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June 14 (Reuters) - Industronics Bhd:
* CHOW RICKY KAM HUNG RESIGNS AS CHAIRMAN Source text for Eikon: [ID:https://bit.ly/2MoLhvW] Further company coverage:
June 14 (Reuters) - Industronics Bhd:
* CHOW RICKY KAM HUNG RESIGNS AS CHAIRMAN Source text for Eikon: [ID:https://bit.ly/2MoLhvW] Further company coverage:
(Bloomberg) -- As one of Sweden’s oldest hedge funds shuts its doors, investors are trying to sort through the wreckage to figure out what exactly went wrong.Lars Ericsson, the chairman of soon-to-be defunct Informed Portfolio Management, says it’s clear now that the quantitative strategies his fund used failed to cope with the market moves brought on by the pandemic. But he rejects the idea that quants have had their day. “There is definitely a future for quantitative hedge funds,” he said on Thursday.IPM, a systematic macro fund based in Stockholm, started bleeding client money more than a year ago, with about $4 billion in assets under management flowing out since late 2019.Ericsson says the fund’s medium-term models failed to handle the shock that hit markets in early 2020.“When the pandemic came, it was a total surprise for the models,” he said.IPM then managed to come back from the brink, but bad trades that predated the pandemic came back to haunt the fund. Its relative equity models had been weighing on performance for years, due in part to a strategy relying on value stocks. This year, IPM’s models misjudged the relative gains in interest rates.Ericsson says he still thinks everything would have worked out had IPM had a little longer. As recently as half a year ago, it even hired some people from Goldman Sachs to help build out its business. But client withdrawals were too intense, and the fund had to give up.“We were about to add some short-term factors, which would have been good diversifiers,” he said. “But unfortunately, we won’t get that chance now.”Industry in Decline?IPM joins a growing list of hedge funds shutting down in recent years as investors rethink their allocations to the industry. More hedge funds have closed than started in the last six years, with 770 of them shuttering in 2020, according to data compiled by Hedge Fund Research Inc.Last year was particularly tough for computer-driven quant funds, including behemoths such as Renaissance Technologies, Winton and Two Sigma.IPM’s systematic macro strategy applied fundamental macroeconomic principles to rank asset classes and economies. It then allocated money across asset classes including sovereign debt, equity indexes, commodities and currencies across the world. The model was based on historical statistical data, and relied heavily on computers.Jonas Thulin, who oversees $6 billion as head of asset management at Erik Penser Bank AB in Sweden, says Ericsson is right to defend quant strategies, despite IPM’s demise. However, Thulin, who’s been able to increase assets under management roughly fourfold since 2018 using macro strategies, says quant models become dangerous when applied too narrowly.The Killers“The usual killers of quant strategies are so-called paradigm shifts and shocks,” he said.Thulin says the way around this is a methodology he calls “dynamic macro.” The idea is that asset managers “constantly run parallel universes of historical relationships and explanatory variables and structures.” Part of the idea is also that the model isn’t used to predict the future, “but rather, the market’s perception of the future,” which requires a human sanity check.That approach helped Thulin deliver a 26% return over the past year on his firm’s multi-asset portfolio, compared with the 5-7% annual return it targets. The global stocks portfolio he oversees is up 39% over the period.Ericsson notes that the long-term trend suggests that the share of total assets being managed under quantitative strategies is increasing, “even though there may be a temporary setback now.”But for IPM, “assets under management decreased faster than we had expected and with that asset base it is difficult to maintain the quality we want.”(Adds comment in 8th paragraph, more details of strategy in 11th)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Reliance Industries Ltd., controlled by Indian billionaire Mukesh Ambani, bought Stoke Park Ltd. for $79 million, adding an iconic locale that’s been the setting for two James Bond films to its portfolio of tourism properties.A wholly owned unit of Reliance Industries will buy Stoke Park, which owns and manages a hotel, sports and leisure facilities in Buckinghamshire, for 57 million pounds ($79 million), said an exchange filing late Thursday. The acquisition will add to Reliance’s consumer and hospitality assets, the filing said.The property’s rolling golf course has been famous since James Bond played a game with Auric Goldfinger there in the 1964 blockbuster. Since then, the estate with the Georgian-era mansion set in the midst of 300 acres of parkland has also been a backdrop in productions like “Bridget Jones’s Diary” and Netflix Inc.’s British Royal Family drama “The Crown”.In real life, its 49 luxury bedrooms and suites, 27-hole championshop golf course, 13 tennis courts and 14 acres of private gardens attracts wealthy tourists from across the world.The latest marquee acquisition for Ambani’s retail-to-refining conglomerate marks its pivot toward consumer offerings and yet another high-profile British brand purchase. Reliance bought struggling U.K.