YEDG - Mar 30 - Topics

[박주하]

Hi YEDGers!

This is material for this Sunday's. 

I am sending this on behalf of Anna, our new active member!

I hope to see you all!

 

Ciao from Serena, 

Sent from my iPhone

Begin forwarded message:
 

From: Anna Lee <annal...@gmail.com>
Date: 2014년 3월 28일 오후 12시 4분 14초 GMT+9
To: 김은영 <sophia...@naver.com>, ye...@googlegroups.com, Anna Lee <annal...@gmail.com>, Robin Kim <robin...@gmail.com>, rea...@gmail.com, hugt...@naver.com, "HaE.S" <esh...@hotmail.com>, esan...@hotmail.com, 董艳姝 <dongy...@hotmail.com>, aabm...@gmail.com, Siobhan Phillips <siobhanp...@gmail.com>, Mikyung Kim <seou...@hotmail.com>, jongche...@hanwha.com, sitco...@naver.com, cool...@hotmail.com
Subject: YEDG - Mar 30 - Topics
 

See you all this Sunday!!  :)

 

 

Article 1. China innovation - Is China a global innovation powerhouse?

http://www.economist.com/debate/days/view/1037

 

Article2. Japanese women and work - Holding back half the nation

http://www.economist.com/news/briefing/21599763-womens-lowly-status-japanese-workplace-has-barely-improved-decades-and-country?fsrc=nlw%7Chig%7C3-27-2014%7C8155417%7C164304049%7CAP

 

 

Article 1. 

China innovation: Statements
http://www.economist.com/debate/days/view/1037/print

Opening statements

Yes

Edward Tse  

Founder, Gao Feng Advisory Co and Chairman Emeritus, Greater China, Booz & Co

SOEs will continue to play a big part in China, but most of the innovation will come from private companies.

No

Anne Stevenson-Yang  

Founder and Research Director, J Capital Research

China has the building blocks for innovation but is thwarted by government domination of the economy.

The moderator's opening remarks

Nov 12th 2013 | Vijay V. Vaitheeswaran  

China's spectacular economic rise is producing some of the world's biggest and fastest-growing companies. Does this also mean that China is an innovation power on par with America?

Boosters point to the soaring number of patents held by Chinese technology firms like Huawei and Lenovo, the number of Chinese PhDs in technical fields graduating each year and the success of internet firms like Alibaba and Tencent as evidence that China is leapfrogging to the forefront of global innovation.

In contrast, sceptics highlight the lack of rule of law and respect for intellectual property rights inside the country, widespread corporate espionage and cybertheft, and forced technology transfers as evidence that China remains a copycat and a cheat.

In his sunny opening argument in favour of the motion, Edward Tse offers three reasons to think China is in fact an innovative economy. He observes that the country is full of entrepreneurial vim, pointing to Xiaomi (a smartphone manufacturer now valued at $10 billion, more than BlackBerry) as an example of such a "fearless innovator". Because China is growing so rapidly, he argues, its markets are forcing firms to become nimble and to adapt quickly. He acknowledges the problems posed by the dominance of uninnovative state-owned enterprises, but thinks private enterprises—including multinationals—will nevertheless carry the day.

In a blistering opening salvo, Anne Stevenson-Yang sets out to make the case against what she considers to be "window dressing" innovation in China. The central problem, she argues, is the dominance of the state. Chinese firms are quite capable of clever inventions, but she thinks firms cannot afford to invest in developing new technologies because of unfair competition from cosseted state-owned enterprises. She also believes much innovative energy is squandered by firms overcoming the obstacles created by the dominance of state capitalists over such things as distribution channels.

The question of whether China can innovate well becomes particularly important as the country's export-led growth model based on cheap labour runs out of steam. Now China's leaders openly talk about the need to shift from exports to domestic consumption, and of the need to boost services. They are explicitly targeting innovation as a national priority, in the hope of speeding the shift from brawn to brain that is required to prosper in this new century's ideas economy.

So is China a world-class innovator or not? Are you moved by the arguments offered by the proponent, or persuaded by the concerns expressed by the opponent? Join our debate today and make your voice heard.

The proposer’s opening remarks

Nov 12th 2013 | Edward Tse  

Innovation, as defined in Wikipedia, is "the application of better solutions that meet new requirements, inarticulate needs, or existing market needs. Innovation differs from invention in that innovation refers to the use of a better and … novel idea or method, and invention refers more directly to the creation of the idea or method itself."

The key drivers of the innovation process can be classified in three major categories and one can picture them as three concentric circles. At the centre there are people, in the middle there are organisations (including culture, processes, offerings) and in the outermost circle there is the environment (economic climate, market condition and geopolitical).

Starting first at the centre: people. Most studies on innovation have shown that it is often more difficult for large corporations to maintain the same level of creativity and freedom (both conducive to the innovation process) as start-ups. China today is filled with start-ups, so it already has a head start. But these Chinese entrepreneurs are looking at other global success stories and, ignited by a "Why not me" mentality, they forge ahead and are not thwarted by the lack of support, but rather find ways to create success against an ever-changing landscape. With limited resources and even less to lose, they are often more risk-tolerant and ready to make tough decisions with short notice, believing that even if these turn out to be suboptimal, they can always change paths and try something else. Against this background, many of them become the embodiment of fearless innovators.

Xiaomi is an excellent example of this. Knowing that it does not have enough money to do detailed research it innovates, and it has completely redefined "listening to your customers". The strategy is working—the company went from zero in 2010 to a current valuation of $10 billion. An obvious comparison would be its American counterpart, Apple, which is undoubtedly one of the most successful innovation companies in the past decade, creating significant market impact and changing the competitive landscape. It is important to note that Apple did not invent the mobile phone or even the smartphone, but it recognised unarticulated consumer needs and went ahead and served those needs. The result for the iPhone is complete market dominance for a long period of time. Steve Jobs did not believe in focus groups because he felt that he knew best. Lei Jun is the opposite, believing that customers are the best ones to tell him what products they want—he listened and then delivered. Both Xiaomi and Apple are highly successful companies and noteworthy innovators, but completely different in their approach.

The second factor is organisations. Organisations generally become more reluctant to change as they become more successful and established. Markets start to mature through time and the market leaders often start to decline as they continue to bask in the glory of yesteryear and miss the early signs of change. Before the emergence of China, these well-established organisations, often market leaders in their respective industries, had attained global leadership and were basically on top of the world. China, however, is a rapidly changing market, and this forces the local market leaders to remain astute. With the lure of the global golden ring, Chinese organisations remain hungry and continue to push for growth.

Haier gained rapid market awareness and share by introducing a washer capable of cleaning not only clothes but also potatoes. This development came about through customer demand from a lower-tier city and is a living embodiment of Haier's "customer centric" management philosophy. Not every company will be like this, but the fact that the market is rapidly changing and there is still more to conquer will encourage more Chinese companies to remain agile and nimble.

The final driver is the environment, and this is the area that causes the most concern for people looking at the future of innovation in China. The criticisms centre on the dominance of state-owned enterprises (SOEs), which basically have little accountability and are not entirely market driven, especially those in closed sectors; the overabundance of government incentive programmes to push for certain technological changes but without the needed oversight; and the heavy involvement of the government in the market.

