Sunday, 29 March 2015

This Magic Number Can Make or Break You in China’s Stock Market

The number is 23 -- and it’s one of the most powerful forces in China’s $6.4 trillion equity market today.
As the Shanghai benchmark index posts the world’s biggest rally, 23 has become a ceiling for firms trying to tap into it. Even though market valuations have climbed, virtually no companies have gone public at prices of more than 23 times their earnings per share.
That’s no coincidence, bankers say. Chinese authorities have quietly quashed attempts to take businesses public at richer prices. By hewing to the multiple 23, regulators are handing investors an almost guaranteed profit when new shares start trading. Companies, on the other hand, get shortchanged with smaller cash infusions than investors are ready to commit.
What’s so special about 23? The number itself is less important than what it says about the Chinese government and its hold on the nation’s financial markets.
Though regulators have made no official announcement about the ceiling, it first emerged after they tightened oversight of the IPO process in January 2014 to prevent companies and certain investors from colluding to drive up prices -- a practice that had saddled individual investors with losses. The China Securities Regulatory Commission didn’t respond to requests for comment on IPO valuations.
Granted, companies everywhere leave money on the table in IPOs. Bankers often underprice offerings to ensure stocks rise from day one. The strategy can hand a favored few instant profits and generate buzz around the shares.
But in China, the power of 23 is uncanny. Only two of the 147 companies that went public during the past 12 months sold shares above that valuation.
The two that broke through didn’t get far: circuit-board maker Guangdong Ellington Electronics Technology Co. fetched 23.2 times profit in its June offering, while fertilizer producer Hubei Forbon Technology Co. priced at 23.01 times later that month. In all, more than half of the 147 IPOs were valued at levels between 22 and 23 times reported earnings.

To contact Bloomberg News staff for this story: Fox Hu in Hong Kong atfhu7@bloomberg.net; Zhang Shidong in Shanghai at szhang5@bloomberg.net; Aipeng Soo in Beijing at asoo4@bloomberg.net


Global Diplomats Converge as Deadline for Iran Talks Looms

(Bloomberg) -- Diplomats seeking to end a nuclear dispute that’s defined Iran’s ties with the world for more than two decades resumed negotiations on Sunday with a self-imposed deadline looming.
Talks between the Persian Gulf nation, which holds the world’s fourth-largest oil reserves, and world powers continued for a fifth day in Lausanne, Switzerland. In a sign of progress still to be made, U.S. Secretary of State John Kerry canceled engagements in Boston on Monday in order to extend his stay.
A negotiated accord -- even if only a political framework - - could be a major stepping stone to ending Iran’s isolation and rebuilding its global trade ties. Failure would not only deny President Barack Obama and others a major foreign policy success but also raise the prospect that he or a successor would turn to force to prevent Iran from producing nuclear weapons.
Russian Foreign Minister Sergei Lavrov is due in Lausanne on Sunday afternoon. French Foreign Minister Laurent Fabius and German Foreign Minister Frank-Walter Steinmeier will remain in the city until talks finish rather than flying to a scheduled Monday meeting in Astana, Kazakhstan, a European official said.
The Chinese foreign minister, Wang Yi, is expected to offer new proposals, according to two people involved in the talks. He convened a bilateral meeting with Kerry at about 12:30 p.m. local time. China in an earlier round of talks this month proposed ways to address lifting UN sanctions.

Blackstone CEO Sees ‘Remarkable’ Opportunities in Slumping Oil

Most of the New York-based private equity firm’s energy investments aren’t in oil, meaning its exposure to lower oil prices is limited, Schwarzman said in an interview on the sidelines of the Boao Forum for Asia with Bloomberg Television on Saturday. Schwarzman, who is also chief executive officer of Blackstone, didn’t elaborate on specific energy investments.
(Bloomberg) -- Blackstone Group LP’s Chairman Stephen Schwarzman is seeing “remarkable” opportunities in debt and equity that are emerging out of the slump in crude oil.
Crude prices tumbled more than 50 percent after the U.S. shale boom boosted output to a three-decade high and as OPEC, led by Saudi Arabia, the world’s largest oil exporter, relinquished its traditional role adjusting production to moderate price swings in an effort to maintain market share.
Brent crude, the global benchmark, fell from last year’s high of $115.71 a barrel to a six-year low of $45.19 on Jan. 13.
Blackstone, the world’s largest private-equity investor, is also actively looking at European property, Schwarzman said.


