What’s the root of Chinese entrepreneurs’ “lack of creativity”?

What is the root of Chinese lack of cretivity? It is a common western stigma, Chinese people aren't
creative.They can only copy, they aren’t good critical thinkers, and they can’t think outside the box.
  You might be swayed to agree. While there are a few exceptions, many of the big names are viewed as local adaptations of western models. Baidu copied Google. Alibaba copied Ebay, Amazon, and Paypal. Weibo copied Twitter.
 When I hear fellow foreigners in Beijing discuss this topic, the most common culprit that comes up is China's education system . You’ve probably heard the old tropes about “rote memorization” and “tiger moms” killing creativity in kids. Another stereotype is that Chinese people are too “safe” to start businesses or take jobs at startups. They prefer to work for large corporations or government enterprises where a routine schedule and monthly paycheck are guaranteed.

But local Chinese entrepreneurs that I’ve spoken with often sing quite a different tune. Rarely do they cite their education or societal preference for financial security as the roots of non-creativity. In fact, many of them argue Chinese entrepreneurs are equally as creative as their western counterparts. The difference is that those truly creative people don’t receive investment or support. The real reason we seldom see disruptive startups coming out of China’s woodwork lies with the venture capitalists and angel investors, who favor startups that use tried-and-tested western models adapted for local markets. As a result, outsiders often only see the copies.

Neither argument should be axioms that guide our judgments about China’s startup ecosystem, nor are they completely without merit. Most successful Chinese entrepreneurs have at least some experience, in education or otherwise, living overseas. As we’ve noted before,going abroad is good advice  for any prospective entrepreneur if feasible. I’ve also spoken with entrepreneurs who have trouble hiring good talent because the top graduates are being snatched up by giant companies with deep pockets.

That doesn’t mean that born-and-raised native Chinese are less inclined to be creative, though. When AngelHack CEO Greg Gopman visited Beijing for a hackathon last weekend, he was surprised at just how innovative the ideas were, many of which he said were unique in his 100-plus hackathon experience. Some local entrepreneurs I’ve talked to have even expressed an interest in going abroad to seek investment for their startups because they don’t have faith in investors in China to support new ideas.
Source: Techinasia

Gold Finds Few Friends at the Taper Party

According to a report from the Wall Street Journal,this year hasn’t been a vintage one for gold. It has shed a quarter of its value in 2013 as investors walked away, largely taking the form of massive liquidations of exchange-traded fund holdings. Having fallen 28% so far this year, gold is well on track to end its 12-year strong bull run. The metal’s slump was triggered in the second quarter, when prices dived by $200 an ounce in two days in April. Chief among the drivers of the gold slump was a mounting fear that the Federal Reserve would scale back its bond purchase program. That caused many investors and analysts to turn negative.

To be fair, gold did find some supporters today, who said that the response was overblown.

“The response of the gold price to the Fed’s announcements yesterday is exaggerated,” said analysts at Commerzbank. The U.S. central bank reiterated Wednesday night that interest rates were likely to remain low for the near future. Low rates make gold, which carries no guaranteed yield, more attractive compared with some other assets.

“The fact that money will remain extremely ‘cheap’ for a long time yet should in fact have lent support to the gold price rather than it coming under pressure due to the end in the near future of quantitative easing,” said Commerzbank.

But the outlook for next year is less than rosy.

Investor sentiment toward the metal is could remain bruised for some time, say analysts.

And in India, for years the largest gold-buying market that would usually scoop the metal up at such low prices, hands are tied by strict import taxes that have been hiked up substantially this year. Physical demand from China, expected to overtake India this year as the top consumer, is expected to be robust, but that might still not make up for India’s shortfall. And it’s worth bearing in mind that China’s consumed vast amounts of the metal already in 2013.

“We expect investment demand to be in the driver’s seat and position liquidation to continue in 2014 and 2015,” said bank ABN AMRO Thursday. “More attractive returns on other investments [and] an environment of low inflation risk and positive investor appetite will result in investors reducing gold positions.”

They bank kept its year-end forecasts for 2014 and 2015 at $1,000 per ounce and $800 per ounce, respectively.

Apple Patents Displays With Better Color And A Maps App With Web-Based Data Layers

Apple has a couple of brand new patent applications (via AppleInsider) out this morning that are quite different but that both offer a window into potential improvements being worked on in R&D. One deals with a method for introducing better, more accurate color rendering to digital displays , and the other involves improving its current Maps offering  with layered on data culled from the Internet.

The display patent application involves “quantum dot-enhanced displays,” which uses components that can be smaller even than biological viruses to fine-tune emitted light. These quant dots are capable of emitting a very narrow spectrum of light, and that would allow for greater control over color accuracy and distribution.

