Archives for August 2015

A hundred and sixty five online accounts have been shut down for alleged misconduct, said the Ministry of Public Security on Sunday, saying it “caused panic, misled the public and resulted in disorders in stock market and society.”

BREAKING: Xinhua reported Chinese journalist Wang Xiaolu confessed to police for her “irresponsible inaccurate” reporting on stock market

— George Chen (@george_chen) 30 августа 2015

Police say arrested journalist Wang Xiaolu of Caijing Magazine confessed to a fake report on July 20 that was ”based on hearsay and his own subjective guesses without conducting due verifications.”

READ MORE: Chinese markets crash again in biggest collapse in 20 years

According to Wang, the information he gave “caused panic and disorder on the stock market, seriously undermined market confidence, and inflicted huge losses on the country and investors.” Wang is cooperating with authorities in a plea bargain.

Liu Shufan, an official with China Securities Regulatory Commission, was also arrested. He is accused of taking bribes, forging official seals and insider trading.

Xinhua reported that Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie, four executives of Citic Securities, the nation’s largest brokerage, were under arrest for alleged insider trading.

READ MORE: Tianjin explosions to cost up to $1.5bn in insurance losses

Among the other people detained are those who were allegedly spreading rumors over the Tianjin blasts and China’s upcoming commemorations of the 70th anniversary of the end of World War II.

Article source: http://www.rt.com/business/313877-beijing-arrests-stock-markets/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

It added that this is “an important day” for the company, as well as for Italy and Egypt, as it could fuel Italy’s economic development and “will be able to ensure satisfying Egypt’s natural gas demand for decades.” 

“It’s a very important day for Eni and its people. This historic discovery will be able to transform the energy scenario of Egypt,” Claudio Descalzi, chief executive of Eni, said in a statement.

The field is located about 80 miles (129 kilometers) off the Egyptian coast, 1,450 meters below the surface.

According to Eni’s press-release, the discovered gas field, which covers an area of around 100 square kilometers, could contain about “30 trillion cubic feet of lean gas” (849 billion cubic meters of gas or 5.5 billion barrels of oil equivalent).

Even more oil could be found at the field during the course of further exploration, potentially amounting up to 40 trillion cubic feet (1.1 trillion cubic meters), Claudio Descalzi told Financial Times.

“I think we can discover more,” he said.

In June, Eni struck a $ 2 billion deal with the Egyptian oil ministry allowing it to carry out exploration in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta.

Claudio Descalzi stressed that “Egypt still has great potential” in the energy field.”

“Important synergies with the existing [Egyptian] infrastructures can be exploited, allowing us a fast production startup,” he added.

The Leviathan gas field near the Israeli coast had been the largest discovered in the Mediterranean Sea before Eni found the “supergiant” field in Zahr. This new find is one of Eni’s biggest, although it is still smaller than a gas field being developed by the company near the coast of Mozambique.

The final investment decision, which is still to be made, could be taken later this year, while drilling could be initiated in 2016, with peak output reaching about 65-80 million cubic meters per day, the Financial Times reports, citing Claudio Descalzi.

“We will fast track this project and production will begin as soon as possible,” he said, as quoted by the Wall Street Journal.

READ MORE: ‘Only way to increase oil prices – reduce production’

The announcement of the discovery came a day after a Cairo meeting between the Egyptian President Abdel-Fattah el-Sisi and Eni CEO Claudio Descalzi, according to the president’s office.

Eni is Egypt’s main oil and gas producer. It has been operating in the country since 1954 through its IEOC subsidiary, with equity production reaching 200,000 barrels of oil equivalent per day.

Article source: http://www.rt.com/business/313850-eni-gas-field-mediterranean/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

US-born Ukrainian Finance Minister Natalie Jaresko, who was granted Ukrainian citizenship when President Petro Poroshenko appointed her last December, has agreed with a creditor committee led by Franklin Templeton (which owns about $7 billion of Ukrainian bonds) on a 20 percent write-down of about $18 billion worth of Eurobonds, the first of which mature in less than a month.  

READ MORE: ‘Ukrainian economy is in free fall’

Russia won’t participate in Kiev’s debt restructuring, said Russian Finance Minister Anton Siluanov after the news broke.

Ukraine should solve the issue of official debt settlement, separately from commercial debt, said Siluanov on Thursday in an interview with Russian TV channel Rossiya-24.

