Wednesday, February 3, 2016

Singapore's MAS likely to ease monetary policy in April: BMI

Singapore's MAS likely to ease monetary policy in April: BMI

MARKET research firm BMI Research expects Singapore's central bank to ease monetary policy in April, via a downward recentring of the Singapore dollar nominal effective exchange rate (S$NEER) band.
"(This) will be tantamount to a one-off depreciation versus its trade-weighted peers. We forecast the Singapore dollar to average SGD1.4600/USD over the course of 2016, and for the consumer price index (CPI) to average 0.3 per cent," said BMI in a report released on Thursday.
It cited a backdrop of consistently negative CPI readings, poor export growth, falling industrial production, and middling economic growth.
It added that lower oil prices have upped the potential for consumer prices to remain sub-zero for a second straight year - a key consideration that it said will likely factor into the Monetary Authority of Singapore's (MAS) decision-making process.
Core inflation - which strips out accommodation and private transport costs - is the focus for monetary policy in Singapore.

'The Russians are going to have a cow': The US's latest message to Putin 'is a really big deal'

'The Russians are going to have a cow': The US's latest message to Putin 'is a really big deal'

The US will devote a substantial portion of its defense spending to building up its military presence in Eastern Europe in an effort to deter Russian aggression in the region, Obama administration officials told The New York Times.
Countries belonging to the NATO alliance in Central and Eastern Europe will apparently receive heavy weaponry, tanks, and other equipment from the US, which quadrupled its budget from $789 million to more than $3.4 billion for military spending in Europe through 2017.
"This is a really big deal, and the Russians are going to have a cow," Evelyn N. Farkas, the Pentagon's top policy official on Russia and Ukraine until October, told The Times on Tuesday. "It's a huge sign of commitment to deterring Russia, and to strengthening our alliance and our partnership with countries like Ukraine, Moldova and Georgia."
The move comes four months after Russia launched an air campaign in Syria to prop up embattled Syrian President Bashar al-Assad in a move widely seen as an attempt by Russian President Vladimir Putin to secure and expand Russia's influence in the Middle East.
Russia's presence in Syria, however, has "undermined" virtually everything the West is trying to accomplish there and beyond, British Foreign Secretary Philip Hammond said in an interview with Reuters from a refugee camp in Jordan on Monday.
That includes the US's attempts to bolster "moderate" Syrian rebel groups, which have been targeted by Russian airstrikes, and the US-led anti-ISIS coalition's attempts to wipe out the Islamic State in Syria, which has largely been spared the brunt of Russia's punishing air campaign.
As such, the new funding being allocated to fortify Eastern Europe against Russian aggression "is not a response to something that happened last Tuesday," a senior administration official told The Times.
"This is a longer-term response to a changed security environment in Europe. This reflects a new situation, where Russia has become a more difficult actor," the official added.
Russia's Foreign Minister Sergei Lavrov (centre R), U.S. Secretary of State John Kerry (C) and foreign ministers attend a meeting in Vienna, Austria, November 14, 2015.   REUTERS/Leonhard Foeger Thomson ReutersRussian Foreign Minister Sergei Lavrov, US Secretary of State John Kerry, and foreign ministers.
Russia is unlikely to react kindly to an expanded NATO military presence along its western flank. In an interview with the German daily newspaper Bild in January, Putin asserted that Russia's tensions with the West largely resulted from NATO's eastward expansion after the collapse of the Soviet Union.
Putin said:
Of course every state has the right to organize its security the way it deems appropriate. But the states that were already in NATO, the member states, could also have followed their own interests — and abstained from an expansion to the east.
He added: "NATO and the USA wanted a complete victory over the Soviet Union. They wanted to sit on the throne in Europe alone."
Incidentally, Russia is now trying to dethrone NATO and position itself as an alternative to US influence in the Middle East, as evidenced by its alliance with Iran, Syria, and Iraq under the guise of fighting ISIS.
Putin AbadiKirill Kudryavtsev/Pool/ReutersIraqi Prime Minister Haider al-Abadi and Putin.
"Russia is of course trying to leverage the entire intervention [in Syria] as a way to lap up as much real estate in the Middle East as possible," Tony Badran, a research fellow at the Foundation for the Defense of Democracies, told Business Insider in September. "It's classic Putin."
In pushing himself to the forefront of an "anti-ISIS coalition" and creating a distraction from Ukraine, Putin has tried to coerce the US into accepting — and potentially embracing — Russia's role in the conflict.
But Obama's new funding plan to bolster NATO's presence in Eastern Europe shows that his administration is trying to put a damper on Putin's plans to dislodge the West from the Middle East entirely by reasserting the US's role in the region.
From The Times:
Administration officials said the new investments were not just about deterring Russia. The weapons and equipment could also be deployed along NATO's southern flank, where they could help in the fight against the Islamic State or in dealing with the influx of migrants from Syria.
Another anonymous administration official speaking to The Times put it bluntly: "This is a message that we see what they're capable of, and what their political leadership is willing to do."

