Singapore banks must innovate: PM Lee

By

Jamie Lee leejamie@sph.com.sg@JamieLeeBT

Singapore banks must now innovate in this challenging environment where economic growth is uncertain, and disruptive forces are now at play, said Prime Minister Lee Hsien Loong on Thursday. 

PHOTO: SPH

NOV 12, 20158:46 PM

SINGAPORE banks must now innovate in this challenging environment where economic growth is uncertain, and disruptive forces are now at play, said Prime Minister Lee Hsien Loong on Thursday.

"Our banks are in a strong position," said PM Lee at UOB's 80th anniversary dinner, noting that Singapore is at the heart of a rising Asia, and banks here have a strong balance sheet.

"But at the same time, this is a very competitive business that continues to evolve rapidly. For while overall our banks are very good, in almost every specific area, we can find others who are better than us."

Looking at China's success in mobile payments, PM Lee pointed to the Alibaba sales on Singles Day on Wednesday, where 70 per cent of the billions in sales were done through mobile purchases.

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Technologies such as blockchain, which can be used for real-time gross settlement or trade finance verification, are also emerging, he said.

"We have to continually innovate and keep up with the latest technologies and services."

Singapore's financial sector was liberalised from 1997, partly as the industry was not as efficient, innovative, and responsive to the market as it should be, said PM Lee. Foreign banks were allowed into Singapore to compete, including in domestic retail banking.

"This more competitive environment forced our local banks to consolidate. But it also spurred them to upgrade, innovate and grow," he said.

"Our strategy has worked. Today, our three Singapore banks have gained a reputation for being amongst the strongest and safest financial institutions in the world. And we have a strong, vibrant financial sector that we can be proud of."

    
 

CREDIT SUISSE: 2016 will be a 'watershed in global economic history' — these are our top 10 trades

• Greg McKenna, Business Insider Australia
 

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REUTERS/Alex GrimmA bull styrofoam figure pictured in front of the DAX board at the Frankfurt stock exchange in 2008.

Credit Suisse is out with its top 10 trades for 2016. Ric Deverell, global head of research, and the members of his fixed income and economics research team aren't mincing words about the year ahead.

"The coming year is likely to prove to be a watershed in global economic history,"Deverell wrote as his opening to the global outlook released Thursday.

The reason for this momentous year ahead is that the Federal Reserve is expected to begin "the process of normalizing US interest rates, after seven years of historically unprecedented accommodation," he said.

At the same time, institutions like the European Central Bank and the Bank of Japan are likely to keep trying to ease conditions for their own economies.

That's important, Deverell says, because:

This attempt at tightening will occur in a global economy experiencing historically large divergences among the major players, as structural issues intersect with normal cyclical dynamics. Rather than following the Fed, as has occurred in previous cycles, the ECB and BoJ are likely to ease further, while the Chinese authorities continue to battle the excesses of investment past.

The words "historically large divergences" are cause for anyone with an interest in markets and economics to get excited about the possibilities that will throw up for the year ahead.

Deverell notes the "intersection of the cyclical and the structural is likely to result in further substantial changes in the flow of capital around the globe."

That's another huge statement. Credit Suisse still expects that the Fed will hike rates four times in 2016 and that there will be a divergent economic outlook across the globe, but not that it will be a year of global economic weakness. Rather, it says, its base case is "a modest rebound in global growth powered by steady developed market consumption."

On China, Deverell's team believes the economy will respond to recent policy measures by the nation's central bank. But it does highlight that a "deepening slump in Chinese investment is a major risk to our outlook." But the potential for this to have a high impact is a "low-probability outcome," the team says.

Key to the outlook and the trades is that Deverell's team thinks there will be a "drift higher in US core inflation that triggers higher interest rates and tighter financial conditions."

Here are the team's top 10 trade ideas.

1. Buy USD versus EUR and CHF

Rationale: We expect the impact of monetary policy divergence between the Fed and ECB to increase as 2016 starts. The SNB is likely to remain committed to preventing Swiss franc strength versus the euro even as EURUSD declines.

