HKMA official referred son for JPMorgan internship in 2006   

DEC 2, 20154:35 PM

[HONG KONG] Hong Kong Monetary Authority (HKMA) official Peter Pang said he referred his son for a summer internship in 2006 at JPMorgan Chase & Co, the bank under investigation for hiring relatives of Chinese business leaders.

Mr Pang, a deputy chief executive at the HKMA, didn't do anything to influence the hiring decision beyond sending the firm his son's curriculum vitae, he said in an e-mailed statement on Wednesday, a comment that was echoed later by the central bank's chief executive officer Norman Chan at a briefing in Shanghai the same day. Marie Cheung, a spokeswoman at JPMorgan in Hong Kong, declined to comment.

"My duties in the HKMA did not involve supervisory functions over or direct business dealings with JPMorgan," Mr Pang said. A profile on the central bank's website showed that he's responsible for "monetary management, financial infrastructure and research". The HKMA said it's collaborating with the "relevant authorities" in looking into the hiring practices of JPMorgan. The US Justice Department is investigating the so-called sons and daughters programme allegedly run by the firm.

Mr Pang said he sent across his son's CV after learning from a friend at the bank that internships were available. His son, who was studying economics at the University of Chicago, got a summer position lasting about two months after going through a selection process, he said.

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The Wall Street Journal reported on Wednesday that Mr Pang was listed in an internal JPMorgan document as having referred his son for an internship.  "Mr Pang only sent the CV. Other than that, he didn't do anything to affect the hiring process and decision," HKMA CEO Chan said at a media briefing in Shanghai. "Second, Mr Pang's duties at the HKMA do not involve supervision of the bank and direct engagement of business. From this perspective, we don't see a big problem with that. We will consider internally revising rules and details on what can be done and what needs to be avoided," Mr Chan said.

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Oil prices fall on rising US stockpiles, weak China outlook

DEC 2, 20154:14 PM

[SINGAPORE] Oil prices fell on Wednesday as an unexpected rise in inventories pulled down US crude contracts, while Brent was weighed down by China's bleak economic outlook and a widespread expectation that Opec will maintain high production.

US crude was trading down 34 cents at US$41.51 per barrel at 0748 GMT. Internationally traded Brent was 24 cents lower at US$44.20 a barrel. "The market is a little bit skittish ahead of the Opec meeting, it is going to be very range-bound between now and Friday," said Ben Le Brun, market analyst at Sydney's OptionsXpress.

Oil production exceeds demand by 0.5-2 million barrels per day. The glut has seen prices tumble over 60 per cent since June 2014, but Opec is not expected to budge from its stance of keeping output high to defend market share against producers such as Russia and North America. "Similar to consensus, we see no material change in policy from the Dec 4 meeting," Morgan Stanley said. "Saudi Arabia is... unlikely to support a cut. The strategy appears to be working and cutting at this point may be futile or send a negative signal politically. Also, their financial position does not suggest any urgency," it added.

Beyond Opec's upcoming meeting, oil traders remained focused on growing stockpiles.

Data from the American Petroleum Institute (API) showed a 1.6 million barrels rise in US crude inventories last week to 489.9 million.

The US government's Energy Information Administration's inventory report will be published later on Wednesday.

But oil markets are getting some support from Chinese demand as the world's biggest energy consumer takes advantage of low prices to build up strategic reserves.

On the demand side, analysts also said that China's economic outlook remained weak. "China's manufacturing sector is stuck in contraction," said Frederic Neumann of HSBC in Hong Kong, and he added that "in the United States, momentum is fizzling as well." Low oil prices in combination with high debt levels are putting heavy pressure on corporate energy earnings. "The global oil and gas sector is heavily indebted, with upstream companies holding around US$1.1 trillion in US-dollar-denominated corporate bonds and loans," BMI Research said. "While the current debt load does not pose a systemic threat to the industry, a pullback in low-cost financing will be a necessary precursor to the broader rebalancing of the physical oil market," it added.

REUTERS

    
 

Opec hawks push for output cuts; Russia pumps record volumes 

DEC 2, 20156:22 PM

[VIENNA] Saudi Arabia has come under increased pressure from fellow Opec members to cut output to prop up prices as the group meets this week amid one of the most severe oil gluts in its history.

