Monday, July 28, 2008

Council on Hemispheric Affairs -- China in L America- a partner, not a threat (so far)

Apologies on the lack of updates and coverage as of recent. I've been in transit from NYC --> Belo Horizonte and was stuck a few days without net or rather without easy access to the net in San Paulo.


Will be publishing from Belo Horizonte for the next few days.


China's Claim in Latin America: So Far, a Partner not a Threat
By light years, Washington traditionally has held the upper hand when it comes to foreign influence on Latin America. Its hemispheric power-advantage rests on decades of security, trade, investment, and ideological connections. However, the era of globalization is now tearing down many of the world's hemispheric divides.

Latin America is rapidly diversifying its international relations as major regional powerhouses, such as China, increase their presence in the region. Many view China's growing influence in the western hemisphere as a challenge to the U.S.'s historic regional supremacy. However, the struggle for power and influence need not automatically reflect a winner-take-all competition, as both outside megaliths can benefit from China's presence in Latin America. China's Economic Expansion China's phenomenal economic growth in the past quarter century has helped motivate Beijing to globalize its industries.

From 1990-1998, China's average annual economic growth rate was 11.2 percent, compared to the world's average rate of 2.4 percent during the same time frame (China's Average Economic Growth Rate in the 90s Ranked 1st in the World 2000) and the country's growth rate is projected to remain above 8.5 percent for the next five years (Erikson 2008). Beijing's economic ties to Latin America have witnessed comparable growth: from 1993 to 2003, China's trade with Latin America increased by 600 percent (Xinhua News Agency 2004).

Chinese president Hu Jintao set the mark for increasing trade with Latin America to $100 billion by 2010, a goal easily met when trade surged to $102.6 billion in 2007, which represents a 42.6 percent increase from 2006 (Erikson 2008).

Click here to access the remainder of this analysis prepared by COHA Research Associate Jamie Heine

Monday, July 21, 2008

India, China continue to push for more nuclear facilities to ease energy shortages -- prices set to rise says analyst Yuriy Humber

Moscow: The uranium industry’s worst year is about to collide with a nuclear construction programe in India and China that rivals the ones undertaken during the oil crisis of the 1970s.

The result is likely to be a 58% rebound in uranium to $90 (Rs3,870) a pound from $57 now, according to Goldman Sachs JBWere Pty. Ltd and the Rio Tinto group, the third biggest mining company. Uranium plunged 57% in the past year as an earthquake damaged a Japanese plant that is the world’s largest and faults shut down reactors in the UK and Germany.

Plans for India and China to end electricity shortages will ripple from Canada to the Australian outback and the flatlands of Kazakhstan, the primary sources of uranium. India will start three reactors this year, with another six due next year in India, China, Russia, Canada and Japan. Uranium demand worldwide will rise as fast as oil this year, or 0.8%, Deutsche Bank AG forecasts.



Scarce commodity: The Hamaoka nuclear power station in Japan. Uranium plunged 57% in the past year
as an earthquake damaged another plant in Japan and faults shut down reactors in the UK and Germany.
(Photo: Robert Gilhooly/Bloomberg)



“The first wave of growth is going to come from the emerging economies,” said John Wong, fund manager with CQS UK Llp. in London, which has $10 billion under management including $150 million of uranium investments. “People are starting to look at coal, gas, oil and seeing the energy prices go up, they wonder about uranium.”

Click here to access the full article from Livemint News.


CTAPDA Website Directory

Sunday, July 20, 2008

Jim Rogers -- Commodity Guru: Hot on China yet cold on India






Courtesy of Commodity Online - News or Click here to Access the full story by George Lype

SINGAPORE: Global market meltdown, recession and bankruptcy fears and dipping profits of companies are wrecking major economies in the world these days. But ace commodities investor Jim Rogers continues to be very be hot on China.

”China is a country I am very hot on. I believe that Chinese economy will overtake the US economy, and China has the best investment potential in the world today,” Rogers, author of such famous books like Hot Commodities and A Bull in China, told Commodity Online.

He said three billion people living in Asia, most of them in India and China, will account for a major portion of the total demand for commodities in the coming years.

”Asia is fueled by massive investment and growth. And in Asia, China is the hottest destination. So I continue to look for investment opportunities in China,” Rogers, who along with billionaire investor George Soros founded the successful Quantum Fund. For more information on the Quantum Fund, click here to access George Soro's trading website (http://www.sorostrading.com/)

...............................

Rogers may be hot on China; but when he talks about India, the legendary investor gets cold feet. “I am excited about India as a travel destination. For an investment proposition in India, I would think twice,” he said.

He says even though India like China has been growing phenomenally well, political and bureaucratic hurdles still exist in India. “Plus, the infrastructure in India continues to be bad compared to China. In China, truck drivers drive at the speed of 70 kilometers per hour. In China, they can drive only at a speed of 20 kilometers because the roads are so bad,” Rogers said.

..............................

Click here
to access the full story from Commodity Online

Sovereign Wealth Fund Tracker (SWFs) Introduced by Global Insight





Global Insight Weekly Newsletter


Sovereign Wealth Fund Tracker

Unparalleled coverage of Sovereign Wealth Funds, their investment strategies, and the controversies that surround them

Countries rich in foreign exchange reserves – often oil-derived – have emerged as some of the most powerful global investors. Some $80 billion has already been ploughed into bank shares or bank equity stakes in the U.S. alone. In the wake of the current credit crunch, developed economies have generally welcomed the timely infusion of capital, but there is growing unease too.

Governments are concerned that foreign ownership of key domestic assets (including corporations, banks and infrastructure) may threaten national security, and they are pressing the funds to be more transparent about their management and strategy. For three years in a row, Sovereign Wealth Funds have grown a remarkable 24% annually, and now exceed some $3.5 trillion.

