Saudi sees no need for oil summit, best leave market alone: sources

Venezuela's President Nicolas Maduro (left) and the Emir of Qatar, Tamim bin Hamad al-Thani (center) smile during a meeting in this handout picture provided by Miraflores Palace on Sep 4, 2015. 

PHOTO: REUTERS

SEP 11, 20157:57 AM

[DOHA] Top oil exporter Saudi Arabia sees no need to hold a summit of producing countries' heads of state if such discussions would fail to produce concrete action toward defending oil prices, sources familiar with the matter said on Thursday.

The comments followed a meeting of Gulf Arab oil ministers with Qatar's emir in Doha, at which a Venezuelan proposal for an Opec and non-Opec summit was discussed.

Oil prices have more than halved since summer last year on an oversupplied market as well as a decision by Opec to defend market share and discourage competing supply sources, rather than cut its output in the face of cheaper crude.

Riyadh believes it is best not to interfere in the market at present, the sources told Reuters on condition of anonymity.

One Opec source said that should such a meeting produce no concrete outcome, it would have a negative impact on prices. "If we are meeting for the sake of meeting, it would backfire," the source said.

Earlier on Thursday, Qatar's energy minister said members of the Organization of the Petroleum Exporting Countries and non-Opec producers were studying the Venezuelan proposal. "But we are in the study phase," Qatar's Mohammed al-Sada added.

Cash-strapped Venezuela has for months been pushing for an emergency Opec meeting with Russia to stem the tumble in prices. "I've made a proposal and I know that the 'empire' is trying to sabotage it around the world," Venezuela's President Nicolas Maduro, who routinely refers to the United States like that, said in a speech on Thursday night. "I'm proposing a presidential summit of Opec and non-Opec producers to take measures to defend the market and the price, measures that can be taken calmly, exercising sovereignty. The consultations are underway. There's some good news on the one hand, but a lot of conspiring on the other." The price of Venezuela's barrel had dropped to US$39 on Thursday, he added.

Non-Gulf members want Opec to take action. Algeria has written to Opec expressing concern about the market and Iran has supported the idea of an emergency meeting.

But the Gulf Opec members have opposed holding an early meeting and show no sign of changing strategy.

Opec last held a heads-of-state summit in Saudi Arabia in 2007, when oil prices were on their way to a record high of US$147 a barrel reached a year later.

Gulf oil sources see no sign of Saudi Arabia wavering particularly when other Opec members such as Iraq are raising production, and Iran is gearing up to boost exports by next year.

Opec's strategy needs time to work and they are willing to wait, they say.

REUTERS

     

China circuit breakers may finally quell volatility, traders say

China's plan to introduce a stock-market circuit breaker would help calm volatility after price swings in the benchmark index surged to an 18-year high, according to analysts in a Bloomberg survey. 

PHOTO: EPA

SEP 11, 201510:07 AM

[BEIJING] China's plan to introduce a stock-market circuit breaker would help calm volatility after price swings in the benchmark index surged to an 18-year high, according to analysts in a Bloomberg survey.

Twelve of the 15 respondents were in favor of the proposal while remainder were against. Under the current plan, a move of 5 per cent by the CSI 300 Index would trigger a 30-minute halt for stocks, options and index futures, according to a joint statement on Monday by the nation's two bourses and the futures exchange.

Turmoil in China's stock market sent a gauge of price swings to its highest level since 1997 as leveraged investors unwound bullish bets on concern valuations were unjustified amid the slowing economy. Volatility has remained elevated despite unprecedented government intervention to stop a US$5 trillion rout, including banning share sales by major investors and at one stage in July allowing more than 1,400 companies to halt trading.

"If there is a fair and transparent circuit breaker mechanism in place, it should help to stabilise the markets during the most vulnerable times," said Cedric Ma, a Hong Kong- based senior investment strategist at Convoy Asset Management Ltd, which oversees about US$500 million of assets. "It's far better than letting companies suspend their shares from trading on their own."

Under the plan, a move of 7 per cent by the CSI 300 measure would halt trading for the remainder of the day. The rules would also apply to convertible bonds and some other equity-related securities. The CSI 300 index was chosen because it includes some of the largest companies traded in both Shanghai and Shenzhen, according to the statement. Feedback on the plan is being accepted until Sept 21.

