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Archive for the ‘China’ Category

Ishandar investors screwed again: by PRCs this time

In China, Malaysia, Property on 01/10/2014 at 4:15 am

Bad news travels in pairs.

Last week, Reuters reported

Amid growing anxiety over a glut of high-rise residences in Malaysia’s Iskandar, a mega waterfront township project there appears to have hit a snag.

The Business Times understands that CapitaLand, South-east Asia’s largest real estate developer, recently sought a six-month extension on the launch of its 900-unit high rise condominium, which is the first phase of a S$3.2 billion ($2.52 billion) Danga Bay project, which spans some 28 hectares on a man-made island.

It seems that it had some problems with Johor state authorities. If  TLC can have such problems, what about yr ordinary, not connected S’porean property buyer?

Then BT on 30 September carried a story reported that thanks to PRC developers and buyers, S’poreans buying to rent in Iskandar are screwed.

A looming housing glut in Iskandar Malaysia may weigh down rental yields in the economic zone, with homes being left empty.

The warning this time came from Malaysia’s national organisation of developers, the Real Estate & Housing Developers Association (Rehda).

FD Iskandar, president of Rehda, noted that some 30,000 homes could be completed by 2016 or early 2017 in Iskandar.

If these are mainly sold to buyers outside Malaysia and Singapore, “then you will see that these units will be empty and once they are put up for rent and there are so many units available, that will put pressures on rental yields”, he said.

Malaysia’s federal government is “actually looking seriously” at this issue … But land administration in Malaysia lies within the authority of the state government.

In the past 12 to 18 months, the deluge of homes launched or in the pipeline by China developers, including Country Gardens and Guangzhou R&F Properties, has stoked concerns over a looming housing glut in the Iskandar region, which encompasses an area of more than 2,000 square kilometres in Johor.

“… developers from China launching a few thousand units at one go,” Mr Iskandar said, adding that Malaysian or Singaporean developers would typically have 400-600 units in one project.

Most of the buyers of these Chinese projects come from mainland China, he observed. “…concerns about these residential units being empty.”

 

 

Uniquely PRC, paving the streets with gold & voluntary compulsion

In China on 28/09/2014 at 5:33 am

NUS has set up China Business Centre to among other things deepen the understanding of China’s business environment.

I hope that lacing noodles with opium to attract repeat customers will be on the curriculum. This is after all a variation of what the Brits did in China in the 19th century, selling opium to the Chinese. Out of that trade grew Jardine Matheson, Swire, HSBC and StandChart.

Or this: The walk at the indoor precinct in Yichang, in Hubei province, consists of 606 shiny yellow bricks, worth $32m (£20m) in total, the Chinanews.com website reports. The bricks weigh 1kg (2.2lb) each, and are covered with a glass pane. The lavish attraction was created to celebrate the shopping centre’s 18th anniversary – and to attract customers during the upcoming “Golden Week” national holiday, after which it’ll be dismantled. Shoppers have been eager to use the walkway, as it’s apparently believed in China that walking on gold brings luck, according to the Shanghaiist blog.

Or thisBaoji city in China is on a blood donation drive, and has caused a stir in social media by saying people should give blood if they want to go to college, learn to drive or even marry.

Background info on NUS’ China Business Centre:

The China Business Centre launched on Wednesday (Sep 24). The centre is helmed by the National University of Singapore’s Business School and is the first China business-centric outfit set up by a local university. 

It will serve as a resource and research platform to deepen the understanding of China’s business environment. The centre will also advance research in management challenges in China, as well as develop leaders with a China-focused business education.

Some of the centre’s upcoming projects include training programmes for business leaders and studies on management challenges and issues faced by businesses in China.

The centre will also organise research symposiums and workshops to promote understanding of China’s business landscape. It is expected to bring industry leaders from Singapore and China together for deeper dialogue. (CNA earlier this week)

 

Shumething gd (finally) from SGX for retail investors/ SGX thinks Chinese leopards can change spots

In China on 24/09/2014 at 6:47 am

(Or “Why hate Foreign Trashes to pieces”)

StockFacts allows investors to screen for stocks based on 20 different criteria, including market capitalisation and revenue. The product will also incorporate information from S&P Capital IQ like analysts’ consensus estimates and recommendations.

“Before StockFacts was launched, investors who wanted to do research on SGX-listed companies had to use various different sources of varying credibility to access the information,” said SGX head of retail investors Lynn Gaspar to BT on Monday. “This was a gap that we identified through retail investor feedback.”

Why took so long Foreign Trashies? CEO and COO are FTs but people pushing for StockFacts are locals. Taz why

So, SGX is now hoping S-Chips will start coming here. and that Sinkies will forget that they were fleeced in the past? To remind

In the case of FerroChina, which had a market value of more than S$2 billion in 2007, shareholders lost their entire investment when the steelmaker was forced to delist in March 2010. Other stocks that have been suspended include Sino Techfibre, which said a fire destroyed its financial records after reporting accounting flaws, and China Sun Bio-Chem Technology Group Co., which said a truck transporting its accounting records was stolen.

http://www.bloomberg.com/news/2014-09-21/singapore-exchange-sees-end-to-two-year-hiatus-for-china-ipos.html

Here’s more fleecing (in Germany)

The chief executive of Chinese footwear firm Ultrasonic, who was reported missing last week along with most of the firm’s cash, has spoken to Chinese media and denied wrongdoing.

Last week, Ultrasonic said it had dismissed him from his post.

The firm said he and his son, who is chief operating officer, had vanished.

The firm, which is listed in Germany, said that both the men, Qingyong Wu and Minghong Wu, had “apparently left their homes and are not traceable”.

Earlier this year, another Germany-listed Chinese manufacturer, Youbisheng Green Paper, said its chief executive had gone missing without explanation. It later initiated insolvency proceedings.

http://www.bbc.com/news/business-29306957

Giants that will slay Jack (Ma)?

In Banks, China, Internet on 23/09/2014 at 4:25 am

Jack Ma, Alibaba’s founder, is a hero. He slew eBay in China. Now he is going up against new giants by shaking up China’s state-dominated finance industry. His business, the Zhejiang Ant Small and Micro Financial Services Group, processes payments, sells insurance and runs one of the world’s largest money market funds, placing it in competition with banks controlled by the Chinese government. It is a precarious position.

http://blogs.wsj.com/chinarealtime/2014/03/26/chinas-largest-bank-declares-war-on-alibaba/

PM talks cock about “private” sector

In China, Temasek on 14/09/2014 at 6:57 am

The private sector-led, Government backed Guangzhou Knowledge City (GKC)* is a good model for future Singapore-China projects, said Prime Minister Lee Hsien Loong on Friday (Sep 12).

… Mr Lee said he was happy with the progress, six years after he first discussed the project with provincial leaders … the private sector-led GKC is a different model that Singapore is “trying out” after the Suzhou Industrial Park and Tianjin Eco-city, both government-to-government projects. (CNA on Friday)

Funnily the private sector leadership is provided by Temasek-owned company Singbridge who is in a j/v and the southern Chinese city of Guangzhou.  Singbridge is 100% owned by Temasek, 100% owned by the Minister for Finance. Not even the fig-leaf of a SGX-listed TLC like Keppel or SIA.

And PM went to Catholic High and NJC? But then Yaacon was from RI (see tom)

—-

*”The hurdle for government-to-government projects like Suzhou and Tianjin will be higher in future, so I think this (GKC) is a good model that we should explore going forward,”

“But there has to be a balance between private sector leadership and government support, and there has to be market demand for what’s being offered by the project” …

Located 35 kilometres from Guangzhou city centre, work is underway to turn the Guangzhou Knowledge City, currently a 123 square-kilometre site into a future magnet for industries like pharmaceuticals and info-comm technology, part of local authorities push for so-called high end industry.

 

Tourism potential of Indon, Vietnam & Burma

In China, Hong Kong, Indonesia, Japan, Malaysia, Vietnam on 24/08/2014 at 4:58 am

Number of foreign visitors received in 2013

  • Thailand – 26.5 million
  • Malaysia – 25.7 million
  • Hong Kong – 25.6 million
  • South Korea – 12.1 million
  • Japan – 10.3 million
  • Indonesia – 8.8 million
  • Vietnam – 7.5 million
  • Myanmar – 2 million

I’m surprised that Indonesia has only 8.8m visitors given the popularity of Bali.

Still Mynamar is the place to invest in the tourism biz. Opportunities there from recent BBC article.

