Martin Franklin, a veteran of buyout vehicles, raised $550m by listing his latest blank-cheque company, Admiral Acquisition, in London on 22 September. The Spac features various features that diverge from the standard blank-cheque format, tweaks that are intended to inspire investor confidence. The $100m committed by Franklin and his fellow founders is likewise intended to boost the attractiveness of Admiral.
UK Prime Minister, Rishi Sunak, has said that he is considering following the US's lead by imposing new restrictions on domestic companies investing in critical industries in China. US President, Joe Biden, has been drawing up a plan to limit investments in key parts of the Chinese economy, which is yet to be announced. Sunak also mentioned that placing further export controls on China would also be discussed at the G7 gathering. Meanwhile, Sunak has backed away from his promise to ban Confucius Institutes from operating in Britain in an attempt to improve UK-China relations.
Asian investors are eyeing several significant economic indicators from Japan and Australia on Thursday, as well as an interest rate decision from the Philippines. However, the main hope for a rebound in Chinese markets could be the prospect of a US deal on the federal debt ceiling, which has boosted stocks and the dollar. The mettle of that claim may be tested, however, after the poorest set of Chinese economic indicators in over six months caused a 1% decline on Wednesday. Nonetheless, Japan is on a high after Q1 GDP growth outperformed expectations and the Nikkei rose over 30,000 points for the first time in 20 months.
Theranos founder Elizabeth Holmes will begin her 11-year, three-month prison sentence for defrauding investors from 30 May. US District Court judge for Northern California, Edward Davila, rejected an appeal by Holmes, who had hoped to evade the sentence. During her trial, prosecutors alleged she misrepresented the technology and finances of the blood-testing start-up, which attracted a valuation of $9bn. Holmes claimed her statements were accurate at the time and is challenging several of Davila’s rulings in her appeal. Holmes’s former colleague, Ramesh Balwani, is serving 12 years, 11 months for defrauding investors of Theranos.
A large amount of water is used in mining, making water stress a major threat to the industry as climate change affects precipitation and drought. The London Stock Exchange Group has examined the water stress risks endured by 10 large mining companies listed in North America, concluding that the largest company, integrated copper producer Southern Copper Corp, faced the highest risk from water stress. Canadian gold mining company Kinross, which owns and operates two gold and silver mines in Chile, was second most at-risk, with Freeport-McMoRan, which is evaluating feasibility for a copper mine in a joint venture with a Chilean company third.
Theranos founder Elizabeth Holmes will begin serving her prison sentence on May 30 for defrauding investors in the failed blood-testing startup once valued at $9 billion. US District Judge Edward Davila set the date on Wednesday for Holmes, 39, to begin serving 11 years and three months in prison. Holmes rose to fame after claiming Theranos' small machines could run an array of diagnostic tests with just a few drops of blood.
Indian shares are poised to open higher today on the back of renewed optimism over progress in US debt ceiling negotiations. Indian equities have enjoyed a positive performance this week amid sustained foreign buying of domestic equities, the longest daily buying streak since December 2020. There are several notable quarterly earnings reports from companies including State Bank of India, ITC, GAIL (India) and Interglobe Aviation scheduled for release today.
Oil prices saw a slight decline over worries of increasing supply, with Brent crude futures dropping by 24 cents to $76.72 a barrel, and US West Texas Intermediate crude dipping 21 cents to $72.62. While both benchmarks showed a near 3% rise on Wednesday in relation to optimism over US debt ceiling negotiations and oil, US oil inventories rose by five million barrels to 467.6 million barrels last week due to another release from the Strategic Petroleum Reserve. However, US gasoline inventories fell as demand increased to its highest since 2021. Price concerns also revolve around US debt ceiling negotiations.
Lack of co-operation stymies investigation into B.C. mortgage broker and missing $225M, court hears
CBC
23-05-18 00:35
Efforts to find the missing millions that mortgage broker, Greg Martel, from Victoria owes to investors has come to a standstill. Martel, who has been accused of running investment business My Mortgage Auction Corp (MMAC), also known as Shop Your Own Mortgage, like a Ponzi scheme, has ignored communication from investigator, PricewaterhouseCoopers (PwC). PwC states that Martel has failed to produce the financial documents and a sworn list of assets, which led to serious concerns about his conduct, including an attempt to move assets from one American bank to another to prevent them from being discovered in the scope of the court order.
Column: Investors favor Japan's rising sun over China's fading star: McGeever
Reuters
23-05-18 00:21
Bank of America's latest surveys, reissued Wednesday, shows investors both in favour of Japanese equities and selling off Chinese assets amid changing economic fortunes for both countries. While Japanese stocks are now at levels not seen for over 30 years, Chinese assets - particularly bonds - are falling out of favour among investors as the country's economic growth slows.
Chinese bond funds are closing their doors or rejecting new subscriptions to limit inflows into the nation’s $14.3tn debt market, according to data by China Securities Journal. About 60 bond funds have made this move this month to limit inflows into a market where yields have experienced a quick decline, making allocations more challenging. The move throws the spotlight on the challenges facing China’s fund managers, whose task of positioning money becomes more difficult as the country’s economic recovery loses momentum.
Accountancy firm EY recently highlighted the potential “risk of bias or fraud” at British tech firm THG in its auditing report. EY said it identified risks in THG's service and hosting divisions, because revenue recognition is difficult to track. All THG unit revenue is second in size to revenue from "third party e-commerce solution" THG Ingenuity, which caters to the £277bn addressable market of "e-commerce supplier to other retailers". THG has not met expectations since its flotation at £5.4bn valuation in 2020 and its market capitalisation stood at under £800m at the time of writing.
