Malaysian PM Najib urges Indonesia to act on smoke-belching fires

Malaysia's premier has called upon Indonesia to act against those responsible for raging forest and agricultural fires that have blanketed the region in smog for weeks, as Malaysian schools closed again for two days out of health concerns. 

PHOTO: REUTERS

OCT 5, 201511:44 AM

[KUALA LUMPUR] Malaysia's premier has called upon Indonesia to act against those responsible for raging forest and agricultural fires that have blanketed the region in smog for weeks, as Malaysian schools closed again for two days out of health concerns.

"They (plantation companies) are operating there, we want Indonesia to take action," Prime Minister Najib Razak was quoted saying by state news agency Bernama late on Sunday.

Bernama said Mr Najib blamed this year's annual "haze" problem for deteriorating air quality in Malaysia and added it was affecting the economy, giving no further details.

It said Mr Najib made the comments while on a visit to Italy.

"Only Indonesia alone can gather evidence and convict the companies concerned," Mr Najib was quoted saying.

The fires flare annually during the dry season on plantations and peatlands that are being illegally cleared by burning on Indonesia's island of Sumatra and on the Indonesian portion of Borneo island.

This year's bout has been one of the worst in years, blanketing huge areas of Indonesia, Malaysia and Singapore in acrid smoke.

It has sparked health alerts and repeated school shutdowns, affected flights, and forced tens of thousands to seek medical treatment for respiratory problems.

Malaysian authorities had earlier ordered schools closed across much of the country on Monday and Tuesday - following previous school closures last month - as pollution levels spiked at the weekend.

Indonesia has faced pressure from its neighbours to address the problem ever since it first emerged nearly 20 years ago, but a long-term solution has proven elusive.

Mr Najib said the three countries must work to formulate an effective strategy to tackle the annual environmental disaster.

His remarks followed comments last week by Singapore officials expressing impatience with Indonesia.

Experts warned last week this year's flare-up was on track to equal or surpass an infamous 1997 haze outbreak that sent pollution soaring to record highs and caused an estimated US$9 billion in economic damage.

The poor air quality has begun to force the cancellation of major events in the region.

In Singapore, races in the Fina World Championship - swimming's World Cup - were called off on Saturday, and one of Malaysia's biggest marathons set for Sunday in Kuala Lumpur was cancelled.

Some local Malaysian football league matches also have been shelved.

AFP

    
 

Hong Kong former leader Donald Tsang charged over corruption

Hong Kong's former leader Donald Tsang was on Monday charged with misconduct during his time in office, local media said, the latest high-profile corruption case to hit the city. 

PHOTO: REUTERS

OCT 5, 201512:39 PM

[HONG KONG] Hong Kong's former leader Donald Tsang was on Monday charged with misconduct during his time in office, local media said, the latest high-profile corruption case to hit the city.

Tsang ended his term in disgrace in June 2012 after admitting to accepting gifts from tycoons in the form of trips on luxury yachts and private jets, but insisted there was no conflict of interest.

He has since been under investigation by the city's Independent Commission Against Corruption (ICAC).

Tsang, 70, who held the leadership post of chief executive for seven years from 2005, is expected to appear in court Monday afternoon, according to reports.

He would become the highest-ranking Hong Kong official to face a corruption trial.

The charges against Tsang are in connection with his failure to file conflict of interest declarations to the Executive Council - the de facto cabinet - according to government-owned broadcaster RTHK.

They come less than a year after Hong Kong property tycoon Thomas Kwok and the government's former deputy leader Rafael Hui were jailed for graft after Hui was found guilty of taking bribes from Kwok and Kwok's brother Raymond.

While serving as chief secretary for administration, Hui was Tsang's deputy from 2005 to 2007.

He was jailed in December for seven and a half years on a total of five graft charges, making him the highest-ranking official in the city's history to be found guilty of taking bribes.

Prosecutors said Hui had enjoyed an extravagant standard of living that far outstripped his official salary, having spent millions on a mistress in Shanghai, for whom he bought gifts from bags, watches to properties.

He was accused of receiving HK$34 million (S$6.3 million) to be the Kwoks' "eyes and ears" in government.

Thomas was sentenced to five years over the payments while his brother Raymond was cleared.

