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Korea’s Instructive Non-Crisis; Reforms and free trade help Seoul avoid capital flight

Updated September 5, 2013, 4:26 p.m. ET

Korea’s Instructive Non-Crisis

Reforms and free trade help Seoul avoid capital flight.

Seoul’s markets used to be highly sensitive to contagion from other markets. The country was among the hardest hit by the 1997 Asian Financial Crisis, and when Lehman Brothers went bankrupt in 2008 it was the first place fearful investors looked for signs of impending Asian doom (which fortunately never came). So it’s worth asking why Korea has been a haven for growth and stability as former star Asian performers such as India and Indonesia suffer from capital flight and currency depreciation. In July, as the broader departure of capital from Asia was gathering pace on speculation about U.S. Federal Reserve tapering, Korea saw inflows into its bond market, while flows out of equity markets slowed. Growth was 2.3% year-on-year in the second quarter, a two-year high. Manufacturing and exports are both picking up again. Read more of this post

Korean Pension Stealth Rule Clears Path to Buy 60 Stocks

Pension Stealth Rule Clears Path to Buy 60 Stocks: Korea Markets

South Korea is putting as many as 60 companies from Cheil Industries Inc. (001300) to Samsung C&T Corp. (000830) on the National Pension Service’s buying list after clearing the way for the $367 billion fund to boost holdings of local stocks. Relaxed disclosure requirements that took effect on Aug. 29 will help NPS increase stakes in some local companies above the 10 percent threshold, the nation’s biggest investor said in an e-mailed response to questions on Aug. 21. The rules lengthen the timing of public filings for transactions above that level to once a quarter from within five days. The fund said it had positions of 9 percent to 10 percent in 60 stocks as of June. Read more of this post

Seoul No Singapore as Korea Housing Bears Raise Rents; “[By renting], at least, I can avoid a nightmare of losing money from the house financed with debt.”

Seoul No Singapore as Korea Housing Bears Raise Rents

Kim Joon Hyung met more than 20 realtors and searched for months to find a place to rent in Seoul. In July, he finally signed a two-year contract on a two-bedroom apartment that requires him to make monthly payments, a rarity in South Korea where landlords and tenants have favored a century-old method of lump-sum deposits to lease homes. “I finally gave up,” said 34-year-old Kim, a marketer at a home-appliance company who’s getting married this month. “This monthly charge rent home was the only thing available.” Read more of this post

Singapore Overtakes Japan as Asia’s Biggest Foreign-Exchange Hub

Singapore Overtakes Japan as Asia’s Biggest Foreign-Exchange Hub

Singapore overtook Japan as Asia’s biggest foreign-exchange center for the first time as trading surged in the past three years, the city’s central bank said, citing a survey by the Bank for International Settlements. The city-state’s average daily foreign-exchange volume increased 44 percent to $383 billion as of April from $266 billion in the same month in 2010, the Monetary Authority of Singapore said in a statement. The average interest-rate derivatives volume climbed 6 percent to $37 billion over the same period, the highest in the region after Japan, it said. Read more of this post

In the new Myanmar, an old junta’s laws survive and adapt

In the new Myanmar, an old junta’s laws survive and adapt

6:42pm EDT

By Jared Ferrie and Aung Hla Tun

YANGON (Reuters) – It was once the feared weapon of a military junta, ruthlessly deployed to restrict Myanmar’s nascent Internet and throw journalists, students, monks and other political opponents behind bars. The junta is gone, but the Electronic Transactions Law and other draconian legislation remain on Myanmar’s books. Attempts to revamp them are stirring debate over the reformist credentials of the semi-civilian government that took power in 2011 and how far it will loosen tough state controls. Read more of this post

Legoland Malaysia, which is celebrating its first anniversary on Sept 15, has exceeded its expectations of gettting one million visitors in the past 12 months

