Changes to Norway’s gigantic sovereign-wealth fund will be felt around the world

Changes to Norway’s gigantic sovereign-wealth fund will be felt around the world

Sep 14th 2013 |From the print edition

NORWEGIANS are different from you and me: they have more money. Norway’s general election on September 9th sounded many of the familia themes of elections everywhere. Erna Solberg, a Conservative, beat Jens Stoltenberg, the Labour prime minister, partly by offering a new face and lower taxes. But as Ms Solberg begins to run the country she will be confronted by a very different problem from most of her fellow world leaders: not how to make ends meet but how to manage abundance. Read more of this post

Restaurant Boom Bodes Ill for Korea Economy; fried chicken joints started by families who used their homes as collateral for loans is part of a broader swelling of the nation’s household debt to levels approaching those in the U.S. before the housing bust

September 13, 2013, 6:45 p.m. ET

Restaurant Boom Bodes Ill for Korea Economy

ALEX FRANGOS and KWANWOO JUN

SEOUL—Korean fried chicken—crunchy, tasty and usually served with pitchers of cold beer—has become a culinary phenomenon far beyond the country’s shores. But at home, it is a source of worry for the struggling economy. In neighborhood after neighborhood, South Korean cities are crowded with greasy fried chicken joints started by families who used their homes as collateral for loans. Chicken-fueled credit is part of a broader swelling of the nation’s household debt to levels approaching those in the U.S. before the housing bust. “If anyone would start doing this business, I would stop him by all means,” says Kang Hyo-seon, who at 51 years old speeds around Seoul on a motorcycle delivering boxes of fried chicken. Read more of this post

Shanghai Free-Trade Dreams Set to Be Dashed; Investors Speculate Wildly on Vague Announcement; Reality Likely to Disappoint

September 13, 2013, 7:59 a.m. ET

Shanghai Free-Trade Dreams Set to Be Dashed

Investors Speculate Wildly on Vague Announcement; Reality Likely to Disappoint

AARON BACK

Little is known about the new free-trade zone that is being planned in Shanghai. But that hasn’t stopped Chinese investors from speculating wildly on who might benefit. Since a vague announcement on Aug. 23 that China’s top governing body had approved the 29-square kilometer zone in Shanghai, shares in Shanghai International Port Co. have risen by more than 130%. Tianjin Port Holding Co. 600717.SH -1.66% is up 30% over the same period on speculation that other coastal cities will get similar areas. Shanghai Pudong Development Bank 600000.SH -2.78% has risen 30% since last Thursday on expectations that financial controls will be loosened in the zone. The reality is likely to disappoint. China already has export-processing zones, where materials and parts can be imported tariff-free and assembled into exports. It’s unclear what more the government will do to expedite trade. Read more of this post

In China, the Dangers of Due Diligence; Background checks, audits and other investigations are just part of doing business in most countries, but in China those jobs can pose big risks

September 13, 2013

In China, the Dangers of Due Diligence

By JANE PERLEZ

SHANGHAI — When Peter Humphrey and his wife, Yu Yingzheng, appeared on Chinese national television recently, handcuffed and wearing orange prison vests, it was the first time in more than a month that family and friends had seen the British-American couple, well-known figures in the foreign business world here. But any sense of relief was tempered by what they saw next: Mr. Humphrey, his face electronically blurred, his head bowed, confessed to a crime and apologized to the Chinese government. Read more of this post

China in Central Asia: Rising China, sinking Russia; In a vast region, China’s economic clout is more than a match for Russia’s

China in Central Asia: Rising China, sinking Russia; In a vast region, China’s economic clout is more than a match for Russia’s

Sep 14th 2013 |From the print edition

LESS than a decade ago little doubt hung over where the newly independent states of Central Asia had to pump their huge supplies of oil and gas: Russia, their former imperial overlord, dominated their energy infrastructure and markets. Yet today, when a new field comes on stream, the pipelines head east, to China. As if to underline the point, this week China’s president, Xi Jinping, swept through Central Asia, gobbling up energy deals and promising billions in investment. His tour left no doubts as to the region’s new economic superpower. Read more of this post

Henmania: Chicken is set to rule the roost in the global meat market

Henmania: Chicken is set to rule the roost in the global meat market

Sep 14th 2013 |From the print edition

ROASTED, fried or served with noodles, chicken is on its way to becoming the world’s favourite meat. Diners currently chomp through more pork—some 114m tonnes a year compared with 106m tonnes for poultry. But chicken consumption is growing faster—by 2.5% a year compared with 1.5% for pig meat—and is on track to overtake pork before 2020. And much more chicken is traded across borders: some 13.3m tonnes a year compared with 8.6m tonnes of beef and 7.2m tonnes of pork, according to the UN’s Food and Agriculture Organisation. Chicken is on a roll. Read more of this post

Household debt: Singapore’s ‘Achilles heel’?

