ARAB TIMES, SATURDAY, AUGUST 20, 2011
Sky challenged over pay-TV movie dominance
Britain’s Competition Commission This, in turn, meant that con- tion. ment: “BSkyB continues to believe bid for the company when a tabloid ment was negative but not a real
set out measures to make the pay- sumers found little alternative to Sky The regulator said it was inviting that no regulatory intervention is newspaper phone hacking scandal surprise.
TV movie market more competitive Movies for new blockbuster films, it responses to possible remedies that required and that consumers benefit caused national outrage. The ultimate outcome may be
and break Sky’s stranglehold, a fur- said. would be intended to enable more from high levels of choice, value and James Murdoch, BSkyB’s chair- similar to the unwinding of Sky’s
ther blow to the broadcaster that is “Sky’s control of this content on firms to secure pay-TV rights from innovation across a wide range of man, is under increasing pressure exclusive rights to show Premiership
struggling to placate investors after pay TV enables it to attract more the major six Hollywood studios. providers.” over the scandal, and News Corp football, put in place last April, said
News Corp’s bid fell through. pay-TV subscribers than its rivals Possible changes include restrict- It added that it would continue to executives are starting to think about Patrick Yau at brokerage Peel Hunt.
The regulator said on Friday Sky’s and having more subscribers ing the number of studios from which engage with the commission. the possibility that he may leave, “Movies and sport are the key rea-
large subscriber base gave it an increases further its advantages Sky could licence first rights, restrict- Last month, the satellite broadcaster sources told Reuters on Thursday. sons subscribers come to Sky, so
advantage that meant potential when bidding in the next round for ing the nature of those rights, or forc- said it would pay out 1 billion pounds BSkyB shares were down 3 per- this will be a blow to the business.”
rivals found it difficult to bid success- pay-TV movie rights, and so it goes ing Sky to offer rival movie channels ($1.6 billion) in a share buyback and cent to 615 pence at 0750 GMT, Regulator Ofcom first referred the
fully for the rights to first-run on,” said Laura Carstensen, who to its subscribers. dividend boost, as it tried to soothe their lowest level since June 2010, case to the Competition Commission
Hollywood movies. headed the commission’s investiga- BSkyB said in a separate state- investors after News Corp dropped its with analysts saying the announce- in August 2010. (RTRS)
Undeclared assets hidden in Swiss banks
Shares fall into liquidity black holes
Wall Street investors Swiss, UK in final phase of tax talks
GENEVA, Aug 19, (Agencies): same time,” the spokesman added. the solution, said the spokesman. According to German media, between
flee as stocks drop Switzerland is in the “final phase” of nego-
tiations with Britain over a tax accord on
undeclared assets hidden in Swiss banks, an
official told AFP Friday.
With France, “there has not been any
contact for a few months,” said the
spokesman who noted that Paris is sceptical
about Bern’s proposals.
The deal concluded between Berlin and
Bern on Aug 10 requires Swiss banks to
pay two billion francs (1.91 billion euros,
$2.6 billion) to German tax authorities to
130 and 180 billion euros are hidden in
Swiss banks. These assets could therefore
net up to 54 billion in taxes.
Meanwhile, France has rebuffed for now
Continued from Page 34 “We are in the final phase of negotia- In Paris meanwhile, France said that the regularise any hidden assets of German tax- a Swiss offer to tax French citizens’ assets
tions. We should conclude them in a few Swiss proposals “posed a problem for us payers. stashed in Swiss accounts modelled on a
their capital-raising business overseas to places like Hong Kong, which would be weeks,” said the spokesman for Bern’s with regard to French tax rules, but it is an In future, all investment income and cap- recent deal with Germany, a budget min-
another blow to Wall Street. chief negotiator. object of discussions.” ital gains arising from assets held by istry source said on Thursday.
“The market we are operating in is markedly different from five years ago,” says Switzerland has so far been only negoti- Italy has also shown little interest in the German taxpayers would also be covered Switzerland and Germany agreed earlier
Andrew Lo, a professor of finance at the MIT Sloan School of Management, who ating such deals with two countries — system put forward by Switzerland, called by a withholding tax of 26.375 percent. this month to tax money stashed by German
frequently writes on hedge fund trading strategies and markets. “We are seeing Germany, with which it concluded an Rubik, which envisages a fixed tax rate for To prevent new undeclared funds from citizens in secret Swiss accounts in a deal
extraordinary emotional reactions from central banks, politicians, regulators and agreement last week, and Britain. the hidden assets but which safeguards the entering Swiss banks, German authorities that was seen as setting a template for other
investors. That kind of reaction is not conducive for building long-term wealth. We “It’s a complex subject, we did not want anonymity of the account-holders. would be able to request information on pacts between Switzerland and other coun-
have an environment that is highly unstable.” to negotiate with too many countries at the Greece, however, has shown interest in suspected tax cheats. tries.
