Wednesday, January 19
Stocks reverse declines by focusing on gains: Markets round up

Stocks reverse declines by focusing on gains: Markets round up

US futures and European stocks reversed a sell-off on Wednesday as optimism about earnings offset concerns about rising bond yields. Contracts for three US benchmarks and Europe's Stoxx 600 Index erased earlier losses to trade slightly higher. Retailers led gains in Europe after Richemont and Burberry Group Plc beat expectations, while bank stocks were mixed in premarket trading after Bank of America Corp. reported earnings. Asian stocks fell for a fifth day. Rising Treasury yields are fueling expectations that the 10-year US bond will top 2%. Speculation is growing that the Federal Reserve could offer more than a quarter percentage point of interest rate hike in March to fight inflation, while the Bank of England could act again next month. Britain's inflation rate unexpectedly ...
Developers soar on China easing proposals: Evergrande update

Developers soar on China easing proposals: Evergrande update

Chinese stocks and property bonds rose for a second day after the central bank pledged to use more monetary policy tools to stimulate the economy. The sector extended gains near the end of trading on reports that China may make it easier for companies to tap pre-sale funds deposited by home buyers. Country Garden Holdings Co., the country's largest developer, led the gains as shares rose more than 8% in Hong Kong, the most in four months. The company's 6.5% note due 2024 rose 12.9 cents on the dollar to 91 cents. Several dollar bonds posted record one-day gains, including Sunac China Holdings Ltd. More broadly, Chinese sovereign bonds defied a drop in global debt after the People's Bank of China cut rates on Monday for the first time in nearly two years and pledged to ease credit...
Striking workers remove Clover products from store shelves

Striking workers remove Clover products from store shelves

Striking Clover workers marched through Johannesburg's city center on Tuesday, stripping the company's products from store shelves and leaving them in shopping carts. They are calling for a boycott of Clover products to protest the restructuring and job losses. Clover's management has said the decision to restructure was made in light of difficult business conditions. Some 70 striking Clover workers marched through Johannesburg city center on Tuesday, calling on the public to boycott Clover products. The workers, many of whom are members of the Food and Allied Workers Union (FAWU) or the General Industrial Workers Union of South Africa (GIWUSA), marched from the offices of the Commission for Conciliation, Mediation and Arbitration (CCMA) in Marshalltown for downtown. They went into gr...
The rise of Wall Street’s ‘model portfolio’ is criticized in a new newspaper

The rise of Wall Street’s ‘model portfolio’ is criticized in a new newspaper

A booming $4.9 trillion branch of the US asset management industry is funneling investors' cash into funds that are more expensive and perform worse than alternatives, new research claims. So-called model portfolios — off-the-shelf investment strategies that often comprise ETF packages — are riddled with conflicts of interest that undermine one of Wall Street's most popular and opaque businesses, a trio of academics argue. Typically created by asset managers and implemented by financial advisors, these allocation plans have become very popular in recent years as simple, one-stop solutions for investors of all kinds. However, the companies that design them tend to favor their own exchange-traded funds, Jonathan Brogaard, Nataliya Gerasimova and Ying Liu wrote. And advisors are sipho...
Bitcoin dominance declines as altcoins take over

Bitcoin dominance declines as altcoins take over

A decade ago, cryptocurrency investors had a choice of one: bitcoin. In the years that followed, a host of new cryptocurrencies were launched, such as Litecoin (LTC) and Ethereum (ETH), each offering novel features and use cases that were missing from bitcoin (BTC). Today, there are more than 8,000 cryptocurrencies, and scores are released every week. Most of these fail to attract much attention, and many are likely to fail. But out of this confusion is emerging a core of potentially fascinating crypto stories with real utility, rather than hype, to justify their rising prices. The graph below shows the dominance of BTC since 2013, i.e. what percentage of the total crypto space it occupies in terms of market cap. Bitcoin dominance in decline Source: TradingView "Bitcoin's dominance in...
Rothschild hired by Eskom’s creditors to help run the debt plan

