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Oil Assets in Niger - April, 2014

Intersuez is developing major oil blocks in the Republic of Niger, a democratic Francofone West African nation with immense deposits of natural resources like oil & gas and uranium. The new oil code of the country adopted in 2007, enabled the opening of the energy market. Large corporations like Areva of France, China National Petroleum Corporation and Sonatrach of Algeria are operating in various parts of Niger. Located in the north of Nigeria and borders with Algeria, Libya, Chad, Burkina Faso, Mali and Benin, Niger has seen substantial investment in oil & gas sector in the recent years. China National Petroleum Corporation also holds permits for multiple blocks and is already operating a refinery in the area and is reportedly committed to investments of around USD 5 Billion. Algerian Sonatrach also holds a mining permit and is currently in the exploration stage. There have been considerable oil discoveries in the recent past. According to the new oil code issued by the Republic of Niger, there are now provisions for upto 9 years of Exploration Permit. The rich oil blocks are located in the Chad Basin.The Draft Production Sharing Agreements were finalised earlier in the month of March.The communication in this regard was issued by The Directorate General of Hydrocarbons, Ministry of Energy and Oil in Niamey, the capital of the country.

 

From the Analyst's Desk - April, 2014

Russia - Russia expects investors to move up to $70bn of assets out of the country in the first three months of this year. The sign that investors are becoming nervous about Russia comes amid sanctions and tensions over Ukraine. Speaking to reporters on Monday, Andrei Klepach, Russia's deputy economy minister, also warned of stagnant growth and rising inflation. He expects growth in the first quarter to be "around zero". The Russian economy grew by just 1.3% last year, but Mr Klepach said it was "too soon" to talk about "a recovery from stagnation". "There won't be a recession, but there is a problem of stagnation; its length and depth," Mr Klepach said. Meanwhile, Russia has suffered a double downgrade from Standard & Poor’s and Fitch as the continuing Ukraine crisis prompts further sanctions from the West. Both S&P and Fitch have cut Russia’s outlook from stable to negative.

Japan - Japan’s biggest banks agreed to raise salaries for the first time in 19 years as an economic recovery puts them on pace to achieve record annual profit.
The banking units will each increase base pay by 0.5% in the year starting April 1, in line with requests from the companies’ labor unions, bank officials said on Thursday.
The banks follow manufacturers from Toyota Motor Corp. to Hitachi Ltd. in increasing pay as Prime Minister Shinzo Abecalls for companies to boost wages to help sustain the economy’s revival. Without higher incomes, Japanese households face declining spending power as the government targets 2% inflation and will raise the sales tax next week.

India - India’s benchmark stock index rose to a record high this week, as State Bank of India paced a rally among lenders after Goldman Sachs Group Inc. raised its recommendation on the nation’s biggest bank. State Bank advanced to its highest level since December after the U.S. investment bank advised investors to buy shares and raised its price target by 44%. The S&P BSE India Bankex rallied to a 10-month high. The Sensex rallied 0.5%, according to preliminary closing prices in Mumbai. The gauge has advanced 4.9% this quarter, the best performance among the three other BRIC nations of Brazil, Russia and China. Foreigners have bought $3.9bn of local shares and bonds this month amid improving public finances, easing inflation, and before the elections due next month.

China - China's manufacturing sector showed further contraction in March, according to a new report which mainly tracks activity in smaller factories.
The HSBC Purchasing Managers' Index (PMI) gave a reading of 48.1 for March, compared to 48.5 in February. A reading below 50 indicates contraction, while one above 50 shows expansion. China's official PMI survey, weighted more towards bigger and state-owned enterprises, will be released later this month.

Trends - The asset management industry is at risk of becoming too focused on short-term performance, a poll of Fundweb readers suggests. Just over three-quarters of respondents agreed that fund management was moving too much towards short-term investing’. The poll came on the heels of comments from Pacific Assets Trust portfolio manager David Gait, who argued that the investment industry is become “more casino-like” as more “hot money” flows into the sector. “One of the things that preoccupy us is that we feel our industry is still becoming more casino-like in nature,” the manager told a First State Stewart conference in Edinburgh. “We certainly feel like active management is at risk of becoming a slightly endangered species.”

