World's Third Largest Shipbuilder Crashes 29% Amid Asian Equity Carnage

Shares in Samsung Heavy, the world’s third largest shipbuilder, plunged by 29% during Wednesday’s trading session after unexpectedly forecasting operating losses this year and 2018 and announcing a capital raise. Meanwhile, Asian equities tumbled, led by technology, mining and industrial companies, with the MSCI Asia Pacific Index falling for eight straight days, its longest run of down days since 2015.

“Things are really getting bad for Samsung Heavy because they have been slow to respond to the weakening market conditions,” said Park Moo Hyun, an analyst at Hana Financial Investment Co. in Seoul. “It’s not going to look good for the company next year.”

The news from Samsung Heavy is a blow to hopes that the shipbuilding industry was poised for a revival after order trends across the industry in 2016 fell to a level below that seen at the nadir of the financial crisis.

Shares in Samsung Heavy’s main rivals fell in sympathy with Hyundai Heavy down 6.2% and Daewoo Shipbuilding & Marine 2.8% lower. According to Bloomberg.

The world’s third-largest shipbuilder said Wednesday it plans to raise 1.5 trillion won ($1.4 billion) by selling new shares in a rights offering. Samsung Heavy, saddled with 3.3 trillion won of short-term debt, expects demand for new vessels and offshore projects to continue shrinking and that will push the company into losses this year and next, compared with analyst estimates for a profit.

Shipyards from South Korea to Singapore have been struggling to emerge from losses since the global financial crisis amid excess capacity worldwide and a plunge in oil prices that damped demand for vessels and offshore drilling rigs. Last year was the worst for the industry, with the collapse of Hanjin Shipping Co., previously among the world’s largest container lines, and freight rates tumbling to record lows.

Samsung Heavy cited falling new order demand, losses on some contracts it won this year and higher raw material costs. However, it sees some light at the end of the tunnel…eventually, expecting the “situation to improve in 2019”. The company said in a statement it expects operating losses of 490 billion won in 2017 and 240 billion won in 2018. The Bloomberg analyst consensus had been for an operating profit of 90 billion this year. Today’s news will bring Samsung Heavy’s financial position back into focus. Speaking to Bloomberg, the company’s largest shareholder, Samsung Electronics with 16.9%, said it had not made a decision on the rights offering, while its biggest creditor, Korea Development Bank, said that it is “monitoring the situation closely”. As Bloomberg notes.

As of Sept. 30, Samsung Heavy had 3.3 trillion won of debt maturing within a year, compared with 451 billion won of cash and equivalents, according to its financial report. The company, rated BBB+ by Korea Ratings, has sold 255 billion won of bonds this year via private placement, according to data from Korea Securities Depository.

The share sale is the second in as many years for Samsung Heavy, which raised 1.1 trillion won in 2016. The company, which reported losses in the past two years, said Wednesday it expects to complete the latest sale by May.

Samsung Heavy’s collapse helped to drag the South Korean Kospi Index 1.4% lower during Tuesday’s trading. The weakness in Asian equities was led by Hong Kong with the Hang Seng Index 1.9% lower. Having briefly exceeded the 30,000 mark, it has fallen for seven out of the last eight days and broke the 50-day moving average to the downside.

The momentum trade continued to unwind with some of the year’s best performing shares sharply lower, for example Geely Automobile Holdings (-8.8%), AAC Technologies (-7.8%) and Sunny Optical Technology Group (-12.5%). The Shanghai Composite fell 0.3% to 3,294.0, although it would have been much worse if the National Team hadn’t ridden to the rescue in the last hour, pushing the index up from an intra-day low of 3,259.3.

Before the cavalry arrived, the PBoC conducted its biggest single-day net withdrawal of open-market operation funds since September 2016. The net 240 billion yuan ($36.3 billion) took the aggregate for the last four days to 540 billion yuan ($81.7 billion).

Furthermore, funds added as part of the Medium-term Lending Facility (MLF) matched the amount due. Westpac’s head of Asia macro strategy Frances Cheung told Bloomberg that by breaking the recent pattern of pre-emptively covering maturities for the entire month, the PBoC was sending a mild tightening signal.

