Funds in Najib's accounts were donations, says Malaysia govt

Funds of more than US$600 million that turned up in Malaysian Prime Minister Najib Razak's private bank accounts were donations and not from a troubled state investment company, the government said Thursday in an explanation to parliament. 

PHOTO: AFP

DEC 3, 20154:14 PM

[KUALA LUMPUR] Funds of more than US$600 million that turned up in Malaysian Prime Minister Najib Razak's private bank accounts were donations and not from a troubled state investment company, the government said Thursday in an explanation to parliament.

The much-awaited statement to lawmakers largely repeated prior remarks from ministers about the scandal, which has dogged the ruling coalition for more than four months and led to periodic drops in stocks and the ringgit.

Investigations are ongoing and it would breach the law to comment further, Deputy Prime Minister Zahid Hamidi said in the address made on Najib's behalf. Lawmakers including some from Najib's own party have sought an explanation for the funds that appeared in the premier's accounts before general elections in 2013. The speaker of the house said after Zahid's statement that no questions were allowed.

Najib is facing his biggest crisis since coming to power in 2009, hit by the funding imbroglio and alleged financial irregularities at debt-ridden 1Malaysia Development Bhd. whose advisory board he chairs. The scandals have sparked political tensions within the ruling United Malays National Organisation and led thousands of anti-government protesters to rally in the capital in August.

'Not Satisfied'

"It is not the content of the information" alone that's frustrating Malaysians, said Fui K. Soong, a director at the Centre for Strategic Engagement in Kuala Lumpur. "The fact is that people are not satisfied with the overall governance of the country." Najib, 62, has said the funds were political donations from the Middle East rather than public money, an initial conclusion also reached by the anti-corruption commission.  The money was to meet the needs of the party and the community and not a new practice, Najib has been cited as saying. He has denied taking money for personal gain.

"In a democracy, the practice of receiving donations is allowed for political parties," Zahid said. "It has never been stated that political donations must be declared."

'For UMNO'

"The prime minister says it is for UMNO," former premier Mahathir Mohamad, who has been on a public campaign to oust Najib, wrote on his blog Thursday. "According to the Societies Act, UMNO must report all financial transactions. There is no evidence that it has done so." The anti-graft agency has identified the individual who donated the money, Zahid said, without elaborating.

"The government is guided and advised by the Attorney- General," Azalina Othman, a minister in the Prime Minister's Office, told reporters Thursday. "This is an ongoing investigation, investigated by the relevant agencies. A person is innocent until proven guilty."

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Singapore industry grouping pledges commitment to green buildings at Paris conference

By

Cai Haoxianghaoxiang@sph.com.sg@HaoxiangCaiBT

DEC 3, 201510:03 PM

INDUSTRY association Singapore Green Building Council (SGBC), which promotes green building design, practices and technologies, has pledged its commitment in line with Singapore's goal to reduce emissions intensity by 36 per cent from 2005 levels by 2030.

The pledge was made at the COP21 climate change conference in Paris.

Among other things, SGBC runs labelling schemes assessing building products for their energy and water efficiency.

SGBC's founding members include some of the largest building and construction players in Singapore, like real estate giants CapitaLand, City Developments and Keppel Land, government agency Building and Construction Authority, and public housing authority Housing and Development Board.

"All 74 national green building councils support the high level commitment from the World Green Building Council to achieve 'net zero carbon' for new buildings and energy efficient refurbishment of the existing building stock by 2050," SGBC said in a press release.

"A total of 25 green building councils, including Singapore, also unveiled national commitments to register, renovate or certify over 1.25 billion square metres of green building space - almost twice the size of Singapore - and train over 127,000 qualified green building professionals over the next five years."

    
 

France's atrocious unemployment numbers show just how bad the country's recovery has been

MIKE BIRD IN 12 HOURS     

The French government just released some pretty painful economic data.

The country’s latest unemployment statistics show the worst joblessness situation for nearly 20 years. The quarterly rate hit 10.6% according to INSEE, France’s statistical agency. Unlike most of the eurozone, where unemployment is in slow decline, France’s has been picking up.

