Najib Calls Malaysia Election With Five-Decade Rule on Line; The KLCI index has gained 82 percent during Najib’s three years as leader as of yesterday’s close, about three times less than benchmarks in Thailand, Indonesia and the Philippines.

Najib Calls Malaysia Election With Five-Decade Rule on Line

Malaysian Prime Minister Najib Razak dissolved parliament in preparation for elections that will determine whether his ruling coalition extends its unbroken hold on power since independence in 1957. Under Malaysian law the contest must be held within 60 days of the dissolution of the legislature. The Election Commission will meet in a few days to announce a date for the poll, spokesman Sabri Said said in a text message. “The ultimate power of choosing the government lies in the peoples’ hands,” Najib said in a televised address. “Over the past five decades we’ve achieved stability and prosperity in this country. I hope we’ll continue this tradition.”

The 13-party Barisan Nasional coalition, which won the 2008 national vote by its slimmest margin, faces a resurgent opposition alliance led by former deputy prime minister Anwar Ibrahim. The prospect of an even closer election result has helped make the FTSE Bursa Malaysia KLCI Index one of the worst performing Asian benchmarks this year. The gauge fell as much as 3.1 percent today, the most since October 2011. “We expect the Barisan Nasional coalition to have less seats in the aftermath of the 13th general election, but not enough to lose their majority,” said Anand Pathmakanthan, head of Malaysia research at CLSA Asia-Pacific Markets. “If you talk to most investors, their best case scenario is that Najib stays as well because they can’t see what comes after.” The KLCI index has gained 82 percent during Najib’s three years as leader as of yesterday’s close, about three times less than benchmarks in Thailand, Indonesia and the Philippines. Read more of this post

Vanguard raises the possibility of free ETFs

April 2, 2013 1:08 pm

Vanguard raises the possibility of free ETFs

By Madison Marriage

Exchange traded fund providers have room to reduce charges to zero and could even pay clients to invest in their products, according to US firm Vanguard. Nick Blake, head of retail at Vanguard Investments, says revenues from securities lending alone are sufficient to make ETFs profitable. Mr Blake says: “I would like to think the cost of investing [in ETFs] could come down to zero. “There will always be a fixed cost in there, but if [a firm’s asset] volume is big [enough], the total expense ratio can come right down.” Vanguard, which has been building its footprint in Europe and now has ETFs registered in Ireland, the UK and Switzerland, currently charges investors an average management fee of 28 basis points.

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Value of China’s documentary market quadruples in 4 years to 1.5 billion yuan (US$242 million)

Value of China’s documentary market quadruples in 4 years

Xinhua 2013-04-03

On location for a documentary about the Mogao Caves in Dunhuang, northwestern Gansu province. (Photo/CNS)

Sales for China’s documentary film industry soared from 400 million yuan (US$64 million) in 2009 to 1.5 billion yuan (US$242 million) last year, according to a recent report. Read more of this post

Chinese Local Governments Face Greater Financial Risks as Land Sales Drop; “A significant amount of local government debts are maturing this year, as debt due in the last two years are transferred to 2013 through re-financing. This year could be a peak of debt repayment. ”

Chinese Local Governments Face Greater Financial Risks as Land Sales Drop

04-02 15:36 Caijing

Declining land sales and squeezed house transactions under property regulations are adding increasing financial pressures to local governments as their debt repayment is coming to a peak in the following two years.

Chinese local governments could face an unprecedented financial challenge in 2013 as the country’s land-selling activities have showed signs of cooling down and a large amount of debts are maturing this year, according to a study by eHouse, a leading real estate services provider in China. China collected 2.69trillion yuan from selling land in 2012, a remarkable 15% drop from a year earlier, contributing to 31% of local government’s total revenue, 7 percentages lower compared with the previous year, but still at historical high, the report said. Read more of this post

Record numbers of British workers are being employed on “zero hours” contracts which keep staff on standby and deny them regular hours, official figures disclose

Number of Britons on ‘zero hours’ contracts hits record high

Record numbers of British workers are being employed on “zero hours” contracts which keep staff on standby and deny them regular hours, official figures disclose.

The number of workers employed on a zero hours contract almost doubled between the quarter to June and the three months to December last year.  Photo: AFP

By Hayley Dixon

11:23PM BST 02 Apr 2013

The number of workers in jobs without any guarantee of regular hours or pay nearly doubled during last year to reach 200,000, according to data from the Office for National Statistics. The contracts – now used by almost a quarter of Britain’s major employers – legally allow firms to employ staff, often in low paid jobs, without any guarantee of actual work, or income. Read more of this post

SocGen: The End of the Gold Era; The Nightmare Scenario For Gold Investors That Could Cause The Market To Crash

PRESENTING: The Nightmare Scenario For Gold Investors That Could Cause The Market To Crash

Matthew Boesler | Apr. 2, 2013, 10:58 AM | 5,471 | 13

Société Générale analysts are quite bearish on gold. Their $1375-per-ounce price target for the end of 2013 puts them well below most of the Street. Today, the SocGen team, led by Patrick Legland and Michael Haigh, released a new report titled “The End of the Gold Era.”

