Wall Street's overnight gains lifted Hong Kong's benchmark index higher for the third straight session on Friday, led by Ping An Insurance and property developers as investors are becoming more optimistic about the global economic outlook.

The blue-chip Hang Seng Index rose 102.58 points, or 0.5%, to 20,971.50 after earlier rising to a high of 21,028.66. For the week, the index was up 1.8%. Market volume on Friday totaled HK$72.65 billion, up from HK$66.13 billion Thursday.

Investor interest in Hong Kong was boosted by Wall Street's gains Thursday because of an unexpected increase in U.S. pending-home sales, with the Dow Jones Industrial Average advancing 0.5% to mark its third day of consecutive gains.

However, traders said that while the city's benchmark index could edge higher in the coming sessions, investors are staying cautious ahead of the U.S. non-farm payrolls report for August due later Friday. The data will likely affect the local index's performance next week, they said, adding they expect the index to trade in a range of 20,500-21,500 points in the coming sessions.

'The index has risen above a major technical resistance level of 20,900, which is a positive signal for the market,' said Linus Yip, a strategist at First Shanghai Securities. However, Yip said it is still too early to say whether there will be a sustainable rebound in the index due to a lack of catalysts to propel more substantial gains.

Property developers rose on the positive U.S. data, with Sino Land gaining 3.2% to HK$14.05, Wharf Holdings rising 2.0% to HK$43.15 and Henderson Land adding 1.1% to HK$47.65.

China's second-largest insurer by market capitalization, Ping An Insurance, jumped 5.4% to HK$69.70 on its second day of trading resumption after it announced a long-awaited move to take control of Shenzhen Development Bank.

The gains came despite private-equity firm TPG's decision to sell its remaining stake in the insurer for HK$65.30 a share, raising US$1.16 billion, a person familiar with the situation said Friday.

'We expect the merger between Ping An's banking division and Shenzhen Development Bank to bring synergies to the insurer, helping it to expand into a broader range of financial services,' said Patrick Pun, head of the China division at Taifook Securities.

He also said TPG's disposal of its remaining stake in Ping An Insurance could also remove an overhang on the insurer's share prices.

Bucking the gains, retailer Esprit, which derives the bulk of its earnings from Europe, became the worst performing blue-chip Friday, with its shares falling 5.4% to HK$40.60, after it posted weaker-than-expected earnings for the last fiscal year and said its outlook was challenging. Friday's decline added to a 3.1% post-results selloff on Thursday.

Hong Kong shares ended lower on profit-taking Wednesday after a five-day winning streak and because of a sharp decline in China Mobile following Vodafone's sale of its stake in the index heavyweight.

The blue-chip Hang Seng Index fell 312.93 points, or 1.5%, to 21,088.86 after trading between 21,066.69 and 21,214.81.

Market volume totaled HK$118.81 billion, up sharply from HK$58.21 billion Tuesday because of active trading in China Mobile after Vodafone's stake sale.

The Hang Seng Index also succumbed to profit-taking after a 4.2% rise in the previous five sessions.

'Overall sentiment remains positive, as we can see the fall is modest compared with the index's recent gains,' said Alvin Cheung, an associate director at Prudential. He said the index could reach 21,800-22,000 by the end of September.

China Mobile sank 3.8% to HK$78.90 after Vodafone sold its 3.2% stake in the mobile operator at HK$79.20 a share, at the bottom of the indicative HK$79.20-HK$80.00-per-share range, according to a person familiar with the situation.

Goldman Sachs said in a report: 'We do not expect meaningful fundamental impact from the stake transfer, given the shares are secondary and Vodafone's operational influence has historically been limited by the small size of the stake.'

It said the stake sale may also have removed an overhang on the stock.

Fellow heavyweight HSBC also dragged the benchmark index lower. It dropped 1.3% to HK$78.20 because of renewed concerns over the financial health of European banks after questions emerged over recent stress tests on the lenders.

Investors were neutral on the news of HSBC Chairman Stephen Green's departure to become the U.K.'s trade minister, traders said. Wing Fung Financial's head of research, Mark To, said the market had speculated about Green's resignation for some time.

'A management change doesn't have a direct impact on the shares, only the earnings outlook does,' To said.

Conglomerate Swire Pacific didn't fall as much as the broader market, dropping 0.6% to HK$97.90, after it said it agreed to sell its holdings in two beverage-can joint ventures to its partner in the ventures, Crown Holdings, for a total of US$150 million.

