Monday, November 2, 2015

China forex regulator tells staff to take graft fight seriously

China forex regulator tells staff to take graft fight seriously

[BEIJING] China's foreign exchange regulator has urged its officials to take seriously the ruling Communist Party's fight against corruption and follow rules closely, the regulator said in a statement released by the country's graft watchdog on Tuesday.
Dozens of senior Chinese officials have been investigated or jailed in a sweeping crackdown on deep-rooted graft launched by President Xi Jinping since he took over the party's leadership in late 2012, and the presidency in 2013.
The State Administration of Foreign Exchange (SAFE) "pays great attention" to instructions about fighting corruption, the regulator's internal discipline team said. "In the face of all kinds of tests and temptations, you must be clear about what you can't do, what you can't eat, what places you can't go and what opinions you can't speak," it said, in the statement carried by the Central Commission for Discipline Inspection. "Pay attention to standards of behaviour and keep a clear head," it added.
China's financial regulators have been under pressure since stock markets collapsed in mid-June following a long bull run, although the statement made no mention of the markets.
The party's graft watchdog said last week it was widening probes into state-owned institutions, by including the central bank, state-owned banks and securities regulators.
REUTERS

Chinese yuan drops after shift by central bank

Chinese yuan drops after shift by central bank

[NEW YORK] China's move to sharply raise its daily yuan reference rate Monday resulted conversely in a fall in the currency, but its overall upward track appeared to remain in place.
Other major currencies were uniformly flat as the week opened - the dollar trading at US$1.1014 per euro and 120.77 yen - leaving the policy move by the People's Bank of China's to hold the forex headlines.
Following last Friday's spike to the highest level since the August devaluation, the yuan slipped back when the PBoC adjusted the central rate of the yuan - also known as the renminbi (RMB) - upwards by 0.54 per cent against the US dollar.
The currency slid to 6.3374 yuan per dollar, against 6.3174 yuan in late trade Friday.
But at that level it was still significantly stronger than the 6.35-6.39 yuan range held since the August 11 devaluation.
The increase in the central rate was the largest since 2005 when Beijing unpegged the yuan from the greenback, and signalled, most analysts said, that Beijing was committed to reforms that will free up RMB trade.
Some analysts said Friday's unexplained surge was a market response to rising expectations that the International Monetary Fund will decide this month to include the yuan in its basket of elite currencies, known as Special Drawing Rights.
Liu Jian, an analyst from the Bank of Communications, said the government's policy goal "is very obvious." "It is trying to maintain a stable foreign exchange market and guide the market as stability is important for the yuan to be admitted to the SDR at the coming IMF meeting."
AFP

US dollar adrift in calm seas; Australian dollar eyes RBA squall

US dollar adrift in calm seas; Australian dollar eyes RBA squall

[SYDNEY] The dollar, euro and yen started trade on Tuesday in familiar territory, having shuffled sideways as uninspired traders waited for bigger fish to fry after the latest readings on global manufacturing activity failed to provide fresh impetus.
The dollar index was barely changed at 96.884 after drifting between 96.635 and 96.965 all of Monday. The euro was hemmed in a tight US$1.1000 to US$1.1053 range and last stood at US$1.1015.
Against the yen, the greenback was equally restrained at 120.78 with Japan on holiday, while the euro was a touch firmer near 133.00.
A crop of industry surveys on Monday pointed to another subdued month for manufacturers across the globe, though a rise in new orders offered hope the United States might have seen its worst.
"Currencies, for the most part, took a back seat in a largely so-so session for broader financial markets... investors appear to be in a holding pattern ahead of bigger event risks later in the week," said Raiko Shareef, currency strategist at BNZ.
US jobs data on Friday is the key feature for the week. On Tuesday, the spotlight falls on an interest rate review by the Reserve Bank of Australia (RBA), where a decision to hold or cut remains too close to call.
The RBA will announce its decision at 0330 GMT.
The Australian dollar appeared to be counting on the central bank to maintain the status quo, rising to US$0.7145 from Monday's trough of US$0.7105. "The house view is for the RBA to keep its policy rate on hold at 2.0 per cent. This will temporarily lift Australian swap rates and AUD," said Elias Haddad, senior currency strategist at Commonwealth Bank.
Debt markets imply just under a 50-50 chance of a rate cut, so a move would definitely trigger a big price response.
REUTERS

