U.S. SEC says audit firms hinder accounting fraud probes at U.S.-listed Chinese firms

U.S. SEC says audit firms hinder accounting fraud probes

Mon, Jul 8 2013

By Sarah N. Lynch

WASHINGTON, July 8 (Reuters) – U.S. federal regulators tried to persuade a judge on Monday to sanction the Chinese arms of the world’s top five accounting firms, saying their refusal to hand over audit work papers has hindered investigations into fraud at U.S.-listed Chinese firms.

In testimony during a hearing at the U.S. Securities and Exchange Commission, an SEC official alleged that Deloitte Touche Tohmatsu LLP’s failure to turn over audit records has stalled a three-year-old probe into financial fraud at a large solar power company. Read more of this post

Has China President Xi’s graft crackdown run out of steam? Analysts say candid coverage of ‘consultations’ may indicate leadership lacks will to take action

Has Xi’s graft crackdown run out of steam?

Tuesday, 09 July, 2013, 12:00am

Cary Huang cary.huang@scmp.com

Analysts say candid coverage of ‘consultations’ may indicate leadership lacks will to take action

President Xi Jinping has consulted retired party leaders on his anti-corruption and austerity campaign, the Communist Party’s official newspaper reported on Monday – a move some analysts believe is a sign that the current leadership lacks the confidence or political will to ring the changes of real political reform.

People’s Daily yesterday gave a rare glimpse into behind-the-scenes details of the intensive politburo meetings on June 22-25. The meetings assessed the anti-corruption and frugality measures that Xi launched earlier this year. Read more of this post

Chinese Cash Squeeze Causes Auto Dealer Panic

Chinese Cash Squeeze Causes Auto Dealer Panic, Group Says

By Bloomberg News – Jul 9, 2013

China’s money-market squeeze, which sent interbank borrowing costs soaring last month, may prompt auto dealers to cut vehicle orders and slow expansion plans to conserve cash, according to an industry group.

“The cash crunch has led to psychological panic among dealers over access to financing,” Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said in a telephone interview from Beijing today. “So far, it hasn’t caused any real damage to the industry, but if the cash crunch continues, the impact will spread to auto dealers.” Read more of this post

Canada Loses Luster as Destination for Corrupt Chinese Cash; Canada became the first country to reach a deal with China to share forfeited assets in an effort to target international organized crime

July 6, 2013, 5:20 AM

Canada Loses Luster as Destination for Corrupt Chinese Cash

Chinese fugitives who touched down in Vancouver or Toronto with suitcases of illicit cash might find it harder to keep their fortunes.

Canada became the first country to reach a deal with China to share forfeited assets in an effort to target international organized crime, according to the official Xinhua News Agency. Once the pact is signed, one country will be able to get money back if a fugitive transfers illegal assets to the other, according to Xinhua.

“Canada is not, and will not be seen as, a safe haven for the proceeds of crime,” said Canadian Foreign Affairs Minister John Baird in a news release about the pact. Read more of this post

Koreans Find Breaking Up With Chaebol Hard to Do

Koreans Find Breaking Up With Chaebol Hard to Do

Everyone loves a good perp walk. For South Koreans, Lee Jay Hyun’s made great theater.

The sight of Lee — chairman of the conglomerate CJ Group and grandson of Samsung’s legendary founder — being led away by police last week on embezzlement and tax-evasion charges has been portrayed as an early victory for President Park Geun Hye’s five-month-old government. The arrest supposedly shows that Park is serious about reining in the chaebol — family-owned behemoths that continue to dominate Asia’s fourth-biggest economy and hog much of the nation’s wealth.

The reality, of course, is far more complicated. Past attempts to bring tycoons to heel have also been greeted with great fanfare, only to fizzle out. In April 2008, Lee’s uncle, Samsung Chairman Lee Kun Hee, resigned after being charged with criminal tax evasion. His ignominious fall was heralded as the end of the chaebol — until then-President Lee Myung Bak pardoned him eight months later, allowing Korea’s richest man to return to work. Read more of this post

LVMH Acquires Cashmere Clothier Loro Piana for $2.6 Billion

LVMH Acquires Cashmere Clothier Loro Piana for $2.6 Billion

LVMH Moet Hennessy Louis Vuitton SA (MC) agreed to pay 2 billion euros ($2.57 billion) for 80 percent of Italian cashmere clothier Loro Piana SpA, adding a high-quality textile producer to its burgeoning portfolio of luxury brands.

The transaction, which is subject to approval by competition authorities, values Quarona, Italy-based Loro Piana at 2.7 billion euros, LVMH said yesterday in a statement after the market closed. The family owners of the maker of $1,385 cashmere sweaters will retain a 20 percent stake in the business, Paris-based LVMH said.

