1 Asian Banks and the coming credit crunch (Matein
Khalid in Khaleej Times) The smoke signals from the world's central bank define
my macro angst. Take India, the jewel in my short-sale crown. I find it amazing
how many investors are still bullish on Indian shares and bank credit even
though the Reserve Bank of India has now sworn to clean the manner in which
banks classify, fudge and hide non-performing loans.
In effect, this means Dr Raghuram Rajan will force
bank chief executives to boost provisioning rates on "restructured
loans" with peekaboo accounting. This means Indian banking faces a
regulatory/earnings shock of (forgive the tired awful cliché!) Himalayan
dimensions. At the very least, this means curtain Indian bank shares will be a
license to make money on the short side as earnings growth expectations are
crushed on Dalal Street.
I had grown nervous on Japan at 20,000 Nikkei and
¥123. However, I am not comfortable
even at 19,000 Nikkei and ¥121 since Bank
of Japan Governor Kuroda will do squat on more easing. The next big Bank of
Japan move could happen in April when the yen could well be trading at ¥115 to
the US dollar. This means there is a bloodbath in the near future for leveraged
investors in Japanese equities.
The 40 per cent plunge in the Turkish lira and
Malaysian ringgit bas taught Gulf bankers, investors and sovereign wealth funds
a hard lesson against investing in economies with poor governance, leveraged
banking systems, corrupt political elites and hyper-volatile hot money capital
flows.
Now higher US rates are the kiss of death for the
Indonesian rupiah, borrowing costs in US dollar will at least triple in 2016, a
financial Black Death for leveraged corporates from Bombay to Jakarta, Istanbul
to Kuala Lumpur, already devastated by mediocre global growth and a shrinkage
in world trade. So 14 times earnings means 2015 is the year of living
dangerously in the Jakarta.
2 Saudi Arabia elects female local councillors (Ian
Black in The Guardian) Saudi Arabia has elected its first female local
councillors in a historic step for a country where women are banned from
driving and face routine discrimination.
Results from Saturday’s municipal council elections
indicated there were about 17 female winners. These included four in Jeddah,
one near Mecca – home to Islam’s holiest site – and others in Tabuk, Ahsaa and
Qatif.
Rasha Hefzi, a prominent businesswoman who won a
seat in Jeddah, thanked all those who supported her campaign and trusted her,
pledging: “What we have started, we will continue.” Hefzi and other candidates
used social media to contact voters because of restrictions on women meeting
men and bans on both sexes using photographs.
Local elections were held in 2005 and 2011, but this
was the first time women were allowed to take part. The powers of municipal
councils are limited to advising local government and helping oversee budgets,
but the election has still been hailed by women activists as a crucial first
step towards achieving wider rights and broadening the understanding of civic
engagement.
No candidates addressed the broader issues of
democracy, human rights or the role of sharia law and punishments, which
attract so much attention abroad. Saudis who boycotted the poll dismissed it as
window dressing, arguing that real the power rests firmly with the royal
family, the religious establishment and male ministers.
For all the excitement, Saudi women are still banned
from driving and are required to cover themselves in public. They are subject
to other routine restrictions including the permission of a male guardian to
leave the country.
3 China’s football revolution (Bill Wilson on BBC) When
Chinese investors recently decided to acquire a 13% stake in Manchester City's
parent firm, it put the country's renewed interest in football firmly in the
spotlight. The world's second largest economy has never been a football
powerhouse, qualifying for just one World Cup.
Meanwhile, the population seems more interested in
NBA basketball than the sport known in the UK as "the people's game".
But over the past couple of years Chinese investors and firms have quietly been
acquiring stakes in football clubs in England, Spain, France, Holland and the
Czech Republic, while President Xi Jinping has professed a love of the game.
So why are the Chinese now snapping up stakes in
European clubs? Reasons include a national desire to look good on the world
stage, developing China's club football and national team, creating Chinese
football fan bases, and firms using clubs to build their commercial presence in
Europe.
Simon Chadwick, chair in sport business at Coventry
University Business School, says President Xi has come out as a big football
fan, and that by 2025 China wants to have a domestic sports industry worth
$850bn. Optimistic estimates put the current entire global sports economy at
$400bn.
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