>>> Asian Update

Asian Market Update: China trade surplus hits new record high, imports fall again; Japan Q2 final GDP revised lower; Sterling craters on Scotland poll


***Economic Data***
- (CN) CHINA AUG TRADE BALANCE: $49.8B V $40.0BE (2nd consecutive record-high)
- (JP) JAPAN Q2 FINAL GDP Q/Q: -1.8% (biggest decline in 5 years) V -1.8%E; ANNUALIZED GDP: -7.1% V -7.0%E; NOMINAL GDP: -0.2% V -0.1%E
- (JP) JAPAN JUL CURRENT ACCOUNT BALANCE: -¥417B V -¥444BE; ADJ CURRENT ACCOUNT: ¥99B (4-month low) V ¥180BE; TRADE BALANCE: -¥828B V -¥726BE
- (AU) AUSTRALIA AUG ANZ JOB ADS M/M: 1.5% (3rd consecutive increase) V 0.5% PRIOR
- (NZ) NEW ZEALAND Q2 MANUFACTURING ACTIVITY VOLUME Q/Q: -0.7% V +0.2% PRIOR; MANUFACTURING ACTIVITY Q/Q: -1.9% V 0.0% PRIOR (1st contraction in a year)

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.1%, S&P/ASX -0.3%, Kospi closed, Shanghai Composite closed, Hang Seng -0.5%, Sept S&P500 -0.1% at 2,004

***Commodities/Fixed Income/Currencies***
- Dec gold +0.1% at $1,269, Oct crude oil -0.1% at $93.19/brl, Dec copper flat at $3.17/lb
- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5 yr JGB and ¥400B in 5-10yr JGB

***Market Focal Points/Key Themes***
- Markets are less enthused by the 2nd consecutive record high in China trade surplus, as it also marked the 2nd straight instance of falling imports. Shanghai Composite is closed for holiday, but the Hang Seng hit its session lows below 25,100 just after the trade figures. Exports rose 9.4% - above 9.0% consensus - but growth in shipments to US and EU markets slowed from July levels. Separately out of China, the Commerce Ministry (MOFCOM) announced it would issue new rules that ease restrictions on local companies making overseas investments. Taking effect Oct 6th, the new rules would only require ministry approval on investments in regions and industries identified as "sensitive".

- Japan released its final Q2 GDP that showed an even bigger contraction than initially estimated. Private consumption was particularly soft, falling 5.1% on sharply reduced spending following consumption tax hike. The biggest downward revision was seen in corporate CAPEX which was cut to -5.1% from -2.5% prelim and below 3.4% consensus, with companies reluctant to invest given the more protracted drag from the sales tax than anticipated.

- Among USD majors, the biggest fluctuation is in Cable which fell as much as 160pips from Friday close to $1.6170. Investors are unnerved by the uncertainty related to the possibility of Scotland referendum for independence after a YouGov survey for the Sunday Times showed supporters of independence are in the lead for the first time by a 51-49% margin. Referendum vote in Scotland is scheduled for Sept 18th.

- In geopotical theater, weekend developments in Ukraine and Iraq will likely keep the markets on edge this week. After the official start of a ceasefire on Friday, both sides accused each other of continued shelling around the Ukraine port city of Mariupol. EU official also unveiled the specifics of the latest round of sanctions on Russia, banning top energy firms Rosneft, Transneft, and Gazprom oil unit from fund raising and securing new loans. In the Middle East, US Air Force conducted two more airstrikes against ISIS over the weekend. Pres Obama is also expected to consult Congress on Tuesday and then deliver a statement on Wednesday unveiling a plan to go on the offensive against the militants on Wednesday.

***Equities***
US markets:
- BA: Ryanair, Boeing to make fleet announcement regarding purchase of $11B worth of Boeing Max aircrafts
- RAX: CenturyLink said to have held talks to acquire company for its cloud services - financial press

Notable movers by sector:
- Materials: Kobe Steel 5406.JP +2.9% (production plans)
- Industrials: Chiyoda Corp 6366.JP +2.2% (awarded contract); Great Wall Motor 2333.HK -2.1% (Aug sales)
- Financials: Mitsubishi UFJ 8306.JP +0.5% (preparing up to $8B in foreign acquisitions)
- Technology: Rakuten 4755.JP -4.2% (reached basic deal to acquire Ebates)
- Consumer Discretionary: Goodman Fielder GFF.AU -0.8% (update on scheme arrangement with Wilmar Int'l)

WSJ : Britain Finally Faces Up to Its Homegrown Jihadist Problem

Britain Finally Faces Up to Its Homegrown Jihadist Problem
Scotland Yard estimates that at least 500 Britons have joined Islamic State.

