Bamboo Innovator

Apple pursuit lures 20,000 students into high-interest loans with annual interest rates of up to 47%

Apple pursuit lures 20,000 students into high-interest loans

By Xinhua in Wuhan (China Daily), 2013-03-22

More than 20,000 college students have taken high-interest loans to buy fancy electronic products, mostly Apple devices, in Wuhan, the capital of Hubei province.

From the start of January 2012 to the end of February 2013, the students applied for loans with a total value of 160 million yuan ($25.7 million) from Home Credit China (HC China), a subsidiary of international investment business PPF Group.

“We have lost touch with about 100 of them, getting no response to calls or letters reminding them about delayed payments,” said Liu Mingwei, Wuhan regional manager of HC China.

With around 1 million students in Wuhan, it means about one in 50 of them is shouldering HC China’s heavy annual interest rates of up to 47.12 percent on a 12-month-term loan. Read more of this post

Chinese officials earned almost US$5 trillion (30 trillion yuan) reselling land, says economist

Chinese officials earned 30 trillion yuan reselling land, says economist

Monday, 25 March, 2013, 2:49pm

News›China

Agence France-Presse in Beijing

Chinese authorities have earned almost US$5 trillion (HK$38.8 trillion) in profit by selling land obtained from farmers to developers over the years, a top economist said according to state media.

As the country undergoes a huge urbanisation process rural land confiscations have led to numerous protests, worrying the ruling Communist Party, which sees corruption and social unrest as threats to its power.

By law, officials may provide compensation worth up to 30 times the value of the land’s output, but in practice they have skimped on payments or foregone them altogether – then sold the land to developers at much higher rates. Read more of this post

Exclusive: ‘Princeling’ firm holds secret stake in giant fund house Cinda, including a private equity fund co-founded by the grandson of China’s former state head Jiang Zemin

Exclusive: ‘Princeling’ firm holds secret stake in giant fund house Cinda

Tuesday, 26 March, 2013, 12:00am

Business›Companies

George Chen george.chen@scmp.com

As jostling starts over the stock market float of Cinda Asset Management, details have come to light of two previously unknown stakeholders

With the giant state-owned fund house Cinda Asset Management planning to go public in Hong Kong this year, two behind-the-scenes investors in the company, including a private equity fund co-founded by the grandson of China’s former state head Jiang Zemin, have been pushed into the spotlight. Read more of this post

Analysis: Sitting on too much money, Norway risks going off course

Analysis: Sitting on too much money, Norway risks going off course

Sun, Mar 24 2013

By Balazs Koranyi and Victoria Klesty

OSLO (Reuters) – Middle East-style oil wealth combined with a generous Nordic welfare model is slowly throttling big chunks of Norway’s economy, threatening western Europe’s biggest success story.

On the surface, Norway is the envy of the world: growth is strong, per capita GDP has exceeded $100,000 and the nation sits on a $700 billion rainy day cash reserve, or $140,000 per man, woman and child.

But it may just be too much money as Norwegians, more keen on leisure and family life are working less and less.

Immigration is not filling the gap in the skilled part of the workforce, so productivity is stagnating, wages are surging and firms are pricing themselves out of their own market.

“Oil is a metaphor for winning the lottery,” said Ivar Froeness, a sociology professor at the University of Oslo. “Affluence has slowly crept into society… people just don’t really notice it because it’s been so gradual.”

“These days more people leave Oslo on Thursday afternoon than on Friday, taking long weekends,” he said. “We may take for granted that we have a house and a cabin in the mountain, and maybe another house on the beach.” Read more of this post

Saving Cyprus Means Nobody Safe as Europe Breaks More Taboos

Saving Cyprus Means Nobody Safe as Europe Breaks More Taboos

By Simon Kennedy – Mar 25, 2013

The devil lies in the detail of Cyprus’s salvation.

The island nation’s rescue sets precedents for the euro zone that may stick in the memory of depositors and bondholders alike as investors debate who will next fall victim to the debt crisis. Under the terms of the agreement struck early this morning in Brussels, senior Cypriot bank bond holders will take losses and uninsured depositors will be largely wiped out.

The message that stakeholders of all stripes can be coerced into helping a cash-strapped nation may make investors more skittish they’ll be targeted should Slovenia, Italy, Spain or even Greece again be next in line to need help. The risk is that bank runs and bond market selloffs become more likely the moment a country applies for a new rescue, said economists and academics from Nicosia to New York.

