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JPM | Pfizer hires JPMorgan to weigh sale of some drugs Bloomberg | Reuters Pfizer Inc N PFE is exploring sale of a group of treatments in cardiology urology and primary care Bloomberg reported on Thursday citing people familiar with the matter The drugs could fetch more than 2 billion Bloomberg reported Pfizer is working with financial adviser JPMorgan Chase Co NYSE JPM for the potential portfolio sale and the process is at a preliminary stage Bloomberg said
Pfizer could not be immediately reached for comment |
JPM | HSBC hires Deutsche Bank s Laing to cover emerging markets ECM sources | LONDON Reuters HSBC L HSBA has hired former Deutsche Bank DE DBKGn executive Christopher Laing to cover emerging markets equity capital financing sources with direct knowledge of the matter said on Thursday Laing s title is still to be finalised but he will perform a similar role to that of head of emerging markets Equity Capital Markets ECM that he held at Deutsche Bank one of the sources said A spokesman for HSBC declined to comment Separately the bank announced on Wednesday it has named Hossein Zami as its new global head of equities and JPMorgan N JPM veteran Ray Doody as global head of leveraged and acquisition finance according to internal memos obtained by Reuters |
C | Top Democrat says regional banks key to Wall Street win on derivatives | By Amanda Becker and Emily Stephenson WASHINGTON Reuters A top Democrat in the U S House of Representatives on Tuesday said unpopular Wall Street banks got a long sought rollback to Dodd Frank reforms through Congress last week partly by leveraging the influence of smaller banks that hold greater sway with lawmakers They have been working for a long time trying different strategies on it California Representative Maxine Waters said in an interview The big banks are in trouble with most legislators so they put the regional banks in front of them in order to gain more support Citigroup Inc and JPMorgan Chase Co wanted to turn back a provision in the Dodd Frank law that would have forced banks to push derivatives trading into separate units The push out rule would have boosted banks trading costs The rollback was included in the 1 1 trillion spending package passed by Congress that funds most government agencies through September 2015 Wall Street banks launched a full court press this year to get the provision into that bill lawmakers and congressional aides said Banks wanted a vehicle most lawmakers would feel compelled to vote for before the rule took effect in July 2015 They knew this was a must pass bill Waters said The derivatives rider first offered by Kansas Republican Representative Kevin Yoder was agreed on by a bipartisan team negotiating the omnibus spending package Many Democrats criticized it as going easy on Wall Street Appropriators said they fought off worse changes to the law and won higher funding for two key regulators Jamie Dimon chief executive of JPMorgan personally called lawmakers before they voted on the package President Barack Obama dispatched a top deputy Thursday to encourage House Democrats to vote for the compromise But in interviews after the bill passed bank lobbyists and Hill staffers said the words Wall Street were anathema to most lawmakers They said banks such as SunTrust and Fifth Third which had ties to local lawmakers actually got the changes across the finish line Regional bank representatives met with Hill lawmakers and Treasury officials and participated in conference calls congressional staffers and lobbyists said Yoder s spokesman CJ Grover said the lawmaker proposed the amendment because smaller regional banks and farmers used derivatives to manage risk Waters however said the biggest U S banks were the beneficiaries of the Dodd Frank change
The big banks tried to hide behind the regional banks she said That s what it s all about Reporting by Amanda Becker and Emily Stephenson Editing by Lisa Shumaker |
C | SMBC to buy Citi Japan retail business in October sources | By Taro Fuse TOKYO Reuters Sumitomo Mitsui Banking Corp SMBC will buy Citigroup Inc s N C Japanese retail banking operations in October for about 40 billion yen 330 million people with knowledge of the matter said on Wednesday The Sumitomo Mitsui Financial Group Inc T 8316 unit will announce the long awaited purchase on Thursday the sources said Citi s Japan consumer banking business has been hurt by weak loan demand and falling interest margins in a market where the U S based lender has operated for over 100 years Spokesmen for the two banks declined to comment on the deal The Citi operations will be merged into SMBC Trust Bank which will let Citi s retail customers in Japan maintain their access to the U S bank s global ATM network for at least two years after SMBC s acquisition the sources said The new business combination will focus on selling Citi developed financial products they said The third largest U S bank said in October it was pulling out of consumer banking in 11 markets including Japan and Egypt as it looks to cut high costs
1 120 3700 yen Reporting by Taro Fuse Writing by William Mallard Editing by Chris Gallagher and Muralikumar Anantharaman |
C | Citigroup To Sell Japan Retail Banking Business To Sumitomo Mitsui | By
Citigroup and SMBC cost of which is still unknown will include the sale of 740 000 accounts worth about billion title Reuters The deal between Citigroup and SMBC cost of which is still unknown will include the sale of 740 000 accounts worth about billion rel external image
Citigroup NYSE C will sell its retail banking unit in Japan to Sumitomo Mitsui Banking Corp SMBC a Japanese multinational banking and financial services company headquartered in Chiyoda Tokyo the companies announced Thursday
SMBC Trust Bank Ltd a wholly owned subsidiary of SMBC will acquire the retail banking business of Citibank Japan which includes about 2 5 trillion yen about 21 billion deposited in nearly 740 000 customer accounts The deal also involves the sale of Citibank Japan s ATMs and 32 retail branches with about 1 600 employees SMBC said on its website According to the companies the transaction is subject to regulatory approvals and is expected to close in October next year
The cost of the acquisition was not disclosed but according to a source cited by Bloomberg SMBC is expected to pay about 40 billion yen about 333 million to acquire Citigroup s Japanese retail banking unit The announcement of the acquisition comes at a time when SMBC is trying to generate more profits by serving wealthy clients in Japan which has about 14 trillion in household financial assets Bloomberg reported
In addition Citigroup reportedly said that it is also considering selling its credit card business in Japan as part of a broader effort to streamline its global banking business that will have an increased focus on corporate and investment banking The Associated Press reported
On Wednesday Citigroup stock closed 2 46 percent up at 54 54 in New York Sumitomo Mitsui Financial Group Inc stock closed up 1 08 percent in Tokyo markets on Thursday |
C | Citigroup makes last minute cut in year end bonuses for traders | Reuters Citigroup Inc N C this week cut its bonus pool for fixed income and equity market traders after market revenues plunged during the last two weeks of the year according to a person familiar with the matter Bonuses will be down about 5 to 10 percent from a year earlier the person said As of mid December they had been expected to hold steady with the past year The change is the result of declines across the trading businesses in the last half of the month the person said On Dec 9 CEO Mike Corbat said he expected market revenues to be down about 5 percent from a year earlier
The change in bonuses was announced internally on Wednesday by Citigroup co president James Forese to trading executives and was reported on Friday afternoon by the Wall Street Journal |
C | Citi To Sell Prepaid Card Services As Streamlining Continues | Citigroup Inc NYSE C inked yet another deal in continuation with its efforts to boost returns by streamlining operations The Wall Street banking giant is set to sell its institutional Prepaid Card Services to Germany based payment and issuing company Wirecard AG The deal includes transfer of around 120 employees to Wirecard and is expected to close in the fourth quarter 2016 subject to regulatory approvals Citi Prepaid card services have introduced more than 2 500 client programs tied with top companies and brands across the world mainly in North America Notably Wirecard will make its entry into North America though the acquisition CEO of Citi Holdings Francesco Vanni d Archirafi stated This transaction is a positive outcome for our clients and employees of Citi s Prepaid Card Services which will become part of an industry leader that is poised for growth We are especially pleased that all Citi employees supporting this business will have the opportunity to join such an innovative company Today s transaction marks yet another important milestone in our strategy to continue the reduction of assets and businesses in Citi Holdings We remain encouraged as Citigroup continues with its repositioning and restructuring initiatives while remaining focused on resolving several internal setbacks including legal issues We believe that these streamlining initiatives will bolster the company s capital position reduce expenses and drive operational efficiencies Notably the company s 2016 capital plan received the Federal Reserve s approval The plan includes a threefold rise in its quarterly dividend to 16 cents per share from current pay out of 5 cents and a common stock repurchase program of up to 8 6 billion over four quarters beginning the third quarter of 2016 Citigroup currently carries a Zacks Rank 5 Sell Some better ranked stocks in the finance space include Franklin Flagstar Bancorp Inc NYSE C Southern National Bancorp of Virginia Inc NASDAQ SONA and First Mid Illinois Bancshares Inc NASDAQ FMBH All three stocks sport a Zacks Rank 1 Strong Buy |
MS | UPDATE 2 SMFG seeks majority control of Daiwa SMBC media | SMFG wants to up stake in Daiwa SMBC as high as 67 Yomiuri
Resistance within Daiwa to losing control of JV Yomiuri
SMFG would merge Daiwa SMBC with Nikko wholesale ops Yomiuri
Recasts adds SMFG spokeswoman comment
TOKYO Aug 19 Reuters Sumitomo Mitsui Financial Group is
looking to take majority control of its investment banking joint
venture with Daiwa Securities Group the Yomiuri newspaper said
on Wednesday
Sumitomo Mitsui Japan s third largest bank by assets has
been pushing to build up its businesses in investment banking and
securities
The bank said in May it would buy Citigroup s brokerage and
key investment banking units in Japan for about 6 billion
aiming to catch up with bigger rival Mitsubishi UFJ Financial
Group and its alliance with Morgan Stanley
Sumitomo Mitsui currently owns 40 percent of the venture
while Daiwa owns the remainder Sumitomo Mitsui is keen to raise
its stake in the unit Daiwa Securities SMBC to as high as 67
percent to gain control the Yomiuri said
The bank has previously said it would consider merging the
venture with the wholesale business it bought from Citigroup
However Sumitomo Mitsui may face resistance from Daiwa
which is not keen to give up its control of the unit the
newspaper said
A spokeswoman for Sumitomo Mitsui and a spokesman for Daiwa
both declined to comment
Reporting by Nathan Layne and David Dolan |
MS | MONEY MARKETS Euroyen futures rally halts yen TIBOR freezes | Euroyen futures rally halts LIBOR TIBOR spreads widen
Aussie interbank bill futures stabilise after rally
Dollar interbank rates at fresh lows
By Vidya Ranganathan
SINGAPORE Aug 19 Reuters Japanese yen interbank rates
paused after a week long rally on Wednesday in step with other
short term rates markets which had reacted this week to the
deep pullback in equity markets and a reassessment by investors
of growth estimates
Most of the regional stocks including the Shanghai market
seemed to have stabilised on Wednesday overcoming their
worries China will intervene to rein in its surging stock
market
But that sharp decline in shares had driven bonds and rates
futures higher as investors pared their aggressive pricing of
future monetary tightening
Euroyen futures for instance were steady at 99 50 for a
June 2010 contract implying 3 month rates at 0 5 percent That
contract has risen from 99 43 a week ago
All money market futures have been rallying globally so
Japan is not isolated from that said Noriyuki Fukuda a
strategist with Morgan Stanley in Tokyo
Plus the BOJ governor s comments were very very cautious
on the economy and I think he is right so there s just an
adjustment from some incorporation of the possibility of
normalisation in rates Some mildly bearish trades have been
taken off perhaps
Bank of Japan Governor Masaaki Shirakawa tempered the
market last week by suggesting deflation could persist for a
while and raising doubts about how strongly global demand will
recover
Aussie bank bill futures were likewise listless after their
rally in the past week with the December 2010 contract steady
around 94 60 or pricing in 3 month bill yields at 5 4 percent
That implied yield was 5 69 percent a week earlier
Eurodollar futures have also been rangebound in the past
two sessions after a steep rise The March 2010 contract has
rallied 40 bps in the past week pricing in 3 month rates at
0 87 percent now Dollar interbank rates in the 3 month tenor
hit a fresh low of 0 4357 percent in Singapore
But in Japan whose economy is mired in deflation and
expected to keep seeing prices fall for a couple of years the
rise in implied yields and interbank rates earlier in August
had been at odds with fundamentals despite the jump in the
equity market to its highest levels this year
Yen LIBOR has gradually been inching down The 6 month
LIBOR is at 0 6125 percent and has fallen 3 bps this month
after falling below corresponding domestic TIBOR in mid July
TIBOR meanwhile has remained sluggish the 6 month rate
unchanged at 0 66 percent through the past three weeks
Analysts at Barclays Capital said in a note this week that
TIBOR s underperformance relative to LIBOR was likely to
continue
This situation is likely to persist for now given the
combination of rising deposits and shrinking lending volumes
and thus outright yen LIBOR or TIBOR LIBOR wideners have
value Barclays said
Editing by Kazunori Takada |
MS | EARNINGS POLL Maersk seen swinging to half year loss | A P Moller Maersk seen reporting half year net loss
Results released on Friday Aug 21
Net loss seen at 2 91 bln crowns
COPENHAGEN Aug 19 Reuters Danish shipping and energy
group A P Moller Maersk is expected to post a net loss for the
first half of 2009 because of low freight rates and slipping oil
prices a Reuters poll of analysts showed
The group was seen swinging to a net loss of 2 91 billion
Danish crowns 552 6 million in the six months to the end of
June from a net profit of 11 59 billion in the same period last
year according to the average of 14 estimates
Maersk is due to report results on Friday Aug 21
Total revenue at the world s biggest container shipping
group was seen falling 14 2 percent year on year to 127 3
billion crowns
Maersk has suffered from a significant slow down in the
container market and low container rates Maersk Oil Gas has
been hit by a very low oil price compared to the year ago record
level Jyske Bank analyst Karsten Sloth said in a research
note
Operating earnings in the Oil and Gas division were seen
down by 53 6 percent at 11 9 billion crowns while the container
and shipping business was seen posting an operating loss of 6
billion crowns
Maersk operates the world s largest container shipping
fleet Maersk Line and controls about 85 percent of Danish oil
production in the North Sea together with partners Shell and
Chevron
Of the 13 analysts who disclosed their recommendations on
Maersk s stock four had neutral views three were positive and
six were negative
Maersk s big shipping competitors include Taiwan s Evergreen
Marine Corp Japan s Mitsui O S K Lines Ltd Korea s Hanjin
Shipping Germany s Hapag Lloyd and privately owned MSC
Data for Reuters Nordics earnings polls compiled by Inquiry
Financial Intelligence For more details on the data please
click on
All figures in millions of crowns except EPS and dividend
which are in crowns
ESTIMATES FOR THE FIRST HALF OF 2009
Mean Median High Low No Yr ago
Total revenue 127 326 130 510 137 500 114 801 13 148 365
EBITDA group 22 304 21 269 27 673 18 000 13 40 021
EBIT group 9 030 9 433 13 376 5 000 13 33 804
cont shipping 5 958 6 207 4 588 7 130 8 1 854
terminals 645 638 771 548 6 n a
tank offshore 1 560 1 542 2 073 1 142 8 4 292
oil gas 11 867 11 337 16 291 10 139 8 25 563
retail 1 000 1 009 1 170 772 8 1 221
industrials 1 91 580 379 8 1 051
Pretax profit 4 787 4 316 9 741 2 414 13 31 788
Net profit 2 907 2 603 930 5 852 14 11 594
EPS 707 43 633 50 226 00 1 424 0 14 2 817 00
FULL YEAR 2009
Mean Median High Low No Yr ago
Total revenue 260 593 261 695 275 000 244 980 12 311 821
EBITDA group 49 470 48 817 55 079 42 880 10 83 945
EBIT group 23 047 22 600 29 638 17 615 11 60 627
cont shipping 9 465 9 121 7 667 11 723 7 4 940
terminals 1 473 1 551 1 747 1 184 5 1 593
tank offshore 3 816 4 390 4 768 2 451 7 6 539
oil gas 25 358 26 643 29 699 19 218 7 45 267
retail 2 379 2 361 2 613 2 010 7 2 569
industrials 298 341 90 563 7 1 255
Pretax profit 16 486 14 600 23 561 10 499 11 52 819
Net profit 1 878 2 543 3 853 6 000 12 16 960
EPS 456 92 618 50 937 00 1 460 12 4 122 00
FULL YEAR 2010
Mean Median High Low No
Total revenue 280 140 280 106 295 000 269 571 11
EBITDA group 65 933 65 782 70 500 61 109 9
EBIT group 40 169 40 080 43 167 35 788 10
cont shipping 2 801 3 017 5 4 865 6
terminals 1 657 1 691 1 930 1 316 4
tank offshore 4 122 4 025 6 730 1 514 6
oil gas 35 052 34 631 38 296 32 854 6
retail 2 475 2 462 2 912 2 013 6
industrials 182 111 22 419 6
Pretax profit 33 941 33 558 38 139 28 659 10
Net profit 8 472 8 204 13 000 4 833 11
EPS 2 061 91 996 3 163 1 176 11
Dividend per share 560 33 650 00 750 00 250 00 6
NOTES
No denotes the number of estimates
A P Moller Maersk s main business areas are its oil and
gas activities mainly in the North Sea oil gas in the table
container and shipping cont shipping in the table terminal
operating company terminals in the table retail solution
segment retail and sand gravel and excavating activities
industrials
The following banks and brokerages provided the estimates
ABG Sundal Collier Carnegie Dansk Aktie Analyse Fearnley
Handelsbanken Capital Markets ING Jyske Bank Morgan Stanley
Nordea Nykredit Markets SEB Enskilda Societe Generale SP
Equity Research Sydbank and UBS
1 5 266 Danish Crown
Reporting by Martin Dahl Editing by Jon Loades Carter |
MS | GLOBAL MARKETS Shanghai stocks rebound 4 pct drive Asia gains | Shanghai up 4 pct set for biggest 1 day rise in 5 months
Asian stocks follow China bounce Europe called higher
Shanghai trade still volatile on low volumes
MSCI Asia ex Japan gains 1 4 pct copper and gold edge up
Analysts say don t read too much into Shanghai swings
By Eric Burroughs
HONG KONG Aug 20 Reuters Chinese shares clawed higher
on Thursday after a two week sell off giving a boost to Asian
stock indexes and commodities even as many investors remained
worried that the Shanghai slide may have more room to run
European shares were set to build on the gains in Asia
with futures on the Dow Jones Eurostoxx 50 up 1 4
percent while U S stock futures rose 0 5 percent
The benchmark Shanghai Composite Index jumped more
than 4 percent helped by reports that the stock regulator had
approved new mutual funds this week to help underpin the market
that has slid nearly 20 percent since hitting a 14 month high
earlier in the month HK
The gains in another day of volatile trade helped give a
lift to other regional shares that have been battered by sudden
slumps in Shanghai this month
Japan s Nikkei average ended 1 8 percent higher
while the MSCI benchmark of Asia Pacific shares outside Japan
gained 1 4 percent Metals also got a lift
with copper prices recovering from a two week low
Shanghai s impact on global markets has surprised analysts
because it is largely closed to foreign investors and its moves
are sometimes due to murky local factors having little to do
with corporate or economic fundamentals
While some investors have seen the Shanghai slide as a
worrying sign about the outlook for the Chinese economy
among the strongest to power out of the global recession
many China watchers have argued that investors should not read
too much into daily swings ID nSP486694
The Shanghai index is still up more than 50 percent so far
this year despite falling some 20 percent in just two weeks
Some market watchers suspect that state owned companies may
have shifted loans received earlier in the year tied to the
more than 1 trillion of new bank lending in the first half of
the year into stocks and now they are taking out those funds
to put into stimulus related projects
The more aggressively minded or cowboys were steering
those funds into the market Now that the more concrete
projects are happening we are starting to see that money
rotate out said Michael Kurtz chief China representative
and head of China research at Macquarie Securities in Shanghai
Jerry Lou China equity strategist at Morgan Stanley in
Hong Kong said that Chinese authorities have also cracked down
on the bank lending that had been funnelled into stock market
speculation
That s what the government wants They don t want an asset
bubble to burst too early in the recovery and then they re out
of cards Lou said We re not seeing the start of a bear
market The fundamentals are too sound
Hong Kong s Hang Seng index rose 1 9 percent along
with the regional rebound
In a sign that heavy share selling by short term
speculators or hot money may be calming down the Hong
Kong dollar recovered to near the upper end of its
tight band against the U S dollar after hitting a two month
low on Wednesday
Hefty fund inflows chasing the stock surge have kept the
Hong Kong dollar pinned at the upper end of its band for much
of the past five months
Patrick Bennett Asia FX and rates strategist at Societe
Generale said the fact that Chinese shares were having such a
big influence on other markets felt like intellectual piracy
but showed how edgy investors are on the global outlook
WORRIES REMAIN
Gains in higher yielding currencies were limited on worries
that the volatile Chinese market was suffering a sharp bout of
profit taking that would resume before long A further slide
may prompt global investors to pull out of riskier assets in
general
The Australian dollar edged up 0 1 percent to 0 8308
despite the broad rise in stocks after having taken a
hit from the sharp drop in Shanghai shares earlier this week
Against the low yielding yen the Aussie was up 0 5
percent
The U S dollar index a gauge of the greenback s
performance against six major currencies was flat at 78 475
Oil prices rose 27 cents a barrel to 72 69 after
having surged more than 4 percent on Wednesday on data showing
a sharp plunge in U S crude stockpiles a jump that spilled
over into shares of energy companies and helped push up the S P
500 up 0 7 percent O R
Shares of Japanese oil and gas field developer Inpex
1605 T were up 2 9 percent
Safe haven government bonds slipped as stocks attempted to
stage a recovery
Japanese government bond futures 2JGBv1 dipped 0 12 point
to 138 75 after having pushed up to a five month high in early
trade The five year JGB yield edged up a basis
point to 0 6550 percent after touching a four year low the
previous day
Editing by Kim Coghill |
MS | GLOBAL MARKETS Shanghai stocks rebound drive Asia gains | Shanghai up 4 pct set for biggest 1 day rise in 5 months
Asian stocks follow China bounce Europe called higher
Shanghai trade still volatile on low volumes
MSCI Asia ex Japan gains 1 4 pct copper and gold edge up
Analysts say don t read too much into Shanghai swings
By Eric Burroughs
HONG KONG Aug 20 Reuters Chinese shares clawed higher
on Thursday after a two week sell off giving a boost to Asian
stock indexes and commodities even as many investors remained
worried that the Shanghai slide may have more room to run
European shares were set to build on the gains in Asia
with futures on the Dow Jones Eurostoxx 50 up 1 4
percent while U S stock futures rose 0 5 percent
The benchmark Shanghai Composite Index jumped more
than 4 percent helped by reports that the stock regulator had
approved new mutual funds this week to help underpin the market
that has slid nearly 20 percent since hitting a 14 month high
earlier in the month HK
The gains in another day of volatile trade helped give a
lift to other regional shares that have been battered by sudden
slumps in Shanghai this month
Japan s Nikkei average ended 1 8 percent higher
while the MSCI benchmark of Asia Pacific shares outside Japan
gained 1 4 percent Metals also got a lift
with copper prices recovering from a two week low
Shanghai s impact on global markets has surprised analysts
because it is largely closed to foreign investors and its moves
are sometimes due to murky local factors having little to do
with corporate or economic fundamentals
While some investors have seen the Shanghai slide as a
worrying sign about the outlook for the Chinese economy
among the strongest to power out of the global recession
many China watchers have argued that investors should not read
too much into daily swings ID nSP486694
The Shanghai index is still up more than 50 percent so far
this year despite falling some 20 percent in just two weeks
Some market watchers suspect that state owned companies may
have shifted loans received earlier in the year tied to the
more than 1 trillion of new bank lending in the first half of
the year into stocks and now they are taking out those funds
to put into stimulus related projects
The more aggressively minded or cowboys were steering
those funds into the market Now that the more concrete
projects are happening we are starting to see that money
rotate out said Michael Kurtz chief China representative
and head of China research at Macquarie Securities in Shanghai
Jerry Lou China equity strategist at Morgan Stanley in
Hong Kong said that Chinese authorities have also cracked down
on the bank lending that had been funnelled into stock market
speculation
That s what the government wants They don t want an asset
bubble to burst too early in the recovery and then they re out
of cards Lou said We re not seeing the start of a bear
market The fundamentals are too sound
Hong Kong s Hang Seng index rose 1 9 percent along
with the regional rebound
In a sign that heavy share selling by short term
speculators or hot money may be calming down the Hong
Kong dollar recovered to near the upper end of its
tight band against the U S dollar after hitting a two month
low on Wednesday
Hefty fund inflows chasing the stock surge have kept the
Hong Kong dollar pinned at the upper end of its band for much
of the past five months
Patrick Bennett Asia FX and rates strategist at Societe
Generale said the fact that Chinese shares were having such a
big influence on other markets felt like intellectual piracy
but showed how edgy investors are on the global outlook
WORRIES REMAIN
Gains in higher yielding currencies were limited on worries
that the volatile Chinese market was suffering a sharp bout of
profit taking that would resume before long A further slide
may prompt global investors to pull out of riskier assets in
general
The Australian dollar edged up 0 1 percent to 0 8308
despite the broad rise in stocks after having taken a
hit from the sharp drop in Shanghai shares earlier this week
Against the low yielding yen the Aussie was up 0 5
percent
The U S dollar index a gauge of the greenback s
performance against six major currencies was flat at 78 475
Oil prices rose 27 cents a barrel to 72 69 after
having surged more than 4 percent on Wednesday on data showing
a sharp plunge in U S crude stockpiles a jump that spilled
over into shares of energy companies and helped push up the S P
500 up 0 7 percent O R
Shares of Japanese oil and gas field developer Inpex
1605 T were up 2 9 percent
Safe haven government bonds slipped as stocks attempted to
stage a recovery
Japanese government bond futures 2JGBv1 dipped 0 12 point
to 138 75 after having pushed up to a five month high in early
trade The five year JGB yield edged up a basis
point to 0 6550 percent after touching a four year low the
previous day
Editing by Kim Coghill |
MS | UPDATE 5 Swiss turn a profit on 5 1 bln UBS stake sale | Swiss govt sells 9 percent stake in UBS
Shares sold at 16 50 francs
UBS shares up 4 6 percent
Adds official price
By Douwe Miedema and Sam Cage
LONDON ZURICH Aug 20 Reuters Switzerland sold its stake
in UBS for 5 5 billion Swiss francs 5 1 billion on Thursday
making a solid profit from last year s rescue of its largest
bank
The sale of the 9 percent stake comes a day after the
country agreed to reveal the names of thousands of UBS s rich
American clients to Washington settling a tax avoidance dispute
that dented its prized banking secrecy
The United States said it now setting its sights on others
helping clients hide assets from the taxman threatening
Switzerland s thriving banking sector and its status as the
world s largest off shore centre
Other Swiss banks such as Credit Suisse Julius Baer
Zuercher Kantonalbank ZKB and Union Bancaire Privee UBP are
now fretting that the U S taxman s spotlight could fall on
them the Wall Street Journal has reported
Swiss authorities said the sale showed UBS had found a solid
footing again after becoming one of the biggest victims in the
credit crisis and analysts said the government exit could
herald a recovery at the bank
The U S deal obviously helps to rebuild UBS s reputation
With that one of the most threatening items for UBS on the way
back to profitability falls away said Rainer Skierka analyst
at Swiss bank Sarasin
Switzerland sold 332 million shares at 16 50 Swiss francs
each at the top end of its price range for a total of 5 5
billion francs 5 16 billion the finance ministry said with
order books oversubscribed multiple times
It also received 1 8 billion francs to compensate for lost
interest on mandatory convertible notes allowing it to make a
1 2 billion franc gain on its investment a number that it said
had been conservatively rounded
Berne made a 30 percent yield on the 6 billion francs it
paid for the stake in October part of a set of emergency
measures at the height of the global financial crisis which
cost UBS its spot as the world s biggest private bank
The stake sale was run by Credit Suisse Morgan Stanley and
UBS itself traders said
MORE CONFIDENCE
Switzerland like most other Western countries took over
part of its banking industry after the credit crisis threatened
a systemic collapse but the sale now means it is ahead of some
others in finding an exit
The UK and the U S still hold big stakes in major banks
while Sweden is still the largest shareholder in Nordea after it
stepped in to rescue lenders in the early 1990s
The Swiss National Bank said the government sale indicated
the market was more confident in UBS while Switzerland s
financial regulator FINMA said it supported the sale since the
bank now had a stable sound capital base
UBS shares were up 4 6 percent at 17 50 francs at 1446 GMT
having closed at 16 74 francs on Wednesday while the DJ Stoxx
bank sector index was up 1 7 percent
In February UBS agreed to pay 780 million and disclose
about 250 client names to settle a criminal probe by U S
authorities One former UBS banker testified that he smuggled a
client s diamonds in a tube of toothpaste
This announcement today should send a signal no matter
what institution you re with the IRS is willing to pursue both
the institution and the individual Internal Revenue Service
Commissioner Doug Shulman said on Wednesday
Switzerland s private banks manage around 2 trillion of
foreign wealth and it is home to dozens of often secretive and
privately held banks for rich clients
For a column on the share sale click
For analysis
Additional reporting by Katie Reid and Rupert
Pretterklieberin Zurich Steve Slater and Daisy Ku in London and
Anshuman Daga in Singapore Editing by Will Waterman and Erica
Billingham
1 1 065 Swiss Franc |
MS | ANALYSIS Europe stocks seek revenue boost after cost cuts | Cost cutting helps firms to beat Q2 profit estimates
Further savings hard to achieve focus on revenue growth
Return to growth in some G7 countries will help sales
By Dominic Lau and Atul Prakash
LONDON Aug 20 Reuters A sputtering European stock
market rally needs a spark from clear signs of an economic
recovery because companies are running out of costs to cut and
will depend on sales growth to lift profits
Analysts say that the prospects of revenue growth are
improving after regional powerhouse Germany pulled out of
recession in the second quarter but caution that any hiccup on
this front could dent stock markets
European shares have jumped 46 percent from March lows
underpinned by better than feared corporate results
The rally is showing some signs of fatigue with investors
concerned about the quality of earnings after many companies
missed revenue forecasts but help could be at hand from
gradually recovering economies
We are constructive on earnings but not because companies
will do another massive round of cost cutting We think there is
basically some topline growth that will start to come back
said Nick Nelson European equity strategist at UBS
Our view is that from the macroeconomic perspective all
the major economies will be showing positive quarter on quarter
growth by Q3
France and Japan also returned to growth in April June And
a survey showed confidence in German economic outlook hit its
highest level in more than three years in August
Ronan Carr Morgan Stanley s European equity strategist
expected revenue growth to track improving economic data
The topline recovery will lag But it could start to show
up in the second half of the year given that GDP are starting
to turn positive already he said
The investment bank had revised its European corporate
earnings forecasts for 2010 to a rise in profits of 20 percent
from no growth previously For 2009 Morgan Stanley forecast a
20 percent fall in earnings
More than half of the 219 DJ STOXX 600 companies that have
so far reported second quarter results beat expectations
according to Thomson Reuters data though profit estimates were
already low
Companies are likely to avoid cutting jobs and capital
expenditure further because they want to keep some firepower for
the upturn when it comes meaning that stock performance hinges
on improved sales
RECOVERY RISK
Mark Bon fund manager at Canada Life said he expected
European earnings to grow by 2 to 3 percent in the third
quarter and by a similar percentage in the fourth quarter
Expectations of earnings are starting to recover he said
There is still room for some positive surprises The main
risk at the moment is the pace of economic recovery If
there is a slight hiccup it would be because the recovery seems
to be coming through slowly
Although three G7 countries were technically out of
recession U S consumers gloom deepened in early August as a
growing number of people in the world s largest economy fretted
about their finances spurring a retreat in equity market
The International Monetary Fund s Chief Economist Olivier
