China may finally have stopped running out of money

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REUTERS/Guang NiuYingying, a 17-year-old panda, born in a zoo in the southwestern province of Sichuan, lifts weights during a performance at the Chinese Acrobats Arts Festival in Beijing late October 20, 2001. Yingying is said to be the only member of the endangered species in the world able to dunk a basketball, go down a slide and drive a car.

Chinese foreign exchange reservesfinally stopped its slide in March, increasing by $10 billion to $3.212 trillion.

China's FX reserves peaked at about $4 trillion (£2.7 trillion) in the middle of 2014, but since then the country has burned through about $800 billion of its foreign cash.

Reserves had fallen for four consecutive months until March, and have dropped more than $600 billion in the last year alone, but that slide may be finally be over, even though the rise is pretty tiny, representing growth of just 0.3%.

The number was a beat on the expectations of economists, who had predicted a further fall — $6 billion — from February's number.

China's FX reserves have been the subject of lots of worry in recent years. In February, notoriously pessimistic economist Albert Edwards warned that the country is running out of money and will have to float the renminbi as a free currency.

Crude oil futures jump on hopes of an output freeze

• Henning Gloystein, Reuters

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Atef Hassan/Reuters

SINGAPORE (Reuters) - Crude oil futures jumped on Wednesday, lifted by growing expectations that exporters will agree to freeze their output amid global oversupply, although Iran's plans to boost production are seen as capping bigger price gains.

The Kuwaiti governor for the Organization of the Petroleum Exporting Countries (OPEC), Nawal Al-Fuzaia, said on Tuesday that there were "positive indications an agreement will be reached" during a producer meeting scheduled for April 17 in Qatar.

Front month U.S. crude futures jumped a dollar, or 2.8 percent, to $36.89 per barrel at 0240 GMT. International Brent futures rose 1.8 percent at $38.55 a barrel.

"Oil gained some momentum. The comment by the Kuwait OPEC governor provided some support to prices," ANZ bank said, but warned that investors would likely remain cautious ahead of the April 17 meeting.

An initial output freeze agreed in February has helped oil prices rise to almost $38 a barrel from a 12-year low close to $27 plumbed earlier this year.

However, prices have fallen in recent days on doubts that a wider deal will be reached, largely because Iran has so far said it has no intention of slowing its production after crippling sanctions against it were lifted in January.

Iranian Oil Minister Bijan Namdar Zanganeh said the country's crude output would reach 4 million barrels per day (bpd) by March 2017, state television reported on Wednesday, with plans to export 2.25 million bpd of those supplies.

That would be up from a little over 1 million bpd under the sanctions and only slightly below pre-sanctions peaks of 2.5 million bpd.

Reuters/Edgar SuA worker prepares to transport oil pipelines to be laid for the Pengerang Gas Pipeline Project at an area 40km (24 miles) away from the Pengerang Integrated Petroleum Complex in Pengerang, Johor, Malaysia.

With Iran's exports rising and other producers pledging to freeze production near record-high levels, an agreement would do little to address a global supply overhang that sees at least a million barrels of crude produced every day in excess of demand.

Dutch bank ING said that technical market indicators implied that oil prices had developed a bottom near recent lows but that the "short-term upside is limited".

In physical markets, sentiment was also less bullish, with Abu Dhabi cutting its March retroactive official selling price (OSP) crude premium over benchmark Dubai prices by 64 cents to $3.06 per barrel on ample supplies.

This followed top exporter Saudi Arabia cutting its May Arab Light crude OSP by 10 cents per barrel to a discount of $0.85 per barrel to the Dubai average.

(Editing by Richard Pullin and Himani Sarkrar)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter

Europe can't find a 'significant gain in momentum'

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GettyOne of the sculptures of young girls by artist Rene Julien stands in front of a flag of the European Union at the Charlemagne building of the European Commission on November 17, 2011 in Brussels, Belgium. Eurozone member countries are continuing to struggle with a debt crisis afflicting a widening circle of nations as the rest of the world fears economic repercussions.

The eurozone's economic growth was "subdued" in the first quarter of 2016, and is struggling to find a "significant gain in momentum", according to the latest PMI data released by Markit on Tuesday morning.

According to Markit, the eurozone saw a composite PMI reading of 53.1, down from the flash reading of 53.7, but marginally up on economists expectations, which put the number at 53 flat.

The purchasing managers index (PMI) figures are given as a number between 0 and 100. Anything above 50 signals growth, while anything below means a contraction in activity — so the higher the better.

Markit's statement alongside the data said:

"March saw the rate of economic expansion in the euro area improve for the first time in three months. The extent of the acceleration was negligible, however, and less marked than that indicated by earlier flash data. Manufacturing saw faster growth of production, but this was mostly offset by a slower rate of output expansion at service providers." 

Here's what Chris Williamson, Markit's chief economist had to say:

"The eurozone economy failed to show any significant gain in momentum in March. With the PMI barely rising from February’s 13-month low, the region looks to have grown by just 0.3% again in the first quarter. “Sluggish growth is the result of lacklustre demand, accompanied by falling prices as firms compete at the expense of profit margins. Not surprisingly, hiring is coming under increased pressure as firms struggle to contain costs."

Here are the headline eurozone figures:

• Services PMI: 53.1, down from February's 53.3, and behind the 54 estimated by Markit's flash data.
• Composite PMI: Also 53.1, just up from February's 53, but down from the 53.7 flash reading.

Markit's chart shows just how much Europe is struggling to find substantially, sustainable growth right now. Take a look:

Markit

As well as the headline figures, Markit released data individually on the eurozone's four biggest economies. Here's how things look in Germany, France, Italy, and Spain:

• German Composite: 54, just down from February's 54.1.
• French Composite: 50, up from February's figure, but a big miss on the flash estimate of 51.1
• Italian Services: 51.2, well down from the 53.8 figure in February, and missing expectations from economists of 54.
• Spanish Services: 55.3, better than the expected 54.5, and well above February's 54.1 number.

The PMI figures come just a few weeks after the European Central Bank and its president Mario Draghi announced a series of new monetary policy measures, including cutting all its base rates, and extending its programme of bond buying.

The measures are designed to try and boost stalling growth, as well as inflation, within the Eurozone. So far the ECB's negative interest rate policy (NIRP) has failed to serve its purpose effectively, and today's data won't exactly fill Draghi and the rest of the ECB with confidence.

However, Markit points to a little bit of optimism after the ECB's new policies, with Williamson saying: “Hopes are pinned on the economy being rejuvenated by the ECB’s more assertive policy initiatives, and the upturn in service sector optimism seen during the month suggests that firms are taking a more positive view of the outlook.

Today's eurozone PMI's follow on from a pretty poor set of global data from the manufacturing sector. Activity levels across the global manufacturing sector expanded at the slowest pace in nearly three years in the first quarter of 2016.

India just slashed interest rates for the 5th time in just over a year

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REUTERS/Eduardo MunozPeople take part in the 35th India Day Parade in New York August 16, 2015.

India's central bank, the Reserve Bank of India has continued the global central bank trend of cutting rates, slashing the country's base interest rate from 6.75% to 6.5%. That's the lowest its been since 2011.

The cut is the fifth by the bank since the start of 2015, and had been widely expected by economists, but still adds to the huge number of cuts in interest rates since the financial crisis.

Last week, a chart from JP Morgan Asset Management's Alex Dryden, first reported by the Financial Times, showed that central banks have cut more than 650 times since 2008. Amongst the latest nations to cut are Norway, which dropped rates to just 0.5% in March, and said it could negative.

Speaking about the cut, the RBI's governor Raghuram Rajan left room for more cuts in the country's rate, saying:

The stance of monetary policy will remain accommodative. The Reserve Bank will continue to watch macroeconomic and financial developments in the months ahead with a view to responding with further policy action as space opens up.

At the same time as the announcement of the central rate cut, the RBI also left its cash reserve rate unchanged at 4%, and upped its reverse repo rate to 6% from 5.75%.

