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from Global Investing:

Asia’s path to prosperity and investment opportunities

Investors have been worried about the effect of a Chinese slowdown on Asian emerging markets, but the long-term growth story is still intact, according to specialist investment manager Matthews Asia.

Consumption is one of the key areas of growth. Illustrating the divergence of Asian economies and their path to prosperity, here's an interesting chart from Matthews which shows the standard of living of various Asian countries, expressed by applying Geary-Khamis dollars -- the concept of international dollars based on purchasing power parity -- to today's Japan.

For example, the living standards of North Korea and Mongolia are at around that of Japan in the 1890s -- when Japan and China fought in the Sino-Japanese war and Wilhelm Rontgen discovered x-rays -- while China's is equivalent of an early 1970s Japan and Malaysia and Thailand are a step ahead at the mid-1970s.

This means a lot of countries have further to go until they reach the present economic status enjoyed by Japan, South Korea and Taiwan, giving investors huge opportunities.

from Global Investing:

Liquidity needs to pick up in EM

Emerging markets have seen heavy selling in the past few months, with political and economic crises hitting the region's currencies and asset markets.

The obvious question now is: Is all the bad news in the price?

London-based CrossBorder Capital, who publishes monthly liquidity and risk appetite data for developed and emerging economies, thinks not.

from Breakingviews:

Smartest U.S. export to China could be Max Baucus

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By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Uncle Sam's new man in China arrives just as his employer seems to have lost interest in its biggest trading partner. Max Baucus, who starts as ambassador to Beijing this month, has little experience of China and even less of diplomacy. Yet used wisely by his bosses, Baucus may be well placed to prize open new trade agreements that would leave both sides better off.

from Breakingviews:

Weibo IPO sets bar low for Alibaba

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By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Imagine the riskiest possible share offering. It would be a new, unprofitable company with rapid and uncertain growth in an emerging market. One whose customers are fickle, which lives under the constant threat of being snuffed out by regulators, and where external shareholders are dominated by insiders. The listing of Sina Weibo fits the bill. The Twitter-like microblog has also set a low bar for the upcoming market debut of e-commerce giant Alibaba.

from Counterparties:

MORNING BID – Losses continue, and other concerns

The ructions in China have had an interesting effect on commodities prices – good for gold, crappy for copper. And more developments in this area should be expected as the market deals with growing weakness and the threat of a deflating credit bubble coming from the massive lending to various sectors in the world's second-largest economy. Copper has been rather weak of late, but the broader CRB commodities index is actually much higher on the year. This is the biggest divergence since the eurozone debt crisis in 2011, points out Ashraf Laidi, the chief global strategist at City Index in London.

Again, the recent selling has had to do with the Chinese companies using the metal (and iron ore, too) as collateral for cheap dollar financing. So we've hit a weird storm here – weak yuan that makes those loans more expensive, and copper falling too, and again, that also messes with those loans. Put that together and you have a few markets moving in directions that are not beneficial to a major counterparty in several of them, for one, and resulting in the kind of activity that tends to turn into a vicious cycle.

from Breakingviews:

Alibaba film deal adds to China internet frenzy

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By Robyn Mak
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Alibaba’s latest deal shows the extent of investors’ frenzy for China’s internet. The e-commerce giant announced on March 11 it had agreed to buy 60 percent of Hong-Kong listed ChinaVision for $804 million. The film group’s market value promptly soared to almost $5 billion. Star-struck investors are too easily excited.

from Global Investing:

No more “emerging markets” please

The crisis currently roiling the developing world has revived a debate in some circles about the very validity of the "emerging markets" concept. Used since the early 1980s as a convenient moniker grouping countries that were thought to be less developed -- financially or infrastructure-wise or due to the size or liquidity of their financial markets -- the widely varying performances of different countries during the turmoil has served to underscore the differences rather than similarities between them.  An analyst who traveled recently between several Latin American countries summed it up by writing that he had passed through three international airports during his trip but had not had a stamp in his passport that said "emerging market".

Like this analyst, many reckon the day has come when fund managers, index providers and investors must stop and consider  if it makes sense to bucket wildly disparate countries together.  After all what does Venezuela, with its anti-market policies and 50 percent annual inflation, have in common with Chile, a free market economy with a high degree of transparency  and investor-friendliness?

from Counterparties:

MORNING BID – Copper, China and currencies

Markets start on the back foot this morning, with weakness overseas - and particularly in emerging markets - feeding through to a bit of strain on U.S. futures and a bit of flight to quality to the U.S. bond market.

The outlook for China once again comes into play, with the most recent fears being more corporate defaults in the world's second-largest economy and the way in which copper imports are used in China as collateral to raise funds. So it's all nicely intertwined here and has had a detrimental effect on both China's stocks, stocks in various exchanges around the world, and of course the price of copper, which was down 5 percent in Shanghai.

from Breakingviews:

Chinese remedy offers little salve for Bill Ackman

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By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

William Ackman is now tilting at pyramids in China. In the latest phase of the uppity investor’s year-long battle against Herbalife, he argued on Tuesday that the nutritional supplements and diet pill maker violated local laws that ban certain multilevel marketing strategies. The Pershing Square Capital founder raises some good questions. For all the effort, though, it’s hard to see how China will help confirm his ultra-bearish thesis.

from Breakingviews:

Credit chains are China’s weakest link

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By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s debts are troubling – and not just because they’re alarmingly big. An equally worrying threat to the country’s prosperity is the complexity of those debts. That’s the trouble with China’s lengthening “credit chains”.

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