Blanchard also said the turnaround would not be simple as the
crisis had left deep scars which will affect both supply and
demand for many years to come
Some analysts say the picture is too mixed to predict a
return to strong revenue growth
The jury is still out We are not seeing strong
second quarter results ripping through into the forward
earnings estimates said Philip Lawlor chief portfolio
strategist at Nomura
If you believe that this second quarter was good you would
have seen people stepping up to the plate and starting to
upgrade their forward earnings estimates he said We have not
seen any evidence of that yet
Forward earnings per share for MSCI world equity stood at
18 47 down from 18 65 at the end of last month but up from
17 7 in the beginning of July before companies reported their
second quarter results Thomson Reuters data showed
But for markets that have been roiled by uncertainty over
the past two years even a steady third quarter will be a
satisfactory result
People are still talking about the third quarter
probably going to be an improvement but not a big improvement
yet So I don t think people will get too upset if the third
quarter numbers are not particularly better than they were in
the second quarter Canada Life s Bon said
One positive factor for equities is that a lower base for
comparison would help companies to achieve positive
third quarter figures
In general the third quarter last year became very
difficult so it will be easy to beat them this year said
Dean Tenerelli portfolio manager for European equities at T
Rowe Price International
Third quarter will be OK to slightly upgraded
Editing by Sitaraman Shankar |
MS | UPDATE 2 India s Adani Power shares make disappointing debut | End flat after falling below issue price
Could tame price expectations for coming IPOs
Updates closing share price analysts view on the stock
By Narayanan Somasundaram Janaki Krishnan
MUMBAI Aug 20 Reuters Shares in Adani Power which
raised 630 million in India s first large IPO in 18 months
made a shaky market debut on Thursday that could prompt other
listing hopefuls to scale down their price expectations
State owned energy explorer Oil India is planning a 500
million to 600 million IPO in September and a clutch of
companies including at least a dozen government firms are eyeing
share sales to fund expansion in Asia s third largest economy
For a Factbox on India share sales see
Shares in Adani Power closed up 0 05 percent at 100 05
rupees on the Bombay Stock Exchange after opening 5 15 percent
higher and then falling as low as 98 50 rupees The benchmark
BSE index climbed 1 4 percent
The stock was the most actively traded notching a volume of
96 4 million shares
The listing was almost reminiscent of the stock market debut
by Reliance Power which raised almost 2 9 billion in India s
largest ever IPO in early 2008 but has not closed above the
issue price
Analysts had expected Adani to open 6 10 percent higher but
slip below the issue price on project execution risk The firm
which is building power plants with a combined capacity of 6 600
megawatts generates only 330 megawatts now
Angel Broking analyst Girish Solanki estimates the fair
value for the stock at 82 rupees citing risks in developing new
capacities Large investors might exit the stock if pricing of
IPOs by rivals such as Indiabulls Power is attractive
Markets are comparatively weaker than when the issue opened
for subscription So I am not surprised given the project
execution risks said Ambareesh Baliga vice president at Karvy
Stock Broking
The tepid listing could dent investor appetite for
high priced offering and companies will have to scale down their
pricing to keep the market going
Investors apply for IPO listing gains It would augur well
for IPOs to leave more on the table for investors Baliga said
At 100 rupees a share Adani would be valued at 4 times book
compared with 3 1 times for state run utility NTPC Ltd that
generates 31 000 megawatts or a quarter of the country s power
BRAVE FACE
The market will find its own price said Adani Power
Chairman Gautam Adani in response to a question on the tepid
listing
I think the company s performance in the coming quarters
with turbines getting added along with the capacity building up
will be able to see the market take care of the pricing he
said
The company expects revenue to start accruing from the
December quarter officials said
Adani Power last month sold 13 84 percent of the company or
301 65 million shares in an offering that was subscribed more
than 20 times with large funds bidding heavily
The company which initially planned the IPO last year but
deferred it amid the global financial crisis plans to spend
21 9 billion rupees 450 million from the IPO proceeds for
building the power plants
DSP Merrill Lynch Enam Securities IDFC SSKI JM Financial
Kotak Mahindra Capital Co Morgan Stanley ICICI Securities and
SBI Capital Markets were the arrangers to the issue
Indian firms have raised almost 10 billion by selling
shares so far this year surpassing the money raised in 2008
helped by an 86 5 percent surge in the BSE index from its March
low However at Thursday s close the benchmark had fallen 4 2
percent in August
State utility NHPC Ltd which raised 1 25 billion earlier
this month in an IPO that was subscribed nearly 24 times is
expected to list in early September
Editing by Ranjit Gangadharan Editing by Jon Loades Carter |
MS | INTERVIEW Origo CEO says investment sentiment on the up | Emerging mkt investors better insulated than western
Sees opportunities in Chinese consumer goods clean energy
Says UK investor confidence at 6 mo high
By Rhys Jones
LONDON Aug 20 Reuters Origo Sino India an Asia focused
private equity group believes investor sentiment is at its best
level for six months and that emerging market investors are
more sheltered from the downturn than those backing western
firms
I sense the confidence of UK investors especially hedge
funds is much better than it was six months ago Origo
Sino India s Chief Executive Chris Rynning told Reuters in an
interview on Wednesday
Investors in China and India have been better insulated
from the financial crisis than those backing western firms
because the gearing of emerging market investments is much lower
so we have seen an improvement in our return potential
The AIM listed fund which has around 200 million pounds
329 3 million worth of investments in 25 pre IPO Asia focused
companies has interests in consumer goods related firms but
sees the best returns are coming from Chinese renewable energy
agriculture and cleantech companies
With rising retail and consumer consumption there are
plenty of opportunities in China in terms of consumer goods
said Rynning
But resources are quite constrained there so if you can
take a long term look at the strategic resources needed to
fulfil China s demand and invest in those specific sectors
which have been largely unexplored by western investors then
you will have a very good return potential
Origo which also manages Origo Resource Partners a listed
natural resources investment fund sees China as its biggest
growth opportunity
I see China as the most attractive investment destination
right now It has plenty of local liquidity an attractive IPO
market with a growth enterprise market due to open in Shenzhen
in October and plenty of exit opportunities said Rynning
Earlier this year Origo started a 300 million agriculture
fund to invest in an Australian farming operation to manufacture
and export food such as chicken and beef to China
Morgan Stanley Private Equity Asia Blackstone Group and
Rabobank have all set up Asia focused agriculture investment
funds in the last year
With urbanisation at the rate it is in China it has left
farmland and water as constrained resources so we will export
food there from Australia because the Chinese diet is changing
and they want to eat safer and better said Rynning
Origo plans to maintain its focus on China and India but has
recently widened its mandate to invest in companies outside of
its two main markets whose demand are driven by the Chinese and
Indian economies
China and India have a combined population of 2 3 billion
people and with consumer demand still rising we see a huge
spectrum of opportunity for us said Rynning
Shares in Origo which have risen in value by 7 percent so
far this year were flat at 15 5 pence by 1235 GMT
1 6073 Pound
Editing by Matt Scuffham and Rupert Winchester |
JPM | Dollar wallows near seven week lows on Trump protectionism | By Yuzuha Oka TOKYO Reuters The dollar struggled near seven week lows on Thursday on growing concerns over U S President Donald Trump s protectionist policies including an executive order to construct a U S Mexican border wall The dollar index DXY which tracks the greenback against a basket of major currencies was last down 0 2 percent at 99 839 It dipped to 99 835 on Wednesday its lowest level since Dec 8 The dollar was generally weaker despite U S shares gaining and the Dow Jones Industrial Average DJI closing atop the 20 000 mark for the first time N Trump has made several business friendly decisions since taking office on Friday including signing executive orders to reduce regulatory burden on domestic manufacturers and clearing the way for the construction of two oil pipelines However the president s broad but divisive plans to reshape U S immigration and national security policy rattled some investors partly as the U S needs foreign capital to finance its large current account deficit Trump on Wednesday ordered construction of a U S Mexican border wall and punishment for cities shielding illegal immigrants while mulling restoring a CIA secret detention program Amid concerns over Trump s protectionism the correlation between U S Treasury yields and the dollar has gotten weaker said Junya Tanase chief currency strategist at JPMorgan Chase NYSE JPM Bank The dollar last stood at 113 21 yen against the yen near two month low of 112 52 yen touched on Tuesday even as U S Treasuries yields stayed near four week highs U S benchmark 10 year Treasury yields last stood at 2 510 percent US10YT RR close to a 4 week high of 2 538 percent hit on Wednesday It s similar to the U S Japan trade conflicts in 1990s Back then the dollar was weak despite the high U S interest rates Dollar would remain weak if Trump pushes his protectionist rhetoric said JPMorgan Chase s Tanase Sterling was last down 0 1 percent at 1 2627 after hitting a six week high of 1 2638 on Wednesday The pound was helped by hopes for a trade deal between Britain and the United States which Prime Minister Theresa May said on Wednesday would put UK interests and UK values first
The euro traded at 1 0755 against the dollar slightly below Tuesday s seven week high of 1 0775 and down 0 1 percent from late U S levels |
JPM | Speculation builds on a Verizon Charter tie up no offer made | By Anjali Athavaley and Liana B Baker Reuters Verizon Communications Inc NYSE VZ is interested in exploring a combination with U S cable company Charter Communication Inc as part of a long list of acquisition targets but no proposal has been made for a tie up between the two companies sources told Reuters on Thursday Speculation over a combination of the companies underscores the pressure the nation s largest wireless carrier faces to do a deal in the wake of AT T NYSE T Inc s planned 85 4 billion takeover of Time Warner Inc NYSE TWX Verizon and other carriers also face a saturated smartphone market Verizon said in July that it struck a deal to buy Yahoo NASDAQ YHOO Inc s core internet properties but the deal was cast into doubt after Yahoo disclosed data breaches last year I think the market is predictably impatient and wants Verizon to do something yesterday said Craig Moffett an analyst at MoffettNathanson The market inevitably draws the comparison to AT T that for better or worse has made its big strategic bet After rising as much as 10 percent and hitting a session high of 341 50 on the news Charter shares eased and were trading up 6 5 percent at 330 59 Verizon shares were down 1 4 percent at 49 08 Charter and Verizon declined to comment A Charter acquisition would signal that Verizon has a drastically different strategic vision than rival AT T which has sought to diversify away from the wireless business through its deal for Time Warner and earlier acquisition of satellite TV provider DirecTV Instead a deal for Charter would indicate Verizon is betting on infrastructure On its earnings conference call with investors on Tuesday Chief Financial Officer Matt Ellis said that 5G wireless technology was a focus for Verizon The great irony could be that the cable operators are better positioned to compete in 5G wireless than the wireless operators themselves Moffett said Speculation over a tie up with Charter has been building steadily since last month when Verizon Chief Executive Officer Lowell McAdam told Wall Street analysts that such a deal would make industrial sense according to a December note by BTIG analyst Walter Piecyk With Charter Verizon would gain a fiber and cable network across 49 million homes including markets in California Texas and Florida that the wireless carrier recently divested to Frontier Communications Corp NASDAQ FTR JPMorgan NYSE JPM analysts said in a note in December From a traditional antitrust point of view the combination of a phone company and a cable company would not raise competition issues that cannot be overcome said George Bittlingmayer a professor at the University of Kansas School of Business The wildcard here is whether people s unhappiness with their cable and mobile phone providers would translate into some grandstanding and arm twisting on the part of the new administration for political benefit he said Phil Cusick an analyst at JPMorgan said in an email on Thursday that he expects 2 billion in annual synergies from a Charter deal but added that the deal s math is difficult to make work noting that a combined company would be heavily leveraged The Wall Street Journal which first reported a preliminary approach between the companies said it was unclear if Charter s executives would be open to a transaction and that there was no guarantee a deal would be struck Verizon had a market capitalization of 203 billion as of Wednesday s close while Charter was valued at nearly 84 billion according to Thomson Reuters data |
JPM | Chipper mood on European earnings warrants caution | By Atul Prakash and Vikram Subhedar
LONDON Reuters The mood among analysts on the outlook for European earnings is the brightest in 6 years although a combination of higher valuations and optimistic projections leaves the bar for disappointment in the imminent results season fairly low
Lofty expectations at the start of the calendar year are not new In every year since 2010 forecasts have called for double digit earnings growth in Europe only for actual annual results to significantly underwhelm
Meanwhile a global rally in stock markets stoked by hopes of better economic growth the return of inflation in Western countries and seemingly unperturbed by a swathe of political risks in Europe and the United States has lifted valuations back to or above long term averages
European shares STOXX are up nearly 11 percent since their early November lows following Donald Trump s win in the U S presidential election with the banks commodity related sectors and industrials leading the charge as investors switched out of defensive dividend paying sectors and into stocks closely geared to the economic cycle
Earnings are forecast to grow roughly 14 percent in Europe this year and companies are seeing more analyst upgrades than downgrades for the first time since 2010 according to Thomson Reuters data
While fundamental factors such as improving global growth forecasts higher commodity prices and steeper bond yield curves have underpinned improving earnings concerns are creeping in on whether the better economic backdrop is already baked into higher stock prices
Valuations for European shares are back to roughly 15 times forward earnings bang in line with long term averages
Investors should be cautious about these headline earnings numbers for 2017 said Alex Dryden global market strategist at JPMorgan NYSE JPM Asset Management
Analyst forecasts typically start the year at an overly optimistic level before falling sharply over the course of the year said Dryden
A strong run up in share prices ahead of earnings makes it that much harder for relatively good results to spur further buying
UBS results on Friday were a case in point The Swiss bank reported better than expected results though shares fell more than 3 percent They had risen more than 20 percent in the three months prior
In terms of growth European banks remain the sector seeing the strongest forecasts Earnings for the sector are seen growing more than 20 percent over the next 12 months followed by the technology sector at 15 percent Insurers and utilities are seeing the softest earnings growth of just under 4 percent
A healthy earnings season in the United States where fourth quarter earnings are on track for their biggest increase in two years has also bolstered the outlook for Europe Inc
Some factors such as higher commodity prices and a steeper yield curve which have benefited U S firms are likely to spill over into Europe too
Commodities and financials have a higher weighting in European indexes relative to the U S suggesting their impact is even more pronounced JP Morgan Asset Management s Dryden said
One worry among investors however is that much of the improvement in outlook hinges on Donald Trump s sweeping agenda of tax cuts infrastructure spending and a healthcare revamp
Worldwide a lot of Trump optimism is discounted in stocks This makes them vulnerable to growth disappointments said Philippe Gijsels head of research at BNP Paribas PA BNPP Fortis in Brussels |
JPM | Florida bitcoin exchange operator s dad avoids prison | By Nate Raymond
NEW YORK Reuters The father of a Florida man who prosecutors said operated an illegal bitcoin exchange avoided prison on Friday after pleading guilty in a case that stemmed from an investigation into a cyber breach at JPMorgan Chase Co NYSE JPM
Federal prosecutors in Manhattan had sought up to 16 months in prison for Michael Murgio a former Palm Beach County School Board member who pleaded guilty in October to obstructing an examination of a credit union linked to the bitcoin exchange
U S District Judge Alison Nathan instead sentenced Murgio 66 to one year of probation a 12 000 fine and 200 hours of community service saying he was far less culpable than his co defendants and had shown remorse
None of us are the worst thing we have done in life Nathan said in court
Prosecutors said bitcoin exchange Coin mx was operated by one of Murgio s sons Anthony Murgio and was owned by Gery Shalon an Israeli accused of overseeing a hacking scheme that resulted in information being stolen for more than 100 million people
The companies that were hacked included JPMorgan which in 2014 disclosed a breach involving records for more than 83 million accounts
The Murgios were not charged in the hacking case
But they and four other men were charged in connection with Coin mx which prosecutors said exchanged with no license millions of dollars into bitcoin and was run through a front called Collectables Club
To evade scrutiny of Florida based Coin mx Anthony Murgio 33 and others in 2014 acquired control of now defunct Helping Other People Excel Federal Credit Union of Jackson New Jersey by bribing its chairman Pastor Trevon Gross prosecutors said
After the National Credit Union Administration in 2014 deemed Anthony Murgio s board picks ineligible due to their residency Michael Murgio drafted a letter falsely claiming Collectables Club was based in New Jersey court papers said
I wish there was a way to take it back but there isn t Michael Murgio said in court on Friday
Anthony Murgio who cried during his father s sentencing pleaded guilty on Jan 9 to charges stemming from Coin mx s operation Gross and Yuri Lebedev who prosecutors say worked on Coin mx are scheduled to face trial on Feb 6
Shalon who prosecutors said was also involved in stock manipulation schemes and online gambling businesses has pleaded not guilty
The case is U S v Murgio et al U S District Court Southern District of New York No 15 cr 00769 |
C | Citi adds 600 positions in Northern Ireland jobs boost | BELFAST Reuters U S bank Citi N C will hire 600 people in Belfast in one of the largest expansions by a multinational in Northern Ireland in recent years Sixteen years after a peace deal largely brought an end to three decades of sectarian violence Northern Ireland s economy remains heavily dependent on subsidies from the United Kingdom treasury It has been eclipsed by the Republic of Ireland whose low corporate tax rate has helped it become one of the largest recipients of U S foreign direct investment in the world Northern Ireland where average wages are lower has been lobbying the British government to allow it to cut its corporate tax rate to better compete for jobs with Dublin
Citi already employs 1 500 people in Northern Ireland most in back office operations The Northern Ireland s jobs agency said it had offered support of around 6 million pounds 9 4 million of a total investment of 54 million pounds 1 0 6380 British Pounds Reporting by Ian Graham Writing by Conor Humphries Editing by Michael Urquhart |
C | ECB drops Citi from FX contact group | By Eva Taylor and Jamie McGeever FRANKFURT Reuters The European Central Bank has dropped Citigroup N C from its experts working group on foreign exchange days after the U S bank was fined by U S and UK regulators for failing to stop traders from trying to manipulate the currency market
A source familiar with the matter said the ECB s decision seemed to be related to the fine
The ECB declined to comment on this aspect saying only that the change in the list of members was part of an ongoing annual review of the foreign exchange contact group
A spokesman for Citi in London declined to comment
Citi the world s biggest foreign exchange bank was one of six banks fined a total of 4 3 billion last week for failing to have adequate systems in controls in place to prevent traders from attempting to rig benchmark currency rates
The ECB has several working groups that consist of experts from the ECB and commercial banks through which it keeps in touch with the debt FX and money markets to discuss developments and to monitor and exchange views
In its latest participants list for its foreign exchange contact group dated November 2014 the Citigroup member has been dropped
None of the other five banks fined last week is in the group
Citi s fines last week totaled 1 018 billion made up of 358 million to Britain s Financial Conduct Authority FCA 310 million to the U S Commodity Futures Trading Commission CFTC and 350 million to the U S Office of the Comptroller of the Currency OCC
Citi was fined the most of the six banks just outstripping the 1 012 billion levied on JP Morgan N JPM
Authorities accused dealers of sharing confidential information about client orders and coordinating trades to boost their own profits The foreign exchange benchmark they allegedly manipulated is used by asset managers and corporate treasurers to value their holdings
In its final notice on Citi the FCA highlighted an attempt by the bank to manipulate the ECB fixing on euro dollar on one particular day by pushing the rate higher
The sharing of order information and trading strategies between a Citi trader and counterparts at four other banks in an electronic chatroom that day resulted in the euro moving higher and a profit for Citi of 99 000
The other traders described Citi s performance as impressive lovely and cnt teach that sic according to transcripts released by the FCA
Reporting by Eva Taylor and Jamie McGeever Editing by Ruth Pitchford Jeremy Gaunt |
C | Lawsuit accuses Wells Fargo of biased lending in Chicago area | By Jonathan Stempel Reuters Wells Fargo Co was sued on Friday by Cook County Illinois which accused the largest U S mortgage lender of targeting black Hispanic and female borrowers with predatory and discriminatory lending in the Chicago area The lawsuit is the latest accusing major banks of biased mortgage lending that harmed major American cities such as Los Angeles Miami and Baltimore and prolonged the nation s housing crisis These lawsuits have had mixed success According to a complaint filed in the U S District Court in Chicago which is part of Cook County and the third most populous U S city Wells Fargo has for more than a decade discriminated against minority and female borrowers in the region with a goal of maximizing profit The 152 page complaint said the bank targeted borrowers from the time loans were made through foreclosure through equity stripping which includes the imposition of inflated or unnecessary rates and fees as well as penalties to refinance Cook County said Wells Fargo s deliberate and egregious activities affected at least 26 000 borrowers eroded the county s property tax base and forced the county to spend more to combat blight from abandoned properties It said damages may total 300 million or more The county is seeking a halt to Wells Fargo s alleged wrongful practices as well as compensatory and punitive damages Its lawsuit also targets practices at the former Wachovia Corp which Wells Fargo bought at the end of 2008 Tom Goyda a Wells Fargo spokesman said the bank would vigorously defend itself against the county s baseless accusations It s disappointing they chose to pursue a lawsuit against Wells Fargo rather than collaborate together to help borrowers and home owners he added The San Francisco based lender is also the fourth largest U S bank by assets Cook County has filed similar lawsuits against Bank of America Corp and Britain s HSBC Holdings Plc Los Angeles the second most populous U S city brought cases against Wells Fargo Bank of America JPMorgan Chase Co and Citigroup Inc
The case is County of Cook Illinois v Wells Fargo Co U S District Court Northern District of Illinois No 14 09548 Reporting by Jonathan Stempel in New York Editing by Lisa Shumaker |
C | Former ICAP trio plead not guilty to Libor fraud charges | LONDON Reuters Three former ICAP L IAP brokers pleaded not guilty in London on Friday to criminal charges that they had sought to manipulate benchmark interest rates setting the scene for a high profile trial next year Colin Goodman Darrell Read and Danny Wilkinson entered their pleas at London s Southwark Crown Court They are expected to stand trial alongside former RPMartin brokers Terry Farr and James Gilmour who pleaded not guilty last December The Serious Fraud Office SFO has charged 13 men in connection with a high profile investigation into the alleged rigging of rates such as Libor London interbank offered rate against which around 450 trillion of financial contracts from mortgages to student loans are pegged worldwide The British agency alleges that Goodman Read and Wilkinson conspired to defraud between Aug 2006 and Sept 2010 Read appeared by video link from his native New Zealand to enter his plea Worldwide 18 men have been charged with benchmark rate rigging to date and three have pleaded guilty two in the United States and one in Britain
Those pleading not guilty in Britain will face trial by jury The first trial is likely to be that of Tom Hayes a former Citigroup N C and UBS VX UBSN yen derivatives trader Hayes faces eight counts of conspiracy to defraud an offence that carries a maximum 10 year sentence Reporting by Clare Hutchison writing by Kirstin Ridley and Freya Berry editing by Keith Weir |
C | Citi s credit card business in Japan gets joint bid from three buyers Nikkei | Reuters Three companies have emerged to make a joint bid for Citigroup Inc s N C credit card business in Japan the Nikkei reported as the U S lender goes ahead with plans to exit consumer banking in the country Shinsei Bank Ltd T 8303 department store operator Isetan Mitsukoshi Holdings Ltd T 3099 and credit card service provider JCB Co Ltd want to buy the unit which offers Diners Club credit cards in Japan the business daily reported Shinsei is expected to be the main buyer with JCB assisting with account settlements and Isetan Mitsubishi providing department store services to cardholders the report said The companies have not yet decided what they will pay for the business the Nikkei said The sale price is expected to be in the range of 30 billion 50 billion yen 247 18 million 411 90 million according to some estimates the Nikkei said Citi declined to comment or confirm the report Reuters had reported last month that four banks including Sumitomo Mitsui Banking Corp SMBC and Shinsei were expected to participate in the second round of bidding for Citi s consumer banking business in Japan The consumer banking unit estimated to have 9 billion worth of dollar denominated deposits has spurred interest of Japanese banks Citi wants to pull out of consumer banking in Japan after 100 years due to weak demand for loans and falling interest margins The lender is expected to pick a buyer for the Japanese business as early as December The sale is part of Citi s plan to shed retail businesses in 11 markets Reporting by Amrutha Gayathri in Bengaluru Editing by Siddharth Cavale |
C | Citigroup to post 2 7 billion in added legal costs in fourth quarter CEO | Reuters Citigroup Inc will record 2 7 billion in litigation expenses and another 800 million in repositioning charges leaving the third largest U S bank marginally profitable in the fourth quarter its chief executive officer said on Tuesday Mike Corbat s announcement at a New York investor conference was the second time in six weeks the bank has had to tack on a massive legal charge The costs stemmed from government investigations into possible manipulation of foreign exchange markets setting of LIBOR interest rates and lax compliance of money laundering rules Past legal charges have foreshadowed settlements of cases Before the announcement analysts had expected Citigroup would make about 3 4 billion in the fourth quarter instead of a small profit While dealing with legal problems Corbat has been trying to meet his profit and efficiency targets for next year He was appointed CEO in 2012 He is also pressing for Federal Reserve approval next year to return more capital to shareholders through higher dividends and stock buybacks The Fed rejected Citi s last request after examining how the company would manage risk to its capital under stress Since Corbat became CEO Citigroup has reduced its payroll by 20 000 jobs It employed 243 000 at the end of September It has also cut its real estate by 10 million square feet or 15 percent he said The company has been closing bank branches consolidating back office support centers and getting out of consumer businesses that are too small to be efficient in some countries With the 2 7 billion in legal charges the company has largely covered its expected liabilities Corbat said Repositioning charges will be lower next year he said The new 800 million charge was about twice as much as Citigroup has recorded in recent quarters Corbat said he and Chief Financial Officer John Gerspach saw opportunities to go ahead and pull some restructuring and repositioning forward when they went through the fourth quarter budget On Oct 30 Citigroup reduced third quarter results because of an additional 600 million in legal costs The change took Citigroup s third quarter profit down to 2 84 billion Corbat also said he expects fourth quarter revenue from capital markets trading to be down about 5 percent from a year earlier Interest rate spreads and foreign exchange rates moved sharply in the first few weeks of the quarter and we didn t escape that Corbat said
Citigroup stock closed down nearly 1 percent to 55 85 Reporting by David Henry in New York Editing by Jeffrey Benkoe |
MS | FTSE eases as weak banks offset oil miner gains | Banks weak on fundraising uncertainties
Oils miners up as commodity prices stabilise
Friends Provident up on takeover deal
International Power boosted by results
By David Brett
LONDON Aug 11 Reuters Britain s top share index slipped
0 1 percent by mid session on Tuesday as weakness in banks
offset gains in energy majors and miners while insurer Friends
Provident rose after agreeing a takeover offer
By 1010 GMT the FTSE 100 was down 4 63 points to 4 717 57
easing back after hitting a 10 month closing high of 4 731 56 on
Friday
With little doubt the big story of the day so far has been
Friends Provident s acceptance of the revised bid offer by
Resolution adding further weight to the arguments that a return
to normality for financial markets remains on the cards said
Philip Gillet sales trader at IG Index
Friends Provident was 1 9 percent higher after Resolution
announced a 1 86 billion pound takeover that valued the life
insurer at a 6 percent premium to Monday s closing price
Resolution lost 2 8 percent after the announcement
Other life insurers shed Monday s gains as the rest of the
sector saw profit takers move in Old Mutual dropped 3 percent
Aviva was 2 4 percent lower and Prudential lost 1 7 percent
Banks were the biggest drag on blue chips with Barclays
Lloyds Banking Group Royal Bank of Scotland and HSBC falling
between 0 8 and 6 1 percent
The financial sector in general is struggling with Lloyds
sitting around 5 percent lower as the spectre of a 15 billion
rights issue continues to weigh said Gillet
The government is close to hammering out an agreement about
how to insure loans granted to Royal Bank of Scotland and Lloyds
Banking Group under its 580 billion pound asset protection
scheme the Guardian newspaper reported
InterContinental Hotels fell 1 percent as the world s
biggest hotelier moved to cut costs further as it warned of
tough trading through the rest of 2009 and reported a 38 percent
drop in first half profit
TUI Travel fell 0 7 percent ahead of its third quarter
results on Wednesday Its German owner TUI AG said it was
preparing to give its former container shipping unit Hapag Lloyd
a further 420 million euros people familiar with the situation
told Reuters
COMMODITIES FIRM
Oil majors were the biggest gainers on the index with BP
Cairn Energy Royal Dutch Shell and Tullow Oil up 0 6 1 7
percent as crude prices hovered around 71 a barrel
Mining companies were up as metals prices remained in
positive territory Anglo American BHP Billiton Rio Tinto
Vedanta Resources and Xstrata added between 0 2 and 1 percent
Power generation firm International Power was the top riser
up 6 5 percent after it reported a 12 percent rise in profits
as currency translation effects helped to offset challenging
U S and British markets
Other individual risers included Smith Nephew which added
1 5 percent after Morgan Stanley raised the medical device
maker to equal weight from underweight and upped its price
target to 504 pence from 463 pence
Diageo the world s biggest spirits firm gained 1 4 percent
on the back of Deutsche Bank upgrading the stock to buy from
hold
On the economic front the decline in British house prices
softened further according to government data which showed a
10 7 percent decline on the year in June after a 12 7 percent
annual decline the month before
The numbers followed news overnight from the Royal Institute
of Chartered Surveyors which said there is growing evidence that
