Archiv: February 2007

Folclore on the German floor

Crowded trading floors with gesticulating dealers and brokers still belong to the typical imagery of a stock report from Frankfurt. The exchange is the populated floor, and the floor is the exchange. At least that's what a lot of investors still believe. Yet, due to the technological changes within the last decade, floor dealers have been continously loosing their former impact. Today in Frankfurt all blue chips are exclusively traded on the fully electronic exchange platform Xetra. Only after 17.30, when Xetra takes a break, the floor comes back into action. Apart from that the floor only trades foreign stock and some German small caps.

Still, the floor has not lost its influence as a suitable PR instrument. All the tv cameras of stock reporters and financial newspapers still use the floor imagery as background. Reto Francioni, CEO of the Deutsche Börse AG, is fully aware of that. If he wants to convey a positive and lively image of the exchange, he needs to offer some 'folclore' to the investor. This is maybe the reason why Reto Francioni has recently decided to invest the sum of six million euro (around $8 million) in the revamp of Frankfurt's trading floor. Some traditions certainly live longer in the hearts and minds of many investors. Ask yourself: would you like to see a row of computers to represent a stock market?

Source: Frankfurter Allgemeine Zeitung (FAZ)

Focus on Asia: Shanghai stock market suffers heavy losses

The Chinese stock market suffered its worst day of trading in 10 years on Tuesday. The benchmark Shanghai Composite Index fell nearly 9 percent, its worst daily performance since 1997. The exchange closed earlier than usual. More than 800 corporations lost considerable market value. Especially the bank, metal and car industry was affected. In the past twelve months prices have been climbing up more than 130 percent. Several times the Chinese financial authority had issued warnings regarding a speculative bubble.

Source: Neue Zürcher Zeitung

Cosmo announces IPO details

The Italian pharmaceutical firm Cosmo Pharmaceuticals announced some key data regarding its forthcoming IPO at the Swiss exchange SWX. Cosmo announced on Monday that up to 3419 million shares will be issued within a price range of 22 to 28 Swiss francs ($18 - $23) per share Additionally, 512,870 shares are reserved under the full exercise of the greenshoe option. If the greenshoe is not exercised, the market capitalisation will be between 322 to 409 million Swiss francs ($262 to $332 million). The book building should be concluded on 7 March. The first trading day of Cosmo shares is scheduled on 12 March.

Source: Neue Zürcher Zeitung

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Wireless users 'do more online'

People who use wireless internet "show deeper engagement with cyberspace," according to an American study.
While 54% of internet users check e-mail "on the typical day," 72% of wireless users check daily. Just under half of wireless users get news online every day, compared to 31% of internet users at large. The Pew Internet and American Life Project survey asked 798 US internet users about their wireless habits and sampled almost 2,300 people overall. The report characterised wireless as connecting to the internet using a wi-fi network or using a mobile network.

Read the full text by BBC News.

Morningstar acquires fund data from S&P

The American financial information provider Morningstar acquires the fund data business from rating agency Standard & Poor's (S&P) at the price of $55 million. With this new data offering, which covers 135 000 investement funds from 30 countries, Morningstar plans to extend its presence outside the US and particularly in Europe. Morningstar currently owns data for 128 000 funds and expects to offer - subsequent to the consolidation - the world's biggest data base for investment funds, ETFs, institutional funds and hedge funds. According to a S&P spokesperson the rating agency estimates that their growth potential looks more promising in fund research and fund rating than in data bussiness.

Source: Neue Zürcher Zeitung

Market Data Information: new exchange codes for European exchange for structured products

The joint venture of the SWX Group and Deutsche Börse AG for structured products, which operates in Switzerland under the name of 'SWX Quotematch AG' and in Germany under the name of 'Börse Frankfurt Smart Trading AG' will cause a consolidation of data delivery. This will necessitate the following changes effective 1st July 2007:

All warrants (security type: 22 / M) and hybrids (security type: 6), which are currently delivered on exchange codes 4, 349, 351, 352, 380 and 504 will be migrated to the new exchange code 880. New group codes and listing classifications will be opened and allocated to these instruments.

Further details will follow as soon as more information will be made available by SWX Group and Deutsche Börse AG.

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Deutsche Boerse presents best financial result in its history

The German exchange Deutsche Börse AG concluded financial year 2006 with the best result in its history. According to the preliminary figures published by the company on Wednesday, sales revenue climbed by 14 percent to €1,854.2 million in 2006 (2005: €1,631.5 million). The company earned a further €150.7 million in net interest income from banking business (2005: €112.7 million). The above-average increase in EBITA (Earnings before interest, tax and goodwill impairment) of 45 percent to €1,029.1 million (2005: €710.9 million) is due to the strong sales growth in all market areas and effective cost management. The net income for 2006 reached €668.7 million, as against €427.4 million in the previous year. Basic earnings per share, calculated on the basis of a weighted average number of 99.4 million shares outstanding, increased considerably by 68 percent to €6.73 (2005: €4.00).

