Fortress to Blackstone Say Now Is Time to Sell on Surge; “It’s almost biblical: there is a time to reap and there’s a time to sow,” Apollo’s Leon Black

Fortress to Blackstone Say Now Is Time to Sell on Surge

By Devin Banerjee – Aug 2, 2013

Private-equity managers from Fortress Investment Group LLC (FIG) to Blackstone Group LP (BX), which made billions by buying low and selling high, say now is the time to exit investments as stocks rally and interest rates start to rise. Fortress, the first publicly traded buyout firm in the U.S., is preparing holdings for public offerings while struggling to find attractive new deals, Wesley Edens, who runs Fortress’s $14.3 billion private-equity business, said on a conference call with investors yesterday. That environment extends to credit and distressed investments, said Pete Briger, who oversees the New York-based firm’s $12.5 billion credit business. “This is a better time for selling our existing investments than making new investments,” Briger said on the call. “There’s been more uncertainty that’s been fed into the markets.” Read more of this post

With few big deals, private equity moves to be Asia’s new banker

With few big deals, private equity moves to be Asia’s new banker

5:58am EDT

By Stephen Aldred

HONG KONG (Reuters) – In three years, global private equity firm KKR & Co (KKR.N: Quote, Profile, Research,Stock Buzz) has provided over $1.5 billion in loans to companies in India, a business traditionally handled by state-owned and private sector banks. Encouraged by that success, KKR – which rose to prominence with its hostile $25 billion takeover of U.S. food and tobacco giant RJR Nabisco in 1989 – plans to expand the niche business in China and across Asia. The move by private equity into lending comes at a time when buyout deals in Asia are few and far between and as traditional banks retreat. Apollo Global Management (APO.N: Quote, Profile, Research, Stock Buzz), KKR and Olympus Capital are raising credit funds as they seek out alternative sources of income. At least $6.6 billion is being raised by 12 funds for investment in Asia, according to Private Equity International and Thomson Reuters data. At the same time, credit across Asia has grown tight, leaving small businesses and family-owned firms short of capital as the big banks focus their attention on top-tier clients. Read more of this post

A bond-fund manager who retired last year wanted to leave before the difficult bear market for bonds that she sees ahead

August 4, 2013, 4:55 p.m. ET

Bond Manager Wanted Out Before the Bear Arrives

MICHAEL A. POLLOCK

Margaret Weinblatt and her husband traveled to China last year.

For successful financial professionals, the toughest decision sometimes is when to quit. The bond-market outlook made the choice easier for Margaret “Didi” Weinblatt, who retired in 2012 after a dozen years as a bond-fund manager at San Antonio-based USAA Investments. Ms. Weinblatt fears that fixed-income investors generally now face a very difficult bear market in bonds as the Federal Reserve eventually pares back its economic stimulus. “Your fund might do well relative to other funds, but when the bond market goes down, all funds could go down,” she says. “That can be very stressful for a fund manager.” Ms. Weinblatt, who is 69, worked in funds management for nearly three decades. At USAA, she managed the $4 billion-plus USAA Income fund and the $500 million USAA Government Securities fund. The funds rank, respectively, in the top quarter and top third of their Morningstar Inc. MORN +0.60% categories for the past decade—performances that she says resulted from “being careful to not take on too much risk.” The Income fund’s only stumble during her tenure was a negative 5% return in 2008. Read more of this post

Dying out? China’s young shun family firms, giving first-generation owners fewer exit options

Dying out? China’s young shun family firms

Wed, Jul 31 2013

By Lavinia Mo

HONG KONG (Reuters) – Dai Yintao, 21, is the only son of the millionaire owner of Chinese real estate, pharmaceutical and mining companies. He has no interest in taking over his father’s business, opting instead to work on a building site in Guiyang in Guizhou province, arriving each day in a Porsche. “I work here because I don’t want to take money from my father,” Dai says. “Freedom means everything.” As China’s first-generation entrepreneurs hit retirement age, more than 3 million private businesses will have to deal with succession issues in the next 3-8 years, according to data from the Chinese Academy of Social Sciences. This is not unique to China, of course, but it poses particular risks in a country where there are few professional managers, and families are reluctant to hire outsiders anyway for fear they will take control of the business. Domestic acquisitions and private equity involvement are also rare, giving first-generation owners fewer exit options. Read more of this post

Murky Data Muddy Debate on Chinese Consumers’ Strength

August 4, 2013, 2:56 p.m. ET

Murky Data Muddy Debate on Chinese Consumers’ Strength

Issue Is Key to Determining Need for Policy Reform

TOM ORLIK

As China’s growth slows toward a 20-year low, economists are calling for consumers to shoulder more of the burden of supporting the world’s No. 2 economy. But the country’s leaders are increasingly saying Chinese consumers aren’t shirking their responsibility—they’re just undercounted. “The official data severely understates household consumption,” argued People’s Bank of China Deputy Governor Yi Gang, speaking at a meeting of top government and private economists from China and the U.S. in April. Mr. Yi also played down the role of China’s low interest rates—long seen as depressing consumption—in contributing to the imbalances, according to those present at the meeting. Read more of this post

