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Aug 23, 2011

SmartCompany News & Analysis: Franchisee collapses after court fight with franchisor, R&D bill passes but experts not convinced, Why baby boomers won’t cause a housing bust

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Today on SmartCompany we look at the court battle between franchisor Cold Rock Ice Creamery and a former franchisee that ended with the franchisee in administration, we talk to tax experts about why the Government still has work to do on its R&D tax credit scheme and look at Facebook’s latest reaction to Google+. Plus in Entrepreneur Watch, James Thomson explains why SMEs shouldn’t forget merger and acquisition aspirations even if the outlook is cloudy.

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Lunch with an Entrepreneur
Cooking up a beauty of a business
James Patten and Bradley Carr of and reveal how they're able to offer large discounts on their online stores. BY MADELEINE HEFFERNAN.

Industry Trends
All’s not well for online customers in health insurance sector
Health insurance is an industry that has become dominated by comparison websites. So you would expect the main players to be internet savvy. But they're not. BY JAMES THOMSON.
Online health insurance

Aunty B
I need to fire a friend. Help!
Set the day. Set the time. Know you will go home feeling awful. Then look forward to a new day.
Aunty B

Profitable growth
Julia Bickerstaff
Selling inventory at rock bottom prices hurts, but it's not as painful as sitting on a pile of old stock when you could be playing with a mound of cash.
Julia Bickerstaff

The Digital Bottom Line
Brendan Lewis
It’s quite obvious to me that competing with “lower prices” is generally a stupid idea.
Brendan Lewis

Property Investor
Michael Yardney
All the talk of a resources boom, which may last for decades, has encouraged investors to look at buying property in mining towns.
Michael Yardney

Entrepreneur Watch
James Thomson
Takeover talk continues at the top end of town despite the market turmoil. SMEs need to stay alive to spot opportunities now.
James Thomson

China’s gilded gold market: MarketWatch | Caixin Online

By Fu Tao and Sun Yanxia 

BEIJING ( Caixin Online ) — At 350 tons per year, China is the world’s largest producer of gold. And yet China’s statistics show that the country has been a net gold importer since the 1990s. Gold imports and exports have been tightly controlled by the People’s Bank of China, though new avenues for investment have emerged in recent years. 

Marcus Grubb, the managing director of investment research and marketing for the World Gold Council (WGC), in June said that the world gold price had yet to fully internalize the additional demand that China’s investors and consumers were bringing to the table. 

At the time, the WGC had just published figures that showed China’s demand for gold surpassing that of India for the first time. This has led many to ask where China’s gold market is headed next and to wonder how China’s expanding gold imports might apply upward pressure to global gold prices.  

This is accurate. Trying to transfer just a fraction of China’s $3 trillion in foreign reserves into purchasing gold would be like trying to fit an elephant in an ice box.
This helps to explain why, in the face of the United States’ and Europe’s current debt crises, the PBOC is still putting one third of foreign reserves into the United States’ Treasury bond market. Even in the midst of the credit downgrade by Standard and Poor’s, China added an additional $5.7 billion of U.S. Treasury bonds to its portfolio in June. 

Personal investment bubble

Chinese individuals’ demand for gold mostly comes in the form of jewelry or bullion. WGC statistics show that jewelry purchases in China accounts for 142.9 tons and has increased by 21% year on year in 2010, and bullion purchases are at 90.9 tons, having increased 123%. China’s total demand for gold has increased steadily, averaging a 14% increase every year since 2001, according to the WGC. 

When discussing the “China factor” in the gold market, it is important to remember that much gold buying in China is speculative in nature and prone to fluctuations. “The power of the herd mentality in the Chinese gold market is very strong among investors,” said one gold market analyst. 

Since January of this year, China has seen four QDII gold funds established one after another. QDII, Qualified Domestic Institutional Investor, allows financial institutions on the mainland invest in offshore markets in a limited capacity. QDII funds have attracted successively lower demand since the first offering. The first QDII fund raised around $3.2 billion when it was established and has since shrunk to $1.5 billion; the Jiashi Fund, established in August, only raised $570 million.

