Index ETFs May Not Track Benchmarks as Expected; The Basic Idea: Their Returns Trail by the Amount of Fund Expenses. But That Isn’t the Whole Story

Index ETFs May Not Track Benchmarks as Expected

The Basic Idea: Their Returns Trail by the Amount of Fund Expenses. But That Isn’t the Whole Story.

ARI I. WEINBERG

Updated June 2, 2014 5:21 p.m. ET

The party line on index exchange-traded funds is that they offer easy exposure to a benchmark, less the fund’s expense ratio. If a stock index were to gain 10% this year, for instance, and an index ETF charges 0.1% of fund assets a year in expenses, an investor in that ETF might expect to earn 9.9%.

The reality is messier. The fund’s costs to buy and sell securities, and other aspects of portfolio management, influence your return as well.

For most stock ETFs, this slippage beyond the expense ratio is usually marginal: The median added cost is four-hundredths of a percentage point for ETFs with more than $100 million in assets that invest in U.S. stocks, according to data from research firm ETF.com. Some ETFs even overcome some costs to deliver tighter index-hugging than their expense ratios would indicate.

In other cases, the lag in ETF performance is significantly greater than one might expect based on fund expenses alone. Read more of this post

A Big-Name Index Is No. 2 in Returns; The Russell 2000 Trails the S&P SmallCap 600 Over Multiple Periods

A Big-Name Index Is No. 2 in Returns

The Russell 2000 Trails the S&P SmallCap 600 Over Multiple Periods

TOM LAURICELLA

June 2, 2014 5:20 p.m. ET

The lineup of stocks in the Russell 2000 small-stock index—and all the index funds that track it—gets an annual tweaking this month. One thing that may not change: the venerable benchmark’s lagging performance versus a younger rival.

For tracking small-company stocks, the 30-year old Russell 2000 is the go-to metric for most investors. But there’s another game in town, and it has often chalked up better total returns than the Russell: the S&P SmallCap 600. Since its launch, the S&P 600 has beaten the Russell 2000 in 12 of 19 years. The S&P benchmark is ahead for the five-, three- and one-year periods through the end of May, including leading by 20.2% to 16.8% over the latest 12 months. Read more of this post

‘Alternative’ Mutual Funds: Different, Yes. Better? Not Lately. Funds With Nontraditional Strategies Haven’t Beaten Stocks Over the Past Few Years

‘Alternative’ Mutual Funds: Different, Yes. Better? Not Lately.

Funds With Nontraditional Strategies Haven’t Beaten Stocks Over the Past Few Years

DAISY MAXEY

Updated June 2, 2014 5:22 p.m. ET

Investors spooked by the stock-market collapse of 2008 have been pouring money into so-called alternative mutual funds ever since. It’s a strategy that they hope will help cushion the blow if stocks take another dive.

It may still do that yet. But meanwhile, many of those investors have taken a beating on their alternative funds as stocks staged an impressive recovery. Consider it a lesson in what to expect from funds whose mission is to set a different course from the stock market. If these funds perform as expected, “you’re protected on the downside, but you’re really going to pay a price if the market is raging,” says Adam Zoll, an analyst at research firm Morningstar Inc. Read more of this post

Stock Investors Can Handle the Truth; The ban on ‘locking’ markets has the effect of hiding the best prices

Stock Investors Can Handle the Truth

The ban on ‘locking’ markets has the effect of hiding the best prices.

CAMERON SMITH

June 2, 2014 7:33 p.m. ET

Most investors would be surprised to learn that current stock-market regulations actually prevent them from seeing and receiving the best price. Why? Well, in 2005 federal regulators at the Securities and Exchange Commission decided, in the immortal words of Jack Nicholson in “A Few Good Men,” that investors “can’t handle the truth” and that seeing true market prices would only confuse them.

Given the SEC’s willingness to conduct pilot programs to make U.S. markets more efficient and competitive, one would hope that eliminating a regulation that reduces transparency and thus harms investors would move to the top of the pilot-program list.

