'Give Greece a chance', Schaeuble tells lawmakers before vote 

German Finance Minister Wolfgang Schaeuble urged lawmakers to back a third bailout for Greece in a vote on Wednesday, saying while there were no guarantees of success, it would be irresponsible not to give Greeks the chance for a new start. 

PHOTO: AFP

AUG 19, 20154:52 PM

[BERLIN] German Finance Minister Wolfgang Schaeuble urged lawmakers to back a third bailout for Greece in a vote on Wednesday, saying while there were no guarantees of success, it would be irresponsible not to give Greeks the chance for a new start.

Lawmakers are expected to overwhelmingly support the 86 billion-euro (S$133.34 billion) bailout, even though Chancellor Angela Merkel faces a dangerous rebellion in her own party ranks.

A significant minority of Merkel's conservatives voting against the package would send the government a warning that this is its last chance to keep debt-ridden Greece in the 19-country euro zone.

Mr Schaeuble, who has taken a tougher line than Ms Merkel in bailout talks and last month tabled the option of a 'timeout' from the euro zone for Greece, told sceptical lawmakers it was the best path for the euro zone to follow. "Of course, after the experience of the last years and months there is no guarantee that everything will work and it is permissible to have doubts," Mr Schaeuble said in his address to the Bundestag lower house. "But in view of the fact that the Greek parliament has already passed a large part of the measures it would be irresponsible to not use the opportunity for a new start in Greece," he said, making the case for the government.

In a test ballot of conservative lawmakers late on Tuesday - a non-binding vote - a clear majority voted in favour of the bailout. Sixty of the 311 conservative lawmakers voted 'no' or abstained - fewer than some in her party had feared.

The results of the vote are expected at around 1200 local time (1000 GMT).

In the Netherlands, the government of Prime Minister Mark Rutte is expected to face a call for a no-confidence vote from euro-sceptic, right-wing rival Geert Wilders, when parliament debates the latest bailout program for Greece on Wednesday. . On Tuesday, the parliaments of Austria, Estonia and Spain voted to approve the bailout.

SHIFTED GROUND

Support from parties including the Social Democrats, Ms Merkel's junior coalition partner, and the opposition Greens means German approval of the bailout is not in doubt. But a rebellion by a large number of her allies would be a blow for Ms Merkel, who remains highly popular after 10 years in office.

Several conservatives were adamantly opposed to the deal."We are going further in the direction of a transfer union,"said CDU lawmaker Wolfgang Bosbach, who has opposed previous Greek bailouts, before the vote.

But Mr Schaeuble threw his weight behind the package and said Athens had clearly shifted ground in the last few weeks and was ready to reform.

He also reiterated the German view that it is imperative for the International Monetary Fund (IMF) to stay on board. The IMF, however, says it won't unless Greece gets debt relief, while Germany is against cutting Greek debt. "I am fairly confident that we (international creditors including the IMF) will reach a joint assessment of (Greece's) debt sustainability in October," said Mr Schaeuble, reiterating that a debt haircut is not possible.

Last month, a record 65 lawmakers from the conservative camp broke ranks and refused to back the start of bailout talks.

REUTERS

      

China injects nearly US$100b into banks for economy lift 

China has injected nearly US$100 billion from its foreign exchange reserves into two policy banks, which lend based on government directives, to help spur the country's sluggish economy, state media reported. 

PHOTO: EPA

AUG 19, 20153:02 PM

[SHANGHAI] China has injected nearly US$100 billion from its foreign exchange reserves into two policy banks, which lend based on government directives, to help spur the country's sluggish economy, state media reported.

The central bank on Tuesday completed putting US$48 billion into the China Development Bank and US$45 billion into the Export-Import Bank of China, the official Xinhua news agency reported.

The move was to enhance their capital base and support the economy, it said.

"The injection suggests the central bank is trying to guide funds to go to the real economy, like exports and infrastructure construction," China economist at Barclays Capital, Wang Shengzu, told AFP.

China's economy, the world's second-largest, expanded 7.4 per cent last year, its weakest since 1990, and has slowed further this year, growing 7.0 per cent in each of the first two quarters.

The government has set a target of around 7.0 per cent growth for all of 2015.

In a bid to stimulate activity, China has cut interest rates four times since November and has also lowered the reserve requirement ratio - the amount of money banks must put aside.

"The funds released from earlier monetary loosening didn't go to the real economy. Instead, most of it went to the financial institutions and the stock market," Mr Wang added.

The benchmark Shanghai stock index rose 150 per cent in 12 months to mid-June in a borrowing-fuelled surge, before plummeting almost a third in three weeks.

