Month: March 2014

China minting billionaires at ‘phenomenal’ rate

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

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China`s prominence on Forbes magazine`s hotly watched annual rich list is one of the strongest trends this year, editor Randall Lane told CNBC on Tuesday.

China registered a record 152 billionaires in the 2014 list, up near 25 percent from 122 last year, while Hong Kong clocked up 45, said Forbes.

“That`s probably the biggest trend coming out of here… we had a little over 30 newcomers just from mainland China,” said Lane.

(Read more: China`s billionaires got way richer in past year )

“Twenty years ago it was pretty much zero so the growth out of China has been phenomenal and it`s increasing every year,” he added.

While recent growth in the Chinese economy has been slower than in previous decades, it continues to outpace the US economy, posting growth of 7.7 percent in 2013, over three times that of the US.

Wang Jianlin, China`s richest person, ranks 64th on Forbes` global rich list with a net worth of USD 15.1 billion.

He owns 75 department stores, 85 shopping plazas and 51 five star hotels. He bought US movie theater chain AMC Theatres in 2013, and listed it on the New York Stock Exchange in December. The billionaire also flew in celebrities Leonardo DiCaprio and John Travolta to help launch an USD 8 billion mini-Hollywood in Qingdao in September, Forbes reported.

Ma Huatent, CEO of publicly traded internet company Tencent Holdings, is China`s second richest person and ranks 80th overall with a net worth of USD 13.4 billion.

Furthermore, a notable newcomer was the youngest billionaire Perenna Kei at age 24, from Hong Kong.

(Read more: China has a word for its crass new rich )

But despite China`s surging number of billionaires, the US remained home to the largest number of billionaires at 492, thanks to a strong performance in its stock market and a continued boom in its tech industry.

Meanwhile, Russia has the third largest number of billionaires at 111.

Regionally, Europe boasted the most billionaires outside of the U.S., with 468 billionaires, while Asia-Pacific was close behind with 444.

Women at the top

Another key trend to emerge from Forbes` research was that a record number of female billionaires made the list this year. The list included 172 women, up from 138 in 2013.

The US had the most female billionaires, with 58, followed by Germany with 16 and Brazil with 14. Christy Walton – the widow of John T. Walton, one of the sons of Sam Walton, founder of Wal-Mart -ranked 9th on Forbes` billionaire rankings, the richest women on the list, with a net worth of USD 36.7 billion.

Bill Gates, co-founder of Microsoft, regained his crown as the richest person in the world after a four year hiatus. Gates has topped the list for 15 out of the past 20 years. He has a net worth of USD 76 billion, up from USD 67 billion in 2013.

(Read more: Rich Chinese continue to flee China )

Gates overtook telecom mogul Carlos Slim Helu, who held the top position for the past four years, but lost USD 1 billion of his worth and is now valued at USD 72 billion.

The biggest net worth gainer was Facebook`s Mark Zuckerberg (ranked number 21), who more than doubled his fortune from USD 13.3 billion in 2013 to USD 28.5 billion as shares of his social network soared. WhatsApp founders Jan Koum and Brian Acton joined the billionaires list for the first time following their USD 19 billion deal with Facebook.

Forbes` 28th annual ranking of the world`s richest saw a record number of billionaires at 1,645, up from 1,426 in 2013, with an average net worth of USD 4.7 billion, up from USD 4.2 billion last year. 1,080 members were self-made, 207 inherited their wealth and another 352 inherited at least a portion of it but are still growing it.

– 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

Why Japan shares can’t get fresh traction

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

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Japan`s latest batch of economic data and corporate earnings paint a slowly brightening picture, but shares can`t seem to gain any traction.

“The valuations are very modest in our view and if you look at corporate balance sheets, (they) are very, very healthy in Japan. Anything from a bottom up perspective is looking fairly positive,” said Amir Anvarzadeh, director of Japan equities at BGC Securities.

“But unfortunately right now, we`re not really in a bottom up kind of market,” he added. “Unfortunately the market is very macro driven.”

On the surface, the macro-economic data appear positive, with a strong start to the year. Japan`s retail sales rose 4.4 percent in January from a year earlier, above analyst expectations for a 3.8 percent rise and marking a sixth straight month of gains.