This can’t-handle-the-truth rule is a seemingly arcane part of the SEC’s Regulation NMS, implemented in 2007, that prohibits a market from displaying a quote that would “lock” the quote of another market. In other words, if one market is displaying, say an offer at $15.50 in IBM, IBM +0.72% then another market should not display a matching bid in IBM at $15.50.

The simple reason is that, in theory, if a bid is the same as an offer, it should result in a trade. Indeed, the stated purpose of the prohibition is that it promotes healthy interaction between buyers and sellers and contributes to a fair and orderly market. Read more of this post

China Keeps Tiananmen Chatter Under Wraps Ahead of Anniversary

China Keeps Tiananmen Chatter Under Wraps Ahead of Anniversary

Dozens Detained, Questioned or Put Under House Arrest, Rights Groups Say

BRIAN SPEGELE and JOSH CHIN

Updated June 2, 2014 3:14 p.m. ET

In Hong Kong, protesters recreated scenes from the Tiananmen Square crackdown. In mainland China, however, such displays were forbidden. Associated Press

BEIJING—China’s leadership is leaving little to chance ahead of this week’s 25th anniversary of the bloody quashing of the Tiananmen Square protests, having embarked on a widespread clampdown on dissent that has targeted lawyers, rights activists and journalists, among others.

Rights groups say dozens have been detained, questioned or put under house arrest to try to make sure no commemorations are held. The group Chinese Human Rights Defenders puts the number at 50 “detained, disappeared or summoned.” Read more of this post

Symbol of Resistance Catching Fire in Bangkok

Jun 2, 2014

Symbol of Resistance Catching Fire in Bangkok

NEWLEY PURNELL

A woman holds up a three-fingered salute during a protest against the Thai military coup at a popular shopping mall in Bangkok on Sunday. The salute is from the movie “The Hunger Games: Catching Fire.”

Anti-coup protesters in Thailand are adopting a symbol of resistance from a science fiction movie in which citizens struggle against a tyrannical government in a dark, dystopian future.

A few dozen demonstrators on Sunday gathered in a flash-mob style protest at a Bangkok shopping mall, where many held anti-army signs and raised their hands in a three fingered salute aimed at nearby troops. Read more of this post

Big Four Audit Firms in China in Settlement Talks With SEC Enforcers; Dispute Arose Over Access to Audit Documents About Chinese Clients

Big Four Audit Firms in China in Settlement Talks With SEC Enforcers

Dispute Arose Over Access to Audit Documents About Chinese Clients

MICHAEL RAPOPORT

June 2, 2014 7:35 p.m. ET

U.S. securities regulators and the Chinese affiliates of the Big Four accounting firms have been discussing a potential settlement of their dispute over access to the firms’ audit documents about their Chinese clients, according to a filing late Monday.

The firms—the Chinese arms of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG—have been in “continued settlement efforts” with the Securities and Exchange Commission’s enforcement division, according to the filing, issued by the five-member SEC.

“We’ve definitely been trying” to reach a settlement, said Amy Call Well, an Ernst & Young spokeswoman. A PwC spokeswoman confirmed the information in the filing but said she couldn’t comment further. The other two firms and the SEC couldn’t immediately be reached for comment. Read more of this post

Samsung Group Holding Company Plans IPO; Everland Listing Could Help Ownership Transition From Group Chairman to His Children

Samsung Group Holding Company Plans IPO

Everland Listing Could Help Ownership Transition From Group Chairman to His Children

MIN-JEONG LEE

June 2, 2014 9:48 p.m. ET

SEOUL—Samsung Everland Inc., the de facto holding company of South Korea’s largest conglomerate, Samsung Group, is seeking an initial public offering by the first quarter of 2015 in a move that is expected to help the succession of ownership from the group chairman to his children.

Samsung Everland operates an amusement park and runs a fashion business, and serves as the holding company for various Samsung affiliates. It will pick managers for the IPO this month and plans to list its shares by the first quarter of next year at the latest, the company said. It said it plans to go public to “raise capital and expand overseas.”