One might say Wall Street is a bipolar market that veers from despair to eupho-
ria with each passing news headline.
British govt borrowing drops
Over the past several weeks, stocks
prices have swung widely based on a
range of factors: the perceived progress S&P plunges
of European leaders in dealing with the
eurozone debt crisis; the fears of a dou-
ble-dip recession in the United States; ‘Death cross’
by more than expected in July
the fallout from Standard & Poor’s
downgrade of US debt; and whether
the Federal Reserve will embrace a rocks Wall St.
new round of easy money to jumpstart
the economy. Continued from Page 34
L. Randall Wray, a professor of eco- Pado says the selling all
nomics at the University of Missouri- started when the S&P 500
Kansas City, says much daily trading in broke through the 200-day
stocks is like a self-fulfilling prophecy. moving average and a sup- PFI model comes under attack in UK
“What matters is what the markets port level of 1,250 on the
think not what people in the markets index. He says, “that started
believe,” says Wray. “Traders are con- the capitulation to the down-
stantly trying to guess how daily events side that we saw in the mar- LONDON, Aug 19, (Agencies): British state borrowing tumbled The figure, which excludes the effects of financial interventions, compared with net bor-
ket overall.” by more than expected in July, boosted by its banking sector levy rowing of £3.5 billion in July 2010.
might affect other market participants.” Market expectations had been for borrowing of about £2.5 billion, according to analysts
The beauty (or flaw) of
This guessing game is largely being technical analysis is that it and improving local government finances, official data showed polled by Dow Jones Newswires.
driven by super-fast computers with
algorithmic programs designed to react
tells traders when to buy or on Friday. The banking sector levy raised around £660 million in the month, while the public purse
sell without regard to corpo- Public sector net borrowing — the government’s preferred measure of the pub- was also bolstered by higher corporation and sales taxation revenues.
to headlines and overall market trading rate earnings or arguments
patterns. The Tabb Group, a financial over how to solve Europe’s lic finances — slid to just £20 million ($33 million, 23 million euros) in July, the Britain’s Conservative-Liberal Democrat coalition government introduced the levy earli-
markets’ research firm, estimates that sovereign debt woes. So the Office for National Statistics (ONS) said in a statement. er this year in a major austerity plan aimed at slashing a record public deficit that was inher-
during the frenetic week of Aug 8, silver lining of a precipitous
high-frequency trading firms and ited from the previous Labour administra-
drop in stocks is that it could
strategies accounted for 65 percent of be a signal for markets to go tion.
the daily trading volume in the United up. Taxation receipts jumped 5.6 percent last
States. “By selling off, the market month to £52.3 billion after the government
The power of the machines over is now discounting the bad ramped up sales tax to 20 percent at the start
trading is one reason why technical news,” said Carter Worth, of the year.
analysis, often pooh-poohed as Wall chief market technician at The ONS added that corporation or busi-
Street alchemy, is gaining more believ- Oppenheimer & Co in New ness tax receipts increased by £1 billion to
ers among traders. There’s more inter- York. £8.6 billion in July, while local government
est than ever in computer programmers Another factor technical expenditure moved into a surplus of £1.1
analysis focuses on is billion.
who can write algos to simply buy and volatility and there has been
sell stocks whenever the S&P hits a A Treasury spokesman said the official
a lot of that lately. In fact, data continued to show “deficit reduction
predetermined target, or some one measure of volatility
bizarrely-named trading pattern such as taking effect with the public finances in bal-
doubled in three days and ance in July”.
a “Death Cross” forms on screens. on Aug 8, when the S&P 500
Some of the surge in volatility is also But he added that the government need-
fell 6.66 percent, the volatili- ed to stick to its cost-cutting plans amid
attributed to a growing legion of ty index closed at its highest
money managers who frequently trade level since the market bot-
ongoing turmoil on global financial mar-
exchange-traded funds - which are bas- tomed in March 2009. kets over soaring sovereign debt in the
kets of stocks, indexes and other assets “It highlights how extreme, United States and in the eurozone.
- as a way to hedge their positions. how one-sided it was,” said “Events have shown with the US ratings
“There’s a different dynamic now Craig Peskin, co-head of downgrade and continued turbulence in
because of the pervasiveness of high- technical analysis research Europe, it is vital that the government sticks
frequency traders and hedge funds,” at MF Global in New York, to this plan,” added the Treasury
says John Longo, chief investment who noted that every stock spokesman.
strategist at MDE Group, which man- in the S&P 500 declined on For the first time in history, Washington
Aug 8. “Everyone was treat- was stripped of its triple-A credit rating ear-
ages $1.3 billion in assets. Longo, also ing everything equally.”
a finance professor at Rutgers Business lier this month by Standard & Poor’s.
