Regional News

Intel Capital Invests in 10 Asian Companies

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Intel Capital recently announced its $40 million worth of investments in ten Asian companies. The investments include eight in companies from China, India, Japan and South Korea, as well as two planned in Taiwan.

“Technology adoption and innovation is an accelerating global phenomenon, and Asian entrepreneurs from both mature and emerging markets are on the cutting edge of this trend,” said Intel Capital president Arvind Sodhani. “These ten companies offer unique technology- from remote security solutions to interactive cloud-based services- that enhances productivity, security and the online experience for consumers and businesses around the world.”

The investments were announced at the 12th annual Intel Capital Global Summit in Huntington Beach, California. The summit, formerly known as the CEO Summit, hosts more than 900 portfolio company CEOs each year, as well as corporate technology decision makers and industry leaders from across the globe.

 

Asian Stocks Fall as Greek Prime Minister Steps Down

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Asian stocks suffered a blow as Greek Prime Minister George Papandreou agreed to leave his post and Italian PM Silvio Berlusconi fought to maintain his advantage in face of the parliamentary vote.

HSBC Hodings, Europe’s primary lender, slipped 1% in Hong Kong, while Takeda Pharmaceutical Co. fell 2.3%. Cnooc Ltd. fell 2.2% after the Chinese oil explorer’s BP Plc purchase in Argentina fell through.

The MSCI Asia Pacific Index lost 0.4% in Tokyo, with approximately three shares falling for every two that rose. The measure fell 3.6% last week, the most since the beginning of the quarter, following Greece’s referendum plan.

“It might get worse before it gets better,” said Binay Chandgothia of Principal Global Investors in Hong Kong. “If you look at the experience in the last 12 to 18 months in Europe, the crisis brings out the right solution. The way they are going to move is one step forward, two steps backward. We have to live with this.”

China Air Gets Bond Offering from US Export-Import Bank

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China Air, China’s national flag carrier, has accepted a bond offering guaranteed by the US Export-Import-Bank, or US-Exim.

The deal, worth $135.31 million, brings into play a new capital market financing solution to airline companies in Asia-Pacific. All gains from the transaction will be put towards refinancing a financial lease structure which was used to purchase a new Boeing 777-300ER aircraft by Air China.

“We are glad to be able to further develop and explore a wider source of funding,” said Jingjing Yao of Air China’s finance department. “The notes offered us a relatively low funding cost as the coupon is the lowest when comparing to transactions with equivalent average life since the product began in October 2009.”

The notes, due in 2023, are priced at a coupon of mid-swap rate, in addition to 105bp alongside market expectations. Eight investors have placed orders, reaching a total of $142 million.

China’s Stock Market and Greece’s Referendum: Michiya Tomita

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Asian stocks have fallen for three days as Greece’s referendum plan heightens concerns that the debt crisis will not be contained. Hong Kong stocks reconvened as a result of beliefs that China will now act to stimulate its economy.

The MSCI Asia Pacific Index fell 0.6% to 118.41 in Tokyo, while three stocks fell for every two that rose. Meanwhile, banks like the Industrial and Commercial Bank of China, as well as developer and infrastructure companies rallied with hopes of an economic boost from the government.

“A loosening of monetary policy in China could support the stock market,” said Michiya Tomita, who helps oversee billions of dollars for Mitsubishi UFJ Asset Management Co. “Any gains may not be sustainable as uncertainties in Europe persist. Investors are taking a wait-and –see attitude.”

Shanghai to Become Regional Hub for International Commerce

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At Shanghai’s 23rd International Business Leaders’ Advisory Council (IBLAC), over 500 government officials were told that the city is on its way to becoming a regional base for international trade within Asia’s economy.

“It’s the beginning of an Asian century,” Maurice Greenberg, the former chairman of IBLAC, said. “Shanghai is not only the major port of entry in Asia, but also the world’s trade center- with its population, talent and business environment, it has everything necessary to become a leader, not only in Asia, but the world.”

Numerous VIPs agreed, stating that the goals would be reached by 2020. According to former U.S. secretary of commerce Carlos Gutierrez, as well as Shanghai Mayor Han Zheng, the city will undoubtedly become a world leader in business, finance, shipping and trade.

“Shanghai has transformed into a modern metropolitan city from one that was traditionally industrial and commerce-based,” said Mayor Zheng. “Looking to the future, we plan to build the city into a market with the capacity to allocate resources to the world.

“In order to do so, we must insist on building a market driven by innovation, and developed strategically.”

Asian Shares Increase as Eurozone Meetings Continue

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Asian shares saw a dramatic increase following this weekend’s meetings in Europe, which resulted in “good progress.” According to European finance ministers, the Eurozone plans to boost its $610 billion rescue fund in an effort to draw investors and convince markets that it is indeed capable of protecting floundering countries such as Italy and Greece.

Few real details were released after the meetings, though. Investors have continued to focus on the yen, which has reached a record post-war high of 75.78 against the dollar. As a result, Japanese finance minister Jun Azumi has called for “decisive steps” to slow the currency’s dramatic rise, amid concerns that the yen will hinder the country’s export market.