2. Long European stocks

Rationale: Given our view that the Fed will tighten, the euro depreciate toward parity, and the ECB extend its QE program, we expect that a catch-up in European corporate earnings will allow European equities to outperform US equities.

3. Sell Aussie dollars against the US dollar again

Rationale: The policy divergence stretches well beyond Europe. Our structural expectations for slowing in China and ongoing weakness in Australia's core commodities leave us bearish on the Aussie dollar.

4. Buy 2-year Germany

Rationale: We expect the ECB to cut the deposit rate in December. This should lead to further rate cuts being priced into the curve.

5. Sell 5-year US Treasuries

Rationale: Our technical analysts see scope for a range break in US 5-year yields.

6. Overweight European versus US credit

Rationale: Relative monetary policy and the much-lagged stage of the European corporate profit cycle make European credit attractive relative to the US, in our view.

7. Overweight local-currency EM bonds

Rationale: Selected EM markets offer value in a rising US yield environment.

8. Overweight credit-oriented SP versus Agency MBS

Rationale: We see the pick-up in volatility related to a potential Fed hiking cycle as structurally negative for Agency. Parts of the non-Agency MBS and CMBS markets appear relatively cheap as they have lagged the recent tightening of macro-markets.

9. Add a USD rates bear flattener

Rationale: We think that the market is under-pricing the medium-term potential for Fed hikes.

10. Protect against risk of dollar surge

Rationale: Higher US rates may trigger a new surge in the dollar, dominating other capital flows. EURMXN downside exposure has cheapened EURUSD/USDMXN implied correlation.

Read the original article on Business Insider Australia. Copyright 2015.

NOW WATCH: The killer jobs report could mean a rate hike in December

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Central bank governor: China faces 'risks' as renminbi becomes international currency

• Wendy Wu, South China Morning Post

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Feng Li/Getty Images

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China faces an uphill battle against financial risks in the next five years as it gradually opens up its capital account and makes the renminbi an international currency, the central bank governor said.

Zhou Xiaochuan did not detail the risks faced, but said structural conflicts and institutional problems have surfaced and the fate of financial reforms would depend on the nation’s financial security.

“To guard against and eliminating financial risks is a severe challenge for us in the next five years,” the Governor of the People’s Bank of China wrote in an article.

His comments were in a publication in which government department chiefs and provincial leaders discussed the country’s next five-year plan.

He said tools should be used and developed to manage financial risks, lower leverage ratios and prevent systemic financial risks.

China wants to smoothly introduce yuan convertibility under the capital account and expand the use of the renminbi at international financial hubs and in developed countries, the article said.

It also wants the renminbi to become an international currency, with the use of the yuan to exceed one-third of the nation’s total cross-border payment by the end of 2020, it added.

Economists have criticized the government’s “clumsy” responses to the slump in share prices in China this summer.

Premier Li Keqiang has said the government interventions in the market were appropriate and helped to stem risks.

The big depreciation pressure on the renminbi and sharp capital outflows following the People’s Bank of China’s one-off devaluation of the currency in August has also fueled calls for a cautious approach to liberalizing the capital account.

Zhou said regulators would improve their competence in managing fiscal and financial risks.

Read the original article on South China Morning Post. Enjoy the full SCMP experience here:click here to get your subscription offer with US$38 gift voucher. Copyright 2015. Follow South China Morning Post on Twitter.

Peaceful message from Xi-Ma meeting encourages cross-Strait travel

Peaceful message from Xi-Ma meeting encourages cross-Strait travel

Updated: 2015-11-10 00:17

(Xinhua)

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TAIPEI - Thousands of locals crowded the 10th Taipei Cross-Strait Travel Fair on Monday after leaders from both sides of the Taiwan Strait pledged to promote peace and prosperity at a historic meeting in Singapore Saturday.

Ciou Jyu-syong, a marketing manager with Pro-Tour Express Inc, a Taipei-based travel agency, has been busy handing out leaflets for the company's travel package to southwest China's Guizhou Province throughout Monday morning.

"Taiwanese like Guizhou. The landscape is very much different from Taiwan and the weather is very mild throughout the year. In addition, we do not have a problem with language and culture differences," said Ciou, who himself has been to Guizhou at least eight times.

