Bamboo Innovator

Steel: An inferno of unprofitability; The world’s overcapacity in steelmaking is getting worse, and profits are evaporating

Steel: An inferno of unprofitability; The world’s overcapacity in steelmaking is getting worse, and profits are evaporating

Jul 6th 2013 |From the print edition

THE importance of steel is in no doubt. It is the material from which much of the modern world is made, from skyscrapers to washing machines. Governments everywhere regard a strong steelmaking business as a sign of economic virility, and thus hover anxiously over their domestic producers. A French minister recently threatened to nationalise ArcelorMittal’s Florange plant if it pursued plans to cut jobs and close two blast furnaces. Despite a weak world economy, global production of steel rose by 1.2% last year to a record 1.55 billion tonnes. Read more of this post

Many wonder about Yingluck’s ‘ice-cream gang’ and its power, a so-called gang of four who allegedly influenced Thailand’s prime minister’s decisions.

Many wonder about Yingluck’s ‘ice-cream gang’ and its power

He alleged that former PM Thaksin Shinawatra was unable to control Samak because of this gang. -The Nation/ANN
Sat, Jul 06, 2013
The Nation/Asia News Network

BANGKOK – Labour Minister Chalerm Yoobamrung dropped a bombshell on Thursday when he declared that Prime Minister Yingluck Shinawatra’s “ice-cream gang” would end up dragging her down a ravine. This declaration gave rise to one simple question: Who is in this ice-cream gang and what influence do they have on her decisions? This is not the first time that Chalerm has spoken about an influential gang. During the tenure of the late ex-PM Samak Sundarvej, he talked about a so-called gang of four who allegedly influenced the prime minister’s decisions. The members of this gang were Newin Chidchob, former leader of the Northeast faction in the then-ruling People Power Party; then-deputy PM and finance minister Surapong Suebwonglee; then-deputy PM Sahas Banthitkul; and then-PM’s secretary-general Thirapol Noplampha. He alleged that former PM Thaksin Shinawatra was unable to control Samak because of this gang. During Abhisit Vejjajiva’s tenure, a so-called ice-cream gang 1 was allegedly present. Its members reportedly included then-PM’s Office minister Satit Wongnongtoey; former Democrat spokesman Thepthai Senpong; Democrat MP Sirichok Sopha; then-PM’s secretary-general Korbsak Sabhavasu; then-deputy PM’s secretary-general Issara Sunthornvut; and then-finance minister Korn Chatikavanij. Read more of this post

Singapore property market: In 2006, 15 groups of people would view a condominium unit for rent. Now it’s 15 landlords looking for that one elusive tenant. And those who are less stubborn will even slash prices to secure a tenant

Property market: Dark clouds ahead?

Thursday, Jul 04, 2013

Linette Heng

The New Paper

SINGAPORE – Stick a hand out anywhere in Singapore and you’re likely to touch a millionaire. A paper millionaire, at least. The Republic has the highest concentration of millionaires in the world. Try 17 per cent of all households here, according to a 2012 report by The Boston Consulting Group. But so much of it is tied down to property. Spoils from property account for 58 per cent of their overall wealth, according to a 2013 Barclays report. Things have been good after the global financial crisis in 2008 with money pouring in. But market watchers say things are set to change with forecasts of higher interest rates and more units coming into the market. More than 30,000 units, including HDB flats, will be completed by the end of the year. And those relying on rents to pay off their investment properties may have no idea the water is slowly coming to a boil. Real estate agents The New Paper contacted have seen the signs. In 2006, property agent Harold Teo would regularly have about 15 groups of people viewing a condominium unit for rent. Now the game has changed. He said: “Now it’s 15 landlords looking for that one elusive tenant. And those who are less stubborn will even slash prices to secure a tenant.” They are even willing to reduce rent by up to $500, said Mr Teo, for an apartment originally demanding $4,000 a month. What has changed? Mr Teo calls it the perfect storm – fewer foreigners, less money and more units. Read more of this post

Making money from private equity in China has become as challenging as “trying to catch a fish in a tree“*.

