Garters Help Tell H&M’s Other Stories in Inditex Chase

Garters Help Tell H&M’s Other Stories in Inditex Chase

Counting on the old adage that sales of affordable luxuries like lipstick and scarves climb in tough times, Hennes & Mauritz AB (HMB) is rolling out a new chain called & Other Stories that focuses on upscale accessories.

As it seeks to make up ground lost to rival Inditex SA (ITX) and win a bigger share of the $111 billion market for shoes and accessories in western Europe, H&M is opening seven outlets of the chain across the crisis-ravaged region this spring.

Better known for dresses and ballet flats cheap enough to be almost disposable, H&M promises curated style at & Other Stories. The stores feature a selection of more expensive clothing jockeying for space with wardrobe add-ons such as jewelry, lingerie, and shoes in four basic styles ranging from “Industrial” to “Glamorous.”

“H&M is getting a lot of pressure from low-price retailers on the one hand and from retailers like Inditex, which reacts faster to demand in the fashion world, on the other,” said Soeren Loentoft Hansen, an analyst at Sydbank A/S. (SYDB) With & Other Stories, H&M can “build some bridges to a higher price segment.” Read more of this post

Australia 10% Unemployment for 9.6% Punctures Gillard Prosperity

Australia 10% Unemployment for 9.6% Punctures Gillard Prosperity

Keith Darley, a 34-year-old electrician, hears from the government that Australia is the envy of the developed world. Yet the father of two, who employed 22 people a year ago, now works alone and says he’ll be voting against Prime Minister Julia Gillard in the Sept. 14 election.

The world’s 12th biggest economy boasts the lowest benchmark interest rate in 53 years, unemployment less than half of Europe’s, contained inflation and an economic growth rate double the average of advanced nations. Even with these conditions — the best since Gough Whitlam took office in 1972 — Gillard’s ruling Labor Party is 16 percentage points behind the Tony Abbott-led opposition.

“When we see a story that Gillard claims the government has created 900,000 jobs, we know that doesn’t stack up here; that’s not our experience,” said Darley, who lives in Sydney’s western suburbs, where eight of Labor’s 72 national seats are threatened and the unemployment rate is as high as 14 percent. “The voters here are not going to support Tony Abbott because they think he’s better, they’re going to be voting against the current government because they’re sick of hearing everything’s great when they know it’s not.”

Darley reflects a widening gap among Australia’s regions and industries. While national unemployment was 5.4 percent in December, the rate was 10 percent or higher in 9.6 percent of the nation’s 1,402 regions, according to government data that dates back to 2008. In some parts of Brisbane, where five Labor seats are in play, joblessness exceeds 27 percent — the highest on record for the areas. Read more of this post

Billionaire Mittal in India Legal Spat Adds to Investor Unease

Billionaire Mittal in India Legal Spat Adds to Investor Unease

Billionaire Sunil Mittal and his company Bharti Airtel Ltd. (BHARTI) are locked in legal battles in India’s top court that some fund managers say could drive wary investors away from the world’s second-largest wireless market. India’s Supreme Court today ordered a lower court to halt proceedings against Mittal until April 15 when it will next hear his challenge to charges relating to Bharti’s purchase of mobile-airwaves beyond the legal limit. A three-judge panel headed by Chief Justice Altamas Kabir asked federal investigators to file a reply to Mittal’s petition. Mittal, 55, faces legal battles even as the Supreme Court in February 2012 canceled 122 licenses tied to India’s largest graft case that led to the exit of Bahrain Telecommunications Co. (BATELCO) and Emirates Telecommunications Corp. Foreign direct investment into India’s telecom industry shrank to $93 million in the first 10 months of the year ended March 31, from $2 billion for the previous 12-month fiscal period, according to data from the Department of Industrial Policy and Promotion.