Eurostat has slightly different figures, which put the French unemployment rate at 10.8% in October.

That’s an important level — because it means French unemployment is now higher than the eurozone as a whole for the first time in very nearly 8 years.

Here’s how it looks:

Mike Bird, Business Insider, Eurostat

Back in mid-2013, at around the time the eurozone’s recession ended, unemployment in the bloc as a whole was at 12.1%, 1.7 percentage points higher than France’s 10.4%.

But that was the recent peak for eurozone unemployment. Since then, it’s slowly declined, dropping to 11.9% at the beginning of 2014, 11.2% at the beginning of this year, and 10.74% now.

French unemployment has been above the eurozone level for two months now, and is actually higher than it was when the recession ended.

It’s a pretty brutal indictment of France’s economic climate. Though the country had a less severe recession than many others following the financial crisis, and didn’t slump dramatically during the 2010-2012 euro crisis, it’s been surpassed by the UK and Germany in terms of post-crash GDP, despite both having more initial severe downturns:

Department for Business, Innovation and Skills

Two and a half years after the euro crisis ended and a year and a half after the region exited recession, Europe’s second biggest economy is still struggling for a meaningful recovery.

The list of potential Yahoo buyers is already being drawn up

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AP Photo/Lionel CironneauYahoo CEO Marissa Mayer.

Yahoo  $35.37

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The speculation about who might purchase Yahoo's struggling internet business has already begun, following a Wall Street Journal report on Tuesday that the company's board would consider a sale, among other strategic options, during meetings this week. 

The obvious candidates to purchase Yahoo's internet business include telecommunications and media companies as well as private equity firms.

Verizon Wireless, which acquired AOL for $4.4 billion in June, and IAC Interactive, the online-services holding company, would both "likely explore a purchase,"The Wall Street Journal said in a follow-up report on Wednesday, citing anonymous sources.

News Corp., which owns The Journal, and Time Inc. would also consider acquiring pieces of Yahoo, should they become available, The Journal noted.

While speculating, we'd add Comcast, which recently invested in Vox and Buzzfeed, and Disney, which has explored investments in Buzzfeed and Vice, according to reports.

This is all highly speculative at this point. None of these companies appear to be in talks with Yahoo about a potential deal. Yahoo's internet business is not even officially on the auction block yet.

How much?

The stock market currently values Yahoo's core internet business at less than zero, with all of the value assigned to its Asian assets, such as its 15% stake in Chinese ecommerce giant Alibaba Group.

But several analysts have recently floated their own estimates for what core Yahoo is worth.

• Pivotal Research analyst Brian Wieser values core Yahoo at $1.9 billion, not including the $5.8 billion in cash on its balance sheet.
• Cowen's John Blackledge pegs the value of Yahoo's search and display advertising business at $3.84 billion.
• And SunTrust analyst Robert Peck reckons a sale of core Yahoo could net $6 billion to $8 billion in net proceeds.

A consensus on a potential sales price will likely firm up and become more clear if Yahoo moves forward, and as potential bidders decide which parts of core Yahoo are most useful to their particular needs.

SEE ALSO: Yahoo's board will consider selling its core internet business

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S&P just cut its ratings for the 8 major 'too big to fail' banks

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Paris — The US ratings agency Standard and Poor's cut its ratings for eight major American banks on Thursday, saying they cannot count on government help again in case of trouble.

"We now consider the likelihood that the US government would provide extraordinary support to its banking system to be 'uncertain' and are removing the uplift based on government support from our ratings," the agency said in a statement.

The eight constitute the group of so-called systemically important banks, a technical term for "too big to fail."

The long-term ratings for Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley were cut by one level to BBB+.

Bank of New York Mellon, State Street, and Wells Fargo were also cut a notch, to A, while JPMorgan went down to A-.

The move concerns only the banks' holding entities, not their underlying operational entities, Standard and Poor's said.

In October, the US central bank, the Federal Reserve, urged major banks to bolster reserves to avoid the need for a taxpayer-funded bailout in case of any future insolvency.

If they accept the idea, the banks will have to issue bonds to the tune of $120 billion that holders can convert into shares in the event of a bankruptcy.