Australia to Join Regional Development Bank Led by China

BEIJING — Australia plans to join an Asian infrastructure bank led by China, the government announced on Sunday, reversing an earlier decision taken at the urging of the United States not to become a member. The move made Australia the latest of a list of major American allies to sign up.
The office of Prime Minister Tony Abbott said in a statement that Australia still had concerns about the management of the bank but recognized the pressing needs for infrastructure in Asia. The decision will allow Australia to “participate as a prospective founding member in negotiations to set up the bank,” the statement said.
Australia said it wanted to ensure that the board of directors had authority over crucial investment decisions and that “no one country,” a reference to China, controls the bank.
Read full story: http://www.nytimes.com/2015/03/29/world/asia/australia-to-join-regional-development-bank-led-by-china.html?rref=homepage&module=Ribbon&version=origin&region=Header&action=click&contentCollection=Home%20Page&pgtype=article

Saturday, 28 March 2015

Fed's Yellen sees gradual rate hikes starting this year

SAN FRANCISCO/WASHINGTON (Mar 28): Federal Reserve Chair Janet Yellen signaled that the U.S. central bank will likely start raising borrowing costs later this year, even before inflation and wages have returned to health, but emphasized the return to normal interest rates will be gradual.
A downturn in core inflation or wage growth could force the Fed to delay the first increase to borrowing costs since 2006, the central bank's chief said on Friday, but policymakers should not wait for inflation to near the Fed's 2-percent goal before tightening monetary policy. The Fed has held short-term borrowing costs near zero since December 2008.
After the first rate increase, Yellen said, a further, gradual tightening in monetary policy will likely be warranted. If incoming data fails to support the Fed's economic forecast, the path of policy will be adjusted, she said.
"With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year," Yellen said at a monetary policy conference at the Federal Reserve Bank of San Francisco.
Yellen said that if economic conditions evolve how the Fed's policy setting committee anticipates, "I would expect the level of the federal funds rate to be normalized only gradually, reflecting the gradual diminution of headwinds from the financial crisis and the balance of risks I have enumerated of moving either too slowly or too quickly."

Israel Releasing Impounded Palestinian Tax Revenue

JERUSALEM — Israel announced on Friday that it would release three months’ worth of tax revenue to thePalestinian Authority that has accrued since Israelsuspended the payments in response to the Palestinianmove to join the International Criminal Court.
The announcement appeared to partly reflect a desire by Prime Minister Benjamin Netanyahu of Israel to ease tensions with the Palestinians and the United States. But it also was a response to a recommendation by Israel’s security establishment amid fears that the impoundment of the revenue was undermining stability in the area and endangering Israel’s own well-being.
Mr. Netanyahu approved the recommendation of his defense minister, Moshe Yaalon, and of the Israeli military and Shin Bet internal security agency to transfer the withheld funds “based on humanitarian concerns and in overall consideration of Israel’s interests at this time,” according to a statement from Mr. Netanyahu’s office. 
The departing United Nations envoy for the Middle East peace process, Robert Serry, urged Israel to immediately reverse its decision to withhold tax revenue in a briefing to the Security Council on Thursday. Mr. Serry, who is ending a seven-year tenure as the United Nations special envoy for the Middle East Peace Process, said the Palestinian Authority’s financial crisis was deepening and that Israel’s action was in violation of the peace accords it signed with the Palestinians in the 1990s.


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Wednesday, 25 March 2015

Mad Mike, the homeless blogger who became a millionaire overnight



Missing the Austin ditch in which he’d slept most nights for the last two years, Mike Wille curled up on the front lawn of the large house his mother had just left him via her suicide note. Her death meant that Mike – known to fans of his street music and his homelessness blog, The Ground Score, as Mad Mike the Hippy Bum – would soon be a millionaire. Mad Mike worried that, given his love of drink and drugs, he could not survive such a lifestyle shift.

At birth, Mike’s left leg was shorter than his right by an inch, with no defined calf muscle and an under-formed foot sans big toe. When I visited his mother’s former home near New Orleans recently, he showed me a box of family papers he’d unearthed regarding the lengthening of his leg by the famous doctor Gavriil Ilizarovwho invented the procedure.
Still, the bum leg helped Mike nurture a negative outlook that, once he became teenager, fractured his relationship with his already volatile parents. “My mother was a fairly erratic person. Sometimes extremely benevolent and generous, other times scathingly cruel,” Mike told me. “When I was in the seventh grade, she tried to kill herself in front of me because I got a D in history and I said I didn’t care. Later we found her passed out in the garage with the car running and my dad freaked out, showing more emotion than I’d ever seen out of him.
“Things came to a head when I was 17 and had a fist fight with my dad, causing him to have me arrested. This was my first time in jail,” says Wille, who immediately moved out of his house. Mike has more recently written exquisitely about subsequent trips to jail (most for public intoxication) at The Ground Score:
Thanks to his blog, Mike received fan mail from Scotland, New Zealand, Latvia and the UkraineTo a homeless bum, this meant everything.
Mike’s deceased mother’s house, a nicely appointed junior McMansion 45 minutes east of New Orleans, represents the first roof over Mike’s head in four years. Mad Mike spent the last 15 years blowing back and forth from Texas to his home state of Louisiana, surfing both couches and park benches.
I met him in New Orleans where he played music in the French Quarter – songs like I Love the Devil and Money For Drugs, which he’d specially designed to make shocked tourists pause. “But after I got them to stop I’d get them to listen to a more substantial song,” Mike clarifies, “usually getting them to tip more money or buy an album in the process.”
For detail study : http://www.theguardian.com/society/2015/mar/24/mad-mike-homeless-blogger-millionaire