Meanwhile, household spending rose 1.1 percent on year in January, well above expectations for a 0.2 percent gain, while industrial output rose 4 percent from a month earlier, also beating forecasts.

But why isn`t that enough to push up stocks? For one, analysts are warily watching for the planned increase to the consumption tax to eight percent from five percent in April, which is likely to dent corporate earnings and consumer spending. Many expect the Bank of Japan will step in with further easing measures afterward.

“There`s some fear of distortion coming from the tax hike where we`re seeing a front loading of consumption happening, particularly for big ticket items like cars and refrigerators,” Anvarzadeh told CNBC.

“Any earnings growth that we`re going to see in the current quarter is going to be seen as kind of flattered,” he said.

“What people really want to see is the quarter after. What kind of drop off are we going to see in end demand and how bad will it be? Until then, I think the jury is out on where the Nikkei is going to go in the short term,” he said. “The concerns are that the economic growth that we`ve seen, that the momentum is just not strong enough going past the sales tax hike and the BOJ would need to become more aggressive with the monetary policy.”

Others are concerned that Abenomics, or the around one-year-old plan from Japanese Prime Minister Shinzo Abe to kick-start Japan`s long-moribund economy, just isn`t living up to its hype.

After the stock market tacked on more than 50 percent last year, “people are sort of waiting for the substance to come on,” said Chong Yoon-Chou, investment director at Aberdeen Asset Manager. “There`s a lot of debate whether Abenomics is actually doing its trick other than quantitative easing.”

The “first arrow” of Abenomics was aggressive easing from the Bank of Japan, which weakened the yen. It was followed by a “second arrow” of ambitious government spending, but the “third arrow” of structural reforms remains elusive.

Chong is doubtful that the quantitative easing had much direct impact on the economy. While the yen weakness flattered corporate earnings, “the impact is actually not direct because Japanese corporates have already rebased their production elsewhere,” he told CNBC.

It`s possible the weaker yen didn`t even serve its traditional purpose of making Japan`s exports more competitive.

“A weaker currency hasn`t translated into the expected export gains,” with Japan`s exporters actually continuing to lose market share, Marcel Thieliant, an economist at Capital Economics, said in a note.

“Companies chose not to cut export prices in foreign currency terms, preferring to reap benefits in terms of surging yen revenues rather than higher volumes and a rising market share,” he said.

Another factor likely to limit the chances of a sustained demand pickup in Japan: raising workers` wages, a key plank of Abenomics, isn`t materializing, posing a “significant threat” to economic recovery, Thielant said.

To be sure, not all of the signs are worrying. Chong noted property prices are increasing.

“That usually is a gauge of animal spirits,” Chong said. “One can debate about the validity of Abenomics, but if they can get the animal spirits up in Japan, things can happen.”

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

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

Why market panic over Ukraine may be ‘short-term’

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

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The global market fallout sparked by escalating tensions in Ukraine is a “short-term phenomenon” that will blow over in a matter of days, said strategists, as Asian markets pared some of their recent losses on Tuesday.

“There has been some volatility in capital markets as a result of the political and military uncertainty in Ukraine, which have, naturally, exacerbated concerns about the country`s fundamental economic weaknesses. However, I fully expect this to be a short-term phenomenon,” Nigel Green, founder and chief executive of financial advisory firm deVere Group said.

“I believe that this tumble will be judged by history as a `bump in the road` as markets will recover quickly. I`m not worried that we are about to slump into another global recession as a consequence of the deepening crisis in Ukraine,” he added.

Green said as the situation regularizes, in whichever form that might take, investors are likely to classify the Ukraine-Russia stand-off as “a local issue.”

Asian markets began to show signs of stability on Tuesday, with Japan`s benchmark Nikkei  clawing 0.3 percent higher after Monday` 1.3 percent fall, while Hong Kong`s Hang Seng  edged up 0.4 percent following losses of 1.5 percent in the previous day.

Global markets were rattled on Monday following Russia`s military advance into Ukraine that prompted world leaders to call for sanctions on Moscow, including measures targeting banks and officials. President Obama said the US was examining economic and diplomatic steps to isolate Moscow, and he called on Congress to expedite assistance for Ukraine.

