Thursday, October 1, 2015

Hong Kong: Chinese stocks rally on government support measures

Hong Kong: Chinese stocks rally on government support measures

[HONG KONG] Chinese stocks in Hong Kong rallied, rebounding from the biggest quarterly loss in four years, as trading resumed after a holiday and the government stepped up targeted support for the economy.
The Hang Seng China Enterprises Index advanced three per cent to 9,651.45 at 10:28 am local time, heading for its biggest gain in three weeks. The gauge tumbled 28 per cent last quarter. China Resources Land jumped 7.8 per cent after the People's Bank of China reduced the minimum home down payment for first-time buyers, while automakers climbed for a second day after authorities cut a tax on passenger-vehicle purchases. Casino operators surged on a report China is studying supportive measures for Macau to revive the city's economy.
Chinese policy makers are increasing targeted stimulus after five interest-rate reductions since November failed to reverse an economic slowdown. The decline in the property down- payment requirement was the first in five years, while the support measures for the auto industry follow five straight months of declining sales. The nation's growth will slow to 6.8 per cent this year, below the government's goal of 7 per cent, according to the median of economist estimates compiled by Bloomberg.
"Sentiment was heartened by measures to support the property market," said Castor Pang, head of research at Core- Pacific Yamaichi Hong Kong. "We may see more measures coming in this quarter for the government to meet the 7 per cent growth target. If index heavyweights such as properties and finance shares move, the market may stage some rebound from here. H shares have hit a bottom."
The Hang Seng Index added 2 per cent. Hong Kong's financial markets were closed on Thursday, while mainland markets will remain shut until Oct 8 for National Day holidays.
Data yesterday showed China's official factory gauge stabilized around a three-year low in September. The reading remaining below the usual level for the month shows "relatively weak domestic and external demand," according to a statement released by government statisticians.
Anhui Conch Cement Co jumped 6.2 per cent and Dalian Wanda Commercial Properties headed for its biggest gain in five weeks. The PBoC cut the minimum down payment for buyers in cities without purchase restrictions to 25 percent from 30 per cent, according to a statement released on its website Wednesday. The previous requirement had been in place since 2010, when the government boosted the ratio from 20 per cent to help curb property speculation.
Automakers Soar Great Wall Motor Co soared 13 per cent, heading for the biggest two-day advance in about seven years. Geely Automobile Holdings Ltd. climbed 4.9 per cent.
China cut the purchase tax on vehicles with engines 1.6 liters or smaller by half to 5 per cent effective Oct 1 through the end of next year, according to the State Council, or cabinet. The directive also forbade local governments from restricting the purchase and operation of electric vehicles and reiterated support for promoting new-energy vehicles and battery development.
Galaxy Entertainment Group surged 9.1 per cent to led gains by Macau casino operators. China is studying measures to help revive Macau's economy, Macao Daily reported, citing Li Gang, director of the Chinese government's local liaison office.
Gross gambling revenue in the former Portuguese colony decreased 33 per cent to 17.1 billion patacas (S$3.07 billion) in the city last month, narrowing from August's 35.5 percent drop, data from Macau's Gaming Inspection and Coordination Bureau showed. The latest decline was in line with the estimates from nine analysts surveyed by Bloomberg.
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MOT will study third-party ride-booking apps, ensure level playing field: Khaw

MOT will study third-party ride-booking apps, ensure level playing field: Khaw

By
jaccheok@sph.com.sg@JacCheokBT  
THE Ministry of Transport (MOT) will study third-party ride-booking apps such as GrabTaxi and Uber, and where justified, level the playing field between private-hire drivers using these apps and taxi drivers, said Transport Minister Khaw Boon Wan on his blog on Friday.
"I have asked Senior Minister of State Ng Chee Meng to take on this assignment, consult our taxi drivers and the general public, and forge a fair solution," added Mr Khaw.
He was responding to concerns by a number of taxi drivers who had informed him during the recent General Election campaign that "UberX is unfair". The latter is the private car hire service of Uber, where its drivers, unlike taxi drivers, do not require a vocational licence to provide on-demand transport services.
"While taxi drivers welcome competition, they demand that the playing field be level. I think our taxi drivers have a point," Mr Khaw noted.
Meanwhile, he urged Singaporeans to be open to new innovations and new business models. "Our instinct must be to flow with the time, keep an open mind to innovations," he said, pointing out that GrabTaxi, Uber and the like have made it easier for commuters to call a taxi, leading to better resource utilisation and consumer welfare.
"But we must always be fair to players, whether incumbent or insurgents, and strike a balanced approach," he wrote on his blog.

