Asia-Pacific

PCCW spinoff can’t unwind tycoon discount

23 Nov 2011

Richard Li’s conglomerate snagged a generous $3.8 bln price tag for its Hong Kong telecom business, thanks to a promise of fat dividends. But the spinoff exposes an inconvenient truth: the mogul’s own holding company is valued at almost 40 percent less than the sum of its parts.

Asia’s half-hearted reform exposed by Western woes

23 Nov 2011

Eastern economies are grappling with slowing exports and receding investment from Western partners. It didn’t have to be this way. Asian economies failed to use boom years to uproot their outmoded development model. Making those changes now promises to be doubly painful.

Chinese accounting paranoia finds new victim

22 Nov 2011

Focus Media’s stock fell 40 percent after it was accused of overstating assets by the same short-seller that targeted Sino-Forest in June. This time the target is a bigger name, and the claims more far-reaching. Fast growth and powerful insiders make Chinese firms easy targets.

Wen paves way for yuan depreciation

21 Nov 2011

China’s premier said the currency should be more flexible “in either direction”. The idea of devaluation might sound strange, but the Chinese trade surplus is shrinking and inflation is cutting into the yuan’s real value. This could be a good time to let the market decide.

China’s own "Little Greeces" should help themselves

18 Nov 2011

Shanghai became the first local government to sell bonds this week. Provinces like Hainan, which has debts of almost 100 percent of GDP, cannot easily go down that route. Beijing might not come to the rescue, so they need help themselves with austerity and asset sales.

India edges open the door to more foreign capital

18 Nov 2011

There are signs that India is getting serious about allowing more international funds to flow into its economy. External pressure for reform is slowly starting to tell on New Delhi’s policy makers. But shortage of capital is the key driver.

Gloats about India’s Icarus miss the point

16 Nov 2011

For many, Vijay Mallya embodies the unsavory flamboyance of India’s newly rich. Some see the problems at the Kingfisher airline he founded as comeuppance. But though grave dangers stalk the entrepreneur, the turbulence in Mallya’s flight path is not all of his own making.

Sino-Forest pays high price for valuable lessons

15 Nov 2011

An independent committee cleared the Chinese group of major accounting worries. But $3 billion of lost market value won’t be easily recouped. Sino-Forest could have helped itself with a simpler structure, more disclosure and by focusing on quality as well as speed of growth.

India is still rising, but it is not shining

15 Nov 2011

The World Economic Forum - best known for its Davos shindig – is holding a summit in Mumbai for the first time. The rhetoric from participants suggests the “India Shining” story is still burning brightly. But the refrain is failing to resonate. The numbers tell a different story.

Sinopec’s M&A strategy gets a little smarter

11 Nov 2011

The Chinese oil major’s $5.2 billion investment in Brazilian oil resembles a deal it did last year – but at 20 pct less per barrel. Non-financial considerations explain some of the difference. But state-owned Sinopec appears to be learning more tricks of the M&A trade.

Collapse not yet likely for battered Olympus

11 Nov 2011

The scandal-racked Japanese company could see its shares delisted, and its debt burden is formidable. But its core medical equipment business provides strength. A strike by suppliers, creditors and customers could push Olympus over the edge, but that still looks remote.

Nat Rothschild’s Bumi broadside reveals weakness

10 Nov 2011

The investor’s coal bet looks messier by the day. He’s now trying to embarrass his Indonesian partners into fixing governance shortcomings that were apparent from the start. Outside investors could ultimately benefit. But by going public Rothschild has shown his lack of power.

Euro crisis worsens the currency wars

10 Nov 2011

Once there was just one big controlled currency, China’s. Now there are three, as Switzerland and Japan try to counteract euro fear and safe haven flows. But these interventions could enlarge global imbalances. China is best placed to help, by letting the yuan rise.

Indian privatisations need time, and hard work

10 Nov 2011

Practical problems often come with moves that are sound in principle. Indian authorities are mulling the part privatisation of four general insurers. As with many other state-owned assets, there’s a tonne of preparatory work to be done before the firms can contemplate a float.

Rights issues need a straightforward story in Asia

10 Nov 2011

Five recent equity raisings worth a total $4.5 bln triggered plunging share prices. Yet rights issues don’t themselves hurt investors. For issuers with a good story, like Thailand’s Big C, the damage will be temporary. Others, like Korea’s LG Electronics, show how not to do it.

HSBC’s good intentions collide with market reality

9 Nov 2011

The lender’s pre-tax profits halved in Q3 from the prior quarter, as loan impairments rose and the European business dipped into the red. CEO Stuart Gulliver’s turnaround should still make HSBC a leaner, better bank. But his targeted 15 percent return on equity now looks optimistic.

Olympus mystery may hinge on M&A accounting

9 Nov 2011

The company hasn’t said how it used takeovers to hide decades of investment losses. Japanese goodwill accounting might provide a way, by allowing companies to pay big takeover premiums and advisory fees and write them down over time. It’s time Japan closed this loophole.

China’s Tencent slows as new Internet models bloom

9 Nov 2011

China’s second-biggest dot-com by market value saw its slowest quarterly earnings growth in four years. Gaming customers are defecting to new Internet models. Higher costs in micro-blogging and video are hurting margins. Tencent needs a strategy beyond simply getting bigger.

Olympus casts shadow over corporate Japan

8 Nov 2011

The Japanese group admitted covering up investment losses for 20 years. That could spell fines and even jail sentences. But Olympus isn’t the only company that lacked necessary checks and balances. Its listed peers may now need to prove that shady accounting wasn’t catching.

Olympus investors price in a worst-case scenario

8 Nov 2011

Shares in the Japanese company have fallen 70 percent as gruesome news of misdeeds in deals has emerged. But assuming the core business is viable – and Olympus escapes giant penalties – significant value may lie beneath the mess. Only the bold will be tempted, though.