Month: October 2015

Deutsche scraps dividend to boost capital in clean-up

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

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Deutsche Bank said it would sacrifice its 2015 and 2016 dividends as new chief executive John Cryan seeks to bolster the bank’s capital and retain money to pay for sins of the past.

Cryan is under pressure to overhaul Germany’s biggest bank, with costly litigation from past scandals and fallout from a market rout in Asia pushing its valuation well below rivals.

Deutsche Bank said on Wednesday it was targeting a reduction of its risk-weighted assets to about 320 billion euros (USD 349 billion) by end-2018 from 416 billion euros at the end of June – towards the top end of analysts’ expectations.

“The plan is based on the elimination of the Deutsche Bank common share dividend for the fiscal years 2015 and 2016,” it said in a statement, adding that it aimed to resume paying dividends thereafter “at a competitive payout ratio”.

Ever since its post-World War Two reestablishment in 1952, Deutsche Bank has always paid a dividend.

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

Rebound in Japan’s industrial output eases pressure on BOJ

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

Asian stocks mostly higher after Fed holds rates steady

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

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Asian stocks mostly advanced on Thursday, encouraged by a stronger finish on Wall Street following the Fed’s decision to leave interest rates near zero.

Major US averages surged more than 1 percent overnight, after the Fed kept rates unchanged but signaled that a December rate hike was still on the table. The Nasdaq Composite led gains with a 1.3 percent rise, while the Dow Jones Industrial Average and S&P 500 closed up 1.1 and 1.2 percent respectively.

“The market, economists, commentators and the man on the street has combed over all aspects of the Fed statement, and it seems all have concluded that the Federal Open Market Committee (FOMC) will follow through with its commitment to raise rates at the December meeting. It’s really the only conclusion you can draw from an almost nonchalant statement,” IG’s market strategist Evan Lucas wrote in a note.

Nikkei adds 0.2 percent

Japan’s Nikkei 225 index extended gains following the release of September industrial output, which suggested that the world’s third-biggest economy is embarking on a recovery.

Industrial production rose 1.0 percent on-month in September, official data showed early Thursday, beating expectations for a 0.5 percent drop. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 4.1 percent in October and shrink 0.3 percent in November, data showed.

Among gainers, heavyweight components SoftBank and Fanuc tacked on 2.1 and 3.4 percent respectively, while export-oriented plays such as Komatsu and Sony piled on more than 2 percent each.

However, sharp losses in securities firms limited the bourse’s advances. Nomura Holdings and Daiwa Securities plunged 4.8 and 3 percent respectively. Japan Aviation Electronics slumped 10.3 percent.

China stocks up

Share markets in China rebounded on Thursday, with the key Shanghai Composite up 0.6 percent.

Among other indexes, the CSI300 notched up 0.6 percent while the Shenzhen Composite rallied 1 percent.

Kospi gains 0.7 percent

South Korea’s Kospi index headed north, thanks to a jump in Samsung Electronics.

Shares of the tech giant surged as much as 6.4 percent to 1,392,000 won – its highest since May 4 – after announcing its first year-on-year profit gain in eight quarters, on the back of strong chip sales and a modest pickup for its smartphone business. Third-quarter operating profit jumped 82 percent to 7.4 trillion won (USD 6.46 billion), compared with its guidance for 7.3 trillion won in early October. Revenue rose 8.9 percent to 51.7 trillion won.

In addition, Samsung is planning to buy back 11.3 trillion won of its own shares.

LG Electronics edged up 0.4 percent ahead of its quarterly results.

ASX eases 0.4 percent

Australia’s S&P ASX 200 index surrendered early gains to nudge down below the flatline.

Australia and New Zealand Banking Group (ANZ) eased 0.8 percent after a brief positive start, as the lender posted its lowest growth in annual profit since the global financial crisis prior to the market open.

Among other decliners, heavyweight Telstra dropped 1.1 percent, while a 1 percent drop in gold prices led Newcrest Mining and Evolution Mining down more than 5 percent each.

