Chinese consumers favour overseas brands in many sectors, eroding Beijing’s attempts to boost domestic profits

October 22, 2013 8:41 pm

China: Foreign values

By Paul J Davies

Consumers favour overseas brands in many sectors, eroding Beijing’s attempts to boost domestic profits

The menswear floor of the New World Department Store in central Chengdu, a city of 14m in western China, offers the kind of fast fashion you might expect to see in any second-tier city in the US or Europe. The signage on the concessions is in English but it displays unfamiliar brand names. “I’m David” sells urban casual wear, “Scofield” is meant to have a British feel, while “Mind Bridge” and “Gather Jewels” are both preppy Ivy League style. They may look the part, but these clothes struggle to compete with Uniqlo, Zara and H&M, all of which have their own stores nearby. Brands such as these illustrate the problems and opportunities facing China as it attempts to jump-start the consumer spending that will rebalance its economy away from heavy investment in factories and property. Read more of this post

A new financial reporting standard (FRS) affecting the consolidation of financial statements will become effective for annual periods beginning on or after Jan 1, 2014, the Singapore Exchange (SGX) reminded investors

PUBLISHED OCTOBER 23, 2013

SGX reminds investors of new consolidation rule

MICHELLE QUAH MICHQUAH@SPH.COM.SG

A NEW financial reporting standard (FRS) affecting the consolidation of financial statements will become effective for annual periods beginning on or after Jan 1, 2014, the Singapore Exchange (SGX) reminded investors yesterday. The new standard, FRS 110, issued by the Accounting Standards Council, could change the entities that consolidated into the group’s consolidated financial statements. “FRS 110 . . . makes control the basis for determining the entities to be included in consolidated financial statements. More entities will be included in the consolidated financial statements if the issuer is able to establish control over them,” SGX said in a mailer, sent via its investor education portal My Gateway, yesterday. “This means the assets, liabilities, income, and expenses of these ‘investees’, or subsidiaries, will be reflected in the consolidated financial statements as if they were part of the issuer group, likely affecting the final figures,” SGX’s report added. Read more of this post

Proposed changes in auditor reporting are expected to dramatically change the way external auditors reflect their opinions on companies’ financial statements

PUBLISHED OCTOBER 23, 2013

Changes ‘to add colour and insight to audit reports’

ISCA event discusses today how proposals will apply in S’pore context

MICHELLE QUAH MICHQUAH@SPH.COM.SG

Changing auditor reporting

[SINGAPORE] Proposed changes in auditor reporting are expected to dramatically change the way external auditors reflect their opinions on companies’ financial statements. Among the key proposals are the provision of more information on how audits are performed – a new section will highlight the key audit matters that came up during the audit – and the audit opinion will be placed right at the beginning of the audit report to increase its prominence. The aim is to provide greater transparency on what goes into an audit and to increase the usefulness of the audit report to users, building on the standard one-page document most audit reports are these days. Read more of this post

Brazil must embrace change to flourish; 74% of GDP growth over the past decade was due to the increase in the number of people working and only about 26% was attributable to productivity gains

October 22, 2013 10:03 pm

Brazil must embrace change to flourish

By Joseph Leahy

The Technological Park of the Federal University of Rio de Janeiro could hardly be better located, given its purpose. Set on an island in Guanabara Bay, the giant natural harbour that forms the setting for Brazil’s second-largest city, the centre has a prime vantage point looking out over the ocean and the country’s huge oil discoveries that lie beneath. These deepwater fields, called pre-salt because they are buried under a layer of sodium chloride that is up to 2km thick, are helping drive a wave of innovation in the energy sector. Read more of this post

Indonesia’s mining industry will collapse if the government moves ahead with a planned ban on the export of raw minerals, the country’s chamber of commerce has warned

October 22, 2013 5:53 pm

Indonesia mining at risk over export ban

By Ben Bland in Jakarta

Indonesia’s mining industry will collapse if the government moves ahead with a planned ban on the export of raw minerals, the country’s chamber of commerce has warned. The southeast Asian nation, which is facing strong economic headwinds, is the biggest exporter of coal for power stations, nickel ore and tin, and a leading shipper of bauxite and copper. But on January 1 it is set to implement a law prohibiting the export of unprocessed metals as part of a drive to refine the ores and potentially generate higher margins. Read more of this post

