MUMBAI: Stock traders are taking a new bet based on a belief that the relief rally may be a shortlived one and that the spiralling crude price will trigger a sell-off whenever stocks move up.
Derivatives analysts say that institutional investors are writing calls at higher levels, pocketing good premium while going long on Bank Nifty which they bet may outperform the market in the near term. High inflation, tight liquidity and a hawkish interest rates view have led to a derating of bank stocks over the past three months. But bankers say that the liquidity position would improve in April, when demand for funds drop.
This, together with banks’ ability to pass on higher interest rate to borrowers, could revive bank counters. Traders have been building long futures positions in stocks, like ICICI Bank , SBI , IDBI, Bank of Baroda and OBC. “The Bank Nifty has seen a good long build-up in the past two days, at an average price of around 10600-10650 ,” said Manoj Murlidharan , AVP-derivatives at broking firm IIFL India. “We expect the Bank Nifty to outperform in the short term and anticipate it to go up to 11500 levels,” he added.
On Thursday, the Bank Nifty closed at 10914.50, up marginally by 0.27% from its previous close. There has been fresh addition of almost 70,000 shares in open interest in the Bank Nifty futures while the open interest in Nifty futures shed by almost 4.5 lakh shares. Some traders are unwinding Nifty futures, selling Nifty call option and using the money received from premium to go long on the Bank Nifty. Many in the market are resorting to a different trading strategy. Here, traders are selling call options of strike 5700 and put options 5300 on the lower side, which bets on a range-bound of the Nifty. This is known as “short strangle” .
The “short strangle” strategy entails selling a put option with a lower strike and selling a call option with a higher strike price with the same expiration date. This is a limited profit strategy, where a maximum profit accrues if the index ranges between the strike prices of the options sold. At expiry, both the options positions off set each other and the option writer pockets the entire premium from the two trades.
But the big downside is that losses on such positions can be unlimited if the market moves sharply up or down. “Brokers as well as select institutions are entering into short strangles to receive high premium . But, the risk is that volatility could increase in the next few days due to fluctuations in global crude prices ,” said Shailesh Kadam , AVP-Derivatives , PINC. So, its a high risk, high reward game and retail investors should stay out of it, he said.
Thursday, March 3, 2011
Mid, small-cap exposure dents diversified funds
NEW DELHI: Diversified stock funds lagged the benchmark Sensex in February, as exposure to mid- and small-cap shares and sectors like capital goods hurt net asset values, or NAVs.
Diversified funds fell 4.66% on an average during the month, compared with a 2.75% fall in the Sensex, data from global fund tracker Lipper, a Thomson Reuters company, showed.
"There is no predictability at all, there are no sectoral moves... sometimes it (market) is getting impacted by global cues," said TP Raman, managing director at Sundaram Mutual Fund.
Equity diversified funds with significant exposure to mid- and small-cap firms bore the brunt as the BSE Mid-cap index declined 7.2% and the small-cap index dropped 7.8% in February.
Though money managers have reduced exposure to such stocks in recent months, these companies still accounted for more than 30% of assets as of January-end, Morningstar India data showed.
Exposure to capital goods - a favourite with fund managers - which accounted for nearly a quarter of assets, also affected NAVs as the sectoral index fell 8.3% during February.
"Funds with higher exposure to realty, healthcare, capital goods and auto sectors took a harder knock on their chin during the month," said Dhruva Raj Chatterji, senior research analyst at Morningstar India.
Among sectoral funds, schemes which bet on pharma stocks lost 6.9% in February, as the healthcare index posted a drop of 8.32%.
Diversified equity funds had 6.6% of their assets allocated to cash at end-January, their highest level since February 2010, data showed.
Fund managers have increased their allocation to cash, as a spate of corruption scandals, high inflation and rising crude oil prices dented sentiment and led to a fall in key indices.
"It appears that some of the funds which took larger cash calls during the correction may also have buffered themselves a bit amidst the turmoil," Mr Chatterji said.