S’poreans: 11th in lying on hols experience

In China, Hong Kong, Humour on 16/08/2014 at 4:34 am

Chinese are number 1. lie to friends and family about the marvellous time they had,The survey didn’t give a reason for why the Chinese exaggerate the most about their holidays, but the status of being able to afford to go abroad, ensuring you keep one step ahead of the Wangses, may be a factor. Another explanation could be that the Chinese tourist is a relatively recent phenomenon who could learn a thing or two about complaining from travel-hardened European and American holiday-makers  Economist

Both reasons are likely to apply to the sheep Singaporeans too.

In Asean, Thais are ahead of us. Interestingly, Hongkies, who many locals think are BS artists don’t exaggerate that much. But then they have a reputation for being gd at complaining.

 

Qn for Swee Say: How cheap you want us to be?

In China, India, Indonesia, Vietnam on 14/08/2014 at 4:36 am

manufacturing wages

When I saw the above table, I tot of the Deaf Frog’s “Cheaper, Better, Faster”. There is always somewhere cheaper as above from FT article shows. And MNCs will move there: now moving from Jakarta and Vietnam to central Java. (Btw, $ + US$)

“Cheaper, Better, Faster’

The apologist version of what he meant by a website funded by a organisation headed by one Philip Yeo after being approached by one BG Yeo (taz the rumour). With credentials like these how not to believe meh?

In 2007, Lim coined the phrase to exhort Singaporean companies to increase their competitiveness.

Companies have to be cheaper and better than their competitors internationally, because those who used to be cheap (China) are now getting better, and those that used to be good (United States) are now getting cheaper as well. Hence, Singaporean companies have to be cheaper and better than them, and yet turnaround faster.

He obviously didn’t do an MBA: it’s accepted wisdom that one cannot have all three, only two. Attempts to have all three results in failure. This should cheer on TRE posters: Swee Say is urging a policy doomed to failure.

 

Problems at Temasek’s StanChart & DBS/ OCBC ovepaid for HK bank?

In Banks, China, Emerging markets, Hong Kong, Temasek on 30/06/2014 at 4:50 am

Standard Chartered has said first-half operating profits will be 20% lower than a year earlier, blaming a slump in income from its financial markets business.

The warning comes only three months after the Asia-focused lender reported its first fall in annual profits for a decade.

The UK bank had been expected to show a modest bounce-back this year.

But it said tougher regulations and low market volatility had hurt revenues.

Standard Chartered said its interest rate and foreign exchange trading had been particularly hit.

Chirantan Barua, an analyst at Bernsteinm said: “Cyclical headwinds are yet to arrive in full force in the bank’s two key markets – Hong Kong and Singapore. Not that Korea or India is out of the woods either.

“Pack that in with a challenging and uncertain capital regime that won’t be resolved until the end of the year and you have a great deal of uncertainty around the stock.”

http://www.bbc.com/news/business-28031504

StanChart shows the peril of investing in a stock listed overseas overseas that operates internationally. When profits were gd, sterling was weak against all major currencies. When sterling is strong, profits no gd. Note the value of sterling is irrelevant to the underlying profits or losses of  most of bank’s international operations.

——

ON AN afternoon in early summer a prospective customer walked into the gleaming new branch established in Shanghai’s free-trade zone by DBS, a Singaporean bank that, like many of its international rivals, has long touted China’s great promise for its business. The lobby was empty, save for a guard playing a video game. A log showed that the branch was attracting just two or three visitors a day. DBS remains optimistic about China and says that most of its free-trade-zone transactions are routed through other locations. But the torpid atmosphere at the branch points to foreign banks’ struggle to crack open the Chinese market.

—–

To be fair to DBS its New Citizen CEO is not like the FT CEO of OCBC who may have blundered.

OCBC is offering to buy Wing Hang Bank’s shares for 125 Hong Kong dollars (US$16.12) each, in a big bet on China’s sustained economic growth. OCBC hopes the deal will springboard its growth into mainland China through the Hong Kong bank’s cross-border operations, and give it a foothold in Macau.

OCBC and Wing Hang Bank, one of Hong Kong’s last remaining family-owned lenders, began discussions on a possible deal late last year, and in January entered exclusive talks (after ANZ and UOB balked at the family’s asking price), which were extended twice as they argued over price.

The most recent comparable transaction (and bargaining benchmark for the family), the 2013 sale of Chong Hing Bank, went for 2.35 times book value including the value of a special dividend related to Chong Hing’s real estate. Accounting for the increase Wing Hang ascribes to the value of its property, the OCBC offer is closer to 2 times book value, a discount, compared to the Chong Hing deal, considering Wing Hang’s return on equity averaged 11.3% for the past three years, versus 7.8% for Chong Hing, according to Capital IQ.

Still OCBC shareholders were not that happy and its share price suffered.

What is unknown is the value of Wing Hang’s Hong Kong real estate, on some of the busiest shopping streets in the world. These could be worth even more than the bank says. A government index of Hong Kong retail properties has risen 400% over the past decade. Yet the company’s revaluation over the acquisition cost of the property is less than 100%.

If enough of Wing Hang’s minority shareholders refuse the price on offer, however, OCBC might prefer to raise it or offer* or bear the cost of maintaining the Wing Hang listing, and the cost of failing to fully integrate the bank.

Update at 6’00am: Here’s someone who thinks OCBC got sold a dog.

Wing Hang gives it greater opportunity to finance trade between China and other parts of Asia such as Malaysia and Indonesia, where it already has a foothold. Wing Hang’s strong funding base – loans were just 73 percent of deposits at the end of last year – is another advantage, as is its ability to capitalise on the yuan’s growing international popularity. About 17 percent of Wing Hang’s deposits are currently in the Chinese currency.

Nevertheless, the purchase brings risks to OCBC investors. China’s economic slowdown is creating credit wobbles, while Hong Kong’s property boom is bound to have led to some lending excesses. Meanwhile, rising interest rates in the United States could reverse the cheap deposits that have flowed into both Hong Kong and Singapore in recent years. Shareholders, who will probably be asked to help finance the purchase, may pay a high short-term price for OCBC’s long-term China ambition.

 http://blogs.reuters.com/breakingviews/2014/04/01/ocbcs-chinese-ambition-comes-with-hefty-price-tag/

 ————

*OCBC has said the bid, a 50% premium to the then stock price, is generous.

Why Japs smarter than Singkies

In China, India, Japan, Vietnam on 21/06/2014 at 5:18 am

http://im.ft-static.com/content/images/c272b0ac-d4f9-11e3-adec-00144feabdc0.img.

By 2050, elderly (65 and over) almost 40% of population

Next to Japan only. But no robots here, only FTs.

Japs smarter than us in avoiding the problems that FTs bring, like pushy Pinoys, wanting to change PM from Prime Minister to Pinoy Minister and SPF to S’pore Pinoy Force. But then they have friends like William wan, Kirsten Han, AWARE and Maruah. Their only public opposition is Gilbert Goh and Goh Meng Seng.

The govt should remember that when the Pinoys burnt our flag in the 1990s and it protested, the Pinoy govt gave the S’pore govt the finger, telling it nothing wrong with burning our flag.

 

Invest with the Hong Leong gp in contrarian play

In China, Property on 27/05/2014 at 4:49 am

First Sponsor Group Ltd, a real estate group whose controlling shareholders are Hong Leong Group S’pore and Tai Tak Group S’pore, is looking to raise up to $102.1 million, through an IPO and a sale of shares to cornerstone investors.

First Sponsor, whose focus is on residential and commercial properties in tier-two China cities, said it plans to make a share offer of 54.05 million shares at between $1.50 and $1.60 per share. This includes 49.05 million placement shares for institutional investors and high net worth investors, and a public offer of five million shares.

The data from China on property is gloomy. Example:http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=2014_05_20_08_46_baf327d0669d4ae5bc33702b274e2271_PRIMARY.jpg

So the Hong Leong group offering investors to join it in investing in China property is intriguing. The group is a shrewd property investor and so may know something that the ang mohs don’t know. Hitch a ride with First Sponsor and find out?

Noble: Time to cheong?

In China, Commodities on 08/04/2014 at 4:25 am

Well depends on whether COFCO will run the joint venture as a commercial entity.

The structure allows Noble to reduce its exposure to an underperforming business while sharing in any recovery. The prospect of a deal had already fuelled a 25 percent rally in Noble’s shares in the past month, lifting its market value to around $6.5 billion. The proceeds could be reinvested in Noble’s better-performing energy and resources businesses. And because Noble will no longer have to include the venture’s $2.5 billion of net debt on its balance sheet, its headline borrowings will roughly halve, according to Eikon.

