June 1 – Daily Brief of World Finance & GCC News

World Finance News Brief

Swiss Debate on Corporate Liability Comes to Head via Ft.com

Some of the world’s biggest companies, from Nestlé to Glencore, face the prospect of tougher ethical regulations in Switzerland, as a four-year debate over business practices comes to a head in parliament this week.

Critics say the proposed legal changes would impose crippling legal liabilities on businesses for abuses far beyond their control, and turn Switzerland into a centre for activists trying to “blackmail” some of the world’s biggest multinationals.

Swiss companies such as Nestlé, Roche, Glencore, Credit Suisse, Richemont and Syngenta, with subsidiaries across the globe, will all be caught by whatever option Bern chooses.

An independent poll conducted last month found that 78 per cent of respondents were supportive of enforcing the new requirements on big business.

Citi Warns Markets Are Out of Step With Grim Reality by ft.com

Citigroup said financial markets were “way ahead of reality” with tougher times to come, warning corporate clients that they should raise as much money as they could before the pandemic’s true cost is factored in by investors.

“We definitely feel that the markets are way ahead of reality. We really are telling every client to tap the market if they can because we think the pricing now couldn’t get any better,” Manolo Falco, investment banking co-head at Citigroup, told the Financial Times.

Mr Falco was more circumspect on the prospect of a wave of activist investment in the aftermath of the coronavirus crisis.

Billions Flowing to China’™s Quants Takes Fight to Global Funds

High-Flyer is among Chinese quant funds closing the technological gap with veterans like D.E. Shaw & Co. and Two Sigma Investments LP as the U.S. firms make inroads on their home turf.

Second-ranked Shanghai Minghong Investment Management Co. has more than quadrupled the money it manages since 2018 to nearly 40 billion yuan, making it China’s biggest quant hedge fund.

China’s quants are benefiting from being “latecomers,” borrowing technologies and algorithm models from abroad, according to UBS Asset Management Hedge Fund Solutions.

Minghong and High-Flyer have distinguished themselves from the close to 9,000 hedge funds vying for investor attention in China.

Even in this crowded field, quant trading is at a nascent stage, said Qiu Huiming,

One early mover was High-Flyer, set up in 2015 by three engineers from Zhejiang University who began trading as students during the global financial crisis. Most of the group’s assets are split between the China Equity Fund CSI 500 Series, which was up 60% last year, and the China Absolute Return Series, which has generated an average 17% since inception more than three years ago.

Minghong says it doubled assets in 2018 alone after moving to a medium-to-high frequency statistical arbitrage strategy that boosted excess returns by as much as 20 percentage points annually

By comparison, BlackRock Inc.’s first China quant strategy gained 37.8% in 2019 and 12.2% as of April 30 since inception in May 2018,

Quant funds globally averaged a return of 6.6% last year and lost 2.9% in the first quarter.

U.S. Government Is Selling Property in Exclusive Hong Kong Area 

The decision comes as protests continue to rock Hong Kong and tensions rise between the U.S. and China over new Beijing-backed national security legislation in the city.

The property which comes with several mansions is located in Shouson Hill, south of Hong Kong Island, and is valued at HK$10 billion ($1.3 billion).

GCC NEWS BRIEF

Sharjah Looking to Raise $1bn From International Debt Markets

Sharjah has hired banks to raise as much as $1 billion from international debt markets, joining wealthier Gulf states to shore up its finances against the fallout of the coronavirus pandemic.

The third-biggest sheikhdom in the United Arab Emirates mandated HSBC Holdings Plc, Mashreqbank PSC, Sharjah Islamic Bank and Dubai Islamic Bank PJSC among others for the deal. 

Abu Dhabi Fund for Development Launches $272.4m Initiative to Support National Companies

Abu Dhabi Fund for Development (ADFD) has announced an AED1 billion ($272.3m) initiative to support national companies during the Covid-19 pandemic.

The initiative, which lasts for the remainder of 2020, provides concessionary loans for national companies operating in sectors considered crucial to the UAE economy – such as healthcare, food security and manufacturing. It also considers firms in sectors that are bearing the brunt of the COVID-19-related disruption to business and economic activity.

Health Remains a Priority as Dubai Rebuilds Economy, Says Sheikh Mohammed.

Economic activity in Dubai will not come at the cost of people’s health, said Sheikh Mohammed bin Rashid on Sunday.

The Prime Minister and Ruler of Dubai was chairing the first meeting of the Cabinet since government workers were allowed to return to offices.

About the author

Financial advisor to UHNWI, private entities, family offices, and companies. Certified Anti-Corruption Manager from The American Anti-Corruption Institute

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