HSBC Boosts Mortgage Rates for the first time in 18 months as Hong Kong Cools Property Market

HSBC Boosts Mortgage Rates as Hong Kong Cools Property Market

HSBC Holdings Plc (5) increased Hong Kong mortgage rates for the first time in 18 months after the city’s banking regulator tightened risk rules on concern a property bubble may undermine financial stability.

Home loans priced at the best lending rate will rise to a range of 2.85 percent to 3.15 percent, from 2.6 percent to 2.9 percent, starting tomorrow, according to an e-mailed statement from the bank. The increase is the first since September 2011, Yvonne Chuang, a Hong Kong-based spokeswoman for the second- largest mortgage lender in the city, said by telephone.

The Hong Kong Monetary Authority on Feb. 22 told banks to set the risk weighting for new residential mortgages at 15 percent or more, to ensure lenders’ capital cushions are deep enough. Standard Chartered Plc last week said the measure will increase its home loan funding cost by a range of 20 basis points to 25 basis points, indicating banks may need to boost mortgage rates.

Since taking office in July, Hong Kong Chief Executive Leung Chun-ying has added property taxes, favored local permanent residents over foreigners, tightened mortgage rules and increased supply after home prices doubled in the past four years.

HSBC ranked second in the city’s home loan market last month with a 17 percent share, while Standard Chartered was in fourth position with 13 percent, according to Hong Kong-based mReferral Mortgage Brokerage Services. Read more of this post

Too many drug types are compromising heart health; About 80 million Americans suffer from heart disease, the nation’s No. 1 killer, and most are on multiple drugs

Too many drug types are compromising heart health: doctors

3:53am EDT

By Debra Sherman

(Reuters) – About 80 million Americans suffer from heart disease, the nation’s No. 1 killer, and most are on multiple drugs.

Some cardiologists think prescribing has gotten out of hand.

The criticism was voiced by a number of leading heart doctors who attended the annual scientific sessions of the American College of Cardiology, held on March 9-11 in San Francisco. They said eliminating certain drugs could potentially improve care without compromising treatment. Evidence is growing that some medications are not effective.

Patients who need multiple daily doses of a given drug often fail to take them, said Dr. Steven Nissen, head of cardiology at the Cleveland Clinic and a past president of the ACC. “There is also the question about whether the benefits are additive.” Read more of this post

Panda tea: one of the world’s most expensive; A kilogram of the tea goes for an average of US$70,000

Panda tea: one of the world’s most expensive

Staff Reporter

2013-03-13

Mengdingshan, a mountain in southwest China’s Sichuan province, boldly claims to be the origin of the world’s tea culture. The mountain’s excellent environment has produced teas of the highest quality, sipped by the country’s emperors (and now presidents) since the Tang Dynasty. Panda tea, a kind of tea that grow on soil fertilized with panda dung, is one of the world’s most expensive tea leaves. A kilogram of the tea goes for an average of 440,000 yuan (US$70,000), reports state-run news agency Xinhua.

C309N0160H_2013資料照片_N71_copy1Children harvest tea leaves in panda costumes in Mengdingshan, Sichuan province. (Photo/CNS)

Check Out the Numbers on China’s Top 10 Social Media Sites (Infographic)

Check Out the Numbers on China’s Top 10 Social Media Sites (Infographic)

Mar 13, 2013 at 16:45 PM by Steven Millward, in Social MediaWeb

With an estimated 597 million people active on social media in China, the country’s top 10 sites actually have a staggering 3.2 billion individual accounts. Armed with the newest user numbers for these Chinese sites, the team at Go Globe has made a good-looking infographic showing how they all stand at present.

Along with those numbers, the data also shows that the largest section of China’s social media users – a full 30 percent – are aged 26 to 30. The perfect target for advertisers. As a whole, 91 percent of Chinese netizens have social accounts, which is way above the 67 percent in the US. Read more of this post

East India Company: The Original Too-Big-to-Fail Firm

East India Company: The Original Too-Big-to-Fail Firm

For an institution that has been defunct for almost 150 years, the East India Company still evokes powerful reactions across the world.

Last year, when the Indian government debated allowing foreign companies to open supermarkets there, protesters shouted: “This is the return of the East India Company!” In the U.K., the East India Company’s extraordinary rise and fall have uncanny parallels with the stock-market bubbles and government bailouts that have shaken the economy over the past decade.

And little wonder: At the heart of the company’s story are eternal questions about how to cope with the powers and perils of large multinational corporations.

Established by royal charter in 1600 with a monopoly on all trade with Asia, the East India Company had many incarnations in its almost 275-year run.

For the first half of its existence, it remained a commercial supplicant, exporting bullion to pay for Asia’s luxury goods: first spices, then textiles and tea. Along the way, it became an early model for today’s joint-stock corporation and pioneered new management techniques for long- distance supply chains.

