FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

Macroeconomics

Little changed to support the rebound in EUR and weakness in the USD on Thursday.&nbsp; In fact dovish ECB comments and on-message statements from senior Fed members suggest the policy divergence is likely to intensify next month.&nbsp; Eurozone industrial production showed a flat trend in recent quarters and US labour data were firm.&nbsp; Eurozone GDP and US retail sales today in focus. A comparison of CAD and AUD reveal much in common, we see downside pressure persisting for both.&nbsp; Weaker oil prices an immediate threat for CAD.&nbsp; Bank of Canada speech tonight in focus.&nbsp; Australian RBA minutes and wage data next week pose downside risk for the AUD.

Little changed to support the rebound in EUR and weakness in the USD on Thursday.&nbsp; In fact dovish ECB comments and on-message statements from senior Fed members suggest the policy divergence is likely to intensify next month.&nbsp; Eurozone industrial production showed a flat trend in recent quarters and US labour data were firm.&nbsp; Eurozone GDP and US retail sales today in focus. A comparison of CAD and AUD reveal much in common, we see downside pressure persisting for both.&nbsp; Weaker oil prices an immediate threat for CAD.&nbsp; Bank of Canada speech tonight in focus.&nbsp; Australian RBA minutes and wage data next week pose downside risk for the AUD.

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.&nbsp; Oil prices appear to be responding to concerns over too much supply.&nbsp; The ECB has said low oil prices are a contributing factor to its assessment that more policy easing may be required. We stick to our weaker EUR view, as other major CBs are more prepared to look through the dis-inflation risk.

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.&nbsp; Oil prices appear to be responding to concerns over too much supply.&nbsp; The ECB has said low oil prices are a contributing factor to its assessment that more policy easing may be required. We stick to our weaker EUR view, as other major CBs are more prepared to look through the dis-inflation risk.

AmpGFX - AUD pulled harder in opposite directions

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The institutional entitlement offer is expected to be completed tomorrow, post which an institutional shortfall bookbuild is likely to be launched. While we await the details of the shortfall bookbuild, we take a look at the deal.&nbsp;We would bid at most at TERP given:<ul><li>The Hony deal&nbsp;is likely to lead to an end of the Scepter episode, as a full fledged takeover,&nbsp;near the previously offered price, looks&nbsp;nearly impossible</li><li>The A$3.5bn combined capital raise will decrease net gearing from 89% to 41%, thus, easing debt concerns in the near term.&nbsp;However, earnings at EBITDA level will not be impacted from the capital raise and the stock doesn't seem to be trading at a very large discount to its peer group on EV/EBITDA basis, thus, upside may not be very high</li><li>Recent lessons from the Origin Energy deal point to a good performance in the short-term, while Oil prices remain key drivers over the medium to long term and may continue to put pressure on the stock performance</li><li>Overall we would be comfortable bidding at most as TERP, since that would still offer some buffer in terms of valuations versus peers</li></ul>

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The institutional entitlement offer is expected to be completed tomorrow, post which an institutional shortfall bookbuild is likely to be launched. While we await the details of the shortfall bookbuild, we take a look at the deal.&nbsp;We would bid at most at TERP given:The Hony deal&nbsp;is likely to lead to an end of the Scepter episode, as a full fledged takeover,&nbsp;near the previously offered price, looks&nbsp;nearly impossibleThe A$3.5bn combined capital raise will decrease net gearing from 89% to 41%, thus, easing debt concerns in the near term.&nbsp;However, earnings at EBITDA level will not be impacted from the capital raise and the stock doesn't seem to be trading at a very large discount to its peer group on EV/EBITDA basis, thus, upside may not be very highRecent lessons from the Origin Energy deal point to a good performance in the short-term, while Oil prices remain key drivers over the medium to long term and may continue to put pressure on the stock performanceOverall we would be comfortable bidding at most as TERP, since that would still offer some buffer in terms of valuations versus peers

Origin Energy plans to sell US$286m/A$400m worth of stock as part of its retail shortfall bookbuild, post completion of its retail entitlement offer.We had covered the institutional short fall <a href="http://www.smartkarma.com/insights/capital-raise-still-doesn-t-quell-the-uncertainty-but-stock-remains-cheap-towards-the-lower-end" target="_blank">here</a>, concluding that the deal remained cheap at the lower end. The stock has performed well since then and remained well above the shortfall bookbuild clearing price of A$5.20/share.We would expect the retail shortfall to clear at least at those levels, if not above, despite its larger size. We would be inclined to bid up to a suitable discount.

