Proxy advisory firm ISS criticises Noble Group on audit committee

13 Apr1:52 PM

[SINGAPORE] Influential proxy adviser Institutional Shareholder Services (ISS) has criticised the composition of Singapore-listed Noble Group's audit committee, weeks after the commodity trader denied claims of improper accounting made by Iceberg Research. "In light of the allegations made by Iceberg, it is imperative that the company's audit committee be comprised entirely of non-executive directors, chaired by a director who is not overcommitted so as to help restore investor confidence in the company's auditing and financial reporting practices," ISS said in a report.

Noble did not immediately provide a comment on the ISS report, which was issued this month ahead of its annual shareholders' meeting due in Singapore on Friday. A copy of the report was obtained by Reuters.

ISS is the largest proxy adviser for institutional investors and its recommendations can have a noticeable impact on how shareholders vote.

China Investment Corp, Templeton Investment, Eastspring Investments, Orbis Investment and INVESCO cumulatively own 30 percent of the company, Thomson Reuters data, based on recent public filings, shows.

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ISS said that though Noble had refuted Iceberg's claims, Noble's executive chairman and the largest shareholder, Richard Elman, is on the audit committee. It is chaired by a director who also chairs a number of audit committees and serves on seven public companies' boards, the advisory firm said.

Noble has rejected anonymous research outfit Iceberg's claims made in mid-February that it inflated asset values by billions of dollars through aggressive accounting. It has linked Iceberg to an employee it fired in 2013 and started legal action against him in Hong Kong.

Like last year, ISS is also recommending that shareholders vote against four resolutions, including those linked to share options and equity issuance. ISS is recommending shareholders vote in favour of adopting Noble's financial statements.

Shares in Noble, one of Asia's biggest commodities traders, have slumped as much as a third, or S$2.56 billion ($1.87 billion), since mid-February after Iceberg's claims and following weak quarterly results. US investment research firm Muddy Waters unveiled a short position on Noble last week.

Noble has pledged to improve transparency about its business but noted that many of its competitors were privately held and released very little public information.

REUTERS

    
 

Morgan Stanley says dollar parity beckons for euro by Q4

The US bank Morgan Stanley has forecast that the euro will sink below parity with the dollar before the end of this year, and election fever will drive down the pound to US$1.39 by June. 

PHOTO: REUTERS

13 Apr6:03 PM

[LONDON] The US bank Morgan Stanley has forecast that the euro will sink below parity with the dollar before the end of this year, and election fever will drive down the pound to US$1.39 by June.

The forecasts for the euro's fall, after a month that has drawn the first expressions of doubt from major bank analysts about the pace and durability of the dollar's rise, are among the most aggressive yet issued, and predict the single currency will be worth just 98 cents by the fourth quarter.

They stem chiefly from expectations of continued euro weakness as the European Central Bank pumps billions more in newly-created money into the financial system, rather than a bullish view on the dollar.

"The anticipated reacceleration of the US economy should keep the dollar strong," the bank said in a note laying out its spring forecasts. "Yet, over the next couple of quarters, the pace of these gains will be muted relative to the brisk advances observed in the last three. Yield differentials will keep EUR under pressure, although JPY will surprise with its relative strength."

Previously Morgan Stanley had forecast the euro at US$1.05 in Q4.

On sterling, under increasing pressure against the dollar ahead of parliamentary elections in May, the bank predicted a slide from around US$1.46 on Monday to US$1.39 by the end of June.

"Under our base case scenario of the next UK government being led by one of the major parties, we would expect renewed fiscal austerity, which will lead to a slower growth picture in the UK," the bank said, also pointing to the risks of a referendum on Britain's EU membership after the election.

Reuters polling of major bank strategists shows the euro falling just 2-3 cents against the dollar over the next year to reach US$1.03 in March of 2016.

REUTERS

    
 

China's influence over AIIB a concern ahead of founders' meeting

13 Apr6:12 PM

[TOKYO] China could have outsized influence over a new Beijing-backed international development bank under a proposed shareholding structure likely to be discussed at a meeting of member nations in Washington this week, sources say.

