In a deal that could value the ride hailing start up DidiChuxing at around $30 billion, Taiwanese electronics giant Foxconn have announced they will invest over $100 million in the Chinese Uber look-a-like.
The investment will be carried out using one of Foxconn’s subsidiaries Foxteq Holdings Inc.
Didi now have a host of influential tech companies under their list of investors which includes Uber themselves. Other notable names include Apple Inc and Alibaba Group Ltd.
Hai Precision Industry Co Ltd, the trading name for Foxconn, announced the deal in a stock exchange filing, and they said the company would own a third of a percent of Didi, one of China’s highest valued tech ventures. The cash injection would give Didi a market capitalization of over $30 billion.
The two firms said they are “looking at a range of possibilities although plans are not finalized as yet.”
Uber have had a torrid time in China, going through three years of court battles which resulted in them being bought out by Didi. In return, Uber acquired a 20% stake in the Chinese firm.
“Uber were fighting a losing battle and I think they chose the smartest way out,” said Global Co-Head of the Investment Management Division of Shizuoka Capital Wealth Management, Michael Lane, commenting on the news.
“With their $8 billion valuation, Uber would have been hit very hard if they got tied up in further litigation. Now they are part of a $30 billion company and can leave the handling of the Chinese government regulations to the local firm.”
Foxconn have also been making moves in the electric auto industry, with a significant investment in Future Mobility, a firm that is looking to rival U.S. company Tesla Motors and recently took on several executives jumping ship from BMW’s electric car unit. Environmentally friendly car sales are booming right now in China with very favourable initiatives for both manufacturers and buyers.
Apple Inc has close ties with Foxconn, being the U.S. firm’s main assembler of its iPhones. Apple came in with a $1 billion investment in Didi and they are interested in getting into the auto-industry next year, with Silicon Valley abuzz with rumours of an iCar.
Monday, September 12, 2016
Friday, September 9, 2016
Google look to firm up cloud operations with Apigee deal
Google will be looking to strengthen their cloud business as it goes into final talks with software development firm Apigee Corp over a possible merger worth around $600 million.
Apigee assists companies communicate with their customers using innovative technology focused primarily on mobile devices and web based applications.
“It’s a brave new world when it comes to how businesses interact with their customer base,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview. “Home visits and even phone calls are dated, with API’s taking over more and more these days.”
The announcement regarding the possible deal was made late Thursday afternoon and a short statement included details on the ratios.
Alphabet Inc's Google would give Apigee shareholders $17.42 for each of their shares, representing around a 7 percent premium to the share’s Thursday close, and their stock was trading slightly up on the offer price the next morning.
Apigee have a host of big name clients including Vodafone, AT&T and the World Bank. The company’s IPO was a year ago in May, and shares have jumped half a dollar since then.
Dianne Greene, who is in charge of Google’s cloud unit, has been pushing to make the company a top player in fintech and other corporate computing services, and she was central in a deal only days ago with online cloud storage firm Box Inc which will be used to integrate Google Docs into the cloud.
Apigee assists companies communicate with their customers using innovative technology focused primarily on mobile devices and web based applications.
“It’s a brave new world when it comes to how businesses interact with their customer base,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview. “Home visits and even phone calls are dated, with API’s taking over more and more these days.”
The announcement regarding the possible deal was made late Thursday afternoon and a short statement included details on the ratios.
Alphabet Inc's Google would give Apigee shareholders $17.42 for each of their shares, representing around a 7 percent premium to the share’s Thursday close, and their stock was trading slightly up on the offer price the next morning.
Apigee have a host of big name clients including Vodafone, AT&T and the World Bank. The company’s IPO was a year ago in May, and shares have jumped half a dollar since then.
Dianne Greene, who is in charge of Google’s cloud unit, has been pushing to make the company a top player in fintech and other corporate computing services, and she was central in a deal only days ago with online cloud storage firm Box Inc which will be used to integrate Google Docs into the cloud.
Thursday, September 8, 2016
Bank of England say they will “give fintech space to grow”
The Chief Cashier of the Bank of England (BoE) Victoria Cleland has said publicly that the central bank will not stifle financial technology innovation as the central bank attempts to keep up with new developments in the field.
According to Cleland, the BoE will customize its new upcoming regulations in order to “give fintech space to grow” and that understanding technological innovation was a priority at the bank.
Most of the recent news surrounding fintech has been focused on digital currencies, like bitcoin, and a high security online ledger called blockchain, which can automate transactions and could be hugely beneficial in the financial industry in the future. The BoE has been looking at benefits, and also the risks of using such systems.
The comments from the senior BoE employee are seen by many observers as an attempted reassurance to fintech firms that their businesses are safe in London, which has been a hub of the industry.
“After the Brexit, policymakers are doing all they can to pander to certain industries they feel are important, and fintech is definitely one of those” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in an email to clients.
“Companies have been worried about having their client base limited and being cut off from the euro zone market after the UK leaves the financial bloc.”
Cleland said she understands the concerns and will work with companies to make it clear where the goalposts are. “Obviously with a technology that is moving at such a fast pace it’s very difficult to draw up regulations for it,” she said in a press meeting. “Seeing that this is a global industry, we really need to see some parity from regulators around the world.”
With the alternative financial industry growing by a massive 80 percent last year alone, all eyes have been on the BoE and the Financial Stability Board, which is headed by Mark Carney the BoE Governor, to see what kind of rules are going to be enforced.
According to Cleland, the BoE will customize its new upcoming regulations in order to “give fintech space to grow” and that understanding technological innovation was a priority at the bank.
Most of the recent news surrounding fintech has been focused on digital currencies, like bitcoin, and a high security online ledger called blockchain, which can automate transactions and could be hugely beneficial in the financial industry in the future. The BoE has been looking at benefits, and also the risks of using such systems.
The comments from the senior BoE employee are seen by many observers as an attempted reassurance to fintech firms that their businesses are safe in London, which has been a hub of the industry.
“After the Brexit, policymakers are doing all they can to pander to certain industries they feel are important, and fintech is definitely one of those” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in an email to clients.
“Companies have been worried about having their client base limited and being cut off from the euro zone market after the UK leaves the financial bloc.”
Cleland said she understands the concerns and will work with companies to make it clear where the goalposts are. “Obviously with a technology that is moving at such a fast pace it’s very difficult to draw up regulations for it,” she said in a press meeting. “Seeing that this is a global industry, we really need to see some parity from regulators around the world.”
With the alternative financial industry growing by a massive 80 percent last year alone, all eyes have been on the BoE and the Financial Stability Board, which is headed by Mark Carney the BoE Governor, to see what kind of rules are going to be enforced.
Wednesday, September 7, 2016
All eyes on Fed as traders hold back
As traders and investors gauge the outlook regarding future interest rate hikes, U.S. stocks flattened out on Tuesday although the Nasdaq somehow managed another record high close.
Grocers results were poor, with sprout farmers the hardest hit. There was a 14 percent drop for sprout shares to $19.69, Kroger shares were down 5 percent to $31.33 and Whole Foods shares dropped 6 percent to $29.09.
Investors have been focused on the Federal Reserve, trying to ascertain how close the central bank is to raising interest rates. Most expect the Fed to hold back on any major changes due to the disappointing jobs report last week together with other discouraging data.
The Fed has been coy on any firm change date, recently commenting on a decent economic expansion in the last quarter.
“After the past week’s moderate jobs report, most observers are getting the distinct impression rates will remain low for the foreseeable future,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management. “We are probably going to see the same story at the ECB [European Central Bank] where policymakers will be tempted to keep rates at rock bottom.”
The largest company in the world by market capitalization, Apple Inc, saw its shares jump 0.8 percent to $108.35 after they unveiled their brand new iPhone 7.
After a health scandal, Chipotle Mexican Grill shares began to see some improvement rising 6 percent to $438.44. The chain was given fresh momentum with a 10 percent stake buy in from Pershing Square Capital owned by William Ackman, who said he would restructure the company at the executive level.
Leading the way on the trading floor yesterday were Delta Air shares, after the company announced better-than-expected sales for the last quarter. They were also helped by rival Southwest revealing they would cut their growth in chartered flights to South America next year.
However, share trading was the lowest seen for 30 days yesterday at around $5.9 billion compared to the $6.7 billion daily average. The Dow Jones average slumped 12 points to 18,526.15 and the S&P 500 index lost 0.32 points to 2,186.16. The Nasdaq result of an 8 point gain was a record close yet again for the benchmark gauge, a surprise for such a slow day.
Grocers results were poor, with sprout farmers the hardest hit. There was a 14 percent drop for sprout shares to $19.69, Kroger shares were down 5 percent to $31.33 and Whole Foods shares dropped 6 percent to $29.09.
Investors have been focused on the Federal Reserve, trying to ascertain how close the central bank is to raising interest rates. Most expect the Fed to hold back on any major changes due to the disappointing jobs report last week together with other discouraging data.
The Fed has been coy on any firm change date, recently commenting on a decent economic expansion in the last quarter.
“After the past week’s moderate jobs report, most observers are getting the distinct impression rates will remain low for the foreseeable future,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management. “We are probably going to see the same story at the ECB [European Central Bank] where policymakers will be tempted to keep rates at rock bottom.”
The largest company in the world by market capitalization, Apple Inc, saw its shares jump 0.8 percent to $108.35 after they unveiled their brand new iPhone 7.
After a health scandal, Chipotle Mexican Grill shares began to see some improvement rising 6 percent to $438.44. The chain was given fresh momentum with a 10 percent stake buy in from Pershing Square Capital owned by William Ackman, who said he would restructure the company at the executive level.
Leading the way on the trading floor yesterday were Delta Air shares, after the company announced better-than-expected sales for the last quarter. They were also helped by rival Southwest revealing they would cut their growth in chartered flights to South America next year.
However, share trading was the lowest seen for 30 days yesterday at around $5.9 billion compared to the $6.7 billion daily average. The Dow Jones average slumped 12 points to 18,526.15 and the S&P 500 index lost 0.32 points to 2,186.16. The Nasdaq result of an 8 point gain was a record close yet again for the benchmark gauge, a surprise for such a slow day.
Wednesday, August 24, 2016
Italy looks to expand EU deficit allowances
Italy’s Industry Minister Carlo Calenda said on Friday that if the country can introduce a new corporate spending strategy they may be able to convince the European Commission (EC) to increase its budget deficit.
The comments came in an interview with la Repubblica daily, where the minister called for a rethink on flexibility rules that reward economic reforms with increased deficit margins only for 12 months.
Italy has previously expanded its 2016 deficit goal by over $10 billion using the EC’s clauses. But due to a major slowdown in this year’s economic growth, mainly because of terrible Q2 figures, the government’s deficit targets are seen to be a high level risk.
Although the nation’s treasury department have said it’s too early to forecast budget effects for next year, it is rumoured that Rome will be petitioning the EC for added budget expansion. This was confirmed by Minister Calenda, who said the country would “almost certainly seek extra flexibility in our budget margins”. The treasury declined to comment on the minister’s remarks.
“What the EC and the euro zone markets need to see is some kind of credible plan from Rome,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview. “It’s clear the fiscal authorities of Italy want to develop the scope of the EC’s clauses both in size and duration.”
It may not be easy to get the grants however, as the EC has said publicly in a meeting last month that Italy has already received “more flexibility than any other country in the region”.
The European markets have traditionally kept Italian public finances at arm’s length due to the country’s terminally stagnant economic expansion and enormous level of public debt that are nearly double the domestic output.
Calenda is insistent that demand stimuli are a lost cause in the current climate and tired tax break initiatives simply aren’t working. The government, he says, needs to focus on the supply side of the equation and wants the budget expansion to increase competition and corporate investment.
The comments came in an interview with la Repubblica daily, where the minister called for a rethink on flexibility rules that reward economic reforms with increased deficit margins only for 12 months.
Italy has previously expanded its 2016 deficit goal by over $10 billion using the EC’s clauses. But due to a major slowdown in this year’s economic growth, mainly because of terrible Q2 figures, the government’s deficit targets are seen to be a high level risk.
Although the nation’s treasury department have said it’s too early to forecast budget effects for next year, it is rumoured that Rome will be petitioning the EC for added budget expansion. This was confirmed by Minister Calenda, who said the country would “almost certainly seek extra flexibility in our budget margins”. The treasury declined to comment on the minister’s remarks.
“What the EC and the euro zone markets need to see is some kind of credible plan from Rome,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview. “It’s clear the fiscal authorities of Italy want to develop the scope of the EC’s clauses both in size and duration.”
It may not be easy to get the grants however, as the EC has said publicly in a meeting last month that Italy has already received “more flexibility than any other country in the region”.
The European markets have traditionally kept Italian public finances at arm’s length due to the country’s terminally stagnant economic expansion and enormous level of public debt that are nearly double the domestic output.
Calenda is insistent that demand stimuli are a lost cause in the current climate and tired tax break initiatives simply aren’t working. The government, he says, needs to focus on the supply side of the equation and wants the budget expansion to increase competition and corporate investment.
