What is An Underwriting Agreement?

The underwriting agreement refers to the contract document of a specific contract between the underwriting syndicate and the company that chooses to issue new securities. Usually, an agent is appointed to determine the terms of the agreement together with the company’s authorized representative. An underwriting agreement is sometimes called a purchase contract or a placement agreement. 

underwriting agreement

Purpose of the underwriting agreement

The purpose of the underwriting agreement is to clarify the terms and conditions related to the underwriting process. The main purpose of the underwriting agreement is to clarify all the terms and conditions of the underwriting process related to these new securities. For this reason, both the company and the underwriter will make specific commitments regarding this stock issuance.

Rights and responsibilities

In the agreement text, the rights and responsibilities of both parties will be clearly stipulated in detail. Therefore, there is no misunderstanding between the two entities. Although certain aspects of the underwriting agreement The details will vary depending on factors such as the type of shares issued, the country of origin, and any currently applicable corporate equity issuance laws.

Defines the Business Structure

Some elements can be found in any such contract. An underwriting agreement usually defines the business structure and purpose of the two entities that signed the agreement. After the identity of the participants is determined, the agreement will continue to define the terms that the parties will recognize and comply with. 

The key Points underwriting agreement

Five other key points will be discussed and defined in the body of the underwriting agreement: First, the underwriter promises to purchase shares to issue. Second, the public offering price of shares will be set. Next, the terms will involve the agreed underwriting spread. 

Fourth, the agreement will specify a settlement date. Finally, it will determine the net income that the issuer will realize. In some cases, the underwriting agreement will take a form called a best effort agreement. In essence, this is a modified form of the underwriting agreement, indicating that the underwriter will do its best to sell a securities company in accordance with the expressed wishes.

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What is Dividend Capture?

Dividend capture refers to the strategy of buying and selling stocks that are almost ready to declare dividends. Generally speaking, a listed company will declare its dividend on a certain day. And then assume that the dividend will be paid to all shareholders on record on a certain future date. Those who try to buy the stock only for the dividend and then sell it It is said that it is implementing a strategy to obtain dividends or trading dividends.

Observing Trends Helps

Observing trends help to capture the dividends of stocks. Usually, during the board meeting, the company will announce earnings every quarter, and then distribute dividends authorized.

If the company has a profitable quarter. The news will then be announced through a press release or press conference. Larger companies will widely report this news through financial publications and TV stations for business news. 

Companies Usually Announce

Companies usually announce quarterly earnings to the public through press releases or press conferences. For example, Widget Inc. may announce a payment on June 1st. U.S. dollar (USD) dividends, June 30 may be paid to all shareholders with records on June 15.

Ex-Dividend Date

The deadline on June 15 is called the ex-dividend date, that is, the date when shareholders can no longer receive dividends. Therefore, those who wish to participate in the dividend will line up to buy this stock at the close of the market on June 14.

The Dividend Capture Strategy

The key to using the dividend capture strategy to profit is to be able to sell the stock at the price paid by traders, or at a price not lower than the actual price paid. Sell ​​stocks. In order to do this, traders usually want to wait as long as possible before buying to avoid large fluctuations in the market.

The only problem with this is that when the stock goes ex-interest, the amount paid is deducted from the stock value. Therefore, after the ex-dividend date, a stock will trade at $50 and will be valued at $49.

Use The dividend Strategy Bet 

Those who use the dividend strategy bet that the actual value of the stock is closer to the number before the ex-dividend date, and the stock will rebound and increase in a relatively short period of time.

Books Reference

Although in some books, the dividend capture strategy is considered to be a quick get rich in the stock market One way, but many financial advisers strongly advise against this strategy. This requires a lot of research and some luck. In addition, a highly volatile market will make the implementation of dividend capture strategies more difficult.

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What is Economic Life?

What is Economic Life: The economic life of an asset is a measure or prediction of the remaining time it can be used economically. This may be shorter than its actual service life because it may reach the point where its operating cost exceeds its productivity. 

What Is Economic life Principles

The principle of economic life is the same as that of depreciation, although these two figures may differ due to legal accounting restrictions. 

The economic life of an asset is a measure of the remaining time it can be used economically or the concept of predicting the economic life of an asset is familiar to anyone because it is scrapped for reasons other than wanting a new model or giving up driving As the car ages and needs more repairs, the number of cars will increase.

