October 28, 2021

Currencies Drop as Dollars Flee Asia

The most-affected large economies have been those of India and Indonesia, two countries where many domestic and foreign investors are now rushing for the exits, exchanging local currencies for dollars. After months of declines, both countries’ currencies dropped further on Thursday, with the Indonesian rupiah and the Indian rupee falling about 2 percent before recovering some of their losses.

The currencies of Malaysia, the Philippines and Thailand also declined, although by less than 1 percent. Stock markets across most of the region fell Thursday, but share prices rebounded slightly in India after days of decline there.

South and Southeast Asia are being buffeted by broad shifts in international economics that are hurting emerging markets around the world. Those problems are compounded within Asia by local issues, notably the region’s dependence on the slowing Chinese economy and on costly imported oil, as well as large government budget deficits across much of the region.

Some Asian business leaders say they still hope the region can escape largely unscathed from broader troubles that are afflicting emerging markets this summer. Sofjan Wanandi, the tycoon who is the longtime chairman of the Indonesian Employers’ Association, said in a telephone interview Thursday that he believed Indonesia’s currency troubles were the result of a temporary failure by the government to formulate a response and communicate it clearly.

“We know the economy is O.K., but the government is not taking quick action,” he said, adding that he and other business leaders were working with the government on a policy statement to be issued Friday. “After that, we hope this will all be calmed down,” he said.

Largely unaffected on Thursday and in recent weeks have been the currencies of Asia’s two largest economies, China and Japan. China’s stock market has even posted a small rally this month on signs that an economic slowdown may be less severe than expected this autumn, although worries persist about next year.

With chronic trade deficits and a dependence on foreign investment, Indonesia and particularly India have faced the biggest problems in the region. The government of India has resorted to increasingly desperate measures in the past two weeks, like steeply raising taxes on imports of silver and gold, but it has been unable to halt the decline of the rupee, which is down more than 7 percent in August and more than 20 percent since the start of May.

Daily steep declines in the rupee are making it much harder for Indian companies to repay their foreign loans, many of them denominated in dollars. The rupee’s decline has also made real estate and other projects in India less attractive for foreign investors who count their profits and losses in dollars, prompting many of them to pull out as well.

As the Federal Reserve mulls tightening monetary policy in the United States in response to early signs of economic recovery there, rising interest rates on Treasury securities and other American financial instruments are drawing money away from emerging markets around the world.

Indonesia and other countries in Southeast Asia have been hurt by their dependence on China, where growth has not only slowed but has also begun shifting gradually away from industries dependent on commodity imports from Asian neighbors, like steel production, and toward service industries.

At the same time, South Asia and most of Southeast Asia, with the exception of the oil-exporting Malaysia, depend heavily on imports of oil that have become more expensive as turmoil in Egypt has pushed the price of Brent crude oil to nearly $110 a barrel.

Article source: http://www.nytimes.com/2013/08/23/business/global/currencies-drop-as-dollars-flee-asia.html?partner=rss&emc=rss

Greece’s Tangled Land Ownership Is a Hurdle in Recovery

But property ownership in Greece is often less than clear cut. So Mr. Hamodrakas put a padlock on his gate and waited to see what would happen. Soon enough, he heard from neighbors. Three of them claimed that they, too, had title to parts of the property.

In this age of satellite imagery, digital records and the instantaneous exchange of information, most of Greece’s land transaction records are still handwritten in ledgers, logged in by last names. No lot numbers. No clarity on boundaries or zoning. No obvious way to tell whether two people, or 10, have registered ownership of the same property.

As Greece tries to claw its way out of an economic crisis of historic proportions, one that has left 60 percent of young people without jobs, many experts cite the lack of a proper land registry as one of the biggest impediments to progress. It scares off foreign investors; makes it hard for the state to privatize its assets, as it has promised to do in exchange for bailout money; and makes it virtually impossible to collect property taxes.

Greece has resorted to tagging tax dues on to electricity bills as a way to flush out owners. Of course, that means that empty property and farmland has yet to be taxed.

Mr. Hamodrakas is far from resolving the dispute with his neighbors. The courts in Greece are flooded with such cases. “These things take years,” he said, “maybe a decade to settle.”

This state of affairs is particularly galling because Greece has thrown hundreds of millions of dollars at the problem over the past two decades, but has little to show for it. At one point, in the early 1990s, Greece took more than $100 million from the European Union to build a registry. But after seeing what was accomplished, the European Union demanded its money back.

Since then, Greece has tried, and tried again. But still, less than 7 percent of the country has been properly mapped, officials say. Experts say that even the Balkan states, recovering from years of Communism and civil war, are far ahead of Greece when it comes to land registries attached to zoning maps — an approach developed by the Romans and in wide use in much of the developed world since the 1800s.

