FT : Probe into Chinese buying Greek villas on credit cards

Probe into Chinese buying Greek villas on credit cards
Central bank looks into unusual transactions under ‘golden visa’ scheme

Greece’s central bank is investigating a series of unusual transactions by Chinese citizens who used their credit cards to buy property in Athens and join the EU country’s flourishing “golden visa” scheme.

The credit card purchases were made through two leading Greek banks, National Bank of Greece and Eurobank, a central bank official said.

The deals were arranged by an Athens-based real estate company, Destiny Investment Group, that offered apartments and villas in the Greek capital to overseas buyers with a starting price of €250,000 — the minimum property investment required under the visa programme.

The golden visa scheme was introduced in 2013 at the height of Greece’s financial crisis in a bid to increase tax revenues and stem a sharp fall in property prices.

The probe comes as the cash-strapped Syriza government debates whether to extend the scheme to other investments such as Greek sovereign bonds and companies listed on the Athens stock exchange.

A senior banking official said more than 250 property transactions were made by Chinese buyers using credit cards, “potentially violating Chinese regulations on capital movement and Greek law on issuing golden visas”.

“This is not a trivial matter but the investigation will determine whether any illegal actions have taken place,” the same official said.

More than 9,000 non-EU citizens and their close relatives were given renewable five-year residence permits in the first nine months of this year, compared with 6,200 in the whole of 2017. Half the visas issued this year went to Chinese citizens, according to the Greek ministry for migration.

Several southern EU member states operate golden visa schemes, among them Spain, Cyprus and Portugal which all require non-EU citizens to invest more than €300,000 to qualify for a residency permit.

Destiny acquired credit card terminals with roaming capacity from the two banks to be used by Chinese buyers for property purchases in Greece. The company sent several terminals to Beijing to facilitate such transactions, according to the senior banking official.

Evangelos Papaevangelou, a prominent Athens businessman and founder of Destiny, has denied any wrongdoing.

In a statement, Mr Papaevangelou said the transactions were legitimate on the grounds they had been approved by the banks that owned the terminals and by the institutions that issued the cards. Destiny stopped the transactions in September after a request by National Bank.

Chinese property investors are now required to make a purchase by transferring funds through a bank to a Greek lawyer and notary acting on their behalf.

Last year China UnionPay, the Chinese state-owned bank card network, explicitly banned the use of its credit and debit cards for property purchases. Analysts in China said a significant portion of Chinese foreign spending classified in official data as overseas consumption is actually disguised capital flight, including investment in property.

A Eurobank official said “only a small number” of unusual transactions took place before its internal monitoring system triggered checks by compliance officers. Eurobank asked Destiny in May to stop using its terminals for Chinese property transactions.

Greece’s supreme court has ordered the anti-corruption prosecutor to carry out a separate probe of the transactions to determine whether any money-laundering has taken place.

Most applicants for golden visas are middle-class Chinese investors taking advantage of a boom in tourism to Athens to buy properties that can generate income as short-term holiday rentals, according to local real estate companies. The visa law specifies that purchases can only be made through bank transfers or cheques.

“We’re not catering for the Chinese super-rich, our investors are prosperous middle-class city dwellers who want a European base from which they can travel to western Europe on their golden visa,” said the owner of a small Athens real estate company who declined to be identified. “For €250,000 they can buy a three-room apartment with a view of the Acropolis or the Aegean Sea. They see it as an attractive opportunity.”

Reuters - Takeda CEO confident of investor backing for $62 billion Shire deal

Takeda CEO confident of investor backing for $62 billion Shire deal - https://reut.rs/2SN7KWL

LONDON (Reuters) - The boss of Japan’s Takeda Pharmaceutical (4502.T) said on Monday he was confident of securing investor backing for its $62 billion acquisition of London-listed Shire (SHP.L), despite some shareholders’ fears about the resulting debt burden.

Buoyed by a strong set of quarterly results last week - helped by strong demand for its existing drugs - Chief Executive Christophe Weber insisted that buying rare diseases specialist Shire was not a defensive move.