Monday, August 22, 2016
Local authorities may fund Chinese steel bailout
Online economic website Caixin has reported that embattled state owned Bohai Steel Group may be the beneficiary of a local government fund initiative which would allow the company to restructure its debt obligations, which total nearly $30 billion.
The company, which came about through the merger of four smaller firms in 2010, owes over a hundred creditors debt and have only just enough assets to cover it.
The plan is to set up a local asset management company in Tianjin, which can handle the debts. The new firm will also assist other indebted companies in the region.
“The debt restructuring is probably the biggest we’ve seen in China since the 2008 economic meltdown. It’s a big effort by the authorities to clear the heavy governmental slate,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management who is advising the Tianjin government on the plan.
Most of the creditors involved are Beijing-based banks and trust firms, the magazine reported.
China has been attempting to keep in check an increasing state sector debt level for many years.
The main strategy has been to encourage creditors to accept debt-for-equity swap deals through newly formed specialist debt management firms such as China Reform Holdings Co., which is spearheading the debt re-shuffling of many state-owned companies.
The government have accelerated the debt repayment plans for the steel sector in particular as the flagging real estate market causes a decline in the demand for basic construction materials.
The company, which came about through the merger of four smaller firms in 2010, owes over a hundred creditors debt and have only just enough assets to cover it.
The plan is to set up a local asset management company in Tianjin, which can handle the debts. The new firm will also assist other indebted companies in the region.
“The debt restructuring is probably the biggest we’ve seen in China since the 2008 economic meltdown. It’s a big effort by the authorities to clear the heavy governmental slate,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management who is advising the Tianjin government on the plan.
Most of the creditors involved are Beijing-based banks and trust firms, the magazine reported.
China has been attempting to keep in check an increasing state sector debt level for many years.
The main strategy has been to encourage creditors to accept debt-for-equity swap deals through newly formed specialist debt management firms such as China Reform Holdings Co., which is spearheading the debt re-shuffling of many state-owned companies.
The government have accelerated the debt repayment plans for the steel sector in particular as the flagging real estate market causes a decline in the demand for basic construction materials.
Friday, August 19, 2016
Governor of BOJ says rates can go even lower
Although a controversial negative rate policy has so far failed to encourage any real economic expansion or inflation, Bank of Japan (BOJ) Governor, Haruhiko Kuroda, has announced that the central bank could be willing to cut rates even further.
Kuroda was quoted in an interview with Sankei newspaper saying that rates have not reached their basement levels yet.
“If we look at the action by the U.S. Federal Reserve and the ECB [European Central Bank] they have gone much lower than we have with their rates so we cannot rule out expansion of the policy,” he said.
There were more than a few raised eyebrows at the start of the year when the BOJ set a minus 0.1 rate for certain deposits in their vaults in the hope that the move would encourage banks and corporations to increase expenditure and spur inflation, but that has not materialized.
The bank will carry out a full assessment of its annual fiscal policies next month, and only then will they make a decision on whether to adjust their huge asset purchasing plan, which has seen them buy up over 90 trillion yens worth of bonds on a yearly basis.
“Despite all this easing of the monetary base we haven’t seen any solid results,” said Michael Lane - Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in an email to investors.
“It’s been going on now for about 3 years and Prime Minister Abe is starting to get called out on his failed policies. The aim is to get up to 2 percent on inflation but the level hasn’t budged, with the economy as stagnant as ever,” Lane added.
The financial world will know more when the BOJ release their annual report on the same day as their meeting next month.
Kuroda was quoted in an interview with Sankei newspaper saying that rates have not reached their basement levels yet.
“If we look at the action by the U.S. Federal Reserve and the ECB [European Central Bank] they have gone much lower than we have with their rates so we cannot rule out expansion of the policy,” he said.
There were more than a few raised eyebrows at the start of the year when the BOJ set a minus 0.1 rate for certain deposits in their vaults in the hope that the move would encourage banks and corporations to increase expenditure and spur inflation, but that has not materialized.
The bank will carry out a full assessment of its annual fiscal policies next month, and only then will they make a decision on whether to adjust their huge asset purchasing plan, which has seen them buy up over 90 trillion yens worth of bonds on a yearly basis.
“Despite all this easing of the monetary base we haven’t seen any solid results,” said Michael Lane - Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in an email to investors.
“It’s been going on now for about 3 years and Prime Minister Abe is starting to get called out on his failed policies. The aim is to get up to 2 percent on inflation but the level hasn’t budged, with the economy as stagnant as ever,” Lane added.
The financial world will know more when the BOJ release their annual report on the same day as their meeting next month.
Wednesday, August 17, 2016
EXOR favours foreign HQ for easier access
In order to give Italian investment firm EXOR better access to European acquisitions and fund raising, owners the Agnelli family have decided to move their base of operations to Holland.
The move comes hot on the heels of a similar base transfer by a firm that EXOR controls with a 30 percent stake, Fiat Chrysler Automobiles, who recently registered as a Dutch company and planted a new HQ in Amsterdam.
“Although moves like this might not please everyone, companies need to do anything they can to improve growth opportunities,” says Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management, who have a small stake in Chrysler U.S.
In 2014 Fiat completed the full acquisition of their subsidiary in the United States, Chrysler, to create the world’s seventh biggest auto producer. At that point they made the decision to move away from home, sparking some unrest within political circles.
After the move, Fiat registered under both the Milan and New York stock exchanges, and chose the UK as its tax domicile.
In a statement released on Thursday evening, EXOR explained the reasoning for their decision to follow Fiat’s example. “Fiat has been much more successful regarding their new investments and M&A activity after their transfer to the Netherlands. We feel EXOR can also greatly benefit from the advantages that can be gained.”
The move comes hot on the heels of a similar base transfer by a firm that EXOR controls with a 30 percent stake, Fiat Chrysler Automobiles, who recently registered as a Dutch company and planted a new HQ in Amsterdam.
“Although moves like this might not please everyone, companies need to do anything they can to improve growth opportunities,” says Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management, who have a small stake in Chrysler U.S.
In 2014 Fiat completed the full acquisition of their subsidiary in the United States, Chrysler, to create the world’s seventh biggest auto producer. At that point they made the decision to move away from home, sparking some unrest within political circles.
After the move, Fiat registered under both the Milan and New York stock exchanges, and chose the UK as its tax domicile.
In a statement released on Thursday evening, EXOR explained the reasoning for their decision to follow Fiat’s example. “Fiat has been much more successful regarding their new investments and M&A activity after their transfer to the Netherlands. We feel EXOR can also greatly benefit from the advantages that can be gained.”
Monday, August 15, 2016
New York now favourite property target amid Brexit
As sentiment turns negative towards London due to the surprising UK vote to leave the European Union, New York has become the number one location for investors to seek out commercial real estate.
Just before the Brexit referendum there was an indication that investors were starting to feel nervy on London, as fluctuating international property transactions pointed to fears the English capital might lose its appeal as a world economic centre if the British public decided to leave the E.U.
According to investment company Jones Lang LaSalle Inc., compared to the first half of 2015, there was nearly a 50 percent drop in cross-border property transactions. Foreign investors simply didn’t want to risk purchasing property that might be devalued due to a political event beyond their control.
Indeed, one of the UK’s largest foreign investors, Norway's sovereign wealth fund, said it needed to wipe 10 percent off its British portfolio due to the Brexit.
“There’s no escaping the fact that London has got the sharp end of the Brexit stick,” Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a note to clients. “The attraction of London has always been as a world economic hub with a wide base of financial service employment opportunities. Obviously there is concern that London’s profile will be eroded.”
Data from Mr. Lane’s firm, Shizuoka, shows New York nearly doubled London’s total for cross-border real estate investments between January and June this year at $10 billion. In the same period last year London raked in $12 billion compared to this year’s $6 billion.
The UK has traditionally been viewed as friendlier than the U.S. towards real estate investors due to beneficial property tax structures, so the trend towards America will weaken one of Britain’s strongest investment areas.
“Many of America’s ‘gateway cities’ like Boston, Chicago, L.A. and of course New York are going to see a surge in capital investment towards property,” says Cushman & Wakefield senior VP Ken McCarthy. “Investors are looking to redeploy their capital away from the UK and, in a broader sense, Europe. It’s not just the shock of the Brexit but negative interest rates are a factor too.”
A World Bank report is expected in the coming months which will present data on the effects of the UK exit from the European Union. It will be released on the same day as a central bankers meeting in the U.S.
Just before the Brexit referendum there was an indication that investors were starting to feel nervy on London, as fluctuating international property transactions pointed to fears the English capital might lose its appeal as a world economic centre if the British public decided to leave the E.U.
According to investment company Jones Lang LaSalle Inc., compared to the first half of 2015, there was nearly a 50 percent drop in cross-border property transactions. Foreign investors simply didn’t want to risk purchasing property that might be devalued due to a political event beyond their control.
Indeed, one of the UK’s largest foreign investors, Norway's sovereign wealth fund, said it needed to wipe 10 percent off its British portfolio due to the Brexit.
“There’s no escaping the fact that London has got the sharp end of the Brexit stick,” Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a note to clients. “The attraction of London has always been as a world economic hub with a wide base of financial service employment opportunities. Obviously there is concern that London’s profile will be eroded.”
Data from Mr. Lane’s firm, Shizuoka, shows New York nearly doubled London’s total for cross-border real estate investments between January and June this year at $10 billion. In the same period last year London raked in $12 billion compared to this year’s $6 billion.
The UK has traditionally been viewed as friendlier than the U.S. towards real estate investors due to beneficial property tax structures, so the trend towards America will weaken one of Britain’s strongest investment areas.
“Many of America’s ‘gateway cities’ like Boston, Chicago, L.A. and of course New York are going to see a surge in capital investment towards property,” says Cushman & Wakefield senior VP Ken McCarthy. “Investors are looking to redeploy their capital away from the UK and, in a broader sense, Europe. It’s not just the shock of the Brexit but negative interest rates are a factor too.”
A World Bank report is expected in the coming months which will present data on the effects of the UK exit from the European Union. It will be released on the same day as a central bankers meeting in the U.S.
Tuesday, August 9, 2016
Japan leads global bond sell off
This summer’s bond rally is finally unravelling.
Japan has led the global sell off and yields are increasing across every continent. Bank of America Corp.’s G-7 Government Index bond average jumped over half a percentage point, which is its biggest climb in over a month.
While the UK was in the grip of its referendum vote on the E.U. this June, the general sentiment in the financial world was that world economic growth would slow enough to convince the Federal Reserve to leave interest rates unchanged.
It may well be the case that those same analysts are now wondering if yields dipped too far. Presidential candidate Donald Trump said that current interest rates are “at a false low”.
Bill Gross, a prominent financial manager and author, said that bets on the ultra-low yields are too risky. The company Gross founded, Pacific Investment Management Co., said the Japanese government bond rally is most likely at an end.
With the G-7 index now falling, many of the gains in early 2016 are now turning into costly losses. This year’s returns are now at a lowly 5 percent.
Bonds in Japan have declined the largest amount since 2013, according to data released by the Japan Bond Trading Co.
10-year yields gained to minus 0.096 percent from the low set in the summer and Gross said the rally “has most definitely fizzled out” due to the Fed reaching the end of the road with its fiscal stimulus plan.
Another telling indicator was the lack of action from the Bank of Japan, who opted to leave their negative interest rates unchanged, and did not expand the bond purchasing plan they already had in place since their last board meeting in July.
“It’s extremely difficult, even for central banks, to get a handle on the situation with bonds,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management.
“Policy-makers simply don’t know what the right response is to the turbulent events of this year. Similarly market participants are not confident with the current state of play. Many have jumped on the gravy train and suddenly there has been a call for the end of the line,” Lane added.
The bond situation may not be settled for a while. With the fallout from Brexit still having a ripple effect and the upcoming presidential election in the U.S., not to mention the continued slide of crude prices, investors would be wise to stay passive in the market for the near future.
Japan has led the global sell off and yields are increasing across every continent. Bank of America Corp.’s G-7 Government Index bond average jumped over half a percentage point, which is its biggest climb in over a month.
While the UK was in the grip of its referendum vote on the E.U. this June, the general sentiment in the financial world was that world economic growth would slow enough to convince the Federal Reserve to leave interest rates unchanged.
It may well be the case that those same analysts are now wondering if yields dipped too far. Presidential candidate Donald Trump said that current interest rates are “at a false low”.
Bill Gross, a prominent financial manager and author, said that bets on the ultra-low yields are too risky. The company Gross founded, Pacific Investment Management Co., said the Japanese government bond rally is most likely at an end.
With the G-7 index now falling, many of the gains in early 2016 are now turning into costly losses. This year’s returns are now at a lowly 5 percent.
Bonds in Japan have declined the largest amount since 2013, according to data released by the Japan Bond Trading Co.
10-year yields gained to minus 0.096 percent from the low set in the summer and Gross said the rally “has most definitely fizzled out” due to the Fed reaching the end of the road with its fiscal stimulus plan.