If growth rates remain constant, they will surpass the entire current economic output of the United States by 2015, and Europe by 2016. Their importance already rivals that of hedge funds and private funds combined.

* Will Sovereign Wealth Funds continue this incredible growth?
* How much resistance are they likely to encounter, and where?

Introducing: Sovereign Wealth Fund Tracker


Global Insight's Sovereign Wealth Fund Tracker provides an in-depth account of funding sources; evolving regulatory and policy environments; and investment strategies. This pilot edition is provided as a free trial. To subscribe to comprehensive quarterly updates, please register your interest with Global Insight.

The report comprises a global summary, 3 regional overviews, and a section on recipient countries (G7 plus Switzerland and Australia). Commentary and data tables include:

- Detailed 3 year forecasts of sovereign wealth growth by country, broken down by type
- Overall sovereign wealth forecast out to 2016
- Analysis and implications of significant events by country within each region
- Legal and policy environments affecting sovereign wealth flows
- Detailed coverage of institutional and market developments, investment vehicles, and specific mergers and acquisitions


Key findings of the Sovereign Wealth Fund Tracker:
  • The largest Sovereign Wealth (SW) generator remains China, with approximately US$1.2 trillion, followed by Russia and Kuwait.
  • The fastest growing generators of SW over the last five years were: Nigeria 291%: Oman 256%; Kazakhstan 162%; Angola 84%; Russia 74%; and Brazil 65%.
  • High energy and commodity prices, combined with a declining dollar, have turbocharged Sovereign Wealth Funds (SWF) in the Middle East, and spawned a new generation of these Funds.
  • Record inflation in SWF countries is the new "push factor" behind SWF's foreign expansion. Inflation has intensified in China, U.A.E, Saudi Arabia, Russia and Kuwait, creating pressure to invest domestic money abroad.
  • The vast majority (93%) of SWF equity investment has so far targeted the western financial sector. But there is new interest in energy and mining companies.
  • In January 2008 alone, worldwide acquisitions by SWF's totalled US$20.6 billion or nearly one-third of the total US$60 billion that SWFs made in mergers and acquisitions (M&A) for the entire year 2007. SWFs accounted for 35% of world M&A activity in 2007, and 28% of all M&A in the US during January 2008, exceeding M&A activity from private equity buyouts, which fell in the last quarter of 2007, as the credit crunch unwound debt leveraging.
  • SWFs have fostered new alliances with private equity to avoid scrutiny. SWFs already account for approximately 10% of private equity investments globally and should grow further in the next few years.

The "Sovereign Wealth Fund Tracker," part of Global Insight's Sovereign Risk Service, provides in-depth analytical quarterly reports on SWF activity, including funding sources, evolving legal and policy environments affecting SW flows, and investment strategies, investment vehicles and specific mergers and acquisitions.



Click here to access Global Insight's release material (PDF)


For additional information feel free to contact:

For more information, please contact:
North America
Morgan Miller
morgan.miller@globalinsight.com
+1-212-884-9516

Europe
Marc Cohen
marc.cohen@globalinsight.com
+44-20-7452-5197

Asia
Reno Sio
reno.sio@globalinsight.com
+65 6430-6621


*** Note developments above provided in totality from Global Insights -- http://www.globalinsight.com/

Global Insight is a leading provider of intentional financial and economic information and analysis. Visit their website to sign up for the news letter and reports on topics such as SWF's, energy analysis, global macro economic conditions, and more.

Investors begin re-thinking oil positions in their portfolio's

http://www.todaysfinancialnews.com -- Quietly, hedge funds and company insiders are moving into position to profit from an imminent drop in oil prices. Find out where they invest.




http://www.todaysfinancialnews.com -- Despite temporary pullbacks, crude oil prices are again setting new historic record highs. But the beginnings of an alternate money flow are becoming visible.

Global trends worth watching

http://www.todaysfinancialnews.com -- Bill Patalon, one of the nation's top analytical business journalists, tell us where to invest -- even in this global economy.

"Follow the money."

Friday, July 18, 2008

South American Energy in focus

Venezuela's PdVSA Reports Successful Oil Drilling Ecuador

A slew of energy developments in a handful of countries in South America has made headlines in the past day or so. For starters Venezuela and Ecuador made headlines this morning once again... this time for successful drilling and exploration in the Amazonian region. The newly established supply of crude will eventually be sent to the new refinery being build on the pacific coast.

Click here to access the full story from Rigzone.



Petrobras' Production Soars 3.3% More in June


Petrobras’ average oil and natural gas production abroad was 218,117 barrels of oil equivalent per day (boed) in June, 8.1%.

Added to the volume lifted from the domestic fields, Petrobras’ total production in June set a monthly record, topping out at 2,421,155 barrels of oil equivalent, 3.3% more than a year ago and 2.3% higher than May 2008.

Click here to access the full story from Rigzone.



Arduous Process of getting the Camisea facilities in Peru up and running
- Wood Snag 3-Year Maintenance Contract for Camisea Facilities


The Camisea Project comprises the exploitation The San Martin and Cashiriari fields natural gas fields, the construction and operation of two pipelines, one for natural gas (NG) and one for natural gas liquids (NGL) and the distribution network for natural gas in Lima and Callao. The pipelines wiII make NG and NGL available for domestic consumption and for export.