Only about a third of his flyers were left by the time noon rolled around. "The weekend was even more crowded than today," he told Xinhua.

About 270,000 people attended the fair from Friday to Sunday, organizers said.

A Taipei woman surnamed Yu in her fifties collected a bag full of travel leaflets from the mainland delegation's main desk.

"I have made several trips to the mainland but I still plan to go. I would like to visit Xinjiang (in northwest China) and Hainan (in the very south)," she said, adding she visited central China's Hunan Province in September.

It used to be very difficult, if not impossible, for ordinary residents to travel across the Strait since the Kuomintang, led by Chiang Kai-shek, fled to Taiwan in 1949 after being defeated in a civil war.

Business and personnel exchanges resumed in the late 1980s but free travel, especially from the mainland to Taiwan, remained difficult. The two sides lifted the ban on mainland tourists in package tours to Taiwan in 2008 and on independent tourists in 2011.

Cross-Strait tourism has been one of the most prosperous businesses since 2008, an outstanding indicator of improving ties.

In the first nine months of this year, about 4 million Taiwan people visited the mainland while 3.11 million mainland tourists went to the island.

At the meeting with Ma Ying-jeou in Singapore, Xi Jinping said that there are still many Taiwan people who have never been to the mainland and he welcomes their visit.

Hsu Chin-jui, head of the Taiwan Travel Quality Assurance Association, told Xinhua that the meeting between the two leaders sent a message of peace and stability across the Strait, which is exactly what tourism business needs.

Tourism business from both sides should take advantage of this favorable situation and work together to provide people with more quality products and services, Hsu said, adding that their efforts will contribute to cross-Strait peace and exchanges as well.

At this travel fair, the mainland sent a large delegation of 820 people, including travel agencies and government tourism officials, and installed booths with a total area of 3,800 square meters.

Zheng Weirong, deputy head of the tourism department of east China's Fujian Province, told Xinhua that the Xi-Ma meeting is definitely good news for tourism.

"I hope that, with the leaders meeting each other, more detailed policies will follow to simplify paperwork and other procedures for cross-Strait travel," he said. Taiwan is a major source of tourists for Fujian, which is directly across the Strait.

San Francisco Mayor Lee has earned second term as city prospers

By Chang Jun (China Daily USA)Updated: 2015-11-10 04:59

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The news that Ed Lee was reelected mayor of San Francisco on Nov 3 came as no surprise to people in the Bay Area.

The son of an impoverished Chinese immigrant couple, and the first Chinese-American mayor in San Francisco's history, is expected to continue to play an important role in advancing the China-Bay Area relationship across a wide spectrum of areas.

Since Lee became mayor of San Francisco in 2011, he has spared no effort in facilitating a more vigorous and dynamic two-way exchange between China and San Francisco. He has led several business delegations on tours to major Chinese cities, including Beijing, Shanghai and Guangzhou, to tout his city as a land of "golden opportunity" for Chinese investors in real estate, high-tech, clean energy and other sectors.

To further cement the already solid relationship with China, Lee continues to send goodwill messages to China and take concrete steps to open his city to the influx of Chinese investment. He hailed the opening of branch offices in San Francisco by the Bank of Communications, the Industrial and Commercial Bank of China and Wing Lung Bank in 2011, 2012 and 2014 respectively, saying he "applauded the correct, important strategic decisions" those Chinese banks had made.

He attended ceremonies to celebrate the inaugural flight of United Airlines' direct service between Chengdu in Sichuan province and San Francisco in June 2014, and China Southern's first-ever non-stop service between San Francisco and Guangzhou, capital of Guangdong province, in June 2015.

"San Francisco is happy to welcome the first nonstop flights between San Francisco and Guangzhou, evidence of the growing economic and cultural connection between the Guangdong province and the San Francisco Bay Area," said Mayor Lee. "I am grateful to China Southern for the vision they demonstrated during our meeting in China, and for their commitment to making this new nonstop service a reality."

Through his unswerving efforts over the years, a burgeoning Chinese presence has started to transform San Francisco's cultural, economic and demographic landscape. To date, there are more than 150 Chinese enterprises operating on the West Coast in a variety of fields, including real estate, biology, pharmaceuticals, chemistry, clean energy and high tech.