The group will meet on the sidelines of the annual meetings of the International Monetary Fund and World Bank in the US capital, said an Indian government official familiar with the plan. India was one of the first nations to join the new bank.

China has proposed that Asian nations own three-quarters of the Asian Infrastructure Investment Bank (AIIB), a larger overall stake than would be warranted were ownership decided by economic weightings alone, given European heavyweights Germany, France, Britain and Italy are also members.

Each Asian member will then be allotted a share of that 75 per cent quota based on their economic size, two Japanese sources said - a formula that would guarantee China the largest single voice inside the bank.

China has outlined details of the bank to Japan in an effort to get Tokyo to sign up, the sources said. However, Tokyo remains non-committal due to its close relationship with the United States, which has urged nations to be wary of the AIIB.

"Looking at GDP-based contributions, if the No 1 and No 3 (the United States and Japan) aren't in, then China will have an overwhelmingly large quota and voice," said one Japanese official.

"No country would be able to challenge China. If Japan were in, it would have considerable influence."

China's finance ministry did not immediately respond to a request for comment.

The United States had earlier cautioned nations about joining the bank, citing what it called a lack of transparency and doubts about lending and environmental safeguards, and how much influence Beijing would wield.

But its major allies - Britain, France, Germany, Australia and South Korea - signed up anyway.

Jin Liqun, secretary-general of China's interim secretariat which is establishing the AIIB, said at a forum in Singapore on Saturday that although China would have the biggest share in the bank, it would not dominate its operations.

"AIIB is a bank, not a political organisation or political alliance," Mr Jin was quoted as saying by China's official Xinhua news agency. He said the AIIB would be "clean, lean and green".

China has said it will announce the AIIB's list of founder members on Wednesday, but it is not clear if the shareholding structure will also be finalised this week.

The Indian official said Asia's total ownership would be between 70 and 75 per cent depending on whether Japan joined or not.

A detailed method of determining the breakdown of national shareholdings had yet to be decided, though it could be based on a country's nominal gross domestic product or its GDP calculated on a purchasing-power-parity basis, or a mixture of the two. Purchasing power parity would give more weight to developing nations than to rich economies such as Japan.

The AIIB has drawn applications from more than 50 nations from Asia, Europe and the Middle East despite US misgivings.

Beijing says it will not hold veto power inside the AIIB, unlike the World Bank where Washington has a limited veto.

Beijing has also said a board of governors will control the operations of the new bank. Founder members will initially pay up to one-fifth of the AIIB'S US$50 billion authorised capital, which will eventually be raised to US$100 billion.

Brazil, Russia, India, China and South Africa will also hold a meeting in Washington this week to iron out details of another international development bank, the US$100 billion BRICS bank launched last year, officials in Brasilia and Moscow said.

"The idea is that everything will be ready for 2016," said an official in Brasilia, adding that governance issues will be taken up in Washington.

REUTERS

    
 

China's Tencent hits US$200b market cap for first time

      

China's Tencent Holdings Ltd for the first time hit a market cap of more than US$200 billion on Monday, making it more valuable than US tech firms like Amazon.com Inc, IBM Corp and Oracle Corp . 

PHOTO: REUTERS

13 Apr6:36 PM

[BEIJING] China's Tencent Holdings Ltd for the first time hit a market cap of more than US$200 billion on Monday, making it more valuable than US tech firms like Amazon.com Inc, IBM Corp and Oracle Corp .

The country's biggest social networking and online entertainment firm rose 5.38 per cent to close at HK$170.50 in trading in Hong Kong, giving it a market valuation of US$206 billion. This is higher than Oracle's US$190 billion, Amazon's US$178 billion and IBM's US$161 billion.

Tencent's shares have rocketed 52 per cent from the beginning of this year, bringing its valuation close to those of US peer Facebook Inc's US$230 billion and Chinese arch rival Alibaba Group Holding Ltd's US$210 billion.