It also created a series of lifestyle revolutions in 18th- century England. Daniel Defoe described in 1708 how the company’s calicoes, shipped from India, “crept into our houses, our closets, our bedchambers.” This calico boom prompted fierce resistance from Britain’s weavers, who felt threatened by a flood of cheap Asian imports. In 1720, the government responded with a ban on Indian calicoes, and it was behind this protectionist wall that the Industrial Revolution would take shape. Read more of this post

Do Short Sellers Front-Run Insider Sales?

Do Short Sellers Front-Run Insider Sales?

Mozaffar Khan University of Minnesota – Twin Cities – Carlson School of Management

Hai Lu University of Toronto – Rotman School of Management

February 28, 2013
Accounting Review, 2013 

Abstract: 
We study the behavior of short sellers as informed market participants and examine potential sources of their information. Using a newly available dataset with high-frequency short sales data, we find evidence of significant increases in short sales immediately prior to large insider sales, but not prior to small insider sales. We examine a number of explanations that the increase in short sales is driven by public information, either about the firm or about the impending insider sale. The evidence is inconsistent with these explanations, but is consistent with front-running facilitated by leaked information. The front-running appears to be concentrated in firms with poor accounting quality, suggesting that information about a large insider sale reinforces short sellers’ adverse opinion about firm value when accounting quality is poor.

Enterprise Holdings Inc. managed to become the world’s largest rental-car company by sales without actually spanning the globe. The chief executive officer says he knows that has to change. “We want to control that customer experience. We want our people taking care of customers.”

Billionaire’s Son Eases Grip to Take Enterprise Global

Enterprise Holdings Inc. managed to become the world’s largest rental-car company by sales without actually spanning the globe. The chief executive officer says he knows that has to change.

Until recently, there wasn’t an Enterprise rental counter in China, Spain or France. Malaysia and Korea, a couple of the world’s fastest growing markets, remain untapped. So to meet the global needs of international corporations, Chief Executive Officer Andy Taylor, son of founder Jack Taylor, has had to do something they have been loath to try in the 56 years they’ve controlled the closely held St. Louis area company: franchising.

“Years ago, the thought of licensing was absolutely abhorrent,” Andy Taylor, 65, said in an interview. “We want to control that customer experience. We want our people taking care of customers. But we’re learning that if we’re going to be a global brand, and we need to be competitive in the future, we’ll have to do it a different way.” Read more of this post

Stranded Hotel in Australia Emblem of Mining Bust: Commodities

Stranded Hotel in Australia Emblem of Mining Bust: Commodities

A prefabricated six-story hotel, once destined to house BHP Billiton Ltd. (BHP) workers, is sitting in 126 boxes stranded on the Melbourne city docks. The stalled project is a sign of the deepening global slowdown in mining.

The contents were to have been assembled 1,990 miles away at Port Hedland, where BHP planned to use the hotel as temporary housing for its estimated $22 billion harbor expansion to export more iron ore. That was before the world’s biggest mining company scrapped its plan, and the hotel developer went bust.

Global capital spending by mining companies is set to drop by a third next year to $96 billion, from a record $141 billion last year, according to UBS AG estimates. Producers have slowed expansions and delayed projects on expectations that commodities prices have passed their highs, after economic growth began slowing in China, the biggest buyer of metals.

“Clearly the rate of new approvals has almost dried up” for mining projects, Michael Elliott, sector leader for Ernst & Young’s global mining practice, said in an interview from Sydney. “A lot of that has been rethinking what rates of return companies now require from these new investments.” Read more of this post

Leonardo da Vinci’s anatomical drawings were “startling” in their accuracy, new medical scans have shown, putting him hundreds of years ahead of his peers

Leonardo da Vinci was right all along, new medical scans show

Leonardo da Vinci’s anatomical drawings were “startling” in their accuracy, new medical scans have shown, putting him hundreds of years ahead of his peers.

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The bones, muscles and tendons of the hand c.1510-11 and 3D image of a dissected hand Photo: Royal Collection Trust / © Her Majesty Queen Elizabeth II 2013 /© Mark Mobley, West Midlands Surgical Training Centre

By Hannah Furness

10:23AM GMT 12 Mar 2013

He has long been praised as one of the finest artists of the Renaissance, working far ahead of his time and producing some of the world’s most recognisable works.

But Leonardo da Vinci has finally received the credit he deserves for his “startling” medical accuracy hundreds of years in advance of his peers, as scientists match his anatomical drawings with modern day MRI scans.

The project, which will be unveiled at the Edinburgh International Festival in August, compares the work directly for the very first time, unveiling the minute details recorded by the artist.

In a series of 30 pictures, the Royal Collection Trust will show da Vinci’s distinctive anatomical drawings alongside a newly-taken MRI or CT scan.

The comparison is intended to show just how accurate da Vinci was, despite his limited technology and lack of contemporary medical knowledge. Read more of this post

Sir Luke Johnson: A founder with a sense of value is able to build a more resilient corporate culture

March 12, 2013 4:11 pm

An eye on costs sets the tone for success

By Luke Johnson

A founder with a sense of value is able to build a more resilient corporate culture

One of the most outstanding entrepreneurs I have ever worked with has one particular trait that I think is the secret of his success. It is not his ability to sell, motivate staff, innovate or think strategically. It is a rather more mundane tendency – but in this climate, an incredibly important one: his sense of thrift.