But not in Greece. Here the extent of disputed land is enormous, experts say.

“If you calculated the total deeds that are registered,” said Dimitris Kaloudiotis, an engineer who took over as president of the national land registry authority last month, “the country would be twice as big as it is.”

Some experts wonder whether there is really the political will to sort things out. An army of lawyers, engineers and architects make their livings through the constant haggling over landownership and what kind of development is possible where. And the lack of zoning maps has proved profitable for some. Researchers, for instance, have found that enormous stretches of protected forest land have been developed in recent years after wildfires cleared the land.

Spyros Skouras, an economist at the Athens University of Economics and Business, who found that the fires increased significantly during election years, says that settling land issues once and for all is difficult politically. “Any government that locks in an outcome will disappoint someone, and no government has wanted to take responsibility.”

Land disputes are less acute in urban centers, where sidewalks, streets and building walls help clarify boundaries. But in the countryside, deeds reflect another era. Boundaries can be the “three olive trees near the well” or the spot “where you can hear a donkey on the path.”

“You had guys who had never been to school — who had 100 sheep — and they would throw a rock a certain distance and say: O.K., that’s mine,” said Mr. Hamodrakas, who in addition to his own problems has handled many landownership cases for clients. “The documents might say ‘from the tree to the stream.’ It is very hard to know what they are talking about.”

Dimitris Bounias contributed reporting.

Article source: http://www.nytimes.com/2013/05/27/world/europe/greeces-tangled-land-ownership-is-a-hurdle-in-recovery.html?partner=rss&emc=rss

Japanese Exports Rise, but Demand for Goods Is Lackluster

TOKYO — A small increase in Japanese exports, improving business confidence and surging investment flows may show early successes for Prime Minister Shinzo Abe’s pro-growth strategy, but companies have yet to see signs of a sustained economic lift, data showed Thursday.

Exports rose 1.1 percent in March from the level of a year earlier, sentiment among manufacturers rose for a fifth consecutive month in April, and foreign investors bought a record amount of Japanese stocks last week.

But as Mr. Abe’s policy agenda, dubbed Abenomics, underpinned optimism for a recovery, the data also showed a weaker yen was increasing import bills, with Japan posting a record fiscal-year trade deficit of ¥8.17 trillion, or $83.7 billion, and a Reuters poll showed sentiment remained negative among manufacturers with many yet to see sizeable increases in orders or demand.

“The outlook is seen brightening as the yen has weakened, but it takes time before it leads to actual demand and orders,” an electric machinery company said in the Reuters Tankan poll, which measures sentiment among manufacturers.

Mr. Abe’s push for aggressive fiscal and monetary policies after two decades of stagnation has driven the stock market up and the yen down since November.

The centerpiece of that effort is the Bank of Japan’s $1.4 trillion stimulus plan, announced April 4, which aims to double the monetary base by the end of 2014.

Since mid-November, the stock market has surged more than 50 percent and the yen has fallen more than 20 percent against the dollar.

That has attracted the interest of foreign investors — they bought a record ¥1.57 trillion worth of Japanese stocks in the week that ended April 13 and bought ¥8.22 trillion worth since mid-November. Japanese investors, capitalizing on the fall in the yen, are also bringing back funds from overseas.

Akira Inoue, head of global business development at Sumitomo Mitsui Trust Bank’s global fiduciary business department, said that until recently foreign institutional investors had no interest in the Japanese market.

“Even after Japanese stocks’ rally began late last year, many took a wait-and-see attitude. But the situation changed in March,” Mr. Inoue said.

Business confidence has improved through Mr. Abe’s first months in office, and the Reuters Tankan data showed manufacturers’ sentiment rose seven points, to minus 4, in April.

The index in the Reuters poll is derived by subtracting the percentage of pessimistic responses from optimistic ones. The lower the number, the gloomier the outlook.

Companies expect the indicator to turn positive in coming months. However, they also say the real economic effect of Abenomics has been limited so far.

“The Reuters Tankan underlines rising expectations among Japanese firms for a brighter outlook, although the real economy is lagging behind those expectations,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

That is not unexpected — it takes time for a weaker yen to increase exports and for the wealth effects of rising markets to flow through — but the risk is that if activity does not pick up, confidence in Mr. Abe and the economy could falter.

Another risk is that although policy makers can drive the yen lower to give a price advantage to Japanese exporters, they cannot control demand elsewhere.

Uncertainty about China’s economy, Europe’s troubles and a slow recovery in the United States all raise doubts about how much export demand can increase, whatever the yen’s value.

“The broad picture remains intact as the weaker yen is having more of an impact on boosting imports than exports, while the recovery in the world economy, particularly China, is tepid,” Mr. Minami said.