The surge in the Shenzhen-based company's share price comes as Hong Kong stocks hit fresh seven-year highs on Monday. China recently allowed mutual funds to buy stocks on the Hang Seng Index under the Shanghai-Hong Kong Stock Connect scheme, fuelling the jump in already-rising Tencent shares.

More money is expected to pour in as investors hunt for bargains.

New York-listed Alibaba, the world's largest e-commerce firm, has seen its shares slide 19 per cent year-to-date. This slump owes itself to investor excitement wearing off after the firm's record-setting US$25 billion IPO last September, and a lacklustre set of third-quarter earnings results.

Facebook is up five per cent since the beginning of 2015.

REUTERS

      

Chinese hackers targeted SE Asia, India for last decade: report

13 Apr6:26 PM

[SINGAPORE] A cyber espionage group most likely sponsored by China has been snooping on governments and businesses in Southeast Asia and India undetected for the last 10 years, Internet security company FireEye said on Monday.

FireEye said the hackers, dubbed APT30, have been systematically stealing "sensitive information" since 2005, targeting governments, corporations and journalists with interests involving China.

"Based on APT30's confirmed targets and their intended victims, the group's interests appear to concentrate on Southeast Asia regional political, economic and military issues, disputed territories and topics related to the legitimacy of the Chinese Communist Party," the report said.

It said the campaign differs from other hacking outfits mostly in its scale and longevity, leading researchers to believe that it must be state-sponsored.

It also said the main objective appears to be data theft as opposed to financial gain.

"Such a sustained, planned development effort, coupled with the group's regional targets and mission, lead us to believe that this activity is state-sponsored - most likely by the Chinese government," said the report released by California-based FireEye's Asia office in Singapore.

China swiftly denied any involvement.

"The Chinese government firmly opposes hacking attacks, this position is consistent and clear," said foreign ministry spokesman Hong Lei in Beijing.

FireEye said the cyber espionage group has consistently developed and refined its tools over the past 10 years.

Bryce Boland, FireEye's chief technology officer for the Asia-Pacific, said in a blog post that the region has some of the highest levels of targeted cyber attacks worldwide, and many of these go undetected.

"This group (APT30) has been able to operate successfully and remain undetected for many years and has not even had to change their attack infrastructure - a clear sign that their victims don't realise this is happening," Mr Boland wrote.

FireEye said the APT30 group "expresses a distinct interest in organisations and governments associated with Asean, particularly so around the time of official Asean meetings".

It said the group's data-gathering tools indicate that it is "most likely trying to compromise Asean members or associates to steal information that would provide insight into the region's politics and economics".

Some members of the Association of Southeast Asian Nations - particularly the Philippines and Vietnam - have festering territorial disputes with Beijing in the South China Sea.

In an earlier report, business consultancy PricewaterhouseCoopers (PwC) said a survey it conducted showed that the total number of cyber security incidents detected by its respondents rose to 42.8 million worldwide in 2014, up 48 per cent from 2013.

It said many more cases may have gone undetected and unreported because "many organisations are unaware of attacks" while others do not report incidents for reasons of national security.

Spending on information security among organisations is "not keeping pace with increases in the frequency and costs of security incidents, despite elevated concerns about cyber risks", PwC said.

Investment in information security budgets fell 4.0 per cent last year from 2013, it added.

AFP

    
 

Interpol office in Singapore boosts fight against cyber crime

13 Apr6:16 PM

[SINGAPORE] Global police organisation Interpol on Monday formally opened a new office in Singapore that will provide additional support to law enforcers and boost the fight against Internet-based criminal activities.

The new Interpol Global Complex for Innovation (IGCI) will ensure that the agency is "best placed to assist police forces around the world address emerging threats," Jurgen Stock, Interpol's secretary general, said in a speech at the centre's inauguration.

Cybercrime "has been prioritised across the world as people, their homes, and national critical infrastructure become smarter, or in other words, networked," Stock said.

The Singapore complex, located within the Southeast Asian city-state's leafy diplomatic quarter, will complement the agency's headquarters in the French city of Lyon.

