China’s iron & steel industry needs to act swiftly to defuse financial risks as the companies are running out of cash

China Steels Teeters amid Financial Risks: Official

09-16 17:21 Caijing

China’s iron & steel industry needs to act swiftly to defuse financial risks as the companies are running out of cash, Xu Kuangdi, president of the Chinese Society for Metals, told a forum on Friday. Over 30 of 86 big and medium-sized steel companies reported a debt-to-assets ratio of above 75 percent in the first half of the year, government data shows. 20 companies posted a debt ratio of above 80 percent while five of them are actually insolvency, with their debt ratios above 100 percent. Read more of this post

China to expand margin trading and short-selling programme

Updated: Tuesday September 17, 2013 MYT 11:19:03 AM

China to expand margin trading and short-selling programme

SHANGHA: China’s securities regulator has approved a plan to expand participation in a pilot programme allowing margin trading and short selling and triple the number of stocks that can be traded on margin, as Beijing moves to deepen and diversify investor participation in its equities markets. The China Securities Finance Corporation Ltd, the semigovernmental agency that runs the trial, named 19 new brokerages that will be allowed to participate in the project, bringing the total number of brokerage participants to 30 from the original 11. Read more of this post

China to become No. 2 market for Starbucks; Illy in China: no catering to local taste

Illy in China: no catering to local taste

Sep 16, 2013 3:37am by Peter Vanham

Is not tailoring your food and drinks to Chinese taste a form of “food neo-colonialism”, as Roland Decorvet of Nestle China put it last year? Illycaffe, the Italian premium coffee roaster, thinks not. Even as it looks to grind away Nestlé’s and Starbucks’ lead in China – a market that’s posting double-digit growth and which is worth about $1.5bn last year – the company says it has no plans to “localise” it product for the Chinese market. “You don’t like our espresso? Then drink our cappuccino. But that’s about as far as I’ll go in adapting to local taste,” Andrea Illy, the company’s third-generation family CEO, told beyondbrics on the sidelines of the WEF in Dalian, China. “Our strategy is executed in exactly the same way in any country.” With this approach, Illy is hoping to replicate the successes of a select club of other global brands whose products are the same across the world. “It’s like a perfume, it has to be the same around the world,” Illy said. “Otherwise you’d be disappointed.” But Illy faces an uphill battle to win over the local coffee drinker in China. Asians are known for not liking the bitter taste of black coffee and Nestlé and Starbucks have both adapted their products accordingly. As the FT’s Patti Waldmeir noted: Read more of this post

Beijing subway failure raises concerns about safety and operator’s abilities to tackle emergencies

Beijing subway failure raises concerns

English.news.cn   2013-09-16

BEIJING, Sept. 16 (Xinhua) — A technical glitch that disrupted passengers on the subway in Beijing for nearly two hours Monday morning has raised questions about safety and operator’s abilities to tackle emergencies. Subway Line 4, a major underground service that runs 50 kilometers through western Beijing from north to south, suspended its operation after a signal failure at 7:22 a.m.. Read more of this post

All that glitters: Diamonds outshine gold for Chinese brides as diamond market more than tripled to $22.8 billion over the last five years

All that glitters: Diamonds outshine gold for Chinese brides

5:41pm EDT

By Adam Jourdan

SHANGHAI (Reuters) – Under a black-and-white framed photo of the New York skyline, a bottle of Moet & Chandon champagne cools in the private bridal salon at Tiffany & Co’s flagship Shanghai store, while white roses and love poems set the mood for China’s Romeo to pop the question to his Juliet. The room, dotted with splashes of the jeweler’s iconic eggshell blue, has been busy of late, as young Chinese, drawn by the allure of diamonds, increasingly choose the sparkling gems over traditional gold baubles to mark their marriage vows. China’s diamond market, now the world’s second largest after the United States, has more than tripled to $22.8 billion over the last five years, according to data from market research firm Euromonitor, steadily gobbling up market share from gold and far outstripping the growth rate in China’s 465 billion yuan ($76 billion) jewelry sector. Read more of this post

A Look Back at the Zhu Rongji Era

09.16.2013 15:03

A Look Back at the Zhu Rongji Era

A book event attended by key American and Chinese figures was an opportunity to revisit interesting times – and peer ahead with some apprehension

By Robert Kapp

I had a chance to go to a delightful gathering of Chinese and American “veteran cadres” in New York on September 9 to celebrate the publication by the Brookings Institution, in cooperation with the China International Publications Group, of the first volume of English-language translations of speeches and writings by former premier Zhu Rongji. The Chinese title of the original publication is Zhu Rongji Jianghua Shilu, and the English collection has been very sensibly titled Zhu Rongji on the Record. Read more of this post

India’s Rising Hindu Nationalist; Narendra Modi, a politician who started off as a tea seller, is beloved and despised

September 16, 2013, 7:11 p.m. ET

India’s Rising Hindu Nationalist

Narendra Modi, a politician who started off as a tea seller, is beloved and despised.

