50.93 +0.09 (0.18%)
After hours: 7:47PM EDT
|Bid||50.75 x 1000|
|Ask||50.95 x 1400|
|Day's range||50.16 - 51.29|
|52-week range||32.00 - 83.11|
|Beta (5Y monthly)||1.83|
|PE ratio (TTM)||7.00|
|Earnings date||14 Jul 2020|
|Forward dividend & yield||2.04 (4.13%)|
|Ex-dividend date||01 May 2020|
|1y target est||61.50|
(Bloomberg) -- Follow Bloomberg on LINE messenger for all the business news and analysis you need.The Indian stock market’s honeymoon with Prime Minister Narendra Modi’s government is under strain.In the first year of Modi’s second term, India has erased more shareholder wealth than any other country on the planet, except Brexit-swayed Britain. That contrasts with his first term of five years, when his reputation as an economic reformer fueled an increase of almost 50% in equity market capitalization.Today, the economy as well as equity values are sinking. Economic growth slumped to an 11-year low even before the full onset of coronavirus, and Bloomberg Economics projects a 25% contraction in the three months through June. Stock values have shrunk by a quarter, or $543 billion, as India takes a bigger knock than some other countries badly affected by the pandemic, including the U.S., China and France.INDIA REACT: Revisions to Show GDP Slump Worse Than ReportedInvestors remain concerned about the state of the economy and Modi’s priorities. His focus has largely been on political issues such as a citizenship bill, a ban on the “triple Talaq” divorce practice among Muslims and revoking Kashmir’s autonomy. There’s been little success in boosting consumer demand or implementing reforms.India’s Budget Target Breach Signals Further Blowout This YearMoody’s Investors Service on Monday downgraded India’s credit rating to the lowest investment grade, citing a prolonged slowdown and rising debt. The focus now shifts to S&P and Fitch, and whether they will lower India’s outlook to negative or cut to junk, Samiran Chakraborty, an economist at Citigroup Inc. in Mumbai, wrote in a note.India’s Sovereign Rating Cut at Moody’s Citing Policy RisksMan of HopeModi swept to power in 2014 as Indians looked for a dynamic leader to revive the economy and reduce corruption. His first term was praised for several reform measures including a new bankruptcy law. The feel-good environment was interrupted by his decision to demonetize high-value currency bills in late 2016, and a messy implementation of a uniform indirect-tax system.As a result, stock values peaked in early 2018. All told, during Modi’s six years in office, India’s equity markets added only $178 billion, compared with the $1.06 trillion they amassed in the same period of his predecessor, Manmohan Singh (which included the 2008 financial crisis).It’s not that things have suddenly turned sour because of the coronavirus, though that was a major shock. Indian companies have failed to meet earnings expectations since October 2014, months after Modi’s ascent to power. Now they are missing forecasts by 23%, after reporting the biggest earnings miss in a decade earlier this year.Currency moves have offered little comfort to investors. While the rupee has been little changed in the past year, carry traders witnessed losses thanks to successive interest-rate cuts.India is gradually reopening its economy, but with more than 8,000 new cases per day, it risks a further spread of the pandemic. Concerns remain on the economic front: manufacturing lags near record lows and more than 100 million people have lost their jobs. Farm distress has been deepened by locust attacks, and a banking crisis simmers.As Modi begins his seventh year in office, investors would be hoping he places a sharper focus on the economic agenda and embarks on measures to bring back consumer demand.(Adds economist’s comment in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The rising tide of pandemic relief money that’s oiling the wheels of finance has been a boon for those in the business of securities trading. Even as the wild market swings have subsided, activity has been buoyant as central banks and governments pumped trillions into economies. This may turn out to be one of the best environments for investment bankers generally, especially those who are buying and selling shares and bonds, but a standout company is emerging.After a record trading performance in first three months of 2020, JPMorgan Chase & Co. is on course to post a 50% jump in trading revenue in the second quarter, when compared with the same period a year ago, the New York giant’s co-president, Daniel Pinto, said last week. The reserved Argentine banker, who has helped JPMorgan move to the top of Wall Street’s rankings, was “very pleased” by the performance. That tells you how well things are going.Other trading firms are doing well too, although not as handsomely as Pinto’s employer. Bank of America Corp. expects bond- and stock-trading revenue to rise close to 10% in the period; Citigroup Inc. is seeing “very good momentum” in the fixed-income business after a 40% jump in the first quarter. Citi is still playing catch-up with its rivals in equities trading.JPMorgan might also be edging further ahead of its European rivals on their home patch. The bank is the favored dealer in Europe for both interest-rate and credit trading, ahead of Goldman Sachs Group Inc. and Citi, according to a poll of bond investors by Greenwich Associates at the end of April. European banks barely made it into the top three in some of Greenwich’s subcategories on fixed-income trading.