2023-12-07 23:58

SEOUL, Dec 8 (Reuters) - South Korea's National Pension Service (NPS) and central bank are in talks to extend their foreign exchange swap programme that was due to expire in December, according to two government sources with direct knowledge of the matter. "The two institutions seem to be in agreement with each other to extend. They are considering it positively," a welfare ministry official told Reuters. Another official at the welfare ministry, which oversees the NPS's fund management and policies, also said extension is currently under discussion. The NPS, the world's third-largest public pension fund, and the Bank of Korea (BOK) established in April a foreign exchange swap line of $35 billion to ease pressure on the local currency from the pension fund's growing investments abroad. The swap allows the NPS to use the BOK's foreign exchange reserves in times of currency market volatility, removing one of the heaviest sources of pressure on the won in the spot market. The new amount and period are not yet determined but will likely be in line with the existing contract, one of the welfare ministry officials said. The move comes amid concerns among foreign exchange traders that the local currency would face additional pressure if the pension fund, a major market player with huge demand for dollars, had to return. The won has weakened 3% against the dollar so far this month, sharply reversing the course from November, when it posted its biggest monthly gain in a year. For 2023, the won has so far fallen 5%, on track for its third straight yearly loss. "It is a news if it does get extended, and it is still a news even if it doesn't," one currency dealer said. The won, one of the most volatile emerging market currencies, still faces external headwinds from uncertainty over the U.S. monetary policy and a sluggish Chinese economy, traders say, with the country's exports expected to make only a modest recovery. In Reuters' request for comment, an official at the BOK said it was discussing with the NPS about extending the swap line. The NPS also confirmed they were in discussion. The NPS has been increasing its overseas investments for higher returns, adding to demands for dollars. As a result, the NPS has come under criticism for aggravating declines in the won with skewed dollar demand in the market. During the dollar's rally in the three months to October, the BOK's foreign exchange reserves dropped by $9 billion to the lowest level since mid-2020. The NPS bought $8 billion worth of foreign stocks and bonds during that period, central bank data showed on Friday. The monthly average buying of foreign stocks and bonds for the January-October period stood at $2.6 billion, bigger than any other year on record. Soon after Reuters reported on the swap extension, the won gained as much as 1.21% against the dollar in the onshore spot market, sharply rebounding from a more than three-week low. The NPS held a total of 983.4 trillion won ($746.11 billion) in financial assets as of end-September, 51.6% of which was in foreign assets. It plans to raise the ratio to 60% by 2028. ($1 = 1,318.0400 won) https://www.reuters.com/markets/asia/skoreas-pension-fund-central-bank-extend-fx-swap-line-sources-2023-12-07/

2023-12-07 23:53

NEW YORK, Dec 7 (Reuters) - Former Binance chief Changpeng Zhao has to remain in the continental United States ahead of his sentencing for violating U.S. anti-money laundering laws, U.S. District Judge Richard Jones said on Thursday. Last month, Binance Holdings agreed to pay over $4.3 billion and pleaded guilty to breaking U.S. anti-money laundering and sanctions laws. Zhao also pleaded guilty and faces a maximum prison sentence of 18 months under federal guidelines and has agreed not to appeal any sentence up to that length. A magistrate judge previously said Zhao could return to the United Arab Emirates, where he has been living, ahead of his February sentencing hearing. Last month, the district judge said he would review the issue. The Justice Department asked the judge to require Zhao to stay in the country, saying he posed a flight risk. Lawyers for Zhao disputed that assertion, noting that he paid a "substantial" bail package and voluntarily came to the United States to accept responsibility for his actions. But in a court document filed on Thursday, the District Court judge in Seattle agreed with the Justice Department and said Zhao had not convinced the court he is unlikely to flee if allowed to return to the UAE. "While the bail package is substantial, if not unprecedented, it is a package that appears to be largely comprised of assets beyond the government's reach," Jones said in Thursday's court filing. Zhao is able to remain free and travel within the United States, according to the conditions of his bail. His sentencing hearing is scheduled for Feb. 23, 2024. https://www.reuters.com/legal/us-judge-orders-binances-former-chief-stay-us-until-sentencing-filing-2023-12-07/