SOEs will continue to play a big part in China, but most of the innovation will come from private companies (and foreign companies operating in China) and there will be an abundance of these springing up across multiple sectors. Where sectors are open, the competition typically becomes intense as all players, be they multinationals, SOEs or private companies, try to capture a piece of the pie. Government incentives in key industries, eg solar energy, have allowed a nascent industry to attain an enviable global position in a relatively short time. However, without any oversight, as demonstrated by the solar-panel market, there is now a glut. Through time, the government's involvement will decrease and normal market dynamics will follow, ie market consolidation and rationalisation. China is increasingly becoming more open and the government is pushing for more deregulation, thereby increasing competition against the backdrop of a large and complicated market and operating environment. All these changes will serve to further foster innovation.

China is one of the most populous countries in the world and the road ahead is not easy. However, the key drivers for successful innovation are very much present in China and will continue to guide the next generation of innovators.

The opposition’s opening remarks

Nov 12th 2013 | Anne Stevenson-Yang  

Two principal types of innovation preoccupy managers of businesses: one creates new value and the other protects existing value.

Some of the examples of innovations, large and small, that create commercial value, respond to market opportunities and improve competitive advantage would include the invention of the computer mouse by Stanford Research Institute, the development of a stronger, oval-shaped ball bearing by Timken, or the development of an online ticketing system common to multiple airlines by a consortium of the carriers.

China has the building blocks for the first type of innovation but is thwarted by government domination of the economy. With a high educational level and intense commercial competition among small, private businesses, heavily populated areas like Zhejiang and coastal Guangdong can be particularly generative of innovation.

Inventiveness, however, is only one requirement for commercial innovation; having the means and incentive to undertake a long and uncertain development cycle is another. Without property rights, the incentive is absent.

The problem here is not the law; should China's government cease to own and manage businesses, innovation would thrive even amid a complete absence of intellectual property regulation. Instead, companies cannot afford to invest in developing technologies because of competition from protected actors in the state sector. As a result, they find it most adaptive to push new products into the market as rapidly as possible in order to benefit from their brief commercial lives, even if this means capturing technologies through copying or reverse engineering.

This is a defect of the state economy. In China, the most valuable asset a company can own is a set of bureaucratic relationships, and this is why some of the strongest Chinese companies are diversified conglomerates whose critical competitive edge consists of their ability to bring government relationships, and the attendant capital, to bear on any commercial opportunity.

The second form of innovation defends companies from predatory regulatory or competitive practices. Commonly, this type of innovation takes the form of rapid adaptation to a fast-changing and opaque commercial environment, made uncertain by regulatory change. To be competitive, Chinese companies must move quickly, and so they maintain highly decentralised organisations, incentive systems that are indexed to growth, short product-development cycles, locally deployed capital, and an organisational separation between product and distribution that enables the distribution chain to move from product to product easily.

These activities in China absorb much innovative energy. To name just a few:

• Tencent's QQ tool, which added so much convenience for consumers, was launched against the background of the state-owned carriers and regulatory restrictions that barred direct competition.

• The same was true for Sohu's early adaptation of short messaging services, or the short-range Little Smart phones that UT Starcom adapted from old Japanese technology.

• The same evasive motives have driven the adoption of third-party payment systems such as Shanda's and Tencent's payment cards.

All of these represent high levels of innovation by entrepreneurs, but most are against the background of micro-regulation that otherwise would inhibit enterprise growth and improved offerings to the marketplace.

Although overcoming the obstacles created by distribution channels monopolised by the state in itself generates adaptive innovation, such obstacles tend to kill inventions before they have a chance to be tested in the market.

Once monopolisation works against innovation, the government steps in to create programmes focused on funding streams for incumbents that undermine the very innovation they are designed to support, as they direct research efforts toward predetermined targets.

• Cell phone companies in the later 1990s were given generous funding for R&D to help them compete with international incumbents in the export market. The Chinese companies focused on undercutting the internationals on price and were left behind when international companies moved up the value chain.

• Auto companies now receive huge grants to develop energy-saving technologies and consequently develop redundant capacity in the same lithium-ion batteries, with no development of infrastructure for electric cars.

• Solar companies were given large subsidies in order to make competitive polysilicon, such that they undercut internationals on price but developed products that cannot survive outside the subsidised environment.

Many times, technology is acquired in Chinese companies under government incentive programmes that encourage capital spending, but the technology is not absorbed into any business process. Yili Milk is one example. The company's packaging plant in Hohhot is as modern as any in the world, but the milk collection is done in unsanitary village stations, because agricultural policy in China makes the aggregation of pasturage impossible.

China's challenge as a nation is to redirect its entrepreneurial energy away from this sort of "window dressing" innovation and towards new value creation.

 

Article 2. 

Japanese women and work

Holding back half the nation

Women’s lowly status in the Japanese workplace has barely improved in decades, and the country suffers as a result. Shinzo Abe would like to change that

Mar 29th 2014 | TOKYO | From the print edition

KAREN KAWABATA represents the best of Japan’s intellectual capital. She has just graduated from the University of Tokyo, the most prestigious in the country. Wry and poised, with an American mother and Japanese father, she has the languages and cosmopolitan attitude that Japanese companies particularly value nowadays. In April she will join McKinsey, a consultancy that should give her immediate membership of a globe-trotting elite.

Yet Ms Kawabata sees obstacles in her path. She is acutely aware of the difficulties she would face at traditional Japanese companies, should she find herself joining one. Ferociously long working hours, often stretching past midnight, are followed by sessions of “nominication”, a play on the Japanese word for drinking, nomu, and the English word “communication”; these are where young hopefuls forge connections and build reputations. Nowadays women trying to impress the boss are allowed to drink plum wine mixed with plenty of soda instead of beer, says Ms Kawabata. But that is hardly a great improvement.

Above all, she worries that having a family will be nigh on impossible to combine with a demanding career. When she met her boyfriend’s father for the first time this year, she reassured him about her intentions at McKinsey. “I told him that I would rethink my career in a few years’ time,” she says.

That one of the brightest of Japan’s graduates needs to say such things should worry Shinzo Abe, the prime minister. Japan educates its women to a higher level than nearly anywhere else in the world: its girls come near the top in education league-tables compiled by the OECD. But when they leave university their potential is often squandered, as far as the economy is concerned. Female participation in the labour force is 63%, far lower than in other rich countries. When women have their first child, 70% of them stop working for a decade or more, compared with just 30% in America. Quite a lot of those 70% are gone for good.

Beyond the Festival of the Dolls

Mr Abe says he wants to change that. In April 2013 he announced that allowing women to “shine” in the economy was the most important part of his “Abenomics” growth strategy. Raising female labour participation to the level of men’s could add 8m people to Japan’s shrinking workforce, potentially increasing GDP by as much as 15%, according to Goldman Sachs, an investment bank. More women working for more pay would also increase demand. Hence speeches from Mr Abe attaching new-found importance to matters such as the opening hours of kindergartens and the challenges of breast-feeding outside the home.

For the prime minister, who belongs to the conservative Liberal Democratic Party (LDP), this is quite a turnaround. In 2005, when a previous government was taking steps towards greater equality, Mr Abe and his fellow conservatives warned of the damage to family values and to Japanese culture that could result if men and women were treated equally. They worried that rituals such as the hina matsuri, or Festival of Dolls, an annual celebration of young girls and the state of matrimony, could be endangered. Their concern was not just based on tradition; keeping women out of the workforce, conservatives thought, made economic sense too. If the country’s “baby-making machines”, as a former LDP health minister put it, stayed at home then they would produce more babies, and thus more workers.

