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'China’s Carl Icahn' arrested for stock fraud
<p>It appears that the Chinese government may finally be getting serious about cracking down on financial sector fraud. On Sunday, Xu Xiang, a Chinese fund manager known as Big Xu and referred to as “China’s Carl Icahn” in the Chinese media, has been arrested for stock fraud in Hangzhou in eastern China.</p> <p>&nbsp;</p> <p> China’s Carl Icahn<br /> Details on arrest of China’s Carl Icahn<br /> In the Chinese version of the OJ simpson standoff, Big Xu was arrested close to the exit of the 22-mile Hangzhou Bay Bridge. Media sources note that the authorities closed the extremely busy bridge’s entrances and exits for around a half an hour before the arrest.<br /> Of note, Xu’s Zexi Investment, headquartered in Shanghai, has been embroiled in accusations starting back in September, when social media posts accused the firm of attempts at market manipulation. One post suggested that Zexi had ordered China’s largest brokerage, Citic Securities, to buy up shares of a money-losing Shanghai clothing retailer to boost the price to help out  several politically connected investors. Zexi denied all charges, saying the charges were “fabrications from nowhere and malicious attacks.”<br /> China’s government news agency Xinhua issued a statement after the arrest Sunday, saying that “Xu Xiang and others are suspected of insider trading and other offenses and are in criminal detention.” The statement offered no further details, and did not confirm or deny the earlier Social media speculation.<br /> Joanna Jiang, a public relations representative for Citic Securities, replied to an email query from the media, saying that Citic “does not comment on market rumors.” Zexi Investment was not answering the phone on Sunday or Monday. Moreover, police headquarters in Zhejiang Province also did not answer phone calls on Sunday.</p> <p>Of note, the website of China National Radio published an article supposedly from the government’s Xinhua News Agency on Monday, reporting that a colleague of Xiang Xu had been shot and killed while attempting to escape from law enforcement. However, the account was retracted shortly thereafter and it apparently never appeared on Xinhua’s website. But no one knows wha happened as Bloomberg reports:</p> <p>Chinese social media was set abuzz Monday morning by an unconfirmed report of a man associated with the insider trading probe who was shot and killed by police while trying to escape apprehension. The report was retracted less than an hour after being posted to various websites, including that of China National Radio. A person at China National Radio’s news department, who refused to give their name, said the police had informed the broadcaster that the information was untrue.</p>
Daily Scan: Flat markets in Europe, Standard Charted slashes jobs, Hollywood-style arrest of 'Big Xu'
<p>November 3</p> <p>Volkswagen's woes afflicted investor sentiment in early European trading. Germany's DAX 30 index fell 0.18% to  10,930.95, the UK's FTSE 100 index lost 0.04% to 6,359.19, the French CAC 40 index slipped 0.09% to 4,911.92 and the pan-European Euro Stoxx 50 index dropped 0.12% to 3,430.55. But there are few economic data releases to give the markets much direction on Tuesday. Meanwhile, Asian share prices had moved slightly higher, buoyed by a stronger stock market performance in the U.S. The MSCI Asia-Pacific (ex-Japan) index rose a little over 1% after sliding yesterday, China's CSI300 was flat. Japan's markets were closed for a public holiday.</p> <p>Here’s what else you need to know:</p> <p>Activision to buy King Digital Entertainment for $5.9 billion. The London-based group behind the Candy Crush Saga mobile games will make the biggest acquisition in the gaming industry since Microsoft bought Minecraft last year. The deal gives the combined group more than 500 million monthly active users across almost 200 countries. The all-cash transaction represents a 25% premium to King’s valuation at Monday’s close -- but a 25% discount to the firm's IPO price just last year. Financial Times (paywall)</p> <p>Australia hints at interest cut later in year. Australian shares bounced more than 1% after central bank governor Glenn Stevens spoke. The Reserve Bank of Australia kept rates unchanged at 2%, stabilizing the Australian dollar after a turbulent year when it hit a record low against the U.S. dollar in September.</p> <p>Billionaire hedge fund manager Xu Xiang arrested. Known as "China's Warren Buffett" and "Big Xu", the general manager of Zexi Investment was arrested for insider trading after his car was surrounded by police on the 36km Hangzhou Bay Bridge in Zhejiang Province. SCMP (paywall)</p> <p>Standard Chartered will cut 15,000 jobs. The U.K.