Trends - Chinese equity funds have suffered their largest weekly net outflow on record as investors continue to worry about the health of the world’s second largest economy.
Fund flow data provider EPFR Global points out that the week ending 18 March was dominated by Russia’s moves to annexe the Ukraine province of Crimea and questions over how China can rebalance its economy to achieve a more sustainable growth model. The Chinese equity funds tracked by the firm witnessed an outpour of more than $1.5bn over the week, while emerging market equity portfolios were hit by their 20th straight week of net outflows on the back on the Ukraine crisis, China worries and concerns over the impact of Federal Reserve tapering. Last week saw Goldman Sachs become latest investment bank to downgrade its outlook for the Chinese economy. It lowered its GDP growth forecast for 2013 from 7.6% to 7.3% after saying the country faces a “bumpy road ahead”.

Commodities - Gold fell to a five-week low on Wednesday as signs of economic recovery in the U.S. boosted speculation that the Federal Reserve will remove stimulus, curbing demand for the precious metal as a store of value.
Orders for durable goods climbed a more-than-forecast 2.2% in February, reflecting the biggest gain in automobile demand in a year, a government report showed on Thursday. Gold has lost 2.8% since March 19, when Fed Chair Janet Yellen said the central bank’s debt-buying program may end this year.

Spotlight on: Is bullish sentiment the biggest risk for global equities?

The high levels of bullishness surrounding global equities could be the biggest risk to their continued rise in 2014, analysts at Barclays Capital argue.
A note by the group predicts that stocks will end the year higher than their current levels but warns that this outlook is complicated by the risk of a market correction.
The analysts point out that since 2009 a market correction has tended to follow when positive sentiment reaches the levels it is at now.
They note that the number of bears replying to the firm’s Investors Intelligence Survey is “very low” at 17%. “At the risk of oversimplifying, although we think the fundamentals of the stockmarket remain favourable, bullish sentiment is, paradoxically, the main risk to our outlook. The ‘push’ and ‘pull’ of these forces has been evident in the market’s performance since our December,” the note says.

“Global equities have generated a total return of 3% since then, but the rally was punctuated by a sharp 5.5% correction in late January, ostensibly prompted by signs of slowing in China, but likely exacerbated by some unwinding of very bullish sentiment among US-based investors.”

The analysts are less worried by the impact of the Federal Reserve’s tapering of quantitative easing on global equities, despite the commonly held view that stocks are trading at high levels because of super-loose monetary policy. “When that degree of stimulus declined, the view went, so would stocks. This has not proved to be the case and although the Fed’s loose policy remains supportive, at least the first hurdle along the road to a less stimulative policy did not produce the negative effect that some had feared,” the note explains.
“This suggests that valuations are not excessively influenced by monetary stimulus, and the point at which tighter policy becomes a dominant and negative influence on stocks may still be some way off.”

Looking to individual regions, Barclays Capital sees the US equities as being “less appealing than elsewhere”. However, unless there is there is a correction caused by an unwinding of positive sentiment, its analysts do not advocate holding a bearish position on the US, opting instead for an underweight rating. They also expect the strong style bias in favour of growth over value to continue in the US. Technology, industrials and staples are tipped for outperformance while utilities, financials and materials are seen as underperforming.

Continental European equities are rated at overweight owing to their heavy discounts, relative to both their own history and to credit markets. The group also has an overweight on emerging market equities, as their “crisis-level valuations” suggest negative earnings growth even though they stand to benefit from recovery in the global economy.

Intersuez has diverse expertise across the globe. To find out more, please contact your Intersuez Executive who will be able to assist you further.

