AustralianSuper begins testing its new internal investment-management systems this month to manage its first money in house from zero to $40 billion in 4 years

Inhouse target: zero to $40 billion in 4 years

Posted By SIMON HOYLE On 22/03/2013 @ 3:16 pm In INVESTOR PROFILE

If everything continues on schedule, the $60-billion AustralianSuper will begin testing its new internal investment-management systems this month, with a view to managing its first money in house in the third quarter of 2013.

Within four years the fund expects to manage as much as $40 billion in house, funded primarily from cash flow, and to have built an investment management capability the equal of any in the world. Read more of this post

China’s Poison Air Is Becoming Its Leading Export

China’s Poison Air Is Becoming Its Leading Export

Sitting on a Tokyo runway last week, the captain announced that our flight would be delayed for reasons few of us could believe: sandstorms.

Chuckles filled the aircraft. The woman next to me quipped: “What, are we in Egypt?” As we all craned our necks to look out the windows, it really did feel as if we were taxiing in Cairo or Marrakesh, not the capital of a Group of Seven nation.

The sand is compliments of China’s boom. Thanks to deforestation and overgrazing, more and more of the Gobi Desert’s grit, along with industrial pollution, is being carried by prevailing winds to Japan. In recent weeks, people in Japan have been Googling “PM2.5,” or fine airborne particulates that cause disease and premature death in high concentrations. They also are loading up on air purifiers as China’s environmental crisis becomes Japan’s.

The geopolitics of pollution has the potential to turn toxic. If you thought Asia’s territorial disputes were a barrier to peace and cooperation, just wait until blackened skies dominate summit meetings. And they will, as nationalists in Japan, South Korea and Taiwan use pollution as a rallying point to gin up anti-China sentiment; business leaders in Hong Kong express anger about having trouble recruiting foreign talent; China lashes out at independent reports on health risks; and the world points fingers at the Communist Party as climate change accelerates. Read more of this post

US Begins Regulating BitCoin, Will Apply “Money Laundering” Rules To Virtual Transactions

US Begins Regulating BitCoin, Will Apply “Money Laundering” Rules To Virtual Transactions

Tyler Durden on 03/21/2013 21:22 -0400

Last November, in an act of sheer monetary desperation, the ECB issued an exhaustive, and quite ridiculous, pamphlet titled “Virtual Currency Schemes” in which it mocked and warned about the “ponziness” of such electronic currencies as BitCoin. Why a central bank would stoop so “low” to even acknowledge what no “self-respecting” (sic) PhD-clad economist would even discuss, drunk and slurring, at cocktail parties, remains a mystery to this day. However, that it did so over fears the official artificial currency of the insolvent continent, the EUR, may be becoming even more “ponzi” than the BitCoins the ECB was warning about, was clear to everyone involved who saw right through the cheap propaganda attempt. Feel free to ask any Cypriot if they would now rather have their money in locked up Euros, or in “ponzi” yet freely transferable, unregulated BitCoins.

For the answer, we present the chart showing the price of BitCoin in EUR terms since the issuance of the ECB’s paper:

Read more of this post

Australia is expensive even for a billionaire. Michael Hintze says coming home from London is not as cheap as it used to be.

Even billionaires get the currency blues

PUBLISHED: 20 HOURS 21 MINUTES AGO | UPDATE: 6 HOURS 56 MINUTES AGO

“The days when there was an arbitrage in saying, ‘Don’t worry I’ll buy you a meal when I come to Australia and you buy me one when you come to London.’ It’s gone the other way around,” says billionaire Michael Hintze.  Photo: Angus Mordant

JONATHAN SHAPIRO, PETER WELLS AND PHILIP BAKER

Australia is expensive even for a billionaire. Michael Hintze, Australia’s wealthiest and most successful financial markets export with an estimated personal fortune of $US1.6 billion, says coming home from his hedge fund’s London base is not as cheap as it used to be.

