Tuesday, May 22, 2012

20120522 1020 Global Market Related News.

Asia Stocks Rise Second Day as Germany, China Vow to Spur Growth (Source: Bloomberg)
Asian stocks rose for a second day after Germany’s financial chief pledged to consider growth measures for Europe. Companies that sell to China rose for a second day after the country’s premier pledged to support economic expansion. LG Electronics Inc. (066570), South Korea’s electronics maker that depends on Europe for 16 percent of its sales, rose 4.5 percent. Fanuc Corp., a Japanese industrial robot maker, and South Korea’s Samsung Electronics Co. (005930), both of whom count China as among their biggest markets, rose more than 3 percent. Tokyo Electric Power Co. (9501) gained 4.3 percent as the government may own as much as 76 percent of the operator of the crippled Fukushima nuclear plant. The MSCI Asia Pacific Index gained 0.9 percent to 113.78 as of 9:39 a.m. in Tokyo before the Hong Kong market opened, with more than six stocks rising for each that fell. The measure rebounded from a five-month low yesterday after Premier Wen Jiabao said China will focus more on spurring economic growth.

Japan Stocks Rise as Germany Agrees to Consider Growth Options (Source: Bloomberg)
Japanese stocks rose, with the Nikkei 225 Stock Average (NKY) set for the biggest gain in five weeks, as Germany said it will consider all ideas to boost euro-area growth and China pledged to bolster its economy. Fanuc Corp. a producer of robotics for mainland factories, jumped 3.3 percent. Sony Corp. (6758), an electronics maker that depends on Europe for a fifth of its revenue, climbed 2.1 percent. Inpex Corp., the nation’s largest oil explorer by market value, gained 2.9 percent after crude prices yesterday advanced for the first time in seven days. “Stimulus measures by China, a country with the world’s No. 2 gross domestic product, is positive for the world economy,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “China may stimulate the economy or markets as the nation’s exports are getting sluggish due to the European economic slowdown.”
The Nikkei 225 Stock Average rose 1.1 percent to 8,724.2 as of 9:52 a.m. in Tokyo, heading for the steepest increase since April 18. Volume on the gauge was 11 percent less than the 30- day average. The broader Topix (TPX) gained 1.1 percent to 733.32, with almost five times as many shares advancing as falling. The Topix has plunged 17 percent from this year’s high on March 27 as China’s economic growth slowed and on renewed concern about Europe’s debt crisis. The political gridlock in Greece after an inconclusive election this month reignited fears the nation will renege on austerity pledges required for 240 billion euros ($307 billion) in aid and exit the euro. Futures on the Standard & Poor’s 500 Index (SPXL1) slid 0.1 percent today. The index gained 1.6 percent in New York yesterday, the biggest rally since March 13, after Chinese Premier Wen Jiabao pledged to focus more on bolstering growth.

German Stocks Rise, Snapping Five Days of Losses (Source: Bloomberg)
German stocks advanced, rebounding from the biggest weekly drop of the year, as Chinese Premier Wen Jiabao pledged to focus more on bolstering growth and Group of Eight leaders pushed for Greece to stay in the euro area. Software AG (SOW) and Infineon Technologies AG (IFX) led technology shares higher. Merck KGaA (MRK) and ThyssenKrupp AG (TKA) rallied at least 2.5 percent after UBS AG upgraded its recommendations on the shares. The DAX (DAX) Index climbed 1 percent to 6,331.04 at the close of trading in Frankfurt. The benchmark gauge retreated 4.7 percent last week, the largest drop since Dec. 16, amid growing concern that Greece will be pushed out of the euro. The broader HDAX Index also rose 1 percent today.
“It feels like a relief rally from oversold levels and confidence in seeing G-8 leaders all in similar tune,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich. “The comments from Wen Jiabao were certainly nice to hear, but the euro story is still the main game in driving markets.” Faced with differences between Europe and the U.S., and among European governments over the crisis response, the eight leading industrial economies concurred at President Barack Obama’s retreat outside Washington “that the right measures are not the same for each of us.”

