Toshiba shares crashed 20% after it warned about a multibillion writedown

• Makiko Yamazaki, Greg Roumeliotis, and Ayai Tomisawa, Reuters

• 8h
• 1,677

Toshiba Corp President and CEO Satoshi Tsunakawa attends a news conference at the company's headquarters in Tokyo, Japan, December 27, 2016.REUTERS/Toru Hanai

TOKYO (Reuters) - Shares in chips-to-construction group Toshiba Corp tumbled 20% on Wednesday, hitting the Tokyo exchange's daily downward limit after the company said it could face a multi-billion dollar charge on a US nuclear power business bought last year.

The Japanese group said cost overruns at US power projects handled by the CB&I Stone & Webster business it acquired last December from Chicago Bridge & Iron (CB&I) would be much greater than initially expected, potentially requiring a huge writedown.

Toshiba's announcement came as its Westinghouse Electric subsidiary is engaged in a legal and accounting row with CB&I, which has argued in court that it expected a relatively small payment from Westinghouse of only $161 million (£131 million) when the deal closed on the understanding that the latter was taking on a challenged business.Markets Insider

Toshiba's latest writedown would be another slap in the face for a sprawling conglomerate hoping to recover from a $1.3 billion (£1 billion) accounting scandal, as well as a writedown of more than $2 billion (£1.6 billion) for its nuclear business in the last financial year.

"This will come as an additional shock to Toshiba's institutional investors that may further undermine confidence in company management, as well as significantly weakening its international nuclear credentials," said Tom O'Sullivan, founder of energy consultancy Mathyos Japan.

Addressing reporters late on Tuesday, Toshiba executives declined to provide further details on the hit, adding the sum would be finalised by mid-February.

Satoshi Tsunakawa, who took the helm in June after his predecessor embarked on a series of restructuring steps to clean up Toshiba's books, said Toshiba was considering options to bolster its capital base, which could fall close to zero if Toshiba logs significant losses. It will also meet its banks to seek support.

Toshiba has been on the Tokyo bourse's watch list since the 2015 scandal, due to concerns about internal controls.

(Reporting by Ayai Tomisawa; Editing by Clara Ferreira-Marques and Sam Holmes)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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Panasonic to invest over $256 million in Tesla's US plant for solar cells

• Taiga Uranaka and Makiko Yamazaki, Reuters

• Dec. 27, 2016, 9:58 AM
• 1,532

Tesla

TSLA Tesla Motors

 218.26 -1.24 (-0.60 %)

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Panasonic will invest more than 30 billion yen ($256 million) in a New York production facility of Elon Musk's Tesla Motors to make photovoltaic (PV) cells and modules, deepening a partnership of the two companies.

Japan's Panasonic, which has been retreating from low-margin consumer electronics to focus more on automotive components and other businesses targeting corporate clients, will make the investment in Tesla's factory in Buffalo, New York.

The U.S. electric car maker is making a long-term purchase commitment from Panasonic as part of the deal, besides providing factory buildings and infrastructure.

In a joint statement on Tuesday, the two companies said they plan to start production of PV modules in the summer of 2017 and increase to one gigawatt of module production by 2019.

The plan is part of the solar partnership that the two companies first announced in October, but which did not disclose investment details.

Tesla is working exclusively with longtime partner Panasonic to supply batteries for its upcoming Model 3, the company's first mass-market car. Panasonic is also the exclusive supplier of batteries to Tesla's Model S and Model X. ($1 = 117.2500 yen) 

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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Bitcoin is still storming higher

• Oscar Williams-Grut
 

• 5h
• 2,093

Bitcoin's incredible rally continues on Wednesday, up close to 3% against the dollar in early trade in London.

The digital currency is up 2.8% to $958.52 at 9.40 a.m. GMT (4.40 a.m. ET). Bitcoin has shot up over $150 over the last week, with little obvious spur for the price rise. Bitcoin is now at its highest level since November 2013 when it reached $979.Markets Insider

Mati Greenspan, a senior market analyst at trading platform eToro, says in an email on Wednesday morning: "We've been seeing an incredible surge since the price crossed $775 and it doesn't seem to be slowing down.

"The media continues to speculate what the reasons for the rise might be but enthusiasts already know. They're simply speculating about how high it will go." Greenspan previously suggested that bitcoin's recent surge could be down to fears in China of an impending devaluation of the renminbi.

