Summit Notebook

Exclusive outtakes from industry leaders

The Nowotny-shaped recovery

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By Petra Spescha

 

European economists have been nearly unanimous about what Europe’s recovery from the crisis will look like on a chart: L-shaped — a severe slump with a prolonged period of flat or minimal improvements in the economy.

 

But at the Reuters Central European Investment Summit Ewald Nowotny created a new shape when he tried to clarify a statement he made to an Austrian newspaper earlier this month about the economic turnaround.

 

“It was not a real L-shape –it was an L which was a bit upward bending,” Nowotny, who is on the European Central Bank’s Governing Council, said.

 

So it appears Nowotny, an economics professor, takes a less pessimistic view of the recovery than we previously thought. Not quite a rebounding ‘V’ shape or a steady ‘U’-shaped rise but somewhere in-between those shapes and the downbeat ‘L.’

Loose lips sink stocks

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-     The president of Renaissance Capital — Russia’s largest home grown investment bank, a fiercely competitive institution which has now survived two crises — is not interested in publicly assessing the competitive landscape in Moscow’s financial sector.     Russia’s stock market was all but shut down in a single day by rumours of distress among brokers, sparked by the selloff of stocks held on margin or as collateral on repurchase agreements.     Operating often on whispers, brokers foreign and domestic slammed shut limits on each other, causing trade on the stock market to seize up.     The first victim — brokerage KIT Finance — was announced by evening and became the first financial instituation to receive a state bailout.      “The crisis has shown that rumours and gossiping about competitors is a very dangerous thing,” Renaissance Capital President Aganbegyan told the Reuters Russian Investment Summit almost a year later.

Global warming: Economic opportunity or not?

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Stephan Dolezalek, Managing Director of VantagePoint Venture Partners and Tom Werner, Chief Executive of solar power company SunPower, sat down at Reuters’ Global Climate and Alternative Energy Summit in San Francisco and shared their views on global warming, investment and cleantech.

Dolezalek sees industrialization in developing countries as a more predictable impetus for investment than global warming.

Echelon’s Ken Oshman on smart meter sector consolidation

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Ken Oshman, the Chief Executive of Echelon, sat down at Reuters’ Global Climate and Alternative Energy Summit in San Francisco to speak about revenue forecasts and smart meters.

The following is Oshman’s thoughts on how the sector may consolidate as the market picks up.

Silver Spring Networks shows grid smarts

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Scott Lang, the Chief Executive of Silver Spring Networks, sat down at Reuters’ Global Climate and Alternative Energy Summit in San Francisco to talk about building and expanding within green tech sector.

Here Lang discusses how his company’s technology for reporting power consumption to utilities also finds problems quickly.

U.N. climate deal in Copenhagen, or København?

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A new U.N. deal to step up the fight against climate change is to be agreed this December in the Danish capital ‘Copenhagen’, or should that be ‘København’?

British and American English speakers often differ about whether to pronounce it “Copen’hay’gen” or “Copen’haa’gen”. And interviews for the Reuters Global Climate and Alternative Energy summit this week are bringing varieties in between.

The visible hand

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Beijing’s affordable housing projects — which account for 10 percent of the government’s huge $585 billion stimulus package, a key to propping up the crucial property market — is making fans
of low income wage earners, but has some developers seething.

Some developers see the government’s role in the market as interference in market forces that are distorting prices.

A “cash cow”

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By Don Durfee

Safe havens have been few and far between during the global economic crisis, but one has been fairly reliable: infrastructure. So it’s not surprising that many companies are betting on the biggest infrastructure opportunity of them all, China’s $585 billion spending package.

One of those is NWS Holdings, a subsidiary of Hong Kong’s New World Development. Speaking at the Reuters China Investment Summit, executive director Tsang Yam Pui spoke glowingly about the company’s investment in a project to develop 18 rail container terminals around the country.

First, be confident

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As China Inc shops for assets almost everywhere across the planet, some people know what they want. Others are just hurrying to grab some company that’s become undervalued during the global financial crisis.
 
At the Reuters China Investment Summit in Hong Kong, we asked one of JPMorgan’s top deal advisers — Brian Gu, head of M&A for Greater China — if he had any suggestions for cash-rich Chinese. His answer was simple: First, be confident.
 
    “For any M&A, they need the confidence that they aren’t getting into anything that’s messy. They have to demonstrate strong integration and a capability to absorb those assets,” said Gu, a biochemist-turned investment banker.
 
    “A lot of companies want to make minority investments because they just don’t have the confidence to handle a full-blown integration.” Instead, he said, companies are taking a phased approach — buy 20 percent, send some representatives to get to know the managers and then make the decision later on whether to buy the whole company.
 
    In fact, not many Chinese overseas acquirers have shown much confidence, including Lenovo — whose chairman once said that it may take years to see whether the purchase of IBM’s PC business would succeed — and China Minsheng Banking Corp. Minsheng bought a minority stake in UCBH and the shares of the American company sank during the financial crisis.
 
    Gu was unenthusiastic about Chinese companies buying into distressed assets. “With distressed transactions, it’s easier to see them buying into simpler assets, such as natural resources or large capital equipment assets”, he said, adding he believes China Inc knows how to value and operate natural resources better than other, more complicated businesses.
 
    “(Chinese companies) don’t have to be involved in turning around a distressed company. That’s why you see a lot of action in those sectors rather than making bold moves where you buy big operations that involve hundreds of thousands of employees.”
 
    Just months ago, a little-known Chinese company called Tengzhong surprised markets with its plan to buy GM’s troubled Hummer unit. The deal is now still subject to final agreement between Tengzhong and GM as well as Beijing’s approval.
 
    Now, the question for Tengzhong — is it confident it can succeed with Hummer where GM has already failed?

Photo Caption: Brian Gu, JP Morgan’s head of M&A for Greater China, speaking at the Reuters China Investment Summit.

IBM skips around China Internet censorship

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Foreign companies in China, which has the world’s biggest online community, have faced allegations of bowing to censorship rules in their hunt for market access. To be careful, they usually avoid questions on the subject altogether or deflect them with humour.

“I don’t think I am the expert to comment on this,” Shirley Yu-Tsui, a vice president of strategy for IBM greater China, said at the Reuters China Investment Summit.

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