Li Revives Old Lending Playbook After Cash Crunch: China Credit

Li Revives Old Lending Playbook After Cash Crunch: China Credit

Syndicated loans to Chinese companies are poised for their best quarter in two years, after a cash crunch curbed expansion in the bond market. Alibaba Group Holding Ltd. and Shuanghui International Holdings Ltd. led $21.3 billion of bank loans denominated in either U.S. dollars or yuan since June 30, according to data compiled by Bloomberg. Including $4 billion of deals in the pipeline, volumes this quarter are set to challenge the $26.8 billion raised in the three months ended Sept. 30, 2011. Local-currency corporate bond sales total 51.3 billion yuan ($8.4 billion) this period, the slowest in two years. Read more of this post

Asia Should Think Twice Before Cheering Fed’s Decision; Fed Can’t Taper Over India’s Cracks

September 19, 2013, 5:25 AM

Asia Should Think Twice Before Cheering Fed’s Decision

By Ewen Chew

At first glance, the Federal Reserve’s surprise decision to postpone a highly anticipated reduction in its bond-buying program is good news for Asian markets. But reading between the lines, the Fed clearly feels the U.S. economy isn’t improving as expected, and might actually be priming markets for tougher times ahead. If so, the impact won’t be limited to America, but will affect Asia’s export-oriented economies and capital-hungry markets as well. Read more of this post

ASEAN is not yet ready for integration, Mahathir says

ASEAN is not yet ready for integration, Mahathir says

Wednesday, September 18, 2013 – 09:32

Supalak Ganjanakhundee

The Nation/Asia News Network

Singapore is the only ASEAN member that will be completely ready for economic integration under the ASEAN Economic Community (AEC) by 2015, and some of the group’s poorer members should be allowed to retain their economic protections, former Malaysian prime minister Mahathir Mohamad said yesterday. “The poorer members of ASEAN are not yet ready for the AEC. Even the richer members are not really ready for the AEC. This is because their domestic policies are not similar,” Mahathir told a conference on “Assessing ASEAN’s Readiness by Country” held by Krungthep Turakij newspaper at a Bangkok hotel. Read more of this post

Will the U.S. Squander Its Energy Bounty?

Will the U.S. Squander Its Energy Bounty?

Almost every aspect of the U.S. energy landscape is changing drastically — except government policy. Consider: The global price of oil has soared to more than $100 today from $30 a barrel in 2004. As a result, the U.S.’s annual bill for oil imports has risen to $365 billion, even though domestic oil production has jumped in the past two years to 7.5 million barrels a day from 5.5 million barrels. Meanwhile, the price of natural gas has plummeted. The tight shale gas boom in the U.S. has caused the domestic price of gas to drop to less than $4 per million cubic feet today from $10 per million cubic feet in 2010. By replacing a diesel or gasoline engine with one that accommodates compressed gas, Americans can drive for the equivalent of 50 cents a gallon. Read more of this post

Buffett’s 9% Heinz Dividend Means 3G Cutting Jobs, Mini-Fridges

Buffett’s 9% Heinz Dividend Means 3G Cutting Jobs, Mini-Fridges

HJ Heinz Co.’s longtime leader Bill Johnson stood in the Veranda ballroom at the Four Seasons Hotel San Francisco, addressing the ketchup maker’s top 50 executives for the last time. Around the corner in a smaller room, his successor as chief executive officer, Bernardo Hees, waited to tell some of the same managers whether they still had jobs. What was slated as an annual leadership meeting became an opportunity for Hees to dismiss 11 senior executives, according to three people familiar with the gathering, who asked not to be identified because it was private. The June 17 session was about a week after Heinz’s $23.3 billion sale to Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) and Jorge Paulo Lemann’s 3G Capital. Read more of this post

Norway’s Salmon Stocks Repel Market Plunge on Production

Norway’s Salmon Stocks Repel Market Plunge on Production

Marine Harvest ASA (MHG), the world’s biggest salmon farmer, and other producers are surviving a slump in fish prices over the last two months as a supply overhang is seen coming to an end. Spot prices for Atlantic salmon plunged 32 percent from a record in July as warmer sea temperatures hastened fish growth and boosted volumes, according to data from the Bergen, Norway-based Fish Pool ASA salmon exchange. The Oslo Stock Exchange’s 15-member Seafood Index has fallen 0.6 percent since mid-July, helped by an outlook for a “pretty tight” market next year, Swedbank AB (SWEDA) said. Read more of this post

Ningxia to be ‘world’s factory’ for halal food; There are about 22 million Muslims in China.