Source: Deutsche Boerse

Focus on Middle East: Dubai Marcantile Exchange to be launched in May

The Dubai Mercantile Exchange Limited (DME), a joint venture between Tatweer, a member of Dubai Holding, and the New York Mercantile Exchange (NYMEX), announced today that the Middle East's first energy futures exchange will launch officially on 1st May 2007.

The Initial three contracts to be traded on the DME will be the physically delivered Oman Crude Oil Futures Contract, and two financially settled contracts, a Brent-Oman spread contract and a WTI-Oman spread contract. Trading of the contracts on DME Direct is expected to begin simultaneously across key energy trading centres at the following local times on May 1st : 6:00 (Singapore), 02:00 (Dubai), 23:00 (London time, previous day), and 18:00 (New York time, previous day).

In addition, DME, ENOC Supply & Trading LLC and Emirates Airline are exploring the potential development of a jet fuel futures contract in collaboration with other industry stakeholders with a view to listing the first jet fuel futures contract on the Exchange later in 2007.

Source: DME

E*Trade introduces global trading online

E*Trade Financial introduced a global trading platform that makes it the first major U.S. discount brokerage house to give customers the ability to trade foreign- listed stocks online. The pilot project, which begins with 1,000 E*Trade customers this week, allows them to buy, hold and sell stocks in Canada, France, Germany, Hong Kong, Japan and Britain. All customers should have access to the service in two months.

Read the full article by the International Herald Tribune.

Telekurs Financial Announces 2007 Release Plan for MiFID Reference Data

Telekurs Financial has released its Release Plan for MiFID related reference data and has documented the type of data that will be provided to clients.

Client information is available from the VDF Server for VDF clients. Other clients can obtain a copy of the document by contacting their account manager.

MiFID is a broad ranging directive and Telekurs Financial has from the beginning been involved in discussions with industry groups and investment firms all across Europe. Feedback has shown that the approach the company has taken to helping clients meet the obligations of the directive, fits well with expectations from its clients.

Any client who would like to learn about Telekurs Financial's plans for MiFID should contact their account manager who will arrange a meeting with a relevant subject matter expert – be it Reference Data, Real Time Market Data or even questions about how to contribute data to Telekurs Financial´s data platforms.

For more information on the Valordata Feed (VDF) please click here.

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Structured products: Switzerland introduces prospectus

According to the new Swiss law on collective capital investments issuers of non-listed structured products will have to present a 'simplified' prospectus for these financial instruments. But the law only gives a very general definition of the content of such as prospectus. The prospectus must have a 'standard scheme' which describes the key elements of the product, a forecast of profits and loss and the major risks involved. Also the text will need to be easily understandable and contain the observation that the product does not fall under the category of 'collective capital investment' and does therefore not require regulatory authorisation.

Source: Neue Zürcher Zeitung

Brady Dougan becomes new CEO of Credit Suisse

Yesterday the present CEO of Credit Suisse, Oswald Gruebel, has announced his retirement. His precedessor wil be Brady Dougan, head of Investement Banking at Credit Suisse. Credit Suisse did not want to comment on Oswald Gruebel's motivation. Gruebel only said "My work is done."

Source: Neue Zürcher Zeitung

Structured products: does the investor really understand them?

In the German market structured products are said to be too expensive and also lack of transparency. Some prejudices are founded, some are not.

1st prejudice: certificates are like black boxes

True or false? This reproach is not unfounded, especially when it comes to offering investment certificates to a conservative investor. The terms are really hard to grasp even for experts. The first year seems easy and promising when the interest of say 6 percent is paid out. But in the second year earnings will depend on the value growth of the underyling share basket according to a number of complicated rules. Investors should be aware of some very creative products and rather go the classical selection. Like the index, discount or bonus certificates. These products are easy to understand and also comparable in the market.

2nd prejudice: these certificates are way too expensive

True or false? Management fees are published in the issuing prospectus. But is this price really fair? This question is hard to answer as there is no such thing as a fair derivative price for the investor (fair value is something else though). The price of an option depends on the future volatility, dividends or interests and on the calculation model of the issuer. The prices of easier index, discount and bonus certificates, however, can be easily compared. For sprint, garanty, twin-win-certificates that is not always the case.

