From JP Morgan’s Flows & Liquidity, a chunk of negative rate stats that are pointing us somewhere. It’s just unclear exactly where right now:
Splitting by region, the stock of Japanese government bonds trading with negative yield reached $6.1tr. This brought the proportion of JGBs trading at negative yields to 78% of the total outstanding amount.
On Tuesday last week, a company called Luen Wong Group, joined Hong Kong’s new-ish Growth Enterprise Market at 25 HK cents a share. By Thursday it was trading at 46 times that. Luen Wong is a civil engineering subcontractor. It’s a specialist in roads and footpaths and drainage.
The company has proved to be the most eye-catching of recent Hong Kong IPOs, but there are plenty of other examples of nuttiness.
A day before Luen Wong arrived, Hypebeast, an online fashion store, jumped 20 fold on the GEM. Read more
There’s overpaying for a company, and then there’s stumping more than 10 times what the last investor valued it at just half a year ago.
From Fortune on Friday: Read more
From Michael Hartnett and team at BofAML:
March 9th marks the seven-year anniversary of the S&P500’s bull market, currently the third longest bull market in history lagging only behind those of Oct’90-Mar’00 and Jun’49-Aug’56.
But contain your joy. Read more
An update on China’s big ball of money which we have seen pouring into stock, bonds etc before…
Right now it’s still rolling hard into Tier 1 property — first Shenzhen, now Shanghai.
From HSBC with our emphasis:
Following Shenzhen’s lead from last year, Shanghai’s residential property prices rose 24% during the first two months of the year.
Presented with very little comment:
On Friday, CB Insights’ machine learning software that captures data on financings, M&A, and IPOs (The Cruncher) found a filing for a company called X Empire, Inc. that was signed by Hakeem Seriki.
The company had raised $1.5M of a $3M offering.
Why is this notable?
Hakeem is better known by his stage name, Chamillionaire. He is a rapper, entrepreneur and angel investor.
China’s second-largest “peer-to-peer” lender has just raised $1.2bn and persuaded investors like Bank of China Group to value it at $18.5bn.
From the FT on Monday: Read more
What a difference a year makes, charted by JPM’s Niko Panigirtzoglou and team (with our emphasis):
Congratulations London, your housing market is indeed the most nuts.
UBS wealth management have you right at the top:
Welcome to Barry Silbert’s new bitcoin incubator, Digital Currency Group, which comes with a singular promise…
Our mission is to accelerate the development of a better financial system.
Charted, courtesy of Credit Suisse:
The conviction from early stage investors in the growth potential for the sharing related companies is also clear. The number of “sharing Unicorns” reached 44 in July this year with a combined implied valuation of cUS$220bn. Seven companies currently have a perceived valuation of more than US$10bn, of which Uber and Airbnb are by far the largest with US$51bn and US$25bn, respectively.
Roadie, the Atlanta-based shipping marketplace that’s angling to tap drivers already on the road to deliver packages, is adding some star wattage to its team with the announcement that music star Ludacris (aka Chris Bridges) is partnering with the company…
“I am intrigued by new technology and I love seeing the Atlanta tech scene on the rise so I partnered with Roadie to help spread the word about this brand new, completely unique app created in Atlanta. In a world where I feel we need a lot more people helping each other out, Friendshipping is the future, ” Bridges said in a statement.
Friendshipping… Read more
Mr. Elon Musk, our Chief Executive Officer, Product Architect and Chairman of our Board of Directors, has indicated his preliminary interest in purchasing up to an aggregate of 83,974 shares of our common stock in this offering at the public offering price for an aggregate purchase price of approximately $20 million.
Tesla Motors, the loss making manufacturer of electric cars, has announced plans to sell an additional 2.1m shares to its investors, to raise $0.5bn in cash. Read more
From the FT’s James Kynge:
On Sunday, the new graduates of Tsinghua University are set to gather in their smartest attire to celebrate degrees from one of China’s most prestigious institutions, a place that has fostered generations of political leaders. Just after the ceremony starts — according to a written agenda — the graduates must “follow the instruction and shout loudly the slogan, ‘revive the A shares, benefit the people; revive the A shares, benefit the people’.”
Hot on the heels of Andrew Murray, tennis player, come
the end times celebrity private equity opportunities!
Via Quartz, TitleCard Capital:
We believe elite athletes and artists are more than pitchmen for someone else, or even a personal brand for themselves, and instead empire builders.
Just some of Nomura’s, reliably gloomy, Bob ‘the bear’ Janjuah. In case Greece and China hadn’t hammered your spirit enough:
Lastly, in terms of my outlook for markets into end Q3/early Q4, I think a considerable risk is building of some form of mini crash. Of course, anything can happen in the very short term. But over the course of Q3 and into Q4, I think we may see a significant short, sharp but large (15% to 20%) correction.
Chinese regulators have markets exactly backwards.