2023-12-07 23:45

A$80 bln tie-up would create global oil and gas major Domestic asset sales likely needed for anti-trust approval Santos investors doubt Woodside will pay big premium SYDNEY, Dec 8 (Reuters) - Australia's Santos Ltd (STO.AX) shares jumped on Friday on the prospects of a possible A$80 billion ($52 billion) merger with its bigger rival Woodside (WDS.AX), but investors were cautious about the competition and valuation hurdles to a deal. Woodside and Santos after market hours on Thursday confirmed speculation they were in preliminary talks to create a major oil and gas company, with assets in Australia, Alaska, the Gulf of Mexico, Papua New Guinea, Senegal and Trinidad and Tobago. Santos shares jumped nearly 11% in early trade to hit their highest level in five weeks, but pared gains to 6% around 0345 GMT. Woodside trimmed early losses and was down 0.5%. Both companies' have lagged the global energy share market boom amid struggles securing environmental approvals for major growth projects. UBS analysts say a deal would provide the scale required to fund the decades long energy transition and could unlock $200 million in cost savings. "It's a dramatic concentration of control," said Tim Buckley, a director at think tank Climate Energy Finance. "But I would emphasize it's coming from a point of weakness. It's coming from a point of ongoing massive underperformance." A bid price with a sufficient premium to satisfy disappointed Santos shareholders is going to be the "biggest issue", said Matthew Haupt, a portfolio manager at long-time Santos shareholder Wilson Asset Management. "We'd like to see a very compelling offer from Woodside with a premium built in to entertain this idea," he said. "I just don't know if Woodside are willing to pay up." UBS analysts modeled an implied bid price for Santos between A$8.20 and A$8.88, with the lower value reflecting a typical "control premium" of 20%. By comparison, Santos shares hit a high of A$7.58 on Friday, reflecting uncertainty about how a deal would be structured. The mooted deal would complete the consolidation of Australia's four biggest homegrown oil and gas companies. Woodside just last year combined with BHP Group's (BHP.AX) oil and gas business, while Santos acquired Oil Search in 2021. With the talks revealed, Santos could potentially attract interest from a major European player with interests in the region, UBS analyst Tom Allen said. French giant TotalEnergies (TTEF.PA) co-owns LNG assets in Papua New Guinea and Australia with Santos. COMPETITION CONCERNS Analysts say a potential Woodside takeover of Santos would create a dominant player in Australia's domestic gas market and prompt close scrutiny from the competition regulator, which is concerned about soaring local gas prices. Selective divestments could assuage the regulator, with Santos' Varanus Island and Cooper Basin assets likely candidates, according to Jarden analyst Nik Burns. The issue will be getting agreement on price for mature assets in a market with only a handful of interested mid-sized players, for instance Beach Energy (BPT.AX), he said. "What's the market appetite to take these assets? It's not like there is a large playing field of potential buyers," said Burns, who was previously investor relations head for Beach. The Australian Competition and Consumer Commission said on Thursday it would consider if a public merger review into the impact on competition was required if the deal goes ahead. ($1 = 1.5154 Australian dollars) https://www.reuters.com/markets/deals/santos-shares-jump-11-53-billion-woodside-merger-talks-2023-12-07/

2023-12-07 23:39

SYDNEY, Dec 7 (Reuters) - (This Dec. 7 story has been corrected to say 16 million tons per year, not 60 million tons, in paragraph 8) Australia's Woodside Energy (WDS.AX) and Santos (STO.AX) said on Thursday they were in preliminary talks to create an A$80 billion ($52 billion) global oil and gas giant, as consolidation among international energy firms intensifies. Combining two of Australia's largest oil and gas producers would be the largest corporate deal in the country for several years, during which buyout activity has been subdued by rising interest rates and financial market volatility. A deal, if it goes ahead, would create the biggest liquefied natural gas (LNG) producer in Australia, the world's No. 2 exporter of the super-chilled fuel that is expected to see decades of growth to meet Asia's energy transition needs. Perth-based Woodside, the larger of the two companies, said the talks with Santos were confidential and incomplete and that there was no certainty an agreement would materialise. Its market capitalisation stands at A$56.91 billion, while Santos is valued at A$22.1 billion. "Woodside continuously assesses a range of opportunities to create and deliver value for shareholders," it said in a statement to the Australian stock exchange. Both companies face rising pressures of decarbonisation as well as challenges in their current projects. Woodside's share price has dropped 15.4% this year so far, while Santos' stock is down 4.3%. Combined oil and gas production for the two stood at just over 260 million barrels of oil equivalent while the total proven plus probable reserves is at 5.39 million BOE, based on 2022 data from the companies. A deal between them would create an LNG powerhouse with annual sales of 16 million metric tons, said Bernstein analyst Neil Beveridge. "It's an Australian powerhouse that would have better leverage with buyers and the ability to optimize that LNG portfolio given the number of terminals," he added. However, such a combination would come under close scrutiny from Australia's competition watchdog, which has been toughening its stance towards allowing takeovers in concentrated sectors. "The ACCC is aware of public reports of the potential transaction," a spokesperson for the Australian Competition and Consumer Commission said. "If the potential transaction progresses, the ACCC would consider if a public merger review into the impact on competition is required." "It (a merger) makes sense given how the share prices have languished and all the capex to come," said Jun Bei Liu, Tribeca Alpha Fund portfolio manager who owns shares in both companies. "In today's world oil is almost done so you need to get scale and generate as much profit as possible to invest for the energy transition." PRESSURE News of the talks follows a string of recent deals in the global oil and gas sector which saw majors Exxon Mobil Corp (XOM.N) and Chevron (CVX.N) paying more than $50 billion each to acquire two U.S. producers. There has also been pressure to simplify the Australian oil and gas sector, which has seen two recent big-cap mergers with Woodside combining with BHP Group's (BHP.AX) oil and gas business and Santos acquiring Oil Search. "Woodside has already been looking outward after the BHP acquisition and both companies have had good runs with the high oil and gas price environment of the past two years," said Kaushal Ramesh, vice president of LNG Research at Rystad Energy. Discussions with Santos come less than 18 months after Woodside completed the BHP deal and as it grapples to get final approvals for its A$16.5 billion Scarborough venture in Western Australia, its biggest growth project. L1 Capital, a local hedge fund and Santos shareholder, called in September for it to consider separating out its LNG assets to help boost its share price, which had lagged global and local peers for three years. Both Woodside and Santos had recently flagged challenging near-term production along with soaring capital expenditure and regulatory hurdles to ongoing projects. Santos wants to restart work on the Barossa gas project once it finishes a fresh round of talks with conventional landowners. ($1 = 1.5244 Australian dollars) https://www.reuters.com/markets/deals/australias-santos-early-merger-talks-with-rival-woodside-2023-12-07/

