Federal Reserve Approves New Measure for Big Banks
The U.S. Federal Reserve has announced new rules that would apply to the country's 8 largest banks, which hold over $10 trillion in loans and securities. The group includes Goldman Sachs, Citigroup and JPMorgan Chase, which may face an estimated $12.5 billion financial shortfall under the new measures. The new measures, which were proposed in December, will focus on a bank's capital, which will increase for the 8 banks as a means to ensure they are more resistant to economic and market shifts. Currently, international banking rules dictate the banks must have a capital equivalent to 7% of its assets. Under the new provisions, JPMorgan - the largest U.S. bank by assets, will have to hold 4.5% more.
Gold Falls Alongside Chinese Gold Reserve Estimates
Gold futures fell for an eighth straight session as data showed China's gold reserves to be at half of market expectation. The drop pushes gold prices to its lowest level in over 5 years. August gold fell 2.2% ($25.10) to $1,106.80 an ounce. Meanwhile, China has released an update on its gold reserves for the first time in 6 years, reflecting a total of 53.32 million troy ounces - up 57% since the end of April 2009. However, the figures were still lower than expectations, given China is the world' largest producer of gold. Other metal prices have also declined, with September silver down 0.5% (7.6 cents) to $14.758 an ounce and Octobert platinum dropping1.3% ($12.70) to &988.60 per ounce.
First Data Corporation Slated to Go Public
First Data Corporation, a credit card and payments processor, filed on Monday for an I.P.O., paving the way for private equity firm Kohlberg Kravis Roberts (K.K.R.) to sell its majority stake after buying the company for $29 billion 8 years ago. The deal was one of the last big leveraged buyouts before the financial crisis in 2008, and K.K.R. is finally looking to exit from one of the most debt-laden agreements in recent years. Currently, Renaissance Capital estimated First Data could raise $5 billion in its initial offering, as the company plans to the use proceeds from the stock sale to repay a portion of its $20 billion long-term debt. While First Data claims some 4,000 financial institutions as clients globally, and boasts a revenue of $11.1 billion, the company lost $265 million in 2014.
Toshiba Executives Quit Amid Earnings Scandal
Top executives at Japanese electronics firm Toshiba have stepped down amid an accounting scandal, which has forced the company to state it will correct earnings figures by at least 152 billion yen ($1.2 billion). According to a third party report, the firm's current and previous presidents Hisao Tanaka and Norio Sasaki sought to delay booking losses, requiring recalculations and earnings cuts from more than 6 years. The largest single earnings figure to be corrected is 85.8 billion yen of pretax profile in 2012; an internal probe also found inaccurate entries totaling 4.4 billion yen for that fiscal year. The company's stock has fallen 20% since the probe was first announced on May 8th.
Sources:
http://www.bloomberg.com/news/articles/2015-07-21/toshiba-to-correct-profit-after-executives-set-unrealistic-goals
http://www.marketwatch.com/story/big-fund-suspected-of-selling-gold-as-price-crashes-to-five-year-low-2015-07-20
http://www.nytimes.com/2015/07/21/business/dealbook/first-data-ipo-is-likely-to-be-one-of-years-largest.html
http://www.nytimes.com/2015/07/21/business/federal-reserve-finalizes-capital-restraints-for-big-banks.html
Monday, July 20, 2015
Thursday, July 9, 2015
U.S. Stock Futures, Commodities ETFs, NYC's Real Estate and P.&G. Selloff
U.S. Stock Futures and Euro Advances Following New Greek Proposal
U.S. stock futures and the euro gained after the Greek government announced a bailout proposal in the form of at least 53.5 billion euros ($59.2 billion) over 3 years. S&P 500 muni futures rose 1% to 2061.75 before settling up 0.9% at 2058.5. Meawhile, the euro advanced 0.2% to $1.1061 as the dollar moved up to $121.71 against the yen. The new Greek deal seeks to offer reforms and spending cuts through pension savings and tax increased - similar to the previous deal presented by the creditors on June 26th. However, analysts continue to monitor market health as they wait to see if stocks in Shanghai will recover.
Commodities ETFs Fall Through First Half of 2015
Metals and soft commodities have taken up 9 of the 10 Worst Performing ETFs list featured on ETF.com. The list includes ETFS Physical Palladium, down -15.92% as South African supplies recover from strikes in 2014; Teucrium Sugar down -20.12%; iPath Pure Beta Nickel ETN down -21.32% after Indonesia - once the largest supplier of nickel ore - banned exported of ore in 2014 in order to build up its own smelting and processing industry; iPath Pure Beta Coffee ETN down -26.18% as Brazil struggles to recover from last year's record drought. Lastly, the number 1 spot goes to the iPath Bloomberg Natural Gas Subindex Total Returns ETN, down -36.82%, as the ETN closes the gap on trading at premiums against its NAV in the past several years.
Real Estate Values Soar Near Manhattan
As Manhattan apartments reach record highs in price, homeowners move toward the outer boroughs for prospective sales. As a result, real estate values rise in areas outside Manhattan. The average price of a Queens condo jumped 20% over the past year, to $575, 229. Meanwhile, the Long Island City neighborhood has advanced 28% to an average price of $1.06 million. However, prices in Brooklyn rise 0.7% to $788,529, as the borough remains a popular alternative to the more expensive Manhattan. While 66% of apartment listings in Manhattan are listed at above $1 million, of 22% have breached this threshold in Brooklyn. Success of real estate markets have continued expanding in New York City. Properties in Brooklyn spend an average of 73 days on the market, 33% less than a year earlier.
Procter & Gamble Sells 43 Beauty Brands for $12.5 Billion
Consumer products firm Procter & Gamble has agreed to sell 43 beauty brands to beauty products manufacturer Coty for $12.5 billion. The deal includes products such as Gucci and Dolce & Gabbana perfumes, and VS Salonist hair products. It reflects P.&G.'s plan to remove over 100 brands and instead focus on a core product line, such as its Tide products. In November 2014, P.&G. struck an agreement with Bershire Hathaway to sell Duracell in a $4.7 billion stock deal. For the latest transaction, the selloff will be structured with a tax-efficient spinoff, in which the new entity will then merge with Coty. Following the announcement, Coty's shares closed down $1.48 (4.7% ) to $30.04, while P.&G. fell 33 cents (0.4%) to $80.66.