market conditions in England and Wales are stabilising after the
financial crisis and recession
British retail sales rose last month compared with a weak
July last year a survey showed on Tuesday after changeable
weather helped seasonal clothing lines food and homeware sales
Analysts said the market will take its direction this week
from UK economic data and the U S Federal Reserve two day
interest rate setting meeting which concludes on Wednesday
Editing by Jon Loades Carter |
MS | ANALYSIS Bets advance on ECB rate hike after growth hints | By Kirsten Donovan
LONDON Aug 11 Reuters A bit more optimism from the
European Central Bank s chief and signs of improvement in euro
zone and U S economic data have led money markets to bring
forward bets for a first rise in euro zone interest rates
The ECB s Jean Claude Trichet last week hinted growth could
return to the euro zone economy sooner than previously thought
Figures derived from widely watched market rates show
traders now expect the ECB to raise rates by a quarter of a
percent to 1 25 percent in June 2010 to stave off inflationary
pressures as the economy emerges from the recent downturn
That contrasts with market expectations over the last two
months that the ECB would leave rates unchanged through most of
next year given banks still seem reluctant to lend to firms and
households despite huge liquidity injections
The swing in expectations has raised forward swap rates
fixed rates which people are willing to pay to receive
floating rate payments over pre agreed time frames quickly
this month as investors lock in fixed rates
One year forward one year swap rates have risen as the
prospect of eventual policy tightening became less unimaginable
to players said Morgan Stanley strategist Laurence Mutkin
These rates show that the average euro zone policy rate for
the year starting in one year s time is expected to be at 2 7
percent up from expectations of a little more
than 2 percent in July according to Reuters data
Similar trends are seen in the U S and UK forward rates
are also showing average rates of 2 5 percent in the U S
and 3 4 percent in the UK
WATERSHED
The spread between the one year forward swap rate and the
one year swap rate starting now is also a key indicator of
shifting interest rate expectations
It has widened around 65 basis points in the last month to
138 basis points In the past decade a spread of around 90
basis points has signalled a likely end to an ECB easing cycle
The ECB will not be in a hurry to signal a shift towards an
exit strategy said Lena Komileva head of G7 market economics
at Tullett Prebon
But signs of a transition point in the global economic
cycle and strong investor sentiment in risk markets are set to
place ongoing pressure on forward rate contracts
That pressure which reflects the view that higher rates are
ahead is eminating from the very front of the yield curve
where the ECB is now flooding markets with short term money
The 200 billion euros or so of excess liquidity in the
system is flowing back to the ECB s overnight deposit facility
and keeping overnight rates pinned near record lows
But as the health of money markets improves banks are
likely to rely less on the ECB s open market operations and
scale back their appetite for short term funds
The impact of that is that you could start to see a good
chunk of money currently in the deposit facility being used up
and that would put upwards pressure on Eonia and upwards
pressure on Euribor said rate strategist David Keeble
Current three month Eonia rates are around 0 43
percent but are seen rising to 0 65 percent in three months
time while equivalent benchmark Euribor interbank lending rates
are showing signs of bottoming out with the rate
of decline slowing markedly
The three month Euribor Eonia spread should also as a result
narrow further from 40 basis points now Three month Euribor
interest rate futures contracts 0 FEI last week posted their
biggest weekly fall in two months pushing implied yields almost
20 basis points higher on contracts to December 2010
TENDER TO OFFER MORE INSIGHT
The ECB s second ever tender for one year money in September
will offer more of an insight into the central bank s thinking
The ECB is committed to providing as many funds as banks
want but it reserves the right to add a spread over the 1
percent rate at which it has recently been providing money
The market is seeing a halt in the decline of Libor
fixings and then the possibility the ECB may add a spread at the
next 1 year tender is elevating rate hike expectations said
BNP Paribas strategist Alessandro Tentori
Analysts are split on what the ECB will do as another huge
take up of funds of the sort seen at its first one year tender
in June would limit the effectiveness of any future rate hikes
It s a classic dilemma said Christoph Rieger Dresdner
Kleinwort rate strategist
If they don t introduce a spread the risk is that banks
will take again a lot of cash But if they do introduce a spread
it could be counterproductive because Euribor fixings would be
at risk of surging higher and greater rate hike expectations
would induce banks to bid for more not less one year funds |
MS | China shares slide on IPO worries drag HK stocks down | Updates to midday
HONG KONG SHANGHAI Aug 14 Reuters China stocks slid 2 4
percent on Friday knocking Hong Kong shares off their firm
start as worries about new supplies of shares joined a list of
concerns that left this year s rally looking overdone
Financial shares dragged the index lower amid market talk
that one major Chinese brokerage would soon list its shares in
Shanghai and another was about to get approval for an IPO while
a major bank announced an expected rights issue
The Shanghai Composite Index was headed for a 6 percent drop
for the week its worst in more than five months
The index has entered a correction phase and investors are
maintaining a wait and see stance as worries linger over policy
and the economic recovery which is not on solid ground said
Zhang Xiang Chief strategist at Guodu Securities
Investors had been overly optimistic about what the July
economic data would show The index is likely to remain sluggish
next week
Here are the index moves and top stock moves in both markets
by midday
HONG KONG
The benchmark Hang Seng Index was 0 8 percent lower at
20 696 55 after opening 0 8 percent higher
After the index hit 21 000 points investors began to look
for bad news or even less good news to start selling Selling
pressure has really built up at that level said Peter Lai
director with DBS Vickers
Consumer goods exporter Li Fung jumped 7 7 percent to
HK 27 after it said profit would improve in the second half of
the year amid early signs of an improving global economy giving
it confidence to reaffirm targets in its three year plan
Morgan Stanley upgraded the stock to overweight with a
target price of HK 30 citing the company s effective
cost cutting strategy and stabilising macro economic backdrop
The China Enterprises Index which represents top
locally listed mainland Chinese stocks was down 1 1 percent at
11 773 48 led by a 1 9 percent drop in top insurer China Life
China Life Insurance sank 2 0 percent to 28 38 yuan in
Shanghai after saying it booked 191 1 billion yuan in insurance
premiums in the first seven months of the year down 5 8 percent
from a year earlier
China s Yanzhou Coal Mining Co jumped 2 6 percent to
HK 12 44 after agreeing to buy Australian coal miner Felix
Resources Ltd for 2 9 billion The stock rose 4 5 percent to
20 88 yuan in Shanghai
Credit Suisse estimated that the proposed acquisition would
boost Yanzhou s earnings by 14 percent in 2010 and by 37 percent
by 2011
Shanghai Forte Land gained 1 7 percent after the company
said it aimed to list in Shanghai through an issue of 285 million
A shares Proceeds from the sale would be used to fund property
development projects and to replenish working capital the
company added
SHANGHAI
The Shanghai Composite Index ended the morning down 2 37
percent at 3 066 092 points
Losing Shanghai A shares outnumbered gainers by 794 to 142
while turnover in Shanghai A shares dropped to 73 4 billion yuan
10 7 billion from Thursday morning s 75 3 billion yuan
reflecting the recent cautious mood toward the market
Analysts cited a widespread market rumour that China
Everbright Securities which raised 10 96 billion yuan 1 60
billion in its Shanghai initial public offering last week will
list its shares in Shanghai next Tuesday while rumours
circulated that another brokerage IPO could be approved soon
China Merchants Bank Co fell 2 3 percent to 17 27 yuan
after saying it would raise 15 billion to 18 billion yuan via a
rights issue of Hong Kong listed H shares and Shanghai listed A
shares to boost its capital adequacy ratio
But the stock rose 2 6 percent in Hong Kong as analysts said
most of the impact of the news had already been reflected in the
bank s stock price which fell nearly 8 percent in four sessions
last month after Reuters reported its capital raising plans on
July 8
The fundraising plan has hit when market sentiment is
already weak The index will soon test 3 000 points said Wu
Nan analyst from Xiangcai Securities
The index has fallen about 12 percent from a 14 month
intraday peak scaled last weak as comments by the central bank
about fine tuning its loose monetary policy and a clampdown on
new bank lending after a record rise fuelled worries over the
ample liquidity that fuelled this year s 90 percent rally
Lacklustre July economic data released this week further
dampened the market s mood
Reporting by Parvathy Ullatil in HONG KONG and Claire Zhang in
SHANGHAI Editing by Edmund Klamann and Chris Lewis |
MS | China shares skid on IPO worries HK shares inch up | China shares finish at lowest in six weeks
Shanghai index drops 6 6 pct on wk biggest drop in 5 mnths
HK shares claw back 0 2 pct led by Li Fung
Updates to close
By Parvathy Ullatil and Claire Zhang
HONG KONG SHANGHAI Aug 14 Reuters Chinese stocks slid 3
percent to their lowest close in six weeks on Friday and posted
their biggest weekly drop in five months as worries about new
supplies of shares joined a list of concerns that left this
year s rally looking overdone
Hong Kong shares clawed back 0 2 percent by the close of
trade on Friday after shedding more than 1 percent earlier as
positive earnings momentum spurred buying in select stocks
The Shanghai index has fallen about 13 percent from a
14 month intraday peak scaled last weak as comments by the
central bank about fine tuning its loose monetary policy and a
clampdown on new bank lending after a record rise fuelled worries
over the ample liquidity that fuelled this year s stellar rally
Lacklustre July economic data released this week further
dampened the market s mood
The index has entered a correction phase and investors are
maintaining a wait and see stance as worries linger over policy
and the economic recovery which is not on solid ground said
Zhang Xiang Chief strategist at Guodu Securities Investors had
been overly optimistic about what the July economic data would
show The index is likely to remain sluggish next week
HONG KONG SHARES ON ROLLER COASTER RIDE
The benchmark Hang Seng Index finished up 32 03 points at
20 893 33 as consumer goods exporter Li Fung jumped 9 2 percent
on an improved outlook for its second half earnings
Li Fung finished at a 14 month closing high of HK 27 80
after it said profit would improve in the second half of the year
amid early signs of an improving global economy giving it
confidence to reaffirm targets in its three year plan
Morgan Stanley upgraded the stock to overweight with a
target price of HK 30 citing the company s effective
cost cutting strategy and stabilising macro economic backdrop
The main gauge managed to finish the week 2 5 percent higher
after shuttling between 20400 points and 21 100 points
Its looking less like a bull market and more like a monkey
market just jumping all over the place said Peter Lai
director with DBS Vickers
Lai said selling pressure intensified after index close above
21 000 points mid week with investors looking for bad news or
even less good news to start selling
The China Enterprises Index which represents top
locally listed mainland Chinese stocks closed unchanged at
11 899 80 but top insurer China Life shed 1 6 percent tracking
steep losses on the Shanghai index
China Life Insurance sank 2 percent to 28 37 yuan in Shanghai
after saying it booked 191 1 billion yuan in insurance premiums
in the first seven months of the year down 5 8 percent from a
year earlier
China s Yanzhou Coal Mining Co jumped 2 3 percent to HK 12 40
after agreeing to buy Australian coal miner Felix Resources Ltd
for 2 9 billion The stock rose 3 7 percent to 20 72 yuan in
Shanghai
Credit Suisse estimated that the proposed acquisition would
boost Yanzhou s earnings by 14 percent in 2010 and by 37 percent
by 2011
SHANGHAI SKIDS 6 6 PCT ON WEEK
The Shanghai Composite Index closed at 3 046 972 points down
6 55 percent for the week after sinking 4 4 percent last week
Losing Shanghai A shares outnumbered gainers by 820 to 120
while turnover for Shanghai A shares rose to 145 8 billion yuan
21 3 billion from Thursday s 138 2 billion yuan
Everbright Securities Co which raised 10 96 billion yuan in
its Shanghai initial public offering last week said it would
list in Shanghai next Tuesday while market talk circulated that
another major brokerage was about to get final approval for an
IPO
The best time for ample liquidity of funds has passed With
more share supply coming to the market the correction may last
until September said Cai Junyi strategist at Shanghai
Securities
China Merchants Bank announced a rights issue to raise up to
18 billion yuan with analysts saying the size may be one of the
largest this year
China Merchants Bank fell 2 38 percent to 17 26 yuan after
saying it would raise 15 billion to 18 billion yuan via a rights
issue of Hong Kong listed H shares and Shanghai listed A shares
to boost its capital adequacy ratio
The fundraising plan hit when market sentiment was already
weak The index will soon test 3 000 points said Wu Nan
analyst from Xiangcai Securities
But the stock rose 3 4 percent in Hong Kong as analysts said
most of the impact of the news had already been reflected in the
bank s stock price which fell nearly 8 percent in four sessions
last month after Reuters reported its capital raising plans on
July 8
Editing by Edmund Klamann and Chris Lewis |
MS | Turquoise hires UBS to seek a buyer sources | LONDON Aug 18 Reuters Turquoise the pan European
equity trading venture backed by nine of the world s biggest
investment banks has hired UBS to seek a buyer people familiar
with the matter said on Tuesday
Sales documents have been send to all major exchanges and
so called multilateral trading facilities MTFs including the
London Stock Exchange Deutsche Boerse Nasdaq OMX NYSE
Euronext SIX and Chi X according to sources
UBS was appointed a couple of months ago to explore all
strategic options one of the sources said
The move comes as MTFs or start up alternative trading
platforms face increasing financial pressure as trading volumes
decline European trading operators have been saying it was
impossible for MTFs to break even and expect consolidation
across the industry
Turquoise which told Reuters in May it was considering a
third round of cash call is backed by Citi Goldman Sachs Bank
of America Merrill Lynch Morgan Stanley UBS Credit Suisse
Deutsche Bank BNP Paribas and Societe Generale
The trading platform launched in August 2008 is still
loss making but has about a 7 percent market share
Reporting by Daisy Ku Editing by Dan Lalor |
JPM | Latin America s priciest bank keeps short sellers at bay for how long | By Guillermo Parra Bernal SAO PAULO Reuters Investors have been puzzled by a 170 percent rally in shares of Banco Santander Brasil SA over the past year that made it Latin America s most expensive bank Now some are gearing up to bet against a stock whose value seems unrealistic in comparison to larger peers None of the 19 analysts covering Santander Brasil recommend the stock as a buy Thomson Reuters data showed Investors shorting Santander Brasil pay about 21 times what they do to bet against larger rivals Ita Unibanco Holding SA or Banco Bradesco SA according to data from financial bourse BM FBovespa SA Still the bank s tiny free float a large base of passive shareholders such as exchange traded funds and efforts by the bank s treasury to defend the stock have so far hindered short sellers investors such as Gustavo Gato of Explorador Capital Management LLC said Shares in the sector are up 80 percent on average in the past year half Santander Brasil s gain amid hopes that the harshest recession on record is drawing to an end As Brazil s largest foreign lender prepares to unveil fourth quarter results on Thursday investors are looking at how to take advantage of those price disparities Markets are struggling to figure out what is supporting Santander Brasil s valuations said Gato who helps oversee 400 million in Latin American equities for Explorador in S o Paulo With Santander Brazil s return on equity trailing equity fundraising costs investors pay about 2 times book value to buy stock in the local subsidiary of Spain s Banco Santander SA MC SAN They could pay less for Ita SA ITUB4 and Bradesco SA BBDC4 which trade between 1 8 times and 2 times book value and have consistently delivered return on equity almost twice those of Santander Brasil s Santander Brasil has been printing good operational improvement in most metrics in the past couple of years but its valuation is difficult to justify said Domingos Falavina a banking industry analyst with JPMorgan NYSE JPM Securities Even if Chief Executive Officer S rgio Rial presents outstanding quarterly results putting Santander Brasil s ROE closer to a 17 percent target for next year numbers are unlikely to perform a miracle and support current valuations said Adeodato Volpi Netto head of research at S o Paulo based Eleven Financial Units of Santander Brasil a blend of the bank s common and preferred shares shed 1 6 percent to 31 24 reais on Tuesday paring back their year to date gains to 10 2 percent They touched about 11 6 reais in Sept 2015 when Rial was appointed CEO NEWFOUND TACK The bank s investor relations division declined to comment citing a mandatory quiet period ahead of the release of quarterly results Santander Brasil kicks off the earnings reporting season for Brazil s private sector banks on Thursday Bradesco is slated to report results on Feb 2 and Ita will do so on Feb 7 Analysts expect fourth quarter net income before one time items of 1 613 billion reais 509 million at Santander Brasil unchanged on a year on year basis but 13 percent down from the third quarter according to consensus estimates compiled by Thomson Reuters Return on equity is forecast at 11 9 percent below the 13 1 percent ROE posted the prior quarter the estimates showed Some analysts including Banco Bradesco BBI s Rafael Frade have said Rial has driven a successful turnaround since he took the helm in Sept 2015 A seasoned dealmaker who had started earlier that year as chairman of Santander Brasil before switching to the executive role Rial has focused on improving customer experience and making sure loans and financial services are priced correctly Santander Brasil has raised credit card account management and payment settlement fees faster than rivals while tightening expenses Under Rial it has grown successfully in profitable areas such as investment banking and card payment processing Still higher taxes risk biting into part of Santander Brasil s recent profit improvement Eleven s Volpi said Insufficient scale may prevent it from taking on rivals more assertively Explorador s Gato added
Deploying capital for acquisitions seems tougher now that larger rivals have gobbled up Brazil s last available takeover targets he said That in the long run could hinder Rial s ability to cut the gap with Ita and Brasdesco both said |
JPM | Saudi Aramco asks banks to pitch for world s largest share sale | By Reem Shamseddine and Tom Arnold KHOBAR Saudi Arabia DUBAI Reuters Oil and gas company Saudi Aramco has invited banks to pitch for an advisory position on what is expected to be the world s biggest initial public offering sources familiar with the matter told Reuters on Tuesday Morgan Stanley NYSE MS and HSBC are among banks that have received the request for proposals one of the sources told Reuters with the other adding that the invitation was to evaluate Aramco s business and help it with measures surrounding the share sale The listing of Aramco is a central plank of the government s ambitious plan to transform the kingdom by enticing investment and diversifying the economy away from a reliance on oil Aramco s chief executive Amin Nasser said in October that 2018 was being targeted for the flotation of up to 5 percent of the company though the exact size of the offering will be determined by the Saudi Supreme Council The first source told Reuters that appointment of banks was expected before the end of 2017
Morgan Stanley declined to comment HSBC declined to comment Aramco was not immediately available to comment Speaking in October Nasser also said Aramco had yet to finalize the location of the listing and was currently reviewing several markets including New York London Hong Kong and Japan Bloomberg reported in April last year that Aramco had selected JPMorgan Chase Co NYSE JPM and Michael Klein as advisers on the IPO |
JPM | Aramco IPO likely to go ahead Q2 Q3 2018 with 5 stake offered | Investing com Most observers expect Saudi Arabia to proceed with oil giant Aramco IPO but some have doubts NYSE JPMorgan other banks advising kingdom to get Aramco in financial shape for listing Aramco income tax rate of 85 needs to be cut also pays 20 royalty to Saudi state IPO of 5 of Aramco worth estimated 100 bn expected in Q2 Q3 of next year Aramco reserves not included in deal for reasons of national security Other assets still big enough to merit valuation in one trillion dollar range Saudi exchange listing NYSE listing unlikely due to oil reserves U S disclosure requirement Aramco may also be listed on London Tokyo or Hong Kong exchanges |
C | Citi to pay 1 02 billion to settle foreign exchange probe | Reuters Citigroup Inc said it will pay 1 02 billion to settle a probe by regulators for failing to stop traders from trying to manipulate the foreign exchange market Citi acted quickly upon becoming aware of issues in our foreign exchange business monitoring processes to better guard against improper behavior the bank said in a statement on Wednesday
UBS HSBC Royal Bank of Scotland and JP Morgan are the other banks facing penalties from the probe Reporting by Tanya Agrawal in Bangalore Editing by Simon Jennings |
C | U S stocks slip from records oil falls | By Richard Leong
NEW YORK Reuters U S equity prices edged off record highs on Wednesday led by weakness in the financial sector after six global banks were fined a total of 4 3 billion for currency rigging while the oil market sagged on concerns about a supply glut
Global regulators fined UBS AG HSBC Holdings Plc Bank of America Corp Royal Bank of Scotland JPMorgan and Citigroup Inc for failing to stop their traders from trying to manipulate the foreign exchange market
Brent crude oil fell for a third straight session approaching 81 a barrel for a near four year low on rising U S output and after Saudi Arabia s oil minister did not make clear whether the kingdom would support a cut in oil production at the OPEC meeting on Nov 27
U S crude futures shed 1 4 percent to 76 88
Saudi Oil Minister Ali al Naimi during a visit to Mexico on Wednesday said that talk of an oil price war was baseless he did not say whether the Saudis will support reducing production
Holding on to their market position means more than anything else to Saudi Arabia now and that means holding on to their production said John Kilduff partner at New York hedge fund Again Capital
The S P 500 ended off fractionally losing 1 44 points to 2 038 24
The pan European FTSEurofirst 300 equity index lost 1 1 percent while the STOXX Europe 600 banks index slid 2 1 percent The Thomson Reuters index of G7 banks lost 0 6 percent
U S Treasuries and German Bunds 10 year yields were little changed at 2 36 percent and 0 81 percent respectively
The dollar weakened 0 2 percent against the yen to 115 53 yen on the EBS trading system The greenback strengthened against the British pound as the Bank of England s view on weak domestic inflation pushed back expectations on the timing of an interest rate hike into late 2015 Sterling fell 0 9 percent to 1 5785 a 14 month low
The dollar was steady against the euro last at 1 2433
Spot gold prices were down falling to 1 158 95 an ounce though the precious metal was off the 4 1 2 year low of 1 131 85 set last Friday
Tokyo s Nikkei closed 0 4 percent higher at 17 197 05 highest since October 2007 on expectations Prime Minister Shinzo Abe would postpone a tax hike and may call an election for December
Additional reporting by Chuck Mikolajczak in New York Lionel Laurent and Anirban Nag in London and Blaise Robinson in Paris Editing by James Dalgleish and Leslie Adler |
C | Citigroup now understands next stress test requirements CFO says | NEW YORK Reuters Citigroup Inc N C for the first time understands requirements for the next Federal Reserve stress test of its capital thanks to the most complete instructions yet from the regulators chief financial officer John Gerspach said on Thursday
Gerspach speaking at an investor conference said this is the first time leading into the test that we actually understood what the Fed is looking for
In March Citigroup failed in its last annual bid to the Fed for permission to use capital to buy back stock and pay higher dividends The failure the second for the company has hurt Citigroup shares and put pressure on executives
Gerspach said regulators have been helpful recently in written descriptions and in conversations about what the bank must do to show it has the strength to distribute capital and still withstand economic stress
Reporting by David Henry in New York |
C | Forex fines show still much to do on UK banking reform lawmakers | By Kylie MacLellan LONDON Reuters An international settlement over allegations of manipulation in the foreign exchange market shows reform of Britain s banking system is still badly needed and must not be diluted a group of British lawmakers said on Monday
Regulators last week imposed fines totaling 4 3 billion on HSBC Holdings Plc Royal Bank of Scotland Group Plc JPMorgan Chase Co Citigroup Inc UBS AG and Bank of America Corp for failing to stop traders from trying to manipulate the forex market following a year long global investigation
Last year Britain s Parliamentary Commission on Banking Standards PCBS set up to look at improving behavior at banks in the wake of scandals including the rigging of interest rate benchmarks such as Libor recommended a range of reforms
These reforms are badly needed to tackle serious lapses in banking standards and a collapse of trust in the industry The forex scandal has exposed how much work there is still to do lawmaker Andrew Tyrie who led the PCBS said
Tyrie said the fact that the forex market appeared to have been similarly exposed to rigging several years after Libor was extremely concerning and banks and regulators needed to make sure the reforms were being put in place
They need to be fully implemented They certainly must not be diluted he said
Publishing a progress report Tyrie and other members of the PCBS warned regulators that the ringfencing of retail banking from investment activities was one area at risk of being diluted by bank lobbying
Any attempts to game the rules once in place should be met with strong action by the regulators said Tyrie
The commissioners said that in order to better align rewards for bankers with the timescale of the risks involved in their trades bonus payments should be deferred for longer than the five to seven years proposed by the regulator
They also criticized the implementation of a scheme requiring staff who could pose the biggest risk of harm to a bank or its customers to be certified and monitored saying banks themselves rather than the regulator should take primary responsibility for identifying such staff
Sources have told Reuters bank executives and regulators could be grilled by parliament s Treasury Select Committee a cross party group also headed by Tyrie over whether fines have done anything to change bank behavior
Editing by David Holmes |
C | Citi cuts around 35 jobs on London trading floor sources | LONDON Reuters U S bank Citi N C has cut around 35 jobs across its capital markets trading operation in London sources with knowledge of the changes said on Wednesday
The cuts announced internally last month were across all asset classes the sources said and included head of G10 currency strategy Valentin Marinov
The move is the latest sign of a squeeze on high earning jobs on banks trading floors stemming from the growth in machine driven trading and broader cutbacks in budgets at banks since the 2008 financial crisis
Reporting by Patrick Graham and Jamie McGeever editing by Jason Neely |
C | U S Justice Dept collects record 24 billion in penalties in fiscal 2014 | WASHINGTON Reuters The U S Department of Justice collected a record 24 7 billion in penalties from fraud and other cases in fiscal year 2014 the agency said on Wednesday as fines against banks for financial misconduct soared Collections from civil and criminal actions including money collected on behalf of other agencies was 8 billion in 2013 and 13 billion in 2012
Collections in 2014 were boosted by multi billion dollar payouts from JPMorgan Chase Co N JPM and Citigroup Inc N C to resolve claims they misled investors about the quality of mortgage bonds in the run up to the financial crisis and include 11 billion in payments made to federal agencies or states
Payouts in fiscal year 2014 which ended Sept 30 also include hundreds of millions of dollars in fines levied on UBS AG VX UBSN and Royal Bank of Scotland Group Plc L RBS
It shows the fruits of the Justice Department s tireless work in enforcing federal laws and in holding financial institutions accountable for their roles in causing the 2008 financial crisis Attorney General Eric Holder said in announcing the total collections
Reporting by Aruna Viswanatha Editing by Chris Reese |
MS | Sanofi s Lantus avoids meltdown after cancer scare | Prescriptions for diabetes treatment holding up
Analysts review worst case forecasts for Lantus sales
Sanofi expected to reiterate confidence at H1 results
Shares up 2 6 percent
By Ben Hirschler
LONDON July 28 Reuters One month on from a cancer scare
that investors feared might sink sales of Sanofi Aventis s
diabetes treatment Lantus the French drugmaker appears to have
escaped the worst
Prescription data showed demand for the long acting insulin
was holding up despite the release of studies on June 26
suggesting a possible link between Lantus and cancer while U S
and European regulators have both backed the product
As a result industry analysts have been reviewing initial
gloomy sales forecasts
Morgan Stanley which upgraded the stock to overweight
from equal weight on Tuesday now believes the downside risk
to Lantus revenues will be closer to 5 to 10 percent rather
than the more than 50 percent that had been modelled initially
Its analysts now forecast Lantus sales will rise to 3 8
billion euros 5 43 billion in 2015 Merrill Lynch is more
bullish predicting 5 billion by 2014 or double last year s
level of 2 45 billion
Other analysts still caution that Lantus could be hit by more
negative news in September when the European Association of the
Study of Diabetes whose journal Diabetologia published the
critical studies discusses the drug at its annual meeting
Still so far at least Lantus has escaped the misfortune of
GlaxoSmithKline s diabetes Avandia sales of which plunged in
2007 when it was linked to heart attack risk
According to Citigroup four week average U S total
prescriptions for Lantus were down only slightly in the period
ended July 17 at 292 700 against 297 300 up to June 26
Avandia prescriptions by contrast had fallen 30 percent by
the same stage and Glaxo s medicine went on to lose 60 percent
of its sales
The lack of widespread media coverage has been one key
difference in the two cases since the European experts who have
questioned the safety of Lantus do not have the high profile of
U S cardiologist Steve Nissen who led the attack on Avandia
Sanofi has also moved quickly to highlight methodological
flaws in the research concerning Lantus
The company s chief executive Chris Viehbacher is expected
to reiterate his confidence in Lantus prospects when he presents
half year financial results on Wednesday
Shares in Sanofi were up 2 6 percent 1250 GMT outperforming
a 1 1 percent advance in the DJ Stoxx European drugs sector
also benefiting from news of a higher than expected price for
new heart drug Multaq
1 7004 Euro
Editing by Karen Foster |
MS | ANALYSIS Bubbly markets are OK while Asia waits on exports | Policymakers unlikely to tackle asset bubble fears for
now
Broader economic recovery export revival still key
Some countries may tinker with monetary policy lending
By Vidya Ranganathan
SINGAPORE July 29 Reuters Ignoring increasingly frothy
asset markets may not be the most prudent strategy to adopt
when the world is still healing from a financial crisis but
Asia s monetary authorities seem set to do precisely that
Awash in cheap cash that central banks and governments have
pumped into the ailing global economy the prices of shares and
property have jumped to levels that belie weakness in other
parts of Asia
House prices in Singapore and Seoul are estimated to have
jumped 10 to 40 percent in the past year or so while their
stock markets have climbed by some 50 to 80 percent since
March
Both economies bounced back in the second quarter
Singapore from its deepest recession on record yet it was a
patchy recovery with conspicuous weakness in exports and labour
markets and disproportionate contribution from policy stimulus
Some of the region s share markets sank on Wednesday under
a heavy bout of profit taking stoked by fears that authorities
may curb robust bank lending
Yet the lopsided economic picture has market participants
believing that central banks in Asia will not tighten policy
soon for fear of derailing nascent recoveries even if they
sense there are asset market bubbles in the making
It is a question of what they should do and what they will
do said HSBC s regional economist Frederic Neumann
Ideally central banks should be raising policy rates as
well as allowing their currencies to appreciate to minimise
the inflationary impact of the cash chasing those surging
assets and to make it more expensive to dabble in markets
Neumann reckons policy rates ought to rise by as much as 3
to 4 percentage points on average to effectively rein in
property and share prices
Rate rises of that magnitude would draw more money into
Asia pushing up its currencies And a loss in terms of trade
is the last thing the region s trade dependent economies want
now when a slump in global demand has already depressed export
incomes
Given the heavy resistance to higher rates or currencies
Neumann says he is ultimately left with policy makers
remaining behind the curve and bubbles blowing larger and
