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from Global Investing:

No one-way bet on yen, HSBC says

Will the yen continue to weaken?

Most people think so -- analysts polled by Reuters this month predict that the Japanese currency will fall 18 percent against the dollar this year. That will bring the currency to around 102 per dollar from current levels of 98. And all sorts of trades, from emerging debt to euro zone periphery stocks, are banking on a world of weak yen.

Now here is a contrary view. David Bloom, HSBC's head of global FX strategy, thinks one-way bets on the yen could prove dangerous. Here are some of the points he makes in his note today:

--  Bloom says the link between currencies and QE (quantitative easing) is not straightforward. Note that after three rounds of QE the dollar is flexing its muscles. The ECB's LTRO too ultimately benefited the euro.

--  The BOJ surprised investors with the scale of its bond buying plan relative to the size of its economy. But Bloom says the Fed has actually tripled its monetary base since 2008 while the Bank of England has expanded it fivefold. The BOJ on the other hand plans to double it over the next two years.

from DealZone:

Can American Capital find a rich suitor?

More consolidation may be coming to the world of private equity lenders. Debt-laden Allied Capital solved its long-standing problems last week when it sold itself to Ares Capital. Rival American Capital, once an S&P 500 component but now struggling for survival, could be the next takeover target.

But some investors wonder if Allied got a raw deal. Ares paid $3.47 a share in stock for a company that had a book value of $7.49 in June. One law firm has already launched a "shareholder investigation". Similarly, American Capital's shares trade below $3, compared with a book value of $8.76 at the end of June.

from DealZone:

Hot Chocolate

How much sweeter will Kraft's bid for Cadbury get? Chief Executive Todd Stitzer seemed to be telling investors -- according to banker's note we got hold of -- that a 20 percent higher bid from Kraft, or about 12.2 billion pounds ($19.93 billion), would be a fair price. Investors don't seem to have bought into his enthusiasm, having not bid the stock to anywhere near such a premium.

"On price, Todd seemed to admit that a 15x EBITDA multiple would be a fair price," the note by Bank of America/Merrill Lynch sales specialist Simon Archer said. Analysts say a multiple at that level puts the price for Cadbury at around 900 pence per share.

from DealZone:

High-frequency trading: useless and manipulative?

Floor tradersThe explosion of interest in high-frequency trading has started to drag new faces to sometimes staid industry conferences. Traders who for years worked on algorithms and computer codes behind the scenes are stepping into the spotlight. They're appearing on more and more panel discussions, feeling the need to defend their practice against the slings and arrows of politicians and regulators.

So far, they've managed to mix exasperation with good humor. The head of one high-frequency trading shop, speaking on a panel this week, said that if you believe everything you read in newspapers you might think the practice is "an unfair, highly profitable and socially useless trading strategy implemented by highly secretive and unregulated traders using superfast computers to compete with retail investors, manipulate markets and front run flash orders causing volatility in the financial markets and creating systemic risk."

from Global Investing:

More than a nice-to-have, buy-side considers its actions

More than a "nice to have," investor sentiment is running heavily on the side of environment, social and governance (ESG) factors, according to the latest Thomson Reuters Perception Snapshot.

Feedback from 25 global buy-side investors found that 84 percent evaluate ESG criteria to some degree when making an investment decision.

from DealZone:

Energy asset on block at Blackstone?

USAOne intriguing remark that Blackstone COO Tony James let slip on today's earnings call is that it could be gearing up to sell an energy asset. 
James explained that while opportunities to exit investments weren't numerous, it had succeeded making a profit on the sale of pharmaceutical company Stiefel. 
"We have another company in our portfolio... in the energy sector, which had some very, very exciting results finding unbelievable amounts of hydrocarbons and... that might be something we'd look to exit," James said on a call to the media. 
He didn't identify the company so we're doing the guessing ourselves -- out of the current energy investments Blackstone lists on its website, we reckon Kosmos Energy, which has a significant oil field in Ghana, could fit the bill.

(Additional reporting by Mike Erman)

from DealZone:

Customer to Venture Capitalists: Please, go out of business

rebecca-s-connollyEven in the depths of a recession, venture capitalists are relentlessly upbeat, but one of their big customers poured cold water on that Thursday, asking some members gathered in Boston for the annual meeting of the National Venture Capital Association to go out of business.

"I hope some of you go out of business. I hope that does happen," Rebecca Connolly, a partner in Fairview Capital, said on a panel. Her West Hartford, Connecticut, firm has about $3 billion under management, 70 percent of it in venture capital funds and the rest with private equity.  Fairview, a fund of funds, manages money for pension funds and endowments

from Global Investing:

Investing in Iraq

Ministers from Iraq, from prime minister Nuri al-Maliki down, are in London on Thursday to attract investment into the country. Could Iraq be one of the few investment regions decoupled from the global economic cycle?

It was having a war while the rest of the world was enjoying economic boom. As well as signs of lessening violence now and the promised withdrawal of U.S. combat troops by August 2010, it does have oil.

from Global Investing:

Bah Humbug

Value managers and contrarian analysts long derided as permanent bears have been poking their heads out of the woods to bring some early Christmas cheer to delegates assembled at the CFA Institute's European Conference in Amstedam.

James Montier, global strategist at SocGen, who likes to swim with sharks in his spare time, opened the conference on Tuesday by saying that he was more optimistic about equities than he had been for a long time, with the UK and European markets approaching bargain basement prices.

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