Uwe Parpart, head of research at Reorient Group agreed investor panic over escalating tensions in Ukraine would soon come to pass. While political rhetoric has been heating up, the risk of military conformation with the West is low and the crisis is likely to be politically resolved, he said.

“The rhetoric out of London and Washington really is just rhetoric, they have no capability or wherewithal to do anything about it. Additionally, the likelihood of war breaking out between two armies [Russia and Ukraine] that not so long ago was the same army is not very large,” Parpart said.

“This will be politically settled, and may take a while before stability returns, but I don`t see any significant longer-term impact on the global financial situation,” he said.

Another reason Ukraine will have a fleeting impact on global markets is that the country accounts for just 0.2 percent of global gross domestic product (GDP), said strategists.

“Let`s keep things in perspective. Ukraine had a 2012 GDP of $176 billion. Its economy is smaller than Greece, Portugal, or Ireland. It is smaller than the Czech Republic, Algeria, or Peru. So the direct impact on the global economy, even if Ukraine descended into civil war, would be minimal,” said Patrick Chovanec, managing director at Silvercrest Asset Management.

Parpart added even if Ukraine were to default on its debt, it would unlikely have a significant impact on global markets.

“Under the circumstances, that won`t be a huge surprise. You`re not talking about a very large economy,” he said.

Credit ratings agency Standard and Poor`s last week lowered Ukraine`s long-term rating from `CCC ` to `CCC` saying the political crisis had put the country`s ability to service its debt at risk and raised uncertainty over Russia providing promised aid.

-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

What to expect at China’s big pow wow next week

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

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With concerns over the stability of China`s financial system at the fore, all eyes will be on the meeting of the country`s parliament, the National People`s Congress, next week for insight into the government`s assessment of the economy and agenda for the coming year.

Beginning March 5, around 3,000 delegates will convene in the Great Hall of the People for a session that is expected to last around nine days.

The NPC is the highest organ of state power that meets yearly to approve policies, laws, the budget and significant personnel changes.

The two main issues to watch for will be the major economic targets for 2014 and whether authorities will walk the talk of reforms.

Premier Li Keqiang is set to deliver the key economic targets at the opening of the NPC next Wednesday. Although Beijing has toned down the importance of gross domestic product (GDP) growth, it remains the most important economic indicator to watch out, say economists.

The government is widely expected to maintain a 7.5 percent GDP target and 3.5 percent inflation target for 2014 to ensure expectations of stability.

“Reform action plans and its implementation will be the focus at NPC and afterwards. To ensure effective delivery of reform measures, Beijing will maintain growth targets at a comfortable range and will likely keep GDP, inflation and targets unchanged,” Qu Hongbin, co-head of Asian economics research at HSBC wrote in a report.

However, some believe the government may add some flexibility to the GDP growth target, by setting a “bottom line” for growth or saying “about” 7.5 percent.

What will the reforms focus on?

Aside from economic targets, the government will unveil further details on its reform initiative following last year`s Third Plenum meeting in November.

“We expect “reform, innovation and upgrading” to be the buzzwords at the NPC meeting,” strategists at Barclays wrote in a report.

The key policy priorities will be deepening reforms, mitigating financial risks and stabilizing growth, the bank said.

As such, tackling the country`s local government debt problem could be top of the agenda, say economists.

“We expect local governments will be legally allowed to run fiscal deficits to finance public projects and will be officially given the access to banks and capital markets during the NPC meeting,” Sylvia Sheng and Ting Lu, economists at Bank of America Merrill Lynch wrote in a report.

“These measures will provide China`s local governments a new source of long-term financing which could help local governments to replace short-term bank and trust loans with longer-duration bonds,” they added.

Other key target areas for reforms include the opening up the state-owned enterprise (SOE) sector, financial liberalization, regulating the shadow banking sector as well as tackling environmental issues as cities across China suffer hazardous pollution levels.

Announcements that are likely to draw market attention, according to Barclays, include the following: moves to allow private and foreign capital entry into services and state-controlled sectors, more free trade zones, measures to improve rural-urban integration and Hukou reform.

Qu of HSBC says judging by the government`s recent positive track record on carrying out reforms, he is optimistic on the implementation of reforms in the months to come.

