BP's share highly under performing due to Western sanctions on Russia

Sanctions against Russia is viewed as an obstacle for BP to keep it's business at normal pace. BP just posted a rise in second quarter profits. BP has around a 20% stake in Russian energy giant Rosneft and the sanctions against Russia due the Ukraine crisis can affect BP in future. BP said, "Sanctions could adversely impact our business."

BP is worried about the impact of sanctions and relationship with Rosneft. The crisis may affect the level of income, production and reserves as well as BP's investment and reputation. The company's second quarter profits is $3.2bn (£1.9bn), up from $2.4bn in the same period last year. For the second quarter, BP said higher oil production in higher-margin areas such as the Gulf of Mexico had boosted its profits. But for third quarter, the production is not expected to be high as second quarter due to the seasonal maintenance in Alaska and the Gulf of Mexico as well as the planned major turnaround.

BP has around a 20% stake in Russian energy giant Rosneft and the sanctions against Russia due the Ukraine crisis can affect BP in future.

If the sanctions become more intense, there could be prohibition of exports of technologies used in the Russian Oil sector.

BP's share price is affected along with political conflicts as BP is more exposed to political situations in Russia than any of its competitors. Analysts are seeing BP's share hugely under-performing. BP's share price had risen by 2% since early June, while Royal Dutch Shell, Exxon Mobil and Chevron had each increased by more than 9%.

On Tuesday, BP shares were up during early trading, but later fell 1.6% to 489p because of the impact on western sanctions on Russia and it's still going down.

Russia's move to prevent itself from high inflation and low investment.

From 7.5% to 8% now. Russian interest rate has increased.

Russia is acting to prevent their economy from the risk of high inflation. The situation in Russia after sanctions from west and recent tension in Ukraine are viewed as the major factors for the probability of increment in inflation.

Since the European economy is in stress and whole Eurozone has low inflation of 0.5%, Russia is also experiencing the stress and other restrictions too. With raising pressure from the west and it's conflict with Ukraine, Russia is anticipating high rate of inflation and in order to check the  risk of high inflation Russian Central bank decided to raise the interest rate by 50 basis points, or half a percent, to 8% per year. In June, core inflation grew to 7.5%, well above the bank's forecast of up to 6.5% for the year.

Analysts were not expecting such changes in the interest rate. They are aware of the vulnerability of the Russia's economy.After sanctions were implemented domestic stocks and the rouble tumbled earlier this year. Analyst are observing the concern of central bank for the potential impact.
The bank is working to reduced the inflation risk  which are caused due to a combination of factors, including, inter alia, the aggravation of geopolitical tension and its potential impact on the rouble exchange rate dynamics, as well as potential changes in tax and tariff policy. The bank point outs the main reason for inflation acceleration is the effect of the observed rouble depreciation on prices of a wide range of goods and services.

While anxious investors are pulling their money out, the exchange rate might still go down.

The consumer price growth rate increased to 7.8% in June and the bank trying to put down the consumer price growth to 4% with increased interest rate.

Russia is concerned about the money leaving from the country. Analysts view this act as  move to prevent large amount of money to leave the country.With such tension in the reason, investors are still searching for the better reason to invest.

Forbes Media sold to international investors, amount still not disclosed.

Forbes Media has an audience of 75 million people worldwide and it was searching for buyer last November. Now, the Media has sold majority of it's stake to a group of international investors in Hong Kong. The company was under the family ownership for 97 years. Forbes magazine is a part of Forbes Media and Integrated Whale Media Investments bought it's majority shares. The amount of purchase was not yet made public.The family announced that it would still have a "significant" stake.

 Forbes Media is profitable and, in 2013, achieved its best financial performance in the last six years.

Steve Forbes will remain as chairman and editor-in-chief. He told,"While today marks a fundamental turning point in this 97-year-old company founded by my grandfather, it should be seen as an opportunity to continue and strengthen our mission." He said, “This is a major milestone for the company and our family, and we’re pleased to partner with a forward-looking investor group to further drive the evolution and growth of this exceptional company.”

While the headquarter will continue to be in the US, the Media is going for international expansion and Company’s Asian business will continue to be led by Forbes Media CEO/Asia Will Adamopoulos. The Media will have it's operating name and it will still be a privately-held, independent company.

"As more market-based economies emerge globally, interest in the information that Forbes provides and the message it delivers resonates with a growing audience,” said Tak Cheung Yam, Chairman and Founder of IAM. He added," Given the tremendous growth of digital in the past decade, Forbes Media’s future plans will include additional internet and social media expansion projects."

“This significant investment in the company is a strong endorsement of the global strength of our brand, as well as our progress and innovative plans for continued growth,” said Mike Perlis, President and CEO of Forbes Media.

