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Asia-Pacific family offices are making it rain
Asset Management
<p>Family offices in the Asia-Pacific region are killing it this year, and guess who they have to thank for it? Private equity.</p> <p>The Australian reports that large holdings in private equity helped Asia-Pacific family offices chalk up the second-best performance of the sector this year, racking up an average 6.3% return bested only by their European counterparts.</p> <p>Why private equity? As sexy as hedge funds sound, private equity has been their investment of choice largely due to the strategy’s transparency and element of control. Here’s what one family office chief had this to say about it:<br /> “We would rather take bets on ventures that we are involved with, because that’s a variable we can control. We can control the management, we can control what we build, we can control the quality, we can control the client service.’’<br /> Unsurprisingly, Asia-Pac family offices also have a predilection for developing market equities, a bias not shared by their European and North American counterparts. Given the asset class’ tendency to produce great returns in good times, it’s probably a huge driver of their returns too.</p> <p>That said, all these returns come at a hefty price:<br /> “Asia-Pacific offices continue to have the highest total operating costs regionally at 115 basis points due to their pursuit of growth- based strategies. This has increased the cost of operating the family office and the fees paid to external managers.</p> <p>Offices in Asia-Pacific remain the most costly to operate and those in Emerging Markets (Africa, Latin America and the Middle East) remain the least expensive.’’<br /> Photo: elycefeliz</p>
Hedge funds got spanked in September
Hedge Funds
Bill Ackman isn’t the only one having a bad year, it turns out, David Einhorn, John Paulson, and a few other heavies took a bath in the third quarter as well. According to Reuters, equity players such as David Einhorn and Dan Loeb both chalked up losses in September. Einhorn’s Greenlight Capital apparently lost 3.6% last month, while Loeb’s Third Point
In 2015, volatility from a phantom rate hike
Capital Markets
Many investors are familiar with the adage, “they don’t ring a bell,” to warn when it is time to get in or out of an investment. Well, sometimes they do, or so the famed scientist Ivan Pavlov would likely contend. The physiologist trained dogs to salivate at the sound of a bell, having conditioned them to associate the bell with
Daily Scan: Global shares skyrocket; Worldwide manufacturing dips
Capital Markets
<p>Updated throughout the day</p> <p>October 1</p> <p>Good evening everyone. Japanese shares may have clipped some of its gains today but there was just no stopping the Nikkei and the Topix from trying to reach orbit. Buoyed by stimulus hopes and a better than expected Chinese PMI reading, the two indices brushed off the disappointing Tankan survey to finish up 1.92% and 2.24% respectively. Real estate, financial, and precision instrument shares posted most of the gains. Hong Kong and China exchanges were closed for a holiday.  South Korea gained 0.84% and Singapore 0.98%.</p> <p>Over in Europe, shares are trading markedly upbeat too. The U.K.’s FTSE 100 is currently up 1.5%, led by – get this – Glencore. Glencore had plunged 29% on Monday as investors fled the debt-laden commodities producer. Over the past three trading sessions, Glencore has virtually wiped out that loss as management defended the company's viability, sharing strategies to tackle its debt load. Germany’s DAX rose 1.3% and France CAC gained 1.6% respectively. Not a bad way to start the fourth quarter.</p> <p>Here’s what else you need to know:</p> <p>Chances of Korean rate cut “diminished.” The nation’s exports may have slid for the ninth consecutive month (it fell 8.3% in September), but a rebound in domestic demand has placed Korea’s economy well on the path to recovery – killing hopes for another rate cut. “Exports are not a direct factor for central bank policy consideration and therefore I think the case for an interest rate cut has diminished.” SCMP (paywall)</p> <p>Spanish manufacturing falls to 21-month low. In the latest episode of Markit’s attack of the PMI’s, the Spain Manufacturing PMI came in at a 21-month low last month despite continued growth in production. The nation’s PMI reading came in at 51.7, a marked dip from its 53.2 showing the previous month. That's still above the threshold separating contraction and expansion. Unlike China’s. Markit</p> <p>Indian manufacturing loses steam. Despite seeing input costs fall for the second-straight time, India’s manufacturing sector dipped to a seven-month low in September, a showing that could