Energy counters rose along a rebound in crude oil prices overnight; Santos and Woodside Petroleum climbed 2.5 and 1.2 percent respectively, while Oil Search edged up 0.2 percent.

Elsewhere in the region, the Reserve Bank of New Zealand (RBNZ) kept its benchmark interest rate steady at 2.75 percent on Thursday, in line with expectations. Kiwi shares ticked up 0.2 percent, but the New Zealand dollar fell against the U.S. dollar to as low as USD 0.6660, but has since recovered to USD 0.6673.

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

Steel demand ‘evaporating at unprecedented speed’

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

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The steel industry’s dire straits are in the spotlight this week, with both China and the UK warning about the hit from the dramatic slump in demand, particularly from the world’s second-biggest economy.

Steel prices have held at USD 170 per ton since October 8, having fallen sharply over the last year from above USD 400 per ton.

The World Steel Association forecasts that global steel demand will decrease by 1.7 percent in 2015, before growing by 0.7 percent in 2016. However Chinese demand is seen falling both this year and next, by 3.5 percent and 2 percent respectively, following a demand peak in 2013.

On Wednesday, the deputy head of the China Iron and Steel Association warned that demand for the ferrous metal was waning fast.

“China’s steel demand evaporated at unprecedented speed as the nation’s economic growth slowed. As demand quickly contracted, steel mills are lowering prices in competition to get contracts,” Zhu Jimin, deputy head of the China Iron & Steel Association, said on Wednesday at a briefing in Beijing, according to Bloomberg.

His words came after UK parliament held a special committee on Tuesday to discuss how to support the British steel industry, which was described as “facing terminal decline.”

The (£1.7 billion) USD 2.6 billion steel industry is of declining importance to the U.K. economy, but still employed 34,500 people in 2014. However, several steel plants — largely located in the comparatively poor regions of Yorkshire, the Humber and Wales — have announced job cuts in recent months. Sahaviriya Steel Industries’ major steel plant in North East England is set to close, resulting in the loss of up to 1,700 jobs.

“The UK’s steel industry has been dealt a series of major blows in recent weeks and months. It is facing terminal decline, even though it is an essential foundation for other parts of our economy like aerospace, construction and automotives,” Iain Wright, the politician chairing the business, innovation and skills committee for the UK Parliament, said on Tuesday.

The slump in steel prices can be attributed to the broader rout in metals and other commodities over the last 12 months, as well as the ramp up in world steel production this millennium.

Total world steel production almost doubled between 2000 and 2014, mostly driven by increases in Chinese output, according to a UK parliamentary briefing paper. Growth in production has slowed considerably since then, but this has proved insufficient to compensate for the slump in demand.

In the case of China, heavy investment in infrastructure in the last decade raised demand for industrial goods like cement and steel, encouraging manufacturers to expand production capacity. However, capacity now exceeds demand in several sectors, with steel, cement, aluminum, glass panels and shipping among those affected.

“Resolving overcapacity is not an easy task: It may be unfeasible to halt planned or in-progress projects and reducing capacity may mean job losses and risk social unrest,” Alberto Gallo, head of macro credit research at Royal Bank of Scotland, said in a research note on Monday.

Stocks of major steel producers around the world have slumped this year. Frankfurt-listed shares of ArcelorMittal are down 69 percent since the start of 2015, while U.S. Steel Corporation has plunged 60 percent.

In addition, China’s state-owned Sinosteel delayed an interest payment due on 2 billion yuan (USD 0.3 billion) of 5.3 percent notes last week, highlighting the difficulties facing Chinese steel, coal mining and shipbuilding companies.

“While Sinosteel’s potential default is reflective of the growing inefficiency of state-owned enterprises, it also points to slowing local demand as China continues its transformation into a consumption-based economy,” Gallo said.

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

Volkswagen shares rise despite billions of losses

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

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Volkswagen’s share price rallied on Wednesday despite an operating loss of 3.48 billion euros ($3.84 billion) in the third quarter, as a scandal over falsifying its diesel emissions knocked the company.

The carmaker was forced to take its first quarterly loss for 15 years, slightly deeper than analysts’ forecasts, as it anticipated hefty payouts to consumers around the world over the deceptive data on its diesel emissions and the potential recall of 11 million cars.

This set of results factored in a 6.7 billion euros writedown related to the scandal, lower than some had feared. After a couple of hours of trade, the stock was up close to 4 percent.

Sales revenues in the first nine months of the year were up 8.5 percent, and the carmaker reaffirmed its full-year new car deliveries of around 10.14 million. One positive step for investors could be the carmakers’ discussions with European Union member states’ authorities to limit legal action beyond what has already been agreed with Germany’s KBA (Federal Motor Transport Authority).

Timothy Rea, analyst at BNP Paribas, described the results as “messy as expected” in a research note Wednesday, but added “importantly, liquidity remains strong (better than we expected) and VW emphasizes this will help it to manage the situation it finds itself in”.

Since the scandal emerged, Volkswagen has appointed a new chief executive, Matthias Mueller, and promised to step up cost-cutting efforts.

Mueller said in a statement: “The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost.”

Winning back that trust in both its cars and its share price could be difficult.

“Volkswagen is facing a big black hole that it’s going to have to throw money at for the foreseeable future, and at the moment it has no idea how deep that hole is,” Laith Khalaf, senior analyst, HargreavesLansdown, wrote in a research note.

Shares in the carmaker, which was mounting a serious attempt to become the world’s biggest before it emerged that it had cheated on emissions tests of some diesel cars, have lost around a third of its value since the scandal emerged last month.

Akio Toyoda, the chief executive of rival Toyota, told reporters at the Japan Car Show on Wednesday: “Just because something like this happens, we are not going to negate it all. But our priorities are hybrids and fuel cell cars. I am not in a position to comment on VW. Toyota has gone through its own quality issues. We are still in the midst of improvement. I want to make better cars so that we never have to go through that kind of incident again.”

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

Carson momentum is top threat to Trump: Ex-GOP advisor

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

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Donald Trump faces the risk that Ben Carson will corner the outsider vote if he wins the Iowa caucus in the race for the Republican presidential nomination, former GOP campaign adviser Kevin Hassett said Wednesday.

Carson recently overtook Trump as the front-runner in a number of polls, just in time for Wednesday night’s third Republican debate, sponsored by CNBC. CNBC’s full coverage begins at 5 p.m. EDT.

Read More: Poll Watch: Ben Carson Edges Ahead Nationally in Times/CBS News Poll

“I think a lot of people are now looking at Iowa, and thinking that Carson’s going to win Iowa. Then all of a sudden the nonestablishment people coalesce around Ben,” Hassett told CNBC’s “Squawk Box.” “I think that’s the Number 1 threat — near-term threat — to Trump.”

For that reason, Trump will likely try to distinguish himself from Carson in Wednesday’s debate, Hassett said.

Wednesday night’s main forum essentially will highlight two sets of candidates, said Joe Lockhart, former press secretary to President Bill Clinton. One is focused on political outsiders like Carson, Trump and former Hewlett-Packard CEO Carly Fiorina, and the other is between candidates with governing and legislative experience.

In the latter, candidates must still differentiate themselves from Trump, Lockhart told “Squawk Box.” “There will be two debates, but Trump will be in the middle of both of them.”

Read More: Republican presidential debate

Trump has the most to lose in the debate because he has dominated the campaign narrative, Lockhart said. However, the focus has not been on substantive issues like taxes and health care, but the trading of insults between Trump and the other candidates, he added.

“I expect other Republican candidates will really be trying to put him on the spot and demonstrate that when it comes to policy, he tends to be making it up as he goes along.”

 Tough economic policy questions will provide an opportunity for someone who is adept in that field to shine at the CNBC debate, which will emphasize economic and financial issues, Hassett said. He noted that Sen. Marco Rubio and former Florida Gov. Jeb Bush have attempted to run substantive, policy-based campaigns.

