Monday 16th July 2018
Mobile operator EE has said it will activate the UK’s first live 5G trial network in London’s Tech City in October –The UK government says organisations that are aiming to establish themselves or expand as Public Service Mutuals can now apply for a share of £1 million in funding -- India’s central bank raised its benchmark interest rate for the first time since 2014 to curb rising price pressures and calm financial markets as policy tightening in the US rattles emerging markets – A new report from South Africa's Reserve Bank (SARB) contains exception results for a trial of its blockchain-based system for interbank clearance and settlement. According to a release yesterday SARB says it has completed a 14-week "realistic" proof-of-concept that managed to settle the country's typical 70,000 daily payment transactions within two hours, taking an average of 1–2 seconds for each transaction while preserving full anonymity. Absa, Capitec, Discovery Bank, FirstRand, Investec, Nedbank and Standard Bank are among a slew of banks that participated in the exercise. Even so, despite the success claims, SARB says its proof-of-concept doesn't mean it plans to replace the existing real-time gross settlement (RTGS) system with a live blockchain implementation, yet – According to Mickhail Shlemov, VTB’s Capital’s head of research today, “With the demerger of Bank of Georgia Group’s investment business to Georgia Capital PLC, we have revised our forecasts for Bank of Georgia Group so that they now include only the banking business. We expect the bank to benefit from this demerger amid an acceleration in corporate loan growth (although retail lending is likely to decelerate), with the total loan book expanding at a CAGR of 11% in 2017-21F. However, NIM performance headwinds are likely to stay intact. Management has reiterated its strategic targets, and we also expect the bank to show ROE of more than 20% in the next three years, with a 40% dividend payout ratio. As a result, our new 12-month Target Price is GBp 2,300/share. This implies an ETR of only 14% (the stock is up 10% since demerger day).” On May 29th, Bank of Georgia Group (BOGG) announced the completion of the demerger of the Group’s investment business to Georgia Capital PLC. As a part of the process, the bank has issued 9.8mn shares (up to 19.9% of the total share count) to Georgia Capital. Yet the capital will also be diminished by a special dividend payment of some GEL 120mn (GEL 3.10/share), similar to the proposed BGEO Group payment – Reuters reports that European parliament member Danuta Huebner says that London’s call for EU access after Brexit under mutual recognition will not work. Equivalence would let the EU set the rules – Scott Eaton, the former chief operating chief for Europe at MarketAxess has been appointed CEO of Algomi following the departure of co-founder Stu Taylor earlier this year. Eaton has taken over the role with immediate effect and will focus on developing Algomi’s fixed income services, including data aggregation and the Algomi ALFA market surveillance tool – The FCPA Blog notes today that banking giant Credit Suisse Group has agreed to pay a $47m penalty to the US Justice Department to end an FCPA investigation into hiring practices in Asia -- The Securities and Exchange Commission (SEC) voted Tuesday to approve a proposal to modify the Volcker rule, the last of the five agencies responsible for the rule to do so. The proposal is now open to a 60-day public comment period. Treasury Secretary Steven Mnuchin called the move "an important first step" and noted Treasury's support for "better tailoring the application of the rule, preserving liquidity during periods of stress, decreasing unintended compliance burdens and encouraging capital formation." --

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Key Stories from FTSE Global Markets
Wednesday, 21 October 2015

Scoping Asia’s investment benchmarks

In a new regular column, Geoff Howie, chief economist at SGX, will provide an invaluable 36,000 foot view of Asia’s securities markets. In this debut piece, he outlines this year’s performance trends and the emerging relationship between the region’s market benchmarks.

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In spite of a definite pall over the high yield segment, both in Europe and the US for most of this year and an uncertain risk outlook in 2016, more than half (54%) of respondents to NN Investment Partners’ new survey of 103 institutional investment managers expected investor’ allocation to European high yield debt to increase over the next three years, versus 18% who expected it to decrease. The findings are a testament to the cross trends in the segment. Another signal of diverse fortune?  Lipper reported net outflows from high-yield bond funds touched $2.2bn in the week ended September 30th compared to inflows totaling $17.7m the previous week, bringing total outflows for the year to date to $5.9bn.

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Chronic low prices in the energy sector have contributed to a spate of defaults in the energy, metals and mining segments. US high yield has been particularly affected. Up to now European high yield has looked relatively sheltered from the storm, but for how long? The US market has been particularly affected, with the US default rate set to rise from 2% last year to 4% this year. How much more battering can the US high yield segment sustain?

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After the Chinese government took steps in mid-August to weaken the renminbi, worries about a sharp slowdown in China, combined with spillover effects to other emerging market economies and ongoing declines in commodity prices, caused investors to question the outlook for growth in major developed countries. After all, China has become the world’s second largest economy and has contributed a disproportionately large share of global GDP growth in recent years. Deterioration  in China specifically and emerging markets more generally will put only mild downward pressure on DM economies, and very likely will fall well short of causing recessions in those jurisdictions. While acknowledging increased downside risk, we forecast solid expansion in the U.S., euro area, and Japan, even as EM economies struggle. Against that backdrop, we do not foresee a repeat of the deflation scare that affected markets earlier in 2015. John Bilton, Global Head of Multi-Asset Strategy, JP Morgan Asset Management looks at the long term market outlook.

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The US authorities continue to police the derivatives markets for unlawful “spoofing”— a sometimes awkward term that denotes entering orders for derivatives trades without the intent to execute them. Spoofing is rather vaguely defined in the law, both in Europe and the US; nonetheless regulators are increasingly prosecuting civil and criminal actions against market participants for alleged violations.  Asset managers—already under the microscope in the United States—are also under scrutiny for possible illegal activity in this area. In the UK meantime (and elsewhere for that matter) asset managers are now reviewing their trading activities in increased regulatory pressure in this area. David Miller (New York), Josh Sterling (Washington) and William Yonge (London) partners in global law firm Morgan Lewis outline the repercussions.

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