Capital Fund International

​The pan-European Stoxx 600 fell by 1.4% in early trade, with basic resources plunging 3.5% to lead losses as all sectors and major bourses traded firmly in negative territory.


Chinese officials have now confirmed more than 2,700 cases of the new strain of coronavirus, which originated in the city of Wuhan, with the death toll rising to 80 and 461 people in critical condition. The virus has now been detected in a host of other countries in Asia and beyond, including the U.S., France, Australia and Canada.

Traditional safe-haven assets such as gold and the Japanese yen surged as investors sought shelter from the potential economic impact, with the specter of the SARS crisis of 2003 hanging over markets.

Most Asian markets remain closed on Monday for the Lunar New Year, but Japan’s Nikkei 225 was down by around 1.83%.

Back in Europe, Italy’s right-wing Lega party has failed in its bid to oust the center-left Democratic Party (PD) from its northern stronghold of Emilia-Romagna, falling short in a closely-watched regional election on Sunday.

In corporate news, Reuters reported on Monday, citing sources, that the Swiss Financial Market Supervisory Authority (FINMA) is looking into the role of the Credit Suisse board in the lender’s recent spying scandal.

Stocks on the move

Travel stocks took a significant hit from coronavirus fears in early trade, with LufthansaeasyJet and Air France KLM all falling by more than 4.5%.

Britain’s Tullow Oil slipped 5.2% to the bottom of the European benchmark as oil prices plunged, while luxury fashion house Burberry fell 5.2%.

There were few success stories in the Stoxx 600, with French pharmaceutical company Ipsen adding 2% to lead the benchmark after shedding a quarter of its value on Friday due to the pausing of a key drug trial.

Controversial Philippine president Rodrigo Duterte has said his country seeks to further boost its alliances with Russia and China, particularly on trade and commerce, CNN reports.

“And the economics, I’m veering towards so many… I’d like to open new fronts with Russia (and) with China,” Duterte said in an interview with Kremlin mouthpiece RT on Friday.

“We have increased in trade and commerce. It’s robust. And maybe if I could start trading with Russia it would be good, it would be that fine,” he added.

The President renewed his intent to forge closer ties with Russia and China, as he praised the two countries for “respecting the sovereignty of the Philippines”.

He made the remarks, as he expressed dismay over the supposed failure of the United States, a long-time ally of the Philippines, to respect the country’s sovereignty.

“(The U.S.) continues to look at us as vassal state because we’re under Americans for 50 years and they lived off the fat of the land before we got our independence. We went to war against them. So if I cannot get a credible posture from the Americans, I can get it from the Russian and the Chinese government(s), it’s because they respect the sovereignty of the country, which America is totally lacking,” he said.

“I mean, America is not the Philippines and the Philippines is not America. It is not that way anymore. And I refuse to dovetail under American foreign policy. They’re always antagonizing the Chinese, and so with the Philippines,” Duterte added.

The president explained that the plan to purchase military equipment from Russia has been delayed due to budget constraints.

“There’s always not enough to go around with… Just because Russia is a friend, it doesn’t follow that we abscond or do not pay our debts,” Duterte said.

“But we have placed the orders now — 12 military helicopters, cargo choppers,” he said.

Last year, the Armed Forces of the Philippines said it was considering buying 16 chopper units as well as arms from Russia as part of its modernization program, which Duterte wants completed before his term ends in 2023.

Germany will pay its utility companies billions of euros to speed up the shutdown of their coal-fired power plants as part of the country’s efforts to fight climate crisis, the government has said.

The agreement reached between federal ministers and representatives of four coalmining states removes a key hurdle in Germany’s plan to curb greenhouse gas emissions over the coming decades.

Some regions, particularly in the less prosperous east, are heavily dependent on mining lignite, or brown coal. Together with imported bituminous – or black – coal it provides about a third of Germany’s electricity needs but is also responsible for a big share of the country’s carbon emissions.

The finance minister, Olaf Scholz, said that operators of heavily polluting coal-fired power plants in western Germany will receive €2.6bn (£2.2bn) in compensation for switching them off early, while €1.75bn will go to those with plants in the east.