QD displays have a couple other advantages over existing tech including LCD, LED and OLED, including an environmental edge. QDs use size instead of chemicals to alter color, which is more environmentally friendly, and it’s actually cheaper to manufacture and easier to scale than traditional display tech. Displays seem to continually be a limiting factor when it comes to Apple’s ability to meet initial demand on its products, so that could be a big selling point.

As for the Maps application, it suggests a means by which users could layer on different data stats to a basic map view. Google already does this sort of thing with its own maps product, especially on the web, but it’d be interesting to see Apple add more contextual options to its mobile offering. The other big difference here is that in Apple’s patent, search would change according to which layer is being displayed at any given time.

Possible rich data categories that act as layers could include weather, nature, sightseeing, traffic, commerce and historical housing data, according to the patent filing, and searching with any one of these layers active would provide different results. So searching for “Food” when you have the travel layer active would bring up restaurants, but doing the same when you’ve got the commerce layer up would yield grocery store results, for instance.

Apple’s mapping initiative will almost certainly lag Google’s for the foreseeable future in some regards, but adding this kind of flexible rich data approach would make it a lot more contextually useful. The only problem is that it also introduces complexity, which Apple is not prone to do when at all possible.

Both of these patents at least offer a look at strategic paths that Apple could take in terms of delivering the next generation of its products. I’d peg the QD display one as having more potential for near-term benefits, as some display manufacturers are already gearing up to offer that tech at production scale.

Source: TECHINASIA

Press Release U.S. National Association of Realtors

– Existing-home sales fell in November, although median prices continue to show strong year-over-year growth, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November from 5.12 million in October, and are 1.2 percent below the 4.96 million-unit pace in November 2012.  This is the first time in 29 months that sales were below year-ago levels.

Lawrence Yun, NAR chief economist, said the market is being squeezed. “Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit,” he said. “There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years.”

The national median existing-home price for all housing types was $196,300 in November, up 9.4 percent from November 2012. Distressed homes – foreclosures and short sales – accounted for 14 percent of November sales, unchanged from October; they were 22 percent in November 2012. A smaller share of distressed sales is contributing to price growth.

Nine percent of November sales were foreclosures, and 5 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in November, while short sales were discounted 13 percent.

Total housing inventory at the end of November declined 0.9 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, compared with 4.9 months in October. Unsold inventory is 5.0 percent above a year ago, when there was a 4.8-month supply.

The median time on market for all homes was 56 days in November, up from 54 days in October, but well below the 70 days on market in November 2012. Short sales were on the market for a median of 120 days, while foreclosures typically sold in 59 days, and non-distressed homes took 55 days. Thirty-five percent of homes sold in November were on the market for less than a month.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.26 percent in November from 4.19 percent in October; the rate was 3.35 percent in November 2012.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, noted that new rules defining the Qualified Mortgage will be going into effect soon.  “New underwriting rules to protect borrowers, effective in January, will prohibit many loan features, set tighter limits on the amount of debt a borrower can have and still get a mortgage, and require that lenders accurately measure a borrower’s ability to repay,” he said.

“This means that qualified borrowers are getting a loan that they are very likely to be able to repay, but some borrowers may wind up paying much more for their mortgage, or not get a loan at all due to the tougher standards,” Brown said. “The new rules may tighten credit too much, but we’re hopeful regulators will make adjustments if this proves to be true.”

First-time buyers accounted for 28 percent of purchases in November, unchanged from October; they were 30 percent in November 2012.

All-cash sales comprised 32 percent of transactions in November, up from 31 percent in October and 30 percent in November 2012. Individual investors, who account for many cash sales, purchased 19 percent of homes in November, unchanged from October and from November 2012. Last month, seven out of 10 investors paid cash.

Single-family home sales fell 3.8 percent to a seasonally adjusted annual rate of 4.32 million in November from 4.49 million in October, and are 0.9 percent below the 4.36 million-unit level in November 2012. The median existing single-family home price was $196,200 in November, which is 9.4 percent above a year ago.

Existing condominium and co-op sales dropped 7.9 percent to an annual rate of 580,000 units in November from 630,000 units in October, and are 3.3 percent lower than the 600,000-unit pace a year ago. The median existing condo price was $197,400 in November, up 10.0 percent from November 2012.

Regionally, existing-home sales in the Northeast declined 3.0 percent to an annual rate of 650,000 in November, but are 6.6 percent above November 2012. The median price in the Northeast was $242,900, up 5.7 percent from a year ago.

Existing-home sales in the Midwest fell 4.1 percent in November to a pace of 1.17 million, but are unchanged from a year ago. The median price in the Midwest was $151,100, which is 6.7 percent higher than November 2012.

In the South, existing-home sales declined 2.4 percent to an annual level of 2.01 million in November, but are 1.0 percent above November 2012. The median price in the South was $168,700, up 7.7 percent from a year ago.

