AmEx shares sink on weak outlook, spending cuts

PHOTO: REUTERS

JAN 23, 20167:40 AM

[NEW YORK] American Express shares plummeted on Friday after it offered a dim profit outlook that highlighted intensifying competition for high-end customers and announced plans to cut US$1 billion in spending.

The banking and credit card company sank 12.6 per cent to US$54.78 in afternoon trade, by far the biggest loser in the Dow on an up day for stocks.

Investors fled the stock after chief executive Kenneth Chenault outlined a range of hurdles facing the company, including overall economic sluggishness, pressures on merchants' fees and "intense competition that has been reshaping the payments industry."

News that the company plans US$1 billion in spending cuts fell flat with investors who are looking for details on how AmEx can better exploit its affluent client base in the mobile era, said Morningstar analyst Jim Sinegal.

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"No one thinks that cutting costs is going to allow them to change their business model," Mr Sinegal said.

"If they had said they were going to put a lot more money into big data or acquiring some analytics firms, that would have reinforced" a more positive narrative, he said.

Amex reported adjusted fourth-quarter earnings of US$1.23 per share, 10 cents above analyst expectations. But the company's forecast for 2017 of US$5.60 per share came in 39 cents below analyst expectations.

"We are not seeing decelerating trends," Mr Chenault said of the economy. "We are certainly not seeing in the overall economy catalysts that would say that we there are going to be improvements in GDP growth."

Mr Sinegal said that AmEx's longstanding ability to win higher fees from merchants is being challenged as competitors like JPMorgan Chase and Bank of America chase after its base of affluent cardholders. Some of these companies have launched award programmes with vendors that further challenge AmEx.

AmEx must back up talk of using big data with a specific game plan to persuade vendors of the benefits of higher AmEx fees, he said.

"Now they're selling rich customers," Mr Sinegal told AFP. "What they need to be doing is selling rich customers' data."

AFP

    
 

Noble Group's Elman sees future as smaller, nimble company

JAN 22, 20166:04 PM

[HONG KONG] Noble Group, Asia's biggest commodities trader, expects to ride out the market downturn and recover from recent accounting-related allegations by turning into a nimble and asset-light company, its founder and chairman Richard Elman told Reuters in an interview on Friday.

Mr Elman, 75, said he sees no further disruptions to the business from charges that Noble inflated its assets by billions of dollars by inaccurately representing the value of its contracts.

"We need to go back to being modest and cautious and economical," said Mr Elman, who set up the Hong Kong-based group with US$100,000 in 1986.

Noble was thrust into the spotlight a year ago when Iceberg Research published the first of three detailed reports on the company alleging it inflated its assets.

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"Last year, we had to separate our business from rumour and gossip. We got attacked in a very low regulated environment," Mr Elman said in his first media interview in three years.

Singapore-listed Noble rejected Iceberg's claims, and a board-appointed consultant, PricewaterhouseCoopers, found the company to have complied with international rules.

"We feel that it's behind us. There is no reason for us to have any further disruption in that sense," Mr Elman told Reuters at his 18th floor office overlooking Hong Kong's Victoria Harbour.

Mr Elman, Noble's largest shareholder with more than 22 percent stake in the company, was relaxed as he gave a wide-ranging interview covering the slump in global commodity prices, the outlook for commodity merchants and last year's accounting allegations.

"We are bottoming in terms of the (commodities) cycle. I wouldn't rule out oil going down to $20-$25 a barrel, but I think it's not going to go down to $10," he said, adding oil prices were unlikely to stay at depressed levels for long.

Noble's plans to bring in new investors were taking time, Mr Elman said. "Most sectors are pretty bashed up at the moment, so new money is going to be very selective. People want to investigate the company and they want to understand the people, they want to learn about the business and...it does take time."

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Palestine is Still the Issue (Video)

Palestine is Still the Issue

2003 , 

This is a huge bluff of the Israeli establishment, that every criticism of its' policy is anti-semitism. In 1977, the award-winning journalist and film-maker, John Pilger, made a documentary called Palestine Is Still The Issue (1977). He told how almost a million Palestinians had been forced off their land in 1948, and again in 1967. In this in-depth documentary, he has returned to the West Bank of the Jordan and Gaza, and to Israel, to ask why the Palestinians, whose right of return was affirmed by the United Nations more than half a century ago, are still caught in a terrible limbo -- refugees in their own land, controlled by Israel in the longest military occupation in modern times.

"The fate and struggle of the Palestinians," says Pilger, "are not just critical to the overdue recognition of their basic human rights, but are also central to whether the region, and the wider world, are plunged into war. Israel is now one of the biggest military powers in the world. While nothing changes, the dangers become greater. This is a film about a nation of people, traumatized, humiliated and yet resilient. In trying to liberate less than a quarter of historic Palestine, they have had no army, no air force, and no powerful friends -- and have fought back with slingshots and now with the terrorism of the suicide bombers."

China central bank says won't rush to cut bank reserve ratio despite liquidity squeeze: sources

JAN 22, 20168:10 PM

[BEIJING] China's central bank will not rush to cut the amount of cash banks must hold as reserves, despite a liquidity squeeze ahead of the Lunar New Year, an assistant central bank governor has said, according to sources.

The central bank "will not easily cut banks' reserve requirement ratios (RRR)", Zhang Xiaohui told senior officials of policy banks and commercial banks at a recent meeting on liquidity management, said the sources with direct knowledge of the meeting.

Zhang said the central bank could use other policy tools to add liquidity into the banking system, as cutting RRR could send a strong signal on policy easing, according to the sources.

Moves by the central bank to inject more than 600 billion yuan (US$91.19 billion) in liquidity ahead of the Lunar New Year holiday in February could substitute for a cut in the cash amount banks must hold as reserves, the central bank's chief economist was this week quoted as saying.

Liquidity often tightens ahead of the week-long holiday and the central bank usually injects large amounts of cash into the banking system before the festivities to keep rates steady.

The first day of the new year is Feb. 8.

Yi Gang, a vice governor of the central bank, told the same meeting the bank would keep the yuan basically stable against a basket of currencies.

REUTERS

    
 

HDB sells S$1b seven-year bonds at 2.50%

By

Siow Li Senlisen@sph.com.sg@SiowLiSenBT

JAN 22, 20168:23 PM

THE Housing & Development Board (HDB) on Friday sold S$1 billion seven-year bonds at 2.50 per cent, amid volatile markets.

Demand for the bonds was lower than expected as HDB has an option to upsize by S$600 million.

"Market was very choppy in the past few days, swinging all over the place," said Clifford Lee, DBS Bank head of fixed income.

The sale was done within two hours in the afternoon, he noted. HDB still has the option to sell the remaining S$600 million later, he said.

Buyers were mainly banks due to HDB's Aaa rating.

"Our customer base of individual investors tends not to be too interested in such low-yielding longer duration paper, but we're hearing that the deal is well-anchored, probably with strong interest from the banks which are incentivised to hold the Aaa paper thanks to banking liquidity rules," said Terence Lin, iFast's regional research manager in the fixed-income division.

Last week, banks were reported to be bidding for the largest issue yet from HDB, totalling up to S$1.6 billion, said IFR.

The Singapore statutory board had asked banks for proposals to sell a seven-year bond for a target size of S$1 billion and a S$600 million greenshoe, said IFR, a Thomson Reuters publication.

If it does achieve the maximum deal size, it will beat its largest single issue, when it sold a S$1.5 billion 1.875 per cent four-year issue in November 2013, IFR said.

The rated HDB notes have a zero risk-weighting and qualify as Level 1 high-quality liquid assets (HQLA) under the Monetary Authority of Singapore's rules on liquidity coverage ratios (LCR), said IFR. Previously, the unrated notes qualified as a Level 2 HQLA and were subject to a 15 per cent haircut under LCR rules.

ANZ, DBS Bank, Deutsche Bank, and Industrial and Commercial Bank of China (ICBC) Singapore handled the sale.