“It’s a balance sheet, scale and electronification game now, and the bigger you are, the better you do,” Greenwich Associates said when the report was published. That’s propelling JPMorgan — which spends more than $11 billion a year on technology — ahead of its competitors.America’s biggest bank added 2.5 percentage points to its share of trading revenue among its top peers between 2015 and 2019. It has a 12% share of trading in fixed-income, currencies and commodities, an 11% share of equity trading, and a lead in derivatives. That places it at the center of the world’s financial markets. Its ability to move large volumes of inventory is unrivaled, competitors and clients say.Last year, JPMorgan added 25% to its hedge-fund balances, bringing them to $500 billion, and it has been targeting $1 trillion. This growth in hedge fund clients has allowed it to build its stock-trading business, with equity derivatives powering a surge in revenue. It helps too that borrowers have been tapping the bond markets at a record pace.Crucially, it’s the bank’s market dominance — which lets it take on more risk relative to its size — that appears to have become self-perpetuating. “We don't need to take a huge amount of risk for the franchise to be profitable,” Pinto told a conference last week. “At our scale, the franchise is perfectly profitable. So, the only thing we need to do is to always be in a position where we can monetize the franchise.”For Chief Executive Officer Jamie Dimon, a roaring trading division is just what he needs to make up for the inevitable problems in the lending business caused by the Covid-19 pandemic, with companies and households struggling to repay their loans amid the worst recession in decades. Credit losses will pile up and the decline in U.S. interest rates will erode profit margins in the business over time. JPMorgan’s profitable consumer business won’t be such a cash cow.But when the wave recedes, the Wall Street trading titan could be in a league of its own. The question then becomes: Is that healthy for the banking system? This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Citigroup Inc. plans to bring its workers back to the office when the Covid-19 pandemic ends, breaking with a raft of competitors planning to make remote operations permanent for many staff.“Our goal is to get our employees back,” Chief Executive Officer Mike Corbat said Friday at a virtual investor conference.Working remotely has definite advantages, Corbat said, including giving him the ability to meet with clients and employees from around the world all in the same week. But he said the firm doesn’t plan to leave employees at home permanently.The pandemic has forced companies to send thousands of employees to their home offices as a way to slow the spread of the deadly virus. For some workers, including those at Citigroup competitors Bank of New York Mellon Corp. and Synchrony Financial, the changes may be permanent, officials there have said.Citigroup, with roughly 200,000 employees around the world, has already begun bringing staff back to some of its offices in Asia, with the Hong Kong office at 50% capacity and Taiwan at 75%, Corbat said.On other topics, the CEO said Citigroup’s fixed-income trading business has continued seeing the good momentum it experienced in the first quarter, when revenue surged almost 40%. The unit has benefited from increased corporate-bond issuance, Corbat said.“It’s been an active period,” he said, with “very good momentum sustained and continuing to build coming out of the first quarter.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The main hurdles in the reopening of branches that Citigroup (C) is currently facing are concerns regarding the daily commute of employees to offices.
(Bloomberg) -- Wall Street giants such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. have tens of billions of dollars at stake in China as political tension risks derailing the nation’s opening of its $45 trillion financial market.Five big U.S. banks had a combined $70.8 billion of exposure to China in 2019, with JPMorgan alone plowing $19.2 billion into lending, trading and investing. That’s a 10% increase from 2018.While their assets in the country are comparatively small, they have big expansion plans there that may come undone if financial services firms are dragged into the tit-for-tat between the two countries. Not only would that cloud their growth plans, it would also threaten the income they have generated over the years from advising Chinese companies such as Alibaba Group Holding Ltd.Profits in China’s brokerage industry could hit $47 billion by 2026, Goldman estimates, with foreign firms gunning for a considerable chunk. There are $8 billion in estimated commercial banking profits as well as a projected $30 trillion in overall assets to go after, also being pursued by fund giants such as Blackrock Inc. and Vanguard Group Inc.“If you’re an American financial institution and you have an approved plan to expand into China, you’re going to continue that plan to the extent that the U.S. government allows you to because you see great future profits,” said James Stent, a former banker who’s spent more than a decade on the boards of two Chinese lenders. “A U.S.-China cold war is not good for your plans to build business in China.”After years of trade war turmoil, U.S. policy makers are now starting to take aim at the financial industry amid growing skepticism over American firms plowing money into a country perceived as a big geopolitical foe. Policy makers and lawmakers are looking at restricting U.S. pension fund investments in Chinese companies and limiting the ability of Chinese companies to raise capital in the U.S.A body advising the U.S. Congress this week questioned Wall Street’s push, saying lawmakers need to “evaluate the desirability of greater U.S. participation in a financial market that remains warped by the political priorities of a strategic competitor.” Add to that potential sanctions against China and even its banks over the crackdown on Hong Kong, and the situation could further escalate.President Donald Trump said he’s “not happy with China” after the country passed a new security law on Hong Kong and will announce new U.S. policies on Friday. His top economic adviser said Beijing would be held accountable by the U.S.Here’s a run down on the biggest U.S. banks’ presence in China right now and their plans.GoldmanGoldman, which has spent years lobbying for control of its onshore business, won approval this year. Chief Executive Officer David Solomon has pledged to infuse its mainland business with hundreds of millions of dollars in new capital as the bank plans to embark on a hiring spree to double its workforce to 600 and ramp up a wide variety of businesses.Goldman put its “cross-border outstandings” to