Private Equity in China 2013: the Opportunity & The Crisis — China First Capital Research Report

2013-07-04 15:36:29

Peter Fuhrman, Chairman and CEO China First Capital

Making money from private equity in China has become as challenging as “trying to catch a fish in a tree“*. The IPO exit channel is basically shut. Fundraising has never been harder. One hundred billion dollars in capital is locked up inside unexited deals. LPs are getting very anxious. Private companies are suffocating from a lack of new equity financing. PE firms are splintering as partners depart the many struggling firms. Read more of this post

Could poor planning turn China’s city centers into slums?

Could poor planning turn China’s city centers into slums?

Thursday, July 4, 2013

Series: Unstable foundations (Part 3)

China has built glittering metropolises in the span of roughly three decades of reform and opening. But in an equal span of time, shiny urban centers risk losing their shining façades or even descending into slums thanks to poor construction quality and unclear property rights.

One study released in January points to exactly that scenario. Authored by an international team of scholars, the report shows that ambiguity in the country’s land laws is pushing investment out of the center of the city and toward the outskirts.  Read more of this post

Investors have fled bonds of all kinds since mid-June—and even one of the fixed-income market’s safest corners – short-term investment-grade bond funds – hasn’t been immune.

July 5, 2013, 6:09 p.m. ET

‘Safer’ Short-Term Bond Funds See Outflows

DAISY MAXEY

Investors have fled bonds of all kinds since mid-June—and even one of the fixed-income market’s safest corners hasn’t been immune. According to preliminary data from mutual-fund tracker Lipper, in the week ended June 26 investors pulled a net $126 million out of the short-term investment-grade bond funds that have reported so far. That brings those funds’ assets to $77 billion. Unless that number changes, the week would be the first time the category saw more money leave than come in since November 2011. Until the end of May, short-term investment-grade bond funds were the bond market’s defensive darlings. This year through May, according to Lipper, investors poured $12.7 billion into the funds, which buy bonds with a relatively low risk of default that mature within one to three years. Because they mature soon, short-term bonds are less vulnerable to interest-rate increases, which drive down bond prices. For that reason, many investors had moved assets from intermediate- and long-duration funds to short-duration funds. But when Federal Reserve officials signaled in mid-June that the central bank might taper its bond buying later this year, investors pulled billions of dollars out of bond funds—and even short-term bond funds were hit. Read more of this post

Banks’ Capital Estimates Seen Overstated; Regulators’ Report Is Liable to Support Push Toward Tighter Rules for Lenders

July 5, 2013, 12:50 p.m. ET

Banks’ Capital Estimates Seen Overstated

Regulators’ Report Is Liable to Support Push Toward Tighter Rules for Lenders

GEOFFREY T. SMITH

The discretion banks use in judging the riskiness of their long-term assets can overstate their capital ratios by up to 20%, global regulators said in a final report on the subject Friday. The long-awaited report, by the Basel Committee on Banking Supervision, appeared to confirm what many outside the banking industry had long suspected: that banks have a structural bias to understate the risk embedded in the vast majority of their investments, so as to make them look better-capitalized and protected against possible shocks than they actually are. Read more of this post

Real Returns: Are Private-Equity Gains Built to Last?

July 5, 2013, 6:05 p.m. ET

Real Returns: Are Private-Equity Gains Built to Last?

MARK HULBERT

A new study shows that one of the chief benefits of private-equity firms is largely an illusion. The study comes as Dell DELL -2.10% shareholders prepare for a July 18 vote on whether to accept a bid from founder Michael Dell and private-equity firm Silver Lake Partners to take the company private at $13.65 a share.

