News > All

HKEx flags short-selling products
Capital Markets
<p>The surge in Chinese share prices in the first half of this year frustrated international fund managers invested in Hong Kong's less volatile market. Despite the dramatic market collapse during the summer, they remain thwarted by Mainland rules that prevent them arbitraging still heady A-share prices and more subdued valuations for the same companies listed in Hong Kong.</p> <p>That could now change.</p> <p> "Hong Kong Exchanges &amp; Clearing [HKEx] is looking to launch products that would allow investors to make bets on the difference between Hong Kong-listed Chinese companies, so-called H-shares, and Shanghai-listed ones, or A-shares, according to exchange officials. As of Friday’s close, Chinese shares traded at a premium of 36.9% to the same companies trading in Hong Kong," reports The Wall Street Journal. (paywall)</p> <p>Yet, short-selling has already been allowed since March within the much heralded (and no rather muted) Shanghai-Hong Kong Stock Connect scheme. But a design flaw means that custody banks and fund managers can't actually lend shares for the purpose of shorting.</p> <p>Perhaps, HKEx should focus on improving an existing system by lobbying China's stock market regulator rather than launching another initiative that could also fail.<br /> Photo: 黃埔體育會 Whampoa Sports Club<br /> &nbsp;</p>
Venting the fintech bubble
<p>It's all go-go-go in the fintech sector -- or is it?</p> <p>First the positive spin: Airbnb has just raised another $100 million after collecting $1.5 billion in its June fund raising round; Uber plans to tap investors for $1 billion by the end of the year; and Lyft aims to attract $500 million in the next few months.</p> <p>On the other hand, here's the view of the Financial Times Lex columnist (paywall):</p> <p>"It is all over. Tech bubble 2.0 has burst. Square priced its initial public offering below the range, at only $9 compared with a proposed $11-$13. Not even Goldman Sachs could sell this thing. Call in the removal trucks. San Francisco is done."</p> <p>"Tech IPOs this year have been mediocre and there is scepticism about private valuations. Institutional investors say they would rather wait to see how a stock performs than take a hefty allocation upfront. That was evident in the Square IPO."</p> <p>However, Lex offers a glimmer of hope for other fintech firms planning to list and make their founders rich.</p> <p>It points out that Square earns most of its revenues collating the transactions of merchants, standing between them and the card networks.</p> <p>"It is not so much disintermediating and disrupting as adding another layer," says Lex.</p> <p>As long as Uber et al can differentiate themselves from Square and convince investors that they offer innovation-led growth then "the party can continue," concludes the pooper.<br /> Photo: Martin Thomas<br /> &nbsp;</p> <p>&nbsp;</p>
What does authenticity really mean?
<p>Nobody likes phonies, but if you want to succeed in business, "just be yourself" won't get you there.</p> <p>Authenticity is a hot word in leadership discussions. The modern workplace is more informal and less hierarchical than in the past. Command-and-control management doesn’t fly with people hired for their creative brainpower. They want leaders who inspire them, and give them reasons for working beyond a paycheck.</p> <p>But all this requires a nuanced understanding of what "authenticity" should mean. In a business context, it doesn’t mean the "be yourself" phrase that probably pops into your mind first. For evidence of this, consider that many of Donald Trump’s supporters praise him for what they view as authenticity. He says what he thinks. He doesn’t seem to care what other people think of that. Yet business leaders emulating this approach might quickly find themselves in trouble. "Being authentic is much more than ‘being yourself,’" says Gareth Jones, coauthor of Why Should Anyone Work Here?: What It Takes to Create an Authentic Organization. "If you want to be a leader, you have to be yourself—skillfully."<br /> Style Is Not Authenticity<br /> To be themselves—skillfully—smart leaders first recognize that authenticity is not about behaving in the exact same way, regardless of context. You may be a casual person, but dressing in shorts when other people expect suits sends a message of disrespect. "It’s not about style. It’s the person inside of you," says Bill George, author of Discover Your True North: Becoming an Authentic Leader.</p> <p>And even with this, you need to think about how the person inside of you comes across. In your personal life, you may love to share your religious faith because it’s what motivates you and inspires you. That doesn’t mean you should proselytize in staff meetings.