Indian fixed income funds investing in government debt saw net values rise 0.67% in February, as the yield on the actively traded benchmark bond fell eight basis points in the month.
India's gold exchange-traded funds (ETFs) gained 3.8% in February as the price of the yellow metal jumped on the back of political turmoil in Libya.
On the continuous charts in India, gold futures ended February at 20,923 per 10 grams, up 5% for the month. -Reuters
Diversified funds fell 4.66% on an average during the month, compared with a 2.75% fall in the Sensex, data from global fund tracker Lipper, a Thomson Reuters company, showed.
"There is no predictability at all, there are no sectoral moves... sometimes it (market) is getting impacted by global cues," said TP Raman, managing director at Sundaram Mutual Fund.
Equity diversified funds with significant exposure to mid- and small-cap firms bore the brunt as the BSE Mid-cap index declined 7.2% and the small-cap index dropped 7.8% in February.
Though money managers have reduced exposure to such stocks in recent months, these companies still accounted for more than 30% of assets as of January-end, Morningstar India data showed.
Exposure to capital goods - a favourite with fund managers - which accounted for nearly a quarter of assets, also affected NAVs as the sectoral index fell 8.3% during February.
"Funds with higher exposure to realty, healthcare, capital goods and auto sectors took a harder knock on their chin during the month," said Dhruva Raj Chatterji, senior research analyst at Morningstar India.
Among sectoral funds, schemes which bet on pharma stocks lost 6.9% in February, as the healthcare index posted a drop of 8.32%.
Diversified equity funds had 6.6% of their assets allocated to cash at end-January, their highest level since February 2010, data showed.
Fund managers have increased their allocation to cash, as a spate of corruption scandals, high inflation and rising crude oil prices dented sentiment and led to a fall in key indices.
"It appears that some of the funds which took larger cash calls during the correction may also have buffered themselves a bit amidst the turmoil," Mr Chatterji said.
Indian fixed income funds investing in government debt saw net values rise 0.67% in February, as the yield on the actively traded benchmark bond fell eight basis points in the month.
India's gold exchange-traded funds (ETFs) gained 3.8% in February as the price of the yellow metal jumped on the back of political turmoil in Libya.
On the continuous charts in India, gold futures ended February at 20,923 per 10 grams, up 5% for the month. -Reuters
Wednesday, March 2, 2011
India most profitable market for StanChart
MUMBAI: For the first time ever, India has emerged as the most profitable market for Standard Chartered Bank. Profits from the bank's Indian operations have touched $1.19 billion, up 13% from last year's $1.06 billion.
Until last year, Hong Kong was the largest market for StanChart in terms of profits. This year the profits from the special administrative region of China at $1.10 billion are behind that of India. StanChart, which has a presence in 70 markets globally, now generates one fifth of its profits from India.
The results for 2010 are part of the bank's global balance sheet which has the calendar year as the accounting year. For 2010, the bank has reported a 19% jump in profit before tax to $6.12 billion on income of $16.06 billion, an increase of 6% over the previous year. The bank has announced dividend of 69.15 cents per share, an increase of 9% over last year.
StanChart, which led several deals last year including Bharti's acquisition of Zain Telecom and refinance of Tata Corus acquisition finance, has also been the market leader in M&A.
Its income from wholesale banking at $1.5 billion was more than three times consumer banking results ($493 million). In India, the bank's balance sheet grew 18-20% to $20 billion during the year.
"Our performance this year is not exceptional, it is in keeping with the consistent growth that we have posted record income and record profits as we gained market share," said Neeraj Swaroop, country head, India. He pointed out that the bank had recorded a five-year compounded annual growth rate of 38% in profits and 28% in income.
The 153-year-old bank, which was the first multinational to list in India following an Indian Depository Receipt issue, is also among the few banks that fall within RBI's description of systemically important - a term used for banks whose assets are more than 0.25% of the banking industry's assets. RBI in its discussion paper on the presence of multinational banks in India had said that systemically important multinational banks should preferably operate in India in the form of wholly-owned subsidiaries rather than branches. Swaroop said his bank would be sending its comments on the issue of wholly-owned subsidiaries to RBI by March 7.
