Goldman to JPMorgan Say Sell Emerging Markets After Slide

                  According to a report from Bloomberg,"Goldman Sachs Group Inc. recommends investors cut allocations in developing nations by a third, forecasting "significant underperformance" for stocks, bonds and currencies over the next 10 years. JPMorgan Chase & Co. expects local-currency bonds to post 10 percent of their average returns since 2004 in the coming year, while Morgan Stanley projects the Brazilian real, Turkish lira and Russian ruble will extend declines after tumbling as much as 17 percent in 2013".
While the economies of Brazil, Russia, India and China symbolized the increasing power of the developing world during the worst of the global financial crisis and delivered outsized returns, Morgan Stanley says some of the same nations may now prove to be laggards as the U.S. Federal Reserve scales back unprecedented stimulus and interest rates rise. The MSCI Emerging Markets Index is down 3 percent this year, compared with a 1.2 percent drop in the developed-market index, and hit a four-month low yesterday as data from China showed weakness in manufacturing and services.

“The world not long ago was so mesmerized by the emerging markets without distinguishing the good from the bad,” Stephen Jen, a partner at SLJ Macro Partners LLP who correctly predicted the selloff in developing nations last year, said in a phone interview from London on Dec. 18. “The cost of capital will start to normalize and that’s when we see the truth being revealed in these markets.”

Emerging-market local-currency bonds returned 205 percent in dollar terms in the decade through 2012, compared with a 58 percent gain for U.S. Treasuries, according to data compiled by JPMorgan and Bank of America Corp. The MSCI index of stocks advanced 261 percent, outpacing the 69 percent rally in the developed-market measure.

Last year, domestic bonds in developing nations lost 6.3 percent, the most since 2002 when JPMorgan started compiling the data. The MSCI emerging-market equity gauge fell 5 percent, compared with a 24 percent rally in MSCI’s World Index, the biggest underperformance in 15 years, according to data compiled by Bloomberg.

“It’s a structural de-rating that’s taking place” in emerging markets, John-Paul Smith, a Deutsche Bank AG strategist in London, said in a phone interview Dec. 18. Developing-nation stocks will trail their peers in advanced economies by a further 10 percent in 2014, he said.

The recovery in developing economies, which contributed to 65 percent of the global expansion since 2010, is struggling to gather momentum as exports grow at the slowest pace in four years. China, which buys everything from Brazil’s iron ore and Chile’s copper, is facing the threat of bank failures as local government debt increased 20 percent annually since 2010.

While emerging markets are still expanding faster than developed countries, the margin will shrink this year to the smallest since 2002, according to Credit Suisse Group AG. The growth rate in advanced economies will almost double to 2.1 percent this year, while emerging markets expand 5.3 percent, compared with 4.7 percent in 2013.

Even a small capital outflow and increase in borrowing costs will have adverse impacts on governments and companies in developing countries as debt levels increased, according to Morgan Stanley.

Net debt amounted to 1.25 times earnings before interest, taxes, depreciation and amortization for companies in the MSCI’s emerging market gauge, up from 0.68 in June 2009, according to data compiled by Bloomberg. Average borrowing costs for developing-country governments jumped to 6.96 percent on Jan. 2, the highest since Mach 2010, according to JPMorgan’s GBI-EM Diversified Index.

“We’re at the mature end of the credit cycle in emerging markets, which suggests we may see increased financial-sector and fiscal risks, which are not priced in by the markets,” Rashique Rahman, co-head of foreign-exchange and emerging market strategy at Morgan Stanley in New York, said by e-mail on Dec. 18.

Morgan Stanley recommended investors reduce holdings of emerging-market currencies and bonds on Dec. 3, saying the developing world “faces the challenge of regaining a decade of lost competitiveness.” The bank labeled Brazil, India, Indonesia, South Africa and Turkey as the “fragile five” in August, because of their reliance on foreign capital.

Goldman Sachs advised clients to cut their emerging-market allocation to 6 percent from 9 percent, citing the lack of economic reforms to improve growth, CNBC reported on Dec. 22. Leslie Shribman, a spokeswoman for Goldman Sachs in New York, confirmed the report without commenting further.

JPMorgan expects a return as low as 1 percent for local-currency bonds this year, compared with an average gain of 10 percent over the past decade, according to its 2014 outlook report.

“Emerging markets will probably find it difficult to sustain the steady improvement in sovereign creditworthiness that has helped to define the asset class since 2004,” David Lubin, the head of emerging-market economics at Citigroup, wrote in a note on Dec. 2.

Although these quotes speak of emerging markets in general, because of the stampede of foreign funds from bonds,stocks and emerging market currencies in 2013 and Investment Banks say it will continue in 2014,not all of them share the same economic problems or better macroeconomic fundamentals.So when the dust settles we will find cheap opportunities in some of these emerging markets.

Source: Bloomberg

Senate confirms Yellen as Fed chairwoman

The Senate on Monday approved Janet Yellen to be the first woman to run the Federal Reserve in the central bank's 100-year history. The vote was 56 to 26. Yellen will be the first Democrat to run the Fed since Paul Volcker left the central bank in 1987. Yelllen's four-year term will begin on Feb. 1. Fed chairman Ben Bernanke is expected to chair the Fed's next rate-policy committee meeting in late January. 