This insight proved to be flawed. As the LDP encouraged women to stay at home, the fertility rate, already low, plunged further, bottoming out at 1.26 children per woman in 2005 before edging up to 1.41 in 2012. The consequent dearth of young people means that Japan’s working-age population is expected to fall by 40% by 2050, exerting a powerful drag on the economy. As a solution to this, the direct measure of getting more women out into the workforce would have great advantages over the indirect tactic of encouraging them to stay at home in the unfounded hope that they will breed instead.

Indeed, it may even turn out that working and having children go hand in hand. In other rich countries, higher birth rates nearly always accompany higher female employment, and in Japan itself the birth rate is higher in the countryside, where more women work, than in the big cities, where fewer do. The changes that might encourage more urban women into work—such as better child-care provision, and a less demanding corporate culture, which would mean shorter working hours for men and women alike—might encourage them and their husbands to have more children, too.

The missing salarywoman

Mr Abe’s interest in all this is new; the problem is not. Yoko Kamikawa, an LDP politician, recently served on the party’s new committee seeking to improve the lot of women. In the 2000s, during Mr Abe’s first term as prime minister, she was his minister of gender equality. She is startled, she says, by the lack of progress since then.

In most countries women’s participation in the labour force dips around the years when they marry and bear children; after that it recovers. But this M-shaped curve is much more pronounced in Japan than in most other rich countries (see chart 1). Japan’s curve has levelled out somewhat in recent years: in 2004 the rate of full- and part-time employment for 30- to 34-year-old women was 61%, a figure which by 2012 had risen to 69%. Yet young, married mothers are still largely absent from the workforce, and many women returning to work go into part-time or temporary jobs with low pay and little security.

Those who stay in work often do so in jobs that waste their abilities. Few women hold professional, technical or managerial roles. In 2012 they made up 77% of Japan’s part-time and temporary workforce. Many of these workers are well-off married women seeking a little extra income. But others are poor and marginalised. The precarious existence of such workers was described in “Out”, a bestselling 1997 crime novel by Natsuo Kirino which had a resonance, and earned acclaim, beyond the borders of the genre. The heroine, who spends her nights toiling in a soulless packed-lunch factory, helps conceal the murder of a colleague’s no-good husband. Ms Kirino’s subsequent bestsellers have also focused on the division of gender roles, describing men slaving away in the corporate world, disconnected from women in the home.

At the very top of corporate Japan, the “bamboo ceiling”—so-called by women for being thick, hard and not even transparent—is starting to let in some chinks of light, but they are few and far between. In 2011, 4.5% of company division heads were female, up from 1.2% in 1989. But relative to other countries the numbers are still dismal. Of the most senior, executive-committee-level managers in Japan, 1% were women in 2011, according to a regional study by McKinsey. The equivalent figure for China was 9%, for Singapore 15%.

Corporate culture is by far the biggest obstacle for Japanese women. The practice of hiring graduates fresh out of university and employing them for their entire working lives makes it difficult for employees to take career breaks and seek new positions elsewhere afterwards. Promotion tends to be based on tenure and overtime, rather than on productivity and performance. And straightforward discrimination remains rampant. In a study that compared the reasons why Japanese and American college graduates leave their jobs, American women cited child care and looking after elderly relations as the main factors. Japanese women blamed dissatisfaction with their jobs and a feeling of being put into “dead-end” roles. The fact that their husbands, who spend more time at work than their counterparts in other developed countries, spend less time on child care or household chores, adds to the perceived need to stay at home (see chart 2).

When Japanese firms take their pick of university graduates they choose men and women, but they still prefer men for management, sticking most of the women on the “clerical” track. Foreign companies have been able to take advantage of this prejudice by hiring and promoting able female graduates, says Georges Desvaux, the head of McKinsey’s Tokyo office, who also leads the firm’s global research on the role of women in companies. Overseas executives inside large Japanese companies tell tales of über-secretaries with the talent to run the whole business.

Keidanren, Japan’s most powerful business lobby, has been markedly uninterested in doing much about this. Though government pressure recently got the lobby to start internal discussions on promoting women, corporate leaders regard Mr Abe’s new enthusiasm for improving the lot of women in the same way as they look on reforms to corporate governance: as costly distractions from the task of lifting Japan Inc’s profits. Keidanren refuses to ask its members even to state the number of women on their boards, in fear of being asked to increase it, or having quotas imposed. Bureaucrats seeking to find the number scan documents for the suffix “ko”, usually found on female names.

Male dominance extends beyond the corporate world: in politics, too, women are grossly under-represented. In the lower house of the Diet, women hold only 8% of seats, with 19% in the upper house. In a global survey of women in parliaments, Japan ranked 123rd out of 189 countries. The older generation of men is particularly traditionalist, and still wields the most clout.

Pampered wife, wise choice

Yet women are not simply being held back by the patriarchy. When the choice is between leisurely dependency in the home—known as sanshoku hirune tsuki (“three meals and a nap”)—and the sorry life of a salaryman there is something to be said for putting your feet up. In wealthy places like Tokyo many women simply do not wish to work, says Takeshi Niinami, chief executive of Lawson, a chain of convenience stores.

Mariko Bando, author of “The Dignity of a Woman”, a bestselling guide for women on how to succeed in the workplace, points out that many Japanese women do not feel they need a high-status job to enjoy high status. A well-educated woman working part-time in a supermarket will not see that job as defining her identity if she is the wife of, say, a high-ranking Mitsubishi Corporation executive.

Remarkably, women seem to have become more conservative about work in the past few years. In 1979, 70% of women agreed with the statement that “The husband should be the breadwinner and the wife should take care of the home”. By 2004 that had fallen to 41%. But in 2012, perhaps because of the recession in 2007-09, just over half said they preferred to stay at home. A survey last year showed that a third of very young women want to become full-time housewives. Potential husbands, meanwhile, were less traditionalist: only one in five young men said he wanted his future wife to stay in the home.

Feminism has remained a timid force in Japan. The long economic boom that began in the 1950s was a national priority which left little room for questioning traditional roles in the home or workplace, says Chizuko Ueno, Japan’s best-known feminist. And women are not without power behind the scenes. Housewives control the family finances, and in the workplace so-called “office ladies” wield a lot of influence over the lives of salarymen, quietly hindering the careers of those they dislike.

There are, however, some indications that the role of women could change. For one thing, the boom that overrode all other interests is long gone. Stagnating wages mean the three-meals-and-a-nap way of life is less widely available, with households increasingly in need of two incomes. And the divorce rate is rising. More Japanese women are opting out of marriages to overworked and largely absent salarymen, and so thus increasingly need to fend for themselves. Although a portion of young women want old-fashioned gender roles, the rest, including the “parasite singles” who prefer living with their parents to marriage, want change.

Herbivore men, carnivore women

Some of the most motivated graduates nowadays are female, and a growing number of companies are waking up to the possibility of putting them to better use than in the past. According to Sakie Fukushima, a director of another business lobby, Keizai Doyukai, human-resources executives say in private that they would hire young women ahead of men most of the time. Yet they are afraid that they will lose them when they have children. Japan’s female 20-somethings now tend to be far more internationally minded than their male equivalents, says Lawson’s Mr Niinami. They outperform soshoku danshi, or “herbivore” men, so-called for taking low-responsibility jobs and preferring shopping to sex. These same young men have little desire to follow the breadwinner/housewife model adopted by their parents. Indeed, Japanese media have recently, with some surprise, begun to note a trend towards young fathers taking on more child care.

