GE lands US$2.6b deal to supply Indian railway

NOV 10, 20157:05 AM

[NEW DELHI] General Electric Co has won a US$2.6 billion contract to supply India's railways with 1000 diesel locomotives, as the state-owned network looks to foreign capital to help it modernise.

The US company will also invest US$200 million to build local manufacturing and service facilities, GE said in a statement on Monday.

"In most of our growth markets, localisation is typically a key part of any infrastructure deal we do," Jamie Miller, chief executive officer of GE Transportation, told Reuters.

The contract is also one of first and largest to be awarded to a foreign firm since India last year allowed 100 per cent foreign direct investment in some parts of its railways, and comes as New Delhi embarks on a huge modernisation programme to overhaul its vast but dilapidated network.

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Under the deal, the largest ever for the US company in India, GE will build a manufacturing facility in the eastern state of Bihar, and two maintenance sheds elsewhere in the country, to service the locomotives over an 11-year period.

GE won against competition from rival manufacturers such as Canada's Bombardier and Germany's Siemens. India is also set to announce the winner of another multi-billion dollar contract to supply electric locomotives.

Keen to upgrade the country's creaking infrastructure, Prime Minister Narendra Modi's government has said it will invest US$137 billion on its railways by 2020.

It has also opened up limited parts of the state-owned network to private and foreign investment, luring manufacturers hungry for contracts from the world's fourth largest train network. "It will bring this technology to a market that needs it. For them, this is really aligned with 'Make in India,' " GE's Mr Miller said.

India's railways is a lifeline for the more than 23 million people who use it every day. It also offers some of the world's cheapest fares to help poor people travel across the country.

But the system largely dates back to the British colonial era and India has struggled to generate money to invest and modernise, leaving an ageing and congested network where trains run at an average speed of just 50 kilometres per hour.

GE said the company had received a letter of award from India, and it would now sign a formal agreement before beginning construction of the new factory.

REUTERS

    
 

Petrobras says Brazil strike cut oil output 115,000 barrels/day

NOV 10, 20157:13 AM

[RIO DE JANEIRO] Brazil's state-run oil company Petroleo Brasileiro SA said late Monday that a weeklong strike is cutting its Brazilian oil output by about 115,000 barrels a day, or about 5.5 per cent of output before the labor action began on Nov 1.

The company and Brazil's two main oil union federations met on Monday without coming to an agreement over labor demands that Petrobras restore cut investments and end plans to sell assets to help pay its more than US$130 billion in debt, the largest of any oil company.

REUTERS

US: Wall Street falls as rate hike looms and growth fears linger

NOV 10, 20157:09 AM

[NEW YORK] US stock indexes lost more than one per cent on Monday, their biggest decline in six weeks, as investors braced for an interest-rate hike and fretted about weak Chinese trade data.

Nine of the 10 major S&P sectors were lower, led by consumer discretionary and energy stocks. The Dow Jones industrial average slipped back into negative territory for the year, with only two of its 30 components higher on the day.

US companies face the prospect of higher borrowing costs if the Federal Reserve raises interest rates next month, as is widely expected after Friday's strong jobs report.

Investors also focused on renewed fears of a slowdown in China, a key market for many companies, ahead of the crucial holiday shopping season.

China, one of the United States' biggest trade partners, ended October with a record high trade surplus, with both exports and imports falling.

US stocks have ended higher for six weeks in a row, buoyed by better-than-expected corporate results and signs of a strengthening domestic economy. "There are short-term myopic concerns about a Fed rate hike," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, which has about US$50 million in assets under management.

"Bond and stock prices will decline when the Fed makes that first announcement, but ultimately, stocks will thrive because it will prove the US economy is healthy enough to stand on its own," Mr Dollarhide said.

The Dow Jones industrial average fell 1.11 per cent to 17,711.14 and the S&P 500 lost 1.11 per cent to 2,075.82 points. The Nasdaq Composite dropped 1.23 per cent to 5,083.60.

The CBOE Volatility index, known Wall Street's fear gauge, rose 15 per cent to 16.50, the most in a single session in six weeks.

