Promise & Peril of SOE Reform in Mainland China

♠ Posted by Emmanuel in at 2/29/2016 06:15:00 PM
There are approximately--count 'em!--150,000 state-owned enterprises (SOEs) in the PRC. When discussing SOE reform, the natural tendency will be for readers to think of privatization. Thousands upon thousands of SOEs are now being loosed from government controls? Think again. China being a practitioner of gradualist tinkering with the economy, the government has announced a scheme that does not go all the way. Rather, China will experiment with allowing SOEs more leeway in business decision-making instead of clearing all and sundry actions with government officials. However, this (somewhat) increased amount of discretion...
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PRC, Beijing Now Lead World in Billionaires

♠ Posted by Emmanuel in at 2/26/2016 02:24:00 PM
Nothing better shatters the myth of the PRC as a "socialist" republic than the emergence of an uber-capitalist class in the billionaires. So China may be slowing economically nowadays, but several decades of astounding growth have nonetheless resulted in the flowering of this class in the meantime. So much for equality and all that communist propaganda. Unleashing market forces all those years ago has led to a lofty kind of stratification on a level not found in any purportedly "capitalist" country. To get rich is glorious, right? This trend is working at two levels based on the most recent report by the infamous Hurun...
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Propaganda Time: PRC Campaigns Against Fakeries

♠ Posted by Emmanuel in , at 2/25/2016 03:40:00 PM
Counterfeiting crime in China doesn't pay...or at least that's what they'd like to portray. Chinese officialdom's reaction to the PRC's image as a manufacturer of copycat products--knock-offs, fakeries, and so forth--has been consistent. That is to say, it publicly discourages the manufacture of such items. Aside from making China vulnerable to copyright and trademark infringement suits, it does not do the national image any favors. You can of course argue that these same authorities have actually been loath to crack down on the manufacture and sale of such fakeries insofar as they remain a source of livelihood for some...
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Why London Mayor Boris Johnson Backs (Unlikely) Brexit

♠ Posted by Emmanuel in at 2/22/2016 01:30:00 AM
Would this guy be able to convince Britons to leave the EU? A few days ago, UK Prime Minister David Cameron negotiated concessions from the European Union that he believes are sufficient to keep his country in it. (The BBC has a good backgrounder on these concessions and the referendum overall.) This notion will be put to the test on June 23 through a referendum on whether to remain in the EU decided by a simple majority. One of the interesting side stories is that his old friend and London Mayor Boris Johnson has now decided to campaign against Cameron with the "no" camp. While not entirely a surprise--he edited the rather...
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After Myanmar: Iran as a Promising Growth Market

♠ Posted by Emmanuel in ,, at 2/18/2016 10:11:00 AM
Whither Iran? With few large developing country markets remaining untapped, Iran's large population and energy-rich economy certainly hold attractions for multinationals. The last one of note, of course, was Myanmar. As multinationals ponder whether to enter this potential growth market, however, risks abound. The Economist Intelligence Unit (EIU) recently put out a report on the opportunities and hazards of investing in Iran. As you can see from the table above, political-economic governance remains a strong concern, yet this observation is almost expected. Let us begin with situation of Iran opening up which should be...
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HSBC Decides Against Moving HQ to Hong Kong

♠ Posted by Emmanuel in , at 2/15/2016 11:54:00 AM
HSBC ain't going back to Hong Kong...if ever. Imagine that a bank with "Hong Kong" in its name, with over 60% of its profits coming from operations in the Asia-Pacific, decides against having its headquarters in the aforementioned financial center of Hong Kong. Since moving its headquarters to London in 1993, HSBC has held board meetings every three years to decide on where its headquarters should be located. Even with seemingly onerous regulations being placed on the UK financial sector in the aftermath of the global financial crisis, HSBC has decided to remain in London. And so it was again the case today: upon further...
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Japan's Last Hope: Can G20 Calm World Markets?

♠ Posted by Emmanuel in ,,, at 2/12/2016 12:28:00 PM
The once-again mighty yen is one of Japan's larger problems once more. With global financial markets going crazy as of late, the hardest-hit have been in Asia due to China's slowdown causing expectations that its closely-linked regional peers will suffer. Even within Asia, though, Japan has been particularly affected as of late. Late last month, the Bank of Japan adopted negative interest rates--albeit on excess deposits of commercial banks only--on top of massive quantitative easing through buying not only Japanese government bonds (JGBs) but also ETFs. In the aftermath of the BoJ announcement, the yen spiked to 121 to...
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Mission Creep: EBRD Turns Into Mideast Aid Agency

♠ Posted by Emmanuel in ,,, at 2/08/2016 05:48:00 PM
You see a major Jordanian camp for Syrians refugees in Zaatari; the EBRD sees a development opportunity. The European Bank for Reconstruction and Development (EBRD) was founded in the aftermath of WWII to rebuild a continent shattered by that conflict. It is one of four regional development banks together with those in Africa, the Americas, and Asia. Until recently, the EBRD's mission has not strayed far from providing funding for, yes, European reconstruction and development. In recent decades, it has helped transition economies from the former Soviet bloc move to capitalist systems. Now, though, comes an element of...
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South Korea, Where Speculators Short EU Stocks, HK$

♠ Posted by Emmanuel in , at 2/05/2016 12:26:00 PM
Beware the Seoul speculator whose derivatives trading causes disorder elsewhere in the world. There's an interesting illustration of financial globalization in how derivatives trading in South Korea (of all places) is apparently helping drive down not only European stock indices but even the Hong Kong dollar. Despite being removed from where the action is--Seoul is not usually regarded as a front-line financial center--the consequences of Korean derivatives trading has magnified movements in offshore markets. The knock-on effects are evident when markets are especially turbulent--as they have been as of late: Korea hosts...
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Why Cheap Oil Hurts Its Net Importer, the Philippines

♠ Posted by Emmanuel in ,, at 2/01/2016 05:39:00 PM
There's an interesting story in Bloomberg about how a largely oil-importing nation, the Philippines, can be negatively affected overall by lower oil prices. Sure, the country benefits from lower oil prices to an extent. However, in the larger scheme of things, matters appear less rosy. As a large labor exporter, the Philippines has, since the first oil shock, sent large numbers of migrant workers to the Middle East. With the country dependent on workers' remittances from abroad to improve its external position--the Philippines runs a sizable trade deficit annually but nevertheless manages a current account surplus due to...
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