Geneva Post-Banking Secrecy is...Gathering Dust

♠ Posted by Emmanuel in at 6/20/2016 12:30:00 AM
Closed for business: a now-common sight in today's Geneva.
One of the major side-effects of the global financial crisis has been a near-universal crackdown by revenue-hungry developed Western states on tax dodgers. Unfortunately for Switzerland, European countries' efforts to bring back taxable monies has resulted in a perhaps permanent diminution in its famed bank secrecy that renders it just like any other country's private banking system. It is certainly true that Swiss bank secrecy was never ironclad--witness the return of billions hidden by the Philippines' infamous dictator Ferdinand Marcos. However, when more powerful and influential countries started storming Switzerland's gates, well, that's another matter entirely:
Three years after Lloyds Banking Group Plc sold its private bank in Geneva, the only signs of life at the now-empty building are piles of cigarette butts and nutshells lying on its dirty window ledges. The riverside offices at Place de Bel-Air are a short walk away from the remaining private banks, hedge-fund managers and luxury-goods stores in the heart of the Swiss city. The locked entrance, where millionaire clients used to come and go, is a reminder that some of the biggest names in global finance have quit Geneva for good.

“The disappearance of international private banks has left an eerie silence in some of the downtown offices that were once the top end of the market,” said Raphael Reginato, who works in the city as a broker at real estate asset manager AMI International. “Geneva’s not the magnet for international finance it used to be.”
To be fair, it's also extraordinarily low prevailing interest rates for Swiss francs that's also denting the appeal of this banking center:
North American and European banks are quitting Geneva as companies battle with the loss of financial secrecy, the strong Swiss franc and pressure on profitability from low interest rates and tougher regulatory demands. Tax probes by the U.S. and France and a new system of bank-data exchange between governments have scuppered the traditional “no-questions-asked” approach to serving rich clients who reside in other countries...

Once a hub for hidden European and American assets, tougher scrutiny on the real ownership of assets and more stringent reporting standards have made offshore private banking in Geneva less profitable.

Bank of America Corp. sold its Merrill Lynch international-wealth businesses to Julius Baer Group Ltd., while Royal Bank of Canada divested its Geneva business to local firm Banque Syz SA. Morgan Stanley sold its Swiss wealth business, also based in the city, to the private bank and asset-management firm owned by billionaire Joseph Safra. Goldman Sachs Group Inc. plans to close a Geneva branch with 18 employees to streamline its operations, a person briefed on the situation said in March.
In many ways, this game is up. Now all that's left is for moviemakers to stop depicting third world dictators transferring their ill-gotten wealth to Swiss bank accounts for the fiction to follow what's already largely gone in real life.

And that, my friends, is all she wrote about Swiss bank secrecy. 
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Scotland's Possibilities for Remaining in EU After a Brexit

♠ Posted by Emmanuel in at 6/18/2016 03:13:00 PM
Sensible Scots are avowedly Europhile. What to do if the rest of the UK plumbs for Brexit?
The Scottish National Party is interesting insofar as it is not a hardcore anti-foreigner, ultra-nationalist party. While it is rather antsy about surrendering too much power to London, it is much less about doing so to Brussels. Like the Economist poll tracker results above show, Scotland is avowedly in favor of staying in the common market. In no small part, this is due to the Scots actually being grateful about having the EU as a market for its energy exports unlike their sometimes ungrateful English and Welsh counterparts, but I will say no more.
 
