Asia-Pacific

Key ingredient missing for M&A revival

17 Sep 2012

Glencore-Xstrata and BAE-EADS might set bankers’ hearts racing. Bulls have financial fuel: QE3 makes debt cheap. They have economic logic: revenue pressure from sluggish growth makes scale more valuable. But a wave of mergers won’t come until confidence rises too.

Obama trade hypocrisy good politics but bad policy

17 Sep 2012

The U.S. president is accusing China of an unfair $1 bln subsidy for its auto industry. That might resonate with voters. But the Asian giant, a vital trading partner for the U.S., has already hit back. And lauding his own $80 bln bailout of Detroit leaves Obama on shaky footing.

Motorola: the breakup that keeps on giving

17 Sep 2012

Splitting the company has been good for shareholders. Google bought the cellphone arm for a chunky premium. Motorola Solutions, its emergency communications business, has done even better. And there’s room for more. It could buy back a third of its stock without financial strain.

Inefficient Market: The Devil’s Dictionary of Finance

17 Sep 2012

Roughly a century ago, the American writer Ambrose Bierce compiled ”The Devil’s Dictionary”. In his celebrated lexicon, Bierce displayed a profound understanding of finance, which he defined as “the art or science of managing revenues and resources for the best advantage of the manager.” Below are several other of his definitions touching on the subject of money.

China’s anti-Japan protests could bring heavy cost

17 Sep 2012

Weekend rallies recall 2005, when riots erupted over Japan’s bid for a seat on the UN security council. This time, however, the stakes are higher. China’s economy is more fragile, making unrest harder to contain. And Japan is more reliant on the whims of the Chinese consumer.

Asia’s vanishing savings will bring new risks

17 Sep 2012

The region’s large trade surpluses have been blamed for hollowing out Western manufacturing and fuelling the debt binge that led to the financial crisis. Now the savings glut is fading as the global economy rebalances. Though that’s welcome, the shift poses new threats to Asia.

Japan holds atomic energy to impossible standard

17 Sep 2012

If Tokyo follows up on its pledge to phase out its reactors, the costs will not be limited to higher electric bills. The replacement fossil fuels are far more dangerous. In demanding perfect safety from nuclear energy - but not from coal - Japan is going with an alarming trend.

Fortescue may get off easy for over-leveraging

17 Sep 2012

The iron-ore miner borrowed heavily to fund a spending binge on the assumption prices would stay high. Now it’s comeuppance time. The shares fell 14 pct on Sept. 13 on talks over debt covenants. But Fortescue isn’t about to run out of cash and there’s time for prices to recover.

Rate cuts can’t reverse India’s investment drought

17 Sep 2012

The Reserve Bank of India’s refusal to cut interest rates doesn’t make it a spoilsport. The cost of capital has little effect on the ability of local companies to borrow. And the central bank can’t afford to take its eyes off high inflation and a gaping trade deficit.

What else could Manmohan Singh reform?

17 Sep 2012

India’s prime minister has unleashed three bold economic reforms. Assuming his nerve holds in the face of strong protests, he may even get a taste for such announcements. India’s financial sector, mining industry and labour market would all benefit from a similar approach.

Fed’s approach to monetary policy looks Chinese

14 Sep 2012

Critics accuse the People’s Republic of using an artificially low exchange rate to promote job creation at home. Now the U.S. central bank says it will keep on stimulating until unemployment falls. The approach is the same, but the Fed’s domestic bias carries more global risks.

QE3 honeymoon may be brief for emerging markets

14 Sep 2012

The flood of cheap dollars from the Fed will lift all boats for a while. But if investors fear it’s not reviving growth, funds will pool in safe havens from inflation. And if it works, the tide will favour recovery plays. Either way, QE is sure to trouble non-U.S. central bankers.

Politics and economy cloud China’s Davos

14 Sep 2012

It’s no surprise the China-focused World Economic forum lacked previous years’ lustre. With a leadership change coming, officials are cautious about what they say. Businesses worry about a weaker economy. And even host city Tianjin shows the limits of China’s rapid development.

New Delhi must stand its ground on subsidy cuts

14 Sep 2012

The government has announced a bold 14 percent hike in the price of diesel. Now it needs to stay the course, embrace the decision rather than apologise for it, and move fast to get even more done. A shift in public spending from consumption to investment is the ultimate goal.

China’s anti-personality cult needs revision

14 Sep 2012

Suppose China’s missing next leader were actually replaced by a double, as one wild rumour suggests. Who could tell? China has eschewed personality politics in favour of dull, clever bureaucrats. That served the country well, but future reform calls for more charisma.

Regulator’s past haunts India’s Sahara case

14 Sep 2012

The chairman of India’s securities watchdog is under a cloud. Last year, a deputy wrote to the prime minister alleging his boss was going easy on Sahara. Now that the conglomerate has been ordered to repay $5 bln to 30 mln investors, the regulator needs to show his independence.

Thais hope for third time lucky with $10bn F&N bid

13 Sep 2012

The Bangkok beer moguls twice failed to get their hands on Asia Pacific Breweries, but prodded Heineken into a higher bid. Now they’re offering to buy the 70 pct of parent company Fraser & Neave they don’t own. At S$8.88 per share, every extra share they get looks a bargain.

China’s big fiscal guns best left in the holster

13 Sep 2012

There’s room for China to spend its way back to higher growth. Government debt is low, and projects aplenty are waiting to be built. Yet despite the slowdown, political timing and euro uncertainty argue against quick action. For now, leaders can afford to talk rather than do.

South Korea’s slowdown response lacks urgency

13 Sep 2012

Falling exports mean the economy is cooling fast. Token tax rebates for homeowners and car buyers won’t have much impact. For debt-addled consumers to loosen their purse strings, interest costs must fall. Yet the central bank seems surprisingly reluctant to cut rates.

Ethical economy: Economic action needs its hard core

12 Sep 2012

Poor-country industrialisation requires revolution that is as much cultural as economic. Many are stuck less than half way up the ladder. Hard core revolutionary capitalists are required, but need help because they are often isolated, subverted or unable to lead.