Existing-home sales in the West dropped 8.5 percent to a pace of 1.07 million in November, and are 10.1 percent below a year ago, in part from constrained inventory conditions. The median price in the West was $284,400, up 16.5 percent from November 2012.

U.S. Budget bill

Senate passes budget deal, President Obama is set to sign a two-year $1.01T budget bill into law after the Senate passed the legislation yesterday by 64-36. However, now the fight starts in the Senate and House Appropriations committees about how to spend the money, with one flashpoint sure to be funding for Obamacare. Congress has until January 15 to resolve any differences in order to avert another partial government shutdown.

Source: Seeking Alpha

Daimler gets Aston Martin stake in engine supply dea

Daimler  said it will receive up to a 5 percent stake in luxury sports carmaker Aston Martin in exchange for supplying engines and electronic components to the 100-year-old British firm.

Aston Martin will team up with the German car maker's high-performance Mercedes-AMG GmbH division to develop a new generation of bespoke V8 engines for its sports cars.

The deal will help Aston Martin, the only global luxury carmaker not attached to a larger manufacturer, spread the cost of developing new fuel-efficient vehicles.

Daimler will receive non-voting shares in Aston Martin, owned by Kuwaiti and private equity investors, in several steps as the technical partnership progresses, the companies said on Thursday. They began negotiating the deal in July.

The two car makers also plan to cooperate on the supply of electronic and electric components.

Daimler will get observer status on the Aston Martin Holdings board as part of the deal.

Existing Aston Martin shareholders include Italian private equity fund Investindustrial, Kuwait-based Adeem Investment and Prime Wagon.

Source: REUTERS

European shares rally as Fed sugar-coats taper move

European shares rallied on Thursday after the U.S. Federal Reserve sugar-coated its decision to start winding down its crisis-era stimulus with a promise to keep interest rates at record low levels even longer than previously signalled.

Investors had been agonising for months over when the Fed would start reducing its bond buying programme. But in the end they took its $10 billion reduction in monthly stimulus in their stride, seeing it as a modest step the U.S. economy could well withstand.

After Wall Street ended at a record high and Tokyo and some other parts of Asia posted big gains, European stocks raced up 1.5 percent in their biggest jump in over two months.

The dollar was the other major beneficiary, though it was showing signs of fatigue as Europe headed towards midday.

Having surged as far as 104.37 yen overnight it was back at 104, while the euro had regained its footing again having toppled back to $1.3675 from a $1.3811 top.

The Fed softened the blow of reducing its stimulus by making its forward guidance on interest rates even more dovish.

"It likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the committee's 2 percent longer-run goal," the Fed statement said.

Source: Reuters

Saab shares leap as Brazil deal secures Swedish fighter project

Shares in Swedish aerospace firm Saab  leapt by a third on Thursday after it beat U.S. and French rivals to win a $4.5 billion fighter deal with Brazil, strengthening its hand in competing for export orders for years to come.

Brazil's choice of Saab's Gripen single engine jet over Boeing's F/A-18 Super Hornet and Dassault Aviation's . Rafale showed the Nordic group could beat global aviation heavyweights, securing development of an aircraft that has been surrounded by doubts.

So far only the Swedish air force has bought new generation.

Gripens, with fellow neutral nation Switzerland poised for a deal and Brazil opting on Wednesday for a similar model. However, Saab was offering a cut-price deal at a time when defence budgets are being slashed in many nations.

"If Brazil, Sweden and Switzerland choose Saab, that makes it easier for other countries to select the Gripen as it removes the uncertainty surrounding the project," said Stefan Cederberg, analyst at SEB.

"If you are going to invest in new aircraft for the coming 30-40 years, the probability has increased considerably that you will do it with the Gripen system."

Saab said it would begin final negotiations on the contract on Friday.

Source: Reuters

FX Concepts' demise signals tough times for forex hedge funds

The collapse of FX Concepts, once the world's biggest currency hedge fund, is symptomatic of the dramatic decline in a once-profitable sector that faces another tough year in 2014 at the mercy of central bank policy.

U.S.-based FX Concepts once managed more than $14 billion, but a combination of increasingly difficult market conditions and self-inflicted wounds killed it off earlier this year.

If that fate can befall the king of the jungle, the smaller beasts will be reminded of their own mortality.

The compression of interest rates across the developed world to virtually zero has wiped out the so-called "carry trade", where investors borrow a low-yielding currency and sell it to buy a higher-yielding one.

And many central banks, as part of their crisis-fighting and growth-boosting armoury, have explicitly or implicitly tried to weaken their currencies, which has led to fewer well-defined long-term trends in currency markets, a trade that many computer-driven funds specialise in.

