2025-02-19 09:57

Benchmark rate kept at 5.75%, as expected Timing of next easing depends on global dynamics, governor says Pressure on rupiah currency a key factor BI conducts FX intervention nearly everyday, governor says JAKARTA, Feb 19 (Reuters) - Indonesia's central bank kept interest rates steady on Wednesday, emphasizing its focus on stabilising the rupiah currency amid global uncertainties, but said further easing to prop up economic growth is only a matter of timing. The benchmark 7-day reverse repurchase rate (IDCBRR=ECI) , opens new tab was held steady at 5.75%, as expected by 26 out of 35 economists polled by Reuters. The remaining nine had predicted a cut. Bank Indonesia also left its two other policy rates unchanged. Wednesday's decision followed a rate cut in January that markets had not expected. In the current cycle, BI has cut rates twice since September. Southeast Asia's largest economy grew 5.03% in 2024, roughly similar to the previous year and in line with expectations, but the pace was the slowest in three years and far behind President Prabowo Subianto's 8% target. Meanwhile, the strong U.S. dollar and global trade disputes have put pressure on the rupiah and other emerging market currencies. Acknowledging that inflation was low and the domestic economy needed stimulus, Governor Perry Warjiyo said there is room for BI to cut interest rates further, but the timing depends on global dynamics. Uncertainty regarding U.S. trade policy, the U.S. fiscal deficit, rising treasury yields as well as the Federal Reserve's monetary easing path was the main consideration to keep rates unchanged for now, he said. "We still see room for further interest rate cuts ... As for the timing, we must consider global dynamics," Warjiyo told a press conference. "We fully support the government's programmes. We are with the government, we want high economic growth," he added. Warjiyo said BI has intervened nearly everyday to support the rupiah , which this month fell to its weakest against the U.S. dollar since June last year. However, he noted the rupiah has been largely stable against its peers and currencies of the country's main trading partners, predicting it would get further support from the government's policy mandating a one-year retention of proceeds from companies' resource exports. "We view this (Wednesday's decision) as a temporary pause driven by global uncertainty and rupiah underperformance, with borrowing costs likely to decline further in first half of the year," said DBS economist Radhika Rao. Capital Economics said BI appeared "a little more hawkish" than during the January meeting, but the consultancy still expects 150 basis points of rate cuts this year. "Importantly, Governor Warjiyo defined currency stability as a stable exchange rate relative to its peers, and not just against the U.S. dollar," Gareth Leather, the consultancy's senior Asia economist, wrote in a note to clients. BI also said it would allow banks to keep a lower level of required reserves from April 1 if they lend to priority sectors like property, part of a policy BI calls "macroprudential liquidity incentive", aiming to free up 80 trillion rupiah ($4.90 billion) gradually for property lending. ($1 = 16,330.0000 rupiah) Sign up here. https://www.reuters.com/markets/rates-bonds/bank-indonesia-pauses-easing-cycle-says-more-cuts-come-2025-02-19/