-headquartered bank said it would reduce headcount by 15,000 by 2018 after posting a surprising $139 million loss in the third quarter. It also plans to raise $5.1 billion to spend on technology infrastructure and other strategic opportunities. CNN</p> <p>Forbes sues Chinese shareholders. The Forbes family is suing Hong Kong-based Integrated Whale Media Investments for defaulting on loans it made to them to acquire a majority stake in Forbes Media last year. CNN </p> <p>U.S. Navy admiral tells China that exercises are not a threat. During the first of a three day visit to China, Admiral Harry Harris told Peking University that US naval exercises near territory claimed by China were not “a threat to any nation” but were designed to defend freedom of navigation in international waters. Financial Times (paywall)</p> <p>Tencent to invest $1 billion in on-demand tech giant. Tencent has already invested in the Meituan-Dianping and the current fund-raise would value the company at $20 billion. In total, the companies may raise $3 billion, one of the biggest rounds ever. Wall Street Journal (paywall)</p> <p>First made-in-China passenger airplane rolls of</p>
An innovative course for China
FinTech
<p>The Fifth Plenum of the Communist Party concluded last week with several major decisions. The world's media was hooked by the change to the one-child policy, but there was also another important statement of intent.</p> <p>“Innovation will play a critical role in growth strategy over the next five years,” notes Zhiwei Zhang, Deutsche Bank Chief Economist for China.</p> <p>“The [Plenum] press release specifically mentioned "internet +" and "national big data strategy" which we believe will get government support.”</p> <p>Zhang points out that President Xi also emphasized the role of innovation in a government meeting on August 18, 2014.</p> <p>Xi argued that innovation could be promoted by: identifying the right areas to spend resources; strengthening incentives to attract talent; developing institutions to promote innovation; and cementing international collaboration.</p> <p>“The focus on innovation likely reflects that the leaders recognize investment driven growth model is not sustainable, hence the search for productivity growth is critical for the next five years,” says Zhang.<br /> Photo: xdxd_vs_xdxd</p>
Big jump in Chinese property onshore bond issuance
<p>Chinese property companies have been reducing their foreign exchange risk by diversifying their funding sources .</p> <p>The $28 billion issuance of onshore bonds by Moody's-rated Chinese property developers for the year to October 30 compared with $1.9 billion for the whole of 2014 is credit positive for the developers, according to Kaven Tsang, vice president and senior credit officer, Moody’s Investor Services. </p> <p>“It (also) lowers their average funding costs, enhances their liquidity profiles, diversifies their funding channels and lengthens their debt-maturity profiles,” he notes in a report published on Tuesday. (subscription)</p> <p>Most of the proceeds have been used to refinance other onshore debt so there is little risk that the increased issuance will subordinate offshore creditors in the event default.</p> <p>However, the Chinese property sector faces three major risks over the next couple of years.</p> <p>These are: “regulatory tightening aimed at limiting sharp price increases in certain cities, deterioration in market liquidity and broad-based weakening of property demand as a result of slowing economic growth.”<br /> Photo: Hugh Dutton Associés<br /> &nbsp;</p>
Asian and emerging market companies miss earnings forecasts
<p>So far companies in the MSCI emerging market and Asia-Pacific (ex-Japan) universe are missing consensus income targets by a big margin, according to Morgan Stanley research. (subscription)</p> <p>About 40% of listed companies by market cap have reported their third quarter numbers, and the aggregate shortfall is 8.2% and 6.5% respectively. On the positive side, Taiwan and Singapore beat the aggregate consensus net income estimates; on the negative, South Korean and Latin American firms are the worst slackers.</p> <p>“Korea reported an aggregate net income miss of 34%. In terms of breadth, 58% of reported Korean companies have missed consensus estimates, while only 23% of companies have beaten consensus estimates,” notes Morgan Stanley.</p> <p>Latin America reported a net income miss of 45%, mainly due to poor results from America Movil and Brazil's Vale.</p> <p>Curiously, this is the 12th time in 14 quarters that MSCI EM and APxJ companies have posted lower results than consensus forecasts. Maybe analysts need to reexamine their models and rein in their natural optimism.<br /> Photo: Frits Ahlefeldt-Laurvig</p>
Paul Tudor Jones on failure