Frugality has never really been in fashion, but now more than ever it is needed. A founder with a profound sense of value is able to build a more resilient corporate culture. Ingvar Kamprad has become one of the wealthiest men ever born by making Ikea the largest and cheapest retailer of furniture in history. It sells home furnishings at prices no rival can match because it is managed with a spirit of thrift. Mr Kamprad practices what he preaches. He always flies economy-class, drives a 15-year-old Volvo, and says: “I am a bit tight with money, a sort of Swedish Scotsman. But so what? If I start to acquire luxurious things then this will only incite others to follow suit.”

One food entrepreneur who recently failed to get it right is John Schnatter, founder of the Papa John’s Pizza chain. He has complained in public about the burden of implementing US President Barack Obama’s healthcare law for staff, and suggested franchisees would cut employee hours or increase prices. Meanwhile, he has company stock worth more than $300m and an extravagant mansion in Kentucky, and yet has always promoted himself as an everyday guy in advertisements. Over recent months he has taken heavy criticism from bloggers to comedians, and thecompany’s reputation has suffered . Now he has hired a powerful PR man to try to rebuild his – and the company’s – image.

The characteristic that I admire in a business builder is not meanness but prudence and cost-consciousness. Such entrepreneurs tend to have a healthy sense of realism: they know just how hard it is for most companies to make sustainable profits. Of course, every business needs much more than a neurotic focus on the expense of everything – there must also be quality, and service, and all the other features possessed by market leaders. Read more of this post

Universities Pile on Faculty Perks as Student Costs Grow and students are struggling to pay off $1 trillion in education loans in a weak job market

Universities Pile on Faculty Perks as Student Costs Grow

By John Hechinger and Michael McDonald  Mar 12, 2013

The University of Chicago paid James Madara $2.5 million in severance when he stepped down in 2009 as medical dean and hospital chief. Madara, who remained on the faculty, later joined the American Medical Association.

Congress is taking a look at such payments following disclosures that Jacob Lew, the new U.S. Treasury secretary, received a $685,000 bonus when he left New York University and had $1.5 million in housing loans from the school.

Harvard and Stanford universities also offer real-estate loans with sweet terms, records show. While the amounts are small relative to university budgets, the perks insulate faculty and administrators from the costs upsetting many middle-class families, said Jonathan Robe, a research fellow at the Center for College Affordability and Productivity in Washington.

“It certainly gives the public a clear example of how out of touch some universities are,” Robe said. “Parents will think, ‘Here I am scraping by, raiding my retirement plan to pay for college. Why are they making me do this just to enrich these executives?’”

Congress and President Barack Obama have been pushing colleges to control tuition and other costs, which can exceed $60,000 a year at a private school. In a weak job market, students are struggling to pay off $1 trillion in education loans. Read more of this post

Banks’ Debt Addiction Said to Face Scrutiny at Basel Group

Banks’ Debt Addiction Said to Face Scrutiny at Basel Group

A planned international limit on bank indebtedness will be on the agenda of every meeting of the Basel Committee on Banking Supervision this year as regulators seek to wean lenders off their addiction to debt, according to three people familiar with the talks.

Regulators are preparing to fight lenders over the details of the so-called leverage ratio as they seek to toughen rules on the minimum amount of capital they must use to back their investments. The Basel group, which brings together supervisors from 27 nations, will meet in the Swiss city tomorrow, according to the people, who asked not to be identified because the meetings are confidential. Read more of this post

Growth comes with side effects for Singapore; Opaque manipulated business brings unwanted attention

March 12, 2013 3:48 pm

Growth comes with side effects for Singapore

By Jeremy Grant

Singapore generally dislikes drawing attention to itself when it comes to financial markets.

Having discreetly built itself up as an Asian financial hub, Singapore has now become one of the world’s largest centres for wealth management and commodities trading. But recently the Lion City has been drawing some unwelcome attention in the foreign exchange markets, where it is ranked fourth-largest in the world by trading volume.

Last month two former UBS traders sued the Swiss-based bank alleging they were wrongfully dismissed when they say the bank fired them for gross misconduct. In two lawsuits filed in Singapore they claim they were fired to cover up any role the bank had in allegedly manipulating the pricing of foreign exchange derivatives.

One, Prashant Mirpuri, was employed as an “emerging market southeast Asia non-deliverable forward trader”, according to court filings. The other, Mukesh Kumar Chhaganlal, was a former co-head of macro-trading, emerging markets Asia.

Behind these opaque job titles lies an equally opaque business done in Singapore: dealing in a type of foreign exchange contract known as a non-deliverable forward. Read more of this post

Chinese cultural puzzles for foreign visitors

Chinese cultural puzzles for foreign visitors

Staff Reporter

  • 2013-03-12

“Why don’t public restrooms in China offer toilet paper?” Questions like these — the peculiarities of Chinese culture against many things Westerners would consider normal — have confused many foreign visitors in China. China Internet Information Center, a mainland web portal, has listed nine confusing questions about China from a stand point of a foreign visitor, reports Want Daily, our Chinese-language sister newspaper.