Article source: http://www.nytimes.com/2013/04/19/business/global/japanese-exports-rise-but-demand-for-goods-is-lackluster.html?partner=rss&emc=rss

DealBook: China Hints at Far Wider Welcome to Overseas Investors

HONG KONG — In what would be a drastic liberalization of China’s huge but still cloistered capital markets, the country’s top securities regulator said Monday that foreign investment could be allowed to rise as much as tenfold.

Citing the still-nascent levels of overseas participation in domestic stock markets — despite recent actions more than doubling the amount of money that foreign funds can invest there — Guo Shuqing, the regulator, hinted that 2013 could bring sweeping new measures to open financial markets in China, which has the world’s second-biggest economy, after that of the United States.

‘‘For our capital markets to mature, they must open more in the future,’’ Mr. Guo, the chairman of the China Securities Regulatory Commission, said Monday at a financial forum in Hong Kong. ‘‘Our goal is to make it easier for nonresidents to issue and trade securities in the domestic markets.’’

Shares in Shanghai leaped 3.1 percent Monday after Mr. Guo’s comments, as investors speculated that a wave of foreign cash could be set to hit the mainland stock markets. That added to a monthlong rally in which the benchmark Shanghai share index has rebounded 18 percent from early December, when it hit its lowest levels in more than three years.

With a total capitalization of about 20 trillion renminbi, or $3.2 trillion, China’s domestic stock market ranks as one of the biggest in the world, but it is also one of the most restricted among major economies.

Mr. Guo has been pushing hard to remove some of these investment barriers. In his comments Monday, Mr. Guo said that foreign investors hold only about 1.5 percent of the domestic share market by value. ‘‘I think at least we can increase that 10 times,’’ he said.

Some observers expressed deep skepticism at the remarks. ‘‘This is great headline stuff, but I don’t think it is particularly constructive, because you are not going to simply take the lid off and increase everything by 10 times,’’ said Fraser Howie, the co-author of ‘‘Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.’’

‘‘I would like to see proper, sensible moves to break down some of the barriers to entry and the actual movement of money,’’ Mr. Howie said.

A former chief foreign exchange regulator and former chairman of China Construction Bank who took the helm at the securities regulator in October 2011, Mr. Guo spearheaded a move last April that more than doubled the amount of Chinese shares that foreign investors could own, increasing the quota for so-called qualified foreign institutional investors to $80 billion from $30 billion.

However, by the end of December, only $37.4 billion of that quota had been actually allocated to investors, spread among 169 banks, brokerage firms and other financial institutions, according to a statement released Friday by the State Administration of Foreign Exchange.

Mr. Guo did not give specific details Monday of how China might raise foreign investment by such a large factor. But he hinted at one potential new program that is under discussion: letting in ordinary retail investors, most likely those from Hong Kong.

At present, China’s markets are open only to funds managed by brokerage firms, banks and other institutions. But Mr. Guo said he had been in talks during the weekend with several unidentified financial industry groups in Hong Kong about introducing a quota for so-called qualified foreign individual investors.

Details were sparse. But analysts said the general tone of the remarks was consistent with similar indications made recently by the central bank that support was growing for financial changes.

‘‘Clearly this demonstrates the resolve to accelerate financial sector reform, and part of the puzzle is to further liberalize the capital account,’’ said Steven Sun, the head of China equity strategy at HSBC in Hong Kong.

Article source: http://dealbook.nytimes.com/2013/01/14/china-hints-at-far-wider-welcome-to-overseas-investors/?partner=rss&emc=rss

DealBook: Investing in Asia’s Frontier, With Eyes on the Horizon

Douglas Clayton, managing partner at Leopard Capital, started the first investment fund focused on Cambodia.Kelly Jordan for The New York TimesDouglas Clayton, managing partner at Leopard Capital, started the first investment fund focused on Cambodia.

PHNOM PENH, Cambodia — Investors started poking around for deals here five years ago, as the war-torn country began to move past its legacy of genocide and coups. When the global financial crisis struck, Cambodia’s fast-growing economy crashed and the dollars flowing from abroad evaporated.

Douglas Clayton stayed put. In the midst of the crisis, he raised $34 million, starting the first investment fund focused on Cambodia.

“High risk also means the potential for high returns,” said Mr. Clayton, the founder of Leopard Capital.

Persistence can pay in this frontier market of 15 million people. Despite some rocky deals, the fund over all has posted solid gains on several investments, according to Leopard Capital. The three investments sold so far by Leopard have generated average annual returns of 36 percent.

“We got in early and have done well,” said Mr. Clayton, 52.

Building on the experience, Mr. Clayton is expanding into other regions with similar characteristics. This year, Leopard Capital started the first big investment fund in Haiti, backed by economic development organizations like the World Bank’s International Finance Corporation. In coming months, he plans to start portfolios focused on Myanmar, Bangladesh and Mongolia. He also plans the first investment fund for Bhutan, which has been reticent about outside money.

