Asia-Pacific

China’s super-railways on track for debt troubles

15 Aug 2011

New super-fast railways would struggle to repay their colossal borrowings even before new safety fears, which will push costs up and demand down. The country benefits, since the perks of fast trains aren’t all financial. Not so investors in banks who fund these trophy projects.

Korea’s leveraged bets put it at risk of contagion

12 Aug 2011

Seoul’s stock market fell further than the U.S. this month - 16 pct. South Korea relies heavily on European credit and a U.S. recession would threaten its exports. But the popularity of loans and derivatives to bet on stocks makes Seoul susceptible to even more dramatic declines.

Nomura’s Wall Street push will be tough to pull off

11 Aug 2011

The Japanese broker is focusing its investment banking ambitions on the United States while trimming its European headquarters. Nomura reckons it can establish itself by hiring rather than buying. But it’s hard to see it succeeding where so many others have failed.

Fed policy creates crunch moment for Chinese yuan

11 Aug 2011

A weaker U.S. dollar raises the cost to China of suppressing its currency - and will further swell its reserves. Pricier commodities could prompt inflation to return. China has resisted a much stronger yuan, but the Fed’s low interest rate pledge may give it little choice.

China’s collectible bubble shows Beijing’s challenge

10 Aug 2011

Investors are bidding up arts and jewellery because they are worried about inflation and a weak dollar. It may not be too damaging if this kind of bubble bursts. But the mania shows how tighter credit rules have only partly worked, and too much money is still sloshing around.

Asian equity sell-off reflects three flavours of fear

9 Aug 2011

While the region’s economies are in good shape, investors fear the impact of a U.S. recession - both on exports, which remain key to growth, and on closely linked capital markets. A third worry is that plunging asset prices could cause a real pullback in credit and investment.

China’s diatribe on U.S. debt could backfire

8 Aug 2011

Official media’s sharp criticism may help shift domestic focus to U.S. economic woes and away from China’s train crash. But using the situation to attack Washington’s military policy in Asia won’t work. If anything, the tirade risks inviting U.S. pressure on trade and currency.

Asia emerges as refuge from global fears

5 Aug 2011

The region’s government bonds have soared amid this week’s panic. Not that investors are buying the theory it has decoupled from the West - Asian stocks are weakening. But with balance sheets that look pristine next to the U.S. and EU, Asian sovereigns are seen as a safe haven.

Hitachi and Mitsubishi should seek to seal merger

4 Aug 2011

Consolidation is a dirty word in Japan, where jobs are valued above profits. But Hitachi and Mitsubishi Heavy are sprawling conglomerates which, together, can be more efficient and productive. There will be short-term pain. But corporate Japan must grasp its nettles.

Japan stems yen’s rise but only buys time

4 Aug 2011

Selling the currency saw the central bank push its price down. But with the EU, U.S. and China looking frail, global investors still want yen. Slowly, companies are adjusting to a stronger yen. That’s wise. Intervention can bring some relief but Japan needs deeper reform.

StanChart investors should not get carried away

3 Aug 2011

The lender’s income is growing at a double-digit clip and it is hiring, not firing. Even better, costs are under control. But StanChart’s premium valuation leaves little room for error. A first-half hiccup in India is a reminder that emerging market growth is seldom linear.

China’s train crash sets new tests for freedoms

3 Aug 2011

Authorities’ attempt to censor coverage of China’s rail tragedy has backfired. Even official media defied orders or found ways to circumvent the ban. If Beijing now clamps down harder, the impact will be economic as much as social.

Kirin pays high price for being late to the party

2 Aug 2011

The Japanese beer group, which like its domestic rivals has belatedly woken up to global M&A, is paying $2.6 billion for 50.45 pct of Brazil’s Schincariol. The brewer, a distant number two, offers a so-so market position - certainly not one worth more than 100 times net income.

HSBC supertanker will take time to turn around

1 Aug 2011

CEO Stuart Gulliver wants to make the bank more efficient, but emerging market wage inflation means costs are still rising. Factor in new capital rules, and HSBC’s return on equity is also well below target. It’s no surprise the bank is planning to slash another 25,000 jobs.

Foreign borrowing undermines China’s tightening

1 Aug 2011

Better-than-expected factories data shows China hasn’t over-tightened. Beijing has curbed domestic loans, but Hong Kong banks are lending and offshore bond issuance also surged. The practice adds risk for foreign investors, and hinders China’s efforts to squash inflation.

Suffering Japan needs higher taxes, weaker yen

10 May 2011

Consumers and companies in Japan are willing to help reconstruction. The government is too deep in debt not to accept. Raising sales and property taxes could come alongside increased spending and investment. In a deflationary economy, a little more money printing wouldn't hurt.

Japan wasting opportunities afforded by crisis

10 May 2011

The March disaster inspired a spirit of unity and sacrifice that could catalyze painful economic reform. Japan must risk its vaunted harmony to overhaul a social contract that has paralyzed it. If politicians continue to squander the moment, Japan faces a long, agonizing decline.

Japan may puncture Goldman’s oil price gloom

14 Apr 2011

Crude fell after the Wall Street firm turned bearish. But Japan's need to make up for destroyed nuclear capacity could offset some downward pressures, such as an end to U.S. money printing. Japan may account for a tenth of demand growth in 2011 enough to keep oil bubbling.

China bulls look to hedge their bets

6 Apr 2011

Cheap dollars still pour into the fastgrowing economy, but as inflation accelerates, investors want more protection. With China's capital markets all but closed, that requires some ingenuity. Taiwan, Australian rates and Korean debt are among the popular proxies.

India needs solution to $1.5 trillion puzzle

24 Jan 2011

That’s what it will need to invest in infrastructure over the next decade if it is to reach 10 percent GDP growth. The government and banks won’t be able to carry that load on their own. Financial liberalisation could help fill the gap.