Tag Archives: Societe Generale

Business, Finance, Occupation & Industry

Gold: The End of an Era

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By Alex Dumortier, CFA, The Motley Fool

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Stocks in Japan and Hong Kong suffered sharp losses today, and major European markets are also in the red. U.S. stocks look to be following their lead this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average down 0.8% and 0.64%, respectively, at 10:05 a.m. EDT.

Gold is losing its luster
On the back of a challenging week during which it lost $60 per ounce, gold is reeling on Monday, down more 5%, having dipped below $1,400 intraday for the first time since March 2011. Gold is a highly volatile asset, and recent downward momentum could be nothing more than a spate of volatility in a long-term secular uptrend. Still, I think Societe Generale‘s research note of April 2, titled “The End of a Gold Era,” looks increasingly prescient. The report included an end-of-year price target of $1,375, and that figure is now in sight. Ten days later, Goldman Sachs piled on with a year-end forecast of $1,450.

Bear in mind that the yellow metal was trading just below $1,600 at the publication of both reports. As the following chart for the SPDR Gold Shares ETF shows, gold has dramatically underperformed stocks so far this year:

GLD data by YCharts.

One of the reasons the metal is so volatile is that, relative to traditional asset markets (stocks and bonds), the gold market is a minnow, particularly when one considers the size of the “free float” — the amount that is actually available for trading. This quality amplified bull-market moves when sentiment was on its side; if a bear market is underway, it will do the same on the downside. And there’s plenty of potential downside left: Gold would need to decline by nearly half to achieve its inflation-adjusted average price since the price of gold floated in Aug. 1971.

If you’re looking for a safer bet than gold, The Motley Fool’s chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article Gold: The End of an Era originally appeared on Fool.com.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

From: http://www.dailyfinance.com/2013/04/15/gold-the-end-of-an-era/

Business, Finance, Occupation & Industry

Fitch Downgrades China's Credit Rating on Rising Debt Concerns

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By Reuters

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Tomohiro Ohsumi/Bloomberg

BEIJING – Global ratings agency Fitch cut China‘s long-term local currency credit rating to A-plus from AA-minus on Tuesday with a stable outlook, citing financial risks from rapid credit expansion alongside the rise of shadow banking activity.

China has seen rapid credit expansion as a result of Beijing‘s stimulus in 2008-09 to counter the global crisis, with the stock of bank loans to the private sector hitting 135.7 percent of gross domestic product at end-2012, the third-highest of any Fitch-rated emerging market, the ratings agency said.

Total credit in the economy including various forms of “shadow banking” activity may have hit 198 percent of GDP at end-2012, up from 125 percent at end-2008, it added.

Fitch said that the percentage of funding coming from bank loans is declining. It estimated that only 55 percent of China‘s new social financing – which includes bank credit as well as corporate bonds and trust loans – came from bank loans in the 12 months ended February 2013, down from 76 percent in 2009.

“The proliferation of other forms of credit beyond bank lending is a source of growing risk from a financial stability perspective,” Fitch said.

Chinese regulators have shown greater concerns over potential risks from off balance-sheet banking activity.

China‘s banking watchdog has ordered banks to strengthen checks on the underlying assets of a range of wealth management products to ward off potential risks to the financial system.

“Definitely the systemic financial risk in China has been increasing steadily in the past two years,” said Wei Yao, China economist at Societe Generale in Hong Kong.

“This shadow banking issue could be the trigger for a hard landing or make the situation worse if Chinese growth starts to decelerate; it’s one of the weakest links in the economy,” she said.

Yao said signs of local government involvement in shadow banking could only fuel financial risks.

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Fitch said its calculations showed that China‘s overall level of general government debt stood at 49.2 percent of GDP at the end of 2012, roughly in line with the A-grade median of 51.2 percent.

“China‘s public indebtedness is therefore not a weakness, but neither is it a strength relative to rated peers, underscoring the case for equalising the foreign currency and local currency ratings,” the statement said.

But the ratings agency affirmed the country’s long-term foreign currency ratings at A-plus, backed by the strength of China‘s foreign exchange reserves, the world’s largest. At the end of 2012, the reserves were $3.31 trillion.

There is growing evidence that the world’s second-largest economy is moving towards a more sustainable consumption-led growth path, Fitch added.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

China's Mixed Message for Gold

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By Doug Ehrman, The Motley Fool

2012 Chrysler 300 S

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China‘s Purchasing Managers Index rose last month, with a March reading of 55.6 relative to the February reading of 54.5; remember, a reading above 50 indicates expansion and is usually deemed positive for the economy. The rise was led by a 4.5 point increase in the construction sub-index to achieve a March level of 62.5. While the increase is a positive indicator for the Chinese economy, the level rising less than expected mirrored both U.S. and eurozone reports.

