DIRS.INFO The most relevant business & tech news

☆ BlackRock calls on clients to rethink hedging strategy after UK pension crisis
▼ + stars: | 2023-03-30 | by ( Tommy Wilkes | ) www.reuters.com time to read: +3 min

Asset managers worry new rules to make LDI investing more robust could render the strategy unviable for some schemes, but consultants warn BlackRock's push could repel pension clients who want to minimise concentration risk. On Wednesday the Bank of England said LDI funds would, in practice, need to increase liquidity buffers to withstand a 300-400 basis points surge in bond yields. BlackRock is also encouraging schemes to shift to a new, smaller range of LDI funds which are less complex to operate, and moving bigger schemes into segregated accounts, which fared better in the crisis, Claringbull said. "But where clients feel they are being compromised they will look to move assets," he added. Despite the crisis fallout BlackRock has told clients it remains committed to LDI.

When bond yields fall, their price rises. But asset managers that run large government bond portfolios still expect bond yields to rise and say they are selling into the rally, expecting the European Central Bank and the U.S. Federal Reserve stay hawkish. Legal and General Investment Management (LGIM), the UK-based $1.6 trillion asset manager, is also reducing its exposure to government bonds, taking profits following the bond rally. As selling gripped bank shares on Wednesday, money market pricing suggested traders were leaning towards a 25 basis-point Fed rate increase next week. "We expect rates to rise," agreed Brian Nick, chief investment strategist at $1.1 trillion U.S. asset manager Nuveen.

LONDON, March 15 (Reuters) - Finance minister Jeremy Hunt presented less gloomy forecasts for Britain's economy at his Spring Budget on Wednesday. Reuters Graphics Reuters GraphicsROSIER OUTLOOKA rout in global banking stocks on Wednesday overshadowed many UK-specific moves. Investments announced by Hunt such as a corporate spending tax break, a boost for defence and extra childcare support were not viewed as particularly inflationary. Unlike in the last budget, noise around windfall taxes on oil and gas companies was muted in the run-up to the budget since energy prices have fallen dramatically since then. "In general, the budget is not the big story for gilts right now, global drivers are in the driving seat," said James Smith, economist at ING.

Unlike rivals Anglo American (AAL.L) and Rio Tinto (RIO.AX), (RIO.L), London-listed Glencore is still mining coal. Activist investor Bluebell Capital Partners last year argued that Glencore should spin off the coal division, following in the steps of Anglo American. His plan is to hang on to coal and keep annual production steady at around 110 million tonnes up to 2025. Over the longer term, he’ll then start shutting coal mines, with at least a dozen closures planned before 2035. EBITDA from Glencore’s coal operations rose to $17.9 billion from $5.2 billion the previous year due to increasing prices.

☆ Analysis: U.S. stock rally faces uphill climb after mixed inflation data
▼ + stars: | 2023-02-14 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +5 min

[1/2] A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 27, 2023. Tuesday's closely watched inflation report on U.S. consumer prices showed the smallest annual price increase since late 2021. But the data did little to dispel expectations that the Federal Reserve will have to continue raising rates higher and keep them elevated for longer to drive inflation lower. The CPI data continues the trend of moderating annual inflation rates that have helped propel this year's rally in risk assets. Some have also expressed concern about investor positioning, which has grown stretched in recent weeks as market participants piled into the stock rally.

Japan's 10-year bond yield, trading at 0.4%, fell on Wednesday but is not far off its highest levels since 2015. Total holdings of foreign bonds by Japanese institutional investors, excluding Japan's $1 trillion reserve portfolio, reached $3 trillion at their peak. GOING HOMEThe implications of higher inflation and a possible end to ultra-low rates are not lost on Japanese investors. Still, anticipating a shift, Japanese investors sold a net 2.1 trillion yen ($15.94 billion) of foreign bonds in December, marking a fourth straight month of selling. According to Nomura, Japanese investors have been far more active buyers of global and overseas equities than domestic stocks in the last decade.

☆ Euro zone inflation rate slides to 9.2% as energy price surge cools
▼ + stars: | 2023-01-06 | by ( Silvia Amaro | ) www.cnbc.com time to read: +3 min

Inflation in Europe has been impacted by higher energy prices and supply shortages. Inflation in the euro zone dropped for a second consecutive month in December, but analysts do not expect it to spark a change in tone from the European Central Bank. It follows November's headline inflation rate of 10.1%, which represented the first slight contraction in prices since June 2021. At the time, the central bank forecast an average inflation rate of 8.4% for 2022, 6.3% for 2023 and 3.4% for 2024. Carsten Brzeski, global head of macro at ING Germany, said these numbers "are not a relief, yet, only a reminder that euro zone inflation is still mainly an energy price phenomenon."

LONDON, Jan 4 (Reuters) - U.S. funds giant BlackRock (BLK.N) will defer third-quarter redemptions from its 3.5 billion pounds ($4.2 billion) BlackRock UK Property Fund, a source told Reuters, in the latest sign of strain in Britain's real estate market. BlackRock's UK property fund will defer withdrawals that were originally due to be paid at the end of December, a person familiar with the situation said, asking not to be named. As of November, funds overseeing around 17 billion pounds in UK real estate assets were restricting redemptions to prevent firesales. A spokesperson for Legal & General Investment Management said on Wednesday that its Managed Property Fund was no longer deferring redemptions. M&G, Columbia Threadneedle, Schroders and CBRE did not immediately confirm to Reuters whether redemption deferrals were still in place for their UK property funds.