Earlier on Tuesday, Australia's Reserve Bank left its base rate unchanged at 2%

Credit Suisse is going after China

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REUTERS/Arnd Wiegmann

HONG KONG — Credit Suisse CEO Tidjane Thiam said on Tuesday the Swiss bank had been "underweight" in China and would look to build its wealth-management capabilities in the world's second-biggest economy, despite slowing growth.

Thiam told a media briefing on the sidelines of the annual Credit Suisse Asian Investment Conference in Hong Kong that he was not concerned by the slower economic growth in China. The CEO said he saw this as a natural development as the country transforms itself into a consumption-driven economy rather than one led by investment.

"We have been underweight (in) China and will continue to invest," said Thiam, 53, who joined the Zurich-based bank in July. The banker said he would be spending five days in China as part of his Asia trip, meeting clients and seeking to develop his understanding of their needs.

Thiam's focus on China comes at a time when Credit Suisse has made wealth management a key plank for its future growth. The bank is also shifting its focus to the Asia-Pacific region, where it already has an important presence in Southeast Asia: Thiam aims to more than double Asia-Pacific pretax income to 2.1 billion Swiss francs ($2.19 billion) by 2018.

China's blistering economic growth over the past decade has made it home to a million high-net-worth individuals, according to consultants Bain & Co, twice as many as in 2010. For foreign banks, Asia — and China in particular — has become the new battleground in developing wealth-management business.

But making money onshore in China has proved a challenge for most foreign banks, hampered by the heavily protected nature of China's financial services sector.

Credit Suisse lacks an onshore license to operate a wealth-management business in China, but it is considering securing one.

"Our strategy is primarily driven by wealth management and private banking," Thiam said. "We have a good customer base. Today we are offshore, but ultimately we will be onshore."

(Reporting by Denny Thomas and Lisa Jucca; Editing by Kenneth Maxwell)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

'Brexit' could leave Britain vulnerable: Europol

FEB 22, 201611:47 PM

[THE HAGUE] Britain's citizens could be left more vulnerable to attacks by terror groups and organised crime gangs if they decide to leave the European Union, the continent's policing agency warned Monday.

"I see a very clear picture of the United Kingdom's dependency on the EU to help protect its security interest," Europol's director Rob Wainwright said in The Hague.

Should Britain leave in a so-called "Brexit" it will "no longer have the benefits that it currently has," Wainwright told reporters in The Hague, speaking on the sidelines of a conference on combatting migrant smugglers into Europe.

This included "direct access to our database, the ability to involve itself into our intelligence projects and many other areas," he said.

Europol's warning follows remarks by British Prime Minister David Cameron over the weekend that a Brexit would offer "risk in a time of uncertainty." Britain would be "safer, stronger and better off" in the 28-member bloc, Cameron said Saturday after announcing June 23 as the date for a referendum on the issue.

The issue has deeply divided Britain's ruling Conservative Party with five cabinet members as well as London's outspoken mayor Boris Johnson supporting the "Leave" campaign, and the country's continued security is a key issue.

Following Cameron's remarks, Work and Pensions Secretary Iain Duncan Smith told the BBC that staying in the EU would make the country more vulnerable to Paris-style attacks.

And Justice Secretary Michael Gove, who also backs an exit, told British media that the EU's policies "have become a source of instability and insecurity," which has encouraged extremism.

Wainwright however said even if Britain would negotiate an agreement with Europol in the event of leaving "it will not be a full member any longer and will not enjoy the benefits."

AFP

Stay or go? Arguments for and against Britain leaving EU

From immigration to sovereignty, here are the main arguments for and against Britain staying in the European Union which will be debated ahead of a referendum expected to be held in June. 

PHOTO: REUTERS

FEB 15, 201610:21 AM

[LONDON] From immigration to sovereignty, here are the main arguments for and against Britain staying in the European Union which will be debated ahead of a referendum expected to be held in June.

