Hopes Dim for Southeast Asia Single Market by 2015

Hopes Dim for Southeast Asia Single Market by 2015

By MARTIN VAUGHAN

Bandar Seri Begawan, BRUNEI—Southeast Asia’s bid to create a single market by 2015 has bogged down, slowed by domestic political pressures in the bloc’s largest economies and alternative trade initiatives competing for policy makers’ energy and attention.

As leaders of the 10-member Association of Southeast Asian Nations gather here Wednesday, analysts say they are well behind on their goal to eliminate barriers to the free movement of goods, services and workers, with the target date just 18 months away. Read more of this post

China May Rethink Electric-Car Push; Buffett’s BYD, which prides itself as being the champion of electric cars in China, acknowledges change is coming

China May Rethink Electric-Car Push

By YOREE KOH And COLUM MURPHY

SHANGHAI—Some of the world’s largest car makers including Germany’sVolkswagen AG VOW3.XE +3.38% and Toyota Motor Corp. 7203.TO -0.72% are using this month’s Shanghai auto show to send a message to Chinese policy makers: Wake up from your electric dreams.

The big auto makers are introducing gasoline-electric vehicles and promising to build components for the vehicles here in a bid to win greater government backing for the technology amid weak demand for purely electric-powered cars.

“There is a discrepancy between the general targets and the general goals of the government and the present situation,” said Jochem Heizmann, head of Volkswagen in China. “For the next 10 years, generally plug in hybrids have a much better chance to become a relevant volume in comparison to just fully electric cars,” he added.

Toyota unveiled its new hybrid Yundon-Showanchin II, which was developed specifically for China. Toyota Chairman Takeshi Uchiyamada, known as the father of the company’s most popular hybrid Prius, said on Saturday that as China’s auto market grows “hybrid vehicles without a doubt will become a necessity.” Toyota plans to start locally producing key hybrid components by 2015. Read more of this post

Barrick Gold at 20-Year Low Turns to Thornton

Barrick Gold at 20-Year Low Turns to Thornton

Wealthiest Americans Only Winners in Recovery, Pew Says. The recession continues for almost everyone else. “The results are entirely sensible, but depressing”

Wealthiest Americans Only Winners in Recovery, Pew Says

Buddhist temples reported losses equal to about a quarter of its assets after bets in the Australian dollar and structured bonds soured.

Buddhist Temples Post Losses as Aussie, Bond Bets Sours

Korean chaebol haunted by ailing builders

2013-04-22 17:28

Chaebol haunted by ailing builders

By Kim Tae-jong

The nation’s major conglomerates, known here as chaebol, are facing a dilemma due to their cash-strapped construction arms.

On the one hand, they can’t simply let their troubled affiliates collapse because they would face strong criticism of acting irresponsibly. On the other, it is not easy to provide financial support as that could have a negative impact on the financial health of the entire group.

“It’s true that there is skepticism on the V-shaped rebound of the construction industry here,” said Park Hyung-ryul, an analyst at KDB Securities. “So it is obviously a burden for parent groups to take steps to revive a troubled construction arm.”

Construction firms have suffered major setbacks in recent years amid a prolonged slump in the local housing market and low overseas demand, which consequently led many of them to face liquidity crises. Read more of this post

With $5.4Bln Debt, China’s LDK Solar Sparks Fears Among Creditors

With $5.4Bln Debt, China’s LDK Solar Sparks Fears Among Creditors

04-23 18:13 Caijing

Analysts are expecting a forced restructure of LDK, de facto insolvent.The solar manufacturer defaulted on a $24 million bond last week, almost a month after rival Suntech Power Holdings Co Ltd defaulted on its bonds

The teetering of China’s renewed energy giant LDK Solar Co Ltd at the brink of bankruptcy, following a partial default on bond payments last week, has sparked fears among its creditors that they could hardly recover their debts.

