News > Financial Services

Maybe it's not so hip to be Square
Venture Capital
Square announced Friday that it will price its upcoming IPO at $11 to $13 a share, making a valuation of about $4.2 billion. Square was most recently valued at $6 billion, so where's the beef? Square is erring on the side of caution as it has watched other tech companies fall short with their own IPOs, reports Wired. At the
Aberdeen CEO stands strong as firm shakes
Asset Management
<p>Aberdeen Asset Management co-founder Martin Gilbert withstood a 97% fall in share price 13 years ago amid scandal. Now Gilbert is on shaky ground again as Aberdeen gets pummeled by emerging market performance and outflows. Rumors are swirling that Gilbert is looking to sell his Scottish firm, but Aberdeen denies the claims and the fact that the company could be in trouble, reports the Financial Times.<br /> Mr. Gilbert’s opinion on this is clear: “Everyone is talking about Aberdeen like we are in some sort of crisis. Of course we’re not, we’re a business with £300bn of assets under management and more than £550m in net cash.”<br /> Aberdeen has made more than 40 acquisitions, including the massive purchase of the Scottish Widows Investment Partnership in 2014, in attempts to expand the business. But the firm has undeniably been bleeding assets for the last two years. Gilbert is putting up a strong front, and has certainly survived turmoil in the past, but is it time for him to step aside? With SWIP and other businesses now under Aberdeen, the firm could start to turn away from the emerging markets that are dragging it down. Perhaps it's time for Gilbert to let someone else take the reins during this transition.<br /> Photo: Aberdeen</p>
People Moves: Allianz hires UK institutional sales head; Pimco loses head of product management
Asset Management
<p>Allianz hires U.K. institutional sales lead. Tim Bird has joined Allianz Global Investors as director of the U.K. institutional sales and client servicing team, a new role for the firm. Bird comes to the firm from T. Rowe Price, where he worked as head of the U.K. and Irish institutional business. That role is now being filled by Andrew Skeat.  Pensions &amp; Investments</p> <p>Pimco head of product management to retire. Wendy Cupps will leave Pimco at the end of the year, after 21 years working for the California firm. Jennifer Bridwell, head of Pimco's alternative products, will replace Cupps. Cupps has been involved in the executive level turmoil at Pimco since founder Bill Gross's departure last fall, but says the firm's upheaval has nothing to do with the timing of her retirement. Reuters</p> <p>Legal &amp; General grows U.S. index team. Legal &amp; General Investment Management America has hired Greg Behar as head of index investment strategy, a newly created position for the firm. Behar joins from Northern Trust Global Investments, where he served as senior v.p. for global equity.</p> <p>Invesco Perpetual CEO to step down. Mark Armour is leaving the U.K. firm less than two years after becoming CEO. Armour will be replaced by Andrew Schlossberg, currently head of U.S. retail distribution and global ETFs at parent company Invesco. Gulf News</p> <p>&nbsp;<br /> Photo:  ©<br /> &nbsp;</p> <p>&nbsp;</p>
Liberal interpretation of IPO helps this etf enjoy facebook's surge
Asset Management
<p>There are a few certainties surrounding Facebook Inc (NASDAQ: FB)'s meteoric rise. It is irrefutable that the stock is up more than 17 percent over the past month. Likewise, it cannot be debated that now home to a market value north of $306 billion (as of Thursday's close), Facebook is worth more than all but a handful of S&amp;P 500 companies.</p> <p>What can be debated is whether or not Facebook is a “new” stock. Three and a half years removed from its initial public offering, Facebook might be new compared to some public companies, but in this case, it depends on what one's view of “new” actually is. In the eyes of the First Trust US IPO Index Fund (NYSE: FPX) and the IPOX®-100 U.S. Index, that ETF's underlying index, Facebook ...</p> <p>Full story available on<br /> Photo: Jason McELweenie </p>
AB’s Peter Kraus says ETFs are a big problem
Asset Management