“When I heard about this case, I thought ’Oh, here we go again’,” Taina Erajuuri, a Helsinki-based fund manager at FIM Asset Management Ltd., said by telephone on April 5, referring to Mittal’s case. “I don’t own telecom stock in India, and that’s for a reason. It’s become too unpredictable, with other places being much safer, without legal or regulatory problems.” Mittal, heralded as one of India’s entrepreneurial leaders who started his business in the 1970s by selling bicycle parts, has been charged with acquiring airwaves in excess of a government limit. India’s Central Bureau of Investigation filed criminal charges in December against Bharti, along with government officials and two other carriers, for revising rules to allocate wireless spectrum, which led to a loss of about 8.5 billion rupees ($155 million) to the exchequer. Read more of this post

The global popularity of sushi, coupled with the yen’s 18 percent decline in the past six months, is proving to be a sweet spot for Suzumo, Japan’s biggest producer of automatic sushi-making machines

Sushi machine maker upbeat about yen’s fall, high overseas demand

BY NAOKO FUJIMURA AND TAKASHI AMANO, BLOOMBERG

Ikuya Oneda, president of Suzumo Machinery Co., poses for a photograph with the company’s automatic sushi chefs in Tokyo.

The global popularity of sushi, coupled with the yen’s 18 percent decline in the past six months, is proving to be a sweet spot for Suzumo Machinery Co., Japan’s biggest producer of automatic sushi-making machines.

The company plans to triple overseas sales to as many as 3,000 units from the last fiscal year and is boosting manufacturing capacity to meet demand in foreign markets, President Ikuya Oneda, 69, said Thursday.

“A weaker yen will make it easier for us to do business” abroad, Oneda said, adding that Suzumo may start taking payments in dollars, if customers request, as the Japanese currency weakens.

The firm’s new production line turning out the automatic chefs, which shape rice into blocks to serve with raw fish or other ingredients, will open around November at its plant in Saitama, according to Oneda. Orders for the machines are pouring in from South America, Europe and Asia, as global consumption of seafood is expected to jump by as much as 17 percent per person over the next two decades. Read more of this post

China: Wenzhou’s financial reform fails to bear expected fruit; Wenzhou’s courts are currently in the processes of handling private debt collections exceeding 50 billion yuan (US$8 billion), while the total of private debt in the city has reached 100 billion yuan (US$16 billion)

Wenzhou’s financial reform fails to bear expected fruit

Staff Reporter, 2013-04-08

On the first anniversary of the State Council’s decision to set up the Wenzhou financial reform zone, an official has admitted that the program has not attracted robust investment as previously expected, the Beijing-based Economic Observer reports. Read more of this post

High inventory plagues China’s Fujian garment capital Jinjiang; Six leading sportswear producers, including Anta, 361 Degrees, Xtep, Peak, Li Ning and Dxsport have been forced to close more than 3,000 outlets across the country since last year, with heavy losses arising from their excess stock worth more than 3.72 billion yuan (US$594 million)

High inventory plagues Fujian garment capital Jinjiang

Staff Reporter, 2013-04-08

The city of Jinjiang in Fujian province is a major center of the Chinese garment and sportswear industry, but many of the businesses there are struggling to stay afloat owing to the heavy burden of excess inventory, reports the Beijing-based China Entrepreneur magazine.

Six leading sportswear producers, including Anta, 361 Degrees, Xtep, Peak, Li Ning and Dxsport have been forced to close more than 3,000 outlets across the country since last year, with heavy losses arising from their excess stock worth more than 3.72 billion yuan (US$594 million), said the magazine. Read more of this post

In China, off-balance-sheet lending risks lurk in the shadows

In China, off-balance-sheet lending risks lurk in the shadows

By Gabriel Wildau and Shengnan Zhang

SHANGHAI (Reuters) – China’s banks are feeding unwanted assets into the country’s “shadow banking system” on an unprecedented scale, reinforcing suspicions that bank balance sheets reflect only a fraction of the actual credit risk lurking in the financial system.

Banks’ latest earnings reports only added to concerns. Despite the slowest economic growth in 13 years in 2012, the banking system’s official non-performing loan (NPL) ratio actually declined, renewing a debate about how reliable those figures are.

But the key question is no longer how much risk banks are carrying. Rather, it’s how many risky loans have been shifted to the lightly regulated shadow banking institutions – mainly trust companies, brokerages and insurance companies.

The risk to the overall financial system is not clear, because of insufficient data about the quality of credit in the shadow banking sector. Read more of this post

China’s President Xi Jinping said the days of “ultra-high speed” growth in the world’s second-largest economy – which many hope can spur a global recovery – are probably over.

China’s Xi says “ultra-high speed” growth probably over

POSTED: 08 Apr 2013 5:32 PM

China’s President Xi Jinping said Monday the days of “ultra-high speed” growth in the world’s second-largest economy – which many hope can spur a global recovery – are probably over.