Thailand rolls out red carpet for foreign bond issuers


Thailand rolls out red carpet for foreign bond issuers

[SINGAPORE] The Kingdom of Thailand will ease the approval process for foreign bond issuers next year in an all-out move to boost its growing status as a regional funding hub.
From January, the Ministry of Finance will review applications from foreign issuers looking to issue bonds in baht every month, rather than three times a year under the current system.
The shift will give overseas companies more flexibility to access the baht market, in a sign of Thailand's desire to deepen its capital markets.
"Market conditions change so fast, such that we realise that it is not easy for the foreign issuers to sell under the current process," Suwit Rojanavanich, director general of MoF's Public Debt Management Office, told IFR in an interview. "We want to help them and so we are fast-tracking the application to a monthly basis."
The change, welcomed by Thai bankers, will do away with the currently cumbersome application process under which there are only three approval windows opened each year.
At the moment, applications can only be made in March, July and November of each year. Foreign issuers need MoF approval, which could come weeks after applying, and have a nine-month window within which they have to sell the bonds.
This means that foreign issuers could miss any opportunities in between application periods to take advantage of any favourable market conditions. Such missed opportunities are aggravated in times of volatility, as seen in the past few months.
Increasing the application frequency will allow the issuer to re-apply if it misses any opportunities during the issuance window. The issuance window will, however, be shortened to a six-month period.
Thailand's domestic bond markets have stayed resilient amid the global volatile market conditions over the past two months, and some foreign borrowers have taken advantage of it.
The Export-Import Bank of Korea raised 10 billion baht (S$402 million) from the sale of 2.18 per cent three-year bonds at end-August while the Lao People's Democratic Republic sold its largest bond in June with a 12 billion baht dual-trancher.
REGIONAL HUB
The Kingdom is actively promoting itself as a viable funding avenue for issuers in Indochina, where underdeveloped domestic capital markets limit funding options.
Its success in attracting the Laos sovereign and its power company EDL Generation to the baht bond market has already drawn the attention of the Myanmar and Cambodian governments.
The PDMO and the MoF have given verbal approvals for Myanmar and Cambodia sovereigns to offer baht bonds.
"We have asked our local rating agencies to rate them," said Mr Suwit. "If the borrowers are sovereign or state-owned enterprises, then the local ratings are likely to be of investment grade."
Myanmar is exploring a potential baht bond, said banking sources, who added that an issuance would still be a long way off as the country prepares for its most widely contested general election.
A potential debt sale by the Cambodian government in Thailand has better prospects but will likely emerge only next year, said one banker deeply involved in preliminary preparations for the deal.
REUTERS

Indonesian interbank rate set for biggest weekly jump since 2013

Indonesian interbank rate set for biggest weekly jump since 2013

[JAKARTA] Indonesian interbank borrowing costs jumped the most in two years this week as the central bank sought to reduce the short-term supply of rupiah to shore up the falling currency.
The one-month Jakarta interbank offering rate rose 57 basis points this week, the most since July 2013, to 8 per cent on Friday, data from the monetary authority show.
The rate, known as the Jibor, fell 13 basis points on Friday after rising to a six-year high of 8.17 per cent on Wednesday. The rupiah declined 0.1 per cent since Sept 25 to 14,706 a dollar, taking its loss this year to 16 per cent, according to prices from local banks.
Bank Indonesia is seeking to manage short-term funding costs to make it more expensive to borrow rupiah that can be used to buy dollars, without raising long-term borrowing rates, Deputy Governor Perry Warjiyo said Sept 30. The rise in the Jibor is in line with the policy, he said. The central bank has kept its benchmark rate at 7.5 per cent since February as the weakening currency limited the scope for cuts to spur economic growth.
"Rising short-term rates increases the likelihood of a hike, but it's unlikely this year owing to easing inflation and weak growth," said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore.
"The central bank has announced many measures, but for the rupiah, it's very much a function of the commodities market and dollar strength against regional currencies."
Mr Ho said she expects Bank Indonesia's reference rate to remain at 7.5 per cent until the end of 2015, before a 50-basis point increase in the first quarter of next year.
Consumer-price gains slowed to 6.83 per cent in September from a year earlier, the least since March, as food prices fell, according to official data released Thursday.
The central bank has announced several measures aimed at stabilising the rupiah in recent weeks including saying it will start intervening in the currency forwards market.
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Ringgit leads losses in Asia as Malaysian budget woes add to China concern