-based toy store chain Hamleys in 2019 and is seeking to revive it.Flush with $27 billion in fresh capital after selling stakes in Reliance’s retail and digital units last year, Ambani is helming a transformation as he seeks to build consumer services into a equal-sized pillar for Reliance Industries, paring dependence on profits from its traditional oil refining business. Acquiring marquee global brands underscores that strategy.Private GardensAlthough the Stoke Park estate has a recorded history of over 900 years, it was used as a private residence until 1908, according to its official website.Ambani has a net worth of $71.5 billion, making him the 13th richest person in the world, according to the Bloomberg Billionaires Index.The group “will look to enhance the sports and leisure facilities at this heritage site,” Reliance said in the filing. Ambani’s conglomerate has equity holding in EIH Ltd., which runs the chain of five star Oberoi Hotels.The U.K. is emerging as a real estate hotspot for wealthy Indians. Adar Poonawalla, chief executive officer of the Serum Institute of India Ltd. -- the largest vaccine manufacturer in the world -- agreed to rent a property in Mayfair for about 50,000 pounds ($69,300) a week, a record for the exclusive London neighborhood, Bloomberg reported last month.(Updates with details throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Parduman Gupta, father of embattled metals tycoon Sanjeev Gupta, has moved out of the U.K., just as the pair’s GFG Alliance teeters on the brink following the collapse of its largest lender Greensill Capital.The senior Gupta has changed his country of usual residence from Britain to India, according to several filings made over the past few weeks at Companies House, the business registry. He owns Simec Group, the branch of the business empire which deals in renewable energy, shipping and mining, and was founded by the magnate as an export-and-import house in India.It’s not clear where Parduman Gupta is currently, but a spokesman for Companies House said that a company director must list their country of residence, and that this “should correspond with their usual residential address.” A spokesman for GFG Alliance, a loose grouping of companies owned by the father and son, declined to comment.Sanjeev Gupta has also been absent for several months from the U.K., where GFG owns numerous steel and aluminum plants and employs around 5,000 people. He said on recent podcasts for GFG employees that he left the U.K. for Dubai before Christmas, and hasn’t returned since.“Dubai is the perfect location for me and my family to operate out of for now,” Gupta said on a April 16 podcast, citing the city’s time zone.But he said that he was keen to be on the move again. “As soon as Covid travel restrictions in the U.K. and Australia and Europe are lifted I will definitely be trying to get in front of the customers and employees around the world.”‘Very Opaque’GFG last month asked the U.K. government for a 170 million-pound ($235 million) bailout, but the request was rebuffed. Business Secretary Kwasi Kwarteng told a parliamentary committee last week that it would be “very irresponsible” to give taxpayers’ money to the group, describing it as “very, very opaque” and having “liabilities that nobody seems to have got to the bottom of.”GFG has borrowed about $5 billion from Greensill, and is desperately seeking fresh financing, which Sanjeev Gupta is coordinating from Dubai.Some progress has been made. Three lenders are in talks to refinance one of his Australian steel mills, while a private equity firm has positioned itself to buy two of the group’s aluminum plants.Still, other parts of the business are facing difficulties. Three French units were put into voluntary administration last week, while other parts of GFG in France and Belgium have sought protection from their creditors.Gupta said on the April 16 podcast that some of his U.K. assets were “struggling at the moment with the lack of funding.” He called on GFG employees to be “brave,” but warned of “some difficult decisions” to come.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Daniel Dines struggled with life in the U.S. after leaving his native Romania in 2001 to work for Microsoft Corp., but the experience created the foundation for one of the world’s biggest fortunes.The software programmer returned to his homeland in 2005 to start the business known today as UiPath Inc., an automation-software maker that debuts Wednesday after raising $1.3 billion in a U.S. initial public offering. Dines, the company’s chief executive officer, controls a stake worth more than $6 billion, according to data compiled by Bloomberg.