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Aberdeen Asset to bag first private fund management license in China
Asset Management
<p>Say goodbye to joint ventures and say hello to a new era for foreign fund managers because according to the SCMP, Aberdeen Asset Management is about to bag the first ever private fund manager licence in China:<br /> “British fund manager Aberdeen Asset Management is due to be granted a private fund manager licence in China, signifying foreign fund managers will no longer need to go into joint ventures and can operate at 100 per cent shareholding in their investment businesses.</p> <p>The fund manager will receive a private fund licence for its wholly-owned foreign enterprise (WFOE) setup in Shanghai.</p> <p>The quota for Britain's renminbi qualified foreign institutional investors (RQFII) programme is due to be increased as part of the 200 trade agreements that are to be concluded over President Xi Jinping’s visit to London this week, sources familiar with the situation told the South China Morning Post.”<br /> The license not only allows Aberdeen to trade in China's secondary markets, but to also raise cash from individual and institutional investors onshore.<br /> Photo: Anthony Kelly</p>
Startups eager for sky-high valuations should heed this cautionary tale
Venture Capital
<p>As the IPO market tanks and startups continue to seek absurdly high valuations, they would do well to remember the 2013 listing of textbook rental service Chegg and its ill-fated use of the IPO "ratchet."</p> <p>Wall Street Journal's Venture Capital Dispatch recalls how Chegg sought to secure a higher valuation during its pre-IPO funding rounds by promising investors their share price would double by time the company went public – a term known as a "ratchet." It backfired. Massively. As early Chegg investor Oren Zeev explained in a conference this year:<br /> “While it turned out that the top line was great, the fundamentals of the business, or the assumptions we were making about the business, were a stretch. It was far less clear it was a great business.”<br /> The upshot was that the business sunk below its IPO valuation after going public and could not deliver on what it promised, and Chegg was forced to issue additional shares to Insight Venture Partners, the VC with which it had the covenant. Companies like Box Inc. and Kayak Software Corp. have also had to pay a painful price for the same reason. </p> <p>One has to wonder how many  of our newly-born unicorns managed to achieve such lofty valuations, and how they will cope when it's time to go public.<br /> Photo: Jellaluna</p>
$1.4 billion in losses don’t scare Bill Ackman
Hedge Funds
<p>In Ackman’s world, cutting losses is for fools:<br /> “Hedge fund manager Bill Ackman said Wednesday that he purchased an additional 2 million shares of Valeant Pharmaceuticals as the stock plunged following the release of an explosive note from Citron Research that alleges the drugmaker is channel stuffing.</p> <p>Ackman told CNBC that he believes in the company despite Citron claims. His firm, Pershing Square, was already one of the largest holders of Valeant stock.”<br /> Pershing Square has so far lost $1.4 billion on Valeant, with Reuters estimating his Wednesday loss at $500 million.<br /> Photo: Insider Monkey</p>
Silicon Valley is hot for insurance tech, and Google is leading the way
FinTech
<p>Insurance may be not be the sexiest area of finance but it certainly seems to be doing something for Silicon Valley where investors are courting disruptive start-ups, and internet giants like Google are looking for a piece of the action.</p> <p>Back in June, CBInsights reported that 2015 was already a record year for insurance tech investment with for $832 million being pumped into the space. That's a 9X increase from five years ago, accounting for more than a third of the $2.12 billion raised by insurance tech companies since 2010.</p> <p>A more recent report shows that Google in particular has been doubling down in this space, signing off six separate partnerships and investments in insurance tech just this year. Its biggest deals include the firm's own Google Compare service, an auto insurance comparison platform launched in March in partnership with CoverHound and Compare.com. But it goes beyond that.</p> <p>Google has backed three firms in the medical insurance space, via its investment units Google Ventures and Google Capital, the most recent being Collective Health.  It has also partnered with home insurers Liberty Mutual and American Family Insurance through its internet-of-things product line Nest.<br /> Photo: GotCredit</p>
Weight Watchers surge 170% thanks to Oprah
Lifestyle, 4:01
<p>Move over Uncle Carl, that “Icahn lift” of yours has nothing on what Oprah recently did:<br /> “Winfrey announced on Monday morning that she had agreed to purchase a 10% stake in Weight Watchers International and had signed a collaboration deal to promote the diet company and its services. The announcement has caused shares of Weight Watchers to soar. With the stock changing hands for around $18, Winfrey has single-handedly generated $700 million in stock market value in two days, given that the company has 63.6 million shares outstanding following the Winfrey deal.</p> <p>Shares of Weight Watchers are up about 170% since they opened for trading on the New York Stock Exchange on Monday morning. Weight Watchers’ stock doubled in value on Monday and rose by another 30% or so on Tuesday.”<br /> Winfrey, who reportedly bought her stake for $43.2 million, now has $110 million in paper profits thanks to an option allowing her to purchase 3.5 million more shares for just $6.79 each. Not bad for just two days work.</p> <p>Guess its time to set up Harpo Capital Partners there, Oprah.<br /> Photo: United Nations photo</p>
With stocks on shaky ground, a promising ballast in bonds
Capital Markets
<p>Weekly Commentary Overview</p> <p> Stocks advanced last week, benefiting from mergers and acquisitions, and the recent drop in interest rates, a trend that continued last week.<br /> The gains we have seen in stocks, credit and even emerging markets in recent weeks have not been driven by signs of economic improvement, firming inflation or rising earnings.<br /> Instead, investors are once again taking solace in low rates and benign monetary conditions, which can and probably will persist for the remainder of the year. But that can only take the market so far.<br /> Meanwhile, another important trend is emerging: For investors looking for some longer-term ballast in their portfolios, particularly equity-centric portfolios, longer-duration bonds are reasserting their role as an effective hedge to equity risk.</p> <p>Stocks Advance, But on Wobbly Trends<br /> Stocks advanced last week, with the biggest gains in Asia. In the U.S., the Dow Jones Industrial Average rose 0.77% to 17,215, the S&amp;P 500 Index grew 0.94% to 2,033 and the tech-heavy Nasdaq Composite Index climbed 1.16% to close the week at 4,886. Equities continue to benefit from an active cycle of mergers and acquisitions. Last week's list included Dell's plans to buy hardware maker EMC and AB InBev raising its bid for SAB Miller.</p> <p>Stocks are also benefiting from the recent drop in interest rates, a trend that continued last week: The yield on the 10-year Treasury fell from 2.09% to 2.03%, and at one point dipped below 2%. German, Italian and Australian yields also dropped last week, as bond prices rose.</p> <p>Recent weeks have seen stocks, credit and even emerging markets start to recover. Unfortunately, the gains have not been driven by signs of economic improvement, firming inflation or rising earnings. Instead, investors are once again taking solace in low rates and benign monetary conditions, which can and probably will persist for the remainder of the year. But that can only take the market so far. Meanwhile, another important trend is emerging: For investors looking for some longer-term ballast in their portfolios, particularly equity-centric portfolios, longer-duration bonds are reasserting their role as an effective hedge to equity risk.<br /> Sugar High<br /> In most countries, interest rates are being held down by persistently low inflation. For example, the latest readings on Chinese inflation came in below expectations while U.K. readings turned negative for only the second time since 1960. Even in the U.S., producer prices are falling at the fastest pace since 2009.