Glencore invests $200 mln in Bumi stake - shareholder

Commodity trading giant Glencore [GLEN.UL] has bought a $200 million stake in Indonesia's biggest coal miner PT Bumi Resources (BUMI), the miner's biggest shareholder said on Wednesday.

PT Bakrie and Brothers (BNBR), controlled by the Bakrie family and Bumi's biggest single shareholder with a 19.3 percent stake, said in its first half financial statement on Tuesday it had signed a share swap deal with Glencore on June 26.

Eddy Soeparno, Bakrie's financial director, told Reuters Glencore had already bought $200 million worth of Bumi stock since June. "We have an option to buy back the stake from Glencore within two years," Soeparno said.

Dileep Srivastava, a director at Bumi, also confirmed Glencore had already bought into the firm in June, but declined to give the size of the stake.

According to Reuters calculations, and based on Bumi's average closing share price and the rupiah IDR= exchange rate between June 28 to June 30, the deal may mean Glencore owns about a 4.95 percent stake in Bumi.

Soeparno said Glencore -- a marketing agent for Bumi coal -- saw Bumi shares appreciating in the future.

Glencore was not immediately available for comment.

A source at Bakrie and Brothers who declined to be identified said the investment holding firm did not have enough cash to increase its stake in Bumi at the moment, but also saw potential upside for the miner's shares.

Bumi's stock has tumbled 29 percent so far this year, underperforming a Jakarta market .JKSE up 27 percent, because of concerns about corporate governance and high debt. Its forward PE ratio is 6.15, versus 10.36 for rival Adaro Energy (ADRO).
Privately held Glencore, the world's biggest commodities trader, has become a global marketing agent outside Japan for PT Kaltim Prima Coal, Bumi's main coal mining unit.
Indonesia is the world's largest exporter of thermal coal, which is seeing growing demand from regional power stations. Source: Reuters

Indosat Launches Asia's First Number Selection Directly on a Mobile Handset

Evolving Systems, Inc. (NASDAQ: EVOL), a leading provider of software
solutions and services to the wireless, wireline and IP carrier market,
today announced that PT Indosat TbK has launched the Company's Dynamic
SIM Allocation(TM) solution throughout Indonesia. 

    Evolving Systems' Dynamic SIM Allocation solution allows new subscribers
to select their own mobile number from a menu displayed on the handset
when they buy and activate a new SIM card. The subscriber can choose
their language (currently Bahasa Indonesia or English), select an Indosat
package and tariff and then enter the pre-paid registration details.

    The inexpensive number selection feature is expected to be very popular
in the highly competitive Indonesian market. For just Rp1,500 (approx.
USD 15c) Indosat will allow subscribers to choose their own number.
Customers can also view 'golden numbers' which may consist of repeated
digits or numbers with multiple '8's -- a number linked with prosperity
in the Asia region -- which can be bought for between US$3 and US$100 and
paid for via top-ups or using an ATM.

    Indosat is also simplifying its offering by launching a generic SIM card
which allows the subscriber to choose their brand/tariff when they
activate it. In doing so, it will dramatically reduce the number of card
types in the market, while at the same time benefiting dealers who will
only need to stock one type of Indosat SIM card. This will also simplify
the logistics and stock management and will allow Indosat to complete
ordering and delivery in a shorter timeframe.

    "Indosat has always been innovative. Offering true number selection to
subscribers directly on the handset and allowing them to choose their
preferred tariff plan is definitely a first in Indonesia, and we think in
Asia," said Laszlo Barta, Chief Commercial Officer for Indosat. "We first
launched in two regions to test the subscriber experience and received
very positive feedback from the new subscribers, as well as our Dealer
Channel. We are now commencing the nationwide launch and expect this to
increase our new activations." 

    "We are delighted that Indosat has decided to work with us to launch
Dynamic SIM Allocation in Indonesia," said Thad Dupper, President and CEO
of Evolving Systems. "The region has a very large population, but with
ten mobile operators in the country, competition is intense. For many
people, a 'good' mobile number can be very valuable and the results of a
recent trial in Indonesia showed that many subscribers bought the new
cards because they liked the flexibility of choosing their own phone
number and tariff plan. In the longer term, subscribers choosing their
own number were found to have higher average revenue per user (ARPU) and
their operator loyalty was extended."