larger
IS IT A BUBBLE
For a start no one is sure if the extraordinary run up in
markets will be sustained long enough to be termed a bubble or
if indeed markets are getting ahead of themselves in pricing in
future economic growth and improvements in corporate earnings
An additional challenge for Asian authorities whose
policies have timelessly been geared towards growth is
deciding at which point they interrupt the party Asset
reflation is already making consumers feel richer and helping
banks repair balance sheets
Retail ownership of stocks and property in Asia is far
lower than in the developed world minimising the impact of
rising asset prices on inflationary expectations in the short
term Only 10 percent of households own equities in India
where the main stock market has surged 84 percent since March
There is also the question of how far rate rises can really
tame asset markets Whether a percentage point or 2 of
increases in funding costs will deter investors looking to reap
between 30 to 100 percent returns on property or stocks is
highly debatable
Still in a world nursing its wounds from a crisis that
sprouted in an overvalued U S property market it would be
unbecoming of central banks to brush aside threats of a bubble
STERILISATION
Average interest rates in Asia excluding Japan are just
above 4 percent meaning the spread over near zero dollar rates
is sufficiently attractive for investors seeking yield
But widening that spread by 3 to 4 percentage points which
is the kind of tightening analysts believe is needed when
markets get too bubbly would put upward pressure on the
currency in other ways For a start domestic investors would
keep their money at home and businesses would borrow more
abroad
Morgan Stanley analyst Chetan Ahya says this is why the
more cyclical and open economies such as Malaysia Singapore
Taiwan and Hong Kong will have difficulty tightening policy
until they see a pick up in global demand
If they raised rates their large current account surpluses
would balloon further unless they let their currencies
appreciate
For them the challenge is bigger precisely because these
countries are dependent on external demand which is weak and
therefore they don t have capacity utilisation at levels tight
enough to pose inflation risk This makes it more difficult to
lift policy rates Ahya said
For now analysts say policy makers in the more hawkish
countries such as India and Korea would merely tinker with
monetary settings by raising bank reserve requirements
issuing more short term bonds or other direct controls on
lending
China has already embarked on that path having started
issuing more bills and restraining banks from lending
recklessly
But such moves known as monetary sterilisation have their
limits In 2007 and 2008 Korea and India tried in vain to halt
spiralling property markets and ran fast out of instruments to
soak up cash from the market
Right now we are not in a bubble stage said Ahya
But in six to 12 months time if the asset markets have
already gone up and external demand has not recovered that is
when the real policy dilemma will come
There are risks but it is hard to quantify that now At
this stage they will probably let this first round of
reflation continue
Editing by Kim Coghill |
MS | UPDATE 2 ANZ likely to agree 775 mln RBS Asian deal source | Deal expected to be announced this week source
Covers assets in six Asian markets China India excluded
ANZ shares rise 2 5 pct in line with peers
Recasts lede adds fund manager comments
By Denny Thomas
SYDNEY Aug 3 Reuters Australia and New Zealand Banking
Group Ltd will likely clinch a deal this week to buy some Asian
assets from British lender Royal Bank of Scotland Plc for about
775 million a source briefed on the situation told Reuters on
Monday
The deal would mark ANZ s biggest overseas purchase cement
its position as a regional bank and would be a key step in
Australia s fourth biggest bank s goal to generate a fifth of
its revenue from Asia by 2012
ANZ has been in talks for weeks to buy retail and
commercial banking operations in six Asian markets from RBS
which is selling assets to concentrate on its home market after
racking up huge losses during the credit crisis
I think it will happen this week at some stage This week
is more likely the source said The source declined to be
identified as the negotiations were confidential
ANZ s Asian aggressive expansion is in contrast to the
strategy adopted by the three top Australian banks National
Australia Bank Westpac Banking Corp and Commonwealth Bank of
Australia which have heavily relied on domestic growth
It s clearly good for ANZ s Asian expansion strategy if
they get these assets for a reasonable price said Mark
Nathan a fund manager with Fortis Investment Partners which
oversees about A 4 billion including ANZ shares
But ANZ was not in talks to buy RBS s Indian and Chinese
businesses the source said Some analysts have questioned the
wisdom of an Asian deal with RBS minus the Indian and Chinese
operations which are seen as the prized assets ANZ raised
about 2 billion in May to fund the potential acquisition
China and India just proved to be too difficult given that
ANZ doesn t have banking licence for those countries at this
moment the source added
ANZ was pursuing assets in Hong Kong Singapore the
Philippines Indonesia Vietnam and Taiwan the source added
ANZ has spent about A 2 billion over the past decade in buying
mostly minority stakes in banks from China to Vietnam
ANZ declined to comment on the progress on the talks or
give details of the assets which it was pursuing
An RBS spokeswoman in Hong Kong said We are well advanced
with the sale process however due to regulatory constraints
and the confidentiality of the process we will not be
commenting on any individual bidders or elements of the
transaction process until its completion
GOOD FIT FOR ANZ
RBS could time the annnoucement to align with the release
of its first half earnings on Aug 7 the source added
JP Morgan said in a report last week the Asian operations
of RBS made a net loss in 2008 due to higher impairments and
lack of operational efficiencies
RBS has a small number of branches across multiple
geographies across Asia In our view this is what appeals
to ANZ in effectively holding the potential for a bolt on
acquisition across multiple geographies to strengthen their
existing presence the report added
ANZ shares ended up 2 5 percent in line with gains in its
peers after Goldman Sachs JBWere upgraded its rating on
Australian banks
RBS 70 percent owned by the British government has put
the assets up for sale as part of a plan to retreat to its home
market and exit or shrink in up to 36 other countries
Asia focused Standard Chartered was in talks to buy RBS s
assets in China India and Malaysia a source told Reuters last
month RBS had initially planned to sell the entire group to
one buyer for at least 2 billion
Standard Chartered declined to comment on Monday
ANZ is being advised Credit Suisse while Morgan Stanley is
advising RBS 1 A 1 20
Additional reporting by Alison Leung in Hong Kong and Saeed
Azhar in Singapore Editing by Anshuman Daga |
MS | China may need 2nd fiscal stimulus next yr Roach | By Deborah Kan
HONG KONG Aug 4 Reuters China may need a second fiscal
stimulus package in 2010 once the impact of the plans announced
late last year begins to fade Morgan Stanley Asia Chairman
Stephen Roach said in an interview with Reuters Television on
Tuesday
Roach s views stand at odds with a chorus of optimistic
analysts after China last month posted stronger than expected
annual growth of 7 9 percent in the second quarter
He said China s recovery so far had been uneven since
Beijing implemented a 4 trillion yuan 585 6 billion stimulus
package in late 2008 in response to the global financial
crisis
The impact of the investment led stimulus will fade and
the Chinese growth rate will start to slip again some time
towards the middle of 2010 Roach said suggesting that
slowing growth could lead to increased layoffs and thus social
instability
That means the Chinese authorities will be forced to
contemplate another proactive fiscal stimulus
In May Roach had said China may face a W shaped economic
recovery and had previously said that China s current stimulus
is directed too much at the pace of growth rather than the
quality of the growth
The former global chief economist for the U S investment
bank also reiterated his concerns about excessive investments
in infrastructure rather than on stimulating private
consumption or bolstering health care or social safety nets for
Chinese
Bottom line is they are creating a very unbalanced
macroeconomic structure Roach said in the interview
estimating that investment spending in the first half of the
year as a share of gross domestic product had exceeded 45
percent of the economy
This is a ratio unheard of in the annals of a modern
large developing economy he said
Morgan Stanley s China economist Qing Wang has forecast
China s economy will grow 9 percent this year and then 10
percent next year Both are at the higher end of economists
forecasts
1 6 830 Yuan
Writing by Rafael Nam Editing by Neil Fullick |
MS | UPDATE 1 M Stanley eyes Shanghai property sale sources | Morgan Stanley aims to sell The Exchange sources
Seeks around 366 million sources
Developer SOHO China frontrunner to buy sources
Adds quotes more details and background
By George Chen Asia Private Equity Correspondent
HONG KONG Aug 4 Reuters The real estate investment arm
of U S bank Morgan Stanley aims to sell a Shanghai office
building for around 2 5 billion yuan 366 million to a
Hong Kong listed developer sources said on Tuesday
Morgan Stanley Real Estate MSRE is in advanced talks with
developer SOHO China for the sale of The Exchange a building on
Shanghai s historic Nan Jing Road according to sources familiar
with the matter
The deal would be SOHO s first property investment in
Shanghai China s financial hub as the developer has focused
mainly on the capital Beijing
Morgan Stanley hopes to cash out while SOHO is keen to
expand into Shanghai so this is almost a perfect time for both
said one source
But the only problem is of course the price said the
source adding some market watchers valued the property widely
between 2 billion yuan and 3 billion yuan due to uncertainties
on its business prospects
MSRE aims to close the deal before the end of this year
said the sources who declined to be identified before an
official announcement is made
No agreement has been signed yet and some other investors
have also shown interest in the property but SOHO China run by
influential Chinese property tycoon Pan Shiyi is the
frontrunner the sources said
MSRE bought Dong Hai Square for roughly 2 billion yuan in
2006 and later renamed the building The Exchange
Morgan Stanley declined to comment A representative for
SOHO China could not be immediately reached for comment
PROPERTY RECOVERY
Morgan Stanley began making property investments in Shanghai
in 2003 and undertook real estate projects with local partners
including Forte and Shanghai Dragon an investment arm of the
city government
Early this year Morgan Stanley was close to raising 6
billion for a new global property fund in which China
Investment Corp the country s 200 billion sovereign fund
commited 800 million Reuters reported
Expansion into China by international companies over the
last decade has pushed up office rents in top cities such as
Shanghai and Beijing but the global financial crisis has forced
some firms to shut down offices
The prospect of office leasing market in China is not very
positive due partly to uncertainties in the global economy
while residential properties are apparently more attractive
now said another of the sources
The Shanghai benchmark stock index has gained over 80
percent this year helping local investors shift focus to
property
Institutional investors such as MSRE and Blackstone Group
often hold property projects for three to five years and cash
out at high premiums
For related Asian private equity news Reuters 3000 Xtra
users can double click on
1 6 830 Yuan |
MS | ANALYSIS New sovereign funds to emerge as crisis eases | By Natsuko Waki
LONDON Aug 4 Reuters As the world emerges from
financial crisis a new generation of sovereign wealth funds is
set to be born and it may act as a catalyst for the recovery of
global markets
An estimated 3 trillion is currently parked in state owned
funds which manage nations windfall earnings from sources such
as oil commodities and trade surpluses Newly established funds
could help to double that figure in coming years
The new funds are likely at first to be conservative
investors mindful of how much existing funds have suffered
during the crisis
But over the long term the shift of capital from central
bank reserves much of them invested in safe haven government
debt into return seeking sovereign funds could help revive
demand for risky assets such as stocks corporate bonds and even
some of the complex derivatives which the crisis hit so hard
Once the financial crisis subsides excess revenues in the
emerging economies from their export activities will resume
said Steffen Kern economist at Deutsche Bank in Frankfurt
This will strengthen again the rationale for setting up new
SWFs
for a graphic on the world s largest sovereign funds click
Japan Taiwan Thailand Bolivia Nigeria and Canada are
just some of the places where a public debate has begun on
establishing some form of sovereign wealth fund
Even within the United Kingdom there is talk that Scotland
should look at establishing such a fund to manage oil wealth
Sovereign funds have been on a rollercoaster during the
credit crisis They poured some 80 billion into banking shares
before the peak of the crisis only to see the value of their
investments implode within months
Many funds reacted by shifting their focus away from
aggressive investment abroad and instead put money into assets
at home or into strategic foreign assets such as mines that
fit in with national economic policy
But the root sources of additional money for these funds
rising commodity prices export growth and foreign reserve
accumulation are now returning after a 12 month hiatus
DOUBLE YOUR MONEY
Kern estimates typical equity portfolios held by existing
sovereign funds may have lost 45 percent between end 2007 and
early 2009 reducing overall portfolios by around 18 percent
But in the next 10 years total assets under the management
of sovereign funds are likely to hit 7 trillion more than
double the current level he thinks
In some countries the crisis may actually have increased
governments desire to develop the funds because officials see
them as tools which can be used to respond to financial shocks
In China for example a domestic arm of the country s
sovereign fund began buying shares in major banks late last year
as a way to support the sagging stock market
There is this appetite for governments to set up new SWFs
Certain countries have taken considerable utility from having
SWFs and a pool of cash during the crisis said Ashby Monk SWF
expert and research fellow at the University of Oxford
Coming out of this crisis we are going to see SWFs
increase in the same way central bank reserves increased coming
out of the 1997 crisis All these new funds may be the conduits
for a real dramatic ramp up of sovereign wealth funds
Brazil is set to join the world s roughly 64 sovereign funds
when its new fund starts operating over the next year The fund
designed to provide a cushion for the domestic economy is
receiving 14 2 billion reais 7 6 billion from the government
On the horizon you may see new funds coming from emerging
markets such as Africa where you have vast oil and natural
resources that will be developed on a large scale in the next
5 10 years said Ken Griffin president of BGR Capital and
Trade in Washington
BGR Capital and Trade is an investment banking arm of
government relations firm BGR Group which represents and
advises Middle Eastern sovereign wealth funds
Less risky investments like Treasuries and investment grade
bonds remain a natural safer harbour for smaller SWFs
especially during current unstable market conditions Griffin
said
As markets settle down however many sovereign funds are
likely to enter more risky areas in search of returns Some
already show signs of doing so
China Investment Corp CIC the country s 200 billion
sovereign wealth fund said in June that it was buying into a
2 2 billion stock offering by Morgan Stanley and would start a
new round of hiring globally to expand its operations
CIC said it would seek professionals in areas including risk
management real estate commodities and hedge fund investment
It is looking at five or six distressed asset deals in Asia and
the West people familiar with CIC s plans have told Reuters
OIL FUNDS
Scottish Finance Secretary John Swinney said last week that
his government would advance its case for a oil fund for
Scotland which would invest some of its oil and gas revenues
Oil and gas reserves will be exhausted at some point be
it in the North Sea or the Gulf That s one of the major
motivations for resource rich countries to think about saving
today for future generations said Kern at Deutsche Bank
Many of the new funds are likely to be based on oil money
Consultancy McKinsey estimates foreign assets held by
petrodollar investors could reach as high as 13 2 trillion in
2013 from the current 5 trillion
A study of 15 countries by the International Monetary Fund
looking at 30 years of data found countries inflation and the
volatility of broad money supply and prices were lower when an
oil fund was in place
Oil funds provide self insurance against macroeconomic
volatility it said Their apparent success may be ascribed to
the inherent prudence of the countries that adopt them
Editing by Andrew Torchia |
MS | UPDATE 4 SocGen profit fall cushioned by market rebound | Q2 net profit 309 million eur vs poll avg 97 million
Loan loss provisions 1 1 bln eur vs 1 3 bln forecast
Investment banking arm recovers close to breakeven
Says signs market stabilising aims to stay independent
Shares up 6 percent in afternoon trade
Adds more comments from SocGen executives analysts
By Sudip Kar Gupta
PARIS Aug 5 Reuters Societe Generale saw signs of
stabler market conditions as modest bad debt provisions and an
investment banking recovery softened the French bank s second
quarter profit fall on Wednesday
SocGen s net income fell 52 percent from last year to 309
million euros well above the average estimate of 97 million in
a Reuters poll of 15 analysts and bouncing back from a
first quarter loss of 278 million
Bad debt provisions of 1 1 billion euros were below
expectations of 1 3 billion and the investment banking arm s
loss of 12 million compared with forecasts for a 213 million
loss
Fighting back from a multi billion euro trading loss
incurred in January 2008 SocGen s investment bank benefited
along with its rivals from a second quarter rebound in world
markets that had been driven to all time lows by the financial
crisis
The division also won several large bond mandates
It s a good set of underlying figures said WestLB analyst
Christoph Bossmann
Banks with large scale trading activities have reaped solid
profits during the quarter though both Morgan Stanley and UBS
continued to post second quarter losses
HSBC Barclays and BNP Paribas France s biggest bank by
market capitalisation all benefited from resurgent debt
currency and equity trading
SHARES SURGE BUT SCEPTICISM REMAINS
SocGen shares were up 6 2 percent at 49 17 euros at 1257
GMT giving the bank a market value of around 30 billion euros
Despite Wednesday s rise SocGen s stock has underperformed
many other European banks The stock has risen 37 percent so far
this year less than the 44 percent gain in the DJ Stoxx
European bank index It fell 61 percent in 2008
SocGen s results are a mixed picture said Agilis Gestion
fund manager Arnaud Scarpaci whose firm manages around 100
million euros of assets
The bad debt charge remains a cause for concern he said
adding that he preferred BNP Paribas shares to SocGen
Brokerage Keefe Bruyette Woods said the
lower than expected bad debt hit stemmed from lower provisions
for its investment banking and international retail banking arm
STABLER MARKETS
SocGen said that while the economic outlook remained
uncertain there were signs that market conditions were becoming
more stable
Asked whether he thought SocGen s investment banking arm
would perform equally robustly for the rest of the year deputy
chief executive Severin Cabannes told reporters It is too
early to say
SocGen has been treading the path to recovery since last
year s 4 9 billion euro trading loss which it blamed on
unauthorised deals by Jerome Kerviel a former junior trader at
the bank
Kerviel remains under formal investigation for breach of
trust computer abuse and falsification
The losses caused by the Kerviel scandal reignited
speculation that BNP Paribas might pounce on its weakened
cross town rival but SocGen Chief Executive Frederic Oudea said
the bank still aimed to stay independent
Editing by John Stonestreet and Erica Billingham |
MS | WRAPUP 1 US jobless claims fall sharply buoy recovery hopes | U S weekly new jobless claims fall sharply last week
Number of workers on long term unemployment aid rises
White House says labor market to improve slowly
Some retailers report sales less steep than expected
By Lucia Mutikani
WASHINGTON Aug 6 Reuters The number of laid off U S
workers submitting new claims for jobless benefits fell sharply
last week fanning hopes the fragile labor market was on the
mend and that the broader economy was stabilizing
Initial claims for state unemployment insurance fell 38 000
to a seasonally adjusted 550 000 in the week ended Aug 1 the
Labor Department said on Thursday beating market expectations
for a drop to 580 000
In a sign that the trend was firmly toward a moderation in
the pace of layoffs the four week moving average for new
claims fell 4 750 to 555 250 in the week ended Aug 1
The four week moving average is considered a better gauge
of underlying trends as it irons out week to week volatility
The moving average has declined for six consecutive weeks
However the number of people collecting long term
unemployment benefits rose by 69 000 to 6 31 million in the
week ended July 25 though the four week moving average
declined for four straight weeks
Analysts said the report which followed data on Wednesday
showing steeper private sector job cuts and declining
non manufacturing employment in July restored optimism that
the labor market was starting to heal
The U S labor market is on the mend This corroborates
our view that the pace of layoffs has slowed down noticeably
said Harm Bandholz an economist at Unicredit Markets
Investment Banking in New York
Top White House economic adviser Christina Romer cautioned
though that economic recovery will be painful and that
Friday s widely watched report on July unemployment likely will
show hundreds of thousands more jobs were lost
U S stocks opened higher but better sentiment over
the jobless claims report quickly fizzled as biotech shares
dropped following the downgrading of Celgene Corp
Government bond prices recouped earlier losses to trade
unchanged from Wednesday s levels
The jobless claims data came ahead of the release of
July s non farm payrolls report and may have signaled the
20 month old recession was winding down analysts said
The claims data are another sign that the recession could
be behind us said Kevin Flanagan fixed income strategist for
Global Wealth Management at Morgan Stanley in Purchase New
York
I am optimistic that a recovery is in the process of
beginning but we will need to see continued improvement in
claims going through below the 500 000 level before the
consumer is willing to come on board and be part of the
recovery he added
A Reuters survey forecast that Friday s U S Labor
Department report will show 320 000 workers lost their jobs in
July the least for any month since September when employers
cut 321 000 jobs
But the jobless rate may climb to 9 6 percent the
highest since June 1983 from 9 5 percent in June as
employers remain reluctant to hire because of subdued demand
ECONOMY STABILIZING
Romer who chairs the White House Council of Economic
Advisers said on Thursday the U S government s 787 billion
stimulus program was stabilizing the economy despite
unacceptable job losses that may continue for some time
Unfortunately even once GDP gross domestic product
begins to grow it will likely take still longer for employment
to stop falling and begin to rise she said ID nN06315673
Analysts said the sharp drop in jobless claims applications
last week was more evidence that employers had cut way too many
jobs as the economy sank in the first quarter
Business overdid things earlier in the year The huge
layoffs we had were not justified we are anticipating that
we will see jobless claims numbers like this frequently going
froward said Milton Ezrati senior economist at Lord Abbett
in Jersey City in New Jersey
Labor market weakness is casting a shadow over the
economy s recovery prospects from the worst recession in over
60 years as high unemployment exerts pressure on incomes
severely curtailing households spending capacity
Consumer spending is the main driver of U S economic
activity and there are some signs that shoppers may be coming
back to the malls
Some U S retailers on Thursday reported sales declines for
July were not as steep as expected although same store sales
were likely to fall for an 11th straight month For details see
ID nN06253715
Additional reporting by David Lawder in Washington John
Parry in New York and Jessica Wohl in Chicago |
JPM | JPMorgan raises CEO Dimon s pay 3 7 percent to 28 million | NEW YORK Reuters JPMorgan Chase Co N JPM directors paid Chief Executive Jamie Dimon 28 million in total compensation for 2016 a 3 7 percent increase from the prior year the company said on Thursday His package includes a base salary of 1 5 million as well as cash and stock related instruments that are tied to Dimon s performance the filing with the U S Securities and Exchange Commission said Dimon s base salary was the same as for 2015 as was a 5 million cash performance bonus The board added 1 million of performance share units bringing the total package to 28 million In setting Dimon s compensation independent directors took into account the firm s strong performance in 2016 and through the business cycle the company said A year ago Dimon s total annual compensation was raised 35 percent to 27 million for 2015
How Dimon s pay is set has been sensitive at JPMorgan One year ago the company changed its executive pay practices to tie more of Dimon s compensation to objective measures of performance and leave less leeway for judgment by directors The change was a response to complaints by institutional investors and proxy voting advisors that Dimon s pay was too arbitrary The change was endorsed in a shareholder vote in May |
C | Obama picks Brooklyn prosecutor Lynch for attorney general | By Aruna Viswanatha and Roberta Rampton WASHINGTON Reuters President Barack Obama will nominate Brooklyn federal prosecutor Loretta Lynch to replace the retiring Eric Holder as U S attorney general and if confirmed she would become the first black woman to serve in the post the White House said on Friday The 55 year old North Carolina native and Harvard trained lawyer has deep experience in both civil rights and corporate fraud cases Lynch is known for a low key personality and stirred little controversy during two tenures as U S Attorney for the Eastern District of New York Her nomination requires Senate confirmation The Senate twice previously has voted to confirm her to federal prosecutor jobs the last time in 2010 In a statement White House spokesman Josh Earnest called Lynch a strong independent prosecutor and said Obama would formally announce her nomination to be the nation s top law enforcement official at an event in the White House Roosevelt Room on Saturday Obama the first black U S president named Holder as the first black attorney general in 2009 Holder announced in September that he would resign With Holder leaving after six years on the job Obama picked Lynch who is not a member of the president s inner circle as the first black woman for the job Sources close to the Obama administration said they expect Lynch will generate little controversy making for a smooth Senate confirmation process The top Republican on the Senate Judiciary Committee Chuck Grassley said she will will receive a very fair but thorough vetting by the panel I m hopeful that her tenure if confirmed will restore confidence in the Attorney General as a politically independent voice for the American people Grassley said Her nomination would be one of the first big changes for Obama to announce after Republicans won control of the Senate in congressional elections on Tuesday Lynch was one of several candidates Holder had recommended to succeed him Lynch emerged as a leading contender after a previous top choice former White House counsel Kathryn Ruemmler pulled out of consideration amid concerns her involvement in controversial Obama administration decisions could complicate her confirmation Holder one of Obama s closest allies has had a rocky tenure as attorney general He clashed frequently with congressional Republicans over gun control same sex marriage and a desire to try terrorism suspects in civilian instead of military courts In one 2011 email released earlier this week Holder referred to Republican members of the House Oversight Committee chaired by Darrell Issa as Issa and his idiot cronies Lynch born in Greensboro North Carolina Lynch earned her college and law degrees at Harvard worked in the Brooklyn U S Attorney s office between 1990 and 2001 and served in the top post from 1999 2001 and since 2010 She developed a close relationship with Holder through her work on the attorney general s advisory committee which she has chaired since the beginning of 2013 In her first stint in the U S Attorney s office she worked on the prosecution of New York police officers who were convicted in connection with the torture of Haitian immigrant Abner Louima an incident that became a national symbol for police brutality More recently her office has brought several high profile cases including the indictment in April of Republican U S Representative Michael Grimm for fraud Her office has worked closely with Justice Department headquarters on several big corporate fraud cases and helped investigate Citigroup Inc N C over shoddy mortgage securities the bank sold which led the bank to enter into a 7 billion settlement in July Lynch s office also was involved in the December 2012 1 2 billion accord with HSBC L HSBA over the bank s lapses in its anti money laundering controls
Prosecutors in Brooklyn are also investigating a member of Putin s inner circle Gennady Timchenko in connection with an oil trading and money laundering probe Additional reporting by Susan Heavey and Julia Edwards Writing by Will Dunham Editing by Sandra Maler |
C | European stocks decline ahead of BoE report banks weigh Dax down 0 91 | Investing com European stocks were lower on Wednesday as investors remained cautious ahead of the Bank of England s upcoming inflation report and following news five banks were fined for forex manipulation
During European morning trade the DJ Euro Stoxx 50 retreated 0 86 France s CAC 40 declined 0 60 while Germany s DAX tumbled 0 91
European equities had strengthened earlier in the week after European Central Bank President Mario Draghi said late last week that the ECB would soon begin purchasing asset backed securities to prop up the economy
But markets were hit after regulators in the U S the U K and Switzerland ordered five banks to pay about 3 3 billion to settle a probe into the rigging of foreign exchange rates
UBS SIX UBSN up 0 72 was ordered to pay the most at 800 million The four other lenders to be fined were Citigroup NYSE C JPMorgan Chase Co NYSE JPM the Royal Bank of Scotland LONDON RBS and HSBC Holdings LONDON HSBA
European financial stocks were broadly lower as French lenders BNP Paribas PARIS BNPP and Societe Generale PARIS SOGN tumbled 1 23 and 0 96 while Germany s Deutsche Bank XETRA DBKGn lost 0 99
Among peripheral lenders Italy s Intesa Sanpaolo MILAN ISP and Unicredit MILAN CRDI plummeted 1 21 and 1 80 respectively while Spanish banks Banco Santander MADRID SAN and BBVA MADRID BBVA declined 0 71 and 0 94
Elsewhere Telefonica MADRID TEF gained 0 45 after reporting that the pace of its revenue decline in Spain had slowed
In London FTSE 100 slipped 0 32 led by Capita Plc LONDON CPI down 5 22 after the outsourcing group said it was on track to achieve at least 8 organic growth for the full year after winning 1 63 billion worth of major new contracts
U K lenders were also mostly lower as the Royal Bank of Scotland edged down 0 11 and HSBC Holdings slid 0 30 while Lloyds Banking LONDON LLOY declined 0 77 Barclays LONDON BARC tumbled 1 71 after announcing that it is not ready to reach an agreement with regulators in the aforementioned currency rigging investigation
In earnings news Burberry Group LONDON BRBY reported a 12 slump in first half earnings due to lower demand in Asia sending shares in the luxury goods company down 0 98
Meanwhile mining stocks were mostly higher Shares in Fresnillo LONDON FRES edged up 0 07 and Glencore Xstrata LONDON GLEN added 0 27 while Rio Tinto LONDON RIO gained 0 40 and Randgold Resources LONDON RRS advanced 0 90
In the U S equity markets pointed to a lower open The Dow 30 futures pointed to a 0 21 fall S P 500 futures signaled an 0 24 loss while the NASDAQ 100 futures indicated a 0 26 decline
Later in the day the euro zone was to produce data on industrial production |
C | Fed investigating bank conduct in forex markets | WASHINGTON Reuters The U S Federal Reserve is investigating possible improper conduct in foreign exchange markets by large banking institutions a spokesman said on Wednesday
The Federal Reserve is continuing to investigate in the foreign exchange markets in coordination with other authorities including the Department of Justice the spokesman said in a statement
The Fed also is working closely with authorities overseas according to the statement
The announcement was made as global regulators fined five major banks including UBS VX UBSN HSBC L HSBA and Citigroup N C 3 4 billion for failing to stop their traders from trying to manipulate the foreign exchange market
Writing by Doina Chiacu Editing by Bill Trott |