The company is expected to list in Seoul, but a spokesman declined to confirm the location. Read more of this post

China disrupts Google services ahead of Tiananmen anniversary

China disrupts Google services ahead of Tiananmen anniversary

6:32am EDT

BEIJING (Reuters) – Google services are being disrupted in China ahead of this week’s 25th anniversary of the 1989 crackdown on pro-democracy demonstrators around Beijing’s Tiananmen Square, a censorship watchdog said on Monday.

GreatFire.org said in a blog post that the government appeared to have begun targeting Google Inc’s main search engine and Gmail, among many other services, since at least last week, making them inaccessible to many users in China.

It added that the last time it monitored such a block was in 2012, when it only lasted 12 hours.

“It is not clear that the block is a temporary measure around the anniversary or a permanent block. But because the block has lasted for four days, it’s more likely that Google will be severely disrupted and barely usable from now on,” the advocacy group said.

Asked about the disruptions, a Google spokesman said: “We’ve checked extensively and there’s nothing wrong on our end.” Read more of this post

It’s Easy to Forget About Risk in a Stable Market

It’s Easy to Forget About Risk in a Stable Market

By CARL RICHARDSJUNE 2, 2014

Stability itself is destabilizing.

This is one of the defining ideas of the economist Hyman Minsky. And it matters because when we have periods of relative stability or happy results in the stock market (like now), we start to tell ourselves little stories. For example, we might believe that the stock market will behave like a bank certificate of deposit but pay us double-digit returns year after year.

We forget what normal market risk feels like, and we get comfortable with more and more risk. That makes it easier to borrow more money, because it’s all good. We say, “Risk? What risk?” as we move more of our 401(k) allocation into the stock market.

Forgetting about risk and pain is a wonderful human trait. Without this amazing ability, I doubt there would be many families with more than one child, and I’m certain that very few people would sign up for a second marathon. Forgetting pain has been good for us as a species, but it’s bad for us as investors. Read more of this post

In Slightly Less Wealthy Circles, Too, Interest Rises in Private Equity

In Slightly Less Wealthy Circles, Too, Interest Rises in Private Equity

MAY 30, 2014

By PAUL SULLIVAN

AS a young lawyer in New York, Robert Rich sometimes bought stocks based on tips he received while playing squash at the Yale Club. Most of them did not do well, so eventually he chose to put his money into mutual funds and focus on his work.

But then the itch for more control and the potential for bigger gains got the best of him and now, at 76, Mr. Rich has put nearly a fifth of his wealth into private equity — an illiquid, risky asset class with returns that range from double digits to a complete loss of principal.

In this, Mr. Rich has been at the vanguard of a wave of affluent do-it-yourselfers investing in private equity by buying into funds that focus on a sector of the economy or on direct investments in particular companies. They most often do this through self-directed I.R.A.s — a type of retirement account that can invest in nonpublic securities. These accounts have been around since the 1970s and are typically used to invest in real estate.

But in the last five years, the custodians for self-directed I.R.A.s report an increasing interest in private equity. Equity Trust, in Westlake, Ohio, said private equity now accounted for 10 to 15 percent of the $12 billion it holds as a custodian. The Pensco Trust Company, based in San Francisco, said 60 percent of new accounts in the last three years had been opened by people who wanted to invest in private equity. Read more of this post

Rules of the Fund Road: Watch the Fees, and Don’t Look Back; The expenses of a mutual fund often tell you something that its past performance can’t

Rules of the Fund Road: Watch the Fees, and Don’t Look Back

MAY 31, 2014

Strategies

By JEFF SOMMER

Investing would be easy if you could predict the future. Unfortunately, I can’t help you with that. But I do know a little about what works and what doesn’t work.

How an investment performed in the past doesn’t work: Past performance doesn’t guarantee future results. That thought should be familiar, since the Securities and Exchange Commission requires that it be published in all advertising dealing with mutual fund performance.

How much a fund charges in expenses does work. Within certain limits, fee levels provide an excellent guide to the future. Of course, fund fees in themselves don’t guarantee that you’ll do well with a particular investment; a bad bet doesn’t magically turn into a good one if the fees are low. But all things equal, you will be a lot better off if hefty fees aren’t eating up your returns. And low fees may tell you much more than that: When fees are low, the chances are much greater that an overall investment portfolio will outperform its peers. Read more of this post

David Jones may not be main prize for Solomon Lew

David Jones may not be main prize for Solomon Lew

June 3, 2014

Elizabeth Knight

At last the big end of town can stop talking about why gaming billionaire James Packer and his best friend Nine Entertainment boss David Gyngell partook in a fisticuffs set-to on the pavement at Bondi Beach and instead turn its attention to what Solomon Lew is hatching at David Jones.

There are theories aplenty but my money’s on the one that says Lew wants to sell his stake in Country Road, rather than make a bid for David Jones. It’s greenmail with a twist. But more on this in a moment. Read more of this post

Chinese Firms with Weak VIEs: Dumb Investment

Chinese Firms with Weak VIEs: Dumb Investment

by Ben StrubelJune 02, 2014, 12:10 pm

Chinese Companies with Weak VIEs: Dumb Investment of the Week by Ben Strubel of Strubel Investment Management

After a wave of accounting and fraud scandals in 2011 (billions of investor dollars were lost), Chinese companies, particularly small and mid cap, are beginning to come back to US markets. Investors are beginning to warm up to these companies again and the share prices of many have risen as the memories of the multitude of fraudulent Chinese companies fade away.

How can investors protect themselves from a repeat of 2011? One thing investors need to do is thoroughly educate themselves on the WFOE (Wholly Foreign Owned Enterprise)/VIE (Variable Interest Entity) system many US listed Chinese companies use. Because of prohibitions on foreign ownership in certain sectors many Chinese companies use a complex legal structure to get around this.

At its most basic the WFOE/VIE structure looks like the diagram below. There is a US listed entity that is registered in Delaware or another corporate haven like the British Virgin Islands or the Cayman Islands. This entity then owns the WFOE which is a PRC registered entity. The WFOE then has a contractual arrangement with one or more VIE entities. The owners of the US listed entity do not own any of the assets in the VIE.

Some companies also include a Hong Kong based entity between the US listed entity and the WFOE. Additionally, most companies have multiple VIEs and various Chinese nationals (typically founders and management) with varying equity stakes in the assortment of entities. Read more of this post

Honeywell CEO: How America can compete with China

Honeywell CEO: How America can compete with China

David Cote

@FortuneMagazine

JUNE 2, 2014, 5:18 AM EDT

The U.S. may never have more people than China so we need to focus on being the most innovative and productive country on Earth.

During the mid 1800’s, we eclipsed the UK economically because of population growth and dynamism.  We encouraged business, a strong working ethic, and innovation (some stolen from the UK).  During this century, China may eclipse the US as the world’s biggest economy.  While some might point to the unsustainability of China’s political system, it is very different than it was 50 years ago or 20 years ago.  China may have more issues to deal with (corruption, wealth disparity, state owned enterprises, pollution, and ghost cities to name a few), but they have shown tremendous capability to evolve their system and address their issues.  We are standing still.

This is not a case of is China “good” or is China “bad,” rather it’s a case of China “is.” At current growth rates, in about 25 years China will be the world’s largest economy and will still have a lower GDP per capita, meaning more growth is possible. This is not to say China’s growth will continue uninterrupted. Something could go awry.  It also doesn’t mean we should stop objecting to issues like cyber security, territorial disputes and intellectual property issues. Read more of this post

Bust may be looming over China property market

Bust may be looming over China property market
Monday, June 2, 2014
By Kelly Olsen, AFP

BEIJING–After years of boom that have seen prices rocket, the prospect of a bust is looming over China’s vast property sector, with authorities hoping to avoid a meltdown that could send shock waves through the world’s second-biggest economy.

Housing was doled out by the state when Communist-style collectivism dominated economic management. But in the past two decades that has given way to market-oriented principles as China’s economy has opened.

New home prices have soared, more than quadrupling in Beijing and Shanghai since 2003, and more than doubling in the country as a whole, according to a report by Jeremy Stevens, Beijing-based Asia economist at South Africa’s Standard Bank.

