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Daily Dispatches – Fighting fire with fire

India feeling the pain

India feeling the pain

India is taking drastic measures to halt the crisis in its economy by dramatically reducing investment outflows and remittances.

A report on Bloomberg today says that the Reserve Bank of India, whose Governor Duvvuri Subbarao steps down next month, has cut by 75% the amount local companies can invest overseas without seeking approval. They may now only invest 100% of their net worth from 400% previously.

In addition residents are limited to USD$75 000 in remittances a year versus the previous USD$200,000 limit.

But these moves haven’t convinced everyone: Bhanu Baweja, the global head of emerging market cross asset strategy at UBS AG, told Bloomberg: “I don’t think this fixes India’s problem, at best it restricts about USD$5 billion of flows annually, which doesn’t make a dent.The minute you restrict outflows, people will start legitimately speaking in terms of capital controls, although these are only on locals and not on foreign investors.”

Do the right thing

Prosecutors in the US have ‘urged’ former JPMorgan Chase traders Javier Martin-Artajo and Julien Grout to surrender and face charges that they attempted to hide trading losses tied to the bank’s USD$6.2 billion loss on derivatives bets last year, says Bloomberg.

But just in case they don’t ‘do the right thing’, arrest warrants have been issued against the two, who face 20 years in prison if convicted of the most serious counts, including conspiracy and wire fraud.

Singapore talks tough

Chief executive officers and chief financial officers in the Lion City may soon be legally liable for certifying that their companies’ financial statements are true and fair, according to The Business Times.

Minister of State for Finance and Transport Josephine Teo said the government had “a broader aim to (make) CEOs and CFOs legally liable . . .” She cited legal frameworks in other jurisdictions that bring various penalties against bosses who make false statements. Punishments include criminal penalties, fines or disqualification from holding a management position.

Big Four Aussie bank’s sterling results

Once again, Australia’s banks have underscored their reputation for being among the most valuable in the world. Commonwealth Bank reported a 7% increase in operating income in the year to June 2013, a significant improvement on the 2% in the previous year and 4% in 2010/11.

Banking Day reports that net profit for the year to June was AUD$7.7 billion – an increase of 8% over the previous corresponding period. Among the divisions, New Zealand was the stand-out, with a 17% increase in cash profit to AUD$635 million.

Rank and file more loyal than headhonchos

More than half (52%) of senior executives were willing to consider a new job when contacted by a leading executive search firm, according to a new paper from Monika Hamori of IE Business School in Madrid and Peter Cappelli of University of Pennsylvania’s Wharton School.

The report – published by ComplianceEX – says that while senior executives are supposed to inspire loyalty across all levels of their organisations, they are more likely to jump ship than their subordinates.

China’s fund market evolution

The China asset management industry is set for some big changes, as the market continues to open up to foreign investment and the global asset managers who dominate the sector facing increased competition.

Financial News says that key among them are challenges from Hong Kong subsidiaries; the Renminbi Qualified Foreign Institutional Investors programme; the popularity of passive products like ETFs; and emerging participants.

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