Category: Commodities

Offshore Trading to Boost Chinese Economy

According to HSBC Holdings Plc., China’s economic burst may push global sales of offshore yuan-related structured products to $1 billion for the first time since last year.

This year, sales of yuan-linked notes have reached “a few hundred million dollars” in Asia alone. Monthly worldwide volume is increasing rapidly, already doubled since 2012, according to HSBC’s Selene Chong.

“The increasing popularity of the structured products will be coupled with an overall increase of interest in renminbi investments,” she said. “As people are becoming more familiar with renminbi and increasingly using it as a trade currency, this will create more investment needs.”

Candy Ho, head of renminbi business development for Asia at HSBC, added that offshore trading for the Chinese currency has boosted demand for additional products as well.

“At the end of the day, you’ll need to use market liquidity to hedge some of the risk,” Ho said. “We expect to continue to see investors looking for opportunities branching into structured products.”

Chinese Investing: Oasis Management Hong Kong

Whether because of or in spite of the global marketplace’s volatility, there is no question that investors are flocking to all things Chinese. Oasis Management Hong Kong, along with a large portion of investors, are busy investing in Asia and trading on the domestic capital markets. But there has been a recent change in the direction Asian investments have been heading.

Opportunities have been shifting for both global fund managers as well as Chinese investors. During the past several decades the emphasis for foreign investors and Chinese regulators has been mostly inbound in type. A sea change is on the horizon as the number of domestic Chinese investors grows and the quick accumulation of large amounts of RMB capital is accrued simultaneously with insufficient global liquidity.

The coming together of the above factors has led to an increased interest in outbound investing opportunities.

Mirae Asset Global On Emerging Markets

A number of major global investment firms are choosing emerging markets in an effort to recover from the latest financial slump. Mirae Asset Global, a firm with $58 billion under management, explained that emerging economies are the hub of global output. The leading market is China, they added.

“We are positive on equities for 2013, although not outrightly bullish,” Mirae analysts wrote in a client report last week. “We believe that the earnings downgrade cycle has ended… and that economic recovery will be slower than in previous cycles as the economies of China and India work to correct their imbalances and are restricted in their ability to pump prime growth.”

The report added, “We are identifying pockets of overvaluation in consumer sectors, and now favor early-cycle consumer discretionary and financials over staples. Industrials and health care stand out as combining structural growth, government support and reasonable valuation.”

 

Asian Hedge Funds Continue to Attract Investors

Asian hedge funds and other equities may be struggling with national and economic limitations and with hedge fund compliance, but investors have taken interest in such firms nonetheless. For example, Oasis Management Hong Kong has the support of multi-national institutions, European banks, and leading financial firms.

New partnerships between American and Asian firms are established on a regular basis. Billionaire Julian Robertson is currently working on a new investment partnership with a focus on Asian equities. Called Tiger Pacific Capital, LP, the new enterprise will be led by Run Ye, Junji Takegami and Hoyon Hwang, according to Robertson’s firm, Tiger Management LLC.

Though Tiger Management was originally built as a hedge fund, Robertson, 80, shifted focus over ten years ago to invest his own fortune in hedge fund managers. Tiger Management has employed more than 40 portfolio managers and analysts who subsequently formed their own firms and became known as ‘Tiger cubs.’ Those built after the change are known as ‘grand cubs.’

Private Equity Funds Seeking to Purchase Stake in Greek Gambling Monopoly

According to an announcement by the Greek agency for privatization HRADF there are now eight potential investors, including private equity funds and a large Chinese conglomerate, showing interest in purchasing a large stake in the Greek gambling monopoly OPAP.

The Chinese concern showing interest in the purchase of OPAP, which needed to meet a November 9 deadline, was a subsidiary of Fosun International. Fosun is one of the largest of China’s business groups whose key shareholder is the Chinese billionaire Guo Guangchang.

OPAP is one of the largest-listed gambling companies in all of Europe. At the moment Greece is offering about one third of OPAP, which is almost its entire stake in the company. OPAP’s total market capitalization is valued at 1.5 billion euros ($1.9 billion) on the Athens Stock Exchange.

Others interested in bidding on the Athens stake in OPAP are several private equity firms including BC Partners and TPG Capital LP.  Playtech, the giant Estonia-headquartered online gaming software provider is partnering with the German gaming equipment maker Gauselmann AG to possibly add their own bid.

