Daily News Roundup 2012: Monday 21 May

Good morning

The headlines:

1. Mark Zuckerberg got married. Link: Improving Facebook Relations with China. His new wife is Priscilla Chan. MZ managed to wear a suit. He designed the ring himself. They got married in a garden. When you social highlights become a Bloomberg news item, you KNOW that you're IT royalty. 
2. Trade disorder caused some awkwardness with the $16 billion Facebook IPO. Sure. "Trade Disorder". Firstly, trading started half an hour late (apparently - the NASDAQ struggled to price the first transaction). Then it couldn't confirm the trades (ie. it couldn't allow a trade to be completed). Now they have to take appeals or something. But seeing as the share price opened at $42 and ended at $38 - anyone purchasing shares will have won by saving $4 a share. But still - when the eyes of the world and twitter are on you - being a fail is such a fail. Oh - and did I mention that other shares (ie. Zynga) had trading suspended? The NASDAQ comes with circuit breakers - if your share price falls by more than 10% in five minutes, the system cuts it. No one is sure what happened - but it seems that it was all part of the same problem. Oi vey. Link: Oh NASDAQ.
3. NASDAQ blames poor design. Link: But you designed it, surely? Something something "not designed to handle this kind of activity and/or cross trade". What they mean by "cross-trade" is that the share price being asked by sellers was higher than the share price being bid by buyers. When I want to buy for $42.50 and you want to sell for $42.99 - that creates some awkwardness on the price front. NASDAQ naturally concluded that the opening price would be $42.05. Which looks like nothing natural to me. Until the share price dropped almost immediately back to $38.01; at which point, vindication (see below). Nasdaq's CEO Robert Greifield admitted that this was not their "finest hour", but he "certainly hope[s]" that his job is safe. Bungling the biggest IPO, like, ever? Hope may be all you have. Because a technology fail for a technology IPO has poetic irony - an irony begs for a scapegoat's head on a platter. A silver platter that can be sold to pay off all the folk that are going to be suing this morning. Ha ha ha ha ha.
4. The Undertakers Underwriters step in to save Facebook IPO price. Link: Not as wonderful as hoped for. Which means that every time the share price dropped to $38.00, they stepped in to buy up shares, boost demand, and maintain the price. A meager gain of $38.23 by close of trade. Baited breath to see what happens when they let it all hang loose. My feeling is: "Drop it like it's hot". 
5. Alibaba is rebuying its shares from Yahoo. It's repurchasing Yahoo's 20% stake for $7 billion, which it's been trying to do for over a year; and the pressure really has been on since September. In that time, Yahoo has been through two CEOs and is now on its third. Some say that Three Point and/or Daniel Loeb are to blame. From what I recall, I think that DL is quite the fan of the Alibaba sale. So is Alibaba. Amazing how not even a week after Mr Thomson left the building, Alibaba is delighted to announce its repurchase. The Chinese are saying that Yahoo can use the cash to turn Yahoo around. That, or give all the cash back to its shareholders (which is exactly what Yahoo is planning on doing). I remember when Yahoo was awesome. Now? Now I'd rather buy Facebook shares at any price*. Link: Taking back China for the Chinese. 
6. Iranian minister expects oil prices to rise. Link: Oh yes! The Iranian oil sanction crisis. It's still ongoing. July 1 is D-day. Can you imagine an oil crisis on top of a Euro crisis on top of an American Debt crisis? Maybe the Mayans were a touch optimistic with their predictions. December 21st seems too far away.
7. Luxury homes bidding wars in California. Link: You just can't keep good Americans down. The sellers are surprised. 
8. China to speed up approval of qualified foreign investors. Link: Red tape? So not only are there quotas, it's also super painful to get onto them. It really makes you feel wanted. The Chinese always strike me as super-cautious. They'll help the Eurozone out with aid just as soon as the Eurozone has sorted itself (and no longer needs the aid). They won't change rates to boost the economy, they'll just change reserve ratios to allow people to borrow more at the current rate. They won't ease foreign investor restrictions, they'll just make the current restrictions easier to navigate. Maybe caution is not such a bad thing in the current climate...

That's all for now.

Have a good day.

*Yes, that's an ironic lie - because I'd rather buy Greek bonds. Which is also an ironic lie: actually, I'd rather be Robert Greifield this morning. But then, that's an ironic lie as well. No. If anything, this morning I'd like to be Priscilla Zuckerberg nee Chan - because she got in there just before MZ "created" the FB. She's put up with him for over 9 years. Respect. But mostly, can you imagine what her divorce settlement will look like? 

