Month: June 2015

Asia’s week ahead: All eyes on Greece

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The long-running Greek drama is nearing a potentially catastrophic denouement, likely hijacking the market’s attention away from economic pulse checks on China and Japan this week.

Greece’s Prime Minister Alexis Tsipras submitted a new reforms package Sunday, offering the potential for a last minute deal to break the logjam in talks with the country’s international creditors. Greece desperately needs more aid before it runs out of cash and potentially defaults on loans to creditors.

Euro zone leaders are set to hold an emergency summit on Monday to “urgently discuss the situation of Greece at the highest political level” after Thursday’s meeting yielded no progress, with both sides refusing to compromise over what reforms Greece should make in exchange for more aid. The emergency summit comes just eight days before Athens needs to make a crucial 1.6 billion euro (USD 1.8 billion) payment to the International Monetary Fund (IMF) to avoid a possible default.

But after months of talks, it isn’t clear that one last emergency meeting will make much progress and Greece may start feeling the effects on Monday.

The European Central Bank told a meeting of euro zone finance ministers on Thursday that it was not sure if Greek banks would be able to open Monday, Reuters reported. Around 2 billion euros flowed out over Monday to Wednesday last week, or around 1.5 percent of the deposits the country’s banks held, Reuters reported, citing unnamed banking sources.

In Asia, a health check on China will come on Tuesday, when the Markit China flash purchasing managers index (PMI) will be released; the data set were previously called the HSBC PMI.

Read More: China shares suffer biggest weekly drop in seven years

A slew of recent data from the mainland has disappointed expectations but some analysts believe the worst of the slowdown may be over.

In the first quarter, China’s economic growth slowed to 7.0 percent, its slowest in six years, spurring a round of easing measures from the People’s Bank of China (PBOC), including three interest rate cuts over the past six months and two rounds of reserve requirement ratio (RRR) cuts. Analysts believe further stimulus measures may be on the cards.

On Wednesday, the Bank of Japan (BOJ) will release the minutes of its May 21 meeting, at which it kept its monetary stimulus program intact and revised its assessment of the economy higher. The previous set of minutes indicated the committee was concerned the central bank’s 2 percent inflation goal would be difficult to hit.

Two central bank decisions — from the Philippines and Taiwan — will be on tap regionally on Thursday.

The Philippine central bank, Bangko Sentral Ng Pilipinas (BSP), is set to announce whether it will keep its benchmark rate unchanged at 4.0 percent, a level it has held for the previous five meetings.

“BSP and the IMF find no compelling reason to shift monetary policy from neutral to accommodative. Headline inflation in the near term is likely to ease further. The impact of the dry spell on agriculture production is limited so far. But an extended dry spell may have more telling impact onheadline inflation and economic activity,” Joey Cuyegkeng, senior economist for Asia at ING, said in a note last week.

“This together with volatile global oil prices [will] keep BSP from engaging in monetary easing.”

Read More: Soon, the BOJ will tell you what it’s thinking

Japan will also be releasing a flotilla of May data on Friday, including the consumer price index (CPI), employment figures and household expenditures.

“Japan’s May data will show an economy perennially struggling to get on track. Core inflation has weakened markedly as the effects of the April 2014 tax hike fade from the numbers,” Moody’s Analytics said in a note last week. “Employment has barely risen over the past year, while the labour force has shrunk. Household spending is stubbornly sluggish, unsurprising with incomes barely growing.”

Moody’s forecasts May CPI will rise just 0.2 percent from the year-earlier period, within the BOJ’s expectations for a 0-0.5 percent increase. The unemployment rate likely remained around 3.3 percent in May, near 20-year lows, while household expenditure likely only edged up 0.5 percent on-year, Moody’s forecast.

In April of 2013, the BOJ launched a massive quantitative easing program, which was later expanded to purchase 80 trillion yen worth of assets a year, as a part of Abenomics – a series of policy measures unveiled under Prime Minister Shinzo Abe to jump start the economy. But Abenomics has had a mixed track record and despite government pressure, firms haven’t moved only slowly to increase wages.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian equities mixed on Greece’s new reform deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian equities were mostly higher early Monday, with investors encouraged by signs of a compromise in Greece’s debt talks with its creditors.

After anxious depositors pulled billions of euros out of Greek banks last week, Greek Prime Minister Alexis Tsipras made a new offer of reforms on Sunday, showing a fresh willingness to make concessions that could unlock frozen aid and avert a default on the country’s debts. Both sides are due to continue the negotiations at a crisis summit in Brussels this week.

