One in four European banks may need more capital

One in four European banks may need more capital

Geoffrey Smith

JUNE 23, 2014, 10:11 AM EDT

They’ve been saved by reluctant taxpayers from a eurozone breakup, they’ve been rescued by the ECB from death by bond markets, their economy has been growing for over a year, but over a quarter of European banks think they may still need more capital, according to a survey out Monday.

The survey, by consultants Ernst & Young, lays bare what officials and bankers have been privately acknowledging all year: six years after the financial crisis exploded, many of Europe’s banks are still relying on optimistic internal accounting and indulgent supervision from their national regulators. Read more of this post

The case for CEO term limits: The longer chief executives hold the job, a new analysis says, the higher their pay – and the more they take risks that hurt shareholders

The case for CEO term limits

Anne Fisher

JUNE 23, 2014, 11:22 AM EDT

The longer chief executives hold the job, a new analysis says, the higher their pay — and the more they take risks that hurt shareholders.

It’s pretty clear by now that many CEOs of public companiesmake more money than their performance warrants, and thatboards of directors often ignore shareholders who complain about it. But how much does paying the chief executive officer more than he (or, rarely, she) is worth really cost stockholders? Read more of this post

Indonesia’s Bumi Fails to Change Terms of Bonds as Default Looms

Indonesia’s Bumi Fails to Change Terms of Bonds as Default Looms

By Eveline Danubrata & Umesh Desai on 01:10 pm Jun 23, 2014

Jakarta/Hong Kong. Bumi Resources has failed to change the terms of $375 million of debt nearing its repayment deadline, raising the prospect of default and sending shares of the Indonesian coal miner to an 11-year low.

Asia’s biggest thermal coal exporter, controlled by Indonesia’s influential Bakrie family, said it proposed changing the terms of bonds due Aug. 5 at a meeting on Friday but not enough creditors attended to approve or reject.

Bumi is just one of many Indonesian companies to have funded expansion using debt. The miner’s current plight has highlighted the prospect of others having difficulty servicing debt as commodity prices fall and growth in Southeast Asia’s biggest economy slows. Read more of this post

World Bank Sounds Alarm for Indonesia to Avoid Middle-Income Trap

World Bank Sounds Alarm for Indonesia to Avoid Middle-Income Trap

By Ridho Syukra on 07:50 pm Jun 23, 2014

Jakarta. Indonesia needs economic growth of above 8 percent in order to escape the so-called “middle income trap,” and to provide jobs for 15 million new workers who will join Indonesia’s labor force by 2020, according to a World Bank report.

At the current 5 percent to 6 percent economic growth pace, Indonesians could be trapped in the condition characterized by a per capita income of below $12,000, low investment, slow manufacturing growth, limited industrial diversification and poor labor market conditions, the Washington-based lender explained in a report titled, “Indonesia: Avoiding the Trap,” which was released on Monday. Read more of this post

Indonesia Shuns 30-Year Tax Holiday, Says Other Incentives Exist for Investors; Samsung Electronics is looking to set up operations in Indonesia. Yet the government balks at granting any company a 30-year tax break

Indonesia Shuns 30-Year Tax Holiday, Says Other Incentives Exist for Investors

By Jakarta Globe on 08:07 pm Jun 23, 2014

Samsung Electronics is looking to set up operations in Indonesia. Yet the government balks at granting any company a 30-year tax break. (Reuters Photo/Tobias Schwarz)

Jakarta. Industry Minister M.S. Hidayat said that the government is flexible enough to provide necessary financial incentives to potential investors, but a 30-year tax holiday is out of the question.

“I’ll never advise anyone [in the government] to raise the tax holiday [period] to 30 years,” Hidayat said in Jakarta on Monday. “What I advise is for potential investors to negotiate on business-like [manners].” Read more of this post

“You’re only knocked out by the punch you don’t see,” Steady Road Takes Its Toll; Traders Stick to Bets That Stocks’ Placid Stretch is Coming to an End

Steady Road Takes Its Toll

Traders Stick to Bets That Stocks’ Placid Stretch is Coming to an End

CHRIS DIETERICH

June 23, 2014 5:05 p.m. ET

Traders are sticking to a losing bet that a placid stretch for stocks is coming to an end.

The CBOE Volatility Index, or VIX, an options-based measure of expected stock-market swings, last week hit its lowest level since 2007. The Dow Jones Industrial Average has gone 32 months without a 10% decline, the fifth-longest run on record. The S&P 500 hasn’t closed up or down 1% in 46 days, the longest stretch since 1995. Read more of this post

Andrew Ceresney on Where the SEC Is Headed

Andrew Ceresney on Where the SEC Is Headed

The Agency’s Head of Enforcement Talks About the Changing Nature of the SEC’s Efforts

June 23, 2014 4:19 p.m. ET

SEC Director of Enforcement Andrew Ceresney spoke with WSJ’s Francesco Guerrera at the CFO Network about the SEC’s recent enforcement strategy in regards to dark pools, high frequency trading and other new developments.

With the 2008 financial crisis in the rearview mirror, the U.S. Securities and Exchange Commission is turning its attention to an ambitious agenda for enforcing financial regulation.

Leading the way is Andrew Ceresney, the SEC’s head of enforcement. Read more of this post

Collateral Damage in China’s Commodity Pileup. For now, the rot seems limited to the surface. But that is only because investors have little visibility of what is at the heart of China’s financial system

Collateral Damage in China’s Commodity Pileup

AARON BACK

June 23, 2014 7:10 a.m. ET

The mysterious case of missing metals at a Chinese port is a headache for the global banks involved. It is also an omen of more widespread risks in the country’s financial system.

Several foreign banks including Citigroup Inc. C +1.52% and Standard CharteredSTAN.LN +0.95% PLC are investigating whether the same stocks of copper and aluminum, stored by a trading company at a Qingdao port, were pledged to all of them as collateral for loans. Deepening the intrigue, a major state-owned enterprise, Citic Resources Holdings Ltd. 1205.HK +0.79% , says some metals that it has stored at the Qingdao port can’t be located. Read more of this post

High Court Gives Companies More Room to Challenge Class Actions; Supreme Court Strikes Middle Ground on Securities Fraud Lawsuits in Case Involving Halliburton

High Court Gives Companies More Room to Challenge Class Actions

Supreme Court Strikes Middle Ground on Securities Fraud Lawsuits in Case Involving Halliburton

JESS BRAVIN and BRENT KENDALL

Updated June 23, 2014 5:46 p.m. ET

WASHINGTON—The Supreme Court on Monday gave companies more leeway to fend off securities-fraud lawsuits before trial, but it declined to overrule legal precedent that has undergirded investor class actions for more than two decades.

The decision, which came in long-running litigation involving Halliburton Co.HAL +0.19% ‘s asbestos liabilities, is a middle-of-the road outcome in a case that could have reset the board to better favor corporate defendants facing class-action lawsuits brought by investors. As a result of Monday’s ruling, companies can present evidence at an early stage in litigation to try to demonstrate that misleading public statements didn’t affect stock prices. The ruling means Halliburton will have an opportunity to present such evidence in a further effort to get the case thrown out in the lower courts. Read more of this post

U.S. Increases Scrutiny of Employee-Stock-Ownership Plans; Transactions That Cheat Workers Have Drawn Attention to Plans Millions Rely on

U.S. Increases Scrutiny of Employee-Stock-Ownership Plans

Transactions That Cheat Workers Have Drawn Attention to Plans Millions Rely on

RUTH SIMON and SARAH E. NEEDLEMAN

Updated June 22, 2014 8:52 p.m. ET

The federal government is stepping up scrutiny of how U.S. companies are valued for employee-stock-ownership plans, a vital source of retirement savings for millions of workers.

Some owners are selling stakes in their companies to employee-stock-ownership plans at inflated prices, the government says, jeopardizing those savings. Read more of this post

The Surging Stock Market: Too Late to Buy? How to Think About Investing When Prices Are This High

The Surging Stock Market: Too Late to Buy?

How to Think About Investing When Prices Are This High

BRETT ARENDS

June 21, 2014 8:19 p.m. ET

Main Street is starting to stampede. As the stock market surges to new highs, ordinary investors who missed a lot of the rise have been rushing to jump on board. So far this year they’ve poured $58 billion into stocks via mutual funds, according to the Investment Company Institute, the mutual-fund trade organization. That’s the biggest first half for mutual funds since the last big boom, in 2007. Read more of this post

EU Scales Back Ties With Thailand; Bloc Will Put Signing of Political Pact on Hold, Suspend Official Visits After Coup

EU Scales Back Ties With Thailand

Bloc Will Put Signing of Political Pact on Hold, Suspend Official Visits After Coup

LAURENCE NORMAN

June 23, 2014 2:58 p.m. ET

LUXEMBOURG—The European Union will scale back political ties with Thailand following the recent coup, putting on hold the signing of a political pact and suspending official visits, the bloc said Monday.

At a meeting of foreign ministers in Luxembourg, the EU also signaled it will freeze talks on a possible trade deal and said it could announce further penalties if the situation in Thailand deteriorates. Read more of this post

China’s ‘Crazy’ Local Government Bond Sale

Jun 23, 2014

China’s ‘Crazy’ Local Government Bond Sale

China’s bond markets turned a little strange Monday.

In a first for China, local government Guangdong Province sold debt in its own name, and surprised markets when the yields were lower than that sold recently by the central government. That’s unusual as investors would normally demand a higher return from a riskier issuer.