Natural gas wiII be transported to the main consumption center in Lima, where it will be used for residential and industrial purposes and to generate electricity, that will then be distributed nationwide through Peru’s existing transmission infrastructure (click here to read more about the Camisea Project)

Wood Group Production Facilities has been awarded a three-year, performance-based contract by Pluspetrol Peru Corporation to provide integrated maintenance services for the Camisea facilities in Peru. The Camisea project includes the largest natural gas field in the region.

Click here to access the full story from Rigzone



Shell to invest $300m in search for oil and natural gas in Peru

Royal Dutch Shell is ready to invest as much as $300 million in exploring for oil and natural gas in Peruvian waters as part of a agreement with BPZ Energy, executives from the two companies said Thursday.

......................

In March, U.S.- and Peruvian-owned BPZ found an estimated 60 million barrels' worth of crude oil and 40 million cubic feet of natural gas in the same region off Peru's northern Pacific coast.

The accord announced Thursday calls for Shell to spend up to $300 million on exploration and - if reserves are found - exploitation of natural gas, while BPZ will put the same amount into searching for crude oil along with an additional $150 million to build an electric plant in the area.

Under the deal, BPZ will get 51.75 percent of any oil or gas produced and Shell will claim the rest.

Click here to access the full story from Rigzone



Geopark Grabs up Additional Petroleum Block in Chile


GeoPark Holdings Limited announced that the Ministry of Mining in Chile has awarded the Otway Block in southern Chile to a consortium consisting of GEOPARK (42%), Methanex Corporation of Canada (16%) and Wintershall Energia SA, a division of BASF Ag of Germany (42%).

The Otway Block is a large new attractive exploration area (5,992 square kilometers) located in the Magallanes region near GEOPARK's Fell Block operation in Chile. GEOPARK is the first and only private-sector oil and gas producer in Chile and the addition of the new Otway Block will further enhance GEOPARK's position as the premier private-sector oil and gas operator in Chile.

Click here to access a previous post in regard to GEOPARK's natural gas discoveries in the Magallanes Region -- published on South-South Cooperation on June 17th, 2008.

Click here
to access the full article from Rigzone



Colombia to create oil price stabilization fund

Colombia's government is creating an oil price stabilization fund (FEPC) that will be used to cushion domestic oil prices from unexpected rises on international markets, government news agency SNE reported.

Congress has approved the fund, which is included in the national development plan and must go to the president for final authorization. The finance ministry would administer the fund, which would receive financing from the existing oil stabilization fund (FAEP) owned by state oil company Ecopetrol.

Click here to access the full story from Rigzone





Ecuador, Venezuela agree to build biggest oil refinery in South America, and.... on the Pacific Coast!

Mercopress reports Rafael Correa, the Ecuadorian president, and Hugo Chavez, his Venezuelan counterpart, have entered into an agreement to build the biggest oil refinery on South America's Pacific coast.

Correa and Chavez

"Instead of having refineries in the United States, we decided to keep them here in our geopolitical context," Chavez said.

Chavez hopes to wean Venezuelan crude away from the US, where Venezuela currently runs seven refineries.

The joint 6.6 billion dollar project by state-run oil firms PDVSA, of Venezuela, and Petroecuador, of Ecuador, will refine 300,000 barrels of crude a day, saving Ecuador 3.0 billion dollars in oil imports a year, Correa said

Click here to access the full story from Mercopress

Thursday, July 17, 2008

Microfinance in focus: IDB to donate $4.3 billion to ACCION over the next 5 years -- ACCION's website now in Spanish

ACCION International Newsletter - July 17, 2008

The Inter-American Development Bank (IDB) has committed $4.3 million to ACCION over the next five years to extend microfinance into rural Latin America. Around the world, the rural poor – often among the most impoverished – are under-served by microfinance.

ACCION will work with five of its long-term partners in Latin America – Banco Ademi in the Dominican Republic, CREDIFE in Ecuador, Financiera FAMA in Nicaragua, FINAMERICA in Colombia and Mibanco in Peru – to overcome barriers and explore new technological and methodological solutions. The project will provide financial services and training to the rural poor that are less expensive, better tailored to the client and easy to replicate.


ACCION website now in Spanish! / ¡La página web de ACCION ahora en Español!
The ACCION International website is now available in Spanish, providing information to Spanish-speaking microfinance enthusiasts about our mission and clients served, as well as our partners, products and services. Visit www.accion.org/espanol to see the new site.



About ACCION

The mission of ACCION International is to give people the tools they need to work their way out of poverty. By providing microloans, business training and other financial services to poor men and women who start their own businesses, ACCION's partner lending organizations help people work their own way up the economic ladder, with dignity and pride. With just a little capital, people can grow their own businesses. They can earn enough to afford basics like running water, better food and schooling for their children.

In a world where three billion people live on less than $2 a day, it is not enough to help 1,000 or even 100,000 individuals. ACCIONs goal is to bring microfinance to tens of millions of people – enough to truly change the world. We know that there will never be enough donations to do this. That's why ACCION has created an anti-poverty strategy that is permanent and self-sustaining.

To read more about ACCION International visit there website - http://www.accion.org




Argentina in focus: Big shots on Wall Street pessimistic about the Argentine Economy

Mercopress published a story yesterday detailing the general outlook the big investments banks, analysts hold in regard to Argentina's economy.

The consensus among
Merrill Lynch, Barclay's and Credit Suisse is not pretty. All three firms are recommending their clients get rid of their assets in Argentine pesos, estimating that sooner or later the Argentina Central Bank will have to yield in the dispute over the US dollar in the local money market.

Bolsa de Comericio de Buenos Aires

According to a survey from Bloomberg, a majority of analysts believe the US dollar will be costing 3.20 Argentine pesos at the end of the year from its current 3.05.
But the main fear of analysts is a continuation of the current economic policies which could lead to a crisis “comparable to that of 2001/02”, when the Argentine economy melted, unless there is a massive correction of economic indexes (such as retail inflation), elimination of subsidies (mainly energy and transport) and increase in public utilities rates, among other issues to address.

