A Fullerton deal, finally, for Eros?

Back in July, Eros International, the Bollywood specialist that came across our radar just a week ago, issued the following muddling statement to the Bombay Stock Exchange:

Clarifies on News item Read more

Where did all the EM FX bonds go?

According to Nomura’s Nordvig and team “the EM [FX] debt bonanza is over”.

Which is nice if you thought it was a measure of building risk…

After three years (2012-2014) of very strong net issuance in emerging markets (around $250bn per year), issuance has dropped to much lower levels during 2015. Chinese entities managed to issue around $50bn in debt, mostly in the early part of the year, but net issuance in other emerging markets has essentially ground to a halt.

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Student debt’s subprime problem

This may sound familiar:

  1. Conventional wisdom says people who own Asset A do better than people who don’t, and that society as a whole would be better off if more people end up owning Asset A
  2. Asset A is expensive, so many people borrow to buy it
  3. Credit constraints limit how many people can buy Asset A
  4. Then, for some reason, lenders become a lot more willing to fund purchases of Asset A, so demand for Asset A goes up a lot
  5. Supply of Asset A isn’t initially big enough to accommodate the extra demand, so prices go up and lots more gets created
  6. All the extra spending temporarily boosts GDP above what it otherwise would have been
  7. Partly because of 1 and 6, regulators take a light-touch approach, which enables (encourages?) lots of fraud
  8. It turns out there were good reasons why credit had previously been constrained, and the new borrowers can’t repay their debts
  9. Credit conditions, prices, and rates of asset ownership eventually return to where they were before but not until after a lot of people suffer losses from the previous credit expansion

 Read more

Markets Live: Tuesday, 29th September, 2015

Live markets commentary from FT.com 

Tick tock, Slater & Gordon…

A brief reminder of the Australian listing rules: companies must deliver an audited set of results within three months of their financial year end.

For Slater & Gordon, the Australian listed law group digesting most of UK peer Quindell, that means Wednesday September 30, lest the shares be suspended come Thursday.

We’ve mentioned before some of the issues likely to be discussed by the company and its auditors, in particular balance sheet values for accumulated work in progress and whether any of the A$1.1bn paid for Quindell in May should be written off. Lets think through the scenarios. Read more

The solution to the question too hard for the pub quiz

If you haven’t taken a crack yet at the finance puzzle we posted on Monday morning, do so now. We’ll wait.

Now that you’re back, see if you solved this the same way we did: Read more

China’s command structure, charted

From Goldman’s latest Top of Mind report:

Do click to enlarge but note that not (fully) pictured are the massed elites that make reform a less than linear process, particularly when objective number one is almost certainly the continuing control of the CCP. Read more

FT Opening Quote – Wolseley gets profits flowing

Plumbers merchant Wolseley has got profits flowing, an Odeon sale rumour has been firmly quashed and the Glencore sell-off may have been overdone. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Tuesday,

- Levine on materiality and how you maybe don’t actually know it when you see it.

- Predictions for the year 2045.

- Bard Finance, LLC: Dirty deeds in the wool trade.

- Carl Icahn eyeing Sundance with 2min trailer for 15min movie. Read more

FirstFT – A Cold War clash over Syria, water on Mars and how the Tube could power London

Putin and Barack Obama exchanged rhetorical barbs not seen at the United Nations since the Cold War Read more

On those diminishing petrodollar flows, Saudi edition

Just in case Glencore’s stock slide and general market volatility have distracted you from fully digesting the significance of this Saudi Arabia funding story from the FT’s Simeon Kerr in Dubai…

We thought we’d reiterate the really important bit about the rate at which the Kingdom is pulling funds from global asset managers:

Nigel Sillitoe, chief executive of financial services market intelligence company Insight Discovery, said fund managers estimate that Sama has pulled out $50bn-$70bn over the past six months.

“The big question is when will they come back, because managers have been really quite reliant on Sama for business in recent years,” he said.

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SOE you think you can reform? Mixed-ownership edition

The tale of Chinese State Owned Enterprise reform is long and ongoing. So we’re going to break it down via an individual “reform” effort that has more than a passing resemblance to the Sinopec Conjecture…

It also reminds us that however you cut it China isn’t about to let go of control. Bit beyond us why anyone was shocked by this kind of thing:

China’s Communist party must tighten its grip on state-owned enterprises in order to maintain the “socialist direction of their development”, the country’s leadership said, an edict which chafes with reforms aimed at improving efficiency and profitability in the lumbering sector…

This particular tale though, whence wider lessons can be drawn, concerns Jiangxi Salt and comes via Gavekal’s Chen Long (bit chunky but very worthwhile, our emphasis): Read more

A history of leverage and the mining industry, 2010-2015

Or, in chart form via Investec… Read more

Markets Live: Monday, 28th September, 2015

Live markets commentary from FT.com 

Zug at 80p

Off some 19 per cent at 78.62 at one stage this morning. UPDATE: Make that 27 per cent, 72p and counting. Now… Read more

The question too hard for our upcoming quiz

While thinking of questions for our New York pub quiz, a friend presented the following puzzle to us. Initially we thought it might be a good question until we realised how long it took us to come up with the answer. (During the actual event you won’t have access to Excel and only about 20 seconds per question.)

