Asia-Pacific

Slowing China may bring relief to commodity buyers

22 Mar 2012

China’s manufacturing activity looks to have shrunk in March. As the economy cools, so will China’s appetite for globally traded commodities like oil and iron ore. The shift away from heavy industry, and exploitation of cheap domestic shale gas, should continue the trend.

Jaguar far from becoming China’s next top model

22 Mar 2012

The luxury carmaker owned by India’s Tata will join Mercedes and BMW in producing in China. It’s smart to get a local badge, since things are likely to get tougher for foreign auto firms. But the regulatory road is long, and low-end carmaker Chery is a curious choice of partner.

China reform may require a deeper crisis

20 Mar 2012

The outgoing premier and his likely successor have both called for change. But the biggest required reforms will leave powerful losers. Unlike Greece, Spain or Russia, China lacks creditors or voters to hold leaders to account. Greater turmoil may be needed to force a shift.

Indian retrospective tax change just isn’t cricket

19 Mar 2012

The one-step-forward, two-steps-back dance with foreign investors continues. Vodafone’s $2 bln tax victory was a boost. But India’s budget contained plans to alter retrospectively the rules on transactions between companies occurring on foreign soil. That’s poor.

China’s pig farms will dampen corn bulls’ hopes

19 Mar 2012

Hopes of China becoming a corn importer have fuelled a global rally in corn prices. But traders underestimate Beijing’s will for self-dependence in this commodity. Improvements in pig-farming efficiency and supply-chain bottlenecks will make global corn prices vulnerable.

India could have its cake and eat it too

16 Mar 2012

The budget has set a 5.1 pct fiscal deficit. That doesn’t look smart. But the deficit need not be Delhi’s number one concern. The consumption it fuels may actually be helpful. But structural reform is essential to ensure the supply side keeps pace – and that’s in short supply.

U.S. dealmakers should beware trustbusters abroad

15 Mar 2012

Bankers are oozing optimism about cross-border M&A. But as Western Digital’s recent $4.8 bln takeover of Hitachi GST shows, antitrust watchdogs around the world are proceeding cautiously and baring their teeth. Other globetrotting buyers like UPS will need to pack some patience.

Purges and paranoia weaken China’s crisis defences

15 Mar 2012

The ousting of Party hotshot Bo Xilai after a rebuke by China’s Premier Wen shows divisions run deep. Modernisation is a sticking point: reformists see it as a cure for unrest, while conservatives see it as a cause. A divided China can still grow, but may not handle shocks well.

HSBC gains little from BoCom cash boost

15 Mar 2012

It’s hard to justify ploughing another $1.7 billion into Bank of Communications when HSBC’s own returns are so low. HSBC can neither raise its 19 percent stake in the Chinese lender, nor sell without causing a diplomatic incident. The benefits for investors are far from obvious.

TCI’s Indian activism looks low risk, high reward

14 Mar 2012

The hedge fund is threatening to sue directors of state-backed Coal India, saying they are supine to government meddling. It’s a long shot. But TCI has little to lose and even partial success could pay off. New Delhi won’t like it – although it could be the biggest beneficiary.

Youku-Tudou price pop not only about synergies

14 Mar 2012

The Chinese video portals’ combined market value swelled by $1.5 billion after they unveiled a merger. Cost savings of $50 million a year only partly explain it. Other factors may include a squeeze on short sellers, and hopes that an enlarged Youku could itself be a bid target.

China has much to gain from rare earths fight

13 Mar 2012

A new WTO case against China may put Beijing on the defensive. But China’s global dominance puts it in a strong position to resist pressure. Besides, the backdoor trade protectionism plays well at home, as does the effort to make rare earth mining less environmentally damaging.

Big pharma needs new compact with emerging markets

13 Mar 2012

India has joined Thailand and Brazil in granting a licence to a generic drugmaker at the expense of a global player. The likes of Bayer will protest but a compromise – with multinationals obliged to take a price hit in return for continued patent protection – is probable.

China’s trade deficit is sign of things to come

12 Mar 2012

Unusually poor demand from Europe and extraordinary purchases of copper and soybeans helped create a rare $4.2 bln trade deficit in the first two months of 2012. But as China imports less to process for export and more to consume, monthly deficits will get more frequent.

Merger of China’s YouTubes shows web maturity

12 Mar 2012

The $3 bln tie-up of China’s two pure-play online video groups looks like a defensive move in the country’s fiercely competitive Internet market. Diversified players like Baidu and Sina are investing in their own video portals. Profits are coming – but only for those with scale.

Prudential’s threat to quit UK isn’t just hot air

12 Mar 2012

The insurer is reviewing its domicile, citing the burden of European regulation. Upping sticks to Hong Kong wouldn’t protect Pru from all the reforms, and would yield few tax savings. But if the new rules turn out bad, decamping to its main growth market would make sense.

In India the biggest surprise would be consistency

12 Mar 2012

New Delhi can’t stop changing policy on cotton exports: banned, maybe allowed or maybe just partially banned. As any Indian driver will tell you being ready to change direction is essential. U-turns may help on India’s chaotic roads, but they’re a menace in driving the economy.

U.S. energy nationalism soft spot could be gas

8 Mar 2012

Seven years after jingoism prevented CNOOC from buying Unocal, Chinese companies remain on the prowl. So far, they have been content with joint ventures. And high oil prices would make acquisitions difficult now anyway. But foreign buyers may find America less protective of gas.

When to worry about China’s military triangle

8 Mar 2012

Security tensions are building in Asia, and a 11 percent budget boost for the People’s Liberation Army won’t help. China’s rise has been peaceful because its leaders have balanced the people, the Party and the PLA. The triangle still holds, but it is getting wobbly.

Indonesia’s mining asset-grab overplays its hand

8 Mar 2012

A decree forcing foreign miners to cut their stakes in projects below 50 percent shows worrying disregard for overseas capital. Indonesia’s finances are robust, but ongoing fuel supply issues, caused by a lack of energy investment, show it can’t afford to play too rough.