Source: Marketwacth

2014 China Startup Guide aimed at Helping Aspiring Entrepreneurs Interested in China

The ‘Startup Guide’ series is an annually published country-specific guide aimed at entrepreneurs interested to learn about the respective countries. The 2014 edition is the 2nd such annual edition with 16 books on 16 countries in Asia and one book putting together all the 16 guides. The ‘Startup Guide’ series is the brainchild of entrepreneur and TED speaker Derek Sivers.The Guide can be bought  on Amazon or as a PDF.

Derek Sivers created CD Baby in 1998, which became the largest seller of independent music online, with $100M in sales for 150,000 musicians. In 2008, Derek sold CD Baby for $22M, and moved to Singapore to start his new company. Derek is an “Entrepreneur In Residence” at INSEAD Business School. In 2011, he published a book which shot to #1 on all of its Amazon categories.

China Startup Guide claims to be the first book that incorporates insights on Chinese business and culture that are up-to-date with China’s constantly changing political, social, and economic environment. The guide hopes to educate aspiring and established entrepreneurs how to go to China and build a business in the country, without spending months of research, or years of trial-and-error.

In the 2014 China Startup Guide, author Janet Chang condenses 200+ hours and 12 months of cumulative research and private, 1-on-1 interviews conducted with China’s top entrepreneurs, business executives, and industry leaders into 221 answers to 221 common questions on how entrepreneurs can live and do business in China. The book was released worldwide on January 1st, 2014.

The website of the book shares the highlights of the 2014 edition:

• The mindset of Chinese citizens can seem contradictory to foreigners. But learn these two main behaviors that dictate most of their actions and you’ll quickly understand the truth. (Page 99)
• Don’t make the mistake of going into these industries because although China is welcoming to foreigners there are many businesses a foreigner should never get involved in. (Page 349)
• Use this tactic to get the upper hand in business negotiations. (To be used sparingly!) (Page 212)
• The difference between “their way” and “the best way” and why it matters to you. (Page 499)
• How to find (and keep) top talent in China. (Page 591)
• Get our personal list of the top 7 English-speaking accountants who will be sure your business follows all of China’s confusing tax laws. (Page 567)
• What is the unique-to-China “water army” social media marketing strategy and how can you use it for your business? (And why you shouldn’t use it.) (Page 693)
• How to jump through red tape and get your business bank account set up properly. (Page 632)
• Learn this to get a significant advantage as a foreigner in China. (Page 221)

Crescimento da economia mundial em 2014 depende de quatro fatores; saiba quais

Embora economistas já identifiquem sinais de melhoras em algumas economias desenvolvidas - como EUA e Alemanha–, 2014 não está livre de riscos econômicos importantes.

As projeções mais recentes do FMI (Fundo Monetário Internacional) preveem que a economia global cresça ao redor de 3,6%, ou 0,7 ponto percentual a menos do que 2013.

Esse aumento ainda não deve servir para recuperar o terreno perdido na crise de 2008 e depende de quatro fatores-chave, que a BBC explica aqui:

1) Zona do euro

A zona do euro começa 2014 com a entrada de um novo membro, a Letônia, e pouco a celebrar.

Segundo o FMI, a economia do bloco se contraiu 0,4% no ano passado e crescerá mero 1% em 2014.

A crise não afeta apenas Portugal, Irlanda, Itália, Grécia e Espanha, mas também economias mais desenvolvidas, como França e Holanda, que se saíram mal em 2013.

Nem o motor da zona do euro, a Alemanha, ficou totalmente imune: apesar de ter reduzido o desemprego, o país teve crescimento anêmico no ano passado.

Os problemas são vários: além de paralisia econômica, há o temor de uma deflação (queda de preços, que pode levar a desinventimentos e falência de negócios) e os persistentes índices de desemprego em alguns países (a média regional é 10%; chega a 25% em países como Espanha e Grécia).

Nesse panorama, um dos grandes temores em 2014 é de que as eleições do Parlamento Europeu se convertam em uma espécie de referendo sobre o euro.

John Bowler, diretor de análise de países da Economist Intelligence Unit, braço de dados e estatísticas da revista britânica The Economist, não descarta a desintegração da zona do euro.

"O grande mérito de 2013 foi que o euro sobreviveu", disse ele à BBC Mundo.

"O perigo é que os políticos acreditem que possam seguir fazendo o mesmo até que a tormenta passe. A realidade é que o mal-estar social pode explodir a qualquer momento. Em maio (mês de eleições no Parlamento Europeu), a legitimidade de muitos governos pode ficar seriamente questionada. Se a isso se somar a pressão econômica em países altamente endividados, é possível que um ou mais de um país saia do euro, algo muito desestabilizador para a economia mundial."

2) EUA e os estímulos monetários

O panorama é mais promissor nos EUA, graças ao crescimento do terceiro trimestre do ano passado e à redução no desemprego.

Algumas estimativas preveem crescimento de 3% para a economia do país.

O otimismo levou o presidente do Fed (banco central americano), Ben Bernanke, a anunciar a redução dos estímulos monetários em vigor e a manter a taxa de juros no nível de 0%.

O enigma é o que fará a sua sucessora no cargo, Janet Yellen, que assume em janeiro. Mas analistas esperam continuidade nessa política.

A flexibilização monetária completou cinco anos e, em 2013, representou a compra de títulos no valor de US$ 80 bilhões, com o objetivo de injetar dinheiro na economia e aumentar o crédito a consumidores e produtores.

Não está claro até que ponto a medida cumpriu seu objetivo ou se incentivou a especulação financeira global e possíveis bolhas financeiras.

E antes mesmo de oficializar-se a redução dos estímulos, o relaxamento da medida provocou em 2013 turbulência nas moedas de muitos países emergentes (no Brasil, fez o dólar disparar).

3 - China: O difícil equilíbrio

Em 2013, ficou claro que a economia chinesa não voltará a crescer como fez nas décadas prévias (a um ritmo anual de 9% a 10%).

Essa mudança de ritmo se deve, em grande medida, ao início da transição de um modelo exportador para outro mais baseado em consumo interno.

Ainda assim, calcula-se que a China tenha crescido 7,5% em 2013, porcentagem invejável. O problema chinês é outro.

Desde a crise global de 2008, a China vivencia uma grande expansão do crédito. Para Gabriel Palma, da Universidade de Cambridge, essa expansão é insustentável.

"O estoque de crédito na China saltou de US$ 9 bilhões em 2007-2008 para US$ 23 bilhões em 2012: cerca de 22% do PIB" disse ele. "Em outras palavras, a China conseguiu replicar todo o estoque de crédito do sistema financeiro americano em apenas cinco anos", disse Palma à BBC Mundo.

Além disso, existe um sistema bancário paralelo, pouco regulamentado, também em crescimento no país, que copia muitas das práticas que levaram à crise imobiliária americana (subprime).

"Na capital, Pequim, de 20 milhões de habitantes, existem hoje quase 4 milhões de casas e apartamentos que não conseguem comprador. E a atividade de construção segue em frente como se nada estivesse acontecendo", diz Palma.

Em julho, o governo anunciou uma auditoria da dívida de governos locais e municipais. Segundo a imprensa chinesa, em dezembro essa dívida parece ter duplicado desde 2010.

O fato de a China ter a maior quantidade de reservas em moeda estrangeira do mundo pode ser crucial para evitar que uma eventual crise acabe contaminando o mundo inteiro.

4 - Matérias-primas

A plena incorporação da China - e, em menor grau, da Índia - no mercado mundial, no início do século, levou a uma explosão dos preços das matérias-primas, que representam 75% das exportações da América Latina, segundo o Banco Mundial.

O problema é que a demanda por elas está caindo, ante o menor ritmo de crescimento chinês e indiano.

O preço do cobre caiu 10% no ano passado; o da prata, mais de 20%; o da soja se manteve estável e o do petróleo flutua em ritmo de queda.

Essa tendência também se observa nos mercados futuros.

Segundo a Bloomberg, os contratos futuros de soja até 2016 são cotados a 16% a menos do que o preço atual, algo que pode ter forte impacto nos produtores do Cone Sul.

Apenas matérias-primas ligadas à alimentação ficaram mais caras: o café subiu 26,7% e o açúcar, 14%.

A Cepal (Comissão Econômica para América Latina e Caribe) calcula que o continente compensará a queda dos preços de muitas commodities com um melhor desempenho do consumo e com o cenário internacional mais favorável: em 2014, a expectativa é de que a América Latina cresça 3,2% em 2014, ante 2,6% em 2013.

Tudo dependerá da evolução das três regiões mencionadas acima: zona do euro, EUA e China.

PROJEÇÕES CRESCIMENTO NA AMÉRICA LATINA EM 2014

País	Projeção crescimento em 2014
Argentina: 2,6%	2,60%
Bolívia: 5,5%	5,50%
Brasil: 2,6%	2,60%
Chile: 4%	4,00%
Colômbia: 4,5 %	4,50%
Costa Rica: 4 %	4%
Cuba: 3%	3%
Equador: 4,5%	4,50%
El Salvador: 2,6%	2,60%
Guatemala: 3,5%	3,50%
Haiti: 4,5%	4,50%
Honduras: 3%	3%
México: 3,5 %	3,50%
Nicarágua: 5 %	5%
Panamá: 7%	7%
Paraguai: 4,5 %	4,50%
Peru: 5,5%	5,50%
República Dominicana: 5%	5%

Fonte: Cepal

Fonte: BBC Brasil

China: Save water in all ways

The importance of water conservation can never be overestimated for China, whose water resources per capita are about one-fourth the world average.

Little wonder that the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development released guidelines last week for charging residents in all cities tiered prices for water use by 2015.

With two-thirds of China's cities suffering from an insufficient supply of water and one-fourth suffering a serious water shortage, increasing residents' awareness of the need to save water is long overdue.

The acceleration of the country's urbanization will likely bring 300 million rural residents into cities in the next 20 years. This will considerably increase the amount of water used in cities.

The shortage of water is increasingly becoming a constraint on the country's economic development and social progress.

According to the guidelines the first-tier price will cover 80 percent of residents, a further 15 percent will pay the second-tier price, while the 5 percent of urban residents that use the most water will be charged the third-tier price, which is three times the first-tier price.

But will the charges really encourage residents to reduce their water consumption by a large margin? That remains to be seen.

If prices remain the same for 80 percent of residents, it is doubtful whether the tiered pricing will have any significant impact on people's profligate water use.

