Is it Right: More Money Means More Health Problems in Asia?

Flavored juice drinks sit on a shelf in a grocery store in Manila. (Bloomberg)

According to The Wall Street Journal, MANILA — Economies in Southeast Asia are not the only things growing in the region. Waistlines are too – and that has doctors and health experts worried about the strains a clutch of new health problems could put on many countries still in the process of developing.

Rapid economic growth has created new and expanding middles classes in places like Indonesia, the Philippines and Vietnam. But new affluence is also driving up the rate of “life-style” diseases, including hypertension, cancer, diabetes and chronic respiratory illness, say doctors.

Together, those diseases account for 80% of the deaths in Asia, but health experts say it need not be that way – most could be addressed by people simply changing the way they eat and live.

“We must have behavior change,” Shin Young-soo, the World Health Organization’s regional director for the Western Pacific, said during a recent health summit in Manila.

As regional incomes improve, people have more money to spend on fast food and processed snacks. In recent years, demand for meat and dairy has also risen dramatically in many of Southeast Asia’s emerging economies.

But changes in diets combined with lack of exercise has made Asians more prone to diabetes than their counterparts in the West, said Dr. Shin, one of nearly 200 health and development experts attending a week-long gathering here aimed at discussing non-communicable diseases and finding way to combat them.

Read more

 

Is it Revival time for the Asian Junk-Bond Markets?

Source: Bloomberg

Source: Bloomberg

According to The Wall Street Journal, risky bonds are making a comeback in Asia after falling out of favor over the summer, as recent developments in the U.S. have prompted investors to embrace increased risk in exchange for higher yields.

Buoyed by the U.S. Federal Reserve’s $85 billion-a-month bond-buying program, investors in Asia took advantage of high-yield, or “junk,” bond issues early this year to increase returns against an otherwise low-interest backdrop. In the first five months alone, new junk bonds issued in Asia outside of Japan totaled $22.4 billion, exceeding the $15.3 billion total for all of last year. But indications from the Fed in late May that it could dial back its stimulus spending earlier than expected damped enthusiasm for the risky securities.

The Fed didn’t announce a pullback in spending after policy meeting last month, however, leading investors to expect at least a brief reprieve.

“The market has returned to a more risk-on mode since early September,” said Job Campbell, Hong Kong-based senior portfolio manager at Income Partners Asset Management, a $1.4 billion fixed-income manager. The fund has recently bought high-yield bonds issued by Chinese property firms including Yuzhou Properties Co. and Greentown China Holdings Ltd. 3900.HK -1.15% , he said.

Investors who were cautiously dipping their toes back into higher-yield bonds after the mid-September decision may have gotten more bullish since the U.S. budget and debt-ceiling standoff this month, the resolution of which has provided more certainty that the Fed will continue its stimulus effort at least until early next year, when the next showdown could occur.

Read more

Cons of deregulating finance

Cons of deregulating finance

It is speculated that China is set to accelerate the deregulation of its financial system. For years, China has restricted the ability of its residents and foreign investors to pull and push their money in and out of the country.

While that may be illiberal, there was a sound reason for this restriction: Every emerging market that has scrapped these regulations has had a major financial crisis and subsequent trouble with growth.

The world can’t afford that to happen in China. China is too big to fail.

This issue came to the fore last year when the People’s Bank of China announced that it might “liberalize” its financial system in five to 10 years. The move was in stark contrast to a National Development and Reform Commission-World Bank report that put such a plan much further into the future.

That study cited the overwhelming evidence that shows, first, that dismantling cross-border financial regulations is not associated with growth and, second, that it tends to cause banking crises in economies with fledgling financial systems.

Read more

Fed Comments Weigh on Asian Shares

Fed Comments Weigh on Asian Shares

Asian markets were spooked Wednesday by fears the U.S. may withdraw its bond-buying program, with stocks in Tokyo slumping 4% to record their biggest decline in over a month.

A sharply higher yen also fueled the drop in Japanese shares with exporters suffering heavily. The yen strengthened to ¥96.93 to the dollar in late Asian trade, compared with ¥97.73 late Tuesday in New York.

The selloff was sparked after two Federal Reserve officials said the central bank could start to withdraw its $85 billion-a-month bond-buying program as early as September, reigniting debate over when the central bank will start to taper. The U.S. stimulus measures have been responsible for heavy buying in Asia earlier this year as global investors sought higher-yielding assets throughout the region.

“A lack of clarity over the tapering scenario seems to be hitting the greenback” versus the yen, said Tim Waterer, senior trader at CMC Markets in Sydney.

Read more

With few big deals, private equity moves to be Asia’s new banker

With few big deals, private equity moves to be Asia’s new banker

Aug 5 (Reuters) – In three years, global private equity firm KKR & Co has provided over $1.5 billion in loans to companies in India, a business traditionally handled by state-owned and private sector banks.

Encouraged by that success, KKR – which rose to prominence with its hostile $25 billion takeover of U.S. food and tobacco giant RJR Nabisco in 1989 – plans to expand the niche business in China and across Asia.

The move by private equity into lending comes at a time when buyout deals in Asia are few and far between and as traditional banks retreat. Apollo Global Management, KKR and Olympus Capital are raising credit funds as they seek out alternative sources of income. At least $6.6 billion is being raised by 12 funds for investment in Asia, according to Private Equity International and Thomson Reuters data.

Read more

Credit squeeze in Asia now worst since financial crisis

Credit squeeze in Asia now worst since financial crisis

Bank lending conditions in emerging Asian nations have tightened the most since the global financial crisis, according to the latest survey from the Institute of International Finance (IIF).

The report shows the region`s headline index falling to a reading of 45.7, below the key 50-level that divides easing and tightening territory and its lowest level since the beginning of the survey in 2009.

Asia also showed the tightest lending conditions of global emerging regions.

The survey questioned 133 banks across Latin America, Europe, Asia and the Middle East- Africa region and Asia`s headline figure of 45.7 was the lowest. Latin America was second-worst at 47.6 while Africa and the Middle East had the best result at 52.9.

Read more

Hong Kong banks’ marketing of FX-linked structured products sparks concern

Hong Kong banks’ marketing of FX-linked structured products sparks concern

If you walk into a bank you may spot signs in the teller queue displaying attractive deposit rates in a foreign currency.

If you ask about them, you’ll be whisked off to a special room to talk to an investment adviser, who will introduce you to an investment that is commonly sold in Hong Kong: the currency-linked deposit.

Make no mistake, these instruments are big business. A 2012 study by the Securities and Futures Commission found that currency-linked instruments comprised 65 per cent of all structured products sold to the public. That translates into annual sales of about HK$380 billion – and that excludes sales by banks.

Read mroe

Former Mizuho Credit Trading Head Plans Own Hong Kong Hedge Fund

Former Mizuho Credit Trading Head Plans Own Hong Kong Hedge Fund

Jeffrey Yap, former head of Asian fixed-income trading at a unit of Mizuho Financial Group Inc. (8411), plans to start his own credit-focused hedge fund in Hong Kong.

Yap, who worked for Mizuho Securities Asia Ltd. until May, will be joined at Ark One Ltd. by two other founding partners he declined to identify. They plan to open the fund to investors in mid-August, pending license approval by the city’s Securities and Futures Commission, he said in an interview in Hong Kong yesterday.

Yap is the latest credit trader to start a fund amid record debt sales in the region spurred by lowinterest rates and yield premiums for risky borrowers, combined with regulatory relaxation. Equity hedge funds still account for 71 percent of regional industry assets, compared to 27 percent globally, according to Chicago-based Hedge Fund Research Inc.

Read more

Asia Private Equity Weekly News, July 29, 2013

Asia Private Equity Weekly News, July 29, 2013

MALAYSIA’S STATE pension fund will invest half a billion euros ($660 million) in industrial property in Germany and office space in France, according to sources familiar with the deals, signalling growing appetite for high-yielding property assets as Europe’s main economies show signs of recovery.

MEIJI YASUDA Life Insurance Co said it has agreed to buy a 15 percent stake in Thai Life Insurance Co as Japanese insurers step up their presence in Southeast Asia.

CHINA’S $500 billion sovereign wealth fund, China Investment Corp, returned to profit growth in 2012, citing growing traction in the global recovery at the end of the year and a steady improvement in risk asset prices.

Read more

Social enterprise in Asia and Europe – learning from each other

Social enterprise in Asia and Europe – learning from each other

Earlier this month, over two days in Berlin, more than 30 social entrepreneurs from more than 20 countries in Asia and Europe met to discuss how to develop a better policy context for social enterprises in the two continents. The gathering was organised by the British Counciland the Asia Europe Foundation, and sponsored by the government of Japan.

The two days comprised a visit to Berlin social enterprises – Ruby Cupand Fairnopoly – and discussion with their founders about how they operate and are funded; briefings from leading social entrepreneurs such as Penny Newman from the UK and Muhammad Ali of BRAC; and a series of seminars and workshops, aimed at finding a consensus between participants about how policy can support social enterprise in both Asia and Europe.

Read more