Still, sentiment remained bullish as the following excerpts from Bloomberg reveal:

Investors are “locking in profits earlier than usual for the year and not opening any new positions,” said Andrew Clarke, director of trading at Mirabaud (Asia) Ltd. “Eventually, as profit taking subsides, buying for the new year will appear as people look toward 2018,” he added.

(Daniel So, strategist at CMB International Securities) remains bullish on Hong Kong equities, saying this correction shouldn’t last too long and the Hang Seng Index may rise to 35,000 next year, while the H-share index might reach 14,400. That represents gains of more than 20 percent for both.

“Profit-taking trades are putting strong pressures on the markets,” said Ken Peng, an investment strategist at Citi Private Bank in Hong Kong. “This is especially the case in Hong Kong, where equities are among the strongest in Asia this year.”

Peng said a slump in technology stocks in the U.S. is weighing on Asia, and investors are also worried about tighter liquidity and tougher regulations in China. He added that tension between North Korea and the U.S. could be an issue as well.

“The market is nervous but it hasn’t reached a point that there’s a sense of panic,” Peng said. “If a sense of panic appears, I would say it would be a great buying opportunity, because the cycle of global economic recovery isn’t over yet, meaning that stocks still have room to climb. The end of the cycle will appear in 2019 or 2020.”

And so, despite Wednesday’s Asian equity carnage, analysts and portfolio managers approached by Bloomberg remain bullish, looking for the right moment to BTFD.

Fonte: qui

Rig For Stormy Weather

What storm? The Dow Jones Industrial Average (DOW) reached another all-time high. Interest rates in the U.S. are yielding multi-decade lows, some say multi-century lows. Trillions of dollars in global sovereign debt have negative yield and European junk bonds yield less than 10 year U.S. treasuries. “Official” unemployment is low. Borrowing is inexpensive. Things are good, so they say!

I Doubt It!

Do you believe the above is a fair and accurate representation of our economic world? If so, how do you explain the following?

• Global debt exceeds $200 trillion and is rising rapidly. This massive debt will NOT be paid back in currencies with 2017 purchasing power. Debt MUST be rolled over in continually DEVALUING dollars, euros, yen and pounds.
• The financial system rolls over maturing debt, adds more, and pretends repayment will not be problematic. Those who hope this will remain true ignore the lessons of history, including sky-high interest rates in the late 1970s, the Asian and Long Term Capital crises in the late 1990s, many defaults and hyperinflations in the last century and the credit-crunch-recession-market-crash of 2008.
• Official inflation statistics show that consumer price inflation is low – supposedly in the two percent range. However, if you pay for health care, hospital bills, prescription drugs, Obamacare, beer, cigarettes, college tuition, fresh vegetables, processed food, auto insurance, and many other necessities, you know better. The Chapwood Indexagrees with your experience. Their statistics show consumer price inflation is much higher than official numbers.
• National debt – the official debt of the U.S. government exceeds $20.5 trillion – more than the U.S. Gross Domestic Product. The debt has increased exponentially (straight line on a log scale chart) for the past century.

• Interest paid on the official national debt is approximately $500 billion per year and climbing. Congress is influenced by the financial elite and will not operate within a balanced budget. Therefore the U.S. will pay more interest each year.

• U.S. government expenditures increase every year. Since annual revenues are less than expenses by a trillion or so, the shortfall is borrowed. Hence national debt rises every year and interest must be paid on ever-increasing debt.

• Debt, out-of-control expenses, and economic craziness are universal in our current system. Race, gender, and political party make no material difference. Why should they? Corporations, politicians, lobbyists, military contractors, Big Pharma and individuals want more dollars to spend every year and the government satisfies everyone by adding to the debt load.

• Debt and currency in circulation rise far more rapidly than growth of the economy which must support the debt. HENCE PRICES RISE.
• Rising consumer prices are essential to a financialized economy. Do you remember prices in 1970? If you don’t, examine the following overview.

WHAT COULD IMPROVE OUR FINANCIAL WORLD?

