Arrested Brazilian billionaire resigns as head of investment bank

NOV 30, 20156:56 PM

[BRASILIA] Billionaire Andre Esteves, arrested on charges related to Brazil's huge Petrobras corruption probe, has resigned as chairman and CEO of Latin America's largest independent investment bank, it said late Sunday.

BTG Pactual did not refer in the statement to Mr Esteves's legal situation, nor to the Supreme Court having agreed to a prosecutor's request to extend indefinitely the now former banker's arrest.

Mr Esteves, 47, who has a personal wealth of US$2.1 billion according to Forbes magazine, was arrested Wednesday along with Delcidio Amaral, a senior senator from the ruling Workers' Party, on charges of obstructing justice in the Petrobras probe.

The arrest of such powerful men stunned Brazil, and indicated the scope of what prosecutors say was a massive bribes and faked contracts scheme at the state oil company involving politicians and business people.

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Prosecutors say that Mr Esteves was planning to finance an escape to Spain, via Paraguay, of former Petrobras executive Nestor Cervero in exchange for Mr Cervero refusing to testify for the government.

The plan was allegedly suggested in a telephone call between Mr Amaral and Mr Cervero's son, who secretly recorded the discussion.

In the call, Mr Amaral allegedly offered to pay Mr Cervero's family U$13,000 a month in exchange for the silence.

Both Mr Esteves and Mr Amaral have denied any wrongdoing.

The Supreme Court on Sunday also ordered the indefinite arrest of senator Amaral and his chief of staff Diogo Ferreira, detained on Wednesday, as well as Cervero's attorney Edson Ribeiro, detained Friday at Rio de Janeiro airport.

The Petrobras scandal, in which executives colluded with politicians and businessmen to rob the company through bribes for rigged contracts, cost the company more than US$2 billion.

AFP

    
 

Russia will not attend Opec consultations, meeting this week

NOV 30, 201511:20 PM

[VIENNA] The Russian Energy Ministry will not send delegates for consultations or attend the Opec meeting this week as an observer, the ministry's press service told Reuters on Monday.

Instead, the ministry expects an experts-level meeting with Opec in mid-December, meaning the Russian energy minister will not attend.

The Organization of the Petroleum Exporting Countries will convene on Dec 4 in Vienna.

A year ago, Russian Energy Minister Alexander Novak and Russia's most influential energy official, Rosneft head Igor Sechin, attended consultations before Opec held talks.

REUTERS

    
 

BOJ's Kuroda dismisses calls to go slow in hitting inflation target

Haruhiko Kuroda, president of Asian Development Bank was part of a group of panel speakers, (moderated by deputy editor and foreign editor of the Straits Times, Warren Fernandez), that spoke on the topic of Asean Integration in the Asian Landscape at the Asean Business and Investment Summit today in Suntec Singapore today, 17 November 2007. 

PHOTO: SPH

NOV 30, 20152:52 PM

[NAGOYA] Bank of Japan's governor has dismissed calls from critics to go slow on hitting the central bank's 2 per cent inflation target and stressed the need to take "whatever steps necessary" to achieve its ambitious consumer price goal.

Various policymakers in Japan, including BOJ board members, have recently warned that pushing up prices too quickly could hurt consumption and have called for the central to give itself more time to achieve its inflation target.

However, BOJ Governor Haruhiko Kuroda on Monday reinforced the need to reinflate prices as a central bank priority. "If the BOJ were to move slowly toward achieving the price target, wage adjustments would also be slow," Kuroda told business leaders in the central Japan city of Nagoya, home to auto giant Toyota Motor Corp. "In order to overcome deflation - in other words, break the deadlock - somebody has to show an unwavering resolve and change the situation. When price developments are at stake, the BOJ must be the first to move." Japan relapsed into recession in July-September as slow wage growth and China's slowdown hurt consumption and exports.

Consumer prices have also kept sliding due largely to the effect of falling energy costs, keeping the BOJ under pressure to expand its massive stimulus programme to meet its pledge of accelerating inflation to 2 per cent by around early 2017.

Kuroda said the recent weakness in exports and output was unlikely to hurt companies' investment appetite for now, as robust domestic demand has made the economy resilient to external shocks.

But he warned that the slowdown in emerging markets, if prolonged, could hurt business sentiment and discourage companies from boosting capital expenditure. "We'll ease policy or take whatever steps necessary without hesitation if an early achievement of our price target becomes difficult," he told a news conference later on Monday.