Some of the questions include: “Why do Chinese act so politely when you talk to them but become so mean on the internet?” or “Why can Chinese people be so weak when giving a speech on stage while they are so humorous off it? ” and “Why don’t Chinese people attend the Ultimate Fight Championship as they are good at Kung Fu?”

One of the questions even asks about the ‘local dialect:’ “Why do Chinese people usually say ‘F#$% your mother’ whereas Americans say ‘F#$% you?'”

The web portal suggests that, in a joking way, visitors should post a sign saying ‘stingy’ on a public restroom that does not offer free toilet paper as most tourist sites charge money for entrance. The web portal also says that Chinese people are not united even though there are excellent individuals around the world.

Bowl in the locker of a nursing home

How we face ‘getting old before getting rich’ 

People’s Daily Online)  07:57, March 13, 2013

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Bowl in the locker of a nursing home in Taiyuan, Shanxi

China’s “ant tribe”: Life in boxy rooms

China’s “ant tribe”: Life in boxy rooms

2013-03-12 06:18:01 GMT

They sleep in boxy rooms crammed into dingy low-rises and spend hours commuting to work on crowded buses as part of a trend of poorer white-collar workers being forced to the fringes of China’s wealthiest cities. These struggling college graduates who swarm out of their cramped accommodations and head to work in the urban sprawl each morning are often referred to as China’s ant tribe. The growing ranks of ‘worker ants’ poses a policy challenge for Chinese leaders as high property prices and dim career prospects thwart the ambitions of many graduates for a comfortable middle-class lifestyle.

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China’s 80 billion disposable chopsticks a ‘burden’ on forests; A total of “20 million 20-year-old trees” have to be chopped down each year to make way for the annual production

China’s 80 billion disposable chopsticks a ‘burden’ on forests

Monday, 11 March, 2013, 2:43pm

Chris Luo chris.luo@scmp.com

A National People’s Congress member has highlighted the dire situation of China’s deforestation during a parliamentary meeting, saying that the country produces as many as 80 billion pairs of disposable chopsticks each year, state news agency Xinhua reported [1].

Bo Guangxin, chairman of state-owned timber firm Jilin Forest Industry, said at a meeting of the annual parliament session on Friday that the mass production of the wooden tableware is a heavy burden on national forests.

Eighty billion pairs of chopsticks is no small figure.

Laid out, that many chopsticks can cover the ground of Beijing’s Tiananmen Square, one of the world’s largest public squares, more than 360 times – with each chopstick being 1cm-by-0.5cm and 20cm long, Bo said.

A total of “20 million 20-year-old trees” have to be chopped down each year to make way for the annual production, he said. Read more of this post

10th anniversary of SARS outbreak: Shadow of SARS remains in an enduring nightmare

Shadow of SARS remains in an enduring nightmare

Mary Ann Benitez

Wednesday, March 13, 2013

Hong Kong may be prepared for new infections, but 10 years after SARS killed 299 people here – and was then overcome – some gaps remain in defenses.

The warning came yesterday from Thomas Tsang Ho-fai, a former controller of the Centre for Health Protection.

“Despite everything we did in pandemic preparedness, some unresolved challenges remain,” he said in marking the 10th anniversary of the emergence of Severe Acute Respiratory Syndrome.

One challenge is limited knowledge about the behavior of novel pathogens such as the SARS coronavirus.

Ten years on, no vaccine is available to see off SARS. In fact, experimental vaccines could stimulate lung diseases. Read more of this post

Life of Pi(G): Parody on Shanghai’s floating pig carcasses in the Huangpu River, which is the major source of water for the city’s 23 million population

pigs2
Authorities in the city of Shanghai reported on March 11 that at least 3,300 dead pigs had been found floating in the Huangpu River, which is the major source of water for the city’s 23 million population. The story shocked many Chinese, who worried understandably about the implications for public health and puzzled over the question of how farmers upstream were able to discharge such a large number of dead pigs into the river without notice. The above cartoon, posted by artist Du Shi Xiong (大尸凶的漫画) to Sina Weibo, is a mock movie poster referencing director Ang Lee‘s recent blockbuster Life of Pi. The poster pictures the film (and book’s) main character, Indian storyteller Pi Patel, drifting on his life raft not with the male Bengal tiger “Richard Parker” but with scores of dead pigs. The water all around him is also littered with dead pigs. This cartoon is one of quite a few now circulating on Sina Weibo using the “Life of Pi” movie poster meme to explore the story of Shanghai’s dead pigs. The following is another posted by Gou Ben (勾犇漫画) today. In this one, Pi Patel wears a heavy-duty safety mask to protect himself from the smog (another health issue of great concern to the Chinese public) while the tiger “Richard Parker” leaps headlong into a river teeming with dead pigs and screams: “Here’s some meat to eat. If it kills me, at least I’ll die of a bloated stomach!”

