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UPP wins bidding battle, securing £230million deal with University

22 Jan

The University of Reading will see its entire on-campus accommodation run by a private student accommodation provider in a £230.1 million deal.

UPP will manage 4,321 rooms under a 125-year agreement in the largest single private residential investment into a UK university. This will consist of the operation of 2,623 rooms of existing accommodation, for the 2011/2012 term, followed by a further 898 rooms currently under construction. 650 new rooms will be developed to complete the project.

The company work with eleven other universities, yet this deal is unique in its time scale – usually such agreements operate between forty and fifty years.

Acting vice-chancellor of Reading, Professor Tony Downes, said he was “delighted” with the deal, and believes it will add to the “high quality experience at Reading.”

The majority of the funding will be provided by Aviva, the UK’s second-largest insurer, marking its first large scale investment into the Higher Education sector.

Sean O’Shea, chief executive of UPP, said: “This deal shows that the higher education sector is bucking the trend, and is an attractive opportunity for investors.”

Mr O’Shea said the deal represents investor confidence in the Higher Education market during such turbulent economic times.

Gold is the word in Japan as exports are at their biggest high in the last twenty years

8 Dec

People in Japan who bought gold twenty years ago have been cashing it in at record prices, resulting in a boom in Japan’s gold exports.

Shipments in the first ten months of the year reached 95.6 metric tonnes. Many countries have jumped on the gold band wagon; exports to Thailand have tripled, and those to Singapore doubled in the first ten months of last year. And the demand from Europe has almost doubled since the fourth quarter of 2008.

Kotaro Horita, a trader at Mitsubishi Materials said:“More and more people who bought gold and jewelry in the 1980’s and 1990’s are selling back what they purchased.”

The largest gold retailer in Japan, Tanaka Kikinzoku Kogyo K.K. reported a 40per cent increase in gold bought from individuals in the first nine months of the year. According to Horita, China and Southeast Asia have been showing particular interest in the metal, with a high increase in exports.

Precious metals such as gold are considered safe havens during times of global economic uncertainty, as they are a good hedge against inflation; which many experts predict will be coming in the years ahead.

Unlike other safe havens, such as the Swiss franc and the Japanese Yen, the price of gold can not be easily interfered with by any one entity. This could attribute to the jump in global gold investment from 33per cent to 468.

With the future of the euro in question, Central Banks have been turning to gold as a safe haven.
“Central banks are continuing to buy gold exchange-traded funds after concerns arose about the creditworthiness of euro- zone nations,” said Koichiro Kamei, managing director at Market Strategy Institute.

Marcus Grubb, managing director at World Gold Council, predicts the amount bought by Central Banks could reach 450tons this year; a big increase from last years purchases of 142 tons.

Eurozone backlash will not phase investors as Asia shines

7 Dec

The debt crisis in Europe provoked fears of contagion, as Asian companies prepared to face the backlash of the economic downfall in the eurozone.

But despite the turmoil, investors are not phased by the possibility of contagion. In fact, they are expecting credit-rating upgrades in Asian countries.

As fifteen eurozone countries face the threat of a downgrade by rating agency Standard and Poor’s, Indonesia and the Philippine’s are being seen as desirable economies for investors, with a possibility for an upgrade from the Philippine’s Ba2 status.

It’s not the first time Asian countries have withstood during times of economic instability; China was upgraded by Moody’s to Aa3 in 2008, after the collapse of the Lehman Brothers which caused a global economic crisis.

Agnes Belaisch at Threadneedle Asset Management in London said: “Further rating upgrades will reward those emerging countries that manage this new stress test successfully, as they did just a couple of years back.”

To put things into perspective, here are some comparisons between European and Asian countries:
When Greece’s debt problems were in full swing, the ratio of debt to gross domestic product was 143 at the back of 2010. France, an economy which is seen as one of Europe’s six triple A’s, was at 82 per cent. A far cry from 16 per cent, 26 per cent and 52 per cent seen in China, Indonesia and the Philippines.

There were also significant differences in the average basis point gains on credit-default swaps, with Asian countries seeing an average rise of 65 basis points to 163 points for 2011, as eurozone countries lifted to 305 from 122.

The graph shows how the credit-default swaps in some of the strongest Asian countries are continuing to fall, which suggests investors are not phased by the possibility of European backlash.

Whilst countries in the eurozone gained a mere 1.4per cent rate on average in the third quarter, Asia’s ten biggest economies excelled, tripling Europe’s rate, reaching an average of 5.2per cent.

Thomas Byrne, senior vice president at Moody’s Investors Service said: “If there’s continued good policy performance, macroeconomic stability in these countries and they weather this distress coming from the euro zone, in general that would be a credit-positive development.”

Whilst it is evident Asian countries are excelling in comparison with Europe, the eurozone continues to hinder other economies from becoming stronger. Andrew Coloqhoun from Fitch Ratings fears Asian countries could be at risk if Europe announce further cuts to global growth forecasts. However, the Financial Times reports he is confident there could be upgrades for both Indonesia and South Korea in the foreseeable future.

Threat of downgrade for six strongest European Economies

7 Dec

Ratings agency Standard and Poor’s has warned six of Europe’s biggest economies they may lose their cherished high credit ratings.

Standard and Poor’s outlined the reasons for its move: “by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole”.

France and Germany are amongst the fifteen eurozone countries which have been put on negative watch. They currently hold triple A credit ratings. The immaculate rating shows the borrower’s debts pose a minimal threat of defaulting. The implications of a downgrade can be unattractive to investors, who may wish to stay clear of countries at risk.

The move came just days before Friday’s EU summit, where it has been speculated there could be discussions on almost doubling the size of the euro’s rescue fund. This would mean the eurozone’s current bailout fund of 440 billion euro’s will still be in force when a further 550 billion euro’s become available in the middle of next year.

Standard and Poor’s warning had an impact on financial markets today, with a fall on the euro, trading 0.1 per cent at 1.34 dollars today. Government bond yields rocked today, with yields on French 10-year-bond yields a rising ten basis points to 3.21 per cent.

US Treasury bond yields stood out with a session high, rising four basis points, whilst German bunds saw a 2bp fall to 2.18 per cent.

Meanwhile, Italy benefits from an increase in trade, following a slide from an unaffordable 7 per cent that it was recently forced to pay, to 5.81 per cent on Rome’s 10-year-yields.

Investors eagerly await the outcome of Friday’s summit.

Global Fears over Europe’s debt crisis lead to liquidity

1 Dec

In an attempt to support the global financial system, The US Federal Reserve has slashed the cost of dollar liquidity on Wednesday, making short-term loans from the European Central Bank around half the amount lower in interest.

Along with other central banks, the co-ordinated move is aimed to avoid further calamities in the global financial system.

The conversion from euros to dollars had reached a record high since the collapse of the Lehman Brothers, and there has been a stigma attached to borrowing from the ECB. Wednesday’s move has shifted the Fed’s swap lines by half, from 100 to 50 basis points, and it is hoped this will encourage bidders.

The central banks’ recognised that liquidity may not solve all of Europe’s problems, such as a possibility of a “credit crunch”, but will be a progressive step forward. Since the European crisis has spread to other countries such as the US, they are acting to help ease the problems to come.

Emerging markets have also showed signs of an attempt to soften Europe’s financial blow, with China saying it would provide its first deposit cut in three years, so banks will pay a reserve of 20 per cent, rather than 21.5 per cent. Their main worry is the threat to economic growth.

Erik Nielson, chief economist at UniCredit outlined how the co-ordinated move will only help the surface issue: “You will buy some insurance against a big, ugly accident, which would be a big bank failure or multiple small failures. But it doesn’t solve the main problem.”

Tony Crescenzi, a strategist at Pimco, thinks Europe needs to take charge of its problems:

“The provision of liquidity is no substitute for other actions that Europe must take to solve its woes. The world continues to wait on European actions on fiscal rules, discipline and enforcement, as well as use of the balance sheet that matters most: The European Central Bank.”

So what else is the ECB considering to curb their crisis?

Many economists think they should up their bond buying programme, setting limits on government bond yields.

Whilst the government is not showing readiness for this move at the moment, the Financial Times suggests they will soon change their mind.

An action they will be partaking in is making sure politicians are meeting expectations in order to help solve the epidemic.

Dollar relying on Euro to stay afloat

4 Nov

With all the drama in the Eurozone as of late, it is the US Dollar taking centre stage today as it appears more vulnerable than the euro.

Whilst the US economy is better than it’s low in August, with help from the Japanese intervention to weaken the Yen, it’s performance is still not to standard – the dollar has fallen almost 3 percent against the Euro this year. The Financial Times state the US economy, considered to be a relative haven, hasn’t managed to bounce from the Eurozones debt crisis, which shows its reliance on the central bank to balance a dual commitment. Combined, their aim is to maintain stable prices and maximum employment.

Alan Ruskin, strategist at Deutsche Bank said, “The primary negative of the dollar is that it has a central bank willing to pursue unorthodox policy and, while that won’t stop dollar appreciation, it does explain why the euro has not sold off more”.

The Feds Chairman, Ben Bernanke, has been considering options should the economy require further help. Purchasing of mortgage backed securities has been suggestion as one possibility.

Meanwhile, Mario Draghi, the new ECB president, warned of a “mild recession” in Europe. This will not help the US economy recover. Whilst some analysts argue the euro is set to weaken, others believe it will not hit the low of $1.19 when Greece’s debt problems erupted.

Instead, analysts predict it will fall to $1.30 over the next few months, returning to January’s low, but not the critical levels of 2010.

Head of global rates and currencies research at Bank of American, David Woo, says the bank is maintaining a 2012 year end target of $1.40.

Mr Ruskin explains how for a single currency to breakdown, “You need to see a rupture of the eurozone core that results in capital flows leaving the euro”. The Financial Times states that although this is not impossible, it is not yet regarded as the most probable outcome.

Uneven Split in Fed Votes

3 Nov

The US Federal Reserve have voted… and the split in votes were far from even, although the general outcome of keeping interest rates on hold , and maintaining its bond-buying programmes were expected. This move will encourage more borrowing and investment. Chairman Ben Bernanke said the Fed was also considering changes to its communication strategy.

The committee voted 9-1 in favour of the statement, with the one dissenter being Charles Evans, an improvement from the 7-3 vote recorded in September. Mr Evans wanted the fed to take further action to boost the economy, although others fear that his methods would run the risk of higher inflation.

Eric Stein told the Financial Times Mr Evans position as sole dissenter, “could be a signal that his policy views were gaining ground”.

So what would Mr Evans do? He thinks the fed should keep interest rates low until unemployment falls below 3 percent, as long as inflation remains below 3 percent.

Mr Bernanke said unemployment was too high, and the economy was “dissatisfying”. Economists polled by Bloomberg predicted Friday’s figures would show the US Economy added 95,000 jobs in October. Also, a report from a placement company showed that job cuts have been the lowest levels since June, but lay-off announcements are still 12.6per cent higher than a year ago.

However, it’s not Mr Evans vote that has been causing discussion amongst analysts. They’re more concerned by the politics of the votes, regarding the three hawks who voted in favour.

Paul Ashworth said, “the view of the hawks is that, once the decision has been made by the majority, it just causes confusion if they continue to roll back action that has already been taken”.

Two banks… A lot of cuts

2 Nov

Current job loss figures suggest the Swiss Bank Credit Suisse has faced the full brunt of the European sovereign debt crisis, with the company cutting 1500 jobs, on top of the 2000 cuts announced in July.

And Credit Suisse aren’t the only ones making job cuts… Japanese Normura will be slashing costs by 1.2billion dollars, after seeing losses of 46.1billion yen from a disappointing second quarter.

Both banks performed below expectations, both have been hit hard by anaemic economic recovery in Europe and the US.

So what’s next for Credit Suisse and Normura? Credit Suisse’s chief executive Brady Dougan is busy promoting the banks business model as a more regulated, less profitable climate for investment banking. Mr Dougan plans to reduce risk weighted assets in the fixed income business by 113billion by the end of 2014. To reach this goal, Credit Suisse aim to leave unsecured trades, and decrease its secuitisation businesses, whilst tightening its richest clients, the ultra high net worth individuals. Furthermore, the bank hopes to focus on emerging markets.

Shareholders are remaining cautious. The banks shares fell by more than 8 per cent on Tuesday, resulting in the shares being down 36 per cent for the year.

Meanwhile, Takumi Shibata, chief operating office of Nomura, said the bank “aims to get through these cloudy times with a lower expense base”. At an analysts meeting Mr Shibata asserted that the company would not be shutting down divisions or regions, predicting its healthy balance sheet will allow it to redeploy its resources to build up its franchise again.

As with Mr Dougan’s claims, Mr Shibata has not been convincing analysts, who criticized his optimistic claims. Jun Shiota, analyst at Daiwa Capital Markets in Tokyo said, “Normally things do not work that conveniently. If the market improves they will rebound, but it is unlikely that they can rebound more than their western competitors”.

The Sunday Night Blues

4 Jul

I’m sure this is something most people have experienced. It’s a Sunday night; you’ve been out for a few the night before and slept it off all day Sunday.

If you’re morning self had known how you’re evening self would feel, they wouldn’t have slept for so long.

But now you’re wide awake. Nothings on the telly – it’s a Sunday night after all. You’ve read all the papers… and it’s 2 in the morning. You have work the next day.

Everyone in the right mind is asleep. It’s a hot summers night and you’re tossing and turning. Lonely, and irritable.

Last night I had the Sunday blues and decided that the best thing to do would be to lose myself in Dracula’s modern day world through The Historian.

I kept telling myself that I would feel better the next day, and the mixture of a hangover and insomnia will have lifted. I’d worn high heals too painful to walk in and had a slight slippage. When I say ‘slight’, my mum who’s a nurse took one look at my injured leg and said, “I feel sick”.

Now it’s a Monday morning and I’ve made my Sunday self numerous promises that I won’t put myself through that again… No huge sleep in, no ridiculous heals and no wine.

From now on I’ll make lovely plans for Sunday evenings, keep Horlicks in the cupboard for that dreaded insomnia and spend my Saturday evenings researching Dickens.

But try telling next Saturdays self that, I’m sure she’ll find that amusing.

Mr Practical, meet my friend Fashion

27 May

I’m forever misplacing my USB stick, and gadgets aren’t really my thing.

Fendi USB

That’s why I need the Fendi USB stick, modelled on the iconic bag.

I’m sure I’d never misplace it again.