Until last year, Hong Kong was the largest market for StanChart in terms of profits. This year the profits from the special administrative region of China at $1.10 billion are behind that of India. StanChart, which has a presence in 70 markets globally, now generates one fifth of its profits from India.
The results for 2010 are part of the bank's global balance sheet which has the calendar year as the accounting year. For 2010, the bank has reported a 19% jump in profit before tax to $6.12 billion on income of $16.06 billion, an increase of 6% over the previous year. The bank has announced dividend of 69.15 cents per share, an increase of 9% over last year.
StanChart, which led several deals last year including Bharti's acquisition of Zain Telecom and refinance of Tata Corus acquisition finance, has also been the market leader in M&A.
Its income from wholesale banking at $1.5 billion was more than three times consumer banking results ($493 million). In India, the bank's balance sheet grew 18-20% to $20 billion during the year.
"Our performance this year is not exceptional, it is in keeping with the consistent growth that we have posted record income and record profits as we gained market share," said Neeraj Swaroop, country head, India. He pointed out that the bank had recorded a five-year compounded annual growth rate of 38% in profits and 28% in income.
The 153-year-old bank, which was the first multinational to list in India following an Indian Depository Receipt issue, is also among the few banks that fall within RBI's description of systemically important - a term used for banks whose assets are more than 0.25% of the banking industry's assets. RBI in its discussion paper on the presence of multinational banks in India had said that systemically important multinational banks should preferably operate in India in the form of wholly-owned subsidiaries rather than branches. Swaroop said his bank would be sending its comments on the issue of wholly-owned subsidiaries to RBI by March 7.
Henkel India's MD quits
CHENNAI: Jayant K Singh, the managing director of Henkel India, has resigned from the board of directors under mysterious circumstances. Domenicoluca Mammola, the CFO of the company, has been elevated as the joint MD.
Company sources said that Singh resigned on February 23 and the necessary filings were made with the regulators. However, there has been no filing with the stock exchanges about the exit of Singh.
Even on Tuesday Henkel said that its board met on February 8 and "authorised Jayant Singh or its CFO Domenicoluca Mammola to negotiate and finalise the proposal to dispose the movable assets of the hair care division of Henkel".
"Between February 8 and now, there has been a lot of change at Henkel. The German parent (which holds 50.97% in the company), wants to bring in changes within to facilitate the restructuring process which is currently on. There are allegations within the company that Singh did not resign, instead he was asked to leave on performance related issues," sources said.
Singh could not be reached for comment. He joined Henkel India in February 2009 with over 15 years experience in the fast moving consumer goods (FMCG) industry across a number of blue-chip organisations including Procter & Gamble, Mars, Gillette and GlaxoSmithkline.
A spokesperson for the company said Jayant K Singh resigned as the MD and director of Henkel India with effect from February 22 and the board accepted it. "Therefore, the position of Jayant K Singh as managing director and director of Henkel India shall stand terminated as of February 22 (or such earlier date as may be agreed between Jayant Singh and Henkel India)."
Henkel India, a joint venture between Tamil Nadu Petroproducts and Henkel AG of Germany, is in the throes of change where it has mandated HSBC to restructure its Indian operations, which includes the sale of some of its businesses or the company as a whole.
Company sources said that Singh resigned on February 23 and the necessary filings were made with the regulators. However, there has been no filing with the stock exchanges about the exit of Singh.
Even on Tuesday Henkel said that its board met on February 8 and "authorised Jayant Singh or its CFO Domenicoluca Mammola to negotiate and finalise the proposal to dispose the movable assets of the hair care division of Henkel".
"Between February 8 and now, there has been a lot of change at Henkel. The German parent (which holds 50.97% in the company), wants to bring in changes within to facilitate the restructuring process which is currently on. There are allegations within the company that Singh did not resign, instead he was asked to leave on performance related issues," sources said.
Singh could not be reached for comment. He joined Henkel India in February 2009 with over 15 years experience in the fast moving consumer goods (FMCG) industry across a number of blue-chip organisations including Procter & Gamble, Mars, Gillette and GlaxoSmithkline.
