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Opportunities for Asia's private bankers
Asset Management
<p>Asia’s wealth management scene is competitive, fluid and expensive. Cost-to-income ratios in Hong Kong are more than 70%, almost double the proportion in Western Europe, as blue chip private banks fish for talent in a small pool of relationship managers with networks among China’s new rich.</p> <p>The bait is a big salary and juicy benefits; the reward for the banks are connections to the world’s fastest growing market of high net worth individuals, according to the latest Capgemini and RBC Wealth Report 2015.</p> <p>However, single- and multi-family offices are gaining traction within Asia, undermining the strategies of the leading banks who argue that scalability is essential to survive. Experienced staff see an opportunity to use their contacts to set up on their own or join a niche, more focussed firm with a realistic expectation of even higher compensation as well as greater independence.</p> <p>Kenneth Ho, the former head of Julius Baer’s investment solutions group in Asia Pacific is the latest high profile banker to make the move. At the beginning of this month, he joined US-based Carret Asset Management where he is tasked to set up an Asian multi-family office, reports AsianInvestor.</p> <p>He is looking to buy independent asset managers in Hong Kong and Singapore, and might also form a private equity fund.</p> <p>In September, another private banking veteran, Stephen Repkow quit Union Bancaire Privée to launch an independent platform in Singapore that will serve both as an external asset manager and a multi-family office.</p> <p>If more bankers strike out for independence then, of course, the talent pool for the big wealth managers will become even shallower. They will have to offer larger salaries and bonuses which will push the cost-to-income ratio higher so that eventually head office must wonder: why bother?<br /> Photo: Mart</p>
China's taste for red
Lifestyle, 4:01
<p>Everyone knows that a Parisian instinctively reaches for a bottle of Merlot to quench his thirst and that French babies are weaned on the juice. But, astonishingly France is no longer the biggest consumer of red wine.</p> <p>Last year, the Chinese overtook the French, guzzling almost 1.9 billion bottles of plonk and are now set to become the world’s leading winemakers, according to The Little Red Book published by Week in China.</p> <p>“Xi Jinping’s campaign against free-spending officials has hit China’s fine wine salesmen hard, with purchases of expensive bottles all but drying up. But there’s a silver lining to the slowdown as millions more consumers choose to drink more affordable wine for the first time,” say the authors.</p> <p>The boom in the best vintages is apparently subsiding, and the industry is now excited by the start of a new era for wine in China as drinkers opt for cheaper – and no doubt more hangover-inducing - brands.</p> <p>And China’s much reported anxiety about food security and farmland scarcity seems to subside after a couple of glasses.</p> <p>The Chinese have more than doubled the amount land devoted to the vine during the past 15 years and claim to have almost 11% of the global grape area, according to the International Organization of Vine and Wine.</p> <p>But, like China’s GDP figures, these numbers are a bit misleading. A large portion of the country’s new vineyards hasn’t reached production and much of the harvest in the short-term is likely to end up as table grapes and raisins.</p> <p>So that’s good news for international wine firms. Ganbei.<br /> Photo: F Delventhal</p>
Weekend Scan: Risk on pushes major bourses higher; Europe's refugee crisis worsens
Capital Markets
