Reuters: How do you spell Singapore without “LKY”?

Analysis – How do you spell Singapore without “LKY”?

Sun, Apr 21 2013

By John O‘Callaghan

SINGAPORE (Reuters) – They crammed into an art cafe in Singapore and pulled no punches, deriding authoritarian officials who ruled with an “iron fist” and complaining that government ministers with million-dollar salaries were out of touch.

One woman, a middle-aged professional, got nods of agreement when she said modern Singapore’s founding father, Lee Kuan Yew, had done great things but that new ways were needed from current leaders still practising a “do-as-I-say style of parenting”.

Singapore remains regimented but the unusually frank criticism at the recent gathering, part of a government-run national “conversation” about the city state’s future, reflects the reality that this is no longer the era of Lee Kuan Yew.

LKY, as he is widely known, built the tiny Southeast Asian island into one of the world’s wealthiest nations with a strong, pervasive role by the state and no patience for dissent. Read more of this post

China says aims to banish superstition, promote knowledge

China says aims to banish superstition, promote knowledge

Sun, Apr 21 2013

By Ben Blanchard

BEIJING (Reuters) – China is struggling to get its estimated 100 million religious believers to banish superstitious beliefs about things like sickness and death, the country’s top religious affairs official told a state-run newspaper.

Wang Zuoan, head of the State Administration of Religious Affairs, said there had been an explosion of religious belief in China along with the nation’s economic boom, which he attributed to a desire for reassurance in an increasingly complex world.

While religion could be a force for good in officially atheist China, it was important to ensure people were not mislead, he told the Study Times, a newspaper published by the Central Party School which trains rising officials.

“For a ruling party which follows Marxism, we need to help people establish a correct world view and to scientifically deal with birth, ageing, sickness and death, as well as fortune and misfortune, via popularizing scientific knowledge,” he said, in rare public comments on the government’s religious policy. Read more of this post

Europe’s struggling emissions trading scheme holds valuable lessons for China

Carbon copies?

Tuesday, April 23, 2013

Europe’s struggling emissions trading scheme holds valuable lessons for China

In Europe, the privilege of emitting a ton of carbon dioxide now costs about the same as a hamburger. That was one painful takeaway from a recent New York Times article on the crisis in Europe’s market for carbon allowances, which has now gone into a noisy free fall. Already-cheap carbon prices sank to record lows last week, after the European Parliament voted on April 16 against a proposal to shore up prices by reducing the number of allowances in the Emissions Trading Scheme (ETS). It was just the latest plunge in a volatile market that has seen the price of a ton of carbon dioxide fluctuate from $0 to $40 in the last few years. Europe launched its emissions trading scheme in 2005 in an effort to raise the cost of emitting greenhouse gases and incentivize industrial polluters to switch to cleaner alternatives, such as wind, solar and natural gas. European governments convinced their companies to spend billions on investing in renewable energy projects to gain credits to offset pollution elsewhere, and many people hailed the market as a success.

But then an oversupply of carbon allowances and Europe’s terrible economic fortunes combined to drag on the market. Analysts say the price of carbon is currently too low to influence corporate behaviors, and Europe is actually seeing increasing investment in coal-fired power plants. As prices have fallen and liquidity dried up, financiers have lost interest in what once seemed to be a promising market. Analysts are debating what effect Europe’s recent failures will have on nascent cap-and-trade schemes around the world. More than a dozen governments are developing their own programs, including Australia, South Korea, California and China. Read more of this post

Paris Hit by Property Freeze as Taxes Deter Buyers

Paris Hit by Property Freeze as Taxes Deter Buyers

At least one in four Paris apartments listed by realtor Agence Etoile can’t be sold, even with mortgage rates at record lows, as buyers and sellers fail to agree on price, the company’s director said.

“I have some inventory that’s too expensive and sellers don’t want to lower prices,” Christine Perrissel said in an interview. “Buyers are just much more selective.”

Across France, an economy that’s stalled for two years, joblessness at a 15-year high, property prices near record highs and new taxes have made households reluctant to borrow to buy homes. While Europe’s debt crisis prompted banks to tighten credit, since the start of this year they’ve offered more attractive terms to lure customers and meet lending targets, after borrowing plunged in 2012.

