Category Archives: Uncategorized

Islamic Finance: The Way Forward

From ESCP Europe Finance Society,

By

Ludovico Buffo, Master Student

ESCP Finance Society

In 2008, while western governments were claiming for a more sustainable and regulated financial system, their counterparts in the Middle East were working towards a long-term global expansion plan for their ancient but efficient model of capital distribution: Islamic Finance.

How is Islamic Finance doing better than capitalism? The answer lies in the sukuk-based financial model that prefers real economy over complex derivatives solutions. Sukuk refers to the most common Islamic form of debt, roughly comparable to a bond instrument that, however, does not provide a fixed interest rate of remuneration. In fact, the concept of interest rate is forbidden by the Shariah law (Riba principle), thus the capital raised through sukuk is remunerated with a floating rate based on the return of the underlying real asset.

Sukuk

The adoption of Shariah-complaint financial instruments might represent a tremendous opportunity for western countries to attract foreign investments. In fact, Sovereign Wealth Funds…

View original post 139 more words

Turmoil and Hope -APAC, Japan & ASEAN Trends – Sept. 20th 2015

From ESCP Europe Finance Society,

By

Ludovico Buffo, Master Student

ESCP Finance Society

While the Asian financial storm is far from being over, the FED recently decided not to hike up the interest rates as the conditions in the global economy have changed dramatically since the last Federal Open Market Committee meeting.

 Rates

The Shanghai Stock Exchange Index (SSE) keeps maintaining its downward trend, losing up to 15% in the last 30 days, reaching the lowest value of 2927.25 in Aug 26. Following the strong financial measures adopted from the Chinese government along with a positive response from the US regarding the interest rates, analysts would have expected a slight upward change in the Chinese stock market that, however, did not happen, highlighting investors’ concerns about China slowdown and Yellen’s warnings about weaker global growth perspectives. A Fed interest rate hike would increase the attractiveness of US dollar denominated assets and thus generate capital outflows from the China and Emerging Markets towards Wall…

View original post 322 more words

FIG Coverage – Americas

From ESCP Europe Finance Society,

By

Tancredi Viale, Master Student

ESCP Finance Society

With the quarterly earnings season already passed away, Financial Services companies have demonstrated to be the real winners in these turbulent times. The majority of the big banks, with some “excellent” exceptions, have outpaced analysts’ estimates. Cost-cutting and business optimization have been the main drivers for the rump-up in profitability.

Starting from Goldman Sachs, this bank is the main exception in the positive momentum banks earnings are experiencing. While major business lines have reported a solid growth pace, expenses have increased dramatically. Goldman Sachs earnings were deeply affected by litigation costs that the Company accounted in legal provisions, which amounted up to $2.77 per share, or $1.48bn. The Bank is in talks with authorities to settle the misconduct in the mortgage crisis. All the major business lines have shown solid growth. Investment Banking grew 13.4% YoY, with the Bank ranking in the top positions in all major Financial Advisors League…

View original post 894 more words

RoboAdvisors or Private Bankers? How will Wealth Management change in the near future

From FutureBanks,

New Insights on Automated Wealth Management

By
Lorenzo Merlino, Master Student

FutureBanks

Virtual financial advisors gaining momentum

The term RoboAdvisors defines a wide array of online platforms that provide savers pre-set investing solutions, specific portfolios (more or less customized), whose management is entirely conducted by automated risk management algorithms. The purchase of these services can be performed, most of the times, directly online and end up straight to the client’s portfolio without the need of any human intervention.

A RoboAdvisor is thus a “virtual financial advisor”, who is able to provide advisory services in an efficient and in a cost-competitive way, leveraging on its ease of usage and on the online browsing experience for the consumer. Due to the centrality of the technological component, RoboAdvisors belong to the FinTech sector: the market where technology meets finance.

Investor assets run by RoboAdvisors are expected to soar to $2.2 trillion in 2020 from $135 billion this year, according to management consulting firm A.T. Kearney

View original post 422 more words

The Chinese Turmoil: Intervention or Resurrection?

From ESCP Finance Society

By:

Ludovico Buffo, Master Student

ESCP Finance Society

China, the leading country of the BRICS , seems to be experiencing a slowdown.  Despite many experts claim that China’s GDP will rise by $7 trillion in the next decade (the equivalent of “two more Chinas”), Chinese manufacturing was dragged down by a weaker demand for Chinese exports down to the 12 months lowest level of 49.2 in April 2015. However, the main questions remains: how does this correlate with the recent Chinese stock market crash? Economists say it does not.

