Hong Kong stocks fall, with real-estate dropping

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Caixin Online: What democracy in Taiwan signals to China

By Chen Jian

BEIJING (
Caixin Online
) — Officials in Beijing must have had a sense of relief after they learned that their favored candidate, the incumbent KMT presidential contender Ma Ying-jeou, won the 2012 Taiwan presidential election on Jan. 14, by a margin of 800,000 (52% vs. 46%) votes. However, that sense of relief might prove to be short-lived and premature.

Ma, a Harvard law school graduate, is widely regarded as a model scholar-official and not a risk taker. Although he is very handsome-looking and appealing to a lot female voters, he is not considered as charismatic or motivating as the opposition candidate. That probably partially explains why his winning margin shrank from more than 2 million votes four years ago.

Another reason why Ma’s support has been dwindling in the last four years emanates from rising economic inequality in Taiwan. From a macroeconomic perspective, Ma’s Taiwan should be many nations’ envy.

The unemployment rate is merely 4.3%, down from 6.7% in April 2010, while the U.S. unemployment rate has been higher than 8% for 36 consecutive months, and across the Taiwan Strait, mainland China’s official unemployment rate is 6.1%, while unofficial quotes put the figure between 15% to 20%.

Ma’s friendly policy with mainland China has helped the economy recover much faster than the rest of the world, with more than 1.3 million visitors from mainland China in 2011 spending big time during their tours. However, the income ratio between the top 20% households and bottom 20% has increased from a multiple of 4 in the 1980’s to 8.2 in 2009.

Across the strait, income inequality in mainland China is similarly severe, if not worse. The income ratio between top 10% and bottom 10% households has increased from 7.3 in 1988 to 23 in 2007 (the similar ratio in Taiwan is 26.5 in 2008). Another quote from a member of the Chinese People’s Consultative Conference claims that 0.4% of the population controls 70% of the wealth. This economic disparity has definitely become a driving factor in China’s “group events,” a euphemism used by official Chinese media to describe protests, demonstrations and upheavals. The occurrence of such events has increased almost twenty-fold from 10,000 in 1993 to 180,000 in 2010.

However, inequality would not necessarily brew “group events” in a democratic society. In Taiwan, ever since the ban on opposition party formation and free press was lifted in 1987, there has never been a presidential election as “uneventful” as the one in 2012. Naturally, when the people can take the poll station, they don’t need to take to the street. When they can cast votes, they don’t want to cast Molotov cocktails.

Thus the “uneventful” election of Taiwan 2012 has motivated a lot of people in mainland China to think: “If the Taiwan people can transform an authoritarian society into a mature democracy in merely 24 years, why can’t the Chinese people do it?”

The Chinese government will undergo a power transition as well in 2012. However, most Chinese citizens won’t be able to vote for their leader, or their congressional representatives. Actually they can’t even vote for their favored pop stars in the most popular talent shows. But they have witnessed their “compatriots” execute voting rights in the other part of China, maybe they would hope that China should be reunified when all Chinese people can have the same rights.

Read this commentary on Caixin Online.

The author is a columnist and adjunct professor of finance at Johns Hopkins University.

Hong Kong stocks fall, with property shares leading retreat; Hang Seng Index down 1%

By Sarah Turner Feb. 22, 2012, 6:25 p.m. EST

SYDNEY (MarketWatch) — Australian shares edged lower in early trading, with the S&P/ASX 200 index down 0.2% at 4,286.60. Miners were lower, with Fortescue Metals Group Ltd. down 0.9% and Rio Tinto Ltd. also down 0.9%. Investors were also eyeing earnings, with airline… Full Story

Asia Markets: Asian stocks fall, led by South Korea

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — Asian stocks markets traded lower Thursday, with Japanese banks under pressure and Australia seeing some earnings-related selling, while many Korean blue-chip exporters suffered sharp drops.

Japan’s Nikkei Stock Average


/quotes/zigman/1653884 AU:XJO
-0.39%



 declined 0.4%. the Korean Kospi Index


/quotes/zigman/1652118 KR:0100
-1.05%



 lost 0.9%, and Australia’s S&P/ASX 200 index


/quotes/zigman/1653884 AU:XJO
-0.39%



  slipped 0.5%

U.S. stocks had ended broadly flat on Wednesday, bringing a three-session run of gains to an end, after a weak survey of euro-zone manufacturing reminded investors that Europe’s troubles haven’t ended with this week’s aid deal for Greece.
See report on U.S. stock action.

