Fitch warns emerging markets of Brazil-like mess on private debt

DEC 2, 201511:15 PM

[LONDON] As if political turmoil, commodity-price meltdown and growth hiccups aren't enough, emerging markets face a threat to their creditworthiness from an entirely different area, - the burgeoning debt of households and companies.

Private-sector borrowing as a proportion of gross domestic product will reach 77 per cent by the end of this year in seven large developing nations, Fitch Ratings said in a report Wednesday. Such liabilities have exceeded government debt levels, exposing their economies and financial systems to "downside risks," analysts Ed Parker and James McCormack said.

The countries - Brazil, Russia, India, Indonesia, South Africa, Turkey and Mexico - are seeing an increase in their private-debt burden in 2015 because of currency depreciation, according to the report. That could weigh on their governments' credit rating through weaker GDP growth, worsening budget deficits, pressure on foreign-currency reserves or further exchange-rate fluctuations, Fitch said.

"Private-sector debt has often migrated to sovereign balance sheets in past financial crises," the analysts wrote. "A stress situation could feed through to pressure on sovereign creditworthiness." Among the countries studied by Fitch, Brazil had the highest proportion of private borrowings relative to GDP, at 93 per cent, and Mexico had the lowest, at 47 per cent. The increase between 2005 and 2014 was also the greatest in Brazil. The challenges facing the South American country will eventually confront others, the report said.

Of the seven countries studied, all except Mexico have either BBB- or BBB with a negative outlook and are therefore close to the junk-rating threshold, according to Fitch. Domestic banks in these nations were the primary source of lending, it said.

"They would face risks of increased non-performing loans, weaker profitability and potentially the need for recapitalization in the event of a systemic crisis affecting corporates or households." China was excluded from the group because its data would skew overall figures for emerging markets, it said.

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US private sector adds 217,000 jobs in November: ADP

DEC 2, 201510:02 PM

[NEW YORK] US private employers added 217,000 jobs in November, above expectations and the most since June, signalling job growth is likely strong enough to support the first Federal Reserve interest rate hike in nearly a decade when policymakers meet later this month, a report by a payrolls processor showed on Wednesday.

Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 190,000 jobs.

Private payroll gains in October were revised up to 196,000 from an originally reported 182,000 increase.

The report is jointly developed with Moody's Analytics. The ADP figures come ahead of the US Labour Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.

Economists polled by Reuters are projecting the Labour Department's report to show US employers hired 200,000 workers in November. The unemployment rate is forecast to hold at 5.0 per cent.

REUTERS

    
 

India floods swamp airport and disrupt BMW, Ford in Chennai

      

People stand on a flooded road in Chennai, India, December 2, 2015.

PHOTO: REUTERS

DEC 2, 20159:37 PM

[NEW DELHI] The worst deluge in a century in India's southern Tamil Nadu state paralyzed Chennai, causing floods and closing offices, factories and the airport in a metropolis of about 9 million people that's facing more rain.

Television images showed brown floodwater lapping at the wheels of stranded aircraft Wednesday and families wading sometimes neck-deep in inundated streets. Factories curbed production a second straight day, including those of Ford Motor Co and BMW AG. Tata Consultancy Services Ltd., Infosys Ltd. and Cognizant Technology Solutions Corp. told staff to stay away from local offices.

The national forecaster said rains may continue to lash India's fourth-largest city this week, threatening further disruption in a hub for automobile manufacturing and information technology services as the army and navy step up rescue efforts. The airport is set to remain closed and about two dozen jets are stranded there, including some belonging to budget carrier SpiceJet Ltd.

"I don't think any flight is possible for at least a week," Chennai International Airport Director Deepak Shastri said by phone from the city. "There's a forecast for more rains, and we'll need to clean up the debris in the entire field after that." Chennai-based TVS Motor Co, which makes motorcycles and scooters, slid 4.9 per cent, the most since Aug 24, after saying rainfall in the past three weeks adversely affected production and sales. Shares in drug maker Natco Pharma Ltd, which shut down a plant temporarily due to flooding, slid for a third day.

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Many manufacturers are based in or near Chennai, including Hyundai Motor Co, Ashok Leyland Ltd and Renault SA. Daimler AG closed a plant there due to the weather.

The Indian Meteorological Department forecasts precipitation and thunderstorms in some parts of the city until Dec 7. The next 48 hours are critical for the rain situation in south India, the department's Director General L. S. Rathore said in New Delhi.

Three of Chennai's four reservoirs are near full capacity, the local water department's data show as of Wednesday.

Some 600 personnel are due to arrive with rescue boats, diving equipment and medical response gear, said S. S. Guleria, a deputy inspector general at India's National Disaster Response Force.

"It's the first time Chennai has seen anything like this," he said, adding so far there didn't appear to be major causalities from the inundation.

Prime Minister Narendra Modi and Tamil Nadu Chief Minister J Jayalalithaa spoke Tuesday about the unfolding disaster. The state government described the torrential rains as the heaviest in more than a 100 years.

The city suffered a 1,218.6 millimeters of precipitation in November, three times more than normal, according to forecaster Skymet. The northeast monsoon typically sets in between October and December over India's east coast, where Chennai is located.

