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Daily Scan: Asia recovers without China, Europe rallies
Capital Markets
<p>Updated throughout the day</p> <p>September 3</p> <p>It appears calm was restored to Asia today as China focused on marching bands and rolling tanks, allowing investors to focus on upbeat US data. Tokyo ended 0.48% higher and Seoul ended up 0.02%. There were also comfortable gains for Singapore and Taipei.</p> <p>European stocks are also rallying as future data points to Wall Street holding on to its gains from the previous day. The market will no doubt be encouraged by a report by Automatic Data Processing and Moody’s Analytics that shows private payrolls in the US increased by 190,000 jobs last month. That said US shares still sit 8.5% their record high touched in May. So we have a ways to go.</p> <p>Here’s what else you need to know:</p> <p>Didi Kuaidi driver faces staggering 100,000 yuan fine. Beijing’s recent crackdown on car-hailing apps hit a new low this week as a Guandong-based Didi Kuaidi driver got slapped with a tremendous 100,000 yuan fine for allegedly “engaging in illegal transport activities and reaping illicit profits.” South China Morning Post </p> <p>U.K. services PMI falls to 27-month low. While that definitely sounds bad, it’s not. The U.K.’s highly-important services sector growth came in at 55.6 in August – its lowest reading since April 2013 – but well above the threshold separating growth from contraction. However, if you couple it with last month’s manufacturing data, things start looking a bit disconcerting, as Markit’s Chris Williamson said: “the three PMI surveys collectively are pointing to the weakest monthly expansion since May 2013.” Markit</p> <p>Eurozone PMI climbs to 54.3. Despite all the fragility and nastiness surrounding it, the Eurozone economy proved to be more than resilient to the storms of summer. Business activity in the region surged at its fastest pace in over four years, taking the final Markit Eurozone PMI from 53.9 in July, to 54.3 in August. Surprisingly, Spain was the largest contributor of economic growth, posting its second-highest expansion reading for the past eight and a half years. Markit</p> <p>S&amp;P cuts Glencore outlook to negative. As if things weren’t bad enough for the once-mighty Glencore, the ratings agency Standard &amp; Poor’s decided to slash its credit outlook rating from stable to negative. The current and continuing slump in commodity prices, seemed to be the main driver behind the move. Financial Times </p> <p>Japan services PMI surges to 22-month high. “Delicate” may been a favorite word to describe Japan’s economy but you’d never think that just by looking at their services sector. The Nikkei Japan Services PMI came in at 53.7 in August, more than two points higher than its July reading and at its highest level in nearly two years. New service provider growth apparently climbed at a robust pace, while business sentiment strengthened once again to reach a two-year high. Markit</p> <p>Australian retail sales surprise to the downside. After climbing 0.6% in June, retail sales down under fell 0.1% in July, notching up its first fall since June 2014 and surprising analysts </p>
Daily Scan: Beige book suggests economy strengthening; stocks end on positive note
Capital Markets
<p>Updated throughout the day</p> <p>September 2</p> <p>The stock market clawed back some of its losses Wednesday after the royal rout on Tuesday. Both the Dow Jones Industrials and the S&amp;P 500 ended about 1.8% higher; the Nasdaq jumped 2.5%. Helping clinch the day's returns: The Federal Reserve's Beige Book -- a survey of local districts -- pointed to expansion, including "wage pressures" in several areas.  That report overshadowed the initial ADP jobs numbers, up only 190,000 jobs in August, falling short of the 215,000 expected in the private sector. Factory orders were up for the second straight month, boosting manufacturing 0.4%. Crude oil inventories grew by 4.7 million barrels last week. U.S. crude imports were up by 656,000 barrels/day. The supply numbers weren't as bearish as some had expected, plus the Beige Book report helped lift crude prices to $46.</p> <p>Here’s what else you need to know:</p> <p>Chinese naval ships off Alaskan coast. Three Chinese combat ships, a replenishment vessel, and an amphibious ship moving toward the Aleutian Islands. It's the first time Chinese ships have been spotted in the area. Wall Street Journal</p> <p>Hillz wins Puerto Rican support. New York City Council Speaker Melissa Mark-Viverito has endorsed Clinton for president, ahead of Clinton's first trip to Puerto Rico this weekend. Clinton supports the island declaring bankruptcy and restructuring its $58 million debt. CNN</p> <p>Obama winning Iran deal. Maryland Democratic Senator Barbara Mikulski is backing President Obama's nuclear deal with Iran. Mikulski is the 34th vote, making it impossible for the GOP to