With Decentralized Power Comes Graft

With Decentralized Power Comes Graft

By Yeremia Sukoyo & Usmin on 9:08 am July 22, 2013.

Riau Governor Rusli Zainal, center, became the latest of nearly 300 regional heads to be arrested for graft since 1999. (JG Photo/Marcel Kataren)

Jakarta/Bengkulu. The advent of regional autonomy more than a decade ago has given rise to highly corrupt local cabals who have misappropriated Rp 2.2 trillion ($218.5 million) in public funds since 2008, watchdogs say.

Uchok Sky Khadafi, the director of investigations and advocacy at the Indonesian Forum for Budget Transparency (Fitra), said at a discussion over the weekend that the figure for the state losses was based on a report published by the Supreme Audit Agency (BPK) about regional funding from 2008 to 2012. Read more of this post

In Brazil, Dilma Rousseff’s woes prompt talk of Lula comeback

July 21, 2013 12:59 pm

In Brazil, Dilma Rousseff’s woes prompt talk of Lula comeback

By Joe Leahy in São Paulo

The interaction was classic Lula, as Brazil’s former president Luiz Inácio Lula da Silva is known.

Discussing mass protests that swept Brazil last month with university students in his working-class neighbourhood of São Paulo, Mr Lula da Silva was all rough charm, casually peppering his discourse with expletives uncommon for a politician, in public at least. Read more of this post

Investors, Analysts See End of Commodity ‘Supercycle’; Popular Bet in Global Financial Markets—That Prices Would Keep Rising—Is Unraveling

July 21, 2013, 3:42 p.m. ET

Investors, Analysts See End of Commodity ‘Supercycle’

Popular Bet in Global Financial Markets—That Prices Would Keep Rising—Is Unraveling

CHRISTIAN BERTHELSEN

Investors are suffering mounting losses as a decadelong rise in commodity prices unravels amid slowing emerging-markets economies, rising supplies of oil and metals and the eventual end of central-bank stimulus policies that propped up prices for raw materials.

The sharp reversal in the prices of commodities, ranging from gold to copper and aluminum, is undermining one of the most popular bets in global financial markets: that prices would keep rising, fueled by strong growth in China and other developing economies and the relative scarcity of many raw materials. Read more of this post

The China disconnect: analysts lose plot on financial stocks

The China disconnect: analysts lose plot on financial stocks

5:45pm EDT

By Nishant Kumar

HONG KONG (Reuters) – Seventy percent of analysts covering Chinese financial stocks rate them a buy, the highest among the world’s top 10 markets for such shares. Yet its financials are the worst performing this year in the group, Thomson Reuters StarMine data shows.

That disconnect has been on display in recent weeks, with Chinese financial stocks getting hammered on fears about a credit crunch and the country’s slowing economy. While the majority of analysts remain positive, mutual funds have dumped shares and short sellers have moved in. Read more of this post

Treasuries Not Safe Enough as Foreign Buying Slowest Since 2006

Treasuries Not Safe Enough as Foreign Buying Slowest Since 2006

Foreign investors, the bulwark of the U.S. government bond market as it more than doubled in size during the financial crisis, are adding Treasuries at the slowest pace since 2006 amid the worst rout in four years.

Holdings by non-U.S. investors rose 1.9 percent through May, down from 5.2 percent a year ago data last week show, as foreigners owned less than 50 percent of Treasuries outstanding for the first time since March 2012. Overseas central banks cut the amount of bonds held for them by the Federal Reserve during the second quarter. The Bloomberg U.S. Treasury Bond Index fell 2.4 percent, the most since 2009, after Chairman Ben S. Bernanke said he might slow asset purchases as the economy improves. Read more of this post

Tycoons Usurped by SOEs in China IPOs as Returns Tumble

Tycoons Usurped by SOEs in China IPOs as Returns Tumble

In December, China Machinery Engineering Corp., a builder of power stations, went public in Hong Kong thanks to five Chinese government-owned companies that bought almost a third of the $575 million offering. The stock has since fallen 24 percent.

China Machinery is among a growing number of state-owned enterprises forced to rely on so-called cornerstone investments by other state firms to get initial public offerings done, as wealthy individuals like Li Ka-shing stopped investing. The results haven’t been stellar. Read more of this post

China’s move to loosen interest-rate controls is insufficient to cut corporate borrowing costs in coming months as the economy expands at the slowest pace since 1990

PBOC’s Rate Rules No Company Salve to Barclays: China Overnight

China’s move to loosen interest-rate controls is insufficient to cut corporate borrowing costs in coming months as the economy expands at the slowest pace since 1990, according to Barclays Plc and UBS AG.