Rothschild hired by Eskom’s creditors to help run the debt plan

Eskom's creditors have begun working with financial advisory firm Rothschild & Co. as the struggling South African utility prepares a long-awaited reorganization aimed at returning to profits and lightening its debt load. Bondholders are forming a common front to protect their interests as the state-owned company moves to split into three entities, according to people familiar with the matter who asked not to be identified because the information is private. While Eskom's 392 billion rand ($25.4 billion) debt will remain under the holding company's control for now, some bondholders fear it could be distributed among financially weaker units, they said. Saving Eskom is a huge undertaking, with South Africa's economy at stake as it struggles to provide uninterrupted electricity. Pre...
Airline Association for Kenya and South Africa: Potential Rewards and Risks

Airline Association for Kenya and South Africa: Potential Rewards and Risks

africa has 357 airlines, the top 10 of which carried more than 60% of the traffic. This reflects the fact that many airlines on the continent are very small: some have as few as two planes. Between them, the airlines transported 95 million passengers in 2019, according to Routes, an online source of route announcement information. Airlines operating on the continent face particular challenges. First of all, the industry has to deal with enormous disparities in economic development and air transport. There is also an uneven distribution of international air passenger traffic between regions and within countries. The traffic is predominantly centered on a few hubs in the north, east and South Africa; and in large and medium-sized cities. Other challenges include high operating co...
Eskom will adjust the assumptions underlying its 20.5% increase offer

Eskom will adjust the assumptions underlying its 20.5% increase offer

On the first day of public hearings by energy regulator Nersa on a possible more than 20% increase in Eskom's rates, the utility's chief financial officer, Calib Cassim, admitted that Eskom is unlikely to achieve the power availability factor (EAF) of 72% of its generation fleet underlying the application. According to Chris Yelland, Managing Director of EE Business Intelligence, the EAF figure was 61.75% during the last calendar year, up from 64.79% in 2020. He says the trend has been down and Eskom is unlikely to be able to reverse it. According to Cassim, the loss of Medupi unit 4 due to an explosion was not factored into the 72% EAF assumption. In addition, Yelland notes that one unit at the Koeberg NPP will be out of service for most of the year, as the generators first in on...
US Stocks, Futures Weaker as Treasury Yields Rise – Markets End

US Stocks, Futures Weaker as Treasury Yields Rise – Markets End

US stock futures retreated and Asian stocks struggled on Tuesday amid a surge in Treasury yields as investors braced for interest rate hikes by the Federal Reserve to quell high inflation. Treasuries fell along the curve, lifting two-year and 10-year yields to levels last seen before the pandemic rattled markets. Pressure is mounting for the Fed to act faster to contain price pressures, which are being fueled in part by an oil rally that has pushed Brent crude to its highest level since 2014. Nasdaq 100 contracts fell about 1%. The S&P 500 and European futures were also in the red. US markets reopen later than a holiday. MSCI Inc.'s Asia-Pacific stock gauge slipped, though China held on to gains in the wake of interest rate cuts on Monday that spurred expectations of further po...
Agile downgraded by S&P;  Contagion Raging Again: Evergrande Update

Agile downgraded by S&P; Contagion Raging Again: Evergrande Update

Agile Group was further downgraded to junk territory by S&P Global Ratings with the ratings firm citing depleted cash and tight liquidity amid large debt maturities and limited refinancing options. Shanghai Pudong Development Bank Co. plans to sell 30 billion yuan ($4.7 billion) worth of bonds to finance loans for property purchases, in a move aimed at easing strain on China's struggling real estate industry. Financial contagion is roaring back into China's real estate industry, putting renewed pressure on Xi Jinping's government to do more to protect the strongest developers. Some higher-rated developers saw their dollar bills bounce on Tuesday, after the previous day's turmoil in real estate bonds on concerns about the scale of hidden debt in the industry. Country Garden Holdings...