An astonishing record – of complete failure: ‘In 2008, the consensus from forecasters was that not a single economy would fall into recession in 2009’

May 30, 2014 1:04 pm

An astonishing record – of complete failure

By Tim Harford

‘In 2008, the consensus from forecasters was that not a single economy would fall into recession in 2009’

In the 2001 issue of the International Journal of Forecasting, an economist from the International Monetary Fund, Prakash Loungani, published a survey of the accuracy of economic forecasts throughout the 1990s. He reached two conclusions. The first was that forecasts are all much the same. There was little to choose between those produced by the IMF and the World Bank, and those from private sector forecasters. The second conclusion was that the predictive record of economists was terrible. Loungani wrote: “The record of failure to predict recessions is virtually unblemished.” Read more of this post

Narendra Modi prepares to raise India’s FDI limits

May 30, 2014 10:39 am

Narendra Modi prepares to raise India’s FDI limits

By Victor Mallet in New Delhi

India’s new government is preparing to ease restrictions on foreign direct investment in the country, including in arms manufacturing, as part of its plan to boost economic growth and create jobs, government officials in New Delhi said on Friday.

Although Bharatiya Janata party leaders had signalled before their election victory that they intended to liberalise India’s complex foreign investment regime, shares in affected Indian companies rose sharply in response to news of reform plans drafted by the ministries of finance and commerce and industry. Read more of this post

The rise of the global capital; ‘Many ambitious Dutch people no longer want to join the Dutch elite. They want to join the global elite’

May 30, 2014 1:00 pm

The rise of the global capital

By Simon Kuper

‘Many ambitious Dutch people no longer want to join the Dutch elite. They want to join the global elite’

It was one of those paceless mornings that make Amsterdam so agreeable. A friend and I were sitting in a dinky café on a canal, armed with good coffee, aimlessly leafing through the newspapers. My friend is an art dealer, and inevitably another art dealer wandered in, and inevitably they knew each other: Amsterdam is an upscale bohemian village. Read more of this post

Corporate citizens of the world owe fealty to us all; Multinationals need to lay down roots wherever they grow

May 30, 2014 7:50 pm

Corporate citizens of the world owe fealty to us all

By Andrew Hill

Multinationals need to lay down roots wherever they grow

The head of a British multinational declared this week that he opposed the idea of companies that exist “somewhere in the ether”. It may be “odd to be British, but it’s even odder to say you’re nobody”, this chief executive said. “Who in the world would applaud you for saying that you are rootless?” The answer was, until recently: most business leaders and investors – the very people who were listening to him address a private session at the Inclusive Capitalism conference in London.

Global companies in the past 30 years have done all they can to shrug off the uncomfortable trappings of nationality, tax domicile and regulatory jurisdiction in pursuit of profit and efficiency. Read more of this post

Bigger graft crackdown for China’s energy sector still to come

Bigger graft crackdown for China’s energy sector still to come

Staff Reporter

2014-05-30

The Chinese government has extended the reach of its anti-corruption campaign to the energy sector by ousting a number of major figures in the field, which, said insiders, may be just the start of an even bigger crackdown.

There have been 21 energy-related ranking officials on the blacklist including three from the National Energy Administration, former chief Liu Tienan, former deputy chief Xu Yongsheng, and the former director of the administration’s new energy and renewable energy department Wang Jun. Read more of this post

Auditors Eye Hydropower Project Linked to Disgraced Mining Boss, Zhou Bin; Examiners want to know why state-owned CPIC paid premium for firm that planned to build hydroelectric plants that were never finished

05.29.2014 19:30

Auditors Eye Hydropower Project Linked to Disgraced Mining Boss, Zhou Bin

Examiners want to know why state-owned CPIC paid premium for firm that planned to build hydroelectric plants that were never finished

By staff reporter Yu Ning

(Beijing) – Government auditors in Harbin, in the northeastern province of Heilongjiang, are looking into large deals by state-owned China Power Investment Corp. (CPIC). The auditing started on April 17 and is to finish in July. Read more of this post

Chinese Regulator Ready to Roll out New Rules for P2P Lending, Sources Say

05.30.2014 16:04

Regulator Ready to Roll out New Rules for P2P Lending, Sources Say

Discussions over new regulations focused on giving P2P lending services enough room to work without breaking existing laws, one company’s boss says

By staff reporters Wang Shenlu and Liu Ran

(Beijing) – The banking regulator is working on the country’s first regulations for the peer-to-peer (P2P) loan industry by treating it as a type of private lending, sources with knowledge of the matter say. Read more of this post

Investors’ – and Wall Street’s – Love for ‘Smart Beta’ ETFs, in a Chart

May 30, 2014, 9:27 A.M. ET

Investors’ — and Wall Street’s — Love for ‘Smart Beta’ ETFs, in a Chart

By Brendan Conway

How do I love thee? Let me count the ways.
I love thee to the depth and breadth and height
My soul can reach, when feeling out of sight
For the ends of being and ideal grace.