Another telling indicator was the lack of action from the Bank of Japan, who opted to leave their negative interest rates unchanged, and did not expand the bond purchasing plan they already had in place since their last board meeting in July.
“It’s extremely difficult, even for central banks, to get a handle on the situation with bonds,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management.
“Policy-makers simply don’t know what the right response is to the turbulent events of this year. Similarly market participants are not confident with the current state of play. Many have jumped on the gravy train and suddenly there has been a call for the end of the line,” Lane added.
The bond situation may not be settled for a while. With the fallout from Brexit still having a ripple effect and the upcoming presidential election in the U.S., not to mention the continued slide of crude prices, investors would be wise to stay passive in the market for the near future.
Monday, August 8, 2016
Weaker ruble and potential stimulus raise Russian stocks
As the trend of central banks around the world proposing massive stimulus to their economies continues, Russian stocks leaped to record highs as investors took advantage of a much weaker ruble, purchasing equities cheaper than any of their developing nation competitors.
As the ruble dipped 0.8 percent to 66.49 per dollar in Moscow’s late afternoon session, the Mices Index, dominated by the Russian currency, gained 0.3 percent as part of a six day advance and neared its record peak reached 3 months ago. The ruble has declined the third worst out of 25 basket peers, according to Bloomberg.
Weaker-than-projected U.S. data has encouraged many investors to back bets the Fed will leave interest rates unchanged, resulting in capital inflow to developing markets which promise higher returns. Therefore, cash has flowed in abundance towards Russian equities, and firms on the Micex are trading at 7 times their forecast 1 year earnings, compared to half that for the MSCI index.
“There’s a feeling to bet long on a lot of Russian risk at the moment,” said Michael Lane - Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management who handle $10 billion worth of capital in the region.
“As long as regulators do what the market expects, those bets will yield heavy returns. It’s a very good time to be involved with developing markets, especially the Russian stock market. We are seeing a prolonged correction on crude and the ruble so there’s plenty of opportunity there for those wagering on a big oil recovery,” he said.
Many prominent analysts are recommending an overweight stance on Russian stocks. David Aserkoff, JPMorgan Chase & Co. Head of Asian Investments said Russia’s equities are “significantly undervalued” and offer “a lucrative return ratio and the best long term dividends out of any developing market globally.”
The ruble dip followed in step with the decline in crude, Russia’s biggest export business. In the U.S., drilling firms increased output putting crude stockpiles at a record high. The market reacted with a 1.8 percent drop in Brent shares to $2.79 per barrel.
The ruble’s decline, however, has been at a very slow rate, a testament to the Russian currency’s resilience, and due in part to the Bank of Russia’s decision to freeze interest rates in their meeting last Monday. Trader attraction to ruble-heavy securities is understandable, as they will always gravitate to currencies offering basement rates.
Friday, August 5, 2016
Yen soars higher as currency swings are upside down
Many investors saw a good opportunity to trade in currency divergence this quarter. The divergence is definitely there, it’s just the opposite of what many analysts thought would happen.
Following the announcement in Tokyo of a spending plan that the majority of financial specialists considered weak, the yen soared to a monthly peak on Wednesday. There were also important announcements across the pacific as the Federal Reserve indicated they will tighten up monetary stimulus, and a report released on Q2 growth was more disappointing than forecast, causing the greenback to continue its slide.
The paths for the yen and greenback seem to be upside down, opposite to the predictions of prominent hedge funds and other specialists in the past 30 days. The past week’s events have destroyed trader’s strategies of staying underweight on bullish yen bets and putting money on dollar increases.
“It looks like the major stimulus that everyone was expecting in Japan just didn’t happen,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview.
“Helicopter money seems out of the question too and the Fed were far less hawkish than predicted, so where does that the leave the dollar-yen relationship? Probably, it will go even lower,” Lane added, and he is now forecasting the yen to increase further to 96 versus the greenback by December which would be a three year high.
The yen’s continued jump has thrown hedge fund strategies into disarray. Other experienced financial speculators have also lost out, many of whom dropped their net-bullish wagers on the yen by 50% in the last month. Meanwhile, the same investors were upping their net-bullish bets on the greenback to the most since the beginning of 2016.
The yen’s rise comes after the Japanese finance ministry made public a 5 trillion yen plan for extra spending in 2016, in their attempts to kick start the nations faltering economy whilst also trying to stay within the range of their fiscal health projections.
The funds added to the system are part of Shinzo Abe’s promised “28 trillion yen stimulus package” that he made public in a short statement to financial press last Monday. Many believe the announcement was designed to impress the public rather than help the economy.
The Bank of Japan last week expanded their exchange-traded funds program but decided to leave negative interest rates the same.
Following the announcement in Tokyo of a spending plan that the majority of financial specialists considered weak, the yen soared to a monthly peak on Wednesday. There were also important announcements across the pacific as the Federal Reserve indicated they will tighten up monetary stimulus, and a report released on Q2 growth was more disappointing than forecast, causing the greenback to continue its slide.
The paths for the yen and greenback seem to be upside down, opposite to the predictions of prominent hedge funds and other specialists in the past 30 days. The past week’s events have destroyed trader’s strategies of staying underweight on bullish yen bets and putting money on dollar increases.
“It looks like the major stimulus that everyone was expecting in Japan just didn’t happen,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview.
“Helicopter money seems out of the question too and the Fed were far less hawkish than predicted, so where does that the leave the dollar-yen relationship? Probably, it will go even lower,” Lane added, and he is now forecasting the yen to increase further to 96 versus the greenback by December which would be a three year high.
The yen’s continued jump has thrown hedge fund strategies into disarray. Other experienced financial speculators have also lost out, many of whom dropped their net-bullish wagers on the yen by 50% in the last month. Meanwhile, the same investors were upping their net-bullish bets on the greenback to the most since the beginning of 2016.
The yen’s rise comes after the Japanese finance ministry made public a 5 trillion yen plan for extra spending in 2016, in their attempts to kick start the nations faltering economy whilst also trying to stay within the range of their fiscal health projections.
The funds added to the system are part of Shinzo Abe’s promised “28 trillion yen stimulus package” that he made public in a short statement to financial press last Monday. Many believe the announcement was designed to impress the public rather than help the economy.
The Bank of Japan last week expanded their exchange-traded funds program but decided to leave negative interest rates the same.
Thursday, August 4, 2016
Bitcoin shares plunge amid exchange theft
In a security breach reminiscent of the Mt. Gox 2014 case, hackers have stolen nearly $70 million worth of bitcoin from Hong Kong-based exchange Bitifinex, sending shares for the digital currency plunging.
Bitifinex is one of the largest exchanges for bitcoin in the world and it halted trading after the theft was discovered. Shares dipped 6 percent versus the greenback as of 3pm on Wednesday in the Tokyo afternoon session, with its two day slump at 14 percent.
Bitifinex said in a brief statement, which acknowledged that bitcoins were stolen from its users, that they were “thoroughly investigating the breach and will release more details as and when they become clear.”
“In the coming week we will look carefully at the situation and attempt to address the issue of user losses,” said the exchange on their blog. “We beg for patience in the bitcoin community as we investigate the breach.”
Bitfinex confirmed that hackers stole nearly 120,000 bitcoin, equivalent to around $70 million at the current exchange rate. “Although we stopped trading on all our digital currencies, the only one to suffer losses was bitcoin,” they added.
“It’s a huge breach,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview yesterday.
“We’ve seen in the past with similar events that bitcoin is fairly resilient however. This can be devastating in the short term and we all remember Mt. Gox filing for bankruptcy after a similar theft caused a 25 percent drop in bitcoin prices. But fairly quickly it bounced back,” Lane added.
The result of the current incident has been almost $2 billion being wiped from the currency’s market capitalization, according to data from CoinDesk, a news site specializing in bitcoin and digital currencies.
The latest theft comes only a year after Bitfinex announced it was hiring Palo Alto-based BitGo to handle its upgraded security. BitGo has an intricate multi-layer security protocol used to safely store deposits online.
After the new security partnership was made public, Bitifinex said, “It’s very difficult for attackers to get through as two separate organizations need to be compromised in order to gain access.”
Other exchanges, for example OKCoin, choose to store most of its funds offline. Only time will tell if Bitifinex decide to go down that route in the future. Judging by the magnitude of the latest attack, it may be something they are likely to consider.
Bitifinex is one of the largest exchanges for bitcoin in the world and it halted trading after the theft was discovered. Shares dipped 6 percent versus the greenback as of 3pm on Wednesday in the Tokyo afternoon session, with its two day slump at 14 percent.
Bitifinex said in a brief statement, which acknowledged that bitcoins were stolen from its users, that they were “thoroughly investigating the breach and will release more details as and when they become clear.”
“In the coming week we will look carefully at the situation and attempt to address the issue of user losses,” said the exchange on their blog. “We beg for patience in the bitcoin community as we investigate the breach.”
Bitfinex confirmed that hackers stole nearly 120,000 bitcoin, equivalent to around $70 million at the current exchange rate. “Although we stopped trading on all our digital currencies, the only one to suffer losses was bitcoin,” they added.
“It’s a huge breach,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview yesterday.
“We’ve seen in the past with similar events that bitcoin is fairly resilient however. This can be devastating in the short term and we all remember Mt. Gox filing for bankruptcy after a similar theft caused a 25 percent drop in bitcoin prices. But fairly quickly it bounced back,” Lane added.
The result of the current incident has been almost $2 billion being wiped from the currency’s market capitalization, according to data from CoinDesk, a news site specializing in bitcoin and digital currencies.
The latest theft comes only a year after Bitfinex announced it was hiring Palo Alto-based BitGo to handle its upgraded security. BitGo has an intricate multi-layer security protocol used to safely store deposits online.
After the new security partnership was made public, Bitifinex said, “It’s very difficult for attackers to get through as two separate organizations need to be compromised in order to gain access.”
Other exchanges, for example OKCoin, choose to store most of its funds offline. Only time will tell if Bitifinex decide to go down that route in the future. Judging by the magnitude of the latest attack, it may be something they are likely to consider.
Wednesday, August 3, 2016
S&P 500 rallies past Wall St. targets
Traditionally, even stocks that have soared to record new heights can be forecast to go even higher by the professionals on Wall Street. That trend might not fit reality now however.
The S&P 500 was forced down to 2,147.61 on Tuesday, representing over a 1 percent slump in response to U.S. shares dipping to a new monthly low.
Fifteen national brokerages were surveyed on their forecasts regarding a year-end target for the S&P 500, with the average being 2,146 at the start of this month. With yesterday’s 0.5 percent drop, that’s 10 points below the closing mark on Tuesday. It’s the first time in two years that the index has finished above analyst forecasts.
“If you view the market as a fundamentalist, then the reaction we’ve seen in the last couple of days actually makes sense,” says Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management.
“There is no factor that we can see driving the market in an upward direction even though sentiment has swung to be positive in general. There is some divergence among prominent analysts in the financial sector with firms like Goldman Sachs staying relatively bearish on equities and sitting on their cash.”
Market analysts on Wall Street are usually a dependable source of enthusiasm and their annual predictions never fall below market prices for prolonged periods. The members of the survey set the index over two years ago at 2,141 and it has fluctuated around that mark steadily.
However, that solid bullish sentiment has declined this year with the bump in equities, and some analysts have reduced their projections which resulted in a fall of the surveyed average.
A champion of the bearish stance most recently has been Goldman Sachs Group Inc. who set a low target for both the S&P 500 and Europe’s Stoxx 600 gauge, saying they would both dip about 15 percent in the next quarter.
In a report by the firm’s equity strategists they said, “We are staying pretty neutral as we look towards next quarter and remain underweight on stocks and overweight on cash. As we see it, due to equities staying on the expensive side and growth in earnings levelling out, equities could well be at their ceiling for their recent rally.
David Kostin, the company’s U.S. equity chief strategist said the main stock indices may fall sharply as we get close to the holiday season.
The S&P 500 was forced down to 2,147.61 on Tuesday, representing over a 1 percent slump in response to U.S. shares dipping to a new monthly low.
Fifteen national brokerages were surveyed on their forecasts regarding a year-end target for the S&P 500, with the average being 2,146 at the start of this month. With yesterday’s 0.5 percent drop, that’s 10 points below the closing mark on Tuesday. It’s the first time in two years that the index has finished above analyst forecasts.
“If you view the market as a fundamentalist, then the reaction we’ve seen in the last couple of days actually makes sense,” says Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management.
“There is no factor that we can see driving the market in an upward direction even though sentiment has swung to be positive in general. There is some divergence among prominent analysts in the financial sector with firms like Goldman Sachs staying relatively bearish on equities and sitting on their cash.”
Market analysts on Wall Street are usually a dependable source of enthusiasm and their annual predictions never fall below market prices for prolonged periods. The members of the survey set the index over two years ago at 2,141 and it has fluctuated around that mark steadily.
However, that solid bullish sentiment has declined this year with the bump in equities, and some analysts have reduced their projections which resulted in a fall of the surveyed average.
