Asian stocks at 19-month highs on robust Wall Street

HONG KONG - Asian stocks edged up to fresh 19-month highs on Thursday, helped by an extended rally on Wall Street and strong US data though the dollar stepped back after a recent bounce.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, rising to its highest since July 2015. It is up by a tenth so far this year partly underpinned by more optimistic earnings expectations and a gradual unwinding of bearish emerging market bets.

Australian stocks advanced 0.4 percent in early deals with looming jobs data the key event risk on the day. A strong showing would set the market up for further gains with technical indicators helping.

"The index has now closed above the key technical resistance level at 5,800 which is a bullish sign opening up further gains in the coming months back towards 6,000," said James Woods, global investment analyst at Rivkin Securities in Sydney.

The Australian employment data is due at 00:30 GMT with market expectations centering around 10,000 jobs being created.

Wall Street pushed further into record-high territory on Wednesday, with the S&P 500 notching a seven-session winning streak, helped by robust economic data and optimism that President Donald Trump will cut corporate taxes.

That optimism was not shared in the currency markets with the dollar's recent bounce running out of steam as investors took profits even as fresh data showed a pick up in inflationary pressures.

US consumer prices recorded their biggest increase in nearly four years in January, backing expectations for the Federal Reserve to raise interest rates at a steady pace over the course of the year.

Fed Chair Janet Yellen, in her second day of economic testimony before Congress, offered no additional insight on the timing of the central bank's next rate hike after her comments a day earlier had hinted at a fairly hawkish policy stance.

Traders may also be leaning towards a rate increase delayed beyond the Fed's March meeting, with the futures markets only pricing a 27 percent chance of a tightening next month.

The dollar index, which measures the currency against a trade-weighted basket of six major peers, slipped to 101.02. It rallied to a one-month high of 101.76 on Wednesday.

In commodity markets, oil prices softened as record high U.S. crude and gasoline inventories fed concerns about a global glut. U.S. crude was down 0.15 percent at $53.03 a barrel and Brent was flat at $55.75 a barrel.

source: news.abs-cbn.com

Wall St edges down as bank shares weigh

Wall Street ended slightly lower on Thursday, held down by bank shares in quiet holiday trading as traders looked to position for the new year.

US equities have stalled in recent days after rallying in the wake of Donald Trump's Nov. 8 election as US president. Investors are betting on benefits from Trump's plans to cut taxes and regulations and introduce fresh economic stimulus.

The post-election surge has put the benchmark S&P 500 on pace for a roughly 10-percent gain for the year, but has left some market participants nervous about a potential correction.

"We ran out of steam after the election rally. Now the market is at fair value and now it is: 'What is going to come next?'" said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.

The Dow Jones Industrial Average fell 13.9 points, or 0.07 percent, to 19,819.78, the S&P 500 lost 0.66 points, or 0.03 percent, to 2,249.26 and the Nasdaq Composite dropped 6.47 points, or 0.12 percent, to 5,432.09.

The Dow has yet to breach the 20,000 mark after repeatedly coming within 20 points of the milestone.

The S&P 500 financial index dropped 0.7 percent, the worst-performing sector, but has still risen about 20 percent in 2016.

Bank of America, Citigroup and Morgan Stanley each fell at least 1 percent. Goldman Sachs and JPMorgan weighed the most on the Dow.

US Treasury yields fell across the curve as investors bought safe-haven government debt after a strong seven-year note auction.

Utilities and real-estate - which have lagged since the election - were the top-gaining sectors on Thursday.

"What you're seeing is some of the investors looking at the more recent losers and picking them up and rotating out of some of the post-election winners," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

A drop in US exports last month pushed the country's trade deficit in goods higher while the number of Americans filing for unemployment benefits fell last week in a positive sign for the labor market, reports showed.

Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc in Toledo, Ohio, said the jobless claims data was "right in line" and "corresponds with what we've had the past week - nothing that will move the needle from the standpoint of buyers getting enthused or sellers panicking out."

In corporate news, drug developer Cempra tumbled 57 percent after U.S. health regulators rejected its antibiotic.

About 4.9 billion shares changed hands in U.S. exchanges, well below the 6.9 billion daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 1.41-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 3 new lows; the Nasdaq Composite recorded 80 new highs and 50 new lows.

source: news.abs-cbn.com

Dollar pulls back after skittling world currencies

LONDON - The dollar surged to a near 14-year high before pulling back on Thursday, clocking up records against a range of other top world currencies and skittling emerging markets.

Stronger data from the world's biggest economy had underpinned the greenback's gains, which were further amplified by thinner volumes as US traders stayed away for the Thanksgiving holiday.

It was off its highs as Europe wound down but had earlier pushed its way past more of last year's peaks against the euro to reach $1.0515, with only the March 2015 high of $1.0457 standing in the way of a drive towards parity.