3rd prejudice: dividends are not always paid out to the investor

True or false? Dividend payments can not be expected in all cases. But mostly there is another compensation in the form of bonus, discounts or other benefits. If that is appropriate, is hard to answer. Only index certificates offer some clarity in this respect. The investor is best served if he acquires certificates on a total return index which includes dividends. Cerficates on a price index must be traded with disagio on the index, as payment is made to the bank and not to the investor.

4th prejudice: banks may conceal special earnings

True or false? It is true that banks can profit by some hedging as for the currency hedged Nikkei certificates. But it is rather exceptional that banks profit from hedging. Most of the time it is just an expenditure for them.

5th prejudice: some certificats present a great issuer risk.

True or false? No doubt about that. The creditworthyness of the issuer is mostly stated in the prospectus. For long-term investment investors should pick issuers with the best ratings and also choose different ones.

Source: FAZ.NET

Nasdaq triples net income in fourth quarter 2006

On Tuesday Nasdaq, the second biggest US-exchange after NYSE, reported fourth quarter 2006 net income of $63.0 million, an increase of 45.9 million from $17.1 million in the fourth quarter of 2005, and and increase of $32.8 million from $30.2 million in the third quarter of 2006. Included in fourth quarter 2006 net income is a $29.4 million gain, net of tax, on foreign currency option contracts purchased to hedge the foreign exchange exposure on the acquisition bid for the London Stock Exchange (LSE).

The share price of Nasdaq, which had already dropped by 5.6 percent on Monday, was again down by 11.4 percent on Tuesday. This could be due to the failure of the second takeover offer regarding LSE, respectively the obvious refusal of CEO Robert Greinfeld on Tuesday to comment on the international strategy of Nasdaq. Nasdaq now seems to be even more lagging behind its biggest rival NYSE. Nasdaq has a current capitalization of $3.6 bln, which is only one fourth of NYSE's actual 'weight'.

Source: Neue Zürcher Zeitung

Focus on Asia: Deutsche Boerse buys into India

Deutsche Boerse has bought a 5% stake in India's Bombay Stock Exchange (BSE) in a deal worth $910m (£466m).
The deal represented "fair value" for the Frankfurt-based operator, BSE chief executive officer Rajnikant Patel said.
At the same time, the Singapore Exchange said it was "still in talks" to buy a 5% stake in the BSE. BSE, Asia's oldest bourse, is expected to sell off a total of 26% of its business, with a maximum of 5% allowed for each investor.

Read the full text by BBC News.

Focus on Asia: China economy 'to slow slightly'

Chinese economic growth is expected to slow slightly to an annual rate of 10.2% in the first quarter of 2007, according to a government think-tank. The State Information Centre puts the fall from 10.4% in the last quarter of 2006 down to government policies to cool China's rapid economic expansion. The measures by Beijing include higher interest rates. The think-tank wants rates to rise further in 2007. It also expects a slight dip in exports will further help cool the economy.

Read the full text by BBC News.

Financial trends: absolute return

New financial instruments such as structured products or index funds have intensified competition in the investment sector and force fund managers to present new attractive concepts in order to attract more clients. This may be the case for 'absolute return'. Products with this label claim to achieve a positive performance in any market phase. However 'absolute return funds' need to be analysed carefully as the respective product can present various investment concepts. The underlying asset can be shares, but also bonds. On top of that one should not forget that most of these products are very young and may still profit from the current positive market trends. Who knows if the promise can still be fulfilled in a bearish environment?

Investors should be aware that the use of this label is often arbitrary and that absolute return does not always give an absolute guarantee against bad performance. Some issuers take higher risks to achieve positive performance at any cost. Others simply replace a traditional definition (e.g. mixed fund) with the more trendy one without really changing their strategy. That is probably why the fund research firm Morningstar classifies only 30 products in Switzerland as 'absolute return' despite the fact that the name is widely spread. The experts from Morningstar define absolute return products as investments which were able to produce only positive returns during a period of 18 months. The funds should also have stricter risk control. This leads to the fact that most of the seemingly absolute return funds turn out to be 'classical' defensive bond portfolios.

Source: Neue Zürcher Zeitung

More 'fallen angels' in US credit heaven

According to rating agency Standard&Poor's (S&P) the number of companies to be downgraded from investment to speculative grade has increased in January compared to the previous month. As from January three companies were downgraded in the triple and double B grades. Last December, however, S&P sent no company to the 'junk grades'. All three companies are US-based and have very diversified activities: Naples (hospital group), Briggs & Stratton (consumer goods) and Kinder (oil and gas industry). The downgrade of Kinder is probably due to its leveraged buyout. And this would confirm a clear tendency of the previous year. Last year for 30% of the 'fallen angels' the downgrade resulted from takeover activities. In the world market 41 companies are currently on the brink of loosing their investment grade with a volume of $78 bln in outstanding issues. According to S&P the critical companies especially come from the utilities, technology, media and real estate branch.