Short-term selling pressures 

Gong Shanqiang, analyst at precious metals firm CGS, also believes that short term profit-seeking might lead to pressure to sell in the gold market and that gold merchants in the coastal regions of China are already facing pressure to buy-back gold. Gong said “the price is already very high, so investors can now resell their purchases and make tidy profits.” 

Gong points to recent activity in Shanghai’s gold exchange as evidence of new bearish tendencies: “In the short-term, the gold market might suffer for a while.” 

But Gong does not look on the gold market with pessimism. He thinks that, if loose monetary policy in the United States does not change, a third period of quantitative easing (QE3) might stimulate the gold market. 

“The key is in the next six months. September is the beginning of the traditional peak season for gold buying in India, and if you add China’s investors into the mix then it’s entirely possible that demand will expand at the end of the year.” Read this report on Caixin Online.

Hong Kong shares drop, hit by China Life results: MarketWatch - Breaking News - Asian Markets | Market Pulse

By V. Phani Kumar

HONG KONG (MarketWatch) -- Hong Kong stocks drifted lower early on Wednesday despite strong cues from Wall Street, as China Life Insurance Co. plunged on disappointment over its half-yearly results. The Hang Seng Index HK:HSI -0.58% fell 0.6% to 19,762.50 and the Hang Seng China Enterprises Index fell 1.2% to 10,457.07. China Life LFC -0.93% HK:2628 -9.15% plunged 9.2% after its first-half profits fell 28%, also dragging down shares of Ping An Insurance Group Co. HK:2318 -2.08% PNGAY +4.52% by 3.1%. Profit-taking after the recent rebound hit coal miners as well as heavyweight stocks, with China Coal Energy Co. HK:1898 -0.80% CCOZY -1.77% falling 0.4%, while HSBC Holdings PLC HK:5 -1.12% HBC -0.65% and China Mobile Ltd. CHL +2.12% HK:941 -0.76% shed 1% and 0.6%, respectively. China's Shanghai Composite CN:000001 +0.28% gained 0.2% to 2,558.32.

Ping Newsletter: CA Australia fills top job.

Ping Newsletter
CA Australia fills top job
SOFTWARE maker CA Technologies has appointed Bill McMurray to run the Australian operations, ending a two-month search.
Facebook adds new privacy controls
FACEBOOK will roll out new controls for sharing personal information on the social network this week.
Seek sees gains from newspaper rivals
ONLINE: Seek chief executive Andrew Bassat is confident the company can continue to grow its share of the job ads market.
Lib MPs 'breaking ranks' to push for NBN
LIBERAL MPs are anxiously lobbying the government to have the NBN rolled out in their electorates, despite their party's opposition to the network.
Ex-NAB tech chief joins Citigroup
FORMER National Australia Bank technology executive Craig Bright has landed a plum position at Citigroup to run its global IT infrastructure division.

Moody's cuts Japan's rating to Aa3 from Aa2: MarketWatch Breaking News | Market Pulse

By Sarah Turner
SYDNEY (MarketWatch) -- Ratings agency Moody's Investor Service said Wednesday that it has cut Japan's rating to Aa3 from Aa2 with a stable outlook. The agency said it made the downgrade due to the country's large budget deficits and a build-up in government debt since 2009. "Over the past five years, frequent changes in administrations have prevented the government from implementing long-term economic and fiscal strategies into effective and durable policies," the ratings agency said. In addition, the earthquake in March has delayed recovery and aggravated deflationary conditions, Moody's added. "Support for the stable outlook comes from the undiminished home bias of Japanese investors and their preference for government bonds," it noted.

The Australian Capital Circle: Thomson quits key committee as pressure mounts on ALP.