Hi there,

Thanks. I am a complete novice in forex trading, but trade on coomon stocks in various markets across the globe.
I have been concentrating for a while now in Hong Kong but will soon write randomly on a basket of other markets for the info of the good audience.

Italian job: How Eni could take Uganda's oil fields

Posted Monday, September 13 2010 at 17:25
from the East African weekly newspaper



A combination of raw nature and pure economics has forced Uganda to climb down from its high pedestal over the production phase of its oil programme.

The country last week announced that it had began talks with Kenya and UK firm ESSAR over the possible joint development of a refinery for Ugandan crude at Mombasa.

While having a refinery in Uganda was always a key political and economic goal of President Museveni’s administration, the government has had to back down after it emerged that it was a high risk venture.

Economics aside, a major obstacle to a Uganda-based refinery lies in the physical properties of the crude that has been discovered.

While it is low in sulphur content, which is considered a good thing; it is 30 per cent parrafin wax.

Besides turning it solid at surface temperatures, this aspect of Uganda crude, according to industry experts would require it to be blended with other crudes to improve its yield of gasoline grade fuel.

Higher cost

This would require a logistical chain for importing those additives which would significantly push up the cost of Ugandan fuel.

With competing refineries in Dar es Salaam and Mombasa refining cheaper imported crude, politically, the Ugandan government would have to live with the unpalatable reality of selling more expensive petroleum products from a domestic source, observed one commentator.

The products would also be unmarketable to the regional market because imported oils from the Middle East would still be cheaper.

There is also the issue is scale. Current daily demand for fuel oil in East Africa stands at 50,000 barrels, just 10 per cent of what Uganda would be pumping out of the holes at peak production, not sufficient for the oil companies to recover their costs if they refined in Uganda.


Italian oil firm, Eni, is back in contention in the hunt for oil in Uganda.
This follows the expiration of the exploration license to the prized block 3a last week.

If indeed Eni does bid for a licence, it will make a significant shift in the hunt for more oil reserves in Uganda that could see the game shifting from small, specialty oil prospecting firms from Canada to mainstream oil majors.

This could see significant foreign investment flows going into Uganda’s emergent petroleum economy.

The small players like Heritage and Tullow play a big role in finding vast oil reserves in difficult places and then flip over their production licences to big oil firms who have access to huge capital outlays that are needed to bring oil to market.

It is this reality that is driving the sands to shift in the murky game that Uganda’s oil production programme has become as the original players who found the oil-- face off with new competitors for oil licences. Some have been pushing hard to get a good bargain out of their licenses.

After seemingly losing out after the Irish firm Tullow Oil exercised its pre-emptive rights in the acquisition of Heritage Oil’s fields in Uganda, the Italians are back in the game. The licences that were due for renewal expired at midnight on September 7, effectively throwing the incumbents out.

On the stroke of September 8, Energy Minister Hillary Onek wrote to Heritage and Tullow informing them of the expiry of the licence.

“You are therefore requested to ensure that all the restoration work detailed in the Environmental Impact Assessment for the respective activities undertaken during the tenure of the Exploration Licence is undertaken as required,” Onek said in his letter.

The event which freed the fields that are host to the proven 200 million barrels Kingfisher well was apparently one of the aces in the Ugandan government’s cards in its ongoing wrangle with oil explorers over unpaid tax dues.

The Uganda government which is still recovering from the public anger it faced after it lost out of $287 million in tax revenues to prospector Heritage Oil, is now determined not to miss out on the capital gains tax in future deals.

Technically, the fields are on the market once again and although Tullow have been told they would be considered favourably in the new round of bidding, the circumstances are different now.

First the price of the fields has gone up considerably since they are now a known find and Tullow would need to match possible steep offers from industry giants such as Eni and even erstwhile partners total and the China National Offshore Oil Company CNOOC

Although the proven Kingfisher well with a flow rate of 14,000 barrels per day has tended to dominate any discussion of Uganda’s oil fields, industry experts say the real target for anybody waiting in the wings is Pelican, a huge prospect to the South that some observers believe will even turn out bigger than Kingfisher.

It is with this knowledge in mind that Tullow’s courters have suddenly dropped it like a leper.

