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Weekend Scan: Belgium terrorist threat, bloody end to Mali hotel siege, markets ready for US rate hike
Capital Markets
<p>Updated throughout the day</p> <p>November 21, 2015</p> <p>Asian, European and U.S. shares ended the week higher as investors seemed to accept the likelihood of a Fed interest rate hike next month while encouraged by the prospect of further monetary stimulus by the ECB.</p> <p>In Asia, Hong Kong's Hang Seng was up 1.13% on Friday and China's Shanghai Composite rose 0.37% spurred by expectations of further PBOC interest rate cuts. In Tokyo the Nikkei 225 crept to a three-month high, gaining 1.4% during the past five days. In London and Frankfurt, stocks also closed higher, with the FTSE 100 up 0.07% and the DAX ring 0.31% .</p> <p>U.S. interest rate futures indicated a 70% probability of a December rate rise, the yield on two-year Treasury note rose 6 basis points during the week to 0.92% and the greenback maintained its upward trajectory, heading to within 1% of its 12-month high reached last March. Consequently, the gold price continued to slide towards a five-year low of $1,065 a month.</p> <p>The S&amp;P 500 closed 0.4% stronger at 2,089 on Friday, up 3.3% in the week</p> <p>Here’s what else you need to know:</p> <p>Mali hostage siege ends with at least 21 dead. A five-star hotel in the Malian capital of Bamako was stormed by 10 gunmen apparently from the Al-Qaeda linked Al-Mourabitoun on Friday. More than 130 staff and guests were later rescued by security forces. Mali declared a 10-day state of emergency, separately Belgium raised its terrorist threat in Brussels to the highest level, warning of an imminent threat and closed its metro until Sunday, Russia says it increased its air raids on IS targets in Syria, and the  UN Security Council unanimously approves 'all necessary measures' against IS in Syria . BBC</p> <p>China confirms security forces kill 28 in Xinjinag operation. Chinese media reports that the deaths occurred during a 56-day operation in response to an incident on September 16 at Sogan colliery in Asku that killed 16 people. The authorities blamed "foreign terrorists" for the attack in a region that is home to an Uighur ethnic minority. Al Jazeera</p> <p>Former chief executive of Rupert Murdoch’s Star India TV arrested for murder. Peter Mukerjea was arrested in Mumbai during the investigation into the killing of his stepdaughter, Sheena Bora. His wife Indrani, her ex-husband and their driver are already accused of strangling Miss Bora, burning her body and burying the remains in a forest outside the capital in April 2012. Telegraph</p> <p>Draghi: “we will do what we must.” Speaking to an audience at the Frankfurt European Banking Congress, ECB President Mario Draghi reiterated his stance that he will do whatever it takes if risks begin skewing to the downside. “We will act by using all the instruments available within our mandate.”  ECB </p> <p>Fischer: “we have done everything we can to avoid surprising the markets.” In his latest speech, Federal Reserve vice-chair Stanley Fischer tried to tone down expectations for a December hike by saying that “no final decisions have been made.” Still though, his comment for the emerging markets sounds a little like “brace yourselves.” Reuters</p> <p>Goldman Sachs forecasts $20 oil price. The U.S. investment banks told clients that the glut of oil on the global market, combined with mild weather from a freak El Nino this winter, could send prices plummeting to $20 a barrel, the so-called ‘cash cost’ that forces drillers to abandon production. Telegraph</p> <p>ABN Amro valued at $17.9 billion in IPO. The Dutch bank was nationalized seven years ago at the depths of the financial crisis.  In one of the biggest banking IPOs in years, the government is shedding just 20% of its stake. Wall Street Journal (paywall)</p> <p>China uncovers $125 billion in ‘grey capital’ flows in crackdown.  China started a crackdown on underground banks in April and has so far uncovered more than 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan ($125.34 billion). SCMP (paywall)</p> <p>India’s central bank employees strike. Most of the Reserve
HKEx flags short-selling products
Capital Markets
<p>The surge in Chinese share prices in the first half of this year frustrated international fund managers invested in Hong Kong's less volatile market. Despite the dramatic market collapse during the summer, they remain thwarted by Mainland rules that prevent them arbitraging still heady A-share prices and more subdued valuations for the same companies listed in Hong Kong.</p> <p>That could now change.</p> <p> "Hong Kong Exchanges &amp; Clearing [HKEx] is looking to launch products that would allow investors to make bets on the difference between Hong Kong-listed Chinese companies, so-called H-shares, and Shanghai-listed ones, or A-shares, according to exchange officials. As of Friday’s close, Chinese shares traded at a premium of 36.9% to the same companies trading in Hong Kong," reports The Wall Street Journal. (paywall)</p> <p>Yet, short-selling has already been allowed since March within the much heralded (and no rather muted) Shanghai-Hong Kong Stock Connect scheme. But a design flaw means that custody banks and fund managers can't actually lend shares for the purpose of shorting.</p> <p>Perhaps, HKEx should focus on improving an existing system by lobbying China's stock market regulator rather than launching another initiative that could also fail.<br /> Photo: 黃埔體育會 Whampoa Sports Club<br /> &nbsp;</p>
