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

IMF: borrowing is back to pre-crisis levels; Meier didn’t actually invite listeners to read between the lines of all the numbers he was presenting, but the meaning was clear to the veterans in the auditorium.

IMF: borrowing is back to pre-crisis levels

22 March 2013

Author: Simon Osborne

Are we meant to cheer, or boo? Borrowing is back to where it was in 2007. In Asia, gearing ratios are back at 96%, the same level as they were pre-crisis. Is that good or bad? Was it not borrowing that got us into this fine mess? “It might be ok now, but given a few years of that trend, that view might change,” says Andre Meier, the International Monetary Fund’s resident representative in Hong Kong, at the Private Equity International Asia Forum. He adds the Chinese are gearing up, last year recording 17% bank loan growth, 80% for Trust loans, 40% for corporate bonds and 30% for entrusted loans. He looked mellow about the bank loan growth, but was that a flicker of a conservative frown for the other three? “These markets are yet to be tested in strained scenarios. For example, there has been no default yet in Chinese domestic corporate bonds.” He pointed a stern finger at a slide with vertiginous lines showing that Dim Sum Bond issuance was $25bn in 2011, $250bn now, and QFII was $75bn in 2011, $140bn now. “The average ratio of credit to GDP is higher now than it was in 1997, the boom is striking.” All those in the audience who were in high school in 1997 smiled. Yes, yes, this is all good news of boom and prosperity……….isn’t it? Capital flows in funds are rushing back to Asia at a rate of $1.75bn per week this year, compared to outflows in 2011. That money is chasing the 7.5% GDP growth that the IMF predicts for Asia in each of the next two years. However, if some “reversal” took place, (could he mean a once-in-a-century crisis that-nobody-sees-coming that now seems to happen every other year), then Asia is vulnerable, as money could be pulled out again. Non-resident holdings of Indonesian, Malaysian and Thai government debt are at 35%, 30% and 25%. Would foreigners whisk their money out of Asia if something goes wrong? Tick, that sounds plausible. He sees less tail risk in Europe, thanks to the ECB medicine in 2012, and growth being shored up elsewhere, and a slump being prevented – by the Bank of England quadrupling the size of its balance sheet, and the Fed multiplying its by 3.5x. Meier didn’t actually invite listeners to read between the lines of all the numbers he was presenting, but the meaning was clear to the veterans in the auditorium.

Because of bias and ignorance, Western companies in Singapore have failed to build up local leadership and talent in their management

PUBLISHED MARCH 22, 2013

Western firms don’t build up local talent: study

Their competitive edge in Asia may be hurt in long haul if such practices stay

BY CHUANG PECK MINGPRINT |EMAIL THIS ARTICLE

[SINGAPORE] Because of bias and ignorance, Western companies in Singapore have failed to build up local leadership and talent in their management, says a study backed by the Tripartite Alliance for Fair Employment. And it warns that this may blunt the competitive edge of these multinational corporations in Asia in the long haul. “Our research shows that Singaporean talent brings unique strengths to leadership and organisational success, yet we observe that local employees often do not rise up through organisations to secure leadership positions,” says Kate Verson, a co-author of the study titled “Adopting an Asian lens to talent development – a Singapore study”. “There is a concern that approaches towards talent development may not be truly inclusive and that companies are potentially overlooking key local talent in the pipeline,” she adds.

Keep flats simple and affordable: Ex-HDB chief Dr Liu Thai Ker; the man who played a pivotal role in Singapore’s successful public housing programme in the early years yesterday made the call to return to the basics.

Keep flats simple and affordable: Ex-HDB chief

SINGAPORE — As the debate rages on over the role and nature of public housing, following National Development Minister Khaw Boon Wan’s call earlier this month to relook the long-term direction, the man who played a pivotal role in the Republic’s successful public housing programme in the early years yesterday made the call to return to the basics.

