Sunday 24th July 2016
NEWS TICKER: JULY 22nd 2016: Apple Inc is planning to open its first Apple Store in Taiwan, a move that comes after the U.S. technology giant raised $1.38 billion in a bond offering last month on the island that is home to many companies in its supply chain -- Taiwan stocks fell in the Asian session today after hitting a more than one-year high in the previous session, tracking losses in overseas markets. The main TAIEX index was down 0.4% at 9,019.87, after closing 0.5% higher in the previous session. Taiwan's export orders from China, in data issued earlier this week, showed slippage in June, hurt by weaker demand for displays, though not by as much as expected. Even so, the Taiwan dollar softened TAD0.019 to TAD32.079 per US dollar - Phillip Capital Group, an Asian financial services provider with $30bn 3 in assets under custody and management, has appointed BNP Paribas Securities Services to service its Singapore-based funds. BNP Paribas Securities Services is a global custodian with USD 9 trillion in assets under custody. Phillip Capital Management (S) Pte Ltd (PCM) has migrated its largest SGD money market fund to BNP Securities Services Singapore. This will help the company enhance operational efficiency and fulfil its regulatory requirements. For example, the company will be able to manage, track and report on its funds in a consistent and timely fashion. The long-term benefits will enable a standardised and scalable approach to custody services being extended into other locations for PCM. Phillip Capital Management (HK) Ltd is also working with BNP Paribas Securities Services to launch a fund in Hong Kong -- Following the event strewn Republican Convention this week, next week it is the turn of the Democrats. The Democratic National Convention is set to take place in Philadelphia from July 25th to 28th. The event is scheduled to be held at the Wells Fargo Center -- China's CSI 300 index and the Shanghai Composite both slipped about 0.5% in the Asian session today, with losses of around 1% for the week. Japan's Nikkei 225 closed down 1.1%, dragged down by the yen's 1% rally on Thursday – a trend that has been apparent all year. The index is still up 0.8% in a week in which it touched an eight-week high thanks to an initially weaker yen and expectations of fiscal and monetary stimulus, though in an interview with BBC radio this week, the Bank of Japan said that it did not believe in ‘helicopter money’ and that its current strategy was adequate to lift the economy out of its funk. The central bank’s next policy decision is expected on July 29th