For Noble investors, the lingering worry is whether or not COFCO, which is already China’s main wheat importer, will run the joint venture as a commercial entity. The involvement of China-focused private-equity group HOPU in the Noble deal offers some comfort. So does China Investment Corporation’s 14 percent stake in Noble, which it has owned since 2009. If China does decide to squeeze Noble, it shouldn’t do so too hard.

http://blogs.reuters.com/breakingviews/2014/04/02/noble-china-joint-venture-still-faces-market-test/

At a recent conference, Yusuf Alireza, the chief executive of Noble, talked business models: “None of us should be arrogant to assume one model is right and one model is wrong . . . from a Noble perspective, our core competence is in the middle part of the supply chain . . . We are not miners, we are not farmers, we are not a bank.”

Why PAP should be afraid but not not too afraid

In China, Humour, Internet, Malaysia, Political governance, Vietnam on 10/03/2014 at 4:49 am

Paper warriors can cause serious problems for paper generals. Take heart Richard Wan, SgDaily, Terry Xu etc. And NSP should put more effort and time on online activities, rather than pounding the streets and climbing stairs, even though P Ravi of NSP gets great workouts: but Ravi, skip the teh tariks at the end. And the Chiams start an online presence.

Online activism can be an accurate indicator of where revolutions might take place next, according to University of Manchester research.

Argentina, Georgia, the Philippines and Brazil are claimed to be most at risk of upheaval, according to this measure.

The Revolution 2.0 Index* was developed last year and identified Ukraine as the most likely to see political upheaval.

This index sees revolution being forecast by computer experts rather than political analysts … It provides a different view of how regimes are put at risk by protest movements, looking at online factors rather than street demonstrations.

The index produces a risk factor based on the level of repression and the ability of people to organise protests online.

(http://www.bbc.com/news/education-26448710)

But Yaacob, MDA, and the ISD can still relax a little: The highest risk comes in countries where there are protests against perceived injustices – but where there is relative freedom online.

Err we knowthat S’poreans don’t like to sweat at Hong Lim: ask Gilbert Goh. (Alternative reason: http://atans1.wordpress.com/2013/10/11/gg-crashes-new-indian-chief-needed/)

So get the people out in their tens of thousands to Hong Lim Green and keep up the online volume, then sure can effect regime change. But fortunately for the PAP, only the LGBTs can get out the crowd. Aand then only once in a pink moon.

Still if PM and the ministers want to make sure they get to keep their mega-salaries then they should start sending study teams to  Ethiopia, Iran, Cuba and China: At the lowest end of this 39-country index are countries such as Iran, Cuba and China because there is a lower level of risk of revolution in repressive countries with tight controls over the internet.

Actually, it juz might be easier to ban Facebook and other forms of social media on the grounds that users waste time on them during office hours (all those cat photos that a certain social activist posts during office hours). Users are subversives, undermining the govt’s productivity drive, the aim of which is to make S’poreans richer slaves.

Talking about the Ukraine, professor Richard Heeks from Manchester University, the creator the index, says: “But social media has been the core tool used to organise protests and maintain them by letting protesters know where they can get nearby food, shelter, medical attention, and so on.

“It has spread word about violence and has garnered support and assistance from overseas.”

BTW, S’pore, Cambodia and Laos are not on the index but the rest of Asean is

The Philippines (4th)

M’sia (14th)

Indonesia (26th)

Vietnam (29th)

Thailand (33rd: err data was up to 2012)

Burma (35th)

———————————————————-

*The index combines Freedom House’s Freedom on the Net scores, the International Telecommunication Union’s information and communication technology development index, and the Economist’s Democracy Index (reversed into an “Outrage Index” so that higher scores mean more autocracy). The first measures the degree of Internet freedom in a country, the second shows how widely Internet technology is used, and the third provides the level of oppression.

 

 

Martial arts training in China

In China, Holidays and Festivals on 01/02/2014 at 6:27 pm

Something for Neigh Year hols viewing

http://www.bbc.com/travel/slideshow/20120712-chinas-kung-fu-revival

Temasek’s right on ICBC, BoC & CCB

In Banks, China, Temasek on 07/11/2013 at 4:52 am

I’ve blogged before that Temasek loves China banks while ang mohs were running away.

Well since late June, Chinese bank shares have been on a roll, example  ICBC (where Temasek had been picking up shares this yr) is up more than 22%. Recent Chinese economic data has got investors buying the banks again, ang mohs included. So much so that some smaller Chinese banks are planning IPOs in HK.

Anyway,Jack, the usual suspects, and the readers of TRE, TOC and TRS needn’t yet bang their [ ] in frustration. Firstly, Temasek can never ever exit these investments given that S’pore wants to be China’s friend. Temasek got big chunks of BoC and CCB at a “special” price.. It can only play around the margins, reducing its cost of these investments.

Then are there two more reasons why we should be worried about Temasek’s punt:-

The biggest threat to Chinese banks’ cozy oligopoly … Online groups Alibaba and Tencent are making incursions into the country’s financial services market, providing an alternative to the capped deposit rates and sluggish service offered by the country’s big lenders. The disruptors are taking on risks, and savers should be glad. http://blogs.reuters.com/breakingviews/2013/10/10/tech-disruptors-could-save-chinas-savers/

Alibaba, the e-commerce group that just bought a 51 percent stake in asset manager Tianhong for $193 million, is the banks’ main foe. By July it had made over $16 billion in short-term loans to companies who sell goods on its sites. Its real-time records of borrowers’ cashflows and counterparties aid lending decisions.

Banks’ deposits are also under threat. WeChat, the mobile chat app that clocked up over 300 million users within two years of being launched by gaming group Tencent, is working on distributing wealth products via smartphones, and offering payment for fund managers, according to Chinese media. Alibaba lets users reinvest surplus balances in their online payment accounts into money market funds. That gives savers a better return than the 3 percent capped rate they get on bank deposits.

Tech companies’ desire to disrupt the financial services sector is understandable. China’s big banks make returns on equity in excess of 20 percent.

Add to that, an attempt to shake up the country’s slow-moving financial industry and create more investment opportunities for the private sector, Chinese regulators have invited companies from across the spectrum to apply for banking licences.
And here’s the latest on bad debt write-offs (something I had talked about) http://www.bloomberg.com/news/2013-10-22/biggest-china-banks-triple-debt-write-offs-to-brace-for-defaults.html.
So Jack, etc can relax. Time enough for their curses on Ho Ching to take effect. I hope they remember that returns from the reserves are used to make life more comfortable for ourselves.

M’sia: The only winners of GE 2013

In China, Malaysia, Vietnam on 12/10/2013 at 5:10 am

In the words of the Institute of Southeast Asian Studies (ISEAS), a S’pore govt-funded think tank, in its Oct Asean Monitor

Barisan Nasional’s worst-ever general election performance in May has undermined Prime MinisterNajib Razak’s promise to reform the United Malays National Organization (UMNO) after he took overits leadership in 2009. Outside UMNO, liberal reforms are stridently opposed and resisted by extremist Malay-Muslim groups such as PERKASA and by UMNO-owned media, especially the Utusan Malaysianewspaper. Within UMNO, political momentum favours former Prime Minister Mahathir and his conservative allies, who support preserving the ketuanan Melayu (“Malay ownership”) status quo.

Recognizing that UMNO needs to be further strengthened after its failure to win a convincing majority of the Malay vote, many senior party leaders and veterans will not want the president and deputy president posts, held by Najib and Deputy Prime Minister Muhyddin Yassin, respectively, to be contested duringthe upcoming October party elections. However, the party’s three vice-presidential posts are likely tobe hotly fought over by the incumbents Ahmad Zahid Hamidi, Shafie Apdal and Hishammuddin Husseinand by three challengers, namely Mohd Ali Rustam, Isa Samad and, potentially, Mukhriz Mahathir.

Recent developments have further pressured Najib to follow through with his general-election pledge totackle corruption and crime. The 2013 Global Corruption Barometer report confirms the perception thatthe level of corruption in Malaysia has increased despite the government’s claims to the contrary. Publicconfidence in the corruption-tainted police force received another huge blow from the recent spike inviolent crimes, including more than 30 murder attempts in the past five months.

Because of the country’s deteriorating public finances, a global ratings agency has downgraded Malaysia’ssovereign credit rating outlook from stable to negative. The Malaysian ringgit slid to three-yearlows against the US dollar and to 15-year lows against the Singapore dollar; these slides may generate inflationary pressures. The government announced 10.5 percent and 11 percent hikes respectively in the prices of subsidized 95 RON gasoline and diesel on 3 September, and it is likely that further measuresto strengthen the country’s fiscal position will be introduced.

