Sing dollar falls through S$1.43 against US dollar, to fresh six-year low

By

Siow Li Senlisen@sph.com.sg@SiowLiSenBT

THE Singapore dollar (SGD) fell through S$1.43 on Tuesday, to a fresh six-year low, on increased concerns over global growth. 

PHOTO: ST FILE

SEP 29, 20152:23 PM

THE Singapore dollar (SGD) fell through S$1.43 on Tuesday, to a fresh six-year low, on increased concerns over global growth.

The SGD has fallen in the past seven days including Tuesday. It hit a morning low of S$1.4335; at the time of writing it was at S$1.4323.

The USD/SGD finally broke above the 1.43-handle on Tuesday morning, bolstered by global growth concerns, said a Maybank Research note.

"With the 1.43-handle broken, the next key barrier is around 1.4460 (Aug 24, 2009 high). In the interim, 1.4400 should be the handle to cross," it added. "Though the risk has tilted a little more to a Monetary Authority of Singapore (MAS) move at its October meeting, our base-line scenario is for the MAS to hold for now."

DBS Bank economists now expect an easing in Singapore's monetary policy come October, via a recentring of the S$NEER (Singapore dollar nominal effective exchange rate).

In a research note on Monday, DBS said that it foresees the band being recentred lower by half a band. "This is equivalent to a one-off devaluation of 2 per cent," it noted.

"The USD/SGD has appreciated back above 1.42 after it corrected down to 1.3879 on Sept 17 from its previous peak of 1.4294 on Sept 8. According to our model, the USD/SGD should not deviate far from the ceiling of its implied policy band, currently located around 1.4370," the report added.

Earlier this month, the MAS cautioned that both headline and core inflation would come in at the lower half of their 2015 forecast ranges, of -0.5-0.5 per cent and 0.5-1.5 per cent, respectively.

United Overseas Bank said that on Tuesday morning, the S$NEER index dipped further to 1.15 per cent below the midpoint, from around -1 per cent on Monday. The S$ index is seen hovering within the -0.5 per cent to -1.5 per cent range below the midpoint, which implies USD/SGD range of 1.4196-1.4340.

    
 

Abe wants more progress in corporate governance

SEP 29, 201511:23 PM

[TOKYO] Japanese Prime Minister Shinzo Abe pledged to push for further improvements in corporate governance, including urging companies to make more progress in unwinding cross-held shares.

"We must let the governance system make a tangible difference," Mr Abe said in a speech at Bloomberg's New York headquarters on Tuesday, days after he announced new targets for expanding the economy by 20 per cent and halting population decline. "We are going to build a new system whereby CEOs and other board members should be transparently selected, and cross shareholding further dissolved."

Mr Abe, 61, was speaking in English to an audience of around 260 investors. The decades-long practice of cross-held shares has come under fire as the government pushes for better use of capital in a nation with an aging population and shrinking birthrate. While the three largest banks have already pledged to sell some holdings, 8.5 trillion yen (US$71 billion) more in such shares will be offloaded in the next few years, according to UBS Group AG's wealth management unit.

Mr Abe came to office in Dec 2012 touting a three-pronged economic revival plan - unprecedented monetary easing, flexible fiscal policy and regulatory reform - to defeat the deflation that has dogged Japan for more than a decade. While his policies have weakened the yen, lifted stock prices and boosted the profits of some bigger companies, the economy has stuttered with contractions in four of the ten quarters under his administration.

The BOJ's main inflation gauge dropped into negative territory last month, marking the first minus figure since April 2013. In his remarks, Mr Abe said the nation has successfully shrugged off the "deflation mindset." The government will focus on putting the economy on the path to robust growth via a new policy program called Abenomics 2.0., Abe said.

"I am determined, in cooperation with the Bank of Japan, to do whatever it takes to put the economy on a robust growth track," Mr Abe said.

Under Abenomics 2.0, the government will aim to boost the economy to 600 trillion yen, up about 20 per cent from where it is now, and to put more money aside to support early education and bolster the social welfare system.

BLOOMBERG

    
 

US consumer confidence rises in September

US consumer confidence rose and was higher than expected in September, according to a private sector report released on Tuesday.

PHOTO: AFP

SEP 29, 201510:40 PM

[WASHINGTON] US consumer confidence rose and was higher than expected in September, according to a private sector report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes rose to 103.0, the highest since January, from a downwardly revised 101.3 the month before. Economists had expected a reading of 96.1, according to a Reuters poll.

The August reading was revised to 101.3 from 101.5.

The consumer present situation index was 121.1 in September, hitting its highest level since Sept 2007 and up from 115.8 in August, which was revised up from 115.1.

The consumer expectations index however fell to 91.0 from 91.6 and the "jobs hard to get" index rose to 24.3 from a revised 21.7 the month before.

