Investments in domestic capital markets via participatory notes (P-notes) have surprisingly surged to 4-month high of Rs 1.78 lakh crore at the end of March despite stringent norms put in place by Sebi to curb inflow of illicit funds. P-notes are issued by registered Foreign Portfolio Investors to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They however need to go through a proper due diligence process.
According to Sebi data, total value of P-note investments in Indian markets – equity, debt and derivatives -increased to 1,78,437 crore at March-end, from Rs 1,70,191 crore at the end of February. Prior to that, the total investment value through P-notes stood at Rs 1.75 lakh crore in January-end and Rs 1.57 lakh crore in December-end. In March, investments through the route had touched the highest level since November, when the cumulative value of such investments stood at Rs 1,79,648 crore.
Chinese investors are gobbling up Manhattan office towers at sky-high prices, fueling speculation that they eventually will get burned — just like Japanese buyers who snapped up U.S. real estate in the 1980s and later were haunted by those properties.
Chinese conglomerate HNA Group will acquire a prime Park Avenue skyscraper for a whopping $2.21 billion, it was reported in late March, in one of the most expensive deals ever for a New York office building. The news follows HNA’s October announcement of a $6.5 billion purchase of a 25% stake in Hilton Worldwide Holdings from investment firm Blackstone Group. The Chinese group has snared other office buildings in midtown Manhattan as well.
Industry giant China Life Insurance made headlines last year when it invested $2 billion in Starwood Capital Group’s hotels, while also getting stakes in other skyscrapers.
Anbang Insurance Group bought the iconic Waldorf Astoria Hotel in New York for some $2 billion back in 2015, and Chinese investors have remained on a shopping spree for U.S. properties ever since.
Chinese companies poured a staggering $33 billion into overseas properties in 2016, up 50% on the year, with $13.4 billion going to the U.S., according to real estate investment firm JLL. Though Beijing has tightened regulations to block capital from leaving the country, Chinese businesses continue to make big investments into office towers and hotels, a JLL officer said.
China’s top securities regulator urged listed companies to reward investors with cash dividends, vowing to punish stingy “iron roosters.”
Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC) also warned listed firms against raising money for blind investments, or designing complicated share structures that facilitate insider trading and other malpractices.
“Paying cash dividends is a basic way to reward investors … and the ultimate source of a stock’s intrinsic value,” Liu said in a recent speech, a transcript of which was posted on CSRC’s website on Saturday.
CSRC will take “tough measures” against those “iron roosters” who haven’t plucked a single feature for many years, even though they have the ability to pay dividends, Liu said.
Liu, installed as head of China’s securities watchdog following the 2015 stock market crash, has made investor protection his priority, having stepped up a crackdown on market manipulation and tightened disclosure rules.
The world’s largest sovereign wealth fund overcame sluggish markets at the start of last year to deliver a return of 6.9 per cent in 2016.
Norway’s $905bn oil fund was boosted by strong stock markets in the second half of the year with equity investments returning 8.7 per cent. Fixed income returned 4.3 per cent in 2016.
Yngve Slyngstad, chief executive of Norges Bank Investment Management, the manager of the fund, said:
“The return in 2016 was characterised by falling international interest rates in the first half of the year and strong equity markets in the second half. The year began with a downturn in the markets, and uncertainty regarding developments in China.”
The fund had 62.5 per cent of assets invested in equities at the end of the year but is expected this spring to be given permission to increase that to 70 per cent. Fixed income assets accounted for 34.3 per cent and real estate 3.2 per cent.
In its latest annual letter, released at 8am on Saturday, Warren Buffett’s Berkshire Hathaway said Q4 profit rose 15% on a rise in gains from investment. Net income rose to $6.29 billion, or $3,823 a share, from $5.48 billion, or $3,333 the previous year, while operating earnings, which exclude some investment results, were $2,665 a share, a slight miss to the $2,717 consensus estimate. In 2016, the 86-year-old billionaire added new companies to his assorted conglomerate portfolio, and completed the purchases of battery giant Duracell and aerospace supplier Precision Castparts, which helped to boost profit in his company’s manufacturing segment.
