Far East Energy seeks refinancing to boost drilling

David Nealis President of Blue Bridge

Far East Energy seeks refinancing to boost drilling

Far East Energy, a United States-based developer of coal bed methane gas projects in Shanxi province China, is seeking to refinance a project loan it obtained in November 2011 to finance a ramp-up in drilling. The nine-month US$ 25million loan carries an effective interest rate of 9.8%. Far East Energy was among the earlier foreign firms to venture into

China's nascent coal bed methane industry. China has the world's third-largest geological reserve of coal bed methane, but the industry has yet to achieve large-scale commercial success like those in USA.

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

StanChart to Increase Commodity Presence in China

David Nealis at the China Futures Exchange

StanChart to increase commodity presence in China

According to a report from Reuters; Standard Chartered Plc (StanChart) is preparing to launch a China commodity trading Unit., they will be among a few of Western companies resolute to over come the capital controls and complex red tape to be able deal in the China market. The setting up of a WFOE will allow the London-based bank to import metals such as copper, offer more hedging products for domestic customers and trade futures contracts through local brokerages on the Shanghai Futures Exchange. I wish them the best of luck; this is a very exciting move. 

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

China signs corn deal with Argentina

David Nealis President of Blue Bridge

China signs corn deal with Argentina

According to a statement posted on Argentina's agriculture ministry website; China has signed an agreement to import corn from Argentina.

The agreement will provide China with an alternative corn supplier other than the United States. Given its strong demand, China’s corn imports in 2012 are expected to reach 3 million tons, according to the statement. China imported 1.57 million tons of corn last year, according to data from the General Administration of Customs.

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

China and Turkey Sign Currency Swap Deal

Bill Henner and David Nealis in Shanghai

China & Turkey Sign Currency Swap Deal

China's central bank said that it has signed a RMB10 billion (US$1.59 billion) currency swap agreement with the Central Bank of Turkey.

According to a statement on People's Bank of China’s website, the three-year agreement will be extendable by mutual consent.To promote the international use of Renminbi, China has signed currency swap agreements with 15 countries and regions since the onset of the global financial crisis in late 2008.  

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?  

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

Gulfstream to open service center in Beijing

Gulfstream to open service center in Beijing

Gulfstream Aerospace Corp. announced today that it has established a JV with Beijing Capital Airlines Co. Ltd. (Deer Jet) and Grand China Aviation Technik (GCAT) to operate a business jet service center at the

Beijing Capital International Airport. Deer Jet is a subsidiary of Hainan Airlines Group and China's largest business jet charter provider. Its fleet includes 26 Gulfstream aircraft. GCAT, another Hainan Airlines Group subsidiary, offers aircraft repair, maintenance and overhaul services. The new venture will operate under the name Gulfstream Beijing.

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

RBS launches China Desk in London

David Nealis in Shandong, China

RBS launches China Desk in London
The Royal Bank of Scotland plc (RBS) announced the launch of a new China Desk in London. The Co-CEO of International Banking at RBS said the launch of the China Desk creates a hub in London to help clients in Europe to take advantage of the growth opportunities in China, which is one of the world's most robust economies. It also opens up RBS’s global network of 36 countries to its Chinese clients, these are exciting times indeed.

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

Sinopec and BP seal US$ 1.1 billion deal for JV in China.

David Nealis

Sinopec and BP seal US$ 1.1 billion deal for JV in China.
Sinopec will build a RMB 7 billon (US$1.1billion) petrochemical complex in the southwest China city of Chongqing with British oil firm BP Plc and South Korea's SK Group. According to a statement released by Chinese government source, the three companies signed a memorandum of understanding for the project which will include a 600,000 ton-a-year acetic acid plant and a 200,000 ton per year BDO facility. The acetic acid plant will be built by a JV that's 51% owned by BP, 44% held by Sinopec and 5% by Chongqing Energy Investment Group. According to a statement released by SK Group their joint venture with Sinopec will invest in the BDO plant, and will be 50 percent owned by each firm.

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

Futures and Options Risk Disclosure
Trading futures and options involves the risk of loss. You should consider carefully whether futures or options are appropriate to your financial situation. You must review the customer account agreement and risk disclosure prior to establishing an account. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of futures results. The risk of loss in trading futures or options can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

China Buys 770 Metric Tons of Gold in 2011

China Buys 770 Metric Tons of Gold in 2011

China bought 20 percent more gold in 2011 compared to 2010 bringing the total to 770 metric tons according to an annual report by the World Gold Council.

