Tuesday 13th October 2015
NEWS TICKER, OCTOBER 13TH 2015: NEWS TICKER: The Lyxor Hedge Fund Index was down -1.4% in September. 3 out of 11 Lyxor Indices ended the month in positive territory. The Lyxor CTA Long Term Index (+4.0%), the Lyxor CTA Long Term Index (+2.3%), and the Lyxor L/S Equity Market Neutral Index (+0.4%) were the best performers. In contrast with the sell-off by last fall, the current recovery process is proving more laborious, says Lyxor. Continued soft macro releases, several micro turbulences (VW, GLEN, the US Healthcare) and signs that the Fed might be more concerned about global growth, drove markets to re-test the end-of-August lows. L/S Equity Long bias funds and Event Driven funds were yet again the main victims. Conversely, CTAs, Global Macro and L/S Equity funds with lower or variable bias, successfully navigated challenging times - British payments processor Worldpay Group Ltd priced its listing on the London Stock Exchange (LSE) today at 240 pence per share, valuing the business at £4.8bn in the largest IPO of this year on the LSE. Payments processing giant Worldpay (WPG) managed to list this morning at 240p, right in the sweet spot of an initial 225p-260p marketing rage which was subsequently narrowed to 235-250p. It currently trades +4% at 250p equating to a positive market debut in light of a slower pace of listings The UK company, which qualifies for FTSE 100 inclusion, processes £370bn in payments from 400,000 merchants every year and handles around 40pc of web-based transactions in Europe. Worldpay earlier this year rejected an offer of up to 6.6 billion pounds, including debt, from French rival Ingenico Group SA. Last year Worldpay made an underlying profit of £765m on revenues of £3.6bn. In the first six months of this year, sales rose 13pc to £465.7m, pushing profits up by the same amount to £182.6m. As of the end of September, the London stock market had welcomed 93 flotations raising £5.3bn this year, a significant drop from the £11bn generated from 136 listings in the same period last year - This week’s major London IPOs have had mixed fortunes. and a cooling in appetite for new paper over the last two years. However, motor insurer Hastings Direct (HSTG), which came to market yesterday, could only manage to get its IPO away at 170p which was well below its 180-185p indicated range. Worldpay’s IPO success most likely reflects the global preference for digital and consumer focused firms - The gross return of the SS&C GlobeOp Hedge Fund Performance Index for September 2015 measured -1.56%. Hedge fund flows as measured by the SS&C GlobeOp Capital Movement Index declined 1.13% in October. “SS&C GlobeOp's Capital Movement Index for October 2015 was -1.13%, down from the previous month's 0.62%, reflecting primarily seasonal factors,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies. “Comparing year-over-year flows, the -1.13% for October 2015 was virtually identical to the October 2014 reading of -1.12%, with both inflows and outflows closely in line for the comparative periods. We have been analysing our Capital Movement Index and Forward Redemption Indicator carefully in the wake of recent market volatility. October's results are certainly indicative of overall stability in hedge fund allocations.” - Zurich UK is in talks with its staff over cutting 29 jobs across the administrative and support teams for retail sales as part of a restructuring process. Zurich UK has entered a period of consultation with its support and administrative staff and it is expected 29 jobs will be cut as a result. The decision has been made to realign all Zurich UK's resources to focus on key areas of protection and wealth, and is expected to help the company deliver increased efficiency and co-ordination of services to advisers and their clients. The company has also re-aligned its platform offices in Leeds and Bristol to become the North and South offices, focusing on the two regions instead of two cities – South Africa’s National Union of Mineworkers (NUM) has signalled that there won’t be any agreement signed between the union and the Chamber of Mines (COM), at least until tomorrow morning. As the majority union, representing 72% of employees represented in the coal wage negotiations, the NUM must agree to the latest offer from the mining companies – Anglo American Coal, Delmas, Exxaro, Kangra, Koornfontein, Msobo and Glencore – represented by the COM, if the coal sector strike is to come to an end - APEC’s Energy Ministers from the 21 APEC member economies concluded their meeting on Tuesday in Cebu, the Philippines, by adopting the Cebu Declaration and Instructions, a joint statement on the the region’s energy priorities. Ministers instruct the region’s energy stakeholders to promote and collaborate on initiatives under the theme: “Towards an Energy Resilient APEC Community,” as well as create a task force on energy resilience to implement disaster-proofing of energy infrastructure, introducing energy efficiency technologies, promoting the use of clean energy and improving energy trade and investment in APEC. - Singapore property firm Perennial Real Estate Holdings (PREH) is launching a maiden issue of three-year bonds to the retail market with an annual payout of 4.65 %. Up to SGD150m of the bonds will be offered to the public although some may be re-allocated to institutional and other investors if applicable, PREH said in a statement. DBS is the sole manager and book-runner. The total issue size can be raised to SGD300m if the public offer is oversubscribed. The maiden bond offering further diversifies the firm’s sources of funding, though they have one of the shortest tenures among retail bonds issued by Singaporean companies in recent years. PREH's offer comes after jewellery firm Aspial Corporation's issuance in August, which offered a coupon rate of 5.25% over a five-year tenure - Major Asian bourses edged lower in trading today and major European equity indices fell in early trading, with energy-related shares leading the losses on profit-taking after a fall in crude oil prices yesterday. Continued concerns over China’s economic outlook and the prolonged rout in the commodities markets is beginning to take on more characteristics of a crisis, than simply market corrections. Most Asian markets fell after Chinese trade data signalled weakening global and domestic demand. Japan's Nikkei Stock Average fell 1.1%, Australia's S&P/ASX 200 lost 0.6% and Hong Kong's Hang Seng Index was down 0.5%. Indonesia's JSX fell 2.6% and South Korea's Kospi shed 0.1%. In brighter mode, the Shanghai Composite Index finished up 0.2%, while the Straits Times Index (STI) ended 33.61 points or 1.12% higher to 3032.11, taking the year-to-date performance to -9.90%. The top active stocks today were SingTel, which gained 1.56%, DBS, which gained 0.45, UOB, which gained0.91%, Noble, which gained 9.57%and Keppel Corp, with a 0.13%advance. The FTSE ST Mid Cap Index gained 1.18%, while the FTSE ST Small Cap Index rose 0.90 - The US Federal Reserve staving off a rate rise last month has given the markets breathing space and market focus will hone in on Federal Reserve Bank’s James Bullard, who will give a speech at the annual meeting of the National Association for Business Economics in Washington - According to Eurobank, the Greek government submitted to Parliament yesterday a bill containing the first set of fiscal and structural measures that will permit the disbursement of ca €2bn from the first instalment of €26bn of the €86bn loan agreed in August under the Third Economic Adjustment Programme for Greece. The bill is expected to be voted on late on Friday this week - InvestCloud, Inc, a provider of cloud-based front and middle-office solutions focused on digitizing customer experiences and internal operations for global investment advisors, today announced it has raised $45 million in growth equity funding. The round was led by FTV Capital and will be used to further invest in the company’s state-of-the-art platform and functionality, enhance customer service, and expand the company’s global footprint. Richard Garman, FTV Capital managing partner, has joined InvestCloud’s board of directors -

