We need to find a fairer way of providing Goods and Services to the rest of the people on Earth.Cryptocurrencies and/or Gold Standard of money....maybe the answer to fight hyperinflation caused by too much printing of paper/fiat currencies by Governments and Central Banks all over the World. (https://nomorefiatmoneyplease.blogspot.com)
China announced plans to cut steel production by as much as 150 million tonnes over the next five years, state media reported Thursday, as the country stares down industrial overcapacity that has weighed on its growth.
PHOTO: REUTERS
[BEIJING] China announced plans to cut steel production by as much as 150 million tonnes over the next five years, state media reported Thursday, as the country stares down industrial overcapacity that has weighed on its growth.
The State Council, the country's cabinet, said it would close outdated plants and refuse to license new steel projects, the official Xinhua news service said.
Crude steel production declined 2.3 per cent year-on-year to 803.8 million tonnes in 2015, the National Bureau of Statistics said last month. Xinhua news agency described it as the first drop since 1981.
China accounts for half the world's crude steel production, according to data from the World Steel Association.
But the sector has been plagued by overcapacity in both China and the rest of the world for years, and global prices have plummeted in the face of oversupply.
Experts say China is sitting on an overproduction of 340 million tonnes.
The current production capacity is 1.2 billion tonnes, but the country only produced 804 million tonnes last year, Xinhua said.
European producers accuse Chinese firms of selling below the cost of production, and French economy minister Emmanuel Macron has warned that Europe would not accept the "Chinese dumping".
Steel producers have also been hit by concerns over China's slowing growth, which reached 6.9 per cent in 2015, its slowest for 25 years.
Beijing has banned new projects in a variety of other industries in an effort to correct the problem, including cement, electrolytic aluminium, flat glass and shipbuilding.
Many of China's giant state-owned enterprises are unviable and Premier Li Keqiang has called for a "cutback on overcapacity in traditional industries as well as a large number of zombie enterprises".
HSBC to transfer Singapore retail, wealth arm to local subsidiary
[SINGAPORE] Europe's biggest lender HSBC plans to transfer its Singapore retail and wealth management business to a locally incorporated subsidiary on May 9, the bank said on Friday.
The move comes after HSBC was identified by Singapore's central bank last year as one among seven banks which had a significant retail presence in the city-state and needed to incorporate locally.
HSBC was among the four foreign banks on the list.
Regulators around the globe are trying to ring-fence the retail operations of global banks to protect domestic customers.
China forex regulator eases capital rules for foreign investors
[SHANGHAI] China's foreign exchange regulator on Thursday relaxed foreign currency management rules under the Qualified Foreign Institutional Investor scheme (QFII), in an effort to further open the domestic capital market.
The upward investment limit for QFIIs would be raised, while the quota approval procedures would be simplified, the State Administration of Foreign Exchange said in a statement on its website.
Rules restricting QFIIs from moving capital in and out of China would also be eased, the statement said.
ECB should separate monetary and supervisory decision makers: Bundesbank
The European Central Bank should have separate decision-making bodies for monetary policy and banking supervision as the current set-up could lead to conflicts of interest, the deputy president of Germany's Bundesbank said on Thursday.
PHOTO: AFP
[FRANKFURT] The European Central Bank should have separate decision-making bodies for monetary policy and banking supervision as the current set-up could lead to conflicts of interest, the deputy president of Germany's Bundesbank said on Thursday.
"The ECB's Governing Council, for instance, is the ultimate decision making body for both, monetary policy and supervisory decisions," Claudia Buch, who sits in on governing council meetings, said in remarks prepared for a speech. "A clear separation of the ECB's responsibilities for banking supervision and monetary policy would be desirable."
Buch also called for a simplification of the rules governing the participation of the European Commission and the Council in the decision-making process of the Single Resolution Mechanism for winding up failed banks.
She said the current institutional framework is vulnerable to possible conflicts of interest but acknowledged that any change would require modifying primary European Union law.
Controversy in Germany over plans to cap cash transactions
[BERLIN] A proposal by German Finance Minister Wolfgang Schaeuble to introduce a ceiling for cash payments to help combat money laundering and the financing of terrorism came under fire in Germany Thursday.