The result has been a slump in total assets run by quantitative currency funds, from around $35 billion at the start of 2008 to approximately $6 billion this year, according to the Bank for International Settlements.

"It's been tricky. The problem is carry and momentum - neither strategy is working well. They've done quite poorly," said a London-based macro hedge fund manager.

"The challenge is to make sure you make money on your good trades and not lose too much on the bad trades. You let the good 50 run and try to limit the losses on the bad 50," he said.

This year has proved particularly troublesome. Many managers were too bullish on the dollar, expecting the Federal Reserve's tapering of its bond-buying in September rather than December. And some were caught out by the rise in sterling and the euro.

Already a number of funds have closed or suffered losses.

Brevan Howard, one of the world's biggest hedge fund firms, recently closed its currency fund, which held around $1 billion last year. The fund fell 2.3 percent last year and 6.4 percent this year to end-October.

The Ortus fund, which is run out of Hong Kong and tries to make money from cycles in global currencies, is down 15.6 percent this year, having lost 17.3 percent last year.

Source: Reuters

Europe moves to banking union with blueprint for failing lenders

 The European Union agreed on Thursday a blueprint to close failing banks but stopped short of a more ambitious plan for the euro zone to unite in tackling its troubled lenders.

More than five years since a financial crisis struck, Europe is on the verge of finalising one its most ambitious reforms since the launch of the euro - an agency and fund to shut problem banks as soon as the European Central Bank starts to police them next year.

Early on Thursday morning, finance ministers from across the bloc sealed a broad agreement on this final element of banking union. European leaders, who will gather in Brussels later in the day, will sign off on it and the final touches will be made in negotiations with the European Parliament next year.

The final pillar for the banking union has been achieved," Germany's Finance Minister Wolfgang Schaeuble told journalists.

The project's aim is to prevent a repeat of the turmoil when failing banks in countries from Ireland to Cyprus brought their states to the brink of bankruptcy.

By setting up a system to shutter troubled lenders, Europe would equip the ECB with the means of dealing with teetering banks. However, the scheme that has emerged, because of efforts to accommodate sceptical countries, is unwieldy.

It requires the ECB to fire the starting shot by declaring a bank as too weak to survive. What follows, however, involves input from a new agency empowered to shut banks, the European Commission and up to 18 different euro zone countries.

Schaeuble played down concerns that this could prove cumbersome. "It has to go quickly in an emergency, over a weekend," he said, adding that the new structure would be nimble enough to do so.

Michel Barnier, the European commissioner in charge of financial regulation, expressed frustration with the watered down deal.

"When I compare it with my original proposal I have regrets," he said. "I would like to have seen things done otherwise."

The ECB, which also lobbied for a simpler system, achieved  limited success in its suggestion for a fast-track procedure in an emergency to decide the fate of a sick bank.

Source: Reuters

Gold falls to June lows as Fed taper sinks in

The announcement of the Federal Reserve’s January tapering plans sent gold prices on a volatile ride that saw the front-month contract push into positive territory before giving it all back, plunging on Thursday to levels not seen since June.

Continuing selling from Asia, gold for February delivery   tumbled $32.60, or 2.6%, at $1,202.10 an ounce in the early hours of Europe trading. The contract hit a low of $1,198 an ounce, trading under that key $1,200 level for the first time since June. March silver  was hit even harder, down 78 cents, or 3.9%, to $19.28 an ounce.

Source: Marketwatch

AstraZeneca to buy Bristol out of diabetes venture for up to $4.1 billion

AstraZeneca has agreed to buy Bristol-Myers Squibb's stake in the companies' diabetes joint venture for up to $4.1 billion in a deal that will help return the group to growth, sending its shares to a new high.

AstraZeneca said on Thursday that it would pay Bristol an initial $2.7 billion plus up to $1.4 billion in additional regulatory and sales-related payments.

The move will bulk up AstraZeneca's thin drug portfolio and give Bristol more funds to invest in other areas, such as cancer, where it is developing promising therapies tapping into the immune system.

Following the announcement shares in AstraZeneca hit an 11-year high in early morning trading before paring earlier gains to trade up 1 percent at 3,595 pence by 0935 GMT.

Speculation that AstraZeneca might look to buy out Bristol was fuelled last month when the U.S.-based company decided to get out of diabetes research.

Source: Reuters

Egypt's Brotherhood rejects terrorism charges against Mursi

The Muslim Brotherhood denounced the Egyptian authorities on Thursday for charging former President Mohamed Mursi and other Islamists with terrorism and conspiring with foreign groups, saying the allegations were "risible".

The Brotherhood also reiterated calls for all nations to put pressure on Egypt to free Mursi a day after the public prosecutor ordered him and 35 other top Brotherhood leaders to stand trial on charges that could result in the death penalty.