As part of mitigation, Tsang wrote a letter to the court pleading for leniency for Hui.

Hong Kong has been seen as relatively graft-free but new cases have fuelled public suspicions over cosy links between authorities and industry leaders.

Concerns have also been raised about the role of the Chinese system of personal connections, or "guanxi", which greases the wheels of business.

AFP

    
 

World Bank trims 2015, 2016 East Asia forecasts, cites China, US rate risks

OCT 5, 201510:08 AM

[SINGAPORE] The World Bank cut its 2015 and 2016 growth forecasts for developing East Asia and Pacific, and said the outlook was clouded by the risk of a sharp slowdown in China and possible spillovers from expected increases in US interest rates.

The Washington-based lender now expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.5 per cent in 2015 and 6.4 per cent in 2016, down from 6.8 per cent growth in 2014.

Its previous forecast in April was 6.7 per cent in each of 2015 and 2016.

"The baseline scenario for regional growth is subject to a greater-than-usual degree of uncertainty, and risks are weighted to the downside," the World Bank said in its latest East Asia and Pacific Economic Update report on Monday.

"In particular, uncertainty surrounds the trajectory of, and spillovers from, China's economic rebalancing and the expected normalisation of US policy interest rates."

The World Bank said the downward revisions to regional growth forecasts mainly reflect a moderate slowdown in China's economy, which it sees growing 6.9 per cent in 2015 and 6.7 per cent in 2016, down from 7.3 per cent in 2014.

The previous forecast was for China to grow 7.1 per cent in 2015 and 7.0 per cent in 2016.

Growth in developing East Asia excluding China is expected to hold steady in 2015 at 4.6 per cent before accelerating to 4.9 per cent in 2016, the World Bank said. Those were down from previous forecasts of 5.1 per cent growth in 2015 and 5.4 per cent in 2016.

The bank said the outlook for household incomes and business profits in Indonesia and Malaysia was clouded by weakness in global commodity markets. It said lower real trade-weighted exchange rates can play a key role for such commodity exporters to adjust to weaker terms of trade.

"The depreciations of the Indonesian rupiah and Malaysian ringgit against the US dollar have reduced the drop in exporter revenues, corporate profits, and household incomes in local currency terms - a valuable shock-absorbing effect," it said.

"More generally, authorities should limit currency market interventions to smoothing volatility, given the importance of maintaining adequate reserve buffers," the World Bank added.

Further declines in Asian currencies against the dollar could cause balance sheet strains in countries with significant dollar-denominated debt, it said.

"Stress may arise whenever individual firms and sectors suffer from a significant concentration of liabilities," the World Bank said, adding that such risks are a special concern in Indonesia, Malaysia, Thailand and Vietnam.

REUTERS

US dollar steady against emerging market currencies; SGD falls 0.03% against USD 

The dollar faced selling pressure against major currencies but strengthened against most of its Asia-Pacific peers Monday as concerns over emerging economies remained strong despite an expected delay in Washington's rate hike. 

PHOTO: AFP

OCT 5, 20151:33 PM

[TOKYO] The dollar faced selling pressure against major currencies but strengthened against most of its Asia-Pacific peers Monday as concerns over emerging economies remained strong despite an expected delay in Washington's rate hike.

The US unit edged up to 119.97 yen in Tokyo afternoon trade from 119.92 in New York late Friday but still down from 120.05 in Tokyo earlier that day.

The euro rose to US$1.1235 and 134.78 yen in Tokyo from US$1.1219 and 134.53 yen in US trade.

"Dollar-selling sentiment is growing against major currencies after the job reports," Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ, told AFP.

The US Labor Department's September report showed stalling job growth in the past two months, stagnating wages, and the participation rate falling to a 38-year low, dampening the likelihood of a rate hike by the Federal Reserve in October.

"The Fed is extremely unlikely to begin policy normalisation as soon as this month and December is looking tenuous too," Philip Borkin, a senior economist in Auckland at ANZ Bank, said in a client note, according to Bloomberg News.

Calls on the Fed to raise interest rates were putting renewed pressure on emerging economies as investors withdraw their cash to seek better returns in the US.

