New Warning Issued on China Local Government Debt

September 27, 2013, 2:04 p.m. ET

New Warning Issued on China Local Government Debt

WILLIAM KAZER

BEIJING—China’s local government debt has nearly doubled since 2010, an official newspaper reported Friday, raising fresh concerns about potential repayment problems and the health of the banking system. The state-run Economic Information Daily, quoting the results of a government audit, didn’t give a figure for the new level of local debt. But a doubling of the total found in the last audit in 2010 would put the tally at around 20 trillion yuan ($3.28 trillion)—or almost 39% of the nation’s gross domestic product last year. China has been concerned that local-government debt levels were rising quickly as economic growth slowed and local administrations and the companies they hold stepped up borrowing to give the economy a helping hand. Most of China’s local governments are forbidden from borrowing money directly, so they have created local-financing vehicles to skirt the restrictions and raise funds for infrastructure and other projects. Those vehicles racked up massive debt levels in 2009 and 2010 as China rolled out a giant infrastructure-based stimulus program in the wake of the financial crisis. Read more of this post

Kelcy Warren, the billionaire running the third-largest U.S. natural gas pipeline company, says the days of deal making are returning

Pipeline Billionaire Ready for Next Round of Deal Making: Energy

Kelcy Warren, the billionaire running the third-largest U.S. natural gas pipeline company, says the days of deal making are returning. Railroads and competing pipeline operators are taking market share, leaving networks with smaller regions and struggling to find business. To survive, companies need a geographically diverse portfolio of assets across an array of oil and gas products that can weather slowdowns in individual sectors or regions, Warren, chairman and chief executive officer of Energy Transfer Partners LP (ETP), said in an interview. Read more of this post

Rethinking equity after Alibaba

September 27, 2013 6:57 pm

Rethinking equity after Alibaba

There may be a place for differential voting shares

The idea that voting power should go hand in hand with share ownership has become so entrenched a principle of corporate governance that it is rarely questioned. This week Alibaba, the Chinese internet group, opted to float in the US because the Hong Kong stock exchange would not bend its rules to allow the company’s owners to control the equity, despite owning only a minority of the shares. Most observers sided with the HK authorities while condemning the US for engaging in a regulatory race to the bottom. Read more of this post

Auction houses in China: Christie’s v the people’s army; Foreign auctioneers have begun to enter China’s huge but unruly art market. They will not find it easy

Auction houses in China: Christie’s v the people’s army; Foreign auctioneers have begun to enter China’s huge but unruly art market. They will not find it easy

Sep 28th 2013 | SHANGHAI |From the print edition

IN 1779 the estate of Sir Robert Walpole, Britain’s first prime minister, sold an art collection to Catherine the Great. The private sale, which included pieces by Rubens and Rembrandt, was brokered by James Christie, a pioneering auctioneer. Though she placed most of these in St Petersburg’s Hermitage museum, the Russian empress traded a few items with the Qianlong emperor for some Chinese masterpieces. Read more of this post

Heineken sewn up in Chinese trademark tangle

September 27, 2013 3:11 pm

Heineken sewn up in Chinese trademark tangle

By Demetri Sevastopulo in Hong Kong

China became the world’s copycatting centre by faking everything from Louis Vuitton bags and PhD diplomas to Apple stores. Now Heineken has become the latest multinational to face an intellectual property challenge – from a tiny Chinese sewing machine company. The global brewer has accused Wujiang Xili Machinery Factory, a company from Jiangsu province with fewer than 50 employees, of pirating its name and logo, and using them at a Shanghai trade show this week. Read more of this post

China to allow banks to sell $49 billion of asset-backed securities: sources

China to allow banks to sell $49 billion of asset-backed securities: sources

Fri, Sep 27 2013

BEIJING (Reuters) – China will allow selected banks to issue asset-back securities (ABS) worth 300 billion yuan ($49 billion) by the end of June next year, expanding a pilot program to support the economy, three industry sources said. The People’s Bank of China (PBOC) asked 20 banks, including big state banks, to submit their ABS issuance plans at a recent meeting which also involved securities brokerages and trust companies, the sources familiar with the development said. Read more of this post

China private bank push sparks speculative stock frenzy

China private bank push sparks speculative stock frenzy

Fri, Sep 27 2013

* Policymakers express support for privately-owned banks

* Speculators feast on stocks linked to private banks

* Hope that private banks can boost financing to small firms

* But officials, bankers say no panacea for SME financing woes

By Heng Xie and Gabriel Wildau

SHANGHAI, Sept 26 (Reuters) – Signs that China is preparing to open its banking sector to privately-owned lenders has raised hopes that they can help ease financing difficulties afflicting smaller firms. A handful of listed companies have also seen their stock prices soar in recent weeks on rumours they are planning moves into banking. But bankers and policymakers say that hopes for private banks have been inflated. At least in the short term, private banks will provide neither big new profits to listed companies nor an easy solution to small- and medium-sized enterprises’ (SMEs) financing woes. Read more of this post

Park eats her words. Can, and will, South Korea’s president make more just, equal society?

2013-09-26 16:59

Park eats her words

Can, and will, president make more just, equal society?        
President Park Geun-hye Thursday expressed regrets about her failure to fully deliver campaign promises on key social welfare programs. “I will try my best to realize these pledges during my term of office,” Park said while presiding over a Cabinet meeting.
Koreans can neither understand why President Park is backtracking on the most important election pledges nor accept the way she is doing so. Park cited the slower-than-expected economic recovery and consequent hole in government revenue as the main reason. This means that she won the election on a pledge that can change by the fluctuations in the business cycle. Read more of this post

A Seoul appeals court handed down severe verdicts to the brothers who run SK Group, the country’s third-largest conglomerate

Appeals court jails 2 SK brothers

Tougher than original verdict, judges also shoot down new trials

Sept 28,2013

A Seoul appeals court yesterday handed down severe verdicts to the brothers who run SK Group, the country’s third-largest conglomerate.

Chairman Chey Tae-won was sentenced to four years in prison, and his younger brother, Chey Jae-won, SK’s vice chairman, was sentenced to three-and-a-half years.
The Seoul High Court yesterday upheld the four-year verdict given to the 52-year-old chairman by a lower court back in January for embezzling 45.1 billion won ($41.8 million) from two SK affiliates for personal investments.  Read more of this post

Hyosung, CJ E&M in tax hole; Cho Suck-rae, chairman of the country’s 26th largest conglomerate Hyosung Group, is likely to be prosecuted for evading hundreds of billions of won in tax

2013-09-27 17:00

Hyosung, CJ E&M in tax hole

By Na Jeong-ju
Cho Suck-rae, chairman of the country’s 26th largest conglomerate Hyosung Group, is likely to be prosecuted for evading hundreds of billions of won in tax.
Sources from the National Tax Service (NTS) said Friday it discovered Cho allegedly dodged paying tax by manipulating account books and setting up a slush fund.
“The case may be referred to the prosecution as early as next week,” an NTS official said on condition of anonymity. Read more of this post

Beer, gambling and Mad Men lead stocks boom

September 27, 2013 3:25 pm

Beer, gambling and Mad Men lead stocks boom

By FT Reporters

When it comes to big stock market gains, investors should look to beer, gambling, the macho culture of Mad Men and box office hits such as The Hunger Games. While many have opted for safety as equities have rallied in the wake of the financial crisis – favouring big, reliable dividend-payers – an eclectic group of global small-caps are setting a blistering pace. The MSCI World Small Caps index has climbed almost 22 per cent already this year, touching a record high last week, thanks largely to growing confidence in the strength of the US economic recovery and hopes for growth in Europe and Japan. Meanwhile, the blue-chip World Index has lagged behind, gaining 16 per cent in 2013. Read more of this post

On the march, small-caps that punch above their weight

September 27, 2013 6:48 pm

On the march, small-caps that punch above their weight

By Jonathan Eley

Small is beautiful. Elephants don’t gallop. A flea can jump 200 times its own height. There’s no shortage of appropriate metaphors for the tendency of small-cap shares to outperform their larger brethren – and in recent years, no shortage of examples of them doing so. Shares in companies outside the top echelon of the market have been on a tear this year. The FTSE Fledgling index is up 27 per cent this year to date, while the FTSE Small-cap is up 25 per cent and the Numis Smaller Companies index has risen 21 per cent – more if the investment trusts are stripped out. That compares with a gain of 11 per cent for the FTSE 100, which tracks the biggest companies. Read more of this post

Byron Wien is Wary of Market’s Optimism; Be defensive “when most others think almost everything is headed in the right direction”

SATURDAY, SEPTEMBER 28, 2013

Byron Wien is Wary of Market’s Optimism

By BYRON WIEN | MORE ARTICLES BY AUTHOR

Be defensive “when most others think almost everything is headed in the right direction,” writes the veteran Wall Street strategist.

We all had plenty to brood about over the Labor Day weekend. President Obama was contemplating sending missiles into Syria to punish President Bashar al Assad for using chemical weapons against his own people and to discourage him from using them again. The President also had to choose a successor to Federal Reserve Chairman Ben Bernanke and his preferred choice, Larry Summers, faced opposition in the Senate, threatening his confirmation. The Federal Reserve, by the way, had indicated in May that it might reduce its $85 billion bond-buying program in the fall, causing interest rates to rise and creating turbulence in the emerging markets. Everyone awaited the Fed’s decision on how much restraint they would implement. The nation’s debt ceiling loomed in October with the Republicans taking the position that unless the Affordable Care Act was deprived of funding, they would not agree to raising the borrowing limit. Finally, as if the political situation in the Middle East were not complicated enough, Iran proceeded with its nuclear weapons development program. Read more of this post