Investors are vary of some of the largest creditors —Beijing Jingyuntong Technology Co Ltd (601908.SS), Jiangsu Huasheng Tianlong Photoelectric Co Ltd (300029:Shenzhen), Liao Ning Oxiranchem Inc (300082:Shenzhen), Henan Xindaxin Materials Co Ltd (300080:Shenzhen) and Henan Hengxing Science & Technology Co Ltd (002132:Shenzhen), who was collectedly owed by LDK nearly 500 million yuan with a maturity of around a year—as default risks by LDK castes doubts over the companies that already suffered huge losses.

Analysts are expecting a forced restructure of LDK, de facto insolvent, without improvement in short-term results. While banks, usually the biggest benefactors behind China’s solar makers, could be persuaded to roll out its debt, the suppliers would at any time turn to Chinese courts for the bankruptcy of LDK. Read more of this post

Asian rituals captivate cosmetics groups; Skincare accounts for 63% of the beauty market in Asia, compared with 32% in the US.

April 23, 2013 2:51 pm

Asian rituals captivate cosmetics groups

By Scheherazade Daneshkhu

When cosmetics groups’ executives survey the Asian market, it is the Korean woman’s beauty regime that gets them excited. She spends 30-40 minutes at night on skincare, using 10-11 products. That compares with the typical French woman who uses only three products in 3-10 minutes a night. The Korean beauty ritual has parallels among other Asian women, so the potential to sell multiple products is higher in Asia than in other regions. With so many creams and serums layered on the face, their weight and texture has to be lighter than that produced for other parts of the world, says Nicolas Hieronimus, head of L’Oréal’s luxury cosmetics division. Some 50 per cent of L’Oréal’s Lancôme Asian sales are for products developed specifically for the region. Some categories – such as whitening creams – do not exist in France, says L’Oréal. “There is no single model for beauty,” the Paris-based company said of the controversial products, which most of the large international cosmetics groups, including Estée Lauder and Clarins, also sell. Whitening creams have a penetration rate of 46 per cent among women in China, 78 per cent among urban women in India and only 5 per cent in the US. L’Oréal says this is because dark spots are the first signs of ageing in Asia, unlike for Caucasian women, who suffer more from wrinkles instead. “There is a genuine demand for whitening products which we respond to by offering products whose function is to eliminate hyper-pigmentation and to even and brighten the skin tone,” said L’Oréal. Asian women much prefer skincare to the other two beauty categories of fragrances and make-up. Skincare accounts for 63 per cent of the beauty market in Asia, compared with 32 per cent in the US. For cosmetics groups, that represents an opportunity to develop the market for fragrances and make-up, mainly through advertising. “China will be a three-category market like the rest of the world in years to come,” forecasts Mr Hieronimus.

Cosmetics groups move deeper into China, the world’s second-largest market for luxury cosmetics after the US

April 23, 2013 4:58 pm

Cosmetics groups move deeper into China

By Scheherazade Daneshkhu

Mrs Chen, who only gives her surname, is delighted that she can buy her favourite cosmetics in her provincial town of Zhenjiang, some 250km inland from Shanghai and close to the Yangtze River.

A beautician massages her face with serum at L’Oréal’s Lancôme counter in the gleaming Yaohan department store, as she explains: “I first heard of Lancôme through a friend and last year I saw this counter and tried products here. They make my skin feel softer.”

Zhenjiang is one of China’s smaller and less affluent “tier-3” cities, urban centres that consumer goods multinationals are targeting because of their potential for faster growth than the more saturated first-tier cities, such as Beijing or Shanghai, or even second-tier provincial capitals such as Nanjing.

China is the world’s second-largest market for luxury cosmetics, after the US, and where L’Oréal and Estée Lauder, the two biggest luxury cosmetics companies by sales, are fighting for market leadership. Read more of this post

Distress spreads in South Korea; Template that relies less on leverage needed

April 23, 2013 5:44 pm

Distress spreads in South Korea

By Henny Sender

Template that relies less on leverage needed

For many years, Japanese business people believed their economic malaise lay in a cheap South Korean won, rather than anything intrinsic to their country. Once the yen depreciated, all would be well.

The Japanese definition of well meant that consumers around the globe would cease to buy Samsung goods and turn to Japanese products instead. Now their thesis is about to be tested.