“We are quite satisfied with our current progress at Takeda. Our business is doing well,” he told the FT Global Pharmaceutical and Biotechnology conference in London.

“We don’t have to do this Shire acquisition. We just feel it is a way to accelerate our progress and our evolution.”

Takeda has already gained approval for what would be the biggest-ever overseas acquisition by a Japanese company from U.S., Japanese and Chinese regulators - but it is still waiting for the nod from European authorities.

Crucially, Takeda also needs two-thirds support from shareholders. It has set Oct. 19 as the record date entitling investors to vote in an extraordinary general meeting (EGM) on the deal, allowing it to hold the meeting within a three-month period ending Jan. 18. Alternatively, it could set a new record date.

Takeda, which has a market value of around $32 billion, has secured a $30.9 billion bridge loan to help finance the Shire acquisition and some investors are concerned as to how well it will cope with debt repayments.

Weber, however, said he was confident he had persuaded Takeda shareholders sufficiently for the company to name an EGM date, without specifying exactly when it would be held.

The Japanese company struck its agreement to take over Shire in May, a deal that will propel it into the top 10 rankings of global drugmakers by sales, alongside the likes of Novartis (NOVN.S) and Pfizer (PFE.N).

It will also increase Takeda’s exposure to the U.S. drugs market - the world’s biggest - which will account for around half of the enlarged group’s business, just as President Donald Trump puts a squeeze on drugmakers to cut their prices.

Weber said Trump’s plans to base the price the government’s Medicare program pays for some medications on the lower prices paid in other countries would add to pressure but would not undermine the fundamental attractions of the U.S. marketplace.

“This is still the country where new innovative medicine has the fastest access - there is this willingness to treat patients with the latest medicine,” he said.

“My assumption always has been there would be more price pressure in the U.S. and we have to deal with it.”

Reuters - Buy, sell or hold: Ten ways to trade the U.S. election


NEW YORK (Reuters) - Buy the dollar but sell FAANGs, buy real estate and machinery, but sell the overall market. Or, do nothing at all.
Investors heading into Tuesday’s U.S. congressional elections are trying to fathom how best to predict the outcome and profit from it.

After two years of wielding no practical political power in Washington, the Democratic Party faces a strong chance of winning control of the U.S. House of Representatives in next week’s election, with Republicans likely to keep the Senate.

These are some of the ideas that analysts, strategists and traders have:

* BUY ANY DOLLAR DIP
If the greenback drops against other currencies on the election result, Citigroup says it should be bought. “Midterms are less likely to mark a major turning point for USD than some investors fear,” Citi analyst Todd Elmer said in a report.

There is no strong historical relationship between midterms and the path of the U.S. currency, making a Democratic House victory unlikely to thwart the dollar’s rally, Citi said.

* FAANGs COULD FALL ON DIVIDED CONGRESS

One policy initiative that looks viable under a divided Congress is increased regulation of social media companies, said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “That is an area where both the Trump administration and Democrats agree,” he said. “We expect that to occur in 2019.” If that happens, shares of Facebook, Twitter and Alphabet, which have come under increased pressure this year, could have more downside.

* BUY CONSTRUCTION STOCKS
Dryden Pence, chief investment officer of Pence Wealth Management in Newport Beach, California, is looking to buy construction-related stocks, as he anticipates that an infrastructure bill, one of Trump’s agenda items, will come to pass regardless of which party controls Congress. “For infrastructure, the most important thing about the election is that it will be over,” he said. Among the stocks Pence likes are United Rentals Inc (URI.N), AECOM (ACM.N), Jacobs Engineering Group Inc (JEC.N) and Vulcan Materials Co (VMC.N).

* BUY REITS ON DEMOCRATIC WIN
Scott Crowe, chief investment strategist at CenterSquare Investment Management, a manager of real assets, said if the Democrats win the House, it likely signals the end of tax cuts or an infrastructure bill for Trump ahead of the 2020 presidential election. If this happens, it would be good news for the 10-year bond yield, and “a lower 10-year bond yield is good news for REITs.”

