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China to build $242 billion high-speed railway from Beijing to Moscow. Amtrak to expand to Danville, IL

China to build $242 billion high-speed railway from Beijing to Moscow. Not to be outdone however, Amtrak in the U.S. has announced they are studying a line between Danville,Il and the Quad Cities in Northeastern Illinois. The study’s outcome could be known within a few

Fake bank in Nanjing swindles 200 million yuan from customers

Shanghai list Fake bank in Nanjing swindles 200 million yuan from customers In what may be one of the most lucrative forms of fakery to come out of China yet, a rural cooperative posing as a bank in Nanjing, Jiangsu province reportedly managed to collect

State of the Union: All is smooth sailing.

U.S. has 89 million full-time non-government employees, (Of the 89 million, we have with 9.5m in fast food and restaurants and 12 million in retail which are considering the working poor.) We have 109 million on welfare and a total of 150m receiving benefits. Whats

Speculators Looking for Havens from Slowing Growth are Piling Into Silver

Bloomberg Silver headed for a bull market in its best start to a year in more than three decades as the European Central Bank expanded economic stimulus measures, boosting demand for the metal as a store of value. Holdings in exchange-traded products backed by the

Chinese Yuan to Follow the Swiss Franc Higher

With China’s trade surplus up a staggering 45% in 2014 and FX reserves reaching $4 trillion, its time the Chinese authorities unlock the Dollar/Yuan Peg and allow the higher living standards to be realised in China. Otherwise, the population of China will start to realise

Kenya to have high speed rail before the U.S.

While China is building high speed rail networks around the world the U.S. can only offer Kenya a drone base. While Kenyan’s are about to get high speed rail, Americans find their roads and bridges collapsing around them. Want China Times China has signed a

General Nice Group buys largest Ore Mine in Greenland

General Nice Group, a Chinese private trading company, is taking over a large iron ore mine in Greenland, in what will be the first project of its kind by an Asian country in the Arctic region. A senior adviser to General Nice, who declined to

A -Share Earnings

Gerard DeBenedetto Former CEO at An Zhong (AZ) Investment Management Shanghai Any reputable bottom up analyst will tell you that earnings matter, whether looked at in aggregate, as a percentage of prior period, relative to earnings or price. The goal of these analysts is to

Chinese Economy goes over $10 trillion in 2014, Western Financial Press slams its slow growth of 7.4%

Dan Collins CMR The mainstream Western press has done a wonderful job in talking down China’s economic progress. After-all, When they get people taking about ghost cities in China then people aren’t talking about the ghost city/murder capitals in America’s rust belt. Case-in-point, Chinese GDP

China’s Trade Surplus rockets to $378 billion USD , up 45.9% in 2014

The U.S., U.K. and Saudi’s have been locked in an oil price war against Russia and Iran. The U.S. and U.K. have been using their captive global banks to short oil on the derivatives markets. The Saudi’s on their part, have refused to cut OPEC

Germany taking back more of its Gold.

Frankfurt (AFP) – The German central bank or Bundesbank said Monday that it stepped up the repatriation of its gold reserves from overseas storage last year. “The Bundesbank successfully continued and further stepped up its transfers of gold,” the central bank said in a statement.

Swiss Franc rockets…Hedgies taken out to the woodshed and shot

Europe is deflating….The Swiss banking established, normally always a pillar of private property and free capital movement have decided to stop pegging their currency which has been an affront against free markets. Hedge Funds piggy banking off government manipulation and mostly short the currency were

China’s stock market has increased $1.8 trillion in value in six months, Jim Chanos nowhere to be seen

China’s stock market swelled $1.8 trillion in value in six months as trading volumes hit records. The Shanghai Composite Index jumped 3.5 percent today for a gain of more than 60 percent since mid-July. Jim Chanos on the other hand after preaching for at least

Gold’s Relative Performance Since 2001 vs Major World Stock Markets

By Vronsky January 8, 2015 http://www.gold-eagle.com Unfortunately, very few investors in the world are cognizant of the relative performance of the gold price vis-à-vis the traditional world stock markets…as demonstrated by the chart below (2001 to 2014). It shows the percent gain or loss over

U.S. military’s Central Command hacked by ISIS and no one lost there job?

