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Fight is on for new HSBC HQ
Capital Markets
<p>The U.S. is looking like the top contender in the competition to hold HSBC's headquarters, as the largest European bank looks to leave the U.K, reports The Financial Times.</p> <p>Not that we're biased or anything, but the U.S. does make an awesome HQ location...<br /> Photo: istock </p>
Daily Scan: Hang Seng climbs 1.34% as Draghi rally reaches new heights
Capital Markets
<p>Updated throughout the day</p> <p>October 23</p> <p>Good evening everyone. With Super Mario ready to reload the stimulus bazooka, Asian shares capped the week on a high note Friday. Hong Kong’s Hang Seng Index and Japan’s Nikkei Average both hit their two-month highs today, while China’s Shanghai Composite posted its third week deep in the red. Here’s the score this week:</p> <p>&nbsp;<br /> Day<br /> Week</p> <p>Hang Seng Index<br /> +1.34%<br /> +1.02</p> <p>Hang Seng China Enterprises Index<br /> +1.34%<br /> +1.79%</p> <p>Shanghai Composite<br /> +1.30%<br /> +0.68%</p> <p>Shenzhen Composite<br /> +2.94%<br /> +2.53%</p> <p>Nikkei 225<br /> +2.11%<br /> +3.06%</p> <p>Straits Times Index<br /> +1.11%<br /> +1.63%</p> <p>The European markets meanwhile look set to post their third straight weekly gain. The U.K.’s FTSE 100 has so far climbed 1.32%, while France’s CAC and Germany’s DAX have each jumped 1.30% and 0.69% respectively. As for Wall Street, it seems to be geared up to join the party too, with S&amp;P 500 futures climbing 0.12% at pixel time.</p> <p>Here’s what else you need to know:</p> <p>Japan “flash” PMI hits 19-month high. Japan’s manufacturing sector rebounded sharply this month, with the Nikkei Flash Japan Manufacturing PMI coming in at 52.5 – its highest level since March 2014 – versus a 50.5 reading expected by analysts. It also beat September’s final reading of 51. Markit</p> <p>PNG to resettle Manus Island refugees.  Papua New Guinea (PNG) is to begin resettling refugees from the controversial Manus Island immigration detention center, Australia has said. Australian Immigration Minister Peter Dutton said the move would allow refugees there to "have a fresh start." BBC</p> <p>South Korea GDP growth rebounds in third quarter. South Korea’s economy picked up pace in the third quarter, helped by rising consumption and construction activity, but weak exports ensured it remained on course for a full-year slowdown worse than official targets. Financial Times (paywall)</p> <p>Korean families say their final farewells. North and South Korean families were forced to say their last goodbyes on Thursday after meeting for the first time in more than 60 years. On the third and last day of their all-too brief reunion in a North Korean mountain resort, the families were given two hours in the morning to say their last goodbyes. Channel News Asia</p> <p>UK backs China bid for EU free-trade pact. Britain yesterday threw its weight behind China's effort to reach a free-trade pact with the European Union, as the two countries issued a joint statement during President Xi Jinping's state visit. South China Morning Post (paywall)</p> <p>Japan, China, South Korea to reinstate annu</p>
Financial Times journalists move closer to work action
Lifestyle, 4:01
<p>It didn’t take long for the ink to dry on a relatively rich Financial Times buy-out offer before the new owner decided to adjust the employee benefits.<br /> Nikkei doesn’t finalize the purchase of the Financial Times until February, but it got to work on one issue very quickly<br /> When news broke on July 23 that Nikkei purchased what is arguably one of the jewels of business journalism, paying £844m or near $1.3 billion, media watchers considered that the Washington Post sold to Amazon.com founder Jeff Bezos for $250 million and they wondered if a successful media business model might be changed.</p> <p>That answer came even before the deal to acquire the firm was finalized. The acquisition of the FT Group doesn’t close until November, but Nikkei was quick to begin work to adjust its compensation model for those that create and control the quality of the product: journalists. Planned changes to newspaper’s pension policy was an initial target in the wake of the record setting purchase price for the previously independently operated business publication.<br /> Financial Times union categorizes quick pension moves as “robbery” as journalists authorize step towards industrial action<br /> Journalists are striking back at the action, which FT management has downplayed as not impacting compensation. But categorizing the move “pension robbery,” the National Union of Journalists apparently disagreed. They organized FT employees who voted to instruct NUJ representatives to begin the process of balloting for industrial action which could result in a work action or potential disruption. The dispute in the press room appears to have gotten volatile.