Asia-Pacific

StanChart risks remain economic, not regulatory

5 Mar 2013

The London-listed lender shrugged off the fourth-largest industry fine to register its tenth consecutive increase in pre-tax profit. Though UK rules and taxes are a drag, StanChart’s growth is firmly hitched to emerging markets. That makes it unique among Western peers.

Three roadmaps for an urbanizing China

5 Mar 2013

Managing the growth of China’s 711 million urban dwellers is high on the new leadership’s agenda. There are three options: let people go where they like, send them where resources are abundant, or put them where empty buildings are. The first is fairest; the last is most likely.

China’s gains tax won’t put a roof on house prices

4 Mar 2013

Charging 20 percent of gains on houses sold will enrich impoverished local governments, and hurt developers, for whom transaction volumes count. There’s little evidence it will make housing more affordable. For that, the remedy is to lend less, not tax more.

Much good cholesterol in India’s spending plan

1 Mar 2013

Investors are wrong to view the 16.5 percent jump in the government’s budgeted spending as fiscal profligacy. Expenditure is growing faster than projected nominal GDP because of a boost to asset creation. This healthy investment will help the slowing economy avoid a seizure.

BOJ chief could score early win by dumping rule

28 Feb 2013

The Bank of Japan’s self-imposed limit on government bond holdings is past its sell-by date. Haruhiko Kuroda, the likely next governor, could deliver a quick boost to monetary easing by dropping the restriction. Doing so would allay fears of a spike in long-term yields.

Stern budget will help India shrug off bad past

28 Feb 2013

Finance Minister Chidambaram has eschewed pre-poll populism. The government plans to control borrowing. That should reduce the competition for savings - and lower interest rates. Private investments will revive and a smaller fiscal deficit will steady the current account.

Illumination alone won’t slow China shadow banks

27 Feb 2013

With non-bank finance over 40 pct of GDP, a mooted plan to disclose and limit off-balance sheet lending is welcome. Yet growth will continue, and it’s still not clear that investors will be on the hook for losses. The economic imperative to keep credit flowing is pre-eminent.

Wage subsidy could blunt Singapore’s edge

26 Feb 2013

The city-state’s plan to subsidise 40 percent of pay increases for low-wage earners is the wrong answer to growing inequality and falling margins. Companies will be left with bloated wage bills when the subsidies end in 3 years. A small economy can’t afford such distortions.

Why Kuroda is a better choice for BOJ chief

25 Feb 2013

The next central bank head will have to print money aggressively and defend a weak yen vigorously. ADB chief Haruhiko Kuroda’s diplomatic savvy and readiness to take risks make him a better choice than previous favourite Toshiro Muto, whose BOJ record did not inspire confidence.

Asia’s property taxes are covert capital controls

25 Feb 2013

Hong Kong has hiked real-estate stamp duty in the latest effort by Asian city-states to cool demand. But local first-time buyers are exempt. As long as low rates push investors to seek hard assets in safe havens, pressure to discriminate against foreign speculators will increase.

Bumi shows that small print is well worth reading

22 Feb 2013

It’s easy to mock the list of “risk factors” in prospectuses. Lawyers rattle off every imaginable thing that could possibly go wrong. The long and deadpan list can be funny and oddly terrifying. But it can be valuable too. Many of the risks at Bumi were hiding in plain sight.

Bumi debacle teaches some all too basic lessons

22 Feb 2013

Most of the mess at the London-listed Indonesian coal miner could have been avoided if Nat Rothschild and his backers had followed what should be standard practices for risky investments. Breakingviews has a check-list for future purveyors of exotic deal structures.

Soaring kiwi dollar tests faith in inflation goal

22 Feb 2013

New Zealand, which pioneered inflation targeting, faces its biggest test in 23 years. The central bank is under pressure to respond to capital inflows and the overvalued dollar. While it’s right to reject a Swiss-style peg, a single-minded focus on prices is no longer sensible.

China’s central bank will find value in continuity

21 Feb 2013

PBOC governor Zhou Xiaochuan has presided over a decade of more-or-less stability. The cost has been financial repression and the build-up of sizeable risks. But the PBOC’s freedom is limited. If ideas and experience are what counts, Zhou remains the best person for the job.

Southeast Asia’s growth could lead to credit curbs

21 Feb 2013

The region’s debt-fuelled expansion is reviving memories of the unsustainable mid-1990s boom. But the authorities are reluctant to tighten monetary policy as higher interest rates might attract more foreign capital. Policy makers may prefer to control credit more directly.

Ethical economy: The menace of financial markets

20 Feb 2013

Are free and open markets for stocks, bonds and currencies the glory of the capitalist system? Quite the contrary. Because financial assets have no clear value, these markets are always too influenced by disruptive wild emotions, and encourage destructive greed.

Marius Kloppers will be hard act to follow at BHP

20 Feb 2013

The miner’s outgoing boss benefited from great assets, management discipline, a bull market, and some luck. BHP’s returns were solid under Kloppers, despite the financial crisis. His successor, Andrew Mackenzie, will stick to the formula, but he’ll need more luck to do as well.

China’s next debt crisis will be a local affair

20 Feb 2013

Elaborate ties between local governments, lenders, companies and guarantee firms mean that the big risks may not lie in the country’s big banks, but in towns and regions. A recent suggestion of setting up local bailout funds sounds sensible. But contagion will be hard to avoid.

Riposte: Money printing is in fact a barmy idea

20 Feb 2013

The FSA’s chairman Adair Turner and my colleague Edward Hadas have argued that the direct monetisation of public expenditures can sometimes be sensible. While unorthodox thinking is urgently needed in economics, this idea is poisonous. Lock it up and throw away the key.

Singapore kicks off necessary benchmark rate cull

19 Feb 2013

The city-state is expected to scrap its U.S. dollar Sibor interest rate in order to focus on the weightier local currency benchmark. With alternatives on tap, the switch should be manageable. It will also be a useful test for London’s planned interest rate bonfire.