Month: December 2013

BOJ talk spices up Japan markets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Talk of further monetary stimulus from the Bank of Japan helped push the yen to a six-month low and lifted the Nikkei  to a six-month high on Tuesday, and the move in Japanese assets may have further to run, analysts say.

Comments made by Bank of Japan (BOJ) governor Haruhiko Kuroda on Monday fueled speculation of further easing, after he told participants at a conference “we are ready to adjust monetary policy without hesitation if risks materialize.”

The dollar-yen hit a six-month high of 103.37 per dollar in Asia on Tuesday, while stocks powered to their highest level since 2007 to close at 15,749 on Tuesday. Better-than-expected US economic data increased expectations of a near-term tapering of the Federal Reserve`s asset-purchase program also helping to boost the dollar-yen.

Japan`s domestic currency and its stock market are closely correlated as a weaker currency is good news for the nation`s exporters.

Analysts said easing expectations could be realized in the next six months.

“The BOJ will have to act when demand and prices are weakening again. Both domestic demand and price trends have likely reached a plateau, so any deterioration of business conditions, either during the tax hike next spring or in the international environment, will trigger further quantitative easing by the BOJ,” said Martin Schulz, a senior economist with the Fujitsu Research Institute, adding that he expected the bank to expand its stimulus program in May.

Meanwhile technical analysts told CNBC they also saw Japan`s stock market powering higher.

“The Nikkei is going to be heading north quite strongly,” technical analyst Ray Barros, CEO of Ray Barros Trading Group told CNBC. “We`ve just taken out the upside resistance level of 15,000. If we can take that out I`d be looking for 17,000,” he added.

However, other analysts said they were less convinced that the Nikkei`s recent winning streak was here to stay.

Mark Konyn, CEO of Cathay Conning Asset Management, told CNBC Asia`s Cash Flow he expected the momentum behind Japanese stocks to continue in the short term, but in the absence of a real improvement in inflation expectations, future gains would likely be limited.

“In the short term there is probably further to run particularly with a weaker yen and slightly improving numbers on the inflation front, but beyond that we are going to need to see a real adjustment in terms of inflation expectations which we haven`t seen yet,” said Konyn.

Japan`s financial markets have seen a turnaround this year, ever since Prime Minister Shinzo Abe launched his ambitious late last year to haul the economy out of an over a decade long period of deflation. His plan, which involves aggressive easing, fiscal stimulus and structural reform has helped power stocks over 51 percent higher year-to-date, while the yen has weakened around 19 percent against the dollar.

But Konyn added that investors needed to remember that the Bank of Japan did not have limitless means to prop up the economy.

“We`re going to need to see wage inflation over the next six months, because if you look at the Bank of Japan and its ability to keep on expanding its balance sheet, it`s going to run out of powder within the next six to seven months before it reaches limits where it isn`t able to go any further, so we really need to see those expectations change,” he added.

Meanwhile David Roche, global strategist at Independent Strategy, also told CNBC he was also concerned about Abenomics working out in the long term.

“It [Abenomics] will run out of steam by next May because it won`t deliver on supply side reforms,” he said.

“Without the market reforms, there is no miracle in Japan and the market will wake up to this when the consumer has finished spending ahead of the consumer tax price increase in May and then the whole thing will fall back,” he added, referring to the upcoming hike in sales tax to 8 percent from 5 percent scheduled for April.

– By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

World’s most big-hearted nation: The United States

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The United States is the world`s most generous nation, according to a global index of giving, as a higher proportion of Americans helped a stranger than any other country in the world.

The 2013 World Giving Index – published annually by international nonprofit organization Charities Aid Foundation – looks at three measures: monetary giving, volunteering and helping of strangers in a typical month. The survey, published on Tuesday, was carried out in 2012 across 135 countries.

The US made a significant improvement in charitable behavior, rising to the top position from fifth place last year.

Meanwhile, three countries tied for second place this year: Canada, Myanmar, and New Zealand. Australia, which was the highest-ranked nation in both the 2010 and 2012 reports, dropped to the seventh position.