India, which is the world’s largest importer of gold, bought an amazing 933 metric tons in 2011.Global gold purchases rose 0.04 percent to 40,671 metric tons in 2011.

China, the world’s second-largest economy, has had an increased gold demand based on multiple factors to include higher income levels which resulted in a surge in demand for gold jewelry and the price of gold has also made it a popular hedge against inflation.

The World Gold Council said it's "likely that China will emerge" as the world's largest gold market for the first time ever in 2012.

Investing in gold has become increasingly more popular because of a lack of other investment options in China, the Shanghai Composite Index was down 20 percent in 2011 and Chinese real estate prices have started to fall.

It seems that 2012 is going to be another good year for gold purchases in China.

China continues to be an ideal place for firms looking for growth, what is your firm’s China Market Strategy?

China Will Invest US$3 Billion in North Korea

David Nealis at Yonsei University in Seoul

China will invest US$3 billion in a special economic zone in northeastern North Korea, a boost for the DPRK’s central planned economy and hopefully to the 200,000 residents of Rason.Pyongyang's dependence on Beijing, its only major ally and largest trading partner, has grown over the years. 

According to sources, China would build an airport, a power plant, a cross-border railway and piers in the North's Rason economic zone bordering China and Russia by 2020, Yonhap reported yesterday. In return for the construction, China had secured the right to use the Rason port for 50 years, the South Korean news agency said. Though there has been no official statement from Beijing. 

The 55-kilometre cross-border railway track will connect Rason with the Chinese city of Tumen. The use of piers at Rason gives China's northeastern provinces direct access to the Sea of Japan, giving a boost to the economy of north eastern China as well. China had lacked this access for 150 years, since it signed a treaty ceding part of its coastline to Russia and leaving its northeastern part landlocked. The new arrangement reduces shipping costs for Chinese firms operating in the area.

While total accumulated foreign investment in North Korea reached US$1.475 billion in 2010, up from US$1.437 billion the previous year, according to the United Nations Conference on Trade and Development, Pyongyang's economy is still struggling. This is not the first time China has set up an SEZ with the North Korea, but let’s hope for the people of North Korea that this time it is successful.

The President of Petrodar Oil Firm Kicked Out of South Sudan

David Nealis President Blue Bridge

Liu Yingcai a Chinese national, the president of Petrodar Operating Company PDOC in the nation of South Sudan, PDOC the nation’s largest foreign oil firm has been given 72 hours to leave the nation.

The government of South Sudan released a statement in which a government investigation found Mr. Liu was found to be involved in a conspiracy with the government of Sudan to steal oil from South Sudan

Petrodar Operating Company is a consortium of oil firms to include State Owned Chinese oil firms and a Malaysian firm. According to their website PDOC is an operating company working in the industry of exploration, development, production and transportation of crude oil. It operates in blocks 3D, 3E and 7E which are located in the south east of Sudan with a total concession area of 72,420 sq. km. PDOC is incorporated under the laws of the British Virgin Islands and has a registered branch in Sudan.

Yunnan Medicinal Herb Prices Increase By 30%

David Nealis President Blue Bridge

Yunnan Medicinal Herb Prices Increase By 30% 

Prices of more than 200 Chinese medicinal herbs from Yunnan province China have gone up an average of 30 percent from the same time last year because of an ongoing drought in the region that has decimated Yunnan farms for the third straight year according to a report in the Beijing Times. Yunnan is a major supplier of Chinese medicinal herbs for the PRC.

This directly affects the cost of traditional Chinese health care as well traditional foods that contain medicinal herbs.

Beijing and Hong Kong Office Space More Expensive Than New York!!!

Beijing and Hong Kong Office Space More Expensive Than New York!!!

David Nealis President of Blue Bridge

Hong Kong tops the list as the most expensive city for office space in the world. 

Hong Kong was the world’s most expensive city for office space last year followed by London, Geneva, Tokyo and Zurich according to property consultancy DTZ. Strong demand and rent increases pushed the total occupancy cost of a workstation in HK to US$ 25,160 per year, a 13 percent increase year of year.

DTZ went on to forecast HK to remain the most expensive office space in the region to at least until 2016.