But Tokyo-Mitsubishi's Uchida said: "The dollar should not be so weak against Asian currencies as players still can't see many encouraging factors to support the regional currencies right now." In Tokyo afternoon trade, the Singapore dollar fell by 0.03 per cent from Friday against the US unit, the South Korean won slipped 0.69 per cent and the Taiwan dollar lost 0.63 per cent.

The Indian rupee declined 0.30 per cent and the Indonesian rupiah edged down 0.60 per cent while the Thai baht was flat.

AFP

      

Fed odds drop to 8% for October; El-Erian says December is 50-50

OCT 5, 20152:42 PM

[SINGAPORE] The bond market shows traders see only an eight per cent chance the Federal Reserve will raise interest rates at its Oct 27-28 meeting following weaker-than-expected employment growth.

Mohamed A El-Erian says the odds are 50 per cent for the next session Dec 15-16. US 10-year yields were below two per cent as investors pushed back forecasts for the move, highlighting the lack of consensus over when officials will shift policy. Data Monday will show growth in services slowed, based on a Bloomberg survey of economists. The US added 142,000 jobs in September, versus 201,000 that analysts predicted, Friday's employment report showed.

"It takes October off the table, but I don't think it takes December off the table," Mr El-Erian said in an interview with Bloomberg following the jobs report.

US 10-year Treasury yields fell one basis point to 1.98 per cent as of 7:06 a.m. Monday in London, according to Bloomberg Bond Trader data. The price of the two per cent security due in August 2025 rose 3/32, or 94 US cents per US$1,000 face amount, to 100 5/32.

The yield dropped as low as 1.90 per cent on Oct 2, approaching the lowest level since April. Treasuries rose 1 per cent last week, the steepest gain in six months, based on Bloomberg World Bond Indexes.

Hideaki Kuriki, who buys Treasuries for Sumitomo Mitsui Trust Asset Management in Tokyo, said 10-year Treasury yields pushed below his 2 per cent target. Now they may fall to 1.90 per cent, he said.

"There's a downside risk," he said. "I didn't think nonfarm payrolls would be weak, so that's a surprise." The yield on the Bloomberg Global Developed Sovereign Bond Index fell below 1 per cent last week to 0.97 per cent, the lowest level since April.

"Global long-term interest rates are coming down because nonfarm payrolls were unexpectedly lower," said Toshifumi Sugimoto, the chief investment officer at Capital Asset Management in Tokyo.

The Institute for Supply Management's non-manufacturing index fell to 57.5 in September from 59 in August, based on a Bloomberg survey.

The odds of a Fed rate increase were about 34 per cent for the December meeting, 40 per cent for the January session and 55 per cent for the Marchgathering. The calculation is based on the assumption that the effective fed funds rate will average 0.375 per cent after liftoff, versus the current target range of zero to 0.25 per cent.

The central bank needs to amend the way traders view the path for interest rates, said Mr El-Erian, who's a Bloomberg View columnist andthe chief economic adviser at Allianz SE.

"The critical issue for the Fed is not when it moves first;it is the journey," he said. Between now and December, it has to get the market to realize "that this will be the loosest tightening in the modern history of central banks," he said.

BLOOMBERG

    
 

TPP trade talks head into Monday

Earlier in the day, Japan's Economy Minister Akira Amari said he was expecting a deal "in principle" to be announced Sunday afternoon. 

PHOTO: REUTERS

OCT 5, 20159:47 AM

[ATLANTA] Talks on the ambitious Pacific free-trade treaty were extended again to Monday as they remained bogged down in differences on the dairy trade and biologic patent protections.

A US trade official said plans for a press conference expected to announce a deal on the 12-nation talks late Sunday were cancelled, though he gave no reason.

Trade ministers and other top officials from the 12 countries have been negotiating around the clock since Wednesday hoping to close the deal on the Trans-Pacific Partnership, which would be the world's largest free-trade zone.

Earlier in the day, Japan's Economy Minister Akira Amari said he was expecting a deal "in principle" to be announced Sunday afternoon.

Amari told Japanese journalists that there had been "major progress" Sunday morning and that a solution had been found to the main roadblock to a deal, how to protect developers of biologic drugs, which saw the United States and Australia sharply divided on the issue.

"We are making preparations now to announce a deal in principle this afternoon," he said, according to a translation of his remarks supplied by Japanese journalists.

