CalPERS is weighing taking its massive $255 billion assets under management and moving it to an all-passive portfolio

A Gigantic Pension Fund Is Reportedly Considering A Change That Should Make Investment Managers Freak Out

Julia La Roche | Mar. 25, 2013, 2:13 PM | 7,432 | 13

Investment News reports that California CalPERS, the second biggest U.S. public pension fund, is weighing taking its massive $255 billion assets under management and moving it to an all-passive portfolio. Why would this matter? Well, it would matter a lot for active managers who receive management fees from CalPERS, Josh Brown, who runs the popular financial blog the Reformed Broker, points out on Twitter. The California Public Employees’ Retirement System already has more than half of its investible assets in passive strategies. CalPERS is expected to make the decision in about five months, the report said.

Passive investing: If it’s good enough for CalPERS …

Giant pension plan’s possible full-on switch to index funds speaks volumes

Mar 24, 2013 @ 12:01 am (Updated 2:24 pm) EST

Passive investing has reached a watershed moment. The second-largest pension fund in the United States is considering a move to an all-passive portfolio while at the same time, the largest brokerage firms are falling over themselves to push passively managed exchange-traded funds.

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Ravi Jaipuria: India’s Pepsi Bottler-Billionaire

Ravi Jaipuria: India’s Bottler-Billionaire

by Naazneen Karmali | Mar 26, 2013

PepsiCo bottler Ravi Jaipuria’s insatiable thirst for growth earned him a fortune

I like to be near water,” says Ravi Jaipuria, seated in his office on the top floor of a building that bears his initials and is situated in Gurgaon, a bustling township adjacent to Delhi. The ocean is nowhere close so the chairman of the privately held RJ Corp—revenues in excess of $1 billion—has to make do with an artificial waterfall in the terrace adjoining his office.

Water of the flavoured kind has made Jaipuria, 58, a fortune: PepsiCo’s largest franchise bottler in India. He claims to be among the multinational giant’s top three globally—is among India’s new crop of billionaires, with a fortune estimated at $1.4 billion.

Jaipuria gets a chunk of that wealth from bottling unit Varun Beverages, which accounts for over half of RJ Corp’s revenues. Named after his son, who works with him, Varun Beverages has 10 bottling plants in India plus an international footprint that includes Sri Lanka, Nepal, Morocco, Mozambique and Zambia. It claims to have close to a third of Pepsi’s business in India. A PepsiCo India spokesman says that half of its beverage volume is from seven franchise bottlers, of which Varun Beverages is the biggest. Read more of this post

Pakistan’s Army of Overseas Workers Keeps Economy From Collapse; Almost 10 million Pakistanis work overseas and the sum they’ve sent home has doubled in the four years through June, to a record $13 billion.

Pakistan’s Army of Overseas Workers Keeps Economy From Collapse

Living in poverty in a mud shack in Pakistan, Mazhar Ali dropped out of school, sold the family’s two buffalo and bought a visa to work in Dubai. The money he sends home is paying for a new house.

“We’re going to build three rooms with bricks and cement, plus a courtyard and a washroom,” said his younger brother Azhar in Larkana, home town of the ruling People’s Party about 300 kilometers north of Karachi. “We will then start marrying one by one, starting with Mazhar sometime this year.”

The family’s change in fortunes reflects a rising trend of rich nations with aging workers tapping poorer ones for labor — total remittances to developing economies will rise 7.9 percent this year, and reach $534 billion by 2015, the World Bank says. For Pakistan, the income offers a source of stability, with the country poised for its first civilian handover of government in May even amid power shortages, bombings and a Taliban insurgency.

“This is our savior for keeping Pakistan out of the oxygen tent,” Farooq Sattar, former Minister for Overseas Pakistanis said in an interview in Karachi last month before his party quit the government alliance. “It has kept us from a complete economic collapse.”

Almost 10 million Pakistanis work overseas and the sum they’ve sent home has doubled in the four years through June, to a record $13 billion. Read more of this post

Mortimer Zuckerman: The Great Recession Has Been Followed by the Grand Illusion; Don’t be fooled by the latest jobs numbers. The unemployment situation in the U.S. is still dire

March 25, 2013, 7:07 p.m. ET

Mortimer Zuckerman: The Great Recession Has Been Followed by the Grand Illusion

Don’t be fooled by the latest jobs numbers. The unemployment situation in the U.S. is still dire.