• Balanced budgets and honest accounting at all levels of government. Not likely.
• Honest currency units, currency units created from productive effort, not units conjured out of “thin air” by central banking and commercial banking fractional reserve policies. Dreaming!
• Global peace. Military and defense expenses could be reduced to a fraction of current levels. Redirect those resources toward more productive purposes. All but impossible!
• Political honesty, absence of corruption and effective, non-intrusive government. Hmmmmm. Maybe we should write to our congressmen.

WHAT COULD MAKE OUR ECONOMIC WORLD WORSE, BUT WE HOPE DOES NOT OCCUR?

• Wars with North Korea, Iran, Russia, China, and others.
• Hyperinflation in western countries, because central banks will be forced to “print” an almost unlimited number of currency units to address their self-created financial problems.
• Derivatives implosion (remember 2008), nuclear war, electromagnetic pulse weapons, and global plague.

PROGNOSIS:

The world will muddle through its problems in spite of wars, pestilence, corruption, central bankers, and self-serving politicians. Based on centuries of economic history, we should expect increasing financial trauma, periodic market crashes, devalued currencies, debt defaults, and … that someone else will be blamed.

WHAT CAN WE DO FOR SELF PROTECTION?

• Realize that markets rise and fall. The stock markets have enjoyed a long bull market while many commodities are relatively inexpensive. Expect a reversal, perhaps soon.
• Buy silver and gold. Why buy metals? They have been real money and a store of value for centuries. They are currently undervalued compared to total debt and the stock market. See below.

Graph silver prices divided by the official U.S. national debt. Silver prices have increased less rapidly than exponentially increasing national debt for 25 years, and are currently selling for multi-decade lows compared to national debt. National debt will increase 8 – 10% per year and silver prices will rise more rapidly in coming years.

Graph silver prices divided by the S&P 500 Index. Silver prices are currently near a two-decade low when compared to the S&P 500 Index. Silver prices will rise and the S&P will correct, possibly soon.

Based on decades of history, silver prices are inexpensive compared to exponentially increasing national debt and stock market prices. Silver prices will rise compared to both, perhaps soon.

CONCLUSIONS:

• Debt and government expenses are excessive and too large for the economy to support. However, they exponentially increase.
• Positive change is possible but given the massive economic resistance from debt, central banker intrusion into markets, and over-valued stock markets, significant improvement in revenues, debt loads and balance sheets seems unlikely.
• Expect a reversal in stock market prices. Expect gold and silver prices will rebound much higher in 2018. Guaranteed – no! Likely – yes!
• Silver and gold will protect your savings, retirement assets and purchasing power from continual currency devaluations, central bank policy errors, and excessive government debt.

Posted with permission and written by Gary Christenson, The Deviant Investor 

Satellite Photos Show North Korea Preparing Another Missile Launch

North Korea carried out its first missile test in more than two months earlier this week, ending the longest stretch of calm since President Trump took office. But according to satellite images exclusively obtained by Fox News, the North Korean military is already constructing another launch pad at the Panghyon Airbase in North Pyongyang - the same site where it carried out its July 4 launch of an ICBM.

This suggests that the North is already preparing for its next missile test.

Analysts at Image Sat International spotted the construction just days after the rogue nation launched an ICBM that North Korea claimed was powerful enough to carry a “super-heavy nuclear warhead” that could strike the “mainland of the U.S."

According to the ImageSat analysts, who are closely following North Korean military activity, this is “the first time that they have decided to rebuild a site that they have used before."

The photos, dated Nov. 23 and 24, appear to show the development of another launch pad just a few yards away from the one used during the July 4 Hwasong-14 ICBM launch, as well as a newly renovated access road.

Constructed in the 1980s, the Panghyon site is North Korea's primary aircraft production, repair, and research facility.

The satellite images also show the construction of an aircraft hangar, as well as airplanes being moved and stored in hangers on the tarmac.

With the recent launch of another ICBM and the construction of additional launching pads, North Korea continues to defy the US-led world outrage over its nuclear program and is determined to bring it to completion.