But companies did also go the other way. As from January six companies were ugraded from speculative to investment grade, but their volumes are definitely lower than those of the 'fallen angels'. S&P sees the downgrade tendendy as an indicator for a probable cooling down of the economy.

Source: Neue Zürcher Zeitung

The global data offering of Telekurs Financial includes ratings from recognized international suppliers. This data is delivered through the broad palette of Telekurs Financial's display and processing products.

Focus on Asia: Peking lifts subscription ban for investment funds

According to the state-owned stock exchange news media "Securities Times" Peking has lifted its temporary ban for the subscription of new investment funds. The government had decided this restriction last December as fears of stock market overheating were growing. In the meantime the mood at the Chinese exchanges has changed from euphoria to scepticism as was shown in the general downturn of the market last week. The Shanhai composite index closed at 2742.31 points on Wednesday.

Source: Neue Zürcher Zeitung

Market watch: success for structured products exchange

The new European exchange for structured products has started off well. The exchange is a joint-venture of the Swiss exchange SWX and the German exchange Deutsche Boerse. In January the exchange recorded revenues of 14.5 bln Swiss francs (USD 11.61 bln). Half of the revenues came from the Swiss part of the joint-venture, SWX Quotematch. SWX announced that revenues rose by 58% compared to the previous month. In the previous year 12000 products had been listed at the exchange. At the German counterpart "Boerse Frankfurt Smart Trading" clients were able to choose among 147000 products.

Source: Neue Zürcher Zeitung

Focus on Asia: India expects 9.2% growth

India's economy is expected to grow by 9.2% in the current financial year, according to the Indian government.The country's robust manufacturing and services sectors are forecast to drive growth at the fastest rate in 18 years.
The government's official growth estimate for the financial year ending in March exceeds the central bank's own forecast of between 8.5% and 9%. Last week, India revised up economic growth for the previous financial year to 9% from 8.4%. The country's stock market jumped to a record high above 14,570 points on the back of the latest figures for the 2006/07 period.

Read the full text by BBC News.

Brillant debut for Industrial and Commercial Bank of China

The Industrial and Commercial Bank of China (ICBC) made a resounding trading start at the Chinese exchanges on Monday. In Shanghai the shares of ICBC closed at Yuan 22.18. The shares were issued at Yuan 15.98. ICBC is partly owned (12.78%) by Hongkong based Hang Seng Bank, wich, in turn, is owned by HSBC Holdings. ICBC had increased its capital by 1 bln shares and got Yuan 16 bln (over $2 bln) out of the IPO. The IPO was oversubscribed 70 times. ICBC was established in 1988 and currently maintains a network of 330 subsidiaires all over mainland China.

Source: Neue Zürcher Zeitung

Press release: Telekurs Financial represented in the MENA region

Telekurs Financial signs contract with Dubai-based company Telenet Systems to service clients in the Arabic-speaking countries.
Read full text of this press release (download 24 KB)

UBS becomes major shareholder at TUI

Investment bank UBS has become major single shareholder at the German travel group TUI. Voting rights of UBS exceeded the 5 percent mark on 26 January and is currently at 5.84 percent. With this increased participaton UBS now replaces the Spanish family Rui as biggest shareholder. Riu currently holds 5.1 percent voting rights, followed by the Spanish bank Caja de Ahorros de Mediterraneo (5 percent), as was announced by TUI on Monday in Hannover.

"This is not a strategical participation for UBS," said a spokesperson of UBS. UBS did not comment on the question if UBS was aiming at a seat at the Board of Directors of TUI. A TUI spokesperson did not want to comment on the importance of UBS as biggest shareholder. For a long time now the TUI group has been active in the search of new investors to fend off possible unfriedly takeover attempts.

Source: Neue Zürcher Zeitung

LSE takeover: NASDAQ looks at alternatives

US-exchange Nasdaq is now looking at alternative growth scenarios in the case that the current attempt to acquire the London Stock Exchange (LSE) should fail. Nasdaq CEO Bob Greifeld announced on Thursday that the exchange was now considering to join a project of international investment banks for the creation of an MTF which would compete with established exchanges. This will increase the pressure on the LSE management which has continously rejected the takeover attempt by Nasdaq. Greifeld told various British journalists that Nasdaq had originally not planned to compete with LSE in technology, but in the light of a possible failure of the takeover it would now consider to let the MTF project use their technology.

Source: Neue Zürcher Zeitung





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