Key points: The status quo will persist, with conservatives gaining control of the UMNO supremecouncil. Budget 2014 will see the introduction of a GST and the scaling back and rescheduling of publicly funded projects.

The Chinese have to live with the consequences of their vote for Anwar’s group. The Indian community (which marginally supported BN) must be sore with the Chinese.

Related articles: http://www.economist.com/news/asia/21586864-ruling-party-returns-its-old-habits-race-based-handouts-bumi-not-booming

http://blogs.wsj.com/searealtime/2013/10/08/in-talent-battle-malaysia-loses-to-singapore/

Other Asean round-up news:

Vietnam R Sembcorp (belated)

UNDETERRED by the many challenges facing Vietnam’s economy, Sembcorp has once again upped its investment in the socialist republic – this time by building central Vietnam’s first large-scale industrial park worth US$337.8 million.

This latest of five Vietnam-Singapore Industrial Parks (VSIPs) is sited in Quang Ngai province, about 90 minutes’ flight south of Hanoi. It offers manufacturers a new and alternative investment locale that is away from Vietnam’s northern and southern regions, where labour markets are tighter and costs continue to rise.

VSIP Quang Ngai will take shape in the form of a 1,120ha industrial park and integrated township; the industrial park will take up 600ha, with the other 520ha slated for commercial and residential purposes. BT 14th August: PM was in Vietnam BTW.

Thailand is to hand over rice and rubber in part-payment for its new high-speed rail system, it’s reported.

The country’s transport minister is expected to formally agree the barter deal with Chinese premier Li Keqiang … The project to link Bangkok with Nong Khai, close to the Laos border, is part of a proposed 2m baht ($30bn, £19bn) infrastructure investment programme to part-financed with agricultural products. The railway is one day envisaged to link Thailand with the Southern Chinese province of Kunming, via the Laos capital Vientiane.

http://www.bbc.co.uk/news/blogs-news-from-elsewhere-24475574

Where S’pore and other Asean countries most vulnerable to Fed tapering

In China, Hong Kong, India, Malaysia, Vietnam on 14/09/2013 at 5:36 am

This chart from Reuters shows the vulnerability of major Asian economies to Fed policy of tapering

http://graphics.thomsonreuters.com/RNGS/2013/AUG/ASIARANKINGS/ASIARANKINGS.html

S’pore is vulnerable

Slowing GDP: Most vulnerable

Growing Public Debt : Second most vulnerable

Uncompetitive Currency: Second most vulnerable

Growing Credit Intensity: Fourth most vulnerable. Another view: Banks with large property loan portfolios will face higher risks when interest rates start to rise — this as highly-leveraged households begin to have difficulty paying their mortgages.

Economists said this could lead to credit tightening by banks, and a hard landing for the property sector.

If that happens, DBS Bank said Singapore and Hong Kong will be hardest hit within Asia.

In other Asean round-up news

surpluses of Thailand, Hong Kong and Malaysia have narrowed even more since the second half of 2007. However, this is partly because Thailand and Malaysia have boosted domestic investment, which lifts imports.

Malaysian and Indonesian companies are grappling with a margin squeeze: The two commodity-producing economies have witnessed the biggest rise in their real cost of capital. The Philippines has the opposite problem: Falling inflation-adjusted returns for savers.

Rightly or wrongly, though, the sovereign debt issued by developed countries is perceived as safe. Malaysia is not in the same league, and it is pruning petrol and diesel subsidies to control its growing public debt problem.

Unlike in 1997, most Asian countries have relatively straightforward choices. Malaysia can introduce a goods and services tax to control the 14 percentage point increase in its sovereign-debt-to-GDP ratio since 2007. Indonesia can raise interest rates to tame 9 percent inflation. The main problem is India, with its cocktail of slumping growth, high inflation, a creaking banking system, reckless fiscal policies and political uncertainty. Other Asian nations can’t take rising U.S. interest rates lightly, but they are far from a crisis.

http://blogs.reuters.com/breakingviews/2013/09/05/not-all-asian-countries-need-to-fear-the-fed/

Indonesia’s central bank raised its benchmark interest rate 25 basis points Thursday afternoon in a move that defied market expectations and continued a swift phase of tightening efforts as the nation’s economic growth showed signs of stumbling.

The interest rate increased to 7.25 percent, the fourth hike in as many months, as Bank Indonesia moved to stabilize the increasingly volatile rupiah while controlling inflation and the widening trade deficit.

The danger of capital controls in Asean (Note this is new link and chart, not the one originally posted)

http://www.economist.com/news/finance-and-economics/21586569-error-apology-and-revision-spreadsheet-different

Asean trade with China (FT charts)

Our world class Chinese banks need US$50-500bn more in capital

In Banks, China, Temasek on 12/09/2013 at 4:56 am

This blog has been pointing out why ang mohs don’t like Chinese banks, while Temasek loves them.

This short video shows the strengths of Chinese banks in size and income from interest (Big 4 in global top 10). The latter must surely be a consideration in why Temasek invests in three of them.

http://www.economist.com/blogs/graphicdetail/2013/09/daily-chart-1

Now back to the worrying analysis:

– With bad loans and competition rising, China’s largest banks face tougher times ahead. ChinaScope Financial, a research firm partly owned by Moody’s, a ratings agency, has analysed how declining net interest margins will affect China’s banks. It estimates that the sector will need an injection of $50 billion-100 billion over the next two years just to keep its capital ratios at today’s level. The managements of the Big Four realise this, and have won approval from their boards to raise over $40 billion in fresh capital over the next two years. But Andrew Sheng of the Fung Global Institute, a think-tank, reckons the sector will need to raise even more later: up to $300 billion over the next five years.

http://www.economist.com/news/finance-and-economics/21584331-four-worlds-biggest-lenders-must-face-some-nasty-truths-giant-reality-check

– China’s bad debts could blow a $500 billion hole in bank balance sheets. That’s roughly how much extra equity the eleven biggest lenders might need if 10 percent of their loans went sour, according to a Breakingviews calculator.

http://blogs.reuters.com/breakingviews/2013/09/04/chinas-bad-debt-could-leave-500-bln-equity-hole/

SingTel affected by rupiah, rupee collapse

In China, India, Indonesia, Malaysia, Telecoms, Vietnam on 31/08/2013 at 5:08 am

In its latest set of results announced a few weeks ago, the profit contribution from regional associates climbed 14% to S$552 million in the quarter on higher results from Indonesia, Thailand and India, the company said.

SingTel gets 12% of its profit before tax from India and 22% from Indonesia, with those earnings in future likely to take a hit when translated back into Singapore dollars. Remember too the weakish A$, Baht, and Filipino peso will affect its earnings.

Other Asean round-up news

At an emergency meeting on Aug. 29, the monetary authority raised its benchmark and overnight deposit rates. It’s a decision Bank Indonesia should have made at its last official gathering less than two weeks ago. An obsession with economic growth stayed its hand. http://blogs.reuters.com/breakingviews/2013/08/29/currency-markets-rude-wakeup-call-stirs-indonesia/

Politics is back on the streets in Thailand, after a relative lull of more than two years, with a protest over the weekend. It underlines the persistence of divisions in Thailand and raises the prospect of a return to the political turmoil that left more than 90 people dead in Bangkok in 2010.

Thousands of demonstrators gathered in a vacant lot in Bangkok on Saturday, as speakers threatened to “overthrow” the government.

But unlike in previous years, this time the protesters were members of Thailand’s oldest political party, the Democrat Party, which has long had a reputation as the staid, well-mannered and intellectual voice of the Bangkok establishment and has been firmly dedicated to resolving differences inside Parliament, where the Democrats lead the opposition.

The acrimony between the Democrats and the government of Prime Minister Yingluck Shinawatra centres on a number of legislative issues, chiefly an effort by the government to pass an amnesty law for those involved in the 2010 protests.

The Democrats oppose the Bill, saying it might also apply to those who insulted the monarchy or committed serious crimes.

But the broader conflict appears to stem from their feeling of powerlessness in the face of the resurgence of Thaksin Shinawatra, Ms Yingluck’s brother, who sets the broad policy lines for the government and the Pheu Thai Party despite living abroad since 2008 in self-imposed exile to escape corruption charges.

The weekend protests followed another peaceful one earlier this month involving some 2,500 supporters of the Democrat Party and royalist groups at Bangkok’s Lumpini Park, throwing fresh light on Thaksin’s divisive influence in Thailand.

(Extract from NYT)

Malaysia‘s government is exploring the possibility of hiking the real property gains tax to rein in rising housing prices and curb speculation in the market. Bernama quoted Housing Minister Abdul Rahman Dahlan as saying that current property tax levels had failed to stabilise house prices with the house price index continuing to rise.