On Friday, Wall Street finished lower, with major indices ending near their lows of the day. The blue-chip Dow and S&P 500 dropped 0.55 and 0.53 percent, respectively, while the Nasdaq Composite shed 0.31 percent following a record high in the previous session.

Nikkei rises 0.9%

Japan’s Nikkei 225 advanced from the get-go, with a modestly weaker yen probably helping to drive sentiment. The dollar-yen nudged up 0.1 percent to 122.73 in early Asian trade.

Honda Motor is in focus after the company’s U.S. unit said Friday it has linked the death of a woman in Los Angeles last September to the rupture of a Takata airbag inflator, bringing the number of fatalities related to the defective airbags to eight.

Shares of the carmaker rose 1.5 percent, while Takata declined 0.9 percent.  Kospi jumps 0.4%

South Korea’s key Kospi index hit a six-day high, thanks to a huge rally among the blue chips.

The bourse’s top two weighted stocks Samsung Electronics and Hyundai Motor jumped 1.1 and 0.4 percent, respectively, while utility Kepco surged 4.2 percent on the back of news over the weekend that the state-run power firm will offer a temporary discount on its rates to households and small and medium-sized enterprises.

Consumer plays staged a comeback following recent losses due to the country’s outbreak of Middle East Respiratory Syndrome (MERS). AmorePacific elevated 0.5 percent, while major retailers Shinsegae and Lotte Shopping rallied more than 8.5 and 2.7 percent, respectively.

Hang Seng adds 0.5%

Hong Kong’s Hang Seng index notched up in early trade amid news that the city’s bourse is consulting investors over current rules which ban dual-class shares.

Mainland markets are closed on Monday for a national holiday after suffering its biggest weekly drop in seven years last Friday. The Shanghai Composite index tumbled 6.4 percent to settle at its lowest level since May 29.

ASX sheds 0.4%

Australia’s S&P ASX 200 index dipped into negative territory amid continuing worries over Greece and as investors try to close their books for the June 30 end of the financial year.

“This is the final full week of the Australian financial year [hence] it will make intra-day direction tricky as managers begin to close the books, while macro issues push and pull investor sentiments,” according to IG’s market strategist Evan Lucas.

Decliners were led by mining and energy counters. Rio Tinto and BHP Billiton fell 0.7 and 1.3 percent, respectively, while Santos and Origin Energy lost more than 2 percent each after crude oil prices fell more than 1 percent on Friday.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Chinese shares suffer biggest weekly drop in 7 years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mainland shares suffered a steep correction on Friday, underperforming other regional bourses which followed the lead from Wall Street to end higher.

Overnight, a dovish statement from the Federal Reserve helped US stocks to finish about 1 percent higher, with the tech-heavy Nasdaq topping its intra-day high from March 2000.

However, concerns over Greece remained in the backdrop after Eurogroup finance ministers failed to reach a deal on Thursday. Negotiations between the debt-stricken country and its creditors will continue at a crisis summit next Monday.

Meanwhile, the Bank of Japan (BOJ) largely stuck to the script in its rates decision on Friday, maintaining its massive asset buying program which increases the money base at an annual pace of 80 trillion yen (USD 650 billion).

Shanghai Comp tumbles 6.4 percent

China’s Shanghai Composite index tumbled on the final trading day of the week to settle at its lowest level since May 29, while the blue-chip CSI 300 plummeted 6 percent.

For the week, both key indexes retreated more than 9 percent, marking their biggest weekly falls in seven years, according to Reuters. The slide was sparked by fresh tightening moves on margin lending by the China Securities Regulatory Commisiion (CSRC), as well as a deluge of initial public offerings (IPOs) that posed a huge threat to market liquidity.

“25 new listings are due to take place today [and] it was estimated that a record of 6.7 trillion yuan (USD 1.1 trillion) worth of funds is being locked up for subscription to these IPOs,” IG market strategist Bernard Aw wrote in a note.

Decliners were led by property and banking plays. Shanghai Shimao and Gemdale lost nearly 10 percent each, while heavyweight components Poly Real Estate and China Vanke eased 6.1 and 4.4 percent, respectively.

Agricultural Bank of China and China Construction Bank were among the biggest losers among financials, down more than 4 percent each.