In some corners of corporate Japan, firms are changing the old working practices. At DeNA, an internet-services company, employees have noticed that their colleagues in California never stay late at the office, instead continuing their work at home. They are now starting to follow the American example, says the company’s founder, Tomoko Namba. A few firms are trying to increase productivity while shortening hours. Mitsubishi Chemical Corporation, a leading blue-chip, is discouraging workers from staying in the office after seven o’clock.

By 2020 Mr Abe wants women to occupy 30% of all “leadership” positions—which would include members of parliament, heads of local government and corporate executives. His most practical step has been to try to shorten waiting lists for child care by allowing more private companies into a previously state-dominated sector. Here he has seized upon the work of Fumiko Hayashi, the mayor of Yokohama, who after being elected in 2009 managed to reduce the city’s child-care waiting list, then the longest in the country, to zero in just over three years. A former senior saleswoman at Honda, BMW and Nissan, she brought private firms into the sector. Mr Abe wants to expand her “Yokohama method” across the country.

Yet many Japanese women, who are particularly protective of their children, distrust day care (one reason women in the countryside have more children is that they are more likely to have parents nearby to lend a hand). What is required, more people now argue, is an army of foreign nannies. In January, at the World Economic Forum in Davos, Mr Abe suggested Japan’s immigration rules could be eased so that foreign workers could help care for children and elderly relatives, another duty that falls most heavily on women. There have been unconfirmed media reports that the government is considering allowing in as many as 200,000 foreigners a year to work in areas such as construction, child care and nursing.

As with much of the country’s ambitious programme of structural reform, however, such a loosening will face high political hurdles. Immigration is unpopular with the Japanese public; insiders note that Mr Abe may say such things in Switzerland, but has not given public voice to them in Japan.

Until overseas talk is followed by domestic action, many will think Mr Abe lacks the will to push for changes that would greatly improve the life of working women. His actions so far have not impressed. A request that firms allow mothers to take three years of maternity leave—compared with the 18 months they can take now—met with derision from all sides. Companies said it would cripple them; feminist critics said that it was part of the old agenda to keep women in the home. The target of 30% women in leadership roles by 2020 was first proposed in 2003 by then-prime minister Junichiro Koizumi. “The target is an old one, and it was not implemented,” says Yuriko Koike, head of public relations for the LDP and a former defence minister. The deadline arrives in only six years; there is little chance it will be met. The idea of reducing waiting lists for child care, too, dates back to Mr Koizumi’s time in office.

Some of Mr Abe’s allies frequently remind voters of the prime minister’s former traditional views on the family. In January Michiko Hasegawa, whom Mr Abe had approved as a board member at NHK, Japan’s national broadcaster, published a column saying that women’s most important task was to bring up their children, and that this should take priority over working outside the home. “The message on women is somewhat mixed,” concludes Ms Koike.

If the government really wants to increase female employment, argues Kathy Matsui of Goldman Sachs, it could do so by axing tax rules that keep women’s earnings low. The “head of household”, normally a man, is allowed to claim a tax deduction of ¥380,000 ($3,700) as long as his spouse’s income does not exceed ¥1.03m. The pension system, too, encourages limited earnings. As long as a wife’s annual wages remain under ¥1.3m she can claim the national pension without paying any premiums. Tackling such privileges, however, could cost the LDP the votes of millions of housewives and their husbands.

At a private dinner in Davos Mr Abe listened to a small group of senior women, including a former head of state, discuss what Japan should do differently. An awkward moment came when one of the guests, Miki Tsusaka, a partner at the Boston Consulting Group, told him she had dreaded returning to Japan after a successful career spent mostly in New York. Yet increasingly, behind their soft tones and feminine demeanour, many Japanese women are getting ready to break out of their dolls’ house. If the country’s policymakers can find the right ways to help them, those women could boost the economy and reform corporate culture. Both they and their sararimen stand greatly to benefit.

From the print edition: Briefing

[박주하]

Hi everyone,

 

As last week we didn't have session, we are going to discuss last week's topics which Anna has sent us already. 

Then, I hope to see you this Sunday!

 

Ciao 

 

-----Original Message-----
From: "Anna SG"<annal...@gmail.com>
To: "박주하"<iosono...@naver.com>;
Cc: "김은영"<sophia...@naver.com>; "ye...@googlegroups.com"<ye...@googlegroups.com>; "Robin Kim"<robin...@gmail.com>; "rea...@gmail.com"<rea...@gmail.com>; "hugt...@naver.com"<hugt...@naver.com>; "HaE.S"<esh...@hotmail.com>; "esan...@hotmail.com"<esan...@hotmail.com>; "董艳姝"<dongy...@hotmail.com>; "aabm...@gmail.com"<aabm...@gmail.com>; "Siobhan Phillips"<siobhanp...@gmail.com>; "Mikyung Kim"<seou...@hotmail.com>; "jongche...@hanwha.com"<jongche...@hanwha.com>; "sitco...@naver.com"<sitco...@naver.com>; "cool...@hotmail.com"<cool...@hotmail.com>; "sjh...@gmail.com"<sjh...@gmail.com>;
Sent: 2014-03-30 (일) 08:31:00
Subject: Re: YEDG - Mar 30 - Topics

Hello All, 

 

Today's meeting is canceled as no one make it today.. 

We shall have awesome meeting next Sunday! 

 

Have a good Sunday.... 

 

Anna

Sent from my iPhone

[박주하]

Hi Ally & everyone!

 

Last week we cancelled the meeting. This week we gonna discuss the articles which our 모범생 Ally has prepared. 

I hope to see all you tomorrow!!

 

Ciao from Serena, 

 

-----Original Message-----
From: "김아름"<sitco...@naver.com>
To: "박주하"<iosono...@naver.com>; "Anna SG"<annal...@gmail.com>;
Cc: "김은영"<sophia...@naver.com>; <ye...@googlegroups.com>; "Robin Kim"<robin...@gmail.com>; <rea...@gmail.com>; <hugt...@naver.com>; "HaE.S"<esh...@hotmail.com>; <esan...@hotmail.com>; "董艳姝"<dongy...@hotmail.com>; <aabm...@gmail.com>; "Siobhan Phillips"<siobhanp...@gmail.com>; "Mikyung Kim"<seou...@hotmail.com>; <jongche...@hanwha.com>; <cool...@hotmail.com>; <sjh...@gmail.com>;
Sent: 2014-04-12 (토) 05:26:53
Subject: YEDG - April 13 - Topics

Hi everyone, this is Ally

 

I prepared for these sunday discussion two articles as below

please read these before our meeting, and share your brilliant ideas during the session

sorry for the late announcement, and hope you to see all of your guys on sunday;)

 

 

Article1. Obamacare Uphill all the way

http://www.economist.com/news/united-states/21599786-deadline-signing-up-nears-obamacare-looks-precarious-uphill-all-way

Article2. The economy On cloud nine trillion

http://www.economist.com/news/china/21599806-our-asia-economics-editor-takes-his-leave-less-worried-many-his-peers-about-frailties

 

[Article1. Obamacare Uphill all the way]

Obamacare

Uphill all the way

As the deadline for signing up nears, Obamacare looks precarious

 

Mar 29th 2014 | PHILADELPHIA | From the print edition

 

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BARACK OBAMA signed the Affordable Care Act on March 23rd, 2010. Exactly four years later J. Louis Felton, a pastor in Philadelphia, led his flock in an unusual procession: out of church and onto a sales bus owned by a local insurer. “We need to sign up,” Mr Felton says. “People in our communities have never had the opportunity to get health coverage before.” On the bus he prayed for Obamacare’s success.

