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Asian family offices turn cautious
Asset Management
<p>Family offices in Asia Pacific are shifting towards a more conservative investment approach, according to a recent survey. Rather than pursuing growth as their main focus, they are getting cautious, moving towards balanced and preservation strategies.</p> <p>The recently released Global Family Office Report 2015 by UBS and Campden also found that the region’s family offices are an uncomplacent lot. </p> <p>Despite posting an average dollar return of 6.7% last year, the second best among their peers in Europe, North America, and emerging markets, they were less happy with their performance than the average in the study. </p> <p>The research questioned principals and executives in over 224 family offices across 37 countries. In Asia Pacific, 35 family offices participated with average assets under management of $431 million. </p> <p>A family office manages key areas of a rich family’s assets, including real estate holdings and direct or indirect investments, tax consolidation, and estate management as well as serving as the central hub for a family’s legacy, governance, and succession communication.</p> <p>It is becoming an attractive alternative to farming out cash and decision-making to private banks. But costs are also rising as offices compete for talent. </p> <p>Oh, the best regional performer last year? Europe, because of big bets on real estate and private equity.<br /> Photo: greg<br /> &nbsp;</p>
China tech titans reveal global ambitions with fintech partnerships
FinTech
<p>Two of China's biggest internet companies - Alibaba and Baidu - both revealed their global fintech ambitions this past week with two significant partnerships.</p> <p>The first was Alibaba, the company behind payments platform Alipay, which announced at tie-up with Aussie fintech startup Get Capital. The company's blog reports that the collaboration will allow Australian importers and exporters to access finance on the Alibaba platform.</p> <p>Get Capital will offer a line of credit through Alibaba.com's e-Credit line facility. The deal represents a significant expansion of Alibaba's finance ecosystem beyond its borders. </p> <p>Baidu, meanwhile, has just had its own big overseas play by launching a Hong Kong-based international fintech accelerator with Standard Chartered Bank and co-working space operator TusPark Global. The so-called SuperCharger fintech accelerator will give Baidu direct access to start-ups both from Greater China and overseas.</p> <p>This is a big development for Baidu which has been somewhat overshadowed by the likes of Alibaba and Tencent when it comes to fintech. But now its seems that all the BATs are developing global fintech ambitions.<br /> Photo: NASA Goddard Space Flight Center </p>
Japan government fintech drive threatens bureaucratic 'turf war'
FinTech
<p>Japanese ministers are tripping over themselves to get behind fintech, so much so that government departments are now treading on each other's toes.</p> <p>This week the Japanese government  charged the  Ministry of Economy, Trade and Industry (METI) with setting up a panel focusing on ways to boost the country's fintech industry. The only problem is that Japan's Financial Services Agency (FSA) has already launched a similar initiative, reports the Asian Nikkei Review, leaving some industry professionals confused.</p> <p>The FSA has already had two meetings attended by e-commerce giant Rakuten and a slew of startups. The agency is said to be focusing on building a framework that makes it easier for financial institutions to acquire fintech startups.</p> <p>METI meanwhile is forming a panel of 13 Japan institutions and fintech startups including NEC, Credit Saison, Mizuho Financial Group, and the Bank of Japan. Similarly the panel wants to encourage collaboration between banks and start-up. </p> <p>With similar remits,  it is very likely that METI and the FSA will find themselves competing for the same budgets. It will be interesting to see how the two departments cooperate.<br /> Photo: Tanya Impeartrice</p> <p>&nbsp;</p>
Earnings crunch begins: Big banks in the spotlight
Capital Markets
<p> The third-quarter earnings crunch begins this week.<br /> Many big banks are scheduled to report, but expectations are muted for them overall.<br /> Well Street expectations are low for others as well, including Dow components GE and Intel, as well as Netflix.</p> <p>The quarterly reporting crunch begins in earnest this week, and many of the big banks will be taking their turns in the earnings spotlight, including Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE: C), JPMorgan Chase &amp; Co. (NYSE: JPM) and Wells Fargo &amp; Co(NYSE: WFC).</p> <p>The consensus forecasts of Wall Street analysts for these are rather muted, with small declines in revenue anticipated from three of them, and modest earnings growth from two, relative to the year-ago period.</p> <p>Below is a quick look at what is expected from these and a few of the week's other most prominent reports.</p> <p>See also: JC Parets: Stay Away From Banking Stocks<br /> Bank of America<br /> This leading money center bank will post earnings of $0.37 per share for its third quarter, if Estimize's consensus forecast is accurate. That would compare to a net loss $0.04 per share in the same period of last year. Note that Estimize overestimated Bank of America earnings in ...</p> <p>Full story available on Benzinga.com<br /> Photo: Wally Gobetz</p>
Weekend Scan: Goldman sees unemployment falling below 4.5% in 2018 even as growth slows
Capital Markets
<p>October 12</p> <p>Good evening everyone. Federal Reserve officials have been saying for some time that they believe the unemployment rate can fall more than they expected before inflation kicks in. Now Goldman Sachs has issued a report saying the jobless rate is likely to fall below 4.5% in the next couple of years, even without stellar growth. The Calculated Risk blog reports that the ageing population is behind the new normal for economic equilibrium. As baby boomers retire, the participation rate in the job force declines. Goldman expects the particpation rate to slip 0.25% annually to 61.8% by 2018 from the current 62.4%.</p> <p>Here’s what else you need to know:</p> <p>Enough already, move! Central bankers at the annual meeting of the International Monetary Fund in Lima, Peru, told the Federal Reserve to raise rates, already. “'Delaying the increase would not solve the situation,' said Sukhdave Singh, deputy governor of Bank Negara Malaysia." They probably didn't read that Goldman Sachs report.  Wall Street Journal (paywall)</p> <p>Deflation, the elephant in the room. Barron's contributing editor Jim McTague writes on his blog that deflation is the thing no one wants to talk about at the Fed: "Deflation is evident in many places in our  economy. The buyout of older, high-paid employees by companies is an effort to reduce payrolls so that they can compete with startups and foreign competitors enjoying  lower human capital outlays.  Home prices in may sections of the country have not recovered from the Great Recession, owing to slack demand caused by weaker incomes.  The National Federation of Retailers this week said that their members this holiday season will have to grapple with deflation.  They will have to offer prices in 2015 lower than in 2014 to loosen consumer dollars." LinkedIn</p> <p>Turkey blaming Islamic state for bomb that killed up to 128. A pair of suicide bombers disrupted a pro-Kurdish demonstration in Ankara. The Turkish government said the attack would not delay elections slated for November. Reuters</p> <p>Iran tests new long-range missle. The surface-to-surface weapon called Emad can reach Israel and has "precise control." The test could throw a wrench into the nuclear agreement recently reached with six nations. Iran's parliament approved the general structure of the deal on Sunday. Wall Street Journal (paywall)</p> <p>Hillary Clinton to claim center stage in first Democratic debate.  A total of five candidates will be squaring off. Can anyone out there name all five candidates? CNN</p> <p>Asia stock markets looking rosy. CSI 300 futures point to a 2.01% climb, Hang Seng Index contracts signal a 0.75% pop, while Straits Times Index futures hint at a 1.73% jump. Japan is close for Health and Sports day.</p> <p>China to release new yuan loans. Watch for the number at 10 a.m., local time.  Also on the docket: Malaysia’s industrial production figures at 1 p.m., and India’s industrial, manufacturing, and inflation numbers at 9 p.m.</p> <p>North Korea is “ready for war.” Celebrating the 70th anniversary of the ruling Workers' Pa</p>
Video: Jim Chanos on Tesla
Hedge Funds
<p>Is Tesla a great company? Billionaire short-seller Jim Chanos seems to think so, though he’s not quite convinced that it could take on the likes of BMW and GM yet, and apparently, that's where its stock is priced at right now.</p> <p>Photo: Fatima</p>
Video: Richard Thaler: The less attention you pay, the more money you’ll have
Asset Management
<p>&nbsp;</p> <p>Merryn Somerset Webb talks to author, academic and ‘father of behavioral economics’ Richard Thaler about pensions freedom, central bankers and fund management fees.</p> <p>This video first appeared in ValueWalk.<br /> Photo: Chatham House</p>
Daily Scan: Shanghai up over 3%; Yuan reaches two-month high on dovish pose at US Fed
Capital Markets
<p>Updated throughout the day</p> <p>October 12</p> <p>Good evening everyone. Chinese shares ended the session higher today amid speculation that Beijing will ramp up stimulus measures as the PBOC announced it would expand its relending pilot program. The Shanghai Composite surged 3.28%, while the Shenzhen Composite climbed 4.18%. Japan was closed but Singapore and Hong Kong were able to join the party:</p> <p> Hang Seng Index: +1.21%<br /> Hang Seng China Enterprises Index: +1.26%<br /> Straits Times Index: +1.04%</p> <p>Over in currencies, the yuan surged 0.42% today to hit a two-month high of 6.3187 a dollar. Emerging market currencies rallied over the past week in response to the Federal Reserve policy minutes, which revealed a very dovish attitude at the central bank. Oil prices continued their blitz  after the U.S. rig count fell for the fifth straight week. WTI gained 0.5% and Brent crude climbed 0.8%. Here’s what else you need to know:</p> <p>HK secondary market home sales hit 21-month low. The Hong Kong property market is feeling the heat again as home sales in the secondary market fell to a 21-month low of zero over the weekend. Sellers are reportedly willing to slash prices by as much as 5% at the moment, though buyers are still holding out for double-digit drops. SCMP (paywall)</p> <p>The prancing horse launches its IPO. After delaying its vaunted subsidiary’s offering earlier this year, Fiat Chrysler Automobiles announced