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Nearly half of hedge-fund investors think the stock market has peaked

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About half of investors in hedge funds think equities peaked as of the end of last year, according to a new survey out Thursday. As a result, they’re turning back to hedge funds to manage the coming volatility.

The largest share of investors in five years plans to increase exposure to hedge funds in 2018, according to the report by data firm Preqin. Almost half are planning to maintain these allocations over the next year, which Preqin said is due to damped sentiment towards stocks.

“Having faced an extended period of low investor confidence and net capital outflows, the hedge fund industry is now experiencing a renaissance among institutions,” Amy Bensted, head of hedge fund products at Preqin, said in a statement. “This may be largely due to an expected correction in equity markets.”

Forty-five percent of investors believe stock markets are at a peak as of the end of 2017, and 5 percent think they are in a “recessional phase,” according to the Preqin report.

The feeling that a long bullish phase is ending has been backed by rising volatility in recent weeks.

The CBOE volatility index, or VIX, hit its highest level since August 2015 as stocks entered correction territory briefly in early February. The market has recovered much of the losses, and the S&P 500 is back in positive territory in 2018, up 1.62 percent year to date.

“In these circumstances, hedge funds provide a valuable opportunity for portfolio diversification and downside risk protection,” Bensted said.

In response to the equity environment, the report said 37 percent of investors plan to take a more defensive stance with their portfolios, while only 10 percent plan to position themselves more aggressively. Only 14 percent of investors plan to increase their exposure to equity strategy hedge funds.

It’s been a rough few years for hedge funds, but inflows are recovering. A year after funds saw $110 billion of outflows, they were back in positive territory for 2017 with net investor inflows of $44.4 billion. This year, 27 percent of investors plan to increase their allocations, the highest proportion since December 2013.

Investors have also upped their searches for active management. The number of active fund searches surged last quarter and the average size of intended new investments jumped by 40 percent, according to Preqin’s data.

And although it’s an encouraging trend for hedge funds, the report pointed to competition in the crowded marketplace and underlined that firms still need to “work hard to attract and retain new investor capital.”

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Lockdown-free UAE kicked off UK travel corridor amid Covid spike

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Parler sues Amazon for withdrawing support after U.S. Capitol riot

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Parler CEO John Matze joins CNBC’s “Squawk on the Street” on July 2, 2020.

CNBC

Social network Parler is suing Amazon for pulling its cloud computing support in the wake of the deadly U.S. Capitol riot last week. 

Popular with conservatives and supporters of President Donald Trump, Parler was reliant on the cloud computing services provided by AWS. However, AWS withdrew its support on Sunday at 11:59 p.m. PT after concluding posts on Parler “clearly encourage and incite violence.”

In a lawsuit filed on Monday, Parler accused Amazon Web Services of breaking anti-trust laws.

“AWS’s decision to effectively terminate Parler’s account is apparently motivated by political animus,” the lawsuit reads. “It is also apparently designed to reduce competition in the microblogging services market to the benefit of Twitter.”

It continues: “This emergency suit seeks a Temporary Restraining Order against defendant Amazon Web Services to prevent it from shutting down Parler’s account. Doing so is the equivalent of pulling the plug on a hospital patient on life support. It will kill Parler’s business — at the very time it is set to skyrocket.”

An AWS spokesperson told CNBC that there’s no merit to the claims, while Parler did not immediately respond to CNBC’s request for comment. 

“It is clear that there is significant content on Parler that encourages and incites violence against others, and that Parler is unable or unwilling to promptly identify and remove this content, which is a violation of our terms of service,” an AWS spokesperson told CNBC.

They added: “We made our concerns known to Parler over a number of weeks and during that time we saw a significant increase in this type of dangerous content, not a decrease, which led to our suspension of their services Sunday evening.”

Apple and Google remove Parler

Screenshots of the Parler app viewed by CNBC show users posting references to firing squads, as well as calls to bring weapons to the presidential inauguration later this month.

In the lawsuit, Parler’s lawyers question why AWS isn’t removing support for Twitter, which is also an AWS customer.

AWS “stated the reason for the suspension was that AWS was not confident Parler could properly police its platform regarding content that encourages or incites violence against others,” the lawsuit reads. “However, (on) Friday night one of the top trending tweets on Twitter was ‘Hang Mike Pence.’ But AWS has no plans nor has it made any threats to suspend Twitter’s account.”

Twitter declined to comment.

Parler became the number one free downloaded app on Apple’s App Store after Twitter announced that it was permanently banning President Donald Trump from its platform. “Conservative users began to flee Twitter en masse for Parler,” the lawsuit reads.  

However, Apple removed Parler from the iPhone App Store on Saturday, while Google removed Parler from its Android app store on Friday.