SADANAND DHUME

To gauge the political prospects of Narendra Modi, you don’t need to know his views on the fiscal deficit, relations with China or the death penalty. But it is important to understand why the man announced Friday as the prime ministerial candidate of India’s opposition Bharatiya Janata Party for next year’s general election evokes deeper devotion and fiercer opposition than any other politician in India. Read more of this post

Harvard of Korea Turns Out More Grads Aiming for Hyundai

Harvard of Korea Turns Out More Grads Aiming for Hyundai

For generations, a Seoul National University degree typically led to a job in law, the civil service or with a high-paying foreign company. Manufacturers like Hyundai Motor Co. (005380) weren’t for the elite. With Hyundai growing faster than any other global auto brand over the past decade, it’s now attracting graduates from the nation’s top schools. In the most recent study of grads from SNU — South Korea’s highest-ranked university and sometimes called the country’s Harvard — more business students in the Class of 2011 said they went to Hyundai Motor than any other employer. Two years earlier, none did. Read more of this post

Japan faces record-long trade deficit, little sign can reverse trend

Japan faces record-long trade deficit, little sign can reverse trend

7:55pm EDT

By Tetsushi Kajimoto

TOKYO (Reuters) – Japan is on course for its longest run of trade deficits, effectively marking the end of the nation’s decades-long reliance on exports from the likes of electronics giant Sony and automaker Toyota as a driver of growth and income. Trade figures due on Thursday are likely to show that Japan produced its 14th consecutive deficit in August, matching a 1979-1980 record run during the global oil shock. Economists say the deficits will continue. Read more of this post

Burned by China, Indonesia Coal Miners Turn to Power Stations

Burned by China, Indonesia Coal Miners Turn to Power Stations

By Janeman Latul & Fergus Jensen on 9:00 am September 17, 2013.
Two of Indonesia’s biggest miners are building power stations to reignite coal demand and counter a drop in global prices that has squeezed industry-wide profit margins to their slimmest in a decade and dulled the appeal of exports to top consumer China. Privately owned Adaro Energy, Indonesia’s second biggest coal miner by revenue, and the government-run Bukit Asam are taking the lead in trying to burn some of the extra coal piling up in global markets as China’s economic slowdown reduces its need for the fuel. Read more of this post

Rupiah Passes Rupee as Asia’s Worst Currency

Rupiah Passes Rupee as Asia’s Worst Currency: Chart of the Day

Indonesia’s record current-account deficit will drive away foreign investors and add pressure on the rupiah, the worst-performing currency in Asia since the beginning of June, according to Nomura Holdings Inc. The CHART OF THE DAY tracks Indonesia’s current-account balance as a percentage of gross domestic product and the rupiah versus the dollar. The currency has weakened 13.9 percent since the start of June, compared with the 10 percent drop in India’s rupee, to be the worst performer in Asia during the period. Read more of this post

Thailand equity rally belies underlying economic problems

September 16, 2013 3:14 pm

Thailand equity rally belies underlying economic problems

By Michael Peel in Bangkok

Asian emerging markets rallied on Monday, as investors pinned hopes on continued US bond-buying to help ease growing domestic economic pressures. Bangkok’s Set index had a particularly strong day, climbing 3.1 per cent and the baht rallied on relief at the news Lawrence Summers had backed out of the race to head the US Federal Reserve, leaving vice-chair of the Fed, Janet Yellen – seen as more dovish than Mr Summers – as the perceived frontrunner. Only Indonesian equities posted larger gains, rising 3.4 per cent. Read more of this post

Thai Government Faces Splinter Group of Angry Rubber Farmers

September 16, 2013, 9:49 PM

Thai Government Faces Splinter Group of Angry Rubber Farmers

By Nopparat Chaichalearmmongkol

Police cars were torched as police officers clashed with rubber farmer protesters at Nakhon Si Thammarat province, southern Thailand, Monday.

BANGKOK–Splinter groups of disgruntled Thai rubber farmers continued to protest on Monday, demanding more monetary support than the government recently approved amid low global rubber prices. The protesters represented only a small part of the rubber farming community, which overall accepted the government’s recent offer of help–a doubling of the subsidy they were receiving. But not all farmers were pleased. Read more of this post

Economist wants politicians to keep off Thai rail project

Economist wants politicians to keep off Thai rail project

English.news.cn   2013-09-17

By Surasak Tumcharoen

BANGKOK, Sept. 17 (Xinhua) — Thai politicians should keep off Thailand’s ambitious rail project so that it will be built in a transparent and graft-free manner and devoid of any shenanigans that are usually associated with politics, according to a noted economist here. Prof. Teerana Bhongmakapat, economics lecturer of Chulalongkorn University, said Monday the Thai government, headed by Prime Minister Yingluck Shinawatra, must see to it that the rail project, legislation for its implementation now deliberated in parliament, will be free of irregularities throughout its seven-year implementation that will last until 2020. Read more of this post