China at $13.2 billion at the end of last year. But its two onshore operations had capital of just 1.8 billion yuan ($251 million), making a profit of almost 300 million yuan.A spokesman for Goldman declined to comment.Morgan StanleyHosting an annual summit in Beijing with 1,900 investors and 600 companies last year, Morgan Stanley Chief Executive Officer James Gorman said in a Bloomberg Television interview that the bank is in China “for the long run.” He highlighted its presence there for 25 years and its handling of hundreds of billions of dollars in equity and merger deals for Chinese businesses.Morgan Stanley won a nod to take majority control of its securities venture this year, and last year had a net exposure of $4.1 billion to Chinese clients. Its local securities unit, however, has revenue of just 132 million yuan, posting a loss of 109 million yuan last year.The bank has been overhauling senior management of the venture, installing its staff in key roles. It plans to apply for additional licenses to broaden its products and invest in new businesses, build market-making capability and expand its asset management partnership and ultimately take control.“It’s a natural evolution to bring the global investment banks into this market,” Gorman said in May last year.A Morgan Stanley spokesman declined to comment.JPMorganThe biggest U.S. bank has been doing business in China since 1921. Chief Executive Officer Jamie Dimon has said that his firm is committed to bringing its “full force” to the country. This year it applied for full control of an asset management firm as well as a securities venture, and is expanding its office space in China’s tallest skyscraper in downtown Shanghai.JPMorgan’s China total exposure in 2019 was $19.2 billion, including $11.3 billion in lending and deposits and $6.5 billion in trading and investing.JPMorgan China’s banking unit had 47 billion yuan in assets last year and made a profit of 276 million yuan, while its newly started securities firm had capital of 800 million yuan.A JPMorgan spokeswoman declined to comment.CitigroupCitigroup Inc., which has been doing business in China since 1902, had total exposure to the country of $18.7 billion at the end of last year. Its local banking arm had total assets of 178 billion yuan, making a profit of 2.1 billion yuan.Citigroup, which is setting up a new securities venture in China, is the only U.S. lender that has a consumer banking business in the country with footprint in 12 cities including Beijing, Changsha and Chengdu.New York-based Citigroup said last month that it has doubled its overall revenue from China to more than $1 billion over the past decade.China represents 1.1% of Citi’s total global exposure and includes local top tier corporate loans and loans to US and other global companies with operations in China, a bank spokesman said.Bank of AmericaBank of America Corp., the only major bank to decide against pursuing a securities joint venture, is continuing to expand into the world’s second-largest economy. The Charlotte, North Carolina-based lender is looking to provide a fuller range of fixed income services in the country.Its largest emerging market country exposure in 2019 was China, with net of $15.6 billion, concentrated in loans to large state-owned companies, subsidiaries of multinational corporations and commercial banks. It followed only the U.S., U.K., Germany, Canada and France in terms of exposure for the bank.A spokeswoman for the bank declined to comment.(Adds Trump comments in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Citigroup Inc. plans to reopen its New York headquarters to a small number of employees as soon as July, and workers will return to London offices even earlier, as Chief Executive Officer Michael Corbat gingerly pushes the bank forward into a world reshaped by the coronavirus pandemic.“It’s going to be driven by data, it’s likely to be slow, it’s going to be granular, site-by-site and within those sites, job-by-job,” Corbat said in a Bloomberg “Front Row” interview. On a follow-up phone call, he said sometime in July or possibly August is when Citigroup hopes to return about 5% of the 12,000-odd staff at its main building in Manhattan’s Tribeca neighborhood. Re-entry will begin next month at the Canary Wharf complex in London.That timetable makes Citigroup one of first big banks to give clear guidance on one of the biggest dilemmas posed by the global outbreak: when to send people back to work. While the company has kept a few hundred essential employees on site since skyscrapers across New York cleared out in mid-March, the return of even a few bankers or traders from vacation homes in the Hamptons and the Rocky Mountains would send a signal that Wall Street is finding its footing again.New York, until recently the hottest hot spot for coronavirus, has used social distancing, mask-wearing and increased testing to dramatically reduce its infection and death rates. Now, like CEOs around the world, Corbat is trying to balance the demands of his business with the dangers of returning to old norms too quickly.“The conversations that I’m having are much more about the commute in urban areas, it’s getting on the train, it’s getting on the subway, it’s getting on the bus and it’s probably less about the workspace,” Corbat, 60, said from Wyoming, where he and his family went to escape the outbreak in New York. “The biggest hurdle we’re going to have is not getting people to operate in the office, it’s getting them to the office.”In Hong Kong, where the pandemic has been more contained, Citigroup only recently increased staffing to 50%. In London, some of the company’s 5,000 employees will start returning next week as part of a plan to repopulate offices by less than 10%.Yet Corbat was clear he doesn’t envision a virtual bank. Offices are necessary both for face-to-face meetings and because banking is an “apprenticeship business” that requires human interaction, he said. That’s why Citigroup is re-examining everything from turnstiles to cafeterias to elevators and is considering new locations in the New York suburbs for employees “who might be uncomfortable getting on