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Kyle Bass cautions about mounting bad debts In China
Hedge Funds
<p>Kyle Bass, Hayman Capital Management founder and managing partner, sounded alarm bells on Tuesday, saying that Chinese banks will likely experience losses that may impact the country's economy as a whole.</p> <p>In his interview on CNBC’s “Squawk on the Street” on Tuesday, Bass said other Asian countries like Malaysia were also facing the same issue.</p> <p>&nbsp;<br /> Kyle Bass: China’s bank assets $31 trillion vs GDP of $10 trillion<br /> During his interview on CNBC, Kyle Bass said Chinese bank assets are up close to 400% since 2007, and now represent about $31 trillion against an economy with a gross domestic product of $10 trillion.</p> <p>Striking a cautionary tone, Bass said: “When you run a bank expansion that aggressively, that quickly, you’re going to have some losses”. He added: “the scary thing about that is a likely 10% asset loss in the banking sector would amount to $3 trillion."</p> <p>Elaborating further on the impact of such huge losses, Bass indicated that such huge losses would force China to use much of its foreign exchange reserves (which stand at about $3.6 trillion) and sell bonds to recapitalize the banking system.</p> <p>Bass indicated that when banks expand so aggressively, they’re entering the non-performing loans cycle in Asia. Touching upon the impact on other Asian countries, he said Malaysia is also facing the same issue, and as a result investors in emerging markets should carefully monitor the size of emerging market countries’ banking systems.<br /> Emerging markets account for 42% of global GDP<br /> Bass said the huge asset losses in the banking sectors are mirrored in many emerging markets, especially those in Asia, and could hence ultimately impact global GDP. He argues the ripples of an emerging market downturn could draw U.S. GDP lower than estimated, but countries like South Africa could be seriously impacted.</p> <p>He noted his investment group is closely watching nations that run twin deficits, and those that may have to devalue their currency "in order to come back to some level of competitiveness with the rest of the world."</p> <p>Striking a cautionary tone for the next two years, Bass said as the loan cycle forces emerging market banks to see steep losses, “the next two years are going to be tough”.</p> <p>Bass highlighted that Asian banks are experiencing a sustained period of increased loan losses, and that global gross domestic product growth would slow more than expected as a result.</p> <p>Underscoring the importance of emerging markets, Bass said emerging markets comprise 42% of global GDP. He reckons global GDP will slow more than people anticipate.</p> <p>Highlighting the forex outflow from emerging markets, Bass said that while money has flowed into emerging markets over the past decade, there was currently a “huge FX reserve drain”. Earlier, David Tepper of </p>
What traders do while waiting for the Fed to come out with its interest rate decision
Lifestyle, 4:01
<p>What did traders do before emojis?<br /> If Janet Yellen keeps rates low into 2016, we made this Bitmoji for you. Yellen be like. $SPY $TLT</p> <p>— StockTwits (@StockTwits) Sep. 16 at 11:51 AM</p>
Blackstone is 2016’s best bank to work for
Lifestyle, 4:01
<p>If you’re a banker, it’s pretty likely you spend a lot of time at the office, so it’s important to choose the right bank. This year, Blackstone, Goldman Sachs, and Morgan Stanley topped’s ratings, Finbuzz reports.</p> <p>The ranking and review website has published their annual ranking of the best banks.</p> <p>Blackstone, Goldman Sachs, and Morgan Stanley maintained their top three positions, and boutique banks like Evercore, Centerview Partners, Houlihan Lokey, and Greenhill &amp; Co. came in fourth, fifth, sixth. J.P. Morgan followed in eighth place, slipping from fourth in last year’s ranking.</p> <p>The only European-based bank to break into the top ten was Credit Suisse.</p> <p>The Vault banking 50 is compiled after interviewing banking professionals and using a weighted formula that is 40 percent based on prestige, 20 percent firm culture, 10 percent compensation, 10 percent business outlook, 10 percent overall satisfaction, 5 percent work/life balance, and 5 percent training.</p> <p>2016 Rank<br /> 2015 Rank<br /> Company</p> <p>1<br /> 1<br /> Blackstone</p> <p>2<br /> 2<br /> Goldman Sachs &amp; Co.</p> <p>3<br /> 3<br /> Morgan Stanley</p> <p>4<br /> 6<br /> Evercore</p> <p>5<br /> 5<br /> Centerview Partners</p> <p>6<br /> 7<br /> Houlihan Lokey</p> <p>7<br /> 8<br /> Greenhill &amp; Co., Inc.</p> <p>8<br /> 4<br /> J.P. Morgan</p> <p>9<br /> 9<br /> Perella Weinberg Partners</p> <p>10<br /> 10<br /> Credit Suisse</p> <p>11<br /> 22<br /> Bank of America Corp.