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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>
Larry Fink tells AB CEO to 'learn more' about ETFs
Asset Management
<p>BlackRock CEO Larry Fink came out swinging against rival AllianceBernstein Tuesday, telling its CEO Peter Kraus to "learn more about ETFs," Reuters reports. Kraus told the New York Times that exchange traded funds are "not safe and your clients need to understand that," while discussing the market volatility of Aug. 24.<br /> "He should learn more about ETFs," Fink responded on a panel at the New York Times' DealBook Conference, when asked about Kraus' comments in the upcoming article. "I would not be as hysterical." Fink, whose iShares division manages $1 trillion in ETFs, said the trading issues on Aug. 24 were temporary and limited, but "a good wake-up call" nonetheless.</p> <p>Photo: WorldSeriesBoxing </p>
Institutional clients buy stocks for first time in 9 weeks: BAML
Asset Management
<p>Last week, institutional clients turned net buyers of U.S. stocks for the first time in nine weeks, though private clients sold the rally for the fourth consecutive week, reports BofAML. After tracking BofAML equity client flow trends, Jill Carey Hall and Savita Subramanian of Bank of America Merrill Lynch published their Nov, 4 research report highlighting that small caps continued to witness negative flow trends.<br /> Record inflows into Consumer Staples stocks<br /> Hall and Subramanian point out that last week (10/26 to 10/30), BofAML clients were net buyers of U.S. stocks for the first time in four weeks. Though hedge funds and institutional clients had been net sellers for the last three weeks and last eight weeks respectively, they led the net buying. Even though private clientssold the rally for the fourth consecutive week, they remain the only net buyers of stocks year to date:</p> <p>After analyzing the weekly flows by sector, client and size, the BofAML analysts point out that net buying last week was led by ETFs and record inflows into Consumer Staples stocks. The analysts also said that net buying was chiefly in large caps, while mid-caps also witnessed small inflows but small caps saw net sales:</p> <p>Hall and Subramanian point out that small caps have continued to witness negative flow trends after they noted several weeks ago that flows in this segment looked like they were starting to roll over. The BofAML analysts continue to prefer large caps over small caps, and they anticipate that large caps will fare better in a rising rate environment:</p> <p>Hedge funds – Net sellers on 4-week average basis<br /> After tracking the data based on rolling four-week average basis in terms of sector, Hall and Subramanian point out that Telecom has witnessed net buying since mid-Oct, while Materials has witnessed net selling since late June:</p> <p>Analyzing the flows based on rolling four-week average trends by client type, the BofAML analysts note that hedge funds are net sellers of U.S. stocks on a </p>
Media ETFs look to join discretionary party
Asset Management
<p>The consumer discretionary sector is the best performer in the S&amp;P 500 this year and as measured by the Consumer Discretionary Select Sector SPDR XLY 0.23%, the battle is not even close. XLY, the largest consumer discretionary exchange traded fund by assets, is up 13.9 percent year-to-date, an advantage of 600 basis points over the second-best SPDR, the Technology Select Sector SPDR XLK 0.06%.</p> <p>With the strength of the broader discretionary group in mind, perhaps it is surprising media stocks have been laggards. Although Walt Disney Co DIS 0.42% is one of the best-performing member of the Dow Jones Industrial Average this year, the PowerShares Dynamic Media Portfolio PBS 0.11%, an ETF that allocates 5.1 percent of its weight to Disney, has posted a year-to-date gain of just 4.6 percent.</p> <p>Earnings reports from 21st Century Fox FOXA 2.01% and Time Warner Cable Inc. TWC 0.45% could provide PBS with the spark the ETF needs. Those stocks combine for 9.6 percent of the ETF's weight.</p> <p>Read more at Benzinga.<br /> Photo: Bruce Tuten </p>
Sequoia makes its first foray into Taiwan with AI investment
Venture Capital
<p>Venture capital behemoth Sequoia Capital has made its first incursion into Taiwan, leading a $23 million Series B round investment in Appier, a "smart marketing" company using artificial intelligence. </p> <p>The startup, which announced its investment on Tuesday, uses AI to tracks the browsing habits of web audiences across multiple devices in order to provide better targeted advertising. </p> <p>UOB Venture Management, JAFCO Asia, TransLink Capital, and MediaTek Ventures are among those who also took part in the deal which brings Appier's total funding to $30 million. CEO and co-founder Chih-Han Yu, who has seen his company grow 600% since its Series A round in June 014, said:<br /> “We are living in a post-mobile era: the era of cross screen. Artificial intelligence is the best approach to resolve this complexity and make cross screen easy. In fact, advertising is just the beginning. We believe in the future our AI can help businesses solve a variety of difficult analytical problems.”<br /> Photo: Allan Ajifo</p>
Video: Larry Fink -- Investing for the long term
Asset Management
<p>https://www.youtube.com/watch?v=6ATtTaFDPcY&amp;feature=player_embedded<br /> In a short-term world driven by quarterly returns, shareholder pressures, endlessly compressed news cycles and election campaigns that start before the last one has ended, how can the public and private sectors develop strategies and invest for the long term?<br /> Laurence D. Fink, chairman and C.E.O., BlackRock, introduced by Andrew Ross Sorkin, columnist, DealBook founder and editor at large, The New York Times.<br /> Photo: tallalex85</p>
