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Indonesia will set up a state investment agency similar to Temasek
The parliament approved the creation of a state-owned investment vehicle that will oversee government investments in some the largest companies. It is similar to Singapore's Temasek investment arm. Soon after Prabowo Subito assumed office in October, the creation of Daya Anagata Nusantara Investment Management Agency (Danantara) was announced with the goal of improving performance and returns on state investments. Danantara will have an initial capital of at least 1,000 trillion Rupiah (61 billion dollars). Sufmi dasco Ahmad, deputy speaker to parliament, told reporters that it would take over the State-Owned Enterprises Ministry's holdings in all state-owned companies. State companies play a major role in Southeast Asia’s largest economy. In 2023, they had assets totaling 11,684.3 trillion Rupiah. Official data revealed that they paid 82.1 trillion Rupiah as dividends to the Finance Ministry in 2023. Erick Thohir, Minister of SOEs, told the parliament that Danantara was officially established and formed to consolidate and optimize the management and investment of state-owned enterprises. State companies include the leading banks Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia. They also include electricity utility PLN, miner MIND ID, energy company Pertamina, telco Telkom Indonesia and cement manufacturer Semen Indonesia. Danantara's goal is to emulate the success of Singapore-based Temasek. According to its website, Temasek had an investment portfolio worth $284 billion as of March last year and has returned 14% to shareholders since 1974. Danantara has not provided any details about its future plans. Danantara’s office has not responded to requests for comment. Toto Pranoto is a University of Indonesia lecturer and consultant who worked on the bill. He said that Danantara would set up two entities, a "superholding", which will manage state companies, and an investment company that will manage dividends and leverage assets. CreditSights' debt research company, Fitch Group, stated in a note published in January that if Danantara was able to consolidate SOEs efficiently and effectively, this would lead to better funding and operational improvements, as well as a better access on global markets. It also warned that the agency was susceptible to political interference. We see risks with the establishment of Danantara. These include potential political influence over the use of the fund, integration, and the influence of Danantara in the strategic direction for the SOE. This could affect investor confidence. Dasco, the deputy speaker of the House, said that Danantara's strong legal framework should alleviate investor concerns. $1 = 16,340 Rupiah (Reporting and editing by Martin Petty, John Mair, and Gayatri Sulaiman)
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Vietnam will soon talk with foreign partners about nuclear power plants
The government announced on Tuesday that Vietnam will be holding talks with foreign partners in this month to discuss projects for the development of its first two nuclear plants. The government announced in a press release that the state utility EVN, and the oil and gas company PetroVietnam would be the investors of the first two plants. According to state media, the government will discuss these projects with partners such as Russia, Japan and South Korea. Southeast Asia, a manufacturing hub in the region, wants to increase electricity supply to support its rapidly growing economy. It is focusing on cleaner energy. Vietnam approved its plans for the development of two nuclear power stations in 2009, but these were halted in 2016, following the Fukushima disaster in Japan, and due to budgetary constraints. The plants were to have a combined power of 4 gigawatts and be built in Ninh Thuan, a province located in central Vietnam, by Rosatom, a Russian company, and Japan Atomic Power Co. Vietnam wants to finish the construction of these plants by the end 2031.
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Austria's OMV reports FY profit in line, helped by the chemicals segment
The Austrian oil and Gas firm OMV reported a full-year adjusted operating result on Tuesday that was in line with expectations. A better performance from its chemicals division compensated for a weakness in the fuel, feedstock and energy segments. Vara Research's consensus estimate of 5,13 billion euros was roughly in line, as the Vienna-based firm reported a clean operational result of 5.14bn euros ($5.29bn), down 15% on an annual basis. Clean operating results are based on current costs of supply and exclude one-off items, short-term gains or losses and energy inventory holdings. OMV's chemical division is a key growth engine as the company moves away from fossil fuels. It produces chemicals that are used in car parts, gas and water pipes and medical syringes. The company expects the average Brent crude oil price in 2025 to be $75 per barrel and the average realized natural gas prices to be 35 euros per megawatt hour. By 2024, Brent crude oil average price will be $80.8 per barrel. The average price of natural gas realized in 2024 is 25.1 euros per megawatt hour.