The Hwasong-15 rocket tested by the North Tuesday was themost powerful of the three ICBMs tested by the Kim regime so far. Furthermore, the mobile night launch appeared aimed at testing new capabilities and demonstrating that Pyongyang would be able to strike back to any attempt at a preventative strike against the regime. The missile's peak height and record flight time also helped confirm the Pentagon's worst fears: The North now possesses the capability to strike nearly any target on the continental US.

Fonte: Z.H.

North Korea Releases Photos Of ICBM Capable Of Striking The US

North Korea alarmed the international community on Tuesday when, after a two-month lull, it fired a Hwasong-15 ICBM into the waters west of Japan. State media touted the launch as its most powerful missile yet. Judging by the missile’s peak height reached during its flight, experts say the North now has the capacity to strike nearly any location in the Continental US. Now, the North's state media released dozens of photos and a video after Wednesday’s launch of the new Hwasong-15 missile, which North Korean leader Kim Jong Un declared had “finally realized the great historic cause of completing the state nuclear force”.  The photos show Kim Jong-un personally overseeing the launch of the missile, an obvious source of national pride.

Pyongyang claimed the Hwasong-15 reached an altitude of around 4,475 kilometers and flew 950 kilometers during its flight, which lasted 53 minutes.

Kim Jong-un was shown in delight as the newly developed intercontinental ballistic rocket Hwasong-15's test was successfully launched, in these photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang November 30, 2017.

Pyongyang announced in a statement read on North Korean state TV that the missile was a Hwasong-15. “Tipped with super-large heavy warhead,” the missile is “capable of striking the whole mainland of the US.”.

“After watching the successful launch of the new type ICBM Hwasong-15, Kim declared with pride that now we have finally realized the great historic cause of completing the state nuclear force, the cause of building a rocket power,” it added.

The aim of the missile is solely “to defend the sovereignty and territorial integrity of the country from the US imperialists’ nuclear blackmail policy and nuclear threat,” according to Pyongyang.

If the missile was indeed a Hwasong-15, it would mean a new development for North Korea. The other launches that took place in 2017 were either claimed to be the older Hwasong-14 ICBM, or the intermediate range (IRBM) Hwasong-12.

Russia condemned Wednesday’s launch of the Hwasong-15, calling it “a provocative act that triggers further escalation and moves us further away from crisis settlement,” Kremlin spokesman Dmitry Peskov told reporters on Wednesday. “We do condemn the launch and hope all the parties will exercise restraint which is so much needed to prevent the situation in the Korean peninsula from going the worst way.”

In a press conference organized to respond to the launch, President Donald Trump described it as “a situation that we will handle,” saying that it won’t change his approach to the crisis on the Korean Peninsula. “I will only tell you that we will take care of it,” Trump told reporters on Wednesday.

Russian ambassador Vassily Nebenzia repeated his pleas for North Korea to stop the tests and called on the US and South Korea to cancel large-scale military maneuvers scheduled for December.

* * *

According to Reuters, the images of the rockets showed stronger engines and a larger design that likely puts Kim Jong Un closer to his goal of being able to deliver a nuclear warhead to a target anywhere in the world, though the missiles still lack accuracy.

“North Korea is continuing to pursue its ICBM in a methodical and pragmatic manner, making progress in incremental steps,” said Joseph Bermudez from 38 North, a Washington-based North Korea monitoring project. U.S. officials noted, however, that North Korea has not proved it has an accurate guidance system for an ICBM or a capable re-entry vehicle.

The missile’s large size was immediately apparent in the photos, which analysts said could provide for a more powerful propulsion system.

“This is a very big missile,” Michael Duitsman, a research associate at the Centre for Nonproliferation Studies, said in an analysis posted to Twitter. “And I don’t mean ‘Big for North Korea.’ Only a few countries can produce missiles of this size, and North Korea just joined the club.”

One US intelligence official said the Hwasong-15 appears to have a more powerful North Korean solid-fuel propulsion system, especially in its second-stage rocket. A solid-fuel system for an ICBM would be a significant development and could allow the North Koreans to transport and launch a missile more quickly, compared to a liquid-fuel system that requires lengthy preparation. The photos appeared to show the missile with at least two large nozzles on its first stage, instead of the one large and several smaller nozzles on the Hwasong-14.

Fonte: Z.H.