Initiatives to foster greater China-Singapore financial cooperation

By

Nisha Ramchandaninishar@sph.com.sg@Nisha_BT

Signing of MOUs between China and Singapore, witnessed by China's President Xi Jinping and Singapore's Prime Minister Lee Hsien Loong, at the Istana, Nov 7, 2015. 

ST PHOTO: LIM SIN THAI

NOV 9, 20152:41 PM

INITIATIVES to strengthen cross-border renminbi (RMB) flows and a commitment to collaborate on capital market connectivity between China and Singapore were the major outcomes in financial cooperation from a recent state visit to Singapore by China's President, Xi Jinping.

Three major initiatives were announced to grow channels for cross-border RMB flows to support greater use of the RMB outside China.

First, China and Singapore agreed to extend to Chongqing Municipality certain cross-border RMB initiatives that are already given to Suzhou and Tianjin. As such, Singapore-based banks will be allowed to lend RMB to companies in Chongqing and Chongqing-based companies may issue RMB bonds in Singapore and fully repatriate the proceeds.

Secondly, Singapore's quota under the RMB Qualified Foreign Institutional Investor (RQFII) scheme will be doubled from 50 billion yuan to 100 billion yuan (S$11.1 billion to S$22.2 billion), as a result of robust interest from Singapore-based asset managers and investors keen to invest in China.

Thirdly, the Monetary Authority of Singapore (MAS) and the People's Bank of China agreed to renew and enhance the bilateral currency swap arrangement (BCSA) established between the two central banks. The existing arrangement was signed in March 2013 and is due to expire in March next year.

A new aspect of financial cooperation between the two nations was added via the agreement to enhance capital market cooperation. Two specific initiatives will help to set off this process.

First, there was agreement to institute a regular high-level dialogue between MAS and the China Securities Regulatory Commission (CSRC) to facilitate the exchange of views between the two regulators.

Second, MAS and CSRC agreed to explore product collaboration to broaden capital market offerings, which will put Singapore in greater stead to support the needs of Chinese policy banks.

MAS managing director Ravi Menon said: "In the next phase of our financial cooperation with China, we hope to replicate in the area of capital market development the success we have had in building the RMB ecosystem. There is great scope for China to tap on Singapore's strong institutional investor base and established derivatives markets to facilitate the development of their own capital markets. There are also significant opportunities for exchanges from both sides to collaborate in a mutually beneficial way."

      

Soul searching for India's Modi after humiliating Bihar defeat

Supporters of the Janata Dal (United) party celebrate after learning of the initial election results at their party office in Patna, India, Nov 8, 2015.

NOV 9, 20152:55 PM

[NEW DELHI] Indian financial markets took fright on Monday at the humiliating defeat suffered in a pivotal state election by Prime Minister Narendra Modi and his party, whose leaders are expected to meet amid calls for a rethink of policies and priorities.

Mr Modi was due to huddle later with a dozen senior colleagues of his Hindu nationalist party, including its president Amit Shah, finance minister Arun Jaitley and home minister Rajnath Singh, party and government officials said.

The loss in Bihar, India's third most-populous and poorest state, is the most significant setback for Modi since he won a crushing victory in a general election last year. "We have to identify what went wrong," said Ram Madhav, a Bharatiya Janata Party (BJP) general secretary.

The BJP office in New Delhi was deserted on Monday with workers compiling newspaper clippings on the election defeat in Bihar. Security guards turned away offerings of sweets and gifts for Diwali, a Hindu festival being celebrated this week.

Indian shares, bonds and the rupee fell to six-week lows as investors who had backed Modi fretted that he would struggle to push economic reforms through the parliament against an emboldened opposition.

The Bihar loss may hamper Modi's reform agenda because he needs to win most state elections in the next three years to gain full control of parliament. India's states are represented in the upper house, where the BJP lacks a majority.

The election came against a background of concerns in India at incidents in which Muslims have been targeted by Hindu zealots. There have been protests by prominent intellectuals at what they call a climate of rising intolerance.

Some BJP lawmakers called for the party to refocus on a more unifying agenda focusing on economic development after a campaign that used rhetoric in Bihar and sought to polarise voters along caste and religious lines. "We have to be single mindedly focused on development, development, development," said Chandan Mitra, a BJP member of parliament. "We can't afford to be distracted by anything else." During the election rally, Modi accused rival parties of snatching economic benefits from lower-caste Hindus and handing them over to a religious minority, a comment interpreted as veiled reference to Muslims.

The election commission banned several party posters they said could incite hatred. One banned poster showed a young Hindu woman embracing a garlanded cow, an animal sacred to Hindus.

