The latest U.S. polls show Republican candidate Donald Trump catching up with his Democratic rival Hilary Clinton, and traders reacted to the news by dodging high-risk assets, selling South Korean stock and buying the safe-haven Japanese yen.
The latest sudden shift in the polls comes days after the FBI announced that they are re-investigating Hillary Clinton’s email server over suspicious communications the former secretary of state sent and received. Director James Comey had made a formal statement to Congress informing them of the probe.
To be fair to Mr. Trump, Clinton’s lead was already narrowing significantly even before the FBI’s recent actions, but the news coming at this very late stage has set investors on edge and caused them to moderate their bets on a Clinton victory and prepare their portfolios for further volatility in the markets.
“We don’t think this is going to put Trump in the White House, but you need to adjust your investments as conditions develop,” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management. “Our basic approach, and advice for our clients, is to price for continued instability over the next week or two.”
The situation mirrors that of the UK Brexit vote earlier in the year, when the financial world was unsure how political events were going to affect the markets in the short-term.
Emerging Asian currencies went toe-to-toe with the greenback at the end of the week, but the dollar eventually steadied itself. The latest uncertainty came after a Washington Post poll showed that Trump was just a single point down on Clinton, a deficit usually treated as statistically insignificant.
“The markets largely priced out the chance of a Trump win and they will now need to revise their forecasts and take the possibility a little more seriously,” said National Australia Bank’s chief currency strategist Ray Attrill in a phone interview for the BBC. “This is not going to be the whitewash for the White House that the markets were previously expecting.”
“Even if Trump wins, I expect the markets to steady fairly quickly. There will of course be some short-term risk aversion in the global financial community but the greenback has historically been quick to recover from these kinds of politically motivated market movements,” Attrill added.
Americans go to the polls on November 8th to choose the 45th president of the United States.
Monday, October 31, 2016
Thursday, October 27, 2016
New Japanese regulation could see Abe in third straight term
Following a decision by his political party to allow its presidents to serve three consecutive terms, Japanese Prime Minister Shinzo Abe will have the chance to remain the country’s leader up to and beyond 2020, which would also make him the longest serving ruling leader in the nation’s history.
Abe just about made it into his second term, with assurances he would revitalise the country’s flagging economy and beef up the nation’s military defences. The term will conclude this time next year.
The rule adjustment by his Liberal Democratic Party could give Abe the time he needs to complete a revision of a controversial post-war pacifist constitution which many conservative politicians see as a humiliating symbol of the nation’s defeat in 1945. Other observers take the opposite view that the constitution represents a beacon of true democracy.
At the moment the LDP allows its presidents two consecutive three-year terms but under the new rules a third term will be allowed, although the regulatory change must be ratified at a party convention in March.
Japan is used to a revolving door of leaders, and Abe will break the mould if elected for a third term which would take him past the Tokyo Olympics in 2020. Combined with his previous tenure in 2006-2007 it would make him the longest serving Japanese leader ever.
“Another term would allow Abe to really settle down and tackle the problem of the Japanese economy,” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management.
“It will be some task in the current environment. Many in the financial community are feeling pretty jaded with his ‘Abenomics’ as the strategy doesn’t seem to have been working. It may be the reason why the Bank of Japan has been trying to tweak their approach recently,” added Poulson.
Even though Abe has largely failed to deliver on his economic promises, his popularity at the polls has remained remarkably solid, with the latest figure at 65 percent, largely due to his tough stance on defence and in particular China, which recently overtook Japan as the world’s second largest economy.
Abe is so popular within his own party, and opposition is so weak, that many are concerned his governance will go largely unchecked if given a third term.
Abe will overtake early 20th century premier Taro Katsuraand if re-elected next year, assuming his party finalize the new rule in March.
Abe just about made it into his second term, with assurances he would revitalise the country’s flagging economy and beef up the nation’s military defences. The term will conclude this time next year.
The rule adjustment by his Liberal Democratic Party could give Abe the time he needs to complete a revision of a controversial post-war pacifist constitution which many conservative politicians see as a humiliating symbol of the nation’s defeat in 1945. Other observers take the opposite view that the constitution represents a beacon of true democracy.
At the moment the LDP allows its presidents two consecutive three-year terms but under the new rules a third term will be allowed, although the regulatory change must be ratified at a party convention in March.
Japan is used to a revolving door of leaders, and Abe will break the mould if elected for a third term which would take him past the Tokyo Olympics in 2020. Combined with his previous tenure in 2006-2007 it would make him the longest serving Japanese leader ever.
“Another term would allow Abe to really settle down and tackle the problem of the Japanese economy,” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management.
“It will be some task in the current environment. Many in the financial community are feeling pretty jaded with his ‘Abenomics’ as the strategy doesn’t seem to have been working. It may be the reason why the Bank of Japan has been trying to tweak their approach recently,” added Poulson.
Even though Abe has largely failed to deliver on his economic promises, his popularity at the polls has remained remarkably solid, with the latest figure at 65 percent, largely due to his tough stance on defence and in particular China, which recently overtook Japan as the world’s second largest economy.