<p>AllianceBernstein CEO Peter Kraus is not a big fan of ETFs. In fact, he’s not much on the whole idea ofpassive investing. Given who he works for and where he comes from that’s not too surprising, as AB sells mutual fun products and Kraus spent 22 years at Goldman Sachs. But his views are still worth a look regardless of his bias.</p> <p>“Let me bring it down to reality,” Kraus commented in a recent sales meeting with a large group of financial advisers. “You guys woke up one morning in August and the Dow was down 1,090 points. And on that day a $40 billion E.T.F. traded at a 30 percent discount. That should never happen, and if your client traded on that day, you will never get that back. Never. These funds may have low fees but they are not safe, and your clients need to understand that.”</p> <p>Concerns about the impact of ETFs on the financial industry<br /> Kraus went on to note: “If you absorb too much liquidity, there is just not enough grease to make the wheel work. We have seen much higher volatility and much faster price reactions over the past few years, and the main reason is this shift from active to passive investing.”<br /> The ETF industry has grown rapidly over the last five years as active management has underperformed, with around $3 trillion under management today. As ETFs have become an investor mania, worries that too much hot money has been lured into hard-to-trade areas of financial market and into risky strategies are surfacing.</p> <p>Recent critics include Stanley Fischer, vice chairman at the Fed, and well-known investors like Carl Icahn, Howard Marks and others. Nearly all of the critics point to the same worrisome scenario: what if heavy selling hits these funds, and investors are unable to get their money back as promised?<br /> The ETF critics argue that a rush of money into funds that offer instant liquidity favors players with a short-term, trader’s outlook as opposed to the patient, longer-term investor’s perspective.<br /> Moreover, the volatility seen in markets over the summer and early fall has heightened these fears. The critics argue that the promise of instant liquidity in illiquid areas — such as emerging-market bonds, leveraged loans and credit-default swaps — is a recipe for disaster. They also highlight the 2X and 3X leverage many ETFs offer as another significant risk.<br /> Only time will tell.<br /> This article was originally published by ValueWalk. <br /> Photo: Janne Räkköläinen<br />  </p>
People moves: Aberdeen adds two in Asia; Ex-GPIF exec starts at Japan Post Bank
Asset Management
<p>Aberdeen makes two new Asia Pacific executive hires. Daniel Choong – CEO at Nomura Islamic Asset Management –  has joined Aberdeen as head of distribution for its Islamic business in Malaysia. His brief will be to develop a team, products and sales to both institutional and retail distributors in the country. He reports to Country Head Gerald Ambrose.</p> <p>Darrel Chang has been made head of institutional sales in Taiwan, also a new role. The appointment reflects the growing importance to Aberdeen of institutions – sales efforts having been focussed so far on retail mutual funds. Chang, who previously worked at Schroders, joins a senior management team under Michelle Maa, acting country head. Asia Asset </p> <p>ShawKwei &amp; Partners appoints Brian Lau as executive director. Lau will be based in the Asian private equity firm’s Hong Kong office. He was formerly a partner at boutique investment bank and advisory firm Prometheus, where he specialised in cross-border advisory and investment collaboration.ShawKwei (pdf) </p> <p>Former GPIF exec Shimizu joins Japan Post Bank to help lead investments. Recently listed Japan Post Bank has hired Tokihiko Shimizu as general manager of its CIO office. The top-ranking welfare ministry bureaucrat helped spearhead a drive to diversify the $1.2 trillion Government Pension Investment Fund's (GPIF) portfolio during his 7-1/2-year tenure at the fund. The move, which was first rumoured in September, was made public on Shimizu’s LinkedIn page last week. <br /> Photo: Official GDC<br /> &nbsp;</p>
Breaking gender barriers in startups
Venture Capital