Click here to read more on this story from
Mercopress

Jim Rogers comments on commodities (Bloomberg LP)... Amazing how this guy alone can cause the market to move

Jim Rogers on Bloomberg 2008.07.14

Wednesday, July 16, 2008

South South Cooperation in focus: Venezuela and Bolivia: energy joint venture

Petroandina, a joint enterprise formed by the Bolivian and Venezuelan state energy companies, plans to invest $883 million to finance oil and natural gas exploration and production in Bolivia, a top official said.

Energy Minister Carlos Villegas announced the figure Tuesday during a press conference to discuss Petroandina's operating contracts, which the Bolivian Congress is set to vote on shortly.

According to Villegas, Petroandina will invest $242.2 million in the western Andean province of La Paz and another $646.1 million in central and southern Bolivia...................

Click here to access the full article from Rigzone

Commodities in focus: Lead and Zinc producers cut production in China to help slumping prices

With commodity prices heating up around the world, emerging markets have finally began to show signs of slowing demand. The latest metals making headlines are two primary base metals; zinc and lead.

A meeting of 27 major Chinese Lead and Zinc producers took place in Shanghai yesterday. The producers agreed in Shanghai "the move would help improve the supply-demand relation so as to curb further price fall," as reported by the China Mining Association (CMA).

In Chinese yuan, the price of lead ingots has fallen 34% from 26,500 yuan/ton ($3,887 usd) to 16,500 yuan/ton ($2420 usd). Zinc ingots meanwhile have plummeted in price, falling by 53% from 33,360 yuan/ ton ($4,890 usd) to 15,650 yuan/ton ($2300 usd).

China's Nonferrous Metals Industry Association estimates domestic lead consumption shrank 50,000 tons in the period January-May, but stated new projects set to begin in Shaanxi, Hunan, Yunnan and Gansu provinces would help re-invigorate demand.

China has been expanding at such a rapid pace it was almost necessary for a price correction in commodities. Add to the recent trend of investing in commodities as a safe heaven or hedge against other currently more risky investments and you get a situation where commodity prices have risen beyond sustainable levels.

Despite China's robust economic growth and ever increasing demand for raw materials, Chinese demand alone is not enough to keep commodities at their current prices. However, as the largest contributor to global GDP in 2007, Chinese demand is a very important factor.

What to make of all this? A temporary correction in commodity prices at best... and by temporary I do mean a few months or a year at most. Zinc and lead will remain in high demand due to the fact a slowing global economy is not going to bring all projects in China or other emerging markets to a stand still. Second if prices continue to decline, supply will probably remain constrained because some miners will put off exploration or development of new mines due to lower prices which make them economically less viable. This will create a similar situation in the long term when demand recovers and the market realizes there is once again insufficient supply. Economics 101 teaches you when there are too many people chasing the same good, the price of the good will rise, and this will be the case with zinc and lead.

As commodity prices decline, China's miners and smelters may suffer, but government projects and domestic urbanization plans become cheaper. As noted above, prices have declined and new projects are being planned in certain provinces.

The provinces mentioned above are all relatively poor regions in China, lacking infrastructure and in desperate need of investment. Shaanxi is a poor region about 6 hours by bus from Beijing and is at the heart of coal production in China.

Yunnan is a province in South China which boarders Myanmar and is populated by over 20 of China's ethnic minority groups. One of China's strategies for keeping ethnic minorities happy is to ensure the regions where they live experience the benefits of China's economic growth. In recent years Yunnan has also emerged as a popular tourist destination. As the influx of both domestic and foreign tourists increase, so will investments in infrastructure and services.

Gansu is a province in western China and is home to a wide variety natural resources. There is extensive mining in iron, lead, nickel, zinc and other metals. Additionally, two of China's most important oil fields, Yumen and Changqing are located in this region.

Hunan province is located along the Yangtze River and is home to the industrial cities of Changsha, Zhuzhou and Xiangtan. All three cities are major centers of production which account for roughly 40% of the regions economic growth. Currently the three cities are in major need of improvements in their infrastructure and will need to import in the materials necessary to furnish the improvements because of a severe lack in local resources.

If you've been following China's development plan since the 90's, it is clear the central government has chosen a selective development strategy-- focusing on important economic zones and leaving others behind. This is all very important because it shows capacity for growth and development in China remain. This is especially true for the regions described above which until recently have been over-shadowed by the wealthy coastal regions where China's export and manufacturing centers are focused.

The recent earthquake in Sichuan Province, rising disparities between Eastern China and Western China, and the need alleviate pressure on major city centers will prompt Beijing to begin paying more attention to the regions it previously ignored. When this happens, Chinese commodity demand will rise and so will prices.

Zinc and Lead began their bull markets in late 2005 / early 2006. At their respective peaks, both had more than doubled in price in just a few years time-- see LME price charts from 2002 - 2008 below.


London Metals Exchange: Zinc ($US/tonne)





London Metals Exchange: Lead ($US/tonne)

Despite being primary metals used as a economic input in production of goods and services, many industry experts felt the rise in Zinc and Lead prices in late 2005 was uncalled for. The two metals had relatively static performance from 2000-2005. However, by late 2005, it seemed the world had suddenly realized surging demand from Asia would create a new demand dynamic, causing prices to rise.

Zinc and Lead suddenly had become hot commodities. In 2003, Peru, the world's number 3 producer of lead and zinc, exported $201.3 million worth of Lead and $528.7 million worth of Zinc. By 2005, Lead exports had risen $312 million and Zinc exports to $805 million.

