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A startling amount of land in Japan has no official owner

Property, period

THE tsunami of 2011 left gaping holes reminiscent of war zones in the landscape along the coast of Tohuku, in the north-east of Honshu, Japan’s main island. Car navigation systems gave directions to landmarks that had vanished into the sea. The subsequent reconstruction effort hit an unexpected roadblock: missing landowners. Officials were stunned to find that hundreds of plots were held in the names of people who were dead or unknown.

The deluge threw the problem into particularly sharp relief in Tohuku, but it is widespread elsewhere too. A report last year for the government by a panel of experts estimated that about 41,000 sq km of land, or 11% of Japan’s surface, was unclaimed, most of it in rural regions. By 2040, it warned, the area could more than double. The cumulative cost in lost productivity could be as high as ¥6trn ($56bn).

The countryside is littered with vacant plots and empty houses. Some date from Japan’s great post-war...Continue reading

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Protectionism may impede Delta’s expansion plans

AS AMERICA’S oldest airline still aloft, Delta makes much of its southern roots. At its biggest hub, Atlanta airport, the company museum recounts how it became the world’s second-biggest carrier. The answer: by buying up domestic rivals. With few takeover targets left at home, Delta’s chief executive, Ed Bastian, is looking abroad. But his plans for more foreign joint ventures (JVs) face regulatory headwinds.

Last year Mr Bastian announced a flurry of JVs. In May Delta launched one with Aeromexico and in June another with Korean Air. In July Delta formed one of the world’s biggest JVs with Virgin Atlantic of Britain and Air France-KLM, a European group. In December it sealed one with WestJet, Canada’s biggest low-cost carrier. It wants closer relations with China Eastern and GOL of Brazil, two airlines in which it owns shares. And on March 12th it emerged that Delta and Air France-KLM plan to bid for Air India, an ailing flag carrier. If all these deals come off, one passenger in eight...Continue reading

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America’s public markets are perking up. Can it last?

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FOR years, discussions of America’s public markets have usually featured a lament for their dwindling appeal. According to Jay Ritter of the University of Florida, the number of publicly listed companies peaked in 1997 at 8,491 (see chart). By 2017 it had slumped to 4,496. True, many of the companies that went public in the internet’s early days should never have done so. But the decline worries anyone who sees public markets as the best way for ordinary investors to benefit from the successes of corporate America.

The mood right now is more buoyant. Bankers and lawyers who usually chat with journalists in their offices are on the...Continue reading

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Will British airlines lose their rights to fly to America after Brexit?

THERE has been much chatter among frequent flyers in London this week about a front-page splash in the Financial Times claiming that British negotiations with America to replace the EU-US Open Skies Treaty are in trouble:

The US is offering Britain a worse “open skies” deal after Brexit than it had as an EU member, in a negotiating stance that would badly hit the transatlantic operating rights of British Airways and Virgin Atlantic. British and American negotiators met secretly in January for the first formal talks on a new air services deal, aiming to fill the gap created when Britain falls out of the EU-US open skies treaty after Brexit, say people familiar with talks.

The talks were cut short after US negotiators offered only a standard bilateral agreement. These typically require airlines to be majority owned and controlled by parties from their...Continue reading

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Pakistan’s Murree Brewery shrugs off restrictions on its products

Tipple from a teetotalitarian land

QUARTER-LITRE bottles of whisky whizz down a conveyor belt past Mukhtar Ali, a quality-control employee at Pakistan’s Murree Brewery, the only legal beer-and-spirit maker in this Islamic country. Nearby labourers pack Vat No.1, a cask-aged spirit, into boxes. An elderly man with a long beard tapes them up. Asked over the roar of imported German machinery if they have ever taken a sip of the amber liquid, each shakes his head. “It’s haram,” (meaning forbidden), says Mr Ali.

The 155-year-old institution causes some spluttering nonetheless. Founded for British troops of the Raj, it can sell only to the 3% of the 207m-strong population that is comprised of foreigners and non-Muslims. But many of its products end up in Muslim hands, as illustrated by the predilections of the former prime minister, Zulfiqar Ali Bhutto, who ordered a nationwide ban on alcohol in 1977. “He was the biggest consumer of Murree in...Continue reading

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Mining data on cab rides to show how business information flows

AS COMPUTING power has grown, it has become easier to uncover information hidden inside datasets that seem totally unconnected. Some recent studies have used this approach to reveal business-related information flows. One linked the movements of 18th-century share prices with the arrival of ships bringing news. Another looked at the relationship between business activity and the movements of corporate jets. A third mined White House visitor logs for the names of executives and examined their companies’ subsequent stockmarket returns.