OPAP is the major monopoly which the Greek privatization program is dealing with in 2013. The privatization program is part of the plan for Greece to raise 2.6 billion Euros to help make its way out of its severe debt and is part of the international bailout plan.

Asia Hopes to Boost Trade and Investment

The 10th Asia-Europe Finance Ministers Meeting, to take place today, will address a recent grievance brought forth by Asian firms, according to Somchai Sujjapongse, the director-general of the Fiscal Policy Office.

The companies have asked Europe to simplify processes and allow them to acquire or merge with other European businesses. This issue is only a small part of the meeting’s main topic; stimulating trade and investment flows between the two regions.

Sujjapongse explained that while multinational companies from Europe have extensive history of investing in Asia, Asian investment in the region remains limited. He called on Europe to promote investment from various enterprises.

“There are some obstacles; for instance, Europe should make it much easier for Asian firms to take over, merge with or form joint ventures with local European firms.”

 

Despite Rough Economic Times, Tudo Launches IPO, Lists on NASDAQ

Tudo, one of China’s largest internet companies and second largest video web site there, bravely listed on the NASDAQ Stock Exchange in August 2011. Eleven other IPOs were postponed due to the volatility of the market, yet Tudo listed, believing that this was the right time to go public.

The Shanghai based company was looking to raise upwards of $180 million from the offering of 6 million American depositary shares (ADRs) which sold at $25.11 each, 13 percent lower than their IPO of $29, fueling investors’ fears that perhaps that was indeed not the best time for Tudo to list on the US markets.

Tudo wants to upgrade its technology, buy rights to videos, and bandwidth expansion. According to the company’s filing, it has accumulated losses $179 million since it launched in 2005. However, annual revenue has surged, and Tudo has 200 million unique visitors to its site every month. However, Todu is logged on to only second to its main rival Youku.com, which went public a year before Tudo. On Youku’s first day after its IPO its price per share jumped by 161 percent. Since then Youku’s stock price has increased almost three-fold, closing on August 17, 2011 at $27.

Asian Stocks Rise as Wen Confirms Stimulus Room

Premier Wen Jiabao’s recent statement that China does indeed have room to add stimulus has buoyed Asian stocks for a fifth consecutive day, while regional bond risks have fallen to their lowest rate in over a year.

Europe’s equity futures have also advanced, as the court prepares for a final verdict regarding Germany’s place in a Eurozone bailout fund.

Yesterday, Wen confirmed that China has “ample” opportunity to use fiscal and monetary policy to meet growth markets, while tomorrow marks the end of a two-day meeting between Fed Chairman Ben S. Bernanke and his colleagues and the final decision regarding their contribution to asset purchases. Germany also plays a significant role in the events as the country’s Federal Constitutional Court will now announce whether it will participate in the European Stability Mechanism.

Hiroichi Nishi of SMBC Nikko Securities Inc. explained:

“The market is getting confident that governments won’t let economies get worse, as expectations are mounting in the U.S. for more monetary easing and China expands public investment. At the same time, Europe is making progress, even though it’s not speedy.”

Short-Selling Will Be Made Easier by Chinese Regulators

The news on investors’ minds today, including those managing Oasis Management Hong Kong, is what will be the consequence of the Chinese plan to introduce a new way to make it more convenient for investors to short-sell locally traded equities.

Chinese regulators are determined to help bring its markets to a place more in line with standards which are in place all over the world. The hope is that the move to make short-selling easier will help stimulate the hedge fund industry in China.

In order to achieve its goals Chinese leaders in Beijing plan to start a group called the Centralized Securities Lending Exchange, which they hope will be in place by the end of March this year, which will act as a platform for short-selling activities.

According to a report, China’s market regulator, the China Securities Regulatory Commission, will be the largest shareholder in the new exchange.

China May Not Import Corn from the U.S.

The United States Grains Council announced that China may not need to import corn from the U.S.  this year.

The group explained that China has no need to “rush into the market,” as they had a successful harvest themselves. Prices have risen to nearly $6.00 a bushel, as well. Still, China may watch to see if the prices fall below $6.00.

As of now, however, corn for the December delivery jumped by 2.1%, to trade at $6.105 with Beijing.