The average home-loan rate fell 0.8 percentage point from a year ago to a record low 3.34 percent in the first two months of the year. Still, new mortgages granted in the 12 months through February slid 27 percent from a year earlier to 98.4 billion euros ($129 billion), according to the Bank of France.

New home sales plunged 18 percent in 2012 to 77,900. Existing home sales declined 12 percent to 709,000, with the drop worsening to 22 percent in the year to February. The average housing investment funded with loans represented 3.73 years of the buyer’s income in March, the lowest since January 2010, a study by lender Credit Logement SA and polling firm CSA shows. Read more of this post

Look to Japan’s ageing industrial sprawl for roadblock to Abenomics; S&P says more than one-third chance of Japan downgrade, cites risks to Abenomics

S&P says more than one-third chance of Japan downgrade, cites risks to Abenomics

Mon, Apr 22 2013

TOKYO (Reuters) – Rating agency Standard & Poor’s said on Tuesday it saw more than a one-third chance that it would downgrade Japan’s sovereign ratings because of uncertainty about whether the government’s push to revive growth and end deflation will succeed. “The continuing prospect of a downgrade arises from risks associated with recent government initiatives and uncertainty of their success,” S&P said in a report. “Japanese Prime Minister Shinzo Abe’s plan to lift Japan out of deflation and spur economic expansion–known as “Abenomics”–has three pillars: bold monetary easing, fiscal efforts to spur growth, and a strategy to induce private sector investment,” it said. “Of the three engines that Mr. Abe foresees reinvigorating the nation’s economy, so far only one, monetary easing, has kicked into full gear. The others remain idle.” S&P has an AA- long-term rating on Japan’s sovereign debt.

Look to Japan’s ageing industrial sprawl for roadblock to Abenomics

Mon, Apr 22 2013

By Yoko Kubota

TOKYO (Reuters) – For a close-up view of where Japanese Prime Minister Shinzo Abe’s economic policies could falter, skip across Tokyo Bay to the sprawling Kimitsu steelworks, once a must-see icon of Japan’s export boom. By the early 1970s, Kimitsu in Chiba had become the hub of the world’s largest steel operation. It provided the sheet metal for the first wave of Japanese cars sold overseas and the beams to build the first skyscrapers in Tokyo’s Shinjuku district, inspiring Chinese leader Deng Xiaoping on a 1978 visit to build a copycat mill in China. But last month Nippon Steel & Sumitomo Metal Corp, (5401.T: Quote, Profile, Research, Stock Buzz) fresh off a merger that created the world’s second-biggest steelmaker, announced it would shut down Kimitsu’s No. 3 blast furnace, part of a sweeping restructuring meant to shed overcapacity at home in the face of unrelenting competition from China and South Korea. “It makes no sense to revive it,” the Kimitsu plant manager, Ichiro Sato, told reporters on a tour last week. “We want to operate without bringing it back.” That same caution is echoed by Japanese manufacturers in industries from autos to electronics.

Read more of this post

Indonesia warns multinationals not to be greedy over resources

Indonesia warns multinationals not to be greedy over resources

5:24am EDT

By Dayan Candappa and Jonathan Thatcher

SINGAPORE (Reuters) – Indonesia’s president told major investors in his country’s natural resources not to be greedy, comments that suggest he is in no mood to row back on policies that foreign mining and energy firms have called a deterrent.

But Susilo Bambang Yudhoyono sounded more accommodative in remarks over a long-delayed $7.2 billion bank takeover by Singapore’s DBS Group and on the thorny issue of reducing state fuel subsidies, which are eating up a growing chunk of the government’s budget.

“My criticism to the world is that many multinational corporations take too much and do not leave behind enough for the people of those countries,” Yudhoyono told a Thomson Reuters Newsmaker event in Singapore on Tuesday. Read more of this post

Malaysia Needs to Get Off the Road to Mediocrity

Malaysia Needs to Get Off the Road to Mediocrity

In his bid for re-election, Malaysian Prime Minister Najib Razak has dispensed with all shame. Vote for me, he has essentially declared, or Malaysia will suffer “catastrophic ruin” and an “Arab Winter” of the kind that has undone economies from Egypt to Libya.

