The road for Shanghai to top Hong Kong (will continue)

"According to the Global Financial Centers Index (2013), the top four hubs are London and New York, which compete in a class of their own, and Hong Kong and Singapore. The index relies on indices from World Bank, the Organization for Economic Cooperation and Development, and the Economist Intelligence Unit. 

In this index, emerging-economy financial hubs are far behind. Shanghai is featured as 24th, somewhere between Vienna and Kuala Lumpur, as well as Melbourne and Paris. But as they say, "Don't believe the hype". 


Last January, Shanghai Mayor Yang Xion unveiled the mega-city's plan to develop the mainland's first free-trade zone. The FTZ will first span 29 square kilometers in the city's Pudong New Area, including the Waigaoqiao duty-free zone and Yangshan port. It may eventually expand to cover the entire area of Pudong. As land value has already soared in Pudong and the proximate areas, property developers look as if they had won the lottery. 

In the past, Beijing has approved over a dozen bonded areas, which are prototypes of free-trade zones. But Shanghai's FTZ will be far more extensive and could bypass that of Hong Kong over time. The new Chinese leadership supports the plan.

Shanghai needs accelerated reforms in finance and trade, to boost the city's maturing growth. Despite the absolute expansion of its economy and population, the relative role of Shanghai - and other first-tier megacities - among all Chinese cities is eroding. With the huge expansion of Chinese medium-size cities of 1-5 million people, the momentum of the property markets has been shifting to second- and third-tier urban centers". 

Source:Dan Steinbock 

              Asian Times

Asian stocks rally to three-week highs on hopes U.S. avoids default

Asian stocks jumped to three-week highs on Friday as investors took a chance and cheered perceived progress in Washington to avert a possible default, even though questions remained over whether a deal could be struck.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 percent, reaching highs not seen since September 19. Tokyo's Nikkei was also 1.3 percent higher.

Gains were seen across the region's emerging markets, with Indonesian shares rising 0.6 percent and the Philippines up 0.9 percent. MSCI's broad emerging benchmark equity index put on 0.8 percent.

The rally in Asia came after U.S. stocks jumped over 2 percent in their biggest one-day gain since January 2 as investors became more confident that squabbling U.S. politicians would at the very least avert a possible U.S. debt default next week.

"The situation is fluid but it seems like progress is being made on averting the worst case scenario. But a short-term solution should be met with short-term enthusiasm," analysts at Nomura wrote in a client note.   

Source: Reuters

China's growth rate to exceed 7.5 percent: central bank official

Chinese economic growth rate is expected to be above 7.5 percent this year, a senior Chinese central bank official said here Thursday.

"I think for this year we're going to have certainly above 7.5 percent growth rate, maybe 7.6 percent something like that," Yi Gang, deputy governor of the People's Bank of China, said at a seminar on the global economy hosted by the International Monetary Fund (IMF) in George Washington University.

A lot of people worried about the slowdown of Chinese economy, even a hard-landing situation, in the first half of this year, but economic data in the third quarter showed China's economy had already picked up, he said.

He added that the problems of shadow banking and local government financial vehicles have been under control.

The Chinese economy is entering a phase of medium-to-high rate growth, maybe at around 7 percent in the foreseeable future, still considered high from global standard, although it's slower than double-digit growth in the past decade, Yi explained.

China needs a stable global economy, including a robust economic recovery in the developed economies and other emerging ones that the Chinese economy is closely linked to, an orderly communicated tapering by the U.S. Federal Reserve, as well as free trade and investment environment, he said.

Yi also urged the United States to deal with federal government shutdown and debt ceiling issues as soon as possible. "The market doesn't like uncertainty. We watch this drama very closely."

"I think they should have the wisdom to solve this problem as soon as possible," he added.

Last Tuesday, U.S. Treasury Secretary Jacob Lew told Congress that the federal government will reach its debt limit of 16.7 trillion U.S. dollars by Oct. 17, and failure to raise it would lead to a catastrophic default.

IMF chief Christine Lagarde warned Thursday that U.S. failure to raise the debt ceiling would damage the U.S. economy and the global one.

For the Chinese currency exchange rate reform, Yi told Xinhua that China would take a gradual manner, taking into account promoting market-oriented reform and maintaining market stability.

China did a better job than other emerging economies in terms of capital flows in the recent months, he said.

China becomes largest musical instrument market

 China's musical instrument market reached over 40 billion yuan (6.5 billion U.S. dollars) in 2012, surpassing the United States for the second year to become the largest musical instrument market in the world.

According to statistics released at the ongoing China (Shanghai) International Musical Instrument Expo held in Shanghai, the sales volume of the Chinese musical instrument industry has increased by three times in the past decade, surpassing the size of the US market for two consecutive years since 2011.

In 2012, China imported musical instruments worth more than 1.85 billion yuan, and domestic production and sales totaled 38.5 billion, according to statistics from the General Administration of Customs.

"With growing economic strength and cultural consumption demands, a large musical instrument market is forming in the country now, including instrument production, sales, education and entertainment," said Zeng Zemin, secretary general of the China Musical Instrument Association (CMIA).

Zeng said China's musical instrument market size is expected to reach 100 billion yuan before 2020.

China's musical instrument industry has developed rapidly in the past ten years. Most well-known international instrument brands have set up manufacturing plants or cooperated on manufacturing in China. China has become a major production site for mid- and low-end musical instruments.

Statistics released by CMIA showed that, in 2012, the total world output of pianos was 500,000, with China accounting for 80 percent. Of the two million Western orchestral instruments in the world, 60 percent of them were made in China, and the country produced 80 percent of the 1.3 million violins made worldwide in 2012.

Alibaba's latest takeover, Chinese fund management firm Tianhong

 Alibaba's latest takeover of Chinese fund management firm Tianhong will inject new vitality into China's online finance market, analysts believe.