</p> <p>As realized inflation has remained stubbornly low, inflation expectations have also been stuck. For example, U.S. five-year inflation expectations fell to around 1.15%, down from 1.25% the previous week. With inflation expectations still falling, a 2015 rate hike by the Federal Reserve (Fed) looks increasingly unlikely; even the odds of an early 2016 hike appear to be fading.</p> <p>This has all helped keep bond yields low. But with bonds providing little appeal and short-term rates fast approaching their ninth calendar year at zero, investors are once again relying on stocks to do the heavy lifting in their portfolios. But this comes with the cost of escalating valuations: Since Sept. 30, the trailing price-to-earnings ratio on the S&amp;P 500 has risen by 10%.</p> <p>That said, while stocks have managed to rebound from their lows, the S</p>
Daily Scan: Asia ex-China shares fall; Europe lower ahead of ECB decision
Capital Markets
<p>Updated throughout the day</p> <p>October 22</p> <p>Good afternoon everyone. Asian shares finished the session lower Thursday, save for China, where stimulus bets led the Shanghai Composite up 1.45%. The Shenzhen Composite meanwhile – buoyed by tech shares – climbed 3.71%. Here’s how the rest did:</p> <p> Hang Seng Index: -0.63%<br /> Hang Seng China Enterprises Index: -0.46%<br /> Nikkei 225: -0.64%<br /> Straits Times Index: +0.44%<br /> Kospi: -0.98%</p> <p>Over in Europe, equities seem to be trending lower ahead of the ECB’s rate decision. The FTSE 100 is currently down 0.25%, the DAX – which climbed as much as 0.28% earlier – is currently up just 0.14%, while the CAC has slipped 0.13% so far.</p> <p>Here’s what else you need to know:</p> <p>Don't panic, says China, as outflows spike.  Recent outflows of money from China are “normal” and not a sign of panic capital flight, a senior official at the foreign exchange regulator said on Thursday, downplaying fears over growing outflows as the economy slows. SCMP</p> <p>U.K. retail sales beat estimates. U.K. retail sales rose sharply in September, punching in at 6.5% year on year versus a forecasted 4.7% climb. Month on month figures were also great, showing a 1.9% jump versus an expected 0.3% bounce. Interestingly, alcohol drove some of the gains. FXStreet</p> <p>South Korea rapper PSY in row with artist tenants.  PSY is fighting a legal battle with artist tenants who are reluctant to leave a building he owns in Seoul. The property dispute has struck a nerve in a country notorious for super-high rents that critics say are killing vibrancy in cities by spurring gentrification and evictions. SCMP</p> <p>China agrees $9.2 billion deal for U.K. nuclear power plant. The deal came in the wake of Chinese President Xi Jinping to Great Britain.  China General Nuclear Power Corporation (CGN) has entered into a deal with French state-owned energy firm EDF to acquire a one third stake in its Hinkley Point nuclear power plant in Somerset. The Telegraph</p> <p>Legoland heads to China. Merlin Entertainments has signed an agreement with China Media Capital to establish a Legoland park in Shanghai. It is part of a deal between the two to explore opportunities to build visitor attractions throughout China. BBC </p> <p>Singapore church leader pulled off $35 million fraud to support wife's failed singing career. The founder of a popular Singapore church, Kong Hee, has been found guilty of misappropriating more than $35.5 million in donations to support his wife's singing career, in a rare case of graft in the city-state. Aljazeera</p> <p>CIT chief John Thain to retire. John Thain, best known for leading Merrill Lynch during the financial crisis, will retire from CIT on March 31. He will remain onboard the lender as its chairman. CIT board member Ellen R. Alemany, will replace him as CEO. </p>
Daily Scan: Stocks fall at end of day; Wikileaks releases CIA director's emails
Capital Markets
