Bamboo Innovator

Tycoons Usurped by SOEs in China IPOs as Returns Tumble

Tycoons Usurped by SOEs in China IPOs as Returns Tumble

In December, China Machinery Engineering Corp., a builder of power stations, went public in Hong Kong thanks to five Chinese government-owned companies that bought almost a third of the $575 million offering. The stock has since fallen 24 percent.

China Machinery is among a growing number of state-owned enterprises forced to rely on so-called cornerstone investments by other state firms to get initial public offerings done, as wealthy individuals like Li Ka-shing stopped investing. The results haven’t been stellar. Read more of this post

China’s move to loosen interest-rate controls is insufficient to cut corporate borrowing costs in coming months as the economy expands at the slowest pace since 1990

PBOC’s Rate Rules No Company Salve to Barclays: China Overnight

China’s move to loosen interest-rate controls is insufficient to cut corporate borrowing costs in coming months as the economy expands at the slowest pace since 1990, according to Barclays Plc and UBS AG.

The People’s Bank of China scrapped the floor on the rates banks can charge customers on July 19 while keeping a cap on deposit rates. Yuan forwards rose and Chinese stocks trading in the U.S. posted the first back-to-back weekly gain since May as the change signaled policy makers’ commitment to market reforms. Read more of this post

Steel Goal Fades as $12 Billion Projects Dumped in India

Steel Goal Fades as $12 Billion Projects Dumped: Corporate India

ArcelorMittal (MT) and Posco’s decisions to scrap $12 billion of proposed steel projects in India and delays in building plants by Tata Steel Ltd. (TATA) and its peers will probably cut the nation’s 2020 capacity target by a quarter.

India may add about 50 million metric tons in the next eight years, half of an earlier plan, taking total capacity to 150 million tons, according to the average estimate of six analysts, government officials and company executives in a Bloomberg survey. Slowing demand, land acquisition delays, rising funding costs and difficulties in getting iron ore mining permits are diminishing the viability of the projects, said A.S. Firoz, the steel ministry’s chief economist. Read more of this post

Beijing Airport Bomber Highlights Threat to Social Stability

Beijing Airport Bomber Highlights Threat to Social Stability

A man who detonated a home-made bomb at Beijing Capital International Airport to gain attention for his grievances highlights the growing threat to social stability in China from frustration at perceived injustice.

The man, identified as Ji Zhongxing, a 34-year-old from Heze city in eastern Shandong province who is confined to a wheelchair, exploded the device outside the exit to the arrival hall of Terminal 3 on July 20, according to a report from the official Xinhua News Agency. Ji, who sustained injuries to his arm, was the only person hurt in the explosion, it said. Read more of this post

China Shipyards Squeezed by Low Down Payments Amid Credit Crunch

China Shipyards Squeezed by Low Down Payments Amid Credit Crunch

During the 2007 shipping boom, China’s shipyards charged down payments of as much as 60 percent of a vessel’s value. Now, shipbuilders are cutting those payments to as little as 2 percent, giving an advantage to state-owned companies that can tap the government’s cash.

With flagging demand pushing shipyards to compete by cutting down payments and China taking measures to rein in lending, the nation’s privately owned yards are getting squeezed by state-owned rivals that enjoy greater access to financing. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the largest shipbuilder outside state control by order book, said this month it’s seeking government support after failing to win any new vessel orders this year. Read more of this post

Keppel Seeks New Non-Rig Orders for Brazil Yards as competition from China pushes down rig prices

Keppel Seeks New Non-Rig Orders for Brazil Yards: Southeast Asia

Keppel Corp. (KEP), the world’s largest oil-rig maker, wants to set aside capacity to build offshore production and support vessels in Brazil as competition from China pushes down rig prices.

Keppel wants to expand its business of building offshore production and support vessels in the country, Chief Executive Officer Choo Chiau Beng said in an interview on July 19. The Singapore company, which is building a second yard in Brazil, also plans to offer more repair and conversion work. Read more of this post

China’s decision to liberalize bank lending rates has raised suspicions that it reflects official concerns over possible loan defaults and is aimed at helping out heavily indebted state firms and local governments