“For someone coming in his 20s to the U.S. from Europe, it was a big challenge for me to adapt to the States, even though professionally speaking my experience at Microsoft was great,” Dines, 49, said last year at the annual Montgomery Summit technology conference.As a result, “I had a crazy idea to go back and start a company,” he added.‘Hidden Advantage’UiPath, which was valued at $7 billion in 2019, is now worth about $30 billion after its shares priced at $56, above a marketed range. That puts Dines among the world’s 500 richest, according to the Bloomberg Billionaires Index. A company representative declined to comment.“Starting a company from a small place with no market has a hidden advantage: It forces you to think globally from day one,” Dines said in a letter included in UiPath’s registry filings for its listing. He had already indicated his company was preparing for a listing back in early 2020.The company’s software performs many low-skilled tasks that businesses once outsourced to humans in cheaper-wage countries such as India or the Philippines. Known as robotic process automation technology, the technique takes over repetitive, routine data-entry and processing tasks. Some of its software has been used in hospitals and health-care projects to help with Covid-19, according to UiPath’s website.Dines, who studied math and computer science at the University of Bucharest, grew up in Romania while the nation was still ruled by dictator Nicolae Ceausescu. He founded the company as DeskOver and renamed it UiPath in 2015, running it out of an apartment in the capital before relocating its headquarters to New York in 2017.Funding RoundUiPath raised $750 million in a funding round led by Alkeon Capital and Coatue that gave it a value of $35 billion, according to a February statement. Altimeter Capital Management, Dragoneer, IVP, Sequoia Capital, Tiger Global Management and funds advised by T. Rowe Price Associates also chimed in.Dines owns all of the company’s Class B shares, which carry 35 votes apiece compared with one each for Class A stock. He will continue to control UiPath after the IPO and sold shares in the offering worth about $75 million, according to filings.“You have to become a public company at some point to allow your employees to get more liquidity, give them stock options,” he said in an interview with Bloomberg last year. “We’re almost there.”(Adds details of share sale in penultimate paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bitcoin declined for the seventh time in eight days, extending losses after President Joe Biden was said to propose almost doubling the capital-gains tax for the wealthy.The slide pushed Bitcoin down as much as 6.1% to about $48,432 in Friday trading as it continued to lose momentum. JPMorgan Chase & Co. and Tallbacken Capital Advisors LLC had recently warned there was potential for further downside after the largest cryptocurrency fell back from its record high of $64,870 on April 14 and took out key technical levels.“Bitcoin has slipped below the 50-day moving average support that it held sacrosanct through this rally,” said Pankaj Balani, CEO of Delta Exchange. “It looks like there is more downside here.”Read more: Wall Street Starts to See Weakness Emerge in Bitcoin ChartsTax concerns may be weighing, too -- as they did on American stocks Thursday. U.S. investors in the digital asset, which has advanced more than 70% this year despite its recent pullback, already face a capital gains tax if they sell the cryptocurrency after holding it for more than a year. But the coin’s been one of the best-performing assets in recent years -- anyone who bought a year ago is sitting on a nearly 550% gain. For investors who bought in April 2019, it’s roughly 800%.“One of the biggest things you have to worry about is that the things with the biggest gains are going to be most susceptible to selling,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It doesn’t mean people will dump wholesale, dump 100% of their positions, but you have some people who have huge money in this and, therefore, a big jump in the capital gains tax, they’ll be leaving a lot of money on the table.”The IRS has stepped up enforcement of tax collection on crypto sales. The agency -- which began asking crypto users to disclose transactions on their 2019 individual tax returns -- asks taxpayers whether they “received, sold, sent, exchanged or otherwise acquired any financial interest in any digital currency.”Still, investors may need to buckle up for more volatility in the near-term.“People have been talking about the capital gains tax and U.S. stock-market selloff being the catalyst of this,” said Todd Morakis, co-founder of digital-finance product and service provider JST Capital. “If it is true we’ve moved too much -- but once Bitcoin gets a head of steam it is tough to stop unless you are at a technical area.(Updates prices and chart.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The report by government-controlled Anadolu Agency comes a week after the country’s central bank announced it was banning the use of crypto for payments.