<p>Updated throughout the day</p> <p>October 21</p> <p>Good evening. U.S. stocks dipped at the end of Wednesday after holding steady most of the day. The Dow ended with a 0.3% loss, the S&amp;P 500 fell 0.6%, and the Nasdaq dropped 0.8%. The health care sector took a hit after Valeant Pharmaceuticals was called a "pharmaceutical Enron" by Citron Research. General Motors reported $1.4 billion in profits for the third quarter, surpassing expectations. But, the car manufacturer did report a heavy $575 million charge last quarter as part of its $900 million settlement over criminal charges about its defective ignition switches. Boeing reported earnings of $1.7 billion last quarter, a 25% increase from the same time last year.  The Mortgage Banks Association application index is up 9% year-over-year -- but it's been volatile of late due to regulatory changes. Housing has been a bright spot this year -- though the refinancing boom appears to be over. All this comes in time for "Back to the Future Day" Wednesday, or the day that Marty McFly travels to in "Back to the Future Part II." When Marty travels to October 21, 2015 from 1985, he sees a number of technological advances including big screen TV and video chats. Seems like we're right on track.</p> <p>Here’s what else you need to know:</p> <p>WikiLeaks releases CIA director's emails. John Brennan's personal email account was reportedly hacked this week by a high school student. The Daily Beast</p> <p>Chinese diplomats shot in Philippines. Two Chinese diplomats were killed and a third wounded in a restaurant in Cebu. A woman who works at the consulate and her husband have been arrested. BBC</p> <p>Joe Biden will not run for president. Biden announced in the White House rose garden that it is too late for him to mount a successful campaign for the Democratic nomination. While Biden won't be a candidate, he said that he will be very vocal throughout the election, and that the next president needs to continue President Obama's work. Biden spoke about the need for more affordable college educations, relief for the middle class, and an end to bipartisan politics. The vice president says that he will focus heavily on cure for cancer as he wraps up his time in office. Biden's son Beau died of brain cancer in May.</p> <p>Speaker election date set. Current Speaker John Boehner announced that the internal Republican election for speaker will take place Oct. 28, and the floor election will be October 29. After chatting with the GOP Tuesday, Wisconsin representative Paul Ryan may be the front runner. Politico</p> <p>Pearson stock drops. The former owner of the Financial Times saw its stock fall 18% Wednesday after it announced that its earnings would be worse that expected. The company blames lower U.S. college enrollment on the slump. Reuters</p> <p>Syria's President Assad makes surprise trip to Moscow. This marks Asad's first known trip outside Syria since the uprising began in 2011. Assad went to visit President Putin secretly Tuesday evening to say thank you for Russia's support in battling rebel forces; the Kremlin released photos on Wednesday. Middle East watchers suggest that Moscow has now supplanted Iran as Syria's No. 1 ally. </p>
Wells Fargo benefits from Credit Suisse private bank closure
Capital Markets
<p>Wells Fargo struck a deal with Credit Suisse allowing Wells Fargo to recruit brokers from Credit Suisse's winding down private bank business, transitioning between the firms by early next year, reports The Wall Street Journal.</p> <p>Will the brokers take the bait? And if they do, what does this mean for the shrinking wealth management industry?<br /> Flickr: Prayitno / Thank you for (7 millions +) views</p>
Goldman dumps Indian asset management unit
Asset Management
<p>It's a quiet breakup, but Goldman Sachs is dumping its Indian fund management unit and Reliance Capital Asset Management is picking it up.</p> <p>Goldman's $37.5 million cash deal is the sixth exit of an asset management from India since 2013, reports the International Business Times. Morgan Stanley, Deutsche Bank, PineBridge, ING, and Daiwa Capital Markets have left the Indian mutual fund sector as the cost of acquiring assets has gone up, cutting into profits.</p> <p>Goldman employees in the ETF business will be offered employment opportunities at Reliance Capital. The deal makes Reliance Capital the sole provider for the government's central public sector enterprises ETFs, reports Live Mint. Goldman's existing ETFs will be rebranded as Reliance Capital's. Goldman says it will remain invested in Indian securities through regional and global funds.</p> <p>Goldman managed about $1.1 billion in India at the end of September. Reliance Capital had about $23.5 billion in assets under management at the same time, and ranks as the third largest fund house in India. The Indian mutual fund industry is worth about $202 billion.<br /> Photo: Kirill Tropin<br /> &nbsp;</p>