Zhejiang Alibaba E-commerce Co., the parent company of Alipay, China's biggest online payment platform, will buy 51 percent of Tianhong Asset Management Company, according to a statement released on Wednesday by Tianhong's shareholder, Inner Mongolia Junzheng Energy & Chemical Industry Co., Ltd.

The statement said that Tianhong's registered capital will surge to 514.3 million yuan (83.69 million U.S.dollars) from its previous 180 million yuan through the fundraising round announced Wednesday.

This will make Tianhong the country's largest fund management company in terms of registered capital, surpassing that of China Asset Management Co., currently the largest with registered capital of 238 million yuan.

Zhejiang Alibaba will invest 1.18 billion yuan for 51 percent of Tianhong's registered capital to become the largest shareholder of the company.

Inner Mongolia Junzheng and Tianhong's management will also buy more of Tianhong's registered capital.

Shares of Inner Mongolia Junzheng soared to the daily trading limit of 10 percent on Thursday.

Tianhong will remain independent in its operations, and the company's name, registration place, structure and management will stay unchanged, Chen Liang, spokesman for Alipay, said Thursday.

"Alipay has some experience in the field of online finance, and we hope the takeover will bring more Internet elements and mindset to the traditional fund industry," Chen said.

In June, Alipay joined hands with Tianhong to create a wealth management product, called Yu E Bao, for users of Alipay to transfer their Alipay balance into a Tianhong money market fund.

The product soon attracted millions of users after its launch, as it offers an annualized yield of about 4.5 percent, higher than the one-year deposit rate of 3 percent offered by commercial banks.

In the first 18 days, Yu E Bao gained 2.5 million users and raised more than 6.6 billion yuan, data from Alipay showed. Analysts believe its size will surpass 100 billion yuan by the end of year.

Liu Xiaoguang, chairman of the Beijing Capital Group, said cooperation between Alipay and Tianhong has been upgraded from a single product to the capital level, and the deal will offer Alipay a significant entry into the field of asset management.

Zhang Jianhui, a fund industry insider, said that the deal will optimize Alibaba's internal use of resources and ease its future development in the financial sector.

The takeover by Alibaba will undoubtedly create a strong competitor for other fund companies, but it will also accelerate the integration of the fund management industry and the Internet sector, Zhang said.

Zhang said that more Internet-based businesses may follow a similar path to tap into the fund industry, bringing new vitality to fund management companies in China.

Chen said that Alipay does not rule out the possibility of similar shareholding moves in the online finance sector in the future.

"We will insist on becoming an open platform for online finance, so we see all business partners as equal in terms of conducting innovation and creating value for our customers," Chen said.

Top political advisor stresses uniting overseas Chinese

China's top political advisor Yu Zhengsheng on Thursday stressed uniting people from Hong Kong, Macao and Taiwan, as well as other overseas Chinese, to make greater contributions to China's development.

Yu, chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), made the remarks at a meeting with 780 members of the Fourth Executive Council of China Overseas Friendship Association (COFA), a group with close ties to overseas Chinese.

Yu, on behalf of the Communist Party of China (CPC) Central Committee, congratulated the members on the convening of the council meeting.

Yu called on the association to unite as many people as possible to propel China's reform, opening up and modernization drive, and to rally them behind President Xi Jinping's call to achieve the Chinese dream.

Yu said the association should unswervingly adhere to the principles of "one country, two systems," and unite people from all walks of life in Hong Kong and Macao to support the lawful governance of their respective chief executives and governments.

In addition, Yu urged the association to build closer ties with all communities in Taiwan, particularly grassroots communities.

The association should also promote closer exchanges with people from other countries in a bid to make China's voices heard in the world and to create a favorable environment for China's national rejuvenation, Yu said.

Ling Jihua, vice chairman of the CPPCC National Committee and head of the United Front Work Department of the CPC Central Committee, was elected president of the COFA at the council meeting.

Chinese President Xi Jinping has reinvigorated Australian enthusiasm for a free trade agreement

 Chinese President Xi Jinping has reinvigorated Australian enthusiasm for a free trade agreement ( FTA) in landmark talks last week with Australian Prime Minister Tony Abbott.

With a 12 month timeline and a mountain of issues, Australian experts agree that despite the challenges, the view from the top will be well worth the climb.

Wallowing in disillusion after almost 20 rounds of roadblocks and missteps, Xi and Abbott's statements of intent for a working FTA has been applauded across industries and party lines in Australia.

Abbott was effusive in his approach to bilateral trade "as comprehensive as possible" on Monday after meeting Chinese President Xi Jinping at the APEC summit in Bali, Indonesia.

Despite domestic tremors, Abbott has signaled the way forward. While APEC itself revealed just how much China's free-trade leadership has sparked regional economic zeal.

The ducks are finally in a row for China's regional engagement through a liberalizing, multi-lateral trade network.

"The president made it clear to me how much foreign investment China hopes to make in coming years, and I want Australia to get a fair share of that foreign investment because that foreign investment will be good for jobs, it will be good for economic activity," Abbott said.

China has seemingly taken the initiative at the 21st economic leaders' meeting of the Asia-Pacific Economic Cooperation (APEC), leaving the unproven value-adding of the Trans-Pacific Partnership in its wake.

Chinese representatives have been at the heart of discussions driving regional trade liberalization, facilitation and integration of multiple free trade agreements in Asia and the Pacific.

China described the APEC summit as a supporting structure for multilateral trade, before setting foot in Bali, fast-tracking prioritization of multiple, genuine free trade zones in the Asia- Pacific.

Australia is certainly hungry for the completion of an FTA that has made little headway over almost ten years, joining China in the effort to create the necessary conditions for a united Asia- Pacific FTA.