* BUY MACHINERY STOCKS
Analysts at Stifel see Trump quickly proposing a “Highway Bill” when the House takes office if Democrats win control of the lower chamber That may lead to increased political rancor and Trump may take the high road of “the people’s business” by proposing a transportation bill, benefiting Caterpillar (CAT.N) and Deere & Co (DE.N).

* CUT EM FOR RED REPEAT
Those positioning for a further poll shift toward Republicans should be prepared for emerging market weakness, wrote Michael Zezas at Morgan Stanley in a research note.

“The potential for a stronger USD and increased leeway for further trade escalation would likely weigh on emerging markets risk appetite. Already cheap valuations would likely protect parts of EM, yet we think Asia would still be at risk due to trade linkages and previous strong equity inflows. Our global EM strategy team suggests short KRW, SGD, TWD with PHP, IDR and INR also vulnerable.”

* EXPECT VOLATILITY TO FALL
Some investment strategists are expecting volatility to ease after the U.S. midterm elections as the elimination of at least one uncertainty the market is facing right now will give traders less reason to worry regardless of what the outcome is.

Parag Thatte, equities strategist at Deutsche Bank in New York says: “Our trading desk thinks betting on volatility reducing after the election would be a good trade right now.”

* EXPECT BIOTECH TO FALL
If Democrats take control of the House and Republicans continue to have an edge in the Senate, UBS Wealth Management analysts say that among the areas where the president and Congress could find common ground are drug price controls and infrastructure spending; the former could pressure large pharma and even biotech stocks lower, or limit their gains, while the latter could boost those in engineering, construction and building materials.

* DON’T BELIEVE THE POLLS
BMO Capital Markets analysts Jon Hill, Ian Lyngen and Ben Jeffery wrote in a recent note that many of their clients are skeptical of political polls on the congressional elections. That skepticism suggests that current valuations do not fully reflect the polls’ expectations and Treasury yields may still move down if Democrats take control of the House of Representatives. The analysts also wrote that a potential error in the polls might not necessarily skew toward Republicans, allowing for the possibility of a bigger Democratic win than is currently projected.

* DO NOTHING
“In our view, investors should avoid making investment changes based purely on fears or speculation of election outcomes,” said analysts at Wells Fargo Investment Institute.

It is more important for investors to maintain and follow their longer-term investment plan, and await signs of action in Congress, they said.

FT : Goldman trader quits ahead of partner selection

Goldman trader quits ahead of partner selection
Talat Khan resigns after missing out on move to lucrative top ranks

A senior equities trader has resigned from Goldman Sachs after failing to be promoted to partner, highlighting the strains at the Wall Street bank as it prepares to name an unusually small group to its top leadership ranks.

Talat Khan, head of equities execution sales trading for Europe, Middle East and Africa, is leaving Goldman only days before it unveils its new partners, an exclusive club that comes with a minimum $1m salary, a bonus that is a multiple of that, and the opportunity to invest in special fee-free funds.

A person with knowledge of Mr Khan’s decision said he had resigned after missing out on promotion to partner. This person added that Mr Khan believed that Goldman was inclined to take less risk in trading under the leadership of its new chief executive David Solomon, who comes from the investment banking side of the business.

His departure comes as people with the knowledge of the bank’s planning have said that it will name a much smaller group of new partners on Wednesday than the 84 promoted in the last biennial selection in 2016.

Goldman typically names a new class of partners, who represent a tiny fraction of its total workforce, every two years and there is often turnover of employees during that time depending on its selections.

Mr Solomon has told his leadership team to keep the list short this year. In 2014 the bank appointed 78 new partners; there were 70 appointed in 2012 and 111 in 2010. The Wall Street Journal first reported that Goldman would appoint fewer than 65 new partners this time.

Mr Khan, 37, had spent over a decade at Goldman Sachs. He previously worked at Credit Suisse.

Goldman Sachs declined to comment. Mr Khan did not respond to requests for comment.

Goldman’s partners are supposed to be stewards of the firm’s reputation, even though the title is purely honorific since the company went public in 1999. Over the years, that standard has not always been met.