Malaysia’s GST will take 14 months to implement if announced in the budget in October, a ministry official said

The Philippines posted better-than-forecast economic growth, fuelled by its services sector and higher consumer and government spending. Its economy grew 7.5% in the April to June quarter, from a year earlier. It is the fourth quarter in a row its economy has expanded by more than 7% – defying a regional trend which has seen growth slow down in many countries. The Philippines’ 7.5% second-quarter growth matched that of China but is higher than Indonesia, Vietnam or Malaysia,

However, the country has been hurt in recent weeks by investors pulling out of the region’s emerging economies. This despite under emerging mkts, given the follow of remittances from workers overseas, it will not have to worry about investors’ outflows unlike other mkts.

Japan’s All Nippon Airways has said it will acquire a 49% stake in Asian Wings Airways, an airline based in Burma..

The Japanese airline will pay 2.5bn yen (US$25m) for the stake.mIt is the first time a foreign carrier has invested in a Burmese-based commercial airline. It currently operates domestic flights to all major tourist destinations in Myanmar.It t plans to “extend its wings to regional destinations through scheduled flights as well as chartered ones”.

SCCCI SME Survey proves LKY’s point?

In China, India, Indonesia, Malaysia, Vietnam on 17/08/2013 at 1:41 pm

Indonesia has overtaken China as a preferred investment destination for small and medium-sized enterprises (SMEs), This was a key finding of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) SME Survey 2013, which polled 516 companies in June and July.

Of the 63% SMEs which are venturing into markets abroad, 39.9% favour investing in Malaysia and 28.1% Indonesia, a hair’s breadth more than the 27.2% looking towards China.

One reason given is that as the Chinese economy develops and wages rise, Indonesia could stand to position itself as an undertapped source of low-cost labour. As I blogged here, a few days back, LKY said that SMEs would flee S’pore if FTs were not allowed in by the cattle-truck load: they want cheap labour. The survey indicates that securing cheap labour is all that SMEs care about?

Other Asean-round up news:

Express link to KL

M’sia should talk to billionaire inventor Elon Musk. He wants to build a Hyperloop that would cut travel time between SF and LA to 35 minute. 12 minutes to KL based on the 35 minutes time

http://www.bbc.co.uk/news/technology-23681266

Shrimps

THe US Commerce Department declined to set duties on shrimp imports from Thailand and Indonesia. It has imposed duties on shrimp imports from five nations.

The ruling applies to about US$2bn of shrimp imports, from India, Ecuador, China, Malaysia and Vietnam. The Commerce Department found that those nations had been subsidising their shrimp producers.

Malaysia faces the highest duties of up to 54.5%, the lowest were set for Vietnam which faces duties of up to 7.8%.

A final approval is needed by another government body, the International Trade Commission (ITC), before the duties can take effect, The ITC will consider whether US producers have been threatened by the imports and make its decision in September.

Fighting inflation the Indon way

Bit like the way they fight the haze: wayang all the way.

Indonesia’s central bank held its benchmark interest rate on Thursday and took steps to contain loan expansion to battle inflation without taking any more steam out of slowing economic growth.

Many economists do expect another rate hike later this year but the central bank faces a tricky combination of surging prices, a falling rupiah, a stubborn current account deficit and slowing economic growth.

Time to worry about Temasek’s strategy on Chinese banks

In Banks, China, Temasek on 02/07/2013 at 5:07 am

Temasek owns big chunks in three out of four China’s major banks

– 2% of Bank of China

– 8% of China Construction Bank

8% of Industrial & Commercial Bank of China,

Temasek has accumulated more than [US]$17 billion of holdings in Beijing-based ICBC, China Construction Bank Corp. (939) and Bank of China Ltd. over the past two years, according to data compiled by Bloomberg. Global firms including Goldman Sachs and Bank of America Corp. have divested holdings as new capital rules known as Basel III make it more expensive to hold minority stakes in banks. (Bloomberg few days ago)

S’poreans have to keep a beady eye on developments in the Chinese economy particularly in the financial sector.

Well things don’t look that rosy:

There is of course a second and much more disturbing possible implication of spiking lending rates in China – which is that the slowdown in credit creation will lead to tumbling asset prices, widespread bankruptcies and the crippling of the banking and wider financial system …

According to a recent and influential report by Fitch, outstanding loans by Chinese banks and shadow financial institutions were equivalent to 200% of GDP at the end of 2012, up from around 125% of GDP in 2008.

 As quantum, domestic business and household debt at two times GDP is high – pretty similar, for example, to a debt burden on the UK private sector which has hobbled our [UK] economy.

 But it is the stunning and unsustainably rapid rate of growth in Chinese credit creation, and who has borrowed the money, that are the main sources of concern.

 Unless China is re-writing financial history, much of that money will have been lent without due care to businesses and individuals, and many of them will never be able to repay much of it.

 As and when that is too conspicuous to ignore, banks and financial institutions will go bust – unless bailed out by central bank and government. http://www.bbc.co.uk/news/business-23000323*

Well in the case of the UK, two major banks were effectively nationalised, and the existing shareholders were left with “peanuts”. And UBS and Citi received injections of cash from their central banks in exchange for securities, exchanges that diluted their other shareholders, including GIC.

In 2007/2008, our SWFs’ bot into UBS (GIC), Citi (GIC) and Merrill Lynch (Temasek) in a big way that ST characterised then as showing S’pore was a tua kee investor.

We lost serious money in two of the 30-yr investments by 2009.

– Estimate of Temasek’s losses on ML and Barclays:

http://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

– Estimate of GIC’s loss on UBS:

http://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

(BTW, Temasek’s 2012 purchase of Credit Suisse mandatory bonds:

http://atans1.wordpress.com/2012/07/22/third-time-lucky-temasek/)

Hopefully Superwoman Lina Chiam will raise the issue of Temasek’s strategy doubling up on Chinese banks in parly so that the finance minister’s rebuttal of her concern, will be a matter of public record,  come the next GE.

*And not only ang mohs are worried about China and its financial system: http://blogs.reuters.com/breakingviews/2013/06/28/review-tales-from-chinas-wild-lending-frontier/

China will eat & eat

In China on 20/06/2013 at 5:03 am

Or it’s all about pigs. Fishmeal is used to feed the pigs. Chart from Economist.

Asean round-up

In China, Malaysia on 15/06/2013 at 6:59 am

1997/ 1998 all over again?

http://www.bbc.co.uk/news/business-22871588

Asian manufacturers got no pricing power

Producer prices are sliding across the region – falling 8.5 percent even in the Philippines, where GDP grew 7.8 percent in the first quarter. Cheaper commodities are partly to blame, but the main culprit is sluggish demand from the United States. If companies can’t make up the difference, they may struggle to repay growing debts … On average, factory-gate prices in China, Taiwan, South Korea, Malaysia, Indonesia, Singapore, Thailand and the Philippines fell 3.5 percent in April, the eighth straight month of declines.

http://blogs.reuters.com/breakingviews/2013/06/12/deflation-flu-could-leave-asia-feeling-very-sick/

Failed at Olam, now trying luck at StanChart

In Banks, China, Temasek on 14/05/2013 at 6:55 pm

 

Carson Block Is Shorting Debt of Standard Chartered

 

 

Carson Block, the short-seller who runs Muddy Waters LLC, said he’s betting against the debt of Standard Chartered Plc (STAN) (STAN) because of “deteriorating” loan quality, triggering a 13.5 percent jump in the cost of insuring against losses on the debt of the British lender.

http://www.bloomberg.com/news/2013-05-12/carson-block-says-he-s-shorting-standard-chartered-debt.html

Somehow I don’t expect StanChart to go berserk like Olam, “Carson Block is outside of the bank and does not have access to the bank’s loan files,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “He has very little ammunition in his gun to shoot at Standard Chartered at this point. He’s got one example of a large loan that appears to be something that possibly would not have been prudent to book.”

China in charts: FT

In China on 16/04/2013 at 6:30 am

Chinese financial sector: there be storms and shaols

In Banks, China, Temasek on 31/03/2013 at 7:06 am

(Backgrounder: Temasek has biggish stakes in three out of the four major  Chinese banks: doesn’t have shares in Agricultural Bank and CapLand is big and bullish on China).