</p> <p>“Staff are in open revolt over plans to cut the cost of pensions,” Steve Bird, FT’s NUJ chapel, told theGuardian. “Hundreds of senior staff will see their pensions cut by up to a half in order to pay rent on the FT building,” indicating a new cost sharing structure. “Whatever financial constraints Nikkei have placed on the FT are being passed on to journalists.”</p> <p>Bird and the NUJ worked to pass a motion condemning Nikkei and FT management for “failing to honor promises” and maintain equivalent terms of employment following the takeover, the Guardian report said. Bird, who manages the union’s response to the situation, had expressed concern when the deal was first announced.<br /> “The FT chapel will do whatever it takes to protect jobs, employee rights and independent, quality journalism,” he said on the day the deal was announced, his fears materializing sooner rather than later. “We were all very concerned at the speed at which the deal seems to have been made. The chapel is now considering putting together a charter setting out our principles on editorial independence and working practices.”<br /> FT management gets wordy in acknowledging they are considering pension changes, but says it is not a cost cutting effort<br /> FT management has a different version of events. In what the Guardian described as “a lengthy statement,” odd for a business that often generates success through succinct prose, management termed the union’s claims that the new pension plan is a cost-cutting measure as “categorically untrue.”</p> <p>“It has never been the objective of FT management or Nikkei to cut costs through pension changes,” an FT spokeswoman told the Guardian. “This proposal is about supporting the long-term strength and sustainability of the FT, and building a consistent and fair scheme for all o</p>
Daily Scan: Stocks soar; Clinton defends herself on Benghazi
Capital Markets
<p>Updated throughout the day</p> <p>October 22</p> <p>Good evening. Stocks had a strong rally Thursday, as the Dow exited correction territory. The Dow added 1.9%, its highest close in more than two months. The S&amp;P 500 gained 1.7%, and the Nasdaq grew 1.65% after steady gains all day. Caterpillar's stocks rose 2.9% even though the company cut its profit projections for the year. 3M shares gained 4.1%, but also reduced its earnings forecast as it moves to cut 1,500 jobs. McDonald's is lovin' its earnings, and the stock rose 8.1% Thursday. Jobless claims are in, totaling 259,000 compared to the estimate of 265,000.</p> <p>Here’s what else you need to know:</p> <p>Clinton talks Benghazi. Former Secretary of State Hillary Clinton was grilled by lawmakers Thursday about her role in the American diplomatic mission in Libya that ended in the death of four Americans. Clinton, who has faced criticism from Republicans since the 2012 attacks, was poised in her defense throughout the interrogation. The hearing adjourned for a break after almost three and a half hours when the Republican committee chairman and two Democratic committee members started a shouting match over Clinton's personal email exchanges. During a 2013 hearing, Clinton accepted responsibility for the security lapses in Benghazi. New York Times</p> <p>Google's ABCs look strong. Alphabet, the Google parent company, reported revenue gains Thursday. Shares are up 23% this year, and continued to rise Thursday. Third quarter net income reached $3.98 billion, compared to $2.74 billion during the same time last year. Wall Street Journal</p> <p>American killed during hostage rescue in Iraq. About 70 hostages facing "imminent mass execution" were saved during a helicopter assault operated by U.S. special ops troops, as well as Kurdish and Iraqi forces. One U.S. service member was fatally wounded during the mission. CNN</p> <p>Masked man kills two in Swedish school. The man killed a student and a teacher, and another teacher and student are being treated for knife injuries. The suspect, who has died of gunshot wounds, was armed with a sword and several knives. BBC</p> <p>U.S. investigating Venezuelan oil company. The probe takes a look at alleged kickbacks  and "other schemes" that Petróleos de Venezuela required from anyone who wanted to do business. PdVSA is alleged to have looted billions. Wall Street Journal (paywall)</p> <p>CIT chief John Thain to retire. The move was unexpected for the 60-year-old executive who landed at the helm of Merrill Lynch during the financial crisis, and was drummed out after controversial bonus payouts and a $1.2 million spending binge to re-decorate his office. Thain, a former top Goldman Sachs officer, will be succeded by CIT board member Ellen R. Alemany. Wall Street Journal (paywall)</p> <p>Europe in holding pattern ahead of ECB meeting. The European Central Bank is in Malta and most watchers expect more stimulus, in part to keep the eu</p>