<p>October 17, 2015</p> <p>Good day.</p> <p>Major world stock markets enjoyed strong gains throughout the week, closing at two-month highs on Friday. Investors absorbed a raft of quarterly earnings announcements in the US which in the end contained few negative surprises. Earlier caution gave way to confidence, boosting share prices on most global bourses.</p> <p>China A-shares were the stellar performer, surging more than 6% during the week on hopes of further stimulus measures. The same expectation in Japan too pushed the Nikkei 225 index over 3% higher.</p> <p>For a change, traders also turned their attention away from speculation about US interest rates and instead were encouraged by hints from European Central Bank (ECB) officials that they would inject more liquidity into a still moribund European economy.</p> <p>The prospect of further ECB quantitative easing provided support for the US dollar against both the euro and the yen. Meanwhile, oil prices staged a rally as traders covered short positions</p> <p>Stocks in major world markets rose to a two-month high on Friday and the dollar ticked up, boosted by views that the European Central Bank may provide more stimulus to the euro zone economy.</p> <p>Here’s what else is happening in the world:</p> <p>Hungary closes its border with Croatia to stem migrant flow. Europe’s refugee crisis continues with Hungary erecting razor wire fences against the tide of hapless people escaping from worn-torn Syria and Iraq. Hungary has been the gateway to their transit to Germany and Austria, and Croatia says it will now direct them to Slovenia instead. BBC </p> <p>Palestinian-Israeli fighting ignites again. After weeks of  fighting between Palestinians and Israeli soldiers that has claimed several lives, a group of Palestinians set fire last night to a compound housing Joseph's Tomb, a Jewish religious site in the West Bank. Both Palestinian and Israeli authorities condemned the act.</p> <p>UN corruption scandal. A US judge set bail at $50 million for Ng Lap Seng, a Macau property tycoon, accused of orchestrating an alleged bribery scheme involving United Nations officials. Prosecutors want to keep him in jail and are considering an appeal because they consider him a flight risk. WSJ (paywall)</p> <p>Europe and Russia plan trip to assess settlement on the Moon. European and Russian space agencies intend to send a robotic lander to the Moon's South Pole to determine the feasibility of permanent settlement. It is not a sci-fi fantasy. Luna 27 will embark in five years’ time and the project’s scientists are confident that in future this largely unexplored area will be an outpost of human civilisation. BBC </p> <p>Barclays plans further investment banking job cuts. The new chief of the UK lender Jes Staley plans to speed up reductions in staff levels in its troubled investment banking business and focus on its “core markets”. Does that mean more branches on UK high streets or simply slashing the wage bill? Financial Times (paywall)</p> <p>Goldman Sachs fires cheating analysts. About 20 analysts have been fired from Goldman's New York and London offices for cheating on internal tests. The tests are firm specific, and not regula</p>
ETF industry needs major reform: SEC’s Aguilar
Asset Management
<p>It looks like the ETF industry is under the gun. Securities and Exchange Commission officials held a meeting of the Investor Advisory Committee in Washington, D.C. on Thursday, and began to lay out the case for reform in the ETF industry. In specific, SEC Commissioner Luis Aguilar outlined the kind of questions they’re asking in their inquiry regarding the rapidly-growing exchange-traded funds market.</p> <p>Questions about the ETF industry began to emerge after August 24th, an extremely volatile trading day and he worst session for U.S. stocks in four years. August 24th witnessed multiple halts in both stocks and ETFs, stoppages that short-circuited the arbitrage mechanism of ETFs and led to ETF prices plunging well below the indexes they’re designed to track for a short period of time. The major glitch in the system was a painful lesson for investors and has brought regulators attention to a number of problems with overlapping market rules implemented following the 2010 “flash crash”.</p> <p>Statement from SEC Commissioner Aguilar about ETFs<br /> Commissioner Aguilar did not beat around the bush in his speech at the SEC committee meeting. He made his agenda clear in his introduction: “Why ETFs proved so fragile that morning raises many questions, and suggests that it may be time to reexamine the entire ETF ecosystem.”</p> <p>In his remarks, Aguilar raised four general questions about the events of August 24th.</p> <p>1) Should ETFs have industry-specific volatility curbs? Do so-called limit up/limit down volatility bands need to be updated? Should market-wide circuit breakers factor in the number of securities that are currently halted?