The BJP president was also criticised for comments suggesting that if his party lost, the result would be celebrated in archrival Muslim-majority Pakistan.

Arun Shourie, a minister in the last BJP government, called for a change in course. "We should be grateful to the people of Bihar because the direction has been halted," he told NDTV. Asked what went wrong with the party's Bihar campaign, he said "everything".

REUTERS

    
 

OECD trims global growth forecast to 2.9% in 2015, 3.3% in 2016

NOV 9, 20156:56 PM

[PARIS] The OECD on Monday cut its forecast for global growth to 2.9 per cent this year and 3.3 per cent in 2016, saying subdued inflation should support a gradual pick up in the world economy.

However, the OECD's chief economist called "deeply concerning" a stagnation in global trade that has in the past "been associated with global recession".

AFP

Eurozone to deny Greece bailout cash

NOV 9, 20157:18 PM

[BRUSSELS] Eurozone finance ministers were set to withhold two billion euros from Greece's huge bailout at a meeting on Monday, European sources said, as tensions resurfaced just months after Athens narrowly avoided a euro exit.

Athens has failed to meet strict reform commitments, with differences over foreclosure rules as the leftist government of Prime Minister Alexis Tsipras insists on protections for low-income homeowners, officials said.

Creditors the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) agreed an 86-billion-euro (S$131.9 billion) debt rescue on July 13 but set tough conditions requiring Athens to cut spending, raise taxes and modernise the economy.

"There will be no deal on Monday on the two billion payment," a senior European source told AFP, hours after senior eurozone officials failed to forge a compromise in preparation for the meeting of 19 eurozone finance ministers.

Two European sources added that a decision was likely later this week when senior eurozone officials hold a teleconference.

However France, which has backed Greece throughout the torrid bailout process, said earlier that, despite the disagreements, a deal to unlock the payment was still within reach on Monday.

"Greece has made considerable efforts (that are) all within the bailout agreement of July 13", French Finance Minister Michel Sapin told reporters in Paris as he headed for the talks.

"I understand the worries of the Greek government," Mr Sapin said, adding that France and Germany also had laws to limit bank seizures. "It's a bit strange that we're always asking more of Greece than what exists in creditor countries."

The renewed tensions hit the financial markets on Monday with Paris and Frankfurt stocks both down 0.20 per cent amid worries about Greece's banks.

Greece's two earlier bailouts, in 2010 and 2012, totalled 240 billion euros and more than 100 billion more in a private sector debt write-off, but Athens struggled to meet the stringent austerity and reform conditions.

The Tsipras government was expected to have finalised a series of so-called reform "milestones" by mid-October but has been stuck on the details.

Analysts warned that the delay will put off the even more sensitive debate over reducing Greece's massive debt pile, another key component of the bailout.

The IMF has said it will stay out of any further rescue of Greece if the country's debt is not scaled back, but harder line countries such as Germany are loath to offer Athens any favours.

"Sigh. And all this before we even get into discussions on debt relief which are infinitely harder," said analyst Raoul Ruparel, of Open Europe think tank in a tweet.

The Greek economy took a massive hit in July after the ECB cut off a lifeline to Greece's banks forcing strict capital controls that are partly still in place.

A stress test on Greece's banking system revealed earlier this month that lenders needed 14.4 billion euros to survive potential economic shocks.

That is less than the 25 billion euros earmarked for the recapitalisation of Greece's four major banks in the bailout package.

"Delay is not a big concern but it's not helpful in the recapitalisation discussion," another senior eurozone source told AFP.

AFP

   
 

Suu Kyi party chalks up wins in first Myanmar poll results

NOV 9, 201510:32 PM

[YANGON] Supporters of Aung San Suu Kyi's pro-democracy party on Monday cheered in growing excitement as early results from Myanmar's historic election boosted hopes of sweeping gains to carry it to power after decades of military dominance.

Election authorities have so far released only a small fraction of the results, but of the 36 announced the National League for Democracy has scooped 35, in a psychological boost to crowds of Suu Kyi supporters gathered in front of her party headquarters in Yangon Monday evening.

"We'll win tonight, we'll stay until we win anyway," said 24-year-old Wanna Htay, sporting a Scarlett bandana with the party's iconic fighting peacock motif as the crowd sung and cheered around him.

Earlier, party spokesman Win Htein told AFP that unofficial tallies showed the opposition was "on track to win more than 70 per cent of seats around the country".

He did not specify if the percentage would translate into power under Myanmar's complex political system.

Sunday's elections saw millions line up to cast their ballots in what many hope will mark a dramatic leap towards democracy in the Southeast Asian nation, which withered under the iron grip of junta rule for decades.

