Troubled Currencies, Troubled Regimes

Troubled Currencies, Troubled Regimes

By Steve H. Hanke on 5:04 pm August 1, 2013.
For academics, the term “troubled currency” might be a term of art. But for people who are faced with such a currency, they know a troubled currency when they see one. Today, this is the case for millions of people around the world – most notably in Iran, North Korea, Argentina, Venezuela, Egypt and Syria. A troubled currency is one in which users have lost confidence. When users no longer think a currency will retain its purchasing power, they attempt to dump it for a stable foreign currency (or commodities). As the demand for the troubled currency evaporates, its value vis-a-vis stable foreign currencies collapses, and prices for goods and services sold in the troubled currency soar. As this process develops, expectations about the currency’s ability to retain its purchasing power deteriorate, and a doom loop ensues. At the extreme, doom loops can culminate in hyperinflation – an inflation rate of over 50 percent per month. This, however, is rare. Indeed, there have only been 56 cases of hyperinflation. Read more of this post

Foreign business leaders residing in Korea say that President Park Geun-hye’s corporate policies to ensure “economic democratization” are a move in the right direction to upgrade Asia’s fourth-largest economy

2013-08-01 18:58

Foreigners like Park’s reforms

By Choi Kyong-ae
Foreign business leaders residing in Korea say that President Park Geun-hye’s corporate policies are a move in the right direction to upgrade Asia’s fourth-largest economy. They stress that her economic policies aimed at reforming chaebol and ensuring “economic democratization” will help the country’s economy become more transparent and sustainable. “The government is just enforcing the law and if you look at what the tax office is doing, it’s enforcing the law against big (companies), small (firms) and individuals. But the large companies are more sensational,” Jeffrey Jones, a lawyer at Kim & Chang, told The Korea Times in a telephone interview. Read more of this post

Korean furniture makers finally met the truth of IKEA’s longtime-wearied arrival on their turf

2013-08-01 18:50

IKEA alert: Korean furniture firms brace for dark future

By Ko Dong-hwan
Korean furniture makers finally met the truth of IKEA’s longtime-wearied arrival on their turf. On Aug. 1, Gwangmyeong City approved of an IKEA store construction work on a site of 25,759 square meters located within the KTX Gwangmyeong railway station sphere, which will be completed by late 2014. Korea’s few major furniture companies like Hanssem and Livart responded rather unstirred by the news. As to IKEA’s signature advantage over rival stores _ affordable prices _ they said they will counter with differentiated quality, design, service and wide distribution networks. “Since IKEA’s coming has been confirmed, there is nothing else for us to do but to do our best. We have had two years of preparation since the news of IKEA’s coming to Korea had surfaced.” But for small-to-medium-sized furniture companies, the news totally wrested their hearts. Unlike the major companies, these minor firms _ mostly run by family members or few part time workers _ have few selling points except cheap prices. Lee Sang-bong, president of the Gwangmyeong Furniture Distribution Business Cooperative, said, “For small furniture firms, competing against a global enterprise like IKEA is futile. We might as well hit the road before trying.” Those who are on the same page with Lee have founded a task force that bashes the arrival of IKEA in Gwangmyeong. Their message, targeted at both Gwangmyeong city and IKEA, is to provide mutual measures that don’t kill but instead embrace the small-to-medium-sized companies.

In China, where pirated movies can be bought for less than $1, people are flocking to theaters, a sign of how Chinese consumers are willing to spend more on entertainment.

August 1, 2013, 2:34 p.m. ET

Now Playing: China’s Booming Movie Market

People Are Flocking to Theaters

WEI GU

In China, where pirated movies can be bought for less than $1, people are flocking to theaters, a sign of how Chinese consumers are willing to spend more on entertainment. China, now the world’s second-largest film market after the U.S., is already critical for Hollywood blockbusters such as “Pacific Rim,” a giant monster-versus-robot slamfest that opened in China this week. The movie struggled in the U.S., but its glitzy special effects may be better appreciated in thousands of state-of-the-art movie theatres that have sprung up in China in the past few years. As in other industries, China has taken a “build first, and demand will follow” strategy with movies. And it has worked. The number of screens in China quadrupled from 2009 to 2012, according to entertainment consulting firm EntGroup Inc. Read more of this post

Myanmar Firms Feel Pinch From Abroad; Foreign Consumer-Goods Companies Rush in After Removal of Market Sanctions

August 1, 2013, 2:26 p.m. ET

Myanmar Firms Feel Pinch From Abroad

Foreign Consumer-Goods Companies Rush in After Removal of Market Sanctions

Drinks and other provisions on display at a tea shop in Yangon, Myanmar. Foreign consumer brands like Coca-Cola and Sprite are increasingly displacing locally-produced beverages like Star Cola, chipping away at profits of local conglomerates in the country.

