Factoring Draws Attention of China’s Bank Regulator

September 3, 2013, 6:43 a.m. ET

Factoring Draws Attention of Bank Regulator

Regulator Seeks Better Monitoring of Innovative Lending

BEIJING—China’s banking regulator has instructed banks to better monitor a type of lending particularly popular with small firms as demand burgeons and banks relax their oversight standards. According to a document from the China Banking Regulatory Commission seen by The Wall Street Journal, loans made against companies’ accounts receivable—those sales for which a company has yet to receive payment—must be recorded as nonperforming loans if they turn bad. Banks also need to be sure that such loans are in fact backed by receivables. Read more of this post

China bans officials from buying mooncakes with public funds

China bans officials from buying mooncakes with public funds

8:30am EDT

BEIJING (Reuters) – China is banning officials from using public funds to buy mooncakes, pastries offered as gifts during the Mid-Autumn Festival, as part of President Xi Jinping’s fight against corruption, the government said on Tuesday. Officials cannot use public money to send mooncakes as gifts or to arrange banquets that are not related to official duties during the festival, which falls on September 19 this year, the ruling Communist Party’s Central Commission for Discipline Inspection said on its website. Read more of this post

For Rich Mainlanders, Hong Kong Loses Luxury Luster

September 3, 2013, 6:22 PM

For Rich Mainlanders, Hong Kong Loses Luxury Luster

By Jason Chow and Chester Yung

Has Hong Kong lost its perch as China’s preferred luxury hub? Mainland Chinese passport holders account for 78% of all visitors to Hong Kong, and they have an outsize presence on the city’s shopping scene. The sheer number of Chinese visitors is huge: Last year saw 34.9 million arrivals from China, equal to about five times’ Hong Kong’s population. But while mainlanders continue to arrive in the city in droves – more than 3.7 million entered the territory in July, up 15.7% from a year before – they seem to be spending less than they used to, and veering away from big-ticket items in particular, according to Hong Kong government figures released on Monday. Read more of this post

Citigroup has shed more than $6 billion in private-equity and hedge-fund assets in the past month in order to comply with new regulations limiting banks’ holdings of “alternative” investments

Updated September 2, 2013, 9:28 p.m. ET

Citigroup Dialing Back Its ‘Alternative’ Holdings

SHAYNDI RAICE

Citigroup Inc. C +2.13% has shed more than $6 billion in private-equity and hedge-fund assets in the past month, according to people familiar with the transactions, in order to comply with new regulations limiting banks’ holdings of “alternative” investments. The nation’s third-largest bank by assets last week sold a $4.3 billion private-equity fund called Citi Venture Capital International for an undisclosed price to Rohatyn Group, a private-equity fund run by Nick Rohatyn, son of financier Felix Rohatyn, said people familiar with the matter. It couldn’t be determined what price the fund fetched. On Aug. 9, Citigroup sold a $1.9 billion emerging-markets hedge fund to the fund’s managers, the people said. Read more of this post

China’s Struggle Sessions; A messy leadership transition suggests the return of ideology

September 3, 2013, 1:10 p.m. ET

China’s Struggle Sessions

A messy leadership transition suggests the return of ideology.

When the trial of Bo Xilai, the former Communist Party boss of Chongqing, ended last week, most observers assumed that Chinese politics would settle into its usual monotonous patterns. But the power plays continue. On Tuesday, Jiang Jiemin was removed as head of the State-Owned Assets Supervision and Administration Commission (SASAC), a post he had held for only a few months. Read more of this post

Buying a Frontier Market Fund? This Theater’s Got a Teeny, Tiny Exit

September 3, 2013, 10:26 A.M. ET

Buying a Frontier Market Fund? This Theater’s Got a Teeny, Tiny Exit

By Brendan Conway

It’s been a rotten year for one of yesteryear’s favorite investing categories: iShares MSCI Emerging Markets ETF (EEM) is down 13% on the year. But iShares MSCI Frontier 100 ETF(FM), which tracks stocks from tiny, less trodden markets that are too underdeveloped for EEM, is up more than 10%. If you guessed frontier markets are even less liquid than emerging markets and, thus, harder to exit in a panic, Joe Light of the Wall Street Journal has some data you should see. Namely, Vanguard Group estimates the one hour it takes to liquidate $100 million in emerging-markets expands to more than 10 days when you’re on the frontier. Being so small can have bad consequences, says Chris Philips, senior analyst at Vanguard Group, which doesn’t offer a frontier-market fund. For one thing, it can take funds a long time to move into and out of stocks. Mr. Philips calculated that a frontier-market fund would need more than 10 days to liquidate a $100 million position. Read more of this post

Europe’s Workers Flock to Norway for Better-Paying Jobs

Europe’s Workers Flock to Norway for Better-Paying Jobs

Pedro Dias cut his workday almost in half and tripled his pay after leaving his native Portugal for a job as a software developer in Oslo. The 27-year-old, who escaped 15-hour days as a researcher at New University of Lisbon and now rarely works past 5 p.m., landed his job at Metafocus AS, a producer of web-based software, at a career fair in the Portuguese capital in February. “In Portugal, with an average salary you will struggle and have to work longer hours,” he said as he looked at the waters of the Oslo Fjord from a patio outside his office in the capital. Dias says he enjoys his new job and his free time, during which he is preparing for his first half-marathon run. Read more of this post