China’s rate reform may serve to shield indebted state firms

4:27am EDT

By Wayne Arnold

HONG KONG (Reuters) – China’s decision last week to liberalize bank lending rates, though widely applauded, has raised suspicions that it reflects official concerns over possible loan defaults and is aimed at helping out heavily indebted state firms and local governments. China’s central bank announced on Friday that banks could now lend at whatever rate they liked, enabling them to compete for new borrowers with cheaper credit at a time when the world’s second-largest economy is slowing markedly. But some investors said the move was symbolic and likely represented, in the short term at least, relief for heavily indebted state-owned enterprises (SOEs), big private-sector employers and local government financing arms. “I’m a little skeptical of the appraisals that this is a big, big reform move,” said Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management in New York and formerly a professor at Beijing’s Tsinghua University. “My concern in the short run is that what will happen is that a bunch of local government financing vehicles will get lower interest rates,” he added. Read more of this post

Poor quality and bad management: India ignored warnings in free meal program

Poor quality and bad management: India ignored warnings in free meal program

7:18am EDT

By Annie Banerji and Anurag Kotoky

GANDAMAN, India/NEW DELHI (Reuters) – The village school in India where 23 children died by poisoning last week had been providing lunch under a government-sponsored scheme without checks or monitoring by local officials to see if the food was stored carefully or cooked properly. Although it is the first such disaster in the “midday meal” project that feeds about 120 million children every day across India, a Reuters review of audit reports and research papers shows officials have long ignored warnings of the lack of oversight and accountability in the program. “You only come and do checks when you get complaints or when there are serious cases,” said Rudranarayan Ram, the local education administrator for the village of Gandaman in Bihar state, where the children died. “This was the first time.” Read more of this post

If You’re a Bond Investor, Beware of the Seesaw; SEC has a basic reminder for investors enticed by rising interest rates on bonds: When rates climb, prices fall.

July 20, 2013

If You’re a Bond Investor, Beware of the Seesaw

By JEFF SOMMER

THE Securities and Exchange Commission issues frequent bulletins about what it calls “investment frauds and scams” — a frightening taxonomy of plots and stratagems aimed at separating investors from their money. The agency’s alerts range from warnings of Madoff-style Ponzi schemes to “pump and dump” operations intended to temporarily inflate a stock price. They also include cautionary notes about polite offers of assistance from predators posing as government regulators. Lately, though, the S.E.C. has been giving a warning of a different sort. Bearing the general title “Interest Rate Risk,” this latest bulletin is a cry for understanding. It’s about bonds, and for most people, the subject is confounding. Read more of this post

Shoppers Drug Mart’s pharmacist associate model a hidden jewel for Loblaw

Shoppers Drug Mart’s pharmacist associate model a hidden jewel for Loblaw

Armina Ligaya | 13/07/20 | Last Updated: 13/07/19 4:46 PM ET
If Loblaw Companies Ltd. successfully buys Shoppers Drug Mart, it will not only inherit the pharmacy retailer’s vast network of stores — particularly key locations in the hearts of Canada’s urban centres — it will also benefit from the advantages afforded by the owner-operators of those stores: pharmacists.

While pure-play food and drug retailers such as Metro and Rexall appear to have the most to lose in the impending nupitals of Loblaw and Shoppers Drug Mart, Monday’s $12.4-billion deal stands to challenge a far broader swath of retail companies — from Old Navy to Sears to Sephora — as the two Canadian retail giants begin stocking their strongest brands and categories in each other’s stores. Read more of this post

Renewable energy in Spain: Sustainable energy meets unsustainable costs

Renewable energy in Spain: Sustainable energy meets unsustainable costs

Jul 20th 2013 | MADRID |From the print edition

ÁNGEL MIRALDA was proud of his 320 solar panels in a field near Benabarre, in northern Spain. They added 56 kilowatts of clean-energy capacity to a country that depended on oil imports. The panels cost €500,000 ($735,000): €150,000 from an early-retirement pay-off from IBM’s Barcelona office, the rest from a bank loan. The government promised a 10% annual return on such projects. That was in 2008. Five years later, after subsidies were cut on July 12th for the third time since 2012, his income is down by 40% and he is struggling to repay the loan. “There is no legal security in Spain,” he complains. Mr Miralda is the victim of a bungled, overambitious renewables programme. Governments everywhere want to turn green and create environmentally friendly jobs. But as Spain shows, good intentions are not enough. If the policies are wrong, the benefits are wasted, the jobs disappear, the costs remain—and business investors bear the brunt. Read more of this post

Lighting rural India: Villagers enjoy sunlight after dark

Lighting rural India: Villagers enjoy sunlight after dark

Jul 20th 2013 | ATRAULI, UTTAR PRADESH |From the print edition

FLY by night over Uttar Pradesh in northern India, the country’s most populous state, and its cities appear as dazzling islands. In between, however, lies an inky sea. Perhaps two-thirds of Uttar Pradesh’s 200m people have no regular electricity. In India as a whole, 700m, or more than half of the population, suffer unreliable connections to the national grid, or none at all.