China worked to soothe concern over its economy at the Group of 20 gathering in Turkey at the weekend, with officials predicting stabilization in the currency and stock markets in the coming weeks. People's Bank of China Governor Zhou Xiaochuan said state intervention prevented systemic risk and stopped a free-fall. The government spent 1.5 trillion yuan (S$333 billion) from the start of the selloff three months ago through August supporting equities, according to Goldman Sachs Group Inc.

For Francis Cheung, head of China strategy at CLSA Ltd, the concept would be a positive step, provided officials are clear about the rules.

"The upside I see is if the government institutes circuit breakers, then it will no longer intervene in the stock market," said Mr Cheung in Hong Kong. "But this is not assured." A circuit breaker could replace existing restrictions on trading as the government moves toward closer integration with global markets, according to Mo Haibo, a director at Wanjia Asset Management Co. Individual stock price moves are subject to a 10 percent daily limit, while the T+1 rule prevents investors from buying and selling shares on the same day. Chinese officials have been pushing for the inclusion of mainland equities in MSCI Inc's world benchmark indexes.

"A circuit breaker is necessary in the long term for protection under extreme market circumstances as China is very likely to scrap the 10 percent daily limit and the T+1 trade rule," said Mr Mo in Shanghai. "Current trading rules may need to be revamped if the circuit breaker is introduced while daily limits are still in place." The CSI 300 added 0.3 per cent at 9:50 am local time to erase a weekly loss. The Shanghai Composite Index added 0.1 per cent.

A circuit breaker could increase intraday volatility as investors rush to buy or sell shares before the halt is triggered, according to Daniel So, a strategist at CMB International Securities Ltd. in Hong Kong. The CSI 300 has risen or fallen by 5 per cent on 20 occasions in the past three months and half of those times daily moves exceeded 7 per cent.

"It might cause more extreme market movements because investors would fear being too slow to react to good or bad news," Mr So said. The halt would also increase selling pressure in Hong Kong, where the same companies would still be trading, he said.

China's planned limits for stopping trading are lower than in the US, which installed market-wide circuit breakers after the 1987 crash. A 7 per cent drop by the Standard & Poor's 500 Index would trigger a 15-minute halt for companies listed on the New York Stock Exchange and Nasdaq Stock Market. Another circuit breaker kicks in if the S&P 500 extends its losses to 13 per cent before 3:25 pm. If the plunge reaches 20 per cent, the entire stock market will shut for the rest of the day.

Hong Kong's bourse will introduce a volatility-control mechanism as soon as 2016 that would prevent an individual stock from moving 10 per cent or more during a five-minute period, once a session. Stocks traded in the city aren't currently subject to any daily price limits.

For Cinda Securities Co strategist Chen Jiahe, the circuit breaker is a sign China's stock market is growing up.

"The circuit breaker mechanism may calm the market and lead to a more rational and mature performance," said Mr Chen in Shanghai. "It's a reflection of an increasingly sound and diversified market mechanism." Brokerages and money managers that participated in the survey include Haitong International Securities Group Ltd, Shenwan Hongyuan Group Co, Delta Asia Securities Ltd, Central China Securities Co, Dongxing Securities, Xiangcai Securities Co, Hengsheng Asset Management Co, Bocom International Holdings Co, China Southern Fund Management Co, JK Life Insurance Co and HFT Investment Management Co.

BLOOMBERG

      

Malaysia's central bank likely to hold rates steady while uncertainties stack up

Malaysia's central bank will likely hold its key interest rate steady at a policy review on Friday as a weakened global economy, battered ringgit and uncertain domestic politics keep policymakers in check. 

PHOTO: BLOOMBERG

SEP 11, 20157:34 AM

[KUALA LUMPUR] Malaysia's central bank will likely hold its key interest rate steady at a policy review on Friday as a weakened global economy, battered ringgit and uncertain domestic politics keep policymakers in check.

Economists in a Reuters poll were unanimous in their forecasts for Bank Negara Malaysia (BNM) to keep its overnight policy rate unchanged at 3.25 per cent, as risks to Malaysia's economic growth remain.

With the country's currency, the ringgit, plummeting to 17-year lows, economists do not see central bank resorting to using interest rates as a policy tool.

Economists say that the most likely policy action to stabilise capital outflows is to repatriate government-linked firms' overseas investments and repatriate Forex earnings.

However, Bank Negara would likely adopt a wait and see approach until the U.S Federal Reserves decides if it would raise rates. "There's no point to use up their bullets now. It would be more prudent to store those measures in their arsenal first,"said Michael Wan, economist at Credit Suisse.

The ringgit has lost over 19 per cent in the year-to-date, making it the worst performing emerging Asia currency. The ringgit hit 4.3450 on Thursday.

Malaysia has been gripped by politicial tensions which escalated in early July after a Wall Street Journal report on indebted state fund 1MDB reported that close to US$700 muillion had been deposited in an account held by Prime Minister Najib Razak.

Najib, who also chairs 1MDB, has denied any wrongdoing, but the scandal has not died down. Last month, an anti-government rally drew tens of thousands of protesters, calling for Najib's resignation, to the streets of Kuala Lumpur.

SLOWING GROWTH

Like other Southeast Asian countries that count China as their biggest trading partner, Malaysia is feeling a chill wind from the slowdown in the world's second largest economy.

Malaysia's economy grew 4.9 per cent growth in the second quarter, slowing from 5.6 per cent in the first quarter.

Domestic consumption, which accounts for 52 per cent of the country's gross domestic product is expanding at a slower rate after the introduction of a 6 per cent consumption tax in April.

Economists expect growth to turn more sluggish in the second half as the outlook for the global economy remains uncertain, and that central bank is unlikely to adjust rates anytime soon. "The last thing you want is in order to stem pressure on ringgit to depreciate, you risk exerting unnecessary pressure on growth," said Irvin Seah of DBS.

In August, Bank Negara said that the current interest rate"remained supportive of economic activity".

The country's economy relies heavily on exports from the commodities, electrical and electronics sector. The latter helped sustain export growth this year.

But in coming months, Malaysia's exports growth could suffer as surveys show manufacturers are reporting fewer orders.

REUTERS

    
 

China, US can cooperate on cyber security: Chinese official

China and the United States can cooperate on cyber security and could work together with other countries on global cyber security rules in a spirit of respect, China's top diplomat was quoted on Friday as saying. 

PHOTO: AFP

SEP 11, 20158:37 AM

[SHANGHAI] China and the United States can cooperate on cyber security and could work together with other countries on global cyber security rules in a spirit of respect, China's top diplomat was quoted on Friday as saying.

The comments from State Councilor Yang Jiechi were published in the English-language China Daily after US Director of National Intelligence James Clapper told a congressional committee on Thursday the United States must beef up security against Chinese hackers. Mr Yang's comments were not a direct reaction. "China and the United States actually can make cyber security a point of cooperation between our two countries," Mr Yang said in an interview focused on Chinese President Xi Jinping's upcoming state visit to America. "We hope China, the United States and other countries could work together to work out the rules for cyber security in the international arena in the spirit of mutual respect, equality and mutual benefit," said Mr Yang, who outranks the foreign minister.

The Obama administration is considering targeted sanctions against Chinese individuals and companies for cyber attacks against US commercial targets, several US officials have said. Chinese hackers have also been implicated in the massive hacking of the US government's personnel office disclosed this year.

Mr Clapper's testimony added to pressure on Beijing over its conduct in cyberspace just weeks before Mr Xi's visit.

Mr Yang noted, as Chinese officials regularly do, that China was itself a hacking victim and said suspected cases of hacking should be investigated and handled "on a solid, factual basis".

On another point of rising friction between the United States and China - the territorial disputes in the South China Sea - Mr Yang said he hoped the United States would stay on the sidelines because it was not part of the disputes.

He added, though: "It is important for both countries to stay in close touch even if they have different perceptions and views."

REUTER
S

EU divided as record wave of migrants stream into bloc

Divisions over Europe's refugee crisis deepened on Thursday as record numbers of migrants streamed through the Balkans into Hungary, forcing Austria to suspend cross-border train services. 

PHOTO: AFP

SEP 11, 20158:55 AM

[RÖSZKE, HUNGARY] Divisions over Europe's refugee crisis deepened on Thursday as record numbers of migrants streamed through the Balkans into Hungary, forcing Austria to suspend cross-border train services.