Increase Taxes Or Increase Insurance

 It may also increase taxes or increase insurance premiums. At the same time, if the car must travel at a slower speed or take more time to repair, then it may not be so useful. Ultimately, the driver will decide that the benefits he or she derives from owning the car do not justify the running costs. 

Physical Assets

A company will look at physical assets in the same way. In theory, a machine can still be used for several years at its operating cost after stopping production to prove its rationality. 

A computer can still work, but it may have slowed down so that its productivity is not enough to justify the time employees spend using it. Economic life is just a prediction, based on a general and predictable recession. Based on the model, unpredictable factors may affect the economic life of an asset. 

If the market price of small parts plummets, a small part manufacturing machine may become unusable overnight. Alternatively, the government may make it illegal to use small parts to make machines unless the dominant part is replaced by steel.

What Is Economic Life Factors Types

These types of factors are not always included in the economic life forecast, but there are some exceptions.

 For example, when an economist evaluates the economic life of an injection mold used to make a soda can and an injection mold used to make a specific mobile phone, he may predict that the latter will have a shorter economic life. 

This is because even if the price of mobile phones is higher, each model of the product is more likely to experience a decline in sales due to aging or even obsolescence, making this type of mold useless. The soda beverage market may remain relatively stable, and even if the popularity of individual brand changes, such molds may still be available.

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What is Shadow Stock?

The term “shadow stock” has several different uses in the financial world. It can refer to publicly traded stocks. That increase in value when newly listed stocks in similar industries begin to rise, or it can refer to stocks called “virtual stock plans”. In a virtual stock plan, people get paid based on stock increases without actually receiving the value of the company’s shares. 

Shadow stocks are publicly traded stocks that increase in value when newly listed stocks in similar industries begin to trend upward.

In the first sense, a typical example of shadow stocks might be the stocks of a car company that has been traded on the market and has a history. When a new car company goes public.

The stock of the first car company becomes a shadow stock. After a new company is listed, there will often be high trading volumes, which will push its value up, while the value of shadow stocks will often increase accordingly, and eventually, the market and value will stabilize. 

Company Shadow Stock

Giving employees a company’s stock, whether it is fake, is an incentive to provide them with the motivation to help the company succeed. In the sense of a virtual stock plan, shadow stock is a somewhat complicated concept. 

Virtual Stocks

In such a plan, employees are given a certain amount of “virtual stocks” which are not real stocks, and employees do not have stocks in the company. When the value of the company’s stock rises, employees are paid based on the number of shadow stocks they receive.

 Company Stock Fake

In other words, it is as if the company has stocks that are generating returns to employees. A company’s stock, whether fake or fake, is used to motivate them and give them the motivation to help the company succeed. Do something that can increase the value of the stock, so that the salary increase is in the best interests of the employee. In the case of phantom stocks, companies can use this technology.

If they are not publicly traded so that they can provide performance-based compensation without losing stock, and public companies can also provide employees with shadow stocks. Usually, the cash payment that employees are entitled to receive from the shadow stock plan is delayed. 

Long-Term Employment

This is to encourage the long-term employment of employees. Employees may not get the shares immediately, and the number of virtual shares provided will increase over time. 

Payments may not start in a few years, which gives employees a reason to stay in the company so they can receive cash dividends. For tax purposes, the money from the virtual stock plan is treated as earned income.

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What is Acquisition Financing?

Acquisition financing is a process of raising funds that can be used to purchase or acquire another business. The idea behind this strategy is to obtain the funds needed to manage the acquisition without involving any assets currently held by the buyer.

Typically, the goal is to use the income stream or assets of the acquired company to repay any debt incurred as part of the purchase process.

Process Of Raising Funds

Acquisition financing is a process of raising funds that can be used to acquire or acquire another company. There are several different ways to complete the task of financing an acquisition. 

Popular Options

A popular option is to apply for a commercial loan or one that is sufficient to cover the full acquisition cost, including legal fees and other miscellaneous expenses. For buyers with excellent credit ratings and a track record of successfully managing companies, they can usually obtain loans at a very competitive interest rate.

