Against the odds: The costs of actively managed funds are higher than most investors realise

Against the odds: The costs of actively managed funds are higher than most investors realise

Feb 22nd 2014 | From the print edition

EVERYONE knows that if you go to a casino, the odds are rigged in favour of the house. But people still dream of making a killing. The same psychology seems to apply to fund management, where investors flock to high-cost mutual funds even though the odds are against them. Russel Kinnel, the director of fund research at Morningstar, has described fund costs as “the most dependable predictor of performance”. Read more of this post

Global banking: Inglorious isolation; To avoid another crisis, the Fed further fragments global finance

Global banking: Inglorious isolation; To avoid another crisis, the Fed further fragments global finance

Feb 22nd 2014 | Washington, DC | From the print edition

THE economics of international banking are straightforward enough: raise funds in countries where they are cheap, lend where they are dear. Done right, this is both lucrative for bankers and good for the world, by channelling savings to their most productive use. Read more of this post

Korea’s major builders are undergoing two contrasting paths. Some of them have enjoyed handsome gains despite the economic slump, while others are suffering; Hyundai, POSCO rise, while Daelim, GS fall

2014-02-20 17:36

Builders follow contrasting paths

Hyundai, POSCO rise, while Daelim, GS fall
By Yi Whan-woo
Korea’s major builders are undergoing two contrasting paths.
Some of them have enjoyed handsome gains despite the economic slump, while others are suffering from less than expected outcomes from their oversea projects. Read more of this post

Buffett’s Business Wire ends feeds to high-speed traders

February 20, 2014 11:38 pm

Buffett’s Business Wire ends feeds to high-speed traders

By Stephen Foley, Kara Scannell and Arash Massoudi in New York

Business Wire, which has published corporate news releases in the US for the last half century, will stop selling direct feeds to high-speed traders, amid concerns that the practice gives the firms an unfair advantage over other investors.

Warren Buffett, whose conglomerate Berkshire Hathaway owns Business Wire, stepped in personally to examine the direct sales, fearing that recent publicity around the practice could hurt the company’s reputation. Read more of this post

Huge losses by Malaysia Airlines can’t be tolerated forever

Huge losses by MAS can’t be tolerated forever

MAS has just reported a fourth consecutive quarter of losses with a net loss of RM343 million for this last quarter.
For the full FY 2013, the net loss amounted to a whopping RM1.17 billion, compared with a net loss of RM433 million in FY 2012.  Read more of this post

The Auditing Roadblock: It’s Not Just China

FEBRUARY 19, 2014, 2:40 PM  Comment

The Auditing Roadblock: It’s Not Just China

By FLOYD NORRIS

The Public Company Accounting Oversight Board is out with a list of 58 international audit firms that it has been unable to inspect for at least four years. Those firms all audited companies registered in the United States, and — under American law — must be inspected by the board. The board has tried to arrange joint inspections with regulators from other countries, but a variety of impediments have arisen. Read more of this post

Beijing is still far too reluctant to allow its equity market to function normally

Taking Stock of China’s Reforms

Beijing is still far too reluctant to allow its equity market to function normally.

CARL WALTER And FRASER HOWIE

Feb. 19, 2014 11:50 a.m. ET

If China’s leaders are as serious as they say they are about economic reform, the country’s stunted financial system will be at the top of their priorities list. So it’s worth checking in on the stock market to see how President Xi Jinping‘s economic program is going. Answer: not well. Read more of this post

The Chinese Dominoes Are About To Fall: Complete List Of Upcoming Trust Defaults

The Chinese Dominoes Are About To Fall: Complete List Of Upcoming Trust Defaults

Tyler Durden on 02/19/2014 22:03 -0500

As has been widely reported on these pages in the past month, after a near-reality experience almost claimed the first material Chinese shadow banking default, the Chinese government and central bank did what they do best: a mysterious “white knight” emerged out of nowhere, and bailed out the Credit Equals Gold #1 Trust. A few days later, we reported that China Development Bank lent 2 billion yuan to coal company Shanxi Liansheng, which owes almost 30b yuan to lenders including banks, trusts and asset management firms. And while we know how “difficult” it was for China to do the wrong thing and encourage moral hazard, despite repeated assurances by one after another PBOC director that this time the central bank means business, we have good news: these two narrowly averted Trust defaults are just the beginning – it is all downhill from here. Read more of this post

IMF Report Warns on Emerging-Markets Problems; Says Some Countries Need to Tighten Monetary Policy, Make Structural Changes

IMF Report Warns on Emerging-Markets Problems

Says Some Countries Need to Tighten Monetary Policy, Make Structural Changes

WILLIAM MAULDIN And JONATHAN HOUSE

Updated Feb. 19, 2014 1:24 p.m. ET

The International Monetary Fund on Wednesday issued its most detailed warning about the financial problems arising in emerging markets this year, saying some countries need to tighten monetary policy and make structural economic changes.

While the IMF noted a rise of harmful inflation in developing countries, it also said Europe is at risk for the opposite problem—deflation, in which prices fall in a spiral that can sap consumption and growth. Read more of this post

Auditors escape attempts to tame them; The Big Four have maintained a wholesome image while doing exactly what they want

February 19, 2014 5:16 pm

Auditors escape attempts to tame them

By Michael Skapinker

The Big Four have maintained a wholesome image while doing exactly what they want

Years ago, I attended a discussion at London’s Brunel Business School that brought together people who never normally met: airport managers, pub owners, healthcare workers and others from the private and public sectors.

There was a presentation from two health visitors, the nurses who see new UK parents at home after a baby is born. Their job was an ambivalent one, the health visitors said. They were there to help, but also to watch out for worrying signs – of depression or possible abuse. Read more of this post

Revisit need for a separate securities regulator in Singapore

Revisit need for a separate securities regulator

Combining commercial and regulatory roles calls for a more robust framework

MAK YUEN TEEN

First published in Business Times on February 19, 2014

Two hats not better: The retired CEO of a listed stock exchange which, like SGX, has dual roles of a regulator and operator, admitted that there is conflict between the two roles but went on to reveal that he couldn’t say it when he was still the CEO. – ST FILE PHOTO

IN 2008, The Business Times published my letter arguing for a review of the regulatory framework of our securities markets and that as part of this review, “we should closely examine the current approach to dealing with the conflicts between Singapore Exchange’s commercial and regulatory roles” (“Thoughts on SGX’s regulatory stance”, BT, Dec 23, 2008). Read more of this post

Accounting Fraud on the Rise at U.S. Companies