While the expansion indicates a move toward increasing stability for the Chinese economy, and thus the global economy – a bearish factor for gold – the fact that the reading came in below expectations provides some support for the commodity. Perhaps tipping the scale is the fact that weaker than expected growth in China is bullish for the U.S. dollar. On a short-term basis, positives for the dollar tend to have an immediately negative impact on gold. Gold, as represented by the SPDR Gold Trust , suffered its worst loss in several weeks during Tuesday’s session.

Mixed signals
With industrial production numbers coming in weaker than expected across the globe, you might think that this sign of weakness for the global economy would be seen as positive for precious metals. The market has interpreted softening PMI numbers, however, as a sign that industrial demand for the metal may contract. This element of demand has played a critical role in supporting precious metals prices over the past several weeks.

Behind the expansion in the Chinese construction numbers is the $150 billion in approved infrastructure projects that the government is using to combat slowing growth. While still booming by most Western standards, China‘s GDP growth fell to 7.8% for 2012 – this represents its lowest level in 13 years. Again, while slowing global GDP growth is typically listed as a bullish sign for precious metals, the bearish factors are winning the day of late.

Chinese weakness and muted inflation concerns have been positive for the dollar and negative for gold. In a recent research note, Michael Haigh and Patrick Legland of Societe Generale noted: “inflation has so far stayed low (U.S. inflation has been trending lower since late 2011) and now we are beginning to see: 1) the economic conditions that would justify an end to the Fed’s QE; 2) fiscal stabilization that has passed its inflection point; and 3) a US dollar that has begun trending higher.” The pair shares one of the most bearish views of gold on the street.

Looking ahead
Where the GLD has been weak, gold miners like Goldcorp and Barrick Gold have been even weaker. Year to date, the ETF is down roughly 6.5% and both miners have fallen double digits. Goldcorp, which recently announced the closing of a $1.5 billion note offering to help fund its ballooning operating costs, will release first-quarter earnings on May 2. Barrick, recently announced negative operating results for the entirety of 2012, again on rising …read more
Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Do people in mature markets like their rich more than the people in emerging markets?

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By Kasia Moreno, Contributor The answer to this questions is yes, somewhat, according to the most recent report from Forbes Insights and Societe Generale Private Banking, “Emerging Markets: Joining the Global Ranks of Wealth Creators—Africa, Central & Eastern Europe, Middle East,” which I authored. (Watch my interview with Societe Generale.) …read more
Source: FULL ARTICLE at Forbes Latest

Business, Finance, Occupation & Industry

Should You Buy AstraZeneca Today?

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By Royston Wild, The Motley Fool

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LONDON — I believe that pharmaceuticals play AstraZeneca  is at risk of a fresh share price collapse, as current levels do not reflect the mountain the company has to ascend to turn its revenues around. Societe Generale last week stuck a 2,650 pence price tag on the company’s stock, an 18% discount to the two-and-a-half-year high above 3,235 pence punched recently.

In my opinion, the company remains highly susceptible to renewed negative re-ratings, with earnings in coming years ready to continue tumbling before its restructuring program kicks into gear and new product development ratchets up.

Earnings slump as patents expire
AstraZeneca announced in January that group turnover slumped 17% to almost $28 billion in 2012, in turn driving pre-tax profit a chunky 38% lower to $7.7 billion. The result was driven by the loss of exclusivity across a number of its key brands — indeed, the firm noted that patent issues related to its Seroquel IR, Nexium, Atacand and Merrem medicines accounted for 85% of the revenue dip.

The company has faced severe criticism in recent times as it has failed to adequately boost its new product pipeline to compensate for such significant patent expiries. New chief executive Pascal Soriot has been entrusted with overseeing a massive restructuring of the group, which includes the establishment of new research bases across Europe and North America, designed to underpin long-term innovation.

Further revenues pain expected
In the meantime, however, City forecasters expect earnings per share to collapse further in 2013 following the heavy 12% decline recorded last year. A drop of 19%, to 345 pence, is expected before falling another 3% in 2014 to 334 pence.

The pharmaceuticals giant does at least offer projected dividend yields well ahead of the 3.5% FTSE 100 average, however, with yields of 5.8% and 5.9% expected this year and next, respectively. And these payouts are pretty well protected, with coverage of 1.9 times for these years just below the widely regarded safety marker of 2.

AstraZeneca carries a P/E ratio of 9.4 and 9.7 for 2013 and 2014 respectively, providing a massive discount to the forward multiple of 31.3 for the broader pharmaceuticals and biotechnology sector.