This Europhile stance, of course, provides for some interesting technicalities should the UK as a whole vote for leaving the EU. Just two years ago, of course, the Scottish electorate decided to stay within the United Kingdom. However, it now faces yet another possible round of reconsideration: the premise then was the UK was in the EU. If that's gone, how can Scotland stay in the EU? It will obviously have to ditch the UK and become an independent nation within the EU:
The Scottish Government are set to negotiate directly with Brussels to stay in the EU if the rest of Britain votes to leave. [SNP leader] Nicola Sturgeon, spooked by polls which show the UK heading for the exit door, ordered officials in the SNP administration to draw up plans... 
Swift talks with Brussels would aim to keep Scotland’s place in the EU while the rest of the UK negotiates a way out. A second independence referendum could then be called, knowing Scotland would retain its place rather than have to rejoin if the UK quits. It would create constitutional turmoil, with no clear precedent to follow. Academics have pointed to Greenland, which is an autonomous part of the Danish EU state but not a full member of the union.
The technicalities are long and arduous--first, of convincing the EU they want to remain and, second, of seceding from the UK when the referendum result staying in is still fresh in memory:
At First Minister’s Questions on Thursday, Sturgeon suggested she was planning for all eventualities. She said: “If Scotland faces the prospect of being taken out of the EU against our democratic will, all options to protect our relationship with Europe and the EU will be considered.” Sturgeon’s predecessor Alex Salmond has also urged a quick move to keep Scotland in Europe. He said: “Whatever chaos envelopes Westminster, I anticipate the First Minister will lead Scotland in that direction.”
Imagine that: unabashedly pro-EU Britons. They may become just pro-EU Scots after a while, but the conviction is clear.
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Globalization: Zidane Flogs Indian Real-Estate

♠ Posted by Emmanuel in , at 6/17/2016 11:20:00 AM
What does Zinedine Zidane have to do with selling kitschy Indian real-estate? Apparently nothing.
It is fairly common in booming countries of Asia for real-estate developers to embark on mega-projects. In our high inequality countries, you should be utterly unsurprised that most of these projects cater to wealthy segments, often hawking properties at exorbitant prices. And therein lies the rub: with so much development concentrated at the upper end of the market, there will inevitably be fewer takers. Such is the problem now faced by real-estate developers in India.

Now, using foreign sporting personalities to flog [to pitch or sell in Brit-speak] stuff abroad is not unusual. Witness the insufferable Cristiano Ronaldo selling a face massager on Japanese TV for a recent example. However, his coach (for now)--the legendary Zinedine Zidane of Real Madrid, recently crowned champions of Europe--is doing the same. That is, selling a somewhat iffy product in Indian luxury real-estate at a time when the inventory there is piling up:
Zinedine Zidane is renowned for his prowess on the football field. Now a Mumbai developer is counting on the retired French football star’s power off the pitch to revive flagging sales in the city’s luxury home market.

Kanakia Spaces Pvt has hired the former attacking midfielder to market a high-end residential project named Paris in Mumbai’s new business district in the northern part of the city called Bandra. Zidane has been signed on as the project’s wellness brand ambassador to design the development’s fitness and sports areas. The company did not disclose how much it’s paying for Zidane’s brand endorsement.

Kanakia, which is counting on the star power of Zizou, as 43-year-old Zidane was nicknamed during his career, features a four-story replica of the Eiffel Tower and a reproduction of the Louvre Pyramid at the Paris project. The builder has sold about 43 percent of the 464 apartments for sale at the development, where units range from 760 square feet to 1,300 square feet and cost between 37.6 million rupees ($559,000) and 64 million rupees, the company said.
It's a straightforward supply and demand problem, with the inventory of overpriced luxury homes unlikely to dissipate anytime soon as buyers have been cautious as the global economy shows signs of slowing down:
“These marketing gimmicks won’t help to sell these homes,” said Pankaj Kapoor, founder of Liases Foras Real Estate Ratings & Research Pvt. “Prices have escalated at every level and what’s needed to boost sales is a genuine price correction.”

Sales of homes costing more than 20 million rupees dropped 23 percent in the quarter ended March from the previous three-month period, according to data compiled by the property consultancy and advisory firm. The average home price in Mumbai is still near a record set in December 2014, as a limited supply of land and demand created by a growing urban population have led to “exorbitant price levels,” according to Kapoor.

As sellers have resisted dropping prices, Mumbai is grappling with record inventory. The city has 266 million square feet of unsold homes, Liases Foras said. It may take developers as many as five years to unload their inventory of luxury homes at current levels, the data show.
Actually, there is a segment of the Indian real-estate market that is growing: homes real people can actually afford:
Budget homes costing less than 2.5 million rupees is the only segment which is showing signs of demand picking up.
Selling things people can actually afford; what a radical idea.
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It's Blitz 1: All-Nighter for London Traders June 23

♠ Posted by Emmanuel in at 6/15/2016 04:13:00 PM
You can bet no one will be snoozing in the City of London come the evening of June 23.
What's probably a bigger political risk event than the 2008 global financial crisis, Greece exiting the euro, or Scottish independence for the UK? Unless you've been hiding in a cave somewhere, it's the upcoming June 23 referendum when voters decide whether to remain in the EU or leave it. Needless to say, I do not side with the xenophobic isolationists, but there are apparently several misguided souls who actually get to vote who do. While next to no sane business establishment supports the UK leaving the EU, its Prime Minister David Cameron nevertheless put the issue to a referendum for reasons I can hardly comprehend.