The consumer discretionary sector was the worst-hit among the S&P sectors, falling 1.5 per cent, weighed down by Priceline.

Priceline slumped 9.8 per cent after a weak fourth-quarter profit forecast.

Only two Dow components rose. Walt Disney gained 0.60 per cent, while DuPont added 0.45 per cent after the chemical and seeds producer said interim Chief Executive Ed Breen will keep his job permanently.

A fall in oil prices led to a 1.3 per cent decline in the energy sector.

Dean Foods rose 4.6 per cent after reporting a better-than-expected quarterly profit.

Plum Creek Timber soared 17.1 per cent after Weyerhaeuser said it would buy the company to create a US$23 billion timber company. Weyerhaeuser fell 2.7 per cent.

Declining issues outnumbered advancing ones on the NYSE by 2,500 to 552. On the Nasdaq, 1,944 issues fell and 819 advanced.

The S&P 500 index showed 3 new 52-week highs and 10 lows, while the Nasdaq recorded 93 new highs and 53 lows.

REUTERS

    
 

Eurozone ministers give Greece one more week for reforms

Jeroen Dijsselbloem, head of the Eurogroup of ministers, said "open issues" remained on commitments agreed by Greece in July as part of its rescue, and urged the leftist government of Prime Minister Alexis Tsipras to close the gap. 

PHOTO: REUTERS

NOV 10, 20157:02 AM

[BRUSSELS] Eurozone finance ministers urged Greece on Monday to deliver on overdue reforms within a week in order to secure crucial funds from its bailout, as tensions resurfaced just months after Athens narrowly avoided a euro exit.

Jeroen Dijsselbloem, head of the Eurogroup of ministers, said "open issues" remained on commitments agreed by Greece in July as part of its rescue, and urged the leftist government of Prime Minister Alexis Tsipras to close the gap.

"The important thing is to get an agreement on those issues. This needs to be finished over the course of the coming week," Mr Dijsselbloem said after the meeting of the eurozone's 19 finance ministers.

Creditors at the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) agreed an 86-billion-euro (S$153 billion) debt rescue on July 13 but set tough conditions requiring Athens to cut spending, raise taxes and modernise the economy.

The most urgent differences dividing Greece and its creditors are over home foreclosure rules and the governance of ailing banks.

"The Eurogroup called on the Greek authorities to finalise the financial sector measures, as well as the legislation agreed under the first set of milestones, in the course of the week," a statement by the Eurogroup said, referring to dozens of reforms included in the bailout.

"This would unlock the disbursement of two billion euros by the ESM (rescue fund) and a transfer of the funds needed for the recapitalisation of the Greek banking sector," the statement added.

The Tsipras government insists any reform on foreclosures should protect low-income homeowners from house seizures, but the two sides disagree on the modalities of granting such an exception.

If Greece delivers on the reforms it gains access to the 10 billion euros already set aside to recapitalise Greek banks that were punished by capital controls at the height of the crisis this summer.

After the talks Greek officials said in a note from Athens that the talks "confirmed the positive climate of recent days", adding that it expected a resolution on the payouts "in the coming days".

In the talks, Eurozone ministers carefully avoided the finger-pointing that marked the six months of bitter talks that led to the bailout.

Germany's powerful Finance Minister, Wolfgang Schaeuble, however drew a more negative tone warning that Greece had failed to meet "a great number" of commitments agreed to in July.

"It is exclusively for Greece to implement what we agreed upon last July," a stern Schaeuble said in Brussels.

France, which has mostly backed Greece throughout the torrid bailout process despite the disagreements, warned that eurozone countries should refrain from treating Greece unfairly.

"Greece has made considerable efforts (that are) all within the bailout agreement of July 13", said French Finance Minister Michel Sapin on Monday.

"It's a bit strange that we're always asking more of Greece than what exists in creditor countries," he said.

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 current delay in reforms has 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.

The Greek economy took a massive hit in July after Athens brought in capital controls in response to a looming bank run.

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

"The recapitalisation of the banks... is our key priority," Mr Dijsselbloem said.