It could use some help. The fight over the law makes mud-wrestling look decorous. This year Obamacare is, yet again, Republicans’ favourite weapon on the campaign trail. On March 25th it was, yet again, debated in the Supreme Court (see article). Meanwhile, Mr Obama continues to undermine his own law by delaying parts of it: this month officials said Americans could keep old plans that don’t comply with Obamacare for another two years.

In this section

• Uphill all the way
• The Hobby Lobby hubbub
• What crisis?
• Style and guile
• Digital resurrection
• Saner than it looks
• A new ranking
• Medals for drone pilots?

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Related topics

• Health-care reform
• Insurance
• Business
• Health insurance
• Personal finance

 

America is the world’s only rich country not to have universal health care. Obamacare was meant to address that. In the past insurers charged the sick higher rates than the healthy. Since January this has been banned. To keep insurers from going bust, the law requires all Americans to have insurance or pay a fine. The premiums from cheap, healthy people are supposed to offset the costs of the sick. New online health exchanges allow people to shop for coverage. For the hard-up, Obamacare does two things. It expands Medicaid (public health care for the poor) to individuals earning up to about $16,000. And it offers subsidies to those who make more than $11,700 but less than $46,700.

In 2011 the Congressional Budget Office (CBO) projected that Obamacare would lower the number of uninsured by 21m in 2014 and 34m in 2021. Now the CBO is gloomier: it says the law will shrink the ranks of the uninsured by 13m in 2014 and 25m in 2021. More than 30m Americans will still lack coverage after Obamacare is fully implemented.

The gap that makes no sense

The law’s drafters assumed that the states would all expand Medicaid, so the subsidies only kick in above that $11,700 threshold. But after the Supreme Court said the states could refuse to expand Medicaid, half of them (mostly Republican-led) did just that. In those states, millions of people will not qualify for Medicaid but are too poor to qualify for Obamacare subsidies.

The results are perverse. In Pennsylvania, which has not expanded Medicaid, childless adults are ineligible, no matter how poor. Paul Johnson, a 51-year-old repairman, boarded that bus in Philadelphia on March 24th, hoping to find coverage. “I’ve never had a check-up,” he said. He will have to wait a bit longer. Earning less than $10,000 a year, Mr Johnson is too poor to qualify for an Obamacare subsidy. But he does not qualify for Medicaid, either. He left the bus as he had entered it, without insurance, hoping not to fall ill.

Pennsylvania and 33 other states also declined to create their own insurance exchanges. The federal government did so on their behalf, setting a new record for bureaucratic ineptitude. The launch of Healthcare.gov in October went so badly that the CBO cut its estimate for the number of enrollees this year from 7m to 6m.

The website is working better now. The deadline for individuals to have coverage in 2014 or pay a penalty was supposed to be March 31st. Under new rules, many who claim to have begun the process will have more time to sign up. By mid-March more than 5m Americans had done so. Mr Obama and his allies hope enrolment will jump by April, especially among the young and healthy. People aged 18-34 were a quarter of those who had enrolled by the end of February, though they are 40% of those eligible to sign up.

The worry is that too few healthy people will enroll, prompting insurers to raise prices next year. That would make fit folk even less likely to buy coverage. To avoid this “death spiral”, the health department spent $52m on adverts from January through March. Mr Obama has hawked the law to young Americans at meetings, online and on television chat shows.

He has also tweaked his reform in ways that may appease angry voters in the short run, but make it less likely to work in the long run. For example, he has made it easier to dodge the requirement to buy insurance, by adding to the law’s long list of exemptions for “hardship”. The weaker the mandate, the less likely healthy people are to sign up: they know they can wait until they fall sick to buy insurance. Paul Starr of Princeton University has argued that the mandate should be made stronger: refuseniks should have to opt out on their tax returns, and should not then be allowed to buy an Obamacare policy for five years.

Mr Obama has also done things likely to make insurance more expensive. For example, his health department will require insurers to cover a broader network of doctors in 2015. That will raise prices—this year, plans with a wide network were 26% more expensive than plans with a narrow one, according to McKinsey, a consultancy. Higher prices will deter enrolment.

A death spiral is unlikely, but by March only 15% of those who could enroll through the exchanges had actually done so, according to the Kaiser Family Foundation, a think-tank. According to a new Kaiser survey, six in ten were still unaware of the enrolment deadline.

Just 19% of Americans said the law has helped them. More continue to oppose Obamacare than support it, though only three in ten favour scrapping it. So long as power in Washington is divided and the parties are polarised, the law can neither be amended nor repealed. It is up to Mr Obama to fix it using his administrative powers; he does not have much time.

From the print edition: United States

 

 

• [ Article2. The economy On cloud nine trillion]

 

 

The economy

On cloud nine trillion

Our Asia economics editor takes his leave, less worried than many of his peers about the frailties and paradoxes of China’s economy

 

Mar 29th 2014 | HONG KONG | From the print edition

 

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SOME economic journalists are like stormbirds: they come alive when financial clouds gather and the thunder rolls. Your correspondent’s career has been different. He has migrated away from trouble, escaping crisis-struck Britain for booming India in 2007, then leaving that country before it sank into its sad, stagflationary funk. This will be his last week covering China’s economy—which is just as well, given the whiff of ozone in the air.

This month China’s corporate-bond market suffered its first default since it began in its present form, a widely watched manufacturing index fell for the fifth month in a row, and officials in one eastern county rushed to placate worried depositors lining up to withdraw money from two small banks. It would seem a good time for a fair-weather bird to fly away.

Related topics

• Asia
• China

 

But China remains a resilient economy. It still has substantial room for error and a lot of room to grow. Although it is already a very big economy (its $9 trillion GDP is bigger than 154 other economies combined) it is not yet a very rich one. Its income per head (at market exchange rates) is only 13% of America’s and ranks below that of more than 80 other economies.

Because China is already the world’s second-biggest economy, it attracts scrutiny that smaller economies escaped when they were at a similar stage of maturity. Observers expect it to pass financial thresholds that other catch-up economies did not cross until much later in their development. This month’s bond default, for example, represents a painful but necessary step towards maturity for China’s capital markets. Most commentators saw it as a woefully belated coming-of-age. But Japan did not record its first bond default until the late 1990s, when its standard of living was 3.7 times China’s today. Likewise back when South Korea had the same income per person as China enjoys now, foreigners paid little attention to its monthly manufacturing wobbles.

The heft of China’s GDP combined with the modesty of its GDP per person is one of the curiosities of China’s economy. But it is not the only one (see box). Another example is China’s “financial repression”. Its central bank caps the interest rate that banks can pay depositors, imposing an implicit tax on their savings. But in China, unlike other countries, this repression does not discourage saving. In fact, it appears to do the opposite. The country’s households are “target savers”: they squirrel away money to meet a fixed financial goal, such as the down-payment on a home. If their thrift is poorly rewarded, they simply do more to reach their target.

 

 

China’s financial repression has therefore proved surprisingly sustainable (although restless depositors have sought higher returns from online funds and wealth-management products). It has contributed to China’s remarkably high rate of saving, which reached over 50% of GDP in 2012. This is more than China can invest at home, obliging it to export some of its saving (typically 2-3% of GDP) abroad. This incurs the wrath of its trading partners. But therein lies a paradox. Even as China is frequently lambasted for excess saving, the same critics also accuse it of excess borrowing. Worrywarts point out that credit in China has increased from about 100% of GDP five years ago to about 135% of GDP today. The central bank’s broader measure of financing (which includes the bond market and some bits of shadow banking among other items) is 180%.

