Posts from Wednesday Jun 9 2010

‘New form of strike’ troubles Beijing

The recent wave of labour disputes in China is creating a political dilemma for a government eager to boost workers’ income but allergic to organised unrest. As the disputes – including strikes at two car-parts plants affiliated to Honda – have hit the headlines, Beijing has avoided taking any firm public position, perhaps in the hope that the unrest will die down, the FT reported.

Foreign exchange control fears hit won

The South Korean won dropped to a two-week low against the dollar on Wednesday on speculation that the country’s authorities were set to introduce forex controls, the FT reported. Reports suggested South Korea planned to implement restrictions on banks’ currency forward trades as early as next week. The won was also hamstrung by speculation the country’s central bank would hold fire on interest rates at its policy meeting on Thursday.

Allscripts deal leaves Misys to focus on banking business

The sale of Misys’s majority stake in Allscripts is a fabulous return for two years’ work, according to the FT. Misys bought the 54.5 per cent stake in the US healthcare software business in 2008 for $330m plus the value of its own ailing related business – estimated to be worth about $100m – which were folded into the combined entity. As of Wednesday, Misys expects to sell most of this stake for $1.3bn in cash, as Allscripts merges with Eclipsys to create one of the largest US healthcare software ops.

JPMorgan in China JV

JPMorgan Chase on Wednesday unveiled a Chinese securities joint venture with First Capital Securities, a small, state-owned mainland Chinese broker, reports the FT. The venture will be allowed to underwrite initial public offerings on the main Shanghai and Shenzhen stock exchanges, but not to trade stocks in China’s booming secondary market.

Noda resists inflation target for BoJ

Yoshihiko Noda, Japan’s new finance minister, on Wednesday said he would not force an inflation target on the Bank of Japan, marking a contrast to his predecessor and now prime minister, Naoto Kan, who has called such a policy “attractive”, the FT reported. Japan’s central bank is opposed to an inflation target.

New Shinsei chief shows long-term vision

Shinsei, the struggling Japanese bank in which private equity group JC Flowers has a 33 per cent stake, needs another decade to build a business model that can generate sustainable profits, according to the bank’s incoming president. “It will take about 10 years to turn [Shinsei] into a bank that combines the profitability and growth potential it has as a Japanese bank,” Shigeki Toma told the FT in an interview.

OFT takes on the investment banks

This could be interesting: the Office of Fair Trading is set to launch an investigation into the big investment banks.

From Sky’s Mark KleinmanRead more

Backlash over India float rule

India is facing a private sector backlash against a rule change that will lead to a flood of more than $50bn of new shares being listed over three years, the FT said. The finance ministry has ordered companies to raise the portion of their shares that are publicly held from the current 10% to 25%, triggering concerns that the move could damage the country’s stock market and hamper economic growth.

Chinese export hopes boost confidence

Reports of a surge in China’s exports and cautiously positive comments on the US economy by US Fed chairman Ben Bernanke boosted demand for riskier assets on Wednesday, the FT reported. But in the background, the spectre of the eurozone debt crisis continued to haunt investors.

Obama’s BP attack fuels alarm

British business on Wednesday expressed alarm at the “inappropriate” and increasingly aggressive rhetoric being deployed against BP by US president Barack Obama, warning that such attacks could affect energy security and damage wider transatlantic industry relations, the FT reports. Meanwhile, FT Energy Source asks: “Is this about British Parochialism or British Pariah-ism?

Bernanke warns on ‘unsustainable’ deficit path

US Fed chairman Ben Bernanke said on Wednesday that the US economy was recovering at moderate pace, but unemployment would be slow to improve and that the federal budget deficit was on an “unsustainable” path, the FT reported. Bernanke projected economic output to expand at a rate of 3.5 per cent this year, with growth accelerating in 2011. He cautioned that this pace of growth would bring “only a slow reduction in the unemployment rate over time”.

Sell in May… Hedge funds hit hard

An end of May snapshot…

Tudor BVI Global MTD (2.26%) YTD: (0.49%) Read more

Goldman faces new CDO case

Add this one to the many legal risks of Goldman Sachs. It looks like the bank’s bid to reach a settlement with the Australian hedge fund Basis Yield Alpha over the so-called Timberwolf CDO hasn’t worked — as was indicated — and the fund is suing the former investment bank. Goldman deplored the suit as “misguided”. Read more

CDS report: Battering for BP

It looked like a case of deja vu this morning as the credit markets replicated yesterday’s trading pattern. Spreads rallied at the open following a late surge in US stocks. But the positive momentum was soon lost and spreads gave up their gains and began to widen. The Markit iTraxx Europe was as wide as 142bp late morning, just 0.5bp wider on the day but matching the level on May 7, the widest level this year.

However, the similarities with yesterday ended shortly after. By midday spreads were rallying and the tightening trend continued into the afternoon. The Markit iTraxx Europe is now trading at 138bp, about 3.5bp tighter than yesterday’s close, while the Markit iTraxx Crossover is 12bp tighter at 621bp. The fate of sovereigns and financials, forever intertwined, continues to drive spread direction. Read more

A further, further BP indignity — in CDS

How Greek. The curve on BP CDS inverted on Wednesday — data via Markit:

 Read more

Meet the new Deutsche Mark

Or the Swiss franc, as it’s more commonly known.

According to Mansoor Mohi-uddin, managing director of foreign exchange strategy at UBS, one of the mega currency trends of the next decade will be the increasing use of the Swiss franc as a proxy for the old German Mark. Read more

Against austerity

Paul Krugman has been fighting something of a one-man war against European fiscal cuts lately — especially after the G20 bestowed its blessings.

He’s now directed his fire at euro-austerity’s impact on global growthRead more

A further indignity for BP?

Nigerian spammers are now trying to profit from its woes, according to Bronte Capital’s John Hempton, who (ahem, ahem, cough, cough) found the following in his inbox on Wednesday:

From: Dudley Caruthers Esq (Barrister at Law)
Subject: BP Related Agreement Entitlement
E-mail: Read more

All TruPSed up

Here’s something suddenly hitting the headlines — the war on TruPS.

That’s Trust Preferred Securities, which have been mentioned on this blog as a major structured finance oops before. And they are now coming under the scrutiny of US regulators. Read more

Shuffling towards a Euro naked shorts ban

Just when you thought it was safe to go back naked and short into the water…

French President Nicolas Sarkozy and German Chancellor Angela Merkel have upped the ante on banning regulating short-selling in Europe. Read more

Spanish interbank spectres (updated)

Well, Spain can’t blame los especuladores medios anglosajones for this one.

The Spanish newspaper Cinco Días says the country’s banks are losing access to interbank lending (translation and emphasis FT Alphaville’s): Read more

Bank balance sheet management, the European way

Or, the interaction between the European Central Bank and eurozone banks, in charts.

The latest European Credit Tracker from UBS, drawn up by banking analysts Alastair Ryan and John-Paul Crutchley, is a great (graphical) overview of the European banking system and the ECB. Read more

Markets Live transcript 9 Jun 2010

Live markets commentary from 

Danger! Knife falls even further

The price action in BP shares just after 10.30am (BST) on Wednesday.

 Read more

China export data boosts confidence

Reports of a surge in China’s exports has put some pep into riskier assets, though the spectre of the eurozone debt crisis continues to menace investors, according to the FT’s global markets overview. The FTSE All-World equities index was up 0.3 per cent and commodities are higher after Reuters reported that a senior Chinese government official had claimed the nation’s exports saw a 50 per cent jump in May, compared with the previous year.

So it begins… the Misys break up

Shares in Misys have soared on Wednesday morning:

 Read more

May is the cruellest month for hedge funds

May has been the worst month for the average hedge fund since the collapse of Lehman Brothers in October 2008, according to industry data out on Tuesday – and for many it is a reminder that, in spite of 18 months of bullish markets, the world is still walking a financial tightrope, the FT reports. Indeed, to some hedge fund traders’ eyes, the way individual names moved during the now infamous May 6 movements in the Dow was disconcertingly similar to the events of August 2007 — and many funds lost billions in that month’s first week.

Fiorina and Whitman win California races

Two former Silicon Valley CEOs have been launched into California’s gubernatorial and senatorial contests, the WSJ reports. Republican primary voters selected former HP boss Carly Fiorina for the Senate race, while former Ebay chief Meg Whitman will contend for governor. Both must now convince Californian voters that they offer more effective responses to the state’s economic paralysis than their veteran Democratic rivals.

BofA sells Mexico bank stake to Santander

Banco Santander, the Spanish bank, will take back full control of its Mexican operations after agreeing to buy Bank of America’s 25 per cent stake for $2.5bn, according to the FT. Following the purchase of the stake, which it sold to the US bank in 2003 for $1.6bn, Santander will own 99.9 per cent of the Mexican unit.

The ECB’s debt certificates. (Ah wait, nevermind).

How not to test your press release systems, courtesy of the European Central Bank: