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Byron Wien’s Firsthand Impressions of Asian Markets; “In past years there was a sense of optimism everywhere you went. Now you get a feeling of uncertainty touched by apprehension.”

WEDNESDAY, JULY 10, 2013

Byron Wien’s Firsthand Impressions of Asian Markets

By BYRON WIEN | MORE ARTICLES BY AUTHOR

“In past years there was a sense of optimism everywhere you went,” writes the Wall Street veteran. “Now you get a feeling of uncertainty touched by apprehension.”

I spent almost two weeks in Asia in June and in some ways it was an eye-opener. In past years there was a sense of optimism everywhere you went. Now you get a feeling of uncertainty touched by apprehension. My trip covered a great circle starting in Singapore and going on to Kuala Lumpur, Taipei, Hong Kong, Beijing, Seoul and Tokyo. Spending only one day in each city, my observations were more impressionistic than analytical. I talked with sovereign wealth fund managers and other major investors. Most concerns related to China’s outlook and whether the financial system there was overextended. As we all know, China is the engine of growth for the region and any problems there are felt everywhere else. In contrast to last year, Japan was also a major topic of interest. Read more of this post

Commodity Traders Face New Squeeze as Storage Congestion Spreads

Commodity Traders Face New Squeeze as Storage Congestion Spreads

Commodity traders are facing another supply squeeze as stockpiles concentrate in fewer cocoa depots, mirroring congestion at metals warehouses that means some buyers are paying record premiums for deliveries.

Warehouses in Antwerp, Belgium, held 61 percent of cocoa certified for delivery by the NYSE Liffe exchange on June 24, compared with 36 percent a year earlier, bourse data show. That mirrors the trend in metal stockpiles, with 73 percent of aluminum and 90 percent of copper tracked by the London Metal Exchange now held in three locations. Read more of this post

The panic that rippled through Asia’s markets in May and June might just be a prelude to a more serious capital flight when the U.S. Federal Reserve starts winding down its stimulus measures for real

Asian stress points unveiled as Fed tapering looms

5:07pm EDT

By Nachum Kaplan and Umesh Desai

Singapore (Reuters) – The panic that rippled through Asia’s markets in May and June might just be a prelude to a more serious capital flight when the U.S. Federal Reserve starts winding down its stimulus measures for real.

How quickly the U.S. Federal Reserve reduces its $85 billion a month of bond purchases, which keep interest rates low, will determine how quickly money is pulled out of Asia. Read more of this post

New-breed bosses rev up Indonesia’s state enterprises

New-breed bosses rev up Indonesia’s state enterprises

Wednesday, Jul 10, 2013

John McBeth

The Straits Times

SINGAPORE – Don’t say it too loudly because it might upset the bureaucrats, but over the past five years, go-ahead private sector executives have been changing the corporate culture and turning around the fortunes of a clutch of Indonesia’s state-owned enterprises.

Pertamina oil company president-director Karen Agustiawan, 54; Garuda Airlines chief executive officer Emirsyah Satar, 53; and Kereta Api national railway boss Ignasius Jonan, 49, have all made an impact on organisations previously known for their leaking budgets and tardy public service. Read more of this post

Trouble Looms for Japan’s Once-Mighty DPJ; Beleaguered Party Projected to Lose Last Grasp on Power in Upper House Race

Updated July 10, 2013, 1:26 p.m. ET

Trouble Looms for Japan’s Once-Mighty DPJ

Beleaguered Party Projected to Lose Last Grasp on Power in Upper House Race

TOKO SEKIGUCHI

TOKYO—Four years after its historic overthrow of the entrenched one-party rule of the Liberal Democratic Party, the Democratic Party of Japan is set to lose its last grasp on power with polls predicting a catastrophic loss for the beleaguered party in the coming upper house race.

The DPJ, led by Banri Kaieda is projected to lose half its 44 seats up for election in the July 21 race, according to surveys by Japan’s major dailies. The DPJ, which for now is the largest single voting bloc in the upper chamber, will be giving up its presence as the dominant opposition force, as the governing LDP-New Komeito coalition’s bicameral control of parliament all but eliminates the DPJ’s tactical recourse against the enactment of government-proposed bills. Read more of this post

Dividend Stock Investors Should Really Consider How CEOs Are Paid

MORGAN STANLEY: Dividend Stock Investors Should Really Consider How CEOs Are Paid