Consumers expectations for inflation in the coming 12 months rose to 5.2 per cent from 4.9 per cent in August.

REUTERS

    
 

McCarthy running to replace Boehner as Speaker

      

US House Majority Leader Kevin McCarthy said he's running to replace Speaker John Boehner, a position the five-term California congressman appears prepared to easily win. 

PHOTO: REUTERS

SEP 29, 201510:35 PM

[WASHINGTON] US House Majority Leader Kevin McCarthy said he's running to replace Speaker John Boehner, a position the five-term California congressman appears prepared to easily win.

Passing a six-year highway funding bill that changes the U.S. tax structure will be a top priority, Mr McCarthy said Tuesday on MSNBC's "Morning Joe." "If we pass a highway bill with tax reform at the same time, that's policy," McCarthy said.

Mr Boehner's surprise announcement on Friday that he'll resign from Congress at the end of October followed years of conflict with conservative members of his Republican caucus. They threatened to shut down the government this week if Planned Parenthood, the women's health provider whose services include abortion, isn't defunded.

Mr McCarthy is likely to win an election to replace Mr Boehner, said House Republicans Mick Mulvaney of South Carolina and Tom Cole of Oklahoma on "Fox News Sunday."

If he becomes speaker, Mr McCarthy would immediately face difficult issues on which members of his party are divided. They include raising the US debt limit, increasing spending on highways and reauthorizing the Export-Import Bank, all of which are opposed by conservative lawmakers.

He apparently won't have to deal with a government shutdown when current funding ends Wednesday night. Mr Boehner said on Sunday on CBS's "Face the Nation" that the House will pass a Senate spending bill, with the help of votes from Democrats, to keep the government operating without defunding Planned Parenthood.

Mr Boehner also suggested on "Face the Nation" that he will seek to push through other top corporate priorities before departing at the end of October. "I don't want to leave my successor a dirty barn," he said on the program.

BLOOMBERG

      

Malaysia's 1MDB not contacted by foreign investigators

Malaysia's troubled strategic investment fund 1Malaysia Development Bhd (1MDB) has not been contacted by any foreign investigators on allegations of mismanagement and corruption, the fund's president Arul Kanda said on Tuesday. 

PHOTO: REUTERS

SEP 29, 20157:49 PM

[KUALA LUMPUR] Malaysia's troubled strategic investment fund 1Malaysia Development Bhd (1MDB) has not been contacted by any foreign investigators on allegations of mismanagement and corruption, the fund's president Arul Kanda said on Tuesday.

The power and property fund, whose advisory board is chaired by Prime Minister Najib Razak, has amassed debt of more than US$11 billion and a number of foreign jurisdictions have reportedly begun investigations concerning the fund or its staff.

Mr Najib is also at the centre of a political storm after Malaysian authorities probing 1MDB found that about US$670 million had been transferred into an account in his name.

Mr Kanda reiterated that no money had gone from 1MDB to Mr Najib's account, and said some media reports suggesting wrongdoing were politically motivated to attack the prime minister.

Swiss authorities said at the end of August they had opened criminal proceedings against two 1MDB executives for suspected corruption and money laundering. The Swiss said they had frozen several tens of millions of dollars at Swiss banks in conjunction to the probe.

But Mr Kanda told Reuters in an interview that there had been no contact from the Swiss or investigators reportedly looking into the fund in Singapore and the United States. "In terms of the Swiss investigations or the Singaporean investigations or the FBI investigations, 1MDB has not been contacted by any of those authorities," Mr Kanda said. "So we have not received any intimation or indication from any of those authorities in relation to these alleged matters that have been carried out in the press." He said asset sales planned in the coming weeks would put 1MDB in a positive cash position from the beginning of 2016.

REUTERS

    
 

Asia's richest man Li voices support for China's leadership

Asia's richest man Li Ka-shing voiced support for Chinese president Xi Jinping on Tuesday and rejected claims he was divesting assets from China after a barrage of media articles accused him of turning his back on the mainland. 

PHOTO: BLOOMBERG

SEP 29, 20157:35 PM

[HONG KONG] Asia's richest man Li Ka-shing voiced support for Chinese president Xi Jinping on Tuesday and rejected claims he was divesting assets from China after a barrage of media articles accused him of turning his back on the mainland.

In January this year, Hong Kong-based Li overhauled his business empire to create two listed companies - one focused on property and the other on telecoms. This saw a shift in the incorporated base of his two main firms to the Cayman Islands from Hong Kong, fuelling speculation the tycoon was pulling out of China.

In an emailed press release sent on Sept 29, Mr Li said he resolutely supported China's path to reform and opening up. "Li has great confidence in China and greatly admires Xi's leadership style," the statement said. It cited billions of dollars spent by Mr Li and his family in greater China for education, innovation and medicinal research purposes.

His comments come a week after official Chinese media made pointed commentaries about his business decisions. "At a time of economic tension in China, Li Ka-shing has abandoned China by selling extensively his assets, disregarding how Beijing has strongly assisted him in the sectors of port facilities, real estate and other infrastructural projects. His act has seriously undermined public confidence in the mainland,"said one commentary from an institute backed by the official Xinhua news agency, titled 'Don't let Li Ka-shing run away'.

Mr Li's family sold more than US$2 billion worth of assets in China last year, including property in Shanghai, Nanjing and Beijing. In January, news of Mr Li's business overhaul was followed by three overseas bids, including US$15.4 billion for Britain's O2, owned by Spain's Telefonica SA.

REUTERS

Indonesia unveils second batch of steps to lure investors 

Indonesia on Tuesday announced a second package of economic stimulus measures in three weeks, increasing efforts to lure investment, prop up the battered rupiah and revive growth in Southeast Asia's largest economy.

PHOTO: BLOOMBERG

SEP 29, 20157:23 PM

[JAKARTA] Indonesia on Tuesday announced a second package of economic stimulus measures in three weeks, increasing efforts to lure investment, prop up the battered rupiah and revive growth in Southeast Asia's largest economy.

The new measures include cutting the number of permits needed for mining exploration and for establishing a business in an industrial economic zone. The government will also remove value-added taxes for ships, planes and trains. "This is a signal to the people and to the neighbouring countries that Indonesia is a country that is friendly to investors," Cabinet Secretary Pramono Anung told reporters at the presidential palace.

Investor sentiment towards the world's fourth most populous nation has soured, with President Joko Widodo struggling to implement much needed reforms, partly due to rifts in his own party and squabbles among government agencies.

The first instalment of the stimulus package, announced on Sept 9, had little impact on markets.

Business executives said authorities need to take bolder steps to bolster growth. "What we need to do now is to turn over negative perception, business pessimism to optimism. And that requires support from monetary policy," said Hariyadi Sukamdani, chairman of the Indonesian Employers Association, adding that the central bank should cut its benchmark interest rate despite a weakening rupiah.

After the first package was announced, chief economics minister Darmin Nasution said Indonesia's "negative list"barring foreigners from investing in some sectors might later be revised. On Tuesday, no changes were announced.

Indonesia's stock index has fallen 21 per cent this year, while the rupiah has weakened nearly 16 per cent, making it Asia's second worst-performing currency after Malaysia's ringgit.

The rupiah hit a 17-year low of 14,730 to the dollar on Tuesday.

The first package of measures streamlined dozens of overlapping trade and industry regulations, simplified the permission process for "strategic projects" and eased rules for foreigners opening bank accounts in foreign currency.

One part of Tuesday's package says the time needed to get an investment permit for business in an industrial estate will be cut to just three hours, from far longer.

David Sumual, economist at Bank Central Asia, said it's unclear how effective moves to speed permit approvals will be"since people in the field may not be ready".

He also said he had hoped for an announcement on a tax amnesty programme or reduced corporate taxes "because that will be more helpful".

On Monday, Indonesia media quoted a minister saying Indonesia plans to cut corporate income tax to 18 per cent from 25 per cent next year.

Indonesia had annual growth of 4.67 per cent in the second quarter, the slowest pace in six years.

REUTERS

India eases bond curbs for foreigners before Fed liftoff

India relaxed curbs on foreign ownership of its debt, giving global funds more access to Asia's best- performing bond market. 

PHOTO: BLOOMBERG

SEP 29, 20155:56 PM

[MUMBAI] India relaxed curbs on foreign ownership of its debt, giving global funds more access to Asia's best- performing bond market.

The limit on foreign institutional holdings of government notes will be denominated in rupees instead of dollars and the cap will be raised in phases to 5 per cent of outstanding debt by March 2018, the Reserve Bank of India said in a statement on Tuesday. The Finance Ministry estimates current overseas ownership is about 3.8 per cent, and the central bank said the increase will help attract 1.2 trillion rupees (US$18.2 billion) of additional investment.

Overseas funds have almost exhausted the previous limit of US$30 billion that was meant to shield local markets against capital outflows, and investors including Pacific Investment Management Co have been pressing for greater access to India's sovereign bonds. RBI Governor Raghuram Rajan had outlined the framework for easing limits in August and said the reforms will proceed even if the Federal Reserve delays increasing U.S. interest rates.

"The move reflects India's confidence to deal with any Fed- induced volatility," said Paresh Nayar, the Mumbai-based head of currency and money markets at the local unit of South African lender FirstRand Ltd. The decision to raise the investment limit is positive for bonds, he said.

Indian bonds rallied, pushing the 10-year sovereign yield to a two-year low, after the RBI relaxed foreign ownership curbs and cut its benchmark rate. The central bank also said it will increase the limit on overseas investment in loans of state governments to 2 per cent of the outstanding stock by 2018.