“Loro Piana is quintessentially high-end while a lot of LVMH is mass luxury,” said Luca Solca, an analyst at Exane BNP Paribas in London, adding that he expects the market to favor the deal. With the purchase, “LVMH can acquire a trophy asset” and get growth opportunities for the future without stretching its balance sheet. Read more of this post

Food companies are experimenting more and more with exotic flavors and ethnic staples to appeal to a rising number of Latino and Asian immigrants

July 8, 2013

American Tastes Branch Out, and Food Makers Follow

By STEPHANIE STROM

Jarritos, the Mexican fruit-flavored soda in brilliant hues rarely found in nature, has entered the mainstream in California and will soon be in conventional groceries elsewhere.

NEW BERN, N.C. — If chicken producers could breed a bird with three legs, they would. These days, they can hardly keep up with the demand for thighs and other pieces of dark meat that had once been among the least desirable parts of a chicken. “Demographics are changing,” Bill Lovette, chief executive of Pilgrim’s Pride, a division of JBS S.A., told a group at the recent Chicken Media Summit here. “There is a growing population that prefers dark meat.” While the effect of changing demographics has been seen in voting patterns and employment trends, the growing influence on America’s palate of the influx of immigrants from Latin America and Asia has been more subtle, even as grocery shelves increasingly display products containing ingredients like lemon grass and sriracha peppers. Read more of this post

China faces a difficult credit bubble workout; It will take Beijing years to tackle excess credit and over-investment

July 8, 2013 11:50 am

Markets Insight: China faces a difficult credit bubble workout

By Gavyn Davies

It will take Beijing years to tackle excess credit and over-investment

The financial shock which has recently hit the emerging markets stemmed in part from a period of severe stress in the Chinese money markets, which has now been brought under control. But the challenges facing China are chronic, not acute. And since the country is much more than “first among equals” in the Brics, a prolonged slowdown in its economy would keep all emerging market assets under pressure for a long while. Read more of this post

Australia’s stock market regulator will increase scrutiny of analysts as part of a clampdown on selective briefings after questions were raised over coverage of Newcrest Mining

Australia Aims Spotlight on Disclosure After Newcrest Slump

Joe Schneider and David StringerJul 08, 2013 2:41 am ET

July 8 (Bloomberg) — Australia’s stock market regulator will increase scrutiny of analysts as part of a clampdown on selective briefings after questions were raised over coverage of Newcrest Mining Ltd. The Australian Securities & Investments Commission will make spot checks on company briefings and communications with analysts in the current half of the year, the regulator said yesterday in a statement. Newcrest shares fell 12 percent in the two days before the company announced a possible A$6 billion ($5.5 billion) writedown, raising concern of selective briefing. Australia requires companies to disclose all market-sensitive information to the Australian Stock Exchange. Newcrest has said it didn’t selectively brief analysts ahead of the announcement. Read more of this post

Why I Became a Chinese Shadow Banker

Why I Became a Chinese Shadow Banker

In the fall of 2010, as deputy head of China investment banking at UBS AG, I spoke to a group of wealthy investors in Beijing about the outlook for Chinese stocks. A rumpled, 50-something man from Hangzhou named Wang Zhigang pulled me aside afterward and asked for my advice about investing. Until then, he had made his money through curbside lending, not stocks. But, he lamented, his returns had dropped from more than 30 percent a year to a mere 23 percent. He worried about his personal fortune, which he had built up from nothing to almost 3 billion yuan (about $445 million back then).

He hardly needed my advice, I told him. “With your performance, even Ba-Fei-Te should farm out some money for you to manage!” I said, referring to Warren Buffett’s name in Chinese. Read more of this post

Shadow banking bolsters China Inc as Beijing tightens credit? “There’s the risk of quenching thirst by drinking poison”

Shadow banking bolsters China Inc as Beijing tightens credit

9:14pm EDT

By Samuel Shen and Michael Flaherty

SHANGHAI/HONG KONG (Reuters) – Wang Zhiyong, the founder of a Shanghai-based gift card company, tried twice to get a bank loan for his business and failed both times. So Wang turned to China’s vast network of alternative lenders, opting for a so called “curb side” loan. Such a loan is just one segment of the country’s shadow banking system, which includes pawn shops, credit guarantee firms, trust companies and other mechanisms as sources of funds for Chinese borrowers. “Banks never lend a hand to start-ups like us,” said Wang, 40. “They only go after big companies and state-owned firms.” The dearth of bank credit available to China’s millions of small to mid-sized companies is expected to tighten as authorities seek to rebalance the world’s second-biggest economy. Read more of this post

