News That Matters

Must read paper on risk, nerds and the unexpected tails. Great insights by BOE’s Andrew Haldane.
All 27 EU countries should submit their big banks to a single cross-border supervisor as part of a banking union to be enacted as soon as next year, the president of the European Commission has urged. In an interview with the Financial Times, José Manuel Barroso said the EU needed to go beyond the incremental legislative measures proposed by his institution last week and take “a very big step” towards deeper integration if the bloc is to learn the lessons of the sovereign debt crisis.

Spain’s big banks are breathing a sigh of relief. The twin news of a clean bill of health from a key International Monetary Fund report, combined with confirmation of a planned €100bn European bailout will, they hope, finally convince investors to make a proper distinction between strong and weak. “This is very good news,” said a board member of one big bank. “The big question investors had was where the money would come from to shore up the banks that need it. There was a need for a backstop. What we have now with this bailout money is the backstop.”

Chinese banks issued more loans than expected in May, providing an important indication that the government is making headway in its efforts to support the flagging economy. Banks lent Rmb793bn ($125bn) last month, well above April’s Rmb682bn and also topping most forecasts for a figure closer to Rmb700bn. More than any other fiscal or monetary weapon in its arsenal, the Chinese government uses its control of the country’s banks as a way of steering the economy. With growth down to its lowest in three years, Beijing has started pressuring banks to loosen the reins on their lending to ensure that businesses can get enough credit.

Apple has struck a new alliance with Facebook to integrate the social network into its iPhone, iPad and Mac operating system at the same time as it introduces a range of new MacBook computers. The ability to post photos, map locations and links to Facebook directly from Apple devices marks a thawing in what has been seen as a potentially adversarial relationship and will bolster the two  companies’ efforts to compete with Google.


Police have raided the homes of prominent Russian opposition leaders and those of their parents in an apparent attempt to prevent their appearance at a large anti-Kremlin rally scheduled for Tuesday in the centre of Moscow, their representatives have said. Alexei Navalny, an anti-corruption blogger, was the first to report via Twitter that police “nearly split the door in two” at 9:30am on Monday to search his flat. Opposition TV personality Ksenia Sobchak, leftwing radical leader Sergei Udaltsov, and Boris Nemtsov, a former deputy minister, tweeted in rapid succession that their homes had also been targeted by police. Ms Sobchak tweeted that police had “robbed” her home and humiliated her. Pro-Kremlin website Life News, citing investigators, reported that police found Ms Sobchak “in her negligee” and had confiscated more than €1.5m from a safe.

Economically, things are not quite falling apart in India but it is becoming clear that the centre is increasingly unable to hold. Political fragmentation and weak leadership in New Delhi are eroding federal power relative to India’s states. But might decentralisation offer hope for the Indian economic union even as the very opposite is seen as Europe’s salvation? If a few years ago pundits were giddy about India’s growth prospects, today the gloom is universal. Fiscal populism, reflected in high subsidies, stubbornly high inflation and large external deficits all point to India’s precarious macroeconomic situation. Weak macroeconomics is a double blow: it has a debilitating effect on growth because it adversely affects investor sentiment; at the same time it robs India of the macroeconomic freedom to offset the decline in growth. India, unlike China, cannot spend its way out of a downturn because of large deficits.
Asian markets fell Tuesday as investor optimism over the Spanish bank bailout waned and as worries grew over this weekend’s elections in Greece. Japan’s Nikkei Average was down 1.5%, South Korea’s Kospi fell 0.9%, Singapore’s Straits Times Index was 0.8% lower. Australia’s S&P ASX 200, however, climbed 0.5% after missing Monday’s gains due to a holiday. Chinese stocks were down, both in Hong Kong and mainland China, despite news that new loans were up in May. Banks issued a better-than-expected 793.2 billion yuan ($124 billion) in new loans last month, compared with 681.8 billion yuan in April, a potential sign that Beijing’s policy easing had an effect. China’s Shanghai Composite was down 0.6%, while Hong Kong’s Hang Seng Index was 1.1% lower.