Struggling Newspapers Sell Off Old Headquarters

October 22, 2013

Struggling Newspapers Sell Off Old Headquarters

By TERRY PRISTIN

They were once major symbols of civic pride and influence, often situated in the heart of the city, and nearly equal in stature to nearby city halls, courthouses and other major public buildings. But increasingly, many of the buildings that served as newspaper headquarters in cities around the country are being put on the market, as a struggling industry searches desperately for ways to increase revenue. Read more of this post

Top China Banks Triple Debt Write-Offs as Defaults Loom

Top China Banks Triple Debt Write-Offs as Defaults Loom

China’s biggest banks tripled the amount of bad loans written off in the first half, cleaning up their books ahead of what may be a fresh wave of defaults. Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four largest rivals expunged in the first six months 22.1 billion yuan ($3.65 billion) of debt that couldn’t be collected, up from 7.65 billion yuan a year earlier, filings showed. That didn’t pare first-half profits, which climbed to a record $76 billion, as provisions were set aside in earlier periods when the loans began souring. Read more of this post

China’s Banks Must Compete to Survive; The explosion of debt and shadow banking may threaten the stability of China’s banking system, if it stays as is

China’s Banks Must Compete to Survive

The explosion of debt and shadow banking may threaten the stability of China’s banking system, if it stays as is.

YUKON HUANG AND CANYON BOSLERYukon Huang

Oct. 22, 2013 1:27 p.m. ET

The news leading up to China’s Third Plenum next month seems to suggest that the country is heading toward a financial cliff. The common perception is that China’s mismanaged banks are saddled with unprecedented credit driven by irresponsible local borrowing and incomprehensible shadow banking products. Over-capacity in manufacturing suggests that high investment rates cannot produce the returns needed to service these new debts. Read more of this post

Buffett Sees Zero Chance of Gates Returning as Microsoft CEO

Buffett Sees Zero Chance of Gates Returning as Microsoft CEO

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said Bill Gates’s focus on philanthropy makes it impossible that the Microsoft Corp. co-founder will return to the company as chief executive officer. “The chances of that are zero,” Buffett told Bloomberg Television’s Betty Liu in an interview today. “He is doing exactly what he wants to do in life, and he’s doing it well and it takes his full-time energy.” Microsoft is searching for a new CEO after Steve Ballmer said he would step down from the world’s largest software maker. Gates, 57, is chairman of Microsoft and serves on the board of Berkshire. In 2006, Buffett committed a majority of his wealth to the foundation run by Gates and his wife, Melinda. Gates is “flying around the world a very significant percentage of the time, and he is engaging governments in his efforts,” said Buffett, 83. “He has got more than a full-time job at the Gates Foundation, and obviously cares about Microsoft, but he’s not going back.” Buffett appeared today alongside his son and grandson, both named Howard, to promote a new book, “40 Chances: Finding Hope in a Hungry World.” The text describes lessons the billionaire’s son learned from his years working to improve food security around the world. The elder Buffett has also given funds to foundations overseen by his three children.

To contact the reporters on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

Howard Buffett Finds 40 Chances to Get Philanthropy Right

Howard Buffett Finds 40 Chances to Get Philanthropy Right

Howard G. Buffett has photographed an African warlord at close range and witnessed 50 children bound in shackles in Senegal. In Barranquilla, Colombia, he sat next to the pop star Shakira in an SUV as kids banged on the windows until their idol emerged to sign autographs. Buffett, son of the second-richest person in the U.S., could have written a vanity book to chronicle his philanthropic work battling world hunger. Instead, he offers insight, self-deprecation, solutions and heart in “Forty Chances: Finding Hope in a Hungry World.” Warren Buffett and his late first wife, Susan, gave and pledged billions to each of their three children to fund charitable foundations. Howard, an Illinois farmer, picked global hunger as his target. In the book’s foreword, the elder Buffett describes “Forty Chances” as a “guidebook for intelligent philanthropy.” It’s more than that. Howard Buffett has figured out a way to tell 40 stories about hunger, farming, poverty and war, while delivering a readable account of a formidable challenge. Philanthropists will take much from “Forty Chances,” and the layperson will benefit, too, coming away wiser about the powerful forces that keep poverty and hunger alive — and ways to fight those forces. Read more of this post

How a Radical New Teaching Method Could Unleash a Generation of Geniuses

How a Radical New Teaching Method Could Unleash a Generation of Geniuses

BY JOSHUA DAVIS

10.15.13

José Urbina López Primary School sits next to a dump just across the US border in Mexico. The school serves residents of Matamoros, a dusty, sunbaked city of 489,000 that is a flash point in the war on drugs. There are regular shoot-outs, and it’s not uncommon for locals to find bodies scattered in the street in the morning. To get to the school, students walk along a white dirt road that parallels a fetid canal. On a recent morning there was a 1940s-era tractor, a decaying boat in a ditch, and a herd of goats nibbling gray strands of grass. A cinder-block barrier separates the school from a wasteland—the far end of which is a mound of trash that grew so big, it was finally closed down. On most days, a rotten smell drifts through the cement-walled classrooms. Some people here call the school un lugar de castigo—“a place of punishment.” Read more of this post

How Our Brains Betray Us

How Our Brains Betray Us

In the wake of the financial crisis, parents, educators and even students have argued for more financial literacy courses in schools. Problem is, many studies show that financial education doesn’t make a difference because people don’t change their behavior – even if they know better. David Laibson, an economics professor at Harvard University, says understanding this anomaly could help us take charge of our financial lives.

Most Americans know they should save for retirement and pay off their debts. Yet they often don’t do those things. Why?

Our brains are responsible for good intentions not being translated into action. There’s a little tug-of-war going on in our minds. One region of the brain tells us that the right thing to do is to execute. Another brain region says to go for instant gratification. The presence of the dopamine reward system make us biased to do things we can do now. To make things that are not pleasant happen, we have to learn how to exert self-control. Read more of this post

Starbucks vs Starbung in Bangkok

Starbucks vs Starbung

starbungcks2

Tuesday, October 22, 2013 – 09:20

The New Paper

BANGKOK – On one side is a billion-dollar global coffee chain. On the other is a Bangkok street vendor, selling coffee from his cart. Starbucks, which had an annual net profit of US$1.38 billion (S$1.7 billion) last year, is suing Mr Damrong Maslae for 300,000 baht (S$12,000) for copying its famous green logo on his Starbung cart, the Bangkok Post reported. Mr Damrong sells coffee for 20-30 baht each in the Thai capital. Starbucks is also demanding a monthly payment of 30,000 baht plus legal fees, according to its Trademark Act violation complaint. Read more of this post

China’s ‘Mr. Market’ Urges Political Reform; Country’s Most Famous Economist Says Next Wave of Change Needs to Target Political System

China’s ‘Mr. Market’ Urges Political Reform

Country’s Most Famous Economist Says Next Wave of Change Needs to Target Political System

ANDREW BROWNE

Oct. 22, 2013 10:31 a.m. ET

102213chinasworld_640x360

The Chinese leadership appears to have launched a battle against press freedom, civil rights and judicial independence. But China’s most famous economist, Wu Jinglian, believes that China needs more – rather than less — political reforms. The WSJ’s Andrew Browne explains why press freedom is crucial to a better economy. BEIJING—Ever since Deng Xiaoping launched his first overhauls in 1978, free-market reforms in China have come in great waves, usually in response to a crisis. Read more of this post

Asia messaging apps seek to upend rivals with marketing might

Asia messaging apps seek to upend rivals with marketing might

5:04pm EDT

By Sophie Knight

TOKYO (Reuters) – In the battle to become the global messaging app of choice, China’s WeChat and Japan-based Line have brought out some large marketing guns – TV ads featuring soccer star Lionel Messi, for instance – that have powered promising bursts of overseas growth. The big bucks strategy stands in stark contrast to other messaging apps, or even apps in general, which spend little on marketing. U.S. rival WhatsApp eschews advertising altogether and has instead relied on word of mouth to become the dominant chat app in many Western countries. Read more of this post

Cardiovascular Systems Soars on FDA Approval of Diamondback, the first coronary system for calcium removal known as atherectomy in more than 20 years, for those with severely calcified arteries

Cardiovascular Systems Soars on Approval of Artery Device

Cardiovascular Systems Inc. (CSII) soared the most in four years after U.S. regulators approved its Diamondback 360 device used to clear calcium from clogged arteries without review by an expert advisory panel. The U.S. Food and Drug Administration cleared the Diamondback, the first coronary system for calcium removal known as atherectomy in more than 20 years, for those with severely calcified arteries. About 40 percent of patients getting artery-clearing procedures have significant calcium buildup, creating a $1.5 billion annual market, CSI said in a statement. The early approval strengthens St. Paul, Minnesota-based CSI’s potential as a takeover target, said Danielle Antalffy, an analyst at Leerink Swann & Co. in New York, in a note to clients today. While similar systems are approved for use in the peripheral arteries, the Diamondback will compete only against Boston Scientific Corp. (BSX)’s Rotoblater in the heart, she said. The approval “makes CSII a much more attractive acquisition target given its best-in-class atherectomy device, strong growth profile, and highly underpenetrated market opportunity,” Antalffy said. “We believe the coronary indication could expand CSII’s addressable market opportunity by another $1.2 billion plus, versus the current $1.5 billion atherectomy in peripheral arterial disease market,” she said. Cardiovascular Systems rose 18 percent to $26.75 at the close in New York, its biggest one-day increase since November 2009. The shares have more than doubled far this year.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

Teva Opts for 5,000 Job Cuts as Big Acquisitions Flop

Teva Opts for 5,000 Job Cuts as Big Acquisitions Flop

Teva Pharmaceutical Industries Ltd. became the world’s largest generic-drug maker and highest-rated pharmaceutical stock earlier in the decade by spending more than $30 billion to acquire competitors. Now, with Teva’s stock down 37 percent from its peak as a patent protecting best-selling medicine Copaxone nears expiration, the company is no longer buying. To grapple with an expected drop in sales of the $4 billion multiple sclerosis injection, Teva is doing something it’s never done before: downsizing. The Petach Tikva, Israel-based company plans to cut 5,000 jobs to save $2 billion in annual costs by 2017. Read more of this post

Where Startups Shop for Finance Talent: EBay Emerges as a Training Ground for CFOs

Where Startups Shop for Finance Talent

EBay Emerges as a Training Ground for CFOs

EMILY CHASAN

Updated Oct. 21, 2013 9:04 p.m. ET

MK-CH215_CFOEBA_G_20131021150532

Meet the eBay EBAY -0.21% Mafia.

That is the tongue-in-cheek name for the at least 20 executives who have become chief financial officers in Silicon Valley and beyond over the past three years after training in the big e-commerce company’s finance department. Many of these eBay Inc. alumni stay in touch with one another, regularly sharing tips about the growing pains of startups and initial public offerings, while waxing nostalgic over a bottle of Cabernet Sauvignon at a trendy San Francisco restaurant. Read more of this post

Netflix Drops on Valuation ‘Difficult to Justify’

Netflix Drops on Valuation ‘Difficult to Justify’

Netflix Inc. (NFLX), the second-biggest gainer in the Standard & Poor’s 500 Index this year, fell the most since October 2012 after Bank of America Corp. analysts called its valuation “difficult to justify.” The stock, which has more than tripled this year, dropped 9.2 percent to $322.52 at the close in New York, the biggest drop since Oct. 24, 2012. The shares reversed after jumping as high as $396.98 after hours yesterday following quarterly results that showed Netflix’s video-streaming service passed the premium cable-TV network HBO in U.S. paid subscribers. Read more of this post

Apple Unveils New IPads Amid Crowded Tablet Market

Apple Unveils New IPads Amid Crowded Tablet Market

Apple Inc. (AAPL) introduced new iPads in time for holiday shoppers, as it battles to stay ahead of rivals in the increasingly crowded market for tablet computers. Apple Chief Executive Officer Tim Cook debuted a new iPad mini with a high-definition screen, as well as a thinner and lighter design for the larger tablet named the iPad Air. The iPad Air goes on sale on Nov. 1, starting at $499. The iPad mini will be available later in November for $399 and up, higher than the previous model’s starting price of $329. Read more of this post

Amazon Raises Free-Shipping Minimum to $35; eBay to Expand Same-Day Delivery

Amazon Raises Free-Shipping Minimum to $35; eBay to Expand Same-Day Delivery

Online Retailers Shake Up Strategies Ahead of Holiday Season

GREG BENSINGER

Oct. 22, 2013 7:34 p.m. ET

Online retailers are shaking up their delivery offerings on the eve of the holiday shopping season. EBay Inc. EBAY -0.21% ramped up its rivalry with Amazon.com Inc. AMZN +1.87% over same-day delivery with an acquisition and plans to reach 25 markets by next year. Meanwhile, Amazon raised the minimum order size required for most U.S. customers to qualify for free shipping. Read more of this post

Yazkuza Bosses Whacked by Regulators Freezing AmEx Cards; “It’s becoming inconvenient to be a yakuza”

Yazkuza Mobsters Whacked by Regulators Freezing AmExs

The yakuza, Japan’s organized-crime syndicates that have reaped billions from activities ranging from extortion to human trafficking, are finding their ranks decimated by authorities employing methods similar to those used to jail Al Capone: going after their money. Japan’s Financial Services Agency delivered the latest blow, last month ordering Mizuho Financial Group Inc. (8411) to improve compliance and then demanding that top executives report by Oct. 28 what they knew and when about a consumer-credit affiliate found making loans to crime groups. Read more of this post

Coutts Cutting Japan Stocks on Concern About Abe’s Third Arrow

Coutts Cutting Japan Stocks on Concern About Abe’s Third Arrow

Coutts & Co., the wealth management unit of Royal Bank of Scotland Group Plc, is cutting holdings of Japanese shares on concern Prime Minister Shinzo Abe won’t pass the structural reforms needed to boost the economy. Coutts shifted from overweight to neutral on the best-performing developed-market equities on signs Abe will squander the early decisiveness of Bank of Japan Governor Haruhiko Kuroda, said Gary Dugan, chief investment officer for Asia and the Middle East. With a sales-tax increase approaching in April, Abe is failing to deliver on reform measures that would ease the burden of the levy, Dugan said. Read more of this post

Hong Kong’s Missing Workers Signal Danger for Aging City

Hong Kong’s Missing Workers Signal Danger for Aging City

Hong Kong restaurant owner Hudson Chang says he can’t lower the bar much further for hiring staff. He warns his employees repeatedly about sending messages on their iPhones during work hours. He pleads with them to be more pleasant to customers. Still, he can’t afford to fire anyone: He can’t be sure of finding a replacement. “We don’t really have much choice,” said Chang, 39, owner of a venue called Indonesian Restaurant 1968 on the outskirts of the central business district. “I’m just looking for people with basic manners. You don’t even need specific qualifications. You just have to be mobile and know how to smile.” Read more of this post

Li Ka-shing’s Hong Kong Sales Signal Peak as European Growth Beckons

Li’s Hong Kong Sales Signal Peak as European Growth Beckons

Hong Kong billionaire Li Ka-shing made his fortune over a half-century of well-timed bets on everything from property to power generation. His latest deals suggest he’s wagering the city’s era of fast growth may be drawing to an end. Asia’s richest man may raise as much as $18 billion selling stakes in his retail unit and Hong Kong’s second-largest power supplier. The moves, announced in the past month, would free up money for Li to buy more assets in Europe, where his companies including Hutchison Whampoa Ltd. (13) have spent $14.5 billion on acquisitions the past three years, according to data compiled by Bloomberg. Read more of this post