Opec is widely expected to stick to its policies - enforced by Saudi Arabia's oil minister Ali al-Naimi a year ago - of defending market share by pumping record volumes to drive rival, higher-cost producers out of the market.

But while the Saudis can claim a partial victory over the US shale oil boom, production from top non-Opec rival Russia has kept surprising on the upside and its own members Iraq and Iran are set to add new barrels. World oil stockpiles are at a record, according to the International Energy Agency.

Venezuelan President Nicolas Maduro on Wednesday said his country, Opec's traditional price hawk, would push for a 5 per cent output cut to shore up prices when Opec meets on Friday. Opec is currently producing some 1.7 million bpd above ceiling "Our (oil) minister Eulogio del Pino will put forth a very clear proposal to respect production ceilings," Maduro said. "The hour has come to put the oil market in order." Iran has also asked Opec members to respect the production ceiling of 30 million barrels per day. It wants Opec to be prepared to accommodate new volumes as soon as Western sanctions on the country are lifted next year.

Oil prices have more than halved to US$45 per barrel over the past 18 months due to a US shale oil boom and high Opec production levels.

The decline was steep enough to deal a severe blow to the US oil industry - where production costs are some of the highest in the world.

Oil services giant Schlumberger said on Tuesday it would cut more jobs, adding to 20,000 already this year, citing low oil prices and a growing oversupply. "It has become clear that any recovery in activity has been pushed out in time," said Schlumberger's president of operations Patrick Schorn.

But outside the United States, the signs of a slowdown in supply are thin. Fresh data on Wednesday showed Opec's biggest rival Russia held its output steady in November at a post-Soviet high.

Russian output has repeatedly surprised Opec on the upside over the past year. A year ago, Saudi's Naimi said output from ageing Siberian fields was set to decline: "Others will be harmed greatly before we feel any pain," he said.

Moscow has allowed its currency to weaken over the past year to adjust to lower prices and oil firms have ramped up drilling.

Last week, US bank Merrill Lynch said Saudi Arabia may have to devalue its currency, pegged to the US dollar, or ultimately cut production to protect its budget revenues.

Several non-Saudi Opec delegates told Reuters they hoped Naimi would listen to other members, whose finances are much more limited than those of Riyadh and need an urgent boost from higher oil prices. "I hope this time it will be different, but I doubt it will be," one Opec delegate said. Another delegate said he still saw no indication an agreement on cuts could be reached on Friday.

REUTERS

China says to cut power sector emissions by 60% by 2020  

DEC 2, 20159:08 PM

[BEIJING] China will reduce emissions from major pollutants in the power sector by 60 per cent by 2020, the cabinet announced on Wednesday, after world leaders met in Paris to address climate change.

China will also reduce annual carbon dioxide emissions from coal-fired power generation by 180 million tonnes by 2020, the official People's Daily website said. It did not give comparison figures or elaborate how it would achieve the result.

China's capital Beijing suffered choking pollution this week, triggering an "orange" alert, the second-highest level, closing highways, halting or suspending construction and prompting a warning to residents to stay indoors.

The smog was caused by "unfavourable" weather, the Ministry of Environmental Protection said. Emissions in northern China soar over winter as urban heating systems are switched on and low wind speeds meant that polluted air does not get dispersed.

The hazardous air, which cleared on Wednesday, underscores the challenge facing the government as it battles pollution caused by the coal-burning power industry and raises questions about its ability to clean up its economy.

Reducing coal use and promoting cleaner forms of energy are set to play a crucial role in China's pledges to bring its climate warming greenhouse gas emissions to a peak by around 2030.

China's delegate at the Paris talks, Su Wei, "noted with concern" what he called a lack of commitment by the rich to make deep cuts in greenhouse gas emissions and help developing nations with new finance to tackle global warming.

REUTERS

     

Singapore shares close higher on hopes for more China, ECB easing

By

R. Sivanithysivan@sph.com.sg@RSivanithyBT

PHOTO: SPH

DEC 2, 20155:36 PM

AFTER Tuesday's play influenced by the inclusion of the Chinese currency in the International Monetary Fund's (IMF's) basket of reserve currencies, the market's attention on Wednesday turned to Thursday's European Central Bank policy meeting at which more monetary easing is expected and to China, where hopes of more easing helped push stocks higher.