Reuters Graphics3/ RE-EMERGING MARKETSWhisper it, but the emerging markets (EM) bulls are back after 2022 delivered some of the biggest losses on record. Credit Suisse particularly likes hard currency debt and DoubleLine's Jeffrey Gundlach, AKA the "bond king", has EM stocks as his top pick. Economists polled by Reuters expect headline U.S. inflation to decelerate to 3.1% by the end of 2023. Valentine Ainouz, fixed income strategist at the Amundi Institute, predicts the 10-year U.S. Treasury yield will end 2023 at 3.5% from around 3.88% currently. Reuters Graphics5/ EQUITIES: SELL NOW, BUY LATEREquity investors hope a V-shaped year for the global economy will see stocks end it comfortably higher.

The amount of new public-sector debt investors will have to absorb in 2023 will be twice as much as the previous record a decade ago, BofA notes. As early as November, the ECB's bond market contact group cited the high amount of debt private investors would have to buy as the most frequently mentioned concern. JPMorgan, the leader for euro government debt sales, expects a fall. The biggest challenge for governments will be timing, Dutch debt office head Saskia van Dun told Reuters last week. They will also have to be careful when picking maturities to issue and compensate investors enough to buy the debt, investors said.

LONDON, Dec 19 (Reuters) - Capricorn Energy's (CNE.L) third-biggest shareholder, Palliser Capital, has called for a general meeting to set a vote on removing seven Capricorn directors from supervisory roles including the CEO, according to documents seen by Reuters. "We have requisitioned the board of Capricorn Energy ... to convene a general meeting (the "EGM") of the Company," Palliser Chief Investment Officer James Smith said in a Dec. 19 letter to Capricorn shareholders. "The EGM will enable shareholders to vote on resolutions to effect the removal of seven current Capricorn directors and the appointment of six independent, highly-qualified replacement candidates." The directors that Palliser wants to remove include Capricorn Chief Executive Officer Simon Thomson and its chief financial officer, also named James Smith, who both hold executive and supervisory roles. The shareholder meeting to vote on Palliser's resolutions has to take place by Jan. 30, Palliser said.

Summary Hawkish central banks dampen hopes of peak ratesEuro zone bonds yields surgeHawkish message a reality check for markets -analystsLONDON, Dec 15 (Reuters) - Forget a year-end rally in financial markets. The message from major central banks is loud and clear: the battle to tame inflation is far from over. Central banks in the United States, euro zone, Britain and Switzerland met on Wednesday and Thursday and all slowed the pace of aggressive rate moves. European Central Bank President Christine Lagarde said to expect more 50-basis-point rate increases for a period of time and that the ECB was not "pivoting" yet. Such sharp moves loosen the very financial conditions that central banks are trying to tighten in order to contain inflation.

☆ UK bond turmoil leaves smaller pension schemes with longer-term costs
▼ + stars: | 2022-11-07 | by ( Carolyn Cohn | ) www.reuters.com time to read: +6 min

As pension funds scrambled for cash to meet margin calls, the Bank of England intervened to stabilise the market and avoid the collapse of some LDI-exposed funds. But pension schemes that could not meet margin calls in time - many of them smaller schemes - had their positions liquidated by LDI fund managers. Larger schemes in segregated funds were more likely to have retained their hedges, industry sources said. Large schemes in segregated funds pay lower fees for more volume - a benefit small schemes cannot enjoy. LDI fund managers BlackRock (BLK.N) and Insight Investment did not respond to requests for comment.

LONDON, Oct 15 (Reuters) - It started out simply enough: British pension schemes were looking for a way to match their assets to future pension payments. But the strategy gradually became riskier, according to interviews with pension scheme trustees, consultants, industry experts and asset managers. Globally, investors are worrying about other financial products predicated on low interest rates, now that rates are rising. Nearly two-thirds of Britain's defined benefit pension schemes use LDI funds, according to TPR. "When people talked about interest rates, all they obsessed about was interest rates falling," said David Fogarty, an independent trustee at professional pension scheme trustee provider Dalriada Trustees.

But it is unclear how many lenders are tapping the facility and whether pension funds are willing to shell out additional fees for what is a temporary solution, sources told Reuters. Banks are reluctant to increase their lending to LDI funds through the repo facility, according to one official at a European bank. BRIDGING THE GAPLDI is an investment strategy sold by asset managers like BlackRock, Legal & General Investment Management and Insight Investment to pension schemes to help them match their assets and liabilities. Governor Andrew Bailey has rejected calls to continue buying bonds from pension funds which say they still need support beyond Friday. "It's a bridging tool that they can still use to keep the dialogue with the market and the pension funds going."

While estimates of how much pension funds need to sell vary they are in the hundreds of billions of pounds, and it is not known how much funds have already raised in cash. Tuesday's BoE intervention was targeted at buying index-linked bonds, a far smaller market than gilts, dominated by pension funds and which suffered another significant selloff this week. He estimates pension funds could sell assets totalling around 300 billion pounds as they adjust hedging positions, although it is not clear how much they may have sold already. He estimated 100 billion pounds could come from gilts and the rest from assets such as global credit, global equities and asset-backed securities. "The bottom line is a lot of schemes need to rebalance their portfolios," he said.

Compounding the pain, providers of so-called liability-driven investment strategies (LDI) are demanding more cash to support new and older hedging positions. The cash buffers now required are about three times bigger than previously requested, according to four consultants advising pension schemes, as market players seek bigger cushions against more volatile moves in bonds. Estimates of how much pension funds need to sell range but are in the hundreds of billions of pounds, although it is not known how much in assets schemes have sold already. "We are definitely not there," he said, referring to whether funds were close to raising the required cash by selling assets. He estimated 100 billion pounds could come from gilts and the rest from assets such as global credit, global equities and asset-backed securities.

Search resuls for: "General Investment Management"

17 mentions found