mass transit” until a vaccine is widely available.Corbat also said he’s considering less business travel, especially after seeing how well Citigroup can serve clients in online meetings and conferences.JPMorgan Chase & Co. has said that offices will be staffed at no more than half of capacity for the foreseeable future. Bank of America Corp., meantime, plans to notify employees at least 30 days before they’re scheduled to return. Corbat, too, said he has told his workforce of 200,000, “You’re not going to wake up one morning or go to bed one evening with a blast email saying, ‘Tomorrow’s the day to come back.’”As much as it stirs anxiety, plays into political debates and captivates the public’s imagination, the question of when and how quickly to reopen is just one of the challenges Citigroup faces. Corbat also is wrestling with collapsing growth, record unemployment, rising tensions over global trade and the consequences of unprecedented aid and intervention by governments and monetary authorities.Citigroup added almost $5 billion to its bad-loan reserves in the first quarter, mostly in preparation for potential consumer defaults in the months ahead. At the same time, the bank may struggle to make money on new loans now that interest rates are near zero again and the Federal Reserve is considering yield-curve manipulation to keep borrowing costs down.Even less clear are the longer-term implications of ballooning deficits and central bank balance sheets.“We do not want our government in the U.S. or other governments to come out in a position where the debt at the federal level is untenable,” Corbat said. “We’re likely to be in this slower-growth environment for an extended period of time.”A decade ago, Citigroup was in no position to warn about imprudence. After loading up on risky debts and derivatives before the financial crisis, the bank needed two federal bailouts and became a poster child for Wall Street recklessness. At bottom, its shares lost 97% of their value.Now, Citigroup has comparatively ample capital and liquidity, and even during a pandemic Corbat is still thinking about expanding in Asia. Growing distrust of China in the West hasn’t curbed his ambitions there, nor has the Chinese government’s recent move to curtail rights and freedoms in Hong Kong.“China remains a very important place for a big number of our clients and so we’re going to make sure we’re there to support them,” Corbat said. “Between some of the political challenges and the health-care challenges, it hasn’t been easy, but we remain committed to Hong Kong.”(Adds details on plans for London offices in sixth graph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Don’t fight the U.S. Federal Reserve — repeat that mantra until it sticks.Jamie Dimon, the boss of JPMorgan Chase & Co., put it well this week. “This wasn’t the bazooka,” he said, referring to Jay Powell’s response to the coronavirus crisis. “The Fed took out the whole military and applied it. Just announcing these programs reduced spreads (the difference between corporate bond yields and their benchmarks) in the market. It’s going to save a lot of small businesses.” In the past month, the equity market’s glass has gone from pretty much empty to at least half full and that’s down to the coordinated fiscal and monetary effort from authorities far and wide. You want some quantitative easing? Please, have some more and take some for the journey home. Even those foot draggers at the European Union are talking about radical fiscal action. We won’t really see a V-shaped economic recovery, but it seems like we’ve stopped the L.Nonetheless, this is a recovery based so far on asset-price inflation rather than any economic data. Central bank and government action may have restored financial valuations but real incomes will still suffer dramatically for a long while to come. Unemployment and diminished consumption cannot be magicked away.The stock market is looking even further into the distance than usual to justify its valuations, which is sometimes hard to square away against a constant stream of dire economic statistics and evaporating company earnings. Since QE came to life during the global financial crisis, it has paid for investors to cast aside their usual forward-earnings analysis and focus instead on the rising tide of money. The central banks have learned their post-2008 lessons and have barely put a foot wrong this time. This is having uneven effects, however. The bulk of the stimulus is coming into investment-grade assets because that’s where central banks feel more comfortable. Credit spreads have recovered most in BBB and A-rated bonds. High-yield yield assets improved sharply at first, but this has abated. The spread between the yields on investment-grade debt and those of junk bonds is still nearly double the levels seen in February. Similarly, new debt issuance is motoring again but only for the better-quality names. While U.S. banks such as Citigroup Inc. and Wells Fargo & Co. are returning for the fifth or sixth time this year to replenish capital, the junk sector has been restricted to one-off selective deals — often with eye-watering yields.The change in stock market sentiment isn’t just about QE. The oil price collapse has come and gone and fears of a devastating second wave of Covid-19 are easing. Short-selling bans have quietly been lifted in several European countries too, and some of the recent improvement may be explained by that. The sound of economies cranking back into life can just about be made out over the whirring of the monetary printing presses, allowing even bombed-out old economy stocks to recover, not just the new technology darlings.Notably, some of the recent action has been in high-dividend stocks, which had been forced to skip shareholder payouts at the height of the crisis. Investors had feared that the dividend bans might last several years; now they think it may be a quarter or two. Many investment funds work off a dividend-yield model.Investment managers may be doing the natural thing right now and chasing the rising stock market indexes, but that doesn’t mean they’re brimful of confidence. The Bank of America fund manager survey for May shows extreme bearishness pervades, with only 10% expecting a V-shaped recovery and 68% expecting stock prices to fall. Given the recent positive news on the virus and the gradual ending of lockdowns, the June survey might be different.The fiscal response will determine how the economy recovers over the long term but the monetary triage has worked better than anyone could have expected in those ugly days of March. For that we should be grateful, and for the stock market’s semi-rational exuberance.