Article on Senkaku Islands and who is claiming stake over it.

http://www.bbc.co.uk/news/world-asia-pacific-11341139

Ties between China and Japan have been repeatedly strained by a territorial row over a group of islands, known as the Senkaku islands in Japan and the Diaoyu islands in China.

What is the row about?

At the heart of the dispute are eight uninhabited islands and rocks in the East China Sea. They have a total area of about 7 sq km and lie north-east of Taiwan, east of the Chinese mainland and south-west of Japan's southern-most prefecture, Okinawa. The islands are controlled by Japan.

They matter because they are close to important shipping lanes, offer rich fishing grounds and lie near potential oil and gas reserves. They are also in a strategically significant position, amid rising competition between the US and China for military primacy in the Asia-Pacific region.

What is Japan's claim?

Japan says it surveyed the islands for 10 years in 19th Century and determined that they were uninhabited. On 14 January 1895 Japan erected a sovereignty marker and formally incorporated the islands into Japanese territory as part of the Nansei Shoto islands.

After World War Two, Japan renounced claims to a number of territories and islands including Taiwan in the 1951 Treaty of San Francisco. The Nansei Shoto islands came under US trusteeship, being returned to Japan in 1971 under the Okinawa reversion deal.

Japan says China raised no objections to the San Francisco deal. And it says that it is only since the 1970s, when the issue of oil resources in the area emerged, that Chinese and Taiwanese authorities began pressing their claims.

What is China's claim?

China says that the Diaoyu islands have been part of its territory since ancient times, serving as important fishing grounds administered by the province of Taiwan. The Ministry of Foreign Affairs has said that this is "fully proven by history and is legally well-founded".

Taiwan was ceded to Japan in the Treaty of Shimonoseki in 1895, after the Sino-Japanese war.

When Taiwan was returned in the Treaty of San Francisco, China says the islands should also have been returned. But Beijing says Kuomintang leader Chiang Kai-shek did not raise the issue, even when the Diaoyu islands were named in the later Okinawa reversion deal, because he depended on the US for support.

Separately, Taiwan also claims the islands.

How have they pressed their claims?

Japan controls the islands, and its coast guards patrol the surrounding waters. But actions by nationalist activists on both sides have repeatedly exacerbated tension.

In 1996 a Japanese group established a lighthouse on one of the islands. Chinese activists then sailed repeatedly to the islands and in one incident, Hong Kong activist David Chan jumped into the sea and drowned. Since then, there have been periodic attempts by Chinese and Taiwanese activists to sail to the islands.

There have also been face-offs between Japanese patrol boats and Chinese or Taiwanese fishing vessels. In 2005, 50 Taiwanese fishing boats staged a protest in the area, complaining of harassment by Japanese patrols.

In September 2010, Japan seized a Chinese trawler and its crew after it collided with two coast guard vessels near the islands, sparking a serious diplomatic row. Small anti-Japanese protests were held in several cities in China. In the end, Japan released the trawler's crew.

In April 2012, a fresh row ensued after outspoken Tokyo Governor Shintaro Ishihara said he would use public money to buy the islands from their private Japanese owner.

Amid visits to the islands by Japanese and Hong Kong activists, the Japanese government then reached a deal to buy three of the islands from the owner in a move to block Mr Ishihara's more provocative plan.

The move angered China, triggering small protests and hitting the operations of some Japanese firms in China. Since then, Chinese government ships have sailed in and out of what Japan says are its territorial waters around the islands on many occasions.

Has the row been limited to spats at sea?

No. Both sides have taken their dispute to the air, rolling it into a broader regional power struggle.

Japan has complained of Chinese unmanned drones flying near its airspace and has scrambled jets as a deterrent.

Japan's Defence Ministry appeared to float the idea in October 2013 that it had the right to shoot down foreign drones approaching its airspace, sparking an angry reaction from Beijing.

Periodic crises have also been caused by Chinese government planes straying too close to the disputed islands for Japan's liking.

In November 2013, China announced the creation of a new air-defence identification zone, which would demand any aircraft in the zone to comply with a number of rules laid down by Beijing.

The area covers the airspace above the disputed islands, and also overlaps with Japan's claimed air-defence zone. Japan labelled the move a "unilateral escalation".

What is the role of the US?

The US and Japan forged a security alliance in the wake of World War II and formalised it in 1960. Under the deal, the US is given military bases in Japan in return for its promise to defend Japan in the event of an attack.

This means - in theory - that if conflict were to erupt between China and Japan, Japan would expect US military back-up. Some US analysts, however, have pointed out that intervention in any Japan-China islands clash is not in America's interests.

The US continues to express vocal support for the Japan-US alliance and - on the islands row - has called for cool heads to prevail, warning of the high stakes involved in any potential escalation.

What next?

The Senkaku/Diaoyu issue complicates efforts by Japan and China to resolve a dispute over oil and gas fields in the East China Sea that they both claim.

It also highlights the more robust attitude China has been taking to its territorial claims in both the East China Sea and the South China Sea. And it poses worrying questions about regional security as China's military modernises as the US embarks on its "pivot" to Asia.