The portfolio of assets are diversified by Forbes Media. It consists of media, digital, technology and branded products. There are more than 6 million readers in the U.S. And it has 24 international web sites. There is new brand extensions, including conferences, real estate, education, financial services and technology license agreements.

Completion of the transaction is expected to take place this year and is subject to customary closing conditions. Deutsche Bank served as financial advisor. RSM Nelson Wheeler performed the financial and tax due diligence work for the investor group and  Credit Suisse (Hong Kong) limited served as financial advisor

Microsoft after Bill Gates and Steve Ballmer. Satya Nadella

Microsoft is making a history again, it's cutting up 18,000 jobs. This is the highest cut in the company's thirty nine years of history. Most of the cuts will be in a recently bought unit, Nokia. It is estimated that around 12,500 jobs will be cut for the unit. This is being announced with 18 months of closing acquisition. Microsoft pledged to cut $600 million per year in costs.

The firm was expected previously to reduce 6,000 initially and while the actual cut are being announced, it became more sever,18,000 jobs. The firm has 127,000 employees world wide.

While it's reducing the number of employees it's not yet specifying locations yet.

The company  is also changing it's core business focus. The company is a software giant and it's still is. But, new CEO is offering something that might be questioning the trust of the investors. In February Microsoft appointed new CEO Satya Nadella who wants the firm to shift it's focus to online services, apps and devices away from software.
The firm is focusing on efficiency by reducing the chain of command and having fewer layers of management. IBM was weak at to reduce it while competing with the firm during the era of technological warfare.

He wore in an announcement,"Making these decisions to change are difficult, but necessary."

The firm is going to complete the re-size by the end of June next year.  It said the affected staff would be notified over  the next six months.

In total it said the cuts, including severance pay, would cost it between $1.1bn to $1.6bn (£643m to £935m) over the next year. Though it might seem to be costly for the company to cut job this will put the company in more favorable situation in coming years. The company will find itself in position where salary to employee and other expenses are much less than at present.

Analyst are still hopeful about the company's ability to be successful in online world. Satya Nadella is expected to put forward massive changes in the company.

Using it's $7.2 billion acquisition and all other resources, Microsoft is working to be a leading company in mobile devices and cloud based services. Satya Nadella is willing to put productivity and innovation as the focus of the company. It's seems the firm will be working in many innovative ideas to get what's useful for people. It's now focusing on Skype and Cortana.

Mr Nadella recreated image of the firm as "the productivity and platform company for the mobile-first and cloud-first world." The company may become leading one, it's time which will show us the result but for now there are people who will have to bear the impact. The cuts are expected to helping Microsoft in the competition with tech giants like Google and Apple.

This has impact on the stock price of the firm. Recently after the news, the stocks were up by 2%. While the world market is being hit by geopolitical unrest, the firms stocks are in increasing trend.

The firm is working to combine three operating systems into one single operating system. Nadella said "this means one operating system that covers all screen sizes." While windows is popular for making versions of the operating system, it's now a bold step for the firm.

Nadella is up with one team and a common architecture to combine Windows, Windows Phone and Xbox.
This could be one of the best step taken by the company to provide universal apps.


Here the analysis of the stock in Nasdaq.

Microsoft is making a history again, it's cutting up 18,000 jobs.This has impact on the stock price of the firm. Recently after the news, the stocks were up by 2%

European Market is upbeat, perhaps too upbeat while US financial markets are closely interconnected with European market, the impact is yet to be seen.

In April, the IMF had predicted that global output would grow by 3.6% in 2014 and 3.9% in 2015. 

At an event in the Robert Schuman Foundation in Paris, IMF head Christine Lagarde said that Europe continues to face important challenges concerning its long-term future and markets might be at risk of being too complacent. She said,"The good news is that the European economy is recovering from the crisis. Confidence is improving and financial markets are upbeat. Perhaps too upbeat."
She has warned that financial markets maybe a little too upbeat given the persistently high levels of unemployment and debt in European economies. She added that growth prospects in the region could be undermined due to continuing low inflation. Currently the inflation in  eurozone is 0.5%.

On the other hand, she was optimistic that European economy was recovering and until demand starts to rise, interest rates should remain low. European Central Bank prefers inflation close to 2%. Being optimistic she said,"Confidence is improving and financial markets are upbeat, perhaps a little too upbeat."

The European Central Bank cut its main interest rate to 0.15% last month. ECB chief Mario Draghi has since said interest rates will remain at their current level for an "extended period of time in view of the current outlook for inflation".

While ECB has become the first major central bank to introduce negative rates.It also cut its deposit rate - the rate it pays banks to keep money on deposit - to -0.1%

Confidence is improving and financial markets are upbeat, perhaps a little too upbeat.