AFP

Fed's Rosengren signals ready to lift rates amid strong data

Federal Reserve Bank of Boston President Eric Rosengren said encouraging US economic data coupled with emerging signs of risk taking by some investors make it appropriate for the central bank to consider raising interest rates as soon as next month, while moving gradually thereafter.

PHOTO: BLOOMBERG

NOV 10, 20156:51 AM

[WASHINGTON] Federal Reserve Bank of Boston President Eric Rosengren said encouraging US economic data coupled with emerging signs of risk taking by some investors make it appropriate for the central bank to consider raising interest rates as soon as next month, while moving gradually thereafter.

"All future committee meetings - including December's - could be an appropriate time for raising rates, as long as the economy continues to improve as expected," Mr Rosengren told an audience on Monday in Portsmouth, Rhode Island.

The policy-setting Federal Open Market Committee meets in Washington on Dec 15-16, when it will decide on whether to raise the benchmark federal funds rate for the first time since 2006. It has held rates near zero since late 2008.

Mr Rosengren cited a better-than-expected October US employment report and measures of retail spending that signal domestic demand is overcoming weakness abroad that hurts US exporters. He also pointed to early signs of a "search for yield" in the commercial real estate market encouraged by very low interest rates.

"When the number of cranes observed on a short walk in a city such as Boston reaches double digits, as is the case today, it is worth reflecting on the sustainability of such growth," he said.

"The trend in commercial real estate prices should be thoughtfully monitored." Investors have increased bets that the Fed will move next month to around 68 per cent, according to pricing in fed funds futures, from 56 per cent before publication of the October jobs report. That assumes the average effective funds rate after liftoff is 0.375 per cent.

Mr Rosengren, who votes next year on the FOMC, argued back in September that the US was not insulated from weaker growth abroad. He said Monday that robust domestic demand during the third quarter "suggests that the US was little affected by the problems in emerging markets, or by the resulting financial- market turbulence." Mr Rosengren said that unemployment, which fell to 5 per cent in October from 5.1 per cent the month before, was close to his own estimate of the long-run rate of joblessness, at 4.8 per cent.

"Clearly, we are seeing continued improvement in labor markets and a further reduction in the remaining labor market slack," he said.

The FOMC in October repeated that it awaits "some further improvement" in labor markets and more confidence that inflation will rise toward its target of 2 per cent in the medium term before lifting rates. At the same time, it signaled how close it was to that decision by explicitly mentioning its next meeting as a possible appropriate time for liftoff.

Mr Rosengren said he supported the October statement while repeating his preference for moving gradually thereafter. Moving slowly after liftoff would, he said, give policy makers time to assess the impact of higher rates on the economy and reduce the chances they would overshoot and raise rates too high.

"Given the uncertainties surrounding the degree of accommodation that is necessary to achieve 2 per cent inflation and full employment, I prefer a path that involves only gradual increases in interest rates and that essentially probes how tight labor markets can be, consistent with our 2 per cent inflation target," he said.

BLOOMBERG

    
 

China-Taiwan Summit a Success for Singapore

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• CHINA

• CROSS-STRAITS RELATIONS

• MA YING-JEOU

• SHANGRI-LA

• SINGAPORE

• SUMMIT

• TAIWAN

• TAIWAN-CHINA RELATIONS

• XI JINPING

 

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Chinese President Xi Jinping and Taiwanese President Ma Ying-jeou shake hands at Singapore’s Shangri-La Hotel on Saturday, Nov. 7, 2015.

 

Associated Press

The choice of Singapore as the venue for Saturday’s historic meeting between the Chinese and Taiwanese presidents is a diplomatic coup for the famously neutral city-state.

The meeting is the first between China’s President Xi Jinping and Taiwan’s President Ma Ying-jeou, and the first time leaders from both sides have met since Taiwan and China split in 1949.

The decision to hold the summit in Singapore shows it maintains its reputation as a rare neutral ground in a region where tensions are rising, even after the death in March of the city-state’s widely-respected former leader, Lee Kuan Yew.

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Mr. Ma said this week the summit is the product of years of diplomacy between the two sides, and that Singapore was chosen for its impartiality.