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Dollar and stocks are on a roller coaster ride as the US slaps new tariffs on China. China responds.
U.S. Stock Futures fell, the Dollar jumped and Hong Kong Shares tumbled from two-months highs after the U.S. imposed a tariff on Chinese imports. China responded quickly. S&P futures, after bouncing in relief at the news that Mexico and Canada reached an agreement to delay tariffs, have now fallen by 0.4%. European futures fell 0.2%, and the euro slid below $1.02 due to fears that Europe could be next. Hong Kong's Hang Seng lost gains of over 2% and closed the day about 1.8% higher. At 0501 GMT, an additional 10% U.S. duty on Chinese exports went into effect. Beijing announced that it would impose tariffs on the imports of U.S. cars, farm equipment, oil, coal and gas. These measures will take effect on February 10. This sparked market concerns about a messy and prolonged tit-fortat trade war. Bitcoin fell by 3%, to $98,750. Ross Mayfield is an investment strategy analyst with Baird, based in Louisville, Kentucky. He said, "I believe you can see the rollercoaster ride of public negotiations around tariffs and policy." Australian shares finished just below flat at the auction. Japanese stocks pared their gains. Trump's Press Secretary said he would speak with Chinese president Xi Jinping within the next few days. The Chinese markets are closed for the Lunar New Year holiday, but the offshore yuan has fallen to 7,3236 per dollar since the tariffs went into effect. The Australian dollar, which is often used as a proxy to represent the yuan due to its liquidity, dropped 0.7%, falling from $0.6180. On Monday, gold reached record highs as investors sought safety amid fears of a global trade war. On Tuesday, it traded at $2,817 per ounce, close to the previous record high. Markets were divided over whether or not there would be two rate cuts in the United States this year. Michael Feroli, J.P. Morgan’s U.S. chief economist, said that the increase in policy uncertainties will be difficult to reverse. The weekend's events will probably reinforce the Fed's tendency to stay on the sidelines, and to be as low-profile as possible.
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After DeepSeek's defeat, Europe's AI bulls are pinning their hopes on the 'Jevons Paradox.
Artificial intelligence bulls are dusting off an old economic theory that dates back 160 years to explain why stocks in the sector may still have more to offer, despite China's new cheap AI model DeepSeek. The tech stocks fell on January 27th after DeepSeek was launched. DeepSeek, which costs a fraction of the rival AI models but requires less sophisticated chips and is cheaper than the other AI models, raised concerns about the West's massive investments in data centres and chipmakers. The biggest one-day decline in market capitalisation of any company in history was caused by the U.S. advanced chips maker and AI poster child Nvidia. It lost 17% of its worth, or nearly $600 billion. Since then, the tech stocks have recovered, European markets are at new highs and an economic theory from 19th century is now on everyone's tongue: The Jevons Paradox. The Jevons Effect is named after English economist William Stanley Jevons. It posits the idea that as a resource's price drops, the demand for it can actually increase. Helen Jewell is the Chief Investment Officer of BlackRock Fundamental Equities EMEA. She said, "I had not discussed it until last Monday, and suddenly, it was everywhere." Jewell said that "this paradox highlights one of the current uncertainties" and that European stock pickers should be asking themselves whether the demand for data centres will decrease. How much energy will be required for the AI revolution? This was one of the biggest questions raised in the news (last) monday. The selloff affected both direct and indirect AI players. ASML (Dutch semiconductor equipment maker), ASMI, BE Semi, and ASMI, sector peers, all fell between 7% and 12% on January 27 before recovering losses later that