Malaysians Brace for Shift to Austerity as Najib Cools Spending

Malaysians Brace for Shift to Austerity as Najib Cools Spending

Malaysian Prime Minister Najib Razak returned to power this year with the help of a spending spree that boosted consumption. Now voters could feel the pinch as he tries to appease a different group: rating companies. Najib’s government raised subsidized fuel prices for the first time since 2010 this month and has said it will delay some infrastructure projects, seeking to contain the budget gap and shore up the current account after Fitch Ratings cut Malaysia’s credit outlook to negative in July. It is also considering a goods and services tax in the 2014 fiscal plan due Oct. 25. Read more of this post

Singapore’s Home Sales Rebound to Be Short-Lived; “Supply is a very real thing, so seeing spanking new buildings coming up with no real demand will see some price correction and some pain for developers as well.”

Singapore’s Home Sales Rebound to Be Short-Lived: Southeast Asia

Singapore’s jump in private home sales last month was only a temporary reprieve for developers as the government’s cooling measures take root and mortgage rates begin to rise. The city’s housing sales climbed 54 percent to 742 in August from July, when they fell to 482, the lowest in almost four years, according to government data. With nine rounds of cooling measures since mid-2009, the increase will be short-lived, according to Mizuho Bank Ltd. and UOB Kay Hian Pte. Monthly sales averaged about 1,700 units in the first six months of the year. Read more of this post

The battle to secure German shipping lender HSH

The battle to secure German shipping lender HSH

1:13am EDT

By Laura Noonan

HAMBURG (Reuters) – Once the beacon of a brave new future for Germany’s publicly-owned regional banks, HSH Nordbank is now a focal point of concern over the sector. The Hamburg and Kiel-based bank earned its trail-blazer status by attracting 1.25 billion euros from US investor J.C. Flowers in 2006 and touting plans to list a significant minority of its equity on the stock market. Now it is blazing a very different trail – the first Landesbanken to return to the European Commission for approval after it regretted a 2011 decision to hand back some of its original post-crisis bailout and asked for it to be re-instated. Read more of this post

Regulators Should Draw a Line Between Finance and Commerce

Sep 16, 2013

Regulators Should Draw a Line Between Finance and Commerce

FRANCESCO GUERRERA

To be or not to be a bank?

The Federal Reserve, Congress and some of the world’s largest financial institutions are about to tackle the existential issue of what a bank is. The narrow version of the debate is whether J.P. Morgan ChaseJPM +1.05% & Co., Goldman Sachs Group Inc.GS +1.85% and Morgan StanleyMS +2.13% should continue to own, store and transport commodities such as oil, copper and electricity. But its ramifications reach into a cornerstone of modern U.S. financial architecture: the separation of finance and commerce. Read more of this post

TIPS Extend Record Loss to Almost 10% Before Consumer Prices

TIPS Extend Record Loss to Almost 10% Before Consumer Prices

Treasury Inflation Protected Securities are extending this year’s record loss to almost 10 percent before a government report economists said will show the annual increase in the cost of living slowed in August. TIPS have declined 9.5 percent in 2013, the most since they were first sold in 1997, based on Bank of America Merrill Lynch data. The Federal Reserve will probably reduce its monthly bond purchases to $75 billion from $85 billion after a two-day meeting concludes tomorrow, according to a Bloomberg News survey of economists on Sept. 6. Read more of this post

Refinancings Plummet After Worst Losses in 14 Years: Muni Credit

Refinancings Plummet After Worst Losses in 14 Years: Muni Credit

U.S. localities are scaling back refinancing by the most since 2006 as the worst municipal bond losses in 14 years push up borrowing costs. With yields near a 29-month high, refinancings shriveled to just $81 billion this year through Sept. 11, out of $229 billion of total sales, Citigroup Inc. data show. That’s down 29 percent from last year’s pace, when localities refunded the most since at least 2003. Read more of this post

Preferred Stocks: Less Volatile Than Stocks, More Liquid Than Bonds?