Rounding out the bottom of the World Giving Index was Greece, reflecting the sluggish economic recovery in the indebted euro zone nation.

Overall, the index found that the world had become a more generous place, with the percentage of people donating money, volunteering time, and helping a stranger growing in 2012 compared with 2011.

The average proportion of people helping strangers across the countries surveyed in 2012 was 47 percent, up 2.4 percentage points from 2011.

The next highest increase was in volunteering time, up 1.4 percentage points, at 19.7 percent.

And finally, the number of people donating money was 28.5 percent, an increase of 1.3 percentage points.

While levels of giving remain below those recorded five years ago, emerging economies are surging ahead in charitable donations. In India, for example, 244 million people give money to charity in a typical month, up from 163 million in the previous year.

According to the survey findings, there are gender differences when it comes to giving patterns.

Women are more likely to donate money to charity than men – a global trend that has been in place since 2008. This comes despite a reported worsening of the imbalance between men and women in terms of global employment.

On average, 28.7 percent of women globally give to charity in a typical month, 0.9 percentage points ahead of the equivalent figure for men.

-By CNBC`s Ansuya Harjani; Follow her on Twitter @Ansuya_H

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Can Japan’s answer to WhatsApp take on the world?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Free messaging service Line has taken Japan by storm over the past few years, but can the company, which is posing a very real threat to the hugely popular WhatsApp, continue to expand at such a rapid pace?

Last week, Line, a subsidiary of South Korea`s Naver Corp, reported its global user base had surged to 300 million, up from 150 million in April, and only 50 million users behind WhatsApp.

Fans say the app`s cutesy stickers, often depicting baby animals and oversized emoticons, together with its games, are central to its appeal.

According to 30-year old Hiroko Yamakawa, who lives in Tokyo, everyone she knows in Japan is using the app, even her parents.

“I use it so much and it has now become essential to my daily life. I use this tool to communicate with my friends, family, colleagues… everyone,” she said.

“I like it because the stickers are so good they express different emotions precisely, and it has sense of humor. I even sometimes only use the stickers to express my feelings,” she added.

Line says 80 percent of its users are now based outside of Japan where it has 50 million users. In Southeast Asia it`s already popular in Thailand, the Philippines, Indonesia and India. The company has also ventured into Western Europe and Turkey, and is popular in Hispanic countries including Spain and Mexico.

However, its user base is still outnumbered by WhatsApp in many countries. For instance, Line has 13 million users in India, in contrast to WhatsApp`s 25 million, but it claims to have gained its 10 million in just three months, a statistic likely to the nerves of its competitors.

Its exponential rate of growth is astonishing. It took the firm 19 months to generate 100 million users, but it added another 100 in the next six months after that, and another 100 million again over the following four months, Line said.

There is no doubt that Line has enjoyed huge success in Japan and other global markets, but analysts told CNBC the firm could face challenges moving into markets where its brand presence is not as strong as its competitors.

“The main risk [to Line] is through the competition, from a growth perspective,” Jiong Shao, regional head of internet research, at Macquarie Securities, told CNBC.

“If you are dominant in Japan, fine, but in order to grow further you may have to go to the Middle East or Indonesia. In these types of markets you are competing with either the entrenched guys or the other players,” he said.

Gaining traction in a market where the brand is relatively unknown can be an issue for free messaging service providers, as they rely so heavily on `word-of-mouth,` analysts told CNBC.

Neo Sijin, a 23-year old student from Singapore, told CNBC she had downloaded Line but never ended up using it.

“I was attracted to Line because they had really cool stickers, and like Twitter, it allows you to update your statuses. But I soon got bored of it because I realized that no one uses Line and everyone is on WhatsApp,” she said.

Macquarie`s Shao said breaking into completely new markets could prove a challenge for Line, though he noted that it would be a challenge for every player in the space.

