Tag Archives: number
Commission Repeats Calls For Carbon Market Reform As Surplus Allowances Double
The number of surplus carbon permits under the European Union’s Emissions Trading System (EU ETS) doubled to two billion last year, the European Commission has announced. 21 May 2013 Topics Climate Action Commissioner Connie Hedegaard said that the figures for 2012 underlined the need for urgent action to address the “supply-demand imbalance” under the struggling scheme. “The good news is that emissions declined again in 2012,” she said. “The bad news is that the supply-demand imbalance has further worsened in large part due to a record use of international credits.” “At the start of phase 3, we see a surplus of almost two billion allowances. These facts underline the need for the European Parliament and Council to act swiftly on back-loading,” she said. The European Parliament rejected a proposal by the European Commission to ‘backload’ a number of allowances under the scheme , as a temporary measure to address falling prices and lack of demand, last month. The proposal will be refined by the Parliament’s Environmental Committee, before returning to Parliament for a new vote next month. The EU ETS was established in 2005 and was the first major emissions trading scheme in the world. Phase 3 began on 1 January 2013, and runs until 2020. Under the scheme there is a cap on greenhouse gas (GHG) emissions from prescribed energy intensive installations. Installations must purchase GHG emissions allowances, called European Union Allowances (EUAs), which represent the right to emit or discharge a specific volume of emissions in line with national allocation plans. Operators of installations must hold EUAs equal to, or more than, total emissions at the end of the EU ETS year and those with excess allowances can ‘bank’ them or trade with those who need to buy more allowances to comply with emissions limits. The European Commission’s proposals would see 900 million allowances that would otherwise have been made available for auction between 2013 and 2015 transferred to later in the third phase of the EU ETS. By doing this, the Commission hopes to address the build-up in allowances caused by reduced industrial activity during the economic downturn. The price of allowances is currently below €4 per tonne according to Thomson Reuters Point Carbon – well below a historical average of €30 per tonne. According to the Commission’s figures, the number of surplus allowances rose from around 950 million at the end of 2011 to almost two billion by the end of 2012. This was due to a “combination” of the use of international credits, auctioned allowances from earlier phases of the scheme and remaining free allowances granted to new entrants to the scheme. Since 2008, the EU ETS has allowed installations to use international emissions reduction credits generated under the Kyoto Protocol to offset part of their emissions. Compliance with the rules of the scheme was “high” in 2012, according to the Commission. Less than 1% of participating installations did not surrender allowances to cover their 2012 emissions by the deadline of 30 April 2013, while aircraft operators responsible for over 98% of 2012’s aviation emissions had also fulfilled their responsibilities under the scheme. This year, aviation emissions fell under the EU ETS for the first time; however aircraft operators were given the option to limit reporting to only those flights within Europe. Environmental law expert Eluned Watson of Pinsent Masons said previously that backloading was merely a “quick fix” for the EU ETS, but that more time would be needed to put together a longer term reform package. ” Urgent action is required, backed by clear legislative support, to structurally reform the EU ETS and to rebalance the supply and demand of allowances in the EU ETS market, ” she said, as prices fell to a record low of €2.81 a tonne at the start of this year. “Although the backloading proposal is very much a ‘quick fix’, reactionary measure, it is clear that longer term structural reform will take time, with changes unlikely to be in place until 2017 at the earliest,” she said. Continue reading
Chinese Shopping Malls To Become Hottest Investment Property: ARA
Total number of mainland malls expected to jump 40 per cent to more than 4,000 by 2015. Wednesday, 22 May, 2013 [UPDATED: 5:09PM] [font=’Arial Black’, ‘, Arial, Helvetica, ‘, ‘Nimbus Sans L’, ‘, sans-serif} ‘] jeanny.yu@scmp.com [/font] Malls like Festival Walk in Kowloon Tong will be the benchmark for ARA Private Funds, which wants to invest in malls that can service China’s rapidly growing middle class. Photo: SCMP Shopping malls will surpass office and residential space as the most profitable type of property investment in China over the next two to five years, thanks to the nation’s booming middle class and its fast-growing income, says a property investment firm partly owned by Asia’s richest man, tycoon Li Ka-shing. “District shopping centres with a gross floor area of 1 million square feet or bigger, and a high footfall will offer the biggest upside with limited risks for private funds in the coming years in the mainland,” said Ng Beng Tiong, ARA Private Funds chief executive. Ng, a former investment banker, is targeting an internal rate of return of 20 per cent by building and operating shopping malls in the mainland through the newly-raised US$441 million Asia Dragon Fund II. HSBC forecasts that another 93 million Chinese households will join the middle class by 2015, while the China Chain Store and Franchise