A champion of the bearish stance most recently has been Goldman Sachs Group Inc. who set a low target for both the S&P 500 and Europe’s Stoxx 600 gauge, saying they would both dip about 15 percent in the next quarter.
In a report by the firm’s equity strategists they said, “We are staying pretty neutral as we look towards next quarter and remain underweight on stocks and overweight on cash. As we see it, due to equities staying on the expensive side and growth in earnings levelling out, equities could well be at their ceiling for their recent rally.
David Kostin, the company’s U.S. equity chief strategist said the main stock indices may fall sharply as we get close to the holiday season.
Saturday, July 30, 2016
Euro zone stocks battered by weak crude and bank industries
Commerzbank was the biggest faller in a slew of disheartening banking results in the euro zone this week, while weak crude prices also buffeted the financial bloc.
The German lender reported a steep decline in its Q2 capital and the STOXX 600 index dropped nearly 0.5 percent to 339.6 in this morning’s early session. Overall, the index has declined 8 percent this year even though it reached a 4 week high in the last session.
After the announcement of Commerzbank figures went public, shares dropped 5 percent. Reasoning for the decline was put down to Italian sovereign debt exposure and pension liabilities.
Experts in the field say that while the company still has an exceptional purchase rating, and the current valuation for its stock is on the low side.
“Profitability remains a slight issue,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management.
“Overall though, Commerzbank has done extremely well to shuffle around its business to adapt to the challenges of recent years and we will see the bank return to its previous high levels before too long,” he added.
Friday saw the release of key European bank stress tests and investors were understandably cautious, reflected by a 2 percent drop in the bank index making the banking sector the worst performing industry not just of the quarter but of the whole year.
Super-low interest rates have not helped the situation in Europe and some of the top banks have seen their capital stretched to critically low levels. Lenders such as Deutsch Bank and UniCredit are down 6 percent.
Meanwhile, in the oil sector, BP failed to keep up with second-quarter targets and dropped nearly 3 percent due to falling oil prices affecting their operating margins. The British oil major announced they would reorganize its investment budget for the coming year in response to the decline.
Another Q2 faller was Mediaset, an Italian broadcaster, who were in line for a merger with a French media company who later pulled out of the deal. Their stock dipped 13 percent.
According to data from Goldman Sachs, there have been pleasant surprises included in the start of the earnings season, with basic resources and industrial goods doing well. The worst performers were real estate, banking and household goods, the report said.
By the end of next week over 50 percent of the companies on the STOXX 600 will have reported their earnings.
The German lender reported a steep decline in its Q2 capital and the STOXX 600 index dropped nearly 0.5 percent to 339.6 in this morning’s early session. Overall, the index has declined 8 percent this year even though it reached a 4 week high in the last session.
After the announcement of Commerzbank figures went public, shares dropped 5 percent. Reasoning for the decline was put down to Italian sovereign debt exposure and pension liabilities.
Experts in the field say that while the company still has an exceptional purchase rating, and the current valuation for its stock is on the low side.
“Profitability remains a slight issue,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management.
“Overall though, Commerzbank has done extremely well to shuffle around its business to adapt to the challenges of recent years and we will see the bank return to its previous high levels before too long,” he added.
Friday saw the release of key European bank stress tests and investors were understandably cautious, reflected by a 2 percent drop in the bank index making the banking sector the worst performing industry not just of the quarter but of the whole year.
Super-low interest rates have not helped the situation in Europe and some of the top banks have seen their capital stretched to critically low levels. Lenders such as Deutsch Bank and UniCredit are down 6 percent.
Meanwhile, in the oil sector, BP failed to keep up with second-quarter targets and dropped nearly 3 percent due to falling oil prices affecting their operating margins. The British oil major announced they would reorganize its investment budget for the coming year in response to the decline.
Another Q2 faller was Mediaset, an Italian broadcaster, who were in line for a merger with a French media company who later pulled out of the deal. Their stock dipped 13 percent.
According to data from Goldman Sachs, there have been pleasant surprises included in the start of the earnings season, with basic resources and industrial goods doing well. The worst performers were real estate, banking and household goods, the report said.
By the end of next week over 50 percent of the companies on the STOXX 600 will have reported their earnings.
Friday, July 29, 2016
Dow Chemical reports increased revenues as tie-up draws near
One of the United States best performing companies, Dow Chemical, comfortably beat Wall Street targets in the second quarter as it seeks to finalize a merger with its closest competitor, Dupont.
The reason for the company’s stellar figures is increased demand for its primary product, plastics.
According to a report by the company released Tuesday, operating earnings jumped to 90 cents a share, outperforming Wall Street forecasts by 5 cents.
Dow’s chairman and CEO Andrew Liveris said in a prepared statement, “This quarter our company has yet again delivered significant growth and expansion of operating profits. Considering the current climate in both the geopolitical and market spheres, it’s extraordinary that we could hit fifteen quarters of growth consecutively.”
Although Dow have comfortably and consistently outpaced their rivals, sales for the Michigan based company have dropped to $11 billion, a decline of 6 percent compared to the same quarter in 2015. Crude prices and the impact from the offload of Dow’s chlorine unit can be blamed for the dip.
The statement also mentioned that due to increased demand throughout all of its global demographic strongholds, volume grew 3 percent.
The company has worked hard to reduce costs this year, with the statement claiming that upwards of $80 million has been saved this quarter alone, bringing the semi-annual savings to $190 million. The company looks good to beat the $290 million savings target for the year end.
Earnings will also get a boost from the recent acquisition of Corning Corporation’s silicon unit, which could add over a billion dollars to the company’s profits per year.
The plastics and materials industry will get a shake up when Dow and DuPont complete the proposed merger, which was green lit by major shareholders in a meeting last week.
The agreement is valued at over $140 billion and the process is said to involve a future split into three separate entities, two of which will concentrate on science and agriculture, and will be headquartered in Delaware.
The third entity, a plastics and materials focused concern, will be based in Dow’s spiritual home of Michigan.
Dow produces a broad range of materials from paint to plastics including many products used in the automobile sector. The company employs over 60,000 staff, many in Michigan. However, there could be downsizing on the horizon.
“Everyone involved in the deal knows that there will be significant job cuts coming,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management. “DuPont already made thousands of employees redundant, and Dow announced last week that certain sacrifices will need to be made involving the workforce.”
The reason for the company’s stellar figures is increased demand for its primary product, plastics.
According to a report by the company released Tuesday, operating earnings jumped to 90 cents a share, outperforming Wall Street forecasts by 5 cents.
Dow’s chairman and CEO Andrew Liveris said in a prepared statement, “This quarter our company has yet again delivered significant growth and expansion of operating profits. Considering the current climate in both the geopolitical and market spheres, it’s extraordinary that we could hit fifteen quarters of growth consecutively.”
Although Dow have comfortably and consistently outpaced their rivals, sales for the Michigan based company have dropped to $11 billion, a decline of 6 percent compared to the same quarter in 2015. Crude prices and the impact from the offload of Dow’s chlorine unit can be blamed for the dip.
The statement also mentioned that due to increased demand throughout all of its global demographic strongholds, volume grew 3 percent.
The company has worked hard to reduce costs this year, with the statement claiming that upwards of $80 million has been saved this quarter alone, bringing the semi-annual savings to $190 million. The company looks good to beat the $290 million savings target for the year end.
Earnings will also get a boost from the recent acquisition of Corning Corporation’s silicon unit, which could add over a billion dollars to the company’s profits per year.
The plastics and materials industry will get a shake up when Dow and DuPont complete the proposed merger, which was green lit by major shareholders in a meeting last week.
The agreement is valued at over $140 billion and the process is said to involve a future split into three separate entities, two of which will concentrate on science and agriculture, and will be headquartered in Delaware.
The third entity, a plastics and materials focused concern, will be based in Dow’s spiritual home of Michigan.
Dow produces a broad range of materials from paint to plastics including many products used in the automobile sector. The company employs over 60,000 staff, many in Michigan. However, there could be downsizing on the horizon.
“Everyone involved in the deal knows that there will be significant job cuts coming,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management. “DuPont already made thousands of employees redundant, and Dow announced last week that certain sacrifices will need to be made involving the workforce.”
Thursday, July 28, 2016
This month’s biotech rally shows investor confidence
July saw a welcome comeback for the biotech industry as stocks increased, indicating a return of investor confidence in the sector.
As of the 28th of the month, with tomorrow still offering another full day of trading, there was a 12 percent jump in the Biotechnology index (NBI) with the gauge looking good for the largest monthly increase since 2013.
The current climate in the pharmaceutical sector has been unfavorable due to negative views on drug prices from many of the world’s leading governments. The NBI is still 20 percent below forecasts this year and over 25 percent below last year’s record breaking high.
Many analysts say shrewd investors are taking the chance to snap up the stocks. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said, “We seem to be on the precipice of a sentiment change. We are advising our investors to climb aboard the biotech train now while prices are low. The outlook has been bearish for some time, but indicators are right for investment in the industry.”
The downturn in the sector in the first 6 months of the year drove shares to record lows, with many of the largest US biotech firms trading at their cheapest levels in five years. Even today, they are still only 13 times earnings for their price-to-earnings ratios. The normal ratio for the last 5 years has been 17.
“Biotech stocks simply plummeted,” says RBC Capital pharma specialist Michael Yee. “The temptation is now there for investors to improve their portfolio for the industry, especially when many of the big companies were trading with pretty much no pipeline value in the first quarter.”
With the increased activity, stocks are now rising sharply. Biogen shares have gained 20 percent this month, with the firm’s end of month report indicating they will up its forecasts for the coming quarter. Alexion Pharmaceuticals, who produce specialist drugs, jumped 14 percent.
Prominent brokers are now marking the healthcare sector as a field investors should be looking to “overweight” and traders need not worry about volatile markets ahead of the US presidential elections, as those perceived fluctuations have been accounted for already.
Healthcare has pushed up the S&P 500 ladder with a 5 percent gain. Biotech has led the surge, however, the industry is still considered to be underperforming if the whole of 2016 is taken into account.
As of the 28th of the month, with tomorrow still offering another full day of trading, there was a 12 percent jump in the Biotechnology index (NBI) with the gauge looking good for the largest monthly increase since 2013.
The current climate in the pharmaceutical sector has been unfavorable due to negative views on drug prices from many of the world’s leading governments. The NBI is still 20 percent below forecasts this year and over 25 percent below last year’s record breaking high.
Many analysts say shrewd investors are taking the chance to snap up the stocks. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said, “We seem to be on the precipice of a sentiment change. We are advising our investors to climb aboard the biotech train now while prices are low. The outlook has been bearish for some time, but indicators are right for investment in the industry.”
The downturn in the sector in the first 6 months of the year drove shares to record lows, with many of the largest US biotech firms trading at their cheapest levels in five years. Even today, they are still only 13 times earnings for their price-to-earnings ratios. The normal ratio for the last 5 years has been 17.
“Biotech stocks simply plummeted,” says RBC Capital pharma specialist Michael Yee. “The temptation is now there for investors to improve their portfolio for the industry, especially when many of the big companies were trading with pretty much no pipeline value in the first quarter.”
With the increased activity, stocks are now rising sharply. Biogen shares have gained 20 percent this month, with the firm’s end of month report indicating they will up its forecasts for the coming quarter. Alexion Pharmaceuticals, who produce specialist drugs, jumped 14 percent.
Prominent brokers are now marking the healthcare sector as a field investors should be looking to “overweight” and traders need not worry about volatile markets ahead of the US presidential elections, as those perceived fluctuations have been accounted for already.
Healthcare has pushed up the S&P 500 ladder with a 5 percent gain. Biotech has led the surge, however, the industry is still considered to be underperforming if the whole of 2016 is taken into account.
$10 billion business software takeover imminent
U.S. software firm NetSuite Inc announced on Wednesday they are being taken over by business software maker Oracle Corp in a deal thought to be worth around $10 billion.
The deal is seen by many as an effort by Oracle to get a foot in the door of one of tech’s fasting growing fields, cloud computing.
Markets buzzed on news of the buyout, with NetSuite shares jumping a huge 19 percent to $108.08 after the noon session. Oracle shares remained at $40.95.
“Some might say it’s an expensive purchase for Oracle, with the current share price just under what they are offering,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview.
“We see this as a shrewd buy. The software and business services sectors have been overlapping for a while now and companies, which cover both bases are outperforming estimates, sometimes by 10 to 15 times the sales. Nearly 10 percent of Oracle’s revenue comes from cloud-software sales currently,” Lane added.
Both NetSuite and Oracle supply companies with business software applications that help them automate front and backend tasks across a wide range of sectors.
Given the decline in profits for the traditional software licensing business model Oracle, along with most of its rivals such as Microsoft, has tried to concentrate more on its ability to deliver applications to end users via cloud systems. This delivery method is being favored by most clients these days, especially small businesses who can’t afford their own hardware and tech workers.
Oracle has been very active with M&A in the sector, having already taken over cloud based firms Opower and Textura. The recent addition of NetSuite will add further clout to the company’s cloud expertise and will certainly increase earnings at the end of the first fiscal year of the buyout. NetSuit have reported profits that have exceeded forecasts for the past seven quarters.