The NLD, which holds a tiny proportion of seats clinched in 2012 by-elections, is shooting for 67 per cent of elected seats in the national legislature to be able to select a president and form a government.

That would be enough to overwhelm the USDP and their military allies - who are gifted 25 per cent of seats by a constitution scripted to ensure they still have a major stake in the future.

The army-backed USDP, or Union Solidarity and Development Party, said it was ready for a wipeout in the commercial capital Yangon, while several of its heavyweights - including its chairman - lost their seats.

But the NLD shied away from an outright declaration of victory, with election authorities expected to release results in several waves deep into Monday night.

Suu Kyi, who is still barred from the presidency under the army-drafted constitution, remained cautious, but hinted at victory.

"It is not the time to congratulate our candidates who we think have won the election," she told supporters and journalists from the balcony of her party's Yangon headquarters.

But "people have an idea of the result even if I don't say it," she added.

Election authorities have said that preliminary figures would be released within 48 hours of Sunday's vote, and a full nationwide count could take 10 days or more.

In its Yangon stronghold, the NLD took 12 lower-house seats and 23 more for the regional parliament.

The USDP, appearing increasingly beleaguered, has taken just one Yangon regional parliament seat so far.

Early NLD victories include a win for Naing Ngan Linn, who was injured in a dramatic sword attack while out canvassing on October 29 in Tharketa township on the city's fringes.

The sitting MP was hospitalised with deep gashes to his arms and face after the attack, apparently by a drunken local gang, in what the party described as the worst incident of violence during its campaign.

But he was back on the campaign trail just a few days later.

Even the state-backed Global New Light of Myanmar declared the "dawn of a new era", while USDP heavyweight Shwe Mann conceded on his Facebook page that he had lost his seat to his NLD challenger.

The junta nominally gave up power in 2011, and the country has since spun through rapid change, with the quasi-civilian USDP government launching reforms that brought the end of most international sanctions.

But the USDP was braced for major losses and some local media called on President Thein Sein to concede without delay.

Party chairman Htay Oo told local media that he had lost his seat in Hinthada, a few hours from Yangon.

Sunday's vote saw enthusiasm for democracy soaring among the 30 million registered voters, many of whom began queuing before dawn to cast their ballot.

Among them were many first-time voters, while others had last voted a quarter of a century ago only to see their hopes crushed by the military when it ignored the results, an outcome they fervently hope will not be repeated this time around.

Election officials estimated an 80 per cent turnout, a figure observers say will aid the NLD's quest for a majority.

President Thein Sein and the still-powerful army chief have both vowed to respect the outcome of the election - even if the USDP loses its choke-hold on power.

AFP

  
 

Berkshire Hathaway beats on earnings by $48 a share

• Akin Oyedele
 
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• Nov. 6, 2015, 4:25 PM
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Reuters/Rick Wilking

Berkshire Hathaway reported third-quarter earnings above analysts' estimates Friday afternoon.

The conglomerate headed by Warren Buffett said its operating earnings per share came in at $2,769, against expectations for $2,721, according to Bloomberg.

The company said its net income doubled to a record $9.43 billion on its Kraft Heinz holding.

Berkshire Hathaway, along with investment firm 3G, bought the ketchup maker for $28 billion in 2013. And in March, the two firms were behind Heinz's acquisition of Kraft Foods.

More recently, this summer Berkshire bought Precision Castparts, a maker of metal components for aircraft and industrial gas turbines, in a $37.2 billion deal.

Berkshire shares are down 10% year-to-date.

SEE ALSO: WARREN BUFFETT: We don't do due diligence — we just look into your eyes

NOW WATCH: How to invest like Warren Buffett

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Two timber companies merged to become a $23 billion behemoth

• Edward Krudy, Reuters

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Thomson ReutersTimberland owned by Plum Creek Timber Co. is seen near Jackman

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Weyerhaeuser buys Plum Creek in $8.44B timber deal

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NEW YORK (Reuters) - Weyerhaeuser Co will purchase Plum Creek Timber Co Inc in a deal announced on Sunday that the two companies said would create a $23 billion timber, land and forest products company, the largest in the United States.

The new company, which will keep the Weyerhaeuser name, will manage more than 13 million acres of timberland that will allow it to drive economies of scale and capitalize on the U.S. housing recovery, the companies said.

The merger combines the two largest owners of timberland in the United States.

"Both companies have historically looked to grow their timberland resource asset base, in others words to acquire more timberlands, so here's an opportunity for both of us to accomplish that," Plum Creek Chief Executive Officer Rick Holley said in a telephone interview.