The administration of President Barack Obama, the prime driver behind the TPP, wants it to create a foundation for "21st century trade rules," setting standards on trade, investment, data flows and intellectual property that eventually non-TPP members - particularly China - will have to accept.

AFP

  
 

US: Stocks end week higher despite rising gloom

PHOTO: AFP

OCT 3, 20156:44 AM

[NEW YORK] Wall Street stocks closed the week on a positive note thanks to a late-afternoon rally Friday, but a weak US jobs report added to worries that the economy is slowing.

The late surge lifted stocks into positive territory for the week, with the Dow Jones Industrial Average finishing up 157.70 points (0.97 per cent) at 16,472.37.

The broad-based S&P 500 rose 20.02 (1.04 per cent) to 1,951.36, while the tech-rich Nasdaq Composite Index advanced 21.20 (0.45 per cent) to 4,707.78.

The benign tally belied the rising pessimism that the US economy will not escape the ripple effects of a slowing China and a continually sluggish Europe.

Some leading analysts still see US stocks regaining some momentum in the final months of 2015. Goldman Sachs forecasts the S&P 500 will return to 2,000 at the end of the year after suffering its steepest drop in four years in the third quarter.

But analysts expressed alarm over Friday's jobs report. The Labor Department estimated the US economy added just 142,000 jobs in September, well below analyst estimates of 205,000. The government also trimmed its estimates for jobs added in July and August.

The jobs report "would indicate fairly strongly the US economy is slowing more significantly than expected," said Hugh Johnson of Hugh Johnson Advisors.

"The word 'recession' is starting to come into the dialogue." Gregori Volokhine, president of Meeschaert Capital Markets, said the weak jobs report added to other lackluster data points, such as an Institute for Supply Management reading that showed near-flat manufacturing activity in September.

"We are beginning to understand why (Fed Chair) Janet Yellen was scared to raise interest rates" at the September policy meeting, Volokhine said.

Not all of the week's US economic data was bad. The Conference Board's consumer confidence index rose in September to 103.0 from 101.3 the prior month, beating market expectations for a sharp drop in confidence.

In another positive sign, September auto sales from carmakers showed US autos continued to be bought at brisk pace. Lightweight vehicle sales in September jumped 15.8 per cent from a year ago to 1.44 million, lifting the pace of sales to the fastest since July 2005, according to Autodata.

But data outside the US continued to paint a gloomy picture overseas, raising worries of contagion.

China's crucial industrial companies saw profits fall 8.8 per cent in August from a year ago, while eurozone inflation again slipped into negative territory (-0.1 per cent) in September.

"There's a lot of fear in the market," Mr Volokhine said.

In corporate news, Alcoa announced plans to split itself into two companies, one focused on upstream mining and smelting and the other on manufacturing aluminum products to supply industries including aerospace and auto manufacturing.

In other deal news, Energy Transfer Equity said it would acquire the Williams Companies for about US$37.7 billion to create a giant in US oil and gas pipelines, while data-storage company Western Digital announced that Chinese technology company Unisplendour Corporation will pay US$3.78 billion for a 15 per cent stake in the US company.

Ralph Lauren, the 75-year-old founder of his namesake company, announced he would step aside as chief executive and hand over the top executive post to Stefan Larsson, global president of the Old Navy brand for Gap.

Next week's calendar includes a handful of early earnings reports, including PepsiCo, Alcoa and Monsanto.

Key economic reports include the ISM reading of services sector activity for September, US trade data for August and the minutes from the September Federal Reserve monetary policy meeting.

AFP

    
 

Shanghai-Hong Kong September stock link trading at 7-month low

      

The Shanghai-Hong Kong Stock Connect saw both northbound and southbound trading fall in September to the lowest level since February.

PHOTO: REUTERS

OCT 3, 20151:48 PM

[HONG KONG] The Shanghai-Hong Kong Stock Connect saw both northbound and southbound trading fall in September to the lowest level since February.

Northbound volume dropped 32 percent to 81.9 billion yuan (S$18.5 billion) from 121 billion yuan in August, according to data from the Hong Kong Stock Exchange. Southbound turnover slumped 50 percent to HK$25.3 billion (S$4.7 billion) from HK$51 billion.

The cross-border stock link, which started last November, allows mainland investors to buy Hong Kong stocks and permits more foreign access to the world's second-largest equity market.