Interpol currently has 110 officers from over 50 countries based in Singapore.

The state-of-the-art building houses a forensics laboratory to support digital crimes investigations and research on the newest modus operandi of cyber criminals.

It also has a command and coordination centre that can provide support to national police forces during crises, complementing similar facilities in Lyon and Buenos Aires.

Interpol said the Singapore complex played a crucial role in crippling the "Simda" botnet last week which had infected more than 770,000 computers worldwide.

The botnet - which is a collection of infected computers that take orders from central servers - was used by cyber criminals to gain remote access to computers for the theft of personal details including banking passwords.

At the moment, the "Internet of Things" - where devices from televisions, to refrigerators, door locks and thermostats are interlinked - must be scrutinised for security weaknesses, said Stock, a former high-ranking German law enforcement official.

"As technology development speeds ahead, so do the criminals, quite frankly leaving the world's governments and their police forces behind," he said.

"We must embrace developments such as the Internet of Things ...and the advantages they bring while simultaneously driving dialogue about their security and their safe use," he added.

"If we do not break down the walls of silence, if the world does not work together, we could soon see cybercriminals use our homes against us, and even our bodies."

A study by the Hewlett-Packard security unit Fortify released last July found 70 per cent of the most commonly used "Internet of Things" devices contain vulnerabilities, including inadequate passwords or encryption.

The study said eight of 10 devices tested leaked private information that could include the user's name, email address, home address, date of birth, credit card or health information.

The study followed multiple warnings about the hacking of medical devices, cars, televisions and even toilets that have an Internet connection.

Stock said another priority is a discussion on "the place of anonymity on the Internet and the need of police to identify and trace cybercriminals while nonetheless safeguarding the privacy of other users".

Singapore's Deputy Prime Minister Teo Chee Hean, who is also the interior minister, said the IGCI can serve "as a key node in Asia to support international operations against transnational crime."

AFP

    
 

Opec publication urges non-members to help stabilise oil market

13 Apr11:33 PM

[LONDON] Opec has criticised unidentified non-member countries for their refusal to cooperate with the oil exporter group in propping up prices and repeated its call for them to do so.

"There is a stubborn willingness of some non-Opec producers to adopt a go-it-alone attitude, with scant regard for the consequences," said the commentary in the latest edition of the monthly Opec Bulletin.

"In the past, Opec has often shouldered the burden of ensuring oil market stability alone. In the current situation, which should be of great concern to ALL, is it not time for this burden to be shared?"

The Organization of the Petroleum Exporting Countries last year refused to cut its oil output after non-member countries including Russia declined to offer output curbs, deepening a slide in oil prices.

REUTERS

Japan, US aim for Pacific trade pact progress before summit

Japanese and US officials will meet from Wednesday in a bid to strike a two-way deal that would give momentum to a pan-Pacific free-trade pact, the 12-nation Trans-Pacific Partnership (TPP), in time for a leaders' summit late this month. 

PHOTO: BLOOMBERG

13 Apr5:40 PM

[TOKYO] Japanese and US officials will meet from Wednesday in a bid to strike a two-way deal that would give momentum to a pan-Pacific free-trade pact, the 12-nation Trans-Pacific Partnership (TPP), in time for a leaders' summit late this month.

Success, however, depends heavily on whether the US Congress, which returns from recess this week, will approve measures to ease passage of trade deals, or trade promotion authority (TPA), Japanese officials have said.

Prime Minister Shinzo Abe will meet US President Barack Obama on April 28 at a summit in Washington that is also expected to focus on security issues.

Japan said US Acting Deputy Trade Representative Wendy Cutler and USTR Chief Agriculture negotiator Darci Vetter would travel to Tokyo for talks with Japan's deputy chief trade negotiator, Hiroshi Oe, and economic ambassador Takeo Mori.

Discussions are expected to focus on remaining gaps over agriculture and the auto industry.

"We think it would be good if the two leaders could announce something positive," a Japanese government source said recently.

