Sunday 28th May 2017
NEWS TICKER, May 26th: A flat opening call comes after more record highs on Wall St and despite a negative session to close the weak in Asia. The FTSE outperforms peers thanks to overnight GBP weakness that helps offset oil prices -6% as traders are left underwhelmed by the OPEC decision reports Accendo Markets. The negative oil reaction to a 9-month OPEC production cut extension is a prime example of ‘buy the rumour, sell the fact’. With nine months having become the baseline - prices +17% in the run-up, hoping for longer and maybe even deeper cuts - potential for an upside surprise was already limited. -- Even so, elsewhere Alastair George, chief strategist at Edison Investment Research told clients in a note this morning that “The global rally rumbles on. Beneath the headlines lie two core beliefs supporting equity markets. First, declining inflation fears are leading to falling long-term bond yields and expectations of looser-for-longer global monetary policies. Second, consensus forecasts for 10% earnings growth in each of the US, UK and continental Europe at the start of the year have remained intact into Q2 17 and are proving an irresistible draw for global equity investors.” -- Investor optimism has increased but it is far from euphoric despite extremely low levels of market volatility, NN Investment Partners says. The NN IP Uncertainty Index, which is based on an analysis of news and social media content has improved since December 2016 from -0.64 to -0.5 but it is still below the levels that were seen last year (-0.39). The Index has ranged between 0 and -0.66 since end-2008.NN IP also notes that cash levels in investors’ portfolios are still above average and the ratio between optimist and pessimistic investors in the US is close to neutral. However, in the US equity market, realized volatility is far below its 30-year average – 6.1% versus an average of 13.2% - while the VIX has fallen below 10 earlier this month, which is a rare event, and the VSTOXX is below 15. Patrick Moonen, principal strategist multi asset, NN IP, says, “So what could be the next source of volatility? There are several candidates. There is geopolitics, including the soured relations between Russia and the West, over the North Korean nuclear threat, to the situation in the Middle East. A cyber security incident undermining confidence is another potential source. This is difficult to assess properly or to time accurately and account for, but it is something that investors should not lose sight of. Also, the shift in central bank policies whereby the unconventional measures are gradually scaled back could be a source of volatility although we think that central bankers will tread carefully preventing turmoil. And of course, there is the possibility that this calm will indeed morph into complacency which will eventually result in unwarranted risk-taking and higher volatility. Stability creates instability.” -- STOXX Ltd., the operator of Deutsche Boerse Group’s index business, and a leading global provider of innovative and tradable index concepts, today announced the expansion of its presence in Asia Pacific with the opening of a new office in Hong Kong -- Following yesterday’s publication of the Global Code of Conduct for foreign exchange (FX) markets, David Newns, global head of Currenex and SwapEx, as well as EMEA head of GlobalLink at State Street Global Markets, says, “We welcome the final version of the Global Code of Conduct and the increased transparency that it will bring to market practices in our industry. The Code provides a way for FX professionals to actively demonstrate that they adhere to the highest ethical standards; but it’s only the beginning of an ongoing process as the industry must continue to strive to rebuild trust. We will evaluate the Code’s implications for our clients and our electronic trading platforms, as we move toward enhancing performance for all participants in the FX market.” -- NN IP Uncertainty Index shows investors are far from euphoric despite low volatility -