Yet, the guideline is still necessary given the fact that the differentiated charges will serve as a reminder to residents they will have to pay more if they use more.

However, it will by no means change the fact that the scarcity of water is becoming increasingly serious and poses a grave threat to the country's urban development in the foreseeable future.

The water price plan is just one of the ways to encourage a more rational use of this precious resource and there is much that remains to be done by the government to save water and protect water resources.

Development and promotion of water saving devices, planting trees in cities, collecting rainwater, keeping enough green space for rainwater to sink underground, and so on, hold great potential for water saving.

It is obvious that more importance needs to be attached to this issue which is vital for the nation's future development.

 Source: China Daily

Pardon to Snowden. Big Brother is watching you policies ARE the problem.

 Newspapers in the United States and Britain on Thursday simultaneously pushed the Barack Obama administration to give the whistleblower Edward Snowden a pardon.

With Snowden, the former US National Security Agency contractor, already being deemed a hero by many in the world arena, offering him clemency would also cater to the US' interests as it could help mitigate the damage done to the US' image by Snowden's leaks.

An editorial in The Guardian, the first newspaper that published information based on Snowden's leaks, said: "We hope that calm heads within the present administration are working on a strategy to allow Mr Snowden to return to the US with dignity, and the president to use his executive powers to treat him humanely and in a manner that would be a shining example about the value of whistleblowers and of free speech itself."

Indeed, if the United States wants to continue with its self-proclaimed role as a beacon of democracy and a champion of human rights, it should set an example in respecting and protecting individual rights and privacy.

Snowden has raised serious issues of public importance, which were previously hidden, or, worse, dishonestly concealed.

The young American has revealed US malpractices that encroach upon the rights of both states and individuals. His leaks about the insidious and pervasive US surveillance practices have prompted countries around the world to pay unprecedented attention to enhancing information security as an important part of national security.

Given the magnitude of Snowden's leaks last year, what he has revealed so far may be only the tip of the iceberg. But to continue to hound Snowden as a criminal would not be in the US' interests, as it would only ensure his lasting fame and further tarnish the US' public image.

In a Christmas message, Snowden called for an end to the US surveillance. He spoke for people around the world, especially those victimized by the US surveillance program. In fact, showing leniency to Snowden is only the first step Washington should take. The US still owes the world, its own citizens included, an honest account of its notorious spying programs and a solemn pledge that it will increase transparency.

 Source: China Daily

Will tailwinds overcome headwinds in France in 2014?

Looking to his second year of governance, French President Francois Hollande is optimistic over the performance of the eurozone' second main power, noting early positive effects from his package of reforms.

Struggling to defend his economic credibility, Hollande wants to accelerate growth by 0.9 percent and lower the budget gap by 0.5 percentage points to 3.6 percent this year banking on his economic roadmap based on spending squeeze, taxes rise on banks, big firms and the rich while pumping more funds into state-aided job creation.

After emerging from recession at the start of the year, the government estimated that the French economy would grow by 0.1 percent over the whole of 2013.

However, a still morose business climate and an unemployment running at 16-year high likely to put the Socialists on hot seat and added more pressure on them to live up their pledges to trim jobless and the management of public finances, according to analysts.

To Jean-Louis Mourier, an analyst at Aurel BGC investment company, the government's euphoria to kick start a robust growth and respect its financial commitments in 2014 would be limited mainly due to weak investment and wane local demand.

"In 2014, we are going to witness the same scenario as 2013. We expect a positive growth but not a strong rate," Mourier told Xinhua.

"On the one hand, consumers will spend less fearing high unemployment. On the other hand, companies are expected to invest less as there are not reasons encouraging them to pour their money in an uncertain market," Mourier said.

In its recent economic report, the national statistics bureau INSEE revised down the 2013 growth forecast to 0.1 percent from a previous estimation of 0.2 percent, citing sluggish investment and feeble sales abroad.

In a further sign of a gloomy outlook, the agency said the French gross domestic product (GDP) would register a quarterly growth of 0.2 percent in both the first and second quarters of 2014, a figure estimated too weak to curb the rising unemployment trend.

Analysts said the two-trillion-euro (2.71-trillion-U.S. dollars) economy should accelerate at least by 1 percent to start absorbing millions of people without job entering the lifeless domestic job market each year.

"We are clearly in a phase of a fragile economy. The economic activity was almost flat and did not reflect strong signs of growth during the last quarter of 2013 and the beginning of 2014," said Philippe Waechter, director of economic researches at Natixis.

"The French economy is struggling to reorganize itself to find a more robust pace of growth. Maybe that structural reforms would be useful," he added.

After proposing a competitiveness pact and labor reforms, French president announced a new "pact of responsibility" inciting firms to recruit more and to be more innovative while offering an opportunity to enjoy reduced charges.

"Results are slow to come but they are here," he said in response of fresh data that showed a rampant unemployment trend despite the state-sponsored job contracts and labor reforms.

In its recent economic survey, the Organization for Economic Cooperation and Development (OECD) expected France's unemployment rate to stand at 10.6 percent in 2013 and 10.8 percent in 2014, compared to 9.8 percent recorded in 2012.

Furthermore, the Paris-based organization urged France to carry out more reforms as the Europe's main powerhouse was behind its southern neighbors that have overhauled their economies and become more competitive.

