SoFi CEO Anthony Noto discusses how his company's consumers can now buy and sell Bitcoin, Ethereum and Litecoin.
SoFi CEO Anthony Noto discusses how his company's consumers can now buy and sell Bitcoin, Ethereum and Litecoin.
(Bloomberg) -- One of the biggest Brexit battlegrounds between the European Union and the U.K. now has a price tag: at least $2.4 million a day.That’s how much any move by the European Union to cut off access to London’s dominant clearinghouses for derivatives could cost traders in euro interest rate swaps, net of buying, according to an estimate from Albert Menkveld, professor of finance at Vrije Universiteit Amsterdam, who has sat on advisory panels to European regulatory authorities.Fragmenting cross-Channel clearing would result in additional costs because global dealers would need more collateral for their positions in multiple clearinghouses in the U.K. and in the EU, Menkveld said. They wouldn’t be able to offset, or net, the positions as easily and that would require dealers to raise extra funds.Those additional costs would likely be passed on to pensions, money managers and other users of derivatives in the local jurisdiction, Menkveld said, who compares the burden on financial markets to traffic jams caused by passport controls.“This is the price we all paid for control by national authorities,” Menkveld wrote in a blog post. “As a European citizen I can now zip onto the Autobahn at 100-plus kilometers per hour, but my pension fund might soon pay for crossing the border with the U.K. to diversify risk.”His tally is one of the first to show the immediate fallout if authorities stop the seamless, cross-Channel settlement of trillions in euro interest rate swap contracts, which currently takes place largely in London. The actual cost could be far greater if it weakens London’s attractiveness as a global financial center. The business is widely viewed as a core pillar of London’s standing and the EU’s desire to pull more of that business away has prompted sabre-rattling from politicians, financiers and even the governor of the Bank of England.The U.K. and major lobby groups for the biggest banks and money managers in the world are calling for the EU to maintain easy access to London clearinghouses, including the London Stock Exchange Group Plc’s LCH unit which is the world’s biggest for euro interest rate swaps. The European Commission in Brussels wants the bloc’s traders to move more of their euro-denominated business inside the EU and not rely so heavily on London. A ruling last year extended access to London through June 2022.Clearinghouses serve as a key hub in the global financial system, settling hundreds of trillions of dollars in deals between banks, hedge funds, pensions and a wide range of corporations. The firms collect collateral, or margin, from buyers and sellers to reduce the risk that the default of one side spreads panic to the other and, in turn, across the broader system.If the temporary decision isn’t renewed, Bank of England Governor Andrew Bailey has said a quarter of euro-derivatives clearing business would need to shift to the EU. The rest would likely stay in London because it is currently the most efficient place for it, he said.Additional CostsThe estimated net price impact probably understates the total additional costs to traders in the market from the disruption that would ensue, Menkveld said.Costs could mount because traders would probably have a harder time offsetting positions in euros, pounds and other currencies as well as the increased compliance burden. In more stressed markets, traders could face much higher costs from the split and difficulty using clearinghouses in both the U.K. and the EU, he said.“There is a trade-off here between the benefits of local control by regulators, and the additional costs that fragmented clearing imposes,” Menkveld said. “The benefit is hard to quantify but the costs are non-trivial.”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) -- DraftKings Inc. said its first-quarter revenue topped analysts’ expectations, and the company boosted its projections for the year.The online gambling company reported record revenue of $312 million in the first quarter, beating estimates of $239.4 million, and now expects $1.05 billion to $1.15 billion in revenue for the full year, up from a previous forecast of $900 million to $1 billion.DraftKings posted a loss of 87 cents a share, worse than analysts’ estimate of 44 cents, driven by sales and marketing expenses.See more details.Key InsightsThe results showed that Americans continued to bet on sports and play games like poker and blackjack on their phones despite the U.S. economy reopening as vaccine distribution ramped up. The guidance assumes that announced professional and college sports calendars come to fruition. “DraftKings is off to an outstanding start in 2021,” Chief Executive Officer Jason Robins said in a statement Friday.DraftKings reported a 114% increase in monthly unique paying customers to 1.5 million, topping the average analyst forecast for 1.19 million. The growth was fueled by strength across daily fantasy sports, online sports betting and i-gaming, DraftKings said in the statement.Shares of DraftKings and closely watched peer Penn National have stumbled in recent weeks due to bumpy legalization in states like New York and as key seasonal catalysts like the Super Bowl and March Madness are now firmly in the rear-view mirror. Despite strong results, Penn National Gaming Inc. became the latest high-flying stock to tumble in the aftermath of earnings, something DraftKings’ investors will be wary of.Market ReactionBoston-based DraftKings rose as much as 3.1% in New York trading before retreating closer to unchanged. The company had shed more than a quarter of its value from a mid-March record prior to Friday’s trading, but the stock still more than doubled in the past year through Thursday.Get MoreRead the statement.See DraftKings estimates.