While we are still having problems with our internet operations, things are easing now that the webmaster is back from holiday. However I am still obliged to focus on the paid subscribers rather than the rest of the world so am again using an older report.

Apologies. I sometimes am biased in favor of foreign regulators and systems. After short-sellers like Citron Research and Muddy Waters revealed how crooked Chinese small cap firms got backdoor listings on the US- and Canadian markets, I hired a reporter bilingual in Chinese to write up shares listed on the London junior exchange, the Alternative Investment Market or AIM.

I assumed that since these stocks had a UK domicile or registration in a UK jurisdiction, plus a UK broker backing them (a Nominated Advisor or Nomad), and since they were written up by Reuters and the Investors Chronicle, they were more fraud-proof. Not so.

One of the stocks Ms Ng found for us was a sportswear firm aiming at the teenage market called Naibu Global, NBU-LSE. NBU was also boosted by Simon Thompson of the Investors Chronicle, a stock advisory service of the London Financial Times.

Last year I sold the stock because it could no longer be tracked and traded in my US e-trade account. Lucky for me and my readers.

Its board in Nov. 2015 released a note reading that “it was disappointed to report that they have been unable to obtain any information on operations in China, and therefore they are currently unable to provide shareholders with any update on the Company. Neither Mr Lin Huoyan, the Chairman, nor Mr. Lin Congdeng, executive director, have responded to requires from the non-executive directors to provide such information [and an audit for the year 2014.]. The non-executive directors [in Britain] have appointed KPMG to prepare a report on the Group's financial position...and will decide what steps to take regarding the continuing business of the Group...” Trading was suspended while the UK board sued to gain control of NBU's operating sub and bank accounts. The board also fired Lin Huoyan who owns 53% of the Chinese sub and Lin Congdeng. I fired Ms. Ng.

Australia cut interest rates by 25 basis points to 1.75% and this will have a lot of impact on our shares, discussed below along with nore for paid subscribers about banking and finance, drugs, telcos, oil, cement, chemical producers, auto and airplane parts makers, IT, a REIT, and a fund.

*Chris Loew leads with an update on Shinmaywa FY2015-6 results for the year to March:

JP:7224 saw both sales and operating income up, at 5.5% and 11.9% respectively while net income rose 12.3%, the 5^th consecutive annual rise. However in the current FY these same measures are forecast to fall by 3.4%, 31.2%, and 27.1% respectively.

The hoped-for deal to sell amphibious plans to India is now in doubt but orders to fill from Japan are still in the pipeline, along with making wing spars for Boeing 787 planes. It is reopening a plant in Hyogo Prefecture to treat aluminum for planes rather than dump truck beds. The truck body business is doing well and is expected to generate exports. The Tokyo Olympics will also boost construction.

The negatives are the strong yen and the sluggish global economies, with a risk of financial shocks and lower global sales.

Banking and Currency

*As the dollar sinks, gold is over $1300 an ounce again. Barrick Gold (ABX) common stock (we own its bonds) were downgraded by Canaccord Genuity to hold from buy. ABX is the common.

*With lower interest rates the existing portfolio of our Aberdeen Asia-Pacific Income Fund (FAX) mostly in Australian government paper, should see good gains in valuations but losses in currency, unless it was hedged. FAX was bought back last year for that reason and it does tend to hedge.

*Tencent (TCTZF) has begun charging fees for formerly subsidized transfers by its WeBank of funds between its WeChat Pay and regular bank accounts after costs soared 155% in the last FY, to hit RMB1.5 bn. This amounts to WeChat leaving the payments battleground where it attacked Alipay, the payments system run by Alibaba's (BABA) Ant Financial, headed by the other Mr. Ma. User fees will help keep more money in WeChat coffers. Ant Financial is gaining because its first mover advantage let it pay lower transaction fees to banks. It also raised $4.5 bn capital from short-term money market funds. TCTZF meanwhile had problems raising money from outside investors for WeBank.

The defeat of the No 2 is actually comforting because Chinese shadow banking is so risky and increasingly subject to official regulations requiring that traditional banks track it properly. China's Banking Regulatory Commission has released rules barring trillions of dollars of high-risk loans from being disguised as wealth-management or money market funds to avoid the need to create loan-loss provisions for these supposed investment products. Better safe than sorry.

*Bank of Nova Scotia (BNS) will take restructuring charges linked to laying off employees of C$375 mn (~C$275 mn after taxes) which will cost about 22 loony cents/sh.

While we like foreign bank preferreds our common shares in banks are rather limited: Santander (SAN) of Spain and Shinhan Financial (SHG) of Korea, both of which have high dividends, SHG's just paid. Our reason for owning Scotia Bank is because of its prowess in Latin America, also the appeal of SAN which fell 3.5% in European markets, mainly from currency effects as the dollar sank some more.

*Royal Bank of Scotland (RBS) whose non-cumulative preferred shares we dote upon, will drop the RBS label form its branches, which will be rebranded as Royal Bank of Scotland in Scotland, and as NatWest and Williams & Glyn in England and Wales. Its Irish branches will remain under the Ulster Bank label. RBS was promoted by Fred Goodwin to unify the branch network before he had to resign and give up his title after the global financial crisis during which the parent bank was nationalized by the British government. After the bailout some of the preferreds were required to suspend payments for 18 months by the European Union, but being non-cumulative they were not made up later. These still offer a substantial yield advantage.

Our chances of continuing to get the nice payout from RBS prefs increased as it will not be able to spin off Williams & Glyn as was supposed to happen by the end of 2017 to satisfy other EU rules. That means no dividend will be paid on the common, so it cannot redeem the preferreds.