Hong Kong and Shanghai both climbed this week as well, as improved manufacturing data was released from China, but Europe’s crisis does not seem to have slowed. Debates are still common as the Eurozone struggles to find a solution for the economic issue without further provoking its richer nations, such as Germany, who have placed their limit after repeatedly bailing out the region’s weaker members.

“The mood of trading is generally optimistic that Eurozone policy makers will announce significant measures on Wednesday to bolster the bailout fund and resolve Greece’s debt crisis, while also supporting the region’s banks,” explained Stan Shamu of IG Markets.

Asian Markets Take Hit as Recession Worsens

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Though the debt crisis has struck the U.S. and EU with fervor, Asian markets have seen some major hits recently as well. The selloff is a result of global recession concerns, as well as worries regarding the financial fragility and cash crunch.

“The way markets are trading, people are anticipating some kind of falling off the cliff,” said Wendy Liu, head of China research for Royal Bank of Scotland. “These valuations don’t come every year.”

Hong Kong’s Hang Seng Index has fallen 23% over the past year, which includes a 12% drop just this month. The MSCI AC Asia ex Japan Index, which tracks all markets throughout Asia, has seen a decrease of 24% this year.

Despite the drawbacks, the Asian economies have recorded solid growth. Until quite recently, central banks were raising interest rates in an effort to lessen inflation.

According to Markus Rosgen, head of Asia Pacific Equity Strategy at Citigroup in Hong Kon, “Markets in Asia are telling you there is going to be global recession.” He added that stocks are pricing in an approximately 33% drop in corporate earnings.

Ewen Cameron Watt of BlackRock backed this, stating “The degree of selloff in emerging-market debt and equities and currencies suggest there is something more than a concern about slowing economies at play here.”

Modernizing China, One Small Business at a Time

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Western companies have become increasingly more attracted to China’s consumer market, despite the major commitment needed in order to become truly involved. According to one observer,  entering the Chinese market is no longer a simple feat.

Once, China would jump at an opportunity with a Western brand. Today, however, the country’s coastal cities are bursting with investment and equity firms, as well as numerous other western businesses. Major competition and the increase of prices in the sector are likely to discourage newcomers.

There are a few suggestions. First, he recommends selling a product that is actually needed by the Chinese. Jokingly, he said a toaster would not make great business, as the Chinese “don’t like to eat hard things.”

Second, he said, is checking that the product is acceptable to the Chinese market. If not, be sure to modify it to fit the requirements.

Lastly, it has been suggested studying the domestic products that have already entered the market. He added that there may be “established players” in the market already, and Western businesses will need a strategy to compete with them.

Last year, some predicted an increase of small Western businesses in China. When asked by the BusinessNewsDaily, he said: “There is significant intrinsic demand built up in the 1.3 billion population of China, which will allow creative entrepreneurs plenty of opportunities to expand overseas in 2011 and beyond. Small businesses have the advantage of being nimble and able to seize even the slightest niche markets by introducing foreign products of unique distinction. The same goods that are well received by Americans are often welcomed by the Chinese, which means there will be many repeats of historically successful product lines. After all, both sides have more similarities than differences, and we can expect further convergence in the coming years.”

Asian Stocks Fall as World Concern Heightens

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Asian stocks have dropped, deepening the hole of the regional benchmark index’s biggest quarterly deterioration in over two years.

Sony Corp fell 6.2% in Tokyo, reaching its lowest price in 24 years, while Toyota Motor Corp, the largest carmaker in the world, fell 2% as well. Building materials, suppliers and mining companies have also seen significant losses.

“The U.S. is not falling into recession, but it’s definitely slowing down,” said Diane Lin of Pengana Capital in Sydney. “We might face more risks, particularly in a market that hasn’t had enough of a correction.”

In Tokyo, the MSCI Asia Pacific Index fell 2.8%, hitting 109.99., just before the meeting with the EU finance ministers. Nearly seven stocks fell for each that rose in the measure, and every one of the ten industry groups weakened.

The world’s concern increases as the gauge drops more than 20%, the European debt crisis worsens and the U.S. economic growth recedes.

Asean Fund Aims to Boost Regional Economic Integration

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In an effort to reduce, if not close, the gap between the dynamic region and major wealthy economies, nations throughout South-East Asia have combined resources to launch a fund of almost $500 million to build infrastructure.

According to finance ministers of Asean, the fund will support the building of roads, railways and other public projects, reducing the need for foreign assistance, and boosting regional economic integration with hopes of its completion by 2015.

Surin Pitsuwan, Asean secretary-general, said “Our community is now being built with speed. This is a milestone. The time for donations, the time for just gifts, is over. We have to be very innovative, we have to be very collaborative in our approach.”

The region has its fair share of famous buildings and businesses, and has seen impressive growth rates, but it lacks in access to major highways, railways, clean water and electricity.

Based in Malaysia, the Asean Infrastructure Fund will initiate with $485.2 million, with hopes of financing six projects every year. The fund predicts that by 2020, it will offer $4 billion in loans, and will be worth a total of $13 billion.

Countries such as China, Japan and South Korea have shown interest in joining the fund, but the region intends to keep the project internal, at least for now.