Fears Rise as China’s Yields Soar

Fears Rise as China’s Yields Soar

SHEN HONG

Nov. 25, 2013 1:31 p.m. ET

SHANGHAI—Yields on Chinese government debt have soared to their highest levels in nearly nine years amid Beijing’s relentless drive to tighten the monetary spigots in the world’s second-largest economy. The higher yields on government debt have pushed up borrowing costs broadly, creating obstacles for companies and government agencies looking to tap bond markets. Several Chinese development banks, which have mandates to encourage growth through targeted investments, have had to either scale back borrowing plans or postpone bond sales. Read more of this post

Global airlines brought in $27 billion in nonticket revenue last year, an 11-fold increase over 2007

Thriftiest Fliers Outwit Fee-Hungry Airlines

Travelers Pack Special-Sized Bags, Use Other Tricks to Avoid Extra Charges

JACK NICAS

Updated Nov. 25, 2013 5:28 p.m. ET

The airline industry’s increasing reliance on extra fees is spawning a sort of arms race between discount carriers and their thriftiest customers to outsmart each other. Global airlines brought in $27 billion in nonticket revenue last year, an 11-fold increase over 2007, according to airline-consulting firm IdeaWorks Co. Nonticket revenue includes fees for extras, as well as sales of frequent-flier points, hotel rooms and rental cars, among other things. Read more of this post

A Debate Over Paying Board Nominees of Activist Funds

NOVEMBER 25, 2013, 9:24 PM

A Debate Over Paying Board Nominees of Activist Funds

By DAVID GELLES

When executives serve on a company’s board, they are often handsomely compensated. But as activist hedge funds continue to get more of their preferred candidates on the boards of companies, some of the hedge funds are angling for certain directors to be paid twice: once by the company, and once by the hedge funds that supported their candidacy. Read more of this post

Glee Gets as Little Respect as Gloom With Fed Driving Stocks

Glee Gets as Little Respect as Gloom With Fed Driving Stocks

Craig Hodges, who runs one of the best-performing U.S. mutual funds, is preparing for the next leg of America’s almost five-year-old bull market. After his holdings of Yelp Inc. and Pandora Media Inc. doubled earlier this year, the 50-year-old manager is adding a new stock: Gogo Inc., an unprofitable provider of in-flight Wi-Fi that’s up 63 percent since its June public offering. Read more of this post

‘Golden Leash’ Payments Fuel Debate; Shareholders and Advisers Are Choosing Sides Over Activists Paying Bonuses to Board Members

‘Golden Leash’ Payments Fuel Debate

Shareholders and Advisers Are Choosing Sides Over Activists Paying Bonuses to Board Members

DAVID BENOIT and JOANN S. LUBLIN

Updated Nov. 25, 2013 6:36 p.m. ET

A shareholder vote Tuesday in California for board members of a small, local bank is emerging as a test case for one of the hottest topics in corporate governance: whether activist investors should be able to pay bonuses to their picks for board seats. After approving a new corporate bylaw that would bar such investor-paid bonuses, three directors at Provident Financial Holdings Inc. PROV +0.28% have found themselves in the middle of the debate and are facing a call for them be voted out. Activists say the payments reward directors for helping increase shares’ value, which benefits all company investors. Critics have dubbed the issue the “golden leash,” referring to some activists’ aim to offer bonus payments over time to board members they help install at a company. Lawyers for companies have argued that such deals can compromise directors’ independence by tying them to specific shareholders, when they have a duty to all stockholders. Read more of this post

Beermaker Efes No Match for Putin Faces Downgrade: Turkey Credit

Beermaker Efes No Match for Putin Faces Downgrade: Turkey Credit

Turkey’s biggest brewer risks losing an investment-grade rating as government officials at home and in Russia, its two largest markets, clamp down on alcohol sales and consumption. The yield on Anadolu Efes Biracilik & Malt Sanayii AS (AEFES) dollar bond due November 2022 surged 57 basis points in the past month to 5.79 percent on Nov. 22 amid alcohol restrictions in Turkey and as the company said Nov. 14 that it will stop brewing beer in Moscow from Jan. 1. That compares with an 11 basis-point gain in JPMorgan Chase & Co’s CEMBI Consumer Index. Read more of this post

Hedge-Fund Fight Club Traded Illegal Tips Not Punches

Hedge-Fund Fight Club Traded Illegal Tips Not Punches

The hedge-fund analysts vacationed together in the Hamptons, gambled in Las Vegas and adopted a creed that parodied the rules in the Brad Pitt film “Fight Club.” Instead of trading punches, they traded illegal tips that allowed their portfolio managers to reap tens of millions of dollars in profit. Having pleaded guilty to insider trading, four of the men are now set to be witnesses against SAC Capital Advisors LP fund manager Michael Steinberg. Ex-SAC analyst Jon Horvath could take the stand as early as today in Manhattan federal court against his former boss after ex-Diamondback Capital Management LLC analyst Jesse Tortora concludes his testimony. Read more of this post

Broking faces change from ‘unbundling’ effects; Broker research, meetings with corporates, IT and market data services are all bought by fund managers out of underlying client funds by bundling the payment into trading commissions

November 25, 2013 10:29 am

Comment: Broking faces change from ‘unbundling’ effects

By Richard Balarkas

The Financial Conduct Authority’s planned review of the practice of “bundled commission payments” was one of a series of recent announcements that hint at a concerted effort to “bootstrap” a UK financial services sector still mired in the aftermath of the financial crisis. It could yet have a profound effect on bank earnings. When a fund manager buys or sells stock on behalf of a client the commission paid to the broker comes from client assets. This is not in itself a problem as the cost of executing a trade is clear and will, through the settlement process, be attributed to the clients on whose behalf the trade was undertaken. Read more of this post

Plenty of signs of froth in equities

Last updated: November 25, 2013 9:14 pm

Plenty of signs of froth in equities

By James Mackintosh

Prepare for slower but still acceptable share gains

Equity markets move in cycles, from despair through disbelief to euphoria and back. One of the skills of the investor is to judge where in the cycle they are, and invest accordingly. At the moment, there are plenty of signs of froth. Perhaps the market is reaching the euphoria stage? Peter Oppenheimer, European equity strategist at Goldman Sachs, thinks not. He puts the region in the third phase of a four-stage cycle starting with despair, hope, then growth and finally optimism. Read more of this post

Policy makers must refresh SME approach; Clear vision needed, including proper plan to police non-banks

November 25, 2013 7:10 pm

Policy makers must refresh SME approach

By Patrick Jenkins

Clear vision needed, including proper plan to police non-banks

The ability of smaller businesses to secure bank loans – or, rather, their inability to do so – is back at the centre of the political agenda. As policy makers across the western world try desperately to fan the flickering flames of business recovery, attention has turned to the SMEs that underpin most economies, and why they are not investing more by borrowing more. Read more of this post