Bruce McLaughlin, an adviser to major Chinese investors in Australia, told Xinhua, "Negotiations have been going on for a very long time, and it seems to me that both sides' negotiating teams have been hamstrung by domestic issues."

McLaughlin noted Abbott's confirmation that investment in Australia by Chinese state-owned enterprises would be welcome "if it's in Australia's national interest, and I think that in most cases, this investment will be in our interest."

"This statement alone form Abbott at the APEC summit shows how much the situation has improved.

"When we look at the enormous benefits that both New Zealand and China have seen from their FTA, it's clear that an agreement will be great news for both Australia and China," McLaughlin said.

The Australia China Business Council (ACBC) has long supported the conclusion a wide-ranging agreement, arguing an FTA would provide an inherent value above and beyond the obvious economic benefits.

ACBC Senior National Vice President Duncan Calder told Xinhua, "As a council, we continue to support the introduction of a free trade agreement between China and Australia."

An agreement the ACBC estimates could deliver 150 billion Australian dollars in value over a 20-year period to both Australia and China.

"The symbolism of friendly nations compromising and navigating sensitivities to deliver such an agreement would in itself be as powerful a message as the economic outcome."

The stuttering bilateral negotiations began in 2005 and despite 19 intense rounds of discussions (Australia was the first country to formally agree to an FTA with China), and other countries including neighboring New Zealand have already concluded pacts with the world's most important economy.

While a trade deal would almost be universally welcomed here, concerns remain over access to agriculture markets, services industries and the development of education exchanges.

Writing in the Australian Financial Review, Laurie Pearcey, director of China Strategy and Development and director of the Confucius Institute at UNSW, said that while the stakes are high for Australia's farmers, bankers, fund managers and companies looking to increase their investment footprint into China, it is the international education sector Australia's quiet achiever that stands to gain from mutually accessible markets.

"Australia's 15 billion (Australian dollars) international education sector has been missing in action in most of the discussion around the FTA."

Pearcey warned that there needs to be a balance struck between a pragmatic recognition by both governments of the commercial issues involved in student recruitment on the one hand, and Australia's growing network of Chinese research partnerships on the other.

"The removal of barriers to recruiting students in China... would give Australia's fourth largest export earners a bigger seat at the table, and allow them to continue their growing partnerships with recruitment agents and academic partners and provide world-class degrees to feed the rise of the Chinese middle class."

Henry Makeham, founder of the grassroots bilateral youth forum, The Australia China Youth Dialogue, expresses some of the caution felt within Australia's agricultural sector.

"I would argue that Australia should not be hasty in entering into a FTA with China...whilst an FTA would be a political milestone. Would it really be a net economic benefit, especially when many key sectors, such as agriculture, may be off limits on the China side?"

McLaughlin, who has advised and identified investment opportunities throughout the Australian agricultural sector, says Chinese companies can benefit from increased access to Australia's broad-acre farming products and Australia food-safety and supply- chain management expertise, as well as Australia's low production costs.

Meanwhile Australian farmers can benefit from increased access to the Chinese market and to Chinese capital, as well as Chinese experience in large-scale production and vertical integration.

"I would hope that we could achieve something on the service sector too: Australia and China could both gain from increased trade, cooperation and investment in the legal and financial services sectors in particular, as our skills and competitive advantages in these sectors are complementary," he said.

Source: Xinhua

Chinese Still Prefer Property Over Stocks

The preference of people in China, for property over other investments is one reason residential prices have defied a long-running government campaign to put the brakes on the housing market to keep homes affordable. New home prices in major cities, including Beijing and Shanghai, rose more than 10 percent in July from the year before, compared with a more than 10 percent drop in the benchmark Shanghai Composite Index during that period. Even after a recent rally, the Chinese stock market is down 32 percent since the end of 2009. Saving rates on bank deposits are set at 3 percent.

Source: Bloomberg

Japan:Bank lending logs highest growth in 4 years

The average balance of lending at Japanese banks in April-September grew 1.9 percent from a year before, the highest rise in four years, the Bank of Japan said Thursday.

The growth was the largest since the 2.4 percent rise in April-September of 2009, when fund demand surged due to financial market turmoil after the collapse of U.S. investment bank Lehman Brothers in September 2008.

For September, the overall average lending balance at banks and shinkin banks rose 2 percent from a year before to ¥468.5 trillion.

G-20 finance officials to focus on U.S. budget standoff

Top Group of 20 finance officials will kick off their two-day talks in Washington on Thursday afternoon with the focus on whether they can hammer out an effective message that can help solve the U.S. budget standoff.

The meeting of the G-20 finance ministers and central bank chiefs comes as the U.S. fiscal problem raises strong concerns as a new risk for the global economy. There will be serious consequences on financial markets if the U.S. government defaults on its debt without a deal before the Oct. 17 deadline.

Source: NewsOnJapan

26,000 seek to join Yahoo Japan mall

The number of applications to open stores at Yahoo Japan Corp.'s online shopping mall reached 26,000 in the two days from Monday, the company has announced.

The wave of applications came after the major Internet portal announced Monday its decision to abolish store opening and commission fees. Currently, the number of shops in the mall stands at about 20,000.

Source: NewsOnJapan

China actively promotes East Asian cooperation

The spotlight fell on Asia-Pacific again Wednesday when Chinese Premier Li Keqiang started a Southeast Asia trip, in the wake of President Xi Jinping's just-concluded tour in the region.

Against the backdrop that the International Monetary Fund cut its growth forecast for developing countries, the dynamic cooperation in East Asia has become ever more important to people around the world.

China always supports the Association of Southeast Asian Nations' (ASEAN) leading role in regional cooperation. Meanwhile, due to a mutual need for security and development and its economic strength, the country is undoubtedly also an important leading force in East Asian cooperation with ASEAN as a geographical center.

On the economic front, China and some ASEAN members have not only competed with but also complemented each other.

