FX trading expanding rapidly
April 15, 2021 (Thursday) Clear
・U.S. CVC Capital Partners is forming an alliance with Japanese company MIM Capital to consider a detailed buyout proposal for Toshiba <6502> [Closing price 4,860 yen].
U.S. KKR is also examining an independent buyout proposal. Several European and American funds are eyeing investment opportunities.
On the 14th, Toshiba announced the resignation of President and CEO Nobuaki Kurita and the appointment of Tomo Takagi as successor chairman.
・ANA HD <9202> [Closing price 2,398.0 yen] will start logistics services using drones (small unmanned aircraft) domestically as early as FY2022.
They will introduce drones developed by a German startup to deliver daily necessities and medicines to islands and mountainous regions nationwide.
・Leading restaurant companies report their 2021 February-term results.
Among the eight major companies with market capitalizations over 10 billion yen, six posted final losses.
Komeda HD <3543> [Closing price 1,962 yen] saw double-digit revenue declines except for a few. “Komeda Coffee” centers on suburban areas, attracting families traveling by car to avoid crowds.
Ichiban-ya <7630> [Closing price 4,885 yen] remained profitable, supported by delivery and takeout services.
・Countdown to the Tokyo Olympics: 100 days (mid) — Sponsorship struggles prompt rethinking of corporate involvement
In unprecedented Olympics and Paralympics, the business opportunities companies had counted on have been drastically shaken.
GDP impact was expected to be 9.2 trillion yen, but analyses suggest a 170 billion yen reduction due to fewer foreign visitors, and about 1.4 trillion yen decrease if the events were held without spectators.
What value can be created in this exceptional event will determine future competitiveness.
・A number of financial institutions have suffered losses from trading with hedge fund Archegos Capital Management, drawing attention to regulatory loopholes.
Archegos used trades that effectively concealed stock positions by shifting profits and losses in a so-called “hidden cloak.”
The U.S. Securities and Exchange Commission (SEC) began introducing new regulations for these trades in November 2021.
It took a decade to implement, and the Archegos meltdown could not be prevented.
Apart from family offices (private wealth managers) that fell outside SEC oversight, the focus is also on
one form of derivative trades: “Total Return Swap.”
Total Return Swaps allow an investor to obtain the economic benefits of owning the stock without actually holding the stock.
Because Total Return Swap contracts do not involve stock ownership, they evade disclosure requirements for “beneficial owners” in the United States.
Powell, Chair of the U.S. Federal Reserve Board, appeared on a U.S. television program on the 11th and stated
that several peers in New York are engaging in similar practices,
“(We are determined) not to let such incidents happen again.”
・Toshiba <6502> [Closing price 4,860 yen] on the 14th announced the resignation of Nobuhide Kurita as President and CEO, with Tomo Takai becoming President and CEO.
Kurita clashed with activist shareholders over governance and growth strategies, which led to internal resistance against structural reforms and cost reductions.
Takai, returning, pledges to pursue a path of reconciliation with shareholders, but balancing growth investments with shareholder returns will not be easy.
・In the wake of renewed COVID-19 infections, Osaka Prefecture’s hospital beds are becoming severely strained.
Utilization of beds for severe cases has exceeded 90%, and even when patients’ conditions worsen, some are admitted for moderate illnesses in subsequent care.
Underlying this is a shortage of medical personnel intensified by the pandemic.
・On the 14th, the Ministry of Internal Affairs and Communications allocated additional spectrum for the 5G mobile standard to Rakuten Mobile <4755> [Closing price 1,369 yen].
The allocation is for one company; NTT Docomo <9432> [Closing price 2,827.5 yen], KDDI <9433> [Closing price 3,427.0 yen], and SoftBank Group (SB) <9434> [Closing price 1,420.0 yen] also applied.
・The government explained the background to the U.S. regarding the investment by Tencent Holdings (China) into Rakuten Group <4755> [Closing price 1,369 yen].
It stated it would monitor under the Foreign Exchange and Foreign Trade Act to ensure no security or information leakage problems arise.
・Cabinet Office on the 14th reported that for February’s machinery orders statistics, nonmanufacturing orders excluding ships and power down 10.9% month-on-month to 4,227 billion yen, a two-month decline.
Meanwhile, external demand remained solid.
・Central banks around the world are facing tests in addressing rising prices.
In emerging economies, policy rate hikes are continuing; more than 20 years have passed since the first wave of hikes, but there is a risk of demand slowdown.
Policy management during the recovery from the COVID-19 pandemic is becoming more challenging.
・SServerWorks <4434> [Closing price 4,610 yen] is entering the financial-institutions sector in earnest.
They will provide end-to-end support for Amazon Web Services (AWS), including design, maintenance, operation, and data migration.
This aims to meet the demand of financial institutions increasing non-face-to-face transactions during the pandemic.
・Individual investors’ foreign exchange margin trading (FX) is expanding rapidly.
Total trading value for FY2020 surpassed 6000 trillion yen for the first time, a record high.
In FY2020, over-the-counter FX trading reached 6,174 trillion yen, up 45% from FY2019. The previous high was 5,524 trillion yen in FY2015.
・World-wide COVID-19 infection numbers (daily new deaths) as of 4/14 4:00 PM, compiled by Johns Hopkins University: Global total 1.37461 billion people (13,517 deaths)
United States 31,345,992 (913), India 13,873,825 (1,027), Brazil 13,599,994 (3,808), France 5,167,265 (345), Russia 4,605,444 (330), United Kingdom 4,390,801 (23)
Turkey 3,962,760 (273), Italy 3,793,033 (478), Spain 3,373,548 (100), Germany 3,054,025 (341), Poland 2,599,850 (645), Argentina 2,579,000 (217)
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