The prosecutor declared it "the biggest case of conspiracy in the history of Egypt", detailing a "terrorist plan" dating back to 2005 that implicated the Palestinian group Hamas, Iran's Shi'ite Islamist government its Lebanese ally Hezbollah.

The trial date has yet to be set.

In a statement released from London and received in the early hours of Thursday, the Brotherhood rejected the charges as a "new episode of the military coup's crimes against the Egyptian people."

"The junta's judges continue to fabricate risible allegations against the democratically elected president and a number of leaders of the Muslim Brotherhood," it said.

Hamas, which governs the Gaza Strip, also dismissed the allegations against it as "fabrications and lies".

Source: Reuters

Russia signals to Syria's Assad to stay silent on re-election

A Russian diplomat signalled on Thursday that Syrian President Bashar al-Assad should refrain from statements suggesting he might seek re-election because it could fuel tension before planned peace talks.

Russia has been Assad's most important international ally during Syria's civil war, but the remarks by Deputy Foreign Minister Mikhail Bogdanov to Interfax news agency appeared to be a rare public criticism of Assad by Moscow.

Assad told Syria's Al Mayadeen television in October that he had no intention of quitting, despite pressure to do so from the United States and rebels fighting government forces. He also saw no obstacles to being nominated for a new term.

"Such rhetorical statements affect the atmosphere and do not

make the situation any calmer," Bogdanov was quoted as saying.

Looking ahead to an international peace conference which is planned on Syria next month in Geneva, he said: "Our position is that ahead of the start of negotiations, there should be no remarks that could displease anyone or provoke emotions and a response. They should rather be avoided."

Bogdanov has been involved in preparations for the peace talks that are due to start in Geneva on Jan 22.

Russia has blocked Western-backed efforts to condemn Assad at the U.N. Security Council or to push him out of power. Moscow says it is not trying to prop up Assad but that his departure cannot be a precondition for peace moves.

Source: Reuters

Tesco plans cautious India entry after arm-twisting by politicians

It took months of arm-twisting and assurances from New Delhi to persuade British retailer Tesco Plc to take the plunge and become the first foreign player to set up a chain of supermarkets in India.

Earlier this year, world No.1, Wal-Mart Stores Inc, walked away from India and few expected any of its rivals to step in before elections due by next May, which could bring to power a government that reverses the opening up of a $500 billion market long dominated by millions of mom-and-pop shops.

But on Tuesday, Tesco announced that it had applied to buy a 50 percent stake in Tata Group's Trent Hypermarket Ltd to open stores in the western state of Maharashtra and neighbouring Karnataka.

The decision marked a victory for the ruling Congress party in securing its first foreign investment victory after staking its political survival on reforming the supermarket sector.

"We were under phenomenal pressure from the Indian government to apply and frankly phenomenal pressure is an understatement," said a senior Tesco official, who spoke on condition of anonymity. "The pressure was intense on a government-to-government level."

A Tesco spokesperson did not comment on the reasons behind the company's decision to enter India now.

Source: Reuters

Why Ukraine spurned the EU and embraced Russia

On September 4, Ukrainian President Viktor Yanukovich called a meeting of his political party for the first time in three years, summoning members to an old Soviet-era cinema called Zoryany in Kiev.

For three hours Yanukovich cajoled and bullied anyone who pushed for Ukraine to have closer ties to Russia. A handful of deputies from his Party of Regions complained that their businesses in Ukraine's Russian-speaking east would suffer if Yanukovich didn't agree to closer ties with Russia. That set him off.

"Forget about it ... forever!" he shouted at them, according to people who attended the meeting. Instead the president argued for an agreement to deepen trade and other cooperation with the European Union.

Some deputies implored him to change his mind, people who attended the meeting told Reuters. Businessmen warned that a deal with the EU would provoke Russia - Ukraine's former master in Soviet times - into toughening an economic blockade on Ukrainian goods. Yanukovich stood firm.

"We will pursue integration with Europe," he barked back, according to three people who attended the meeting. He seemed dead set on looking west.

Less than three months later Yanukovich spurned the EU, embraced Russian President Vladimir Putin and struck a deal on December 17 for a bailout of his country. Russia will invest $15 billion in Ukraine's government debt and reduce by about a third the price that Naftogaz, Ukraine's national energy company, pays for Russian gas.

It is not clear what Yanukovich agreed to give Russia in return, but two sources close to him said he may have had to surrender some control over Ukraine's gas pipeline network.

What caused the U-turn by the leadership of a country of 46 million people that occupies a strategic position between the EU and Russia?

Public and private arm-twisting by Putin, including threats to Ukraine's economy and Yanukovich's political future, played a significant part. But the unwillingness of the EU and International Monetary Fund to be flexible in their demands of Ukraine also had an effect, making them less attractive partners.

