DTI’s WEEKLY DIGEST [30 May/ 6 June]
#MAIN
OPEC meeting ended with no surprises.
Countries failed to agree both on oil output ceiling and output freeze.
The markets fell sharply upon the news.
European Central Bank decided to leave interest rates unchanged.
QE program was kept unchanged, too.
Mario Draghi doesn’t expect interest rates to rise at least until the end of the first quarter of the next year, as the eurozone economy growth rate has not reached high levels yet.
The probability of the Fed rate hike fell from 20% to 6% in June.
This happened after the release of weak U.S. labor market statistics.
The number of employed in non-agricultural sectors increased just by 38 thousand instead of expected 160 thousand.
Poor data on the U.S. labour market caused the growth of everything profit-making including the ruble.
#MACRO #FINANCE
Brazil GDP in the first quarter dropped by 0.3% QoQ or by 5.4% YoY.
The recession in the country becomes deeper and deeper.
Indian GDP growth rate increased to the 7.9% level in the first quarter.
Thus, the country increased the lead from China and proved its status of the most rapidly growing big economy.
Hong Kong edges out the US as world’s most competitive economy, according to The IMD World Competitiveness Yearbook.
Switzerland is the second and US is the third in the competitiveness ranking.
A low corporate tax rate, an easy taxation system and the absence of bureaucratic obstacles for the cash flows form the basis of the innovative economy of Hongkong.
Moreover, the island megapolis presents the main investment gate for the continental China, which is the new economic superpower.
China itself fell from the 22nd to the 25th position in the ranking.
Black Rock, the largest investment company in the world ($4.7 trillion under management as of March 31, 2016) lowered its forecast for the U.S. and EC markets.
The reason is that they ‘no longer look cheap’ due to a number of negative factors, and also noting the already past growth on stock and commodity markets.
«Transneft» loss from financial markets operations during ruble devaluation amounted to 75.3 bln rubles for 2014 only.
Concerning that, the auctioneer of the UCP fund, a gas company, reproached managers of Transneft, who lost ‘astronomical sums’, and appealed to the court.
However, the first vice president of «Transneft», Maxim Grishanin, explained that the loss is more of a lost opportunity and that it is rather paper and not money loss.
Colleagues, hedge correctly. It is not worthwhile to thoughtlessly use barrier options, forwards, and swaps.
In May 2016, Russian Ministry of Finance spent 390 bln rubles from the Reserve fund, which fell to $38,6 bln by the beginning of summer, financing the budget deficit.
Moreover, the Ministry of Finance wants to equate currency residency to the tax one, i.e. consider those who spent at least 183 days in a single year in Russia as currency residents.
Other solutions may come up, as one of the officials stated.
«Vnesheconombank» will convert 212.6 bln rubles of debt to the central bank into a subordinated loan.
In the case of bankruptcy of the company that has received a subordinated loan, the last thing to do is to meet the obligations under this loan.
A billion IPO of «RussNeft» in Russia
As an alternative, IPO in London is being considered, but the ‘optimal’ option now is placement on the Moscow Stock Exchange, taking the ‘deficit of interesting companies’ on Russian marketplace into account.
The company would like to raise up to $2 bln during the placement.
If we assume that 49% of shares should be sold to reach that goal, the overall «RussNeft» evaluation for the deal will make up about $4 bln.
#CHINA
The slowdown in the services sector in China.
This strengthens the uncertainty about the second largest economy in the world.
The fall in May means the second fall in a row, which points at the preserved weakness in the services sector of the country, despite all the attempts of Beijing to support the recovery.
#COMMODITIES
The corn, wheat and soy prices achieved their new maxima.
This followed the appeared optimism in terms of goods demand.
#INTERESTING
Saudi Fund will invest $3.5 bln in Uber.
Grandchildren of the poor out of the desert, who are now building islands in the sea, invest as much as 1.5 of the Tajikistan national debt in dispatching cars every day.
>> The world has changed >> Evolution or oblivion.
Reuters: Apple plans to sell $1 billion of bonds in Taiwan.
As insiders said, these are 30-year bonds.
The yields are expected to be around 4.2–4.3%.
46 million people worldwide are trapped in slavery.
What is more, Asian countries account for 60% of the world’s enslaved.
India has become the country with the highest number of people trapped in slavery — 18.3 mln.
North Korea had the highest scope of slavery with 4.37% of its population enslaved, as noted in the study.
Normand shared its plans to create its own virtual currency by 2018.
This currency will be freely convertible into the already existing local currencies.
It should be noted that France has a circulation of more than 40 of local currencies, which is completely legal and is supported by the French bank.
Airbus presented the world’s first 3D-printed mini aircraft.
Airbus and its US rival Boeing are already using 3D printing, particularly for making parts for their huge passenger jets, the A350 and B787 Dreamliner.