Daily News Roundup 2012: Monday 30 April

Good morning

The headlines:

1. Hedge funds are betting against the Eurozone. There is a core group of hedge fund managers (including John Paulson - who keeps being mentioned in books written by Michael Lewis) that has been rejoicing in the Long Term Refinancing Operations of the ECB. The theory is that German bonds are underpriced (their yields are near zero). Why? Well if you continue to look at Germany as a separate economy, then it makes sense to buy their bonds compared to other countries in the Eurozone. But practically speaking, the Eurozone is a collective economy, and the German bonds should be pricing in the risk of a default from, say, Spain. Germany would probably step in to help with a bailout, which would significantly alter its risk profile. What happens in that scenario? The price of bonds drop, and yields go up. And the other side of the equation is credit-default swaps. Because the current yields on the German bonds are so low, credit-default swaps are cheap (around 86 basis points per annum - or 86 cents for every $100 of protection). And as the yield goes up, so does the price of credit-default protection. If the German CDS spreads go back to their December 2010 levels of 121 basis points, that's a gain of almost 50% for current holders of default protection. It's not insuring against the risk of default so much as betting on the change of default risk relative to the other members of the Eurozone. Link: Hedge funds support Hollande.
2. Facebook snubs Wall Street. At least, that's what Wall Street is saying. The reasons? Well, Marky Mark doesn't want to go to the roadshow, which I believe makes the Wall Streeters feel like they're not wanted enough. Facebook is also maintaining control over the allocation of shares - and it's rumoured that they're going to screen the applicants for weed out the short-term individual investors in favour of long-term institutional ones. It mostly wrote its own exchange filing, thereby depriving first year analysts of weeks of review and amendment and change of font. I reckon that there's a lot of reference to Fecesbook in internal mails between bankers... Link: Mr Zuckerberg ignores the rules.
3. Clinton and Geithner are still going to visit China, despite reports that the US is sheltering a Chinese activist. Legal Activist Chen Guangcheng escaped house arrest in Shandong and fled to the US embassy in Beijing. Has anyone else noticed the string of chinese "defectors" fleeing to US embassies in China? If I was into conspiracy theories, I would say that those Sino-US relations are under attack. Link: Annual US-China talks to continue.
4. China invests in South Sudan. The $8 billion loans will be used over the next two years for infrastructure improvement. However, it looks like one of the requirements is that the construction companies used be Chinese. Which looks a lot like China lending money to South Sudan to pay China. And then South Sudan will repay the original loan to China, plus interest (in whatever form the interest will take). China will no doubt get some more pre-emptive rights to oil. The deal sounds sweet! Link: South Sudan's $8 billion loan.
5. Australian Billionaire to build the Titanic II. But I don't understand why? How expensive is it to maintain ocean liners - and is there really a grand demand to travel by boat? Link: Titanic Reloaded.
6. Syria continues to fall apart. There's not much more to be said really. Link: Syrian Peace Plan not working.
7. Lakshmi Mittal is not giving up on India. Link: "The India Story is not over".
8. Malawi is to devalue its kwacha to meet IMF Aid Requirements. The devaluation by 40% will allow Malawi access to IMF aid. The World Bank may help by offering grants to help cushion the impact of a sudden devaluation (presumably the grant can be used to subsidize imports, thereby slowing the cost-push inflationary impact?).  Link: Banda to devalue kwacha by 40%.

That's all for now!

Have a good day.

Daily News Roundup 2012: Friday 20 April

Good morning

The headlines:

1. The Spanish Bond Auction had high demand yesterday. Spain met all of its targets yesterday, with the subscriptions for 10-year bonds being almost double the amount sold. Agreed - the yields on the 10-year bonds were higher than the last sale of 10-years (February); but they didn't break the magical 6% limit that "most economists see as unsustainable" (the actual yield achieved was 5.743%). And yields on 2-years bonds were slightly lower than in February. What does it all mean? Possibly that the likelihood of default is still distant. Personally? While I think that default is a fun topic - I also think that the big institutions need to do something with the money that they're holding on to. After all, the bulk of the world's money supply is governed by policy mandates that designate the types of asset that can be bought, and in what proportion. Whatever else happens, every month, millions of people contribute to their pension, provident and retirement funds, and pay their medical, funeral, life and house insurers. What happens to that money? It falls into the hands of fund managers that need to earn returns with it. As per investment policy statements. Ergo: at the base level of finance, there is a seller's market. Link: Strong Demand and European Debt Auctions.
2. Analysts are expecting China to announce a third rate cut in the next few weeks. It's been a while since the government played around with bank reserve requirements. But according to a news announcement yesterday, the Chinese Central Bank remains committed to "targeted liquidity management actions". Sounds like a great euphemism to me. In theory, cutting the reserve requirement allows banks to issue more loans through "fractional banking". Fractional Banking (without reserves) means that a bank can lend money almost infinitely: a depositor places $100 with the bank, and the bank can then lend $100 to a borrower. The borrower then uses the $100 to pay for things; and his suppliers now have $100 that they bring to the bank and deposit; so the bank now lends $100 to someone else. And essentially, the same $100 can be turned into an infinite fortune of bank credit. Where there is a 40% reserve requirement, the bank must lodge 40% of deposits with the Central Bank, and can lend out the remaining. So with the original $100, the bank sends $40 to the Central Bank, and lends out $60. The borrower spends the $60, and his suppliers bring back and deposit $60 at the bank. The bank places $24 (40% of $60) at the Central Bank, and lends out a further $36. And so on, until the bank eventually has lent out around $150 off the original $100. If the reserve requirement is cut to 20%, this translates into $400 worth of loans off the original $100. So that's the plan. Link: China may cut Reserve Ratio.
3. And the African Business News in brief. Link: ABN Briefs. The highlights:
• Burundi's revenue collection has increased by 17% year-on-year, thanks to reforms meant to attract investment. It's ironic that higher tax collection attracts investment - but there we are.
• Lots of mining and oil companies are doing well (the summarised version).