<p>Few things in life are as powerful as failure, and no one knows that more than Paul Tudor Jones. While the legendary trader did build his name on an impressive, constant stream of wins (Tudor B.V.I.'s only down year was in 2008), Jones knows that one's greatest successes are often the children of their own failures.</p> <p>And here is talking just about that. While his commencement speech to the Buckley School's class of '09 may be a bit old and touch long, I'm sure you'll still find it a fantastic, moving read nonetheless. Check it out, you'd be glad you did.</p> <p> Paul Tudor Jones Failure Speech from Kenny Leng<br /> Photo: TED Conference</p>
Paul Singer backs Marco Rubio
<p>Maybe Floridians want him to give up his senate seat, but Marco Rubio has gained himself one very powerful backer.</p> <p>Billionaire investor Paul Singer has announced his support for Rubio, hitting the already floundering Jeb Bush campaign hard, reports the New York Times. Bush and New Jersey Gov. Chris Christie had been vying for Singer's blessing, which is sure to come with millions in campaign donations. Last year Singer game more money to Republican candidates and causes than any other donor in the country, and in 2012 he raised more than $3 million to Mitt Romney. A number of other big GOP donors are known to follow Singer's influence.</p> <p>Singer called the Tea Party's Rubio the only candidate who can "navigate this complex primary process, and still be in a position to defeat" Hillary Clinton next fall.<br /> Photo: Marc Nozell</p>
China’s policies, Fed’s taper tantrum – more treats, less tricks
<p>This article is an excerpt from a previously released Sidoxia Capital Management complementary newsletter (November 2, 2015). </p> <p>Have you finished licking the last of your Halloween chocolate-covered fingers and scheduled your next cavity-filled dental appointment? After a few challenging months, the normally spooky month of October produced an abundance of sweet treats rather than scary tricks for stock market investors. In fact, the S&amp;P 500 index finished the month with a whopping +8.3% burst, making October the tastiest performing month since late 2010. This came in stark contrast to the indigestion experienced with the -8.7% decline over the previous two months.</p> <p>What’s behind all these sweet gains? For starters, fears of a Chinese economic sugar-high ending in a crash have abated for now. With that said, “Little Red riding Hood” is not out of the woods quite yet. Like a surprising goblin or ghost popping out to scare you at a Halloween haunted house, China could still rear its ugly head in the future due to its prominent stature as the second largest global economy. We have been forced to deal with similar on-again-off-again concerns associated with Greece.</p> <p>The good news is the Chinese government and central bank are not sitting on their hands. In addition to interest rate cuts and corruption crackdowns, Chinese government officials have even recently halted its decades-long one-child policy. China’s new two-child policy is designed to spur flagging economic growth and also reverse the country’s aging demographic profile.</p> <p>Also contributing to the stock market’s sugary October advances is an increasing comfort level with the Federal Reserve’s eventual interest rate increase. Just last week, the central bank released the statement from its October Federal Open Market Committee meetings stating it will determine whether it will be “appropriate” to increase interest rates at its next meetings, which take place on December 15th and 16th. Interest rate financial markets are now baking in a roughly 50% probability of a Fed Interest Rate hike next month. Initially, the October Fed statement was perceived negatively by investors due to fears that higher rates could potentially choke off economic growth. Within a 30 minute period after the announcement, stock prices reversed course and surged higher. Investors interpreted th</p>
Daily Scan: Tencent in $1B investment in Meituan-Dianping
<p>Asian markets will have little fresh data to go on Tuesday to lift them out of the doldrums. On Monday, factory data revealed that China was still shrinking -- albeit more slowly than in previous months. Japan was hardest hit, falling 1.7%; its markets are closed Tuesday. The central bank in Australia will announce its interest rate decisions at 11:30 a.m. HKT. Analysts expect the bank to keep rates unchanged at 2%. Overseas, manufacturing data overnight was surprisingly robust lifting most European markets. The Dow Jones Industrial Average crept back into the plus zone for the year as the gloom and doom of the summer faded.