Read more of this post

Asia royalty rises provoke investor fury; Dramatic hikes viewed by many as worrying trend to remove funds from emerging markets

April 2, 2013 6:23 pm

Inside Business: Asia royalty rises provoke investor fury

Dramatic hikes viewed by many as worrying trend to remove funds from emerging markets

By Jeremy Grant

If you are a fund manager investing inAsia’s emerging markets, one way to gain exposure is by holding shares in a multinational company’s locally listed subsidiary.

Want some concrete action in India? Buy shares in Ambuja Cements, a Mumbai-listed company controlled by Holcim, the Swiss cement maker.

How about shampoo in Indonesia? Simple. Buy a chunk of Unilever Indonesia, which has been listed on the Jakarta stock exchange since 1981.

For years, this arrangement worked well for fund groups such as Aberdeen Asset Management and Arisaig Partners, a Singapore-based boutique investor with a focus on the consumer companies that are such a big part of the emerging market growth story. Unilever Indonesia made sales of $2.6bn last year from selling Dove soap, Surf detergent and Wall’s ice cream across the country’s vast archipelago. Its market capitalisation makes it one of Asia’s biggest companies. It is also highly profitable. Net profit has risen every year bar one since 1999, hitting $432m in 2011 – the last year for which figures are available. Dividends have rolled in nicely.

However, in the past few months, this neat way of investing in emerging markets has been upset. A chorus of funds is furious that Unilever and Holcim, as parent companies, have recently decided to take much bigger royalty payments from their Indonesian subsidiaries. Similar noises have been made in India where the two companies are also seeking higher royalty payments. Royalties are levied by multinationals on local units to recoup the cost of providing “shared services” – research and development, marketing, branding and so forth. But changes to royalties are not unusual and are perfectly legal. Read more of this post

Martin Wolf: Why China’s economy might topple

April 2, 2013 6:42 pm

Why China’s economy might topple

By Martin Wolf

As Japan has shown, shifting to a lower-growth model is risky

Over the next decade, China’s growth will slow, probably sharply. That is not the view of malevolent outsiders. It is the view of the Chinese government. The question is whether it will do so smoothly or abruptly. On the answer depends not only China’s own future, but also that of much of the world.

Official Chinese thinking was on display at last month’s China Development Forum, organised by the Development Research Center of the State Council (DRC), which brought influential foreigners together with high-level officials. Among the background papers was one prepared by economists at the DRC, entitled “Ten-year Outlook: Decline of Potential Growth Rate and Start of a New Phase of Growth”. Its proposition is that China’s growth will slow from more than 10 per cent a year from 2000 to 2010 to 6.5 per cent between 2018 and 2022. Such a decline, notes the paper, is consistent with the slowdown since the second quarter of 2010 (see chart).

The authors note two possible reasons for the decline: either China has fallen into the “middle income trap” of aborted industrialisation; or it is managing the “natural landing” that occurs when an economy begins to catch up with advanced economies. This latter scenario played out in Japan in the 1970s and South Korea in the 1990s. The DRC paper argues that, after 35 years of 10 per cent growth, it is at last happening to China.

Here are a few reasons why the authors say this view is plausible. Read more of this post

Key Bond Index Gets Bitten; Investors Are Pulling Funds Tied to ‘the Agg’ as Safe Bonds Look Anything But

Updated April 2, 2013, 9:51 p.m. ET

Key Bond Index Gets Bitten

Investors Are Pulling Funds Tied to ‘the Agg’ as Safe Bonds Look Anything But

By CAROLYN CUI And PATRICK MCGEE

The guiding star for many bond investors is starting to flicker. The Barclays BARC.LN +2.18% U.S. Aggregate Bond Index, known as “the Agg”—which tracks the broader debt market the way the Standard & Poors-500 follows stocks—declined 0.12% in the first quarter, its first negative return in that period since 2006. And with many large investors yanking funds tied to the Agg, the index’s flagging popularity is having repercussions for how hundreds of billions of dollars are allocated in fixed-income portfolios. The move is perhaps the most stark indication yet that the safest bonds are scaring investors.