C | Regulators fine global banks 3 4 billion in forex probe | By Kirstin Ridley and Joshua Franklin LONDON ZURICH Reuters Regulators fined five major banks 3 4 billion for failing to stop traders from trying to manipulate the foreign exchange market the first settlement in a year long global investigation UBS VX UBSN HSBC L HSBA and Citigroup N C Royal Bank of Scotland L RBS and JP Morgan N JPM all face penalties resulting from the probe that has also put the largely unregulated 5 trillion a day market on a tighter leash One regulator gave banks a 30 percent discount for settling early In the latest scandal to hit the financial services industry dealers shared confidential information about client orders and coordinated trades to make money from a foreign exchange benchmark used by asset managers and corporate treasurers to value their holdings Dozens of traders have been fired or suspended Dealers used code names to identify clients without naming them and created online chatrooms with pseudonyms such as the players the 3 musketeers and 1 team 1 dream in which to swap information Those not involved were belittled Switzerland s UBS swallowed the biggest penalty paying 661 million to Britain s Financial Conduct Authority FCA and the U S Commodity Futures Trading Commission CFTC UBS was also ordered by Swiss regulator FINMA which also said it had found serious misconduct in precious metals trading to hand over 134 million Swiss francs after failing to investigate a 2010 whistleblower s report The misconduct at the banks stretched back to the previous decade and up until October 2013 over a year after U S and British authorities started punishing banks for rigging the London interbank offered rate Libor an interest rate benchmark RBS which is 80 percent owned by the British government received client complaints about foreign exchange trading as far back as 2010 The bank said it regretted not responding more quickly to the complaints The other banks were similarly apologetic Their shares were under pressure in European trading EXASPERATION Reflecting exasperation that banks failed to stop the activity despite pledges to overhaul their culture and controls the FCA levied a 1 7 billon fine the biggest in the history of the City but gave a 30 percent discount for early settlement The FCA also launched a review of the spot FX industry that will require firms to scrutinise trading and compliance and may involve looking at other markets such as derivatives and precious metals Today s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right the FCA s Chief Executive Martin Wheatley said They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about Barclays L BARC which had been in settlement talks with both the FCA and the CFTC made a commercial decision to pull out of the discussions the FCA said Its investigation of the banks continues The FCA said its enforcement activities were focused on the five banks plus Barclays signalling that Deutsche Bank DE DBKGn would not face a fine from it Lenders are expecting more penalties however with the U S Department of Justice and New York s Department of Financial Services still investigating the scandal Britain s Serious Fraud Office is also investigating and there is the threat of civil litigation from disgruntled customers The CFTC which regulates swaps and futures in the United States fined the five banks more than 1 4 billion as part of Wednesday s group settlement Since 2012 financial firms have been fined nearly 10 billion for rigging market benchmarks BANK OF ENGLAND The Bank of England said in a separate review on Wednesday that its chief foreign exchange dealer Martin Mallet had not alerted his bosses that traders were sharing information The central bank whose boss Mark Carney is leading global regulatory efforts to reform financial benchmarks has dismissed Mallet but said he had not done anything illegal or improper It also said it had scrapped regular meetings with London based chief currency dealers a sign the BOE wants to put a distance between it and the banks after the scandal The investigation has provoked major changes to the foreign exchange market with a clamp down on chatrooms the suspension or firing of more than 30 traders an increase in automated trading and new regulatory changes to FX benchmarks which world leaders are expected to sign at the G20 summit in Brisbane this weekend FINMA has also instructed UBS to limit bonuses for traders of foreign exchange and precious metals to 200 percent of their base salary for two years
Refiles to fix name of FCA in paragraph 5 Additional reporting by Steve Slater Huw Jones Jamie McGeever Clare Hutchison and Matt Scuffham in London and Katharina Bart in Zurich Writing by Carmel Crimmins Editing by Alexander Smith and Anna Willard |
MS | FOREX US dollar falls vs major currencies tracking stocks | Dollar edges lower against basket of currencies
Steady stocks housing data offset weak bank results
Bank of England to keep asset buying level
Recasts updates prices adds quotes changes byline
By Wanfeng Zhou
NEW YORK July 22 Reuters The U S dollar edged lower
on Wednesday as a steady performance in the stock market and
stronger home prices more than offset weak bank earnings and
dented the greenback s safe haven allure
Trading was choppy and lacked conviction with some
equities indexes and currencies testing key technical levels
analysts said Investors awaited more news on the economy and
earnings to see whether the recent rally in risk appetite can
be sustained
We ve seen the stock markets grind higher since the open
and that has helped currencies gain a bit of a bid against the
U S dollar said Sacha Tihanyi currency strategist at Scotia
Capital in Toronto
Technical factors were also a driver with traders saying a
big buy order of euros versus the yen helped push the euro zone
single currency higher against the dollar
In afternoon trading in New York the ICE Futures dollar
index a measure of the greenback s value against six other
major currencies fell 0 3 percent on the day to 78 692
The euro was up 0 1 percent at 1 4230 coming off a more
than six week high of 1 4277 hit on Tuesday
The dollar was steady at 93 63 yen while the euro was at
133 20 yen also little changed on the day
Kathy Lien director of currency research at GFT Forex in
New York said solid housing data and comments from Federal
Reserve Chairman Ben Bernanke that he s seeing some positive
signs in the housing market also helped boost risk appetite and
push the dollar lower
Even though Bernanke repeated the same remarks he made on
Tuesday markets are encouraged by his comments today that the
recovery is gaining steam she said
Data from the Federal Housing Finance Agency earlier showed
prices of U S single family home rose by a seasonally adjusted
0 9 percent in May from April
Vassili Serebriakov senior currency strategist at Wells
Fargo in New York said the FX equity link is still pretty
tight and overall investors are less optimistic
Financial sector optimism was dampened hit by a third
consecutive quarterly loss at Morgan Stanley along with rising
credit losses at Wells Fargo Co and a 43 percent drop in
profits at Bank of New York Mellon
In other currencies sterling erased losses after minutes
from the Bank of England s latest policy meeting showed a
unanimous decision to maintain the bank s 125 billion pound
asset buying total and keep interest rates at 0 5 percent
The market took this as a signal that UK quantitative
easing could be at or near an end suggesting the economy may
be starting to recover Sterling last traded up 0 1 percent at
1 6459
Among higher risk currencies the New Zealand dollar rose
0 7 percent to US 0 6604 while the Australian dollar rebounded
from lows to trade at US 0 8174 down 0 1 percent on the day |
MS | FOREX US dollar hits seven week low versus basket | Dollar falls to seven week low vs basket of currencies
Steady stocks housing data offset weak bank results
Bank of England to keep asset buying level
Updates prices adds quotes
By Wanfeng Zhou
NEW YORK July 22 Reuters The dollar hit a seven week
low versus a basket of currencies on Wednesday as steady stock
markets and data showing stronger U S home prices offset weak
bank earnings denting the greenback s safe haven allure
U S stocks seesawed with the Nasdaq gaining for
its 11th straight session buoyed by solid profits from Apple
Inc European shares also closed higher for the eighth
straight session
We ve seen the stock markets grind higher and that has
helped currencies gain a bit of a bid against the U S dollar
said Sacha Tihanyi currency strategist at Scotia Capital in
Toronto
Trading was choppy and lacked conviction with some
equities indexes and currencies testing key technical levels
analysts said Investors awaited more news on the economy and
corporate earnings to see whether the recent rally in risk
appetite can be sustained
In late New York trading the ICE Futures dollar index
a measure of the greenback s value against six major
currencies fell 0 3 percent on the day to 78 728 It had
earlier hit 78 563 the lowest level since early June
Kathy Lien director of currency research at GFT Forex in
New York said solid housing data and comments from Federal
Reserve Chairman Ben Bernanke that he was seeing some positive
signs in the housing market also helped boost risk appetite and
push the dollar lower
Even though Bernanke repeated the same remarks he made on
Tuesday markets are encouraged by his comments today that the
recovery is gaining steam she said
Data from the Federal Housing Finance Agency earlier showed
prices of U S single family homes rose by a seasonally
adjusted 0 9 percent in May from April For details see
ID nN22310155
LESS OPTIMISTIC
The euro was up slightly at 1 4220 near a more
than six week high of 1 4277 hit on Tuesday
The dollar fell 0 2 percent to 93 47 yen while the
euro was down 0 3 percent at 132 88 yen
Risk appetite had improved in recent recessions fueled by
strong quarterly results from some of the big banks including
Goldman Sachs but that optimism has started to wane
analysts said
Worries about the financial sector resurfaced following a
third consecutive quarterly loss at Morgan Stanley
along with rising credit losses at Wells Fargo Co and
a 43 percent drop in profits at Bank of New York Mellon
ID nN22320552
Over the past 48 hours the markets have pulled back
from the really strong drive that they were building into last
week John Kicklighter currency strategist at DailyFX com in
New York
So many markets are actually coming up to significant
resistance in terms of risk appetite he said The markets are
starting to realize that the earnings quality is perhaps not
as good as many analysts and speculators are actually
expecting
In other currencies sterling erased losses after
minutes from the Bank of England s latest policy meeting showed
a unanimous decision to maintain the bank s 125 billion pound
asset buying total and keep interest rates at 0 5 percent
The market took this as a signal that UK quantitative
easing could be at or near an end suggesting the economy may
be starting to recover Sterling last traded up 0 2 percent at
1 6471
Among higher risk currencies the New Zealand dollar rose
0 5 percent to US 0 6589 while the Australian dollar
rebounded from lows to trade at US 0 8164 down 0 2
percent on the day
Additional reporting by Gertrude Chavez Dreyfuss Editing by
Chizu Nomiyama |
JPM | Bitcoin exchange employee pleads guilty in U S case tied to hacking | By Nate Raymond NEW YORK Reuters A Florida man pleaded guilty on Tuesday to charges stemming from his employment with an unlicensed bitcoin exchange that prosecutors say was owned by an Israeli who oversaw a massive scheme to hack companies including JPMorgan Chase Co NYSE JPM Ricardo Hill 38 entered his plea in Manhattan federal court to seven counts including conspiracy to operate an unlicensed money transmitting business wire fraud and bank fraud The Brandon Florida resident is one of nine people to face charges following an investigation connected to a data breach that JPMorgan disclosed in 2014 involving records for more than 83 million accounts The charges against Hill stemmed from his employment as a finance support manager and business development consultant for an unlicensed bitcoin exchange called Coin mx according to court papers Prosecutors have said Coin mx was operated by another Florida man Anthony Murgio from 2013 to 2015 and exchanged millions of dollars into bitcoin while operating through several fronts including one called Collectables Club Prosecutors said Coin mx was owned by Gery Shalon an Israeli who with Maryland born Joshua Samuel Aaron orchestrated cyber attacks on companies including JPMorgan that resulted in more than 100 million people s information being stolen Prosecutors said the men carried out the cybercrimes to further other schemes with another Israeli Ziv Orenstein including pumping up stock prices with sham promotional emails Aaron was deported from Russia in December and taken into U S custody while Shalon and Orenstein were extradited from Israel in June All three have pleaded not guilty Murgio who like Hill was not accused of engaging in the hacking scheme pleaded guilty on Jan 9 to charges that included conspiracy to operate an unlicensed money transmitting business and conspiracy to commit bank fraud Five other individuals have been charged in connection with Coin mx including Murgio s father Two individuals linked to it are scheduled to face trial on Feb 6 The case is U S v Murgio et al U S District Court Southern District of New York No 15 cr 769 |
JPM | Capital curbs push Chinese firms to risky costly dollar bonds | By Samuel Shen and John Ruwitch SHANGHAI Reuters China s efforts to support its currency and cool its hot property market are encouraging more Chinese companies including many state firms to take on extra cost and risk by raising foreign currency bonds in Hong Kong and other offshore locations Despite the yuan s nearly 7 percent slump against the dollar in 2016 Chinese companies including state owned Bank of China SS 601988 raised a record 111 billion in offshore dollar bonds according to data from Dealogic up from 88 billion in 2015 JPMorgan NYSE JPM analysts using their own dataset are forecasting another rise this year even though many economists expect the yuan to fall further making the loans more expensive to service and repay The list includes issuers who need dollars to pay for overseas acquisitions and deals but are unable to use their yuan after China tightened its grip on capital outflows last year to support the currency It s getting increasingly difficult to move money out said Shen Weizheng fund manager at Ivy Capital which invests in stocks and bonds in Hong Kong So for Chinese companies eager to invest overseas the dollar bond market becomes an easier funding avenue State firms are also doing so because the government has made it easier for them to tap offshore markets and there is pressure on them to bring more dollars onshore investment bankers said Some property firms have also been left with little choice but to raise money offshore as government measures to contain a property bubble have included lending restrictions onshore Both the Shanghai and Shenzhen stock exchanges have tightened bond issuance rules for real estate firms since October and regulators have repeatedly urged Chinese lenders to restrict property lending Chinese property developers have 7 9 billion in loans falling due in 2017 according to Thomson Reuters data which could push more into offshore markets if they need refinancing On top of the exchange risks the borrowers also have to swallow much higher borrowing costs China Evergrande Group HK 3333 pays a 7 percent yield on its dollar bonds in Hong Kong but just 3 percent in China while China Aoyuan Property Group HK 3883 raised 250 million through three year bonds in early January paying 6 35 percent almost double the average yield on yuan bonds onshore Despite the cost more issuers are lining up for after the Chinese New Year in late January A fund manager at Invesco Asset Management in Hong Kong said his firm had signed confidential agreements with 10 Chinese issuers to become their cornerstone investor FAST TRACK An underwriter who helps Chinese firms issue dollar bonds said state owned enterprises SOEs were keen to issue dollar bonds partly because the central government is encouraging them to bring dollars back to China and SOEs are not very sensitive to borrowing costs The government fast tracked approvals for bringing dollar bond proceeds back onshore for several state firms in a bid to ease depreciation pressure on the yuan and slow the pace at which the country was burning through currency reserves Previously all SOEs needed to register their offshore debt issuance plans with China s central planning agency but last year it allowed 21 SOEs to proceed without registration China s local government financing vehicles LGFV have also joined this growing band of bond issuers in Hong Kong Last January Jiangsu NewHeadline Development a financing vehicle of the Lianyungang municipal government in Jiangsu Province issued 200 million of 3 year bonds paying interest of 6 20 percent NewHeadline the first LGFV to sell offshore bonds could have issued yuan bonds onshore paying around 5 percent without the risk of the exchange rate moving against them I asked them your fundamentals are not bad so why are you willing to raise funds at a higher cost said a fund manager who subscribed to the bonds They said there was a political target to raise overseas money A NewHeadline official told Reuters the purpose was to boost our overseas branding so that more foreign investors know us She didn t say why the company which is mainly involved in infrastructure and water treatment in China wanted overseas branding A stream of LGFVs followed in NewHeadline s footsteps and the company is mulling a second offshore bond this year The attractive yields combined with investors expectations of a rising dollar led to an increasing number of funds targeting dollar bonds in China last year That fueled a fivefold increase in the outbound funds held in a scheme set up a decade ago to let domestic investors invest overseas even as Beijing has suspended approvals for new quota for the scheme as part of its capital curbs
Quota holders can now rent out their quota for twice the price they could last year such is the demand |
JPM | South Korea s Netmarble seeks M As U S expansion founder | By Joyce Lee SEOUL Reuters South Korea s largest mobile game company Netmarble Games Corp is seeking more mergers and acquisitions and intellectual property rights to expand its share of the gaming market in North America and Europe its founder said The Tencent backed HK 0700 firm with plans for a public listing estimated at billions of dollars in the first half this year aims to raise its ranking in key markets to reach its goal of becoming a global top 5 game company by 2020 Bang Jun hyuk told Reuters Netmarble wants to place within the top 10 in mobile games in China and Japan Bang said on the sidelines of a news conference on Wednesday The global game market s wave of M As that began in 2016 is expected to continue to the first half of 2018 the 48 year old controlling shareholder said After the market is reorganized the remaining major companies profits are expected to rise Netmarble which CLSA valued at 14 3 trillion won 12 3 billion in a Jan 17 report will look to the initial public offering to build up funds for mergers and acquisitions and other investments to help reach its target of 5 trillion won in sales by 2020 It reported 1 5 trillion won in 2016 provisional sales up from 1 07 trillion won in 2015 helped by its blockbuster role playing game Lineage 2 Revolution which earned 206 billion won in first month revenue since launching in one country South Korea in December The 2016 hit Pokemon Go reported about 200 million in first month revenue according to data provider Sensor Tower South Korea is the world s fourth largest games market behind China the United States and Japan with annual revenue of around 4 billion according to June 2016 data from research firm Newzoo Bang said the company plans to make role playing games in which participants assume the role of a character and interact within the game s imaginary world more mainstream in North American and European markets where strategy games dominate Netmarble has invested in mobile game studios in the United States and Canada However the need for a bigger war chest was evident when it lost out last year to a Chinese consortium including Alibaba s Jack Ma that offered 4 4 billion in cash to buy Caesars online game unit Aside from plans to take Lineage 2 Revolution global Netmarble announced on Wednesday plans for 17 new games with some based on franchises such as Transformers and G I Joe Bang said there would also be 4 games developed for China Going forward we have a target of releasing major games in China and Japan he said Bang a high school dropout who founded Netmarble in 2000 after two previous start up failures sold management control to South Korean conglomerate CJ Group in 2004 but returned to lead a struggling Netmarble in 2011 He owns a 32 4 percent stake in the firm while Tencent Holdings Ltd holds a 25 3 percent stake through an investment vehicle
Netmarble received Korean exchange approval for an IPO in December 2016 JP Morgan N JPM and NH Investment Securities KS 005940 are advisers |
JPM | U S sues JPMorgan for alleged mortgage discrimination | By Dena Aubin NEW YORK Reuters The United States on Wednesday sued JPMorgan Chase Co NYSE JPM accusing the bank of discriminating against minority borrowers by charging them higher rates and fees on home mortgage loans between 2006 and at least 2009 Filed in a Manhattan federal court the government s complaint accused the bank of violating the U S Fair Housing Act and the Equal Credit Opportunity Act by charging thousands of African American and Hispanic borrowers more for home loans than white borrowers with the same credit profile JPMorgan Chase and U S Attorney Preet Bharara did not immediately respond to requests for comment The alleged discrimination involved so called wholesale loans that were made through mortgage brokers the bank used to originate loans the complaint said Chase allowed brokers to change rates charged for loans from those initially set based on objective credit related factors the complaint said
Chase did not require mortgage brokers to document the reasons for changing rates and failed to address racial discrimination encouraging it to continue the complaint said |
C | Citigroup sets aside 600 million more to cover legal costs | By David Henry and Ankur Banerjee Reuters Citigroup Inc N C said it was setting aside an extra 600 million to cover legal expenses in the third quarter due to rapidly evolving regulatory inquiries while also disclosing that it was subject to foreign exchange market probes Citigroup is one of six major banks that are expected to settle with Britain s Financial Conduct Authority by mid November over allegations that the banks manipulated foreign exchange markets The banks are aiming to settle for a total of around 1 5 billion pounds sterling or 2 42 billion sources have told Reuters Barclays Plc another of the six banks said on Thursday it had set aside 500 million pounds for the third quarter to cover potential fines Big banks have paid billions of dollars in recent years to settle investigations into their mortgage lending commodities and interest rate trading and a wide range of other activities Authorities have broadly been trying to hold banks accountable for the excesses that led to the financial crisis While the legal costs have hit profits weighed on share prices and consumed management time they have not forced banks to raise money by issuing shares and are not expected to Citigroup for example is likely to make nearly 28 billion in pre tax profits over the next five quarters way more than enough to cover heightened legal expenses according to analysts at Bernstein Research The bank s shares fell 2 percent to 52 05 in extended trading after it revised down its third quarter net income to 2 84 billion from the 3 44 billion it had posted on Oct 14 On a per share basis Citigroup adjusted its profit to 88 cents for the quarter It had earlier reported a profit of 1 07 per share Like most banks Citigroup does not disclose how much money it has set aside to cover legal costs that it can dip into in the future known as its reserves Bernstein Research analysts estimated before Thursday s announcement that Citigroup s remaining reserves were about 2 5 billion at the end of September Citigroup did not say specifically that the additional legal expenses were recognized in anticipation of a settlement of the foreign exchange probes MORE POSSIBLE SETTLEMENTS After announcing the additional legal expense on Thursday Citigroup said in a quarterly filing with the Securities and Exchange Commission that its estimate of possible legal costs in excess of its litigation reserves was about 5 billion the same as it estimated for the end of the previous quarter and for year end Citigroup faces additional possible settlements Federal authorities are investigating possible money laundering through Citigroup s Banamex USA unit for example The Mexican part of the Banamex business has been beset by multiple problems in the last few years including fraudulent loans and rogue trading Citigroup said in the filing that it was cooperating fully with investigations into its foreign exchange business in Britain the United States and elsewhere Reporting by David Henry in New York and Ankur Banerjee in Bangalore Editing by Saumyadeb Chakrabarty Robin Paxton Dan Wilchins Andrew Hay and David Gregorio |
C | RBS takes 640 million forex charge and warns of more to come | By Matt Scuffham LONDON Reuters State backed Royal Bank of Scotland L RBS has set aside 400 million pounds 640 million to cover potential fines for manipulating currency markets and warned further charges for past misconduct would continue to hit its profits RBS 80 percent owned by the British government following a 45 billion pound bailout during the financial crisis of 2007 to 2009 on Friday joined other big rivals in signaling it is close to agreeing settlements over alleged manipulation of the 5 3 trillion a day foreign exchange market Rival Barclays L BARC said on Thursday it had set aside 500 million pounds to cover potential FX fines while JP Morgan N JPM UBS VX UBSN and Citi N C have also set aside large sums The forex manipulation revelation of which came after banks were already under scrutiny for profiteering in the setting of benchmark lending rates such as Libor relates to daily fixing rates which traders are alleged to have manipulated to suit their own market positions RBS also faces a number of other probes relating to past misdeeds which threaten to undermine its turnaround under Chief Executive Ross McEwan who has steered the bank back into profit this year after it made a loss of 8 2 billion pounds in 2013 We are actively managing down a slate of significant legacy issues This includes significant conduct and litigation issues that will continue to hit our profits in the quarters ahead McEwan told reporters on Friday RBS is being investigated by regulators looking into its selling of bonds backed by residential mortgages in the United States and its treatment of struggling small British firms The bank is also expected to be fined by British financial regulators for an IT failure two years ago which left customers without access to their bank accounts In addition RBS faces a mounting bill to compensate customers mis sold loan insurance It set aside another 100 million pounds to deal with the matter on Friday taking its total bill to 3 3 billion pounds GROUP SETTLEMENT RBS is one of six banks in talks with UK regulators on a deal that would involve them paying about 1 5 billion pounds in a group settlement sources have said They said a deal could come in mid November and U S regulators were also working on a group settlement McEwan said RBS wouldn t pay a dividend until it has more clarity over future misconduct charges and has substantially strengthened its capital position potentially making it more difficult for the government to start selling its shares I don t think we should be thinking about dividends until we ve got a really good capital build and seen some of the bumps in the road out of the way he said The bank which had a core Tier 1 capital ratio of 10 8 percent at the end of the third quarter has set a target of holding core capital of more than 12 percent by the end of 2016 There s no way we will be paying a dividend until we get ourselves well in advance of that 12 percent target he said Britain s financial regulator expects banks to hold an absolute minimum of 7 percent core capital However investors generally expect a ratio of at least 10 percent RBS said it made a third quarter pretax profit of 1 3 billion pounds compared with a loss of 634 million the year before That was ahead of an average analyst forecast of 1 1 billion compiled by the bank An economic revival in Britain and Ireland has enabled RBS to recover debts it had written off The bank had a net release of previously written off loans of 801 million pounds during the quarter ahead of an average forecast of 590 million Shares in RBS which have risen by more than a quarter in the past six months were up 4 3 percent at 6 a m EDT They rose as high as 381 6 pence their highest in 12 months RBS said it had decided to keep Ulster Bank having carried out a review of the business which could have resulted in it being sold off McEwan said the unit could deliver attractive shareholders returns in future Editing by Steve Slater and David Holmes |
C | Monte Paschi working on substantial capital increase source | By Pamela Barbaglia LONDON Reuters Italy s Banca Monte dei Paschi di Siena is working on a rights issue to fill at least half of a 2 1 billion euro 2 6 billion capital hole uncovered in a European financial health check a source with direct knowledge of the matter said
The world s oldest surviving bank has hired UBS and Citigroup to assess strategic options after it failed the European Central Bank ECB test designed to test the solidity of the euro zone s financial system
The options for the Tuscan lender Italy s third largest which raised 5 billion euros as recently as June to strengthen its balance sheet and help pay back state aid are expected to include further asset sales and potential a merger
The source told Reuters the plan which has to be presented to the ECB by Nov 10 would include a substantial capital increase of at least 1 billion euros but gave no precise figure because a decision had not yet been taken
Banks that underwrote June s capital increase remained interested in backing the new cash call the source said adding the advisors were also sounding out potential new investors
The plan also includes an M A event which was more difficult and there were various options on the table the source said adding talks with UBI Banca and other merger candidates were under way
Combining Monte Paschi with a top Italian bank such as Intesa Sanpaolo might lead to heavy job cuts which is why a regional bank is seen as a preferred option he added
A spokesman for UBI said there were no talks whatsoever with Monte Paschi over a possible merger
Monte Paschi was not immediately available for comment
The bank s chairman Alessandro Profumo told Reuters on Tuesday the lender could ultimately become part of a larger entity though he said there had been no talks with any potential buyers He also said the bank might seek to delay repaying hundreds of millions of euros in state aid to help shore up its balance sheet
Monte dei Paschi shares have dropped some 40 percent since the result of the ECB stress tests were announced a week ago meaning the bank is currently worth less than half its value in early June when it raised 5 billion euros in new capital
1 0 7985 euro
Writing by Danilo Masoni additional reporting by Silvia Aloisi editing by Silvia Aloisi and John Stonestreet |
C | Banks set aside up to 7 billion as UK currency settlement looms | By Jamie McGeever LONDON Reuters Major banks have set aside almost 7 billion for potential settlements with regulators investigating allegations of collusion and manipulation in foreign exchange markets the first of which could come in Britain later this month
Europe s largest bank HSBC L HSBA on Monday was the latest bank to make provisions in its most recent earnings report putting aside 378 million specifically for a potential settlement with Britain s Financial Conduct Authority FCA
HSBC is the last of six banks in talks with the FCA over a group FX settlement to report their results The other five also set aside substantial sums for litigation provisions
British banks Royal Bank of Scotland L RBS and Barclays last week set aside 640 million and 800 million respectively specifically for settlements related to the global FX probe which has been running for a year
This means the three British banks have made almost 1 8 billion provisions in their latest earnings reports specifically for FX related issues
The near 7 billion from eight banks also including Deutsche Bank DE DBKGn and Credit Suisse VX CSGN isn t entirely for currency related issues although that s where the lion s share of the total is likely to be spent analysts say
Banks provisions are cash earmarked to pay for costs or losses that are anticipated to occur in the future and the final amount may be more or less than the sum set aside
However with potential settlements still to come with the U S Department of Justice DOJ which has shown it has the power and willingness to levy multi billion dollar fines on banks for financial misconduct the final bill could be much higher
Around ten other regulators around the world are also investigating
The FCA s talks with six banks are at an advanced stage and a settlement for between 1 5 and 2 billion pounds 2 4 3 2 billion could come later this month
The six are RBS Barclays HSBC Switzerland s UBS VX UBSN and U S titans JP Morgan N JPM and Citi N C Despite its position as the second biggest currency market bank in the world Deutsche isn t part of these collective talks
This settlement is likely to be based on banks acknowledging lax internal compliance oversight failures and market conduct breaches by individual employees but not deliberate manipulation of the 5 trillion a day market
On Monday HSBC said its detailed talks with the FCA centre on systems and controls relating to one part of its spot FX trading business in London
UBS ring fenced the most of any single bank in the third quarter its 1 9 billion almost double the provisions made by the next in line Deutsche Bank with 1 1 billion and JP Morgan with 1 billion
All three declined to reveal in their recent earnings reports how much of these provisions were specifically for foreign exchange
Citi added a further 600 million for legal costs while Credit Suisse said 400 million would be kept back for future litigation
No bank has been accused of wrongdoing but several are cooperating with UK U S and other authorities around the world in their investigations into the allegations of collusion and price manipulation
Settlements with U S regulators are expected to be much more costly
Earlier this year French bank BNP Paribas PA BNPP paid the DOJ a record 8 9 billion fine for violating U S sanctions on Sudan Libya and Cuba between 2002 and 2012
Estimates on how much banks will be fined in total for FX vary wildly Earlier this year banking research firm Autonomous put the worldwide total at around 35 billion
This would dwarf the 6 billion paid so far by 10 financial firms to settle the international investigation into the manipulation of Libor interest rates
This refiled version of the story removes extraneous word from first paragraph
Reporting by Jamie McGeever and Steve Slater Editing by Alexander Smith and Toby Chopra |