The debt mountain at U.K. water companies is their best defense against politicians seeking to cut the cost of living

Debts Keep Water Firms Off-Limits for Politicians: U.K. Credit

The debt mountain at U.K. water companies is their best defense against politicians seeking to cut the cost of living. The Labour opposition, which has pledged to freeze gas and electricity prices for 20 months if it wins the 2015 general election, may be wary of imposing a similar cap on highly leveraged water businesses, according to Lakis Athanasiou, a utilities analyst at Agency Partners LLP. Water companies have debt-to-equity ratios as high as 80 percent and rely on borrowings to keep infrastructure intact. “I really can’t see them going after the water industry,” Athanasiou said in a phone interview. “Because they are highly leveraged structures, they need masses of debt, not just for expansion but for replacement of existing debt.” Read more of this post

Fidelity to Open Cheapest Single-Industry ETFs in Push

Fidelity to Open Cheapest Single-Industry ETFs in Push

Fidelity Investments, the second-biggest mutual-fund provider, plans to open the cheapest lineup of single-industry exchange-traded funds as it seeks to break into a market dominated by Vanguard Group Inc. and BlackRock Inc. (BLK) Fidelity on Oct. 24 will start 10 funds, focused on industries ranging from energy to telecommunications, with an annual expense ratio of 0.12 percent, cheaper by 2 basis points than Vanguard Group Inc.’s lineup of similar ETFs, according to a regulatory filing and data compiled by Bloomberg. The ETFs, distributed by Fidelity, will be managed by BlackRock, the world’s biggest money manager. A basis point is one-hundredth of a percentage point. Read more of this post

Emerging-Market Currency Rout Will Worsen Next Year, Jen Says

Emerging-Market Currency Rout Will Worsen Next Year, Jen Says

Emerging-market currencies will probably see bigger declines next year when the Federal Reserve actually starts tapering its record stimulus, Stephen Jen, co-founder of hedge fund SLJ Macro Partners LLP said. The Fed’s signal on May 22 that it may start reducing its $85 billion of monthly bond purchases caused the JPMorgan Emerging Markets Currency Index to drop 7.2 percent through the end of August. India’s rupee led the declines with a 16 percent loss during the period, followed by Brazil’s real at 14 percent and Indonesia’s rupiah at 13 percent. The gauge has since rallied 4.3 percent as the Fed unexpectedly decided to maintain its debt buying on Sept. 18. Read more of this post

Fund firms wrestle with “star manager” syndrome

Fund firms wrestle with “star manager” syndrome

Tuesday, Oct 22, 2013

Reuters

LONDON – Neil Woodford’s surprise announcement last week of his planned departure from fund manager Invesco Perpetual neatly encapsulates the risks to fund firms who employ such star managers and the investors who back them. They can leave. Woodford, widely feted for a defensive stock-picking style that made money throughout the financial crisis, is responsible for running around 30 billion pounds (S$60.22 billion) of assets, out of the firm’s 70 billion total. His 25-year career made him one of the best known money managers among Britain’s private investors. Yet for the fund firms who employ such individuals, there are clear risks of becoming over-dependent on their presence. Read more of this post

Auto Makers Shift Gaze to ‘Emerging’ Emerging Markets

Auto Makers Shift Gaze to ‘Emerging’ Emerging Markets

Car Companies Look Past the BRICs

NEAL E. BOUDETTE

Oct. 22, 2013 1:27 p.m. ET

TROY, Mich.—The auto industry has been buzzing for the last couple of years about growth in the so-called BRIC markets –Brazil, Russia, India and China. Now the conversation is shifting to the Future 15—the next group of emerging markets beyond the BRICs that are expected to drive the industry forward. They include populous Asian nations of Indonesia, Thailand and Malaysia; Turkey, Saudi Arabia and Iran in the Middle East; South America’s Andean nations such as Chile and Argentina; and Morocco, Egypt and others in North Africa. Read more of this post

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