Reuters blog archive
from Global Investing:
Where is the Japanese money? Mostly it has been heading back to home shores as we wrote here yesterday.
The assumption was that the Bank of Japan's huge money-printing campaign would push Japanese retail and institutional investors out in search of yield. Emerging markets were expected to capture at least part of a potentially huge outflow from Japan and also benefit from rising allocations from other international funds as a result. But almost a month after the BOJ announced its plans, the cash has not yet arrived.
EM investors, who seem to have been banking the most on the arrival of Japanese cash, may be forgiven for feeling a tad nervous. Data from EPFR Global shows no notable pick-up in flows to EM bond funds while cash continues to flee EM equities ($2 billion left last week).
But first, some good news. Retail investors are demonstrating some interest in emerging assets. Barclays says launches of toshin or investment trusts last week garnered $2 billion in subscriptions, with a Pacific Rim equities fund, partly geared to Asia, receiving $1.2 billion. The previous week saw a $500 million ASEAN fund while an emerging equities toshin started in March took in $1.6 billion. There has also been net new uridashi bond issuance in the Mexican, Brazilian, Turkish and Russian currencies over the past few weeks, Barclays data shows.
from From Reuters.com:
Sex and sexuality in some form or another dominated our best-read list this week, whether a simple kiss, randy nurses or naked activists. There was some serious stuff in there, too, but really, it's all about the sex.
You, dear readers, were no doubt flabbergasted when you read this headline, so much so that you clicked it straight to the top of our most read list. Dubai authorities arrested the couple in November and now face a month in prison for the crime of … kissing. Egad! Off with their heads! My message to Dubai authorities: You must remember this: a kiss is just a kiss …
Insurance companies are the focus of many deals pages on Thursday, with Prudential eyeing a listing in Asia, AXA moving to sell a stake in China's Taikang and Aviva detailing its restructuring now the Delta Lloyd IPO is moving.
Other deal news today includes:
* South Korea's Korea National Oil Corp (KNOC) has agreed to buy Canada's Harvest Energy Trust for C$1.8 billion, the Canadian company said.
It's amazing how well the company has positioned itself to clean up the mess left behind by the financial crisis. It already has chummy ties with the government, including the Federal Reserve which tapped it to manage and eventually liquidate toxic assets the central bank took on from AIG. It's also the risk and analytics manager in chief for the Fed's MBS purchasing program.
The Wall Street Journal reports today that the National Association of Insurance Commissioners is also considering the giant money manager to sub for the rating agencies, which the insurance industry blames for getting insurers into such a pickle with structured finance investments.
from Funds Hub:
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Insurers quit hedge funds - Insurance Times
Hedge fund ATM moves to Washington - Bloomberg
Will the high water mark catch on - Seeking Alpha
Back to life (settlements) - HFMWeek
Catastrophe bond lovers and other insurance-linked securities enthusiasts should take a look at a report on insurance securitisation published today by the International Association of Insurance Supervisors (IAIS).
There is an interesting section in the report looking at the various cat bonds that have gone pear-shaped since the dawn of the market in the 1990s.
Banks and insurers are looking for ways to bolster their capital, while having the flexibility to strike if there are acquisitions to be had on the cheap. To achieve these twin goals, Spain's Santander and now British insurer Aviva intend to float minority stakes in subsidiaries.
Aviva's chief executive Andrew Moss, who cut the insurer's dividend with its first-half result on Thursday, argued that it must be ready to take advantage of acquisition opportunities. Moss plans to float 25-30 percent of Delta Lloyd so that Aviva's 92 percent owned Dutch insurance unit can take part in the restructuring of the Benelux insurance market.
from The Great Debate UK:
-- Margaret Doyle is a Reuters columnist. The opinions expressed are her own --
Barclays thinks the insurance it has against its "impaired assets" is worth twice as much as RBS seems to believe. It's hard to see how both could be right.
On May 7, Barclays said that it expects to get 76 percent of any claim made against its "monoline" insurers. The following day, RBS said fat chance -- we think it's 35 percent. They may not have the same insurers, but they are also coming from the problem from different angles.
Unlike Barclays, RBS is already attached to the government teat. Because RBS has taken a huge capital injection from the state, chief executive Stephen Hester had much less to lose than his counterpart at Barclays John Varley in admitting that things are looking grim.
For Barclays, it makes more sense to take losses only as fast as you earn enough to cover them.
Moreover, RBS has also already agreed to join the government insurance scheme. RBS said that around 75 or 85 percent of the 4.9 billion pound headline hit in the first quarter was to assets that will end up in the government's Asset Protection Scheme (APS). RBS has to take 19.5 billion in losses before it calls on the government purse. These numbers show that it has already chalked up around 4 billion of that first loss.
Moreover, that huge figure excludes 755 million pounds of trading asset write-downs. That means the bank's total losses for the quarter were 5.6 billion pounds.
RBS's 51-page report also reveals the details of another banking farce. It has 31 billion pounds-worth of bonds outstanding. The market is sceptical about RBS's ability to repay this, and has marked the bonds down accordingly. In this quarter alone, that market write-down equates to more than 1 billion pounds. RBS has taken this as a "profit".
Hester himself rightly flags up that there are more headwinds to come. There will be further losses as the recession deepens.
Net interest margins are likely to remain compressed. While the banks may get away with what they term asset pricing (higher interest charges on our loans), it will be a while -- if ever -- before their funding costs return to pre-crunch levels.
Longer term, regulators will demand that banks set aside more capital against the loans that they make, thus depressing equity returns.
Hester may think there is mileage in being frank. But he should be careful. After all, RBS has not agreed final terms on the APS with the government. Having seen these numbers, it may decide that RBS should be forced to pay harsher terms.
from The Great Debate UK:
Revolting shareholders were reduced to throwing shoes and coins at the chairman at Tuesday's meeting to approve the carve-up of the failed Benelux bancassurer, but to no avail.
It looked like throwing good money after bad.
A majority of shareholders still backed the deal, rightly recognising that it represented the best hope for their beaten-down shares. By going to the law over the nationalisation of the Benelux banks and the sale of the Belgian bank to BNP Paribas <BNPP.PA> last October, the shareholders won some baubles for the rump Fortis Holding company <FOR.BR>.
from Africa News blog:
There are some expectations that piracy in the Gulf of Aden is about to tail off for a bit. It appears that pirates don't like rough weather any more than anyone else does.
Exclusive Analysis, a political risk consultancy, has conducted a detailed study of incidences of maritime hijacking in order to give its insurer clients the heads up about when and under what circumstances piracy is most likely to occur. It has told the International Underwriting Association of London that the arrival of the monsoon in the Gulf of Aden about now usually keeps pirates on shore. Not so for Somalia, where the waters are generally calmer at the moment. Technically, it is when the Sea Scale hits 5 or 6, that is, rough to very rough.