kill the deal in Congress. Politico</p> <p>Lego is world's biggest toy maker. The Danish Lego had a 23% sales increase for the first half of 2015, while Mattel was hit with a 5% drop. "The Lego Movie" as well as special sets for Star Wars, Jurassic Park, and others have boosted the toy maker to world domination. Financial Times (paywall)</p> <p>Trouble ahead? China cracks down on "grey market" margin lending. Beijing is putting the kibosh on the non-bank market, estimated to be 1 trillion yuan ($160 billion). The goal may be to stop stock manipulation but the result could be a liquidity crisis. Reuters (h/t Quartz)</p> <p>Beijing wouldn't let the stock market rain on its parade. That parade, of course, has long been in the making to mark the end of World War II. A stock market slump just wouldn't do. So Beijing worked its magic, turning a 4.7% collase on the Shanghai Composite into a 0.2% barely-there loss. Ditto the more volatile Shenzhen Composite, which trimmed its 4.8% drop to down 1.98%. Hong Kong’s Hang Seng Index and Japan’s Nikkei Average meanwhile, slipped 1.18% and 0.39% respectively.</p> <p>China sharpens the competition to the World Bank. Sources say the Asian Infrastructure Investment Bank will not ask borrowers to privatize or deregulate -- unlike the World Bank. The </p>
Ex-Merrill president leads dining revolution
Lifestyle
<p>Ahmass Fakahany once led board rooms and managed billions of dollars, now he oversees the restaurants his former peers frequent.</p> <p>Fakahany, who left Merrill Lynch in 2007, and chef Michael White own the Altamarea Group of restaurants, reports Business Insider. In Altamarea's flagship Italian restaurant Marea on Central Park South one can spot hedge funder Dan Loeb, or Bill Ackman, or Goldman Sach's Lloyd Blankfein. The model for Marea is clean and simple; class without the frills; quality without being ostentatious. Post-financial crisis, if you will.</p> <p>That simple sophistication has been a success, so much so that Altamarea just opened its biggest location yet on the Upper East Side of Manhattan. The French Vaucluse serves up escargots, duck and pork terrine, and plenty of truffles. The company now has a total 16 restaurants around the world. Annual revenue has grown from about $3 million in 2008 to more than $50 million. Writes Business Insider:<br /> “Well, he’s certainly mastered Italian, so I’m anxious to see what Michael can do with French cuisine," said Jim Chanos, founder of short-biased hedge fund Kynikos Associates.<br /> The Egyptian-born Fakahany dreamed of a hospitality career while working for Merrill around the world. He started the Merrill Lynch wine collection, and set the entertainment standards for the bank's meetings and dinners. Fakahany met White while dining with clients at the former Soho restaurant Fiamma, and the two hit it off. Since then, the team has hired other reformed-Wall Streeters for their team, such as CFO Arthur Li, who previously worked at J.P. Morgan and in private equity at Wasserstein &amp; Co. It doesn't hurt to be be able to identify with the clients.<br /> Photo: Krista</p>
UBS: What traders should be watching in September
Capital Markets
<p>In a new report, UBS analyst Julian Emanuel previewed what U.S. equity investors can expect during the month of September. According to Emanuel, it’s likely going to be a bumpy ride.<br /> August Recap<br /> The month of August was one of the most eventful months in recent years. Emanuel pointed out that the stock market has been particularly scary during the late-summer months since 2007.</p> <p>In 2007, it was the Great Quant Meltdown; in 2011, it was the U.S. Debt Ceiling crisis; in 2012, it was the European Crisis; in 2013, it was the Taper Tantrum and now this year it has been China’s currency devaluation.</p> <p>On top of China concerns, the S&amp;P 500 now faces pressure from the Federal Reserve, which indicated its continued willingness to raise interest rates at the August Jackson Hole event.</p> <p>Related Link: The Bull Case For Bearish China ETFs<br /> September Market-Movers<br /> Read more at Benzinga.</p> <p>&nbsp;</p>
Daily Scan: China rules the markets, even on a day off
Capital Markets
<p>Updated throughout the day</p> <p>September 2</p> <p>Good morning.  We present you with the China edition of the Daily Scan. These days, China rules the U.S. and European markets almost more than local data. That should make for an interesting Federal Reserve policy meeting later this month. Still, it is jobs' weeks and let's gather up some energy to pay attention to what's going on in our own back yard. U.S. stocks were climbing their way back up Wednesday morning after falling Tuesday. The Dow and Nasdaq both gained about 1% by midday. The S&amp;P 500 climbed 0.76%. The initial ADP report shows that businesses added 190,000 jobs in August, falling short of the expectations of 215,000 jobs added. Factory orders are up for the second straight month, boosting manufacturing 0.4%. Crude oil inventories grew by 4.7 million barrels last week. U.S. crude imports were up by 656,000 barrels/day. Also on the calendar: the Fed's Beige Book report on how different economic districts are faring (2 p.m.).