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Investors come back to the markets in search of returns Photograph © Xy/ Dreamstime.com, supplied March 2013.

Investors come back to the markets in search of returns

Tuesday, 19 March 2013
Investors come back to the markets in search of returns The markets this year have started with a bullet. The current bull market hints that investor confidence might be rising as the debt crisis in Europe looks to be under control and the US is managing its fiscal cliff. What are the implications of this sea-change? Carey Olsen, which advises on the largest total number of funds and assets under management in Guernsey, believes there will be slow and steady growth in both fund creation and the breadth of investments they adopt. Corporate partner, Graham Hall, examines where this growth will come from and what innovations investors and private equity houses are employing to realise returns. http://www.ftseglobalmarkets.com/media/k2/items/cache/e37cb185c8f2dc5dd52ce2fc045570ec_XL.jpg

The markets this year have started with a bullet. The current bull market hints that investor confidence might be rising as the debt crisis in Europe looks to be under control and the US is managing its fiscal cliff. What are the implications of this sea-change? Carey Olsen, which advises on the largest total number of funds and assets under management in Guernsey, believes there will be slow and steady growth in both fund creation and the breadth of investments they adopt. Corporate partner, Graham Hall, examines where this growth will come from and what innovations investors and private equity houses are employing to realise returns.

Equities have started to move this year. Having locked up money for four years, keeping their money in ‘safe’ investments, investors now look to be interested again in assets which they think offer potential for higher yields. There is, of course, some residual skittishness but recent movement in the markets indicates there is a lot more confidence and enthusiasm.

There have been rallies in the past which have not stuck and there is still a question mark as to whether (or how long) this one will hold. However, the market does seem to think there is a way to go before there will be any sort of correction.