Were those words penned by Elizabeth Barrett Browning, or by investors in smart-beta ETFs?

I’ll go with Browning, but the accompanying chart seems at first glance to make a different case. “Smart beta” is the term these days for any index-based fund which deviates from the market-weight approach of the S&P 500 and several other familiar benchmarks. The surging purple isJ.P. Morgan’s estimate of the group’s assets in the U.S. market. Read more of this post

Harnessing China’s Competitive Streak

ANDREW SHENG

Andrew Sheng, Distinguished Fellow of the Fung Global Institute and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

XIAO GENG

Xiao Geng is Director of Research at the Fung Global Institute.

MAY 29, 2014

Harnessing China’s Competitive Streak

HONG KONG – China’s State Council recently unveiled a comprehensive blueprint for capital-market reform until 2020, in which it identifies two key objectives: “to support open, fair, and integral market processes, and to protect investors, particularly the legal rights of small investors.” Achieving these goals, as the blueprint recognizes, will require policymakers to weigh market autonomy against state authority, innovation against stability, investor protection against caveat emptor, and the temptation of rapid reform against the need for pragmatism. Can it be done? Read more of this post

Serving the base of the pyramid: five tips from emerging-market experts

Serving the base of the pyramid: five tips from emerging-market experts

The idea of serving the world’s poorest populations while expanding into developing countries is alluring, but has proven difficult in practice. Here’s some advice from the trenches

Bruce Watson

theguardian.com, Friday 30 May 2014 17.02 BST

For companies looking to expand their markets, emerging markets represent an attractive target: billions of consumers, eager for jobs, goods and services that will bring them further into the global economy. Read more of this post

Getting swallowed by bigger government-linked companies (GLCs) really didn’t spell the end for some of Malaysia’s top property entreprenuers

Updated: Saturday May 31, 2014 MYT 7:49:13 AM

Resilient chieftains

BY ANGIE NG

GETTING swallowed by bigger government-linked companies (GLCs) really didn’t spell the end for some of the country’s top property entreprenuers. The stalwarts of the acquired companies are still around strutting their stuffs and living their dreams of building landmark projects.

The famous trio that come to mind are Datuk Tong Kooi Ong of the Sunrise Bhdfame, Datuk Terry Tham and Tan Sri Liew Kee Sin who are synonymous with Eastern & Oriental Bhd (E&O) and SP Setia Bhd respectively. Read more of this post

Value-add main criterion for admitting foreign entrepreneurs

PUBLISHED MAY 31, 2014

Value-add main criterion for admitting foreign entrepreneurs

JAIRA KOH

JAIRAKOH@SPH.COM.SG  

AN “accident”, is how Casa Italia chief executive Phippo Hardegger describes founding his gelato company in Singapore.

Unable to secure an Australian visa, the Swiss was persuaded by a friend to come here instead. Finding regulations that do not hinder, and a government forthcoming with the information he needed, sealed the decision, he says. Read more of this post

Three things Asean must do – now

Updated: Saturday May 31, 2014 MYT 8:00:10 AM

Three things Asean must do – now

FIRST, take stock. Of course, given the three pillars of the community-building process and the end-2015 timeline, the progress against the blueprints for the political-security, economic and socio-cultural communities has to be determined and shortfalls addressed.

For example, for the Asean Economic Community (AEC), there is a lag against stated objectives, even by official measure. What more against actual business experience, documented by reports commissioned by the Asean Business Club (ABC). Read more of this post

Shadow banking has made quite a mess and there is no easy way out

Updated: Saturday May 31, 2014 MYT 8:02:51 AM

Shadow banking has made quite a mess and there is no easy way out

THE lure of shadow banking is ever present.

Bank of England governor Mark Carney points to shadow banking in emerging markets as the greatest danger to the world economy.

That’s serious. Indeed, I receive regular requests to unravel this phenomenon and why it creates such an all-round “con-attitude” every time the concept surfaces. Read more of this post

Asia must now cope with worldwide landscape transition

Updated: Saturday May 31, 2014 MYT 7:57:16 AM

Asia must now cope with worldwide landscape transition

BY TAN SRI DR ZETI AKHTAR AZIZ

ASIA weathered the global financial crisis and its aftermath with a resilience it built steadily over the past decade. Today, that resilience is again being tested as a significant transition takes place in the global economic and financial landscape.

