Simon Potter

The total assets of the merged entity is still only a fraction of Goldman's at US$1.6 trillion. China's ambition is to create an "aircraft carrier-sized" investment bank to take on Wall Street banks. Therefore, I see this to be the first of the many consolidations expected in the future. China merges two brokerages to create 1.6 trillion yuan giant

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The Benchmark Index behaviour with higher Highs and higher Lows in past weeks on the Chart decipts a Curved-up posture implying that Consolidation is apparently over. An Ascending Channel has emerged/formed with a mild Angle of Elevation. The KSE-100 Index closed for the week at 78897 levels posting a gain of 409 points on WOW. The Right Flank or Arm of the Inverted Head and Shoulder is extended in terms of Time and Space and has transformed into new Ascending Channel PPRR creating room for moves to Minor Resistance RR at around 80000 which is Celing of the Channel and Necline QR at 81000. The Immediate Resistance is OO at 79260. The Major Resistance is Ascending Axis DD in proximity of 82000 and Strong Resistance is Horizontal Axis BD at 82500 level. The Ascending Channel PPRR is in Nascent stage and for it to remain intact the Floor PP or the Immediate Support in proximity of 78400 should hold. The Minor Support is Horizontal Axis PK at 77000 level whereas Major Support is Ascending Axis DF in proximity of 74400 level. #technicalanalysis #indexanalysis #indexfunds #forex #market #psx #kes100 #trading #economy

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I am very excited to share our view on US stock market and bring new ETF to investors! # Hangseng investment # S&P500# HK-listed ETF #3195.HK #9195.HK Main points shared in online webinar: 1、 美股到底貴不貴？現在投資美股時機如何？ 2、 捕捉降息週期機會，選個股還是美股指數？ 3、 為何選擇標普500指數？ 4、 為何選擇恒生標普500指數ETF？

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Japan’s continuing stock market rally is further aiding #japanesecompanies in unwinding #crossshareholdings amidst increasing pressure, not only from both domestic and international #investors, but also from the Tokyo Stock Exchange and Japan's Financial Services Agency, Japan (JFSA, 金融庁) , both of whom are pushing for more robust #corporategovernance and related #disclosures. The FSA, in particular, has been scrutinising companies who “are suspected of avoiding sharing information on cross-shareholdings by labelling them ‘pure investments,’ even though they do not intend to sell those shares because such investments do not require disclosure.” An FSA spokesman said that “efforts to reduce cross-shareholdings are important for improving corporate value. The FSA will continue encouraging companies with cross-shareholdings to disclose information in an appropriate manner." Other entities are also applying pressure with the Asian Corporate Governance Network (ACGN) , an independent, Hong-Kong based investor group, writing “in an open letter in April that companies should have zero cross-shareholdings”, saying the practice has a "detrimental impact on companies' capital efficiency." Whether it’s the stock market rally, regulatory pressures or both, companies appear to be  responding with Toyota Motor Corporation recently announcing it would buy back more than $5 billion of its shares owned by banks such as MUFG and Sumitomo Mitsui Banking Corporation – SMBC Group . Honda, too, made a similar announcement. The big question is whether this will improve #ROE significantly: according to S&P Global, average ROE for Japanese mega banks, as an example, was 6.5% in the latest fiscal year compared to JP Morgan’s 16%. A Jefferies analyst calculated that if companies in the Topix sold all their cross-shareholdings, average ROE could rise to around 12% from 9%. #japan

