Banking World’s Ikea Born in Sweden Challenging Deposit Giants

Banking World’s Ikea Born in Sweden Challenging Deposit Giants

Sweden’s state-backed mortgage lender wants to take retail customers from the nation’s biggest banks as it targets as much as $14 billion in deposits. SBAB plans to more than double its share of Sweden’s savings market to as much as 6 percent in the coming years, from today’s 2 percent, Chief Executive Officer Carl-Viggo Oestlund said yesterday in an interview at the bank’s headquarters in Stockholm. Oestlund predicts the bank’s deposit base will rise as high as 90 billion kronor in coming years ($14 billion). Read more of this post

Debt Disaster Seen Unless VAT Rises to 20% by 2020: Japan Credit

Debt Disaster Seen Unless VAT Rises to 20% by 2020: Japan Credit

Japan must raise its sales tax to at least 20 percent by the time the Olympics come to Tokyo in 2020 to avert a “disaster” in its bond market, according to the head of a panel advising the world’s biggest pension fund. The consumption levy, due to increase in April for the first time since 1997, will need to quadruple from current levels to handle Japan’s increasing welfare costs and rein in the nation’s debt, said Takatoshi Ito, who leads an investment panel for the 121 trillion yen ($1.23 trillion) Government Pension Investment Fund. He said funds like GPIF are at risk of being too dependent on Japanese government bonds, where 10-year yields of 0.670 percent are the lowest globally. Read more of this post

Henry Ford’s Century-Old Line Finds $15 Billion in China

Henry Ford’s Century-Old Line Finds $15 Billion in China

On Oct. 7, 1913, Henry Ford’s assembly line moved for the first time. A century later, among the changes in Ford Motor Co. (F)’s production, none is more dramatic than simply where it takes place. Ford vehicles assembled in China and the rest of Asia now outnumber those built in Europe for the first time. By 2015, Ford will have the capacity to produce more cars and trucks in Asia than it made last year in North America. Read more of this post

Fonterra CEO Says Whole Milk Prices Too High, Need to Decline

Fonterra CEO Says Whole Milk Prices Too High, Need to Decline

Fonterra Cooperative Group Ltd. Chief Executive Officer Theo Spierings said milk powder prices are too high and risk hurting the dairy industry unless they normalize. “The distance between whole milk powder and the other milk products is too big,” Spierings said in an interview in Auckland today after Fonterra, the world’s largest dairy exporter, reported a 3 percent drop in earnings for the 2012-13 year. Higher prices not only push customers toward other milk products, they also make substitutes such as soy or vegetable oil more attractive, he said. Read more of this post

Chanos Undeterred by China Growth as O’Neill Bullish

Chanos Undeterred by China Growth as O’Neill Bullish

China’s improving economic fundamentals are unconvincing to Jim Chanos, the founder of Kynikos Associates Ltd., who is maintaining short bets on the nation’s banks. “My caution is related to the credit-driven model,” said Chanos, who correctly bet in 2001 on the collapse of Enron Corp., on a panel moderated by Tom Keene at the Bloomberg Markets 50 Summit in New York. “If you grow new credit by 30 percent to 40 percent” of gross domestic product a year, it’s not difficult to reach the government’s growth target, he said. A Chinese manufacturing index rose to a six-month high in September, boosting Premier Li Keqiang’s odds of meeting the year’s 7.5 percent expansion goal. The economy grew 7.7 percent last year, the slowest since 1999, as loan expansion fueled concern that banks may fail. Read more of this post

China Beige Book Shows Slowdown, Opposite Official Data

China Beige Book Shows Slowdown, Opposite Official Data

China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed. Increases in business-investment and real estate revenue also slowed, while service industries picked up and employees became tougher to find, the survey from New York-based China Beige Book International said yesterday. The report is based on responses from 2,000 people from Aug. 12 to Sept. 4 as well as 32 in-depth interviews conducted later in September. Read more of this post

JIM VS. JIM: The Ultimate China Bull And The Ultimate China Bear Debate The Country’s Future