(Updates with shares in Market Reaction.)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) -- Follow Bloomberg on LINE messenger for all the business news and analysis you need.Hong Kong tycoon Li Ka-shing’s private investment firm Horizons Ventures Ltd. will make Southeast Asia a priority, with the region’s digital economy booming as the pandemic drives more people to use the internet.Horizons Ventures will focus in particular on Southeast Asia’s biggest market, Indonesia, co-founder Solina Chau, Li’s long-time confidante, told Bloomberg News in a statement sent by text message.The firm, whose early bet on Zoom Video Communications Inc. contributed to a surge in Li’s wealth during the pandemic, has over the past year invested in three Indonesia-based startups in funding rounds that have raised more than $210 million. Partnering up with Jakarta’s Alpha JWC Ventures, one of Southeast Asia’s largest venture capitalists, Horizons seeks to identify young companies that could be the region’s next most popular.The investment firm is pivoting into developing economies after previously focusing on North America, Europe and Israel. Covid-19 is fueling a rapid digital transformation and burgeoning startup scene in Southeast Asia as more people use digital services, generating some of the region’s largest listings. New internet users quadrupled year-on-year in 2020 to 40 million in its six largest economies -- bringing 70% of their total population online -- according to an annual study by Google, Bain & Co. and Singapore’s Temasek Holdings Pte.“In the past, we felt more innovation, opportunities and founders with science and technology background in the U.S., Europe and Israel, but now we are seeing Indonesia and broader Southeast Asia really going through a very critical juncture,” Frances Kang, a director of Horizons Ventures, told Bloomberg in an interview. The company “will only deploy more capital” into the region, she said, and has set up a team looking into opportunities there.Horizon Ventures and Alpha JWC have over the past year invested in Indonesian online stock brokerage Ajaib, rapidly-expanding coffee chain Kopi Kenangan and capsule hotel operator Bobobox. Alpha manages some $200 million across two funds and has invested in more than 40 startups.Still, the region’s political uncertainties and fragmented markets remain challenging for investors. Two of Southeast Asia’s leading economies, Thailand and Malaysia, have seen recent government upheavals, and memories of the 1997 and 2008 financial crises linger.Recent mega deals in Southeast Asia include the $40 billion listing of Singapore’s ride-hailing firm Grab and a similar deal for Indonesian online travel company Traveloka, with a potential valuation of $5 billion.Li, 92, joins other high-profile global investors chasing the region’s growth potential. His son Richard Li, chairman of Hong Kong’s Pacific Century Group, has teamed up with American tech mogul Peter Thiel to set up two blank-check companies seeking merger and acquisition targets in Southeast Asia. Japanese conglomerate SoftBank Group Corp. and billionaire Mohamed Mansour, meanwhile, have invested in Grab, the region’s most valuable startup.Horizons Ventures has made early investments in a number of other tech giants including Facebook Inc. and Spotify Technology SA.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) -- Coinbase Global Inc. sank to a record low as investors fled high-flying market newcomers.The operator of the largest U.S. cryptocurrency exchange slumped 6% to $256.76 on Thursday, dropping for a fourth straight day. That left the shares just above the $250 reference price for its April direct listing. An exchange-traded fund that tracks shares of companies that recently went public plunged for an eighth day, the longest slide since 2015. Virgin Galactic Holdings Inc. and Opendoor Technologies Inc., companies that came to market through blank-check offerings, each sank at least 3.8%.“We saw a mini-bubble in SPACs, IPOs, crypto, clean-tech and hyper-growth in late 2020 and early 2021 and many of these asset classes are nursing bad hangovers,” said Mike Bailey, director of research at FBB Capital Partners.Coinbase’s slide comes as investors pour into extremely speculative cryptocurrencies such as Dogecoin and Binance Coin -- tokens that the exchange doesn’t offer. Most of its traffic had come from Bitcoin trades, but the price of the largest crypto coin has been mired in a narrow band for weeks. Coinbase started trading at $381 on April 14 before briefly topping $400. It’s now down 22% from the close on its first day.Nasdaq had set a reference price of $250 a share on April 13 for Coinbase’s direct listing, a number that’s a requirement for the stock to begin trading, but not a direct indicator of the company’s potential market capitalization.“What has really hurt Coinbase, now that their direct listing has taken off, you’re seeing expectations that other exchanges are coming on board,” said Edward Moya, senior market analyst at Oanda. “There’s this belief this could be as good as it gets for Coinbase in the short-term.”The Renaissance IPO ETF dropped 4.2% on Thursday, bringing its year-to-date loss to about 14%.(Updates prices.)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.
