fintech
Company News

Fintech Investments on Standard Chartered Innovation Fund’s Agenda

By 6239 0

One of the most important developments over the past half a decade or so has been the breakneck speed at which financial technology or Fintech has developed into one of the world’s most important industries. The scope of the industry is immense, and now many of the world’s biggest banks are taking notice of the sector, after being largely aloof to the transformational potential of Fintech for years. In a new development, British banking giant Standard Chartered has stated that its subsidiary SG Ventures is currently exploring options regarding Fintech investments in startups in the financial sector.

The bank is also looking for partners and co-investors in Africa and the Middle East, in order to invest $100 million in at least three such startups. The chief of SC Ventures, Alex Manson, stated that the fund does not want to invest a large chunk of money in one company and are instead looking to help three startups scale their businesses up steadily. As far as partners and co-investors are concerned, Standard Chartered is aware that the Fintech sector is ready for an explosion in the years to come and for a bank of its size, it is only natural for it to invest heavily in the sector. SG Venture has already met with potential clients and co-investors regarding the project, and Manson stated that the potential for growth in the Fintech space is substantial in the UAE.

SG Ventures was established by Standard Chartered with a view to gathering minority stakes in upcoming Fintech companies. The investments are made through the innovation investment fund, which has a corpus of $100 million, and Manson has stated that the entire amount is going to be invested by the end of next year. Nowadays, banks are looking to have a dominant presence in the digital services space, and the investments in the Fintech space is only going to rise in the years to come. In this regard, Standard Chartered is moving aggressively. Manson added,

I anticipate that at any point in time we will have 10 to 15 ventures in our portfolio [in different stages of growth]. But we are at an early stage of building that portfolio.

goldmansach
Opinion & Analysis

Fed Rate Cuts Are Being Overpriced By Markets, Say Goldman And UBS Executives

By 8403 0

Investors almost always look for cuts in the interest rate so that they are able to get capital at a cheaper rate and invest in the market. More often than not, it is something that has always been an expectation from investors, but it is unlikely that they are going to get their wish at each instance. However, over the past few months, there has been a widespread belief that the United States Federal Reserve is readying for a rate cut and much of that has been down to the statements from important officials.

In addition to key officials at that Federal Reserve, the chairman of the central bank Jerome Powell has also made statements that clearly point towards a cut in the interest rates. Needless to say, the stock markets reacted accordingly and went on a sustained upsurge. However, Alex Weber, the President of UBS and John Waldron, the Chief Operating Officer and President of Goldman Sachs, have sounded notes of caution. Weber stated that many traders might have misconstrued the comments from the Federal Reserve chairman and other officials. He said,

If you listen to some of the key decision makers like Charlie Evans if you listen to Jay Powell, there is no imminent rate cut. There is a likelihood, if further weakness, in the data evolves over the second half of the year that they might consider corrective action.

On the other hand, John Waldron was equally cautious about the present optimism in the market and actually stated that he is a bit worried about it all. He said, “The market is pricing in a fairly substantial set of moves by the Fed. I worry a little bit that the market is too optimistic about how much and how soon the Fed will move.” Considering the fact that the statements came from two of the top executives at the biggest investment banks in the world, traders would perhaps do well to listen to what they have to say. However, it remains to be seen whether this optimism proves to be misplaced or not.

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Stocks

Uber IPO Fails, SoftBank Value Falls

By 15793 0

Uber which changed the way urban transportation was done is troubled by Wall Street. The first day of the Uber IPO trading on the NYSE began with a fall of 7.6% from its Initial Public Offering price of $45. By the end of the day on Friday, the market capitalization of the company was a shade above its $76 billion that private investors put it at and was at $76.5 billion. The ride-hailing company started at $42 for a share down by its $45 IPO. Later it further slid down to $41.06 quashing all the hopes of a successful IPO for its CEO Dara Khosrowshahi who was appointed specifically to work on making the IPO a success.

The reduction in stock prices was a shocker and raised many questions on the fate of other tech start-ups that are about to list their shares shortly. Many Wall Street banks were hired its underwriting, and there is a concern that some of them have miscalculated the actual value and also the risk appetite of investors. Traditionally, tech companies have seen a jump in share prices on the first day of their IPOs. Some big companies like Facebook, Snap, Alibaba, etc. rose in the initial offering. Adding to the woes of Uber was the volatile stock market on Friday with the S&P 500 index on a decline for the fifth day due to ongoing trade tensions between the US and China.

Softbank value slides down
After the Uber IPO failed to take off as predicted the Softbank shares saw a fall of 5.4%. They reported a loss of $9 billion in the market despite a valuation gain that they got from having a stake in Uber. Softbank founder Masayoshi Son who is transforming the company from a telecom operator to an investment firm for tech start-ups has invested $100 billion in Vision Fund, and its stocks have risen by more than 60% in the past year, but the recent slide in its value will not augur well for Son’s portfolio.