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Something strange happened in the U.S. stock market on Tuesday.No, it wasn’t that the S&P 500 crossed 3,000 for the first time in almost three months, generating a yelp of joy from the White House and groans from Wall Street veterans who remain perplexed at the seeming disconnect between financial markets and the American economy.Rather, the most unusual part of the latest rally is that bank shares clearly led the advance. As of last week, Bloomberg’s 18-company S&P 500 Banks Index was down more than 40% in 2020, trailing the broader stock market by an almost unprecedented degree since the coronavirus pandemic shut down the world’s largest economy. However, the index soared 9% on Tuesday, far and away a bigger gain than any of the other 23 industry groups. A simple ratio of this bank index to the broad S&P 500 shows the extent to which financials have been beaten down so far in 2020 relative to other segments of the stock market. The gauge fell on May 13 to a level seen only twice before in data going back three decades, both in March 2009. The banks swiftly rebounded in the following months as the U.S. recession officially drew to a close in June of that year.As investors weigh the drastic gains on Wall Street against the backdrop of widespread unemployment and shuttered small businesses on Main Street, the performance of bank stocks may prove to be a crucial barometer of whether markets can sustain their exuberance. Few analysts dispute that shares of financial companies are cheap on a relative basis — but sometimes prices are depressed for good reasons. Inexpensiveness alone isn’t a compelling enough reason to expect banks to bounce back as they did in 2009. Instead, perhaps more than any other industry, a lasting rally will come down to investors’ conviction in a sharp and sustained economic recovery.Investors have a few obvious reasons to be wary of U.S. banks. For one, long-term interest rates are near record lows while traders have started to wager on negative short-term rates, even as Federal Reserve officials repeatedly question the policy. All this points to lower net interest income, a crucial metric that reflects the spread between what a company earns on its loans and what it pays on its deposits. Meanwhile, large banks have already halted share buybacks, and minutes from April’s Federal Open Market Committee meeting revealed that policy makers are debating whether they should also restrict their ability to pay dividends to shareholders during the pandemic.Whether those downsides merit a $1 trillion wipeout, akin to the 2008 financial crisis, is not so clear cut. As Bloomberg News’s Lu Wang and Felice Maranz reported, at that time the financial industry’s earnings worsened for eight consecutive quarters, but analysts only expect profit declines to last half as long this time around. Banks are broadly considered to be well capitalized — certainly much more than they were 12 years ago when they had to be bailed out by the government. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon expressed confidence in mid-April, when the outlook was even more uncertain than today, that the biggest U.S. bank can handle “really adverse consequences.” He said on Tuesday that the U.S. could see a “fairly rapid recovery.”“The government has been pretty responsive, large companies have the wherewithal, hopefully we’re keeping the small ones alive,” he said at a virtual conference hosted by Deutsche Bank AG.It’s far too soon to declare an “all clear” on the economy, but it’s starting to look as if actions from the Fed and Congress at least helped the U.S. clear the low bar of avoiding the worst-case scenario. The numbers are still awful, especially when it comes to unemployment, but data released Tuesday showed an unexpected increase in new-home sales in April compared with those a month earlier. Broadly, Citigroup Inc.’s economic surprise index is off its lows, indicating that recent figures aren’t quite as bad as analysts expected.“The economic data have been so darn grim lately with job losses in the tens of millions that the green shoots of optimism from better consumer confidence and new home sales are welcome,” Chris Rupkey, chief financial economist at MUFG Union Bank NA, wrote on Tuesday. “We still can’t see a V-shaped recovery, but at least this is looking like the shortest recession in history which will be measured in months not years.”If that’s the case, investors will likely look back on the past few weeks as a time when bank stocks became far too cheap compared with other parts of the market. Yet Tuesday’s seemingly huge rally still leaves financial companies worth far less than before the pandemic, and it seems reasonable to expect they’ll remain that way for a while. After all, it’s anyone’s guess just how many loans will end up going bad and saddle banks with losses. There are far more moving parts to JPMorgan’s bottom line than that of, say, Netflix Inc., which fell 3% on Tuesday, the most in almost a month.It’s never a good idea to read too much into one optimistic trading day, especially coming out of a U.S. holiday weekend in which many Americans probably got a taste of “normal” pre-pandemic activities. But on its face, Tuesday looks as if it could be something of a turning point for bank shares. The follow-through will indicate if they were just too cheap to pass up, or if the economy truly is on the mend.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The iconic New York Stock Exchange floor is back open for business. Here is what New York Stock Exchange President Stacey Cunningham told Yahoo Finance.