The Wutongshu Investment Platform Co, which invests China's foreign exchange reserves, carried out the bank fund injections and will become a shareholder in both financial institutions, Xinhua said.

China's foreign exchange holdings are the world's largest, though they fell to US$3.69 trillion at the end of June, down from US$3.73 trillion at the end of March.

Bloomberg News reported China Development Bank and another policy bank, the Agricultural Development Bank of China, plan to issue 1.0 trillion yuan (S$230 billion) worth of bonds to fund construction projects to boost the economy.

AFP

      

US consumer prices edge up 0.1% in July

AUG 19, 20159:18 PM

[WASHINGTON] US consumer prices rose slightly in July, extending a slow year-over-year rise since April as the Federal Reserve plans an interest rate increase this year, official data showed Wednesday.

The Labour Department said its consumer price index rose 0.1 per cent in July, slowing from a 0.3 per cent gain in June and the smallest monthly increase since April.

Food prices rose 0.2 per cent. Energy prices were up 0.1 per cent, led by a 0.9 per cent rise in gasoline prices that offset declines in other components, including fuel oil.

Excluding food and energy, which tend to be volatile month on month, core CPI also rose 0.1 per cent, down from 0.2 per cent in June.

But on a 12-month basis, consumer prices were up 0.2 per cent, building on a gain since April. Core CPI year-on-year was roughly steady at 1.8 per cent.

The Federal Reserve's target for price stability is 2.0 per cent inflation over the longer term. The central bank's preferred inflation measure, the personal consumption expenditures price index, increased 0.3 per cent in June compared with a year ago, and excluding food and energy, was up 1.3 per cent.

AFP

    

Goldman Sachs's unit obtains Hong Kong banking license  

A wholly-owned unit of Goldman Sachs Group received a banking license from The Hong Kong Monetary Authority (HKMA), the HKMA announced on Wednesday, in a step that creates a local subsidiary through which the US investment bank can book its trades. 

PHOTO: BLOOMBERG

AUG 19, 20155:19 PM

[HONG KONG] A wholly-owned unit of Goldman Sachs Group received a banking license from The Hong Kong Monetary Authority (HKMA), the HKMA announced on Wednesday, in a step that creates a local subsidiary through which the US investment bank can book its trades.

The so-called restricted banking license that Goldman Sachs has obtained allows it to take deposits of HK$500,000 (S$90,548) and above, but is normally used for investment banking and capital markets activities, according to the HKMA's website.

The world's largest investment banks have been setting up new subsidiaries as rules drawn up in the wake of the global financial crisis have forced financial firms to rethink where they book their over-the-counter derivatives transactions.

The subsidiaries allow banks' customers to transact with local entities, rather than deal cross-border with the parent bank in another jurisdiction.

REUTERS

Singapore chosen as overseas HQ by Alibaba's cloud computing arm

The cloud computing arm of Alibaba has chosen Singapore as the headquarters of its overseas business, on top of being a site for its new data centre, as the Chinese e-commerce giant expands globally."Singapore is a natural destination to be our headquarters for overseas expansion," Ethan Yu, vice president of Aliyun said in a statement on Tuesday. 

PHOTO: EPA

AUG 19, 20158:05 PM

[SINGAPORE] The cloud computing arm of Alibaba has chosen Singapore as the headquarters of its overseas business, on top of being a site for its new data centre, as the Chinese e-commerce giant expands globally."Singapore is a natural destination to be our headquarters for overseas expansion," Ethan Yu, vice president of Aliyun said in a statement on Tuesday.

He added: "The city state is a natural springboard into the Asia Pacific region, not only for us, but for our target audience. We are seeing healthy demand for cloud-related data management services in Singapore because of the ease of doing business, comprehensive transport and telecommunications connections and robust intellectual property regime." Aliyun's new cloud data centre in Singapore will serve the cloud computing needs of businesses investing in Southeast Asia, with a focus on Chinese businesses
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Corporate governance index to cast wider net on stakeholder feedback

2016 index will also tap OECD principles; scores in 2015 rankings hit a new high. Singtel takes top spot in annual ranking

By

Kenneth Limkenlim@sph.com.sg@KennethLimBT

PHOTO: CPA AUSTRALIA

 Know your pay

 Governance and Transparency Index 2014 – the full rankings

AUG 19, 20155:50 AM

Singapore

CONSIDER it the seven-year itch of corporate governance.

How and why the current Governance and Transparency Index (GTI) can be improved became the hot topic on Tuesday as organisers revealed the seventh annual edition of the governance benchmark.