Working together in broad areas ranging from trade, finance and infrastructure to culture, science and technology, China and ASEAN, as well as other East Asian nations, have continuously made headway in their cooperation.

Facing a sluggish recovery of the world economy, the continuous spillover from developed countries' tapering of monetary easing measures, and rising trade protectionism, cooperation in East Asia has come under great pressure and growth forecasts for China and some ASEAN members have also been cut by the IMF.

However, China and other East Asian nations can learn the lessons of history and turn the pressure into impetus.

As Li put it at the 10th China-ASEAN Expo in the southern Chinese city of Nanning last month, the two sides have not only built a "Golden Decade" over the past 10 years, but have the ability to create a "Diamond Decade" in the future.

Only through pragmatic moves and substantial results, can China's relations with ASEAN and East Asia mature and their cooperation accelerate.

China's economic strength also contributes to its leading role in East Asian cooperation. Peter Drysdale, head of Australia's East Asia Forum, said almost all countries in the region looked forward to becoming a major trade partner of China.

Thanks to the rocketing trade volume between China and ASEAN over the past decade, it is not difficult for the two sides to expand trade to one trillion U.S. dollars by 2020.

In pursuit of peace, development and cooperation, China has led cooperation in the most dynamic region into a new stage.

Chinese leaders' speeches at a summit of the Asia-Pacific Economic Cooperation (APEC) forum and a series of East Asian meetings have demonstrated that China is willing to build mutual political trust with other countries in the region, so as to boost their economic cooperation.

In their view, East Asian cooperation relates not only to the establishment of a community of common destiny in the region, but also to the whole world's stability and prosperity.

Over the past two decades, China has put forward a series of new ideas in promoting regional cooperation.

During the East Asian leaders' meetings in Seri Begawan, Brunei, China is expected to propose a new pattern for cooperation in the region, including a free trade system under a regional comprehensive economic partnership (RCEP), an Asian currency stability system, an investment and financing cooperation system, and an Asian credit rating system based on the Asian bond market.

The new pattern not only pays attention to immediate substantial results, but also attaches great importance to future benefits.

With deep insight and a blueprint for concrete actions, East Asian cooperation presents an unprecedented opportunity for the region, and shows clear prospects to move from a "Golden Decade" to a "Diamond Decade."

Chinese Premier Li Keqiang met with South Korean President Park Geun-hye

Chinese Premier Li Keqiang met with leaders of South Korea, Indonesia, Cambodia and New Zealand Thursday on the sidelines of the 8th East Asia summit.

When meeting with South Korean President Park Geun-hye, Li said that to strengthen strategic communication and practical cooperation between China and South Korea is conducive to peace and development of the region.

China stands ready to keep high-level contacts and expand cultural and people-to-people exchange with South Korea, Li said, adding that his country is also ready to actively push forward the construction of a China-South Korea free trade area and raise bilateral cooperation to a higher level.

Park said her country is willing to work with China to comprehensively implement the cooperation consensus between the two countries, accelerate negotiations on a free trade agreement, deepen cooperation in various fields and advance the South Korea-China relationship.

Source: Xinhua

Chinese premier calls for deepened cooperation in East Asia

Chinese Premier Li Keqiang on Thursday called for joint efforts in East Asia to keep the sound momentum of development and further enhance the cooperation in the region.

Li made the remarks in an address to the eighth East Asia summit held in the Bruneian capital.

After eight years of development, the summit has become an important bridge linking East Asia and Asia-Pacific, said Li, urging countries in the region to stick to the spirit of openness and inclusiveness in their cooperation.

"We should properly handle problems hindering the development, manage the divergences among us, so as to build a favorable environment for peaceful and secure development in the region," he said.

To do that, he put forward a three-point proposal.

First, East Asian countries should strengthen strategic cooperation and work together to face challenges.

"We should pay more attention to cooperation in such fields as food and energy security, natural disaster, climate change and public health," said the Chinese premier, adding that his country stands ready to join hands with relevant countries to promote the green and low-carbon development and people-to-people exchanges in the region.

"Second, we should deepen economic cooperation, accelerate regional integration, and share capital, technology as well as market through regional cooperation," said the Chinese leader, vowing to conclude negotiations for a modern, comprehensive, high-quality and mutually beneficial free trade agreement by the end of 2015, with joint efforts of the Regional Comprehensive Economic Partnership members.

Third, East Asian countries should strengthen security mutual trust, and maintain the stability and peace in the region.

Proposing a regional security framework which conforms with the regional situation and needs of relevant parties, Li called on countries in the region to embrace a new security concept centering on comprehensive, common and cooperative security.

"We should also push forward candid talks and cooperation in traditional and non-traditional security fields, so as to build lasting peace in East Asia," he noted.

The premier also elaborated China's stance on the South China Sea issue.

The freedom of navigation in the South China Sea is intact and the safety of navigation there is guaranteed, he said.

China, said the premier, stands ready to continue to work with other countries in the region to maintain the freedom and safety of navigation in the South China Sea.

China and ASEAN countries have reached consensus that the dispute should be resolved by relevant parties through consultation and negotiation, he added.

"Unilateral referral of the issue to international arbitration runs counter to the Declaration on the Conduct of Parties in the South China Sea (DOC) agreed by China and ASEAN countries," said Li.

The Chinese premier promised that his country will work jointly with ASEAN members to effectively implement the DOC and advance the consultations on a code of conduct in the South China Sea (COC) in an active and prudent manner based on the principle of consensus-building.

Faced with unprecedented opportunities of development as well as severe challenges, East Asian countries should adhere to the concept of openness,inclusiveness, cooperation and win-win, abandon the Cold War and zero-game mentality so as to promote the peaceful coexistence and common development in East Asia and the Asia-Pacific region at large, he said.

