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Putin wants to chummy up with China
<p>With its economy a mess, and its relations with its Western neighbors in tatters, Russia is in dire need of new friends. So, its leader - Vladimir Putin - is looking east to China.</p> <p>According to Reuters, Putin was at the Eastern Economic Forum in Vladivostok  earlier this week trying the woo Asian investors in a bid to drum up cash for Russia's neglected Far East region. </p> <p>“The possibilities in region,” Putin told Asian investors, “are enormous”. The Russian leader was touting the region - packed with natural resources, forestry and fish stocks - to delegates from Japan, South Korea, and, most importantly, China. </p> <p>Its Putin’s hope that Russia’s Asian friends will help turn his country’s Far East - which takes of a third of its landmass - into a "profitable business center". </p> <p>China is already throwing quite a bit of love Russia's way. Data from Rhodium, a China-focused research group, shows that China's direct investment into Russia totaled about $8.4 billion in 2014, up 10% from 2013. That’s almost half of the $18 billion China invested in the whole of Europe for the same period. </p> <p>With its economy buffeted by cheap oil and western sanctions, resulting from its conflict in Ukraine, Russia really needs its Asian allies. But then again, anyone with even with a passing interest in the global economic affairs will know that China is having a few money problems of its own right now.</p> <p>Photo: Donkey Hotey via Flickr</p>
Internet entrepreneur sells LA home
<p>Internet entrepreneur Jason Calacanis is leaving Los Angeles for San Francisco, and he's sold his home for $2.92 million.</p> <p>Calacanis, who has invested in Uber and Tumblr, was splitting his time between San Francisco and L.A. before August, reports Business Insider. He sold his L.A. home after having it on the market for almost a year, and was most recently listed for $2.998 million in July.</p> <p>The L.A. home has four bedrooms, a bright sun room, and a large swimming pool. The 1940's house resides in the high end Brentwood neighborhood. A separate pool house can provide extra space for guests.<br /> Photo:  Joi Ito</p>
ETFs may wobble, but can they 'flash crash'?
<p>Wobbly markets and international turmoil can get the best of even a seasoned investor. Take a look at what happened in the world of ETFs. When the Dow Jones Industrials plunged 10% on Black Monday, some ETFs went all haywire. The much-loved vehicle for Main Street suddenly stopped making sense.</p> <p>Kim Arthur, of Main Management, told ETF.com that the August 24 mayhem was  reminiscent of the May 2010 flash crash.</p> <p>&nbsp;</p> <p>Just to recall what happened: In the early trading hours, ETFs suffered a massive sell-off, with some funds seeing close to 50% losses. The iShares Select Divident fund was down 36%. And the Guggenheim S&amp;P 500 Equal Weight dropped 42%. Skittish investors sold the funds at huge discounts, only to see the security prices bounce back in minutes. Some investors were stalled for up to 20 minutes trying to log into their accounts, creating pent-up sell stops that slammed the market.</p> <p>Arthur says players aren't playing close enough attention to trade executions and keeping realistic bid/ask spreads.<br /> “I had thought, along with that flash crash in 2010, [regulators] told market makers they had to have some reasonable tolerance within your bid and your offers; otherwise, you cannot be making a market. You have to get out of the way,” Arthur said. “It seems like we saw that again [August 24].”<br /> Not so, says Ed Rosenberg, head of ETF Capital Market and Analytics for FlexShares. You can't compare the original "flash crash" of 2010 to a quick downturn in ETFs, he argues.  “Its almost impossible for the ETFs to crash on their own,” says Rosenberg. ETFs are tied so closely to the underlying securities that there needs to be serious price dislocation from securities for that to happen. Price dislocations do happen, but they self correct within seconds. "Those last so short it's unbelievable," says Rosenberg.