RWE, Germany’s biggest power producer, said it would cut some 6,000 jobs, or nearly a third of its current workforce, by 2030 as the country phases out brown coal as an energy source. It said the compensation offered was less than the €3.5bn hit it estimated it would take, even excluding the expected loss of profits. However, the deal pushed up RWE’s share price by 2%, their highest level in five years.

The compensation for the utilities is on top of €40bn that the government has already promised to coalmining regions to soften the economic blow of abandoning the fossil fuel.

The government said reviews will be carried out in 2026 and 2029 to determine whether Germany can exit coal-fired electricity generation in 2035, three years before the final deadline.

Environmental campaigners criticised the decision, though, noting that the agreement will still mean a new coal-fired plant – Datteln 4 – goes online this year and allow for the expansion of the Garzweiler opencast mine in western Germany, although a nearby forest that has been the target of long-running protests will be spared.

“Australia’s forests are burning, millions of people are demonstrating for climate protection and the German government is clearing the way for a new coal power plant,” said Martin Kaiser, the managing director of Greenpeace Germany.

“Nothing shows more clearly than Datteln 4 that this government can’t find an answer to the climate crisis.

“Chancellor [Angela] Merkel has missed a chance today to provide companies with long-term planning safety and to send a signal that Germany is reacting appropriately to the climate crisis.”

Eric Schweitzer, who heads the Association of German Chambers of Commerce and Industry, said a key question is how the electricity currently coming from coal-fired power plants will be replaced. The government has set a target of generating 65% of Germany’s electricity from renewable sources by 2030.

The environment minister, Svenja Schulze, acknowledged that Germany will need a “massive expansion of wind and solar energy” as the country is also in the process of exiting atomic power. The last nuclear reactor is set to go offline at the end of 2022.

“We are the first country that is exiting nuclear and coal power on a binding basis and this is an important international signal that we are sending,” she said of Thursday’s agreement.

The head of Germany’s main industrial lobby group, BDI, urged the government not to wait until 2026 – three years after the shutdown of the last nuclear plant – to review the measures.

However, Altmaier, the economy minister, said that while there would less “excess production” in Germany in the future, “we are very sure that we can ensure sufficient electricity supply for business but also for private consumers”.

More mainland Chinese developers will return to the Hong Kong land market as it becomes easier to outbid their local rivals who are holding back amid the city’s gloomy economic outlook, say industry experts.

They have already won three government tenders for sites in the current financial year, without having to fork out the eye-watering sums they became known for a few years ago.

Kaiser Group Holdings, Citic Pacific and a joint venture between China Resources Land and Poly Property secured three residential plots in Tuen Mun, Tai Hang and Kai Tak, the site of the city’s former international airport, for a total of HK$19.6 billion (US$2.52 billion). That accounted for 18 per cent of the HK$110.07 billion generated by land revenue between April 1 and January 12.

“They have been able to defeat local property giants, which have turned more cautious about the market outlook. This provides an opportunity for mainland firms to win in the government tenders,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal.

 Citi Pacific’s HK$3.2 billion winning bid for a luxury residential site in Tai Hang, southeast of Causeway Bay, on December 18 was just 4.6 per cent higher than the next highest bid, according to the Lands Department. The government started to reveal all the unsuccessful bids anonymously to enhance transparency in March 2018.
Last summer, China Resources Land and Poly Property won a residential site in Kai Tak for HK$12.9 million, just 3.1 per cent above the second-placed bid of HK$12.5 billion. The latest trend is in stark contrast to 2016 when mainland builders paid jaw-dropping prices for government land, pushing prices to record highs.

In November of that year, HNA Group, once China’s most aggressive overseas buyers, shocked the market when it won a residential site in Kai Tak for HK$8.84 billion, or HK$13,500 per square foot, a new record for the area. The winning bid was 120 per cent higher than the HK$6,101 per sq ft paid by Wheelock Properties in the previous land tender, in 2014.

