Quoteworthy: "We were here in 1889, and we will be here in 2089 and beyond." –— Michael Smith, CEO of Hongkong Land, on the news of a more than US$1 billion upgrade of Landmark
Yen poised for big swings on intervention threat
The market is jittery about a big increase in volatility in the yen as a slump in the currency to the lowest since 1986 raises the spectre of Japanese intervention.
Volatility spreads show that investors are demanding a premium to guard against sudden moves, bearish yen wagers are piling up and a measure of active trader positioning is at its most negative since 2022.
Warnings from the Japanese authorities are unlikely to prevent the yen from weakening further, which increases the risk they will have to act on their threats to step into the markets, Carol Kong, a currency strategist at Commonwealth Bank of Australia, wrote in a research note this week.
The nation’s top currency official, Masato Kanda, has said that Japan stands ready to intervene 24 hours a day if needed.
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While implied volatility in the yen appears subdued, its spread over fluctuations in other currencies is sticking above the average seen since the start of 2021.
Hedge funds and asset managers collectively held bearish yen wagers worth about US$14 billion ($19.01 billion) as of June 18, according to the latest data available from the Commodity Futures Trading Commission. That is more than other major currencies, and compared with euro net longs worth US$32.7 billion.
A gauge of active trader positioning in the yen from Citigroup Inc has fallen to the most negative since 2022, after a surge in short bets on the currency. While this shows traders remain firmly bearish, it also suggests there are plenty of positions that may need to be quickly unwound should the currency suddenly strengthen.
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The effects of the JPY9.8 trillion ($83 billion) that Japan spent on forex intercession earlier this year have already worn off. Individual investors are eyeing another opportunity to sell the yen if Japan’s currency rises after another round of intervention, said Hideki Shibata, a senior strategist at Tokai Tokyo Intelligence Lab. — Bloomberg
London Metal Exchange looks to set up warehouse in Hong Kong
The London Metal Exchange (LME) is exploring setting up its first warehouse in Hong Kong for metals delivery as it seeks to strengthen services across Asia.
“We recently commissioned a third-party feasibility study on this idea, and we have been receiving great support from the local market,” Bonnie Chan, CEO of Hong Kong Exchanges and Clearing, which owns the LME, said at the LME’s annual Asia seminar in Hong Kong on June 27.
The move would be a boost for the world’s largest metals trading bourse, which has long aimed at creating a warehouse and logistics system for metals in China to serve clients from the top market better.
The LME has long wanted to establish a warehousing foothold inside mainland China, but has been rebuffed by Chinese regulators over concerns including competition with the Shanghai Futures Exchange. In Hong Kong, high property and labour costs have been a hurdle.
“Our mission is to get as close to the mainland as possible,” LME CEO Matthew Chamberlain said in a Bloomberg TV interview. “Hong Kong is absolutely at the centre of our plans for that bridge.”
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In response to questions about warehouses in the mainland, Chamberlain said that was a decision for Beijing to take.
“The ability to deliver into Hong Kong, to truck or to rail metal down here on the fantastic transport network, is something that we are really excited about,” Chamberlain told the seminar.
The Hong Kong Energy, Mining and Commodities Association, a local industry body that includes metals traders, said in a statement it has been in talks with the bourses to promote the city as a “good delivery point” to serve clients from the city and mainland China to throughout the Asia Pacific region.
The association is collecting logistics and industry data for LME, it said. The exchange already operates warehouses across Asia, including Singapore, South Korea, Malaysia, Japan and Taiwan.
The LME has a large network of approved warehouses worldwide that at times hold millions of tons of metals from copper to aluminium and zinc. When Chinese users want to deliver metal to the exchange, their closest options are in South Korea, Taiwan or Malaysia.
A warehouse in Hong Kong would “strengthen the link between mainland physical metals markets, and international pricing on the LME will create more market arbitrage opportunities”, Chan told the seminar. China’s drive for a greener economy is likely to boost its demand for materials, and the city has the logistics infrastructure and trusted regulatory frameworks to make a warehouse work, she said. — Bloomberg
Lawsuits targeting ‘climate-washing’ are becoming more frequent
Companies accused of misrepresenting their progress on tackling climate change are increasingly finding themselves the target of litigants, as activist groups look to hold some of the world’s worst polluters to account.
As many as 47 new climate-washing cases were filed in 2023 against companies and governments around the globe, according to a new report from the London School of Economics’ Grantham Research Institute on Climate Change and the Environment.
