Metals pricing under threat from warehousing rule change; reduced dominance of warehousing companies in physical metals markets could lead to significant price drops for some metals

July 4, 2013 5:47 pm

Metals pricing under threat from warehousing rule change

By Jack Farchy

Warehousing sounds dull. But investors should pay attention: it may be about to reshape the global metals markets. The buzz among metals traders this week was not about Chinese growth or US monetary policy, but a proposed change in warehousing rules by the London Metal Exchange. The move, coming just six months after the LME was acquired by Hong Kong Exchanges & Clearing for £1.4bn, aims to reduce long queues to remove metal from some warehouses in the LME’s global network. Should the LME push ahead with its proposal, traders and analysts say, the impact on the global metals markets could be dramatic, reducing the dominance of warehousing companies in physical metals markets and possibly leading to significant price drops for some metals. Read more of this post

Hoping to bring banking services to millions of people in small towns and villages, India is turning to industrial companies to set up banks, a strategy that has had bad consequences in other countries

July 4, 2013, 7:22 p.m. ET

India’s Risky Step to Boost Banks

NUPUR ACHARYA And SHEFALI ANAND

MUMBAI—Hoping to bring banking services to millions of people in small towns and villages, India is turning to industrial companies to set up banks, a strategy that has had bad consequences in other countries. Regulators are taking this risk because only one in two Indians have bank accounts in India, and one in seven have access to bank credit, according to CrisilLtd., 500092.BY +0.14% a research unit of Standard & Poor’s. State-run banks, which dominate India’s banking system, are struggling to expand due to shortage of capital. Meanwhile, foreign banks have been stymied, because all of them together are allowed to open only 12 branches a year. Read more of this post

Brazilians Foil a Bus Fare Hike, but Commuting’s Still Costly

Brazilians Foil a Bus Fare Hike, but Commuting’s Still Costly

By Joshua Goodman on July 03, 2013

The street protests that rocked São Paulo and Rio de Janeiro achieved their initial modest goal: In mid-June authorities revoked a 9¢ increase in bus fares that had gone into effect in both cities. Yet even without the fare hike, Brazilians devote a bigger share of their paychecks to mass transit than most of their urban counterparts around the world. Read more of this post

What Abe Can Learn From Japan Inc.’s Mavericks

What Abe Can Learn From Japan Inc.’s Mavericks

There’s no shortage of pundits eager to tell Shinzo Abe how to shake up Japan’s economy. Instead of looking to academics for advice, though, the prime minister should get into the trenches with some of the nation’s more unconventional corporate heads.

Abe talks, for example, about wanting to make Japanese companies worldlier. For pointers, he should study what Tadashi Yanai has already accomplished at Fast Retailing Co., home of the Uniqlo brand. Yanai has become Japan’s richest man — and the only Japanese on Time magazine’s latest 100 most-influential list — largely because of his success at expanding abroad. Read more of this post

Chavez’s 70% Gold Bet Unravels as Reserves Plunge

Chavez’s 70% Gold Bet Unravels as Reserves Plunge: Andes Credit

The bet on gold that former Venezuelan President Hugo Chavez made in the final years of his life is collapsing at the wrong time for his country.

Chavez, who argued that Venezuela should move away from the “dictatorship of the dollar,” stockpiled more than 70 percent of Venezuela’s foreign reserves in gold by 2012, the highest percentage among all emerging-market countries and more than 50 times that held by neighbors Colombia and Brazil, according to the World Gold Council. Read more of this post

Forget Handouts—India Is Starving for Growth; New Delhi’s decision to increase handouts of subsidized food doesn’t bode well for India’s economy

July 4, 2013, 7:28 a.m. ET

Forget Handouts—India Is Starving for Growth

New Delhi’s decision to increase handouts of subsidized food doesn’t bode well for India’s economy.

ABHEEK BHATTACHARYA

New Delhi’s decision to increase handouts of subsidized food doesn’t bode well for India’s economy. The bigger problem, though, is that India is starving for growth. The National Food Security Bill, passed by the government Wednesday, guarantees cheap grain to 800 million Indians. But there’s no such thing as a free lunch. The new program will cost at least $4 billion a year, according to the government, on top of the roughly $18 billion a year India already spends on food subsidies. Critics say the move is a politically motivated handout meant to garner popular support ahead of next year’s general election, and does nothing to fix India’s woeful food supply infrastructure. Read more of this post

Burned Bond Buyers Re-Evaluate Africa

July 4, 2013, 4:20 p.m. ET

Burned Bond Buyers Re-Evaluate Africa

SERENA RUFFONI And PATRICK MCGROARTY

Just weeks ago, Africa was a hot destination for yield-hungry bond investors. It was a bet that burned many money managers. Prices of government bonds around the world have declined, pushing yields higher, as investors come to terms with the possibility the Federal Reserve could scale back its economic stimulus within months. A flurry of bonds issued by nations in sub-Saharan Africa since September have taken some of the biggest hits, an unpleasant wake-up call for investors who dove into these “frontier” markets in search of fat yields. The selloff has spurred investors to take a closer look at these countries’ finances and re-evaluate the risks that come with investing in Africa. As exuberance turns to trepidation, doubts have surfaced about whether countries with plans to tap international markets this year will proceed. Flagging investor interest has already raised borrowing costs for Nigeria, which sold $1 billion worth of bonds to global money managers Tuesday. Read more of this post