(Bloomberg Opinion) -- China’s decision to impose a national security law on Hong Kong has spurred speculation of capital flight and an erosion of the city’s status as an international financial center. As a venue for share offerings, at least, the near-term future is looking bright. For that, the territory can thank worsening U.S.-China relations.U.S.-listed Chinese technology companies are lining up to sell stock in Hong Kong, seeking refuge from an environment that has become increasingly less hospitable. Nasdaq-traded JD.com Inc. and NetEase Inc. are planning secondary listings in the city next month, following a trail blazed by Alibaba Group Holding Ltd. in November. Optimism that more companies will join them drove shares of Hong Kong’s exchange operator up more than 6% on Monday.There’s every reason to expect these stock offerings to do well, and push Hong Kong back up the rankings of the world’s largest fundraising centers. So far this year, the city is the sixth-largest market by capital raised. It topped the table for the whole of 2019 when New York-listed Alibaba sold $13 billion of stock, underscoring the existence of a strong local investor base for China’s most successful companies.The reception for Alibaba suggests that Asian institutional investors want to be able to trade China’s leading enterprises in their own time zone. JD and NetEase are also among the nation’s technology champions. Beijing-based JD competes with Alibaba in e-commerce, while Hangzhou-based NetEase is behind some of the most popular mobile games in China. Beyond these two, search-engine operator Baidu Inc. is considering delisting from Nasdaq and moving to an exchange nearer home, Reuters reported last week. The coronavirus has exacerbated tensions between Washington and Beijing, while scandals such as fabricated sales at Luckin Coffee Inc. have spurred politicians to push for tighter regulation, giving Chinese companies an incentive to list elsewhere.Hong Kong is an obvious choice. The city burnished its appeal for U.S.-traded companies last week when the compiler of the city’s benchmark Hang Seng Index said it would change its rules to admit secondary listings and companies with dual-class share structures. Stocks that join the benchmark can expect inflows from passive investors such as exchange-traded funds that track the index.Citigroup Inc. reckons that 23 of the 249 Chinese stocks traded in the U.S. meet Hong Kong’s criteria for a secondary listing, which require companies to have a market value of $5.2 billion or, alternatively, a combination of $129 million in annual sales and a $1.3 billion market cap. JD tops the group with a value of $73 billion.An even more alluring prize would be inclusion of secondary listings in Hong Kong’s stock-trading links with the Shanghai and Shenzhen exchanges, which would enable mainland Chinese investors to buy these shares. Alibaba wasn’t included in the stock connect, to the disappointment of some investors. China’s government could yet decide to make this happen.It’s a reminder that Beijing has levers at its disposal to help shore up Hong Kong’s economy and financial industry, which accounts for a fifth of the city’s gross domestic product — as it did after the SARS epidemic in 2003, when half a million people demonstrated against the Hong Kong government’s first, aborted attempt to introduce national security legislation. Hong Kong Exchanges & Clearing Ltd. surged the most in 18 months Monday even as unrest returned to the city. Listing of American depositary receipts may double the exchange operator’s revenue, Morgan Stanley said. The Hang Seng Index, meanwhile, stabilized after slumping 5.6% on Friday.An exodus of businesses, people and capital may yet imperil Hong Kong’s role as an international financial center. The IPO outlook suggests that, rather than a sudden demise, that’s likely to be a long drawn-out process. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The benefits to banks of having their staff work from home will “erode over time”, Citigroup’s investment banking boss Paco Ybarra warned as he made the case for offices hollowed out by the coronavirus pandemic. “I am very cautious about this,” Mr Ybarra said in an interview.