East Asian leaders believed ASEAN should play a leading role in East Asian cooperation given the complex international political and economic situation. Countries in the region should strengthen their communication and coordination to deepen strategic mutual trust and advance practical cooperation.

ASEAN leaders said they are willing to properly handle the South China Sea issue through negotiation and consultation with China with a view to safeguarding peace, stability and prosperity of the region.

Li arrived here earlier Wednesday to attend a series of East Asian leaders' meetings and visit the country, the first leg of his maiden Southeast Asia tour since taking office in March. The trip will also take him to Thailand and Vietnam

World Bank :China's willingness to continue reforms despite lower growth rates is a "good example" for all emerging markets and developing countries.

World Bank President Jim Yong Kim said on Thursday that China's willingness to continue reforms despite lower growth rates is a "good example" for all emerging markets and developing countries.

"In terms of the Chinese approach to the current lower growth rates, we were very impressed with the fact that China is still committed to the reforms," said Kim at a press conference prior to the Annual Meetings of the World Bank and its sister agency International Monetary Fund scheduled to kick off on Friday.

Despite China's economy expands at a slower pace, "things like the Shanghai Free Trade Zone are going forward" and "the commitment to switch its growth strategy from one focused on investment and exports to consumption and services is going to continue," Kim said, adding it is exactly the right thing to do.

China's economic growth has decreased from the previous double- digit growth rates to 9.3 percent in 2011, 7.8 last year and 7.6 in the first half of this year, arousing worries over the prospects of the world's second largest economy.

Addressing an Asia-Pacific Economic Cooperation summit held on the Indonesian island of Bali on Monday, Chinese President Xi Jinping noted that the recent slower speed of China's economic growth is within a reasonable range and the slowdown is an intended result of China's own regulatory initiatives.

He said that China will deepen reform and opening-up in all respects.

While endorsing China's commitment to reforms, Kim also noted that indebtedness in China has gone up. "The local debt is a concern," he said. "But China has an unusual situation in that they seem to have resources to be able to support the system if that does not become a problem."

Coming Chinese Indicators

 Watch for some jostling Friday ahead of a batch of China economic data to be released in the coming days; Saturday will bring September trade numbers while an inflation reading hits the wires on Monday. Investors in Hong Kong will be particularly keen to position for the numbers as the city’s stock market will be closed Monday for the Chung Yeung Festival.

Source: The WSJ

Brazil:Dólar fecha no menor valor em quase quatro meses com alta da Selic e EUA

A perspectiva de que a taxa básica de juros brasileira volte a dois dígitos e de que esteja próximo um acordo entre republicanos e democratas nos Estados Unidos sobre o aumento do teto da dívida do governo fizeram o dólar fechar esta quinta-feira (10) em queda, para o menor patamar em quase quatro meses.

O dólar à vista, referência no mercado financeiro, teve queda de 1,33% em relação ao real, cotado em R$ 2,178 na venda --menor cotação desde 19 de junho deste ano, quando estava em R$ 2,177. Já o dólar comercial, usado no comércio exterior, caiu 1,13%, a R$ 2,181 --menor valor desde 18 de junho deste ano, quando estava em R$ 2,178.

Fohla de Sao Paulo

Obama turns to local strife while China promises to expand Trade and Investment with Asia-Pacific neighbors

Last week, Obama, locked in his fight with the Republican Party, canceled a much-anticipated trip to Asia. This is the region to which he had announced he would "pivoted" his foreign policy, trying to contain the regional growth of China. At the same time, Obama's competitor, Chinese President Xi Jinping, took center stage. He triumphed in Malaysia and Indonesia by promising China's neighbors expanded trade and investment. 

In move typical of the game the Chinese call weiqi and the Japanese go, with America supporting Vietnam and the Philippines to surround China, Xi decided to support Indonesia and Malaysia to surround Vietnam and the Philippines. Moreover, if the US, constrained by growing budget difficulties and by an impending financial crisis that could lead to a default on the US debt, is apparently willing to leave Asia now, will it leave again in a few months or years? Conversely, despite all its internal problems, China has a tradition of not going back on its international commitments, and despite possible domestic economic difficulties, it will not go back on its word to increase regional commerce. 

Moreover, China is not simply moving eastward, to the sea. Beijing has grand plans and deep pockets to create a huge continental railway network that would link Asia to the European economic powerhouses, bypassing all sea routes. There are talks with Kazakhstan to build a new line that would boost transport and communication in the country and restart a new version of the old Silk Road. Talks are occurring with Thailand to build a line going through Laos or Myanmar, and there are projects to extend the Tibetan railway through India. Meanwhile, another railway could stretch from India to Vietnam via Myanmar and Thailand. In other words, a cobweb of railways pivoting around China could be built in the coming decades, transforming the economic and political dynamic of the region. 

This could objectively decrease China's focus on the eastern and southern seas, which is currently causing tension with Japan and the Philippines. So far, the only difficulty in this grand plan is that too much power was given to the often inefficient and corrupt railway companies. If Beijing decides to take on a more central and strategic role, things could move faster and more efficiently. 

Source: Asia Times

EIG tira Eike da LLX antes do aumento de capital e bancos rolam dívidas

Mais uma empresa do grupo EBX vai mudar de dono. O Conselho de Administração da LLX, empresa de logística do grupo EBX, de Eike Batista, aprovou o aumento de capital de R$ 1,3 bilhão, a ser subscrito pela americana EIG, que se tornará controladora da empresa no final da operação.

O controlador Eike Batista abriu mão de subscrever o aumento de capital da LLX. Além disso, segundo comunicado enviado nesta quinta-feira (10) ao mercado, as duas empresas assinaram um contrato de usufruto sobre os direitos de voto das ações atualmente detidas por Eike, o que garante à EIG assumir imediatamente o controle da LLX.

