90 seconds at 9 am: Risk off

90 seconds at 9 am: US stocks fall on rising tensions in Europe and Mid East; Fonterra float successful; CIC wants $100 mln; NZ$1 = 81.1 USc

15th Nov 12, 8:43am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including news Fonterra's NZ$500 million sharemarket offer has attracted a very strong buying response. The book-build brokers have had to scale back applications significantly and some investors have missed out entirely.

There will be no public pool; buying a share on the secondary market is the only way in now.

Meanwhile, The Wall Street Journal is reporting this morning that China Investment Corp. is in talks with Fonterra about investing in another shareholder fund created by the cooperative, this one with non-voting units.

CIC is reported to be looking to invest about NZ$100 million. With about NZ$600 billion in assets under management, CIC is the fifth-largest sovereign fund in the world.

In China, the Communist Party is now filling its vacancies in the power transition. Indications are that anti-corruption leaders are winning top spots, but some are not seen as very active policy makers.

In Europe overnight, clashes have broken out in Spain and Italy as angry workers stage a co-ordinated Europe-wide string of rallies and strikes against austerity cuts and tax rises, shutting transport, grounding flights and closing schools.

Markets ignored these tensions in early trading however, but they have responded when more trouble showed up in the Middle East, which this time have boiled over in Gaza and this has created strong risk-off sentiment.

Oil is up a few dollars, but gold is unchanged, curiously. The Dow is down 0.6% in mid-day New York trading.

The NZ$ starts the day at 81.1 USc and 72.7 on the TWI, both softer than yesterday.

No chart with that title exists.

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8 Comments

by starfish1 | 15th Nov 12, 9:40am 1352925624

The Middle East looks like to it going to blow up, this has to be negative for stocks. Eventually maybe some years away but eventually Saudi Arabia will go the same way. In Europe the politicians are making a big mistakes and not the banks this time. What they need to understand is that the austerity will back fire as the people of Spain , Greece and Italy will say enough is enough and want out of Europe. in the USA the re-election of Obama, Wall Street will realise that this is negative for stocks as a continuation of the same old money printing and not have a solution to paying debt will start to drag.

by Stephen Hulme | 15th Nov 12, 10:04am 1352927045

There will be no public pool; buying a share on the secondary market is the only way in now.

I bet not - it doesn't fit the plan - probably loads of diversified demand from influential nominee agents on behalf of the likes of a corporate such as Nestle.

by Casual Observer | 15th Nov 12, 10:24am 1352928271

Those with connections will still be able to buy via their connections, in to the Fonterra Friends allocations - which Fonterra has steadfastly refused to state how big that pool is. Though only the supplying shareholder entity can buy, at a recent meeting it was said that there is nothing to stop that entity buying units and then 'gifting them to someone else'.

by Andrewj | 15th Nov 12, 10:12am 1352927571

Risk is the pollution created by the process of making money. So where you find people making one you will surely find them hiding the other. You’ll find both at the banks.

http://www.golemxiv.co.uk/2012/11/where-has-all-the-risk-gone/

by Chris-M | 15th Nov 12, 11:10am 1352931033

Re Fonterra

It has taken them a long time but it appears that they now have it in a position where it will pass out of the control of New Zealanders. Influential nominees, Chineese investment funds..... These people are not in it for just a regular interest check.

by waymad | 15th Nov 12, 11:33am 1352932415

Spengler pronounces on Petraeus - a commentary worth more than most of the daily-graph-influenced twaddle we see 'round 'ere.

by Wolly | 15th Nov 12, 12:20pm 1352935211

"Rich people with expensive properties are not paying their fair share for Earthquake Commission land cover, says EQC chairman Michael Wintringham".

http://www.stuff.co.nz/the-press/business/7951500/Wealthy-not-paying-enough

And to hell with any old sods living in their decades owned home on a section with a seaview...because if this bureaucrat has his way, they will classified as rich and smashed with far larger EQC charges...

Notice this overpaid paper shuffler makes no mention of the potential for multi million dollar savings to be had from tearing the EQC to bits and handing the entire problem to the private sector...

But that would mean demolishing part of the socialist state...can't have that can we old boy...think of the jobs and the lost fat salaries.

by waymad | 15th Nov 12, 12:57pm 1352937471

Quite a good note from Reggie Middleton, including a swipe at the false dichotomy between austerity and Keynes....dates from last week, but a few common taters here could usefully internalise this complicated situation.