Bill Gross says its time for the Fed to turn on 'Operation Switch'
Asset Management
<p>Forget 2012's "Operation Twist," it's time for "Operation Switch," says Bill Gross in his latest investment outlook. Central banks need to raise their inflation targets to benefit the markets, he says. The Fed needs to produce a steeper yield curve to allow businesses and savers to increase their profit margins. Gross explains:<br /> I propose an “Operation Switch”. Instead of 2012’s “Operation Twist”, which sold 2-5 year notes and reinvested the proceeds in longer dated Treasuries now resting in their portfolio, the Fed should do just the reverse. After all, the twist did nothing to improve YOY GDP growth – it may in fact have lowered it as the above argument claims – dropping GDP in the 4th quarter of 2013 to .9% YOY following the “Twist” in 2012. The Fed now holds upwards of $2 trillion longer dated Treasuries and mortgages that can be “switched” into 2-5 year paper, steepening the yield curve and benefiting savers, liability-based businesses, and the economy itself. But they won’t, you know. Yellen and Draghi believe in the Taylor model and the Phillips curve. Gresham’s law will be found in the history books, but his corollary has little chance of making it into future economic textbooks. The result will likely be a continued imbalance between savings and investment, a yield curve too flat to support historic business models, and an anemic 1-2% rate of real economic growth in even the most robust developed countries.<br /> &nbsp;</p>
Square readying IPO prepares to hit the road for Thanksgiving pricing
Venture Capital
<p>Square is ready to hit the road. According to unnamed sources at CNBC, the payment app founded by Twitter CEO Jack Dorsey is revving up to price its shares by Thanksgiving week.</p> <p>In a filing with the SEC, Square has said it hopes to raise $275 million. The company raised money last year at a valuation of $6 billion.</p> <p>Square is a favorite among payments mavens and it is ubiquitous among small merchants. But just how it makes money is unclear. It seemed destined for greatness when Starbucks forged a deal with the fledgling company about three years ago. Turns out, Starbucks is a better negotiator than Square, which never got much customer traction for its wallet.  Investors are also concerned about just how much attention Dorsey will be paying to the payments company, which is in a very crowded space.</p> <p>&nbsp;</p>
Junk Bond ETFs: Old black is the new black again
Asset Management
<p>If exchange trade funds inflows are an accurate gauge, market participants have largely scoffed at interest rate concerns this year while pouring billions of new assets into fixed income ETFs. Year-to-date, two bond funds rank among the top 10 asset-gathering ETFs while no bond funds are found among the year's worst outflow offenders.</p> <p>That statistic du jour being bandied about is that bond ETFs listed around the world now have over $500 billion in combined assets under management. Even in what is a tricky environment for bonds and fixed income funds, high-yield corporate bond ETFs are contributing to that growth.</p> <p>To this point in the fourth quarter, four of the top 10 asset-gathering ETFs are bond funds and the leader of that pack is the SPDR Barclays Capital High Yield Bnd ETF ...</p> <p>Full story available on Benzinga.com<br /> Photo: Got Credit</p>
China’s policies, Fed’s taper tantrum – more treats, less tricks
Asset Management
<p>This article is an excerpt from a previously released Sidoxia Capital Management complementary newsletter (November 2, 2015). </p> <p>Have you finished licking the last of your Halloween chocolate-covered fingers and scheduled your next cavity-filled dental appointment? After a few challenging months, the normally spooky month of October produced an abundance of sweet treats rather than scary tricks for stock market investors. In fact, the S&amp;P 500 index finished the month with a whopping +8.3% burst, making October the tastiest performing month since late 2010. This came in stark contrast to the indigestion experienced with the -8.7% decline over the previous two months.</p> <p>What’s behind all these sweet gains? For starters, fears of a Chinese economic sugar-high ending in a crash have abated for now. With that said, “Little Red riding Hood” is not out of the woods quite yet. Like a surprising goblin or ghost popping out to scare you at a Halloween haunted house, China could still rear its ugly head in the future due to its prominent stature as the second largest global economy. We have been forced to deal with similar on-again-off-again concerns associated with Greece.</p> <p>The good news is the Chinese government and central bank are not sitting on their hands. In addition to interest rate cuts and corruption crackdowns, Chinese government officials have even recently halted its decades-long one-child policy. China’s new two-child policy is designed to spur flagging economic growth and also reverse the country’s aging demographic profile.</p> <p>Also contributing to the stock market’s sugary October advances is an increasing comfort level with the Federal Reserve’s eventual interest rate increase. Just last week, the central bank released the statement from its October Federal Open Market Committee meetings stating it will determine whether it will be “appropriate” to increase interest rates at its next meetings, which take place on December 15th and 16th. Interest rate financial markets are now baking in a roughly 50% probability of a Fed Interest Rate hike next month. Initially, the October Fed statement was perceived negatively by investors due to fears that higher rates could potentially choke off economic growth. Within a 30 minute period after the announcement, stock prices reversed course and surged higher. Investors interpreted th</p>