SAM RO JUL. 11, 2013, 7:39 AM 844 1

Adam Parker, Morgan Stanley’s Chief U.S. Equity Strategist, is on Bloomberg Surveillance with Tom Keene this morning. While discussing dividend paying stocks, Parker noted that we should consider executive compensation structures. Parker addressed this in a recent report to clients: Management teams are paying themselves more in restricted stock units (RSUs) than in options. In recent years, more CEOs of S&P 500 companies have received compensation in the form of restricted stock than as options (Exhibit 14). It is important that fundamental analysts understand how the senior management teams of the companies they are analyzing are variably compensated, as those with restricted stock and not options are much more likely to increase dividends. The principle? People rarely intentionally damage their own net worth. The shift toward equity-based compensation was designed to align executives’ interests with shareholders. However, we have to wonder if corporate decision-makers will pass up better uses of cash to enrich themselves in the form of dividends. Regardless, this decision to pay out an increasing dividend is crucial to investors. Since 1930, dividends have accounted for 42 percent of stock market investment returns.

Chateau d’Yquem ’90 Extends Decline to Lowest Level Since 2009

Chateau d’Yquem ’90 Extends Decline to Lowest Level Since 2009

A case of 1990 Chateau d’Yquem, Bordeaux’s top-ranked Sauternes dessert wine, sold for 2,700 pounds ($4,050) on the Liv-ex market yesterday, extending a 15-month drop and taking it to its lowest level since October 2009.

The wine sold for 20 percent less than the 3,380 pounds at which it traded in March last year, having peaked at 3,400 pounds in September 2011, according to data on London-based Liv-ex’s Cellar Watch website. Read more of this post

Fittings maker Grohe attracts bid interest from rivals; Grohe, which has a 8% global market share, posted sales of 1.4bn euros, EBITDA 273m euros

Fittings maker Grohe attracts bid interest from rivals – sources

1:10pm EDT

FRANKFURT (Reuters) – German bathroom fixtures maker Grohe GROH.UL has attracted bidding interest from several rivals, which have been asked to submit tentative offers by the end of next week, three people familiar with the process told Reuters.

Grohe’s owners, investor TPG Capital TPG.UL and the private equity arm of Credit Suisse (CSGN.VX: Quote,Profile, Research, Stock Buzz), are running a so-called dual track process that may alternatively result in a stock market listing of Europe’s biggest bathroom equipment maker in the autumn. Read more of this post

Brazil Signals World’s Biggest Key Rate Increase Far From Over; Brazil Raises Rate to 8.5% as Inflation Undermines Growth

Brazil Signals World’s Biggest Key Rate Increase Far From Over

Brazil’s central bank raised the benchmark interest rate a third consecutive time and said it was giving continuity to the world’s biggest tightening cycle, signaling increases may be extended through year-end as policy makers battle inflation.

The bank’s board, led by President Alexandre Tombini, yesterday raised the benchmark Selic (BZSTSETA) rate by 50 basis points to 8.50 percent, as forecast by all 51 analysts surveyed by Bloomberg. The move led Itau Unibanco to reiterate its call for a rate increase in each of the three meetings left this year. Read more of this post

Indonesia Raises Rate More Than Forecast to 6.5% on Inflation

Indonesia Raises Rate More Than Forecast to 6.5% on Inflation

Bank Indonesia raised its key interest rate more than forecast to bolster a weakening currency and ease inflation pressures after the government increased fuel prices last month.

The central bank boosted the reference rate by 50 basis points to 6.5 percent, Governor Agus Martowardojo said in Jakarta today. The outcome was predicted by three of 19 economists surveyed by Bloomberg News, with the majority expecting a 25 basis-point increase. It also boosted the deposit facility rate to 4.75 percent from 4.25 percent. Read more of this post

Emerging Markets Are Stuck on Fed’s Elevator Ride

Emerging Markets Are Stuck on Fed’s Elevator Ride

Back in the 1960s, a French finance minister called the U.S.’s ability to borrow in its own currency — thanks to the dollar’s pre-eminence and reserve-currency status — an “exorbitant privilege.” It’s an advantage that the rest of the world has to pay for, one way or another. This has lately given many emerging-market governments cause for complaint. If they had the will, one or two of them could do something about it. Maybe it’s time they did.

The issue has been highlighted in recent weeks as the Federal Reserve (FDTR) unsettled global markets by signaling its intent to start tightening monetary policy — at least, that’s what investors thought it said. There was a sell-off in global fixed-income markets, and many emerging economies saw the value of their bonds, equities and currencies drop. Read more of this post