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  • Friday, 26 May 2017 A continuation of carry
    Risk appetite has rebounded in the past week as worries surrounding the Trump Presidency and political turmoil in Brazil have faded into the background. Fed Minutes remain fully consistent with a June hike and further normalisation in monetary policy to follow thereafter. It seems that the Fed is committed to start tapering its balance sheet by setting caps on the reinvestment of maturing securities it owns later this year. European Central Bank (ECB) continues to reiterate its dovish stance and consequently Bund yields remain unchanged and risk assets in the region continue to rally. Mark Dowding, partner & co-head of investment grade debt at BlueBay Asset Management, provides his latest market views. Read more...
  • Thursday, 25 May 2017 New synthetic bond debuts on MARF
    The Mercado Alternativo de Renta Fija (MARF) has admitted to trading a new synthetic securitisation bond issue with a value of €66.5 million by the Fondo de Titulización PYMES Magdalena. It is the first such issue to be admitted to trading on MARF. Read more...
  • Thursday, 25 May 2017 Guernsey Court of Appeal rejects "oppressive" Scheme of Arrangement
    Legal firm Mourant Ozannes' litigation and corporate teams in Guernsey have successfully resisted an appeal by Puma Brandenburg Limited against the refusal by the Royal Court of Guernsey to sanction its scheme of arrangement. In a landmark judgment released yesterday, the Guernsey Court of Appeal was highly critical of the Scheme, describing the manner in which Puma Brandenburg pressured minority shareholders to accept a significantly discounted offer price on their shares, as "oppressive". Read more...
  • Thursday, 25 May 2017 Mercer says there is no automatic case for extending UK Pensions Regulator’ powers
    Advisory maven Mercer says it encourages the next UK government to first assess whether the Pensions Regulator’s existing powers could be used more effectively before automatically providing it with additional authority. Read more...
  • Monday, 22 May 2017 Can America’s nuclear sector avoid meltdown?
    Under pressure from low power prices, higher operating costs and regulatory uncertainties, America’s nuclear power sector is facing a troubling future – leading to calls for subsidies to save ailing nuclear plants and preserve jobs. S&P Global Ratings’ Michael Ferguson, Director, U.S. Energy Infrastructure, believes that nuclear plants could remain at the market’s mercy regardless of state assistance. By Michael Ferguson, director, US Energy Infrastructure, S&P Global Ratings. Read more...
  • Monday, 22 May 2017 M&G Real Estate acquires offices in Berlin from JP Morgan AM
    M&G Real Estate says it has acquired a central Berlin office asset as part of its pan-European growth strategy. It has purchased the 22,521 sq m ‘Badensche Strasse’ office for €94.1m from an entity managed by JP Morgan Asset Management. Comprising two adjoining buildings with four floors and two basement levels, the office is let to strong tenants including BImA (the Institute for Federal Real Estate) and Paypal. Located in Berlin’s Wilmersdorf district, Badensche Strasse is a modern, well-specified and recently refurbished office building. Read more...
  • Monday, 22 May 2017 NICE Actimize launches RPA technology
    2017 will be remembered as the year the robots took over in terms of financial institutions using Robotics Process Automation (RPA) to reduce compliance costs, better access their primary asset of data, and to establish truly proactive compliance and risk management. Whether you are managing fraud risk, regulatory compliance or other operational issues, the current trend to robotics-based technology has caught fire this year, overcoming reluctance to remove or reduce human analysts from the equation. This is due to 3 converging trends: RPA can reduce costs by up to 50%; the regtech movement driving comfort with tech solutions and finally, regulatory support of innovation Read more...
  • Monday, 22 May 2017 Aegon to divest majority of US run-off businesses
    Aegon has agreed to sell its two largest US run-off businesses, the payout annuity business and the Bank Owned / Corporate Owned Life Insurance business (BOLI/COLI), to Wilton Re. The transaction is consistent with the company's stated strategic objective to reduce the amount of capital allocated to its run-off businesses. Read more...
  • Monday, 22 May 2017 Private equity duo joins Skadden in London
    Legal maven Skadden, Arps, Slate, Meagher & Flom LLP says that leading private equity lawyers Richard Youle and Katja Butler will join the firm's European private equity practice as partners in London. Youle and Butler are expected to add a significant dimension to Skadden's global private equity and corporate platforms. Read more...
  • Monday, 22 May 2017 KfW doubles green bond portfolio
    Since 2015, KfW has been building up a dedicated green bond portfolio backed by a promotional mandate from the German Federal Ministry for the Environment. As the portfolio is growing faster than initially planned, KfW now doubles the target volume from €1billion to €2bn with an investment horizon of three to five years. Moreover, KfW says it will keep actively contributing to the further establishment of high quality market standards. Read more...
  • Monday, 22 May 2017 Standard Life Investments builds out multi-asset structuring team
    Standard Life Investments, the global investment manager, has added to its Multi-Asset Investing (MAI) Structuring team with the appointment of Mathias Marta as a Quantitative Investment Director. Read more...
  • Monday, 22 May 2017 Tikehau IM leads the refinancing of Terratest with a €60m unitranche
    Spain’s Tikehau IM, the asset manager and subsidiary of Tikehau Capital, has arranged a €60m unitranche to support the recapitalisation of Terratest, an international provider of geotechnical engineering and foundations solutions. Terratest provides foundation work, ground improvement and micro-tunneling services for large-scale international infrastructure projects, industrial, commercial and residential construction. This is the third corporate financing action by the asset manager, following recent financings for ELIX Polymers (in September last year) and Telvent, a couple of months ago. Read more...
  • Monday, 22 May 2017 More investors positive about UK assets post Brexit, says State Street
    State Street Corporation’s latest findings from its Brexometer Index, a quarterly pulse survey of institutional investor sentiment about the UK’s departure from the European Union suggests just under one fifth (19%) of institutional investors plan to reduce their holdings of UK assets over the next six months, a 3% drop from the bank’s Q1 survey. Read more...
  • Monday, 22 May 2017 OECD GDP growth falls to 0.4% in first quarter of 2017
    Quarterly growth of real gross domestic product (GDP) in the OECD area decelerated sharply to 0.4% in the first quarter of 2017, compared with 0.7% in the previous quarter, according to provisional estimates. Read more...
  • Monday, 22 May 2017 ESMA clarifies traded on a trading venue under MiFID II
    Market regulator, the European Securities and Markets Authority (ESMA) has issued today an opinion regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). The opinion clarifies the concept of “traded on a trading venue” (TOTV), which is relevant for a number of provisions under MIFID II and MiFIR. Read more...

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Key Stories from FTSE Global Markets

Although long standing, in 2016 the country’s privatisation programme was harnessed by the government to encourage foreign investment in minority stakes in a gamut of state-owned firms, include the country’s flagship National Company KazMunaiGas. Since then, the programme has sometimes been mired in questions around governance. Partners, Carter Brod and Aset Shyngyssov of global law firm Morgan Lewis examine the viability of Kazakhstan’s privatisation plans.

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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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  • Thursday, 27 October 2016 08:05 Has monetary policy reached its limit?
    In Japan and the eurozone, it increasingly appears that monetary policy easing is effectively at its limits, thinks Kathleen Hughes, head of European Institutional Sales, Goldman…
  • Friday, 05 May 2017 17:34 ‘Going digital’
    ‘If you don't know where you're going, any road will take you there.’ Paraphrase of an exchange between Alice and the Cheshire Cat in Lewis Carroll's ‘Alice's…

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