Sources:
http://www.bloomberg.com/news/articles/2015-07-09/greeks-under-gun-to-produce-a-reform-plan-to-keep-euro-ibwl1vjy
http://www.bloomberg.com/news/articles/2015-07-09/queens-condos-set-record-as-manhattan-buyers-priced-out
http://www.etf.com/sections/features-and-news/worst-10-commodity-etfs-2015?nopaging=1
http://www.nytimes.com/2015/07/10/business/dealbook/pg-sells-43-beauty-brands-to-coty.html
http://www.reuters.com/article/2015/07/10/us-markets-global-idUSKCN0PJ2ZW20150710
U.S. stock futures and the euro gained after the Greek government announced a bailout proposal in the form of at least 53.5 billion euros ($59.2 billion) over 3 years. S&P 500 muni futures rose 1% to 2061.75 before settling up 0.9% at 2058.5. Meawhile, the euro advanced 0.2% to $1.1061 as the dollar moved up to $121.71 against the yen. The new Greek deal seeks to offer reforms and spending cuts through pension savings and tax increased - similar to the previous deal presented by the creditors on June 26th. However, analysts continue to monitor market health as they wait to see if stocks in Shanghai will recover.
Commodities ETFs Fall Through First Half of 2015
Metals and soft commodities have taken up 9 of the 10 Worst Performing ETFs list featured on ETF.com. The list includes ETFS Physical Palladium, down -15.92% as South African supplies recover from strikes in 2014; Teucrium Sugar down -20.12%; iPath Pure Beta Nickel ETN down -21.32% after Indonesia - once the largest supplier of nickel ore - banned exported of ore in 2014 in order to build up its own smelting and processing industry; iPath Pure Beta Coffee ETN down -26.18% as Brazil struggles to recover from last year's record drought. Lastly, the number 1 spot goes to the iPath Bloomberg Natural Gas Subindex Total Returns ETN, down -36.82%, as the ETN closes the gap on trading at premiums against its NAV in the past several years.
Real Estate Values Soar Near Manhattan
As Manhattan apartments reach record highs in price, homeowners move toward the outer boroughs for prospective sales. As a result, real estate values rise in areas outside Manhattan. The average price of a Queens condo jumped 20% over the past year, to $575, 229. Meanwhile, the Long Island City neighborhood has advanced 28% to an average price of $1.06 million. However, prices in Brooklyn rise 0.7% to $788,529, as the borough remains a popular alternative to the more expensive Manhattan. While 66% of apartment listings in Manhattan are listed at above $1 million, of 22% have breached this threshold in Brooklyn. Success of real estate markets have continued expanding in New York City. Properties in Brooklyn spend an average of 73 days on the market, 33% less than a year earlier.
Procter & Gamble Sells 43 Beauty Brands for $12.5 Billion
Consumer products firm Procter & Gamble has agreed to sell 43 beauty brands to beauty products manufacturer Coty for $12.5 billion. The deal includes products such as Gucci and Dolce & Gabbana perfumes, and VS Salonist hair products. It reflects P.&G.'s plan to remove over 100 brands and instead focus on a core product line, such as its Tide products. In November 2014, P.&G. struck an agreement with Bershire Hathaway to sell Duracell in a $4.7 billion stock deal. For the latest transaction, the selloff will be structured with a tax-efficient spinoff, in which the new entity will then merge with Coty. Following the announcement, Coty's shares closed down $1.48 (4.7% ) to $30.04, while P.&G. fell 33 cents (0.4%) to $80.66.
Sources:
http://www.bloomberg.com/news/articles/2015-07-09/greeks-under-gun-to-produce-a-reform-plan-to-keep-euro-ibwl1vjy
http://www.bloomberg.com/news/articles/2015-07-09/queens-condos-set-record-as-manhattan-buyers-priced-out
http://www.etf.com/sections/features-and-news/worst-10-commodity-etfs-2015?nopaging=1
http://www.nytimes.com/2015/07/10/business/dealbook/pg-sells-43-beauty-brands-to-coty.html
http://www.reuters.com/article/2015/07/10/us-markets-global-idUSKCN0PJ2ZW20150710
Wednesday, July 8, 2015
NYSE Glitch, Private Equity Funds, Oil Futures and Microsoft's Nokia
NYSE Glitch Not A Showstopper for Market Activity
Despite over 3 hours of trading suspension on the New York Stock Exchange (NYSE) due to a software bug today, markets proved to be resilient and was not significantly impacted. For example, investors were still able to trade I.B.M. or Target shares, which are listed on the NYSE. The lack of impact shows the growing complexity of the U.S. stock market and thus its ability to become robust. Part of this is attributed to the increasing number of private stock trading platforms - dark pools - which allow investors to trade without affecting the broader markets. Dark pools now make up 40% of all stock trading volume. The fragmentation of markets is also a factor; today, NYSE and Nasdaq account for 24% and 19% of the volume, respectively. In contrast, the 2 exchanges handled 80% in 1997.
Private Equity Firm K.K.R. Raises $3.1 Billion for Infrastructure Investments
Kohlberg Kravis Roberts stated that it has raised $3.1 billion for a new fund to invest in infrastructure projects, such as roads, water systems and energy pipelines. The announcement reflects growing interest of private equity firms toward infrastructure improvement, as it can offer steady cashflows for multiple years. Despite political opposition and lack of funds by local governments for such projects, the investment companies have taken part on less visible projects such as renewable energy plants. This new fund is the second to K.K.R. to be focused on infrastructure; the firm raised $1 billion in 2012.
Oil Futures Decline By Over 1%
Despite over 3 hours of trading suspension on the New York Stock Exchange (NYSE) due to a software bug today, markets proved to be resilient and was not significantly impacted. For example, investors were still able to trade I.B.M. or Target shares, which are listed on the NYSE. The lack of impact shows the growing complexity of the U.S. stock market and thus its ability to become robust. Part of this is attributed to the increasing number of private stock trading platforms - dark pools - which allow investors to trade without affecting the broader markets. Dark pools now make up 40% of all stock trading volume. The fragmentation of markets is also a factor; today, NYSE and Nasdaq account for 24% and 19% of the volume, respectively. In contrast, the 2 exchanges handled 80% in 1997.
Private Equity Firm K.K.R. Raises $3.1 Billion for Infrastructure Investments
Kohlberg Kravis Roberts stated that it has raised $3.1 billion for a new fund to invest in infrastructure projects, such as roads, water systems and energy pipelines. The announcement reflects growing interest of private equity firms toward infrastructure improvement, as it can offer steady cashflows for multiple years. Despite political opposition and lack of funds by local governments for such projects, the investment companies have taken part on less visible projects such as renewable energy plants. This new fund is the second to K.K.R. to be focused on infrastructure; the firm raised $1 billion in 2012.