In the Fortune list of 80 start-ups worth $1 billion or more (dubbed unicorns) published last January, only four had female CEOs. But, perhaps barriers in the tech world are being broken down. "The success of prominent female leaders such as Facebook‘s Sheryl Sandberg and Yahoo‘s Marissa Mayer are bringing more attention to women in the tech sphere...An accomplished number of female
Yellen holds the cards for rate-sensitive ETFs
Asset Management
<p>The Federal Reserve passed on raising interest rates following its October meeting, but Federal Reserve Chair Janet Yellen's comments before Congress earlier Wednesday indicate the Fed chief is mulling a boost to borrowing costs in December.</p> <p>How investors treat rate-sensitive stocks and exchange-traded funds this time around remains to be seen, but conventional wisdom usually dictates that as Treasury yields rise in anticipation of higher interest rates, market participants ditch sectors such as consumer staples, real estate investment trusts (REITs) and utilities.<br /> Recent U.S. Equity ETFs Performances<br /> Last month, U.S. equity ETFs added $10 billion in new assets, nearly triple the $3.7 billion that flowed into international equity funds. However, international stock funds retain their year-to-date advantage over their U.S.-focused rivals by a margin of $23.1 billion to $17.7 billion, according to State Street Global Advisors data.</p> <p>Sector ETFs were once again popular with investors in October, and against the backdrop of low interest rates, market participants piled into rate-sensitive sector funds. For example, utilities ETFs added nearly $210 million in new assets last month, according to State Street data.</p> <p>Read more at Benzinga.<br /> Photo:Marilyn Roxie</p>
China hedge fund scandal claims its first victim
Hedge Funds
<p>The arrest of “China’s Warren Buffet”, AKA hedge fund guru Xu Xiang, has battered both his reputation and his investments. One of biggest losers this week was consumer goods company China Seven Star which saw its share price plummet following Xiang’s arrest for insider trading on Sunday.</p> <p>Barron’s Asia reports the the company saw its share price slump by nearly 40% on Tuesday morning, from 1.29 Hong Kong dollars on Friday,  to 0.75 following a trading halt on Monday. The stock, which rallied 369% this year until Friday, has since a recovered to 0.98.</p> <p>Xiang is the company’s second largest stakeholder with a 9.7% share. China Seven Star said in a filing it tried to contact Xu unsuccessfully.</p> <p>According to South China Morning Post, Xiang, was widely believed to be safe after being interrogated earlier this year. His firm, Zexi Investment, saw its hedge funds record at least 140% growth in net asset value for 2015. Zhou Ling, a hedge fund manager at Shanghai Shiva Investment, told the paper.<br /> "He was viewed as the best of the best before the investigation into him was announced. His detention shows there is no God in this market at all.”<br /> Photo: Phillip Taylor</p>
Chinese A-shares may make it into key indexes sooner than you think
Asset Management
<p>&nbsp;</p> <p>Investors have expected the MSCI to include China A-Shares in its benchmark indices twice during the past two years. But each time, the index compiler has backed off, pointing to barriers to foreign investor access.</p> <p>Recent state intervention (or manipulation) in the markets seemed to put the kibosh on their inclusion any time soon. But, fund managers might be missing a trick.</p> <p>“Many investors are underestimating the impact of the inclusion of China A-shares in global emerging market benchmarks and may be caught off guard when it happens,” reports AsianInvestor, citing fund management experts. (paywall)</p> <p>“This is despite the move by U.S. fund giant Vanguard to steadily incorporate mainland stocks into its EM exposure.”</p> <p>Wang Qi, a partner at Shanghai-based Mega Trust Investments notes that the Chinese government’s intervention in the stock market in the summer means that many money managers assume that A-Share inclusion in the MSCI benchmark indices is now in the distant future.</p> <p>“However, if you look into the details of the review process, this is not a major concern for the index providers,” he says.</p> <p>The MSCI is likely to conclude its next assessment in the first half of next year.<br /> Photo: Jim Winstead<br /> &nbsp;</p> <p>&nbsp;</p>