“It was very emotional, he hugged almost everyone”; Some of the beneficiaries of Sarawak Chief Minister Taib’s atypical show of affection looked surprised and a few even seemed uncomfortable.

Updated: Tuesday February 11, 2014 MYT 9:25:25 AM

So, who will be the next CM?

BY JOCELINE TAN

Abang Johari (left) Adenan Satem

Tan Sri Taib Mahmud’s priority is to choose a successor who can lead the ruling coalition into the next state polls.

SARAWAK Chief Minister Tan Sri Taib Mahmud is not a touchy feely type of politician. As such, journalists were astonished to see the normally reserved leader throwing his arms around one person after another at the PBB supreme council meeting. Read more of this post

GMO’s James Montier: How do you select the subjects on which you do research? Are there particular publications or information sources that offer good insight or inspirations for the topics you choose?

James Montier – What Worries Me Right Now

By Robert Huebscher
February 4, 2014

James Montier is a member of Grantham Mayo van Otterloo’s (GMO’s) Asset Allocation team. Prior to joining GMO in 2009, he was co-head of Global Strategy at Société Générale. Mr. Montier is the author of several books including Behavioral Investing: A Practitioner’s Guide to Applying Behavioral Finance; Value Investing: Tools and Techniques for Intelligent Investment; and The Little Book of Behavioral Investing. Mr. Montier is a visiting fellow at the University of Durham and a fellow of the Royal Society of Arts. He holds a B.A. in Economics from Portsmouth University and an M.Sc. in Economics from Warwick University.

Advisors and retail investors can access GMO’s asset allocation by buying the Wells Fargo Advantage Absolute Return instead of the GMO Benchmark-Free Allocation Fund and the Wells Fargo Advantage Asset Allocation Fund instead of the GMO Global Asset Allocation Fund. The minimum investment for the GMO Funds is $10 million, while the minimum investment for the Wells Fargo Funds is $1,000.

I spoke with James on Jan. 28. Read more of this post

The top three Aussie franchises

The top three Aussie franchises

February 11, 2014

Adam Courtenay

If you’re researching franchises, you need to know why these are the best.

General manager of the Franchise Council of Australia Kym de Britt says franchises thrive on mutual benefit.

A company which has managed to wheel out 100 shops in 100 days was recently named the top franchisor in the country for 2013. Sounds like a simple business, easy to set up and quick to generate revenues? A passing fad perhaps? Not at all. Read more of this post

Banking on good sense and a prayer; As head of ICICI Bank, India’s biggest privately owned lender and the nation’s second largest by assets, 52-year-old Chanda Kochhar is a vastly influential figure in her native country.

Banking on good sense and a prayer

Tuesday, Feb 11, 2014

Ravi Velloor

The Straits Times

The global leaders and the famous who flock to the Swiss resort of Davos for their annual conclave in January have often spotted a slim Indian woman, draped in the traditional sari, glad-handing key decision-makers and customers between meetings. Read more of this post

China firms head for U.S. IPOs, not fussed by accounting flap

China firms head for U.S. IPOs, not fussed by accounting flap

4:09pm EST

By Denny Thomas and Elzio Barreto

HONG KONG (Reuters) – Chinese companies are flocking to the U.S. IPO market in their biggest numbers since 2010, drawn by soaring valuations for tech start-ups and undeterred by a flare-up in an accounting row between Washington and Beijing. Read more of this post

“Breathtaking” Corruption In Europe

“Breathtaking” Corruption In Europe

Tyler Durden on 02/10/2014 12:12 -0500

Submitted by Pater Tenebrarum of Acting-Man blog,

A recent article at the BBC discusses the findings of a report by EU Home Affairs commissioner Cecilia Malmstroem on corruption in the EU. According to the report, the cost of corruption in the EU amounts to €120 billion annually. We would submit that it is likely far more than that (in fact, even Ms. Malmstroem herself concurs with this assessment). This is of course what one gets when one installs vast, byzantine bureaucracies and issues a veritable flood of rules and regulations every year. More and more people are needed to administer this unwieldy nightmare of red tape, and naturally the quality of the hires declines over time due to the sheer numbers required. Read more of this post

A New World for Bonds: Time to sweep away an artificial distinction in the world of corporate debt issues

February 7, 2014

The Economist

A New World for Bonds: Time to sweep away an artificial distinction in the world of corporate debt issues.