“I think that the excitement of the Greek bailout getting through has now worn off a bit … [and] that permeated the European and the American markets,” said Michael Heffernan, senior client adviser at Austock.

Financials, which moved lower in U.S. trade, also drew selling in Asia. In Japan, top lender Mitsubishi UFJ Financial Group Inc.


/quotes/zigman/267078 JP:8306
-1.95%



 


/quotes/zigman/392753/quotes/nls/mtu MTU
-0.20%



 was down 2.7%, while rival Sumitomo Mitsui Financial Group Inc.


/quotes/zigman/310742 JP:8316
-0.56%



 


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-2.36%



 fell 1.3%.

In Sydney, Westpac Banking Corp.


/quotes/zigman/181294 AU:WBC
-0.96%



 


/quotes/zigman/181293 WEBNF
+1.54%



 retreated 1.2%.

Miners were also under pressure in Australian trading, as Rio TInto Ltd.


/quotes/zigman/176317 AU:RIO
-1.50%



 


/quotes/zigman/182541/quotes/nls/rio RIO
-1.32%



, gave up 1.4%, and Fortescue Metals Group Ltd.


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-1.62%



 


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+0.34%



saw its share price erode by 2%.

Iluka Resources Ltd.


/quotes/zigman/204322 AU:ILU
-3.96%



 fell 4.8% inSydney after the zircon miner posted a sharp increase in annual profit but highlighted an expected increase in costs during the current year.

The losses for the sector emerged with copper futures down 1 cent at $3.83 per pound in electronic trading, but oil futures maintaining its hold around the $106 a barrel mark.

Political uncertainty also weighed on the Sydney market, as Prime Minister Julia Gillard said Thursday morning she would hold a vote for leadership of the ruling party and government next Monday.
See report on Australian leadership vote.

Concerns about the global economy helped weigh on export-dependent South Korea, where shares of Samsung Electronics Co.


/quotes/zigman/189458 SSNLF
+6.39%



 fell 2.8%, while Hyundai Motor Co.


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0.00%



 surrendered 2.2%.

Back in Tokyo, stock Mazda Motor Corp.


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-7.48%



 


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-12.00%



 skidded 8.8%, after the firm confirmed earlier reports it would issue new shares.

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Sarah Turner is MarketWatch’s bureau chief in Sydney.

Latin American Markets: Mexican stocks avert losses after downbeat data

By Carla Mozee, MarketWatch

LOS ANGELES (MarketWatch) — Mexican stocks edged higher Wednesday, sloughing off losses that tracked Wall Street’s decline after U.S. monthly housing data came in below expectations.

Mexico’s IPC


/quotes/zigman/1475587 MX:IPC
+0.14%



 fought out of the red to end 53 points, or 0.1%, higher at 37,912.55. Investors during the session considered a round of downbeat data from Europe and China, and lower-than-expected home sales figure from the U.S. Also, a report showed retail sales in Mexico fell in December compared with the previous month.

A rebound in shares of copper miner Grupo Mexico


/quotes/zigman/140394 MX:GMEXICOB
+0.59%



aided the index, as did a narrowing of losses in shares of cement maker Cemex


/quotes/zigman/216063/quotes/nls/cx CX
-2.30%



. They finished the session down 2.2%.

Shares of Gennoma Lab


/quotes/zigman/516124 MX:LABB
-3.49%



 logged the sharpest decline, down 2.8%. The shares dropped more than 9% on Tuesday after the company said it planned to acquire Prestige Brands Holdings Inc., a U.S.-based over-the-counter drug maker.

UBS on Wednesday held its buy rating on Genomma’s stock, but cautioned about selling pressure “as strategic synergies are being questioned and final terms are not set,” analyst Marimar Torreblanca told clients. But “we believe the transaction under the offered terms would be positive news. If the terms of the deal change, we will reassess.”

Prestige Brands is “a great operating fit” for Genomma, said UBS, in part because it is a well-known consumer products company, and has grown mainly by buying and expanding on brands from other large companies, similar to Genomma’s business strategy.

Grupo Financiero Banorte


/quotes/zigman/203730 MX:GFNORTEO
-1.65%



 shares ended 1.4% lower, off their worst levels, while lender Compartamos


/quotes/zigman/3436323 MX:COMPARC
+0.25%



 turned higher by 0.8%. U.S. banking stocks, however, remained in the red, hit especially hard after data showed private-sector activity in the euro-zone unexpectedly contracted in February, stirring recession worries.