</p> <p>The market did exactly what it was supposed to do August 24, but ETF investors freaked out, writes Dave Nadig in FactSet. For example during the first hour of the market's open, trading in the Guggenheim S&amp;P 500 Equal Weight ETF (RSP) only happened in 15 to 30 second bursts between halts. Any move of more than 10% within a five minute window triggers a halt, meaning trading halted four times on down moves and six times on up moves.</p> <p>Most investors are "smart enough to treat their ETFs...as long term asset allocation vehicles," says Nadig. The day to day swings can be scary, but most people recognize that it's part of holding such an investment.</p> <p>Investors do need to understand that an ETF isn't to be traded like a stock, says Rosenberg. ETFs seem to trade like stocks, but stocks are driven by supply and demand, where ETFs are tied to the underlying securities, he says.</p> <p>Unlike mutual funds, which just trade once a day at the closing net asset value price, ETFs have to weather the daily trading storms, says Ben Carlson in his blog "A Wealth of Common Sense." "Whenever something goes wrong in the markets (read: losses), people tend to look for someone or something to blame," writes Carlson. It's not the ETFs' fault if an investor put in a sell order and gets stuck with the market's price for the fund. ETF traders should expect this, but long term investors needn't worry. Panics can and will happen on occasion, says Carlson. The trick is just to not be forc</p>
Real Estate Porn: Southampton estate
<p>Looking for an end-of-summer deal? A former Carnegie family summer home is on the market in Southampton for $37.5 million with Sotheby's.</p> <p>The 1890's home holds the Gilded Age charm with modern amenities, over 12,000 square feet.</p> <p>Having a party? No problem. The home has 11 bedrooms, 12 baths, and 11 fireplaces, plus a 2 bedroom, 2 bath apartment complete with a living room and kitchenette.</p> <p>Outside, the grounds hold a swimming pool and tennis court, within walking distance from the ocean.</p> <p>&nbsp;<br /> Photos: Jake Rajs</p>
The art of capital flight
<p>CAMBRIDGE – What impact will China’s slowdown have on the red-hot contemporary art market? That might not seem like an obvious question, until one considers that, for emerging-market investors, art has become a critical tool for facilitating capital flight and hiding wealth. These investors have become a major factor in the art market’s spectacular price bubble of the last several years. So, with emerging market economies from Russia to Brazil mired in recession, will the bubble burst?</p> <p>Just five months ago, Larry Fink, Chairman and CEO of BlackRock, the world’s largest asset manager, told an audience in Singapore that contemporary art has become one of the two most important stores of wealth internationally, along with apartments in major cities such as New York, London, and Vancouver. Forget gold as an inflation hedge; buy paintings.</p> <p>What made Fink’s elevation of art to investment-grade status so surprising is that no one of his stature had been brave enough to say it before. I am certainly not celebrating the trend. I tend to agree with the philosopher Peter Singer that the obscene sums being spent on premier pieces of modern art are disquieting.</p> <p>We can all agree that these sums are staggering. In May, Pablo Picasso’s “Women of Algiers” sold for $179 million at a Christie’s auction in New York, up from $32 million in 1997. Okay, it’s a Picasso. Yet it is not even the highest sale price paid this year. A Swiss collector reportedly paid close to $300 million in a private sale for Paul Gauguin’s 1892 “When Will You Marry?”</p> <p>Picasso and Gauguin are deceased. The supply of their paintings is known and limited. Nevertheless, the recent price frenzy extends to a significant number of living artists, led by the American Jeff Koons and the German Gerhard Richter, and extending well down the food chain.</p> <p>For economists, the art bubble raises many fascinating questions, but an especially interesting one is exactly who would pay so much for high-end art. The answer is hard to know, because the art world is extremely opaque. Indeed, art is the last great unregulated investment opportunity.