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

The Real North Korea–Life and Politics in the Failed Stalinist Utopia; “I have had enough of listening to talk about an irrational and unpredictable North Korea; they could be the greatest bunch of Machiavellians in the modern world”

April 9, 2013, 11:22 AM

North Korea Expert’s New Book Explores Regime’s Inner Logic

By Alexander Martin


Andrei Lankov is one of the world’s top experts on North Korea with decades of experience studying the inner workings of the isolated regime. Born in St. Petersburg, Russia, he graduated from the Leningrad State University, while spending time in the mid-1980s studying as an exchange student at Pyongyang’s Kim Il Sung University. He speaks Korean and now teaches history at Kookmin University in Seoul.

In his new book, “The Real North Korea–Life and Politics in the Failed Stalinist Utopia,” Mr. Lankov delves into what he calls the “inner logic of the North Korean behavior,” and the peculiarities of a society that has seen it survive until this day despite mounting international pressure and domestic economic woes.

Mr. Lankov argues that contrary to the common Western portrayal of the North as a country run by irrational, sadistic madmen, its leaders were in fact cold-minded manipulators who have used saber-rattling successfully for decades to ensure its survival.

“I have had enough of listening to talk about an irrational and unpredictable North Korea … they could be the greatest bunch of Machiavellians in the modern world,” he told KRT. Read more of this post

Adults Skipping Medicines to Save Money, Research Finds

Adults Skipping Medicines to Save Money, Research Finds

Adults who haven’t reached retirement age were twice as likely as those who have to skip their prescribed medications to save money, a U.S. study found.

About 20 percent of adults regardless of age have asked their doctors for a lower cost treatment, according to the study released today by the Atlanta-based Centers for Disease Control and Prevention. Spending on drugs is expected to increase an average of 6.6 percent a year from 2015 through 2021, the Kaiser Family Foundation has reported.

Americans spent $45 billion out-of-pocket on retail prescription drugs in 2011, the CDC said. The Affordable Care Act is expected to expand access in 2014 when medication coverage is considered an essential benefit of any health plan offered in new insurance marketplaces called exchanges.

“If you’re not insured or you face high co-payments, you’re going to stretch your prescriptions,” said Steve Morgan, an associate professor at the University of British Columbia’s School of Population and Public Health in Vancouver. “Even among insured populations, there is this invincibility mindset among the very young. Older people are more likely to adhere to chronic therapies over a longer period of time than younger.”

Today’s study found 13 percent of those ages 18 to 64 reported not taking their medications as prescribed to reduce costs compared with 5.8 percent of those 65 and older. The 2011 data came from the National Health Interview Survey. Most U.S. adults are eligible at age 65 for Medicare, the federal government’s health program. Read more of this post

Cambodia fights surge in bird flu deaths; Vietnam reports first bird flu death in 14 months

Cambodia fights surge in bird flu deaths

Bird flu killed 8 people so far this year in Cambodia, including 6 children, while more than 13,000 chickens have been culled or died from the highly contagious illness.- AFP
Suy Se

Tue, Apr 09, 2013

PHNOM PENH – As China scrambles to contain a deadly new strain of bird flu, Cambodia is battling a spike in the better known H5N1 strain that is baffling experts a decade after a major outbreak began in Asia. Bird flu has killed eight people so far this year in Cambodia, including six children, while more than 13,000 chickens have been culled or died from the highly contagious illness. The impoverished kingdom is also nervously watching the spread in China of a new H7N9 strain that had not previously been transmitted from birds to humans, but has now killed seven people in China since February.

Read more of this post

China: Hunan’s rice sales plummet amid reports of cadmium-polluted crops

Hunan’s rice sales plummet amid reports of cadmium-polluted crops

Staff Reporter, 2013-04-09

Rice sales in parts of Hunan province in south-central China have plunged and local farmers are giving up planting following reports of rice being tainted by excessive levels of cadmium.

The amount of rice sold in parts of the province is said to have dropped by 60%, resulting in a decline in prices, after domestic media reported at the end of February that 10,000 tonnes of cadmium-tainted rice from Hunan was sold to Guangdong province. Read more of this post

New cancer case diagnosed every six minutes in China

New cancer case diagnosed every six minutes in China

Staff Reporter, 2013-04-09

China’s cancer rate has climbed to alarming new heights, with at least one person being diagnosed with a form of cancer every six minutes, according to the country’s National Cancer Registration Center. There are 3.12 million new cancer cases reported in China annually, an average of 8,550 people per day, according to a report published by the center earlier this year. At present, one in eight people diagnosed with cancer will die from it, a mortality rate of about 13%. Chen Wanqing, deputy director of the center, said China will have 6 million new cancer patients and 3 million cancer-related deaths every year by 2020. Experts note that cancer incidence will only continue to rise over the next decade, and have attributed the trend to the country’s serious air and water pollution.