Below I have included two charts of the major sectors in which Lead and Zinc are used in.






As readers can see both metals are used in a variety of industries. Even if Lead and Zinc have a tough 2008, demand for the base metals will not fade. Consider this correction an overdue dose of medicine to cool a surge in prices which in reality was far from justified.

Tuesday, July 15, 2008

International Finance - China Play - China 3C Group (CHCG.OB)

China 3C Group (CHCG.OB), a stock pick which I mentioned briefly in a previous post on July 25th (click here), recently released their preliminary second quarter 2008 financial results.

Net sales for the second quarter 2008 is expected to be in the range of $81.5-$82.5 million, which would be a 26%-28% increase compared to the prior year second quarter results of $64.5 million.

Net income for the second quarter 2008 is expected to be in the range of $7.3-$7.4 million, which would be a 33%-35% increase compared to the prior year second quarter results of $5.5 million. Second quarter 2008 diluted earnings per share is expected to be approximately $0.14 compared to $0.10 in the same period last year.


Mr. Zhenggang Wang, Chairman and Chief Executive Officer commented, “We are very pleased with our preliminary second quarter results, which exceeded our internal plan. Our sales growth benefitted from a net increase in new doors, healthy demand for electronic products in most of our key categories, a broader product selection from the prior year period as well as from certain, new consumer-oriented programs that focus on service and increasing awareness of our expanding portfolio of brands.


Our net income improved largely due to increased sales results, the exit from unproductive doors as well as a lower tax rate in the second quarter compared to the prior year. We also anticipate a sequential improvement in gross margin for the second quarter. Overall, we are encouraged with our second quarter performance and continue to work aggressively to further enhance our position in China’s electronic consumer industry,” concluded Wang.



CHCG.OB as of close on July 15 - 2008

This stock has in no shape or form been the best preformer in my portoflio, as a matter a fact it's been the worst preforming equity I've owned in the past year and a half. Nevertheless, I have remained patient and vigilent with this company knowing that when global financial markets finally begin to recover and Chinese equities and markets pick up once again... the mainstream investment community will once again take note China 3C Group.

CHCG is a sort of mini version of Best Buy, operating small electronic retail stores within larger retailers of China. CHCG currently has over 900 stores within stores in operation, and hopes with their recently agreement with Yongle, they will achieve their long time goal of having 1,000 stores in operation. Some of its retail partners include Carrefour (French), Bestbuy (US), Wal-Mart (US), Lotour (Chinese), Yongle (Chinese) among others.

*** Click on the links above to access articles describing CHCG's agreement with each particular company.

2008 was undoubebly a tough year for all equities. CHCH was no exception. After receiving a great deal of hype from articles published in the Wall Street Journal, Barrons and other financial publications; the stock failed to ever IPO and saw its share price plummit from around $8/ per share in the summer of 2007, to under $2/ per share this year.

I feel the stock is unfairly priced, with the market pricing in too high a risk factor on the equity. The company has virtually no liabailities (that means little or no debt), it slowed down the pace of opening its long time goal of 1000 + stores in order to consolidate its current operations, closing various stores throughout 2008 and focusing its energies on the more profitable operations.

CHCG also receives revenue from its distributions services to larger retails, which it is highly acredited for doing efficiently. With the backing of many well known foreign retailers, big names in China and continued profits this equity looks like a good play to me.

Although I don't condone any action on the part of readers, this is a micro-cap, speculative investment which could continue to preform badly if markets overall continue this bear market, which has been one of the major reasons this equity has failed this past year.

Energy in focus: Washington Post reports Russia has missed oil targets on many of its energy projects

Russia's energy projects, all of which have foreign participation, failed to achieve their oil production targets in 2007, the state auditor said. The projects were ExxonMobil's Sakhalin-I, Gazprom's Sakhalin-II in the Far East and Total's Kharyaga, Russia's Audit Chamber said. All of them operate under production-sharing agreements, or PSAs.

Russia devised PSAs in the 1990s to lure foreign investment into some of its more difficult and inaccessible oil fields. Under PSAs, companies were able to recoup investment costs before sharing profits with the Kremlin. But such contracts fell out of favor with growing resource nationalism.

Click here to access the full article from the Washington Post

Energy in focus: China's energy consumption per unit of GDP continues to fall reports Xinhua

BEIJING, July 14 (Xinhua) -- China's energy consumption per unit of gross domestic product (GDP) value continued to fall last year, as a result of the country's efforts to make energy use more efficient and cut pollution, official figures show.

The energy consumption for every 10,000 yuan (1,429 U.S. dollars) of China's GDP stood at 1.16 tonnes of coal equivalent in2007, down 3.66 percent from the year 2006, the National Bureau of Statistics, National Development and Reform Commission (NDRC) and National Energy Administration under the NDRC said in a statement Monday.

................................

Beijing saw the energy use per unit of GDP shrink 6.04 percent last year, the biggest drop among all provincial jurisdictions, as the Chinese capital strove for energy efficiency and clean environment ahead of the Olympics.

China has set a target of reducing energy consumption per unit of GDP by 20 percent and major pollutant emission by 10 percent by the year 2010 from the levels in 2005.

Click here to access the full article from Xinhua News


Visibility improving in Beijing... Blue skys (semi) for 4 days running

July 15, 2008 -- 23 Days to go until the opening ceremony of the Olympics -- Reuters






July 8, 2008 -- One Month to go until the opening ceremony of the Olympics -- Reuters






Monday, July 14, 2008

Singapore to open a new bourse reports Reuters

SINGAPORE, July 9 (Reuters) - India's Financial Technologies Group, operator of India's top commodities bourse, plans to launch a similar exchange in Singapore early next year, it said on Wednesday.