Oil Futures Decline By Over 1%
Crude futures in the U.S. fell over 1% on Wednesday as the U.S. Energy Information Administration announced that stockpiles had increased for crude, gasoline and distillates. The statement surprised investors, who were expecting oil inventories to decrease. The news adds to current worries on Greek debt, possibility of Iran to re-enter the oil market, and China's equity plunge, all of which has had a negative impact on the commodity. Earlier in the week, oil prices had fallen to a 3-month low. However, as crude fell, gasoline rallied due to expectations for high fuel demand through the summer driving season.
Microsoft Writes Off Nokia a $7.6 Billion
Software giant Microsoft has decided to write off its acquisition of Nokia, a $9.5 billion deal made by the previous CEO Steve Ballmer. The agreement had included $1.5 billion of acquired cash and $2 billion to license Nokia's patents. However, Microsoft has deemed the acquirement a failure, as 7,800 personnel are being laid off along with the write-off. Microsoft's write-downs for M&A deals now total at about $14 billion over the past 3 years, including $6.3 billion for digital advertising agency aQuantive. Nevertheless, current CEO Satya Nadella has also followed Ballmer's footsteps to acquire external growth, as he spent over $2 billion on Minecraft maker Mojang last year.
Sources:
http://blogs.reuters.com/breakingviews/2015/07/08/microsoft-gets-7-6-bln-wakeup-call-from-nokia/
http://www.nytimes.com/2015/07/09/business/dealbook/an-offline-nyse-makes-barely-a-ripple-in-a-days-trading.html
http://www.nytimes.com/2015/07/09/business/dealbook/kkr-raises-3-1-billion-to-invest-in-road-and-other-infrastructure-projects.html
http://www.nytimes.com/2015/07/09/business/dealbook/an-offline-nyse-makes-barely-a-ripple-in-a-days-trading.html
http://www.nytimes.com/2015/07/09/business/dealbook/kkr-raises-3-1-billion-to-invest-in-road-and-other-infrastructure-projects.html
Tuesday, July 7, 2015
Chinese Trade Halts, BRICS' Reserve, Horizon's Offer, and Financial Scams
Chinese Firms Halt Trading
About 745 Chinese companies - comprising 26% of firms listed on mainland Chinese exchanges - have suspended trading in response to the recent selloffs that have caused market downfalls in the country. The suspensions halt movement of $1.4 trillion of shares, representing 21% of China's market capitalization. Meanwhile, the Shanghai Composite Index has already fallen 28% since its June 12 peak value. The rout has always erased $3.2 billion in China's markets, equivalent to twice the size of India's entire stock market. Companies such as Searainbow Holding Corp. in Shenzhen has lost 54% in the past 3 weeks, after rising 150% in the year thru June 11.
Russia Contributes $18 Billion to BRICS Reserves Pool
The central banks of Brazil, Russia, India, China and South Africa (BRICS) have signed an agreement on Tuesday to create a reserve pool to provide source of liquidity for the member nations in times of trouble. Worth $100 billion (the fund is denominated in U.S. dollars), China will contribute $41 billion, while B, I and R will provide $18 billion, and South Africa $5 billion. Elvira Nabiullina, governor of Russia's central bank, has stated that the contribution will not reduce the country's official reserves, as the amount comes from Russia's gold and forex reserves. As of end of June, Russia's gold and forex pools stood at $362 billion.
Horizon Pharma Makes Offer of $3 Billion to Depomed
Irish drug maker Horizon Pharma announced it had made an offer to acquire American manufacturer company Depomed for $3 billion, all in shares. While Depomed has so far rejected the proposal, which is valued at $29.25 per share, 42% above Depomed's closing mark of $20.64 on Monday. Horizon Pharma had previously acquired Vidara Therapeutics International for $660 million and California-based Hyperion Therapeutics for $1.1 billion. The mergers reflect current trends in the health care sector, as pharmaceutical companies look to increase strategic and financial value.
London Hedge Fund Lost $1.2 Million in Phone Scam
Hedge fund Fortelus Capital Management LLP lost 742,668 pounds ($1.2 million) after its CFO, Thomas Meston, was conned into providing securities code to who he thought was Coutts, the fund's bank. The scam happened on a Friday afternoon phone call, when Meston was warned of fraudulent activity on the fund's account. Meston has since been fired by the firm and sued by Fortelus for breaching his responsibilities. The event highlights the vulnerability of online security systems, as the Bank of England noted that cyber crime was growing threat to the financial industry. Similar cases have cropped up, as with Zurich Insurance Group AG, where fraud caused a loss of 5 million pounds over 3 months.
Sources:
http://www.bloomberg.com/news/articles/2015-07-07/chinese-trading-halts-freeze-1-4-trillion-of-shares-amid-rout
http://www.bloomberg.com/news/articles/2015-07-07/friday-afternoon-scam-cost-hedge-fund-1-2-million-and-cfo-s-job
http://www.nytimes.com/2015/07/08/business/dealbook/horizon-pharma-offers-to-buy-depomed-for-3-billion.html
http://www.reuters.com/article/2015/07/07/us-emerging-brics-russia-cenbank-idUSKCN0PH1L820150707
About 745 Chinese companies - comprising 26% of firms listed on mainland Chinese exchanges - have suspended trading in response to the recent selloffs that have caused market downfalls in the country. The suspensions halt movement of $1.4 trillion of shares, representing 21% of China's market capitalization. Meanwhile, the Shanghai Composite Index has already fallen 28% since its June 12 peak value. The rout has always erased $3.2 billion in China's markets, equivalent to twice the size of India's entire stock market. Companies such as Searainbow Holding Corp. in Shenzhen has lost 54% in the past 3 weeks, after rising 150% in the year thru June 11.
Russia Contributes $18 Billion to BRICS Reserves Pool
The central banks of Brazil, Russia, India, China and South Africa (BRICS) have signed an agreement on Tuesday to create a reserve pool to provide source of liquidity for the member nations in times of trouble. Worth $100 billion (the fund is denominated in U.S. dollars), China will contribute $41 billion, while B, I and R will provide $18 billion, and South Africa $5 billion. Elvira Nabiullina, governor of Russia's central bank, has stated that the contribution will not reduce the country's official reserves, as the amount comes from Russia's gold and forex reserves. As of end of June, Russia's gold and forex pools stood at $362 billion.
Horizon Pharma Makes Offer of $3 Billion to Depomed
Irish drug maker Horizon Pharma announced it had made an offer to acquire American manufacturer company Depomed for $3 billion, all in shares. While Depomed has so far rejected the proposal, which is valued at $29.25 per share, 42% above Depomed's closing mark of $20.64 on Monday. Horizon Pharma had previously acquired Vidara Therapeutics International for $660 million and California-based Hyperion Therapeutics for $1.1 billion. The mergers reflect current trends in the health care sector, as pharmaceutical companies look to increase strategic and financial value.