Investors should follow Warren Buffett's value investing strategy, according to the Questor column in The Telegraph. The strategy involves purchasing stocks for less than their intrinsic value and focusing on companies that have wide economic moats. Questor suggests that investors should avoid buying "story stocks" and instead mimic Buffett's approach for the best results. One investment trust that follows a value investing approach is Temple Bar, whose strategy is centred on short-term market fluctuations, purchasing temporarily undervalued stocks and avoiding companies that offer scant investment potential. The trust has posted impressive returns over recent years. Despite this, it continues to trade at a 6% discount to net asset value, suggesting that it offers good value for money. The trust's dividend yield is currently in excess of 4.1%, slightly above the FTSE 100's income return of 3.9%.
Private airline VistaJet has a $4.4bn debt pile, according to Dan McCrum's deep dive, which looks at the firm's unusual relationship with Bombardier and its founder's aircraft trading activity. Thomas Flohr has spent 19 years building VistaJet into an exclusive club for the wealthy traveller, selling "Jet Cards" that enable passengers to travel in one of its 18 silver Global 7500 business jets. This compares with market leader NetJets which sells fractional ownership. Despite being loss-making, VistaJet's strategy has been supported by leasing firms, bond markets, and the Canadian government as lenders. In addition, the firm was handed a payday by its owner, Flohr. In 2015, he acted as a middleman between Bombardier and VistaJet, ordering 18 Global 7500 jets from his own company, and effectively earning a fee for broker services. Bondholders' documents reveal the group paid $1.1bn to Bombardier and about $224m to Flohr. Despite being warned in EY's opinion on the 2022 accounts, that "there may exist a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern", Flohr told the FT that his stakeholders were happy with VistaJet's financial performance.
Emerging market (EM) stocks are trading at a discount in comparison to developed world equities, with the spread of price/book multiples indicating EM is cheaper compared to developed markets than at any other point this century. Indications are that it is time to rethink how investors approach EM investing, particularly in respect of indexing which looks at market cap.
Indexing can be a challenge in many emerging markets since the larger companies are often formerly state-controlled, monopolies, in utilities or banking–and while they may be the largest companies, their growth prospects aren’t thought to be exciting, so it makes little sense to direct investment there.
In China, it seems that after a four-year rally in consumer tech stocks, Chinese state-owned enterprises (SOEs) have led the markets following a government clampdown. The crackdown has created the opportunity to buy non-SOE companies while they are cheap.
The absence of tax-free shopping for tourists in the UK is making the country “less competitive” and helping Europe, Burberry CEO Jonathan Akeroyd has warned. Akeroyd said that an increasing number of visitors were opting for mainland Europe cities such as Barcelona, Milan and Paris, with “big surge[s]” in spending in those locations. Sales to tourists rose by 19% in the UK during the last three months of Burberry’s latest financial year, compared to strikingly higher increases elsewhere, such as the almost 43% figure recorded in Milan. A scheme which allowed non-EU visitors to gain VAT refunds on shopping receipts was ended following the Brexit referendum. Burberry’s results showed its revenue for the year to 1 April reaching £3bn ($3.8bn), a rise of £200m over the previous year, but its share price fell 5% in response to the figures.
Global venture capital funding for clean energy startups increased to $12.3bn last year, from $1.9bn in 2019, according to analysts Oliver Wyman. Battery, storage and renewable technology comprised two-thirds of last year's investments, while investors in North America made up 57% of the total, European investors contributed $3.5bn and Chinese investors contributed $1.2bn. Green subsidies in the US and Europe spurred the rise, and interest in clean tech investment is set to increase, according to industry insiders.
The risk of declining consumer and business investor confidence in China's recovered economy may lead to a downward spiral. China's uneven recovery so far has not lifted the domestic mood. Although the country's official growth target for this year is only 5%, the risk of a downward spiral arises as disappointment becomes apparent, compounded by rising jobless rates, weak links, and geopolitical tensions. Easing monetary policy more straightforwardly remains an option for China, although the government may not prioritize this immediately, as the official growth target is unambitious.
Western Alliance Bancorporation’s announcement that its deposit levels are continuing to recover has sparked a rally in bank shares. While regional bank indices remain down 25% since March, it is believed that the banking crisis is now in its acute phase, at the very least. Meanwhile, volatility is missing in the markets, with the S&P 500 where it was 45 days ago. The lack of significant price movement of late is down to four counteractive forces, according to Citi trading strategist Stuart Kaiser. On the one hand, funds have offloaded risk and investors are sitting on a lot of cash. Other investors have bought protection and systematic funds which buy when volatility is low are entering the market. However, these are countered by reasons including the fact that equities need more upside now than before, stock valuations are less than desirable and that risks to growth and corporate earning are ever-present.
Sony says it is considering spinning off and relisting shares of its financial services arm to boost investments in its entertainment business. Shares of Sony rose 6.4% on news of the potential split, which would allow the company the ability to invest in entertainment and image sensors at a new level while retaining a 20% stake in the unit. The IPO would be in line with the company's recent expansion of acquisitions in the entertainment business. Now with growing hopes of higher governance standards in Japan and expectations for larger share buybacks, Sony may be on track to fund aggressive merger and acquisition activity without incurring significant taxes by breaking up and selling its financial unit via IPO. Sony is expected to retain a stake of about 20% in order for the deal to go through.