“The days when there was an arbitrage in saying, ‘Don’t worry I’ll buy you a meal when I come to Australia and you buy me one when you come to London.’ It’s gone the other way around,” says Hintze, the founder of the $US11.5 billion hedge fund CQS and a well known donor to the UK’s Conservative Party.

With the British pound at a 28-year low against the Australian dollar, British tourists and returning hedge fund titans are clearly feeling the pinch. “The Australian dollar certainly feels fully valued,” says Hintze, who owns farmland in Australia. “I wish the dollar were lower as it would be easier in farming.” Read more of this post

Hong Kong Homes Face 20% Price Drop as Banks Raise Rates; Midland, the city’s biggest publicly traded realtor, predicted as many as a third of real estate agent branches in Hong Kong will close. Cheung Kong Says Hong Kong Property to Slow on Mortgage Costs

Hong Kong Homes Face 20% Price Drop as Banks Raise Rates

By Stephanie Tong and Kelvin Wong – Mar 22, 2013

Hong Kong officials, who have struggled in vain for three years to slow the growth in home prices, are about to get their wish as the city’s biggest banks raise mortgage rates.

Prices could fall as much as 20 percent over the next two years, according to Deutsche Bank AG, after lenders including HSBC Holdings Plc, Hong Kong’s biggest by assets, and Standard Chartered Plc raise their home loan rates by 25 basis points in response to tighter risk rules.

Hong Kong dollar’s peg to the U.S. currency has kept interest rates in the city at near record lows, underpinning a more than 110 percent gain in home prices since the beginning of 2009 to the most expensive among major global cities. Low mortgage costs, coupled with a property buying spree driven by Chinese from the mainland, have seen home prices shrug off repeated attempts by the government since 2010 to stymie escalating housing values amid an outcry over affordability.

“You have this pile of measures plus higher interest rates; this will be a big challenge for the market,” said Buggle Lau, chief analyst at Midland Holdings Ltd. (1200), the city’s biggest publicly traded realtor, which predicted as many as a third of real estate agent branches in Hong Kong will close. Read more of this post

Exorbitant property prices reported in Beijing university district at a record 100,000 yuan (US$16,000) per square metre; neighbourhood labeled as “the centre of the universe”.

Exorbitant property prices reported in Beijing university district

Thursday, 21 March, 2013, 5:24pm

Ernest Kao ernest.kao@scmp.com

Property prices in Beijing’s secondary market have come under scrutiny once again after a tiny apartment in a university district recently listed a sell price of 3.5 million yuan (HK$4.4 million) – close to the very high levels in Hong Kong.

The price of the 37-square-metre (400 sq ft), one-bedroom flat located in the city’s northwest Wudaokou neighbourhood, hit a record 100,000 yuan per square metre, Xinhua reported [1] on Wednesday. Read more of this post

First Financial News looks at the the “empty city” that is Tianjin’s Xiang Luo Wan Central Business District in Binhai New Area 房企主动停工？天津响螺湾暂成“空城”

房企主动停工？天津响螺湾暂成“空城”

作者 蔡胤

来源 第一财经日报

时间 : 2013-03-22 01:39

这一区域长期来看还是能发展起来的，只是浦东当时的发展用了多久，这里也需要多久，关键看当地政府的决心。 Read more of this post

Hebei “trash mountain” that threatens part of Beijing’s water supply 河北兴隆20年堆出2.3万米平垃圾山 威胁北京水源

河北兴隆20年堆出2.3万米平垃圾山 威胁北京水源(图)

2013年03月22日 02:29
来源：新京报

2月21日，河北兴隆县青松岭上的垃圾山，虽然被黄土掩埋，仍可见大片生活垃圾。新京报记者尹亚飞摄 Read more of this post

L’Oreal Eats Into P&G’s China Lead With Mushroom Lotions

L’Oreal Eats Into P&G’s China Lead With Mushroom Lotions

At L’Oreal SA (OR) (OR)’s Shanghai research center, more than 260 scientists working with skin cells and test tubes tailor products from lipsticks to shampoos for Chinese shoppers.