C | Citigroup C Sues AT T For Infringing ThankYou Trademark | Ever thought saying ThankYou could land you in trouble Well this is actually happening Citigroup Inc NYSE C is suing the telecom major AT T Inc NYSE T for trademark infringement The bank alleged that AT T s use of the trademarks thanks and AT T thanks infringes upon the former s trademarks including ThankYou and Citi ThankYou DetailsPer the lawsuit filed in the U S District Court Southern District of New York Manhattan AT T announced its new appreciation program AT T thanks for its customers on Jun 2 despite being aware of Citigroup s use of related trademarks Since 2004 the banking giant has been using ThankYou trademark in a customer loyalty program with approximately 15 million members in the country The bank claims For many years Citigroup has used trademarks consisting of and or containing the term THANKYOU including THANKYOU CITI THANKYOU CITIBUSINESS THANKYOU THANKYOU FROM CITI and THANKYOU YOUR WAY in connection with a variety of customer loyalty reward incentive and redemption programs collectively the THANKYOU Marks Citigroup further stated that it has a co branded credit card with AT T the AT T Universal Card that gives ThankYou reward points to its user based on the amount spent Moreover AT T s trademark designs have similar fonts and word placements So AT T s new program is bound to confuse costumers Therefore Citigroup wants the court order to stop AT T from using the terms Apart from this order Citigroup also seeks unspecified damages Nevertheless AT T plans to counter Citigroup s allegations The company spokesperson Fletcher Cook in an email said This may come as a surprise to Citigroup but the law does not allow one company to own the word thanks We re going to continue to say thanks to our customers Going ForwardThough hearing date is not yet fixed this court room battle is expected to continue for a while Profitability from card business generally outpaces others Hence banks are boosting their card operations by getting more people to open accounts and use their cards on a regular basis and Citigroup is no different The company has been trying to improve its card operations as other avenues for top line growth are facing several challenges Currently both Citigroup and AT T carry a Zacks Rank 3 Hold Some better ranked finance stocks include SEI Investments Co NYSE C and PrivateBancorp Inc NYSE T Both these companies hold a Zacks Rank 2 Buy |
C | Citigroup C Brazil Unit Divestment May Take Up To 3 Months | Per a Reuters report the Wall Street giant Citigroup Inc NYSE C will take another three months to finalize the sale of its Brazilian retail banking unit However Helio Magalhaes senior country executive for Citigroup in Brazil did not disclose the names of the potential bidders and said the bank is working on the sale of the unit We probably have two or three months ahead until getting some news Magalhaes stated during a meeting with Brazil Finance Minister Henrique Meirelles According to sources Brazilian bank Itau Unibanco Holding SA NYSE ITUB and Spanish bank Banco Santander Brasil SA MC SAN are interested in buying parts of Citigroup s Brazilian business unit BackgroundIn Feb 2016 Citigroup announced the reduction of its footprint in Brazil Argentina and Colombia in line with its strategy of minimizing its international operations The bank intends to transfer its retail banking and credit card operations to Citi Holdings from Citicorp Regulatory pressure over Citigroup s global operations and concerns of weak returns were the reasons behind this move Aimed at increasing the efficiency of the company s overall business the initiatives include streamlining operations and optimizing footprints across geographies Notably while Argentina s economy has been under pressure after years of currency control and policies restricting it from accessing international capital markets the Brazilian economy is faced with the worst crisis in decades Citigroup s plans to exit from the Brazilian market follows HSBC Holdings LON HSBA plc s NYSE C announcement to divest its entire Brazilian business to Banco Bradesco S A NYSE BBD in Aug 2015 The all cash deal was valued at 5 2 billion ConclusionAmid troubled tides Citigroup is likely to gain some financial flexibility from this move We believe the company is well positioned to address its internal inefficiencies and setbacks Further we believe that the company s streamlining initiatives will bolster its capital position reduce expenses and drive operational efficiency Citigroup currently carries a Zacks Rank 3 Hold
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MS | FOREX Dollar rises as US bank results weigh on risk appetite | Morgan Stanley incurs Q2 loss
Euro high yielders down as risk rally fades
Markets await Bernanke s second day of testimony
Recasts updates prices adds quotes changes byline
dateline previous LONDON
By Gertrude Chavez Dreyfuss
NEW YORK July 22 Reuters The dollar edged higher
against the euro while the yen rose on Wednesday as risk
appetite worsened after weak Morgan Stanley results dampened
optimism about a global economic recovery
The U S bank s earnings report exacerbated pessimism in
the market already made nervous after Federal Reserve Chairman
Ben Bernanke s cautious assessment on the U S economy on
Tuesday
Morgan Stanley missed expectations by a mile and this is
weighing on risk appetite We re seeing the euro and yen
crosses head lower said Brian Dolan chief currency
strategist at Forex com in Bedminster New Jersey
Overnight risk appetite was already down after Bernanke s
testimony Morgan Stanley was the icing on the cake
In early New York trading the dollar fell 0 4 percent to
93 29 yen while the euro slipped 0 2 percent against the
dollar to 1 4179
U S equity futures fell in the wake of Morgan Stanley s
earnings report which showed the bank posted a second quarter
loss of 1 10 per share
Wells Fargo also released results on Wednesday and reported
that its quarterly profit increased 47 percent as strong
mortgage banking results and the acquisition of Wachovia Corp
offset rising credit losses
Sterling meanwhile pared some losses after minutes from
the Bank of England s latest policy meeting showed a unanimous
decision to maintain the bank s 125 billion pound asset buying
total and keep interest rates at 0 5 percent
The pound was still down at 1 6387
Higher risk currencies such as the Australian and New
Zealand dollars edged down after rising in recent sessions
The Australian dollar fell 0 9 percent to US 0 8111 The
New Zealand dollar slipped 0 4 percent to US 0 6529
Investors awaited further comments from the Fed s Bernanke
later on Wednesday this time before the Senate Banking
Committee Bernanke will repeat his testimony before the Senate
Banking Committee at 1400 GMT and then take questions
Additional reporting by Tamawa Desai in London
Editing by Theodore d Afflisio |
MS | Europe stock lower banks fall after Morgan Stanley | FTSEurofirst 300 index down 0 4 percent
Banks fall after Morgan Stanley Wells Fargo earnings
GlaxoSmithKline gains after results
By Joanne Frearson
LONDON July 22 Reuters European shares were down in
afternoon trade on Wednesday with banks leading the decline
after quarterly results from U S banks Morgan Stanley and Wells
Fargo disappointed investors
By 1306 GMT the pan European FTSEurofirst 300 index of top
shares was down 0 4 percent at 884 79 points after trading
between 879 97 and 888 23 points
Morgan Stanley s operating loss per share looks on the high
side compared to others in the sector I think Morgan Stanley s
paying back public aid has distorted results it is not known if
this has been incorporated into analysts expectations of the
results said Heino Ruland strategist at Ruland Research
Bank shares took the most off the index after Morgan Stanley
reported its third consecutive quarterly loss and Wells Fargo
reported rising credit losses
The continuing decline in asset quality is a worry and
whilst they are making money in other areas it just goes to show
that conditions in the consumer segment are still evidencing
headwinds said Paul Chesterton senior sales trader at CMC
Markets
Barclays BNP Paribas UBS and Lloyds Banking Group were
down 1 5 3 8 percent
Miners were also heading lower BHP Billiton fell 2 8
percent after the world s largest miner reported a 10 percent
fall in iron ore output to 27 048 million tonnes after its
operations were hit by mining fatalities and flooding in
Australia
Energy stocks were down as crude slipped 1 5 percent BP
Royal Dutch Shell Premier Oil and Total were 0 8 2 8 percent
weaker
On the upside drug makers added most points to the index
GlaxoSmithKline gained 0 3 percent after it beat expectations
with its second quarter earnings and said momentum in the second
half would pick up on the back of flu vaccine sales
Across Europe the FTSE 100 index was down 0 3 percent
Germany s DAX was down 0 4 percent and France s CAC 40 was down
0 8 percent
Reporting by Joanne Frearson editing by Will Waterman |
MS | US STOCKS Wall St slips at open as bank results disappoint | NEW YORK July 22 Reuters U S stocks fell at the open
on Wednesday after a batch of corporate earnings mostly beat
lowered expectations but the key financial sector continued to
show signs of weakness
A third consecutive quarterly loss at Morgan Stanley and
rising credit losses at Wells Fargo Co dented recent optimism
about the financial sector s recovery
The Dow Jones industrial average dropped 43 45 points or
0 49 percent to 8 872 49 The Standard Poor s 500 Index fell
6 02 points or 0 63 percent to 948 56 The Nasdaq Composite
Index shed 7 85 points or 0 41 percent to 1 908 35 |
MS | FOREX U S dollar rises vs euro as risk rally fades | Morgan Stanley incurs loss Wells Fargo credit losses up
Euro high yielders down as risk trades fall
Bank of England to keep asset buying level
Updates prices adds quotes
By Gertrude Chavez Dreyfuss
NEW YORK July 22 Reuters The dollar drifted higher
against the euro while the yen edged up on Wednesday as risk
appetite worsened after weak Morgan Stanley results and Wells
Fargo s credit losses dampened optimism about a global economic
recovery
The U S banks earnings exacerbated pessimism in a market
already nervous after Federal Reserve Chairman Ben Bernanke s
cautious assessment on the U S economy on Tuesday The Fed
chief repeated his remarks on Wednesday before the Senate
Banking Committee
Wall Street shares were volatile making it difficult for
currencies to make headway in either direction
Overall the FX equity link is still pretty tight said
Vassili Serebriakov senior currency strategist at Wells Fargo
in New York
Risk trades are down What we have seen is that bond
yields were lower after Bernanke s testimony and that s
consistent with less optimistic markets and more subdued risk
appetite
In mid morning New York trading the dollar fell 0 1
percent to 93 58 yen while the euro slipped 0 2 percent
against the dollar to 1 4187 Against the yen the euro slid
0 4 percent to 132 74
Morgan Stanley s earnings report which showed the bank
posting a second quarter loss of 1 10 per share kicked off
dollar buying in New York trading See ID nLM377743
Morgan Stanley missed expectations by a mile and this is
weighing on risk appetite said Brian Dolan chief currency
strategist at Forex com in Bedminster New Jersey
Overnight risk appetite was already down after Bernanke s
testimony Morgan Stanley was the icing on the cake
Wells Fargo also released results on Wednesday While it
said its quarterly profit increased 47 percent the report
showed a surge in bad loans That fueled the view that the
fourth largest U S bank still needs more capital to cover loan
losses See ID nN22255536
Sterling pared losses after minutes from the Bank of
England s latest policy meeting showed a unanimous decision to
maintain the bank s 125 billion pound asset buying total and
keep interest rates at 0 5 percent
The market took this as a signal that UK quantitative
easing could be at or near an end suggesting the economy may
be starting to recover But the pound was still 0 2 percent
weaker at 1 6415
Higher risk currencies such as the Australian and New
Zealand dollars edged down after rising in recent sessions
The Australian dollar fell 0 6 percent to US 0 8136
The New Zealand dollar was slightly lower at US 0 6555
Editing by Dan Grebler |
MS | FTSE adds 0 3 pct extends rally to eighth session | Defensive stocks gain as risk appetite eases
GlaxoSmithKline posts solid Q2 numbers
Banks weak U S sector results disappoint
By Jon Hopkins
LONDON July 22 Reuters Britain s leading shares index
added 0 3 percent on Wednesday extending its winning streak to
eight sessions thanks to modest gains on Wall Street and solid
second quarter results from drugs giant GlaxoSmithKline
At the close the FTSE 100 was 12 56 points higher at
4 493 73 up 8 2 percent over the past eight sessions
The morning session saw profit taking after the recent
rally however Glaxo s results and a steady showing on Wall
Street bought the market back to par said Mic Mills a senior
trader at spread betters ETX Capital
Drug maker Shire was the best blue chip performer up 4
percent with its second quarter results due in a few weeks
while AstraZeneca gained 1 2 percent
But GlaxoSmithKline surrendered earlier gains shedding 0 6
percent on profit taking after its second quarter earnings beat
expectations and the firm said momentum in the second half would
pick up on the back of flu vaccine sales
Other defensive stocks were in demand as investor s risk
appetite abated slightly after the recent strong run with
tobaccos mobile telcoms and utilities standing out
Imperial Tobacco was a strong gainer up 2 7 percent ahead
of a trading update due on Thursday while British American
Tobacco added 1 2 percent
Market heavyweight Vodafone gained 1 0 percent Telecoms
firm BT Group said it would transfer its consumer and small
business broadband and voice consumer base in the Republic of
Ireland to Vodafone
Among utilities Severn Trent added 1 2 percent extending
Tuesday s gains which followed a trading update while Pennon
firmed 2 2 percent and Scottish Southern Energy took on 1 8
percent ahead of an update due on Thursday
Nomura pointed out that shares in the water companies have
been overly pessimistic ahead of Thursday s draft price
determination by regulator OFWAT
Oil majors were mixed as crude prices stayed weak but pushed
back above 65 Royal Dutch Shell lost 0 5 but BP added 0 1
percent and BG Group gained 1 7 percent helped by the
re emergence of vague takeover talk
BANKS EASIER
Banks were weak after the latest results from their U S
peers dampened optimism about a recovery in the financial
sector Morgan Stanley posted its third consecutive quarterly
loss while Wells Fargo reported rising credit losses
Barclays Lloyds Banking Group Royal Bank of Scotland and
Standard Chartered shed between 0 3 and 3 1 percent HSBC added
1 0 percent
Insurers suffered too with Aviva Legal General and
Standard Life off 0 3 to 2 2 percent
Weakness in mining issues weighed heaviest on the blue chips
as investors booked profits after a recent rally
Lonmin Kazakhmys BHP Billiton Eurasian Natural Resources
and Antofagasta fell between 1 0 and 3 2 percent
BHP Billiton reported a 10 percent fall in iron ore output
to 27 048 million tonnes after its operations were hit by mining
fatalities and flooding in Australia
On the macroeconomic front Confederation of British
Industry industrial data showed that its manufacturing order
book fell to its lowest level since January 1992
Other data also reminded investors that the UK economy faces
a long slow road to recovery
Britain s economy will return to growth in the last quarter
of the year as companies start to rebuild inventories but
strong growth will not return until 2013 the National Institute
of Economic and Social Research said
There s a lot of hope priced in about the strength of the
recovery hope is a good breakfast but a poor supper
Eventually we ll have to see some meat on the table if the rally
is to be sustained said Henk Potts a strategist at Barclays
Wealth
Editing by Karen Foster |
MS | FOREX U S dollar slips in volatile trading | Dollar turns lower vs euro after trading up most session
Currencies track Wall Street stocks
Morgan Stanley incurs loss Wells Fargo credit losses up
Bank of England to keep asset buying level
Recasts updates prices adds quotes
By Gertrude Chavez Dreyfuss
NEW YORK July 22 Reuters The dollar edged lower in
choppy trading on Wednesday as a mix of encouraging remarks on
the U S economy by the Federal Reserve chief stronger house
prices and technical factors more than offset weak bank
earnings
Although Fed Chairman Ben Bernanke delivered precisely the
same remarks before the U S Senate Banking Committee as he had
to the U S House Financial Services Committee on Tuesday on
Wednesday said he is seeing some positive signs in the housing
market His comments seemed in line with data showing U S home
prices were up 0 9 percent in May from the previous month This
helped increase risk appetite boosting currencies viewed as
higher risk such as the euro
Even though Bernanke repeated the same remarks he made on
Tuesday markets are encouraged by his comments today that the
recovery is gaining steam said Kathy Lien director of FX
research at GFT in New York
We also had a strong housing report All these have helped
push the dollar lower
Technical factors were also a major driver with traders
saying a big buy order of euros versus the yen helped push the
euro zone single currency higher against the dollar
In addition analysts said the 9 000 figure in the Dow
Jones industrial average is a huge level and traders are aiming
to take stocks higher and take that key figure out
Around noon 1600 GMT the Dow was up 0 23 percent at
8936 20
In midday New York trading the ICE Futures dollar index
a measure of the greenback s value against six other major
currencies fell 0 3 percent on the day to 78 696
The euro was up slightly versus the dollar at 1 4218 and
was little changed against the yen at 133 28
The dollar edged up against the Japanese currency to 93 76
yen
Earlier in the session financial sector optimism was
dampened after weak Morgan Stanley results and higher credit
losses at Wells Fargo
Morgan Stanley s earnings report which showed the bank
posting a second quarter loss of 1 10 per share kicked off
earlier dollar buying in New York trading
Wells Fargo quarterly profit increased 47 percent but its
report showed a surge in bad loans fueling a view that the
fourth largest U S bank still needs more capital to cover loan
losses
Wall Street trading was volatile making it difficult for
currencies to make headway in either direction
Overall the FX equity link is still pretty tight said
Vassili Serebriakov senior currency strategist at Wells Fargo
in New York
Even though equities have fluctuated Serebriakov believes
that risk appetite remained subdued and investors in general
are less optimistic
In other currencies sterling pared losses after minutes
from the Bank of England s latest policy meeting showed a
unanimous decision to maintain the bank s 125 billion pound
asset buying total and keep interest rates at 0 5 percent
The market took this as a signal that UK quantitative
easing could be at or near an end suggesting the economy may
be starting to recover But the pound was still 0 1 percent
weaker at 1 6429
Among higher risk currencies the New Zealand dollar rose
0 4 percent at US 0 6580 while the Australian dollar came off
lows to trade 0 2 percent down at US 0 8170
Editing by James Dalgleish |
JPM | JPMorgan upgrades Indonesian stocks to neutral after row | By Gayatri Suroyo and Hidayat Setiaji
JAKARTA Reuters JPMorgan Chase Co N JPM upgraded its investment recommendation on Indonesian stocks to neutral from underweight on Monday partially reversing a move it made in November that upset the government
Indonesia cut its business ties with JPMorgan after the U S investment bank downgraded its recommendation on Indonesian stocks to underweight from overweight in a research report issued after the U S presidential election
Government officials said JPMorgan s November report did not make sense because it gave better recommendations for equities of other emerging economies that Indonesia argued were not doing better than its economy Southeast Asia s largest
JPMorgan s equities research team wrote on Monday that in the month after Donald Trump s surprise victory funds sold large amount of emerging markets bonds and equities which it estimated at 15 billion each
Redemption and bond volatility risks have now played out in our view Bond volatility should now decay allowing us to partially reverse November s tactical moves including upgrading Indonesia to neutral according to the note sent to clients and seen by Reuters
Indonesia s macro fundamentals are strong with high potential growth rate and low debt GDP with economic reform Within Asia it was the biggest beneficiary of bond inflows the bank said adding that better motorcycle sales data also supported its upgrade
JPMorgan said it remained concerned about volatility in the first half of 2017 and manages risk with a neutral call
When asked about JPMorgan s upgrade Indonesia s Finance Minister Sri Mulyani Indrawati said it s good without elaborating
Responding to the upgrade Indonesia s central bank governor Agus Martowardojo said 2017 will be a year of recovery for Indonesian corporates banks and fiscal spending while 2016 was a year of consolidation
Indonesia s main benchmark index JKSE has dipped so far this year after gaining more than 15 percent in 2016
After JPMorgan s November downgrade Indonesia s finance ministry dropped the bank s services as a primary dealer for domestic sovereign bonds and as an underwriter for bonds sold to global markets The bank also no longer receives certain transfers of state revenue
The ministry then issued new rules that require all primary bond dealers banks and securities appointed to buy government bonds in auctions and resell them in the secondary market to safeguard their partnership with the government and avoid conflict of interest
JPMorgan did not mention the government s sanction in the note it published on Monday |
JPM | Luxottica and Essilor in 46 billion euro merger to create eyewear giant | By Valentina Za and Sudip Kar Gupta MILAN PARIS Reuters Italy s Luxottica MI LUX and France s Essilor PA ESSI have agreed a 46 billion euro 49 billion merger to create a global eyewear powerhouse with annual revenue of more than 15 billion euros The all share deal is one of Europe s largest cross border tie ups and brings together Luxottica the world s top spectacles maker with brands such as Ray Ban and Oakley with leading lens manufacturer Essilor Finally two products which are naturally complementary namely frames and lenses will be designed manufactured and distributed under the same roof Luxottica s 81 year old founder Leonardo Del Vecchio said in a statement on Monday Shares in Luxottica were up by 8 6 percent at 53 80 euros by 1405 GMT 9 05 a m ET with Essilor up 12 2 percent at 114 60 euros The merger between the top players in the 95 billion eyewear market is aimed at helping the businesses to take full advantage of expected strong demand for prescription spectacles and sunglasses due to an aging global population and increasing awareness about eye care Jefferies analysts estimate that the market is growing at between 2 percent and 4 percent a year while Luxottica and Essilor say that at least 2 5 billion people in the world still suffer from uncorrected vision problems The deal also removes for now at least uncertainty over succession at Luxottica which has lost three CEOs since 2014 because of rifts with Del Vecchio The strategic rationale is strong JPMorgan NYSE JPM Cazenove analysts said in a note adding that the deal defuses the risk of growing competition between two groups that had been encroaching on each other s areas of expertise in recent years with Essilor buying online retailers and Luxottica investing in lens manufacturing ONLINE FOCUS Both companies have been grappling with slowing sales growth hit by weakness in North America and face rising competition from cheaper rivals and the challenge of online distribution While Asia and Latin America are seen by the companies as potential growth markets e commerce will also be a top priority Luxottica s third quarter results had showed revenue from its online platforms grew by 18 percent with the company stating that e commerce had been targeted as an area for accelerated growth in 2017 The third quarter e commerce growth far exceeded that for overall sales which rose by 1 4 percent at constant exchange rates The merger is expected to boost operating profit by up to 600 million euros in the medium term the companies said It will also leave smaller rivals lagging even further behind Dutch retailer GrandVision AS GVNV and Italy s Safilo Group MI SFLG had revenue of 3 2 billion euros and 1 3 billion euros respectively in 2015 Though advisers on the deal have presented it as a merger of equals Del Vecchio will be the biggest shareholder of the combined group with a stake of between 31 percent and 38 percent through his family holding company Delfin Voting rights will be capped at 31 percent Analysts said that Essilor shareholders are getting a good deal because the share exchange ratio implies a 5 percent discount to Luxottica s closing price on Friday which was down 27 percent from its 2015 peak Delfin will contribute its 62 percent stake in Luxottica at a ratio of 1 share in the Italian group for every 0 461 Essilor shares The French lens maker will launch a mandatory exchange offer on all remaining Luxottica shares at the same ratio with the aim of delisting Luxottica s shares TWIN BOSSES The merged EssilorLuxottica will have 140 000 staff and will be headquartered and listed in Paris It will also have a complex governance structure with Del Vecchio and Essilor Chairman and CEO Hubert Sagnieres effectively sharing the driving seat while the 16 strong board will have an even split of Essilor and Luxottica executives A source close to the deal said no arrangements had been made at this stage for when Del Vecchio will retire Del Vecchio who returned to the helm of Luxottica two years ago after taking a back seat for the previous 10 years will be CEO and executive chairman of the merged group Sagnieres 61 will serve as executive vice chairman and deputy CEO but he and Del Vecchio will have the same powers In a conference call with analysts the two sought to play down concerns over the co leadership We have and share the same values we have and share the same vision we have and share the same interest in the product If we really want to provide consumers with the best product Leonardo and I will have to co manage Sagnieres said Del Vecchio who grew up as an orphan but is now Italy s second richest person said he had long dreamed of such a merger This marriage will take place and will work he said The deal is expected to close by the end of the year and Del Vecchio said he is confident there will be no problems gaining approval from competition authorities Luxottica and Essilor which have a market value of about 24 billion euros and 22 billion euros respectively had explored a possible tie up a few years ago Luxottica said in September 2014 that discussions had taken place in 2013 but were dropped for a number of reasons including shareholding governance issues A source close to the deal said that the two companies business models operations and strategy have converged since then and that the merger makes more sense now given growing competition The source said the tie up had been agreed in the past six weeks Mediobanca advised Delfin on the merger with Essilor advised by Rothschild and Citi
Delfin s shareholders are Del Vecchio s six children and his second wife |
C | U S and UK to test big bank collapse in joint model run | By Randall Palmer and Douwe Miedema WASHINGTON Reuters Regulators from the United States and the United Kingdom will get together in a war room next week to see if they can cope with any possible fall out when the next big bank topples over the two countries said on Friday
Treasury Secretary Jack Lew and the UK s Chancellor of the Exchequer George Osborne on Monday will run the first ever joint exercise simulating how they would prop up a large bank operating in both countries that has landed in trouble
Also taking part are Federal Reserve Chair Janet Yellen and Bank of England Governor Mark Carney and the heads of a large number of other regulators in a meeting hosted by the U S Federal Deposit Insurance Corporation
There is no doubt that in 2008 the judgment taken by my predecessor and others was that banks like the Royal Bank of Scotland L RBS and others were too big to fail Osborne said
Now I want to make sure that we have real options and that we are able to avoid bailing in taxpayers with a bailout And I m pretty confident that s the case now he said
Six years after the financial crisis politicians and regulators around the globe are keen to prove they have created rules that will allow them to let a large bank go under without spending billions in taxpayer dollars
They have forced banks to ramp up equity and debt capital buffers to protect taxpayers against losses and have told them to write plans that lay out how they can go through ordinary bankruptcy The plans are so called living wills
Yet salvaging a bank with operations in several countries which is the norm for most of the world s largest banks such as Deutsche Bank DE DBKGn Citigroup Inc N C and JPMorgan N JPM has proven to be a particularly thorny issue
Regulators may not be used to talking to each other and there have also been suspicions that supervisors would first look to save the domestic operations of a bank and would worry less about units abroad
One scenario would test the hypothetical failure of a U S bank with UK operations and a second the demise of a large UK bank with U S operations the countries said Results would be communicated after the exercise
The exercise comes as regulators are about to bring to fruition further initiatives to make banking safer
The first would force banks to have more long term bonds that investors know can lose their value during a crisis on top of their equity capital to double their so called Total Loss Absorbing Capacity TLAC
A second measure expected to be announced this weekend will force through a change in derivative contracts which in their current form protect investors and complicate the winding down of a bank across borders
Reporting by Douwe Miedema and Randall Palmer Editing by Matthew Lewis and Andrea Ricci |
C | Citigroup shares gain 1 2 after Q3 earnings beat | Investing com Banking conglomerate Citigroup NYSE C reported better than expected third quarter earnings and revenue on Tuesday sending its shares higher in pre market trade
Citigroup said adjusted earnings per share came in at 1 15 in the three months ending September 30 above expectations for earnings of 1 12 per share and up from 1 00 in the year ago period
Net income in the third quarter was 3 4 billion compared to 3 2 billion in the same period a year earlier
The bank s third quarter revenue totaled 19 97 billion beating forecasts for revenue of 19 09 billion and compared to revenues of 17 9 billion for the third quarter 2013
Michael Corbat Citigroup s Chief Executive Officer said Our consumer bank and institutional business each had solid performance during the quarter and generated stronger revenues both sequentially and year on year
The bank announced strategic actions in global consumer banking to reduce footprint from 35 to 24 markets
Immediately after the earnings announcement C shares rose 1 2 in trading prior to the opening bell
Meanwhile the outlook for U S equity markets was modestly higher The Dow 30 futures indicated a gain of 0 2 the S P 500 pointed to a rise of 0 3 while the tech heavy NASDAQ 100 indicated an increase of 0 3 |
C | Citi pulls out of consumer banking in 11 countries profit jumps | By Anil D Silva and David Henry Reuters Citigroup Inc N C said it was pulling out of consumer banking in 11 markets including Japan and Egypt as the U S bank with the biggest international business looks to cut persistently high costs The third largest U S bank built with a series of acquisitions spanning back to the 1980s has been trying to slim down since the financial crisis to be as profitable as rivals It has shed hundreds of billions of dollars of bad assets The latest exits were the result of studies the bank began in early 2012 to figure out which countries were not profitable enough for retail banking Getting results took a long time partly because the bank did not have standardized accounting systems across all countries to compare the units profitability sources familiar with the matter told Reuters in 2013 A spokesman for Citigroup said the bank has long had systems in place to consistently measure profitability across businesses and geography The deliberate pace at which Chief Executive Officer Michael Corbat is fixing its business underscores how hard it is to fix a business as sprawling as Citigroup which operates in more than 100 countries Corbat told analysts that in shedding the poorly performing businesses the company is also taking a valuable step toward reducing complexity Chief Financial Officer John Gerspach speaking earlier to reporters said the bank first identified sub standard businesses about a year and a half ago and tried to fix them before concluding they had to go Better late than never said stock analyst Mike Mayo of CLSA Citigroup separately announced the results of a probe that also illustrates how hard it is to manage the bank it found a new 15 million fraud at its Mexican unit Banamex which has been roiled by a series of mishaps The bank is showing some signs of progress in streamlining itself On Tuesday it posted stronger than expected third quarter adjusted net income of 3 67 billion or 1 15 per share from 3 26 billion or 1 02 per share a year earlier Profit was boosted by better results from its portfolio of troubled assets left over from the financial crisis Its shares rose 3 1 percent on Tuesday to 51 47 Adjusted results exclude a tax benefit from last year and accounting adjustments linked to changes in the value of the company s debt Analysts had expected earnings of 1 12 per share according to Thomson Reuters I B E S FOCUSING ON EXPENSES But the bank still has work to do Expenses at Citicorp which houses the bank s main businesses rose 11 percent while revenue rose 8 percent The increase in expenses came from money set aside to cover expected legal liabilities The bank has been trying to rein in its expenses for about a decade At a meeting with 300 Citigroup executives in February CEO Corbat stressed the need to focus on expenses and efficiency this year Shedding retail businesses in 11 markets may help stripping out these units would have reduced operating expenses by 1 34 billion over the last year while reducing net income by only 34 million The bank said it would exit Costa Rica Czech Republic Egypt El Salvador Guam Guatemala Hungary Japan Nicaragua Panama and Peru as well as the consumer finance business in Korea It will continue to serve institutional clients in these markets In December 2012 Citigroup said it was withdrawing from consumer banking in five other countries After these latest exits the bank will serve consumers in about 24 countries ASIAN EXITS Citi has previously flagged its reduced ambitions in Asia where it faces tough competition in developed markets like Japan and Korea from entrenched local players and a rising challenge from regional rivals such as Australia s ANZ AX ANZ and Malaysia s CIMB KL CIMB Cutbacks in its less profitable Asian markets will help Citi focus on the rest of the region which reported record revenue of 3 9 billion for the third quarter this year with profits up 39 percent on the same period a year ago In April Citi said it would close around a third of its branches in Korea becoming the third global bank to trim its presence in the country after Standard Chartered L STAN HK 2888 and HSBC L HSBA HK 0005 both pulled back Citi is screening bidders for its Japan consumer banking business which includes Diners Club credit card amid weak loan demand and falling interest margins in a market where the U S based lender has operated for over 100 years Four banks Sumitomo Mitsui Trust Holdings Inc T 8309 Sumitomo Mitsui Financial Group Inc T 8316 Shinsei Bank Ltd T 8303 and Mitsubishi UFJ Financial Group Inc T 8306 remain on the shortlist of potential buyers after the first round of bidding last month people with knowledge of the matter said They said the second round of bidding was likely to take place next month
