EU official: No Brexit cliff for cross-border contracts | Chinese growth hits lowest rate since financial crisis | Asian-Pacific markets mixed after China's GDP growth weakens
19 October 2018
CFA Institute: Financial NewsBrief
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Top Stories
2019 tech IPOs could bring valuations topping $100B
Uber, Lyft and Palantir are among a growing number of high-profile technology companies on track for initial public offerings next year. Deals in planning stages or in the IPO pipeline indicate valuations could exceed $100 billion.
CNBC (18 Oct.),  The Wall Street Journal (tiered subscription model) (18 Oct.) 
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EU official: No Brexit cliff for cross-border contracts
Brexit won't disrupt insurance and derivatives contracts between parties in the UK and those in countries remaining in the EU, even if no transition deal is reached, says Olivier Guersent, director-general of financial services at the European Commission. "There is no cliff" for cross-border contracts on Brexit day, he says.
Politico (18 Oct.),  City A.M. (London) (18 Oct.),  Reuters (18 Oct.) 
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Chinese growth hits lowest rate since financial crisis
Chinese economic growth declined to 6.5% in the third quarter from 6.7% in Q2, as an intensifying trade conflict with the US began to affect Chinese companies. The Q3 growth rate is the lowest China has experienced since the financial crisis.
South China Morning Post (Hong Kong) (19 Oct.),  BloombergQuint (India) (19 Oct.) 
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Market Activity
Asian-Pacific markets mixed after China's GDP growth weakens
Asian-Pacific markets were mixed after China's GDP data came in lower than expected. Japan's Nikkei 225 fell 0.6%; Hong Kong's Hang Seng Index gained 0.4%; Australia's S&P/ASX 200 slid 0.1%; China's Shanghai Composite added 2.6%; South Korea's Kospi rose 0.4%; and India's Sensex was down 1.3%.
CNBC (19 Oct.),  The Economic Times (India) (19 Oct.) 
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MassMutual to sell OppenheimerFunds to Invesco for $5.7B
Massachusetts Mutual Life Insurance has reached a deal to sell asset-management business OppenheimerFunds to Invesco for $5.7 billion worth of stock, making MassMutual Invesco's top shareholder. MassMutual will receive $1.7 billion worth of common shares and $4 billion worth of preferred shares.
ThinkAdvisor (free registration) (18 Oct.) 
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China to let public wealth-management funds buy stocks
The China Banking and Insurance Regulatory Commission has proposed a rule that would allow publicly offered wealth-management funds run by bank subsidiaries to invest in the stock market. Current rules limit stock market investment by wealth-management funds to privately sold funds.
Reuters (19 Oct.) 
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Focus turns to ECB interest rates as asset buying ebbs
The European Central Bank could end a policy of paying negative interest on deposits in January 2020, a Bloomberg poll of economists finds. Renewed focus on interest rates comes as policymakers wind down asset purchases to a cap of €2.6 trillion at year-end.
Bloomberg (tiered subscription model) (19 Oct.) 
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Popularity of hedge funds wanes in Europe
European sentiment for hedge long and short bond strategy dropped 15.5 percentage points in the third quarter compared with Q2, while multistrategy declined 13.6 percentage points, according to a survey by Last Word Research. Sentiment for all hedge strategies declined in Q3, the survey finds.
Expert Investor (UK) (18 Oct.) 
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Economics
Pace of RIA consolidation deals picks up
Acquisitions of registered investment adviser firms for the first nine months of this year totaled 137, up from 127 a year earlier, according to an Echelon Partners report. There were 43 deals in the third quarter, down from 48 in Q2 but the most for a Q3 in five years, the report said.
InvestmentNews (tiered subscription model) (18 Oct.) 
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Japan's consumer price inflation keeps rising
Japan's average core consumer price index gained 1% last month, an acceleration from August's 0.9% but still short of the Bank of Japan's target of 2%. September's figure was the 21st consecutive month of gains.
Nikkei Asian Review (Japan) (tiered subscription model)/Kyodo News (19 Oct.),  Market News International (18 Oct.) 
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Draghi reportedly warns against defying EU rules
Draghi reportedly warns against defying EU rules
Draghi (Francois Guillot/AFP/Getty Images)
European Central Bank President Mario Draghi, likely targeting Italy's budget dispute, has told EU leaders questioning the bloc's rules could worsen its economic outlook and financial conditions, a source says. The spread between 10-year Italian and German bond yields has expanded to the widest since 2013.
BloombergQuint (India) (18 Oct.),  Bloomberg (tiered subscription model) (18 Oct.) 
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US hog farmers under pressure from Chinese tariffs
Retaliatory tariffs imposed on US pork are sending Chinese buyers to suppliers in South America and Europe. Foreign pork producers are ramping up capacity hoping they can permanently replace the US as suppliers to world's biggest buyer of pork.
NewsMax (18 Oct.),  The Wall Street Journal (tiered subscription model) (18 Oct.) 
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Geopolitical/Regulatory
SEC to issue final rule on advice package in 2019
The final rule on the Securities and Exchange Commission's advice-standards package for firms and investment advisers will be issued in September, according to the agency's agenda. The package includes changes to Form Customer Relationship Summary, amendments to Form ADV and other disclosures regarding communications and restrictions.
ThinkAdvisor (free registration) (18 Oct.) 
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Labor Dept. to issue revised fiduciary rule in 2019
The US Labor Department will release an updated fiduciary rule in September. The department adopted a fiduciary rule in 2016 to replace one enacted in 1975, but the rule became vacated by the US Court of Appeals for the 5th Circuit.
ThinkAdvisor (free registration) (18 Oct.),  InvestmentNews (tiered subscription model) (18 Oct.) 
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CFTC wants EU to clarify "systemic risk" definition
The Commodity Futures Trading Commission says it has been unable to get the EU to explain how the definition of "systemic risk" in European Parliament legislation would apply to US clearinghouses. US officials are increasingly concerned US clearinghouses will have to face additional regulation in the EU.
MLex (subscription required) (18 Oct.),  Financial Times (subscription required) (18 Oct.) 
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SEC debuts hub for innovation, fintech
The Securities and Exchange Commission has introduced the Strategic Hub for Innovation and Financial Technology, a portal that is accessible to the public. FinHub lets users view regulation and information covering blockchain, digital marketplace financing, automated investment advice and artificial intelligence.
ThinkAdvisor (free registration) (18 Oct.) 
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Public support for German government hits record low
Only 39% of German voters support the coalition government headed by Chancellor Angela Merkel, a record low, according to a survey by public broadcaster ARD. The survey shows increased favor for the Green party, which carries the strongest support since 2011.
Deutsche Welle (Germany)/Deutsche Presse-Agentur/Reuters (18 Oct.) 
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Financial Products
JPMorgan debuts ultrashort-maturity muni bond ETF
JPMorgan Chase has brought to Cboe Global Markets an exchange-traded fund that buys municipal bonds with an average weighted maturity of two years or less. The JPMorgan Ultra-Short Municipal ETF is actively managed and pursues a value-based strategy.
ETF (18 Oct.),  ETF Trends (18 Oct.) 
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