Bank of England might move on buy-to-let market: Cunliffe

Jon Cunliffe, deputy governor for financial stability at the Bank of England (BOE), speaks during the bank's financial stability report news conference at the Bank of England in the City of London, U.K., on Tuesday, Dec. 1, 2015. 

PHOTO: BLOOMBERG

DEC 2, 20154:50 PM

[LONDON] The Bank of England might take action after a sharp increase in the number of properties acquired by investors with the intention of renting them out, a top policymaker at the central bank said on Wednesday. "Buy-to-let has grown faster than any other part of the housing market," Jon Cunliffe, a BoE deputy governor, told BBC radio in an interview. "When you find one sector of the property market growing fast ... then I think you have to ask questions about are there risks here, and you have to monitor those risks and if necessary you have to take action to curtail those risks." The BoE took no action on the buy-to-let market at the latest meeting of its Financial Policy Committee, the results of which were announced on Tuesday. The FPC has previously said it was monitoring the market.

Cunliffe also told the BBC that the Bank was keeping an eye on growth in lending by banks to consumers but did not think it poses an immediate risk to the economy. "At the moment, I think it's containable at the level it's growing but it's something you need to watch," he said.

In a separate interview with the Financial Times, Cunliffe reiterated his view that the BoE's next move on interest rates would be an increase. The Bank's chief economist Andy Haldane has said he could not rule out a rate cut because of the risks that a further slowing of the world economy might hurt Britain. "I think we see signs of pay growth coming back in the economy and we're seeing signs of productivity coming back, but ... I'm data-dependent," he told the FT.

REUTERS

Asia: Stocks slip, dollar supported after Yellen's rate hike comments

PHOTO: BLOOMBERG

DEC 3, 201511:09 AM

[TOKYO] Asian stocks slipped and the dollar advanced on Thursday after hawkish comments from Federal Reserve Chair Janet Yellen reinforced the case for an interest rate hike later this month.

Japan's Nikkei lost 0.3 per cent, moving in a tight range as a wait-and-see mood prevailed ahead of the European Central Bank's policy decision later in the day.

Fighting stubbornly low inflation, the ECB is expected to deliver a variety of measures that could include a deposit rate cut and changes to its asset-buying programme. "The ECB's decision will likely set the direction for the Japanese market tomorrow and beyond, but it's also true that the market is seen overbought recently," said Hikaru Sato, a senior technical analyst at Daiwa Securities in Tokyo.

Australian shares fell 0.6 per cent and South Korea's Kospi shed 1 per cent.

Shanghai shares bucked the trend and were last up 0.1 per cent, brushing aside a Caixin/Markit Purchasing Managers'Index showing growth in China's services sector cooling in November.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 per cent taking a lead from Wall Street, which fell overnight on Yellen's comments and falling crude prices that hit energy shares.

Yellen said on Wednesday she was "looking forward" to a US interest rate hike that will be seen as a testament to the economy's recovery from recession.

Yellen's comments come after expectations for a Fed rate hike at its Dec. 15-16 policy meeting were slightly shaken on the back of poor manufacturing data released earlier in the week.

However, faith in the US economy was partially restored after Wednesday's ADP data showed private employers added a larger-than-expected 217,000 jobs in November.

The dollar index advanced to a 12-1/2-year high of 100.51 following Yellen's comments and the upbeat data. It last stood at 100.12.

The euro dipped 0.2 per cent to US$1.0595. The markets were braced for the ECB potentially delivering long-expected monetary easing measures. "There is great potential for euro volatility as the ECB announces its policy decision, followed by the press conference by President (Mario) Draghi starting 45 minutes later," wrote Sean Callow, a senior strategist at Westpac. "Draghi and selected colleagues have clearly signalled that there is sufficient risk of undershooting the ECB's inflation target to warrant further loosening of monetary settings." While the prospects of further ECB easing dogged the euro, expectations of added stimulus have lifted European stocks. The pan-European FTSEurofirst 300 index touched a 3-month high this week.