Some likened what they Despite the July improvement, Capital
School in New Jersey, adds: “The were seeing in the market to
down-5-percent one day, up-5-percent Economics economist Samuel Tombs said
last year’s flash crash, when the government would likely miss its bor-
the next day volatility wouldn’t have the Dow Jones Industrials
happened in the past.” rowing target of £122 billion for the
plunged nearly 1,000 points 2011/2012 year, which runs until next
The trouble for ordinary investors is in 20 minute. Except this
that there are no good market forecasts March, as the ONS revised other data.
time, it appears to be a flash
for predicting what might spark a liq- crash in slow motion. “Borrowing for previous months was
uidity black hole. Fear about the United revised up, so on current trends it will over-
States and European countries slipping shoot the ... full-year forecast of £122 bil-
back into recession is a legitimate con- Critics of high-frequency trading lion by around £10 billion. This overshoot
cern that could have real impact on cor- firms argue that the May 6, 2010 “flash largely reflects the weakness of tax
A city worker walks over London Bridge in central London, on Aug 18. London’s main stock index slumped by more than
porate profits and stocks. But when crash,” in which the Dow Jones 5.0 percent in Thursday afternoon trade as more weak US data intensified worries that the global economy was heading receipts,” said Tombs.
traders act on those fears at lightning Industrials plunged 1,000 points in less for another sharp downturn, dealers said. (AFP) See Markets Page 39 Meanwhile, a report by British lawmak-
speed it can result in seemingly irra- than 20 minutes, was caused in part by ers on Thursday criticised the funding
tional sell-offs. an absence of liquidity or traders mak- structure behind many schools and hospi-
Take the scary 6.66 percent drop in ing markets in stocks. While securities
regulators have never identified a sin-
Firm pledges 2.5 pence maiden interim dividend tals, saying that Public Finance Initiatives
(PFI) are not value for money, and projects
the S&P500 on Aug 8. On that first
trading day after the credit rating arm gle cause for the flash crash, they have must be paid for upfront by the govern-
of S&P stripped the US of its vaunted
Triple AAA debt rating, all 500 stocks
in the index closed the day in the red.
The selling was so ferocious that
noted that the rapid collapse of stock
prices was exacerbated by some high-
frequency trading firms turning off
their computers and not making trades.
UK fund Jupiter eyes EU, rich clients Higher borrowing costs since the credit
crisis means that PFI projects are an
“extremely inefficient” method of financ-
shares of McDonald’s Corp, for Some are starting to worry about the ing, according to a new report from a
LONDON, Aug 19, (RTRS): Fund funds. Jupiter shares were down 2.8 percent Treasury Select Committee.
instance, fell 3.5 percent to $82.11, impact on ordinary investors of the rise manager Jupiter put a brave face on the “I think we are at relatively early at 1040 GMT, trading at 190.7 pence,
even though the fast-food giant report- of the machines and all these unfore- In Britain, PFI has been used to build
financial market turmoil that has rattled stages in the European investment underperforming the FTSE 250 index everything from roads to prisons, with a
ed a 5.1 percent climb in same-store seen consequences. These Wall Street its core British customers, saying it was habit where people are moving from down 1.8 percent.
sales for July, higher than analysts had professionals wonder whether events total of 339 deals worth $76.5 billion proj-
expected. like the flash crash and the frenzied pushing ahead with plans to expand in cash and a bond culture to increase Analysts at Peel Hunt gave Jupiter a ects from 2005-2009, according to the
Such selling with no regard to cor- trading of this month will push average Europe and attract more wealthy their weighting to equity over time... ‘buy’ rating saying “the longer-term infrastructure Projects Database, with the
porate fundamentals makes the notion investors further away from stocks and clients. we have seen it in Germany in the last attractions of Jupiter’s model remain - model now widely exported.
of stock picking seem quaint. into low-yielding money market funds Jupiter, one of the UK’s largest retail few years.” strong brand, consistent flows and high The PFI model, which uses private capi-
Keith Wirtz, chief investment officer and bond funds. investment fund managers with around In the UK, Jupiter is looking to margins.” tal to build public infrastructure, has failed
at Fifth Third Asset Management, with “The last 10 years have been a night- 84 percent of assets invested in equi- increase its private client business. Market conditions, however, “have in its central promises of not effectively
$18 billion in assets, says the indis- mare in this business,” says Dave ties, said on Friday that first-half net “It could range from the private clearly changed” since the end of June, transfering the risk of the project to the pri-
inflows to its funds fell to 676 million vate sector, and getting a good deal for tax-
criminate selling means “good stocks D’Amico, president and chief market client and wealth management fit of a Peel Hunt said. Global stock markets payers, said the report.
