Bamboo Innovator

Sony’s $100 Billion Lost Decade Supports Loeb Breakup

Sony’s $100 Billion Lost Decade Supports Loeb Breakup

By Angus Whitley, Brooke Sutherland and Naoko Fujimura – May 16, 2013

Sony Corp. (6758) has a $100 billion reason to consider Daniel Loeb’s breakup proposal.

Loeb, whose Third Point LLC hedge fund just took a $1.1 billion stake in Sony, is pushing the Tokyo-based company to sell as much as 20 percent of its entertainment business and focus on the “considerable and underappreciated value” of its electronics unit. After Loeb’s proposal sparked the biggest rally in Sony shares in more than four years, the $21 billion company still languishes at a cheaper valuation relative to profit than 90 percent of similar-sized consumer electronics makers, according to data compiled by Bloomberg yesterday.

Loeb is approaching Sony after shareholders lost more than $100 billion in market value since 2000. CLSA Asia-Pacific Markets said Sony would be worth 28 percent more in a separation. While estimates from Macquarie Group Ltd.’s Damian Thong fall short of Loeb’s targeted 60 percent stock gain, the analyst said the activist’s claim that spinning off the entertainment unit and boosting its profitability may raise the company’s market value by about 30 percent “seems reasonable.”

“Sony is a chronic underperformer,” Joshua Strauss, Chicago-based co-manager of the Appleseed Fund at Pekin Singer Strauss Asset Management Inc., which oversees about $1 billion, including investments in Japan and Korea, said in a telephone interview. “Should they spin off the entertainment division? Would it create shareholder value? Probably. When you do that sort of thing, the sum of the parts is greater than the whole.” Read more of this post

Chinese economy replaces EU debt crisis as investors’ top concern

Chinese economy replaces EU debt crisis as investors’ top concern

Staff Reporter 2013-05-16

Predictions that China’s economy will face a hard landing leading to a commodity collapse has replaced the European sovereign debt crisis as one of the main concerns of international and domestic investors, with many reducing their investments in emerging markets and commodities to invest in Japanese and European equities, reports our sister paper Want Daily.

A report released by the Bank of America Merrill Lynch earlier in the month showed that many investors are currently forecasting a weakening Chinese economy, with those feeling positive about the country’s economic outlook dropping by 8%. It is the first negative figure in fourteen months, while 25% of the fund managers surveyed considered a hard landing a possibility in China, a sharp increase from the 18% recorded last month.

Approximately 29% of the fund managers have already reduced their investments in China’s commodity market, while investments in Japanese equities have increased for the seventh consecutive month, surpassing the 31% recorded in May 2006. Read more of this post

Bentley Luxury-Car Sales in China Cool; Global luxury goods market to cool in 2013: Bain

May 15, 2013, 11:07 a.m. ET

Bentley Luxury-Car Sales in China Cool

By COLUM MURPHY

BEIJING—The maker of Bentley luxury cars is the latest high-end auto maker to warn that ebbing confidence among Chinese consumers and a government-led drive against conspicuous consumption has hurt demand for its expensive rides. Read more of this post

China in innovation challenge to Europe

May 16, 2013 12:03 am

China in innovation challenge to Europe

By Chris Bryant in Frankfurt

Europe’s business leaders fear its industry will fall behind China in technological innovation within a decade as the economic crisis undermines one of the continent’s competitive advantages.

More than two-thirds of business leaders surveyed by Accenture, the consultancy, on behalf of BusinessEurope, the business lobby group, said China would reach or pull ahead of Europe in innovation by 2023.

Weak demand caused by Europe’s economic crisis has sent industrial production into decline, while corporate reluctance to delve into cash reserves is holding back new investment, training and R&D. Read more of this post

Beijing signals concerns at rising unemployment

May 15, 2013 4:35 pm

Beijing signals concerns at rising unemployment

By Jamil Anderlini in Beijing

China’s newly installed leaders have signalled their concern about rising unemployment in the slowing Chinese economy with several carefully stage-managed public appearances this week.

On Tuesday, Chinese President Xi Jinping paid a surprise visit to a job fair in the eastern city of Tianjin while Premier Li Keqiang warned the country faces an unprecedented challenge in finding jobs for a record number of university graduates.

In a nationwide teleconference on Monday that was widely reported in state media on Wednesday, Mr Li said that nearly 7m tertiary students would enter the job market in July in China, the largest number in the country’s history.

He said it was an “important task” to find jobs for all these graduates, who make up a demographic considered potentially threatening to Communist Party rule if they become disaffected in large numbers. Read more of this post

China’s companies spurn directive to pay 30% dividend; Just 60 per cent of China’s biggest listed-companies met the dividend guidelines, a blow for attempts to build credibility in China’s equity markets

May 16, 2013 5:48 am

China’s companies spurn directive to pay 30% dividend

By Josh Noble in Hong Kong

Just 60 per cent of China’s biggest listed-companies met the dividend guidelines laid out by the Shanghai stock exchange earlier this year, a blow for attempts to build credibility in China’s equity markets.

Of the members of the FTSE A50 index, only 30 companies paid a dividend of over 30 per cent during the most recent earnings season, according to data compiled by Markit.