How can an economy suffer from both excess saving and excess borrowing? This riddle is best answered with a textbook parable. Consider a one-farm economy, which yields a GDP of 100 ears of corn. The farmer gives half to a fieldhand as wages and keeps the rest for himself. The fieldhand eats half of his wages and lends the remainder (25 ears) to the farmer. The farmer now has 75 ears of corn. He eats 25 of them, ploughs 48 back into the field as seed corn for next year’s harvest and lends two to a neighbouring farm.

To an economist, saving means anything not consumed. Therefore this economy, like China’s, has a remarkably high saving rate (the 50% of corn not eaten). But this high saving is combined with heavy domestic borrowing: the farmer has added 25% of GDP to outstanding debt. If, instead of lending corn to the farmer, the fieldhand ate it, saving would fall (because more corn is now being consumed) and so would borrowing (because the farmhand is now consuming his own earnings, rather than lending half of them out).

China’s economy last year harvested over $9 trillion worth of goods and services. Almost half of that output consisted of new capital goods (infrastructure, housing, factories and machinery). This investment rate of about 48% of GDP is among the highest ever recorded. Some of this frantic accumulation has been wasteful: building cities without citizens, and bridges without destinations. It is as if the farmer scattered some seed corn on stony ground, where it failed to take root.

Sad but not serious

This “malinvestment” is a pity but it is not enough to undermine China’s economic future. The country, as its critics suggest, should have consumed these resources rather than squandering them on ill-conceived ventures. If it had done so, its people would be happier. But, it is important to realise, they would not be any wealthier. Consumption, like malinvestment, leaves no useful assets behind. If the farmhand had eaten the wheat his boss scattered on stony ground, he would be better fed but next year’s harvest would be no bigger.

China’s high investment has been financed with plentiful credit. One further puzzle is why this surge in credit has not resulted in higher inflation. Investment adds to an economy’s productive capacity, which will eventually depress prices. But to build the extra capacity, firms must first hire workers and buy materials. If carried too far, this will push up wages and prices, adding to inflation.

China has escaped this fate partly because a growing portion of credit has been spent on existing assets, including land and property. Because these assets already exist, their purchase does not make any fresh demands on the economy’s productive capacity. Buying them does not add to GDP (which only measures the production of new goods and services). Nor does it push up wages and consumer prices.

It will, however, drive up asset prices. These higher valuations can, in turn, raise people’s willingness and ability to borrow. In this way, credit and asset prices can chase each other upwards, without any immediate limit. It is as if two farmers were to compete to buy the same storehouse of grain, by offering ever bigger IOUs.

Deflating this credit bubble is the trickiest task China now faces. Stormbirds squawk incessantly about a “Lehman moment”. But that disaster was only the second of three acts in America’s financial tragedy. The first was an inevitable fall in house prices. The second was a seizure in the financial system after Lehman’s bankruptcy, as financial intermediaries lost confidence in each other. The third, interminable act consisted of a prolonged shortfall in spending, as chastened banks and bloodied borrowers licked their wounds.

China will suffer the first of these stages. People will discover they were not as wealthy as they thought. But China should escape the second and third stages. Rather than allowing banks to fail, the central government—or even the central bank—can step in and take bad loans off their balance sheets. Credit will stop growing as quickly. But since China’s credit excesses added little to GDP, unwinding them need not subtract greatly from GDP. If a lack of lending or spending does threaten to drive output below its full potential, the government can oblige banks to lend and state-owned enterprises to spend.

This may seem too good to be true. But it reflects the peculiar nature of China’s excesses. Asset prices may need to fall. But production does not. China suffers from neither inflation nor a big trade deficit. It is not living beyond its means. It does not need to spend less; it needs to spend differently. For every sunset industry that must contract (steel, solar energy, baroque flats), a sunrise industry should expand (health care, logistics, spartan flats). Otherwise it will fall short of its potential. It must consume more of its harvest and invest less of it. But it should still reap that harvest in full.

Of course, it is not always easy to reallocate labour and capital from oversupplied industries to under-served ones. But this is not a challenge unique to China, nor is it unique to this period in its history. The composition of China’s output, like every other economy’s, is always changing. In the past six years alone, exports have fallen from 38% of GDP to about 25%, and services have grown from 42% to 46%.

China’s excesses should also be kept in perspective. It has indeed accumulated more capital per worker than other fast-growing countries had at a similar stage of development (see chart). But it also has many stages of development ahead of it. Its capital stock per worker is only about a quarter of South Korea’s, for example. As the economy grows, big problems tend to diminish in its rear-view mirror. In 1998 up to 40% of China’s loans turned sour. Cleaning up the mess cost 5 trillion yuan, or 58% of China’s 1998 GDP. But China’s growth makes molehills out of mountains: 5 trillion yuan now represents less than 9% of its GDP. New production quickly eclipses the old. Indeed, of all the goods and services ever produced by the People’s Republic of China, over 30% were churned out in the four years since your correspondent arrived in 2010.

 

 

On a prior visit to Shanghai, he enjoyed a drink at Cloud 9, a bar at the top of the city’s then tallest building. He recommended the same bar to his wife a few years later, only to realise (too late) that the tallest tower was no longer the same one. Now Shanghai is conjuring a third tower to overshadow the other two.

This new peak was recently scaled by two foreign trespassers, who posted a video of the climb online. The pair looked woefully ill-equipped, but the view from the top was breathtaking and a little gut-wrenching. This feeling of being overawed, under-equipped but well-rewarded is familiar to anyone lucky enough to write about China’s vertiginous economy.

From the print edition: China

 

 

Best regards, Ally

 

 

 

[김은영]

Greetings all,

please find the articles we are going to discuss this Sun and hope to see you all.

 

http://www.economist.com/news/leaders/21602219-right-be-forgotten-sounds-attractive-it-creates-more-problems-it-solves-being

http://www.economist.com/news/leaders/21602206-although-economies-around-europe-may-be-mend-voters-disillusion-could-cause-new

 

Google and the EU

On being forgotten

The right to be forgotten sounds attractive. But it creates more problems than it solves

May 17th 2014 | From the print edition

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MAX MOSLEY enjoyed sexual practices which many might find odd. But that was his business, so when in 2008 a now-defunct British tabloid wrongly dubbed him a participant in a “sick Nazi orgy”, he sued it for breaching his privacy and won. The allegations, however, remain on the internet. If you type in “Max Mosley”, Google helpfully tries to complete the search: the first four options are “video”, “case”, “pictures” and “scandal”. He—and many others who feel their lives are tainted by the smears and irrelevancies which search engines link to their names—want redress.

Many European politicians are sympathetic to this. Countries such as France and Britain have long allowed the erasure of criminal records once convictions are spent. The European Parliament has backed a “right to be forgotten”, though to become law it would need the approval of all the European Union’s 28 member states. Mr Mosley has won the first round of a legal battle in Germany to block the images appearing on Google searches there.