“We now have a new type of rule and everyone within the euro zone has to sit down and see what that implies for their own finances,” Nobel laureate Christopher Pissarides, an adviser to the Cypriot government, told “The Pulse” on Bloomberg Television. Read more of this post

IT’S OFFICIAL: Banks In Europe May Now Seize Deposits To Cover Their Gambling Losses; CITI: Cyprus Set A Bad Precedent, And Is Long-Term Negative For The Euro

IT’S OFFICIAL: Banks In Europe May Now Seize Deposits To Cover Their Gambling Losses

Henry Blodget | Mar. 25, 2013, 4:38 AM | 1,761 | 12

As expected, Cyprus and the EU reached a new late-night bailout deal last night that will reduce the chance that Cyprus’s financial system and economy will completely implode. The new deal is better than the last deal in one key respect: Deposits under 100,000 euros will be protected. That’s very important. Those deposits were ostensibly “insured.” To seize them, the way the last bailout deal would have, would have been grossly unfair and would have set a truly alarming precedent. Now, small depositors in European banks can breathe more easily. At least in this case of gross malpractice on the part of reckless bank managers, their life savings have been preserved. Alas, the good news ends there.

Although deposits under 100,000 euros will be spared, deposits over 100,000 euros will be seized and subjected to an as-yet undetermined haircut–with the confiscated money going to bail out the gambling losses of the aforementioned reckless idiots who run some of Cyprus’s banks. This seizure, needless to say, will dampen the enthusiasm of rich depositors for keeping money in banks that get themselves into financial trouble. And because many, many banks in Europe have gotten themselves into financial trouble, this will create a general state of unease among rich depositors throughout the Eurozone. And it should wig out some bank lenders, as well. After all, never before in the history of this global financial crisis has a major banking system allowed depositors to lose money, no matter how reckless and stupid and greedy their bank managers have been. And only rarely have bank lenders–those who hold bank bonds–been asked to pony up. In this case, however, the depositors will lose money. Perhaps a lot of money. And if there had been big bank debtholders in Cyprus, they probably would have been socked with losses, too.

It’s possible that everyone will just laugh off Cyprus, viewing it as an exceptional one-off. After all, the Cyprus banking system was notorious for being the offshore money-laundering arm of many Russian oligarchs, so many folks will likely view this asset seizure as a case of “just desserts.”  But this optimistic view of the Cyprus horrorshow overlooks one key fact: The main reason that Cyprus depositors will lose their cash is because it has become politically difficult (impossible?) for leaders in Germany and other rich European countries to bail out their brethren in the “periphery” without taking many pounds of flesh. And it is that precedent, in addition to the fate of big depositors in Cyprus, that should spook Europe’s big bank depositors and lenders. If Germany is done bailing out countries and banks without having those countries and banks cover some of the cost, it’s not clear why Germany will relent next time Spain, Italy, Greece, and other countries in near-desperately bad financial shape come rushing to the EU with their hands out. Read more of this post

One lump or two? Indonesian “sugar samurai” serve foreigners sparingly

Published: Monday March 25, 2013 MYT 11:19:00 AM

One lump or two? Indonesian “sugar samurai” serve foreigners sparingly

JAKARTA: White sugar prices hit a record in Indonesia last summer and further spikes are expected this year even though the world is awash with the sweetener. The main cause, say critics, is a small group of traders known in the industry as sugar samurai.

There is no evidence the samurai are doing anything illegal but they buy most of the crop through an auction system that works in their favor, say the critics, who include industry officials, government advisers and other traders. Some of the purported samurai firms deny the auctions are unfair.

The system, which some samurai helped establish, gives them the right to buy sugar at the expense of other traders under certain conditions. The samurai also run most distribution and retail networks, giving them almost total control over the market and the retail price of sugar, the critics add.

That has made it virtually impossible for foreign commodity firms or other local players to enter one of Southeast Asia’s largest white sugar markets, said Indonesia’s commission for the supervision of business competition, an independent body that looks into unfair and monopolistic business practices. Read more of this post

Mango Mirroring Zara Challenges Europe’s Wealthiest Man; Mango’s revenue hit 1.41 billion euros in 2011; Isak Andic is the founder, chairman, and owner of almost 100 percent of Mango

Mango Mirroring Zara Challenges Europe’s Wealthiest Man

Two years ago, Spanish retailer Mango could barely convince its employees to wear its dresses, skirts, and blouses, which many workers — and customers — thought were too formal.