Among other notably operational highlights, Berkshire said it had booked a $1.2 billion gain from converting its preferred stake in Dow Chemical to common stock, and that it had sold all of the Dow common it converted by Dec. 31. Berkshire also revealed that its massive holdings of Apple stock, which as of December 31, had risen to 61.2 million shares making Berkshire one of the Top 10 holders of Apple, was acquired last year for $6.747 billion, or an average of roughly $110 per share. The stake was valued at more than $8.3 billion as of Friday’s $136.66 closing price, leading to a $1.6 billion unbooked gain. In addition to apple, Berkshire’s other Top 15 investments are laid out below:
Ironically, even though Berkshire – along with Goldman and JPM – has been among the biggest beneficiaries of the “Trump rally”, with Berkshire Class A shares climibg 15% since Nov. 8, bringing the company’s market capitalization above $400 billion for the first time, beating the S&P’s 11% increase, there were no explicit mentions of Donald Trump’s name anywhere in the letter. There were, however, various veiled references to the new president.
Norway’s government has proposed making the biggest changes to the world’s largest sovereign wealth fund in decades, increasing its risk by investing about $90bn more in stock markets and cutting the amount of oil money it can use in the budget.
The $900bn oil fund should be able to invest 70 per cent of its assets in equities, up from the current 60 per cent, as the centre-right government backed proposals by both the fund itself and an expert group.
The shift, which needs parliamentary approval, would be significant for global markets as the oil fund on average already owns 1.3 per cent of every listed company. The increase in equities would come at the expense of bonds, as the oil fund, which has an investment horizon of a century or more, tries to increase its returns.
At the same time, the Norwegian government is aiming to reduce the amount of money from the fund Oslo is allowed to use in budgets. Under the so-called spending rule introduced in 2001, the government is allowed to take up to 4 per cent of the fund each year – which is meant to be equivalent to the real return from investments. This would be reduced to a maximum of 3 per cent in the future under the new proposal, as the outlook for returns has fallen.
Stocks around the world continued to push higher Monday, and U.S. indexes again hit records. Bond yields climbed.
The Standard & Poor’s 500 index rose 12.15 points, or 0.5%, to close at a record 2,328.25 and topped $20 trillion in market value for the first time ever. The Dow Jones industrial average rose 142.79 points, or 0.7%, to an all-time closing high of 20,412.16. The Nasdaq composite gained 29.83 points, or 0.5%, to a record 5,763.96.
Treasury yields also rose as the yield on the 10-year Treasury note rose to 2.43% from 2.41% late Friday. Two-year and 30-year Treasury yields also notched higher.
Roughly five stocks rose for every three that fell on the New York Stock Exchange. Financial stocks helped lead the way, and those in the S&P 500 rose 1.3%. That’s the largest gain among the 11 sectors that make up the index. Raw-material producers and industrial companies were also strong.
Stocks resumed their upward climb last week after stalling for a couple weeks. Strong earnings reports have helped drive the gains. The majority of companies in the S&P 500 that have reported fourth-quarter earnings so far, 69%, have beaten Wall Street’s expectations, according to S&P Global Market Intelligence. It’s mostly come through companies keeping control of costs better than analysts were forecasting.
Back in late 2015, when the Chinese stock bubble had violently burst and was suffering daily moves of 10% in either direction as retail traders scrambled to get out of what until recently was a “sure thing”, Beijing did what it does best, and found a convenient scapegoat on which to blame the market crash – which was function of the country’s relentless debt bubble and lack of trading regulations – in late 2015 it arrested one of the most prominent hedge fund traders, Xu Xiang, also known as “hedge fund brother No. 1” and “China’s Carl Icahn” for his phenomenal, and rigged, winning record in the stock market, who ran the Shanghai-based Zexi Investment.
Which is not to say that Xu wasn’t engaged in shady activites: while the country’s stock prices plummeted in 2015, Zexi’s investments earned an average 218%, far more than the second-most profitable player, Shen Zhou Mu Fund, which reported a 94% yield, according to market analysis website Licai.com.
Daiwa Asset Management is set to start operating a mutual fund that invests in stocks related to U.S. President-elect Donald Trump’s infrastructure investment policy. Daiwa will launch the product on Tuesday.
The open-end mutual fund — the first of its kind in Japan since Trump’s election victory in November 2016 — is likely to be made available to retail investors by the end of the month.
The U.S. infrastructure builder equity fund, which invests in U.S. companies, will quantify how much each stock will benefit from Trump’s infrastructure policy, based on criteria such as sales ratio in the U.S. and the degree of obsolescence of the target infrastructure. The details of the portfolio will be determined by how much share prices are undervalued and how competitive the companies are.
The portfolio, comprising 30-50 companies — mostly in the construction, transport and materials sectors — will be adjusted as appropriate as Trump’s policy takes form.
Trump has pledged to spend $1 trillion to overhaul the country’s aging infrastructure over the next decade.