Ringgit leads losses in Asia as Malaysian budget woes add to China concern

[KUALA LUMPUR] The ringgit led losses in Asia and stocks retreated as concern Malaysia may miss its target of balancing the budget by 2020 hurt a currency already reeling from a worsening slowdown in China and allegations of corruption against Prime Minister Najib Razak.
The fiscal shortfall may be "in the region" of 1 per cent of gross domestic product at the end of the decade, compared with a current deficit of 3.2 per cent, the New Straits Times reported on Thursday, citing comments by Najib to fund managers and investors in New York. Malaysia derives 22 per cent of government revenue from oil-related sources and its finances have been sapped by a 49 per cent drop in Brent crude over the past 12 months.
The ringgit fell 0.9 per cent, the biggest decline in more than a week, to 4.4415 per US dollar as of 10:11 am in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It's dropped 21 per cent so far in 2015, trailing only the Brazilian real, Turkish lira and Colombian peso among 24 emerging markets tracked by Bloomberg amid a deepening slowdown in China and the prospect of higher US interest rates.
Against the Singapore dollar, the ringgit was trading at 3.0991 as of 10:58 am, up from its close on Thursday of 3.0836."The ringgit seems to continue to be Asia's underperformer," said Mitul Kotecha, head of foreign-exchange and rates strategy for Asia at Barclays in Singapore. "There are generalized factors which have been China, the Federal Reserve and slowing growth. If there are concerns about the budget balancing, that clearly could be an issue as well." Reports last month in the Wall Street Journal and New York Times over alleged money laundering and overseas property purchases relating to state-owned investment company 1Malaysia Development Bhd. and Prime Minister Najib Razak have further weighed on sentiment toward Malaysia.
Investors in the US shouldn't be concerned with the political situation in Malaysia as there is "stability," Mr Najib was cited by the New Straits Times as saying. 1MDB will sort out its financial issues before year-end and is expected to further reduce its debt by 16 billion ringgit (S$5.2 billion) very soon, Mr Najib said, without elaborating. The country also remains committed to achieving a balanced budget by 2020, he said.
The benchmark FTSE Bursa Malaysia KLCI Index of stocks retreated 0.5 per cent on Friday, after two days of gains. The gauge has fallen 7.7 per cent this year as foreign funds pulled US$4 billion from Malaysian shares. The yield on five-year sovereign bonds was steady at 3.79 per cent on Friday and is down eight basis points this week, according to prices from Bursa Malaysia.
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US job growth seen accelerating, leaving Fed closer to hike