Germany, which is spearheading Europe's response to the emergency, warned that an EU plan to distribute 160,000 new arrivals among member states was a mere "drop in the ocean".

The plan already faces stiff opposition from eastern members, including those on the front line of the huge influx of people, who say they will not accept binding quotas from Brussels.

Foreign Minister Frank-Walter Steinmeier will try to win over eastern European states at a meeting in Prague on Friday.

The European Union is bitterly divided over how to cope with the biggest migrant crisis since World War II, with some countries on the bloc's borders hardening their stance while others in Western Europe have opened their doors.

Some 22,500 refugees and migrants arriving on the Greek island of Lesbos have been registered by officials since Monday evening, according to police, many of them Syrian refugees setting sail from Turkey.

In Hungary, police said Thursday 3,321 people had entered in just 24 hours, hurrying to cross before tough new anti-migrant laws take effect, a new border fence is completed, and the weather worsens.

Austria's train operator suspended services with Hungary on Thursday due to "massive overcrowding" and urged bus companies and volunteers to stop bringing migrants to stations.

In Serbia, where state television said 5,000 people had arrived at the border with Hungary, the prime minister warned the situation would worsen when new immigration laws come into force Tuesday.

'AN ACCOUNTANCY EXERCISE'

The UN refugee agency on Tuesday warned that at least 42,000 migrants were expected to enter Hungary by next week.

Many have endured treacherous sea journeys across the Mediterranean - most fleeing war and poverty in Syria, Afghanistan or Pakistan.

On Macedonia's border with Greece, AFP journalists saw some 50 buses transporting some 2,500 migrants and three trains packed with 3,000 people departing from the town of Gevgelija.

EU interior ministers will meet Monday to discuss how to share the burden across the bloc and ease the pressure on frontline states.

Germany, which has already welcomed 450,000 migrants this year, wants the 28-nation group to go further, calling for no limits to the quotas.

"The distribution of 160,000 refugees across Europe is a first step, if one wants to be polite," said Deputy Chancellor Sigmar Gabriel.

"It's a drop in the ocean." But binding quotas are facing fierce resistance from eastern EU members.

"It is inappropriate to talk about mandatory quotas, calculated on an extremely bureaucratic basis, almost like an accountancy exercise I might say, without consulting member states," said Romania President Klaus Iohannis.

His views echoed those of Slovakian Prime Minister Robert Fico, who said Wednesday he did not "want to wake up one day and have 50,000 people here about whom we know nothing".

'WALKING FOR HOURS'

Mr Juncker's proposals include a possible revision of the EU's much-criticised Dublin Treaty, under which asylum claims must be processed by the first country where refugees arrive.

EU lawmakers called for an international conference on migration bringing together the United States, United Nations and Arab countries.

Facing criticism that his government has been too slow to help, US President Barack Obama pledged to admit at least 10,000 Syrian refugees in the year starting October 1.

Spokesman Josh Earnest said Obama had ordered staff to "scale up" the number of Syrian refugee admissions from around 1,500 this year after over 62,000 Americans signed a petition calling on Washington to take in more people.

Meanwhile, on the Greek island of Lesbos, another flashpoint in Europe's crisis, the boats kept arriving.

Hundreds - perhaps thousands - made a gruelling 50-60km walk from their landing place to the main town where they must go to receive registration papers.

"We have been walking for four hours. There is no bus, no taxi, no water, no anything," said Mohammed Yassin al-Jahabra, a 23-year-old English literature student.

Thousands of people have been forced to camp on the streets in squalid conditions, and there were repeated clashes as riot police struggled to control huge crowds pressing forward to get on board ferries.

But the boats are still arriving at an astonishing pace, with six landing in the space of an hour on Wednesday, AFP correspondents said.

"As soon as I put my feet down (on dry land), I stopped feeling tired," said Feras Tahan, a 34-year-old Syrian graphic designer, his shoes and trousers soaked.

AFP

      

Japan floods leave 1 dead, 22 missing as another river bursts

One person died and 22 were missing after torrential rain triggered severe floods across swathes of land north of Tokyo, state broadcaster NHK said.

