Sunday, December 13, 2015

UK may nationalise Rolls Royce's nuclear submarine business: FT

UK may nationalise Rolls Royce's nuclear submarine business: FT

[LONDON] The UK government is considering nationalising the nuclear submarine business of Rolls-Royce Holdings PLC, which powers its Trident missile deterrent system, the Financial Times reported.
The government may also decide to merge some or all parts of Rolls Royce's businesses with BAE Systems, the FT said. Rolls Royce's Chief Executive Warren East had ruled out any plans to "sell big chunks" of their business in November amid pressure from activist investor ValueAct for the company to divest its marine engine business and focus on its main aero-engine business.
The company shocked investors four months ago when it said profits from its aero-engine business, its biggest unit which last year accounted for about half of profits and which it is counting on for future growth, would shrink in 2016.
Officials at Prime Minister David Cameron's office are concerned that Rolls Royce's management has no substantial experience of defending itself in the event of a hostile takeover bid, the FT reported, citing people familiar with the matter.
The paper quoted a government spokesperson saying that the company is a "major contributor to the UK economy and is an important supplier of defense equipment to the government." The 131-year-old company that supplies engines to airplanes, ships and for industrial use, issued a fourth profit warning in November as a slowdown in Asia hit demand for servicing older aircraft engines.
Representatives of the UK government, Rolls Royce and BAE Systems could not be reached immediately for comment outside regular business hours.
REUTERS

Greece to host mini-summit on migration with Germany, Turkey: minister

Greece to host mini-summit on migration with Germany, Turkey: minister

[ATHENS] Greece will host a mini-summit on migration with the leaders of Germany and Turkey in early 2016, Foreign Minister Nikos Kotzias said on Sunday.
"We will call on Chios (island) a meeting between (German Chancellor Angela) Merkel, (Turkish President Recep Tayyip) Erdogan and ourselves, and we plan to cross over to (Izmir) to see both sides," Kotzias told Mega TV.
"No date has been set... it could happen in early February," he said.
Greece has consistently called on Turkey to keep refugees and economic migrants from endangering their lives in crossing the Aegean Sea to Europe.
"(Algerians and Moroccans) fly to (Istanbul) with just 50 euros... they should not be allowed out of the airport," Kotzias said.
After revelations that two jihadists involved in the Paris attacks last month slipped into Europe through a Greek island, posing as refugees, Athens has faced heavy scrutiny over its screening of more than 750,000 people who have landed on its shores this year.
Earlier this month there were reports that Greece's place in the EU's passport-free Schengen zone was in jeopardy because of failings in its handling of the migrant crisis.
Also Sunday, the head of EU border agency Frontex said Greece had held up the planned deployment of additional security staff in October by failing to provide squad commanders.
"We had available border guards from October but were delayed because the Greek squad chiefs had not been appointed," Fabrice Leggeri told Kathimerini daily.
"We cannot send border guards without Greeks in charge.... This week 19 Greeks were provided and we still lack another 12," he said.
Kotzias countered that in contrast to Greek security staff who work "flat out", Frontex shuts down on weekends.
"Frontex would shut down at 2:00 pm and would not work on weekends," he told Mega.
"We asked for 780 staff for the islands and they have given us (around 430) at this point," he added.
The European Commission is pushing for a new 1,000-strong EU force to slow the record flow of migrants across the EU's external borders.
Kotzias also noted that cash-strapped Greece has so far spent nearly 2.0 billion euros (S$2.1 billion) on managing the migration wave in 2015, and expects to receive 450 million euros from the EU in coming months.
AFP

Merkel wants to "drastically reduce" refugee arrivals in Germany

Merkel wants to "drastically reduce" refugee arrivals in Germany

[KARLSRUHE] Chancellor Angela Merkel said on Sunday she wanted to "drastically decrease" the number of refugees coming to Germany, signalling a compromise to critics of her open-door policy from within her conservatives on the eve of a party congress.
Merkel has resisted pressure from allies within her Christian Democratic Union (CDU) to put a cap on the number of refugees entering Germany, which is expected to top 1 million this year. "At the same time we took on board the concerns of the people, who are worried about the future, and this means we want to reduce, we want to drastically decrease the number of people coming to us," Merkel told broadcaster ARD.
Merkel, whose popularity has fallen over her handling of the refugee crisis, said the word "limit" did not feature in the CDU's main resolution which will be debated at the two-day party congress starting on Monday in the southern city of Karlsruhe.
The chancellor added there was broad support in the CDU for her strategy to reduce the numbers.
This included working with Turkey to fight traffickers, improving the situation at Syrian refugee camps in Turkey, Lebanon and Jordan, and strengthening control of the European Union's outer borders.
Merkel's conservative critics want her to get the number of arrivals down before three state elections in March and say her hopes of running for a fourth term in 2017 would be in danger.
Her strategy also includes finding a solution to the migration crisis on the EU level, where she is meeting resistance from member states opposed to a quota system to distribute refugees.
Her critics say her decision in late August to allow Syrian asylum seekers to remain in Germany regardless which EU country they had first entered had accelerated the influx of migrants.
REUTERS

14 women win seats in historic Saudi vote

14 women win seats in historic Saudi vote

[RIYADH] At least 14 women won municipal council seats in Saudi Arabia's first ever election open to female voters and candidates, officials said Sunday, far exceeding expectations in the ultra-conservative kingdom.
"Even if it was only one woman, we're really proud of that. Honestly, we weren't expecting anyone to win," said Sahar Hassan Nasief, a women's rights activist in the Red Sea city of Jeddah.
But with 2,106 seats up for election in Saturday's polls, the 14 women will comprise less than one per cent of Saudi Arabia's elected council membership.
"We need more than nine," said Aljazi al-Hossaini, who was defeated in Diriyah on the edge of Riyadh, where three women won seats, according to Saudi news channel Al-Ekhbaria.
She hoped women would be also included among the one third of council seats which are appointed by the municipal affairs ministry.
A teacher from the small bedouin town of Mudrika outside the holy city of Mecca was the first woman to be declared a winner.
"My whole life has been a struggle," Salma bint Hizab al-Oteibi told AFP.
Khadra al-Mubarak in the Gulf coast city of Qatif confirmed to AFP that she was also among the victors.
"I will be in contact with society, especially women, to deliver their voices and demands to the council. I promise I will represent her by all means," said Mubarak, one of two women elected in the Eastern region.
Hanouf bint Mufrih bin Ayid al-Hazmi won in the northwestern region of Jawf, the Saudi Press Agency (SPA) said, adding that neighbouring Tabuk elected two women.
In the east, Sanna Abdel Latif Hamam and Maasooma Abdel Mohsen al-Rida were elected in Ihsa province, SPA said.
Winners came from the south as well, with one woman elected in Jazan region, while two others including Lama al-Suleiman will join councils in Jeddah, the kingdom's second city, local election officials cited by SPA said.
The duties of municipal councils are limited to local affairs including streets, public gardens and garbage collection.
Saudi Arabia is an absolute monarchy with some of the world's tightest restrictions on women, including a ban on driving.
It was the last country to allow only men to vote, and polling stations were segregated during the ballot.
More than 900 women were among the 6,440 candidates standing for seats on 284 councils.
They had to overcome a number of obstacles to participate in the landmark poll.
Female candidates could not meet face-to-face with male voters during campaigning, while neither men nor women could publish their pictures.
Women voters said registration was hindered by factors including bureaucratic obstacles and a lack of transportation.
As a result, women accounted for less than 10 per cent of registered voters.
According to election commission data, nearly 1.5 million people aged 18 and above signed up for the polls.
This included about 119,000 women, out of a total native Saudi population of almost 21 million.
Turnout for women was around 80 percent in parts of the country, well in excess of the figure for men, according to official data analysed by AFP.
Overall turnout throughout the Gulf kingdom was 47.4 percent, with a total of 702,542 voters, Municipal and Rural Affairs Minister Abdullatif bin Abdulmalik al-Shaikh said.
Nassima al-Sadah, an activist in Qatif, said the voting process was relatively smooth, unlike the registration.
Oil-rich Saudi Arabia boasts modern infrastructure of highways, skyscrapers and ever-more shopping malls.
But women still require permission from male family members to travel, work or marry.
Ruled by the Al-Saud family of King Salman, Saudi Arabia has no elected legislature and faces intense Western scrutiny of its rights record.
A slow expansion of women's rights began under Salman's predecessor Abdullah, who announced four years ago that women would take part in the 2015 municipal elections.
Men have voted since 2005 in the local polls.
AFP

Canada moves to rein in home prices in Toronto, Vancouver

Canada moves to rein in home prices in Toronto, Vancouver

[OTTAWA] Canadian regulators are seeking to clamp down on runaway prices in the country's two most expensive housing markets - Toronto and Vancouver.
In a coordinated effort by the three federal agencies that oversee home borrowing, Canadian authorities on Friday said that they would raise downpayment requirements for homes above C$500,000 (S$513,700), while making it more costly for banks to fund lending to that market.
The move is the biggest signal yet that policy makers are worried that markets in Toronto and Vancouver have become overinflated and are a risk to the nation's financial system. The balancing act for Finance Minister Bill Morneau is to target higher-end homes in those two cities, without precipitating a major decline elsewhere in the country where prices are falling or flat.
"In the Toronto and Vancouver market, we have seen house prices that have been elevated, and we want to make sure that we create an environment that protects the people that are buying their homes so they have sufficient equity in their home," Mr Morneau told reporters in Ottawa, adding he doesn't think those two markets are in bubble territory.
Years of surging prices, a condo construction boom and low borrowing costs have drawn warnings from the International Monetary Fund and Canada's own housing agency. The market is being stoked by interest rate cuts this year by the Bank of Canada, aimed at offsetting the oil price collapse, and there is little chance that benchmark interest rates are poised to rebound any time soon.
In Vancouver, the average price for a detached home has jumped to almost C$1.6 million, prompting speculation that an influx of foreign buyers is behind the surge. A detached home in Toronto also averages more than C$1 million. The average sale price of a home in Toronto this year - including condos and semi-detached residencies - is C$621,883, up 9.9 per cent from a year ago. In Vancouver, it's up about the same amount to C$893,864. The national average price is C$441,131.
"Any way to kind of temper that growth will probably be a good thing, because at some point rates will go up and there will be an impact," Bharat Masrani, chief executive officer of Toronto-Dominion Bank, Canada's largest lender by assets, told Pamela Ritchie in a Bloomberg TV Canada interview on Friday.
Three federal agencies - the Canada Mortgage & Housing Corp, the Office of the Superintendent of Financial Institutions (OSFI) and the federal finance department - announced tightening measures all within half an hour of each other.
At a press conference outside the House of Commons, Mr Morneau said that downpayments on homes will double to 10 per cent on the portion of the house price between C$500,000 and C$1 million, starting from Feb 15. The threshold will remain at the current 5 per cent level for anything below that mark. Homes worth more than C$1 million, which don't qualify for government insurance, will still require a minimum 20 per cent downpayment.
Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce in Toronto, estimated in a report on Friday that the downpayment rule will affect 5 per cent of new sales in Toronto and 2.5 per cent in Vancouver.
Canada's bank regulator and housing agency also outlined new rules for residential lending and government guarantees on mortgage-backed bonds.
In a separate release, OSFI said that it would raise the minimum amount of capital that lenders and insurers need to set aside on residential mortgage loans in case of default. For the country's biggest banks, the new capital requirements will be tied to local housing conditions and incomes. For example, a C$1 million home in Toronto where incomes may be far below that cost would have a higher requirement than a cheaper real-estate market where home prices are more in line with incomes.
The rules are meant to help the country's banks and insurance providers "absorb severe but plausible losses", Mark Zelmer, deputy superintendent of OSFI said in a statement. The rapid rise of prices across Canada make those potential losses more severe, he said.
The bank regulator is consulting with the private sector next year and looks to have new regulations in place by 2017, it said.
In their release, Canada Mortgage & Housing Corp said that it will set higher fees for the guarantees that it offers on debt backed by mortgages, aiming to "encourage the development of private market funding alternatives". The move by the state-owned housing agency adds to a string of small measures in recent years to reduce its exposure to the housing market.
Mr Morneau, who also spoke with Bank of Canada governor Stephen Poloz on the issue, said that housing was one of the first briefings he sought after his Liberal Party won an Oct 19 election.
Mr Morneau's predecessor under the previous Conservative government - Joe Oliver - had rejected a similar proposal earlier this year, according to people familiar with the discussions, amid worries that it would impactaffect the ability of first-time home buyers to get into the market and cloud one of the few bright spots of Canada's economy.
Still, the trend has been for policy makers to tighten the market in recent years as interest rates have hovered at historic lows. Mr Oliver's predecessor, Jim Flaherty, tightened mortgage rules multiple times since 2008, including lowering amortisation periods and limiting the amount that homeowners can borrow against the value of their homes.
That government officials have failed to slow the market doesn't bode well for the latest steps, said Derek Holt, an economist at the Bank of Nova Scotia.
"On balance, the sharp rule tightening since 2008 hasn't had much of an effect on the housing market," Mr Holt said in a note, citing low interest rates and the fact that homebuyers can obtain downpayments through other forms of leveraging. BLOOMBERG

Hong Kong on the brink as builders offer price cuts

Hong Kong on the brink as builders offer price cuts

[HONG KONG] Kowloon Development Co's Upper East project in Hong Kong's Hung Hom area is offering a raft of rebates and hidden discounts that can reduce the cost to a buyer as much as 14 per cent, and it will throw in a second mortgage too.
The enticements are paying off. Since its Sept 5 launch, the company has sold 940 out of 1,008 units. One buyer even snapped up two apartments on the sixth and eighth floors, according to transaction data published on the company's website.
Kowloon Development is not alone. Cheung Kong Property Holdings Ltd and Henderson Land Development Co are among Hong Kong developers offering inducements including stamp-tax rebates, first and second mortgages to keep buyers coming.
That's allowed them to avoid the outright price cuts they fear could spur a sharp reversal of gains that made the city the world's least affordable major housing market.
"After 12 years of a bull market, Hong Kong property is at an inflection point," said Spencer Leung, a Hong Kong strategist at UBS Group AG. "Property developers are trying hard not to paint a picture that things are going down."
Not everyone is convinced that they will succeed. Bocom International Holdings Co sees house prices dropping as much as 20 per cent in the next three to six months, while property adviser Colliers International Group Inc predicts a 15 per cent slide next year.
Volumes at the 10 largest private-housing estates plunged to a nine-year low in November, the Hong Kong Economic Journal reported on Dec 1, citing data from Centaline Property Agency Ltd.
Developers are under pressure to move stock in the expectation of an increase in supply of housing next year and fears that the slowdown in the secondary market will spill over into new-home sales.
Mainland buyers, who've been key to stoking demand, have also pulled back. Their share of property purchases in Hong Kong fell to 6 per cent in the first six months of this year, down from 12 per cent at their peak in 2011, according to data from Jones Lang LaSalle Inc.
The last time Hong Kong saw such generous enticements was in 2003, when home prices were at the bottom of a six-year plunge, according to Nicole Wong, Hong Kong-based head of property research at CLSA Ltd. The decline in property prices at the time forced developers to write down the value of their projects and sell homes at a loss.
This time it's different. Developers are avoiding price cuts that would signal a downturn has started, turning it into a self-fulfilling prophecy. They're also stepping into the role of lenders: Chinachem Group, Henderson Land and Far East Consortium International Ltd are among those offering financing of up to 90 per cent through associated finance companies.
"Developers are very keen to sell, but don't want to cut prices, so they have progressively increased the buyer incentives," said Yu Kam-Hung, senior managing director for investment properties at CBRE Group Inc in Hong Kong.
"They feel there is uncertainty over the economy and government policies to increase supply and want to move properties before the overall market turns down."
In the case of Kowloon Development, the rebates on the Upper East development helped reduce the price the buyer paid for the two flats to HK$6.9 million (S$1.3 million) from more than HK$8 million.
Across Victoria Harbour at the upscale Cadogan in the neighbourhood of Kennedy Town on Hong Kong Island, similar sweeteners are on offer by Kowloon Development.
In October, a 732-square-foot apartment on the 31st floor listed at HK$21 million ended up costing the buyer HK$18.5 million, including first and second mortgages covering up to 90 per cent.
While such lures might appeal to first-time homebuyers constrained by loan-to-value ratios of 60 per cent on bank lending imposed by the Hong Kong Monetary Authority, purchasers in the luxury end of the market are less likely to need developer assistance, says Keith Chang, managing director of residential services at Savills plc. The previous ceiling of 70 per cent on properties costing less than HK$7 million was lowered in March to cool property prices.
A Dec 10 research note from analysts led by Paul Louie at Barclays plc, which used data from recent sales, said that on average 18 per cent of primary homebuyers availed themselves of developer financing packages, adding that the "take-up of these plans is not as common as one would think".
One exception, which was excluded from the average, was Henderson Land's Eltanin Square Mile development. About 42 per cent, or 118 out of 279 units sold at the development, were financed with mortgages offered by developer, according to the note.
Still, at some point, developers will have to bite the bullet as more housing comes on-stream next year. Supply is expected to increase by 70,000 to 80,000 new units within the next three to four years, said Mr Yu at CBRE.
"I do feel they are going to cut prices but they don't want to do it overly aggressively," said Mr Leung at UBS. "Nobody wants to spoil the party."
BLOOMBERG

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