Asia’s Recent Past Catches Up With It; Federal reserve ‘tapering’ is merely exacerbating problems created by earlier failures to reform

September 5, 2013, 12:39 p.m. ET

Asia’s Recent Past Catches Up With It

Federal reserve ‘tapering’ is merely exacerbating problems created by earlier failures to reform.

FREDERIC NEUMANN

As investors cast around for someone to blame for recent market turmoil in Asia, it’s easy to point the finger at the U.S Federal Reserve. Hints that the Fed may taper its massive monetary easing, the thinking goes, has pushed up interest rates in America. That, in turn, is drawing capital away from emerging economies. There’s just one problem with this conventional wisdom: The current turmoil in emerging markets, above all Asia, has mostly local roots. It’s true that easy money provided a cushy ride since 2009. With rising interest rates in the United States, those days are now over. Still, the scale of the current sell-off, such as in India and Indonesia, suggests that something more profound is going on. After years of policy neglect, emerging Asia no longer offers the returns in growth and profits that investors seek. Only far-reaching reforms can pull the region out of its malaise. Read more of this post

Thais Debate Rising Cost of Living: Perception or Reality

September 7, 2013, 3:27 PM

Thais Debate Rising Cost of Living: Perception or Reality

By Warangkana Chomchuen

BANGKOK–For Thai consumers, September has delivered a triple whammy. The costs of cooking gas, electricity and expressway tolls rose at the start of the month. Electricity went up 0.07% per unit used. Drivers using Bangkok’s elevated highways can expect to pay about $10 more a month. Cooking gas prices will increase incrementally every month over the course of 12 months. By August next year, the cooking gas will have risen by 38% to 25 baht (80 U.S. cents) a kilogram of gas from 18 baht. These increases might not seem a big deal, and that’s what the government officials have been telling the public. The increases, they said, would barely budge the country’s inflation rate. But the new price increases have nevertheless stirred up public anger – and whipped up a debate over whether it will lead to a sharp increase to living costs. Read more of this post

Five Years Later, Fannie Mae, Freddie Mac Remain Unfinished Business; Fixing the Mortgage Giants Remains the Largest Single Piece of Unfinished Business From the Financial Crisis

September 6, 2013, 8:04 p.m. ET

Five Years Later, Fannie Mae, Freddie Mac Remain Unfinished Business

Fixing the Mortgage Giants Remains the Largest Single Piece of Unfinished Business From the Financial Crisis

NICK TIMIRAOS

WASHINGTON—Of all the temporary patches the U.S. government slapped onto the sinking financial system in September 2008—from pumping money into banks to rescuing insurer American International Group Inc. AIG -1.01% —none was more urgent to then-Treasury Secretary Henry Paulson than saving mortgage giants Fannie Mae FNMA +0.81% and Freddie Mac FMCC -0.88% . Read more of this post

Where’s the next Lehman? Five years after the maelstrom of September 2008, global finance is still not safe enough

Where’s the next Lehman?

Five years after the maelstrom of September 2008, global finance is safer. But still not safe enough

Sep 7th 2013 |From the print edition

THE bankruptcy of Lehman Brothers, an American investment bank, in 2008 turned a nasty credit crunch into the worst financial crisis in 80 years. Massive bail-outs from governments and central banks staved off a second Depression, but failed to prevent a deep recession from which many rich economies have yet fully to recover. Five years after that calamity, two big questions need to be answered. Is global finance safer? And are more crises on the horizon? The quick answers are yes, and yes. Global finance looks less vulnerable because reforms to the financial industry have made it more resilient, and because America, the country at the heart of the Lehman mess, has got rid of much of the excess debt and righted many of the imbalances in its economy. Today’s danger zones are elsewhere. They are unlikely to spawn a collapse on the scale of 2008. But they could produce enough turmoil to hit growth hard. Read more of this post

White Knights Dispense Short Shrift in Asia; Short Sellers in Asia Need to Be on the Lookout for Big Shareholders

Updated September 6, 2013, 6:05 p.m. ET

White Knights Dispense Short Shrift in Asia

Short Sellers in Asia Need to Be on the Lookout for Big Shareholders

ABHEEK BHATTACHARYA

Small short seller slays big Asian firm. This David-and-Goliath tale has played out many times, but a third character has shown up recently: the white knight. A string of short sellers have targeted companies with Asian operations recently. Most famously, Muddy Waters alleged in 2011 that Toronto-listed Sino-Forest overstated its timber assets in China. Sino-Forest later filed for bankruptcy protection. But the latest dust-up shows how a third-party investor can hurt the shorts. On Aug. 26, California-based Glaucus Research accused Singapore-listed vegetable producer China Minzhong Food K2N.SG -0.45% of fabricating its sales. The stock lost nearly half its value before trading was frozen later that day. Then on Sep. 2, Minzhong’s largest shareholder came to its aid. PT Indofood Sukses Makmur, INDF.JK -0.83% a noodle maker run by Indonesia’s fourth-richest family, said it plans to make an offer for the shares it doesn’t own, which could effectively take the company private. It will even offer a 10% premium to where the stock traded before the Glaucus report. Minzhong’s shares have since rebounded to the offer price. That may squeeze some shorts, though it is unclear whether Glaucus exited its position in time. Indofood says this is a “strategic acquisition” that will “be mutually beneficial to both Indofood and China Minzhong.” Pre- Glaucus, Indofood owned about 29% of the company. Read more of this post