On paper, plans exist for linking the country’s northern and southern grids. That would help, yet nobody expects rural India to be properly plugged in for a long time yet. Meanwhile, villagers soldier on with paraffin lamps, which harm lungs and emit a dim light that is of little use for school homework. Darkness breeds danger, so women stay home after the sun goes down. A lack of electricity limits business, as markets and shops close early. Banks have been ordered to reach villages, but they need electricity. And though most Indians have mobile phones, many struggle to recharge them. Lots of India’s 400,000 mobile-phone towers are powered at least in part by diesel generators, which are noisy, dirty and costly. Power can account for two-fifths of a mobile-phone company’s operating costs. Read more of this post

Hauling New Treasure Along the Silk Road; With freight trains as their caravans, manufacturers like Hewlett-Packard are reviving an ancient way to ship products made in China to markets in Western Europe

July 20, 2013

Hauling New Treasure Along the Silk Road

By KEITH BRADSHER

AZAMAT KULYENOV, a 26-year-old train driver, slid the black-knobbed throttle forward, and the 1,800-ton express freight train, nearly a half-mile long, began rolling west across the vast, deserted grasslands of eastern Kazakhstan, leaving the Chinese border behind.

Dispatchers in the Kazakh border town of Dostyk gave this train priority over all other traffic, including passenger trains. Specially trained guards rode on board. Later in the trip, as the train traveled across desolate Eurasian steppes, guards toting AK-47 military assault rifles boarded the locomotive to keep watch for bandits who might try to drive alongside and rob the train. Sometimes, the guards would even sit on top of the steel shipping containers. Read more of this post

A Bizarre Goldman Sachs Aluminum Moving Scheme Has Allegedly Cost US Consumers $5 Billion In The Past 3 Years

A Bizarre Goldman Sachs Aluminum Moving Scheme Has Allegedly Cost US Consumers $5 Billion In The Past 3 Years

ADAM TAYLOR JUL. 20, 2013, 6:20 PM 5,341 24

The Federal Reserve is currently “reviewing” a landmark 2003 decision that first allowed regulated banks to trade in physical commodity markets. Why exactly shouldn’t banks be able to trade physical commodities? To see one argument, take a look at a big report from David Kocieniewski in today’s New York Times. According to Kocieniewski, a Goldman Sachs-owned company has been involved in an elaborate plan to move around aluminum in a way that has inflated market prices. The report states that every time an American consumer buys a product containing aluminum, they pay a price that has been affected by this maneuver. Sources told The New York Times that in total the plan has cost American consumers more than $5 billion over the last three years, Kocieniewski’s investigation centers on Metro International Trade Services, an aluminum storage company that Goldman Sachs bought three years ago. According to the Times, since Goldman bought the company the average wait time at the storage facility has gone up more than 20-fold. As the wait times are longer, the companies’ revenues for storing the aluminium are higher. This cost is reflected in the market price of aluminum. Aluminum storage facilities are not allowed to mindlessly sit on aluminum — industry standards require them to move 3,000 tons of the metal every day. However, according to the Times, Metro International gets around this law by moving the metal between its own warehouses every day. One analyst estimated that around 90% of the metal moved each day went to another Goldman-owned warehouse. The body that governs the industry has shown little interest in reforming the practice, Kocieniewski writes. This may be because the body — the London Metals Exchange — collects 1% of the rent from aluminum storage facilities. Limiting the amount of rent received would cost it millions. This all makes for a somewhat absurd working environment. Workers told the Times that they’d routinely see the same drivers making three or four round trips a day. Some warehouses reportedly sat empty 12 or more hours a day, the Times reports, despite the huge backlog. If the practice is as the Times describes it, it is very hard to see what value is given to society by the activity. A loose coalition of companies that use aluminium — including Boeing and Coca-Cola — have begun to put pressure on Goldman. However, the issue may go beyond aluminum — JP Morgan, Blackrock and Goldman have all been given approval by the SEC to buy a large amount of copper available on the market and stockpile it, Kocieniewski reports. Read more of this post