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Thailand’s Securities and Exchange Commission (SEC) lacks ability to nab share price manipulators as it has no authority to file charges against perpetrators

SEC lacks ability to nab manipulators

Published: 3 Apr 2013 at 00.00

The securities regulator wants to put more effort into cracking down on share price manipulators during the bull market, but its work remains limp as it has no authority to file charges against perpetrators.

The Securities and Exchange Commission (SEC) is only the starting point for a stock manipulation crackdown, as these matters go to court, said secretary-general Vorapol Socatiyanurak.

The SEC just filed its first criminal complaint this year against Shine Bunnag and 12 others for manipulating the share prices of Mida Leasing Plc (ML) from March-May 2008 and in August 2010 and doing the same to Max Metal Corporation (MAX) shares in September 2010. There are growing worries over the irregular movements of several stocks now that the market is skyrocketing. Read more of this post

Asia Soaring Wages Stoke Inflation as Factory Costs Rise; “The wage increases I hear about in Asia are astronomical, and our American customers just laugh because they cannot relate to it. This is not over yet.”

Asia Soaring Wages Stoke Inflation as Factory Costs Rise

Koda Ltd (KODA). Executive Director Ernie Koh has a message for clients in 50 countries who complain about the Singapore-based furniture maker’s first price increase in two years: Take it or leave it.

Koda’s factories in China, Malaysia and Vietnam are battling rising costs as governments in Asia increase minimum wages to curb discontent over a widening wealth gap. While weak global growth and increased competition limited the ability of producers to raise prices during the past five years, Koh says they can’t go on absorbing the additional expenses.

“We aren’t even passing on the full costs,” said Koh, who counts U.S. retailer Williams-Sonoma Inc (WSM)., owner of Pottery Barn, and Cost Plus Inc. among customers. “Wage escalation in China these past few years has been crazy. We have collective bargaining with the union in Vietnam, and in Malaysia there is a big outcry among manufacturers over the minimum wage.”

Average pay in Asia almost doubled between 2000 and 2011, compared with a 5 percent increase in developed countries and about 23 percent worldwide, according to the International Labour Organization in Geneva. The gain was led by China, where average remuneration more than tripled during the period. Southeast Asia is catching up, with new minimum pay levels in at least five nations eroding companies’ ability to make cheap toys, clothes and furniture. Read more of this post

The failed $740 million funds management empire overseen by flamboyant Gold Coast businessman Peter Drake lent $301 million to Mr Drake and his companies, administrators have revealed.

Related-party loans probed in LM fund

April 3, 2013, Ben Butler

The failed $740 million funds management empire overseen by flamboyant Gold Coast businessman Peter Drake lent $301 million to Mr Drake and his companies, administrators have revealed.

Administrators John Park and Ginette Muller, of FTI Consulting, said the loans were made from the LM Managed Performance Fund, which operated outside Australian company law.

The related-party loans, representing about three-quarters of the $397 million fund, included $17 million lent directly to Mr Drake, the administrators said.

They said they would apply to the Queensland Supreme Court on April 12 to take control of the fund as its receivers.

”MPF has to date been operating as an unregulated fund outside the Corporations Act,” the administrators said. ”The administrators are continuing to work with ASIC [the Australian Securities and Investments Commission] to address the regulatory concerns.” Read more of this post

Suntech Unit Bankruptcy Had Roots in Deadbeat Customers linked to the founder who couldn’t pay their bills and the company booked the sales as revenue anyway

Suntech Unit Bankruptcy Had Roots in Deadbeat Customers

Suntech Power Holdings Co. (STP), forced to put its Chinese solar unit into bankruptcy last month, began that slide into insolvency in 2009 when customers linked to the founder couldn’t pay their bills and the company booked the sales as revenue anyway, regulatory filings show.

Seven buyers backed by an investment firm funded by Suntech and its founder, Shi Zhengrong, accounted for 29 percent of Suntech’s uncollected bills as 2009 ended, according to correspondence between the solar company and the U.S. Securities and Exchange Commission. Those customers hadn’t yet received enough money to proceed with their projects and Suntech, once the world’s largest solar-panel maker gave them more time to pay, the letters show.

The SEC correspondence provides clues to Suntech’s prospects and a road map to business practices that left the company vulnerable to a 560 million-euro ($720 million) fraud and a $541 million bond default. Anyone with Internet access could have learned that Suntech was booking revenue from sales to related companies with unbuilt projects in the fledgling solar industry, while also guaranteeing loans to those related companies. It relied on a former sales agent to secure one guarantee with bonds it never saw.

“Digging through SEC correspondence is one of the most important things an investor should do before investing in any company — especially in companies that are higher risk or more opaque,” said short seller Carson Block of Muddy Waters LLC, whose analyst reports starting in November 2010 triggered $7 billion in losses for Chinese stocks in two years. Read more of this post