That's all for now.

Have a good day.

Daily News Roundup 2012: Thursday 12 April

Good morning

The headlines:

1. The US Government has sued Apple (and five publishing houses) for ebook price-fixing. Apparently, they all worked together to eliminate competition amongst stores (ie. Amazon) selling ebooks, ultimately increasing prices to shareholders (and decreasing profits for Amazon). On a personal note, and as a frequent customer of the iBooks store, I have noticed that the price of ebooks has more or less returned to those that I'd pay for a new printed copy (it was not always that way). But maybe I've just bought the story (pun intended) that the bulk of a book's cost is not in the paper and binding. Honestly, I think that the real loser in all this is Amazon, who dominated the ebook market before Apple started its "agency model". Nutshell: Amazon used to buy the books wholesale, and then sell them on at a markup; Apple now sells the books as an agent for the publishers, and takes a cut. Does that sound less competitive? It certainly sounds more intelligent... Link: US Sues Apple for Ebook Pricing.
2. The World Bank has cut its forecast on China's growth. Note that this means that the World Bank still expects growth, just less of it. The forecast has fallen from 8.4% to 8.2%, which doesn't sound like much - but China is the second largest economy in the world. A 0.2% drop in their growth could be the equivalent of, say, the economy of Ghana. "World Bank cuts growth forecast; World loses medium-sized African nation". The World Bank's solution: the Chinese government should increase fiscal spending to spur consumption, and bank reserve requirement should be lowered (again) to ease credit. It all sounds very conventional - but does anyone worry that the correct word here is more "spurious" than "spur"? The solution is fiscal spending (how will they finance it?) and more credit? Does any of that sound sustainable? Link: World Bank forecasts China.
3. In other Chinese news, the fall of Bo Xilai continues in spectacular style. The former Minister of Commerce, and until recently the Communist Party of China (CPC) Chongqing Committee Secretary (AKA - the leader), his fall comes ahead of the once-in-a-decade leadership change (elections/appointments for the nine-member Politburo Standing Committee, China's highest ruling council, are happening in a couple of months). He was a lead candidate for promotion, until some police chief in Chongqing sought refuge in a consulate for some reason. This lost Bo his position (?). Now his wife has been accused of murdering a British businessman (the term used is "highly suspected"), with her charges being read out on China's central television station every hour on the hour. The CPC is going media-crazy in calling for Bo's investigation (but isn't this his wife?), announcing that "Bo has seriously violated the Party discipline, causing damage to the cause and the image of the Party and state". I'm in awe of the Chinese political machine. Link: Boo hoo, Bo who?.
4. Christopher Dodd, Chairman of the Motion Picture Association of America, has announced that SOPA is dead, in his view. The Stop Online Piracy Act was shelved by Congress in January after the Google and Wikipedia-led protest against it (I have fond memories of a #FactsWithoutWikipedia trend on twitter that day). The Motion Picture Association had lobbied heavily in favour of the bill, but Dodd admits that it probably went further than it should have. According to Bloomberg, under SOPA, the US Department of Justice would have been able to obtain court orders forcing Internet-service providers, search engines, payment processors and online ad networks to block non-US sites linked to selling counterfeit goods. Which seems strange - because my understanding is that SOPA would have meant no more music videos on Youtube. Either way, I think we won. Link: Web Piracy Bills are Dead.
5. And continuing yesterday's story on the South China Sea, Philippines President Benigno Aquino says that he is seeing a diplomatic solution to the stand-off with China. I'm sure he is. Look at what they happened to Bo! But China has issued their side of the story. Yesterday, the Philippines said that the Chinese ships had stopped them arresting illegal fisherman. China has now said that the Philippines folk had illegally blocked the passage of ships seeking shelter from bad weather. Although it seems that the fisherman were seeking shelter for three days, because they were first spotted on April 8. And the diplomatic incident took place on April 10. Link: Philippines seeks peaceful end. 
6. And the African Business News in brief. Link: ABN Briefs. The highlight:
• Sudan has stopped all talks with South Sudan after new fighting on their border. South Sudan says it was acting in self defence. 

That's all for now.

Have a good day.

