Shanghai’s Zone of Timidity; Capital controls prevent a serious challenge to Hong Kong

Updated October 10, 2013, 7:23 p.m. ET

Shanghai’s Zone of Timidity

Capital controls prevent a serious challenge to Hong Kong.

The main result so far of Shanghai’s “free trade zone,” which opened September 29, has been confusion. The rules governing it remain unclear, no senior leaders showed up for the launch, and most foreign banks are taking a wait-and-see attitude before deciding whether to open branches. The disarray suggests a battle is underway within the Communist Party over financial reform, and that the trade zone is a proxy. Read more of this post

China’s Urban Slowdown; Fewer Chinese are moving to cities, which threatens Beijing’s plan to raise GDP through urbanization

October 10, 2013, 1:25 p.m. ET

China’s Urban Slowdown

Fewer Chinese are moving to cities, which threatens Beijing’s plan to raise GDP through urbanization.

PHILIP BOWRING

The latest International Monetary Fund World Economic Outlook predicts a sustained fall in growth rates in developing countries, including China. But many a China bull continues to find solace in the prospect of stepping up urbanization as a means of sustaining China’s medium-term GDP growth. In principle it is an attractive proposition. Cities have sprung up over the past two decades and, judged by the rise in prices, there is apparently an insatiable demand for housing. Yet demographic shifts, including the slower rate at which young people are moving into cities, threaten to derail China’s grand urbanization plan. Read more of this post

Japan Needs More Brawling Billionaires

Japan Needs More Brawling Billionaires

Japan is being treated to a juicy spectacle as two of its richest and most innovative entrepreneurs brawl in public over Internet market share and visions for the future. But what’s most important about the fight between Masayoshi Son and Hiroshi Mikitani is the example it’s setting. The two men have much in common. They are self-made billionaires who founded game-changing technology companies — Son with mobile-phone carrier SoftBank Corp., Mikitani with e-commerce giant Rakuten Inc. Each is his company’s largest shareholder, fully fluent in English (a rarity in corporate Japan) and U.S.-educated (Son at the University of California at Berkeley; Mikitani at Harvard University). Both are married with two kids. Both make splashy investments in overseas Internet companies (Son in Alibaba Group Holding Ltd.; Mikitani in Pinterest Inc.). Both are sports nuts who own baseball teams. Read more of this post

Anti-government protesters dog Taiwan National Day

Anti-government protesters dog Taiwan National Day

Published on Oct 10, 2013

Activists holding placards with defaced images of Taiwan’s President Ma Ying-jeou march along a street to protest against Mr Ma’s policies during National Day celebrations in Taipei on Thursday, Oct 10, 2013. Thousands of anti-government protesters gathered on the fringes of Taiwan’s carefully choreographed National Day celebrations on Thursday, waving banners and chanting slogans denouncing the policies of Mr Ma.

TAIPEI (AP) – Thousands of anti-government protesters gathered on the fringes of Taiwan’s carefully choreographed National Day celebrations on Thursday, waving banners and chanting slogans denouncing the policies of President Ma Ying-jeou. The large-scale protests against his increasingly unpopular government were the first to dog the normally staid National Day observance since Mr Ma entered office in 2008. Police kept the estimated 10,000 protesters well away from the downtown Taipei plaza where Mr Ma delivered an address calling for Taiwan to improve its economic performance. He shared the podium and on occasion chatted comfortably with legislative speaker Wang Jin-pyng, whom Mr Ma has attempted to oust from both his job and from the ruling Nationalist Party over allegations that Mr Wang pressured prosecutors not to appeal the acquittal on influence peddling charges of an opposition lawmaker. But the attempts have backfired amid charges that Mr Ma colluded with high-level judicial officials to press his case against longstanding rival Mr Wang, and allegations have surfaced that the initial evidence against Mr Wang was gathered by an illegal wiretap conducted by an elite prosecutorial unit.

