EM PM, Ecstrat

Emad Mostaque

EM PM

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Thematic (Sector/Industry)

It has been an interesting few weeks for observers of Saudi Arabia as Doha oil freeze talks failed, concerns re-emerged over the stability of the Saudi-US relationship and months of press coverage culminated in the announcement of Saudi Vision 2030 today.This note analyses some of the drivers of the changes we have seen in Saudi policy and the likely impact of these going forward on local markets and the oil price.The upshot is that I am, just as was the case in 2015, once more bearish on oil and oil-related equities into summer, although I retain my bullish view longer term.This should also prevent significant appreciation in Middle East markets short-term, although it is likely to be an interesting few years ahead as reforms, many of which necessitate increased economic and market liberalization and sharp increases in FDI, start to come in force.

It has been an interesting few weeks for observers of Saudi Arabia as Doha oil freeze talks failed, concerns re-emerged over the stability of the Saudi-US relationship and months of press coverage culminated in the announcement of Saudi Vision 2030 today.This note analyses some of the drivers of the changes we have seen in Saudi policy and the likely impact of these going forward on local markets and the oil price.The upshot is that I am, just as was the case in 2015, once more bearish on oil and oil-related equities into summer, although I retain my bullish view longer term.This should also prevent significant appreciation in Middle East markets short-term, although it is likely to be an interesting few years ahead as reforms, many of which necessitate increased economic and market liberalization and sharp increases in FDI, start to come in force. 

The Middle East has already hit the headlines in 2016 as the relationship between Saudi Arabia and Iran deteriorated further after the execution of 47 convicts including Shia cleric Sheikh Nimr al-Nimr.While some claim this is the latest manifestation of a historic Sunni-Shia hatred, digging deeper shows other, more important factors at work that could determine the fallout for the region.

The Middle East has already hit the headlines in 2016 as the relationship between Saudi Arabia and Iran deteriorated further after the execution of 47 convicts including Shia cleric Sheikh Nimr al-Nimr.While some claim this is the latest manifestation of a historic Sunni-Shia hatred, digging deeper shows other, more important factors at work that could determine the fallout for the region.

China

Shanghai Datun Energy Resources Co., Ltd. explores, washes, and produces a variety of coal products for sales to the manufacturers of steel, gas, and electric power. Shanghai Datun also produces alumina, owns, manages, and operates coal-fired power plants, and provides coal railway transportation services.

Guizhou Gas Group Corporation Ltd. offers gas transmission services. The Company offers gas transmission and distribution, safety, bills payment, and other related services. Guizhou Gas Group serves customers throughout China.

Henan Dayou Energy Co., Ltd. engages in the exploitation and distribution of coal in China. The company, through its subsidiaries, is also involved in the production and sale of mining equipment and accessories, as well as the provision of consulting services of coal mine technologies.

Geo-Jade Petroleum Corporation is a petroleum technology and investment company. The Company's business includes oil exploration, petrochemical technology development and investment, and oil refining.

Taiyuan Coal Gasification Co., Ltd. produces and markets coal, coke, gas, and related chemical products.  The Company's products are supplied  to north China and east China areas.

Taiyuan Coal Gasification Company, (000968 CH)

Shaanxi Heimao Coking Co. Ltd. processes, manufactures, and distributes coking products. The Company produces coke, oven gas, coal tar, crude benzene, methanol, and other related products. Shaanxi Heimao Coking also provides power generation and building materials distribution services.

Shanxi Lanhua Sci-Tech Venture Co., Ltd. produces and markets coal and fertilizers.

Anhui Hengyuan Coal Industry and Electricity Power Co., Ltd. operates in coal mining and processing.

Beijing Haohua Energy Resource Co., Ltd. produces and sells coal.  The Company's products are used in metallurgy, power generation, chemical and construction material industries.

Beijing Haohua Energy Resource (601101 CH)

Guizhou Panjiang Refined Coal Company Ltd. operates in the coal mining and processing industry. The Company's products include raw coal, refined coal, blended coal, and other related products.

Pakistan Petroleum Ltd. specializes in the exploration and production of crude oil and natural gas. The Company also sells liquefied petroleum gas and condensates.

SK Gas Ltd imports, stores, and distributes liquefied petroleum gas (LPG). The Company supplies its products mainly to domestic market for household, the transportation industry, and petrochemical products manufacturers.

Mari Petroleum Co Ltd specializes in the drilling, production and selling of natural gas.

United Energy Group, Ltd. is engaged in the exploration and production of oil and natural gas. The Company owns and operates a producing oilfield Liaohe Province of the P.R. of China and owns an interest in an exploration field in Madura PSC, Java, Indonesia.  UEG mainly engages in the upstream oil and natural gas business.

Sinopec Kantons Holdings Limited trades crude oil, petroleum and petrochemical products.  The Company also operates a crude oil jetty and its ancillary facilities and petrol stations.

Karoon Energy Ltd operates as an exploration company. The Company explores and acquires oil and gas exploration assets. Karoon Energy serves customers worldwide.

Banpu Public Company Limited mines for coal and other minerals. The Company produces thermal coal and coking coal, and have expertise in open-pit and underground coal mining operations, as well as coal-fired power generation.  Banpu PCL has business bases in Thailand, Laos, Indonesia, China, Australia and Mongolia.

Green Plains Inc. owns and operates ethanol plants located in the Midwest U.S. The Company also markets and distributes fuel grade ethanol, livestock feed and industrial grade corn oil. Green Plains provides grain handling, storage and complementary agronomy services to local grain producers through grain elevators located in Iowa, Missouri, Nebraska and Tennessee.

Bangchak Corporation Public Company Limited operates as an energy company. The Company offers petroleum exploration and production, biomass, crude oil, and solar energy. Bangchak markets its products in Thailand.

Kinetic Mines and Energy Ltd. is a mining company focused on constructing and developing the Dafanpu Coal Mine. The Company's vision is to become a leading private-sector, integrated coal provider in China with mining, processing, transportation and storage capabilities.

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Kinetic Mines and Energy (1277 HK)

Saudi: A New Hope?

It has been an interesting few weeks for observers of Saudi Arabia as Doha oil freeze talks failed, concerns re-emerged over the stability of the...

Emad Mostaque

The Sunni-Shia Canard

The Middle East has already hit the headlines in 2016 as the relationship between Saudi Arabia and Iran deteriorated further after the execution of...

Emad Mostaque

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