Five world currencies that are closely tied to commodities
Capital Markets
<p>For more than a year now, commodity prices have been under pressure from the strong U.S. dollar and slowing global demand. This has made a huge dent in the balance sheet of many net exporters of resources, in turn weakening their currencies.</p> <p>This should come as a shock to no one, but what most people don’t realize is just how closely some currencies track certain commodities. When I presented at the International Mining and Resources Conference in Melbourne, Australia, earlier this month, I shared several charts that show this correlation. Many attendees were astounded—and we’re talking professional economists, money managers and CEOs here.</p> <p>With that said, I think it’s important that you see this correlation as well. Below are five world currencies that have been impacted by lower commodity prices.</p> <p>1. Australian Dollar</p> <p>Australia now accounts for around a third of global iron ore production, according to the country’s budgetary office. This means that its income is very sensitive to price changes. As demand from China, the world’s largest consumer of iron ore, has softened, so too has the Australian dollar.</p> <p>2. Canadian Dollar</p> <p>The sixth-largest oil producer in the world is Canada, about a quarter of whose exports is oil. The Conference Board of Canada, a not-for-profit economic research group, estimates that sales for the country’s energy sector will recede a sizable 22 percent this year. In Alberta, where revenue from oil sand exports had until recently helped the province become the fastest-growing in Canada, GDP is expected to contract 1 percent. And in September, the country’s economy shrank for the second straight quarter. As for the Canadian dollar, it’s fallen around 15 percent against the dollar for the one-year period.</p> <p>3. Russian Ruble</p> <p>Compared to Canada and Australia, Russia’s export mix isn’t nearly as diversified: About half of its exports in terms of value are a combination of oil and natural gas. (Russia sits atop the third-largest oil reserves in the world, the number one natural gas reserves.) It should come as no surprise, then, that its currency is highly influenced by Brent oil. Where oil went starting in July 2014, so went the ruble.</p> <p>4. Colombian Peso</p> <p>The same story can be found in Colombia, where oil exports are responsible for about 20 percent of government revenue. Officials estimate, however, that oil sales will total $1.1 billion in 2016, compared to $6.7 billion in 2014. With prices lingering just above $41 per barrel, the Colombian peso has retreated 30 percent against the U.S. dollar for the one-year period.</p> <p>5. Peruvian Sol</p> <p>Besides gold, copper is Peru’s most important mineral export by value. With around 13 percent of the world’s copper reserves, it’s the third-largest producer after Chile and China. As such, the Peruvian sol has declined in tandem with the red metal.</p> <p>This story first appeared in Advisor Perspectives.</p> <p>Photo: Sajid Pervaiz Fazal</p>
Daily Scan: Stocks end week on high note; Chipotle slammed for E. coli
Capital Markets
<p>Updated throughout the day</p> <p>November 20, 2015</p> <p>Stocks ended the week on a high note, bouncing back from terrorist attacks around the world. The S&amp;P 500 had its biggest week of gains in almost a year, thanks to healthcare and tech stocks. St. Louis Federal Reserve president and known interest rate hawk James Bullard spoke Friday morning, also helping push stocks up. "We are going to return to an era where there is a bit more uncertainty about what the committee is going to do meeting to meeting," said Bullard."I would welcome the return of that because to me that's normal monetary policy." The S&amp;P 500 rose 0.4% Friday. The Nasdaq was up 0.6% and the Dow gained 0.5%.</p> <p>Here’s what else you need to know:</p> <p>Chipotle E. coli outbreak spreads. At least 45 people across six states have gotten sick as a result of eating at Chipotle, health officials say. The stock for the Mexican fast-casual restaurant hit an 18-month low with the news. Reuters </p> <p>Malian hostage situation ends with at least 27 dead. A five-star hotel in the Malian capital of Bamako was stormed and at least 170 people taken hostage Friday. Al-Qaeda linked Al-Mourabitoun has taken responsibility for the raid. About 10 gunmen reportedly yelled "Allahu Akbar," or "God is great," as they rushed in. U.S., French, Malian, and U.N. soldiers responded.  