Featured Topic: Industry

Recent analysis shows that Asia-focused hedge funds have brought in around $500 million in the month of August, raising the market’s total income to $7 billion in 2011. Eurekahedge, the hedge fund tracker based in Singapore, stated that this year has exceeded last year’s inflow by $3 billion.

The study went on to indicate that Europe’s hedge fund industry gained $2.8 billion in August, while funds in the U.S. reached $.8 billion.

Total Asian hedge fund assets tracked by Eurekahedge increased to $136.1 billion by the end of the summer, reaching their highest level since December of 2008. Despite its peak of approximately $176 billion in 2007, the industry is making a remarkable recovery in the face of the global financial crisis.

High profile hedge funds, such as Morgan Sze’s Azentus Capital and others launched by Carl Huttenlocher and Seth Fischer, are projected to have significant impact on the industry’s assets throughout the remainder of the year.

 

More Sheep Farms in Armenia

It seems like anything goes in these days of global investment opportunities. Indeed, in a recent news report from Arka, the Armenian Development Agency (ADA) will be privy to a new investment program by a (yet to be named) Australian company. By next month, this will enable the set-up of sheep-breeding farms there, with a capacity of 5,000 sheep. This will take place in conjunction with regional administrations in Armenia and a “territory for building the farms will be defined.” The main goal of this program will be the “farming of genetically traditional semi-stiff-haired types of sheep in Armenia.”

Australia: Armenia’s Auxiliary

So what does Australia have to offer Armenia? According to the ADA’s General Director, Robert Harutyunyan, the Australian company is going to “introduce a standard plan of a sheep-breeding farm in the investment package,” and that later on, there will be a defining of territories for farms through the regions.” ADA’s main aim is to finally eliminate “old soviet standards,” and thereafter develop “new sheep-breeding farms in accordance with international standards.”

Additional Armenian Investment Opportunities

But that is not all. At the moment there are also a few other potential investors hailing from CIS and Arab countries that are looking into these projects with interest and are seeing Armenia as a good place. Plus it seems sheep farming is on the rise since figures for last year showed that “customs cost of 135 thousand sheep increased by 56% making about $14 million compared with 2009.” In addition, according to Harutyunyan, a cheese company in Armenia is looking into expanding its export volumes this fall, following its successful 5 ton export to Russia a few months ago.

Indeed, “if supply exceeds demand here in Armenia, greater volumes may be sent outside.” Forecasts suggest that such supply may indeed “exceed demand by 10 to 20 percent.” Russians like Armenian cheese, and according to another related Arka article, “the Armenian Cheese company was set to export 120 to 140 tons of cheese in Sept-Oct 2010 to Russia and 80 tons to the United States. However, nothing like that happened, since cheese prices jumped in Armenia, and it was decided to refrain from exporting cheese and postpone these plans for 2011.”

According to a recent FKI report (Federation of Korean Industries), there was good news for South Korea vis-à-vis investment opportunities, based on data assembled by the OECD (Organization for Economic Cooperation and Development). Indeed, in an article on the report, the region’s business investment growth “ranked no. 1 among the world’s developed market economies,” in 2010. Now, it just has to keep up this title. Indeed, South Korea’s facility investment escalated 21.3 percent on-year last year which rendered it the “highest increase among 23 countries checked and far higher than runner-up Estonia, which posted investment growth of 14.1 percent.” America came third and Britain, fourth.

South Korea Big Investments

South Korea’s investment in national accounts reached 116.8tr won, with a substantial amount of this being put into machinery and the remainder into transportation-related equipment. Indeed, machinery investment increased more than 26 percent on the grounds of the purchase of additional IT products, autos and manufacturing machinery in a one-year timeframe. Transportation sector investment increased 6.2 percent in 2010; most of this capital was spent on trucks and other autos primarily used for business.

2009 Figures

The financial crisis led to problems in 2009 such as a drop in facility investment in the OECD countries to 19.5 percent but with South Korea it was only 1.2 percent. As well in 2010 South Korea witnessed an additional 2.3 percentage points to last year’s economic escalation vis-à-vis investments in business, which, according to an FKI official, “represented a significant contribution to national growth.”

According to the Cambodian Ministry of Commerce, a group of Yunnan province investors (in China) has been looking into Cambodian investment opportunities and has found the possibilities most favorable there. The delegation, led by deputy chief of China International Economic Development and Cooperation Office, Cao Junde, met with Cham Parasidh, the Cambodian Minister of Commerce and Vice Chair of the Council for the Development of Cambodia. According to an article in China Daily, the Ministry said that “some of the investors have showed their interest in investing in mining, oil and gas exploration, rice mill and hydro-electricity in Cambodia.” Anyway today, China is Cambodia’s largest foreign investor, with figures reaching $8bn by the end of last year. So it seems like it’s worth the two countries developing better ties as well.