London Hedge Fund Lost $1.2 Million in Phone Scam
Hedge fund Fortelus Capital Management LLP lost 742,668 pounds ($1.2 million) after its CFO, Thomas Meston, was conned into providing securities code to who he thought was Coutts, the fund's bank. The scam happened on a Friday afternoon phone call, when Meston was warned of fraudulent activity on the fund's account. Meston has since been fired by the firm and sued by Fortelus for breaching his responsibilities. The event highlights the vulnerability of online security systems, as the Bank of England noted that cyber crime was growing threat to the financial industry. Similar cases have cropped up, as with Zurich Insurance Group AG, where fraud caused a loss of 5 million pounds over 3 months.
Sources:
http://www.bloomberg.com/news/articles/2015-07-07/chinese-trading-halts-freeze-1-4-trillion-of-shares-amid-rout
http://www.bloomberg.com/news/articles/2015-07-07/friday-afternoon-scam-cost-hedge-fund-1-2-million-and-cfo-s-job
http://www.nytimes.com/2015/07/08/business/dealbook/horizon-pharma-offers-to-buy-depomed-for-3-billion.html
http://www.reuters.com/article/2015/07/07/us-emerging-brics-russia-cenbank-idUSKCN0PH1L820150707
Monday, July 6, 2015
Largest Metro Economies, HK Stocks, Oil Futures and Warren Buffett's Donation
Analysis Determines Scope of Largest Cities to Impact Global Economy
A new study by the Brookings Institution has identified 100 metropolitan across the world which accounts for 20% of the global economy, worth $22 trillion in 2014. of the 100 centers, 49 are in China, 19 in Japan, South Korea and Taiwan, 12 in North America, 7 in Southeast Asia, 7 in Latin America and 6 in Australia/New Zealand. As large regions of Asia continue to urbanize and industrialize, major metro economies will play a significant role in trade and investments. Of all the cities listed, Chinese cities saw the fastest per-capita GDP growth.
Hong Kong Experiences Fall of Chinese Stocks
The Hang Seng broad index of Hong Kong fell 3.2% on Monday, as the Hang Seng 100-large-mainland-companies index dropped 3.7%. While the Chinese government has intervened to ease the slide in mainland China, tighter restrictions and corporate governance rules have prevented such actions to be taken in Hong Kong. As such, foreign investors have been selling their HK shares in response to mainland China's market developments. There is the suggestion that foreign investors believe the Chinese government has intervened too much; so far, 21 mainland brokerage firms have set up a $19.4 billion fund to buy the larger companies' shares. This support is reflected in a noticeable rally for large-company firms in Shanghai and Shenzhen. The CSI 300 index of large-caps gained 2.9% at closing.
Oil Futures at 3-Month Low
August 2015 crude prices fell $4.40 (7.7%) to $52.53 per barrel on NYMEX (New York Mercantile Exchange), signaling the largest drop since April 13. Possible causes point to the latest news in Greek (where the referendum concluded in a "No" response to accepting current bailout terms) and possibility that a nuclear deal with Iran could lead to an increase in oil supplies. Analysts also point to the recent fall of Chinese equities that may suggest a weaker demand for oil.
Warren Buffett Continues Summer Trend of Donations
Warren Buffett has once again announced he will be donating a portion of his wealth to charity. This summer, the amount is over $2.8 billion, which comes from 20.64 million Berkshire Hathaway class b shares. The stock closed at $137.39 per share on Thursday, totaling $2.84 billion. The major recipients - as has been the case for a decade - is the Bill and Melinda Gates Foundation and the foundations of Buffett's family members. Following this summer's donation, Buffett's worth decreases to $64.5 billion. In the previous two summers, Buffett donated amounts of $2.6 billion and $2.8 billion, as he pledged to give away 99% of his wealth during his lifetime.
Sources:
http://www.bloomberg.com/news/articles/2015-07-06/the-cities-that-make-up-the-biggest-economy-on-earth
http://www.forbes.com/sites/alexmorrell/2015/07/06/warren-buffett-unleashes-another-2-8-billion-donation/
http://www.marketwatch.com/story/oil-tumbles-4-after-greek-voters-reject-creditors-reform-proposal-2015-07-06
http://www.nytimes.com/2015/07/07/business/international/chinese-share-sell-off-spills-over-to-hong-kong.html
A new study by the Brookings Institution has identified 100 metropolitan across the world which accounts for 20% of the global economy, worth $22 trillion in 2014. of the 100 centers, 49 are in China, 19 in Japan, South Korea and Taiwan, 12 in North America, 7 in Southeast Asia, 7 in Latin America and 6 in Australia/New Zealand. As large regions of Asia continue to urbanize and industrialize, major metro economies will play a significant role in trade and investments. Of all the cities listed, Chinese cities saw the fastest per-capita GDP growth.
Hong Kong Experiences Fall of Chinese Stocks
The Hang Seng broad index of Hong Kong fell 3.2% on Monday, as the Hang Seng 100-large-mainland-companies index dropped 3.7%. While the Chinese government has intervened to ease the slide in mainland China, tighter restrictions and corporate governance rules have prevented such actions to be taken in Hong Kong. As such, foreign investors have been selling their HK shares in response to mainland China's market developments. There is the suggestion that foreign investors believe the Chinese government has intervened too much; so far, 21 mainland brokerage firms have set up a $19.4 billion fund to buy the larger companies' shares. This support is reflected in a noticeable rally for large-company firms in Shanghai and Shenzhen. The CSI 300 index of large-caps gained 2.9% at closing.
Oil Futures at 3-Month Low
August 2015 crude prices fell $4.40 (7.7%) to $52.53 per barrel on NYMEX (New York Mercantile Exchange), signaling the largest drop since April 13. Possible causes point to the latest news in Greek (where the referendum concluded in a "No" response to accepting current bailout terms) and possibility that a nuclear deal with Iran could lead to an increase in oil supplies. Analysts also point to the recent fall of Chinese equities that may suggest a weaker demand for oil.
Warren Buffett Continues Summer Trend of Donations
Warren Buffett has once again announced he will be donating a portion of his wealth to charity. This summer, the amount is over $2.8 billion, which comes from 20.64 million Berkshire Hathaway class b shares. The stock closed at $137.39 per share on Thursday, totaling $2.84 billion. The major recipients - as has been the case for a decade - is the Bill and Melinda Gates Foundation and the foundations of Buffett's family members. Following this summer's donation, Buffett's worth decreases to $64.5 billion. In the previous two summers, Buffett donated amounts of $2.6 billion and $2.8 billion, as he pledged to give away 99% of his wealth during his lifetime.