Ao mesmo tempo, a LLX conseguiu um novo financiamento de R$ 900 milhões com os bancos Santander e Bradesco, pelo prazo de 18 meses, e prolongou duas parcelas de empréstimos com o Bradesco, que venciam em 2014, no valor total de R$ 813 milhões.

Um dos empréstimos vencia em fevereiro do ano que vem, no valor de R$ 345 milhões, e outro em outubro, no total de R$ 427 milhões. A rolagem da dívida foi pelo período de três anos, mesmo prazo obtido em setembro junto ao BNDES (Banco Nacional de Desenvolvimento Econômico e Social), que rolou uma dívida de R$ 518 milhões.

O acordo ainda abrange a alienação de 30% da LLX Açu, uma subsidiária da LLX, cujo controle hoje é detido por Eike, através da empresa Centennial. A LLX Açu passará a ser integralmente da LLX.

Fohla de Sao Paulo

Brazil: The Government soften terms on fines and taxes of Brazilian Mutinationals

The Ministry of Finance has decided to change the terms on Brazilian multinationals that have been fined  for not paying taxes related to their affiliates and subsidiaries abroad. In addition to forgiving penalties and interest of those who agree to pay the debt in cash, the government will also allow companies to use accumulated tax losses on their balance sheets as a way to repay their debt with the Union.
In a meeting with the economic team last week, it was agreed that 30% of the amount due may be offset by companies. The tax credit will be deducted from the amount due after already discounted penalties and interest. Only the remaining balance will be settled in cash.

The new benefit will have significant impact for companies and their market value. Instead of using funds from their cash, companies may pay part of their debts with credits.

It is estimated that the tax dispute already amounts to R$70 billion. By reducing charges, the government calculates it has R$25 billion to receive from Brazilian companies that operate abroad. The portion in cash, however, will be reduced in proportion to losses that companies use to cut their debts.

Source: Valor International

Brazil: Central Bank raised interest rate to 9.5%

In a decision widely expected by financial markets, the Central Bank’s Monetary Policy Committee (Copom) raised the base interest rate of the economy 0.5 percentage point to 9.5% from 9%. And it has indicated that monetary tightening started in April will continue at its next meeting in November.

  Copom decided unanimously to raise the Selic rate to 9.50% per year, without bias. The Copom considers that this decision will contribute to bringing inflation down and ensure that this trend will continue next year." 

Copom has one more meeting in 2013, scheduled for November 26 and 27. With the same statement, it is possible that the market will move towards a consensus that the Selic can indeed achieve and even exceed double digits, since the wording is associated with 0.5 percentage-point hikes.

Currently there is disagreement among economic analysts and market operators about the possibility of the base interest rate, which in April was at a record low of 7.25%, rise back to double digits.

Some of them believe that, with the signs of economic slowdown and lower inflation rates reported recently, the Central Bank (BC) can finish its job in November with an increase of 0.25 percentage point, which would raise the Selic rate to 9.75%.

But some believe that, to tame inflation and bring it closer to the center of the target of 4.5%, interest rates must rise to 10% or more. 

Recent statements by BC Economic Policy director Carlos Hamilton Araújo have reinforced the market’s conviction that the Copom may go beyond 9.75%, the "magic number " that seemed to have been consolidated within the market as a "ceiling" for the current adjustment cycle.

Source: Valor International

White House:"After a discussion about potential paths forward, no specific determination was made"

President Barack Obama and congressional Republicans found no specific way forward to break their impasse over a government shutdown and extending the U.S. debt ceiling at a meeting on Thursday, the White House said.

The session of about an hour and a half between Obama and Republican leaders of the House of Representatives was described as a good meeting where Obama heard House Speaker John Boehner explain Republican proposals for a short-term extension of the U.S. debt ceiling.

"After a discussion about potential paths forward, no specific determination was made," said a White House statement. "The president looks forward to making continued progress with members on both sides of the aisle."

Source: Reuters

Alibaba led a US$ 206 investment in ShopRunner Inc

"Alibaba Group Holding Ltd. has led a $206 million investment in a rival to Amazon.com Inc. one of its biggest U.S. moves as the Chinese e-commerce giant considers an initial public offering here.

Alibaba invested in ShopRunner Inc., which offers unlimited two-day shipping from retailers including Toys "R" Us Inc. andRadioShak Corp a $79 annual fee.American ExpressCo.  has also taken a small stake in ShopRunner.

As part of the deal, eBay Inc.  sold its prior 30% holding in ShopRunner for a profit, said a person familiar with the matter. The deal values ShopRunner at about $600 million, the person said, and completes a funding round in which Alibaba previously chipped in about $70 million. It isn't clear exactly how much Alibaba invested, but it did put in the majority of the funding"

Source: The Wall Street Journal

Tablets are going to be part of 21st-century childhood, Michael Acton Smith

Michael Acton Smith: 'We don't want kids – or anyone – to be spending all their time with their face in the screen, but I think tablets are going to be part of 21st-century childhood'
With more than 60 million registered users, Moshi Monsters is already one of the most popular children's virtual worlds. Now it's set to go fully mobile before the end of 2012.

However, the full Moshi Monsters experience is set to make the leap from desktop to tablet. Chief executive Michael Acton-Smith talked about the company's plans in a speech at the Children's Media Conference in Sheffield, saying a team is already hard at work on the app.

"We're hopefully going to launch Pocket Moshi or Moshi-on-the-Move or whatever it's called in the next few months," he said. "We're going to make it free, and hopefully have millions of kids playing it."

Acton-Smith admitted that Mind Candy took time to come around to the idea that apps could be a big growth area for children's entertainment

"18 months ago, we were saying like most people 'are kids really going to have mobiles? Are parents going to buy £500 iPads for their kids? And the answer is absolutely yes," he said.