In commodities, crude oil bounced modestly on bargain hunting following a tumble overnight prompted by surging US stockpiles and a stronger dollar.

US crude was up 0.5 per cent at US$40.13 a barrel after tumbling 4 per cent overnight. Crude was still capped with Opec widely expected not to opt for a production cut at Friday's meeting despite a global supply glut.

Spot gold languished close to US$1,050.25 an ounce, its lowest since February 2010. Higher interest rates would diminish the allure of non-yielding gold and a stronger greenback makes the dollar-denominated metal more expensive for buyers.

Industrial metals also remained under pressure amid global oversupply and shrinking Chinese demand, with spot iron ore prices plumbing 10-year lows this week.

Three-month copper on the London Metal Exchange was down 0.5 per cent at US$4,542 a tonne. Copper edged back towards a 6-year low of US$4,443.50 touched late last month with pleas for Chinese government intervention providing little tonic.

China's major copper producers have asked the government this week to buy the metal, joining a growing chorus in the country's base metal industry that is pleading for state intervention.

REUTERS

    
 

Oil prices bounce back on eve of Opec meeting

Oil prices bounced back in Asia on Thursday but trading was cautious on signs the Opec cartel is divided ahead of a meeting on whether to maintain or slash its high output levels. 

PHOTO: AFP

DEC 3, 201512:21 PM

[SINGAPORE] Oil prices bounced back in Asia on Thursday but trading was cautious on signs the Opec cartel is divided ahead of a meeting on whether to maintain or slash its high output levels.

The US benchmark West Texas Intermediate closed below US$40 a barrel for the first time since late August on Wednesday after data showed an increase in US commercial stockpiles and production, adding to anxiety about a long-running supply glut.

Focus is now on the Organisation of the Petroleum Exporting Countries meeting in Vienna Friday. Analysts say the 12 members appear to be divided, with Saudi Arabia and its Gulf partners at odds with others pushing for a cut in output in a bid to perk up prices.

WTI for delivery in January was up 20 cents at US$40.14 and Brent crude was trading 23 cents higher at US$42.72 at around 0300 GMT.

WTI fell 4.6 per cent Wednesday while Brent sank 4.4 per cent.

Bloomberg News said Venezuela and Ecuador - which have been badly hit by the plunge in prices - would seek production cuts during the meeting.

IHS Energy said Saudi, Kuwait, Qatar and the United Arab Emirates will have great influence on the tone of the meeting as they account for more than half of OPEC's 31.5 million barrels per day output.

"Without the Gulf group, there can be no effective Opec agreement," IHS Energy said in a report ahead of Friday's meeting.

Opec has been pumping above its collective target of 30 million barrels per day as its influential members led by Saudi Arabia try to maintain their share of a highly competitive market.

Prices have plunged by more than half from peaks of above US$100 a barrel in mid-2014 largely because of the oversupply.

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US economy shows 'modest' growth: Fed report

The Federal Reserve's latest snapshot on the US economy shows "modest" expansion and a tightening jobs market, laying a path for the first increase in interest rates since 2006. 

PHOTO: BLOOMBERG

DEC 3, 20157:09 AM

[WASHINGTON] The Federal Reserve's latest snapshot on the US economy shows "modest" expansion and a tightening jobs market, laying a path for the first increase in interest rates since 2006.

The Fed released its Beige Book report on Wednesday as Chair Janet Yellen, in a speech, signaled the rate hike could come in two weeks at the Federal Open Market Committee's policy meeting on December 15 and 16.

The report, a collection of anecdotal evidence from the central bank's 12 districts, provides some of the context for the FOMC policymakers in deciding monetary policy.

"Economic activity increased at a modest pace in most regions of the country since the previous Beige Book report" in October, said the report, based on information gathered before November 20.

Consumer spending, the driver of two thirds of US economic activity, increased in almost all districts, with automobile sales remaining "robust".