Separately, RBS's spin off of the overseas branches of its Coutt's Swiss private bank last year has also generated bad odors as banking regulators there say it was involved in the looting of $4 bn (of a larger total) from the Malaysian state investment fund by the country's prime minister

*Barclays (BCS), whose preferreds we also own, engaged in money laundering and misspelling in France according to a whistle-blower from its Biarritz branch. BCS was also fined for washing money for Qatari clients in Britain.

Drug Stocks

*Our Canada-based reporter notes that GlaxoSmithKline (GSK) is investing heavily in his province, Vancouver, having now bought another platform for new Azymetric bispecific antibodies from local firm Zymeworks. This allows it to get more from its earlier deal for Efect, a library of antibody Fc modifications which can boost or tone down an immune response. It will pay a total of $1.3 bn potentially to the Vancouver firm for milestones, development cash, and commercial bonuses and sales royalties. This is serious money. The targeted research is into large molecules with multiple platforms and tools, unusually not just focused on cancer. Zymeworks might be an interesting stock itself as it has also done deals with Merck, Lilly, and Celgene but so far it is private.

GSK research director Moncef Slaoui has just bought $1.07 mn in its shares. However exiting CEO Andrew Witty sold $14.75 mn worth of stock, perhaps because he likes his strategy better than that of any likely successor.

*Another Reckitt-Benckiser (RBGLY) scandal has resulted from its sterilizers sold for humidifiers in South Korea and Japan, a day after its Nurofen marketing fiddles resulted in Australian fines. The sterilizers appear to have killed 92 people and led others to need oxygen tanks to survive, including a 13-year old boy. The controversy dates back to 2011 but RBGLY's former management tried to dodge the consequences. I mention this because the UK taste for blocking CEO pay rises has hit Rakesh Kapoor, who was responsible for the way Reckitt peddled bog-standard ibuprofen as being specially formulated for different needs, like headaches, menstrual pain, or arthritis.

Kapoor is second best paid FTSE 100 CEO with a £23 mn basic package.

*Teva (TEVA) was up 2.5% perhaps because its Chief Scientist Michael Hayden gave an impressive interview to an Israeli newspaper about his work and his loyalties. One of his relatives sent me the article. Mr Hayden is of distinguished German-Jewish ancestry (his father changed the family name and ultimately moved to South Africa.) The son studied there and in Britain before settling in Canada. Now he has “made Aliyah”, moved to Israel after being recruited by TEVA. I originally bought the stock when it was on the pink sheets because I too had a family connection with TEVIY, as it then was. Its then CFO was the son of another German-Jewish family which I was not related to, but his father and mine went to German Gymnasium (high school) together. I met Dr Siegfried Suesskind, father of Dan, on my first trip to Israel as a student.

*Boosted by Valeant (VRX), Pershing Square Holdings (PSHZF) gained 10.2% net in March, but is still down YTD. The fund, managed by activist Bill Ackman, went all out for VRX of Canada, and Ackman now is on its board along with a new CEO. PSHZF is incorporated in The Netherlands as a sort-of closed-end fund and trades mostly in London. I halved my exposure but am fascinated by how an activist operates.

*Novartis (NVS) is an early backer of Maryland's Northwest Bio (NWBO) which is having problems with how its shares were distributed to Cognate BioServices in violation of Nasdaq rules. NVS is particularly in regulators' sights after various previous frauds and bribery matters and should be smarter than to go with NWBO.

Swiss Shareholder Non-Protection

We bought NVS under its new manager Joe Jimenez after a terrible takeover of our Alcon shares, a US company, NYSE-ACL, controlled by Nestle. The Swiss cooked cooked up a deal for a majority of the stock and underpaid the American minority shareholders despite ACL's board trying to stop this. Now a similar deal is hitting a Swiss company being bid for by France's venerable Compagnie de Saint-Gobain. Controlled by members of the Burkart family with supervoting rights, board seats, and 16% of the common, Sika building materials is under offer. And this time the victimized shareholders are Swiss. Let's see how this plays out.

Ironically enough, the evil move to gain control of Alcon has backfired as it is now hemorrhaging cash because of failing to keep up with new eye medications and devices.

Latin Loves

*The Federal Mexican Profeco environmental regulators have intervened to require that security be beefed up at the jv of our Mexichem and state oil company Pemex. The plant of Petroquimica Mexicana de Vinylo exploded two weeks ago killing 32 people at last count.

*Another industrial disaster at Vale's junior venture with BHP-Billiton in Brazil saw huge flooding and damage to the site, and only now the tailings dams will be monitored and regulated. Joint ventures are dangerous. VALE stock was down 7.6% after climbing high because of a higher real (the currency) against the US dollar. This makes its debt less dangerous but may cut its sales, especially now that Australia is cutting interest rates and the A$ is down 1 and a half cents against the US version. China buys its iron ore pellets from Oz and Brazil.

*Also down is Cosan (CZZ), the Brazilian biofuel and sugar producer, CZZ.

*And Ecopetrol of Colombia is also suffering from the greenback's further fall. Oil is priced in dollars but its costs are mostly in pesos.

*Mexican REIT Fibra Uno declared two divvies payable May 9, a regular one of NMP 0.4298 and a special one of NMP 0.0721. FBASF.

Heavy Industry

*BP plc (BP) would rather finish the payments over the Deepwater Horizon disaster than fight the shrimp boat men. It won a judgment in a New Orleans court throwing out 40,000 claims, about half the total from non-existent Vietnamese in return for non-fraudulent demands for damages. This will nip its existing $12.9 bn claims fund by as much as a further $1 bn. However it is not paying the fraudulent claims from a lawyer who has now been indicated for a list which included fake names, fake social security numbers, dead people, and even a dog.

*New Ireland Fund now is 6.8% invested in cement multinational CRH plc right after its biggest holding, Ryanair, now at 7.6%. IRL; CRH.