Though there is a slide in Softbank’s value due to Uber’s IPO making a fall on the first day of its IPO, market analysts like Tomoaki Kawasaki say “It’s too early to tell how sensitive SoftBank will be to Uber’s price moves going forward. But even if they fall, that doesn’t have a direct impact on Vision Fund profits.”. But some investors are already selling as the debut was not as they had expected.

Business
Stocks

Lyft Warns of Peak Losses in 2019 as Uber Readies for its IPO

By 7286 0

Last month ride-hailing company Lyft had its initial public offering (IPO) amid much fanfare, but within two days the company’s shares crashed after the listing day positivity, and since then the stock has been in a cycle of negativity. In a new development, the company has released some alarming projections that are going to put off potential investors further and perhaps make the current investors think twice about continuing with their existing holding. On Tuesday, Lyft recorded another humungous loss as the quarterly losses stood at a staggering $1.1 billion, but in a more alarming development, the company has also stated that its losses are going to be at its peak in 2019. At the same time, the company went on to state that it is going to cut costs significantly and ensure that revenues per customer are raised.

That being said, the company sounded bullish about its future and Brian Roberts, the Chief Financial Officer of Lyft went on to state that a path to profitability exists. He said, “We are encouraged by the strength of our core business and see a clear path to profitability in ride sharing.” Despite these announcements from the company, it needs to keep in mind that at the time of its IPO, Lyft had stated that it might never actually make a profit and that must weigh on the minds of most investors. The stock never really recovered since its fall on the day after listing and is down 29% from its listing price so far.

However, Lyft’s announcements could also affect its much larger rival Uber, which is all set to have its mega IPO this week. It is going to be the biggest IPO in the history of Wall Street, with the company seeking a valuation of around $90 billion and it remains to be seen whether Lyft’s troubles affect Uber’s listing day performance or not. At the end of the day, they are competitors in the same line of business, and this is only going to be the second IPO for a ride-hailing company. That being said, the interest in Uber from large institutions is genuine, and although the company has stated that it might ever be able to turn a profit, investors could still bet on what it promises.

stocks
Trading News

Asian Stocks Fall To Three Week Low, Oil Prices Reduce Slightly

By 17448 0

Stock markets across the world showed a mixed response, while the Asian shares fell due to fears of a global slowdown due to weak economic data from Germany and South Korea. The oil prices also reduced slightly after it hit a 7 month high earlier this week. The Wall Street stocks rallied as the earnings reports from major tech companies rolled in.

In the market:

Stocks

The Asia Pacific shares broadest index, MSCI fell by 0.5% as the South Korean economic data showed the economy had reduced in the first quarter fueling worries of a slowdown.

The Wall Street swung and ended lower as many companies reported their earnings with some missing the estimates and other like Microsoft posting a surprise profit. It reached the $1 trillion value for the first time predominantly due to its cloud computing. Facebook also beat the estimates for the first quarter. Investors are waiting for other companies to report to know if the stocks will rally.

The Nikkei ended the day with a rise of 0.5%. The Bank of Japan announced that it was in discussion to introduce a facility to expand its monetary policies by lending the traded funds. The announcement did not help the Nikkei as there was no consensus among the traders about what the move meant was it to improve cash or liquidity of the stock market. Leading strategist at Mitsubishi said ‘This is one technical move I would assume aimed at lack of liquidity in the stock market. I wouldn’t consider it as a monetary policy’.

Currency

The yen ended a little higher as the Bank of Japan decided to reduce the interest rates to as low as possible until 2020. The dollar index against six major currencies was at 98.189 and was down by 0.15%. The euro was steady at $1.1157 and the pound was at $1.291 hitting a two-month low. The Canadian dollar was also reaching a 4 month low and was at C$1.3488 for a dollar as the Bank of Canada reduced the growth forecast.

Commodities

The Brent Crude futures were at $74.75 for a barrel a rise of .25% and the WTI crude futures remained at $65.93 for a barrel. The oil prices which reached a 6 month high earlier this week continues to remain in that range as there were reports that the US will stop waiver to all countries importing oil from Iran. Moreover, the OPEC has already cut supplies which have added to the price rise.

Business
Stocks

Chinese Starbucks Rival Set to Raise $800 Million in US IPO

By 10591 0

Over the last two decades, many Chinese companies have become major players in industries that have traditionally been dominated by household global names, and in a new development, Chinese coffee house chain Luckin Coffee Inc and Starbucks’ rival is gearing up for a mega Initial Public Offering (IPO). However, what is even more interesting is the fact that the company is going to have its IPO at the stomping ground of its much bigger rival, the United States. According to sources which are close to the developments, the company is looking to raise as much as $800 million in its IPO in the US and have already set $100 million as the place holding the amount in its filings with the Securities and Exchange Commission. However, sources have revealed that the actual IPO is going to be a much larger one.