The Straits Times Index managed a second consecutive rise of 13.38 points to 2,883.64. Volume, which spiked up on Monday to S$1.7 billion most probably because of month-ending window-dressing, amounted to 945.3 million units worth S$1.06 billion, much more in line with recent averages. Excluding warrants, there were 204 rises versus 180 falls.

In the offshore and marine sector, shares of SembCorp Marine (SMM) plunged S$0.09 or 4.4 per cent to S$1.97 on volume of 6.1 million after the company on Tuesday issued a profit warning.

OCBC Investment Research said it expects downward earnings revisions from all brokers and for its part it has cut FY15/16 forecast earnings by 37 and 11 per cent, respectively. "With increasing earnings uncertainty, we switch our valuation to 1.15x FY16F P/B (price/book) close to where the stock was trading at previously when its ROE (return on equity) was at depressed levels," said the broker. "This leads to a drop in our fair value estimate from S$2.00 to S$1.79. Maintain SELL."

    
 

US: Stocks open flat ahead of Yellen's speech    

PHOTO: REUTERS

DEC 2, 201510:41 PM

[BENGALURU] US stocks opened little changed on Wednesday as investors await Federal Reserve Chair Janet Yellen's speech.

The Dow Jones industrial average fell 9.88 points, or 0.06 per cent, to 17,878.47, the S&P 500 lost 1.13 points, or 0.05 per cent, to 2,101.5 and the Nasdaq composite added 2.13 points, or 0.04 per cent, to 5,158.44.

REUTERS

      

Fitch warns emerging markets of Brazil-like mess on private debt

DEC 2, 201511:15 PM

[LONDON] As if political turmoil, commodity-price meltdown and growth hiccups aren't enough, emerging markets face a threat to their creditworthiness from an entirely different area, - the burgeoning debt of households and companies.

Private-sector borrowing as a proportion of gross domestic product will reach 77 per cent by the end of this year in seven large developing nations, Fitch Ratings said in a report Wednesday. Such liabilities have exceeded government debt levels, exposing their economies and financial systems to "downside risks," analysts Ed Parker and James McCormack said.

The countries - Brazil, Russia, India, Indonesia, South Africa, Turkey and Mexico - are seeing an increase in their private-debt burden in 2015 because of currency depreciation, according to the report. That could weigh on their governments' credit rating through weaker GDP growth, worsening budget deficits, pressure on foreign-currency reserves or further exchange-rate fluctuations, Fitch said.

"Private-sector debt has often migrated to sovereign balance sheets in past financial crises," the analysts wrote. "A stress situation could feed through to pressure on sovereign creditworthiness." Among the countries studied by Fitch, Brazil had the highest proportion of private borrowings relative to GDP, at 93 per cent, and Mexico had the lowest, at 47 per cent. The increase between 2005 and 2014 was also the greatest in Brazil. The challenges facing the South American country will eventually confront others, the report said.

Of the seven countries studied, all except Mexico have either BBB- or BBB with a negative outlook and are therefore close to the junk-rating threshold, according to Fitch. Domestic banks in these nations were the primary source of lending, it said.

"They would face risks of increased non-performing loans, weaker profitability and potentially the need for recapitalization in the event of a systemic crisis affecting corporates or households." China was excluded from the group because its data would skew overall figures for emerging markets, it said.

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US private sector adds 217,000 jobs in November: ADP

DEC 2, 201510:02 PM

[NEW YORK] US private employers added 217,000 jobs in November, above expectations and the most since June, signalling job growth is likely strong enough to support the first Federal Reserve interest rate hike in nearly a decade when policymakers meet later this month, a report by a payrolls processor showed on Wednesday.

Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 190,000 jobs.

Private payroll gains in October were revised up to 196,000 from an originally reported 182,000 increase.

The report is jointly developed with Moody's Analytics. The ADP figures come ahead of the US Labour Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.

Economists polled by Reuters are projecting the Labour Department's report to show US employers hired 200,000 workers in November. The unemployment rate is forecast to hold at 5.0 per cent.

REUTERS