    About Dynamic SIM Allocation
 Dynamic SIM Allocation solution is a new
way of activating phones, which removes the inefficiencies of
pre-provisioning, avoids the costs associated with large numbers of
inactive SIM cards, and enables wireless carriers to offer an enhanced
end-user experience. Dynamic SIM Allocation can help: 


--  Optimize use of core network capacity
    --  Provision only on first use of SIM cards
--  Improve SIM Card Supply Flexibility
    --  With improved geographic mobility of SIM cards
--  Improved MSISDN Utilization
    --  By provisioning numbers at first use of the SIM card
--  Increase revenue by enhancing user experience
    --  Offer choice and personalization on first use

    

About Evolving Systems(R)
 Evolving Systems, Inc. (NASDAQ: EVOL) is
a provider of software and services to more than 70 network operators in
over 40 countries worldwide. Its portfolio includes market-leading
products for Service Activation, Service Verification, Dynamic SIM
Allocation, Number Portability, Number Inventory and Mediation solutions.
Founded in 1985, the Company has headquarters in Englewood, Colorado,
with offices in the United Kingdom, Germany, India and Malaysia. Further
information is available on the web at www.evolving.com. Source: Reuters

Indonesia's Government Has Redirected State-Owned Oil Refiner Pertamina to Build Three Refineries Each Costing US$5bn By 2020

Indonesia's strong long-term domestic demand growth, ample raw material
resources and proximity to Chinese and ASEAN markets will drive investment in
the petrochemicals sector in coming years, according to BMI's latest Indonesia
Petrochemicals Report. 

In response to the lingering problem of a lack of local petrochemicals
capacities, the government has redirected state-owned oil refiner Pertamina to
build three refineries each costing US$5bn by 2020. This would reduce the
Indonesian petrochemicals industry's reliance on imported naphtha, which has
hampered the expansion of the sector. In February 2010, Chandra Asri, Dow
Chemicals, Pertamina, Polytama and Try Polyta announced plans to invest
US$1.12bn in 2010. According to reports, the projects planned by the five
Indonesian petrochemical companies will reduce the deficit in the supplies of
petrochemical products. However, Indonesian petrochemicals producers are too
small to stump up the necessary investment to take advantage of the additional
feedstock and would need foreign partners. This looks an increasing likelihood. 

Indonesia is becoming increasingly attractive as an investment destination for
petrochemicals producers, particularly from Taiwan. The country is unable to
meet its needs in polymer resins, but at the same time Taiwanese majors are
facing constraints in building large refinery and cracker investments in China
and are seeking locations with a high availability of raw materials. Taiwan's
Chinese Petroleum Corp (CPC) is planning a US$2.8bn petrochemical complex at
Kalimantan which will involve the relocation of a refinery with
100,000-200,000b/d of refined product and a naphtha cracker with 730,000tpa of
ethylene production capacity as well as downstream PE, styrene monomer and
acrylonitrile facilities. However, it is unclear when the project would come
onstream. 

Indonesia's current sole producer of ethylene, Chandra Asri, is working with
Pertamina on a refinery project. Chandra Asri is planning two projects,
including the country's first butadiene unit with an investment of US$100mn and
a US$70mn BTX extraction plant. Dow Chemicals plans to spend US$500mn on a
petrochemical project, while PT Pertamina is to invest US$200mn in a PE project
in Balongan, West Java. Pertamina is also building a new 250,000tpa PP plant at
its Balongan complex. Meanwhile, Polytama is looking at the expanding its PP
capacity from 280,000tpa to 440,000tpa. The project is expected to be completed
by 2011 and will cost up to US$300mn. The expansion of Tripolyta's PP plant in
Merak to 480,000tpa in 2011 will provide an extra 120,000tpa of PP capacity in
Indonesia. With domestic PP demand due to reach 1.1mn tpa in 2011, the expansion
of capacity at both Merak and Balongan will not be enough to reduce Indonesia's
dependency on imported PP. BMI cautions that greater PP self-sufficiency cannot
be achieved if the country does not sustain an adequate local supply of
propylene, which as mentioned has been problematic. Source: Reuters 

FACTBOX-Capital levels of Asia's top banks

Banks will need to hold more capital under new standards to be laid out 

on Sunday aimed at making lenders resilient enough to withstand 

another financial crisis. 