Abe is so popular within his own party, and opposition is so weak, that many are concerned his governance will go largely unchecked if given a third term.
Abe will overtake early 20th century premier Taro Katsuraand if re-elected next year, assuming his party finalize the new rule in March.
Friday, October 14, 2016
Wanda chairman still top of China’s wealth rankings
According to the annual Hurun rich list, Chinese property tycoon Wang Jianlin remains the nation’s wealthiest individual despite a 40 percent surge in wealth for his nearest rival, Alibaba founder Jack ma.
Dalian Wanda Group chairman Wang defended his top spot with a personal fortune of over $30 billion and fended off not only Ma, but also up and coming players like Baoneng's Yao Zhenhua and online gaming specialist Ding Lei of Netease.
The Hurun data on China’s wealthiest people is a good indicator of where money is being distributed in the communist country and highlights the growing financial power the nation’s billionaires are wielding, a trend that explains the recent surge in Chinese M&A activity across the world in the last few years.
Baoneng Group chairman Yao Zhenhua is the biggest mover and shaker on the rankings, with a meteoric 800 percent surge in his personal wealth to over $17 billion, taking him to third in the list. Yao has been fighting hard in a hostile takeover of the country’s biggest real estate developer, but trade is not where Yao made his fortune.
“We are seeing a new breed of wealth here in China,” says Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management who oversee a $7 billion fund in the region. “These individuals are coming from a financial market background as opposed to the more traditional routes to the top, like manufacturing or exporting.”
“The country as a whole has to become more flexible to alternative income flows as materially the economy is slowing down as new government reforms come in. It’s all about the capital markets and other financial investments not just in China but overseas also, as we’ve seen with recent Chinese M&A activity in Germany,” Poulsen added.
The real estate developer on Yao’s portfolio is China Vanke Co Ltd and his wealth has grown as his stake in the company has increased; now becoming the largest single shareholder through Baoneng, who were a relatively unknown financial conglomerate previously.
The Hurun rich list revealed there are now nearly six hundred billionaires in China, with the world’s second largest economy now leading the U.S. in billionaires. The next target for China’s mega rich is to make it onto the global top twenty rankings, where they don’t have a single representative.
Dalian Wanda Group chairman Wang defended his top spot with a personal fortune of over $30 billion and fended off not only Ma, but also up and coming players like Baoneng's Yao Zhenhua and online gaming specialist Ding Lei of Netease.
The Hurun data on China’s wealthiest people is a good indicator of where money is being distributed in the communist country and highlights the growing financial power the nation’s billionaires are wielding, a trend that explains the recent surge in Chinese M&A activity across the world in the last few years.
Baoneng Group chairman Yao Zhenhua is the biggest mover and shaker on the rankings, with a meteoric 800 percent surge in his personal wealth to over $17 billion, taking him to third in the list. Yao has been fighting hard in a hostile takeover of the country’s biggest real estate developer, but trade is not where Yao made his fortune.
“We are seeing a new breed of wealth here in China,” says Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management who oversee a $7 billion fund in the region. “These individuals are coming from a financial market background as opposed to the more traditional routes to the top, like manufacturing or exporting.”
“The country as a whole has to become more flexible to alternative income flows as materially the economy is slowing down as new government reforms come in. It’s all about the capital markets and other financial investments not just in China but overseas also, as we’ve seen with recent Chinese M&A activity in Germany,” Poulsen added.
The real estate developer on Yao’s portfolio is China Vanke Co Ltd and his wealth has grown as his stake in the company has increased; now becoming the largest single shareholder through Baoneng, who were a relatively unknown financial conglomerate previously.
The Hurun rich list revealed there are now nearly six hundred billionaires in China, with the world’s second largest economy now leading the U.S. in billionaires. The next target for China’s mega rich is to make it onto the global top twenty rankings, where they don’t have a single representative.
Thursday, October 13, 2016
South Korean shipping company looks for buyers
Hanjin Shipping Co Ltd is looking for bidders for its vast Asia to U.S. network less than 60 days after the firm applied for court receivership after racking up total debts thought to be in the region of $5 billion.
According to a statement by the company on Wednesday, Hanjin will receive letters of intent up to the end of October concerning the sale of its main business.
Global industry overcapacity, tough competition and relatively low freight rates have taken their toll on Hanjin over the past year and experts believe that they will not be the only shipping firm to be pulled into the murky depths of receivership.
According to shipping data provider Alphaliner, Hanjin dropped to 18th place in the container ship capacity global rankings as of the start of this month, and creditors started to make claims soon after that.
The statement went on to detail the assets Hanjin would put up for sale, which includes six of their container ships, a dozen overseas businesses, all operations involved in the Asia to U.S. shipping route and manpower systems. A spokesman for the company did not comment on potentially interested buyers or exact prices for the assets, saying it was confidential.
Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management said Hanjin’s bankruptcy “has started to affect West Coast ports in the U.S. and especially the Port of Long Beach” where container volumes plummeted 17 percent in the second week of October.