Tuesday, 24 March 2015

Why Silicon Valley Loves Wall Street

Some Wall Street stars are decamping for Silicon Valley, corralled by tech giants and tech start-ups looking for financial expertise, marquee talent and bragging rights.
Morgan Stanley announced Tuesday that Ruth Porat, its chief financial officer and a 28-year veteran of the firm, will become theCFO of Google at the end of April. (She replaces CFO Patrick Pichette, who quit this month before his successor had been chosen.)
Porat is a big get for Google, which has had issues with analysts and regulators over slowing growth and concerns that it bullies competitors on the Web. Porat has a sterling reputation on Wall Street and in Washington, where's she's regarded as an executive who has a deft hand with regulators and investors.
During the financial crisis that began in 2008, Porat advised the Treasury Department on the bailout of the foundering government-sponsored lenders Fannie Mae and Freddie Mac. She helped rebuild Morgan Stanley’s reputation with investors in the wake of the crisis. Her performance through all of that got her on the shortlist of candidates to be the U.S. Deputy Treasury Secretary.
Google’s desire to have someone like Porat in its C-suite speaks to Silicon Valley's continuing effort to buy managerial legitimacy and gravitas, a need heightened by the fact that companies like Google -- which were still relatively new 15 years ago -- are now elder statespeople that have to pursue much more sophisticated dealings with big investors and public policymakers.
For details : tobrien46@bloomberg.net

Give China a Reserve Currency



As former U.S. Secretary of State Colin Powell famously advised, China favors "overwhelming force" in its campaigns, military or otherwise. Most recently, in a direct challenge to the global economic architecture established by the U.S. and its allies after World War II, Beijing has pledged nearly $200 billion to various new lending institutions and funds -- to bolster trade with Europe, establish a footprint in the Indian Ocean, build infrastructure across Asia and generally increase the mainland's influence worldwide.
A new push to establish the renminbi as one of the world's reserve currencies adds to this campaign. The move would confer prestige, take America down a peg and attract more investment. Viewed that way, Washington should fear the yuan joining the ranks of the dollar, euro, yen and British pound, right? Wrong. Increased use of the yuan internationally will force China to restructure more radically than its leaders may realize. It also could stabilize the country's rickety financial system, to the benefit the U.S. and the rest of the globe.
While People's Bank of China Governor Zhou Xiaochuan hasn't said so publicly, I'll bet that his push for the International Monetary Fund to add the yuan to its Special Drawing Rights system is a backdoor gambit to promote reform at home, more than a geopolitical power grab. Zhou is an unabashed liberalizer, a trusted disciple of former Premier Zhu Rongji, the man who in the 1990s took on state-owned companies and tossed more than 40 million of their employees out of work. Amid speculation Zhou, 67, may soon be replaced, he could be trying to cement the reform process his mentor began.
for details : wpesek@bloomberg.net

Obama Snubs Nato Chief as Crisis Rages

President Barack Obama has yet to meet with the new head of the North Atlantic Treaty Organization, and won't see Secretary General Jens Stoltenberg this week, even though he is in Washington for three days.  Stoltenberg’s office requested a meeting with Obama well in advance of the visit, but never heard anything from the White House, two sources close to the NATO chief told me. 
The leaders of almost all the other 28 NATO member countries have made time for Stoltenberg since he took over the world's largest military alliance in October. Stoltenberg, twice the prime minister of Norway, met Monday with Canadian Prime Minister Stephen Harper in Ottawa to discuss the threat of the Islamic State and the crisis in Ukraine, two issues near the top of Obama's agenda.
Kurt Volker, who served as the U.S. permanent representative to NATO under both President George W. Bush and Obama, said the president broke a long tradition.  “The Bush administration held a firm line that if the NATO secretary general came to town, he would be seen by the president ... so as not to diminish his stature or authority,” he told me.
America's commitment to defend its NATO allies is its biggest treaty obligation, said Volker, adding that European security is at its most perilous moment since the Cold War. Russia has moved troops and weapons into eastern Ukraine, annexed Crimea, placed nuclear-capable missiles in striking distance of NATO allies, flown strategic-bomber mock runs in the North Atlantic, practiced attack approacheson the UK and Sweden, and this week threatened to aim nuclear missiles at Denmark’s warships.
“It is hard for me to believe that the president of the United States has not found the time to meet with the current secretary general of NATO given the magnitude of what this implies, and the responsibilities of his office,” Volker said.
Bernadette Meehan, a spokeswoman for the National Security Council, declined to say why Obama didn’t respond to Stoltenberg’s request. “We don’t have any meetings to announce at this time,” she told me in a statement. Sources told me that Stoltenberg was able to arrange a last-minute meeting with Defense Secretary Ashton Carter.
Bernadette Meehan, a spokeswoman for the National Security Council, declined to say why Obama didn’t respond to Stoltenberg’s request. “We don’t have any meetings to announce at this time,” she told me in a statement. Sources told me that Stoltenberg was able to arrange a last-minute meeting with Defense Secretary Ashton Carter.
For details - tharshaw@bloomberg.net