JIM VS. JIM: The Ultimate China Bull And The Ultimate China Bear Debate The Country’s Future

LINETTE LOPEZ SEP. 24, 2013, 3:07 PM 1,794 3

Jim O’Neill, former head of Goldman Sachs Asset Management, coined the term ‘BRIC’, and is a huge bull on China. Jim Chanos, the CEO of Kynikos Investments and famed short seller, is a massive China bear. They faced off at the Bloomberg Markets 50 conference, Bloomberg TV’s Tom Keene hosted. Here we go. Keene started us off by asking the guys to lay out their arguments. O’Neill said that “most of the reason” why China has slowed is because it has deliberately slowed, and either way the rate they’re going to grow at this year is equivalent to the U.S. growing at 4%. Chanos countered the that Chinese model is all wrong. It’s built on credit. So in a sense, he said, “we’re talking passed each other.” He doesn’t disagree with the number O’Neill presented, but what that number is built on, which is an investment driven model. “If you’re going to grow net new credit in this economy by 30%-40% you ought well to be growing by 7% real,” said Chanos. It’s the health of the system, especially banking, Chanos is concerned about. “And by the way I’m using their data,” he said smiling at O’Neill. This is where things got deep. “It was blatantly obvious to people three years ago that China was finished,” said O’Neil. The takeaway there (from O’Neill) was that Chanos is shorting the old China and he’s bullish on the new one. “But there have been so many new China’s!” said Chanos.  “How do you play the recent bounce in emerging markets,” asked Keene, breaking in. Chanos responded: “I’m looking at Petrobras” (that’s Brazil’s state oil company that Chanos has openly said is subsidizing lower prices for its customers and hurting its own business). Chanos went on to say that any company in iron ore or mining is in trouble over the next year as well. Read more of this post

Property groups investing in China look to local investors

September 24, 2013 3:59 pm

Property groups investing in China look to local investors

By Simon Rabinovitch in Shanghai

When Tishman Speyer, the US property company, raised its first China fund in 2007, the money came from overseas investors eager to get a piece of one of the world’s hottest real estate markets. Six years on, China’s property is still sizzling but foreign investors are much more nervous about its outlook. For Tishman Speyer, which remains upbeat about Chinese property, this shift has led to a change of strategy. Instead of tapping overseas markets, it is raising the cash it needs for Chinese projects within China itself, where investors remain much more positive. Read more of this post

Party Will Pay the Price for China’s Rebalancing

Party Will Pay the Price for China’s Rebalancing

We need to keep the impact of financial repression in mind in understanding the Chinese growth model. It is a fundamental cause of China’s rapid expansion and its extraordinary imbalances. State-owned enterprises, like other large-scale investors, have benefited from artificially low interest rates, and it is quite easy to prove that over the past decade they have been value destroyers on a very significant scale. Read more of this post

Noted Chinese Real Estate Tycoon, Vanke’s Wang Shi, Warns About Danger in China’s Housing Market

Noted Chinese Real Estate Tycoon Warns About Danger in China’s Housing Market

09-25 10:33 Caijing

“Rises of housing prices in first-tier and second-tier Chinese cities bear striking similarities to those in the bubble economy of Japan at the end of 1980s’, ” said Wang, chairman of China Vanke The red-hot housing market in China’s big cities are much like the situation in Japan’s bubble economy two decades ago, said Wang Shi, a prominent real estate tycoon in a dire warning over unrelenting housing market in the world’s second largest economy. “Rises of housing prices in first-tier and second-tier Chinese cities bear striking similarities to those in the bubble economy of Japan at the end of 1980s’, ” said Wang, chairman of China Vanke, the country’s largest real estate developer by market value, Tuesday on his weibo. “The bubbles in Japan burst. Take a lesson from that,” Wang said. Read more of this post

Executive’s Arrest Is Latest Sign of Trouble for China’s State-Owned Shipper COSCO