Maria Terekhova, BI Intelligence's fintech research analyst, says in an email on Wednesday morning: "Bitcoin’s continued growth will depend on the factors that have so far contributed to its success. On one hand, as the cryptocurrency gains more exposure and enters the mainstream, more investors may to flock to the asset.

"On the other hand, however, much of bitcoin’s recent boom has resulted from uncertainty around events such as the US election and Brexit. As Trump enters office and Brexit negotiations begin, the resulting settling-down might impact bitcoin's momentum.

"Bitcoin's future success is tied to whether investors will embrace the asset on its own merits, rather than simply in response to geopolitics."

Here's how bitcoin has performed across 2016 — a highly tumultuous year for geopolitics:BI Intelligence

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Chinese cities are undergoing an insane housing boom with prices up as much as 43% in a year

• Oscar Williams-Grut
 

• Dec. 26, 2016, 4:55 AM
• 3,509
 

A worker shovels concrete from a mixer outside a new apartment building in Beijing. AP Photo/Greg Baker

House prices in leading Chinese cities are exploding, according to figures from property consultancy and estate agency Knight Frank.

Eight out of the top 10 cities for fastest growing prices globally in the third quarter of the year were in China, according to Knight Frank, and 10 Chinese cities recorded annual price growth above 20%.

Prices in the Chinese city of Nanjing, the hottest property market globally, were on average 42.9% higher in the third quarter of the year than they were a year earlier.

Knight Frank's international residential research analyst Katie Everett-Allen says in a note circulated this week: "Urbanisation and rising household wealth is behind the surge in Chinese prices but it is far from uniform with smaller cities and rural markets lagging behind.

"China’s rapidly-rising urban house prices have not escaped the attention of policymakers with many cities seeing the tightening of mortgage lending, higher deposit requirements, and in some cases, a ban on non-local buyers. Home purchase restrictions even saw couples divorcing to enable them to buy more properties." 

The Wall Street Journal reported in August on a rush for quickie divorces in Shanghai so they could buy an extra house.

Everett-Allen says: "Since September there is some evidence to suggest the rate of price growth has cooled in a few key cities as the new regulations have taken effect."

Average house prices across Asia rose by 12.3% in the third quarter, making it the continent with the fastest growing house prices globally. Europe recorded average growth of just 3.7%.

Vancouver and Chennai had the join biggest increase in property prices out of any city outside of China. The Canadian and Indian cities both recorded 24% price growth in the third quarter.

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China's cabinet names Harvard graduate as central bank vice governor

• Reuters

• Dec. 27, 2016, 4:00 AM
• 157

A Chinese national flag flutters outside the headquarters of the People's Bank of China in Beijing Thomson Reuters

BEIJING (Reuters) - China appointed Yin Yong, a Harvard-educated official, on Tuesday as a vice governor of the People's Bank of China, replacing Guo Qingping.

The State Council announced the promotion of Yin, who has been an assistant governor at the central bank since August 2015, on its website.

Yin holds a PhD in engineering from Tsinghua University and a master's degree in public administration from Harvard University.

He had previously worked for the State Administration of Foreign Exchange - the foreign exchange regulator, and an arm of the central bank, responsible for managing the country's foreign exchange reserves.

His predecessor, Guo, became vice central governor in February 2015, and had been responsible for anti-money laundering operations.

Though no reason was given for his departure, Guo turned 60 this year - the normal retirement age for officials of his rank.

Central bank chief Zhou Xiaochuan has been promoting a number of influential scholars to senior positions to beef up the central bank's management.

Yi Gang, a renowned economist who has a PhD from the University of Illinois, is a deputy central bank governor.

The cabinet said on Tuesday it had appointed Liu Guoqiang as an assistant governor at the central bank, replacing Yang Ziqiang.

No reasons were given for Yang's removal, but the Central Commission for Discipline Inspection, the ruling Communist Party's anti-corruption watchdog, said in September Yang had violated rules by using public funds to cover some costs incurred during a private trip.

(Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Simon Cameron-Moore)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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GOLDMAN SACHS: 'Fallen angel' debt had its best year since 2003

• Ben Moshinsky
 

• 8h
• 512

James A. Michener Art Museum

If you followed Warren Buffet's investing mantra – be greedy when others are fearful and fearful when others are greedy – then 2016 should have been a bumper year.

Debt traders that loaded up on newly downgraded bonds early on in 2016 made a lot more than their peers.

The so-called fallen angels – bonds issued by companies that were unexpectedly downgraded by credit rating agencies – had their best year since 2003, according to Goldman Sachs. 