SHIBANI MAHTANI

YANGON, Myanmar—The world’s biggest consumer companies are flocking to Myanmar, filling the once-pariah nation and its backward economy with goods previously unavailable to its 60 million people. But not everyone is happy. Some of the country’s biggest conglomerates—plugging away at the cash-strapped market for decades and fighting hard to grow despite crippling Western sanctions—are now finding themselves drowned out by foreign competitors including Coca-Cola Co. KO +1.22% of the U.S. and Canon Inc.7751.TO +1.78% of Japan. “It is very tough for us, now that these big multinationals are here,” said Sai Sam Htun, chairman of the Loi Hein Group of Cos., one of Myanmar’s largest conglomerates. “They have easily taken over in a short time, because they are so powerful and strong.” Read more of this post

After years of quietly building its craft beer brand in the shadow of MillerCoors, Blue Moon is fighting back against the naysayers

Blue Moon Tells Beer Snobs to Drink Up and Show Respect: Retail

MillerCoors LLC has a message for beer snobs: Blue Moon is an authentic craft brew. So show a little respect.

Aficionados long ago dubbed Blue Moon an impostor cooked up by a megabrewer to exploit the explosive growth of artisanal beer. In recent months, small beermakers have stepped up their attacks — calling suds like Blue Moon “crafty” for not spelling out their corporate parentage. Micro breweries have reason to be defensive: Blue Moon has grabbed what equals 15 percent of the U.S. craft market, expanded as far as Japan and spawned an Anheuser-Busch InBev NV (ABI) knockoff called Shock Top. After years of quietly building its brand in the shadow of MillerCoors, Blue Moon is fighting back against the naysayers. It’s adding more artisanal brews, including a wine hybrid. Marketing emphasizes the beer’s provenance and Belgian-trained brewmaster. Blue Moon is even taking credit for helping to popularize craft. Read more of this post

80 per cent of Beijing’s edible ice cubes from ‘illegal’ factoriesl Only six manufacturers have production license for edible ice in the capital in a market worth $80-130 million

80 per cent of Beijing’s edible ice cubes from ‘illegal’ factories

China Daily/ANN | Thu Aug 1 2013

Only six manufacturers have production license for edible ice in the capital.

China, August 1, 2013

As much as 80 per cent of the edible ice cubes in Beijing’s shops and restaurants come from “illegal” factories, National Business Daily reported. Only six manufacturers have production license for edible ice in the capital, making the total output valued at 100 million yuan (S$20.75 million) in the summer season. But the output of the whole market is valued at 500 to 800 million yuan, which means at least 80 per cent of the ice come from non-qualified factories, the report said. Edible ice companies must have a QS, or Quality Standard identification since 2005. And it costs at least 30,000 yuan to cover the certification besides building laboratories and hiring inspectors, according to an agency for quality certification. Ice cubes at several restaurants were found to be dirtier than toilet water, Chinese media reported last week. According to CCTV, ice cubes used by fast food giants including KFC, McDonald’s and Guangzhou-based Kungfu at their Beijing branches were tested to contain bacteria at severe levels. The KFC ice cubes contained levels of bacteria which were 20 times higher than the national limit, and 13 times higher than water samples taken from toilet bowls. “The market is in chaos,” said an employee of an ice company, “Costs are increasing and those with qualification certificates would have closed down if they didn’t rely on big buyers.”

County in Shaanxi in a Deep Hole as Mining Bubble Pops

08.01.2013 19:19

County in Shaanxi in a Deep Hole as Mining Bubble Pops

Shenmu rolled in cash when prices for its coal soared in recent years. Now private bankers are fleeing and the local government is in a bind

By staff reporter Li Yan

(Shenmu) – A financial crisis triggered by falling coal prices is brewing in Shenmu County, in the northwestern province of Shaanxi. Construction projects have been halted, universal health care has run into payment problems and many private bankers have disappeared in the last few months, all indications that another story of legendary development is now just a bubble bursting. The richest county in the province, Shenmu is blessed with abundant coal reserves. Buoyed by rising prices in the last decade, Shenmu enjoyed the birth of a vibrant mining industry. Accompanying this were rampant private lending, skyrocketing real estate prices and government largesse in social spending. The county’s 400,000 residents were the happy recipients of China’s first universal health-care scheme and free education for 15 years, six more years than the national minimum. Read more of this post

The $7 Trillion Problem That Could Sink Asia

The $7 Trillion Problem That Could Sink Asia

“It’s our currency, but it’s your problem.” This musing from Nixon-era Treasury Secretary John Connally is about to find new relevance as the White House battles Republicans over raising the U.S. debt limit.