At any rate, there is an interesting Reuters story on how it will be all hands on deck in the trading rooms of British financial institutions the day, night, and early morning after the vote. Stay or leave, there will likely be large moves in equity, fixed income, foreign exchange markets. There is, in other words, plenty of money to be gained or lost. As such, it's going to be an all-nighter for any number of traders:
The world's biggest banks including Citi and Goldman Sachs will draft in senior traders to work through the night following Britain's referendum on EU membership, set to be among the most volatile 24 hours for markets in a quarter of a century.
A vote to leave the European Union on June 23 would spook investors by undermining post-World War Two attempts at European integration and placing a question mark over the future of the United Kingdom and its $2.9 trillion economy.

Citi, Deutsche Bank, JPMorgan, Goldman Sachs, HSBC, Barclays, Royal Bank of Scotland and Lloyds are among those banks planning to have senior staff and traders working or on call in London as results start to dribble in after polls close at 2100 GMT, according to the sources.
What sort of epoch-making moves might be in store if the anarchists get their way? Let us count the ways:
A vote to leave could unleash turmoil on foreign exchange, equity and bond markets, spoiling bets across asset classes and potentially testing the infrastructure of Western markets such as computer systems, stock exchanges and clearing houses.

Federal Reserve Chair Janet Yellen has cautioned that a Brexit vote could shake financial markets and potentially push back the timing of the next rise in U.S. interest rates.

Bank of England Governor Mark Carney has said sterling could depreciate, "perhaps sharply" and some major banks have forecast an unprecedented fall to parity with the euro and as low as $1.20 in the days following any vote to leave the bloc.
The Bank of England will be staffed overnight, with senior policymakers on call if markets go into meltdown. The finance ministry would not comment on its staffing plans.
Trading could get real exciting as you'd expect:
Officials and bank managers planning for the event draw comparisons with the 40 percent surge in the Swiss franc in January 2015, which bankrupted dozens of small investment funds and cost banks including Citi hundreds of millions of dollars.

Traders and analysts told Reuters they would expect a Brexit vote to cause sterling to 'gap', or plummet lower - as orders to sell the currency met an absence of willing buyers, leaving a blank spot on the price charts snaking across traders' screens.

Gaps can inflict huge losses on banks and traders, forcing them to bail out of trades at prices far below the automatic sell orders, or 'stops' they normally use to limit losses.

Currency market participants have urged the Bank of England to call on U.S. Federal Reserve if the turbulence gets really bad. The BoE could buy sterling with dollars borrowed directly from the U.S. central bank under arrangements first used in response to the global financial crisis in 2008.

Carney has said the Bank would not stand in the way of any exchange rate adjustment but would take the necessary steps to ensure markets remained orderly. It has not commented on whether or how the bank might intervene.
I remain incredulous that Prime Minister David Cameron has (1) allowed the UK and Europe's future to be so endangered to begin with by giving voice to these sorts of cheap pandering and (2) not really thought through what the consequences of a "leave" vote would be.

But that's just me. Come June 23, all traders will be at hand as belligerents strafe London once more. Unfortunately, the most regrettable thing is that they allowed all of this to be unleashed upon themselves rather than some foreign foe. 
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Will MSCI Demote Peru From Emerging to Frontier Market?

♠ Posted by Emmanuel in , at 6/14/2016 06:39:00 PM
Stock market "trading"--something of a Peruvian novelty.
Later today, the market indexing firm MSCI will issue guidance on whether to include Chinese equities in their emerging market indices. While that decision obviously has huge implications--China is the world's second largest economy, so it rankles not to be included in a simple index of EMs--there is another pending decision you should watch for if development is an area of interest. As China vies for inclusion, Peru is trying to stave off the capital markets equivalent of "relegation." (See MSCI's classification scheme here.)