“If you don`t compete as well, for whatever reason – it could be that you are not spending as much marketing dollars or you are not targeting the right users – that`s the risk from the growth forecast perspective. All the new competitors want these same markets just as badly as Line does,” he added.

But Shao pointed out that free messaging providers like Line and China`s WeChat have an edge over WhatsApp because their strategies have more room for growth from a monetization standpoint.

Line makes most of its money through selling its stickers and games, earning around  USD 10 million a month from sticker sales, while WhatsApp`s main source of revenue is derived from its initial one-off charge to download the application.

“Line and WeChat and all these other players have formed a new path to prosperity. They have used the messaging as the glue and have built that out into a social network. Now Line makes most its money from games and who know what`s next?” he added.

Line reported third-quarter gross revenue of  USD 165 million, up 50 percent on the previous quarter. The company is rumored to be considering an IPO worth $10 billion, but the rumors have not been confirmed, Reuters reported last month.

–By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Which countries are the most and least corrupt?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The bloody civil war in Syria is having yet another impact: The nation is now considered one of the most corrupt in the world, according to newly released data from the anti-corruption group Transparency International.

The organization`s annual “Corruption Perceptions Index,” first published in 1995, is one of the most closely watched barometers of the issue. The group surveyed experts on public sector corruption in 177 countries, grading each nation on a scale of zero to 100, with zero being “highly corrupt” and 100 being “very clean.”

Syria has never been considered particularly virtuous, but growing attention to the business dealings of President Bashar al-Assad and his associates helped its score plunge to 17 from 26 in 2012. The country now ranks near the bottom-tied with Turkmenistan and Uzbekistan for 168th place. It ranked 144th last year. 

But no nation has a monopoly on corruption, according to the study, which found that 70 percent of the countries scored 50 or below.

“The `Corruption Perceptions Index 2013` demonstrates that all countries still face the threat of corruption at all levels of government, from the issuing of local permits to the enforcement of laws and regulations,” Huguette Labelle, chair of Transparency International, said in a statement.

America`s ranking

The US turned in a mediocre performance, according to the study. The world`s largest economy scored 73 in this year`s index-identical to last year-which puts it in a tie with Uruguay for 19th place. Canada, Germany, Great Britain and Japan are among countries considered cleaner than the United States.

Transparency International and others have criticized the US for relatively lax controls on money laundering. Other issues considered include campaign finance and government contracting. The US has never finished higher than 14th (in 2000) and has come in as low as 24th (2011), though the organization says year-to-year comparisons can be misleading because of changes in methodology.

This year`s least-corrupt countries are Denmark and New Zealand, which both scored 91. The most corrupt are Afghanistan, North Korea and Somalia, each scoring a mere 8 out of 100 points.

Russia matched last year`s score of 28 points, finishing in a nine-way tie for 127th place. China improved by one point, for a score of 40, tying with Greece for 80th place.

That score is a marked improvement from a year ago, when Greece was in the depths of a financial crisis. The resulting reforms may have helped boost last year`s score of 36 points, but it is still perceived to be the most corrupt country in the euro zone, the study said.

Global corruption

An alarming number of countries worldwide are infected with toxic levels of corruption, with more than two-thirds of the 177 nations included having unacceptably high levels of “abuse of power, secret dealings and bribery,” according to a press release issued by Transparency International.

However, even top-performing nations struggle with undue influence exerted over government via backroom deals, campaign financing and awarding of government contracts.

Double-dealing, bribery and other forms of misconduct affect all categories and levels of government, ranging from a local municipal office issuing permits to a national government agency charged with enforcing laws and regulations. Controlling corruption in policing, justice systems and the activities of political parties is especially important, according to a press release that accompanied the results.

The index is based on data collected over the past two years by 13 different entities, including the Economist Intelligence Unit, the World Bank, and World Economic Forum. It rates each country examined on a scale from 0 (highly corrupt) to 100 (“very clean”).

Any rating below 50 is considered more corrupt than clean.