The BOJ has recently joined government calls for firms to use their huge cash-pile to boost wages and investment, so far with limited success.

While the BOJ cannot directly influence wages, it can help push them up by reinforcing its commitment to achieve its price target, Kuroda said. "If Japan were to emerge from deflation and see inflation hit 2 per cent, it's important that companies start preparing for that moment by investing more on human resources and capital expenditure," he said.

He also said that while monetary policy does not directly target currency rates, the BOJ will closely monitor yen moves because of their big impact on Japan's economy. "What's most desirable is for exchange rates to move stably reflecting economic and financial fundamentals," Kuroda told business leaders.

REUTERS

    
 

German retail sales dip on the month in October   

NOV 30, 20153:16 PM

[BERLIN] German retail sales fell unexpectedly on the month in October, but a solid rise on the year strengthened expectations that private consumption will remain a key growth driver for Europe's largest economy in the final quarter of the year.

Retail sales, a notoriously volatile indicator often subject to revision, inched down 0.4 on the month in real terms in October after stagnating the previous month, the Federal Statistics Office said on Monday. That was below the Reuters consensus forecast for a 0.4-per cent rise.

On the year, retail sales climbed by 2.1 per cent, missing the consensus forecast for a 2.9-per cent rise.

From January to October, retail sales increased by 2.8 per cent in real terms compared with the same period last year - the strongest increase since 1994. "People keep spending money because their job situation is good, and the record-influx of refugees also increases demand,"an official at the Statistics Office said.

German consumers are benefitting from record employment, rising wages and nearly stable prices while low interest rates are giving them little incentive to save and cheap energy is freeing up additional cash for spending.

A survey showed last week that morale among German consumers declined less than expected running into December with the willingness to buy even improving, in a sign that Christmas shoppers are prepared to open their wallets.

REUTERS

      

China QFII quota rises to US$79.10b in Nov: FX regulator 

NOV 30, 20153:54 PM

[BEIJING] The outstanding amount of China's dollar-denominated Qualified Foreign Institutional Investor (QFII) programme rose to US$79.10 billion as of Nov 27, from US$78.97 billion at the end of October, the country's foreign exchange regulator said on Monday.

The QFII scheme was created by China to allow foreigners to invest in Chinese capital markets.

REUTERS

Japan's GPIF posts record loss in July-Sept as China worries, yen bite

NOV 30, 20154:10 PM

[TOKYO] Japan's public pension fund, the world's biggest, suffered a record 7.9 trillion yen (S$90.7 billion) loss in the third quarter as financial markets turmoil triggered by China's economic slowdown knocked both domestic and overseas equities.

It was the biggest quarterly investment loss for the US$1.2 trillion Government Pension Investment Fund (GPIF), which doubled its target allocations for equities in October last year under Prime Minister Shinzo Abe's push to promote risk-taking and foster confidence in financial markets.

The fund made a historical shift last year, abandoning its stance to stack up its portfolio predominantly with domestic government bonds.

In the July-September quarter, GPIF made a paper loss of 4.3 trillion yen in domestic shares, 3.6 trillion yen in foreign shares, and 240 billion yen in foreign bonds, the fund said in a statement on Monday.

On its investment in Japanese government bonds, the fund made an unrealised profit of 300 billion yen.

The total loss was larger than the 5.7 trillion yen losses it suffered in the final quarter of 2008, at the height of the global financial crisis.

But in terms of the earning rate, it was the third largest decline on record at 5.6 per cent, less than the 6.1 per cent in the fourth quarter of 2008 and 7.8 per cent in the third quarter of 2001, the fund said.

The GPIF said the domestic stock market was hit by worries about China's economic slowdown, while the yen's rise resulted in investment losses in foreign equities.

The Nikkei share average fell 14.1 per cent in the quarter to Sept. 30 while the broader Topix, which is used as a benchmark by many investors, dropped 13.5 per cent.

As of end-September, the fund had 21.35 per cent in Japanese equities, down from 23.39 per cent three months earlier, and below its target of 25 per cent.

Reuters calculations based on the GPIF's data show that the fund bought about 370 billion yen worth of Japanese equities in the July-September quarter. It also bought 1.66 trillion yen in foreign shares in the period.

Its holding of foreign bonds dropped to 21.64 per cent of the total, down from 22.32 per cent at the end of June, as the yen's gains chipped into their value.