"If France does not undertake quickly a turn of 180 degrees, notably by lowering the tax burden and public spending, 2014 could well be worse than 2013. Like last year, we hope that the country's political leaders will finally take the right decisions," Marc Touati, director of ACDEFI financial analysis bureau, wrote in a note. (1 euro = 1.36 U.S. dollars)

Source: Xinhua

Abe eager to hold summit talks with China, S. Korea leaders

Prime Minister Shinzo Abe expressed his eagerness on Monday to hold summit talks with Chinese and South Korean leaders in a bid to mend soured bilateral relationships.

"Because there are difficult tasks and issues, leaders should hold open discussions without preconditions," Abe said at a press conference. "I want to explain my visit to Yasukuni Shrine sincerely and directly" to leaders of China and South Korea, he said.

Abe said he wants to carefully explain to other countries, including China and South Korea, his hopes to change the government's interpretation of the Constitution to lift a ban on exercising the right to collective self-defense, as well as his aims to make constitutional amendments.

Source: The Japan news

Arrival of 'bad inflation' trend bodes ill for Japan's rebound

Price increases are prompting Japanese shoppers to buy less mayonnaise, showing the fragility of any economic rebound unless wages keep up with living costs.

Production of the sauce fell 5.1 percent in the five months that ended on Nov. 30 from a year earlier, which partly reflected stockpiling before Kewpie Corp. hiked prices by as much as 9 percent in July, followed by Ajinomoto Co. in August. The cost of living in Japan, excluding fresh food, climbed at the fastest pace in five years in November, even as salaries continued a tailspin that started in June 2012.Lower earnings, higher prices and a looming tax hike present a triple burden for households in the world's third-largest economy, prompting Bank of Japan Gov. Haruhiko Kuroda to urge regional business leaders to raise basic pay. While swaps indicate annual inflation of 2.12 percent for the next two years, economists surveyed by Bloomberg News said the BOJ will modify or abandon its 2 percent target.
"The trend appears to be a sign that bad inflation is unfolding," Toru Suehiro, a market economist in Tokyo at Mizuho Securities Co., said of the drop in mayonnaise production. "Stockpiling shows consumers are sensitive to prices. If salaries had been rising, there wouldn't have been such stockpiling."
Even as 15 years of deflation lowered the cost of living, consumers didn't have as much purchasing power as those in other developed nations. Salaries have fallen 8 percent since they peaked in 1998, figures from the labor ministry show.
Japan's average annual wage stood at $34,138 last year after adjusting for the differences in inflation, lagging behind South Korea, Spain and Australia, according to figures compiled by the Organization for Economic Cooperation and Development. The highest was $55,048 in the United States, while Mexico has the lowest wage, at $13,775, the OECD data show.

Source:  Japan Times

Japan: Individual investment accounts launched

Monday is the launch day for tax-free individual investment accounts in Japan. Account holders will not have to pay taxes on capital gains and dividends from annual investments of up to 1 million yen, or about 9,500 dollars.

Government officials are targeting Nippon Individual Savings Accounts, or NISA, at individual investors. The tax-free period will last 5 years after investors open their accounts.

Officials hope the system will encourage people to move their money from savings accounts into investments.

Banks and securities firms started accepting requests in October to set up NISA accounts. So far, more than 3 and a half million people have applied.

Source:NHK

Cross-border e-commerce allows more people to benefit from FTZ

The Shanghai Free Trade Zone is exactly 100 days old on Monday. While most pilot programs only take place within the trial area, the launch of a cross-border e-commerce service allows a wider population to enjoy the FTZ's benefits.

From bags to cosmetics, clothes to food, quite a lot of Chinese consumers are fond of foreign products. While many made purchases through third-party delivery companies or individual online vendors, some were worried about the authenticity and lawfulness of these products.

Seeing the market opportunity, the Shanghai Free Trade Zone launched the country's first cross-border e-commerce platform called "kuajingtong.com" last month. Kuajingtong says products sold on its platform are generally 30 percent cheaper than those in retail stores. Although it's difficult for the platform to beat individual vendors who can offer even lower prices, the company’s CEO says he’s confident about the platform’s competing strengths.

"Kuajigntong can guarantee the authenticity of the products with fast delivery, reasonable pricing, after-sale services and transparent taxes. I think we are changing the cross-border e-commerce industry by providing consumers with new shopping experiences," Yan Jing, CEO of Shanghai Kuajingtong International Co., says.

Yan Jing says the key to achieve these goals is to sign agreements with payment, logistics and retail companies while reaching deals with major global e-commerce giants such as eBay and Amazon. Consumers will still have to pay customs duties for their purchases, but they will be able to save money.

"Compared to the old model, the products are already in the Free Trade Zone, so consumers only need to pay customs and mail duties. This reduces logistic costs," a Shanghai Customs staff says.

The company Kuajingtong says China's cross-border e-commerce exceeded 48 billion yuan, or 8 billion US dollars in 2012. It expects the market to have grown by more than 50 percent in 2013.

Source: CCTV

Shanghai FTZ's telecom to allow higher foreign investment

Telecommunications sectors within the Shanghai Free Trade Zone will be able to attract higher proportions of foreign investment.

