Chinese Exports Keep the S&P Rising; Koch Industries Will Acquire Electronic Components Maker Molex for $7.2 Billion; Japan’s Growth Stronger than Previously Reported; High-Speed-Trading about to Hit the Brakes
Chinese Exports Keep the S&P Rising (Bloomberg)
Positive export numbers released yesterday by China’s General Administration of Customs supported the S&P 500’s five-day upward trajectory. Inaction by the West in Syria and low expectations for Fed tapering also contributed. “We’re latching on to the better trading in Asia after the Chinese data,” Robert Pavlik, New York-based chief market strategist at Banyan Partners LLC.
Molex Inc. (MOLX), a maker of electronic components for products such as Apple Inc. (AAPL)’s iPhone, agreed to be acquired for $7.2 billion by Koch Industries Inc., a holding company controlled by the billionaire Koch brothers. Koch will buy Molex’s shares for $38.50 apiece, a 31 percent premium over the publicly traded common stock, according to today’s announcement. The companies expect to complete the transaction by the end of the year. Koch, a closely held company based in Wichita, Kan., owns everything from biofuel and fertilizer makers to commodity-trading services. It is using the acquisition to expand into connector components. The deal won the support of the Krehbiel family, which has controlled Molex since it began life as a manufacturer of moldable plastic in 1938. The deal will turn Molex into a stand-alone division of Koch. Molex will retain its name and its headquarters in Lisle, Ill. Koch reported that it has committed about $50 billion to acquisitions and capital spending since 2003.
The Nikkei index leapt 2% on the news that Japan’s economy expanded 0.9% in the April-to-June quarter, up from the 0.6% growth of the initial estimate. This puts the recent proposals to raise the Japanese sales tax on a firmer footing. “The moves by Japanese policymakers have fuelled optimism of a recovery, which has seen companies start to invest more,” said Martin Schulz of Fujitsu Research Institute.
The Commodity Futures Trading Commision (CFTC) released a study examining high-frequency trading, i.e. trading by computers at speeds beyond human capabilities. The paper cited several recent major market fluctuations due to computer malfunction. It will be discussed at a meeting of the CFTC’s Technology Advisory Committee, regulators and industry participants on Sept. 12, as a possible first step towards regulation. “This looks like a long-overdue first step by the financial regulators to stop abusive high speed computer-driven practices, which have caused havoc in our markets,” said Dennis Kelleher, who heads financial reform group Better Markets.