Dealers in Debt Pare Commitments Raising Risk as New Rules Bite

Dealers in Debt Pare Commitments Raising Risk as New Rules Bite

The worst losses in U.S. debt in at least 37 years are being magnified by investors exiting the market at the same time new regulations prompt Wall Street firms to cut back on trading corporate bonds. Bank of America Merrill Lynch’s U.S. Broad Market Index is on pace to drop 4.41 percent, the biggest annual loss since at least 1976. Investors pulled $123 billion from bond funds since May, according to TrimTabs Investment Research. Read more of this post

North Korea Can Launch Nuclear-Tipped Missiles, South Korea Says, contradicting the U.S. position that the country is years away from developing the technology

North Korea Can Launch Nuclear-Tipped Missiles, South Korea Says

North Korea can now deliver a nuclear warhead on a missile, the South Korean Defense Ministry said in a report, contradicting the U.S. position that the country is years away from developing the technology. “The security situation on the Korean Peninsula has now worsened as the North’s threat of nuclear missiles has become real,” according to the report, which was presented to a parliamentary committee on national security today and released by the office of lawmaker Kim Kwang Jin. The new capability may embolden North Korea toward military provocation once the U.S. relinquishes its wartime command of South Korean troops in 2015, the report said. That command was given to the U.S. during the 1950-53 Korean War. North Korea threatened first strikes against South Korea and the U.S. in March after a February nuclear test prompted tightened sanctions against the Kim Jong Un regime. The Obama administration, which has called on North Korea to renounce its nuclear program, has said the country didn’t have the ability to launch an atomic weapon on a missile. Until 2010, the North was in an experimental stage with its nuclear missiles, and the country has now come to a point where it can actually use them, the report said. The Defense Ministry didn’t explain how it reached its conclusion, and the study didn’t mention the ranges of the missiles that the North had the capability to mount weapons on.

To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net

China Solar Defaults Shock Holders as $8.4 Billion Due

China Solar Defaults Shock Holders as $8.4 Billion Due

LDK Solar Co.’s delay in paying debt and Suntech Power Holdings Co.’s attempts to renegotiate obligations are prompting investors to gird for losses as $8.4 billion in renewable energy comes due by the end of next year. The 2014 securities of LDK slid to a record low of 25.6 yuan per 100 yuan face value last week after the manufacturer said a payment due Aug. 28 on the notes would be delayed. That compares with the 30 euros per 99.861 euro issue price on Bonn-based Solarworld AG. (SWV) Suntech, once the world’s biggest panel maker, said former chairwoman Susan Wang and two other directors quit amid negotiations with holders of its defaulted debt. Read more of this post

Rupiah Weakens Beyond 11,000 a Dollar for First Time Since 2009

Rupiah Weakens Beyond 11,000 a Dollar for First Time Since 2009

The rupiah weakened beyond 11,000 per dollar for the first time since April 2009 on concern Indonesia will struggle to rein in a record current-account gap. The nation’s trade shortfall was $2.3 billion in July, compared with the $393 million median estimate in a Bloomberg survey of economists. The current-account deficit will be about 4 percent of gross domestic product or more this quarter, from 4.4 percent in the previous period, Bank of America Merrill Lynch economist Hak Bin Chua wrote in a note yesterday. This is higher than the government’s target of 3 percent this quarter. Read more of this post

Japan Salaries Extend Longest Fall Since ’10 in Threat to Abe

Japan Salaries Extend Longest Fall Since ’10 in Threat to Abe

Japan salaries extended the longest slide since 2010 in July, raising the stakes for Prime Minister Shinzo Abe’s decision on whether to increase a sales tax. Regular wages excluding overtime and bonuses dropped 0.4 percent from a year earlier, marking a 14th straight month of decline, according to data released today by the Ministry of Health, Labour and Welfare. Bonus payments rose 2.1 percent, helping to lift total cash earnings 0.4 percent. Read more of this post

RBA Running Out of Room to Cut Rates, Australia’s Robb Says

RBA Running Out of Room to Cut Rates, Australia’s Robb Says

Australia’s central bank is running out of room to implement emergency stimulus measures should they be needed with interest rates now at historical lows, Shadow Finance Minister Andrew Robb said. The central bank doesn’t have “a lot of room left if there was some other unforeseen event in the world economy to make a difference,” Robb, whose Liberal-National coalition is on track to win government at the Sept. 7 election, said in an interview with Bloomberg Television today. “The Reserve Bank has been relied upon, or pressured, to do the heavy lifting in the economy for the last few years.” Read more of this post

SNB Shield Reaps Reward of Growth Defying Euro Area

SNB Shield Reaps Reward of Growth Defying Euro Area

Switzerland’s economy defied the recession that afflicted its neighbors to notch up a year of uninterrupted growth, underlining the importance of the country’s currency ceiling as it marks its second anniversary. Swiss gross domestic product rose 0.5 percent in the second quarter from three months through March, when it expanded by 0.6 percent, the Secretariat for Economic Affairs in Bern said in a statement today. That is more than a median estimate of 0.3 percent in a Bloomberg survey of 18 economists. Read more of this post