The Singapore Mercantile Exchange will provide a platform for futures and options trading on precious metals, base metals, energy, agricultural commodities, currency pairs, carbon credits and commodity indices, the group said in a statement. .................

Click here to access the full story from Reuters.com

Chavez to expand Venezuela's oil pact

Venezuelan President Hugo Chavez is flexing the country's petroleum muscle once again, stating he seeks to expand Venezuela's oil pact to poor nations in the Caribbean.

Chavez stated "Nations taking part in Petrocaribe initiative will now be required to pay just 40% of the bill within 90 days - down from the current 50%. The rest can be paid over the next 25 years at a fixed rate of 1% percent as long as oil prices are above US$100 a barrel.

"That could compensate for the horrible curve of the jump in oil prices," Chavez said. He added that 70 percent of payments may be deferred if oil reaches US$150 a barrel.



AP Photo

In this photo released by Miraflores Press Office, Venezuela's President Hugo Chavez speaks during the opening ceremony of the Petrocaribe Summit in Maracaibo, Venezuela, Sunday, July 13, 2008. President Hugo Chavez sought to expand an oil-supply pact that is delivering fuel to 17 nations, calling it a tool against poverty and dismissing opponents' accusations that he is giving away Venezuela's oil wealth.


Sounds really generous to me... Venezuela is unarguably of the wealthier Caribbean nations in the
Caribbean, however it does remain a country with many economic problems. Calculating if such a long-term donation is even feasible is difficult to do. So many variables could arise in the next 25 years which could cause the cash flow from its oil accounts receivable ledger simply stop...

New government could come into power who don't honor the repayment. Alternative energy could leap frog and bring the price of oil down substantially. A new government could come into power in Venezuela and re-arrange the terms, leaving small Caribbean contries with little bargaining power against Venezuela: their provider of energy and also regional political and economic power.

No less the gesture as it stands is a nice one, and in reality there is just so much domestic investment that is possible given Venezuela's limited FDI and internal domestic capacities. Oil drills may be in shortage, but so is the industry as a whole since the PDVSA strikes. Given the set backs, PDVSA remains a relatively vibrant operation, turns a profit and even manages to give Chavez some diplomatic barganing chips by making Venezuela into a gracious, oil rich country which cares about its region and the poor of world... unlike the United States, which is a underlying point Chavez hopes to make through such efforts.


Sunday, July 13, 2008

Update: Lula's in South East Asia pt. 2 -- Indonesia and Brazil to cooperate in biofuels

Brazilian Present Luiz Inacio Lula da Silva began his tour of South East Asia in Vietnam. He met with his counterpart Nguyen Minh Triet and the two discussed promoting stronger trade ties between their respective counries (click here to view original Vietnam piece from July 10).

Lula has moved onto his second destination, Indonesia, where he also made a good impression with with his Indonesian counter-part, President Susilo Bambang Yudhoyono.

Brazilian and Indonesian leaders agreed on Saturday the two nations could mutually benefit if they developed a framework in which to cooperate on biofuels. Brazil and Indonesia are home to much of the world's remaining tropical rain forest, which at the moment is shrinking due to expropriation, illegal timber operations and government/ private sector expansion--- many times into biofuels.

The two nations signed an agreement for Indonesia to send experts to Brazil to study its biofuel developments, said Indonesian President Susilo Bambang Yudhoyono.

"Brazil has been successful developing bioethanol and of course Indonesia can learn from the research and development," Yudhoyono stated at a news conference.

Both countries are big biofuel producers-- Brazil produces large amount of pure ethanol for both domestic use and export. Brazil does so through tapping into its huge sugar cane sector, mixing a sugar cane based fuel with gasoline to make a clean ethanol it fuels its automobiles with.

Indonesia, a former member of the OPEC cartel, is also the world biggest palm oil producer. Indonesia once mainted a surplus of oil, allowing it to export its surplus abroad in exchange for hard currency which it used to subsidize much of its state spending, and maintain price controls on goods ranging from food to gasoline.

Indonesia is now a net importer of crude oil. The country has naturally began exploring alternative energy options, one of which is to encourperate biofuel made from palm oil. The government hopes this will at least partially help to compensate for both increasing energy demand in Indonesia as population rises and society modernizes and also for its own decreasing domestic production.

Indonesia's government has set a goal of making as many petroleum based products as possible into a new blend petroleum biodiesal blend. The blend will use 2.5% biodiesal produced form domestic palm oil.

With the food crisis in full swing (read previous post on food crisis), many critisize the biofuel sector for being responsible for rising prices, since those crops otherwise would go to markets instead of factories to be made into fuel... Maybe, but that's over simplyfying the situation and leaving out the United States which has probably hurt poor people's diet much more substantially due to its use of corn to produce its ethanol.

It also probably angers a country like Brazil. Brazil is home to the most fertile land of any country on the planet, yet its agriculture industry is inhibited because of agricultural subsidies from the developed world-- a point Lula continuously tries to make well known.

Another factor Indonesia has been keep to point out itself is the fact richer nations should also be responsible for their own forests (Canada and the US in particular), which also account for large stores of carbon and act like sponges to soak up greenhouse gases just as tropical forests do.

"No one wants to preserve our forests more than we ourselves but the most polluting countries they must start to discuss more seriously how to cut greenhouse gas emissions," said Lula on Saturday to Indonesian Press.

Click here to access a article on this topic from the Economictimes.indiatimes.com

Although originally questioned for being a bit too far to left for the likings of the United States, Lula and his administration have prooven to be quite good at managing the macro economy. Add to that the incredible strides Lula has made in the international areana.