DTZ said the increase in office space costs were also seen in major cities across China, which continued to rise over the past year, driven by demand from domestic firms interested in having their brands associated with top office buildings. The highest increase in office space costs was seen in the China capital, Beijing’s Central Business District rose 38 percent year on year, fuelled by rent rate increases by landlords and limited office space supply. 

Obviously the high rents in Hong Kong signify the value of being in the market here, this has been great for Hong Kong’s real estate developers, but the side affect is it is affecting small locally grown firms as well as small to midsize firms wanting to locate here. Hong Kong is also seeing a brain drain as young professionals look to other markets to start their firms and purchases houses due to the high costs in here.

Drought and Low Temps Could Affect China’s Crops This Year

David Nealis with Corn Crop

China is expecting more unfavorable weather this year compared to last year and wider the Agriculture Ministry said.

A major possibility of a “severe spring drought” was foreseen in area including the northeast of the country, the country’s corn and soy bean belt, while lower than normal temperatures were expected in parts of the northeast, which could delay plantings of the crops according to a report on the Agriculture Ministry website.

So this week we saw the Chinese purchase over US$ 10 Billion in US Soy products , if the corn crop in China is not sufficient to their needs I believe we could see another large order for US corn from the Chinese similar to the one we saw this last fall.

UBS SDIC Fund to Conduct Arbitrage of Commodity Futures

David Nealis at the China Financial Futures Exchange Shanghai

UBS SDIC Fund to Conduct Arbitrage of Commodity Futures
China has approved the country's first fund to conduct commodity futures arbitrage trading, which analysts said could bring maturity and stability to the country's volatile commodity futures market. UBS SDIC, a fund management JV between UBS AG and the parent of the State Development and Investment Corp (SDIC), will be able to arbitrage commodity futures through a managed account product. Unlike the nation's stock market, most participants in China's commodity futures market are speculators and industry hedgers, with few professional institutional investors such as investment funds.

D.E. Shaw in China Fund Tie-Up

David Nealis President of Blue Bridge

D.E. Shaw in China Fund Tie-Up

D.E. Shaw and Company, one of the world's largest hedge funds, is teaming up with its local

Hong Kong partner to launch the first RMB denominated private equity fund for the legendary Wall Street firm. Which many analysts believe signals international capital inflows into China are continuing despite growing concerns about the country's economic outlook. According to a South China Morning Post report, D.E. Shaw is working with Hong Kong-based Ascendent Capital to launch the RMB-denominated fund, which aims to initially raise around RMB500 Million (US$79.5 million).

Seems like Hong Kong is the place to be these days.

China Signs Massive US Soy Deals

David Nealis President of Blue Bridge in Soybean Field

China Signs Massive US Soy Deals

I statement released by the Chinese Government stated; The agricultural ministries of China and the United States will further enhance agricultural exchanges and cooperation, deepening mutual understanding and trust, so as to achieve mutually beneficial development in the future, Minister of Agriculture Han Changfu said. Agriculture was one of the first areas in which China and the United States began to cooperate, as the two are both large nations of agricultural production, trade and consumption and view agriculture as a strategic and basic industry, according to Han.

And shortly afterwards China, the world’s largest soybean importer and consumer, signed agreements to purchase 8.62 million metric tons of the oilseed from U.S. suppliers in a deal valued at $4.3 billion.

A Chinese trade delegation signed agreements with US grain companies to buy 8.62 million tons of soybeans from the United States and will sign more deals in California for a record-setting purchase topping 12 million tons. Chinese powerhouses like COFCO Co Ltd, the country's largest State-owned grain trading house, and Sinograin, which manages state grain reserves, signed deals in Des Moines, Iowa, with Archer Daniels Midland, Bunge Ltd, and Cargill Inc, among others. The soybeans will come from supplies harvested last fall and the crop that will be planted this spring. The value of the purchases in total will be around US$6 billion.

Chinese and U.S. officials have attended a symposium last week in Des Moines, Iowa sponsored by the USDA. Chinese companies intend to invest more on advanced agricultural technology and sustainable farming from the U.S., Xinhua News Agency reported, citing an interview with the Minister of Agriculture Han Changfu, who is accompanying the Chinese Vice-President Xi Jinping his week on his trip to Iowa.

China's Citic is planning expansion into US market

David Nealis President Blue Bridge

China's Citic is planning expansion into US market
Citic Securities Co., Which is China's largest brokerage firm by market value, is planning to enter the US market, Citic Securities initial goal is to secure a bigger role in helping Chinese companies expand abroad, the Wall Street Journal reported, quoting people familiar with the matter. Fresh from its US$ 1.7 billion IPO in Hong Kong in October 2011, Citic Securities has applied with US regulators for a securities license that would allow it to underwrite stocks and bonds in the world's largest economy, the report said.

Quoting Thomas Friedman “The World is Flat”; This should be a wake up call for all of the US brokerage firms who haven’t considered entering the Greater China Market, what were once only players in their domestic markets are now entering your domestic market.

BP gets OK for South China Sea Gas Exploration

David Nealis President of Blue Bridge

BP gets OK for South China Sea Gas Exploration BP PLC has obtained approval from the Ministry of Commerce of China to explore in the South China Sea in what will be the company's second deepwater project in China. BP received approval to have a presence in a gas field known as block 43/11, operated by the China National Offshore Oil Corp (CNOOC). BP will have a roughly 40% stake in the block during the exploration period and a 20% share when the project has moved into production according to sources familiar with the deal.

Agricultural Bank of China opens London branch

Agricultural Bank of China opens London branch

David Nealis President of Blue Bridge

The Agricultural Bank of China Ltd, a major Chinese State-owned commercial lender ranked among the largest four banks in China announced it has launched an overseas subsidiary in London. The bank said in a press release that the establishment of the London unit will support their expansion in the European market and efforts to create a 24-hour global capital operation platform, as well as a multi-currency cross-border settlement network; this may also aid London in becoming a major center for the RMB trade.

Sinochem Wants to Quadruple Overseas Oil Output by 2020

David Nealis President of Blue Bridge

China's Sinochem Corp aims to nearly quadruple its overseas oil and gas output to 300,000 barrels oil equivalent per day (bpd) by 2020, building three production hubs in Colombia, Brazil and the Middle East, Reuters reported. Its oil and gas assets are dwarfed by China’s large oil firms such as Sinopec Corp, PetroChina and CNOOC Ltd. Though the target means a big leap in Sinochem's upstream portfolio, 300,000 bpd is equivalent to just 3% of China's total oil use.

China Grants Seven QFII Licenses in January 2012

David Nealis President of Blue Bridge at Shanghai Exchange

The China Securities Regulatory Commission (CSRC) granted Qualified Foreign Institutional Investors (QFII) licenses to seven investors including the South Korea's National Pension Service and Shinhan BNP Paribas Asset Management Co Ltd. China launched the QFII scheme in 2003 to allow foreign investors to buy Chinese stocks and bonds and has so far granted 142 QFII licenses and US$22.24 billion in combined investment quotas, which isn’t that large of an amount considering China is the world’s second largest economy.

Xinjiang’s Inland Port Sees Jump in Foreign Trade.

Alataw Pass is modernizing the Silk Road

China's largest inland port, the port of Alataw Pass in Xinjiang Uygur autonomous region located in western China, saw its foreign trade value reach US$17.4 billion last year, up by 46.5% from the previous year. Last year, China imported 18.62 million tons of goods through the port, with an import value of US$ 14 billion. Exports from the inland port were 1.72 million tons with a value of US$3.4 billion, according to the Customs of Urumqi, the capital city of Xinjiang province. I believe this inland port in Xinjiang province will completely change the financial environment of western China as well as improve the cargo traffic through the ports of some Baltic states like Estonia.

Fortescue Forcasts Stronger Iron Ore demand From China

David Nealis President of Blue Bridge

Fortescue Forcasts Stronger Iron Ore demand From China.

Australia's Fortescue Metals Group shrugged off worries about a slowdown in Chinese demand for iron ore, vowing to stick with an US$8.4 billion mine expansion plan and forecast China to remain a big buyer in coming years. The company sells 95% of its output to Chinese steel mills, China is the world's biggest buyer of iron ore and plans to nearly triple production by mid-2013. Spot iron ore prices fell 19% in 2011 as China clamped down on liquidity, but have been steady this year around US$140 a ton.

This makes me wonder if Fortescue sees something in the market that I do not see, with the EU slow down which is China’s largest trading partner and the continued restrictions on real estate in China, I am not sure where this increased Chinese demand is going to come from.