Although the current deal is said to be overseen by a committee of independent executives, Larry Ellison, Oracle Executive Chairman, and his close family own about 50 percent of NetSuite shares, according to the company’s own released data.
NetSuite were the first firm to offer business apps over the internet in 1998, and have been pioneers in the cloud computing sector ever since. Their CEO, Zach Nelson, worked for Oracle for two years, heading up their marketing department.
The deal is seen by many as an effort by Oracle to get a foot in the door of one of tech’s fasting growing fields, cloud computing.
Markets buzzed on news of the buyout, with NetSuite shares jumping a huge 19 percent to $108.08 after the noon session. Oracle shares remained at $40.95.
“Some might say it’s an expensive purchase for Oracle, with the current share price just under what they are offering,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management in a phone interview.
“We see this as a shrewd buy. The software and business services sectors have been overlapping for a while now and companies, which cover both bases are outperforming estimates, sometimes by 10 to 15 times the sales. Nearly 10 percent of Oracle’s revenue comes from cloud-software sales currently,” Lane added.
Both NetSuite and Oracle supply companies with business software applications that help them automate front and backend tasks across a wide range of sectors.
Given the decline in profits for the traditional software licensing business model Oracle, along with most of its rivals such as Microsoft, has tried to concentrate more on its ability to deliver applications to end users via cloud systems. This delivery method is being favored by most clients these days, especially small businesses who can’t afford their own hardware and tech workers.
Oracle has been very active with M&A in the sector, having already taken over cloud based firms Opower and Textura. The recent addition of NetSuite will add further clout to the company’s cloud expertise and will certainly increase earnings at the end of the first fiscal year of the buyout. NetSuit have reported profits that have exceeded forecasts for the past seven quarters.
Although the current deal is said to be overseen by a committee of independent executives, Larry Ellison, Oracle Executive Chairman, and his close family own about 50 percent of NetSuite shares, according to the company’s own released data.
NetSuite were the first firm to offer business apps over the internet in 1998, and have been pioneers in the cloud computing sector ever since. Their CEO, Zach Nelson, worked for Oracle for two years, heading up their marketing department.
Wednesday, July 27, 2016
BOK says nation’s growth outperforming Bloomberg forecast
Supported by the continued boom in the construction industry and moderate increases in private consumption, the South Korean economy grew at an increased rate this quarter.
The Bank of Korea (BOK) released its Q2 data on Monday and it revealed the GDP swelled by 0.8 percent compared to 0.4 percent at the start of the year. This quarter’s performance has surpassed Bloomberg’s forecasts by 0.3 percent.
The report also showed the economy expanded 3.3 percent compared to the previous fiscal year, with private consumption up 1 percent and construction investment up nearly 3 percent.
Consumption figures were boosted by the surprise extension of temporary tax discounts brought in by the government to spur auto purchases. The on-going construction frenzy has thrived under ultra-low interest rates.
However, the BOK felt the need to slim down its GDP forecast by a small amount to 2.6 percent in response to upcoming reshuffling of management at several key indebted firms, market volatility regarding the Brexit vote and the newly formed anti-corruption law.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the news, “The central bank need some time to observe how their stimulus packages are filtering through the economy. This encouraging data will buy them that time. There are likely to be a few heavy factors that might drag on the economy in the near future, but at the moment we can call this an upswing.”
Director for BOK, Kim Young Tai, said several new product releases in the automotive and phone industries combined with the tax break extension gave private spending a much needed boost. He said that “the first 6 months of this year have fallen in line with central bank forecasts.”
The government and central bank announced they have set aside nearly $10 billion designed to act as a safety net should corporate restructuring and a dip in employment negatively affect the economy. The authorities are particularly wary regarding the shipbuilding industry which slumped last year.
The new anti-corruption measures, which will go live this October, might also inhibit economic growth. Yoo Il Ho, South Korean Finance Minister, said the new legislation may hurt some larger businesses and have some negative aftershocks on the wider financial landscape.
The law aims to put an end to gifts that certain citizens holding prominent positions can take. Included are journalists, teachers and politicians.
The Bank of Korea (BOK) released its Q2 data on Monday and it revealed the GDP swelled by 0.8 percent compared to 0.4 percent at the start of the year. This quarter’s performance has surpassed Bloomberg’s forecasts by 0.3 percent.
The report also showed the economy expanded 3.3 percent compared to the previous fiscal year, with private consumption up 1 percent and construction investment up nearly 3 percent.
Consumption figures were boosted by the surprise extension of temporary tax discounts brought in by the government to spur auto purchases. The on-going construction frenzy has thrived under ultra-low interest rates.
However, the BOK felt the need to slim down its GDP forecast by a small amount to 2.6 percent in response to upcoming reshuffling of management at several key indebted firms, market volatility regarding the Brexit vote and the newly formed anti-corruption law.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the news, “The central bank need some time to observe how their stimulus packages are filtering through the economy. This encouraging data will buy them that time. There are likely to be a few heavy factors that might drag on the economy in the near future, but at the moment we can call this an upswing.”
Director for BOK, Kim Young Tai, said several new product releases in the automotive and phone industries combined with the tax break extension gave private spending a much needed boost. He said that “the first 6 months of this year have fallen in line with central bank forecasts.”
The government and central bank announced they have set aside nearly $10 billion designed to act as a safety net should corporate restructuring and a dip in employment negatively affect the economy. The authorities are particularly wary regarding the shipbuilding industry which slumped last year.
The new anti-corruption measures, which will go live this October, might also inhibit economic growth. Yoo Il Ho, South Korean Finance Minister, said the new legislation may hurt some larger businesses and have some negative aftershocks on the wider financial landscape.
The law aims to put an end to gifts that certain citizens holding prominent positions can take. Included are journalists, teachers and politicians.
Friday, July 15, 2016
IMF says China needs “serious reforms” on debt
David Lipton, one of the International Monetary Fund’s highest ranked officials, has warned China that it needs to initiate “serious reforms” in order to address the country’s corporate debt if it wants a smooth transition from a manufacturing to a consumer based economy.
“If this problem is not tackled immediately China will be taking some extremely hazardous detours as it develops,” he said in a Chinese economic forum in Shenzhen on Sunday.
No country in the Group of 20 has amassed debt at a faster rate than China over the last quarter of a century, and this is just the last in a string of stern reprimands the IMF have given to the world’s second largest economy.
Lipton noted that China has “not come far enough” with its efforts to limit the amount of corporate debt it is taking on, with the country accumulating approximately $1.4 trillion in overly exposed loans.
A report by the IMF recently criticized China’s plan of using debt-to-equity swaps to even out the leverage ratios of the nation’s biggest companies, saying the strategy could easily blow up in their face, allowing ‘shell companies’ up to their neck in debt to keep operating, thus creating a dangerous conflict of interest for bank executives.
With estimated total debt at 230 percent of gross domestic product, Lipton described China as being “debt laden, by any country’s standards.”
Other economists agree. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management wrote on his blog, “I think many people are realising that China has a very obvious weakness in its economy now, and it is being fuelled by extremely fast credit growth both last year and in the first quarter of 2016. The other issue is the huge rates of investment which seems to have no end.”
Lane added that “fast action” will be needed on a governmental level, and both banks and multinational companies need to get their balance sheets in order.
As part of a yearly review of China’s economy, Lipton and other IMF officials will take part in a summit with China’s top finance chiefs.
Although Lipton said the situation was urgent, he was quick to add that China is not in financial crisis.
“According to the Macquarie Capital Ltd report released earlier this month there is a major concern regarding corporate debt, however, the situation is recoverable. There is no current crisis, but work is needed sooner rather than later,” Lipton said.
“If this problem is not tackled immediately China will be taking some extremely hazardous detours as it develops,” he said in a Chinese economic forum in Shenzhen on Sunday.
No country in the Group of 20 has amassed debt at a faster rate than China over the last quarter of a century, and this is just the last in a string of stern reprimands the IMF have given to the world’s second largest economy.
Lipton noted that China has “not come far enough” with its efforts to limit the amount of corporate debt it is taking on, with the country accumulating approximately $1.4 trillion in overly exposed loans.
A report by the IMF recently criticized China’s plan of using debt-to-equity swaps to even out the leverage ratios of the nation’s biggest companies, saying the strategy could easily blow up in their face, allowing ‘shell companies’ up to their neck in debt to keep operating, thus creating a dangerous conflict of interest for bank executives.
With estimated total debt at 230 percent of gross domestic product, Lipton described China as being “debt laden, by any country’s standards.”
Other economists agree. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management wrote on his blog, “I think many people are realising that China has a very obvious weakness in its economy now, and it is being fuelled by extremely fast credit growth both last year and in the first quarter of 2016. The other issue is the huge rates of investment which seems to have no end.”
Lane added that “fast action” will be needed on a governmental level, and both banks and multinational companies need to get their balance sheets in order.
As part of a yearly review of China’s economy, Lipton and other IMF officials will take part in a summit with China’s top finance chiefs.
Although Lipton said the situation was urgent, he was quick to add that China is not in financial crisis.
“According to the Macquarie Capital Ltd report released earlier this month there is a major concern regarding corporate debt, however, the situation is recoverable. There is no current crisis, but work is needed sooner rather than later,” Lipton said.
SNB says they are ready to implement further easing
Deputy-chairman of the Swiss National Bank Fritz Zurbruegg, who has held the job since 2012, announced last weekend the bank are ready to step in with easing in order to keep the franc in check.
“There is a strong possibility we could drop interest rates shortly or step in with other interventions,” he commented to the Swiss-German regional daily paper Basler Zeitung. He added, “As far as an actual exchange rate target is concerned, we have none.”
Early in 2016 the SNB removed an upper limit restriction on the franc against the euro and have since attempted to reign in the currency using qualitative easing techniques with negative interest rates.
Many specialists believe current data shows the Swiss franc is punching well above its weight.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said the currency is “extremely overvalued”.
He added in a phone interview, “The central bank in Switzerland has not been shy regarding intervention into the currency exchange. Meddling in the forex has been their recent policy and, combined with interest rate adjustment, they are keeping the franc high versus its peers.”
Major financial investors and institutions keeping their funds at the SNB are being charged -0.70 interest rates currently.
Deputy-chairman Zurbruegg failed to elaborate on what the possible long-term fallout might be in using negative rates citing lack of experience with the tool.
“We could conceivably go even further with the rates,” he said. “Obviously we take into account the immediate effects, like cash demand and declines in savings and deposits.”
Zurbruegg also weighed on with his thoughts on the imminent Brexit vote coming up in the U.K.
He remarked that the SNB have been drawing up multiple scenarios in relation to monetary policy to try and determine the best course of action for the franc should the British public choose to leave the European Union on June 23rd.
“There is a strong possibility we could drop interest rates shortly or step in with other interventions,” he commented to the Swiss-German regional daily paper Basler Zeitung. He added, “As far as an actual exchange rate target is concerned, we have none.”
Early in 2016 the SNB removed an upper limit restriction on the franc against the euro and have since attempted to reign in the currency using qualitative easing techniques with negative interest rates.
Many specialists believe current data shows the Swiss franc is punching well above its weight.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said the currency is “extremely overvalued”.
He added in a phone interview, “The central bank in Switzerland has not been shy regarding intervention into the currency exchange. Meddling in the forex has been their recent policy and, combined with interest rate adjustment, they are keeping the franc high versus its peers.”
Major financial investors and institutions keeping their funds at the SNB are being charged -0.70 interest rates currently.
Deputy-chairman Zurbruegg failed to elaborate on what the possible long-term fallout might be in using negative rates citing lack of experience with the tool.
“We could conceivably go even further with the rates,” he said. “Obviously we take into account the immediate effects, like cash demand and declines in savings and deposits.”
Zurbruegg also weighed on with his thoughts on the imminent Brexit vote coming up in the U.K.
He remarked that the SNB have been drawing up multiple scenarios in relation to monetary policy to try and determine the best course of action for the franc should the British public choose to leave the European Union on June 23rd.
Messaging app valued at over six billion on listing
Japan's Line Corp has set itself up to be the biggest IPO in the tech sector so far in 2016 as the price range set for the messaging app operator could value the company at well over six billion dollars.
The valuation reflects the Korean owned company’s solid demand and shows the firm have turned from a reasonably wise investment into a rapidly growing start-up.
The range of 2,800 to 3,300 yen is seen by many as cautious, but even that range could see Line raise over a billion dollars from the sale of up to forty million shares.
The timing for Line’s statement to the press regarding the IPO was mildly surprising considering the state of the global markets as it attempts to recover from losses and a sentiment of general uncertainty following Britain’s vote to leave the E.U. on Friday.
The company refused to delay any longer, however, as its bullish pricing yesterday defied the expected cautious outlook that many investors thought would prevail and force many firms to suspend their IPO strategies.