BOAO, China:  China’s President Xi Jinping said Monday the days of “ultra-high speed” growth in the world’s second-largest economy — which many hope can spur a global recovery — are probably over.

“I don’t think we will be able to sustain an ultra-high speed of economic growth and it is not what we want either,” Xi told about two dozen foreign business figures on the southern island of Hainan. Read more of this post

Hey, Fund Companies: Share the Wealth; The oft-practiced but rarely disclosed tactic of securities lending has landed BlackRock and State Street in the courts. Here’s what this practice is, and why it matters to you

SATURDAY, APRIL 6, 2013

Hey, Fund Companies: Share the Wealth

By BRENDAN CONWAY | MORE ARTICLES BY AUTHOR

The oft-practiced but rarely disclosed tactic of securities lending has landed BlackRock and State Street in the courts. Here’s what this practice is, and why it matters to you.

When funds lend their holdings to short sellers, shareholders take on all of the risk—but they don’t always get to keep all of the profits.

A handful of pension funds and trusts are suing giant asset managers, includingBlackRock (ticker: BLK) and State Street (STT), over the arcane realm of securities lending. The claim: The firms kept too much profit from this corner of fund management for themselves, instead of disbursing more of those profits to exchange-traded-funds’ shareholders and other fund investors.

The lawsuits focus attention on an industrywide practice whereby asset managers lend (usually to institutional short sellers) stock held by its funds in exchange for various fees and cash collateral, on which they collect interest. Securities lending is common enough that it probably contributes to your funds’ returns—so long as the asset manager rewards you with most of the income it collects, instead of keeping gobs of it at the corporate level. The latter is at the heart of the continuing lawsuits, and while it might not be a bad thing for the firms’ stockholders, it behooves you to know who’s getting what. It’s the fund shareholders, after all, taking on the risk of lending the securities. Read more of this post

Beware of Index Funds That Aren’t; The new generation of investments aren’t nearly as passive— or as cheap—as you might think

Updated April 7, 2013, 7:51 p.m. ET

Beware of Index Funds That Aren’t

The new generation of investments aren’t nearly as passive— or as cheap—as you might think

By MICHAEL A. POLLOCK

Index funds aren’t always what you think they are. And your innocence could cost you.

To most investors, of course, index funds are passive investments, providing returns that basically mirror the market they are designed to follow. They charge low fees and carry no hidden costs.

But the old definition is starting to change. Unlike simpler, earlier generations of index and exchange-traded funds, new variations are morphing into products that risk putting many investors afoul of the old rule about not investing in things you don’t understand.

As more money flows toward indexing, some fund firms are trying to capture a share of it by creating complex ETFs that blend active management and indexing. The fees charged by some of these funds can be several times those charged by traditional index funds. And, because they sometimes specialize in very narrowly defined, less-active markets, they can wrack up hidden trading costs. Read more of this post

Malaysia’s Prime Minister Najib Unveils Poll Manifesto Similar to Opposition leader Anwar’s; “My sincere apologies to all Malaysians if we have done anything wrong. At the end of the day, we are ordinary humans.”

Malaysia’s Najib Unveils Poll Manifesto Similar to Anwar’s

Malaysian Prime Minister Najib Razak pledged to fight corruption, bring down living costs and build a pan-Borneo expressway if his coalition retains power in elections due in a matter of weeks.

These were all policies mooted by opposition leader Anwar Ibrahim in his manifesto released six weeks earlier than the one Najib’s governing National Front unveiled at a weekend rally in Kuala Lumpur. The Election Commission meets this week to set a date for polls after the prime minister dissolved parliament on April 3.

“They had the benefit of time to study our manifesto over the past month and incorporate some elements,” Ong Kian Ming, a political analyst at Kuala Lumpur’s UCSI University and an opposition election strategist, said by phone. “Unlike us, there’s nothing in there about electoral reform. That’s something a lot of people are concerned about.”

In the lead-up to the polls, Najib has boosted government spending, distributed a second round of cash handouts to the poor, and raised salaries of civil servants, police and the military. He also delayed implementing a goods-and-services tax and froze plans to wind back state subsidies on essential items. The manifesto offers increased handouts for the poor, and lowered car costs and broadband fees.

