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Wed, 25th May 2016

Anirudh Sethi Report

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Archives of “stock” Tag

Hackers turn stock advisers as Anonymous targets China Inc.

Having made a name for itself with high-profile cyberattacks on government offices and businesses, international hacker network Anonymous is now taking on the role of investment adviser.

Anonymous Analytics, the network’s research report site, examines companies’ financial statements and recommends investors sell their shares when irregularities or inconsistencies are uncovered. Recently, their targets have included a growing number of Chinese companies. 

The opinion of these hacktivists-cum-advisers apparently carry weight with investors. Though targeted companies deny problems raised by Anonymous, they often see their stock prices plunge.

“Endless laughs”

Hong Kong-listed lottery service provider REXLot Holdings found out firsthand how devastating an Anonymous Analytics report can be.

In a report on June 24, 2015, Anonymous Analytics questioned the accuracy of financial information REXLot had submitted to the Hong Kong Stock Exchange. The report claimed that revenue from the company’s lottery business was only one-third the announced figure, and that the amount of cash on its balance sheet was exaggerated given the amount of interest earned. Dividend and corporate acquisition plans were also questionable, it added.

Bayer confirms $62bn takeover offer for Monsanto

Bayer, the German chemicals and pharma group, confirmed its offer to acquire Monsanto, with a $122 per share all-cash offer which values the US agribusiness at $62bn.

The offer represents a 37 per cent premium to Monsanto’s undisturbed share price of $89.03 on May 9

The German group said buying Monsanto would be a “compelling opportunity to create a global agricultural leader”. Bayer said it expected annual synergies of about $1.5bn after the third year, plus additional benefits in future years.

“We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” said Werner Baumann, Bayer’s chief executive in a statement.

P-note rules get tougher

Issuers of offshore derivative instruments (ODI) – the portmanteau term that covers P-notes and other exotic products – will now have to comply with Indian know-your customer (KMC) and anti-money laundering (AML) norms.

Earlier, they were granted latitude in this respect and permitted to follow KYC rules either in the jurisdiction of the end beneficial owner or in the jurisdiction of the ODI issuer.

At a meeting of the Sebi board here today, it was decided that ODI issuers would be required to identify and verify the beneficial owners in the subscriber entities who hold in excess of threshold levels: 25 per cent in the case of a company and 15 per cent in the case of partnership firms, trusts and unincorporated bodies.

 In such cases, the ODI issuer will be required to identify and verify the person or persons who control the operations of these entities.

It has also been decided that ODI subscribers will have to seek prior permission of the original ODI issuer before transferring the instrument to another subscriber.

Sebi tightens P-Note norms to check money laundering

Tightening its norms to check any misuse of controversy-ridden PNotes, regulator Sebi today made it mandatory all end-users of these overseas instruments to follow anti-money laundering law in India and asked their issuers to report any suspected breach immediately.

Acting upon recommendations of the Supreme Court-appointed Special Investigation Team on black money, Sebi tightened the due diligence requirements for issuance and transfer of controversy-ridden P-Notes and put the onus on investors to ensure the AML compliance.

The issuers would have to conduct periodic review and report the complete transfer trail of Offshore Derivative Instruments (ODIs) — commonly known as Participatory Notes or P-Notes — to Sebi on a monthly basis in addition to the present requirement of reporting details of their holders.

Any change in P-Note regulations often results in a significant impact on the markets. As a Sebi board meeting was on today, markets plunged sharply on anticipation of tightening of the norms.

After the meeting here today, Sebi said its board has approved additional measures for the purpose of enhancing the transferability and control over the issuance of ODIs.

Suzuki shares U-turn ,Now Up 6.1% after fuel test warning

Shares in Suzuki have bounced back a day after the Japanese automaker said its fuel testing methods have not complied with domestic standards for more than five years.

Within the first hour of trade on Thursday, Suzuki share were up 6.1 per cent, but had traded as much as 7.8 per cent higher. It was a big enough jump to put it among the top performers on the Japanese stock market, but not enough enough to recoup the 9.4 per cent drop yesterday, and the stock had been down as much as 15 per cent when the news broke.

Suzuki, Japan’s fourth-biggest carmaker, found after an internal probe that its testing methods had not complied with domestic standards since 2010. The company will refrain from revising its figures, saying the gap in the performance of its vehicles was small, at less than 5 per cent. The news affects all 16 of its models sold in the Japanese market, or more than 2.1m vehicles.

Japan’s equities benchmarks were up about half a percentage point.