According to the oil exploration and production sharing agreements Uganda signed with the oil prospectors, once a find is announced, the oil firm has up to two years to file a development plan and apply for a production licence.

While heritage which made the kingfisher discovery in 2007 did not seek the necessary permits because it planned to cash in on its fortune and exit Uganda; Tullow got so taken up by efforts to enforce its preemptive rights that it forgot to fulfil this small but critical formality.

While the Italians who initially courted both Tullow and Heritage had receded into the background after their proposed buyout of heritage was scuttled by Tullow¹s preemptive rights, they have recently bounced back.

The EastAfrican has learnt that Eni has renewed contracts with its local suppliers for another six months, suggesting that they have not given up on Uganda yet.

According to oil industry sources, Eni which has so far spent $15 million on its Uganda programme has opted to play a waiting game.

This is the first time the company is spending so much money on a programme in a country before it has secured any tangible assurances that they will get a production licence.

The Italians apparently have the upper hand however, because they are the only company to have put together a basin-wide development plan and feasibility studies.

This, coupled with Eni track record and financial resources are considered to be strong selling points to Uganda which is eager to bring its fields into the production phase.

Hong Kong shares ended higher Monday after China's inflation data for August were in line with economists' expectations, easing concerns over a hike in the country's interest rates in the near term, with Cnooc leading the gains on a rise in crude oil prices.

The blue-chip Hang Seng Index rose 400.96 points, or 1.9%, to 21,658.35 after trading between 21,395.57 and 21,714.36 during the session.

Market volume totaled HK$80.05 billion, up from HK$65.95 billion Friday.

Data issued Saturday showed China's consumer price index rose 3.5% in August from a year earlier, the fastest rate in nearly two years, but the rise was mainly due to abnormal weather conditions and it matched the median 3.5% forecast of 14 economists. Inflation pressures will likely ease in coming months, economists said.

China National Offshore Oil Corp., the nation's top offshore oil and gas company, will likely produce 60 million metric tons of oil equivalent of oil and gas this year, a company executive said.

This is 26% higher than the company's output of 47.66 million tons last year, according to Dow Jones Newswires' calculation.

Cnooc will produce 50 million TOE from domestic offshore oil fields this year, Cnooc Group Vice President Lu Bo said Tuesday.

The figure is close to output at China's largest oil field, Daqing, owned by PetroChina Co. (PTR).

NOTWITSTANDING NEGATIVE REPORTS OF :- CHILD KIDNAPPING, TERRORISM, RITUAL KILLINGS FOREIGNERS STILL LOVE KAMPALA/UGANDA
The Mzungu diaries in Kampala


Posted Saturday monitor, September 18 2010 at 00:00 BY A SOUTH AFRICAN LADY

I arrive on my first day at the Daily Monitor with my pale legs, white top and diamante sandals covered in mud. The potholes and rainfall have coloured me and my attire orange. As if I have applied some cheap self-tan the night before. The security guard, frowning, looks me up and down. I give an apologetic smile and blame the careless boda-boda driver. Instantly, I feel guilty, because it is really my fault too. In my efforts to read up on the politics of Uganda, I completely forgot to check the weather conditions, not exactly the trademark of a competent traveller. If I had, I would have known it is rain season in Uganda this time of year. I would have reconsidered my packing strategy and exchanged my trench and sandals for a raincoat and some Wellingtons. Silly mzungu!

I came to Kampala to work at the Daily Monitor for a month and gain some experience in African reporting. For some reason, I was mostly attracted to the name of Uganda’s capital, Kampala. It sounds so melodic and tropical. Kampala. Like the name of an exotic cocktail. Kampala, for the lady? Yes, please! With orange juice and no ice. Ugandan people are an absolute delight. Peaceful, friendly and very helpful. Ugandan men seem to think I am very beautiful. The average conversation between the boda-boda driver and myself on my way to and from work is something like this:

Boda: Are you married?
Me: No.
Boda: Can I give you my phone number?

My popularity rates and market value have noticeably increased since coming to Uganda. Maybe I lost some weight on the four hour plane ride from Johannesburg to Entebbe? Although I did take full advantage of the open bar facilities. When I tell my Ugandan friend that I am quite the hit in Kampala, he starts laughing. Compared to South Africa, I feel surprisingly safe in Uganda. In South Africa, crime rates are still terrifyingly high. The nice thing about this place is that the criminals are right where you can see them, sitting in the government.

