Sony’s Bread and Butter? It’s Not Electronics; selling life, auto and health insurance accounts for 63 percent of Sony’s total operating profit

May 27, 2013

Sony’s Bread and Butter? It’s Not Electronics

By HIROKO TABUCHI

TOKYO — Sony is best known as a consumer electronics company, making PlayStation game consoles and televisions. And it loses money on almost every gadget it sells.

Sony has made money making Hollywood movies and selling music. That profitable part of the business is what Daniel S. Loeb, an American investor and manager of the hedge fund Third Point, wants Sony to spin off to raise cash to resuscitate its electronics business.

But as Mr. Loeb pressures Sony executives to do more to revive the company’s ailing electronics arm, some analysts are asking, Why bother?

Sony, it is suggested, might be better off just selling insurance. Or just making movies and music. But not electronics. Read more of this post

Financial innovation for once works for the investor

Financial innovation for once works for the investor

Posted by: abnormalreturns, May 27th, 2013 at 4:08 pm

True, long-lasting innovations ares a rare thing in the world of finance. In my book I argue that the introduction of the ETF or exchange-traded fund was exactly that. It has taken two some decades but we are now seeing real changes in how people invest due to ETFs. I wrote:

Like all upheavals, the ETF revolution has both its benefits and its drawbacks. On the whole, ETFs have made investing easier, more diverse, and cheaper. On the other hand, the introduction of ETFs has changed the actual underlying nature of some markets, and the rapid introduction of new ETFs has diluted the benefits seen early on. Unlike many revolutions, we are not likely to see a counterrevolution unseating the ETF regime any time soon.

You can see how the introduction of ETFs has driven the adoption of “broadly diversified, low-cost portfolios.”Joe Davis and Andy Clarke at the Vanguard Blog compare the rise of these portfolios to other “great ideas. They write:

The adoption of great ideas typically follows an “S” curve, starting slowly, then accelerating. Eventually, the great idea becomes commonplace. The adoption of the “broad low-cost portfolio” seems to be following this pattern.

Source: Vanguard. Adapted from Visualizing Economics and The New York Times. Vanguard calculated the growth in the low-cost portfolio based on data from Morningstar, Inc. The calculation represents the percentage of U.S. mutual fund and ETF assets under management with annual expense ratios of less than 25 basis points.

They note that we are still in the “second or third” inning of this process. Of course there is a limit as to just how much of the asset management industry can (or will) shift towards this approach. To be clear the definition of these portfolios is low cost, not necessarily indexed. In any event if too much money becomes indexed there should be a resulting increase in opportunities to generate alpha. Read more of this post

U.S. securities regulators are turning back toward Main Street, renewing their focus on accounting fraud and other financial-disclosure failings

May 27, 2013, 5:56 p.m. ET

Accounting Fraud Targeted

With Crisis-Related Enforcement Ebbing, SEC Is Turning Back to Main Street

By JEAN EAGLESHAM

U.S. securities regulators are turning back toward Main Street, renewing their focus on accounting fraud and other financial-disclosure failings.

Such cases were long a staple of the Securities and Exchange Commission’s enforcement efforts, leading to more than 25% of civil-enforcement actions filed by the agency in its 2003 to 2005 financial years. The financial crisis shifted attention and money elsewhere. In the year ended last September, accounting fraud and financial-disclosure problems made up just 11% of SEC enforcement actions. Read more of this post

Over-optimism raises risk of global recession

Over-optimism raises risk of global recession

In April 2010, the International Monetary Fund’s World Economic Outlook offered an optimistic assessment of the global economy, describing a multi-speed recovery strong enough to support roughly 4.5 per cent annual GDP growth for the foreseeable future — a higher pace than during the bubble years of 2000-2007.

27 MAY

In April 2010, the International Monetary Fund’s World Economic Outlook offered an optimistic assessment of the global economy, describing a multi-speed recovery strong enough to support roughly 4.5 per cent annual GDP growth for the foreseeable future — a higher pace than during the bubble years of 2000-2007.