Although this could a solid base from which to accrue juicy gains, the prospect of rising earnings pressure could drive share prices lower in the medium term. I would also like to see further progress from its restructuring plan before selecting AstraZeneca for my own stocks portfolio.

The prescription for plump returns
Although AstraZeneca presents too much risk in my opinion, check out this newly updated special report that highlights a host of other FTSE winners identified by ace fund manager Neil Woodford.

Woodford — head of UK Equities at Invesco Perpetual — has more than 30 years’ experience in the industry, and has identified two other fantastic pharmaceutical firms in the report set to deliver spectacular investor returns.

The report, compiled by The Motley Fool’s crack team of analysts, is totally free and comes with no further obligation. Click here now …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why MBIA Shares Jumped

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By Jeremy Bowman, The Motley Fool

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Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of insurance provider MBIA jumped as much as 25% today after it won the dismissal of a long-standing lawsuit from Bank of America .

So what: The Supreme Court of New York upheld an earlier decision that said the company’s 2009 restructuring plan was legal, dismissing the allegations from B of A and Societe Generale. The two banks were left over from 18 that had originally sought a reversal of the restructuring approval, accusing MBIA of committing fraud in the process. The suit had weighed on MBIA‘s shares in the recent past as a favorable result for the plaintiffs would have been damaging for the insurer. CEO Jay Brown said he was “pleased” that the court had affirmed what he believed was obvious all along.

Now what: Today’s result represents a big step for MBIA, but it’s still facing litigation in other areas. MBIA‘s principal business is insuring municipal bonds, and the company should improve along with the overall financial sector, which has been among the best performers this year. Today’s news should only strengthen the investing thesis for MBIA.

Want more on MBIA? Add the company to your Watchlist by clicking right here.

The article Why MBIA Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Cinedigm Closes $195 Million in Two New Credit Facilities to Refinance All Existing Phase 1 Senior D

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By Business Wirevia The Motley Fool

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Cinedigm Closes $195 Million in Two New Credit Facilities to Refinance All Existing Phase 1 Senior Debt and Corporate Debt

Extends Maturities and Lowers Initial Average Debt Cost of Capital By Over 3%

LOS ANGELES–(BUSINESS WIRE)– Cinedigm Digital Cinema Corp. (NAS: CIDM) today announced the closing of a $125 million senior non-recourse credit facility led by Societe Generale Corporate & Investment Banking and a $70 million non-recourse credit facility provided by Prospect Capital Corporation (NAS: PSEC) . These two new non-recourse credit facilities will be supported by the cash flows of the Phase 1 deployment and the Company’s digital cinema servicing business and will refinance the Company’s existing $92 million non-recourse senior 2010 Term Loan and $98 million recourse Note. The senior facility has received an upgraded rating of Baa3 from Moody’s Investor Service.

The new five-year term senior loan, provided by a syndicate of institutional lenders led by Societe Generale, will be at a rate of LIBOR +275 basis points with a 1.0% LIBOR floor, substantially improving upon the previous rate of LIBOR +350 basis points with a 1.75% LIBOR floor.

The new financing, provided by Prospect Capital Corporation, will be at an all-in rate of 13.5%, including a cash rate of LIBOR +9.0% with a 2.0% LIBOR floor, and a Payment In Kind, or PIK, rate of 2.5%, improving upon the previous all-in rate of 15% on the Company’s existing Sageview Note. In addition, the new Prospect loan extends the maturity to March 2021 from August 2014.

These new facilities significantly improve upon the terms of the previous financing arrangements through a combination of reduced borrowing costs, making all debt non-recourse to Cinedigm’s software and content businesses, and a significant maturity extension.

“We are pleased to announce this successful refinancing of our existing debt,” said Chris McGurk, Chairman and CEO of Cinedigm. “This transaction reaffirms the value of the Company’s digital cinema asset base and positions Cinedigm to accelerate our growth plans.”

“This refinancing is a significant step in our progress towards strengthening Cinedigm’s balance sheet,” added Adam M. Mizel, Chief Operating Officer and CFO of Cinedigm. “By lowering our cost of capital, extending our mezzanine debt maturity to 2021 and shifting all of our debt to be secured only by our deployment businesses, we have improved our capital flexibility, unlocked equity value and simplified our …read more
Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Corporate debt: Philip Morris shops benchmark bond sale as maturities loom

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By Gayatri Iyer, Contributor

Facing an imminent debt maturity, Philip Morris International is in the market with a public benchmark offering of two-year, floating-rate notes, along with 10- and 30-year fixed-rate tranches, sources said. Active bookrunners for the issue, which has an expected A2/A profile, are Goldman Sachs, HSBC, and Societe Generale, along with passive bookrunners Barclays and Citi. …read more
Source: FULL ARTICLE at Forbes Latest