Crocs Wants You to Forget About Its Clogs; Crocs is targeting foreign markets. Half of the 90 stores it will open in 2013 will be in Asia

Crocs Wants You to Forget About Its Clogs

By Matt Townsend on July 03, 2013

http://www.businessweek.com/articles/2013-07-03/crocs-wants-you-to-forget-about-its-clogs

Search online for “hate crocs” and you’ll quickly see why Crocs (CROX) is eager to downplay the clunky clogs it unleashed on an unsuspecting world 11 years ago. Bloggers have denounced the rubbery footwear as ugly and an escalator tripping hazard. On YouTube, a woman cuts a yellow pair into pieces and then feeds them to a blender.

The clogs still generate 47 percent of the company’s sales; lots of people like them, especially medical professionals and kids. Yet to hit Chief Executive Officer John McCarvel’s target of doubling sales in five years, the company has to woo consumers with its other footwear. That’s why Crocs-the-company is telling the world all about its foam-bottomed wedges, sneakers, and leopard-print ballet flats—and putting Crocs-the-clogs in the back of stores the way grocers do with milk. “If someone wants them,” McCarvel says, “make them walk through all the new stuff first.” Read more of this post

The Eurobond’s 50th birthday has lessons for governments about how not to regulate finance

The Eurobond’s 50th birthday has lessons for governments about how not to regulate finance

Jul 6th 2013 |From the print edition

FIFTY years ago this week Autostrade, an Italian motorway operator, issued a $15m bond. The first Eurobond was less a piece of clever financial engineering than an elaborate tax dodge. The idea dreamed up by London bankers was to capture some of the dollars that were sloshing around Europe (hence the name Eurodollars) because of America’s Regulation Q, which limited the interest rates paid on deposit accounts. Autostrade was chosen as the first issuer because it had the right to pay interest (in the form of coupons) without deducting Italian tax. The bond was issued in Schiphol airport in Amsterdam to avoid British stamp duty. The coupons were payable in Luxembourg to avoid British income tax. Read more of this post

Mumbai’s hungry high rollers; The fight to fill the stomachs of Mumbai’s rich

Mumbai’s hungry high rollers; The fight to fill the stomachs of Mumbai’s rich

Jul 6th 2013 | MUMBAI |From the print edition

IF YOUR thing is an infinite supply of langoustine and Veuve Clicquot served, to a piercing guitar solo, by a waiter who probably lives in a slum, then head to Mumbai. India’s financial capital has developed a mania for Sunday brunch. The magic formula is a gluttonous amount of food and drink for $40-80 a head, and a background of classic rock. Luxury hotels and restaurants each have their own style and their own clientele. In the Marriott Hotel in Juhu, a filmi suburb where actors live, bandannas and boob-jobs are on display. At the new Shangri-La, bankers boast about how much face-time they get with Mukesh Ambani, an upholstered tycoon, while loading up on tuna nigiri-zushi. The age of the brunch reflects rising numbers of wealthy folk. “People used to entertain at home, but things have become less conservative—money does wonders,” says a catering manager at the Taj Mahal Palace Hotel, standing by a cheese the size of a car wheel. It also reflects a dearth of things for the well-to-do to do. Mumbai has little green space, few shops and dire transport. The rich would not be seen dead on the foreshore promenades where anglers cast for mullet on the weekends when the council does not release sewage into the sea, or on the beaches where whizzing cricket balls, rubbish and tens of thousands of paddlers vie for space. Read more of this post

P&G Invokes Bollywood in India Toothpaste Battle

P&G Invokes Bollywood in India Toothpaste Battle

Procter & Gamble Co. (PG) is betting on one of Bollywood’s most popular actors to help it break the dominance of Colgate Palmolive Co. (CL) and Hindustan Unilever Ltd., which together control 73 percent of India’s toothpaste market.

The world’s biggest maker of consumer products, which started selling its Oral-B Pro-health toothpaste in mainly urban centers in India in June, is using Hindi-movie actor Madhuri Dixit-Nene to endorse the brand. By enlisting mother-of-two Dixit-Nene, 46, P&G is targeting all age groups, said Harish Bijoor, who advises companies on brands. Read more of this post

China, Australia and a hard landing

China, Australia and a hard landing

Neil Hume | Jul 04 03:53 | Comment | Share

Kevin Rudd 2.0 has been quick to highlight the dangers posed by slowing Chinese growth since he was returned as Australia’s prime minister. For example: When I look at the challenges of rest of this year, and certainly for the upcoming three-year term, the huge outstanding economic challenge for us is the end of the China resources boom. This will have a dramatic effect on our terms of trade, a dramatic effect on living standards in the country, a dramatic effect also potentially on unemployment unless we have an effective counter-strategy. And… There are a lot of bad things happening out there. The global economy is still experiencing the slowest of recoveries. The China resources boom is over. China itself, domestically shows signs of recovery and when China represents such a large slice of our own economy, our jobs and our own opportunities for raising our living standards. But just how dangerous is a Chinese slowdown? Read more of this post