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Singapore's PMI contracts again in November, at 49.2

By

Kelly Taykellytay@sph.com.sg@KellyTayBT

Singapore's manufacturing sector continued to fare poorly, with the Purchasing Managers' Index (PMI) staying in contraction mode for the fifth month in November. 

PHOTO: AFP

DEC 2, 20159:13 PM

SINGAPORE'S manufacturing sector continued to fare poorly, with the Purchasing Managers' Index (PMI) staying in contraction mode for the fifth month in November.

Still, the PMI - a barometer of industrial activity - rose 0.3 point to 49.2, marking a slightly higher-than-expected reading.

Private-sector economists polled by Bloomberg had been expecting the PMI to rise just 0.1 point to 49.0.

A reading above 50 denotes growth, while one under 50 denotes a contraction in the manufacturing sector.

Said the Singapore Institute of Purchasing & Materials Management (SIPMM), which compiles the index monthly from a survey of more than 150 manufacturing firms' purchasing managers: "The contraction in the overall PMI was attributed to further decline in new orders and new export orders."

Production output and inventory continued to contract, although they both showed improvements in readings.

The electronics PMI remained below the 50-point mark in November as well, with a 0.4 point rise to 49.0. This was higher than the market's forecast of 48.8.

    
 

Singapore must continue to build inclusive society, says PM Lee

By

Claire Huanghuangjy@sph.com.sg@ClaireHuangBT

Singapore must continue to build a more inclusive society by valuing everyone and through active citizenship. 

PHOTO: SPH

DEC 2, 20157:16 PM

SINGAPORE must continue to build a more inclusive society by valuing everyone and through active citizenship.

This was a point made by Prime Minister Lee Hsien Loong when he graced the official opening of the Enabling Village.

The Enabling Village located in Lengkok Bahru spans some 30,000 square metres and brings a range of facilities and services under one roof for persons with disabilities, including training and employment support, as well as information and referral services.

Mr Lee said Singapore is building a fair and just society which respects every individual, particularly those with disabilities.

As part of this, there is the Enabling Masterplan, a roadmap for the disability sector.

He said it reflects the government's desire to empower and recognise the disabled, and to give them full opportunity to become integral and contributing members of society.

Good progress has been made under this current Masterplan which will end in a year's time, Mr Lee said, adding that Minister for Social and Family Development, Tan Chuan-Jin, will initiate the preparation of the next Masterplan - the third - in 2016.

The first Enabling Masterplan was from 2007 to 2011. The current roadmap is from 2012 to 2016.

Mr Lee said it will continue to be a collective effort involving the different stakeholders and should build on the momentum so it can make an even greater impact for the sector.

The success of the Enabling Village depends on the wider support of the public and he urged Singaporeans to also take part in SGFuture engagements to foster a more caring and empathetic society.

    
 

Heavy flooding causes chaos in southern India state

      

The heaviest rainfall in over a century caused widespread flooding across the southern Indian state of Tamil Nadu, driving thousands of people from their homes, shutting down factories and paralysing the airport in the state capital Chennai. 

PHOTO: AFP

DEC 2, 20153:18 PM

[CHENNAI] The heaviest rainfall in over a century caused widespread flooding across the southern Indian state of Tamil Nadu, driving thousands of people from their homes, shutting down factories and paralysing the airport in the state capital Chennai.

India's fourth-largest city is a major auto manufacturing and IT outsourcing hub for companies including Ford Motor, BMW AG, Infosys, Tata Consultancy Services and Cognizant Technology Solutions Corp.

Thousands of factories on the outskirts of the city were forced to close due to the deluge, which disrupted power supplies and swamped at least one runway at the international airport. About 25 flights were cancelled as of Wednesday morning, the national emergency operations centre said. "We have started the rescue operation but the biggest challenge is to find a way to clear the inundated airport and main roads," said Anurag Gupta, a senior official at the National Disaster Management Authority in New Delhi.

Weather experts say the seasonal northeast monsoon was responsible for the flooding in the city of at least 6 million, which like many other parts of India lacks an adequate drainage system.

At least twice as much rain fell in the last 24 hours as the average for the whole month of December, private weather forecaster Skymet said, adding that the downpour would continue for another 24 hours.

Meteorologists had warned late last month that the remnants of Typhoon Marilyn, or In-Fa, and which had formed near the Philippines, could turn into a tropical depression and bring heavy rains to India's east coast.

RELIEF EFFORT

Prime Minister Narendra Modi has ordered rescue teams and paramilitary forces to launch an extensive relief and rescue operation in Chennai.

He had earlier blamed climate change for the rains in the southern state, speaking after returning from a global climate conference in Paris that has drawn attention to the vulnerability of tropical countries like India to extreme weather events.

Hundreds of divers and army rescue teams entered inundated homes, taking the injured to hospitals. Authorities said more than a million people were affected by the flooding, with some residents bemoaning the slow response of the relief teams.

Ramana Goda, 56, said his family was stuck in an area where 10 feet (3 m) of water covered some roads. "The police want to help but there are no boats. We are trying not to panic," said Goda, who took refuge at a police station after fleeing his home with his family overnight.

REUTERS