"Labour markets continued to tighten modestly," the report said, reiterating limited wage pressures except for skilled occupations and for workers that were in short supply.

The strength of the dollar was blamed in part for weakness in the manufacturing sector. US exports have become relatively more expensive in a global market suffering from an economic slowdown.

"The strong dollar, low commodity prices, and weak global demand were named by several districts as factors for constrained demand," the report said.

Tourism was mixed, showing growth in the Richmond, Atlanta, Minneapolis and Dallas districts, while the New York district saw flat activity at or below the level of a year ago amid "sluggish" consumer spending.

Housing markets continued to be a bright spot in the economy, improving at "a moderate pace" with a modest rise in home prices.

Overall prices were stable, although some prices were lower due to further declines in commodity and energy prices as well as the strong dollar, the report said.

"On balance, the December Beige Book provides little new information on economic activity and is unlikely to be impactful for policy," said Jesse Hurwitz at Barclays Research.

Ms Yellen echoed the report with comments saying she expects the US economy to continue to grow at a similar moderate pace over the coming few years.

She said the economy has expanded at an annual rate of about 2.25 per cent during the first three quarters of this year and should continue at that level.

"Many economic forecasters expect growth roughly along those same lines in the fourth quarter," she told members of the Economic Club of Washington.

"I anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our two percent objective," she added.

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EU, Vietnam sign free trade deal

The EU and Vietnam on Wednesday signed a free trade deal that removes nearly all tariffs between Europe and one of the world's last communist states. 

PHOTO: REUTERS

DEC 3, 20157:20 AM

[BRUSSELS] The EU and Vietnam on Wednesday signed a free trade deal that removes nearly all tariffs between Europe and one of the world's last communist states.

"Today's signature is not the end of our relations but the beginning of far more ambitious ties. The EU and Vietnam can do great things together," said EU Commission head Jean-Claude Juncker after talks with Vietnamese Prime Minister Prime Minister Nguyen Tan Dung.

The agreement followed two and a half years of intense negotiations between the 28-nation European Union and Vietnam, whose two-way trade has grown three-fold to 28 billion euros (S$42 billion) in the last 10 years.

The EU and Vietnam in August reached an agreement in principle and only had a few legal hurdles to overcome to finalise the deal.

In a statement, EU Trade Commissioner Cecilia Malmstroem called the deal "a new model for trade policy with developing countries".

The agreement, which follows a similar one with Singapore last year, was a milestone in EU ties with the 10-member Association of Southeast Asian Nations (Asean), which includes Vietnam and Singapore, she said.

"Our ultimate goal is to have a region-to-region agreement," the former Swedish politician said in August.

The EU is holding separate talks with two other Asean members, Malaysia and Thailand, to secure similar free trade agreements.

The agreement is the first that the EU has concluded with a developing country and will remove more than 99 per cent of tariffs on goods traded between the two economies over a period of up to seven years.

Vietnam exports mobile phones and other electronics, footware and textiles, and agricultural products including coffee, rice and seafood to the EU.

EU exports to Vietnam, meanwhile, are dominated by high-tech products including electrical machinery and equipment, aircraft, vehicles and pharmaceuticals.

The EU and Japan are also negotiating a free trade agreement. Brussels and South Korea already have a free trade agreement.

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Trump, Clinton extend leads in US 2016 race: poll

Donald Trump has extended his lead in the Republican presidential nomination race amid a fresh bout of controversy over his remarks about Muslims, while Hillary Clinton has consolidated her lead among Democrats, a poll showed Wednesday. 

PHOTO: REUTERS

DEC 3, 20157:24 AM

[WASHINGTON] Donald Trump has extended his lead in the Republican presidential nomination race amid a fresh bout of controversy over his remarks about Muslims, while Hillary Clinton has consolidated her lead among Democrats, a poll showed Wednesday.

