Singapore Bonds Decline to Become Second-Worst Debt Market in the World

Singapore Bonds Decline to Become Second-Worst Debt Market

By Kenneth Foo – Jun 12, 2013

Singapore bonds fell for a fourth day, making their loss for the past three months the second-biggest in the world, as investors gird for the possibility that the U.S. Federal Reserve could slow bond purchases. The price of Singapore’s 3.125 percent note due in September 2022 tumbled to S$107.30 as of 3:27 p.m. local time from S$108.24 yesterday, based on data compiled by Bloomberg and the Monetary Authority of Singapore. The yield rose 10 basis points, or 0.1 percentage point, to 2.24 percent, a level not seen since July 2011. “The only reason for this is the speculation of Fed tapering,” said Michael Wan, an economist at Credit Suisse Group AG in Singapore. “There’s pretty much a sell-off across all countries and markets.” The Bloomberg Singapore Sovereign Bond Index (BSIN) has declined 2.4 percent over three months. The only other sovereign index among 33 tracked by Bloomberg that fell more was Slovenia’s with a 4.3 percent decline. The Bloomberg U.S. Treasury Bond Index fell 0.2 percent. The Fed buys $85 billion of Treasuries and mortgage-backed securities each month to support the economy by putting downward pressure on borrowing costs. It will probably reduce its purchases to $65 billion a month at its Oct. 29-30 meeting, according to the median estimate in a Bloomberg survey of 59 economists last week. To contact the reporter on this story: Kenneth Foo in Singapore at kfoo23@bloomberg.net

Asia’s ticking time bonds; Time to cut and run?

Asia’s ticking time bonds; Time to cut and run?

1:28am EDT

By Saikat Chatterjee and Umesh Desai

HONG KONG (Reuters) – Efforts to make the global financial system safer could be making Asia more – not less – vulnerable to any credit market shocks, leaving bond traders worried that a sharp selloff since late May could turn into a rout. Low global interest rates have made it easier than ever to sell new bonds denominated in dollars, euros or yen, resulting in a boom in issuance that has made Asia and its companies ever more dependent on debt. But the market for trading those bonds is slowly drying up, leaving it susceptible to a sharper selloff if holders of these so-called G3 bonds decide it is time to head for the exit. “The issue is that if any of them choose to sell their holdings, the market may not have the capacity to absorb these flows. If we reach a stage like that then liquidity could dry up very quickly and that can have a spiraling effect,” said Dhimant Shah, a fund manager at Mackenzie Investments in Singapore. Read more of this post

A business owner fleeing 800 million yuan in debt from China’s Jiangsu highlights financial transparency issues the city is having

Company Head Flees 800 Million Yuan Debt – Economic Observer Online 

By Jing Tian (景天)
Issue 623, June 10, 2013
Xu Cailiang (许才良), owner of Rong Tai Oil Technology Ltd. (融泰石油科技股份有限公司), fled to the U.S. last month leaving behind 800 million yuan in debt. A source at the local financing office said that the company was founded in 2007 in Jiangyin (江阴), Jiangsu and has been losing money ever since. It’s been able to receive loans from banks because of its close relationship with Jiangyin City Construction and Comprehensive Development Ltd. (江阴市城镇建设综合开发有限公司), also known as City Constriction. “The owner of Rong Tai and the owner of City Constriction are the same person: Xu Cailiang,” the source said. The state-run City Construction was founded in 1984 and Xu became its CEO in 1998. Then in 2007, he bought it for 20 million yuan in cash and became the company’s sole shareholder. Xu was also a supervisor in Jiangyin Agricultural Bank, one of Rong Tai’s investors. City Construction provided 470 million yuan to Rong Tai as a loan guarantee on top of a 3.2 million yuan deposit and a mortgage guarantee allegedly worth 763 million yuan. However, according to a source in a local bank, the mortgage written in the loan application was much higher than the actual value. Two similar cases have happened in Jiangyin within the past six months. A local official said that the economic environment of Jiangsu is much less transparent than that of its neighbor, Zhejiang, making problems like these less likely to be discovered before it’s too late. Jiangyin, a town with 34 public corporations, has been held up as a model for economic development in recent years. However, it’s likely that the city’s economy isn’t as healthy as it appears on the surface.