US job growth seen accelerating, leaving Fed closer to hike

[WASHINGTON] US employers likely added jobs at a brisk pace in September, a sign that the labour market is near full strength and could push the Federal Reserve to raise interest rates at one of its two remaining meetings this year.
The Labor Department's monthly employment report, due on Friday at 8.30am EDT (1230 GMT), will almost certainly show the US economy is growing enough to push the jobless rate lower in the coming months.
Economists surveyed by Reuters forecast US payrolls outside of farming rose by 203,000 last month, bouncing back from softer job growth in August despite worries a China-led global economic slowdown is sapping America's strength.
"The US economy is alive and kicking," said Phil Lachowycz, an economist at Fathom Consulting in London.
The jobless rate was expected to hold steady at 5.1 per cent in September because some workers who gave up jobs hunts in harder times were expected to return to the labor force.
But economists estimate that the economy currently only needs to add about 100,000 jobs a month to keep up with population growth.
This is important because job creation above that level will push the jobless rate lower over time and raise the risk of a surge in inflation. "We're still running well above that pace," said David Stockton, the Fed's chief economist between 2000 and 2011. He expects the US central bank will raise rates in December.
WAGES SEEN RISING MODESTLY
In another sign of labour market tightening, Friday's report was expected to show significant upward revisions to job growth in prior months.
Still, inflation has remained subdued despite the jobless rate's sharp drop over the last year and Fed Chair Janet Yellen has said the Fed will hold off on rate hikes until it is quite confident that inflation is going to pick up.
Currently, the pace of inflation, at 0.3 per cent in the year through August, is well below the Fed's 2 per cent target.
There is little sign of inflationary pressure in wages. Average hourly earnings are expected to have increased just 0.2 per cent last month, slower that the 0.3 percent gain in August.
Employment gains in September are expected to have been concentrated in service industries, in part because a China-led global economic slowdown appears to be battering US factories.
The manufacturing sector is expected to have added zero jobs last month.
Construction sector payrolls, however, likely rose also thanks to a strengthening housing market.
But more layoffs in the energy sector, which is grappling with a nearly 50 per cent drop in the price of oil over the last year, were probably a drag on mining payrolls.
REUTERS

World's oldest rainforests burn as Joko scales back promises

World's oldest rainforests burn as Joko scales back promises

[JAKARTA] Having promised to extinguish forest fires in Riau in western Indonesia by early October, President Joko Widodo jetted into Sumatra island last week for a progress check. The smoke was so thick his plane couldn't land, forcing him back to the capital.
Exacerbated by dry conditions from El Nino, the haze has blown across Southeast Asia, blanketing Singapore, parts of Indonesia and Malaysia in a smog that has closed schools and forced some people to flee their homes. In what has become an annual "haze season" ritual, governments are bickering about who is to blame and how to fix things, fearing a hit to tourism and economic activity.
So far Joko, known as Jokowi, is following a similar track to his predecessors: Threaten to punish the palm oil and other plantation companies whose land is ablaze and send soldiers in to help fight the fires. But unless he addresses the broader factors behind the burning off, the chances are the haze will keep coming back.
Mr Joko's maneuverability is limited by a decentralized system of government put in place in 2001 in the world's largest archipelago that has coalesced power around local officials and potentially made it harder to tackle corruption on the ground.
There's also been little effort over the years to address a complex system of overlapping land permits where forest is illegally burned to claim ownership and increase the value to sell for plantations.
"There is no strong control, no strong standards on making decisions at the local level," said Bustar Maitar, head of Indonesia forests for campaign group Greenpeace. "Jokowi should create strong standards to follow."
Fire hotspots have been burning all year in the tropical forests of Sumatra and Borneo, but the government only acted after complaints by neighbor Singapore and as haze in the area surged.
The worst of it has been in Indonesia itself: A pollution index at Palangkaraya in central Kalimantan province reached 1,990 last week, more than five times the level considered "hazardous," and around 125,000 people in the country are suffering haze-linked health issues.
"The government seems to be working slow in handling this, we have lived three years like this with smoke," said Helda Satriani, a resident of Rumbai in Riau who is nine months pregnant with her first child. "Government, please, take immediate action!"
OLD RAINFOREST
Mr Joko took office a year ago promising to address structural bottlenecks in Southeast Asia's largest economy, from building infrastructure to making bureaucracy more efficient.
He came to power with high expectations given his success in tackling red tape as Jakarta governor. Since then, he's run into roadblocks from vested interests and even his own party, causing unease among investors and helping make the rupiah Asia's second-worst performing currency this year.
After his September pledge, Mr Joko has scaled back expectations, saying in a BBC interview this week it could take three years to see results.  Southeast Asia has some of the oldest continuous rainforest in the world, part of a swathe that once ran from Malaysia to Northern Australia.
Much of Sumatra has a thick canopy of trees covering waterlogged peat soil, an early form of coal, which is drained when logged, leaving a vast area of tinder that can explode and smolder for extended periods. The fires may be extinguished by November, the country's disaster agency said on Thursday.
DISCOURAGING LANDOWNERS
Still, "it's ridiculous for Widodo to say this will take three years," said Keith Loveard, head of political risk at Jakarta-based security company Concord Consulting.
"What is required is the application of the law in a manner that discourages landowners, small and large, from continuing this practice, in other words tough penalties handed down without exception."
The government devolved power to the regions to prevent the archipelago from breaking apart after the end of dictator Suharto's three-decade rule and the Asian financial crisis in 1998.
Dubbed the Big Bang decentralization, Indonesia almost doubled the share of government spending to regions and transferred almost two thirds of the central government workforce, according to a 2003 World Bank report.
Re-centralising land permits may not be possible as the country is too big, but establishing a master map with clearer ownership would be a step forward, said Kevin O'Rourke, who wrote Reformasi: The Struggle For Power In Post-Soeharto Indonesia."
SINGLE MAP
Mr Joko told Bloomberg in February he wanted to create a single map for all provinces to prevent overlapping concessions, though there's been no detail since.
"If we can have one map by 2020, that will be very helpful," said Aida Greenbury, the manager for sustainability at Singapore-based Asia Pulp & Paper Co, one of whose suppliers PT Bumi Mekar Hijau has been named a suspect for causing fires.
There are 500 licenses held by other companies across the land in its supply chain, and while burning has no value for APP it triples the price others can sell land for, she said.
In a country with traditional slash-and-burn agricultural practices, local communities are allowed to burn up to 2 hectares of land per family.
Prevention of illegal larger scale burning has been limited, with the government freezing permits for four companies so far.
MULTIPLE HATS
"Mid-level companies are using a lot of families to burn," said Arief Perkasa, a Jakarta-based manager at TFT, an environmental supply chain organisation. Cutting forest is 20 times more expensive than burning it, he said.
The financial benefit from the fires may be US$856 a hectare for farmer group organisers, village heads and land claimants, Herry Purnomo, a forestry scientist for the Indonesia-based Centre for International Forestry Research, said in a report last month. They get thousands of dollars more from planting palm over the years.
"Many players benefit enormously from fire," Mr Herry said. "These players wear multiple hats, e.g. farmers, politicians, businessmen, government officers."
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Indonesia forest fires could become worst on record: Nasa