Visa agrees to buy Visa Europe for as much as US$23.4b

Visa agrees to buy Visa Europe for as much as US$23.4b

[WASHINGTON] Visa, the world's largest payments network, agreed to acquire Visa Europe Ltd. in a deal valued at as much as 21.2 billion euros (S$32.8 billion) to unify the brand globally after eight years as separate companies.
The transaction includes a 16.5 billion-euro upfront consideration, the companies said Monday in a statement. The purchase ends years of speculation among analysts about whether the companies, which split in 2007 ahead of the US firm's initial public offering, would reunite.
The lack of meaningful contributions to earnings from Europe has long been seen as a weakness for Visa and an advantage for smaller competitor MasterCard Inc, which owns its European business. Foster City, California-based Visa relies more on the US, which accounted for 54 per cent of revenue in fiscal 2014, compared with 39 per cent for MasterCard.
Visa Europe, owned by more than 3,000 European banks, has a put option that would force a sale to its former parent. Visa, led Chief Executive Officer Charlie Scharf, has valued the option at more than US$15 billion, and Bloomberg reported in May that the US payments network was in preliminary talks to buy its former subsidiary for as much as US$20 billion.
The deal could boost earnings by as much as 5 per cent, according to estimates from Donald Fandetti, a Citigroup Inc analyst. Sanford C Bernstein & Co's Lisa Ellis estimated a US$20 billion transaction could increase 2018 profit by as much as 12 per cent.
A combination also may bring short-term risks to Visa and benefit MasterCard, according to analysts including Chris Hickey of Atlantic Equities. Visa probably will raise prices after a deal is completed and it could be disruptive as the US company integrates operations with its European counterpart, Mr Hickey said before the deal was announced. MasterCard also stands to gain market share by picking up business from European banks that were previously tied to Visa, Bernstein's Ms Ellis said.
Visa Europe, which has a licensing agreement with Visa Inc, managed more than 500 million accounts and processed more than 16 billion transactions last year, according to its annual report. It earned 219.8 million euros in 2014, up 29 per cent from a year earlier.
BLOOMBERG

UBS names Chee, Beniwal as investment-banking heads for Asia

UBS names Chee, Beniwal as investment-banking heads for Asia

[HONG KONG] UBS Group AG has appointed Joseph Chee and Saurabh Beniwal as co-heads of corporate-client solutions for Asia, almost six months after the former chief's retirement was announced.
The Swiss firm also appointed Jiang Guorong and Lauro Baja as vice-chairmen of corporate-client solutions for Asia, according to an internal memo. Rob Stewart, a Hong Kong-based spokesman for the firm, confirmed the document's contents.
Chee was UBS's head of global capital markets for Asia, while Beniwal led Southeast Asia corporate client solutions, according to the memo. The two fill a role vacated by David Chin, who spent 21 years at the Swiss investment bank, and whose retirement was announced in May. Chee and Beniwal will report to Matthew Hanning, Asia Pacific head of corporate-client solutions, Stewart said.
The corporate-client solutions group is responsible for mergers advisory, capital markets and financing for companies, financial institutions and private-equity firms.
The business came into being after UBS said in November 2012 that it would split its investment bank into two groups. The second unit - investor client services - encompasses equities, foreign exchange, precious metals, rates and credit.
BLOOMBERG