Less than two months before the first state-wide votes to determine the presidential nominees, Mr Trump was his party's undisputed leader, backed by 27 per cent of registered Republican voters, while his closest challenger for months, retired neurosurgeon Ben Carson, has faded to third place, according to the Quinnipiac University survey.

Freshman Senator Marco Rubio of Florida has surged into second with 17 per cent, while Mr Carson is tied for third with Senator Ted Cruz of Texas at 16 per cent. Former Florida governor Jeb Bush languishes in fifth place with five per cent, while no other candidate is above three per cent.

Quinnipiac conducted its poll last week. Its Republican figures have a margin of error of 3.8 percentage points; the error margin for the Democratic polling is 4.1 percentage points.

Mr Trump has faced fierce criticism for several remarks he has made in recent weeks, including saying "thousands" of Muslims in New Jersey cheered when the World Trade Centre collapsed in the 9/11 attacks of 2001, a claim that has been widely debunked.

"It doesn't seem to matter what he says or who he offends, whether the facts are contested or the 'political correctness' is challenged, Donald Trump seems to be wearing Kevlar," Quinnipiac assistant poll director Tim Malloy said in a news release detailing the results.

Mr Trump, who was at 24 per cent one month ago, has topped nearly all Republican polls since July.

Among registered Democratic voters, Mrs Clinton has risen to 60 per cent support, double the backing of her nearest rival, Senator Bernie Sanders of Vermont, at 30 per cent, according to Quinnipiac.

Former Maryland governor Martin O'Malley registers just two per cent in the much smaller Democratic field.

Mrs Clinton, bolstered by Vice President Joe Biden's decision not to seek the nomination, has appeared more confident on the campaign trail.

Mr Sanders, a self-described democratic socialist, has sought to seduce voters on the left, but his campaign, which soared in the summer, appears to have come down to Earth and is plodding along with little gain against Mrs Clinton.

The first state-wide vote in the primary process to determine the parties' nominees occurs in Iowa on February 1, followed by New Hampshire on February 9.

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White House, China discuss cyber commitments in meeting

Two top advisers to US President Barack Obama met on Wednesday with Chinese State Councilor Guo Shengkun to discuss cyber issues and the threat posed by Islamic State militants, the White House said.

PHOTO: EPA

DEC 3, 20157:36 AM

[WASHINGTON] Two top advisers to US President Barack Obama met on Wednesday with Chinese State Councilor Guo Shengkun to discuss cyber issues and the threat posed by Islamic State militants, the White House said.

Susan Rice, Obama's national security adviser, and Lisa Monaco, his counterterrorism adviser, met Mr Guo "to underscore the importance of full adherence" to commitments made during Chinese President Xi Jinping's visit to the White House in September, the White House said in a statement.

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Shooting rampage in California leaves 14 dead, 17 wounded

Gunmen opened fire on a holiday party on Wednesday at a social services agency in San Bernardino, California, killing 14 people and wounding 17 others before fleeing, authorities said. 

PHOTO: REUTERS

DEC 3, 20158:10 AM

[SAN BERNARDINO] Gunmen opened fire on a holiday party on Wednesday at a social services agency in San Bernardino, California, killing 14 people and wounding 17 others before fleeing, authorities said.

As an intense manhunt for up to three suspects ensued, San Bernardino police reported one "suspect down" in an exchange of gunfire with officers but did not immediately confirm whether the individual was connected to the shooting.

The shooting rampage at the Inland Regional Center about 60 miles (100 km) east of Los Angeles marked the deadliest US gun violence since the massacre at Sandy Hook Elementary School in Newtown, Connecticut, in December 2012, in which 27 people, including the gunman, were killed.

San Bernardino Police Chief Jarrod Burguan said in a televised news briefing three hours after Wednesday's shooting that the suspects were believed to have made their getaway in a dark-colored sport utility vehicle.

A vehicle matching that description turned up at the shootout with police several hours later, city police spokeswoman Sergeant Vicki Cervantes. She said the number of wounded rose to 17.