“We identify ourselves as official creditors. The settlement of the debt is first with the commercial creditors. The settlement of the debt to official creditors, with countries like Russia, is considered completely separately,” Siluanov said.

December’s payment of $3 billion in Eurobonds to Russia is the largest due for Ukraine this year. Most experts believe the Ukrainian government does not have enough money, so default is considered likely.

Ukrainian Prime Minister Arseny Yatsenyuk said that Russia didn’t accede to the creditors’ committee and wouldn’t receive better terms than the other lenders under any circumstances.

READ MORE: Ukraine to get new IMF loans despite inability to repay private lenders

Ukraine has been negotiating the restructuring of its debt since March. The country has repeatedly warned about the possibility of a moratorium on foreign debt payments if creditors didn’t agree to the restructuring, including a write-off of about 40 percent.

Bloomberg forecasts Ukraine’s economy is expected to contract 8.7 percent this year.

Article source: http://www.rt.com/business/313598-ukraine-debt-haircut-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“The government is in the early stages of the review and could look at cutting investment spending, estimated to be about 382 billion riyals ($102 billion) this year, by about 10 percent or more,” wrote Bloomberg, citing two people familiar with the matter speaking on condition of anonymity.

According to the sources, besides reviewing its capital spending, the Saudi government may delay or reduce some of its projects to save money. However, spending items such as public sector salaries would not be affected, the report claims.

The Saudi budget, which draws some 90 percent of its revenue from the petroleum sector, has been heavily hit by a 50 percent drop in oil prices and is expected to incur a deficit amounting to 20 percent of GDP in 2015, the International Monetary Fund has estimated.

READ MORE: Saudi Arabia to raise $27bn in bonds, trying not to sink with oil – media

“This is a response to the lower oil prices but also to the fact that capital spending has been growing strongly over the past few years,” Fahad Alturki, chief economist and head of research at Jadwa Investment Co., told Bloomberg while commenting on the report.

He added that though a cut in capital spending “will impact economic growth, the non-oil sector is not as reliant on government spending as it was 20 or 30 years ago.”

In the meantime, the Saudi Finance Ministry declined to comment.

Earlier in August, the Financial Times reported that Riyadh planned to raise $27 billion on the bond market by the end of 2015 to balance its budget, which had been prepared based on an estimated crude oil price of $106 per barrel.

READ MORE: Crude price low on high supply

As a result of the sharp recent dip, the price for Brent crude oil currently stands at $43.32 per barrel as opposed to over $100 a year ago, while the price of WTI Crude oil has dropped to $39.55 from over $90.

Saudi Arabia, which dominates OPEC, is thought to have played a key role in instigating the slump in crude oil prices. The biggest economy in the Arab world has been unwilling to cut its crude output. In June, OPEC confirmed it is not cutting output, which has even increased since last year from under 30 million to about 32 million barrels per day.

Article source: http://www.rt.com/business/313425-saudi-arabia-cut-budget-oil/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Investors were rattled as the China Securities Regulatory Commission made no attempt to reassure markets after Monday’s crash, as they did a month ago after an 8.5 percent drop.

READ MORE: China stocks suffer biggest one-day loss in 8yrs, Shanghai Composite drops 8.5%

“It’s panic selling and an issue of confidence,” Wei Wei, an analyst at Huaxi Securities in Shanghai, told Bloomberg News. “The government won’t step in to rescue the market again, as it’s a global selloff and it’s spreading everywhere now. It’s not going to work this time.”

Tokyo’s Nikkei index was again dragged down by Beijing, closing four percent down. Other Asian markets managed to recover after Monday’s collapse. Hong Kong’s Hang Seng closed under one percent higher, while one of the previous worst-performing markets, Taiwan’s TSEC 50 Index, closed 3.58 percent up.

European markets on Tuesday were making a modest recovery after the Black Monday crash. London’s FTSE 100, Germany’s DAX and French CAC 40 were growing by between two to three percent in afternoon trading. In fact, all European equity markets were trading in the green as of 09:00 GMT.

READ MORE: Black Monday: Wall Street plummets 1000 points at opening bell

In the past, China’s central bank has regularly intervened in an effort to revive markets. The People’s Bank of China has spent more than $200 billion buying Chinese stocks since early July.