And amid this international tug-of-war, Yanukovich's personal antipathy towards his jailed political rival, Yulia Tymoshenko, was a factor, according to Volodymyr Oliynyk, an ally of Yanukovich and a prominent member of the ruling party. The EU accused Ukraine of treating Tymoshenko unfairly - to the annoyance of Yanukovich, according to his supporters and one of her lawyers.

The upshot is that Yanukovich, 63, has split his party and his country. Some leading party officials have deserted him. His hopes of re-election in 2015 - if there is a free and fair vote - look weak.

Hundreds of thousands of protesters have taken to the streets, demanding he step down and the country pursue closer links with the EU. Yanukovich, who has been increasingly cut off in his sprawling residence outside Kiev and distant even from some of his oldest friends, did not respond to requests for comment.

Source: Reuters

Asia: Fed Taper Move Sparks Tokyo Rally

The Federal Reserve's move to taper its massive stimulus programme gave most Asian markets a lift on Thursday, with investors taking it as a signal of rising confidence in the US economy.

The Fed said it would trim its bond-buying programme and expects to keep chipping away at stimulus as the US economy gathers momentum. Policymakers confirmed that monthly purchases of Treasury bonds and mortgage-backed securities would be reduced to $75bn from $85bn previously.

The benchmark Nikkei 225 advanced 1.74% as the Fed taper move sparked a sharp rise in the dollar against the yen. 

Heavily weighted Fast Retailing bounced 4.5% in Tokyo while other risers included Mitsui Fudosan, up 4%. Canon firmed 0.3% while Kyocera rose 2.5%.

The broader Topix added 1.01% or 12 points to 1,263 while the Hang Seng bucked the mostly upbeat session, settling down 255 points or 1.10% at 22,888 as concern about tighter monetary conditions in China dried up investor appetite. 

Hong Kong financials were sold off with China Construction Bank easing 1.7% while Agricultural Bank of China dropped 1.3%.

LatinTrade: Latin America’s booming pharma industry is a local affair by John Price

Getting older and wealthier by the day, Latin Americans increasingly visit their pharmacy. Since 2008, the region is by far the fastest growing pharmaceutical market in the world. By 2017, Brazil will become the fourth largest pharma market, behind the U.S., China and Japan. But, this impressive growth story is not a victory for multinationals. The real winners are Latin American generic drug makers and locally owned retailers.

In the course of two decades, Latin American generics have evolved from a nuisance to the international laboratories into the dominant force in most medication categories. The most accommodating market in the region is Argentina. Patents were only first legally recognized starting in 2000, so as a result, many international drugs marketed there carry no patent protection. Non-original drugs are classified as Biosimilars (not generics) and thus do not require proof of bioequivalence. Furthermore, data exclusivity, the most important step of protecting original formulas in developed markets, is not even recognized in Argentina. Argentina’s lax intellectual property protection has enabled the generic industry to thrive. Companies like Laboratorios Raffo, Driburg, Grupo Bago and Biosidus are some of the largest private sector employers in Argentina and the pride of Kirchner administrations, under whose favorable regulatory regime they have expanded.

Former Brazilian health minister, Jose Serra famously stood up to the international pharmaceutical industry in the 1990s by criticizing the lengthy patent protections of expensive HIV drugs. After winning their showdown with global pharma, Brazil began opening the regulatory door to more generics. Though considered more respectful of intellectual property rights than Argentina, Brazil nonetheless supports one of the world’s largest generic industries. EMS, Brazil’s largest drug laboratory, began producing generics in 2000, and today employs over 5,000 Brazilians and exports generics to 40 plus countries. Even Mexico, bound by the rigors of Nafta, has developed an impressive homegrown generics industry.

Generics can be as much as 70 percent cheaper than original drugs. Since medical prescriptions in Latin American countries must only list the medical name and not the brand name, pharmacists tend to recommend generics. In spite of their affordability, generics are mindful to incorporate a healthy margin for pharmacy retailers into their pricing structure.

The accessible prices of generics has helped unleash consumer demand for pharmaceuticals. Rising incomes and an aging population further bolsters medication volumes. The pharmacy retail sector is quickly evolving to meet demand. Chile was the first to modernize and consolidate its pharmacies. Farmacias Ahumada S.A. (Fasa), based in Santiago, is the largest drugstore chain in Latin America and one of the largest in the world in number of outlets, with a network of nearly 1,000 pharmacies in Chile, Peru, Brazil, and Mexico.

Consolidation is underway in other markets, most evidently in Brazil and Mexico where independents are losing ground to well-lit large size pharmacy chain stores modeled after U.S. and UK equivalents where a high percentage of sales come from OTC and non-medical related items. In Mexico and Brazil, the larger pharmacy chains are striving to stay ahead of the process and prevent foreign competitors from entering. The greatest threat to pharmacy chains comes from non-medical retailers like Walmart, who mastered the pharma product category in its U.S. stores and now sells more than 250 generics in its Mexican outlets. Almost one fourth of all pharmaceutical sales in Mexico today go through non-medical retailers including Superama, and Soriana, two of the largest supermarket chains.