Singapore’s selection as host “further highlights Singapore’s role in international politics,” said Huang Jing, professor of U.S.-China relations and director of the Centre on Asia and Globalisation at the National University of Singapore. The meeting “gives Singapore a status that no other country except Singapore can match up to,” he said, adding that the city-state’s relations with both sides will likely improve as a result.

Mr. Lee, Singapore’s first and longest-serving prime minister, earned the admiration of many national leaders, such as Britain’s Margaret Thatcher and Ronald Reagan in the U.S., during his 31-year tenure in the top job. Many foreign leaders, including U.S. President Barack Obama, sought meetings with Mr. Lee to discuss international relations, both before and after he stepped down.

His son, Lee Hsien Loong, now heads a government that is keen to maintain Singapore’s regional relations. The younger Mr. Lee, although viewed as a competent and respected leader, has not inherited his father’s reputation for straight-talking, no-nonsense politics, and doesn’t yet have the leadership experience that drew his predecessor favor with other politicians in Asia.

Still, the younger Mr. Lee has worked to maintain diplomatic and economic relations with Singapore’s neighbors, sharing his father’s view that a small, multi-ethnic island surrounded by much larger countries is best served by fostering strong relationships, rather than by taking sides. It’s a position that is rare in a region brimming with diplomatic tension, as shown by current disputes such as the conflicting territorial claims in the South China Sea.

Singapore, which Chinese ethnic majority and large Indian and Malay populations, is frequently chosen as a diplomatic hub, hosting Asia-Pacific Economic Cooperation meetings and other summits. It is also the annual venue for the Shangri-La Dialogue, a high-profile international security conference.

The Shangri-La Hotel, close to the city’s central shopping district, was the venue of choice for Saturday’s meeting between Messrs. Xi and Ma. The National University of Singapore’s Mr. Huang said that allowed the Singapore government to maintain its policy on China-Taiwan relations by avoiding hosting the meeting in a government facility.

The city-state maintains a “one-China” policy on cross-strait issues, officially recognizing only Beijing as China’s capital.

Lee Kuan Yew broke Singapore’s relations with Taiwan in 1990 to open them with China, although relations with both sides today are close. He also helped ease decades of tension between the two nations. In 1993, shortly after Mr. Lee stepped down from his post as prime minister to take an advisory role, Singapore hosted the first talks between representatives of China and Taiwan since the two sides clashed.

– Jake Maxwell Watts

World's biggest shipping company: Global economic growth is even worse than it looks

• Mike Bird
 
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Peter Macdiarmid/Getty Images)

The CEO of the biggest shipping company on earth is pretty much as exposed to global growth as anyone gets, and he has a worrying message for the world.

In an interview with Bloomberg, Moeller-Maersk CEO Nils Smedegaard Andersen suggested that consensus forecasts for global growth were still too strong, despite already being trimmed from more optimistic levels earlier this year.

Just days ago the company announced that it was slashing 4,000 jobs, reporting a major profit slump.

Here's a snippet from Bloomberg:

"We believe that global growth is slowing down," he said in a phone interview. "Trade is currently significantly weaker than it normally would be under the growth forecasts we see ...

"We conduct a string of our own macro-economic forecasts and we see less growth — particularly in developing nations, but perhaps also in Europe — than other people expect in 2015," Andersen said. Also for 2016, "we're a little bit more pessimistic than most forecasters."

Andersen doesn't see an all-out crisis, but it's a depressing appraisal of the state of the world economy seven years on from the financial crisis. Economies like those of the UK and the US are seeing relatively solid growth, but the eurozone is still expanding at a modest pace at best, and expectations for growth in emerging markets have been seriously pared back.

It has been rough to be exposed to global growth over the past few years.

World trade values were practically stagnant between mid-2011 and mid-2015, disconnecting from the pre-2008 trend. Since then, they have slumped:

Capital Economics

That's consistent with what's happening in the Baltic Dry Index right now. The index measures the cost of shipping commodities in bulk, so a spike means a surge in demand or a sudden disappearance of supply (the actual ships), while a decline means the opposite.

The index never returned to anything like its pre-financial-crisis highs, but it is still tracked in terms of which direction it's moving as a barometer of global trade.