"We are hoping that the US-Japan can send a good message."

Japan wants to protect farm products such as rice, wheat, sugar, diary products, beef and pork, while the United States argues Japan has non-tariff barriers in its auto sector.

Both allies, however, are keen for a TPP deal they see as central to America's "rebalance" of its strategic focus to Asia, in response to China's growing clout.

"I don't know if they (Abe and Obama) will use the word'agreement'," said another Japanese source. "There are lots of possible expressions such as 'good discussions', 'significant progress', 'epoch-making progress' or'steady progress'."

Japan's economy minister Akira Amari has urged Washington to push the TPA through Congress and expressed hope he can meet US Trade Representative Michael Froman to clinch a trade deal before the summit.

Mr Abe has cited agricultural reform among the key structural changes needed to spur long-term economic growth.

Last Thursday, Akira Banzai, head of powerful farming lobby group JA-Zenchu, said he would resign in August after the cabinet approved a bill weakening the group's clout and freeing up local cooperatives.

That resignation could strengthen Mr Abe's hand in reaching a deal, some experts said. "Banzai's prolonged departure will limit the organization's ability to mobilize resistance to TPP," wrote Tobias Harris, a senior associate at consultancy Teneo Intelligence.

A strong showing by Mr Abe's ruling bloc in a string of local elections this past Sunday could also smooth the way for a trade deal.

REUTERS

   
 

Taiwan rejected as founding member of AIIB: Beijing

13 Apr7:36 PM

[BEIJING] Taiwan's bid to become a founding member of China's new regional development bank has been rejected, Beijing said on Monday, dashing the island's hopes of having a platform in the institution from the start.

Ma Xiaoguang, spokesman for the Beijing-based State Council Taiwan Affairs Office, said in a statement that a Hong Kong report the island had failed to become a founding member of the Asian Infrastructure Investment Bank (AIIB) was correct.

But he held out the possibility of Taiwan joining later if it meets a key naming condition.

Beijing regards Taiwan as part of its territory and opposes international recognition for it, often curtailing its involvement in global agreements. The two split in 1949 at the end of the Chinese civil war.

"We are willing to continue to listen to the opinions of various parties to appropriately handle the issue of Taiwan's participation in the AIIB," Mr Ma said in the statement.

"The AIIB... is open and inclusive and welcomes the Taiwan side to join under an appropriate name," he added.

Taiwan is not a member of the United Nations, World Bank or International Monetary Fund but it has joined some international organisations under different names.

Reaction in Taiwan was characterised by a mix of disappointment, resignation and tenacity.

Charles Chen, spokesman for President Ma Ying-jeou, issued a brief written statement saying: "Joining AIIB would be good for Taiwan, but Taiwan would rather not attend if we are not treated under the principle of 'dignity and equality'."

But the main opposition Democratic Progressive Party (DPP) was harshly critical.

Spokesman Cheng Yun-peng in a statement accused the government in Taipei of having been in too big a rush to seek membership.

"There was a lack of professional evaluation and sufficient communication with the people in advance," Mr Cheng said.

"The hasty and wishful decision was rewarded with disappointment and harm to the country's reputation."

Parliamentary speaker Wang Jin-pyng, a member of the ruling Kuomintang party, said Taiwan would not give up, but stressed there were limits to how far it would go.

"We still hope we could join as a member in the future and will keep striving for this." "But then again, in what name we would join is important," he added, describing "Chinese Taipei" - the name under which Taiwan is referred to by the International Olympic Committee - as "the bottom line".

Taiwan is known as the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu at the World Trade Organization.

It is a member of the Asian Development Bank (ADB) under the name "Taipei, China", while officially the government refers to itself as the Republic of China.

More than 50 countries have applied to join the AIIB, a success for Beijing's diplomacy after close US allies decided to participate even after Washington initially opposed them signing up.

The United States, which leads the World Bank, and its Asian ally Japan, which heads up the ADB, have not sought to participate.