“A quick review over the 60-point bold reform plan issued after the Third Plenum suggests that action plans over 31 of those have been announced already. These range from the reform of SOEs, the local implementation of the relaxing of the one-child policy…and many more. This recent progress, plus the presence of the Central Leading Group on Reform headed by President Xi, makes us optimistic on the delivery of reforms in the year ahead,” he said.

-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

Are we being complacent over the yuan’s decline?

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

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As China`s yuan heads toward its steepest ever weekly loss, some analysts told CNBC investors could be underestimating the importance of the move.

The tightly controlled currency has fallen 0.8 percent so far this week and is heading towards its biggest weekly fall on record, Reuters reported. Many have interpreted the move as a signal that Beijing is on the cusp of widening its trading band and taking a step towards liberalization.

(Read More: Yuan to topple dollar as top reserve currency: Survey )

“This is manufactured by the People`s Bank of China (PBOC), there`s no question about it,” Uwe Parpart, the head of research at Reorient Financial Markets, told CNBC.

Parpart told CNBC the Chinese government was deliberately calling attention to their currency ahead of the National People`s Conference in early March, where decisions will be firmed up on the reforms outlined in Third Plenum meeting in November.

“Some of this stuff is going to happen and we think there`s a pretty good chance that some time in the near future we will get a widening of the yuan band from 1 percent to 2 percent,” he said.

The currency is currently allowed to rise or fall by 1 percent in either direction from a level fixed against the dollar set by the PBOC.

But according to Richard Jerram, chief economist at Bank of Singapore, analysts could be underestimating the full extent of the drivers behind the recent weakness.

(Read More: Is China getting ready to widen the yuan`s band? )

“Nearly every commentator out there is reading this as a deliberate move by the People`s Bank of China to introduce two-way risk, and as a prelude to widening the trading band, but I think they are being complacent over the reasons for the move,” said Jerram.

“It could be that China is responding to the loss of some of its competitiveness as other Asian currencies weaken. If that is the case then it would suggest that the policy change signals some trouble in the region in terms of a growth problem,” he added.

Boris Schlossberg, managing director at BK Asset Management, voiced a similar view on CNBC Asia`s Cash Flow on Friday.

“Perhaps [the] more real reason [for the yuan`s recent slump] is the economy in China is not growing as fast, [and] they [the PBOC] would actually like to see the currency lower because they want to stimulate export demand as much as possible,” he said.

(Read More: Yuan as a World Currency? Getting There Fast )

The yuan opened at 6.1275 per dollar on Friday, dipping to a 10-month low of 6.1806 in morning Asian trade, below the PBOC`s midpoint for the fourth session in a row.

The move has attracted a lot of attention from analysts given that previously the yuan had always been perceived as a steady one-way bet.

The yuan rose roughly 12 percent against the dollar from June 2010 until mid-January this year, and has since fallen around 2 percent.

(Read More: Does the yuan`s slide mark a major shift in policy? )

However, Paul Mackel, head of Asia currency research at HSBC, said he strongly disagreed that yuan weakness had anything to do with trying to revive China`s rate of growth.

“I don`t think this is a purposely designed weakness of the currency to actually try and support growth, I don`t think that`s the story,” said Paul Mackel, head of Asia currency research at HSBC.

“If we are actually going to be worried about Chinese growth, seeking a weaker currency is not the way to go about it. It`s going to use other policy tools to try and support the economy,” he said, referring to the use of monetary policy.

– 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

Highest-rated Oscars ever? See the numbers here

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

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The Academy Awards has started broadcasting, and while most of the attention is on the winners and losers and whether the host is funny, another closely watched aspect of Oscar night are the TV ratings for the often laboriously long ceremony.

The Oscars usually do pretty well with viewers, who can’t seem to get enough of the stars on display, whether they’re posing on the red carpet or tripping over steps on their way to collect their awards and thank their agents, third-grade drama coaches, co-stars, directors, producers and physical trainers.

But since we have to wait to see how the 86th Academy Awards turn out, we can take time now to look at Oscars’ past as a sort of prologue for Sunday night. Here are some numbers on telecasts from years gone by.

(Read more: In a multiscreen home, TV remains king)

The Numbers:

• The most-watched Oscar ceremony was in 1998. The telecast averaged 55.25 million viewers. That was the year “Titanic” took home best picture, and Billy Crystal hosted.

• The only other time an Oscar telecast averaged more than 50 million viewers was in 1983, when “Gandhi” won best picture. The ceremonies were hosted by a foursome of Liza Minnelli, Dudley Moore, Richard Pryor and Walter Matthau.

• The least-watched telecast since 1974 was in 2008, when “No Country for Old Men” took the best picture award and Jon Stewart was host. The show only averaged 32 million viewers.

• The Oscars averaged 40.4 million total viewers last year. Compare that to this year’s Super Bowl, which averaged 52.6 million females viewers alone.

• Speaking of women, 61.8 percent of viewers for last year’s Oscar’s telecast were female.

• Oscar telecasts are more for the upscale crowd. For 2013, the average household rating was 24, but in homes with incomes more than USD 100,000, the average rating was nearly 35.

• The top five spenders for advertisers over the past five years for Oscar telecasts have been Hyundai at USD 56.5 million, J.C. Penney at USD49.4 million, Coca-Cola USD41.4 million, American Express USD24.4 million and Samsung USD24 million.

• McDonald’s has advertised in every Oscar telecast since 1992; American Express in each since 1993; and Penney since 2002.

• The 2013 Oscar telecast produced a record USD 88.3 million in ad sales.

• The 2013 Oscars saw an increase of almost 200 percent over 2012 in terms of social media comments. There were more than 14 million social media comments, 13 million on the show day alone.

(Sources: TV ratings and demographics from Nielsen: ad figures from Kantar Media.)

—By CNBC’s Mark Koba. Follow him on Twitter @MarkKobaCNBC.

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

Hedge funds sit out the emerging market turmoil

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

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Hedge funds usually thrive on volatility, but many of them are sitting out the emerging market turmoil even as they become more positive on the segment.

Greater differentiation among global emerging markets, leading to less correlation within the asset class, should offer hedge funds more scope for returns as they typically make both long and short bets.

(Read more: 2014: The year hedge funds fight back)

“Hedge funds are still viewing emerging markets as a great opportunity now that it’s no longer moving in synch with other markets,” said Nicolas Campiche, chief executive officer for alternative investments at Swiss private bank Pictet.

But he added, “We’re very picky,” with most of the exposure through macro managers.

(Read more: These big hedge funds got crushed in January)

Many hedge fund managers are keeping their exposure to the segment relatively low. Indeed, they increasingly say they are “under-invested” in emerging markets – or that they believe their risk position should be increased if they were aligned with their sentiment, according to a survey by Societe Generale, which found this described about 42 percent of the hedge-fund clients surveyed.

The problem may be that emerging markets simply aren’t developed enough for hedge funds’ strategies.

(Read more: Coming soon to a theater near you: Hedge funds—the movie)

“Most hedge funds in emerging markets tend to be long only. I don’t want to pay 2/20 for that,” Campiche told CNBC, referring to the typical hedge fund fee structure of 2 percent of assets invested and 20 percent of returns. Getting emerging market exposure via equity funds would be cheaper, he said.

Others also cited the limitations affecting hedge funds’ investments in emerging markets.

“Running a true long-short in many emerging markets is difficult,” said Misha Graboi, a portfolio manager for Pacific Alternative Asset Management Co., or Paamco, a fund of hedge fund firm.

“In many emerging markets, either there are outright prohibitions on shorting or getting the liquidity or the shorting costs are prohibitively high,” Graboi said.

(Read more: And the world’s most successful hedge fund manager is…)

“Sometimes they end up just shorting an index and the problem of shorting the index in emerging markets is that they tend to be dominated by one industry or even one company,” he added. “Long some stocks and short the index would be an explicit sector bet in some emerging markets.”

As an example, he cited Samsung Electronics’ dominance of South Korea’s stock market. Samsung Electronics is the Korean stock market’s biggest capitalization stock and it has an around 25 percent weight in the benchmark Kospi index. Samsung and Hyundai Motor together account for about 21 percent of the benchmark Kospi index’s total market capitalisation.

He noted Paamco has limited exposure to emerging markets, mostly through pan-Asia managers, and it prefers investing in developed markets.

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1 

http://www.cnbc.com/id/101402523

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