Asia-Pacific

Fracking tie-up makes sense for shale-rich China

16 Dec 2011

Buying a piece of Frac Tech, a U.S. gas services company, for a mooted $2.2 billion would be a savvy move by China’s national energy majors. Frac Tech’s drilling technology should be easy to copy, and could help China unlock 140 years of gas supplies. The strategic benefits justify a premium price tag.

India’s inflation puzzle may have unusual answer

16 Dec 2011

It’s not intuitive, but cutting rates may be the best bet in fighting rising prices. The central bank can’t really raise rates because the economy is weak, and flat rates will achieve little. Dropping them, meanwhile, could perk up the market and halt the pressure on the rupee.

Sino-Forest debt games are bad for creditors

15 Dec 2011

The decision not to pay $10 mln interest may push the scandal-hit Chinese timber firm towards default and a restructuring process. Bond holders are in a weak negotiating position. Most of the assets, if they really exist, are inside China, where it is hard to enforce claims.

Olympus must dump its board to save itself

15 Dec 2011

The Japanese company’s board wants to hang on until March. That’s too long. Even though it beat an earnings deadline, Olympus still risks being delisted over ongoing accounting concerns. A fresh board can only help, and should also placate creditors and help buoy up the stock.

India’s growth requires fundamental tax reforms

15 Dec 2011

Only 3 pct of the Indian population pays income tax and the total take, as a proportion of GDP, is well below international peers. Anti-corruption campaigners focus on riches parked offshore. But India’s economy will be threatened unless New Delhi plugs tax holes at home.

Asian banks can’t fill gap as Europeans retreat

14 Dec 2011

Lenders in Asia are flush with local currency deposits. But companies in the region got used to a world of cheap dollars. The only way most banks can lay hold of dollars is to borrow them, which could leave a $390 billion gap as global lenders pull back.

No easy pickings for vultures in Vietnam

13 Dec 2011

Elliott Advisors is suing a state-owned shipping firm over a defaulted $600 mln loan. It’s good that punchy hedge funds are helping keep emerging-market borrowers honest, where big institutions may be more supine. But it’s a lot of hassle for what may be at most a $25 mln gain.

Rupee’s decline adds to India’s woes

12 Dec 2011

The rupee has fallen 17 percent this year. Self-inflicted wounds and worries about troubles elsewhere have led to a flight of the capital which India needs to fund its current account deficit. New Delhi, already in turmoil, is running out of firepower to deal with the impact.

Hong Kong needs to add polish to its IPO crown

9 Dec 2011

Asia’s financial centre is set to cede IPO leadership back to New York. Deal flows from China are strong and global giants like to list close to the world’s biggest growth market. But HK’s listing process may have to be shorter and simpler if it is to quickly regain top spot.

Michael Kors IPO cut from same cloth as Prada’s

6 Dec 2011

The U.S. designer’s eponymous firm is seeking a luxury price tag of up to $3.6 bln in a New York float. It’s an all-American fashion name and the high-end valuation isn’t out of line with Prada’s Hong Kong listing this year. But Kors may struggle to keep up the pace of growth.

Pharma center of gravity shifts eastward

6 Dec 2011

Drug research tends to follow spending. Take Merck’s pledge to invest $1.5 bln in R&D in China. Emerging economies’ citizens are growing wealthier and living longer, while their governments’ fiscal health is robust. Merck’s step suggests drug development is shifting accordingly.

Olympus’ ex-CEO no shoo-in for post-scandal return

6 Dec 2011

Michael Woodford wants his job back at the Japanese group now that those accused of covering up investment losses have left the board that fired him. But the same board hired him, and he only ran the company for six months. Olympus shareholders should make sure to look around.

India shuts up shop

5 Dec 2011

What seemed like a turning point last week, when the Indian government announced it would allow foreign investment in retailing, now looks to have become an embarrassing U-turn by the beleaguered Indian government. India can’t afford to continue tarnishing its brand.

Bagehot to cenbanks: liquidity needn’t be cheap

30 Nov 2011

The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.

Central banks take on market fears

30 Nov 2011

A six-nation coordinated move to make cheaper dollars available globally seems aimed initially at European banks. Like it or not, it shows a willingness to do what private investors won’t. If politicians show similar unity, they could win the standoff with markets over the euro.

China’s rich splash out despite slower growth

30 Nov 2011

Macro data is weakening but art auctions and handbag sales are still going gangbusters. The disconnect is disconcerting. When growth is rapid, conspicuous consumption looks like progress. Now it suggests waste. The callous rich could become targets of political and popular ire.

Myanmar forms centre of economic love triangle

30 Nov 2011

A visit from Hillary Clinton marks the end of Myanmar’s pariah status, but there is much work to be done before the country can offer investors sustainable returns. With the United States, China and India all jockeying for position, capital flows may come too quickly.

Australia still vulnerable despite triple-A crown

29 Nov 2011

Investors love the low official debt, high yields and strong exports to China. A Fitch upgrade makes Australia one of 14 nations with top marks from all three rating agencies. But there’s kryptonite: indebted households and reliance on foreign investors and high commodity prices.

China could gain from helping Europe via IMF

28 Nov 2011

Rescuing the euro zone is a tough sell for a still-poor nation. But like Saudi 35 years ago, China could parlay some of its $3.2 trln of reserves into greater international clout through the IMF. It would be saving a big export market and a reserve diversifier into the bargain.

BRIC success shows the power of a good idea

28 Nov 2011

Goldman’s Jim O’Neill invented the acronym for the leading emerging markets 10 years ago. What started as a good economic theme became a state of mind – the embodiment of a global power shift. So far, so good, but at least one BRIC is likely to disappoint in the next decade.