China competition proves hard for Yum to swallow 9 Oct 2013 The nation is eating less KFC chicken, hurting sales at the chain’s U.S. owner. Last year’s fears of antibiotic-laced Zinger Burgers didn’t help, but fierce competition has also given consumers more dining options. Yum is no longer a great bellwether for Chinese appetites.
BRIC woes make African economies shine brighter 8 Oct 2013 The not-so-dark continent will outpace all but one of the BRICs next year, the IMF now believes. Policy failures in Brazil, Russia, India and China have led to scaling back of growth. These bruised giants may look to African stars like Ghana and Nigeria for economics lessons.
Three taboo-breaking deals offer hope for Japan 8 Oct 2013 Japan Inc tends to frown on overseas buyers, selling non-core businesses, or leveraging up for acquisitions. Yet Tokyo Electron, Panasonic and Lixil have recently ignored these strictures. A freer form of capitalism looks to be taking hold in the land of the rising sun.
For China, U.S. debt ceiling is a paper tiger 8 Oct 2013 The biggest holder of U.S. debt is understandably troubled by Washington’s financial straits. Yet absent an actual default, China is relatively insulated from market gyrations. The more trade partners doubt the dollar, the faster it can promote its own currency as a substitute.
Japan index: Rising risks to third-quarter growth 8 Oct 2013 A slide in manufacturing output in August caused the Breakingviews Abenomics Index to partly give up the previous month’s strong gains. Without a quick rebound, Japan’s annualized GDP growth will struggle to match the second-quarter expansion rate of 3.8 percent.
Mitsu-Stanley becomes the envy of Japanese finance 7 Oct 2013 When MUFG and Morgan Stanley pooled their investment banks into two complicated JVs, even the two group’s bankers had their doubts it would work. It has. Mitsu-Morgan is at the top of the league tables and rivals are examining the venture as a possible template to adopt.
Airbus has got the sales. Now how about profit? 7 Oct 2013 The European aircraft maker won over Japan Airlines, one of the few remaining Boeing-only carriers. The order of 31 A350 jets confirms the string of Airbus’ recent sales successes over its U.S. competitor. Now it should get to work on what its rival does better: profit.
Tyremakers’ takeover spat faces high toll 7 Oct 2013 India’s Apollo wants to renegotiate the $2.5 bln takeover of its U.S. rival following labour disputes. Cooper Tire has gone to court to force its suitor to pay up. Investors are increasingly doubtful the deal will cross the finish line. A compromise looks the least bad outcome.
Mongolia gives a little in investment tug-of-war 7 Oct 2013 As Rio Tinto thrashes out terms for its stalled copper project, a promise of equal treatment for foreign investors bodes well. Mongolia’s rich resources mean overseas groups will tolerate occasional bad behaviour as long as they mostly get their way. That now looks more likely.
Review: Economic history makes a happier return 4 Oct 2013 In “The Great Escape”, Angus Deaton recounts the frequently forgotten economic accomplishments of the last century. There were massive improvements in health and welfare. While giving new perspective to the rise of inequality, he makes a persuasive case against foreign aid.
Japan’s bonus boom masks bigger wage challenge 4 Oct 2013 The 8 percent jump in payouts this year is the best since 2006. Yet, bigger bonuses alone won’t end Japan’s deflation. Regular wages, which drive consumer spending, are still stagnant. Targeted fiscal incentives, followed by labour reforms, can boost both pay and productivity.
China’s dash for dairy based on frothy forecasts 4 Oct 2013 Foamy figures about milk’s popularity in China have lifted share prices of domestic producers, propelled Huishan’s $1.3 bln IPO last week and attracted big investors like Henry Kravis. China’s market size potential is massive, but the rate of growth may be leaner than advertised.
Tokyo Electron takeover is no template for Japan 3 Oct 2013 Applied Materials wooed its smaller rival with an all-stock merger and shared governance. Other buyers may try a similar approach to tempt Japanese partners to the altar. But a large chunk of Tokyo Electron’s stock is already held overseas. Other targets lack that advantage.
An Abenomics lesson on politics for Uncle Sam 2 Oct 2013 While dysfunction has shut Washington, Japan pushed ahead with a 60 pct consumption tax hike and $51 bln stimulus. What’s startling about the contrast is that Japan was the paralyzed one two years ago. Staring down the barrel of a demographic gun concentrates the political mind.
Japan’s pension pool can help in deflation fight 2 Oct 2013 A panel set up by the prime minister may ask the country’s $1.9 trillion public pension funds to shift cash to equities. Higher stock prices can help lift the gloom of a sales tax increase. For more enduring gains, though, fund managers must pressure companies to boost returns.
Global snowbelt leaves the world behind 2 Oct 2013 From a southern country and want to succeed? Head north, to the global snowbelt. That may be the message of a new Human Capital Index. Talent is squandered in much of the world while newcomers help the U.S. cover up domestic failures. Migration risks reinforcing economic gaps.
Japan’s tax blow is well cushioned 1 Oct 2013 Prime Minister Shinzo Abe has unveiled a $51 billion stimulus to help offset next year’s increase in the sales tax. That should soften the impact on spending. But if consumers do catch a deflationary chill, the government can count on the Bank of Japan to crank up money printing.
Great Moderation #2 warrants a muted welcome 30 Sep 2013 Before the 2007 crisis, optimists hailed a new era of steady growth with low inflation. There’s a reprise, but the new moderation is slower and riskier, thanks to high debt and weak politics in rich countries and structural problems in developing ones. Still, it could be worse.
Alibaba mess ought to prompt Hong Kong IPO rethink 30 Sep 2013 The e-commerce giant’s governance structure ran afoul of the rules. But the saga has exposed gaps in the way regulators handle IPOs. Hong Kong needs to debate the purpose of its policies, whether the ones it has are effective, and how to make the approval process more transparent.
Li Ka-shing’s Hong Kong spinoff fails to energise 30 Sep 2013 The tepid reaction to the tycoon’s plan to list his local power utility suggests there’s little hidden value. The mature unit’s stable cash flows will look less attractive as interest rates rise. It’s hard not to share Li’s conclusion that cash can be put to better use elsewhere.