Ningxia to be ‘world’s factory’ for halal food

Wednesday, September 18, 2013 – 09:02

The Straits Times

YINCHUAN – North-west China’s Ningxia region, home to about two million Chinese Muslims, is planning to be a global halal food centre, including upgrading a halal industrial park and perfecting domestic halal standards. Officials and businessmen of Ningxia spoke about their vision just before the first China-Arab States Expo opened on Sunday in Yinchuan, capital of Ningxia. Read more of this post

Coase’s Chinese Legacy

Coase’s Chinese Legacy

18 September 2013

Andrew Sheng, Xiao Geng

HONG KONG – The recent death of Ronald H. Coase, the founding father of new institutional economics, is a great loss to Chinese economists who are seeking an effective framework for understanding China’s ongoing economic transformation. His legacy – insights into the role of firms, financial institutions, and the state in shaping the market and driving economic development – will prove crucial as China works to achieve high-income status. Read more of this post

Let money leave China to ease Fed ‘taper’ pressure

September 18, 2013 8:54 am

Let money leave China to ease Fed ‘taper’ pressure

By Charles Dumas

Impact could be transformative for global financial markets

China is teetering on the brink of a radical policy change that could transform not just China, but also world financial markets. Current global pressure on emerging markets is felt most acutely in China. In the comparable late 1990s, the Asian crisis largely passed China by. Its hefty devaluation in 1994 had left it highly competitive. The latest upswing of US interest rates will again hit the overvalued emerging markets hardest. This time China is the most exposed. Read more of this post

China’s Phony War on Corruption; Beijing’s anti-graft efforts are really about the Party’s power.

Updated September 18, 2013, 6:47 p.m. ET

China’s Phony War on Corruption

Beijing’s anti-graft efforts are really about the Party’s power.

The Mid-Autumn Festival on Thursday is an occasion when Chinese exchange gifts of mooncakes, a calorie-laden treat. But this year tradition collided with a government campaign against the “four decadences”: formalism, bureaucratism, hedonism and extravagance. As a result, sales of luxury mooncakes that are often given as bribes fell around 20% and retailers are desperately cutting prices. Read more of this post

China Credit Slowdown Signals Drop in Macau VIP Spending

China Credit Slowdown Signals Drop in Macau VIP Spending

Macau’s high-stakes gambling volume should expand through year’s end, then slow in 2014 as China’s decelerating loan activity filters into the economy, according to Wells Fargo & Co. The CHART OF THE DAY compares growth of Macau’s junket volumes and China’s so-called social financing, a measure of credit activity, on a 12-month trailing basis. Gambling by “high rollers” typically shifts in conjunction with lending on the mainland, though with a lag time of about six to 12 months, Wells Fargo says. That means gaming volume should rise through part or all of the fourth quarter, as credit growth peaked in April. The lower panel tracks shares performances of the four Macau casino operators that rely most on VIP tours, normalized from the start of 2012, according to Bloomberg Industries. Read more of this post

A recent shouting match between senior bankers involved in Huishan Dairy IPO illustrates the competitive squeeze on banks from Chinese companies offering incentives ahead of lucrative IPOs

Goldman, HSBC spat over Huishan IPO highlights Chinese squeeze on banks

4:41am EDT

By Michael Flaherty and Elzio Barreto

HONG KONG (Reuters) – A recent shouting match between senior bankers involved in Hong Kong’s second-largest IPO so far this year illustrates the competitive squeeze on banks from Chinese companies offering incentives ahead of lucrative initial public offerings. At a routine September 6 meeting of around 20 underwriters to China Huishan Dairy Holdings Co Ltd’s (6863.HK: Quote, Profile, Research, Stock Buzz) planned $1.3 billion IPO, tempers flared between two bankers from HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) and Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), said people who were at the meeting and others briefed on the incident. One said the row escalated to the point where the Goldman banker threatened to have his HSBC rival fired. Read more of this post

When Is a Mooncake Just a Mooncake? Companies doing business in China are reconsidering the wisdom of giving even small gifts such as mooncakes.

September 19, 2013, 5:37 PM

When Is a Mooncake Just a Mooncake?

Companies doing business in China are reconsidering the wisdom of giving even small gifts such as mooncakes.

Mooncakes, dense Chinese cakes commonly stuffed with salted egg yolks to represent the full moon, are popular gifts during the Mid-Autumn Festival. But in the corporate world, “mooncakes have been a hard sell this year” after Chinese authorities in August banned their purchase with public funds, says Qiang Li, managing partner at law firm O’Melveny & Myers’ Shanghai office. Read more of this post

Stocks Surge Past Economic Benefit on Tokyo Olympic Pick

Stocks Surge Past Economic Benefit on Tokyo Olympic Pick

Japanese shares seen as benefiting from the 2020 Olympics surged too far, too fast after Tokyo won hosting rights, with the rally outweighing the estimated economic impact, according to Shinkin Asset Management Co. About 13 trillion yen ($131 billion) was added to the market capitalization of the Topix index last week after the city’s winning bid was announced, data compiled by Bloomberg show. One-third to half the gains were from investors trading on the Olympics news, Shinkin Asset said. The Tokyo Metropolitan Government projects the event will boost Japan’s economy by 2.96 trillion yen in the next seven years. Read more of this post