In this section

• Europe goes to the polls
• Collective insecurity
• Kick-starting India
• Privet and privation
• On being forgotten

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Related topics

• Europe
• Search Engines
• Science and technology
• Internet
• Technology

Now the European Court of Justice (ECJ), the EU’s highest court, has boosted this cause in a landmark case (see article). A Spanish lawyer, Mario Costeja González, sued Google because its search results linked his name to a newspaper article from 1998 about a now-resolved lawsuit. The court ruled that Google was a “data controller” under the 19-year-old European law on data protection, which gives individuals strong rights over data that others hold on them. It said Google could be required not to display links to information that is “inadequate, irrelevant...or excessive”, given the purpose for which they are processed, and the time elapsed. Individuals will be able to appeal to their national data watchdogs if they are turned down.

The court’s desire to protect victims of misunderstanding and malice is understandable. But a right to be forgotten would be hard to implement. Even if Google is made to censor its search results in Europe, in America the First Amendment’s free-speech provision usually trumps privacy concerns. With modest technical know-how, European internet users will be able to make American-style searches. Europe will hardly want to build a Chinese-style firewall to prevent that.

And even if it were practicable to force companies to erase the past, it would do more harm than good. It would hamper everyone interested in finding out inconvenient truths about those who would like their past covered up. The ECJ ruling makes allowance for a public-interest defence, but it will mostly make commercial sense for Google and other search engines to take down material as soon as someone complains, rather than to weigh the merits of each case.

Watch out for silent encroachments

The right to be forgotten would also undermine the internet’s great strength. The internet is, in effect, a library of unimaginable size—full, as all libraries are, of news, gossip, archive material and other stuff which may to varying degrees be irrelevant, wrong or mad. It has made the best and worst of such information more freely available than ever before. Search engines should be like library catalogues—comprehensive and neutral, and without fear or favour of what the contents may reveal, or how they may be used. It should be up to individuals, not governments, to distinguish what is right or wrong, useful or immaterial. People should be wary of ceding the power to make that judgment, even to a court that thinks hard about it and backs the underdog. As James Madison said, “I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.”

 

The European Union

Europe goes to the polls

Although economies around Europe may be on the mend, voters’ disillusion could cause a new crisis

May 17th 2014 | From the print edition

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AFTER five gruelling years, many of Europe’s citizens must wish they could dispatch the entire political class to hellfire and torment. As it happens, the ballot for elections to the European Parliament from May 22nd to 25th does not include that option, so a record number will probably not bother to turn out. Many of those who do will back populists and extremists. Broadly anti-European parties may take well over a quarter of the seats. The French National Front, the Dutch Party of Freedom and the UK Independence Party are likely to win their highest vote ever. This will cause domestic political ructions, but it is also an indictment of the European Union, a project that millions of voters have come to associate with hardship and failure.

Europe’s political leaders will be tempted to pay little heed. Economies are improving. After a grinding recession and years of battling the euro crisis, growth is returning and bond yields are sharply down. The danger that financial markets might blow up the euro (and the EU) has disappeared, at least for now. A new Pew Research poll this week even suggests that trust in the EU may be reviving a little. If the politicians can just hang on, won’t a slow but steady recovery win back all those disgruntled citizens?

I

No. The last crisis may be over, but it has exacerbated a deep contradiction at the heart of Europe—between euro-zone economies’ need for integration and the voters’ rejection of it. If populism continues to rise, a euro-zone member could elect a government set on tearing up the rules and quitting the single currency. That would reignite the euro crisis—and political upsets can be harder to put right than economic ones.

Repair and reform

European leaders’ wishful thinking starts with the economy. Growth may be back, but it is anaemic. Unemployment remains horrific: as many as 26m people in Europe are now out of work. Almost everywhere debt is dangerously high. With banks fragile, credit is hard to come by, and parts of Europe are on the verge of deflation. The euro zone may be heading into a lost decade similar to Japan’s in the 1990s. Japan is a socially cohesive nation-state; the diverse EU is far less likely to survive such an experience.

The EU could help bolster growth. The European Central Bank could ease monetary policy, including by unconventional means. The European Commission could make a renewed push at completing the single market in services, digital technology and energy, for instance, or could press ahead with a free-trade deal with America.

Yet a blast of reformist zeal from Brussels would hardly mollify Europe’s disgruntled voters. For one thing, reforms tend to produce short-term pain before long-term gain—one reason why many European governments have found them so hard. For another, voters do not like being pushed around by Eurocrats.

The battle to save the euro has led to the centralisation of powers over banking, taxing and spending; and, while most euro-zone voters want to keep the euro, they have made it quite clear that they oppose the accretion of ever more intrusive powers to the ECB, the European Commission and the European Parliament. The EU’s abandoned constitution and its successor, the Lisbon treaty, were together rejected in three out of six referendums; ten governments broke promises rather than hold votes on the final version. In France, a founding member, the EU today attracts even more resentment than it does in famously Eurosceptic Britain. The populists’ appeal in the European elections is based largely on rising hostility to interference by Brussels.

This is an issue of democracy, not of economics. Voters are not impressed when they toss out an incumbent government only to be told by the EU that its replacement must stick to the same fiscal rules and economic policies. Since the transfer of powers to the centre has come about as a result of economic failure, and not of broader political debate or of resounding success, the chances of its being meekly accepted are slim.

Hand powers back

Voters’ resentment suggests that giving the European Parliament more power has not been a reliable route to democratic legitimacy. The parliament has failed in its 35-year strategy of persuading voters to take it seriously by winning an ever growing role (see article). Europe’s heads of government should stand against its latest power grab, which is to arrogate to itself the right to choose the next European Commission president by getting the main political groups to nominate candidates and refusing to accept any alternative.

If the EU is to gain democratic legitimacy, it will do so not through the European Parliament but through national parliaments. That means giving powers back to them wherever possible, including greater fiscal flexibility and more national control over social policy and employment rules. It also means that national leaders must take responsibility for economic reform, rather than hiding behind the convenient fiction that painful choices are being forced on them by bad people in Brussels or Berlin. Recent experience shows that those who do so can benefit: countries which have made deeper changes at home, such as Spain and Portugal, are now bouncing back more strongly than reform laggards like France and Italy.

At one time Europe seemed to be moving inexorably towards “ever closer union”—and many federalists hoped the euro crisis, like previous crises, would mean another leap forwards. Yet in the wasteland left after the crisis, voters are shaking their pitchforks at the notion of a United States of Europe. Rather than seek to expand the role of the EU’s institutions, it would be better to reinforce the nation-states where legitimacy lies. Europe’s broad strategic direction should be set by heads of government, not by the European Commission, even though that body proposes the detailed laws. The European Parliament should be downgraded, with more democratic control given to national parliaments. If the EU is to survive, it must hand powers back to the peopl 

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[박주하]

Sophia!!

쌩유 포 디스!
근데 2번째 기사는 지난번에 했던 기사라능.
다른 거 하나 더 추가해주셔~~ :)

[김은영]

Frontier markets

Wedge beyond the edge

Money is leaving emerging markets for riskier bets at the investment frontier

Apr 5th 2014 | JOHANNESBURG | From the print edition

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MANY of Africa’s roads are scarred with potholes, so the fresh tarmac on the drive between Ndola and Kitwe, two cities in Zambia’s copper belt, is something of a treat. The country’s roadbuilding is financed by a $750m Eurobond (as dollar bonds issued outside America are known) issued in September 2012. The timing was perfect. The Federal Reserve had an open-ended commitment to buy Treasuries to keep yields low. Investors in America and Europe were hungry to buy dollar-denominated debt offering juicy yields. Zambia drew $12 billion of orders for a ten-year bond paying only 5.4%. Spain could not borrow as cheaply at the time.