Taiwan's bid to join the AIIB and controversial new Chinese flight routes over the Taiwan Strait have sparked a string of protests on the island.

AFP

    
 

China to surpass US as top cause of modern global warming

China is poised to overtake the United States as the main cause of man-made global warming since 1990, the benchmark year for UN-led action, in a historic shift that may raise pressure on Beijing to act. 

PHOTO: STOMP

13 Apr7:48 PM

[OSLO] China is poised to overtake the United States as the main cause of man-made global warming since 1990, the benchmark year for UN-led action, in a historic shift that may raise pressure on Beijing to act.

China's cumulative greenhouse gas emissions since 1990, when governments were becoming aware of climate change, will outstrip those of the United States in 2015 or 2016, according to separate estimates by experts in Norway and the United States.

The shift, reflecting China's stellar economic growth, raises questions about historical blame for rising temperatures and more floods, desertification, heatwaves and sea level rise.

Almost 200 nations will meet in Paris in December to work out a global deal to fight climate actions beyond 2020.

"A few years ago China's per capita emissions were low, its historical responsibility was low. That's changing fast," said Glen Peters of the Center for International Climate and Environmental Research, Oslo (CICERO), who says China will overtake the United States this year.

Using slightly different data, the US-based World Resources Institute think-tank estimated that China's cumulative carbon dioxide emissions will total 151 billion tonnes for 1990-2016, overtaking the US total of 147 billion next year.

The rise of cumulative emissions "obviously does open China up to claims of responsibility from other developing countries," said Daniel Farber, a professor of law at the University of California, Berkeley.

In a UN principle laid down in 1992, rich nations are meant to lead in cutting greenhouse gas emissions because their wealth is based on burning coal, oil and natural gas since the Industrial Revolution began in the 18th century.

Emerging nations, meanwhile, can burn more fossil fuels to catch up and end poverty. But the rapid economic rise of China, India, Brazil and many other emerging nations is straining the traditional divide between rich and poor.

"All countries now have responsibility. It's not just a story about China - it's a story about the whole world," said Ottmar Edenhofer of the Potsdam Institute for Climate Impact Research and co-chair of a UN climate report last year.

India will overtake Russia's cumulative emissions since 1990 in the 2020s to rank fourth behind China, the United States and the European Union, according to the CICERO calculations.

China surpassed the United States as the top annual emitter of carbon dioxide in around 2006 and now emits more each year than the United States and the European Union combined. Per capita emissions by its 1.3 billion people are around EU levels.

Beijing says the best yardstick for historical responsibility is per capita emissions since the 18th century, by which measure its emissions are less than a tenth those of the United States.

But stretching liability so far back is complicated.

Should heat-trapping methane gas emitted by rice paddies in Asia in the 19th century, now omitted, count alongside industrial carbon emissions by Europe? Should Britain be responsible for India's emissions before independence in 1947?

Lawyers say it is difficult to blame people living today for emissions by ancestors who had no inkling that greenhouse gases might damage the climate.

"I feel very uneasy about going back more than a generation in terms of historic responsibility," said Mr Farber, arguing that Berlin could hardly be blamed if someone died by setting off a rusting German World War One landmine in France.

All governments are now working out plans for a climate summit in Paris in December that will set targets for 2025 or 2030. Beijing set a goal last year of peaking its rising emissions around 2030, perhaps before.

"China is acting. It has acknowledged its position as a key polluter," said Saleemel Huq, of the International Institute for Environment and Development in London.

And historical responsibility is at the heart of talks on solving the problem.

The UN panel of climate scientists estimated last year that humankind had emitted 1.9 trillion tonnes of carbon dioxide since the late 19th century and can only emit a trillion more before rising temperatures breach a UN ceiling of 2 degrees Celsius above pre-industrial times.

Any fair formula for sharing out that trillion tonnes, or roughly 30 years of emissions at current rates, inevitably has to consider what each country has done in the past, said Myles Allen, a scientist at Oxford University.

"Until people start thinking about blame and responsibility they are not taking the problem seriously," he said.

REUTERS