HNA won another three residential plots in Kai Tak, raising its total investment to HK$27.2 billion in the Hong Kong land market in just four months.

A year later, the financially troubled conglomerate was forced to sell all four parcels to local builders Henderson Land Development and Wheelock for a total of HK$29.16 billion as it rushed to pay off debt. HNA made a profit of HK$1.96 billion before interest expenses from the four sales.

Chinese investment in Hong Kong’s commercial property tumbled 251 per cent to HK$8.5 billion last year from 2018 after peaking at HK$35.7 billion in 2017, according to data from CBRE.

“The drop in overall investment volume, including by Chinese buyers, in 2019 is a combined result of mounting economic uncertainties, weakening demand [from homebuyers and shaky rents across major commercial real estate sectors. Chinese capital was not only less active in Hong Kong, but also on a global basis, because of tightened capital controls and yuan depreciation,” said CBRE.


Chinese developers are still actively bidding for land sold by Hong Kong government tender, said Reeves Yan, CBRE Hong Kong’s executive director for capital markets.

“Mainland builders’ usual business, like developing residential projects still receives support from central government,” he said.

Russia and India may team up to construct nuclear power plants in Africa and the Middle East, building on their current experiences in Bangladesh, India’s ambassador to Russia said last week, according to RIA Novosti.

“There are also good prospects for cooperation of Russia and India in nuclear energy in third countries,” Ambassador Venkatesh Varma told the news agency.

“We are already working under the scheme in Bangladesh,” Varma added, referring to the current construction of the country’s first nuclear power plant, named Rooppur. “Now Russia is also pretty active in the construction of nuclear power plants in the Middle East and Africa. That opens a new pathway of cooperation for us.”

Varma believes the two sides could also launch projects in Africa using the experience they gained from joint work on Rooppur, which is being built by Russia’s state nuclear energy corporation Rosatom and costing over $13 billion.

“Russia already has agreements in this field with a number of African countries,” Varma said. “Ethiopia is one of them, and there are some countries in the Middle East.”

“It will be Russian projects but with Indian cooperation. The discussions are still at a preliminary stage, but we hope that this will be a new area of cooperation. It is related to the success of the Indo-Russian cooperation in Bangladesh,” Varma added.

The first two units at Rooppur is scheduled for commissioning in 2023, while the second unit is expected to start operations the following year.

As one of the world’s largest producers of nuclear energy, Russia is a key partner for India, whose relationship with the post-Soviet country dates to the 1960s. The first jointly constructed plant was Kudankulam in the southern Indian state of Tamil Nadu, which has two 1,000-megawatt (MW) pressurized water reactor units based on Russian technology.

The first part of a batch of Norwegian oil – about 3.5 thousand tons – was delivered to the Naftan refinery in Belarus, TASS reported.

“A train of 59 tanks with a total volume of about 3.5 thousand tons arrived from Klaipeda port by rail on Sunday to the Novopolotsk station. The entire batch of Norwegian oil (more than 80 thousand tons – approx., according to TASS) delivered by the Breiviken vessel, should arrive at the enterprise within the next two weeks,” said the representative of the concern.

According to the Vestnik Naftana newspaper, the train arrived from Lithuania to Novopolotsk at 08:10 a.m., and at 11:30 a train began to be delivered to the overpass for oil discharge.

According to Naftan CEO Aleksandr Demidov, the quality of Johan Sverdrup Norwegian oil is close to the quality of Russian Urals oil.

“There are significant advantages. Johan Sverdrup oil has a higher yield of light oil products, respectively, less residual fuel oil. Moreover, North Sea black gold has almost two times less sulfur. This figure affects the process, environmental aspects,” he told Vestnik Naftana, “noting that the potential of Johan Sverdrup is higher than that of Urals.

Demidov recalled that over many years of history, Naftan has experience in the processing of various oils, including Venezuelan.

According to experts, loading Norwegian oil into tankers, transshipment in Klaipeda, and then transportation by rail leads to an increase in its cost by at least $ 100 per tonne compared to Russian.