In August, it prohibited traders from borrowing and repaying stocks on the same day, making it difficult to benefit from hourly price fluctuations in the stumbling market. The state-run China Securities Regulatory Commission (CSRC) announced in July that any shareholder with more than a 5 percent stake in any Shanghai- or Shenzhen-listed company, including foreign investors, should not reduce its holdings over the next six months.

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Article source: http://www.rt.com/business/313320-china-market-crash-tuesday/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The grim data was predictable, as before the opening the Nasdaq 100 Index contract dropped 5 percent reaching its daily loss limit. Companies like Apple and Netflix also suffered from a massive sell-off, sinking at least 5.7 percent amid the panic triggered by Chinese stock markets collapse.

As I have long stated, we are so tied in with China and Asia that their markets are now taking the U.S. market down. Get smart U.S.A.

— Donald J. Trump (@realDonaldTrump) 24 августа 2015

Dow futures plummeting more than 800 points has allowed The New York Stock Exchange to apply Rule 48 for the Monday stock market open, according to Dow Jones.

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The rule was last invoked during the financial crisis, and allows the NYSE to open stocks without indication. “It was set up for situations like this,” Art Hogan, chief market strategist at Wunderich Securities told CNBC.

The Dow Jones Industrial Average dropped 1000 points or 6%, to 15,441.

The collapse in the US markets was triggered by China where a brutal sell-off saw indexes down 8.5 percent on Monday. Beijing’s failure created a domino effect dragging down markets around the world.

“Until we have some sign that China and the emerging markets aren’t being sucked into some vortex from which they can’t recover … it is unlikely this sell-off will stem,” Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia told Reuters.

READ MORE: Biggest slide in Chinese stocks since 2007, Brent oil below $44

London’s FTSE finished the day down 288 points, or 4.67 percent, at 5898. Major markets in France and Germany ended the day down 5.5 percent and 4.96 percent, respectively.

Market turmoil has also had in impact on commodity prices. Brent crude briefly dipped below $43 per barrel falling to $42.57 at 13:40 GMT, at the opening bell on Wall Street, but is now trading above $43. Meanwhile, the price of gold is on the up, trading 0.28 percent higher at $1,162.80 per troy ounce as investors look for a safe haven. Agriculture commodities are also being dragged down by the market collapse, as orange juice, cotton and lumber have lost more than three percent.

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Article source: http://www.rt.com/business/313226-wall-street-stock-rout/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“This is a real disaster and it seems nothing can stop it,” Chen Gang, Shanghai-based chief investment officer at Heqitongyi Asset Management Co., told Bloomberg. “If we don’t cut holdings ourselves, the fund faces risk of forced closure. Many newly-started private funds suffered that recently. I hope we can survive.”

Asian markets followed China with a broad sell-off.

Japan’s Nikkei closed down 4.6%, Hong Kong’s Hang Seng was 5.17% in the red, and Mumbai’s Sensex is down nearly 6 percent.

Ripple effects were felt in European markets on Monday as well. The STOXX Europe 600 Index dropped 5.3%, suffering its worst percentage loss since 2008.

London’s market closed with the FTSE 100 Index slumping 4.6% to 5.9 on Monday – its biggest loss since 2009. Germany’s DAX shed 4.7% percent, finishing below 10,000 for the first time since January, according to Market Watch.

As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation.

— Lawrence H. Summers (@LHSummers) August 24, 2015

Meanwhile, France’s CAC fell 5.4% to 4.4, suffering its worst session since November 2011.
Commodities are down across the board, with Brent crude trading below $44 per barrel, a six-and-a-half-year low.

On Friday, the US WTI crude benchmark dropped below $40 per barrel in an eighth straight weekly decline, the longest falling streak in almost 30 years.

READ MORE: WTI crude drops below $40 first time since 2009

The Russian ruble has fallen to its lowest level since February against major currencies, dragged down by both weak oil and Chinese stocks. The ruble was trading at over 71 rubles against the US dollar and 81.78 rubles against the euro as of 09:25 GMT.

Equity markets in Moscow are in the red with the RTS losing 5.51 percent and the MICEX down over two percent as of 09:25 GMT.

US Dow Jones industrial futures are down by more than 600 points, and SP futures down nearly 60 before opening bell on Wall Street.