Household debt: Singapore’s ‘Achilles heel’?

SINGAPORE, TOURISM, EMERGING ASIA, CURRENCIES, INDIA, BUSINESS NEWS

CNBC.com | Thursday, 12 Sep 2013 | 2:25 AM ET

Singapore stepped up efforts to contain a rapid increase in household debt by tightening rules around unsecured credit late Wednesday – a move viewed by economists as a preemptive strike ahead of a rise in borrowing costs in the country. “The central bank is being pre-emptive. Taken together with the previous measures announced, including the Total Debt Servicing Ratio (TDSR) framework for property loans, they will likely be effective,” Michael Wan, economist at Credit Suisse told CNBC on Thursday, referring to a measure which caps monthly mortgage payments to 60 percent of a borrower’s monthly income. Read more of this post

Singapore is missing new software boat

Singapore is missing new software boat

Saturday, Sep 14, 2013

Bas Vodde

The Straits Times

Western countries are losing in “old” industries like consumer electronics, but they aren’t too bothered by this. That’s because they are still front runners in new software-centric industries – despite years of outsourcing. Singapore is missing this boat. Netscape founder and HP board member Marc Andreessen recently wrote an important article – Why Software Is Eating The World – about how software is disrupting traditional businesses. The role of software is changing from one of business support to being a core business. Companies need to re-learn their new core business, otherwise software companies will learn their old core business and disrupt them. Read more of this post

The SEC is pressing energy companies in the U.S. to disclose how much of their reserves—a key gauge of future profit—consists of oil rather than less valuable liquids like propane

September 13, 2013, 6:41 p.m. ET

Oil Firms Queried on Reserves

SEC Is Pressing Companies for More Disclosure

DANIEL GILBERT

The Securities and Exchange Commission is pressing energy companies in the U.S. to disclose how much of their reserves—a key gauge of future profit—consists of oil rather than less valuable liquids like propane. After prodding from regulators, companies including BHP Billiton Ltd. BHP.AU -1.04%and ConocoPhillips COP +0.60% have recently joined Exxon Mobil Corp.XOM +0.48% and Anadarko Petroleum Corp. APC -0.87% in agreeing to break out how much of the fuel they can pump at a profit is crude rather than liquids derived from natural gas. Read more of this post

It takes Swedes 140 years on average to repay their home loans. Only 40 percent of borrowers with mortgages smaller than 75 percent of their property’s value actually pay down their debt

Sweden’s Banks Face Extra Buffer as Private Debt Hits Record

Sweden’s financial watchdog said banks in the largest Nordic economy will probably need to hold extra capital to reflect households’ record debt burdens. That means a countercyclical buffer that’s yet to be calculated for Nordea Bank AB, Swedbank AB (SWEDA), SEB AB (SEBA) and Svenska Handelsbanken AB (SHBA) may stay above zero for “several years,” said Martin Andersson, director general of the Swedish Financial Supervisory Authority. “It has been seen as another fine-tuning instrument for the economic cycle, but that’s never been the intention and that wouldn’t be a good way to use it,” Andersson said yesterday in an interview in Stockholm. “It’s about dealing with a credit cycle that’s much longer.” The FSA isn’t planning to adjust the buffer “particularly often,” he said. Read more of this post

Five Years of Financial Non-Reform

Five Years of Financial Non-Reform

Anat Admati, Professor of Finance and Economics at the Stanford Graduate School of Business, is co-author (with Martin Hellwig) of The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It.

13 September 2013

STANFORD – Five years after the collapse of Lehman Brothers triggered the largest global financial crisis since the Great Depression, outsize banking sectors have left economies shattered in Ireland, Iceland, and Cyprus. Banks in Italy, Spain, and elsewhere are not lending enough. China’s credit binge is turning into a bust. In short, the world’s financial system remains dangerous and dysfunctional. Worse, despite years of debate, no consensus about the nature of the financial system’s problems – much less how to fix them – has emerged. And that appears to reflect the banks’ political power. Read more of this post

Turning against the tycoons: Some of Israel’s leading businessmen are suffering a backlash

Turning against the tycoons: Some of Israel’s leading businessmen are suffering a backlash

Sep 14th 2013 | TEL AVIV |From the print edition

A CORPORATE saga has filled Israel’s newspapers for months: the struggle of Nochi Dankner, one of the country’s leading businessmen, to keep control of IDB Holding Corporation, a debt-laden conglomerate. Mr Dankner came to prominence when he bought IDB in 2003. If he fails to devise a viable rescue plan soon, the firm’s bondholders will gain control; Mr Dankner may lose much of his fortune. Read more of this post

