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The Importance Of Oud
Sustainable Asset Management and Greenstone Equity Partners have teamed up with speciality plantation operator Asia Plantation Capital to bring agro-forestry and Oud bearing Aquilaria plantations as serious project opportunities to institutional investors in the Middle East North Africa (MENA) region, whilst simultaneously working to help preserve the increasingly rare Aquilaria tree in the wild. The traditional use of Oud as an incense in the Gulf region is well known. This valuable oil is renowned for its pleasant and distinctive odour. Over generations Oud has been embodied into local culture as a sign of hospitality and generosity to family, guests and dignitaries. As a result of this demand, Oud and agarwood have become rare in the wild. Future supplies have only been safeguarded by both international legislation, with CITES protecting the rare Aquilaria species in the wild, and by the actions of specialist forestry companies such as Asia Plantation Capital (APC) who have created sustainable tree plantations and invested in modern distilling techniques to ensure future farmed Oud and Agarwood supplies. Aquilaria trees require very specific growing conditions and when infected by particular fungi yield the precious agarwood, from which Oud is derived. In nature this occurs in fewer than five trees per hundred, but with modern forestry practices and following extensive scientific research, several methods have now been discovered to inoculate these trees and induce agarwood in virtually the whole crop. This has allowed innovative companies such as APC, who use an organic inoculation method, to develop a good number of small-scale forestry plantations across Thailand, Sri Lanka and other South East Asian countries where Aquilaria trees have been grown for a number of years and continue to be planted. Mark Wills, Managing Director at Sustainable Asset Management (SAM), explains that “these plantations help balance the supply & demand, reducing pressure for illegal logging and the environmentally damaging cutting of wild Aquilaria in search for wild agarwood.” The size and nature of each Aquilaria plantation is of key importance for the crop and for the local community. APC plantations are classed as agro-forestry as the land has dual uses in the early years of the Aquilaria trees’ life. By grouping plantations in regions, and growing secondary crops such as teak, bamboo, banana and other foods, these plantations create many jobs for local communities and become a centre for the processing of agarwood and Oud oil; which are labour intensive and rewarding activities for local community groups. APC has used agarwood as a social instrument to help revitalise communities in rural areas in this region. APC is a vertically integrated business; social forestry is their passion and they recognised early on that value retention comes from selling the end product through to the market and developing new products and brands for their produce. Today APC is using agarwood and Oud as traditional products for the Gulf communities, as well as in a variety of products that appeal to Western and Eastern consumers’ alike; from fragrances used at Fragrance du Bois, through luxurious cosmetic products, to nutritional supplements, improved rice and even in traditional medicinal applications. Of course, there remains Oud oil. APC and Sustainable Asset Management place great emotional value on the traditional uses of Oud and have been honoured by the recognition of their dedication from both Gulf based investors and now by Greenstone Equity Partners, looking to participate in what has become a partnership for social action and culture preservation. Omar Al-Gharabally, Managing Director at Greenstone Equity Partners comments “when we recognised the quality of Sustainable Asset Management’s Oud, and heard of the dedication and forestry expertise within APC, we knew that we would welcome a commercial relationship. The careful due diligence we have conducted highlights not only the environmental and cultural positives of this project but also the financial rewards.” Continue reading
September’s Red-Hot Emerging Markets
By Nicholas A. Vardy, CFA With Ben Bernanke’s putting “tapering” on hold, the green light for a traditional fourth-quarter rally in emerging markets is on. Recall that the mere threat of tapering on May 22 had put emerging markets into a tailspin. The stock markets of formerly red-hot BRICs — Brazil, Russia, India and China — fell off a cliff, as sentiment soured on these economic powerhouses. Political unrest in Egypt, Turkey and Syria sent global investors scurrying for the safety and security of developed markets, the U.S. and Japan in particular. That all changed on Aug. 27 when emerging markets bottomed. The MSCI Emerging Markets Index has rallied 14.59% since then, and among the 40 global stock markets I monitor on a daily basis, 13 are up by double digits in September alone. That’s a huge turnaround — but not an unexpected one. I’d be hard pressed to recall many other episodes of such massive underperformance of emerging markets compared with the U.S. Following such a sharp rally, emerging markets are certainly overbought on a short-term basis. But with the Fed putting tapering on the back burner for now, I’m looking for a big fourth quarter in emerging markets. And in a liquidity-driven market, September’s top emerging-market performers are a good place to start. 1. iShares MSCI Thailand Capped ETF : +21.29% The iShares MSCI Thailand Capped ETF THD -2.36% has been one of the top-performing emerging-market exchange-traded funds (ETFs) of the past few years, soaring 39.98% in 2012 alone. But during this past summer’s drubbing of emerging markets, Thailand was hit harder than most. Between May 22 — the day the Fed announced the prospect of tapering — and hitting a its low on Aug. 27, the Thai ETF tumbled over 28%. But since then, the Thai market has rallied 23.49%. The triple whammy of a slump in the Thailand’s currency, the baht, economic growth screeching to halt, and fears of the Federal Reserve’s tapering plunged Thailand’s stock exchange firmly into a bear market. Indeed, Thailand’s economy hardly is ship-shape. Its economy contracted 0.3% between April and June, following a previous fall of 1.7% during the first quarter of 2013, putting the Thai economy officially into recession. That’s a stark contrast to last year’s strong economic growth of more than 6%. No wonder that even as the market has rallied, Goldman Sachs cut its rating for Thailand from overweight. 2. iShares MSCI Turkey ETF : +20.45% Turkey was the top-performing emerging market of 2012, with the iShares MSCI Turkey ETF TUR -1.36% soaring an eye-popping 65.58%. But the threat of imminent tapering and boisterous anti-government protests caused the Turkish market to plunge almost 32% between May 24 through Aug. 26. Since bottoming, however, the market has rallied 21.47%. The summer’s political protests caught investors off guard. Back in the 1990s, Turkey’s emerging market was a poster child for economic instability. Sure as day follows night, you could always count on Turkey’s stock market to blow up regularly. That all changed with a new pro-business Islamic government installed in 2001. The Turkish economy grew at an Asian Tiger-like average rate of 7.5% between 2002 and 2006, faster than any other OECD country. By 2012, Istanbul boasted an eye-popping 36 billionaires, putting it fifth in the world behind Moscow, New York City, London and Hong Kong. In November 2012, Fitch Ratings upgraded Turkey sovereign debt to “BBB-,” the lowest rung on the investment-grade level — the emerging market’s first investment-grade rating in 18 years. Moody’s followed in May 2103, and the Turkish market hit highs not seen in 25 years. 3. WisdomTree India Earnings : +15.27%. Few former emerging-market darlings have attracted more negative headlines over the past six months than India. One of my favorite contrarian indicators is to look at headlines … and bet the opposite. That strategy would have paid off in spades with India. Britain’s Economist magazine dedicated its Aug. 24 cover story to India’s fall from economic grace. Since bottoming four days later, the Wisdom Tree India Earnings ETF EPI -0.32% has rallied 20.15%. Since May 22, the Indian had market plunged 27.7%, hitting a low on Aug. 28. Political gridlock, a brake on economic reforms, and a plummeting rupee, have made the Indian stock market the worst-performing stock market in the world in 2013, down 17.4%. And that’s after it’s recent sharp rally. The appointment of Raghuram Rajan, a University of Chicago economist and former chief economist of the World Bank , as India’s central-bank chief has lit a fire under the rupee and the Indian stock market. Rajan is introducing reforms to address India’s most glaring weaknesses. But not all of Rajan’s actions bode well for this former emerging market high-flyer. On Friday, Rajan unexpectedly raised a key interest rate in an effort to quell inflation — the first increase since 2011. Disclosure: I hold the iShares MSCI Turkey ETF. Continue reading
Sun, Water, CO2 And Algae: A Recipe For Biofuel?
Plant-based biofuels were initially hailed as the answer to all problems posed by traditional fossil fuels. Supply is unlimited and they are also neutral to emissions harmful to the environment also. But using plants has led to other problems, which a team of European scientists hopes to get around by using aquatic organisms to create fuels from the sun, carbon dioxide (CO2) and water. The nine-partner team behind the EU-funded project DIRECTFUEL (‘Direct biological conversion of solar energy to volatile hydrocarbon fuels by engineered cyanobacteria’) believes the answer could lie in aquatic organisms . The team is developing photosynthetic microorganisms able to catalyse the conversion of solar energy and CO2 into engine-ready fuels. Plant biomass is definitely cleaner than fossil fuels. However, the plants used to create fuel are frequently in competition with food crops , particularly in poorer countries, while cultivation of plants for biomass can also have a detrimental impact on neighbouring agricultural land. Plants also convert solar energy relatively slowly. The research by DIRECTFUEL’s team involves three key steps: enzyme discovery and engineering, metabolic engineering of cyanobacteria (a type of micro-algae) and design of the production process. The target fuels are non-toxic and have been shown to be compatible with combustion engines that have been slightly modified and even with normal ones. Central to the project is the construction of biochemical pathways not existing in nature for the synthesis of ethylene, ethane and propane. The team’s research has already increased understanding of the factors important for catalytic conversion by studying the mechanism of a candidate enzyme. The next step is to use enzyme engineering to program the enzymes to act on desired substrates. Work on targeted enzyme engineering at the biosynthesis of volatile alkanes is underway, and the team is now working to engineer the metabolism of the host organisms in order to enhance CO2 assimilation and thus increase yield. To be able to engineer the metabolism of cyanobacteria, the researchers needed to first understand and be able to predict which modifications in the biochemical pathways will have which impact on metabolism. To make this possible, the team is using a computational model developed by one of the DirectFuel partners. The model will also be improved and expanded during the project to boost its effectiveness in predictive engineering. In addition, a preliminary process layout has been prepared and a laboratory-scale photo-bioreactor constructed. Cultivation of the essential cyanobacteria can be carried out on land unsuitable for agriculture, and in enclosed containers that require no soil, thus eliminating any competition between land for food and fuel production. It will take time before the technology developed within DIRECTFUEL is on the market, but the eventual impact is likely to be considerable in the production of carbon-based fuels and chemicals. The research has already attracted interest from petroleum gas associations. The DIRECTFUEL project has received almost EUR 5 million in EU funding and runs from 2010 until 2014. It is coordinated by the University of Turku in Finland. Read more at: http://phys.org/news…iofuel.html#jCp Continue reading