Late on Thursday they announced an investigation into manipulation by short sellers, while the futures exchange seems to be discouraging people shorting, or betting on price falls.
In practical terms, the action failed: stocks fell again, leaving them down 12 per cent on the week and down more than a quarter from their peak three weeks ago, with extraordinary intra-day swings.
In principle, though, the action is just wrong. The reason the stock market is falling isn’t short sellers, it’s long sellers. More precisely, the hordes who’d been piling into stocks and pushing prices through the roof over the past year are selling, and that was entirely predictable (the difficult issue was when there would be a rout, not whether there would). Read more
Seriously, it’s foolproof and definitely not something we’ve seen before in other bouts of market mania.
From the WSJ:
Chinese companies are turning to an unlikely source for profits in the soft economy: the country’s red-hot stock markets.
From Bocom’s Hao Hong, he of the “price to whatever ratio”, we get today’s China nuttiness fact du jour*:
When calculated on a free-float adjusted basis, Chinese market’s average holding period is about one week – a hallmark of intense speculative trades in the market. Everyone is busy looking for the greater fool. Note that at the height of the Taiwanese bubble in 1989, every available share on the exchange changed hands close to twenty times per annum. That is, the free-float shares on Taiwanese exchange changed hands every 15 days on average.
Andy Murray, the third best tennis player in the world, who is 28 years old:
I’ve always been interested in investment, and being able to get involved in an innovative way to help support British startups really appealed to me.
A warm welcome to the newest advisory board member for Seedrs, the crowdfunding site dedicated to connecting small investors with risky businesses. Read more
Full disclosure: below is the sum total of what we know about MIE holdings Corporation, a value added oil & gas partner listed in Hong Kong (HKG: 1555).
In March the company was worth HK$1.9bn. On Tuesday morning in Hong Kong it was worth HK$2.4bn. At the close on Thursday: HK$3.9bn.
Here’s a helpful statement from the board, issued in response to Tuesday’s “Unusual Price and Trading Volume Movement”: Read more
Click above for the prospectus for the 100-year bond being marketed on Monday by Petrobras, the Brazilian state-owned oil giant and sometime corruption-riddled enterprise.
Pricing (says Bloomberg) is somewhere around 8.8 per cent. Read more
A privately-held tech company is desperate for cash.
In this age of “decacorns“, you might think it would raise equity from overeager venture investors. But Jawbone, which competes with, among others, Apple, decided to borrow $300 million from Blackrock. Dan Primack thinks this financing choice creates value:
Structuring this deal as debt instead of as equity also allows the San Francisco-based company to maintain a $3 billion valuation it reportedly received last fall. That means it needn’t reprice existing employee stock options, and gives it upside flexibility when recruiting new employees. Plus, Jawbone doesn’t take the kind of ‘falling unicorn’ PR hit that could cause potential customers to purchase from more stable vendors.
This flies in the face of standard corporate finance theory. Franco Modigliani and Merton Miller both won Nobel prizes in economics for arguing that the underlying value of a company doesn’t depend on its capital structure. Read more
A Macquarie update, on their previous free floats and nutty Chinese markets work, has landed. With our emphasis:
Margin positions in the Chinese equities market have continued to rise in the past month, since we wrote our first Twilight Zone note on April 20. Since then, margin positions have risen by 9.2% MoM to RMB1.9 trillion, or an unprecedented 8.9% of the market capitalization of the combined free float of Shanghai-Shenzhen stock markets. This could already be the highest level of margins vs free float in market history…
We’ll share this prime piece of pre-nuttiness, if only for those who don’t know what “AOL” is or was.
DULLES, VIRGINIA and NEW YORK, NEW YORK January 10, 2000 – America Online, Inc. [NYSE:AOL] and Time Warner Inc. [NYSE:TWX] today announced a strategic merger of equals to create the world’s first fully integrated media and communications company for the Internet Century in an all-stock combination valued at $350 billion. Read more
It took 102 trading days for 10-year Bund yields to rally from 68bp to their all-time low of 7bp on April 20th.
It took just 15 days after that to jump back to 68bp again.
That fact, and many more on our favourite nutty asset, European sovereign debt, via Bank of America’s credit strategists (with our emphasis):
In the volatility of the last week, the backdrop of negative yielding assets in Europe has changed significantly. Higher yields mean fewer negative yields. Chart 5 shows that the peak of negative yielding Eurozone government debt was just over €2.8tr at the end of March. But this has now declined to €2tr. In other words, Europe has “lost” almost €1tr of negative yielding assets in the last month.
Exclusive to All Newspapers
In the last few weeks, in common with all other financial media, we may have given the impression that inflation had died forever and that it was in some way entirely rational for an investor to purchase Austrian government bonds at €220 per €100 of value.
We may further have led readers to believe that Bund yields would never stop falling that there were, officially, no more sellers of bonds…
We now realise, in light of the past few day’s events, that this is bunkum and the market does, for the moment, in fact resemble a New York rooftop bar at closing time. Read more