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Asia-Pacific crude: Falling refining margins weigh on outlook
[SINGAPORE] Weaker refining margins were expected to weigh on demand in the Asia-Pacific crude market when trading for April-loading cargoes gets underway next week.
Complex refining margins in the Singapore hub have averaged just below $7 a barrel in the past week, compared with about US$10 a barrel in January.
Lower gasoline and naphtha cracks dented Asian refiners'profit margins, even as fuel oil cracks improved.
Asia's gasoline margin last week posted its biggest weekly fall in more than two years on ample supplies, although traders said it may rebound by March as refineries enter a maintenance period and buyers stockpile for peak summer demand.
Thai demand provided some relief for sellers, after state-run PTT purchased a total of 1.8 million barrels in a tender for refiner IRPC, including 1 million barrels of Azeri Light and 600,000 barrels of Malaysian Kikeh, traders said.
Pricing details and the identity of the sellers were unclear.
Brent's premium to Dubai swaps, or Brent-Dubai Exchange of Futures for Swaps (EFS) DUB-EFS-1M , widened 22 cents to US$2.98 a barrel, the widest in two weeks.
Maersk profit plunges as oil, container units both suffer
[COPENHAGEN] AP Moeller-Maersk A/S reported an 84 per cent plunge in 2015 profit after its oil unit was hit by lower energy prices and its container division got squeezed between sluggish trade growth and overcapacity.
Maersk said net income was US$791 million last year compared with US$5.02 billion in 2014. That compares with a median estimate of US$3.7 billion in a Bloomberg survey of 16 analysts.
The result includes a writedown in the value of Maersk's oil assets by US$2.6 billion, the Copenhagen-based company said.
"Given our expectation that the oil price will remain at a low level for a longer period, we have impaired the value of a number of Maersk Oil's assets," chief executive officer Nils Smedegaard Andersen said in the statement.
"We will continue to strengthen the Group's position through strong operational performance and growth investments."
In October, Maersk started cost cut programs for both of its two biggest units to address what analysts have described as a perfect storm for the conglomerate, which historically has found support from positive market conditions for at least one the two divisions.
Maersk said Wednesday that 2016's underlying profit will be "significantly below" last year's US$3.1 billion.
The Maersk Line unit's profit will also be "significantly below" 2015's level, which was US$1.3 billion. Maersk Oil will report a loss this year, it said.
The unit currently breaks even when oil prices are in a range of US$45 to US$55 a barrel, the company said.
HSBC board said to meet Sunday to mull headquarters decision
HSBC Holdings Plc's board will meet on Sunday to decide whether to shift its headquarters from London, according to two people with knowledge of the decision.
PHOTO: BLOOMBERG
[LONDON] HSBC Holdings Plc's board will meet on Sunday to decide whether to shift its headquarters from London, according to two people with knowledge of the decision.
The board has a meeting scheduled in London and if a decision is reached, the bank will make a formal announcement that evening, said the people, who asked not to be identified because the process is private. There is a chance the board will not reach a verdict and postpone the decision, the people said.
The board, led by Chief Executive Officer Stuart Gulliver and Chairman Douglas Flint, started a review of the bank's UK domicile in April, mulling tax systems, financial regulations and the ability to tap qualified staff among 11 factors outlined. British Chancellor of the Exchequer George Osborne has since made concessions to the largest banks, scrapping plans to raise the tax burden further and helping pave the way to ease regulatory scrutiny.
"An announcement will be made when the board makes its final decision and, if necessary, a further update will be provided at the time of the full year results announcement," Morgan Bone, a spokesman at HSBC, said in an e-mailed statement.
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HSBC rose 1.4 per cent to 438.65 pence at 11:12 a.m. in London, paring its loss this year to 18 per cent.
The board has another meeting scheduled for Feb 19 in London, where members will sign off on the bank's full-year results, according to the people.
Finance Director Iain Mackay has said HSBC considered Hong Kong as well as Canada, the US, China, Australia, Singapore, France and Germany as possible locations. Hong Kong is seen by analysts and shareholders as the most likely destination. Large investors including Aberdeen Asset Management Plc forecast the bank to stay in London.
Right Place?
"It's too difficult logistically, and whether Hong Kong would be the right place for them to go would be a different story," Martin Gilbert, CEO of top-10 shareholder Aberdeen, said in an interview on Bloomberg Television Tuesday. "The government in the UK have conceded enough to keep them." Osborne's proposal last year to dilute a levy on bank balance sheets was interpreted by analysts and investors at the time as a concession to keep Asia-focused lenders HSBC and Standard Chartered Plc from moving abroad. Osborne also ousted the regulator's chief enforcer, Martin Wheatley, and u-turned on a plan to assume senior bank managers are guilty until proven innocent, which lenders blamed for hindering the recruitment of top foreign executives.
HSBC will also have to consider the long-term impact if the UK votes to leave the European Union. "Brexit" would damage the country's financial industry because investment would be lost and rival cities would try to poach business from London, two of the nation's most senior corporate directors, Barclays Plc Chairman John McFarlane and BT Group Plc Chairman Michael Rake, said last month.