Worst Market Since Reagan Greets Obama Before Election (Source: Bloomberg)
With only six months before the election, the stock market is giving President Barack Obama the worst returns since Ronald Reagan was seeking a second term. The Standard & Poor’s 500 Index (SPX) is up 1.3 percent since Mitt Romney’s campaign began 12 months ago, compared with average gains of 12 percent for incumbents who won re-election starting with Harry S. Truman, according to data compiled by Bloomberg. Stocks are also advancing less than the 7 percent minimum enjoyed by George H.W. Bush, Jimmy Carter and Gerald Ford, who lost their bids for a second term. The only one with a worse equity performance heading into the vote was Reagan.
Weakening equity markets after a three-year rally underscore the challenge faced by Obama, who took office during the worst recession in seven decades and has presided over 11 quarters of growth. While share returns do little to foretell presidential contests, the 8.7 percent decline in the S&P 500 since April 2 may be a sign investors are losing confidence in an accelerating recovery even as they anticipate more central bank spending to stimulate the economy. “Fiscal policy is maxed out,” Wayne Lin, a money manager at Baltimore-based Legg Mason Inc., said in a telephone interview on May 16. His firm oversees $643.3 billion. “In past years, we actually had the budget to be able to do it. We had the economic growth that generated tax revenues to be able to support any kind of fiscal policy. There was a lot more flexibility in enacting fiscal policy in prior years.”

Stocks Advance With Commodities While Dollar, Yen Weaken (Source: Bloomberg)
Global stocks rebounded from the worst week since September and commodities snapped a three-day drop as China signaled it would support the economy and German and French officials said they would work to keep Greece in the euro. The yen and dollar weakened against most major peers. The Standard & Poor’s 500 Index climbed the most in two months, surging 1.6 percent to 1,315.99 at 4 p.m. as takeover news also boosted stocks. Facebook (FB) Inc. tumbled below its $38 offering price. Ten-year Treasury yields added two basis points to 1.74 percent. The yen weakened against 15 of 16 major peers, while the dollar declined against 14. The S&P GSCI Index of 24 raw materials rebounded from its 2012 low, with oil up 1.2 percent to $92.57 a barrel and copper climbing 1 percent.
Concern Greece will exit the euro has erased about $4 trillion from global stock markets this month. China should adopt a “proactive fiscal policy and a prudent monetary policy” to bolster the economy, Premier Wen Jiabao said over the weekend. Germany will consider ways to spur European economic growth and do “everything necessary” to keep Greece in Europe’s currency union, German finance chief Wolfgang Schaeuble said after meeting with France’s Pierre Moscovici. “Equity prices have gotten oversold,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “A more positive tone regarding efforts to put together some growth- related initiatives in Europe is enough to give investors a pause from the selling pressure. In addition, any kind of talk about recognizing China’s slowdown that could lead to stimulus would be good for global activity.”

Treasuries 10-Year Yield Close to Low Amid Europe Talks (Source: Bloomberg)
Treasury 10-year note yields traded at almost record lows as German and French finance ministers met to discuss strategy amid the Greek electoral impasse that has worsened the European debt crisis. U.S. 30-year bond yields closed near the lowest since December as the Federal Reserve purchased $1.8 billion of longer-term Treasuries. U.S. debt fell earlier on speculation record-low yields may limit demand as the government auctions $99 billion of coupon-bearing debt this week. The difference between the yields on the 10-year and 30-year securities narrowed to the least since January on reduced concern inflation will erode the value of fixed-income assets. “There continues to be demand for the long end,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “The market has been able to improve on the day. The persistent flight to quality demand will support this week’s auctions.”
The 10-year yield rose two basis points, or 0.02 percentage point, to 1.74 percent at 4:59 p.m. in New York, Bloomberg Bond Trader prices show. The 1.75 percent note due in May 2022 fell 5/32, or $1.56 per $1,000 face amount, to 100 2/32. The yield added as much as five basis points earlier and reached a record 1.67 percent on Sept. 23.

Dollar Bond Sales Stall in Asia as Costs Soar on Debt Crisis (Source: Bloomberg)
Asian companies and sovereigns sold no dollar-denominated bonds last week for the first time since January after yields surged on the deepening debt crisis in Europe and slowing industrial output in China. China Petrochemical Corp., the refiner known as Sinopec Group, sold the last securities in the U.S. currency on May 10, before the slowest week since the Lunar New Year holidays in January, according to data compiled by Bloomberg. While yields on U.S. Treasuries dropped to near record lows, average yields on Asian corporate debt have surged 24 basis points to 5.31 percent, the biggest weekly gain since the period ending Oct. 7, Bank of America Merrill Lynch indexes show. Funding costs increased an average 10 basis points to 3.42 percent globally in the same period, the indexes show.
Asian companies with the equivalent of $326 billion of debt maturing this year must refinance as the crisis in Europe deepens, with Greece facing new elections and Spain trying to boost confidence in its banks after taking over Bankia SA. German and French leaders will meet this week to map out a revised plan for the euro after Group of Eight meetings exposed disagreements on a rescue strategy. “The market is increasingly nervous so more and more people are trying to get out and that’s starting to push down pricing,” said Endre Pedersen, a managing director in the fixed income team at Manulife Asset Management in Hong Kong. “Everyone is watching what’s playing out in Greece and Spain.”