Investing.com

Though the index hit historical lows earlier this year and hasn't quite touched them again yet, Zero Hedge notes that the index has never been lower in November.

NOW WATCH: 'Shark Tank' star Robert Herjavec says only Americans think there are no opportunities in America

More: Maersk Global Economy Growth Baltic Dry Index

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Abu Dhabi's Etihad Airways, Mubadala extend partnership, see US$1b of contracts

NOV 9, 20156:27 PM

[DUBAI] Abu Dhabi's Etihad Airways and state fund Mubadala have extended their partnership which could lead to US$1 billion of new contracts over a decade, the airline said on Monday.

Mubadala has interests and operations in various sectors including aerospace, real estate, oil and gas, communications and mining, while Etihad is the United Arab Emirates' national carrier. Both are owned by Abu Dhabi's government.

The new agreement will see Etihad appoint Mubadala unit SR Technics, which maintains and repairs aircraft, engines and components, as its preferred service provider on what the airline described as commercially competitive terms.

Mubadala and Etihad may also establish a narrow-body aircraft maintenance, repair and overhaul facility in Eastern Europe, the statement said, adding negotiations were already underway "with concerned parties". It did not provide further details.

In May 2014, Etihad agreed to buy plane maintenance firm Abu Dhabi Aircraft Technologies from Mubadala, while the same month the fund also revealed it would sell the airline part of a pilot-training company.

REUTERS

    
 

India's Jet Airways confirms order for 75 Boeing 737 planes

NOV 9, 20156:21 PM

[DUBAI] India's Jet Airways confirmed on Monday an order for 75 Boeing 737 planes previously listed on the US manufacturer's book as for an undisclosed client.

"The order, previously attributed to an unidentified customer, includes conversions of 25 Next-Generation 737s to 737 MAX8s, as well as options and purchase rights for an additional 50 aircraft," Boeing said in a statement released at a joint press conference at the Dubai Airshow.

AFP

US: Stocks open lower after recent gains

NOV 9, 201510:53 PM

[NEW YORK] US stocks opened lower Monday after notching a sixth straight week of gains, with online travel giant Priceline sinking after issuing an unexpected warning on fourth quarter earnings.

Five minutes into trade, the Dow Jones Industrial Average was down 74.89 points (0.42 per cent) to 17,835.44.

The broad-based S&P 500 dropped 8.02 points (0.38 per cent) to 2,091.18, while the tech-rich Nasdaq Composite fell 19.54 (0.38 per cent) to 5,127.58.

AFP

Temasek's Heliconia wants to help Singapore firms go global

A man walks past one of the Jumbo Group of food and beverage outlets in Singapore on Nov 9, 2015. 

PHOTO: AFP

NOV 9, 20153:49 PM

[SINGAPORE] Heliconia Capital Management, owned by Singapore's Temasek Holdings, wants to help local firms, such as the operator of a chain of chili-crab restaurants whose shares debuted on Monday (Nov 9), in their global expansion.

Jumbo Group surged in its trading debut after selling shares in the country's biggest initial public offering this year to investors including Heliconia and Osim International's chairman Ron Sim. The shares rose as much as 58 per cent to an intraday high of 39.5 Singapore cents. Jumbo sold the shares at 25 Singapore cents.

"For Heliconia, our mandate is to identify and support Singapore-headquartered companies to be globally competitive companies," chief executive officer Derek Lau said in an interview at the listing ceremony. "We'll continue with a steady pace of investment."

Heliconia took a S$10 million holding in Jumbo's IPO, according to a stock exchange filing by the restaurant operator. It has invested in about nine companies focused on urbanisation and the growing middle class, said Mr Lau, a former managing director of investment at Temasek.

"We're careful," he said. "We have no set targets; it depends on when the opportunities arise. There's no fixed formula. We need the stars to be aligned. Obviously the companies themselves must see the value that Heliconia can bring."

Jumbo, which also operates restaurants offering pork rib soup, or bak kut teh, and ramen noodles, serves more than 6,000 customers daily, according to its website. The restaurant operator will open at least four more outlets in China and Singapore within the next two years, according to its filing.

BLOOMBERG