Markets

South Korea Investment News

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KEPCO (Korea Electric Power Corp) just announced that South Korea will be investing $7.18 billion into a nationwide smart grid that is due for completion by 2030.  This investment is an attempt to “curb the country’s carbon emissions and improve efficiency in its electricity market.”  It seems that South Korea is the perfect location for smaller-scale greening efforts such as the transformation of landfills into hydrogen generators; the construction of huge 131-acre rooftop gardens; the introduction and use of electric scooters for local police.  This is great, but it comes alongside the fact that the country is quite a high carbon polluter within the OECD (Organization for Economic Cooperation and Development) countries. For South Korea, this will ultimately mean that 11 percent of energy will be taken from renewable sources like wind and solar.  The country will draw 11% of its energy from renewable sources, such as wind and solar.
 

China’s Wealth Gap

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On 27 February, Wen Jiabao (China’s Premier) compared the country’s economic development to a cake that needed to be larger and more evenly distributed.  He insisted it was essential that the government take on the task of “ensuring fair income distribution” over the next five years.  This is not just for the country’s economic stability (which of course is important) but also as a measure of “social justice and fairness” in China.  Whilst indeed the country has witnessed significant economic advancement, it still suffers from social/class difficulties such as a “widening wealth gap and slow increase in incomes.”  In some areas this has even led to social conflict which of course will ultimately impact the country’s economy. 
 

J.P. Morgan was Awarded Hong Kong’s Best Foreign Investment Bank

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The Asset Triple A Award for Hong Kong’s Best Foreign Investment Bank was awarded to J. P. Morgan for the sixth consecutive year. J. P. Morgan exhibited has consistently displayed leadership through a wide variety of products. It is a major adviser to a big portfolio of blue chip clients in the Hong Kong area. They also have an ongoing repeat business.

Through the listing by introduction of Fortune Reit in 2010, J.P. Morgan instituted Hong Kong’s first bridging dealer mechanism. This mechanism allows the Hong Kong Exchange and Clearing to use introduction to approve listings.

Japanese traders increase investments in Chinese start-ups

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Japan’s large trading companies, seeing the excellent returns from the growth of Chinese start-ups, are channeling more of their investments into these start-ups.

Mitsui & Co purchased 12.2 percent of Hutchison MediPharma Ltd, a division of Hutchison China MediTech Ltd. Mitsui sent a representative to sit on the board in China.

In order to raise the Hutchison’s corporate value, Mitsui plans to make an alliance with a Japanese pharmaceutical company.
Mitsui expects to invest approximately 3 billion yen a year in Chinese start-ups that show good potential.
Mitsui hopes to double its investment, up to 15 to 20 billion yen, in the next three years.

An anonymous Mitsui official explained that “In general, corporate value increases by 100-200 percent when a business goes public,” In addition, “It can be as high as 400-500 percent if it is a long-term investment.”

Banks Dumping Japanese Government Bonds

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YenAs demand for loans dropped in Japan, Japanese banks bought record amounts of government debt. Now they are selling the bonds for the first time this year as prices are in free fall.

Lenders cut Japanese government debt holdings to 142.2 trillion yen ($1.7 trillion) as of Oct. 31 from a record high of143.2 trillion yen a month before, according to the Bank of Japan. The banks bought bonds in each of the previous nine months as outstanding loans fell 2.1 percent to 391.9 trillion yen, the lowest since May 2008. Government bonds lost 1.5 percent since Sept. 30, set for the worst quarter in the last seven years, indexes compiled by Bank of America Merrill Lynch show.

Thakral Sets New Strategy For Real Estate Business

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Thakral Corporation will partner as a financial investor with with developers to implement its new strategy for its real estate business.
In its filing with the Singapore Exchange, the company wrote that as a capital investor, it seeks to invest in affordable mid-sized residential developments located in cities in Asia Pacific and Australia.

Thakral indicated that its new strategy will generate a second revenue stream for the company.

The firm is seeking returns of 15 to 25 per cent, with an exit strategy in 12 to 36 months.

Mr Singh said, “We will receive our returns and capital when the projects are completed and all units already pre-sold to buyers are settled.”

Thakral already owns commercial and residential property holdings in Hong Kong and China.

In addition to real estate, Thakral also distributes consumer electronic products in Singapore, India, China and Japan.