Al Jazeera</p> <p>Draghi: “we will do what we must.” Speaking to an audience at the Frankfurt European Banking Congress, ECB President Mario Draghi reiterated his stance that he will do whatever it takes if risks begin skewing to the downside. “We will act by using all the instruments available within our mandate.”  ECB </p> <p>Fischer: “we have done everything we can to avoid surprising the markets.” In his latest speech, Federal Reserve vice-chair Stanley Fischer tried to tone down expectations for a December hike by saying that “no final decisions have been made.” Still though, his comment for the emerging markets sounds a little like “brace yourselves.” Reuters</p> <p>Asian shares end the week higher.  Speculation that the PBOC would slash rates once again fueled most of the Hang Seng’s gains, while late buying from institutional investors helped pull the embattled Nikkei from finishing the red. For the week, the Hang Seng Index is up 1.61% and the Shanghai Composite roared 2.31% higher. The Shenzhen Composite rocketed 4.73% while the Nikkei 225 gained a more modest 0.95%.</p> <p>ABN Amro valued at $17.9 billion in IPO. The Dutch bank was nationalized seven years ago at the depths of the financial crisis.  In one of the biggest banking IPOs in years, the government is shedding just 20% of its stake. Wall Street Journal (paywall)</p> <p>China uncovers $125 billion in ‘grey capital’ flows in crackdown.  China started a crackdown on underground banks in April and has so far uncovered more than 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan ($125.34 billion). SCMP (paywall)</p> <p>U.S. releases Jonathan Pollard from jail after 30 years. The former U.S. Navy analyst was convicted of spying for Israel. The case has been a diplomatic sore point for decades. He will not be allowed to join his wife in Israel for five years. Reuters</p> <p>Terrorists kill five in Israel. Palestinians killed two Israelis in Tel Aviv and three on the West Bank, including an American 18-year-old spending his gap year in Israel. Reuters</p> <p>India’s central bank employees strike. Most of the Reserve Bank of India’s (RBI) 17,000 employees went on strike over pensions on Thursday in what the central bank described as “mass casual leave.” BBC</p> <p>BoJ’s Kuroda remains bullish on Japan economy. Bank of Japan Govoner Haruhiko Kuroda remained optimistic about Japan’s economy and inflation prospects at a post-policy-meeting news conference Thursday, pointing to significant improvement in consumer spending and exports. Nikkei</p> <p>Anti-Apec protests greet Manila trade summit . Large protests are taking place in the Philippine capital, where leaders are attending the
People Moves: ITG loses chair and director; Nomura hires 6 for Americas
Capital Markets
<p>ITG chairwoman to step down. Maureen O'Hara will retire in January after serving on the board of Investment Technology Group since 2003. ITG director Chris Dodds will also be retiring at the end of the year. Incoming CEO Frank Troise will begin in January. Reuters</p> <p>Nomura hires for American push. Japanese firm Nomura has hired six senior bankers for its U.S. endeavors. Mark Connelly has been named head of equity capital markets. He comes to the firm from Jefferies, where he worked as global co-head of equity capital. Garrett Carpenter and Christina Park will be managing directors for the acquisition leveraged finance team. Carpenter is from Bank of America Merrill Lynch and Park is from Barclays. James Frawley and Peter Finn both join the industrials mergers group from Macquarie Capital. Carl Torrillo will join the industrials investment banking team from ACE Portal. New York Times<br /> Photo: @iStock.com/ooyoo<br /> &nbsp;</p>
Daily Scan: Militants seize 170 hostages in Mali; Asian shares higher on week and Draghi's easy money
Capital Markets
<p>Updated throughout the day</p> <p>November 20, 2015</p> <p>Once more Friday brings terrible news -- militants shouting "Allahu Akbar" stormed a Radisson Hotel in Mali, seizing 170 hostages. At least three people were killed in the attack. No one has taken responsibility for the raid on a hotel popular with diplomats and businessmen in Bamako, the capital. Meanwhile, in Paris another victim succumbed to wounds sustained during the Friday 13th attack, bringing the total number of murdered to 130. A manhunt continues for an eighth member of the team who perpetrated the crime.</p> <p>Here’s what else you need to know:</p> <p>Asian shares end the week higher.  