stymie prime minister Modi’s “Make in India” campaign. The Nikkei India Manufacturing PMI number this month was 51.2, a point and a tenth lower than August’s 52.3 reading. Looking ahead however, Markit’s Pollyanna De Lima had this to say:  “The region's growth prospects for the July-September quarter are encouraging. According to PMI data, the manufacturing sector looks set to provide a stronger contribution to GDP than it did in the April-June quarter.” Markit</p> <p>Caixin PMI hits 6 ½ year low. The National Bureau of Statistics’ official PMI reading may have come in higher, but Caixin’s independent survey was a lot less optimistic. Caixin China General Manufacturing PMI slipped to 47.2 in September, down from its 47.3 reading in August. It was better than expected though, so it wasn’t that bad. Markit</p> <p>Tankan numbers tank. The Bank of Japan's quarterly Tankan large manufacturer’s index, one of the most highly watched indicators coming out of Japan, tumbled to 12 for the third quarter, missing an estimated 13 reading and falling below the last quarter’s 15 figure. Outlook for the sect</p>
Sotheby's to auction Jack Ma's first oil painting
Lifestyle, 4:01
<p>Alibaba founder Jack Ma isn't satisfied just being a business man. Ma is also an artist.</p> <p>Ma's first oil painting will be sold by Sotheby's in a Hong Kong sale this fall, reports Yibada. The painting, called "Tao Hua Yuan," has been tagged between $194,000 and $323,000. Ma previously sold his own "Ma-style painting" for $312,000 in a charity auction in 2013.</p> <p>Ma didn't work alone on this most recent oil painting. Artist Zeng Fanzhi collaborated with the entrepreneur in applying and scraping layers of paint to create the three-dimensional piece.<br /> Photo: Melies the Bunny<br /> &nbsp;</p>
Daily Scan: Stocks rise Wednesday but suffer worst quarter in four years; Government avoids shutdown
Capital Markets
<p>Updated throughout the day </p> <p>September 30</p> <p>Good afternoon.  U.S. stock markets rose Wednesday, but notch the worst quarter in four years, with the Dow Jones Industrial Average tumbling 7.6%. The Dow gained 1.5% on Wednesday, the S&amp;P 500 added 1.9%, and the Nasdaq added 2.3% after Chinese consumers registered a surprising amount of confidence in the economy. The Westpac MNI China Consumer Sentiment Indicator rose to 118.2 in September from 116.5 in August -- the best reading since May 2014. European markets rose about 2% on the report, shrugging off news that deflation was back as prices dropped 0.1%, largely the result of cheaper oil. Oil continues to hover just over $45/barrel.  On the schedule today:  at 7 p.m. Fed governor Lael Brainard will also address the St. Louis community banking conference. The economic fodder of the week: the jobs report for September, to be published Friday at 8:30 a.m. ET.</p> <p>Here's what else you need to know:</p> <p>Shutdown averted. The U.S. Senate approved a temporary spending measure, averting a government shutdown. The government will continue operating through Dec. 11 as Congress continues to debate funding policies. New York Times</p> <p>Janet Yellen says little during Wednesday speech. At a meeting for the Conference of State Bank Supervisors, Yellen refrained from commenting on the U.S. economy or monetary policy. Instead, she said small banks are "essential" to the economy and the Fed is working to not overburden community banks. Reuters</p> <p>U.N. raises Palestinian flag for the first time. At the ceremony in New York, President of the Palestinian Authority Mahmoud Abbas  repudiated the Oslo Accord, signed in 1993, saying Israel had violated the accords. Israeli Prime Minister Benjamin Netanyahu called Abbas' remarks "deceitful." In 2012 Palestine joined the Vatican with "non -member observer" status at the U.N. CNN</p> <p>M&amp;T Bank acquisition approved. The Federal Reserve approved M&amp;T's acquisition of Hudson City Bancorp after more than three years of regulatory review. The $3.7 billion deal is the longest-delayed U.S. bank deal of more than $100 million. Wall Street Journal (paywall)</p> <p>The MSCI Asia ex-Japan Index collapsed 19% in 3Q. China notched its worst quarter since 2008, losing roughly 29% since the start of July. Currencies also got slammed. Malaysia's ringgit tumbled 14% in the quarter and is off 26% year-to-date. The one bright spot: China's auto industry, which surged after the government halved sales taxes on small-engine cars. MarketWatch </p> <p>Volkswagen may evade criminal charges. VW has admitted to tampering with emissions tests to pass tough regulations for 11 million vehicles. The German carmaker may benefit from a legal loophole but the Justice Department is trying to figure </p>
Will Kyle Bass’s win lead to more hedge fund patent challenges?