South Korea's gender problem could lead to an existential crisis

South Korea's gender problem could lead to an existential crisis

RTR36ZVILucas Jackson / ReutersBom, a member of the K-pop group 2NE1.
South Korea has such a low birth rate that it could become the world's oldest country by 2045, with an average age of 50. If things continue at this rate, the country could even go extinct by 2750. All that aging is putting the country into some dire economic straits.
Solving this demographic crisis will take more than national sex nights.
Richard Jackson, president of the nonprofit Global Aging Institute, argues that it could require a fundamental change in workplace and gender dynamics.
"Policies that help women (and men) balance jobs and children are the linchpin of any effective pronatal strategy," he wrote in "The Graying of the Great Powers."
This is true of Korea more than anywhere else in the developed world, Jackson said in an interview with Tech Insider.
TI_Graphics_Fertility and labor force (1)Skye Gould / Tech Insider
Simply put, most Korean women are forced to choose between a long-term career and children.
This dynamic shows up in countless statistics.
Women in South Korea earn just 65% of what men earn. The country placed 115 out of 145 onThe World Economic Forum's Global Gender Gap Index 2015, sandwiched between the African nations of Burkina Faso and Zambia.
It's even more staggering when you compare women before and after having kids. A 2012 survey of 15-year-olds found that Korean girls aspired to high-status careers more than boys. Korean women have higher workforce participation in their 20s than men, but many women drop out of the labor force in their 30s. When they return in their 40s, they tend to get much less competitive jobs, according to The Economist.
shutterstock_341036129ShutterstockMyeong-dong shopping street in Seoul.
According to the Korea Labour Institute, women spend five times as long taking care of children and the home than men.
"There are not enough modern men for the newly educated women to marry," economist Jisoo Hwang told The Economist.
There's a lot of cultural momentum at work here. South Korea — which rose from being one of the poorest countries to one of the wealthiest — has one of the world's most extreme work cultures. Koreans work the third-longest hours of the OECD countries, and in the evenings it's expected that the whole team goes out to booze and bond, leaving little time to help out at home.
With those factors in mind, it's no wonder that more Korean women just aren't that interested in marriage or kids.

What can be done?

