Citi’s Matt King has some harsh words for central bankers ahead of this week’s gathering in Jackson Hole, Wyoming: he says they’ve broken the market. King echoes a group of fund managers who say central banks’ stimulus efforts are distorting the way global markets function. The problem is this: with negative yields on $13 trillion of safe assets, investment managers are crowding into the shrinking group of investments with yield — or into securities they may be able to sell to central banks.
This state-owned thing is massive. China massive. Fifth largest bank in China by assets and largest by number of branches massive — 40,000 branches nationwide and “about 500 million clients or nearly half of China’s population” massive at that. Its plan is to IPO in September in Hong Kong…
PageGroup shows referendum jitters while Asos bucks the UK retail trend with strong sales and housebuilder Galliford Try expects postive results. FT Opening Quote is your early Square Mile briefing, with deputy companies editor Matthew Vincent. You can sign up for the full newsletter here.
UK retailers, with some exceptions, have had a rocky start to the day, but The City can take solace in musical metaphors for Brexit. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for a full newsletter here.
Amazon is getting fresh with a UK grocery delivery service, RPC is buying British Polythene, Glencore has made a $625m stake sale. 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.
It’s a theory at least, courtesy of a new Bernstein long read on the reported listing of 5 per cent of the state owned oil and gas giant by 2018. The final highlighted bit being the point, with the question being “why now?”: Often the simplest explanation is the most likely to be correct. With Saudi running a significant budget deficit, the listing of Aramco is one way to plug a gap in government finances. More broadly the listing of Aramco could be an example to other state owned firms, as Saudi reaches its ‘Thatcher’ moment in seeking to privatize state owned companies to increase efficiency as part of their plan to move beyond oil. The problem for oil markets is that privatized state companies tend to grow more quickly following privatization. Perhaps Aramco’s growth will be focused on refining and natural gas, but it is possible that Saudi have also realized that demand is likely to run out before supply and it makes more sense to deplete their own reserves ahead of others. While this is pure conjecture at this point, it could have bearish implications for oil markets. In the near term however, Saudi will not want to list Aramco at a low oil price. In the run up to 2018, we expect that Saudi will do everything in its power to ensure oil markets remain balanced and prices stable. This could be positive near term for oil equities. If that last theory is correct, it’s a solid end of the oil age gambit that is based in part on an eventual race to produce kicking in.
Once upon a time, going public was the pinnacle of achievement for a tech entrepreneur. This is no longer the case. Tech IPOs have taken a major hit and startups are staying private for longer. The US IPO market in general is experiencing the slowest year since the financial crisis, but it has been a particularly quiet year for tech IPOs, with only a few companies going public in the US.
People are usually told that knowledge equals power, but in business, knowledge — and a failure to disclose that knowledge — can be a dangerous thing that leaves you unemployed. That seems to be the story of what went wrong for Renaud Laplanche, the former chief executive of Lending Club, America’s largest online lender. He was reportedly not as forthcoming as the board would have liked on what he knew about the missold loans to Jefferies. Combined with his failure to properly disclose an interest in a fund which the company decided to invest in, it made his position untenable. Lending Club’s 10-Q filing on Monday now blames the “tone at the top” for the missold loans, which is also what Valeant’s board said after Mike Pearson was ousted. It also says that the board “did not have the information required to review and approve or disapprove investments” made by Laplanche and a board member — John Mack — in Cirrix Capital, a holding company for funds that invest in Lending Club loans.
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.
Every little sales increase helps Tesco, which is back in the black; McCormick has dropped its bid for Premier Foods; the FCA wants to shake up the IPO process. 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.
Markets run into inefficiencies for technical reasons all the time. But every now and then inefficiencies are purposefully engineered into markets, for profit. Financial market regulators are charged with policing shenanigans to keep markets fair and transparent. When caught, market manipulators are fined to discourage others from trying. But the remit of financial regulators only extends so far. They can’t, for example, influence the world of tangible goods, products and collectibles nearly as easily. This matters because negative interest rates are making investments in everything from super-cars to art and collectibles increasingly appealing. As speculators pile in, those markets are getting financialised, which increases the potential profit gained from obstructing the ordinary flow of operation.