"We really firmly believe at Mind Candy that the tablet device is going to be the dominant form of entertainment for kids over the next few years. As revolutionary and exciting as what Disney did in the 1920s… what Henson did with Sesame Street, and what Pixar did in the film world."

Mind Candy has also considered launching Moshi Monsters on Facebook, although Acton-Smith said the social network's official no-under-13s policy led it to shelve the idea. This may change.

"If Facebook did develop a kids version, which has been whispered about for a while, we would absolutely look at putting our content on there."

Even so, mobile and particularly tablet is the bigger focus for Mind Candy as it continues to build Moshi Monsters in a multi-platform brand.

"If we just focused on desktop, in the next year or two we'd be a dinosaur," said Acton-Smith.

Source: theguardian

Fra dodici anni il 46% delle maggiori corporation avrà sede nei Paesi emergenti. Oggi è il 17%

Uno studio del McKinsey Global Institute prevede che nel 2025 il 46% delle 500 maggiori corporation della classifica di Fortune sarà basato in economie emergenti. Era il 5% nel 2000.
«Questa potente ondata di nuove imprese potrebbe alterare profondamente le dinamiche competitive da tempo stabilite nel mondo», commenta lo studio. Se ci si riferisce alla lista delleFortune 500, le corporation con sede in Paesi emergenti erano 24 nel 2000 e saranno 230 tra una dozzina d’anni, secondo le proiezioni di McKinsey. 
Nel mondo ci sono oggi ottomila imprese con un fatturato superiore al miliardo di dollari: tre quarti vengono da Paesi sviluppati. Entro il 2025, altre settemila raggiungeranno quella dimensione e il 70% di queste nuove imprese avrà il quartier generale in Paesi emergenti.
Delle 150 imprese europee nella classifica delle 500 di Fortune, quattro su dieci siano nate prima del 1900; è ora in arrivo una nuova generazione che le minaccia direttamente. Devono rispondere alla sfida in fretta.
Quello che può succedere — nota McKinsey — è simile all’onda delle case automobilistiche giapponesi che invasero i mercati occidentali negli anni Ottanta. Ma in una misura molto maggiore e non in un solo settore. La sudcoreana Samsung che conquista quote di mercato alla Apple è l’esempio più evidente del momento. Si ripeterà moltiplicato. Anche perché le nuove imprese saranno probabilmente agili, con costi più bassi delle concorrenti occidentali; meno preoccupate dei risultati a breve termine ma più focalizzate sui tempi medio-lunghi delle imprese quotate a Wall Street o nelle Borse europee.

Corriere della Sera

Alitalia,Soldi freschi per assicurare continuità aziendale

Sono le Poste Italiane il soggetto pubblico individuato dal governo per correre in aiuto ad Alitalia. L’azienda - secondo quanto si apprende da fonti vicine al dossier - parteciperà all’aumento di capitale della compagnia da 300 milioni con una cifra intorno ai 75 milioni e una partecipazione fra il 10 e 15%.
Nella nota diffusa da Palazzo Chigi si evidenzia che alla compagnia «servono discontinuità, stabilizzazione dell’azionariato e una importante ristrutturazione attraverso un nuovo progetto industriale». L’entrata di Poste «e’ fondata su queste premesse - spiegano da Palazzo Chigi- Il Governo si aspetta che i soci si assumano appieno le loro responsabilità». La «nostra parte è stata fatta»: è il commento del premier Enrico Letta. E il ministro delle Infrastrutture e dei Trasporti Maurizio Lupi esprime soddisfazione per l’accordo : «Ce l’abbiamo fatta - sottolinea Lupi - Abbiamo lavorato intensamente in queste settimane per ottenere questo risultato»«Dobbiamo evitare il commissariamento di Alitalia, trovare una soluzione ponte e rinegoziamo al meglio questa alleanza anche con Air France ma difendendo gli interessi del paese».
«Nel consiglio di amministrazione di Alitalia di venerdì «penso» arriverà il via libera a una manovra finanziaria «da 500 milioni, di cui 300 come aumento di capitale e 200 di prestiti dalle banche», ma se così non fosse «sabato ci vengono a portare loro la licenza» per poter volare, ha detto Riggio ha ricordando che l’Ente dell’aviazione civile deve applicare in questi casi i regolamenti comunitari e ha aggiunto: «Vediamo se domani vengono fuori questi quattrini, ma se la compagnia non ha né liquidità né fondi per far fronte ai propri impegni i suoi aerei vanno a terra».

Bank of England is unlikely to raise rates before unemployment falls to 7%

"The Bank of England has rejected calls for a rise in interest rates despite a strong run of surveys showing the economy is recovering at its fastest pace since 2010.

In a widely expected decision, the central bank's interest rate setters kept the base rate at 0.5% and the level of its monetary stimulus to the economy, known as quantative easing, at £375bn.

Some analysts have called for a rise in interest rates in response to the improving economic picture and a recent jump in housing market activity.

However, the bank's monetary policy committee has agreed to maintain its current policy stance until the unemployment rate falls to 7%. It expects to reach this milestone in 2016 after 750,000 jobs have been created.

Governor Mark Carney believes the economy remains weak and much of the current 2.7% inflation rate can be blamed on one-off shocks.

The bank is known to be extremely concerned at the level of business investment, which has continued to fall this year despite the pace of recovery picking up since the spring and many commentators describing it as a well-advanced and sustainable expansion of economic activity. Without a return to healthy rates of business investment, senior Bank staff fear the economy will be forced to rely on consumer spending to maintain growth".

Source: The Guardian

IMF Christine Legarde: There would be very dangerous consequences for the US economy and the global economy,if the default was not prevented

"Shares and oil prices rose strongly on Thursday amid hopes that policymakers in Washington were buckling under the global pressure for them to settle their differences and prevent a US debt default.