On the broader market, the S&P 500 Index


/quotes/zigman/3870025 SPX
-0.33%



 fell 0.3% and the Dow Jones Industrial Average


/quotes/zigman/627449 DJIA
-0.21%



 pulled back 27 points to 12,939, the first loss for U.S. equities in four sessions.
Read about U.S. equity losses in Market Snapshot.

The euro-zone report came after a similar index showed February factory activity in China remained at levels that indicate a modest contraction.
Read about HSBC’s China manufacturing index.

The reports from Europe and China were followed by figures from the U.S. — Mexico’s largest trading partner — that existing-home sales rose 4.3% in January to a seasonally-adjusted annual rate of 4.57 million, according to the National Association of Retailers. While sales rose, the result was short of the 4.7 million projected by analysts surveyed by MarketWatch.
See more about U.S. sales of existing houses.

Meanwhile, Mexico’s Inegi statistics agency said retail sales fell 2.56% in December on a seasonally-adjusted basis from the previous month when sales were bolstered by promotional offers heading into the Christmas season. Retail sales in December rose 3.5% year-over-year, surpassing the Dow Jones Newswires’s consensus estimate for a rise of 2.8%.

Among retailers, Wal-Mart de Mexico shares


/quotes/zigman/256436 WMMVY
+1.52%



 rose 2.1%. The shares on Tuesday reversed course, giving up gains that had followed the company’s announcement that it would invest about 19.7 billion pesos ($1.53 billion) in new stores. Walmex also said fourth-quarter profit rose 14% to 22.25 billion pesos on a 13% sales increase to 379.02 billion pesos.

In Brazil, the Ibovespa


/quotes/zigman/1467794 BR:BVSP
-0.17%



 closed down 0.2% at 66,092.77. Trading was closed Monday and Tuesday for the Carnival holiday.

Trading also resumed after a two-session break for Carnival in Argentina. The Merval equity index


/quotes/zigman/1467195 AR:MERV
+1.42%



 ended 1.4% higher at 2,838.62. Chile’s IPSA


/quotes/zigman/1467792 CL:IPSA
-0.13%



 closed Wednesday’s session down 0.1% at 4,519.44.

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Carla Mozee is a reporter for MarketWatch, based in Los Angeles.

Obama signs payroll-tax cut into law

WASHINGTON (MarketWatch) — President Barack Obama signed a bill into law on Wednesday that extends a payroll-tax cut through the end of 2012, prolongs extended unemployment benefits, and prevents a cut in pay for doctors who treat Medicare patients. The House and Senate passed the bill last week. Obama campaigned hard for the bill, which he says will prevent a tax hike for 160 million Americans.

Australia to hold national leadership vote

By Virginia Harrison, MarketWatch

SYDNEY (MarketWatch) — Australian Prime Minister Julia Gillard called a leadership vote on Thursday, with the man she deposed expect to challenge her in a bid for power, drawing months of speculation and infighting within the ruling party to a head.

Gillard will compete in the vote for the Labor leadership, slated to be held at 10 a.m. local time on Monday.

“We need a leadership ballot in order to settle this question once and for all,” Gillard said at a media conference in Canberra on Thursday, one day after her likely challenger, former prime minister Kevin Rudd, resigned as foreign minister.

“For far too long we have seen squabbling within the Labor Party, which has obscured the government’s achievements of what we are doing. This has moved to a distraction from governing itself,” she said.

Gillard said she would “renounce any further ambition for the Labor leadership” and move to the back-bench should she fail to receive the support of her colleagues in Monday’s vote.

Rudd was expected to make a formal announcement on his intentions to run when he returns to Australia from a diplomatic tour on Friday.

“I anticipate that Mr. Rudd would also be a candidate in this ballot … and ask if he does not succeed that he will go to the back bench,” Gillard told reporters on Thursday.

The minority Labor government has suffered in opinion polls for months, as leadership tensions engulfed the party and speculation mounted that Rudd would make a bid to return to power.

Rudd was deposed as leader in a party coup that brought Gillard to power, and he was later installed as foreign minister in 2010.

In a dramatic news conference called from Washington D.C. in the early hours of Wednesday morning, Rudd resigned as foreign minister saying he had lost the confidence of his party’s leader.

“The truth is I can only serve as foreign minister if I have the confidence of Prime Minister Gillard and her senior ministers,” Rudd said at the news conference.

“There is one overriding question for my caucus colleagues and that is, ‘Who is best placed to defeat [opposition leader] Tony Abbott at the next election?’“

The surprise resignation triggered a wave of vicious attacks from Labor ministers, including Treasurer Wayne Swan, who also served under Rudd.

