Asia’s great investor rotation flows to North from South

Asia’s great investor rotation flows to North from South

3:56am EDT

By Vidya Ranganathan and Vikram Subhedar

SINGAPORE/HONG KONG (Reuters) – Alongside the great rotation from bonds to equities and from emerging to developed markets that has been 2013’s overriding investment theme, Asia is seeing its own migration in portfolio flows: from the South to North. Foreign investment flows have lifted stock markets in China, South Korea and Taiwan since July, the first and tentative signs that investors still see pockets of value at a time the outlook for emerging markets is glum. The appeal of these markets comes from several factors. While the consensus calls are still for an outperformance of equity markets in Japan, the United States and the rest of the developed world, a growing number of investors believe there is scope for Asia’s trade-driven, open economies to do well as U.S. growth recovers. Read more of this post

Asia Faces Higher Borrowing Costs; Rising U.S. Rates Make it Harder for Asian Issuers To Raise Funds Cheaply

August 15, 2013, 12:18 a.m. ET

Asia Faces Higher Borrowing Costs

Rising U.S. Rates Make it Harder for Asian Issuers To Raise Funds Cheaply

MICHAEL S. ARNOLD And NATASHA BRERETON-FUKUI

HONG KONG—Governments and companies across Asia are facing an era of tighter credit that could impact the region’s growth prospects. Since the financial crisis, low global rates have been a significant motor of Asia’s developing economies. Now, rising U.S. rates, amid expectations the Federal Reserve will taper its massive bond-buying program later this year, are making it harder for Asian issuers to raise funds cheaply. Countries and firms across the region have had to pay higher rates to attract investors, or shelve bond issuances, as investors pulled some $6 billion out of regional debt in June and July, according to data provider EPFR Global. Read more of this post

JPMorgan And Goldman Sachs Are Playing Whack-A-Mole With Everyone Suing Them Over Their Metal Warehousing Businesses

JPMorgan And Goldman Sachs Are Playing Whack-A-Mole With Everyone Suing Them Over Their Metal Warehousing Businesses

LINETTE LOPEZ AUG. 13, 2013, 2:16 PM 1,554 6

As if on cue, around the country individuals and companies have started filing lawsuits against JP Morgan and Goldman Sachs for allegedly delaying deliveries of aluminum stored in their metals warehouses, thus manipulating the price of the commodity. Lawsuits have been filed in Michigan, Florida and Louisiana. On top of that, The Commodities Futures Trading Commission has subpoenaed JPM, Goldman, and commodities trading firm Glencore for documents related to their warehouse businesses, Bloomberg reports. The thing is — usually, when an issue is this obscure and hard to understand, it’s easily swept under the rug. Read more of this post

Intermittent Nature of Green Power Is Challenge for Utilities

August 14, 2013

Intermittent Nature of Green Power Is Challenge for Utilities

By DIANE CARDWELL

The 21 turbines at the Kingdom Community Wind farm in Vermont soar above Lowell Mountain, a testament in steel and fiberglass to the state’s growing use of green energy. Except when they aren’t allowed to spin at their fastest. That has been the case several times in the farm’s short existence, including during the record July heat wave when it could have produced enough much-needed energy to fuel a small town. Instead, the grid system operator held it at times to just one-third of what it could have produced. “We were being told to turn on diesel-fired units that are very expensive and dirty and told to ramp down what is renewable, cost-effective energy for our customers,” said Mary Powell, chief executive of Green Mountain Power, the utility that owns and operates the wind plant. “We should go with the sources that can have the highest value, especially during peak times.” Read more of this post

Following a setback in the South Korean government’s efforts to raise taxes against the middle-income class, the new tax code plan has angered those who inherit family business

New tax code angers long-lasting family firms

Lee Sang-deok, Jeon Jung-hong

2013.08.14

Following a setback in the South Korean government’s efforts to raise taxes against the middle-income class, the new tax code plan has angered those who inherit family business. Earlier, the government said it will raise the threshold for inheritance tax reduction in case of family business succession from the current 200 billion won ($178.5 million) in sales to 300 billion won. The measure would benefit 400 companies. But the government also introduced a carryover of transfer tax years in the new tax code. Under this system, if children who inherit family business from their parents inevitably sell the inherited asset, they will have to pay a transfer tax calculated from the date of acquisition by parents, not by children. According to the finance ministry and Korea Federation of Small and Medium-sized Businesses on Wednesday, small companies requested the government to re-examine the calculation method. “Strict conditions, including a 10-year job security program, should be met in order to get tax deduction in family business succession, but the carryover system is too harsh for heirs because it is applied at any time when they sell the inherited asset after inheritance,” said Kang Sang-hoon, Chairman of Dongyang Foods.