Wei Kuangrong, director of the Cancer Research Institute at Zhongshan People’s Hospital in Guangdong province, said that 8.34 people were diagnosed and 5.27 people died from cancer in Zhongshan every day in 2009. In the 1970s, the rate for both was only 0.78. Wei said that nasopharyngeal carcinoma, a form of cancer that originates in the upper region behind the nose, has become extremely prevalent in the city. Other areas across the country have also reported high incidences of specific forms of cancer. The city of Qidong in Jiangsu province has reported unusually high rates of liver cancer. Experts have speculated that the geographical distribution of cancer across the country may be linked to local eating customs, environmental conditions or other factors, though no theory is regarded as conclusive. Wang Ning, the deputy director of the Beijing Cancer Institute and Hospital, predicts that China’s cancer rate will not drop over the next 10 years and the nation will be lucky if the rate remains steady.

Enron’s Short Seller Jim Chanos: Stay Away From U.S. PC Tech Firms

Jim Chanos on Daily Ticker: Stay Away From U.S. Tech Firms

Posted: 08 Apr 2013 01:13 PM PDT

Mike “Mish” Shedlock

Here is an interview of Jim Chanos by Lauren Lyster from the Wine Country Conference. Chanos says Stay Away From U.S. Tech Firms

The Daily Ticker’s Lauren Lyster sat down with Chanos, also president and managing partner of Kynikos Associates, at the 2013 Wine Country Conference in support of Les Turner ALS Foundation last week. Of course we asked him: “What are your biggest shorts?” His response? U.S. technology. “I’ve been a big bear for the last year and a half, two years, in the P.C. space,” Chanos says. “I think that we are seeing a secular headwind in that business as more and more people go to mobility and tablets and the cloud. The P.C.-centric space is going to increasingly see negative surprises.” Chanos cites Hewlett-Packard (HPQ) and Dell (DELL) for problems with their accounting practices. “They spend very little on R&D and yet the companies that everyone wants to compare them to spend dramatically more on R&D thus, hurting their profitability,” he notes. Even though Dell and HP have been starting to make huge acquisitions to gain a competitive advantage, they’re doing a “very bad job” at it, Chanos argues. “I am completely mystified as to what the buyout groups at Dell are seeing here because the business from a cash flow point of view, from an accounting point of view, is deteriorating right before your eyes and yet there seems to be a number of players who think this is the greatest thing since sliced bread,” Chanos says. Chanos offers a few pointers for the average retail investor including: don’t try to trade like a hedge fund. “The deck is stacked against retail investors selling short on their own. I don’t think it is generally a good policy,” he says. “Just sell down your stocks to sleep at night.”

Listing Standards and Fraud

Listing Standards and Fraud

Douglas Cumming York University – Schulich School of Business

Sofia Johan York University – Schulich School of Business; Tilburg Law and Economics Center (TILEC)

March 31, 2013
Managerial and Decision Economics, Forthcoming 

Statistics reporting litigated cases of fraud on an exchange-by-exchange basis are not readily available to investors. This paper introduces data from three countries with multiple exchanges operating under different listing standards – Canada, the United Kingdom and the United States – to show litigated cases of fraud significantly vary by country, and the different exchanges within the country. Comparisons are also made to Brazil, China and Germany to assess out-of-sample inferences. The data examined suggest there are significant differences in the nature of observed fraud across exchanges within the United States; by contrast, outside the United States there appears to be a comparative lack of enforcement. The data also suggest policy implications for the ways in which fraud should ideally be reported to improve investor knowledge, market transparency and market quality.

Tiny Chiplets: A New Level of Micro Manufacturing

April 8, 2013

Tiny Chiplets: A New Level of Micro Manufacturing



An enlarged view of small slivers of silicon, each no larger than a grain of sand, called chiplets. Using laser printers, Xerox’s Palo Alto Research Center may one day be able to create desktop manufacturing plants that use chiplets to “print” the circuitry for a wide array of electronic devices.