Sources:
http://www.bloomberg.com/news/articles/2015-07-06/the-cities-that-make-up-the-biggest-economy-on-earth
http://www.forbes.com/sites/alexmorrell/2015/07/06/warren-buffett-unleashes-another-2-8-billion-donation/
http://www.marketwatch.com/story/oil-tumbles-4-after-greek-voters-reject-creditors-reform-proposal-2015-07-06
http://www.nytimes.com/2015/07/07/business/international/chinese-share-sell-off-spills-over-to-hong-kong.html
Friday, July 3, 2015
Euro Stocks Cautious, Chinese Markets Fall, Aetna's Humana and BP's Penalties
European Assets On the Defensive as Greek Vote Looms
Yields on the German 1-year Bunds, the benchmark for European borrowing costs, fell 3bps to 0.83% as investors chose low-yielding but safer assets going into the weekend. Subsequently, European stocks dipped as shares were traded cautiously and the euro moved 0.1% to $1.1097. However, the movements have been marginal, as investors do not want to position heavily on either side of the market. This suggests traders are preparing for a volatile Monday following the Greek referendum on July 5th.
China Shares Back Up
China shares fell on Friday, with the Shanghai Composite ending down 5.8% and closing the week having lost 12.1%. Meanwhile, the Shenzhen market fell 5.3% (its worst week since December 1996) and the ChiNext board of small-cap stocks lost 1.7%. Chinese regulators have implemented measures to prevent massive stock selloffs, such as lifting restrictions on investments with borrowed cash and cutting interest rates. However, the efforts have failed to encourage buys. As such, the China Securities Regulatory Commission has allowed 10 companies to be listed in domestic stock markets for the first 10 days of July. Stock regulators have also announced they are investigating possible market manipulations that may have fueled the market drops. Firms such as Morgan Stanley have been accused by the Chinese media for "carelessly" remarking that the Shanghai Composite topped out in June.
Aetna Acquires Humana for $37 Billion
Health insurer Aetna has agreed to buy its smaller rival Humana for $37 billion in cash and stock, bringing together 2 of the U.S.'s biggest health insurers. It is estimated that the combined company would have an estimated operating revenue of $115 billion, serving over 33 million consumers. After the transaction - which is still subject to shareholder and regulatory approval and is expected to close in late 2016 - Aetna shareholders would own about 74% of the new firm, while Humana shareholders would own 26%. Following the merger, Aetna is expected to see $1.25 billion in annual cost savings by 2018. Such acquisitions may start a trend for the health insurance sector, as the U.S. Supreme Court's recent decision to uphold Obamacare may result in incentives for companies to grow faster in order to gain ground in a limited-profit-margins environment.
Final Settlements Become Clear for Oil Company BP
Over 5 years after BP's Deepwater Horizon oil platform exploded to unleash millions of gallons of crude, the oil giant has finally reached an agreement to settling federal and state claims from the damage. Totaling $18.7 billion over 15 years, BP will pay $5.5 billion to the federal government and 5 Gulf States under the Clean Water Act (CWA), $4.9 billion to settle economic and miscellaneous claims from the 5 states, and up to $1 billion to 400 local government entities. The latest penalties will amount to $1.1 billion annually, which may be manageable for the firm. However, there are still outstanding shareholder lawsuits, and low oil prices may impact the company's profits as well. While the agreement could deter negligence in the future, oil investments in the U.S. may suffer if multinational firms deem the legal system to be too risky to deal with.
Sources:
http://blogs.reuters.com/breakingviews/2015/07/02/healthcare-ma-pumped-after-obamacare-booster-shot/
http://www.bloomberg.com/news/articles/2015-07-03/aetna-humana-adds-to-takeover-frenzy-among-u-s-health-insurers
http://www.economist.com/news/business-and-finance/21656847-costly-mistake
http://www.marketwatch.com/story/as-china-stocks-sink-some-accuse-morgan-stanley-other-foreign-forces-2015-07-03
http://www.marketwatch.com/story/china-leads-asian-shares-lower-2015-07-02
http://www.nytimes.com/2015/07/04/business/dealbook/aetna-agrees-to-acquire-humana-for-37-billion-in-cash-and-stock.html
http://www.reuters.com/article/2015/07/03/us-markets-global-idUSKCN0PD01T20150703
Yields on the German 1-year Bunds, the benchmark for European borrowing costs, fell 3bps to 0.83% as investors chose low-yielding but safer assets going into the weekend. Subsequently, European stocks dipped as shares were traded cautiously and the euro moved 0.1% to $1.1097. However, the movements have been marginal, as investors do not want to position heavily on either side of the market. This suggests traders are preparing for a volatile Monday following the Greek referendum on July 5th.
China Shares Back Up
China shares fell on Friday, with the Shanghai Composite ending down 5.8% and closing the week having lost 12.1%. Meanwhile, the Shenzhen market fell 5.3% (its worst week since December 1996) and the ChiNext board of small-cap stocks lost 1.7%. Chinese regulators have implemented measures to prevent massive stock selloffs, such as lifting restrictions on investments with borrowed cash and cutting interest rates. However, the efforts have failed to encourage buys. As such, the China Securities Regulatory Commission has allowed 10 companies to be listed in domestic stock markets for the first 10 days of July. Stock regulators have also announced they are investigating possible market manipulations that may have fueled the market drops. Firms such as Morgan Stanley have been accused by the Chinese media for "carelessly" remarking that the Shanghai Composite topped out in June.
Aetna Acquires Humana for $37 Billion
Health insurer Aetna has agreed to buy its smaller rival Humana for $37 billion in cash and stock, bringing together 2 of the U.S.'s biggest health insurers. It is estimated that the combined company would have an estimated operating revenue of $115 billion, serving over 33 million consumers. After the transaction - which is still subject to shareholder and regulatory approval and is expected to close in late 2016 - Aetna shareholders would own about 74% of the new firm, while Humana shareholders would own 26%. Following the merger, Aetna is expected to see $1.25 billion in annual cost savings by 2018. Such acquisitions may start a trend for the health insurance sector, as the U.S. Supreme Court's recent decision to uphold Obamacare may result in incentives for companies to grow faster in order to gain ground in a limited-profit-margins environment.