A spokesperson for the company said Jayant K Singh resigned as the MD and director of Henkel India with effect from February 22 and the board accepted it. "Therefore, the position of Jayant K Singh as managing director and director of Henkel India shall stand terminated as of February 22 (or such earlier date as may be agreed between Jayant Singh and Henkel India)."
Henkel India, a joint venture between Tamil Nadu Petroproducts and Henkel AG of Germany, is in the throes of change where it has mandated HSBC to restructure its Indian operations, which includes the sale of some of its businesses or the company as a whole.
Monday, February 28, 2011
Indian business mildly positive about budget
Indian business broadly welcomed a budget that contained few surprises but lacked the sort of big push on reform necessary to disperse the clouds over the countries’ markets.
The benchmark Sensex index, which had declined by 13.7 per cent this year, rose by up to 3.2 per cent as Pranab Mukherjee, finance minister, delivered his budget speech, before falling back to close up by less than 1 per cent.
Govind Sankaranarayanan, chief financial officer of Tata Capital, the financial services arm of the Indian conglomerate, said: “Overall, most parts of industry should not be unhappy with this budget”.
The combined effect of souring sentiment towards emerging markets internationally and concerns over corruption scandals and stubbornly high inflation at home have weighed on Indian markets since late 2010.
The surge in oil prices brought on by convulsions in the Arab world added to unease that saw the Sensex suffer its steepest one-day fall in 16 months on Thursday.
While Mr Mukherjee’s plans calmed investors’ pre-budget nerves, it added little detail to expectations that the government would lift caps for foreign investment in sectors such as retail and insurance.
Rujan Panjwani, president of Edelweiss Capital, a Mumbai-based financial services group, said: “It was not a bad budget but for a change in mood you need some mega-shift to happen”.
Analysts and executives were cheered by the government’s commitment to trim the fiscal deficit to 4.6 per cent of gross domestic product this year from an estimated 5.1 per cent last year, even if there were some questions as to whether the target was realistic.
Jairaj Purandare, executive director in India at PwC, the auditor, said: “Given the backdrop of what’s been happening in the country these past few months, I think the finance minister would have been under great pressure to give in to different lobbies.
“Overall, he’s done a pretty good job.”
Ridham Desai, Morgan Stanley’s India strategist, welcomed as the budget’s “biggest positive impact on sentiment” the decision to allow foreigners who meet the market regulator’s “know-your-customer” requirements to invest in domestic mutual funds.
He said in a research note: “This opens up a new source of funding for the current account deficit as well as for Indian equities”.
Analysts also welcomed a doubling to $40bn the limit on foreign funds’ permitted holdings of Indian corporate bonds, as well as changes to taxes on dividends to encourage companies with foreign subsidiaries to repatriate profits.
There was, however, doubt for some sectors.
The IT industry, a mainstay of Indian international expansion, saw no extension of a tax holiday for software parks and no clarification on rules for services exporters, in what Ernst & Young described as a “dampener” for the sector on a day of otherwise good news.
Arun Nanda, a regional chairman of the Confederation of Indian Industry, summed up business reaction with his verdict: “Overall: better than we had expected.”
The benchmark Sensex index, which had declined by 13.7 per cent this year, rose by up to 3.2 per cent as Pranab Mukherjee, finance minister, delivered his budget speech, before falling back to close up by less than 1 per cent.
Govind Sankaranarayanan, chief financial officer of Tata Capital, the financial services arm of the Indian conglomerate, said: “Overall, most parts of industry should not be unhappy with this budget”.
The combined effect of souring sentiment towards emerging markets internationally and concerns over corruption scandals and stubbornly high inflation at home have weighed on Indian markets since late 2010.
The surge in oil prices brought on by convulsions in the Arab world added to unease that saw the Sensex suffer its steepest one-day fall in 16 months on Thursday.
While Mr Mukherjee’s plans calmed investors’ pre-budget nerves, it added little detail to expectations that the government would lift caps for foreign investment in sectors such as retail and insurance.