</p> <p>2) Should rules for “clearly erroneous” trades be reformed?</p> <p>3) What roles should exchanges have in ETF trading?<br /> 4) How can market makers be more incentivized to stay in the market during times of extreme volatility?</p> <p>Democratic SEC Commissioner Aguilar also went on to argue that the commission needed to ask bigger, even existential questions about the ETF industry and its very rapid growth, including the issue of whether the growth needed to be curtailed. Here, he outlined four general areas for consideration:</p> <p> How does the growth of ETFs and their gradual movement into less liquid asset classes challenge the effectiveness of the ETF arbitrage and pricing mechanisms?<br /> Are sophisticated traders able to exploit inefficiencies in the pricing mechanisms of less liquid ETFs and exploit retail investors?<br /> Should alternative pricing methods for less-liquid ETFs, such as so-called NAV-based trading, where ETFs are traded at a specific premium or discount to the ETF’s net asset value, be allowed?<br /> Should the growth of ETFs be limited to protect investors and the entir</p>
Seasonal style tips from Savile Row legendary tailor
Lifestyle, 4:01
<p>How does the world remember Paul Wolfovitz from the World Bank? What first came to your mind after seeing his name? Holes in his socks that were exposed during his visit to a mosque in Edirne, Turkey?</p> <p>Of course he did a lot to fight poverty around the globe, but because of the staggering contrast of his high up position vs. poor wardrobe maintenance, he remains a subject of jokes about a banker with holes in his socks, putting into question his professional abilities, writes FinBuzz.</p> <p>It’s no secret that one’s wardrobe should reflect professional achievements, but how to achieve that if you have no time to learn about style?</p> <p>Brian Lishak, co-founder of the bespoke tailoring house Richard Anderson at 13 Savile Row tells you exactly what to wear this season to look at your best.</p> <p>Cut is everything</p> <p>“First of all, I need to say that Savile Row is not about trends, it is about making a man look his best using special cut and colour combinations”.</p> <p>That’s why when you enter Brian’s atelier, you will be asked questions about your lifestyle and business style, measured and photographed. That kind of research ensures the final product is right just for you.</p> <p>“Fashion Industry will sell you a trend,” says Brian, who worked at Huntsman from 1956 till 2001. “But our job at Savile Row is to make a man look as slim and tall as possible. Each client is different and we always look at a man’s size, habits, complexion, lifestyle and business style to guarantee he gets what is good for his personal ways, at the same time achieving as much of the trendy lean and hungry look as we possibly can.”</p> <p>Japanese Denim</p> <p>However, there are some trends that today’s men follow anyway and Brian simply offers the best products on the market.</p> <p>“Modern men often prefer to wear jeans and a smart jacket, while in the past smart jackets would always go with smart pants”.</p> <p>A few years ago, when the jeans trend began, Richard Anderson Ltd started searching for true denim and it led them to… Kurashiki! It is a well-known fact that denim was popularised in the USA, however when the love affair with American culture reached Japan in 1955, many Japanese businesses started to produce own denim and innovate. The company in Kurashiki went to Nîmes, France, where denim was originally produced by the Andre family, and bought the original denim-producing machines. They brought the machines back to Japan and up to this day produce a traditional raw vegetable-dyed indigo selvedge denim, which Brian uses for jeans and jackets.</p> <p>“Japanese denim is arguably the best one the world now. There at Kurashiki they make for us special jeans that are cut by our designs. The trick is — we cut them slightly tight on the upper part of the leg and straight down from the knee. That makes our jeans compliment every figure.”</p> <p>Pants and Shirts</p> <p>“We also make special narrow corduroy trousers in ruby red, russet, brick orange and navy blue. Combined with sport designer shirts or light wool crewneck sweaters they help to easily achieve modern British stylish look.”</p> <p>“As for the shirts — light blue is a universal colour. 50% of all shirts we sell are light blue, which is so easy to wear. However a lot of people still like pale pink and pale violet, which we make too. The only difference of our shirts is the wide-spread collar. That gives more space for the tie”.</p> <p>Controlled Ties</p> <p>For two years narrow lapels were in</p>
Daily Scan: Stocks end week with gains; Goldman fires analysts for cheating
Capital Markets
<p>October 16</p> <p>Good evening. Stock rose Friday, ending the week on a positive note for the third straight week. The Dow grew 0.4% Friday. The Nasdaq added 0.3% and the S&amp;P 500 gained 0.5%. Stock options expired today in the U.S., which normally spells a fall for stocks. Earnings season has kicked off with rocky results, but don't seem to be quite as disappointing as anticipated. European stocks also rose with the Stoxx Europe gaining 0.6%.</p> <p>Here’s what else you need to know:</p> <p>Goldman Sachs fires cheating analysts. About 20 analysts have been fired from Goldman's New York and London offices for cheating on internal tests. The tests are firm specific, and not regulatory exams. CNN</p> <p>Trump suggests Bush could have stopped 9/11. Presidential candidate Donald Trump suggested Friday that former President George Bush failed to stop terrorist attacks. "When you talk about George Bush, I mean, say what you want. The World Trade Center came down during his time," he said. Needless to say, Trump's 2016 rival and Bush brother Jeb responded with disgust. New York Times</p> <p>United CEO hospitalized. The 56-year-old Oscar Munoz was named CEO of the airline last month. The airline did not confirm whether Munoz had suffered a heart attack, as rumored, but the stock fell 3.1% Friday with the news. Reuters</p> <p>FIFA is at it again. A new report shows that Germany likely only hosted the 2006 World Cup because of bribes. The report alleges that four FIFA execs were paid for their votes, and that FIFA helped launder the money. DeadSpin</p> <p>U.S. industrial production drops. Industrial production fell in September for the second straight month, dropping 0.2%, as expected. The August decline was revised to a 0.1% fall. CNBC</p> <p>JOLTS report shows job openings down. The quits rate has held steady at 1.9% for the fifth consecutive month. Job openings in August were at 5.6 million, down from the adjusted 5.67 million in July. Business Insider</p> <p>GE surprises with better-than-expected earnings. Boosted by better aviation and transportation earnings, General Electric reported a profit of $2.51 billion, or 25 cents a share, last quarter. Excluding the finance business, which GE is moving to cut, the company had revenue of $27.9 billion, on a profit of 29 cents a share. Wall Street Journal</p> <p>Theranos backs away from much vaunted "nanotainer" tests. After an inspection by the Federal Drug Administration, the hot startup (company valuation $9 billion) is now able to use the assay to test just one condition -- not the 100 originally publicized. </p>
People Moves: Nuveen builds ETF business; Voya poaches JP Morgan exec
Asset Management
Nuveen building ETF business. Nuveen Investments has hired Martin Kremenstein for the newly created role of head of ETFs. Kremenstein will report to Greg Bottjer, head of product strategy. Kremenstein most recently worked as managing director for asset and wealth management at Deutsche Bank, helping establish the firm's US ETF business. Voya grabs JP Morgan exec. Karen Eisenbach has joined
Wall Street still wants Jeb
Lifestyle, 4:01
<p>There's no love lost between Wall Street and Donald Trump. Or Ben Carson. Or a number of other presidential candidates for that matter. But Jeb Bush is quietly accumulating Wall Street support.</p> <p>Half of the top 10 employers of Bush donors are in finance: Goldman Sachs, Morgan Stanley, Merrill Lynch, Neuberger Berman, and Barclays, reports The Wall Street Journal. Employees from 11 major financial firms gave about $200,000 to Bush between July and September, far beyond Bush's Republican opponents. Hillary Clinton has raised less than $130,000 from those firms. Industry titan Anthony Scaramucci, founder of SkyBridge Capital, recently joined other finance professionals on Team Jeb after Wisconsin Gov. Scott Walker dropped out of the race.</p> <p>But filling his accounts with Wall Street money won't win Bush the hearts and minds of the Joe the Plumbers of this election. Is having the support of Wall Street a financial gift or a political curse?<br /> Photo: Gage Skidmore <br /> &nbsp;</p>