“My sincere apologies to all Malaysians if we have done anything wrong,” the prime minister said in a speech at the rally, broadcast live on national television. “At the end of the day, we are ordinary humans. If we are given a strong mandate, I can assure you that we will do better in the next five years.” Read more of this post

Liquidity Carpet Bombs Fueling Asset Bubbles, Rohde Says

Liquidity Carpet Bombs Fueling Asset Bubbles, Rohde Says

Policy makers steering the global economy have pumped the financial system with so much liquidity that any exit risks popping potential asset bubbles or stunting a recovery, Danish central bank Governor Lars Rohde said.

“The risk is we stay in this climate too long and that the carpet bombing of liquidity spurs inflation,” Rohde, 59, said in an April 5 interview from his office in Copenhagen. Though there are no current signs of consumer price inflation “there is inflation, perhaps a bubble, in some asset classes,” he said. “Equities (MXWO) are trading close to all-time highs. Segments of property markets across the globe, for example London, also display symptoms of this. How do we exit this without killing whatever nascent recovery there might be at that time?”

The warning from the head of Denmark’s central bank, which has kept its deposit rate below zero since July, comes as policy makers in Japan, the euro area and the U.S. deliver unprecedented monetary stimulus to drag the global economy out of the worst crisis since the Great Depression. Easy money has fueled equity prices, helping send the Standard & Poor’s 500 Index to an all-time high on April 2. The yield on Japan’s benchmark 10-year bond hit its lowest on record last week.

“We’re in a landscape where we’ve never been before, with regard to extreme monetary accommodation over a very, very long period of time,” said Rohde, who took over as the head of Denmark’s central bank in February. “What does that end up doing to a society? It’s been a necessary policy, but I have my concerns about what the long-term risks are.” Read more of this post

Why Making Europe German Won’t Fix the Crisis

Why Making Europe German Won’t Fix the Crisis

Most people see Europe’s economic crisis as a cautionary tale of good and bad policy making, in which fiscally prudent countries, such as Germany, remain stable, while reckless ones, such as Greece, unravel.

So ingrained is this idea that it’s now common to hear analysts say Europe must become “German” to exit from the crisis, adopting Teutonic approaches to policy — from fiscal tightening to labor- and product-market reforms. If only societies on Europe’s periphery can learn to do what the Germans do, the argument goes, the European Union and its single currency will have a stable future.

This is wrong and we already have evidence to show it. The question isn’t whether Germany’s policies are correct. It is whether they will produce the same outcomes in different economic and political environments. To see that they don’t, you need to ignore Greece and look at its neighbor, Bulgaria.

Like Germany, Bulgaria went through several years of prudent budgets and economic reforms aimed at improving competitiveness before the financial crisis began in 2008. Both countries initially responded to the shock with sudden increases to their budget deficits, but also quickly reined these back in. Bulgaria’s deficit was 0.7 percent of gross domestic product in February, according to the Finance Ministry. Government debt was 16 percent of GDP. So pretty German already. Read more of this post

Vietnam Crony Communists Resist Constitution Backlash

Vietnam Crony Communists Resist Constitution Backlash

While filming a documentary about Ho Chi Minh as his compatriots battled U.S. forces in the 1960s, Tran Van Tan observed how the Communist leader’s embrace of a simple lifestyle endeared him to Vietnam’s poor.

Five decades later, Tan says the Communist Party’s leaders are more concerned with enriching themselves than adhering to Ho Chi Minh’s ideals. Abolishing the one-party system would lead to “healthy competition” and narrow the wealth gap, said Tan, 65, a retired civil servant who now sells tea in downtown Hanoi.

“There are people who don’t have enough food to eat, whose children don’t have enough clothes to cover their bodies in winter,” Tan said. “There are farmers who don’t have land. They are so poor, while many in the leadership are very wealthy. These leaders are so rich that even their children, grandchildren wouldn’t be able to use it all up.”

Tan is among more than 12,000 former bureaucrats, academics and rice farmers speaking out publicly against proposed constitutional changes that would strengthen the Communist Party’s grip on power. The unprecedented movement threatens to increase challenges to Prime Minister Nguyen Tan Dung as he seeks to turn around a slowing economy which posted Southeast Asia’s highest level of bad debt last year. Read more of this post