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Chinese Women Aren’t Taking Buffett’s Advice on Gold; “It’s almost Mother’s Day. My mother bluntly told me to buy her gold.”

Chinese Women Aren’t Taking Buffett’s Advice on Gold

On Sunday afternoon, a microblogger in Beijing logged into Sina Weibo, China’s leading social media platform, to gossip about the “auntie” next door. It’s a broad term of respect for an older woman, and his followers understood precisely what he meant when he tweeted, “The auntie next door used all of her retirement savings to buy gold. When asked what she’d do if prices keep dropping, she replied that if everyone kept buying gold, the price wouldn’t drop…”

This might strike a conservative investor as reckless. But in China, where gold has long been a national obsession, a mid-April record crash in global gold prices has been seen as an unprecedented buying opportunity. According to reports in China, Chinese have purchased 300 tons of gold worth more than $16 billion since the crash. Read more of this post

SocGen: Nearly Every Company We Met ‘Admitted’ That Chinese Trade Is About More Than Moving Goods + Chart of the Day: China Exports to Taiwan

SocGen: Nearly Every Company We Met ‘Admitted’ That Chinese Trade Is About More Than Moving Goods

Sam Ro | May 8, 2013, 8:48 AM | 2,044 | 

The better-than-expected Chinese trade data has everyone crying foul. Nomura’s Zhiwei Zhang, Bank of America Merrill Lynch‘s Weijun Hu and Ting Lu, and Societe Generale’s Wei Yao have all pointed to discrepancies between China’s numbers and the numbers of its trading partners. Furthermore, all point to companies using inflated bills as a way to circumvent strict Chinese capital controls and move money in and out of the mainland. “In 1Q13, China’s export data were heavily distorted due to over-reporting by exporters who might bring in hot money through fake exports and arbitrage the differential between CNH/USD and CNY/USD by moving goods in and out of HK,” said BAML’s Hu and Lu. SocGen’s Yao is actually having a hard time finding people who aren’t engaged in this practice. “As for reasons, our observation from the trips to the mainland led us to believe that there is indeed a large amount of speculative capital flows,” wrote Yao in a note to clients. “Nearly all corporates we met admitted that they were conducting some forms of interest rate arbitrage on the expectation of further yuan appreciation.”

CHART OF THE DAY: It Doesn’t Take A Genius To See Something Fishy In China’s Trade Data

Sam Ro | May 8, 2013, 7:29 AM | 4,509 | 4

Earlier today, China published its official April trade figures. And while the numbers for both imports and exports were much stronger than expected, experts have been left scratching their heads over the unusual discrepancies. For one thing, exports surged 14.7% year-over-year even as exports to the U.S. fell by 0.7%. Exports to the EU fell by 6.4%. In a note to clients, Nomura’s Zhiwei Zhang attributed it to companies trying to get around strict Chinese capital controls. “We believe exports to destinations like Hong Kong, a major financial hub, are likely being over-invoiced in an attempt to circumvent capital controls and bring foreign capital into China,” said Zhang who pointed out that exports to Hong Kong surged by 57.2%. Societe Generale’s Wei Yao agrees with Zhang.  “As for reasons, our observation from the trips to the mainland led us to believe that there is indeed a large amount of speculative capital flows,” wrote Yao in a note to clients. “Nearly all corporates we met admitted that they were conducting some forms of interest rate arbitrage on the expectation of further yuan appreciation.” But Hong Kong wasn’t the only discrepancy. Yao noted a whopper in the Taiwan numbers. “Head-scratching discrepancies in bilateral data comparison persisted on both sides of the ledger,” she wrote. “Compared with the data from Taiwan – the only economy besides China that has published the complete set of April data – growth of mainland exports to Taiwan was 57.7 ppt faster based on China’s data (+49.2% yoy vs. -2.7% yoy) and that of mainland’s imports from Taiwan was 58.6ppt faster (+55.7% yoy vs. -2.9% yoy)! The gaps narrowed only marginally from March.” No wonder people question the reliability of the data.

Beijing Puzzles Over Urban Growth; Government Entertains Debate on How to Manage Population Gains as It Seeks Lift From Bigger Cities

Updated May 8, 2013, 7:55 p.m. ET

Beijing Puzzles Over Urban Growth

Government Entertains Debate on How to Manage Population Gains as It Seeks Lift From Bigger Cities

By BOB DAVIS

BEIJING—China’s new leaders are counting on urbanization to remake the economy but have tried to limit the flow to the country’s largest cities, fearing that a surge in migration could turn them into Latin American-style slums. Some urbanization specialists inside and outside China argue that the fear is largely misplaced. The problem with Beijing, Shanghai and other Chinese megacities, they say, is that they aren’t even more densely packed—or better planned. Adding more people to Beijing, for example—on top of the 18 million or so who already live here—would encourage better public transportation, boost land prices so high that factories would move away, and attract talented people with fresh ideas, according to these specialists. Imagine, say, Manhattan or Tokyo. “We have to let the market play a bigger role in the development of cities and dismantle barriers” to urban growth, said He Fan, a senior economist at the Chinese Academy of Social Sciences, the government’s most prestigious think tank. “People prefer to move to larger cities because there is more opportunity there.” Angel Gurría, secretary-general of the Organization for Economic Cooperation and Development, is another big-city booster. “When you see the situation in the large urban conglomerations, you say, ‘Let’s stop the growth,’ ” he said during an interview in Beijing. “But you probably don’t want to stop the growth [because] a well-organized, predictable process of urbanization allows for a much better allocation of resources.” Urban planners talk about “agglomeration” effects—the idea that cities gain by having people more tightly packed. That’s because travel by car becomes impractical and is replaced by public transportation. Also, old-line industries are forced to relocate because of rising prices, and lightly polluting service industries take their place. The influx of people brings an energy to a city that helps create new businesses and investment. Read more of this post

Yen’s Slide No Panacea For Japan Inc.

May 7, 2013, 10:59 p.m. ET

Yen’s Slide No Panacea For Japan Inc.

By AARON BACK

Japanese Prime Minister Shinzo Abe has weakened the yen and sent stocks soaring. Boosting long-term earnings growth for Japanese companies will be more difficult. Increasing domestic consumption is an important objective of Mr. Abe’s plan. But much depends on the impact of a weaker yen on Japan’s export-focused businesses. In the current fiscal year, companies on the main Tokyo stock exchange could see profits jump 30% to 40% year-over-year if the yen averages between 100 and 115 to the dollar, saysCitigroup C +2.45% . The yen’s slide has two main effects on corporate earnings. First, revenue earned overseas is immediately worth more in yen terms. Nomura’s survey of large Japanese nonfinancial companies that have reported earnings for the three months ended March 31 shows profits up 7.7% on the previous year. That is down from a 33.2% jump in the previous quarter, though some major companies haven’t reported yet. The second benefit is that Japanese companies should become more competitive as the cheaper yen means foreigners pay less for the country’s exports. While this should boost sales volumes, not all exporters will be able to take advantage.

Take Canon 7751.TO -0.29% . Revenue from its imaging business fell 1.8% year-over-year in the three months to March 31. The fall would have been 14% but for the effect of the weakening yen. But Canon faces fundamental problems that can’t be fixed by currency movements. The company’s core digital-camera business is in decline because amateur photographers can now snap photos with increasingly high-resolution smartphones. In addition, because Canon mainly competes with other Japanese camera makers like Nikon 7731.TO -0.14% and Olympus, 7733.TO -1.10%its rivals will also benefit from the yen’s slide. Read more of this post

Mao Zedong’s granddaughter and her husband appear on the latest rich list as survey suggests that who, not what, you know is still important

Mao Zedong granddaughter on rich list, prompting debate

Thursday, 09 May, 2013, 12:00am

Cary Huang in Beijing cary.huang@scmp.com

Mao Zedong’s granddaughter and her husband appear on the latest rich list as survey suggests that who, not what, you know is still important

The addition of the granddaughter of Mao Zedong to a list of the richest Chinese – along with a survey suggesting that graduates from well-connected families tend to find better jobs – has triggered fresh debate about political connections and personal wealth.

With family assets estimated at 5 billion yuan (HK$6.25 billion), Kong Dongmei , granddaughter of the late leader, and husband Chen Dongsheng are 242nd on the 2013 New Fortune 500 Rich List [1], media reports said yesterday. Read more of this post

HK vs Beijing: A Battle to Become Art Capital of China

May 8, 2013

A Battle to Become Art Capital of China

By KEVIN HOLDEN PLATT

BEIJING — The sometimes-tense relationship between Hong Kong and Beijing appears set to move to another front: the world of art.

With the National Art Museum of China — or Namoc — planning to open in a new building in 2017, and Hong Kong projected to open its M+ museum in a new cultural district about the same time, the cities could emerge as twin titans of contemporary Chinese culture.

Namoc attracted some of the world’s leading architects, including Zaha Hadid, Frank Gehry and Jean Nouvel, to its design contest for the new museum in Olympic park in Beijing. Xie Xiaofan, a deputy director at Namoc, informally announced at theE.U.-China High Level Cultural Forum in November that Mr. Nouvel’s design had been selected, although the decision is subject to the approval of China’s new leadership. Read more of this post

Brazil has plenty of entrepreneurs but many lack ambition when it comes to expanding companies

May 8, 2013 7:27 pm

A spirit for enterprise

By Joe Leahy

When Linda Rottenberg moved to Latin America in the 1990s, she was surprised to find there was no word for “entrepreneur” in the local Spanish or Portuguese. Ms Rottenberg, president of Endeavor, a global non-governmental organisation that supports entrepreneurship, says every university student she met wanted to work for the government. Over the years, however, with the opening of the region’s economies and the rise of its stock markets, that attitude has changed so much that a Portuguese word for entrepreneur has emerged: empreendedor. “One of my favourite days was when the editor of a Portuguese dictionary told me he was adding the word for ‘entrepreneur’,” Ms Rottenberg said recently, before the Global Entrepreneurship Conference, a summit for service providers in the field, which was held in Rio de Janeiro.

Few people, particularly the participants milling around the conference, would question the existence of a Brazilian entrepreneurial spirit. On the global stage, there is Brazil’s most prominent entrepreneur, Jorge Paulo Lemann, who is teaming up with Warren Buffett to buy Heinz. Or Embraer, the world’s third-largest commercial aircraft maker, which continues to practise “intrapreneurship” by taking risks on new products and investing in fresh business lines. At home, there are businessmen such as Andre Esteves, who is building BTG Pactual, the country’s biggest independent investment bank, or Peixe Urbano, the collective buying platform that is Brazil’s version of Groupon. The idea of the entrepreneur has become such a celebrated part of Brazilian culture that one of the main characters in Avenida Brasil, a popular soap opera, was an entrepreneur selling hair products developed in her shop in a favela.

But in a country dominated by huge companies, some state run and most recipients of state credit, how much is this idea of the great Brazilian entrepreneur myth or reality? Rather than patting itself on the back, should Brazil, facing increasing doubts over its international competitiveness, be doing much more to foster entrepreneurship? “You need more Embraers, you need more Brazilian companies participating in higher value-added production chains,” says Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Centre for Scholars in Washington. Read more of this post