Japan Finance Ministry says will take necessary steps to deal with FX volatility

Japanese Finance Minister Taro Aso said on Friday the government would take necessary steps to deal with currency volatility, the minister's strongest hint of intervention since the yen began its surge this month. 

PHOTO: AFP

FEB 12, 20169:48 AM

[TOKYO] Japanese Finance Minister Taro Aso said on Friday the government would take necessary steps to deal with currency volatility, the minister's strongest hint of intervention since the yen began its surge this month.

The dollar fell below 111 yen on Thursday to hit its lowest level since October 2014, triggering market speculation that Tokyo could conduct yen-selling intervention to prevent a further yen spike from hurting the export-reliant economy.

"We have agreed at G7 and G20 that sudden foreign exchange moves are undesirable," Mr Aso told reporters at a post-cabinet meeting news conference. "Recent foreign exchange moves have been very rough. I am very nervously watching these moves and will take appropriate steps as necessary."

In response to the question of whether Japan intervened on Thursday, Aso said that is not something that a finance minister comments on.

Japanese Prime Minister Shinzo Abe's policies, known as "Abenomics", rely on a weak yen to push up corporate earnings and to help generate inflation by raising import prices.

Mr Abe has also repeatedly touted the benefits of a rising stock market, which bolsters corporate sentiment and generates positive returns for individual investors.

However, some economists worry that Mr Abe will struggle to come up with ways to stimulate the economy now that stocks and the yen are moving against government policy.

Aso also said he hopes the Group of 20 finance leaders gathering in Shanghai later this month will consider a global policy response in the wake of the recent market turmoil.

A global stock market sell-off and a rising yen threaten to hurt corporate earnings, weaken sentiment and slow inflation, which would undermine the Japanese government's efforts to revitalise the economy and strengthen domestic demand. "I want to consider if there are ways that the G-20 countries can cooperate in response to recent market turmoil," Mr Aso said.

Group of 20 finance ministers will meet at the end of February in Shanghai, China, which holds the rotating presidency of the group, to survey the world's economic outlook with its risks.

There is a lot at stake, because China's economic slowdown, a collapse in oil prices, doubts about the pace of US interest rate hikes and the Bank of Japan's adoption of negative rates have roiled financial markets.

The combination of all these factors has raised concerns that the global economy is much weaker than anticipated, which is driving asset flows from stocks into bonds and into the yen, which are often perceived as a safe-haven assets.

REUTERS

    
 

Beijing offers support for Hong Kong after New Year violence

China's central government firmly supports Hong Kong authorities and police in safeguarding public order and punishing those who break the law, the foreign ministry has said in Beijing's first reaction to a riot in Hong Kong earlier this week. 

PHOTO: REUTERS

FEB 12, 201610:15 AM

[BEIJING] China's central government firmly supports Hong Kong authorities and police in safeguarding public order and punishing those who break the law, the foreign ministry has said in Beijing's first reaction to a riot in Hong Kong earlier this week.

Sixty-four people have been arrested in connection with the violence on Monday night, the first day of the Lunar New Year holiday, when protesters hurled bricks at police and set fire to rubbish bins in Mong Kok, a tough, working-class neighbourhood just across the harbour from the heart of the Asian financial centre. Thirty-seven were charged on Thursday.

China's foreign ministry said in a statement late on Thursday that Hong Kong was a society with the rule of law. "The Chinese central government believes and firmly supports the Hong Kong government and the police in safeguarding social security, protecting Hong Kong residents and their property, and punishing illegal and criminal activities in accordance with the law," the statement said.

Police fired two warning shots into the air, almost unheard of in the former British colony that reverted to Chinese rule in 1997 and is considered one of Asia's safest cities. More than 130 people were wounded in the clashes.

The violence has compounded a sense of unease since an"Occupy Central" pro-democracy movement in late 2014 that saw thousands of protesters block major roads, including in Mong Kok, to demand Beijing's Communist leaders allow full democracy in the city.

At least one of those charged in connection with this week's trouble belongs to a group called Hong Kong Indigenous, one of a cluster of outspoken groups calling for greater Hong Kong autonomy and even independence from China, the group said.

China's Foreign Ministry said the riot was "plotted mainly by a local radical separatist organisation". "The violence quickly subsided as the Hong Kong police took effective measures in a professional manner with restraint and in accordance with the law," the statement said.

REUTERS

    
 

Barry Manilow rushed to hospital, cancels shows

      

Soft rock star Barry Manilow was rushed to a hospital on Thursday, forcing him to cancel dates on what he says will be his final tour.

PHOTO: BMG

FEB 12, 20167:08 AM

[LOS ANGELES] Soft rock star Barry Manilow was rushed to a hospital on Thursday, forcing him to cancel dates on what he says will be his final tour.

The 72-year-old singer, who had just played a sold-out show in Memphis, was taken to a Los Angeles hospital "due to complications from emergency oral surgery" he underwent earlier in the week, his management team said in a statement.

Manilow postponed shows scheduled for Thursday and Friday, although his managers said they would be rescheduled.

The New York-born singer enjoyed wide success as a soft rock singer in the 1970s, with hit singles including Copacabana (At The Copa).

Manilow, who has suffered a series of health scares over the years, has said that his ongoing tour will be his last. It is scheduled to end on June 23 at the O2 Arena in London.

AFP

      

Online travel shares surge on cheap-oil boost

PHOTO: EPA

FEB 12, 20166:55 AM

[NEW YORK] Shares of online travel companies Expedia and TripAdvisor jumped Thursday following solid earnings announcements, as investors bet on the boost to leisure tourism from cheap oil.

Expedia chief executive Dara Khosrowshahi cited the benefit of cheaper airfares as a boon to the online travel industry, helping to offset the ills from the November Paris attacks, as well as the drag from the sinking stock market.