In a country where people still overwhelmingly prefer to pay in cash, even the central bank or Bundesbank was critical of the government's proposal.
"For citizens, any restriction in the usage of cash is a infringement on their personal economic liberty," said Carl-Ludwig Thiele, who is responsible for cash management on the Bundesbank's executive board.
Hans Michelbach, financial expert in the conservative CSU party, was similarly opposed.
Introducing a limit on cash payments would mark an "unjustifiable encroachment in citizens' freedom of action," he said.
Newspapers were also up in arms, with the business daily Handelsblatt saying the government was "waging a war on cash." The daily Sueddeutsche Zeitung warned against the negative effects on important sectors such as skilled trades and crafts or the second-hand car sales.
On Wednesday, Schaeuble had suggested that a 5,000-euro (US$5,500) limit be placed on cash transactions, but that it would be need to be implemented at a Europe-wide level in order to be effective.
Around 79 per cent of payments are made in cash in Germany, according to Bundesbank statistics.
Critics, such as the OECD (Organisation for Economic Cooperation and Development), have complained this makes money laundering easier.
According to a study commissioned by the finance ministry, as much as 100 billion euros of dirty cash is laundered in Germany each year.
In the context of combatting the financing of terrorism, the EU promised earlier this week to examine, along with the European Central Bank, the use of 500-euro banknotes, which are in demand in criminal circles for their high volume and low volume.
Banks press EU to drop 'arbitrary' derivatives-collateral rule
[LONDON] Banks and clearinghouses are lobbying European Union regulators to shelve a proposal setting collateral requirements during the trading day, warning that it could upend broader efforts to reach a deal with the US on oversight for the global derivatives market.
The Futures Industry Association and International Swaps and Derivatives Association, two of the leading trade groups for the biggest dealers in derivatives, said in a joint letter released on Thursday that the plan for intra-day collateral requirements at clearinghouses will cause "major and disproportionate operational complexities" and is inconsistent with US rules.
The requirement, proposed in December by the European Securities and Markets Authority, "could re-introduce the potential regulatory arbitrage situation" that the proposal "is specifically targeted to resolve," the groups said in the letter, which ESMA made public. Banks and clearinghouses say there are already sufficient systems to collect collateral if necessary during the day and that the new regulatory requirement is unnecessary.
Intercontinental Exchange Inc, which is based in the US and operates a European clearinghouse, said the requirement "should be removed completely" to reach equivalence with the US Commodity Futures Trading Commission, the main US derivatives regulator. "CFTC rules have no such requirement," the company said.
The intra-day requirement is the latest wrinkle in more than two years of debate between the EU and US on supervision of clearinghouses, which stand between buyers and sellers and receive collateral from both sides. The two sides have been negotiating policy changes that would enable European authorities to make a key finding that US rules are equivalent to their own and strong enough that extra capital isn't necessary to protect against losses.
The industry has repeatedly called for the two sides to reach a deal that would avoid a major hike in capital requirements for European banks when they use a US clearinghouse. The CFTC and European Commission, the EU's executive arm, have both said the talks have progressed recently and that a deal is expected soon.
The intra-day requirement was included in a broader proposal from ESMA in December to allow European clearinghouses the option of offering some US-style collateral rules. Under the proposal, European clients could use the US system for futures and other exchange-traded derivatives. The proposal has generally been praised by the industry as a step toward achieving a trans-Atlantic agreement.
ESMA said that clearinghouses need "more stringent requirements" to monitor and collect intra-day collateral if they adopt the US-style system. The proposal said clearinghouses should calculate collateral requirements at least hourly and collect additional collateral within an hour if the new requirement is higher than 120 percent of the available collateral.
"The proposed threshold is arbitrary," Deutsche Bank AG's head of regulatory policy said in a Feb 1 letter to ESMA.
China's corruption watchdog finds no major problems with financial agencies
[BEIJING] China's central bank will maintain a prudent monetary policy and fend off financial risks, it said in a statement posted on the People's Bank of China (PBOC) website on Thursday.
China's corruption watchdog dicovered no major problems as it finished its inspection of the PBOC, the statement added. The inspectors identified minor issues, however, according to statements on the websites of multiple agencies.
The Central Commission for Discipline Inspection (CCDI), the ruling Communist Party's anti-corruption watchdog, finished inspections of 31 organisations, 21 financial agencies among them, state television and radio said.
Financial agencies investigated include the central bank, the foreign exchange regulator - the State Administration of Foreign Exchange - and the securities regulator - the China Securities Regulatory Commission (CSRC).
This round of inspections was closely watched by investors because of the power wielded by agencies such as the PBOC and SAFE, state radio said.
Goldman Sachs with Pimco warn bond gains will turn into losses
Goldman Sachs Group Inc and Pacific Investment Management Co (Pimco) say bonds are poised to fall and traders aren't prepared for how far the Federal Reserve will raise interest rates.
PHOTO: REUTERS
[SYDNEY] Goldman Sachs Group Inc and Pacific Investment Management Co say bonds are poised to fall and traders aren't prepared for how far the Federal Reserve will raise interest rates.
"Ten-year yields are likely to go up," Jan Hatzius, chief economist for Goldman Sachs, said at a conference in Sydney. The "bond market is underestimating to a significant degree the amount of monetary normalization that we're likely to see." The benchmark yield will rise to about 3 per cent by year-end, he said, from 1.91 per cent Thursday.
Global economic growth will subdue deflation fears, and the Fed will raise rates more than traders expect, according to Pimco, which manages the world's biggest actively run bond fund. The company has a "small underweight" position in global bonds, according to a report Wednesday by Mihir P. Worah and Geraldine Sundstrom, fund managers at the Newport Beach, California, firm.
The two bond powerhouses are voicing the consensus outlook among economists surveyed by Bloomberg, which projects yields will rise through the course of 2016. The bearish view is reemerging after being drowned out in January as tumbling oil and stock prices sent investors rushing to the haven of government debt.
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The Treasury 10-year note yield rose two basis points, or 0.02 per centage point, to 1.91 per cent as of 6:36 a.m. in New York Thursday, according to Bloomberg Bond Trader data. The price of the 2.25 per cent security due in November 2025 was 103 2/32. The yield dropped to 1.79 per cent Wednesday, the lowest level since February 2015.
Bond traders see less than a 50 per cent chance the Fed will raise rates in 2016, based on futures contracts. When policy makers met in December and increased their benchmark for the first time in almost a decade, they indicated there would be four more moves this year.
The rationale for higher yields is "quite strong," Goldman Sachs's Hatzius said. "Recent news, of course, has been somewhat softer so there's some downside risks to that." Early in 2015, with the Treasury 10-year yield at about 1.90 per cent, Hatzius predicted it would jump to 2.85 per cent by the end of that year. The yield ended December at 2.27 per cent. Goldman Sachs is one of the 22 primary dealers that trade directly with the Fed.
Pimco's Jerome Schneider says bond traders shouldn't write off Fed rate increases this year. He and his colleagues predict policy makers will raise their target more than once in 2016 as US economic growth remains stable and wage gains pick up.
"The fundamentals of the US economy remain fairly intact," Schneider said in an interview in New York. "Not to say we are going to have successive Fed hikes. It will be under four hikes." Data due later Thursday will show jobless claims for the week ended Jan. 30 held near the same level as the previous week when they dropped from a six-month high, according to the median forecast of economists surveyed by Bloomberg. A report on Friday will show employers added 190,000 jobs last month after 292,000 in December, a separate survey indicated.
Schneider's US$13.8 billion Pimco Short-Term Fund gained 1.4 per cent last year, while rivals in the same category were flat on average, data compiled by Bloomberg show. The performance helped lead Morningstar Inc. to name him and his team fixed- income fund manager of the year last week.
Pimco faced growing outflows after co-founder Bill Gross was ousted in 2014. Withdrawals from the Total Return Fund, which Gross managed, reached over US$200 billion relative to the peak in assets in 2013. The US$89.3 billion Pimco Total Return Fund has fallen 0.7 per cent in the past year, ranking in the middle of its peers, based on data compiled by Bloomberg.