A similar connect between the Shenzhen and Hong Kong bourses may be delayed until 2016 as China is more focused on stabilizing its stock rout, according to 10 of 13 analysts surveyed by Bloomberg.

BLOOMBERG

BoJ to cut forecast for economic, price growth: report

OCT 3, 20152:40 PM

[TOKYO] The Bank of Japan (BoJ) will this month cut its forecast for both economic growth and inflation amid a slowdown in the global economy and cheaper commodities, a leading newspaper said Saturday.

The central bank will unveil the downward revisions in its biannual outlook for economic activity and prices report due out October 30, the Nikkei business daily said.

BoJ policymakers will downgrade the forecast for economic growth to around one percent from 1.7 per cent for the current fiscal year to March 2016, the daily said. It added that the following fiscal year's growth estimate would also be lowered from 1.5 per cent, but did not give details.

The Nihon Keizai Shimbun - or Nikkei daily, which recently bought the Financial Times for US$1.3 billion - has a track record of financial scoops and is considered a must-read for executives.

With China and other emerging markets slowing, the global economy is seen expanding by only about three percent this year, with little hope of a quick improvement in 2016, it said.

Japanese business investment, consumer spending and other economic activity is holding up well in the Bank's view, but it forecasts that domestic growth may fall somewhat short of expectations, it added.

The central bank is also expected to trim its consumer price growth forecast, from its earlier estimate of 0.7 per cent to less than 0.5 per cent for the current fiscal year in the wake of a slump in crude oil prices, the daily said. The Nikkei did not publish what the specific new forecast.

BoJ policymakers will consider pushing back the bank's expected timeframe for achieving its 2.0 inflation target, now described as around the first half of fiscal 2016 starting in April next year, according to Nikkei.

Central bank chief Haruhiko Kuroda remains upbeat on reaching the promised 2.0 per cent inflation - a cornerstone of Japan's attempt to conquer years of deflation and revive the long-sluggish economy.

But Japanese consumer prices fell 0.1 per cent in August year-on-year, the first decline in over two years, official data showed late September, fuelling speculation that the central bank may unleash a fresh round of stimulus measures.

AFP

    
 

China to curb yuan speculation amid reform push: central bank

China is studying plans to curb currency speculation even as it seeks to quicken the process of making the yuan trade freely, a deputy central bank governor said. 

PHOTO: REUTERS

OCT 3, 201512:50 PM

[BEIJING] China is studying plans to curb currency speculation even as it seeks to quicken the process of making the yuan trade freely, a deputy central bank governor said.

Beijing will further open up its capital markets and develop its foreign exchange market as it aims to "accelerate the renminbi convertibility on the capital account", Yi Gang wrote in an article published in China Finance magazine, a central bank publication. The yuan is also known as renminbi.

While the yuan is already convertible under China's current account, the broadest measure of trade in goods and services, the capital account, which covers portfolio investment and borrowing, is still subject to restrictions due to worries about abrupt capital flight and hot money inflows.

Chinese officials have not given a firm timetable for making the yuan freely tradeable.

They have pledged financial reforms to make the yuan more convertible as they push for it be included in the International Monetary Fund's Special Drawing Rights (SDRs) basket.

But the authorities are also studying plans to curb currency speculation, including a "Tobin tax", non-interest bearing reserve requirement and foreign exchange trading fees, Mr Yi said.

Chinese offices have floated the idea of the Tobin tax, a scheme to penalise short-term currency speculators that was proposed by Nobel prize-winning American economist James Tobin in 1972. "In the long term, foreign exchange management departments should always give top priority to preventing risks," Mr Yi said.

Mr Yi, who also heads the State Administration of Foreign Exchange, said the regulator will improve its monitoring on cross-border capital flows and develop an early warning system.

The authorities have taken a series steps to curb currency speculation and money outflows that intensified after China's surprising Aug 11 devaluation of the yuan.

The People's Bank of China has told banks to set aside reserves for purchases of currency derivatives, while the foreign exchange regulator has instructed them to bolster checks on currency dealings and identify "abnormal" cross-border fund transfers.

The central bank has intervened heavily to support the yuan, alongside the government's efforts to stem a slide in China's stock market.

REUTERS