Are we really supposed to believe this? If these guys can hack Centcom can you imagine what the Russians or Chinese could do. Don’t worry, the government just happens to be ready with updated legislation to make it legal for private firms to spy on

China’s Operation Fox Hunt bags 680 economic criminals overseas

China Daily

A total of 680 fugitives suspected of economic crimes have been repatriated
to China as a result of the transnational “Fox Hunt” operation launched in July.

BEIJING – A total of 680 fugitives suspected of economic crimes have been
repatriated to China as a result of the transnational “Fox Hunt” operation
launched in July, the Ministry of Public Security said Thursday.

Of those seized, 117 had been at large for over a decade and one had been on the
run for 22 years, assistant public security minister Meng Qingfeng told a press
conference. Of the 680 suspects, 208 were involved in economic crimes involving
over 10 million yuan ($1.6 million), 74 of which were involved in cases involving
over 100 million yuan.

Overall, 390 turned themselves in, with 332 doing so after Oct 10, the date Chinese authorities announced that criminals that gave themselves up before the deadline
of Dec 1 would receive lighter punishment.

The fugitives had been hiding in 69 countries and regions, according to the ministry.
Chinese police filed coordinated investigation applications in over 90 countries and
regions, and more than 70 Chinese police teams were sent overseas to support the
operation.

China’s ongoing counter-corruption campaign aims to catch high-ranking “tigers”
and low-level “flies,” the terms assigned to officials depending on rank and
level of corruption.

The six month Fox Hunt 2014 operation, from July to Dec 31, aimed to to “block the
last route of retreat” for corrupt officials in line with the ongoing crackdown
on abuse of power.

“As long as people remain at large, the hunt will go on,” Meng said, stressing
there was “no safe haven” for suspects. The ministry urged those still evading
the authorities to hand themselves in, calling it “the only correct choice.”

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Pentagon concerned by China’s ever deadlier ICBMs

The United States has been concerned over China’s array of intercontinental ballistic missiles and ever-increasing military budget and presence, reports Huanqiu, website of the nationalistic tabloid Global Times.

China’s latest DF-31A ICBM has a range of 11,200 km and is able to attack key cities in the US. China’s ten DF-31 intercontinental ballistic missiles that have already been put into service can only hit the west coast of the US but are able to be launched within 30 minutes. The DF-31 and DF-41 missiles that China has been developing are both able to be released by multiple independently targetable re-entry vehicles (MIRVs), said the report.

What added to Pentagon’s concerns was China’s military budget, which has been growing over the past two decades and increased 5.7% to US$119.5 billion last year. The country’s growing military presence in the world and expanding economic and diplomatic interest are threatening its neighboring countries and US partners and allies, said the Pentagon.

The US has been troubled by China’s elusive military intentions, even after President Xi Jinping and his US counterpart Barack Obama met in June 2013 and agreed to improve bilateral relations, said the US government agency. China has made huge investments to modernize its strategic weapons but they are not exclusive to anti-access/area-denial capabilities The rejuvenation of its military is set to last until 049. also planned to rejuvenate its military until 2049.

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Chaos in Paris. (WARNING) Graphic Video:

Where is French Leadership? You bring them in, put them on welfare, they shoot
you in the head. Your country like most in Europe is dying. Wake up before its
too late. Demographics is destiny. In 100 years, France will be an Islamic state.
You have forsaken all your ancestors have left you.

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Chinese rail project breaks ground in California

A U.S. funded rail project as broken ground in California. Chinese firms
have been contracted to provide the high-speed rail technology to the
developing country, the United States. The United States has been
the victim of a thirty-year trade war using non-tarrif trade barriers and
currency manipulation which has resulted in the situation today where they
are now unable to build projects which are require manufactured and
engineered products.

From China Daily…
A groundbreaking ceremony for a California high-speed railway project
is a symbolic moment for the state, but there are significant obstacles
for the project, according to an urban planning expert.

Governor Jerry Brown helped break ground on a 29-mile segment of the
railway Tuesday, the first high-speed stretch attempted in the United States.

The groundbreaking was held at the future site of the high-speed train station
in downtown Fresno. The initial segment will run from Madera to Fresno.
“The high-speed rail links us from the past to the future; from the south to
the north,” Brown said.

US-based SunGroup USA said in October that it had teamed with China’s CNR Corp
and its Tangshan Railway unit for a pitch. The group said it could supply
California with up to 95 trains that can travel as fast as 220 mph.