Legoland doing better than expected

Friday, September 6, 2013 – 09:27

The Star/Asia News Network

JOHOR BARU – Legoland Malaysia, which is celebrating its first anniversary on Sept 15, has exceeded its expectations of gettting one million visitors in the past 12 months. General manager Seigfried Boerst said the theme park in Nusajaya, surpassed its target by 70 per cent some months ago. Read more of this post

Financial Crisis Anniversary: For Corporations and Investors, Debt Makes a Comeback

Updated September 5, 2013, 9:38 p.m. ET

Financial Crisis Anniversary: For Corporations and Investors, Debt Makes a Comeback

JAMES STERNGOLD and MATT WIRZ

Oil worker Jeremy Barnett positions a pipe Wednesday at a well site near Hennessey, Okla., that belongs to Gastar Exploration, which financed the site’s purchase with junk bonds. Looking back, J. Russell Porter said his company was “almost at death’s door” when the U.S. economy hit bottom. With credit markets near frozen, he said, Gastar Exploration in 2009 couldn’t find banks or investors willing to provide the $35 million the oil-and-gas producer needed to refinance its crushing debt. Read more of this post

The Next Emerging Market Crisis

SEPTEMBER 5, 2013, 12:01 AM

The Next Emerging Market Crisis

By SIMON JOHNSON

Simon Johnson, former chief economist of the International Monetary Fund, is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

Do the world’s middle-income countries – known in the investment business as “emerging markets” – face a serious risk of crisis? If such a crisis unfolds in one country, could there be contagion, with panic spreading around the world? My answer is a cautious “no” on both questions. But it would be a mistake to dismiss or ignore these questions, in part because they are being asked by smart people in financial markets and in part because sometime in the not-too-distant future the answer could be a decisive “yes” – with disastrous consequences. There are three main sources of concern. Read more of this post

Shiller Warns of Housing Bubble in Brazil After 225% Surge

Shiller Warns of Housing Bubble After 225% Surge: Brazil Credit

Robert Shiller, who predicted the collapse of the U.S. housing market, is warning that a bubble is emerging in Brazil at a time when a sluggish economy and persistent inflation are eroding investor confidence. Since January 2008, home prices in Sao Paulo have soared 181 percent and jumped 225 percent in Rio de Janeiro, according to the FIPE Zap index. That’s as much as twice the increase in rent prices, signaling that the housing market has become overheated, according to Shiller, a Yale University professor who helped create the S&P/Case-Shiller Index (SPCS20) of U.S. home prices, which has dropped 13.7 percent since 2007. Read more of this post

London’s extraordinary lead in FX; London accounted for almost 41 per cent of global FX turnover vs 19% for US, 5.7% for Singapore

London’s extraordinary lead in FX

Paul Murphy

| Sep 05 14:43 | 4 comments | Share

The triennial central bank survey of foreign exchange and derivatives market activity from the BIS is out. FX details are here and OTC IR derivatives are here. Oh, and the Bank of England’s parochial summary is here. But if you are interested in how financial centres stack up against each other you’ll need to consult this table: London accounted for almost 41 per cent of global FX turnover at the survey point (April this year). That compares with 19 per cent for the US and 5.7 per cent for Singapore, the third largest financial centre as far as FX goes. London’s dominance is even more extreme when it comes to IR derivatives.

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Latest bond market rout unhinges U.S. short-term yields

Latest bond market rout unhinges U.S. short-term yields

8:08pm EDT

By Richard Leong

NEW YORK (Reuters) – The punishing sell off in the U.S. Treasury market has taken a surprising turn, with yields on shorter maturities getting swept higher at a startling pace. The rise defies a widely held view that they would remain anchored at historic lows by the Federal Reserve’s pledge to keep a lid on short-term rates. In what some see as investors second-guessing the Fed’s resolve, the 2-year Treasury note yield on Thursday jumped above 0.50 percent for the first time since June 2011. Read more of this post

