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Market round-up: Profits on producing gas oil, jet fuel soar in Asia

LiveMint logoLiveMint 13-09-2017 Livemint

Profits on churning out barrels of gas oil and jet fuel in Asia could keep climbing after marking their highest in nearly two years this month, boosted as demand outpaces supply hit by a string of refinery outages both internationally and in the region. Royal Dutch Shell shut its Pernis refinery in Rotterdam, the largest in Europe, in late July following a fire, while Hurricane Harvey curtailed refining production on the US Gulf coast. Along with refinery outages in Asia that helped push the profit margin on producing gas oil—used in heating and as a transport fuel—to its strongest since September 2015 on Friday, Reuters data showed. The jet fuel margin on the same day touched its highest since November 2015. Reuters

Hedge funds’ China shorts fizzle out amid optimism

Naveen Kumar Saini/Mint

A sharp devaluation. A credit crisis. And an economic hard landing. That’s what some of the biggest names in the hedge fund industry were predicting for China after the nation’s stocks and currency tumbled in 2015. Two years later, it hasn’t worked out the way pessimists anticipated. Bets on a devaluation have fizzled as the yuan rallied more than 6% from its eight-year low against the US dollar in December. Chinese credit markets have stabilized, while the nation’s Shanghai Composite Index touched a 20-month high on Tuesday. How have bears responded? A few, like Crescat Capital’s Kevin Smith, are still holding out for a crash. But as a group, they’re less pessimistic now than they were in the wake of China’s 2015 market turmoil. Some, including Mark Hart of Corriente Advisors, have even turned bullish. Bloomberg

Thailand is unlikely bond-flow magnet

Its sovereign bonds don’t yield much more than US Treasuries, they cost less to insure than Spanish notes and its currency is more stable than China’s managed yuan. In a sign of how the flood of money into emerging markets is upending conventional wisdom, military-run Thailand with a credit rating just three levels above junk at Moody’s Investors Service has become a favoured low-yielding destination for bond investors. A current-account surplus that’s forecast to be around 10% of gross domestic product this year and Asia’s best-performing currency of 2017 are luring foreign money. Overseas investors have pumped a net $2.6 billion into Thai notes so far this month, more than for South Korea, India and Indonesia combined. While Indian and Indonesian debt have attracted more foreign money this year, the two countries offer 10-year yields almost triple that of Thailand. Bloomberg

Subrata Jana/Mint

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