(Bloomberg) -- One of Turkey’s largest cryptocurrency exchanges said it lacked the financial strength to continue operations, leaving hundreds of thousands of investors fearing their savings have evaporated as authorities sought to locate the company’s 27-year-old founder, who fled the country.Confusion reigned about how many users of the Thodex exchange were affected and how much money was at stake. In a statement from an unknown location, Thodex Chief Executive Officer Faruk Fatih Ozer promised to repay investors and to return to Turkey to face justice after he did. The government moved to block the company’s accounts and police raided its head office in Istanbul.Losses could be as high as $2 billion, according to Haberturk newspaper, and a lawyer for the victims said the money invested by about 390,000 active users had become “irretrievable.” Both figures have been disputed by Ozer. About 30,000 users have been impacted, he said in a statement on the company’s website on Thursday.While authorities and customers tried to work out the details of what happened, a senior official in President Recep Tayyip Erdogan’s office called for rapid regulation of the crypto market. Globally, the surge in the prices of digital tokens has been accompanied by convictions and regulatory measures after various scams tied to trading platforms.The Turkish government should take action “as soon as possible,” Cemil Ertem, a senior economic adviser to Erdogan, told Bloomberg. “Pyramid schemes are being established. Turkey will undoubtedly carry out a regulation that’s in line with its economy but also by following global developments.”Alternative InvestmentsThodex was part of the cryptocurrency boom that has drawn in legions of Turks seeking to protect their savings from rampant inflation and an unstable currency. Inflation hit 16.2% in March, more than three times the central bank’s target of 5%. The Turkish lira has weakened 10% against the dollar this year, its ninth consecutive year of losses.The government spent a massive $165 billion in foreign-exchange reserves over the past two years, Erdogan revealed on Wednesday, part of a futile effort to prop up the national currency. Concern about the country’s dwindling foreign-exchange reserves, which are negative when money borrowed by the government from private banks via swap agreements are factored in, has fueled concern about both lira and dollar deposits -- and pushed savers into alternative investment vehicles.Last Friday, the volume of trade in Turkish crypto markets tripled to over $1.2 billion from a week earlier, according to data published by coingecko.com, which tracks data on price, volume and market value on crypto markets. That compares with an average daily trading volume in the Turkish stock market’s benchmark index of about $3.1 billion.“One can establish a crypto exchange with just 50,000 liras (about $6,000) in capital,” Oguz Evren Kilic, a lawyer representing Thodex users, said by phone. “There’s a huge regulatory gap in this field.”Ozer didn’t respond to multiple calls to his mobile phone. The company’s call center also didn’t pick up calls. Bedirhan Oguz Basibuyuk, Thodex’s lawyer, told Bloomberg he doesn’t know where Ozer is but that he’s not in Turkey. Demiroren News Agency reported that he fled to Albania on Tuesday, publishing what it said was a photo of him at Istanbul’s airport.Dogecoin CampaignLast month, Thodex initiated a campaign to boost membership by offering millions of free Dogecoins to new registrants. Its website says 4 million of the coins were distributed, though many people have taken to social media to complain they never received them.“I was born as one of the three siblings of a civil servant,” Ozer said in his statement, adding that he’s a high-school dropout. As the company ran into financial trouble, he said he thought about either committing suicide or giving himself up to authorities, but both of those options meant clients’ assets would never be retrieved.“So I decided to stay alive and fight, work and repay my debts to you,” he said. “The day I repay all my debt, I will return to my country and give myself in to justice.”(Updates with new lede, government agency action, details throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
SHANGHAI (Reuters) -Asian shares advanced on Friday, lifted by rising Chinese blue-chips and a decision by the European Central Bank to maintain stimulus, while investors largely shrugged off the impact of a possible U.S. capital gains tax hike. But equity markets in Europe were set to open lower after two days of gains. In early European trades, pan-region Euro Stoxx 50 futures were down 0.25%, German DAX futures slipped 0.35% and FTSE futures shed 0.43%.