</p> <p>Second, smart leaders recognize that "effective leadership is a skillful, authentic role performance," says Jones. You might be the kind of person who, deep down, likes to sit in the hotel and watch movies when you’re jet-lagged. But if you’ve jetted in somewhere to boost morale and excite people about your mission, leadership means you need to suit up and do what they are expecting you do.<br /> Knowing Where You're From<br /> Here’s a more workable definition of authenticity in a business context. It’s about being consistent in word and deed, having the same fundamental character in different roles, and being comfortable with your past. Indeed, the first definition of "authentic" that pops up when I type it in Google is "of undisputed origins." "You can change your future, but you can’t change your past," says Jones. "Your past made you who you are."</p> <p>That doesn’t mean authentic leaders need perfect stories explaining all their life choices. "I think storytelling has become a bit of a kind of fad," says Jones. There is nothing authentic about hunting through past events with a coach to determine a story that ties neatly to your current product line.</p> <p>Understanding what shaped you can help you interact with other people without the barriers that lead to disengagement. "Authentic leadership is inherently a developmental process," says George. It’s about becoming "the person you are created to be."</p> <p>This story first appeared in Fast Company.<br /> Photo: Chuck Coker</p>
Five world currencies that are closely tied to commodities
Capital Markets
<p>For more than a year now, commodity prices have been under pressure from the strong U.S. dollar and slowing global demand. This has made a huge dent in the balance sheet of many net exporters of resources, in turn weakening their currencies.</p> <p>This should come as a shock to no one, but what most people don’t realize is just how closely some currencies track certain commodities. When I presented at the International Mining and Resources Conference in Melbourne, Australia, earlier this month, I shared several charts that show this correlation. Many attendees were astounded—and we’re talking professional economists, money managers and CEOs here.</p> <p>With that said, I think it’s important that you see this correlation as well. Below are five world currencies that have been impacted by lower commodity prices.</p> <p>1. Australian Dollar</p> <p>Australia now accounts for around a third of global iron ore production, according to the country’s budgetary office. This means that its income is very sensitive to price changes. As demand from China, the world’s largest consumer of iron ore, has softened, so too has the Australian dollar.</p> <p>2. Canadian Dollar</p> <p>The sixth-largest oil producer in the world is Canada, about a quarter of whose exports is oil. The Conference Board of Canada, a not-for-profit economic research group, estimates that sales for the country’s energy sector will recede a sizable 22 percent this year. In Alberta, where revenue from oil sand exports had until recently helped the province become the fastest-growing in Canada, GDP is expected to contract 1 percent. And in September, the country’s economy shrank for the second straight quarter. As for the Canadian dollar, it’s fallen around 15 percent against the dollar for the one-year period.</p> <p>3. Russian Ruble</p> <p>Compared to Canada and Australia, Russia’s export mix isn’t nearly as diversified: About half of its exports in terms of value are a combination of oil and natural gas. (Russia sits atop the third-largest oil reserves in the world, the number one natural gas reserves.) It should come as no surprise, then, that its currency is highly influenced by Brent oil. Where oil went starting in July 2014, so went the ruble.</p> <p>4. Colombian Peso</p> <p>The same story can be found in Colombia, where oil exports are responsible for about 20 percent of government revenue. Officials estimate, however, that oil sales will total $1.1 billion in 2016, compared to $6.7 billion in 2014. With prices lingering just above $41 per barrel, the Colombian peso has retreated 30 percent against the U.S. dollar for the one-year period.</p> <p>5. Peruvian Sol</p> <p>Besides gold, copper is Peru’s most important mineral export by value. With around 13 percent of the world’s copper reserves, it’s the third-largest producer after Chile and China. As such, the Peruvian sol has declined in tandem with the red metal.</p> <p>This story first appeared in Advisor Perspectives.</p> <p>Photo: Sajid Pervaiz Fazal</p>
Hot investments: FinTech, marijuana and healthcare, says BlockChain co-founder Nicolas Cary
