Fitch Lowers Rating on China Local-Currency Debt in one of the most prominent warnings to date over a credit buildup in the world’s second-largest economy

Updated April 9, 2013, 9:26 a.m. ET

Fitch Lowers Rating on China Local-Currency Debt


BEIJING—Fitch Ratings Inc. on Tuesday lowered one of its key ratings on China’s government debt, in one of the most prominent warnings to date over a credit buildup in the world’s second-largest economy.

The downgrade applies only to China’s yuan-denominated debt, which is primarily traded domestically—not the foreign-currency debt that it issues in international financial markets, so it is unlikely to have a big impact on global financial markets.

But the move highlights a risk to the Chinese economy that has been flagged recently by analysts and market players: that massive lending by China’s banks, as well as shadowy nonbank institutions, runs the risk of turning bad.

The credit rating agency lowered China’s long-term local currency rating to A+ from AA-, with a stable outlook. It kept China’s foreign-currency rating unchanged at A+, saying it is well supported by China’s massive foreign-exchange reserves, worth $3.387 trillion at the end of 2012.

“Risks over China’s financial stability have grown,” Fitch said in a statement. The stock of bank credit extended to the private sector was worth 135.7% of China’s gross domestic product at the end of 2012, the highest level of any emerging market economy rated by Fitch, it said. Read more of this post

H7N9 rumored to have hit Beijing as warnings censored

H7N9 rumored to have hit Beijing as warnings censored

Staff Reporter, 2013-04-09

The deadly new strain of avian influenza is rumored to have spread to Beijing after a local hospital worker issued a cryptic warning to friends on his microblog account, reports citizen journalism website Boxun. A new subtype of the bird flu, known as H7N9, has so far infected 24 people in eastern China and led to seven deaths, according to official figures. The victims have so far been geographically limited to the east of the country, with all reported cases coming from Shanghai and the provinces of Jiangsu, Zhejiang and Anhui. Internet rumors are circulating which suggest a government cover-up, with many microblog users believing that the virus has already spread to other major cities such as Beijing and Guangzhou, though hospital staff have been forced to remain silent. An alleged Beijing hospital worker recently posted a thinly veiled warning about the presence of the virus in the city on their Sina Weibo microblog account. “I cannot say anything. I can only hint that my friends in Beijing need to be careful. Hope you understand what I mean,” said the post, reportedly uploaded by a stem cell researcher from one of the city’s top hospitals. The warning was quickly deleted along with the microblog account that posted it.

Beijing’s health authorities have released a notice on preventing the spread of the flu, requiring all hospitals and medical centers to complete related training by Wednesday. City hospitals with patients suspected to have contracted the virus must also report directly to central health authorities within two hours. The notice also imposes strict restrictions on live poultry trading at markets and the transportation of birds into the city, including on public trains or buses. Food and health regulators will also increase supervision of the slaughter, processing, transportation and storage of poultry for human consumption.

IShares tests the waters for active ETFs

April 7, 2013 4:13 am

IShares tests the waters for active ETFs

By Jackie Noblett

IShares registered the launch of two active US equity products last Monday, the latest test of the waters for the world’s largest exchange traded fund company.

The US house unveiled plans for the iShares Enhanced US Large Cap ETF and the iShares Enhanced Small Cap ETF.

It is the latest attempt by iShares to register active ETFs. But, like other fund companies to have registered funds, including Legg Mason and Federated, iShares has yet to go live with any of those products.

Analysts believe, however, that a number of active ETFs will come to the market this year. Read more of this post

Why Dominates Social Media Commerce While Other Brands Struggle

Why Dominates Social Media Commerce While Other Brands Struggle

Lucy FisherThe Guardian | 17 minutes ago | 69 | 

With high profile brands such as Gap, Gamestop and, in the US, JCPenney, having opened and then subsequently closed Facebook stores (presumably because they weren’t delivering ROI) it would be easy to assume that social media is not suitable for sales – too easy, perhaps.

But those who dig a little deeper may find that opportunities abound if social media is leveraged in the right way.

“We haven’t tried to use social as a sales channel at all. It doesn’t suit our demographic and we’re not a discounter,” argues Andrew Curran, chairman at luxury homewares e-tailer Amara. “Having said that, there are examples – take – of retailers for which social is a significant proportion of what they do and drives a large percentage of their business.”

He’s not wrong. E-commerce site, which specialises in “everyday design” items, grew sales by nearly 300% in January 2013 over January 2012. In Europe alone, 50% of its members have come from social sharing and lead to 33% of revenue in the region. Its member base grew to 11m people, up from 1.5m at the start of last year. With social networking sites and mobile apps forming a significant part of its business model, the innovative company has won a raft of awards. Read more of this post

A Year Later, Instagram Hasn’t Made a Dime. Was it Worth $1 Billion?