PHOTO: AFP

SEP 11, 20159:53 AM

[TOKYO] One person died and 22 were missing after torrential rain triggered severe floods across swathes of land north of Tokyo, state broadcaster NHK said.

The Shibuigawa river in Miyagi Prefecture, an area hit by the record 2011 tsunami, burst its banks Friday morning, exacerbating flooding in an area already declared a state of emergency, according to NHK. This follows a breach Thursday by the Kinugawa river in the city of Joso, about 26 miles (42 kilometers) north of Tokyo.

TV footage showed dozens of submerged houses in Miyagi, and rescue workers airlifting people from homes in danger of being swept away. More than 700 homes were flooded in Ibaraki and Tochigi prefectures, according to the Fire and Disaster Management Agency.

Toyota Motor Corp halted production at three factories in northeastern Japan due to the heavy rains, according to the Nikkei newspaper. None of the plants were damaged, the paper said.

Shares in home builders rose, while stocks of insurance companies fell. Iida Group Holdings Co was up 8 per cent as of 10:07 am in Tokyo, and Sanei Architecture Planning Co increased 6.2 per cent. T&D Holdings Inc. fell 2.4 per cent.

The rains caused contaminated water at Tokyo Electric Power Co's wrecked Fukushima Dai-Ichi facility to leak into the Pacific Ocean, according to company spokesman Tatsuhiro Yamagishi.

"Tepco determined that the slightly tainted water leaked from the Fukushima facility had no impact on the nearby ocean's radiation level," Mr Yamagishi said by phone Friday.

Heavy rain subsided in the Kanto region near Tokyo on Friday, while parts of Hokkaido may see rain as tropical storm Kilo approaches northern Japan. With more than 500mm of rain accumulated in some areas over a 12-hour period Thursday, Kanto must stay on alert for floods and landslides, Japan Meteorological Agency's Eiju Takahashi said.

BLOOMBERG

      

Watch what you eat over the holidays, China tells officials

SEP 11, 201511:10 AM

[BEIJING] Chinese officials have to watch what they eat and where they go over two upcoming holidays to make sure they don't break frugality rules, and regret after the fact will not be accepted as an excuse, China's top graft-buster said on Friday.

Since President Xi Jinping's appointment in 2013, the government has cracked down on official corruption and extravagance in China, where the flaunting of personal and often illicit wealth and wasteful public spending have led to widespread criticism of the party.

Gift giving is particularly popular over holidays, such as mooncakes at the Mid-Autumn Festival later this month. The first week of October is the National Day holiday.

In a letter written to more than 300,000 officials at central government departments and state-owned industries, the Central Commission for Discipline Inspection said that cadres needed to be aware they represented the Communist Party. "Having a 'clean' holiday starts with you; steadfastly do not eat what you are not supposed to eat, steadfastly decline gifts you're not supposed to accept and steadfastly don't go to places you're not supposed to," reads the letter, excerpts of which were released by the graft watchdog.

Since the corruption crackdown began, Chinese media has been filled with stories of officials downing bottles of expensive imported liquor, carousing with prostitutes at private clubs, or playing golf at exclusive courses, often using public money.

Serious cases are prosecuted, but less serious ones generally result in a slap on the wrist, like a demotion.

The party is using such a novel and "homely" way as this letter to drive home its point to make sure officials understand potential corruption problems must be nipped in the bud before they become more serious, the watchdog said. "Everyone feels regret when we see officials expressing penitence during the course of an investigation, but there is no drug to cure regret in this world. Once something has happened, it's too late for regrets," an unidentified watchdog official was quoted as saying.

The anti-graft campaign has over the past two years or so dragged down sales of high-end products from the fiery sorghum-based liquor, baijiu, to mooncakes, both traditional popular gifts for smoothing business and official ties.

REUTERS

  
 

Hundreds trapped as floods sweep Japan

Nearly 700 people were awaiting rescue and at least 12 missing in Japan Thursday after torrential rains that saw a river burst its banks and deluge a city north of Tokyo. 

PHOTO: AFP

SEP 11, 20157:24 AM

[JOSO CITY] Nearly 700 people were awaiting rescue and at least 12 missing in Japan Thursday after torrential rains that saw a river burst its banks and deluge a city north of Tokyo.

