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.
What a difference a year makes. The U.S. stock market kicked off the first day of trading of 2017 with solid gains, a year after plunging in the opening session of 2016 on its way to its worst week to start a year ever.
The benchmark Standard & Poor’s 500 stock index — which closed up 0.9% to 2258 — posted a gain on the first trading day of a new year for the first time since 2013. Last year, the large-company stock index cratered 1.53% on January’s first trading session — its sixth-worst Day 1 percentage loss and worst annual kickoff since 2001 — on its way to a worst-ever first week of the year decline of 5.96%, according to S&P Dow Jones Indices. The S&P 500, however, rebounded and finished 2016 up 9.5%.
The Dow Jones industrial average rose as much 176 points before pulling back and finishing up 119 points, or 0.6%, to 19,882. The blue-chip index came within 105 points of 20,000 after a late-year flirtation with the milestone fell short. The technology-packed Nasdaq rose 0.9% and the small-company Russell 2000 stock index, which gained 19.5% in 2016, finished up 0.5%.
The Bank of International Settlements is particularly good at two things in its periodic quarterly review update: i) stating the obvious, especially when it comes to summarizing the trader and market participants concerns at any given moment, and ii) having its constituent central bank members – after all the BIS is the “central banks’ central bank” – ignore all of its warnings.
In its just released, latest report, the BIS continues to excel in both, when it lays out what it dubs a “paradigm shift in markets” and points out that unlike previous VaR shock episodes, most notably the 2013 Taper Tantrum, financial markets have been remarkably resilient to rising bond yields and sudden shift in outlook following last month’s shock U.S. election result.
Stocks rallied Wednesday and continued their record-setting run as the Dow soared almost 300 points and leaped to another new record closing high. The rally was broad-based as the S&P 500, Dow transports and Russell 2000 also set new record closes.
The Dow Jones industrial average jumped 297.84 points, or 1.6%, to an all-time closing high of 19,549.62. The Standard & Poor’s 500 index jumped 1.3% to a record close of 2241.35. The small-stock Russell 2000 index gained 0.9% to an all-time high of 1364.51.
The tech-heavy Nasdaq composite index rose 1.1% to 5393.76, about 5 points shy of its record close.
Stocks moved steadily higher throughout the day after a mixed open. Phone and real estate companies made the largest gains, but the rally moved into high gear in the afternoon, as airlines, railroads and trucking companies soared.
Investors took the rally in transportation stocks as a sign of optimism about economic growth. Technology and consumer-focused companies also jumped. Biotech drug companies took steep losses after President-elect Donald Trump said he wants to reduce drug prices.
U.S. government bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 2.34% from 2.39%. Bond yields have risen sharply since the summer but have slipped in the last few days.
Oil prices fell back below $50 a barrel as benchmark U.S. crude dropped 2.3% to $49.77 a barrel in New York.
On Tuesday afternoon, the billionaire founder and CEO of Japan’s Softbank and was seen entering the Trump Tower, to meet with the President-elect. It appears that they had fruitful conversations, because just a few minutes later, Trump – who earlier in the day lambasted Boeing over charging too much for Air Force 1 sending its stock lower – tweeted some words of praise for the Japanese businessman.
At 2:10pm eastern, Trump tweeted “Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs…” and in a follow up Tweet added “Masa said he would never do this had we (Trump) not won the election!”
As Dow Jones adds, $50 billion of the $100 billion investment will come from a joint investment fund Softbank had set up with Saudi Arabia. Son also said that he set up the meeting with Trump and “likes him very much”, however he declined to comment on his interest in T-Mobile.
It was not immediately clear what investments the Japanese investor would make, or what kinds of jobs he would create. However, as an immediate result of the benevolent tweets showing that Trump is favorably inclined toward SoftBank and vice versa, Sprint stock, which SoftBank already owns some 80% of and has been pushing for a merger with T-Mobile, spiked confirming that in the “Trump Normal” the biggest stock market catalyst will no longer be Fed headlines but Trump tweets.
The Dow and Russell 2000 hit new closing highs Tuesday as stock indexes turned positive in the afternoon and stayed there, helped by shares of telecommunications companies such as Verizon, Sprint and AT&T.
The Dow Jones industrial average gained 35 points, or 0.2%. That’s up about 36 points to 19,251.78, its new all-time closing high.
The Russell 2000 soared 1.1%, up 15 points. Its new closing high: 1,352.67.
Also gaining were the S&P 500 and the Nasdaq composite, ending up 0.3% and 0.5%, respectively.
Sprint and T-Mobile shares climbed sharply after President-elect Donald Trump said in a tweet that Japanese company Softbank, which owns the majority of Sprint, was going to invest $50 billion in the U.S. to create 50,000 jobs over the next four years. However, it’s not clear if Softbank’s announcement is new.
U.S. government bond prices rose slightly. The yield on the 10-year Treasury note fell to 2.39% from 2.40% late Monday. In foreign exchange trading, the dollar rose to 114.06 yen from 113.75 yen. The euro fell to $1.0718 from $1.0770.
Italy’s stock market jumped 4.2%, a day after slipping in the wake of the failure of a constitutional referendum that forced the resignation of that country’s premier. France’s CAC 40 added 1.3%, Britain’s FTSE 100 was up 0.5% and Germany’s DAX rose 0.8%.
The head of the National Stock Exchange of India has resigned weeks before the country’s largest exchange was due to file details about a public listing.
The group said on Friday that Chitra Ramkrishna had decided to step down. “Ms Ramkrishna had tendered her resignation due to personal reasons and expressed her desire to step down with immediate effect,” the NSE said in a statement.
Her decision comes as the NSE was due to announce to file with markets regulators about a stock market flotation. The NSE said in June that it would file a draft prospectus by January. Analysts have said a listing could value the NSE at around $6bn.
Some foreign investors who bought stakes in India’s leading exchanges over the past decade have been frustrated by delays to public listings, because they were unable to monetise their paper profits.
Most global equities trade on listed exchanges, but plans to float India’s bourses have repeatedly run into problems with the country’s markets regulator, the Securities and Exchange Board of India.