Graff’s new luxury paradigm hits the rocks 31 May 2012 Falling markets and the Facebook IPO flop have helped sink Graff Diamonds’ $4 billion Hong Kong listing. But Graff came with hard-to-sell quirks. The bet that investors would buy into a “new” kind of luxury at a time of risk aversion was too optimistic.
High-end luxury looks exposed as China slows 31 May 2012 Hong Kong’s arts auction and property market is cooling as mainland Chinese buyers retreat. Tighter credit and China’s political cycle have both played a role. The hardest hit could be “hard” luxury products like sports cars and watches, often assumed to be the most resilient.
India needs an adult conversation 31 May 2012 As GDP growth slumps to 5.3 pct, the county goes on strike. The people are up in arms over a sensible cut in petrol subsidies. The government’s instinct is to pander and roll back, but it might get more respect by telling the truth about what’s needed to get the economy moving.
China bankers’ bad habits die hard 31 May 2012 The investigation of a top AgBank executive will remind investors of the frauds that dogged Chinese banks of old. Lenders have come far, but low pay, poor disclosure and incomplete reforms leave much scope for bad behaviour. As banks’ balance sheets get bigger, so do the risks.
Li Ka-shing opts for succession China-style 30 May 2012 The HK tycoon has avoided a power scramble by naming his eldest son as heir to his business empire. To ensure Li’s values prevail, his successor will be surrounded by long time acolytes. It’s much like what’s happening in Beijing. In both cases, the newbies will need new tactics.
Japan’s $3.6 bln Gavilon buy goes with the grain 29 May 2012 Marubeni’s swoop on U.S. agricultural specialist Gavilon can be put down to a strong yen and commodity traders’ quest for scale. As long as China’s appetite for commodities keeps growing, so will M&A among its suppliers.
India’s welcome market reform comes with a bonus 29 May 2012 In removing the option to settle serious cases by paying a fine, SEBI has created some confusion. What happens to active cases such as the one against Reliance Industries? The regulator could allow those under investigation one last chance to make a juicy offer it can’t refuse.
EU probe shows hidden costs of China subsidies 28 May 2012 A mooted trade case against telecom vendors may hinge on their access to state credit. Yet Huawei and ZTE are competitive enough not to need such perks. State support for national champions may now be turning into a disadvantage, since it makes it easy for others to cry foul play.
Lady Gaga not the only one turned off by Indonesia 28 May 2012 The pop diva nixed a planned show over conservative protests and demands she tone down her act. Investors feel similar about demands they cede some control in mining and finance. Many are now selling stocks and the rupiah. Indonesia’s assertive new strut may backfire.
Indian oil producers may be due a windfall 28 May 2012 Delhi presently subsidises refiners, and forces state-owned oil companies to bear part of the cost. Growing deficits mean that can’t continue. A logical move is for the government to let the price of diesel rise, which could mean a boost for the likes of Oil and Natural Gas Corp.
CIC investment could improve Alibaba’s prospects 25 May 2012 A possible $2 billion investment from China’s sovereign fund would help Alibaba fund its buyback of half of Yahoo’s stake. Alibaba can appear patriotic by becoming more Chinese. It might also help the group reclaim its valuable and politically sensitive payment division, Alipay.
China’s steel sector needs more than a stimulus 25 May 2012 Its mills made a loss in the first quarter, and falling iron prices won’t get them out of their predicament. The problem is rampant overcapacity. While China’s steel needs are growing, producers are now years ahead of themselves. Politics, not profits, are driving the cycle.
India’s market regulator needs to get tougher 25 May 2012 SEBI is considering removing the option to settle serious cases like insider dealing without admitting guilt. That could lead to even less enforcement than at present. But if it hardens SEBI’s resolve to land a high-profile conviction, such self-denying ordnance may be worth it.
Petrol hike pumps hope for deflated India 24 May 2012 It’s a small start, which will be meaningless unless followed with bolder action to cut subsidies and reform the economy. But the direction of travel is right and, if it proves more than a false dawn, it will help India rediscover its credentials as a high growth economy.
Trafigura move tests Singapore’s fat-cat fatigue 24 May 2012 The commodities trader is moving its HQ to Singapore, where its CFO joins Facebook founder Eduardo Saverin and a stream of bankers. Low taxes and proximity to growing Asian markets explain the appeal. But a warm welcome may depend on new arrivals’ ability to create local jobs.
China doesn’t need a policy U-turn 23 May 2012 The premier has given investors hope for a new stimulus. But Beijing shouldn’t panic this time. Unlike in 2008, there are no massive job losses threatening stability, and still too much money sloshing around from the last stimulus. Structural reforms are the right remedy.
Japan’s debt pits economists against investors 23 May 2012 Fitch’s Japanese downgrade makes sense in economist-world, where more sovereign debt is always bad. Investors live in another place, where prices rise because people have to buy something. The two universes mostly co-exist peacefully. That could change any time.
Miners can live with a not-so-super cycle 22 May 2012 Cooling demand in China, the world’s most important swing customer for metals like copper and iron ore, suggests the decade-long materials boom may be fading into a more humdrum cycle. That’s a challenge for the top miners. But it doesn’t necessarily herald value destruction.
Anil Ambani mystery reflects poorly on India 22 May 2012 How did two Ambani firms invest $250 mln in another Reliance company without anyone in the group realising? The UK regulator raised a red flag, but its Indian counterpart and Reliance itself are saying little. Such cases do little for India’s attractiveness to investors.
China diversified dot-coms avoid Facebook pitfalls 22 May 2012 Fears that the advertising-led model is weak drove down shares in Renren, but other Chinese dot-coms are better positioned. Many have traditionally focused more on gaming, where revenues are still surging. Diversified players like Tencent are more recession proof.