Demands for new Indian states revive after Telangana created; India could have 50 States if all demands are met

August 4, 2013 1:03 pm

Demands for new Indian states revive after Telangana created

By Amy Kazmin in New Delhi

Globally renowned for tea estates that produce some of the most delicate, and highly-prized teas, India’s mountainous Darjeeling region was rocked for most of the 1980s by strikes and protests by the indigenous Gorkha community, who were demanding the area be turned into a separate state within the Indian union. The movement ebbed in the late 1980s, when Darjeeling was granted some autonomy within its present state of West Bengal. But this weekend the Himalayan region has been shut down once again. Businesses and elite boarding schools are closed, transport suspended, and tourists have been sent away as Gorkha political leaders enforce an indefinite strike in a ‘do or die’ push for statehood. Read more of this post

Regulatory risk on the rise in India

Regulatory risk on the rise in India

Fri, Aug 2 2013

* Constant rule changes spook investors

* Lack of clarity mars even positive changes

* Courts often overturn new regulation

By Manju Dalal

SINGAPORE, Aug 2 (IFR) – When Palaniappan Chidambaram took over as Finance Minister of India exactly a year ago, he would not have expected that his efforts to open doors for foreign investors would end up highlighting one of their biggest concerns: regulatory risk. The recent attempts to stem the rupee’s depreciation have reminded global investors that the rules of engagement in India can change with alarming regularity. “We make investment decisions on factors like forex risk, regulatory risks and target company fundamentals. Of these three pillars, two are already on very shaky ground in India,” said a Singapore-based investor. “If I was 100% bullish on India two years back, I am only 25% bullish now. I cannot ignore India, but I know for sure I cannot expect the kind of stability in regulation that we see in China or even in Thailand.” Read more of this post

For most of the past decade Yes Bank has been the fastest-growing and highest-profile upstart in India; Yes Bank loses shine as India liquidity ebbs and rupee slumps

August 4, 2013 8:14 am

Yes Bank loses shine as India liquidity ebbs

By James Crabtree in Mumbai

For most of the past decade Yes Bank has been the fastest-growing and highest-profile upstart in a new generation of Indian private banks. But in the aftermath of government moves to prop up the nation’s currency, it is gaining a fresh reputation as the biggest loser from India’s new moment of tighter liquidity. Founded in 2004, Yes Bank has expanded rapidly to become the country’s fourth-largest private bank by loans, with after-tax profits growing at an eye-catching compound annual rate of 44 per cent over the past five years – creating an unorthodox image bolstered by the group’s charismatic and publicity loving founder Rana Kapoor. Read more of this post

To begin to comprehend China’s vast underground economy, one need only visit this city’s major transportation depots and watch as peddlers openly hawk fake receipts

August 3, 2013

Coin of Realm in China Graft: Phony Receipts

By DAVID BARBOZA

Officers from the Ministry of Public Security looked over bundles of fake receipts seized during raids in Beijing and Hebei.

SHANGHAI — To begin to comprehend China’s vast underground economy, one need only visit this city’s major transportation depots and watch as peddlers openly hawk fake receipts. “Receipts! Receipts!” calls out a woman in her 30s to passers-by as her two children play near the city’s south train station. “We sell all types of receipts.” Buyers use them to evade taxes and defraud employers. And in a country rife with corruption, they are the grease for schemes to bribe officials and business partners. Making them and using them is illegal in China. Some people have been executed for the crime. But demand is so strong that a surprising amount of deal-making takes place out in public. It is so pervasive that auditors at multinational corporations are also being duped. The British pharmaceutical company GlaxoSmithKline is still trying to figure out how four senior executives at its China operation were able to submit fake receipts to embezzle millions of dollars over the last six years. Police officials say that some of the cash was used to create a slush fund to bribe doctors, hospitals and government officials. Read more of this post

SEC Door, Spinning Mightily, Smacks Investors

SEC Door, Spinning Mightily, Smacks Investors

The appalling — yet hardly surprising — news that Robert Khuzami, the former enforcement director at the Securities and Exchange Commission, has cashed in his four-year stint for a $5 million-plus salary at Kirkland & Ellis, a prominent Wall Street law firm, is the latest example of the corrupt relationship between money and power in the U.S.

Courtesy of a mostly fawning July 22 New York Times story, we learn that Khuzami orchestrated a frothy auction for himself. Who better than me, Khuzami’s logic must have gone, to provide clients with the government access, connections and insights needed to bill them $1,000 an hour? Read more of this post

Why foreign cars are expensive in China; A BMW 650i sedan can sell for 2 million yuan (US$326,000) in China compared to the original price of US$91,000 in Germany

Why foreign cars are expensive in China

Staff Reporter

2013-08-05

A BMW 650i sedan can sell for 2 million yuan (US$326,000) in China compared to the original price of US$91,000 in Germany.