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Equity Distributions with High Cash Flow CLO Equity is having another stellar year. Reported IRRs for CLO Equity: ~15% YTD for many of the top CLO managers. CLOs start with a warehouse line allowing CLO managers to accumulate/ramp their BSL portfolio of performing & highly diversified loans (~200 BSLs when CLO is priced). The most favorable CLO warehouse lines have non-marked-to-market facilities with roughly 4x leverage. Bank facilities provided with favorable terms are about SOFR +125 to +150bp range. During the warehouse ramp, equity seeks to earn 20-30% IRR, but this can vary widely, however it’s for a short period (~3 – 6 months), so the MOIC is low as it’s just a component that drives the overall CLO equity return. The BSL market is performing well. I expect the credit markets to perform well in this environment with default rates for BSL declining in the coming year, which should prove positive for CLOs debt and equity. AAA CLO tranches represent about 60% of the CLO cap stack and AAA’s have tightened to ~+130 from its wide earlier this year of S+150. The CLO equity arb is driven by the difference between the rate earned on the BSL portfolio vs. the liability costs (and admin costs). Holding all things constant, tighter liability costs are accretive for CLO equity investors. Credit selection and asset management is critical to performance as the best CLO managers employ dedicated teams of investment professional’s expert in loan underwriting, building, and managing highly diversified CLO portfolios. Strong credit profile is key to maintain low default rates, and its best to avoid CCCs, as mitigating risk is critical to performance. CLO equity also benefits from reinvestment during the investment period, active management that can add alpha via relative value, and repricing/extensions of CLO liabilities later in the CLO life span. CLO equity holders earn strong current cash distributions for well performing deals, with the potential to earn mid-teens IRRs, strong DPI and MOICs. The added kick is when the CLO manager shares a portion (10-20%) of its management fees they earn from managing the CLO (~40 bps) with the CLO equity investors. This fee sharing arrangement was first introduced post-GFC when CLO managers raised CLO equity funds required under risk-retention requirements as The Volcker Rule was introduced. Since the Volker rule no longer applies to U.S. CLOs, fee sharing arrangements are less prevalent today, but available from select managers. For these reasons and more, I am a proponent of CLO Equity and believe there is a place within in broader portfolio to hold these high yielding assets. Big shout out to Marathon Asset Management's CLO team who just closed Bryant Park 2024-24, a $405M CLO yesterday, bringing Marathon’s CLO capital market transactions to $2.4B YTD.

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Hong Kong Monetary Authority (HKMA) issues warning of fraudulent websites (2024 July) – China CITIC, DBS Bank, Julius Baer & Royal Bank of Canada.  Read - https://lnkd.in/gHH6Jimd follow Caproasia | Driving the future of Asia The Hong Kong Monetary Authority (HKMA) has issued warning of fraudulent websites (2024 July) – China CITIC, DBS Bank, Julius Baer & Royal Bank of Canada.  HKMA: “The HKMA wishes to remind the public that banks will not send SMS or emails with embedded hyperlinks which direct them to the banks’ websites to carry out transactions. They will not ask customers for sensitive personal information, such as login passwords or One-Time Password, by phone, email or SMS (including via embedded hyperlinks).  Anyone who has provided his or her personal information, or who has conducted any financial transactions, through or in response to the website concerned, should contact the bank using the contact information provided in the press release, and report the matter to the Police by contacting the Crime Wing Information Centre of the Hong Kong Police Force at 2860 5012.  A hyperlink to the press release is available on the HKMA website.” China CITIC Bank International Limited, China CITIC Bank, DBS Bank, Julius Baer, RBC

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Korea Treasury Bulls Might Not Fear a Fed-Cut Delay We are here in Seoul this week for a marketing trip (Bloomberg 2H24 Macro and Industry Outlook Seminar on May 21: https://lnkd.in/gQrrkgab), so please feel free to come say hi to if you're around! Nice weather aside, this might be an optimal timing to visit given that it's BOK rate decision time again on Thursday (May 23), and we have also taken this window to refresh the Korea Treasury Bond primer. We have argued that KTB bulls could still cheer even if the Fed pushes back the timing of the first rate cut into later this year -- which looks increasingly likely and the hawkish Fedspeak overnight could be one reminder. For the Bloomberg Intelligence research written with Chunyu Zhang, CFA, FRM out today, please visit the rates strategy homepage BI RATEN <GO>: "Korea Treasury Bond Bulls Might Not Fear a Fed Rate-Cut Delay" (terminal link: https://lnkd.in/gZybw8e7). #bloombergintelligence #bonds #rates #korea #us #federalreserve #dollar Korea Treasury-Bond Yields FX Hedged (Source: Bloomberg Intelligence)