The sources who are aware of the developments have stated that the company is looking to raise a minimum of $500 million from the IPO, with the maximum target remains $800 million. That being said, the company has not yet revealed the number of shares which are going to be put on sale on the day of the IPO. It is a very exciting time for the company as it raised a staggering $150 million in its latest round of funding and is now valued at $2.9. However, with the IPO, they are targeting of valuation to the tune of around $5 billion and needless to say, it is all set to be one of the biggest listings in the US this year once trading goes live on the stock.

The reason behind listing in the US instead of places like Hong Kong is perhaps the fact that it has not yet turned a profit ever since it first opened for business in 2017. It is a well-known fact that most bourses outside of the US are far more conservative in nature and investors are reluctant to bet big on companies that can’t show profits, irrespective of the prospect of the business. However, when it comes to the US, that is not often the sole focus, and the potential investors try to work out whether the company in question can grow or not. In that regard, Luckin is in a good position since the company has grown at a tearing pace over the past few years and the number of cups of coffee that is being sold each day has grown exponentially. Last year, the company sold 8.7 billion cups, and they expect that figure to balloon to 15.5 billion cups in the next four years.

Trade
Trading News

Asian Stocks Remain On A High, Wall Street Underperforms

By 6677 0

Asian stock which had reached a 9-month high due to positive export and banking data in China continued to rally as the investors hoped that the Chinese economy would get better. Meanwhile, Wall Street underperformed as the quarterly earnings of major banks started pouring in.

In the market

Stocks: Asia-Pacific’s shares broadest index MSCI climbed by 0.3% mainly due to market gains in India and China. The index was at its 9-month high due to positive export and banking data in China. The Chinese shares reacted positively to the house pricing data and rose by 1.7%. The NSE, India climbed 0.8% as the country heads to general elections. In the other important Asian market, Nikkei was up by 0.2%.

The positives from the Asian market could not see through the pessimism seen in Wall Street as the banking earnings reports did not meet expectations. The major stock indexes were all lower than before with only the S&P 500 doing better.

The European shares picked up as Frankfurt and London shares rose to 0.3%.

Treasury yields: The 10-year US treasury bond yields were at 2.548% a fall from its previous high of 2.574%.

Commodities: The oil rally due to a supply crunch and also sanctions on Iran and Venezuela by the US halted as OPEC and Russia may increase oil production in a fight for domination with the United States. The US WTI crude was at $63.30 for a barrel a fall by 0.15 cents.

Spot gold suffered its fourth consecutive day loss and was at $1,286.21 for an ounce.

Currencies: The dollar was at 96.980 against the major currencies. Against the yen, it was at 111.94. The euro remained unchanged and was at $1.13045.

Senior Strategist Yukino Yamada talking about the recent developments in the Asian markets said ‘Recent Chinese data is boosting confidence in the Chinese economy while earnings have not been bad either’. On the Indian stock market doing well she said ‘Indian shares are rising on hopes on the country’s elections. In the past, they have tended to do well during a six-month period leading up to the election as well as one month after the election.’ To top it, the Asian investors became optimistic about the trade negotiations ending with a deal between China and the US. Wall Street will only hope that the earnings report that is due in this week by big corporates is not too bad as that could mean another downward spiral for the stocks.

Trade
Trading News

U.S. Consumer Prices Go Up

By 6665 0

U.S. consumer prices went up the most in the last 14 months in March. However, the underlying inflation trend seems to slow down the domestic as well as global economic growth.

On Wednesday, a mixed report was released by the Labor Department which seemed to support the Federal Reserve’s decision to suspend its campaign in raising interest rates. The projections put forth by the U.S. central bank showed no interest rate hikes planned for this years, especially after the borrowing costs were lifted four-times last year.

The minutes of the Federal Reserve’s March 19-20 meeting was published on Wednesday. It showed that most of the policymakers saw the price pressures to be muted. However, they expected inflation to go up to reach the central bank’s target of two percent. The Federal Reserve’s inflation measure which includes personal consumption expenditures price and excludes energy and food is currently at 1.8 percent.

According to Joel Naroff, a chief economist at Naroff Economic Advisors in Pennsylvania, the inflation is likely to remain tame. He also said that the Federal Reserve seems to have gone on vacation and is likely to stay that way for a few more months.

The Consumer Price Index went up by 0.4 percent according to the Labor Department. This jump was encouraged by the prices increase of gasoline, food, and rents. In fact, this is seen as the biggest increase since January 2018.

