(Bloomberg) — While the first OPEC production cuts since 2008 were inked as Asia slept, the winners and losers from the surprise deal are already becoming clear in the world’s biggest oil-consuming region.
U.S. crude is hugging $50 a barrel following Wednesday’s 9.3 percent surge, the biggest since February, and Goldman Sachs Group Inc. is projecting further gains of more than 10 percent by the end of the first half as the current oil surplus withers into a deficit. A revival in prices could prove challenging to countries like India and China, which import most of the crude they consume. Yet the region is also home to some of the largest players when it comes to shipping and oil-market infrastructure.
“It’s extremely hopeful and optimistic for those traditional manufacturing companies in Asia,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “Oil explorers as well as steel companies that supply pipeline makers will start boosting investment and production as oil prices are on the rise in the long term.”
Asian energy stocks are surging the most in almost 10 months, with exploration companies such as Australia’s Santos Ltd. and Tokyo-based Inpex Corp., Japan’s biggest oil and gas explorer, leading gains.
Rig builders are also rallying, amid speculation higher oil prices will encourage further exploration, fueling demand for drilling equipment. Keppel Corp., the world’s biggest oil-rig manufacturer, jumped as much as 5.5 percent to S$5.75 in Singapore, the most since June. Sembcorp Marine Ltd., the second-biggest, also surged.
For them, the OPEC deal is coming at a key moment. Oil-rig makers have fired thousands of workers in the past two years and have been planning more cuts amid weak demand for equipment to explore and transport oil. Energy companies have cut more than 350,000 jobs since crude prices started to fall in 2014 and explorers reduced hundreds of billions of dollars in investment to weather the rout.
Shipbuilders in South Korea, home to the world’s top three shipyards, also benefited from the deal, with Hyundai Heavy Industries Co., the biggest, gaining more than 5 percent in Seoul. Rival Samsung Heavy Industries Co. rose the most since June on a closing basis. Both companies have also had to shed employees this year as low oil prices crimped demand for new vessels and deep-sea drilling platforms.
While the oil-price increase may prove a boon for crude-industry support companies, it’s a negative for air carriers, with jet fuel prices jumping to a one-month high in New York. Japan Airlines Co. sank the most in nine weeks, as Australia’s Qantas Airways Ltd. slipped more than 2 percent. Singapore Airlines Ltd. lost the most since Nov. 11.
Moving beyond equities, the impact of the OPEC deal is being most keenly felt in the government bond market in Asia, with benchmark yields from China to New Zealand tracking Wednesday’s surge in 10-year Treasury rates.
The Bloomberg Barclays Global Aggregate Total Return Index, a measure of investment-grade debt from 24 markets around the world, capped a 4 percent slide for November last session, the gauge’s worst monthly slump since its inception in 1990. High oil prices buoy inflation expectations, which were already elevated on bets Donald Trump’s U.S presidency will usher in a wave of government spending.
Yields on Australian sovereign notes due in a decade jumped by seven basis points Thursday to 2.79 percent, their highest level since January. Rates on similar maturity bonds from South Korea to Hong Kong rose by at least two basis points as the slump in Treasuries worsened. Ten-year U.S. yields extended Wednesday’s nine basis-point climb, rising another basis point to 2.39 percent, their highest level since July 2015.
“A lot of people are beginning to think that it is the end of the bull rally,” said Roger Bridges, chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management’s Australia unit, which oversees $14 billion.
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