</p> <p>Much has been written about the painting collections of hedge fund managers and private equity art funds (where one essentially buys shares in portfolios of art without actually ever taking possession of anything). In fact, emerging-market buyers, including Chinese, have become the swing buyers in many instances, often making purchases anonymously.</p> <p>But doesn’t China have a regime of strict capital controls that limits citizens from taking more than $50,000 per year out of the country? Yes, but there are many ways of moving money in and out of China, including the time-honored method of “under and over invoicing.”</p> <p>For example, to get money out of China, a Chinese seller might report a dollar value far below what she was actually paid by a cooperating Western importer, with the difference being deposited into an overseas bank account. It is extremely difficult to estimate capital flight, both because the data are insufficient and because it is tough to distinguish capital flight from normal diversification. As the late MIT economist Rüdiger Dornbusch liked to quip, identifying capital flight is akin to the old adage about blind men touching an elephant: It is difficult to describe, but you will recognize it when you see it.</p> <p>Many estimates put capital flight from China at about $300 billion annually in recent years, with a marked increase in 2015 as the economy continues to weaken. The ever-vigilant Chinese authorities are cracking down on money laundering; but, given the huge incentives on the other side, this is like playing whack-a-mole.</p> <p>Presumably, the anonymous Chinese buyers at recent Sotheby’s and Christie’s auctions had spirited their money out of the country before bidding, and the pai</p>
Top Ten Investment Scams Ever
<p>Every year, over 31 million purchasers are victimized by investment fraud. The medium loss per investor is roughly $15,000. Individual losses run into hundreds of thousands of dollars. Most remarkable is that financial swindle targets ranked above financial non-victims with percentages of 58% and 41% respectively.</p> <p>Why do many get scammed The #1 rule in fraud is "Don't breed any mistrust." High returns can go overlooked for decades. But, like Bernie Madoff shows, it will all show up at the end of the day. In 2013, the SEC listed over 700 enforcement efforts for investment scams.</p> <p>A look at fraud would have to go back centuries to 300 BC. That’s about the timie a Greek merchant named Hegestratos took out an insurance policy. The merchant would borrow money and pay it back with interest on a ship’s cargo arrived. If the loan isn’t paid back, the lender had the rights to acquire the boat and its freight.</p> <p>Hegestratos conspired with a few friends to empty his boat, sink it, keep the loan and sell the corn. His plan didn’t really work out. The ship’s crew and passengers caught him in the act and he drowned trying to escape.<br /> Investment Scams: The First Insider Trading Scheme<br /> Just a few years after American became a nation, it produced it first fraud. In the late 18th century, American bonds were like junk-bonds are today. Every wind of news about the colonies’ fortunes cause the value of the bonds to fluctuate. The trick for the investor was to be able to anticipate which direction a bond’s value was headed.</p> <p>Alexander Hamilton, Treasury Secretary, worked to restructure American finance by replacing a variety of bonds issued by the colonies with bonds from the new country’s central bank.</p> <p>William Duer, assistant secretary of the Treasury, was in the perfect spot to get in some profitable insider trading. Duer was among the first to know news which would drive up bond prices. He would tip his friends, trade in his portfolio and then leak that information to the public. Then all Duer had to do was set back and sell off bonds and make an easy profit.<br /> Top Ten Investment Scams</p> <p> Charles Ponzi – $20 million lost by investors</p> <p>Everyone has heard of "Ponzi scheme. It is titled after Charles Ponzi's famous scheme where he promised profits of 50% in 45 days. Tenured investors were paid off with money from fresh investors.