John Matze, the founder and CEO of Parler, condemned the tech giants’ moves in a series of posts on Parler over the weekend, claiming that his platform had removed its violent content and adding that its community guidelines don’t allow Parler to be knowingly used for criminal activity.

Matze said in a statement on Monday that the Parler app will be down “longer than expected” because other cloud hosting companies do not want to work with Parler in light of the press statements issued by Amazon, Google and Apple.

“This is not due to software restrictions — we have our software and everyone’s data ready to go. Rather it’s that Amazon’s, Google’s and Apple’s statements to the press about dropping our access has caused most of our other vendors to drop their support for us as well,” Matze said.

He added: “Most people with enough servers to host us have shut their doors to us. We will update everyone and update the press when we are back online.”

Parler has transferred its domain name to Epik, which hosts the similar far-right social media network Gab. However, it still needs to find a hosting provider.

Gab, a similar social network to Parler known for its far-right userbase and a frequent host of hate speech, appears to be benefiting from the fallout. On Monday, Gab CEO Andrew Torba announced that the platform had gained 600,000 new users.

— CNBC’s Annie Palmer contributed to this report.

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More parts of China lock down as virus cases spike ahead of WHO visit

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A resident undergoes a Covid-19 coronavirus test at the basement of a residential compound as part of a mass testing programme following new cases of the virus emerging in Shijiazhuang, in central China’s Hebei province on Jan. 12, 2021.

STR | AFP | Getty Images

BEIJING — Local authorities in regions near Beijing are stepping up restrictions on social activity as new coronavirus cases grow.

Langfang city, located about 1.5-hours south of downtown Beijing, told its nearly 5 million residents on Tuesday to stay home for the next seven days. The city is in Hebei, the same province as Shijiazhuang, a city of 11 million people that locked down late last week after a spike in coronavirus cases.

Shijiazhuang reported 39 new confirmed cases for Monday, while Langfang disclosed one. That brought the total number of current confirmed and asymptomatic cases in Hebei province to more than 500 people.

Separately, two regions of China’s northernmost province of Heilongjiang announced lockdowns on Tuesday. The province reported one new confirmed case and 36 asymptomatic ones for Monday.

Beijing reported one confirmed case for Monday. Since mid-December, the city has reported a handful of cases in close succession, prompting tighter restrictions on some apartment compounds and mass testing on the outskirts of the nation’s capital city.

It was not immediately clear to what extent the local economy would be affected as there was no official order to halt work. Heilongjiang accounted for just over 1% of China’s GDP in 2019 and Hebei about 3.6%. Neither province is as important economically compared with those in the southeastern, coastal parts of China.

Representatives for European and American business associations in China said members were not significantly affected by the latest increase in virus cases. Economic activity generally slows down in late January through February as hundreds of millions of workers return to their hometowns for the Lunar New Year.

However, some provinces have begun to announce bans on large-scale gatherings and events. The central government is encouraging people to stay put during the Lunar New Year holiday that officially falls in mid-February this year.

“The worsening coronavirus situation will impact economic activity, and markets may need to temper their expectations for strong pent-up consumption demand in the coming LNY holidays in mid-February,” Ting Lu, chief China economist at Nomura, said in a note Monday.

“With the worsening virus situation and the coldest winter in decades, growth recovery lost some momentum in recent weeks,” he said. “A full recovery in the services sector could be delayed, as suggested by weaker services PMI indices in December.”

Both official and private surveys for last month showed that the services PMI, or Purchasing Managers’ Index, remained in expansion territory but fell from November.

China’s economy shrank 6.8% in the first quarter of last year as authorities shut down more than half the country in an attempt to control the outbreak.

WHO team to begin investigation

Covid-19 first emerged in late 2019 in the Chinese city of Wuhan. Authorities locked down the city by late January 2020, but the disease soon spread to the rest of the world in a global pandemic. The coronavirus has since infected more than 90 million worldwide and killed over 1.9 million people.

On Thursday, a team from the World Health Organization is set to arrive in China to research the origins of the virus with local scientists. The WHO said the study will begin in Wuhan.

A separate WHO team is working with producers of Covid-19 vaccines from Chinese pharmaceutical companies Sinovac and Sinopharm “to assess compliance with international quality manufacturing practices ahead of potential emergency use listing by WHO,” said WHO director-general Tedros Adhanom Ghebreyesus.

Beijing has pushed back against the idea that Covid-19 came from China. After the spread of the virus stalled domestically last March, authorities have blamed subsequent spikes in cases on foreign sources.

For the latest outbreak, Hebei province began to report cases about 10 days ago. On Sunday, an epidemiologist from the provincial disease control center told reporters the cases likely stemmed from foreign sources that were in contact with the province before December 15.

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