Hedge Funds
<p>As the sting of hedge fund manager Martin Shkreli’s Turing Pharmaceuticals raising the price of a lifesaving cancer drug from $13.50 per tablet to $750, comes a victory for hedge fund manager Kyle Bass, who is challenging pharmaceutical patents and says his actions will lower drug prices.<br /> U.S. Patent and Trademarket Office rules with Kyle Bass<br /> In a victory for Bass, a tribunal at the U.S. Patent and Trademark Office was reported on Friday to have denied a request by Celgene Corp to sanction Bass and his Coalition for Affordable Drugs by throwing out their challenges to its patents.</p> <p>In an odd-twist on the Robin Hood concept, Bass had taken short positions in various drug companies and then challenged the validity of their patents, which as of Friday’s ruling will proceed in court. His actions could benefit consumers by making drugs cheaper, but at the same time enriching his hedge fund. The goal of the $2 billion Dallas-based Hayman Capital Management was to lower drug prices and profit on it in the process.</p> <p>"Profit is at the heart of nearly every patent," the Patent Trial and Appeal Board (PTAB) said in dismissing Celgene’s argument, noting that short selling was legal and regulated. "As such, an economic motive for challenging a patent claim does not itself raise abuse of process issues."</p> <p>What will the fallout be from the Kyle Bass victory?<br /> In July Celgene claimed Bass was abusing the patent review process when he sold shares in the firm, profiting when the price dropped when a patent review is filed. If this hedge fund investment tactic is not deterred, other Hedge Funds could begin using patent reviews as part of an active investment strategy.</p> <p>In a statement to Reuters, a spokeswoman for Hayman Capital Management the PTAB can now turn to evaluating "challenges to Big Pharma patents that contribute to out of control prescription drug prices."</p> <p>While hedge fund managers are sometimes painted as the black hats in societal discourse, this case raises the question: is it possible for a hedge fund manager to engage in positive acts for the general population (in this case by lowering drug prices) and still make a profit? What is the implication of the ruling going forward? Could it impact research and development spending? Could this ruling lead to additional moves by hedge funds to challenge patents? We will watch the issue closely.</p> <p>This article was originally published by ValueWalk. <br /> Photo: ValueWalk</p>
Sold for $442m, how does Business Insider rank in the content boom?
Venture Capital
<p>VC-backed media outlet Business Insider has just been sold to German publisher Axel Springer (fresh from its failed bid for the Financial Times) in a deal valuing the business at $442 million.</p> <p>Springer - which held a 9% stake in the business via Axel Springer Digital Ventures - was one of 24 investors to back the content startup, according to CrunchBase.</p> <p>The others included the likes of RRE Ventures, Marc Andressen, Kohlberg Ventures , International Venture Partners , and notably Amazon CEO Jeff Bezos, who is reportedly retaining his stake.</p> <p>Business Insider managed to secure a healthly valuation but its not the largest in the recent content boom. A recent report by CB Insights ranked it ninth in a list of the largest valuations in the news and media space today.</p> <p>Many of these companies can be classed a startups, with venture capital firms and strategic investors funneling a reported $800 million into digital new and media start-ups over the past year.</p> <p>Vox Media and BuzzFeed are among those to reach unicorn status, putting them ahead of such old guard media giants as Forbes and the Washington Post. Here is CB Insights' media valuation ranking in full:</p> <p> Vice (2.5b)<br /> SNL ($2.23b)<br /> BuzzFeed ($1.5b)<br /> The Economist ($1.46b)<br /> Financial Times ($1.31b)<br /> Vox ($1b)<br /> Merger Market ($624m)<br /> Forbes ($475m)<br /> Business Insider ($442m)<br /> Refinery29 ($290m)<br /> Washington Post ($250m)<br /> ZY ($120m)<br /> .Mic ($100m)<br /> The Boston Globe ($70m)</p> <p>Photo: NexChange</p>
IMF warns of huge emerging market defaults
Capital Markets
As if the US Federal Reserve doesn’t have enough to weigh up as it vacillates about raising interest rates. The International Monetary Fund (IMF) has added another factor to the mix. Yesterday, it warned that higher US interest rates could cause a wave of default by companies in emerging economies and panic in global financial markets as liquidity evaporates, reports
Alibaba ups its stake and pumps $680m into India's Paytm
Venture Capital
<p>Alibaba has made yet another incursion into Indian e-commerce, chucking $680 million at Indian payments firm Paytm - alongside its financial affiliate Ant Financial - bringing their stake to 40%.</p> <p>Alibaba and Ant Financial are now the largest shareholders of One97 Communications, the firm behind Paytm, which is now valued at $3.4 billion, the Economic Times reports.</p> <p>Paytm offers a mobile wallet app, online phone credit recharge, and a shopping service. Its been working on synergies with Alibaba since the Chinese e-commerce giant first invested in February.</p> <p>The Indian payments firm has seen its services used by a number of big players in India's burgeoning e-commerce space including Uber and Snapdeal, another Alibaba investment.</p> <p>The firm was also part of a consortium - which also included SoftBank - that pumped $500 million into Snapdeal last month. It looks like Alibaba now has a formidable potion in the sector.</p> <p>&nbsp;</p>