Reliance Industries (RIL) today announced a huge natural gas discovery, possibly the biggest find ever, in the flagging eastern offshore KG-D6 block that will be key to arresting falling output.
RIL and its partner BP plc of UK encountered 155 metres of gas pay zone in the first exploration well drilled on the block in more than five years. The well was drilled two kilometres below the existing producing D1&D3 fields.
“The KGD6-MJ1 well was drilled in a water depth of 1,024 metres – and to a total depth of 4,509 metres (4.5 kilometres below seabed),” RIL-BP said in a statement.
The well was drilled to explore the prospectivity of a Mesozoic Synrift Clastic reservoir lying over 2,000 metres below the already producing reservoirs in the Dhirubhai-1 and 3 (D1&D3) gas fields. >> Read More
The analysts at Goldman Sachs have just published their latest Hedge Fund Trend Monitor report, which tracks the equity investments of the world’s hedge funds.
One thing is clear: hedge funds are struggling to keep up with the market.
“The typical hedge fund generated a YTD return of 5% through May 10, compared with 15% gains for both the S&P 500 and the average large-cap core mutual fund,” wrote Goldman Sachs Amanda Schneider. “Hedge funds returned an average of 3.5% in 1Q 2013, lagging the S&P 500 by 700 bp. Last year the average fund returned 8% vs. 16% for the S&P 500.”
In other words, you would’ve been much richer if your money were sitting in a boring, low-cost index fund.
This is what has changed in the EM space, in our view:
1) The Bank of Israel surprised with a 25 bp rate cut Monday, an intra-meeting move
2) EUR/CZK traded above 26 for the first time since November 2011, as Q1 GDP came in much worse than expected at -1.9% y/y vs. -1.7% y/y in Q4
3) On the other hand, EUR/HUF moved lower on better than expected Q1 GDP of -0.9% y/y vs. -2.7% y/y in Q4
4) PBOC is finally fixing USD/CNY higher after a prolonged bout of appreciation
1) The Bank of Israel surprised with a 25 bp rate cut to 1.5% Monday, an intra-meeting move. Next scheduled meeting is May 27. We’ve been looking for more cuts, especially as the shekel has strengthened, but found this week’s cut a bit strange in terms of timing. Israel has kept rates steady since the December 24 cut to 1.75%. It met in January, February, and March and kept rates steady. Why now? The next meeting was only two weeks away. It looks like the currency aspect drove this decision. >> Read More Reliance Industries Ltd (RIL), which has repeatedly been claiming that the gas output from the KG-D6 fields is diminishing, has announced that it will invest around $5 billion in various projects to “reverse the trend”.
RIL and its British partner BP Plc have submitted to the Government, plans to bring into production satellite fields in the eastern offshore KG basin block to raise output that they claim has plummeted to less than 16 million standard cubic meters per day (mmscmd) from about 64 mmscmd achieved three years ago.
“We are planning to invest in a series of projects to develop around 4 trillion cubic feet of discovered natural gas resources from the block,” RIL Chairman Mukesh Ambani said in the company’s annual report for 2012-13.
While RIL-BP have planned various activities including work-overs, side tracks and compressor addition to maximise recovery from the existing wells, new production would be added in 4-5 years using existing infrastructure, he said. >> Read More
In an unusual occurrence, both the Federal Reserve and the European Central Bank will hold policy making meetings next week. Most recently a consensus has emerged in favor of an ECB refi rate cut next week. In the US, spurred by a reading of the FOMC minutes, many observers have been talking about the tapering off of the Fed’s long-term asset purchases in light of what appears to be above trend growth in Q1 (which will be reported tomorrow). On both issues it makes sense to consider what can go wrong with the consensus view.
To be sure, we have been anticipating a rate cut by the ECB in Q2 and recognize that the top ECB officials, including Draghi, have opened the door to lower refi rate, if the economic data worsened. It has worsened, as the flash PMIs earlier this week showed.