BY NG JING YNG –

4 HOURS 52 MIN AGO

SINGAPORE — As the debate rages on over the role and nature of public housing, following National Development Minister Khaw Boon Wan’s call earlier this month to relook the long-term direction, the man who played a pivotal role in the Republic’s successful public housing programme in the early years yesterday made the call to return to the basics.

Forget the bells and the whistles, and build more flats than needed — the end goal is affordability, said Dr Liu Thai Ker, whose 20-year career in the Housing and Development Board (HDB) began in 1969 when he was the head of the Design and Research Section.

He rose through the ranks to become its Chief Architect and ultimately, the Chief Executive Officer, before he left in 1989 to become the CEO and Chief Planner of the Urban Redevelopment Authority.

And his call was backed by former Senior Minister of State and HDB Chairman Aline Wong, who reiterated that the purpose of public housing is to “provide a shelter over everybody’s heads”.

“The asset part comes along because … property appreciates over a long time. But that is not our primary objective. People make money, accumulate savings … but we cannot promise that they will not lose (value in their property), depending on the property cycle,” she said. Read more of this post

McDonald’s franchises in China need 5 years to break even

McDonald’s franchises in China need 5 years to break even

Staff Reporter

2013-03-21

McDonald’s franchises in China may need up to five years before they break even, according to the Shanghai-based First Financial Daily. Chinese investors interested in taking up a new McDonald’s franchise must pay an initial fee of 2 million yuan (US$320,000) and must also pay for the building itself, equipment and other additional costs, including monthly franchising operations and advertising fees. An outlet may need to operate for five years before it starts to see a profit, based on the current sales of a typical McDonald’s restaurant and the increasing cost of running a business in the country, analysts say. The US fast food giant is continuing to expand its China network, with new franchises licensed in Hunan province last September, and the Jiangsu Rongjin Group obtaining franchise rights last October. McDonald’s has also opened more outlets in Fujian and Sichuan provinces, according to sources familiar with the business.

McDonald’s is one of the world’s highest-grossing fast food chains and derives its profits from other channels in addition to its burgers, selling franchising and property as well as renting out its outlets. The company reported operating revenue of US$9.9 billion in 2011. Total business from its restaurants, franchising fees and rents accounted for 32%, 23% and 45% of operating revenue, respectively. However, the company has failed to successfully apply its standard business model in China. Rival KFC beat McDonald’s into China and has held the lead in terms of revenue and expanding its franchises over the past 20 years. McDonald’s hopes to expand its network in mainland China from 1,500 to 2,000 restaurants by the end of 2013 and 20%-30% of its restaurants will be franchise outlets by 2015. According to analysts, McDonald’s should work more closely with agents within China to better understand the local market.

Chart Of The Day: China PMI Vs Electricity Production

Chart Of The Day: China PMI Vs Electricity Production

Tyler Durden on 03/20/2013 22:13 -0400

HSBC’s China Flash PMI just printed above expectations at 51.7, disappointing those hoping for more stimulus but just Goldilocks enough to satisfy the world that China is firing on all cylinders… But, and there’s always a but, the following chart suggests that the diffusion-driven survey-based PMI data may be just a little different from the hard data on the ground. Of course, everything could have magically turned around in the last 3 weeks (aside from Copper demand and PBoC repo/rev. repo that is). For now, we tip our hat to the well planned PMI print as indicative that all is well in the smog-ridden pig-barren nation but scratch our chin at just what is powering all this growthiness… HSBC’s Flash PMI upticked more than expected but remains in that neverland zone… and here are the stunning sub-indices showing the ‘surges’ – hhmm – employment? pricing? even New Export Orders are in ‘fence-sitting’ mode… But when judged against the history of a relatively tight relationship to Electricity production… is it any wonder we call it the Chart of the Day… It seems we are about to witness a jump from -13% YoY decline (as we discussed here the largest ever) to a +10% YoY rise in the span of just one month…