Other Chinese Investments

In other areas of China, investments are being made in Cambodia too. The country’s east Jiangsu province has been looking into investment opportunities there also. The country’s Prime Minister, Hun Sen, is currently visiting China for five days and met with the secretary of the Jiangsu Provincial Committee of the Communist Party of China (CPC), in Nanjing, Luo Zhijun. Jiangsu has a lot to be proud of, having successfully worked hard to get China out of the global financial crisis. The rapid growth of China’s economy has also been beneficial to Cambodia. As well, according to a report in China Daily, Hun Sen said that the “Hongdou Group Co., Ltd., a Jiangsu-based enterprise in clothing, tire, biological pharmacy and real estate, is building an industrial park in Sihanoukville Province, southern Cambodia.” The PM is hopeful that both parties can work together “to develop the industrial park.”

Hun Sen has been working hard to establish and develop good relations between the two countries, especially in regards to “friendly communication, bilateral exchanges and cooperation.” Of course, the PM’s visit will only lead to a further development of “mutual understanding, promote pragmatic cooperation and establish a win-win relationship between the two countries.”

Increasing Bangladesh Needs

Bangladesh needs more electricity. In an effort to deal with this, the country is currently trying to acquiesce a further $7bn from foreign investments to construct power plants to respond to this need. According to Senior VP of the Chittagong Chamber of Commerce and Industry in Saudi Arabia, Mahbubul Alam, it is actually worth investing in the country as he has found “lucrative returns” for his country. Indeed, as noted in a recent article, Alam said Bangladesh has developed “massive programs for infrastructure development in partnership with private sectors.”

Electricity Needs

Bangladesh’s population is thriving which is of course a good thing. But the 160 million inhabitants are developing greater needs which are not being fulfilled by the country’s “poorly maintained electricity grid which sees frequent outages during the peak months.” Clearly something needs to be done and a big investment would for sure be a great first step. The fact that the country’s power sector has now opened up to private investment is a good step in the right direction too. Bangladesh is offering a whole slew of new incentives for “private power producers” as well, such as not having to pay corporate income tax for up to 15 years and a waiving of custom duties for plant and equipment import. An agreement for the Avoidance of Double Taxation was also signed a few months ago.

Turkey and Vietnam Need to Join Forces

It seems that if there was greater cooperation between Vietnam and Turkey, the economy climates of both countries would greatly benefit. According to an article in the Vietnam News, they need to get on to this though and start making real efforts so that they will thrive. This is the case for many areas such as: “economics, education and training, [and] science and technology.” It was just two days ago that Nguyen Tan Dung, the Prime Minister of Vietnam, spoke about this in a statement in which he “received outgoing Turkish Ambassador Ates Oktem in Ha Noi.” He had been impressed with the Ambassador’s efforts in his time in office which helped “develop the Vietnam-Turkish friendship and co-operation.”

Better Buddies

Although there is still a way to go, things have for sure improved between Turkey and Vietnam in the last few years. For example, just last year, trading between the two countries reached US$850m. At the moment, Turkey and Vietnam are in the process of signing an “investment encouragement and double taxation avoidance agreements.” It is anticipated that these will really give a jumpstart to economic cooperation and partnerships between the two countries.

Put Differences Aside

It is true that there has been tension between the two countries over the years. But imagine what would happen if these were totally put to one side? As it is business between Turkey and Vietnam is booming and got to almost $1bn last year, even with the current political instability. There has been a steady increase of trade between the two countries over the last few years “from almost nothing to $857m in 2010.” In 2002, this figure was just a little more than $100m.

It is Turkey that is vehement in trying to improve relations with Vietnam and working hard towards this goal. It intends to “appoint a trade counselor” to its Hanoi embassy. Vietnam is home to around 86 million people and is the world’s 13th biggest population. So it’s worth everyone working closely with Vietnam, but especially Turkey.

Stable Singapore Stakes

Is it true that things (financially-speaking) are that good in Singapore these days? Is that what is making the area so attractive for hedge funds, financiers and investors? Indeed the answer should be a resounding yes. The country is for sure facilitating things for these financiers as “setting up shop” is now deemed as much easier in Singapore than in any other Asian city.

If you just take a look at Hong Kong you will see just how much harder it is for such financiers to work. Indeed, managers of hedge funds alone are doing it tough, being forced to engage in the “same licensing requirements as mutual-fund managers.” Small funds in Singapore will be able to continue operating without having a license at all. Since it is today Singapore and Hong Kong which are the countries that have the most operation of hedge funds, of course these financiers would choose the former over the latter.

Seductive Singapore Taxes

The taxes haven’t always been so attractive in Singapore. But today they are, given what is going on in the UK. Currently the highest taxes for individuals reaches 20 percent in Singapore but the UK recently put their top rate up to a staggering 50 percent. In addition, the whole of Europe – as well as America – in general works on “tougher rules.”

So it makes sense that hedge funds in Singapore saw a significant development, reaching $48bn at the end of 2009 which was a jump of $10bn from just four years earlier. In 2001 there were only 20 hedge funds; two years ago that figure had escalated to 320 hedge fund managers. All predictors are pointing to a continued hedge fund interest looking to “tap Asia as a source of funds as well as a source of excess returns,” over the next year.

Singapore Squeeze?