Canadian electric vehicle company Lion Electric on Friday said it had selected Illinois as the location for its new U.S. manufacturing plant, promising to invest at least $70 million and create about 750 jobs over the next three years. Lion, known for its electric yellow school buses, said it will build the 900,000 square foot facility in Joliet near Chicago to produce 20,000 electric buses and medium and heavy-duty trucks per year. Lion Chief Executive Marc Bedard said in an interview that while the Illinois factory would focus on vehicle manufacturing initially, the company might later add battery production.
As investor interest in cryptocurrency spikes, bitcoin could rise to $1 million over the next five years, one expert told Yahoo Finance Live.
(Bloomberg) -- Sanjeev Gupta’s U.K. steelmaking business has reached terms on a 200 million-pound ($278 million) loan from White Oak Global Advisors LLC.The loan will be subject to due diligence and the approval of Credit Suisse Group AG, according to a person familiar with the matter. The Swiss bank has a claim on the business through financing provided by Greensill Capital and repackaged into its funds.The working capital facility would allow Gupta’s steel businesses to increase production and take advantage of record steel prices, the person said, asking not to be identified because the matter is private.The loan would be a potential lifeline for Gupta’s GFG Alliance, which is fighting for survival after the collapse of its biggest lender Greensill Capital. Earlier this week, Gupta agreed another loan for his primary steel business in Australia, which includes the Whyalla mill.White Oak declined to comment.Gupta’s U.K. steel business owes Greensill $769 million, according to a March 2021 GFG presentation seen by Bloomberg. The loan from White Oak would not be used to refinance that debt, the person familiar said.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) -- China’s exports rose more than expected in April, suggesting its trade out-performance could last longer than expected this year, fueled by global fiscal stimulus.Exports grew 32.3% in dollar terms in April from a year earlier, the customs administration said Friday, exceeding the 24.1% median estimate in a Bloomberg survey of economists. Imports climbed 43.1%, a sign of strong domestic demand and soaring commodity prices, resulting in a bigger-than-expected trade surplus of $42.85 billion for the month.Global appetite for Chinese goods remained strong in the month, thanks to stimulus packages introduced by developed economies that’s helped to fuel demand for household goods, furniture and electronic devices. With vaccine rollouts accelerating and more economies opening up, China’s export growth was widely expected to moderate this year as consumers start to spend more on services. But April’s data shows that hasn’t happened yet.“The export figure clearly reflects a recovering and expanding global economy,” said Hao Zhou, an economist at Commerzbank AG in Singapore. “Robust imports and exports also mean that China’s manufacturing industry is still outperforming the services sector to lead the economic rebound.”The low base from a year ago also helped to underpin the strong results, but even on a two-year average growth basis which strips out those effects, April’s export growth was 16.8%, much stronger than pre-pandemic levels, according to analysis by Bloomberg Economics.What Bloomberg Economics Says...“Imports were lifted mainly by higher commodity prices, but also due to a recovery in domestic demand. These factors that supported China trade look set to continue in the near term.”-- David Qu, China economistFor the full note click hereThe U.S. was the biggest export market last month, accounting for 15.9% of Chinese goods sold abroad. Southeast Asian nations bought 15.6% of exports while the European Union purchased 15.1%.“We expect China’s export growth will stay strong into the second half of this year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd, citing strong growth in U.S. demand and continued coronavirus outbreaks in developing countries such as India causing production to shift to China. Those trends are likely to support China’s currency, he added.Politburo MeetingLiu Peiqian, an economist at Natwest Group Plc, cited increased global demand for microchips, where Chinese companies are a key part of the supply chain, as another reason why “exports outperformance will likely remain a key theme” in China’s recovery. In volume terms, imports of industrial metals and energy products softened slightly in April, she added, suggesting that the domestic demand recovery could still be relatively weak.At the Communist Party’s Politburo meeting last week, China’s top leaders pledged to accelerate the recovery in domestic demand and reiterated there would be “no sharp turn” on economic policy. But the government is focused on raising consumer spending on goods and services, while taking a cautious stance on property and infrastructure investment, which tends to be more import-intensive.Read More: Chinese Copper Imports Drop With Scorching Rally Taking TollA strengthening recovery in Chinese consumer spending was indicated by the April services purchasing managers’ index compiled by Caixin Media and IHS Markit, which rose to 56.3 from 54.3 the previous month, well above the 50 reading that marks an expansion from the previous month. However, data from a recent five-day public holiday in China showed spending below pre-pandemic levels, suggesting China will remain dependent on overseas demand for much of its growth this year.Other details:For a breakdown of commodity imports, click here. While the volume of iron ore imports rose 6.7% in January-April compared with the same period in 2020, the value of shipments surged 82.1%Imports were also boosted by the delivery of 24 aircraft in April; on a year-to-date basis, the value of aircraft imports surged 247% from the same period in 2020In yuan terms, exports rose 22.2% in April from a year earlier, higher than the 12.5% forecast by economists in a Bloomberg survey; imports grew 32.2%, below the 33.6% predicted(Updates with additional details and comments from economists.)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) -- West Fraser Timber Co. plans to expand capacity at five of its lumber mills in the U.S. South as a home-building boom fuels lumber demand.The pandemic-fueled surge in home construction last year took North American sawmills by surprise, sending lumber prices to new records. U.S. futures this week hit $1,600 per 1,000 board feet for the first time, a four-fold increase from a year ago. While production has since ramped up, demand continues to outpace supplies as home-buying and renovations continue.“In the lumber segment we expect to invest approximately $150 million at five of our U.S. South lumber mills under the strategic capital program,” the company said Thursday in a statement. “Investments at the target mills will expand their capacity, increase the mix of higher-margin 2x4s and reduce fixed and variable production costs.”Key TakeawaysThe Vancouver-based company acquired Norbord Inc., one of the world’s biggest makers of oriented strand board, in February. West Fraser said it will invest $30 million at two OSB mills to improve productivity.Log costs for the company’s Canadian and engineered wood product operations are expected to remain elevated as long as demand exceeds available log supply in B.C.Higher Canadian stumpage rates and increased costs from extreme weather in the U.S. south, negatively impacted adjusted EBITDA compared to the prior quarter, the company said.Adjusted EBITDA for lumber in the last three months of 2020, when prices were unseasonably high due to strong home building and renovation demand, was $425 million. This jumped to $646 million in the first three months of 2021.West Fraser said it will move forward with roughly $180 million of additional capital projects in the second half of 2021 through 2023, and reiterated its capital expenditure target of roughly $450 million this year.Market ReactionWest Fraser shares are up 28% this year through Thursday’s close, after reaching a record high at C$106.42 last month in Toronto, outperforming the nearly 11% gain of Canada’s benchmark S&P/TSX Composite Index.Get MoreFirst-quarter adjusted EBITDA was $1 billion or $6.96 a share, missing the C$1.18 billion average estimate in a Bloomberg survey.Read more about West Fraser’s quarterly results here.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.
It's been a long time since inflation posed a potential problem for investors, and some strategists have some ideas how to defend a portfolio against it.
The propulsion system, which powers automotive vehicles, will incorporate American Axle's electric drive units into Ree's technology that integrates all the traditional vehicle chassis components into the arch of the wheel. The electric drive units will be developed by American Axle in Detroit and prototypes will be delivered by the end of the year.
(Bloomberg) -- As the pullback in Federal Reserve monetary support draws inexorably closer, investors are striving to taper-proof their portfolios with 2013’s volatility still fresh in their minds.Eight years ago this month, global yields jumped and risky assets fell on a hint from then-Fed Chairman Ben Bernanke that the central bank might start trimming its crisis-era bond program. Wary of a repeat volatility spike some fund managers are turning to lower-duration high-yield debt for shelter, while others see a tantrum-less taper and are betting on emerging market assets to prevail.With economists expecting the central bank to begin paring asset purchases by the end of this year, Fed officials are sticking to the script that it’s too early to discuss any shift in pandemic policy setting. But moves by counterparts in the U.K. and Canada to slow the pace of bond buying as their economies improve have reminded traders that the Fed cannot avoid the taper forever, especially as U.S. growth surges.“The biggest threat to the market is rates volatility jumping higher, like we saw at the end of February,” said Pilar Gomez-Bravo, investment officer and director of fixed income at MFS Investment Management in London. “The valuations of risky assets are high, so you don’t have a lot of room for complacency.”Gomez-Bravo favors junk bonds as an asset class less vulnerable to a reset in yields than their investment-grade peers, which have much higher duration or sensitivity to interest rates. Leveraged loans are an even better choice and some “stressed” debt securities should be less correlated to broader market repricings, according to Jefferies Financial Group Inc. credit strategist Sherif Hamid.Investment-grade bonds are already under pressure with the largest exchange-traded fund for high-grade credit experiencing its longest stretch of outflows since 2013, according to data compiled by Bloomberg.Taper TemplateBonds took the brunt of the 2013 turmoil, with Treasury yields jumping 50 basis points in the month after Bernanke spoke. Over the same period the MSCI Emerging Markets Index slumped 14% and the Nasdaq 100 fell 4%. However, the tech-heavy gauge now trades on 26 times forward earnings, compared to just 15 times then.This time around, BlackRock Inc. -- the world’s largest asset manager -- suggests that much of the move in the bond market may have already taken place, and emerging market assets should hold up much better.“We still think yields can move somewhat higher but tactically we think the big repricing of the activity restart is now mostly done,” said Ben Powell, chief Asia Pacific investment strategist for the BlackRock Investment Institute.The 10-year Treasury yield is up about 65 basis points this year and traded around 1.57% on Friday. The Bloomberg Barclays U.S. Treasury Total Return Index is down over 3% year-to-date.According to BlackRock, the combination of an economic recovery, heavy stimulus and a broadly stable dollar should be enough to spare risk assets -- including those from developing countries -- much of the impact of a gradual easing of central bank support.The firm is overweight both developed- and emerging-market equities, “and on the fixed-income side we actually upgraded EM local currency debt last week,” Powell said.Jackson HoleGauges of implied volatility in currencies, Treasuries and U.S. equities have retreated after a modest rise at the end of February suggesting investors don’t see an immediate risk of a Fed taper announcement. But trader activity in the options market points to Jackson Hole -- the annual gathering of central bankers in August -- as a likely candidate for taper talk to begin.Meanwhile, investors should parse minutes of Federal Open Market Committee meetings where past experience suggests discussions of tapering will appear first, according to Win Thin, Brown Brothers Harriman & Co.’s global head of currency strategy. Minutes for the April meeting will be released on May 19.“Suffice to say that Chair Powell will take great pains not to surprise the markets with a decision to taper,” Thin wrote Thursday. “Rather, it will be well-telegraphed and the minutes are the first place markets should look.”(Updates pricing in tenth 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.
At least two private equity funds are seeking to acquire stakes in Venezuelan companies that have survived the country's economic crisis, spurred in part by optimism that the Biden administration could ease sanctions on the South American nation, according to a dozen sources familiar with the talks. The interest by funds, including Miami-based 3B1 Guacamaya Fund and Cayman Islands-based Knossos Asset Management, follows Venezuelan President Nicolas Maduro's abrupt 2019 liberalization of the economy https://www.reuters.com/article/us-venezuela-shops-idCAKBN1YK16X amid a sanctions program created by former U.S. President Donald Trump. Maduro's unexpected overhaul scrapped a price control system and permitted dollar transactions for the first time in decades, allowing a small group of firms to emerge from the wreckage of a four-year hyperinflationary crisis that prompted many multinationals to leave https://t.co/I8H1Kakhhs?amp=1 the country or sell subsidiaries.
(Bloomberg) -- Malaysia kept its benchmark interest rate at a record low Thursday as a fresh surge in coronavirus infections threatens to further delay an economic recovery.Bank Negara Malaysia held the overnight policy rate at 1.75% for a fifth straight meeting, a decision expected by all 21 economists in a Bloomberg survey.“Latest indicators point to continued improvements in economic activity in the first quarter and into April,” the central bank said in a statement Thursday. “While the recent re-imposition of containment measures in select locations will affect economic activity in the short term, the impact will be less severe as almost all economic sectors are allowed to operate.”Still, the statement noted that “the balance of risks to the growth outlook remains tilted to the downside,” due to uncertainty over the course of the pandemic and potential challenges for the country’s vaccine rollout.The decision comes as Malaysia suspended a domestic travel bubble and tightened movement curbs in Kuala Lumpur and in Selangor, its richest state, to contain a surge in infections that has left some hospitals low on ICU beds. Daily cases last week topped 3,000 for the first time since February.The ringgit was largely unchanged on the day at 4.1215 per dollar as of 4:38 p.m. Stocks erased earlier losses to trade little changed on the day.Recent GainsBank Negara Malaysia “spoke about how the current monetary policy stance remains appropriate, and how the virus curbs are less severe than before,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore. “From those alone, it does not look like a central bank that is laying the groundwork for any cut in the near term.”Further containment measures could undo recent strides the economy has made. The April manufacturing Purchasing Managers Index hit a record high, while March exports registered the strongest year-on-year growth in almost four years. Manufacturing sales rose at their fastest pace in nearly four years in March, while an index of industrial production showed its strongest gains in March since July 2013.What Bloomberg Economics Says...