The commodities crash around January and February led to sudden downgrades of mining and oil companies, allowing buyers to pick up bargains cheaply.

"The sizeable supply of downgraded bonds has been met with an equally strong investor demand, allowing fallen angels to deliver their best performance since 2003," Goldman Sachs credit analysts said in an end-of-year note to clients.

"As shown by Exhibit 10, the Citi Yield Book time-weighted fallen angel index, which assigns a higher weight to recently downgraded bonds, has generated a total return of 37%, more than double the total return in the broader HY market. Again, this solid performance reflects the heavy concentration of the supply of downgraded bonds in the Energy and Metals and Mining sectors."

Here is the chart:

Goldman Sachs

The Goldman analysts said risk had shifted from the commodities sector to the retail industry. If bonds are downgraded in 2017, the recovery is unlikely to be swift.

"As we discussed in our 2017 Global Outlook, the biggest pocket of downgrade risk going forward is in the Retail sector, while the Energy and Metals and Mining issuers have no bonds outstanding on downgrade watch," Goldman Sachs said.

"Given the numerous secular decline challenges facing the Retail sector, we think the performance of fallen angels will likely be much more modest in 2017." 

More: Goldman Sachs Debt Markets 2016 

Bitcoin is still popping

• Oscar Williams-Grut
 

• 8h
• 1,563

Bitcoin's rally continues on Friday, with the digital currency breaking through the $900 per coin mark.

Bitcoin is up over 5% against the dollar at just after 8.00 a.m. GMT (3.00 a.m. ET) in London to reach $913.13. It follows similarly strong gains on Wednesday and Thursday.

Friday marks a fresh 2016 high for bitcoin against the dollar and the first time the cryptocurrency has been above $900 this year.

Here is how bitcoin looks against the dollar over the last three months — note the sharp uptick at the end:Markets Insider

It is unclear what's driving bitcoin's recent rally.

Bitcoin has behaved like a risk asset this year, spiking around the Brexit referendum in June and Trump's election in November. However, there has been no news trigger over the last few days to drive a fresh spike and other safe-haven risk assets, such as gold, aren't rising in-line.

Mati Greenspan, a senior market analyst at trading platform eToro, says in an email on Friday morning: "Nothing is moving at the moment like the digital currency which is blowing right through the roof.

"Many reasons have been given for the sudden surge. Some say that Chinese investors are expecting another devaluation in the Renminbi and are trying to get their assets offshore. Some cite increasing political uncertainty around the globe. No doubt, the growing momentum and the pop of the $775 level has caused a snowball effect. When you see something moving this fast it's difficult not to be a part of it."

But he cautions investors: "Please remember though that this is an incredibly high risk asset. We could easily see further jumps of $300 or more in either direction before the excitement fades."

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Monte dei Paschi shares are swinging wildly as the bank's bailout crisis comes to a head

• Will Martin
 

• 6h
• 438

Shares in Banca Monte dei Paschi di Siena are swinging wildly in morning trade on Thursday as the ongoing crisis at the bank finally starts to come to a head, just before the Christmas break.

The bank's stock plunged by almost 9% as the markets opened for the day causing them to be briefly halted after reaching the so-called "limit down" — the point where stocks are electronically halted when they move too far either up or down — before fighting back and coming close to where they started the day. 

The stock then dropped again, and was down around 3%, before climbing to trade higher by 2.4% as of 9.40 a.m. GMT (4.40 a.m. ET).

Here is how that looks:

Investing.com

On Wednesday, the bank said it would run out of liquidity in four months, rather than the 11 months that investors had previously thought, sending shares down massively.

It then emerged that the bank had failed to successfully secure an anchor investor for its offer of new shares. Reuters reports that two sources close to the matter said this had in turn dissuaded other institutional investors from supporting this part of the €5 billion rescue plan, essentially killing off any hopes of a private sector rescue.

That leaves just one realistic option open for the bank, a state bailout. While the move will help the lender, it could also see the Italian government fall foul of EU rules of bank bailouts, launching a fresh political crisis in a country. Italy has just appointed a new prime minister, Paolo Gentiloni, following the resignation of Matteo Renzi after his crushing defeat in the country's constitutional reform referendum.

Italy's financial sector is carrying more than €300 billion in nonperforming loans and may ultimately need an injection of about €52 billion, according to Deutsche Bank analyst Paola Sabbione.

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