A paper in this vein published on March 5th pores over a dataset released by New York City’s government covering more than 1bn cab rides between 2009 and 2014. David Finer, a graduate student at University of Chicago’s Booth School of Business, analysed trips connecting the headquarters of big banks and the Federal Reserve Bank of New York. He extracted trips starting at commercial banks and at the New York Fed that converged on the same destination around...Continue reading

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A Chinese oil baron is reportedly detained by the authorities

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Ye Jianming in bloom

STAFF had routinely been directed to pore over their chairman’s speeches and learn from them. One which Ye Jianming, the 40-year-old founder of CEFC, delivered last autumn—“Only One Step From Midsummer to Harsh Winter”—was a historical tale meant to motivate the troops. In it he compared his firm’s swift rise to that of Hu Xueyan, a 19th-century merchant banker. Hu amassed a fortune trading in salt, tea, arms and silk through close ties to China’s imperial elites, then fell from grace and went bankrupt.

Mr Ye did not mean the lesson to be pertinent to his own situation. CEFC was then enjoying its own midsummer. As China’s largest private oil group, it had just won a 14.2% stake in Russia’s state-backed oil firm, Rosneft, paying $9.1bn for one of the most significant shares of the world’s largest listed oil firm by production. Industry analysts outside China had been scrambling to study CEFC since early 2017 when it joined national...Continue reading

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America’s companies have binged on debt; a reckoning looms

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AMERICA’s companies have been powering ahead for years. Amid growing profits, the recession that began in 2007 seems an increasingly distant memory. Yet the situation has a dark side: companies have binged on debt. For now, as the good times have coincided with a period of record-low interest rates, markets have been untroubled. But a shock could put corporate America into trouble.

No matter how it is measured, the debt load looks worrying. When calculated as a percentage of GDP, the total debt of America’s non-financial corporations reached 73.3% in the second quarter of 2017 (the latest available data). This is a record high. Measured against earnings before interest, tax, depreciation and amortisation (EBITDA), the net debt of non-financial companies in the S&P500 hit a ratio of 1.5 at of the end of 2016, a level not seen since 2003. And it remained nearly as high in 2017 (see chart).

To be sure, things are less worrying than they were before the financial crisis. According to a recent analysis by S&P Global Ratings, a...Continue reading

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Markets fret about America’s turn toward protectionism

IN THE run-up to the presidential election of 2016, investors were nervous about Donald Trump. They liked his tax-cutting, anti-regulation promises, but fretted about his foreign and trade policies. Some dubbed the two agendas “Trump lite” and “Donnie Darko”.

Almost as soon as it became clear that Mr Trump would become president, the markets decided to believe in the optimistic version. His tweeting and decision-making may have been erratic, but investors seemed to forgive the president his peccadilloes as a wife might her errant husband: “He may not be faithful but he’s a good provider.”

Fears about trade conflict almost disappeared. In last month’s survey of global fund managers by Bank of America Merrill Lynch, just 5% regarded a trade war between America and China as the biggest risk facing the markets, compared with 45% who worried about a return of inflation or a crash in the bond markets.

The announcement of tariffs on steel and aluminium on March 1st thus...Continue reading

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CFIUS intervenes in Broadcom’s attempt to buy Qualcomm

IT WAS only five months ago that President Donald Trump lauded Broadcom, a chipmaker, as “one of the really great, great companies” for announcing its plan to move its legal headquarters to America from Singapore. With such praise in the bank, the firm’s chief executive, Hock Tan, may have expected his subsequent offer for a rival, Qualcomm, to enjoy an easy ride. Its course has been anything but smooth. The $142bn bid, which would be the largest-ever tech deal, was rebuffed by Qualcomm’s management. Broadcom next turned to shareholders, asking them to elect its nominees to Qualcomm’s board at a meeting scheduled for March 6th.

Then, in a dramatic twist, the Committee on Foreign Investment into the United States (CFIUS), which oversees the national-security implications of foreign transactions, stepped in to delay the meeting while it conducts a review. It had been drawn in by Qualcomm, in what its furious suitor has branded a “desperate” attempt to prevent the vote. The panel’s surprise intervention suggests a more activist...Continue reading

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