The yen had skidded to an eight-month low and China's yuan to an 8-1/2 year low, while the highly sensitive Turkish lira and Indian rupee hit new troughs as warning lights flashed in emerging markets.

"There doesn't seem to be anything stopping US yields going higher in the near-term so I think people are going to stay on the dollar trend," State Street Global Markets' head of global macro strategy, Michael Metcalfe, said.

"The only risk to this are that the dislocations in markets outside of the US, particularly in emerging markets, get to a point where they start to feed back into concerns (for the Federal Reserve as it looks to raise interest rates)," he said.

In contrast to all the FX noise, European shares saw a broadly quiet day, with most of the main bourses inching up on gains from chemical and insurance sector stocks but capped by weaker banks.

German business confidence data showed firms remained unfazed, for now at least, by the US election win for Donald Trump and the political uncertainty bubbling in the euro zone.

However, the European Central Bank delivered an unusually downbeat message, warning that global political shifts could compound existing vulnerabilities to rising interest rates and revive worries about the euro zone's weaker economies.

ECB Vice President Vitor Constancio said the bank would be watching Italy particularly closely as it braces for a referendum on sweeping changes to its constitution next month.

"It's the sort of political uncertainty that will trigger or not an economic shock in financial markets," Constancio told reporters after presenting the ECB's twice yearly report on financial stability, referring to if Italy's government losses the vote.

"And depending on the degree of that shock, then we have to see if we have anything to do or not."

DOLLAR BULLS IN THE CHINA SHOP

It was enough to keep bond markets playing the transatlantic divide that has been widening again on bets that, while the United States may be about to raise interest rates, Europe is unlikely to follow suit for a couple of years.

The yield on Germany's 10-year government bond, the benchmark for the region, fell 2 basis points (bps) to 0.26 percent, while Italy, which has been plagued by its political concerns, outperformed with yields down 5 bps to 2.08 percent.

In the US on Wednesday by contrast, the two-year Treasury yield hit its highest since April 2010.

The firm dollar hit most emerging market currencies, with China's yuan nearing the 7 per dollar level for the first time since May 2008.

State banks or foreign exchange authorities in China, India, Indonesia and the Philippines were all suspected of intervening to slow the slide in their currencies, traders said.

Turkey's lira and India's rupee both sank to record lows. The lira was also buffeted by calls from European lawmakers to halt Turkey's EU membership talks, though it clawed back some ground after the Turkish central bank raised one of its key interest rates for the first time since 2014.

"Exchange rate movements due to recently heightened global uncertainty and volatility pose upside risks on the inflation outlook," the central bank's monetary policy committee said in its statement.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.4 percent, though the drop in the yen lifted the export-orientated Nikkei in Tokyo to a near 11-month high.

Hong Kong's Hang Seng shed 0.2 percent while higher metals prices lifted China's blue-chip CSI300 index 0.4 percent.

Oil prices were little changed amid all the dollar commotion and ahead of a planned OPEC-led cut in crude production at a meeting on Nov. 30.

US crude was up 10 cents at $48.08 a barrel and Brent was up a similar amount at $49.09.

Industrial metals remained red-hot meanwhile on hopes of a revival in US manufacturing and infrastructure spending under Trump. London zinc hit an 8-year high and copper jumped for a fourth day in a row to put $6,000 a tonne within reach.

"Strong durable goods orders in the US helped buoy investors who have viewed Trump's upcoming presidency as a positive for industrial metals demand," ANZ said in a report.

source: news.abs-cbn.com

Global Markets: Shares rally, dollar sags on slow-motion Fed

SYDNEY - Asian shares look set to rise for a sixth straight session on Thursday after the Federal Reserve left U.S. rates unchanged and plotted a lower trajectory for future hikes, slugging the dollar and boosting commodity prices.

Traders expected stocks to at least match the 1.1 percent gain enjoyed by the S&P 500. MSCI's broadest index of Asia-Pacific shares outside Japan was seen testing its recent one-year peak.

While Tokyo was on holiday on Thursday, stocks were boosted on Wednesday by the Bank of Japan's shift to targetting a positive yield curve, a move that was considered bullish for banks, insurers and pension funds.

The U.S. Fed did highlight the risk of a hike in December, but the forward guidance on rates - known as the dot points - left investors feeling any tightening would be glacial at best.

Market pricing for a December move rose only a fraction to 59.3 percent, from 59.2 percent, according to CME Group's FedWatch program.

Richard Franulovich, an analyst at Westpac, noted that back in June the median dot showed five hikes to end-2017. Now it was down to just three. The estimate of the long run neutral rate had also fallen 12.5 basis points to 2.875 percent.

"We do not feel that the dollar has the wherewithal to make a more concerted run higher in the next few weeks," he added. "The FOMC is unlikely to deliver anything more than a very 'dovish' December hike."