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Latin American stock markets mirrored the downtrend, plunging to their lowest in 22 years, according to Bloomberg. The JP Morgan Latin America Currency Index (LACI) reached its lowest level since November 1922 on Monday.

READ MORE: Global markets enter correction on China fears

Colombia’s peso suffered its most severe drop since 2009, falling 3.3%, to a record low of 3.2 against the US dollar.  It was joined by Mexico’s currency, which decreased by 0.7 percent to 17.1.  The Brazilian real weakened by 1.1%, sliding to a 12 year low of 3.5.

The Ibovespa Brasil Sao Paulo Stock Exchange Index (IBOV) continued last week’s decline, sliding 3.9 % on Monday to reach its lowest level since January.

“It is a bloodbath,” Bernd Berg, a London-based strategist at Societe Generale SA told Bloomberg on Monday.  “We see panic selling due to global growth fears and uncertainty about the next Fed move.”

Over the last month, the Chinese government has taken drastic measures to stop the stock market’s decline. On Sunday, the Xinhua news agency reported that Beijing would allow its main state pension fund to invest up to 30 percent of its net assets in China-listed shares for the first time.

In mid-August, the People’s Bank of China devalued the yuan over three consecutive days, stopping at a 4.4 percent overall depreciation. The move intended to help faltering exports sowed panic in the world’s equity markets and may have started a new wave of currency wars.

READ MORE: Biggest slowdown in Chinese manufacturing in 6yrs

The real Chinese economy has been showing signs of slowing growth. In a report published last Friday by Caixin and Markit, it became clear that manufacturing has been losing momentum. The Purchasing Managers’ Index (PMI), its key indicator, saw a fall to 47.1 from 47.8 in July. This is the lowest level since March 2009 and shows a contraction.

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Article source: http://www.rt.com/business/313180-china-market-crash-monday/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

What happened in China?

In three consecutive days last week, the People’s Bank of China devalued the national currency, with a 4.4 percent overall depreciation. The step was intended to revive exports, but caused a domino effect leading to panic and fluctuations in equity markets around the globe.

READ MORE: World markets bearish on grim China data

As a result, several countries followed China’s lead and devalued national currencies to keep pace with Beijing and support their exports; others are victims of falling commodity prices, while smaller countries are affected by their bigger neighbors.

Kazakh tenge

The worst case is the Kazakh tenge that saw a 23 percent loss on Thursday after President Nursultan Nazarbayev decided to allow a freely floating exchange rate. The government of Central Asia’s biggest crude exporter is trying to manage the falling crude prices, and the economic weakness of its top trading partners – China and Russia.

Vietnamese dong

Hanoi devalued the dong for the third time this year by 1 percent on Wednesday to 21,890 dong a dollar, which is another mark that the Asian exchange rates are now under extreme pressure.

“The dong will have enough room to fluctuate more flexibly to cope with negative impacts from international and domestic markets, not only from now until the rest of the year but also in the early months of 2016,” said a statement from the central bank.

Malaysian ringgit

The currency dropped to a 17-year low on Thursday and foreign exchange reserves sank below the $100 billion point for the first time in five years.

Turkish lira

The Turkish currency is one of the world’s worst-performers since the Chinese devaluation. The Turkish lira has lost more than five percent against the dollar after Beijing’s move, almost nine percent in a month and more than 25 percent in a year. 

Turkey’s ruling Justice and Development Party (AKP) won elections on June 7 but for the first time since 2002, lost the parliamentary majority, and will not be able to form a government alone. Leading parties in Turkey have not yet been able to agree on forming a coalition, which weakens the lira.

Saudi Arabia’s riyal

Saudi Arabia has already spent $65 billion from its reserves since the oil price decline began, down from a maximum $737 billion in August 2014. However, the remaining $672 billion is still enough to keep the riyal stable. At the same time, according to Bloomberg, the forward contracts used by traders to bet on or hedge against future price moves – are at the lowest level since 2003, which implies about a one percent fall in the national currency over the next year.

Who else?

Among the other potential victims of the current market situation are Kyrgyzstan’s som, Tajikistan’s somoni and Turkmenistan’s manat. All of these Asian former-Soviet countries have close economic relations with Russia, China and Kazakhstan which makes it highly probable they will be damaged as well.