Rujan Panjwani, president of Edelweiss Capital, a Mumbai-based financial services group, said: “It was not a bad budget but for a change in mood you need some mega-shift to happen”.
Analysts and executives were cheered by the government’s commitment to trim the fiscal deficit to 4.6 per cent of gross domestic product this year from an estimated 5.1 per cent last year, even if there were some questions as to whether the target was realistic.
Jairaj Purandare, executive director in India at PwC, the auditor, said: “Given the backdrop of what’s been happening in the country these past few months, I think the finance minister would have been under great pressure to give in to different lobbies.
“Overall, he’s done a pretty good job.”
Ridham Desai, Morgan Stanley’s India strategist, welcomed as the budget’s “biggest positive impact on sentiment” the decision to allow foreigners who meet the market regulator’s “know-your-customer” requirements to invest in domestic mutual funds.
He said in a research note: “This opens up a new source of funding for the current account deficit as well as for Indian equities”.
Analysts also welcomed a doubling to $40bn the limit on foreign funds’ permitted holdings of Indian corporate bonds, as well as changes to taxes on dividends to encourage companies with foreign subsidiaries to repatriate profits.
There was, however, doubt for some sectors.
The IT industry, a mainstay of Indian international expansion, saw no extension of a tax holiday for software parks and no clarification on rules for services exporters, in what Ernst & Young described as a “dampener” for the sector on a day of otherwise good news.
Arun Nanda, a regional chairman of the Confederation of Indian Industry, summed up business reaction with his verdict: “Overall: better than we had expected.”
First Deep-Water Drilling Permit Issued Since Spill
WASHINGTON — The Interior Department said Monday that it had approved the first new deepwater drilling permit in the Gulf of Mexico since the BP explosion and spill last spring, a milestone after a period of intense uncertainty for industry and a wholesale remaking of the nation’s system of offshore oil and gas regulation.
Michael R. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said that Noble Energy had been granted permission to resume drilling in 6,500 feet of water off the coast of Louisiana.
Work on the well was suspended, along with virtually all other drilling activity in water deeper than 5,000 feet, immediately after the Deepwater Horizon accident last April 20. The disaster killed 11 rig workers and spewed nearly five million barrels of oil into the ocean.
Still, there was no indication that drilling in the gulf would return anytime soon to levels preceding the BP well blowout.
Mr. Bromwich made clear that each new permit would be closely reviewed on a well-by-well basis and that the old system of rapid approvals of drilling permits had been permanently changed. Noble Energy said it expected to resume drilling by late March.
Approval of the Noble Energy application comes as oil prices are rising in response to unrest in the Middle East and North Africa and many in Congress and in industry are complaining of burdensome rules that are thwarting the development of domestic energy resources.
The interior secretary, Ken Salazar, plans to testify before Congress this week in defense of his department’s budget and is certain to face harsh questioning about why it has taken so long to resume drilling in the gulf.
Judge Martin Feldman, of the United States District Court for the Eastern District of Louisiana, recently ordered the Obama administration to move quickly on permits for new deepwater wells in the gulf, saying that the continuing delays were “increasingly inexcusable.”
But in a conference call with reporters, Mr. Bromwich said that there were “absolutely no politics associated with the approval of this application.” He also said that the decision to grant Noble Energy the drilling permit was not a response to Judge Feldman’s order; he said the department disagreed with the ruling and was preparing a legal response.
It is not clear how quickly federal regulators will move to on the six pending deepwater drilling permits or how soon the normal flow of applications will resume after a nearly yearlong halt to deepwater activity.
“We are taking these applications to drill as they come in,” Mr. Bromwich said. “Industry has been waiting for signals that in fact deepwater drilling will be allowed to resume and many will take this as that signal.”
“I have no idea how quickly new applications to drill will be filed,” he added. “I have no idea how long it will take to approve the next one or the next one after that or the next one after that.”
Mr. Bromwich noted that Noble’s permit was the first in deep water since the BP accident but that 37 shallow-water applications had been approved over the last 10 months.
