Readings: Insider trading, India’s a safe haven?, Gold ETFs
- Wall Street Journal: Trading in Deal Stocks Triggers Look at Banks
Investment banks aren’t allowed to trade on their inside information about potential mergers. But sometimes by chance, one arm of a bank will buy a stock without knowing that another arm is advising on a deal. That’s what J.P. Morgan says happened with Rural Cellular. “These purchases were made on behalf of our clients and were totally appropriate,” says a spokesman.
The study, which examines statistical patterns, concludes that some banks likely are trading on their inside information about deals.
“People doing these mergers hire the banks to be their best agent. But from the data, it seems that the banks are doing what’s best for themselves, rather than the clients.”
Not much of a surprise, eh?
They predicted India will fare better than more trade-dependent economies as U.S. growth slows, noting exports of goods and services account for about a fifth of its gross domestic product, compared with 40% for China.
“Its valuations look steep, and it’s a crowded trade … but it’s the nature of lifeboats to get crowded. And there is some merit to the idea of India being seen as one now,” Mark Matthews, Merrill Lynch’s chief Asia equity strategist, told a media briefing in Hong Kong.
“It’s our sense that it can remain in a protracted expensive valuation zone because there’s not enough reason to sell it.”
Sounds good. The party will go on!
- Marketwatch: Warehousing bullion for gold’s supermarket
. . . the total amount of gold held in the StreetTracks trust stood this week at 642 metric tons, according to the fund. (One metric ton is equivalent to 1,000 kilograms or about 2,205 pounds.) That’s more than the gold reserves held by many national governments, including China, Russia, the European Central Bank and the Netherlands, according to data compiled by the World Gold Council, the trade group that sponsors StreetTracks Gold Shares.
To put that figure into perspective, about 3,400 metric tons of gold is sold each year for commercial production, mostly jewelry, and industrial uses.
Because the StreetTracks reserve expanded faster than expected, its managers had to move the stores to a bigger vault about six months ago to make more room.
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