The dollar was down at 100.40 yen, having lost 1.3 percent on Wednesday to touch a 3-1/2 week low of 100.30. The euro had popped up to $1.1190, while the dollar index stood at 95.499 after easing 0.5 percent from a more than six-week high of 96.333.

CENTRAL BANKS STILL TRYING

The yen had gained broadly after the BOJ's shift to yield curve control - already abbreviated by the market to "YCC" - left some unimpressed.

"Fundamentally, it did not amount to an easing of monetary policy, but merely offers policy tweaks at the margin and a strengthening of forward guidance," said Frederic Neumann, co-head of economic research at HSBC.

"The BOJ now essentially promises to purchase JGBs for even longer, until inflation exceeds, and not merely meets, its 2 percent inflation target."

Another central bank struggling with too-low inflation is the Reserve Bank of New Zealand and it renewed a pledge to lower rates again on Thursday even as much of the domestic economy is growing briskly.

The RBNZ's blunt statement that further easing would be needed knocked the local dollar down half a US cent to $0.734, but the market has found it hard to sell a currency that still offers an overnight interest rate of 2 percent.

In commodity markets, gold traded at $1,332.36 an ounce, having climbed 1.6 percent as the US dollar declined.

Oil prices had climbed as much as 3 percent on Wednesday after a third surprise weekly drop in US crude stockpiles boosted the demand outlook in the world's largest oil consumer.

Another supportive factor was an oil workers' strike in Norway, which threatened to cut North Sea crude output.

U.S. crude (WTI) futures were up another 29 cents early Thursday at $45.63 a barrel. Brent crude futures had finished $1.17 higher at $47.05 per barrel.

source: www.abs-cbnnews.com

Alternative Investing in Binary Options

Finding the best alternative source of income can be challenging for most people; especially due to the time commitment required by most of the available options in the market.  Most of them might require a huge capital investment such as real estate investment. Others may require a lot time investment such as real-time forex and stocks trading; whereas others may be just be very complicated with a lot of technicalities to understand such as bond trading.


However, there are other new platforms such as 10trade that provide simpler and easy to understand alternatives for those with less financial knowledge. These options are also favorable to those who do not want to speed their whole day in front of a scree trying to follow every small movement of the Japanese candle sticks.  From the comfort of your home or your office, you can be able to make an extra income through binary options trading by using very simplified trading methods and tools available online.

Binary option trading is trading in commodities, stocks, indices, currency, bonds among other investment assets without actually owning the underlying assets. All you need to do as the trader is to predict the price movement of the underlying asset and if your prediction is right then you gain money from your transaction. If however your prediction is not correct, you end up losing money in that particular transaction. This is a very easy way to make money in the commodities, stocks and bonds markets without actually acquiring the real underlying assets and without having to undergo the pressure of understanding the complicated investment strategies involved in those markets.

By just being able to predict whether the price of a commodity like oil will either go up or g down and do that accurately, you become a binary options trader! However, there are a few basic things you need to know before you venture into binary options trading. First you need to know how binary options trading works, know the different types of binary options and finally get a few tips on how to become an above average trader in this new financial markets segment.

Trading in binary options has close similarities with derivatives trading. Both binary options trading and derivatives trading involve predicting the price movement of an underlying investment asset. In both investment alternatives, if your prediction is right then you gain from the transaction and you are said to be in the money. However, if you are wrong with your predictions as to how the price of the underlying asset will move, then you lose money and you are said to be out of the money.  Another similarity is that in both investment alternatives we have specific investment periods which are pre-determined when initiating the trade. We also have pre-determined gains which are also agreed upon when initiating the trade. Finally, in both cases you do not own the underlying investment asset, rather you just speculate on its price movement.

Back to binary options, there are two major types of the same. We have the call options trade which is the trade you place when you expect the price of the underlying asset to go up. For example oil could be trading at $70 and you expect that by the end of the day it will be trading at $85 due to sanctions imposed on one of the leading oil producers in OPEC. The binary option trade you place in this case is a call option because you anticipate that the oil prices will rise due to the changing macro-economic factors. If your prediction is true by the end of the day you make money; while on the other hand you lose money if it is wrong.

Put binary options are the direct opposite of call binary options. Here you make money when you become the prophet of doom and predict that the price of the underlying asset will fall. If for example you predicted that the price for oil from the example above would fall to $57 and it actually did fall, then you make money. If on the other hand the price went up, then you lose your money. This aspect of having to make a decision between only two alternatives while trading is what makes the trading be referred to as binary options trading.

