Thai central banker warns on subsidies largesse

September 27, 2013 10:00 am

Thai central banker warns on subsidies largesse

By Michael Peel in Bangkok

Thailand’s central bank chief on Friday fired a broadside against populist government policies, echoing wider fears that climbing consumer debt levels and more spending on commodity subsidies are underminingsoutheast Asia’s second-largest economy. Prasarn Trairatvorakul, governor, warned that Thai households could become “undisciplined” and “addicted to easy money”, amid a succession of handouts by government ranging from subsidies to rice farmers to tax breaks on first-time car buys. Thai household debt has risen to about 80 per cent of gross domestic product, from 55 per cent in 2008. Much of that growth has come from lending to subprime lenders, according to Fitch, the rating agency – a practice that helped unravel the US economy. Read more of this post

Trend-following funds head for third down year

Trend-following funds head for third down year

Fri, Sep 27 2013

NEW YORK (Reuters) – Long-term trend following funds are headed for a third straight year of losses unless the underlying commodity and financial markets they trade settle into a more predictable pattern, which does not seem likely given the Federal Reserve’s mixed signals on the U.S. economic stimulus. Many of the so-called Commodity Trading Advisors (CTAs) were whipsawed in the first half by market gyrations over whether the Fed would cut its bond buying this year. Further volatility seems likely after the Fed said last week it needed more time to decide on the stimulus. Some CTAs trading on shorter time horizons and focused on gold made money as bullion prices swung on speculation over the Fed. Other funds gained in the past two months by following a relatively steady rally in oil caused by Middle East tensions, and a run-up in cattle prices. Read more of this post

Latin America’s Middle-Class Mirage

Eduardo Levy Yeyati

Eduardo Levy Yeyati, former Chief Economist at the Central Bank of Argentina and Head of Emerging Markets Strategy at Barclays Capital, is Director of Elypsis Partners, Professor at Universidad Torcuato Di Tella, and President of the Center for Public Policy (CIPPEC).

Latin America’s Middle-Class Mirage

25 September 2013

BUENOS AIRES – Rising incomes across the developing world will bring some 400 million people into the middle class by 2020, up from 1.8 billion today. Their increasing spending power, especially on non-essential consumer goods and services, is being hailed as the great hope for the global economy. But closer examination of their economic circumstances suggests that these new consumers are neither as wealthy nor as secure as we may think. Read more of this post

Investors are pouring money into nontraded real-estate investment trusts, despite repeated warnings from regulators

September 27, 2013, 6:48 p.m. ET

A REIT That Could Bite Back

A target of regulators, nontraded REITs are drawing record assets.

LIZ MOYER

Investors are pouring money into nontraded real-estate investment trusts, despite repeated warnings from regulators. The products, which often sport yields of more than 6%, have proved popular among income-hungry investors looking to diversify beyond bonds. Like their exchange-listed cousins, nontraded REITs pool investor money into income-generating properties, such as office buildings, hotels or shopping malls, and pay dividends. As their name implies, they aren’t publicly traded and can lock up investor money for a number of years. Critics contend that the products are hard to understand and that investors aren’t being adequately warned about the risks. Read more of this post

China puffer fish tower adding to GDP prompts a huff about state spending

China puffer fish tower prompts a huff about state spending

7:18am EDT

BEIJING (Reuters) – A Chinese viewing tower in the shape of a giant, copper puffer fish has raised an online huff about the latest in a series of bizarre and extravagant targets of state investment. Encased in 8,920 copper plates and built at a cost of around 70 million yuan ($11.4 million), the tower on an island in Yangzhong county, eastern Jiangsu province, hovers 15 storeys above ground. The government has often been criticized for wasteful investment to power the world’s No. 2 economy. Beijing acknowledges the problem and wants consumption to overtake investment as a driver of growth. Residents who welcome the fish tower say it improves the county’s image. Less enthusiastic residents question whether such expensive and impractical buildings are needed. “To spend so much money on something so meaningless, I really admire these ‘wealthy’ people,” Mother988 said on Sina Weibo, China’s version of Twitter, with apparent heavy irony. The People’s Daily, the Chinese government’s main mouthpiece, acknowledged that the construction had polarized opinion. “Once this giant puffer made its appearance, it caused a heated debate online,” it said. Public records show Jiangsu’s local government bodies are the most indebted in the country. Jiangsu says its debt is manageable, but took steps this week to rein in risk by announcing plans to control land sales, becoming the first Chinese government to do so. Yangzhong aims to promote the tower as the world’s biggest metal construction in terms of volume, the People’s Daily said. Central Henan province drew controversy in 2011 when a state-backed charity tried to build an eight-storey sculpture of Song Qingling, second wife of modern China’s founding father Sun Yat Sen. Construction was scrapped half-way through. The eastern province of Zhejiang also came under the spotlight after it modeled one of its city court houses on Capitol Hill.($1 = 6.1 yuan)

Active Stock ETFs Move Closer to Market After Long Delay

Active Stock ETFs Move Closer to Market After Long Delay

Companies seeking to push exchange-traded funds into the almost $6 trillion U.S. market for actively managed stock funds are starting to gain traction with regulators after a long delay. Guggenheim Partners LLC, Eaton Vance Corp. and Precidian Investments have received formal comments in the past two months from the Securities and Exchange Commission staff on plans for new types of actively managed ETFs, industry lawyers and executives said. Similar proposals, some as old as five years, have been on hold at the SEC. Read more of this post

Home Depot Expands Redbeacon to Add ‘Do-It-for-Me’ Services

Home Depot Expands Redbeacon to Add ‘Do-It-for-Me’ Services

Home Depot Inc. (HD), the world’s largest home improvement retailer, is accelerating the national rollout of its online handyman referral service Redbeacon to tap demand from homeowners who don’t want to do fix-it projects themselves. Redbeacon, which connects consumers with painters, plumbers, carpenters and maids, expanded this week through Home Depot to Oregon, Washington, Idaho, Utah, Montana and Alaska. That puts the service in 11 states as the service pushes nationwide over the next two years, Chief Executive Officer Anthony Rodio said in an interview yesterday. Read more of this post

Rajan is set to use consumer-price inflation as the main guide for monetary policy for the first time, a shift that signals further increases in the benchmark interest rate

Rajan Seen Switching Main RBI Price Gauge in Sign of Rate Rises

Reserve Bank of India Governor Raghuram Rajan is set to use consumer-price inflation as the main guide for monetary policy for the first time, a shift that signals further increases in the benchmark interest rate. Rajan, 50, will add to last week’s surprise repurchase-rate boost after specifying a pace of consumer-price gains as the key target, seven of 10 analysts said in a Bloomberg News survey. A panel he set up after becoming governor on Sept. 4 is due to report by December on revising the monetary-policy framework. Read more of this post

Chicken Processed in China Triggers U.S. Food Safety Protests

Chicken Processed in China Triggers U.S. Food Safety Protests

Food-safety advocates are raising alarms over a decision by the Obama administration to permit chicken processed in China to be sold in the U.S. even after several high-profile incidents of food contamination. The U.S. Department of Agriculture, in addressing a decade-long trade dispute over farm imports, said it will allow poultry slaughtered in the U.S. and Canada to be processed in China and returned to the U.S. for consumption. Critics are vowing to fight the decision, which they say puts consumers at risk due to lax Chinese factory oversight. Read more of this post

Panasonic Said to Sell 80% of Healthcare Unit to KKR for $1.5 Bln

Panasonic Said to Sell Health Care Unit to KKR for $1.5 Billion

Panasonic Corp. (6752) is poised to agree to sell its health-care unit to KKR & Co. (KKR) for about 150 billion yen ($1.5 billion) today, according to two people with knowledge of the matter. The Japanese electronics company will sell about 80 percent of Panasonic Healthcare Co. to the U.S. private equity firm and keep 20 percent, the people said, asking not to be named before a statement scheduled for release later today. Panasonic Healthcare, which provides digital medical record systems and makes instruments that measure blood glucose, would be KKR’s biggest acquisition in Japan, data compiled by Bloomberg show. Osaka-based Panasonic is selling control of the unit as it focuses on a 250 billion-yen plan to reverse losses at its electronics business in the next two years. The Nikkei newspaper reported the transaction earlier today. Chieko Gyobu, a spokeswoman for Panasonic in Tokyo, declined to comment on the sale, as did a spokesman for KKR in the Japanese capital. New York-based KKR got preferential negotiating rights after two rounds of bidding for Panasonic Healthcare, three people with knowledge of the matter said earlier this month.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