But, since then, the IMF has steadily pared its economic projections. Indeed, this year’s expected GDP growth rate of 3.3 per cent — which was revised downward in the most recent WEO — will probably not be met.

Persistent optimism reflects a serious misdiagnosis of the global economy’s troubles. Most notably, economic projections have vastly underestimated the severity of the eurozone crisis, as well as its impact on the rest of the world. And recovery prospects continue to depend on the emerging economies, even as they experience a sharp slowdown. The WEO’s prediction of a strengthening recovery this year continues the misdiagnosis. Read more of this post

Li Says China Confronts ’Huge Challenges’ as Growth Levels Slow

Li Says China Confronts ’Huge Challenges’ as Growth Levels Slow

Chinese Premier Li Keqiang said his country is confronted by “huge challenges” as it opens up the economy and that the new government’s reform measures will be accompanied by tapered-off levels of growth.

Speaking in Berlin during his first trip abroad as premier, Li said the Chinese government will move forward with market-oriented reforms to generate stable growth after the economy unexpectedly slowed in the first quarter. Read more of this post

Asia seen as least creditworthy relative to their global peers

‘Asia seen as least creditworthy relative to their global peers’

Published: 2013/05/28

BEIJING: Borrowers in Asia are seen as the least creditworthy relative to their global peers in almost a year on signs of faltering growth in China.

The Markit iTraxx Asia index of credit-default swaps traded as much as 20 basis points higher than the average of four others from around the world this month, the biggest premium since June, according to data provider CMA. As recently as March, Asian borrowers were seen as better credits than the rest of the world.

Confidence in Asia is being dented by slowing growth in the region’s biggest economy, where manufacturing is contracting for the first time in seven months.  Read more of this post

HSBC’s $1.9bn money laundering settlement with US authorities could be rejected, leaving the bank open to criminal prosecution and a ban from operating in America

HSBC’s $1.9bn money laundering settlement could be rejected

HSBC’s $1.9bn settlement deal with US authorities over money laundering charges could be rejected, it was reported on Thursday night.

By Andrew Trotman

10:41PM BST 23 May 2013

Judge John Gleeson is considering cancelling December’s so-called deferred prosecution agreement that gave HSBC immunity from claims it allowed terrorists to move at least $881m (£584m) around the financial system. This could leaving the bank open to criminal prosecution and a ban from operating in America. However, HSBC disputes this. The US Department of Justice (DoJ) is reportedly challenging Mr Gleeson’s need to sign off on the deal. The judge last mentioned the case in February, stating that he had not yet approved nor disapproved of the settlement. Read more of this post

Bitter Election Creates Long-Term Headache for Malaysia’s Najib

Bitter Election Creates Long-Term Headache for Malaysia’s Najib

By Niluksi Koswanage on 10:07 am May 26, 2013.

Demonstrators hold up lighters during a protest against recent election results in Petaling Jaya, outside Kuala Lumpur, in this May 25, 2013 file photo. Malaysia’s divisive election has left a bitter taste for millions of people that risks creating a long-term problem of legitimacy for Prime Minister Najib Razak’s long-ruling Barisan Nasional (BN) coalition. (Reuters Photo/Bazuki Muhammad)

Kuala Lumpur. Malaysia’s divisive election has left a bitter taste for millions of people that risks creating a long-term problem of legitimacy for Prime Minister Najib Razak’s long-ruling Barisan Nasional (BN) coalition.

The outrage was clear at a busy intersection across from one of Kuala Lumpur’s fanciest shopping malls, where a huge poster of Najib and his deputy had been defaced – a rare display of public disrespect in the Southeast Asian nation.