2023-12-07 23:28

NEW DELHI/MUMBAI, Dec 7 (Reuters) - India directed sugar mills not to use cane juice or syrup to produce ethanol, the government said in a notification on Thursday, as New Delhi tries to increase sugar supplies by curtailing ethanol production. Reuters had reported on Wednesday that the government was planning to discourage the diversion of sugar for ethanol production as part of efforts to ensure sufficient supplies of the sweetener in the local market. Fuel retailers, under current contracts, are permitted to keep their procurement of ethanol derived from B-heavy molasses, a byproduct with higher sucrose levels, the government said. It would also allow the diversion of 1.04 million metric tons of B-heavy molasses for ethanol production under existing contracts, government officials said. The moves will help to reduce diversion of around 2.14 million tons of sugar for ethanol-making from cane juice, they said. An industry official had said on Wednesday the government would allow mills to produce ethanol only from C-heavy molasses, a cane by-product that has hardly any sugar content left in it. Shares of Indian sugar and ethanol makers such as E.I.D.-Parry (EIDP.NS), Balrampur Chini Mills (BACH.NS), Shree Renuka (SRES.NS) , Bajaj Hindusthan (BJHN.NS), and Dwarikesh Sugar (DWAR.NS) closed up to 6% lower on Thursday. India's fuel retailers buy ethanol from sugar mills to blend with gasoline and pay a higher price for ethanol produced from juice and B-heavy molasses. Patchy rains in the top sugar cane-growing western state of Maharashtra and southern Karnataka state have raised concerns about this year's sugar output. The Indian Sugar Mills Association, a producers' body, last month said sugar production is likely to fall 8% to 33.7 million metric tons in the 2023/24 marketing year. The likely production drop has lifted local sugar prices to their highest levels in nearly 14 years. https://www.reuters.com/markets/commodities/india-curbs-ethanol-production-cane-juice-boost-sugar-supplies-2023-12-07/

2023-12-07 22:44

Dec 7 (Reuters) - There have already been 478 new exchange-traded funds (ETFs) launched in the U.S. this year as of Wednesday, a new annual record, according to data from Morningstar. That number, fueled by the record $7.65 billion invested in ETFs, is likely to climb still higher, analysts at Morningstar and other firms said. At least another dozen ETFs are scheduled to make their debut over the next week, according to Strategas, an investment advisory firm. The previous record was set in 2021, when ETF managers rolled out 477 new funds. Last year, quiet by comparison, was still the second-busiest ever, with 407 ETF debuts. It has been clear since October that the pace had picked up this year. "The wheels are in motion," said Todd Sohn, ETF analyst at Strategas. The vast majority of ETF launches this year -- some 76%, according to Morningstar Direct estimates -- have been of active ETFs rather than funds designed to track some kind of index. Another big theme in 2023 has been the interest in ETFs that can deliver a steady stream of income. "It's the current craze," Sohn said. "A lot of managers are rushing to mimic" multi-billion dollar ETFs like the JPMorgan Equity Premium Income ETF , and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ.O). Sohn said there was no reason to believe the flood of new ETF issuance will slacken next year. Still, he and other ETF analysts are watching the rate at which some recently launched ETFs have been closed. ETF providers have shuttered 208 funds so far this year, but as a percentage of new issuance or the total number of funds, that falls well short of a record. Still, given the increasingly crowded ETF landscape, several say they are monitoring the figure. The data measures U.S.-based ETFs in all categories and asset classes. https://www.reuters.com/markets/us/new-us-etf-launches-set-annual-record-morningstar-2023-12-07/