By MORTIMER ZUCKERMAN

The Great Recession is an apt name for America’s current stagnation, but the present phase might also be called the Grand Illusion—because the happy talk and statistics that go with it, especially regarding jobs, give a rosier picture than the facts justify.

The country isn’t really advancing. By comparison with earlier recessions, it is going backward. Despite the most stimulative fiscal policy in American history and a trillion-dollar expansion to the money supply, the economy over the last three years has been declining. After 2.4% annual growth rates in gross domestic product in 2010 and 2011, the economy slowed to 1.5% growth in 2012. Cumulative growth for the past 12 quarters was just 6.3%, the slowest of all 11 recessions since World War II. Read more of this post

Chinese College Graduates Play It Safe and Lose Out; Chinese college graduates say they want to work for the government or big state-owned firms, which are seen as recession-proof, rather than the private companies that have powered China’s economic climb

March 25, 2013, 10:32 p.m. ET

Chinese College Graduates Play It Safe and Lose Out

By BOB DAVIS

BEIJING—Xie Chaobo figures he has the credentials to land a job at one of China’s big state-owned firms. He is a graduate student at Tsinghua University, one of China’s best. His field of study is environmental engineering, one of China’s priorities. And he is experimenting with new techniques for identifying water pollutants, which should make him a valuable catch. But he has applied to 30 companies so far and scored just four interviews, none of which has led to a job. Although Mr. Xie’s parents are entrepreneurs who have built companies that make glasses, shoes and now water pumps, he has no interest in working at a private startup. Chinese students “have been told since we were children to focus on stability instead of risk,” the 24-year-old engineering student says.

Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China’s remarkable economic climb, surveys indicate. Few college students today, according to the surveys, are ready to leave the safe shores of government work and “jump into the sea,” as the Chinese expression goes, to join startups or go into business for themselves, although many of their parents did just that in the 1990s.

Chinese economists worry that waning entrepreneurial zeal could hobble China’s ability to remake its economy and reach the ranks of wealthy nations. “The current education system does not produce people who are innovative,” says Li Hongbin, a Tsinghua University economist who specializes in education and conducted some of the surveys. “That makes it harder for the country to reach its long-term goal of building an innovative society.”

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Apple pursuit lures 20,000 students into high-interest loans with annual interest rates of up to 47%

Apple pursuit lures 20,000 students into high-interest loans

By Xinhua in Wuhan (China Daily), 2013-03-22

More than 20,000 college students have taken high-interest loans to buy fancy electronic products, mostly Apple devices, in Wuhan, the capital of Hubei province.

From the start of January 2012 to the end of February 2013, the students applied for loans with a total value of 160 million yuan ($25.7 million) from Home Credit China (HC China), a subsidiary of international investment business PPF Group.

“We have lost touch with about 100 of them, getting no response to calls or letters reminding them about delayed payments,” said Liu Mingwei, Wuhan regional manager of HC China.

With around 1 million students in Wuhan, it means about one in 50 of them is shouldering HC China’s heavy annual interest rates of up to 47.12 percent on a 12-month-term loan. Read more of this post

Chinese officials earned almost US$5 trillion (30 trillion yuan) reselling land, says economist

Chinese officials earned 30 trillion yuan reselling land, says economist

Monday, 25 March, 2013, 2:49pm

News›China

Agence France-Presse in Beijing

Chinese authorities have earned almost US$5 trillion (HK$38.8 trillion) in profit by selling land obtained from farmers to developers over the years, a top economist said according to state media.

As the country undergoes a huge urbanisation process rural land confiscations have led to numerous protests, worrying the ruling Communist Party, which sees corruption and social unrest as threats to its power.

By law, officials may provide compensation worth up to 30 times the value of the land’s output, but in practice they have skimped on payments or foregone them altogether – then sold the land to developers at much higher rates. Read more of this post

Exclusive: ‘Princeling’ firm holds secret stake in giant fund house Cinda, including a private equity fund co-founded by the grandson of China’s former state head Jiang Zemin

Exclusive: ‘Princeling’ firm holds secret stake in giant fund house Cinda

Tuesday, 26 March, 2013, 12:00am

Business›Companies

George Chen george.chen@scmp.com

As jostling starts over the stock market float of Cinda Asset Management, details have come to light of two previously unknown stakeholders

With the giant state-owned fund house Cinda Asset Management planning to go public in Hong Kong this year, two behind-the-scenes investors in the company, including a private equity fund co-founded by the grandson of China’s former state head Jiang Zemin, have been pushed into the spotlight. Read more of this post