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In a recent piece for e-Forex magazine, Goh Qian Ying, CMT, Head of Institutional FX Sales for StoneX Pro, Singapore, shared her views on the rapid rise of the Singapore FX ecosystem and what’s behind its success: - International investor demand and robust base of buy-side clients - Geopolitical stability and regulatory frameworks - Innovative trading technology and skilled workforce "At StoneX, we've observed FX trading in Singapore shifting towards more complex FX instruments such as forwards, swaps, and options as corporates and financial institutions look for more advanced instruments to hedge their currency exposure" Goh said. Learn more about what’s driving Singapore’s thriving FX market by reading the full story here: https://lnkd.in/eFeUHABu #StoneX #StoneXPro #FXliquidity #FXtrading #FX #FXmarkets #eForex

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In recent years, global stock markets have shown divergent performances, leading to an increasing demand from investors to build more diversified and well-balanced investment portfolios. This demand has prompted ETF issuers from different exchanges to launch ETFs that track overseas market performances, catering to the needs of investors. In this post, HSVM CIO Wilfred Sit shared insights on how ETF fund managers construct and manage related investment portfolios, as well as provide an overview of the pricing mechanisms used by ETF market makers during trading hours. Stay tuned for valuable information on optimizing your investment strategies with ETFs! #InvestmentManagement #ETFs #Diversification *Investments involves risk (including the loss of capital invested), no one should make their investment decisions based on this content. Before investing, the relevant investment product’s offering document should be read, and independent advice should be sought. Past performance is not indicative of future performance. SFC authorization is not an endorsement or recommendation. This content has not been reviewed by the Securities and Futures Commission and is intended for Hong Kong investors only.

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Mr.Zhao Xuejun, the chairman of Harvest Fund Management, has resigned from the mutual fund house due to an ongoing investigation, as confirmed by a statement released by the Beijing-based company last Friday. Zhao, 58, a PhD holder in economics from Guanghua School of Management, Peking University, took on the role of president of Harvest in 2000 and was later appointed chairman and president in 2017. During Zhao's tenure, Harvest Fund Management has transformed from a mutual fund company to an asset management conglomerate diversifying into real estate, equity investment, and intelligent investment research services. With AUM around CNY 1.57 trillion ($219 billion) No.8th of China mutual funds, Harvest has delivered nearly CNY 200 billion ($27.89 billion) in returns for the investors. The potential implication of Zhao's resignation hints at Beijing's escalating crackdown on the securities sector amidst market challenges. This development raises the possibility of more senior officials within brokerages and fund houses facing consequences for unethical practices in the near future. #China #stockmarket #mutualfund #crackdown

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All sorts of deals at BDA Partners. Industrials, Tech, Logistics, Chemicals, Health, Consumer, Distribution, Automotive, Services, Financial Sector. Japan, Korea, Indonesia, India, Singapore, USA, Canada, UK. Family offices, private equity, VC, entrepreneurs, MNC spin-offs, sovereign wealth. We're covering a lot of ground. When you think of Asia, think of us. #bdapartners #theglobalinvestmentbankingadvisorforasia