“Downside risks from the pandemic keep the door open for more rate cuts. Our base case, though, remains that BNM will leave its policy rate unchanged this year. This assumes global demand continues to recover, supporting commodity prices and market sentiment. The distribution of Covid-19 vaccines, albeit slow, should help to steadily lower new virus cases, allowing Malaysia’s social distancing measures to be pared back.”-- Tamara Mast Henderson, Asean economistConsumer prices surged to an almost three-year high in March, driven partly by a low base effect from last year, when tight movement restrictions pushed the country into deflation. The central bank expects headline inflation to average 2.5%-4% this year.“The fact that Bank Negara Malaysia (BNM) left its policy rate on hold at 1.75% today despite the worsening economic outlook means any further loosening is unlikely,” Alex Holmes, Asia economist at Capital Economics Ltd., wrote after the decision. “With the recovery set to be slow and fitful, we think BNM will leave interest rates at their current low until at least the end of 2022.”(Updates market levels in sixth paragraph, adds Bloomberg Economics comment in text box.)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) -- China’s key equities index fell on Thursday following the Labor Day break, led by a slump in drugmakers after news that the U.S. will support a proposal to waive intellectual-property protections for Covid-19 vaccines.The CSI 300 Index dropped 1.2%, while the Shanghai Composite Index slipped 0.2% at close. The tech-heavy ChiNext Index fell 2.5%. The health-care subgauge was the worst performer on the benchmark CSI 300, while Shanghai Fosun Pharmaceutical Group Co. dropped by as much as 26% in Hong Kong on the prospect of increased global supply.Tourism stocks also fell despite the increased number of travelers over the break from a year earlier. Songcheng Performance Development Co. closed 5.4% lower, while China Tourism Group Duty Free Corp. lost 5.2%. Even with domestic travel recovering, spending still lags, Citigroup Inc. analysts including Lydia Ling wrote in a note.Adding to the bearish sentiment was a statement from China saying the nation was suspending ministerial economic talks with Australia, a largely symbolic move showing Beijing’s growing frustration with Canberra. Rising geopolitical tensions between China and some western countries are also weighing on the market, with the European Union increasingly taking a tougher stance on Beijing.“It’s unclear what the actual impact of halting the dialogue will be on trade and markets,” said Wu Xuan, chief strategist at Tebon Fund. “It does cast doubt and uncertainty towards the safety of investments of Chinese firms overseas, especially in areas where the geopolitical conditions are not so friendly toward China.”While growth continues in the world’s second-largest economy, traders say the recent economic signals offer few catalysts to push the key benchmark away from its recent narrow band. The best quarterly earnings since 2010 were met with range-bound trading, a wave of new pandemic cases in developing countries is weighing on markets, a supercharged commodities boom may spur inflation and the Communist Party’s Politburo meeting last week called for a continuation of macro policies.“The mainland market lacks upside catalyst,” said Castor Pang, head of research at Core Pacific Yamaichi. “The Politburo meeting offered nothing that excite the investors, as there is no additional incentives to boost the economy. The virus situation is worrying and the relationship with the U.S. is relatively sour.”Traders were jittery about Thursday’s open as they recalled their return from the last national holiday in February when a rally that pushed the CSI 300 past its 2007 peak fizzled on the back of a renewed deleveraging campaign by Beijing. The gauge is down 12% since that year-to-date high before Thursday.That’s not to say there aren’t drivers that could give the market a lift out of the doldrums. The end of the holidays will mean retail investors could return en masse, having piled into Chinese equity exchange-traded funds ahead of the break. Both Goldman Sachs Group Inc. and UBS Group AG strategists believe the recent decline has made Chinese stocks relatively attractive, as the benchmarks are trading at undemanding price-to-earnings multiples.Read more: ‘Buy in May’ Is Right Strategy for Goldman and UBS: China TodayForeign investors have been bullish: they bought a combined 52.6 billion yuan ($8.1 billion) of mainland stocks through Hong Kong’s stock trading links with Shanghai and Shenzhen in April, the most in four months, according to Bloomberg data. On Thursday, they net bought 184 million yuan of mainland shares via the links.(Updates closing prices in paragraphs 2 and 3, adds northbound flow in final 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.
LONDON (Reuters) -BMW remains on course to meet its profit targets for 2021 despite rising raw material costs, the German carmaker said on Friday, having largely steered clear of the semiconductor chip shortage battering rivals like Volkswagen. Volkswagen boss Herbert Diess had said on Thursday that Europe's top carmaker was in "crisis mode" over the chip shortage, which would hit profits in the second quarter, while Ford Motor Co last week said the lack of chips could halve its second-quarter vehicle production. BMW is known for its strong relations with suppliers and has been working with them to avoid disruptions.