While this is great for the country, is it so good for the people and the businesses already in existence there? Apparently there is the fear that “the increasing number of global hedge funds is unlikely to crowd out smaller Singapore-based managers.” There will however, be space for “large and niche players” as long as they keep adding “value to investors.” There is now more focus on “transparency and risk management by investors post-crisis,” also, which will lead to hedge fund managers around the world developing their “mid-bank office infrastructure.”

It’s great that Singapore is providing such an attractive environment for financiers around the world and that for sure will help the country’s economy. But at the same time, it has to ensure it looks after its own.

Well, not exactly. But there will be some mega-German investments in China. BMW is currently planning to advance development of its work in China with “investments to increase manufacturing capacity.” According to the company’s board of management chair, Norbert Reithofer, the Chinese really like the BMW vehicles and “anticipate” more growth for the company for the future.

Mega Monies Investments

Hence the company in Germany is combining its efforts with their “joint venture partner Brilliance” in an effort to further develop the investment monies it announced before which was already significant at EU 560m. This will be taking place in Shenyang which is where their Chinese facility is. Now, the figure will be increased to EU 1bn.

This extra money will be split between BMW and Brilliance and be utilized for the construction of paint shop, press shop and to advance the Tiexi plant’s infrastructure in anticipation of greater production capacities hoped for the future.

German-Chinese Manufacturing Relations

Germany has had a good relationship with China vis-a-vis investments for a while now. For the last six years, there has been production in China of both the BMW 3 and 5 Series. Around a year and a half ago, BMW Germany said it was planning on constructing a second production plant in China “with the BMW X1 slated to begin production there in 2012.” Further, this renders China as BMW’s “third-largest market worldwide, with 167,116 vehicles sold in China during the last financial year.” The plan is that there will be an expansion of over 100,000 vehicles per annum at the first facility (Da Dong) and then at the second one, 200,000.

Indonesia and Malaysia Join Forces

There have been substantial efforts made to encourage companies from Indonesia to make investments in Malaysia which, has also resulted in a re-balance of “bilateral investment between the two friendly neighbors.” According to Datuk Seri Mustapa Mohamed (International Trade and Industry Minister for Malaysia), various companies from Indonesia have been discussion four memorandums of understanding (MoUs) with four companies in Malaysia for possible investment opportunities there. He pointed out that once negotiations are completed, there will be a signing ceremony in Malaysia.

Business Summit

The Asean-EU Business Summit takes place today along with the Asean Economic Ministers’ Meeting, which Mustapa is attending. He is using these meetings to meet up with various figures in the Indonesian corporate world who are involved in these possible investments.

Origins of Success

The way it all started was when Tan Sri Muhyiddin Yassin, Deputy PM of Malaysia, came to Indonesia and met with industry “captains” in the industry a year ago. This was what led to such an optimistic response from investors in Indonesia. This led to Malaysian companies inviting “Indonesian Chinese corporate figures from the Indonesian Chinese Chambers of Commerce and Industry to Malaysia in February to explore investment prospects in Malaysia particularly in projects slated under the Economic Transformation Program.”

The good news for Indonesia is that the economy has grown so fast. But this has resulted in the country’s businessmen looking for investment possibilities outside of the republic. Now Malaysia has invited Indonesians to use its country “as the platform to set a basin foreign investment.” These days Malaysia is definitely doing better vis-à-vis investments between the two countries as trade is up to over $2bn and Indonesia’s is $600m in Malaysia.

Border Clashes Negatively Impact Trade

There’s going to be trouble with the Asian economy, and a lot of it. That’s if the situation between Thailand and Cambodia continues. Currently the border clashes there are so detrimental to good sentiments between the two countries, that even though trade is developing, without an end to these clashes, the market share of Thailand goods in Cambodia will be reduced.

According to Kasikorn Research Center (KRC), what will happen is that Thai exporters and potential business investors will lose confidence in placing their businesses in Cambodia. In addition, other countries will start putting pressure on them to take business elsewhere, especially Vietnam.

Good Trading Between Thailand and Cambodia

But it would be a real shame if things went sour. Investment between Thailand and Cambodia has been increasing continuously over the last few years from $1.4bn in 2007 to $2.5bn in 2010. Thailand has been benefitting from this vis-à-vis trade. In addition, trade between the two countries accounts for at least 70 percent of overall trade – that is a huge amount that would be devastating for both places if it things stopped going well.

It’s not all been great news though. In March 2011 there was only a slight increase in export volume. Also, due to border clashes, there was a drop from 34.9 percent in 2008 to 29.9 percent in 2009. There was a large plummet of Thai investment in Cambodia from the 2008 figure of $30.7m to the 2010 figure of $1m.

Vietnam-Cambodia Trade Figures

Consequently there was additional merchandise from Vietnam to the Cambodian market with an increase of 19.5 percent in 2008 to 23.7 percent in 2009. But Vietnamese exports to Cambodia also increased in 2010 by a significant 35.3 percent, culminating in $1.5bn. But anyway Vietnam ranks as Cambodia’s largest investor with “an accumulated investment value of around $49.5m. Thailand comes in second at $47.2m, and Singapore in third place at $24.9m.

So there is work to be done. It would clearly be a huge economic shame if the political situation between Thailand and Cambodia wasn’t resolved – and fast.