Friday 27th May 2016
NEWS TICKER: THURSDAY, MAY 26TH - Dan Carter has been appointed lead manager of the Jupiter Japan Income Fund, with immediate effect. Dan, who is currently deputy manager of the fund will take over from Simon Somerville, who will be leaving Jupiter after eleven years. Carter has 12 years’ experience of analysing and managing Japanese equities, and has worked alongside Somerville for eight years. He has also lead managed the Jupiter Japan Select Sicav fund, aimed at international clients, since 2013, having been deputy manager for two years. There will be no change to the investment philosophy of the fund says Jupiter and the funds will continue to be managed alongside each other, ensuring continuity for investors. There is a significant overlap between the two portfolios in terms of the companies they are invested in. The funds seek to own long-term positions in cash-generative, income-paying Japanese companies that are run for shareholders, have a genuine competitive advantage and offer real, identifiable growth opportunities that he believes are underappreciated by the market. Carter joined Jupiter in 2008 as an analyst on the Far Eastern Equities team. Before that he was a Fund Manager at Odey Asset Management on the Japanese equities team, and was previously at Baillie Gifford & Co, where he was an investment analyst for both the Japanese equities and UK large-cap equities teams - CME Group Executive Chairman and President Terry Duffy will appear before the Illinois House Revenue and Finance Committee today to discuss how imposing a proposed tax on financial transactions would harm Illinois consumers, agricultural producers, businesses and the state economy. "Imposing a financial transaction tax will not alleviate the state's budget crisis, and instead would have a negative impact on consumers because the cost of hedging their business risks would go up as much as 800 percent," said Duffy. "If enacted, every business that uses any risk management tools would face higher costs as bid/ask spreads widen. Farmers, ranchers and other businesses in Illinois and all over the country would be forced to pass along those costs to consumers, who would pay more for food, gas, airline tickets and other products. Additionally, a transaction tax would put the largest exchange in the US, which is headquartered in Illinois, at a competitive disadvantage in the global marketplace." The hearing is scheduled for 10:00 am CT in the Capitol Building in Springfield, Illinois. Duffy's testimony will be available on www.cmegroup.com at the same time as the hearing - Moody's has upgraded to A3 from Baa1 the senior unsecured debt ratings of Autoroutes du Sud de la France (ASF). Concurrently, Moody's has upgraded to (P)A3 from (P)Baa1 the rating on the company's €8bn medium-term note (EMTN) programme. The outlook on the ratings is stable. The upgrade reflects ASF's strengthening financial profile on the back of a strong traffic performance and expected future traffic growth, says the ratings agency. ASF is expected to exhibit funds from operation/debt metrics firmly in the mid-teens in percentage terms, which Moody's considers commensurate with the A3 rating level. In 2015, ASF reported traffic growth of 3.1% compared to the previous year. “We expect traffic growth to moderate during the year, although the 2016 annual traffic increase is anticipated to be at least 2%. The positive traffic trends, which offset the financial impact of the 2015 tolls freeze and the relatively limited toll increases in 2016(1.63% for ASF and 1.18% for Escota), are supportive of ASF's credit profile in the context of the group's increasing investments associated with the implementation of the so-called Plan de Reliance Autoroutier (a government stimulus plan),” says Moody’s. ASF is expected to implement capital expenditure worth €800m per annum over the next three years - The European Parliament has approved aid on Thursday worth €6,468,000 for 557 redundant workers from the “Larissa” supermarket in Greece and €5,146,800 for 2,132 former drivers for the road haulage and delivery firm MoryGlobal SAS in France. The European Globalisation Adjustment Fund (EGF) aid will still need to be approved by the Council of Ministers on June 6th. In Greece, Larissa’s 422 employees and 135 worker-owners were made redundant when the cooperative supermarket was declared bankrupt. In France, MoryGlobal’s 2,132 lorry drivers and their delivery colleagues lost their jobs due to its bankruptcy and closure. Both bankruptcies resulted from the prolonged global financial and economic crisis which has devastated the Greek economy and deeply affected the road haulage sector. The measures, co-financed by the EGF and the Greek and French governments, would help the workers to find new jobs by providing them with occupational guidance