One of the scrawled comments poked fun at the unconvincing share of the votes won by Najib’s ruling coalition in its May 5 election victory: “47 percent PM,” it said. Read more of this post

The world’s biggest energy companies have warned Australia has less than two years to fix the high cost of building big projects or risk being frozen out of a new $150 billion wave of global investment in LNG

LNG costs risk $100 billion of projects

PUBLISHED: 10 HOURS 39 MINUTES AGO | UPDATE: 0 HOUR 45 MINUTES AGO

GEMMA DALEY AND ANGELA MACDONALD-SMITH

The world’s biggest energy companies have warned Australia has less than two years to fix the high cost of building big projects or risk being frozen out of a new $150 billion wave of global investment in liquefied natural gas ­supply.

Senior executives said Australia needed to reduce the world’s most expensive labour costs, cut regulation and deliver a stable tax and political ­environment to have a chance of competing against East Africa, West Canada and the United States to fill ­­in a looming 160 million tonne annual ­global shortfall in LNG supply.

Projects hanging in the balance include Woodside Petroleum’s Browse venture, Shell and PetroChina’s Arrow project in Queensland, the Scar­borough floating plant proposed by ExxonMobil and BHP Billiton and the GDF Suez-Santos Bonaparte floating venture. Read more of this post

Boom or bust? Bras cost more than properties, says Chinese developer

Boom or bust? Bras cost more than properties, says Chinese developer

Staff Reporter

2013-05-27

When Peggy Yu, executive chairwoman of Chinese online retailer Dangdang, complained about expensive property prices to the chairman of Beijing-based developer Huayuan Group, Ren Zhiqiang, at a meeting held by China Entrepreneur Magazine on May 18, Ren replied by saying that bras are in fact more expensive than properties.

“A property project takes several years to complete, but how long does it take for you to make a suit of clothes?” Ren said. “A small bra may cost hundreds of yuan, so it’s much more expensive than a house, if you go by price per square meter.” Ren’s “bra theory” triggered widespread debate online, with some internet users asking Ren if he would be willing to sell his smallest house to exchange for three good bras. Read more of this post

How much is an apology worth? Ge Wenyao, chairman of Shanghai Jahwa United Co, just paid more than 300 million yuan ($50 million) to make one

Argument prompts introspection

Updated: 2013-05-27 05:34

( China Daily)

How much is an apology worth? Ge Wenyao, chairman of Shanghai Jahwa United Co, just paidmore than 300 million yuan ($50 million) to make one. Read more of this post

President Xi Joins Premier Li in Indicating China Tolerance for Slower Growth Rate

Xi Joins Li in Indicating China Tolerance for Slower Growth Rate

China’s President Xi Jinping indicated a tolerance for slower expansion to avoid environmental degradation, adding to signs that the government will limit temporary boosts for the economy as officials map out plans for market-based changes to drive long-term expansion.

The country won’t sacrifice the environment to ensure short-term growth, Xi said during a study session of the Communist Party’s top leadership on May 24. His comments follow a statement issued on the same day that the State Council, or cabinet, which is chaired by Premier Li Keqiang, approved a series of measures aimed at revamping the economy.

China’s new leaders may be reluctant to implement stimulus to reverse an unexpected slowdown in first-quarter growth after a 4 trillion yuan ($586 billion at the time) package to support the economy during the global financial crisis led to inflation, a housing bubble and industrial overcapacity. Since taking office in March, Li has pledged to cut government interference in the economy, give market forces more power and boost the role of private companies. Read more of this post

Korea eyes Western model for funding ecosystem

2013-05-26 14:52

Korea eyes Western model for funding ecosystem

By Kim Da-ye

The word “venture” is in vogue again. Tech start-ups thrived in the late 1990s and early 2000s. Internet portal Naver, game developers Nexon and NCsoft, and set-top box manufacturer Humax are the so-called first-generation ventures from this era. Along with the worldwide burst of dot.com bubbles, the domestic venture culture disappeared, and Korea Inc. became dominated by large conglomerates.

The wide distributions of smartphones and ubiquitous connectivity in the past few years have reignited interests in venture firms. The trend is, however, limited to creating apps and mobile games. For a real start-up culture to form, ventures should also look into other serious areas of technology and science such as medical equipment, biotechnology and clean energy. The new government says it is determined to turn the trend into a second venture boom. Read more of this post