The Ministry of Information and Technology and the Shanghai government announced on Monday that they will remove restrictions on foreign investment in value added services such as app stores, call centers and network access. In e-commerce services, they will allow foreign investment to go as high as 55 percent, and VPN services 50%.

Source: CCTV

Japan's whisky makers drum up global market for their drams

After years of being overshadowed at home and practically unheard of overseas, Japan's whisky distilleries are expanding capacity as their malts become serious contenders against Scottish and Irish brands.

Exports are booming at Nikka, owned by Asahi Group Holdings, and at Suntory Holdings, which is ramping up production at its Yamazaki distillery for the first time in 45 years as domestic sales recover from a prolonged slump.

But some are concerned the distilleries may be caught out if the enthusiasm for whisky changes as it did in the 1990s, when several smaller players shut down as Japanese drinkers shifted to beer, clear spirits and imported liquor.

"At the moment, no one can see this boom busting. The difficulty is that you're making it today for 20 or 50 years' time," said Marcin Miller, an importer of small-batch Japanese whisky with his British company Number One Drinks.

The drop in demand during the 1990s meant Suntory and Nikka had to cut production, industry experts say, leaving distilleries with a shortage of stock for their youngest single malts when whisky made a comeback in 2008.

Last year, Suntory stopped making its 10-year Yamazaki and Hakushu single malts and introduced "no age" versions. Nikka is expected to phase out its 12-year Taketsuru single malt after releasing a "no age" variety this year.

The slump had more a serious impact on minor distilleries such as Karuizawa, Mars and Hanyu. All three were mothballed by 2000 and their stock left dormant until a run of international awards for Japanese whisky brought buyers knocking.

Source: Reuters

Bluefin tuna price slumps at Japan auction

A giant bluefin tuna sold at a Japanese auction on Sunday for less than five percent of the record-breaking sum paid last year amid concerns over soaring prices for the prized delicacy.

The 230-kilogram (507-pound) bluefin tuna was purchased at the Tsukiji market's first auction of the year for 7.36 million yen ($70,000), significantly down from the 155.4 million yen paid for a fish of similar quality in 2013 -- slipping below 10 million yen for the first time in five years.Bluefin is usually the most expensive fish available at Tsukiji, the biggest fish and wholesale seafood market in the world.
A piece of "otoro", or the fatty underbelly, can cost up to 2,000 yen at high-end Tokyo restaurants.
The winning bidder, Kiyoshi Kimura, president of the company that runs the popular Sushi-Zanmai chain, said the quality of the fish was as good as last year's, telling reporters: "It's the best."
The price decline was in part due to the greater number of bluefins available from Oma, the northern Japanese city that is a top site for tuna fishing.

Source: NewsOnJapan

China's growth softens slightly at year-end

China's latest economic figures, especially the purchasing managers' index (PMI) in both factory activity and the services sector, indicated sagging momentum in December, with the country's growth softening slightly last quarter, economists said.

The National Bureau of Statistics (NBS) is scheduled, later this month, to release China's macroeconomic data for the fourth quarter and the entire year of 2013, such as gross domestic product (GDP) growth, industrial production, retail sales and fixed-asset investment.

China's economy expanded by 7.7 percent in the first nine months of 2013. GDP growth in the third quarter accelerated to 7.8 percent from 7.5 percent in the second.

On Dec. 25, a report submitted by the State Council (cabinet) to the country's parliament said China's economic growth in 2013 is likely to stand at 7.6 percent. That would be the weakest growth since 1999.

DECLINING PMIs IN DECEMBER

The PMI for the non-manufacturing sector, a key measure of business activity in the services sector, fell to a four-month low at 54.6 in December, as most industries strived to find new growth engines amid slowing exports.

The figure was released on Friday by the NBS and the China Federation of Logistics and Purchasing (CFLP). The federation's vice chairman Cai Jin attributed the drop mainly to a slowdown in the construction and service sectors near the end of the year.

Earlier on Wednesday, NBS and CFLP said that the PMI for the manufacturing sector, a key measure of factory activity, had dropped to 51 in December, the lowest since August of 2013.

A HSBC survey, released on Thursday, showed the final reading of China's manufacturing PMI dropped to 50.5 in December from 50.8 in November, mainly due to slower output growth.

According to the HSBC survey, the subindex of new export orders declined for the first time since August.

Though a reading above 50 indicates expansion, falling PMIs in December reflected a fourth-quarter cooldown in both factory activity and business activity in the services sector.

Source: Xinhua

Japan: Luxury grab-bag sales surge

Grab bags of diamonds and electronics flew off the shelves during Japan's New Year sales, as the nation's continuing economic recovery whetted consumer appetite for spending.

Thousands waited in line at department stores in the cold around the country for the first store openings on Jan. 1 and 2 before elbowing and screaming to get at the so-called lucky bags. Some stores opened early to meet the larger-than-expected demand in an apparent sign of the feel-good factor of Japan's recovery after a year of Prime Minister Shinzo Abe's pro-growth "Abenomics" policies.

The bags are a New Year's tradition in Japan. Retailers stuff products in boxes or paper bags and sell them at a generous discount. Customers don't know what specific goodies are inside, but they do know they will be saving on the regular retail price and that some of the bags contain hugely discounted items for the lucky few. Their popularity rests on a kind of reverse psychology that drives people to spend money in the name of saving money. They hope to acquire luxury items at a steal, a seasonal portent for a year of good fortune.