The increases have been a key source of wealth for China’s rising middle classes, and a major driver of the economy.

Now some — including individuals who have made fortunes — foresee imminent disaster.

“I think Chinese property is the Titanic about to crash into the iceberg right in front of it,” Pan Shiyi, billionaire chairman of commercial developer SOHO China, said at a forum, China Business News reported last week.

At the same time, surging prices have driven homes beyond the reach of many ordinary Chinese, stoking resentment and inequality. Read more of this post

Banks in China fear over-reliance on IBM information systems; Chinese banks ditch US providers for Alibaba’s Aliyun

Banks in China fear over-reliance on IBM information systems

Staff Reporter

2014-06-01

The issue of Chinese banks’ relying on core technology from overseas for their information systems has been a cause for concern for many in the regulatory and banking sectors.

It is estimated that 90% of China’s banking institutions use IBM for their core technology, and China is urging its banks to remove high-end servers made by IBM in favor of the servers made by local brands.

China Banking Regulatory Commission chairperson Shang Fulin spoke on the issue at a meeting held in late 2012.

Shang suggested a strategy for self-reliance in stages so as to gradually steer clear of reliance on foreign brands. Read more of this post

Thai coup protesters have adopted the Hunger Games’ three-fingered salute

Thai coup protesters have adopted the Hunger Games’ three-fingered salute

By Quartz Staff 7 hours ago

At demonstrations against Thailand’s military government continued this weekend, protesters unveiled their newest tactic: Appropriating the three-fingered salute from the Hunger Games, which the movies’ downtrodden citizens use as a silent rebuke to their dystopian government.

Ever since the Thai military seized power last month, protesters have been using social media to organize hit-and-run demonstrations in Bangkok, and on Sunday they made a last-minute change of venue, gathering at the downtown shopping district’s Terminal 21 mall. They were opposed by hundreds of soldiers and police, who have mobilized at possible protest sites around the city to pre-empt large-scale demonstrations. At least four people were arrested, including one woman who was dragged into a taxi by undercover police after giving the three-finger salute.

Thais are avid consumers of pop culture, including the Hunger Games movies, so it’s not surprising that they have chosen to use the salute favored by cinematic heroine Katniss Everdeen. Adding to the cultural mash-up, protesters on Sunday said the three fingers stand for liberty, brotherhood, and equality—a slogan associated with the French Revolution that is now the official motto of France.

Inflation Prospect Changes Japan Stock Strategies; Some Investors Look for Companies Putting Their Cash Hoards to Work

Inflation Prospect Changes Japan Stock Strategies

Some Investors Look for Companies Putting Their Cash Hoards to Work

KOSAKU NARIOKA

June 2, 2014 7:31 a.m. ET

Some long-term investors are capitalizing on the recent weakness in Japanese stocks to scoop up shares of companies they believe will be winners in an emerging inflationary environment.

These investors are buying shares in companies that are positioning themselves for growth by ramping up capital spending, or putting cash in shareholders’ hands, because merely sitting on funds will no longer be a viable strategy if steady inflation returns to the economy.

The demand has helped the Nikkei Stock Average reach a nearly two-month high, although it is still down 8% since the start of the year. The average gained 2.1% Monday.

Government data released Friday showed consumer prices in April were up 1.5% from a year earlier, after stripping out the effects of an increase in the national sales tax at the start of the month. Generally speaking, signs of inflation are good news for Japan’s economy because they suggest stronger demand—consumers are less likely to hoard cash—after a deflationary spell dating to the 1990s. Read more of this post

Remembering Tiananmen: The lessons of history

Remembering Tiananmen: The lessons of history

As our bureau chief leaves China, he reflects on the crushing of the protests he witnessed 25 years ago, and what has transpired since

May 31st 2014 | BEIJING | From the print edition

EVEN after the Chinese army moved into Tiananmen Square on the night of June 3rd 1989, and cleared it of the detritus left by the students who had occupied it for most of the previous seven weeks, it was several days before observers were certain who was in control of China. Your correspondent, looking down Beijing’s central boulevard, Chang’an Avenue, at a maze of still-burning barricades a day after the bloody operation, was not alone in wondering whether the Communist Party could ever heal. This newspaper, with which he was not then linked, summed up a common view: “This week China looked into the abyss of coup, counter-coup and civil war”. Foreign doomsayers were proved wrong. But even after 25 years of relative stability, it is still wise to be cautious about the cohesion of Chinese politics.