The information set out herein has been obtained from various public sources and is sent to you by way of information only. Intersuez can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

 

 

Hyundai Engineering and Inishan

Hundai Engineering Co. Ltd. of South Korea and Inishan International P.Ltd., an Intersuez Group company, have agreed to collaborate on opportunities in India. In a letter to Inishan on the 8th December, 2010, Mr. Myong-Ho Chon, General Manager, Hundai Engineering has authorised Inishan to search and develop opportunities in the fields of oil & gas, refinery, petrochemicals, LNG, power and energy, infrastructure, environmental and industrial plants, etc. The projects would be identified by Inishan and Hyundai Engineering would look at the projects on their merits and decide the course of action on a project to project basis. This is an important step in the collaboration of two countries and would bring high technology in the large infrastructure space in India. The Hyundai group is already well known in India especially in the auto sector and has great acceptability.

 

August 2010

World Bank Carbon Funds

Intersuez Advisors Private Limited, a part of Intersuez Group, is pleased to announce that it is in discussions with World Bank in Washington DC for the purchase and financing of the CFL Lighting projects in India. World Bank is the trustee of a number of carbon funds owned by various European countries that have committment to reduce emissions under the Kyoto Protocol. The World Bank team also visited the project sites in India early this month. A number of meetings and discussions have been held with various departments of World Bank in their headquarters to brainstorm the issues therein. Intersuez and World Bank have also agreed to explore the possibilities of working out some unconventional ways of funding these projects as they require a different financial outlook instead of routine carbon finance approach. The uncertainty of the continuation of Kyoto mechanisms is likely to remain for sometime. Intersuez is making all efforts to ensure that an globally acceptable solution is worked out with the World Bank.

 

April 2010

 

United Nations registers the World's largest Carbon Credit Project

Intersuez Group is pleased to announce that the UNFCCC has finally registered the Program of Activities called CFL Lighting Scheme Bachat Lamp Yojana, the only program of its kind to harness CDM mechanism of UNFCCC with the Government of India. The program involves replacement of more than 400 million CFL lamps all across the country with the active involvement of the local electricity distribution companies. Intersuez Advisors Private Limited, India, has already signed agreements with the discoms in India and is actively engaged with a host of others to accomplish this program. Intersuez would be involved in relacement of millions of CFL lamps in India thereby generating Emission Reductions in India leading to sustainable development of the country.

 

March 2010

 

Exploring Islamic Finance & Takaful Insurance and Re-Insurance

Intersuez Group has taken a corporate decision to develop expertise in Islamic Finance and Takaful Insurance and re-insurance businesses. It has initiated discussions with major global Players in this area. There is an identifiable requirement of these products in markets like India, Bangladesh, etc, and Intersuez is very well disposed to take advantage of this situation. However, Intersuez is inclined to have a strategic alliance with a global Takaful operator to roll out these operations. The group expects to launch its services in a separate dedicated company in the year 2011. It estimates to take the largest market share in these countries. The Indian market alone consists of more than 130 million muslim population.

 

February 2010

 

Focus on Water Projects in Asia

Intersuez Group would be incredasingly focussing on water related projects in Asia in the areas of resource management and utility/distribution levels. It has opened various dialogues with water authorities in India, Thailand, Indonesia, etc, and would be identifying projects in Water Treatment, resource concessions, distribution concessions, etc. Intersuez is also exploring possibilities of investing directly into distribution concessions. Various possibilities are being explored for creating strategic partnerships on a country to country basis to undertake these projects. This year would see Intersuez positioning itself in this market.

 

January 2010

 

India Efficient Lighting Projects - 2009/10

Our Indian arm, Intersuez Advisors Private Limited, recieved a Letter of Intent from the Indian electricity utility Punjab State Electricity Board for the appointment of Intersuez as the Project Developer for four regions of the northern state of Punjab in India to implement Efficient Lighting Projects. These projects are being developed under the Program of Activities called Bachat Lamp Yojana by Bureau of Energy Efficiency owned by the Ministry of Power, Government of India. India had ratified Kyoto Protocol under the United Nations body UNFCCC and these projects are being developed as climate change projects under the Clean Development Mechanism (CDM) proposed under the Protocol. The project areas of Punjab are expected to generate around a million CERs. Intersuez Advisors, India, currently has an important market share in these projects with a total expected generation of more than 25 million CERs. Intersuez in India is also actively pursuing other environment projects in the areas of solar power, wind power, water and waste management. Intersuez is in discussions with large financial institutions around the world to structure these projects.