Bamboo Innovator

Shake-up looms in Singapore banking, wealth managers warn

August 28, 2013 3:54 pm

Shake-up looms in Singapore banking, wealth managers warn

By Jeremy Grant in Singapore

Intense competition, a tendency for wealthy Asians to use multiple private bankers and high staff costs are likely to force consolidation in the wealth management business in Singapore and could push operators out of business, top private bankers have warned. Signs of competitive strain in one of Asia’s biggest wealth management hubs stand in contrast to an image of rising wealth as the number of multimillionaires grows faster in the region than anywhere else. Read more of this post

Corruption in the Philippines; Benigno Aquino pledges to end a crooked disbursement system in the Philippines

Corruption in the Philippines

Scratching pork

Aug 29th 2013, 6:20 by J.McL. | MANILA

“PEOPLE Power”, which toppled the corrupt regime of Ferdinand Marcos in 1986, was in the minds of protestors massed in Manila’s main park on August 26th. From families and schoolchildren to nuns, the tens of thousands of Filipinos were demanding an end to pork-barrel politics, after a government audit earlier this month revealed that politicians had funnelled over 6 billion pesos ($135m) into 82 dodgy NGOs. Many demonstrating saw themselves as the heirs of ’86. Read more of this post

Johor to review property ownership policy for foreigners

Johor to review property ownership policy for foreigners
Price hike not due to rise in number of buyers from Singapore, it says
PUBLISHED AUGUST 29, 2013
[NUSAJAYA] The Johor government is looking to review the policy on foreign ownership of real estate to keep the escalating property prices in the state under control, said Johor Housing and Local Government Committee chairman Abdul Latiff Bandi. Mr Latiff was responding to a question by Mohd Ismail Roslan (Barisan Nasional MP from Semerah) on the state government’s efforts to control the escalating property prices in Johor during the state assembly meeting recently. Read more of this post

Why Emerging Market FX Has Further To Fall

Why Emerging Market FX Has Further To Fall

Tyler Durden on 08/28/2013 20:14 -0400

The current external environment and consequence of past policies are limiting options for EM nations (most specifically Indonesia and India). Citi believes the best they can do now is to smooth the (inevitable) macro adjustment (weaker FX, higher risk premiums, slower growth) through improved policy credibility (to curb volatility and overshooting) and find offsets to portfolio flows to ease the pressure. The 4 choices of various rocks and hard places do not hold much hope for anything but further FX devaluation. As Citi’s Matt King points out, what goes up (in terms of Emerging Market central bank FX reserves) risks coming back down with a thud… and in case you were wondering why India, Turkey, and Indonesia were the most-hammered… It’s all about the carry… Read more of this post

The Emerging Market Profit Collapse

The Emerging Market Profit Collapse

ED YARDENI, DR. ED’S BLOG AUG. 28, 2013, 10:57 AM 1,911

I don’t expect that yesterday’s anxiety attack over the deteriorating Middle East situation will turn into another panic attack for the US stock market. On the other hand, while US stock prices have been quite resilient this summer, the currencies, bonds, and stocks of emerging market (EM) economies have been getting clobbered. This has happened because global investors fear that the consequences of prospective Fed QE tapering will be more severe for the EMs than for developed economies. That’s only part of the story. The fact is that the forward earnings of the MSCI Emerging Markets composite peaked at a record high during the week of August 4, 2011 and has been trending lower since then. Analysts’ consensus estimates for both 2013 and 2014 also are falling, and at a faster pace in recent weeks. Net earnings revisions have been negative for the past 30 months. Read more of this post

The Day Everbright Had to Pull Power Plugs to Stop Erroneous Trading

08.28.2013 17:09

The Day Everbright Had to Pull Power Plugs to Stop Erroneous Trading

Securities firm made a bundle by skipping a crucial risk control step so it could deal fast, but when things soured, traders literally resorted to yanking cables out of sockets

By staff reporters Yang Lu, Fan Junli, Fu Yanyan and Zhou Qun

(Beijing) – How did a simple system glitch slip past layers of supposedly strong fail-safe mechanisms and rock the country’s entire securities market? This is the question that many people have been asking since a trading error by Everbright Securities directly led to erroneous transactions worth billions of yuan on August 16. The A-share index surged as a result, then fell the same day when the firm admitted its mistake. Read more of this post

Strike on Syria could trigger retaliatory attacks, cyberwar

Strike on Syria could trigger retaliatory attacks, cyberwar

1:09am EDT

By Warren Strobel and David Alexander

WASHINGTON (Reuters) – It’s a truism often repeated in the Pentagon and across the U.S. security establishment: In war, the enemy gets a vote. A U.S.-led cruise missile attack on Syria in response to its alleged use of chemical weapons, which seems increasingly likely in the coming days, could provoke reprisals from Damascus and its backers, ranging from retaliatory missile strikes to terrorist attacks and cyberwar, according to government officials and private analysts. Read more of this post