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GAM and SHK & Co Announce Strategic Alliance to Drive Growth and Enhance Distribution in Greater China GAM Investments (“GAM”, SWX: GAM), an independent investment manager headquartered in Zurich and Sun Hung Kai & Co. Ltd. (“SHK & Co”, SEHK: 86), a leading Hong Kong-based alternative investment firm, are pleased to announce a new strategic alliance. This alliance aims to drive growth and enhance client coverage and capabilities across Greater China (Hong Kong, mainland China, Taiwan and Macau). Effective from 1 August 2024, the alliance includes significant new investment in an expanded distribution platform and new strategic alliance serving investors across the region. This collaboration leverages GAM’s near 40-year commitment to the region, Swiss heritage and active investing approach with SHK & Co’s deep understanding of the Asian market, strong local presence, and extensive expertise and network. Together, both companies share a vision and entrepreneurial mindset to drive new business growth, private wealth solutions and active investing opportunities for a broad range of clients. Read Press Release here: https://ow.ly/2SK950SEVUM

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HKEX REACHES AGREEMENT WITH SSE AND SZSE TO EXPAND SCOPE OF ELIGIBLE ETFS UNDER STOCK CONNECT Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce on Friday that it has reached an agreement with Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) to expand the scope of eligible exchange-traded funds (ETFs) under Stock Connect. The eligibility criteria for ETFs for both Northbound and Southbound trading, including the assets under management requirement and the index weighting requirements, will be relaxed to support the continued development of the mutual market access programme. This expansion will further enrich investment options and enable Stock Connect investors to allocate assets in both Hong Kong and Mainland China markets in an efficient and cost-effective way. Further details of the expansion can be found in the circular published by HKEX today. The three exchanges will work closely on the business and technical preparations for the expansion, which is expected to take effect approximately three months from the date of this announcement. #ETF #StockConnect #HKEX #SSE #SZSE

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The end of #ZIRP puts yet more pressure on hedge fund fees. A letter from a number of large institutions including Teacher Retirement System of Texas GIC Korea Investment Management Co., Ltd Virginia Retirement System calls for cash hurdles for performance fees. "A hedge fund may collect significant incentive fees based solely on skill-less returns generated from short rebate, securities lending, unencumbered cash, etc. These returns are easily obtainable by LPs outside of a hedge fund structure for free. Earning cash returns is not the reason institutional LPs invest in hedge funds." Cash is king again, apparently. Full text of the letter: https://lnkd.in/gmzC_xZp

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H&P Financial Services Weekly - Hong Kong’s Hang Seng is the Number One Super market of the week, up > 30%, driven by lower rates and new liquidity. We look at intraday volatility in Q3, which was up on Q2, with that major August spike, which should have helped the leveraged trading platforms PLUS, IGG and CMCX. Rising markets will have added some c. 3% to UK wealth management assets last quarter. Brooks Macdonald estimates are still woefully out of date, in our opinion. Premier Miton reveals more of their MPS plans. Man Group presents an entry point, with AHL underperforming for a while. Tavistock flies on a major disposal which will nonetheless benefit acquirer Saltus. Frenkel Topping would not be at this valuation if it had any liquidity. https://lnkd.in/eDVaAAV5