Imagine that the stock market was divided into two. The big investment banks — Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch — would create lists of the shares that they liked. These approved shares would be classed as IB, for investment-bank-approved, and would trade on a higher valuation (i.e., lower yield) than equities they did not like, which would be lumped together in the BS, or bank-shunned, category. Some investors would be prevented from owning anything but the IB shares.

The idea sounds bizarre, but such an artificial distinction does exist in the bond markets, where the big ratings agencies class debt issues on a scale from AAA, the highest class, to D, for bonds in default. Bonds rated BBB- or higher are classified as investment grade (IG) whereas those rated BB+ or below are regarded as speculative, or more popularly, junk bonds. Some investors will not touch junk bonds at all; most bond funds focus on either IG bonds or junk.

But as Kevin Corrigan of Lombard Odier Investment Managers points out, this Manichean divide is rather odd. The difference between the BBB and BB categories is not that fundamental. Figures from Standard & Poor’s, one of the big ratings agencies, show that, of American corporate bonds rated BBB, 1.1 percent are in default three years later; for those rated BB, the figure is 4.8 percent. By contrast, 14.7 percent of bonds rated B have stopped paying within three years and 41.7 percent of those rated C or below. The figures for European bonds are similar (see chart).

A degentrification has been taking place in the bond market. The aristocrats of bonds — issuers of AAA-rated debt — have virtually disappeared. There is no longer much of an advantage in being rated AAA: shareholders instead want companies either to return the spare cash that might help earn them a high rating or to make their balance-sheets more “efficient” by borrowing more to take advantage of the tax deductibility of interest payments, thus jeopardizing an exalted status. Read more of this post

Some of the world’s largest banks are suffering from financial gangrene

Some of the world’s largest banks are suffering from financial gangrene

By Jason Karaian @jkaraian 5 hours ago

For critics of the financial industry, just about every big bank is a “bad bank.”

But a so-called bad bank is also a semi-technical term that describes a special division at a financial institution that happens to be packed with toxic assets, unwanted loans or entire business units hived off from a banking group’s “core” operations. Banks euphemistically dub these units “non-core,” “non-strategic” or a host of other names, steering investors away from considering them part of a bank’s future (and generating increasingly impenetrable earning reports in the process). This is how Lloyds Banking Group recently described its internal bad bank: Read more of this post

Henry Paulson: Why cities are the key to China’s success

Henry Paulson: Why cities are the key to China’s success

February 10, 2014: 5:00 AM ET

The world’s second-largest economy may have seen extraordinary growth, but that can’t continue without giving more of China’s rural workforce a stake.

By Henry M. Paulson

FORTUNE — China’s growth model is unsustainable. The costs of that growth are readily apparent in the country’s cities. Most pronounced are the stifling smog and serious water pollution. But vast energy consumption, health problems, density of population, and social stress are emerging problems exerting new pressures. Yet with a shrinking rural, agriculture sector — under 40% of the population — that’s now only about 10% of the Chinese economy, urbanization is both at the heart of China’s future growth and prosperity and posing a vexing challenge. If the country continues along the same path, the migration of another 300 million people into cities over the next couple of decades will impose a terrible price — not just on the Chinese people but on the rest of the world. Read more of this post

Controversial Malaysia state boss due to “retire”, but keep influence

Controversial Malaysia state boss due to “retire”, but keep influence

Monday, February 10, 2014 – 14:34

Reuters

KUALA LUMPUR – The chief minister of Malaysia’s Sarawak is expected to announce his resignation on Monday after 33 years in charge of the resource-rich state that have been key to keeping the national coalition in power but marred by corruption allegations and deforestation. Read more of this post

Toyota exit heralds end of Australia’s auto industry

Toyota exit heralds end of Australia’s auto industry

By Charles Riley  @CRrileyCNN February 10, 2014: 3:02 AM ET

HONG KONG (CNNMoney)

Toyota said Monday that it will close its factories in Australia by the end of 2017, a move that will cost thousands of jobs and leave the country without a major automobile manufacturer.

The decision to stop building Camry, Camry Hybrid and Aurion models in the country will result in approximately 2,500 lost jobs, the company said. Read more of this post