It was not just foreign observers who were given to apocalyptic musings at the time. “If the rebels had had their way, there would have been a civil war,” Deng Xiaoping told a visiting Chinese-American physicist, Tsung-Dao Lee, three months after the army crackdown that left hundreds, if not thousands, dead. Thanks to strenuous efforts by the Communist Party to erase memories of what happened (see article), many in China now have only a dim understanding of the history of the protests in Tiananmen Square and the nationwide unrest they triggered. But Deng’s analysis is remarkably close to the mainstream among the generation of young urban residents who have grown up since: if they have heard of the 1989 protests, many feel that, though the killings may have been bad, the army’s resolute action helped to create the stability that allowed China’s economy to grow from one that was then smaller than Britain’s into the world’s second-largest. Read more of this post

Bad News for the Big Four Auditors in China

Bad News for the Big Four Auditors in China

Mainland ban on HK firms has little effect »

Paul Giles, 2 Jun 2014

The CICPA has issued their annual rankings of Chinese CPA firms for 2013. It is bad news for the Big Four. BDO’s Chinese affiliate Lixin jumped over both KPMG and EY to kick EY out of the Big Four in China. RSM and Crowe Horwath’s shared affiliate Ruihua pushed KPMG out when it passed both EY and KPMG last year. PwC continues to be the largest CPA firm in China, extending its lead over Deloitte. PwC’s growth was a modest 4%, while Deloitte actually shrunk by 5%.

Here are the top ten CPA firms in China in 2013:

In most parts of the world the top accounting firms release information on their performance. Although they are private companies, they are public interest entities and the public deserves to look in their drawers just as they look into everyone else’s. In China and Hong Kong, however, the Big Four are intensely secretive about their operations. The CICPA data is the only look inside. I believe that the data are generally reliable. It is used by the CICPA to set dues, so cheating upward would be expensive, and cheating downward could risk their right to practice. The revenue includes only audit fees. The Big Four operate their consulting practices in WFOEs and local firms report consulting revenues separately. Read more of this post

Singapore-Taiwan cross-border contactless card in the works

Singapore-Taiwan cross-border contactless card in the works

By John Leong 
POSTED: 02 Jun 2014 12:10
EZ-Link and Taiwan company EasyCard will be developing the card to allow Singaporeans to pay for public transport or admission tickets to local attractions in Taiwan, and vice versa.

SINGAPORE: Singaporeans will soon be able to access public transport and retail options while in Taiwan, and the same is true for Taiwanese travellers visiting the city-state.

EZ-Link and its Taiwanese counterpart, EasyCard, signed a Memorandum of Understanding (MOU) on Monday (June 2) to jointly develop a cross-border, multi-functional contactless card.

The card, named Cross Border Combi Card, will allow people to pay for anything from public transportation to admission tickets to local attractions. It will contain separate “purses” to store both Singapore and Taiwanese currencies, according to the companies.

EZ-Link said it hopes the new card will be ready within a year.

Myanmar to launch stock exchange by Oct. 2015: media

Myanmar to launch stock exchange by Oct. 2015: media

YANGON, June 1 (Xinhua)– Myanmar is ready to launch stock exchange by October 2015 and the related plan is progressing on schedule, state media quoted a government’s financial official as saying on Sunday.

Deputy Minister of Finance Maung Maung Thein told a seminar in Yangon that the three components for emergence of a capital market are taking place simultaneously, which are formation of a securities and exchange commission, launch of Myanmar’s first stock exchange and preparation by companies to be listed.