Association separately expects the number of mainland malls to jump 40 per cent to more than 4,000 by 2015. However, not all of these new malls will provide decent returns, so real estate funds will have to be highly selective, Ng said, warning that the presence of luxury brands did not guarantee fat margins. “We don’t go for malls that are full of Guccis and LVs (LVMH luxury goods), but (for) the ones that serve the daily needs of a large catchment of residents and office workers,” Ng said, citing its Asia Dragon Fund I’s Dalian shopping mall and the Festival Walk in Hong Kong’s Kowloon Tong as references. Of the two private funds closed last year, Ng plans to invest up to 70 per cent of the US$441 million Asia Dragon Fund II in China, of which over a half would go to shopping malls that serve the growing middle class. “It is the middle income group that is growing faster in terms of their wealth and buying power, which translates into a very strong fundamental support for shopping malls”, he said. The firm, in which Cheung Kong holds a 14 per cent stake, is looking to expand its footprint to key tier-two cities, such as Hangzhou, Suzhou, Guangzhou, Shenzhen, Chongqing, Chengdu and Wuhan. It already had projects underway in Shanghai, Beijing, Dalian and Nanjing, he said. By 2015, the retail market would double in China’s key tier-two cities, according to HSBC research, and shopping malls would account for 74 per cent of the retail market in these cities, up from 51 per cent currently. Singapore-based ARA managed around S$22.1 billion (US$17.6 billion) of assets as of the end of last year, according to its annual report. The company is an affiliate of the Cheung Kong Group and apart from its private fund business, it also runs some of Asia’s most popular REITS (real estate investment trust), including Hui Xian REIT and Fortune REIT. Continue reading
A Slowdown In US Lending Or A Ramp Up In Shadow Banking?
April 30, 2013 12:26 PM We’ve received a number of emails pointing to what looks like a slowdown in lending by US-chartered banks. The amount of loans and leases on balance sheets of US banks has stopped growing. As in 2009 and 2011, some people are upset to see record levels of bank excess reserves that are not being turned into loans. These are deposits at the Fed earning 25bp and people are asking why banks are not lending more of this capital out. But what exactly caused the loan growth on banks’ balance sheets to stall? More precisely, what types of loan balances are no longer growing? It turns out that while commercial and industrial loans continue to grow – in fact accelerating – the growth in retail mortgage balances has stalled. And that’s the explanation for the flat-lining of the overall loan balances (the first chart above). Fixed maturity mortgages on US banks’ balance sheets (source: FRB; not seasonally adjusted) “Aha”, some economists would say. Banks are not extending as much credit in the mortgage space as they should, which is slowing down the economy. Those evil zombie banks… The real answer however has to do with the wonderful world of “shadow banking”. Why would banks want to keep all these mortgages on their books when they can blow them out to Freddie and Fannie, who in turn sell them to the market in the form of agency MBS (mortgage backed securities). And who are the buyers? The usual suspects of course – insurance firms, mutual funds, etc., and of course the biggest buyer of them all – the Fed. In fact the holdings of MBS on Fed’s balance sheet just hit a record. Mortgages are simply making their way from banks’ balance sheets onto the Fed’s balance sheet in the form of MBS. Source: FRB The data from Freddie and Fannie confirms this trend, with the first quarter of this year showing the largest MBS issuance volume in two years. As much as people don’t like to think about it this way, Freddie and Fannie are the biggest “shadow banks” around. The last time we had a spike in MBS issuance in early 2011, mortgage balances at banks declined, as banks did some “spring cleaning”. But what about loans that are not Freddie and Fannie eligible? Those should still be sitting on banks’ balance sheets, right? Not exactly. The private side of shadow banking is now kicking into gear, particularly in the so-called jumbo loans (mortgages too large to qualify for the GSEs). Inside Mortgage Finance: – The private-label market is “showing new signs of life,” according to Standard & Poor’s, which predicted that banks are likely to increase their securitization of jumbo mortgages. In a report released late last week, S&P projected $14 billion in non-agency jumbo MBS in 2013. Redwood alone set a goal of issuing $7 billion in non-agency MBS this year and is on pace to exceed that volume, helped by a pending $425 million deal, its sixth of the year. PennyMac Mortgage Investment Trust is also aiming to issue a non-agency jumbo MBS in the Redwood mold in the third quarter of 2013. The demand for fixed income product has manifested itself in the so-called “private-label” MBS, allowing banks to securitize mortgages that don’t qualify for Freddie and Fannie. Once again, it’s not about lending less – which is how some economists are reading the first chart above. It’s about originating product, collecting fees, and then selling into the hot securitization market – public or private. And taking those loans off the balance sheet creates room to do it all over again (the “recycling” of capital.) As one banker put it, “I want to be in the origination and fee business, not in long-term warehousing …” Continue reading