On Friday with the Hang Seng Index soared 1.13%, the Shanghai Composite climbing 0.37%, and the Nikkei 225 bouncing 0.10%. Speculation that the PBOC would slash rates once again fueled most of the Hang Seng’s gains, while late buying from institutional investors helped pull the embattled Nikkei from finishing the red. Here’s the score this week:</p> <p>Day<br /> Week</p> <p>Hang Seng Index<br /> +1.13%<br /> +1.61%</p> <p>Hang Seng China Enterprises Index<br /> +1.07%<br /> +1.39%</p> <p>Shanghai Composite<br /> +0.37%<br /> +2.31%</p> <p>Shenzhen Composite<br /> +1.27%<br /> +4.73%</p> <p>Nikkei 225<br /> +0.10%<br /> +0.95%</p> <p>Draghi: “we will do what we must.” Speaking to an audience at the Frankfurt European Banking Congress, ECB President Mario Draghi reiterated his stance that he will do whatever it takes if risks begin skewing to the downside. “We will act by using all the instruments available within our mandate.”  ECB </p> <p>European shares  headed for best close in a month. The bourses were modestly lower Friday and airline stocks are getting hard hit again faced, once more, with acts of terrorism. Wall Street however seems to be receptive to Draghi’s overtures, with S&amp;P 500 futures climbing 0.1%, and Dow futures jumping 0.2%.</p> <p>Get ready for a world without antibiotics. The world is on the cusp of a "post-antibiotic era", scientists have warned after finding bacteria resistant to drugs used when all other treatments have failed.The bacteria is able to shrug off the drug of last resort - colistin - in patients and livestock in China. BBC</p> <p>Pigeons detect breast cancer.  Doctors train for years in order to be able to correctly diagnose breast cancer - but could they soon be replaced by pigeons? Perhaps not, but scientists have now found that pigeons are surprisingly adept when it comes to spotting cancerous cells. Telegraph</p> <p>China uncovers $125 billion in ‘grey capital’ flows in crackdown.  China started a crackdown on underground banks in April and has so far uncovered more than 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan ($125.34 billion). SCMP (paywall)</p> <p>India’s central bank employees strike. Most of the Reserve Bank of India’s (RBI) 17,000 employees went on strike over pensions on Thursday in what the central bank described as “mass casual leave.” BBC</p> <p>North Korean leaders propose border village meeting with the South. The offer for working-level talks is a response to invite by Seoul in September. The two countries saw an escalation of military tensions over the summer. The Guardian</p> <p>Weak inflation is a concern for Atlanta Fed President. Dennis Lockhart says that market volatility has settled enough that he’s ready to lift short-term rates soon, but the consistently low inflation is concerning. Wall Street Journal (paywall)</p> <p>Fischer: “we have done everything we can to avoid surprising the markets.” In his latest speech, Federal Reserve vice-chair Stanley Fischer tried to tone down expectations for a December hike by saying that “no final decisions have been made.” Still though, his comment for the emerging markets sounds a little like “brace yourselves.” Reuters</p> <p>BoJ’s Kuroda remains bullish on Japan economy.Bank of Japan Govoner Haruhiko Kuroda remained optimistic about Japan’s economy and inflation prospects at a post-policy-meeting news conferenc
Daily Scan: Asian shares trade mixed; China cracks down on underground banks
Capital Markets
Updated throughout the day Weighed by a strong yen, a weak dollar, and fading enthusiasm over the Fed rate hike, Asian shares traded mixed on Friday with the Hang Seng Index down 0.19%, the Shanghai Composite up 0.07%, and the Nikkei 225 down 0.22%. Here’s how the rest fared: Hang Seng China Enterprises Index: -0.22% Shenzhen Composite: +0.59% Straits Times&hellip;
People Moves: Citic Securities chair to retire; Citi appoints new APAC TMT head
Capital Markets
Citic Securities chair steps down. Wang Dongming, without a doubt one of China’s banking heavyweights, will be stepping down as chairman of Citic Securities, citing to his age. His departure comes just as several of his top lieutenants were detained under suspicions of insider trading. Wang, who headed the firm since its 1995 founding, is expected to be replaced by&hellip;
Daily Scan: Asian futures climb; Fed officials try to dial back expectations
Capital Markets
Updated throughout the day November 20 The U.S. may have closed essentially flat, but if stock index futures are anything to go with, it looks like Asia’s set to rip higher. Contracts on Hong Kong’s Hang Seng Index are signaling a 0.12% pop at the open, while those on the CSI 300 point to a 1.69% jump over in the&hellip;
Daily Scan: Match and Square show strong debut; Lockhart nervous about inflation
Capital Markets
Updated throughout the day November 19 The U.S. markets were fairly stagnant Thursday, with the exception of some IPO and earnings excitement. No real move from the major indexes. Match Group, parent of Tinder and other dating apps, opened at $13.50 in its public debut, up 12.5% from the IPO pricing. The Gap tumbled more than 1% after it slashed its 2015&hellip;