Investors seem enthusiastic towards the top end of the IPO range as they will feel it gives them the best opportunity to gain reliable returns at a good value in its most important marketplaces in Asia like Japan and Thailand.
Nonetheless, many local investors and fund managers were put off by the pitch saying that although it might suit this short time of uncertainty, Line would have been better off listing the company at the period when its growth was most rapid.
Line took off as a cobbled together communication tool used after the tsunami of 2011 but has grown to be the dominant messaging app of choice in the Japanese marketplace.
The situation remains though, that many in the retail sector and international speculators alike are looking to buy in to the IPO, according to certain insiders.
“I wouldn’t say it has been difficult for Line to attract investors,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management who manage over a billion dollars of funds in the region. “The kinds of firm who want to improve their short-term profit strategies are jumping on this,” he added.
Line has hired a who’s who of financial brokers, including JP Morgan and Goldman Sachs, to handle the listing and will go public first in New York on the 14th July and then in Tokyo the day after.
The valuation reflects the Korean owned company’s solid demand and shows the firm have turned from a reasonably wise investment into a rapidly growing start-up.
The range of 2,800 to 3,300 yen is seen by many as cautious, but even that range could see Line raise over a billion dollars from the sale of up to forty million shares.
The timing for Line’s statement to the press regarding the IPO was mildly surprising considering the state of the global markets as it attempts to recover from losses and a sentiment of general uncertainty following Britain’s vote to leave the E.U. on Friday.
The company refused to delay any longer, however, as its bullish pricing yesterday defied the expected cautious outlook that many investors thought would prevail and force many firms to suspend their IPO strategies.
Investors seem enthusiastic towards the top end of the IPO range as they will feel it gives them the best opportunity to gain reliable returns at a good value in its most important marketplaces in Asia like Japan and Thailand.
Nonetheless, many local investors and fund managers were put off by the pitch saying that although it might suit this short time of uncertainty, Line would have been better off listing the company at the period when its growth was most rapid.
Line took off as a cobbled together communication tool used after the tsunami of 2011 but has grown to be the dominant messaging app of choice in the Japanese marketplace.
The situation remains though, that many in the retail sector and international speculators alike are looking to buy in to the IPO, according to certain insiders.
“I wouldn’t say it has been difficult for Line to attract investors,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management who manage over a billion dollars of funds in the region. “The kinds of firm who want to improve their short-term profit strategies are jumping on this,” he added.
Line has hired a who’s who of financial brokers, including JP Morgan and Goldman Sachs, to handle the listing and will go public first in New York on the 14th July and then in Tokyo the day after.
Thursday, July 7, 2016
US economy outpacing Q1 forecasts
According to official data from the Commerce Department, the US economy is performing better than predicted in the first quarter of 2016.
Estimates for the nation’s GDP were around 0.8 percent annualized for the first quarter, while the actual figures were 1.2 percent.
Impressive export figures helped with the upward revision of the gross domestic product.
However, a downturn in spending for the heath sector and diminished consumer spending was reflected in a revision down for overall growth in consumer spending to 1.5 percent, its worst performance for two years.
This is the third effort by the Commerce Department to forecast Q1 GDP. Last year they also took a few revisions before settling on a confident figure.
Although the recent data is seen by most as a very positive indicator for the world’s largest economy, there is also a general air of concern that the UK’s shocking Brexit vote could send a negative ripple effect through the domestic financial landscape, slowing growth in the second quarter.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the reports in a phone interview, “We still expect Q2 growth this year to be up or around the 2.5 percent mark regardless of many investors bearish outlook following the British decision to leave the European Union.”
He added, “Consumers in America will, once again, be the dominant factor in the domestic economy. There have been reliable forecasts that personal consumption in the coming quarter will grow by over 3.5 percent.”
Estimates for the nation’s GDP were around 0.8 percent annualized for the first quarter, while the actual figures were 1.2 percent.
Impressive export figures helped with the upward revision of the gross domestic product.
However, a downturn in spending for the heath sector and diminished consumer spending was reflected in a revision down for overall growth in consumer spending to 1.5 percent, its worst performance for two years.
This is the third effort by the Commerce Department to forecast Q1 GDP. Last year they also took a few revisions before settling on a confident figure.
Although the recent data is seen by most as a very positive indicator for the world’s largest economy, there is also a general air of concern that the UK’s shocking Brexit vote could send a negative ripple effect through the domestic financial landscape, slowing growth in the second quarter.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the reports in a phone interview, “We still expect Q2 growth this year to be up or around the 2.5 percent mark regardless of many investors bearish outlook following the British decision to leave the European Union.”
He added, “Consumers in America will, once again, be the dominant factor in the domestic economy. There have been reliable forecasts that personal consumption in the coming quarter will grow by over 3.5 percent.”
Tuesday, July 5, 2016
German tech firm agree terms with Chinese giant
Chinese conglomerate Midea has eventually won over famed German tech company Kuka, who specializes in industrial automated machinery, and have agreed preliminary terms thought to be worth around four billion euros.
A condition of the deal, however, is that the Chinese giant will refrain from restructuring the corporate organization of Kuka, allowing them to stay headquartered in Germany and keeping its jobs and factories in its existing locations.
Midea have also made assurances that under no circumstances will the takeover lead to Kuka being delisted.
The first offer by Midea was made in May and was a very high profile and unpopular case with certain elements in German political circles. Some members of the German parliament have recently switched sides as favourable conditions were written into subsequent drafts of the agreement which basically mean Kuka will be able to operate somewhat independently from its new Chinese owners and will be assisted greatly with expansion into the Chinese marketplace.
The last few months have seen a plethora of approaches by Chinese buyers to German companies specializing in industrial technology, Kuka being the largest firm in the sector to make a deal.
In a press release Kuka expressed their satisfaction with the 120 euro per share offer saying it was “very fair”. Experts in the field agreed.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said the German tech firm would be able to “use Midea’s vast experience to expand into new areas whilst remaining at its core a wholly German company.”
Kuka’s major shareholders face important decisions. Mechanical engineering group, Voith, are thought to be offloading their 25 percent stake although they declined to comment on recent news reports.
The other main investor in Kuka, Friedhelm Loh, commented that his lack of a “blocking minority” in shares was untenable, hinting he would soon sell his 15 percent stake.
“I’m looking at all options available,” said Loh in a newspaper interview last week.
A condition of the deal, however, is that the Chinese giant will refrain from restructuring the corporate organization of Kuka, allowing them to stay headquartered in Germany and keeping its jobs and factories in its existing locations.
Midea have also made assurances that under no circumstances will the takeover lead to Kuka being delisted.
The first offer by Midea was made in May and was a very high profile and unpopular case with certain elements in German political circles. Some members of the German parliament have recently switched sides as favourable conditions were written into subsequent drafts of the agreement which basically mean Kuka will be able to operate somewhat independently from its new Chinese owners and will be assisted greatly with expansion into the Chinese marketplace.
The last few months have seen a plethora of approaches by Chinese buyers to German companies specializing in industrial technology, Kuka being the largest firm in the sector to make a deal.
In a press release Kuka expressed their satisfaction with the 120 euro per share offer saying it was “very fair”. Experts in the field agreed.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said the German tech firm would be able to “use Midea’s vast experience to expand into new areas whilst remaining at its core a wholly German company.”
Kuka’s major shareholders face important decisions. Mechanical engineering group, Voith, are thought to be offloading their 25 percent stake although they declined to comment on recent news reports.
The other main investor in Kuka, Friedhelm Loh, commented that his lack of a “blocking minority” in shares was untenable, hinting he would soon sell his 15 percent stake.
“I’m looking at all options available,” said Loh in a newspaper interview last week.
Monday, July 4, 2016
Investment group wary Tesla board has slanted power structure
Following an offer by Tesla Motors Corp for the energy services provider SolarCity, a prominent investor group sounded a warning that Elon Musk’s role as both CEO and chairman of Tesla could cause significant conflict of interest.
The South African born business magnate is also the chairman of SolarCity and the biggest shareholder, leading to calls from CtW Investment Group to add at least two independent directors to the Tesla board.
CtW referred to the issue as a “deep-rooted governance problem” and offered a five step plan as a solution which includes clearly defining, if not totally separating, Musk’s dual role in the firm.
They will also insist that a specialized committee be formed by independent and unbiased board members to look over the SolarCity deal before any major decision is reached. Also, a proposal was put forward to adjust the power structure of the board so that stockholders would have some input as to the election of directors on an annual basis.
They also want a top to bottom revision of governance rules to stop immediate family members of directors serving back to back. That particular reform is clearly aimed at Tesla board member Kimbal Musk, chief executive of Medium Inc., who is Elon Musk’s brother.
The Tesla approach for SolarCity is thought to be worth nearly three billion dollars as an all-stock offer.
CtW Executive Dieter Waizenegger wrote in an email that he and other investors have been “actively opposed to the proposed SolarCity agreement which has only underlined the faulty governance structure at Tesla.” He wrote, “We are convinced the power hierarchy at the company must be reformed in order to ensure stockholders interests are priority.”
Some observers think CtW are getting too involved and should trust the firm’s leaders. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said, “As far as stockholders are concerned, Tesla have laid out a convincing argument that SolarCity is the right acquisition for the company and will generate both financial and product benefits for everyone involved. They will ultimately have a vote in the process so they should look through the proposal carefully.”
Shares in Tesla dropped nearly 15 percent 24 hours after Musk, who owns around 20 percent of both companies, announced the bid.
CtW argues that too many of the SolarCity board are directly involved with Tesla at an executive level and called for special committees on both boards to review the bid.
The South African born business magnate is also the chairman of SolarCity and the biggest shareholder, leading to calls from CtW Investment Group to add at least two independent directors to the Tesla board.
CtW referred to the issue as a “deep-rooted governance problem” and offered a five step plan as a solution which includes clearly defining, if not totally separating, Musk’s dual role in the firm.
They will also insist that a specialized committee be formed by independent and unbiased board members to look over the SolarCity deal before any major decision is reached. Also, a proposal was put forward to adjust the power structure of the board so that stockholders would have some input as to the election of directors on an annual basis.
They also want a top to bottom revision of governance rules to stop immediate family members of directors serving back to back. That particular reform is clearly aimed at Tesla board member Kimbal Musk, chief executive of Medium Inc., who is Elon Musk’s brother.
The Tesla approach for SolarCity is thought to be worth nearly three billion dollars as an all-stock offer.
CtW Executive Dieter Waizenegger wrote in an email that he and other investors have been “actively opposed to the proposed SolarCity agreement which has only underlined the faulty governance structure at Tesla.” He wrote, “We are convinced the power hierarchy at the company must be reformed in order to ensure stockholders interests are priority.”
Some observers think CtW are getting too involved and should trust the firm’s leaders. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management said, “As far as stockholders are concerned, Tesla have laid out a convincing argument that SolarCity is the right acquisition for the company and will generate both financial and product benefits for everyone involved. They will ultimately have a vote in the process so they should look through the proposal carefully.”
Shares in Tesla dropped nearly 15 percent 24 hours after Musk, who owns around 20 percent of both companies, announced the bid.
CtW argues that too many of the SolarCity board are directly involved with Tesla at an executive level and called for special committees on both boards to review the bid.
Thursday, June 23, 2016
Trade Deficit Shrinks 29% as Commodity Gains Increase Export Profits
Australia’s trade deficit decreased 29% in spring as commodity prices took a positive upturn.
Official numbers from the Australian Bureau of Statistics demonstrated the balance of import and export revenues fell to $2.16 billion for the month, from $3.41bn in February.
Exports increased 4%, while imports climbed only 0.7 points.
The positive increase was supported by a sharp bounce back commodity valuations according to analysts.
"Not surprisingly, metal minerals climbed. However, the 0.7pc increase was somewhat short of what we anticipated given the [21 per cent] rise in the Chinese spot price for iron," Shizuoka Capital Wealth Management Global Co-Head of the Investment Management Division, Michael Lane said.
"The shock this month was the almost 60% increase in gold trading internationally,” added Lane.
The April bounce in commodity costs ought to guarantee a further narrowing of the deficit before it widens again later in the year. The cost of both coal and iron mineral rose in April which looks good for the month to month read on the exchange balance" CBA financial specialist Gareth Aird said.
"However, we see pressure on the present spot cost of iron metal ($US60) and expect the cost of iron to fall in the later part of 2016.”
In general terms, the balance of products and services was a shortfall of $2.8bn, down 8% on the previous month.
The data coincided with a better than-anticipated reading on retail numbers, with the figures aiding the Aussie dollar in its return to USD0.75.
Official numbers from the Australian Bureau of Statistics demonstrated the balance of import and export revenues fell to $2.16 billion for the month, from $3.41bn in February.
Exports increased 4%, while imports climbed only 0.7 points.
The positive increase was supported by a sharp bounce back commodity valuations according to analysts.
"Not surprisingly, metal minerals climbed. However, the 0.7pc increase was somewhat short of what we anticipated given the [21 per cent] rise in the Chinese spot price for iron," Shizuoka Capital Wealth Management Global Co-Head of the Investment Management Division, Michael Lane said.