Final Settlements Become Clear for Oil Company BP
Over 5 years after BP's Deepwater Horizon oil platform exploded to unleash millions of gallons of crude, the oil giant has finally reached an agreement to settling federal and state claims from the damage. Totaling $18.7 billion over 15 years, BP will pay $5.5 billion to the federal government and 5 Gulf States under the Clean Water Act (CWA), $4.9 billion to settle economic and miscellaneous claims from the 5 states, and up to $1 billion to 400 local government entities. The latest penalties will amount to $1.1 billion annually, which may be manageable for the firm. However, there are still outstanding shareholder lawsuits, and low oil prices may impact the company's profits as well. While the agreement could deter negligence in the future, oil investments in the U.S. may suffer if multinational firms deem the legal system to be too risky to deal with.
Sources:
http://blogs.reuters.com/breakingviews/2015/07/02/healthcare-ma-pumped-after-obamacare-booster-shot/
http://www.bloomberg.com/news/articles/2015-07-03/aetna-humana-adds-to-takeover-frenzy-among-u-s-health-insurers
http://www.economist.com/news/business-and-finance/21656847-costly-mistake
http://www.marketwatch.com/story/as-china-stocks-sink-some-accuse-morgan-stanley-other-foreign-forces-2015-07-03
http://www.marketwatch.com/story/china-leads-asian-shares-lower-2015-07-02
http://www.nytimes.com/2015/07/04/business/dealbook/aetna-agrees-to-acquire-humana-for-37-billion-in-cash-and-stock.html
http://www.reuters.com/article/2015/07/03/us-markets-global-idUSKCN0PD01T20150703
Thursday, July 2, 2015
Chinese Home Buyers, Univision's I.P.O., Rakuten's Purchase and Tesla Stocks
Chinese Buyers Descend to Buy Japanese Real Estate
Since the yen's decline to a 22-year low and with the impending excitement over 2020 Tokyo Olympics, Chinese investors have been coming into Japan to buy up housing properties. Realty agencies in Beijing have already been offering twice-monthly tours to Tokyo and Osaka for prospective buyers, and Shanghai is expected to start property tours soon as well. As a result (at least partly), Tokyo apartment prices have advanced to highest levels since the early 1990s. In the last 2 years, levels have increased 11%, according to the Real Estate Economic Institute Co. A brokerage agent noted that his number of mainland buyers have increased 20% in just the past year. Such trends have already taken place in the U.S. ($28.6 billion on homes bought by buyers in China, Hong Kong and Taiwan) and Sydney (where the Chinese has bought nearly a quarter of new homes).
Univision Looks to Pursue I.P.O. in United States
Spanish-language cable networks owner Univision Holdings intends to pursue an initial public offering in the U.S., according to recent filings with the Securities and Exchange Commission (SEC). Based in New York, the company operates television and radio networks for the Hispanic audience in the States. In 2014, the firm posted a revenue of $2.91 billion. While the volume of shares is unknown, Univision has stated it hopes to raise $100 million - the traditionally cited figure in registration statements. This means the end valuation could be much higher. The I.P.O. will be led by Morgan Stanley, Goldman Sachs and Deutsche Bank.
Rakuten Acquires Tokyo-based Start-up Voyagin
Japan's largest e-commerce site and leading online travel agency, Rakuten, is expanding its business with the buyout of tour planning start-up Voyagin. While the deal's financial terms remain undisclosed, Voyagin's co-founders have confirmed that Rakuten paid cash and now holds more than 50% stake. Voyagin currently features over 1,800 activities and has served more than 30,000 customers in the past year. With this addition, Rakuten - which books over 3.8 million hotel nights each month - will look to increase its international consumer base, as its user are currently mostly domestic tourists. Travel to Japan has increased recently due to depreciation of yen, as well as relaxed visa policies for countries such as China and Vietnam. In April, Japan hosted about 1.8 million foreign visitors, a 43.3% increase year-over-year. This number is expected to continue growing as Japan prepares for the 2020 Olympic Games.
Tesla Motors Inc. stock rose this week, following the company's announcement that it delivered 11,507 Model S sedans during the 2nd quarter, up 52% from the previous year's period. Tesla had previously anticipated sales of between 10,000 and 11,000 cars. Its shares have gained 24% in 2015 so far, with 44% in the last 3 months. This is far above the S&P 500's growth rate, of 0.4% in the last quarter. However, while the average price target for Tesla shares is $276.37, analysts at Bank of America Merrill Lynch maintains a conservative estimate of $180. Furthermore, BAML has kept its rating of Tesla unchanged at underperform, suggesting the company's shares are overvalued. This is due to their contention that Tesla remains a niche company in the near-term.
Wednesday, July 1, 2015
Puerto Rican Debt, ETF Inflows, U.S. Stocks, Ace's Acquisition and Mexican Pesos
Puerto Rico's Power Authority Makes Debt Payment
PR's power utility has made a $415 million debt payment after reaching a deal with borrow more money with its bond insurers. The repayment marks the first step to the commonwealth's approach for restructuring its debt. Puerto Rican governor Alejandro Garcia Padilla is seeking a restructuring to the island's $72 billion debt after his government determined that the loan could not be repaid. However, negotiations for revamping the debt of Prepa, the power utility, has been taking place for over a year. Prepa announced it will finance its principal and interest payment with $153 million in cash, with the rest from its debt-service reserve accounts. Meanwhile, the newly issued bonds are due on Dec, 15th of this year.
ETF Flows Set New Record for Midyear
ETF net inflows totaled a record $101 billion, while U.S.-listed ETF assets numbered at $2.118 trillion at the end of June, 14% higher than a year ago. International equities and currency-hedged strategies dominated ETF inflows for the large part, with the most popular ETF being the eurozone-focused WisdomTree Europe Hedged Equity Fund. HEDJ has pulled in nearly $14 billion in this year so far. However, due to the strength of the dollar, funds without a currency hedge is vastly underperforming; the SPDR S&P 500 ETF is barely above 0 through June.
U.S. Stocks Rise Amid Uncertainty on Greek Debt Crisis
U.S. stock markets closed higher than yesterday, but the energy sector fell as Greece's debt showdown continues with no resolutions as of yet. The S&P 500's energy sector were impacted by the largest slide in oil prices since April, due to a report that U.S. crude stockpiles unexpectedly rose for the first time in over 2 months. However, U.S. private employers added 237,000 jobs in June, the biggest gain since December 2014, and construction spending increased in May to its highest point in over 6 years. The Dow Jones industrial average rose 138.4 points (0.79%) while the S&P 500 advanced 14.31 (0.69%).
