News > All

Daily Scan: Americans remember 9/11; stocks rise before rate decision
Capital Markets
<p>Updated throughout the day</p> <p>September 11</p> <p>Good evening,</p> <p>Friday marks the 14th anniversary of the 9/11 attacks on the U.S., in which more than 3,000 people were killed when terrorists commandeered three commercial airliners and crashed them. President Obama marked the tragedy with a town hall meeting in Fort Mead, Md. Other ceremonies took place in Washington, D.C., New York, and Pennsylvania. Years after the event, the death toll continues to mount as survivors succumb to injuries related to the attack.</p> <p>Stocks rose Friday, after starting the morning with small losses. The Dow ended up 0.63%, making a weekly gain of more than 2% for the first time since March. The S&amp;P 500 gained 0.45%, and the Nasdaq rose 0.5%. Oil fell, ending below $45/barrel.</p> <p>Here's what else you need to know:</p> <p>Rick Perry drops out of presidential race. Former Texas governor Perry is the first of the Republicans to drop out of their party's very crowded presidential race. Perry, who also ran in 2012, has struggled all summer against more dominant candidates. Politico </p> <p>Crane kills 65 people at Mecca. A crane collapsed on the Grand Mosque in the Muslim holy city of Mecca, killing at least 65 people and injuring more than 150 more. Mecca is preparing for the annual Hajj pilgrimage when hundreds of thousands visit the Saudi city. The site has been undergoing construction to accommodate more worshipers. BBC</p> <p>Serena shut down. Serena Williams was denied another Grand Slam title by Italian Roberta Vinci. Vinci, ranked 43rd, wasn't even seeded at the U.S. Open. Had Williams won, she would have been the first person since Steffi Graf in 1988 to win all Grand Slam titles in one year. CNN</p> <p>D.C.'s Union Station closed after shooting. A station security guard shot a man that stabbed his girlfriend. Both are alive. The incident was unrelated to September 11. Quartz</p> <p>18 fintech companies raised $210 million this past week. FundBox, CommonBond, Orchard Platform, and Chain all raised more than $30 million. Year to date fintech companies have raised $12.4 billion. Finovate</p> <p>CNN debate lineup announced. Of the now 15 Republican presidential candidates, the following will participate in the California debate scheduled for next week: Donald Trump, Ben Carson, Jeb Bush, Ted Cruz, Scott Walker, Marco Rubio, Carly Fiorina, Mike Huckabee, Rand Paul, and John Kasich. The other five candidates are invited to participate in a debate earlier in the evening. CNN</p> <p>Cuba to release 3,522 prisoners. The Council of State for the island nation announced that it will release the prisoners ahead of Pope Francis' visit to the country next week. This is the third time Cuba has release prisoners before a papal visit. The released prisoners will be a mix of women, those younger than 20, the ill, and those with sentences ending next year. </p>
StanChart, Manulife team up to dominate HK’s pension fund arena
Asset Management
<p>HSBC may be the undisputed champ in Hong Kong’s pension fund arena, but perennial runner-up Manulife has been busy looking for ways to bridge the gap – and fast.</p> <p>According to Asia Asset Management, Manulife has just entered a 15-year partnership with Standard Chartered Bank – Hong Kong’s 12th largest Mandatory Provident Fund (MPF) provider – to exclusively distribute the latter’s MPF products in the territory.</p> <p>The deal reportedly cost Manulife 400 million big ones, but in return, it gets to boost its 18.8% share of the region’s MPF business closer to HSBC’s 23%. Not to mention a large chunk of the nation’s Occupation Retirement Schemes Ordinance (ORSO) traffic and a big piece of StanChart’s investment management ops as well.</p> <p>Regarding the partnership, Manulife Asia CEO Roy Gori had this to say:<br /> “This partnership between two of Hong Kong’s top financial services companies will enable us to increase value to customers and deliver the benefits of economies of scale.</p> <p>The MPF industry in Hong Kong is experiencing continued consolidation, and Manulife is seen as a partner of choice. Manulife is a major player in the pension business in Hong Kong, Canada, the United States, and Indonesia. This deal complements Manulife’s recent acquisitions in Canada and the United States and accelerates our strategy to grow our Asia and wealth management businesses.”<br /> Photo: Kirill Ξ/Κ Voloshin</p>
Howard Marks still sees opportunity in China
Hedge Funds
