Standard Chartered's US$5.1b share sale gets 97% demand

Standard Chartered raised about US$5.1 billion after 96.8 per cent of the bank's shareholders exercised their rights in a share sale on Friday, signaling confidence in chief executive officer Bill Winters's strategy to turn around the Asia-focused lender. 

PHOTO: BLOOMBERG

DEC 11, 20152:21 PM

[LONDON] Standard Chartered raised about US$5.1 billion after 96.8 per cent of the bank's shareholders exercised their rights in a share sale on Friday, signaling confidence in chief executive officer Bill Winters's strategy to turn around the Asia-focused lender.

The shares will be listed in Hong Kong and the first trading day is expected to be Dec 16, the London-based bank said in a statement on Friday.  Mr Winters, 54, announced the rights issue in November as part of a plan to restore profitability at a bank reeling from losses tied to bad loans after commodity prices slumped and economies from China to India cooled. The CEO is also cutting 15,000 jobs to help save US$2.9 billion by 2018, scrapped a second-half dividend and unveiled plans to restructure or exit US$100 billion of risky assets.

The 705 million new shares include those bought by Temasek Holdings, Standard Chartered's largest shareholder, according to the statement. The Singaporean state-owned investment firm intended to take up rights for 15.8 per cent of the company's existing share capital, the bank said last month.

Of Temasek's 17.2 per cent stake in Standard Chartered, 1.4 percentage points has been loaned out, according to the British lender's November filing on its capital raising, reducing Temasek's entitlement in the rights issue to 15.8 per cent.

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The shares were loaned under the terms of a total return swap agreed in 2013 with Bank of America, and which expires at the end of this year, according to a person familiar with the situation.

A Temasek spokesman declined to comment. Mark Tsang, a Bank of America spokesman in Hong Kong, declined to comment.

Standard Chartered's stock in Hong Kong sank 0.7 per cent as of 1:36 pm, Friday. The lender's London-listed shares fell 1.3 per cent on Thursday, taking their drop this year to about 44 per cent.

The bank previously raised capital in 2008 and 2010 to help fund its expansion under former CEO Peter Sands. This year's rights issue was fully underwritten by JPMorgan Chase & Co and Bank of America Corp.

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Fosun bonds fall, stock halted after report chairman Guo missing

Fosun International bonds plunged by a record and the company suspended its shares in Hong Kong after Caixin magazine reported that billionaire Chairman Guo Guangchang had gone missing. 

PHOTO: REUTERS

DEC 11, 201510:36 AM

[BEIJING] Fosun International bonds plunged by a record and the company suspended its shares in Hong Kong after Caixin magazine reported that billionaire Chairman Guo Guangchang had gone missing.

Closely held Fosun Group, which controls Fosun International, has "lost contact" with Mr Guo, 48, the magazine said, citing people it didn't identify.

The shares declined for a sixth consecutive day on Thursday in Hong Kong, losing 1 percent to close at HK$13.34, and tumbled more than 11 per cent to US$1.55 in over-the-counter trading in New York. Fosun International dollar bonds fell by a record, with the US$400 million of 6.875 per cent bonds due in 2020 slumping 16.1 US cents to 88.3 US cents on the dollar as of 9:10 am in Hong Kong.

"The news that the chairman went missing will take a toll on the bond prices and until the company can clarify the situations, and we'd expect further weakness in the near term," Nuj Chiaranussati, a Singapore-based debt analyst at Gimme Credit LLC.

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Mr Guo, who calls himself a student of Warren Buffett, built Fosun Group into an empire spanning everything from insurance to holiday resorts through dozens of deals over the past three years, most of them made through Fosun International. His companies own Club Mediterranee SA and Greek jewelry brand Folli Follie, as well as a stake in Cirque du Soleil Inc.

News that Mr Guo is unreachable prompted many related companies to halt trading. Shanghai Fosun Pharmaceutical (Group), Nanjing Iron & Steel, Shanghai Yuyuan Tourist Mart and Hainan Mining suspended trading in Shanghai on "relevant issue" verification, according to Shanghai Stock Exchange.