Daily News Roundup 2012: Wednesday 11 April

Good morning

The headlines:

1. I guess the big news of the day is that Rick Santorum has suspended his nomination for the Republican Presidential candidate. I love the way that Americans use the word "suspend" like somehow he can change his mind if he'd like. Uh no. Either way - I'm a liberal at heart in everything except abortion and tax rules (I make no apologies), so I'm delighted. Although I suppose that this now means that Mr Romney will look for a running mate who'll stand for all the conservative social issues. That said: I'd vote for anyone who realises that the social debate pales in comparison to the fiscal crisis faced by the US. I guess that means I'd vote for Ron Paul. Geezlike. Link: The Santorum Suspension.
2. Also, it seems that the world didn't buy Spain's 10 billion euros of efficiencies in healthcare and education. Literally. Spanish yields on 10-year benchmark bonds increased by 20 basis points yesterday. And you know the story - an increase in yields means that the price of the bond has come down, which means that people are either selling more or only willing to buy at a lower price, which is a sign of the market seeing the bonds as more risky, so on, so forth, etc. But I agree with the market's point (I think). Without the austerity measures, Spain is at risk of needing a bailout. With austerity measures, Spain is going to economically slow down, and may still need a bailout. Either way: risk. Link: Spanish Bond Yields Rise.
3. The Philippines have said that they're in a stand-off with Chinese ships in the South China Sea. The details involve illegal fisherman in the Philippine economic zone, Chinese surveillance ships preventing an arrest, and the summoning of an envoy to Manila to explain itself - but the details aren't really that important. I'm mentioning it because I think that it's so interesting. Every couple of months, you hear of another incident where China is antagonising another-country-whose-name-I-can't-spell over territory in the South China Sea. Which is a hot-bed of oil. And also hotly disputed. From what I can tell, China considers "Philippine Economic Zone" to be nothing but a naming convention for an area of its sea. After all, proximity to the Philippines is as good a reason as any for a name. Link: The South China Sea Stand-off.
4. And the African Business News in brief. Link: ABN Briefs. The highlights:
• Zimbabwe Agriculture Minister Joseph Made has announced that Zimbabwe plans to nearly double its wheat production this year to 75,000 tonnes. Umm. How? "Low-interest loans". Umm. With what now? 
• Malawi's finance minister expects international aid to the country to be restored under the new president, Joyce Banda. As do we all.
• Transnet is looking to raise R86.5 billion from debt markets to finance its capital infrastructure expansion plans.
• Randgold has "welcomed" the political settlement in Mali, the site of two thirds of its gold-mining operations.
• Zimbabwe has accepted the Anglo American Platinum's plan for indigenisation. So this is where the wheat money is coming from. And election cash. 

That's all for now.

Have a good day.

Daily News Roundup 2012: Monday 9 April

Good morning

The headlines:

1. JP Morgan trader Bruno Iksil, recently dubbed Voldemort (not by me - but high fives to whoever did), has drawn attention to the little-known area of the bank that invests the bank's own capital. This comes back to the debate around the Volker Rule (part of the Dodd-Frank Act), which seeks to regulate the risks that banks take with their own money. Why regulate it? Well - the money is subsidized by depositors, and federally insured (if they fail, they get bailed out). Although the debate is a bit irrelevant - the investment division that plays those risks lives in London. The US may try to force external compliance with the Volker Rule, but will they do that at the risk of putting the US banks at a serious competitive disadvantage with the other non-US internationals? Unlikely. JPM waves a wand, "Avada Kedavra", gets a green light. Like a boss. Link: The JP Morgan Trading Debate.
2. Myanmar is asking the US to lift sanctions faster. Admittedly, in some very broken English. "This is the time giving more carrots will help more". Hilary Clinton announced last week that the US would allow companies to invest in certain sectors, but didn't give any specifics. The question being asked is whether the sanctions are still required to encourage democracy. After all, President Thein Sein's party, The Union Solidarity and Development Party, is still granted 25% of the Parliamentary Seats under the current constitution. Either way - if US companies can't go there, the famed mineral wealth of Burma will be the exclusive treasury chest of China, no doubt. All hail the soon-to-be-bejazzled Chinese overloads. Link: Myanmar wants more carrots.
3. Chinese consumer prices rose more than the expected 3.4% in the year ended 31 March. The CPI rose 3.6%, which is still below the government's benchmark of 4%. Food-related costs, however, rose 7.5%. This data may slow the introduction of new quantitative easing measures by China's Central Bank. Interestingly, this turns the real savings rate of interest negative again (it was briefly positive in February - the first time in 2 years). Negative real rates of interest occur when inflation is higher than nominal interest (the interest rate offered by the banks). In theory, this means that it costs you to deposit money with a bank - and you should therefore spend your money/invest it, rather than leave it with the bank. However, this is offset by the convenience of having money on hand. The danger comes when interest rates are so deeply negative that it exceeds the benefit of convenience. And more so, when the cost of borrowing becomes so deeply negative that borrowing for non-productive purposes (ie. speculation) becomes incentivised. At that point: hyperinflation risk. But I've digressed - that's unlikely to happen to China. The US, on the other hand... Link: Chinese Consumer Prices rise faster than anticipated.
4. And the African Business News in brief. The highlights:
• Malawian Vice-President Joyce Banda has been sworn in as the new President of Malawi after the death of Bingu wa Mutharika. And there is a collective sigh of international relief. Mr Mutharika was going a bit crazy toward the end there - tell foreign investors and the World Bank where to get off, and such. Also, Joyce and Bingu had fallen out. Read how here: Joyce Banda: in her own words.
• Nigeria has launched a new taxation system, to "change the way that Nigerians see tax". Read more here: Nigeria's New Tax System.