Care for some pineapple juice or fermented milk in your beer? Big Brewers Make Summer Wacky Beer Season in Japan

August 14, 2013, 6:51 p.m. ET

Big Brewers Make Summer Wacky Beer Season in Japan

Kirin and Asahi Test Innovations Like Soft-Serve Foam, Extra-Cold Brew and Beer Cocktails

HIROYUKI KACHI

At a Kirin Ichiban Garden, a temporary restaurant in downtown Tokyo, a server offers two experimental summer brews from Kirin.

Care for some pineapple juice or fermented milk in your beer? Strange brews are on tap in Japan this summer, as the country’s biggest beer-makers—Asahi Breweries Ltd. 2502.TO -2.23% and Kirin Brewery Co.2503.TO -2.18% —experiment with novelty beers they hope will appeal to younger Japanese drinkers, particularly women, who prefer drinks sweeter than the average pint. The gimmicky concoctions are available mainly at bars and temporary beer gardens the companies have set up for the peak quaffing season in cities across Japan. The drinks are becoming a regular summer feature, a way for Asahi and Kirin to promote and test new-product ideas, the most promising of which can be sold more broadly later. Kirin is selling 12 cocktails featuring its Ichiban Shibori beer leavened with mixers like pineapple, grapefruit or tomato juice, as well as cassis or lemon liqueur. The company calls them Ichiban Shibori Two-Tone Drafts, for the layers of color created in the glass before the beer and mixer are stirred. Read more of this post

Indonesia, a former net oil exporter and OPEC member, has been trying for years to reverse the decline at its aging oil fields. Its annual oil output has fallen about 50% from peak levels reached in the 1990s

August 15, 2013, 1:15 PM

Indonesia’s Energy Watchdog Admits Taking Money

Top of Form

By I Made Sentana and Joko Hariyanto

JAKARTA–Rudi Rubiandini, who until Wednesday was the head of Indonesia’s upstream oil and gas watchdog, has denied he is guilty of corruption but admitted to accepting money in comments to reporters after he was questioned by the country’s antigraft agency. “I didn’t commit an act of corruption, but [what I did] seems to be categorized as [accepting] gratification,” Mr. Rubiandini said to reporters in brief comments late Wednesday after he emerged from the Corruption Eradication Commission’s office and before he was transported to the agency’s jail. “There was a friend who came bringing money,” said Mr. Rubiandini, without elaborating. Read more of this post

Western Financial Firms Sour on Indian Investments

Aug 14, 2013

Western Financial Firms Sour on Indian Investments

By Kenan Machado and Nupur Acharya

Exasperated by a lack of growth and profitability, Western firms, mostly financial institutions, are selling their Indian investments, with a weakening rupee expediting the departures. And bankers and analysts said more exits are expected. AvivaAV.LN +1.56% PLC and New York Life Insurance Co. are among insurers that are selling or have sold their India franchises in the past year. A person close to Aviva said last week that the U.K. insurer was leaving India because its venture hadn’t grown as much as expected. Banks, too, are scaling back, including BarclaysBARC.LN +0.63% PLC and Royal Bank of Scotland GroupRBS.LN +3.51% PLC, which said on Friday it would sell some of its Indian assets to a local bank as part of its strategy to exit noncore investments. Read more of this post

Take a closer look at the hand that gives; An arbitrary target for Indian corporate giving may do harm not good

August 14, 2013 4:07 pm

Take a closer look at the hand that gives

By James Crabtree

An arbitrary target for Indian corporate giving may do harm not good, writes James Crabtree

Last week, India’s ill-functioning parliament passed a bill rejigging the country’s companies laws. It included an especially eye-catching proposal: all businesses are now expected to give 2 per cent of their net profits to corporate social responsibility projects. The rule is not mandatory but even so, any large enterprise that fails to meet this minimum threshold will have to explain its shortcomings in its annual reports. If not, the company will be fined. It sounds like a splendid means of nudging stingy businesses to greater heights of public spiritedness. Unfortunately, the generally cozy, often inefficient and occasionally corrupt systems through which some Indian companies support worthy causes mean it may do more harm than good. Read more of this post

Jagdeep Chhokar: Why Does Our Political Process Produce Rotten Leaders? By resisting reforms and efforts to introduce transparency in their functioning, the political establishment is defeating the purpose of democracy

Jagdeep Chhokar: Why Does Our Political Process Produce Rotten Leaders?

by Jagdeeep S Chhokar | Aug 15, 2013

By resisting reforms and efforts to introduce transparency in their functioning, the political establishment is defeating the purpose of democracy

Jagdeep S Chhokar
Profile: Jagdeep S Chhokar is founder and trustee of Association for Democratic Reforms (ADR). He has been central to ADR’s success in bringing political parties under the ambit of RTI and the Supreme Court ruling barring convicted criminals from contesting elections. He is a former professor, dean, and director in-charge of IIM-A.
The question asked in the title of this piece is obvious, even embarrassing. But it is unequivocal. It says, without any hesitation, that our political process produces rotten leaders and corrupt folk. This is a strong statement, but true. The more complex question is: Why? The answer is not easy but I will attempt an answer. But first, a clarification: The title does not apply to all political leaders; obviously there are exceptions, politicians who are not rotten or corrupt; but those are few and far between. Read more of this post

India’s Quick-Fix Steps Aren’t Helping the Rupee

August 14, 2013, 2:58 AM

India’s Quick-Fix Steps Aren’t Helping the Rupee

By Sudeep Jain and Shefali Anand

India this week announced several steps aimed at shrinking its large current-account gap and stabilizing the rupee, but economists and markets have reacted with a shrug.
The rupee has continued to slide. On Wednesday, it was trading at 61.57 rupees for one U.S. dollar, versus 60.80 for a dollar, before India outlined its plans late Monday. It is not far from a record low of 61.80, reached last week. Read more of this post

Concerns grow over Indian industrials’ debt burdens

August 14, 2013 2:22 pm

Concerns grow over Indian industrials’ debt burdens

By James Crabtree

Concerns are growing in India that a worsening economic slowdown in Asia’s third-largest economy may be increasing debt burdens at some of the country’s most important industrial companies to unsustainable levels. New research from Credit Suisse reveals that 10 of the country’s most heavily indebted industrial conglomerates, including billionaire Anil Ambani’s Reliance companies along with the Vedanta and Essar groups, had combined gross debts of $102bn at the end of the last financial year, up 15 per cent from the year before. Many Indian industrialists have struggled amid the nation’s recent decline in economic growth, which has been exacerbated by chronic regulatory problems delaying crucial investments in power plants and infrastructure projects. Read more of this post

Welcome to the golden age of activist investors

Welcome to the golden age of activist investors

CNBC.com | Wednesday, 14 Aug 2013 | 3:37 PM ET

Carl Icahn moves stocks with tweets now.

Yesterday Icahn tweeted that he had taken a position in Apple. The stock immediately was bid upward. This much is clear: we’re living in the golden age of activist investors. Almost every day there’s a new story that runs like this: hedge fund manager “X” has purchased a stake in an iconic American company that he thinks will be worth more—if only the company will follow his plan. It’s now a familiar part of the Wall Street landscape. The names are familiar to anyone reading the financial headlines: David Einhorn of Greenlight Capital. Nelson Peltz of Trian Partners. Dan Loeb of Third Point. Paul Singer of Elliot Management. Bill Ackman of Pershing Square.  Read more of this post

Old Economies Rise as Emerging Markets’ Growth Falters

August 14, 2013

Old Economies Rise as Emerging Markets’ Growth Falters

By NATHANIEL POPPER

The balance of world economic growth is tipping in another direction. Just as economists have begun lowering their forecasts for China and many other developing economies, the American economy is bouncing back. Japan appears to have turned a corner and is ending almost two decades of grinding deflation. Economic data out of Europe on Wednesday provided the first solid indication that many countries in the euro zone may be escaping the clutches of recession. Read more of this post

Germany Fights Population Drop

August 13, 2013

Germany Fights Population Drop

By SUZANNE DALEY and NICHOLAS KULISH

SONNEBERG, Germany — At first glance, this town in central Germany, with rows of large houses built when it was a thriving center of toy manufacturing, looks tidy and prosperous. But Heiko Voigt, the deputy mayor here, can point out dozens of vacant homes that he doubts will ever be sold.