</p> <p>Here’s what else you need to know:</p> <p>Chinese naval ships off Alaskan coast. Three Chinese combat ships, a replenishment vessel, and an amphibious ship moving toward the Aleutian Islands. It's the first time Chinese ships have been spotted in the area. Wall Street Journal</p> <p>Hillz wins Puerto Rican support. New York City Council Speaker Melissa Mark-Viverito has endorsed Clinton for president, ahead of Clinton's first trip to Puerto Rico this weekend. Clinton supports the island declaring bankruptcy and restructuring its $58 million debt. CNN</p> <p>Obama winning Iran deal. Maryland Democratic Senator Barbara Mikulski is backing President Obama's nuclear deal with Iran. Mikulski is the 34th vote, making it impossible for the GOP to kill the deal in Congress. Politico</p> <p>Lego is world's biggest toy maker. The Danish Lego had a 23% sales increase for the first half of 2015, while Mattel was hit with a 5% drop. "The Lego Movie" as well as special sets for Star Wars, Jurassic Park, and others have boosted the toy maker to world domination. Financial Times (paywall)</p> <p>Trouble ahead? China cracks down on "grey market" margin lending. Beijing is putting the kibosh on the non-bank market, estimated to be 1 trillion yuan ($160 billion). The goal may be to stop stock manipulation but the result could be a liquidity crisis. Reuters (h/t Quartz)</p> <p>Beijing wouldn't let the stock market rain on its parade. That parade, of course, has long been in the making to mark the end of World War II. A stock market slump just wouldn't do. So Beijing worked its magic, turning a 4.7% collase on the Shanghai Composite into a 0.2% barely-there loss. Ditto the more volatile Shenzhen Composite, which trimmed its 4.8% drop to down 1.98%. Hong Kong’s Hang Seng Index and Japan’s Nikkei Average meanwhile, slipped 1.18% and 0.39% respectively.</p> <p>China sharpens the competition to the World Bank. Sources say the Asian Infrastructure Investment Bank will not ask borrowers to privatize or deregulate -- unlike the World Bank. The White </p>
Beverly Hills 90210 star pad up for $2.9m
Lifestyle
<p>Remember the 90's teen drama Beverly Hills, 90210? If so, there is chance you will remember Luke Perry who played the show’s bad-boy heartthrob Dylan McKay. Well, Perry is selling up.    </p> <p>Perry (now a 48-year-old father of two, feeling old yet?) has put his home up for sale for $2.9 million. Unfortunately it's not in Beverly Hills but in LA’s Hancock Park. </p> <p>According to Trulia, Perry’s five-bed, four-bath, 4,062-square-foot Mediterranean-style enclave is situated in a very private estate that features an expansive backyard, a large heated pool, and a separate three-car garage.<br /> Photo: Susumu Komatsu</p>
Direct fund sales surge in Asia
Asset Management
<p>Banks are having a tough time. They are pilloried by the public and punished by regulators, but the biggest threat to their prosperity is technology.</p> <p>Already challenged by online payment platforms and alternative lenders, banks are having another source of reliable income eroded. They can’t count on the fees they’ve collected for years from selling mutual funds. Instead, more and more people are dodging the middleman and investing directly online.</p> <p>The shift is well-established in the UK, and now momentum is picking up in Asia, writes AsianInvestor. Banks had a 63.3% share of mutual fund sales in 2012 and 59.9% in 2013, but by the end of 2014 it had dropped to 48% in the region. Meanwhile the slice of the pie grabbed by direct sales grew from 10.9% in 2012 to 12.4% in 2013 and swelled to 16.2% last year, according to a report by Cerulli Associates, a leading research firm specializing in asset management and distribution analytics.</p> <p>“There is a global trend towards robo-advice, business-to-business platforms and, more recently, direct-to-consumer platforms,” it concluded.</p> <p>Commissions – in plain language, bribes – are paid to banks by the big asset managers to distribute their funds and give them a marketing edge over rivals. Clearly there is a conflict of interest, as a salesman is unlikely to misalign his investment advice with an easy payday.</p> <p>But, the public really aren’t mugs when given a choice. In China, Tianhong Asset Management partnered with Alibaba’s payment system Alipay to launch the Yu’E Bao money market fund in June 2014. It was the country’s first internet fund and now Tianhong has more assets under management than any of its competitors.</p> <p>Elsewhere, regulators are pressing the advantage home that technology can give them over powerful banks. The Australia Stock Exchange-led mFund Settlement Service allows investors to buy and redeem units in unlisted funds directly through a stockbroker, Fund Online Korea is an online supermarket that offers 900 products with low-management fees and it won’t be long before Hong Kong has its own platform in place.</p> <p>In the past, banks lobbied successfully for free-wheeling disintermediation in financial services and prospered mightily. It would be ironic if new technologies lead them to protect their own vested interests by lobbying for prudence.<br /> Photo: New York Playhouse</p>