Life-of-PiG-2

In Spinoffs, a Chance to Jettison Undesirable Liabilities; spinoffs have a dark side, serving as a convenient dumping ground for unwanted businesses

MARCH 12, 2013, 5:44 PM

In Spinoffs, a Chance to Jettison Undesirable Liabilities

By STEVEN M. DAVIDOFF

A spinoff is a product of Wall Street math that says one plus one can equal three. Yet as shareholders of Time Warner may be about to find out, it can also be all about subtraction, as a company ditches an unwanted business, in this case, magazines.

The business argument for a spinoff is typically that a separation of the assets allows both the former parent and the newly independent company to be better run, freeing management to take bolder steps with the new company. And because Wall Street is a place where magic works, the market will recognize this, giving each of the separated companies a higher price.

There is evidence of this effect. Studies of spinoffs have found that they produce short-term gains, although these gains evaporate over the long term.

Spinoffs, not surprisingly, are big business these days on Wall Street. Last year, there were 85 spinoffs worldwide worth $109 billion, according to Dealogic, down just a bit from 93 spinoffs worth $128 billion in 2011.

But spinoffs have a dark side, as they can serve as a convenient dumping ground. In 1999, General Motors spun off its auto parts maker into Delphi, and the following year, Ford Motor did the same with Visteon. Both automakers larded the subsidiaries with too much debt, high labor costs and sweetheart pricing deals. The result sent both spinoffs into bankruptcy. Ford and G.M. are still dealing with the fallout and litigation. Read more of this post

Fever-Tree founders sell £48m stake in tonic maker; “Fever-Tree follows in a tradition of great British brands including Innocent, Ella’s Kitchen and Tyrrells which all achieved fantastic success by exporting to the rest of the world.”

Fever-Tree founders sell £48m stake in tonic maker

Two entrepreneurs who spent 18 months scouring the globe for ingredients for the perfect gin and tonic have been backed with £48m.

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Tim Warrillow and Charles Rolls launched Fever-Tree eight years ago.

By James Hurley

6:59PM GMT 12 Mar 2013

LDC, the private equity arm of Lloyds Banking Group, has invested in premium tonic water brand Fever-Tree, which was founded eight years ago by Charles Rolls and Tim Warrillow.

Mr Warrillow spent a year-and-a-half searching for the right ingredients for the tonic water. The company now uses quinine from the Congo, Rwandan bitter orange oil and natural cane sugar. It also makes ginger beer using gingers from the Ivory Coast.

The deal will see LDC replace original investor Lochside and leaves Mr Rolls and Mr Warrillow still holding a small majority stake.

Mr Rolls says the £16m turnover company has exploited the growing popularity of gin. “It began with a simple idea. We saw a lot of premium spirits so we thought people would want a premium mixer. If three quarters of your drink is the mixer, you should make sure the mixer is the best.

“Premium mixers didn’t exist before we started but we were right. Within six months, the likes of Waitrose were calling us. That never happens.”

More than two-thids of Fever-Tree’s sales now come from overseas, with Spain and the USA the most successful of the 35 markets it sells to. Read more of this post

Bond boom ‘as bad as dotcom bubble’

Bond boom ‘as bad as dotcom bubble’

Sovereign bonds are as overvalued as technology stocks were during the dotcom boom, a fund manager has warned.

By Richard Evans

3:41PM GMT 12 Mar 2013

George Godber of Miton said that when Germany issued bonds paying no return at the height of the eurozone crisis, the investment case was akin to a technology company floating with no prospect of making profits.

“When those bonds were issued I thought: ‘This is Baltimore Technologies as over again’,” he said.

Baltimore was one of the defining stocks of the technology boom. It promised to revolutionise internet security but never made a profit and its shares ended up in the “90pc Club” of those that lost almost all their value.

Mr Godber said even gilts yielding 2pc were hugely overvalued on the measure normally used to value shares.

“A 2pc yield is equivalent to a price to earnings ratio of 50,” he said. Shares typically trade at a p/e ratio of between 10 and 20, and investorsbuying shares at the higher end of the range normally expect earnings growth, which is not available on bonds. Read more of this post

So, How Did the Market Timers Do? With the Dow recently completing a round trip, we search for market-timing strategists who called the peak and the trough

TUESDAY, MARCH 12, 2013

So, How Did the Market Timers Do?

By MARK HULBERT | MORE ARTICLES BY AUTHOR

With the Dow recently completing a round trip, we search for market-timing strategists who called the peak and the trough.

Anxiously following the stock market’s ascent to new all-time highs, wondering when it will be time to get out?

Welcome to the club. A market-timing system that will reliably get us out at tops, and back in at market bottoms, is the investor’s Holy Grail.

How is this search going? Are we getting closer?

Now is a perfect time to ask these questions: With the stock market back to where it stood in October 2007, the last five-and-a-half years constitute an ideal laboratory in which to judge the success of market timing in the real world. Only after a full market cycle can we tell whether a timer can both get out at tops and get in at bottoms.