<p>FinTech startups in London are booming. Just recently BlockChain, the world’s most popular Bitcoin wallet, raised $30.5 million, making it the highest investment achieved by a UK startup. </p> <p>Blockchain is an open-source software code that uses high-tech encryption to monitor and record bitcoin transactions. On November 18, BlockChain was joined by Credits.Vision and Nutmeg at the Google campus in London for an angel investor event organised by HoxTechangels.</p> <p>“Investing in tech startups requires a degree of prudence as the risk is higher than most other asset classes,” said Marina Atarova, co-founder of HoxTechangels. “We aim to tap into a few ways to approach the challenges of investing in Financial Technology.”</p> <p>Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.</p> <p>Why London?</p> <p>Paul Dowling: “London is one of only two places in the world where FinTech is going to be really big. The second place is New York.” Paul is a co-founder of the HoxTechangels and moderator of the discussion.</p> <p>Iqbal Gandham: “You have a complete spectrum of people, you have students, which helps startups to test their ideas and find a better square miles.” Iqbal is one of those rare people, who has worn both the CTO and CMO hats with equal degrees of success. He was the CMO at Nutmeg, the UK’s first online discretionary investment manager, where he was instrumental in launching the company, re-branding, full-stack marketing, and worked through two rounds of investment.</p> <p>Nick Williamson: “You kind of want to find out where the nucleus is. Everybody in that space is doing adjacent things, people bounce off each other and that’s the network effect that you’re seeing in London.” Nick is the CEO and founder of Credits.Vision who started his career overlooking Product &amp; Operations of Ring Games at Pokerstars –he largest real-money online poker product in the world. In 2010 he was introduced to Blockchain technology via Bitcoin and quickly became a leader in the space, which led to building a Credits.Vision, a built-from-scratch blockchain that cryptographically secures transactions between private and public chains.</p> <p>Nicolas Cary: “I think it is less to do with people and more to do with regulatory environment. What happened is — there is no more land, no more coal, not many trees left and the only thing you can do here [in the UK] is arbitrage legal services in regulatory environment. [In these circumstances] the BEST thing you can do is to build a space where entrepreneurs can try to create an incredible business. London has been a historical leader in finance innovation, so that on top of the incredible talent pool.” Winner of the 2015 European Digital Leader award for his inspiring and innovative contribution to initiate progress in the digital world and BlockChain co-founder, Nicholas himself is definitely an invaluable addition to that incredible pool.</p> <p>His company Blockchain is the world’s leading Bitcoin software company. Blockchain, which has 5 million users, manages the most widely-used and most trusted developer platform in the Bitcoin eco-system. In 2014, Blockchain raised the largest first outside capital round in industry history announcing over $30.5 million from leading venture capital firms.</p> <p>Will Bitcoin disrupt the financial industry?</p> <p>We are seeing digitization everywhere and finance is the sphere which is not revolutionised yet. “Those castles are well protected legally, but they will need to build bridges to the technologies,” Nicolas Cary said. “No one has a monopoly on innovation. We add 80 000 users a week, which makes us a fastest growing finch company on Earth. Last week we had $300 million worth of transactions facilitated on peer-to-peer basis using bitcoin protocol, we hire like crazy. We raised $30.5 million from three
Learning from China’s development: a case for active management within Asia
Asset Management
<p>Learning From China’s Development-A Case For Active Management Within Asia by David Dali, Matthews Asia</p> <p>Much is debated about the necessity of active management when it comes to investment portfolios. Being active managers ourselves, we are clearly biased. That said, from time to time, it is a worthwhile exercise to evaluate the various vehicles that investors have at their disposal to access growth.</p> <p>As Asia becomes a larger part of the MSCI Emerging Markets (EM) Equity Index it is natural for investors to ask whether or not this benchmark index represents the best way to access the growth of emerging economies. And if not, is there a better way? This is clearly a broad topic that can be addressed many ways but for the purposes of this piece, we would like to focus on Asia as the largest region within the EM benchmark, and furthermore, attempt to highlight lessons learned from China, and the implications for investing in the region.