Credit issues in Pearl Estuary region:  http://blogs.reuters.com/breakingviews/2013/03/27/chinese-credit-alarms-sound-in-the-east/

And New rules will force mainstream lenders to cap their exposure to some of the riskier off-balance sheet products they have sold to customers – in particular, those that are effectively repackaged corporate debt. That limits a big source of risk for banks, but creates a new one for the Chinese economy.

http://blogs.reuters.com/breakingviews/2013/03/28/china-shadow-bank-curbs-attack-symptom-not-cause/

The junk bond market in China took off this year. Although the deals still account for a small share of the global total, Chinese companies have sold $8 billion of high-yield bonds to overseas investors since January. That’s up from $2.3 billion during the same period a year earlier, according to figures from Dealogic … the Chinese market has its own set of potential problems, and some analysts worry that investors aren’t being properly compensated for the added layer of risks.

he bulk of the high-yield bonds in Asia this year — roughly half — come from Chinese real estate companies. The fear is that the housing market, which has been booming, is a bubble that will eventually burst.

Mainland China’s domestic bond market remains largely off limits to foreign buyers. So most investors buy offshore Chinese bonds, which are issued through holding companies headquartered in places like the Cayman Islands.

The bonds tend not to be backed by the actual businesses and underlying assets in mainland China. That means foreign bondholders may have little legal recourse if a company defaults on its debt, especially if local banks or other Chinese creditors make claims.

Bondholders are now facing such difficulties with the bankruptcy of Suntech Power.

http://dealbook.nytimes.com/2013/03/28/as-pace-of-chinas-junk-bond-sales-grows-so-do-worries/?nl=business&emc=edit_dlbkpm_20130328

Why S-Chips no hew our laws

In China, Corporate governance on 26/03/2013 at 5:46 am

Chinese no hue US laws.

Ned L. Sherwood won a proxy contest with the ChinaCast Education Corporation, an education company based in China that is incorporated in the United States, but the ousted executives subsequently transferred all the company’s valuable Asian assets, leaving Mr. Sherwood and the US public shareholders with nothing but a lawsuit in China. The deal highlighted the risks of investing in Chinese companies.

AND

Now some distressed debt investors get to find out what exactly it is you buy when you buy American-issued debt in a company incorporated in the Cayman Islands and doing business in China. I suspect the answer will be “not much.” http://dealbook.nytimes.com/2013/03/22/chinese-solar-giants-bankruptcy-presents-a-test/?nl=business&emc=edit_dlbkpm_20130322

But investors still buying these bonds.  http://blogs.reuters.com/breakingviews/2013/03/22/exposed-bondholders-suffer-solar-burns-in-china/

Asean round-up

In China, Indonesia, Vietnam on 12/01/2013 at 5:08 pm

Gd news for SE Asia. China has reported better-than-expected trade data, adding to optimism that growth in the world’s second-largest economy may be rebounding.Exports, a key driver of expansion, rose 14.1% in December from a year earlier. Most analysts had forecast a figure closer to 4%.Imports also rose, climbing 6% and indicating stronger domestic demand.

The US has filed a complaint with the World Trade Organization (WTO) against Indonesia’s restrictions on imports of horticultural and animal products. BBC report. Other agricultural exporters like Australia and Thailand have been unhappy about Indonesia’s restrictions too.

Thailand is considering measures to help companies cope with the country’s rise in the minimum wage (35% up from level of last year), but has rejected business warnings of job losses, factory closures and a shift by some manufacturers to neighbouring countries

Thailand’s central bank left its benchmark interest rate unchanged at 2.75% on Wednesday, as expected, saying the global economy continued to recover while growth this year could be higher than thought and inflation was stable.

The International Monetary Fund has warned that a credit boom in Cambodia poses a threat to economic growth. Banks have been cutting interest rates to win customers and private sector credit has increased by almost a third in the past 12 months, the fund said.

A $US200m deal with Masan Group by KKR is the largest by a private equity firm so far in Vietnam. It comes in addition to an earlier $159 million investment by KKR. Masan is Vietnam’s leading fish, soya and chilli sauce producer. As well as sauces Masan makes instant foods such as noodles, cereals and coffees. The firm estimates that 90% of local households use its products.http://www.bbc.co.uk/news/business-20954875

Japan was in talks with the Philippines on Thursday to enhance maritime co-operation amid their separate territorial rows with China.

“We talked about the challenges that we appear to be facing in view of the assertions being made by China,” Philippine Foreign Secretary Albert del Rosario told reporters after meeting with his Japanese counterpart, Fumio Kishida, in Manila.

Part of the co-operation may include 10 new patrol vessels from Japan to boost the Philippine coast guard, as well as communication equipment, Mr Del Rosario said.

Noble Gp: “Cheong all the way” Maybank

In China, Commodities on 11/01/2013 at 5:39 am

But if China doesn’t perform, you’re in trouble.

S’pore Biz Review

It was annced yesterday that China’s commodities imports accelerated in 2012 in volume terms in spite of slowing growth in the overall economy, with crude oil, iron ore and copper reporting record high imports for 2012.

This guy is awesome!

In China, Internet on 18/09/2012 at 7:18 am

That is what Mr Moncayo did when, at the tender age of 23, he devised a grand plan to forge a whole new trading relationship between Latin America and China

Despite knowing very little about manufacturing and unable to speak a Chinese language, he decided to build a career negotiating and supervising deals between firms in his native Latin America and Chinese suppliers. It was an obvious gap in the market.

“We were the first ones to really connect these two regions,” he says.

Just eight years later, Mr Moncayo is the chief executive of Asiam Business Group, handling orders from Asia worth $35m (£22m) per year, mainly on behalf of Latin American fashion houses.

http://www.bbc.co.uk/news/business-19507524

Long term investor while trading a stock

In China, Financial competency, Temasek on 04/09/2012 at 7:00 am

Jim Cramer’s “trading round a position”. Got to try it. Locks in profits.

http://www.cnbc.com/id/48614527?__source=ft&par=ft

Maybe Temasek is trading round its position in the Chinese banks it holds, given that China will not be pleased if it sells out of them. http://atans1.wordpress.com/2012/05/03/temasek-rebalancing-its-chinese-bank-portfolio/

Even Chinese manufacturers are moving to Vietnam & Bangladesh

In China, Vietnam on 16/08/2012 at 5:24 am

Earlier this week FT reported that an online Chinese retailer was trying out manufacturing in Vietnam. At about the same time, CNN reported that  Chris Devonshire-Ellis, founding partner of Dezan Shira & Associates in Beijing, which advises firms on foreign direct investment (FDI), as saying,”Companies are starting to think twice before building in China.”

He said the cost of running a factory in Dongguan, China with 300 workers would be about US$2.3 m. The same factory in Ho Chi Minh City, Vietnam would be US$650,000, and a similar factory in Chennai, India would cost about US$346,000.

“About 50 per cent of our work in Vietnam is setting up factories for companies which have relocated from South China because they want to add more (manufacturing) capacity (in the region), but they don’t want to have Chinese costs. Vietnam and Bangladesh are becoming subsidiary manufacturing nations to make goods for sale in China.”

Earlier this month, the Economist wrote, “Another manufacturing firm [making flags]moved its operations to Vietnam in 2004. “We have to migrate, like herdsmen chasing water and pastures””. Love the way moving to a cheaper place is described.

What the MSM doesn’t tell you abt Shenzhen

In China on 07/07/2012 at 6:10 am

The number of listed companies has almost trebled from about 500 before the SME board started eight years ago, and the market value of listed companies soared to US$1.2 trillion at end-May … double the size of Singapore’s exchange.

http://in.reuters.com/article/2012/07/01/china-shenzhen-ipos-idINL3E8HF38F20120701

And no FTs in mgt!

FYI, NYSE is at US$12.5 trillion.

Europe: Temasek has competition

In China, Temasek on 03/07/2012 at 7:42 am

(Updated on 5 July 2012 : forgot to mention ex-UBSer appt)

Sometime back, the new CIO said that Temasek is looking for investment opportunities in Europe.  He said turmoil in Europe may result in a market slump rivaling the 2008 global financial crisis creating opportunities for Temasek to make deals. Earlier this year, Temasek hired former UBS Chief Financial Officer John Cryan to oversee its strategy for Europe, whereit has limited exposure. The hiring of Cryan had raised speculation that Temasek is eyeing distressed assets in the euro zone, shumething that the CIO has confirmed.

It had better hurry.

The total value of mergers and acquisitions in Europe by foreign companies has reached US$101 billion, well ahead of the combined US$73 billion spent in the United States by international acquirers, according to the data provider Dealogic http://dealbook.nytimes.com/2012/06/20/amid-debt-crisis-overseas-buyers-seek-european-companies/?nl=business&emc=edit_dlbkam_20120621.