<p>While most of his hedge fund brethren rush for the exit at the mere mention of China, Oaktree Capital’s Howard Marks says there’s still a lot of good buys in the region. And not only that, he sees a “bright future” ahead of it as well.</p> <p>Granted, Marks is known as a distressed asset wunderkind, so his view may differ than the Bill Ackman’s and the Ray Dalio’s of the world, but surprisingly, the SCMP reports that most of his positions in the region aren't in his bread and butter non-performing loans or bankrupt companies, rather, they're mostly in listed Chinese equities.<br /> “We have found equities in China that have been worth holding…We strongly believe in the A-share market…We have a substantial position in Chinese equities today and we are very comfortable.”<br /> He also said that there were a lot of good buys when the SHCOMP hit the 3,100 level, especially in contrast to its earlier high of 5,200 points. He didn’t share which stocks he was talking about though, which would’ve been great to hear given that the index is still below 3,200.</p> <p>Anyway, despite all that A-share talk, the man behind the world’s largest distressed-asset fund still has an eye on the region’s various bad debts, and is hoping to ramp up his holdings of them if he can:<br /> “Oaktree made its first investment in non-performing loans in May and would continue, he said.</p> <p>‘NPL investment will be a good idea if banks are willing to sell them at reasonable prices, which we believe to provide good return,’ he said.”<br /> With the market going the way it is, he just might have a lot of those pretty soon.<br /> Photo: Ade Russell</p>
People Moves: Aberdeen hires senior manager in Korea; Monument hires three in HK
Asset Management
<p>Aberdeen adds senior manager in Seoul. Dong-Ki Kim, Russell Investments Korea’s former business development associate director, has joined Aberdeen Asset Management as senior manager for its Seoul office. This will be a new position for the firm as it looks to expand its operations within Korea. Prior to his tenure at Russell Investments, Kim spent several years at Hanwha Life Insurance, where he managed investments from mezzanine debt to properties to hedge funds. He will be reporting to Alex Kim, the asset manager's chief representative in the region. Asia Asset Management </p> <p>Monument Group makes three HK hires. Albert Jun, a former VP and Fund Placement Division senior at NH Investment &amp; Securities Korea, will be joining the Monument Group in Hong Kong as director. He will be in charge of marketing, with a focus on Korean as well as other Asian investors. Also joining the firm are Sabrina Meng, a four-year veteran of Emerald Hill Capital Partners, who’ll be a senior associate within Monument’s analytics team, and Kris Ho, who’ll be handling the firm’s various client service and office management needs as its operations manager. She joins the fund placement agent from MVision, where she held a similar role the past five years. FINalternatives</p> <p>For Capital Markets moves, click here.<br /> Photo: Luke Ma</p>
People Moves: HSBC hires new trading execs; Soc Gen names new Asia-Pac DCM boss
Capital Markets
<p>Soc Gen appoints new head of Asia-Pacific DCM. Laurent Morel, a 21-year Soc Gen man, has been appointed by the firm’s corporate &amp; investment banking arm as its new head of debt capital markets for Asia-Pacific. He replaces Yves Jacob, who moved to Paris to take on his new role as the firm’s Senior Banker in charge of the global relationship with International Financial Institutions – Morel’s previous role. Morel joined Soc Gen back in 1994 after a brief stint at Air France UK. He has served the French bank in various roles since then, including head of global DCM corporate origination and global head of ECM. He will be based in Hong Kong and will report to Patrick Menard, Global Head of Capital Markets, and to Sadia Ricke, Head of Global Finance in Asia Pacific. Societe General Corporate &amp; Investment Banking</p> <p>HSBC hires new Asia-ex Japan S&amp;T execs. Andrew Maynard, CSLA’s former head of global trading and execution services, has joined HSBC as its new head of sales trading and execution services for the firm’s Asia ex-Japan equities business. Prior to joining CSLA, Maynard spent 16 years at Bank of America Merrill Lynch where he ran the bank’s regional execution services platform. Joining him in Hong Kong are Deutsche Bank’s former Asia-Pac director of Institutional Program sales and trading, Christopher White, and former Barclays director Jonathan Green. Judy Low meanwhile will be heading HSBC’s Asean sales and trading business from Singapore after spending 9 years at Deutsche Bank. Finance Asia</p> <p>Citi names new Asia Pacific head of public sector banking. David Ratliff, one of Citigroup’s senior execs in Hong Kong, was recently named as the firm’s Asia Pacific head of public sector banking. In the newly created role, Ratliff will take charge of the bank's Asian corporate and investment banking coverage as well as its markets and securities services coverage of public sector clients. He was previously the firm’s Asia-Pac head of investor sales and relationship management for and Asia-Pac equities head for Citigroup Global Markets. Reuters</p> <p>For Asset Management moves, click here.<br /> Photo: Wendy</p>
China consumes mind-boggling amounts of raw materials
Capital Markets
<p>&nbsp;</p> <p>Over the last 20 years, the world economy has relied on the Chinese economic growth engine more than it would like to admit. The 1.4 billion people living in the world’s most populous country account for 13% of global GDP, which is significant no matter how it is interpreted. However, in the commodity sector, China has another magnitude of importance.</p> <p>&nbsp;</p> <p>Source: Visual Capitalist</p> <p>This story first appeared in ValueWalk<br /> Photo: Stefan Jürgensen</p>
Analysts haven’t been this negative on Emerging Markets since...