The decision was cautiously welcomed by the oil industry.
Gary Luquette, president of Chevron’s North America exploration and production, called the permit “a step in the right direction.” But he added, “It is time for the government to clear the backlog of deepwater drilling permit applications so industry can create the energy, jobs and economic growth our nation needs so badly.”
Lee Hunt, president of the International Association of Drilling Contractors, said the industry was seeking clarity on the pacing of additional permits. “A permit for any well prohibited by the moratorium represents progress,” he said. “The question now is how quickly will they proceed to approve other permits that are awaiting approval.”
Mr. Hunt said that six deepwater permits were awaiting federal approval and that the industry could put 33 projects back in operation if companies could obtain permits.
At least six rigs affected by the drilling moratorium, imposed last June, have left the gulf to drill elsewhere.
Mr. Bromwich said that Noble had met new safety and environmental rules that were put in place after the spill and had a contract with a company that was capable of capping a blowout and handling a discharge of as much as 69,000 barrels a day — roughly the same volume of oil that leaked from the crippled BP well for nearly three months.
The emergency well-capping system will be furnished by the Helix Well Containment Group, which Mr. Bromwich said was capable of meeting the government’s spill response requirements for the Noble Energy well.
Mr. Salazar and Mr. Bromwich were briefed in Houston on Friday by Helix executives and representatives of another group developing a new oil spill response system. The second group, a consortium of Exxon Mobil, Chevron, Shell, ConocoPhillips and BP, has developed a system meant to cap a well in up to 8,000 feet of water and collect 60,000 barrels of spilled oil a day.
The consortium is also working on a second system that by the end of the year will be capable of operating in up to 10,000 feet and contain 100,000 barrels a day.
Randall B. Luthi, former director of offshore drilling regulation at the Interior Department and now president of the National Ocean Industries Association, a drillers’ trade group, said the approval came at a critical moment. “With all the world-complicating factors, including rising oil prices, political turmoil in the Middle East and the loss of jobs in the Gulf of Mexico, this decision offers hope,” he said.
Jack Gerard, president of the American Petroleum Institute, sounded a less magnanimous note. “This slow-moving process continues to stifle domestic production and puts thousands of jobs at risk in the gulf and around the country,” he said.
Senator Mary Landrieu, the Louisiana Democrat who has pressed the administration to begin issuing deepwater permits at a steady clip, called the permit “long overdue,” adding “I hope that this permit is the first of many to come, and I will continue to use every lever at my disposal to ensure that it is.”
Michael R. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said that Noble Energy had been granted permission to resume drilling in 6,500 feet of water off the coast of Louisiana.
Work on the well was suspended, along with virtually all other drilling activity in water deeper than 5,000 feet, immediately after the Deepwater Horizon accident last April 20. The disaster killed 11 rig workers and spewed nearly five million barrels of oil into the ocean.
Still, there was no indication that drilling in the gulf would return anytime soon to levels preceding the BP well blowout.
Mr. Bromwich made clear that each new permit would be closely reviewed on a well-by-well basis and that the old system of rapid approvals of drilling permits had been permanently changed. Noble Energy said it expected to resume drilling by late March.
Approval of the Noble Energy application comes as oil prices are rising in response to unrest in the Middle East and North Africa and many in Congress and in industry are complaining of burdensome rules that are thwarting the development of domestic energy resources.
The interior secretary, Ken Salazar, plans to testify before Congress this week in defense of his department’s budget and is certain to face harsh questioning about why it has taken so long to resume drilling in the gulf.
Judge Martin Feldman, of the United States District Court for the Eastern District of Louisiana, recently ordered the Obama administration to move quickly on permits for new deepwater wells in the gulf, saying that the continuing delays were “increasingly inexcusable.”
But in a conference call with reporters, Mr. Bromwich said that there were “absolutely no politics associated with the approval of this application.” He also said that the decision to grant Noble Energy the drilling permit was not a response to Judge Feldman’s order; he said the department disagreed with the ruling and was preparing a legal response.
It is not clear how quickly federal regulators will move to on the six pending deepwater drilling permits or how soon the normal flow of applications will resume after a nearly yearlong halt to deepwater activity.
“We are taking these applications to drill as they come in,” Mr. Bromwich said. “Industry has been waiting for signals that in fact deepwater drilling will be allowed to resume and many will take this as that signal.”
“I have no idea how quickly new applications to drill will be filed,” he added. “I have no idea how long it will take to approve the next one or the next one after that or the next one after that.”
Mr. Bromwich noted that Noble’s permit was the first in deep water since the BP accident but that 37 shallow-water applications had been approved over the last 10 months.
The decision was cautiously welcomed by the oil industry.
Gary Luquette, president of Chevron’s North America exploration and production, called the permit “a step in the right direction.” But he added, “It is time for the government to clear the backlog of deepwater drilling permit applications so industry can create the energy, jobs and economic growth our nation needs so badly.”
Lee Hunt, president of the International Association of Drilling Contractors, said the industry was seeking clarity on the pacing of additional permits. “A permit for any well prohibited by the moratorium represents progress,” he said. “The question now is how quickly will they proceed to approve other permits that are awaiting approval.”
Mr. Hunt said that six deepwater permits were awaiting federal approval and that the industry could put 33 projects back in operation if companies could obtain permits.
At least six rigs affected by the drilling moratorium, imposed last June, have left the gulf to drill elsewhere.
Mr. Bromwich said that Noble had met new safety and environmental rules that were put in place after the spill and had a contract with a company that was capable of capping a blowout and handling a discharge of as much as 69,000 barrels a day — roughly the same volume of oil that leaked from the crippled BP well for nearly three months.
The emergency well-capping system will be furnished by the Helix Well Containment Group, which Mr. Bromwich said was capable of meeting the government’s spill response requirements for the Noble Energy well.
Mr. Salazar and Mr. Bromwich were briefed in Houston on Friday by Helix executives and representatives of another group developing a new oil spill response system. The second group, a consortium of Exxon Mobil, Chevron, Shell, ConocoPhillips and BP, has developed a system meant to cap a well in up to 8,000 feet of water and collect 60,000 barrels of spilled oil a day.
The consortium is also working on a second system that by the end of the year will be capable of operating in up to 10,000 feet and contain 100,000 barrels a day.
Randall B. Luthi, former director of offshore drilling regulation at the Interior Department and now president of the National Ocean Industries Association, a drillers’ trade group, said the approval came at a critical moment. “With all the world-complicating factors, including rising oil prices, political turmoil in the Middle East and the loss of jobs in the Gulf of Mexico, this decision offers hope,” he said.
Jack Gerard, president of the American Petroleum Institute, sounded a less magnanimous note. “This slow-moving process continues to stifle domestic production and puts thousands of jobs at risk in the gulf and around the country,” he said.
Senator Mary Landrieu, the Louisiana Democrat who has pressed the administration to begin issuing deepwater permits at a steady clip, called the permit “long overdue,” adding “I hope that this permit is the first of many to come, and I will continue to use every lever at my disposal to ensure that it is.”
Asian Stocks Rise as U.S. Incomes, Falling Oil Boost Optimism; Honda Gains
Asian stocks rose for a third day as falling oil prices and U.S. data showing higher personal incomes boosted confidence in global economic growth prospects.
Honda Motor Co., Japan’s second-biggest carmaker, gained 1.3 percent in Tokyo as the yen also weakened. Sony Corp. Japan’s largest electronics exporter, advanced 0.7 percent. BHP Billiton Ltd., the world’s No. 1 mining company and Australia’s largest oil producer, climbed 0.7 percent in Sydney. Rival Rio Tinto Group rose 0.8 percent as copper prices advanced for the third straight session in New York yesterday.
The MSCI Asia Pacific Index added 0.5 percent to 138.24 at 9:32 a.m. in Tokyo. The gauge, which advanced 0.6 percent in February, dropped 2.1 percent last week as political unrest swept the Middle East.