The People’s Bank of China scrapped the floor on the rates banks can charge customers on July 19 while keeping a cap on deposit rates. Yuan forwards rose and Chinese stocks trading in the U.S. posted the first back-to-back weekly gain since May as the change signaled policy makers’ commitment to market reforms. Read more of this post

Steel Goal Fades as $12 Billion Projects Dumped in India

Steel Goal Fades as $12 Billion Projects Dumped: Corporate India

ArcelorMittal (MT) and Posco’s decisions to scrap $12 billion of proposed steel projects in India and delays in building plants by Tata Steel Ltd. (TATA) and its peers will probably cut the nation’s 2020 capacity target by a quarter.

India may add about 50 million metric tons in the next eight years, half of an earlier plan, taking total capacity to 150 million tons, according to the average estimate of six analysts, government officials and company executives in a Bloomberg survey. Slowing demand, land acquisition delays, rising funding costs and difficulties in getting iron ore mining permits are diminishing the viability of the projects, said A.S. Firoz, the steel ministry’s chief economist. Read more of this post

Beijing Airport Bomber Highlights Threat to Social Stability

Beijing Airport Bomber Highlights Threat to Social Stability

A man who detonated a home-made bomb at Beijing Capital International Airport to gain attention for his grievances highlights the growing threat to social stability in China from frustration at perceived injustice.

The man, identified as Ji Zhongxing, a 34-year-old from Heze city in eastern Shandong province who is confined to a wheelchair, exploded the device outside the exit to the arrival hall of Terminal 3 on July 20, according to a report from the official Xinhua News Agency. Ji, who sustained injuries to his arm, was the only person hurt in the explosion, it said. Read more of this post

China Shipyards Squeezed by Low Down Payments Amid Credit Crunch

China Shipyards Squeezed by Low Down Payments Amid Credit Crunch

During the 2007 shipping boom, China’s shipyards charged down payments of as much as 60 percent of a vessel’s value. Now, shipbuilders are cutting those payments to as little as 2 percent, giving an advantage to state-owned companies that can tap the government’s cash.

With flagging demand pushing shipyards to compete by cutting down payments and China taking measures to rein in lending, the nation’s privately owned yards are getting squeezed by state-owned rivals that enjoy greater access to financing. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the largest shipbuilder outside state control by order book, said this month it’s seeking government support after failing to win any new vessel orders this year. Read more of this post

Keppel Seeks New Non-Rig Orders for Brazil Yards as competition from China pushes down rig prices

Keppel Seeks New Non-Rig Orders for Brazil Yards: Southeast Asia

Keppel Corp. (KEP), the world’s largest oil-rig maker, wants to set aside capacity to build offshore production and support vessels in Brazil as competition from China pushes down rig prices.

Keppel wants to expand its business of building offshore production and support vessels in the country, Chief Executive Officer Choo Chiau Beng said in an interview on July 19. The Singapore company, which is building a second yard in Brazil, also plans to offer more repair and conversion work. Read more of this post

China’s decision to liberalize bank lending rates has raised suspicions that it reflects official concerns over possible loan defaults and is aimed at helping out heavily indebted state firms and local governments

China’s rate reform may serve to shield indebted state firms

4:27am EDT

By Wayne Arnold

HONG KONG (Reuters) – China’s decision last week to liberalize bank lending rates, though widely applauded, has raised suspicions that it reflects official concerns over possible loan defaults and is aimed at helping out heavily indebted state firms and local governments. China’s central bank announced on Friday that banks could now lend at whatever rate they liked, enabling them to compete for new borrowers with cheaper credit at a time when the world’s second-largest economy is slowing markedly. But some investors said the move was symbolic and likely represented, in the short term at least, relief for heavily indebted state-owned enterprises (SOEs), big private-sector employers and local government financing arms. “I’m a little skeptical of the appraisals that this is a big, big reform move,” said Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management in New York and formerly a professor at Beijing’s Tsinghua University. “My concern in the short run is that what will happen is that a bunch of local government financing vehicles will get lower interest rates,” he added. Read more of this post

Poor quality and bad management: India ignored warnings in free meal program

Poor quality and bad management: India ignored warnings in free meal program

7:18am EDT

By Annie Banerji and Anurag Kotoky

GANDAMAN, India/NEW DELHI (Reuters) – The village school in India where 23 children died by poisoning last week had been providing lunch under a government-sponsored scheme without checks or monitoring by local officials to see if the food was stored carefully or cooked properly. Although it is the first such disaster in the “midday meal” project that feeds about 120 million children every day across India, a Reuters review of audit reports and research papers shows officials have long ignored warnings of the lack of oversight and accountability in the program. “You only come and do checks when you get complaints or when there are serious cases,” said Rudranarayan Ram, the local education administrator for the village of Gandaman in Bihar state, where the children died. “This was the first time.” Read more of this post