Tag: sovereign wealth funds

Have Oil and Gas Companies Seen Their Best Days?

ORACLE’S RESPONSE:

No. The actions of large oil and gas companies will continue to shape the global economy for the foreseeable future. Despite efforts around the world to diversify away from hydrocarbons, state-owned oil and gas companies and large independent producers will grow and prosper, and be critical players in efforts to move toward a net-zero emissions regime. If you’re a pension fund, buy stocks of the major oil and gas producers, including those from China, Russia, and Saudi Arabia (after Aramco’s IPO).

RECENT SIGNALS OF CHANGE

Oil and natural gas will continue to be key energy sources for the foreseeable future. In May 2016, Shell’s scenario group published a plausible scenario of the world meeting international climate goals and achieving a net-zero emissions state. Shell described a number of key developments over the next 50 years that could lead to net-zero emissions, including significant investments in solar, wind, and nuclear sources, carbon capture and storage technologies, many country de-carbonization strategies, and a global carbon pricing system—whether through carbon trading, carbon taxes, or mandated carbon-emission standards. However, for the future global population of 10 billion people to have a decent quality of life, the global energy needs would have to double by the end of the century. Oil and natural gas would have to remain important energy sources for the next forty years, until solar, wind, and nuclear sources can assume the burden of meeting the global economy’s needs. When the net-zero emissions state reached, let’s say by the end of the century, the share of oil and gas in the overall energy mix will have fallen from 57 percent to around 15 percent, while the non-fossil-fuel share will be just under 80 percent.

According to the International Energy Agency (IEA), to have a chance at keeping global warming to less than 2ºC above pre-industrial levels, oil demand would have to peak in 2020 at 93 million barrels per day (b/d), just above current levels, and oil use in passenger transport would have to decrease dramatically. Shell’s chief financial officer said he expected oil demand could peak in 5 to 15 years. State-owned China National Petroleum Corp. recently forecast that China’s oil consumption would begin to decline by 2030. But the uncertainty is high on when demand might peak. It could be much later. In its most likely scenario, where more stringent government policies to limit global warming aren’t effectively implemented, the IEA says oil demand will continue to increase beyond 2030.

There is plenty of oil and gas. In 1995, proven oil reserves (i.e., oil discovered and economic to produce) in the world were 120 trillion cubic meters. In 2015, proven oil reserves were 187 trn cubic meters. Global oil supply has steadily risen—almost 20 percent—since the year 2000 to over 95 million b/d in 2016, with non-OPEC producers leading the charge, competing strongly with OPEC producers for market share.

The last three years have been tough on OPEC countries that rely on oil and gas revenues for their government budgets. The International Monetary Fund in October 2016 estimated the oil price needed to balance Middle Eastern government budgets ranged from a low of $47.76/b for Kuwait to a high of $216.46 for Libya. The prices are a key indicator of the governments’ dependency on oil revenues and the budget difficulties they face when prices fall. Surprisingly, Iran at $55.29/b is perhaps less motivated than Saudi Arabia at $79.71/b for a large price increase. In 2015, Saudi Arabia posted a budget deficit of $98 billion. In October 2016, the Kingdom issued $17.5 billion of bonds, its largest amount ever. Governments facing years of economic difficulties are struggling with how much effort should they apply to save existing ventures (and the jobs), mitigate the impacts of the closed or canceled ventures, and change the incentives to attract new multinational and local investments.

Government incentives and hurdles toward increased oil and gas development activities vary significantly around the world.

  • Government stakeholders in the United States are questioning the companies’ financial and accounting practices, business models, and oil-spill and climate-change prevention efforts. The US Securities and Exchange Commission is looking into whether ExxonMobil values its unproduced-reserves appropriately after the oil price declines and potential regulatory action on climate change.
  • The US Energy Department recently curtailed licensing and development plans for Alaska’s Arctic region. The US Energy Information Administration in its 2016-published energy outlook shows oil production from Alaska decreasing to less than half its current level after 2030.
  • The governor of the Bank of England suggested in September 2015 the companies should disclose how they would manage climate-change risks.
  • Saudi Aramco, the largest oil producer in the world, is producing oil at record levels.
  • Russia is developing oil reserves as fast as it can under western-government sanctions. Iran is aggressively trying to expand.
  • In November 2016, at the end of China’s President Xi Jinping’s visit to Latin America, China’s state media released its strategic blueprint for China-Latin America relations. Latin America is already China’s second-largest investment destination after Asia. Much of the investment is in energy projects. An example, state-run State Grid Corp. of China, the world’s largest electricity provider by revenue with $312 billion, is pursuing a takeover of CPFL Energia SA, the Brazilian electric company, for $13 billion.

