Thursday 27th November 2014
NEWS TICKER, WEDNESDAY NOVEMBER 26TH 2014: According to local press reports, the chief of the UAE stock market regulator wants more industrial companies to list their shares on exchanges dominated by property and investment firms. Abdulla Al Turifi, chief executive of the UAE Securities and Commodities Authority (SCA), says the regulator is reviewing applications for initial public offerings of up to four companies to list on the UAE bourses and another three applications for a new secondary market for companies that currently trade only OTC. The UAE is seeking to broaden its industrial base and reduce its reliance on hydrocarbons, but the country’s two main stock exchanges are dominated by property and financial listings. Recent IPOs have come from retail, a sector also previously unrepresented on the exchanges. In February this year, the SCA and the Ministry of Economy issued a law requiring private joint stock companies to list their shares on a second market, in the hope that it would encourage firms to eventually move onto the main board- Moody's has placed the B3 corporate family rating, B3-PD probability of default rating and B1 rating on the senior secured facilities of Reynolds Group Holdings Limited under review for downgrade. The review follows RGHL's announcement that it had entered into a definitive agreement to sell its SIG Combibloc business to Onex Corporation for up to €3.75bn. The transaction is expected to close in the first quarter of 2015, pending final regulatory approvals and the satisfaction of other customary closing conditions - Morocco’s House of Representatives yesterday approved a new law authorising the establishment of Islamic banks and private companies to issue Islamic bonds. Since the Islamist-led government took office in 2011, it has been attempting to develop Islamic finance in the country. The bill was passed unanimously - According to Iran’s Fars News Agency (FNA) Iran’s non-oil exports have grown by 28% since the end of March. Iran’s non-oil exports have surged by 28% since the Persian new year (March 21), Fars News Non-oil export revenues, minus gas condensates, were approximately $18bn this year. Roughly $5bn from the non-oil exports revenues were from tourism (up 32%), though the bulk comes from engineering, workforce and transit services. Some 93% of the country’s non-oil export revenue comes from Asian countries. Imports since the end of March have risen 32% to $21.695bn -IXICO the brain health company, today announces that the contracts for two separate clinical trials in Huntington’s disease with two pharmaceutical companies have been extended. As a consequence, IXICO anticipates the revenue from these two contracts to be significantly enhanced to a potential £2.5m over approximately three years – Any announcement around the sale of Japan Post Holding’s projected IPO now looks to be postponed until January, according to the company’s president Taizo Nishimuro, at a news conference earlier today. In October, the government selected Nomura Securities and ten other underwriters for the initial public offering. The IPO is the first leg of the government's plan to sell up to two-thirds of Japan Post's shares. The government is hoping to raise more than $20bn from the sale - The US Commodity Futures Trading Commission (CFTC) filed notice to revoke the registrations of Altamont Global Partners LLC (Altamont), a commodity pool operator of Longwood, Florida, and John G. Wilkins a principal, managing member and approximate one-third owner of Altamont. The notice alleges that Altamont and Wilkins are subject to statutory disqualification from CFTC registration based on an order for entry of default judgment and an amended Order of permanent injunction. The orders include findings that Altamont and Wilkins misappropriated commodity pool funds and issued false quarterly statements to pool participants. The notice alleges that Wilkins is subject to statutory disqualification from CFTC registration based on his conviction for conspiracy to commit mail fraud and wire fraud. A US District Court has sentenced Wilkins to 108 months in federal prison - The Straits Times Index (STI) ended +0.94 points higher or +0.03% to 3345.93, taking the year-to-date performance to +5.72%. The FTSE ST Mid Cap Index gained +0.08% while the FTSE ST Small Cap Index gained +0.08%. The top active stocks were SingTel (+0.26%), Global Logistic (+1.52%), DBS (-0.40%), OCBC Bank (+1.26%) and UOB (-0.42%).The outperforming sectors today were represented by the FTSE ST Consumer Services Index (+0.40%). The two biggest stocks of the FTSE ST Consumer Services Index are Jardine Cycle & Carriage (+0.29%) and Genting Singapore (+0.44%). The underperforming sector was the FTSE ST Utilities Index, which declined -0.97% with United Envirotech’s share price declining -0.61% and Hyflux’s share price gaining +1.09%. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+0.78%), SPDR Gold Shares (-0.22%), United SSE 50 China ETF (+2.33%). The three most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (+0.26%), Ascendas REIT (+0.87%), CapitaMall Trust (+0.51%). The most active index warrants by value were HSI23800MBeCW141230 (+20.35%), HSI24400MBeCW141230 (+18.67%), HSI23600MBePW141230 (-20.00%) and the most active stock warrants by value today were OCBC Bk MBeCW150413 (+6.38%), KepCorp MBePW150330 (-5.88%), UOB MB eCW150415 (unchanged) - Sentiment in the Italian consumer sector has taken another step backwards according to the latest figures this month. The Italian Consumer Confidence indicator has now fallen for a seventh straight month to produce a November reading of just 100.8, from a peak above 106.0 this sentiment metric reached 101.3 last month, market expectations for today’s reading were for a slight rise to 101.6. The Organisation for Economic Co-operation and Development (OECD) yesterday published a less than optimistic report for the near term growth prospects of the Italian economy. The previous OECD report projected growth for Italy of 0.5% over the full 2014 year but this has now been revised downwards by almost a full point to forecast a 2014 contraction of -0.4%.