"The more leisure travellers we have flying, the more opportunity we have to sell hotels and insurance and cars and everything else to them," Mr Khosrowshahi said.

TripAdvisor chief financial officer Ernst Teunissen has not seen a "discernible impact" from the macro economic worries, adding, "we are keeping our eye on it very closely."

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Shares of Expedia jumped 9.6 per cent to US$103.37, while TripAdvisor vaulted 12.4 per cent to US$61.07.

Both companies saw net income dented by higher expenses as they invest in new initiatives and acquisitions to attract users.

Expedia lost US$12.5 million in the fourth quarter, compared with a gain of US$65 million, while TripAdvisor's fourth-quarter earnings fell to US$3 million from US$36 million in the year-ago period.

But investors overlooked that in light of a 25.3 per cent gain in Expedia's fourth-quarter revenues to US$1.7 billion, and TripAdvisor's 7.0 per cent revenue surge to US$309 million.

Mr Khosrowshahi said that while the macro economic environment looked uncertain and the stock market "scary," the outlook for travel bookings remains encouraging as airlines pass on some of the benefits of cheaper fuel to consumers.

Expedia projected 2016 growth of adjusted earnings before taxes of 35-45 per cent.

Expedia said the Paris attacks of November, in which jihadists killed 130 people in shootings and bombings and frightened large numbers of tourists into cancelling travel plans to the French capital, hit adjusted pre-tax earnings by about US$10-15 million in the quarter.

"We saw immediately an effect on broader European destinations and that effect looks like its disappeared," Mr Khosrowshahi said.

"But the trends in Paris are certainly poor compared to the trends that we had seen before fourth quarter last year." "It was a horrific event and I think it was the kind of event that stays in people's memories," Mr Khosrowshahi said. "So I think there will be some effect going into the balance of the year."

AFP

    
 

Yen adds to gains as investors run for cover

The Japanese yen surged again on Thursday as traders spooked by turbulence in financial markets continued to plow into the safe haven.

PHOTO: REUTERS

FEB 12, 20166:49 AM

[NEW YORK] The Japanese yen surged again on Thursday as traders spooked by turbulence in financial markets continued to plow into the safe haven.

Federal Reserve Chair Janet Yellen's noncommittal stance on interest rate policy in a second day of hearings in Congress left currency investors nervous, while her warnings the global markets turmoil could threaten the US economy helped send equity markets from Tokyo to New York sharply lower.

The yen jumped 0.9 per cent against the dollar and 0.6 per cent on the euro, to follow up gains of about 1.5 per cent on Wednesday.

The dollar finished at 112.39 yen, and the euro at 127.25 yen.

Meanwhile the European currency gained on the dollar, rising 0.4 per cent to US$1.1323.

Ms Yellen leaned to dovishness in her testimony but maintained the Fed's line since its December rate hike that the trend is for more increases, albeit only very gradually.

However, noting that other major central banks have cut rates to negative territory - the Swedish central bank took its short-term rate to -0.5 per cent on Thursday - she hinted that the Fed was still mulling the longer-term impact of global markets turmoil and slower growth.

Some took that as a sign the Fed could consider reversing course.

"Now, with the Fed not only unsure about further interest rate hikes but also potentially entertaining the possibility of rate cuts and negative interest rates on the hazy horizon, the previously rising US dollar has made an abrupt U-turn," said James Chen at Forex.com.

AFP

    
 

Singtel Q3 profit slides 1.7%, forex hurts

ST PHOTO: THOMAS WONG

FEB 12, 20167:29 AM

[SINGAPORE] Singapore Telecommunications Ltd reported a 1.7 per cent fall in third-quarter net profit, nearly in line with estimates, as adverse currency movements and investments offset growing mobile data usage by its customers.

Singtel, Southeast Asia's biggest telecommunications operator, posted a net profit of S$954 million for the three months ended December, compared with S$970 million a year ago. Underlying net profit, excluding one-off items, was S$955 million.

The average forecast of three analysts polled by Reuters was for a net profit of S$957 million.

Revenue rose 1.1 per cent to S$4.47 billion.

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Oil slumps again; US crude at 2003 low

Without any particular market-moving news but a persistent global crude oil glut, the oil market slid again on Thursday, dragging US crude to its lowest price in nearly 13 years. 

PHOTO: BLOOMBERG

FEB 12, 20167:02 AM

[NEW YORK] Without any particular market-moving news but a persistent global crude oil glut, the oil market slid again on Thursday, dragging US crude to its lowest price in nearly 13 years.

Down by about US$3.50 per barrel over the three prior sessions, US benchmark West Texas Intermediate for delivery in March dived another US$1.24 (4.5 per cent) to US$26.21 a barrel, its lowest close since May 2003.

In London, Brent North Sea crude for April, the European oil benchmark, dropped to US$30.06 a barrel, down 78 cents (2.6 per cent) from Wednesday's settlement.

"We're seeing some ... downtrend in the global economy," said Carl Larry of Frost & Sullivan. "There's a lack of recovery around the world. That's keeping pressure on the oil market right now." "As long as demand is going to stay low and the economy is going to stay weak, we're going to see low oil prices maintained," he added.

"Global petroleum markets remain under pressure on Thursday, with investors increasingly fearful of recession," said Tim Evans of Citi Futures.

Analysts said sentiment was marred also by a report this week from the Organisation of the Petroleum Exporting Countries that showed the cartel's production rose by about 130,000 barrels a day in January.

"With the fundamentals of an unrelenting oversupply still in place and the conflict of interest between Opec members pumping record high levels... low oil prices may be here to stay for an extended period," said Lukman Otunuga, research analyst at trading group FXTM.

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