The environmental risks of commodity operations are not going away, and new ones continue to come to light.

  • Recent figures indicate that around a third of the annual methane emissions in the United States can be traced to the natural gas industry. While methane doesn’t remain in the atmosphere as long as carbon dioxide (12 years compared to 500 years), it is about 25 times more potent as a cause of global warming. The Environmental Defense Fund, an American NGO that often works with industry, estimates 2-2.5% of the gas flowing through the supply chain leaks out.
  • Petrobras is implementing a divestment plan to sell $15 billion in assets to help pay off the company’s very high debt load of $126 billion. In the spring and summer of 2016, Petrobras sold stakes in Argentina and Chile subsidiaries, a large offshore oil field to Norway’s Statoil, and petrochemical units to Mexico’s Alpek.

Fueled by commodity prices, particularly oil exports, sovereign-wealth funds—financial vehicles owned by governments—doubled in size from 2007 to 2015 to $7.2 trillion. Since 2007, the number of sovereign funds increased by 44 percent to 79, many in Africa and Asia. Nearly 60 percent of sovereign wealth fund assets are related to energy exports.

Oil prices peaked in August 2013 over $110 a barrel. They bottomed out below $30 a barrel in January 2016. Since May 2016, prices have been relatively level, bouncing around between $40 and $50 a barrel. Not surprisingly, the number of rigs drilling for oil in the United States is up by 50 percent since May.

The world’s seas are becoming more efficient in moving hydrocarbons.

  • The major Panama Canal expansion, opened in June 2016, more than doubles the canal’s capacity and includes a third lane to accommodate ships large enough to carry 14,000 TEU. The Canal hopes to recover the 10 percent to 15 percent of annual revenue lost to the Suez Canal from 2013-2015. A key market of the future for the canal could be LNG carrier traffic.
  • Russia’s US$27 billion Yamal LNG project within the Arctic Circle will begin operation in 2017. This remarkable project will use West-designed and Far East-built ice-class LNG tankers to enable year-round export shipments from northwest Siberia to European and Asian markets. The LNG tankers are intended for navigation both westbound and eastbound along the Northern Sea Route (NSR), the Arctic seaway along Russia’s coast linking the Atlantic and Pacific. The Russian company, Novatek, has a 50.1% interest in Yamal LNG; China National Petroleum Corporation and France’s Total Group both have a 20% holding; and the Chinese state-owned Silk Road Fund has a 9.1% interest.
  • Ship transport of Russian Barents Sea oil along the Norwegian Arctic coast in the first part of 2016 reached new highs because of cumulative oil-development and port infrastructure investments over the last decade in the Russian sector above the Arctic Circle.

Producers are following the market toward gas. From 2000 to 2015, the percentage of total energy production of natural gas in Shell, Eni, Total, ExxonMobil, ConocoPhillips, and Chevron went up significantly. Only in BP did it go down slightly. In Shell, Eni, and Total the share of natural gas is almost 50 percent.

  • US exports of natural gas have just exceeded US gas imports for the first time in 60 years with most of the export increases going to Mexico and Canada.
  • China Petroleum & Chemical, or Sinopec, is attempting to double domestic natural gas production in the next five years in order to reduce coal usage in the country and reduce China’s need for imported liquefied natural gas—that many investors around the world were counting on. Sinopec is counting on rapidly expanding natural gas production from shale reserves.
  • US coal exports to China have recently shrunk to almost nothing. They were almost 6 million short tons in 2011, 10 million tons in 2013, and about 300 thousand to date in 2016. Out of seven West Coast export terminals proposed in the past five years, none has opened.

During the last three years of low oil and gas prices, independent oil and gas companies have been reluctant to start new ventures, even to secure low-cost reserves.