Ace Agrees to Acquire Chubb Corporation
The Swiss insurance company Ace has agreed to buy property insurer Chubb Corporation for $28.3 billion in cash and shares. The deal will merge 2 large providers of property and casualty insurance, which services both businesses and individuals. It is also a reflection of the reinsurance industry's moves to increase scale and product diversity. Earlier this year, PartnerRe and Axis Capital Holdings had also agreed to merge as equals. As for today's deal, Chubb shareholders will receive cash and shares equivalent to $124.13 a share, which translates to 30% premium of Chubb's 6/30 closing price. In addition, the combined firm will operate under the Chubb name and will hold assets of $150 billion.
Drop In Value of Mexican Pesos
The Mexican currency fell to its lowest valuation against the dollar since 1993, at 15.81 pesos per dollar. This reflects the broader sell-off in emerging-market currencies. In Mexico's case, the dive is due to strong U.S. economic data coupled with weak Mexican manufacturing data. The peso has weakened by 7% against the dollar since the start of the year. Nevertheless, the peso is an attractive currency for funding carry trades, as Mexico's benchmark interest rate is also at a record low 3%. As the Federal Reserve looks to raise rates before year-end, analysts expect the peso could weaken further, and become more liquid for investors.
Sources:
http://www.etf.com/sections/fund-flows/midyear-etf-flows-set-new-record-101b
http://www.marketwatch.com/story/the-mexican-peso-cant-catch-a-break-2015-07-01
http://www.nytimes.com/2015/07/02/business/dealbook/ace-to-buy-chubb-for-28-3-billion.html
http://www.nytimes.com/2015/07/02/business/dealbook/puerto-rico-power-utility-makes-debt-payment.html
http://www.reuters.com/article/2015/07/01/us-markets-stocks-idUSKCN0PB4J520150701
PR's power utility has made a $415 million debt payment after reaching a deal with borrow more money with its bond insurers. The repayment marks the first step to the commonwealth's approach for restructuring its debt. Puerto Rican governor Alejandro Garcia Padilla is seeking a restructuring to the island's $72 billion debt after his government determined that the loan could not be repaid. However, negotiations for revamping the debt of Prepa, the power utility, has been taking place for over a year. Prepa announced it will finance its principal and interest payment with $153 million in cash, with the rest from its debt-service reserve accounts. Meanwhile, the newly issued bonds are due on Dec, 15th of this year.
ETF Flows Set New Record for Midyear
ETF net inflows totaled a record $101 billion, while U.S.-listed ETF assets numbered at $2.118 trillion at the end of June, 14% higher than a year ago. International equities and currency-hedged strategies dominated ETF inflows for the large part, with the most popular ETF being the eurozone-focused WisdomTree Europe Hedged Equity Fund. HEDJ has pulled in nearly $14 billion in this year so far. However, due to the strength of the dollar, funds without a currency hedge is vastly underperforming; the SPDR S&P 500 ETF is barely above 0 through June.
U.S. Stocks Rise Amid Uncertainty on Greek Debt Crisis
U.S. stock markets closed higher than yesterday, but the energy sector fell as Greece's debt showdown continues with no resolutions as of yet. The S&P 500's energy sector were impacted by the largest slide in oil prices since April, due to a report that U.S. crude stockpiles unexpectedly rose for the first time in over 2 months. However, U.S. private employers added 237,000 jobs in June, the biggest gain since December 2014, and construction spending increased in May to its highest point in over 6 years. The Dow Jones industrial average rose 138.4 points (0.79%) while the S&P 500 advanced 14.31 (0.69%).
Ace Agrees to Acquire Chubb Corporation
The Swiss insurance company Ace has agreed to buy property insurer Chubb Corporation for $28.3 billion in cash and shares. The deal will merge 2 large providers of property and casualty insurance, which services both businesses and individuals. It is also a reflection of the reinsurance industry's moves to increase scale and product diversity. Earlier this year, PartnerRe and Axis Capital Holdings had also agreed to merge as equals. As for today's deal, Chubb shareholders will receive cash and shares equivalent to $124.13 a share, which translates to 30% premium of Chubb's 6/30 closing price. In addition, the combined firm will operate under the Chubb name and will hold assets of $150 billion.
Drop In Value of Mexican Pesos
The Mexican currency fell to its lowest valuation against the dollar since 1993, at 15.81 pesos per dollar. This reflects the broader sell-off in emerging-market currencies. In Mexico's case, the dive is due to strong U.S. economic data coupled with weak Mexican manufacturing data. The peso has weakened by 7% against the dollar since the start of the year. Nevertheless, the peso is an attractive currency for funding carry trades, as Mexico's benchmark interest rate is also at a record low 3%. As the Federal Reserve looks to raise rates before year-end, analysts expect the peso could weaken further, and become more liquid for investors.
Sources:
http://www.etf.com/sections/fund-flows/midyear-etf-flows-set-new-record-101b
http://www.marketwatch.com/story/the-mexican-peso-cant-catch-a-break-2015-07-01
http://www.nytimes.com/2015/07/02/business/dealbook/ace-to-buy-chubb-for-28-3-billion.html
http://www.nytimes.com/2015/07/02/business/dealbook/puerto-rico-power-utility-makes-debt-payment.html
http://www.reuters.com/article/2015/07/01/us-markets-stocks-idUSKCN0PB4J520150701
Tuesday, June 30, 2015
Greece Defaults, Indonesian's Youth, China's Stock Traders and G.E.'s Selloff
IMF Confirmes Greece Defaults on Scheduled Repayment
The IMF has confirmed that Greece did not make its scheduled 1.6 billion euro loan repayment, leading the fund's Managing Director Christine Lagarde to report that the country is "in arrears." The default has sparked fears that Greece may exit its euro membership; however, this is still dependent on the Greek referendum on July 5th. In addition, the IMF has confirmed that Greece has asked for a last-minute repayment extension, which the fund will consider appropriately. Currently, there is no indication that any of Greece's 3 lenders - the European Commission, the ECB and the IMF - will release frozen aid to avert a default. For now, the country will lose access to a 1.8 billion euro loan tranche and 10.9 billion euros for recapitalizing banks. Since 2010, Greece has received nearly 240 billion euros in 2 bailouts from the EU and the IMF. These loans have come at a high cost to Greek citizens, as cuts were made to pensions, wages and public services. With the missed IMF repayment, Fitch ratings agency has cut its long-term rating for the country from CC to CCC. It marks the first case in IMF history that a developed nation has defaulted on a loan.