The number of job vacancies in the U.K. rose in May at its slowest pace in five months, according to a survey published Tuesday, in a sign that employers’ hiring intentions may be weakening in response to an uncertain outlook for the economy. An index based on a survey of recruitment consultants that tracks job vacancies weakened in May to 53.5 compared with 54.2 in April. A reading above 50 indicates a higher number of vacancies than the previous month. The index was compiled by financial-information firm Markit on behalf of the Recruitment and Employment Confederation and auditor KPMG. Demand for both full-time and temporary staff weakened but remained positive, the survey found. Demand for staff was strongest in sectors including computing and engineering, and weakest in sectors including hotels and catering.

The hedge-fund industry may more than double in size during the next five years, to more than $5 trillion in assets, as private fund firms broaden their offerings to compete with traditional money managers, according to a recent Citigroup Inc. survey. The poll of investors, consultants and money managers predicted that hedge funds could lure $2 trillion in new money to investment vehicles long associated with mutual-fund companies and other institutional managers, including “long-only” funds that buy and hold stocks.

Some top J.P. Morgan Chase & Co. executives and directors were alerted to risky practices by a team of London-based traders two years before that group’s botched bets cost the bank more than $2 billion, according to people familiar with the situation. Interviews with more than a dozen current and former members of the bank’s Chief Investment Office, the unit responsible for the losses, indicate that discussions about reining in London traders started as early as 2010. Certain directors were briefed then on a foreign-exchange-options bet that went bad, and were told that the trader responsible wouldn’t be allowed to

The six-year slide in U.S. home prices and the dollar’s weakness against some currencies are driving a property-buying binge by Asians, Canadians, Europeans and Latin Americans eager to own a piece of America. Plowing money into real estate may sound like a risky venture to many Americans. But to growing numbers of foreigners, U.S. housing has never seemed a smarter investment. nternational buyers accounted for $82.5 billion, or 8.9%, of the $928 billion spent on residential real estate in the 12-month period that ended in March, according a survey released Monday by the National Association of Realtors. That was up

Cyprus said that it urgently needed European financial aid to boost its banks’ capital, a step that would make it the fifth euro-zone economy to seek help from the region’s bailout funds. Cyprus Finance Minister Vassos Shiarly said that the country’s need for an international bailout was “exceptionally urgent” in order for it to recapitalize its banks, and that the issue would need to be resolved by the end of the month. According to several European officials, the size of any bailout would be unlikely to exceed €3 billion to €4 billion ($3.8 billion to $5 billion), a sum that wouldn’t strain the resources of the euro zone’s bailout funds. The economy of Cyprusan island of 800,000 peopleis 1/60th the size of the economy of Spain, which said over the weekend that it would seek European funds to recapitalize its own banks.
House prices in the U.K. fell in May and activity in the housing market slowed, a poll of surveyors showed Tuesday.  The survey, by the Royal Institute of Chartered Surveyors, also found home sales are expected to pick up in the next three months but house prices will continue to decline.  RICS said in its monthly gauge of sentiment in the housing market that a majority of the 268 surveyors it polled reported a decline in prices in May, although the proportion reporting a fall was slightly lower than it was a month earlier.  Its net price balance–the difference between the proportion of surveyors reporting a rise in prices and those seeing a fall–remained negative but improved to -16 from -19 in April. Economists had expected the balance to improve to -17. The poll found a slim majority of surveyors reported a fall in new buyer inquiries in May, which RICS said probably reflected the expiry of a tax break aimed at luring first-time buyers into the housing market. In April, a majority were reporting an increase in buyer inquiries. Vendor inquiries also weakened in May, a majority of survey respondents said.
Brent crude inched towards its lowest so far this year on Tuesday, slipping below $97 on concerns the euro zone debt crisis will worsen and hurt the global economy, threatening growth in oil demand. Brent slipped as low as $96.62 a barrel, close to the low for the year of $95.63, struck on June 4. It was trading 79 cents lower at $97.21 by 0311 GMT. U.S. oil was down 90 cents at $81.80 a barrel after dropping to a low for the year at $81.07. Both contracts have fallen for the fourth day. “We will see this kind of volatility because of the uncertainty over Greek elections, lack of clarity on the length and breath of the Spanish bank bailout,” said Ben Le Brun, a Sydney-based markets analyst at OptionsXpress. “I am not surprised to see the pull back in oil prices.”

Gold inched down on Tuesday after optimism about Spain’s bank bailout quickly gave way to renewed worries about the euro zone debt crisis ahead of a string of key events later this month. Spot gold inched down 0.1 percent to $1,592.79 an ounce by 0350 GMT. U.S. gold futures for August delivery lost 0.2 percent to $1,594. Gold buyers have pinned hope on more Fed stimulus, which would help the metal attract investors who are concerned about the threat of higher inflation.
Wall Street bankers and traders, given hope by a market rebound in the first quarter, are now seeing earnings and paychecks threatened by turmoil in Greece in what is becoming an annual cycle.  For a third consecutive year, revenue from investment banking and trading at U.S. firms may fall at least 30 percent from the first quarter, Richard Ramsden, a Goldman Sachs Group Inc. (GS) analyst, said in a note last week. Greece, which gave English the word “cycle,” has been the main reason each year that the second quarter soured after a promising first three months. Deal volume has dropped and equity and credit markets have fallen on concern that Greece may abandon the euro and the European sovereign-debt crisis will spread to nations including Spain. Those economic issues cut profit, bonuses and jobs at Wall Street firms in last year’s second half and threaten to do the same in 2012.

The U.S. added seven economies to the list of nations qualifying for an exemption from financial sanctions on Iranian oil imports, penalties intended to pressure Iran’s leaders to abandon any nuclear weapons ambitions. India, South Korea, Turkey, South Africa, Malaysia, Sri Lanka and Taiwan will not be penalized by the U.S. for continuing to import oil from Iran over the next six months because they have proven they “have all significantly reduced” the volume of the oil they buy from Iran, Secretary of State Hillary Clinton said in a statement yesterday.  China, the leading importer of Iranian crude in the first half of last year, and Singapore were not granted exemptions. U.S. officials familiar with the decision said talks are continuing, and they may win exemptions before the June 28 deadline for the sanctions to take effect. India and South Korea were the third- and fourth-largest buyers of Iranian oil in the first half of last year, according to the U.S. Department of Energy.

The 100 billion-euro ($126 billion) rescue for Spain’s banks moved Italy to the front line of Europe’s debt crisis, as the country’s bonds and equities slumped on concern it may be the next to succumb. Italy’s 10-year bonds reversed early gains today in the first trading after the Spanish bailout. Their yield rose by the most in a day since Dec. 8, adding 27 basis points to 6.04 percent. Shares of UniCredit SpA (UCG), the country’s largest bank, had their steepest decline in five months. “The scrutiny of Italy is high and certainly will not dissipate after the deal with Spain,” Nicola Marinelli, who oversees $153 million at Glendevon King Asset Management in London, said in an interview. “This bailout does not mean that Italy will be under attack, but it means that investors will pay attention to every bit of information before deciding to buy or to sell Italian bonds.”

The International Monetary Fund said Japan’s currency is overvalued and the central bank should consider further monetary stimulus, including longer-dated government bonds and private securities. “Theexchange rate has appreciated over the past year partly because of safe-haven capital inflows, and our analysis suggests that the yen is moderately overvalued from a medium- term perspective,” the IMF said in a report on Japan’s economy released today in Tokyo.  Investor concern about Europe’s sovereign-debt crisis has fueled a 5 percent gain in the yen against the dollar since mid- March, threatening the profits of the nation’s exporters. The Bank of Japan could increase its asset purchases “substantially” to help the nation overcome more than a decade of deflation, the Washington-based fund said. “The asset-purchase program could be expanded substantially beyond current plans to increase the likelihood of achieving the 1 percent inflation goal by end 2014,” the IMF said, referring to the BOJ’s price target. “Given the importance of expectations in the current low-interest rate environment, an upfront announcement of such easing could also raise inflation expectations.”
Weak euro/dollar, strong dollar Index and weakening gold price. That’s the new relationship and it’s infuriating some gold bugs. As much as many traders think gold should go up the weekly chart of Comex gold suggests there are some serious barriers to a price rise back to $1,750 an ounce or $1,850. The first dominant feature on the chart is the long term up sloping trading channel. The lower edge of the channel is defined by the long term uptrend line A starting in 2010 April. The gold price has tested this trend line as support level in 2011 December and again in 2012 April. The trading channel is defined by the upper trend line B. This is parallel to the lower trend line A. The two trend lines create an up sloping trend channel. The sustained downside break below this trading channel is the first move below the lower edge of the channel in more than 16 months.
Action to save the euro is needed in “more shortly than three months,” IMF Managing Director Christine Lagarde told CNN’s Christiane Amanpour in an exclusive interview. Lagarde’s tight deadline was a response to billionaire investor George Soros’ prediction that Europe has three months to save the euro. “The construction of the eurozone has taken time,” Lagarde said. “And it’s a work in construction at the moment.” Lagarde declined to predict whether Greece would exit the eurozone. “It’s going to be a question of political determination and drive,” she said. Lagarde came under fire recently for highlighting Greek tax evasion. She apologized that her comments were taken “in a very inflammatory way and created offence.”
Treasury Secretary Timothy Geithner will travel to India in late June for two days of talks with government and business leaders, Treasury said Monday. Geithner will participate in the third annual meeting of the U.S.-India Economic and Financial Partnership with Indian Finance Minister Pranab Mukherjee on June 27 in New Delhi. The next day, Geithner will visit Mumbai to meet with Reserve Bank of India Governor Duvvuri Subbarao and business leaders. Geithner is expected to be joined on the trip by Fed Chief Ben Bernanke.

There is not yet a clear cut case for the need for more monetary easing, Atlanta Federal Reserve Bank President Dennis Lockhart said Monday. “I don’t think any of the options should be taken off the table under current circumstances. But I am not convinced at this moment that the circumstances quite yet call for additional action,” Lockhart said in remarks to reporters after a speech in Chicago, according to Reuters. Lockhart is a voting member this year and his views are watched closely as he is considered one of the more pragmatic central bank policymakers.
The International Monetary Fund said Japan’s currency is overvalued and the central bank should consider further monetary stimulus, including longer-dated government bonds and private securities. “The exchange rate has appreciated over the past year partly because of safe-haven capital inflows, and our analysis suggests that the yen is moderately overvalued from a medium- term perspective,” the IMF said in a report on Japan’s economy released today in Tokyo. Investor concern about Europe’s sovereign-debt crisis has fueled a 5 percent gain in the yen against the dollar since mid- March, threatening the profits of the nation’s exporters. The Bank of Japan could increase its asset purchases “substantially” to help the nation overcome more than a decade of deflation, the Washington-based fund said.
Tokyo has become the world’s most expensive city for foreign staff to live in, according to research, overtaking the Angolan capital Luanda. The yen’s rise against the dollar pushed up the cost of living for staff and firms paid in other currencies. The research, carried out by the consultancy Mercer, showed that Paris, Rome and Amsterdam had all slid down the rankings as a weaker euro reduced costs for overseas firms.  London ranked 25, down seven places.
The Treasury is in “danger of being swamped by the pressures placed on it” and should consider receiving funding from the financial services industry, the former Cabinet Secretary said last night.  Lord O’Donnell warned that too many Treasury officials were leaving and that staff are underpaid. His comments come amid criticism that the Treasury has failed to develop radical policies to help boost economic growth. George Osborne, the Chancellor, has also faced accusations that some measures in the budget were poorly considered. Treasury officials are currently grappling with multi-billion pound new schemes to help encourage more private investment in infrastructure.