</p> <p>12<br /> 11<br /> Peter J. Solomon Company</p> <p>13<br /> 13<br /> William Blair</p> <p>14<br /> 41<br /> Robert W. Baird &amp; Co. (Baird)</p> <p>15<br /> 19<br /> UBS</p> <p>16<br /> 12<br /> Moelis &amp; Company</p> <p>17<br /> 46<br /> Cowen Group, Inc.</p> <p>18<br /> 15<br /> RBC Capital Markets</p> <p>19<br /> 16<br /> Citi Institutional Clients Group</p> <p>20<br /> 14<br /> Lazard</p> <p>21<br /> 21<br /> Barclays (Investment Banking)</p> <p>22<br /> 20<br /> Deutsche Bank AG</p> <p>23<br /> 24<br /> Guggenheim Securities, LLC</p> <p>24<br /> 23<br /> Jefferies &amp; Company, Inc.</p> <p>25<br /> 25<br /> Rothschild</p> <p>26<br /> 26<br /> Wells Fargo &amp; Company</p> <p>27<br /> 27<br /> Allen &amp; Company LLC</p> <p>28<br /> 28<br /> Qatalyst Partners</p> <p>29<br /> 29<br /> Oppenheimer &amp; Co.</p> <p>30<br /> 31<br /> HSBC North America Holdings</p> <p>31<br /> 32<br /> Nomura Holdings, Inc.</p> <p>32<br /> 30<br /> Macquarie Group (U.S.)</p> <p>33<br /> 34<br /> BMO Capital Markets</p> <p>34<br /> 35<br /> Piper Jaffray Companies</p> <p>35<br /> 33<br /> BNP Paribas USA</p> <p>36<br /> 36</p>
Opportunity with emerging Asia ETFs
Asset Management
<p>With the MSCI Emerging Markets Index down about 14 percent this year, positioning the widely followed emerging markets benchmark for its third consecutive annual loss and fourth in five years, getting excited about developing world equities and exchange traded funds is increasingly difficult.</p> <p>Focusing on various regions of the developing world can cloud investors' mood even more. For example, the iShares S&amp;P Latin America 40 Index (ETF) (NYSE: ILF), thanks in large part to struggling Brazilian stocks, has tumbled about 25 percent year-to-date.<br /> Emerging Asian Markets<br /> ILF's Asia equivalent, the iShares MSCI Emerging Markets Asia ETF (iShares Inc. (NYSE:EEMA)), has been less bad with a year-to-date loss of 13 percent. No investor should be excited by a 13 percent slide in less than nine months, but Emerging Asia could be the one corner of ...</p> <p>Full story available on</p> <p>Photo:<br /> Photo: AK Rockefeller<br /> &nbsp;</p>
Apple looks to new markets for customers -- but does it fit?
Capital Markets
<p>The launch of Apple Inc. (NASDAQ: AAPL)'s latest array of products has raised many questions about whether or not The Fruit has bitten off more than it can chew. Its souped-up iPad Pro has been designed to fill the needs of businesses while new versions of the Apple Watch are expected to tap in to the luxury market.</p> <p>As Apple has always had mass appeal to the general public, some are questioning whether the firm can reach into these new spaces and still retain its primary customer base.<br /> Luxury Watch<br /> Apple's watches have been accepted enthusiastically as an improvement over previous wearable technology. However, some expect that its $1,500 luxury ...</p> <p>Read more at Benzinga.<br /> Photo: Niall Kennedy</p>
Ultimate showboating frivolity
Lifestyle, 4:01
<p>A billionaire sailor no longer need feel anxious about having to wait for a limousine to pick him up when his superyacht docks at a smart Mediterranean resort. He can now take his own supercar with him.</p> <p>And the new Marine Edition Mono is rather special. </p> <p>Launched by yachting company Camper &amp; Nicholsons in collaboration with Briggs Automotive Company, the car can reach 170mph and can surge from 0-60mph in just 2.7 seconds - yet it weighs only 580kg so can easily be hoisted onto land, according to The Daily Telegraph.</p> <p>Owners can customize it by having its color match the yacht and the car’s seat molded to fit snugly. Protective coatings on the bodywork also protect against corrosion from salty air and water.</p> <p>The price-tag is £500,000 (plus delivery and VAT where applicable) or about $750,000.</p> <p>And for “superyacht owners who prefer to spend their time at sea its main purpose could simply be to serve as the ultimate showboating frivolity,” says The Daily Telegraph.<br /> Photo: mangopulp2008<br /> &nbsp;</p>
How Bitcoin is shaking up the gambling world