Apple Inc.AAPL -2.20% sold good luck bags for ¥36,000 ($345) at Apple Stores this year, some of which included 11-inch laptops that usually sell for ¥98,800 in Japan.

Department store Mitsukoshi's Nihonbashi branch in Tokyo offered five ¥105,000 grab bags with diamond pendants and earrings, as well as nearly 4,000 bags priced at ¥1,050 containing various food items.

Source: NewsOnJapan

Harry Potter wizard invoked again as Japan hits back at China

The diplomatic bickering between Japan and China has descended into name-calling in the British press, with claim and counter-claim by the countries' ambassadors invoking the fictional evil wizard of the Harry Potter series, Lord Voldemort.

In an opinion piece published in Britain's Daily Telegraph newspaper on Monday, Tokyo's envoy to London, Keiichi Hayashi compared Beijing to the villain of JK Rowling's multi-million selling books.

"East Asia is now at a crossroads. There are two paths open to China," he wrote.

"One is to seek dialogue, and abide by the rule of law. The other is to play the role of Voldemort in the region by letting loose the evil of an arms race and escalation of tensions, although Japan will not escalate the situation from its side," he said.

"The answer seems obvious. Although China has so far refused to enable dialogue between our leaders, I sincerely hope that it will come forward, rather than keep invoking the ghost of 'militarism' of seven decades ago, which no longer exists," Hayashi wrote.

Asia's two biggest economies have long endured a difficult relationship characterised by disagreements on a wide range of issues, many of which are tied to bitter memories of violence in Asia by Japanese soldiers before and during World War II.

But ties have plunged since Tokyo nationalised a set of disputed islands in East China Sea in 2012, fuelling nationalism in both nations that has seen paramilitary ships and planes from both sides involved in regular standoffs around the isles.

Hayashi's letter was an apparent response to an earlier op-ed - also invoking Voldemort - published by the paper on January 1 by Liu Xiaoming, Chinese ambassador to London.

In the letter, Liu harshly criticised Japanese Prime Minister Shinzo Abe's recent visit to Tokyo's controversial Yasukuni war shrine, which honours Japanese war dead, including men convicted of serious war crimes in the wake of Japan's 1945 World War II defeat.

Source: Daily Telegraph

China FTA talks: Ways to further tap into global trade system

The Chinese Government sees Free Trade Agreements as a new platform to further opening up to the outside by speeding up domestic reforms, and to strengthen economic cooperation with other economies.

Currently, China has 18 FTA partners comprising of 31 economies, among which 12 Agreements have been signed already. 6 negotiations are underway, between China and South Korea, Gulf Cooperation Council, Australia and Norway, as well as China-Japan-South Korea trilateral trade talk.

Source: CCTV

China's Spring Festival shopping season begins

Not only the price is rising, but the holiday shopping fever is also heating up. According to the Chinese Zodiac 12-animal system, it is the year of the horse this year. And horse-themed products are galloping out of stores. Many Chinese vendors are putting horse toys, decorations and mascots in the most eye-catching spots.

Lovely horses, on fabrics, on paper, and on gold: small vendors in the East Chinese Jiangsu Province, is embracing the traditional lunar new year shopping season.

Consumers believe that adding horse elements to their home decorations and personal accessories, brings joy and luck.

"I'm shopping for a horse shaped pendant for my son. I hope that he will grow into a hardworking person like a horse," consumer Yang Jie says.

In the meantime, new year stamps are in hot demand. Many collectors are anticipating horse-themed stamps to complete their 12 zodiac collection. The price of each horse-themed 2014 stamp has risen by 9 times the usual price.

Across the pond, sales of lucky money notes for the year of the horse kicked off last month in Washington DC.

It's the peak shopping season for the Chinese community around the world.

Source:  CCTV

Prices rise as Chinese New Year approaches

China's traditional lunar New Year is approaching. And consumer prices are on the rise as festivity-related demands such as family reunion dinners and self-rewards prompt up consumption.

China's lunar new year is still a month away, but you can already feel the New Year atmosphere in the retail and the wholesale sectors.

In Jiangsu Province, one of China's major agricultural producing regions, prices of both vegetables and meat are rising.

"Bamboo shoots are sold for 15 yuan per 500 grams. But the cost has increased to 12 yuan. It's hard for me to profit," a vegetable store keeper from Changshu City of Jiangsu Province says.

Due to the cold weather and soaring demand, meat prices have seen a fast rise as well. Aquatic products also become popular as a part of the New Year feast. Meanwhile, the sales of special local products are heating up too.

"The local products pack sells best, which includes many cheap but high-quality organic foods. People prefer to take some to their families for the New Years," a local products store owner in Suqian City of Jiangsu Province says.

But not all goods prices are increasing. Some high-end healthcare products lost their glamour to consumers this year. By contrast, low-and-medium end ones sell better.

"The sales of the low-and-medium products have increased about 30 to 40 percent than before," a healthcare salesperson says.

As the most important holidays in China, the traditional New Year is seen as a consumption generator. According to the Ministry of Commerce, the retail and catering sales reached nearly 540 billion yuan, or 90 billion U.S. dollars during last year's Spring Festival. And a similar trend is expected this year as well.