“When a company that contributes 10-15 percent of a ports total containerised volume goes bust, you are going to feel reverberations in the local community. Dockers are pretty nervous right now in Long Beach,” Poulson added.
One likely interested party would be Korean firm Hyundai Merchant Marine. The company’s CFO said the firm would need to carefully review Hanjin’s books before putting in any firm offers for the shipping line, but Hanjin was definitely on their radar.
According to a statement by the company on Wednesday, Hanjin will receive letters of intent up to the end of October concerning the sale of its main business.
Global industry overcapacity, tough competition and relatively low freight rates have taken their toll on Hanjin over the past year and experts believe that they will not be the only shipping firm to be pulled into the murky depths of receivership.
According to shipping data provider Alphaliner, Hanjin dropped to 18th place in the container ship capacity global rankings as of the start of this month, and creditors started to make claims soon after that.
The statement went on to detail the assets Hanjin would put up for sale, which includes six of their container ships, a dozen overseas businesses, all operations involved in the Asia to U.S. shipping route and manpower systems. A spokesman for the company did not comment on potentially interested buyers or exact prices for the assets, saying it was confidential.
Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management said Hanjin’s bankruptcy “has started to affect West Coast ports in the U.S. and especially the Port of Long Beach” where container volumes plummeted 17 percent in the second week of October.
“When a company that contributes 10-15 percent of a ports total containerised volume goes bust, you are going to feel reverberations in the local community. Dockers are pretty nervous right now in Long Beach,” Poulson added.
One likely interested party would be Korean firm Hyundai Merchant Marine. The company’s CFO said the firm would need to carefully review Hanjin’s books before putting in any firm offers for the shipping line, but Hanjin was definitely on their radar.
Wednesday, October 12, 2016
Hike expectations unchanged as U.S. stocks gain slightly
The general feeling around Wall Street this morning is that the U.S. Federal Reserve, and investors alike, are both waiting on domestic earnings reports before taking any meaningful action. That means expectations for a rate hike are largely unchanged.
Those conditions saw the Dow Jones industrial average and the S&P 500 index gain slightly in the morning session in New York.
According to the minutes of the Fed’s latest meeting in September, several voices on the board feel a hike will be “around the corner” if the domestic economy continued its upswing.
“There are downside risks to keeping rates low but the Fed obviously think it’s a greater risk to bump rates at a time when the economic strengthening is in the balance,” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management in an email to clients yesterday.
According to the CME FedWatch tool, traders are pricing in low odds of a rate hike in November as the U.S. presidential election is just days away from the next Fed meeting. Most traders feel a December hike will be the most likely outcome even if the odds were down slightly from the previous day.
“Investors are going to wait on earnings data in the absence of any solid news from the Fed. And the Fed is likely waiting on the same reports,” Poulsen added.
Thomson Reuters data is forecasting a Q3 fall of around 0.6 percent in the S&P 500 meaning a fourth successive quarter of negative earnings for the benchmark index.
The Nasdaq Composite fell 7.78 points, or 0.14 percent, to 5,239.06, the Dow Jones industrial average rose 15.56 points or 0.08 percent to 18,144.3 and the S&P 500 gained 2.46 points, or 0.12 percent, to 2,139.17.
Cisco Systems weighed heavily on the Nasdaq after stocks dropped amid reports of a massive profit decline for rivals Ericsson.
A more hawkish Fed was feared by investors in both the electronics and real estate sectors. All eyes will be on the next meeting in a month’s time, but odds are rates will be left unchanged yet again.
Those conditions saw the Dow Jones industrial average and the S&P 500 index gain slightly in the morning session in New York.
According to the minutes of the Fed’s latest meeting in September, several voices on the board feel a hike will be “around the corner” if the domestic economy continued its upswing.
“There are downside risks to keeping rates low but the Fed obviously think it’s a greater risk to bump rates at a time when the economic strengthening is in the balance,” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management in an email to clients yesterday.
According to the CME FedWatch tool, traders are pricing in low odds of a rate hike in November as the U.S. presidential election is just days away from the next Fed meeting. Most traders feel a December hike will be the most likely outcome even if the odds were down slightly from the previous day.
“Investors are going to wait on earnings data in the absence of any solid news from the Fed. And the Fed is likely waiting on the same reports,” Poulsen added.
Thomson Reuters data is forecasting a Q3 fall of around 0.6 percent in the S&P 500 meaning a fourth successive quarter of negative earnings for the benchmark index.
The Nasdaq Composite fell 7.78 points, or 0.14 percent, to 5,239.06, the Dow Jones industrial average rose 15.56 points or 0.08 percent to 18,144.3 and the S&P 500 gained 2.46 points, or 0.12 percent, to 2,139.17.
Cisco Systems weighed heavily on the Nasdaq after stocks dropped amid reports of a massive profit decline for rivals Ericsson.
A more hawkish Fed was feared by investors in both the electronics and real estate sectors. All eyes will be on the next meeting in a month’s time, but odds are rates will be left unchanged yet again.
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