(Bloomberg Opinion) -- The coronavirus recovery is in trouble before it even begins. As swiftly as the lockdowns across Asia were imposed, the process of lifting them will be slow and uneven. That means the region is months, if not years, away from any semblance of normal.Plans for full and partial reopenings in Australia, Singapore and Thailand sound reasonable in theory, but they won’t deliver the hoped-for economic bounce. These countries, deeply reliant on trade and tourism, remain largely closed to the outside world. Domestic consumers, buffeted by layoffs and wage cuts, are in poor shape to pick up the slack. Bankruptcies in Singapore were climbing even before the most stringent virus-suppression efforts. In Australia, social engagements can resume and businesses can open their doors. Yet the country is bereft of foreign tourists, new international students and immigrants — and it was workers from abroad who helped drive the 28-year boom that preceded the pandemic. The lockdown has essentially set Australia back four decades, just before Paul Hogan starred in the “Crocodile Dundee” movies, as Bloomberg News's Michael Heath wrote. That era saw a boost in tourism and freer capital markets, with moves to float the local dollar and lower tariffs.Politicians say raising the drawbridge isn't a big deal; domestic spending can make up the difference. Aussies will vacation closer to home. You can simply luxuriate in tropical Queensland resorts instead of the Maldives. But this is a big country with relatively expensive domestic air travel (one of two major carriers just collapsed amid the shutdown). With the jobless rate likely to climb to 10% soon, according to the central bank, any splurge seems frivolous. You can't just plug a labor market back in after cutting the cord.In Singapore, core economic sectors — tourism, lodging and conventions — will be among the last to restart. The government unveiled Tuesday a phased reopening after two months of lockdown. From June 2, schools will gradually welcome back students, limited family visits can occur and many businesses that don't interact with the public can resume. Large corporate gatherings, as well as sporting and cultural events, are on hold. Some activities will be shelved until a vaccine is found, or Covid-19 is no longer deemed a risk.Officials in the city-state say they are prioritizing safety and want to avoid a second wave that will further retard the recovery. While the concern is entirely justified, it comes at a cost: Singapore attracted 19.1 million visitors last year, more than three times its population. Tourism makes up about 4% of GDP, and supports a substantial hotel industry and retail scene. Yet Singapore Airlines Ltd.’s fleet remains mothballed. All this adds up to a grim economic outlook: Gross domestic product will shrink 8.5% this year, Citigroup Inc. predicted.The state of the travel industry makes optimism about Thailand’s prospects all the more puzzling. Wagers on an appreciation of its currency, the baht, appear anchored in the idea of tourists returning. With most borders shut and big economies plagued by historic levels of unemployment, where are these visitors going to come from?While caution is understandable, these awakenings don’t inspire confidence in a long and robust recovery. Global GDP will jump an annualized 37% in July to September after diving in the current quarter, says JPMorgan Chase & Co. Economies are nevertheless unlikely to regain their pre-Covid form anytime soon, and even less likely to do so uniformly. “Along with variation in the peak of containment polices, there has been equally large variation in the degree to which countries are now reversing these measures,” Joseph Lupton, the bank’s global economist in New York, wrote this week. In an effort to crank up the flow of people, countries are exploring green lanes that would prioritize visitors from nations seen to have had success tamping down the virus. That sets a low bar, and would be a step toward restoring tourism and business travel. But it’s a far cry from status-quo ante. Much of Asia rose from agricultural backwaters to urbanized hubs for manufacturing and services because they embraced globalization. An Asia disconnected from the world would be a major step back. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Citi today announced a partnership program with the National Banking Association (NBA), where Citi has created a purchasing facility that allows it to buy loans in the secondary market from Minority-Owned Depository Institutions (MDIs) originated under the Small Business Administration (SBA) Paycheck Protection Program (PPP). Citi’s purchasing facility will assume up to $50 million in SBA loans from MDIs, which serve urban and underserved communities.
American Express CEO Stephen Squeri lays out his vision for how employees will return to work after COVID-19 quarantines lift.
Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story...