week. Siemens Energy, which supplies hardware for AI infrastructure, also recovered its losses. "Jevons Paradox strikes once again!" Microsoft's chief executive Satya Nadella wrote in a blog post on X. As AI becomes more accessible and efficient, its use will skyrocket. It will become a commodity that we can't have enough of. THE NEW BUZZWORD Tomasz Godziek said on Friday that lower AI costs may be an example of the Jevons Paradox. He is the portfolio manager for the Tech Disruptors Fund at J. Safra Sarasin Sustainable Asset Management. Godziek stated that "ultimately, this could spark a new wave in AI investment and create fresh opportunities in particular in software and inference technology." Thematics Asset Management (an affiliate of Natixis IM) portfolio managers cite the Jevons Paradox among other reasons why they think demand for AI chips will remain strong. Mark Hawtin of Liontrust's global equity team said that the news from Jan. 27 highlighting the paradox reinforced his investment thesis. Kunal Kothari is the portfolio manager at Aviva Investors, and he manages an equity income fund in the UK with assets of around 2 billion pounds ($2.5billion). The GenAI's improved productivity will benefit UK companies as they are the main consumers of this technology. He pointed to names such as RELX and LSEG as well as Experian, Sage and Experian as likely beneficiaries. DATA CENTRE NEEDS IN FOCUS Data centres and the enormous power needed to run them have already driven AI investments in Europe, as there are no homegrown competitors to Nvidia whose share price has soared by 200% in less than two years. Kasper Elmgreen is the CIO for fixed income and equity at Nordea Asset Management. He said: "There's an implicit assumption about AI adoption and usage requiring more and more chips and data centres, as well as more power consumption." DeepSeek has questioned what's required of that route, and what can be achieved by creating much better software. Jordan Rochester, the head of FICC Strategy at Mizuho EMEA, is not convinced by this new rationale. He wrote that "while many Nvidia Optimists pointed out the Jevons Paradox as a way to sleep better at nights, it was less convincing over the short-term after what had been a meteoric increase in Nvidia's shares."
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Palm falls due to weakness in Chicago Soyoil
After five consecutive sessions of gains, the price of palm oil in Malaysia fell on Tuesday as Chicago soyoil prices dropped on news that U.S. import tariffs would be delayed for Mexico and Canada. At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for April delivery fell 90 ringgit or 2.06% to 4,277 Ringgit ($960.04) per metric ton. A Kuala Lumpur based trader stated that the crude palm oil futures fell due to weakness in the Chicago soybean oil market. The trader stated that "the news that the U.S. would postpone the imposition of import tariffs against Mexico and Canada has caused a large sell-off this morning in Chicago soybean oil." The Chicago Board of Trade reported a decline of 3.48% in soyoil. Dalian Commodity Exchange will be reopening on Wednesday after the Chinese Lunar New Year. As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils. The oil prices fell after U.S. president Donald Trump agreed not to impose steep tariffs for one month on Mexico and Canada - the two largest foreign oil suppliers in the United States. Brent crude futures dropped 0.78%, to $75.38 per barrel at 0505 GMT. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. The palm ringgit's trade currency strengthened by 0.29% against dollars, increasing the price of the commodity for buyers who hold foreign currencies. Celeres, an agribusiness consulting firm, said Brazil's soybean crop in 2024/25 is expected to hit a record of 174 million metric tonnes, up from 170.8 million due to favorable weather conditions. Technical analyst Wang Tao stated that palm oil could retrace to a range between 4,265 and 4,315 ringgits per ton as it has failed to break the resistance level of 4,402 ringgit.
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EIB, EBRD Grant $620M for Poland’s Largest Offshore Wind Farm
The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) have granted a total of $623.6 million to support the development of 1.5 GW Baltica 2 offshore wind farm, the second and the largest offshore wind farm in Poland.EIB signed an agreement with Poland’s largest utility Polska Grupa Energetyczna (PGE) to provide $415.7 million for the design and construction of Baltica 2 offshore wind farm in the Baltic Sea, being developed by PGE Ørsted.The loan represents the first part of a $1.45 billion package approved by the European Union’s climate bank to support PGE and Ørsted in constructing two new, large-scale offshore wind farms in the Baltic Sea.EBRD also contributed $207.9 million to support the buildout of the offshore wind farm, with the financing provided through a consortium of international and local commercial lenders, EIB, Bank Gospodarstwa Krajowego and the Export and Investment Fund of Denmark.Once operational, Baltica 2 will be the largest wind farm in the Baltic Sea, with a capacity of up to 1.5 GW. It is expected to generate about 5,000 GWh of electricity annually, which equates to approximately 3 per cent of Poland’s current electricity generation.Baltica 2 offshore wind farm is due to be completed as early as 2027.It will comprise of 107 turbines located some 40 km north of Poland’s Baltic shore. Together with its sister project Baltica 3, they are to have total capacity of 2.5 GW and double PGE’s existing renewable energy portfolio.“As the climate bank of the European Union and a leading partner of multidimensional energy transition in Poland, the EIB is keenly supporting Baltica 2. The EIB’s investment of $415.7 million is the largest own resources contribution to this transformative project by a financial institution.“Baltica 2 is the biggest offshore wind farm under construction in the European Union. It will increase the share of renewables in Poland’s energy mix and help reduce greenhouse gas emissions. It will strengthen Poland’s energy security and support economic competitiveness by harnessing innovative technologies,” said Teresa Czerwińska, EIB Vice-President. “Scaling up renewables and accelerating decarbonisation of the Polish economy are key strategic priorities for the Bank’s investments in Poland. We are delighted to support this milestone project, which will contribute to Poland and the European Union’s drive to net zero, and provide a solution to energy security concerns,” added Andreea Moraru, the EBRD’s Head of Poland and the Baltic States.
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Guyana to Greenlight Two Oil and Gas Projects This Year
Guyana's government plans to issue two licenses this year for oil and gas projects, one for Exxon Mobil's seventh development in the country, Hammerhead, and one for the nation's first natural gas development, Energy Minister Vickram Bharrat told Parliament on Friday.The gas license is conditional on a green light to Exxon and Fulcrum LNG for an ambitious project that could involve exports of liquefied natural gas. The license plans were included in the country's 2025 public budget.(Reuters - Reporting by Kemol King; writing by Marianna Parraga; Editing by Leslie Adler)
LME copper reaches a new high in a week after Trump's tariffs pause
LME copper prices reached a one-week peak on Tuesday after recovering from a sharp decline in the previous session. This was due to President Donald Trump delaying tariffs against Canada and Mexico by a month. This eased concerns about a possible trade war.
As of 0425 GMT the benchmark copper price was up by 0.5% to $9,145 per metric tonne, its highest level since January 27. On Monday, the metal hit a four-week high.
Dollar index dropped 0.2% Tuesday, making commodities priced in greenbacks cheaper for holders other currencies.
Trump has backed down from his threat of imposing steep tariffs against Mexico and Canada, but U.S. Tariffs on China were due to go into effect very soon. China is the biggest consumer of industrial metals.
He is expected to speak with Chinese President Xi Jinping this week. This will set up a major exchange of diplomatic information as the two world's largest economies try to reach a deal which could avert a wider trade war.
The focus is on whether the U.S. tariff of 10% proposed against Chinese imports will be implemented. This will have a significant impact on the copper market due to the implications for Chinese demand, said Kyle Rodda senior financial markets analyst for Capital.com.
If they need to avoid tariffs in the future, U.S. firms will turn to the Middle East and India to get more aluminium, and to Chile and Peru to get copper.
Recent data revealed that China's manufacturing activity increased at a slower rate in January. Caixin/S&P Global Manufacturing PMI fell to 50.1 from 50.5 in January.
Aluminium for the three-month period rose by 0.1% to 2,625.5. LME zinc rose 0.7% to a ton of $2,817.5, while tin increased by 0.1% to $29,945, and lead increased by 0.2% to $1949; nickel fell 0.4% to 15150.
Shanghai Futures Exchange will be closed on February 5th for Lunar New Year. The markets will resume trading on Wednesday, February 5.
(source: Reuters)