“We are trying to pioneer this investment class,” he said. “We can put money in places it’s never really been, and get good results.”

He will have to tread cautiously. Mr. Clayton is moving into treacherous investment territory, plagued by infrastructure problems, corruption, political instability and weak or nonexistent regulatory leadership. For example, Mongolia’s economy is on shaky ground, after a series of political maneuvers left foreign investors nervous.

“We’ve proven ourselves here in Cambodia, and feel we can go anywhere,” Mr. Clayton said.

The potential payoff can be substantial. Some investors can double or triple their capital, according to Kathleen Ng, managing director at the Center for Asia Private Equity Research, which tracks fund performance in the region.

Ms. Ng said that China has been the hottest area for investment in Asia for years, but as returns have peaked, many began looking further afield, to places like Vietnam and Indonesia. Countries like Cambodia, Laos and Bangladesh — all Leopard targets — are just now getting on investors’ radars.

“Frontier markets really attract a different investor,” Ms. Ng said. “For the right fund — and a first mover — you can make a lot of money.” Even now, Ms. Ng notes, Leopard remains one of the few private equity funds focused exclusively on the region.

Still, investors need strong reserves to make money in such far-flung places. Returns can be choppy. Over the last five years, an index that tracks the frontier markets around the world is off nearly 42 percent, according to data from Thomson Reuters.

“On the surface, there is so much opportunity here,” said Nicholas Lazos, an investment manager at Insitor, a fund in Cambodia. “But executing is quite difficult.”

Mr. Clayton knows the challenges, having spent much of his career in Asia,

Originally from Madison, Conn., Mr. Clayton graduated from Cornell in 1982 and then served four years in the Army. While stationed in Korea, he became enamored with Asia.

After leaving the Army in 1986, he moved to Hong Kong and persuaded Sun Hung Kai Securities to give him a job as a trader, despite his lack of experience. “China was just opening up,” he said. “This company wanted some foreigners. I got hired and traded to learn.”

Three years later, he was hired by Kerry Securities to head its investment research in Thailand. In 1999, he opened his own firm in Bangkok, Abacas Equity Partners. The firm specialized in distressed assets, plentiful in Thailand after the Asian currency crisis of 1997.

He made his first trip to Cambodia in 2005, during a period of personal reflection. His first marriage had ended, and he was weary of the frenetic pace in Asian hot spots like Singapore, India, Thailand and Hong Kong.

Cambodia reignited his drive. “It was kind of spooky and scary,” he recalled. Yet he also sensed unique opportunity. “Nobody was here yet. It was really unknown, and exciting.”

He started the Leopard Cambodia Fund in April 2008 with $10 million, mainly from family and friends. Then prospects dried up in the global crisis. Many other firms withdrew from the country.

Mr. Clayton remained committed. Over the next two years, he visited 50 cities around the globe, pitching investment opportunities in Cambodia. He originally aimed for a goal of $100 million for the fund, but scaled back during the global financial crisis. “It was a hard sell,” he said.

Since then, he has invested about $36 million in a dozen companies, placing small bets in various industries. He put $5 million into ACLEDA Bank, a stake that has soared, and earned double-digit gains on telecoms and utilities in the region.

The money manager has experienced his share of difficulties. The firm took an aggressive stance with Nautisco Seafood, buying up debt and forcing a restructuring.

Leopard wound up in court over the deal. The founders charged Leopard with interference, a situation that resulted in big layoffs and an eventual takeover. Leopard denied the allegations, and the suit was eventually dismissed.

Mr. Clayton is applying his experience to investment opportunities across Asia and beyond.

The private equity firm has started the Leopard Haiti Fund, supported by the International Finance Corporation, the Netherlands Development Finance Company and the Multilateral Investment Fund. These three agencies committed $20 million to the fund, which will focus on shifting capital into food processing, tourism, affordable housing and renewable energy.

“This is a big signal to investors looking at Haiti,” said Sergio A. Pombo, an investment officer at the I.F.C.

Mr. Clayton has also looked to the I.F.C. for support in Bangladesh, where Leopard plans to start a $100 million fund. Mr. Clayton compared Bangladesh to neighboring India a few decades ago, with a large, low-cost labor force.

Leopard is also contemplating starting a $15 million to $20 million fund for Bhutan, a former Buddhist kingdom in the Himalayas. Bhutan has no investment funds operating in the country, few industries and only 700,000 people.

Mr. Clayton is most bullish about Myanmar, which is going through drastic political reforms. Largely closed to Western investment by the military regime that has ruled for decades, Myanmar, formerly known as Burma, is suddenly open for business.

“This will be a real core country for Leopard in the future.” He predicted the trajectory will follow other Asian nations in the 1980s to 1990s, only at a more rapid pace. “It really seems full speed ahead.”

Still, he cautioned that challenges remained. Foreign investment laws have only recently been announced, and many industries remain closed. Hotels in the capital of Yangon are packed with business delegations, but many outside investors complain that there are few surefire deals, and corruption is a major worry.

Still, Mr. Clayton is focused on the long-term picture for these frontier markets. “These places can be good for investment,” he said. “You just need to do your research, build good local teams and make the right deals.”

Article source: http://dealbook.nytimes.com/2012/12/26/investing-in-asias-frontier-with-eyes-on-the-horizon/?partner=rss&emc=rss

More Time For Investors To Sell Back Greek Debt

LONDON — Greece, on the verge of completing a crucial plan to reduce its debt burden, extended the deadline on Monday for foreign investors and Greek banks to sell their deeply discounted bonds back to the government.

The deadline for taking part in the buyback, announced a week ago, was to have been last Friday. But even though Greek banks and hedge funds have offered close to 26 billion euros ($33.6 billion) in bonds, that amount falls short of the goal of 30 billion euros that the government’s troika of international creditors had set as a minimum for the program to be considered successful.

The new deadline is noon Tuesday London time.

Having borrowed 10 billion euros from a European bailout fund to buy back the debt, the goal is for net relief of 20 billion euros — an amount the International Monetary Fund has said Greece must retire if it is to continue lending to the country.

The I.M.F., along with the European Commission and the European Central Bank, make up the troika that has bailed out Greece twice.

Bankers close to the bond buyback program say that hedge funds, which for weeks have been coy about whether they might agree to sell at what would be an average price of around 33 cents a euro, have participated in larger-than-expected numbers. And the bankers say they still expect the buyback to be completed. But with Greek banks reluctant to sell all of their bonds back to the government, the buyback’s success remains dependent on foreign investors selling the majority of their holdings.

Greek banks are thought to own 17 billion euros worth of bonds. Unlike foreign investors, many of whom bought the securities at reduced prices, the Greek banks would not reap big profits if they sold their bonds — which were restructured earlier this year — at about 33 cents a euro. Bankers estimate that foreign investors, which own about 24 billion euros worth of bonds, have offered 15 billion to 17 billion euros in debt so far.

The restructured bonds are seen by the Greek banks as a premium asset that can be used for borrowing much-needed funds from the European Central Bank.

“If the foreigners do not come in we are toast,” said one banker who was involved in the transaction but spoke on the condition of anonymity.

The head of the Greek debt management agency, Stelios Papadopoulos, in a statement on Monday, made it clear to reluctant investors that they might never get another chance to sell their debt at prices as high as the government is offering.

“Investors should bear in mind that even if Greece accepts all bonds tendered in the invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path,” Mr. Papadopoulos said. “Future measures may not involve an opportunity to exit investments in designated securities at the levels offered for this buyback.”

Such measures might include a second buyback offer at a lower price, with the government invoking collective action clauses to force holdout investors to accept the terms. The government could also try to use provisions in the bond contracts that might allow Greece to keep paying its European creditors while forcing private sector bondholders to take losses.

Such steps would likely be challenged in courts by foreign investors. Given the recent successes that hedge funds have had in suing Argentina and Ireland over past bond restructurings, Greece — and Europe — would most likely think long and hard before taking this type of action.

Article source: http://www.nytimes.com/2012/12/11/business/global/greece-extends-deadline-for-debt-buyback.html?partner=rss&emc=rss

Michael C. Woodford, Ex-Olympus C.E.O., Resigns as Company Director

Mr. Woodford, who was fired by Olympus in mid-October after raising questions about a series of irregular acquisition payouts, said Wednesday that he would join with shareholders to pressure the company into calling an extraordinary shareholders’ meeting as soon as February — and suggest his own set of “untainted” candidates for a new company board.

The former executive now faces a battle against the current Olympus president, Shuichi Takayama, to see who can garner more shareholder support. Though Mr. Woodford has the support of major foreign investors, he may face resistance from institutional investors in Japan who still control a bulk of Olympus’s shares.

“Let me make it explicitly clear: I am not walking away from Olympus,” Mr. Woodford said in a statement from New York, where he has met with F.B.I. officials who are investigating the case. “I would like nothing more than to return to Olympus and lead it.”

Since Mr. Woodford went public in October with his concerns over Olympus’s finances, the company has admitted to using acquisition payments to hide old investment losses. Still, Olympus maintains that Mr. Woodford was fired because his aggressive, Western style of management was not a good match for the 92-year-old maker of endoscopes and cameras.

Mr. Woodford had remained a director of the company since his dismissal, however, because only a shareholders’ meeting — or a resignation — could remove him from that position. He said Wednesday that he would resign, however, to be able to cooperate more freely with shareholders and other supporters.

His lawyers submitted a letter of resignation early Thursday in Tokyo, he said.

Mr. Woodford, a British national and one of only a few foreign chief executives at a major Japanese corporation, said he would have no part in an overseas buyout of Olympus, however.

“I’m not trying to get involved to sell Olympus to an American health care group or an overseas health care group. I don’t want to be a part of that,” he told reporters in New York, according to Reuters.

He had been approached by several parties interested in a buyout, Reuters quoted him as saying, but had not spoken to them.

“This won’t be aggressive or hostile in any way,” he said. “I am quite Japanese in that sense.”

Olympus said in a statement that it had accepted his resignation. The company has promised a thorough and impartial investigation of its past acquisitions, appointing an external panel of legal experts led by a former justice of Japan’s Supreme Court. That panel is expected to release its findings within days.

Three former board members, who Olympus says were behind the cover-up of losses, have lost their positions and have now resigned from the company. Last week, Olympus also said the entire board was prepared to step down once necessary reforms were in place.

In his statement, Mr. Woodford said those promises carried “little or no credibility.”

It is “completely inappropriate,” he said, “for the current management team who are tainted by its past mistakes to make choices about the identity of new board members. Key decisions such as this should be made by the company’s shareholders.”

Nippon Life Insurance in Japan, among Olympus’s largest shareholders, has said it will stand by the current management. It recently slashed its holdings of the company, however, and retains about 5 percent.

Southeastern Asset Management, which is Olympus’s biggest foreign shareholder with about 5 percent of shares, has backed Mr. Woodford and his calls for the board to step down.

Mr. Woodford said he had spoken to some shareholders about the possible makeup of a new board, though he had yet to finalize his ideal team of directors.

Olympus faces immediate hurdles, however. It must meet a Dec. 14 deadline to submit amended financial earnings statements or face a delisting from the Tokyo Stock Exchange. Such a move would wipe out investors’ stakes, severely constrict Olympus’s ability to raise capital and put it under pressure to sell off its most lucrative assets, including its highly competitive medical endoscope business.

Any recognized links to organized crime syndicates could also get the company delisted. Japanese authorities are looking into any possible ties, as well as whether the company paid out money to these parties separate from its cover-up of losses.

Article source: http://feeds.nytimes.com/click.phdo?i=701170dae6b955e2e2aef72a65873d16

With Economy Slowing, the Indian Rupee Tumbles

The value of the rupee has fallen nearly 14 percent, to 52.21 against the dollar, since the end of August as investors have stepped back from the Indian economy and many traders have stepped up bets against the currency. Less than three months ago, the rupee was trading at 45.79 to the dollar.

Foreign investment in India, which has a big need for foreign capital because it imports more than it exports, has been falling sharply since June, when the country took in $6.5 billion. In September, it took in just $616 million.

During that time, many analysts and investors have grown more concerned about the growth prospects of the Indian economy. Some analysts now predict the country might grow 7.2 percent in the current fiscal year, down from 8.5 percent last year.

Partly in response to the concerns about growth, the cabinet of Prime Minister Manmohan Singh voted on Thursday to allow foreign retailers to invest in stores in the country in spite of significant political opposition. Analysts said the long-delayed proposal should help lure more foreign investment into the country, though not right away, especially given the stringent conditions that policy makers imposed on foreign investors.

The rupee was up just 0.3 percent against the dollar Friday after the decision to open the retail market.

While many currencies have recently depreciated against the dollar, the rupee has fallen more than most. It is the worst-performing Asian currency this year, and some analysts are predicting that it could fall further. Strategists at HSBC said in a note issued Thursday that the rupee could fall to 58 against the dollar.

“We do not yet see light at the end of the tunnel,” Paul Mackel, the head of Asian currency research at HSBC, wrote.

Analysts say the depreciation of the rupee could worsen inflation, which has been at or above 10 percent for more than a year, by sharply increasing the cost of oil and other commodities that India imports and has to pay for in dollars. That would also deepen the government’s already large fiscal deficit, because the country heavily subsidizes imported fuel and fertilizers.

For Indian exporters, including software outsourcing companies like TCS and Infosys, a weaker rupee could help increase sales because it would make their products and services cheaper. But analysts say those gains would be muted because Western customers are not spending much. Moreover, higher exports would not fully offset the rising cost of imports because India has an annual trade deficit of more than $80 billion.

Ayush Lohia, the chief executive of Lohia Auto Industries, a maker of electric bikes and scooters, said his costs for components like motors, controllers and plastic had shot up 15 percent in recent weeks. He has not yet raised the price of his products, which sell for 25,000 to 31,000 rupees ($480 to $590) in New Delhi, because he is worried about losing sales.

“We are just waiting to see if it will come down from the current level so that there will be no reason to increase prices right now,” he said. “I am just praying to God that the dollar can go down below 50 rupees.”

Analysts say investors have bet heavily against the rupee in recent weeks after officials at the central bank, the Reserve Bank of India, suggested they would not intervene to limit the currency’s slide.

“The Indian rupee’s fall has been too much, too soon, and R.B.I.’s own guidance has added to the depreciation pressure by giving a green light to speculators” to bet against the currency, said Rajeev Malik, an economist at the investment firm CLSA.

The central bank, however, has since stepped in to try to check the sharp depreciation by selling dollars and buying rupees, analysts say. The bank has also said it will sell dollars to state-owned oil companies so that they will not have to buy them on the open market, which would further drive down the value of the rupee.

In the longer term, the government’s decision to allow foreign retailers in the country should help, if companies like Wal-Mart, Tesco and Ikea inject money into the Indian economy to set up new stores, warehouses and other facilities.

But the flow will be measured and drawn out, analysts said. India’s commerce minister, Anand Sharma, told reporters in New Delhi on Friday that foreign retailers that sell multiple brands of clothing could set up stores only in cities with more than one million people; there are 53 such cities in the country.

Mr. Sharma also said those retailers would have to invest a minimum of $100 million, put 50 percent of their investment in back-end infrastructure and buy 30 percent of the goods they sold from small companies. Also, each of India’s 28 states would have to individually allow foreign-owned retail stores in their territory.

“The step which we have taken is an investment in the present and the future of this country,” Mr. Sharma said.

Retailers have welcomed the move. Ikea, the Swedish furniture and home furnishings retailer that had previously said it wanted to set up stores here, said in an e-mail that it would “expect to present more information shortly about our intention to establish retail operations.” Because it sells only one brand of products, the company would be able to own 100 percent of its Indian operation under India’s new rules.

Rajan Bharti Mittal, a vice chairman of the Bharti Group, Wal-Mart’s Indian partner, said in an interview that the conditions imposed by the government on retailers that sell more than one brand were acceptable. He said Bharti and Wal-Mart would soon start discussing how best to take advantage of the new rules.

Heather Timmons contributed reporting from New Delhi.

Article source: http://feeds.nytimes.com/click.phdo?i=90b38a4b6c03c46feb2834a73c169a27

North Korean Resort Seeks Foreign Investors

The golf course is devoid of caddies; banks and restaurants are chained and padlocked; and empty hotel rooms have grown musty.

Income from tourism here has plummeted since a South Korean visitor was shot dead in 2008 by a North Korean soldier while wandering one night into a nearby area that North Korean officials said was a military zone. South Korea then forbade its citizens from traveling here, and the South Korean developer of the park, Hyundai Asan, had to suspend the venture, for which it had exclusive rights from this authoritarian Communist state.

Now, the North Korean government, desperate for revenue, seeks to lure other foreign investors to Mount Kumgang, against the wishes of South Korea.

A senior North Korean tourism official gave a video presentation on Wednesday night to scores of Chinese businesspeople and officials shuttled to the park on a 21-hour bare-bones cruise from the Rason region in the far north of the country. The official, Kim Kwang-yun, told foreign reporters who had been given a rare opportunity to accompany the Chinese group to this secretive country that Mount Kumgang was open to investment from anywhere.

“Last night, I explained a lot to allow foreigners to see the beautiful sights of Mount Kumgang,” Mr. Kim said as he sat beneath chandeliers in the lobby of the Kumgang Hotel, adding that he could also talk about investing “if big delegations from Europe, Africa and other countries come to the Mount Kumgang area.”

The effort by North Korean officials to bring foreign investment to Mount Kumgang is the latest move in a chess match between the two Koreas over the park, which abuts the demilitarized zone. New investment would help with infrastructure construction, and rejuvenated park operations could bolster tourist numbers. But the vast majority of the two million visitors who have come to the resort since its opening in 1998 have been South Koreans, and North Korean officials say they want to restart their partnership with Hyundai Asan. The very public wooing of foreign investors could be an effort to pressure the South Korean government to let Hyundai Asan rejoin the venture.

The North Koreans began raising the stakes on Aug. 22, when officials informed the government in the South that they were evicting any remaining South Korean employees from the park and contended that they had the right to “start legal disposal” of South Korean assets, which amount to $443 million.

The South Korean government immediately said it would take legal and diplomatic measures to protect the assets, and Hyundai Asan warned that anyone who bought facilities at the resort would be implicated in international lawsuits.