For this column I analyzed the returns since October 2007 of the more than 100 market-timing newsletters and web-based advisors monitored by the Hulbert Financial Digest (HFD). Most of these timers also are money managers, putting real money on the line with their bets. For purposes of this column, I focused only on that portion of their returns directly attributable to their market-timing calls—ignoring their abilities (or lack thereof) to pick individual securities.

One other feature of the HFD database is also of note: It is updated in real time, and therefore reflects the signals that the market timers actually made along the way. This is crucial in the market-timing debate, because it is otherwise all too easy, with the benefit of hindsight, to retrofit a market-timing system that would have worked wonderfully. The market-timing records that the HFD reports, in contrast, reflect transactions on those days that clients were specifically told to buy or sell.

The first lesson that emerges from the HFD data may be obvious, but is worth noting: No market timer called the market top in October 2007 and the bottom in March 2009, if by “called” we mean went completely to cash on Oct. 9, 2007, the exact day of the high, and got back 100% into stocks on March 9, 2009, the precise date of the bear market bottom. Read more of this post

Indonesia is Social: 2.4% of World’s Twitter Posts Come From Jakarta [INFOGRAPHIC]

Indonesia is Social: 2.4% of World’s Twitter Posts Come From Jakarta [INFOGRAPHIC]

Mar 13, 2013 at 09:00 AM by Enricko Lukman, in CreativeSocial Media

Brand24.co.id, an Indonesian company that monitors social marketing online, has come out with this interesting new infographic about Indonesia’s online socializing. It shows how the country – and particularly residents of the capital, Jakarta – has taken to sites like Facebook, Twitter, Linkedin, and YouTube in huge numbers. The infographic shows Jakarta is very social, ranked second in terms of the world’s top cities on Facebook (Bangkok is first). When it comes to Twitter, Jakarta alone contributed about 2.4 percent of the 10.6 billion Twitter posts made worldwide from January to March this year. Tokyo came close, creating 2.3 percent of all tweets. The nation as a whole has 29 million Twitter users. When it comes to startups in the country, Indonesian humor site MalesBanget made it to the number one spot for the size of its local YouTube account. Besides cheering for celebrities Agnes Monica and Sherina Munaf, around 4.7 million Indonesian Twitter users read their astrology forecasts through @tweetramalan every day. Read more of this post

China’s shale frenzy and the technology hurdle

China’s shale frenzy and the technology hurdle

Kate Mackenzie

| Mar 12 10:50 | 22 comments Share

Hardly anyone, it seems, believes that China’s shale gas efforts are going to hit paydirt any time soon. Reuters wrote yesterday that the shale gas revolution risks ‘running further off track’ — and this is before it has even begun to produce any significant volumes. China early this year carried out the second auction for shale gas producing licences. As Reuters notes, the first shale auction two years ago was dominated by the likes of Cnooc and PetroChina, but this latest round was quite different — none of the 19 winning bidders had drilled a shale gas well before. In fact, it was a pretty scrappy field. The second auction attracted interest from more than 100 firms, an eclectic group that included a real estate developer, a grain trader and a tobacco dealer, lured by gas subsidies and aided by easy access to funds. Read more of this post

Visa Says Big Data Identifies Billions of Dollars in Fraud

March 11, 2013, 6:11 PM ET

Visa Says Big Data Identifies Billions of Dollars in Fraud

Steve Rosenbush, Deputy Editor

The rising controversy over China’s alleged cyber espionage against U.S. companies has dominated the recent discussion over network security. While politically motivated intrusions are doubtless a threat to many corporations around the world, those concerns may be obscuring a much bigger and more immediate threat to many businesses and their customers—and that is the mounting sophistication of criminal gangs that operate online.

“We are confronting a criminal population that continues to improve its sophistication and its attack vectors, so we can’t stand still,” says  Ellen Richey, chief enterprise risk officer at Visa Inc. “You see the criminal capability evolving on the technology side,” she said. “They are getting into the systems of [Visa] stakeholders and other companies that process payments,  and they are able to encrypt their own movements on networks, sometimes for months, and exfiltrate the data.”

No company—and certainly not Visa, the credit and debit card processing giant—can afford to “stand still,” Richey says. The company risks losing trust, and standing, with its customers – something it cannot afford to let happen in an increasingly competitive payments market. To confront the risk, Visa introduced a new analytic engine in August 2011, which she says has changed the way the company combats fraud. The analytic platform harnesses the power of Big Data—a term that refers to larger and more varied set of data, powerful algorithms, and underlying hardware and software that runs calculations faster and more cheaply than traditional databases or analytic engines.  The company estimates that the model has identified $2 billion in potential annual incremental fraud opportunities, and given it the chance to address those vulnerabilities before that money was lost. Read more of this post

Can a New Culture Fix Troubled Companies?

March 12, 2013, 7:30 p.m. ET

Can a New Culture Fix Troubled Companies?