“Although there’s still uncertainty about what’s happening in North Africa and the Middle East, easing crude futures are supportive” for the stock market, said Fumiyuki Nakanishi a strategist at Tokyo-based SMBC Friend Securities Co. “The data continues to show the economy is steadily improving.”
Japan’s Nikkei 225 Stock Average gained 0.8 percent. Australia’s S&P/ASX 200 Index rose 0.2 percent ahead of a central bank decision on interest rates. Markets in South Korea are closed today.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The index advanced 0.6 percent in New York yesterday after reports showed personal income improved more than economists expected and a measure of U.S. business conditions rose to its highest level in more than 22 years.
U.S. Incomes
In the U.S., incomes climbed 1 percent in January, exceeding the median forecast of economists surveyed and the most since May 2009, according to figures from the Commerce Department yesterday in Washington.
The Institute for Supply Management-Chicago Inc. said yesterday its business barometer rose to 71.2 in February, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News.
The MSCI Asia Pacific Index lost 0.2 percent through yesterday in 2011, compared with gains of 5.5 percent by the S&P 500 and 3.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.8 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.4 times for the Stoxx 600.
Crude oil for April delivery declined 0.9 percent to settle at $96.97 a barrel in New York yesterday, the biggest daily drop since Feb. 11, after Saudi Arabia offered to make up for supplies lost because of unrest in Libya.
Yen Relief
The yen’s depreciation should also give a lift to Japan’s exporters today, SMBC’s Nakanishi said.
The currency fell to as low as 81.98 against the dollar, compared with 81.66 at the close of stock trading in Tokyo yesterday. Against the euro, Japan’s currency weakened to 113.35 from 112.39. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.
Honda Motor Co., Japan’s second-biggest carmaker, gained 1.3 percent in Tokyo as the yen also weakened. Sony Corp. Japan’s largest electronics exporter, advanced 0.7 percent. BHP Billiton Ltd., the world’s No. 1 mining company and Australia’s largest oil producer, climbed 0.7 percent in Sydney. Rival Rio Tinto Group rose 0.8 percent as copper prices advanced for the third straight session in New York yesterday.
The MSCI Asia Pacific Index added 0.5 percent to 138.24 at 9:32 a.m. in Tokyo. The gauge, which advanced 0.6 percent in February, dropped 2.1 percent last week as political unrest swept the Middle East.
“Although there’s still uncertainty about what’s happening in North Africa and the Middle East, easing crude futures are supportive” for the stock market, said Fumiyuki Nakanishi a strategist at Tokyo-based SMBC Friend Securities Co. “The data continues to show the economy is steadily improving.”
Japan’s Nikkei 225 Stock Average gained 0.8 percent. Australia’s S&P/ASX 200 Index rose 0.2 percent ahead of a central bank decision on interest rates. Markets in South Korea are closed today.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The index advanced 0.6 percent in New York yesterday after reports showed personal income improved more than economists expected and a measure of U.S. business conditions rose to its highest level in more than 22 years.
U.S. Incomes
In the U.S., incomes climbed 1 percent in January, exceeding the median forecast of economists surveyed and the most since May 2009, according to figures from the Commerce Department yesterday in Washington.
The Institute for Supply Management-Chicago Inc. said yesterday its business barometer rose to 71.2 in February, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News.
The MSCI Asia Pacific Index lost 0.2 percent through yesterday in 2011, compared with gains of 5.5 percent by the S&P 500 and 3.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.8 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.4 times for the Stoxx 600.
Crude oil for April delivery declined 0.9 percent to settle at $96.97 a barrel in New York yesterday, the biggest daily drop since Feb. 11, after Saudi Arabia offered to make up for supplies lost because of unrest in Libya.
Yen Relief
The yen’s depreciation should also give a lift to Japan’s exporters today, SMBC’s Nakanishi said.
The currency fell to as low as 81.98 against the dollar, compared with 81.66 at the close of stock trading in Tokyo yesterday. Against the euro, Japan’s currency weakened to 113.35 from 112.39. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.
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