This year’s offerings: a cosmetic balm for Chinese men looking to mask face blemishes, and skin serums made from white fungus, ginseng, and cordyceps — a type of parasitic mushroom widely used as a herbal remedy.

The world’s largest cosmetics maker is launching the new products to whittle away at Procter & Gamble Co (PG).’s lead in China’s market for beauty and personal care products, estimated to reach $34 billion this year by Euromonitor. To gain an edge over its Cincinatti competitor, L’Oreal is counting on lotions using traditional medical ingredients and offerings targeted at Chinese men, among the fastest growing sections of the market.

The strategy will help the Paris-based firm boost China sales more than 10 percent in 2013 from 12.05 billion yuan ($1.9 billion) last year, China Chief Executive Officer Alexis Perakis-Valat, predicted in an interview. The new products will be unveiled later this year.

“L’Oreal has become a formidable competitor for Procter & Gamble (PG) in skin care,” Oru Mohiuddin, a senior analyst in London at researcher Euromonitor International, said in an e-mail. “Not just has L’Oreal approached China from various angles, including pricing and retail coverage, it also strived to make the brands more customized and effective.” Read more of this post

Lies, Damned Lies, and Chinese Statistics; Who’s cooking Beijing’s books? Ingrained belief that boosting morale through exaggerated claims was more important than reporting reality

Lies, Damned Lies, and Chinese Statistics

Who’s cooking Beijing’s books?

BY TOM ORLIK | MARCH 20, 2013

On Wednesday, U.S. Treasury Secretary Jack Lew met with China’s Premier Li Keqiang, a crucial first meeting between new representatives of the world’s two biggest economic powers. Lew’s interlocutor sits at the top of the world’s second-largest economy — a country whose GDP reachedapproximately $8.3 trillion in 2012. But how accurate are the statistics that illuminate China’s growth? Even Li himself has said (as quoted in a U.S. State Department cable published by WikiLeaks) that China’s GDP figures are “man-made” and therefore unreliable. In this excerpt from his book, Understanding China’s Economic Indicators, Wall Street Journal China reporter Tom Orlik explains how to get to grips with China’s data. Read more of this post

What Should China Do with 18 Mln Pigs Carcasses Every Year?

03.21.2013 19:40

Closer Look: What Should China Do with 18 Mln Pigs Carcasses Every Year?

The appearance of thousands of carcasses in a Shanghai river shows how much work the government has to do on a major public health issue

By staff reporter Gong Jing

More than 10,000 dead pigs have been pulled out of a Shanghai river that provides drinking water to 23 million people over two weeks, raising health concerns. Even worse, there have been reports that many dead pigs were processed and sent to people’s dining tables.

Behind all of this is the issue of disposing of pigs that dies from disease, an area that regulators have long neglected.

Yu Kangzhen, an expert from the Ministry of Agriculture, said that an investigation has not found an epidemic at farms in Jiaxing, a city in Zhejiang Province believed to be the source of the animals found in Shanghai’s Huangpu River.

Information from other sources backs Yu. There has been no significant rise in pig deaths in Jiaxing this year. As a major pig farming city, Jiaxing raised about 4 million of the animals every year. If a normal death rate from disease is used, about 3 percent, this means the city has to handle about 120,000 dead pigs per year.

China raises more pigs than any other country in the world. Rough statistics show that it had nearly 700 million pigs in 2012. That means, about 18 million pigs died of disease every year.

How does China handle such a large number? The ministry says pigs that die from disease are usually buried or burned. But in reality, many farmers illegally sell them or simply dump the carcasses. Read more of this post

As Pollution Worsens in China, Solutions Succumb to Infighting

March 21, 2013

As Pollution Worsens in China, Solutions Succumb to Infighting

By EDWARD WONG

Smog veiled the China Central Television Building in Beijing last week. Air pollution hit record levels in north China last month.