Rolling returns to assess fund performance

portfolio manager patterns

Tom Brakke

Morningstar published an article on rolling returns that included this graphic:

It shows the percentage of time the three-year trailing returns for six funds spent in each quartile of their respective categories.  (This is monthly for ten years, so 120 observations.) By chance, I had just read this from Howard Marks, I believe from 1990:  “I feel strongly that attempting to achieve a superior long term record by stringing together a run of top-decile years is unlikely to succeed.  Rather, striving to do a little better than average every year — and through discipline to have highly superior relative results in bad times — is:  less likely to produce extreme volatility, less likely to produce huge losses which can’t be recouped and, most importantly, more likely to work (given the fact that all of us are only human).” Read more of this post

Markets must force banks, like petulant toddlers, to grow up

August 28, 2013 5:56 pm

Markets must force banks, like petulant toddlers, to grow up

By Tim Harford

Even with a large equity cushion, the perverse incentives of ‘too big to fail’ will assert themselves

Like monstrous toddlers, the world’s banks have stumbled from manic exuberance, destroying all they touch with clumsy glee, to petulant refusal to get off the floor. As any parent will tell you, round-the-clock supervision of toddlers is impossible and clearing up the mess is no fun. How can we force banking to grow up? The problem is that governments – rightly, given the present set-up – regard certain banks as too big or too interconnected to fail. Read more of this post

Making law school cheaper; For many, two years is plenty

Making law school cheaper; For many, two years is plenty

Aug 28th 2013, 18:36 by The Economist | NEW YORK

“THIS is probably controversial to say, but what the heck,” said Barack Obama on August 23rd. “[L]aw schools would probably be wise to think about being two years instead of three.” Mr Obama once taught constitutional law; his proposal could put many of his former colleagues out of work. Yet he has a point. For most of the 1800s, would-be lawyers (such as Abraham Lincoln) learned the trade as apprentices. Law schools sprouted up late in the century, in two main flavours. Elite universities set up legal departments for posh students; night schools catered to the sons of immigrants. Read more of this post

Have you fed your Cash-Eating Organism today? Fraud, failure and bankruptcy pay well for CEOs

Aug. 28, 2013, 6:15 a.m. EDT

Fraud, failure and bankruptcy pay well for CEOs

Commentary: Have you fed your Cash-Eating Organism today?

By Al Lewis

Richard Fuld had a $66 million payday in 2000 because, well, he was a great chief executive officer, now wasn’t he?

Though the Internet bubble popped and the Nasdaq peaked in 2001, he made another $105.2 million. In 2002, he bagged yet another $28.7 million; 2003, $52.9 million; 2004, $41.8 million; 2005, $104.4 million; 2006, $27.3 million; 2007, $40 million. His tab for eight years of CEO work came to $466.3 million. You may still remember the name of his company. It was called Lehman Brothers. In 2008, it set a record as history’s largest bankruptcy, setting off the nuclear reaction we now call the financial crisis and cementing America’s future as a socialist state for giant banks and corporations. Read more of this post

Hank Paulson: Why Fannie and Freddie remain a big threat

Hank Paulson: Why Fannie and Freddie remain a big threat

By Katie Benner August 28, 2013: 10:45 AM ET

No one had a better view of the chaos of the financial crisis five years ago than former Treasury Secretary Hank Paulson. In this expansive Q&A, he tells Fortune where the trigger points for the next meltdown may be.

FORTUNE — To commemorate the five-year anniversary of the financial crisis, former Treasury Secretary Hank Paulson has written a new prologue to his memoir On the Brink, which chronicles the dark days of 2008. As head of the Treasury, Paulson, now 67, had the herculean task of saving the global banking system when problems in the subprime mortgage market sent waves of losses to the furthest reaches of the financial markets. Read more of this post

For the first time, the combined GDP of poor nations is greater than the rich ones

For the first time, the combined GDP of poor nations is greater than the rich ones

By David Yanofsky @YAN0 August 28, 2013

For the first time ever, the combined gross domestic product of emerging and developing markets, adjusted for purchasing price parity, has eclipsed the combined measure of advanced economies. Purchasing price parity—or PPP for short—adjusts for the relative cost of comparable goods in different economic markets. According to the International Monetary Fund—the supplier of this data—emerging and developing economies will have a purchasing price parity-adjusted GDP of $42.8 trillion in 2013, while that of emerging economies will be $44.4 trillion. In other words, emerging markets will create $1.6 trillion more value in goods and services than advanced markets this year. Advanced economies are, according to the IMF, the 34 nations that result from combining the members of the G7, euro area countries, and the 4 “newly industrialized Asian economies”—Taiwan, Hong Kong, Singapore, and South Korea. The world’s 150 other nations are considered emerging or developing. Excluding the largest advanced economy, the United Sates, and the largest emerging economy, China, which both account from more than 30% of their respective group’s total GDP, the data show that the PPP-adjusted GDP of poorer nations surpassed that of richer ones in 2009. It’s worth keeping in mind that the emerging economies have strength in numbers. Not only are there more emerging and developing nations; those nations also boast a larger combined population. As such, emerging and developing economies trail far behind advanced economies in per-capita terms. Their aggregate per-capita PPP-adjusted GDP is $7,415, while the same measure for advanced nations totals $41,369.

Brazil Raises Rate to 9% as Real Undercuts Inflation Fight

Brazil Raises Rate to 9% as Real Undercuts Inflation Fight

Brazil’s central bank raised the key rate by half a percentage point for a third straight meeting, as a plunge in the currency undermines efforts to slow inflation in the world’s second-largest emerging market. The bank’s board, led by President Alexandre Tombini, today unanimously voted to raise the benchmark Selic rate to 9 percent from 8.5 percent, as forecast by 50 of 52 economists surveyed by Bloomberg. One economist expected a 75 basis-point increase, while one forecast a 25 basis-point boost.

Read more of this post

Bond Binge Expands Leverage Toward Financial Crisis Peak

Bond Binge Expands Leverage Toward Financial Crisis Peak

Company debt loads in the U.S. are approaching the highest level since the aftermath of the financial crisis as borrowing to finance mergers and shareholder payouts exceeds earnings growth.

Debt levels have increased faster than cash flow for six straight quarters, boosting the obligations of investment-grade companies in the second quarter to 2.09 times earnings before interest, taxes, depreciation and amortization, according to JPMorgan Chase & Co. That’s up from 2.07 times in the first three months of 2013 and compares with 2.13 in the third quarter of 2009, when it peaked after the deepest recession since the Great Depression. Read more of this post

Why $3.4tn in foreign reserves is not China’s escape hatch

Why $3.4tn in foreign reserves is not China’s escape hatch

Guest writer | Aug 28 08:40 | 5 comments | Share

By Paul J. Davies, the FT’s Asia financial correspondent.

After trying to work out how big China’s bad debt problem might be, many people still turn round and point to the country’s mammoth foreign exchange reserves as its great get-out clause. The idea is seductive. On a deliberately gross calculation using the 20 per cent non-performing loan rate found at China’s big banks in the late 1990s, total bad debts would amount to Rmb21tn. A more sensible stab might put the level at roughly half that, or Rmb10tn. These are painfully large numbers – but hang on, China’s central bank has foreign exchange assets of $3.4tn, or Rmb20tn. Perfect – what’s the problem? Read more of this post

Beijing land values surpass US annual GDP

Beijing land values surpass US annual GDP

Staff Reporter

2013-08-28

Transaction prices in China’s urban housing market have touched new highs in 2013, such as Beijing, Shanghai, Guangzhou and Hangzhou. In Sunhe, located in the Zhaoyang district in Beijing, Cofco Property, spent 2.36 billion yuan (US$385 million) on July 23 this year to buy an HIJ plot, measuring 33,000 square meters. The floor area was priced at 44,000 yuan (US$7000) per square meter, making it the most expensive plot of land in the capital. On Aug 16, China Resources won the bid for a plot of land in Qianhai, Shenzhen for 10.9 billion yuan (US$1.7 billion), which broke the record for the highest price quoted for a single land transaction. Read more of this post

“China has made too many mistakes, and urbanization in several places is not even real”

Urbanization in parts of China slower than Vietnam

Staff Reporter

2013-08-28

Ren Zhiqiang, right, attends a meeting in Hainan. (Photo/Xinhua)

Until China solves its problems of household registration and land issues, urbanization in certain parts of the country will still be slower than those found in Vietnam, said a Beijing party official. “China has made too many mistakes, and urbanization in several places is not even real,” said Ren Zhiqiang, who also doubles as the chairman of Huayuan, a real estate company based in Beijing. Ren suggested that China allows people to have access to all the resources related to urbanization. “First, the industry has to become a free market. Second, the government should give people the right to change their residence,” he said. “Many in China blame real estate companies for resources being unequally allocated. But the government is actually the one to be blamed, because it caused the country’s urbanization to be slower than other Asian countries, Vietnam for example,” he said.