Zambia’s debut Eurobond showed how rich-world funds were looking beyond their home territory, past even emerging markets to “frontier markets” at the farthest edge of the investment universe. Even as the prospect of the end of the Fed’s bond-buying caused wobbles in emerging markets last year, African nations were able to tap funds. Nigeria and Ghana sold Eurobonds in July. Mozambique raised $850m in September. Gabon issued a second Eurobond in December.

In this section

Frontier markets are generally small, illiquid and risky, so it is a surprise that recent tremors in emerging markets have not shaken them more. Exotix, a broker, calculates an average interest-rate spread of Eurobonds from 50 frontier markets (compared with Treasuries). The spread on its index has narrowed to 395 basis points. The gap between the Exotix measure and J.P. Morgan’s benchmark Emerging-Market Bond Index (EMBI) reached an all-time low of 68 basis points this week (see chart 1). Nor has investors’ interest been confined to bonds. The MSCI frontier equity index lagged behind its emerging-market cousin after the global financial crisis but recently has been catching up (see chart 2).

Frontier markets might once have been dismissed as a side bet for emerging-market funds looking to pep up returns. They are now seen as an asset class in their own right, says Andrew Brudenell, who runs $700m of frontier equity funds at HSBC. Pension-fund trustees and consultants now ask how much money they should allocate to the frontier. The rising interest is in part because GDP growth in China, Brazil and India has diminished. The things that made emerging markets exciting in the 1990s are now found in frontier markets, says Charlie Robertson of Renaissance Capital, an investment bank.

There is much debate about where the frontier starts and ends. If the definition is a market that is neither developed nor emerging, then 23 of the 25 fastest-growing economies over the past decade are in the frontier category. But many of these frontier economies do not have stockmarkets and only Qatar is in the MSCI frontier-market index, an industry benchmark. To qualify, a stockmarket must have at least two stocks that meet specific thresholds for size and liquidity. It must also be “accessible”: this is harder to quantify but what matters is openness to foreign ownership, the ease with which capital can flow across borders and the stockmarket’s functioning. Only 24 markets across eastern Europe, the Middle East, Africa and Asia make the cut. Their combined market capitalisation is $146 billion or so. By comparison the 21 stock markets in MSCI’s emerging-market index are worth $4 trillion.

A familiar grumble about these sorts of indices, which are weighted by the market value of stocks, is that they have a skew that is unfavourable to bargain-hunters. Investors in index trackers spend more on stocks that have gone up in price. It is an acute problem for frontier markets. More than half of the MSCI index is accounted for by stocks from three oil-rich Gulf states: Qatar, the United Arab Emirates and Kuwait (though the first two will soon graduate to emerging-market status).

The purist sort of frontiersman sees the job as investing in poorer countries with the greatest potential. Purists give more room in their portfolios to stocks from poor, populous and fast-growing markets, such as Nigeria or Pakistan. As countries like these become richer, their middle classes will grow and spending on infrastructure will increase. The so-called BBC stocks (banks, brewers and cement companies) are one way to play these investment themes. Zenith Bank, Nigerian Breweries and Dangote Cement are popular stocks. Nestlé has a subsidiary that is listed in Lagos. In Pakistan there is Bank Alfalah and DG Khan, a cement company.

Specialist funds wanting to spread their bets may look at markets and stocks that are not in the main index. Saudi Arabia is a liquid market but tricky for foreigners to invest in. Its stockmarket sports SADAFCO, a dairy producer. Cambodia is another off-index bet. It has Nagacorp, a casino. Often the only way to buy exposure is through bonds. Angola is Africa’s third-biggest economy, after South Africa and Nigeria. It has no stockmarket but it does have a Eurobond. Mozambique’s Eurobond was ostensibly for a state-backed fishing venture. Investors bought it anyway, with one eye on the country’s fast-growing economy and the other on its offshore gas reserves.

Greater demand should spur the supply of stocks, through sales of private stakes or privatisations. Deeper equity markets would be welcome. Access to debt markets is more of a mixed blessing for some. Ghana issued its first Eurobond in 2007. Within a few years its budget deficit blew out to 12% of GDP after a large public-sector pay rise. Mozambique shows worrying signs of similar trouble.

Zambia meant to use its proceeds wisely. The money was to go on targeted projects. New roads in the copperbelt make sense since so much cargo is sent by truck. But easy money leads to lax discipline (see article). The state’s wage bill has become bloated. The budget deficit may be as high as 8% of GDP this year. To help fill the gap, Zambia is said to be plotting another Eurobond. 

-----Original Message-----
From: "김은영"<sophia...@naver.com>
To: <ye...@googlegroups.com>; "김아름"<sitco...@naver.com>; "Anna SG"<annal...@gmail.com>;
Cc: "Robin Kim"<robin...@gmail.com>; <rea...@gmail.com>; <hugt...@naver.com>; "HaE.S"<esh...@hotmail.com>; <esan...@hotmail.com>; "董艳姝"<dongy...@hotmail.com>; <aabm...@gmail.com>; "Siobhan Phillips"<siobhanp...@gmail.com>; "Mikyung Kim"<seou...@hotmail.com>; <jongche...@hanwha.com>; <cool...@hotmail.com>; <sjh...@gmail.com>;
Sent: 2014-05-16 (금) 12:47:13

[RYAN SHIN]

Dear Serena and Sophia, 

I appreciate your insightful selection of very informative articles. 

Please find the case analyses on the right to be forgotten. 

Max Mosley 소송사례 등은 언젠가 우리나라에도 도입되어야 하는 잊혀질 권리의 범위나 한계, 행사방법에 대한 중요한 근거가 될 것으로 본다. (법률사무소 민후 김경환 대표변호사)

http://company.hauri.co.kr/news/security_news_view.html?intSeq=6012 

BlockRock, the world's largest asset manager, has been jumping into the frontier markets as well. It could be worthwhile to think about its investment rationale. 

최근 1년 사이 주식형 상장지수펀드(ETF) 가운데 블랙록의 아이셰어 MSCI 프론티어 100 펀드의 자산이 가장 큰 폭으로 늘어남: 쿠웨이트와 카타르의 투자 비중이 절대적인 이 ETF의 자산은 1년 사이 9배 급증, 5억9400억달러로 불어남 (수익률은 23%)

반면 같은 기간 블랙록과 뱅가드 그룹의 이머징마켓 ETF에서는 같은 기간 260억달러의 자금이 빠져나감 

http://www.newspim.com/view.jsp?newsId=20140329000022 

Thanks. 
Ryan Ilchul Shin 

"O Lord, help me not to despise or oppose what I do not understand." ~ William Penn

[김은영]

다양한 시각과 인사이트를 주셔서 많이 배우고 있습니다  ^^

그리고 늘 좋은 자료 공유해 주셔서 감사합니다

 

오늘도 행복한 하하루 되세요 ^^

 

소피아 드림

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"O Lord, help me not to despise or oppose what I do not understand." ~ William Penn

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[박주하]

ㅎ,, 네, 모처럼 기존 멤버들이 많이 와서, 또 좋은 기사로 재미 있는 토론을 할 수 있어서 좋았더랬어요~

일철님,, 또 마무리로 이런 좋은 자료 공유해주셔서 감사~

소피아님,, 런던 잘 다녀오시고~~

 

담주에는 Greg 선생님이 미리 공유해주신 자료로 즐거운 시간 만들어요!~