ASX jumps 1.3 percent

Australia’s S&P ASX 200 index recouped all of Thursday’s 1.3 percent slump, thanks to stellar gains in the resources sector on the back of a dovish Federal Reserve and a weaker US dollar.

As crude oil prices held on to overnight gains, Oil Search tacked on 2 percent, while Santos and Woodside Petroleum ended up 0.6 and 0.8 percent, respectively. Iron ore miners also had a fillip prices, with BHP Billiton and Rio Tinto rising more than 1 percent each.

Shares of News Corp elevated 2 percent, unaffected by news that the company will be carrying out a major reorganization at its Dow Jones news publishing unit.

Nikkei rises 0.9 percent

Japan’s Nikkei 225 hurled itself back above the 20,000 mark, after falling below the key psychological mark for the first time since May 19 in the previous session.

The Tokyo bourse and the yen were little moved on the BOJ’s policy decision.

Automakers were among the top gainers for the day; Suzuki Motor surged 1.6 percent, while Toyota Motor and Honda Motor closed up 0.6 percent each. notched up 0.8 and 0.6 percent, respectively. Nissan, which announced a 1.9 percent rise in May sales figures for Asia and Oceania, bounced up 1.5 percent.

Seven & i Holdings piled on nearly 3 percent after the Nikkei business daily reported that the supermarket operator likely logged a record first-quarter profit.

Kospi adds 0.3 percent

South Korea’s key Kospi index chalked up a three-day winning streak on Friday.

Brokerages and airlines were among the sectors that attracted hefty buy orders. Daewoo Securities outperformed the sector with a 5.6 percent rally, while Hyundai Securities and Mirae Asset Securities leaped 4.8 and 1.9 percent, respectively.

Staging a comeback after recent losses, Korean Air Lines and Asiana Airlines closed up 6 and 5 percent, respectively. The local carriers, together with other tourism-related counters, have underperformed since the country’s outbreak of Middle East Respiratory Syndrome (MERS).

Meanwhile, market participants continue to focus on the battle between Samsung Group and US hedge fund Elliott. Cheil Industries and Samsung C&T finished 1.8 and 0.2 percent higher, respectively, after a South Korean court said it will rule on Elliott’s injunction request to block a planned merger between the two Samsung affiliates by July 1.

Cheil Industries is the de facto holding company of Samsung Group.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China shares underperform Asia on IPO woes; BOJ eyed

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why the Fed just sent the US dollar lower

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The dollar dropped against a basket of major currencies on the back of the Federal Reserve`s Wednesday policy statement, hitting a nearly one-month low due to a slightly more dovish outlook than expected.

The central bank chose to keep policy as is, leaving the federal funds rate target at rock-bottom levels, and noting in identical language to its April statement that “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”

Read More: Here’s what changed in new Fed statement 

But the Fed also made changes to its projections about both the federal funds rate and GDP , showing that it is now expecting both slower growth and lower policy rates in the near future. To some, this points to a good deal more downside for the greenback.

Jens Nordvig, Nomura`s global head of fixed income, recommends exiting long-dollar positions on the back of the Fed news.

Nordvig had previously suggested being long the dollar against the yen, and being long the euro against the dollar (which is equivalent to being long the dollar against the yen).

Referring to the euro trade in a Wednesday afternoon note, Nordvig wrote that “This trade was partly based on the prospect for a `status quo` view from the Fed, which is not exactly what we have been getting today,” due to the GDP and future fed funds rate (or “dot plot”) projections.

Kathy Lien, currency strategist at BK Asset Management, wrote that “There`s no question that the Fed disappointed FX traders. … Investors were hoping for a clear road map for liftoff, but she did not even mention that the chance of a September rate hike has strengthened.”

Generally, rising rates cause a given currency to climb as well, given that it makes holding that currency more profitable. That is, if risk-free rates in the US become much higher than risk-free rates in Europe, holding dollars is then that much more attractive than holding euros.

Still, Lien says that “In no shape or form do we believe that the long dollar trade is dead. In fact our conviction about the dollar rising was strengthened by Yellen`s comments. From the FOMC statement and forecast, we know that the majority of policymakers expect rates to rise this year with a larger number looking for two quarter-point rate hikes in 2015.”

Consequently, Lien is on the other side of Nordvig`s trade, writing that “We have used that latest pullback as an opportunity to reload some of our long dollar positions.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

JP Morgan vice chairman Jimmy Lee dead: Company

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vice Chairman Jimmy Lee unexpectedly died on Wednesday, the company said. He was 62.