Bank of England policy maker Adam Posen has urged the UK central bank to buy assets other than Government bonds. Mr Posen, who will step down from his role in August, added that he was “too optimistic” when he abandoned a push for more stimulus in April. “Further asset purchases by central banks can improve the economic situation we are now in,” Mr Posen said in a speech in London. He also said it is “time for the major central banks, including the Bank of England, to engage in purchases of assets other than government bonds”. The BoE held its bond-purchase target at £325bn this month as policy makers kept a close eye on the crisis in the eurozone. Mr Posen, who until April voted to increase stimulus, said the global recovery had “petered out” and the “risk of disorder in the euro area has reinforced the trends towards excessive reluctance to invest”.

Philip Clarke, Tesco’s chief executive, has warned that consumer confidence around the world shows no sign of improvement, as he reported the supermarket’s sixth consecutive fall in quarterly UK trading. Mr Clarke said he would not be “pinned down” to a date when the performance of its British shops would improve. “We always said it would take time,” he said. The UK’s largest retailer revealed that like-for-like sales, excluding both VAT and petrol, dropped, 1.5pc during its first quarter to May 26. This was a very small improvement on the fall of 1.6pc experienced in the previous quarter, and marginally better than most analysts expected. However, Mr Clarke sounded a note of caution about its overseas shops, which in recent years have experienced stellar growth.
Business conditions have slumped to a three-year low, dragged down by a sharp deterioration in the mining industry, NAB’s business survey says. Despite a super-sized interest rate cut of 50 basis points last month, today’s NAB business survey for May shows conditions fell heavily as global confidence plunged. The survey’s reading of business conditions dropped by 4 points to -4, a reading that points to a slowing in economic growth this quarter, and more job cuts in weak industries. Business confidence also fell, dropping by 6 points to -2, as fears the future of the eurozone intensified during the month.

THE number of people taking out home loans with non-bank lenders is creeping up, a trend the government says shows banking competition is increasing. Federal Treasurer Wayne Swan has promoted non-bank lenders as a ”fifth pillar” of the financial system since the big four banks grabbed a dominant market share in the global financial crisis. Amid fierce political and media scrutiny of interest rate changes, the latest figures show a small but growing number of customers are turning to non-bank lenders. Their share of new owner-occupied home loans by value in April was the highest in more than a year, at 8.85 per cent, Bureau of Statistics figures show.
Canadians are playing a larger role in the U.S. housing market than in any year since 2007 and they outpace buyers from China and Mexico by far, according to a new survey of American real estate brokers. The survey by the Washington-based National Association of Realtors (NAR) said foreigners snapped up $82.5-billion (U.S.) worth of houses in the 12-month period ending March 31. That compared with $66.4-billion a year earlier. Canadians made up the largest share of purchasers, accounting for 24 per cent of all international sales. That compared with 23 per cent in 2011 and 11 per cent in 2007.
Bolivia is taking over a Swiss-owned zinc and tin mine in the western part of the country, a government spokesman announced Monday. The move is part of President Evo Morales’ ambitious program to recover the nation’s natural assets from foreign private ownership. Presidential Minister Juan Ramon Quintana told state-run media that “the government has decided to nationalize the Colquiri mine which belongs to Swiss company Glencore’s subsidiary Sinchi Wayra.” The government announcement followed a meeting over the weekend with union leaders from the Bolivian Miners’ Trade Union Federation (FSTMB) and other organizations from the Colquiri mining district to discuss the takeover, Quintana said.

Bank of Korea (BOK) Governor Kim Choong-soo said Tuesday that global economy remained bogged down in the crisis that spread from Wall Street to Europe. “Despite each country’s efforts over the past five years to escape from the global financial crisis, which is called the severest one since the Great Depression in the 1930s, global economy remains bogged down in the crisis,” Governor Kim said in a speech for the 62nd anniversary of the founding of the South Korean central bank. The financial crisis that started from Wall Street has spread to Europe, resulting in the sovereign debt crisis, Kim said, noting that anybody can still find neither when the crisis will end nor what would be needed to terminate the crisis.

The U.S. agricultural economy had recovered more quickly from its worst recession since the 1930s than many other sectors, according to a report released Monday by the federal government. The total value added to the U.S. economy from the farm sector rose about 35 percent between the second quarter of 2009 and the fourth quarter of 2011, said the report prepared by the Council of Economic Advisers, the White House Rural Council and the U.S. Department of Agriculture (USDA). Strength in agricultural production also supported other parts of the economy. Farm machinery shipments reached nearly 3 billion dollars in 2011 while manufactured food product shipments exceeded 710 billion dollars, both of which were record high.
China’s fiscal revenue in the first five months rose 12.7 percent from the same period a year ago to nearly 5.3 trillion yuan (841.3 billion U.S. dollars), the Ministry of Finance (MOF) said Monday.
The increase was down 19.3 percentage points compared to the Jan.- May period last year. The ministry attributed the slower growth to economic weakness, slower price rises, dwindling corporate profits and tax cuts to adjust revenue distribution.

Minister of Commerce Chen Deming said Monday China’s foreign trade could grow by around 10 percent this year “if lucky”, meanwhile, he warned of the continuing severity to come in the remainder of the year. Customs data released Sunday showed the country’s foreign trade rose 14.1 percent year on year to 343.58 billion U.S. dollars in May, rebounding from the 2.7-percent growth registered in April.

China’s inflation, industrial output and retail sales all flagged in May for a second straight month of sluggish growth that galvanized policymakers last week into taking their boldest action yet to combat a sharpening slowdown. A flurry of data over the weekend explained China’s surprise cut in interest rates on Thursday – its first since the global financial crisis – by showing the extent of the domestic economy’s weakness. The rate cut followed a number of measures designed to get money flowing back into the economy. Beijing could offer more support if needed to combat risks from the euro zone debt crisis, which claimed Spain this weekend as the fourth country to seek financial support, and to promote stability in a year of leadership change, analysts said.
Dismissing concerns that India’s economic growth will falter further in the current fiscal due to policy paralysis, the Finance Minister, Mr Pranab Mukherjee, said all steps are being taken to get the economy back to the pre-2008 growth trajectory. He also saw the current fiscal (2012-13) as a year of ‘turnaround’ for the economy, indicating that GDP growth could comfortably exceed 7 per cent. The optimism stems from the recent decline in global oil prices, interest rate cycle reversal by the central bank, and expectation of a normal South-West monsoon. “I do not accept the prophecies of self-styled Cassandras. We are taking all steps to come back to the targeted GDP growth. We expect to make a turnaround this year,” Mr Mukherjee said at the 28th annual conference of Chief Commissioners and Directors-General of Income Tax in the Capital on Monday.  Terming the GDP growth of 6.5 per cent in 2011-12 as “disappointing”, Mr Mukherjee pointed out that the renewed global uncertainty had affected domestic business sentiments last fiscal. The tight monetary policy also did not help.

Finance Minister Pranab Mukherjee, on Monday, rejected the Standard and Poor’s report that India could be the first BRIC country to falter and said there would be a turnaround in growth prospects in the coming months. Hours after S&P threatened to downgrade India’s credit rating to speculative grade with highly loaded political remarks, Mr. Mukherjee said the government was fully seized of the current situation and expressed confidence that there would be a turnaround in growth prospects in the coming months. “This (S&P report) is not based on a fresh rating action. S&P had issued India’s sovereign credit rating on April 25 reaffirming the country’s long term sovereign credit rating at BBB(), although it revised the outlook from negative to stable,” he said in the statement.

Indirect tax collections have increased by 16.1 per cent to Rs.37,166 crore in May on the back of rise in excise duty and service tax rates.  The overall growth in indirect tax revenue collection during May is about 16.1 per cent which is 5.7 per cent higher than last month’s position, an official release said.  The indirect tax, excise duty, customs and service tax, collections had totalled Rs.32,019 crore in May, 2011.  During the month under review, service tax collections grew by hefty 45.4 per cent to Rs.8,607 crore from Rs.5,918 crore in the same month in the previous fiscal. Collections from excise at the same time were up 16.2 per cent at Rs.14,693 crore against Rs.12,640 crore in May, 2011.
Kulvinder Gill, professor of breeding and genetics at the Washington State University in the US, describes himself as a dreamer and an optimist. One of his dreams is to make sure food production does not decline over the next few decades, when increasing temperatures act on the yields of major crops. Specifically, he is beginning a project with six other organisations in India to make wheat less sensitive to heat while flowering. “We hope we can solve the problem in four years,” says Gill.  Wheat and rice, two major crops in India, are sensitive to rapid changes in temperature. An increase of 2 degree centigrade over normal during flowering will reduce the yield of wheat by 15-20%. An increase in 1 degree centigrade at night can reduce the yield of rice by 10%. India’s average temperature is supposed to rise by at least 1 degree centigrade by 2050.
South Korea is seeking to expand free trade pacts with other countries to overcome present economic challenges and achieve sustainable growth, the country’s top economic policymaker said Tuesday. In a meeting of economic policymakers, Minister of Strategy and Finance Bahk Jae-wan said the country must do more to make inroads into new overseas markets while at the same time opening itself to foreign competition. He stressed that protectionism is not an answer to economic problems and called for more free trade agreements (FTA) to be reached so the country can gain access to more overseas business opportunities.
South Africa will join Citi’s influential World Government Bond Index (WGBI) from October, the US bank said on Monday, conferring an important seal of approval on the continent’s biggest economy after recent credit outlook downgrades. Citi said 11 of South Africa’s government bonds worth $83bn had met the WGBI’s entry requirements for three straight months, allowing it to accede to the index later this year. When South Africa’s possible inclusion was first announced in April, bonds rallied sharply due to expectations of a flood of cash from index-tracking funds that would need to load up on South Africa debt.
The Iranian Oil Ministry plans invest 100 trillion rials (almost $8.2 billion) in 12 projects in the oil and gas sectors in the current Iranian calendar year, which ends on March 20, 2013. The money will be spent mainly on developing the South Pars gas field, developing other oilfields in the Persian Gulf, and establishing LNG plants, the Mehr News Agency reported.  According to the Fifth Five-Year Development Plan (2010-2015), $30 billion should be invested in the oil and gas industries every year.  Oil Minister Rostam Qasemi has said that the global economic sanctions imposed on the Islamic Republic would not hinder the development of the country’s oil industry.  “The ministry is committed to accelerating the implementation of its development plans, financed through the financial system and through government bonds,” IRNA quoted Qasemi as saying in April.

OPEC’s Iraqi president Abdul Karim al-Luaibi denied Iraq was overproducing to make up for Iranian production being lost to sanctions. “Those who say that Iraq has compensated for Iranian oil production are mistaken,” he said, speaking as Iraqi oil minister. “We have no big increase in production to compensate for Iran.”  Speaking in his capacity as president of the Organization of Petroleum Exporting Countries ahead of its meeting in Vienna later this week, Mr. Luaiby said that world oil markets are currently oversupplied and the surplus has led to a “severe” and rapid decline in oil prices.