Midwest Farmland Values See Biggest Rise in 35 Years



Jim Rogers and David Nealis in Singapore

This is good news for the Midwest of the USA. It will be interesting to see how this affects the price of corn and soybeans in the coming years. And I have to give credit were credit is due, Jim Rogers suggested that I should  buy a farm more than 18 months ago and he gave multiple reasons for it. I didn’t buy a farm but I did make investments into agriculture that have been very fruitful. Thanks Jim for the great guidance!

Please read the article below from Reuters on Midwest Farmland Values.

Thanks for reading my blog.

David Nealis  

Midwest Farmland Values See Biggest Rise in 35 Years

Published: Thursday, 16 Feb 2012 | 5:41 PM ET

By: Reuters

 Prices of farmland in the U.S. Midwest Corn Belt rose 22 percent in 2011, the biggest annual gain since 1976, the Federal Reserve Bank of Chicago said on Thursday in its quarterly survey of agricultural bankers.

"The year 2011 may go down in the annals of U.S. agriculture as a once-in-a-generation phenomenon," the bank said in summarizing its survey results of 205 bankers in Iowa, northern Illinois and Indiana, Wisconsin and Michigan.

"Undergirding the huge upward movement in farmland values was an unusual shift up in agricultural prices across the board. Not only did major crop prices move higher, but key livestock and dairy prices were higher as well," it said.

The Fed said that although gains in farmland sales prices were lower in the October-December 2011 quarter compared with the preceding one, more than 40 percent of the bankers surveyed expected continued price gains in the first quarter of 2012.

From Kazakhstan Direct to Hong Kong, Twice a Week

A Kazakhstan Airline; Air Astana, will be the first central Asian airline to provide service between Kazakhstan and Hong Kong with flights twice per week starting in June 2012.

Directly connecting Almaty, the Kazakhstan capital to Hong Kong signifies the rising importance of the central Asian nation to the finance world.

Air Astana already operates flights to 20 cities including flights between Almaty and Beijing and Seoul. Air Astana is 51 percent owned by Kazakh welfare fund Samruk-Kazyna with the remainder held by Britain’s aerospace company BAE Systems, it was established in 2001.

Hong Kong exchange to launch futures trading for HSI Volatility Index

David Nealis President of Blue Bridge

Fear Index Futures Keenly Awaited

Market participants are eagerly awaiting the launch of Hong Kong Stock Exchange (0388) futures on the so called Hong Kong fear index as it provides a hedge against market swings.

The bourse is to launch futures trading for the HSI Volatility Index next Monday - the first such product in Asia, which will offer a hedge against market price swings. The index, based on Hang Seng Index options prices, is a measure of expectations of market volatility within a month.

"Vega [volatility] hedging with VHSI futures can reduce counterparty risks [of swaps], while it does not create delta risks [price movements] as you hedge with options," HKEx head of trading Calvin Tai Chi-kin said.

HKEx will educate investors about the product. From April, the stock exchange will collaborate with five brokerages to provide simulation trades for clients.

China’s Oil Supply Takes Hit After Sudan Oil Cut

David Nealis President of Blue Bridge

   The nation of South Sudan has shut down its oil output, estimated at around 350,000 barrels per day (bpd), as it and its neighbor Sudan struggle to disentangle their oil industries, borders and debt. Before the shutdown, China imported most of their output, bringing in around 260,000 bpd last year, according to customs data. That loss, in addition to cuts China has made in imports from Iran as Beijing and Tehran bicker over contract terms, has left China looking for alternatives equivalent to around 10% of its imports or around 545,000 bpd.

CNOOC and Isofoton form JV in Tianjin China

China National Offshore Oil Corporation, the SOE parent of publicly listed offshore oil and gas producer CNOOC Limited, has agreed to put US$300 million toward a Tianjin based joint venture with Spanish solar-panel maker Isofoton.

David Nealis President of Blue Bridge

From the JV CNOOC will gain a technology partner to help its expansion into the renewable energy sector, while allowing Isofoton to access the China market for sales, one of the world's fastest growing solar energy markets, amid a slowdown in the European market due to government subsidy cuts.

Isofoton has advanced solar technology that can convert close to 40 per cent of energy from sunlight into electricity, around double that of conventional solar panels that are on the market today.

The goal of the joint venture will to develop solar power plants with total generation capacity of 150 megawatts for the Chinese and other markets, Isofoton said.

China's solar power panel installation surged more than six-fold to 2.9GW last year, and became the largest market in Asia Pacific with a 48 per cent share, according to industry consultancy Solarbuzz.