and other assistance schemes. The aid request from France was passed by 540 votes to 73, with 2 abstentions. The request from Greece was approved by 551 votes to 67, with two abstentions. The European Globalisation Adjustment Fund (EGF) was introduced in 2007 as a flexible instrument in the EU budget to provide support, under specific conditions, to workers who have lost their jobs as a result of mass redundancies caused by major changes in global trade (e.g. delocalisation to third countries). The EGF contributes to packages of tailor-made services to help redundant workers find new jobs. Its annual ceiling is €150m. Redundant workers are offered measures such as support for business start-ups, job-search assistance, occupational guidance and various kinds of training - Pirum Systems says Ben Challice will be joining as chief operating officer, responsible for strategic product and market development. Challice joins from Nomura, where he headed up Global Prime Services – which included Equity Finance, Prime Brokerage and Delta One at Nomura and previously held senior positions at Lehman Brothers and Goldman Sachs - Catella has appointed Antti Louko to head its Finnish operations and to establish a new corporate finance unit in Helsinki. Louko will join Catella as managing director of Catella Property Oy and head of the new corporate finance unit, from November. Louko joins Catella from a role as head of real estate at Advium Corporate Finance Oy where he headed the real estate team. He previously worked as the director responsible for transactions at SRV Group, and at Aberdeen Property Investors - Advanced payments tech firm SafeCharge says Umberto Corridori has been appoint vice president of sales for Europe. Corridori has held senior roles in large companies such as Dell Italy and joins after a long tenure at PayPal where he served as head of sales Italy & iGaming CEMEA - AIM-listed Xtract Resources PLC says it has entered into an agreement to sell the Manica Gold project in Mozambique to Nexus Capital and Mineral Technologies International Ltd for $17.5m in cash. The firm says some of the proceeds will be used to settle outstanding payments owed to Auroch over the acquisition of the Manica licence. Xtract adds that it expects to have remaining cash proceeds of approximately $12m. Under the agreement, Xtract will sell its 100% interest in Explorator Limitada, the entity which holds title to the Manica mining licence 3990C on completion of the deal. Xtract said it is expected that a bankable feasibility study, to assess the viability of developing and mining a hard rock gold deposit identified within the Manica licence, will be completed in the second quarter of 2016, Mine construction is planned to begin in the fourth quarter, with first production to follow in the final quarter of 2017. Mining of the alluvial gold deposit is planned for the third quarter this year – The European Bank for Reconstruction and Development (EBRD) is providing up to €294m in local currency equivalent for two ground-breaking projects to increase the use of domestically produced natural gas and largely replace the use of coal in Kazakhstan. The first project is the upcoming modernisation and refurbishment of the underground storage in Bozoi in the Bank’s first-ever cooperation with the national gas company KazTransGas (KTG). An EBRD loan equivalent to €242m in local currency to the KazTransGas subsidiary Intergas Central Asia will allow for the upgrade of the storage to its full capacity of 4bn cubic metres (bcm), from the current limit of 2.6 bcm - United Utilities reported a 0.6% rise in full year revenue to £1.73bn this morning, although the new regulated price controls contributed to a 9% drop in underlying operating profit to £604m. The company says it is confident of reaching its targets for capital expenditure in the first year of the new regulatory period and announced plans to invest £100m across the 2015-2020 period in renewable energy projects, mainly solar power. The final dividend was raised 2% to 25.6p, making a total of 38.45p for the year – Ahead of its planned initial public offering in Australia, fantasy sports app Sports Hero has raised an additional $2.4m in funding. SportsHero is a new app that lets sports fans dabble in match predictions and show their skills off against friends and other game-watchers. The app is made by the team behind Singapore-based TradeHero, a virtual trading app backed by more than $10m from investors. - DONG Energy has set an indicative price range for its planned stock market listing of 17.4% of its shares at DKR200 to DKR255 per share, giving the group a market value of DKR83.5bn to DKR106.5bn ( between $12.6bn and $16bn), making it Europe’s biggest float this year. The state-controlled company, is one of the world’s largest offshore wind farm developers -