By JOANN S. LUBLIN

Bob Flexon, chief executive of Dynegy Inc., DYN +2.03% occupies a 64-square-foot cubicle, identical to the ones used by the 235 colleagues who surround him at its Houston headquarters. Hourly employees sometimes stop by his desk to chat.

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Eric Kayne for The Wall Street Journal

Dynegy CEO Bob Flexon, shown in his 64-square-foot cubicle on an open floor, where 235 headquarters colleagues surround him.

It’s a long way from the expansive office suite, $15,000 marble desk and Oriental rugs that Mr. Flexon inherited when he arrived at Dynegy in July 2011, four months before the power producer filed for bankruptcy.

Under his command, Dynegy shifted its headquarters last May to a single, open floor in a different building.

The move, which saved $5 million a year, is the most visible symbol of Mr. Flexon’s attempts to overhaul the company’s culture. He aims to transform a business previously focused on day-to-day survival into an agile operator poised for growth.

Among other changes, he made frequent visits to the company’s power plants, banned employees from checking email and phones during meetings and restored annual performance reviews. “The idea was to instill a winning spirit,” Mr. Flexon says. Though Dynegy emerged from bankruptcy last October, its cultural restructuring remains a work in progress.

Increasingly, leaders of troubled businesses try to fix the company’s culture along with its bottom line. Since the financial crisis struck in 2008, CEOs have sought to improve collaboration and decision making, recognizing that a strong culture is “a critical component of their long-term success,” says Nick Neuhausel, a partner at consulting firm Senn Delaney, which advised Dynegy.

“The right culture change can—without question—improve results,” says John Kotter, co-author of the book “Corporate Culture and Performance” and head of research at consulting firm Kotter International. But putting a sick business on a healthier strategic path while changing its culture “is much more difficult than most executives realize,” he cautions. Read more of this post

Fortune 500? Singapore’s Bamboo Innovator 500!

Fortune 500? Singapore’s Bamboo Innovator 500!

By KEE Koon Boon

13 March 2013

“Singapore is too small and its talent pool is too small to produce a world-class manufacturing giant of the Fortune 500 class”, Singapore’s former Minister Mentor Lee Kuan Yew once said. A cryptic remark indeed because it does not imply that the venerable founder of modern Singapore thinks Singapore cannot produce knowledge-based giants, or resilient “Bamboo Innovators”.

Why “Bamboo Innovators”? Bamboos bend, not break, even in the most terrifying storm or devastating earthquake that would snap the mighty resisting oak tree. It survives, therefore it conquers. Disruptive industry trends and black-swan crises have become a permanent fixture in today’s marketplace. How wonderful it would be if countries, companies and individuals can stay resilient amidst the disruptive upheavals and unorthodox challenges – like the bamboo. The study of Bamboo Innovators can hopefully inspire companies to be productive innovators in order to surpass stall points in their business models during tumultuous periods, particularly SMEs aspiring to scale up to become global champions.

But why is it that Asian companies are predominantly product manufacturers in the first place? This could ironically be a result of the Asian values of hardwork and sacrifice. It is far easier for the Asian entrepreneur to be the middleman in getting orders from a few important anchor MNC customers who have access to the end customers, take capital risk in investing in tangible assets, and work hard in producing the required products with quality and efficiency, rather than attempt to build business models that have direct ownership of the hundreds and thousands of end customers. To do the latter would require interacting intensively with the end customers, a task which is beyond that of a lone powerful entrepreneur. As a result, Asian entrepreneurs are unwilling to share the rewards with their “undeserving” staff who did not take risk or sacrifice, thus treating employees as expenses, making most or all of the decisions and hoarding most of the resources and information themselves, running the firms as a “one-man-show”, and facing potential business continuity challenges from succession woes.

Keyence, established in 1974, is an illustration of the unconventional Asian firm. Takemitsu Takizaki, the 67-year-old founder, liberated the firm from manufacturing conventions and built a knowledge-based enterprise in laser sensors for use on automated factory assembly lines serving over 100,000 customers in 70 countries. Despite having only less than 1 percent global market share in a commodity-like product and only around 3,000 employees, Keyence commands a US$17 billion market value, approximately similar to Singapore’s Keppel Corp, a global leader in offshore oil rig design and building. It is also double the value of Nidec, another outstanding Japanese company which has more than 80 percent global market share in miniaturized motor and 100,000 employees.

Takizaki-san, who stepped down from the CEO role to be the Chairman in 2000, understood keenly that Keyence cannot improve on Japan’s legendary manufacturing efficiency. So, unlike its manufacturing-based competitors which focus on manufacturing and leave sales to distributors, wholesalers and agents, it deliberately avoids making products, except for manufacturing steps that involve trade secrets which are kept in-house. Most of its 3,000 employees are either “sales” or “research” staff. In their direct contact with the customers, Keyence’s in-house “sales” team pick up new product ideas on frequent factory visits. They would report back to the research department on what new machines their customers would find useful. They also tell the production department about demand for existing products, helping Keyence to regulate its output and reduce inventories. For instance, Keyence’s frontline solution providers observed from the production lines at instant noodle factories that the noodle quality was compromised because they were manufactured at variable thicknesses. Laser sensors that could measure noodles to 1/100th of a millimetre were develop and used by giants such as Nissin to keep noodle thickness consistent. 25 percent of sales at Keyence are generated from such new products, even higher than 3M.