Major financial institutions in the US were bailed out by the government during the 2008 financial crisis, but the administration was unlikely to be as supportive again next time round, Standard and Poor's warned.

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OPEC is meeting on Friday, and rumors about what they'll do are already flying

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APIn Monday, Dec. 22, 2014 photo, an Iranian oil worker walks at Tehran's oil refinery south of the capital in Iran.

Most members of the 12-member oil cartel OPEC are reportedly willing to agree to cut their output to prevent oil prices from tumbling much lower.

That's according to the Iranian oil ministry's website Shana, which cited comments from Mehdi Asali, a ministry official.

Saudi Arabia and the Persian Gulf Arab countries are the only ones that are not in agreement on a cut, according to the Shana report. 

OPEC member countries meet in Vienna on Friday to discuss their production targets. At their meeting last year, crude oil prices slumped after OPEC decided not to cut its output, even though oil was basically in free fall at that point.

Iran had announced plans to boost production by 500,000 barrels per day once sanctions are lifted. Early next year, the agreement between Iran and world leaders is expected to kick in, which involves Iran returning to oil markets provided its nuclear program conforms to certain conditions.

After the reports crossed, West Texas Intermediate futures in New York were down about 2%, near $40.86 per barrel. WTI futures lost some ground after data from the Energy Information Administration showed that US oil inventories rose more than expected last week, by 1.2 million barrels. 

Brent crude, the international benchmark, was also down by about 2%, near $43.58.

SEE ALSO: Here's where each of the 12 OPEC members stand ahead of this week's meeting

NOW WATCH: Saudi Arabia is building the world’s tallest building – nearly twice the height of One World Trade Center

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DRAGHI'S BAZOOKA: What to expect from the ECB's massive meeting today

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REUTERS/Ralph OrlowskiEuropean Central Bank (ECB) President Mario Draghi attends the IMFS Conference 2015 of the Institute for Monetary and Financial Stability in Frankfurt March 11, 2015.

The European Central Bank meets on Thursday, and analysts are expecting a major announcement.

In late October, ECB President Mario Draghi dropped a major hint that there was going to be more monetary easing in the very near future — either in the form of further interest rate cuts, or some form of boost to the quantitative easing programme.

In a speech this November, Draghi doubled down, saying that the ECB "will do what we must to raise inflation as quickly as possible," a phrase a bit like his "whatever it takes" speech in mid-2012, which was credited with bringing an end to the euro crisis.

The meeting concludes at 12:45 p.m. GMT (7:45 a.m. ET), when we'll get any announcement of changes in interest rates, and the crucial press conference starts 45 minutes later.

Here's how things stand at the moment:

• The last ECB interest rate cut (the 11th since November 2008) came in September 2014, when the deposit rate was clipped from -0.1% to -0.2%. Two other policy rates — the fixed rate and the marginal lending facility — were cut to 0.05% and 0.30% respectively.
• In January 2015, the ECB announced a QE programme. It entailed buying €60 billion ($63.41 billion, £42.46 billion) of investment-grade government debt and some other securities it was already buying in smaller schemes, per month.
• This was meant to last until September 2016, or until the central bank saw a meaningful pick-up in inflation. Soon after, the eurozone recovery reached a recent peak, hitting 0.5% GDP growth in Q1. It's since slowed to 0.4% in Q2 and 0.3% in Q3.
• There has been very little pick-up in inflation over the period since QE was announced. Because of tumbling oil prices, consumer prices have risen by basically nothing on aggregate this year. Core inflation, which strips out volatile prices like fuel, rose by 0.9% in the year to November, about half of what the ECB would like.

And here's what's on the table in the upcoming meeting:

• The ECB could cut rates. Draghi previously suggested the September 2014 cut was the lowest the ECB could go, but revised his view in October, saying that other central banks had managed to cut rates further into negative territory.
• They could boost QE. This could mean a number of things. The ECB could extend the universe of bonds it's willing to purchase, into things like municipal bonds. It could extend the suggested end of the programme, or it could increase the amount purchased monthly.
• They could do both. This would be the both barrels approach — doing both would also loosen up the limits on how much QE can be done. Currently, the ECB can't buy bonds yielding less than the deposit rate (-0.2%). With an increasing weight of EU sovereign bonds carrying negative yields, that would widen the scope that could be bought.