Another option for commercial loans is to seek external investors who will provide funds for the acquisition in exchange for future Some kind of compensation. In this case, acquisition financing may provide these investors with stocks to repay their contributions at a fixed or variable interest rate, or a combination of the two.

Specific Situation

Depending on the specific situation, a group of investors may cooperate with a bank or advantage of more attractive repayment terms provided by other financial institutions. As part of the acquisition financing strategy, the buyer must also have a clear plan for debt repayment. 

Assuming that the goal is to continue to operate the newly acquired business, the repayment strategy may focus on using any net profit generated by the business to repay the acquisition loan or line of credit. In the case of acquiring a business and absorbing part of the business to the parent company, sell any or all assets that do not require the reorganized enterprise to operate at the highest efficiency. 

Repay Debts

The proceeds from the sale of these assets are used to repay debts so that the buyer has the ability to use the income stream of the parent company after the reorganization. The details of how to arrange acquisition financing usually depend on the buyer’s potential motives and what it ultimately hopes to obtain through the acquisition.

Kind of Financing

It is easier to determine what kind of financing The strategy can achieve the expected goals and take measures to implement the necessary steps. Most buyers will also prepare a contingency plan.

Contingency Plan

If the main strategy does not work as planned, the contingency plan can be activated, either before the purchase or during the repayment period. Doing so can increase the likelihood of maintaining a reliable credit rating and enable the buyer to make more acquisitions in the future.

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The dollar shows signs of rebound-focus on heavy rounds this week

The increase in non-agricultural employment in the U.S. announced last Friday was slightly better than market expectations. The number of jobs increased by 1.76 million and the unemployment rate fell to 10.2%. The U.S. job market continued to rebound after the economy restarted, and the U.S. stock market suffered Positive employment data encourages to continue higher. However, from the perspective of the currency market, investor optimism has been reduced, the US dollar has shown signs of rebound, and commodity currencies and gold prices have fallen under pressure. On the one hand, the implementation of the US government’s new crown aid fund plan has been blocked, and on the other hand, the tension between China and the United States has further escalated, which may lead to a rise in the recent risk-off transaction sentiment. In addition, some important economic data this week will give the specific conditions of economic recovery in various countries after the economic restart, which is an important factor in the direction of long-term transactions.

U.S. economic data

Some important U.S. economic data this week mainly include the U.S. Consumer Price Index (CPI) in July on Wednesday and Friday’s retail sales data. Affected by the continued decline in the U.S. dollar, the market expects that CPI data in July will show a sustained rebound. This data recorded an increase of 0.2% and returned to positive after shrinking for three consecutive months after the lockdown due to the epidemic. In addition, Friday’s retail data may continue to improve. The US retail industry has shown a sharp rebound after May, shrinking from April to -17.2%, V-shaped reversal to May’s growth of 12.4%, and June’s data is an increase of 7.3 %, we may see growth in July, but the momentum may be greatly weakened.

China Economic Data

Several important economic data of China will be released this Friday, including: industrial production data, fixed asset investment, retail data and unemployment rate. The above data are all annual ratios. Since March, various data in China have rebounded flexibly. Fixed asset investment expectations still show a negative range this time, but the degree of shrinkage is significantly reduced. This time the expected value is down 1.6%. The same data in March is down 24.5. %. At the same time, retail sales data is expected to return to the positive range for the first time since February, with March data falling by 20.5%. Industrial production data will rise to more than 5%, while the unemployment rate is expected to drop to 5.7%. China’s data will have a direct impact on the currencies and stock markets of commodity exporting countries.

New Zealand’s central bank discusses interest rates

Since the economic closure in May, various economic data in New Zealand showed that the economy rebounded rapidly. The employment data in the second quarter was better than market expectations, and the unemployment rate fell to 4%. However, since the number of job seekers has greatly decreased during the lockdown period, the real situation of the data may be affected. In addition, government subsidies will be suspended in the third quarter, and the unemployment rate is expected to rise in the second half of the year. Although the central bank’s decision is not expected to further reduce interest rates to zero or a negative range, it may adjust the scale and expiry time of quantitative easing to support the New Zealand economy. The New Zealand currency may weaken significantly this week.

Australia employment data for July

Also after the restart of the economy, Australia’s employment population increased significantly in June, recording 210.8 thousand new jobs. However, affected by the rebound of the second epidemic, the data in July is expected to slow down significantly, and the unemployment rate may continue to rise to close to 8. %s level. The Australian dollar as a typical commodity currency may be suppressed by risk factors, and there is a possibility of a technical fall this week.