Today, Mango has ditched the glitz in favor of more casual attire like that from Spanish rival Inditex SA (ITX), the world’s biggest seller of apparel and owner of the Zara brand. The change has helped Mango outpace Inditex in Spain’s 16.2 billion- euro ($21 billion) clothing market.

“We had gone way too far with our focus on clothes for parties and events,” said Enric Casi, general manager of the Barcelona-based retailer. “Not even our employees wore Mango.”

The casual push wasn’t the only lesson Mango took from Arteixo, Spain-based Inditex as it sought to address a decline in profit of almost 60 percent in the two years through 2011. That year, Isak Andic, the founder, chairman, and owner of almost 100 percent of the company, stepped back into a stronger day-to-day management role to help reformulate strategy.

Since then, Mango says, the chain has cut prices by about 20 percent across the board, bringing them closer to Zara’s. And the company has stepped up expansion outside of crisis-weary Spain and placed more emphasis on the fast-fashion model that has helped Inditex prosper. Read more of this post

China’s swap market is signaling interest-rate increases for the first time since 2011 after inflation accelerated to a 10-month high and the housing market defied government cooling efforts.

Zhou on High Alert Prompts Swaps PBOC Rise Signal

China’s swap market is signaling interest-rate increases for the first time since 2011 after inflation accelerated to a 10-month high and the housing market defied government cooling efforts.

Two-year contracts that exchange the People’s Bank of China’s 3 percent savings benchmark for a fixed payment rose eight basis points this month to 3.03 percent, data compiled by Bloomberg show. The swap had been lower than the one-year PBOC deposit rate for 16 months. Of the 27 economists surveyed this month by Bloomberg, 13 predicted higher rates in 2013, with Credit Agricole CIB, Daiwa Capital Markets and Nomura Holdings Inc. forecasting two increases.

PBOC Governor Zhou Xiaochuan said on March 13 the government should be on “high alert” after consumer prices jumped a more-than-forecast 3.2 percent in February. Data last week showed new home prices last month posted the broadest advance since December 2011. China’s 10-year bond yield is 38 basis points higher than inflation, compared with a similar U.S. real yield of minus 8 basis points.

“The rising inflation trend and upward pressure on home prices will continue, forcing the central bank to tighten,” said Dariusz Kowalczyk, senior economist and strategist with Credit Agricole in Hong Kong. “Main lending rates will be hiked to reduce inflation expectations.”

Inflation will probably quicken to 4 percent in the second half, a level that will “really concern” the central bank, said Kowalczyk, who accurately predicted the February consumer- price gain. He forecasts two deposit rate increases after June to 3.5 percent to protect returns on savings. Read more of this post

Free Tires for Malaysian Cabs Expose Budget Risk Before Vote; “It’s not in a proper way, it’s like rasuah,” Ramachandran said, using the Malay word for bribery. “I want to change the government and see what happens for the next five years.”

Free Tires for Malaysian Cabs Expose Budget Risk as Vote Looms

Malaysians like cab driver Ramakrishnan Ramachandran are getting used to handouts from the government as the next election looms. The budget deficit is set to show the strain regardless of who wins the vote.

From rebates for smartphones to household subsidies for electricity and higher wages for civil servants, Prime Minister Najib Razak has gone on a spending binge to woo voters ahead of polls that must be held by late June. In 2012, he announced a 35 million ringgit ($11 million) voucher program to help taxi drivers pay for new tires.

“The government simply throws the money,” Ramachandran, 54, said as he waited for passengers outside a Kuala Lumpur shopping mall, adding that the 520 ringgit he received for the wheels won’t deter him from voting for the opposition for the first time. “Whatever the government gives, I take.”

The opposition, attempting to break the ruling coalition’s hold of more than five decades on power, is also prepared to be generous as it promises free university education, lower fuel prices and the elimination of toll fees. Any fiscal deterioration from persistent largesse could raise the risk of capital outflows should the U.S. shift to tightening monetary policy, triggering a reversal in the flood of cash into emerging markets in recent years.

“No one will be overly alarmed by whether Malaysia can pay for its spending now but its fiscal trajectory is not a pretty thing,” said Vishnu Varathan, a Singapore-based Mizuho Corporate Bank Ltd. economist who has covered Malaysia for seven years. “Should investors start pulling money out of emerging markets, Malaysia is not at the top of the hit list but the sustainability of the fiscal situation is a concern for longer- term investors.” Read more of this post