JPMorgan to stop making student loans: company memo

JPMorgan to stop making student loans: company memo

7:05pm EDT

By David Henry

NEW YORK (Reuters) – JPMorgan Chase & Co (JPM.N:Quote, Profile, Research, Stock Buzz) has decided to get out of the student loan business, after the biggest U.S. bank concluded that competition from federal government programs and increased scrutiny from regulators had limited its ability to expand the business. Read more of this post

China Cash Crunch 2: Just When You Thought It Was Safe to Go Back in the Markets

September 5, 2013, 2:15 PM

China Cash Crunch 2: Just When You Thought It Was Safe to Go Back in the Markets

Could June jitters in China’s money market be followed by a September shudder? The causes of the June cash crunch that pushed short-term borrowing rates close to 30%, triggering a sell-off in the mainland’s equity and bond markets, were complex. But analysts break it down into five main factors. Some of them look set to return.

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Bill Gross latest monthly: “Why invest in financial or real assets if bond prices could only go down, and/or stock prices could no longer be pumped up via the artificial steroids of QE?”

September 2013

Seventh Inning Stretch

William H. Gross

They say that reality is whatever you wish it to be and I suppose that could be true. Just wish it, as Jiminy Cricket used to say, and it will come true. Reality’s relativity came to mind the other day as I was opening a box of Cracker Jacks for an afternoon snack. That’s right – I said Cracker Jacks! I can’t count the number of people who have told me during the seventh inning stretch at a baseball game to make sure I sing Cracker Jack (without the S) because that’s what the song says. I care not. No one ever says buy me some “potato chip” or some “peanut.” How about a burger and some “french fry?” In all cases, the “s” just makes it flow better. My reality is a box of Cracker Jacks, and I think little sailor Jack on the outside of the box would be nodding his approval if he could ever come to life, which maybe he can if the stars are aligned and reality is whatever we wish it to be. Read more of this post

Cheap Diving Lures Singaporeans as Ringgit Falls: Southeast Asia

Cheap Diving Lures Singaporeans as Ringgit Falls: Southeast Asia

The ringgit’s descent to a 15-year low against the Singapore dollar is luring tourists and property-buyers from the city-state, providing relief as Malaysia’s economic growth slows.

In the past three months, the ringgit has lost 5.8 percent against the greenback and 4.1 percent versus the currency of Singapore, which accounted for 52 percent of overseas visitors last year. Malaysia’s current-account surplus shrank 70 percent in the second quarter, while Singapore’s widened 28 percent, helping fuel a selloff in the nation’s assets by overseas investors preparing for the Federal Reserve to reduce stimulus. Read more of this post

Money Fund Lehman Moment Lurks as New Protections Stall

Money Fund Lehman Moment Lurks as New Protections Stall

A year ago, when opposition from the asset-management industry killed her plan to make money-market mutual funds safer, U.S. Securities and Exchange Commission Chairman Mary Schapiro looked to Timothy Geithner, then the Treasury Secretary, to tackle “one of the pieces of unfinished business from the financial crisis.” It remains unfinished.

As Schapiro and Geithner prepared to leave government toward the end of 2012, the effort started anew to make the $2.6 trillion money-fund industry less likely to disrupt global financial markets. Norm Champ, a Harvard University-trained lawyer and the SEC’s top regulator of mutual funds, canvassed the remaining four commissioners, seeking to find common ground on which new rules could be built after Schapiro failed to corral enough votes to push her plan forward. Read more of this post

Australia Gold Coast Homes at 50% Below 2010 Lure Buyers

Australia Gold Coast Homes at 50% Below 2010 Lure Buyers

After sitting on the sidelines for two years watching home prices plummet, Rina Poke bought her ninth investment property in Australia’s Gold Coast for A$121,000 ($110,388), beating another buyer after a frantic round of bidding. “This is definitely the time to buy,” Poke, a 44-year-old sales manager at World Gym in the Gold Coast suburb of Ashmore, said after the auction on Aug. 8 at which 16 properties were offered. “Interest rates are at an all-time low, it’s the bottom of the market and prices are on their way up.” Read more of this post