To be good in binary options trading, all you need is to be consistent in following trends in the markets for the underlying assets that you are trading on. For instant if you are trading in gold, you need to keep tabs of the latest trends in the gold market and other macro-economic factors that might affect the price of gold. This is not a difficult thing however since there many online business and economic news sites to keep you are informed. In addition, to be a veteran trader you need to separate your emotions from the trading and let the facts from the market analysis advice your decision making before you place any trade. Finally, keep trading and the more you do it, the better you shall become and eventually be a master of the game.

source: 20smoney.com

PSE hit by 40-min trading halt as tech glitch hits system

Trading has been halted at the Philippine Stock Exchange (PSE) due to a technical problem Friday.

The PSE has informed traders to standby for further announcements, while loud complaints of orders being rejected could be heard from the trading floor at around 10:30 AM.

The Philippine Stock Exchange Index (PSEI) was at 7,198.46, down 34 points or 0.48% before trading was halted.

The PSE flashed a message on the main board asking traders to re-log into their PSEtradex workstations and the Market would resume at 10:58 AM. Ticker appears to be frozen.

Trade halted at PSE pic.twitter.com/8uZ30pN64a

— Warren de Guzman (@wddeguzman) April 8, 2016

 Traders say the market has not resumed. The PSEI however did move to 7,200.83, down 32 points or 0.44%.

PSE President Hans Sicat said the technical glitch Friday that halted trading for 41 minutes was due to a network related issue. PSE is currently contacting their third party service providers for further information. He stressed this is very different from the August trading halt that lasted 5 hours.

Sicat declined to blame it on slow internet, saying PSE has to further investigate.

Last year, trading was halted three times in August. On August 25, trade was halted for 5 hours, the longest trading halt ever for the PSE related to a technical glitch.

The halts happened after the current trading system, PSETradeXTS was adopted on June 22, 2015. That system was developed by NASDAQ but the PSE stressed the halts had nothing to do with the new system.

Trading was also halted in May 2014 when an older trading system was in place.

The PSE has a circuit breaker, or a threshold that would automatically suspend trade if volatility becomes excessive. The threshold for that is a change of 10%.

source: www.abs-cbnnews.com

Asia stocks extend gains, Tokyo lifted by weak yen

HONG KONG, China - Asian markets advanced on Monday, with Tokyo boosted by a weaker yen after the US Federal Reserve chief stuck to her plan to raise interest rates by year-end.

The euro suffered further losses as Greece warned it did not have enough money to service its debts next month without the rest of its bailout cash.

Tokyo closed 0.74 percent higher, adding 149.36 points to reach a 15-year high of 20,413.77, while Sydney jumped 1.00 percent, or 56.8 points, to 5,721.5.

Shanghai was up 2.58 percent in late trade as traders moved into undervalued stocks.

Hong Kong and Seoul were closed for public holidays.

Fed chief Janet Yellen said on Friday she expects to raise rates from historic lows "at some point this year", warning that a delay could risk overheating the economy. However, she also said there were still weaknesses, including slackness in the job market despite unemployment at 5.4 percent.

Her comments came two days after minutes of the Fed's April policy board meeting made it clear that slow growth in recent months meant it was not expecting a rise before late July.

Adding to the dollar's strength was news from the US Department of Commerce that core consumer prices -- which exclude food and energy -- jumped 0.3 percent in April from March, the largest one-month rise in more than two years.

The dollar was at 121.59 yen Monday, against 121.52 yen in New York and sharply up from 120.71 in Tokyo earlier Friday.

"Inflation is speeding up a little in the US, and we can see the intention to raise rates sometime this year," said Shoji Hirakawa, chief equity strategist at Okasan Securities Co in Tokyo.

"When we consider the US versus Japan, rates will be higher in the States. Japan’s rate hikes and tapering will be further into the future."

Greece 'out of cash'

Japan has for the past two years been embarking on a bond-buying programme that pumps cash into the financial markets -- which hits demand for the yen -- in a bid to defeat deflation.

The euro fell to $1.0990 and 133.73 yen from $1.1016 and 133.86 yen in US trade as investors become worried about Greece's ongoing bailout overhaul talks.

Interior Minister Nikos Voutsis told Mega TV that Athens has nothing with which to pay the International Monetary Fund ahead of a June 5 deadline.

"The instalments for the IMF in June are 1.6 billion euros. This money will not be given. There isn't any to be given. This is a known fact," he said.

Nevertheless, the minister said he believes that negotiations between Athens and its creditors were taking place "on the basis of cautious optimism that there will be a strong agreement".

Athens has been locked in months-long discussions with the IMF and European Union over restructuring its bailout terms in order to release the last tranche of rescue money to pay its bills.

However, with both sides unable to agree a deal there are fears the country will default, which could see it tumble out of the eurozone.

On Wall Street Friday the Dow fell 0.29 percent, the S&P 500 lost 0.22 percent and the Nasdaq eased 0.03 percent.