Five European Union member states earned scores below 50, including Italy, Greece, Romania, Slovakia and the Czech Republic.

Notwithstanding the occasional crack-smoking mayor, Canada also outranks the US with a score of 81.

Countries that improved their standings on the index this year include Myanmar, Brunei, Lesotho, Senegal, Nepal, Estonia and Latvia.

Others that have lost ground this year include high-ranking Australia, Slovenia and Iceland, as well as Spain, the Gambia, Guinea-Bissau, Libya, Mali, Eritrea, Mauritius, Yemen, Guatemala, Madagascar and Congo Republic.

The index, of course, is not without its limitations. It measures only about half of the 322 countries around the globe and focuses only on corruption in the public sector (government agencies, justice system, etc.).

Transparency International warns that countries ranking at the bottom of the index are not necessarily the most corrupt societies overall.

“Corruption remains notoriously difficult to investigate and prosecute,” and will likely stymie efforts to tackle international scourges such as extreme poverty, climate change, and economic crisis, Transparency International said in a press release.

The group calls on international bodies such as the G20 to “crack down on money laundering, make corporations more transparent and pursue the return of stolen assets.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Meet ‘Bitcoin Jesus’, a virtual currency millionaire

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The astronomical rise in the value of bitcoin – which has surged more than 8000 percent over the course of 2013 – has created a new breed of digital currency multi-millionaires.

34-year-old Roger Ver began investing in bitcoins in early 2011 – and made his first million from the virtual currency that same year – which saw prices skyrocket from around USD 0.30 to USD 32.00 before settling at USD 2. He bought his first bitcoins at around USD 1.

(Read more: Bitcoin`s surge due to `excess liquidity`: Faber )

With prices currently hovering above USD 1,000, his virtual wealth has since exploded. Ver says he doesn`t feel “richer” but that his wealth is “much more liquid than it would be in a normal bank account.”

Ver is one of hundreds of investors that have struck it big with bitcoin. But his association with the virtual currency extends far beyond just owning it.

He has helped seed about a dozen different businesses involving bitcoin and actively promotes the currency, earning him the nickname “Bitcoin Jesus”.

“I believe Peter Vessenes [chairman of the Bitcoin Foundation] gave me the title when we were at a BBQ together. I was explaining bitcoin to about two dozen high school kids. The kids were all enthralled by bitcoin, and hanging on my every word,” he said.

(Read more: Bitcoin breaks $1,000 barrier for the first time )

“Peter then commented that `it`s like you are a Bitcoin Jesus, and you have all your disciples around you`,” he added.

His venture MemoryDealers.com, a website that sells discounted computer parts, became the first mainstream business to accept Bitcoins as payment. It`s also worth noting that it was through this business that he made his first million, in dollar terms, back in 2003.

Ver`s nickname is as colorful as his past. Born and raised in Silicon Valley, he moved to Tokyo, Japan in 2005 after serving 10 months in federal prison for selling a product called “Pest Control Report 2000” – which he described as a firecracker used by farmers to keep animals away from their cornfields – on eBay.

Before that, in 2000, he tried his hand in politics, running for California State Assembly as a Libertarian, but lost.

Bitcoins are “incredibly cheap”

Bitcoin`s meteoric rise in the recent weeks has led to concerns that it may be a speculative bubble, but Ver says this is not a concern for him.

At USD 1,000, Ver regards Bitcoin as “incredibly cheap”, noting that if it gains in popularity as he anticipates, each Bitcoin would be worth tens or hundreds of thousands of dollars.

“The rapid price rise is due to people with money starting to realize how important of an invention Bitcoin is,” he said.

“Bitcoin will experience many bubbles along its way to improving the lives of everyone on the planet. I`m not concerned with the short-term price fluctuations,” he added.

Ver, who currently uses Bitcoins to pay factories in China to produce electronics components for his company, says he plans to use them “to promote the ideas of Voluntaryism and economic freedom” in the future.

