Dividend Policy

Dividend Policy

Capital structure

Capital structure

SRI development in Asia

Recently, corporate social responsibility (CSR) programme as much importance seems core value in order to make the social quality a better. This concern not only enterprises in their commercial operations to cope with the responsibility of his interest, but also let society and attention to the ethical enterprise of coexistence and common prosperity.

In westerns, numerous of case show us the CSR deeply affected commitment and ethics, to contribute to the economic development. For instants, Pharmaceutical giant Novartis are now put a lot of effort to provide health plans for the world's poor, even lost so long. Today, in the 21st century, the world has known in the past and today's poorest people the suffering of all. Surely, Novartis don't ask material return, only help to needy communities, sponsorship and so on. And through donations of money, assets or activities to donated by medicine to the needs of people.

Eye on Asia, in March 2011, Japan suffered an earthquake and tsunami tragedy. Fukushima after the nuclear disaster, more investors are expected to take into account environmental, social and governance standards, enterprises will be more closely focused on how they communicate with shareholders. Time shifted to 1999, Japan's social responsibility investments can be traced back the first public offering socially responsible investment (SRI) mutual fund was established. Japan is the most developed SRI market in Asia. This type of investment is a special type of investment approach, investors are interested in not only the traditional monetary returns, also taking into account the social justice and economic development, world peace and environmental protection. Then established a lot of similar investment funds, grasp the characteristics of public environmental awareness is growing. Other Asian institutional investors generally responsible investing as a strategy in Europe and America, so they focus on their own responsibility whether the investment targets are consistent with their obligations. As part of the study makes it clear that responsible investment in the long run will achieve better performance or limited study on downward trend, most Asian investors are encouraged to focus on non-performance of SRI portfolio.

SRI funds continue to grow is the continuous improvement of management skills, and more efficient research tools such as the innovation of environmental protection rating service. SRI in the past can only passively filtering company, avoid unacceptable companies on investment policies and such investigations are carried out by external consultants. Initially, fund managers only use single method to select acceptable according to survey company by views on the industry or market nature. In recent years, a new generation of fund managers willing combining their past knowledge of sustainable development and on the former boundary to has a comprehensive view of the market, this advance concern of the more powerful SRI has also been said, more in-depth attention to social factors are, better portfolio profits.

What LTRO effects can it bring?

Recently, number of important policy-makers and financiers said the credit crunch could continuous engulf the global financial market liquidity, which triggered a wave of instability in the world. After credit crunch contributed to the US properties decline, house prices are still falling in the US and reducing the value of mortgage loans at the same time. Thousands of property owners so far face climbing up interest rates, when their introductory periods has ended, the interest rate will extend to the regular annual percentage rate (APR) normally is customarily higher than the introductory rate to face their terrible ballooning mortgage payments. In 2007, the US had to increase the interest rates base upon upbeat inflation. Much of new homeowners initially could not afford the mortgage payments in higher interest rates. A nearby disaster recession in the US and global slump could cause by US subprime mortgages bubble burst. It can be easily triggered by the bankruptcy of Lehman Brothers hit of all countries of the Eurozone, this is expected to only the Eurozone’s weakest economies will fall into recession. Besides that, many Asian countries rely heavily on foreign banks for financing, either as cash-strapped foreign banks to cut lending, or raising the loan price, there will be the possibility of a credit crisis. According to the Bank for International Settlements (BIS) the second quarter of 2011 data stated that $ 2.52 trillion cross-border banking loan in Asia (not including Japan) in outstanding loans order, of which 21% from continental European banks.

Banking is a traditional credit provider by buying a large number of government bonds from the government to peer through the inter-bank lending and to provide credit to all types of businesses and individuals dilute the risk of itself. Banking like a gear wheel which necessary parts to make sure economic machine running well. In 2011, the demand for bank financing is stronger than expected. The European Central Bank was announced €489bn fund provided its response to the Eurozone credit crunch issues. The enthusiastic response from banks was initially welcomed by the policy, the euro and the stock market rallied by surging hope this will help to support the banks’ balance sheet stretched. However, the subsequent enthusiasm faded. Can this three years unprecedented level of longer-term refinancing operation (LTRO) loans help comes ahead of a crucial first quarter of 2012 balance sheet due to a large number of banks and government debt become expire?