The Lehman anniversary: Five years in charts

The Lehman anniversary: Five years in charts

Sep 14th 2013 |From the print edition

The world of banking has changed dramatically, if not radically, in the five years since September 15th 2008, the day Lehman Brothers went bust. American and European banks used to dominate the list of the world’s biggest banks (see chart 1); the Chinese have since scaled the charts. The balance-sheets of Europe’s behemoths have got quite a bit smaller (chart 2); consolidation has made America’s giants bigger than ever. Western banks are generating much lower returns on equity than they did in the years before the crisis (chart 3), in part because the industry is being forced to fund itself with higher levels of equity than in the past (chart 4). So cost-cutting is much more important than it was: compensation ratios at investment banks have fallen (chart 5). But those who want a complete reshaping of finance can still argue that change has not gone far enough: more people work in finance in London in 2013 than did in December 2007 (chart 6).

The ambitions of Western firms in emerging markets far exceed their efforts

The ambitions of Western firms in emerging markets far exceed their efforts

Sep 14th 2013 |From the print edition

SPEAK to the boss of a big, rich-world multinational company and he will soon wax lyrical about the attractions of emerging markets. Even recent wobbles in some of these countries have not curbed vocal enthusiasm for the BRICS and other collections of high-growth markets, whose prospects have more than offset a gloomy prognosis for the maturing, growth-starved domestic markets of the developed economies. So, with the source of future profits so clearly identified, presumably such firms are doing everything possible to succeed in emerging markets? Read more of this post

Rich Bet on Farms to Rail Cars as Yield Hunt Brings Risks

Rich Bet on Farms to Rail Cars as Yield Hunt Brings Risks

Ken Slater says he was a novice at growing corn and soybeans when he asked Bank of America Corp.’s U.S. Trust unit to purchase the first of three farms for him in the past two years. A millionaire living in Palm Beach, Florida, Slater was looking for a place to put his money that would provide income, diversify risk and offer capital appreciation. He wasn’t thrilled with the returns of corporate and municipal bonds, so he put 5 percent of his portfolio in real assets such as farmland and timber. Read more of this post

Powder buyers have been holding back their purchases waiting for prices to fall further; “As long as they don’t sell the powder, pressers bring the butter price to a level whereby most of the processing cost is covered by butter sales”

Record Chocolate Sales Boosting Cocoa Demand to Leave Shortages

Record chocolate sales are boosting cocoa demand and prices as bean supplies lag behind demand for a second year.

Output will be 129,000 metric tons smaller than demand in the 12 months starting Oct. 1, Euan Mann, director at the London-based Complete Commodity Solutions Ltd., said at the European Cocoa Conference in Istanbul this week. That follows a shortage of 119,000 tons a year earlier. Chocolate sales volume will rise 6.2 percent to a record $117 billion next year, researcher Euromonitor International Ltd. in London estimates. Read more of this post

What We Learned From the Financial Crisis; From Timing Retirement Withdrawals to Avoiding Unnecessary Complexity, Some Hard Lessons on Managing Money

September 13, 2013, 4:41 p.m. ET

What We Learned From the Financial Crisis

From Timing Retirement Withdrawals to Avoiding Unnecessary Complexity, Some Hard Lessons on Managing Money

KELLY GREENE, LIAM PLEVEN, LAURA SAUNDERS, DAWN WOTAPKA and JASON ZWEIG

There is nothing quite like living through a financial cataclysm to teach you what really is important when it comes to your finances. Or is there? It has been five years since the collapse of investment bank Lehman Brothers Holdings, a shock point in an era that saw the takeover or shutdown of many household-name financial institutions and the meltdown of the stock and housing markets. Despite a government bailout of financial firms costing hundreds of billions of dollars, 8.8 million jobs and $19.2 trillion in household wealth were lost, according to a U.S. Treasury report on the crisis. Read more of this post

Why the Dow — Quirks and All — Is Beating the S&P 500

Sep 13, 2013

Why the Dow — Quirks and All — Is Beating the S&P 500

JASON ZWEIG

This coming week, the dowager gets a makeover. The Dow Jones Industrial Average, which turned 117 years old this summer, will get three new members as Nike, Visa and Goldman Sachs Group replace AlcoaAA -0.98%, Hewlett-PackardHPQ +0.50% and Bank of AmericaBAC +0.07%. Should you care? There will be no immediate impact on the level of the Dow, which finished this week at 15376; the three stocks getting the boot have barely budged in price. But the inner workings of the average, which have changed little since its inception, hold some important lessons for investors—most notably that things on Wall Street are seldom as simple as they seem. Read more of this post