India Suspends ‘Buy India’ Provisions after just five months

Updated July 8, 2013, 5:55 p.m. ET

India Suspends ‘Buy India’ Provisions

R. JAI KRISHNA

NEW DELHI—India on Monday suspended its “Buy India” guidelines, which had come under fire, after just five months. The entire policy “will be revisited and reviewed,” according to a statement on the prime minister’s website. The guidelines, introduced in February, mandated that electronic goods purchased by the government contain a certain proportion of locally made hardware. “There have been some reservations,” India’s telecommunications secretary, M.F. Farooqui, said on the sidelines of an industry event in New Delhi. “We wanted to address that.” Global investors had requested that India reconsider the policy, said Guarav Verma, head of the New York office for the U.S.-India Business Council. International companies had told the government that the policy might prompt them to set up operations elsewhere, he added. Read more of this post

Fracking Firms Face New Crop of Competitors; Schlumberger, Halliburton, Baker Hughes Struggle to Distinguish Themselves as Smaller Rivals Crowd the Marketplace

July 8, 2013, 7:31 p.m. ET

Fracking Firms Face New Crop of Competitors

Schlumberger, Halliburton, Baker Hughes Struggle to Distinguish Themselves as Smaller Rivals Crowd the Marketplace

ALISON SIDER

So many companies have jumped into the hydraulic-fracturing business that the price of performing the key part of the oil- and gas-drilling technique has plunged in recent years, forcing fracking’s pioneers to play up new technologies to stand out. Schlumberger Ltd., SLB +0.94% Halliburton Co. HAL +0.48% and BJ Services, a company that is now a subsidiary of Baker Hughes Inc., BHI +1.25% once did nearly all the hydraulic-fracturing work in the U.S., helping energy companies unlock previously unreachable oil and natural gas in shale formations and ushering in a boom in domestic energy production.

Read more of this post

Central Bankers Hone Tools to Pop Bubbles

July 8, 2013, 11:04 p.m. ET

Central Bankers Hone Tools to Pop Bubbles

DAVID WESSEL and ALEX FRANGOS

In Seoul’s upscale Gangnam neighborhood, made famous by pop star Psy’s viral music video, government curbs on real-estate lending froze a market in which home prices had been rising as fast as 25% a year. In Toronto, housing prices reversed their rapid rise and fell for five months after the government changed rules to effectively increase monthly payments on new loans. But in Tel Aviv, home prices kept right on climbing—up 11% over the past year for a three-bedroom apartment—even after the central bank boosted minimum down payments and made mortgage lending less attractive to banks.

Central bankers everywhere else are watching these experiments closely, among them Ben Bernanke, chairman of the U.S. Federal Reserve. He and his counterparts around the world, seared by the worst financial crisis in 75 years, are searching for ways to halt borrowing binges before they morph into bubbles, and to push lenders to shore up their defenses before the next crisis arrives. Read more of this post

LVMH’s Bernard Arnault has collected scores of brands but his quest for Hermès has ignited a fierce handbag war

July 8, 2013 6:55 pm

Luxury: Object of desire

By Scheherazade Daneshkhu

LVMH’s Bernard Arnault has collected scores of brands but his quest for Hermès has ignited a fierce handbag war

Bernard Arnault, the billionaire head of French luxury goods group LVMH, once dismissed a question about a rival group, saying: “As far as competitors, there are two I admire: Chanel and Hermès.” That was soon after Mr Arnault’s tenacious “handbag war” for control of Gucci, the Italian leather goods maker, ended in rare defeat at the hands of arch-rival François Pinault’s PPR group (now known as Kering) more than a decade ago. Now Mr Arnault is involved in a second handbag war – this time for Hermès – regarded as the crème de la crème of luxury goods companies for the quality and craftsmanship of its bags and silk scarves and ties. Read more of this post

Hedge funds lose 2-second edge on econ report; Reuters agreed to end its practice of giving high-frequency traders an early look at potentially market-moving consumer survey results that could mean millions of dollars in profits

Hedge funds lose 2-second edge on econ report

Kevin McCoy, USA TODAY11:45 a.m. EDT July 8, 2013

STORY HIGHLIGHTS

Results from consumer surveys will no longer go early to high-frequency traders

High-speed computers are able to make trades within the two-second gap

Reports also not being distributed early to news organizations

Financial information giant Thomson Reuters Monday agreed to end its practice of giving high-frequency traders an early look at potentially market-moving consumer survey results that could mean millions of dollars in profits. Changing the policy amid an investigation by New York Attorney General Eric Schneiderman, the company said it would no longer provide early access of the University of Michigan consumer survey findings issued every other Friday at 9:55 a.m ET. Financial information giant Thomson Reuters Monday agreed to end its practice of giving high-frequency traders an early look at potentially market-moving consumer survey results that could mean millions of dollars in profits. Read more of this post