First of all, market participants hard to finance from the markets, this is the result of a common increase in risk aversion. Prevent the substantial contraction of bank debt market financing by the central bank financing instead of bank debt contraction will lead to seek mitigation bank financing difficulties, and may even exacerbate the credit crunch.

Secondly, most of the measures in these plans lack credibility. The banks had about half of the 442 billion euros (€530bn) in June 2009, for the purchase of sovereign debt yields higher, much of Greece and Spain bonds did not solve the problem of credit crunch. Banks may become over rely upon easy access to central bank funds and indefinitely postpone the adjustment to drive the Eurozone into a deep recession have been weakened by the Eurozone’s worsening sovereign debt crisis. Thus, the cheap three-year financing makes the Eurozone commercial banks have no incentive to rebuild its the capital foundation. Unless, the banks will only seems central bank funds only as a temporary saviour. No incentive to actively and in fair competition base on the pursuit of self-reliance.

Even though ECB hope to reduce systemic risk of liquidity and attempted avoid a credit crunch. But, this hot money will trigger vicious circle affect the banks' profits continued to downturn, and therefore more difficult to attract investors. Finally, in turn, lead to increased borrowing costs for banks.

hows IT giants in Merger & acquisition?

If someone ask me what is the biggest merger & acquisition (M&A) throughout last year. There are no needs to dispute the case of Google's Motorola Mobility takeover will be the winner. Under Google press releases, the company involved a deal, Google's will employ USD40 dollars per share acquisition totalling about $ 12.5 billion, premium 63% to the closing price of Motorola Mobility shares.

Google of Android is an open of platform, currently totalling 150 million worldwide carrying the devices was the use of the system, about 550,000 units a day was started in 123 countries around the world and there are 39,231 carriers and hardware manufacturers cooperate. Imagine wanted to Android today of powerful, its base upon high speed growth market field against another smart phone competitors. Moreover, Google has been is committed to itself proud product which capability to shift future mobile and tablet computers development named cloud service, let users with home regardless of in phone or desktop, enjoy  synchronism  rely on Google. Whereas arise user number become huge, order advertising income also into is proportional to the growth. If lack of chips in conference table will losses other Partner support is does not worth .Google is time to do something like spent money to acquire some patents , will not focus on Vertical integration, but to Google's main purpose is to make Android brightness view.

To pursue a health environment in grow. HTC with Apple of phone patent war has stir up Google of neural, if Apple keep in eye in protect own phone system to playing patent war, Google and all Android phone manufacturer will affected, like some phone manufacturer fear provoked lawsuit and prepared go cast Microsoft window mobile system 7. For solve this patent war of dilemma, Google need supercharge phone of fundamental-multiple wireless and the phone of technology patent start.

Someone will think Google is making a high-stakes gamble in the global smartphone wars. But, as my point of view, the premier proposes of this M&A motive not only cross-selling to work with stable development partners, but also secure the fundamental financial with increase shareholder wealth to reach profit maximisation goal. When Google acquired Motorola Mobility with full commitment to the Android operating system means there is a natural fit, look like a stronger and more viable Google emerged into. Hence, some analysts say maybe the right moment to take on smart phone giants such as Apple and Samsung. Shareholders would think that Motorola Mobility took on the role of the self-sacrificing. But this is unavoidable abandon some innocence , as it turns out, shareholders of Motorola made a cool 63% premium over its closing price on announcement date. The shares have risen more than 7.7% to $600.25 after its takeover on the NASDAQ on Friday, before closing at $557.23. Nevertheless, the shareholders of Google Inc. also received a steady development as hopes rise wealth that this innovative technology inject will help it break more records. 

How critical of FDI affect PRC economic and the future?