Under the terms of the merger, Plum Creek's shareholders, who will need to approve the deal, will receive 1.60 shares of Weyerhaeuser for each Plum Creek share. The companies said the exchange implies a premium of 13.8 percent to a weighted average price ratio of Plum Creek shares to Weyerhaeuser shares.

The transaction could amount to about $8.4 billion based on about 174 million Plum Creek shares outstanding and Weyerhaeuser's closing price of $30.40 on Friday. The joint company's equity value would amount to $23 billion. Plum Creek was not able to confirm that figure.

Holley said that combining the two companies, which operate as real estate investment trusts and are popular with asset managers seeking to hold timber in their portfolios, will be able to attract larger investors both at home and globally.

"If you want to invest in this asset class - and many, many do - this is where you go, to this new company,' said Holley.

Holley and Weyerhaeuser's chief executive, Doyle Simons, said in a phone interview that they did not foresee any regulatory or shareholder obstacles to the deal, which they expect to close late in the first quarter or earlier in the second quarter of 2016. The boards of both companies have unanimously backed the merger.

Holley will serve as non-executive chairman of Weyerhaeuser's board.

Simons said cost synergies would amount to $100 million but that there would be "many synergies above and beyond that".

Weyerhaeuser plans to spin off its cellulose fibers business, but Simons said that process was still in its early stages. He declined to say how much the business was worth.

Seattle-based Plum Creek owns approximately 6.2 million acres of timberlands located in over 19 states. Weyerhaeuser, based in nearby Federal Way, Washington, manages 6.9 million acres, primarily in the Pacific Northwest.

Weyerhaeuser said it intends to execute a $2.5 billion share repurchase program shortly after closing the deal. The company said the net financial impact would be as if the deal had been structured with about 70 percent stock and 30 percent cash.

The combined company expects to maintain Weyerhaeuser's current annual dividend of $1.24 per common share, which would be a 13 percent increase on the dividend currently received by Plum Creek shareholders, the companies said.

Morgan Stanley is serving as financial adviser and Cravath, Swaine & Moore is serving as legal counsel for Weyerhaeuser .

Goldman Sachs is lead financial adviser to Plum Creek. BofA Merrill Lynch is also a financial advisor to the company. Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel.

(Reporting by Edward Krudy; Editing by Jonathan Oatis)

Read the original article on Reuters. Copyright 2015. Follow Reuters on Twitter.

Saudi Arabia: 'We've seen the pain' and we don't care

• Ben Moshinsky
 

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REUTERS/Hamad I MohammedSaudi Aramco CEO Khalid al-Falih.

Saudi Arabia's mission to blow everyone out of the oil market isn't over yet.

The country's policy of pumping so much oil that prices stay too low for competitors to make a profit has led to losses at big oil companies, suppressed inflation globally, and even seen Saudi Arabia's own sovereign debt downgraded.

And the country has no plans to stop.

The chairman of Saudi Aramco, the state's oil company, told the Financial Times: "There have been no conversations here that say we should cut production now that we've seen the pain.

"The only thing to do now is to let the market do its job," the Saudi Aramco chairman, Khalid al-Falih, said.

The OPEC oil-producing cartel, of which Saudi Arabia is a key member, decided against cutting production targets last year, letting the price fall from around $100 to less than $50.

Here's the Brent crude oil price, a benchmark for oil, over the past two years:

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At the time, Saudi Oil Minister Ali al-Naimi said the policy was aimed at defending market share and shoving less-efficient oil-producing countries like Russia, which needs oil up at $100 to make money, out of the market.

"It is also a defence of high efficiency producing countries, not only of market share," al-Naimi said in an interview cited by the Financial Times last year. "We want to tell the world that high efficiency producing countries are the ones that deserve market share. That is the operative principle in all capitalist countries."

Saudi Arabia isn't immune from the pain of low oil prices. The country's sovereign credit ratings were cut to "A+/A-1" from "AA-/A-1+" by the credit-rating company Standard and Poor's.

In a release, S&P said a "pronounced negative swing" in Saudi Arabia's fiscal balance prompted the downgrade.

Over the 10 years that ended in 2013, S&P noted that Saudi Arabia's budget surpluses — or money available after all government expenses had been met — averaged about 13% of gross domestic product. This situation, however, has changed rapidly as the price of oil has crashed, and in 2015 Saudi Arabia is expected to see a budget deficit equal to 16% of GDP.

"We knew that it was going to be painful but the extent of the pain went beyond our expectations," Falih said in the Financial Times interview. "The market has overreacted as it typically does in such down-cycles."

NOW WATCH: President Obama just killed the Keystone XL pipeline

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