Origin Energy plans to sell US$286m/A$400m worth of stock as part of its retail shortfall bookbuild, post completion of its retail entitlement offer.We had covered the institutional short fall here, concluding that the deal remained cheap at the lower end. The stock has performed well since then and remained well above the shortfall bookbuild clearing price of A$5.20/share.We would expect the retail shortfall to clear at least at those levels, if not above, despite its larger size. We would be inclined to bid up to a suitable discount.

QUICK NOTE: Time to reload - but this time round limited risk will likely lead to limited returns

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

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Event-Driven

<ul><li class="p1">We are retaining our AUD 8.00 per share fair value estimate&nbsp;despite a soft third quarter, with just 14.5&nbsp;mmboe produced, along with a hastily&nbsp;rejected left-field AUD 6.88 conditional takeover bid from&nbsp;private equity.</li><li class="p1">Another strong performance from the Papua&nbsp;New Guinea Liquefied Natural Gas, or PNG LNG, project&nbsp;partially offset unscheduled oil maintenance at both Chim&nbsp;Sao and Mutineer-Exeter/Fletcher Finucane and lower than&nbsp;expected domestic gas demand in Queensland.</li><li class="p1">Our&nbsp;2015 earnings forecast declines 30% to AUD 0.13 per share&nbsp;as a result of forgone high-value oil.</li><li class="p1">Regardless, Santos&nbsp;shares have rallied to AUD 6.50 on the takeover approach.</li><li class="p1">An improved bid is the obvious route to a closing in the gap&nbsp;between the shares and our AUD 8.00 fair value estimate;&nbsp;that, or an equity raising and/or asset sales to address debt&nbsp;levels.</li></ul>Analysts: Mark Taylor &amp; Mathew Hodge

We are retaining our AUD 8.00 per share fair value estimate&nbsp;despite a soft third quarter, with just 14.5&nbsp;mmboe produced, along with a hastily&nbsp;rejected left-field AUD 6.88 conditional takeover bid from&nbsp;private equity.Another strong performance from the Papua&nbsp;New Guinea Liquefied Natural Gas, or PNG LNG, project&nbsp;partially offset unscheduled oil maintenance at both Chim&nbsp;Sao and Mutineer-Exeter/Fletcher Finucane and lower than&nbsp;expected domestic gas demand in Queensland.Our&nbsp;2015 earnings forecast declines 30% to AUD 0.13 per share&nbsp;as a result of forgone high-value oil.Regardless, Santos&nbsp;shares have rallied to AUD 6.50 on the takeover approach.An improved bid is the obvious route to a closing in the gap&nbsp;between the shares and our AUD 8.00 fair value estimate;&nbsp;that, or an equity raising and/or asset sales to address debt&nbsp;levels.Analysts: Mark Taylor &amp; Mathew Hodge

Maintenance-Crimped Third Quarter Overshadowed by Takeover Bid

Australia

Washington H. Soul Pattinson & Company Limited is an investment holding company. The Company owns shares and properties, coal mining, bulk handling, commercial television licensee, telecommunications carrier, merchant banking, funds management, pharmaceutical retailing, manufacture, processing and marketing of biscuits and cakes.

Washington H. Soul Pattinson and Co. Ltd (SOL AU)

Santos Limited explores for and produces natural gas, crude oil, condensate, naphtha and liquid petroleum gas.  The Company conducts major onshore and offshore petroleum exploration activities at oil and gas fields in Australia (Cooper/Eromanga Basins), the United States (Gulf of Mexico), Indonesia and Papua New Guinea. The Company also transports crude oil by pipeline.