PALO ALTO, Calif. — Under a microscope, four slivers of silicon — electronic circuits called chiplets — perform an elaborate, jerky dance as if controlled by a hidden puppet master. Then on command, they all settle with pinpoint accuracy, precisely touching a pattern of circuit wires, each at just the right point of contact.

The technology, on display at Xerox’s Palo Alto Research Center, or PARC, is part of a new system for making electronics, one that takes advantage of a Xerox invention from the 1970s: the laser printer.

If perfected, it could lead to desktop manufacturing plants that “print” the circuitry for a wide array of electronic devices — flexible smartphones that won’t break when you sit on them; a supple, pressure-sensitive skin for a new breed of robot hands; smart-sensing medical bandages that could capture health data and then be thrown away. Read more of this post

Teacher Knows if You’ve Done the E-Reading; Educators from nine universities are testing technology from a Silicon Valley start-up, CourseSmart, that allows them to track their students’ progress with digital textbooks; “It’s Big Brother, sort of, but with a good intent”

April 8, 2013

Teacher Knows if You’ve Done the E-Reading


SAN ANTONIO — Several Texas A&M professors know something that generations of teachers could only hope to guess: whether students are reading their textbooks.

They know when students are skipping pages, failing to highlight significant passages, not bothering to take notes — or simply not opening the book at all.

“It’s Big Brother, sort of, but with a good intent,” said Tracy Hurley, the dean of the school of business. Read more of this post

Oishi’s founder Tan Passakornnatee deploys a superhero, social media and sugary bottled teas to build his second beverage empire Ichitan. The only thing in his way? His first beverage empire.

4/03/2013 @ 7:00AM |383 views

Thai Beverage Man Tan Passakornnatee Is On a Mission

By Susan J. Cunningham


As he clowns around for a photo shoot in front of the giant fiberglass animals adorning his restaurant compound off of tony Thonglor Road, Tan Passakornnatee is sporting vivid yellow pants and a polka-dot shirt, his customary style for addressing college students or business groups. When he’s in an even more casual mood, he wears T-shirts with the image of a pig (he was born in the year of the pig). But either way he always dons a captain’s hat–not least when he flies amid tall buildings wearing a caped costume in the commercials for his company’s current promotion. The tubby superhero “Tan Man” is on his way to change the lives of 60 people–one a day for 60 days–who are about to win 1 million baht ($33,000). As consolation prizes, he’s also giving away 1,250 iPhone 5s.

Tan is the 53-year-old founder and chief executive of Ichitan Group, which started making flavored tea drinks less than two years ago. With his chubby face under the captain’s hat, the marketing is working. It’s gaining fast on Thailand’s No. 1 brand, Oishi, which Tan himself founded almost a decade ago. Last year Oishi controlled 34% of the country’s $385 million ready-to-drink tea market, while Ichitan was second at 19%, according to a Euromonitor estimate. And the market grew 38%. Read more of this post

Malaysia poll to test regional democracy; Political upsets could undermine southeast Asia’s success

April 8, 2013 4:37 pm

Malaysia poll to test regional democracy

Political upsets could undermine southeast Asia’s success

By Jeremy Grant in Singapore

With their signature royal blue shirts, the leaders of the governing coalition led by Najib Razak, Malaysia’s prime minister, fired up a crowd of thousands of party loyalists in a stadium in Kuala Lumpur at the weekend.

Launching its election manifesto, Barisan Nasional – Malay for “national front” – pledged a raft of election giveaways including more cash handouts for the poor.

So far, so normal in electoral politics in Malaysia, where taxi drivers have already received vouchers for new tyres. But what was unusual was the rally’s timing.

In past elections Barisan’s main party, the United Malays National Organisation (Umno) has waited until after a date has been set for polling day before unveiling its manifesto, such has been its confidence of repeating the thumping majorities it has enjoyed for decades.

