The Korean government will bring criminal charges against CEOs of large firms that force suppliers and sub-contractors to lower their product prices

2013-06-13

CEOs to be punished for ‘forced price cuts’

By Yi Whan-woo

The government will bring criminal charges against CEOs of large firms that force suppliers and sub-contractors to lower their product prices.

The Fair Trade Commission (FTC), the country’s anti-trust watchdog said on Friday that those convicted will face a maximum fine equal to three times the financial damage suffered by the small businesses. Read more of this post

“The Market Would Have Collapsed” Had The PBOC Drained: Chinese Liquidity Shortage Hits All Time High

“The Market Would Have Collapsed” Had The PBOC Drained: Chinese Liquidity Shortage Hits All Time High

Tyler Durden on 06/13/2013 09:41 -0400

Those who have been following our coverage of the bipolar Chinese liquidity situation (most recently here and here) are well aware of the unique position the world’s fastest (if only on paper) growing economy finds itself in: on one hand, it is the target of massive external hot money flows from both the Fed and the BOJ, which are pushing select inflation in the country higher, manifesting itself best in the real-estate market now higher for 12 consecutive months. On the other hand, the local banking system is in such dire need of liquidity, that not only have various short-term SHIBORs soared to multi-year highs but as Market News reported last week, China Everbright Bank failed to repay 6b yuan ($977m) borrowed from Industrial Bank on time yesterday because of tight liquidity, leading to “chain effect” borrowing in the market overnight and almost ushering in the first bank failure in China. The unprecedented liquidity shortage in China is seen best on the overnight SHIBOR chart below which just hit an all time high. In a nutshell there is zero free liquidity in the system. Which all culminated to last night’s surprising move by the PBOC to step aside from draining funds from the financial system for the first time in three months as even the PBOC now realizes that in the battle against Bernanke and Kuroda’s cash it is about to lose the fight. Read more of this post

The houses built on China’s ‘poisoned’ land; Huge areas of contaminated land in Chinese cities like Beijing are being developed into residential districts. But the residents of these developments have no idea

The houses built on China’s ‘poisoned’ land

Gao Shengke Wang Kai

05.06.2013

Huge areas of contaminated land in Chinese cities like Beijing are being developed into residential districts. But the residents of these developments have no idea.

Gao Shengke and Wang Kai have won the prize for Best Investigation atchinadialogue’s and The Guardian’s China Environmental Press Awards – 2013 for their investigation into contaminated earth in Chinese cities. Here is the first of their three-part series of reports.

The excavators are rumbling and dust swirls all about at the second phase of the Kangquan New City construction project in Guanzhuang village, Chaoyang District, outside Beijing’s east fifth ring road. A 20-metre deep pit has been dug on the site. A foul stench rises from the pile of earth that has been removed. Until now, few people knew about the secret that was buried here. This plot of land was previously the site of a factory owned by the Ministry of Railways that made anti-corrosive railway sleepers. The plant was in operation for more than 30 years; many kinds of organic pollutants continuously seeped into the topsoil, deeper soil layers, and into the groundwater. Some seven or eight years ago, the factory was relocated and this plot of ground was left unused. In January 2011, the city administration decided to convert the land into a development for affordable housing and it was taken over by the Residential Construction Service Centre for Civil Servants to build low-cost housing for civil servants from all ministries. Read more of this post

Not Just Solar: The China Car Industry Capacity Problem

June 12, 2013, 6:16 PM

Not Just Solar: The China Car Industry Capacity Problem

By Michael Dunne

Where Chinese solar panels lead, can made-in-China cars be far behind?

China has the capacity to build twice as many solar panels as the world needs–so much so that the Middle Kingdom, according to European officials, has been dumping them overseas. So desperate is the drive to unload extra stock that the Chinese are selling at prices 88% below market value, according to EU trade officials. The EU approved punitive tariffs last week. We’re bound to see a similar, if not quite as extreme, story in cars. By 2018 Chinese and global auto makers, with new factories scattered across China, will be equipped to make more than 30 million cars a year. To put that number in perspective, consider that 30 million cars amount to twice the size of the entire U.S. market. Read more of this post

Japan’s leading appliance retailer getting knocked out of China

Japan’s leading appliance retailer getting knocked out of China

June 12, 2013

By TOKUHIKO SAITO/ Correspondent

NANJING–Tensions over the Senkaku Islands, “obstructive behavior” by rival companies and fierce price wars forced Japan’s leading electric appliance retailer to leave Nanjing only a year after opening a retail shop there.

