Singapore banks ink agreements with Chongqing government to promote cross-border trade

By

Jamie Lee leejamie@sph.com.sg@JamieLeeBT

THE Singapore banks on Friday said they have signed agreements with the Chongqing government to promote cross-border trade and investment between Chongqing and South-east Asia, including Singapore. DBS's agreements also include tie-ups with the Chinese banks and financial institutions. 

PHOTO: SPH

JAN 8, 20165:24 PM

THE Singapore banks on Friday said they have signed agreements with the Chongqing government to promote cross-border trade and investment between Chongqing and South-east Asia, including Singapore. DBS's agreements also include tie-ups with the Chinese banks and financial institutions.

Under a memorandum of understanding (MOU) signed each with the financial affairs office of the Chongqing Municipal People's Government, OCBC and UOB will work with the government agency to help companies based in Chongqing to tap on the South-east Asia market.

DBS separately signed two tripartite agreements with the Chongqing municipal government, one with the Industrial and Commercial Bank of China (ICBC), and another with China Construction Bank Corporation (CCB) - with the banking partners looking at financing services, and sharing resources.

It also signed two bilateral agreements with two partners: the Chongqing Liangjiang New Area Administrative Committee, and the Chongqing Yufu Asset Management Group. According to DBS, the latter two agreements will prioritise DBS as the main bank for financing needs.

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UOB said its branch in Chongqing has doubled its wholesale banking customer base since its launch in September 2014.

In a media statement, Eric Lian, chief executive officer of UOB (China), said Singapore will play a key role by being a gateway city for Chinese companies expanding into South-east Asia. "Chongqing is a key city in the development of western China. We believe that it will be a major beneficiary of trade connectivity initiatives such as the One Belt One Road aimed at increasing economic cooperation between China and its trading partners in South-east Asia."

Chongqing was selected as the location of the third Sino-Singapore bilateral project, following from the Suzhou Industrial Park and the Tianjin Eco-City projects.

OCBC China's CEO, Kng Hwee Tin, said: "The MOU we inked today reflects our belief in the economic promise that Chongqing holds and our continued efforts to harness opportunities arising from macro developments in the Greater China region."

    
 

US: Wall St opens higher after upbeat jobs data

US stocks opened higher on Friday as Chinese stocks recovered, oil prices rose slightly and data showed that hiring surged in December in the United States. 

PHOTO: AFP

JAN 8, 201610:49 PM

[NEW YORK] US stocks opened higher on Friday as Chinese stocks recovered, oil prices rose slightly and data showed that hiring surged in December in the United States.

The Dow Jones industrial average rose 54.58 points, or 0.33 per cent, to 16,568.68, the S&P 500 gained 7.7 points, or 0.4 per cent, to 1,950.79 and the Nasdaq composite added 33.94 points, or 0.72 per cent, to 4,723.37.

REUTERS

      

Singapore commits S$19b for new research, innovation and enterprise plan

By

Lee U-Wenleeuwen@sph.com.sg @LeeUwenBT@LeeUwenBT

THE government is committing S$19 billion for its new Research, Innovation and Enterprise (RIE) 2020 plan, which is 18 per cent higher than the S$16.1 billion set aside for the previous five-year plan. 

PHOTO: ASTAR

JAN 8, 20165:59 PM

THE government is committing S$19 billion for its new Research, Innovation and Enterprise (RIE) 2020 plan, which is 18 per cent higher than the S$16.1 billion set aside for the previous five-year plan.

Announcing this on Friday after chairing the annual RIE Council meeting, Prime Minister Lee Hsien Loong said the government was sustaining its spending in this area at about one per cent of GDP.

This proportion, he added, is more than what the UK spends and about the same as the US. It is also comparable to public spending in other small research-intensive economies.

As it made its RIE2020 plan public, the National Research Foundation said the funding would be prioritised in domains where Singapore has a competitive advantage or important national needs.

The four domains it singled out are advanced manufacturing and engineering; health and biomedical services; services and digital economy; and urban solutions and sustainability.

    
 

Weak US wholesale inventories point to slower Q4 growth

US wholesale inventories fell more than expected in November amid a push by businesses to reduce a stockpile of unsold goods, the latest indication that economic growth moderated sharply in the fourth quarter. 

PHOTO: AFP

JAN 8, 201611:26 PM

[WASHINGTON] US wholesale inventories fell more than expected in November amid a push by businesses to reduce a stockpile of unsold goods, the latest indication that economic growth moderated sharply in the fourth quarter.

The Commerce Department said on Friday wholesale inventories dropped 0.3 per cent as inventories of both durable and nondurable goods fell. October inventories were revised down to show a 0.3 per cent decline instead of the previously reported 0.1 per cent dip.

Inventories are a key component of gross domestic product changes. The component of wholesale inventories that goes into the calculation of GDP - wholesale stocks excluding autos - dropped 0.4 per cent in November.

The report added to weak data on construction spending, export growth and manufacturing that have suggested GDP growth braked sharply in the final three months of 2015.

Fourth-quarter GDP growth estimates, which currently range from as low as a 0.4 per cent annual rate to as high as a 1.1 per cent rate, are likely to be revised further down following the wholesale inventory report.

The economy grew at a 2.0 per cent pace in the third quarter.

A record inventory accumulation in the first half of 2015, which outpaced demand, left businesses saddled with unsold merchandise and little incentive to order more goods. That has weighed heavily on manufacturing.

A report this week showed factory inventories fell in November for a fifth straight month. Inventories subtracted 0.71 per centage point from GDP growth in the third quarter.

Sales at wholesalers dropped 1.0 per cent in November, the biggest decline since January 2015, after falling 0.2 per cent in October.

At November's sales pace it would take 1.32 months to clear shelves, up from 1.31 months in October. The high ratio suggests that the inventory liquidation at wholesalers could persist, continuing to put pressure on manufacturing.

REUTERS

    
 

ECB's Lane says can do more QE if needed: report

The European Central Bank has room to do more quantitative easing if economic data over the next few months suggests it's needed, new ECB governing council member Philip Lane was quoted as saying on Friday.

PHOTO: BLOOMBERG

JAN 8, 20163:27 PM

[DUBLIN] The European Central Bank has room to do more quantitative easing if economic data over the next few months suggests it's needed, new ECB governing council member Philip Lane was quoted as saying on Friday.

In Lane's first council meeting last month, the ECB extended its asset-purchase programme by six months but the measures fell well short of the aggressive easing many investors had hoped for from ECB chief Mario Draghi, who has over-delivered in the past.

Debt investors on Thursday moved to price in a 50 per cent chance of a further rate cut from the ECB at its March meeting as this week's Chinese market rout and sliding oil prices dimmed the outlook for inflation. "By that point (December) there was plenty of evidence that QE was effective, that it was helping to increase credit growth in Europe, is helping to reduce lending rates in some countries," Mr Lane said in a transcript of an interview with the Irish Times newspaper, published on the central bank's website. "But it's important to say that no door has been closed. If the data flow over the next number of months is that more needs to be done, more can be done," Mr Lane said in his first remarks since becoming Irish Central Bank governor in November.

Mr Lane, who took over from fellow university professor Patrick Honohan, said the European economy is recovering, although low oil prices have been an important source of support amid an"unusually high amount" of uncertainty in the global economy.

Regarding the turbulent start to Chinese markets in 2016, Mr Lane said he believed there was a lot of policy space for the Chinese authorities to intervene in the transition to more of a consumption driven economy and the inevitable slowdown in an economy of its size.

"Those economies like China which have a long sequence of external surpluses, have a large bank of foreign reserves, they have a lot of policy instruments to deal with any problems that emerge," Mr Lane said. "Whereas those economies such as Brazil which have been running external deficits and which basically do have a heavy reliance on foreign currency debt, are much more vulnerable."

REUTERS

    
 

SNB suffers record 23b-franc loss amid stronger currency

The Swiss National Bank incurred a record loss of 23 billion francs (S$33 billion) last year after it abandoned its currency cap. 

PHOTO: BLOOMBERG

JAN 8, 20162:57 PM

[ZURICH] The Swiss National Bank incurred a record loss of 23 billion francs (S$33 billion) last year after it abandoned its currency cap.

The appreciation of the franc that followed the Jan 15 decision resulted in a loss of 20 billion francs on its foreign- currency positions, the central bank said in a statement on Friday based on preliminary calculations. The 2015 result exceeds the 20.8 billion-franc loss caused by a strengthening currency in 2010, when Greece asked for its first bailout.

While the SNB doesn't need to generate a profit for monetary-policy purposes, municipalities have come to rely on an annual handout from the central bank to fund local spending. Their circumstances are already straitened by slower economic growth brought on by the currency's ascent from the cap of 1.20 per euro to about 1.09 now.

The SNB said it would pay a dividend of 15 francs per share as well as 1 billion francs to the federal government and cantons.

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"This would contribute to easing the strain on cantonal finances," UBS Group AG economist Dominik Studer said in a note published earlier in the week.

The Swiss currency finished 2015 more than 10 per cent stronger against the euro, which constitutes more than 40 per cent of the SNB's foreign-exchange holdings. It depreciated nearly 1 per cent against the dollar, reflecting the recovery of the US economy and the prospect of the Federal Reserve's first interest-rate increase in nearly a decade.

The SNB is a joint-stock company, with the majority of shares held by cantons and cantonal banks. In 2013, the cantons had to forgo their payout after the price of gold slumped. The SNB earnings are calculated by comparing asset prices at the start and end of each period.  The SNB will published the definitive figures for 2015 on March 4.

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