As the recovery in the major advanced economies strengthens, the end of unconventional monetary easing in these economies is an inevitability. While the prospect of a return to more conventional monetary policy reflects improved economic conditions, it has been accompanied by heightened volatility, with spillovers to the emerging market economies. Asia, with highly open economies and increasingly globally-connected financial systems, is not insulated from these external developments. The region will benefit from the global recovery, and its strength and resilience will help it navigate this more volatile international financial environment. Read more of this post

No Free Lunch in Dividend Funds

May 30, 2014

No Free Lunch in Dividend Funds

JASON ZWEIG

There’s no such thing as a free lunch, but there is an inexhaustible supply of investors who will trip all over themselves in pursuit of it. Read more of this post

Thai General Maps Return to Democracy

May 30, 2014, 1:29 p.m. ET

Thai General Maps Return to Democracy

By Jake Maxwell Watts and Warangkana Chomchuen

BANGKOK–Thailand’s army chief Friday asked the international community for time to repair what he described as a flawed democratic system and laid out a tentative road-map for returning an elected government to power after last week’s coup.

Gen. Prayuth Chan-ocha has come under growing pressure to outline a return to democracy in this country of 66 million people following May 22’s putsch, which saw Thailand’s army briefly detain key leaders of rival protest groups, censor media and tear up its constitution. Read more of this post

How China Hides Its Tumbling Housing Market: It Simply Ignores It

How China Hides Its Tumbling Housing Market: It Simply Ignores It

Tyler Durden on 05/30/2014 17:12 -0400

Recently we showed that in order to goose its fading all-important housing market (to China housing is like the stock market to the US: both mission-critical bubbles designed to give a sense of comfort and boost the “wealth effect”), China has first resorted to zero money down mortgages across various markets, and secondly to such gimmicks as “buy one floor, get one free.” However, that’s only part of the story. Even worse is what is not being disclosed to the general public: such as the true state of the housing market in China. Because according to a recent report on Sina, quoted on Investing In Chinese Stocks, when it comes to revealing just how bad things are domestically, Chinese developers are simply pulling a page out of biotech ETF playbooks, and simply not reporting price drops greater than 15%! Read more of this post

FBI, SEC Probe Trading of Carl Icahn, Billy Walters, Phil Mickelson; Insider-Trading Investigation Began in 2011 With Unusual Trades in Clorox

FBI, SEC Probe Trading of Carl Icahn, Billy Walters, Phil Mickelson

Insider-Trading Investigation Began in 2011 With Unusual Trades in Clorox

SUSAN PULLIAM and MICHAEL ROTHFELD

Updated May 30, 2014 7:58 p.m. ET

Federal investigators are pursuing a major insider-trading probe involving finance, gambling and sports, examining the trading of investor Carl Icahn, golfer Phil Mickelson and Las Vegas bettor William “Billy” Walters. Read more of this post

Integrated resorts could be key to Japan’s economic strategy: Abe

Integrated resorts could be key to Japan’s economic strategy: Abe

Japanese Prime Minister Shinzo Abe said casino resorts could become a pillar of his country’s future economic growth as he toured Singapore’s two integrated resorts yesterday.

MAY 31

Japanese Prime Minister Shinzo Abe said casino resorts could become a pillar of his country’s future economic growth as he toured Singapore’s two integrated resorts yesterday.

Mr Abe, who until now has remained silent on the issue of casinos, gave a strong endorsement to legislation that would legalise casino gambling in Japan. Read more of this post

Chengguan are the most hated govt officials in China

Chengguan are the most hated govt officials in China

BEIJING — China’s urban management officers, or chengguan, regularly make the news, at home and abroad, usually for unpleasant encounters with members of the public. It is not especially surprising, then, that a new report ranks them as the country’s least popular officials.

MAY 31

BEIJING — China’s urban management officers, or chengguan, regularly make the news, at home and abroad, usually for unpleasant encounters with members of the public. It is not especially surprising, then, that a new report ranks them as the country’s least popular officials. Read more of this post

Value Investing in Sanrio vs the Hello Kitty Premium

Value Investing in Sanrio vs the Hello Kitty Premium

by Guest PostMay 29, 2014, 3:46 pm

Sanrio Company, Ltd. (TYO:8136) (OTCMKTS:SNROF) shares have taken a beating the past several months and really got hammered last week — “blame” Goldman Sachs Group Inc (NYSE:GS) for the latter, as it appears that its post-earnings report casting undue pessimism and uncertainty on Sanrio’s business model fueled the selloff and compelled Morgan Stanley (NYSE:MS) -MUFG Securities to publish a copycat note. (Sanrio’s statement emphasizing profit-focus and no plans to abandon lucrative licensing business.) Attracted to Sanrio’s high ROE, a weakening yen, and “Cool Japan” marketing in overseas markets that only solidifies the popularity and brand recognition of flagship character, Hello Kitty, I had the fortunate timing of building a position in Sanrio’s ordinary shares in Q4’12 ahead of a sizable run up in 2013. Following are some lessons learned from that profitable investment and the intraday 23% drop Sanrio’s shares suffered last Thursday.