Wealth manager to marry pro-poker player
Lifestyle, 4:01
<p>&nbsp;</p> <p>It official! ? He asked me to marry him! ? I am so lucky to have met the man of my dreams! After all the ?s I have finally met my Prince Charming!<br /> A photo posted by BethShak (@bethshak) on Oct 22, 2015 at 8:02am PDT</p> <p>Mark Yadgaroff, senior managing director at Bernstein Global Wealth Management, has gotten engaged to professional poker play Beth Shak.</p> <p>Yadgaroff gave Shake, who is also known for her collection of more than 1,200 shoes, a 4.5-carat marquise diamond ring, surrounded by scalloped round diamonds, reports the New York Post. The two met in 2011 at a premiere of the documentary "God Save My Shoes," which featured Shak.</p> <p>Shak was previously married to hedge funder Daniel Shak. In 2012, Daniel Shak sued his ex-wife to have her shoe collection sold off as marital property, but the suit was eventually dropped.</p>
Bonds -- the Rodney Dangerfield of investments
Asset Management
<p>Vanguard strategist Fran Kinniry thinks bonds deserve a lot more respect.  "Like the late comedian Rodney Dangerfield, bonds suffer from a chronic lack of respect," Kinniry writes. These two charts explain why we should salute investment grade bonds a little more resolutely:</p> <p>Charts: Vanguard<br /> Photo: sionnac</p>
Ferrari races into its first ETF
Asset Management
<p>Italian automaker Ferrari NV (NYSE: RACE) raised $893 million in its initial public offering Tuesday, offering 17.2 million shares at $52 in what was arguably the most ballyhooed automotive IPO since Elon Musk's Tesla Motors Inc (NASDAQ: TSLA) came public nearly five and a half years ago.</p> <p>With a market cap of nearly $10 billion, Ferrari is large enough to already be finding homes in exchange traded funds and the Italian auto giant has done just that as Renaissance Capital, the issuer of the Renaissance IPO ETF (NYSE: IPO), confirmed that fund will add shares of Ferrari after the close of U.S. markets on October 27.</p> <p>"The Renaissance IPO ETF is designed to provide investors with efficient exposure to a portfolio of U.S.-listed newly public companies ahead of their ...</p> <p>Full story available on Benzinga.com</p> <p>Photo:  pyntofmyld</p> <p>&nbsp;</p>
Retail banking could witness “fintegration”: EIU
FinTech
<p>Over the next five years, retail banking is likely to see a growing trend of banks’ co-option of Fintech models, notes EIU.</p> <p>The Economist Intelligence Unit published a report titled: “The disruption of banking” after surveying over 100 senior bankers and 100 Fintech executives to ascertain the likely landscape for the retail banking industryover the next five years.<br /> Fintech will strongly impact retail banking landscape<br /> The EIU report points out that digital disruption is the top-of-mind technological issue in the C-suite today, with senior executives in virtually every industry wondering whether their firm will be Amazoned or Ubered. The report notes the multi-trillion-dollar banking industry is facing disruptive challenges by financial technology upstarts, known as “Fintech”. The EIU report reckons over $25 billion has been poured into Fintech in the past five years, making it the number-one target for venture funding.</p> <p>Highlighting the enormity of the challenge, the EIU report draws attention to JPMorgan CEO Jamie Dimon’s remarks to his shareholders about Fintech: “They all want to eat our lunch. Every single one of them is going to try”.</p> <p>The EIU report points out that though over 90% of households in developed economies use a bank, over 90% of bankers project that Fintech will have a significant impact on the future landscape of banking. However, a majority of bankers (54%) believe that banks are either ignoring the challenge or that they “talk about disruption, but are not making changes”.</p> <p>Touching upon the strength of banks, the report notes one of the hallmarks of the customer relationship is a reputation for trustworthiness and stability with no major retail bank failed in the 2008 financial crisis. Nearly 95% of bankers and Fintech executives believe that banks will remain in a strong position even as Fintech gains ground:</p> <p>Banks will continue to dominate<br /> The EIU survey reveals that Fintech executives respect the banks more than the bankers themselves do. Responding to the future balance between the two segments, Fintech executives were more than twice as likely to predict that banks would continue to dominate the market:</p> <p>The EIU report points out that Fintech firms have the ability to take a “category killer” approach to banking portfolios, as the Fintech firms are able to maintain a laser-like focus on a single product, building excellence into both the technology and customer experience:</p>