CBRC Tells Banks to Limit Investment in Local Government Bonds

CBRC Tells Banks to Limit Investment in Local Government Bonds

China’s banking regulator told lenders to be “cautious” when investing in bonds issued by local government financing vehicles as policy makers seek to rein in local borrowing. The China Banking Regulatory Commission has capped at end-2012 levels LGFV loans by banks, which are banned from providing guarantees to the entities’ bonds, Cao Guoqiang, Vice President of China Citic Bank Corp. (998), said at a teleconference. Read more of this post

China to Place Consumption Tax on More Luxury Goods, Xinhua Says

China to Place Consumption Tax on More Luxury Goods, Xinhua Says

China will widen the scope of its consumption tax to include more luxury goods, the official Xinhua News Agency reported, a sign that some high-end brands may become more expensive for purchasers on the mainland. The Asian nation is also targeting goods that cause heavy pollution or use excessive levels of energy for consumption tax adjustments, Xinhua said on its official microblog today. The news agency cited a report by China’s finance minister Lou Jiwei to the Standing Committee of the National People’s Congress. Read more of this post

China Urban Migrants’ Cost Seen at Least $6.8 Trillion

China Urban Migrants’ Cost Seen at Least $6.8 Trillion: Economy

China must spend at least 41.6 trillion yuan ($6.8 trillion) over two decades to integrate rural workers living in cities and towns so the country realizes benefits of urbanization, a United Nations report said. Spending may exceed 75 trillion yuan in a scenario with a higher rate of investment to improve living conditions and housing quality, according to the report released yesterday in Beijing. The study’s baseline assumptions are for the urban population to rise to 976 million in 2030 from 666 million in 2010 and integrate about 210 million migrant workers. The report quantifies the urbanization challenges faced by Communist Party leaders as they prepare for a November meeting to discuss deepening policy reforms amid an economic slowdown. Officials are considering changes to the hukou residence-registration system that excludes migrant workers from taking advantage of schools and pension benefits in cities. Read more of this post

After mega-LBO boom, a massive private equity cleanup

After mega-LBO boom, a massive private equity cleanup

3:31am EDT

By Greg Roumeliotis

NEW YORK (Reuters) – According to Blackstone Group LP’s (BX.N: Quote, Profile, Research, Stock Buzz) books, the private equity firm’s investment in Hilton Worldwide Inc was worth 50 percent more this year than when it took the international hotel chain private in 2007. While that might not seem like much compared to private equity’s historical record of doubling or tripling its investments, it is a remarkable turnaround for a $26.7 billion deal that has come to epitomize the leveraged buyout boom and bust of the past decade. Hilton is one of many cleanup acts that have been quietly going on in the world of private equity, as the industry atones for a debt binge in the years before the financial crisis. Many of the largest buyouts from 2005 to 2008 were based on revenue and profit expectations that proved too optimistic when the recession hit. Companies such as casino operator Caesars Entertainment Corp (CZR.O: Quote, Profile, Research, Stock Buzz) and Texas utility Energy Future Holdings were saddled with huge piles of debt and had difficulty meeting interest payments when business declined. Read more of this post

Suntech Directors Quit Saying Solar Maker Has No Business Plan

Suntech Directors Quit Saying Solar Maker Has No Business Plan

Suntech Power Holdings Co. (STP), the Chinese solar manufacturer whose main unit was pulled into bankruptcy earlier this year, said three directors including the former chairwoman quit saying the company had no business plan. Susan Wang, Julian Worley and Zhizhong Qiu resigned on Aug. 21, saying they weren’t provided with information they needed to fulfill their responsibilities, the Wuxi, China-based company said today in a statement. Michael Nacson replaced Wang as chair, who took the post in March, Suntech said. The resignations highlight the divisions that have plagued the company’s management and come less than six months after Suntech founder Shi Zhengrong was ousted as chairman. Nacson was appointed to the board last month by Suntech’s bondholders. Read more of this post

China companies feel the investment hangover

Last updated: August 27, 2013 5:10 pm

China companies feel the investment hangover

By Simon Rabinovitch in Qujing

Wooden carvings of two elephants and an eagle, meant to symbolise wisdom and prosperity, flank the entrance to the Chinese chemical producer Yunwei. Today, they suggest a very different interpretation: a lumbering debt load and scavengers picking over the company’s scraps. “Lots of Chinese companies rushed to expand, to be the biggest in the world. This was a source of great pride. Now we see it as a headache,” says a soft-spoken Yunwei executive, back from a business trip where he was trying to sell more of the hard black coking coal piled high in the company’s storage facility in Qujing in the southwestern province of Yunnan. Read more of this post