Stocks rose for the first time in three days earlier on Wednesday.
UBS (UBS) lowered its price target for Nike (NKE) from $183 to $175. This follows a Chinese-led boycott of the brand for past statements criticizing China for alleged human rights abuses against Uyghurs in the northern province of Xinjiang.
(Bloomberg) -- The Bank of Canada sent out a warning to investors this week that inflation still matters.In a surprise move, it accelerated the timetable for a possible interest-rate increase and began paring back its bond purchases on Wednesday. That made Canada the first major economy to signal its intent to reduce emergency levels of monetary stimulus.It’s a turn in policy by Governor Tiff Macklem that shows there’s a limit to how much he’s willing to test the upper boundaries of inflation, with new forecasts showing the central bank expects the biggest persistent overshoot of its 2% target in at least two decades. The question is whether Canada’s situation is unique, or foreshadowing the start of a global exit from stimulus.Markets, however, see it as an outlier so far.“Canada does give you a flavor of what happens when your trajectory is stronger than anticipated,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney.While the Canadian dollar jumped the most since June on Wednesday, the Bank of Canada’s big move didn’t cause much of a ripple effect in global markets. The MSCI benchmark for global stocks is trading within 1% of a record high. Ten-year U.S. Treasury yields have fallen below 1.6%, from 1.74% at the end of March, as investors pare expectations that the Federal Reserve will raise rates soon.‘Distinguishing Factors’Counterparts elsewhere, meanwhile, are resisting. At a decision Thursday, European Central Bank President Christine Lagarde said the institution isn’t discussing the phasing out of its emergency bond buying, while the Federal Reserve has long been adamant it won’t scale back the pace of its $120 billion-a-month bond purchases until it sees “substantial further progress” on employment and inflation.“Central banks of small economies can sometimes be canaries in the coal mine,” Krishna Guha, vice chairman at Washington-based Evercore ISI, said in a report to investors. “But while there are some elements of this decision that have an obvious read-across to other central banks, there are also distinguishing factors that caution against naive extrapolation.”Some analysts don’t even see the Canadian central bank taking a dramatically more aggressive policy stance, even after Wednesday’s move. At a press conference after the decision, Macklem emphasized the central bank’s commitment is not to raise interest rates before the economy fully recovers, and that any future hike would reflect economic conditions at the time.Macklem is right-sizing one of the more aggressive quantitative easing programs relative to the size of its bond market, in an economy also being supported by massive fiscal stimulus. The Bank of Canada owns more than 40% of outstanding federal government bonds, potentially distorting the market.“Canada is different. The amount of the bonds they are buying is huge,” Steve Englander, head of global G-10 FX research at Standard Chartered Bank in New York, said by phone. “The Fed doesn’t have that issue.”The economic fundamentals are also pretty solid. Canada’s jobs market has recouped 90% of losses during the pandemic, versus just over 60% of U.S. losses made up so far. Canada’s red-hot housing market is another worry.