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  • Friday, 22 July 2016 Brexit: Markit’s business sentiment index and sterling tank
    It was never going to be easy once the UK electorate decided to leave the European Union. Whatever the pros and cons of leaving, the country is now facing the consequences of its decision and the reality is that while things won’t be as bad as everyone thinks; they won’t be as good as the optimistic Leavers want us to believe. The reality is that the true extent of the implications of leaving the Union won’t be clear for many months if not years and what the market is seeing now is simply a foretaste of much of what is to come. It all hangs on leadership and the rapid articulation of a viable vision for the UK in a post EU world, as well as the contractual securing of an advantageous relationship with mainland Europe. Those are all in the future and until there is an indication of the road travelled, markets will be subject to any and all indications of shifts in investors and business sentiment in the UK. The Markit Flash UK Composite Output Index – which is compiled using the same methodology as Flash PMI data published for the euro area, the United States and Japan – fell to 47.7 in July, its lowest reading since April 2009. No surprise that sterling tanked on the publication of the data this morning. Read more...
  • Friday, 22 July 2016 Moody's says global issuance dipped in second quarter, while global asset prices rose
    Global private debt issuance by financial institutions and non-financial corporations (NFCs) dipped slightly in the second quarter as lower volumes in China pulled emerging market issuance lower and uncertainty around the UK's vote on its EU membership weighed on June volumes, Moody's Investors Service said in a report today. A second report showed that Moody's Global Asset Price index edged up in Q2, driven by a rebound in bond markets and a modest recovery in equities. Moody's quarterly issuance report, entitled "North American Issuance Picks Up in Second Quarter, but Chinese Placements Fall", and the rating agency's quarterly Asset Price Monitor, entitled "Asset Price Recovery in Global Markets Driven by Strong Bond Markets and Pickup in Equities", are both available through the links at the end of this press release. Read more...
  • Friday, 22 July 2016 Global corporate default tally rises to 104 says S&P
    The global corporate default tally climbed up to 104 so far in 2016 with the addition of four US-based defaulters (one confidential) this week, said an article published today by S&P Global Fixed Income Research. "Of the 104 defaulters, the energy and natural resources sector saw the highest concentration--with 57 issuers or 55% of the total defaults this year," explains Diane Vazza, head of S&P Global Fixed Income Research. Read more...
  • Friday, 22 July 2016 IMF warns G20 of need for broad based policies to ignite global growth
    There has been a small but discernible shift in policy outlook in recent months, with governments and central banks (Taiwan, ECB, UK et al) shifting focus on structural investment rather than unilateral quantitative easing. Now the IMF has drunk the latest coolaid and now warns that the global economy is likely to suffer from an extended period of "stubbornly weak growth" if the Group of 20 nations fails to back broad-based policies to reinvigorate growth and contain risk. The IMF report comes ahead of this weekend's meeting of G-20 finance ministers in China. "Strong global growth will not return without decisive policy action," according to the IMF. Read more...
  • Friday, 22 July 2016 Chinese health reform critical over long term says new World Bank study
    China needs to further reform its health system with a number of critical steps to meet the growing health needs of the population and further control spending increases, despite impressive achievements in healthcare reform and rapid progress toward universal health coverage. These include systemic and institutional reform and innovation, adoption of a tiered service-delivery system, a return to greater reliance on community health care and less on more expensive hospital care, according to a sweeping two-year study conducted by the World Bank Group, the World Health Organization, the Ministry of Finance, the National Health and Family Planning Commission, and the Ministry of Human Resources and Social Security of China. Read more...
  • Thursday, 21 July 2016 Hedge fund managers see opportunities in Europe in Q2 reports Preqin
    Some 16% of hedge funds launched in Q2 target Europe, while UCITS-compliant funds represent largest ever proportion of launches in the quarter. Preqin’s Q2 update on the hedge fund industry finds that economic uncertainty following the UK vote to leave the EU has created potential opportunities for hedge fund managers and, as a result, many more funds have launched focused on the region. Europe-focused hedge funds saw a large increase in the proportion of overall fund launches, rising from 1% of funds launched in Q1 to 16% of those incepted in Q2. Read more...
  • Thursday, 21 July 2016 Nasdaq Stock Market touches 38% share in ETP Listings and Switches in Q2
    Nasdaq announced 13 new ETP listings in June, establishing itself as a leading listing and trading venue for exchange-traded products (ETPs having captured 38 % of ETP listings and switches with 36 products in total in the US market. “We had tremendous success in attracting the industry’s leading ETP issuers to list on Nasdaq through the first half of the year,” says Jeff McCarthy, vice president and head of ETP Listings at Nasdaq. “We grew the number of listings and switches to Nasdaq by 44% over the first quarter 2016, reinforcing Nasdaq as the exchange of choice for issuers introducing new and innovative products to market.” Read more...
  • Thursday, 21 July 2016 ETF Securities launches first Gold ETC on Euroclear’s Fundsettle
    ETF Securities, the independent ETP provider today announced the listing of the first-ever Exchange Traded Commodities (ETCs) on Euroclear’s FundSettle fund processing platform, powered by FundsPlace. Investors will now have access to two physically-backed gold ETPs from ETF Securities via the platform; Gold Bullion Securities and ETFS Physical Gold. Read more...
  • Thursday, 21 July 2016 Covered bonds in Slovakia on the rise, but issuance constraints remain
    Covered bonds may become an increasingly attractive funding option for banks in Slovakia as strong demand for loans is gradually reducing the pool of customer deposits available and they look to expand their market funding, says Moody's despite tight regulation in the country relating to covered bond issuance, which currently constrains the growth of this market. "Slovakia's low interest rate environment, good economic growth, and deepening banking penetration are fuelling rapid credit expansion, which is gradually outpacing the growth of deposits," says Arif Bekiroglu, an assistant vice president at Moody's. "As a result, Slovak banks will increasingly need to turn to capital markets to make up the shortfall." Read more...
  • Thursday, 21 July 2016 Eaton Vance expands European leveraged credit research capabilities
    Eaton Vance Management (International) Limited (EVMI), a subsidiary of Eaton Vance Management, hails the arrival of Hari Thirumalai who joined the firm’s Global High Yield team in London this week as a senior analyst. This newly created role supports the build-out of Eaton Vance’s European leveraged credit capabilities following the launch last month of the Eaton Vance (Ireland) Multi-Asset Credit Fund. Thirumalai will report to Jeffrey D Mueller, who was hired as a Global High Yield Portfolio Manager in early 2015, which led the development of Eaton Vance’s European corporate credit operations. Read more...
  • Thursday, 21 July 2016 Multinational companies seek market leading trade and supply chain efficiencies in Africa
    Multinational companies moving into Africa are looking for supply chain efficiencies that provide market leading solutions which can optimise balance sheets and the use of working capital, says Standard Bank. According to Kent Marais, head of transactional products & services product management at Standard Bank there is still interest from multinational companies to expand into Africa due to the higher growth rates on offer than elsewhere in the world, but expectations around more sophisticated solutions are much higher than they were in the past. Read more...
  • Thursday, 21 July 2016 Moody's says EMEA auto loan and auto lease ABS stable between March to end May
    The overall performance of the auto loan and auto lease asset-backed securities (ABS) market in Europe, the Middle East and Africa remained stable during the three-month period ended May 2016, according to the latest indices published by Moody's. The 60+ day delinquency for overall index decreased to 0.36% in May 2016 from 0.38% in February 2016, cumulative defaults decreased to 0.87% from 0.89% over the same period. Cumulative losses decreased slightly to 0.42% in May 2016 from 0.43% in February 2016. The prepayment rate for overall index increased to 17.68% in May 2016 from 16.17% in February 2016. Worth of mentioning that prepayment rates for overall index were in record high in the three month period ended May 2016, this is mainly driven by the high level prepayments in German Auto ABS market. Read more...
  • Thursday, 21 July 2016 Brexit and other political risks bounce ECB rate policy into the long grass
    In what sounded to be a tale of two halves, Mario Draghi, governor of the European Central Bank explained today that “Based on our regular economic and monetary analysis, we decided to keep the key ECB interest rates unchanged”. In a press conference this afternoon he noted, “Following the UK referendum … our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience”. At the same time, he conceded that, “Over the coming months, when we have more information, including new staff projections, we will be in a better position to reassess the underlying macroeconomic conditions, the most likely paths of inflation and growth, and the distribution of risks around those paths. If warranted to achieve its objective, the Governing Council will act by using all the instruments available within its mandate”. Commentators now think that any movement on rates or extending QE further will not take place before September, Draghi’s statement having knocked that expectation into the relatively long grass. Read more...
  • Thursday, 21 July 2016 Has UK energy policy led to market failures? Lords to investigate
    The UK’s House of Lords Economic Affairs Committee has today launched a new inquiry into the economics of the UK energy market. The accelerated closure of coal-fired plants, and subsidies for renewables, have been the principal means of securing decarbonisation, say experts. Paying for subsidies by charges on consumers, rather than from taxes however, has meant that prices have risen while the resultant lack of investment in baseload capacity means that continuity of supply is now seriously threatened. This suggests a dysfunctional energy market or a conflict of government policies. The Committee says it will consider whether the present mix of policy interventions and subsidies in pursuit of those objectives have led to failures in the energy market. It will look at what measures are required to correct these failures. Read more...
  • Thursday, 21 July 2016 Standard & Poor’s confirms L&G Group rating as AA–stable outlook
    Standard and Poor’s has held its annual rating committee on Legal & General group core subsidiaries, and affirmed the rating at AA– Outlook Stable. Legal & General is only one of four European Insurers rated ‘AA’ range. Standard & Poor’s says the group has improved its management effectiveness and its focus on its strengths in recent years and this will help L&G to limit the potential turmoil following the U.K.'s vote to leave the EU. Read more...