What FDI stand for? FDI World Dental Federation? Foreign Direct Investment (FDI) is the modern capital of one of the major forms of internationalisation, in accordance with the International Monetary Fund (IMF) of FDI is defined as a State of production or management of investors would be capital for other countries and our knowledge of certain operating control over the investment behaviour. Also can said is a country (area) of residents entity (external directly investment who or mother company) in its national (area) of another a country of enterprise (foreign directly investment enterprise, and branch enterprise or abroad branch institutions) in the established long-term relationship, enjoyed lasting interests and on of for control of investment.

FDI in PRC, also known as RFDI (Renminbi foreign direct investment), has recorded expand substantially in the last few decade reaching $185 billion in 2010($194 billion in U.S.). Thus, PRC is the second largest recipient of FDI globally. Compare with developing countries like India, they rarely reported $24.2 billion in 2010 base upon education levels for domestic workers, investor-friendly policy environment, positive eco-system and huge potential for growth and so on also judge investor confidence. Though this trend, can PRC take lead in FDI?

Since FT finance news (February 6, 2012) see that PRC is much preferred business activity in the process of rapid growth and industrialization. Even though PRC's inflation-adjusted wages growing at around 12% per year, but according to EIU study, while PRC 's textile industry is pulling back at an annual rate of 6%, but in terms of computer products and value added products, PRC is still manufacturing hub like great performance in overall retail trade and services. That research likewise suggests primary beneficiaries of rising labour costs in the coastal areas of PRC will be PRC 's inland provinces, which will attract FDI in the region in the next few years. Nevertheless, the government of PRC is continuously working towards increasing FDI flows into the country. EIU estimates that by 2015 will attract up to 50 billion dollars in FDI in Liaoning province, Sichuan province will attract about $ 18 billion as well as Guangdong, PRC’s most industrialised province since the last century 80 's have been attracting large amounts of FDI, US $ 33 billion in 2015 is expected to be attracted. To make a brighten contrast, India: 10 months before the 2010 year, India the country attract FDI of us $ 78 billion. In addition, service industries to attract foreign investment in PRC are constantly increasing. In the last 5 years, FDI in services both wholesale and retail areas are growing at an annual rate of nearly 40%. In short, it’s providential that PRC Basic productivity and wage are also growth, thereby reducing the impact of rising wages in the manufacturing sector and the service sector companies.

In generally, FDI contain three main intention include market seeking, efficiency seeking and resource seeking. Focus on first two, PRC at the Asia centre nearby almost emerging market that foreign enterprise hope to capital in. Whereas huge self-developing in PRC recently, it’s not difficult to foresee how successful grow up itself. The market advantage since the relationship and connivance location with other Asia countries, moreover is become multinational distribution network connect orient and Occident. That is the reason PRC get potential to over U.S., enhance to first leadership in inbound FDI ranking. Secondly, as I mentioned above that the education levels of workers in PRC more than India and Indonesia workers, also, inflow of foreign capital and funds, investment in addition to an increase in the transfer of skills, technology. So that, PRC workers like more manageable than other competitors.

A recent meta-analysis of the effects of foreign direct investment on local firms in developing and transition countries suggests that foreign investment robustly increases local productivity growth. PRC has made great step in its reforms to open up its market for foreign direct investment.  Among developing countries, PRC is now become the largest recipient of foreign capital.  Foreign direct investment is still concentrated in the southeast and the coastal areas, even though we see a slow process of diffusion.  Foreign-invested firms have played an increasingly important role in Chinese economic reform.  It is also a large part of PRC trading activities with the rest of the world.  While there may be some differences in interpretations with respect to the role of foreign investment in raising PRC’s GDP, few would deny that without foreign investment, PRC reform will eventually suffocate.

let's talk about the types of currency risks exposures

"The World is Flat: A Brief History of the Twenty-first Century" a book, Thomas Friedman pointed out that global economic integration led to the so-called (A level playing field). Due to the rise of the Internet and the popularity boost by software development and innovation, the unbelievable rate of rise of capital markets including China and India, can easily achieve their own social division of labour via internet. Also, emerging countries can rival with the developed countries, which a new round of globalization that everyone can erase all national boundaries and made ​​the world flat, wow, what’s an amazing world.  