Dramatic aerial footage showed whole houses being swept away by raging torrents in scenes eerily reminiscent of the devastating tsunami that crushed Japan's northeast coast in 2011.

Television images from Joso, a small city of 65,000, showed desperate residents waving towels as they stood on balconies trying to summon help after the levee on the Kinugawa river gave way, flooding an area that reports said spanned 32sq km and included 6,500 homes.

Military helicopters plucked some stranded residents from roofs. One man was seen clutching a concrete post as waters swirled around him.

An estimated 690 people were still awaiting rescue as of 11.00pm (1400 GMT), the National Police Agency said, according to Kyodo and Jiji Press news agencies, 10 hours after the levee burst.

"Please continue to ask for help. Please don't give up hope," an anchorman for public broadcaster NHK told trapped viewers.

"I've never seen the Kinugawa river burst its banks," 63-year-old Joso resident Akira Yoshihara told AFP.

"My house is on higher ground but I'm worried the water may reach it tonight." At least 12 people were missing after being swept away when the levee burst, the reports said, citing the prefectural government.

"We know the damage is extensive and affected wide areas," an Ibaraki official told AFP.

More than 100,000 people had been ordered to leave their homes after a huge swathe of northeast Japan was battered by torrential rain, with up to 60cm falling in some places.

The rains came in the wake of Typhoon Etau, which smashed through the country on Wednesday, bringing strong winds and causing travel chaos.

TRAPPED

Forecasters from the Japan Meteorological Agency had issued special warnings urging vigilance against mudslides and flooding in Joso and other parts of Ibaraki prefecture, with 20,000 people there told to seek shelter.

Joso is about 60km outside Tokyo, which has also been hit by localised flooding.

In neighbouring Tochigi prefecture, authorities ordered more than 90,000 people to evacuate, while another 116,000 were advised to leave their homes, broadcaster NHK said.

A 63-year-old woman died after a landslide in Tochigi, Kyodo reported.

Flooding complicated a contaminated water problem at the crippled Fukushima nuclear plant, where the site's drainage pumps were overwhelmed, sending radiation-tainted water into the ocean, a spokesman for operator Tokyo Electric Power said.

"This is a scale of downpour that we have not experienced before," forecaster Takuya Deshimaru told an emergency press conference.

Prime Minister Shinzo Abe said the government was on high alert, and vowed to put the "highest priority" on saving people's lives.

Two men were missing in Tochigi's Nikko, a city known for its historic shrines, after possibly being buried by landslides, NHK said.

Two other men in Nikko were rescued after being swept into a drainage gutter, but one was unconscious, the broadcaster said.

Etau, which smashed into Japan on Wednesday, moved out into the Sea of Japan (East Sea) by the end of the day, but a wall of rain continued to lash the country.

More than a dozen people were injured, including a 77-year-old woman who broke her leg after falling in strong winds, local reports said.

Japan is no stranger to natural disasters, and is frequently rocked by typhoons.

However, nothing in recent memory has compared with the tsunami of 2011, when more than 18,000 people were killed.

AFP

      

New York governor reveals plan for US$15 minimum wage

SEP 11, 20157:29 AM

[NEW YORK] New York Governor Andrew Cuomo announced his support Thursday for a US$15 per hour minimum wage that would be gradually implemented state-wide for all workers.

The move follows his push in late July to raise the minimum wage for fast-food employees to US$15.

"Every working man and woman in the state of New York deserves US$15 an hour as a minimum wage," Mr Cuomo said during a speech in Manhattan, flanked by union leaders and US Vice-President Joe Biden - who is considering a bid for the White House.

The Democratic governor said he would take his proposal, which would benefit an estimated 2.2 million workers, to New York's state legislature.

However the measure will need support from the body's Republican lawmakers.

The federal minimum wage is currently pegged at US$7.25 an hour, but states and municipalities can set their own minimum.

Some 29 states and Washington, DC, have minimum wages above the federal minimum. New York's stands at US$8.75.

Meanwhile, several cities from Seattle to San Francisco have a US$15 minimum wage, and US President Barack Obama has recommended a federal minimum wage of $12 per hour.

Under Mr Cuomo's plan, wage increases would be implemented gradually, taking effect in New York City by 2018, and elsewhere in the state by 2021.

AFP