  • In 2016 ExxonMobil lost its triple-A bond rating that it has had since 1930. In 2015 it failed to find enough new oil and gas to replace what it produced for the first time in 20 years. And in October 2016 it announced some 4.6 billion barrels of its reserves, nearly 20 percent of its oil and gas reserves, mainly in Canada, may be too expensive to produce.
  • Exxon Mobil is not continuing its involvement in a venture to build a new LNG export terminal in Alaska. The project is not forecast to be very competitive in the world. Just a year ago, the Alaska state government paid $65 million for TransCanada Corp.’s 25% share in the overall project that was expected to cost between $45 billion and $65 billion. BP and ConocoPhillips, other shareholders in the venture, are also expressing concerns about the project.
  • In November 2016 Blackstone Group cancelled an $800 million venture it set up two years before to invest in distressed oil and gas assets in Southeast Asia. Potential sellers such as international oil companies hung onto assets rather than selling on the cheap.

But Russian and Chinese companies have been getting bigger and better while the prices have been low.

  • Russia’s oil and gas companies, Rosneft, Gazprom, Gazprom Neft, Lukoil, and Surgutneftegas—all operating under guidance by Putin’s government—continue to grow and become more capable. Their development and production activities are Russian focused, but the companies have extensive international relationships with technology partners, financiers, service companies, and customers.
  • Russia’s oil and gas ties with both China and India have increased significantly in the last three years. In October 2016, Russia’s state-controlled Rosneft announced the purchase Indian refiner and gas-station owner, Essar Oil, Ltd. for $7.5 billion.
  • Russia also has deals to supply oil and gas to China and for Chinese companies to buy stakes in Russian energy projects abandoned by western firms due to the sanctions. China’s support to Russian energy and infrastructure projects is critical but fragile. For the Yamal LNG project Chinese lenders recently signed a $12 billion loan agreement after two years of talks. But many other agreements signed in the last two years haven’t yet led to firm contracts, and the perception is China has been able to take advantage of Russia’s weak negotiating position. Also, China’s goal of building land and sea routes that will enable Europe to connect more easily with China could reduce Russia’s role as a trading partner of Europe.

As the technological and operational leader in the Arctic region, the partially state-owned Norwegian oil company, Statoil, is continuing to pursue opportunities throughout the region, including in Russia despite the strained political ties between Russia and Norway and the EU. Statoil’s strategic cooperation with Rosneft involves joint exploration in the Russian Barents Sea and Sea of Okhotsk (in the far east of Russia), as well as pursuing interests in a license in the Norwegian Barents Sea. Statoil began drilling in June 2016 in the Sea of Okhotsk. “We are pleased to have entered a key stage in our long term cooperation with our partner, Statoil . . .,” said Igor Sechin, chief executive of Rosneft and an ally of Russian president Vladimir Putin in July 2016. On the other hand, Norway and Statoil would like to continue selling natural gas extracted from Norwegian waters to Europe. But replacing the aging gas fields in Norway has been difficult, and Statoil and other energy companies haven’t yet made the next big discovery in Norwegian waters that would justify building the large necessary gas export infrastructure.

Some integrated oil and gas companies are also investing in alternatives to oil and gas. Solar and wind energy sources are growing rapidly around the world and their prices now are competitive with fossil-based sources. In a figure by IHS Markit in The Economist November 26, 2016 issue, the cost of power generation in the United States from solar is competitive with oil (although oil isn’t used anymore in power generation). The cost of natural gas is on par with coal. Worldwide, renewable energy passed coal as the world’s biggest source of power-generating capacity. Statoil, Norway’s state-owned energy company, is investing in carbon capture and storage technologies and offshore wind farms.

ORACLE MUSINGS: PLAUSIBLE DEVELOPMENTS WE MIGHT SEE IN THE FUTURE

Large oil and gas companies around the world will do well for the next 20 years largely because demand for oil and gas will continue to increase because the world economy will depend on them. The major uncertainty for all the companies is the policy restrictions on carbon sources that will be implemented. Unless extensive bans on using fossil fuels are implemented, the companies will remain major players in the global economy.

After the next 20 years, the range of uncertainty on the energy sources used in the world remains extremely wide. The use of nuclear, the government restrictions on hydrocarbons, the technology innovations in renewables and CCS, etc. all remain highly uncertain.

While the demand for oil will increase for the next 20 years, the demand for natural gas is going to explode.