To be sure, many private-equity buyout funds have in the past produced superior returns. But their fees are steep—typically 2% of assets plus 20% of any profits. And many of their advantages are either ephemeral or can be replicated at a much lower cost. Read more of this post

China: Private Banks Possible in Sweeping Reform

China: Private Banks Possible in Sweeping Reform

Friday, 05 Jul 2013 07:32 AM

China on Friday promised sweeping changes to its state-run banking industry — including allowing the creation of private lenders — to support its credit-starved entrepreneurs and curb what regulators worry are growing financial risks.

Analysts including the World Bank say an overhaul of a Chinese banking system that lends little to private businesses is urgently needed to keep economic growth strong. Communist leaders who took power last year have promised to support entrepreneurs who generate China’s new jobs and wealth, but have yet to make significant changes. Read more of this post

Mortgage REITs Slide Most Since 2011 on Fed Tapering Concern

Mortgage REITs Slide Most Since 2011 on Fed Tapering Concern

Real estate investment trusts that buy mortgage debt slumped after a better-than-forecast employment report stoked speculation the Federal Reserve will begin to reduce the size of its asset purchases.

A Bloomberg index of shares in the REITs tumbled 3.9 percent as of 4:40 p.m. in New York, the largest drop since October 2011. Annaly Capital Management Inc. (NLY), the largest of the companies, and American Capital Agency Corp. (AGNC), the second biggest, each plunged more than 5 percent. Read more of this post

Trades Rival University Degrees for Canada Labor Market

Trades Rival University Degrees for Canada Labor Market

Ellie MacRae is taking summer classes to accelerate a four-year degree in early childhood studies, even as she worries her efforts won’t pay off like her boyfriend’s electrical training.

“Undergraduate degrees don’t get you a job,” said MacRae, 21, who is in her second year at Toronto’s Ryerson University. Her boyfriend “will have an easier time finding a job than me – – there’s just a lot more opportunities in the trades.” Read more of this post

Which State Drinks The Most (And Least) Beer?

Which State Drinks The Most (And Least) Beer?

Tyler Durden on 07/04/2013 19:55 -0400

On a day when the underlying reason for celebration in the US is often washed away by a few gallons of alcohol, we thought it timely to see just which states are the biggest soaks. It is likely no surprise that Utah is the driest state but the top 4 states seem head and shoulders above the rest with North Dakota topping the list at 45.8 gallons of beer per capita per year (or an average of just over 1 pint per day – which seems very reasonable?). Only 4 states have seen consumption per capita rise in the last 5 years – Vermont (+8.34%), North Dakota (+7.5%), Maine (+3.45%) and New Hampshire (+0.34%) – while Nevada (-16.42%), Washington (-15.24%), and Florida (-15.01%) are sobering up the fastest…

China signals will cut off credit to rebalance economy

China signals will cut off credit to rebalance economy

7:21am EDT

By Koh Gui Qing and Langi Chiang

BEIJING (Reuters) – China said on Friday it would cut off credit to force consolidation in industries plagued by overcapacity as it seeks to end the economy’s dependence on extravagant investment funded by cheap debt. In a statement from the State Council, or cabinet, Beijing laid out broad plans to ensure banks support the kind of economic rebalancing China’s new leadership wants as it looks to focus more on high-end manufacturing. Read more of this post

China Vice Finance Minister Urges ‘High Alert’ on Local Debt

China Vice Finance Minister Urges ‘High Alert’ on Local Debt

A Chinese vice finance minister warned the nation must be on “high alert” to the dangers of rising debt in companies set up by local governments to fund investment projects.

“Prominent risks are not only in the shadow-banking area but also in local government financing vehicles, and we do need to be on high alert,” Zhu Guangyao said at a briefing in Beijing today. At the same time, companies are mainly investing in infrastructure projects with relatively good operations and repayment abilities, he said. Read more of this post

PBOC to Extend Cash Crunch as Zhou Discovers Flaws

PBOC to Extend Cash Crunch as Zhou Discovers Flaws

China’s finance companies predict central bank Governor Zhou Xiaochuan will extend a cash crunch, albeit without June’s dramatic swings, as he calls for the market to “discover and correct” excessive lending.