Lagarde said,"Monetary policy should remain supportive until private demand has fully recovered" and the ECB "has achieved its price stability objective." She added,"There is a danger of a vicious cycle - persistently high unemployment and high debt-to-GDP ratios jeopardize investment and lower future growth."
"Global activity is picking up but the momentum could be less strong than we had expected because potential growth is weaker and investment ... remains subdued," she told.

She said,"Looking at emerging Asian countries, and in particular China, we are reassured because we do not see a brutal slowdown but rather a slight slowing of a growth that has become ... more sustainable and that we see at 7-7.5% this year."

In April, the IMF had predicted that global output would grow by 3.6% in 2014 and 3.9% in 2015. The information of IMF slashing US economic growth rate is there in the market. IMF slashes estimate for US economic growth in 2014, the annual review cut its growth forecast to 2%, citing a harsh winter, weak international demand for the country's products and problems in housing market.

After the financial crash of 2008, many nations across the globe have to restructure and re-balance their economies. While others were recovering substantial sovereign and bank debt led the euro zone to fall back into recession in 2011. In the summer of 2013, eurozone economy managed to expand again, but has failed to build on that with growth of just 0.2 percent in the last quarter compared to the previous period.

"More developed and diversified regional capital markets can support innovation, investment, and long-term growth," Lagarde said. "Deeper integration with world markets would improve productivity and plug countries into global supply chains."

World Markets affected by geopolitical unrest.

World markets plunged down on Friday after Malaysian Airlines Plane crash. The tension in Ukraine affected markets world wide. It has been said that the Flight MH17 was brought down by a surface-to-air missile over a region where Ukrainian government forces and  pro-Russian rebels are fighting.

As the news of crash spread, Japan's Nikkei tumbled by 1% and Germany's DAX fell 0.35%.


Russia and Germany has close trading ties, and it's been anticipated that Germany might lose more than most from a deepening crisis. After the crash, Moscow is going to experience pressure from the world to resolve the conflict between Russia and Ukraine. Such political unrest has affected markets around the world.

On the other hand, aviation stocks are falling in Malaysia, it fell by 0.4%. Four months earlier Flight MH370 disappeared, this is the second tragedy to hit the airline business this year.
After the attack, the most actively traded stock in Kuala Lumpur, Malaysia Airline fell by 11% while Malaysia Airport slide down nearly 5%.


While the tension spread and Russian stocks were also on the slide, extending Thursday's losses triggered by the announcement of new U.S. sanctions targeting leading Russian energy companies and banks on the other hand, the West is trying to pressure Moscow into ending its support for the rebels in Ukraine.


Investors were further thrilled when Israel sent ground troops into Gaza.

On Thursday, US stocks were also seen affected : the S&P 500 declined about 1.2%, the Nasdaq slid 1.4% and the Dow closed down almost 1%, the drop for the Dow was the biggest in two months, and the S&P's fall was the steepest in three months.

While stock markets were falling gold price was up 1.5% higher. The VIX index, which measured market volatility rose up by 36%.


While these events affected world market after the news, Wall Street bounced back Friday.

Political Unrest and shares prices in US

A Malaysia Airline Flight 17- a Boeing 777 crashed in Ukraine border near Russia, on Thursday. Israel began a ground invasion into the Gaza strip. This caused  decline in US shares. Investors have lost the confidence after these political unrest.

The S&P 500 plunged 23.45 points or 1.18%, to 1,958.12,
The Nasdaq index dropped 62.52 points or 1.41% to 4,363.45.

Closing back below the symbolic threshold of 17,000, the Dow Jones index fell 161.39 points, or 0.94%, to 6,976.81

Earlier in the day of new US and European Union sanctions on Russia, such new has made impact in US share market.
Such uncertainty and tension, along with the Israel's invasion into Gaza, investors are attracted to invest in assets like gold and US treasury bonds. Gold futures jumped $17.10, or 1.3%, to $1,316.90 an ounce on strong demand.

Google has reported 22% increase in revenue during the second quarter compare to a year earlier. Stocks was up by 1.18% at 580.5

Google has reported 22% increase in revenue during the second quarter period from March through June compare to a year earlier. This increase in revenue is more than the expectation of the investors but the profit is not as expected.

Google reported it's profit was $3.4 billion, which was up by 6% while revenue rose up to $16 billion.
With the reports out the Google shares rose by more than 1% in share market.

Goods advertisement are very popular in internet and many clients are using these advertisement to increase their sales. While Google announced increase in revenue, Google's chief business officer is leaving for SoftBank. Google announced Nikesh Arora was leaving for SoftBank.

Omid Kordestani,  who was Google’s business founder and formerly led Google’s sales team, will be replacing Mr Arora temporarily.

NRB increases limit on margin call

Nepal Rastra Bank, through its Unified Directives-2071 has increased the limit on margin call. It's been anticipated positively by stocks market.According to the new directive, marginal call up will not be needed up to 1.5 times of the security coverage.