BEIJING — China’s state leadership transition took place this month against an ominous backdrop. More than 13,000 dead pigs were found floating in a river that provides drinking water to Shanghai. A haze akin to volcanic fumes cloaked the capital, causing convulsive coughing and obscuring the portrait ofMao Zedong on the gate to the Forbidden City.

So severe are China’s environmental woes, especially the noxious air, that top government officials have been forced to openly acknowledge them. Fu Ying, the spokeswoman for the National People’s Congress, said she checked for smog every morning after opening her curtains and kept at home face masks for her daughter and herself. Li Keqiang, the new prime minister, said the air pollution had made him “quite upset” and vowed to “show even greater resolve and make more vigorous efforts” to clean it up.

What the leaders neglect to say is that infighting within the government bureaucracy is one of the biggest obstacles to enacting stronger environmental policies. Even as some officials push for tighter restrictions on pollutants, state-owned enterprises — especially China’s oil and power companies — have been putting profits ahead of health in working to outflank new rules, according to government data and interviews with people involved in policy negotiations. Read more of this post

LME copper inventories at 10-year high; Level is the highest since China’s industrialisation was in its infancy

March 21, 2013 8:02 pm

LME copper inventories at 10-year high

By Jack Farchy in London

Copper inventories on the London Metal Exchange have risen to their highest level since 2003, in the latest sign of the copper market’s shift into oversupply.

LME copper stocks have risen 165 per cent since October, amid an increase global mine production and slower purchases from China, which has seen a rapid build-up of copper stocks in recent years.

On Thursday stocks on the LME rose 6,625 tonnes to 557,450 – the highest since October 2003, when the commodities supercycle driven by China’s industrialisation was still in its infancy.

Although LME stocks only represent one chunk of global inventories, they are closely watched by traders and analysts as an indication of the amount of surplus metal that is readily available to deliver into the market. Read more of this post

Offshore Marine Boom? Oil rig engineering specialist Lamprell posts $110m loss on cost overruns

March 21, 2013 4:31 pm

Lamprell posts $110m loss on cost overruns

By Michael Kavanagh

Lamprell, the specialist engineering group, set out plans for a return to break-even on trading this year after delivering a $110m loss prompted by cost overruns and penalties on key projects.

The Dubai-based contractor, which specialises in oil and gas rig construction and repair and the building of vessels used to install wind turbines, was on Monday fined £2.4m by the Financial Services Authority for failing to update the market properly on its worsening financial position in early 2012. Read more of this post

China’s rail reform skirts big question: Who pays? China’s massive high-speed rail expansion is likely to cost over $100 billion a year. The funding for it has been pure folly.

China’s rail reform skirts big question: Who pays?

March 21, 2013: 12:36 PM ET

China’s massive high-speed rail expansion is likely to cost over $100 billion a year. The funding for it has been pure folly.

By John Foley, Reuters Breakingviews

FORTUNE — China’s massive rail expansion is good for the economy. Burying it under $420 billion of debt isn’t. The long awaited dismantling of China’s sprawling Ministry of Railways and creation of a new rail company, announced on March 10, is a good moment to change track.

A grand plan to double track length to 120,000 kilometres between 2010 and 2015 is likely to cost over $100 billion a year. It’s worth it. As well as comfort, prestige and low emissions, rail is the ticket to better urbanization. A recent World Bank report calculated that the benefits to a city of better connectivity from high-speed rail could be almost as large as those from saving passengers time and operating costs.

The funding, though, has been pure folly. Projects depend on borrowing from Chinese state banks and issuing bonds — which in turn are mostly bought by the banks. The resulting debt, on a notional 6% interest rate, would require $25 billion a year of interest payments. Passengers aren’t rich enough to cover that cost. Read more of this post