With suspects at large, authorities ordered a security "lockdown" of all local schools, as well as city and county buildings, and area hospitals were placed on alert, Burguan said.

Burguan said he knew of no possible motive behind the attack, which unfolded at about 11 a.m. "We have no information at this point that this is terrorist-related, in the traditional sense that people may be thinking," he added. "Obviously, at minimum, we have a domestic-type terrorist-type situation that occurred here." He said the suspects were armed with rifles.

The shooting unfolded on the campus of the Inland Regional Center, one of 21 facilities set up by the state and run under contract by non-profit organizations to serve people with developmental disabilities, said Nancy Lungren, spokeswoman for the California Department of Developmental Services.

Lavinia Johnson, executive director of the facility, told CNN the suspects opened fire inside a conference building in the complex where a holiday party was being held for county health department personnel.

The conference building sits adjacent to the two larger three-story buildings that house most of the agency's offices at the complex, Johnson said. Asked whether that meant that the Inland Regional Center staff and clients were safe, she said she understood they were being evacuated.

STRING OF SHOOTINGS

So far in 2015, there have been more than 350 shootings in which four or more people died, according to the crowd-sourced website shootingtracker.com, which keeps a running tally of mass shootings.

The shooting in California comes less than a week after a gunman killed three people and wounded nine in a shooting rampage at a Planned Parenthood clinic in Colorado Springs, Colorado. In October, a gunman killed nine people at a college in Oregon, and in June, a white gunman killed nine black churchgoers in South Carolina.

Gun control advocates, including Democratic President Barack Obama, say easy access to firearms is a major factor in the shooting epidemic, while the National Rifle Association and other pro-gun advocates say the Second Amendment of the US Constitution guarantees Americans the right to bear arms.

REUTERS

    
 

Britain to join Syria air strikes against ISIS after vote

Britain will join the US-led bombing campaign against Islamic State (IS) jihadists in Syria after MPs voted Wednesday in favour of air strikes.

PHOTO: AFP

DEC 3, 20158:12 AM

[LONDON] Britain will join the US-led bombing campaign against Islamic State (IS) jihadists in Syria after MPs voted Wednesday in favour of air strikes.

Prime Minister David Cameron secured the strong mandate he had sought with 397 of MPs voting in favour and 223 against, a majority of 174, after over 10 hours of passionate and often angry debate.

"I believe the house has taken the right decision to keep the UK safe - military action in Syria as one part of a broader strategy," Cameron wrote on Twitter.

The result in the House of Commons means that British planes could start bombing over Syria within hours. Foreign Secretary Philip Hammond said the first strikes could come as early as "tomorrow night".

US President Barack Obama welcomed the decision, calling Britain one of his country's "most valued partners" in fighting IS.

Earlier, Cameron kicked off the debate by urging MPs to "answer the call" from allies like France and the US, adding that bombing the "medieval monsters" of IS was "the right thing to do".

"The question is this: do we work with our allies to degrade and destroy this threat... or do we sit back and wait for them to attack us?" he said.

But many of the MPs crammed on to the Commons' benches and walkways spoke against air strikes while some 2,000 anti-war protesters held a second consecutive night of protest outside parliament.

"We need to stop bombing innocent countries," said one demonstrator, Theresa Gormley. "Thousands of innocent people will be killed by David Cameron and his friends." Labour leader Jeremy Corbyn, who opposes military action, said Cameron's proposals "simply do not stack up".

"The spectre of Iraq, Afghanistan and Libya looms over this debate," Corbyn added, referring to unpopular British interventions in foreign conflicts over the last 15 years.

Asked when British air strikes on Syria could begin, Hammond told Channel 4 television: "Probably not tonight, but it could be tomorrow night".

Cameron has wanted to extend Britain's role in the fight against IS for months but made a fresh push which led to the vote after last month's Paris attacks which killed 130 people.

Britain already has eight Tornado fighter jets plus drones involved in the US-led coalition striking IS targets in Iraq.

However, it currently only conducts surveillance and intelligence missions over Syria.

The government is now set to deploy more jets and argues that the Royal Air Force's Brimstone missiles will be particularly valuable for precision strikes to avoid civilian casualties.

Military experts question how much difference Britain would make to the campaign, saying it may be more about wanting to stand shoulder-to-shoulder with allies like France and the United States.

Cameron again stressed that British ground forces will not be deployed to Syria as part of the action Wednesday, saying that would be a "mistake".

Labour was deeply divided on air strikes, with 67 of its 231 MPs reportedly voting in favour of air strikes, despite Corbyn opposing the move.

In what will be an embarrassment to the Labour leader, that number included 11, or more than a third, of his front bench team.

The party leader, who took office in September, let his party have a free vote on the issue because dozens of MPs, including his foreign and defence spokespeople, supported it.

In a highly unusual move, foreign affairs spokesman Hilary Benn closed the debate for Labour by speaking in favour of air strikes.

Benn drew rare and sustained applause from across the Commons, hours after Corbyn opened the debate for Labour by urging MPs to vote against strikes.

"We are here faced by fascists," Benn said, reminding his party that socialists had fought against Spanish dictator Francisco Franco in the 1930s.

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South Korea converts monks and priests to tax payers

After a debate stretching back more than 40 years, South Korea's parliament has approved a bill that will finally compel the country's influential clergy to pay taxes. 

PHOTO: AFP

DEC 3, 20158:46 AM

[SEOUL] After a debate stretching back more than 40 years, South Korea's parliament has approved a bill that will finally compel the country's influential clergy to pay taxes.

The bill was passed shortly before midnight Wednesday by 195 votes to 20, with 50 legislators abstaining.

It has been a long road to legislation, with previous efforts to bring monks, priests and pastors into the national tax fold being repeatedly foiled by vehement clerical opposition and political timidity.

In a reflection of the issue's sensitivity, the new bill has a lengthy built-in time delay, only coming into effect from the start of 2018.

Kang Seog-Hoon, a legislator with the ruling Saenuri Party, said the grace period would be used to communicate with religious groups "so that the policy can settle down without turbulence".

South Korea has an estimated 360,000 priests whose earnings will be re-classified as "religious income" rather than the current label of "honorarium".

A sliding bracket means those earning 40 million won (34,500 dollars) or less a year will only be taxed on 20 per cent of their income.

At the upper end, those earning more than 150 million won will have to pay tax on 80 per cent of their income.

Public opinion polls have long favoured extending tax responsibilities to religious groups, some of whom are highly secretive about their financial arrangements.

AFP

    
 

China to launch new pilot zones to open up financial markets: media

China will set up pilot zones to quicken the pace of financial reform, the official China Securities Journal reported, the latest effort by Beijing to support cash-starved enterprises amid a slowing economy. 

PHOTO: AFP

DEC 3, 20159:20 AM

[SHANGHAI] China will set up pilot zones to quicken the pace of financial reform, the official China Securities Journal reported, the latest effort by Beijing to support cash-starved enterprises amid a slowing economy.

The cabinet said it would set up a pilot zone in Taizhou city in the central province of Zhejiang to develop innovative and online financial institutions to help small- and medium-sized enterprises to tap onshore and offshore funds, the newspaper reported.

A second pilot zone in the northeastern province of Jilin will focus on easing access to finance for the agricultural sector. Plans include developing insurance products for agribusiness and expanding the range of collateral banks accept for lending to them, the report added.

Plans also include a new pilot zone in each of the existing Guangdong, Tianjin and Fujian free trade zones to develop cross-strait financial co-operation. These zones will focus on the cross-border use of the yuan, cross-border investment and financing, the report said.

The International Monetary Fund admitted China's yuan into its benchmark currency basket on Monday, in a victory for Beijing's campaign for recognition as a global economic power.

REUTERS