Return of bundled debt deals raises crisis re-run fears

November 27, 2013 9:06 am

Return of bundled debt deals raises crisis re-run fears

By Tracy Alloway in New York

The Adams Express Building in lower Manhattan has a colourful history that includes a first world war explosion and the discovery of basement-dwelling goldfish. Perhaps of greater relevance to its Wall Street neighbours, the loan used to build the near century-old skyscraper was also one of the first to be bundled and securitised into a commercial real estate bond. Read more of this post

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

Hungry Americans Less Productive as Budget Cuts Deepen: Economy

Hungry Americans Less Productive as Budget Cuts Deepen: Economy

Olivia Solis asks herself the same two questions every morning: “How’s rent going to be paid? What meal are we going to make with what food we do have?” The unemployed mother of three said answers were harder to find this month when the U.S. food-stamp program was trimmed. The worries also preoccupied her mechanic husband, Gumecindo, who would send texts from work with ideas on how they could make extra cash, including cleaning houses or helping people move. Read more of this post

Taper Isn’t Tightening as Bonds See No Rate Boost Until ’15

Taper Isn’t Tightening as Bonds See No Rate Boost Until ’15

The $11.7 trillion Treasury market is betting on history not repeating as the Federal Reserve moves closer to reducing its unprecedented stimulus. From futures to derivatives, traders don’t see the central bank raising its benchmark interest rate from a record low until nine months after policy makers end their monthly bond purchases of $85 billion, or late 2015. In September, when the Treasury market was tumbling in the midst of its worst year since 2009, the projected gap was two months, according to Barclays Plc. Read more of this post

Is the SEC’s New Enforcement Zeal for Real?

Is the SEC’s New Enforcement Zeal for Real?

Mary Jo White, the chairman of the Securities and Exchange Commission, has been on a charm offensive of late, hoping to prove that her agency is no longer the lap dog of Wall Street. It’s not an easy argument to make. Not only did White’s predecessor, Mary Schapiro, appear to let the inmates run the asylum by not aggressively bringing cases against the Wall Street bankers who caused the financial crisis, but White herself, for all the bravado, is also a product of the revolving door between Wall Street and Washington. Read more of this post

The Dirty Secret of Black Friday ‘Discounts’; How Retailers Concoct ‘Bargains’ for the Holidays and Beyond

The Dirty Secret of Black Friday ‘Discounts’

How Retailers Concoct ‘Bargains’ for the Holidays and Beyond

SUZANNE KAPNER

Updated Nov. 25, 2013 7:19 p.m. ET

With Black Friday approaching, we explain how retail discounts generally aren’t discounts at all — they are priced into it from the beginning. Suzanne Kapner reports on the News Hub. Photo: Getty Images.

When shoppers head out in search of Black Friday bargains this week, they won’t just be going to the mall, they’ll be witnessing retail theater. Stores will be pulling out the stops on deep discounts aimed at drawing customers into stores. But retail-industry veterans acknowledge that, in many cases, those bargains will be a carefully engineered illusion. Read more of this post

Israel’s corporate pyramid problem threatens to get uglier

Israel’s corporate pyramid problem threatens to get uglier

As the Knesset prepares to vote limits on tiered corporate structures, the two bidders for the troubled IDB group are proposing the biggest pyramids Israel has ever seen.

By Ido Baum | Nov. 25, 2013 | 5:01 AM

As the Knesset readies the final stages of legislation to limit the phenomenon of business pyramids, a Tel Aviv court is being asked to approve the country’s biggest pyramid ever: Nochi Dankner’s IDB group. Two groups remain in the battle to take control and rescue the financially troubled conglomerate, but the structures being proposed are problematic, particularly given that IDB is already the country’s largest corporate pyramid. Read more of this post

What the Convertible Debt Boom Means for Bankruptcy

NOVEMBER 25, 2013, 10:28 AM

What the Convertible Debt Boom Means for Bankruptcy

By STEPHEN J. LUBBEN

So the word is that convertible debt issuance is at a record high. On one level, that is totally predictable. In an environment where bond prices are going down and stock prices are going up, the option to bail out of the debt and jump into equity has a lot of intuitive appeal. Just don’t think too long about the somewhat shaky nature of many of the companies that issue convertible debt. Read more of this post

Wal-Mart to Microsoft Shifts Show CEO Change Fastest Since ’08

Wal-Mart to Microsoft Shifts Show CEO Change Fastest Since ’08

U.S. corporations are switching chief executive officers at the fastest pace in five years as companies from Wal-Mart Stores Inc. (WMT) to Microsoft Corp. (MSFT) grapple with shifting customer tastes, competition from upstarts and restive shareholders. This year, through the third quarter, 43 companies in the Standard & Poor’s 500 Index were working under new CEOs, according to executive recruiter Spencer Stuart. That suggests 2013 will surpass the 49 of 2011, the biggest for turnover since 2008. Wal-Mart joined those ranks yesterday, saying Doug McMillon, head of its international business, will replace Mike Duke in February. Read more of this post

Najib: It’s either GST or facing bankruptcy

Najib: It’s either GST or facing bankruptcy

Monday, November 25, 2013 – 09:13

The Star/Asia News Network

KUALA LUMPUR – Malaysia has a stark choice of either increasing government revenue via the goods and services tax (GST) or burdening the country by borrowing more money. Prime Minister Datuk Seri Najib Tun Razak said the implementation of GST was necessary as the country risked becoming bankrupt like Greece if it resorted to borrowing. Read more of this post

New framework to let Chinese firms list directly in Singapore

New framework to let Chinese firms list directly in Singapore

SINGAPORE — The Singapore Exchange (SGX) and China Securities Regulatory Commission (CSRC) have set up a new framework that will allow companies on the mainland to list directly in Singapore, in a move that could potentially make the Republic a more accessible capital market and improve ease of regulatory oversight.

