HSBC: China June PMI at 50.1 Lowest in 11 Months

HSBC this morning announced China’s June PMI is estimated at 50.1, lower compared to May 2011 51.6. It is the lowest PMI reading in 11 Months.

Also, China’s Manufacturing index is estimated at 50, compared to May’s reading of 51.6 is also the lowest in 11 months.

HSBC China Chief Economist and Chair of Economic Research for Asia Pacific Qu Hongbin(宏斌指) said, due to the tightening of monetary policy, with the weakness from external consumption, causes the drop in demand for manufacturing products. This correction has caused the decline in growth. However, he doesn’t see the chance of a hard landing in China because the current PMI level is still in-line with approx. 13% industrial growth.

He also stated, that a relief of inflation along with a decline in demand is a good sign to the Chinese economy.

Translated from: http://www.hkej.com/template/onews/jsp/detail.jsp?title_id=64758

Icahn to Return Outside Money in Hedge Fund

You can call him a coward, but you can’t call him a loser.

Carl C. Icahn is returning all outside money in his hedge fund, citing his reluctance to be responsible to investors through another possible crisis.

“While we are not forecasting renewed market dislocation, this possibility cannot be dismissed,” Mr. Icahn wrote in a letter to investors. “Given the rapid market run-up over the past two years and our ongoing concerns about economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis.”

Mr. Icahn is the latest prominent manager to decide to close off his fund to outside investors after the financial crisis.

Stanley Druckenmiller, who ran Duquesne Capital Management, and Chris Shumway, who founded Shumway Capital Partners, are among those who have handed money back to investors in recent months.

In his letter, Mr. Icahn reflected on the experience of 2008, noting that while it might sound “corny to some, the losses that were incurred by investors in our funds in 2008 bothered me a great deal more, in many respects, than my own losses.”

Mr. Icahn said his firm’s decision not to impose gates during 2008 and 2009 meant many investors withdrew money from the funds. But rather than selling off positions to meet the liquidity demands, his firm pumped its own capital into the fund. As a result, outside money makes up just 25 percent, or $1.76 billion, of fund assets.

Icahn Capital, the fund started in 2004, has earned gross returns of 104 percent since its inception, Mr. Icahn said.

David Shukis, a managing director of hedge fund research and consulting at Cambridge Associates, said of Mr. Icahn: “He clearly has enough money to do what he’s continued to do without the frustrations of outside investors. It’s unfortunate because the occurrence of really outstanding investors closing their funds and focusing on their own capital is reducing the opportunity set for our clients.”

Mr. Icahn said in his letter that he planned to return 95 percent of outside money in April.

Ichan Letter to Investors

Top 10 Biggest Hedge Funds in 2010

AbsoluteReturn+Alpha is out with its 2010 year-end survey of the top ten hedge funds in the Americas. Their findings show that American hedge funds manage a combined $1.297 trillion, up 10% from the year prior. However, this still falls short of the 2008 peak level of $1.675 trillion before the financial crisis.

The Top Ten Hedge Funds in the Americas

1. Bridgewater Associates: $58.9bn AUM
2. JPMorgan Asset Management: $45.5bn
3. Paulson & Co: $36bn
4. Soros Fund Management: $27.9bn
5. Och-Ziff Capital Management: $27.6bn
6. BlackRock: $26.6bn
7. Baupost Group: $23.4bn
8. Angelo, Gordon & Co: $22bn
9. Farallon Capital Management: $21.5bn
10. King Street Capital Management: $19.9bn

Possibly the most astonishing fact here is that in 2010 the big… got even bigger. Ray Dalio’s Bridgewater Associates increased its AUM by $15.3 billion. Dalio gave a rare interview yesterday that’s definitely worth listening to. His Pure Alpha Fund II gained 44.8% last year, quite the performance when you compare it to other 2010 hedge fund returns.

Of the hedge funds featured on the list, we provide updates on the portfolio activity of four of them:

- Seth Klarman’s Baupost Group has been active in commercial real estate and we just posted up an excerpt from his year-end investor letter.

- Paulson & Co has been focusing on restructured equities as noted in their year-end letter.

- Farallon Capital focuses on risk arbitrage and their investments have been featured in our newsletter.

RMB is estimated to appreciate 2.5% in 2011

RMB exchange rate on Monday increases slights.  Based on the FX market price, 1 USD  is equal to 6.5716 RMB.  RMBUSD rate fluctuates between 6.5713 to 6.5780 RMB.

The People’s Bank of China adjusted median price lower on Monday (2/28) to 6.5752, but on par with last Friday’s 6.5757.  From Offshore RMB market, one year RMB to USD contract dropped to RMB 6.4140/6.4180.  Based on the 1-yr futures contract, It is estimated RMBUSD rate will appreciate 2.5% this year.

Ratings on The Analysts

Given the latest debacle on rating agencies about their accuracy of their ratings on the CDS, I thought to myself, why hasn’t anyone quantitatively and qualitatively measure the accuracy of the investment analysts who appeared on public medium (new or old) to talk up or down a stock?  Therefore…

Today I have initiated coverage on Wedbush Morgan, an All-Star Wall Street Banker covering the biotech space.

Wedbush Morgan’s coverage on Celegene has me intrigue about him calling the company “the next Genentech”.  Don’t get me wrong, I personally also like Celegene at this level.  With great performance on their global sales of REVLIMID up 46% and VIDAZA sales up 60%, Celegene is on track to have a breakout year.  But I’m very interested to find out if his call will be accurate or not.  The following are his calls on Celegene.

• Celegene has “exceptional near- and long-term growth prospects”
• “Stands to become one of the few small molecule biotech companies to achieve a market cap in the tens of billions of dollars”
• “Celegene will achieve a market cap of $50 Billion in the next 2-3 years“
• Wedbush believe Celegene will nearly double in value within the next 24 to 36 months

The only point that is quantitative in his statement that I can gauge accuracy is the call on CELG market cap.  As of today April 30, 2010, CELG market cap is $28.50 Billion, compared to Amgen has a market cap of $55.36Billion.

So, check back often to see if Wedbush call is correct or not.  Stay tuned.

First Post

Hello everyone,  This is my first post on this blog with regards to global finance and investment opportunities.  I hope everyone will enjoy my postings.  Please feel free to comment at any time.  Thanks.

Regards,

Ben Tang