Foreigners hold less than 5 per cent of India's outstanding sovereign debt, one of the lowest proportions in Asia, according to DBS Bank Ltd. Such holdings stand at more than 35 per cent in Malaysia and Indonesia and are above 10 per cent in South Korea and Thailand, according to the lender.

Mr Rajan has built a war chest of near- record foreign-exchange reserves as the nation seeks to avoid a repeat of 2013, when the Fed's signal that it would end its bond purchases saw investors pull about US$9 billion from Indian notes in the June to August period, causing the rupee to plunge to a historic low.

The rupee has rebounded about 4.3 percent from an unprecedented 68.845 a dollar on Aug. 28, 2013, outperforming South Africa's rand, Indonesia's rupiah, Turkey's lira and Brazil's real. Morgan Stanley dubbed the currencies the "Fragile Five" that year for being the most at risk of capital flight.

Narrower current-account deficits in Indonesia and India put them in a stronger position to endure outflows than two years ago, Jens Nystedt, managing director at New York-based money manager Morgan Stanley Investment Management, said in an interview earlier this month.

BLOOMBERG

    
 

Vietnam's economic growth accelerates as exports beat peers

Vietnam's economic growth quickened in the third quarter, buoyed by foreign investments and exports growth that contrasts with the performance of many of its neighbors.

PHOTO: BLOOMBERG

SEP 29, 2015 5:16 PM

[HANOI] Vietnam's economic growth quickened in the third quarter, buoyed by foreign investments and exports growth that contrasts with the performance of many of its neighbors.

Gross domestic product rose 6.81 per cent in the third quarter from a year earlier, according to figures released by the Hanoi-based General Statistics Office Tuesday that complements other signs of an economic pickup. That compares with a revised 6.47 per cent pace in the second quarter this year. Vietnam typically releases growth estimates before the end of the quarter, weeks ahead of its peers, and the numbers are often revised later.

"Vietnam is the only country with strong export growth amid contracting exports among its regional peers," according to a Australia & New Zealand Banking Group Ltd research note earlier this week.

In a bid to safeguard exports and support government efforts to boost economic growth to a four-year high of 6.2 per cent in 2015, the central bank weakened the dong's reference rate in August for the third time this year, widening the currency's trading band after China devalued the yuan. The country is also benefiting from cheaper energy costs as disappearing inflation aids domestic demand.

The faster growth numbers failed to lift Vietnam stocks, which joined Asian markets in a tumble Tuesday with a selloff in commodity companies. The benchmark VN Index dropped 0.7 per cent at the close. Vietnam's stocks are poised to resume gains that have made the benchmark equity index Asia's best performer this year, according to analysts in a Bloomberg survey.

In the nine months through September the economy grew 6.5 per cent, compared with the median estimate of 6.4 per cent in a Bloomberg survey.

BLOOMBERG

     

China punishes 249 "lazy" officials for unspent funds

SEP 29, 20154:41 PM

[BEIJING] China has punished 249 officials for laziness, exemplified by failure to spend government funds, delays to projects and sitting on land earmarked for development, as the government wages war on graft, state news agency Xinhua said.

Spooked by China's biggest-ever crackdown on corruption, many officials have preferred in the past 18 months to dither over approvals for major projects, so as to avoid drawing the scrutiny of anti-graft officials.

That has annoyed Beijing, which has scolded procrastinating local governments for their laziness and repeatedly threatened to punish them by recalling their untouched budgets.

Xinhua said the 249 officials in 24 provinces, regions or cities had been sacked, or given administrative demotions or warnings after an investigation running from the end of May until the middle of June.

As late as May this year, a food recycling project in the northern province of Shanxi had yet to start construction, even though the government had released funds for it in 2012, Xinhua said late on Monday, listing some of the most telling examples. "The aim of holding these people accountable is to promote work and manage the issue of laziness in government and doing nothing ... and ensure this year's economic targets are on track," the report cited an unidentified official as saying.

Unspent funds of 296 billion yuan (US$46.5 billion) seized by the government by the end of August had mostly already been invested in "urgent" development projects and to improve people's livelihoods, Xinhua added.

It was not immediately clear if this figure was the same as the sum of 300 billion yuan in seized funds announced by the cabinet last week. The government has previously said unspent funds would be invested as soon as possible.

Chinese Premier Li Keqiang has repeatedly criticised officials for being slack and lazy in pushing through Beijing's policy directives, as they kept their heads down to avoid being targeted in the anti-graft campaign.

China's economy appears set this year for its weakest performance in at least a quarter of a century, putting global investors and policymakers on edge.

A plunge in China's stock market over the summer and a surprise devaluation in the yuan currency have roiled global markets, stirring doubts about the government's ability to manage the economy.

REUTERS