Nicholas Eberstadt, an American Enterprise Institute political economist, tells Tech Insider that the best the Korean government can do to increase the birthrate is "work at the margins."
The birth rate isn't like the economy: There's no cutting interest rates to make it easier to borrow money and spur business investment, there's no switch to be flipped.
But promoting gender equality at work is a good start.
Jackson points to two models that work for other developed countries:
There's the "nanny state" model, like in France and Sweden. In these countries, you have a job guarantee if you take maternity leave, and gender equality in Sweden is engineered so that if the mother of a child takes maternity leave, then the father has to take paternity leave for the second child. In France, the government will give you "family allowances" for having more children. And there's no social stigma for a mother of young children going back to work — the kids are expected to go to publicly funded crèche (day cares). It's part of a child's socialization.
And then there's the "flexible labor" model, like in the US. Though there isn't the same state support, it's become culturally normalized in the US to reenter the workforce, work flexibly, and otherwise combine professional and familial ambitions. The flexible labor comes in the form of part-time work, the ability to go back to school, getting degrees online, or starting a new career. While there are career-opportunity costs to diverting your energy from work to family, it's better than in Japan or South Korea, Jackson says, places where if you step off the career ladder, you don't get back on.
Korea, like Japan, may be a better fit for the nanny-state model, Jackson says.
GettyImages 468858421Chung Sung-Jun / GettyMore bi-racial families?
Another thing that could help is immigration. Lots of people — mostly women — from countries like China and the Philippines are moving to South Korea for marriage, to the point that the number of mixed ethnic families grew 700% from 2006 to 2014.
By 2030, it's estimated that 10% of the population will be made up of foreign-born families, compared with a little over 2% today. This means huge changes in cultural norms for a society where being "pure-blood" Korean has long been a praise-worthy trait.
Then there's the complicated effort to engineer new social norms around single parenting, fighting a huge stigma against unwed mothers. In a December 2015 statement, the South Korean finance ministry said that it plans "to change the social perception on various family forms to boost the birth rate," though the ministry didn't mention how it planned to do this.
Perhaps the biggest unknown is South Korea's neighbor to the north. If North and South were to reunify, Eberstadt says, the demographics would skew slightly younger and the birth rate would probably bump up. But beyond the estimated $500 billion cost, there are huge wild cards about the human resources of North Korea.
North KoreaREUTERS/Jason LeeNorth Korea.
"We don't know what life expectancy is," says Eberstadt, who authored the books "The Population of North Korea" and "The End of North Korea."
He says:
It may have bounced back from Somalia levels, but we don't know if it exceed Russian federation, which is brutal for an educated, urbanized society. We don't know how urbanized it is — it may be more rural than we think. And critically, we don't really have any hard data about the actual education capability, educational training, and the health of the young working population in the North. That throws a huge question mark over any sort of discussion of the demography of the unified peninsula.
Despite the dangers faced by Korea getting older — like putting tremendous pressure on working-age people to support elders and children — there are at least some benefits. For instance, the children of these less-populous generations stand to be well-educated, given South Korea's remarkably thorough school culture, where grade-schoolers go to math academy, English academy, and a music lesson after their "normal" school day finishes. If there are fewer kids, then even more resources can be devoted to their achievements.
Read the original article on Tech Insider. Follow Tech Insider on Facebook and Twitter. Copyright 2016.

Daiwa becomes latest firm to cut jobs in debt trading

Daiwa becomes latest firm to cut jobs in debt trading


[HONG KONG] Japan's second largest brokerage Daiwa Securities Group Inc has become the latest financial firm in Asia to reduce presence in the region's debt capital markets by cutting jobs.
The Japanese firm has cut six jobs in its debt capital markets division in its Asia ex-Japan business, according to bankers with knowledge of the situation.
Departures include executive directors Larry Temlock and Zac Yu while Jonathan Jackson, the head of Asian debt syndicate ex-Japan was reassigned to London in December.
Daiwa's retreat comes after it quit equity warrants trading in December and one source familiar with the situation said the brokerage is considering exiting the equity capital markets business with job cuts likely to follow.


If it does drop trading in those instruments, the brokerage will be left with equity sales and trading, corporate finance, M&A and private equity businesses.
"The company is going back to what it was around in 2010 with broadly a sponsor-focused model, though the restructuring may be coming to an end," said one source familiar with the ongoing developments.
The restructuring, ongoing since 2013, has seen employee numbers at its Hong Kong office shrink from a peak of about 700 to around 300.
In a sign of how times have changed, the debt capital markets business was moved to Hong Kong from Singapore to capitalise on the growing opportunities from the mainland.
Daiwa did not respond to requests for comment.
The moves reflect the difficult market for investment banks as more stringent rules on capital have hurt profitability. Last month Barclays cut hundreds of jobs in a broad retreat from Asia that saw it exit Australia, Taiwan and South Korea.
Concerns over a global slowdown led by China, falling commodity prices and the spectre of rising US interest rates have halted the boom enjoyed by primary debt markets in recent years.
Issuance fell 12.9 per cent in 2015 to US$182.9 billion after three straight years of record volumes. Banks are predicting a further shrinkage in 2016.
Secondary market volumes have also fallen with Greenwich Associates reporting a 9 per cent drop in corporate bonds in 2015 compared to the previous year while rates trading was flat.
REUTERS

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