Anyhow, see if you can solve it. Read more

Chup raho! You’re a non-performing asset

We don’t mean to keep banging on about it. But the bad loans in India’s banking system are both a significant barrier to a new, and badly needed, investment cycle getting properly underway — and a source of some hilarious numbers.

From Credit Suisse’s Ashish Gupta on the Reserve Bank of India (the regulator here): Read more

FT Opening Quote – Shell abandons Arctic drilling

Shell’s Arctic dreams have melted and Vodafone’s talks with Liberty Global have ended. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Monday,

- Tomorrow’s dystopia comes ever closer.

- The Economist: “it makes sense to look beyond inflation—and to consider targeting nominal GDP (NGDP) instead.”

- Why has deflation returned to Japan?

- What if the Fed is wrong?

- 1099 as antitrust.

- Things I totally agree with: “there’s an internal VW story – or perhaps industry-wide story – here that I’d love to hear.” Read more

FirstFT – Catalan independence boost, ISIS recruitment and why VW is worse than Enron

Catalonia’s independence movement won a historic but incomplete election victory Read more

Monetary stimulus doesn’t work the way you think it does, redux

Once upon a time people thought central banks could boost business investment by lowering interest rates.

Thus America had its Large-Scale Asset Purchase programmes, which, according to the Fed, lowered longer-term Treasury yields. Again, according to the Fed, part of the appeal of these purchases was the impact they would have on investors with fixed income liabilities. Unable to hit their return targets with safer bonds they would be forced to buy riskier instruments, which, in theory, should improve the flow of credit to businesses and households and therefore spending. Read more

Spasms in Zug

Seems worth capturing the action in Glencore stock on Friday afternoon…

 Read more

Putting ESG risk into the market with Volkswagen

ESG stands for Environment, Social, Governance.

And it’s an increasingly big thing in the asset management world.

The basic premise is that if you can get the biggest investment managers to collectively commit to ESG-focused principles in their strategies — whether that be through active engagement as shareholders or divestment strategies — capital will eventually be pulled from the type of corporations that routinely undermine or undercut the standards society judges to be important — from pollution and environment, to labour rights and fraud — forcing them to adapt their behaviour.

The idea is to send bad corporates to capital-unavailable CoventryRead more

One look at whether reduced bank lending costs stimulates the economy

Here’s an easy game: spot the credit card provider who needs to try harder.

Most of the time, banks manage credit card limits in a fairly continuous and granular way. As credit scores go up, so do credit limits. Here is what it looks like: Read more

Markets Live: Friday, 25th September, 2015

Live markets commentary from FT.com 

Burn it like a bitcoin processor company (Updated)

You may remember BitPay, the bitcoin payments processor, on account of its proud assertion back in May 2014 that it was (at that point) the world’s most well-funded Bitcoin company.

Well, it’s only been a year since BitPay managed to raise $30m from investors including PayPal founder Peter Thiel, Hong Kong billionaire Li Ka-shing and Sir Richard Branson — reportedly valuing the company at $160m — and yet, seemingly, much of that cash may by now be gone.

Talk of the Reddit forums on Friday was news that BitPay had not only u-turned on some of its free service promises, but was also letting staff go. Read more

FT Alphachat podcast: Robert Shiller, Martin Wolf, and a tough week for biotech

Alphachat is on iTunes and Stitcher. We’d love your feedback and questions — especially those that we can play on the podcast — so feel free to call us at 917-551-5012 (a US number) or email us at alphachat@ft.com. For those who can’t dial a US line but would like a question played on the episode, you can also send us a voice recording via email. Read more

FT Opening Quote – Judge sterilises FTC’s Synergy blocking

A US judge has refused an injunction request by the Federal Trade Commission aimed at blocking sterile equipment provider Synergy Heath’s acquisition by Steris. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here. Read more

Further reading

Elsewhere on Friday,

- Why Britain is not so unequal after all.

- Panda Express’s life coach might have overshared a bit.

- Generic drug regulation and pharmaceutical price-jacking.

- “I was the head of the Piers Gaveston Society…”

- But who is Xi dada? Also, more helpfully and less terribly.

- How guilty is VW?  Read more

FirstFT – Yellen reiterates case for 2015 rate rise, VW’s new boss and tracking a hacker

Shortfall in US inflation a result of falling energy and import prices, says Fed chair Janet Yellen Read more