Archives for October 16, 2017

By Apeksha Nair

REUTERS – Gold slipped on Monday on a firmer dollar and stronger Asian equities, but stayed above the key psychological level of $1,300.

The metal gained about 0.9 percent on Friday after U.S. President Donald Trump warned he might ultimately end a 2015 nuclear agreement with Iran and after data showed underlying inflation remained muted in the United States.

The weaker-than-expected U.S. inflation print helped push Treasury yields lower, giving a fillip to gold trade above $1,300, said John Sharma, an economist with National Australia Bank.

The recent rise in the dollar as Treasuries shed some of their earlier gains put a bit of downward pressure on gold, Sharma added.

Spot gold was down 0.2 percent at $1,302.51 an ounce as of 0358 GMT, while U.S. gold futures for December delivery were unchanged at $1,304.80 per ounce.

The dollar edged up but lacked momentum, while the euro was on the defensive after Austria’s election and on concerns over Catalonia’s confrontation with Madrid.

Asian shares, meanwhile, advanced to new highs following the lead of Wall Street, while escalating tensions between Iraq and Kurds saw U.S. oil futures jump.

Senior Trump administration officials said on Sunday that the United States was committed to remaining part of the Iran nuclear accord for now, despite Trump’s criticisms of the deal and his warnings that he might pull out.

“There’re obviously some geopolitical issues… but at the moment investors are still focused on the United States,” ANZ analyst Daniel Hynes said.

“The market’s still surely pricing in a rate hike this year by the Federal Reserve.”

The U.S economy remains strong and the strength of the labour market calls for continued gradual increases in interest rates despite subdued inflation, Fed Chair Janet Yellen said on Sunday.

Rising interest rates tend to boost the dollar and push bond yields up, putting pressure on the greenback-denominated, non-yielding gold.

“Prices have established themselves above $1,300, although upside may be little bit limited, so we would expect to see them remain at $1,300-1,310 mark over the course of the week,” said Hynes.

Spot gold may break a resistance at $1,305 per ounce and rise to the next resistance at $1,318, Reuters technicals analyst Wang Tao said.

Speculators cut their net long position in COMEX gold contracts for a fourth straight week in the week to Oct. 10, data showed on Friday.

Silver was flat at $17.35 an ounce after hitting its highest since mid-September earlier in the session.

Platinum eased 0.2 percent to $942.50 an ounce, while palladium was 0.4 percent higher at $992.40.

(Reporting by Apeksha Nair in Bengaluru; Editing by Joseph Radford and Subhranshu Sahu)

• At least six Egypt companies plan to list by end of next year
• Franklin Templeton says state company IPOs would boost market

Egypt’s stock market is shaping up to be the Middle East’s hot spot for initial public offerings next year.

At least six companies plan IPOs by the end of 2018, following two sales since January, according to data compiled by Bloomberg. That’s a marked increase on the average of three in the past three years as foreign investors fretted that a severe dollar shortage would trap their money.

Between 2011 and 2014, there were no IPOs at all as the aftermath of a popular uprising destroyed the conditions for listings. The turning point came in November, when authorities removed almost all restrictions on the pound to help end the hard-currency crunch and secure a $12 billion loan from the International Monetary Fund.

Hazem Barakat, the chairman of Cairo-based BPE Partners, has intended to sell shares in his private equity firm for longer than a year. He has now hired managers to oversee a share sale that could raise about 500 million Egyptian pounds ($28 million) in the first quarter of 2018.

“The only foreign investors in the market were the ones who couldn’t get their money out,” said Barakat. “After the float, Egypt is on the investment map and people are looking at it. Now there is a chance to do an IPO.”

Share trading has almost doubled, averaging 1.1 billion pounds a day in the 12 months ended Oct. 10, compared with 540 million pounds a year earlier, data compiled by Bloomberg show. And foreigners have returned, their net buying of stocks tripling to $497.3 million in the fiscal year to June 30.

The prospects for further IPOs look promising, said Mohamed Farid, the chairman of the Egyptian Exchange. “We have plenty of requests from various companies of various sizes to list and partially float. Also there is plenty of traction when it comes to companies asking for listing requirements and trying to comply with them.”

Oil, Banks

While the uptick in IPOs is a boost for Africa’s third-biggest economy after years of political and economic instability, the relatively small size of most of the planned new listings may discourage some foreigners from buying the securities.

“Egypt’s market cap remains fairly underrepresented compared to the economy and liquidity is still low, although improving, which limits international participation in the market,” Salah Shamma, Franklin Templeton Investments’ head of Middle East and North African equities, said in an interview.

Two of the six IPOs planned for the coming months involve state-owned businesses: Engineering for the Petroleum & Process Industries and Banque Du Caire SAE. They’re part of a government plan announced last year to raise as much as $10 billion from share offerings. Better progress on that plan would attract bigger companies to market, generating greater foreign interest and higher trading volumes, Shamma said.

Past attempts to bring large government companies to market have proven complicated and time-consuming. Telecom Egypt Co. was the last state-owned company to sell shares to the public more than a decade ago.

Regional Competition

Egyptian companies will also have to compete for investor money with the main event on next year’s Middle East IPO calendar: Saudi Arabian Oil Co., which may sell a stake of as much as 5 percent for what could potentially be the world’s biggest offering. In the United Arab Emirates, regulators say they are working on five applications for IPOs as the country joins other Gulf Cooperative Council neighbors in diversifying its economy and reducing reliance on crude oil.

“Egypt is one of the busier markets in the region, but low oil prices and ongoing economic restructuring means that we are likely to see IPOs of state-controlled assets in the GCC as well,” said EFG-Hermes’ Strategist Simon Kitchen. Appetite for broader emerging market IPOs should remain robust in 2018, with Egypt in line for a “bigger piece of the pie” following the currency float.

NEW YORK (Reuters) – Shares of China’s No.2 e-commerce firm JD.com <JD.O> are a better deal for investors than Alibaba Group’s <BABA.N> stock and could rise 30 percent or more over the next year, Barron’s said on Sunday.

JD.com’s shares have underperformed Alibaba’s since the beginning of August due to misplaced concerns, and JD.com stands to be among the biggest beneficiaries of China’s shopping holiday on Nov. 11, the Barron’s report said.

A decline in gross profit margin when the JD.com reported quarterly results in mid-August spooked investors but was not as worrisome as it seemed, Barron’s said.

The slip was due to aggressive promotions in June and a change in the way JD.com accounts for some third-party logistics costs, Barron’s said.

Worries about increased competition from Alibaba were also overdone after it said in September that it would raise its stake in Cainiao Smart Logistics Network Ltd. JD.com has superior capabilities in middle and last-mile delivery, Barron’s said, citing MKM Partners analyst Rob Sanderson.

JD.com’s shares, which have gained 52 percent this year, have slipped 14 percent since the start of August, compared with a 15 percent gain for Alibaba shares over the same period.

Alibaba shares have doubled in price this year.

(Reporting by Saqib Iqbal Ahmed; Editing by Cynthia Osterman)