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Investors Should ‘Buckle-Up’ For Jittery Markets in September: deVere CEO

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capital market - Investors King

Financial markets are going to get jittery in September amid concerns over the Delta variant, China’s regulatory attacks and shifting monetary policies, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

Against this backdrop, says Nigel Green of deVere Group, investors should review and potentially rebalance their portfolios sooner rather than later.

He comments: “History teaches us that October is tricky for stock markets having been the month in which some of the biggest market routs have begun.

“But this year, I believe the autumnal volatility is going to be seen earlier, with markets getting jittery in September.”

There are, says the deVere CEO, three main triggers for the expected market rout.

“First, markets are likely to pull back due to expected slower economic growth, which is being driven by serious worries over the Delta variant of Covid and how it could force further restrictions, impacting many sectors,” he notes.

“Investors will be thinking that the complete pandemic recovery might take a bit longer.

“In addition, much of the talked-about post lockdown pent-up demand has now burned out.

“Second, markets will be carefully monitoring for signs of a broader regulatory crackdown on Chinese tech companies after Beijing effectively issued a shock ban on the country’s $100bn private tutoring sector last month.

“That regulatory attack appears to highlight the Chinese government’s new thinking and its increasing push for control of the private enterprise. This stance could be expected to ripple through global markets as we move into the critical month of September.”

He continues: “Third, markets could throw a ‘taper tantrum’ as central banks signal that their massive stimulus packages – which have supported asset prices – are fading.”

Despite these significant headwinds, Mr. Green says we can expect the market bull run experienced throughout 2021 to remain for the rest of the year.

“After an impressive year, the current bull run in stock markets is likely to continue, however, the landscape will become increasingly turbulent.

“Yet, as ever, with the turbulence some key opportunities will be presented for investors to grow their wealth by topping up their portfolios. Those best-positioned to seize these will be those who are properly diversified across asset class, sector, currency and region.”

The deVere CEO concludes: “September will be defined by the bull run, but also by increasing volatility.

“Investors should buckle up, remain invested and seek out the inevitable opportunities.”

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Crude Oil

Oil Holds Near Highest Since 2018 With Global Markets Tightening

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Crude Oil - Investors King

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.

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Energy

Unlocking Investments into Africa’s Renewable Energy Market

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green energy - Investors King

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.

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Energy

Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips

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Shell profit drops 44 percent

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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