South Korea Embraces Craft Beer

September 18, 2013, 10:26 AM

South Korea Embraces Craft Beer

By Andrew Salmon

SEOUL — In a tangle of nondescript alleyways in central Seoul’s Noksapyeong district, a handful of Korean and foreign entrepreneurs are pioneering a new market for homegrown craft beers. Hidden opposite a side exit to the U.S. Army’s giant Yongsan garrison is trend-setting brewpub Craftworks Brewing Co. Defying its shabby surroundings, Craftworks’ interior is upscale. The bar’s eight taps pour artisanal ales, wheat beers, lagers and porters — each branded with a Korean name. Read more of this post

At H&M, 3,000 Stores and Counting; The Swedish retailer is growing faster in China than it has in any other market in its 66-year history

Updated September 26, 2013, 12:26 p.m. ET

At H&M, 3,000 Stores and Counting

Shares Hit High as Profit Rises; China Expansion Continues

JENS HANSEGARD and LAURIE BURKITT

STOCKHOLM—The laid back Chinese city of Chengdu, famous for its spicy Chuan style food, became the home of Hennes & Mauritz‘s HM-B.SK -0.35% 3,000th store earlier this month, underscoring an ambitious commitment by Chief Executive Karl-Johan Persson to expand the company on the back of Asian consumers with rising incomes and heightened demand for style. The Swedish retailer is growing faster in China than it has in any other market in its 66-year history. On Thursday, investors drove H&M shares to a record high as third-quarter earnings indicated that its aggressive store-opening strategy is paying off. Read more of this post

China Seen to Wait Until 2016 to Scrap Cap on Bank Deposit Rates

China Seen to Wait Until 2016 to Scrap Cap on Bank Deposit Rates

China will probably wait at least two years before requiring banks to pay market rates on deposits as officials seek to avoid disrupting the banking system while the economy is slowing. Policy makers will remove all restrictions on deposit rates in 2016 or later, according to seven of 12 economists and analysts surveyed by Bloomberg News from Sept. 9 to 13. Most respondents said such a move could cut net interest margins, a measure of loan profitability, by at least 50 basis points and smaller banks will be the hardest hit. Read more of this post

In the hunt for luxury hotel management companies in America, China’s richest man may set his sights on Four Seasons, or several smaller boutique chains

Four Seasons Seen Drawing China’s Richest Man: Real M&A

In the hunt for luxury hotel management companies in America, China’s richest man may set his sights on Four Seasons, or several smaller boutique chains. Wang Jianlin, owner of commercial land developer Dalian Wanda Group, said this month he hired two investment banks to buy hotel management companies, mostly in the U.S., where a recovery in travel is boosting lodging demand. Closely held Four Seasons Hotels & Resorts, operator of the namesake properties in Manhattan and around the world, would give Wang a high-end, globally recognized brand, said Robert W. Baird & Co. Read more of this post

Huishan Dairy, the milk producer backed by billionaire Cheng Yu-tung, fell in its trading debut after the company and investors sold at least HK$10 billion ($1.3 billion) in shares in an IPO

Huishan Dairy Falls in Trading Debut After $1.3 Billion IPO

China Huishan Dairy Holdings Co. (6863), the milk producer backed by billionaire Cheng Yu-tung, fell in its trading debut after the company and investors sold at least HK$10 billion ($1.3 billion) in shares in an initial public offering. The stock declined 5.2 percent to HK$2.53 as of 9.35 a.m. in Hong Kong trading. The benchmark Hang Seng Index advanced 0.34 percent. Huishan Dairy and its investors sold a total of 3.8 billion shares at HK$2.67 apiece, with the company raising HK$7.52 billion after deducting underwriting fees, it said yesterday. The price was at the top end of a marketed range. Read more of this post

BlackRock’s Hambro Sees CEO Exits as Gold Miners Book Writedowns

BlackRock’s Hambro Sees CEO Exits as Gold Miners Book Writedowns

BlackRock Inc. (BLK)’s Evy Hambro, who manages the $8 billion World Mining Fund, expects more heads of gold producers to exit as companies book further writedowns after the metal’s biggest quarterly drop in more than 90 years. “It’s very clear to us that there will be further writedowns as we go into the full year, or the results season at the beginning of next year,” Hambro said in an interview, declining to name any companies. “I would be very surprised if we didn’t see more change in CEOs across the gold industry.” Read more of this post