Mr. Kim said the South Korean government was responsible for the conflict by putting “unilateral restrictions on tourism” for “political purposes.” He added that the tensions would not scare off foreign investors.

“I think we already established the legal foundation for developing this Mount Kumgang area,” he said. “Whether they will invest in this area is their choice.”

An official at South Korea’s Unification Ministry said in an e-mail on Saturday that the “Mount Kumgang tourism issue cannot be resolved by the unilateral measures by the North. It can be addressed by inter-Korean dialogue.”

Once accessed by ferry and road from South Korea, the special administrative zone of Mount Kumgang is a rugged area of pine trees and waterfalls, soaring stony peaks and curving coastlines. Carved into the ubiquitous granite rock faces are gigantic slogans paying homage to the North Korean leader, Kim Jong-il, and his deceased father and North Korea’s founder, Kim Il-sung.

The South Korean government built a center here for a pilot program in which family members split by the division of Korea in 1945 and the subsequent war could meet again. But since the killing of the South Korean tourist, relations between the two Koreas have become much more strained, especially after the sinking of a South Korean naval ship for which the South blames the North and the shelling of a South Korean island last year.

The drop in tourism has been particularly hard on North Korea, which has been grappling with food shortages caused in part by failed economic policies and struggling with the effect of economic sanctions from the United Nations. The sanctions were imposed mostly at the urging of the United States, which is trying to force the North Korean leader to end a nuclear weapons program.

Edy Yin contributed research from Mount Kumgang, and Choe Sang-hun contributed reporting from Seoul, South Korea.

Article source: http://www.nytimes.com/2011/09/04/world/asia/04nkorea.html?partner=rss&emc=rss

DealBook: Russia Musters Its Credibility to Sell Fund

As part of its drive to show foreign investors that Russia is a safe and profitable place to put their money, a government-owned bank has established a private equity fund with a former Goldman Sachs banker in charge and Prime Minister Vladimir V. Putin as rainmaker.

Last month, Mr. Putin met in Moscow with prominent international investors including Stephen A. Schwarzman, chief executive of the Blackstone Group, and Lou Jiwei, chief executive of the China Investment Corporation, to try to generate interest in Russia’s direct investment fund. Mr. Putin plans to announce the fund formally later this month at the St. Petersburg International Economic Forum.

Over dinner on Wednesday in Vienna with a small group of business people and investors, Kirill Dmitriev, an alumnus of Goldman Sachs and McKinsey Company who is chief executive of the fund, gave details about how it would be structured.

The point of the fund, Mr. Dmitriev emphasized, will be to make money. That is not always obvious in Russia, where foreign investors have been concerned about corruption, lack of an impartial court system and the authoritarian tendencies of the government.

“We want to make some returns,” said Mr. Dmitriev, who speaks lightly accented, colloquial English and graduated from Stanford University and Harvard Business School. Before Mr. Putin named him to run the fund, Mr. Dmitriev was president of Icon Private Equity, a fund focused on Russia and the former Soviet Union.

Profitability, rather than government policy goals, will drive the investments, Mr. Dmitriev promised. While the overall aim is to promote growth and create jobs, investments will be judged according to the potential return over the typical private equity cycle of five to seven years, he said.

Russia plans to commit $10 billion to the fund, in installments of $2 billion a year for five years, via the government development bank Vnesheconombank. But the bank’s stake in investments will never exceed 50 percent, meaning that foreign investors will retain control, said Petr Fradkov, deputy chairman of the bank.

At the same time, Mr. Putin’s personal involvement in the fund is designed to reassure investors that they will not be abused by arbitrary or corrupt lower-ranking officials. “The investor has implicit comfort,” Mr. Fradkov said.

Mr. Putin met for an hour and a half on May 18 with the foreign investors, a group of about 20 people that also included representatives of the Kuwait Investment Authority, the Abu Dhabi Investment Authority and private equity fund Permira, Mr. Fradkov and Mr. Dmitriev said.

Investors are not being asked to write blank checks to the fund, but rather to invest in individual deals, another feature designed to reassure them that they will have control over how their money is spent. Mr. Fradkov said that there were projects in the works and the first deals should be announced within nine months.

Mr. Fradkov would not give specifics about potential deals, but Mr. Dmitriev said one goal of the fund would be to invest in companies that could profit from Russia’s rapidly growing middle class.

Investors may still need to be persuaded. The questions put to Mr. Dmitriev and Mr. Fradkov at the dinner made it clear that many still regarded Russia as risky and unpredictable. When politicians are involved — and not just in Russia — there is always a risk that money will be steered to pet projects.

As Mr. Dmitriev points out, the best way to deal with such concerns will be to generate some big returns in the years to come.

Article source: http://feeds.nytimes.com/click.phdo?i=c325a4bbbebaa1cf7b1d107ebc5e4cfe