To excel in these areas, Keyence had to cultivate a meritocratic culture and it is “notorious” for having one of the highest-paid salaries in corporate Japan for its employees. Bright young people from rival firms are attracted to Keyence by the performance-based pay. The engineers also get the chance to do their own research, rather than labouring for years under grey-haired supervisors. The average pay of the employees at Keyence is US$100,000.

“Ownership” of customer by decentralizing and empowering frontline employees also helped IBM to stave off a near-death experience in the early 1990s. When Lou Gerstner took over as CEO in April 1993, IBM had three consecutive years of financial losses, including losing a record $8 billion in 1993, and was about to be broken up. Lou reduced the Big Blue’s dependency in mainframe manufacturing, which was supplanted by personal computers and servers, and built the global platform for services to provide higher value to customers, a core business which today accounts for over 40 percent of its overall profits. Lou had multiplied the market cap 10-folds to $100 billion by the time he passed over the leadership baton in 2002 to Sam Palmisano, who quadrupled earnings and created an additional $130 billion in shareholders’ value in 10 years as he positioned IBM in software and analytics, a task now continued by the new CEO Virginia Rometty.

Keeping the frontline, or the “periphery”, to be resilient and innovative, and the center, or the “core”, to diffuse and enforce meritocratic values to all levels, has compounded immense value at both Keyence and IBM. This core-periphery growth pattern is also that of the bamboo whereby the vitality of its growth revolves around its “empty” center. Instead of sanely constructing itself inch by solid inch like trees, soberly climbing into the contested forest air, the nutrients and moisture that would have been exhausted making and maintaining its empty center can be utilized for growth of its periphery in the other culms (stem). From a builder’s viewpoint, the architecture of the bamboo culm presents a powerful configuration: fibers of greatest strength occur in increasing concentration toward the periphery of the plant.

Manufacturing and project-based companies often tout the size of their “orderbook” and their idea of “teamwork” is about hiring high-profile rainmakers or dealmakers who can bring in the sales orders and the job of everyone else is to execute efficiently and “productively”. The well-connected dealmaker may be able to pull in high-dollar projects but because of the difficulties in coordinating and executing large-scale complex projects, these projects or deals cannot be repeated and the hype associated with big orderbook starts to fade, particularly when cost overruns and delivery delays start to rear their ugly heads. Bigger becomes riskier. Even in manufacturing, the only way to perform and execute large-scale complex projects repeatedly is to create an intangible culture and environment of excellence where the interests of the mid-level and frontline individuals matter by aligning their interests and empower them to become. Customers are attracted to this contagious performance culture rather than to the dealmakers on a relationship basis, or even to the core “team”, resulting in a valuation breakthrough beyond the billion-dollar market value barrier that many Asian companies find hard to break.

A service-based economy does not emanate from taking a broad sector or industry approach, such as identifying “hot” services such as healthcare, education, media and so on. Such a headlong approach can only get the growth engine going only so far. Services sustainability has to stem from equitizing customer ownership based upon performance and interaction, trust, mutual respect and interdependency. This inevitably requires “emptiness” in the business model design like the bamboo with a core-periphery growth structure in order to scale up in a sustainable way. A powerful lone entrepreneur at the center who believes that he has work so hard and sacrificed so much, or a “I-did-it-all-by-myself” mentality, often does not believe in sharing with other “undeserving periphery” people if he does not cultivate a culture rooted in kindness, trust and cooperation.

Culture is like the invisible intricate underground root structure that makes the ground around a bamboo grove very stable – and make possible the flexibility and adaptability of the bamboo to bend, not break, with the wind. Kindness is like water nourishing the powerful roots of bamboo. A culture rooted in kindness definitely seems incompatible in a harsh, competitive business world. But kindness is trusting and ready to risk in new innovations. Kindness is an inner revolution; as is innovation. We become more fluid, more willing to risk. Kindness is about putting less in our possession and more in people. The boundaries between us and others begin to merge, so that we feel engaged and committed as part of a whole in which it is possible to share resources, emotions and innovations.

Rootedness in a culture of kindness and trust triggers the intense instinct, emotional focus and commitment with regard to actively planning for the enterprise’s future as one cohesive singular enterprise, to accept and embrace those who want to contribute, and to engender love amongst the members despite differential rewards and efforts as all work towards the objective of creating a resilient structure as a true compounder, the evergreen Bamboo Innovator.

Fortune 500? With “emptiness” in business model design and “rootedness” in a kindness culture, just like Keyence and Keppel which have almost US$20 billion in value, Singapore can have its own unique Bamboo Innovator 500 powerhouse with a US$10 trillion value.

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