“The situation is sufficiently unique in Canada that I’m not sure it applies to the Fed, or ECB,” Jean-Francois Perrault, chief economist at Bank of Nova Scotia, said by phone. “Our labor market basically is back to where it was.”What Bloomberg Economics Says...“The Bank of Canada brought forward when it expects the economy’s excess slack to be absorbed, but the accompanying Monetary Policy Report includes discussion of several factors that could soften the need to pull forward a rate hike into 2022. We continue to think a rate move is likely to be delayed into the first quarter of 2023.”--Andrew Husby, economistFor a full report, see herePerhaps more consequential, the Bank of Canada’s mandate is narrow -- focused on a 2% inflation target, with some flexibility over timing. Consumer price gains are expected to be at or above that mark for more than 70% of the forecast horizon to the end of 2023, according to Bloomberg calculations on Bank of Canada data.Macklem justified his tolerance for above-target inflation this week by citing the central bank’s decision not to preemptively raise rates until a full recovery. It’s a policy that’s paralleled in the U.S.But the Fed is juggling a number of objectives. These include growing concerns about racial equity that suggest it’s waiting for the headline jobless number to drop even below estimates of full employment.A more accommodative approach was formalized in a policy review last year that now allows the Fed to explicitly overshoot 2% inflation moderately for some time. It’s an option the Bank of Canada is considering as it completes its own mandate renewal later this year.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The direction of the June Comex gold market on Thursday is likely to be determined by trader reaction to the major 50% level at $1788.50.
The investing icon spells out what you should — and shouldn't — spend that money on
TAIPEI (Reuters) -Taiwan's key semiconductor industry has years of growth ahead of it with no worries about oversupply despite a massive capital investment programme and only a few competitors in the next decade or so, a senior government minister said on Friday. Kung Ming-hsin, the head of Taiwan's economic planning agency, the National Development Council, told Reuters the business opportunities presented by the global transformation to a digital economy were "very, very enormous". Kung also sits on the board of Taiwan Semiconductor Manufacturing Co Ltd (TSMC) as a representative of the largest shareholder, the government's National Development Fund, which holds around 6% of the stock of the world's most valuable semiconductor company.
French luxury house Chanel on Wednesday lost its trademark fight with Huawei Technologies after a top European court said their logos bear no similarity to each other. The dispute dated to 2017 when Huawei sought approval from the EU Intellectual Property Office (EUIPO), a trademark body, to register its computer hardware trademark which has two vertical interlocking semi-circles. Privately owned Chanel objected, saying that the design was similar to its registered French logo of two horizontal interlocking semi-circles used for its perfumes, cosmetics, costume jewellery, leather goods and clothing.
Netflix added just 4 million new subscribers this quarter, compared to the 6 million it expected. The streaming service blamed Covid-related production delays leading to a "lighter" than usual content slate.