That's all for now.

Have a good day.

Daily News Roundup 2012: Wednesday 4 April

Good morning

The headlines:

1. US Stocks fall as Fed Minutes Damp Stimulus Expectation. The S&P 500 fell yesterday on signs of less stimulus, after rising to its highest level since 2008 on Monday based on news that US manufacturing was showing signs of better-than-expected growth. Because <insert sarcastic tone here> manufacturing, in and of itself, is always a good thing. Can I get a “not”? And here's why: if I were a manufacturer, I would hike production when there's lots of demand (probably a good thing), or when it's cheap to produce (probably not such a good thing). In the States situation, as a manufacturer, I would look at the deficit crisis; and I would think "Obama or Romney or Santorum - they're all going to cock it. Obviously - because the right decision here is an unpopular one, and these men are politicians. And then they're going to monetise the debt by getting Bernanke to toss more stimulus into the mix, and then we're going to hyperinflate". Do you know who wins in hyperinflation? Manufacturers. Because they get to constantly self-hedge. And now - now interest rates are really low (so cheap to produce on borrowed money), and the Fed is quantitatively stimulating (let's look forward to higher prices). Yes - I would certainly manufacture. And yes - if the Fed announced less stimulus, markets should be concerned that I made the wrong call. Which they are. Link: Stocks fall on Fed Minutes.
2. In more Petronas news (who was yesterday eying out Canada for a $5 billion purchase), its South African unit Engen has announced that it has suspended its purchases of oil from Iran. Engen normally sources about 80% of its fuel from Iran. And according to Petronas CEO Shamzul Azhar Abbas, Engen is yet to source alternative supplies! And this is after Sasol also stopped purchasing Iranian fuel (about 20% of its supply) last month. So to clarify: Engen imports raw crude from Iran and refines it at its Durban refinery; and the refinery is built/modified to process Iranian crude. So things will need to be re-modified once new supplies are sourced. All this sounds like the beginning of a series of fuel shortages in Johannesburg. And then I will not be happy. And then it will make me want to say some things about this US sanction business that would probably blacken my name on any and all future US Visa applications. How I hate to bite my tongue. Link: Engen suspends Iranian Oil imports.
3. China has increased the quotas for foreign investment on its capital markets. The quotas for qualified foreign institutional investors over their investments in stocks, bonds and bank deposits have been increased from $30 billion to $80 billion. This is seen as a shift in the current export-driven model that China employs. This is also meant to be part of China's commitment to liberalise the yuan. And take over the world. However, that said, since the China Securities Regulatory Commission (CSRC) first initiated the program in 2003, it has only granted $24.6 billion of the original quota. So this may not be a practical reality so much as a theoretical limit. And therefore: lip service. Link: China "opens" its capital markets.
4. An 11 year-old Dutch boy has won a €100 prize for his plan to fix the euro that involves describing money as a pizza. This suggestion was in pursuit of the Wolfson Economic Prize, the second highest honour in the field of Economics (after the Nobel Prize which isn't a real Nobel prize - because it only came about years after Nobel's death). The topic for this year's Wolfson is finding a way to let a country leave the Eurozone without ensuing economic chaos. The kid didn't make it into the top 5 (presumably, the moderators prefer pasta), but the top 5 do have some interesting theories. Link: The Ten Year Old Euro Exit Plan: Pizzare.
5. And the African Business News in brief. Link: ABN Briefs. The highlights:
• Ethiopia has purchased thirty-five thousand tonnes of Russian wheat. The purchase now hinges on the approval of the World Bank, which is financing the transaction.
• The JSE and FTSE are set to rebase the FTSE/JSE Africa General Industrials index (J272) on 26 April. 
• Despite fears, Sudan and South Sudan have begun peace talks. 
• South Africa's total new vehicle sales increased by almost 5% year-on-year in March, but exports declined by almost 20% over the same period. 

That's all for now.

Have a good day.