  • The two big hurdles for companies developing the new oil and gas reserves will be the large capital required to explore, develop, and produce oil and gas in hard to reach places, and the liability risk to companies from oil spills and contributing to global warming.
  • For oil and gas companies, NGOs, and other energy stakeholders, a key to their success will be their abilities to manage in a complex environment, subject to disruptive changes. Will organizations develop the necessary capabilities, processes, and strategies for an environment of continuous change?

Prices will grow slowly over the next five years.

  • The large, integrated oil and gas producers will specialize in developing low-cost oil and gas reserves anywhere they can be found.
  • They will flock back to Russia when sanctions are lifted.
  • If sanctions aren’t lifted, Russia will get the expertise and financial support it needs from China, India, Brazil, and special deals made with Statoil and others.
  • Africa and North and South America will be major areas of activity.
  • Technology innovation (e.g., in fracking) will continue to lower the costs of extracting oil and gas from source rock.

Greenhouse-gas (CO2 and methane) emissions will likely increase each year and accumulate in the atmosphere and ocean.

  • The battles over the development and use of fossil fuels could become even more intense.
  • NGO’s will continue to object to natural gas development and production activities and the companies that conduct them. Becoming a good world citizen will be hard for gas companies to achieve.
  • Large private oil and gas companies could experience more protests wherever they operate.
  • Russian and Chinese companies will be singled out more and more by NGOs.
  • Many western governments will find themselves simultaneously penalizing Russian and OPEC producers or taxing imports from them while welcoming them as important gas and oil suppliers to their countries.

Most of the large independent oil producers will become majority gas producers. They will follow the various government incentives to increase natural gas production to displace coal and enable a net-zero emissions system. However, the companies will continue to be seen as dirty and dangerous to the environment because of their extensive oil operations and the safety issues associated with the natural gas.

Large western companies will compete well for large projects because of their project experience, use of new technology, and ability to raise large amounts of capital.

  • Chinese companies will become fierce competitors of the large western companies around the world.
  • Russian companies may expand operations outside of Russia.
  • Technology innovation will be extensive in the pursuit of low-cost oil. Many technologies will be valuable in other realms—security, environmental monitoring, automation for underwater and harsh environments, etc.

OPEC Producers are not going to slow down. OPEC producers will not reduce oil production to any degree in order to boost market prices. They might pledge to limit production, but they will continue seeking ways to expand production to meet future demand around the world. Aramco will still produce at high levels.

Sovereign-wealth funds will be more important financiers of oil and gas developments in the future—often the only sources of capital for very large projects.

Oil and gas companies will perform very well financially, and will remain amongst the largest corporations in the world in terms of revenues. But the costs to them of catastrophic environmental events will rise. It’s uncertain how a foreign company, even if it were Chinese, would fare if they were responsible for a major event in the Arctic region that couldn’t be cleaned up.

Emerging-Market Takeover of Commodities

Foresight

Emerging-market organizations will define the future of global trade, often controlling large segments. As commodity prices rebound in the next two years, albeit slowly, the actions of sovereign-wealth funds, commodity producers from emerging-market economies, the crony capitalists running those producers, and Chinese state-owned banks will influence much more the global economy and the large role played by commodities. Key signals that this could happen include the emergence of sovereign-wealth funds with their vast financial sums to invest around the world, the growth of crony capitalists in emerging-market countries, the current global monetary disorder, the declining influence of Western foreign aid and London as a financial center, and the recent rebound in commodity prices after the commodity markets collapse.

Recent Signals of Change

Recent disruptive, big, and out of the ordinary changes affecting global money flows and ownership include:

  • Fueled by commodity prices, particularly oil exports, sovereign-wealth funds—financial vehicles owned by governments—doubled in size from 2007 to 2015 to $7.2 trillion. Since 2007, the number of sovereign funds increased by 44 percent to 79, many in Africa and Asia. Nearly 60 percent of sovereign wealth fund assets are related to energy exports.
  • Many sovereign-wealth funds, including most likely several from the Middle-Eastern oil exporters, came to the aid of the Russian Direct Investment Fund when US and European sanctions restricted business between the Russian fund and Western companies. Sovereign funds don’t behave like traditional institutional investors that typically invest only to produce returns. Sovereign funds often answer to top government officials and may invest not only to produce returns but also to push economic-development or diplomatic initiatives.
  • Developing economies account for 43 percent of global GDP but 65 percent of crony wealth. Crony capitalism is where an individual’s wealth stems from a special relationship with the government. Since globalization took off in the 1990s, the wealth of billionaires in high-crony industries, like natural resources, real estate, construction, telecoms, and defense where there’s a lot of interaction with the state or are licensed by it, grew substantially in developing countries. The Economist’s crony-capitalism index indicates billionaire wealth in crony industries in developing countries has fallen—largely because of the fall in commodity prices—from 7 percent in 2014 to 4 percent in 2016. Russia’s crony industries represents approximately 18 percent of Russia’s GDP.
  • Large commodity traders, like Glencore and Trafigura, have been buying parts of the commodities supply chain. Margins in commodities trading have been shrinking as the efficiencies of the supply chain have improved and data become more abundant, and trading firms are seeking opportunities to take advantage of their commodity insights. Except when commodity prices are volatile, like over the last two years, the trading firms are looking to take advantage of global trade flows.
  • As of July 2016, it appears energy and materials commodity prices hit bottom in 2015 and now are steadily recovering. The commodity fuel (energy) index of indexmundi.com is up approximately 45% since the beginning of 2016, although it’s still 23% down from the highs of a year earlier. Noticeably, private equity firms are beginning again to invest in oil opportunities. The metals price index of indexmundi.com is up 10% for the year, but still down 15% from a year ago.
  • Chinese commodities exchanges are shaping the world’s commodity prices. China accounts for three of the top five trading exchanges for future contracts. While essentially closed to foreigners, the Chinese commodities markets are the world’s largest and drive short-term price fluctuations in the world.
  • Large increases in the issuance of catastrophe bonds are transferring the risks from the insurance industry to capital markets. Currently $72 billion of bonds are outstanding representing a loss of 12 percent of the reinsurance business.
  • London’s role in capital markets and financing sector is falling. UK banks are no longer global leaders. The average global rank of HSBC, RBS, Lloyds, and Barclays by Tier-1 Capital fell from 8.8 in 2004 to 15.5 in 2015. After Brexit, London will likely no longer be Europe’s financial center.
  • Emerging-market banks are now the biggest banks in the world, feeding on the borrowing binges in those markets. The world’s four largest banks are in China, and more than a third of the world’s biggest banks have their headquarters in emerging markets. While banking standards and regulations in emerging markets are improving rapidly, the countries are becoming increasingly leveraged: Bank lending in emerging markets has increased from 77 percent of GDP in 2007 to 128 percent in 2015. In India, non-performing or restructured loans now account for 14 percent of the assets of public banks.
  • Africa’s banks are in serious trouble. Africa’s financial firms did very well after the financial crisis in 2007/2008 as the world demanded the continent’s commodities. In Nigeria, 25 percent of local bank loans went to oil land gas wells. Today with the oversupply of commodities worldwide and sharply lower prices, many African-bank loans are non performing. At Nigeria’s second largest bank, First Bank, 18 percent are non-performing.
  • Global monetary disorder! An array of exchange-rate mechanisms executed by governments around the world for various political and economic reasons is creating more volatility, currency mismatches, and persistent imbalances. A number of governments are intervening in foreign-exchange markets to manipulate currencies to gain export advantage. Two outcomes of this chaos are uncertainty for international businesses—and less investment—and political backlash against global trade.
  • Foreign aid just isn’t efficient: Instead of going to poor, well-governed countries, it is more likely to go to middle-income countries that are poorly governed. While more transparent in the 21st century, the “system” of foreign aid is still failing. Official development aid from more well off countries is still a tool of foreign policy. New cures for poor foreign aid practices continue to be promulgated, often contradicting earlier cures. Official aid is worth about $130 billion a year—a very large sum—but it’s hard to imagine much positive direct impact given the problems it must avoid: Crooks siphoning the money or goods, weak bureaucracies administering the monies, imported goods distorting local markets, and aid monies propping up governments of dictators and prolonging civil wars.
  • Economic migration is so widespread that remittances back to developing economies from workers abroad are now worth twice as much as foreign aid. Remittances are worth 10 percent of the Philippines’ GDP and 42 percent of Tajikistan’s. The cost of remitting money however is quite expensive. On average the cost to send the funds is 7.7 percent. Technology is developing to increase the competition and reduce the costs but regulations to prevent money laundering and financing of terrorism are increasing the risks and costs.
  • Cross-border money payments are a target of cyberattacks. In May 2016, the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the global payments system most banks around the world use to move money, described recent some spectacular cyber bank thefts out of Bangladesh, Vietnam, and Ecuador. Each of the thefts involved re-routing transactions through the SWIFT network.
  • Energy-producing nations of the Persian Gulf are setting records in issuing bonds to offset the revenue declines from lower oil and gas prices. The Gulf Cooperation Council states of Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Oatar, and Oman together have raised $18 billion in 2016.