Deference and deal-making: The absurdity of Xi's UK tour
Capital Markets
<p>China’s decision to invest 6 billion pounds ($9.2 billion) into the U.K.’s Hinkley Point nuclear plant project is one of many deals being struck between the two countries as the U.K. rolls out the red carpet for Chinese President Xi Jinping. But the lavish welcome has both baffled economists and worried the U.K.’s traditional allies.</p> <p>The U.K. has spared little pomp in welcoming their guest. Highlights so far have included a state banquet at Buckingham Palace, afternoon tea with members of the royal family at Clarence House, and a ride in the Queen’s diamond jubilee state coach.</p> <p>The U.K. government is selling the five-day visit — now in its third day — as a boon for the U.K. economy, claiming the trip has already drummed up 40 billion pounds worth of business. But Prime Minister David Cameron has also come in for a lot of flak both at home and abroad, accused of "kowtowing" to Chinese interests.  </p> <p>The PM’s own former advisor Steve Hilton — now a Silicon Valley CEO — took to the pages of The Guardian newspaper to accuse Cameron of “sucking up to despots” and questioned the economic sense of chuming up so closely to China.</p> <p>He is not alone. Former Wall Street trader Michael Pettis, now professor at Peking University’s Guanghua School of Management, has also used his blog to call out the PM for the "almost teenagerish excitement" with which he has been “BFFing” China, He writes:<br /> “For a rich, developed country like England, inward investment almost always affects growth adversely (unless it brings technological and managerial advances with it) and never more obviously so than when interest rates are struggling against the zero bound and every country is urgently trying to export excess savings. As one of my exasperated PKU students asked me after class last Saturday when we discussed the president’s trip: ‘So everyone agrees that it is good for England to get much more foreign investment, and everyone also agrees that it is bad for England to have a much bigger trade deficit. Don’t they know it’s the same thing?’”<br /> And then there are the U.K.’s long-standing diplomatic partners. The Financial Times has reported the U.K.’s efforts to accommodate China has caused U.S.-U.K. relations to become frayed. Patrick Cronin, an Asia expert at the Center for A New American Security, warned:<br /> “There is a growing concern in Washington about China’s intentions with respect to deepening ties with our key ally in Britain. The Chinese are definitely insinuating themselves way into the inner sanctum of the British national security [world] through these investments.”<br /> Its easy to see how in the long run China may be the one that stands to gain the most from this new relationship. Not the U.K.<br /> Photo: Foreign and Commonwealth Office</p>
No joke: Hong Kong manager launches 'HAHA' on NYSE as it gains toehold in US ETF market
Asset Management
<p>While western firms scramble to set up shop in the region, Hong Kong-based CSOP revs up its quest to dominate New York.</p> <p>Hot on the heels of its first New York-listed ETF – the CSOP FTSE China A50 ETF (ticker: AFTY) – the asset manager is set to launch two more ETFs on the NYSE, according to a statement.</p> <p>Its second ETF, the CSOP MSCI China A International Hedged ETF (ticker: CNHX), aims to track the performance of the MSCI China A International Index while neutralizing the ups and downs of the yuan relative to the greenback. The third one -- the amusingly tickered CSOP China CSI 300 A-H Dynamic ETF (ticker: HAHA) -- seeks to track the performance of the CSI 300 Smart Index.</p> <p>Apparently, HAHA will be the first time anyone combined A and H-shares together in one product, and was specifically engineered “for the vast number of investors who have only invested in offshore H shares ETFs in the U.S.” Interestingly, the fund was also structured to arb A-shares and H-shares price differentials, which sounds neat. Let’s just hope investors won’t find any irony involved with its ticker.</p> <p>Joking aside, this actually sounds like a great opportunity for U.S. investors, as Louis Lu, a portfolio manager at CSOP, had to say:<br /> “After launching our first FTSE China A50 ETF in the U.S. market, we are proud to bring two more exciting products to U.S. investors. With the expedited opening steps of China's capital market, we maintain a constructive view on China's A-shares market and think it is good timing for U.S. investors to increase their holdings of China A-shares.”<br /> Photo: Thomas Hawk</p>