G20 says in Moscow that tax evasion is really bad 22 Jul 2013 The world’s largest economies have agreed on a broad plan to fight multinational companies’ tax optimisation and evasion. The next step is to translate this into national laws. But Russia may not have been the best possible place to launch a global push for tax fairness.
China’s tech hopefuls still prefer US dollars 22 Jul 2013 Yuan venture capital is growing, but foreign funding still rules. Despite the red tape, a lack of domestic exit options means entrepreneurs are following giants like Baidu and Tencent offshore. As long as a Nasdaq listing retains its allure, the greenback will continue to reign.
China’s PBOC serves reformists an amuse-bouche 19 Jul 2013 The central bank has allowed banks to lend as cheaply as they like. That smells like liberalisation, but it’s no more than a tasty morsel. Banks could even end up weaker, if rates fall for well-connected borrowers. The real meat, relaxing deposit rates, is still off the menu.
Review: The rise and fall of an Asian tycoon 19 Jul 2013 Mohsin Hamid understands corruption: his fictional portrait of a crooked yet oddly sympathetic tycoon shows how shady dealings can make or break a career. Hamid doesn’t condone skullduggery, but this detailed profile is an instructive guide to a darker side of rising Asia.
Vietnam is back in the game for buyout firms 18 Jul 2013 Warburg Pincus is investing $200 million in the country’s largest mall owner at a time when retail sales growth is at a 10-year low. The U.S. private equity firm’s punt might be premature, but it isn’t wrong. Vietnam is outgrowing its bad reputation with foreign capitalists.
Baidu deal shows pain of being China tech upstart 18 Jul 2013 After the search engine said it would buy app store 91 Wireless, the seller’s shares fell almost a quarter. As China’s tech giants fight for mobile market share, small players face pressure to compete or get out of the way. Both options can leave investors disappointed.
India new FDI rules show welcome long-termism 17 Jul 2013 Letting foreigners own more of local industries like telecoms won’t kick off a rush to invest. But it suggests a desire to court longer-term inflows, and replace an unhealthy reliance on hot money. The new policies may help stem the rupee’s slide too.
Billabong pays up for shelter from debt storm 17 Jul 2013 In return for saving the Australian surf brand from a potentially fatal debt crunch, private equity group Altamont gets a 12 pct coupon on loans and up to 40 percent of Billabong’s equity. Existing investors will see scant returns, but without this deal they could have been sunk.
GSK finds toxic side effects in Chinese market 16 Jul 2013 The UK pharma group is accused of using elaborate kickback schemes. But the Chinese combination of pervasive state involvement, underpaid doctors and coveted foreign products is almost an invitation for bad practice. A full cure requires time, money and stronger institutions.
India in depth: Time to treat savers fairly 16 Jul 2013 One of the lowest real costs of capital in Asia didn’t prevent an investment slump, but it did put off savers. The economy wouldn’t rely so much on hot money if local households weren’t short-changed. The outmoded state-built apparatus of financial repression needs to be junked.
Investors miss emerging-market reality 15 Jul 2013 In the markets, the talk is all of China slowdown and problems in developing markets. Yet emerging economies are still set to provide 76 pct of total additional global GDP in 2014. The financial focus ignores the big picture: the balance of global economic power has shifted.
Asian capital flight risk goes beyond hot money 15 Jul 2013 Reversal of foreign investment flows isn’t the only threat for policymakers. Domestic households too could whip out their cash as rising US interest rates make it more attractive to take money abroad. For some countries the savings arbitrage could prove damaging.
Review: "Balance" missing from analysis of decline 12 Jul 2013 Glenn Hubbard and Tim Kane try to draw lessons for today’s United States from the fate of past great powers. The economic analysis of historical falls from greatness is mostly convincing, but the application to America doesn’t stick. Preconceived ideas get in the way.
Grohe should help rid Germany of locust curse 12 Jul 2013 The private equity-owned bathroom fixtures maker is mulling an IPO. Possible buyers are circling. Grohe was declared a victim of “locust investors” by a German politician a decade ago. Today it is stronger than ever, even though its mooted valuation looks a bit optimistic.
The lowdown on China’s slowdown 12 Jul 2013 This year’s expected GDP growth has shrunk. Weak exports hurt, but 7 percent may be the new normal in a richer, ageing country with a legacy of poor credit allocation. It’s too simple to say the government can make slower growth work - but too early to brace for a hard landing.
Olympus $1.2 bln share sale fails zoom-lens test 12 Jul 2013 Tapping investors to cut debt and expand its medical unit makes sense for the scandal-hit Japanese company. But only selling shares overseas is a slight on local shareholders who endured the dark days. Besides, a close-up view suggests Olympus’s finances were already on the mend.
Batista’s house of cards is too clever by half 11 Jul 2013 The Brazilian sometime multi-billionaire may now lack the $1 bln pledged to OGX. Other group companies dependent on the oil explorer could suffer as a result. Batista’s interlocking realms, along with Babcock & Brown and other too-smart creations, serve as a warning to investors.
New Bumi plan makes bad jam even worse 11 Jul 2013 Fresh proposals could see the Bakrie family bought out of the London-listed Indonesian coal miner by its chairman, Samin Tan. It’s far inferior to an earlier plan to cancel the shareholding. It would help investors, including Nat Rothschild, if Tan commits to sell down his stake.
Dash from emerging to developed markets hits new risks 11 Jul 2013 Capital is being sucked from emerging markets, depressing both asset prices and growth. Developed-market equities are the new favourite. But Europe is in recession, U.S. growth is moderate and Japan’s stimulus may wear off. Investors are swapping one set of risks for another.
Edward Hadas: Get used to zombie economics 10 Jul 2013 Moviegoers know that zombies are neither really alive nor fully dead. The idea is also useful in demographics and economics. Although economic zombification receives little attention, its effects could be as important as monetary policy, fiscal deficits and structural reforms.