Source: CCTV

Samsung Electronics braces for weakest year of smartphone growth

 Samsung Electronics Co Ltd is bracing for its weakest smartphone profit growth this year since 2007 as arch rival Apple Inc challenges its domination in China's $80 billion market.

Samsung's mobile devices business, which earns two thirds of the company's profit, will come under pressure when Apple makes its phones available from January 17 via China Mobile Ltd, through which Samsung has been selling smartphones for around seven years.

Apple is also widely expected to sell smartphones with larger screens come autumn when it traditionally announces products, neutralizing a selling point that Samsung has enjoyed since introducing its Galaxy Note in late 2011.

Operating profit at Samsung's mobile devices division is likely to grow by a low single digit or to shrink mildly in 2014, after increasing its size by eight times over the past five years, according to a Thomson Reuters' Starmine SmartEstimate of 23 analysts, which gives greater weighting to the more accurate analysts.

Samsung, the world's biggest smartphone maker with a third of the market, will release October-December earnings guidance on Tuesday which will likely show operating profit growth of 10 percent at 9.75 trillion won ($9.24 billion), according to Starmine.

That would be 4 percent less than the record 10.2 trillion won of July-September as Apple enjoyed buoyant sales in the United States and Japan during the year-end holiday season.

Fourth-quarter earnings were also likely pulled down by a special bonus related to the 20th anniversary of the "New Management" strategy of Chairman Lee Kun-hee, which analyst estimates put at 300 billion to 700 billion won.

Samsung is the biggest smartphone vendor in China with sales reaching around 70 million units last year, or 20 percent of its total shipments, analysts estimate.

But Apple's China Mobile incursion and possible larger screen offerings could cut sales of Samsung's latest Galaxy S and Note series by 3 percent this year, BNP Paribas estimates. The iPhone is widely perceived in China as a gold standard for high-end products, analysts say.

"We think one of the key reasons Samsung has managed to take market share from Apple so far is its large-sized screen offerings," BNP analyst Peter Yu said in a note.

"However, this gap is likely to narrow if Apple launches large-screen phones in 2014. Unless Samsung further differentiates itself with flexible OLED (organic light-emitting diode) screens, it may lose some of these high-end customers."

The shares, worth $190 billion, fell 10 percent over the past fortnight to a 4-month low last week, wiping off market value to the tune of $19 billion - equal to the total value of shares of Sony Corp.

The won's rise to a five-year high against the U.S. dollar has also been prompting investors to sell, as a strong won reduces the value of Samsung's repatriated earnings.

A strong won is particularly troublesome for Samsung's components business, which generates around 30 percent of overall operating profit, because it primarily settles accounts in dollars, analysts said.

Samsung's brightest spot is its semiconductor unit, which brings in 20 percent of operating profit, and which enjoys growth estimates of around 42 percent this year.

Overall operating profit growth for 2014 is likely to be 6.2 percent, the slowest pace in three years, according to Starmine.

Source:  Reuters

Insight - Fuelled by Syria war, al Qaeda bursts back to life in Iraq

Al Qaeda gunmen seeking to form a radical Islamic state out of the chaos of Syria's civil war are fighting hard to reconquer the province they once controlled in neighbouring Iraq, stirring fears the conflict is exporting ever more instability.

Exploiting local grievances against Baghdad's rule and buoyed by al Qaeda gains in Syria, the fighters have taken effective control of Anbar's two main cities for the first time since U.S. occupation troops defeated them in 2006-07.

United States has pledged to help Baghdad quell the militant surge in Anbar -- although not with troops -- to stabilise a province that saw the heaviest fighting of the U.S. occupation.

Washington announced it was speeding up deliveries of military equipment to help Baghdad fight the gunmen. This would include missiles, surveillance drones and helicopters.

Al Qaeda's Islamic State of Iraq and the Levant (ISIL) has a tough potential foe in Anbar's well-armed tribes, fellow Sunnis ill-disposed to ceding power to al Qaeda even if they share ISIL's hostility to the Shi'ite-led central government.

And the group's goal of creating a hardline Islamic state reaching into Syria is still seen by many as far-fetched.

But its high-profile push into Ramadi and Falluja illustrates the dangers of conflict spreading from Syria's three-year-old conflict, which is in part a proxy war between Sunni Muslim Saudi Arabia and Shi'ite rival Iran, analysts say.

ISIL fighters operate in Syria as well, and recent setbacks for the group in the war there mean its Iraqi members may be all the more determined to secure gains in Anbar, analysts say.

"There is already a fierce geostrategic struggle unfolding in the Arab arena between Saudi Arabia and Iran. There is a real danger that all-out war in Iraq could pour more gasoline on this raging fire and destabilise fragile Arab countries."

The ISIL fighters are exploiting simmering Sunni anger against the Shi'ite-led government of Prime Minister Nuri al-Maliki in Baghdad, seen by many Sunnis as a high-handed autocrat beholden to Iran.

They are also making the most of rising sectarian sentiment around the region and a weakening of government control in those Arab countries most affected by the popular uprisings since 2011.

"Al Qaeda in Iraq, Syria and even in Lebanon basically appeals to a certain segment within Sunni public opinion that feels alienated, marginalised or persecuted,"said Fawaz Gerges, a Middle East expert at the London School of Economics.

Source: Reuters