</p> <p>Here’s what else you need to know:</p> <p>Tencent to invest $1 billion in on-demand tech giant. The internet giant has already invested in the Meituan-Dianping and the current fund-raise would value the company at $20 billion. In total, the companies may raise $3 billion, one of the biggest rounds ever. Wall Street Journal (paywall)</p> <p>First made-in-China passenger airplane rolls off the assembly line. Only three years after its expected due date. And the twin-engine airliner by Commercial Aircraft Corp., Comac, won't be available for delivery for another three years. So Boeing and Airbus don't have to worry about the competition. Yet. Wall Street Journal (paywall)</p> <p>U.S. Navy admiral to spend three days visiting China amid rising tensions. Admiral Harry Harris has urged the U.S. to push back against Beijing's territorial grab in the South China Sea. Last week, the U.S.S. Larssen sailed within 12 nautical miles of the disputed Spratly Islands. China then conducted military exercises in the region. South China Morning Post</p> <p>Nissan is bullish. The Japanese carmaker lifted its net profit forecast for the year by 10%, saying that U.S. sales will offset emerging market slowdowns. Sales in the U.S. are at the fastest pace in 15 years, but have slowed in China. Wall Street Journal (paywall)</p> <p>ECB leaders met with bankers, managers before key policy decisions. The diaries for six officials at the European Central Bank reveal they met with members of the financial services industry between August 2014 and August 2015. The meetings raise concerns about the coziness between regulators and the regulated. Financial Times (paywall)</p> <p>Porsche sucked into Volkswagen emission cheating scandal. The EPA and California regulators found another 10,000 cars on the road designed to give false emission readings, all from Volkswagen’s luxury Porsche brand. Volkswagen is already in trouble for problems with 11 million diesel cars worldwide. CNN</p> <p>AIG posts losses, shares drop. AIG lost about $231 million in the last quarter, amid pressures from shareholders to break up the company. The company is eliminating 300 to 400 senior management positions as part of plans to reduce staff and cut operations costs. Wall Street Journal (paywall)</p> <p>George Soros pulls $500 million investment with Bill Gross. Less than a year ago, Soros showed his support for bond </p>
Daily Scan: Dow reaches positive territory for the year; Porsche dragged into VW scandal
<p>Update throughout the day</p> <p>November 2</p> <p>The Dow has reached positive territory for the year, after gaining 0.9% Monday. The Dow hasn't closed with a  2015 gain since July 22. The S&amp;P 500 was also up 1.2% and the Nasdaq gained 1.5%. The first week of the month is often a time of caution: Friday brings the jobs report, the first snapshot of how well the economy did the previous month.  The U.S. manufacturing report shows another slow month in October, but a rise in new orders. The national manufacturing index managed to squeak out at 50.1, down from 50.2 in September. A reading above 50 signals expansion. Stay tuned for more earnings reports this week.</p> <p>Here's what else you need to know:</p> <p>Porsche sucked into Volkswagen emission cheating scandal. The EPA and California regulators found another 10,000 cars on the road designed to give false emission readings, all from Volkswagen's luxury Porsche brand. Volkswagen is already in trouble for problems with 11 million diesel cars worldwide. CNN</p> <p>Nissan is bullish. In other car maker news, Nissan lifted its net profit forecast for the year by 10%, saying that U.S. sales will offset emerging market slowdowns. Sales in the U.S. are at the fastest pace in 15 years, but have slowed in China. Wall Street Journal (paywall)</p> <p>AIG posts losses, shares drop. AIG lost about $231 million in the last quarter, amid pressures from shareholders to break up the company. The company is eliminating 300 to 400 senior management positions as part of plans to reduce staff and cut operations costs. Wall Street Journal (paywall)</p> <p>George Soros pulls $500 million investment with Bill Gross. Less than a year ago, Soros showed his support for bond king Gross' move to Janus Capital, giving him a large chunk of money to manage. But Gross has been plagued with poor performance and outflows in his Janus Global Unconstrained Bond fund. Now it seems Soros has joined the exodus. Wall Street Journal (paywall)</p> <p>Chipotle closes almost 50 stores. The popular burrito chain was forced to temporarily close 43 stores in the Pacific Northwest after at least 22 people contracted a possibly fatal strain of E. coli bacteria. Better get your guac somewhere else for now. BuzzFeed</p> <p>"External influence" blamed for crash of Russian airliner. A Metrojet spokesperson said that is the only explanation for the disaster in the Egyptian Sinai peninsula. All 224 people on board were killed in the weekend accident. The Kremlin is not ruling out terrorism although it previously dismissed a claim of responsibility from ISIS. BBC</p> <p>Visa to buy Visa Europe for $23.4 billion in cash and stock. The move brings all of Visa's operations under one umbrella. The company also reported earnings of $0.62/share, in line with estimates. The company also announced plans for a $5 billion share buyback. </p>