The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.
The headquarters of the Caracas Stock Exchange (CSE) in the upmarket business district of El Rosal are big, imposing and comatose. On one recent day, December 10th, the market handled a grand total of 11 trades worth only US$72,526. Just four stocks changed hands: one fell in price slightly, while three were unchanged.
It was a typical, soporific day at the CSE. Of the 60 companies listed in the exchange, fewer than half see their stocks traded with any frequency. Some shares go months without a trade, making Caracas home to one of the least liquid bourses in the world. It is, in effect, a zombie exchange.
Read more at Financial Services Briefing: “The living dead” (December 16th)
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
“There is opacity around what fees are actually paid, to whom and for what.” This is one of the conclusions of a new report about rights issues in the UK by a group of institutional investors. The group, known as the Institutional Investor Council, bemoans the fees paid by companies to raise equity capital.
Underwriting fees should be expected to rise during times of stress, given the greater risk that underwriters expose themselves to when managing issues in choppy markets. However, the investor council claims that the average gross underwriting fee since 2007, 3.4%, is unjustifiably higher than the 2.0% average recorded throughout the 1990s. It cites a lack of transparency and limited competition as key factors contributing to the situation. It also notes the common perception among clients of banks and other professional advisors that low fees are a sign of low quality. It then provides this unflattering anecdote:
We were told that extreme pressure could be brought on issuers to pay additional costs, the need for which appeared to come to light only once the process had started. Indeed, one sought to protect itself at the outset from these risks by paying an additional fee dependent on ‘not being held to ransom’ after the process had started.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.
By most measures, Brazil weathered the global financial crisis better than almost any other major economy. Amidst the economic turmoil in North America and Western Europe, Brazil saw its reputation enhanced among international investors. But when it comes to recent stock market performance, the São Paulo exchange is a laggard in comparison with some of its neighbours.
So far this year, investors have been richly rewarded in places like Chile, Peru, Colombia and even Argentina. In Bogotá, the IGBC index is up by 33% through early December. In Santiago, the IPSA has gained 39% over the same period, while the Merval in Buenos Aires has added 48%. But even these impressive performances have been surpassed by Lima’s red-hot IGBVL, up by 53% year-to-date. And it gets even better for investors looking for dollar returns, as local currencies in Latin America have been appreciating against the greenback.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
In May, a “flash crash” wiped off nearly 1,000 points—or around 9%—in the value of the Dow Jones Industrial Average in a matter of minutes. The index quickly rebounded, ending the day 3% lower.
Yesterday, the Dhaka Stock Exchange suffered a sudden drop in value, with the broad market index shedding 550 points—around 6%—in early trading. Although the decline unfolded over an hour-and-a-half, it also had an element of “flash”; a group of investors took to the streets and set fires while chanting angry slogans at the exchange’s bosses and national securities regulators.
In the end, the index closed the day down by less than 2%. It was the third consecutive daily decline, a rarity for an exchange that is up by almost 90% year-to-date. (The Dow Jones Industrials is up by only 9% so far this year.)
The Dhaka index added 1.5% in trading today. The streets were peaceful.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.
Investors from all over the world are looking for ways to buy into Brazil’s robust economy. But are Brazilians interested in gaining more exposure to global markets? The São Paulo stock exchange thinks so.
In early October, the bourse launched a range of unsponsored Brazilian Depositary Receipts, or BDRs, which enable local investors to buy shares from the likes of McDonald’s, Google or Apple without exchanging their reais for dollars.
The new product is being marketed as a diversification tool, giving investors a new way to hedge their exposure to the Brazilian economy and currency. Deutsche Bank, which will issue the first batch of unsponsored BDRs, claims that Brazil could soon overtake Mexico as the largest market for depositary receipts in Latin America.
Read more at Financial Services Briefing: “Outward bound” (October 15th)
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
A new survey of investment fund distributors shows the enduring appeal of equities among European retail investors. According to Greenwich Associates, some 47% of retail assets are invested in equities in Europe. By contrast, institutional investors on the continent allocated only around 20% of assets to equities. This difference is particularly stark in Germany, where retail investors devote 66% of their portfolios to shares, versus an average allocation of only 7% among institutional investors in the country.
Roughly two-thirds of the fund distributors polled by Greenwich say that retail clients will boost allocations to emerging-markets equities over the next year. Other asset classes poised for growth, survey respondents say, are a host of alternative investments, including hedge funds and vehicles focused on commodities and infrastructure.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.
After more than a year and a half of talks, the major securities exchanges in Chile, Colombia and Peru are ready to form themselves into a single, unified market. The new market will be the second largest equity platform in Latin America, ahead of Mexico’s Bolsa Mexicana de Valores and behind Brazil’s Bovespa.
The timing is right. As rich-country markets falter on a slower-than-expected rebound from the economic crisis, investors are looking to fast-growing emerging markets for better returns. Although this new crossborder Andean equity market still does not hold a candle to Brazil, it does give investors a larger target in the region, as well as the simultaneous opportunity to get exposure to three Latin American economies that look very strong coming out of the 2009 recession.
Read more at Financial Services Briefing: “Andean tie-up” (October 5th)
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
“Following the Wall Street crowd of analysts is rarely the way to make money,” writes Barry Ritholtz, an analyst. This somewhat paradoxical comment is in response to a story about how, despite bullish earnings forecasts, US equity analysts’ recommendations are the most bearish they’ve ever been. (Or rather, the most bearish since 1997, when Bloomberg started keeping records of such things.)
Indeed, the share of “sell” and “hold” ratings, at around 70% of all recommendations so far this year, is exceptional in recent history. Although outright “sell” ratings the lowest they’ve been in many years, the ranks of “hold” ratings are very large by historical standards. And as a money manager tells Bloomberg, “A ‘neutral’ usually means historically a ‘sell.’” If the contrarians are to be believed, the current pessimism on the part of analysts is as bullish a sign for stocks as CEOs on magazine covers and stock tips from shoeshine boys are bearish for investors.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
The trader folk wisdom that says “sell in May and go away” proved particularly wise this year. In America, the Dow and S&P 500 indexes recorded their worst May performances since 1940 and 1962, respectively. The global, broad-based MSCI World index shed nearly 10% last month, its worst May performance since the index was created in 1970. A jittery start to June in many major markets suggests that the pain for investors could continue into the summer.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
Citigroup’s shares are worth less than 10% of their peak value a few years ago. But far from a slide into obscurity, a steady stream of market-moving news has seen the bank’s stock account for an extraordinarily large share of trading volume at the New York Stock Exchange recently.
The trade in Citigroup briefly reached above 25% of all shares traded around midday yesterday, when interest was driven by the government’s announcement of its intention to sell its stake in the beleaguered lender. (At the parent site, a full analysis of the Treasury’s plan is available for subscribers.)
Today, Citigroup accounted for “only” 15% of trading in New York. It was still the most active stock by far, with the absolute volume of shares changing hands—nearly 620m—dwarfing second-place Bank of America, which saw a mere 143m shares traded.
The EIU's Financial Services Briefing delivers a complete picture of the finance industry in markets around the world, combined with five-year forecasts of key sub-sectors.