Oil prices were higher. US benchmark West Texas Intermediate for July delivery rose five cents to $59.77 a barrel and Brent crude for July eased two cents to $65.35.

Gold fetched $1,205.18 compared with $1,212.40 late Friday.

In other markets:

Taipei was slightly higher, adding 6.37 points to 9,645.17.

Taiwan Semiconductor Manufacturing Co rose 1.37 percent to Tw$147.5 while leading smartphone camera lens maker Largan Precision Co was up 0.14 percent at Tw$3,465.0.

Wellington advanced 0.33 percent, or 18.96 points, to 5,794.98.

Contact Energy surged 11.35 percent to N$6.18 after announcing a special dividend payment, while Fletcher Building gained 0.35 percent to close at NZ$8.56.

source: www.abs-cbnnews.com

PSEi up for 8th day

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) is up for an 8th straight day, with property companies leading the rally.

The PSEi gained 0.11 percent to close at 7,834.86, a fresh all-time high.

SM Prime Holdings, which reported strong 2014 earnings on Monday, was the day's biggest gainer, rising as much as 3 percent.

Other advancers include Ayala Land, Megaworld and Century Properties.

CBRE Philippines said it expects the property sector to continue its strong growth, driven by the hospitality, gaming and retail industries.

At the foreign exchange market, the peso weakened to P44.33 against the US dollar.

Meanwhile, Southeast Asian stock markets traded stronger on Tuesday, although gains were capped as investors looked to Federal Reserve Chair Janet Yellen's statement later in the day for signs of when the U.S. central bank would raise interest rates.

The Thai SET index was up 0.5 percent by midday, led by a 1.8 percent gain in the country's top oil firm, PTT.

Yellen will deliver the central bank's semi-annual Monetary Policy Report to the Senate Banking Committee later in the day, in the first of two days of testimony to Congress on the state of the economy. And there is much uncertainty over whether she will echo the dovish tone of the minutes from the Fed's last meeting, or reaffirm June as a window for a first rate hike.

"Market traders continue to be cautious in the wake of 'unsettled issues' in Greece, but were also optimistic that China may lead the way with further market easing news," Singapore-based NetResearch Asia said in an investor note.

Euro zone ministers late on Friday agreed to extend Greece's financial rescue package by four months, a shorter extension than the six months the country had sought. But concerns over Greece's willingness for required reforms weighed on sentiment.

Singapore was up 0.3 percent, Malaysia traded 0.4 percent firmer, and Vietnam, which resumed trading after long holidays, gained 1 percent.

In Kuala Lumpur, energy shipping company MISC Bhd jumped 5.4 pct to its highest since July 2011 after it entered into an agreement with controlling shareholder Petroliam Nasional Bhd and South Korean shipbuilder Hyundai Heavy Industries Co Ltd, to build five liquefied natural gas carriers. - With reports from ANC and Reuters

source: www.abs-cbnnews.com

Papal rally? PSEi hits new all-time high

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) traded at an all-time high on Wednesday morning.

The main index reached a new all-time intra-day high of 7,530.41.

As of 12:00 noon, the PSEi stood at 7,528.49, up 129.49 points or 1.75 percent.



While some may say the stock market is feeling the "Pope Francis" effect ahead of his visit to Manila, analysts are attributing the euphoria to the continuing plunge in oil prices.

"Lower oil prices help ease inflation concerns… With this trend, 2015 inflation could be at 2.5%, this means more leg room for monetary policy (no interest rate hike in 1st half of 2015)," BDO analyst Jonas Ravelas said.

Reuters reported oil tumbled 5 percent to near six-year lows before recovering ground on Tuesday, and Brent briefly traded at par to U.S. crude for the first time in three months as some traders moved to take advantage of ample storage space in the United States.

Traders were searching to store the glut of oil, which has knocked prices down 60 percent in the last six months. So far this week, Brent has lost 7 percent and U.S. crude 5 percent.

Brent settled down 84 cents at $46.59 a barrel, after falling to $45.19, its lowest since March 2009.

U.S. crude closed down 18 cents at $45.89, after hitting an April 2009 low of $44.20.

R.S. Lim & Co. president and CEO Ali Yu said lower oil prices are good for listed companies, especially in the retail and industrial sectors.

Nickel Asia

Meanwhile, Nickel Asia traded at an all-time high on Wednesday morning, after the company reported its 2014 shipments breached its targets.

Nickel Asia shares jump as much as 2.5 percent to a record high of P32.85 in early trades. The company said nickel ores shipped and delivered from the company's four operating mines reached 17.9 million wet metric tonnes (WMT) in 2014, exceeding the target of 17 million WMT.

Nickel Asia, the Philippines' biggest nickel miner, is partly owned by Sumitomo Metal Mining Co Ltd of Japan. - With Michelle Ong, ANC and Reuters

source: www.abs-cbnnews.com

Only 2 stock market trading days left for 2014

MANILA, Philippines - There are only two remaining stock market trading days for 2014.

