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.
Friday, July 15, 2016
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.”
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