The reality is that the German population is shrinking and towns like this one are working hard to hide the emptiness. Mr. Voigt has already supervised the demolition of 60 houses and 12 apartment blocs, strategically injecting grassy patches into once-dense complexes. Read more of this post

Bullet Trains Attract Customers From Chinese Airlines

Bullet Trains Attract Customers From Chinese Airlines

For two decades, Liu Yueping flew first class on China Southern Airlines Co. (1055) between Changsha and Shenzhen. This year, she took a bullet train and spent a fifth of the 2,000 yuan ($327) she would have paid to fly.

Money wasn’t the issue. The 3 1/2-hour ride on the high-speed rail between Changsha in central China and Shenzhen in the south is never late and allows phone calls unlike on a plane, she said. “Now that we have the bullet train, who will take flights?” said Liu, 50, who owns a property investment company and travels eight to 10 times a year between the cities. Read more of this post

Finance: Balance sheet battle; Regulators are reviving an old measure to gauge banks’ ability to withstand a crash but bankers are crying foul

August 14, 2013 7:18 pm

Finance: Balance sheet battle

By Tom Braithwaite and Patrick Jenkins

Regulators are reviving an old measure to gauge banks’ ability to withstand a crash but bankers are crying foul

When Anshu Jain finally buckled in April and agreed to raise €3bn of newDeutsche Bank shares, he was rewarded with a surge in the stock price. The market took heart that the bank was now one of the best capitalised of its peer group, instead of one of the worst. Burnished with new equity, Deutsche even leapfrogged JPMorgan Chase, which has long boasted of a “fortress balance sheet”. But the victory of Mr Jain, co-chief executive of Germany’s largest lender, was shortlived. Within weeks it became clear that Deutsche’s capital raising had been overtaken by a new regulatory agenda. Read more of this post

EM decoupling story was always over-hyped

August 14, 2013 9:51 am

EM decoupling story was always over-hyped

By John Plender

Fed taper talk reaction shows EMs still linked to developed world

Emerging market equities have not had a congenial summer. Since Ben Bernanke, chairman of the Federal Reserve, broached the subject of tapering the Fed’s asset purchasing programme back in May, they have notably underperformed developed world equities. It looks suspiciously as though the emerging market growth story is tarnished.

The story was, in truth, over-hyped. The suggestion that emerging markets could somehow decouple from the developed world and deliver self-sustaining high growth rates for the foreseeable future was always a nonsense. With the developed world now experiencing mediocre sub-trend growth the nonsense has become palpable, most notably in Europe where the travails of the eurozone have hurt the emerging market economies of central and eastern Europe, together with Turkey. Read more of this post

Britain has ‘Alice in Wongaland’ economy; Britain has an “Alice in Wongaland” economy in which people are taking out payday loans and raiding their savings to fuel shopping sprees

Britain has ‘Alice in Wongaland’ economy

Britain has an “Alice in Wongaland” economy in which people are taking out payday loans and raiding their savings to fuel shopping sprees.

Britain has an “Alice in Wongaland” economy in which people are taking out payday loans and raiding their savings to fuel shopping sprees. Photo: Alamy

By Steven Swinford, Senior Political Correspondent

9:58AM BST 15 Aug 2013

Retail figures, published by the Office for National Statistics this morning, showed that people are returning to Britain’s High Streets. Sales rose at their fastest annual rate in over two years in July, official data showed on Thursday. Volumes rose 1.1pc on the month, almost twice as fast as expected to give an annual rise of 3pc and the highest since January 2011. The Office for National Statistics said feedback from supermarkets suggested the sunny weather had boosted sales of food, alcohol and clothing. Experts have said that the warm weather, increased consumer confidence and the “feel good factor” created by the Royal Wedding stimulated growth. Read more of this post