Good morning

The headlines:

  1. For those of us that missed the Friday fun, I’m going to start with the BATS IPO debacle. *HILARIOUS*. And I know that I sound like a bit of a teenage girl for reacting that way, but I make no apologies. So BATS is an acronym for “Better Alternative Trading System” – which essentially makes BATS Global Trading Inc. a stock exchange in its own right. However, unlike the traditional stock exchanges that we’re familiar with (like the Dow Jones or the JSE), BATS is open 24 hours a day. The exchange is underpinned by its ECN (or Electronic Communications Network), which is the financial term for a computer trading system that will match buy and sell orders outside of normal exchange hours (I wiki’ed it). So that’s the background. Recently, BATS announced an IPO of 6.3 million shares at $16 a pop, underwritten by Morgan Stanley, Citigroup and Credit Suisse. And it was going to list on its own exchange. At 10:30 am American time (one of those timezones) of Friday, trading opened with the first trade taking place at $15.25. At 10:57 am, the IPO was pulled and cancelled. And the share price was being recorded at $0.02. Why? Software glitch. Egg on face: they have it. Link: BATS CEO scuttled IPO on potential for erratic trading.
  2. Everyone is still concerned that China’s “soft-landing”, however engineered, will still be a problem for commodities markets and all related-production parties. Despite various revisions to China’s growth forecasts (most analysts are predicting Chinese stimulus to push up growth), this doesn’t change the fact that there are stockpiles (at least – that’s the way I read it). Link: China’s Soft Landing Hard on Commodities.
  3. Oh – the other Friday news: MF Global’s Jon S. Corzine apparently authorised the transfer of $200 million from a customer’s account to settle one of the company’s brokerage accounts with JP Morgan. That transfer took place on October 28. The company collapsed/filed for bankruptcy on October 31. FYI: MF Global was one of the world’s major traders in derivatives (futures, forwards, etc – basically anything financial that derives its value from some kind of underlying asset – such as a share, or a commodity like gold). What does the transfer mean? <insert blasphemy here>. Let me rephrase the issue: if I took $200 million from my friend Peter and used it to pay my friend Jon-Paul, that would make me more successful than Bonnie and Clyde. And that ended on a small road with a number of guns and a dramatic soundtrack. Fun. And then they go after Jon-Paul to get the money back. Link: The Chairman in the Board Room with the Dirty Memo.
  4. Italian Prime Minister Mario Monti has warned that Spain may be the new Greece. Spain is struggling to balance its deficit. That said: lots of European countries are at risk of being the new Greece. But Spain – Spain is fairly large. I think they use the phrase “too big to fail”, as if it were an Investment Bank. We shall see. Link: Monti signals Spanish Euro Risk.
  5. Frontier Currencies are being flooded with speculator cash as the markets search for returns. The focus is on countries with high growth rates and/or a strong reliance on commodities. Which is unfortunate – because as the money comes in, those currencies appreciate. And strong currencies tend to weaken economic growth – especially in resource-driven economies that export their products. The inflow of cash also tends to spark asset-pricing bubbles. Such a cost. Link: Frontier currencies irresistable.
  6. And the Africa News in Brief. Link: ABN Briefs. The highlight:
    • Kenya’s East Africa Cable Company posted an 80% increase in full year pre-tax profit. Madness. However, some of this can be attributed to the weakness of the shilling, which has made exports more competitive.
That’s all for now.
Have a great Monday.