The four Japanese banks could not immediately be reached for comment Reporting by David Henry in New York and Anil D Silva in Bangalore Additional reporting by Neha Dimri Taiga Uranaka in Tokyo Lawrence White in Hong Kong Editing by Saumyadeb Chakrabarty Dan Wilchins Lisa Shumaker and Will Waterman |
C | Bears Finally Gain Some Real Ammunition | So the bears finally had some real ammunition First there was the news out of financial leader C Citigroup NYSE C They told the street that there would be this little thing called a warning about their next earnings quarter You know just the run of the mill 25 WARNING Are you kidding me Who misses by that much EVER Then there was the second shot fired at the bulls The Jobs Report everyone was anticipating was over one hundred thousand jobs short That was the worst possible news for the bulls and best possible news for the bears The futures sank but not as much as one would expect The S P 500 was down roughly eight points at the open I would have expected twice if not three times that The bears did put the pressure on as the day moved on during the morning which allowed the S P 500 to be down nearly twenty points Certainly more would be expected but not bad for the always gutless and always burned bears With such a bad report it seemed the bears finally had their gap and run day
A day of celebration was finally here Or that s what everyone would have thought likely if not guaranteed Not to be as the bulls put on their usual rally to cut in to those losses One has to honestly ask themselves where is the buying really coming from How and why would the market rally out of the blue on the bad news that hit the market this morning I think it s manipulated but who knows Bottom line is the bulls took control and held the bears from getting what they wanted as per usual A huge victory for the bulls today It seems there is no news out there that can bring the market down The powers that be want it up and it s as simple as that I think the market would rally even if we knew the world was ending Once we clear 2111 2116 we re on our way back to the old high at 2134 and with today s action it probably won t take long to get there
I can t imagine what it must be like to be a bear I saw many articles that were sent to me by those writers and market players who are perma bears You could feel the giving up that came from their words They know they have everything and I mean everything on their side The only thing they don t have is low rates which we now know won t be raised any time soon That said there still is no excuse for the bears not to have made an absolute killing today The low rate story gets old after years of this nonsense The bears should have seized on the worst jobs report possible They just couldn t do it for some reason
Again manipulation Don t know for sure but it doesn t matter What does matter is the last drops of air coming out of the bears case for lower prices The market has changed and the bears are probably finally coming to acceptance of that reality It s a hard thing to come to terms with but I think the bears now can officially say they are defeated If they couldn t get the market down hard today they probably never will A very sad day for all of those perma bears who still hoped for a miracle None are forth coming Today was probably the last punch in the gut for the bears
The more we see this type of action taking place on horrendous news the more likely we are to see froth completely blow up once again The bulls have to feel immortal after today s recovery Once they get this brave they will fly in off the sidelines These are the old bulls who short term went agnostic We saw a big leap up last week and now we re likely to see another strong jump up in the bull bear spread in the weeks to come
Once we blow through 2116 and challenge 2134 the percent will explode and thus it shouldn t be too long before we re well back up in the 30s on the spread which is very dangerous for the bulls That said since the market seems bullish no matter what it may take near 50 again before we see any real selling from there being too many bulls in the game I will now be on watch for froth to ramp but if you re a bull you have no worries on that front for quite some time if even then For now we watch 2111 2116 When it breaks above the market could go somewhat parabolic |
C | Commodities Enter Bull Market 6 ETF Winners | Broad commodities saw a strong start this year and are clearly outperforming global equities and bonds indicating that the five year bear market for commodities has finally come to halt Notably the Bloomberg Commodity Index which tracks returns from 22 raw materials is up over 11 compared to gains of 6 for the global bond market and over 2 for equities from a year to date look Commodities gained over 20 from the lowest level it touched on January 20 reflecting that the index has entered a bull market This represents the best start since the notorious commodities price spike of 2008 Recovering macro fundamentals tight supply conditions and rising global demand along with a delay in rate hike boosted prices of a wide range of commodities including oil sugar gold soyabeans and zinc Moreover the raised forecast by Citigroup NYSE C last month for commodities such as gold oil and grains amid a stabilizing China the world s largest consumer of raw materials added strength In particular oil price jumped to 50 per barrel from the 12 year low of 27 hit in mid February amid disruptions in Nigeria and Venezula as well as reduced output in U S and many other producers Additionally bullish comments from Goldman infused further optimism into the global market read Zinc is the best performing industrial metal this year buoyed by cutbacks in mines and a deficit in the concentrate market Additionally precious metals like gold and silver are the strongest performers this year as global concerns and a retreat in the U S dollar bolstered demand for precious metals as stores of value On the agricultural front soyabeans consumed in cooking oil and livestock feed have jumped 33 and 58 respectively this year as floods in South America damaged crops and dry weather hurt U S output As a result the most popular commodity fund PowerShares DB Commodity Index Tracking Fund WA DBC which tracks a broad basket of the 14 most heavily traded commodity futures contracts has pumped in 228 5 million so far this year after witnessing huge outflows of 1 billion last year as per ETF com see Given this we have highlighted the five top performing ETFs from various corners of the commodity market that have delivered outstanding returns so far this year Any of these could be excellent plays for investors seeking to ride out the current bullishness in the space iPath Pure Beta Sugar ETN Up 28 8 This note seeks to match the performance of the Barclays LON BARC Sugar Pure Beta Total Return Index Unlike many commodity indexes this product can roll into one a number of futures contracts with varying expiration dates as selected by using the Barclays Pure Beta Series 2 Methodology This approach might result in less contango which could prove beneficial as shifting from month to month in contracts can eat away returns in an unfavorable market situation The note is illiquid with a paltry volume of under 1 000 shares and unpopular with AUM of just 1 2 million Expense ratio comes in at 0 75 However SGAR has a Zacks ETF rank of 4 or Sell rating with a High risk outlook read United States Diesel Heating Oil Fund Up 26 5 This ETF tracks the movement of heating oil prices It is unpopular and illiquid in the oil space with AUM of 3 9 million and average daily volume of under 3 000 shares The ETF has 0 60 in expense ratio United States Brent Oil Fund AX BNO Up 24 9 BNO provides direct exposure to the spot price of Brent crude oil on a daily basis through futures contracts It has amassed 132 2 million in its asset base and trades in solid volume of more than 308 000 shares a day The ETF charges 75 bps in annual fees and expenses read Teucrium Soybean Fund Up 20 3 Unlike many commodity ETFs this product doesn t just cycle into the next month as expiration approaches Rather it utilizes a much more in depth approach that reduces the effects of backwardation and contango The product uses three futures contracts for soybeans all of which are traded on the CBOT Futures Exchange The three contracts include the second to expire contract weighted 35 the third to expire contract weighted 30 and 35 weighted contract expiring in the December following the expiration month of the third to expire contract The fund has amassed 13 3 million in its asset base and trades in a lower volume of about 16 000 shares a day The product is the high cost choice in the agricultural space as it charges a fee of 3 41 per year The ETF has a Zacks ETF Rank of 5 or Strong Sell rating with a High risk outlook iPath Bloomberg Grains Subindex Total Return ETN Up 19 2 The product follows the Bloomberg Grains Subindex Total Return which delivers returns through an unleveraged investment in three futures contracts on grains commodities corn soybeans and wheat The ETN has been able to manage 124 8 million in AUM and trades in moderate volume of roughly 63 000 shares per day Expense ratio comes in at 0 75 BAL has a Zacks ETF Rank of 4 with a High risk outlook ETFS Physical Silver Shares Up 19 This fund has AUM of 298 1 million and trades in moderate volume of around 92 000 shares per day on average It tracks the performance of the price of silver less the Trust expenses and is backed by physical silver under the custody of HSBC Bank USA in London Expense ratio comes in at 0 30 SIVR has a Zacks ETF Rank of 3 or Hold rating with a Medium risk outlook read Bottom LineThe recent trends have been encouraging for commodity ETFs though many of them have a Zacks Rank that is not favorable Investors could consider these for a near term play on commodities that are enjoying a huge run up in their prices |
C | Citigroup Inc Stock Chart Shows Major Pattern | Citigroup Inc NYSE C has a classic head and shoulder pattern showing up on the daily Remember head and shoulder patterns are bearish in nature and foretell downside action
Citigroup will break the neckline at 44 50 The calculated target fall takes the stock from down to 38 00 a 15 drop Note the chart below This also tells us that the financial sector may be in trouble in the next few weeks |
MS | Buoyant financials fuel European stocks winning run | FTSEurofirst 300 rises 0 5 percent up for 7th straight
day
Financials pace gains led by Santander Axa
Morrison s strong sales outlook boosts food retailers
Nokia drops 2 9 percent after Morgan Stanley downgrade
For up to the minute market news click on
By Blaise Robinson
PARIS July 21 Reuters European shares were up 0 5
percent around midday on Tuesday advancing for the seventh
consecutive session and reaching a five week high led by
buoyant financial stocks such as Santander and Axa
At 1106 GMT the FTSEurofirst 300 index of top European
shares was up 0 5 percent at 885 85 points
Food retailers were also among the biggest gainers
propelled by Wm Morrison s raised outlook for full year results
Morrison surged 8 3 percent Carrefour added 1 6 percent Tesco
rose 1 7 percent and Sainsbury climbed 2 5 percent
Nokia the world s top cellphone maker dropped 2 9 percent
after Morgan Stanley slashed its rating on the stock to
underweight from overweight citing a threat from rising
competition in all segments
Although smartphone value share ticked up in the second
quarter we expect it to fall again after a slew of recent
competitor launches and potential expansion of the iPhone into
China and new operators in Europe Morgan Stanley analysts
wrote in a note
The FTSEurofirst 300 index which is up 6 5 percent in 2009
has surged 8 8 percent over the past seven sessions the
index s longest winning run since August 2007 powered by
better than feared company profits
We re getting into a short term overbought situation so it
would not be surprising to see consolidation down the road but
that would not change the medium term improved technical
picture said Achim Matzke European stock indexes analyst at
Commerzbank in Frankfurt
So far in the current earnings season 26 companies of
Europe s STOXX 600 have posted results for the quarter of which
12 have beat estimates one has matched and 13 have missed the
estimates according to Thomson Reuters research data
Improving corporate results and early signs of a global
economic turnaround have sparked a debate about how and when
policymakers will remove the unprecedented stimulus measures
introduced as the credit crisis sent equity markets plummeting
last year
FED S EXIT STRATEGY
In an opinion piece published on the Wall Street Journal s
website U S Federal Reserve Chairman Ben Bernanke said the
huge amounts of money the U S central bank has pumped into the
economy will not undercut its ability to push borrowing costs
higher when the time is ripe but stressed that the weak U S
economy will likely warrant exceptionally easy policies for a
long time to come
The outline of the Fed s exit strategy from its
extraordinary monetary policy easing offered a preview of the
testimony Bernanke will give to Congress on Tuesday when he
presents the Fed s twice a year economic report
Around Europe UK s FTSE 100 index was up 0 7 percent
Germany s DAX index up 0 9 percent and France s CAC 40 up 0 9
percent
Financial stocks were the biggest gainers with Banco
Santander up 0 9 percent Axa up 2 7 percent and UniCredit up
1 8 percent
Pharma stocks were also on the rise after Actelion and Elan
posted forecast beating results with sales of key drugs
helping shield the companies from the recession
Actelion gained 3 9 percent and Elan rose 2 1 percent while
AstraZeneca climbed 1 3 percent and Novartis added 0 8 percent
French luxury goods group Hermes rose 2 percent after
posting a 12 percent rise in second quarter sales helped by
strong demand for its leather bags
Editing by Karen Foster |
MS | UPDATE 2 UAE s Etisalat bids for Libyan telecom licence | Bids for fixed and mobile licence
CEO International says would invest at least 500 million
CFO says still not bid for Meditel stake in Morocco
Adds more Etisalat comment analyst
By John Irish
ABU DHABI July 21 Reuters UAE telecoms firm Emirates
Telecommunications Corp Etisalat could invest at least 500
million if it wins a tender for a telecom licence in Libya as it
looks to boost its customer base into North Africa a top
executive said on Tuesday
Libya is very strategic Jamal al Jarwan chief executive
of Etisalat s international unit told Reuters by telephone
We would need a new network and it will not be less than
500 million he said That s the minimum to get started
Jarwan said declining to say how much it had bid for the
licence
Etisalat the Gulf Arab region s second largest
telecommunication s firm by market value said in a regulatory
filing it submitted a bid to the Libyan General
Telecommunications Authority on July 15
The UAE firm will compete against Turkey s biggest mobile
operator Turkcell which said on July 13 that it would also bid
for the Libyan license citing high growth potential
Etisalat has been expanding overseas especially in Africa
as it faces stiffer competition in its home market of the United
Arab Emirates where some analysts have predicted that job cuts
could reduce population weighing on profits of Etisalat and
rival du
OPEC member Libya is the latest North African state to allow
private investors into the lucrative telecoms sector after
government officials repeatedly said the country did not need
foreign private sector involvement
Libya has two state mobile phone operators Libyana and
Madar to service a market of 5 million
We re hopeful we can add value although the size is small
users are holding good at 15 revenue per user ARPU Jarwan
said adding that it would bring its experience in applications
such as 3G to the table
Etisalat s shares closed 0 96 percent up in Abu Dhabi after
Jarwan told Reuters the firm was also interested in buying a 51
percent stake in Kuwaiti mobile operator Zain
Etisalat has the advantage of applying their experience in
Egypt to other markets in Africa Khaled Akl head of research
at Abu Dhabi Commercial Bank The entry price ticket of these
markets is cheap and there is a potential for growth in
subscribers despite the lower levels of ARPU
STILL NO MOVE IN MOROCCO
The firm s chief financial officer Salem Ali al Sharhan
told Reuters by telephone from Switzerland on Tuesday that
Etisalat had yet to make a bid for a stake in Meditel Morocco s
second largest telecoms firm
Portugal Telecom has appointed Morgan Stanley to sell its 32
percent stake in Meditel people familiar with the matter said
in May
In the same month Etisalat s chairman told Reuters it would
bid for the Meditel stake as it seeks acquisitions in the Middle
East and Africa after asset prices declined
We are still looking at Morocco but will it materialise
It s not clear Sharhan said
Etisalat made a second quarter net profit of 2 41 billion
dirhams 656 1 million down 19 percent from a year earlier
but beating forecasts
The company said on Friday that growth in revenues would
help the firm expand and develop national and international
business units
Etisalat believes Africa is a growth market due to lower
market penetration levels in comparison to developed markets
said Akl Egypt has been a successful story for Etisalat as
mobile penetration level for the country has increased from
39 82 percent in December 2007 to approximately 60 percent as of
June 2009
Etisalat has more than 85 million subscribers and expects
subscriber numbers to reach 100 million in 2010
Reporting by John Irish Editing by John Stonestreet and
Rupert Winchester |
MS | US STOCKS SNAPSHOT Futures slide as bank results disappoint | NEW YORK July 22 Reuters U S stock index futures
added to losses on Wednesday after disappointing quarterly
results from Morgan Stanley and Wells Fargo Co
Shares of both banks were down more than 5 percent in
premarket trade
S P 500 futures fell 8 6 points and were below fair value
a formula that evaluates pricing by taking into account
interest rates dividends and time to expiration on the
contract Dow Jones industrial average futures lost 68 points
and Nasdaq 100 futures fell 6 5 points |
MS | US STOCKS Futures moving lower after bank earnings | Morgan Stanley Wells Fargo results disappoint
Fed Chairman Bernanke to speak to Senate
Updates prices adds quote byline
By Rodrigo Campos
NEW YORK July 22 Reuters U S stock index futures
pointed to a lower open on Wednesday after disappointing
quarterly banking results dented recent optimism about the
financial sector s recovery
A third consecutive quarterly loss at Morgan Stanley and
rising credit losses at Wells Fargo Co pushed those shares
lower in premarket trading by 5 percent
There s fear of more losses across the financial spectrum
Regardless of what they did in the second quarter the thought
is there s more bad news to come said Jim Paulsen chief
investment officer at Wells Capital Management in Minneapolis
You also have this coming in after a pretty good run and
the market is vulnerable because it is so extended
Also on Wednesday Federal Reserve Chairman Ben Bernanke
begins a second round of testimony in Congress with investors
looking for clues on how the Fed plans to balance its actions
to help the economy recover while avoiding weakening the U S
dollar further
Bernanke pointed out the fragility of the recovery and led
a lot of investors to reconsider whether a policy of low
interest rates is what the stock market needs to continue its
recovery or will lead to further problems down the road said
Rick Meckler president of LibertyView Capital Management in
New York
Bernanke s testimony before the Senate Banking Committee
begins at 10 a m 1400 GMT
S P 500 futures fell 8 points and were below fair value a
formula that evaluates pricing by taking into account interest
rates dividends and time to expiration on the contract Dow
Jones industrial average futures lost 75 points and Nasdaq 100
futures dropped 5 points
Regional bank KeyCorp posted a wider than expected loss
hurt by bad loans and its shares fell more than 5 percent in
premarket trade
Apple Inc posted on Tuesday quarterly profits that beat
forecasts helped by robust sales of Mac computers and iPhones
and higher than expected gross margins sending its shares up
more than 4 percent in premarket trading
A surge in Apple shares could help the Nasdaq extend its
current 10 day winning streak its longest in 12 years
U S shares gained ground on Tuesday as strong results from
Caterpillar Inc eclipsed some uneasiness about the company s
outlook for the current quarter but the gains were limited as
some investors paused following the recent earnings fueled
run up |
JPM | JPMorgan Q4 EPS 1 71 vs estimate 1 44 revenues up 2 | Investing com NYSE JPMorgan Friday reported Q4 EPS of 1 71 vs estimate of 1 44 and year earlier 1 32 Revenues increased 2 to 24 33 bn compared with a forecast of 23 74 bn Net interest income was up 5 at 12 1 bn boosted by higher interest rates JPMorgan shares were up 0 19 at 86 40 in pre market trade |
C | Swiss bank UBS warns of penalties as forex settlement talks begin | By Joshua Franklin ZURICH Reuters Switzerland s largest bank UBS warned it faced new fines after confirming it was holding talks to settle allegations it was involved in rigging foreign exchange rates Authorities from around the world are investigating allegations that dealers at major banks colluded and manipulated key reference rates in the 5 3 trillion a day foreign currency market the world s biggest and least regulated UBS has started settlement talks with some of the investigating authorities the bank said in a share swap prospectus published on Monday The terms proposed in the talks included findings that UBS did not have adequate controls over its foreign exchange business it said UBS said it could face material monetary penalties in any deal struck The foreign exchange probe is one of several legal headaches facing the bank as it shrinks its investment banking business It raised its provision against future litigation to 1 98 billion Swiss francs 2 08 billion earlier this year but has warned this might not be enough to cover possible fines and charges UBS did not identify the regulators it was talking to but sources told Reuters on Friday that Britain s Financial Conduct Authority FCA was talking to UBS and five other banks Barclays HSBC Royal Bank of Scotland JP Morgan and Citi about a possible settlement that could results in each bank being fined hundreds of millions of pounds UBS said in its prospectus that other authorities could start settlement talks in the near future The U S authorities which traditionally levy far higher fines than their British counterparts are not part of the UK negotiations Stung by a previous scandal into manipulation of benchmark interest rates which saw it pay out 1 5 billion in fines and penalties UBS has tried to stay on top of the foreign exchange probe It suspended at least five traders and approached U S authorities last year with information in the hope of gaining antitrust immunity if charged with wrongdoing UBS said on Monday it would continue to take appropriate action over personnel in connection with the foreign exchange probe Britain s Lloyds Banking Group said on Monday it had dismissed eight staff following an investigation into manipulation of benchmark interest rates after it was fined in July by American and British regulators So far more than 30 traders from various banks have been put on leave suspended or fired in connection with the FX probe No individual or bank has been formally accused of any wrongdoing CORPORATE RESTRUCTURING The prospectus UBS published on Monday is aiming to attract investors to swap their shares into a new group holding company a restructuring effort designed to ensure it can be broken up more easily in a crisis Updated figures showed the bank has made a profitable start to the third quarter Retained earnings as of Aug 31 rose by 731 million Swiss francs to 27 1 billion Swiss francs 28 44 billion from 26 3 billion francs in the second quarter It shows that they ve been profitable which is good said Kepler Cheuvreux analyst Dirk Becker A spokesman for UBS said it does not disclose what is in its retained earnings figure Equity attributable to shareholders also rose to 50 8 billion francs from 49 5 billion francs Shares in UBS were up 0 9 percent at 0647 ET outperforming the European banking sector which was down 1 percent UBS has a goal of tendering 90 percent of the new shares The start of the initial acceptance period is Oct 14 and ends on Nov 11 The bank reaffirmed that it expected the new structure will allow it to qualify for a capital rebate under Switzerland s too big to fail requirements resulting in lower overall capital requirements for the bank In addition to setting up the new holding company UBS Group AG the bank also plans to establish a Swiss subsidiary in mid 2015 and a holding company for its U S operations by mid 2016
In the previous model a parent company holds a host of interconnected UBS branches The change means UBS s businesses can be separated more easily if one ran into trouble without jeopardizing the others preventing a repeat of 2008 when Swiss taxpayers had to save the bank from huge losses in the United States Reporting by Joshua Franklin Additional reporting by Carmel Crimmins and Jamie McGeever Editing by David Goodman and Susan Thomas |
C | May Asset Class Review REITs Lead EM Bonds Lag | The recent rebound in global markets stumbled in May Other than gains in US REITs US equities and US high yield bonds the rest of the field for the major asset classes suffered losses last month
The big winner in May real estate investment trusts in the US MSCI REIT which posted a 2 4 total return last month For the year so far US securitized real estate is ahead by a solid 6 2 Note however that 2016 s current year to date leader is broadly defined commodities the Bloomberg Commodity Index is higher by 8 8 so far this year
The main loser last month bonds in emerging markets Citigroup NYSE C which shed 5 2 Emerging market stocks were the runner up for red ink in May via a 3 7 loss
The negative bias in markets last month kept a lid on the Global Market Index GMI an unmanaged benchmark that holds all the major asset classes in market value weights The index posted only a fractional gain of 0 1 in May For the year so far however GMI is still ahead by a respectable 3 2
Note too that GMI s trailing 3 year annualized total return inched up to 4 8 through last month That s still near the weakest 3 year rolling return for GMI in several years On the other hand a 3 year return that s close to 5 looks encouraging relative to the subdued long run risk premia forecasts for GMI of late |
MS | KKR merger with Euronext fund moves closer sees profit | KPE board unanimously approves proposed KKR deal
Deal still requires consent from KPE shareholders
NYSE listing remains on horizon
Equity incentive plan proposed
KKR Q2 earnings seen 345 mln 370 mln AUM 50 8bln
By Megan Davies
NEW YORK July 20 Reuters Private equity firm Kohlberg
Kravis Roberts Co on Monday moved a step closer to merging
with its Euronext listed fund after receiving approval from
the board of the fund to combine businesses
Combining with KKR Private Equity Investors LP KPE is a
roundabout way for KKR to gain a European listing and is a
step towards it following rival Blackstone Group in becoming a
New York Stock Exchange listed company
KKR one of the world s most powerful private equity firms
also gave further details on the planned combination with KPE
including a proposed equity incentive plan
It provided an update on its profit outlook saying
earnings for the second quarter were expected to be between
345 million and 370 million The most recent comparison are
figures it released in May which showed a loss for 2008 of
1 2 billion
Fee related earnings for the three months were expected to
be between 45 million and 55 million it said
It also said assets under management for the end of June
were expected to be 50 8 billion a 7 percent rise from the
47 3 billion it disclosed in May
KKR co founded by buyout king Henry Kravis has
investments in numerous household names such as Toys R Us Inc
mattress maker Sealy Corp and asset manager Legg Mason Inc
The economic meltdown hit the valuations of private equity
firms portfolios their ability to raise money from the large
pension funds that invest in their funds and their ability to
do leveraged deals
However KPE s net asset value is expected to be 3 billion
for the end of June a 14 percent rise from the 2 6 billion
reported for the end of March the firms said
On a per unit basis KPE s net asset value is expected to
be between 14 55 and 14 75 per unit a 13 15 percent rise
from the 12 82 reported for the end of March
The figures are a fall from the same period a year earlier
however when KPE s net asset value was 4 6 billion or 22 25
per unit
Valuations have been helped by a rebound in the equity
markets over the last few months Private equity firms have to
value their portfolio companies as if they were selling them
today rather than years in the future In its first quarter
figures KKR wrote up its investments in companies including
discount chain Dollar General and hospital company HCA
KPE has investments in six KKR private equity funds
NYSE LISTING PLANS
KKR launched plans to list on the NYSE via a traditional
initial public offering in July 2007 a month after Blackstone
went public and just before the markets started to tumble
It later proposed a more complex method of going public by
combining with KPE delisting the fund from Amsterdam and
listing in New York In June it formally withdrew the proposed
New York IPO plan but kept the door open for such a move
saying it had the ability to seek a listing in the future
This was re iterated in Monday s press release which said
KPE and KKR would have the ability to require that the other
use its reasonable best efforts to cause KPE s interests in the
combined business to be listed and traded in the U S
After a certain period KPE and KKR would have the ability
to seek a listing of the combined business in the U S they
said
The deal agreed on Monday is a revised deal to the original
terms KKR proposed Under the deal agreed Monday KPE will own
30 percent of the combined business which would keep the
Euronext listing The original plan called for a delisting of
the fund and would see KPE own 21 percent of the company
INCENTIVE PLAN
The combined company would also have an equity incentive
plan under which 15 percent of the fully diluted interests of
the business may be issued the pair said in an annex to
Monday s statement That was consistent with other publicly
traded U S alternative asset managers they said
Any grants made under that plan after the combination would
dilute KPE and KKR principals interests in the combined
business however no grants would be made to senior members of
KKR until either one year after the combination or the
business was listed in New York they said
The companies stressed that KKR s executives were not
selling equity under the deal with KPE
KKR on Monday said the board of KPE had unanimously
approved the deal although it still required the consent of
KPE unitholders Those owning 44 percent of KPE s outstanding
shares have agreed to the deal Provided that consent is
obtained the deal is expected to occur on October 1
KKR co founders Henry Kravis and George Roberts said in a
statement that the combined business would be well positioned
to take advantage of exciting opportunities in asset
management and financial services
The original deal gave an implied value for KPE
shareholders of 16 to 19 20 per share according to a KKR
presentation at the time It is unclear what the implied value
is under the new deal
Citi is advising KPE Lazard is advising the independent
directors and Goldman Sachs and Morgan Stanley are advising
KKR
Editing by Chris Lewis |
MS | UPDATE 2 Hopu Temasek eye 1 bln China iron ore IPO sources | Iron ore miner Lung Ming seeks to raise up to 1 billion
Lung Ming s Hong Kong IPO likely in the fourth quarter
Hopu Temasek invested 300 million in Lung Ming in 2008
Adds additional company background Lung Ming investors
By George Chen and Michael Flaherty
HONG KONG July 20 Reuters Chinese iron ore miner Lung
Ming partly owned by private equity firm Hopu and Singapore s
state investor Temasek plans to list shares in Hong Kong this
year to raise up to 1 billion sources with direct knowledge
of the plan said
If successful Lung Ming s IPO would be the first
investment exit for Hopu an influential China focused private
equity firm run by top dealmaker Fang Fenglei who helped
Goldman Sachs set up its China investment banking joint
venture
Amid a recovery in global markets companies are rushing to
raise equity after a roughly year long drought of IPOs Private
equity firms for their part see the IPO recovery as a way to
cash out of existing investments and pocket the profits
Last week China Pacific Insurance Group Co Ltd the
country s third largest life insurer and partly owned by the
Carlyle Group said it was relaunching its Hong Kong IPO
likely to raise 3 5 billion
Lung Ming which owns and operates a Mongolian iron ore
mine aimed to raise between 500 million and 1 billion and an
initial public offering of shares was likely to take place in
the fourth quarter said the sources who declined to be
identified as the IPO process is confidential
A representative for Lung Ming could not be immediately
reached for comment
Lung Ming was Hopu s first investment since its fund was
launched and now it is going to be the first exit case for
Hopu so this will attract lots of eyeballs said one source
Fang established Hopu in 2007 and completed raising its
first 2 5 billion China focused fund in 2008 Hopu s main
investors include Singapore s sovereign fund Temasek and
Goldman Sachs
Shortly after Hopu Investment Management raised its first
fund in early 2008 Hopu teamed up with Temasek Holdings to
jointly invest US 300 million in Lung Ming the sources said
MONGOLIAN IRON ORE
As the fastest growing major economy China is the world s
largest iron ore buyer and consumes more than half of its
