in its Annual Statistical Bulletin.
It boosted exports by 1.7 percent to 23.6 million barrels a day, maintaining its share of global markets, as Iraq increased output and Saudi Arabia pressed on with a policy to squeeze rivals………………………………………..Full Article: Source

World waits for global commodity bubble to deflate

Posted on 17 June 2016 by VRS  |  Email |Print

When the Federal Reserve raised rates in December, it thought the fallout would be minimal. It had telegraphed the increase for a year and it was, after all, just a quarter of a percentage point. Yet since then both the US and, even more so, the global economies have slowed. The reason isn’t because a quarter-point rate increase by itself represents a stringent tightening of monetary policy.
Rather, it brought to an end seven years of unprecedented monetary ease that had helped fuel a global commodity bubble. That bubble began deflating in 2014 and the effects are now being felt around the world and washing back on the US………………………………………..Full Article: Source

Opec revenue seen down for 3rd straight year

Posted on 17 June 2016 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (Opec’s) full-year 2016 oil export revenues will probably fall 15 per cent, down for the third straight year and possibly the lowest in more than a decade before rising in 2017, the US Energy Information Administration (EIA) said.
Members of Opec, including Iran, will likely earn about $341 billion in 2016, about 15 per cent below 2015 levels, based on projections of global oil prices and the group’s production levels, the US government’s EIA said in a report. The last time Opec’s export revenues fell for three years straight was 1983-86………………………………………..Full Article: Source

Commodities making a comeback as best performing asset class

Posted on 16 June 2016 by VRS  |  Email |Print

Commodities have performed strongly so far this year, returning 14.0%, outperforming Bonds at 6.6% and Equities at 0.5%. Nitesh Shah, Director – Commodities Strategist, ETF Securities, identifies an improved outlook for global growth, and signs of a commodity supply deficit, as key stimulants of the comeback.
“Sustained central bank interest in keeping interest rates low in an effort to stimulate the economy is providing further support for commodities. And investor sentiment has come off near decade lows as investor realise that commodity oversupply is ending in many areas.”……………………………………….Full Article: Source

Opec Oil Revenues Fell By $350bn Last Year, Says EIA

Posted on 16 June 2016 by VRS  |  Email |Print

Members of the Organization of the Petroleum Exporting Countries (Opec) saw their revenues from oil sales fall by $349bn last year, according to new analysis by the US Energy Information Administration (EIA).
The EIA estimates that the 13 countries of the oil cartel earned $404bn last year from oil exports, 46% less than the $753bn they earned the year before. It was the bloc’s lowest earnings since 2004. Lower export volumes played a role in the decline, but it was mainly due to the sharp fall in the price of oil which began in late 2014………………………………………..Full Article: Source

Charting the lowest interest rates in 5,000 years, worst commodity returns in 80 years

Posted on 15 June 2016 by VRS  |  Email |Print

Looking to dazzle friends and family at the next summer barbecue? Well, drop this little fact on them: global interest rates are at their lowest in 5,000 years. Not only that, you can tell the acquaintance who brags about his gold bars in the bank vault that returns on commodities are the worst since 1933. Sounds crazy you may say, but that’s just the kind of history Bank of America Merrill Lynch rolled out in the third edition of “Longest Pictures” note.
The assembly of more than 100 charts illustrates the long-term history of returns, volatility, valuation and ownership of financial assets. Pushing aside the mindblowers listed above, they also found corporate bond returns have never been higher going all the way back to 1915………………………………………..Full Article: Source

Commodities are the best performing asset class.

Posted on 07 June 2016 by VRS  |  Email |Print

After years of disappointment, evidence that some investors are again seeking broad exposure. Here’s an unfamiliar phrase: commodities are the best performing asset class. Yes, it’s true. In the year 2016, total returns from the Bloomberg Commodity Index are over 11 per cent. Compare that to global bonds, at about 6 per cent, and global equities at just over 2 per cent.
The index has pushed higher thanks to components such as oil, gold, soyabeans and zinc. On Monday, the benchmark was up 21 per cent from its January low, entering a bull market. It is the strongest start to any year since the notorious commodities price spike of 2008………………………………………..Full Article: Source

How an Interest Rate Hike Could Affect Commodities

Posted on 06 June 2016 by VRS  |  Email |Print

Commodities tend to move lower when real interest rates rise, as supply increases and capital flows into higher yielding assets. For instance, commodity prices soared in the 1970s as real interest rates moved into negative territory. Commodity prices then fell in the 1980s when Paul Volcker raised interest rates to fight inflation and real interest rates reached all-time highs.
There is a very strong inverse relationship between real interest rates and commodity prices over time. In recent years, both nominal and real interest rates have been very low due to central bank monetary easing policies and low inflation expectations. These dynamics helped commodity prices move substantially higher following the 2008 economic crisis………………………………………..Full Article: Source

Rebound in distressed debt boosts investors

Posted on 06 June 2016 by VRS  |  Email |Print

Robust gains mainly reflects valuations for energy bonds rebounding with a higher oil price. Distressed debt investors have experienced their best returns since the financial crisis, providing a rare boost for specialist players after disappointing results in recent years.
In the wake of two straight years of 20 per cent plus losses, this highly volatile style of investing has rebounded strongly, with gains between March and May approaching 30 per cent, the best three-month stretch since the US emerged from recession in July 2009………………………………………..Full Article: Source