Both warnings are ludicrous — signs of how worried Najib’s National Front coalition is of losing power for the first time since 1957. They speak to the desperation of a government that has come to serve itself, not Malaysia’s 29 million people. And they are emblematic of a leader whose talk of bold change hasn’t been matched by action.

Najib’s claim is this: Giving the opposition, led by former Finance Minister Anwar Ibrahim, a chance to lead on May 5 would reverse all the gains Malaysia has made since the 2008 financial crisis. The economy would crater, stocks and the currency would plunge, and chaos would reign.

Change through the ballot box in a democracy should never be disruptive or chaotic, and rhetoric suggesting otherwise is disingenuous. Najib likes to say: “The time has come for Malaysians to make a decision.” Actually, the time has come for Malaysia’s government to grow up.

Najib’s scaremongering, some of which came out of an April 17 Bloomberg News interview, smacks of the re-election campaign run almost a decade ago by then U.S. President George W. Bush. Instead of this vote-for-me-or-you’re-in-danger appeal, Najib should scare up some headline-grabbing reforms that leave Malaysia better off in the future. Read more of this post

Borrowers in Asia dangle rebates as bait to get wealthy individual investors to buy their dollar-denominated bonds as returns dwindle to an 18-month low

Asia Banks Offer Bond Perks as Returns Dwindle: Credit Markets

Borrowers in Asia have stepped up the use of rebates to get wealthy individual investors to buy their dollar-denominated bonds, underscoring weakness in the market as returns dwindle to an 18-month low.

At least 24 percent of the deals in the region last quarter provided a monetary incentive for private banks whose clients bought the offerings, more than double the same period of 2011, according to FIL Ltd., a global fund manager known as Fidelity Worldwide Investment that oversees $248.2 billion. While the practice is legal, it’s only common in Asia, lawyers say. Read more of this post

Chinese Investors Are Reportedly Having Big Money Trouble In North Korea; As many as 100 Chinese businessmen have reportedly holed up in hotels in downtown Pyongyang waiting to recover money invested in the country

Chinese Investors Are Reportedly Having Big Money Trouble In North Korea

Geoffrey Ingersoll | Apr. 22, 2013, 5:11 PM | 2,408 | 3

As many as 100 Chinese businessmen have reportedly holed up in hotels in downtown Pyongyang, North Korea, waiting to recover money invested in the country.

Some of these businessmen may have even been deported, the Chosun Ilbo reports citing the Chongqing Daily.

This is just the most recent case of long running risky-business in the Hermit Kingdom. A Chinese beer business in the country went belly up just last week, and just last year mineral producer Xiyang Group reportedly lost 240 million yuan ($3.8 million) in a North Korean iron mine.

“The biggest mistake Xiyang Group made was to ignore the dangers of investing in North Korea,” Jiao Qiming, head of a Chinese trading company in Dandong, told the Chosun Ilbo, “Once a dispute occurs, it is impossible to beat the North Korean government.” Read more of this post

Deloitte Loses Bid to Delay SEC Suit Over China Documents of its fraudulent client Longtop Financial Technologies

Deloitte Loses Bid to Delay SEC Suit Over China Documents

Deloitte Touche Tohmatsu CPA Ltd. lost a bid to delay a lawsuit brought by the U.S. Securities and Exchange Commission seeking documents in an investigation of the auditor’s former client Longtop Financial Technologies Ltd.

U.S. District Judge Gladys Kessler in Washington today rejected Shanghai-based Deloitte’s argument that the case should be put on hold while an administrative judge considers a separate case the regulator brought against the China-based affiliates of the Big Four accounting firms.

“There is no significant burden placed on Deloitte by requiring it to litigate these two very different proceedings simultaneously,” Kessler said.

The decision may quicken the pace of litigation over the Chinese documents sought by the regulator more than 22 months ago.

