5 things to start your day

Five Things - Asia

Eli Lilly's vaccine trial is the latest to hit speed bumps. Two of America's biggest banks see a long road to economic recovery. And Apple shows off its latest iPhones. Here are some of the things people in markets are talking about today.

Trials Paused

Eli Lilly has paused enrollment of participants in a clinical trial of its antibody treatment for Covid-19 due to a potential safety concern. The company didn't provide information about why an independent data safety monitoring board recommended the pause, which pushed down the company's shares. Earlier, Johnson & Johnson paused its Covid-19 vaccine trial because of a participant's unexplained illnessLilly is one of several companies developing antibody therapies, including Regeneron Pharmaceuticals. Both Lilly and Regeneron are now seeking emergency authorization of the treatments.

Market Open

Asian stocks were set for modest declines after American equities slipped, with little sign for a quick end to the stalemate over fresh U.S. fiscal stimulus. Treasuries and the dollar climbed. S&P 500 futures opened flat after banks led losses on Tuesday. Equity futures were lower in Japan and Australia. Hong Kong's markets are expected to resume after a tropical storm forced closures on Tuesday. Crude oil advanced, while gold retreated. Traders will be watching a speech from Chinese President Xi Jinping in Shenzhen on Wednesday, where he is expected to lay out a vision for the region's growth.

Economic Grind

Two of the biggest U.S. banks are gaining confidence that the pandemic won't send the economy into a calamitous slide, even if they see a long path back to growth. JPMorgan and Citigroup set aside $2.87 billion for loan losses in the third quarter — less than half what analysts expected. The lenders said they've been encouraged as consumers have been quick to pay down their credit-card bills and corporate borrowers have repaid the revolving credit lines they tapped at the start of the lockdowns. Executives are still cautioning that the economy is in for a long grind, though Citigroup said unemployment will probably be higher at the end of next year than initially expected. Meanwhile, the International Monetary Fund warned that the world economy still faces an uneven recovery until the coronavirus is tamed. 

Paying Debt

China Evergrande has raised HK$4.3 billion ($555 million) in a downsized share placement, according to terms reviewed by Bloomberg, buying itself some more breathing space after a liquidity scare that rattled investors and Chinese regulators last month. The world's most indebted developer sold 260.7 million shares at HK$16.50 apiece, representing a 14.7% discount to its last closing price in Hong Kong — which was already down 31% from a 15-month high reached in early July. The share sale is among the latest attempts by Hui Ka Yan's junk-rated property behemoth to raise funds as it faces a debt pile of $120 billion, about $5.8 billion of which is maturing in the next two months, data compiled by Bloomberg show. 

iPhone 12

At a virtual event on Tuesday, Apple showed off the iPhone 12 in black, red, blue, green and white with a 6.1-inch screen and aluminum sides. It starts at $799, while a smaller version, the iPhone 12 mini, costs $699. There's also an iPhone 12 Pro and an iPhone 12 Pro Max. Wall Street expects the latest range of iPhones will kick off a new cycle of sales growth for the world's largest technology company. Read more here about the new devices and what they might mean for the company. 

What We've Been Reading

This is what's caught our eye over the past 24 hours:

And finally, here's what Tracy's interested in today

What do you think Masayoshi Son's SPAC presentation will look like? I like to think it will feature Pegasuses emerging triumphantly from the Valley of Limited Investment Options, and lots of lines that slope upwards and arrows that point in the direction of "future growth." Earlier this week, Softbank's Rajeev Misra told Bloomberg that the Japanese technology conglomerate was planning to create a SPAC. These blank-check companies — a way of taking private firms public — have boomed this year. They have also been criticized for being too expensive compared to traditional IPOs, and for often paying exorbitant fees to the management charged with identifying targets. Many think they're a sign of froth in the market or too much money sloshing around the system. 

While SPACs can be a nifty way of uniting experienced sponsors' operational input into companies that may benefit from their expertise, it's hard to see how that much differs from traditional M&A or venture capital in Softbank's case. So it's worth asking — as people do every once in a while — what Softbank actually is? In addition to "SPACsperimentation," the company has been dabbling in stock options (though Misra, in the same interview, denied it was having an impact on the market). At this point it looks more like an experiment in creative capital markets vehicles than in innovative new technology.

You can follow Tracy Alloway on Twitter at @tracyalloway.


Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more.



Popular posts from this blog

अभिषेक बच्चन ने कहा- पापा ने मेरे लिए कभी कोई फिल्म नहीं बनाई, उन्होंने कभी मेरी मदद नहीं की

The speech that sunk the world's biggest IPO

James Gunn Confirms ‘The Suicide Squad’ Panel For CCXP Worlds