Lanhee Chen, director of Domestic Policy Studies at the conservative Hoover Institution, said he expected Rubio to be able to present a forward-looking vision on the economy and foreign policy.

The focus on economic issues at the debate will “expose the true contenders from the wannabes,” he told “Squawk Box.”

As for Bush, the conventional wisdom is that he needs a break-out performance, said Jared Bernstein, former economic policy adviser to Vice President Joseph Biden.

“He’s been really pretty ineffective in these debates so far and kind of riding on an assumed front-runner status,” Bernstein told “Squawk Box.”

Read More: GOP candidates on retirement and student debt

Bush has only 5 percent support among likely Republican caucus participants in Iowa, according to the latest Quinnipiac Poll, released Thursday. The poll surveyed 574 Republicans by phone and has a margin of error of plus or minus 4.1 percentage points.

The prospect of Trump or Carson making it all the way to the Republican National Convention can’t be ruled out because the 2016 race is being run with “a very different set of rules,” Bernstein said. So far, it has been an outsider’s game, he noted.

In that regard, Bernstein added, Rubio is interesting because he fits somewhere between the political insider and D.C. outsider models.

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

Twitter plunges as much as 12% on light guidance

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

Chinese consumer sentiment indicator slumps in October

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

Oil declines weigh on Asia markets, but Japan shares rise

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

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Asian markets traded mixed Wednesday, with losses in energy plays amid fresh oil-price declines counterbalanced by gains in Japan shares as traders hoped for more stimulus from the central bank.

Oil shares around the region lost ground after crude oil futures settled at a two-month low of USD 43.20 a barrel, down 78 cents, in US trade overnight. Japan’s Inpex shed 1.1 percent.

In Australia, major resources plays dropped sharply. BHP fell 2.2 percent, AWE lost 1.4 percent, LNG lost 4.5 percent and Woodside shed 1.2 percent. That weighed on the S&P ASX 200 index, which lost 0.3 percent.

Jeff Powell, chief investment officer at Polaris Greystone Financial blamed much of oil’s decline on OPEC’s failure to cut production.

“You’ve also seen a lot of efficiencies created as oil has dropped within the fracking segment of the US market, so a lot of the production that’s going on in the U.S. really hasn’t slowed down even though you have seen this material drop in oil price,” Powell told CNBC.

However, he said that it’s possible oil prices are bottoming, noting that he’s “dabbling” in energy shares.

Japan shares were higher, with the Nikkei index tacking on 0.65 percent.

Traders there are likely to be hesitant as they await the outcome of the Bank of Japan’s meeting at the end of the week. Many analysts expect the central bank to introduce further stimulus, which is likely to boost asset prices.

“There is a strong case for more QE at the 30th October meeting; the economy is stagnating and the target measure of inflation is below zero,” Oxford Economics said in a note Tuesday.

“We expect a 20 trillion yen lift to annual asset purchases, taking the rate to 100 trillion yen. With the BOJ already owning a third of the stock of Japan government bonds any extra buying may be concentrated in other assets, such as REITs or ETFs.”

Canon dropped 2.6 percent after cutting its full-year profit outlook Tuesday as demand for cameras in China and Southeast Asia failed to meet expectations.

In Korea, the benchmark Kospi index slipped 0.2 percent. Bucking the trend, LG Chem jumped 5.5 percent after the Nikkei Asian Review reported that the company was in talks with Tesla to supply batteries for the U.S. company’s electric cars. In Japan, Tesla’s current supplier, Panasonic, shed 3.0 percent.

Elsewhere in the region, Apple suppliers are likely to be in focus after the technology giant’s quarterly earnings beat expectations as consumers in China snapped up iPhones. But the tech gian’t shares slipped as its outlook disappointed.

The Nasdaq composite erased early gains to close down 0.1 percent as Apple slipped more than half a percent. The Dow Jones Industrial Average shed 0.2 percent, weighed by IBM’s 4 percent fall after the firm disclosed the SEC is conducting an investigation into its accounting treatment of certain transactions. The S&P 500 closed 0.3 percent lower, weighed by energy stocks amid declines in oil.

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