Russian jet broke up in mid air, too early for conclusions, official says

Russian jet broke up in mid air, too early for conclusions, official says

[CAIRO] A Russian airliner that crashed in Egypt's Sinai Peninsula broke up in mid-air, an official of a Moscow-based aviation agency said on Sunday after visiting the disaster site, but stressed it was too early to draw conclusions from this.
Russian authorities also ordered Kogalymavia airline, operator of the Airbus A321 which came down on Saturday killing all 224 people on board, not to fly its jets of the same model until the causes of the crash are known.
The jet, which Kogalymavia flew under the brand name Metrojet, was carrying holidaymakers from the Red Sea resort of Sharm el-Sheikh to St Petersburg when it crashed into a mountainous area of central Sinai shortly after losing radar contact near cruising altitude.
"The destruction happened in the air, and fragments were scattered over a large area of around 20 square kilometres,"said Viktor Sorochenko, director of the Intergovernmental Aviation Committee. However, he warned against reading anything into this information. "It's too early to talk about conclusions," he said on Russian television from Cairo.
The Moscow-based committee represents governments of the Commonwealth of Independent States, which groups Russia and other former Soviet republics.
Egyptian analysts began examining the contents of the two"black box" recorders recovered from the airliner although the process, according to a civil aviation source, could take days. However, Russian Transport Minister Maxim Sokolov told Russia 24 television that this work had not yet started.
At St Petersburg's Pulkovo Airport on Sunday, grieving Russians piled flowers high in memory of their dead compatriots.
Mourners in Moscow arranged candles to spell out 7K-9268, the number of the flight that crashed.
Carriers from United Arab Emirates, Qatar, Bahrain and Kuwait said they would re-route flights over Sinai as a security precaution until there was more clarity. Abu Dhabi's Etihad Airways said it would continue to overfly the peninsula but avoid airspace over certain areas on the advice of Egyptian authorities.
MONTHS OF INQUIRIES
A militant group affiliated to Islamic State in Egypt said in a statement that it brought down the plane "in response to Russian airstrikes that killed hundreds of Muslims on Syrian land", but Sokolov told Interfax news agency the claim "can't be considered accurate".
Egyptian President Abdel Fattah al-Sisi said it could take months to establish the truth behind the crash though his country was cooperating with Russia to aid investigations. "This is a complicated matter and requires advanced technologies and broad investigations that could take months,"Sisi said in a televised speech on Sunday.
The wreckage was found in a desolate area of stony ground.
Rescuers had collected the colourful suitcases of the passengers into a pile. A pink child's sandal decorated with white flowers lay among the debris, a reminder that 17 children were among those killed as they headed home from their holidays.
Parts of the wreckage were blackened and charred, with one section forming heaps of twisted metal, although the blue Metrojet logo was still visible on its broken tail fin.
As the Russian investigators moved slowly across the site, Egyptian military helicopters buzzed overhead, combing the wider area for debris - or bodies - not yet found.
MORGUE
At least 163 bodies had already been recovered and transported to various hospitals including Zeinhom morgue in Cairo, according to a cabinet statement.
Airport security sources said Russian experts who arrived on Saturday brought with them refrigerators and DNA samples to help identify and take home the dead.
Russian experts had already visited the morgue on Saturday night and Moscow's ambassador to Cairo said the first 130 bodies were due to leave on Sunday evening bound for St Petersburg.
A source inside the morgue said the bodies had been numbered using bracelets, ready to be received by the Russians, and empty ambulances were arriving to pick them up.
Those on board the doomed flight included 214 Russians, at least three Ukrainians and one Belarusian, most returning from the Red Sea, popular with Russians seeking winter sun.
The Russian flag was flying at half-mast over the country's embassy in Cairo on Sunday morning. President Vladimir Putin has declared a day of national mourning in Russia.
Russia's transport regulator said in a statement that it had grounded Kogalymavia's Airbus A321s until the reasons for the crash became clear.
Russian transport prosecutors have already examined the quality of the fuel used by the airliner and found that it met necessary requirements, Russia's state-run RIA news agency said.
The crew had also undergone medical tests recently and no problems were detected, Interfax reported.
Experts from Airbus have begun arriving in Egypt to assist in the investigation, the civil aviation ministry said.
SEARCH RESUMES
Emergency services and aviation specialists resumed early on Sunday their search at the crash site which is spread over more than 15sq km, with 100 Russian emergency workers helping them recover bodies and gather evidence.
Russia, an ally of Syrian President Bashar al-Assad, launched air raids against opposition groups in Syria including Islamic State on Sept 30.
Islamic State, the ultra-hardline group that controls large parts of Iraq and Syria, has called for a holy war against both Russia and the United States in response to airstrikes on its fighters in Syria.
Sinai is the scene of an insurgency by militants close to Islamic State, who have killed hundreds of Egyptian soldiers and police and have also attacked Western targets in recent months. Much of the Sinai is a restricted military zone.
Militants in the area are not believed to have missiles capable of hitting a plane at 30,000 feet.
Islamic State websites have in the past claimed responsibility for actions that have not been conclusively attributed to them. Officials say there is no evidence to suggest so far that a bomb could have brought down the plane.
Three carriers based in the United Arab Emirates airlines - Emirates, Air Arabia and flydubai - said on Sunday they were re-routing flights to avoid flying over Sinai. Two of Europe's largest carriers, Lufthansa and Air France-KLM, have already said they would avoid flying over peninsula while awaiting an explanation of the cause.
Sherif Fathy, Chairman of EgyptAir, said the national carrier had taken no such action. "I heard some other companies may be doing this, but I don't think it's justified," he said.
The A321 is a medium-haul jet in service since 1994, with over 1,100 in operation worldwide and a good safety record. It is a highly automated aircraft relying on computers to help pilots stay within safe flying limits.
Airbus said the A321 was built in 1997 and had been operated by Metrojet since 2012. It had flown 56,000hours in nearly 21,000 flights.
The aircraft took off at 5.51am. Cairo time (0351 GMT) and disappeared from radar screens 23 minutes later, Egypt's Civil Aviation Ministry said in a statement. It was at an altitude of 31,000 feet when it vanished from radar screens.
According to FlightRadar24, an authoritative Sweden-based flight tracking service, the aircraft was descending rapidly at about 6,000 feet per minute when the signal was lost to air traffic control.
REUTER
S