If the past four years has taught anything it is that it often pays to be innovative and funds are seeking unusual opportunities where the risk is seen as manageable. With interest rates remaining at historic lows, investors are chasing yield and the focus is firmly on emerging, or high growth markets, particularly those with a history of under-investment. Eastern Europe is a particular case in point. Bulgaria, Hungary, Czech Republic, Slovenia, Poland, Slovakia, Estonia, Lithuania and Latvia joined the European Union club in the past eight years while Montenegro, Serbia, the Republic of Macedonia and Turkey remain in the wings, with EU membership only a function of time.

In spite of some structural economic problems, growth figures across the region remain attractive. The Polish economy, for instance, grew by 3.8% in 2011; Austria grew by 3.3%, while Moldova, Estonia and Lithuania all grew between 6% and 7% in real gross domestic product (GDP) terms.

These figures compare to Germany’s 2.7% growth and the Eurozone’s blended growth rate of around 1.6%, over the same year. The growth rates in the eastern European zone points to opportunities in the development of infrastructure and commercial property (where property values remain low, but high returns are predicted); it is an attractive combination for investors recently starved of promising investments in Western Europe and the United States.

Graham HallGraham Hall, corporate partner, Carey Olsen, Guernsey.Debt is also attractive as banks get rid of their loan books and finance houses adjust their loan-to-asset ratios. Much of this debt is now being sold off, sometimes their whole debt portfolios.  Debt books can be picked up relatively cheaply by smaller operators at significantly reduced rates. Of particular interest, but not openly discussed, are lease car debt books. These books are sold at significant discounts and it is an area of significant potential returns as the economy improves and the risk of holding this debt reduces.

Hedge funds also have appeal right now. They are performing better than they have in a long while and investors are beginning to recoup, or certainly looking to, the losses of the past. Whether it means more money being invested in hedge funds remains to be seen. It is difficult to give a time frame on when we might see a return to more halcyon days because, while there are individuals and select funds rallying, it is the big institutional pension funds that are needed to ensure a true return to performance. This sector is traditionally cautious and, having been severely hit in the crisis, their return will be slow and steady. It is really only 10% of the market that is prepared to take a risk and they appear to be a lot more open to the idea this year.

There was a flight to Luxembourg by many hedge funds during the economic crisis thinking they needed to be seen to be onshore. Many are now realising this was a false perception as Luxembourg is an expensive and bureaucratic place to do business which has an impact in the efficiency of the funds and the returns that can be made. These funds are starting to look at other jurisdictions that offer ­stability and pragmatic regulation without the expense or bureaucracy. As ever, Guernsey is ideally placed to reap these opportunities. According to the Guernsey Financial Services Commission, the net asset value of total funds under management and administration increased in the third quarter (Q3) in 2012 by £3.6bn (1.3%) to reach £274.4bn.

For the year since 30th September 2011, total net asset values increased by £3.3bn (1.2%). Guernsey is indicative of the worldwide trend where the interest in open-ended funds has decreased by £1.6bn (-3.2%) over the quarter to £51.5bn. The closed-ended sector increased over the quarter, by £4.2bn (3.3%) to reach £130.3bn. This represents an increase of £4.6bn (3.7%) over the year since 30th September 2011.

The market recognises Guernsey’s proven operating model with highly skilled professionals across the board. It is up to Guernsey to ensure it does not become too expensive but this is a secondary consideration to investors with the level of expertise and experience being far more important. Investors and funds, now more than ever, want to know that a jurisdiction has breadth and depth.

It would be overstating the case to suggest the fund markets are entirely out of the woods; but there are definitely strong ‘green shoots’. Guernsey certainly remains the most popular jurisdiction for private equity albeit with fewer funds being created. There is activity from global private equity houses investing in infrastructure (Terra Firma, Permira, and Apex). They continue to invest but at lower levels. For example, the focus has been on global farmland as a sound investment for some of these closed-ended funds with investments being made in cattle stations in Australia and New Zealand (beef and dairy) and in China.

It is tighter market and funds are looking much harder at efficiencies and costs. It is harder to raise the money and it takes longer and funds are launching with lower expectations which, arguably, is no bad thing.

Closed-ended funds are the majority of the market now and will continue to grow. 2013 has started as a bull market. The driving sentiment is one of optimism. There is a movement away from bonds and corporate gilts but there will not be a return the pre-2008 activity for a long time—slow and steady seems to be this year’s watchwords.

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