Capital Circle Newsletter

Thomson quits key committee as pressure mounts on ALP
The Coalition will continue to pursue Craig Thomson in the parliament today after his decision to quit as chair of the House economics committee.

Julia Gillard is in Canberra and will meet the President of the Republic of Seychelles, James Alix Michel, later today. But Ms Gillard's meeting with the President could be cut short by parliamentary divisions after she was denied a pair by the Opposition Leader.
Tony Abbott promised this morning the Coalition would continue to pursue Labor MP Craig Thomson for a full explanation of his alleged misuse of credit cards from 9am. Mr Abbott told ABC radio: "It's very important this matter is resolved." He said while the government was distracted by the Thomson matter it could not attend to pressing problems such as the crisis in manufacturing.
Independent MP Andrew Wilkie said this morning he would support the Coalition motion for Mr Thomson to explain himself. But the opposition motion is set to fail as it did yesterday for want of an absolute majority of 76 votes.
The Thomson affair is continuing to test Julia Gillard's government. The MP resigned as head of the parliamentary economics committee yesterday, hours after NSW police announced they were assessing whether a criminal investigation should be launched into allegations of credit card misuse during his time as the national secretary of the Health Services Union. (report)
But there's more allegations, with the Daily Telegraph reporting : NEW revelations have emerged that Mr Thomson lobbied a Central Coast firm for a job for his ex-wife. The besieged MP used his parliamentary email to lobby Central Coast Group Training (CCGT) on behalf of his ex-wife Christa in March - at the same time it had applied for $2.7 million in Commonwealth funding.
In Canberra today: Up to 22 MPs will report back to the parliament about their consultations with constituents on gay marriage (report
Peter Brent
Peter Brent
Beware the wacky stories
Some odd stories are creeping into the coverage of Australian politics. Last week this one started doing the rounds: Andrew Wilkie’s poker machine…
More Peter Brent

The Australian Business Briefing: Wall St rally unshaken by quake and despite bleak economic data

Wall St rally unshaken by quake
earthquake New York Steven Russolillo US stocks rallied today, with the Dow rising 322 points despite bleak economic data and an earthquake that rattled the East Coast.
Labor red flag for Qantas suitors
qantas Annabel Hepworth LABOR is signalling a hardline approach to any private equity bids for Qantas amid escalating speculation of a $3.5 billion-plus approach.
ATO pursues Myer float millions
Australian Tax Office Richard Gluyas THE ATO has won court orders to help trace the overseas flow of hundreds of millions of dollars from the Myer float.
BofA defends capital position
Bank of America Mortgages David Benoit INVESTORS remained concerned about Bank of America today, as the cost to protect its debt from default hit new highs.
Heinz targets budget consumers
Earns HJ Heinz Paul Ziobro HEINZ is adding more products at lower prices to try to draw in lower-income consumers buffeted by economic uncertainty.
Weak Foster's result suits suitor
Foster's result suits suitor Blair Speedy FOSTER'S has suffered its biggest decline in beer sales for 20 years, and has warned that volumes are still slipping.
New BoQ chief a fan of expansion
New BoQ chief a fan of expansion Andrew Fraser RELYING  less on Brisbane has proved a good strategy for Bank of Queensland.
'Time to get real on NRL rights'
NRL logo James Chessell CONSOLIDATED Media Holdings has raised serious questions about the value of some sports broadcasting rights.
Financial Markets
Wall St rally unshaken by quake
earthquake New York Steven Russolillo US stocks rallied today, with the Dow rising 322 points despite bleak economic data and an earthquake that rattled the East Coast.
Gold falls as equities surge
Oil price climbs above $US85
Financial Markets Coverage
Mining & Energy
Gold falls as equities surge
Gold Tatyana Shumsky GOLD fell as the US stockmarket rallied, worrying gold traders, in the aftermath of an earthquake that struck Virginia.
Oil price climbs above $US85
Copper rises 1pc on China PMI
More Mining & Energy