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The head of Korea's market watchdog stressed on Thursday the importance of the public pension fund's role in the success of ongoing capital market reforms, nudging the fund to invest more in the domestic market.

"The responsible role of pension funds and asset management firms as long-term investors is paramount to expand the base of investments in the capital market," Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), said.

Lee cited the assessment of market participants that increasing investments in domestic markets by Japan's public pension fund had contributed to the success of its market reforms.

In February, Korea unveiled a "Corporate Value-up Programme," mirroring Japan's capital market reforms, to boost the domestic stock market with measures to encourage more shareholder returns by listed companies. It has come up with several follow-up measures, including tax cuts, to beef up the programme, since then.

Lee's comments came at a forum co-hosted by the FSS, the National Pension Service (NPS), the world's third-largest pension fund with 1,147.0 trillion won ($86 billion) in assets as of the end of June, and the Korea Exchange.

The NPS in recent years has been aggressively raising investments in overseas assets in a bid to get higher returns and delay the depletion of the fund. Its funds are expected to run out by 2056 due to a fast-ageing population.

The NPS in March said it would make a decision on whether and to what extent it will allocate its assets for the government's corporate reform push after assessing details of the plan.

Source: Koreatimes

Standard Chartered will offer the first commercial debt to a technological carbon removal firm after British Airways (BA) agreed to an advance purchase of more than 4,000 tonnes of credits from project developer UNDO, the lender told Reuters.

The ability to suck climate-damaging carbon emissions out of the air is a central part of the world’s attempt to combat global warming, yet many of the technologies are nascent and unproven at scale.

While grants, pre-payments and venture capital have typically provided early-stage financing, project developers have been considered too risky for banks to offer them corporate loans, StanChart said.

By agreeing an advance purchase deal with BA and backing it with insurance that pays out in the event not enough carbon credits are produced to repay the loan, the credit risk on project developer UNDO is lowered, it added.

UNDO uses so-called ‘enhanced rock weathering’ to speed up a natural process by spreading silicate rock dust over farmland that then captures carbon when it rains, locking it away for more than 100,000 years.

The partners in the deal, which also include offtake intermediary CUR8, insurer CFC and broker WTW, hope its structure can be replicated by other developers and help to scale up the market. Financial terms were not disclosed.

“We need a technological solution that can scale, allowing carbon dioxide removals to become affordable across the market and deliver the net in net-zero,” said StanChart’s Chris Leeds, head of carbon markets development.

“This transaction puts money into a project today in an efficient way, through upfront bank finance.”

Scientists have said around 10 billion tonnes of carbon emissions may need to be taken from the atmosphere every year by mid-century in order to hit the world’s climate goal, yet such removal credits currently form only a small slice of the market.

Ms Carrie Harris, director of sustainability at British Airways, said carbon removals formed “a key part” of reaching its climate goals.

Source: Straitstimes

OpenAI is in talks to raise about US$6.5 billion (S$8.49 billion) as part of a deal that would value the company in the range of US$150 billion.

This is a nearly US$70 billion increase from its valuation nine months ago, according to five people with knowledge of the conversations.

The deal would make the company more valuable than any other private company with the exception of ByteDance, maker video-sharing app TikTok.

As recently as end August, OpenAI was looking to raise about US$1 billion at a US$100 billion valuation.

The new funding round would be led by investment firm Thrive Capital, which has previously invested in OpenAI. Tech giants Apple, Nvidia and Microsoft have also been part of the discussions, said the people, who spoke on condition of anonymity because of the nature of the discussions.

In late 2022, OpenAI started the artificial intelligence (AI) boom with the release of its online chatbot ChatGPT, inciting a global surge in funding for startups that built similar technology. Interest in such companies dropped this summer as a series of prominent companies all but disappeared into wealthier and more powerful AI companies like Google, Microsoft and Amazon.

OpenAI has also struggled to repair its reputation after four board members unexpectedly fired chief executive officer Sam Altman in late 2023. Since his reinstatement just five days after he was forced out, the company has lost several high-profile employees, including its chief scientist and co-founder Ilya Sutskever.

In that same period, the company, which has more than 1,700 employees, has added over 1,000 new workers and released increasingly powerful versions of ChatGPT and similar technologies, including systems that generate images and videos.

Mr Altman, who is admired by peers in Silicon Valley for his fundraising ability, has strategically built investor enthusiasm for opportunities to purchase stakes in OpenAI. His strategy has been to sell existing shares in a so-called tender offer once a year, which benefits the company’s employees, while later complementing that with a traditional funding round to support OpenAI’s business, a person familiar with Mr Altman’s approach said.