Abe Asks Tepco to Shut All Fukushima Reactors to Focus on Crisis

Abe Asks Tepco to Shut All Fukushima Reactors to Focus on Crisis

Japan’s Prime Minister Shinzo Abe on a visit to the wrecked Fukushima Dai-Ichi atomic station told Tokyo Electric Power Co. its priority is to halt leaks of radioactive water from the plant into the ocean. He also urged the company to decommission the two remaining reactors at the site, following the four it wrote off in April 2012 due to damage from the earthquake and tsunami. Reactors 5 and 6 that Abe referred to were safely shut down during the disaster on March 11, 2011. Read more of this post

India’s Auto Makers Struggle With Sharp Shift in Economy

September 19, 2013, 7:11 a.m. ET

India’s Auto Makers Struggle With Sharp Shift in Economy

SEAN MCLAIN

NEW DELHI— For years, Udayan Banerjee’s business making automobile exhaust systems was in high gear as middle-class Indians flocked to buy cars. This summer, that came to a screeching halt. “July and August were the worst months I’ve ever seen,” Mr. Banerjee said, predicting that his Sharda Motor Industries Ltd. 535602.BY +7.38% would post a loss for this year’s third quarter. Until recently, India was seen as a potential new Asian tiger, powered by its globalized information-technology industry, and auto makers were among the biggest beneficiaries of a boom in consumer-driven growth. Now they are reeling as investors pull back from emerging markets around the world, exposing the frailties of an Indian economy that was already decelerating sharply even before the global market turmoil. Read more of this post

Indonesian oil and gas: Crooked pipelines

Indonesian oil and gas: Crooked pipelines

Sep 6th 2013, 4:54 by N.O. | JAKARTA

GIVEN his industry’s woes, Lukman Mahfoedz is surprisingly upbeat. As Indonesia’s oil-and-gas sector reels from its most recent scandal, the president of the Indonesian Petroleum Association is relaxed when he greets your correspondent at his office atop a gleaming high-rise in Jakarta’s business district. On August 13th anti-corruption investigators arrested the chairman of the country’s upstream regulator, Rudi Rubiandini, on suspicion of accepting a $700,000 bribe. He had only been in the job eight months (last November the Constitutional Court dissolved the previous regulator, an independent watchdog, to install one under the control of the energy ministry). This new scandal strikes at an ailing industry. Indonesia’s oil production has been in decline for decades. Some predict that its proven reserves of about 4 billion barrels could be exhausted by the mid-2020s. Read more of this post

Indonesia Warned of Weak Human Capital

Indonesia Warned of Weak Human Capital

By Anushka Shahjahan on 9:11 am September 19, 2013.
The vision of an integrated regional economic community by 2015 is aimed at liberalizing trade among the 10-member Association of Southeast Asian Nations, but questions remain over whether the countries are ready for it and how Indonesia will benefit from the integration. A press statement released after the ninth Asean Economic Community council meeting said that 77.5 percent of the regulatory and economic measures under the blueprint had already been implemented. Read more of this post

Blue Bird Taps Taxi Know-How to Expand Logistics: Southeast Asia

Blue Bird Taps Taxi Know-How to Expand Logistics: Southeast Asia

The owner of Blue Bird, Indonesia’s biggest taxi operator, plans to boost revenue from logistics at least fivefold by delivering more sandwiches and electronics to a burgeoning middle class. The Djokosoetono family, whose Iron Bird unit transports dry and chilled goods to 7-Eleven convenience stores in Jakarta, plans to increase the share of logistics in group sales to more than 50 percent “ideally,” from about 10 percent now, said Noni Purnomo, a director at PT Pusaka Citra Djokosoetono, the parent company of Iron Bird and Blue Bird. Purnomo didn’t specify a timeframe for the target. Read more of this post

Mooncakes Go Unsold as Vietnam Slowdown Hurts Companies

Mooncakes Go Unsold as Vietnam Slowdown Hurts Companies

By noon on a recent weekday, Nguyen Thi Hanh hadn’t sold a single mooncake at her sidewalk kiosk set up for the Mid-Autumn Festival on a busy street in Hanoi. She squatted on the ground to tend to her embroidery, instead. “I’m very worried the slow sales will cut into my bonus this year,” said the 52-year-old vendor, who sells the sweet pastry stuffed with mung beans at 36,000 dong ($1.70) each for a local food chain. Sales are about half of last year’s, she said Sept. 3, about two weeks before the festival. “There’s no way I can meet the quota set by the company if this continues.” Read more of this post