<p>Betting with Bitcoin is not new. The anonymity it offers has seen it be adopted for various illicit purposes since its inception and gambling is no exception. But now Bitcoin - and the nascent digital gaming industry it supports - wants to go mainstream.</p> <p>Gaming platform Augur is one of the ways in which this is happening. Augur allows participants to wager money on any future event they want - including sports events.</p> <p>The software sets the odds, collects the bets, and disperses the winnings. All the money in the system is Bitcoin, or other types of cryptocurrency, no credit cards or banks are involved.</p> <p>While peer-to-peer betting already exists on platforms like Betfair, Augur's use of blockchain technology means there is no middleman and no way to switch it off. It is drifting into uncharted waters and some are worried about its implication for governments and business. </p> <p>In the Racing Post, Tom Kerr looks at the implications of this for horse racing, but it easily applies to other sports. Firstly, the combination of an anonymous betting exchange and anonymous cryptocurrency will make it hard to keep the sport fair, he says, as racing relies on bookies flagging up suspicious bets.</p> <p>Also the platforms like Auger threaten to massively disrupt existing bookies by having no middlemen, no overround and no commission beyond 1%. It is very early days for the space Kerr adds, but the technology is now there and the  trend is going nowhere:<br /> At some point, unregulated and uncontrollable betting platforms like Augur may become commonplace. If that happens it will make the disruption betting exchanges caused to gambling and racing seem like nothing.<br /> Photo: John Athayade</p>
For Wynn, seeing $258m stolen from its Macau casino is not the worst of it
Capital Markets
<p>Lady luck is not smiling on gaming giant Wynn Resorts. Last week it was uncovered that a reported $258 million was stolen from its Macau casino in what looks like an inside job. But this is not the worst part.</p> <p>For a start, the money was not actually stolen from Wynn. The victim was a junket operating inside  the casino, Dore Group, which is said to have been ripped off by its own employees. In Macau junkets operate as third parties, bringing in cash for high rollers to use as leverage for their bets. Dore makes up a quarter of Wynn’s junket volume.</p> <p>The details as to how much money was actually stolen are also murky, as this Barron’s report explains. The trust system that operates in the junket financial system means that the money was never actually on Dore’s books therefore does not represent a loss of liquidity. Gaming research firm Union Gaming meanwhile reports that police figure of $258 million could be overstated due to a misunderstanding over currency conversion.</p> <p>But that doesn’t mean US-listed Wynn is not feeling the pain. The theft has triggered a massive 10% drop Wynn’s stock over the past week. That’s roughly $700 million wiped from its market value - a lot more than was pilfered from its partner's vaults.  </p> <p>This is not the worst seen in the Las Vegas of the East. According to Business Insider, a $1.3 billion heist from the junket Kimren in April 2014 - which analysts call Macau's "Lehman Moment." - dealt the biggest blow to Macau’s high roller market. </p> <p>But even without Asia’s Ocean Eleven smuggling out cash out of Wynn’s  front door, thing have been pretty lousy for Macau’s casino trade as a whole. Government figures show that revenues each month have been down 30% to 50% year-over-year. This is not just down to China's general economic slowdown, but also President Xi Jinping's anticorruption drive. China’s high rollers, it seems, just can’t stomach the risk anymore.</p> <p>Photo: Derek Tam</p>
Checking China's real crisis
Capital Markets
<p>The world’s investors seem to have changed their collective mind. Recent panic selling implied an implosion in China and recession elsewhere. The sudden turn to recovery and moderation indicates something much less pessimistic, if not absolutely upbeat. Since markets, as always, remain vulnerable to future emotional outbursts of this kind, it might help to take this moment of relative calm to examine some of the issues that contributed to the recent panic and that might contribute to a future panic. Of one particular importance is China’s by now long-standing real estate crisis.</p> <p>Though the evidence is muddled, statistics nonetheless yield a picture that should at once sober optimists and embarrass pessimists. On the side of bad news, there is no denying that China faces a significant real estate bubble. The adjustment to it will take a considerable time, and inevitably will have negative economic and financial implications. On the side of good news, it is clear that the adjustment has already begun and is proceeding in an orderly fashion that promises to avoid the kind of financial collapse many fear.