By 2029, a trip from San Francisco to Los Angeles on the railway is expected
to take less than three hours. The line will eventually extend to Sacramento
and San Diego. Brown has vowed to see the train system built, and in a 2013
trade mission to Shanghai, he courted Chinese investment.

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China boasts world’s youngest billionaire

Twenty-four-year-old Perenna Kei obtained shares of her family businesses
through multiple companies registered in the Cayman Islands and Guernsey,
which helped her surpass Facebook co-founder Dustin Moskovitz as the
world’s youngest billionaire last year, China’s state newswire Xinhua
reports.

Kei inherited family wealth through trusts and multiple companies, according
to a report in the Nanjing-based Yangtse Evening News in November last year.
When Longan Property Holdings registered in the Cayman Islands on May 14,
2010, a Codan Trust Company (Cayman) Limited purchased one share of the
property firm and transferred it to Kei.

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Gorden Chang predicts a China collapse again for 15th year in a row, Chinese stock market jumps 42%.

The man who has only been in China once or twice has been predicting
collapse since his book in 2001 when the GDP was about $7 trillion lower
in China than it is today. I doubt this guy even speaks Chinese.

Dinosaur media continue to trot this guy out and make a fool of anyone
who listens.

 

BOOM: Chinese Markets in 2014

The CSI 300 returned slightly more than 51%, the average fixed income fund
returned almost 19%, even money market funds averaged just a few basis points
under 4.5%.

Active Equity Funds average 2014 return: 25.7%

Equity ETF’s average 2014 return: 42%

Passive Funds average 2014 return: 39%

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China Investing – Everything Has Changed, Again

By Gerard DeBenedetto

Happy New Year – Wishing everyone a healthy and happy 2015. Now get your
gear on, because it will be physical.

At the end of the summer I published “China Investing – Everything Has Changed”. My thesis argued that while the number of products giving investors exposure to China has expanded; most couldn’t find a Goldilocks balance. So what’s happened since the summer?

EQUITY SIDE

While the headlines about China continue to be negative, the reality is that local A-Shares were the top performing market in 2015, unfortunately this only brought the indexes back to 2010 levels. What has changed is the market momentum and how A-share equity investing as become more nuanced.

In the two years prior to September 2014, the so-called Chinex index trounced the CSI300 by roughly 100%. This in and of itself was largely overlooked by media outlets and market watchers. In the last four months of 2015 there was a complete reversal where the CSI300 trumped the Chinex by some 50%. There is no shortage of opinions about why this happened (stimulus, rate cuts, stock connect, etc) but be confident that nobody was calling it in August. In fact, the reasons for this abrupt flip are less interesting than understanding that A-Share volatility will continue and ensuring that your allocation is positioned for positive upside.

At the time, there was no established Chinex ETF so I recommended splitting your China equity allocation between ASHS which is more of a midcap product, but offered different exposure than PEK which is the large cap index fund. Following that strategy would have led to almost 30% in three months. Going forward I suggest maintaining a balance between small and large caps and of course, fixed income.

FIXED INCOME SIDE

As usual, I recommended gaining exposure to fixed income and that ANY investment strategy focused on China should include a fixed income allocation. Now more than ever, it is important to implement this approach. It has never been easier to gain exposure to the asset class. Since the summer, a cohort of products offering investors access to the on shore fixed income market debuted. Unlike the Dim Sum bond funds of 2011(RMB denominated bonds issued outside of China, usually HK) these products are structured through the RQFII program and invest directly on shore, CHNB, CBON and KCNY are three such products. I would stick with brand name issuers when selecting these products.

Rates on the 10 year government bond on the mainland have come about 70 bps since the summer and the short term remains volatile with 7 day repo rates spiking above 5% recently and 1 month SHIBOR quoted at 5.588%. Investments in the aforementioned products will benefit, although there may be liquidity issues as these are generally new products with small assets under management – I am confident this will change.

Regards,

Gerard DeBenedetto

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The Future of Material Science: China dominating new Graphene applications

CMR
05JAN2015

Graphene is to be used in the mass production of electric car batteries
in China in 2015 according to Chinese media reports.

Graphene is the dominate futurist material for future product applications
across a broad range of industries. Despite being discovered in a lab in
Manchester in 2004, it is China which has rapidly moved to commercialise
the new material.

Last month a major break-through occurred when a so-called super battery for
electric vehicles was charged in only eight minutes due to the graphene
material.

China has established several graphene development bases in Chongqing, Wuxi,
Nanjing and Qingdao. But graphene researchers said that the development in
China is mainly to apply graphene to existing lithium-ion batteries rather
than using the graphene to make the battery itself.

With American and U.K governments focused on printing more money for banks,
don’t expect an Anglo-Saxon response on taking a technical leadership role
on this new break-though material.

Unknown

 

Shanghai Composite to hit 3,500 in 2015

 

There Will Be Blood: America’s oil price war could set off mother-of-all economic crashes

Dan Collins
CMR
29DEC2014

Oil prices fell today to 5-year lows with WTI coming in as low as $52 a barrel.
Keep in mind, these 5 year low’s are coming at a time when American GDP just
put up a 5% handle on last quarters GDP. Does that make sense?
Is it Chinese demand driving down the price? No, China is importing more oil
than ever as the car market continues to boom and they take advantage of low
oil prices to greatly expand the countries strategic reserves.

Of course, U.S. shale has come on gang-busters but this oil is not exported
and would be unlikely to drive down oil prices by 50% in only 6 months time.

So what’s going on?

The most simple of explanations is that U.S. is conducting and oil price war
with Russia. It’s not a coincidence that the rapid oil price decline started
once sanctions were put on Russia for Crimea’s defection from the Ukraine.

With $280 trillion in derivates, many of those derivatives based on energy,
the prices can easily be manipulated by the Federal reserve and their member
banks when they coordinate to sell down the price of oil in the markets.

What Washington is missing ,however, as they attempt to displace Putin and
get control of Russia’s economic assets is that they could be ready to set
off a global economic contagion that would make 2008 look like a picnic.

The sudden dramatic collapse in the price of oil could result in trillion of
derivative losses; and the FDIC could be liable, following repeal of key portions
of the Dodd-Frank Act last weekend.

That’s right, only a few weeks ago, in the U.S. spending bill a key section
of the Dodd-Frank act was repelled allowing the countries largest banks to
get FDIC insurance on their derivatives. Jamie Dimon himself along with
President Obama were lobbying hard to get the taxpayers on the hook for
these derivative losses.

The large U.S. banks are exposed to trillions in losses that they did not
predict and now the U.S. government has agreed to back-stop their losses.

One must wonder if it was a quid-pro-quo for help in driving down the price
of oil in the first place.

One also wonders if oil price loses could trigger a meltdown in the $280
trillion dollar derivatives market which will leave no one unscathed and
would be the single most important event for anyone living on the planet
today.

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Larger-breasted Chinese women have bigger assets: Alibaba

Want China Times

Chinese statisticians have found that women with larger breasts tend to boast higher spending power.

A woman’s spending power increases with her cup size, according to big data from Alibaba’s e-commerce portal.

Twenty-six percent of women with E cups rate in Alibaba’s higher level of spending power, while only 7% of women with a B cup are included in this bracket. Women with E-cups beat every other cup size in the bracket and women with smaller breasts make up the majority of the low consumption bracket. No women with B cups were in the “high spending power” category. Women with A cups were not included in the study.

Guangdong’s Southern Weekly raised two queries regarding the results of the study. Firstly, women who shop online do not necessarily buy underwear that fits their size exactly and secondly that online spending power does not necessarily equate to one’s overall spending power.

Furthermore, it may be speculated that women in China with an E cup breast size may shop on the internet due to the difficulty of buying bras in stores.

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big-boobs

 

Merry Christmas & Happy New Year

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Internet goes down in North Korea

While the American media and government snicker behind the scenes’
on taking out the North Korean internet, the response from the
North Korean population was unexpected.

North Koreans when hearing of the swift American response in
knocking out North Korean IP addresses were heard as saying
” Ich bom do lu chu gi” Loosely translated as….

“The internet, what the fuck is that?”

images

 

The IMF is now dead: Rubble Swap Shows China Challenging IMF as Emergency Lender

China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries.

Chinese officials signaled on the weekend they are willing to expand a $24 billion currency swap program to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments.

By lending to nations shut out of overseas capital markets, Chinese President Xi Jinping is bolstering the country’s influence in the global economy and cutting into the International Monetary Fund’s status as the go-to financier for governments in financial distress. While the IMF tends to demand reforms aimed at stabilizing a country’s economy in exchange for loans, analysts speculate that China’s terms are more focused on securing its interests in the resource-rich countries.

“It’s always good to have IOUs in the back of your pocket,” Morten Bugge, the chief investment officer at Kolding, Denmark-based Global Evolution A/S who helps manage about $2 billion of emerging-market debt, said by phone. “These are China’s fellow friends and comrades, and to secure long-term energy could be one of the motivations.”

The ruble jumped 4.9 percent to 55.8 per dollar in Moscow on Monday after Hong Kong-based Phoenix TV cited China’s Commerce Minister Gao Hucheng as saying that expanding the currency swap between the two nations would help Russia.

Ukraine’s Allies

The ruble has gained 10 percent over the past two days, paring a selloff that’s made it the world’s worst performing currency over the past six months.

VIDEO: Roubini: Don’t Understimate Euro-Zone Political Risks
Unlike Ukraine, where the pro-west government received a $17 billion IMF-led bailout this year, Russia, Argentina and Venezuela are often at odds with the U.S. and its allies, essentially keeping them out of the reach of the Washington-based institution. At $3.89 trillion, China holds the world’s largest foreign-exchange reserves, allowing it to fill the void.

China and Russia signed a three-year currency-swap line of 150 billion yuan ($24 billion) in October, a contract that allows Russia to borrow the yuan and lend the ruble. While the offer won’t relieve the main sources of pressure on the ruble — which has lost 41 percent this year amid plunging oil prices and sanctions linked to Russia’s annexation of Crimea — it could bolster investors’ confidence in the country and help stem capital outflows.

Argentina Reserves

Two phone calls to China’s central bank seeking comment on the terms of its currency swaps weren’t returned. Russia isn’t in talks with China about any financial aid, Dmitry Peskov, a spokesman for President Vladimir Putin, said on Dec. 20.

Funding from China has helped raise Argentina’s foreign reserves to a 13-month high of $30.9 billion, a boost for a country that has been kept out of international capital markets since defaulting on foreign obligations in 2001.

Argentina received $1 billion worth of yuan earlier this month as part of the three-year currency-swap agreement with China, a central bank official in the South American country, who asked not to be identified because he isn’t authorized to speak publicly, said Dec. 11. That extended the funds transfered to Argentina to $2.3 billion since October. The swap is for a maximum of $11 billion over three years.

$21 Billion

In Venezuela, President Nicolas Maduro last month added $4 billion he borrowed from China to the country’s reserves after they fell to an 11-year low. The country now has about $21 billion in its coffers, equal to the amount of debt it has coming due in 2015 and 2016.

Venezuela, which was already plagued by shortages of everything from toilet paper to toothpaste, is also suffering from the drop in oil, its biggest export. Traders are betting that there’s an 89 percent probability that Venezuela won’t be able to make good on its debts over the next five years, according to credit-default swaps data compiled by Bloomberg.

“I don’t think this is a broad policy to support any country that asks for Chinese help,” Steffen Reichold, an economist at Stone Harbor Investment Partners in New York, said in an e-mail. “Several countries are currently in a tight spot and the Chinese are offering to help. That buys them some goodwill and influence, and promotes the use of the yuan.”

 

RMB-denominated assets gaining steam in Asian market

Want China Times

Renminbi-denominated assets appear to be gaining acceptance among Asian central banks, which recently subscribed to 21% in renminbi-denominated preferred shares of ICBC, a much higher amount than these same bank’s shares denominated in the US dollar and the euro, during a recent offshore floating of such shares by the banks, according to Li Kefei, managing director of UBS Securities, one of the four underwriters for the new share issuance, Shanghai’s China Business News reports.

The preference is unprecedented and may be regarded as a milestone in the internationalization of the renminbi, Li said.

ICBC raised fresh funds equivalent to US$5.66 billion in the overseas issuance of preferred shares, including 12 billion yuan (US$1.9 billion) of renminbi-denominated shares, or one third, along with US$2.94 billion of US dollar-denominated shares and €€60 million (US$73 million) of euro-denominated shares. The issuance attracted 4.9 times oversubscription on average, including 2.6 times for renminbi-denominated shares.

The enthusiasm for renimbi-denominated assets among Asian central banks underscores their growing acceptance of renminbi as a reserve currency, rather than just the benefits from the prospects for the appreciation of the currency, according to Li Kefei.

The renminbi has become the world’s seventh-largest reserve currency and renminbi-denominated assets have been included in the reserves of 30 central banks and sovereign wealth funds worldwide, according to Deutsche Bank.

The positive reception of renminbi-denominated assets comes from the expectations of ICBC officials, who originally feared gaining full subscriptions to the shares or the overly high cost for floating the shares, Li said. The concern is well founded, as past issuances of dim sum bonds, or renminbi-denominated bonds floated by Chinese enterprises abroad, chiefly in Hong Kong, never exceeded 3 billion yuan (US$482 million) in scale.

Li said that the outcome has greatly boosted his confidence in the potential of the offshore renminbi market.

Deutsche Bank predicts that cross-border settlement in the renminbi will top 7 trillion yuan (US$1.12 trillion) in 2015, up 17%, when offshore renimbi-denominated assets will expand to 3.25 trillion yuan (US$522.6 billion) in value, up from 2.6 trillion yuan (US$418 billion) now.

 

China offers $3 billion in aid and loans to neighbors: Xinhua

BANGKOK/SHANGHAI (Reuters) – China has offered more than $3 billion in loans and aid to neighbors Cambodia, Vietnam, Myanmar, Thailand and Laos to improve infrastructure and production, and to fight poverty, state media reported on Saturday.

Chinese Premier Li Keqiang said the offer included $1 billion for infrastructure, $490 million for poverty alleviation and $1.6 billion in special loans for China’s production capacity export, Xinhua news agency said.

During a speech to the fifth summit of the Greater Mekong Subregion (GMS) Economic Cooperation in Bangkok, Li also pledged $16.4 million to dredge waterways along the Mekong River to prevent natural disasters.

“”These are important parts of our efforts to upgrade China- ASEAN cooperation … we are ready to work with the five countries to build a new framework to deepen cooperation and bring the GMS comprehensive partnership to a new level,” Li said.

He said China planned to export high-level production capacity in electricity, telecommunications, steel and cement to its neighbors on regional transportation routes, Xinhua reported.

Li is in Thailand attending a two-day summit of leaders of Mekong River region countries, the biggest international gathering in Thailand since its military seized power.

China will finance projects by offering special loans, currency swaps in cross-border transactions and by allowing a role for private enterprises, Li said.

On Friday, China said it would build an 867-km rail network in Thailand and buy two million tonnes of its rice..

Li offered $20 billion in loans for Southeast Asia during a regional meeting in Myanmar last month. It is not clear if the money announced in Bangkok was part of that figure or represented new funds.

More than $120 billion has been promised by China since May to Africa, Southeast Asia and Central Asia as Beijing tries to present a softer, more cooperative side to the world following months of tension over territorial issues and other problems.

“We’ll create new levels of industrial cooperation. China has become the most important trade partner in the sub region and our investment will increase. . . We have every reason to draw on each others’ strengths,” Li added.

China has set nerves of edge in Southeast Asia with its claims to the South China Sea, which have rankled Vietnam and the Philippines in particular.

Southeast Asia has also emerged as a new area of strategic competition between China and the United States, and China has been keen to present a softer side to the region, partly though offering massive new funding for infrastructure projects.

(Reporting by Engen Tham and Martin Petty; Additional reporting by Ben Blanchard; Editing by Jeremy Laurence)

 

Asia Hedge Funds Survive In Year Of Pain For Global Industry

This about says it all as to why global wealth has flown East.

“In Asia, there is less hot money than in Europe and the U.S.,” he said. “It’s
a cultural thing. Asia is about safe money; Americans and Europeans are
big borrowers.”

Dec 16 2014 | 6:33am ET
By Klaus Wille (Bloomberg) — In a punishing year for global hedge funds,
those investing in Asia are the survivors.

Stung by poor returns and large redemptions, 889 hedge funds worldwide shut
in the first 11 months of the year, above the annual average of 810 in the
five years since the global financial crisis of 2008, according to figures
from research firm Eurekahedge Pte. In contrast, 56 Asia-focused funds had
closed by the end of November, less than half the average 135 closures in
the previous five years.

“Asia’s hedge funds, on average, are more resilient than those in Europe
and the U.S.,” said Brian Thung, who advises hedge funds as a Singapore-
based partner at Ernst & Young Global Ltd. “In addition to better
performance, they have a lower cost base, which helps them survive with
lower assets under management.”

Bolstered by rallies in equity markets such as India and China, Asian
funds are set to outperform their peers in Europe and the U.S. for a third
year, even as their inflows slowed. Funds investing in the region, which
on average are two-thirds the size of their U.S. peers, have returned
6.1 percent this year to the end of November, compared with a 5.7 percent
return for North America and 1.2 percent for Europe, according to data
from Singapore-based Eurekahedge.

Running a hedge fund in the Asia-Pacific region can be as much as
42 percent cheaper than in the U.S. and Europe, helped by lower salary
costs, according to a survey by Citigroup Inc. published in November 2013.

Smaller Funds

Small and mid-sized funds in Asia have received a greater proportion of
reduced inflows compared with similar-size funds elsewhere, which has
helped the region’s many minnows stay alive, according to Mohammad Hassan,
a Singapore-based analyst at Eurekahedge.

Hedge funds investing in Asia, which may be based outside the region, on
average have $223 million of assets under management, compared with $357
million in North America and $294 million in Europe, Eurekahedge said.

In Asia, funds with assets of $500 million or less had net inflows
amounting to 8 percent of the region’s total flows since January 2013,
according to Eurekahedge. By comparison, investors withdrew money from
same-sized funds focusing on other regions, with outflows making up 9
percent of total flows, according to the data provider. Globally, smaller
funds have suffered as institutional investors have focused on the bigger
managers, such as Citadel LLC and Millenium Management LLC.

Sticky Allocations

In the U.S., the $37 billion Brevan Howard Asset Management LLP decided
to shut its $630 million commodity fund after it had tumbled 4.3 percent
this year through the end of October, according to a person with knowledge
of the firm. Woodbine Capital Advisors LP closed down after assets dwindled,
while Anderson Global Macro LLC and Kingsguard Advisors LP both shut after
less than three years in business.

Allocations in Asia are “stickier” and less likely to be withdrawn in times
of trouble, said James Luong, the Singapore- based manager of the Thetis
Macro Opportunities Fund, which started this year with assets of less than
$20 million.

That’s because Asia-mandated funds get more money from the region’s wealthy
individuals and family offices, and less from institutional investors than
funds investing elsewhere, Luong said. Many of those Asian investors “were
entrepreneurs at one point in time. So they are more comfortable with
volatility and risk taking,” he said.

Underweight Asia

Among closures in Asia this year, PCA Investments, based in Hong Kong,
shut a multistrategy hedge fund after China’s sovereign wealth fund, its
only major outside investor, indicated it would pull its money because
of a strategy change, two people familiar with the matter said in January.

Despite those shutting down, Asia’s fund industry is more “robust” because
investors’ allocations have been less volatile, said Gordon Russell,
Singapore-based global head of risk at hedge-fund service provider
Broadridge Financial Solutions Inc.

“Asia has been underweight by global allocators for years,” Russell said.
“So when institutional investors and funds-of-funds are looking to pull
their money, they are going to pull less from Asia because they are
underexposed already.”

Inflows Slow

Russell also said that Asia’s investors have borrowed less than those
elsewhere and consequently are under less pressure to withdraw money when
their investments decline in value.

“In Asia, there is less hot money than in Europe and the U.S.,” he said.
“It’s a cultural thing. Asia is about safe money; Americans and Europeans
are big borrowers.” Asia, especially emerging markets in the region, makes
for good diversification in investors’ portfolios at a time when Europe
is struggling to recover and the U.S. is just starting to pick up,
Eurekahedge’s Hassan said.

“That means investors are less inclined to withdraw money from the region,
which stabilizes Asia’s hedge-fund industry,” he said. Net flows into funds
investing in North America were at $28.6 billion this year through October,
according to Eurekahedge. That’s less than half the $63.2 billion collected
last year.

Inflows into Asia fell to $5.3 billion this year through October, from $11
billion last year, the data show. Gains in Asian stock markets this year have
helped equity long-short funds, the dominant strategy among hedge funds focused
on the region. India’s S&P BSE Sensex benchmark index has gained 36 percent and
China’s CSI 300 Index has advanced 21 percent to the end of November,
outperforming the 12 percent gain of the Standard & Poor’s 500 Index and the
5.8 percent advance of the Stoxx Europe 600 Index over the period.

More fund managers in Asia start with their own money, giving them more of an
incentive to perform and stay in business, said Thung at Ernst & Young. “There
is a deep keenness of managers here who want to try to continue as long as
they can, even by funding their own operations themselves,” he said.

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American Power Grid: Worst in the developed world

Dan Collins
CMR

With the power going outLights Go Out (Briefly) at White House this week
it makes one wonder what exactly is going on. Growing up in the U.S. the
only power outages I remember were when my Dad didn’t pay the electric bill.
Living in other (developed) countries around the world it is not something
that ever comes up. So what is going on?

Simply speaking, the country is devolving, like Rome the country is devolving
so fast that the younger generation can not keep on the power systems. Much of
the same systems that were put in by their grandparents generation. Makes one
wonder how a countries GDP grows from $1 trillion to $16 trillion over a few
decades yet the roads, airports, bridges, and electrical infrastructure is
allowed to rot slowly.

The power grid in the United States has more blackouts
than any other country in the developed world. Americans face more power grid
failures lasting at least an hour than residents of other nations, according
to statistics provided by the Department of Energy (DOE) and the North American
Electric Reliability Corporation — NERC.

From a recent article in The Inquistr

Recent power grid reports indicate that the electrical system loses power more
than 285 percent more often that it did in 1984 — when blackout record keeping
began. The power outages cost businesses in the United States as much as
$150 billion per year, according to the Department of Energy.

In 2013, the power grid received a “D+” grade on its report card from American
Society of Civil Engineers — ASCE. The power grid grade card rating means
the energy infrastructure is in “poor to fair condition and mostly below
standard, with many elements approaching the end of their service life.”
It further means a “large portion of the system exhibits significant
deterioration” with a “strong risk of failure.”

“America relies on an aging electrical grid and pipeline distribution
systems, some of which originated in the 1880s. Investment in power
transmission has increased since 2005, but ongoing permitting issues, weather
events, and limited maintenance have contributed to an increasing number of
failures and power interruptions. While demand for electricity has remained
level, the availability of energy in the form of electricity, natural gas,
and oil will become a greater challenge after 2020 as the population
increases. Although about 17,000 miles of additional high-voltage transmission
lines and significant oil and gas pipelines are planned over the next five
years, permitting and siting issues threaten their completion. The electric
grid in the United States consists of a system of interconnected power
generation, transmission facilities, and distribution facilities.”

Read more at http://www.inquisitr.com

lowman-step-up-sub

 

Chinese nuclear weapon growth stuns US, Russia

Want China Times

The growth of China’s nuclear capabilities has threatened the United States and Russia with the potential of its intercontinental ballistic missiles (ICBMs), equipped on the country’s latest guided missile nuclear submarine Type 094, to strike US coastal regions, reports Sina’s military news portal.

The submarine, scheduled to be launched at the end of this year, was spotted by a US satellite in the waters near the coast of Dalian. The 16 JL-2 ballistic guided missiles have a range of 8,000 to 12,000 kilometers.

It is China’s first reliable submarine-launched nuclear intimidation measure and the first time that “China’s nuclear arsenal will be invulnerable to a first strike,” said Nicolas Giacometti, an independent strategist who has written analysis for the Center for Strategic and International Studies. The country has solidified its ability to retaliate with nuclear force on the submarine.

The US parliament does not have the exact figures on the number of China’s intercontinental guided missiles and nuclear warheads since the figure was last collected in 2006. Washington has been trying to find out the length of an underground tunnel China uses to store nuclear weapons and the number of its nuclear warheads. United States Strategic Command has compiled a report on China’s underground “nuclear Great Wall” and recommended US military destroy these underground facilities and China’s nuclear weapons.

The JL-2 ballistic missile on the latest nuclear submarine suggests that China has developed a well-rounded missile that can be fired from both land and sea, given that the JL-2 was reportedly modified from the land-based DF-31 missile. The Chinese missile has a launch speed faster than other ballistic missiles, making satellites difficult to detect its launch.

On land, more trouble for the US on the move in the form of China’s mobile ballistic missiles. The weapon is extremely difficult to detect since it can be launched from a wide range of areas, including highways. Washington was stunned when China launched its first mobile ballistic missile in September, a move that put China’s nuclear capabilities in competition with Russia and the US and proved that Beijing now has the ability to counterstrike invaders with nuclear weapons. The US government has attempted to monitor mobile ballistic missiles around the world, 24 hours a day, for years to no avail. It plans to launch 21 satellites between 2015 and 2020 in attempt to reach this target.

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