"The missing chairman is going to have a big impact on investing in China and the performance of the company," said Cyrus Ng, an analyst in Hong Kong at China Galaxy Securities Co.

Fosun International has announced 16 deals worth a combined 29 billion yuan (S$6.3 billion) this year, according to data compiled by Bloomberg. Some of Fosun's biggest acquisitions include One Chase Manhattan Plaza in New York. In July, it said it bought the former Milan headquarters of Italy's UniCredit SpA.

Mr Guo is China's 17th richest man with a net worth of US$5.6 billion, according to the Bloomberg Billionaires Index. Mr Guo co-founded Fosun with four friends and about US$6,000 in capital in the 1990s and later built it by borrowing from the investing approach used by Buffett's Berkshire Hathaway.

In August, China's official Xinhua News Agency said Mr Guo granted favours to an executive of a state-owned company 12 years ago in exchange for unspecified benefits, according to a report in the Wall Street Journal. Mr Guo wasn't accused of wrongdoing, according to that report.

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Asia: Stocks head for weekly loss, China yuan hits 4-1/2-year low

PHOTO: EPA

DEC 11, 201511:06 AM

[TOKYO] Asian shares slumped on Friday, on track for a weekly loss as plunging crude prices heightened fears about receding global growth, while China's yuan hit its weakest level in more than four years.

A supply glut in oil markets and cooling growth in China, the world's biggest commodities consumer, have pressured many asset markets ahead of a widely expected hike to US interest rates by the Federal Reserve next week.

China's central bank set its guidance rate at the weakest level in more than four years on Friday, a sign Beijing is permitting the currency to depreciate after it was included in the International Monetary Fund's reserve basket.

The lower fixings have also raised questions about how far the central bank intends to let it depreciate.

In the spot market, the yuan was changing hands at 6.4515 in early trade, taking out its August low hit after the unexpected devaluation of the Chinese currency. It also marked the lowest level since the middle of 2011.

MSCI's broadest index of Asia-Pacific shares outside Japan erased early gains and was down about 0.4 per cent, facing a weekly loss of 2.7 per cent.

Chinese shares were lower ahead of a spate of economic data scheduled to be released on Saturday.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen was down 0.8 per cent, while the Shanghai Composite Index shed 0.9 per cent.

Japan's Nikkei stock index bucked the trend, buoyed by overnight gains on Wall Street and a weaker yen, adding 0.9 per cent. But it was still headed for loss of 1.4 per cent for the week.

The dollar index, which tracks the US unit against a basket of six major rivals, was up about 0.1 per cent at 98.044. But it was on track for a weekly loss of about 0.3 per cent after investors trimmed dollar-long positions ahead of next week's US Federal Reserve meeting at which the central bank is widely expected to hike interest rates for the first time in nearly a decade.

Fed fund futures place an 85 per cent chance of the Fed raising rates at its Dec 15-16 meeting. A recent Reuters poll also showed that all but one of 18 brokerages that deal directly with the Fed expect a rate increase.

The euro edged down about 0.1 per cent to US$1.0933 but still up about 0.4 per cent for the week after comments from the European Central Bank's Ewald Nowotny raised doubts about the extent to which US and European monetary policy will diverge.

The dollar added 0.4 per cent against its Japanese counterpart to 122.07 but was still down around 0.8 per cent for the week.

Despite this week's weaker dollar, US crude oil futures continued to wallow close to 2009 lows on oversupply fears, shedding 0.8 per cent to US$36.47 a barrel. Brent skidded 0.7 per cent to US$39.47.

US dollar weakness and lower commodity prices "do not normally come hand in hand as dollar weakness generally drives commodity prices higher but nothing seems to matter more this week than position adjustments," Kathy Lien, managing director at BK Asset Management, wrote in a note to clients.

South Africa's rand, meanwhile, plumbed record lows against the US dollar after the abrupt dismissal of respected Finance Minister Nhlanhla Nene to make room for an ally of President Jacob Zuma.

The rand sunk as low as 15.4895 against the greenback, and was last at 15.3740.

REUTERS