Breaking : Buffett’s Berkshire Hathaway Shows New Stake in Apple (AAPL)

After three consecutive weeks of seemingly relentless bad news for Apple, moments ago the stock jumped by $2 dollars, rising from $90.5 to over $92.50. There was some confusion as to why the jump and then it was revealed that none other than that “other” billionaire, Warren Buffett, has decided to start building a stake in the world’s biggest cell phone company to the tune of 9.8 million shares or about $1.07 billion as of March 31.

The 9.8 million share position makes Buffett the 56th largest holder of AAPL, still well behind the Swiss National Bank, which as we reported last week was aggressively buying AAPL stock in Q1, adding some 4.1 million shares to its now record 14.5 million share holding in the tech company.

And so with Carl Icahn’s “no brainer” trade in AAPL being unwound in late April, it appears that in addition to the SNB, the other major counterparty who was buying Carl’s shares was none other than folksy uncle Warren.

Considering that the news comes days after it was announced that Buffett is also seeking to get involved in the Yahoo financing, one wonders if Berkshire has changed its bankers in recent days and is now being advised to buy into “growth” and tech companies.

 

Market Scramble: Foreigners hopeful of Japan stimulus before G-7

Having pulled out of its stock market, overseas investors are starting to closely watch whether Japan hammers out a fiscal expansion measure ahead of a summit it will soon chair.

Japanese shares declined Friday, sending the Nikkei Stock Average down 234.13 points, or 1.41%, to 16,412.21. Still, the index gained about 2% for the week.

 As Kyoya Okazawa of BNP Paribas Japan prepares to visit North America next week to meet with investors, he notes that “something is different” from his previous trips there. His schedule is filled with visits to large hedge funds — in many cases with investment officers who typically skip this type of meeting.

“Investors have already factored in the speculated postponement of the consumption tax hike. So they are wondering what fiscal bazooka Japan will fire at the summit,” Okazawa said, referring to the late-May Group of Seven gathering.

Peter Boardman, a Japanese-equities specialist at Tradewinds Global Investors, is among those keeping an eye out for what Tokyo does next. Stimulus is necessary to buoy the Japanese economy, he said.

Overseas investors were net sellers of Japanese stocks for a second week in the first week of May, according to data released Friday by the Tokyo Stock Exchange. But this week, “foreigners slowly started to return as they assess Japanese companies’ earnings,” a trader at a domestic brokerage reported.

Global equities suffer investor flight -Redemptions from stock funds have reached nearly $90bn

90-BILLIONInvestors are pulling money from global equity funds at their fastest pace since 2011, as benchmark indices stall ahead of the anniversary of last year’s record highs.

Redemptions from stock funds have reached nearly $90bn so far this year as portfolio managers and hedge funds struggle to navigate a market that no longer appears driven by radical central bank policy.

Markets have rebounded from a steep sell-off at the year’s start, but confidence has slipped and investors have shifted to the sidelines. The S&P 500, Euro Stoxx 600 and Nikkei have all slid since May began, and $7.4bn was withdrawn from equities in the last week alone, according to data provider EPFR.

“It’s the great unknown. Everyone is pushing on a string,” said Jim Tierney, a chief investment officer with AllianceBernstein. “If you didn’t invest when rates were zero, and you’re not investing now when rates are negative, what more can be done to prod people to spend and invest.”

The withdrawals underline fears over growth in Japan and the eurozone, as well as questions over US companies’ ability to weather a fragile economic backdrop. Technology earnings, one engine of growth, broadly disappointed in the latest quarter, with more than $80bn sliced off Apple’s valuation since its earnings announcement in April.

Many of the concerns that plagued markets when the year began — the collapse in oil prices, fears of a Chinese hard landing and even talk of recession in the US — have eased, but investors are now looking at a horizon pockmarked by exogenous risks.

OPEC leaves world oil demand growth forecast unchanged at 1.2mbpd

Here’s the latest OPEC report

  • Raises OPEC demand forecast to 31.49mbpd vs 31.46m prior
  • Says non-OPEC demand will drop by 740kbpd vs 730k prior
  • 2016 oil market surplus will rise to 950kbpd vs 790k prior
  • Saudi’s tell OPEC it pumped 10.26mbpd, +40k from March
  • Secondary sources says OPEC output rose 188k to 32.44mbpd

One of main reasons why OPEC, and particularly the Saudi’s keep pumping is that they think the demand will be there further out, or so they say. Given the global slump that looks a long shot, and meanwhile stocks keep rising.