2023-11-13 11:05

Nov 13 (Reuters) - Panama's top court is likely to rule against Canadian miner First Quantum when it decides on the fate of a key copper mine contract in the coming weeks, a majority of lawyers in a Reuters survey said, citing precedent for a similar verdict. The court's nine judges are weighing whether to revoke First Quantum's contract for the Cobre Panama mine, a significant resource that contributes 5% to Panama's GDP and 1% to global copper production. The contested contract, which was approved on Oct. 20, provides First Quantum a 20-year mining right with an option to extend for another 20 years, in return for $375 million in annual revenue to Panama. However, the contract has faced numerous legal challenges due to protests that claim it favors the miner too much and allege corrupt practices in its approval. Such protests have escalated into an anti-government movement, resulting in two deaths. The miner's contract has snowballed into a lightning rod ahead of the May 2024 Panama election. Meanwhile, Standard & Poor's has revised Panama's economic outlook to negative from stable due to potential risks to investors' confidence. The uncertainty has also wiped about C$8 billion ($5.80 billion) from First Quantum's market value. Amid the rout, China's Jiangxi Copper Co Ltd (600362.SS), First Quantum's biggest shareholder, last week raised its stake in the Canadian company to 18.5%. Two Panamanian prosecutors have deemed the contract unconstitutional after examining legal challenges submitted to the court. However, Maritza Cedeno, the president of the country's bar association, noted that past rulings have deviated from the initial positions of these officials. She declined to disclose her stance, saying the court should work without pressures. Four out of the seven lawyers polled by Reuters predicted the top court will nullify the contract, possibly as soon as mid-December. Two others believe the court will uphold the contract, while one remains uncertain. "There is precedent...," said lawyer Ariel Corbetti, pointing out that the contract has similarities to the initial First Quantum deal, which was scrapped by the court in 2017. That contract was inherited by First Quantum in 2013 after it became the operator of the mine. However, Panama's top court in 2017 deemed unconstitutional the law under which First Quantum was operating the mine. The ruling was upheld in 2021, resulting in last month's fresh deal with the government. A representative for Panama's top court declined to comment on the possible outcome, and directed Reuters to a statement saying resolving the challenges is the body's "number one priority." First Quantum did not reply to a request for comment on the future of the contract pending court proceedings. BAN ON NEW MINING LICENSES Granting a concession requires a public tender, which did not happen with First Quantum, Corbetti said, adding that foreign state-owned entities cannot own mining resources, which he said happens in this case with China. If the court deems the contract unconstitutional, Panama would be in a tricky spot, lawyers said, as the government on Nov. 3 signed a bill banning all new mining concessions and extensions. That would prevent the two parties from negotiating a new deal. Panama has issued seven orders to cancel mining concessions to abide by the new law, the trade ministry said last week, without providing detail. Corbetti also said authorities should seek an agreement with the company for its exit to avoid international litigation. Panama's mining chamber has urged against canceling the contract, saying First Quantum could sue Panama for at least $50 billion. Another lawyer said the court could also move to declare parts of the contract unconstitutional, which would not annul it completely. Others say the court will rule in First Quantum's favor. "This conflict cannot be solved in a temperamental way," said lawyer Juan Carlos Arauz, former head of the country's bar association, adding he does not see a scenario under which the court would deem the miner's contract unconstitutional. Arauz said revoking the contract would put Panama in a weak spot if the matter goes to international arbitration and could open leaders to litigation. Lawyer Victor Baker said proper consultations were conducted for the contract's approval and there was no need for a bidding process since the miner had existing operations, as he expressed confidence in a ruling favoring the company. ($1 = 1.3802 Canadian dollars) https://www.reuters.com/world/americas/panama-court-likely-revoke-first-quantum-copper-mine-contract-2023-11-13/

2023-11-13 11:02

A look at the day ahead in U.S. and global markets from Mike Dolan A sideswipe at the last remaining triple-A U.S. sovereign credit rating appears to have been batted away by bond investors so far - but the lingering risk of a government shutdown this week keeps a cloud over markets. Moody's credit ratings firm on Friday lowered its outlook on U.S. government debt to "negative" from "stable," citing large fiscal deficits and a decline in debt affordability and dysfunction in congress. It's the last of the three major rating agencies to maintain a top rating for the U.S. Treasury as Fitch lowered its rating in August and S&P removed its AAA in 2011. Moody's analyst William Foster told Reuters on Friday the chance of a "significant policy response" to rectify the fiscal situation probably wouldn't happen until 2025 "because of the reality of the political calendar next year." And yet the clunky machinations of Congress and gridlock between the two main parties mean there's still a chance government operations could be shut down as soon as Friday. U.S. House of Representatives Speaker Mike Johnson unveiled a Republican stopgap spending measure on Saturday aimed at averting it and pushing the budget standoff into next year - but the measure quickly ran into opposition from both sides. All the more impressive then that Treasuries seem so calm first thing on Monday, with the 10-year Treasury yield hovering at about last week's close at 4.62% - 3 basis points below Friday's intraday high and still some 40bps below the October's peaks above 5%. The dollar index (.DXY) was only marginally lower, with the dollar/yen exchange rate surging again to its highest in more than a year - and within a whisker of the 33-year high set last October despite Japanese intervention warnings. On one level, there's some relief the AAA rating was maintained despite the darker outlook. And on another level, there's a mixed take on the implications of a shutdown - not least that it would dampen further economic activity in an already slower fourth quarter. And that would at least keep the Federal Reserve at bay despite its warnings last week that another rate hike was still on the table. However, the Fed focus this week was likely as much on the October consumer price inflation report on Tuesday and the retail sales data on Wednesday for guidance. Prices are expected to have remained sticky last month, while high street sales slowed. Retail will be a theme of the week in corporate earnings too, with Tyson Foods out on later on Monday, Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday. This month's Thanksgiving holiday also focuses minds on shopping too and the resilience of the consumer. Overall, the sharp rally in Wall St stocks on Friday also showed a persistent seasonal bid for equities despite a rough week and Fed reality check on easing hopes. Futures were slightly in the red ahead of Monday's bell, but the ViX (.VIX) volatility gauge remained subdued around 15. World stocks followed through with slight gains on the back Wall St's late week strength, with China's bourses more mixed ahead of a big economic data release schedule this week - including industrial and retail readouts for last month. However, the main set-piece may well be in San Francisco where President Joe Biden and China's President Xi Jinping are due to hold a much anticipated summit on Wednesday. Elsewhere, British markets and the pound were stable amid a UK government reshuffle that saw the interior minister Suella Braverman lose her job and former Prime Minister David Cameron return as foreign minister. Key developments that should provide more direction to U.S. markets later on Monday: * October Federal Budget, New York Fed's Oct inflation expectations survey * Federal Reserve Board Governor Lisa Cook speaks; Bank of England policymaker Catherine Mann speaks * U.S. corporate earnings: Tyson Foods, Henry Schein * U.S. Treasury auctions 3-, 6-month bills https://www.reuters.com/markets/global-markets-view-usa-2023-11-13/

2023-11-13 10:39

MUMBAI, Nov 13 (Reuters) - The Indian rupee ended little changed on Monday as traders remained wary of adding large positions in a holiday-truncated week on expectations the central bank would step in to curb any volatility in the local currency. The rupee ended at 83.3325 against the dollar, compared with 83.34 in the previous session. The local unit traded in a narrow four-paisa range throughout Monday's session. The rupee, on Friday, hit a lifetime low of 83.42, affected by a technical system outage. The Reserve Bank of India (RBI) had stepped in to stem the fall, according to traders. While state-run banks were supplying dollars in the spot market even on Monday, traders said it was difficult to ascertain whether it was for their clients or for the RBI. "Since October, rupee remained in the range with record low volatility - the main target of the central bank," said Dilip Parmar, a foreign exchange analyst at HDFC Securities. As long as volatility remains low and there is window for banks to take fresh positions, the rupee could trade in the range of 83.00-83.60, Parmar added. Investors are now eyeing the U.S. inflation reading due on Tuesday for further cues. India's financial markets are closed on Tuesday for a local holiday. U.S. headline prices likely rose just 0.1% month-on-month in October, thanks to lower energy prices, while the more important core measure likely increased 0.3% on-month and 4.1% on-year, according to a Reuters poll. Federal Reserve officials, including Chair Jerome Powell, said last week that they are still not sure that interest rates are high enough to end the battle with inflation. The Fed's next policy decision is due in December with a 11% probability of a rate hike. Ahead of the U.S. inflation data, India will release headline inflation reading late on Monday. October's print is expected to come at a four-month low of 4.80%, according to a Reuters poll. https://www.reuters.com/world/india/rupee-little-changed-rbi-support-aids-inflation-data-focus-2023-11-13/

2023-11-13 07:34

HONG KONG, Nov 13 (Reuters) - Citadel Securities, one of the world's biggest market-making firms, is "actively exploring" establishing a licensed onshore business in China, its chief executive Peng Zhao said. If Citadel Securities were to obtain a licence, it would be the first foreign firm to formally foray into market-making in China outside interbank and foreign exchange market making. Over the last two years, Chinese authorities have encouraged the development of market makers, approving more licences and pledging to roll out more types of derivatives as they seek to boost liquidity and draw in more long-term capital. At least 16 domestic securities brokerage firms have been given the nod to act as market makers in China A shares as of mid-September, official records show. "We are pleased to see the introduction of the market-making program in China," Zhao told Reuters in an interview in Hong Kong. He declined to disclose the specific licence the company might seek. "As the Chinese capital market continues to grow beyond simple stock trading and into more complex products, the concept of market making not only will come naturally but also becomes necessary instead of just adding value from a liquidity perspective," Zhao said. Billionaire Ken Griffin's Citadel Securities, which handles about $390 billion in trades per day, is one of the top market makers by trading volume in the United States. Market makers quote both buy and sell prices for assets and are constant trading participants in the market, earning profit through the spread of bid and offer prices. China's nascent market-making sector could grow to be worth 250 billion yuan ($34 billion) in revenues in 2032, compared with an estimated 40 billion yuan last year, according to Chinese brokerage Haitong. Market-making was first introduced in China in 2014. In February, Beijing started to allow licenced securities brokerage firms to act as market makers for its newest board Beijing Stock Exchange, following a similar move in May 2022 for its Nasdaq-style STAR Market. Citadel Securities in July appointed Tony Tang, the former head of BlackRock's China business, to helm its China operations. In February, it became a "qualified foreign institutional investor" in China, a few months after the country allowed qualified foreign institutions to trade more broadly in domestic futures and options instruments. The wider access it gained with that licence covers bonds, futures and options in addition to stocks it traded via China's Stock Connect Programme. This year, Citadel Securities also launched an investment-grade corporate bond market-making business in the United States. It is now looking to bring that business to Asia. Currently, it focuses on helping clients in Asia trade in U.S. assets such as U.S. Treasuries and U.S. dollar interest rate swaps. Since 2020, the brokerage has more than doubled its Asia Pacific headcount to nearly 300 people, a contrast to the wider trend of Wall Street layoffs amid depressed deal activity due to high interest rates and geopolitical uncertainty. https://www.reuters.com/markets/asia/citadel-securities-explores-china-licence-beijing-steps-up-market-making-program-2023-11-13/