</p> <p>Lesson: Get an independent 3rd party to write the statements</p> <p> Barry Minkow – Loss calculated at $100 million</p> <p>When he was 19, Minkow saw his rug washing company go public and eventually reach $200 million in capitalization. Using false records and sales slips, it appears Minkow had built a huge and profitable business. Clients who were suspicious about overcharges on their invoices headed to an inquiry which uncovered Minkow's revenue figures. Minkow was sentenced regarding almost 60 felonies.</p> <p>Lesson: Again — Get a reliable 3rd party accountant is reviewing the statements.</p> <p> Jordan Belfort – Loss $200 million</p> <p>Jordan Belfort was the subject of the TK movie "Wolf of Wall Street." Belfort reached the silver screen by running a pump-and-dump scam in the 90s where agents would force up the cost of usually, junk stock and then ca</p>
NexAsia Week Ahead: Chinese inflation, exports, and forex reserves figures coming up
<p>(Note: all times HKT)<br /> Good morning everyone. China and the Federal Reserve will continue to dominate the headlines this week as the former reports is forex reserves and export data while the latter gears up to decide whether it should lift rates or not. There are other heavies on this week’s docket though, such as the Bank of Canada’s and the Reserve Bank of New Zealand’s interest rate decision, the Bank of England’s PMC minutes, Japan’s GDP growth, and Jean-Claude Juncker’s upcoming State of the Union address.</p> <p>Here’s what else you should look out for:</p> <p>Monday:</p> <p>6:00 am – China August foreign exchange reserves</p> <p>1:00 pm – Japan July preliminary coincident index – Forecast: 112.17 from 112.3</p> <p>1:00 pm – Japan July preliminary leading economic index – Forecast: 106.3 from 106.5</p> <p>2:00pm – Germany July YoY industrial production – Forecast: 1.84% from 0.6%</p> <p>Tuesday:</p> <p>7:50 am – Japan Q2 QoQ final GDP growth rate – Forecast: -0.4% from 1%</p> <p>7:50 am – Japan Q2 annualized final GDP growth rate – Forecast: -1.6% from 3.9%</p> <p>9:30 am – Australia August NAB business confidence – Forecast: 3.75 from 4</p> <p>10:00 am – China August balance of trade – Forecast: $40 billion from $43 billion</p> <p>10:00 am – China August YoY exports</p> <p>10:00 am – China August YoY imports</p> <p>2:00 pm – Germany July balance of trade – Forecast: € 21.8 billion from €24 billion</p> <p>5:00 pm – EU Q2 estimated YoY GDP growth rate – Forecast: 1.2% from 1%</p> <p>Wednesday:</p> <p>8:30 am – Australia September Westpac consumer confidence index – Forecast: 98.58 from 99.5</p> <p>1:00 pm – Japan August consumer confidence – Forecast: 40.22 from 40.33</p> <p>4:30 pm – U.K. July balance of trade – Forecast: unchanged at £ -1.6 billion</p> <p>4:30 pm – U.K. July YoY manufacturing production – Forecast: 0.4% from 0.5%</p> <p>4:30 pm – U.K. July YoY industrial production – Forecast: 1.31% from 1.5%</p> <p>8:15 pm – Canada August housing starts – Forecast: 195,100 from 193,000</p> <p>8:30 pm – Bank of Canada interest rate decision – Forecast: unchanged at 0.5%</p> <p>Thursday:</p> <p>5:00 am – Reserve Bank of New Zealand interest rate decision – Forecast: unchanged at 3%</p> <p>9:30 am – Australia August unemployment change – Forecast: 9,500 from 38,500</p> <p>9:30 am – China August YoY inflation rate – Forecast: 1.7% from 1.6%</p> <p>9:30 am – China August YoY PPI – Forecast: -5.5% from -5.4%</p> <p>7:00 pm – Bank of England interest rate decision – Forecast: unchanged at 0.5%</p> <p>7:00 pm – Bank of England MPC meeting minutes</p> <p>7:00 pm – Bank of England quantitative easing – Forecast: unchanged at £375 billion</p> <p>10:00 pm – Singapore Parliamentary elections</p> <p>Friday: </p> <p>2:00 pm – Germany August YoY inflation rate – Forecast: unchanged at 0.2%</p> <p>8:30 pm – U.S. August MoM core PPI</p> <p>8:30 pm – U.S. August MoM PPI – Forecast: 0.1% from 0.2%</p> <p>10:00 pm – U.S. September preliminary Michigan consumer sentiment – Forecast: 91.5 from 91.9<br /> Photo: nuomi @1280x1024.net</p>
How UBS’s Suki Mann went from top banking strategist to blogger