India joins the global push to bring digital cash to the poor
FinTech
<p>The world’s second most populous country, India, has joined a global initiative to bring digital money to emerging economies.</p> <p>The initiative is called the Better Than Cash Alliance and it is backed by a group of development organisations, foundations and private firms like Citi and Visa.</p> <p>The idea is to bring digital money and financial services to countries like India where the vast majority its impoverished population are unbanked.</p> <p>This mission chimes well with the Indian government’s financial inclusion program; an ambitious effort led by Prime Minister Narendra Modi to make sure every Indian household is covered with a bank account in a matter of months.</p> <p>The government - which is targeting those people who typically do not hold accounts: women, small farmers, and laborers - claims it has helped see 175 million new accounts opened with deposits of more than $3.4 billion.  </p> <p>By joining the alliance, the government says it will have access new research, technology, and policy partners as it seeks to exploit new ways of shifting the population toward banking a electronic payments.</p> <p>Which is no doubt fantastic for India’s rural poor, but even better news for the people they will be banking with.<br /> Photo: Sistak via Flickr</p> <p>&nbsp;</p>
96% of Chinese mutual funds were profitable in H1
Asset Management
<p>Here’s an interesting data point. According to Asia Asset Management, 2483 out of the 2593 registered mutual funds currently in China were profitable during the first half of the year.</p> <p>And not only that, the entire group apparently raked in a whopping $138 billion in revenue during the same time frame, almost $60 billion more than what the industry made in 2014.</p> <p>The three biggest winners appeared to be Shanghai-based China Universal Asset Management, which cashed in 46.7 billion yuan in earnings, the Deutsche Bank-backed Harvest Fund Management, which pulled in around 58 billion yuan in profits, while China Asset Management Co – otherwise known as China AMC – lorded above them all with an impressive 60.4 billion yuan in revenue.</p> <p>Granted, the Shanghai Composite did climb over 50% by mid-June, so even the most outright beta huggers should have came in deep in the black, but still, an impressive showing nonetheless.</p> <p>Everything kinda went downhill since that mid-June peak though, so it’d be interesting to see how the group fares during the second half. Unfortunately, Z-Ben Advisor’ Shichen Liu gave Asia Asset a pretty grim assessment:<br /> “Though [the] China Securities Regulatory Commission (CSRC) asked [the] China Securities Finance Corporation (CSF) and Central Huijin [Investment] to save the market, it [has] just simply slowed the drop of [the] stock market. However, [the] SHIBOR (Shanghai Interbank Offered Rate) (overnight)) has been increasing since July, which indicates that money market funds would have higher returns in the second half. The overall performance will still see a large decline compared to the first half [figures].”<br /> I wonder what happened to the 110 that didn’t make it, did they get caught by the sell-off? Curious what you guys have to say.<br /> Photo: Anthony Kelly</p>
Private instant messenger service thumbs its nose at critics
FinTech
<p>Symphony, a messenger software for the banking sector, has taken a lot of flak recently. Backed by around fifteen large banks, the encrypted service had more than a few fans in the financial sector.</p> <p>Regulators hate it. The American Banker reports that Senate Banking Committee member Elizabeth Warren, among others, has come out saying the service would compromise regulators ability to stamp out fraud, and facilitate shenanigans like the Libor rate-rigging scandal. </p> <p>Symphony’s CEO David Gurle - who has had numerous meeting with US officials - appears unfazed by critics’ regulatory sabre-rattling and insists the service will go ahead with its planned September 15 launch. </p> <p>But he is going to have to convince the nay-sayers of Symphony’s merits to shift the focus away from its users. David Weiss, senior analyst at Aite Group, had this to say:<br /> "These are shots across the bow at Symphony's investors, whom they perceive as bad actors, not at Symphony itself. There's no regulatory oversight of Symphony as a company by any of these folks."<br /> Photo: Eleazar</p>