But now the coalition is nervous, and with good reason. Read more of this post

My favorite photos of Margaret Thatcher


Then-Conservative Party Leader Margaret Thatcher chats with a gun-toting four-year-old in 1976


Thatcher sits in the commander’s cupola of a Chieftain on a visit to troops in West Germany in 1983by-1986-thatcher-looked-pretty-comfortable-riding-in-the-turret-of-a-tankheres-thatcher-in-1982-meeting-with-chairman-deng-xiaoping-in-beijing-who-is-widely-credited-with-bringing-a-market-economy-to-the-peoples-republic-of-china

Here’s Thatcher in 1982 meeting with Chairman Deng Xiaoping in Beijing, who is widely credited with bringing a market economy to the People’s Republic of China

The managing director of JCB welcomes the pro-business Thatcher with a ceremonial arch of mechanical diggers in 1987

Thatcher and her husband Dennis don traditional tribal garb on a visit to Kenya in 1988

3-D Printing Is Ready for Surgery; Surgeons Practice With Replicas of Patients’ Organs Before Surgery

Updated April 8, 2013, 9:31 p.m. ET

3-D Printing Is Ready for Surgery

Surgeons Practice With Replicas of Patients’ Organs Before Surgery



Japanese surgeon Maki Sugimoto holds a 3-D replica of a patient’s liver built by printers using acrylic resin.

Surgeons at a hospital in Japan recently faced a dilemma before transplanting a parent’s liver into a child: How exactly to trim the organ to fit the space in the child’s smaller cavity while preserving its functions.

So they took a knife to a three-dimensional replica of the donor’s liver built by a machine that resembles an office printer. The model helped the doctors figure out where to carve it, leading to a successful transplant last month.

Surgeons are finding industrial 3-D printers to be a lifesaver on the operating table. This technology, also known as additive manufacturing, has long produced prototypes of jewelry, electronics and car parts. But now these industrial printers are able to construct personalized copies of livers and kidneys, one ultrathin layer at a time. Read more of this post

Convincing Chinese Bird Flu Is Unrelated to Dead Pigs; “From SARS to H7N9, the most horrible Chinese virus has never been cured: a regime that doesn’t want to tell the truth. Human flu is much worse than bird flu.”

Convincing Chinese Bird Flu Is Unrelated to Dead Pigs

How does the Chinese Communist Party manage to calm a public convinced that — on matters of public health, at least — officials are probably lying to them?

It’s a critical question as infections and fatalities related to the H7N9 bird flu slowly tick upward, unnerving Chinese disinclined to trust their government. The crisis of confidence has its roots in the fatal consequences of the high- level coverup of SARS in 2003, and, more recently, in the still unexplained dead-pig tide that polluted Shanghai waterways. With this sorry history as a precursor and widely assumed precedent, Chinese seem ready to believe anything that doesn’t come from a government mouthpiece — especially if it contradicts the official story or fills a knowledge gap that the government hasn’t addressed.

Consider this sarcastic tweet to Sina Weibo, China’s most popular Twitter-like microblog, on Monday morning by Wu Yan, a popular Internet commentator and writer. In addition to bird flu and SARS, it invokes China’s crackdowns on corrupt officials and the country’s long-standing problems with contaminated dairy products: “From SARS to H7N9, the most horrible Chinese virus has never been cured: a regime that doesn’t want to tell the truth. The root of bird flu is not an animal but those nasty lies from lunatic officials, including: Dead pigs don’t influence the water quality, and domestic milk powder is the safest. And there is a very small ratio of greedy officials or even none! — Human flu is much worse than bird flu.” Read more of this post

China Failed Mining Deals Top $45 Billion on Hanlong Bungle

China Failed Mining Deals Top $45 Billion on Hanlong Bungle

Sichuan Hanlong Group’s botched $1.2 billion bid for Australia’s Sundance Resources Ltd. (SDL) brings the value of China’s recent failed mining deals to $45 billion, a record that’s prompted stricter Chinese scrutiny of acquisitions.

Chinese companies attempted $107 billion worth of mining takeovers over the past five years, with about $45 billion, or 42 percent by value, of deals ending in failure. Of $562 billion of deals proposed globally in the same period, $180 billion, or 32 percent, didn’t proceed, according to data compiled by Bloomberg.

The collapse yesterday of the bid for Sundance, seeking to develop a $4.7 billion iron ore project in Africa, comes after a string of failed investments by Chinese companies, including the demise of a $19.5 billion investment in Rio Tinto Group in 2009. Regulators under China’s new leadership team of Xi Jinping and Li Keqiang have told state-owned companies that overseas takeovers will face a more stringent approval process. Read more of this post

Western drugmakers may have to give hefty subsidies and forgo some profit on expensive cancer drugs if they want access to China’s “huge market,” the country’s former health minister said.

China Drugmaker Access May Require Profit Cut, Chen Says

Western drugmakers may have to give hefty subsidies and forgo some profit on expensive cancer drugs if they want access to China’s “huge market,” the country’s former health minister said.