Yamada Denki Co. had planned to use its store in the southern Chinese city as a starting point to advance into nearby Shanghai, one of the country’s largest cities. Read more of this post

China’s proposed ban on the import of low-grade coal is likely to hit small Indonesian producers hard; Indonesia is the world’s biggest exporter of coal for power stations and as much as a third of its exports to China could be blocked if the plan is implemented as currently suggested

June 12, 2013 2:04 pm

Small Indonesian coal miners to be hit by China import ban

By Ben Bland in Jakarta

China’s proposed ban on the import of low-grade coal is likely to hit small Indonesian producers hard but most large miners will only suffer a minimal impact, according to analysts and industry executives.

Indonesia is the world’s biggest exporter of coal for power stations and as much as a third of its exports to China could be blocked if the plan is implemented as currently suggested. Read more of this post

Private investors to be forced to pay for Japan’s bank failures

Last updated: June 12, 2013 10:52 am

Private investors to be forced to pay for Japan’s bank failures

By Ben McLannahan in Tokyo

Japan is to force losses on investors in troubled banks, brokers and insurers, leading efforts by regulators around the world to lighten the burden on taxpayers.

Under new legislation cleared by Japan’s parliament on Tuesday, holders of new types of preferred shares or subordinated bonds will face losses, or mandatory conversion to common stock, if the Financial Services Agency deems the issuer insolvent.

The FSA will gain its powers to trigger so-called “bail-in” clauses on these instruments – which are compliant with new Basel III rules on bank capital – as early as next spring, assuming that the bill becomes law. Read more of this post

The day the central banks lost control

June 12, 2013 4:13 pm

Markets Insight: Central bank loss of control leads to EM tumble

By Ralph Atkins in London

Fears of stimulus withdrawal trigger rising bond yields but central banks could change tactics, Ralph Atkins

Tear gas and riot police fill Istanbul’s Taksim Square. Investors fret about the growth outlook in India and China. But these were not the main factors behindsharp falls this week in emerging economies’ bond prices, and corresponding rises in yields. Read more of this post

Brainpower alone cannot save India’s growth model; The problems at Infosys raise questions about its role at a national level

June 12, 2013 4:59 pm

Brainpower alone cannot save India’s growth model

By David Pilling

The problems at Infosys raise questions about its role at a national level

For Infosys, a pioneer of India’s outsourcing revolution, the world used to be flat. Now it is looking more pear-shaped.

It was Nandan Nilekani, a co-founder of Infosys, who first put the idea in Thomas Friedman’s head that the world was flattening. Mr Friedman, who was wowed by the oasis of calm and sophistication he found at the company’s shiny Bangalore campus, recalls Mr Nilekani telling him: “Tom, the playing field is being levelled.”

That led him to think about how technology was rendering distance and borders increasingly irrelevant, and accelerating the process by which hundreds of millions of people in emerging countries were pressing into the global workforce. Read more of this post

Nostalgia Swells for Mandela Era; As Markets Fall, South Africans Lament Nation’s Dimmed Prospects

Updated June 12, 2013, 7:46 p.m. ET

Nostalgia Swells for Mandela Era

As Markets Fall, South Africans Lament Nation’s Dimmed Prospects; Statesman Responds to Treatment

By PATRICK MCGROARTY, DEVON MAYLIE and PETER WONACOTT

JOHANNESBURG—With their former president in the hospital and their nation’s economic promise unfulfilled, South Africans are suffering from a powerful moment of Nelson Mandela nostalgia.

On Wednesday, President Jacob Zuma elicited rare across-the-aisle cheers from parliament when he said the 94-year-old statesman was responding to treatment after five days in a Pretoria hospital for a lung infection. “We are very happy with the progress that he is now making following a difficult few days,” Mr. Zuma said in Cape Town.

Mr. Zuma’s comments lightened what has been a hard week for South Africa. On Tuesday—amid both the latest news of Mr. Mandela’s failing health and declines in emerging-market assets across the globe—South Africa’s rand fell to a four-year low against the dollar. The Johannesburg Stock Exchange posted its steepest one-day drop in 20 months. Read more of this post

Cosco Highlights Doubts Over China Deals; why investors in Hong Kong-listed units of Chinese state giants are sometimes concerned that the interests of the parent companies come first in asset sales

Jun 12, 2013

Cosco Highlights Doubts Over China Deals

By Joanne Chiu

Cosco Pacific Ltd. 1199.HK -3.49%’s plan to sell its stake in a container maker back to its parent sheds light on why investors in Hong Kong-listed units of Chinese state giants are sometimes concerned that the interests of the parent companies come first in asset sales.