(Bloomberg) -- U.S. regulators are considering tougher disclosure requirements for investment firms in response to this year’s implosion of Archegos Capital Management and trading gyrations in GameStop Corp.Securities and Exchange Commission officials are exploring how to increase transparency for the types of derivative bets that sank Archegos, the family office of billionaire trader Bill Hwang, according to people familiar with the matter. The regulator also faces pressure from Capitol Hill to shed more light on who’s shorting public companies after the GameStop frenzy.The review is in its early stages and Gary Gensler, who took over as SEC chairman last week, will decide how to proceed, the people said. A spokesman for Gensler declined to comment.The SEC is focusing on public documents known as forms 13F and 13D that reveal big stock holdings of hedge funds, mutual funds and family offices. Investment firms that own shares worth at least $100 million must file a 13F detailing their portfolios every quarter, while funds issue a 13D once their stake in a single corporation exceeds 5% -- alerting other investors that they may be pursuing a hostile takeover or the breakup of the company.Archegos, which doesn’t appear to have ever filed a 13F or a 13D, used swaps rather than common stock to stealthily amass huge positions, including an estimated $10 billion wager on ViacomCBS Inc. Like derivatives, short-sales are also largely excluded from the forms, an issue that became a flashpoint this year when lawmakers questioned how hedge funds made bearish bets that were seemingly bigger than GameStop’s market value without anyone knowing who was behind the trades.Read More: Archegos Exposes SEC Blind Spots, Dithering on Market OversightAmong issues the SEC is evaluating are whether filings should include derivatives and short positions, and if firms should submit 13Fs more frequently than every three months, said the people, who asked not to be identified in discussing internal conversations. An overhaul might help regulators and Wall Street spot risks that are building up in the financial system. The billions of dollars in losses that Archegos triggered for Credit Suisse Group AG and other firms show the consequences of having such blind spots.“Current reporting is both too slow and it’s incomplete,” said Andrew Park, a senior policy analyst at Americans for Financial Reform, a Washington-based group that pushes for stringent financial regulations. “Few people knew about Archegos until after it had blown up.”New details on the Archegos fallout emerged Thursday with Credit Suisse saying it would slash its lending to hedge funds by a third after the blow up cost the bank $5.5 billion. The losses were among the costliest in the firm’s history and have prompted it to tap investors for $2 billion in fresh capital.If the SEC requires more transparency, it would be welcomed by business groups that have long argued that investors should be compelled to disclose bets against companies and derivatives that are directly linked to share prices.But hedge funds and activist investors would likely lobby to fend off changes. Such firms claim that having to reveal short positions would make them targets of corporate smear campaigns and deter trading that can expose badly run companies or even frauds. The industry also says more disclosure isn’t necessary because market participants already know the level of negative wagers made against specific companies even if they can’t see who’s making the trades.One thorny issue the SEC is examining is how much legal flexibility it has to revamp rules, some of the people said. Current disclosure requirements are based on equity stakes that give investors the right to vote shares in corporate elections, not complex financial instruments like derivatives or options.Democrats on the House Financial Services Committee are also evaluating whether regulations should be tightened, including by making family offices like Archegos file confidential forms to the SEC that are meant to help identify threats to market stability, a congressional aide said. Even when family offices file 13Fs, they often avoid reporting their investments publicly because the SEC permits them to submit parts of the documents covertly.Read More: How New Wealth, Few Rules Fueled Family Office BoomThere isn’t yet a push to pass legislation because lawmakers would like to give Gensler time to get up to speed in his new job, according to the aide. In addition, some congressional members believe the SEC has all the authority it needs to make changes.Any move to increase transparency would be a reversal from what was proposed during the Trump administration when the SEC sought to exempt firms from filing 13Fs unless they held stock worth at least $3.5 billion. The plan was scuttled late last year amid heavy criticism from public companies.(Updates with details on Credit Suisse losses in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Wall Street is skeptical President Joe Biden's expected proposal to hike capital gains taxes could pass the Senate, but investors see risks that tax-motivated selling could still weigh on technology and other sectors that skyrocketed during the pandemic. While any tax increase will likely be lower than Biden's initial proposal given the Democrat's small advantage in the Senate, individual investors who are concerned about rising rates may start to unload shares in order to lock in current rates.