Connally couldn’t have foreseen how right he would be 42 years on as Asia sits on almost $7 trillion in currency reserves, much of it in dollars. Asia’s central banks engaged in a kind of financial arms race after a 1997 crisis, stockpiling dollars as a defense against turmoil. That altered the financial landscape in two ways: One, Asia now has more weapons against market unrest than it knows what to do with. Two, Asia is essentially America’s banker, with China and Japan having the most at stake. Read more of this post

SEC Says Largest U.S. Hedge Funds’ Debt Tops $1 Trillion

SEC Says Largest U.S. Hedge Funds’ Debt Tops $1 Trillion

The nation’s largest hedge funds had $1.47 trillion in net assets and more than $1 trillion in borrowings as of the fourth quarter, according to the first report compiled on confidential data they provided to the U.S. Securities and Exchange Commission.

The SEC’s Division of Investment Management issued the report to Congress last week using figures from money managers who run private funds with gross assets of at least $150 million, including borrowed capital, and the agency broke out figures for the biggest firms. Congress ordered the SEC to collect information from private-equity and hedge-fund managers under a provision of the 2010 Dodd-Frank Act designed to help regulators monitor risk in the financial system. Read more of this post

China moves to eliminate financial scam advertisements

China moves to eliminate financial scam advertisements

Thursday, August 1, 2013 – 18:39

AFP

BEIJING – China kicked off a nationwide campaign on Thursday to do away with advertisements for financial scams promising big returns at no risk, highlighting concern over the potential for trouble as financial know-how lags behind rising personal wealth. The China Banking Regulatory Commission said the three-month “clean-up campaign” would take aim at the huge number of advertisements in China for wealth management products, no-interest loans, real estate and many other “no-risk, high-return” schemes from planting forests to breeding animals. Read more of this post

About 1.3 million Hongkongers are living in poverty, of whom 500,000 are in severe poverty, a study claims.

500,000 found suffering in severe poverty
Magdelene Cubbon
Friday, August 02, 2013

About 1.3 million Hongkongers are living in poverty, of whom 500,000 are in severe poverty, a study claims. Academics at the Hong Kong Institute of Education researched 2011 census data and found a staggering 363,275 or 41.1 percent of the elderly, aged 65 and above, are living in either poverty or severe poverty. This age group constitutes the largest proportion of the total number of those in poverty of more than 27percent. The 18.8percent of the population in poverty represents a 1.1percent increase on the Census and Statistics Department’s 2005 figure of 17.7percent. Read more of this post

Fresh grads in China face job crunch as economy slows

Fresh grads in China face job crunch as economy slows

By Kristine Lim
POSTED: 01 Aug 2013 8:50 PM
Fresh graduates in China are facing what has been described as the toughest employment season ever. The job crunch is worse in major cities.

BEIJING: Fresh graduates in China are facing what has been described as the toughest employment season ever. The job crunch is worse in major cities. Nearly seven million students graduate from college this year, the highest number since the PRC was founded in 1949. Although this is less than a three per cent increase from 2012, the situation is complicated by a lack of jobs as a result of slowing economic growth. In Beijng, government and state-owned enterprises have cut job vacancies for fresh graduates by 14 per cent compared to a year ago. Read more of this post

Asia’s richest man made a subtle but significant statement that he’s stepping back from his $120 billion empire and allowing his eldest son to emerge from his shadow

August 1, 2013, 6:48 a.m. ET

Li Ka-shing Signals Power Shift With Absence From News Conference

TE-PING CHEN

Asia’s richest man made a subtle but significant statement Thursday that he’s stepping back from his $120 billion empire and allowing his eldest son to emerge from his shadow.

In a sign of the power shift under way from father to son, Li Ka-shing, 85 years old, skipped his annual televised news conference timed to the earnings from his companies Cheung Kong Holdings0001.HK +2.39% and Hutchison Whampoa 0013.HK +0.17% . For the past 10 years, it has been one of the city’s most anticipated press events, in which the charismatic Mr. Li dazzles reporters with his star power, answering questions on subjects from education to Hong Kong’s politics. Read more of this post

HK developers turning blue as property market enters ‘ice age’

HK developers turning blue as property market enters ‘ice age’

HONG KONG – Government cooling measures to rein in Hong Kong’s property market are finally taking a toll on the city’s powerful developers and industry watchers forecast prices could drop by up to 15 per cent in the second half of this year.

42 MIN 11 SEC AGO

HONG KONG – Government cooling measures to rein in Hong Kong’s property market are finally taking a toll on the city’s powerful developers and industry watchers forecast prices could drop by up to 15 per cent in the second half of this year. Weak property sales at conglomerate Cheung Kong (Holdings), controlled by Asia’s richest man, Mr Li Ka-shing, confirmed that a series of tightening steps are weighing on companies’ bottom lines and taking the heat out of one of the world’s most expensive real estate markets. “It’s like an ice age now from an agent’s perspective,” said Mr Patrick Chau, director of residential investment at property consultant Savills. “The sales volume has dropped substantially since the implementation of a series of tightening policies.” Read more of this post