The seven-day repurchase rate, which measures interbank funding availability, may average 4 percent in the third quarter, compared with 3.62 percent in the past year, according to the median estimate in a Bloomberg survey of eight analysts. The rate surged to a record 10.8 percent on June 20, and averaged 4.49 percent last quarter, the highest since the National Interbank Funding Center started compiling the data in 2003. The similar rate in India fell 73 basis points. Read more of this post

China Probes Tetra Pak for Abuse of Market Control; China Probes 60 Drugmakers in Effort to Curb Drug Prices

China Probes Tetra Pak for Abuse of Market Control, Xinhua Says

China is probing Switzerland-based food-packaging company Tetra Pak Group for possible abuse of market dominance, the official Xinhua News Agency reported today, citing the State Administration for Industry & Commerce.

The market watchdog has organized more than 20 of its regional agencies to investigate the allegations, Xinhua said without giving further details. Three telephone calls to the watchdog’s press office in Beijing weren’t answered. Calls to Tetra Pak’s Shanghai office were also not answered. Read more of this post

Christmas Candy Stockpiled in July as Aussie Slump Looms

Christmas Candy Stockpiled in July as Aussie Slump Looms

Andy Adams has already bought his Christmas candy. With the Australian dollar down 12 percent in its longest losing streak since the 2008 financial crisis, he’s stocking his food store early in anticipation of a further fall.

“We basically doubled the size of our last order. We had to,” said Adams, whose British Sweets and Treats store in the Sydney suburb of Bondi caters to U.K., Irish and American expats craving Maynards Wine Gums, Barry’s Tea, and Baby Ruth bars. “We know the dollar’s going to creep down, so we’re trying to grab it now at a reasonable price.” Read more of this post

Three Thai tycoons are warning of a nascent economic bubble, blaming policies that have encouraged consumers to take on debt while the government borrows hugely to spur the economy

Tycoons of disaster urge caution; State policies creating a bubble, they warn

Published: 4 Jul 2013 at 23.52

From left, Sawasdi Horrungruang, Boonchai Bencharongkul and Prachai Leophairatana. The three business tycoons discussed how they survived the 1997 crisis. (Photo by Pawat Laopaisarntaksin)

Three businessmen who lost most of their empires during the tom yum kung crisis are warning of a nascent economic bubble, blaming policies that have encouraged consumers to take on debt while the government borrows hugely to spur the economy. Boonchai Bencharongkul, a founder of No.2 mobile operator Total Access Communication (DTAC), voiced concern about a potential new crisis forming. “I think the current situation is worrisome. As one of those who had such an experience, I can smell it now. People are rushing and competing to buy condos while more and more people are driving Ferraris. These are the same things we saw before the 1997 crisis occurred,” Mr Boonchai told a forum hosted by Thansettakij newspaper Thursday. He said populist policies such as the first-time car buyer tax rebate have prodded people to borrow from banks as part of the government’s attempt to boost gross domestic product (GDP). “Don’t focus so much on GDP. In the end, people really care about how much money they have left in their pockets,” he said. Read more of this post

China Rongsheng, the nation’s biggest shipyard outside state control, is seeking support from the government and its largest shareholder amid a plunge in orders and prices

China Rongsheng’s Call for Government Support Drives Down Shares

China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the nation’s biggest shipyard outside state control, is seeking support from the government and its largest shareholder amid a plunge in orders and prices. The shares fell.

The shipbuilder had a net loss in the first half, it said in a filing on preliminary earnings to Hong Kong’s stock exchange today. Rongsheng, which reported its first annual loss since 2008 last year, dropped 9.4 percent to 96 Hong Kong cents as of 9:31 in Hong Kong trading. Read more of this post