Elon Musk, CEO of Tesla and SpaceX, likes cryptocurrency, such as bitcoin and dogecoin. But he's urging investors to proceed "with caution."
(Bloomberg) -- A large option bet on quicker rate-hikes by the Federal Reserve got bigger this week, even as officials pushed back against hawkish expectations.The wager -- carrying a notional value of $40 billion -- is focused on a possible surprise at the annual August symposium in Jackson Hole, which has been used in the past by central bankers to signal changes in monetary policy. The positions are now the third-biggest of any Eurodollar options.As it stands, Eurodollar futures -- which are priced off three-month Libor -- imply a bit less than five 25 basis point rate increases by September 2024. This option play, focused on contracts expiring the month after Jackson Hole, is looking for traders to add another two Fed hikes to those expectations.The trade began last week through risk reversals -- where the investor purchases put options that pay off if rates rise, but offsets the cost by selling those which benefit from a fall -- in a position exceeding 150,000 contracts, according to U.S.-based traders, who declined to be identified as they aren’t authorized to speak publicly.The put option bought was the 98.00 strike, equivalent to markets pricing for a 2% Libor fix by September 2024 versus around the 1.50% that is expected now.Read: More details on the initial risk reversal flowThe size was already large enough to get tongues wagging among brokers. There was another spate of buying this week, though solely in the put strike. There’s been around 250,000 put options bought, which combined with the initial risk reversal flows, mean about 400,000 puts have been placed, the traders said.Following Thursday’s purchase, preliminary open interest -- a measure of outstanding positions -- surged again, with the position in this strike now the third largest of any Eurodollar options.See here for detail on prices paid in latest put option purchaseThe wagers have continued to be placed despite Fed officials this week pushing back on market expectations for policymakers to start discussing a tapering of the central bank’s bond-buying program.(Updates to include data showing scale of option bet in second and seventh 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.
Aston Martin sales have surged as consumers flocked to buy a new SUV from the troubled luxury car maker. The business sold 1,353 cars in the first three months of 2021, more than double the 578 sales it made a year earlier. Around half of the cars sold this year were its DBX model, a 4x4 which costs at least £158,000. Revenue jumped 153pc to £224m and pre-tax losses more than halved to £42m. The sales are a boost for executive chairman Lawrence Stroll, a billionaire motoring enthusiast who took charge of Aston in January 2020 after mounting losses and a brutal run of share price performance. Mr Stroll has bet the company's future on the success of the DBX, insisting it would prove popular with drivers seeikng an ultra-high end SUV. The strongest demand in the first quarter came from China where sales jumped 900pc, Mr Stroll said. He said there is far more appetite for SUVs than sports cars in the Chinese market, where 20pc of buyers are female. Losses were reduced by what Mr Stroll described as an expensive but necessary decision to clear unsold stock languishing in forecourts. Aston now only builds cars to order, and expects to sell 6,000 vehicles this year.
(Bloomberg) -- About 8,300 miles east of Wall Street, on a stretch of Bangalore’s Outer Ring Road, sits what was once the heart of the global financial industry’s back office.Before the pandemic, this cluster of glass-and-steel towers housed thousands of employees at firms like Goldman Sachs Group Inc. and UBS Group AG who played critical roles in everything from risk management to customer service and compliance.Now the buildings are eerily empty. And with case counts soaring across Bangalore and much of India, work-from-home arrangements that have sustained Wall Street’s back-office operations for months are coming under intense strain. A growing number of employees are either sick or scrambling to find critical medical supplies such as oxygen for relatives or friends.Standard Chartered Plc said last week that about 800 of its 20,000 staffers in India were infected. As many as 25% of employees in some teams at UBS are absent, said an executive at the firm who spoke on condition of anonymity for fear of losing his job. At Wells Fargo & Co.’s offices in Bangalore and Hyderabad, work on co-branded cards, balance transfers and reward programs is running behind schedule, an executive said.While banks have so far avoided major disruptions by shifting tasks to other offshore hubs, India’s Covid crisis has exposed a little-discussed vulnerability for companies that have spent decades outsourcing functions to the country. India’s outbreak is intensifying even as vaccinations fuel economic recoveries in other parts of the world, heightening fears of a back-office bottleneck at a time when Wall Street firms have rarely been busier.