China microlenders get death threats as they try to recover bad loans; “Some of the borrowers are steel traders, toy makers, or plain loan sharks. Everything is fine when the economy grows robustly and liquidity is plentiful.”

China microlenders get death threats as they try to recover bad loans

Saturday, 08 June, 2013, 12:00am

Jane Cai in Beijing xuejun.cai@scmp.com

Threatening messages are routine for Miao Qiang these days.

“A killer from Beijing will take your life if you don’t withdraw the lawsuit,” a message on his mobile phone reads.

Miao, co-owner of a microcredit company in Jiangsu province, laughs helplessly. He has brought a dozen companies and individuals to court since the beginning of the year as loan defaults surged. But little of the money has been collected. Read more of this post

India’s Small-Change Problem; Ever been given a candy instead of a rupee for change? Here’s why.

June 12, 2013, 11:02 AM

India’s Small-Change Problem

Top of Form

By Anant Vijay Kala

If you’ve shopped in India you likely know the problem. You go to a store to buy a few things and when it’s time to pay, you hand over the cash. But the cashier’s run out of change. Instead of the few rupees you’re owed, the cashier gives you one or two candies, or a stick of chewing gum, to make up the shortfall. You want those coins, the exchange doesn’t feel quite fair – and it’s bad for your teeth – but you’re reluctant to make a fuss. And so you walk out, feeling a little short-changed. If this chimes with you, then you’re not alone. A survey conducted in 2012 by the Reserve Bank of India, in response to complaints from the public, found that 44% of people in 12 Indian cities had the same experience; candies instead of coins for change. Read more of this post

Becoming ‘Asia Literate’: Learn Chinese, but Don’t Stop There

JUNE 11, 2013, 2:20 AM

Becoming ‘Asia Literate’: Learn Chinese, but Don’t Stop There

By SUE-LIN WONG

BEIJING — While studying abroad at Peking University in Beijing, Andrew Stead didn’t expect to find a job at Burton, one of the top snow boarding brands in the world.

“In my spare time on exchange, I would go skateboarding around Beijing with friends, including one who worked at Burton. A few months later, I was offered a job at their Beijing office because of my interest in snowboarding and China,” said Mr. Stead, 23, who is majoring in engineering and finance and speaks solid Chinese. He plans to return to Beijing after he graduates soon from an Australian university.

Governments are increasingly recognizing the opportunities that exist for people like Mr. Stead who are able to marry technical skills or hobbies with “Asian literacy.” Also called “global competence,” it represents an understanding of other cultures and languages; but China isn’t the only nation in Asia and people should also be looking more broadly, to Japan, India and Indonesia, to name just three other places, according to some experts. Read more of this post

China Audit Office Shines Light On Local Government Debt

June 11, 2013, 5:56 PM

Audit Office Shines Light On Local Government Debt

In recent years, China’s local governments have borrowed trillions of yuan from banks, the bond market andshadow lenders in order to build infrastructure, housing, and improve government services. That spending has helped prop up economic growth, but little is known about the quality of debt and the local governments’ ability to repay it.

On Monday, the National Audit Office of the People’s Republic of China posted on its website the highlights of an audit into the debt holdings of 36 local governments at the end of 2012, providing rare insight into one of the greater challenges facing China’s financial system. Read more of this post

Norway’s biggest bank is warning investors not to underestimate the risks lurking in Scandinavia’s largest junk bond market

Bankers Spot Cracks in Norway High Risk Bond Boom: Nordic Credit

Norway’s biggest bank is warning investors not to underestimate the risks lurking in Scandinavia’s largest junk bond market.