Indonesia In the Midst of a Population-Ageing Golden Age
While Indonesia' GDP is still relatively small (about a quarter of the size of Germany's economy), it is the world's fourth most populous country. This offers a positive outlook for the archipelago country, as the World Banks notes the nation has an abundance of youth. Currently, 50% of Indonesians are under 30 years of age, and the proportion of elderly people is lower than other large Southeast Asian economies. In the realm of economic cycles, this stage of growing supply of workers and relatively few retirees implies a strong recipe for growth. However, to help ensure economic gain, the Indonesian government must address 3 critical areas: (1) Improved efficiency of labor, such as investment in transportation; (2) Transition to higher-productivity jobs such as in the service industry; (3) Loosening of laws which has made the labor market uncompetitive, such as removing the requirement to pay nearly 2 years' worth of severance wages when firing employees. Of course, leveraging demographics will also play a role; currently, only 51% of women participate in the workforce, compared to 84% for men.
Stock Traders Outnumber Party Members in Communist China for First Time
According to the China Securities Depository and Clearing Co., over 90 million Chinese are trading stocks today, surpassing the 87.8 million Communist Party members. While this has drawn political inferences from the Western press, it also demonstrates the transformation of the Chinese markets over the past decade. Just in the past year, new investors numbered more than the population of Germany, as the Shanghai Composite Index doubled. However, this also leaves a wider Chinese population to market volatility; the Shanghai Composite advanced 5.5% on Tuesday after falling as much as 5.1%. Nevertheless, equity ownership remains a growing space for the private sector. A Charles Schwab survey estimates that stocks account for 20% of financial assets in Chinese homes, compared with 45% in cash and bank deposits.
General Electric to Sell European Financing Division to Sumitomo
G.E. confirmed today that it has agreed to sell a division which finances leveraged buyouts in Europe to Sumitomo Mitsui Banking Corporate for $2.2 billion. The sale of the private equity lending unit continues G.E.'s focus to re-establish its roots as an industrial business, all the while removing itself from the banking sector. This also marks the third major move by General Electric this month; earlier in June, the firm also agreed to sell its U.S. private equity finance unit to the Canada Pension Plan Investment Board for $12 billion. Just yesterday, it reached a deal to sell its fleet-financing businesses (in the U.S., Mexico and Australia/New Zealand) to Element Financial Corp. of Canada for $6.9 billion. If G.E. continues to execute its current strategy, it is expected that most of its GE Capital finance arm will be sold by the end of 2016.
The IMF has confirmed that Greece did not make its scheduled 1.6 billion euro loan repayment, leading the fund's Managing Director Christine Lagarde to report that the country is "in arrears." The default has sparked fears that Greece may exit its euro membership; however, this is still dependent on the Greek referendum on July 5th. In addition, the IMF has confirmed that Greece has asked for a last-minute repayment extension, which the fund will consider appropriately. Currently, there is no indication that any of Greece's 3 lenders - the European Commission, the ECB and the IMF - will release frozen aid to avert a default. For now, the country will lose access to a 1.8 billion euro loan tranche and 10.9 billion euros for recapitalizing banks. Since 2010, Greece has received nearly 240 billion euros in 2 bailouts from the EU and the IMF. These loans have come at a high cost to Greek citizens, as cuts were made to pensions, wages and public services. With the missed IMF repayment, Fitch ratings agency has cut its long-term rating for the country from CC to CCC. It marks the first case in IMF history that a developed nation has defaulted on a loan.
Indonesia In the Midst of a Population-Ageing Golden Age
While Indonesia' GDP is still relatively small (about a quarter of the size of Germany's economy), it is the world's fourth most populous country. This offers a positive outlook for the archipelago country, as the World Banks notes the nation has an abundance of youth. Currently, 50% of Indonesians are under 30 years of age, and the proportion of elderly people is lower than other large Southeast Asian economies. In the realm of economic cycles, this stage of growing supply of workers and relatively few retirees implies a strong recipe for growth. However, to help ensure economic gain, the Indonesian government must address 3 critical areas: (1) Improved efficiency of labor, such as investment in transportation; (2) Transition to higher-productivity jobs such as in the service industry; (3) Loosening of laws which has made the labor market uncompetitive, such as removing the requirement to pay nearly 2 years' worth of severance wages when firing employees. Of course, leveraging demographics will also play a role; currently, only 51% of women participate in the workforce, compared to 84% for men.
Stock Traders Outnumber Party Members in Communist China for First Time
According to the China Securities Depository and Clearing Co., over 90 million Chinese are trading stocks today, surpassing the 87.8 million Communist Party members. While this has drawn political inferences from the Western press, it also demonstrates the transformation of the Chinese markets over the past decade. Just in the past year, new investors numbered more than the population of Germany, as the Shanghai Composite Index doubled. However, this also leaves a wider Chinese population to market volatility; the Shanghai Composite advanced 5.5% on Tuesday after falling as much as 5.1%. Nevertheless, equity ownership remains a growing space for the private sector. A Charles Schwab survey estimates that stocks account for 20% of financial assets in Chinese homes, compared with 45% in cash and bank deposits.
General Electric to Sell European Financing Division to Sumitomo
G.E. confirmed today that it has agreed to sell a division which finances leveraged buyouts in Europe to Sumitomo Mitsui Banking Corporate for $2.2 billion. The sale of the private equity lending unit continues G.E.'s focus to re-establish its roots as an industrial business, all the while removing itself from the banking sector. This also marks the third major move by General Electric this month; earlier in June, the firm also agreed to sell its U.S. private equity finance unit to the Canada Pension Plan Investment Board for $12 billion. Just yesterday, it reached a deal to sell its fleet-financing businesses (in the U.S., Mexico and Australia/New Zealand) to Element Financial Corp. of Canada for $6.9 billion. If G.E. continues to execute its current strategy, it is expected that most of its GE Capital finance arm will be sold by the end of 2016.
Sources:
http://www.bloomberg.com/news/articles/2015-06-30/in-communist-china-stock-market-capitalists-now-rule
http://www.thefinancialist.com/indonesias-winning-demographic-hand/
http://www.nytimes.com/2015/07/01/business/dealbook/ge-agrees-to-sell-european-buyout-financing-business-to-sumitomo.html
http://www.reuters.com/article/2015/07/01/us-eurozone-greece-idUSKBN0P40EO20150701
http://www.bloomberg.com/news/articles/2015-06-30/in-communist-china-stock-market-capitalists-now-rule
http://www.thefinancialist.com/indonesias-winning-demographic-hand/
http://www.nytimes.com/2015/07/01/business/dealbook/ge-agrees-to-sell-european-buyout-financing-business-to-sumitomo.html
http://www.reuters.com/article/2015/07/01/us-eurozone-greece-idUSKBN0P40EO20150701
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