He said the Yangon Stock Exchange will be operated by the Myanmar Economic Bank in partnership with Japan’s Tokyo Stock Exchange (TSE) and Daiwa Securities Group and the signing of a joint venture agreement will take place soon. Read more of this post

China clampdown ahead of Tiananmen massacre anniversary

June 1, 2014 7:03 pm

China clampdown ahead of Tiananmen massacre anniversary

By Jamil Anderlini in Beijing

China has detained dozens of people and launched an unprecedented security operation in central Beijing to stop anyone commemorating the 25th anniversary of an event that has been virtually wiped from the collective memory of the nation.

A quarter of a century after the People’s Liberation Army turned its tanks and guns on the people and marched into Tiananmen Square on the night of June 3 and early hours of June 4, 1989, any mention of the massacre of hundreds, perhaps thousands, of people is banned from public life.

More than 50 people, including activists, lawyers, journalists and relatives of students killed in the massacre, have been detained, arrested or simply “disappeared” in recent weeks because of their efforts to commemorate the anniversary, according to human rights groups. Read more of this post

South Koreans drawn to unification-linked funds

June 1, 2014 5:41 am

South Koreans drawn to unification-linked funds

By Song Jung-a in Seoul

South Korean investors are pouring millions of dollars into unification-themed equity funds, reflecting local investors’ growing optimism over a unified Korea, although the chances of the two countries joining remain as remote as ever.

Such funds have emerged as an unlikely darling for Korean investors after President Park Geun-hye in her new-year speech compared unification to an economic “jackpot”, which has prompted an increase of discussion of national reunification in local media.

A combined net Won35bn ($35m) has flowed into two such funds over the past two and a half months in spite of volatile inter-Korean relations and Pyongyang’s warning of another nuclear test, while Won3.4tn has flowed out of the country’s other equity funds in the same period. Read more of this post

Appetite grows for Indonesia’s herbal remedies

June 1, 2014 5:45 am

Appetite grows for Indonesia’s herbal remedies

By Ben Bland in Jakarta

Whether suffering from headaches, a cold or flatulence, Indonesians have long sought relief in a range of cure-all herbal potions known as jamu.

By producing its signature Tolak Angin (“expel the wind”) herbal medicine in small, cheap-to-distribute sachets, Irwan Hidayat’s family took a cottage industry dominated by itinerant hawkers and petty stallholders and transformed it into a billion-dollar business.

“When I was small, I could not imagine that we could build a company such as this,” says the 67-year-old chief executive of Sido Muncul, the family’s herbal medicine company, which has seen its shares rise by 40 per cent since it listed in Jakarta in December, giving it a market capitalisation of more than $1bn. Read more of this post

Tiananmen Square: the long shadow; The leaders of the Tiananmen Square protests have taken varied paths in the 25 years since the massacre

June 1, 2014 3:47 pm

Tiananmen Square: the long shadow

By Jamil Anderlini

The leaders of the Tiananmen Square protests have taken varied paths in the 25 years since the massacre

©AFP

The massacre in which hundreds, perhaps thousands, of people died in Beijing on the night of June 3 and the early hours of June 4 1989 remains the most important and traumatic single event in modern Chinese history.

It was the moment the people’s army turned its guns on the people, shattering the legitimacy of the Communist party and ushering in an era of rapid capitalist-style reforms. Read more of this post

U.S. Rubber-Band Maker Survives by Stretching Its Portfolio of Products; Alliance Rubber Finds Novel Uses for Rubber Loops; New Equipment Turns Out Customized Products

U.S. Rubber-Band Maker Survives by Stretching Its Portfolio of Products

Alliance Rubber Finds Novel Uses for Rubber Loops; New Equipment Turns Out Customized Products

JAMES R. HAGERTY

June 1, 2014 4:48 p.m. ET

Most of Alliance Rubber’s products now are rubber-band spinoffs, like the Eraselet, a wristband that doubles as an eraser. Alliance Rubber

Making rubber bands in the U.S. takes a lot of flexibility these days.

Companies in Thailand and China, benefiting from lower labor costs, have grabbed much of the U.S. market for rubber bands. Meanwhile, some of the biggest traditional uses for the product—such as holding together newspapers and bundles of mail for home delivery—are withering away. Read more of this post