Demographic sands shift under Malaysian elite; Recalcitrance seems to have been woven into Malaysia’s success story as a nation

Demographic sands shift under Malaysian elite

BY:ROWAN CALLICK, ASIA-PACIFIC EDITOR 

From:The Australian

April 16, 2013 12:00AM

RECALCITRANCE seems to have been woven into Malaysia’s success story as a nation.

Mahathir Mohamad’s extraordinary spell as prime minister from 1981 to 2003 is just a part of it.

From Australia’s perspective, Malaysia has been a leading example of Asia’s inexorable progress towards a form of middle-class prosperity – while its leadership style has been from time to time decidedly edgy, especially when the ruling class has appeared to be on the ropes.

The country has been led in the 56 years through independence from Britain by Barisan Nasional – a coalition of 13 parties dominated by the United Malays National Organisation – and its predecessor coalition.

Malaysia’s next election, on May 5, is heading towards a tighter finish than the country has seen in decades. There is even a prospect – still somewhat remote – that Prime Minister Najib Razak’s BN might be defeated by the People’s Alliance Coalition (Pakatan Rakyat) led by charismatic former deputy prime minister Anwar Ibrahim, which combines his own People’s Justice Party, the Pan-Malaysian Islamic Party (PAS) and the Democratic Action Party that has recently attracted the lion’s share of ethnic Chinese voters. Read more of this post

Blank cheque IPOs sprouting in Malaysia; Firms with no profit, revenue or assets entice with plans to buy corporations

Blank check IPOs bring hope and caution to Malaysia

Sun, Apr 14 16:59 PM EDT

By Yantoultra Ngui and Elzio Barreto

KUALA LUMPUR/HONG KONG, April 15 (Reuters) – Malaysia’s bull market is seeing a type of initial public offering, still fairly new to Asia, that takes a special kind of company public: one with no profits, revenues or assets.

Cliq Energy Bhd last week became the second such firm – known as a special purpose acquisition company (SPAC) – to list in Kuala Lumpur and three more are preparing IPOs. The spurt comes after Malaysian equities rose for four straight years, including a banner year for IPOs in 2012, and as investors anticipate a jump in mergers and acquisitions in Southeast Asia.

But SPACs have historically been high-risk, high-reward investments. Some U.S.-listed SPACs have performed well and built market value, while others have failed to make any acquisition and were forced to delist.

“If the historical experience in the U.S. is any indication, it should provide a warning sign that these investments may not turn out to be particularly good ones,” said Stefan Lewellen, a SPAC expert who authored a study on U.S. SPACs at Yale University. Read more of this post

Gold’s Plunge Turns New York’s Diamond District Upside Down; “We currently have a line selling precious metals. I think it is type of paranoia. They are expecting gold to hit even lower than it is, and everyone is trying to get it in as fast as they can.”

Apr 15, 2013

Gold’s Plunge Turns New York’s Diamond District Upside Down

By Michael Casey

Few businesses have been impacted more by gold’s rollercoaster price ride in recent years than the 2,600 independent firms jammed into New York’s bustling Diamond District.

And since Friday, with the international price of gold falling more in dollar terms than in any previous two-day period since at least 1974, the activity on this crowded strip on 47th Street between 5th and 6th Avenues has gotten a little crazier. Gold dealers and their customers, accustomed to buying and selling according to the so-called “London PM fix” — the second of two daily benchmark prices set by a group of London bankers — had to adjust their reference prices by the minute as a plunging real-time market left them exposed to losses.

Roni Rubinov, proprietor of New York Gold and Silver Refiners, was forced to turn away one regular customer who’d come in toting a plastic bag of gold rings, necklaces and watches. The trading price was then at $1,370 per ounce, $25 less than the London fix, on which he had based his own delivery commitments for the day to larger wholesale refiners. By the end of trading Monday, the front-month April contract had settled on the Comex division of the New York Mercantile Exchange at $1,360.60 an ounce, down 9.4% on the day to mark a 13% decline in two days. “But I have a lot,” the man said. “Can you at least do half?” Since he was a regular customer, Rubinov, who owns both a gold dealing business and a pawnbroker, said he could have bought at a $5-per-ounce loss, but not at $25 down. He advised his customer to sit on his merchandise and wait for the price to come back at a later date. The man left, a despondent look on his face. Read more of this post

Gold’s Decline Rattles Some Small Investors’ Faith

April 15, 2013, 4:56 p.m. ET

Gold’s Decline Rattles Some Small Investors’ Faith

By MATT DAY

Gold’s two-day swoon has shaken even some of the metal’s most diehard fans.

Throughout gold’s 19-month rough patch, small investors – those who buy gold coins, or own shares in exchange-traded funds that buy the metal – were one group that never lost faith.

Gold coin sellers clogged the airwaves with advertisements making the case that there has never been a better time to buy. Newsletters from self-proclaimed gold-market experts proliferated, as did financial products designed to capitalize on interest in the metal. U.S. Mint gold coin sales hit a record high in January, even though gold prices were down 11% from record highs hit in August 2011.

Some of those buyers say they’re having second thoughts this week. A wave of selling that hit the market Friday morning accelerated when the market reopened Monday. During the two days, gold futures lost 13% of their value, falling $203 to $1,361.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Monday’s $140 drop was the largest in 30 years. Read more of this post

Investor Jim Rogers Says Gold Needs Correction, Isn’t Buying Yet as it hasn’t dropped enough; Indians Defer Gold Purchases, Betting Bear Market Set to Deepen

Investor Jim Rogers Says Gold Needs Correction, Isn’t Buying Yet

Gold, which tumbled into a bear market last week, is in need of a correction, according to investor Jim Rogers, who said that he’s not buying the commodity yet as it hasn’t dropped enough. “This may be the correction that gold needs,” said Rogers, chairman of Rogers Holdings. “If it goes down enough, I will start buying it,” Rogers told reporters in Singapore today, without identifying a level. Gold extended losses to the lowest level in two years today after investors cut holdings in exchange-traded products as the U.S. recovers. Rogers, who foresaw the start of a commodity rally in 1999, has previously backed bullion to rally as central banks boosted their balance sheets to stimulate growth. Bullion for immediate delivery fell as much as 3.9 percent to $1,425.75 an ounce and was at $1,436.10 at 3:55 p.m. in Singapore. Prices tumbled 5 percent on April 12, taking losses to more than 20 percent since the record close in September 2011 and meeting the common definition of a bear market. Rogers said in April 2006 that a boom in energy and raw- material prices would help drive gold to a then-record $1,000, without giving a timeframe for that forecast. In July 2007, Rogers said that he wasn’t selling his gold position even though there were too many speculators backing further gains. In October 2009, Rogers said that gold may top $2,000 in the next decade, citing the printing of money. In August 2011, Rogers said while he wouldn’t buy more gold “right now,” the metal was still poised to rally to $2,000 “over the years.”

To contact the reporters on this story: Chou Hui Hong in Singapore at chong43@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

Indians Defer Gold Purchases, Betting Bear Market Set to Deepen

Gold buyers in India, the world’s biggest consumer, are delaying purchases in a bet that the bear market in bullion will deepen, according to the All India Gems & Jewellery Trade Federation.

“People are expecting prices to drop more as the sentiment in the market is weak and selling pressure remains,” Chairman Haresh Soni said in a phone interview from New Delhi. The price volatility is discouraging buyers, he said. The federation represents about 300,000 jewelers nationwide. Read more of this post

Slovenia’s plan to sell shares in state-owned companies failed to ease investor concern that the country will become the next euro-area nation to need a bailout

Slovenia Asset-Sale Plan Fails to Ease Debt Squeeze Concern

Slovenia’s plan to sell shares in state-owned companies failed to ease investor concern that the country will become the next euro-area nation to need a bailout. Slovenia’s default risk rose to a six-month high and bond yields hovered near records as the country prepares to tap markets this week. Prime Minister Alenka Bratusek’s April 12 announcement of plans to sell stakes in companies, including a bank, looks like an effort to stall rather than to obtain financing, according to Milan Smiljanic, head of trading at Perspektiva d.d.

“There is skepticism that they are only buying time and will try to fix debt problems, avoiding privatization,” Smiljanic said by e-mail from Ljubljana. “There are no bank bidders at the moment.” Slovenia, the European Union’s fourth-smallest economy, is trying to avoid becoming the sixth euro-area state to seek a bailout after international lenders agreed to help Cyprus. The government will sell 500 million euros ($654 million) in 18- month Treasury bills at an auction in two days as it tries to shore up confidence that it can recapitalize its ailing banks without seeking outside assistance. The cost of protecting Slovenian debt against non-payment using credit-default swaps rose to a six-month high today, advancing six basis points to 375, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. Read more of this post

From Bad To Worse – European Non-Performing Loans In Context

From Bad To Worse – European Non-Performing Loans In Context

Tyler Durden on 04/15/2013 10:41 -0400

Europe remains in a critical state – despite the protestations of its leadership and the indications of its nepotistic bond markets.Unconventional monetary operations have enhanced liquidity, but have done little-to-nothing to solve the real issue – insolvency. As Jassaud and Hesse note, vulnerabilities remain; as reliance on central-bank liquidity is still high especially for banks in peripheral countries. Assets continue deteriorating and remain on banks’ balance sheets, weighing on profitability. Non-performing loans (NPLs) in EU banks continue to soar, drastically outpacing loan growth. Since 2007, loans to the ‘real’ economy have decreased by 3% while NPLs increased by almost 150%, i.e., €308 billion in absolute terms. This trend shows no sign of reversal, reflecting the continued macro deterioration in parts of the EU and the absence of restructuring (until the new ‘template’). During the last European Banking Authority recapitalisation exercise, 30% of the increase in capital ratio was reached by reducing risk-weighted assets, of which one third came from risk-weighted asset ‘recalibrations’ – i.e. from rotations among the peripheral bonds that (while ultimately risky) are deemed risk-free by the ECB. For a sense of just how absolutely dire the situation is (and entirely unsustainable) across the entire Eurozone, the following chart shows thecurrent ratio of NPL-to-Total-Loans relative to Dec-2007… As ever, credit creation inflated asset prices and provided the cushion for an increase in liabilities (and never a bubble is seen) but once the bubble in asset prices begins to deflate, reality sinks in and the liabilities remain (large as ever). Thus the central bank inspired cycle of credit boom and bust continues – until, of course, there is no capacity left (and no gold to transfer).

BOJ Finds Inspiration in a 1930s Iconoclast Korekiyo Takahashi

BOJ Finds Inspiration in a 1930s Iconoclast

By Michael Schiltz – Apr 11, 2013

Korekiyo Takahashi, left, in an undated photo, had a long career in public office, including stints as Japan’s finance minister in the 1930s. Source: Library of Congress, Prints and Photographs Division

The Bank of Japan has decided to take bold action to reverse the nation’s economic decline.

The bank’s governor, Haruhiko Kuroda, announced a “new dimension in monetary easing,” vowing to double the purchases of government bonds and expand the monetary base. The BOJ also formally adopted a previously announced two-year target of 2 percent inflation. Quantitative easing will be the bank’s core business for the near future, a strategy that resembles the Federal Reserve’s response to the collapse of Lehman Brothers Holdings Inc.

The BOJ’s actions also mark a return, at least partly, to the unorthodox efforts of Japan’s finance minister in the early 1930s, Korekiyo Takahashi, who was praised by Fed Chairman Ben Bernanke for “brilliantly rescuing Japan from the Great Depression through reflationary policies.” Read more of this post

Chinese industry caught in vicious circle of over-production

Chinese industry caught in vicious circle of over-production

Staff Reporter, 2013-04-15

Chinese industries are caught in a vicious circle of over-production and loss, owing to conflicting government policies and expectations, according to the Guangzhou-based 21st Century Business Herald. The country’s producer price index dropped by a total of 1.9% this year due to overproduction, which includes a 5.6% slump in ferrous metals and a 2.6% fall in non-ferrous metals sectors. The country’s steel industry produced 2.2 million tonnes of steel per day in February, which was a historic high and will ultimately drive up annual production to 800 million tonnes. The record production came despite most producers operating at a loss. Aluminum production increased from 24 million tonnes in 2011 to 26 million tonnes in 2012, yet only 20 million tonnes were sold in 2012. The slump in prices caused by overproduction has prompted the government to close outdated and inefficient plants, especially those which were producing iron, steel, electrolytic aluminum and coke. Despite closing plants a different government agency has contrarily offered to subsidize electricity for the non-ferrous metal industry, especially in aluminum factories which use electricity in production. Read more of this post

Which Country’s Gold Will Be Sold Next?

Which Country’s Gold Will Be Sold Next?

Tyler Durden on 04/15/2013 08:05 -0400

The first time the Status Quo/Troika tried to force a (not so) stealthy gold confiscation on an insolvent European country was back in early 2012, when as part of the most recent Greek bailout MOU, it was disclosed that “Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.” However, the public outcry was so loud that the Troika had no choice but to shelve its plans and proceed with a full scale bondholder restructuring instead. Fast forward to last week, when Europe’s appetite for physical gold came back with a bang, this time as part of the Cyprus “Debt Sustainability Analysis“, and subsequent comments from Mario Draghi, demanding that tiny Cyprus, whose opposition, already weakened by the confiscation of uninsured deposits would be far less vocal than Greece’s, sell off €400MM, or virtually all of its sovereign gold, over 10 of its 13.9 total tons, to cover the excess costs of its ever ballooning sovereign bailout. So who’s next? It remains to be seen, although we are certain there will be a very clear correlation between the next country to see its gold “purchased” by the status quo, likely some time in the next 1-3 months, and the amount of total non-performing loans on said country’s bank balance sheets. The usual suspects are presented below. And, in the parlance of Goldman Sachs, these countries better scramble to sell, sell, sell now before gold hits 0, or maybe even goes negative.

Canadians losing faith in economic “miracle”

Analysis: Canadians losing faith in economic “miracle”

1:16am EDT

By Louise Egan and Andrea Hopkins

OTTAWA/TORONTO (Reuters) – Factory worker Nelson Claros has little time for talk of the Canadian economic miracle.

The 50-year-old was laid off last year from his job of 22 years at a bus-assembly plant northwest of Toronto, and has since applied for 130 jobs. His best offer: A job at $12 an hour, half his previous wage and not enough to pay his bills.

“Really there is a recession right now. They don’t call it a recession, but the companies are closing, there are a lot of layoffs. How can this be a miracle economy?” he asked.

It wasn’t supposed to be like this. Canada’s recovery from a mild 2008-09 recession was quick and job-filled, and the country added nearly 900,000 jobs to take the jobless rate to 7.2 percent from 8.7 percent at the depths of the downturn. Read more of this post

Wells Fargo is slashing an approved list of money managers and investment vehicles that its stockbrokers market to the firm’s wealthy clients, a change of direction that has rattled the third-largest U.S. brokerage network

Exclusive: Wells Fargo cuts approved list of money managers

1:46am EDT

By Jed Horowitz

NEW YORK (Reuters) – Wells Fargo & Co is slashing an approved list of money managers and investment vehicles that its stockbrokers market to the firm’s wealthy clients, a change of direction that has rattled the third-largest U.S. brokerage network.

Executives said the clampdown protects clients from exposure to a plethora of investment models that have received little oversight. It will also reduce the firm’s risk at a time when litigation and compliance costs are rising industry wide. Read more of this post