In both China and Japan, meanwhile, the dispute has a tendency to ignite nationalist passions on both sides, putting pressure on politicians to appear tough and ultimately making any possible resolution even harder to find.

 

Regards,
Shashi

http://timesofindia.indiatimes.com/world/us/Cali-multiplication-Secession-in-the-united-states/articleshow/30882000.cms


In the turbulent weeks that the Telangana issue was coming to a boil in India, halfway across the world a movement to split California into six smaller states was quietly gathering steam. There was no violence, no bloodshed, no legislative bedlam, and no rowdy politics in the movement, although the issues were broadly the same — regions of the state that felt hard done by the sheer unwieldiness of the large state, which, if treated as an independent country, would geographically be bigger than Germany, with an economy that would be the eighth or ninth largest in the world. Indeed, the state is so large that it is used to define the extra-long bed size in the US: California King Size is 72in x 84 in compared to regular King Size which is 76 in x 80 in.

The call for splitting California — or indeed the call for division of many other states in America — is neither new, nor unusual. California itself has seen scores of proposals (220 by one count,with 25 serious ones ) to divide it into smaller units. So have Texas, Florida, New York and more than a dozen "united states'' big and small.

But in a country that decimated its native population, subsumed immigrant ethnicities, and forged a single national identity based largely on one language and the principle of life, liberty, and the pursuit of happiness (or the happiness of pursuit ), there is very little raw emotion and flaming passion accompanying movements to split and secede. Most of the pathology it appears was spent during the inappropriately named Civil War. Now it is all done in a very civilized, business-like manner.

Article IV of the United States Constitution in fact provides for the admission of new states and the changing of state boundaries in the Union, requiring that any such creation be approved by the legislature of the affected state (s), as well as the United States Congress. But since the adoption of the US Constitution, only four states have been created from parts of an existing state : Maine (from Massachusetts ), West Virginia (from Virginia ), Kentucky (also from Virginia ), and Vermont (from New York and New Hampshire ). In fact, since the creation of West Virginia in 1863, no new states have been successfully created from parts of already existing states, although new states such as Alaska and Hawaii have been added to the union as recently as the 1950 s. Most movements for new states lack passion and urgency.

California,once described as a diamond on the diamond ring, has been straining at the leash of late, with at least half-dozen attempts since 2000 to break of the state. The latest effort comes from Silicon Valley venture capitalist Tim Draper, who thinks the state has reached breaking point on account of its unwieldy size and wants to break it into six smaller states, including giving life to a notional unit called Silicon Valley, which hitherto has existed without specific geographical domain. Last week, Draper managed to cross the first hurdles towards what many consider a pipe dream by filing a petition and getting approval from the state's secretary of state for gathering signatures to place it on a ballot. He will need signatures of 807,615 registered voters in 150 days (by July 18, 2014) to qualify the petition for a ballot that may then be voted statewide.

Few people have any idea where the proposal will go if it crosses those two hurdles, given that the US has had a finely crafted and carefully balanced federal structure that includes two seats per state in the 100-member Senate. Would the six new California states (including the new state of Silicon Valley) each have two senators ? What happens to the electoral college, the massive size of which plays a decisive role in presidential election ? Most experts think Draper's proposal is a nonstarter, given the enormous complexities. Previous such proposals have invariably been shot down well before it got to Washington DC, which itself has periodically been in the throes of statehood.

Another state where some politicians are toying with splitsville lately is Florida. Southern Florida pols argue that their region is politically and culturally distinct from northern Florida, and politicians from Tallahassee (the capital, which is in the north ) do not provide enough tax money tothe Miami area,which is in the South.

But what the whole exercise of putting the petitions and proposals through the democratic mill does is leach whatever passion and pathology there is in the movement - which isn't very much in the first place. America's regional or chauvinistic fervor is largely restricted to the sporting arena even though many of its activist citizens recognize the disparities arising from inequitable distribution of resources. This is a settled country in more than one sense — occasional petitions and ballots notwithstanding.

 

Regards,
Shashi

Foreign Institutional Investor article

What does it Mean? An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing. Institutional investors include hedge funds, insurance companies, pension funds and mutual funds.

Investopedia Says... The term is used most commonly in India to refer to outside companies investing in the financial markets of India. International institutional investors must register with the Securities and Exchange Board of India to participate in the market. One of the major market regulations pertaining to FIIs involves placing limits on FII ownership in Indian companies.

Institutional Investor

What does it Mean? A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

Investopedia Says... Watching what the big money is buying can sometimes be a good indicator, as they (supposedly) know what they are doing. Some examples of institutional investors are pension funds and life insurance companies.

nstitutional Investors And Fundamentals: What's The Link?
October 15, 2003 | By Ben McClure, Contributor - Investopedia Advisor

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Many investors quickly learn to appreciate the significance of institutional shareholders - the mutual funds, pension funds, banks and other big financial institutions. These types of investing entities are often referred to as "smart money" and are estimated to account for as much as 70% of all trading activity. This professional stock buying is called institutional sponsorship and is believed by many stock watchers to send a strong message about a company's health and financial future.

