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from Breakingviews:

One idea Samsung could safely copy from Apple

By Una Galani

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

Here’s one idea that Samsung could safely copy from Apple. As a proportion of its $221 billion market capitalization, the South Korean giant’s near $40 billion cash pile is almost as big as that of its U.S. arch rival. With reserves accumulating fast, it can afford to mimic Apple by giving more to investors.

If Samsung were an American company, it might attract the attention of the likes of Carl Icahn. The activist investor is pushing Apple to return more of its $130 billion cash hoard - equivalent to 27 percent of its market capitalization - even after the iPhone maker earlier this year grudgingly agreed to double the amount it distributes to shareholders.

Samsung’s net cash at the end of the third quarter was equivalent to around 17 percent of its current market value - and growing. The semiconductor-to-smartphone maker will generate $24 billion of free cash flow this year, estimates brokerage Bernstein. At that rate, and assuming the conservative company doesn’t develop an appetite for mega acquisitions, it will have $100 billion of net cash on its books in just over two years.

from The Great Debate:

Saving Defense dollars: From BRAC to ORAC

While the government shutdown continues because of the Democrats’ and Republicans’ profound disagreement, the real issue facing the nation is something that both parties agree on, in principle: the need to reduce the size of the federal deficit.

The Budget Control Act of 2011 and sequestration have made some steps in this direction, though aiming indiscriminately at certain parts of government far more than others. Half of all cuts, for example, come from the Defense Department.

from Global Investing:

The hit from China’s growth slowdown

China's slowing economy is raising concern about the potential spillovers beyond its shores, in particular the impact on other emerging markets. Because developing countries have over the past decade significantly boosted exports to China to offset slow growth in the West and Japan, these countries are unquestionably vulnerable to a Chinese slowdown. But how big will the hit be?

Goldman Sachs analysts have crunched the numbers to show which markets and regions could be hardest hit. On the face of it non-Japan Asia should be most worried -- exports to China account for almost 3 percent of GDP while in Latin America it is 2 percent and in emerging Europe, Middle East and Africa (CEEMEA) it is just 1.1 percent, their data shows.

from Global Investing:

Russia — the one-eyed emerging market among the blind

It's difficult to find many investors who are enthusiastic about Russia these days. Yet it may be one of the few emerging markets  that is relatively safe from the effects of "sudden stops" in foreign investment flows.

Russia's few fans always point to its cheap valuations --and these days Russian shares, on a price-book basis, are trading an astonishing 52 percent below their own 10-year history, Deutsche Bank data shows.  Deutsche is sticking to its underweight recommendation on Russia but notes that Russia has:

from Global Investing:

Weekly Radar: Watch the thought bubbles…

Far from the rules of the dusty old investment almanac, it’s up, up and away in May after all. And judging by the latest batch of economic data, markets may well have had good reason to look beyond the global economic ‘soft patch’ – with US employment, Chinese trade and even German and British industry data all coming in with positive surprises since last Friday. Is QE gaining traction at last?

Well, it's still hard to tell yet in the real economy that continues to disappont overall. But what's certain is that monetary easing is contagious and not about to stop in the foreseeable future - whether there's signs of a growth stabilisation or not. With the Fed, BoJ and BoE still on full throttle and the ECB cutting interest rates again last week, monetary easing is fanning out across the emerging markets too. South Korea was the latest to surprise with a rate cut on Thursday, in part to keep a lid on its won currency after Japan's effective maxi devaluation over the past six months. But Poland too cut rates on Wednesday. And emerging markets, which slipped into the red for the year in February, have at last moved back into the black - even if still far behind year-to-date gains in developed market equities of about 16%!

from Breakingviews:

Ailing South Korea needs monetary remedy

By Andy Mukherjee

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

The Bank of Korea is making a big mistake by not cutting interest rates more aggressively. A weaker Japanese yen and tepid global demand are squeezing the country’s exporters from Hyundai Motor to steelmaker Posco. Though demand from China is still growing, shipments to Europe are falling, while those to the United States have stalled (See graphic).

from Global Investing:

Amid yen weakness, some Asian winners

Asian equity markets tend to be casualties of weak yen. That has generally been the case this time too, especially for South Korea.

Data from our cousins at Lipper offers some evidence to ponder, with net outflows from Korean equity funds at close to $700 million in the first three months of the year. That's the equivalent of about 4 percent of the total assets held by those funds. The picture was more stark for Taiwan funds, for whom a similar net outflow equated to almost 10 percent of total AuM. Look more broadly though and the picture blurs; Asia ex-Japan equity funds have seen net inflows of more than $3 billion in the first three months of the year, according to Lipper data.

from The Great Debate:

Drone coalition: Key to U.S. security

The Pentagon’s biggest, most high-tech spy drone aircraft — one of the hottest items on the international arms market — is the key to a burgeoning robotic alliance among the United States, Japan, South Korea and Australia.

The RQ-4 Global Hawk, a $215 million, airliner-size Unmanned Aerial Vehicle (UAV) built by Northrop Grumman, could help this four-nation coalition monitor both China, as it increasingly flexes its military muscles, and North Korea, as it develops ever more sophisticated nuclear weapons.

from The Great Debate:

China as peacemaker

Nuclear escalation on the Korean Peninsula demands creative solutions. With a 2,200-year history of non-aggression, China is in the best position to take the lead — and relieve the United States of a burden it has shouldered for too long.

In fact, no other nation  has had as stable a pattern of world citizenship. Over two millennia, China has not attempted to conquer its neighbors or spread its system of government on any scale remotely comparable to the Romans, Mongols, British, Germans, French, Spanish, Russians, Japanese or even Americans. China does brutally resist the secession of Tibet, which it considers part of its ancient patrimony. But it has not grasped for lands beyond its historical borders.

from Global Investing:

Asia’s credit explosion

Whatever is happening to all those Asian savers? Apparently they are turning into big time borrowers.

RBS contends in a note today that in a swathe of Asian countries (they exclude China and South Korea) bank deposits are not keeping pace with credit which has expanded in the past three years by up to 40 percent.

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