Hedge funds are fleeing stocks: one chart tells the story
Hedge Funds
<p>&nbsp;</p> <p> Evercore ISI’s recent hedge fund survey indicated that funds have their lowest net-long exposure to stocks in two years.</p> <p> Net-long exposure to stocks peaked in September of 2014.<br /> Analyst James Walsh said that funds’ net exposure has been a good contrary indicator of stock market movement.</p> <p>&nbsp;</p> <p>In a new report, Evercore ISI analyst James Walsh looked at hedge fund exposure to stocks. According to Evercore’s most recent survey, funds have been consistently reducing exposure to stocks for quite a while.<br /> Method<br /> Evercore surveyed 31 hedge funds with net assets of about $86 billion and asked them to rate their long exposure to stocks on a scale of 0 to 100, where 50 indicates normal net exposure. “Over the years, we have noticed that our hedge fund survey has been a good contrary indicator for the market,” Walsh wrote.</p> <p>Read more and see the chart at Benzinga. <br /> Photo: Umberto Salvagnin</p>
Daily Scan: Beware stock options expiration day; dark horse candidates pose fund raising challenge to incumbents
Capital Markets
<p>October 16</p> <p>Good morning everyone. Stock options expire today in the U.S. Watch out. For the past eight expirations, markets rallied the day before (ahem) and then tanked on expiration day. But for now, stocks are up a bit, with the Dow, Nasdaq, and S&amp;P 500 all adding 0.1%. Which makes us think of the Presidential primary election. What should we make of the fund-raising data just released? Ben Carson, the retired neurosurgeon gunning for the GOP nod, raised $20 million in the third quarter vs. $12 million for establishment candidate Senator Ted Cruz of Texas.  Favorite Jeb Bush? The former Florida governor took in just $11.4 million (though he raised tons in the summer). And Democratic frontrunner Hillary Clinton barely out-raised rival Bernie Sanders, the Vermont senator: $29.9 million vs $26.2 million.</p> <p>&nbsp;</p> <p>Here’s what else you need to know:</p> <p>U.S. industrial production drops. Industrial production fell in September for the second straight month, dropping 0.2%, as expected. The August decline was revised to a 0.1% fall. CNBC</p> <p>JOLTS report shows job openings down. The quits rate has held steady at 1.9% for the fifth consecutive month. Job openings in August were at 5.6 million, down from the adjusted 5.67 million in July. Business Insider</p> <p>GE surprises with better-than-expected earnings. Boosted by better aviation and transportation earnings, General Electric reported a profit of $2.51 billion, or 25 cents a share, last quarter. Excluding the finance business, which GE is moving to cut, the company had revenue of $27.9 billion, on a profit of 29 cents a share. Wall Street Journal</p> <p>Theranos backs away from much vaunted "nanotainer" tests. After an inspection by the Federal Drug Administration, the hot startup (company valuation $9 billion) is now able to use the assay to test just one condition -- not the 100 originally publicized. Wall Street Journal (exclusive, paywall)</p> <p>Roaring week for Chinese stocks. The Shanghai Composite notched gains fo 6.13% and the Shenzhen 7.66% on the back of  stimulus hopes both in China and in Japan. The Hang Seng hung back a bit, nudging 0.69% higher and the Nikkei 225 rose 3.14%. Hooray for stimulus.</p> <p>Since June, asset classes in synch for first time in 20 years. And that's not good. Robeco Investment Solutions show that gold, real estate, stocks, high yield bonds, stocks are all in the tank. Usually different asset classes hedge one another. MarketWatch</p> <p>Yuan heads to weekly low. With the PBOC fixing the yuan’s midpoint down 0.05% to 6.3436, both onshore (CNY) and offshore (CNH) yuan are heading to their weekly lows. CNY touched 6.3555 against the greenback today, just as the CNH dipped to 6.3583. </p>