</p> <p>The Bubble’s Extent<br /> The evidence of excess and all that goes with it is clear. Between 2012 and 2014, China engaged in significant overbuilding. By early last year, spending on residential construction had reached an unsustainable 10.4% of the country’s gross domestic product (GDP). That is the second highest figure on record for any country. (Only Spain’s 2006 bubble, which took such spending to 12.5% of GDP, surpassed it.) China’s rate tops Japan’s 1973 bubble peak at 8.7% of GDP and certainly this country’s 2005 peak at 6.5% of GDP. China’s breakneck pace of residential construction was at its 2013 peak in increasing floor space at a clearly unsustainable annual rate of 50%. It had increased the per-capital available floor space in China by 20%, to some 30 square meters, far above any other emerging economy and even some developed economies. Spain, for instance, has only about 27 square meters of living space per capita, and Japan has only some 22 square meters. Only the rich nations of Europe, the United States, Canada, and Australia offer their populations more. This construction so far exceeded sales that unsold inventories reached astronomical levels of over two year purchases.</p> <p>Debt problems inevitably have accompanied this kind of overbuilding. Though government debt in China is still a relatively low 25% of GDP, real estate-related debt in recent years has exploded to more than twice that figure. At last measure, almost half of all outstanding credit in China was somehow related to real estate. The excesses promise to force a significant portion of this debt into default, with some estimates indicating that a fifth of all the real estate debt will fail in one way or another. Since that figure amounts to nearly one-tenth of the country’s GDP, the legacy of this overbuilding cannot help but strain Chinese financial institutions, investors, financial markets generally, and, consequently, overall economic growth prospects. The need for construction cutbacks will further impair growth prospects, not the least because residential building has until recently accounted for so much of China’s economic activity.</p> <p>Still, It Is Not the End of the World<br /> As strained as all this looks, and is, much suggests that China can avoid the implosion many from time to time have feared. After all, the evidence suggests that the adjustm</p>
Daily Scan: China investors rush in for best performance in 3 weeks; Asia finishes up
Capital Markets
<p>Updated throughout the day</p> <p>September 16 </p> <p>Good evening everyone. Investors rushed to the Chinese markets in the afternoon, ahead of a move by the China Securities Regulatory Commission to clamp down on margin lending.  The Shanghai benchmark was up almost 5% at market close, and the Shenzhen up 6.5%. Hong Kong's Hang Seng index meanwhile finished up  2.38%. Other Asian markets also saw lift today, taking their cue from Wall Street, but the rally was tempered in the region as investors remained cautious ahead of the Federal Reserve interest rate hike: </p> <p> Jakarta Composite: -0.33%<br /> KLSE Composite: +0.46%<br /> Nikkei 225: +0.81%<br /> Straits Times: +1.01%<br /> Seoul Composite: +1.96%</p> <p>Here is what else you need to know:<br /> Shares of Chinese brokerage Citic fall on police probe. Shares of China's largest brokerage, state-owned Citic Securities, fell as much as 4% after it said three executives, including its president, were under police investigation. The executives are being investigated for suspected insider trading and "leaking inside" information. BBC<br /> Macau's Wynn Resorts loses 10% on reports of $258m casino heist The gambling giant took a pounding on the markets after it was found a large junket group operating out of its Macau casino may have lost as much as 2 billion Hong Kong dollars ($258 million). Barron's<br /> White House Confirms Chinese President's first state visit. Chinese President Xi Jinping will make a state visit to the U.S. at the end of the month, the White House confirmed on Tuesday. The trip will be on September 25 and reciprocates President Barack Obama’s trip to Beijing last November.<br /> Hewlett-Packard to cut up to 10% of workforce, 30,000 jobs. The move is part of an effort to split the company into two units. The cuts will come in Hewlett Packard Enterprise, which is splitting from the firm's printer and personal computer business, and and are expected to save $2.7 billion in annual costs. The restructuring will cost $2.7 billion to implement. BBC</p> <p>China puts up gas rigs in disputed in East China sea. Pictures of Chinese structures in the East China Sea have been captured by the Japanese government showing signs of natural gas production.The unilateral development in the contested area is likely to spark fresh row between the two countries. Nikkei </p> <p>Nintendo picks new president after death. Long-serving Nintendo executive Tatsumi Kimishima will be appointed president of the firm following the death in July of Satoru Iwata. Kimishima has been a managing director at the firm since June 2013, and joined in 2000.BBC</p> <p>North Korea tries to push America’s button; its working. The U.S. has warned North Korea to refrain from "irresponsible provo</p>