(Bloomberg) — Citigroup Inc. is planning to include an investment banking unit in China to take advantage of an expected steady stream of big stock deals as the nation opens up and liberalizes its financial markets, a person familiar said.
In intensifying discussions in recent months, the bank’s senior executives in Asia have been lobbying the bank’s top brass in New York to revive an application as part of a plan to form a China securities business, the person said, asking not to be identified before a final decision is made.
Its local executives last year considered opting out of establishing an investment bank, balking at the costs of hiring at least 35 people as regulations require, people familiar said at the time. The U.S. bank initially planned to focus only on building its brokerage and futures trading business and expanding its custodian services.
The strategy shift, which will require more capital, comes after the introduction of a new technology board in Shanghai, as well as eased rules for selling shares to the public, which is expected to generate lucrative fees on a slew of new economy IPOs over the next few years.
The bank will now need to play catch up with rivals including JPMorgan Chase & Co. and Goldman Sachs Group Inc. who have already won approval to take control of Chinese securities operations after the country this year opened fully to foreign banks.
Citigroup has tread carefully in China amid increased political tension between the two powers as well as regulatory pressure in the U.S.
The bank has been dogged by issues of risk controls, having fines imposed on it by U.S. regulators. Some executives have expressed concerns it may not receive the blessing by the U.S. Federal Reserve for its China expansion, the person said. The lender was this month assessed a $400 million penalty by the Office of the Comptroller of the Currency, which also demanded the bank seek its approval before “significant new acquisitions” and advance approval for anything beyond “hedging, market making and securitization transactions.”
A Citigroup spokesman declined to comment.
Citigroup is one of four sponsors arranging a massive initial public offering from billionaire Jack Ma’s Ant Group, which is said to seek to raise about $35 billion with dual listings in Shanghai and Hong Kong. Share sales on the mainland have jumped 63% this year, partly driven by the emergence of the country’s new Nasdaq-style STAR board which opened last year, according to data compiled by Bloomberg.
The U.S. bank generates more than $1 billion of revenue a year from its China-based clients — a tenfold increase from a decade ago. Its locally incorporated bank currently has outlets in 12 Chinese cities and held 178 billion yuan ($27 billion) of assets by the end of last year, according to its annual report. It also operates four small lending entities in China, according to its website.
©2020 Bloomberg L.P.
Bitcoin rally ends – Investment Executive
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Canadian assets in responsible investments reached $3.2 trillion at the end of 2019
- By: Katie Keir
- November 26, 2020
November 26, 2020
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Gold Is a Dull Investment – Morningstar.ca
I’ve never been a big fan of gold. It’s not a productive asset, so it doesn’t generate any cash flows, and it’s only worth what someone else is willing to pay for it. Yet there’s evidence that gold can serve as a hedge against a market meltdown and inflation, so it may serve a purpose as a small position in a diversified portfolio. The opportunity cost of holding gold is currently low, as real interest rates are negative.
Yet insurance doesn’t boost expected returns. Rather, it tends to reduce them. There is no compelling economic reason to expect gold to provide strong real (inflation-adjusted) returns over the long term. Gold is far from a perfect hedge against inflation and market tail risk. But then again, nothing is.
Investors willing to accept the cost of this imperfect insurance might consider a low-cost physical gold exchange-traded fund like SPDR Gold MiniShares (GLDM). It owns gold bars in a vault in London, so it should closely hew to gold spot prices.
An Imperfect Hedge
Gold is a strange metal. It is a commodity that behaves as a safe-haven asset, largely because of its universal role as a store of value for thousands of years. Sam Lee, a former editor of this newsletter, articulated it well when he said, “The best way to think of gold is as a nonyielding currency with a special trait: The only way to ‘print’ it is to pull it out of the earth at great cost.” Like any foreign currency, the price of gold tends to move in the opposite direction of the strength of the U.S. dollar.
Predicting the movement of any currency or commodity is very difficult, and gold is no different. The best reason to own it is as a hedge against a market meltdown and inflation, rather than as a speculative bet that gold prices will be higher in the future. Over short periods, gold has been uncorrelated with stocks, but over longer holding periods the two assets have been negatively correlated, as Exhibit 1 shows. In other words, gold has tended to do well in stretches when stocks have fared poorly, and vice versa. For example, during the global financial crisis from Oct. 9, 2007, through March 9, 2009, gold cumulatively gained 25.9%, while the S&P 500 lost 54.9%.
There is no law that this relationship must always hold, and there are no economic drivers to enforce it. It exists because investors perceive gold as a safe-haven asset and use it accordingly. While there isn’t a compelling reason to expect that perception to change, the hedge is only as strong as that perception.