“It is with deep sorrow and a heavy heart that I inform you that our beloved friend and colleague, Jimmy Lee, unexpectedly passed away this morning,” JPMorgan Chairman and CEO Jamie Dimon said in a statement. “Jimmy was a great friend, leader and mentor to me and so many others.”

James B. Lee Jr. led the company`s investment banking arm, and was known for his work on the syndicated loan market among other things.

He oversaw major mergers and acquisitions deals including the sale of General Electric assets, the General Motors and Alibaba IPOs (the two largest U.S. IPOs ever), the United-Continental merger and the Comcast-NBCUniversal merger, according to a company spokesman.

Read More: On the Record: Jimmy Lee, JPMorgan Chase

“As Vice Chairman of our company and former head of our Investment Bank, Jimmy made an indelible and invaluable contribution to our company, our people, our clients and our industry over his nearly 40 years of dedicated and selfless service. Jimmy was a master of his craft, but he was so much more-he was an incomparable force of nature,” Dimon said in his statement.

Lee told CNBC in 2010 that he felt lucky for having his job.

“I love coming to work every day. I`m lucky in the sense that I get to work on, and many times run, our biggest transactions. I like the content of what I do and who I do it with,” he said at the time .

Lee was exercising at his home in Connecticut when he felt short of breath, CNBC learned.

He is survived by his wife Beth, and three children-Lexi, Jamie and Izzy-according to Dimon`s statement.

“I`ve got a great wife, I got three great kids. I love being with them. To me the family unit is an important sacred place and I enjoy that the most,” he told CNBC in 2010.

Hedge fund titan Dan Loeb shared a few thoughts on Lee`s passing:

Jimmy loved Wall Street more than anyone I`ve ever known. He wasn`t driven by money or deals but by his passion for people. There was no more loyal friend to be had on Wall Street, nor anyone whose wise counsel I valued more.
For example, when I told Jimmy I planned to send a Japanese CEO a letter announcing we were becoming active in its stock, he advised me to deliver it in person, which I did. When that act earned us praise in Japan for showing special sensitivity to the country`s cultural customs, I repaid him by making him a tee shirt that said, “I advised Dan Loeb on his investment in Sony and all I got was this lousy tee shirt.” Later, after Third Point became the first shareholder to meet with Fanuc in 40 years, Jimmy purchased a linen jacket in the company`s distinctive corporate color-bright yellow-for me.
My last correspondence with Jimmy was a note from him titled “Bragging,” where he told me about his son`s admission into a highly competitive securities analysis program at Columbia Business School. He signed off by telling me that despite his long and successful career, his “greatest accomplishment” was his children. With Jimmy`s passing, our community lost a little bit of its humanity and I lost the closest thing I`ve had to a big brother. My thoughts and prayers are with his family, who we discussed frequently, and who he was devoted to and loved so much. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China stocks open lower on falling home prices

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fed leaves interest rates unchanged for now

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ECB raises Greek bank aid ceiling: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The European Central Bank raised the ceiling on Greece`s liquidity assistance from 83 billion to 84.1 billion euros, Bloomberg reported.

Greek banks are currently reliant on a loan program offered by the European Central Bank known as Emergency Liquidity Assistance (ELA). This is designed to provide credit to financial institutions in the euro zone that are solvent but face “temporary liquidity problems.” 

Read More: Central banking: CNBC Explains

Last week, the ECB increased its ceiling for ELA to Greek banks by 2.3 billion euros ($2.6 billion) to 83 billion euros, in light of Greek savers continuing to pull out their savings.

However, the ECB is at liberty to restrict banks` access to the ELA if operations “interfere with the objectives and tasks of the Eurosystem.” This decision would be taken by the ECB`s Governing Council and would require a majority of two-thirds of the votes cast.

ECB President Mario Draghi and his colleagues have insisted that liquidity will be provided to Greek banks as long as they remain solvent. But if Greece fails to repay the 1.6 billion euros it owes to the International Monetary Fund at the end of this month, this could be in jeopardy.

Read More: The trump card the ECB could use on Greece

In 2013 Cyprus turned to emergency liquidity assistance after the ECB refused to accept the country`s sovereign bonds as collateral. Cyprus too faced warnings that the ECB`s Governing Council was prepared to reject the continuation of ELA. The country later entered a rescue program and imposed capital controls to restore solvency to its banks.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fed doves expected to fly even with rate hike coming

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow