Ex-US special agent pleads guilty to taking US$800k in Bitcoin 

A former US Secret Service special agent pleaded guilty to taking more than US$800,000 of electronic Bitcoin currency while investigating the "Silk Road" online black market, the Justice Department said Monday.

PHOTO: REUTERS

SEP 1, 20152:00 PM

[WASHINGTON] A former US Secret Service special agent pleaded guilty to taking more than US$800,000 of electronic Bitcoin currency while investigating the "Silk Road" online black market, the Justice Department said Monday.

The "Silk Road" was a website where sometimes illegal transactions could be conducted secretly in Bitcoin. The site's creator was sentenced to life in prison in May for charges including money laundering and drug and drug trafficking.

Former Secret Service member Shaun Bridges, 32, pleaded guilty to money laundering and obstruction of justice over taking the Bitcoins while assigned to an electronic financial crime unit during the investigation.

The Secret Service is charged with the protection of the US president and other national leaders and also investigates counterfeit currency and other financial crimes.

Bitcoin is a virtual currency that has no central bank or government backing it, and is instead regulated by users.

Bridges is scheduled to be sentenced by a California judge in December.

"Mr Bridges has now admitted that he brazenly stole US$820,000 worth of digital currency while working as a US Secret Service special agent, a move that completely violated the public's trust," US Attorney Melinda Haag said in a statement about the case.

According to his statement, Bridges used an administrator account to enter the Silk Road website and transfer Bitcoins to the account he controlled.

The money was transferred to another account in Japan before being returned to the US and sold for a sum of US$820,000, the government said.

Another former agent, Carl Force, also recently pleaded guilty to charges involving a theft of more than US$700,000 in digital currency, the US said.

Earlier in August, the head of another Bitcoin exchange known as MtGox was taken into custody in Japan over allegations he manipulated data to create US$1 million worth of the digital money.

AFP

GE2015: PM Lee asks for strong mandate, refutes argument that more opposition makes PAP perform better

Prime Minister Lee Hsien Loong took aim at key opposition argument on Tuesday, saying that voting in more opposition members does not make the PAP perform better. 

PHOTO: SPH

SEP 1, 20156:13 PM

[SINGAPORE] Prime Minister Lee Hsien Loong took aim at key opposition argument on Tuesday, saying that voting in more opposition members does not make the PAP perform better.

Speaking at a press conference hours after the close of nominations, he called the idea a fallacy and said that the PAP needs a strong mandate."In order to achieve the things we have achieved, you need a strong mandate. And good people in government. Every non PAP seat, affects the composition of government and Parliament. There'll be fewer and fewer people to do those good things." The idea of voting in opposition members to keep the PAP on its toes has been a frequent refrain of numerous opposition parties in this election as well as previous ones. It was the thrust of the Workers' Party's "Towards a First World Parliament" slogan in 2011 and WP MPs spoke often of being a co-driver to the PAP
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Indonesian employers resist workers' calls for higher wages

SEP 1, 20156:28 PM

[JAKARTA] An Indonesian employers association labelled workers' demands for steep annual wage hikes as "unrealistic" on Tuesday, and warned there could be more layoffs at companies struggling amid a slowdown in Southeast Asia's largest economy.

Labour-intensive sectors like manufacturing and mining have shed thousands of jobs in recent months as economic growth in the second quarter slowed to its weakest pace in six years.

"The economy is slowing and companies all over the country are already either closing down or cutting jobs," said Hariyadi Sukamdani, head of the Indonesian Employers Association.

"And this could get worse if the annual wage increase is too high," he said, adding that firms in the association had cut 50,000 jobs since January.

Thousands of workers marched in several cities on Tuesday to protest layoffs and call for higher wages as they contend with rising food prices that made Indonesia's annual inflation stay above 7 per cent in August, the highest in the region.

Union leaders have called for at least a 22 per cent rise in minimum wage in the capital Jakarta, which is seen as a bellwether for the rest of the country. Jakarta last year saw a rise of 11 per cent in its minimum wage to 2.7 million rupiah (US$191.56) a month.

Annual negotiations are getting underway between workers, employers, and local administrations to determine minimum wages later this year.

Unemployment in Southeast Asia's largest economy stood at 5.81 per cent in February, according to official statistics, but analysts say that doesn't cover the informal sector and the real figure could be much higher.

"We realize economic conditions in Indonesia are not very good at the moment, but the government needs to realize it's the workers and poor people who get hit the hardest," said Bambang, a Jakarta factory worker who had participated in the rallies. "We are the ones who need to be protected."

REUTERS

    
 

Aussie sinks to 6-year low as China factory gauge clouds outlook

The Australian dollar plunged to a six-year low as a decline in China's official factory gauge eroded the outlook for commodities demand.

PHOTO: BLOOMBERG

SEP 1, 20159:10 PM

[SYDNEY] The Australian dollar plunged to a six-year low as a decline in China's official factory gauge eroded the outlook for commodities demand.

The currency dropped as much as 1.1 per cent to 70.37 US cents, touching the cheapest since April 2009. China's official Purchasing Managers' Index dropped to 49.7 for August, the weakest in three years. Numbers below 50 indicate contraction. Australia's central bank left interest rates unchanged Tuesday.

"Australia is largely considered a satellite economy to China, so any indication of weakness in China and traders look at the Australian dollar as the first currency outside China to feel the strain," John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark, said by e-mail.

Reserve Bank of Australia Governor Glenn Stevens and his board kept the cash rate at a record-low 2 per cent, as predicted by markets and economists following reductions in May and February. The currency has tumbled more than 2 US cents since the last meeting, cushioning the impact of lower commodity prices.

BLOOMBERG

    
 

Eurozone unemployment lowest for three years

Unemployment in the eurozone fell to its lowest level for three and a half years in July, raising hopes that economic recovery in the single currency area is taking hold, official data showed on Tuesday. 

PHOTO: BLOOMBERG

SEP 1, 20157:45 PM

[BRUSSELS] Unemployment in the eurozone fell to its lowest level for three and a half years in July, raising hopes that economic recovery in the single currency area is taking hold, official data showed on Tuesday.

Joblessness in the 19-nation bloc fell to 10.9 per cent in July from 11.1 per cent in June, the first time it has dipped below 11 per cent since February 2012, the EU statistics agency Eurostat said.

However youth unemployment was at a still high 21.9 per cent.

As usual, the level of joblessness varied widely across the eurozone, but the sharp fall will boost hope that Europe is emerging from its prolonged debt crisis.

However, analysts cautioned that any improvement in the jobs market remained modest and came after disappointing second quarter economic growth data.

"We do not expect the eurozone's labour market recovery to gain much pace in the coming months," said Jessica Hinds, European economist at Capital Economics.

"The employment components of survey indicators... only nudged up in August and remain consistent with pretty weak annual employment growth in the near term," she said.

In contrast to the fall in joblessness eurozone-wide, unemployment rose in France to 10.4 per cent, in Austria to 5.8 per cent and Finland to 9.7 per cent.

The highest rate was in debt-stricken Greece, at 25 per cent in May, the latest data available, but down from 25.6 per cent a month earlier.

Youth unemployment in Greece stood at 51.8 per cent and at a still huge 48.6 per cent in Spain, another country struggling to reignite job creation after the crisis.

The lowest rate in the bloc was in powerhouse Germany, unchanged at 4.7 per cent.

In welcome news, Italy, the eurozone's third biggest economy, saw joblessness fall to 12 per cent, snapping two consecutive months of increases despite a wave of job reforms.

Youth unemployment in Italy still stood at a high 40.5 per cent.

EU-wide, unemployment in the 28 member states fell by 0.1 per cent to 9.6 per cent in June, the lowest level since June 2011.

Last month, data showed that growth in the eurozone slowed slightly in the second quarter to 0.3 per cent, coming in at the bottom end of analyst forecasts.

The lack of a sharp improvement in the eurozone economy comes despite a massive European Central Bank stimulus programme.

AFP

    
 

Dutch Central Bank gives pension funds 12 years to recover

The Netherlands' Central Bank on Tuesday gave Dutch pension funds, which include some of the largest in the world, 12 years to rectify low funding ratios. 

PHOTO: BLOOMBERG

SEP 1, 20157:58 PM

[AMSTERDAM] The Netherlands' Central Bank on Tuesday gave Dutch pension funds, which include some of the largest in the world, 12 years to rectify low funding ratios.

In the past, funds had been required to repair their funding ratios - their current estimated assets compared with their estimated future obligations - within three years by cutting pension payouts and increasing premiums. But the central bank said neither would be necessary.

The longer recovery plans will allow 154 troubled funds to restore their solvency gradually and "almost entirely from expected returns on investments." It did not name the funds.

Dutch funds are considered under stress when their coverage ratio falls below 104 per cent; they are only allowed to increase pension payments to match inflation once their coverage rate returns to above 110 per cent.

An analysis by Aon Hewitt published last month found that the coverage ratio of the average Dutch fund was 104 per cent at the end of July.

The largest Dutch fund, ABP, with more than 300 billion euros (S$475.4 billion) of assets under management, reported a coverage ratio of 100.9 per cent as of July 31.

The DNB announcement comes seven years since the onset of the financial crisis, after the central bank completed a review of recovery plans for funds that needed to restore their funding ratios. Roughly two-thirds of Dutch pensions are under stress, in a system considered one of the most robust in the world.

In July, the central bank announced it would measure pension liabilities more strictly than required by European rules, by assuming that interest rates will remain low into the distant future.

The Aon Hewitt analysis estimated that coverage ratios at Dutch pensions fell by about 4 percentage points as a result of the change.

But Tuesday's announcement of the results of the DNB review show the central bank is not taking a hard line on the other side of the equation, expected returns. It is allowing funds to calculate a return of 7 per cent on equities and a 4.7 per cent overall average return.

"A number of mostly larger funds are choosing to assume this maximum allowed return on investments," the bank said in a statement.

"Whether this return will actually be achieved is of course dependent on development in the markets."

REUTERS

    
 

Chinese firms could handle 10% yuan depreciation, Moody's says

Chinese companies with debt denominated in foreign currencies have sufficient cushioning to weather a 10 per cent depreciation of the yuan, Moody's Investors Service said in a report after studying 70 rated companies. 

PHOTO: REUTERS

SEP 1, 20156:33 PM

[BEIJING] Chinese companies with debt denominated in foreign currencies have sufficient cushioning to weather a 10 per cent depreciation of the yuan, Moody's Investors Service said in a report after studying 70 rated companies.

The companies analyzed in the report had 48 per cent of their debt denominated in foreign currencies at the end of 2014, Moody's analysts led by Lina Choi and Gerwin Ho wrote in a note.

Alibaba Group Holdings Ltd, Tencent Holdings Ltd and Baidu Inc are in net cash positions of dollars, while Chinese state-owned players such as CNOOC Ltd, China Oilfield Services Ltd, Shanghai Electric Group Co and China Resources Gas Group Co have financial strength and government support to deal with a weaker yuan.

The findings may provide some comfort to authorities as they prop up the yuan after a surprise Aug 11 depreciation triggered concerns of further weakness. The People's Bank of China has intervened in the foreign exchange market, while Premier Li Keqiang signaled support for the currency, saying late last week that there was no basis for continued depreciation.

Moody's analysts found that only four companies, including Yanzhou Coal Mining Ltd and China Oil and Gas Group, may see their debt metrics worsen to a degree that can add downward pressure on their ratings.

Some Chinese agencies involved in economic affairs have begun to assume in their research that the yuan will weaken to 7 to the dollar by the end of the year, people familiar with the matter told Bloomberg last week.

In the latest move to shore up the yuan, the PBOC will impose a reserve requirement on financial institutions trading in foreign-exchange forwards for clients, making it more costly for traders of forwards contracts to bet on swings in the currency.

BLOOMBERG

      

China said to slap new requirement on yuan trades to stem swings

SEP 1, 20157:10 PM

[HONG KONG] China's central bank added to measures designed to shore up the yuan, making it more costly for traders of forwards contracts to bet on swings in the currency.

The People's Bank of China will impose a reserve requirement on financial institutions trading in foreign- exchange forwards for clients, according to six people familiar with the matter. The change, which takes effect on Oct. 15, will mandate a deposit of 20 per cent of sales to be held at zero interest for a year, said the people, who asked not to be identified because they aren't authorized to speak on the issue.

"It's a move to ease the reduction in foreign-exchange reserves," said Tommy Ong, managing director for treasury and markets at DBS Bank Hong Kong Ltd.

"It's also meant to discourage speculation and ensures the yuan's rates are reflecting genuine demand and supply. That includes cross-border yuan investment into fixed assets."

The PBOC has intervened to prop up the yuan since the devaluation, a policy that eats into its US$3.65 trillion of foreign-exchange reserves. The stockpile will drop by an estimated US$40 billion a month partly because of the support, according to a Bloomberg survey conducted in August. Premier Li Keqiang signaled support for the currency, saying late last week that there was no basis for further declines.

"The new move aims to curb speculative onshore positions as it makes the cost of buying dollars higher," said Becky Liu, a rates strategist at Standard Chartered Plc in Hong Kong. "It will also remove lots of speculative trades that aim at short- term gains as the reserves have a minimum lock-up period of one year."

The value of yuan forward transactions was US$51.1 billion in July, according to the State Administration of Foreign Exchange, compared with US$698 billion in the spot market. The yuan, which fell 2.6 per cent in August in the biggest monthly decline since 1994, rose 0.1 per cent to 6.3698 a dollar as of 2:27 p.m. in Shanghai. The freely traded currency in Hong Kong was at 6.4110, after a 3.5 per cent drop last month.

The onshore currency's one-month implied volatility, which measures expected swings and is used by some traders to price options, jumped 427 basis points to 5.78 per cent in August, the biggest monthly advance since 2005. It fell 19 basis points on Tuesday to 5.59 per cent.

IMF Bid The new reserve requirement comes as China pushes to add the yuan to the International Monetary Fund's reserve-currency basket in a review later this year. The IMF has said China should reduce intervention except at times of excessive volatility and allow a more market-oriented exchange rate.

"The PBOC move is probably made to reduce the gap between onshore and offshore yuan rates, reduce volatility in the short- run and reduce the cost to intervene in the onshore market," said Irene Cheung, a currency strategist at Australia & New Zealand Banking Group Ltd. in Singapore. "But in the medium to long term, the yuan's volatility and exchange-rate depends on fundamentals." Opening Up China has accelerated the opening up of its financial markets this year with moves such as allowing foreign banks to trade in its interbank bond market, and inviting some offshore yuan clearing lenders to apply to trade onshore swaps and forwards. The PBOC didn't immediately reply to a fax seeking comment on the reserve requirement for yuan forwards.

"The new reserve requirement for forwards discourages speculation against the yuan," said DBS' Mr Ong. "I don't see it having any major implications for IMF inclusion, as long as it doesn't disrupt any major progress made so far."

BLOOMBERG

    
 

ECB asset-backed debt holdings fall even with renewed buying push

The European Central Bank's holdings of asset-backed debt fell for the first time since January, even as the bank steps up purchasing efforts to help boost regional lending. 

PHOTO: AFP

SEP 1, 20157:33 PM

[LONDON] The European Central Bank's holdings of asset-backed debt fell for the first time since January, even as the bank steps up purchasing efforts to help boost regional lending.

The outstanding amount held in the ECB's asset-backed securities purchase program declined by 106 million euros(S$167 million) to 11.1 billion euros in the week ended Aug 28, the Frankfurt-based institution said Monday. A spokesman declined to comment on the drop in holding of bonds backed by mortgages to auto loans.

The decline is probably because the ECB can't buy enough new bonds to replace maturing debt, said Gareth Davies, head of European asset-backed securities research at JPMorgan Chase & Co.

The ECB's efforts to buy the debt, in order to remove risk from banks and encourage new lending, have been hampered by a lack of new issuance and an approval process that takes as long as five days.

"Negative purchases are another example of how difficult the ECB is finding it to operate in the ABS market," said London-based Mr Davies.

"While I fully believe it's more of a temporary hiccup than a permanent reduction in willingness to engage with asset class, it's still not a great headline."

The decline in January was the result of debt maturing, a spokesman said at the time.

European issuance of asset-backed debt has totaled 59 billion euros so far this year, compared with the 255 billion euros raised in the same period of 2006, the busiest year for sales, according to JPMorgan. It is up from more than 47 billion euros in the first eight months of last year.

The ECB has increased efforts to boost its holdings of asset-backed debt, which are about 10 per cent the size of covered-bond purchases under a similar program. Since June, the bank has targeted investors directly by having fund managers make unsolicited requests for securities, four people familiar with the matter said last week. They asked not to be identified because they're not authorised to speak about it.

"The ECB has demonstrated a pick-up in energy to buy ABS," said Anuj Babber, head of consumer securitisation at Prudential Plc's M&G unit in London. "However, without net new issuance this could lead to the universe of eligible assets diminishing over time, which would mean the run rate of purchases will decrease."

BLOOMBERG

    
 

China to set up 60 billion yuan fund to boost smaller companies 

China will establish a 60 billion yuan (US$9.4 billion) fund to finance small and medium-sized companies as a means to boost innovation and employment. 

PHOTO: REUTERS

SEP 1, 20158:34 PM

[BEIJING] China will establish a 60 billion yuan (US$9.4 billion) fund to finance small and medium-sized companies as a means to boost innovation and employment.

The central government will contribute a quarter of the sum, with the rest coming from investments from private and state-owned companies, financial institutions and local governments, the State Council said in a statement Tuesday.

The fund will focus on supporting start-up companies and will use market-driven methods, according to the statement from a meeting chaired by Premier Li Keqiang.

The State Council also cut capital requirements for some fixed-asset investment projects, the statement said.

China is on track to grow at its slowest pace in a quarter- century this year as it shifts its economy more toward consumption and services and away from investment and manufacturing. An official gauge of factory activity released Tuesday fell to its lowest level in three years as recent monetary easing failed to revive old growth drivers.

Capital requirements for projects involving airports, shipping and ports will be cut to 25 per cent from 30 per cent, according to the statement. Railway, road and urban rail transit projects will have a 20 per cent capital requirement, down from 25 per cent.

Industries with overcapacity including steel, cement and coke will continue to face stricter capital requirements of 30 per cent to 40 per cent, the statement said.

BLOOMBERG

      

IMF, World Bank to hold 2018 annual meetings in Bali

SEP 1, 20159:01 PM

[WASHINGTON] The International Monetary Fund and the World Bank said Tuesday they would hold their 2018 annual meetings on the Indonesian island of Bali.

The meetings, usually held every three years outside Washington where the sibling 188-nation institutions are headquartered, will take place in Nusa Dua in October 2018, the IMF and World Bank said in a joint statement.

The 2015 annual meetings are scheduled for October 9-11 in Lima, Peru.

"I would like to thank the government of Indonesia and people for hosting the 2018 Annual Meetings," Christine Lagarde, the managing director of the IMF, said in the statement.

"This will be a great opportunity to showcase Indonesia's impressive economic and social achievements, as well as the culture, beauty, and vitality of the country."

AFP

US manufacturing sector growth slows in August: ISM

SEP 1, 201510:07 PM

[NEW YORK] The pace of growth in the US manufacturing sector slowed in August to its weakest in over two years, according to an industry report released on Tuesday.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.1 from 52.7 the month before, marking the lowest reading since May 2013. The reading was shy of the expected 52.6, according to a Reuters poll of economists.

A reading above 50 indicates expansion in the manufacturing sector.

The new orders subindex fell to 51.7 from 56.5 to also mark the lowest level since May 2013. The prices paid index fell to 39.0 from 44.0 to mark the weakest level since March, disappointing expectations for 42.5.

The employment index slipped to 51.2 from 52.7 to mark its lowest level since April, while the imports index hit its lowest level since January 2013 at 51.5.

REUTERS