In the past twelve months till March 2019, the CPI has gone up by 1.9 percent. The CPI went up by 1.5 percent in February alone. Economists who were polled by Reuters had forecast a 0.3 rise in March.

After excluding volatile components like food and energy, the CPI went up by 0.1 percent, thereby matching February’s gain. This CPI remained held down by the 1.9 percent drop in apparel prices.

Last month, the government introduced a new method to calculate apparel prices. This caused the apparel prices which had gone up for two consecutive months to be trimmed to 0.07 percent suddenly. Most economists expect a reversal this month.

In the past twelve months till March 2019, the core CPI went up by 2.0 percent, which is the smallest increase since February 2018.

The dollar was traded at a lower rate compared to a basket of currencies as the U.S. Treasury prices went up. Stocks on Wall Street also went up as well.

Inflation remained mute, as wage growth increased moderately even though conditions tightened in the labor market.

business
Stocks

Report of Third Point’s Rising Stake Sends Sony Shares Soaring

By 8793 0

There are many funds across the world that are known for driving changes in companies in which they have significant investment and so is the case most of the time, when Third Point LLC corners a large enough stake in any company. In a new development, that is the talk of the financial world at the moment, Third Point LLC is apparently going to raise their stake in Japanese electronics giant Sony Corp, and after the news was broken in a story, the shares of the company soared to new heights. Following the publication of the report in question, the shares in Sony went up by as much as 7%. While the surge in the share price is definitely a piece of good news for investors and shareholders, it is also necessary to note that if Dan Loeb owned Third Point is able to get their hands on more shares, then there is almost certainly going to be conflict in the company.

According to sources which are close to the developments, Third Point has decided to allocate a whopping $500 million for the purpose of buying the new batch of Sony shares, and it could go as high as $1 billion. The money is not a problem for the fund, as it already manages $14.5 billion in total assets as of today. Sony Corp remains one of the most valuable companies in Japan with a valuation of $55 billion and considering its dominance in both electronics and the entertainment industries, it could prove to be a hugely lucrative move from Third Point. However, it is also necessary to point it out that if Third Point does manage to pick up the shares that it has targeted, then the company is almost certainly going to demand management changes inside Sony. Hyundai faced a similar issue from Elliott Management recently, but their shareholders voted down the demands.

Sony’s studio business is something that could be a subject of takeover attempts in the years to come, but it is believed that the company has no plans to sell. However, getting in early might allow Third Point to be in a better position to get a good price on the stock and then have an active role in the decision-making process when the offers do come in. However, an analyst at Ace Securities dismissed the notion of sale with regards to the entertainment business. He said, “I don’t think a sale of the pictures business is an option for Sony now because entertainment content is becoming crucial for the company.”

business
Opinion & Analysis

Hold Dividends Payout, Use It To Reduce WildFire Risks: US Judge

By 22489 0

Due to PG&E’s ‘rampant wrongdoing’ of not trimming trees which touch power lines and causing many wildfires recently, a federal Judge has asked the utility company to suspend issuing dividends to its stockholders till the company shows that it will not cause any more wildfires. Judge William Alsup who is presiding over this case overturned the objections raised by PG&E and also issued five new conditions for probations in the San Bruno gas explosion case in 2010.

Apart from banning issuing of dividends till the company complies with clearance rules, it should also be open to getting audited by a monitor appointed by the court and also document all the efforts it is undertaking to not risk another wildfire in the state of California.

PG&E cases in court:

The court order comes after it is widely believed that the company’s equipment has caused wildfire and gas pipeline explosion. In 2010, a gas pipeline burst in San Bruno, California which left 58 injured and killing 8 people. Another major disaster the company is being held liable for is the deadly and destructive wildfire in 2018 where 86 people were killed making it the deadliest in the history of California. PG&E later filed for bankruptcy on Jan 29 anticipating compensation.

Judge expresses his concern:

Judge Alsup was not greatly impressed by the company’s efforts in containing future wildfires and was also concerned about it giving away $4.5 billion as dividends instead of spending on trimming trees away from power lines and also the replacement of faulty equipment. The fires caused in 2017 and Camp Fire in 2018 was due to power lines touching trees and a failure of a worn out hook. The judge added that the company troubles are their own doing he said, “The company is facing a problem of your own making and you have to undo that problem and make it square with the people of California.”

Judge Alsup added new terms and said that the company has to implement them to mitigate wildfire in California. As per the new goals set, the company had to remove 375000 trees that are dead or hazardous from areas that are at high risk of wildfire in 2019. Till the new terms are not accomplished, the company will not be able to pay its shareholders until then.

The shares of the company on the NYSE fell by 2% on Tuesday and was at $17.66 as concerns of liabilities rose.