In January, the Shanghai bourse told listed companies to return at least 30 per cent of profits to shareholders“because of a definite gap between cash dividend ratios for Shanghai-listed companies and those in mature markets”. Read more of this post

China is addicted to debt and shows few signs of kicking the habit, says Francis Cheung

Thursday, May 16, 2013

China is addicted to debt and shows few signs of kicking the habit, says Francis Cheung

Credit can be like steroids for developing countries. Pump loans to businesses and governments, and they will be better able to tap into the latent opportunities of an undeveloped economy.

But as Francis Cheung, head of China and Hong Kong strategy at brokerage CLSA, points out, China has become addicted to debt to fuel growth. And like habitual steroid use, eventually growing debt will threaten the health of the overall system.

Cheung authored a report earlier this month sounding the alarm on how the levels of debt are piling up with no sign of slowing while bringing fewer benefits to the economy. More than half of China’s total debt was added in the past four years, the bulk of which came from shadow banking and bonds. The country’s debt level sits at roughly 205% of GDP as of 2012.

On the sidelines of the CLSA China Forum 2013 in Beijing earlier this week, Cheung spoke to CHINA ECONOMIC REVIEW about where the biggest risks lie and their possible solutions, even if it’s unlikely they’ll be enacted Read more of this post

Chairman of Sinovel has resigned as of one of the country’s largest makers of wind turbines struggles amid an industry downturn

05.15.2013 18:20

Head of Sinovel Resigns amid Company Struggles

Wei Chiyuan steps down as chairman after pursuing reforms that could not keep firm profitable during industry downturn

By staff reporter Pu Jun

(Beijing) – The chairman and acting president of Sinovel Wind Energy Group Co. has resigned as of one of the country’s largest makers of wind turbines struggles amid an industry downturn. Read more of this post

Hukou Age Limits Anger Graduates; A new policy prevents college graduates who are too old from getting Beijing residence

Hukou Age Limits Anger Graduates

By Liu Jinsong (刘金松) and Hu Dan (胡丹)
Issue 619, May 13, 2013
When Zhang Xin (a pseudonym) went online to find information about getting a Beijing hukou (household registration), he came across an agency saying that it would cost 220,000 yuan for people “within the age limit.” But for people over the “age limit,” it would cost an additional 40,000 yuan for them to work around “new rules.”

Zhang will finish his master’s degree at Peking University this June, and has already signed a contract with a well-known international company. Many people in his situation can obtain a Beijing hukou through their job so that they access certain social services within the city. Zhang Xin had counted on this.

However, the “age limits” mentioned by the online agency was the first mention he’d heard of any new rules. He thought it might be a scam, so he went to the company he was set to work for, as well as the employment office at his university. They all said they hadn’t heard of any age limits on obtaining a hukou. But after searching more online, Zhang found that the agency wasn’t a scam. Many others were facing the same problem. Read more of this post

Ping An’s investment in Chinese cosmetics company Jahwa turns sour; public is keen to know what went wrong with to the seemingly perfect investment

Ping An’s investment in Jahwa turns sour

Staff Reporter

2013-05-16

After Ge Wenyao stepped down as chairman of Shanghai Jahwa United, a listed Chinese cosmetics company, the public is keen to know what went wrong with to the seemingly perfect investment made by the Ping An Trust, a strategic investor that was introduced into the business by Ge himself. Read more of this post

Challenging domination of oil’s powerful few

May 15, 2013 8:05 pm

Challenging domination of oil’s powerful few

By Ajay Makan in London

For decades the physical oil market has been the unregulated preserve of a few powerful companies. But in the wake of the Libor scandal, it is subject to intense scrutiny. Energy companies including BP, Royal Dutch Shell and Statoil, the majors raided by the European Commission on Tuesday in a probe into possible price rigging, have long dominated the trade. A handful of large commodity trading houses, hedge funds and investment banks are the other big participants. The market is not overseen by governments or exchanges, but by companies such as Platts, a price reporting agency (PRA) which publishes daily assessments that are gospel in the world of physical commodities. That gives Platts, a unit of the New York-listed McGraw Hill Financial, which was also raided on Tuesday, huge influence. According to Platts, its daily assessment of dated Brent, as the physical North Sea oil market is known, is the reference price for 60 per cent of crude traded worldwide. Dated Brent also underpins exchange-traded derivatives used by airlines to hedge prices and, along with taxes, Platts’ crude and product prices determine the price of petrol at the pump. The power of Platts has not gone unnoticed. Read more of this post

Vietnam must ditch state-sponsored crony capitalism

Last updated: May 15, 2013 8:03 pm

Vietnam must ditch state-sponsored crony capitalism

By David Pilling

For a country in its demographic sweetspot, the economy is not growing fast enough

The country has just emerged from a scandal that exposed virulent corruption at the heart of the Communist party. There is a pressing need to reform state-owned enterprises – behemoths of inefficiency, patronage and powerful vested interests. The internet is awash with stories about arbitrary land grabs, prisoners of conscience and the antics of the party’s privileged offspring. It sounds like China, but this is Vietnam, another one-party state where the economic and social aspirations of the people are bumping up noisily against a rigid and flawed political system. Read more of this post