(Bloomberg) -- U.S. stocks had their biggest slide in five weeks after President Joe Biden was said to propose almost doubling the capital-gain tax for the wealthy. The dollar advanced.The S&P 500 turned lower after Bloomberg News reported that for those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means that federal tax rates for rich investors could be as high as 43.4%. Speculation arose that some traders may sell shares before any change is made to capture the lower rate.“Sticker shock over some of these tax figures will be hard to shake off for some investors,” Edward Moya, senior market analyst at Oanda, wrote in a note. “Some traders are looking for an excuse to lock in profits and they might choose to use this tax story as their catalyst.”Equities whipsawed throughout the session amid mixed economic data and renewed concern the pandemic was worsening. All major groups in the S&P 500 fell, led by material, energy and tech shares. AT&T Inc. jumped after beating earnings estimates. Intel Corp. -- the biggest chipmaker -- slid in afterhours trading as it reported a drop in data-center revenue and a steep slump in gross profit margin.Elsewhere, Bitcoin declined for the sixth time in seven days, extending losses after the higher capital gains proposal was revealed. Investors already face a capital-gains tax if they hold the cryptocurrency for more than a year.Here are some key events to watch this week:U.S. releases new home sales data Friday.These are some of the main moves in markets:StocksThe S&P 500 fell 0.9% at 4 p.m. New York time.The Stoxx Europe 600 Index advanced 0.7%.The MSCI All-Country World Index declined 0.2%.CurrenciesThe Bloomberg Dollar Spot Index gained 0.2%.The euro declined 0.2% to $1.2014.The Japanese yen appreciated 0.1% to 107.98 per dollar.BondsThe yield on 10-year Treasuries fell one basis point to 1.54%.Germany’s 10-year yield rose one basis point to -0.25%.Britain’s 10-year yield was unchanged at 0.74%.CommoditiesWest Texas Intermediate crude rose 0.5% to $61.66 a barrel.Gold fell 0.5% to $1,783.50 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- American Industrial Partners has bought most of the senior debt of two of Sanjeev Gupta’s European aluminum assets, putting it in position to take them over, people familiar with the matter said.The New York-based private equity firm in recent days bought debt linked to Gupta’s Dunkirk smelter in France as well as refinancing the senior debt of the Duffel rolling mill in Belgium, said the people, who asked not to be identified as the deals weren’t public.Gupta has been searching for new financing as the industrialist scrambles to save his metals empire after the collapse of its biggest lender, Greensill Capital, last month. AIP’s move to buy out other creditors at par could signal its intention to purchase the aluminum assets -- either directly from Gupta or after an insolvency process.Gupta’s GFG Alliance, a loose group of metals and commodity trading companies, warned in February it would face insolvency without Greensill’s funding, according to court documents. Its aluminum assets are grouped under the name Alvance.“GFG Alliance can confirm Alvance Aluminium Duffel is enjoying the benefits of recent strong aluminum markets and its excellent relationships with customers. We have now completed the refinancing of its external debt facilities, with a large international lender, which will position the business for continued growth,” a spokesperson for GFG said, without elaborating.The GFG spokesperson declined to comment on Dunkirk and potential talks to sell the plants. Representatives for AIP didn’t immediately reply to calls and emails seeking comment.AIP’s move caps a frenetic period of trading in debt linked to the Dunkirk plant, Europe’s largest aluminum smelter, which Gupta bought from Rio Tinto Group in 2018.Several lenders including BNP Paribas SA, Morgan Stanley, Natixis SA, Industrial & Commercial Bank of China Ltd. and ICBC Standard Bank Plc have sold or sought to sell their portions of the loan in recent weeks, Bloomberg has reported. The loans were then bought at a discount by distressed debt investors including Davidson Kempner Capital Management and Triton Partners, before AIP came in to buy them out at par, the people said.Still, Trafigura Group has not only retained its portion of the Dunkirk loan but also added to it in recent days, several of the people said, potentially indicating that the trading house could play a role in a future deal for the smelter. Rival trader Glencore Plc has also expressed interest in the smelter, according to separate people familiar with the matter.Trafigura and Glencore declined to comment.At the same time, a senior loan of around 50 million euros ($60 million) to the Duffel plant from Tor Investment Management has also been repaid, two of the people said.AIP is focused on buying industrial businesses and has raised approximately $7 billion of capital across seven investment funds, according to its website. In December, it bought a former Aleris Corp. aluminum rolling mill in Lewisport, Kentucky from Hindalco Industries Ltd.Gupta’s aluminum assets could have an enterprise value of just over $1 billion, including $637 million in debt, according to a GFG presentation seen by Bloomberg News. The assets’ earnings before interest, tax, depreciation and amortization totaled $103 million last year, the presentation showed.(Adds context on AIP in penultimate paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.