Last year, as he wrapped up a tender offer that valued the company at more than US$80 billion, Mr Altman was already telling investors that he planned to raise money to value it at US$100 billion. THE NEW YORK TIMES

Source: Straitstimes

India wants oil producers group Opec and its allies to raise oil output as there are countries such as India where fuel demand is rising, the nation's oil secretary Pankaj Jain said on Thursday.

The Organization of the Petroleum Exporting Countries (Opec) and allies, together called Opec+, last week agreed to delay a planned oil output increase for October and November and said they could further pause or reverse the hikes if needed.

India, the world's third biggest oil importer and consumer, imports over 80% of its oil needs from overseas.

Fuel demand in India is rising and Jain said the country wanted Opec and its allies, including Russia, to raise oil output.

Asked if India will consider buying more oil from Russia, he said refiners will buy oil from suppliers that offer cheaper rates.

India became the top buyer of Russian oil in July, surpassing China.

Jain said Indian fuel retailers would consider cutting pump prices of gasoline and gasoil if crude oil prices remained subdued.

Source: Theedgemarkets

The bond market has ended its long flirtation with the Federal Reserve cutting interest rates by half a point this month as resilient inflation and labor market data reinforce a measured course of action.

Swap traders have fully priced in a quarter-point reduction at the Fed’s policy announcement next week. The Treasury market ended lower Wednesday after a choppy session that started with a selloff in the wake of inflation data. The S&P 500 Index rebounded to close 1.1% higher after a volatile trading day. Stocks closely tied to the economy, including equipment rental companies and debt-heavy small caps, were among the most hit in trading before closing higher.

“Both the bond market and the Fed need to see where the economy lands,” said George Catrambone, head of fixed income, DWS Americas.

Whether the economy is entering a soft landing that only requires a series of modest rate cuts, as seen in 2019 and 1995, or heading for a harder landing at some stage in the next year is the biggest conundrum for investors.

The policy-sensitive two-year yield initially rose as much as 9.5 basis points to 3.69%, with the 10-year note backing up 4 basis points to 3.68%. At the end of the session the front end remained higher by about 5 basis points.

“A point of pain is the front end as the market has priced in so many cuts,” said Catrambone.

The central bank has held rates from 5.25% to 5.5% since July 2023, and as inflation pressure moderated during the past 14 months, that policy setting has become increasingly restrictive. This trend spurred Fed officials in recent weeks to set the stage for an easing cycle to start this month.

“The Fed’s going to start cutting, and we’ll see 25 basis points in September,” said Matt Eagan, portfolio manager and head of the Full Discretion team at Loomis Sayles.

Once the Fed begins lowering borrowing costs, the debate will center around the pace of subsequent easing. Fed officials have identified a softening in the labor market as the spark that would spur faster easing in the coming months. But a string of weaker-than-expected employment reports did not build a case for rapid cuts.

Eagen expects a shallow rate-cutting cycle that results in the Fed easing toward 3.5%, not current market expectations of less than 3%, as Loomis expects inflation pressure holds up due to “structural tailwinds” that includes “predominantly the deficit, an aging population, and security concerns around geopolitics.”

For traders, the tail risk for the market over the coming months is the performance of the economy and the jobs sector. Two monthly employment reports are due before the Fed announces its Nov. 7 meeting outcome just a couple of days after US elections.

Currently, Fed swaps are pricing in over 140 basis points of rate cuts by the Jan. 29 rate decision, equivalent to roughly two half-point moves over the next four gatherings barring no intra-meeting event.

In terms of market vulnerability, the two-year yield is likely to shift higher should the Fed deliver a measured pace of rate cuts that falls short of the 250 basis points of easing priced by futures contracts for September 2025.

“We were never in the 50 basis point camp, and it seems like the modest upside surprise in CPI would likely be enough to give any policymakers considering a bigger move pause,” said Zachary Griffiths, head of US investment grade and macro strategy at CreditSights.

On Wednesday, following the CPI data, Citi economists ditched their forecast for a half-point rate cut at next week’s Fed meeting, while maintaining their call for a total of 125 basis points of easing this year. JPMorgan Chase & Co. remains a holdout sticking with its bet that the Fed would slash rates by a half-percentage point this month.

“The Fed got lucky that the CPI data bailed them out. I suspect that fed funds futures will recede sufficiently now that the FOMC need not intervene to massage expectations going into the meeting,” said Stephen Stanley, the chief US economist at Santander Capital Markets.

Last month’s highly anticipated Jackson Hole economic symposium and subsequent Fed speak provided little guidance on the central bank’s policy path for the rest of the year, he added.

Source: The edge markets