Growth in China trust assets slows as shadow banking crackdown bites

Growth in China trust assets slows as shadow banking crackdown bites

1:05am EDT

By Gabriel Wildau and Lu Jianxin

SHANGHAI (Reuters) – Growth of China’s trust sector, the largest component of the country’s so-called shadow banking system, slowed markedly in the second quarter after a government clampdown on risky lending.

China’s top leaders have signaled concern over runaway credit growth and the risk of a debt crisis being sparked by local governments and firms borrowing at high interest rates from non-bank lenders, especially trust companies. Read more of this post

Japan nuclear body says radioactive water at Fukushima an ’emergency’

Japan nuclear body says radioactive water at Fukushima an ’emergency’

3:40am BST

By Antoni Slodkowski and Mari Saito

TOKYO (Reuters) – Highly radioactive water seeping into the ocean from Japan’s crippled Fukushima nuclear plant is creating an “emergency” that the operator is struggling to contain, an official from the country’s nuclear watchdog said on Monday. This contaminated groundwater has breached an underground barrier, is rising toward the surface and is exceeding legal limits of radioactive discharge, Shinji Kinjo, head of a Nuclear Regulatory Authority (NRA) task force, told Reuters. Read more of this post

Chinese banks face losses over “Chinnovator” Wuxi Suntech Power loans

August 5, 2013 4:34 pm

Chinese banks face losses over Wuxi Suntech Power loans

By Henny Sender

Chinese banks that lent money to solar-panel maker Wuxi Suntech Power, and later put it into administration, are facing substantial losses on their loans, according to the company’s other creditors.

While the total liabilities of Wuxi Suntech – which is the principal operating subsidiary of the US-listed Suntech Power Holdings – remains in dispute, creditors have said the figure is at least Rmb10bn ($1.63bn), while its assets may be less than a quarter that amount. Read more of this post

Investors Turn Hong Kong’s Red Taxis Into Latest Bubble Market; The price of a license combined with a taxi reached a record HK$7.66 million ($987,600)

Investors Turn Hong Kong’s Red Taxis Into Latest Bubble Market

Allan Shek, the owner of a Hong Kong shop selling gold and jade jewelry, says he’s made millions on the side by riding wild swings in the stock market and by buying into the city’s property boom. No more. Last month, he bought five Hong Kong taxis and the licenses to operate them. Seven or eight of his friends have bought taxis too, he says.

“If I have the ability, I will buy another 15 taxis this year,” says the 60-year-old Shek, speaking with rapid-fire enthusiasm over the latest way to make money in a city where the benchmark Hang Seng Index (HSI) has fallen almost 7 percent from the year’s high and record property prices have started to decline because of government curbs. Read more of this post

Berkshire Avoids Rout as Buffett Sidesteps Bonds

Berkshire Avoids Rout as Buffett Sidesteps Bonds

Warren Buffett’s preference for buying stocks and whole companies rather than bonds is helping Berkshire Hathaway Inc. (BRK/A) weather a spike in interest rates better than other insurers.

Book value rose 2 percent to about $122,900 per Class A share in the three months ended June 30, Omaha, Nebraska-based Berkshire said Aug. 2. Insurance competitors including Allstate (ALL) Corp., American International Group Inc. (AIG) and Travelers (TRV) Cos. posted second-quarter declines in the measure of assets minus liabilities. Read more of this post

Family Offices Chasing Wealthy’s $46 Trillion in Assets

Family Offices Chasing Wealthy’s $46 Trillion in Assets

Karen McNeill, Ph.D., used to teach history at the University of California, Berkeley. In June, she took a job as head of family history with Ascent Private Capital Management, a new unit of U.S. Bancorp (USB) that manages the affairs of ultra-wealthy families.

McNeill’s job is to help Ascent’s clients discover their pasts, skeletons and all, and gain perspective on their Gatsby-sized fortunes. The job is the creation of Michael Cole, Ascent’s president, who’s determined to make Minneapolis-based U.S. Bancorp, the fifth-largest U.S. lender, a contender in the market for high-end financial services. Read more of this post

Chicago pits going quiet, 165 years after shouting began

Chicago pits going quiet, 165 years after shouting began

7:16am EDT

By Tom Polansek

CHICAGO (Reuters) – On a recent morning in the Chicago Board of Trade’s soybean futures pit, the trading action looked like this: One trader hiked up a leg onto a metal railing, stretching his hamstring; another passed time bouncing a green rubber ball; a third yawned.

Activity in Chicago’s 165-year-old open-outcry grain markets has been declining for decades because of computerized trading, which can be executed much faster. But after the CBOT changed the way it reports end-of-day prices in June last year, the share of trading attributed to shout-and-gesture trading fell by about half. Read more of this post

China’s Offshore Push Shakes Singapore Builders of Oil-Drilling Rigs

August 5, 2013, 8:07 a.m. ET

China’s Offshore Push Shakes Singapore Builders of Oil-Drilling Rigs

Beijing Shifts Resources From Shipbuilding, Seeking 20% of Global Market

ERIC YEP

Despite booming demand, tiny Singapore faces a tough time ahead defending one of its few heavy industries, building offshore drilling rigs. The reason is familiar: rising Chinese competition. Singapore’s rig makers, Keppel Corp.’s BN4.SG +0.48% Keppel Offshore and Marine unit and SembCorp Marine Ltd., S51.SG 0.00% which both posted lower second-quarter profits, are responding by trying to move upmarket, with equipment that can drill for oil and gas at greater depths and more extreme conditions than the shallow-water rigs they’ve specialized in. But this is a sector where South Korean yards are well-established and China is a growing presence. Read more of this post

Abu Dhabi sovereign wealth fund is fighting to avoid losses on its $2 billion investment in Eike Batista’s companies as the former billionaire seeks to save his commodity empire from collapse

Citigroup Haunts Abu Dhabi as Mubadala Caught in Brazil Meltdown

Mubadala Development Co., the Abu Dhabi sovereign wealth fund, is fighting to avoid losses on its $2 billion investment in Eike Batista’s companies as the former billionaire seeks to save his commodity empire from collapse.

The fund is owed $1.5 billion after converting a preferred equity investment in Batista’s EBX Group Co. into debt, three people with knowledge of the matter said last month. That amount is secured by Batista assets, one of the people said, asking not to be named as details are private. EBX also last month agreed to “redeem” a portion of Mubadala’s original investment. Read more of this post

Falling Rupiah Hits Indonesian Firms

Falling Rupiah Hits Indonesian Firms

By Francezka Nangoy on 8:54 am August 6, 2013.
The weak rupiah might be a boon to exporters keen to get their products to foreign markets cheaply, but for some local firms it is eroding profit margins and leaving them with foreign exchange losses.

After tumbling 2.7 percent against the US dollar in the first six months of the year, the rupiah underwent a sharp depreciation in July, leaving it 6.4 percent weaker for the year so far, according Bank Indonesia. That makes the rupiah one of the worst-performing currencies in the Asia Pacific region. Read more of this post

Thai Public Spending Delay Adds to Growth Risks: Southeast Asia

Thai Public Spending Delay Adds to Growth Risks: Southeast Asia

Thailand’s economic growth may slow further this year as the government’s attempt to push through an amnesty bill for political protesters risks delaying its $64 billion infrastructure spending plan.

Prime Minister Yingluck Shinawatra’s ruling Pheu Thai party said it will resume debate tomorrow on a law to exonerate protesters involved in demonstrations stretching from a coup in 2006 that ousted her brother, Thaksin Shinawatra. Read more of this post

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