The Fed’s Commitment Issue; Surprise Decision to Hold Off on Scaling Back Bond Purchases Shows It Hadn’t Convinced Investors It Intends to Keep Short-Term Rates Low for Longer

Updated September 18, 2013, 7:12 p.m. ET

The Fed’s Commitment Issue

Surprise Decision to Hold Off on Scaling Back Bond Purchases Shows It Hadn’t Convinced Investors It Intends to Keep Short-Term Rates Low for Longer

JUSTIN LAHART

On second thought, maybe not. The Federal Reserve’s decision not to reduce monthly bond purchases got a rousing cheer from investors Wednesday. Stocks rallied, sending the Dow Jones Industrial Average to a new record, as did Treasurys, pushing yields sharply lower. The response was good news for the Fed—higher stock prices and lower long-term interest rates offer more support to an economy that remains in a rut. But it also could make for some headaches down the road. Read more of this post

Giant state-owned firms have fallen back out of fashion. Good

Giant state-owned firms have fallen back out of fashion. Good

Sep 21st 2013 |From the print edition

BACK in 1987 the rock band Bon Jovi was top of the pops and the world’s third-largest firm by value was Tokyo Electric Power (TEPCO), a utility in Japan few outside that country had heard of. Today Bon Jovi is still churning out number-one albums but TEPCO’s value has fallen by 90% and it is teetering on bankruptcy. It is now known around the world for the disaster at its nuclear power plant at Fukushima. Like pop charts and Olympic medal rankings, corporate league tables are both silly and compelling. They reflect the ups and downs of firms, which investors amplify by buying or dumping their shares with less fealty than a teenage music fan. But they are also a crude test of economic virility. Read more of this post

SEC Thinks Disclosing Worker Pay Will Shame CEO’s?

SEC Thinks Disclosing Worker Pay Will Shame CEO’s?

There’s an obvious illogic in efforts to use disclosure to shareholders as a way to stop things that politicians dislike. Shareholders love things that politicians dislike. Conflict diamonds? Oh, sure. Giant executive paychecks? Why not. In fact, the last time regulators tried to shame companies out of paying their chief executive officers too much — by requiring them to disclose how their pay compared to that of their peers — they ended up driving up executive pay. Why would any company want an average CEO? Everyone has to get top-quartile pay. Read more of this post

One-Hundred-Year Bond Wiped Out by 21-Cent Plunge: Mexico Credit

One-Hundred-Year Bond Wiped Out by 21-Cent Plunge: Mexico Credit

Three years after Mexico took advantage of the Federal Reserve’s unprecedented stimulus effort to sell the world’s longest-dated government debt, the Latin America nation’s timing is proving to be prescient. Mexico’s bonds due 2110 have plunged 21.2 cents since Fed Chairman Ben S. Bernanke said on May 22 that policy makers may taper their asset purchases of $85 billion each month. On a total return basis, the 17.4 percent decline was the most among investment-grade sovereign notes maturing in 30 years or more, according to data compiled by Bloomberg. At 92.94 cents on the dollar, the 100-year bonds currently trades below their issue price of 94.276 cents and yield 6.19 percent. Read more of this post

Wealthy Borrowers Sacrifice Upside for Down Payment Aid

Wealthy Borrowers Sacrifice Upside for Down Payment Aid

Jeff Uter would have needed to sell stocks or pull cash out of his consulting business to afford the down payment on a $780,000 home in Orange County, California. Instead, he paid half of the 20 percent required and got the other $78,000 from San Francisco-based FirstRex. In exchange, the real estate investment firm will get 40 percent of any gains in the value of Uter’s 4-bedroom condo in a golf course community. “I have stocks and my own business,” said Uter. “I’d rather invest in that than put it in a personal residence.” Read more of this post

China Developer’s 20% Loan After Bank Rebuff Signals Risk

China Developer’s 20% Loan After Bank Rebuff Signals Risk

China property developer Zhang Fuguo was rejected by banks for a loan to help keep building two office towers in the central city of Zhengzhou. So he turned to a manufacturer of water and gas meters. The 50 million yuan ($8.2 million) loan last month at a 20 percent interest rate will help Zhang pay workers and buy materials and was like “delivering coal on a snowy day,” he said. It was less so for one board member at lender Henan Suntront Technology Co. (300259), who abstained from approval on concern that Zhang’s company would fail to repay the debt. So-called entrusted loans, in which banks are “entrusted” with funds as middlemen between companies, increasingly grease the wheels of China’s economy, withstanding a crackdown on shadow banking this year and rising to a record 293.8 billion yuan in August. The increase was part of a surge in non-bank credit that may add to default risks threatening Premier Li Keqiang’s efforts to sustain 7 percent expansion this decade. Read more of this post