09.24.2013 18:28

Executive’s Arrest Is Latest Sign of Trouble for State-Owned Shipper

Former GM of COSCO subsidiary detained over questionable leasing deals, just the most recent bad news for the embattled company

By staff reporter Liu Ran

(Beijing) – The recent arrest of an executive of a subsidiary of China Ocean Shipping (Group) Co. (COSCO Group) has spelled more trouble for the state-owned shipping firm, which has been grappling for years with the heavy losses incurred by another member of the corporate family. Meng Qinglin, former general manager of COSCO Dalian Ocean Shipping Co. (COSCO Dalian), was taken away for questioning by the Communist Party’s discipline watchdog over alleged corruption related to vessel-leasing deals, COSCO Dalian said on August 27. Read more of this post

Chinese Cities Hooked on Land Revenue Fuel Housing Costs

Chinese Cities Hooked on Land Revenue Fuel Housing Costs

Chinese cities, addicted to the money they raise by selling land to developers, are undermining the government’s multiyear campaign to contain housing costs. Municipal residential land deals, measured by area, rose 26 percent in the first eight months of the year from the same period in 2012, according to China Investment Securities Co. The average price per square meter jumped 43 percent, pushing proceeds up 80 percent to 816.5 billion yuan ($133 billion). Local officials rely on revenue from the sales to repay debt, especially as economic growth slows. Developers bid up prices because demand from homebuyers remains strong. The cycle is driving property costs higher, complicating Premier Li Keqiang’s task of preventing social unrest over the lack of affordable housing amid a massive urbanization program. Read more of this post

China’s younger migrants eye more than money

China’s younger migrants eye more than money

Wednesday, September 25, 2013 – 03:00

Esther Teo

The Straits Times

BEIJING – Unlike her father, who did not venture out of central Henan province to work in Beijing until he was in his 30s, florist Su Ya left her home for the bright lights of the capital three years ago – when she was only 20. Ms Su makes new friends through floral arrangement classes and keeps in touch with them through social media, such as the Twitter-like Weibo microblogs. Her parents mix mostly with colleagues and fellow Henan natives. Read more of this post

China’s Industrial-Sized Debt; Beijing continues to fuel economic growth with more credit

Updated September 24, 2013, 9:17 p.m. ET

China’s Industrial-Sized Debt

Beijing continues to fuel economic growth with more credit.

The economic news from China this week is nominally positive, as HSBC’s Purchasing Managers’ Index shows industrial production picking up. This seems to confirm reports that Beijing decided in July that growth had slowed too much. The state-owned banking system pushed out some new loans to finance investment by state-owned companies. This has China bulls smiling, because they believe that rebalancing toward greater consumption will happen eventually and without serious dislocation. China bears, by contrast, see it as adding to a debt reckoning that is on the horizon. Read more of this post

China to Audit Army Officials Before Promotions or Retirement

China to Audit Army Officials Before Promotions or Retirement

China will audit military officials’ real estate holdings and use of official cars before deciding whether to promote them, as the Communist Party seeks to purge wasteful spending and power abuse within its ranks. Military officers recommended as candidates for regimental commander-level posts or above, personnel due to retire, and those who will be transferred to civilian posts will undergo the audit, the official Xinhua News Agency reported yesterday, citing guidelines issued by the Central Military Commission. Read more of this post

Amway Embraces China Using Harvard Guanxi

Amway Embraces China Using Harvard Guanxi

On a sweltering July evening in the inland Chinese city of Hefei, 1,000 people whistle and clap as Cao Yuchao tells them about Amway Corp., the household-products giant named after the American Way. Against a rainbow backdrop and the Chinese characters for glory and dreams, Cao, Amway’s local chief, paints a glowing portrait: China has been the company’s top market for nine years, with booming sales of Artistry cosmetics and Nutrilite dietary supplements. Amway also was a sponsor of China’s team at the 2012 Olympics, Bloomberg Markets will report in its November issue. Read more of this post