Gold outlook remains tied to political risks

Wednesday, 08 February 2012
Gold outlook remains tied to political risks If 2011 was all about a strong investment case for gold, the sell-off at the very end of last year heralded a more cautious approach to the yellow metal. Most analysts believe gold will continue to rise in the first half of 2012, possibly by as much as $300 to $500 a troy ounce. However, they also warn that prices are likely to start falling in the second half of this year and continue on a downward path into 2013, while platinum and palladium could climb steadily. By Vanya Dragomanovich. http://www.ftseglobalmarkets.com/media/k2/items/cache/5214bdb529ff52c2bc08d9b03f97b94e_XL.jpg

If 2011 was all about a strong investment case for gold, the sell-off at the very end of last year heralded a more cautious approach to the yellow metal. Most analysts believe gold will continue to rise in the first half of 2012, possibly by as much as $300 to $500 a troy ounce. However, they also warn that prices are likely to start falling in the second half of this year and continue on a downward path into 2013, while platinum and palladium could climb steadily. By Vanya Dragomanovich.

The vast strategic allocations—not only from speculators but also from private banking and high net worth individuals—which have shaped the precious metals market over the past two and a half years have now subsided, according to Nick Moore, a commodity analyst at RBS. “To us this had always seemed inevitable. Investment demand could not expand perpetually,” he says.
Even so, this is no grounds to become bearish because the arguments in favour of investing in gold remain solid, adds Moore. Last year, it has to be said, was busier than most, dotted with events that inevitably propelled investors towards gold as a safe haven. In case you’ve forgotten, here’s the well-worn list: the Arab Spring; the Japan earthquake; the conflict in Libya; the downgrading of the US sovereign debt; the Greek debt crisis. Equally inevitably, gold prices shot up from $1,370 a troy ounce in January 2011 to a high of more than $1,900/oz in September. The subsequent drop to $1,670/oz by year end was as much about cashing in on the year's rally as it was about deleveraging while the debt crisis exerted its wasting grip on Europe.
It is patently clear already that a lot of the uncertainty of 2011 will overhang across the market, at least for the first half of 2012. The list of reasons is again very obvious: the chronic European debt problem; fragile growth in the global economy; and unsettling political stresses emanating from Iran and the US, even potentially Syria. All of these elements will continue to inject volatility into the gold market.
With this amount of uncertainty it would be foolish to write off gold as an investment. Despite the sell-off in December, a large proportion of investors across the board—be they retail, central banks, large institutions or speculators––continue to look at gold either as an alternative currency or a diversification asset designed to protect against losses from other investments.
In the past two months investors have been divided in their approach to gold. While short-term speculators liquidated large positions in December, cashing in on a rally that happened over the course of 2011, long-term investors, particularly ETF investors, stuck faithfully to their positions. Speculative positions in Comex gold are at their lowest levels since 2009 but physical gold ETF holdings reached record levels of 2,300 tonnes in December.
Since the beginning of this year “fresh money has been put to work and the energy sector and precious metals have so far been the main recipients,” particularly gold and silver, says Ole Sloth Hansen, senior commodity manager at Saxo Bank. One of the key factors working in favour of gold is the low interest rate environment which currently exists in over half of G20 countries, he adds.
Further monetary easing in Europe, China and potentially a round of QE3 in the US will increase liquidity and drive the gold price to new records, possibly as early as the first half of 2012. “Liquidity will be a stronger influence on market performance than macroeconomic turbulence,” says Bjarne Schieldrop, chief commodities analyst at SEB bank.
The European sovereign debt crisis will also be supportive at the retail level because at times of crisis retail investors tend to buy gold bars and coins. While at first glance this type of demand may seem like a small driver of the market, industry consultancy Thomson Reuters GFMS says that last year bar and coin buying rivalled that of ETF investment flows.
“Private investors in Europe and the US are the biggest buyers of bars and coins; they buy it for safety because they are worried about the purchasing power of paper currencies,” says Carsten Fritsch, an analyst at Commerzbank.