To be exact, Peru does not appear to have enough freely traded listings to qualify for inclusion in the MSCI Emerging Markets index according to free float and liquidity criteria. That is, interested foreign investors should have the means necessary to purchase such stocks without undue difficulty. How many listings should qualify? Well, it's, er, three. Even by that measure, though, Peru is coming up short. Despite Peru's thin volumes, there would still be consequences for the global universe of equity investments:
The Peruvian stock exchange fears that the move would drive foreign investment away from its $67bn bourse. Moreover, the move would further unbalance the MSCI Frontier index and potentially divert much-needed foreign investment from countries such as Nigeria, Argentina and Pakistan. “It may seem like linguistics, but the index designation is important in terms of retaining and attracting foreign investor assets,” says Mark Mobius, executive chairman of the Templeton Emerging Markets Group, who believes foreign investors are responsible for roughly a third of Peru’s trading volume.
Index inclusion often drives investment since indexed funds are obviously required to place a proportion of their investments in the countries included. Such are China's hopes and, conversely, Peru's fears. And the bush league of the frontier market is really quite tiny:
MSCI launched a consultation on Peru’s potential ejection from its flagship EM index — tracked by an estimated $1.5tn, against just $12bn for the Frontier equivalent — in August last year. MSCI’s concern was that only three stocks in its Peru equity universe meet its liquidity and free float requirements, the minimum number to be eligible for its EM index...

Compounding the problem, MSCI has proposed switching Southern Copper, one of these three stocks, to its US equity universe, where it is listed (it is currently included in the Peruvian section for “historical and index continuity reasons” and generates 43 per cent of its revenues from Peru, with the remainder from Mexico), pushing Peru below the minimum threshold.
While the arguments for and against de-indexing Peru are interesting, the larger fact remains: without wider Peruvian development, you can hardly expect its prospects for stock market indexing to be much better. And so it finds itself in this unpromising position.
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Why Google Cars Beat Tesla + Old Mfgs Still Matter

♠ Posted by Emmanuel in at 6/12/2016 09:31:00 AM
Why tomorrow's king of the (virtual) road may be Google, not Tesla.
There's a wide-ranging interview in Vox of automobile commentator Edward Niedermayer on that ever-popular topic, the future of the automobile. In contrast to many of today's journalists, Niedermayer is skeptical of Tesla. Especially with its myriad of quality control issues born of, well, not really having the experience of being a full-fledged car company, he views its business model as fundamentally flawed. (Also see Consumer Reports' scathing reappraisal.) As Tesla moves down the price range, these shortcomings may become more evident as those relying on these vehicles for everyday transportation will be less forgiving of their cars' foibles:
Cars have become so reliable and so easy to use that we think about them less than we ever have in the 100-plus-year history of the automobile. This is one reason we don't appreciate this depth of complexity. Not only are cars different from software in very fundamental ways, they're much more complicated than anything else consumers buy.

Cars use a wide variety of materials, built into components and subassemblies by massive global supply chains. Car companies have to choose and develop the right materials and components, maintain their uniformity and integrity throughout that supply chain, and ensure that they operate reliably in almost every imaginable condition on Earth.

A great example is the problem of mold growing from inside the Model S's roof, particularly in Norwegian cars. Because its large panoramic sunroof is difficult to manufacture and install to a precise specification, Model S roofs often leak. A lot of those leaks are so small that customers might not notice. But because Tesla used an organic-fiber pad at the edge of the sunroof, aggressive molds invade at alarming rates in certain climates. This kind of complex, cascading defect is why automakers value their accumulated institutional knowledge and spend years testing vehicles.
Google, on the other hand, Niedermayet is more sanguine about. Despite ostensibly coming from the same "Silicon Valley" culture, Google has the foresight to enlist actual car guys instead of assuming they know better, and this supposedly makes all the difference:
Google's strategy is the counterfactual that makes me especially nervous about Tesla. Google's core technology is the autonomous drive capability, and I think they have to be closely watching Tesla and the struggles they've had. So Google has hired some very high-profile people from the car business. They have former Ford CEO Alan Mulally on their board. Lawrence Burns, the former research and development boss for General Motors, is a consultant for them. The head of their autonomous car program is John Krafcik, one of the auto industry's most respected veterans.

It's a dream team of real tier-one automaker experience. With their accumulated knowledge — and looking at Tesla's struggles — they know that building their own car is a fool's mission. They also recognize that Silicon Valley culture is fundamentally different from manufacturing culture...