<p>Last February Suki Mann was the ‘star credit strategist’ at UBS, and now, instead of sending notes to clients, he blogs his financial musings to the entire cyber-world, reports Finbuzz.</p> <p>The blog so far includes three posts that read like very colorful and well-written research notes and a ticker that flashes global indexes and has up to date FOREX trading quotes.</p> <p>Mann’s LinkedIn profile states that he left his position at UBS Investment Bank in February of 2015, just after six months. UBS has not commented on Mr. Mann’s departure or whether he was fired, laid off, or left on his own accord. Before that, he had worked as the Head of European Credit Strategy for Societe Generale for nearly 14 years.</p> <p>So far Mann’s Twitter handle only has 20 followers, but given his robust experience and insights into European debt markets, that number is likely to take off once the City gets wind of his blog. His inaugural tweet was sent into the Twittersphere on August 26, 2015.</p> <p>Several ex-analysts have made careers out of journalism. Joe Weisenthal, now the host of his own TV show at Bloomberg, followed a similar path. After working as an analyst for the money management firm Prentiss Smith &amp; Co., he left finance as Wall Street was crashing into recession and joined Business Insider, just financial news was abundant and in demand.</p> <p>Photo: 3news.co.nz</p>
Barron's Weekend Roundup: Making sense of the market correction
<p>The bull market isn't over yet. The August 24 stock market correction may have shaken some, but U.S. shares will still see gains for 2015, Barron's writes in this week's cover story. Analysts say the S&amp;P 500 will hit 2150 by the end of the year, a more than 10% increase from Friday's close.</p> <p>ETFs dropped sharply on August 24, during the massive market correction. ETFs should offer investors prices close to the underlying stocks, but that Monday ETFs dropped more than the stocks, writes Barron's. Some of the problems seem to stem reflect the flash crash in 2010. Regulators will need to take a look at how to ensure smooth ETF trading in the event of another such market swing.</p> <p>Leah Zell, head of Lizard Investors, says international small-cap value investing is the way to go. Zell tells Barron's that China's slowdown will be felt unevenly. "International small-cap investing is the last refuge of stock-picking," she says. Lizard looks at investments a year or two out, or even three to five years if possible.</p> <p>&nbsp;<br /> Photo: Jim Bowen <br /> &nbsp;</p>
Chinese team to debut on the Rolex Sydney Hobart race
<p>Much like Gianni Agnelli, Ted Turner, Larry Ellison, and several other gazillionaires before them, a group of Chinese businessmen have taken a liking to the world of high-performance sailing and are now set to flex their muscles in the 71st edition of the Cruising Yacht Club of Australia’s Rolex Sydney Hobart Yacht Race.</p> <p>Taking a page off Larry Ellison, the group has hired a Kiwi to help the team take the glorious-looking, Botin &amp; Carkeek-designed Ark323 to victory. But aside from him, Sail Word reports that it’s a wholly Chinese team – a first, they point out – as Serena Cai, the team’s manager, told the magazine:<br /> “Ark323 is a purely Chinese entry; a Chinese owner, crew and administrators. The yacht is representing Noah Sailing Club in Shanghai, but we do have a coach from New Zealand. The boat is owned by Noah’s Group, which is led by Wilson Lee and sponsored by E-commerce company Nuoego.com.”<br /> Their entry appears to be a source of great pride for Mr. Lee, who told Sail World:<br /> “We made a decision to enter the Rolex Sydney Hobart because of the nature of the prestigious event, the challenge it presents. It is also one of the ultimate platforms to showcase the Chinese team and the Club’s passion to increase a Chinese presence at international yachting events.”<br /> I wish them all the best, though it does appear to be a tough race; Harburg Investments’ Peter Harburg and his champion crew are also in, while Colin Buffin – who may or may not be a senior MD at Candover Partners – has brought along Sydney Hobart vets to help him win the race.<br /> Photo: davekeane</p>