September 9, 2013

Less Volatile Than Stocks, More Liquid Than Bonds

By JOHN F. WASIK

AS hybrid securities, preferred stocks fill a useful niche between stocks and bonds, paying high dividends. Yet they are often ignored when building an income portfolio. As interest rates have climbed in recent months, though, you have to be careful about buying preferred shares. While they are worthwhile additions to retirement portfolios, you have to be aware of their risk profile. Read more of this post

Navigating the financial labyrinth of Germany’s Landesbanken

Navigating the financial labyrinth of Germany’s Landesbanken

1:13am EDT

By Laura Noonan

HAMBURG (Reuters) – To the casual observer, the Landesbanken’s results for the first half of this year might suggest Germany’s publicly-owned regional banks are in rude financial health. But the headline numbers belie a more complex reality. Four of the five major Landesbanken boasted improvements in profits for the first half of 2013, sometimes quite dramatic, like the 400 percent increase in pre-tax profits at Hamburg and Kiel based shipping lender HSH Nordbank. <SEE FACTBOX> Read more of this post

Martin Feldstein: How to Create a Real Economic Stimulus

September 16, 2013, 7:08 p.m. ET

Martin Feldstein: How to Create a Real Economic Stimulus

Entitlement reform is key to shrinking the ratio of debt to GDP and making room for pro-growth tax cuts.

MARTIN FELDSTEIN

Earlier this year, former U.S. Treasury Secretary Larry Summers expressed doubts about the Federal Reserve’s quantitative easing policy of buying $85 billion a month of government bonds and other long-term assets. His skepticism antagonized some Fed insiders and liberal Democrats, who recently opposed his consideration by President Obama as the next Fed chairman. When Mr. Summers on Sunday withdrew his candidacy for the chairman’s job, there was one immediate benefit: Now Larry Summers will be free to voice an even clearer and stronger critique of current policy. Read more of this post

Fed Faces Tough Sell on Low-Rate Strategy

September 16, 2013, 2:21 p.m. ET

Fed Faces Tough Sell on Low-Rate Strategy

Steadying Economy Poses Test on Key Easy-Money Policy

JON HILSENRATH

Federal Reserve officials face a communication challenge explaining their interest-rate plans when they gather for a policy meeting this week. Their updated economic projections could show an economy that appears back to normal by 2016, but their projections of where short-term interest rates will be could show rates still quite low by then. Their challenge: How to justify the low interest-rate plan when their own estimates suggest an economy regaining its health. Read more of this post

Bionic Fed is No Match for Bond Market

Updated September 16, 2013, 8:04 p.m. ET

Bionic Fed is No Match for Bond Market

Tame inflation expectations don’t jibe with surging bond yields. The incoming Fed Chair will have a struggle on his or her hands keeping the Treasury market from choking off the recovery.

SPENCER JAKAB

Steve Austin, eat your heart out. The Six Million Dollar Man could have a second bionic arm installed and still not hold a candle to Janet Yellen, the $600 billion woman. That was the approximate gain in global stocks Monday morning after the Federal Reserve’s vice chair became the presumptive nominee for the top job. Even a better, stronger and faster chairman than Ben Bernanke won’t have the power to hold off the bond market forever, though. Under the past five months of his term, the yield on the benchmark 10-year Treasury note has surged an eye-watering one-and-a-quarter percentage points. Read more of this post

Affluent investors bet on farms, rail cars amid hunt for yield, income; reminscent of 1980s collapse of farmland values?

Affluent investors bet on farms, rail cars amid hunt for yield, income

Risk assets used mainly by pensions, endowments being pitched to rich investors

Sep 15, 2013 @ 2:13 pm (Updated 2:43 pm) EST

Ken Slater says he was a novice at growing corn and soybeans when he asked Bank of America Corp.‘s U.S. Trust unit to purchase the first of three farms for him in the past two years. A millionaire living in Palm Beach, Florida, Slater was looking for a place to put his money that would provide income, diversify risk and offer capital appreciation. He wasn’t thrilled with the returns of corporate and municipal bonds, so he put 5 percent of his portfolio in real assets such as farmland and timber. Read more of this post

Bernanke’s Maradona swerve hits bonds; how the Federal Reserve chairman has managed to tighten US financial conditions by more than 100 basis points without touching the Fed funds rate

September 16, 2013 8:43 am

Bernanke’s Maradona swerve hits bonds

By Steven Major

Clues to Fed chairman’s plan were in ‘term premium’ talk

Has Ben Bernanke delivered a modern version of the Maradona effect? It may help to explain how the Federal Reserve chairman has managed to tighten US financial conditions by more than 100 basis points without touching the Fed funds rate. The analogy, first applied to monetary policy by Sir Mervyn King, former Bank of England governor, refers to the ability of famed Argentine footballer Diego Maradona to clear a path to goal by wrongfooting opposing players as they tried to anticipate his next move. The bond market may not have been wrongfooted by Mr Bernanke’s swerve if it had paid better attention to what he said in March this year. We are used to thinking of his May 22 comments on the phasing out of US quantitative easing as this year’s key event for financial markets. It marked the start of the sell-off in US Treasuries, which contributed to big ructions in many emerging markets. But it was the earlier speech that provided some clues. Speaking about long-term interest rates on March 1, Mr Bernanke mentioned the phrase “term premium” no less than 28 times. Read more of this post