What fundamentally sets Google apart is that these auto people know how hard building cars is. It is not only an intellectual challenge, it's a discipline challenge. Managing that level of complexity requires a certain amount of accumulated knowledge; building that from scratch is incredibly difficult.
And how about the traditional automakers? In a world of Tesla and Google autonomous vehicles, are these stodgy types inevitably doomed? Actually, a lot of their conservatism stems from previous experiences with product liability issues which have the potential to hinder the growth of the tech companies' vehicle sales. By contrast, the old timers have given much thought to these sorts of issues already:
But the legal liability risks are very high. It's very easy for people to make mistakes and blame the car for their mistakes. So in some ways that's an incentive to go full autonomy. But even for a company like Toyota with $80 billion in the bank, there could be liability issues that could challenge the fate of the company. So they are incredibly conservative about deployment, and they will not deploy anything unless it works in 99.9 percent of use cases. That contrasts with what Tesla is doing, a public beta test. They say they are. They admit it...

I personally tend to like Toyota's approach, because they accept and own the conservative nature of the business. So they don't fool themselves that they're going to do this leapfrog approach.
It's food for thought--especially if you're contemplating a Tesla or Google car in the future. 
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Polish Zloty, Hungarian Forint as Brexit Proxies

♠ Posted by Emmanuel in , at 6/10/2016 12:31:00 PM
Praises be to the zloty? Its foreign exchange shows no imminent '"Brexit."
What do the currencies of former Soviet bloc countries have to do with a UK referendum on whether to stay in the EU? After all, even if Poland and Hungary opt for using the euro in the future, doesn't the UK still have its own currency? Bloomberg, however, proposes the currencies of these countries as a proxy for whether the UK will stay in the EU. And, based on current exchange rates for the zloty and forint, it looks like the UK will indeed stay:
Investors betting on Brexit may want to keep an eye on eastern European currencies, because Poland and Hungary stand to lose a bulwark of financial and political support from a British departure from the European Union. And by that measure, it looks like Britain will vote to stay in the 28-nation bloc in the June 23 referendum. Poland’s zloty and Hungary’s forint were among the top gainers of emerging currencies against the euro in the past week, even after three surveys published on Monday showed Britons favor an exit.
The logic is that, in the EU budget, the UK pumps in a lot of the money going to these newer EU member countries. Without that financial lifeline, well, the prospects of Poland and Hungary are rather diminished. Therefore, if expectations are that the UK will leave, then the currencies of those countries will take it on the chin. That simply isn't happening, however:
The calm in the currencies of post-communist bloc countries could quickly turn to turmoil because a British departure from the EU would throw into jeopardy its contribution to an EU budget that has supported the economies of Poland, Hungary, Romania and Czech Republic. Britain was the third-largest contributor to the EU budget in 2015 with a net contribution of 10.9 billion euros ($12.4 billion) and Poland is scheduled to be the biggest recipient among the bloc’s 28 members through 2020.

“Currencies and bonds of eurozone periphery countries rather than the U.K. would be most at risk after a potential Brexit,” said Peter Duronelly, strategist and money manager at Aegon’s fund unit in Budapest, which oversees 2.5 billion euros of assets.

The U.K.’s support for eastern EU countries dates back to before the bloc expanded in 2004, when the British government was the flag bearer for taking in the countries that were once behind the Iron Curtain. Those alliances have continued, with the U.K. often supporting eastern nations in the face of euro area dominance in EU decision-making, and providing a counter-balance to the attempts of western European governments that want to knit the bloc more closely together. 
It's food for thought, certainly. That the pound would be less affected by the UK leaving the EU than those of Poland and Hungary is certainly interesting if unexpected.
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Crossfire Victim: L'Oreal, PRC & Hong Kong Democracy

♠ Posted by Emmanuel in ,, at 6/09/2016 10:17:00 AM
On the bright side for L'Oreal, they won't hire the Dalai Lama as a spokesperson since he has...no hair.
I hate to say it but, if Hongkongers were optimistic about the remit of "one country, two systems," then they have been proven wrong again. What we recently had was a big brouhaha when Lancome, one of the brands of French cosmetics giant L'Oreal, decided to sponsor a concert by canto pop (that's Hong Kong's particular brand of Cantonese-language pop which you'll hear on its streets day in and day out) star Denise Ho. It would be an unremarkable marketing promotion exercise were it not for Denise Ho being an outspoken proponent of democracy for Hong Kong [!] and a vocal supporter of Tibetan independence [!!] besides. Some people--Lancome's management in HK--are just asking for it.