The one thing that's clear is that it has to be big. Markets have now priced in a move from the ECB, and if they're disappointed it'll likely mean a stronger euro and a slump for European equities, at least in the short term. 

What's interesting is the lack of opposition that Draghi's comments have prompted. Since October, resident Hawks like Bundesbank chief Jens Weidmann have done little more than make lukewarm comments opposing monetary easing in general.

Over at the FT, Gavyn Davies referred to the ECB as having "the zeal of a convert." It was years behind other major central banks in its adoption of unconventional measures like QE, but now that it's there, it seems to be far less conservative about its approach.

The combination of the impending easing from the ECB and the impending rate hike from the Federal Reserve has analysts expecting the euro to fall to parity with the dollar for the first time in more than a decade — analysts at Deutsche Bank, Capital Economics, Macquarie, Citi, Goldman Sachs, Credit Suisse are all expecting a 1:1 exchange rate between the euro and dollar to be reached in the next few months.

FRED, Business Insider

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More: ECB European Central Bank Mario Draghi

How the renminbi became an elite currency- By Rosamond Hutt Dec 2 2015

China

Economics

How the renminbi became an elite currency

By Rosamond Hutt

Dec 2 2015

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The International Monetary Fund (IMF) has decided to add China’s renminbi to its elite basket of global currencies. The move follows a campaign by China for inclusion in the IMF’s special drawing rights (SDR) basket – currently only the US dollar, the British pound, the euro and the yen are included.

The 1 October 2016 date for inclusion marks a major milestone for China as a global economic power and is a vote of confidence in its efforts to become a more market-driven economy.

While China has undoubtedly succeeded in raising the profile of the renminbi in recent years, its march to reserve currency status has not been an entirely smooth journey.

Source: Bloomberg

The renminbi’s growing role in world trade

China is now the world’s largest exporter and is set to overtake the US as the biggest importer. The renminbi’s role has expanded alongside China’s emergence as a leading trading nation and is likely to continue to grow. An HSBC survey of 1,600 executives in 14 different markets in January and February found more than half expect to start using the renminbi more frequently in transactions.

In 2013, the renminbi leapfrogged the euro as the world’s second choice in trade finance after the dollar. It is now the preferred currency for trade between China and regional partners such as South Korea. Trade payments in renminbi to China and Hong Kong now make up almost a third of transactions, compared to just 7% three years ago, according to international payments services provider Swift.

How did the renminbi get SDR status?

The renminbi’s inclusion hinged on meeting two criteria – it needed to be “widely used” and “freely usable”. It met the first criteria because of the currency’s massive role in global trade and increased use outside China’s borders. However, in 2010, the Chinese currency was found not to be freely usable. As recently as July, an IMF report said that the renminbi still had further to go to reach the freely usable criteria.

So what changed?

In recent months, China announced policy reforms to tackle many of the shortcomings highlighted in the IMF report. The decision to include the renminbi was based on its increasing international use, reforms that would allow the currency to be used more easily in SDR operations, and moves by China to improve data disclosure, according to the IMF.

What is the likely impact on the global economy?

Although the renminbi’s inclusion in the SDR may not have an immediate practical impact on the world economy, it is likely to increase global demand for the currency in coming years.

What does it mean for China?

The inclusion is welcome news for China after this summer’s stock market turbulence, slowing growth and the move towards a market-driven exchange rate. It is also an endorsement of China’s economic development and reforms.

Have you also read?

Is a stronger renminbi threatening China’s long term growth?

The rise of the renminbi

The international role of the renminbi

To keep up with the Agenda subscribe to our weekly newsletter.

Author: Rosamond Hutt is a Senior Producer at Formative Content.

Image: A Chinese national flag flutters in front of the headquarters of the People’s Bank of China, China’s central bank, in central Beijing, May 16, 2014. REUTERS/Petar Kujundzic 

Posted by Rosamond Hutt - 11:36

All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.