Yet there are reasons why an ECB rate cut is not a done deal. First, the refi rate is not the key rate in the current environment. It is the deposit rate, which is at zero and no one is seriously talking about cutting it. The overnight rate is trading well through the 75 bp refi rate and EONIA is near 8 bp. Given the tightening credit standards and the broken transmission mechanism for small and medium size businesses, it is not clear that a 25 bp refi rate cut would anything but symbolic. Some adjustment of collateral rules, perhaps reduced haircuts, would seem to have greater impact than a refi rate cut. >> Read More Comments Off | Leave Comment Posted in: Analysis, Economy
This is what has changed in the EM space, in our view:
1) Brazil is hiking, but reluctantly
2) Turkey is cutting, and resolutely
3) China will further relax the FX trading band
4) Philippines will further relax FX trading limits
5) Korea announces a big stimulus package
6) Colombia announces a medium stimulus package
7) Political change in Venezuela is happening too fast
1) Brazil is hiking, but reluctantly. The Brazilian central bank decided to hike rates by 25 bp last night after days (if not weeks) of shifting markets expectations. Yesterday’s move is just the first one of many hikes in a cycle that will total between 100-150bp, in our view, though early dovish signals suggest the lower end is more likely. The statement was not convincing about the bank’s commitment to hike, and two members voted for no change. As a result, yields came crashing down across the local swap curve in a strong bull steepening move.
2) Turkey is cutting, and resolutely. We were surprised to see the 50 bp cut to the benchmark repo rate on Tuesday. We thought the bank would stick with lowering the bottom end of the corridor for now, which it reduces the lira’s carry. Instead, they cut 50 bp off all three rates. The bank is counting on weak global demand and lower commodity prices to “contain the upward pressures on inflation.” We hope they are right, but with CPI still running at about 7.5% y/y and a more active policy to weaken the lira, we are not totally convinced. We would hate to see the central bank’s hard earned credibility eroded by a precocious move towards easing. For now, we still give them the benefit of the doubt.
3) Korea announces a big stimulus package. At about $15.4 bln, the supplementary fiscal stimulus package surprised on the upside, mostly because it included plans to raise more debt. Beyond that, the announcement was as expected. The package is estimated to boost growth by 0.3 percentage points and create 40,000 jobs. >> Read More Comments Off | Leave Comment Posted in: Analysis, Economy
- FTSE closes down 0.5%
- Dax up 0.1%
- Spains Ibex down 0.4%
- Italy Mib down 1.7%
- France CAC unch
On the bonds;
- Italy 10′s +0.06 bp to 4.67% up 1.4% on the day
- Spaininsh 10′s +0.04 bp to 4.77 up 0.91% on the day
18 February 2013 - 22:20 pm FTSE 100: down 10 points at 6318, -0.16%
German DAX: up 34 points at 7,628, + 0.46%
French CAC: up 8 points at 3668, +0.2%
Italian FTSE MIB: down 83 points at 16406, – 0.5%
Spanish IBEX: down 41 points at 8108, -0.5%
Spanish 10′s +0.04 bp to 5.24%
Italian 10′s -0.0140 bp to 3.5380
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05 February 2013 - 13:48 pm 
BP has set aside a further $4.1bn (£2.6bn) to cover costs relating to the Gulf of Mexico oil spill, as it reported a fall in profit.
It takes the total cost of the explosion at the company’s Deepwater Horizon rig in April 2010 to $42.2bn (£26.8bn).
Earlier this month, BP agreed to plead guilty to manslaughter over its role in the incident - which resulted in the deaths of 11 workers - and pay $4.5bn (£2.9bn) in a record criminal settlement.
A trial in the US is expected to begin later this month. >> Read More
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31 January 2013 - 20:33 pm
Review of Prudential Guidelines on Restructuring of Advances by Banks and
Financial Institutions – Draft Guidelines
Please refer to paragraphs 90 to 92 (extract enclosed) of the Second Quarter Review of Monetary Policy 2012-13 announced on October 30, 2012, wherein it was indicated that the draft guidelines on ‘Review of Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions’ in the light of the recommendations of the Working Group (WG) to Review the existing Prudential Guidelines on Restructuring of Advances (Chairman: Shri B. Mahapatra) will be issued by end-January 2013.
2. Accordingly, certain provisions of the existing guidelines contained in our circular DBOD.BP.BC.No.37/21.04.132/2008-09 dated August 27, 2008 and subsequent circulars issued on the subject have been revised and draft guidelines enumerating the existing instructions, recommendation(s) of the WG in that regard, and the proposed revised instruction(s) are given in theAnnex.
3. Comments on the draft guidelines may please be emailed or sent to the Chief General Manager-in-Charge, Department of Banking Operations and Development, Reserve Bank of India, Central Office, Mumbai 400 001 on or before February 28, 2013. >> Read More
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