FOREX-Euro gets respite, but stays under pressure
LONDON, May 21 (Reuters) - The euro traded firm above recent four-month low as some investors who had bet on the currency falling booked profits, but deep-seated concerns about financial turmoil in Greece and Spain will keep it under pressure.
"That 2012 low is still the target and the euro would need a catalyst for that. That could come if the informal (EU) leaders' meeting this week offers no consensus (on tackling the euro zone debt crisis)."

Yen Drops Versus Peers on Prospects BOJ to Add Stimulus (Source: Bloomberg)
The yen declined against most of its major counterparts on speculation the Bank of Japan (8301) will add to stimulus measures this week to support growth and weaken the nation’s foreign-exchange rates. The euro erased losses against the dollar as German Finance Minister Wolfgang Schaeuble said Germany and France will do “everything necessary” to keep Greece in the shared currency. Brazil’s real sank as Finance Minister Guido Mantega said a weaker currency is helping to reignite the economy. India’s rupee plunged to a record against the dollar, spurring the central bank to impose curbs on trading in the foreign-currency futures market. “If they do surprise and expand their asset-purchase program again, I think that the reaction will be relatively subdued and short lasting,” Andrew Cox, a currency strategist at Citigroup Inc. in New York, said of Japan’s central bank. “The broad expectation is for an unchanged policy stance from the BOJ this week.”
The yen fell 0.7 percent to 101.65 per euro at 5 p.m. in New York after dropping 0.3 percent on May 18. Japan’s currency declined 0.4 percent to 79.31 per dollar. The euro rose 0.3 percent to $1.2818 after earlier depreciating more than 0.4 percent. It slid 1.1 percent last week and reached $1.2642 on May 18, the least since Jan. 16.

End of Extended Benefits May Lower U.S. Jobless Rate: Economy (Source: Bloomberg)
The declining U.S. jobless rate may soon get another push downward as Americans lose extended unemployment benefits. From April 7 through May 12, about 370,000 Americans in 23 states stopped getting the benefits, which provide payments for as long as 99 weeks, according to estimates from the National Employment Law Project. People in the remaining six states and the District of Columbia who still qualify may lose eligibility by September, bringing the program to an end, the report showed. Some recipients who lose their benefits may decide to accept jobs they view as less than ideal. Others may give up looking for work and drop out of the labor force, eliminating them from the ranks of the jobless. Those outcomes may trim the unemployment rate by 0.1 percentage point to 0.2 point in the next few months, according to economists Dean Maki at Barclays and Michael Feroli at JPMorgan Chase & Co.
“The unemployment rate would be the place where the effect is likely to show up most,” said Maki, chief U.S. economist at Barclays in New York and a former economist at the Federal Reserve. “It may put some modest downward pressure” on the jobless rate. People may also curtail their spending once they lose this source of income, resulting in slower economic growth that weighs on hiring. Taking these people into account, Maki estimates the drop in unemployment may be closer to 0.1 point. Those continuing to search for a job after payments expire will still be counted among the unemployed.

Fed More Bullish Than Wall Street Forecasting Growth (Source: Bloomberg)
Stephen Stanley, chief economist at Pierpont Securities LLC, has derided the Federal Reserve for downplaying improvement in the U.S. economy. Yet his 2.6 percent forecast for growth this year is below the midpoint in the central bank’s projection of 2.4 percent to 2.9 percent. Stanley’s not alone: The median of 55 estimates compiled this month by Blue Chip Economic Indicators for 2012 is 2.3 percent. All but 16 of the predictions were below the bottom of the Fed’s so-called central tendency. JPMorgan Chase & Co.’s Michael Feroli, John Lonski of Moody’s Capital Markets Group and Wells Fargo Securities LLC’s John Silvia all are relatively more cautious on growth than the policy makers.
The disconnect between the Fed’s optimistic forecast for expansion and its more bearish expectations for the labor market and inflation have made it difficult to predict the course of monetary policy, according to Stanley, who said he’s underestimated central bankers’ emphasis on their goal of full employment. The Fed last month reiterated its plan to keep borrowing costs “exceptionally low” through at least late 2014, in part to bring down “elevated” joblessness. “I’ve been banging my head against the wall,” said Stanley in Stamford, Connecticut, a former researcher at the Federal Reserve Bank of Richmond, who had predicted an interest- rate increase as early as last year and now says the Fed probably will tighten in the middle of next year. “They’re willing to let things run for longer and let inflation accelerate more than historically.”