With the cost of some oncology drugs topping $100,000 a year, Chinese officials may increasingly push for deals like one reached last year with Novartis AG (NOVN), in which the company agreed to donate three doses of its leukemia drug Gleevec for every one sold to the government, the former minister, Chen Zhu, said during an interview in Washington, D.C.

“If the cost is too high, maybe only a few percent of patients can benefit,” said Chen, who stepped down last month after seven years as China’s top health official. “If we can arrange an appropriate, acceptable, affordable price, then you can have a huge market.” Read more of this post

Why Thatcher Wouldn’t Succeed in Our ‘Lean In’ Culture

Why Thatcher Wouldn’t Succeed in Our ‘Lean In’ Culture

There could never be another “Iron Lady.”

That was the first thought that came to some minds today with the news that Margaret Thatcher, the U.K.’s great prime minister, had died.

This is an odd reaction. Women in the developed world now routinely hold more top jobs than they did in 1975, when the 49-year-old Thatcher first assumed leadership of the Conservative Party. The No. 1 bestseller on the New York Times list is “Lean In,” by a woman holding one of the highest of those positions, Sheryl Sandberg, the chief operating officer of Facebook Inc. (FB)

A look at what Sandberg, the granddaughter of a retailer, recommends and what Thatcher, a grocer’s daughter, did, reveals similarities. But there are also such great differences between the two women that you wonder whether a Thatcher might make it today in politics or at a publicly traded company.

Sandberg advises women to learn from female mentors, and Thatcher certainly did. Her tutor at Oxford University, the scientist Dorothy Hodgkin, encouraged the young Margaret Roberts to logically work through problems to their conclusion. That is so Sandberg: Sheryl plans her career moves in an Excel spreadsheet.

Taking Risks

Sandberg admonishes younger women to “lean in,” to push harder at work, in order to advance. Thatcher did lean in, and up, ascending by force the lowest rungs of the Tory ladder, starting with the Oxford University Conservative Association as a student. Sandberg specifically counsels women to take risks early and Thatcher certainly did that, too. While still in her 20s, Thatcher dared to run twice for office in a Labour Party stronghold, Dartford, and lost both times. Nor did Thatcher temper her risk-taking as she rose.

Her party tended to cave and reverse policy under political pressure, but not Thatcher: “This lady’s not for turning,” she famously declared. Read more of this post

Market Valuation of Intangible Capital in China; at the firm level, human capital has the strongest influence on firms’ market performance

Market Valuation of Intangible Capital in China

Yin Yu University of Reading – ICMA Centre

Carol Padgett University of Reading – ICMA Centre

March 21, 2013

We introduce a new model to identify and value firms’ intangible capital relative to that of their industry peers and competitors. The model introduced in this paper distinguishes effects from human capital, external capital, and organizational capital at both industry level and firm level. Using firm data from Shanghai Stock Exchange, we find that the traditional asset pricing model could be statistically enhanced by the presence of intangible capital and that market is able to recognize the value of intangible capital. We also look into the interactive effect from different types of intangible capital by dividing firms into portfolios according to their model value. Our results suggest that at the firm level, human capital has the strongest influence on firms’ market performance and that external capital is the most difficult to capture.

Soros Sees China Shadow-Banking Risk Matching Subprime

Soros Sees China Shadow-Banking Risk Matching Subprime

Billionaire investor George Soros said China has a “couple of years” to control risks from nontraditional financing whose expansion has parallels with the cause of the global financial crisis. “The rapid growth of shadow banking has some disturbing similarities with the subprime-mortgage market in the U.S. that caused the financial crisis of 2007-2008,” Soros said today in a speech at the Boao Forum for Asia in China. “I’m sure the authorities are aware of the dangers. They have both the skills and the resources to deflate an incipient bubble gradually.” The comments add to concerns that the increase in credit risks triggering turmoil that would cause an economic downturn. Aggregate financing, an indicator started by the central bank in 2011 to provide a broader gauge of funding, more than doubled to a record in January from a year earlier.

“If the American experience is any guide, the authorities have a couple of years to bring shadow banking under control,” said Soros, 82. “It’s of utmost importance that the authorities should succeed. Not only for China, but also, for the world.”