The International Monetary Fund and the Organisation for Economic Cooperation and Development both issued sharply worded warnings to Republicans and Democrats amid signs that America's Asian creditors were becoming alarmed at the potential consequences of the impasse.

Reports in Washington that the Republicans would agree to a six-week extension of the debt ceiling from next week's 17 October deadline led to a 200-point rise in the Dow Jones average in early trading. Brent crude was up by $2 a barrel and the FTSE rose by 92 points as the Republican leader in the House of Representatives John Boehner said it was time for meaningful talks with president Barack Obama.

Speculation about a deal emerged after Jack Lew, the US Treasury secretary said there would be chaos if the US defaulted – a message rammed home by the IMF's Christine Lagarde and the OECD's secretary general Angel Gurría.

Lagarde, the IMF's managing director, said there would be very dangerous consequences for the US Economy and very dangerous consequences outside the US economy if the default was not prevented.

She distanced herself from the infighting in Washington, noting: "The IMF does not make recommendations about how, politically, this can be resolved. We don't take a political view. We just look at the economic consequences.

"When it affects the largest economy in the world, we are bound not only to look at the immediate domestic consequences but at what happens elsewhere, so that we can have a dialogue with our members to help them prepare. I hope we will be able to look back in a few weeks and say what a waste of time that was. But we have to look at the risks no matter how unlikely they are to materialise."

Lagarde said there were two channels through which a debt default in the US would spread to the rest of the world. "One would be the trade channel, caused by a reduction in economic activity in the US from the third quarter onwards. The second would be the financial channel – the result of uncertainty and material issues. We are likely to see volatility, uncertainty and consequences for the rest of the world."

Source: The Guardian

Investors' Worries About Stalemate Shift to End of the Year

"Signs that the fiscal impasse in Washington might be thawing sparked a strong price rally in very-short-term Treasury bills Thursday, but prices of longer-maturing T-bills fell as investors saw the risk rising of another stalemate at the end of the year.

Investors bought the U.S. debt securities after lawmakers indicated they were closer to a deal for a short-term increase in the country's borrowing limit, which reduced fears over a U.S. default in the near term. The Treasury Department has said it could run up against its borrowing limit around Oct. 17.

The prospects for an agreement cheered financial markets Thursday, stemming a multiday selloff in some T-bills. The yield on the T-bill due Oct. 17 topped 0.5% earlier Thursday but has since tumbled to as low as 0.215% and recently traded at 0.38%, according to Tradeweb. Yields fall as bond prices rise.

The T-bill due Nov. 7, the benchmark one-month T-bill, traded at a yield of 0.2% Thursday, down from 0.279% Wednesday. The yield rose above 0.35% on Tuesday, the highest level since the depths of the financial crisis in 2008.

But a potential deal for a six-week extension of the U.S. borrowing limit merely puts off the threat of default until early December, said some analysts.

The T-bill due Dec. 19 yielded 0.11% Thursday, higher than the three-month T-bill, which was yielding 0.04%, and the six-month T-Bill's 0.06%.

Investors sold longer-maturing U.S. debt, which is generally considered a safe-haven investment, as fears about a default abated. The benchmark 10-year note's yield rose to the highest level in nearly three weeks. In recent trade, the 10-year note was 17/32 lower in price, yielding 2.716%.

"That is taking some of the fear bid out the Treasury market."

Source: The Wall Street Journal

U.S. Treasury Secretary Jack Lew said he would be unable to prioritize some payments over others

The Obama administration says it will be unable to pay all of its bills if Congress does not raise the $16.7 trillion debt ceiling by October 17. Treasury Secretary Jack Lew said he would be unable to prioritize some payments over others among the 30 million transactions his department handles each week.

"It would be chaos," Lew told the Senate Finance Committee.

The Republican plan would postpone that day of reckoning by roughly six weeks, which would give them more time to seek spending cuts, a repeal of a medical-device tax, or other measures they say are needed to keep the national debt at a manageable level.

Democrats have called for a debt-ceiling hike that would extend government borrowing authority for more than a year.

The House could vote on the measure as early as Thursday afternoon, though timing remained unclear. House leaders cancelled a planned recess and said they would remain in Washington next week to keep working on the problem.

Opinion polls indicate that Republicans appear to be getting more of the blame for the standoff. The Republican Party's approval rating now stands at a record low of 28 percent, according to Gallup, down 10 points from pre-shutdown levels. The Democratic Party's approval rating has dipped slightly to 43 percent.

Business groups that have close ties to the Republican Party have also pressed for an end to the brinkmanship and some are laying plans to mount primary challenges next year to lawmakers who refuse to raise the debt ceiling.

With the October 17 deadline a week away, Obama is scheduled to meet with House Republican leaders at 4:35 p.m. EDT (2035 GMT). He is also due to meet separately with Senate Democrats and Senate Republicans.

Source: Reuters

House Republican: Temporary Debt-Ceiling Increase but ban the Treasury Department use of extraordinary measures to avoid default.

  According to the Wall Street Journal:
"The House Republican plan to extend the debt ceiling for six weeks would permanently ban the Treasury Department from using extraordinary measures to avoid default, congressional aides said.

The provision would ban practices, used by Democratic and Republican administrations for decades, which have effectively allowed the Treasury to limit investments in pensions and other funds when the government bumps up against its borrowing limit. These steps have extended the time that Treasury can continue borrowing and paying the nation's bills while Congress debates terms for raising the debt ceiling.

The White House has not said it whether it would accept the condition as part of any deal, though it effectively would be surrendering tools it uses to avoid falling behind on federal payments. The Democratic-led Senate could reject the provision.

Even though the steps are called "emergency" measures, they have become employed so routinely during recent fiscal standoffs that Congress often waits for the emergency steps to be exhausted before beginning negotiations on raising the borrowing limit".