This latest version of the Singapore Governance and Transparency Index (SGTI) will replace the current benchmark in 2016, said its organisers CPA Australia, the National University of Singapore's Centre for Governance, Institutions and Organisations (CGIO) and The Business Times.

The new index will adopt a more comprehensive view of a company's stakeholders and work on principles derived from the Organisation for Economic Co-operation and Development (OECD).

Participants in a panel discussion found themselves debating whether a benchmark like the GTI adequately captures the effectiveness of a board of directors, especially in terms of participation in the company, developing strategy and setting a corporate culture.

Singapore Telecommunications (Singtel) reclaimed the top spot in 2015, a position it last held in the 2012 ranking. Singapore Exchange, fourth last year, jumped to the second spot.

The GTI remains dominated by a select group of blue chips - 18 of the top 21 this year were also in the top 21 last year - and scores in general have improved.

The mean score of 47.6 out of a best possible 143 in 2015 was the best since the first GTI in 2009.

Associate professor Lawrence Loh noted that companies in the middle of the pack had to improve their scores by seven points in the latest ranking just to maintain the same rank; companies between the 25th and 75th percentile who maintained the same score could lose about 100 places.

"You can't stay still," Prof Loh said.

The 2015 GTI looked at 639 Singapore-listed companies' annual reports and assessed them on matters relating to the board, remuneration, accountability and audit, and transparency and investor relations.

After assigning a base score out of 100, assessors then added bonus points or subtracted penalty points. The highest score in 2015 was 118, and the lowest, nine - the first time that the bottom score was positive.

Prof Loh called the Code of Corporate Governance, which was revised in 2012 but fully applied to every annual report only from this round of rankings, as the key lever that lifted the scores.

Prof Loh said: "The revised code is actually more than a tap on the wrist; it is a kick in the pants for everybody to be serious about corporate governance. Because now it's enshrined, you now have to comply or explain."

Sharp improvements were recorded in the following areas:

• the number of financial statements certified by the chief executive or chief financial officer;
• the use of poll voting at shareholder meetings;
• the disclosure of how remuneration was linked to performance; and
• the disclosure of limits to concurrent directorships.

But improvement seemed to lag in other areas. For example, only 3.8 per cent of companies disclosed the exact remuneration of their top five executives; and although 94.5 per cent of companies said they had a whistleblower policy, only 23.3 per cent gave details of that policy.

Whether the GTI's scores and rankings said enough about the effectiveness of a board was something prominent business leader Boon Swan Foo questioned several times.

The board's role goes beyond simply complying with governance guidelines, he said. Directors should also be assessed in terms of whether they are active participants in their companies. Do they contribute to strategy and culture?

He said: "The more important part, to me, is strategy and risk management - how you participate in running the company, not how you participate in controlling the company."

Singtel chief corporate officer Jeann Low said that it was important to also recognise sustainable long-term performance; key to that is how the board and management work together.

"What you need really is the entire dynamics of the board," she said.

Chng Lay Chew, chief financial officer of Singapore Exchange, said that it was also important to recognise that shareholders are not the only stakeholders in a company.

"One possible way to supplement measurement of compliance against corporate governance standards is to obtain stakeholder feedback on their view of a company's governance. This can include (feedback from) shareholders, regulators and customers."

Prof Loh said that the new SGTI will seek to address that issue, with a more comprehensive look at a company's impact.

"We are going beyond the board of directors or even the shareholders," he said. "We will look at employees, customers, suppliers, regulators, the society at large. This is in line with the spirit of global practices.
"

Singapore's Jurong Aromatics said in debt talks after oil plunge

AUG 19, 20152:37 PM

[SINGAPORE] Jurong Aromatics Corp, operator of one of the world's largest petrochemical plants, can't service its interest payments and is negotiating a debt restructuring with bankers amid a plunge in oil prices, people familiar said.

Operations at the US$2.4 billion plant have been stalled since December as the Singapore-based group remains locked in talks with lenders including BNP Paribas SA and Standard Chartered Plc, as well as suppliers Glencore Plc, BP Plc and SK Energy Co, the people said, asking not to be identified because the details are private. Production began in September last year, according to Jurong Aromatics's website, and the plant was targeting to produce 1.5 million tonnes of aromatics and 2.5 million tonnes of transportation fuels per annum.

Singapore's national plan to leverage upon its geographical position and become a regional refining hub has been dented by the recent falls in commodity prices. From the establishment in 2001 of tax breaks for trading companies to the hollowing of part of the island to store oil, the country has worked to become one of the world's biggest energy hubs.