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Key Stories from FTSE Global Markets

Set against a dynamic business backdrop in its own backyard, the European Energy Exchange (EEX) has adopted a confident and bold strategy to establish its global footprint within the exchange industry. Last year’s move into new commodity focused asset classes marks a new dimension in EEX’s growth and its continued transition from Europe’s leading energy exchange towards a global, multi-commodity exchange group. It has provided EEX and its parent company, Deutsche Börse Group, a growing competitive edge, given that it can also provide the vertical post trade support infrastructure required to back its expansion plans. Why has EEX been so successful in Europe, and how does that translate into its plans for global growth?

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Wednesday, 21 October 2015

Egypt opts for development funds

For the third time this year, the Central Bank of Egypt (CBE) has depreciated the Egyptian pound against the dollar in a foreign exchange auction in mid-October, taking the currency's decline for the year to 9.8%. The pound fell 1.3%(10 piasters) to 7.93 per dollar sell side and 7.88 buy side according to a report by the state-owned Middle East News Agency, which announced that the CBE offered $40m at a regular dollar sale to local lenders. Can the country pick its way out of the blues?

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The make-up of shareholders in Turkey’s banking segment has always been a touchstone of wider market change. The country has always been a swing market and the banking system has remained vulnerable, even with an improved capital base, as it has an ultra-high dependency on foreign funding of lending. That vulnerability has resulted in some significant changes in the investment in the country’s banking segment by foreign financial firms who have shown little stickiness in the country when the going gets tougher.

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Wednesday, 21 October 2015

Political uncertainty weighs on Turkey

A survey of 947 respondents in Turkey by Washington think tank PewCentre Research suggests Turks are dissatisfied with the direction of their country. Rising prices, crime and inequality are concerns. Moreover after years of quasi-Islamic rule that has been antipathetic to the military; survey respondents say the military is the only group with a “good influence on the country”. Opinions of the police, national government, religious leaders and the courts are mixed, while views of the media tilt to the negative. More pertinently perhaps, 52% of Turks think their children will be worse off financially in the future. The findings come as voters are scheduled to revisit national government elections on November 1st after the AKP party failed to form a coalition government in June. The upcoming elections will be closely watched, both as a bellwether of wider change in the eastern Mediterranean and as an indicator of the near term prospects for a lynchpin emerging market.

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In September, FTSE Group announced that Qatar will be upgraded from frontier to secondary emerging markets within the FTSE Global Equity Index Series in two equal tranches in September 2016 and March 2017, after the index provider confirmed that the country had now passed its key liquidity criteria for Secondary Emerging Market inclusion. Despite the plunge in oil prices, Qatar has held up relatively well in the current rout in emerging market stocks. Although with the exception of the FTSE upgrade, there remains a lack of immediate catalysts for Qatari stocks, even so Qatar maintains its edge as the government continues to spend freely, even as energy prices remain depressed. Does positive thinking about the kingdom’s prospects have legs?

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