David Fuller and Eoin Treacy's Comment of the Day
Category - General

    M&G Freezes Flagship Real Estate Fund as Withdrawals Mount

    This article by Lucca de Paoli, Jack Sidders and Nishant Kumar for Bloomberg may be of interest to subscribers. Here is a section:

    The asset management industry has been rocked by fears over daily-dealing funds that allow investors easy entry and exit, but hold assets that take far longer to sell. M&G’s freeze follows the shock collapse of star U.K. stock picker Neil Woodford’s empire this year, amid tougher scrutiny of managers who have been pushed to seek harder-to-sell assets in their hunt for yield.

    “Woodford and M&G are different scenarios, but both point to the same thing,” Ben Yearsley, investment director at Shore Financial Planning said. “You shouldn’t hold illiquid assets in
    open-ended funds.”

    GAM Holdings AG, H20 Asset Management and Lime Asset Management Co. have also grappled with liquidity crises in the past two years.

    The M&G money pool was one of seven major U.K. funds that halted trading in the aftermath of the 2016 Brexit vote, when spooked investors demanded their money back. In a rush to sell properties quickly in order to raise cash, many funds disposed of buildings that remained attractive to buyers even after the Brexit vote, such as London offices or warehouses.

    That’s left funds like M&G with a higher relative exposure to retail properties that have proven tough to sell. Retailers have been closing stores and seeking rent cuts in an attempt to compete with online rivals, sending retail property values plunging.

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    Oil Surges After Saudis Surprise Market With Additional

    This article by Sheela Tobben and Alex Longley for Bloomberg may be of interest to subscribers. Here is a section:

    The additional supply reduction would take the kingdom’s production down to levels not seen on a sustained basis since 2014, according to data compiled by Bloomberg.

    After the announcement, Prince Abdulaziz predicted that Saudi Aramco, which just completed an IPO at a valuation of $1.7 trillion, would soon soar above the $2 trillion. The kingdom plans to pump 9.7 million barrels a day, he said. That’s a reduction of about 300,000 barrels a day from its output in November and 100,000 below the year-to-date average, according to data compiled by Bloomberg.

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    Food Inflation Rears Its Head in Chile and Brazil in November

    This article by Mario Sergio Lima and John Quigley for Bloomberg may be of interest to subscribers. Here is a section:

    In Brazil, the inflation pick-up comes as economists and company executives sound the alarm on rising meat prices due to dwindling supply. China, the world’s top meat consumer, doubled pork imports and shipped in 63% more beef in October than a year earlier as the country struggles to ease shortages due to African swine fever.

    “The food price shock has arrived” in Brazil, said Leonardo Costa, an economist at Rosenberg Associados. “We’re increasing our 2019 inflation call to 4% because the increase in food and
    beverage costs will be even stronger in December.”

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    Japan Leans on Fiscal Stimulus to Keep Recession at Bay

    This article by Toru Fujioka, Yoshiaki Nohara and Takashi Hirokawa for Bloomberg may be of interest to subscribers. Here is a section:

    “In any country, the positive impact of extra monetary stimulus is limited, which is especially true in Japan and Europe where rates have turned negative. You have no effective choice but to execute fiscal measures to support growth,” said Harumi Taguchi, Tokyo-based principal economist at IHS Markit.

    Earlier in the day, Abe described the stimulus as a three-pillared package designed to aid disaster relief, protect against downside economic risks and prepare the country for longer-term growth after the 2020 Tokyo Olympics.

    He said the stimulus would be funded by a supplementary budget for the current fiscal year ending in March, and special measures in the following year. The package outlines 4.3 trillion yen in funding for the measures in an extra budget this fiscal year.

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