Thursday 29th June 2017
NEWS TICKER: In a market note this morning, Royal London Asset Management’s fixed income team say that while investors got their heads round the launch of an Argentinian bond maturing next century (despite the country last defaulting just three years ago) borrowing long looks set to continue. Both the US and UK have been mooting the idea of issuing ultra-long government debt, with hints emerging that the UK’s Debt Management Office could print a new 60-year bond, perhaps in September. Meanwhile, US Treasury Secretary Steve Mnuchin has come out and said that any decisions to print ultra-long bonds would not be a one-off occurrence. The asset management team also notes that Bank of England chief economist Andy Haldane contradicted Mark Carney and spooked gilt markets a little on Wednesday when he suggested that he could see a case for paring back the additional stimulus provided last August. The two- year gilt yield is now trading around its highest level all year this morning, but the longer-term picture remains, with the yield available on short term debt still well below pre-referendum levels. In our view, any expectations of a rate hike seem premature, given the effects of continued political uncertainty on business confidence and subdued wage growth. Both in the UK and overseas, government bond markets have been singing from the same hymn sheet, with the yield available on short dated debt rising, while longer dated bond yields remain roughly unchanged. Meanwhile comments of a rather dovish tone from the ECB have continued support for periphery European issuers such as Spain and Portugal. Craig Inches, head of short rates and cash at Royal London Asset Management, says, “With global bond yields still low, and demand still high, it’s perhaps understandable that governments of all stripes are looking to lock in very long-term borrowing. However, the worry of what happens when yields begin to finally rise is likely to prey on investors’ minds, particularly for those investing in more esoteric, emerging market government debt. By contrast, present weakness in short duration bonds could provide an opportunity should rumours of a rate hike fail to materialise.” -- Commenting on the anniversary of Brexit this morning, Graham Bishop, investment director at Heartwood Investment Management said: “Sterling’s devaluation in response to the shock UK referendum result has been the most significant market event in recent years. It has yet to materially recover from its post-referendum low and now remains vulnerable to even more political and economic uncertainty. However, this year’s general election result seems, at least, to have mollified some of the UK government’s hard Brexit rhetoric, which has shifted to being more pragmatic and conciliatory. Uncertain domestic politics, economic cloudiness and more ambiguities around Bank of England policy lead us to maintain an underweight allocation to UK assets.” – Michael van Dulken and Henry Croft at Accendo Markets commented to clients this morning that a negative opening call for European equities comes a after a mixed stateside session, and slim gains in in Asia overnight. Investors may be sceptical of the latest oil price bounce, having been here several times lately but continually failing to overcome a downtrend channel amid global oversupply. Senate threats to Trump’s latest Healthcare Bill also add to political uncertainty and sap faith in the new US President getting his stimulus election pledges through Congress. However, the status quo benefits the Healthcare sector and Banks may welcome overnight US Fed stress test results. Japan’s Nikkei is just positive, they say, hindered by a flat yen, a drop in PMI Manufacturing and lower oil prices hurting Energy. Australia’s ASX is outperforming (only just) as banks are hurt by a new tax proposals and a mixed show from Energy/Miners after the oil price decline --

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    Russia’s biggest developer of residential real estate, PIK Group, has approved a new dividend policy that provides for the distribution of at least 30% of net cash from operating activities (OCF) in form of dividends twice per year, in line with best practice. This policy will be used for the first time to calculate dividends for FY 2017. Read more...
  • Friday, 23 June 2017 AMF proposes ways to reform the functioning of ESMA
    French market regulator, the Autorité des Marchés Financiers has responded to the European Commission's consultation on the operations of the European Supervisory Authorities for banking (EBA), insurance (EIOPA) and financial markets (ESMA). The review is focused on the functioning and the powers of ESMA, which is the pillar of harmonised interpretation of European legislation and of a common culture of supervision in Europe. AMF says it has drawn up proposals to strengthen ESMA. Read more...
  • Friday, 23 June 2017 Reduxio unveils new data storage platform with inbuilt disaster recovery
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  • Wednesday, 21 June 2017 RPMI Railpen announces new Chief Operating Officer
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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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