</p> <p>To start, first we must realize that the Asian region is truly diverse in terms of its level of development. The region contains advanced economies such as Singapore, Japan and Hong Kong. It has its emerging economies, including China, India, South Korea, Malaysia and Thailand. And, of course, there are its frontier economies, which include Pakistan, Bangladesh, Vietnam and Sri Lanka.</p> <p>The diversity of the Asian region creates not only significant investment opportunities but also its share of complications. Because of the complexity of emerging markets, and Asia more specifically, investors often lean on index-like investments to gain exposure. While this is fully understandable, it may not be ideal. For example, China recently achieved an important milestone: the faster growing services and consumption portion of the economy now accounts for more than half of China’s GDP. Yet the slowing industrial, construction and export driven sectors combined with less efficient state-owned enterprises (SOEs) still occupy an outsized representation within the MSCI China Index, making passive investments in the country less than optimal, in our opinion.</p> <p>The same can be argued for the broader Emerging Markets index and, specifically, its Asia component. To analyze the concept and to illustrate the importance of active management within Asia, we charted China’s economic development in terms of GDP per capita and attempted to map sector performance of the MSCI China Index during different stages of China’s economic development. We find this analysis interesting given that many other Asian countries may follow a similar growth path. Any insights we can gather regarding sector performance can help us become better investors.</p> <p>What we found was interesting and, more importantly, can serve as a supplemental roadmap for investing in emerging and frontier Asia. As the chart below highlights, during China’s early stages of economic development, sectors focused on basic necessities like energy, consumer staples and utilities were strong relative performers. As China grew between US$1,000 to US$2,000 per capita GDP, the energy, materials and health care sectors performed well. Further along in development, financial services and consumer discretionary sectors were leaders and finally as we approach current levels of Chinese development (per capita GDP of close to US$8,000), telecommunications and information technology have been among the leaders in performance.</p> <p>So why is this analysis relevant? Many investors seek exposure to emerging markets to capture growth and to diversify risk away from their developed market holdings. This makes sense. However, how you access that growth matters and the construction of many of passive vehicles may not give investors what they are looking for. For example, the largest three countries within the MSCI Frontier Markets Index, Kuwait, Nigeria and Argentina, constitute almost 50% of the country weights and according to the IMF, 45% of the countries represented within this same index are forecasted to grow at less than 3% per annum
Daily Scan: Stocks end week on high note; Chipotle slammed for E. coli
Capital Markets
<p>Updated throughout the day</p> <p>November 20, 2015</p> <p>Stocks ended the week on a high note, bouncing back from terrorist attacks around the world. The S&amp;P 500 had its biggest week of gains in almost a year, thanks to healthcare and tech stocks. St. Louis Federal Reserve president and known interest rate hawk James Bullard spoke Friday morning, also helping push stocks up. "We are going to return to an era where there is a bit more uncertainty about what the committee is going to do meeting to meeting," said Bullard."I would welcome the return of that because to me that's normal monetary policy." The S&amp;P 500 rose 0.4% Friday. The Nasdaq was up 0.6% and the Dow gained 0.5%.</p> <p>Here’s what else you need to know:</p> <p>Chipotle E. coli outbreak spreads. At least 45 people across six states have gotten sick as a result of eating at Chipotle, health officials say. The stock for the Mexican fast-casual restaurant hit an 18-month low with the news. Reuters </p> <p>Malian hostage situation ends with at least 27 dead. A five-star hotel in the Malian capital of Bamako was stormed and at least 170 people taken hostage Friday. Al-Qaeda linked Al-Mourabitoun has taken responsibility for the raid. About 10 gunmen reportedly yelled "Allahu Akbar," or "God is great," as they rushed in. U.S., French, Malian, and U.N. soldiers responded.  