Soros also said that next year will be a turbulent one with the euro at the center of the storm, and the decline in the yen and pound will probably aggravate the recession in Europe. In 1992, Soros and his then-chief strategist Stan Druckenmiller made a $10 billion wager the Bank of England would be forced to devalue the pound, a trade that netted $1 billion.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at; Scott Lanman in Beijing at

China Export-Data Skepticism Deepens From Goldman to Nomura

China Export-Data Skepticism Deepens From Goldman to Nomura

China’s unprecedented run of better- than-forecast export growth has spurred deeper skepticism of the data at banks including Goldman Sachs Group Inc., casting doubt on the strength of the recovery.

Gains in overseas shipments exceeded forecasts by at least 7.5 percentage points in December, January and February, the first time that’s happened in three straight months in the eight years Bloomberg has compiled analyst estimates for the data. March figures are due to be released tomorrow at 10 a.m. at a briefing in Beijing, giving the customs administration an opportunity to address the issue.

Overstated exports would mean China is failing to get the boost from global demand that the data suggest as the new government under Premier Li Keqiang seeks to sustain an economic rebound. Theories include companies inflating the value of shipments to bring money into China, according to Nomura Holdings Inc., and exporting the same goods twice as local governments seek to boost data, Goldman Sachs says.

“The recovery in exports is there, but the magnitude probably is much weaker than the official data has been indicating,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. Read more of this post

Chinese Asked to Change Eating Habits as H7N9 Infections Rise

Chinese Asked to Change Eating Habits as H7N9 Infections Rise

China asked its citizens to avoid contact with live poultry as it tries to stem a deadly outbreak of H7N9 bird flu that’s killed six people and infected 15 others in three eastern provinces and Shanghai.

Consumers should avoid markets where poultry are butchered as authorities increase monitoring for the new influenza strain, Feng Zijian, head of emergency response at the Chinese Center for Disease Control and Prevention, said in Beijing today. A vaccine is being prepared in case the virus starts spreading from human to human, health officials said.

“Consumers should no longer pursue the kind of eating habits where they buy fresh chickens that are butchered on the spot,” Feng told reporters at a briefing held jointly with the World Health Organization. “Stalls and markets in cities where live poultry is being butchered need to be closely monitored as possible venues of infection.” Read more of this post

Beware of Economists Peddling Elegant Models; Mathematics can be beguilingly elegant. It can also be dangerous when people mistake its elegance for truth.

Beware of Economists Peddling Elegant Models

Mathematics can be beguilingly elegant. It can also be dangerous when people mistake its elegance for truth.

Albert Einstein’s theory of general relativity might be the best example of elegant math, capturing a wide range of subtle and surprising phenomena with remarkable simplicity. Step toward the practical, though, and physics moves quickly away from elegance to makeshift usefulness. There’s no pretty expression for the operation of a nuclear reactor, or for how air flows past the swept wings of an aircraft. Understanding demands ugly approximations, or brute-force simulation on a large computer.

In one very practical and consequential area, though, the allure of elegance has exercised a perverse and lasting influence. For several decades, economists have sought to express the way millions of people and companies interact in a handful of pretty equations.

The resulting mathematical structures, known as dynamic stochastic general equilibrium models, seek to reflect our messy reality without making too much actual contact with it. They assume that economic trends emerge from the decisions of only a few “representative” agents — one for households, one for firms, and so on. The agents are supposed to plan and act in a rational way, considering the probabilities of all possible futures and responding in an optimal way to unexpected shocks. Read more of this post

Orphan Drug Prices Under Siege in Austerity-Minded Europe

Orphan Drug Prices Under Siege in Austerity-Minded Europe

Treatments for rare diseases are hot properties for drugmakers, who covet the medicines for their exclusive markets, tax breaks and through-the-roof prices. Now that’s changing.

This year, the Netherlands demanded cuts in the prices of enzyme-replacement therapies including Sanofi (SAN)’s Myozyme, which costs 700,000 euros ($909,000). Ireland won a “significant” reduction in the cost of Vertex Pharmaceuticals Inc. (VRTX)’s Kalydeco for cystic fibrosis, and the U.K. rejected a recommendation to expand the use of Alexion Pharmaceuticals Inc. (ALXN)’s drug Soliris, which is prescribed for two blood disorders.

As more medicines win approval to treat diseases that affect no more than 5 in 10,000 people, austerity-conscious governments in Europe are applying the same pressure to so- called orphan drugs that they do to widely prescribed medicines for heart disease and diabetes. That’s putting the brakes on an $86 billion sector of the pharmaceutical industry that’s been expanding twice as fast as the market as a whole. Read more of this post

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