Prime Minister David Cameron, who faces euro-skeptic sentiment in his party as well as the country, has pledged to hold a vote on Britain's membership of the 28-nation bloc. EU leaders meet in Brussels to discuss the UK's pitch for fresh membership terms on Feb 18-19, paving the way for a referendum as early as June 23.
Singapore's life insurance business grew 9 per cent year on year to S$832.2 million in the fourth quarter of 2015
SPH
SINGAPORE'S life insurance business grew 9 per cent year on year to S$832.2 million in the fourth quarter of 2015 in total weighted new business premiums - a way to measure the growth of the life insurance industry - lifted by sales of non-linked weighted single-premium plans.
Weighted single-premium sales in the fourth quarter rose 28 per cent to S$281.9 million, driven by a 37 per cent increase year on year for non-linked single-premium plans to S$220.9 million.
Weighted annual premium sales for the quarter inched up marginally by one per cent to S$550.3 million.
For the full year, total weighted new business premiums rose 8 per cent year on year to nearly S$3 billion, lifted by the sales of single premium-linked products.
Weighted single-premium sales rose 9 per cent to S$940.8 million in 2015, of which single premium-linked sales comprised 26 per cent, while CPF-funded policies made up 16 per cent.
Weighted single premium-linked plans rose 22 per cent to S$244 million and non-linked sales climbed 6 per cent to S$696.8 million.
In 2015, weighted annual premium sales rose 7 per cent to S$2.06 billion.
Khoo Kah Siang, president of the Life Insurance Association Singapore, on Wednesday noted that the industry recorded healthy growth across all types of businesses and provided new protection cover totalling S$101.2 billion compared to 2014, which represents a 14 per cent rise in new business sum assured.
He added that the Integrated Shield Plan (IP) insurers have been working with the Ministry of Health on the standard class B1 plan, which will be announced soon.
[LONDON] The European Union and the United States have agreed to recognize each other's derivatives rules to avoid punitive capital charges on banks, a source close to the talks said on Wednesday.
Both sides of the Atlantic are introducing reforms after the 2007-09 financial crisis highlighted how the hitherto opaque US$550 trillion sector for interest rate and credit default swaps accentuated uncertainty in rocky markets.
The bulk of derivatives are traded in New York and London but the EU and United States had been unable to accept each other's rules in order to avoid international banks, who handle most transactions, being burdened with overlapping requirements. "It's done," the source said on condition of anonymity.
Without the EU formally recognizing US rules as being equally strict or equivalent to European rules, banks in Europe using an American clearing house would have to hold more capital.
Yellen warns of domestic, global risks to US economy
Federal Reserve Chair Janet Yellen warned Wednesday that the US economy faced risks from tightening domestic financial conditions as well as global economic turmoil.
PHOTO: REUTERS
[WASHINGTON] Federal Reserve Chair Janet Yellen warned Wednesday that the US economy faced risks from tightening domestic financial conditions as well as global economic turmoil.
"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar," she said in testimony to Congress.
"These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market," she said, according to the prepared text.
Yellen said the Fed still expects the US economy to grow at a moderate pace this year, noting that recent employment gains and a tentative pickup in wages "should support the growth of real incomes and therefore consumer spending." But she said that market turmoil abroad was also buffeting US economic momentum, and could drag down US growth.
The sharp fall in commodity prices - which she linked in part to "uncertainty" about China's economy and its policies - threatened to "trigger financial stresses" in commodity-exporting countries and companies.
"Should any of these downside risks materialize, foreign activity and demand for US exports could weaken and financial market conditions could tighten further."
While she gave no hint as to whether the Fed would consider raising interest rates again at its mid-March policy meeting, Yellen's warning appeared to reduce that likelihood.
After having increased its benchmark federal funds rate in December for the first time in seven years - to 0.25-0.50 percent - Yellen would only say that the Fed "expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the coming years."
Yellen: 'Uncertainty' over China's yuan fuels market turmoil
US Federal Reserve Chair Janet Yellen said Wednesday that China's unclear policy over its yuan currency was stoking turbulence in global markets and exacerbating global economic growth concerns.
PHOTO: REUTERS
[WASHINGTON] US Federal Reserve Chair Janet Yellen said Wednesday that China's unclear policy over its yuan currency was stoking turbulence in global markets and exacerbating global economic growth concerns.
The yuan's recent declines "have intensified uncertainty about China's exchange rate policy and the prospects for its economy," she said in testimony to Congress.
"This uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth."
Although she expressed confidence that China's economy was not facing an abrupt stall, the US central bank chief said the overall uncertainty emanating from the world's second-largest economy was behind some of the steep falls in global commodities prices, in turn stressing the economies of exporters.
"Recent economic indicators do not suggest a sharp slowdown in Chinese growth," she said in prepared testimony.
But the uncertain yuan policy's negative impact on the global economy "contributed to the recent fall in the prices of oil and other commodities."
In turn, she said, "low commodity prices could trigger financial stresses in commodity-exporting economies" as well as in commodity-producing firms around the world.
If such problems materialize, she added, "foreign activity and demand for US exports could weaken and financial market conditions could tighten further."