Magnus Piene, DNB ASA (DNB)’s global head of offshore, says surplus liquidity flowing into Western Europe’s biggest oil producer may lead to a repeat of the spate of defaults Norway saw at the height of the financial crisis in 2009.

“I see early signs of this coming up again and it’s merely a function of excess liquidity,” Piene said in an interview in Oslo. “Instead of putting money into a bank with poor-yielding deposits, you put them into these high risk projects that you may consider low risk — wrongly in some cases, I would say. All that liquidity is pushing people to do things they shouldn’t be doing.” Read more of this post

Traders Said to Rig Currency Rates to Profit Off Clients; Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set

Traders Said to Rig Currency Rates to Profit Off Clients

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years. Read more of this post

The US Treasury will have to pay a positive real interest rate on new 10-year borrowing for the first time in 18 months; TIPS inflation-adjusted or “real” Treasury yield pushed above zero from minus 0.75 per cent as recently as April

June 11, 2013 6:53 pm

Fears of QE3 slowdown drive Treasury rates up

By Michael MacKenzie in New York and Robin Harding in Washington

The US Treasury will have to pay a positive real interest rate on new 10-year borrowing for the first time in 18 months as investors get cold feet about a possible slowing of the Federal Reserve’s bond buying programme.

Bond investors are ditching Treasury inflation-protected securities, or Tips, pushing the inflation-adjusted or “real” Treasury yield above zero. It was minus 0.75 per cent as recently as April. Read more of this post

Apple $17 billion bonds lose 9% in six weeks. Will Apple’s $17bn debt sale in April turn out to be the “AOL buys Time Warner”moment of the three-decade bond market bull run?

June 11, 2013 9:53 am

Apple bonds lose 9% in six weeks

By Stephen Foley and Michael Mackenzie in New York

Investors are nursing losses of up to 9 per cent on Apple’s record-breaking $17bn bond offering, less than six weeks after the securities landed in their portfolios.

The technology giant tapped the white-hot bond market for the largest debt fundraising to date on April 30, but a sharp turn in interest rates has caused a sell-off in corporate bonds and wiped hundreds of millions of dollars off the value of the offering.

Apple sold $3bn of bonds maturing in 2043, locking in a low interest rate of 3.9 per cent for the next 30 years, but the market price of these bonds had fallen to 90.36 per cent of face value in late trading on Monday, according to Trace data. Read more of this post

An exodus from emerging markets threatens to hurt the financing and growth prospects of developing economies that have come to rely on large inflows of foreign capital in the wake of the global financial crisis

Updated June 11, 2013, 6:05 p.m. ET

Money Flows Out of Emerging Markets

By ALEX FRANGOS and DANIEL INMAN in Hong Kong and PATRICK MCGROARTY in Johannesburg

Money streamed out of emerging markets, destabilizing currencies, sinking stocks and creating headaches for policy makers already worried about faltering growth.

In the latest signs of turmoil, highflying stock markets fell in Asia, while currencies in India, Thailand and Indonesia reeled in the face of a surging U.S. dollar.

Some emerging-market currencies rebounded in New York trading hours but others remained weaker on the day. The volatile trading reflected the difficulties investors face in trying to predict when developed-world banks might start to withdraw stimulus and how such moves would ripple across global markets. Read more of this post

Across China, local governments are pushing ambitious spending projects that add to concerns about wasteful capital investment and rising debts

June 11, 2013, 1:30 p.m. ET

Across China, the Itch to Spend Is Strong

BEIJING—As leaders in Beijing remain cautious about stimulating China’s economy out of a slowdown, local governments are taking no chances, pushing ambitious spending projects that add to concerns about wasteful capital investment and rising debts.

It isn’t clear how many of these undertakings—which include everything from highways to subways—will end up with funding. But the push illustrates Beijing’s challenge as it attempts to rebalance the world’s No. 2 economy to make it less dependent on such massive investment plans.