The yen gained 2.3 per cent over the same period while the MSCI's broadest gauge of world shares fell 9.9 per cent.

REUTERS

    
 

South Korea legislature approves free-trade pact with China

NOV 30, 20154:17 PM

[SEOUL] South Korea's parliament on Monday ratified a free-trade agreement with China, authorising the expansion of relations with the country's biggest trading partner.

The pact, signed by the two countries in June and set to take effect as early as this year, will reduce barriers to commerce, but leaves in place curbs on rice and automobiles.

South Korea is one of the few developed countries that runs a surplus with China - to the tune of US$55.2 billion in 2014, according to the country's presidential office - thanks to exports of smartphones, flat screen TVs, and semiconductors.

REUTERS

      

Fitch affirms Singapore at 'AAA'; outlook stable

NOV 30, 20154:48 PM

[HONG KONG] Fitch Ratings has affirmed Singapore's long-term foreign- and local-currency Issuer default ratings (IDR) at 'AAA' with stable outlook. The debt issue on Singapore's senior unsecured local-currency bonds is also affirmed at 'AAA'.

Fitch's affirmation balances Singapore's exceptionally strong external balance sheet, robust fiscal framework, high levels of per capita income, and strong governance indicators against its high vulnerability to external shocks - given that Singapore remains a small, open economy.

Exceptionally strong current account surpluses have led to a large positive net international investment position, which is equivalent to close to 200 per cent of GDP as of end-2015 as per Fitch estimates. Fitch estimates that the current account surplus would gradually decline over the medium term on lower savings, which is related to an ageing population. Nevertheless, Singapore's current account surplus is far above the 'AAA' median, and Fitch estimates that it would be close to 20 per cent of GDP by end-2015, as against the 'AAA' median's 6.3 per cent.

Fitch has revised downward its growth outlook for Singapore in 2015-2016 to an average of 2.1 per cent, as against our previous forecast of 3.2 per cent. The downward revision is based on a less favourable external environment, accompanied by the ongoing economic transformation of the Singapore economy. Nevertheless, Fitch does not view this growth slowdown as leading to a significantly weakened credit profile. The sovereign's external balance sheet remains strong, while fiscal discipline remains underpinned by a constitutional mandate that requires the government to run a balanced fiscal position, on average, during its term.

Singapore's fiscal position is a credit positive in the sovereign's credit profile. Presidential approval is required to use the country's "past reserves" (fiscal reserves accumulated during the terms of previous governments). The general government fiscal surplus (based on Fitch's broader definition of the general government balance) averaged about 15 per cent of GDP between 2010-2014. Furthermore, Singapore has no fiscal financing needs, and general government debt is issued to develop the local bond market. The sovereign does not issue any foreign-currency debt.

The stable outlook reflects Fitch's assessment that downside risks to the 'AAA' rating are not significant. Nonetheless, the following risk factors could result in negative rating action:

-A severe regional or global economic shock sufficient to force the sovereign to draw down past reserves on a scale that impairs the sovereign's balance-sheet strength. By implication, this would have to be more severe than the global shock of 2008-2009.

-Sustained rapid credit growth that eventually increases Singaporean private-sector leverage to a level significantly above rated peers and leads to reduced resilience to macroeconomic volatility.

-A severe banking system crisis could have a major spill-over into the economy because of the large size of the banking sector. By implication, this would have to be more severe than the global shock of 2008-2009
.

India's economy grows by 7.4% in second quarter

NOV 30, 20158:53 PM

[MUMBAI] India's economy grew by 7.4 per cent in the second quarter, official figures showed on Monday, outperforming China and slightly ahead of analysts' expectations.

Growth in the three months to the end of September quickened to 7.4 per cent year-on year from 7.0 per cent in the previous quarter, according to statistics ministry data.

The figures for the second quarter of the financial year were marginally higher than the median forecast of 7.3 per cent in a survey of economists by Bloomberg News.

They also bettered China's 6.9 per cent increase in Gross Domestic Product (GDP) recorded for the same period and reported by Beijing last month.

The figures are a boost for Indian Prime Minister Narendra Modi and his ruling party which suffered a drubbing at a key state election earlier this month.

Modi has made boosting economic growth a priority since sweeping to power in a general election in May 2014 and India has now recorded three straight quarters of growth above seven per cent.

But investors have raised concerns about the pace of promised economic reform needed to create jobs for India's tens of millions of young people.