2025-02-19 09:52

Hedge funds add the most China stocks in 12 months Lots of Chinese company stock trading below value AI will continue to be a theme LONDON, Feb 19 (Reuters) - Global hedge funds keen to navigate U.S.-China trade tensions are amassing Chinese stock bets in the hopes of making huge profits if Beijing forms a pact with Donald Trump, or if the rest of the world and China unite against the U.S. president. As lower-risk bets, they shouldn't be too hard hit either way, several fund managers and investment professionals say. Hedge funds currently own the most Chinese stock they have in 12 months but relative to history, levels remain low, Morgan Stanley wrote in a prime brokerage note on Monday. The U.S. hedge fund community, representing the largest chunk of the industry, currently allocates around 3% of its portfolios to China, said Morgan Stanley. By comparison, global hedge funds directed around 60% of their trading flows to the United States in the week to February 14, a separate Goldman note showed. A relatively robust economy coupled with expectations for deregulation and tax cuts under Trump continues to bolster U.S. markets. China meanwhile is still battling a real estate crisis and high debt, meaning hedge funds remain cautious about allocating cash to the world's No.2 economy. But funds that stayed away from China lost out on a sharp rally in stocks from September. Driven by economic stimulus hopes, Chinese stocks closed 2024 with their first annual gain since 2020. That's why some U.S. hedge funds have crept back into Chinese stocks, finding cheap and lower-risk ways to do this. David Aspell, a portfolio manager at the $1.7 billion macro hedge fund Mount Lucas, said he bought call options, giving him the right to a stock but only if it touches a certain price. These came cheaply as the price they must hit is valued far above the current trading price, he said. He also has exposure to China index funds and single stocks and reckons tariff headwinds will ease, arguing Trump wants a trade deal with China that serves U.S. interests. CHINA'S CHOICE Having promised 60% tariffs on Chinese imports before he was elected, Trump has revised that to 10% since taking office. "China now has a choice. If it’s not going to be in the club, the U.S. may cut it off," said Aspell. "At that point China will have to find other markets to absorb its massive export capacity, which may or may not exist." Aspell added that he was optimistic a trade deal might happen although the path ahead might be bumpy. Boaz Weinstein, founder of the $5 billion Saba Capital Management, noted how some Chinese stocks trade below the levels of company cash intake after costs, making them undervalued. "Certain Chinese tech stocks are profitable and deeply undervalued companies that have attractive, market-leading businesses," Weinstein told Reuters. Jon Withaar, who manages an Asia special situations hedge fund at Pictet Asset Management, added some China stocks but recently became concerned about the composition of China's most recent tech-driven rally and the speed at which it happened, and bought some put options - hedges in case stock values decline - on the index level. Global markets were rocked last month as DeepSeek, a low-cost Chinese artificial intelligence model, took the top download spot on the Apple store. "My biggest concerns are further headlines around the China/U.S. relationship, and extreme bullish positioning from fast money and retail accounts," Withaar said. But even before DeepSeek's debut, Chinese AI development had been a key interest for local funds. "AI is a mega trend. It will exist no matter how the U.S.-China trade war develops," said Fang Zheng, chief investment officer at Hong Kong-based Keywise Capital. In a recent letter to investors, the $112.5 billion Bridgewater Associates’ co-chief investment officer Karen Karniol-Tambour said that investors are likely to benefit from geographic diversification, with some preference to China. "The world ahead is likely to reward diversification, as increasing global fragmentation in response to rising mercantilist policies will reduce correlations and increase the likelihood that there will be clear winners and losers," she wrote. BNP Paribas' recent 2025 Hedge Fund Outlook anticipated that investors would reverse their exodus from China assets, noting that 7% of investors they surveyed were looking to add China exposure. "This is in direct contrast to 2024 and 2023, when 17% and 42% of investors pulled capital, respectively," the report said. Sign up here. https://www.reuters.com/markets/asia/hedge-funds-tailor-win-win-bets-china-2025-02-19/

2025-02-19 07:32

PARIS, Feb 19 (Reuters) - French nuclear fuels company Orano is looking to increase output of uranium from new mines in Mongolia and elsewhere to meet rising demand from the nuclear power industry and offset production from its stalled projects in Niger, said CEO Nicolas Maes. Orano has had problems exporting uranium from its mines in Niger since the country was taken over by a military junta in 2023. In January, it signed a preliminary agreement with Mongolia to develop a mining project with potential output of 2,600 metric tons a year by 2044. It is also looking at expanding output in Uzbekistan as well as Canada, its top source of the material, Maes told journalists. "We have considerably developed this diversification and that makes us much stronger with regard to geopolitical risk," he said. Sign up here. https://www.reuters.com/markets/commodities/orano-looks-mongolia-new-source-uranium-niger-problems-drag-2025-02-19/

2025-02-19 07:27

JOHANNESBURG, Feb 19 (Reuters) - South Africa's rand weakened on Wednesday after the national budget was postponed due to disagreements within the coalition government. At 1505 GMT, the rand traded at 18.565 against the dollar , down about 0.9% from its previous close. After his budget speech was postponed, South Africa's Finance Minister Enoch Godongwana said the government would have further discussions and propose a new budget in March. The Democratic Alliance (DA) said the budget had been postponed because of its opposition to an African National Congress (ANC) proposal to increase value-added tax (VAT) by 2 percentage points. The ANC will need the support of other parties to pass the budget as it lost its parliamentary majority in an election last year. The DA is its main partner in the government. Analysts said the knee-jerk market reaction was not surprising, with current volatility expected to be temporary. "While this lack of cohesion raises concerns about the government's ability to reach consensus, it is worth noting that the GNU (government of national unity) remains intact and actively negotiating – an indication that the process, however fraught, is still functioning," said Danny Greeff, co-head of Africa at ETM Analytics. Investors were keenly awaiting the budget speech for clues on the coalition government's fiscal priorities, its plans to tackle debt, and economic reforms. The delay also triggered the sharpest selloff in the country's government bonds since December with the 2052 dollar bond trading roughly 1 cent lower to be bid at 89.20 cents on the dollar . Jurgen Eckmann, wealth manager at Consult advisory group, said sentiment could soon recover after Wednesday's market selloff. "When the budget is finally tabled in March, we will hopefully see a stronger, more balanced budget of consensus," Eckmann said. On the stock market, the Top-40 (.JTOPI) , opens new tab index closed down about 0.8%. South Africa's benchmark 2030 government bond was weaker, with the yield up 5.5 basis points at 9.18%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-steady-ahead-national-budget-2025-02-19/