A Year Later, Instagram Hasn’t Made a Dime. Was it Worth $1 Billion?

By Victor LuckersonApril 09, 2013Add a Comment

A picture’s worth much more than a thousand words to Facebook. Last April — a year ago today, in fact — the social media giant agreed to buy the quickly growing photo-sharing social network Instagram for a cool $1 billion (the final price, a mixture of cash and stock, was $715 million because Facebook shares tumbled before the deal was finalized). The sky-high purchase price, well above Instagram’s $500 million valuation at the time, led some to wonder if Facebook was helping to fuel another tech bubble. A year later, the jury’s still out on whether Instagram will one day reap huge profits, but the company is laying groundwork to put the monetization machine in motion.

By many metrics, Instagram has had an impressive year under Facebook. The photo-sharing network had about 30 million users at the time of the buyout. Today there are more than 100 million monthly active users posting more than 40 million photos per day. The company has doubled its staff to more than 25 employees, including a new business operations director brought over from Facebook.

Despite the large growth numbers, it’s difficult to say whether Instagram has earned its price tag. The company earns no money and has not talked about monetization strategies its executives are mulling, though CEO Kevin Systrom has said that Instagram’s goal is to become a self-sustaining business. Facebook’s financial support has likely shielded Instagram from some of the financial pressures it would have faced on its own. “If there’s no revenue pressure…maybe they’ll take a wait-and-see attitude,” says Brian Blau, research director in consumer technologies at Gartner. “Their strategy today is more around building infrastructure, setting up their features and functions for the future.” Read more of this post

The Price Is Not Right in China; Alibaba’s Internet shopping price index shows that prices in February were up 11% from a year earlier. Alibaba sells a different range of goods than what’s in the CPI basket, but the difference between its number and the official figure is striking nonetheless.

Updated April 9, 2013, 5:32 a.m. ET

The Price Is Not Right in China



In China, it’s common for shoppers to haggle on prices. Investors should quibble over the country’s inflation data, too. Official figures show China’s consumer price index easing to 2.1% year-on-year in March from 3.2% in February. That’s not unexpected. In February, food prices were higher because of the Lunar New Year, which in 2012 occurred in January. With the celebrations over, food-price increases slowed.

But Chinese households have long harbored suspicions that the CPI is not capturing all of the price increases they face. Some Internet users joke that government statisticians don’t buy their own groceries so they don’t know how much things cost. Data from Alibaba, China’s biggest online-shopping platform, suggests the skeptics may have a point. Based on online transactions, Alibaba’s Internet shopping price index shows that prices in February were up 11% from a year earlier. Alibaba sells a different range of goods than what’s in the CPI basket, but the difference between its number and the official figure is striking nonetheless.

Property prices in major cities are rising fast too. Data from property agency Soufun shows prices in Guangzhou and Beijing rising at double-digit rates. Residential rent in Shanghai is up 13% from a year ago, according to Centaline, another property agency. That makes sense. China’s economy is awash in cash. Money supply expanded 13.8% year-on-year in 2012, compared with 7.8% growth in gross domestic product. A massive increase in new credit in the first two months of 2013 accelerated money-supply growth to 15.2%. Wages are rising at double digit rates. The markets cheered March’s relatively benign price rise. The Hang Seng China Enterprise Index gained 1.9% Tuesday. But if inflation is higher than CPI suggests, official data is not a good predictor of the need for tighter monetary policy.

North Korea said the Korean peninsula was headed for “thermo-nuclear” war and advised foreigners in South Korea to consider evacuation; Japan puts anti-North Korean missiles in Tokyo

N Korea urges South evacuation, warns of nuclear war

POSTED: 09 Apr 2013 2:28 PM

North Korea said the Korean peninsula was headed for “thermo-nuclear” war and advised foreigners in South Korea to consider evacuation, in the latest in a series of apocalyptic threats.

SEOUL – North Korea said Tuesday the Korean peninsula was headed for “thermo-nuclear” war and advised foreigners in South Korea to consider evacuation, in the latest in a series of apocalyptic threats.

It followed a similar warning issued last week to foreign embassies in its capital Pyongyang to consider evacuating by April 10, saying it could not ensure the safety of their personnel if a conflict broke out.

“The situation on the Korean Peninsula is inching close to a thermonuclear war,” the North’s Asia-Pacific Peace Committee said in a statement carried by the North’s official Korean Central News Agency.

Saying it did not want to see foreigners in South Korea “fall victim”, the statement requested all foreign institutions, enterprises and tourists “to take measures for shelter and evacuation in advance for their safety”. Read more of this post

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