The Deloitte case has been on hold since August when the U.S. sought a resolution from Chinese regulators. Chinese law bans the removal offshore of audit papers, and foreign regulators aren’t allowed to work inside the country. Read more of this post

Germany Joins Low-Speed Europe; When even Germany stops motoring, you know you have a problem

April 22, 2013, 1:24 p.m. ET

Germany Joins Low-Speed Europe

By ANDREW PEAPLE

When even Germany stops motoring, you know you have a problem.

The woes of Europe’s auto industry show no sign of abating: European Union auto sales were down 9.8% year on year in the first quarter. But within the data, there is an anomaly. In Germany, Europe’s supposed economic strongman, car sales fell 12.9% over the first quarter compared with 2012; in the moribund U.K., sales rose 7.4%. Unfortunately, Germany’s slowdown, not the U.K.’s acceleration, is the truer guide to the health of the European market.

The U.K.’s outperformance should be put in perspective. Car sales in 2012 were still 20% below their 2003 peak, despite rising 5% from 2011. The post-2007 sales slump is still affecting the market now, because it has restricted the supply of cars currently available in the second-hand market. Auction prices for cars sold in “part exchange”—when the old car is sold as part of the deal—for another rose 23% last year, according to Sanford C. Bernstein. Consumers might as well buy a new car instead of an increasingly pricey old one. With interest rates seemingly stuck at 0.5%, car sellers have been able to offer generous financing terms. Read more of this post

Misuse of collateral creates systemic risk

Last updated: April 22, 2013 1:14 pm

Markets Insight: Misuse of collateral creates systemic risk

By Satyajit Das

Rather than reducing risk, collateral just creates different risks

Five years after the global financial crisis, collateral arrangements remain central to financial markets. They provide security for loans, structured as repurchase agreements or as mortgages or pledges of real estate or financial assets. In derivative transactions, collateral is lodged to secure current mark-to-market exposure.

Rather than reducing risk, as theory would suggest, collateral in practice creates different risks, for a number of reasons.

First, it shifts the emphasis from the borrower or counterparty’s creditworthiness to the collateral. Parties normally ineligible to borrow or transact in the first place are able to enter into transactions. Rapid growth in debt levels, derivative contract volumes and the shadow banking system (hedge funds or structured investment vehicles) are dependent on the use and availability of collateral. Read more of this post

Consumer Meteor Strikes China’s State Dinosaurs

Updated April 22, 2013, 9:52 a.m. ET

Consumer Meteor Strikes China’s State Dinosaurs

By TOM ORLIK

A common worry about China’s economy is that vested interests in the state sector will block reforms needed to raise household income and consumption. State-owned enterprises are certainly influential. But new technologies and demanding consumers can make them look less like all-powerful giants, and more like ungainly dinosaurs.

In telecommunications, for instance, popular web-based messaging systems like Tencent’s WeChat are a major challenge to state-owned China Mobile. WeChat has more than 300 million users, sending voice and text messages over the web.

The U.S. experience suggests carriers can be big losers when the likes of WhatsApp takes hold. In the first quarter of 2013, China Mobile’s profits grew just 0.3% year on year; the company said new technologies are eating into the traditional communications business.

Something similar is going on in banking. In the past, China’s savers had little choice beyond bank deposit accounts that offered low returns. Now, the rapid growth of high-yield investments known as wealth-management products, or WMPs, means savers have options to move their money around. Read more of this post

China’s top general said that a fourth North Korean nuclear weapons test is a possibility that underscores the need for fresh talks between Pyongyang and other regional parties

China says new North Korea nuclear test possible

April 23, 2013

THE ASSOCIATED PRESS

BEIJING–China’s top general said on April 22 that a fourth North Korean nuclear weapons test is a possibility that underscores the need for fresh talks between Pyongyang and other regional parties.

Chief of the General Staff Gen. Fang Fenghui said Beijing firmly opposes the North’s nuclear weapons program and wants to work with others on negotiations to end it. He said Beijing’s preference is for a return to long-stalled disarmament talks involving the two Koreas, China, Russia, Japan and the U.S.

“We ask all sides to work actively to work on the North Koreans to stop nuclear tests and stop producing nuclear weapons,” Fang told reporters. “We believe that dialogue should be the right solution.” Read more of this post