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Standard Chartered Plc Raised About $5.1 Billion

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Standard Chartered

Standard Chartered Plc raised about $5.1 billion after 96.8 percent of the bank’s shareholders exercised their rights in a share sale on Friday, signaling confidence in Chief Executive Officer Bill Winters’s strategy to turn around the Asia-focused lender.

The shares will be listed in Hong Kong and the first trading day is expected to be Dec. 16, the London-based bank said in a statement on Friday.

Winters, 54, announced the rights issue in November as part of a plan to restore profitability at a bank reeling from losses tied to bad loans after commodity prices slumped and economies from China to India cooled. The CEO is also cutting 15,000 jobs to help save $2.9 billion by 2018, scrapped a second-half dividend and unveiled plans to restructure or exit $100 billion of risky assets.

The 705 million new shares include those bought by Temasek Holdings Pte, Standard Chartered’s largest shareholder, according to the statement. The Singaporean state-owned investment firm intended to take up rights for 15.8 percent of the company’s existing share capital, the bank said last month.

Of Temasek’s 17.2 percent stake in Standard Chartered, 1.4 percentage points has been loaned out, according to the British lender’s November filing on its capital raising, reducing Temasek’s entitlement in the rights issue to 15.8 percent.

The shares were loaned under the terms of a total return swap agreed in 2013 with Bank of America Corp., and which expires at the end of this year, according to a person familiar with the situation.

Stock Decline

A Temasek spokesman declined to comment. Mark Tsang, a Bank of America spokesman in Hong Kong, declined to comment.

Standard Chartered’s stock in Hong Kong sank 0.7 percent as of 1:36 p.m. Friday. The lender’s London-listed shares fell 1.3 percent on Thursday, taking their drop this year to about 44 percent.

The bank previously raised capital in 2008 and 2010 to help fund its expansion under former CEO Peter Sands. This year’s rights issue was fully underwritten by JPMorgan Chase & Co. and Bank of America Corp.

Bloomberg

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Crude Oil

Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts

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Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.

Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.

Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.

Despite this effort to tighten supply, market sentiment remains unresponsive.

“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.

Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.

Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.

Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.

Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.

The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.

Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.

Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.

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Crude Oil

U.S. Crude Production Hits Another Record, Posing Challenges for OPEC

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Oil

U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.

The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.

The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.

Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.

This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.

While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.

The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.

Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.

Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.

This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.

In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.

However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.

Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.

While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.

The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.

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Crude Oil

Nigeria Takes Bold Step to Energize Oil Sector: Plans to Revoke Dormant Exploration Leases

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The Nigerian Upstream Petroleum and Regulatory Commission (NUPRC) has announced that the Federal Government is considering revoking inactive oil exploration leases granted to companies unable to conduct exploration activities.

Gbenga Komolafe, CEO of NUPRC, conveyed that only companies demonstrating robust technical and financial capabilities would retain their leases under the guidelines of the Petroleum Industry Act (PIA).

“Based on PIA, the commission is focused on delivering value for the nation, so only firms that are technically and financially viable will keep their leases,” affirmed Komolafe in a statement to Reuters.

He outlined that the commission plans to review existing leases, and the allocation of new leases will be contingent upon specific terms and conditions.

Current data from NUPRC reveals that over 60% of prospecting licenses, comprising 53 exploration leases issued since 2003, have expired. Of these, 33 licenses, including four entangled in contract disputes, have not been renewed.

While automatic revocation has not been exercised, the regulator signals a departure from allowing companies to indefinitely retain leases without meaningful exploration activities.

The enactment of the PIA in 2021 empowers the regulator to assess the technical and financial capabilities of companies holding oil exploration leases.

The Nigerian oil and gas sector has faced challenges, witnessing dwindling investments as major players exit onshore and shallow water assets due to security concerns, infrastructure sabotage, and legal disputes in the Niger Delta.

The proposed move aims to incentivize active exploration, addressing the sector’s stagnation and fostering renewed investor confidence.

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