The Chinese even have a fund to co-invest with Chinese cos wanting to buy European coms for their technology or brands. Not juz but investment returns or financial egineering, unlike Temasek. Maybe our leaders should “sit down and shut up” when it comes to advising China to follow them? And observe what the Chinese are doing?

Hopefully, Temasek will remember that it bot Barclays and Merrill Lynch, and GIC bot UBS and Citi a bit too early in the 2008 cycle, to be precise in 2007. Temasek sold its dogs in 2009, juz went markets were recovering, losing billions. Given the losses, Temasek will hopefully be more cautious, even if it means losing some great bargains. Catching a falling knife will not amuse S’poreans, the “owners of Temasek” (Ho Ching once called us).

As to why it needs to do deals: investment returns are likely to have without some good deal http://www.businessweek.com/news/2012-06-21/temasek-expects-smaller-returns-amid-difficult-years-curl-says.

Related post: http://atans1.wordpress.com/2012/02/26/our-swfs-owned-four-out-the10-biggest-investment-flops-of-the-last-10-yrs/

If China slows down, ASEAN beneficiaries

In China, Commodities, Indonesia, Malaysia, Vietnam on 26/06/2012 at 6:22 am

(Or “What stocks, ETFs to buy”)

A  China slowdown need not be bad for everyone. Mr Frederic Neumann, Regional Economist at HSBC, distinguishes between hard and soft commodities. A Chinese rebalancing could actually be good for soft commodities*, such as wheat and soybeans*, if household spending were to rise.

Brazil’s loss, in other words, could be Argentina’s gain. Other commodities, such as palm oil**, used in processed foods, may also do better.

That could benefit countries such as Malaysia, which has ramped up palm oil*** production in recent years, and Indonesia**** – although the latter also produces hard commodities including coal.

On the other side of the ledger, some big oil importers***** could benefit from the weaker prices that a Chinese slowdown might produce.

http://www.todayonline.com/CommentaryandAnalysis/Commentary/EDC120622-0000021/Should-we-fret-about-Chindown?

*Think Olam, Wilmar, Golden Agri, Bumitama Agri, Kencana Agri and First Resources

**Think Wilmar and the other SGX plantation stocks.

***Think Felda, Sime Darby, United Plantations, IOI, Genting Plt, KL Kepong, TSH, Oriental.

****Think Astra Agro and London Sumatra Indonesia. Any other Indon listed plantations cos to think about? Do remember that the SGX-listed planters are mainly Indonesian planters and many of them are relatively new, giving them an advantage over the older Malaysian plantation players. Malaysian planters have also bought land in Indonesia partly because land in Malaysia is getting too expensive even in East Malaysia.

*****Think ETFs on Singapore, Thailand and Vietnam.

“China has risen”: Mao will be proud

In China on 16/06/2012 at 6:57 am

More people are saying that China is world’s leading economic power

http://www.economist.com/blogs/graphicdetail/2012/06/daily-chart-8

This guy is shorting China & emerging markets

In China, Emerging markets on 14/06/2012 at 7:11 am

And a bull on US retailers.

And he has outperformed his peers!

http://www.bloomberg.com/news/2012-06-06/a-contrarian-fund-manager-bets-against-emerging-markets.html

Why our local banks shld stop wasting resources on China proper

In Banks, China, Investment banking, Temasek on 07/06/2012 at 5:14 am

(Or “Why Temasek’s big bet on Chinese banks makes sense“)

DBS is the 6th largest foreign bank in China proper. It has a strategy of expansion into China. So have UOB and OCBC.

Well, its a tough biz to be in. Non-Chinese banks have only 2% market share. Even HSBC, StanChart and Citi have problems http://www.bloomberg.com/news/2012-06-04/china-wall-hit-by-global-banks-with-2-market-share.html

DBS, OCBC and UOB shld juz not bother abt China.

Test needed to ask questions at co. meetings

In China, Corporate governance, Financial competency, Humour, Property on 04/06/2012 at 5:01 am

(Or “Shume really stupid shareholders” or “Why SGX shld pay Mano Sabnani to conduct courses on asking sensible qns at AGMs and EGMs”)  

Sometime back, the media reported that some daft shareholders (same people as those who complained at DBS AGM that DBS paid 50% premium over Bank Danamon’s share price to get controlling stake? I mean these people never ever heard of a premium needed to secure a controlling block?) abt CapitaLand’s China exposure and share price since 2008 or 2007 at its AGM.

Don’t they read the int’l media?

Example from BBC Online:”China has, thus far, avoided the much-feared hard landing,” said IHS Global’s Ren Xianfeng.

“Expect no major property meltdown or construction bust. Expect no deflationary spiral or banking crunch.”

Analysts said that given the steadiness of the property market, policymakers were likely to continue to ease their policies to boost growth.

Ting Liu of Bank of America-Merrill Lynch forecast that China’s economy was likely to grow at an annual rate on 8.5% in the second quarter, up from 8.1% in the first three months of the year.

And on the share price: don’t they realise that equity markets have had a choppy ride since 2008. And that China-related stocks have been the target of bear raids and that CapitaLand is an obvious target to short given that the stock is liquid and shares can be easily borrowed

In case anyone doesn’t understand the reference to Mano, he asks vv intelligent questions at AGMs and EGMs. Only one I can bitch abt is at K-Reit EGM when he queried the price paid for Ocean Towers from its parent. Shumething like Ocean Towers seldom gets sold at mkt price, except perhaps in distressed sale. Kanna pay premium.

More bad news for Noble, Olam and Wilmar

In China, Commodities, Logistics on 21/05/2012 at 5:48 am

The FT reports that Chinese importers are requesting trading houses to defer shipments of commodities. Sometimes they have broken agreements by refusing to accept deliveries.

Commodities specifically mentioned are iron ore and thermal coal (Noble’s specialities), cotton (Olam speciality) and soyabeans (Wilmar is world’s boiggest crusher). No wonder the price of these stocks keep weakening.

BTW, until I read below, I didn’t realise Noble is a big player in coffee and cocoa (but revenue is “peanuts” compared to iron ore and energy).

http://seekingalpha.com/article/572831-commodity-trading-firms-bunge-and-noble-offer-investors-good-value

MIIF & FCT: Useful updates

In China, Property, Reits on 17/05/2012 at 6:51 am

Never summed up the courage to buy MIIF because although it is a China infrastructure play, yirld is super, and MIIF is net cash, its underlying investments are up to their eyebrows in debt: could affect MIIF’s payouts, NAV and price. But chk out for yrself  http://www.investmentmoats.com/money-management/dividend-investing/amfraser-have-some-seriously-optimistic-cash-flow-projections-for-miif/

For the working stiffs who got cashflow from day jobs. Not for retiree who gambled his cashflow.

 CIMB likes Frasers Commercial Trust I own shume.

Update: DBSV likes FCT too http://sreit.reitdata.com/2012/05/18/fcot-dbsv-3/

Philippines not safe for PRC nationals warns China

In Casinos, China on 12/05/2012 at 6:26 am

China told its citizens on Thurday  they were not safe in the Philippines and its state media warned of war, as a month-long row over rival claims in the South China Sea continued.

Chinese travel agencies announced they had suspended tours to the Philippines, under government orders, and the embassy in Manila advised its nationals already in the country to stay indoors ahead of protests on Friday. Five hundred protested outside the Chinese embassy, in the event.

And the Philippines wants Chinese gamblers to visit Manila, and the Chinese to invest in the country. What a joke!  Want Chinese money but intent on upsetting China. Filipinos are not realists.

Temasek: Rebalancing its Chinese bank portfolio

In Banks, China, Temasek on 03/05/2012 at 6:04 pm

Last month, Temasek bought US$2.3bn worth of shares in Industrial and Commercial Bank of China (ICBC), taking its overall stake in the bank to 1.3%. I commented that it was increasing its bet on the big Chinese banks (it owned big stakes in three of them) when the mood on them was getting bearish.

Well it is now sell US$2.4bn worth of its shares in Bank of China and China Construction Bank.

So overall, it is reducing its stakes in BoC and CCB (locking in some profits: it got into these at very attractive prices as a cornerstone pre-IPO investor) while adding a stake in ICBC to the mix at a slight discount to the market.

Update on 4 May 2012 at 3.10pm: More details http://www.bloomberg.com/news/2012-05-02/temasek-selling-2-4-billion-in-boc-china-construction.html

Temasek’s Chinese banks have an unending appetite for capital

In Banks, China, Temasek on 27/04/2012 at 6:54 pm

Regular readers will know that Temasek’s investments in Bank of China and China Construction Bank are great investments. It came in as a pre-IPO cornerstone investor and unlike the Western banks that had similar status had not sold out. Gd friend of China. It trades out and in of these stocks to make realised profits. But these trading profits are peanuts as the trading positions are peanuts in relation to its holdings in these banks

And that it recently bot Goldman Sach’s remaining stake in ICBC, at a slight discount to its mkt price. 