Around 70% of the cases concluded between 2016 and 2023 ended in the claimants’ favour, according to the report. Regulators around the world have also been trying to clamp down on climate-washing. The annual report analyses a database of 2,666 climate litigation cases compiled by the Sabin Center for Climate Change Law at Columbia.
Litigation is a crucial part of the toolkit to force companies and governments to account for their climate promises and to galvanise action to slow global warming. Rulings in favour of claimants can have a far-reaching impact far beyond the specific case.
A landmark ruling from the European Court of Human Rights this year found that Switzerland failed to protect its citizens from the ravages of climate change, following a case brought by a group of elderly Swiss women.
Elsewhere, the UK government’s net-zero strategy was found lacking for the second time by a London judge in May.
In 2023, some 233 new climate-related cases were filed worldwide, with cases in the global south gaining traction. A ruling by the Supreme Court of India established a new constitutional right to be free from the adverse effects of climate change.
“Whether climate litigation is advancing or hindering climate action remains difficult to determine,” said Catherine Higham and Joanna Setzer, the authors of the report. “Some types of cases, such as government framework cases, have already had lasting impacts on domestic climate governance.” — Bloomberg
Musk’s SpaceX tender offer said to value company at record US$210 bil
SpaceX will sell insider shares at US$112 ($151.97) apiece in a tender offer, a higher-than-expected price that boosts the value of Elon Musk’s space and satellite company closer to US$210 billion, according to people familiar with the matter.
The company was last valued at US$180 billion in a transaction in December, Bloomberg News reported.
The world’s second-most valuable start-up decided to price its current tender offer — a transaction that enables employees and insiders like investors to sell shares — above the US$200 billion valuation that was discussed last month, due to significant investor demand, the people said, who declined to be identified as they are not authorised to speak publicly.
The new valuation is a record for an American private company, but is still lower than the US$268 billion valuation of ByteDance, parent of social video platform TikTok. Already, SpaceX is on a par with some of the world’s largest, publicly traded companies by market capitalisation.
Terms are not finalised and the size of the tender offer could change depending on interest from both insider sellers and buyers.
Representatives for SpaceX, formally known as Space Exploration Technologies Corp, did not immediately respond to requests for comment. — Bloomberg
Amazon hits US$2 tril in value as AI frenzy fuels rally
Amazon.com Inc has reached a US$2 trillion ($2.72 trillion) market valuation for the first time ever as an artificial intelligence-fuelled rally pushed the tech giant deeper into record territory.
Shares rose 3.9% on June 26 to close at US$193.61, pushing the market value to more than US$2 trillion. The company is now a member of an elite club of a handful of peers that have surpassed the key market capitalisation. Alphabet Inc passed the US$2 trillion threshold in late April, while rallies have pushed market values of Nvidia Corp, Microsoft Corp, and Apple Inc to more than US$3 trillion.
Amazon shares have whipsawed since the company’s first-quarter earnings, when the cloud unit posted the strongest sales growth in a year, helping to power the stock back above the all-time high set in April. The stock rallied in June, recovering losses from the end of May to gain 27% so far this year.
Shares of the megacap technology company have gotten a lift over the past year as the company cut costs and restructured its business to better take advantage of the AI frenzy. In addition, its key Amazon Web Services business has shown signs of re-accelerating growth, a major point of optimism for investors.
“Part of the good stock performance over the last six to nine months for Amazon has been related to the fact that it was oversold” at the end of 2022, said Dan Romanoff, an analyst at Morningstar Investment Service. — Bloomberg
Jho Low to forfeit Warhol, Monet works in 1MDB deal with DOJ
The US Justice Department has reached a deal to recover more than US$100 million ($135.7 million) in funds, including artworks by Claude Monet and Andy Warhol, linked to the multi-billion-dollar 1MDB scandal.
The department announced an agreement with Jho Low, members of his family, and trust entities in order to resolve two civil forfeiture cases.
The department previously brought the cases against assets that it alleges were acquired by Low and his family using funds allegedly embezzled from the troubled sovereign investment development fund, 1Malaysia Development Bhd.
Low also agreed to cooperate in the transfer to Malaysia of certain other assets located in Hong Kong, Switzerland and Singapore that are linked to 1MDB funds.
“The agreement resolves the civil forfeiture action against a luxury apartment in Paris and artwork located in Switzerland by artists Andy Warhol and Claude Monet, which Low purchased for approximately US$35 million in total,” according to the statement. “In addition, parties agreed to return to Malaysia real property and cash in bank accounts valued at approximately US$67 million located in Hong Kong, Switzerland, and Singapore.” — Bloomberg