traded ore
China s annual term iron ore price negotiations have this
year degenerated into an international row with China alleging
that Rio Tinto employees were involved in spying and bribing
Chinese officials
Beijing is seeking alternatives to rely less on imports of
natural resources Chinese companies and funds are encouraged
by the government to acquire resource assets worldwide
Lung Ming owns 53 percent of Mongolian iron ore mine Eruu
Gol Local partner Dornyn Gobi holds the remaining 47 percent
local media reported
Besides Hopu and Temasek early investors in Lung Ming
include U S private equity firm Clarity Partners and Credit
Suisse which bought some convertible bonds of Lung Ming in
late 2007 according to local media reports
Last June Lung Ming hired Morgan Stanley and Credit Suisse
to advise on its Hong Kong IPO according to local media
reports at the time but the plan did not work out because of
the worsening global financial crisis
Investment banks including UBS and Morgan Stanley were
pitching Lung Ming to advise on its new IPO plan although no
appointments had so far been made said the sources
Additional reporting by Joseph Chaney Editing by Jacqueline
Wong and Chris Lewis |
JPM | Wall St lower as Trump eschews economic policy details | Investing com U S stocks were lower early Thursday as Donald Trump failed to provide details of his economic policies Wednesday The market expected Trump to flesh out plans for a fiscal stimulus package and corporate tax cuts at a much awaited news conference The DJI was off 0 75 at 10 30 ET after closing higher overnight The S P 500 lost 0 73 The tech heavy Nasdaq composite shed 1 00 Trump s eschewal of policy details saw thedollar index slump to below 101 Banks were lower as U S Treasury yields retreated NYSE 243 Bank of America NYSE JPMorgan NYSE Wells Fargo due to report Q4 earnings Friday |
JPM | JPMorgan sees Brazil Mexico politics posing risk for bank bonds | SAO PAULO Reuters A slow economic recovery across Latin America and growing political risks in Brazil Mexico and Argentina could pose additional challenges for commercial banks some of which have been wrestling with loan quality issues in recent years JPMorgan NYSE JPM Securities said on Thursday In a client note analyst Natalia Corfield recommended investors focus on higher yielding bank debt offering some cushion to price declines including subordinated bonds issued by state controlled lenders in Brazil and Mexico s Grupo Financiero Banorte SAB MX GFNORTEO among others Current macroeconomic conditions have gained relevance for Latin American banks due to a correlation with political events that may affect domestic banking systems she said A stagnant economy in Argentina escalating political tension in Brazil and the impact of new U S government on Mexico could make bank bonds in those countries more vulnerable to bouts of volatility Given the balance of risks our focus is on higher yielding instruments with enough carry to offset possible price declines Corfield wrote Her remarks underscore how Donald Trump s U S presidential victory in November has shaken confidence in some Latin American countries and how governments and companies in the region have to advance their own agenda to lure investors back Argentina President Mauricio Macri is struggling to revamp an economy long hobbled by years of high inflation and weak investment while Brazilian President Michel Temer is wrestling with the country s worst recession ever and fallout from a massive corruption scandal that helped topple his predecessor Trump has pledged to curtail financial flows to and renegotiate trade deals with Mexico which derives most export proceeds from sales to the United States Governments and companies in Latin America may halve global bond sales this year reflecting the success of prior refinancing efforts and uncertainty about Trump s views on the region Regional offerings could fall to as low as 60 billion this year from over 120 billion in 2016 Corfield has a negative bias on Colombian bank debt which may suffer with years of tepid growth Chilean bank debt remains resilient while Peruvian lenders look well positioned to seize on the country s growth prospects Bond prices could be bolstered on expectations banks may slow fundraising activity this year she said Corfield assigned overweight recommendations on Brazilian state controlled lender Caixa Econ mica Federal s 4 15 percent and 7 25 percent subordinated bonds due in 2019 and 2024 respectively as well as Banco do Brasil SA s 6 25 percent perpetual note Others include Banorte s 5 75 percent global maturing in 2031 05962GAF6 |
JPM | U S stock index futures edge higher as U S data on tap | Investing com U S stock index futures edged higher Friday with U S consumer data on tap The Dow futures was up 0 11 at 07 30 ET after the DJI fell overnight TheS P 500 futures gained 0 10 The tech heavy Nasdaq 100 futures added 0 16 U S retail sales consumer sentiment are due for release later in the session The dollar index was lower as the so called Trump effect started to fade NYSE 243 Bank of America reported a 48 rise in Q4 EPS to 0 40 beating an estimate of 0 38 NYSE JPMorgan NYSE Wells Fargo FC due to report Q4 earnings later |
JPM | JP Morgan shares rise after Q4 beat | Investing com JP Morgan the biggest U S bank reported earnings and revenue that beat Wall Street forecasts on Friday
Specifically the blue chip bank reported earnings per share EPS of 1 71 compared to expectations for 1 44
Net revenue rose 2 from a year ago to 24 33 billion beating the consensus forecast for 23 74 billion
Shares of JP Morgan NYSE JPM were last up 0 55 to 86 73 in pre market trade compared to Thursday s close of 86 24 That was compared to a flat reading just prior to the release |
C | U S judge sets hearing in Argentina bond case over Citi subpoena | NEW YORK Reuters A U S judge overseeing litigation by Argentina and creditors who did not participate in the country s past debt restructurings on Friday scheduled a hearing to assess whether Citigroup Inc N C should be forced to comply with a subpoena
U S District Judge Thomas Griesa in New York scheduled a hearing for Sept 10 at 2 30 p m EDT following a request by a lawyer for Elliott Management s NML Capital Ltd a creditor suing over Argentine bonds that have been in default since 2002
Reporting by Nate Raymond in New York Editing by Meredith Mazzilli |
C | Parmalat ordered to pay Citibank 431 million lawyers | MILAN Reuters An Italian court upheld a ruling by a U S court for dairy group Parmalat MI PLT to pay Citibank N C 431 million in damages in a case relating to the Italian company s 2003 bankruptcy lawyers for the U S bank said on Thursday
In 2008 the Superior Court of New Jersey had thrown out a request for damages by Parmalat against Citibank and had instead accepted a request for damages against the dairy group by the U S bank
Following the demand by Citibank for recognition of the U S ruling in Italy the Bologna Court of Appeal has now ruled that the U S sentence be recognised in Italy against Parmalat law firm Clifford Chance said
Parmalat was not immediately available for comment
Reporting by Stephen Jewkes editing by Oleg Vukmanovic |
C | Citigroup expenses rise to meet stress testing | NEW YORK Reuters Citigroup Inc s N C third quarter expenses are running slightly higher than three months ago because of efforts to prove to regulators that its risk and balance sheet management is good enough to allow more spending for dividends and share buybacks the bank s chief financial officer said on Monday
John Gerspach told an investor conference the company is well on the way to making needed changes in its capital planning for the Federal Reserve s next stress test early next year
In March the Fed Reserve rejected Citigroup s last capital plan in a surprising rebuke for Chief Executive Officer Mike Corbat Gerspach acknowledged that the company had been wrongly confident in that plan He said the company had a false set of understanding of Fed requirements going into that test and has since been working constantly to improve its management
Gerspach in the first comments on third quarter trading results from a major Wall Street executive also said equity and fixed income market revenue is roughly in line with a year earlier
Investment banking revenue is expected to be better than a year earlier but less than in the second quarter because of seasonally lower underwriting Gerspach said
The CFO also said that Citigroup now estimates that a hypothetical one percentage point rise in short and long term rates would increase the company s 2014 earnings by 43 cents a share Stock analysts estimate on average that the company will earn about 3 69 per share this year according to Thomson Reuters
In Monday morning trading in New York Citigroup shares were up 0 3 percent to 52 46
Reporting by David Henry in New York Editing by Tom Brown |
C | Banks join forces in push for coordinated FX settlement sources | By Jamie McGeever LONDON Reuters Banks caught up in the British investigation into alleged manipulation of global currency markets are pushing for a coordinated settlement that would reduce their exposure to potential reputational damage banking and legal sources told Reuters
In the year since the scandal surfaced regulatory authorities have yet to show proof of criminal activity or manipulation of benchmark exchange rates the sources said adding that a deal with Britain s top financial regulator could be agreed by the end of the year
The sources said that a settlement with the Financial Conduct Authority FCA is now being sought on the basis of banks acknowledging lax internal compliance oversight failures and market conduct breaches by individual employees but not deliberate manipulation of the 5 trillion a day market
One source involved in the talks acknowledged that all sides are keen to wrap up the main part of the investigation given how long it has been dragging on and that the plan is to co ordinate the settlements
Two separate banking sources with knowledge of the investigation said a settlement could be reached this year with one of them saying that it is likely be a coordinated agreement
Such a deal would see potential FCA fines levied bank by bank recognizing the differences between various types of misconduct and the degree of any wrongdoing but with the watchdog announcing the settlements simultaneously several sources said
Among the banks cooperating with the watchdog s inquiries are Barclays L BARC UBS VX UBSN Deutsche Bank DE DBKGn JP Morgan N JPM Citi N C and RBS L RBS all of which declined to comment for this article as did the FCA
MOVING QUICKLY
Regulators are moving quickly on this so a push toward a year end resolution doesn t surprise me the second source said But this is their investigation It doesn t matter what we the banks think
It is unclear how or through what channels the banks aim to achieve this common position and there is no indication how amenable the FCA would be to such a proposal
Any agreement this year would represent a dramatic advance on previous FCA estimates of how long it would take to complete its investigation
The regulator s chief executive Martin Wheatley said in February that he would be surprised if conclusions were drawn this year while FCA head of enforcement Tracey McDermott told Reuters in April that the investigation was in a relatively early stage and that the FCA was some way away from saying there was actually misconduct at all
The sources said that a coordinated settlement with the FCA would not remove the wider global investigation s potential for later action from authorities such as the U S Department of Justice DoJ and the European Commission most likely to be on antitrust grounds
PUBLIC BACKLASH
However a collective settlement would help to insulate the banks from the potential for more severe punishment if they opted to go it alone and could also shield them from the kind of public backlash Barclays felt after the Libor scandal
Barclays was fined a discounted 453 million by British and U S authorities in 2012 because it came clean earlier than others in the rate rigging scandal But by doing so the bank became the focal point for the public s anger forcing the resignation of disgraced Chief Executive Bob Diamond
Given that the FCA and U S authorities have been working together closely on the FX investigation sources say that the banks hope that a simultaneous settlement could be reached with both regulators
A Washington source familiar with the matter offered little hope of that being achieved It is hard enough getting one bank investigation over the finish line so getting multiple regulators on the same page for a coordinated announcement could prove extremely difficult the source said
Banks have set aside billions of dollars to cover litigation costs and regulatory settlements but estimates for the final cost vary wildly Banking analysis company Autonomous Research pegs the figure as high as 35 billion which would be almost six times the 6 billion paid out in Libor settlements
Regardless of collective agreements the FCA DOJ and other regulators around the world also have the power to charge individuals as and when they see fit
More than 30 currency operatives at several leading banks including one at the Bank of England have been suspended placed on leave or fired as a dozen authorities have conducted their investigations
Additional reporting by Matt Scuffham in London and Aruna Viswanatha in Washington Editing by David Goodman |
C | Is Manufacturing On The Rebound Services PMI Casts Doubt | Markit s Services PMI fell to just 51 2 in May dropping a rather large 1 6 points from 52 8 in April That meant the combined US Composite PMI which puts together both manufacturing and services was barely above 50 registering just 50 8 As with all PMI s the distinction around 50 is unimportant what matters is the direction and for more than a single month On that count services reflect what we have seen in manufacturing that the rebound in March and April was nothing more than a small relative improvement after the liquidation driven start to the year The economy didn t get better it for a few months just failed to get worse
In terms of the Services survey Markit reports several distressing indications including respondents views for
May data highlighted a renewed fall in business optimism across the service economy Reflecting this the balance of service sector firms forecasting a rise in business activity over the year ahead eased to its lowest since the survey began in October 2009 Anecdotal evidence suggested that uncertainty related to the presidential election and concerns about the general economic outlook had continued to weigh on business confidence emphasis added
While I don t want to overemphasize individual parts of individual sentiment surveys it is quite a contrasting summation with the apparent self delivered economic approval of the FOMC to execute the next policy communication rate hike in name only And this is not manufacturing it is the services component that is supposed to steer the economy far away from the manufacturing recession That was always a dubious proposition particularly when so much of the supposed services economy itself relates to the transportation management and then sale of goods
On that count Markit s Chief Economist Chris Williamson noted that May s update reflected very poorly on measurement expectations for Q2
Service sector growth has slowed in May to one of the weakest rates seen since 2009 and manufacturing is already in its steepest downturn since the recession
Having correctly forewarned of the near stalling of the economy in the first quarter the surveys are now pointing to just 0 7 annualised GDP growth in the second quarter notwithstanding any sudden change in June
This is all a dramatic change condensed tellingly into a rather short economic window The manufacturing sector has been shrinking for almost two years but in the service sector indications such as these PMI s had only pointed to a slowing from 2014 s supposedly upbeat pace Even just six months ago in the flash Markit US Services PMI for November the mood was
Looking ahead service sector companies were upbeat overall about their prospects for growth over the next 12 months However the degree of positive sentiment remained subdued in comparison to the post crisis average Some panel members noted that signs of weaker global economic conditions were a factor leading to caution about the outlook for business activity at their units
Williamson added
The US economy is showing further robust economic growth in the fourth quarter with the pace of expansion picking up in November
Again it s another indication that something changed toward the end of last year In November 2015 service businesses were suggesting only signs of weaker global economic conditions but now in May 2016 that has been transformed into concerns about the general economic outlook such that forward economic optimism is like 2009 and nothing at all like what is in Janet Yellen s world We don t have to wonder why that would be as even the FOMC has provided all the necessary indications about as shorthand for the dollar
Even from a purely psychological standpoint two successive massive global financial disruptions which weren t really about the stock market though it shows you just how deep they were that they would so interrupt the third equity bubble this century both of which were declared impossible would wear down a wide margin of those still waiting on Yellen s recovery to occur That has been the story throughout the slowdown back to 2012 as markets and economic agents alike have given the orthodoxy wide berth to continue to claim it is coming even though evidence for that view remained powerfully scarce The belief may have been more emotional than rational even recession fatigue after the Great Recession had seemed to linger in the air for year after year as people beaten down by continued disappointment will latch onto even the most fantastical hope That was QE3
What was left of the recovery then was little more than that faith Once the plausibility of the happy ending was sufficiently challenged there was little left to offer actual economic support The successive dollar events of the past year certainly erased a good deal of that plausibility the first one in August was just enough to entertain doubts no matter how many times Yellen said the words transitory and unemployment rate and then the bigger one in January clinched them I think that is why we have seen this shift in apparent economic condition and outlook and why it happened when it did
When Citigroup s economics team proposed in December that the outlook for the global economy next year is darkening that it represented apologies to Winston Churchill the end of the beginning It was a starkly different view from what they had forecast the prior December 2014 or even in individual statements made by members of the team just months before
What has changed since For one Citi seems to have sensed that the Fed s role is only to make matters worse thus their citation of yield curve inversion More than that the manufacturing recession for whatever proportion of the economy it might directly effect has become real not just in more indisputable fact but more so in what it suggests about the direction of the economy services and all Citigroup NYSE C may still be lagging financial indications especially the dollar that were suggesting this fate long ago and projecting it into commodity and fixed income markets but at least they appear to be approaching it with a refreshing accountability to something other than Yellen s models and next year s certainty
Five months later having gone through the second liquidation with no traction of a real economic rebound from it phase shift does appear to be the growing prognosis Whether or not that adds up to the historically conforming recession cycle isn t clear and may not truly matter in the end As the more important factor is whether any recession would be a true cycle or just another ratchet down toward further and lengthy abyss The PMI s of late are in agreement that the slowdown is moving past the manufacturing recession phase to whatever it is that might await the economy next |
C | The Zacks Analyst Blog Highlights Contango Oil Gas Sanchez Energy Rose Rock Midstream McDermott International And Pembina Pipeline | For Immediate Release
Chicago IL May 27 2016 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog include Contango Oil Gas Company Sanchez Energy Corporation Rose Rock Midstream L P McDermott International Inc and Pembina Pipeline Corporation
Today Zacks is promoting its Buy stock recommendations
Here are highlights from Thursday s Analyst Blog
Oil at 2016 Highs 5 Stocks Making the Most of It
Oil prices are hovering close to the psychological 50 per barrel mark and we feel the time has come for the long beleaguered sector to come back to life Since mid 2014 the commodity s price has been plunging primarily due to excess supply of crude in the global market However the wheel of fortune is slowly turning for the space which witnessed the 12 year low mark of 26 05 per barrel for West Texas Intermediate WTI crude in mid February this year This is remarkable considering the fact that the overall market sentiment usually veers toward profit booking prior to the Memorial Day weekend
Rebound in the Cards
The upside in this space is mainly driven by lower production from the non OPEC space The International Energy Agency IEA the OECD energy watchdog is also bullish on the demand growth prospects of the trio India China and Russia Per the agency the triad consumed about 1 million barrels per day more year over year in the first quarter of 2016
Our bullishness is further compounded by the latest weekly data from the Energy Information Administration EIA that revealed a fall in U S crude stocks as imports dropped and refineries cut output The optimism was also echoed by the American Petroleum Institute API the largest oil industry association in the U S
As a result investors hopes were rekindled on oil and the commodity which is showing overall improvement after touching the lowest point in mid February Also the domestic oil count stopped the southward march last week when it stopped a steady eight week fall as revealed by Baker Hughes
We feel the correction in rig count is a blessing in disguise for the beleaguered energy space This is due to the simple fact that over the past decade the space has seen a mammoth rise in drilling and production related capacities This resulted in an invariable rise in production levels However the correction in rig count clears the path for stability in the space Recovery at the Right Time
The current change in demand supply dynamics put energy players on radar of investors long awaiting a lift in the fortunes of the space So long the sector was ravaged by falling realizations from upstream operations which dragged down the overall picture The downfall continues to affect the performance of even the largest players in the space like Royal Dutch Shell LON RDSa which recently announced the axing of another 2 200 jobs globally in 2016 Now What
Now investors can only hope that the decline in the production level does not end up being a mirage After all the entire diminishing inventory overhang has been a key part of our favorable view of the oil space this year
We however did not foresee the unplanned supply disruption out of Nigeria and Canada but those are temporary in any case and will eventually be back online But it s reduced volumes from the U S shale basins purely on economic ground that are likely to be the more enduring cure for the oil market s supply problems Production declines from the shale basins have proved to be a lot slower than many of us had envisioned but it s happening nevertheless and the trend is expected to only accelerate in the coming days despite the commodity s recent favorable momentum
On a final note Wall Street giant Citigroup NYSE C upped the ante by pushing WTI to 61 per barrel by year end 2017 Top Stocks Rallying with Crude
A number of energy stocks saw their prices head north along with an uptrend in the prices of commodities they deal with Below we highlight five such energy stocks that are gaining Each of these stocks carries either a Zacks Rank 1 Strong Buy or 2 Buy Contango Oil Gas Company
Houston TX based independent energy company Contango Oil Gas Company is engaged in the acquisition exploration development exploitation and production of crude oil and natural gas offshore in the shallow waters of the Gulf of Mexico and in the onshore Texas Gulf Coast and Rocky Mountain regions of the United States The upstream energy operator s shares have shot up roughly 86 3 year to date Sanchez Energy Corporation
Sanchez Energy Corporation is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources in the onshore U S Gulf Coast The company s main current focus is on the Eagle Ford Shale in South Texas and the Tuscaloosa Marine Shale The stock has jumped 80 3 to date this year and has surprised earnings to the upside in three of the last four quarters Rose Rock Midstream L P
Headquartered in Tulsa OK Rose Rock Midstream is a midstream energy partnership The partnership provides crude oil gathering transportation storage and marketing services with the majority of its assets strategically located in or connected to the Cushing Oklahoma crude oil marketing hub The stock has jumped 58 1 year to date McDermott International Inc
McDermott is a leading provider of integrated engineering procurement construction and installation EPCI and module fabrication services for upstream field developments worldwide The company delivers fixed and floating production facilities pipelines installations and subsea systems from concept to commissioning for complex Offshore and Subsea oil and gas projects The company has seen a 40 spike in its share price to date Pembina Pipeline Corporation
Calgary based Pembina Pipeline Corporation is a leading transportation and midstream service provider The company owns and operates an integrated system of pipelines that transport various products derived from natural gas and hydrocarbon liquids produced in western Canada and North Dakota Share price has appreciated more than 32 to date this year Summing Up
Entering the market at the right time helps to maximize portfolio returns With an unexpectedly large fall in U S production crude prices have given a much needed breather As such we believe it will be prudent to start accumulating these stocks right away
Want the latest recommendations from Zacks Investment Research Today you can download 7 Best Stocks for the Next 30 Days
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MS | ANALYSIS India budget disappoints but more detail to come | By Tony Munroe and Surojit Gupta
NEW DELHI July 7 Reuters India s newly re elected
government may have disappointed investors with a deficit laden
budget lacking big pro market initiatives but it does not mean
the government has abandoned intentions towards reforms
Investors many of whom had priced in unrealistic
expectations from Monday s budget need patience
Government insiders and observers said more is to come
The thing this budget may be remembered by is delay A
delay to deficit reduction a delay to subsidy cuts and
flexible fuel pricing UBS economist Philip Wyatt wrote in a
note
Monday s budget release was heavy on spending for farmers
and the poor a core constituency of the Congress party led
ruling coalition funded by a surge in borrowing and an
increase in the fiscal deficit to 6 8 percent of GDP
Investors who wanted restrictions loosened on foreign
ownership tighter fiscal management and an end to costly fuel
subsidies were disappointed
Finance Minister Pranab Mukherjee made few promises with
his budget Morgan Stanley economist Chetan Ahya wrote
Indeed we believe he was careful to avoid making noise on
politically sensitive issues such as divestments and FDI
foreign direct investment Ahya wrote
However we believe no mention in the budget does not
mean no action on this front he wrote adding that it is
highly likely that the government will raise 5 billion from
divestments in the fiscal year that ends in Match 2010
EARLY DAYS
But fears that Prime Minister Manmohan Singh s government
has squandered the opportunity to use its sweeping re election
mandate to usher in a wave of reforms are premature
Instead Monday s budget was aimed at broadening economic
growth and opportunity funding for rural infrastructure
ultimately generates new demand Indeed the rural sector has
helped insulate India during the global economic downturn
Spending on rural areas and the poor also benefits a
constituencies farmers and the poor that were key to
Congress big win in May and will also be crucial in upcoming
state elections
Political reality has been taken care of by this
thanksgiving budget said D H Pai Panandikar president of
private economic think tank RPG Foundation
But I think reform issues will be taken up in the next
budget Reform measures have become an agenda for the future
UNREALISTIC HOPES
While much stock is placed in India s annual budget
announcement far too much critics say key policies are
increasingly made outside the budget process
Saumitra Chaudhuri a member of the government s Planning
Commission said Monday s budget speech is not the last word on
the government s plans
The contentious issue of subsidies on gasoline and diesel
which are hugely expensive but politically popular was shifted
by Mukherjee to a committee for investigation Last week the
government unexpectedly raised prices at the pump by as much as
10 percent
I think there will be many other adjustments that need to
be made Petroleum product pricing he has essentially
exported the problem out of the budget into a committee
Chaudhuri said
Chaudhuri also said more details were likely in coming
months on the planned sale of government stakes in state
companies
And while the budget did not include the removal of foreign
investment caps in key sectors Transport Minister Kamal Nath
told Reuters on Tuesday that the government aims to attract a
massive 10 billion a year in overseas funding for
road building
Investors who treated the budget rudely on Monday stocks
made their biggest drop in six months bond yields rose and the
rupee sank took a more sober view on Tuesday with both
stocks and the currency clocking gains
Clearly this is a budget from a government that has five
years in which to build a strong economy wrote Madhabi Puri
Buch managing director and chief executive of ICICI
Securities
Additional reporting by Saikat Chatterjee
Editing by Kazunori Takada |
MS | ANALYSIS Stocks contrarians favour growth laggards Europe Japan | By Natsuko Waki
LONDON July 9 Reuters Investors who have long dismissed
Europe and Japan as laggards in any global economic recovery are
starting to view equities in these regions as adequately priced
for that underperformance and may look to put cash back in
Convinced that the euro zone and Japan will find it more
difficult than most to recover from one of the deepest global
recessions of the past century the stock market consensus is
for now decidedly bearish
A recent survey by Morgan Stanley shows just 19 percent of
investors chose Europe as the best of 4 major equity market
regions for the next year versus 42 percent for the United
States and 36 percent for emerging markets
Japan where local stocks have been stuck in a broader
bear market since late 1990s is the most unpopular region
the favourite market for a meagre 3 percent of respondents
Fund managers polled by Banc of America Securities Merrill
Lynch have been picking Europe as the region they want to
underweight the most on a 12 month horizon
However strategists reckon it may pay to bet against any
big consensus positions on regional equity markets
According to Morgan Stanley s data areas that won more than
30 percent of votes for best region underperformed in 7 out of 8
cases by on average 5 percent
We recommend closing any underweight positions in Europe
Valuation is attractive and at the bottom of the historical
range on many measures while booming liquidity and
recovering fund flows may also benefit non U S markets said
Ronan Carr strategist at Morgan Stanley
Japan may be the market with biggest potential to surprise
on the upside The contrarian today should favour Europe and
Japan over the United States and emerging markets
PAST PERFORMANCE
Pan European stocks have fallen 1 2 percent so far this
year underperforming the 3 percent gain in MSCI s index of
world stocks Tokyo stocks are also way behind the global
benchmark with a loss of 1 4 percent
Currency shifts may have flattered those returns for
unhedged overseas investors but these markets have been far
behind emerging economies and even come in shy of Wall St
Mainstream economic forecasts may explain some of that
The International Monetary Fund expects the euro zone
where monetary and fiscal boosts to ease the recession fall
short of those in the United States or Britain to contract
4 8 percent this year That is almost twice the forecast 2 6
percent contraction for the United States
Japan s economy which never fully recovered from its own
property driven bust in the early 1990s is expected to shrink a
whopping 6 0 percent in 2009
But looking into next year the IMF expects Japanese growth
of 1 7 percent outstripping its forecast for the developed
world as a whole by almost three to one
The expected 0 3 percent contraction of the euro zone will
continue to lag its major peers but even there the gap next
year is forecast to narrow slightly to less than one percent
Valuations also argue for overweight position on Europe
Morgan Stanley s calculations show the MSCI Europe index trades
almost at all time lows on trailing price to earnings and price
to dividend ratios
On the bank s measure using indices such as price by volume
and price dividend Europe is 35 percent cheaper than the United
States within the bottom decile of the almost 40 year range
Clients polled by Credit Suisse said it might take a little
more time for Japan to get ahead of its peers with its analysis
showing Japanese stock markets outperforming four months after
the upturn in leading indicators
To most clients Japan is just a later cycle cyclical play
and into the downturn Japan had been hit more than other
developed countries the bank said in a note to clients
Signs that increasingly risk favouring U S investors have
begun to return to overseas markets would also help Europe and
Japan outperform in the medium term
U S mutual funds increased their share of foreign assets to
24 5 percent in May having kept it to around 23 percent since
the beginning of the year according to UBS
This compares with a peak of 26 percent reached in mid 2008
Within Europe some like to focus on high yielding stocks
where dividends are well covered by cashflow
Tom Beevers manager of the Newton Pan European fund likes
Europe s largest entertainment group Vivendi which yields 8 5
percent and Europe s biggest telecoms group Deutsche Telekom
which yields 9 5 percent
It appears that the unprecedented fiscal and monetary
stimulus is starting to gain traction restoring a degree of
confidence among consumers and corporates he told clients
Editing by Ruth Pitchford |
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