Tuesday, November 15, 2016

The Green back continues to strength

The Green back continues to gain strength on expectations of higher interest rates under Trump, pushing the yuan to a near 8-year low and taking its losses so far this year to more than 5%. The People's Bank of China set its daily fix at 6.8495 yuan against the dollar, compared with Monday's 6.8291 yuan, marking the weakest fix for the currency since 2008.

Monday, November 14, 2016

U.S Bond yields are sharply higher

Bond yields across the board following a public market holiday on Friday, as traders continue to eye upward inflation trends following the election of Donald Trump. The yield on the benchmark 10-year Treasury note is 15 bps higher at 2.27%, while the 30-year Treasury bond yield is over 3% for the first time since January. The movement has also lit a fire under the greenback, with the U.S. dollar index up more than 1%, hitting 100 for the first time in almost a year.

Wednesday, November 9, 2016

Global Equity market witness sell off

It's an historic day for the United States, but it may not be one for the markets. Global equities initially cratered on word of a Trump presidency, even triggering safety breakers on U.S. index futures, but have pared losses. Dow futures are now about 400 points lower, while the S&P and Nasdaq are down over 2%. The tone is certainly negative, but this is not a Brexit reaction. 

The Mexican peso was hit hardest, tumbling as much as 13%, while the U.S. dollar plunged against the euro, yen and Swiss franc.

Tuesday, November 8, 2016

Key Takeaways from US Presidential Elections

What Investors want to know from US Elections

  • Clinton shares many of the Democratic Party's traditional views on spending and taxes, but Trump is generally not as fiscally conservative as a typical Republican
  • Regardless of who wins, Congress will decide which policies become reality - and the vast majority of Congressional seats are in play
  • A Clinton victory could result in a sell-off of pharmaceutical, biotech and possibly financial-services stocks
  • A Trump win could result in a short-term sell-off in stocks, a flight to gold and a rise in the US dollar.

      To understand the impact a Hillary Clinton or Donald Trump win could have on these areas, we must first examine the platforms of the two candidates in a variety of key areas - albeit with the caveat that their platforms have changed over time, particularly Trump's.

    Platform 

     Government spending

     Taxation

     Regulation

     Immigration

     Trade

    • In this "all bets are off" election, investors might want to prepare for more volatility by increasing their focus on tactical asset allocation and sector allocation - and on downside protection.
    • Investors may also want to take a close look at the risk-mitigation and diversification benefits that alternatives provide.
    • It continues to be important to pursue alpha with active management, since beta returns are set to be low and volatile, which could undermine cheap index investments.

     

     

Tuesday, November 1, 2016

Standard Chartered Becomes Frst Commercial Issuer Of SDR Bonds In China

The IMF in November announced plans to add the yuan to the U.S. dollar, the euro, the Japanese yen and the British pound in its elite basket of global reserve currencies, which are widely used in trades and held by governments and institutions as a foreign exchange reserve.

On August 31, in what was dubbed a "historic event", the World Bank became the first issuer of bonds denominated in SDR and settled in yuan when it sold 500 million SDR units worth of bonds in China. Then, overnight, in yet another historic event, Standard Chartered Bank (Hong Kong) said on Friday that it has obtained approval from the People’s Bank of China to be the first commercial issuer of bonds denominated in Special Drawing Rights (SDRs) in China’s interbank bond market.

According to Reuters the size of the issuance programme is 100 million SDRs – approximately 925 million yuan, or $139 million – and the bonds will be settled in yuan. 

A successful offering would mark the first ever time a commercial issuer has issued securities have been issued in the synthetic reserve currency in 35 years.

“SDR bonds, to be settled in RMB, will help promote SDR financial instruments, provide a channel for investors to invest in foreign currency bonds in the onshore market, and offer more diversified bond products in the market."

 “The impact of the bond is very small as the size is tiny in comparison to US dollar denominated bonds and the secondary market for SDR bonds is non existent since this is the first of its kind issued in over 30 years.”
 
 And now that an alternative issuance currency is needed, the IMF's SDR will be happy to step in those shoes, or at least try, as it attempts to become, at first tentatively, to become a new global currency, one which - however - will need a lot of support from an establishment funded in the US currency to displace the greenback as the world's reserve currency, especially since it remains unclear how China feels about floating the Yuan and making it a truly international, and thus competitive, currency.

 The IMF also announced the weight of the five currencies within the basket – the percentage of each based on its relative importance in the world's trading and financial systems – would be set at 41.73 percent for the dollar, 30.93 percent for the euro, 10.92 percent for the yuan, 8.33 percent for the yen, and 8.09 percent for the pound.

 Currency components of the IMF's special drawing rights



S. 45/48: In valuing the shares of a privately held co, the “enterprise valuation” has to be taken by valuing even the assets held by subsidiaries of the Company. It is common for the sellers to charge a “controlling premium” for the sale of the shares. Such transfers to enable restructuring and re-aligning the shareholding pattern are genuine and bona fide. The alleged excess consideration for the sale of the shares cannot be treated as “unexplained income”

Amritlal T. Shah vs. ITO (ITAT Mumbai)

The exit from the closely held company BEC Industrial Investment Company Private limited with its subsidiaries could in commercial parlance definitely command premium in addition to the normal price based on NAV as first of all the valuation of the subsidiary would get embedded in the price of share of BEC Industrial Investment company Private Limited and that valuation has to be done based on present value of enterprise and not necessarily the book value as represented by financial statements and also controlling premium is embedded in the price for the shares paid by acquiring shareholders to the selling shareholder group to vest/strengthen their control in the BEC Industrial Investment Private Limited which shall get embedded in mutually agreed negotiated price between the buyer and the seller