The trouble began when the stridently jingoistic, quasi-official Global Times blasted Lancome for effectively going against the will of Beijing, calling for a mainland boycott of the brand. With China being the brand's second-largest market, you can guess what the result was: Lancome decided to cancel the planned Hong Kong concert, disowning Denise Ho in the process. The Global Times is even gloating that PRC "market power" is responsible for this change of heart:
Ho was one of the most prominent activists during the 2014 Hong Kong Occupy Central Movement. Mainland netizens then began to boycott her and her harsh response further enraged the mainland public. Last month, she posted her photos with the Dalai Lama on Facebook, writing "I could feel the blessing and energy rushing through my body just by holding his hands." The disagreement between her and mainland opinion is deepening.

Lancôme responded fast by releasing a statement saying Ho was not a spokesperson for the brand and canceled the planned concert, citing "safety reasons." But the real reason is self-explanatory.

Some Hongkongers slammed Lancôme for groveling to the mainland and vowed to resist the products of Lancôme and parent company L'Oreal. It seems that Ho has pushed Lancôme into a dilemma. Apparently Lancôme has given more consideration to the sentiment of the mainland public, because the mainland boasts a much larger market than Hong Kong. As a commercial company, it is bound to seek commercial gains, a wisdom it is supposed to have under complex situations. No big companies would like to step into politics as the high stakes have already been proved by previous cases.
Meanwhile, mayhem erupted in the normally placid and consumerist shopping malls of Hong Kong as protesters targeted Lancome and sometimes other L'Oreal brands' outlets in the city:
Cosmetics maker Lancome shut all its Hong Kong shops on Wednesday as protesters accused the cosmetics brand of kowtowing to Beijing when it scrapped a promotional event featuring an activist singer...

Several dozen protesters marched to an unstaffed Lancome counter in a downtown Hong Kong department store Tuesday. They taped up signs accusing the company of self-censorship and of kowtowing to Beijing and called for a boycott.

Hong Kong's 23 Lancome boutiques were closed for the day and it was uncertain whether they would reopen on Thursday, which is a public holiday, a customer service representative said by phone. Lancome and its parent company, French cosmetics giant L'Oreal, did not respond to emailed requests for comment. Shops under at least four other L'Oreal brands, including Kiehl's and The Body Shop, were also shut.
There is no edifying aspect to this spectacle. Instead, I will say that it was spectacularly dumb of Lancome to choose Denise Ho for a promotional concert when there are dozens of canto pop stars who are as outspoken. Pro-democracy Hong Kong campaigners will have another reason to be dismayed, but hey, there's a definite case for not putting yourself in such a compromised position to begin with.

UPDATE: Also see Advertising Age for more on the political angle of this topic.
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Will US Investors Take Up New $38B PRC Quota?

♠ Posted by Emmanuel in at 6/08/2016 12:58:00 PM
The Chinese stock markets of Shanghai and Shenzen have been largely off-limits to foreign investors, with the partial exception of those from Hong Kong, Singapore, UK and France who have been granted Renminbi Qualified Foreign Institutional Investor (QFII) status. Recently, we received news that the Chinese are about to allow American investors to buy "A" shares as RQFII status is about to be extended to Americans as well. Here is a brief description of RQFII from China Daily:
Qualified Foreign Institutional Investor (QFII) Scheme is a transitional arrangement that allows institutional investors who meet certain qualification to invest in a limited scope of cross-border securities products, in the context of incomplete free flow of capital accounts.