When price of securities is enough to cover 1.5 times of the loan issued against it, Development Banker's association is against of making margin call.

What happens with this new margin call limit?
The new limit for margin call allows share investors to get loan package and there's no necessary margin call even if the price of scrip falls by 10 percent.

Now the BFIs can issue a margin call to a borrower to meet the required margin within seven days only if the price of scrip goes beyond 1.5 times of the security coverage.

Meanwhile, the central bank has become more flexible to promoter shareholders of a listed company by allowing the promoter/ promoter group to file candidacy for public director as well. Promoters can fight for public directors, too.

When BFIs have been asked to convert more of their promoter shares to ordinary shares, NRB has stated such provision.

$7billion settlement by Citigroup, Investors seem to be happy with that decision because stock price rose.(3.02%)

The Citigroup fines are said to have surprised stock analysts and people inside the bank, who had hoped to settle for less.Citigroup will pay $7 billion to settle an investigation into risky subprime mortgages, the type that helped fuel the financial crisis. Following the decision for consumer relief, the bank reported a stronger than predicted quarterly profit, and saw its share price rise by 3.02% to $48.42 (£28.34).


Citigroup's chief executive, Michael L Corbat, said,"We believe that this settlement is in the best interests of our shareholders, and allows us to move forward and to focus on the future, not the past." Investors seem to be happy with that decision because stock price rose.

The bank offered to pay less than $4billion to resolve the  investigation. In reaction to it the justice department warned last month that it would sue the bank for offering less than what government was seeking.

The bank will take a pre-tax charge of about $3.8 billion because of the settlement during its second quarter.

Citigroup said Monday that its net income dropped in the second quarter after the settlement was arranged. That charge pushed down Citigroup's net income to $181 million from $4.18 billion a year earlier.On a per-share basis, net income was 3 cents, compared with $1.34 in the second-quarter a year earlier. Excluding the charges and an accounting gain, the bank's second-quarter profit rose 1 percent to $3.93 billion, or $1.24 a share.

The bank earned $3.89 billion, or $1.25 per share, a year earlier. Revenue was $19.4 billion, excluding the accounting gain, compared with $20 billion a year earlier.

Adeal between the Justice Department and JPMorgan Chase & Co., the nation's biggest bank was similar to this settlement, but it's much larger than this.After months of negotiations, the bank last year agreed to pay $13 billion after an investigation into toxic mortgage-backed securities..

Portugal is trying to dimish fear over Banco Espirito Santo

Portugal's Largest bank is trying to ease it's investors and saver.

Banco Espirito Santo is trying to calm down the investors that the bank is not in need of extra funds.
It has said that it has sufficient finances to deal with its parent company's debt problems.
On Thursday, the banks's financial strength hit the stock market. On the other hand, Portugal's central bank said investors and saver should not be worried about the bank's financial situation.


What's the impact?
Banco Espirito Santo (BES) and Espirito Santo Financial Group- which holds a 25% stake in BES - both's shares fell sharply on worries about the financial health of the Espirito Santo group. BES shres were even suspended for regulation in Lisbon stock market. It closed at  0.4810 euros in Lisbon.
In order to remove this fear and recover from the loss the group is releasing a restructuring plan of Espirito Santo Group.
It even said,"BES Executive Committee believes that the potential losses resulting from the exposure to Espírito Santo Group do not compromise the compliance with the regulatory capital requirements."

Mr Pedro Passos Coelho, Portugal's Priminister said: "There is no reason for the state to intervene in a bank which has solid capital and which has a comfortable margin to deal with any eventuality, even the most adverse".

These events initiated a chain reaction in Europe and US about the perception of European banks. The bank's trouble is expected to affect Portugal seriously since it's last bailout. In the harsh condition of the financial crisis, Portugal took a 78bn euro ($106bn; £62bn) bailout from its European partners and the International Monetary Fund. The government's burrowing costs reached 3.5% in April which was eight-year low but the country's financial sector's condition are pushing it back up.

Even though strategists are not sure about the outbreak of the crisis to other countries and how will the bank do in future, there's still no certainty that the market is going to take it normal.

Google has started deleting some news articles in Europe, Google to comply with court ruling.

Google has told the BBC, The Guardian and The Independent that some articles will be removed form European search results in response to requests from individuals looking to make use of a 'right to be forgotten' ruling by the European Court of Justice. Google says it's "disappointing."

The stocks are trading at 584.73 on July 05. This ruling of European Court of Justice might impact on share price of the Google. It all depends on how the stock holders perceive this event.

Still the company holds power to show or not to show some results for queries in it's search engine. The company says it will balance the individual's privacy as well as public's right to know and distribute information.

Google has 70,000 request to delete results relating to personal information. The challenge for the company is that it has to act as judge and jury in cases that could have big implications for personal privacy and censorship.