1. Newsroom
  2. Oil and politic talk
Menu
Analisi 23.02.2016

Oil and politic talk

Oil and politic talk

Political tensions rose after Pyongyang launched a satellite, claiming that it was part of a scientific space program.


Viewing the move as a cover for missile test, South Korea and the US responded to the threat by starting discussion over the deployment of a US Army missile in South Korea to improve the defense posture. China denounced the system’s deployment stating that it would harm its strategic security interests. Tensions worsened after recent images revealed that China had positioned missiles on a contested island in the South China Sea, just after President Xi pledged not to militarize the disputed atolls. In the meantime in California, President Obama was gathering with ASEAN leaders last week to discuss the need to ease tensions in the oil-rich South China Sea region.

Oil also sparked international debates after weeks of price collapsing. As a result, oil ministers of Saudi Arabia, Russia, Qatar and Venezuela announced a production freeze output at January levels. Crude oil was volatile last week with New York futures price rising to USD31.98 per barrel at the most before closing the week at USD29.64 per barrel on February 19th. In Hong Kong, oil companies CNOOC (8.23 HKD, +1.60%) and Sinopec (4.40 HKD, +0.92%) started this week on strong basis in line with oil price recovery. Financial companies such as AIA Group (40.10 HKD, +1.91%) and Bank of Communications (4.50 HKD, +0.67%) recovered some of their early loss caused by concerns over growth and margins. In addition, worries over developed markets central banks’ ability to spur growth and wind up inflation strengthen after Bank of Japan’s recent rules on negative interest failed to impress the market. On the winners side, China Unicom (9.04 HKD, +3.31%) and Hang Seng Bank (130.90 HKD, +3.64%) contributed positively to the Hang Seng index, which was up +0.67% since last Friday’s closing. In China, the Shanghai Stock Exchange Composite Index and CSI 300 gained +1.51% and +1.24%, respectively.

In South Korea, the KOSPI index decreased slightly -0.11% this week. Bank of Korea unchanged its key interest rate at 1.5%, opening speculation for a rate cut later this year. The South Korean auto sector registered some encouraging numbers with Hyundai Motor (149000 KRW, 0.00%) and Kia Motors (48000 KRW, -2.04%) seeing January European’s sales growing +9.1% for the former and +12.7% for the latter, on a year on year basis. Cosmax (121000 KRW, -2.81%) cosmetics manufacturer reported disappointing results amid China-related uncertainties.

The ASEAN region continued to show positive numbers as Thailand recorded GDP growth of +2.8% and Malaysia’s GDP expanded by +4.5%, both beating market estimate. On February 18th, Bank of Indonesia decided to cut its reference rate by 25bps to 7%. The Indonesian Central Bank also stated that private investment is expected to pick up this year due to greater room to ease monetary policy and a relatively more stable macroeconomic environment.

Oil and politic talk Graph

 

Guillaume_Poncet.jpg
Guillaume Poncet, Analyst
 

Le news più lette

Analisi 17.10.2018

Impact investing, il futuro comincia oggi

L’impact investing si assume il compito di impegnarsi per risolvere i più pressanti problemi globali identificando interessanti investimenti a lungo termine.

Analisi 15.10.2018

Global Equities: P/E de-rating in progress

Spotlight - The broad-based sell-off in global equities has fully retraced the gains made from February 2018’s lows. Even world beating technology shares have fully given up the 8% gains seen over the summer.

Analisi 08.10.2018

The latest on the oil market

September saw WTI oil prices drop 4% during the first week of the month before rallying almost 12% to reach USD 75 per barrel at the beginning of October. The rally came as investors have been gauging OPEC’s ability to replace falling Iranian exports and declining Venezuelan production.


Altro da leggere

Analisi 22.02.2019

Does January’s Credit Jump Signal China's QE?

China’s January total new credit (aggregate financing, flow data) reached a record high of RMB4.64trn ($690bn). Our China’s Credit Impulse Indicator finally turned around for the first time in 14 months. Does this signal a return of China’s aggressive reflation policy?

Analisi 15.02.2019

The Fed returns the punchbowl to the party

Spotlight - The dramatic Fed pivot from hawkish in September 2018 to now at worst ‘neutral’ signals that the Fed is reluctant to ‘take away the punchbowl’ completely from the post-2008 economic expansion.

Analisi 31.01.2019

Measuring funds’ social and environmental impact

In 2018, UBP started a collaboration with the Cambridge Institute for Sustainability Leadership (CISL), a pioneering institution within the University of Cambridge working with influencers to build a sustainable economy.