Daily News Roundup 2012: Monday 2 April

Good morning

The headlines:

1. China's Purchasing Manufacturer's Index (PMI) rose to a one-year high of 53.1 for March, according to China's National Bureau of Statistics. This is after last week's freak-out when HSBC and Markit announced forecast a PMI falling below 50. Note: when the index falls below 50, this is seen as a sign of economic downturn - which led everyone back to "soft landing/hard landing" commentary. According to HSBC, the official PMI is "affected by seasonality" - which suggests that the upswing is a result of manufacturers returning to work after the Lunar New Year holiday, rather than it being a sign of real economic upturn. The debate continues. Link: The Chinese Statistical Debate.
2. As free elections are held for the first time in Myanmar (Burma), Aung San Suu Kyi's party, the National League for Democracy, is declaring a landslide victory. Well. "Landslide" is not really the metaphor that I would use. They are set to win 43 of the 44 seats they contested. But the Myanmar parliament has 664 seats up for grabs. So winning 43 of them is really getting 6% of the voting power. And President Thein Sein's party will still hold the majority. Many multinationals are hoping to get in on the Myanmar action once US and EU sanctions are lifted (assuming that this first democratic step is appropriately rewarded by the colonial parents). It seems to me that the real winner in all of this is Thein Sein. Who will also probably get a Nobel peace prize. And be very popular in elections with the "I held the Kyi, and now the door is open" tagline. Can you say win-win? Link: The Slight Opening-Up of Myanmar.
3. MTN's former CEO, Phuthuma Nhleko, is adamant that no wrong-doing took place in the Iran Licencing process during his tenure as CEO. He can state that "quite categorically". I'm still not really sure what the phrase is meant to mean. But I agree with him - those Turkcell allegations do sound far-fetched. Link: Nhleko says Iran Bribery Allegations Untrue. 
4. According to Pravin Gordhan, the South African fiscal deficit is likely to be 4.5% for the 12 month fiscal period ended 31 March. This is lower than the forecast 4.8%. Gordhan suggested that the improvement is a result of tax collection being R4 billion higher than forecast, and government spending being R4 billion lower than forecast. Sometimes - the numbers all just sound so conveniently symmetrical. Link: SA Deficit - better than expected. 
5. And the African Business News in brief. Link: ABN Briefs. The highlights:
• Diamond output at Rio Tinto's Zimbabwean operations more than doubled last year. Any bets on who the next Zimplats might be?
• SA Credit Growth has quickened since January. 

That's all for now.

Have a good Monday.

Daily News Roundup 2012: Tuesday 27 March

Good morning

The headlines:

1. Dominique Strauss-Kahn, former head of the IMF, has been charged with "illegally procuring prostitutes".  I realise that this is no longer finance-related. But juice is juice. And I was intrigued: because how do you illegally procure prostitutes? I was under the impression that either prostitution is legal or it isn't. Apparently not. The issue in France: it's totally fine to find your own fun; but it's not fine when your mate finds it for you. So really, he should be charged with "illegally having prostitutes procured for him". It's a crazy world. Link: D S-K and the Carlton Sex Ring.
2. Apple CEO Tim Cook is in China and planning more investment therein. Apple has recently signed a deal a second Chinese telecom provider, China Telecom Corp. - this has doubled their potential customer base in the country. Strangely, Apple has not signed on with China Mobile Ltd, the largest telecom carrier in the world by customers. Apparently, the iPhone does not work on China Mobile's "home-grown" 3G network. I wonder if it's a stand-off between giants... Apple: "We are the world. Change your network". China Mobile: "We are the people. Change your phone". Link: Apple Plans Further Chinese Investment.
3. So in case anyone missed in, Jim Yong Kim was the surprise US nomination for World Bank president, and he's coming under criticism for being anti-economic growth. Now this is really interesting for a number of reasons. Firstly, he's not Hillary Clinton. Secondly, he's not someone else. Thirdly, he's very experienced at World Health - which I find strangely ironic. If there's no doctor in the house, call one in? Admittedly, he's not an expert in World Economic Health - but I reckon that the principle is the same. Capital flows and blood flows: when too much blood pumps, you get high blood pressure, a clot, and an aneurism. I think that the technical term is "the boom and bust cycle". And whence cometh the criticism? Well - he wrote (actually, he co-edited) a book called "Dying for Growth" that argued that neoliberalism and corporate-led economic growth has actually left the poor and middle classes in developing countries worse off. Uproar! Except for the libertarians, who are nodding heads sagely in agreement. Folks: I think that the evidence is empirical. Either way - the argument is that economic growth is not enough - it needs to be sustainable (ie: a function of something other than monetary stimulus). Agreed. I'm a fan. Link: US World Bank Nominee Under Fire.
4. Greg Smith, Mr "Goldman Sachs calls clients 'muppets' and I'm leaving in a huff", is shopping around for a publisher. Actually - he's auctioning off the rights to publish the tell-all (smart guy - no doubt). The price-tag may be as high as $1 million: which maybe seems a bit low, considering the types of bonus one would have had at GS? Dealbreaker.com is asking around for title suggestions. Thoughts? I'm voting with "Way Lost, Weigh Less: Helping Miss Piggy". Link: The Goldman Tell-All. 
5. Ben Bernanke says that accommodative monetary policy is still needed. I don't have too much to add. Maybe the new World Bank nominee would ask if this is a bit like treating a headache with morphine? In the end, everything will slow down. Link: Bernanke says accommodative policy still needed.
6. And the African Business News in Brief. Link: ABN Briefs. The highlights:
• HSBC is looking to sell its retail banking and wealth management operation in Mauritius.
• Chinese-run miner Anjin, the largest in Zimbabwe's Marange diamond fields, has ended a two-day strike by agreeing to a 25% wage increase for workers. Previous walk-outs have taken place over "beatings by management". Hectic.
• More natural gas has been discovered off the coast of Tanzania by BC Group and Ophir Energy than previously anticipated.

And that's all for now.

Happy Tuesday.

Daily News Roundup 2012: Monday 26 March

Good morning

The headlines:

1. For those of us that missed the Friday fun, I'm going to start with the BATS IPO debacle. *HILARIOUS*. And I know that I sound like a bit of a teenage girl for reacting that way, but I make no apologies. So BATS is an acronym for "Better Alternative Trading System" - which essentially makes BATS Global Trading Inc. a stock exchange in its own right. However, unlike the traditional stock exchanges that we're familiar with (like the Dow Jones or the JSE), BATS is open 24 hours a day. The exchange is underpinned by its ECN (or Electronic Communications Network), which is the financial term for a computer trading system that will match buy and sell orders outside of normal exchange hours (I wiki'ed it). So that's the background. Recently, BATS announced an IPO of 6.3 million shares at $16 a pop, underwritten by Morgan Stanley, Citigroup and Credit Suisse. And it was going to list on its own exchange. At 10:30 am American time (one of those timezones) of Friday, trading opened with the first trade taking place at $15.25. At 10:57 am, the IPO was pulled and cancelled. And the share price was being recorded at $0.02. Why? Software glitch. Egg on face: they have it. Link: BATS CEO scuttled IPO on potential for erratic trading.
2. Everyone is still concerned that China's "soft-landing", however engineered, will still be a problem for commodities markets and all related-production parties. Despite various revisions to China's growth forecasts (most analysts are predicting Chinese stimulus to push up growth), this doesn't change the fact that there are stockpiles (at least - that's the way I read it). Link: China's Soft Landing Hard on Commodities.
3. Oh - the other Friday news: MF Global's Jon S. Corzine apparently authorised the transfer of $200 million from a customer's account to settle one of the company's brokerage accounts with JP Morgan. That transfer took place on October 28. The company collapsed/filed for bankruptcy on October 31. FYI: MF Global was one of the world's major traders in derivatives (futures, forwards, etc - basically anything financial that derives its value from some kind of underlying asset - such as a share, or a commodity like gold). What does the transfer mean? <insert blasphemy here>. Let me rephrase the issue: if I took $200 million from my friend Peter and used it to pay my friend Jon-Paul, that would make me more successful than Bonnie and Clyde. And that ended on a small road with a number of guns and a dramatic soundtrack. Fun. And then they go after Jon-Paul to get the money back. Link: The Chairman in the Board Room with the Dirty Memo.
4. Italian Prime Minister Mario Monti has warned that Spain may be the new Greece. Spain is struggling to balance its deficit. That said: lots of European countries are at risk of being the new Greece. But Spain - Spain is fairly large. I think they use the phrase "too big to fail", as if it were an Investment Bank. We shall see. Link: Monti signals Spanish Euro Risk.
5. Frontier Currencies are being flooded with speculator cash as the markets search for returns. The focus is on countries with high growth rates and/or a strong reliance on commodities. Which is unfortunate - because as the money comes in, those currencies appreciate. And strong currencies tend to weaken economic growth - especially in resource-driven economies that export their products. The inflow of cash also tends to spark asset-pricing bubbles. Such a cost. Link: Frontier currencies irresistable.
6. And the Africa News in Brief. Link: ABN Briefs. The highlight:
• Kenya's East Africa Cable Company posted an 80% increase in full year pre-tax profit. Madness. However, some of this can be attributed to the weakness of the shilling, which has made exports more competitive.

That's all for now.

Have a great Monday.

Daily News Roundup 2012: Friday 23 March

Good morning

It's Friday.

The headlines:

1. After the Agribank Branch story yesterday, China's Agribank announced that its quarterly profits unexpectedly fell for the first time in 2 years. Net income declined 14% - and those 20 analysts from the Bloomberg survey were expecting a 17% increase! Awkward (again). The reason for the increase is given as the government's attempts to curb property spending. They have done this by tightening credit (ie. restricting the number of mortgage loans that can be given out) and by imposing higher mortgage rates (ie. forcing lower demand by raising the cost). The corollary of this is fewer customers and higher bad debts/defaults for the lenders. My question: if China has artificially restricted lending - what difference will changing the reserve ratios of the branches make? In theory, the branches could lend more. Legally, it looks like they can't. And then? Link: Agribank's profits drop.
2. The president of the Fed of St Louis has said that US monetary policy is at a turning point. One day, I'm going to have to work out how the Fed actually works because there seem to be a great number of presidents. Anyway, Mr Bullard says that we can expect an interest rate hike as early as late 2013. So not really at a turning point so much as squinting your eyes and making out a grey haze on the horizon. Other Fed presidents disagree. Or didn't comment. Either way, the turning point will only become clear once some of the economic effects of the current policies become more evident. Link: The US Fed Turning Point.
3. South Africa's Foreign Ministry has announced that it will be reducing its imports of oil from Iran. According to Ebrahim Ebrahim (the Deputy Minister of the Department of International Relations and Cooperation - so good they named him twice), SA has suspended almost all oil imports from Iran (the source of about 29% of SA's fuel). The South African Petroleum Industry Association finds that "hard to believe" as they haven't yet been informed of the plan; and are only expected to hear from a government task team on the issue at the end of May. Other government spokespeople are saying that the cabinet has not made a decision on Iran. What a mess. Link: South Africa and the Iranian Oil Imports.
4. The commodities bear market is set to continue as analysts predict falling prices of copper. According to this article, industry stockpiles in China have more than doubled since last quarter. And according to the Shanghai Futures Exchange, stockpiles are at their highest level in nine years. It brings me back to the happy reports from a month or so ago, when everyone was excited by the good Chinese manufacturing figures/purchasing manager index figures. I called stock-piling. Smugness: distasteful but fun. Link: The Copper Bear Market. 
5. Randgold Resources' share price has plunged after a coup in Mali. The company has three gold-mines there. Randgold has since announced that those operations remain unaffected. Randgold and the Mali Coup.
6. As a sidebar fun piece, researchers suggest that people may be investing money in online Ponzi schemes even though they know that it's fraudulent. It makes sense in some ways - if you're an initial investors, and you draw out your returns in cash as they're generated instead of reinvesting, you get to be one of the people that genuinely makes money out of Ponzi. That is: as you become aware of the existence of the scheme, you start to act as a scheme operator rather than a scheme participant. Human nature. And greed. Link: The Allure of Online Ponzi Schemes.
7. While we're on the topic of Ponzi schemes, FBI files are revealing how Bernie Madoff deceived his employees. It's so Mafioso with all the Italian names. Link: Madoff FBI Files.
8. And the African News in Brief. Link: ABN Briefs. The highlights:
• Shoprite Holdings is due to issue more shares (around 27.2 million of them - around 5% of current shares in issue), as well as issuing R4.5 billion worth of convertible bonds. They're raising capital to strengthen the balance sheet and for acquisitions. 
• Zimbabwe plans to issue a $100 million infrastructure bond. I wonder if they can find an agency to rate it?

That's all for now.

Have a great Friday!

Daily News Roundup: Monday 19 March

Good morning

The headlines:

1. For a while now, there has been a lot of talk about Chinese home prices and a "hard landing". The IMF's Zhu Min (a deputy managing director) emerged over the weekend to tell everyone that China is heading for a "soft landing". "Even as government data showed property prices falling in most of the nation's biggest cities". And sometimes, I think that these news pieces haven't yet been translated from the original mandarin, because I'm regularly left so awkwardly confused. So to start: the property prices. The Chinese government has been running a 2 year campaign to reduce the price of housing (Premier Jin Bao says that current prices are "far from reasonable"). This has been done by dampening demand (higher down-payments required on mortgages and purchase restrictions); and by instituting low-cost housing construction projects. In the grand scheme of things - these restrictive policies will restrict economic growth. Which leads to the concept of a "hard landing" - from what I can tell, this would be a sudden and dramatic economic retraction (eg. growth rates dropping from 8.9% down to zero, or something like that). Jargon. Oi vey. Link: China's Home Prices Fall.
2. Last week, the Fed approved Goldman Sach's plan to increase its dividend and repurchase shares. This decision has been criticised, with former regulator Sheila Bair pointing out that no distribution should be approved that would bring a bank's leverage ratio below 4%. Currently, the Federal limit is 3%. A leverage ratio of 4% means that the bank's liabilities exceed its capital reserves by 25 to 1. In the event of a crisis, this would almost certainly result in a bank run. Goldman Sachs (as well as Morgan Stanley) were in the same leverage ratio range as Citigroup (who failed the stress tests); but the capital plans of GS and MS were both approved. Link: Goldman should be barred from returning capital.
3. UPS has agreed to purchase TNT express. Or, rather, TNT has agreed to be purchased - at 9.5 euros per share, this values TNT at around $6.9 billion. The deal gives UPS a much better foothold in Europe - making it roughly around the same size as its competitors. So prepare for more amazon deliveries right to your European door. Link: UPS and TNT.
4. The Africa Business News in brief. Link: ABN Briefs. The highlights:
• Kenya has opened up 8 new offshore oil blocks for leasing to exploration firms.
• Rwanda's Central Bank has kept its key lending rate unchanged at 7%.
• South Africa has conditionally approved of Glencore's takeover of Optimum Coal (a $1.3 billion transaction).

That's all for now.

Have a great Monday!