Thanks to Abenomics, massive liquidity in Japan means corporate distress there is diminishing. International hedge funds that bet not long ago on the cost of credit insurance going up for the weakest sectors, such as shipbuilding and steel, have seen the cost come down instead – at least for the moment.

By contrast, signs of distress in South Korean companies are starting to intensify. The country successfully weathered the 2008 global financial crisis but five years later, it isn’t faring as well. Read more of this post

Economists Agree: Solutions Are Elusive

April 23, 2013

Economists Agree: Solutions Are Elusive

By EDUARDO PORTER

Last week the International Monetary Fund hosted a conference of some of the world’s top macroeconomists to assess how the most intense crisis to have shaken the industrialized economies since the Great Depression has changed the profession’s collective understanding of how the world economy works.

Two things struck me about the conclave. The first was hearing George Akerlof, a Nobel-winning economist from Berkeley, take to the lectern to compare the crisis to a cat stuck in a tree, afraid to move.

The second was realizing how, after five years of coping with the consequences of the disaster, there is still so much uncertainty about what policies are needed to prevent another financial shock from tipping the world economy into the abyss again a few years down the road.

“We don’t have a sense of the final destination,” said Olivier Blanchard, chief economist of the monetary fund. “Where we end I really don’t have much of a clue.” Read more of this post

India in depth: A Japanese-style “big reset”

India in depth: A Japanese-style “big reset”

Tue, Apr 16 2013

By Andy Mukherjee

SINGAPORE (Reuters Breakingviews) – India needs a Japanese-style reset. For the country to decisively escape from its self-constructed trap of extreme economic pessimism, New Delhi needs to import the spirit of Abenomics.

The advice may appear counterintuitive, considering that new Japanese Prime Minister Shinzo Abe’s strategy of aggressive fiscal and monetary easing is the opposite of the policies India should pursue. But at its core, Abenomics is about hitting an economic reset button so that corrosive forces, which have created a lousy equilibrium of their own, are defeated, and a more virtuous economic cycle can begin.

With economic growth at its weakest in a decade, India needs a reset as badly as Japan did when it elected Abe in December last year. Finance Minister Palaniappan Chidambaram has so far focussed on structural reforms. But pruning government expenditure and allowing greater foreign participation in aviation, insurance and retail does not produce results overnight. A bold reset – such as devaluing the rupee 16 percent against the US dollar – will have an immediate impact. Read more of this post

China’s Shaken Trust; An earthquake shows the decline of confidence in the Communist Party.

Updated April 23, 2013, 5:10 p.m. ET

China’s Shaken Trust

An earthquake shows the decline of confidence in the Communist Party.

Saturday’s earthquake in Sichuan brought back traumatic memories of the much larger quake only 40 miles away that killed almost 90,000 people in 2008. So far the official death toll this time is around 200, but the government has again mobilized a massive rescue and relief effort.

A notable difference is the public response, which has revealed profound mistrust of the government. Donations to state-run charities are down and cynicism reigns online about official statements and appeals. The country has shifted under the feet of the Communist Party since 2008, which means new leaders Xi Jinping and Li Keqiangare under pressure to find ways to restore trust.

After the first Sichuan quake, there was an immediate outpouring of donations in response to the state-run media’s appeals. Yet early praise for government efforts gave way to anger as the quake exposed government corruption and incompetence. Poorly built schools collapsed, killing more than 5,000 schoolchildren, while government offices and their occupants survived. Large sums of relief money disappeared. The reconstruction enriched officials while survivors continued to suffer.

The Party’s reputation has deteriorated even further since 2009, when the advent of microblogging created a new outlet for exchanging information and opinions. A watershed moment came after the 2011 crash of a high-speed train in Wenzhou, when news flashed around the country that a two-year-old girl had been found alive in the wreckage after rescue operations were called off. Former Railways Minister Liu Zhijun is awaiting trial for taking $250 million in bribes, which given the notorious corruption in the high-speed rail program is probably a fraction of his total take. Read more of this post