However, investors with a fundamental approach need to understand the connection between a company's fundamentals and the interest the company attracts from large institutions. Institutional sponsorship, often driven by factors other than fundamentals, is not always a good gauge of stock quality.

The Dependability of Institutions
The argument that institutional sponsorship signals strong fundamentals makes a lot of sense. Big institutions make their living buying and selling stocks. Working hard to buy stocks that are undervalued and offer good prospects, institutional investors employ analysts, researchers and other specialists to get the best information about companies. The institutions meet regularly with CEOs, evaluate industry conditions and study the outlook for every company in which they plan to invest.

Besides, the institutions with large stakes have a vested interest in increasing the value of their shareholdings. Big institutional investors can exercise significant voting power and impact strategic decision making. These shareholders tend to promote value-driven decisions and create shareholder wealth by ensuring that management maximize the stream of earnings. Broadly speaking, research shows that high ownership concentration generally leads to better monitoring of management, leading to higher stock valuation.

Academic research suggests that institutional holdings pay off. In their study "Does Smart Money Move Markets?", which is published in the Spring 2003 edition of Institutional Investor Journals, Scott Gibson of the University of Minnesota and Assem Safieddine of Michigan State University, compare changes in total institutional ownership to stock returns over the each quarter from 1980 to 1994. During the 15-year period, stocks with the largest quarterly increase in institutional ownership (about 20% of all stocks) consistently posted positive returns.

William J. O'Neill, founder of Investor's Business Daily and creator of the CANSLIM stock selection methodology, argues in his book "How to Make Money in Stocks" (1988) that it is important to know how many institutions hold positions in a company's stock and if the number of institutions purchasing the stock now and in recent quarters is increasing. If a stock has no sponsorship, the odds are good that some looked at the stock's fundamentals and rejected it.

When the Dependability Becomes Instability
Of course, you can have too much of a good thing. O'Neil is careful to point out that while institutional sponsorship is attractive, a lot of institutional ownership can be a sign of danger. If something goes wrong with a company and all the institutions holding it sell en masse, the stock's valuation can tank - regardless of fundamentals.

Think of a stock as a swimming pool. The water level is analogous to the stock price, and elephants represent institutional investors. If the elephants suddenly start stepping into the pool (buy the stock), the water level (the price of the stock) will rise very quickly. But if the elephants get spooked and leap out of that pool (or sell the stock), then the water level (price of the stock) will fall rapidly.

Remember, institutions are not only investors but also traders. In principle, they will put money into stocks only after lots of fundamental analysis, identifying where the stock price should be and compare that to where it is. In practice, however, they often forego fundamental analysis for the signals emitted by technical indicators. Because their main worry is whether the stock price is going up or down, institutions will often concentrate on whether the price direction has any momentum.

A stock with a lot of institutional support may be close to the peak of its valuation, or full of elephants. When every mutual and pension fund in the land owns a chunk of a particular stock, it may have nowhere to go but down. Look at the meltdown of technology stocks in 2000 and 2001. Companies like Cisco, Intel, Amazon and others had an unprecedented amount of institutional sponsorship, but, as the subsequent collapse of their share price demonstrated, they also had unattractive fundamentals.

The legendary investor, Peter Lynch, thinks institutional investors make poor role models for individual investors. In his best-selling book "One Up on Wall Street", he lists thirteen characteristics of the perfect stock. Here's one of them: "Institutions Don't Own It and the Analysts Don't Follow It." Lynch brushes aside the notion that companies without institutional support carry the risk never being discovered: he argues that the market eventually finds undervalued companies with solid fundamentals. These companies are never out of sight for long. By the time institutional investors discover these hidden gems, the companies will no longer be hidden but fairly valued, if not overvalued.

Finding Out Who Holds the Institutional Sponsorship
It all comes down to the quality of institutional sponsorship. With a little extra research, investors can find out which institutions own the stock. For spotting companies with good fundamentals, you can determine if the stock is owned by funds with good track records.

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One way to see if a stock has some institutional support is by checking its trading activity for block trades. A block trade, which is a single trade of a large number of shares, typically has a value of at least $100,000. Normally only an institutional investor has the money to buy such blocks.

Otherwise, visit Multex Investor, which provides a list of links to research reports online, some of which may identify institutional holdings. Many of the Multex reports are free.

Of course, the easiest way to find out if a company has some institutional sponsorship is simply to ask it. Often the company's investor-relations web page will provide a listing. Otherwise ask the company's representative if any of their shares are held by mutual funds, pension funds or other institutional investors. They should be able to tell you which institutions are shareholders.

Conclusion
Although logic and statistics show that institutional sponsorship is a good indicator of a good company, investors should be aware that institutional investing is not always driven by quality fundamentals. Before you depend on the assumption that smart money is the leader in judging fundamentals, make sure you determine whether the institutions are investing for the same reason you are.