"The shock this month was the almost 60% increase in gold trading internationally,” added Lane.
The April bounce in commodity costs ought to guarantee a further narrowing of the deficit before it widens again later in the year. The cost of both coal and iron mineral rose in April which looks good for the month to month read on the exchange balance" CBA financial specialist Gareth Aird said.
"However, we see pressure on the present spot cost of iron metal ($US60) and expect the cost of iron to fall in the later part of 2016.”
In general terms, the balance of products and services was a shortfall of $2.8bn, down 8% on the previous month.
The data coincided with a better than-anticipated reading on retail numbers, with the figures aiding the Aussie dollar in its return to USD0.75.
Global Hospitality Giant to Acquire Boutique Hotel Group
SBE, the world renowned hospitality company, has struck a deal with Morgans Hotel Group that will facilitate a friendly takeover this year. Part of the terms of the deal will see all outstanding shares of Morgans stock acquired by SBE for just over $2 per share, which, along with the exchange of Morgans Series A securities, the assumption of obligations and transfer of leases, represents a total agreement value of close to $800 million.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the share acquisition at his blog “SBE seemed to have concentrated their end of the deal on favourable per share prices which represent a 69 percent premium over Morgans' initial closing price in the first week of May. With the deal including ownership of the Hudson hotel in New York and the Delano property in Miami Beach this is definitely going to raise the global profile of SBE to new levels”
Morgans is a low scale but highly influential leisure operator that, under its founders, nightclub legends Ian Schrager and Steve Rubell, helped explode the boutique hotel scene in the 80s. It featured elegantly designed properties with lobbies that became public gathering areas.
More recently, Morgans has suffered from poor financial returns, board room squabbling and loss of market share as the big hotel chains began to compete in the niche boutique, or “lifestyle”, sector.
“The failure of negotiations last year was a setback for SBE. But the end result worked in their favor financially. The $2.25 a share is about 0.3 percent of the price of where the shares were trading when SBE and Morgans originally began talks.” Lane added
The deal, which was passed by the SBE Board, is expected to be completed late this year assuming that various regulatory approvals are forthcoming. The agreement is also subject to the refinancing of Morgans' property loan agreements, and customary closing settlements, including a green light for the transaction by the company’s major shareholders who represent just under 30% of the firms outstanding shares of common stock.
SBE commented to press that it has procured assurances to finance the project through a combination of income from the selloff of new equity in the merged company to an outside investor, a new revolver and cash from the refinancing of its current loans.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the share acquisition at his blog “SBE seemed to have concentrated their end of the deal on favourable per share prices which represent a 69 percent premium over Morgans' initial closing price in the first week of May. With the deal including ownership of the Hudson hotel in New York and the Delano property in Miami Beach this is definitely going to raise the global profile of SBE to new levels”
Morgans is a low scale but highly influential leisure operator that, under its founders, nightclub legends Ian Schrager and Steve Rubell, helped explode the boutique hotel scene in the 80s. It featured elegantly designed properties with lobbies that became public gathering areas.
More recently, Morgans has suffered from poor financial returns, board room squabbling and loss of market share as the big hotel chains began to compete in the niche boutique, or “lifestyle”, sector.
“The failure of negotiations last year was a setback for SBE. But the end result worked in their favor financially. The $2.25 a share is about 0.3 percent of the price of where the shares were trading when SBE and Morgans originally began talks.” Lane added
The deal, which was passed by the SBE Board, is expected to be completed late this year assuming that various regulatory approvals are forthcoming. The agreement is also subject to the refinancing of Morgans' property loan agreements, and customary closing settlements, including a green light for the transaction by the company’s major shareholders who represent just under 30% of the firms outstanding shares of common stock.
SBE commented to press that it has procured assurances to finance the project through a combination of income from the selloff of new equity in the merged company to an outside investor, a new revolver and cash from the refinancing of its current loans.
Experts say Japanese currency intervention will help regional outlook
A group of IMF researchers have found that Japan’s unorthodox currency easing policy has had a surprisingly positive effect on most surrounding economies in the region, and have released their findings in a paper.
The country’s interventions into the currency exchange markets, an attempt to lower the yen’s value, have been ill received by the U.S. with both nations coming together at a G-7 summit in Japan this week where the subject is likely to be hotly debated.
The research paper is the first of its kind and claims to offer a model of the knock on effect of Japan’s monetary easing policy on emerging S.E. Asian economies.
Qualitative and quantitative easing (QQE) has been practised for over 3 years now and has been targeting a number of assets including various funds, bonds and real estate as well as directly affecting the currency markets. The outcome has been a significant drop in the yen versus the greenback from 80 at the start of easing to about 120 last year.
The report shows that regional economies are benefitting from this. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the findings in a phone interview, “What we are seeing is a positive effect on emerging S.E. Asian currencies as the QQE goes full throttle in Japan. Equity prices go up all across the region in response to the policy, not just in Japan.”
Lane added, “There has been a gain in output, inflation and capital investment in the smaller economies. Basically all this means a generally positive effect on economic growth and a healthy outlook for the region overall.”
The paper also reports that the jumps in equity prices also prompts a rise in general confidence, which spurs further investment. A good example is China, a country with particularly solid trade partnerships with Japan.
The International Monetary Fund research report is by no means the official line, nor does it represent the consensus view of IMF staff, however, with Japan likely to come up against stern opposition from the United States at the forthcoming Group of seven summit concerning this issue, the paper comes as welcome and much needed ammunition for the Finance Minister Taro Aso as he looks to gain allies to his side of the argument and build backing for monetary easing to counter the inevitable U.S. objections.
Michael Lane continued, “The meetings are going to be very interesting. Japan has these new stats coming from a very prominent source and this could tip the balance in their favour.”
The country’s interventions into the currency exchange markets, an attempt to lower the yen’s value, have been ill received by the U.S. with both nations coming together at a G-7 summit in Japan this week where the subject is likely to be hotly debated.
The research paper is the first of its kind and claims to offer a model of the knock on effect of Japan’s monetary easing policy on emerging S.E. Asian economies.
Qualitative and quantitative easing (QQE) has been practised for over 3 years now and has been targeting a number of assets including various funds, bonds and real estate as well as directly affecting the currency markets. The outcome has been a significant drop in the yen versus the greenback from 80 at the start of easing to about 120 last year.
The report shows that regional economies are benefitting from this. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the findings in a phone interview, “What we are seeing is a positive effect on emerging S.E. Asian currencies as the QQE goes full throttle in Japan. Equity prices go up all across the region in response to the policy, not just in Japan.”
Lane added, “There has been a gain in output, inflation and capital investment in the smaller economies. Basically all this means a generally positive effect on economic growth and a healthy outlook for the region overall.”
The paper also reports that the jumps in equity prices also prompts a rise in general confidence, which spurs further investment. A good example is China, a country with particularly solid trade partnerships with Japan.
The International Monetary Fund research report is by no means the official line, nor does it represent the consensus view of IMF staff, however, with Japan likely to come up against stern opposition from the United States at the forthcoming Group of seven summit concerning this issue, the paper comes as welcome and much needed ammunition for the Finance Minister Taro Aso as he looks to gain allies to his side of the argument and build backing for monetary easing to counter the inevitable U.S. objections.
Michael Lane continued, “The meetings are going to be very interesting. Japan has these new stats coming from a very prominent source and this could tip the balance in their favour.”
Saturday, June 11, 2016
Fed announcements expected, Greece bail out discussed
All ears will be on U.S. Federal Reserve officials this week as focus shifts to a possible coming interest rate hike. Meanwhile, in Europe, finance ministers are in negotiations concerning a final plan for aid to struggling Athens.
Investors have reacted positively to recent Fed press releases and meeting minutes with the dollar gaining together with euro zone bond yields.
The general consensus in the market is that the Fed will bring in a hike soon; the only question is whether it will be this month or July. Comments from officials in the last couple of days haven’t changed that sentiment.
“It’s likely the Fed will hold off until next month,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management, “They will have a look at the outcome of the G-7 economic summit in Japan this week which could affect things. Major events in Europe could also play a part,” he added.
With the Brexit referendum due next month, the Fed could very well hold off.
The minutes from the latest meeting indicated that their most important preconditions for a rate increase were signs of economic growth this quarter as well as positive improvement regarding inflation and employment data.
“Q2 is expected to look very solid as data has showed that the economy performed much better than expected in the first quarter,” Lane said via email. “Data from Britain has shown that fallout from the Brexit vote is unlikely to shake up the bigger economies in Europe.”
Greece talks
With the Eurogroup meeting of finance ministers coming up this week, the feeling is that a new agreement will be worked on to help Athens continue to pay off its creditors in the coming year.
Officials have also commented that they may help Greece to restructure its debt obligations in order to make it more sustainable. The IMF has previously offered objections to the idea and these differences will need to be straightened out before any firm plan can go ahead.
The IMF insists that investors need more transparency with regard to the debt repayment situation, while European authorities want to wait a few years until a final decision is made on that issue.
Analysts at RBC Capital said, “Concessions are likely from the euro side as bringing the IMF on board with any plan is crucial. We don’t expect a firm decision this week but very soon in the near future.”
Investors have reacted positively to recent Fed press releases and meeting minutes with the dollar gaining together with euro zone bond yields.
The general consensus in the market is that the Fed will bring in a hike soon; the only question is whether it will be this month or July. Comments from officials in the last couple of days haven’t changed that sentiment.
“It’s likely the Fed will hold off until next month,” said Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management, “They will have a look at the outcome of the G-7 economic summit in Japan this week which could affect things. Major events in Europe could also play a part,” he added.
With the Brexit referendum due next month, the Fed could very well hold off.
The minutes from the latest meeting indicated that their most important preconditions for a rate increase were signs of economic growth this quarter as well as positive improvement regarding inflation and employment data.
“Q2 is expected to look very solid as data has showed that the economy performed much better than expected in the first quarter,” Lane said via email. “Data from Britain has shown that fallout from the Brexit vote is unlikely to shake up the bigger economies in Europe.”
Greece talks
With the Eurogroup meeting of finance ministers coming up this week, the feeling is that a new agreement will be worked on to help Athens continue to pay off its creditors in the coming year.
Officials have also commented that they may help Greece to restructure its debt obligations in order to make it more sustainable. The IMF has previously offered objections to the idea and these differences will need to be straightened out before any firm plan can go ahead.
The IMF insists that investors need more transparency with regard to the debt repayment situation, while European authorities want to wait a few years until a final decision is made on that issue.
Analysts at RBC Capital said, “Concessions are likely from the euro side as bringing the IMF on board with any plan is crucial. We don’t expect a firm decision this week but very soon in the near future.”
Sunday, June 5, 2016
TV-Internet Takeover "will drive investment”
Over 30 million consumers in 40 states of the U.S. will be served by a brand new entity formed by the recent combination of Charter Communications Inc. and Time Warner Cable. Bright House Networks LLC is also included in the new company.
Charter Communications announced Thursday that final stages of its acquisition of the two other companies had been completed, effectively creating the nation’s largest internet provider.
All this comes nearly a year after the first announcements of the deal was made. Charter has fought hard for federal and state regulatory approval since then, which has finally been passed.
According to Charter, the deal to acquire Time Warner Cable and Bright House is valued at nearly $70 billion, not including debt.
Experts believe the merger has created an attractive new company for investment. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented in a phone interview, “This deal is not only good for the end consumer, making internet services faster and developing infrastructure for the networks….it will also drive investment into the new company. They are a market leader in the communications sector now.”
The deal didn’t sail as smoothly through the regulators as Charter would have liked, with the U.S. Justice Department giving antitrust approval only with a firm set of conditions attached that will limit the company from using its influence to stifle competition.
As technology moved forward the pay TV industry has seen a rapid decline due to web services such as Hulu and Netflix. These companies lack live TV and current shows, however others, such as HBO NOW and Sling TV could give Charter a run for their money in the field.
A condition of the Justice Department deal is that Charter will not have power over the content providers, allowing sales of their products online. There will also be FCC restrictions on the company for six years more years.
Charter will be required to branch out their internet services to a further 2 million customers within the set time period, with a competitor serving another million.
The chase to acquire TWC goes back around 3 years. Billionaire CEO of Telecommunications Inc, John Malone had courted the company with his offshoot Liberty Media Corp, which backs Charter.
Time Warner initially rejected early offers and referred to the bids as “unsolicited”. Comcast Corp, then the top cable company in the country, nearly came to the rescue with a rival offer, but the deal eventually collapsed, leaving the way clear for Charter to continue their acquisition.
Charter Communications announced Thursday that final stages of its acquisition of the two other companies had been completed, effectively creating the nation’s largest internet provider.
All this comes nearly a year after the first announcements of the deal was made. Charter has fought hard for federal and state regulatory approval since then, which has finally been passed.
According to Charter, the deal to acquire Time Warner Cable and Bright House is valued at nearly $70 billion, not including debt.