BY WONG WEI HAN –

6 HOURS 1 MIN AGO

SINGAPORE — The Singapore Exchange (SGX) and China Securities Regulatory Commission (CSRC) have set up a new framework that will allow companies on the mainland to list directly in Singapore, in a move that could potentially make the Republic a more accessible capital market and improve ease of regulatory oversight. Read more of this post

In Myanmar, Newly Free Media Struggle to Turn a Profit

November 25, 2013

In Myanmar, Newly Free Media Struggle to Turn a Profit

By THOMAS FULLER

YANGON, Myanmar — Myanmar’s journalists celebrated this year when the government lifted a five-decade ban on private newspapers. But six months after a dozen dailies rushed into production, journalists who had withstood the wrath and cruelty of a military dictatorship are struggling against something much more mundane: market forces.  Read more of this post

More Singaporeans succumbing to money mule temptation

More Singaporeans succumbing to money mule temptation

Monday, Nov 25, 2013

Siow Li Sen

The Business Times

THERE has been a spike in the number of Singaporeans acting as money mules, that is, individuals who let their bank accounts be used to receive ill-gotten funds. The police have received a number of reports in which overseas banks have asked for their customers’ funds to be recalled on the grounds that the remittances were fraudulent. And it is a matter of urgency for these overseas banks, because most of these funds are moved out of Singapore on the same day. Read more of this post

Thai $2.96b rice bond may struggle, risk of further payment delays

Thai $2.96b rice bond may struggle, risk of further payment delays

Monday, November 25, 2013 – 18:35

Reuters

BANGKOK – Thailand may struggle to sell a 75 billion baht (S$2.96 billion) bond to fund its rice intervention scheme, fund managers said on Monday, risking further delays on payments to farmers. The state Bank of Agriculture and Agricultural Cooperatives (BAAC) needs money from the bond, its biggest ever, to pay farmers for rice bought at above market prices in a subsidy scheme that has cost the government 680 billion baht so far. Read more of this post

URA acts to curb use of ‘SoHo’ by developers

PUBLISHED NOVEMBER 26, 2013

URA acts to curb use of ‘SoHo’ by developers

It says they should clarify approved use of a development

MINDY TAN TANMINDY@SPH.COM.SG

The Urban Redevelopment Authority (URA) is clamping down on the use of the term “small office home office” (SoHo) for commercial and residential units, as the man on the street may be led to think that such units can be used as homes and offices – whether concurrently or interchangeably – PHOTO: FAR EAST ORGANIZATION

[SINGAPORE] The Urban Redevelopment Authority (URA) is clamping down on the use of the term “small office home office” (SoHo) for commercial and residential units, as the man on the street may be led to think that such units can be used as homes and offices – whether concurrently or interchangeably. Read more of this post

Tokyo Beating Paris Property Lifts REIT Bond Sales: Japan Credit

Tokyo Beating Paris Property Lifts REIT Bond Sales: Japan Credit

The strongest bond sales in three years by real estate investment trusts are showing confidence in the property revival sparked by Prime Minister Shinzo Abe. REIT sales jumped 33 percent this year to 95.8 billion yen ($944 million), outpacing the 5.9 percent increase in Japanese corporate issuance and the 2.2 percent climb for that in the U.S., according to data compiled by Bloomberg. Japan Excellent Inc. (8987), whose properties house units of Toshiba Corp. and Fujitsu Ltd., raised 5 billion yen of 0.46 percent debt last week due 2018 at a 5 basis point yield premium over the yen swap rate, down from the 48 it paid in 2011. Read more of this post

Prologis to Boost Japan Rents, Buy Warehouses on Abenomics Bonus

Prologis to Boost Japan Rents, Buy Warehouses on Abenomics Bonus

Prologis Inc. (PLD), the world’s biggest warehouse owner, plans to increase rents and spend as much as $600 million a year to develop warehouses in Japan as Prime Minister Shinzo Abe’s policies boost corporate confidence. The company expects rents to rise about 3 percent annually “for a while” and will invest $500 million to $600 million a year in warehouses, said Hamid Moghadam, chairman and chief executive officer of San Francisco-based Prologis. That compares with the the average annual investment of $400 million to $600 million historically, he said. Read more of this post

52 South Koreans in their 30s and 40s owned over 100 billion won ($94.2 million) in equity, and only nine of them were self-made entrepreneurs

52 S. Koreans in 30s, 40s own over $94mn in equity

2013.11.25 15:04:50

52 South Koreans in their 30s and 40s owned over 100 billion won ($94.2 million) in equity, and only nine of them were self-made entrepreneurs, according to an analysis. Hyundai Motor vice chairman Chung Eui-sun, who owns 3.5 trillion won worth of equity, was ranked as the richest among those in their 30s and 40s in terms of equity holdings.  Read more of this post

Anti-chaebol regulations backfire

2013-11-25 18:03

Anti-chaebol regulations backfire

Brioche Doree, Dufry allowed ‘unintedned’ way into Korean market
By Yi Whan-woo
A growing number of foreign companies are entering the Korean market by taking advantage of loopholes in regulations introduced to prevent sprawling expansion of large firms and to nurture small- and medium-sized enterprises (SMEs) The National Commission for Corporate Partnerships, a presidential committee, has restricted family-owned conglomerates and companies with more than 300 employees from expanding into several industries in which the government intends to foster SMEs.
These industries include bakeries, restaurants, coffee shop franchises, duty free shops, catering, stationeries, car rentals and IT services. Read more of this post