Banks are expected to be given more than five years to implement the
changes. Most Asian banks already hold Tier 1 capital well above the expected
minimum levels, though some in Japan may find it tougher to meet the new
requirements.

Banks in Indonesia and Singapore look to be in the strongest position,
having an average core Tier 1 ratio of around 12.5 percent and 11.9 percent,
respectively.

The following are the core Tier 1 capital levels of Asia's top banks:

CHINA                                    CORE TIER 1 RATIO*

ICBC                                                 9.90

China Construction Bank                              9.31

Bank of China                                        9.07

Bank of Communications                               8.15

*As at end 2009

INDIA                                        TIER 1 RATIO*

State Bank of India                                   9.7

ICICI Bank                                           14.2

HDFC Bank                                            13.8

Punjab National Bank                                  9.3

*As at end 2009

INDONESIA                                       TIER 1 RATIO*

Bank Mandiri (BMRI)                                  11.85

Bank Rakyat Indonesia (BBRI)                         12.17

Bank Central Asia (BBCA)                             14.70

Bank Negara Indonesia (BBNI)                          9.70

*As on June 30, 2010

AUSTRALIA                                       TIER 1 RATIO*

National Australia Bank                               9.3

Commonwealth Bank of Australia                        9.1

Westpac Banking Corp                                  8.5

Australia and New Zealand Banking Group              10.4

* As at end 2009

 JAPAN                                      CORE EQUITY TIER 1

Mitsubishi UFJ Financial Group                   6.66* 7.36**

Mizuho Financial Group                           2.93* 4.75**

Sumitomo Mitsui Financial Group                  5.93* 6.22**

* at end June 2010 ** end March 2012

(Source: Deutsche Securities Tokyo)

KOREA                                          TIER 1 RATIO*

Kookmin Bank                                         10.9

Shinhan Bank                                         11.6

Woori Bank                                           10.2

Hana Bank                                            11.4

*At end 2009

 SINGAPORE                                 CORE TIER 1 RATIO*

DBS                                                  11.0

OCBC                                                 11.6

UOB                                                  13.0

* Estimated June 30, 2010

SOURCE: REUTERS

IMF says risks to global growth have intensified

The International Monetary Fund said on Friday that downside risks to global recovery have intensified due to recent turbulence in sovereign debt markets and continued weakness in the financial sector.

The IMF, in a briefing note prepared for Group of 20 deputy finance ministers, said global growth had been somewhat stronger than expected during the first half of 2010, "but is projected to slow temporarily during the second half of 2010 and the first half of 2011."

The Fund said European policy actions to calm the euro-zone sovereign debt crisis have eased market concerns.

"Renewed turbulence in sovereign debt markets could precipitate an adverse feedback loop between sovereigns and the financial sector, with spillovers to the real economy through higher bank funding costs, tighter lending conditions, and retrenchment in financial capital flows," it said.

The IMF also cited the U.S. property market as a source of downside risk, with increased foreclosures further pressuring bank balance sheets and possibly causing a reduction in credit available to the economy.

The G20 "surveillance note", prepared for a September 4-5 deputies meeting in Gwangju, South Korea, did not change any of the IMF's official forecasts. The Fund predicts global output will expand 4.6 percent in 2010 and 4.3 percent in 2011, compared to a decline of 0.6 percent in 2009.

The report did not specifically mention currency policies among the G20 members, which include top emerging markets China, India and Brazil. It did, however, say that sustained, healthy recovery in global growth rests on rebalancing of both internal and external demand.

Advanced economies must show a strengthening of private demand and an increase in net exports, while export countries, notably in emerging Asia, must rely more on internal demand and less on exports.

The IMF also called for the rebalancing to include credible plans by advanced economies to cut budget deficits in the future.

"This fiscal adjustment should begin in 2011, even if activity is modestly weaker than presently projected. Fiscal consolidation remains essential for strong, sustained growth over the medium term."

However, the IMF said that if growth threatens to slow appreciably more than expected, G20 countries should resort to monetary measures first, although it acknowledged that such defenses had "become thin". Some countries with budgetary breathing room may be able to temporarily delay their consolidation or let automatic stabilizers such as unemployment benefits to kick in. Source: Reuters

Palm-Oil Imports Into Pakistan May Drop as Floods Curb Demand, Traders Say

Pakistan, the world’s third-biggest importer of palm oil, may buy 10 percent less of the commodity in October and November than in July after the country’s worst- ever floods destroyed villages, a traders’ group said. 

“Who will buy the oil when there are no people to sell it to?” said Ikram Chaudhary, secretary of the Pakistan Edible Oil Refiners Association, in a phone interview from Islamabad. “Our imports may decline after floods washed away our selling points.” Imports in July were 147,666 tons, according to the country’s Federal Bureau of Statistics. 

Pakistan’s record flooding, which has begun to recede in some places, has claimed the homes and livelihoods for 17.2 million people and killed more than 1,500, the United Nations Office for the Coordination of Humanitarian Affairs said. A majority of the displaced belong to rural areas, where palm oil is used to make ghee, a local cooking fat. 

“Initial estimates tell us that our orders for October- November may be affected,” said Chaudhary. 

Palm oil has advanced 18 percent from near an eight-month low on July 7, driven by festival demand in Asia. Futures for November delivery declined 1.1 percent to 2,644 ringgit ($850) at the 12:30 p.m. trading break in Kuala Lumpur. Prices jumped 1.8 percent to 2,674 ringgit, the highest level since Aug. 16. 

Palm oil imports may climb to as much as 1.85 million tons this year from 1.75 million tons in 2009, Rasheed Janmohammad, vice chairman of the refiners association, said Aug. 5. 

Pakistan consumes about 3 million tons of vegetable oils annually. It buys palm oil from Malaysia and Indonesia, the top producers, and rapeseed oil from Canada, Australia and Europe, according to the refiners’ association.Source: Bloomberg

Rubber Production in Indonesia to Miss 2010 Target on Rainfall, Group Says

Natural-rubber output in Indonesia, the world’s second-largest grower, may miss an industry group’s target for this year as heavy rains disrupt tapping, adding to signs that wet weather is hurting commodity production. 

Output may total 2.4 million metric tons in 2010, less than an earlier forecast of 2.6 million, said Suharto Honggokusumo, executive director of the Rubber Association of Indonesia. Production last year was 2.44 million tons, according to the Association of Natural Rubber Producing Countries. 

The missed target may tighten global rubber supplies, helping to support prices that have surged over the past year as demand has rebounded. The government in Indonesia, Southeast Asia’s largest economy, and other industry groups have also blamed the rains for lower output of tin, palm oil and cocoa. 

“Unusual rain and climate change have disrupted tapping,” Honggokusumo said in a phone interview from Jakarta. The rains - - which have been linked to the La Nina weather phenomenon -- started in July, two months earlier than normal, he said.

Rubber in Tokyo has advanced 35 percent over the past year, boosted by demand from China, the largest buyer, and limited supply. The most-active contract gained as much as 1.3 percent to 302.6 yen per kilo ($3,610 a metric ton) today, the highest intraday price since April 30, before ending lower at 293.5 yen. 

‘Supporting Prices’

“Reduced supply from Indonesia may add to tight conditions in the world rubber market, supporting prices,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said by phone. 

La Ninas bring wetter-than-usual weather to parts of Asia. Tropical rains from the central and west-central Pacific are expected to shift to Indonesia, according to the Maryland-based Climate Prediction Center. Conditions may strengthen and last through the Northern Hemisphere winter, it said last month. 

The shortage of rubber supply will help “prices to remain high,” Honggokusumo said yesterday, declining to provide a specific forecast. “I doubt that it will reach a record because oil prices and exchange rates affect the price.” 

Natural-rubber prices are influenced by crude-oil costs as synthetic rubber, a rival product, is made from naphtha. The futures contract in Tokyo is denominated in yen, and shifts in response to changes in the yen-dollar rate. 

Thailand, the largest producer, Indonesia and Malaysia together account for about 70 percent of global output. Bernard Dompok, Malaysia’s plantation minister, said in July that 2010 rubber output may be 900,000 tons. 

Thai Forecast

Thailand’s Meteorological Department said on Aug. 16 that a La Nina had developed and would probably intensify. Output this year was forecast in January at 3 million tons, according to the Thai Rubber Association. 

Cocoa-bean exports from Sulawesi, Indonesia’s main growing region, dropped for the first time in four months in August on heavy rains, the Indonesian Cocoa Association said on Sept. 6. Indonesia is the largest grower after Ivory Coast and Ghana, and Sulawesi accounts for about 75 percent of total output. 

The Indonesian Palm Oil Association said last month that output may drop by as much as 10 percent this year because of the longer-than-normal rainy season. Tin output may plunge about 20 percent, the energy ministry said Aug. 11. Coal output may be 300 million tons this year, missing a target of 320 million tons, according to the Indonesian Coal Mining Association. 

The La Nina may persist at least into early 2011, Australia’s Bureau of Meteorology said on Sept. 1. Indonesia’s Meteorology, Climatology and Geophysics Agency has forecast increased rainfall in Sumatra, Kalimantan and parts of Sulawesi and Java this month. Source: Bloomberg

Goldman Sachs Sees Record `Wall of Money' Headed Toward Emerging Markets

Net capital inflows into emerging market economies are running at record levels, pushing up asset prices and raising the risk governments may impose capital controls, Goldman Sachs Group Inc. said in a research report today. 

Capital inflows into emerging markets are running at $575 billion a year, more than ever before and 20 percent higher than before the world financial crisis, according to an e-mailed report by Robin Brooks, a senior foreign exchange strategist for Goldman in New York. Low interest rates in the developed world are leading investors to seek higher returns in faster-growing emerging economies, he said. 

“Our baseline case remains of moderate growth in the advanced economies,” Brooks said. “This is contributing to direct ‘a wall of money’ to emerging markets in search of higher yields.” 

Capital inflows help emerging economies by providing cheap financing, lowering bond yields and boosting domestic demand, Goldman said. They also push currencies to appreciate and create inflationary pressures which could lead some countries to impose controls on funds entering from abroad, Brooks said. 

“Some emerging markets have already resorted to capital controls, and the risk of further such measures remains,” he said. 

Emerging-market sovereign bonds have returned 11.8 percent this year, according to JPMorgan Chase & Co.’s EMBI+ index. Stocks included in the MSCI Emerging Markets Index have risen 2.3 percent so far in 2010, compared to a 2.8 percent decline in the MSCI World Index of 24 developed countries. 

Capital Controls

In June, South Korea tightened limits on maximum holdings of currency derivatives by banks in an attempt to reduce the volatility of capital inflows. The same month, Indonesia’s central bank said it would insist investors in its one-month bills hold the securities for at least four weeks. Brazil imposed a 2 percent tax on foreign investors’ purchases of shares and bonds in October last year. 

South Africa’s ruling African National Congress proposed in a discussion document July 30 that an inflow tax be considered to help curb the rand’s appreciation. The currency has strengthened more than 30 percent against the dollar since the beginning of 2009. National Treasury Director-General Lesetja Kganyago said in September the country relies on the foreign money to finance its current-account deficit, and shouldn’t impose a tax on the inflows. 

Goldman recommends investing in the currencies of Asian countries benefitting from growth in China, he said. Source: Bloomberg