A total of 16 provinces and two municipalities representing more than 60% of China’s gross domestic product have issued statements since the start of the second quarter proclaiming the importance of investment projects in driving growth and urging lower levels of government to use all means to accelerate plans in the months ahead. Read more of this post

UPS is expanding its health-care shipping services in China, as it pursues a larger foothold in a lucrative market with limited access to foreign delivery companies; The largest distributors in the U.S. control approximately 90% of the health-care logistics market

June 11, 2013, 12:36 p.m. ET

UPS Bulks Up in China

Delivery Firm Seeks Deals to Broaden Health-Care Shipping Efforts

By LAURIE BURKITT

SHANGHAI—United Parcel Service Inc. UPS -0.81% is expanding its health-care shipping services in China, as it pursues a larger foothold in a lucrative market with limited access to foreign delivery companies.

Atlanta-based UPS is seeking acquisitions to broaden its health-care supply chain in China, enabling it to transport medical devices and pharmaceuticals in China to companies such as drug maker Merck & Co., said Jim Barber, the president of UPS International. The company operates a facility in Shanghai as well as a new 237,000-square-foot storage and distribution center in the coastal city of Hangzhou, China. Read more of this post

Chinese local governments are padding their balance sheets with billions in fake assets

Chinese local governments are padding their balance sheets with billions in fake assets

By Gwynn Guilford @sinoceros 10 hours ago

Even China’s most prominent cities and provinces are increasingly relying on high-risk and murky forms of borrowing. That’s according to a new report from China’s National Audit Office on the finances of 36 provincial and municipal governments(link in Chinese). The report covered the governments of cities including Shanghai, Chongqing and Tianjin, and the provincial governments of Guangdong, Jiangsu and others. Here’s a roundup of the most notable numbers:

Local government debt hasn’t gone up much recently… or so it might seem. At the end of 2012, those 36 local governments had racked up $628 billion in debt, a 12.9% increase on what they’d amassed by the end of 2010. That’s not exactly shocking. But there are hints that the debt of some local governments may be threatening to spiral out of control: 12 of them saw their debts rise 20% or more. Plus, as China Real Time estimates, the report probably only covers 25-30% of total local government debt.

A sizable part of some local governments’ debt is dubious “shadow lending.” Nearly 16% of the total debt accrued by 13 local governments since 2010—$36 billion—came from trust loans and other sketchy financing, which channels lending off bank balance sheets. That could be higher—the report said financing through these channels is easy to conceal. It also noted that these are especially risky since rates tend to be much higher than those of banks—up to 17.5% annually.  Read more of this post

The price of love: Dowry map of China goes viral

The price of love: Dowry map of China goes viral

Staff Reporter

2013-06-08

The map shows the different amounts of dowry money expected in different parts of the country. (Internet photo)

In traditional Chinese culture, a man must first provide a dowry to his wife’s family before getting married. The practice has persisted into the present day, and a map showing the average amount required in different parts of China has gone viral online, with many internet users saying that they cannot afford a wife, reports the Henan-based news website Dahe.

The Dowry Map of China divides the country into five zones in terms of the amount expected by a bride’s family — 1 million yuan (US$163,000), 500,000 yuan (US$80,750), 100,000 yuan (US$16,300), and 10,000 yuan (US$1,600), and zero yuan. Read more of this post

Tamil Nadu: Can eccentric politics continue to deliver prosperity? Why are so many Tamil politicians ex-film stars?

Tamil Nadu

A successful show begins to pall

Can eccentric politics continue to deliver prosperity?

Jun 8th 2013 | CHENNAI |From the print edition

IMAGINE a place run by film stars—vain, power-hungry, paranoid, adored. Imagine they had been in charge not for the duration of a reality television series but for decades in a territory containing 72m people and one of the world’s largest cities. It would be a disaster zone, wouldn’t it? Think again, and welcome to Tamil Nadu, one of India’s great success stories—and a state run by actors. It is the ultimate celebrity experiment.