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Today’s China Top Five: 💡 𝗙𝗲𝗲 𝗖𝘂𝘁𝘀 | 𝗘𝗧𝗙𝘀 Several major fund managers, including China Asset Management Co., Ltd., E Fund Management Co.,LTD. and Huatai-PineBridge Fund Management Co., Ltd. (Formerly AIG-Huatai) announced reductions in management and custodian fees for large-cap ETFs. These changes apply to ETFs tracking key indices like CSI 300, SSE 50, CSI 500, and others, with over RMB1.3tr in AUM. 💡 𝗛𝗶𝗴𝗵-𝗹𝗲𝘃𝗲𝗹 𝗠𝗲𝗲𝘁𝗶𝗻𝗴 | 𝗖𝗶𝘁𝗮𝗱𝗲𝗹 𝗦𝗲𝗰𝘂𝗿𝗶𝘁𝗶𝗲𝘀 Citadel Securities CEO Zhao Peng met with Shanghai Party Secretary Chen Jining. The two discussed the prospects of Shanghai as an international financial hub and Citadel Securities reiterated its long-term investment plan to bring its expertise to the onshore market. 💡 𝗟𝗶𝘃𝗲𝘀𝘁𝗿𝗲𝗮𝗺 𝗣𝗲𝗻𝗮𝗹𝘁𝗶𝗲𝘀 | 𝗕𝗿𝗼𝗸𝗲𝗿𝘀 & 𝗜𝗙𝗔𝘀  Regulatory actions against violations in financial live streaming are intensifying, targeting unauthorized stock recommendations and compliance lapses. Recent enforcement includes penalties for Zhongtian Securities and Tonghuashun’s subsidiary for improper practices in live-streamed stock recommendations. 💡 𝗙𝘂𝗻𝗱 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 | 𝗘𝗻𝗵𝗮𝗻𝗰𝗲𝗱 𝗜𝗻𝗱𝗲𝘅 Many enhanced index funds have underperformed their benchmarks recently due to rapid market shifts and high volatility. From September 24 to November 18, only 53 of 536 enhanced index funds surpassed their benchmarks. However, over longer periods more than two thirds have achieved positive excess returns. 💡 𝗠𝘂𝘁𝘂𝗮𝗹 𝗙𝘂𝗻𝗱𝘀 | 𝗔𝗰𝘁𝗶𝘃𝗲 𝘃𝘀. 𝗣𝗮𝘀𝘀𝗶𝘃𝗲 With ETFs bringing in more than RMB1tr this year, the active vs. passive debate is raging onshore. Passive equity assets have surpassed active for the first time, but active funds retain the better long-term annualized returns.   #chinatopfive #zbenadvisors #assetmanagement #mutualfunds #ETFs #china #financialnews

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"Rmb300bn ($41bn) fund to support government purchases of unsold housing, the Chinese government. This is a drop in the ocean given the scale of unsold stock, said Harry Murphy Cruise, an economist at Moody’s Analytics. China has Rmb30tn of unsold housing inventory, spanning land and completed apartments — equivalent to 10 times the amount sold last year.And Goldman Sachs estimated that, in addition to the unsold housing stock, there were 90mn-100mn units of “shadow supply” in China that were often bought as investment properties and had not been lived in. Stock of unsold properties in China reached record high in February. Beijing has responded mainly by encouraging the completion of unfinished residential projects, This is not like the great financial crisis where the Federal Reserve comes out to buy all the troubled assets of the financial institutions,” said Leonard Law, senior credit analyst at Lucror Analytics in Singapore. “What China is trying to do is much more targeted,” because it “still has to combat moral hazard and be careful not to reinflate the bubble. At a press conference in Beijing on Friday, the term “marketisation”, a common refrain referring to the need for market-orientated principles in policymaking, was mentioned 15 times. New home prices in April dropped at the fastest monthly rate in nine years. If they realise prices continue to fall and sales are not picking up, I imagine the central government will have to step up the funding they are providing.” UBS has estimated that, based on the inventory in 35 large cities, it would cost the government up to Rmb2.4tn to reduce excess inventory of completed but unsold homes to normal levels." #realestate #china #commodities #gdp #inflation

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If history is any guide, these violent market sell-offs are usually petty short-lived and driven by technical factors rather than fundamentals. Simply put, certain speculative investors have taken on too much debt to fund their positions (especially in US equities and crypto) and have become forced sellers as borrowing costs rise and margin calls amplify as the value of their holdings decline. This is all being caused by the unwinding of the Yen carry trade which, in turn, was prompted by the Bank of Japan’s decision to raise interest rates last week. Expect to see some soothing words from Central Bankers over the coming days and, all things equal, markets should settle relatively soon. But this likely signals the start of a more volatile period for risk assets, meaning these “air pocket” selloffs could repeat even if the broader bull market remains intact. The reality is the exceptionally benign market conditions of the past 12-18 months, in which most assets have marched higher without any meangiful correction, is pretty unusual. So we’re arguably just returning to a more normal environment for investing. What do you think?

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