Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Categorized | Equities

Ashmore slips amid rising inflation expectations


Posted on November 11, 2016

Ashmore hit a four-month low on Friday as emerging markets bore the brunt of rising inflation expectations in the wake of Donald Trump’s US election victory.

Ashmore, a debt-fund specialist and dollar earner, dropped 9 per cent to 298.8p as investors moved to price in a US-led infrastructure spending spree and an end to low global growth and inflation. Peers also slumped with Aberdeen Asset Management down 7 per cent to 288.4p.

Sterling’s rebound and a falling oil price combined to sink the wider market with the FTSE 100 dropping 1.4 per cent, or 97.55 points, at 6,730.43.

Packaging maker Mondi, which counts on emerging markets for about half its sales, slid 4.7 per cent to £15.17. Deutsche Bank questioned whether this reaction was logical, given Mondi is largely reliant on eastern Europe and domestic Russian sales.

Among the gold miners, Polymetal fell 4.9 per cent to 836.5p following a report in the Russian media that PPF Group, its 13 per cent shareholder, has been looking to sell the stake.

Building materials companies faded following a profit warning from roofing and insulation supplier SIG, which tumbled 21.8 per cent to 90.5p.

SIG blamed UK demand, saying September and October had been disappointing and that “one major competitor” had cut prices aggressively. Travis Perkins, of SIG’s biggest UK competitors, slipped 0.9 per cent to £14.01.

“With SIG still trading below peers and key management now in a state of transition, investors are likely to question whether SIG has a future as an ongoing listed entity in its current form,” said Deutsche Bank.

High street retailers were helped both by sterling’s rally and by BDO weekly data that showed apparel sales boosted by the recent cold snap.

Marks and Spencer gained 3.3 per cent to 327.2p, also helped by revived bid speculation, while Next was up 3 per cent to £50.40.

EasyJet rose 1.6 per cent to £10.55 and British Airways owner IAG took on 1.4 per cent to 440.6p. Berenberg started coverage of both stocks with “buy” ratings.

Next year looks tough for the airlines sector as the benefits of cheaper fuel give way to worries about capacity growth and the implications of Brexit, said Berenberg.

But EasyJet’s valuation already prices in these concerns while IAG can damp the effects by delivering “large, sustainable cost cuts, particularly at British Airways”, it said.

BAE Systems slipped from a record high, down 3.5 per cent to 590.5p. Business development director Alan Garwood sold shares for £200,000.

Drugmaker Shire lost 1.7 per cent to £49.98 after US data showed prescriptions for its Xiidra eye treatment, launched in August, were flat against the previous week.