that Ferrari has just launched its long-awaited IPO. The offering will see 17,175,000 of the prancing horse’s shares sold to the public, each valued between $48 and $52 per share. Fiat Chrysler Automobiles</p> <p>Kuroda: “Inflation dynamics is as we anticipated.” Bank of Japan Governor Haruhiko Kuroda dashed all hopes for an uptick in QE Monday. Kuroda told CNBC the bank can turn up monetary policy whenever necessary but “at this moment the inflation dynamics is as we anticipated.” The central banker also said  “unless oil prices decline further, the negative impact from oil will eventually dissipate, fade out, disappear and then 1 percent inflation is quite likely to come.” CNBC</p> <p>PBOC: market “correction” almost over. PBOC deputy governor Yi Gang, speaking at the IMF and World Bank meeting in Peru, was quoted saying that after several rounds of “corrections,” the Chinese stock market rout is “almost over.” Foreign and local investors, scrambling to take their capital elsewhere, missed the memo. Reuters</p> <p>Glencore to sell Chilean, Australian copper mines. The shares had halted trading in Hong Kong ahead of the announcement. Glencore is down 55% for the year; the mining and commodities giant is struggling to reduce $30 billio in debt. Last week, Glencore announced plans to dramatically reduce its zinc production. BBC</p> <p>China detains two more Japanese “spies.” In a move likely to strain its already troubled ties with Japan, China has detained two more Japanese nationals on susp</p>
Banks are more talk than action when it comes to innovation, survey shows
FinTech
<p>Banks are more talk than action -- at least that's what insiders are saying in a recent survey.</p> <p>In its quarterly State of Banking study, Bank Innovation reports that industry insiders rank themselves on innovation a mediocre 2.67 on a scale of 1 to 5 (5 is the best).  That's way below estimates in 2014 and 2013. But when it comes to perception, banks score very high on the innovation scale at 4.65.</p> <p>“Banks wants to be perceived as innovative, rather than actually innovate," one person told Bank Innovation.</p> <p>Success, by that measure, has arrived for the industry.</p> <p>The quarterly survey of 115 bankers, conducted last week, also asked where they saw the industry headed by 2020. The answers were all over the place. In other words, the crystal ball is cloudy.  Some predicted greater specialization while others saw more aggregation. More APIs were on the list. There was confidence and insecurity. Some stated they would remain "trusted advisors" while others expected greater competition from non-traditional sources. They also expected to deploy more analytics to customize products. And, of course, no list of the future would be complete without mention of blockchain technology -- something everyone calls revolutionary but have yet to figure out how to use.<br /> Photo: Nancy I'm gonna SNAP!</p>
Goldman touts Iran investment opportunity
Asset Management
<p>On the day last week when Israeli Prime Minister Benjamin Netanyahu was delivering a speech at the United Nations bemoaning the Iranian nuclear arms deal and those around the world “rushing to embrace and do business with a regime openly committed to our destruction,” a report from Goldman Sachs Group Inc (NYSE:GS) points to “The Awakening of Another Oil Giant” in Iran.</p> <p>Iran has "huge potential" but it is an investment wrapped in "significant uncertainty"<br /> The October 1 report asked the question, “Why focus on Iran,” then proceeded to answer: “Huge potential” that can be tapped but one that requires investors to do so in an environment of “significant uncertainty.”</p> <p>Iran possesses the 4th largest oil reserves in the world and largest gas reserves which has potential to be a key driver of global supply growth. Significant uncertainty remains, however, around the lifting of sanctions, the investment required in fields and infrastructure, and the framework to be put in place by the Iranian regime for international investment, the report noted.<br /> If sanctions are lifted, Iran could grow to fulfill nearly 25 percent of the expected global demand growth in 2016. Currently Iran accounts for 4.1 percent of global oil production and 5 percent of global natural case production.</p> <p>Unlocking Iran and its investment potential may take time and money<br /> However, don’t expect an investment in Iran to be an overnight success. “Growth may take time,” the report said, echoing a common investment pitch phrase that is most often followed by a call for cash. Such an investments is “requiring attractive contract terms and significant investment,” which Goldman estimates at $30 billion over 5 years. “There is potential for production growth far in excess of our base case, with the limiting factors ultimately being above ground issues, primarily around the level of investment that is incentivized. This potential growth could maintain pressure on oil prices, and delay the re-balancing of oil markets,” they wrote.</p> <p>The dropping price of oil is a concern for U.S.-based production, but those laws of gravity don’t necessarily apply to Iran, which has a much lower price of production. The report estimated that the average break even could be near $20 to $35 per barrel. With the price of oil hovering near $45, that appears as an attractive return on investment.</p> <p>This article was originally published by ValueWalk.<br /> Photo: </p>