Guangdong Province sold five-year bonds, part of its planned 14.8 billion yuan ($2.4 billion) issuance, at 3.84% and lower than the 3.99% on a sale of bonds by the finance ministry earlier this month that were issued on behalf of local governments. Read more of this post

Rio Tinto’s Massive $6.2 Billion Oyu Tolgoi Mine in Mongolia Hits Another Snag; Operating Company Handed a New Audit Claiming Unpaid Taxes and Penalties

Rio Tinto’s Oyu Tolgoi Mine in Mongolia Hits Another Snag

Operating Company Handed a New Audit Claiming Unpaid Taxes and Penalties

ALEXIS FLYNN

June 23, 2014 11:38 a.m. ET

LONDON—One of Rio Tinto RIO.LN +1.61% PLC’s largest projects hit another snag Monday after the company running the $6.2 billion Oyu Tolgoi copper and gold mine in Mongolia was handed a new audit claiming unpaid taxes and penalties.

Turquoise Hill Resources Ltd. TRQ.T -3.18% , the Rio Tinto-owned mining company that owns the rights to Oyu Tolgoi, said it disputed the Mongolian Tax Authority’s claims and that a failure to resolve the issue before the end of the month could jeopardize the mine’s next phase of development. Read more of this post

Abenomics 2.0: Bold Goals, Modest Proposals

Abenomics 2.0: Bold Goals, Modest Proposals

Japan’s Prime Minister Tackles Economic Tradition

JACOB M. SCHLESINGER

Updated June 23, 2014 8:08 a.m. ET

TOKYO—When Japanese Prime Minister Shinzo Abe first announced his growth strategy a year ago, the stock market fell sharply in disappointment. Officials hope for a better response to the revised plan to be unveiled Tuesday.

The difference lies in part on more realism from investors, and less hype from a more low-key Mr. Abe. This isn’t about quick gains, but raising long-run prospects. Will it do that? Many proposals were watered down before final announcement. Abe aides say that raises prospects that something will actually get implemented.

“We made political compromises,” Hiroshige Seko, one of Mr. Abe’s top advisers, told The Wall Street Journal in an interview Monday. “We’re emphasizing execution, even if the plan gets a score of 80, instead of 100.” Read more of this post

Investors Prepare for Volatility Ahead of Indonesia Election

Investors Prepare for Volatility Ahead of Indonesia Election

JAKE MAXWELL WATTS

Updated June 23, 2014 7:03 p.m. ET

Investors are turning wary of Indonesian stocks ahead of a presidential election early next month that could make or break one of Asia’s best-performing markets.

Enthusiasm for Jakarta Governor Joko Widodo, the reformist frontrunner who had a strong early lead in the polls, has helped push Indonesian stocks up more than 13% this year. But as the race has grown tighter, some fund managers have held their bets or taken them off entirely while preparing for volatility. Read more of this post

Big Investors Missed Stock Rally; Pension Funds, University Endowments Diversified Into Other Investments With Disappointing Performances

Big Investors Missed Stock Rally

Pension Funds, University Endowments Diversified Into Other Investments With Disappointing Performances

GREGORY ZUCKERMAN

June 23, 2014 7:51 p.m. ET

Corporate pension funds and university endowments in the U.S. have missed out on much of the rally for stocks since 2009, following a push to diversify into other investments that have had disappointing performances.

The institutions, ranging from large corporations such as General Motors Co.GM +1.24% to big universities such as Harvard, have been shifting to hedge funds, private equity and venture capital. But while these alternative investments outpaced stocks during 2008’s market meltdown and are seen as potentially less volatile, they have badly lagged behind the S&P 500 since 2009, a period in which U.S. stock indexes have more than doubled. Read more of this post

In Japan, Hundreds of Shareholder Meetings on Same Day; This year, more than one in three companies will hold their meetings on Friday. Experts say the practice underscores Japanese companies’ dismissive attitude toward shareholders

CORPORATE GOVERNANCE

In Japan, Hundreds of Shareholder Meetings on Same Day

By HIROKO TABUCHI

JUNE 23, 2014 1:06 PM 1 Comments

Investors who own shares in Japanese corporations might want to clear their calendars next Friday.

At 10 a.m. on June 27, annual shareholders’ meetings kick off at more than 900 major Japanese companies across the country. That’s more than one in three companies traded on the Tokyo Stock Exchange. Read more of this post

Merger Fever Can Be a Menace for Shareholders; Deals often stroke the ego of chief executives. But they can also destroy much value

Merger Fever Can Be a Menace for Shareholders

JUNE 21, 2014

By JEFF SOMMER

Shareholders beware: M.&A. mania is back.

The numbers suggest that chief executives have a bad case of the seven-year itch: After eyeing other companies hungrily for so long, they have begun trying to buy them. Read more of this post