Experts believe the merger has created an attractive new company for investment. Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented in a phone interview, “This deal is not only good for the end consumer, making internet services faster and developing infrastructure for the networks….it will also drive investment into the new company. They are a market leader in the communications sector now.”
The deal didn’t sail as smoothly through the regulators as Charter would have liked, with the U.S. Justice Department giving antitrust approval only with a firm set of conditions attached that will limit the company from using its influence to stifle competition.
As technology moved forward the pay TV industry has seen a rapid decline due to web services such as Hulu and Netflix. These companies lack live TV and current shows, however others, such as HBO NOW and Sling TV could give Charter a run for their money in the field.
A condition of the Justice Department deal is that Charter will not have power over the content providers, allowing sales of their products online. There will also be FCC restrictions on the company for six years more years.
Charter will be required to branch out their internet services to a further 2 million customers within the set time period, with a competitor serving another million.
The chase to acquire TWC goes back around 3 years. Billionaire CEO of Telecommunications Inc, John Malone had courted the company with his offshoot Liberty Media Corp, which backs Charter.
Time Warner initially rejected early offers and referred to the bids as “unsolicited”. Comcast Corp, then the top cable company in the country, nearly came to the rescue with a rival offer, but the deal eventually collapsed, leaving the way clear for Charter to continue their acquisition.
Sunday, May 22, 2016
Swiss Holding Company Forecasts Chinese Stock Climb
After another anonymous article by an “economic oracle” in the People’s Daily describing an "L-shaped" growth trend, Credit Suisse AG is projecting that same forecast to the stock market.
The SSE Composite Index, which keeps track of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange, will still trade in channels after mass sell-offs at the beginning of the year. This is despite another economic “communication” like those before the last two runs of declines in Chinese equities, according to the Swiss holding company.
The reference to the L shaped trend by Credit Suisse’ Equity Manager Li Chen was first seen in January, when the People's Daily newspaper printed an interview by an "authoritative person" who forecast “a sustained period” with an L-shaped development trend, rather than a quicker V or U recovery. The announcement from Credit Suisse Group AG comes after the third mysterious communiqué last week also appearing on the front page of the national publication, which is usually reserved for in depth articles covering the movements and actions of the president of the nation, multiplying the interview’s importance.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the state of play on Tuesday, “The general sentiment of the interviews has investors worried more than the actual fine print. The facts communicated in the articles are pretty fundamental. Building up huge debt is very risky and China needs to take a hard look at its underperforming loans.”
Unlike the previous lengthy interviews that appeared in the paper there is little chance this one will be a prelude to large scale sell offs. The SSE Composite Index is predicted to fluctuate between a 2,600 to 3,000 margin, quite close to the current levels of 2,843, as a supply of equities that is fast accelerating is reined in by multiple components such as cheap valuation.
According to Chen, "The primary reasons for stock decline, spoken of in financial circles, differs from the policy changes in the articles by this mysterious expert“, the comments coming despite China's local A-share market reduced markedly after the first two printed interviews.
The first article, this time last year, concentrated on “risk control” and a sell-off was subsequently brought on by deleveraging in the stock market, Chen said, and the second piece came before yuan declines that sent the Chinese stock market on a vicious downturn even though the report followed supply side reforms.
The SSE Composite Index, which keeps track of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange, will still trade in channels after mass sell-offs at the beginning of the year. This is despite another economic “communication” like those before the last two runs of declines in Chinese equities, according to the Swiss holding company.
The reference to the L shaped trend by Credit Suisse’ Equity Manager Li Chen was first seen in January, when the People's Daily newspaper printed an interview by an "authoritative person" who forecast “a sustained period” with an L-shaped development trend, rather than a quicker V or U recovery. The announcement from Credit Suisse Group AG comes after the third mysterious communiqué last week also appearing on the front page of the national publication, which is usually reserved for in depth articles covering the movements and actions of the president of the nation, multiplying the interview’s importance.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the state of play on Tuesday, “The general sentiment of the interviews has investors worried more than the actual fine print. The facts communicated in the articles are pretty fundamental. Building up huge debt is very risky and China needs to take a hard look at its underperforming loans.”
Unlike the previous lengthy interviews that appeared in the paper there is little chance this one will be a prelude to large scale sell offs. The SSE Composite Index is predicted to fluctuate between a 2,600 to 3,000 margin, quite close to the current levels of 2,843, as a supply of equities that is fast accelerating is reined in by multiple components such as cheap valuation.
According to Chen, "The primary reasons for stock decline, spoken of in financial circles, differs from the policy changes in the articles by this mysterious expert“, the comments coming despite China's local A-share market reduced markedly after the first two printed interviews.
The first article, this time last year, concentrated on “risk control” and a sell-off was subsequently brought on by deleveraging in the stock market, Chen said, and the second piece came before yuan declines that sent the Chinese stock market on a vicious downturn even though the report followed supply side reforms.
Sunday, May 8, 2016
UN’s Monetary Situation Solid
A top UN administration official reported today that their financial circumstance is "solid and positive," taking note of "some stress" with respect to the regions of customary budget and holds.
"The budgetary shape of the UN is by and large stable," said Yukio Takasu, Under-Secretary-General for Management in a press meeting at UN HQ in New York, amid which he additionally noticed some worries with respect to the normal spending plan and holdings.
Mr. Takasu's briefing came after a 6 monthly presentation to the General Assembly’s Fifth Advisory group, which is tasked with managerial and budgetary concerns, and where he concentrated on evaluation issues, unpaid surveyed commitments, accessible money assets and exceptional installments to included States.
His review included subtle elements on the four principle evaluation zones; the general spending plan, UN peacekeeping operations, worldwide tribunals, and the Capital Chief Strategy.
Mr. Takasu highlighted that the Association's financial balances were good toward the end of 2015, aside from the customary spending plan, which demonstrated a deficit of $217 million. This deficit is being subsidized by a "small backup," he said.
"I believe it's reasonable to survey the sufficiency of the stores," he said, including that he had made this point to the General Assembly prior to today. "The customary spending plan is consistently tight in the last quarter of the year, and this is normal in 2016. The inquiry is whether or not the span of the reserve is adequate," he added.
For the 2015 spending plan, Member States were committed to contribute an aggregate of $2.771 billion, an expansion of $159 million from 2014. Installments were $237 million higher in 2015 than in 2014, Mr. Takasu said.
Unpaid surveyed commitments remained at $1.43 billion starting 30 April 2016, down $163 million from the same period the year before.
For peacekeeping operations, which work on a 1 July to 30 June monetary cycle, Mr. Takasu said the aggregate of unpaid appraisals toward the end of 2015 was $976 million, mirroring a decrease of $306 million from the previous year.
“Starting 30 April, new appraisals of $3.9 billion had been issued, of which $2.4 billion stay unpaid,” he said.
He stated that unpaid installments to Member States – which added up to $824 million toward the end of 2015 – were anticipated to drop to $818 million before the end of the year, as an after effect of a continued increase in the speed of installments received for troops, police and hardware.
The UN Secretariat will consolidate the data given by Mr. Takasu today into a report from Secretary-General Ban Ki-moon that will be introduced to the Fifth Council on 11 May.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented “I think this is excellent news from the UN showing that Member states finances are in great hands moving forward. I’m very confident in the UN’s ability to handle the collective finances responsibly”.
"The budgetary shape of the UN is by and large stable," said Yukio Takasu, Under-Secretary-General for Management in a press meeting at UN HQ in New York, amid which he additionally noticed some worries with respect to the normal spending plan and holdings.
Mr. Takasu's briefing came after a 6 monthly presentation to the General Assembly’s Fifth Advisory group, which is tasked with managerial and budgetary concerns, and where he concentrated on evaluation issues, unpaid surveyed commitments, accessible money assets and exceptional installments to included States.
His review included subtle elements on the four principle evaluation zones; the general spending plan, UN peacekeeping operations, worldwide tribunals, and the Capital Chief Strategy.
Mr. Takasu highlighted that the Association's financial balances were good toward the end of 2015, aside from the customary spending plan, which demonstrated a deficit of $217 million. This deficit is being subsidized by a "small backup," he said.
"I believe it's reasonable to survey the sufficiency of the stores," he said, including that he had made this point to the General Assembly prior to today. "The customary spending plan is consistently tight in the last quarter of the year, and this is normal in 2016. The inquiry is whether or not the span of the reserve is adequate," he added.
For the 2015 spending plan, Member States were committed to contribute an aggregate of $2.771 billion, an expansion of $159 million from 2014. Installments were $237 million higher in 2015 than in 2014, Mr. Takasu said.
Unpaid surveyed commitments remained at $1.43 billion starting 30 April 2016, down $163 million from the same period the year before.
For peacekeeping operations, which work on a 1 July to 30 June monetary cycle, Mr. Takasu said the aggregate of unpaid appraisals toward the end of 2015 was $976 million, mirroring a decrease of $306 million from the previous year.
“Starting 30 April, new appraisals of $3.9 billion had been issued, of which $2.4 billion stay unpaid,” he said.
He stated that unpaid installments to Member States – which added up to $824 million toward the end of 2015 – were anticipated to drop to $818 million before the end of the year, as an after effect of a continued increase in the speed of installments received for troops, police and hardware.
The UN Secretariat will consolidate the data given by Mr. Takasu today into a report from Secretary-General Ban Ki-moon that will be introduced to the Fifth Council on 11 May.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented “I think this is excellent news from the UN showing that Member states finances are in great hands moving forward. I’m very confident in the UN’s ability to handle the collective finances responsibly”.
Friday, April 22, 2016
The Yen has Performed Remarkably Well Recently. Why?
This week, the Japanese currency surprised money managers
when it reached an all-time high. According to experts, this surge can be best
attributed to the changes in bond market.
Given the fluctuations in the Japanese economy, the
authorities had not expected such a rise in the Yen. However, the currency
astonished some when it showed a gush of about 3% against the dollar this week.
This has been Yen's most noticeable and substantial surge since February.
What's more surprising is the fact that this surge came at a time when the
country's bond yields are negative for most maturities. In the past, negative
bond yields had been the key factor responsible for dwindling interests in the
Japanese currency.
However, the banks have been pointing to a decrease in
inflation as the prime factor that could have led to such an unexpected rise in
the Yen. They have been studying different metrics to pin-point various factors
that could have caused the Yen to perform so well. It's
believed that another factor that could have led to this change is the decrease
in United States real yields in the recent past. The banks have now predicted
that by the end of September, the dollar could drop further down to 105 Yen.
According to Michael Lane, the Global Co-Head of the
Investment Management Division of Shizuoka Capital Wealth Management based in
Tokyo, who manages $2bn of institutional investor’s assets, "When we take
into account the decreasing inflation, it becomes easier to overlook the
10-year Japanese Debt which United States holds over the country."
According to Mr. Lane, if the United States manages to keep
real yields high, it will be able to diminish the export of capital which has
been a key factor in causing Yen's rise against the dollar.
The Yen’s gains weren’t limited to the dollar. The Yen has
performed well against most major currencies. It has showed a boost of almost
2% in general. This has been Yen's strongest performance since October 31, 2014
when the Japanese authorities released the monetary stimulus program to support
the Japanese economy.
So, what does the future hold for Yen?
The Japanese currency, has registered a growth of almost 11
percent since the start of 2016. This was a blow to some analysts who had
predicted In early January, that the Yen would fall during the year, down to
124 against the dollar by March end.
The Yen's strong performance has been even more surprising
given the fact that Japanese economy has been struggling since the middle of
2013. Machinery prices have been declining and producer prices have been
dwindling too.
The Japanese authorities have voiced their concern on the
issue. Taro Aso, the Japanese Finance Minister, gave a statement saying that an
unpredictable and undesirable growth in any currency is a trend that should be
seen with some suspicion. Similar statements were also heard coming from
Yoshihide Suga, the Chief Cabinet Secretary of Japan. However, the Prime
Minister of Japan, Shinzo Abe, quelled all such concerns by pledging to stay
away from arbitrary intervention.
Traders continue to bet on the Yen.
Speculators, however, have been undisturbed by these recent
developments. They have continued to show trust in the future of the Yen.
According to the Shizuoka Capital Wealth Management,
analysts and hedge funds have escalated their net bullish position on the
Japanese currency. By the end of April 5, about 60,000 contracts had showed
trust in the future of the Yen and had predicted a further rise in Japan's
currency. These contracts weigh highest since 2008 - a positive sign for Yen
values.
Yet another important thing to keep in mind is that United
States’ dominance over Japan has reduced since Japan's real yield on 10-year
U.S debt has reduced from 1.1 percentage point to 0.6 percentage point.
According to Michael Lane, "The Yen will continue to
rise even more in the coming term. Since inflation is expected to continue to
decline, Japanese real yields will show positive growth and influence the
country's currency positively."
About Shizuoka Capital Wealth Management
The company is engaged in wealth management services such as
securities, the buying and selling of corporate dept, handling mergers and
acquisitions, private equity and fixed income. Founded in 2006 with Headquarters
in Tokyo, Japan. As of 2015 the company assets were in the region of $6bn.
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