Admittedly, it is not all love at first sight. Even though, I appreciate the buzz of this lush East African city, I can not help but feel terrified when moving around whether it is on a boda-boda, matatu or 4x4. Everyone seems to have studied a different version of Uganda’s traffic rules, if there are any to begin with. Lack of discipline and consensus can only lead to utter chaos and dangerous manoeuvres. I suppose, for Ugandans, it is also not a real Frisbee to the head when I say the state of Kampala’s roads is appalling.

The traffic in Europe or in South Africa – where I currently live – is hectic as well. And the constant road works make rush hour congestions even worse. But, I don’t see any road works in Kampala. Or am I too busy avoiding the potholes to notice? Minister John Nasasira has been in office for more than 15 years. Clearly, otherwise he might have registered the state of the decaying city and done something about it. Kampala, Kampala, Kampala, you deserve a little more attention.[/

Hong Kong's benchmark index ended above the psychologically important 22,000 level for the first time in more than five months on Tuesday, led by property developers on expectations the U.S. Federal Reserve will leave interest rates unchanged, but profit-taking in other blue chips limited the market's gains.

The Hang Seng Index rose 25.25 points, or 0.1%, to 22,002.59 after hitting a high of 22,118.58. The index last ended above 22,000 on April 15, when it closed at 22,157.

Market volume rose to HK$70.38 billion from HK$63.91 billion Monday.

Analysts said they expect trading volumes to be light and investor interest to be limited Wednesday and Friday, because of the Mid-Autumn Festival public holiday in Hong Kong on Thursday, and the closure of mainland China's markets between Wednesday and Friday for the festival.

However, Peter Lai, a director at DBS Vickers, said: 'I believe trading sentiment remains strong with investors looking at equity markets to park funds.'

He said he expects the blue-chip index to take a breather after its 7% rise since the start of September, and to resume rising in the medium term if the Chinese equities market regains strength.

Hong Kong property firms led the local gains, ahead of the Federal Open Market Committee meeting scheduled later Tuesday. Investors expect the Fed to keep ultra-low U.S. interest rates unchanged, thus benefiting property developers. Because Hong Kong's currency is pegged to the U.S. dollar, Hong Kong's monetary policy follows that of the U.S.

'We don't expect any significant changes to the language of the FOMC statement on Tuesday afternoon,' Deutsche Bank said in a note.

Cheung Kong ended up 2.3% at HK$109.20 and Sino Land ended up 2.3% at HK$15.40. Sun Hung Kai Properties rose 0.7% to HK$123.00 after reporting a 12% rise in underlying net profit for the full year ended June 30.

Hong Kong property firms are also relatively undervalued, said Castor Pang, research director at Cinda International. He said he expects new major residential projects to be the sector's short-term catalyst. For example, Cheung Kong will likely launch a new project in Ma On Shan soon, analysts said.

Bucking the gains, developer China Resources Land fell 1.7% to HK$16.94, becoming the worst-performing blue chip, because of dilution concerns. It plans to issue HK$5.53 billion worth of new shares to its parent company at HK$15.88 each, in addition to HK$2.37 billion to be paid in cash, in exchange for three property projects in mainland China.

Still, Deutsche Bank said in a report the asset injection would enhance the company's net asset value.

Battery maker China Strategic fell 4.8% to HK$0.295, off its intraday low of HK$0.285, after saying it and Primus Financial had decided to terminate their attempt to buy AIG's Taiwan life-insurance unit

Property developers led Hong Kong shares slightly higher Wednesday after the Federal Reserve indicated interest rates will remain low for some time.

The blue-chip Hang Seng Index rose 45.12 points, or 0.2%, to 22,047.71, down from an intraday high of 22,229.18. The index has risen in 10 of the past 11 sessions for a cumulative gain of 4.6%.

Market volume totaled HK$69.08 billion, down a tad from HK$70.38 billion Tuesday.

UOB KayHian director of institutional sales Steven Leung said he expects the index to hit 22,500 in the near term and 26,500 by the end of 2010.

'The latest rally is mainly driven by liquidity as the U.S. dollar's weakness is supporting the prevailing buying spree in the equity market,' he said. The Hong Kong dollar is pegged to the U.S. dollar.

Local shares also rose after the Fed concluded its one-day policy meeting overnight without changing rates, and U.S. central bank officials signaled they are uncomfortable with the low level of inflation and are prepared to take additional action to boost the recovery.