Investors are hoping Modi's government will be able to reach a consensus with opposition parties and push reforms through the current session of parliament, including one that paves the way for a long-awaited national sales tax.

The positive data makes it likely Reserve Bank of India governor Raghuram Rajan will choose to keep interest rates unchanged when the central bank holds its monetary policy review meeting on Tuesday.

Monday's numbers were the latest growth data to be released since the government introduced a revised formula for calculating GDP that some analysts have criticised.

India's government changed the way it calculates GDP in January, saying the new method was closer to international standards.

The main change is that India now measures its economic growth at market prices to incorporate "gross value addition" in goods and services as well as indirect taxes.

The base year to calculate India's GDP has also been advanced to 2011-12 from 2004-05.

But analysts say the new data does not correlate with some other economic indicators, including last year's industrial production figures and corporate profits.

AFP

    
 

China plans to launch carbon-tracking satellites into space

NOV 30, 20159:40 PM

[BEIJING] China plans to launch satellites to monitor its greenhouse gas emissions as the country, estimated to be the world's top carbon emitter, steps up its efforts to cut such emissions, official news agency Xinhua said on Monday.

News of the plan comes as more than 150 world leaders arrived in Paris for climate change talks and Chinese President Xi Jinping and US President Barack Obama said they would work together towards striking a deal that moves towards a low-carbon global economy.

According to the Xinhua report, the country's first two carbon-monitoring satellites will be ready by next May after four years of development led by Changchun Institute of Optics and Fine Mechanics and Physics, part of China's Academy of Sciences.

No launch date was given and no other details of the plan were announced. The government and research institute were not available to comment.

If successful, it would be the world's third country to send satillites into orbit to monitor greenhouse gases, coming after Japan which was the first country to do so in 2009, followed by the United States last year.

The satellites will be key for expanding research into emissions - currently, China is only able to collect data from the ground, whereas the probes will also monitor oceans, which make up 71 per cent of the world's surface.

While these probes will have worldwide scope it would improve China's emissions data collection, which many experts say is inaccurate.

The country's emissions are estimates based on how much raw energy is consumed, and calculations are derived from proxy data consisting mostly of energy consumption as well as industry, agriculture, land use changes and waste.

REUTERS

    
 

China's Xi demands developed nations pay for climate action 

NOV 30, 201510:12 PM

[PARIS] Chinese President Xi Jinping called Monday for rich nations to honour their commitment to provide US$100 billion a year to developing countries to tackle climate change.

Xi told the UN climate summit in Paris that developed countries should accept "more shared responsibilities" for limiting global warming and helping poor countries adapt to a climate-afflicted world.

"Developed countries should honour their commitment of mobilising US$100 billion each year from 2020 and provide stronger financial support to developing countries afterwards," Xi said, according to an official translation of his remarks.

"It is also important that climate-friendly technologies be transferred to developing countries." Rich nations pledged at a UN summit in Copenhagen in 2009 to muster US$100 billion annually in financial support to poor countries starting in 2020.

The money is meant to help them cut greenhouse gas emissions that drive global warming, as well as to adapt to rising sea levels, droughts and other potentially catastrophic impacts.

However, six years later, poor nations are frustrated that rich countries have yet to fully commit to the fund.

The debate over the money highlights a long-standing feud between rich and poor nations over how to distribute responsibility for tackling climate change.

While China and the United States have pledged to work together to fight global warming, Xi made clear on Monday that poor nations should not have to sacrifice economic growth.

"Addressing climate change should not deny the legitimate needs of developing countries to reduce poverty and improve their people's living standards," Xi said.

"The Paris conference should reject the narrow minded mentality of a zero-sum game and call on all countries - developed countries in particular - to assume more shared responsibilities for win-win outcomes." Rich nations acknowledge a historical responsibility for global warming.

But holding temperature increases below two degrees Celsius - the UN-endorsed goal - will be impossible if emerging giants such as China and India fail to step up their efforts, they argue.

AFP

      

China, US holding high-level cybercrime talks: Xinhua 

NOV 30, 201511:37 PM

[HONG KONG] China's Public Security Minister Guo Shengkun is in the United States to take part in the first high-level dialogue on cyber crime between the two countries, state media reported.

During his visit, which is due to end on Thursday, Guo will meet Secretary of Homeland Security Jeh Johnson, Xinhua state news agency said on Sunday.

Cyber security has long been an irritant in relations between China and the United States, despite robust economic ties worth US$590 billion in two-way trade last year.

REUTERS