Pro-Brexit: Those who want to leave the EU say Britain should be able to control its own borders and limit the number of migrants coming from the European Union. They are particularly worried about migrants who claim benefits and use public services like the National Health Service (NHS). Last year saw record net migration to Britain of 336,000, of which 180,000 people came from the EU.

Pro-EU: Those in favour of staying argue that migrants from the EU contribute to the economy by paying taxes. They say that, since they are young, they often do not place an undue strain on public services.

EU migrants contribute 34 per cent more than they receive from the state, according to 2013 research conducted at University College London. Prime Minister David Cameron is also seeking to limit their access to benefits as part of a package of reforms designed to convince voters to stay in the EU.

Pro-Brexit: Leaving the EU would mean Britain would no longer have to pay its contribution to its budget - estimated at almost £8.5 billion (S$17.3 billion) last year.

Brexit could mean GDP increasing between now and 2030 by up to 1.6 per cent, according to the most optimistic calculations by the Open Europe think-tank. It could seek to keep a trading relationship with the EU while cutting political ties, like Switzerland or Norway, they say.

Pro-EU: In campaigners say EU membership means a stronger economy creating jobs, trade and investment in Britain. Some 45 per cent of all British exports go to the EU and three million jobs in Britain are linked to trade in Europe, they argue. Open Europe indicates that a Brexit could lead to GDP shrinking by up to 2.2 per cent by 2030.

Pro-Brexit: Britain could boost its standing in the world by leaving the EU as it would remain in NATO and keep its seat on the UN Security Council while leaving it free to push for new global trade deals alone, campaigners say. It would also free Britain up to create its own laws rather than having many imposed on it from Brussels, they add.

Pro-EU: Leaving the EU would undermine Britain's standing in the world and could increase the likelihood of Scottish independence, campaigners argue. As part of his reform package, Mr Cameron is also seeking an opt-out from further integration and a veto which national parliaments could use to opt out of EU legislation to address concerns about sovereignty.

Pro-Brexit: Brussels imposes too much red tape on British business, according to the pro-leave camp, which says the top 100 regulations cost Britain's economy over £33 billion per year. If Britain leaves the EU, businesses, particularly small ones, would have more freedom to make their own decisions, it adds.

Pro-EU: Cameron is seeking a commitment from Brussels to cut red tape. In any case, the Office for Economic Cooperation and Development (OECD) says that Britain is currently among the least regulated wealthy countries. Its analysis puts Britain's labour market on a level with the US and Canada.

AFP

    
 

China to consolidate drug market, promote traditional medicines

China plans to consolidate its huge and fragmented drug market and will support a greater role for traditional Chinese medicines (TCM), the central government said in a statement on Sunday following a meeting of the State Council. 

PHOTO: AFP

FEB 15, 201611:16 AM

[SHANGHAI] China plans to consolidate its huge and fragmented drug market and will support a greater role for traditional Chinese medicines (TCM), the central government said in a statement on Sunday following a meeting of the State Council.

China will also strengthen safety controls and traceability of domestic drugs, the statement said, part of an ambitious programme of healthcare reforms to improve home-made medicines and reduce reliance on generic and more innovative drugs from overseas.

"Accelerating the development of our domestic drug industry will better serve our people's healthcare needs, help build a healthier China and unleash economic growth potential," the statement posted on the central government website said.

China's near 1.4 billion potential patients are a major lure for drug firms targeting growth driven by rising incomes and a fast-ageing population.

Beijing is keen, however, for local firms to take a larger slice of a healthcare bill set to hit 1.3 trillion by 2020.

The statement said China would push to consolidate the fragmented domestic sector: "We will support pharmaceutical mergers and acquisitions and foster industry leaders in order to solve the 'scattered' nature of the market," it added.

Traditional Chinese remedies, used to treat ailments from colds to cancers, will also play a greater role, the statement said. The TCM market, with expensive natural ingredients ranging from deer antler to ginseng, is set to hit US$40 billion by the end of the decade.

"We will raise investment and policy support for TCM," the statement said, adding the government would give greater support to research and development in the area as well as helping push these remedies overseas.

REUTERS