Tycoons and foreign bosses are infatuated by Gujarat, a hard-charging western state where the trains run on time. Policy wonks admire Bihar, an eastern badland that is getting its act together. But India’s most consistent economic performer is in its deep south (see chart). Tamil Nadu has the third-biggest GDP of any state and has grown faster and richer than most.

It is as industrialised as Gujarat—Hyundai, Ford and Renault, among others, churn out a third of all cars made in India there, while the state’s looms dominate the national textile industry. It is also as socially progressive as famously lefty states like Kerala. Compared with the Indian average, more people can read, fewer babies die, and fewer folk are poor in Tamil Nadu. Read more of this post

After two years of relentless buying overseas, Japanese companies are taking a breather in mergers and acquisitions

Jun 11, 2013

Japanese M&A Takes a Step Back

By Isabella Steger

After two years of relentless buying overseas, Japanese companies are taking a breather in mergers and acquisitions.

Japanese outbound M&A has dropped 67% this year from a year earlier, according to data provider Dealogic, with just $11.9 billion in announced deal volume, the lowest level since 2009. In the same period in 2012, $35.3 billion in deals had been announced.

Deal sizes have also become noticeably smaller this year. In the same period last year, the biggest deal was the $5 billion acquisition by advertising giant Dentsu Inc. 4324.TO -2.38% of U.K.-based Aegis PLC, followed by a string of multibillion-dollar deals. Only two transactions announced this year by Japanese companies were valued at more than $1 billion—the biggest being the $2.6 billion acquisition by Orix Corp. 8591.TO -4.34% for Dutch asset manager Robeco Group ROBA.AE -1.02% from Rabobank in February. Read more of this post

Fast Retailing, operator of the casual clothing chain Uniqlo, has become the unlikely symbol of volatility in Japanese stocks

June 11, 2013, 2:23 p.m. ET

Fast Retailing: The Stock That Wags the Nikkei

By MAYUMI NEGISHI And BRADFORD FRISCHKORN

TOKYO—Fast Retailing Co., 9983.TO -1.44% operator of the casual clothing chain Uniqlo, has become the unlikely symbol of volatility in Japanese stocks, pulling with it the Nikkei Stock Average in its incandescent rise and sudden drop.

Shares in Fast Retailing, headed by Japan’s richest billionaire, Tadashi Yanai, more than doubled in 2013 to an all-time high of ¥44,400 before shedding 33% as Japanese equities markets underwent a severe correction stretching from late May to early June. Shares closed Tuesday at ¥31,250, down about 30%, and off 2.5% for the day, compared with a 1.45% loss for the overall Nikkei.

Neither the rise nor fall had much to do with the business performance of the maker of T-shirts and thermal underwear. The key was Fast Retailing’s 9.4% weighting on the Nikkei average—the highest of all 225 stocks in the index and more than the combined weighting of Japan’s four biggest companies by market capitalization. Read more of this post

S Korean women struggle in workforce; Only about 10 per cent of all managerial positions are held by women, and the gender pay gap is 39 per cent, making it the highest in the OECD

June 11, 2013 9:20 am

S Korean women struggle in workforce

By Song Jung-a

Mrs Kim has been thinking about quitting her job at a Seoul brokerage for a while, as she finds it hard to juggle her career and two pre-school children.

Like many South Korean office workers, Mrs Kim leaves home before 7am and returns after 7pm. While long work days are common in Korea – which has the longest working hours in the OECD – they are tough for mothers with young children.

“Sometimes days pass by without even saying ‘hi’ to my children when I get too busy,” says the 38-year-old. “Then I become more sceptical about continuing my work.”

She is not alone. Korean women have to overcome many obstacles at work after marriage and child birth. On top of the long hours, the lack of childcare and the male-dominated business culture force many to leave the workforce. Read more of this post