(Bloomberg) -- Saudi Arabia’s sovereign wealth fund said in April that it was looking into “any opportunity” arising from the economic wreckage of the coronavirus crisis. A regulatory filing Friday shows how the fund spent billions of dollars this year on stocks.The $320 billion Public Investment Fund, which until five years ago was a holding company for government stakes in domestic businesses, disclosed an $827.8 million stake in BP Plc, a $713.7 million investment in Boeing Co. and $522 million positions in both Citigroup Inc. and Facebook Inc. at the end of the first quarter. Other bets include $495.8 million on Walt Disney Co. and $487.6 million on Bank of America Corp. The PIF is looking into “any opportunity” arising from the economic wreckage of the crisis, the fund’s governor, Yasir Al-Rumayyan, said at a virtual event in April. The fund expects to see “lots of opportunities,” he predicted at the time, citing airlines, energy and entertainment companies as examples.Behind the scenes, as coronavirus outbreaks disrupted commerce and drove stock prices to their lowest levels in years, the fund reassigned staff to find bargains to broaden its global portfolio, people familiar with the plan have said. The investments disclosed in a quarterly filing Friday amount to a bet that marquee names of the corporate world will rebound as many facets of life return to normal.“PIF is a patient investor with a long-term horizon,” according to a statement from the fund. “We actively seek strategic opportunities both in Saudi Arabia and globally that have strong potential to generate significant long-term returns while further benefitting the people of Saudi Arabia and driving the country’s economic growth.”Other holdings described by the fund include a $513.9 million investment in hotel owner Marriott International Inc. that’s even greater than the PIF’s previously disclosed wager on cruise operator Carnival Corp. Both companies are contending with a virtual shutdown in global travel. Similarly, the fund gathered a $416.1 million stake in concert promoter Live Nation Entertainment Inc., which faces bans on large gatherings.The fund also amassed shares of Canadian oil sands players Suncor Energy Inc. and Canadian Natural Resources Ltd., on top of investments that previously emerged in Equinor ASA, Royal Dutch Shell Plc, Total SA and Eni SpA. The regulatory filing disclosed the fund held almost $10 billion of U.S. equities, including an approximately $2 billion position in Uber Technologies Inc.The bargain-hunting contrasted with retreats by the likes of Warren Buffett’s Berkshire Hathaway Inc., which previously announced a full exit from investments in four major U.S. airlines. On Friday, Berkshire also disclosed that it sold off most of a longtime investment in Goldman Sachs Group Inc. and trimmed stakes in companies including JPMorgan Chase & Co.Coincidentally, the fund bought a $78.4 million stake in Berkshire as well.The PIF’s mandate was broadened in 2015 by Crown Prince Mohammed bin Salman to include international investments to support economic diversification.(Updates with comment from PIF in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Michael Corbat, Chief Executive Officer of Citigroup, will present at Bernstein’s 36th Annual Strategic Decisions Conference on Friday, May 29, 2020. The presentation is expected to begin at approximately 10:00 a.m. (Eastern). A live webcast will be available at www.citigroup.com/citi/investor. A replay and transcript of the webcast will be available shortly after the event.
(Bloomberg) -- A Singapore foreign-exchange platform has won financial backing from HSBC Holdings Plc and Citigroup Inc. just as its trading volume more than doubled on coronavirus-driven volatility.HSBC and Citi join Goldman Sachs Group Inc. as investors in Spark Systems after participating in series B funding that’s raised $16.5 million over two rounds, according to Chief Executive Officer Wong Joo Seng. Citi and HSBC representatives confirmed their companies have invested in Spark. OSK Ventures International Bhd., a Kuala Lumpur-based investment firm, also joined the current round, which brought the firm’s valuation to $70.5 million, Wong said.Wong said the amount raised will be sufficient for the next three and a half years, though more investors will participate in the current round later this year.The timing for the fund-raising has been propitious. Currency trading skyrocketed across the globe earlier this year when panic selling in the coronavirus-induced market meltdown triggered a stampede for dollars and fueled demand for lightning-fast pricing.“Trading started to surge into late February just as the contagion spread,” said Wong.Singapore, already Asia’s biggest currency-trading hub, is wooing the world’s top banks to set up electronic-pricing engines in the city state to win a bigger slice of the $6.6 trillion-a-day foreign-exchange market. The island nation posted an average daily trading volume of $640 billion in April 2019, and ranked third globally behind the U.K. and U.S, data from the Bank for International Settlements show. Spark currently provides clients with prices from banks such as JPMorgan Chase & Co. and UBS Group AG that have pricing systems set up in Singapore, according to Wong.“We are executing in Singapore on a one to two millisecond time basis,” he said, noting that executions in London or New York could take on the order of 380 milliseconds, so the time savings from the regional operation is substantial.Spark’s platform helps boost Singapore’s position as a low latency financial hub, said Alaa Saeed, global head of electronic platforms and distribution of CitiFX and Gavin Powell, HSBC Singapore’s head of global markets.The start-up, which is backed by the Monetary Authority of Singapore, recorded an average $5.5 billion-a-day trading volume during the first quarter, up from $2.5 billion during the same period in 2019. But the slowing global economy is now starting to dampen activity in the second quarter, Wong said, with average trading volume sliding to $4.5 billion to $5 billion a day.“If you have GDP shrinking, if you have numerous companies that are badly affected, it will affect the level of economic activity and the amount of forex being traded,” he said.The vast majority of the firm’s trades currently involve Group-of-Ten assets, but Wong sees opportunities for the firm to boost its capabilities in emerging-market currencies such as the Korean won, Chinese yuan, Malaysian ringgit and Indonesian rupiah.“We see Singapore as a very natural hub for corporate treasury and for emerging market currencies price discovery,” he said. “We’d like to be the center where that is being traded.”(Adds BIS data in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.