South Korea Bans Japanese Fish Imports Over Fukushima Leak

South Korea Bans Japanese Fish Imports Over Fukushima Leak

South Korea banned imports of fish caught near the site of the Fukushima nuclear accident over concerns of radioactive contamination from the plant. The ban affects marine products from eight prefectures, including Fukushima, where the 2011 earthquake and tsunami devastated the plant, causing the worst nuclear accident since Chernobyl. Some of the fishing grounds were already closed. The decision came after the Japanese government revealed last month that 300 tons of contaminated water leaked from the site, with some making it to the ocean. Read more of this post

Japan Fishermen Reject Release of Fukushima Water to Ocean

Tepco Irradiated Water Find May Signal Problem for Bypass Plan

Tokyo Electric Power Co. (9501) found irradiated water near a storage tank that leaked last month at the Fukushima plant, complicating its plan for a pipeline to cut the volume of radioactive water it’s forced to manage. Inspectors found 650 becquerels per liter of beta radiation, which includes the contaminant strontium-90, Mayumi Yoshida, a spokeswoman for the utility known as Tepco, said today by phone. That’s more than 21 times government safety guidelines covering sea water near the plant for strontium-90, which has been linked to bone cancer. Read more of this post

Announcing this year’s traditional autumn crisis

September 6, 2013 8:32 pm

Announcing this year’s traditional autumn crisis

By John Dizard

Emerging market worries replace the time-honoured eurozone crackup farce, finds John Dizard

So, summer is over and everyone in the money world is getting ready for the traditional autumn crisis. Of course we will have the, now time-honoured, eurozone crackup farce. Show times will be set and the cast members announced after the German election in two weeks, ready for the IMF-World Bank meetings in mid-October. There may, though, be something Different This Time. You will notice that after the spring and summer market hiccups and corrections, a couple of asset classes are not only coughing, but coughing up some blood. Emerging market-traded debt and equities, even after last week’s little rally, have continued to lose international investors’ cash and confidence. Read more of this post

Bogged-Down Banking Fight Leaves EU Vulnerable to Relapse

Bogged-Down Banking Fight Leaves EU Vulnerable to Relapse

Europe’s march toward a banking union began in the early morning hours of June 29, 2012, during an overnight summit that pitted Germany against Spain and Italy over their plea for more help against the raging debt crisis. The 13 1/2-hour meeting resulted in a deal that introduced the possibility of aid to banks from the euro firewall fund. In return, leaders said the European Central Bank should take over financial supervision in the 17-nation currency bloc. Read more of this post

It’s well known that September has been the worst month, on average, for stocks. But no one has come up with a plausible explanation for why that is.

Updated September 6, 2013, 6:25 p.m. ET

How to Play the September Effect

It’s well known that September has been the worst month, on average, for stocks. But no one has come up with a plausible explanation for why that is.

MARK HULBERT

Stock-market aficionados know that the average September over the past 100 years has been terrible for stocks. But this record, in and of itself, isn’t a good reason to sell all your stocks and leave the money in cash this month. That is because there appears to be no convincing explanation for why equities have performed poorly in September. So there is a good chance September’s dismal historical record is just a random fluke that won’t persist. Read more of this post

Mafia hurt by asset seizures but still too strong to beat

Mafia hurt by asset seizures but still too strong to beat

11:47am EDT

By Barry Moody

NAPLES, Italy (Reuters) – Syringes litter the floor of an abandoned school in the crime-plagued Scampia district of northern Naples, alongside tin foil used for crack cocaine, a filthy mattress and piles of clothing. What was once a classroom is smeared with human waste and Coca Cola bottles filled with urine are stacked in one corner, alongside an abandoned children’s toy. For years desperate addicts lived in the school, where the local mafia or Camorra sold hard drugs from a counter. Now the building is part of a nationwide campaign to use confiscated gang assets to persuade youths from sink estates like Scampia that there is an alternative to drugs and working for the mob. Read more of this post

Malaysia Risk Tops Philippines on Najib Budget Gap

Malaysia Risk Tops Philippines on Najib Budget Gap

Malaysia’s default risk climbed above that of the Philippines for the first time as Prime Minister Najib Razak seeks to avoid a debt-rating cut, while his counterpart pitches for upgrades. Contracts insuring Malaysian bonds against non-payment rose 63 basis points this year to 141, compared with an advance of 33 to 139 for its lower-rated neighbor, according to data provider CMA. Malaysia’s 10-year ringgit yield jumped 44 basis points to 3.92 percent, 16 basis points higher than the rate on similar-maturity Philippine notes, data compiled by Bloomberg show. Read more of this post

M’sia debt ratio nears ‘worrying levels’ and near the country’s mandated debt ceiling of 55 per cent of GDP: BOA; In the 1960s, the limit was made law by then-finance minister Tan Siew Sin to ensure fiscal prudence

PUBLISHED SEPTEMBER 07, 2013

M’sia debt ratio nears ‘worrying levels’: BOA

S JAYASANKARAN BTWORLD@SPH.COM.SG

A US bank has warned that Malaysia’s ratio of public debt to gross domestic product (GDP) “is approaching worrying levels”. In a report yesterday, Bank of America Merrill Lynch (BOAML) said that the country’s debt-to-GDP ratio had risen to 54.6 per cent at the end of the second quarter, from 53.8 per cent in the first quarter. If BOAML’s estimate is right, the figure is just shy of the country’s mandated debt ceiling of 55 per cent of GDP. In the 1960s, the limit was made law by then-finance minister Tan Siew Sin to ensure fiscal prudence. Read more of this post