“The party has given Kevin Rudd all the opportunities in the world, and he wasted them with his dysfunctional decision-making and his deeply demeaning attitude toward other people including our caucus colleagues,” Swan said in a statement issued late Wednesday.

Rudd told reporters in Washington D.C. on Thursday that he “has been encouraged by the levels of support I have received so far, and I have a lot more people to talk to.”

“I will make a full statement on my future on the question of the Australian Labor Party leadership in Australia — that is the correct place to do it,” he said.

Virginia Harrison is a MarketWatch reporter based in Sydney.

Therese Poletti’s Tech Tales: H-P and Dell give investors cloudy vision

By Therese Poletti, MarketWatch

SAN FRANCISCO (MarketWatch) — Last November, Hewlett-Packard executives bought some time with investors, announcing in their conference call after earnings that the company would no longer give revenue guidance or outlook for individual business segments.

It was the first earnings call presided over by H-P’s


/quotes/zigman/229301/quotes/nls/hpq HPQ
-1.40%



 new chief executive, Meg Whitman. Wall Street didn’t like it much, and it was viewed as a move to get investors to lower their expectations. Since she was named CEO last September, Whitman has been working to staunch some of the damage done by her predecessor, Leo Apotheker.

On Tuesday, Dell Inc.


/quotes/zigman/27952/quotes/nls/dell DELL
-5.82%



, which disappointed investors with its fiscal fourth quarter, made a similar move, telling investors it would also not give annual revenue guidance, though the company gave a rough prediction for sales for the current quarter.
Read more about Dell earnings.

“With our primary objective continuing to be one of reshaping the company for the future combined with today’s more uncertain environment and our continued pruning activities, we’re not providing a revenue outlook for the year,” said Brian Gladden, Dell’s chief financial officer, on Tuesday. “We feel this will allow us to focus both externally and internally on our key strategic priorities.” He added that Dell will update its longer-term outlook at its June analyst meeting.

Investors were not taking these actions lightly. The implication is that both companies are not seeing revenue growth and have no visibility as to when that situation will change. Several analysts quizzed both companies during their respective earnings calls, trying to suss out more details about the outlook for their businesses.

“I would hope that as we get through 2012, and enter 2013, you’ll start to see the revenue decline flatten out,” Whitman told analysts on Wednesday. “Hopefully, as we get into 2013, by the end, you’ll start to see us grow revenue. It’s very hard to predict. I think it depends on how fast we can get after some of these challenges in the business. It depends obviously what the market does. It depends on the macro economic environment, but a lot of this is in our own hands.”

Both companies are still wrestling with the impact of last year’s flooding in Thailand, which disrupted some major manufacturing plants of hard disk drives. But those shortages hit H-P far harder, as the company was not effective in matching supply and demand, and it chose to focus on its most profitable customers, rather than volume.

In Dell’s case, Gladden told investors that the disk drive situation should be challenging for the next two quarters, and then it should ease. Guidance for the April quarter, though, was that revenue would fall 7% from the fiscal fourth quarter.

Of more concern to investors, however, were Gladden’s comments about demand growing more cloudy, especially in Europe. It’s an issue that will also effect H-P.

“I think clearly it’s a different demand environment and there’s more uncertainty as you look at things like Europe, as you look at some of the demand dynamics we’ve seen over the past year,” Gladden said.

When H-P reported its fiscal first quarter earnings on Wednesday, the results were also plagued by lack of revenue growth. Net revenue of $30 billion was down 7% from the year-ago period. Sales to consumers in both PCs and printers were especially dismal, with revenue in consumer PCs falling 25%, and in printers, where units are a more important barometer, unit volumes of consumer printers fell 15%.

Whitman also highlighted on the company’s conference call that the supplies business, particularly the sell-through of its highly profitable ink cartridges, was at particularly low levels.

One of the vestiges of Apotheker’s brief tenure, before he was ousted by the board, was that H-P made a bizarre public statement last summer that it was considering all its options for the PC business, including spinning it off to investors. That news hurt the PC business, as partners and customers wondered about its future. In addition, H-P is now grappling with changes in the printing market, as consumers print less at home.

Brian Marshall, an analyst at ISI Group, said both companies clearly have no visibility.

“Too many moving targets and they aren’t revenue growth stories so revenue metric is irrelevant,” Marshall said in an e-mail. “Margins and EPS are the name of the game for these two cats.”

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Therese Poletti is a senior columnist for MarketWatch in San Francisco.

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