are going down at the same pace as bad strategist at Braver Capital pounds ($1.1 million) from 814 million big bank ... we see it as a growth area have tumbled in recent weeks on fears
a year earlier. It advocates much stricter criteria for PFI
stocks.” Management, which has $575 million in the UK and in Europe as well,” he of another recession and fresh concern funding, taking projects onto the balance
Karolyi says the waves of wholesale in customer money. “People distrust Investor confidence had taken a said. over the euro zone debt crisis. sheet and abolishing “perverse incentives”
selling driven by liquidity black holes Wall Street at one of the highest rates I knock and “significant uncertainty Bonham Carter also identified long- Jupiter’s first-half pre-tax profit rose to use PFI.
are not just the byproduct of the over- can remember.” remains,” it said. term trends likely to favour the busi- to 37.3 million pounds from 14.6 mil- If all PFI liabilities were included in the
computerization of trading, it’s the end Evidence of that distrust is already “Sentiment is definitively more ness, such as pension reforms in the lion pounds a year earlier. National Accounts, the Office for Budget
result of too much “group think” by apparent. Over the past two weeks, nervous, it would be surprising if it UK that will make workers save more, The company is diversifying its Responsibility estimated that national debt
institutional traders. retail investors pulled $17.4 billion out wasn’t. I would be quite amazed,” would rise by £35 billion ($57.5 billion)or
He says Wall Street first saw this in of US equity mutual funds, according including a move to automatically product range, having launched at the
Chief Executive Edward Bonham enroll workers over 22 in a pension end of last year funds in convertible 2.5 percent of GDP.
August 2007, when dozens of quant to Lipper, a mutual fund information Carter told Reuters in an interview. “The markets will have already fac-
hedge funds suffered big losses at the service. Investors have been backing plan. bonds and total return strategies,
Rival fund house Henderson forecast although Bonham Carter said it will tored this in, in large measures, I would
start of the financial crisis because the away from stocks for some time, with
a near-term decline in investment from Culture expect,” Chairman of the Treasury Select
algos they employed were all buying many retail investors missing out on a remain focused mainly on equity, long-
retail clients, when it published results “I think savings are structurally pick- only funds. Committee, Andrew Tyrie MP told
and selling the same securities. This sizable chunk of the 5,000 point surge
flawed thinking by some of Wall earlier this week. ing up and that is a very strong positive Conditions for new products launch- Reuters.
in the Dow Jones Industrials since the “We can’t carry on as we are, expect-
Street’s brightest math geeks was an markets bottomed in March 2009. Jupiter is pushing ahead with medi- in our business in the longer term. The es are “particularly hostile,” he said.
um-term plans to diversify its client UK is behind the US by about at least ing the next generation of taxpayers to
early warning sign of even worse group According to Strategic Insight, a Assets pick up the tab,” he said, as the govern-
think to come with regards to the value mutual fund consulting firm, stock base, seeking more wealthy investors five or 10 years where people have a
and expanding into Europe. greater tendency to invest in mutual Jupiter said its private equity team ment grapples with a record peacetime
of securities backed by subprime mort- mutual funds in 2009 took in about $85 budget deficit.
gages. billion as the markets were beginning The moves “over the course of this funds,” Bonham Carter said. running 90 million pounds of assets has
Jupiter pledged its first interim left to join another company. Jupiter He added that new infrastructure and
Karolyi says his research, which will to rise. In comparison, a record $425 year and into next year,” will start with services should be paid for directly, as a
be officially published later this year in billion was invested in low-yielding a new office in Switzerland, Bonham dividend since floating on the stock will earn one-off management fees of capital project.
The Journal of Financial Economics, bond mutual funds. Carter said. market last year after pretax profit 3.2 million pounds in the second half of “The PFI system we inherited was ...
has found the phenomenon of liquidity This trend of retail investors prefer- Continental investors, who tradition- more than doubled in the half-year to the year as a result of the move. nothing more than a ploy to keep expensive
black holes is spreading beyond the US ring bonds over stocks continues to this ally favour investment in bonds, are end-June. Assets under management remained projects off the balance sheet,” said an aide
to other stock markets. That is prob- day, even as the yield on the 10-year becoming more open to putting their The fund manager will pay a 2.5 at 24.8 million pounds — the figure for to the Chancellor. “That’s why we are
lematic because the effects of liquidity US Treasury hit 1.98 percent on money in stocks, he added, a trend pence interim dividend, in line with the five months to end-May announced reforming it.” The Treasury said last month
black holes can be profound. Thursday. Jupiter hopes to harness with its core expectations of analysts at Numis in June. Jupiter had 19.8 billion pounds it was aiming to save £1.5 billion across its
offering of equity-focused mutual Securities. at June-end 2010. 495 PFI projects in England.