TIPS Give Bernanke Green Light to Ease Amid Record Yields (Source: Bloomberg)
Bond traders are cutting expectations for U.S. inflation by the most since December, providing Federal Reserve Chairman Ben S. Bernanke the scope for additional stimulus as the central bank’s current effort winds down. With six weeks left before the end of the Fed’s $400 billion swap of short-term debt for longer-term securities in a program known as Operation Twist, everything from yields on securities that protect against rising consumer prices to a measure of the outlook for inflation in the forwards market show diminished concerns. Traders are pricing in a 55 percent chance that the central bank will begin new efforts to spur economic growth, Bank of America Corp. says. Speculation has risen that the central bank may need to add to the $12.8 trillion already spent to avert a second recession in three years after reports showed jobs are growing more slowly than forecast and Bernanke said April 25 that the Fed remains “prepared to do more as needed.”
For first time since it announced Operation Twist in September, the Fed’s preferred gauge of measuring traders’ inflation expectations is poised to fall for a second straight month. “It’s not only a weak economy, but as inflation comes down, it could be another reason for the Fed to implement some more stimulus,” said Gary Pollack, head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York, which manages $12 billion, in a May 14 interview.

JPMorgan Europe Home-Loan Debt Raises Anxiety: Mortgages (Source: Bloomberg)
JPMorgan Chase & Co. (JPM)’s holdings of home-loan bonds from outside the U.S. soared 35-fold in the past three years. Now, with its chief investment office facing scrutiny after a $2 billion trading loss, investors are raising concern the European market’s biggest buyer will pull back. The largest U.S. bank by assets accelerated its purchases last quarter, adding $8.5 billion to lift its total to $74.5 billion, according to regulatory filings. The New York-based company’s investments approached 9 percent of the size of the Dutch and U.K. mortgage-bond markets it’s been focusing on. If they stop buying, it would be pretty bad as they are one of the major buyers at the moment,” said Frank Erik Meijer, head of asset-backed securities at The Hague-based Aegon Asset Management, which manages 220 billion euros ($280 billion). “If they need to sell, that would certainly give rise to quite some” increases in yields relative to benchmark rates.
JPMorgan bolstered prices and issuance when Europe’s lenders were forced to shrink and other potential buyers shunned asset-backed notes after U.S. subprime mortgage debt sparked a global credit crisis, according to six people at banks and investment firms active in the home-loan bond market who declined to be identified because they were speaking about a competitor. Chief Executive Officer Jamie Dimon, 56, last month described the securities as part of the chief investment office’s “very conservative” holdings, four weeks before announcing an unrelated $2 billion derivative loss that highlighted the division’s influence in certain credit markets.

Stockton Creditors Extend Talks to Avert Bankruptcy (Source: Bloomberg)
Stockton, the California city on the brink of bankruptcy, and creditors agreed to extend talks aimed at restructuring its municipal debt for an extra 30 days. The bargaining was set to end after 60 days under a California state law. The extension will give negotiators until June 25 to reach agreement, the city said today in a statement. “This is a good sign,” Stockton Mayor Ann Johnston said in the statement. “It means that our creditors understand our fiscal circumstances and it indicates that they believe that it is worth the investment of time and resources to work toward a solution.”
The community of about 292,000 residents 80 miles (130 kilometers) east of San Francisco is trying to avoid becoming the largest U.S. city to enter bankruptcy after mounting retiree health-care costs, the recession and accounting errors left it almost insolvent. The City Council in February agreed to pursue the negotiations with creditors, which include the California Public Employees’ Retirement System, the largest U.S. pension, and San Francisco-based Wells Fargo & Co. (WFC), the nation’s largest home lender.