The Philippine Stock Exchange (PSE) said there will be stock market trading on December 23 and 29, 2014.

However, there will be no trading at the PSE during the days declared as regular and special non-working holidays over the Christmas break.

The holidays declared during the next two weeks are December 24, 25, 26, 30 and 31, 2014 and on January 1 and 2, 2015.

"Since the government has declared the suspension of bank clearing and settlement operations for December 24, 25, 26, 30 & 31, 2014 and January 1 & 2, 2015, there will also be no trading, clearing and settlement at the PSE during these dates," PSE President and CEO Hans B. Sicat said.

Trading at the PSE and clearing and settlement at the SCCP will resume on January 5, 2015.

"We understand that prolonged breaks can be disruptive to the financial system especially in the context of globalizing environments and we have thus asked the Bangko Sentral ng Pilipinas to take into account in subsequent similar occasions opening clearing operations to minimize such disruptions," Sicat said.

source: www.abs-cbnnews.com

The Risk Principle of Investment

Risk is inherent in investment. But if you are unwilling to assume a certain level of risk, you will most assuredly lose wealth. This is the reality of buying power as it relates to inflation. As a nation’s currency is inflated, individual dollars are worth less over time. So that $10,000 you have sewed into your mattress won’t get you the same amount of stuff in 10 years that it does today. This is why people invest, to protect and increase the buying power of their hard won dough. But there is always the chance you could lose some, or all, too.

So investors accept certain levels of risk. Every form of investment carries with it a level of risk, but these vary widely from form to form. Some investments pay off very little, but have almost no risk of losing value. Others are more likely to lose value than not, but bear the possibility of bringing in huge winnings. We’ll say that on the one hand you’ve got money sewn into a mattress and on the other hand buying a lottery ticket. I don’t recommend either approach, so an investor needs to make his or her life somewhere in the middle. Here are different degrees of risk found in various forms of investment. The wise investor will create a portfolio that is some combination of all levels of this spectrum.

Risk Level 1: Bonds – The US government has never defaulted on bonds in its history, making them one of the most secure forms of investment around. Because of this, many investors buy up more and more bonds as they age, to make sure that they don’t lose a boatload in a sudden stock market crash, just before or during retirement. Bonds bring in returns at roughly 4% a year. It’s nothing you’ll get rich on, but if you already have money, it’s a great way to preserve its value and even increase it somewhat, without bearing the risk of catastrophic loss. Again though: low risk, low reward.

Risk Level 2: Stocks – The stock market is a tricky game. The closer you zoom in to individual stock behaviors, the harder it is to come out on top. Individual stocks whizz around like mosquitoes. They may have an overall trajectory, but moment by moment, or even year by year, it’s very hard to know what they are going to do. Some stock pickers are great at this, bringing in annual returns in the 10’s and 20’s, or higher, year after year. But these are in the minority. Most active stock managers fail to beat the market, which rises on its own about 9% a year, on average (there are many down years). An index mutual fund latches onto dozens of stocks all over the market to leverage the overall growth of the market.

Risk Level 3: Stocks/Day Trading – This is the way people get rich quick (and the alternative). Remember how I said that stocks jump around a lot? Day traders make short wagers on this behavior, taking home bundles for insight and paying dearly for mistakes. This system has been digitized in the form of spread betting, where investors win based on their correct prediction of stock growth or loss, and the amount the market goes in their chosen direction. Many bets can be made a day, so the potential for growth and loss is enormous.

The savvy investor will accept judicious amounts of each of these risk levels. By putting all your money into level one, you’d never make a thing. All level 2, you’d have to settle for very gradual growth, without any guarantees that it would be there when you most need it. All level 3, and you stand a good chance of losing it all, or will at least have a mercurial existence. Talk to your finance professional about how much risk you should include in your portfolio.

source: 20smoney.com

How these small groups of traders manipulated forex markets

LONDON - In online messages full of bravado and Cockney rhyming slang, small groups of traders using names such as "The Three Musketeers" and "The A-team" colluded to manipulate foreign currency markets to maximize their profits.

They used private chats to share confidential information about deals being placed with their rival banks, and used that information to push benchmark rates up or down depending on what would earn them the most, regulators said.

"How can I make free money with no fcking(sic) heads up," said one trader in an exchange published by Britain's Financial Conduct Authority, which with US and Swiss regulators levelled hefty fines Wednesday against five major banks for rigging markets.

"Go early, move it, hold it, push it" -- read one of the chatroom lines, summing up how markets were manipulated.

Clients would place an order with their bank for a certain amount of euros, pounds or dollars to be bought or sold at a specific benchmark rate for that day, known as the "fix".