In this way, gold is similar to fiat currencies like the U.S. dollar. Its value depends on others’ faith in it, as there are limited practical applications for it aside from jewelry. The difference is the supply of gold is fairly stable, while central banks can change their money supply at will. This underpins the second reason for owning gold: to hedge against inflation.
Like most commodities, gold prices have been positively correlated with inflation, as Exhibit 1 shows. But they don’t move in lockstep with inflation. Gold can and has lost purchasing power over decade-long spans, as it did between August 1993 and December 2005. Investors who bought gold at its record high real price in January 1980 are still waiting to be made whole on an inflation-adjusted basis. Gold is clearly not a perfect inflation hedge, though it can help boost returns in inflationary periods.
Cryptocurrency has emerged as a competing asset with gold for investors who don’t trust government-issued currency. While this could reduce investment demand for gold, it still has a couple of things in its favor: 1 | It has proven staying power and is more likely to be around 50 years from now than any cryptocurrency; and 2 | gold still behaves like a safe-haven asset, while most cryptocurrencies are highly speculative.
Gold doesn’t yield anything, so there’s an opportunity cost to own it. The lower interest rates are, the lower that opportunity cost is. Consequently, there has been a strong inverse relationship between real (inflation-adjusted) interest rates and the real price of gold, like most bonds. Because current prices and future returns move in opposite directions, the expected returns on gold are positively correlated with real interest rates, even though gold yields nothing. Exhibit 2 shows this relationship. Low interest rates inflate gold prices but depress future returns.
Rising interest rates hurt gold prices by increasing the opportunity cost of holding it. So a bet on gold is also a bet that real interest rates will remain low.
Because real interest rates are near record lows, it’s not surprising that real gold prices in U.S. dollars are near record highs, as shown in Exhibit 3. Viewed in this light, gold is far from a screaming buy. Although its long-term real returns will likely be lower going forward, gold may still be worth considering. It’s not perfect, but it can still serve as a hedge against tail risk and inflation.
Premier Tech Announces a $251.2M Investment in Québec – Canada NewsWire
RIVIÈRE-DU-LOUP, QC, Nov. 26, 2020 /CNW Telbec/ – Premier Tech is pleased to announce a $251.2M investment in the presence of Mr. Pierre Fitzgibbon, Minister of Economy and Innovation, Ms. Marie-Eve Proulx, Minister for Regional Economic Development and Minister responsible for the Chaudière-Appalaches, Bas-Saint-Laurent and Gaspésie-Îles-de-la-Madeleine regions, and Mr. Denis Tardif, Member for Rivière-du-Loup–Témiscouata. This announcement follows the signing of a contribution agreement in the form of a $45 million repayable, interest-free loan between Premier Tech and Investissement Québec.
This major investment by Premier Tech is part of a substantial acceleration of the company’s investments in manufacturing and Innovation, Research and Development (IR&D). This will take place over a five-year period and will allow Premier Tech to increase its IR&D activities, accelerate its digital transformation and intensify its manufacturing operations in Québec through the deployment of innovative manufacturing tools. This investment program also intends to develop new markets and accelerate the company’s international outreach by developing and perfecting several of its software and business platforms.
In addition to consolidating the operations and strengthening the teams working at the Premier Tech World Headquarters, located at its Rivière-du-Loup Campus, this investment will lead to the creation of some 500 new jobs in Québec, allowing the company to reaffirm its ongoing commitment to reinforce its presence in Québec and support its international development.
“Over the years, Premier Tech has been able to identify promising development and growth opportunities and implemented a unique and unparallelled innovation force within its various businesses around the world. Our significant growth directly reflects our sustained and ongoing investments in Innovation, Research and Development, and in the continuous improvement of our business processes,” says Jean Bélanger, president and chief executive officer of Premier Tech.
About Premier Tech
Making a difference, this is what we are all about at Premier Tech. One team driven by a shared passion to deliver solutions that will better the lives of people, businesses and communities. At Premier Tech, People and Technologies connect in lasting, transformative ways, giving life to products and services that help feed, protect and improve our world. We are committed to creating sustainable solutions that help bring beautiful gardens to life, increase crop yields, improve the efficiency of manufacturing facilities, treat and recycle water, and much more as we keep innovating.
For more than 95 years, Premier Tech has been growing internationally, driven by the collective power of its 4 600 team members in 27 countries, of which over 1 000 are based in Québec, mainly in Rivière-du-Loup. Backed by a quarter-century-long track record of solid growth, Premier Tech today records sales of one billion dollars.
SOURCE Premier Tech ltée
For further information: France Bégin Parent, Public relations director, Premier Tech, 418 867-8883, ext. 16059, [email protected], www.premiertech.com
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