Most recently, Tim Leissner, a former Goldman partner, became ensnared in the Malaysian 1MDB scandal. The Justice Department said last week that Mr Leissner had pleaded guilty to two counts of conspiring to commit money laundering and bribe foreign officials.

>>> Apple, semiconductors are trading lower for the second day in a row after th

Apple, semiconductors are trading lower for the second day in a row after the Nikkei reported that Apple canceled planned production increases for the low-end iPhone XR
Apple (AAPL -2.2%) led suppliers lower on Friday after the company missed Q4 iPhone unit sales estimates, guided Q1 below consensus and said it would stop disclosing unit sales data, signaling unit growth would be hard to come by in the increasingly saturated smartphone market.
Overnight, the Nikkei reported that Apple cancelled increasing production of the newest low-end iPhone XR. On the other hand, Nikkei reported demand for the older generation iPhone 8 and 8 Plus are higher than expected. A higher mix of the iPhone XS/XS Max would improved ASPs for Apple.
Apple has fallen to a three-month low; chip stocks (SMH -0.5%)/Apple suppliers: QRVO -5.05% CRUS -4.19% STM -3.10% AAPL -2.42% AMD -2.20% SWKS -1.96% ASML -1.73% MXWL -1.56% AVGO -1.25% STX -1.49% FORM -1.04% MRVL -1.36%

>>> US Gapping down


Gapping down
In reaction to disappointing earnings/guidance:

  • FLKS -12%, SOGO -6.2%, SYY -6%, PEGI -3.7%, DEA -3.6%, RACE -2.2%, TA -1%, SOHU -0.5%

Other news:

  • CLSD -47.5% (announced that the primary endpoint was not achieved in its Phase 3 SAPPHIRE clinical trial)
  • AAPL -1.8% (Apple (AAPL) has cancelled production increase for iPhone XR)
  • HIIQ -0.8% (announces termination of relationship with Health Benefits One) .

Analyst comments:

  • MKTX -1.4% (initiated with a Sell at Goldman)

>>> U S Gapping up


Gapping up
In reaction to strong earnings/guidance:

  • WTS +11.9%, CRNT +11.3%, CHEK +7.3%, HAIR +7.1%, CYOU +5.5%, SRC +3.5%, DO +3.4%, WRK +3%, BRK.B +2.8%, FOLD +2.1%, NS +1.9%, ACRX +1.3%, OHI +1.2%

M&A news:

  • DWCH +34.7% ( to be acquired by Altair (ALTR) for $13.10/share in cash)
  • CZR +3.6% (MGM Resorts considering merger with Caesars Entertainment (CZR), according to NY Post) . 

Select metals/mining stocks trading higher:

  • AU +2.8%, RIO +1.6%, BBL +1.6%, SBGL +1.2%

Other news:

  • INFI +10.2% (Infinity Pharmaceutical & Bristol-Myers Squibb (BMY) announce clinical trial collaboration to evaluate Opdivo in combination with IPI-549 in patients with advanced urothelial cancer)
  • SAGE +6.9% (confirms FDA Advisory Committee voted 17-1 in support of benefit-risk profile of ZULRESSO injection for treatment of postpartum depression)
  • MEIP +5.9% (executes a license agreement granting Kyowa Hakko Kirin exclusive rights to develop and commercialize ME-401 in Japan)
  • MFGP +5.6% (announces the appointment of Brian McArthur-Muscroft as Chief Financial Officer; FY18 constant currency revenue guidance trending toward better end of range; to recommence buy-back program)
  • AXL +4.4% (modestly rebounding after last week's 24% decline)
  • SPOT +2.2% (authorizes $1 bln stock repurchase program)
  • LLY +2.1% (presents initial results from real-world EMPRISE study)
  • GE +1.2% (CEO Larry Culp discloses the purchase of 225k shares at $9.73)

Analyst comments:

  • UAA +2.4% (upgraded to Overweight from Neutral at Piper Jaffray)
  • FCAU +1.1% (upgraded to Buy from Hold at Societe Generale)
  • FATE +7.8% (initiated with a Buy at Jefferies)