Capital Markets
<p>Analysts Haven’t Been this Negative on Emerging Markets Since the Financial Crisis Low in Stock Prices, and that’s Great for Investors!<br /> In simple terms, everyone has moved to the same side of the boat when it comes to expectations about the prospects of emerging market stocks. Not since the financial crisis nadir in stock prices have analysts of EM stocks been so bearish and quick to rerate expectations. Yet, amid all this negativity, there arises a fantastic opportunity for investors of EM stocks. As the famous Warren Buffet axiom states, “Be fearful when others are greedy and greedy when others are fearful”. To say that analysts are fearful would be an understatement. It could be that market expectations for EM stocks have moved to far negative and now could be an opportune time to increase exposure to this hated asset class. Enough commentary, let’s get to the charts.</p> <p>The first two charts below show the sales (first chart) and EPS (second chart) growth expectations for EM stocks. The blue line is the average stock’s growth expectation and the red line is the median stock’s growth expectation. Expectations for the next twelve months of growth have not been this low and falling since the market thought the world was going to implode in 2009.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>The next two charts show the percent of issues with higher sales (first chart) and EPS (second chart) expectations versus three months ago. These charts show for how many companies expectations are improving. The bottom line is that expectations are improving for the smallest percent of companies since the fall of 2008 when Lehman Brothers went bankrupt.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>Surely no one knows what the future holds and that is why investing is a game of probabilities. It seems to us the probability that expectations for EM stocks to be lower in six months time than they are now is slim.</p> <p>© GaveKal Capital</p> <p>This story originally appeared in Advisor Perspectives.<br /> Photo: Joe The Goat Farmer</p>
Daily Scan: Asian shares end the week higher
Capital Markets
<p>Updated throughout the day</p> <p>September 11</p> <p>Good evening everyone. With the Fed keeping the world on the edge of their seats, Asian shares went into risk-off mode once again with only the Shenzhen Composite and Japan’s broader Topix managing to eke out some gains. Here’s how Asia’s largest bourses did this week:</p> <p>&nbsp;<br /> Day<br /> Week</p> <p>Shanghai Composite<br /> +0.073<br /> +1.3%</p> <p>Shenzhen Composite<br /> +0.62%<br /> +3.8%</p> <p>Hang Seng Index<br /> -0.27%<br /> +3.2%</p> <p>Hang Seng China Enterprises Index<br /> -0.63%<br /> +6%</p> <p>Nikkei 225<br /> -0.19%<br /> +2.7%</p> <p>Topix<br /> +0.1%<br /> +2.5%</p> <p>The European markets meanwhile turned mostly negative, with the FTSE 100 slipping 0.2%, the Dax falling 0.5%, and the CAC sliding 0.3%. Since the Fed won’t give its decision until Thursday next week, I doubt anything’s going to change market-wise until then. Here’s what else you need to know:</p> <p>Non-OPEC oil production set to hit 24-year low. We all know that crude oil’s continued fall could mean bad news for the industry, but here’s the International Energy Agency to tell you just how bad it could get: “Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day - the biggest decline in 24 years.” International Energy Agency </p> <p>Italian industrial output thrashes estimates. Proving how awesome Italians are, industrial output in the nation surged 1.1% in August, nearly double the 0.6% climb analysts have been expecting. Energy output’s 7.1% rise seemed to be the main driver behind the surge, while consumer good added another 1%. MarketWatch</p> <p>Indonesia sends troops to battle smog fires. More than 10,000 troops are being sent to fight fires in southern Sumatra, as smoke makes thousands sick, delays flights and pushes air quality to unhealthy levels in neighbouring Singapore and Malaysia. Channel News Asia</p> <p>Bank of Korea keeps rates unchanged. After slashing rates four times between August and June, the Bank of Korea kept its benchmark Base Rate unchanged this month at 1.50%. The prior cuts were mostly due to the MERS outbreak, which crippled the nation’s economy enough to force a government-backed stimulus package. While they’re not out of the woods yet economy-wise, the BOK “forecasts that the domestic economy will show a trend of recovery going forward.” Bank of Korea</p> <p>Moody’s takes on the SFC. In a closely-watched hearing at the Securities and Futures Appeals Tribunal, U.S.-based Moody’s has locked horns with Hong Kong’s Securities and Futures Commission over complaints that a 2011 report from the ratings agency was “shoddy.” The report was apparently titled “Red Flags for Emerging Market Companies: A Focus O</p>