(Read more: Regulators see value in Bitcoin, and investors hasten to agree )

This past weekend, Ver made the largest-ever bitcoin-based charitable donation. Ver donated 1000 bitcoins (over USD 1 millions) to the Foundation for Economic Education – an American organization that promotes the principles of laissez-faire economics, private property, and limited government to students.

-By CNBC`s Ansuya Harjani; Follow her on Twitter @Ansuya_H

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Get ready for 10 percent drop in 2014: Goldman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Goldman Sachs’ chief US strategist, in an appearance Monday on CNBC, downplayed fears of a bubble in equities and the effect an expected drawdown of the Federal Reserve’s economic stimulus program would have on the financial markets.

Forecasting next year’s economic picture, David Kostin told CNBC that the S&P 500 could hit 1,900 by the end of 2014 and the economy will continue to improve, but investors should be prepared for a 10 percent correction during the same time frame.

“Generally speaking, earnings are rising and the economy is getting better, and that’s a positive backdrop,” Kostin said on “Squawk on the Street.” “The second issue is the probability of a drawdown. The market is now up almost 50 percent in 18 months with no 10 percent correction. It’s basically been a straight shot up.”

Read more: Goldman most upbeat on Japan, Europe stocks in 2014

Kostin told CNBC that he predicted the market had a 67 percent probability of a correction next year, based on quantitative analysis and simulations. He expected an increase in earnings per share, and that multiples will remain around 15 times earnings, saying they could jump to 16 times earnings.

Reiterating Goldman’s position that the Federal Reserve would begin to taper its massive asset-purchasing program in March 2014, Kostin said low interest rates in the years after the financial crisis of 2008 allowed companies to shore up debts.

“Most companies have refinanced their debt, they’ve extended their maturities,” Kostin said. “They’ve taken advantage of this very, very low, unprecedented low interest rates environment to optimize their debt profile. That’s an important issue.”

Read more: Goldman predicts steep losses for gold in 2014

Kostin also told investors to look toward companies that use capital for stock buybacks and dividends, pointing to aerospace and defense company Northrop Grumman as an example. Kostin predicts a 9 percent increase in overall capital spending by companies next year, he said.

“In general companies that buy back shares over time, that’s a positive indication,” Kostin said.

In July, Kostin told CNBC the markets remained fairly priced, and that the single best trade was to sell bonds and buy stocks, in particular dividend payers. He said the outlook through December was “likely to be a story of improving economic activity,” and forecast that the S&P 500 could hit 1,750 by the end of the year.

The index closed trading last week at 1,805.

Read more: Markets fairly priced, equities only place to be: Goldman

—By CNBC’s Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from “Squawk on the Street”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China’s Nov factory activity sticks to steady pace: HSBC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

China’s manufacturing activity maintained its steady growth in November, a HSBC purchasing mangers’ index (PMI) released on Monday showed.

The final reading of the HSBC November PMI stood at 50.8, down a touch from 50.9 in October but better than a flash estimate of 50.4. A number above 50 is consistent with expansion in manufacturing activity while a number below this level indicates a contraction.

The final HSBC PMI reading comes just a day after China said its official PMI stood at 51.4 in November, unchanged from the previous month and above market expectations. Factory growth held at an 18-month high.

Read more: China’s new plan for growth—and less government

Recent economic news coming out of the world’s second biggest economy has defied expectations for a modest slowdown in the final months of the year.

“Our clients are going into 2014 much more optimistic,” Michael Klibaner, regional director and head of research, China at Jones Lang LaSalle, told CNBC after the release of the PMI data.

“The whole concern about the hard landing is off the table at this point, you don’t hear those words at all, which is such a big change from three or four months ago. I’m quite optimistic about 2014, we’re in a period of synchronized growth, from Japan to Europe to China,” he said.

Read more: China’s economic reforms: What you need to know

The HSBC PMI survey showed that a sub-index of new orders hit an eight-month high of 51.7 in November from 51.5 in October, although new export orders dipped to a three-month low.

— Follow us on Twitter:@CNBCWorld

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow