Asia-Pacific

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.

Fortis India’s $665 mln u-turn hard to justify

8 Nov 2011

The family-controlled Indian group is buying an unlisted, Singapore-based healthcare operator from its own founders. Yet a year ago Fortis claimed its focus was purely domestic. Minority shareholders would probably have got a better deal if the cash had been spent in India.

Japan Inc’s earnings problems are home grown

7 Nov 2011

Honda, Panasonic and Sony all reported grim quarterly earnings. Weak global demand, a strong yen and natural disasters are partly to blame. But they underscore deeper problems caused by domestic policies and Japanese exporters’ long-standing neglect of profit margins.

Joining "too big to fail" club is a bonus for BOC

7 Nov 2011

Bank of China has been added to the list of globally systemic banks at the request of domestic regulators. Though it already has government backing, SIFI status could help BOC win more business abroad. And it doesn’t need extra capital. More Chinese lenders may want to sign up.

Qantas vindicated in workforce battle

4 Nov 2011

The Australian airline’s decision to ground its fleet a week ago looked like commercial madness, and followed tactical errors by the CEO. But a resolution with recalcitrant unions is in sight. The gamble will pay off as long as Qantas wins back passenger confidence.

U.S. deficit drama needs to play well overseas

3 Nov 2011

Foreign central banks, among America’s most reliable lenders, have been cutting their exposure to Uncle Sam’s debt since August. As Washington readies “Deficit Debacle: The Sequel” for primetime this month, legislators should keep foreign audiences in mind.

China must hurt the rich to save the rich

3 Nov 2011

Half the country’s well-off want out, a recent survey argued. Despite their considerable wealth, it’s not so bad if they go. More important is ensuring China creates a new generation to replace them. That means making reforms that might speed the old hands on their way.

LG rights issue won’t help it win smartphone wars

3 Nov 2011

Investors dumped shares in the Korean electronics maker even before it announced a surprise $1 billion cash call. Loss-making LG has fallen behind Samsung and Apple in the race to make trendy smartphones. It’s not clear how throwing good money after bad will help.

India’s quest for foreign coal looks here to stay

3 Nov 2011

The country has the world’s fourth largest coal reserves, but environmental restrictions result in a struggle to keep up with demand. Indian firms have already spent $10 bln this year on mines overseas. Though imports are pricier, the domestic alternatives don’t look much better.

Debt triangles return to haunt Chinese firms

2 Nov 2011

Despite robust sales and earnings, Chinese companies’ operating cash flow deteriorated sharply in the first half - suggesting many have increased credit to customers. If they can’t pay, a wave of ugly bad debt could hit companies and their lending banks.

Korea may change monetary tack to placate young

2 Nov 2011

Exports are slowing. That used to be a signal for the central bank to ease interest rates to help the big exporters cope. But they are no longer creating jobs young Koreans want. Political pressure from the young may push the bank to be tighter – even if that slows growth.

India ratchets up currency pressure on China

2 Nov 2011

Tired of a ballooning trade deficit, Indian trade negotiators are threatening duties on Chinese goods, starting with power equipment. Tit-for-tat tariffs are fruitless, but as a fellow emerging giant, Indian calls for China to revalue its currency would add weight to the debate.

Tough markets prompt Nomura soul-searching

1 Nov 2011

After a $589 million quarterly loss, the Japanese group is shrinking its investment bank. It’s not alone. But unlike peers, Nomura was sub-scale to begin with. Without a sustained market recovery, it is hard to see how Nomura’s global ambitions can survive.

New Delhi’s fiscal profligacy starts to bite

1 Nov 2011

India is set to bust its fiscal deficit/GDP target. Half way through the year, it has used two-thirds of the sums set aside. With inflation close to 10 percent and growth sluggish, there is an urgent need for the government to get a grip of public spending.

Japan acts alone in global financial mess

31 Oct 2011

Monday’s unilateral effort to keep the yen from rising will probably work as well as the last one – not very much. Tokyo can’t easily resist the pressure from foreigners fleeing troubled currencies. The G20 could move the world towards financial balance, but won’t try hard soon.