“This is not a local, India-only problem, this is a global crisis,” said D.D. Mishra, senior director analyst at researcher Gartner Inc. The current wave will be “significantly bigger” and organizations with India-based staff “will need to take action to plan for and mitigate if needed,” Mishra and his colleagues wrote in a note last week.Nasscom, the key lobby group for India’s $194 billion outsourcing industry and its almost 5 million employees, has downplayed the threat to operations. But Mishra and fellow analysts at Gartner say they’re fielding a daily flood of calls from anxious global clients asking about the Covid-19 situation.India’s total coronavirus infections have risen to 21.5 million, of which about a third were added since mid-April. The state of Karnataka, whose capital is Bangalore, reported almost 50,000 new infections for a second straight day, with 30% of all results throwing up a positive result.Experts have warned the crisis has the potential to worsen in the coming weeks, with one model predicting as many as 1,018,879 deaths by the end of July, quadrupling from the current official count of 234,083. A model prepared by government advisers suggests the wave could peak in the coming days, but the group’s projections have been changing and were wrong last month.In Bangalore, Delhi and Mumbai, the three main bases for the financial giants’ operations, infection rates have reached such alarming levels that local governments have ordered stringent restrictions on movement.While the crisis has hit swathes of the nation’s $2.9 trillion economy, the latest wave has notably affected the twenty-something segment of the population that dominates outsourcing companies and is hard to replace. Most of them are English-speaking, technically-skilled workers.Continuity PlanningFor now, back-office units are marshaling part-time workers or asking employees to perform multiple roles and re-assigning staff to make up for those who are absent. They are scheduling overtime, deferring low-priority projects and conducting pandemic continuity planning exercises for multiple locations should the virus wave intensify.A Wells Fargo employee said some work is getting transferred to the Philippines, where staff is working overnight shifts to pick up the slack. The San Francisco-based bank employs about 35,000 workers in India to help process car, home and personal loans, make collections, and assist customers who need to open, update or close their bank accounts. The company didn’t respond to a request for comment.An employee at UBS said that with many of the bank’s 8,000 staff in Mumbai, Pune and Hyderabad absent, work is being shipped to centers such as Poland. The Swiss bank’s workers in India handle trade settlement, transaction reporting, investment banking support and wealth management. Many of the tasks require same-day or next-day turnarounds. A UBS representative didn’t respond to a request for comment.With uncertainty surrounding how soon the Indian government will contain the crisis, one executive who asked not to be identified likened the situation to flying blind without any idea how many employees will be affected from one week to the next.Rebalancing Loads“We are looking carefully at how we can rebalance loads,” Standard Chartered Chief Executive Officer Bill Winters said on an earnings call last week, noting that some work has been routed to Kuala Lumpur, Tianjin and Warsaw. “In any case, we think we are very well provided for.”Barclays Plc CEO Jes Staley said some functions were shifted to the U.K. from India. Call volumes have increased and people are distressed, he said, adding that signs of pressure was something to watch for. The bank has 20,000 employees in India.Last year, when a sudden lockdown ordered by Prime Minister Narendra Modi saw these banks scrambling to keep their operations running, the European Banking Authority said the push to outsource support functions “exposed these banks to operational risks.”After asking their employees to work from home en masse last year, most of them have continued to operate at near 100% work-from-home levels. Natwest Group Plc’s workforce in Bangalore, Delhi and the southern city of Chennai -- accounting for a fifth of its global total -- is completely set up to work from home.Management BandwidthSimilarly, thousands of Goldman employees are working from home, doing high-end business tasks such as risk modeling, accounting compliance and app building. A representative for the bank said workflows can be absorbed by the wider team if needed and there’s been no material impact so far.Citigroup Inc. said there’s currently no significant disruption, while Deutsche Bank AG said employees were working seamlessly from home. Morgan Stanley and JPMorgan Chase & Co. detailed relief efforts they are undertaking, but didn’t elaborate on the impact on their operations. Last week, HSBC Holdings Plc Chief Executive Officer Noel Quinn said he’s “watching it closely” and ruled out any material impact at this stage.Besides worrying about disruptions to operations, employee well-being and securing medical help are also taking up a lot of management bandwidth at every large outsourcing unit.At a recent all-hands, virtual corporate strategy team meeting at Accenture Plc, for instance, the talk wasn’t about the usual pay-raises or promotions. Instead, worker after worker demanded flexibility, reduced workloads and no-meeting Fridays, an executive said, asking not to be named discussing internal company matter.Their size has become a hindrance, one executive said, but it’s not clear where else they can go for talent and scale, he added.“We are telling clients they need to relax service levels and reduce expectations for the coming few weeks,” said Mishra, the Gartner analyst. “This not a normal situation.”(Updates infections and deaths in eighth and ninth paragraphs.)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.