On Monday last week British Prime Minister David Cameron proposed legislation to prevent citizens who joined the Islamic State and other terrorist groups from re-entering Britain to "wreak havoc." His proposal followed the Aug. 19 release of a video showing a jihadist who spoke with a British accent appearing to behead American journalist James Foley. One day after Mr. Cameron's announcement, the Islamic State posted a video showing the murder of American journalist Steven Sotloff, ostensibly by the same Briton.

The jihadist's nationality shocked Britain and the world. It shouldn't have. Scotland Yard estimates that at least 500 Britons have traveled to the Middle East to join the Islamic State. British-born terrorists have been the most numerous, violent and influential of European jihadists since well before 9/11.

Why Britain? The reasons include the nation's tradition as a sanctuary for dissidents; a defendant-friendly judiciary; a law-enforcement system with few Muslim informants; a profligate version of multiculturalism; and the misfortune of having Pakistan as the main source of Muslim immigrants.

Most jihadists who call Britain home aren't immigrants. They are the alienated children of immigrants. These second-generation immigrants regard Pakistan as their ideological lodestar, and like other British Pakistanis vacation there yearly—where they can contact that country's ample supply of extremists. The second-generation British Muslim is often subject to discrimination by "Anglos," yet he spurns his parents' folk Islam, along with their traditional ways. Into this cultural vacuum steps radical Islam, providing an identity that claims to be unique and modern.

British jihadism emerged in the early 1990s. Disaffected Muslims began flocking to the sermons of London's foreign-born imams, or to listen to their audiotapes, spewing anti-Semitism, homophobia and calls for violent jihad. Typically these preachers, regarded by the government as dissidents from overseas, were entitled to welfare benefits.

Among the welfare recipients was Abu Hamza, an Egyptian imam. His Finsbury FIF.LN +0.40% Park Mosque harbored an all-star team of terrorists—including "shoe bomber" Richard Reid, the 9/11 "20th hijacker" Zacarias Moussaoui, would-be Los Angeles airport Millennium bomber Ahmed Ressam, and Ahmed Omar Saeed Sheikh, who the Pakistani government says murdered Wall Street Journal reporter Daniel Pearl.

For crimes including soliciting murder and inciting terrorism, Abu Hamza was sentenced in Britain to a mere seven years. He was eventually extradited to the U.S., where in May he was convicted on 11 charges, including conspiring to set up a terrorist training camp in Oregon in 1999. Abu Hamza will be sentenced Sept. 9 and will almost certainly receive a life sentence.

For years British law enforcement did not consider foreign imams a domestic threat, since they preached against their countries of origin—such as Algeria, Syria, Egypt and Jordan. That perception ended on July 7, 2005, when four British Muslims detonated bombs in London that killed 52 commuters and injured another 700 on trains and buses.

The suicide bombers (three of Pakistani descent) died in the explosions. But prosecutors were unable to convict the surviving collaborators, in large part because British police were without ties or informants that could crack the code of silence of the Muslim community in Beeston, where the killers lived or trained.

This is tragically ironic because the U.K. takes pride in multiculturalism. But as Amartya Sen, the Nobel-laureate economist, puts it, what Britain has is "plural monoculturalism." This does not promote the mixing of different cultures in a national culture, but rather focuses on preserving cultural identity.

Thus alienated Muslims can learn from mosque, media and university that they should not, as the prominent Islamic Leicester Institute instructs Muslims, "accept British values or to adopt a British identity" but "express their own identities, explore their own histories, formulate their own values, pursue their own lifestyles."

Most British Muslims are loyal, upwardly mobile citizens, play cricket and football and enjoy pubs and often attend university. Yet to spend time, as I have, in the streets of Beeston, or to listen to sermons in London's radical mosques, is to enter a world where "infidels" are suspect, toleration proscribed and integration abhorred. In this universe young Muslim men often prefer to watch jihadist videos or heed the message of "Al-Wala' wa'l-Bara'" (Loyalty and Repudiation), a tract translated by a Saudi-backed London publisher that affirms "Do not take the Jews and the Christians for friends," and "whoever of you takes them for friends is (one) of them."

Britain has fewer Muslims than France or Germany, yet its jihadists exceed the number in those countries. In 2006 U.K. authorities uncovered a plot to explode trans-Atlantic airliners bound for America with liquid explosives; liquids were henceforth banned from carry-on bags. All 19 suspects were British-Pakistanis with East London addresses.

As a result, a year later Jonathan Evans, then general director of British domestic security service MI5, acknowledged that there were 2,000 individuals known to be "involved in terrorist-related activity in the U.K." In 2008 Mr. Evans said there were more. Last year the new MI5 general director, Andrew Parker, noted that from Sept. 11, 2001, to the end of March 2013 "330 people were convicted of terrorism-related offences in Britain"—and all of them were British Muslims.

Nowhere else in Europe have authorities felt the need to release a jihadist head count, but in confidential briefings no Belgian, Danish, Dutch, French, German, Italian and Spanish security official offered me estimates at a fraction of British appraisals. Britain possesses a deeply rooted and insular radical Islam culture. This is why British investigators are having such a tough time identifying the murderer of the two Americans and why British tweets praising the killings abound.

Mr. Leiken is the author of "Europe's Angry Muslims: the Revolt of the Second Generation" (Oxford University Press, 2012). His website is rsleiken.net.

WSJ : New EU Sanctions to Stop Fundraising by 3 Russian Oil Giants

New EU Sanctions to Stop Fundraising by 3 Russian Oil Giants
Rosneft, Transneft and OAO Gazprom Among Russian Firms Affected

BRUSSELS—New European Union sanctions on Russia to be implemented this week will expand the number of Russian companies unable to raise new money in the bloc's capital markets to include three major state-owned oil companies, according to documents seen by The Wall Street Journal.

Under a modest expansion of sanctions introduced in late July, the three oil companies— Gazpromneft, SIBN.MZ +0.02% the oil-production and refining subsidiary of OAO Gazprom, OGZPY +3.55% oil transportation company Transneft, TRNFP.MZ +1.28% and oil giant Rosneft—will be forbidden from raising funds of longer than 30 days' maturity.

Five state-controlled banks, including Sberbank and VTB Bank, VTBR.MZ +1.57% already barred from raising funds for longer than 90 days under the July sanctions, will also have the maximum maturity cut to 30 days.

The new sanctions were agreed on Friday, and are expected to implemented Tuesday.

They include for the first time a ban preventing the named companies from raising new bank loans in the EU of longer than 30 days' maturity.

Three companies involved in military production—Oboronprom, United Aircraft Corp. and Uralvagonzavod—will also be barred from future EU fundraising.

The new sanctions will also bar new contracts for services needed for oil exploration and production in deep water, the Arctic or shale-oil projects.

The restrictions will bar sales from the EU of so-called dual-use technologies—meaning they have both civil and military applications—to nine Russian companies providing services to the Russian military. The list includes electronic-optics company JSC Sirius, mechanical engineering company OJSC Stankoinstrument, and the small-arms manufacturer JSC Kalashnikov.

European leaders said late last week the new measures could be lifted if there was clear evidence that Moscow was helping forge a genuine political solution in Ukraine.

According to an EU spokeswoman, that evidence would need to include permanent monitoring of the Russia-Ukrainian border, the withdrawal of illegal armed groups from Ukraine and of Russian forces illegally operating on Ukrainian territory.

On Sunday, fighting in two Ukrainian cities called into question a cease-fire agreed to on Friday.

The documents show the EU seeking to hit Russian oil companies, but leaving unscathed those involved in gas production and export, which are critical to many European countries' energy supplies.

They also make some exceptions for exports destined for the Russian space and civilian nuclear industries.

>>> What to look at this week end.

US Market closed higher, All ten sectors finished in the green, but health care (+0.6%) contributed to the opening weakness, pressured gy GILD (-8,7% at the lowest level to finish -1,4%), utilities was best performer(+1,2%)...volume were light...VIX @ 12,09 -4,35%

Macro
- Schumer Draft Tax Proposal on Inversions Could Reach to 1994 {NSN NBJQF06TTDS2 <go>}
- EU unveils details on new Russia sanctions; To prevent top energy firms Rosneft, Transneft, and Gazprom oil unit from fund raising
-ECB's Visco (Italy): ECB should not hesitate to take further action on monetary policy if needed

Keep an eye on :
- ADS GY : Adidas Trails Nike, Under Armour in U.S. Sportswear Sales: WSJ
- AGN US : Allergan/Jazz: Irish Takeover Rules May Trigger Clarity: Sterne
- ALO FP : Alstom Accused of Paying GBP6m in Bribes to Win Contracts: FT
- AZN LN : AstraZeneca Sues Sagent Pharma Over Patents for Faslodex
- BA US : Boeing Said Poised to Win $11b Ryanair Order for 737Max Models
- CU FP : Club Med’s Sales Decline Complicates Potential Fosun Bid: Monde
- AM FP : Airbus Said Planning 10% Dassault Stake Sale Ahead of Full Exit
- DTE GY : Dish’s Ergen Said to Discuss T-Mobile Deal With Deutsche Telekom {NSN NBG12M6KLVRE <go>}
- EOAN GY : Italy’s Edison to Enter Talks to Buy E.ON Italian Unit: Reuters
- GSK LN : Glaxo’s Experimental Ebola Vaccine Fights Off Virus in Monkeys
- NFLX US : Netflix Will Have to Pay 2% Tax on French Revenue, Figaro Says
- NOVN VX : Novartis: Data Show Ultibro Cut More COPD Flareups vs Seretide
- RYA LN : Boeing, Ryanair to Make ‘Significant Announcement’ Tomorrow
- TIT IM : Telecom Italia’s Patuano Says No Intention to Spin Off Network, to Speed Up Investments in Brazil, CEO Says
- TIT IM : Telecom Italia says may reconsider Telecom Argentina's sale if Argentine regulators continue delaying deal approval, TIM remains core asset
- TMUS US : Dish’s Ergen Said to Discuss T-Mobile Deal With Deutsche Telekom {NSN NBG12M6KLVRE <go>}
- VIE FP : Veolia CEO Sees at Least 2 Credible Bidders for Ferry Co. SNCM
- VOD LN : Vodafone to Begin Mobile Payment Service in U.K. Next Month: FT

NYT : John Paulson Bids Good Riddance to Summer

The hedge fund magnate John A. Paulson seemed to be enjoying himself at the United States Open on Wednesday night, watching Novak Djokovic defeat Andy Murray.

But over all, this summer has not been kind to Mr. Paulson. In July, his $23 billion Paulson & Company suffered across-the-board losses. August was marginally better, according to the latest numbers, disclosed in a monthly update letter sent to investors on Friday.

Mr. Paulson’s Advantage and Advantage Plus funds were down 1.5 percent and 1.2 percent during August, bringing losses to 4.8 percent and 3.9 percent so far this year, according to the update. Among the worst-hit sectors for the firm were hotels, telecommunications and energy.

Meanwhile, his Recovery fund, which made nearly $1 billion through its stake in OneWest Bank after the CIT Group bought it in July, managed to claw back marginally from a 4.9 percent loss in July to bring its losses to 1.6 percent this year.

Mr. Paulson’s largest fund, called the Credit fund, gained 0.5 percent in August. The Enhanced fund was flat but still remains up 8.9 percent so far this year.

Mr. Paulson made a name for himself after he reaped billions of dollars betting on the housing crash during the financial crisis. Since then, his firm has focused on placing bets on the mergers and acquisitions boom taking place on Wall Street.

The hedge fund has been the center of a flurry of activity this year, with holdings in companies on both sides of many of the year’s most prominent deals.

But two of the year’s biggest deals fell through in August. Sprint’s attempted takeover of T-Mobile and Rupert Murdoch’s bid for Time Warner were both abandoned in one torrid week. Since then, Mr. Paulson’s holdings in Sprint, T-Mobile and Time Warner have suffered losses.

Meanwhile, the momentum behind so-called inversion deals — in which United States companies acquire a foreign company and reincorporate overseas to pay lower taxes — is under threat amid a broader political backlash in Washington.

In July, the pharmaceutical company AbbVie closed a $54 billion deal with its European rival Shire, drawing regulatory scrutiny to such deals. Mr. Paulson holds a 4.5 percent stake in Shire and holds stakes in companies that are considering inversions.

Mr. Paulson may hope for better prospects in the last months of this year. Since the second quarter, his firm has added positions in Covidien and DirecTV, which Mr. Paulson told an audience at a Manhattan hedge fund conference in July were “attractive”.

While the investor letter did not point to specific stocks that hurt the firm’s performance, two of its largest holdings — the casino and hotel chain Caesars Entertainment and the hotel chain Extended Stay America — have not performed well recently. Mr. Paulson has a 9.5 percent stake in Caesars and a 23.3 percent stake in Extended Stay.

Since the second quarter, Mr. Paulson has reduced his stake in Caesars, which has been weighed down by $25 billion of debt and is locked in a litigious battle with bondholders seeking to extract their money from the company. He also sold shares in Extended Stay America, which Mr. Paulson helped to buy out of bankruptcy together with Centerbridge and Blackstone in 2010 for $3.9 billion.

A spokesman for Paulson & Company declined to comment.

FT : Economists hail birth of ‘Draghinomics’

conomists hail birth of ‘Draghinomics’

Eurozone officials attending the Ambrosetti forum over the weekend welcomed the European Central Bank’s moves to cut interest rates and signal forthcoming purchases of asset-backed securities, with some private-sector economists suggesting this could herald a new policy mix.
Even though the ECB’s long-term forecasts of moderate recovery remain unchanged, the bank’s board members have grown increasingly worried about the recent downward pressure on prices and the softening of consumer confidence. Its latest moves are designed to stave off deflation and jolt the sluggish eurozone economy back to life.

Nouriel Roubini, professor of economics at New York University, said ECB president Mario Draghi’s remarks at the Jackson Hole meeting of central bankers signalled an important evolution of thinking. Mr Draghi said at the symposium that monetary policy should be supported by increased spending by countries with strong fiscal positions and structural reforms in economies such as France and Italy. Mr Roubini labelled the emerging policy mix “Draghinomics” because of its similarity to the three arrows of Abenomics in Japan.
“Abenomics has three arrows: monetary and fiscal easing and structural reforms. The eurozone is in near deflation and the recovery is not happening. Monetary and fiscal easing cannot resolve the problem on their own. The ECB has recognised that structural and supply-side reforms are fundamental,” Mr Roubini told the Financial Times.
Jyrki Katainen, the European Commission’s vice-president for economic and monetary affairs, said that member states needed to stick to the fiscal discipline that had helped stabilise the currency bloc. But in an interview with the Financial Times, he suggested there was some “fiscal space” in the eurozone as a whole to increase public investment spending. The commission would put renewed emphasis on structural reforms.
“I very much agree with Mario Draghi and what he said that there is a huge need for pursuing structural reforms to improve competitiveness in Europe,” Mr Katainen said, highlighting labour and product market reforms, pension reforms, and liberalising some professional services in various countries. He also said that public spending across the eurozone should be adapted to encourage investment.
One other senior eurozone official attending the Italian forum which gathers together policy makers, business people and academics said: “Structural reforms are key. Those countries that have made these efforts are performing better: Ireland, Spain and Portugal. Italy and France should think a little bit about this.”
Members of the ECB’s governing council applauded Mr Draghi’s performance to the press on Thursday, saying his remarks accurately characterised the debate between policy makers. It was during the press conference following the rate cut announcement that the ECB president acknowledged the council was split for the first time since last November.
Though there was a “comfortable majority” in favour, some members of the council voiced concern that a programme of asset-backed security purchases could lead to the ECB taking too much credit risk away from the banks and on to the central bank’s balance sheet. Arguments for waiting for more data met with resistance from Mr Draghi, who believed urgent action was needed. Others called on the ECB president to go a step further and embark on mass government bond buying.
“Some of our governing council members were in favour of doing more than I have just presented, and some were in favour of doing less,” Mr Draghi said last week, adding that the plan announced “strikes the middle of the road”. Jens Weidmann, the Bundesbank’s president, was one member of the council who wanted less than what was unveiled on Thursday.
A figure for the size of the programme was mooted, but most felt it too early to give an exact figure for the value of assets the ECB was likely to buy. Reuters reported before the decision that the central bank was mulling a plan to buy €500bn of ABS and covered bonds.
Mr Draghi said instead that the combination of purchases and its forthcoming auctions of cheap loans would boost the ECB’s balance sheet by up to €1tn to levels not seen since the start of 2012.
The ECB cut rates to boost the take-up of its first offer of cheap, fixed-rate four year loans – set for the middle of this month. The cost of the loans drawn from the Targeted Longer-Term Refinancing Operation are tied to the ECB’s benchmark interest rates. Policy makers hope that what Mr Draghi promised was the final cut in rates will encourage treasurers to bid for funds in September instead of waiting until the end of this year or 2015.
Jean-Claude Trichet, the former president of the ECB, said it might be possible to boost demand by increasing infrastructure spending across the eurozone. Jean-Claude Juncker, the incoming president of the European Commission, has proposed a €300bn public-private investment programme. “These ideas of having some kind of big investment programme that would be financed by traditional means, by private-public partnership, and if necessary by project bonds do not seem to me aberrant in the present situation. Hundreds of billions [of euros] have been mentioned. We’ll see what happens,” he said in a video interview.

FT : Method in the madness of the Alibaba cult

Method in the madness of the Alibaba cult

A small group of committed revolutionaries spend years in the wilderness, committed to a utopian theory of radical change with themselves as its agents. They create an organisation where fanatical loyalty is most prized, with arcane rituals, purges, and even funny hats.
It is not the Chinese Communist party, this is Alibaba Group, which accounts for more-than three quarters of China’s retail ecommerce. It credits its awesome growth over the past 15 years to a uniquely personal corporate culture and the visionary leadership of founder Jack Ma.

“Alibaba reminds me of the Chinese Communist party in its early years,” said Li Zhihui, who used to work for Alibaba and has since written a book about the company’s management style. “They are a group of second-rate professionals doing a first-rate job.”
As Alibaba prepares for what is likely to be a record-breaking initial public offering in New York this month, both admirers and detractors alike credit the creativity and drive that got the company this far to Alibaba’s somewhat cult-like esprit de corps – and the quirky Mr Ma.
On Friday, the company announced it would seek a valuation of up to $163bn as it published a regulatory filing ahead of a global roadshow that starts with one-on-one meetings and a lunch for hundreds of would-be investors in New York on Monday.
The price range set out in the document of $60-$66 per share would make Alibaba the largest technology or internet IPO yet. Strong investor demand could make it the largest from any sector.
In a letter to investors, Mr Ma signalled that his messianic ambitions spread far beyond China. “lin the past decade, we measured ourselves by how much we changed China. In the future, we will be judged by how much progress we bring to the world,” he wrote.
Potential investors will have to decide what stomach they have for Alibaba’s quirks – its governance structure gives virtually all power to 27 board members, and very little to ordinary shareholders. They will also have to have a high tolerance for sometimes bizarre antics by senior managers, and a corporate culture that is more colourful than its world-spanning peers like Google and Facebook.
“Alibaba has a bit too much personality to be a global company just yet,” is the way Mr Li put it. “If we were to merge with, say IBM, it would fall apart within a year, because our values are too radical.”

The Chinese company’s 22,000 employees, known as Aliren or Ali fellows, appear to be fuelled by adrenalin and inspired by Kung Fu novels.
Alibaba employees are encouraged to take Kung Fu nicknames. “When they ran out of names from Kung fu novels, they made up their own,” said Zhang Yi, chief of iMedia, a China based ecommerce consultancy.
Mr Ma created Alibaba 15 years ago with friends in his apartment. Since then, his quirky personality has created headlines and fosters what one former employee calls a “slightly crazy” atmosphere at the company.
Mr Ma practices Kung Fu and dresses in outlandish costumes for the company’s annual Chinese new year festival – one year he was a punk rocker with a silver mohawk, another year he was Snow White, wearing a dress and bonnet.
Last October, he sent an internal message to employees exhorting them to “invade Antarctica” in order to “kill penguins” in their duel with rival internet giant Tencent – whose mascot is a Penguin.
“Alibaba is not a group of civilised gentlemen, or men who nicely play by the rules,” said Mr Li. “They are reckless with ambition, they are radical and aggressive. Everyone walks out of a meeting room beet-red from shouting, that’s how we held meetings – with our voices raised. Its very intense,” he said.
Occasional partial nudity is another distinguishing feature of life at Alibaba. Following Mr Ma’s Penguins message in November, online photos emerged of 300 employees at a team building exercise with their shirts off, being harangued by executives to add “south pole marching army” to their names.
Some outsiders describe Alibaba’s culture as cult-like, prizing crazy antics and fanatical loyalty to Mr Ma. However, most former employees who agreed to speak to the FT said there was method to the madness.
“Corporate culture is still Chinese, [the] appraisal system is that of a Chinese company,” said Jasper Chan, formerly Alibaba’s senior corporate communications manager, who worked for the company from 2007-12. Employees are constantly evaluated by managers on their commitment to six core values: teamwork, integrity, “customer first”, “embrace change”, commitment and passion.
“An employee could have great sales, they could bring in a ton of revenues, but if they don’t score well in core values, they could still lose their job,” she said.
As one rises higher in the organisation the appraisals take on more and more significance. One former employee said that at top executive levels “professional skills are not noted. The first and foremost quality stressed is ‘infinite loyalty to Alibaba and powerful identification with Alibaba’s values’.”
Mr Li said that likening Alibaba to the early Communist party is more than a gimmick. “The two are also alike in that there is firm and common belief. In the very beginning, communists did truly believe in establishing a new and better China, it was like a religion to them. For Alibaba, our belief is that we can each help to make something totally awesome.”

WSJ : EU Concerned Banks Are Ignoring Rules on Bonus Limits

EU Concerned Banks Are Ignoring Rules on Bonus Limits
Internal Markets Commissioner Michel Barnier Cites Banks' Use of 'Allowances' for Some Staff

The European Union's financial-services czar is stepping up the pressure on banks to obey rules limiting bonuses for key employees, just as the bloc's top court begins its examination of the caps' legality.

In a letter addressed to Andrea Ernía, the chairman of the European Banking Authority, the EU's banking supervisor, Internal Markets Commissioner Michel Barnier, said he was concerned about banks introducing so-called "allowances" for some staff and stressed the need to ensure that the law wasn't being disregarded.

These allowances, which the EBA identified in a report on banks' pay practices published in June, are paid as fixed amounts on top of a banker's base salary. Although allowances are considered to be fixed—not performance-related like bonuses—the EBA pointed out that they could be canceled under some circumstances. It said at the time that it would further investigate the payments and check whether they are in line with the EU's bonus caps.

The EU passed new rules in 2013 that block banks from paying bonuses that are higher than a bankers' base salary. With shareholders' approval, bonuses can be double the fixed salary.

In his letter, dated Sept. 4, Mr. Barnier said he was concerned by the continuing reports of the use of these allowances and asked Mr. Ernía to keep him informed on the results of the EBA's investigation, whose results he said he expected "very shortly."

"It is important to show a collective proactive stance on this important matter and to address claims made that "the spirit—if not the letter—of Union law is being disregarded," he said.

The caps, which came into force on Jan. 1, were embedded in a broader law on banks' capital requirements. Lawmakers in the European Parliament, which insisted on the caps, said high payouts linked to short-term profits encouraged excessive risk-taking and had contributed to the global financial crisis.

The law was vehemently opposed by the U.K., home to Europe's largest financial hub, which warned repeatedly that it would lead banks to move their operations outside the EU. On Monday, the European Court of Justice will hold a hearing in a suit filed by the U.K. against EU institutions, in which London claims that the bonus rules go beyond what is permitted by the EU's treaties and won't make the financial system any safer.