Developing-nation stocks gained, adding to their best quarterly performance since 2012, after a report that Deutsche Bank AG may settle with U.S. regulators for less than half the amount investors spurred demand for higher-yielding assets.
The MSCI Emerging Markets Index rose 0.5 percent as of 12:06 p.m. in Hong Kong, extending its 8.3 percent advance since June. Ten of 11 industry groups climbed, led by telecommunications, information technology and health care shares. Markets were closed Monday in China, South Korea and Malaysia for public holidays. Indonesia’s rupiah and the Philippines peso paced gains among developing-nation currencies.
Deutsche Bank shares surged Friday after Agence France-Presse reported that the lender was nearing a $5.4 billion settlement with the U.S. Department of Justice, less than half an initial request, that stemmed from a probe tied to residential mortgage-backed securities.
“A lot of the market sentiment has improved because obviously people were worried that Deutsche Bank might be going to recreate the Lehman moment,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong. “The fact that actually Deutsche Bank came out and said it’s well capitalized and that it’s close to securing a deal with U.S. Department of Justice over that fine has just given the market more confidence that we’re not going to have another breakdown in the global banking system.”
Emerging-market equities have risen as near-zero rates in Japan and Europe boosted demand for riskier assets and the Federal Reserve refrained from tightening policy so far this year. The benchmark gauge is valued at 12.4 times the projected 12-month earnings if its members. That compares with a multiple of 16.2 for the MSCI World Index of developed-nation stocks, which has increased 4.5 percent since the end of June.
China Mobile Ltd. climbed 1.9 percent in Hong Kong as the Hang Seng China Enterprises Index advanced 1.2 percent. Sinopharm Group Co. gained 2.3 percent. The Jakarta Composite Index rose 1.1 percent, while equity gauges in Taiwan and the Philippines gained at least 0.4 percent.
The MSCI Emerging Markets Currency Index was little changed after completing a third straight quarterly advance on Friday. The rupiah was the best performer Monday, strengthening 0.5 percent. The Philippines peso gained 0.4 percent after the finance department said in an e-mailed statement the nation can ride out any financial market volatility.
Colombia’s peso is likely to be sold following the unexpected rejection in a referendum of a peace deal between the government and Marxist guerrillas, according to Goldman Sachs Group Inc.
“The rejection of the proposed peace deal was not expected nor discounted by the market,” analyst Alberto Ramos wrote in a report. “We expect financial markets to react negatively on Monday with the COP and local interest rates likely to sell off.”
The peso closed at 2,882.06 per dollar on Friday and has strengthened 10 percent this year after climbing by more than 3 percent in each of the two previous months.
Oil Holds Near Highest Since 2018 With Global Markets Tightening
Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.
Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.
China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.
Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.
“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.
Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.
At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.
Unlocking Investments into Africa’s Renewable Energy Market
The African Energy Guarantee Facility (AEGF) is launching a virtual roadshow of free webinars allowing a deeper understanding of risk issues for renewable energy projects on the continent, and conversations around risk mitigation solutions. The first webinar will take place on Thursday, 23 September from 14:30-16:00 hrs. EAT.
The session will be oriented on how to get more energy projects from the drawing board to the grid. While the energy demand in African economies is expected to nearly double by 2040, and although the potential for renewable energy is 1,000 times larger than the demand, only 2GW out of almost 180GW of this new renewable power were added on the African continent.
Clearly not good enough! To improve the situation within the next two decades, new solutions need to be implemented urgently. De-risking and promoting private sector investments will play a crucial part of it.
In this 90-min interactive session, AEGF partners: the European Investment Bank (EIB), KfW Development Bank, Munich Re and the African Trade Insurance Agency (ATI) will share their experience and provide valuable insights on how they were able to come together and design practical solutions for investors and financiers of green energy projects in Africa aligned with SDG7 objectives.
Across Africa, the complexity of renewable energy projects and their long tenors hold back crucial energy investment. Tailored to the specific needs and risk profiles of sustainable energy projects, AEGF will tackle the investment challenge by providing underwriting expertise and capacity tailored to market needs.
The AEGF will significantly boost private investment in sustainable energy projects, both expanding access to clean energy and contribute to achieving UN Sustainable Development Goals. The scheme supports new private sector investment in eligible renewable energy, energy efficiency and energy access projects in sub-Saharan Africa.
Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips
Shell Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Permian business to ConocoPhillips, a leading shales developer in the basin, for $9.5 billion in cash. The transaction will transfer all of Shell’s interest in the Permian to ConocoPhillips, subject to regulatory approvals.
“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director. “This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”
Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.
The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30 percent of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.
Shell has been providing energy to U.S. customers for more than 100 years and plans to remain an energy leader in the country for decades to come.
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