Indonesia forest fires could become worst on record: Nasa

[JAKARTA] Forest fires blanketing Southeast Asia in choking haze are on track to become among the worst on record, scientists warn, with a prolonged dry season hampering efforts to curb the crisis.
Malaysia, Singapore and large expanses of Indonesia have suffered for weeks from acrid smoke billowing from fires on plantations and peatlands that are being illegally cleared by burning.
The crisis grips the region nearly every year during the dry season, flaring diplomatic tensions among the neighbours as flights are grounded, schools close and pollution levels reach hazardous highs.
But the current outbreak is one of the worst and longest-lasting in years, with an El Nino weather system making conditions drier than usual in Indonesia and keeping much-needed rain at bay.
Scientists at Nasa now warn this year's outbreak is on a trajectory similar to 1997 - widely regarded as the most serious haze event on record - and could exceed those unprecedented levels.
"Conditions in Singapore and southeastern Sumatra are tracking close to 1997," Robert Field, a Columbia University scientist based at Nasa's Goddard Institute for Space Studies, was quoted as saying by the US science agency.
"If the forecasts for a longer dry season hold, this suggests 2015 will rank among the most severe events on record."
Herry Purnomo, a haze expert at the Indonesia-based Centre for International Forestry Research, agreed the situation was akin to 1997, describing the magnitude of this year's fires as "horrendous".
"I believe the impact of the fires this year will be as bad as 1997, in terms of the cost," he told AFP.
Indonesia has deployed more than 20,000 troops, police and other personnel to Sumatra and Kalimantan to fight the fires through waterbombing and chemically-induced rainfall, and hopes rain will arrive within a month to finally douse the blazes.
Indonesia has faced pressure from its neighbours to address the problem since it first emerged nearly 20 years ago.
Authorities this year say tens of thousands of people across Singapore, Malaysia and Indonesia have been forced to seek medical treatment for respiratory problems.
The fires also contribute significantly to climate change. The Nasa-linked Global Fire Emissions Database has estimated around 600 million tonnes of greenhouse gases have been released as a result of this year's fires - roughly equivalent to Germany's entire annual output.
AFP

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