Foreign investments in China are restricted due to foreign exchange control. The quota, products, accounts, and fund conversions are strictly monitored and regulated. QFII scheme was introduced in 2002, allowing foreign investor’s direct access to China's capital market.
When implemented, RQFII for US investors will supposedly be the second largest allocation after Hong Kong's. Still, $38 billion does not seem an awful lot considering that the capitalization of the Shanghai Stock Exchange alone, for instance, is $3-trillion-something. Anyway:
China will give the United States a 250 billion yuan ($38 billion) investment quota for the first time to buy Chinese stocks, bonds and other assets, officials said on Tuesday, deepening financial ties and interdependence between the world's two largest economies. China has given such quota allocations to several countries, including the UK, France and Singapore, but this would be the biggest given to a single jurisdiction after Hong Kong.
Why the seeming change of heart after all this time? With PRC stock markets floundering to be honest, there is some hope that American money can help buoy them. Still, governance concerns remain:
China's regulators have been pushing to expand foreign investors' access to domestic financial markets to make its markets broader and attract more capital inflows. But foreign interest has waned after a near meltdown in Chinese stock markets last year and heavy-handed official intervention to shore them up.

"I would imagine that investors would look for certain financial reforms in order to dive in," said Gregory Peters, a senior investment officer at Prudential Fixed Income with more than $621 billion of assets. "A consistent application of the rule of law is paramount. ... Not sure China is quite there yet."
Another is that, having been denied last year for inclusion in the MSCI index, Chinese officials want to show greater capital market access for foreign investors since it is one of the conditions for inclusion. Formally, these are "capital mobility restrictions." The logic for inclusion, though, remains to attract additional foreign investment since index-tracking funds--of which there are more and more--would have to buy PRC-listed shares were these to be included in MSCI indices:
Another big catalyst for foreign investment flow is on the horizon. Index compiler next week MSCI is expected to announce whether it would include Chinese shares in its benchmark index.
My two cents is that $38 billion is not all that much in the wider scheme of things. While Chinese mainland stocks are still somewhat pricey in price-to-earnings terms at the moment, there will likely be good entry points soon for US investors keen on diversification. So, the quota will probably be used up; just don't expect a mad rush but something more gradual. 
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Brexit Kronikles: Why are British Expats Held in Contempt?

♠ Posted by Emmanuel in , at 6/05/2016 03:37:00 PM
Unfortunately for UK expats in the EU, they don't have much say in a process affecting them greatly.
There's an interesting article in The Economist on how the upcoming UK referendum on whether to remain or leave the EU is revealing how the country treats its expatriates. Famously a widely-traveling people, it turns out that the home nation does not have particularly high regard of its citizens living abroad. The evidence is from not giving expatriates a clear and well-organized way to cast their votes. This matters especially to expatriates working in other EU countries since, if the referendum results in leaving the grouping, there is no guarantee that they can work on anywhere near similar terms since the "Leave" camp is fervently isolationist towards everyone else--especially other Europeans. Why would the EU not return the favor?
That means protections for expats need to be secured as part of Britain’s exit negotiations. But will they be? If the country sought an arrangement similar to Norway’s, whereby it kept the trade benefits of EU membership in exchange for preserving freedom of movement, this might well be possible. But the Leave campaign is increasingly defining a pro-Brexit vote on June 23rd as a mandate for a draconian clamp-down: on June 1st Vote Leave, the official Out campaign, proposed slamming the door on all EU citizens except those with particular skills. If this happened, reciprocal restrictions would presumably apply to Britons planning to move to the continent. How it would affect those who have already done so is unclear. In the event of Brexit, European leaders are likely to try to discourage copycats by pointedly restricting the full benefits of EU citizenship to full EU citizens.
In an age when diaspora communities are regarded as resources--bringing knowledge and skills back to the home nation or sending remittances from abroad--the UK is curiously of the "out of sight, out of mind" disposition towards its own:
All this is part of a wider story: Britain tends to disregard its diaspora. The country limits its expats’ voting rights (which are withdrawn after 15 years abroad) and certain welfare payments. It freezes their pensions and makes relatively little effort to find out where they are, what they are doing or even how many of them exist.

And this in a technological age when other governments are going to new lengths to engage their emigrants. Ireland is building a giant database of its diaspora, to help nurture and woo it; New Zealand runs a social network for far-flung Kiwis. Mexico, India and China see their emigrants as soft-power warriors and try to lure high-flyers, with their international experience and connections, back home. France and Italy both have overseas parliamentary constituencies and let their expats vote in embassies...

Yet why should such Britons, many of whom have paid into the welfare state for decades before moving abroad, be treated as second-class citizens.
There are many "known unknowns" in Rumsfeld-speak for the UK itself if it leaves the EU; what more for those actually plying their trade on the continent?
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