Another country from the Russia-led Eurasian Economic Union, Armenia is also hit by the ruble’s depreciation. Armenia’s dram has lost 15 percent in the past 12 months and it’s not the end.

Belarus, one Russia’s closest allies, has also seen its national currency plummet. The Belarusian ruble lost some 27 percent in a year and it may still not have reached rock bottom.

Article source: http://www.rt.com/business/313168-china-currency-war-markets/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The mauling began in Asia where the key Chinese indices, the Shanghai Composite and Shenzhen Composite closed with 4.27 and 5.39 percent loss respectively. Other Asian markets followed: Hong Kong’s Hang Seng fell 1.53 percent (six percent since Monday) and Japan’s Nikkei closed almost three percent lower (5.2 percent loss for the week).

READ MORE: Biggest slowdown in Chinese manufacturing in 6yrs

In the US, Wall Street had its biggest one-day drop in four years on Friday leaving the Dow industrials more than 10 percent below a May record. The Dow fell 3.12 percent, and the Nasdaq dropped 3.52 percent. The SP 500 suffered its biggest daily percentage drop in nearly four years on Friday, losing 64.8 points, or 3.19 percent.

A three-day selloff culminated in Europe’s benchmark equity gauge falling 13 percent from its record. Thirteen out of 18 western-European markets have lost 10 percent or more from their highs, with Germany’s DAX Index down 18 percent. London’s FTSE 100 index recorded its biggest weekly loss this year, losing 5.2 percent since Monday.

And the correction is not over yet, according to investor Bob Doll.

“I think we’re rapidly reaching a near-term oversold, from which we’ll get a bounce. But I don’t believe this corrective period is over yet. Most of the decline is probably behind us from a point standpoint. But I think we have more time to sort this out,” the chief equity strategist and senior portfolio manager for Nuveen Asset Management said in an interview with CNBC.

READ MORE: WTI crude drops below $40 first time since 2009

Problems on the global equity markets began even before the news about China’s production activity slowdown. About $2.2 trillion was wiped from the value of worldwide stocks in the first four days of the week as the rout in commodities and emerging markets deepened, fueling bearish sentiment.

US oil prices also took a dive on Friday, with WTI crude dipping below $40 a barrel for the first time since the financial crisis and marking its longest weekly losing streak since 1986.

READ MORE: China stages biggest currency devaluation in 20 yrs to revive exports

China has been trying to boost its slowing economy and stabilize the falling stock market. In mid-August Beijing devalued the national currency in an attempt to revive its faltering exports.

Article source: http://www.rt.com/business/313105-global-markets-correction-china/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Soros purchased one million shares in Peabody Energy and another 500,000 shares in Arch Coal. Both companies have been struggling since President Obama’s ‘war on coal’ aimed at reducing carbon dioxide emissions. The coal industry’s biggest players have recently lost more than 98 percent of their share value. On Friday Peabody Energy’s shares cost $1.73, compared with more than $72 per share at their peak in 2011.

“George Soros spent millions of dollars and multiple years helping to driving down the price of coal,” H. Sterling Burnett, research fellow and managing editor, at the Heartland Institute, told FoxNews. The businessman bought as many shares as he could, and, when stocks rebound, he can sell them and make a huge profit, Burnett added.

READ MORE: New emissions rules for power plants bring fears of higher energy bills

Despite the world coal price falling, partly caused by weakening demand from China and other countries, “there is still a huge need for coal and eventually prices will go up,” according to UK-based mining and energy consultant Michael South.

In 2009, Soros, the 29th richest person in the world, promised to spend $1 billion on renewable energy and then funded the Climate Policy Initiative (CPI) think tank. The billionaire said he will donate $10 million a year to the organization for the next 10 years.

Soros also claimed he preferred a greenhouse-gas tax because carbon emission-trading systems, which are used in Europe, could be manipulated by investors.

“There is no magic bullet for climate change, but there is a lethal bullet: coal,” Soros said then.

In October, the Soros-funded think tank published a report saying the world economy could save $1.8 trillion over the next 20 years if it shifts from coal to clean energy.

The 85 year-old Hungarian-born hedge fund legend is worth $24.2 billion, according to Forbes.

Article source: http://www.rt.com/business/313046-soros-coal-investment-climate/?utm_source=rss&utm_medium=rss&utm_campaign=RSS