Investment Company Asks: Is it legal in China to short a company’s shares and then publicly question its financials with prepared research reports?

05.13.2013 16:20

Investment Company Asks: Can We Legally Short Sell?

Zhongneng Xingye’s research reports can hammer a listed companies’ share prices, but CSRC refuses to say whether it regards the activity as legal

By staff reporters Liu Ran and Wang Shenlu

(Beijing) – Is it legal in China to short a company’s shares and then publicly question its financials with prepared research reports? This is the question a domestic investment company formally asked China Securities Regulatory Commission (CSRC) in a letter in March.

The matter drew attention because of the significant weight it carries in the country’s nascent short-selling industry. The method in question is practically the same as that used by American short seller Muddy Waters Research, which has made a name for itself by attacking U.S.-listed Chinese companies in recent years and making big money out of the ensuing share collapses. Read more of this post

An odd corporate vehicle in China; The experience of carmakers reveals the challenges of joint ventures

May 13, 2013 4:21 pm

An odd corporate vehicle for doing business in China

By Andrew Hill

In 2010, seven managers from PSA Peugeot Citroën and five from Chang’an Automobile met in Shenzhen, southern China, to lay the groundwork for a new car factory. Three years later, Capsa, a 50-50 joint venture between the French and Chinese companies, is in the final stages of preparing a 1m square metre plant for the September launch of Chinese-made premium cars under the DS brand. “Because we were beginning from a blank sheet, people wanted to make it as perfect as possible,” says Gilles Boussac, Capsa’s president, between meetings with his team of mostly Chinese managers. “So often in China, if you’re trying to rework or improve something, it takes years to achieve.” But the people who built Capsa have not started from scratch. Their shared enterprise is based on three decades of global car companies’ experience working with Chinese partners. International car executives are confident such ventures will continue to be the best way to reach Chinese customers, who now buy more than 20m new vehicles annually, making it the world’s largest automobile market. But their enthusiasm for these awkward corporate vehicles, with their unique management challenges, obscures the fact that the path of co-operation has been bumpy. Read more of this post

Without constitutional rule, China will struggle to avoid turbulence

Last updated: May 13, 2013 7:07 pm

Reform can end loose talk of a Chinese revolution

By Deng Yuwen

Without constitutional rule, the country will struggle to avoid turbulence, says Deng Yuwen

There are few books as popular among Chinese intellectuals and officials these days as Alexis de Tocqueville’s L’Ancien Régime et la Révolution. The 19th-century historian postulated that the unprecedented prosperity France enjoyed under Louis XVI, its final pre-revolt king, actually hastened the 1789 French revolution.

This seems to have relevance for China. Many people say there is a possibility of revolution in China in the next 10 years. That revolution is being discussed again at all – an idea to which China’s intelligentsia bade farewell in the 1990s – shows how enormously our country has changed over the past decade.

Indeed, when we discuss revolution today, the target is the ruling Communist party – an irony given that the party long monopolised the definition of revolution. The renewed talk of revolution also shows that without constitutional rule, China will struggle to break free from the cycles of turbulence that have dominated its history. Read more of this post

France set to tax smartphones to protect culture in digital age

Last updated: May 13, 2013 6:51 pm

France set to tax smartphones to protect culture in digital age

By Hugh Carnegy in Paris

France is preparing to tax smartphones, tablets and all other internet-linked devices to help fund the production of French art, films and music.

The proposal was made in a government-commissioned report that was broadly endorsed by President François Hollande’s socialist administration.

In a trenchant defence of France’s “exception culturelle” in the digital age, the report proposed imposing a tax of up to 4 per cent on the sale of all devices, including gaming consoles and e-readers, that allow access via the internet to “cultural content”. Read more of this post

Emerging markets turn sour for global banks; Muddy Waters’ Carson Block Says He’s Shorting Standard Chartered Debt

May 13, 2013 5:54 pm

Inside Business: Emerging markets turn sour for global banks

By Patrick Jenkins

As growth has stagnated or gone into reverse across much of the western world in recent years, banks have understandably been burnishing their emerging markets credentials. Any lender with a credible plan to tap into the most dynamic markets of the world has been duly rewarded. It is no coincidence that the archetypal emerging markets bank, UK-based Standard Chartered, has seen its share price increase more than 130 per cent since its low point in early 2009 – outperforming the FTSE global banks index by 38 per cent. Rewind a few weeks, though, and that outperformance was all the more dramatic. Until the start of March, this was an unadulterated boom stock, with outperformance topping 65 per cent. The latest dip came as a result of some disappointing results last week. The bank only publishes skeletal quarterly information, but the disclosure that profits fell “slightly” in the first three months of the year has been enough to push its share price down more than 10 per cent over the four trading days since. The reason is simple enough. The bank’s core operations are no longer performing as they once did – high-risk emerging markets are delivering the same near-zero growth as lower-risk developed markets. StanChart is not alone. Other global banks with big operations in Asia and Latin America suffered a disappointing first-quarter performance, too. Read more of this post

Bank recruitment runs into red-faced factor; Only 2% of students considering career in finance; More than a quarter of students would be too embarrassed to admit to their friends that they were taking up a job in banking

May 13, 2013 8:05 pm

Bank recruitment runs into red-faced factor

By James Pickford, London and South-East Correspondent

More than a quarter of students would be too embarrassed to admit to their friends that they were taking up a job in banking, according to research that underlines the failure of banks to win over public opinion following the financial crisis. António Horta-Osório, chief executive ofLloyds Banking Group, said the result – in which only 2 per cent of students surveyed said they were considering embarking on a career in banking – was “very worrying”.  Read more of this post

Engaging with a company’s users: Ducati tapped the power of its fans; In five years revenues quadrupled to €407.8m, market share doubled and the company became more widely known

May 13, 2013 4:21 pm

Engaging with a company’s users

By Paolo Aversa

The story. Widely seen as the acme of Italian style, tradition and performance in motorcycle design and manufacturing, Ducati has nevertheless often struggled to transform fame and fans into sales. By 1996 the company was on the verge of bankruptcy and had undergone several buyouts when a new chief executive, Federico Minoli, took over.

The challenge. Ducati faced fierce competition from traditional brands such as Harley-Davidson, BMW and Triumph, and from Japanese companies Honda, Yamaha, Kawasaki and Suzuki. Ducati’s annual production in the late 1990s was about 20,000 bikes, which generated modest revenues compared with, say, the annual 5.4m Hondas sold at the time. In less than five years Mr Minoli effected a turnround. This was achieved partly by a strict reduction in production costs, but also through a strategy of extending the traditional consumer base of extreme riders to the larger group of more laid-back enthusiasts. Still, Mr Minoli felt Ducati had not made full use of the potential of its fans’ extensive community. But how could it reach such a widespread group of users with few resources to invest in the endeavour? Read more of this post

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