“Gross margins of imported luxury cars with large engine sizes in China are conspicuously higher than corresponding levels in foreign countries,” an auto importer told the Chinese-language National Business Daily. The hefty profit margin has combined with high taxes leading to the exorbitant retail prices of imported cars. At present, imported vehicles are subject to a 25% tax on the basis of CIF (cost, insurance and freight) prices, 17% value-added tax and a consumption tax ranging from 1%-40% according to the engine size, with models with a engine being subject to the highest 40% rate. As a result, an imported vehicle with a 4.0l engine or larger and CIF price of 1 million yuan (US$163,000) would be subject to taxes totaling 1.43 million yuan (US$233,000). Read more of this post

Whistleblowers pay price even as China vows to fight corruption

Whistleblowers pay price even as China vows to fight corruption

Sun, Aug 4 2013

By Sui-Lee Wee

HUIZHOU, China (Reuters) – Chinese bloggers trying to expose corruption say they are coming under increasing physical and verbal attack over their reports, in what anti-graft activists describe as another blow to efforts to make Chinese officials more accountable. At least six self-styled whistleblowers have been assaulted or harassed in recent months, according to media reports, Internet postings and several of the bloggers who spoke to Reuters. Two unidentified men stabbed blogger Li Jianxin in the face and splashed acid on his back on July 8. Li, now blind in his right eye, remains in hospital in the southern city of Huizhou. The attacks coincide with a government crackdown on activists demanding officials disclose their wealth, underscoring the limits of an anti-corruption push by President Xi Jinping. Read more of this post

Wall St falls out of love with commodities trading; JPMorgan’s exit signals that the boom is over

August 4, 2013 5:56 pm

Wall St falls out of love with commodities trading

By Gregory Meyer in New York and Jack Farchy in London

Blythe Masters was triumphant. TheJPMorgan Chase executive had just sealed a deal that would propel her bank to the top of Wall Street’s commodities league table. JPMorgan paid $1.7bn and assumed $3.3bn in debt to buy the global oil, gas, coal, power and metals businesses of RBS Sempra Commodities, a trading venture. While JPMorgan was strong in commodity derivatives, Sempra was at root a physical house moving molecules through a storage and warehousing network stretching from Baltimore to Singapore. For Ms Masters, head of global commodities, this exposure was critical. Read more of this post

Banks Replacing Enron in Energy Incite Congress as Abuses Abound

Banks Replacing Enron in Energy Incite Congress as Abuses Abound

The U.S. government permitted Wall Street firms to expand in the energy industry a decade ago, when the collapse of Enron Corp. and its army of traders left a void in the market. The results aren’t pretty.

JPMorgan Chase & Co. (JPM) settled Federal Energy Regulatory Commission claims this week that employees engaged in 12 bidding schemes to wrest tens of millions of dollars from power-grid operators. A Barclays Plc (BARC) trader stands accused of bragging he “totally fukked” with a Southwest energy market. Deutsche Bank AG workers, faced with losses on a contract, allegedly altered electricity flows to make it profitable instead. Read more of this post

Oil markets: The danger of distortion

August 4, 2013 4:17 pm

Oil markets: The danger of distortion

By Ajay Makan

Governments are deliberating whether to impose more supervision, writes Ajay Makan

Warped system: oil prices are notoriously hard to track and some companies do not co-operate with the price reporters

As Opec ministers gathered in Vienna in May to discuss the oil market, one man stood out. On the terraces and in the lobbies of the grand hotels favoured by members of the oil producers’ cartel, Jorge Montepeque was holding court. A Guatemalan-born US citizen with a fiery temper and sharp tongue, Mr Montepeque is the architect of the system that now underpins global trade in oil. In Vienna he was his ebullient self, stopping at tables to swap gossip between meetings. But for Mr Montepeque this was no normal Opecgathering. Two weeks earlier the European Commission had swooped on offices across Europe in pursuit of any evidence of price fixing in oil markets. Along with the oil majors BP, Royal Dutch Shell and Statoil, and the Dutch trader Argos Energies, officials raided theCanary Wharf headquarters of Platts – the price reporting agency where Mr Montepeque has worked for decades. The raids earned the oil market comparisons with Libor, the discredited interest rate rigged by some of the world’s biggest banks for years. They came as governments were already weighing direct supervision of the unregulated trade in physical oil. And they have added to fears among some participants that the market is only likely to become more opaque, if traders stop co-operating with price reporting agencies. Read more of this post

Korea’s major accounting firms are engaged in a cutthroat battle to attract more corporate clients given that most of their current contracts with some of the leading Korean conglomerates are scheduled to expire next year

2013-08-04 18:20

Accounting firms vying for survival

By Na Jeong-ju
The nation’s major accounting firms are engaged in a cutthroat battle to attract more corporate clients given that most of their current contracts with some of the leading Korean conglomerates are scheduled to expire next year. Industry sources say that more than 500 companies, including Samsung, POSCO, Doosan, CJ and KB, will decide on whether to renew their current accounting contracts with the same firms or find different accounting firms for fresh contracts. The planned implementation of new accounting standards is making the competition even fiercer. Read more of this post