On Thursday, shareholders of the port operator will vote on a plan to sell its 21.8% stake in China International Marine Containers 000039.SZ -3.29%(Group) Co. to its ultimate parent: state-controlled China Ocean Shipping (Group) Co., or Cosco Group. CIMC has been hurt by the rout in trade since the financial crisis, but is still the world’s largest container maker and accounts for almost a fifth of Hong Kong-listed Cosco Pacific’s earnings. Read more of this post

Bank Indonesia raised its benchmark interest rate by a quarter of a percentage point to 6%, the second time in two days the central bank has surprised market participants

June 13, 2013, 3:36 a.m. ET

Bank Indonesia Raises Benchmark Rate Again

By FARIDA HUSNA And I MADE SENTANA

JAKARTA—Bank Indonesia raised its benchmark interest rate by a quarter of a percentage point to 6%, as it works to rein in inflation expectations and support a weakening rupiah following recent outflows.

It is the second time in two days the central bank has surprised market participants as it is widely perceived to be dovish, after having kept the benchmark rate at a historic low since February 2012.

Late Tuesday, the bank raised its overnight deposit rate by 0.25 percentage point to 4.25%, effective Wednesday, to improve sentiment toward the rupiah. The currency has fallen against the U.S. dollar to its lowest since 2009 as foreign investors pulled money from emerging markets, and as domestic investment decisions are influenced by the prospect of slowing growth. Read more of this post

Debt Makes Comeback In Buyouts

Updated June 12, 2013, 6:45 p.m. ET

Debt Makes Comeback In Buyouts

By MATT WIRZ

Shareholders in BMC Software Inc. BMC -0.18% will receive $6.9 billion to sell the corporate-software developer to a group of private-equity firms. But the buyers, led by Bain Capital LLC and Golden Gate Capital, only intend to pay $1.25 billion in cash out of their own pockets. The rest will come from debt raised by BMC to finance its takeover.

The little-noticed acquisition is another milestone in the return of cheap debt and higher-risk deals to Wall Street: The cash put down by BMC’s private-equity buyers is the lowest as a percentage of the purchase price of any buyout with loans exceeding $500 million since 2008, according to data-provider Thomson Reuters LPC. Read more of this post

Madoff Evoked in N.Z. as Ponzi Scheme Loses $317 Million

Madoff Evoked in N.Z. as Ponzi Scheme Loses $317 Million

New Zealand charged a 63-year-old financial adviser with running the biggest Ponzi scheme ever alleged in the South Pacific nation.

The Serious Fraud Office and Financial Markets Authority allege David Ross defrauded investors of about NZ$400 million ($317 million) through his closely-held Ross Asset Management Ltd., which collapsed in November last year. He will face four charges of false accounting and one of theft in the Wellington District Court, the agencies said in a joint statement today.

“It’s yet to be seen if he’s New Zealand’s Bernie Madoff, but the amounts were high by New Zealand standards and hurt a lot of people,” said Wellington barrister Kevin Sullivan. Read more of this post

Hong Kong Chief Executive Pledges Property Curbs to Stay; “This is not the time to relent.”

Hong Kong Chief Executive Pledges Property Curbs to Stay

Hong Kong, the world’s most expensive home market, will not ease its real-estate curbs until there’s a steady supply of new properties as the government seeks to address concerns that it favors developers.

Earlier actions have brought down prices and rents, and the government can do more if needed, Chief Executive Leung Chun-ying, 58, said in an interview in New York.

“There’s a voice out there in the Hong Kong community that the government should ease off,” the former property surveyor said yesterday. “This is not the time to relent.” Read more of this post

Emerging-Market Bond Anxieties Surging by Most Since 2008

Emerging-Market Bond Anxieties Surging by Most Since 2008

The biggest drop in perceived creditworthiness for emerging-market borrowers since the credit crisis is deepening as speculation intensifies that central banks will scale back record stimulus.

Prices on the Markit CDX Emerging Markets index, a credit-default swaps benchmark for debtor nations from Latin America to the Middle East and Asia, have tumbled 4 cents in the two weeks through yesterday to 107 cents on the dollar. The decline is the biggest since the failure of Lehman Brothers Holdings Inc. reverberated across financial markets and caused the index to plunge 6.7 cents in the period ended Nov. 18, 2008. Read more of this post

Indonesia’s Delayed Fuel Decision Haunts Rupiah: Southeast Asia

Indonesia’s Delayed Fuel Decision Haunts Rupiah: Southeast Asia

Indonesia’s government needs to rein in fuel subsidies that have spurred a current-account deficit to support efforts by the central bank to stabilize the weakening rupiah, economists say.

Rupiah forwards rose the most in a year yesterday after Bank Indonesia increased the rate it pays lenders on overnight deposits and said it was ready to buy government debt in the secondary market to maintain monetary stability. Still, the spot rate weakened 0.3 percent to 9,860 a dollar, the most since May 16, according to prices from local banks compiled by Bloomberg. Read more of this post