2023-11-13 07:26

SYDNEY, Nov 13 (Reuters) - Australian pension fund AustralianSuper said on Monday it had rejected an "eleventh hour" offer from a Brookfield-led consortium and its partner EIG to drop its opposition to their $10.5 billion bid for Origin Energy and join the takeover. Australia's largest pension fund reaffirmed its intention to reject the bid at the shareholder meeting on Nov. 23, hours after receiving the consortium's "unsolicited" offer, the fund said in a statement. "AustralianSuper’s position is unchanged on the upcoming vote ... as we believe the offer remains substantially below our estimate of Origin’s long-term value," a spokesperson said. AustralianSuper said it was Origin Energy's largest shareholder, but did not specify the size of its stake as it has done in previous releases. The Australian Financial Review reported late on Monday the fund had raised its stake to 16.5% from 15%. AustralianSuper declined to comment. The moves come just under two week since the A$300 billion fund turned down an improved "best and final" A$9.53 per share bid from the group and threatens to scupper the buyout of Australia's largest energy retailer. While AustralianSuper's stake is below the quarter threshold required to block a bid, generally low turnout from the retail shareholders who make up about a third of the listing gives the fund's stake extra weight. Brookfield argues its bid, which comes with the commitment of A$20 to A$30 billion worth of investment, will decarbonise Origin Energy faster than if the company remains in public hands. "We’re offering a clear pathway to a faster reduction of the company’s emissions and an acceleration of Australia’s net zero targets," Brookfield Managing Director of Renewable Power & Transition Luke Edwards said in a statement. However, AustralianSuper said on Monday it was also open to stumping up cash to fund Origin's transition. https://www.reuters.com/markets/deals/australiansuper-rejects-brookfield-offer-take-part-origin-takeover-2023-11-13/

2023-11-13 06:57

A look at the day ahead in European and global markets from Kevin Buckland Chip stocks gave Asian equity investors some small bit of cheer to start the week, picking up where Wall Street left off while U.S. yields stayed subdued, which kept a lid on the dollar, too. But elsewhere, bears were firmly in control. A lot of that can likely be traced to China, rather than to the Moody's downgrade to the outlook for the U.S. sovereign debt rating, which investors have taken in stride. The Chinese consumer has so far refused to ride to the rescue of the world's second-largest economy. Monthly retail sales data is due on Wednesday but the country's Singles Day shopping extraganza over the weekend - equivalent to Black Friday sales elsewhere - recorded only meagre growth. Looking across the region, Japan's tech-heavy Nikkei managed to keep its head above water, buoyed by gains for its two biggest chip-related shares; Taiwan's benchmark advanced 0.8%. But Hong Kong flipped from early gains to a loss of about 0.15%. A sub-index of tech shares remained firmly positive but another of mainland property developers slumped more than 1%. China's blue chips fell 0.5%. U.S. retail sales data is also due on Wednesday, preceded by CPI a day earlier. The figures could be key in helping the Federal Reserve to plot the path ahead for interest rates, including whether another hike is needed. The Fed's rhetoric has taken a hawkish turn recently, but markets so far are more focused on the data, particularly the soft non-farm payrolls numbers at the start of this month. ECB President Christine Lagarde last week said that rates will stay restrictive at least for several quarters. Lagarde deputy Luis de Guindos has his say a little later today, giving the keynote speech to kick off Euro Finance Week. Elswhere, Bank of England board member Catherine L. Mann will take the podium, after the bank's chief economist, Huw Pill, said last week its projection that monetary policy will need to remain restrictive for an extended period should not be taken as a promise. Key developments that could influence markets on Monday: -ECB's de Guindos, BoE's Mann speak -UK Rightmove house prices -Sweden SEB housing -New York Fed consumer expectations survey https://www.reuters.com/markets/europe/global-markets-view-europe-2023-11-13/