Al Jazeera</p> <p>Draghi: “we will do what we must.” Speaking to an audience at the Frankfurt European Banking Congress, ECB President Mario Draghi reiterated his stance that he will do whatever it takes if risks begin skewing to the downside. “We will act by using all the instruments available within our mandate.”  ECB </p> <p>Fischer: “we have done everything we can to avoid surprising the markets.” In his latest speech, Federal Reserve vice-chair Stanley Fischer tried to tone down expectations for a December hike by saying that “no final decisions have been made.” Still though, his comment for the emerging markets sounds a little like “brace yourselves.” Reuters</p> <p>Asian shares end the week higher.  Speculation that the PBOC would slash rates once again fueled most of the Hang Seng’s gains, while late buying from institutional investors helped pull the embattled Nikkei from finishing the red. For the week, the Hang Seng Index is up 1.61% and the Shanghai Composite roared 2.31% higher. The Shenzhen Composite rocketed 4.73% while the Nikkei 225 gained a more modest 0.95%.</p> <p>ABN Amro valued at $17.9 billion in IPO. The Dutch bank was nationalized seven years ago at the depths of the financial crisis.  In one of the biggest banking IPOs in years, the government is shedding just 20% of its stake. Wall Street Journal (paywall)</p> <p>China uncovers $125 billion in ‘grey capital’ flows in crackdown.  China started a crackdown on underground banks in April and has so far uncovered more than 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan ($125.34 billion). SCMP (paywall)</p> <p>U.S. releases Jonathan Pollard from jail after 30 years. The former U.S. Navy analyst was convicted of spying for Israel. The case has been a diplomatic sore point for decades. He will not be allowed to join his wife in Israel for five years. Reuters</p> <p>Terrorists kill five in Israel. Palestinians killed two Israelis in Tel Aviv and three on the West Bank, including an American 18-year-old spending his gap year in Israel. Reuters</p> <p>India’s central bank employees strike. Most of the Reserve Bank of India’s (RBI) 17,000 employees went on strike over pensions on Thursday in what the central bank described as “mass casual leave.” BBC</p> <p>BoJ’s Kuroda remains bullish on Japan economy. Bank of Japan Govoner Haruhiko Kuroda remained optimistic about Japan’s economy and inflation prospects at a post-policy-meeting news conference Thursday, pointing to significant improvement in consumer spending and exports. Nikkei</p> <p>Anti-Apec protests greet Manila trade summit . Large protests are taking place in the Philippine capital, where leaders are attending the
People Moves: Harmony Partners names new partner; Microsoft vet leaves for VC
Venture Capital
<p>Harmony Partners names new partner. Michael Chou, who joined the New York office in 2011, has been named partner at Harmony. He moved to the firm's San Francisco office earlier this year. He previously worked as an investment banker.</p> <p>Madrona hires Microsoft vet. "Soma" Somasegar has joined Madrona Venture Group as a venture partner. Somasegar worked at Microsoft for almost 27 years, most recently as corporate v.p. of the developer division.<br /> Photo: ©</p>
People Moves: Boston Company loses PM; Franklin Templeton names head of ETFs
Asset Management
<p>Boston Company loses portfolio manager. Joe Mittelman is leaving Boston Company Asset Management to join Fiduciary Trust Company, where he will serve as an investment officer. Mittelman has previously worked for Fidelity Investments, Wellington Management, and McKinsey &amp; Company.</p> <p>Franklin Templeton hires head of ETFs. Patrick O'Connor has joined Franklin Templeton as head of Global Exchange Traded Funds, a newly created role for the firm. O'Connor most recently worked at BlackRock as managing director of iShares Product Canada, Latin America &amp; Iberia, and equity portfolio management.</p> <p>Sun Life names CIO. Randy Brown will replace Steve Peacher as CIO of Sun Life Financial, effective January 11. Peacher will remain president of the firm. Brown comes to the firm from Deutsche Asset &amp; Wealth Management where he worked as global head of insurance and pension solutions. Pensions &amp; Investments</p> <p>&nbsp;<br /> Photo: ©<br /> &nbsp;</p>
People Moves: UBS hedge fund poaches ex-Citigroup trader
Hedge Funds
<p>UBS hedge fund poaches ex-Citigroup trader. Kevin Russell joins as CIO of UBS O'Connor, UBS's $5.7 billion hedge fund unit, in January. Russell recently stepped down from his role as global head of equity trading at Citigroup, a position he took last year. Business Insider<br /> Photo: ©<br /> &nbsp;</p>