Hong Kong’s Most-Popular IPOs Return the Least: Chart of the Day (Source: Bloomberg)
Hong Kong’s most-popular initial public offerings among retail investors since the start of 2010 have plunged an average of 54 percent from their offer price and trail returns of the city’s IPOs. The CHART OF THE DAY shows the 54 percent slump by the 10 companies with the most orders from individuals relative to stock available, against an average 7 percent drop by the 10 most-undersubscribed IPOs and a 13 percent decline for all 186 companies completing Hong Kong IPOs. The data, showing returns through May 18, are compiled by Bloomberg and Computershare Hong Kong Investor Services Ltd. By contrast, the 435 IPOs in the U.S. generated a loss of 5 percent in the same period. “Retail investors are easily driven by market sentiment and may crowd into over-priced deals if recent IPOs have been profitable,” said Pamela Chung, managing director of Computershare, a share registry that handled IPO applications accounting for 90 percent of Hong Kong’s deal flow in the last three years.
“They may stay away from good deals if people recently got burned.” Milan Station Holdings Ltd. (1180)’s May 2011 share sale drew the highest IPO subscription rate in Hong Kong’s history, five weeks after the benchmark Hang Seng Index rose to a two-month high. The retailer of used handbags lured orders from individuals worth about HK$59 billion ($7.6 billion), or 2,180 times the HK$27 million of shares available, the data show. Shares in the company, which issued a profit warning last month, plunged 54 percent since their debut through last week. Citic Securities Co. (6030), the biggest Chinese brokerage, is the best performer among the 10 deals that drew the lightest demand from individuals. The company received orders covering just 9 percent of the HK$660 million of stock available to retail investors. The stock has rallied 13 percent since its Oct. 6 debut, which was two days after the Hang Seng fell to its lowest level in more than two years.

Koreans Need to Recoup Woori Funds Soon, Regulator Says (Source: Bloomberg)
More than 10 years after South Korea spent $11 billion bailing out its weakest banks, taxpayers are still waiting to get their money back. It’s time to fix that, says Kim Seok Dong, the nation’s top financial regulator. The government needs to push ahead with its third attempt to cut its 57 percent stake in Woori (053000) Finance Holdings Co., the company created in 2001 by combining the failing banks, as quickly as possible to recoup that money and arrest its eroding value, said Kim, who is chairman of Korea’s Financial Services Commission and the official in charge of the sale. The latest plan to sell at least 30 percent of Seoul-based Woori -- a stake that’s currently worth about $2.1 billion -- is more likely to succeed as its operations have improved and Korea’s financial markets have stabilized, Kim said. Buyers face a July 27 deadline for preliminary bids. The market value has dropped 35 percent since before the first attempt in 2010.

Vietnam Economic Slowdown Seen in Cobweb-Covered Crates (Source: Bloomberg)
Nguyen Thi Ha sighs as she looks at the dust and cobwebs covering crates full of colorful, enameled tiles in her factory by Hanoi’s Red River. “We’re struggling to keep our business alive,” said Ha, who laid off more than half of her 60 employees this year as luxury hotels in the beach resort of Danang halted orders. “If the situation doesn’t improve, it will be hard for us to hold out beyond this year.” Ha’s factory is among thousands in Vietnam that cut production or closed this year after policy makers curbed a lending spree and bad debts mounted. As demand also slows from Europe to China, the shakeout of businesses that mushroomed during the 2002-2007 boom is slowing economic growth and may temper a stocks rally that made Vietnam the world’s third-best performer this year.
“There’s no way we can meet the economic growth target of 6 percent this year when so many companies are in serious trouble,” said Le Dang Doanh, an economist who has advised Prime Minister Nguyen Tan Dung and who estimates 2012 expansion may slow to as low as 5 percent, the least since 1999. “Many businesses are on their last breath.”

King’s Crisis Response to Face Scrutiny After U.K. Lawmaker Push (Source: Bloomberg)
Bank of England Governor Mervyn King’s response to the financial crisis will be scrutinized after lawmakers pushed for an inquiry as the central bank prepares to take over financial regulation. The Court, the Bank of England’s governing body, ordered a review of some central bank actions, including its conduct after the collapse of Lehman Brothers Holdings Inc. The investigation will cover the Emergency Liquidity Assistance program in 2008 and 2009, the framework for providing liquidity to banks, and the Monetary Policy Committee’s forecasting capability, the Court in London said yesterday. The move follows a push by a cross-party committee of lawmakers for an examination of the central bank’s performance as Parliament debates a bill to give it new powers. While King told the panel in January that reviews have been carried out of all the Bank of England’s responsibilities, he said last month he would “welcome” another one if it was deemed necessary.
“It didn’t seem reasonable that we’ve had a massive financial crisis that required the bank to respond across a number of fronts, and that its decisions and decision-making process shouldn’t be reviewed in some independent way,” said David Tinsley, an economist at BNP Paribas SA in London and a former central bank official. “Critics of the bank will say this isn’t enough.”