Shanghai and Shenzhen, the two Chinese stock markets, strongly differs from their global counterparts in terms of investors. In fact, Individual investors account for the 80% of the stock markets, as there is a weak presence of institutional investors. The rising Chinese middle class preferred to invest its savings into the bullish Chinese stock markets as stocks prices have constantly appreciated in the last years. (CSI 300 Index +…

View original post 345 more words

A bubble about to burst? – APAC Overview

From ESCP Finance Society.
By
Roberto Vacca, Master Student

ESCP Finance Society

The monetary expansion policy of the People’s Bank of China fueled the Shanghai, Shenzhen, and ChiNext indices of 95%, 198%, and 383%, respectively, since January 2013. Chinese stock-market capitalization grew from 44% of GDP at the end 2012 to 94% of GDP earlier this month[1], but at the same time the Chinese GDP growth, equal to 7,4%, has slightly slowed at the lowest level since the 1990 and the average ratio price to earnings is 26.

It seems clear that there are enough evidences that prove the presence of financial factors that are threatening the economical rebalance of Chinese economy: from export oriented economy to consumptions. This is the issue. At the beginning of financial crisis, the Chinese political establishment chose to fuel the economy by increasing the public spending and making easier to borrow money.

Therefore, the private debt raised from 100% in 2002 to 200% in…

View original post 255 more words

An insight into the CAC40 – Index Expert

From ESCP Finance Society
By
Soukaïna Bouziri, Master Student

ESCP Finance Society

The « CAC40 » (cotation assistée en continu) is the French stock market index. The market open at 9.00am till 17.35, following the pre-market hours from 7.15-9.00am. The CAC40 is undoubtedly and by a long chalk, the most followed up index of Paris Stock market.  So, let’s analyze what’s behind all this financial boiling and give a critical vision of this thermometer of the French economy as a whole.

As a matter of fact, the CAC40 progression reverberates investors’ expectations about the global performance of the French economy. The explanation is pretty simple: the CAC40 tracks the 40 listed French enterprises with the highest market capitalization. Some of the CAC40 companies are listed also in other stock exchanges like Amsterdam, or Italy (LVMH). Every companies’ stocks influence the Index proportionally to their weight over the market capitalization.

This principle enhances the height of the « BIG VALUES » of the CAC40…

View original post 237 more words

Is Japan economy really catching up? – APAC Overview

From ESCP Finance Society
By
Ludovico Buffo, Master Student

ESCP Finance Society

While Europe is still at the center of the financial news as Grexit slowly becomes more probable, many strong positive signals are coming from the third biggest world economy, Japan.  Following the great crisis, Japanese economy did face a period of deflation due to steady prices and shortage of investments.

In order to improve the economic outlook, Shinzo Abe, Japan’s Prime Minister, elaborated an economic plan to face deflation. The so-called “Abenomics” is based upon three arrows: fiscal stimulus, monetary easing and structural reforms. An increase in taxation along with a massive monetary QE followed by important reforms are the way in which Japan is trying to comes out from the internal economic crisis. While there is a consensus for the modus operandi chosen for the first two “arrows”, very few information are known about how Abe would like to proceed with the structural reforms.

This piece of information ought…

View original post 126 more words

Europe: A Turbulent Snatch? – European Citizen

From ESCP Finance Society
By Me
@TanViale

ESCP Finance Society

In recent days, Europe has been a very dramatic battlefield. Talks between Greece and European officials are still going on, with Greek Ministers firmly stuck on their requests and European Officials unhappy and unsatisfied with Greece’s request. Tsipras does not want to change the pension system, contribution-based, still plenty of “baby retired”. Yesterday, Angela Merkel appeared as a Deus Ex Machina willing of peacefully solving the Greek Crisis. The main goal in Europe by now is to avoid the Euro Area break up, who can lead us into periods of unprecedented uncertainty and volatility, and can wreak havoc the entire Europe. Standard and Poor’s downgraded Greece Debt to triple CCC, following the postponement of the repayment to the IMF and the higher risk of default. Jeroen Dijsselbloem, the President of the Eurogroup, warned against the running out of time, and urged Athens and Europe to a peaceful resolution.

Many venerable European…

View original post 81 more words

Earthquake in German Finance – Banking Insider

From ESCP Finance Society
By Me
@TanViale

ESCP Finance Society

The Annual General Meeting of Deutsche Bank AG, which took place on the 20th May 2015, shook up the top Management. Angry shareholders have appointed the CO-CEOs Anshu Jain and Jürgen Fitschen as the main responsible of the Bank’s underperformance. In the past years, the bank has suffered plunges in profitability largely due to the vast amount of money expensed in fines and litigation after the mortgage crisis, and linked to Libor and Forex manipulations. During the meeting, Anshu Jain, a former trader and investment banker, emerged as the man who was going to be in charge of the new restructuring plan. The main driver of the plan was a strong cost-cutting campaign, which could boost profitability in all areas of business. In the last three years, Deutsche Bank’s stock has been one of the worst performing in the Banking sector. The plan, indeed, which is supposed to add billions to the…

View original post 152 more words

%d bloggers like this: