Cabbies block roads as France hit by multiple strikes

Angry French taxi drivers blocked key roads with burning tyres and hundreds of flights were cancelled as air traffic controllers joined civil servants, hospital staff and teachers for a "Black Tuesday" of strikes.

PHOTO: REUTERS

JAN 27, 201610:16 AM

[PARIS] Angry French taxi drivers blocked key roads with burning tyres and hundreds of flights were cancelled as air traffic controllers joined civil servants, hospital staff and teachers for a "Black Tuesday" of strikes.

At Paris's Orly airport, one protester was injured when a shuttle bus forced its way through a blockade, with the driver saying he "panicked". Police arrested the driver.

Some 2,100 taxi drivers, furious over upstart competitors such as Uber, blocked the capital's ring road at a key western intersection, lighting fires and throwing smoke bombs.

One Uber driver had his car splattered with eggs and kicked by protesters, an AFP journalist said.

"Today our survival is at stake, we are fed up of meetings and negotiations," said Ibrahima Sylla, spokesman of the Taxis de France collective.

"Before I'd have 10 to 12 fares per day. Now, it's just five or six," said Rahim Edalat, who has been driving taxis in Paris for 20 years.

"It's the worst year I've ever seen," he told AFP.

A total of 14 protesters were arrested around the capital for violence and lighting fires, police said.

"There is a right to protest... even during a state of emergency," said Prime Minister Manuel Valls, referring to measures imposed after the November attacks in Paris.

"But violence is unacceptable." Police advised motorists to avoid several areas of the capital, including Porte Maillot in the west of Paris where hundreds of taxi drivers had gathered with some intending to stay.

The taxi drivers kept up their action overnight and were continuing into Wednesday, with routes to Orly and Roissy airports also affected, police said.

Adding to the chaos, one in five flights in and out of Paris were cancelled because of a strike by air traffic controllers over pay and conditions, with the action affecting both Orly and Charles de Gaulle airports.

Budget airline Ryanair said it cancelled more than 200 flights, and easyJet cut 35 flights, mostly within France but also affecting Italy, Switzerland and Spain.

Air France said it would operate all its long-haul flights and more than 80 per cent of its short and medium-haul flights in France and elsewhere in Europe.

Last year, France banned Uber's low-cost UberPOP service - which used unlicensed drivers - but the professional version of Uber continues to operate legally, with taxi dispatchers in Paris saying business has shrunk by 20 to 30 per cent.

"Uberisation... is not just a Paris problem but a world problem," said Paris Mayor Anne Hidalgo, sympathising with regular taxi drivers who "must be able to make a decent living".

Uber flouted the UberPOP ban for several months, triggering a spate of violent protests in June.

The San Francisco-based company finally shut down the low-cost service in July after two of its French bosses were arrested and charged with "misleading commercial practices (and) complicity in the illegal exercise of the taxi profession".

At the same time, unions had urged some 5.6 million civil servants to down tools in protest over reforms that have already seen seven billion euros (S$10.8 billion) in austerity cuts.

The government said only 10 per cent had joined the strike, but the hardline CGT union put the figure at nearly 30 per cent, describing the action as "the biggest mobilisation" of civil servants since socialist President Francois Hollande came to power in 2012.

In Paris, thousands of demonstrators marched with banners reading "Enough of austerity" and "Increase wages, not shareholders" with police putting the figure at 6,000 protesters while unions said turnout was around 15,000.

The strike also affected schools, with the education ministry saying more than 12 per cent of primary teachers had joined over demands for higher pay, as well as 22 per cent of high school teachers who are protesting against the reform of education for pupils aged between 11 and 15.

The striking unions - which led up to 120 demonstrations across France on a day dubbed "Black Tuesday" - said they were protesting over some 150,000 job losses since 2007, and demanded the creation of new positions, particularly in the hospital sector.

Farmers upset over falling prices also blocked roads with tractors in several rural areas and dumped manure outside some tax offices. Their unions are demanding distributors and major food companies pay more for produce and livestock.

Protests also took place in other French cities, notably Toulouse, Marseille and Aix-en-Provence in the south and Lille in the north, notably around railway stations and airports.

AFP

    
 

China's Dec industrial profits fall 4.7% year on year

Profits earned by Chinese industrial firms in December fell 4.7 per cent from a year earlier, the seventh straight month of declines, as the slowing economy hits sales and forces many companies to cut prices to win business. 

PHOTO: AFP

JAN 27, 20169:59 AM

[BEIJING] Profits earned by Chinese industrial firms in December fell 4.7 per cent from a year earlier, the seventh straight month of declines, as the slowing economy hits sales and forces many companies to cut prices to win business.

Industrial profits - which cover large enterprises with annual revenue of more than 20 million yuan (S$4.42 million) from their main operations - fell 2.3 per cent in 2015 from 2014, the National Bureau of Statistics(NBS) said on its website on Wednesday.

That compared with 3.3 per cent growth in 2014.

High costs and tight liquidity curbed companies' production and operations, along with weak domestic and global demand, the NBS said.

China's economic growth cooled to 6.9 per cent in 2015, the slowest pace in a quarter of a century, weighed down by sluggish demand, industrial overcapacity, slowing investment and a struggling property market.

Producer prices fell for the 46th month in a row in December, highlighting the deeply entrenched pressures facing its manufacturers.

REUTERS

    
 

Asset bubbles may be avoidable after all, Asian results show

JAN 27, 201610:42 AM

[SYDNEY] Years after the biggest global financial meltdown since the Great Depression spurred debate over how policy makers can head off asset bubbles, tentative evidence is emerging from Asia-Pacific economies that prudent regulation can prove effective. 

From Singapore to Sydney to Seoul, regulators have implemented prudential rules that target house-price inflation at the same time as they deliver stimulus to their economies through monetary policy. As the list of countries dropping rates toward zero lengthens, macroprudential measures, once out of favor in the developed world, are staging a comeback.

"Asia has been a pioneer in macroprudential measures," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. "Ideally the region would've had higher interest rates in recent years to cool down speculative pressure, but that wasn't possible. So this was a substitute and early signs are it seems to have worked." The crux of the debate over macroprudential measures harks back to an argument from former Federal Reserve Chairman Alan Greenspan that a central bank could clean up the mess from financial excesses, not prevent it.

But following the US housing bust and freezing up of global credit markets in 2008, such a laissez-faire attitude became increasingly untenable. The conundrum of cheap money pouring into real estate in Asian economies as the Fed lowered its benchmark rate to near zero demanded action.  Singapore led the response, introducing residential property curbs in 2009. These included: a cap on debt repayment costs at 60 per cent of a borrower's monthly income; higher stamp duties on home purchases; and increased real estate taxes. 

Hong Kong acted in 2010 and in subsequent years, introducing: a special stamp duty on properties resold within two years, later lengthened to three; An additional 15 per cent tax on purchases by foreigners and corporations in 2012 in response to overwhelming demand from mainland Chinese buyers; and  * A doubling of the progressive ad valorem rates in February 2013 to a maximum of 8.5 percent; Falling Prices Prices in both jurisdictions are now falling with Singapore registering a ninth consecutive quarterly drop in December while secondary residential prices in Hong Kong dropped 6.9 percent in the fourth quarter.

Adair Turner, chairman of the UK Financial Services Authority until it was disbanded in 2013, said city-states like Singapore are now international property markets and using interest rates alone would do some "pretty weird things" to their economies.

"It takes a hell of a lot to control an out-of-control property boom with an interest rate," he said in Singapore on Tuesday. "To deal with them monetary authorities and regulators need an array of tools and powerful macroprudential tools." Elsewhere macroprudential measures weren't embraced so quickly. Australia's central bank Governor Glenn Stevens was reluctant to reimpose them, arguing that they were scrapped Down Under from the 1980s because people always found a way around them.

"As an economist you always regard macroprudential rules as second best," said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd, reflecting on Stevens's views. "You always prefer to raise interest rates and let the market sort itself out. But in the exceptional circumstances that the world has found itself in the last few years, they do seem to have proven their worth."

Across the Tasman Sea, New Zealand's central bank moved faster. In October 2013, it told banks that only 10 per cent of their portfolios could be composed of home loans with low down payments.

It relaxed that limit to 15 per cent in November for everywhere except Auckland, where prices continued to rise. It also required investors buying in the country's largest city to have a deposit of at least 30 per cent of a property's value to qualify for a mortgage.  Australia succumbed to the inevitable as prices in its two biggest cities rocketed amid record-low rates. In December 2014, the banking regulator urged lenders to limit growth in mortgages to 10 per cent a year and in July last year it gave the four largest banks a year to increase the average capital they hold against mortgages to 25 per cent from about 16 per cent.

The measures forced Australian lenders to raise mortgage rates for property investors in July and for owner-occupiers in November, the first such increase in five years. That led to a 2.3 per cent fall in Sydney home prices in the quarter ending Dec 31.

In South Korea, regulators last year imposed stricter lending standards to curb swelling household debt and from as soon as February most new home buyers will have to take out amortised loans instead of those with interest-only payments.

Fitch Ratings is forecasting a sharp deceleration in house- price growth in Australia and New Zealand and a further fall in Singapore. It cited prudential measures as among the reasons, as well as very high prices that make housing increasingly unaffordable for owner-occupiers.

Macroprudential measures "had been a feature of policy in the US and many other industrial economies in the 1950s, '60s, and '70s, and it has remained a key aspect of the regulatory approaches in many emerging market economies in the 2000s," Donald Kohn, an external member of the Bank of England's financial policy committee and a former vice chairman of the Fed's board of governors, said in a speech in October. "In the wake of the GFC, macroprudential regulation has been reborn in advanced economies." Still, it's not a case of uninterrupted success. In the UK, house prices continue to climb, fueled by a reduced supply of properties coming onto the market, a reality that even macroprudential measures can't resolve.

But the reality is that more countries may experiment with macroprudential rules given the International Monetary Fund has downgraded global growth for this year and several central banks, including New Zealand's, are unwinding rate increases that proved too tough for their economies.

"Central bankers are going to have to keep interest rates extremely low for some time to come," said Mr Oliver. "The best way to deal with it is macroprudential controls."

BLOOMBERG

    
 

China achieved main economic goals in 2015: Premier

China achieved its main economic goals in 2015, Premier Li Keqiang said at a conference on Wednesday, adding that he is confident the country can overcome economic challenges. 

PHOTO: AFP

JAN 27, 201611:28 AM

[SHANGHAI] China achieved its main economic goals in 2015, Premier Li Keqiang said at a conference on Wednesday, adding that he is confident the country can overcome economic challenges.

The premier also said that China's 6.9 per cent GDP growth in 2015 was "hard-won," and the country was impacted by the sluggish global economies last year.

He denied that China is to blame for increasing volatility in global markets.

Li called for more confidence on the world's second largest economy in the future.

China's full-year 2015 gross domestic products (GDP) growth slowed to 6.9 per cent, its slowest rate in 25 years.

REUTER
S

Norway's oil wealth, an enviable nest egg in hard times

Oslo has prudently tucked away most of its oil money since the 1990s in order to be able to finance its generous welfare state indefinitely.

PHOTO: BLOOMBERG

JAN 27, 201611:31 AM

[OSLO] When times get tough, it never hurts to have 700 billion euros stashed away like Norway does in the world's biggest sovereign wealth fund to cushion the blow of plunging oil prices.

Oslo has prudently tucked away most of its oil money since the 1990s in order to be able to finance its generous welfare state indefinitely.

Invested in stocks, bonds and real estate, the fund is now worth around 6.96 trillion kroner (S$1.13 trillion), equivalent to around six annual budgets or more than 137,000 euros for each of the country's 5.2 million inhabitants.

"We sold a lot of oil when the prices were high and saved a lot of the money we received," explained Ragnar Torvik, economics professor at the Norwegian University of Science and Technology in Trondheim.

"As a result, the Norwegian economy is well-equipped to withstand a drop in the oil price seeing as the latter has little impact on public finances," he added.

But it is strictly forbidden to touch the riches in what Norwegians call both the "oil fund" and the "pension fund" with governments only allowed to tap the returns, estimated at around 4.0 per cent, and not the capital.

The sums at the authorities' disposal swell as the fund continues to grow, fuelled by new oil revenues and the return on investment. And it has even grown so fast the current rightwing government only intends to use 2.8 percent of its nest egg for 2016.

"It's not a crisis fund. It's a fund that is supposed to bring a regular contribution to the state budget," explained Handelsbanken economist Knut Anton Mork.

"This input... today finances about one-eighth of all public spending in Norway. It's a lot but it's independent of the oil price because it's the financial return that is behind that," he said.

The oil price has fallen from more than US$110 a barrel in the summer of 2014 to around US$30 today, but the only financial impact for Norway is that the fund's growth curve has slowed.

"It's important because it determines the size that the fund will end up being. We thought it would continue to grow for a long time but if the oil price remains low for a long time, that won't be the case," Mr Mork said.

While public finances have not been affected by the low oil price, it's a different story entirely for the real economy: oil investments have declined, growth is sluggish, and the unemployment rate, at 4.6 per cent, is higher than it has been in more than a decade - even though it remains the envy of many countries.

Since the start of 2014, almost 30,000 jobs have been cut in the oil sector, including at oil and gas giant Statoil. Stavanger, until recently Norway's thriving oil capital, is in the doldrums.

To kick-start business, the government has presented an expansionary budget and the central bank has slashed its key rate in half. Partly compensating for the decline in oil income, the Norwegian krone has weakened considerably, boosting competitiveness in other sectors.

"As a whole, the Norwegian economy is not in crisis," Finance Minister Siv Jensen said on Monday.

"But it's a crisis for the regions, the sectors, the companies and the families affected by the long-term structural transformation of the economy," she said.

Aware that its oil and gas reserves are on the decline and that the deposits that remain are often expensive - even too expensive - to exploit, the country has for several years said it intends to break its dependence on black gold.

As it hopes to convert its economy into one based on renewable energies, new technologies and fish farming, the drop in the oil price has only sped up thoughts in this direction.

AFP

    
 

Poor sentiment masks benefits of cheaper oil to economy

But some economists say the precipitous drop in oil prices has upped the stakes for businesses, making the operating environment even more challenging

By

Kelly Taykellytay@sph.com.sg@KellyTayBT   

Amid all the negative news, it's worth remembering that falling oil prices are actually a boon for the Singapore economy. 

PHOTO: REUTERS

 A mixed result

JAN 27, 20165:50 AM

Singapore

AMID all the negative news, it's worth remembering that falling oil prices are actually a boon for the Singapore economy. But the positive effects have not been fully registered this time around - mainly because the tumble has happened alongside intense market volatility and uncertainty.

Singapore, as a net oil importer - meaning it imports more oil than it exports - stands to benefit directly from lower oil prices. Numerous analyses have shown this; just last year, Oxford Economics had forecast that Singapore's GDP would be 0.4 percentage point higher if oil prices were to drop to US$40 a barrel from US$84.

But drawing such a conclusion is difficult this time, given the extent of alarm permeating through financial markets.

As CIMB Private Banking economist Song Seng Wun put it: "On balance, being a net oil or energy importer, lower oil prices should be net positive for Singapore on a macro level ... But that's not necessarily true (when) people are in 'fearful mode'. Sentiment has a lot to do with it - rather than be cheered by the lower cost of energy, we become fearful that lower prices are actually a reflection of the global economy grinding to a halt."

Added Mizuho economist Vishnu Varathan: "The correlation between oil and equities has been phenomenal, almost shameful, actually. I mean, these guys are not supposed to go hand and club - they're different asset classes, companies are supposed to be benefiting. But none of this has held. Not only is oil being sold off; everything is taking a hit as well." Mr Song believes an element of 'self-fulfilling prophecy' is at play here. "Not much has changed in terms of fundamentals for oil prices to tank from US$50 to US$40 to now below US$30 ... So it must be speculation that's adding to it and making it worse."

Economists also pointed out how the precipitous drop in oil prices has upped the stakes for businesses, making the operating environment even more challenging.

Said Mr Varathan: "People who run these regressions (to calculate the impact of lower oil prices on GDP) are usually testing for a very linear and incremental drop over time - they're not looking for a 70 per cent plunge which is also going to kill a lot of businesses. It's not just about the volatility, but also the depth of the movement. That has wiped out a lot of the oil-related industries."

Indeed, with the oil slump showing no signs of recovery, oil majors - which have a sizeable presence in Singapore - are again slashing spending, selling assets, cutting jobs, and delaying projects. According to Rystad Energy, global oil and gas investments are expected to fall to their lowest in six years in 2016 to US$522 billion. This follows an already-severe 22 per cent fall to US$595 billion in 2015.

That, in turn, has had significant implications up and down the entire supply chain in Singapore, with offshore and marine firms especially feeling the strain. With fewer construction contracts to go round, revenues continue to be squeezed and margins thinned.

Bank of America Merrill Lynch economist Chua Hak Bin also flagged the knock-on pain experienced by the banking and finance sector, given increasing worries over bank loans to oil- and commodity-related companies.

Still, it's not all doom and gloom. Businesses outside of the oil and gas sector have on the whole benefited from lower utility and fuel-related costs. For example, those in the chemicals sector have seen some easing in their cost-side pressures. Airline and shipping companies have rejoiced at cheaper fuel, too; some have even cut prices to entice more consumers to travel.

Said UOB economist Francis Tan: "If airlines are aggressively cutting and no one is biting, that would be scary. But that's not the case right now - at least this shows that Singaporeans are still travelling and discretionary spending is still happening. So the underlying demand is still okay."

Inflationary pressures have come off as well, thanks to a mix of budgetary and administrative measures, coupled with lower energy prices. On Monday, the Department of Statistics said inflation eased to -0.5 per cent in 2015 - marking Singapore's first full-year negative inflation since 2002 (-0.4 per cent) and also the lowest in 29 years (1986: -1.4 per cent).

With the Monetary Authority of Singapore (MAS) indicating that it will be watching volatile oil prices closely, economists now believe the central bank could ease its Singapore dollar policy - although it is not their base case for now.

That is because it is tough to get clarity on the domestic inflation outlook - and hence, MAS' likely policy action. Said DBS economist Irvin Seah: "Much depends on the outlook for oil going forward, which is hard to call. I don't think anyone dares to make calls with conviction now - especially not after all the mistakes that were made last year."

      

Worst manufacturing decline in 14 years prompts growth revisions

Some economists are revising down Q4 2015 and full-year forecasts, but others say the slump in manufacturing's output will have a muted impact

By

Soon Weilunsoonwl@sph.com.sg@SoonWeilunBT

Figures from EDB indicate that factory production last year was 5.2 per cent lower than in 2014, making it the biggest contraction since the dot-com crash, when manufacturing output fell by 11.6 per cent in 2001.

FILE PHOTO

 Disappointing report card

JAN 27, 20165:50 AM

Singapore

THE contraction in Singapore's manufacturing output last year - the deepest in more than a decade - is forcing economists to relook at economic growth figures for 2015.

Kit Wei Zheng of Citigroup, for example, said: "Factoring in downward revisions in services, given the slowdown in trade-related activities and financial services, we think gross domestic product (GDP) growth in the fourth quarter of 2015 could be revised down to 1.4 per cent year-on-year ... bringing full year 2015 growth to 2 per cent."

Advance estimates previously released by the Ministry of Trade and Industry (MTI), based on data collected last October and November, had pegged Singapore's economy to expand 2.0 per cent year on year in the fourth quarter of 2015, and to grow by 2.1 per cent for the whole year.

Data released by the Economic Development Board (EDB) on Tuesday, on the other hand, gave economists fresh input to chew on.

Factory production last year was 5.2 per cent lower than in 2014, making it the biggest contraction since the dot-com crash, when manufacturing output fell by 11.6 per cent in 2001.

The slump was also the first time since the Great Financial Crisis that manufacturing output had decreased from the previous year. Output last decreased in 2009, by 4.2 per cent.

December's monthly print represented a year-on-year fall of 7.9 per cent. This was also the 11th consecutive month of year-on-year contractions in manufacturing.

These superlatives sent economists back to the drawing board on Tuesday.

CIMB Private Bank economist Song Seng Wun said: "All else constant, these figures alone would see headline GDP being bumped down to 1.8 per cent for the fourth quarter of 2015. I haven't even factored in the numbers on the services side."

He also recalculated 2015's full-year growth from 2.1 per cent down to 2 per cent.

But though Tuesday's figures put 2015's manufacturing output at its worst showing in over a decade, he said he thinks the sectoral recession last year was of a different nature from that during the Great Financial Crisis and the dot-com crash:

"Last year's slump was due to excess supply and over-capacity. Money was cheap, and businesses manufactured in anticipation of much stronger demand, and demand is still there," said Mr Song.

UOB economist Francis Tan also thinks that manufacturing's output slump in 2015 is not enough to be a precursor of a wider recession, when it is viewed in the context of stable employment figures and a robust services industry.

In addition, the impact of the contraction in itself would be muted.

MTI's estimates said that manufacturing GDP shrank by 6 per cent year-on-year in the fourth quarter of last year. EDB's data revealed that the sector's output decreased by 6.7 per cent in that quarter.

For a sector that has a GDP share of less than 20 per cent, the steeper decline indicated by EDB's data would ultimately have a negligible drag on total growth, said DBS economist Irvin Seah.

But he had a caveat to his calculations:

"No one knows for sure the spillover effects of inter-industry linkages in the economy," he said.

For example, the marine and offshore engineering segment's output represents only about 10 per cent of manufacturing's total output. But the segment shrank by a staggering 40.3 per cent year-on-year last December.

Its vertiginous drop in output took the wind out of the larger transport engineering cluster's sails, forcing it to shrink at 26.4 per cent year-on-year in December.

This might have implications for the oil-and-gas industry in Singapore, which in turn might make its effects felt in the wider economy, said Mr Seah.

Already, the malaise in most clusters of the manufacturing sector in 2015 made it the worst-performing year in over a decade.

Only the chemicals cluster recorded output growth in 2015, at 3.9 per cent. The transport engineering cluster shrank the most, at 13.5 per cent.

But UOB's Mr Tan was sanguine about prospects for manufacturing in 2016, as last year's slump presented opportunities for restructuring within the sector.

He forecasts a 2.5 per cent growth, partially due to the lower base from 2015's sectoral decline.

"We cannot throw away this engine," he said, referring to the sector as a driver for GDP growth. "What we need to do now is to find out how to refine this engine."

MTI will release full GDP estimates for the fourth quarter and the whole of 2015 next month.

    
 

Changi Airport handles record 55.4m passengers in 2015, thanks to uptick in H2

By

Nisha Ramchandaninishar@sph.com.sg@Nisha_BT

Changi Airport saw a record 55.4 million passengers in 2015, up 2.5 per cent year on year, thanks to a rebound in the second half of the year.

PHOTO: STEPHANIE YEOW

JAN 27, 201610:46 AM

CHANGI Airport saw a record 55.4 million passengers in 2015, up 2.5 per cent year on year, thanks to a rebound in the second half of the year.

This is slightly higher than the 54.1 million passenger movements in 2014.

Growth in the first half was essentially flat, as high-profile air accidents in 2014 dampened travel demand and as carriers struggled with depressed yields.

Changi Airport Group chief executive, Lee Seow Hiang, said: "We pressed on to actively woo new airlines and seek growth opportunities with existing ones, and our efforts have yielded some positive outcomes. We have seen both full-service and low-cost carriers add capacity in recent months and this has resulted in stronger passenger growth of about 5 per cent for the second half of the year."

There were 346,330 landings and take-offs, an increase of 1.4 per cent, while cargo traffic clocked around 1.85 million tonnes, edging up 0.5 per cent.

Top source markets such as Thailand (12.5 per cent), Vietnam (7.2 per cent) and China (7 per cent) saw the strongest growth. But others - such as Indonesia (-7.3 per cent) and Hong Kong (-1.2 per cent) - posted lower growth. One of the factors flagged was the strong Singapore dollar.

The busiest routes in 2015 were Jakarta, followed by Bangkok and Kuala Lumpur.

During the year, seven new carriers started operations at Changi Airport, including Air New Zealand, Batik Air and Thai Lion Air. Meanwhile, the airport added nine new destinations last year, of which four were in China.

Mr Lee added: "Going forward, economic uncertainty in many markets, made worse by lacklustre business and consumer confidence, may dampen travel demand in the near term. However, low fuel prices should support airlines' profitability. The outlook for Changi is also bolstered by positive developments such as the addition of new city links and airlines in the coming months."