India Infrastructure Finance Company Ltd will issue a Rs 1200cr tax-free bond

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India-Map2India Infrastructure Finance Company Ltd (IIFCL) will issue a Rs 1,200-crore retail infrastructure bond issue at the end of the year.

The bond issue would come in three stages of Rs 400 crore each between January and March, according to, managing director of IIFCL, S.K. Goel.

The IIFCL chief said the bonds that are AAA-rated will have a coupon rate of 8.5 per cent for 10 years and 8.75 per cent for the 15-year issue. At the end of five years both issues will have a put and call option.

The State Bank of India (SBI) bond issue received a great response from investors due to the high interest rates the bank is giving.

Cross-Shareholdings At Lowest Rates Since 1991: Japanese Banks Sell-Off Shares

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Japanese Companies reduce their cross-shareholdings of allied companies to the lowest level since 1991. Banks sell shares due to narrower global capitalization requirements.

In the year that ended March 31, stocks owned with corporate allies dropped to 4.9 % of the nation’s shares. This represents a two-point drop from the previous year and the lowest rate since 1991.

Keisuke Nitta, a strategist at NLI Research Institute, explained that “Cross-shareholdings held by banks are based on relationships with clients, so it doesn’t mean that the shares they hold are ones that are likely to grow.”He continued “A lot of the superior shares have already been sold off. It means a lot of unattractive stocks are still on their books.”

Banks are positioning for new regulations decided upon by the Basel Committee on Banking Supervision which require Banks to double the Tier 1 capital reserve. Tier 1 capital includes cash and equities. Therefore, volatile and poorly performing stocks will lower a bank’s ability to lend.
Since the International Accounting Standards Board issued guidance last year that the current market value of shareholdings are required to be included in financial statements, companies are reducing their holdings.

Hidehiro Tomioka, who manages about $1.4 billion at the Japanese asset management u_wpnonce=b29c1b17d4

Nikkei Falls 0.84 % Due To Geopolitical Tension And Eurozone fears!

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Tokyo stocks fell on Wednesday and the Nikkei stock index lost 0.84 percent, as tensions arose over geopolitical strife over conflagrations in Korean and the instability of the eurozone after Ireland’s debt-rating cut stressed investor feelings.

Standard & Poor’s downgrading of Ireland’s long-term debt caused fear of a domino effect in the eurozone and lowered investor confidence.
Adding to investor uneasiness are increasing tensions in Korean after artillery exchanges between the Republic of Korea (ROK) and the Democratic People’s Republic of Korea (DPRK).

Japan’s nearness to the conflagrations lead to share dumping in the Japanese market, according to some analysts.

Tokyo Electron fell 2.1 %, down to 5,150 yen. Mitsubishi Corp. lost 1.4 percent to 2,115 yen. Mitsui & Co. dropped 0.8 percent to 1, 330 yen.

G20 leaders meet to Strengthen to World economic system

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SEOUL, South Korea – America’s move to flood its sluggish economy with $600 billion of cash, has triggered alarm in capitals from Berlin to Beijing. This has created tensions over currencies and trade gaps which are growing before the summit of global leaders this week.

The Group of 20 developing and rich nations are attempting to reform the world economy in the aftermath of the 2008 financial crisis. Two years ago the group’s leaders met for the first time. They set out an ambitious agenda to ensure stable economic growth and to strengthen financial supervision to prevent further meltdowns and to give developing countries more of a say in what’s going on.

The Federal Reserve’s decision to buy $600 billion of Treasury bonds over the next eight months helps tolower interest rates to spur growth and cut the high unemployment rate. However, this decision  is complicating  discussions on achieving those goals at the summit Thursday and Friday in Seoul

At the center of the discussions is the understanding that a decades-long global economic order centered on the U.S. buying exports from the rest of the world and running huge trade deficits while other countries such as China, Germany and Japan accumulate vast surpluses is no longer reasonable after the crisis.

The attempt to remake the world economy received some of its momentum from the rise of countries such as brazil, India, and China to become economic and political giants in their own right. The G-20 meetings themselves show the great changes since the crisis. They mark the end of a system in place since the 1940s in which the world economy was managed mainly by a small group of rich nations led by the United States, Europe and later Japan.