Tongyang to sell core unit Tongyang Power to repay debt for survival

2013-09-24 17:45

Tongyang to sell core unit for survival

FSS monitors ‘fund run’ out of securities arm

By Na Jeong-ju
Tongyang Group said Tuesday that it is willing to sell one of its core affiliates, Tongyang Power, in order to secure funds for debt repayment.
On the same day, the wife of the late Tongyang founder, Lee Yang-ku, said she will transfer her stake in Orion Group, an offshoot of Tongyang, to Tongyang Networks, to help relieve its cash shortage problem. The stake is worth about 150 billion won, according to the group.
These plans, if implemented successfully, could help the country’s 47th conglomerate avoid immediate bankruptcy, analysts said. Read more of this post

Kim Sung-joo, one of Korea’s most successful businesswomen, is in trouble as sluggish local demand is taking its toll on her MCM brand-bag business

2013-09-24 17:18

MCM suffers major setback

By Choi Kyong-ae

Kim Sung-joo, one of Korea’s most successful businesswomen, is in trouble as sluggish local demand is taking its toll on her brand-bag business. Her Business is being pressured to withdraw or downsize from The Country’s major Department store chains, People familiar with The MATTER said Tuesday.  Read more of this post

Foreigners hunt small Japanese shares as big caps no longer cheap

Foreigners hunt small Japanese shares as big caps no longer cheap

10:13pm EDT

By Ayai Tomisawa

TOKYO (Reuters) – Long-term foreign investors are looking into small cap Japanese shares as the Tokyo market’s bellwethers such as Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) and Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) no longer look cheap even after considering the effect of the weak yen. Some fund managers have been dabbling in subcontractors of big Japanese exporters while others look at companies whose coverage by analysts is low and have been neglected by international investors. “Many export-oriented companies have become a little expensive to us,” said Drew Edwards, portfolio manager at Advisory Research Investment Management based in Chicago, who has $800 million under management. Read more of this post

Stronger is better: brewers tap India thirst for potent beer

Stronger is better: brewers tap India thirst for potent beer

Tue, Sep 24 2013

By Aradhana Aravindan and Nandita Bose

MUMBAI (Reuters) – With up to 8 percent alcohol, Carlsberg’s Tuborg Booster Strong packs a heavier punch than the Danish original and is sold only in India, where consumers in the world’s third-fastest growing beer market prefer an extra kick. Billed as the world’s first fruit-flavoured strong beer in its May launch, Tuborg Booster Strong is one of several potent brews that Carlsberg and rivals SABMiller, Anheuser-Busch Inbev and United Breweries are rolling out to make inroads in a market dominated by whisky. Read more of this post

Singapore plans to almost double its container port capacity after Shanghai overtook the nation to become the world’s busiest harbor, part of Prime Minister Lee Hsien Loong’s push for an economic and popular revival

Lee Seen Spending $8 Billion on Ports as Support Falls: Freight

Singapore plans to almost double its container port capacity after Shanghai overtook the nation to become the world’s busiest harbor, part of Prime Minister Lee Hsien Loong’s push for an economic and popular revival. The government is spending at least S$8.8 million ($7 million) this fiscal year on the project, which involves moving terminals to free 1,000 hectares for development and building a larger facility at Tuas in the southwest. The plan may spur yearly growth of 5 percent and port building costs could top S$10 billion, said Vishnu Varathan, an economist at Mizuho Bank Ltd. in Singapore. Read more of this post

NZ’s Fonterra sees own-brand milk formula in 70 Chinese cities in three yrs

NZ’s Fonterra sees own-brand milk formula in 70 Chinese cities in three yrs

Tue, Sep 24 2013

WELLINGTON (Reuters) – Fonterra, the world’s biggest dairy exporter, is accelerating its expansion strategy in China and plans to sell its own branded infant milk formula in 70 cities there within three years, its chief executive officer said on Wednesday. Chief Executive Officer Theo Spierings said in an interview with Reuters the company was undeterred by a recent botulism scare and would push ahead with plans to enter the lucrative branded infant formula market in the world’s second-largest economy. Read more of this post