He has successfully promoted Brazil as the leader of the fight between developing contries and developed counries over farm subsidies.

His presidency has successfully brought inflation under control and made the Brazilian Real one of the best preforming currencies against the US $ in the world as of recent.

He has forged strategic ties with a wealth of countries which Brazil previously had little or no exchange with-- Vietnam and Indonesia being two recent examples.

Brazil has joined the ranks of China, India and Russia in what is now referred to as the BRIC contries-- the largest and potentially most influential developing countries in the world.

The list goes on... note however, there also exist many scandels, political mishaps and growing problems; such as the growing income disparity and extremly high crime rates in its major cities. No less Brazil has not done so bad.

China to dismantle some price controls -- CNBC video discussing the "real price" in China

Video found from fellow blog -- All Roads Lead to China.

Click here
for direct access to original post.




Recent CNBC interview where I discuss the removal of many of China's subsidies and the potential for factory closures during the months surrounding the 2008 Beijing Games.

The Chinese Economy in focus -- developments on growing agricultural deficit, slowing auto imports, and lower than expected export growth...

China's farm produce trade deficit up 14.3 times in first five months -- reports Xinhua

BEIJING, July 13 (Xinhua) -- China's trade deficit in agricultural products rocketed 14.3 times on the year-earlier level to 7.57 billion U.S. dollars in the first five months of this year, sources with the Ministry of Agriculture said on Sunday.
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The five months saw the nation's net cereal exports decline drastically and trade deficit in animal by-products increase rapidly.

Between January and May, China exported 1.19 million tons of cereals, down 76.6 percent from the year-earlier level, but imported 911,000 tons, up 14.2 percent. The net exports stood at 276,000 tons, down 93.5 percent. .....................................

Click here to access the full article from Xinhua


China's auto import growth slows down in first five months

BEIJING, July 13 (Xinhua) -- Growth in China's auto imports slowed down in the first five months of this year, thanks largely to a compulsory coding system for standardizing vehicle purchase from abroad, according to General Administration of Customs. ........................................

Upon the tightened control, China's auto imports in April declined 7.5 percent from March level to 37,000 units, and in May, went further down 18 percent from April level to 31,000 units.

The customs said between January and May, China bought 171,000 motor vehicles from abroad, a growth of 59 percent on the same period of last year. The arrivals were valued at 6.26 billion U.S. dollars, up 74.9 percent. The import growth rate, however, was 15.7 percentage points lower than the first quarter level.

The total imports included 71,000 motor vehicles bought from Japan, up 100 percent, and 57,000 from the European Union, up 54 percent. The growth rates were 19 percentage points and 13 percentage points, respectively, lower than the first quarter level. ......................................

Click here to access the full article from Xinhua


Shock as China's Export Growth Falls John Garnaut Asia Economics Correspondent

CHINESE export growth has slowed to its lowest rate in at least five years, raising new risks for the world economy.

China's export volumes grew just 7 per cent in the year to June - down from sustained growth rates above 20 per cent before the middle of last year - and they are likely to fall further as key markets in the United States and Europe continue to deteriorate.

"It's signaling that by the end of the year we'll have zero export growth," said Stephen Green, an economist with Standard Chartered Bank in Shanghai. ...............................

Click here to access the full article from the Business Day Australia

Saturday, July 12, 2008

Flooding continues in China... (again)

CPM Group says global molybdenum supply deficits will grow in 2009 and 2010

In its latest molybdenum market study, CPM says tight credit market s and other developments have caused molybdenum’s forward supply curve to shift over the past year. Author: Dorothy Kosich
Posted: Thursday , 10 Jul 2008

Commodities research firm CPM Group says financing for molybdenum mining projects "has become an uphill battle for some of the new primary and by-product producers."

Meanwhile, the delays in bring new primary moly or copper/moly mining projects on line have exacerbated the moly supply deficits forecast for 2009 and 2010, according to CPM's study, The Sustainability of Recent Molybdenum Prices, 2008


"These higher production costs-combined with robust demand in the energy industry, narrow inventory levels, and expectations that molybdenum supplies will not exceed demand on a sustained basis are expected to boost the floor prices of molybdenum," according to a news release issued by CPM Wednesday.

"Demand is not only growing in the principal end uses of molybdenum, but in newer industries that are seeking to utilize molybdenum's significant alloying properties," according to CPM.

..........................

Click here to access the fully article from Mineweb.com

Brazil to Sell Oil Fields at Auction

Brazil will auction oil fields, except for the newly discovered pre-salt areas, authorities said Thursday.



Brazilian Basins

Brazil's National Agency of Petroleum, Natural Gas and Biofuels, a regulatory department for the industry sectors concerning the natural resources, will restart the eighth round of auctions of oil fields, which had been suspended by a court dispute, Minister of Mines and Energy Edison Lobao said.

........................

Click here to access the full article provided by Rigzone. Copyright (c) Xinhua News, 2008

Venezuela and Colombia make up and begin discussing Orinoco Oil Projects

Venezuela and Colombia are set to discuss possible joint development projects in the oil rich Orinoco belt when the presidents of both countries meet Friday, the Colombian ambassador to Venezuela,
Fernando Marin, said.

"The Venezuelan government has told us that it's important for them to have Colombian presence in the Orinoco belt. It's something that we're eager t
o talk about," Marin told Dow Jones Newswires.

........................


Allowing for Colombia's presence in the Orinoco belt would be a surprising gesture by Venezuela, given the recent diplomatic disputes between both countries, which escalated to threats of war in March. Chavez has threatened on several occasions to shut imports from Colombia.