2025-02-19 07:27

LONDON, Feb 19 (Reuters) - The pound edged up on Wednesday, after data showed UK consumer inflation rose faster than expected in January, weakening the case for the Bank of England to deliver another two rate cuts this year. The Office for National Statistics said its consumer price index rose at an annual rate of 3% in January, above forecasts for a rise of 2.8%. Services inflation, something the BoE has flagged as an obstacle, rose at a rate of 5%, from 4.4% in December, but was below expectations for rise of 5.2%. Sterling spiked after the numbers, but quickly fell back to where it was before the data. By 0718 GMT it was up 0.05% at $1.262. Against the euro , the pound held steady at 82.86 pence, roughly where it was before the inflation report. Sign up here. https://www.reuters.com/markets/currencies/sterling-edges-up-after-jump-uk-inflation-2025-02-19/

2025-02-19 07:24

Share price falls 7%, underperforming peers Profits have fallen for two consecutive years Lower coal prices prove "a major headwind" Net debt higher than analysts expected LONDON, Feb 19 (Reuters) - Glencore (GLEN.L) , opens new tab is considering moving its primary listing from London, it said on Wednesday, after it posted lower earnings, recorded $2.3 billion in impairment losses and said it would return $2.2 billion to shareholders. Analysts said the dividend and buybacks could boost the London-listed share price, but on Wednesday it had sunk by 7% by 1215 GMT, underperforming peers. Glencore's impairments stemmed partly from lower assumed coal prices, logistical issues at its South African assets, and the closure of its Koniambo nickel operation in New Caledonia. "Weaker coal prices have been a major headwind for Glencore over the past six months, but we see value at current levels and the shares offer sector-leading shareholder returns in 2025," Deutsche Bank analysts said in a note. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 16% to $14.36 billion in 2024, from $17.1 billion last year, in line with analysts' consensus estimates of $14.55 billion. Last year marked the second consecutive decline in profit for the Swiss-based miner and commodity trader, following two record years, when metal prices soared. Its $2.2 billion payout means shareholders will get 18 cents per share this year, compared with 13 cents last year. Analysts said a $1 billion repurchase plan was designed to bolster the company's undervalued stock price. Glencore's share price lost 25% of its value in 2024, more than other diversified miners - BHP (BHP.AX) , opens new tab and Rio Tinto's (RIO.L) , opens new tab shares lost 21% and 19% respectively, while Anglo's (AAL.L) , opens new tab shares rose 20%, boosted by takeover approaches. The company's net debt rose to $11.2 billion, from $4.9 billion in 2023, partly due to $6.7 billion of net capex and the $7 billion acquisition of metallurgical coal portfolio EVR, which it bought from Teck Resources (TECKb.TO) , opens new tab. This was above analysts' consensus expectation for debt of $8.7 billion. The company said the net debt increase was balanced by "healthy cash generation, along with $1.8 billion of net working capital inflows". NEW YORK PRIMARY LISTING? Glencore is studying whether its shares would gain if it moved its primary listing to another exchange. "We are now actively considering the right exchange for our shares ...we are saying is - is there a better exchange for us to trade our securities?," Chief Executive Gary Nagle said. He added New York was at the top of the list under consideration. Companies have left London in recent years for the United States and also European Union markets, under pressure from investors seeking to boost the value of their shares. Among the most high-profile companies to have left London in 2024 were travel giant TUI (TUI1n.DE) , opens new tab and Netherlands-based food delivery company Just Eat Takeaway.com (TKWY.AS) , opens new tab. BHP Group, the world's largest mining company, collapsed its dual listing in favour of Sydney in 2022. "Re-domiciling to the U.S. would be a positive catalyst for these shares if the company decides to go down that path," Jefferies analyst Chris LaFemina said. Glencore's Nagle also said that global trade uncertainties could benefit its marketing, while signs of continued growth in China and a resilient U.S. economy should increase commodities demand this year. He added that U.S. tariffs introduced by the Trump administration "could act as a bit of a handbrake". "Although maybe long term (tariffs) may not be good for global growth, in the short term, as we see this volatility and uncertainty, it raises our ability to get better returns on our marketing because of dislocation and arbitrage opportunities," he said. Glencore trades most of the products it mines, including metals, thermal and metallurgical coal, oil and gas. Its adjusted EBIT from the marketing division at $3.2 billion, the higher end of its guidance, was down 8% from 2023. Sign up here. https://www.reuters.com/markets/commodities/glencore-posts-lower-2024-earnings-return-22-billion-shareholders-2025-02-19/