Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.
Monday November 7
The week began with yet more evidence that the hedge fund industry is struggling, as Lansdowne Partners announced that they have been recording losses of up to 20 per cent at two of its key funds. Lansdowne’s largest fund is the UK Equity fund, which manages $7.8bn of assets and is down 15.6 per cent in the ten months to the end of October. This is in stark contrast to its average annual return of 14.85 per cent in the decade since it was set up. One of the worst hit is Lansdowne’s long-only $409m UK Strategic Investment fund, which is down 20.4 per cent so far this year. This all follows the company’s decision in July to sell its $850m stake in Goldman Sachs. Roberto Botero, director at Sciens Capital Management, said that managers were adopting “fairly conservative” strategies until market turmoil has eased.
Read about the poor results from Lansdowne Partners in more depth here.
Tuesday November 8
The cost of settling claims for mis-selling payment protection insurance (PPI) is still haunting the Lloyds Banking Group, as it reported a $6.3bn (£3.9bn) loss for the first three quarters of this year. A year earlier, the group announced a pre-tax profit of £2bn. This year, though, it has had to spend £3.2bn covering PPI claims, which, combined with a fall of 15% in total income, has led to this unfortunate figure. The UK government still holds a 41% stake in Lloyds, whose chief executive, Antonio Horta-Osorio, announced earlier this month that he was going to be taking medical leave. BBC Business Editor Robert Peston commented that, whilst Lloyds is meeting its lending targets to small- and medium-sized firms, the bank has visibly shown an aversion towards lending to the riskier, yet potentially higher-growth companies.
Read about the Lloyds Banking Group's third-quarter results in more depth here.
Wednesday November 9
It would be an understatement to say that some big events have happened in the eurozone debt crisis saga this week. It would be an understatement to say that some massively crucial and world-changing events have happened in the eurozone debt crisis saga this week. We could fill this entire blog post with news and developments including the words ‘Berlusconi’, ‘eurozone’ and ‘disaster’, but instead we’ll report that on Wednesday Italy’s cost of borrowing climbed to a new record high of more than 7%. This development came after Italian Prime Minister Silvio Berlusconi said that he would resign once budget reforms were passed in the country. This marker of 7% was significant as many commentators viewed this as unsustainable, and was also the point at which Portugal, Greece and the Irish Republic were forced to seek a bailout. The so-called yield on Italian government debt is the highest since the euro was introduced in 1999. The debt level rose also, as a clearing house requested for a larger deposit to trade Italian bonds, based on fear of non-payment. Germany’s implied cost of borrowing for 10 years is 1.73%.
Read about Italy, Silvio Berlusconi and the latest development in the eurozone debt saga in more depth here.
Thursday November 10
Figures released yesterday showed that, whilst China’s export growth hasn’t halted completely, the rise in shipments from the country was only 15.9%, noticeably down from 17.9% growth in September and 24.5% in August. At the same time, imports grew 28.7%, which resulted in a trade surplus of $17bn (£10.7bn). This decline is the realization of fears that a global economic slowdown could impact upon China’s growth, which is largely tied to its exports. Wang Hu of Guotai Securities in Shanghai said “export growth continued to drop last month against the backdrop of a sputtering economy in European countries, which is the largest export destination of our country… With the euro debt crisis spreading, we expect export growth to further decline in months ahead.”
Read about the slowing of China's export growth and the repercussions of this in more depth here.
US Treasury Secretary Timothy Geithner was playing on such an idea when he addressed finance ministers from the 21 countries that make up the Asia-Pacific Economic Co-operation (Apec) group this week. He urged Asia-Pacific countries to increase their efforts to boost the global economy, saying: “we are all directly affected by the crisis in Europe”.
Read about Timothy Geithner's meeting with the Apec group in more depth here.
Friday November 11
As regular readers will know, we always like to end the weekly news blog on a positive note, but this we just can’t find anything. Therefore, we bring you news that India’s second-biggest airline, Kingfisher Airlines, has cancelled more flights as its shares hit a record low due to mounting debt fears. Shares in the carrier dropped 19.1% in early trading on the Bombay Stock Exchange, but then recovered slightly to a 12.2% loss. The airline is roughly $1.2bn in debt and struggling to raise the cash necessary, although founder and part-owner Vijay Mallya insists that the airline will not close. The cancellations were put down to cutting losses through rationalizing flights and reconfiguring airlines.
Read about the troubles plaguing India's Kingfisher Airlines in more depth here.
Come back next Friday for another report on the world of business and finance.
Extras from the week:The 2nd Finance Shared Service Center Summit
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