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Of mice and men and bailouts

Wednesday, 25 July 2012
Of mice and men and bailouts With the sovereign debt crisis still in full swing it is becoming a moot point as to where you should place your money. Popular reflection throws up the usual suspects, gold, bunds, gilts, US T-bonds and so on, but one does begin to wonder whether this accepted order of security is actually right. We have seen haircuts taken on quite a bit of sovereign debt. However, were not for central banks still accepting such debt as collateral, the yields on certain national issuance would be considerably higher than they are at right now. Simon Denham, managing director of spread betting firm, Capital Spreads gives the bearish view. http://www.ftseglobalmarkets.com/

With the sovereign debt crisis still in full swing it is becoming a moot point as to where you should place your money. Popular reflection throws up the usual suspects, gold, bunds, gilts, US T-bonds and so on, but one does begin to wonder whether this accepted order of security is actually right. We have seen haircuts taken on quite a bit of sovereign debt. However, were not for central banks still accepting such debt as collateral, the yields on certain national issuance would be considerably higher than they are at right now. Simon Denham, managing director of spread betting firm, Capital Spreads gives the bearish view.

Simon DenhamSimon Denham, managing director of spread betting firm Capital Spreads. Photograph kindly supplied by Capital Spreads.We have the curious situation of New Spanish issuance being bought by Spanish banks then repoed at favorable rates back into the ECB as collateral against debt taken out for this very purpose. The politicians have now agreed bailouts for the banks (but not for Spain itself) in the full knowledge that most of such bailout monies will be used for exactly the purposes described above.

The question must be: how much more will northern Europe tolerate? As times get tougher in Greece, Spain and Italy more of the little business still being done is actually flowing into the black market, exacerbating already critical deficit problems. 



Forcing through stern excise adherence needs to be done when times are good not when many businesses are struggling for survival. This actually is the knub of the problem of the eurozone since its inception; Southern States previously accepted a generally deteriorating currency in exchange for a certain laxness in fiscal responsibility. Other the other hand, the much bigger North (economically) certainly did not.

When the good times rolled all the politicians basked in the supposed genius of the new bloc studiously ignoring all of the ever more strident warnings of productivity dislocation and failing dismally to impose any form of regional spending controls. The saying ‘your sins will find you out’ could hardly be more apposite in this situation as Germany and France (who were amongst the first to break the piously agreed deficit limitations back in 2003) are now requiring just such a response from the weaker members.

Where then, does this leave equities?

Well, oddly enough there is an argument to say that corporate assets might well become the safe haven investment of the future. The ability to move companies from one jurisdiction to another if the regulatory/tax burdens becomes too extreme, the general fiscal responsibility of the vast majority of executive boards, their generally low debt position and the high profit margins lead one to consider that equities and corporate bonds are a rather safer home than ­sovereign debt (of whichever nation).  

The major advantage of a sovereign nation has always been the accepted lore of their ability to raise taxes no matter what the economic situation. Even so, as we see from Spain and Italy’s recent tax receipt numbers—and even the UK over the past few months—this accepted truism may be starting to wear thin.  People in general continue to lose any respect for their government’s ability to spend wisely. If then the average German, Finn or Dutchman decides that bailing out Southern Europe is not his responsibility and we effectively move towards a Greek position on paying tax, or voting for parties that espouse a more isolationist policy, the general deficit situation may well ­deteriorate exponentially.

All the while, returns on equities look to be attractive in the current interest rate environment. The FTSE 100 yield is over 4% as is the Stoxx 50 and the dividend adjusted price versus the cost of acquisition is now at historically high levels. Obviously, dividends might well be lowered over the coming years as growth looks more remote, but interest rates are likely to remain sub 1% as well, so even a reduction in payments might not be accompanied by a fall in price. Returns on stocks have remained remarkably stable despite the current political brouhaha. However, this might be the time that this ‘value’ was reappraised upwards to reflect falling returns elsewhere. 

For all of the truly awful news of the last six to twelve months the FTSE is still pretty much where it was this time last year. It might not take much in the way of good news to send us higher. Of course, this said, we do still need the politicians to make at least a couple of good choices!

As ever ladies and gentlemen, place your bets! 

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