COMMODITIES ROUNDUP
STAR performer oil hit an eight-month peak last week on the back of simmering tensions in key crude producer Iran, but other commodities enjoyed mixed fortunes as traders tracked the Greek debt crisis.
“This week, sentiment has once again shifted toward Europe’s sovereign debt issues-particularly concerning the developments in Greece - and Middle East geopolitical risks,” said Barclays Capital analyst Sudakshina Unnikrishnan.
“Crude oil markets broke away from their range-bound trading and gained steady ground over the week supported by constructive fundamentals and escalating geopolitical tensions.”
OIL
Brent oil prices rocketed to an eight-month high early on Friday, driven by concerns over Iran and hopes that the Greek debt crisis can be resolved, traders said.
Brent North Sea crude for April delivery struck US$120.70 per barrel, its highest point since June 14.
The market has surged after Iran warned that it may suspend crude exports to six European Union countries amid escalating tensions over Tehran’s nuclear program.
Iran said Wednesday that it was considering cutting oil sales to six EU countries but would not do so “at the moment,” while unperturbed European officials said they were looking for other suppliers anyway.
Prices also won support after the US Department of Energy reported American crude stockpiles sank by 200,000 barrels in the week ending February 10, indicating strengthening demand in the world’s biggest crude consumer.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in April jumped to US$119.32 a barrel from US$116.93 the previous week for the March contract.
BASE METALS
Base or industrial metals fell across the board as traders fretted over Greece and weak fourthquarter gross domestic product (GDP) data in the eurozone.
“The market has generally reacted negatively to the latest attempts to resolve the Greek debt position,” said Societe Generale analysts in a research note to clients.
“Also, the market has to absorb the (eurozone) data which confirmed the weak performance in the final quarter of last year.”
By late Friday on the London Metal Exchange, copper for delivery in three months fell to US$8,293 a tonne from US$8,500 the previous week. ASIAN stocks rose last week, with the MSCI Asia Pacific Index equaling its longest streak of advances, as China pledged to do more to help Europe cope with the debt crisis and Japan boosted asset purchases.
Cosco Pacific Ltd., the Hong Kong-listed operator of Greece’s Piraeus port, climbed 4.1%. Chipmakers outside Japan rallied after debtladen Elpida Memory Inc. said it may not survive. Reliance Power Ltd. jumped 19.7%, leading Indian companies higher. Billabong International Ltd., an Australian surfwear maker, jumped 42% after receiving a takeover bid from TPG Capital.
The MSCI
Asia Pacific Index gained 1.7% to 126.95 last week, extending its winning streak to the longest since December 2005. The gauge has advanced for nine consecutive weeks only three previous times since 1988.
“It’s a distinct improvement from the fourth quarter last year from the perspective of investor confidence and risk appetite,” said Prasad Patkar, who helps manage about Us$1bil at Platypus Asset Management Ltd. in Sydney.
“The European news flow still seems to be determining the direction of the markets. So, when there’s a bit of relief from the European front, the markets can focus on fundamentals, which seem to be improving by the day.”
Japan’s Nikkei 225 Stock Average rose 4.9% , heading for the biggest weekly gain since Dec. 2, as the yen fell against all of its 16 major counterparts. A weaker yen boosts the earnings of Japanese exporters overseas when repatriated. The Bank of Japan surprised the market on Feb. 14, when it expanded its government bond purchases.
China’s Economy
Australia’s S&P/ASX 200 fell 1.2%, and South Korea’s Kospi Index advanced 1.5%. Hong Kong’s Hang Seng Index advanced 3.4%. India’s BSE Sensitive Index climbed 3.1%.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, trailed major regional gauges as slumping foreign direct investment and trade data pointed to further weakness in the world’s second-largest economy.
“The fundamentals of the economy aren’t good and monetary policy will still be kept relatively tight this year,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about Us$120mil.
“But investors anticipate the government will have measures to support equities. Stocks will be volatile for the moment.”
Europe Assistance
Asian stocks extended gains as People’s Bank of China Governor Zhou Xiaochuan said on Feb. 15 that China is ready to be more involved in resolving the European crisis through the European Financial Stability Facility and European Stability Mechanism. Premier Wen Jiabao said on Feb. 14 that the nation is willing to get “more deeply” involved.
Financial companies gained amid optimism Europe’s debt crisis won’t throw the global financial system into disarray.
Germany, the biggest country contributor to euro-area rescues, signaled yesterday that finance ministersmaybe ready to back Greece’s second bailout in two years when they meet Feb. 20 in Brussels.
“The sense of worry is weakening slightly in markets across the board,” said Hisakazu Amano, who helps oversee the equivalent of Us$29bil at T&D Asset Management Co. in Tokyo.
“Expectations for a US economic recovery are increasing and the uncertainties on the European debt issues are subsiding.”
Mitsubishi UFJ Financial Group advanced 5.5% to ¥406. Nomura Holdings Inc., Japan’s biggest brokerage by market value, rose 10% to ¥345. HSBC Holdings Plc, Europe’s No. 1 lender, climbed 2% to HK$70.50.
Cosco, Esprit Cosco Pacific rose 4.1% to HK$12.60. Esprit Holdings Ltd., a clothier that gets more than 80% of revenue from Europe, climbed 5% to HK$15.02. Canon Inc., the Japanese camera maker for whom Europe is the biggest market by sales, added 4%.
Elpida touched its lowest price since listing in November 2004. The chipmaker slumped 16% to ¥310 after saying it sees “uncertainty” over remaining in business because it hasn’t secured financing. The company, which reported ¥311.7bil (Us$3.97bil) revenue in the 12 months to Dec. 31, has ¥210.8bil of debt maturing this year, according to data compiled by Bloomberg.
Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, rose 11% to 1.176 million won. Samsung may separate its liquid-crystal-display business, the Electronics Times reported Feb. 15. Hynix Semiconductor Inc., a maker of semiconductors such as dynamic random access memory, gained 6.9% to 28,850 won.
Billabong Buyout Bid
Billabong International jumped 42% to A$2.62 after it received a takeover approach from buyout firm TPG Capital valuing the company at A$765mil (Us$825mil). The approach comes less than two months after the company started a review of its capital structure amid a slump in earnings and looming debt payments.
Reliance Power Ltd., the Indian utility controlled by billionaire Anil Ambani, led a rally among power and related companies this week on the MSCI Asia Pacific Index after Prime Minister Manmohan Singh ordered additional supplies of coal to the nation’s utilities.
Reliance Power rallied 19.7% last week, boosted by a 42% increase in third-quarter profit, the company said on Feb. 13. - Bloomberg