Traders are alleged to have put their orders together -- known as "building" or "leaving you with the ammo" -- to give them enough volume to shift the market before the fix is set.

Banks profit if they buy the currency at a lower rate on the market than the fix rate at which they sell to clients.

'Nice work gents'

The most widely used benchmarks are the so-called 1:15pm daily fix by the European Central Bank, which is based on a snapshot of the market early afternoon, and the 4pm fix by WM Reuters (WMR), which takes an average of trading over a one-minute period.

In one example published by the FCA, US bank Citigroup had orders to buy 200 million euros at the 1:15pm euro-dollar fix.

The FCA claims the bank added to this order by "building" from other banks, and in the 15 seconds before the fix was set, used the volume of currency to push up the market price.

It placed a number of orders increasing in size and price, pushing up the average market rate so that the fix was set higher than it would have been even a minute earlier.

After the fix, the traders congratulated each other on a $99,000 profit for Citibank: "impressive" and "cnt [can't] teach that", they said in the online chatroom.

Similar conversations were evident involving traders from the other four implicated banks -- HSBC, Royal Bank of Scotland, JPMorgan Chase and UBS.

In one deal that made HSBC a $162,000 profit, a trader remarked, "nice work gents... I don my hat", while in another making $33,000 for JPMorgan one crowed: "we... do... dollarrr".

The traders also talked about "betty" -- Betty Grable, the US film star and rhyming slang for cable, as the sterling-dollar market is known -- and their huge bonuses, the FCA said.

"They are not trying to coordinate for the interests of their customer. They are coordinating for the interests of their own bottom line," said Therese Chambers, who led the FCA investigation.

Many firms have now imposed restrictions or outright bans on the chat rooms used by their traders.

The FCA's chief executive Martin Wheatley said preventing this kind of collusion was "not rocket science".

"It's fairly simple things like watching the extent to which people are using mobile phones on the trading floor, allowing them unmonitored use of private chat rooms, monitoring the activity around particular benchmark fixing points," he said.

Simon Hunt, a financial services risk and regulation partner at the consultancy PricewaterhouseCoopers, said banks had increased their surveillance following previous unauthorised trading incidents.

"Good progress is being made by bank management but culture change does not happen overnight," he said.

source: www.abs-cbnnews.com

Asia markets take beating after US data

HONG KONG - Asian markets tumbled Thursday, led by another huge sell-off in Tokyo, following a disappointing set of US data that fueled fears about the world's top economy.

Traders took their lead from New York and Europe, where equities and the dollar sank, while oil prices are rooted at multi-year lows.

Tokyo plunged 2.36 percent as exporters were stunned by the stronger yen, while Sydney fell 1.16 percent and Seoul lost 0.76 percent.

The US Commerce Department said retail sales fell in September for the first time in seven months, Total retail and food services sales dropped 0.3 percent from August, slightly more than the 0.2 percent expected on average by analysts.

Also Wednesday the Labor Department said US producer prices fell last month for the first time since August 2013. Analysts had expected a rise.

The news led to fears that the US economy, which has been showing strong signs of recovery this year, may be feeling the effects of a torpid eurozone, a slowdown in China and stuttering Japanese growth.

The Dow fell 1.06 percent -- although it had been more than two percent lower earlier in the day -- the S&P 500 shed 0.81 percent and the Nasdaq eased 0.28 percent.

In Europe London's FTSE 100 tumbled 2.83 percent to its lowest close since June 2013, while Frankfurt's DAX 30 lost 2.87 percent and the Paris CAC 40 sank 3.63 percent.

Wednesday's US figures also dampened any chance the Federal Reserve will lift interest rates from record lows any time soon, putting further downward pressure on the dollar.

The greenback just two weeks ago was at multi-year highs against other currencies in anticipation that the Fed would move more quickly than other central banks to tighten monetary policy.

In early Asian trade it was at 106.00 yen, compared with 105.91 yen in New York but sharply down from 107.33 yen in Tokyo earlier Wednesday. At the start of the month had broken 110 yen for the first time in six years.

The euro was also boosted against the dollar and fetched $1.2832 Thursday, up from $1.2834 in New York and much stronger than the $1.2702 earlier Wednesday in Tokyo.

The single currency was also at 136.05 yen against 135.94 yen in New York.

Oil prices extended their losses as investors fret about weak demand caused by the downbeat economic outlook and the huge increase in supplies coming to the market.

US benchmark West Texas Intermediate for November delivery was down 94 cents at a two-year low of $80.83 a barrel in mid-morning trade and Brent crude tumbled 59 cents to $83.19, a four-year low.

Gold was at $1,224.00 an ounce against $1,233.25 late Tuesday.

source: www.abs-cbnnews.com

'The markets are not rigged'

WASHINGTON - U.S. Securities and Exchange Commission Chair Mary Jo White flatly rejected claims that retail investors are being fleeced by high-frequency traders who can use their speed to jump ahead with buy and sell orders that fetch better prices.