A Singapore-based spokeswoman for Jurong Aromatics, who asked not to be identified, said company officials weren't immediately able to comment.

Jurong Aromatics had US$1.53 billion in liabilities and US$68.7 million of accumulated losses as at the end of 2013, according to the company's latest available financial records. BP, Glencore, SK Energy have secured claims against the firm, while BNP Paribas led a US$1.73 billion loan facility in 2011 that has yet to be repaid, the records show.

Jurong Aromatics ran out of working capital in December, the people familiar with the matter said. With interest payments delayed and a grace period coming to an end, some lenders have threatened to tip the company into receivership, they said. Shareholders and suppliers, however, are trying to extend the grace period while an agreement is negotiated, the people said.

The need for fresh capital has prompted BP, SK Energy and Glencore - which combined are owed about US$500 million - to suggest converting some debt into equity, some of the people said. That would dilute current shareholders and result in the trio holding a 75 per cent stake themselves, the people said.

Jurong Aromatics is currently owned 30 per cent by SK International Investment, 25 per cent by China's Jiangsu Sanfanxiang Group Co and 10 per cent by Glencore. Other shareholders include Arovin Ltd, Shefford Investments Holding, UVM Investment Corp, EDB Investments Pte and Essar Ltd, company records filed with Singapore's Accounting and Corporate Regulatory Authority show. EDB Investments is a unit of Singapore's Economic Development Board.

Arovin and Shefford Investments, representing about 20 per cent of the company, are understood to have resisted that proposal and had earlier sought to reach an agreement with Dutch commodity trader Trafigura Beheer BV, other people said. Trafigura Beheer would then pay a fee to use the plant itself.

Economic Development Board Executive Director for energy and chemicals, Damian Chan, said because Jurong Aromatics isn't "integrated with other plants on Jurong Island, the impact to the rest of the energy and chemicals cluster is expected to be limited." "Nevertheless, in view of the people employed and the assets invested, EDB continues to encourage and be facilitative of discussions among the stakeholders to start up Jurong Aromatics's operations," Mr Chan said. "Singapore has developed an extensive chemicals portfolio, of which aromatics is one of them. Unfortunately the aromatics market is currently in a down cycle and aromatics producers are finding it more difficult to deliver returns." Spokespeople for BNP Paribas, BP and Glencore declined to comment. E-mails and telephone calls to media relations officers at SK Energy parent SK Innovation Co and Standard Chartered went unanswered.

BLOOMBERG

    

Gold marks time ahead of Fed minutes    

AUG 19, 20152:41 PM

[MANILA] Gold was stuck in a narrow range on Wednesday as investors waited for the minutes of the Federal Reserve's meeting last month for clues on whether the US central bank might raise interest rates next month.

Bullion has found some support above US$1,100 an ounce after last week's strong recovery away from a 5-1/2-year low reached in late July, helped by the uncertainty that followed China's shock devaluation of its currency. "Whether this will be enough to keep the upward momentum going remains to be seen as we head into the Fed meeting whereby the central bank will likely raise rates," INTL FCStone analyst Edward Meir said. "We suspect that gold will be under pressure between now and then, but we do expect a post-move rally in most commodity markets, as investors should start discounting the likelihood that the Fed may choose to stand pat after its first move, thus prompting the dollar to come off its lofty perch." Spot gold was flat at US$1,117.75 an ounce at 0607 GMT, extending Tuesday's lethargic performance.

US gold for December delivery was also little changed at US$1,117.30 an ounce.

A recovery in the housing sector, a strengthening job market and other upbeat economic signals suggest the US central bank is on track to raise interest rates this year.

But some analysts say it might adopt a gradual approach after the first increase, following China's yuan devaluation last week.

The imminent increase in US interest rates will be the first since 2006 and it has dimmed the appeal of non-interest-bearing assets such as gold.

Further bolstering the case for a speedy rate rise, data on Tuesday showed US housing starts rose to a near-eight-year high in July.

However, technical charts suggest gold may have potential to test the three-week high of US$1,126 touched last week and then US$1,137, according to analysts at ScotiaMocatta. "We are cautiously bullish due to the impact of the firm dollar, which has been a negative weight on the metal," they said in a note.

Spot platinum slipped 0.4 per cent to US$986.80 an ounce and palladium dropped nearly 1 per cent to US$589.22, both not far off multi-year lows reached recently. Miner and commodity trader Glencore is considering closing its Eland platinum mine in South Africa due to falling prices.

Silver was up 0.1 per cent at US$14.88 an ounce.

REUTERS