Latin America’s $100 billion pharmaceutical industry is today dominated by Latin American firms. Brazilian, Argentine and Cuban generics producers already export their goods to other emerging markets in Asia, Africa and the mid-East. It may not be long before Latin American pharmacy giants do the same. Perhaps then, the multinational players will finally act upon the opportunities south of the Rio Grande

Who likes Public-Private Projects in Latin America

Chile and Brazil are the countries most inclined to make alliances with private sector groups. Argentina and Venezuela are the least interested.

In assessing the environment for public-private projects in Latin America and the Caribbean, it was found that the lack of infrastructure in Latin America and the Caribbean continues to be at the top of the political agenda in the region. That is the conclusion of Infrascope 2012, a recent study by the Economist Intelligence Unit for the Multilateral Investment Fund, which assesses the capacity of countries in Latin America and the Caribbean to establish public-private projects during the period December 2011-July 2012. Whether driven by external factors, such as the world sporting events that will be celebrated in Brazil, or internal factors, such as the infrastructure deficit emphasized by governments in such countries as Colombia or Costa Rica, the needs are pressing. This is due to reasons that range from the urgency to improve export competitiveness in Ecuador to modernizing transportation in the Dominican Republic. They have enabled the development of a form of consensus about the importance of private investment for the development of infrastructure in Latin America.

 

Liz Ann Sonders. Fed's future plans

"As for the Fed's future plans:  "If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course…"

In the press conference following the release of the statement, Fed Chairman Ben Bernanke suggested that the Fed anticipates similar-sized ($10 billion) reductions in purchases at upcoming meetings.  That would suggest a finale to quantitative easing toward the end of 2014, given that there are eight meetings each year.  When asked about likely-incoming Chair Janet Yellen's perspective, he mentioned she was fully supportive of the decision to taper.

Today's market reaction may ease some of the consternation of Fed watchers that believe there is no way the Fed can engineer a benign exit from its unprecedented policy easing/unwinding of its near-$4 trillion balance sheet.  But history may be instructive.  As Schwab's fixed income strategist Kathy Jones has noted in her recent commentary, in the post-World War II era, the Fed's holdings of US securities totaled about 22% of GDP- the same as the current level.  In the 1940s and 1950s, the Fed pursued very similar policies to deal with the debt that was incurred during the war.  Eventually the Fed's policies were unwound and the balance sheet restored to normal with limited disruptions; including no major uptick in either inflation or interest rates".

Source: Liz Ann Sonders, Schwab.

  It sounds really optimistic,time will tell. Still the global economy has a lot of headwinds to deal with.

Liz Ann Sonders. Tapering is not tightening

Tapering is not tightening

"The Fed, at least so far, appears to have done a better job than last summer in anchoring expectations for short-term rates; reinforcing the notion that "tapering is not tightening."  Looking at the Fed's economic outlook, there is very little chance it raises short-term rates in 2014; although two voting members believe it would be appropriate.  Most of the FOMC (12 members) expect at least one hike by the end of 2015; with three members believing the first increase won't come until 2016".

"Before I get to the qualitative analysis, let's start with an analysis of the Fed's statement accompanying today's decision.  One key sentence:  "The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal.  When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent."

Fed officials now predict the unemployment rate could be as low as 6.3% by the end of 2014, compared with a September projection of 6.4-6.8%. In fact, in general, the Fed's tone was relatively optimistic; removing the reference to downside risks that had been in prior statements:  "The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced."  The Fed also mentioned less fiscal drag:  "Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing."

"The Fed, at least so far, appears to have done a better job than last summer in anchoring expectations for short-term rates; reinforcing the notion that "tapering is not tightening."  Looking at the Fed's economic outlook, there is very little chance it raises short-term rates in 2014; although two voting members believe it would be appropriate.  Most of the FOMC (12 members) expect at least one hike by the end of 2015; with three members believing the first increase won't come until 2016".

Before I get to the qualitative analysis, let's start with an analysis of the Fed's statement accompanying today's decision.  One key sentence:  "The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal.  When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent."

Fed officials now predict the unemployment rate could be as low as 6.3% by the end of 2014, compared with a September projection of 6.4-6.8%. In fact, in general, the Fed's tone was relatively optimistic; removing the reference to downside risks that had been in prior statements:  "The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced."  The Fed also mentioned less fiscal drag:  "Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing."

Source: Schwab, Liz Ann Sonders. Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.