As this article explains these banks have an unending appetite for capital because they are “squeezed for capital”. So Temasek has to be willing to cough up more of our money if it wants to avoid being diluted when rights issues are called.

S-Chips are not the only Chinese junk exports, ask the US and HK

In China, Hong Kong on 23/04/2012 at 6:44 pm

The 180 Chinese companies that went public around the world since the beginning of 2010 are trading at an average of 21%  below their IPO prices, Bloomberg News reports.

In Singapore, the third-biggest market for such listings after Hong Kong and New York, eight Chinese companies that went public in 2010 have declined an average of 47 percent from their offer prices, the data show. That compares with a drop of 15 percent for the 23 non-Chinese firms that had IPOs in 2010.

And trading volumes are shrinking. In the last 12 months, trading volumes in S-Chips have halved. [Update on 24 April 2012 at 7.20pm]

But HK and the US are doing something. Regulators in Hong Kong are set to propose rules that would make banks liable for faulty IPO documents, Reuters reports. And earlier today, Hong Kong’s securities regulator fined a brokerage firm and revoked its corporate finance licence. Mega Capital (Asia) has been fined HK$42m (US$5.4mfor “inadequate and sub-standard” diligence work and “failure to act independently”. The firm was the sole adviser to Hontex International, which had raised HK$1bn via a share sale in 2009. BBC Online

In the US, the SEC and FBI have been investigating people allegedly involved in fraud in China-based companies listed on US exchanges. Latest [25 April 2012] SEC investigations and analysis of the complicated structure that overseas listed Chinese cos (including S-Chips) have to adopt to list overseas which makes malpractice easier..

Err waz happening here? We are told by an SGX non-executive director that SGX is “a private club” despite it regulatory role. He said this recently when representing SGX in court as SGX’s lawyer in a case involving a S–Chip. Article 14 analyses the case.

When will this happen to a S-Chip?

In China, Corporate governance on 22/04/2012 at 7:20 pm

It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.

Its ousted chief executive, Ron Chan, has been accused of aiding in the disappearance of ChinaCast’s chops — ornate corporate seals that are needed to approve everything from paychecks to contracts.

And recently more than a dozen men claiming an association with Mr. Chan burst into the company’s Shanghai office twice, violently carting off several computers from the finance department, according to a United States regulatory filing.

http://dealbook.nytimes.com/2012/04/19/battle-over-a-chinese-company-turns-physical/?src=dlbksb

No wonder S-chips are finding it difficult to get people to be non-executive or independent directors.  And the row between China Sky’s former independent director Yeap Wai Kong and SGX doesn’t help. He took SGX to court in an attempt to quash its public reprimand issued against him in December 2011. The court is hearing the case.

ANZ Bank attractive to Chinese strategic buyer?

In Banks, China on 20/04/2012 at 7:24 pm

An Australian who recently retired as head of Standard Chartered’s business in China believes there’s a strong chance of a major Chinese lender picking up a cornerstone stake in one of Oz’s big four banks within a few years. The Age carried an interview with Mike Pratt, , who says it’s “highly possible” that a major Chinese player will take a stake of up to 15%  in a major Australian bank this decade”.

ANZ Bank would make the most sense, given its super-regional bank strategy. Commonwealth Bank is increasing its presence in Asia but is nowhere as regional as ANZ Bank.

Westpac (a portmanteau of “Western-Pacific”) despite its name, and National Australia Bank both focus on Oz after misadventures abroad.

Analysing Temasek’s investment in another Chinese bank

In Banks, China, Financial competency, Temasek on 16/04/2012 at 7:06 pm

Temasek has agreed to buy Goldman Sachs’s shares in the Industrial and Commercial Bank of China (ICBC), the world’s largest bank. It will buy US$2.3bn worth of ICBC shares, taking its stake to 1.3% in the bank.

In an interview with Reuters at the end of March, Ho Ching’s presumed successor-in-training, Temasek’s head of portfolio management,acknowledged the heavy allocation to financials, but noted that it holds four very good banks: Bank of China, China Construction Bank, DBS Group and Standard Chartered. Well it has added ICBC to this list, and at a price close to the market price, unlike the stakes in the other two Chinese banks where it got a “special” price as a pre-IPO cornerstone investor.

But is it a wise move?

True, since the lows last October of the Chinese and HK stock markets, the shares of the four leading Chinese banks (including Bank of China, China Construction Bank and ICBC) have gone up by more than half, easily outperforming the broader market.

But since March, prices have been off (but masked by general market falls) because of concerns abt China’s growth, bad loans and comments by the  Chinese PM, Wen Jiabao, who hinted  of breaking the monopoly state-owned lenders have enjoyed in China’s banking sector. (The sector is dominated by four big state-owned banks and Temasek now has significant stakes in three of them.)

Mr Wen said that their monopoly was hurting businesses in the country, as they had few options to raise capital.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital,” he was quoted as saying by China National Radio. “That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

The lack of easy availability of capital has often been cited as threat to growth of small and medium-sized businesses in China. There have been fears that some of these businesses, seen as key to China’s growth, may turn to unofficial sectors for capital, increasing their borrowing costs substantially

But Temasek could be betting on, “Wen has one year left [in his term].” This was said by an unnamed Chinese state banker quoted by Reuters. “This is a task for the next generation of leaders. It cannot be accomplished within one year.”

But the banker could be wrong, Wen could be telling us what has been agreed upon between his generation and the next generation of leaders.

Remember, It took a beating on its finance industry holdings after the 2008 crisis, losing about $5 billion in stakes held in Barclays and Merrill Lynch, now part of Bank of America. It has since trimmed its financial holdings by 4 percentage points to 36 percent of the portfolio. Last month, it sold a 1.4 percent stake in India’s No.2 lender ICICI Bank. From said Reuters reported.

And of the remaining two “very good banks” where Temasek has significant stakes, DBS has juz decided to buy Temasek’s stake in Bank Danamon. Management will now be preoccupied with getting the deal approved by the Indonesian authorities, then integrating the bank into DBS. Before this deal, management had finally got to grips with DBS’s operational problems. The danger is that the focus on the Danamon deal may lead to backsliding in the area of operatons.

The genuine jewel is StanChart, but by global standards, it is “peanuts”.

Another day, another sucker

In China, Corporate governance on 21/03/2012 at 8:53 am

First it was SGX, then US exchanges, now London’s AIM the target for Chinese IPO scammers?

http://www.reuters.com/article/2012/03/14/ipo-london-china-idUSL5E8E8A2220120314?feedType=RSS&feedName=financialsSector

A Gamble Too Far? Pinoys gamble on China

In Casinos, China on 15/03/2012 at 9:45 am

The Philippines is not just ahead of other new casino markets [like South Korea, Japan and Taiwan]; it also has several key benefits over the more established ones, according to Gustino De Marco, vice-president at the Hong Kong-based brokerage BTIG and a specialist in this area.

Firstly, it has a strong domestic demand and the type of games Filipinos like to play are the high risk-high reward games such as slot machines, which give better returns to the casino operator than card tables.

Another attraction is geography, with the Philippines only a few hours flight from China, Japan and South Korea, where most high-rolling Asian gamers come from.

And while it is near China, it is not under any kind of Chinese jurisdiction. So, unlike Macau, which in recent years has had to ramp up its gambling tax and impose certain visa restrictions on Chinese gamers, the Philippines is free to offer all the incentives it can.http://www.bbc.co.uk/news/business-16753960

But is it realistic for the Filipinos to expect the Chinese authorities* and patriotic Chinese to co-operate when the Filipino government is the most hawkish of all the ASEAN nations when it comes to territotial disputes with China? The Institute of Southeast Asian Studies (a S’pore government statutory board thhin-tank) says in its inaugral ASEAN Monitor dated February 2012: Despite the weakness of its armed forces, the Philippines has assumed the role as the most outspoken of four Southeast Asian claimants against China’s assertiveness in the South China Sea. President Benigno Aquino has taken the lead in trying to rally ASEAN behind a common policy on the South China Sea, mainly to present a united front in negotiations with Beijing over acode of conduct. Defying threats from official Chinese media, Manila has encouraged the US to increase its military presence in the Philippines and supply the country with additional resources to patrol its waters … Will the Philippinegovernment maintain its hard line over the South China Sea, or prove as susceptible to China’s entreaties as some of its predecessors?

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*They could make travelling to the Philippines inconvenient.

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