Read more of this post

Truthful top lines: New global rules aim to make it harder for firms to fib about their revenues

Truthful top lines: New global rules aim to make it harder for firms to fib about their revenues

May 31st 2014 | NEW YORK | From the print edition

WHEN companies should recognise revenues on their books is one of the most contentious and consequential issues in the staid profession of accounting. For simple sales of goods the timing is usually straightforward, but in the areas of services and long-term contracts it gets murky fast. Companies may manipulate the “top line” of their accounts—their revenues—say, by booking sales they are not yet sure of (to boost their reported profits) or not booking sales that they are certain of (to postpone profits, and the taxes on them). Read more of this post

SABMiller in Africa: A long-established African firm went global, only to find the fastest-growing market was on its doorstep

SABMiller in Africa: A long-established African firm went global, only to find the fastest-growing market was on its doorstep

May 31st 2014 | KITWE AND ONITSHA | From the print edition

ON A Friday evening in Onitsha, as the beer market is closing, a man carefully straps six cases of Hero lager and two cases of Pepsi to the pannier of his moped. Another rolls away his purchases by wheelbarrow. Coaches parked nearby will soon be filled with day-trippers and their cases of booze. Each day a vast quantity of beer is sold from this closely packed warren of stores. It is part of a sprawl of specialist markets in the city, a commercial hub on the Niger river, which draws in traders from across southern Nigeria.

It was the bustle of Onitsha that persuaded SABMiller, the world’s second-largest beer company, to set up a brewery here. The market takes a slice of SAB’s local production and sells it on to small traders who are otherwise hard to reach. The company had been late in coming to Nigeria. First it acquired a rundown brewery in Port Harcourt in 2009 and then another in Ilesha before it built a brand-new plant in Onitsha in 2012. Already, its capacity is being increased, to slake locals’ ever-growing thirst. Read more of this post

The impossible dream: The surprisingly successful president of the Philippines

The impossible dream: The surprisingly successful president of the Philippines

May 31st 2014 | From the print edition

IN 1987, when he was 27, Benigno “NoyNoy” Aquino was in Manila when plotters attempted a coup against the president, his mother Corazon Aquino. Recalling a promise to his late father to look after his mother and sisters, he rushed towards Malacanang, the presidential palace, to join them. He and his four guards were ambushed. Three were killed and one lost his eyesight. Mr Aquino himself still carries a bullet, along with his guilt. Read more of this post

Thailand’s coup: In for the long haul; As crackdown follows coup, the generals may stick around for as long as they think it takes to restructure politics and the economy, and manage the royal succession

Thailand’s coup: In for the long haul; As crackdown follows coup, the generals may stick around for as long as they think it takes to restructure politics and the economy, and manage the royal succession

May 31st 2014 | BANGKOK | From the print edition

IT IS official. On May 26th General Prayuth Chan-ocha secured the royal imprimatur for his coup four days earlier. Dressed in a white army uniform, sword at his side, General Prayuth knelt before a portrait of King Bhumibol Adulyadej as he formally took up his royal appointment as head of the National Council for Peace and Order, the junta that now runs the country. That the frail 86-year-old king was not there in person hinted at anxieties over the royal succession that have played their part in recent political ructions as well as in the coup itself. Read more of this post

Tiananmen Square: Ageing rebels, bitter victims; Twenty-five years after the bloodshed in Beijing, new details keep emerging

Tiananmen Square: Ageing rebels, bitter victims; Twenty-five years after the bloodshed in Beijing, new details keep emerging

May 31st 2014 | From the print edition

The People’s Republic of Amnesia: Tiananmen Revisited. By Louisa Lim. Oxford University Press; 248 pages; $24.95. Buy from Amazon.com, Amazon.co.uk

ON THE night of June 3rd-4th 1989 the Chinese army unleashed its tanks in the centre of Beijing to crush a protest that had begun seven weeks earlier against the Communist Party’s autocratic rule. Ever since, Chinese officials grow nervous in the run-up to the anniversary of the crackdown. This year they are especially jittery, fearful that the symbolic passage of a quarter of a century might encourage some dissidents to be more daring than usual in their public remembrance of the hundreds, perhaps thousands, who were killed. Security forces around the country are on heightened alert, particularly in Tiananmen Square, the plaza that has become synonymous with the unrest. Read more of this post