The Vicuñas

The vicuña is a member of the camel family. It is the smallest of the six species of camel, and is thought to be the wild ancestor of the alpaca. It lives on the high, grassland plateaus of the Andes mountains which range from southern Peru to northern Chile and into parts of Bolivia and Argentina. Only tough bunch grasses and festuca grows here. The sun's ultraviolet rays burn through the thin atmosphere during the day. At night the heat of the day escapes into the atmosphere and the temperatures go down to freezing. Although they look fragile, the vicuña is specially adapted to its high-altitude habitat. It has an incredibly thick, soft coat that traps layers of warm air close to its body and protects it from freezing

temperatures. The lower teeth of the vicuña grow constantly, like a rodent's, so they can eat the tough grasses. The vicuña also walks on the soles of its feet so it can flex its toes and grab on to the rocks and gravel-covered slopes. Vicuña milk is very rich so the babies grow quickly.

Vicuñas weigh between 75-140 pounds. They are about 4-6 feet long and stand 2-3 1/2 feet at the shoulders. They have very long necks, round heads, and large, forward facing eyes. Their ears are long and pointed and stand up on their heads. Their fur is a rust color, with white around the muzzle,the chest, belly, and the insides of the legs. The white hair on their chests is longer than their other hair.

Vicuñas graze mostly on grasses. Their teeth are large and grow constantly like those of a rodent. They chew their cud when resting getting more nutrients out of the nutrient poor grass.

Vicuñas are very shy animals and run away fery quickly.They have two territories that they defend from other herds; a feeding territory or about 45 acres, and a smaller sleeping area on higher ground where they are more protected. The vicuña live in herds of 5-10 members, which includes one dominant male and several females and their young. They mate in March and April and their young are born 11 months later. The young stay with their mother and the herd for another 10 months, when they are driven off by the herd. Young males will form bachelor groups and the young females try to find another group to join. This ensures that the herd stays the same size, which is important with their limited food supply.

The vicuña was almost hunted to extinction for its beautiful soft wool. The Incas used to round up the wild vicuñas and pen them in stone corrals, where they were sheared for their wool. In modern times they were almost wiped out for their meat and wool. By 1960 there were only 6,000 vicuñas left in the wild. Chile and Peru established protected national parks and put a halt to trade in vicuña wool. Now there are about 125,000 vicuñas, but they are still listed as threatened. The vicuña is classified as vulnerable by the IUCN, and as endangered by the USDI.

China: Funny translations in College English Test. Dire need of training to improve.

China held the National College English Test last Saturday. This year's exam laid more emphasis on subjective questions rather than objective ones. The result was some very funny translations from Chinese into English.

"GPS" for compass, "Pizza Yue" for moon cake. Translations such as these were quite common in this year’s college English test. And once they were published on China’s twitter like service Weibo, they were an instant hit.

"I really don’t know how to translate our traditional cultural concepts." College student said.

"I’d rather answer objective questions because I can at least take chances."

This year’s test required students to translate a passage with 140 to 200 Chinese characters into English within 30 minutes. The passages dealt with Chinese history, culture and economy. But students were baffled. Some translated "royal family" into "the stars of VIP", and "government officials" into "government boss".

"I kept laughing when I saw the translation questions. I believe there are a lot of bizarre translations." College student said.

The new change in the format of the College English Test is part of the overall education reform efforts in China. Some teachers believe the poor translation reflects the drawbacks of China’s exam-oriented system. And there is much to improve.

"We are in dire need of training students to enhance their practical use of the English language." English teacher Ren Ruigang said.

The National College English Test, which began in the 1980s, is a biannual test that determines the English language proficiency of undergraduate students. Some universities will not allow students to graduate without obtaining the certificate, and it is a prerequisite for those entering the job market.

Source: CCTV

Executives in Asia top the global pay league

Executives in the Asia-Pacific region earn the highest base salaries in the world.

According to the Association of Executive Search Consultants, he base annual salary for senior executives in this region during 2013 stands at around 244,000 US dollars. In contrast, executives in the Americas have an annual base salary of 229,000 US dollars.

While the figure for bosses in the emerging markets of Europe, the Middle East and Africa, or EMEA, stands at 212,000 US dollars. In the Asia-Pacific region, most executives made between 201,000 and 250,000 US dollars.

The majority of executives in the Americas were in the same pay range, while the highest percentage of executives in the EMEA made between 151,000 and 200,000 US dollars.

Source: CCTV

Chinese companies seek to expand overseas. Paying Competitive salaries for foreign executives.

Executives in the Asia-Pacific region earn the highest base salaries in the world. According to the Association of Executive Search Consultants, he base annual salary for senior executives in this region during 2013 stands at around 244,000 US dollars. In contrast, executives in the Americas have an annual base salary of 229,000 US dollars.
Source: CCTV