The Dow Jones Industrial Average rose 0.07% to 10,761.03, closing at its highest level since May. It has risen in 13 of the last 15 sessions and is up 7.45% in September.

But a public holiday in Hong Kong on Thursday led investors to pare gains in local shares in the afternoon, said Francis Lun, general manager at Fulbright Securities.

Despite the positive news out of the U.S., 'the market retreated sharply and almost fell into negative territory in the afternoon session because nobody wants to hold too much stock over the holiday,' he said.

Hong Kong markets will be closed for the Mid-Autumn Festival on Thursday. Mainland China's markets are closed from Wednesday through Friday for the festival.

Among property companies, Cheung Kong gained 2.1% to HK$111.50, Sun Hung Kai Properties rose 1.8% to HK$125.20 and Sino Land added 2.0% to HK$15.70.

Bourse operator Hong Kong Exchanges rose 1.4% to HK$142.50 after AIG received approval for a US$10 billion-US$15 billion initial public offering of its pan-Asia life insurer, AIA, which could be world's second-biggest IPO this year.

Gold miners were mixed.

Zhaojin Mining gained 2.2% to HK$23.00 after spot gold hit a fresh record high. Spot gold jumped to $1,288.50 a troy ounce from $1,270.60 after the Fed statement. It hit an all-time record high of $1,291.40 at 0600 GMT. Analysts expect gold prices to reach $1,300 a troy ounce by the end of 2010.

But fellow gold miner Zijin Mining fell 1.2% to HK$5.90, after a typhoon damaged a tin mine it operates in Guangdong province.

'Negative news won't go away for Zijin,' said Tanrich Securities investment manager Jackson Wong. Zijin cut production at its Zijinshan copper mine in June after it polluted a river in Fujian province, and the company suspended its Shandong mining operations in August following a fire.

The blue-chip Hang Seng Index rose 71.72 points, or 0.3%, to 22,119.43, it highest closing level since 22,157 on April 15, after falling to a low of 21,956.76 in the morning session. The index is up 0.7% for the week.

Market volume totaled HK$70.04 billion, up slightly from HK$69.08 billion Wednesday. Hong Kong markets were closed for the Mid-Autumn Festival on Thursday.

Analysts said there is limited room for further gains ahead of the Oct. 1-Oct. 7 National Day holiday. They said they expect the benchmark index to trade in a narrow range between 22,100 and 22,300 points over the coming sessions.

All three companies making their trading debuts Friday ended sharply higher, buoyed by investors seeking to make short-term gains following strong demand for the firms' initial public offerings, according to analysts.

Magic Holdings, China's biggest facial-mask brand, surged 37% to HK$4.51, medical devices maker Microport advanced 36% to HK$8.29, and truck component maker Changfeng Axle rose 12.5% to HK$4.50.

'Market sentiment for IPO activity has picked up, with some investors shifting their focus to listings away from the secondary market given a lack of interesting trading ideas,' said William Lo, an analyst at Ample Capital.

Bourse operator Hong Kong Exchanges rose 3.8% to HK$147.90, adding to Wednesday's 1.4% gain, boosted by the strong performance of the new listings.

Among other blue chips, local developers rose broadly, with the Hang Seng Property Index gaining 0.4% to 30,289.84 because of expectations a government land auction Wednesday will attract high bids from developers. Investors are closely watching the sale of the two sites, in Chai Wan on Hong Kong Island and Fanling in the New Territories, as the results of the sale will be viewed as a barometer of the city's property market outlook.

'The two sites will likely set another record for the city's property market amid ample liquidity inflows,' said Francis Lun, general manager of Fulbright Securities.

Among the developers posting gains Friday, Cheung Kong Holdings rose 1.4% to HK$113.10, Sun Hung Kai Properties was up 1.3% at HK$126.80, and Henderson Land added 1.2% to HK$53.30.

However, overall trading was subdued, with China's markets closed for the Mid-Autumn Festival.

Bucking the trend, banking heavyweight HSBC fell 0.6% to HK$80.60 after people familiar with the situation said Friday the lender's chief executive, Michael Geoghegan, will leave the London-based bank, to be replaced by head of investment banking Stuart Gulliver. The people also said Chief Financial Officer Douglas Flint will replace departing Stephen Green as HSBC's chairman.