Waters near Johor and Malacca now world’s top piracy hotbed

Waters near Johor and Malacca now world’s top piracy hotbed

Tuesday, September 24, 2013 – 09:08

The Star/Asia News Network

PETALING JAYA – The treacherous waters off Somalia used to be the world’s most dangerous marine passageway. That dubious distinction has moved a lot closer to home, with the waters near Johor and Malacca now surpassing Somalia as the top piracy hotbed, according to the Inter­na­tional Maritime Bureau. It attributed this to the rise in piracy off Indonesia’s Tanjung Priok, Dumai, Belawan, Taboneo and Muara Jawa – where the waters have been marked as hot spots. Read more of this post

Mr Fix-It’s big job: Malaysia’s economy

Mr Fix-It’s big job: Malaysia’s economy

Wednesday, September 25, 2013 – 04:10

Yong Yen Nie

Malaysia Correspondent In Putrajaya

The Straits Times

MALAYSIA – FOR over two decades, Senator Abdul Wahid Omar has been known as “Mr Fix-It”, turning Malaysian giants such as Maybank and Telekom Malaysia into regional players. On May 15, just 10 days after the Barisan Nasional coalition led by Prime Minister Najib Razak won the general election, Mr Wahid was summoned to Mr Najib’s office to take on what could be his biggest repair job – fix the economy. The challenges are daunting. For 15 years, the government has spent more than it has taken in, and public debt has ballooned to 53.5 per cent of gross domestic product, the highest in the region. Exports are dwindling due to the weak demand from Europe, the United States and China. Its current account surplus, at RM2.6 billion (S$1 billion) in the second quarter of this year, is the narrowest since 1997. Read more of this post

The prospect of foreign takeovers of debt-burdened Italian companies trigger backlash

September 24, 2013 5:41 pm

Sales of Italian groups trigger backlash

By Guy Dinmore in Rome

The prospect of foreign takeovers of debt-burdened Italian companies, includingTelecom Italia, Alitalia and units ofFinmeccanica, could be seen as a boost for prime minister Enrico Letta as he tries to attract foreign investment on Wall Street this week. Instead, back in Rome the usual storm is brewing, as politicians and trade unions raise an outcry over what they see as a threat to jobs and national control over strategic industries that have blocked similar takeover attempts in the past. Read more of this post

Rattlesnake Frontier Answering Brazil’s Land Shortage

Rattlesnake Frontier Answering Brazil’s Land Shortage

Atop a mountain plateau in Brazil’s northeastern Piaui state, Luciano Curioni inspects shriveled corn cobs as dust whirls across his rattlesnake-infested farm that has no water, power or a phone. Farmers like Curioni are testing the limits of climate and technology, pushing the country’s agricultural frontier into increasingly inhospitable regions, as the world’s fourth-largest farm exporter runs out of arable land. Companies providing solutions, such as Deere & Co., Monsanto Co. (MON), and Bayer AG, stand to gain. Read more of this post

Morgan Stanley: ‘The Fragile Five’ — The Most Troubled Currencies In Emerging Markets

MORGAN STANLEY PRESENTS: ‘The Fragile Five’ — The Most Troubled Currencies In Emerging Markets

MAMTA BADKAR SEP. 24, 2013, 3:46 PM 6,824 1

Ten years ago, Goldman Sachs declared Brazil, Russia, India and China (BRIC) as the emerging markets with the brightest economic growth prospects. This year, Morgan Stanley declared the Brazilian real, the Indonesian rupiah, the South African rand, the Indian rupee, and the Turkish lira as the “Fragile Five,” or the troubled emerging market currencies under the most pressure against the U.S. dollar. “High inflation, weakening growth, large external deficits, and in some cases exposure to the China slowdown, and high dependence on fixed income inflows leave these currencies vulnerable,” wrote Morgan Stanley analysts in an August research note. We’ve highlighted Morgan Stanley’s greatest concerns for each of the “Fragile Five,” and include their year-to-date performance against the greenback. Read more of this post