 "The markets are not rigged," White told a U.S. House of Representatives panel on Tuesday, in response to a blunt question from New Jersey Republican Congressman Scott Garrett.

"The U.S. markets are the strongest and most reliable in the world," she added.

White's comments to the House Financial Services Committee mark the first time she has directly responded to allegations in Michael Lewis' new book "Flash Boys: A Wall Street Revolt" since its publication about a month ago.

In the book, Lewis claims that high-speed traders are engaged in a form of front-running, in which the firms are able to quickly identify an investor's desire to buy a stock, rush to buy it first and then sell it back at a higher price.

The book has since prompted the FBI, the SEC, the U.S. attorney general and the New York state attorney general to disclose they are investigating potential abuses by high-speed traders.

White reiterated on Tuesday that her agency's investigators are actively pursuing probes into high-speed traders and dark pools, or anonymous trading venues.

But she also sought to dispel the notion that using high-speed technologies to trade ahead of others using stock quotes disseminated on public data feeds could meet the legal definition of "unlawful insider trading."

"There is some confusion about that," she said.

The SEC has long been reviewing equity market structure issues, particularly following the May 6, 2010 flash crash incident when the Dow Jones Industrial Average sharply plunged before quickly rebounding.

But in recent weeks, Michael Lewis' book has re-ignited a long-standing debate over the role of high-speed traders, and whether they may be getting an unfair advantage over ordinary investors.

Many Wall Street brokers and stock exchanges have lambasted the book as a one-sided account that fails to acknowledge the liquidity benefits that high-speed traders bring to the markets.

But others have lauded it as a breath of fresh air that they hope will finally prod U.S. regulators to take action.

Although staff at SEC are considering whether to launch some pilot studies to test different regulatory proposals, there are no immediate plans to issue rules to crack down on high-speed trading or trading in unlit markets.

White was careful not to rule out any potential regulatory changes for U.S. equity markets, saying the agency could later consider measures to improve market quality.

She acknowledged at one point that the market is not "perfect" and told lawmakers that the agency's "data-driven" review of market structure issues surrounding areas such as order types, dark pool trading and data feeds was still ongoing.

But she also cautioned against tinkering with the rules before understanding the potential consequences.

In one exchange with a lawmaker on the panel, she forcefully defended the functioning of the market and rejected claims that mom-and-pop investors are being harmed.

"I want to be very clear that the market metrics suggest that the retail investor is ... very well-served by the current market structure," White said.

Her cautious approach to market structure rule-making won her praise from many Republicans on the panel.

"I believe you and your staff are approaching this ongoing review of our equity markets in just the way you should," Garrett told her.

"It is critical that you and your agency do not fall into the trap of adopting half-baked potential changes in order to publicly respond to a sensationalized and over-hyped media narrative," he added. "The SEC has to be the grownup in the room."

source: www.abs-cbnnews.com

Thinking of investing in stocks? Here are some tips

MANILA, Philippines – To be a successful stock trader, you must first get into the mindset that you won’t simply get rich through trading stocks, a financial analyst said.

Andrew Stotz, the president of CFA Society Thailand, said there is a good reason why most of the world’s 500 richest people listed by Forbes are not stock traders.

“What you find is that the people who get rich in this world get rich from building successful businesses. That’s where real wealth is generated. It doesn’t come from the stock market,” he told ANC’s “On The Money.”

Stotz cited American billionaire Warren Buffet, who ranks high among the world’s billionaires, as a business owner “who only uses the stock market as a place to buy and sell.”

Investing in the stock market, Stotz said, is about protecting your wealth while also trying to get a decent return.

“If you can go into investing by realizing ‘I’m not getting rich from this,’ now you have the right mindset to invest. If you go in thinking I’m going to get rich from this, that doesn’t happen,” he said.

According to Stotz, the 5 major factors that determine return are inflation, dividends, growth in book value, possibility share price dilution, and the “dream factor.”




“Take any stock and let’s say last year people were willing to pay 10 in price for one in earnings. A year later they’re willing to pay 15 in price for one in earnings. What has changed? That inflation in the PE or other metrics is what I call the ‘dream factor,’” Stotz explained.

He warned, however, that when price-to-earnings ratio gets higher than 15 times, then the stock trader should realize that the “dream factor” can turn into a nightmare.

“The amazing thing about the stock market is that it’s so complex, you can never develop a rule. There is no rule that consistently works so you have to be aware of shifting sands,” he said.

“When investing in stocks, we ought to rely less on predicting the future. Know where we are today and where the market has been in the past. Predicting the future gives you a false sense of security,” he added.

source: www.abs-cbnnews.com