Another big contributor to a high gold price in 2011 was the fact that central banks bought some 450 tonnes of the metal. Analysts expect the trend to subside this year but not to stop. “Central banks in emerging markets are still heavily under-invested in gold,” says Fritsch. “In 2011 Mexico for instance bought 100 tonnes of gold and Russia, Turkey and South Korea were all major buyers. We don't expect to see the same amount of central bank buying this year but we do expect central banks to buy smaller amounts, for instance Russia,” he says. Fritsch argues that if Russia does come back as a buyer it will most likely absorb some of the domestic gold production but this will mean that less gold will make it onto the global market.
One of the two key risk factors for gold is the strength of the dollar, particularly when it weakens the currency of a big gold buyer such as India. When the rupee plunged against the US currency in late 2011, domestic gold buying as good as dried up. The other potential threat to gold is a recovery in equity markets which annuls the reasons for safe-haven buying.
Looking at other precious metals such as silver, platinum and palladium, there is an interesting investment case to be made—particularly for palladium. All three were sold off heavily at the end of last year to the point that they are now considered relatively cheap.
“Within the precious metals group we see palladium as the better pick given its bias to the US and China,” says Deutsche Bank's Michael Lewis. The palladium price depends heavily on demands from the car industry which uses it to make catalytic converters, to cut CO2 emissions. In November 2011, US car sales rose by 14% and Chrysler said recently that its US sales rose 37% in December, the fastest of the top three US car manufacturers.
On the other hand, Chinese car sales slowed considerably in 2011 because of the phasing out of tax subsidies and car scrappage incentives. Yet even with that, China's sales of 18.5m cars in 2011 still outstripped the estimated 12.8m light vehicles sold in the US. This comes at a time investors in palladium futures cut their net long positions by 77% from August 2011 highs and when ETF investors reduced their exposure by 23% for the same period.
An important question this year is whether Russia will stick to current export volumes for palladium. The answer is actually a political one.  Although Russia's nickel miner Norilsk Nickel is the world's biggest palladium producer, stocks of palladium are ­state-controlled and sold through a government agency that never reveals how much stock it holds or plans to sell. For years analysts in the West have speculated that those stockpiles are about to come to an end, this year being no exception, but there is so far no material evidence to support this. The speculation may prove yet again to be a case of wishful thinking rather than actual fact.
Even so, Commerzbank expects palladium prices to recover noticeably over the course of this year and to hit $850 by the end of 2012, up from the current $680/oz.
There is a similar case to be argued for platinum, which is also used by the car industry and in jewellery. Platinum has traditionally traded at a higher price than gold, but with gold now the more expensive metal, jewellers, particularly in Asia, are switching to platinum as an alternative.
On the supply side, South Africa, the biggest platinum producing country, is facing problems with electricity supplies which could hamper platinum mining over coming months. However, at current prices, platinum miners are under pressure and on an all-in cost basis many are making losses. “We believe this is unsustainable in the long run and something has to give—the price has to recover or production growth will slow,” says RBS's Moore. He sees the $1,400/oz level as the floor and expects that any dips in prices below that figure will prove short-lived. In similar vein, Commerzbank forecasts platinum prices to rise to $1,850/oz by year end from the current $1,550/oz.
Silver is probably the most volatile of the three and not a market for the faint-hearted. “Silver has always been a volatile metal, but 2011 was a vintage year. The euphoria of the 89% February-April rally to a $50/oz peak was followed by the revulsion of a 35% collapse, the latter over just two weeks. A few months later, in September, an even more dramatic drop saw silver shed 40% of its value,” says Moore. This serves as a painful reminder for investors to tread cautiously, or at least not to leave their silver positions unchecked for lengthy periods.
This year the demand from the electrical and electronics industry, the key consumer of silver, will continue to support prices although consumption from solar cell makers is likely to slow after several years of fast growth.
RBS's Moore expects silver to rally from current levels to a peak of $34/oz in the third quarter, in line with gold, but to trend lower afterwards.

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