GE looks to sell asset management arm
Asset Management
<p>General Electric is looking at a potential sale of its asset management arm, reports the Wall Street Journal.</p> <p>GE has expressed interest in cutting extraneous units to focus on its core industrial businesses. The asset management arm has $115 billion in assets from GE's U.S. benefits plans, as well as third party institutional investors. Proceeds of a potential sale will go to GE Pension Trust. GE Asset Management would still remain plan sponsor and fiduciary for the company's plan benefits following a sale.</p> <p>GE Asset Management is separate from the financial services unit GE Capital, but GE is moving to shrink that business as well.<br /> Photo: Diana Parkhouse<br /> &nbsp;</p>
Will VC valuations come down to earth?
Venture Capital
<p>Is the U.S. VC market in bubble territory? There’s no shortage of commentary on the subject, but the conversation was more theoretical before the stock market dipped in late August. For startups and their investors, high valuations feel more uncertain today than they did 12, six, even three months ago. Most of the data in this report is through the first half of 2015, before the stock market lost its footing. As such, they could represent a high point in round sizes and valuations across any—or all—stages. Even if stock prices recover over the next few months, it wouldn’t be surprising to see valuations come down to earth as the year progresses.</p> <p>Through June, however, valuations kept climbing. Seed valuations hit a median $6.1 million, a record. Markups at the seed stage have pushed up Series A and B valuations to $15.1 million and $41.4 million, respectively, up from already high medians of $12.6 million and $35.3 million in 2014. Later stage trajectories were even steeper, and arguably more vulnerable to the latest downturn in public markets. At a median $184 million, valuations at Series D and later stages are the most likely to get hit in the coming quarters. So-called “unicorns”, startups valued at $1 billion or higher, are set to get the most scrutiny. As we detail on page 13, the number of U.S.-based unicorns has almost doubled this year. Another 31 startups joined the club through August, on top of 32 new unicorns minted last year. It’s taken less time for this year’s unicorns to reach billion-dollar status; the time between their prior rounds and unicorn rounds fell to a median 1.1 years, and median valuation step-ups from those prior rounds fell to 2.1x compared to 10x in 2012.</p> <p>One reason for the rise in unicorns (and high valuations in general) has been a steady migration of mutual fund investors into the asset class. We dove into that trend on page 15 and found some interesting results. Late stage rounds with mutual fund participation skyrocketed in 2014 (no surprise there) and stayed high through 1H 2015. Starting this year, however, mutual funds have crowded into earlier stages, as well, causing the median early stage valuation (Series B and prior) to jump to $56 million. The 2014 median was a much more modest $13.6 million, about half of what it was in 2007.</p> <p>If U.S. VC activity is in for a correction, it’s going out on a high note. $21.8 billion worth of investments were inked in 2Q, yet another post-crisis record. The past five quarters have either nearly hit or eclipsed the $15 billion mark, compared to zero prior to 2Q 2014. At the same time, the number of rounds has steadily waned since the 2,200 seen in 1Q 2014. This past quarter’s total fell to 1,767, a 20% drop by count. The sharpest slowdown continues to be in later stage activity, tallying only 338 rounds in the second quarter versus 548 in 2Q 2014. Depending on investor sentiment, we might see further slowdown at the Series C and D stages, or at least a leveling off if VC firms are pressured to finance future pre-IPO rounds.</p>