London Home Prices May Reach New Record on Haven Status: Economy (Source: Bloomberg)
London house values rose to a record this month and the city’s property market may be further boosted as investors seek a haven from the euro-area debt crisis, according to Rightmove Plc. (RMV) The average asking price in the U.K. capital rose 0.9 percent from April to 469,314 pounds ($742,500), the most since the operator of Britain’s biggest property website started keeping the data in 2002, it said today. Nationally, values were unchanged in May from the previous month. “The Greek situation means that other countries may well be undermined and you might get a domino effect of people looking to actually put their cash into a safe haven,” Rightmove commercial director Miles Shipside said on Bloomberg Television. “Obviously, as the euro depreciates, the U.K. gets slightly more expensive, but perhaps it’s a better option than what’s facing them in their own countries.”
The pound and U.K. government bonds are already benefiting from haven status as turmoil in Europe threatens to force Greece out of the euro area and engulf Spain. The pound has gained 3.2 percent this year, the most among 10 developed-market peers, data compiled by Bloomberg show, while the yield on the 10-year gilt is close to a record low.

Schaeuble Seeks Crisis Resolution With France’s Moscovici (Source: Bloomberg)
German and French leaders meet this week to map out a revised plan for the euro as the Group of Eight exposed disagreement on a rescue strategy, Greece lurched toward a possible exit and Spain’s budget deficit widened. German Finance Minister Wolfgang Schaeuble will for the first time discuss the 17-nation currency with his newly installed French counterpart, Pierre Moscovici, in Berlin today as European Union leaders prepare for a summit meeting in Brussels on May 23. After three shorter meetings in the last week, Chancellor Angela Merkel and French President Francois Hollande will seek to balance France’s desire to jump-start growth with Germany’s preference for spending cuts. “We’re all very pleased that France wants to offer new initiatives with its newly elected president,” Schaeuble told the Bild am Sonntag newspaper in an interview yesterday. “The German government is ready to talk about anything,” Schaeuble said, though he ruled out measures that would raise debt.
G-8 leaders on May 19 urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing the EU’s bailout deal. The country is preparing for June 17 elections, following an inconclusive May 6 ballot. Spain revised its 2011 deficit upward -- even as its borrowing costs approached levels that prompted bailouts in Greece, Ireland and Portugal.

South Africa Approves $3.4 Billion Renewable Power Plan (Source: Bloomberg)
South Africa approved 19 wind, solar and hydropower proposals in a second bidding round, increasing the cost of renewable-energy projects given the go-ahead to 73 billion rand ($8.8 billion) as the nation boosts cleaner energy. The Department of Energy got 79 bids for 3,255 megawatts in the round and 51 met the qualification criteria, Minister Dipuo Peters said in Pretoria today. Among the winners were Tata Power Co. and Exxaro Resources Ltd. (EXX)’s Cennergi venture, as well as a group including Acciona SA and Aveng Ltd. Total capacity on offer in the round was 1,275 megawatts, Peters said. That on top of the 1,416 megawatts, costing 45 billion rand, approved in the first round in December. South Africa said in August it would add 3,725 megawatts by the end of 2016. It is expanding capacity after state-run Eskom Holdings SOC Ltd., which generates most of its power from coal, suffered shortages in 2008, leading to mines closing. The whole program will cost an estimated 100 billion rand, Peters said.
Sishen Solar, Solar Capital De Aar 3, Dreunberg, Gouda Wind, West Coast 1 and Grassridge are also among the winners. Proposed costs in the second-round fell and the proportion of equipment and services sourced locally rose as bids became more competitive, Energy Department Director-General Nelisiwe Magubane said. The average cost for solar photovoltaic plants slid to 1,645 rand a megawatt-hour from 2,758 rand, a copy of a presentation handed to reporters in Pretoria showed.

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