As U.S. Banks Exit Commodities, an Australian Rival Takes Over

Posted on 06 June 2016 by VRS  |  Email |Print

After the Federal Reserve pledged to crack down on banks engaged in the lucrative business of commodities trading, most big Wall Street firms got out. Macquarie Group Ltd. took the opposite approach. Australia’s largest investment bank has been buying and selling increasing amounts of oil, natural gas and fuel in the U.S., taking advantage of the opening as its competitors backed away.
It now is North America’s third-largest trader of physical gas, trailing only industry giants BP PLC and Royal Dutch Shell PLC, according to industry publications Platts and Natural Gas Intelligence………………………………………..Full Article: Source

Global commodity assets rise to $220 billion in April: Barclays

Posted on 02 June 2016 by VRS  |  Email |Print

The total value of commodity assets held by fund managers globally rose in April to $220 billion, up 14 percent from the month before to reach the highest level in a year, analysts at Barclays said in a note.
Precious metals accounted for 50 percent of total assets under management (AUM) at $110 billion, followed by energy at $58 billion, said the note published on Tuesday, which cited an analysis of data from financial information suppliers including Reuters as well as Barclays’ own research. ……………………………………….Full Article: Source

The banks where the commodities rout will hurt most

Posted on 31 May 2016 by VRS  |  Email |Print

When it comes to souring commodity-related loans putting pressure on banks, the credit ratings of lenders in Singapore, South Korea and Mongolia are the most at risk. That’s the verdict from Moody’s Investors Service, which highlighted the three countries as areas of particular concern, even though the ratings agency does not expect negative bank rating actions for most of Asia Pacific despite the prolonged commodities rout.
However “pressure on the quality of commodity-related loans could be a contributing factor behind possible negative bank rating actions in Singapore, Korea and Mongolia over the next 12-18 months, as reflected in our negative outlooks on many banks in these systems,” the ratings agency said………………………………………..Full Article: Source

Indian banks to hurt from weakness in metals, mining: Moody’s

Posted on 31 May 2016 by VRS  |  Email |Print

Global rating agency Moody’s expects banks in the Asia-Pacific region (excluding Japan) to feel the ripple effects of the problems in commodities-related sector. The asset quality and profitability of banks in Mongolia, Singapore, Korea, Indonesia and India are exposed to the more vulnerable parts of the energy/commodity sectors, such as oil services, offshore marine, shipping and shipbuilders, and metals & mining and steel, says the Moody’s report.
“For metals and mining, banks in Mongolia, India, Indonesia and China are more exposed,” says the report. Moody’s expects 2016 to be another challenging year for metals and mining firms, leading to higher problem loans and weak recoveries for existing problem and restructured loans. ……………………………………….Full Article: Source

Banks see worst Q1 in a decade in commodities

Posted on 25 May 2016 by VRS  |  Email |Print

Commodities revenue at the largest banks had the worst start to a year in more than a decade amid a pullback in financing of raw materials. Income at Goldman Sachs Group, Morgan Stanley and 10 other top banks slid by a combined 40 per cent year on year in the three months to March to US$1.1 billion (S$1.5 billion), according to analytics firm Coalition, which tracks commodities activities, including power and gas, oil, metals, coal and agriculture.
Revenue shrank as banks scaled back hedging and financing deals and their hedge-fund clients pulled out of commodities, said Mr Amrit Shahani, a research director at Coalition………………………………………..Full Article: Source

Defaults Have Already Spread Outside Commodities

Posted on 24 May 2016 by VRS  |  Email |Print

Bond investors appear to have placed their faith in commodities exceptionalism, with many positing that the recent pick-up in U.S. default rates will defy historical trends and remain confined to that industry.
New research from Deutsche Bank AG pours cold water on that idea, arguing that there are already signs of contagion in junk-rated debt outside of the commodities space. A look at previous peaks in default rates shows the potential for more pervasive corporate stress………………………………………..Full Article: Source

Gold miners net cash by 2018 as Goldmans ups price deck

Posted on 13 May 2016 by VRS  |  Email |Print

Analysts are throwing their weight behind a stronger gold market in the medium term with Goldman Sachs upgrading its dollar gold price deck by 10% to 15% for the next three years.JP Morgan was also positive on the medium term outlook for precious metals but diverging views on the platinum group metal (PGM) market could spell trouble in the short term for the normally robust gold stock, Sibanye Gold.
In a note published this morning, Goldman Sachs said the mines held in Rustenburg Platinum Mines, the entity Sibanye Gold is buying from Anglo American Platinum (Amplats), were not generating cash at current PGM prices………………………………………..Full Article: Source

The 15 Biggest Oil Bankruptcies (So Far)

Posted on 10 May 2016 by VRS  |  Email |Print

The pace of oil patch bankruptcies is picking up. According to a new count from Houston law firm Haynes & Boone, April saw 11 bankruptcy filings, the most of any month in the past two years. The headline failures that month were Ultra Petroleum, which buckled under $3.9 billion in debt, and Energy XXI, which carried debt of $2.9 billion.
All told, 69 oil and gas producers with $34.3 billion in cumulative secured and unsecured debt have gone under. Since share prices peaked in 2014, the oil bust has wiped out about $1 trillion in equity, with the Dow Jones U.S. Oil & Gas Index off 40%………………………………………..Full Article: Source

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