Technical analysis

CMC Markets US Dollar Index- Daily Chart

Looking at the daily chart, the US dollar index has a clear technical bottoming pattern-the bottom stop hammer + positive pillar, and it breaks through the downward trend line, which means the end of this down market. The target for further rebound in the near future is to see the middle track of the Polyga Channel and the 61.80% reverberation line. The specific price is near the 1000 integer mark. Immediately, the oscillating indicators also showed a bottom rebound, especially when Stoch appeared a potential “buy up” signal of a golden cross in the oversold area. However, the general downward trend determined by fundamentals has not completely changed. The recent rebound may be a short-term market. The near-term support below focuses on the low of last week near 990.

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Careem Becomes The Region’s Multi-service, Everyday Super App

Single, unified smartphone app serving people’s local, daily needs
Dubai  Careem, the leading internet platform for a rapidly growing region extending from Morocco to Pakistan is now the region’s first everyday Super App. As a Super App, Careem will provide multiple services alongside its core business of ride-hailing.
From the end of June 2020, an expanded range of services will be available to all of Careem’s 33 million registered users and 1.7 million Captains across 13 countries and over 100 cities.
Careem began expanding its core business initially with food and delivery in 2019 and is now offering services across three areas: Mobility of People, Mobility of Things, and Mobility of Money. “The move from offline to online commerce is a secular and significant opportunity, one that has accelerated as a result of the global pandemic.
Careem’s Super App supports this acceleration by bringing together people’s essential, everyday services in one place, with a single sign-on and integrated payment system.
We are tailoring products and services to local needs so that people with busy lives can get right to the services that are important to them when they need them Careem’s Super App reduces the time a person will spend looking for the right app, whilst making it simple and easier for customers to use multiple services.
According to research from Apptopia, ride-hailing, and food delivery apps are amongst the top 10 most used apps – often used on a daily basis. Combining the two will allow users to combine tasks more efficiently. Dara Khosrowshahi, CEO Uber stated: “The Super App is Careem’s enormous wagered for the more extensive Middle East locale, and we’re energized by the constructive, early signs we’re seeing, as individuals progressively embrace advanced administrations in their day by day lives.
I’ve been hugely impressed by the Careem team, as they have moved fast during the pandemic to innovate and meet changing consumer demand.” On the Careem Super App, customers can now arrange a ride with one of Careem’s Captains, order food from over 10,000 partner restaurants across the region, and order daily essentials from supermarkets, pharmacies, or other businesses.
The Super App user can also choose a business not yet on the Super App and have goods purchased and picked up by a Captain and delivered to wherever they are. Every customer has access to Careem PAY – making it simple to pay for all services in a secure way. People can also transfer credit via Careem PAY to pay back family and friends or easily split a bill. Careem has also expanded its Rewards scheme.
Super App customers now earn rewards points on every ride and order. Rewards points can be redeemed for discounts on rides, food, partner services, or donated to a wide range of charities. Captain’s – both car and bike – experience changing demands throughout the day. Increased demand across the Super App will provide Captains greater earnings and opportunities to serve more customers in more ways – this is particularly relevant during the Covid-19 pandemic.
By spending less time waiting for rides and more time earning, Captains will get more out of their time with Careem. The Super App enables merchants to partner with Careem and expands their business by expanding their customer base, payments, and logistic capabilities. Partners will gain access to Careem’s 33 million registered users, Careem PAY payments infrastructure, along with a fast-growing network for last-mile delivery (LMD). Careem’s purpose is to make people’s everyday life simpler so that they can realize their potential and spend time on things they care about most.
Becoming a Super App and simplifying the lives of people in the region in more ways is aligned with its purpose and is a natural evolution of the business to stay ahead of customer demands and market capabilities. From a business performance perspective, Careem expects to see increased revenues, lower customer acquisition costs, and improved customer retention metrics through cross-selling and customer use of multiple products and services.
Over time, Careem will open its Super App to 3rd parties and developers to build their own services to live on Careem’s Super App platform. The roll-out of Careem’s Super App started in March 2020 and is expected to complete by the end of June 2020.