Plausible Developments in the Next Five Years

The goal of this analysis is to highlight possible outcomes in the next five years that could be very disruptive. The recent signals of change above suggest we could see the following.

  • Sovereign-Wealth Funds. Sovereign funds will grow in importance in global finance. They will be the means for holding commodity-export monies anywhere in world and using them for whatever purpose.
    • As commodity prices recover, the assets of sovereign funds will likely rebound and grow larger than they were in 2014. The funds will become more intertwined in the global financial system.
    • The investment policies of most of these funds will remain largely obscure. Key investment criteria will most likely continue to include the foreign policy of the sovereign governments and crony benefits.
    • Sovereign funds will become an even more important source of capital for large multinational companies, competing with regulated banks and public capital markets to provide that capital. The new key financiers of the world could be the investment-authority executives of commodity export countries. How might they influence the management of those companies? Might California Public Employees’ Retirement System (CalPERS) decide to exit many energy investments to be replaced by Saudi Arabia state-owned investment funds?
    • Sovereign funds of commodity-export countries may become the financiers of last resort for illiberal governments and organizations subject to international sanctions. Dark money.
    • More schemes by government officials and cronies to siphon off monies of the funds, like the recent case of Malaysia’s 1MDB, will become public.
    • Sovereign funds will experience large volatility in their asset values and performance. A new financial disaster could occur if several large funds simultaneously collapse in some way.
    • The US Justice Department and US Treasury Department will emerge as the primary check on sovereign-wealth fund abuses. No other government organization or international agency will develop the capability to identify and effectively pursue illegal actions involving the global financial system.
  • For the next couple of years emerging-market currencies will remain low relative to the dollar until commodity demand and prices rebound more.
    • The US dollar will remain the strongest currency and global benchmark in the foreseeable future.
    • But the Chinese Yuan will establish itself as the primary alternative.
    • After all the dollar-denominated borrowing by crony commodity-export producers leading up 2015, taking advantage of the low interest rates of the US dollar, many producers will struggle in 2016 and 2017 to cover the dollar interest charges with falling local currency.
    • High inflation, stoked by the currency devaluations, will continue in many countries—Russia, Brazil, Venezuela—until commodity sales improve.
  • Commodity markets. Commodity prices in general will rebound slowly, and the crisis is over except for the radical restructurings of many bankrupt and financially stricken producers.
    • An oversupply situation will continue for several years for most natural resource categories.
    • Commodity producers will continue to perform poorly financially for a couple more years.
    • Large producers will continue to close or divest expensive supply assets, but excess supply will remain in place for several more years.
  • Commodity sellers. But as commodity prices increase, we will see the emergence of powerful crony producers in the next five years and a decline in market share of the multinationals.
    • For the next couple of years, non-state international producers will attempt to lower their costs significantly by restructuring internally and by merging or acquiring other producers and restructuring some more.
    • Some producers, particularly those state-owned, will use extend and pretend practices, trying to sweep problems under the rug.
    • In desperate efforts to develop new business, international corporations will pursue relations with large commodity exporting countries wherever they can, for example Russia, Iran, and Somalia. If they are Western companies, they may pursue opportunities that are against the will of their home governments.
    • Commodity producers from emerging market countries will continue turning into large international competitors as they diversify and grow. More Chinese companies will become international competitors.
    • As a result, multinationals from North America and Europe will lose market share to the new players. State-owned commodity producers from China are already significant players in North America, South America, Africa, and northern Europe.
  • Non-performing loans and solvency of emerging market banks.
    • Many emerging-market banks will likely fail in the next two years, particularly in Africa.
    • If a restructuring of the banks in the different emerging-market countries doesn’t occur, then the rebound of their commodity markets will be delayed.
    • China’s state-owned banks involved in Russia, Africa, and Latin America will take advantage of commodity-export countries’ need for capital.