Mandarin-speaking tourists and investors stroll along the sidewalks of the city, participating in the local economy. Martial arts practitioners stretch at Golden Gate Park. Exhibitions and Chinese cultural events draw huge crowds. Restaurants now offer authentic Chinese cuisine on their menus, specializing in Sichuan spicy and Huaiyang style dishes. Downtown department stores feature Mandarin-speaking salespeople and signage.

Following Mayor Lee's lead, California Governor Jerry Brown also conducted many business trips to China sending the same message. "We're going to facilitate billions of dollars of investments. Not overnight, but over time," he said.

Luo Linquan, Consul-General in the Chinese Consulate General in San Fransico, congratulated Lee the day after his landslide re-election.

"In the past four years, you've proven yourself to be a great mayor loved by the people of the great city of San Francisco, not only because of your achievements in developing the economy and reducing the unemployment rate, but also because of your consideration for the low-income class by increasing more affordable housing," Luo wrote in his congratulatory letter.

For Lee, his focus on jobs and business growth sent the city's unemployment numbers tumbling from a high of 8.9 percent in January 2011 down to 3.2 percent in September 2015, one of the lowest rates in the US.

As a gateway for China's entrance into the US, San Francisco has been and is still playing an irreplaceable role in the China-US relationship. The rapid development in the high-tech cooperation between China and San Francisco is a good example and will benefit both our peoples, said Luo.

Contact the writer at junechang@chinadailyusa.com

What a gem: Hong Kong tycoon buys daughter US$48m diamond

NOV 12, 20151:34 PM

[HONG KONG] A Hong Kong billionaire spent a record US$48.4 million buying a 12.03-carat diamond dubbed "Blue Moon" for his daughter in an auction in Geneva, his spokeswoman confirmed to AFP Thursday.

Property tycoon Joseph Lau, who last year was found guilty of bribery in neighbouring Macau, bought the rock at a Sotheby's auction on Wednesday and immediately renamed it "The Blue Moon of Josephine" after his seven-year-old daughter.

The sale comes the day after he spent US$28.5 million buying a rare 16.08-carat pink diamond - the largest of its kind to ever go under the hammer - from rival auction house Christie's, which he rebaptised "Sweet Josephine".

A Hong Kong-based spokeswoman for Lau confirmed the two purchases to AFP.

"The first was the pink one 'Sweet Josephine' and the second one was the 'Blue Moon of Josephine'," she said.

David Bennett, head of Sotheby's international jewellery division, said the "Blue Moon" sale broke several records, making the gemstone "the most expensive diamond, regardless of colour, and the most expensive jewel ever sold at auction".

The jewel, set in a ring, was sold for 48.6 million Swiss francs (S$68.7 million), including fees, with a starting bid of 43.2 million Swiss francs.

It also fetched the highest-ever price per carat, he said, with the buyer shelling out 4.02 million Swiss francs per carat.

The previous world record for a jewel sold at auction was held by the 24.78-carat "Graff Pink" diamond, which was sold by Southeby's for US$46.2 million in November 2010.

This is not the first time Lau has bought rare jewels for his daughter. In 2009, he reportedly spent US$9.5 million on another blue diamond, which he renamed the "Star of Josephine".

Josephine is his daughter with girlfriend and former aid Chan Hoi-wan, according to local media. The 64-year-old also has two children with long-time partner Yvonne Lui.

In March last year, he was found guilty of bribing a former minister in the gambling enclave of Macau in an attempt to purchase a prime development site.

Lau, who was not in Macau for the sentencing, is unlikely serve time as the two semi-autonomous Chinese cities do not have an extradition agreement.

He was locked in a telephone bidding war for eight minutes for "Blue Moon" before the hammer went down, with the precious jewel staying within its pre-sale estimate of US$35-55 million.

The diamond was discovered in South Africa in January last year and was the largest cushion-shaped blue stone in the fancy vivid category to ever appear at auction.

Experts say the market for coloured diamonds has grown increasingly robust and both the blue and pink diamonds garnered a lot of attention in the run up to this week's jewel sales in Geneva.

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