Hershey Adds First New Brand in 30 Years; Lancaster Caramels Were Launched Initially in China

Hershey Adds First New Brand in 30 Years

Lancaster Caramels Were Launched Initially in China

LESLIE JOSEPHS

Oct. 10, 2013 11:15 a.m. ET

Hershey’s Lancaster caramels first debuted in China.The Hershey Company

NEW YORK— Hershey Co. HSY +2.30%plans to start selling a line of caramels—its first new brand in 30 years—in the U.S. early next year, after launching the product this year in China. The new brand, dubbed Lancaster, is the first from Hershey to have its debut outside of the U.S., the company said Thursday. It started selling them in three Chinese cities in June, as part of an effort to grow its presence there, where candy is becoming more popular. Read more of this post

U.S. Shale-Oil Boom May Not Last as Fracking Wells Lack Staying Power

U.S. Shale-Oil Boom May Not Last as Fracking Wells Lack Staying Power

By Asjylyn Loder October 10, 2013

Chesapeake Energy’s (CHK) Serenity 1-3H well near Oklahoma City came in as a gusher in 2009, pumping more than 1,200 barrels of oil a day and kicking off a rush to drill that extended into Kansas. Now the well produces less than 100 barrels a day, state records show. Serenity’s swift decline sheds light on a dirty secret of the oil boom: It may not last. Shale wells start strong and fade fast, and producers are drilling at a breakneck pace to hold output steady. In the fields, this incessant need to drill is known as the Red Queen, after the character in Through the Looking-Glass who tells Alice, “It takes all the running you can do, to keep in the same place.” Read more of this post

Caesars Woos Gamblers With Wheel Taller Than London Eye

Caesars Woos Gamblers With Wheel Taller Than London Eye

With $23 billion in debt, the most of any U.S. hotel or casino company, Caesars Entertainment Corp. (CZR) wanted to spruce up its stretch of the Las Vegas Strip without dropping a bundle or adding to a glut of rooms in the city. So the owner of Caesars Palace and Planet Hollywood bet its tight expansion budget on a 550-foot Ferris wheel and “party district” right in the middle of the Strip, where 20 million people amble past its eight properties each year. Read more of this post

China’s Latest Move To Unwind A $2 Trillion Investment Product Is Bad News For Chinese Banks; “The key change is to remove an implicit guarantee of principle and yield, in the form of ‘expected return,’ by WMPs”

China’s Latest Move To Unwind A $2 Trillion Investment Product Is Bad News For Chinese Banks

MAMTA BADKAR 32 MINUTES AGO 0

The Shanghai Composite fell 1% on Thursday, with Chinese brokerages taking the biggest hit. Citic Securities, China’s largest brokerage, was down 3.7%. This comes on news that the government wants banks to unwind the controversial wealth management products (WMPs) and switch to asset management plans (AMPs). WMPs make up the $2 trillion powder keg at the heart of China’s banking system. In a quest for higher returns, tons of people have been pouring their wealth into WMPs, which are sold as high yielding,  low-risk investments offering “expected” instead of “guaranteed or promised returns.” This flood of deposits is key reason behind the surge in social financing and banks’ fee income in recent years. WMP holders largely view these as “investments as deposits” according to Bank of America’s David Cui, while in reality they take the hit if the investments go bad. And it is “this perception mismatch” that “prompts banks to seek undue risks when investing ‘other people’s money he writes. This has obviously been unsustainable. In late 2012, we saw investors take to the streets when WMPs they bought from Huaxia Bank soured. AMPs on the other hand will only provide investors with a “possible range of returns,” and they are open-ended. Initially they will only be allowed to invest in direct debt financing instruments (DDFIs) like securitized bank loans and other such assets, that can be traded on China’s interbank market. So what’s the rationale for switching to AMPs? “The key change is to remove an implicit guarantee of principle and yield, in the form of ‘expected return,’ by WMPs,” writes Cui. Read more of this post

Mistresses help keep the property bubble aloft in Beijing; state-run Beijing Evening Daily estimated back in 2010 that there were 200,000 mistresses living in apartments in Beijing alone

Mistresses help keep the property bubble aloft in Beijing

By Heather Timmons 4 hours ago

Keeping a mistress is a normal part of life for successful Chinese businessmen and government officials, and in some ways they have become more visible in recent years, playing roles in corruption scandals and even, sometimes, turning in their lovers. They and their big-spending partners may also be contributing to ever-increasing real estate prices in some of China’s biggest cities. That’s because these women, often from rural areas, are regularly kept in apartments that their lovers buy for them in urban centers, near his work or home. The practice has created entire neighborhoods of apartments in big Chinese cities filled with women who would otherwise be living at home with their families, or perhaps sharing a rental. Read more of this post

Liu Yonghao is China’s wealthiest investor: Hurun

Liu Yonghao is China’s wealthiest investor: Hurun

Staff Reporter

2013-10-10

Chinese millionaire Liu Yonghao — chairman of the agricultural industry giant New Hope Group — is the richest investor in China, after Liu’s assests were made public in a sub-list of the Hurun China Rich List 2013 on Oct. 9, reports the new portal Sichuan Online. Liu and his family have increased their wealth since 1996, when Liu and several company owners launched the China Minsheng Bank, the largest private bank in China. Liu is now the major share holder of the bank with 6.7% of its shares, while he also possesses shares in other businesses across the country. Meanwhile, Gong Hongjia and wife Chen Chunmei, leading angel investors in the Chinese technology sector, came in second on the Hurun sub-list. The couple, who own Hikvision Digital Technology, a leading supplier of video surveillance products and solutions, saw their company grow 300% over the past three years. Lu Jiqiang checked in as the third richest investor on the list. Lu is also one of the major share holders of the China Minsheng Bank, possessing 2.46% of the shares. The 22 investors on the list possess assests totaling 212 billion yuan (US$34.6 billion). Among the top 20, 36.8% of them are in the IT business and 26.3% are in banking, the report said.

Marlboro in the Middle Kingdom: Chinese Kids Know Their Smokes; nearly nine out of 10 Chinese children aged 5 and 6 can identify at least one cigarette brand, and roughly one out of five say they expect to smoke when they grow up

October 10, 2013, 1:43 PM

Marlboro in the Middle Kingdom: Chinese Kids Know Their Smokes

Students posed with cigarette models made from waste paper during a campaign ahead of the World No Tobacco Day in Handan, Hebei province, in May.

Nearly nine out of 10 Chinese children aged 5 and 6 can identify at least one cigarette brand, and roughly one out of five say they expect to smoke when they grow up. Those are some of the breathtaking results of arecent study by Johns Hopkins University on the effects of tobacco marketing on children in low- and middle-income countries. Read more of this post

Don’t laugh at the “man purse”—it’s now a $9 billion luxury business

Don’t laugh at the “man purse”—it’s now a $9 billion luxury business

By Jason Karaian @jkaraian 6 hours ago

All is not well in the luxury world. Stalwart luxury buyers in China are cutting back, according to recent statements from Burberry and Richemont, among others. New data from research firm Euromonitor International confirms that the industry is in a bit of a slump. Global luxury sales are on track to grow by 3% this year, the slowest rate in four years. Euromonitor reckons that growth will pick up next year, though, driven by its strongest segment in recent years: accessories, specifically men’s accessories. The luxury goods industry has been “manning up” of late, says Fflur Roberts of Euromonitor. A host of luxury brands are opening men’s only stores, tapping a less saturated market undergoing significant shifts in tastes.

Read more of this post

Whole Foods Selling K-Cups in Challenge to Green Mountain

Whole Foods Selling K-Cups in Challenge to Green Mountain

Whole Foods Market Inc. (WFM) started selling organic private-label coffee pods that fit into Green Mountain Coffee Roasters Inc.’s Keurig machines, providing more competition for the single-serve coffee company’s K-Cups. A 12-pack of 365 Everyday Value brand K-Cups is $8.99 at U.S. Whole Foods stores, and there are five varieties, Emily Wright, a spokeswoman for the Austin, Texas-based company, said in an e-mail. Whole Foods, the largest natural-goods grocer in the U.S., has no relationship with Green Mountain, she said. A 24-pack of Green Mountain brand French Roast K-Cups sells for $16.49 on its website. Read more of this post