The group of global economic integration has accelerated the transformation of enterprise management defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology”. In order of drive forward the whole globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments. Nowadays, domestic economic growth is not adequate fulfil shareholder anticipation. Thus, global bargain is much more complicated than domestic trading because of many additional factors, for instance, business tax, trade tariffs, embargo and especially exchange rate and so on. In regard of first risk source that foreign trading faces and currencies are always unsteadiness in the foreign exchange market, yet meaningful subset of these factors that can vary company profitably as well.

 As analysed by the BBS News and Yahoo Finance last year, it’s not difficult to seek how Japanese exporters has also been hurt by a vigorous rising Japanese yen. Numerous Japanese companies who reported profit warning, the world’s top automaker Toyota, electronics giants Toshiba and Panasonic also quoted the negative impact as well as Honda was reported a loss by poor sales in some mutual market. The top four Japanese Exporters net profit are also affected by overseas sales were hit since the strong yen, which makes products more expensive and lack of competitive to another foreign enterprise. In this case, Honda, the world’s sixth largest auto manufacturer has announced a 41% drop in quarterly profit. In 2011, Honda's global output dropped by a fifth to 2.9 million cars, slipping below 3 million for the first time in eight years.

To explore and critically appreciate these fluctuating exchange rates issues around major international volatile market. Three main risks named transaction exposure, translation exposure and economic exposure applied to explain conduct such trade each other, and the exporters must accept exposure to the risk associated with changes in currency. Increases in global trades in itself outcome policy is only accepting one role: the exposure to the relative risk combined with changes in currency. 

First of all, Transaction exposures is the risk that in the agreed transactions denominated in foreign currency transaction gain or loss that a firm with known future cash flows in a foreign currency that arises from possible changes in the exchange rate. These risks include:
 1. A spot or deferred payment for the import and export of goods or services, payment terms, the shipment of goods and services yet to collection and payment of money or labour costs, the risk of foreign exchange rate changes occur. 

       2. The international credit denominated in foreign currencies, credit and debt is not settled before the exchange rate risk. For example: a project to borrow yen, due for return of yen. The benefits of the project received the U.S. dollar. If the dollar-yen exchange rate plummeted, the project than originally planned to spend a lot of dollars in order into yen against the return of principal and interest, resulting in the loss. 

      3. Forward foreign exchange contracts to be performed, agreed exchange rate and the spot exchange rate changes due to the risks arising.

Secondly, Translation exposures also known as the Conversion Risk refers to the possibility of the amount of change of corporate balance sheets basic upon changes in foreign exchange rates and some foreign exchange capital projects. It is a carrying amount of the losses and gains, has neither actually take delivery of the actual profit and loss nor affect the report of the results of the corporate assets and liabilities. It involved a Risk of adverse effects on a firm's financial statements that may arise from changes in exchange rates.

Finally, Economic exposures occur surrounding the uncertainty in the economy, the economic entities engage in normal economic activity and the possibility of economic loss. It is a natural phenomenon in the development of the market economy. With the development of market economy, continues to expand the scale of production, speed up product updates, changes in social demands intense, economic risks have become producers and so on factors operators must face up to the problem.

Exposed in such global risky market, why domestic corporates will still want to ship their products outside, join in the international stage? The answer is simple: profit maximisation. In common with many corporates not prefer a global trade with tons of countries their even do not know the capital name. Whereas how to bulk up shareholder value maximisation, they have no choose to put company under risks. For now, the best solution is made trading with international bank rather than manage much different currencies in hand which costly to govern huge money pool. Some banks will consider about your company growth opportunities, financing healthy, liquidity and size, etc. to help client set up a hedge portfolio to help them build trading with only one home currency.