Whitehaven Coal Limited mines and sells metallurgical and thermal coals to the global steel, power generation, and metallurgical industries.

New Hope Corporation Limited is a thermal coal production company based in Australia. The Company also has interests in logistics and infrastructure operations in Australia as well.

Viva Energy Group Limited markets petroleum products. The Company focuses on making, importing, and delivering the fuels, lubricants, chemicals, and bitumen. Viva Energy Group serves the mining, aviation, and marine industries in Australia.

Beach Energy Limited explores for, develops, and produces oil and natural gas. The Company holds interests in exploration and production tenements in Australia, USA, Egypt, Tanzania and Papua New Guinea.

Paladin Energy Ltd operates as a mining company. The Company explores and mines uranium. Paladin Energy serves customers worldwide.

Stanmore Coal Ltd. explores for coal in Australia. The Company's interests include a portfolio of coal assets within Queensland's Bowen and Surat Basin coal provinces.

Emerald Resources NL is an oil and gas exploration company with exploration activities in the United States and Australia.

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

Idemitsu Kosan Co., Ltd. explores, imports, refines, and distributes petroleum and its related products.  The Company also manufactures and sells petrochemical products.

PTT Exploration and Production Public Company Limited explores for crude oil and natural gas, develops fields for production, and produces oil and natural gas. The Company is a subsidiary of the Petroleum Authority of Thailand.

China Petroleum & Chemical Corporation produces and trades petroleum and petrochemical products. The Company offers gasoline, diesel, jet fuel, kerosene, ethylene, synthetic fibers, synthetic rubber, synthetic resins, and chemical fertilizers. China Petroleum & Chemical markets its products throughout China.

ENEOS Holdings, Inc. operates refining and marketing businesses. The Company refines and distributes petroleum and petroleum chemical products. ENEOS Holdings also provides non ferrous metals, electronic materials, and other products.

APA Corporation operates as an oil and gas company. The Company focuses on exploration and production of oil and gas properties. APA serves clients worldwide.

Marathon Oil Corporation is an independent international energy company engaged in exploration and production, oil sands mining and integrated gas. The Company's operations are focused in North America, Africa and Europe.

EQT Corporation is an integrated energy company with emphasis on Appalachian area natural-gas supply, transmission and distribution. The Company, through its subsidiaries, offer natural gas products to wholesale and retail customers.

Kunlun Energy Company Ltd, through its subsidiaries, explores and produces crude oil and natural gas in China.

Bharat Petroleum Corporation Limited explores for and refines crude oil. The Company manufactures petroleum, petroleum products, lubricants, liquefied petroleum gas, aromatics like benzene and toluene, and other related products. Bharat has retail outlets throughout the country.

Antero Resources Corporation explores, develops, and produces oil and natural gas. The Company focuses on the acquisition, development, and production of unconventional oil and liquids-rich natural gas properties. Antero Resources serves customers in the United States.

Origin Energy Limited is an integrated energy company. The Company is an energy retailer in Australia across electricity, gas and LPG. Origin Energy also holds a generation portfolio and fuel position and a renewable energy portfolio, as well as unconventional gas and LNG interests.

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Origin Energy (ORG AU)

AmpGFX - CAD and AUD in the hot-seat

Little changed to support the rebound in EUR and weakness in the USD on Thursday. In fact dovish ECB comments and on-message statements from...

Greg Gibbs

AmpGFX - AUD pulled harder in opposite directions

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity...

Greg Gibbs

Ridding itself of the Spectre of Scepter

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The...

Sumeet Singh

QUICK NOTE: Time to reload - but this time round limited risk will likely lead to limited returns

Origin Energy plans to sell US$286m/A$400m worth of stock as part of its retail shortfall bookbuild, post completion of its retail entitlement...

Sumeet Singh

Maintenance-Crimped Third Quarter Overshadowed by Takeover Bid

We are retaining our AUD 8.00 per share fair value estimate despite a soft third quarter, with just 14.5 mmboe produced, along with a...

Morningstar, Inc.

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