Orinoco Heavy Oil Belt, Venezuela

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Click here access the full article. Provided by Rigzone and Copyright (c) 2008 Dow Jones & company, Inc.

China's crude oil import volume up 11%

China's Crude Oil Import Volume Up 11%

Crude imports stood at 90.53 million tons, the General Administration of Customs said on Thursday. The growth rate was down 0.2 percentage points from last year. The imports were valued at 64.98 billion U.S. dollars, up 85.8 percent, as world prices surged. Import prices hit a record high of 849.10 U.S. dollars per ton in June. Angola, Saudi Arabia, and Iran were the top three oil suppliers. China also imported 21.01 million tons of refined oil products in the first half, up 16.4 percent year-on-year.
Xinhua News Agency - China, the world's second-largest energy consumer, imported 11 percent more crude oil in the first half of 2008 than in the year-earlier period.


...............................

Click here
to view full article from Xinhua news courtesey of Oilworks.com

Friday, July 11, 2008

China, Mexico etablish strategic dialogue mechanism reports Xinhua News

BEIJING, July 11 (Xinhua) -- China and Mexico announced the establishment of a strategic dialogue mechanism on Friday during talks between Chinese President Hu Jintao and his Mexican counterpart Felipe Calderon Hinojosa.

..................................
Chinese President Hu Jintao (R) shakes hands with Mexican President Felipe Calderon Hinojosa during the welcoming ceremony Hu hosts for him at the Great Hall of the People in Beijing, capital of China, July 11, 2008. (Xinhua Photo)
...................................

During the talks, Hu put forward a four-point proposal to cement Sino-Mexican relations:

--Strengthening political dialogue, maintaining high-level contact, and realizing the action plan from 2006 to 2010 to promote strategic partnership;

--Boosting a win-win economic cooperation. The Chinese government encourages its enterprises to invest in Mexico's infrastructure including ports, roads, and hydroelectric stations, and supports cooperation on mining, telecommunication, agriculture and the fishing industry;

--Pushing personnel exchanges in the fields of culture, education, traditional medicine and social development;

--Promoting multilateral cooperation and consultation on major international affairs so as to safeguard the legal rights of developing countries..................

Click here to access the full article from Xinhua News

Aluminum price closes at US$1.48/lb on the London Metals Exchange (LME)

Aluminum prices are soaring... That is obvious. What is interesting is that despite a near 40% rise since the beginning of 2008, record high energy costs, a ever worsening credit / mortgage crisis, a sinking US$ both the aggregate demand and supply of aluminum remain strong.

Aluminum is a relatively labor and energy intensive metal to produce in a pure form which is suitable for use in relatively complex industry and production lines. Record high energy prices of recent have made it so that Aluminum is naturally more expensive to produce.

Second, global efforts (if you go as far to call it an "effort) to combat climate change has also caused the price of producing aluminum to rise. Aluminum producers must account for any damaging effects production causes and either.

Last, and arguably the most significant is the seemingly insatiable demand stemming from the developing world, which despite a 40% rise in the price of Aluminum this year, demand has only continued to increase.

A little outdated perhaps, the chart below indicates by 2005 China's aluminum consumption had grown to represent roughly 23% of global demand, surpassing the United States.


The nice pie chart below breaks down global production of aluminum. The BRIC countries (Brazil, Russia, India and China) alone in 2006 accounted for 45% of total aluminum production. Developing countries have emerged as a signifcant force on both the supply and demand sides of aluminum trade.



It is no wonder, even with record high prices there appears to be little reasons to believe in a price correction or slow down in demand in the near or long term.

Click here to read Business News America's article on rising aluminum prices.

Thursday, July 10, 2008

Commodities in Focus: Peru: Gold Mining --- China: Iron Ore Imports

South African gold miner, Gold Fields Considers expansion of Peruvian Mine

South Africa`s Gold Fields will consider doubling the size of its US$450 million Cerro Corona copper and gold project in Peru once the mine reaches full output in December, it was reported on Thursday.

Juan Luis Kruger, the head of Gold Fields` South American operations, told South Africa`s Business Report, the company`s equivalent reserves in Peru, which include gold and copper-rich ore, could reach as much as 5.7Moz, up from 5Moz, due to higher metal prices. ...............

Click here to access the full story from The Mining-journal.com.



China Iron Ore Imports rise 22% in first half

China, the world`s top steel producer and consumer, imported 230Mt tonnes of iron ore in the first half, up 22.5% from a year earlier, and analysts said the momentum is not likely to ease in the second half.

Most iron ore mines in northern Chinese provinces, which account for the bulk of domestic output, have halted production ahead of the August Beijing Olympics, forcing local steel mills to source more imported ores, they said.

"It is very likely that some steel makers in northern China are building up stocks for their production during the Olympics period," said Macquarie Bank analyst, Henry Liu. ..................

Click here
to access the full story from
The Mining-journal.com.



China... ready to show off the results of Beijing's pre-Olympic construction boom

Photos and descriptions obtains from Xinhua, China's state media.


Beijing's Olympic "Forest Park"














Photo taken on July 6, 2008 shows courtyard houses "knitted" with pipes at the man-made sinkage square in the Olympic Forest Park in Beijing, capital of China. The sinkage square is dubbed as "palace under ground", or "the corridor for traditional Chinese arts", which has its seven "exhibition courtyards" like ancient-styled Chinese palace gate, booth, chime, red walls in line, displaying traditional Chinese culture and arts to athletes and visitors from around the world. (Xinhua Photo)



China Central Television headquarter building



China Millennium Monument-Great Altar



Terminal 3 -- Beijing Capital International Airport



National Center for the Performing Arts