Bank of England posits 35% house price decline in stress test

Bank of England posits 35% house price decline in stress test

[LONDON] The Bank of England set out the scenario it will use to assess the resilience of the UK banking system in the coming years, including a 35 per cent decline in house prices between the end of this year and the second quarter of 2018.
The test foresees a slide into recession lasting until the end of June 2017, with unemployment rising to as much as 11 per cent by the second quarter of 2018. Interest rates jump to 4.2 per cent at the end of the period, as annual inflation reaches 5.6 per cent the next year and falls back to 5 per cent two years later.
"We're not just interested in whether banks stay afloat," Alex Brazier, executive director for financial stability, said in a speech about the BOE's stress testing approach at the London School of Economics Oct 30. "We want the system to be strong enough to continue to serve the real economy, even in the storm."
The BOE's "anchor scenario" applies to the entire UK banking system. It doesn't include international developments such as the 65 per cent plunge in the Hang Seng Index and the 34 per cent collapse in Brent crude oil prices, which are included in a stress test applying only to the seven biggest banks and set out in May.
BLOOMBERG

ECB's Nowotny urges caution on bond buying: newspaper

ECB's Nowotny urges caution on bond buying: newspaper

[VIENNA] The European Central Bank is right to consider stepping up its bond buying to boost inflation but should think very carefully before doing so, Governing Council member Ewald Nowotny said in a newspaper interview published on Monday.
The ECB last month raised the prospect of further monetary easing in December and said it would look at measures including modifying the asset buying programme, known as quantitative easing (QE), and cutting its deposit rate.
In an interview published on Saturday, its president Mario Draghi said the central bank was ready to do what it took to keep its inflation target on course.
Nowotny, asked why the ECB was considering expanding its bond buying, told Austria's Kleine Zeitung newspaper on Monday the bank's 2 per cent inflation goal was clearly being missed.
But he added: "There are no decisions. There are discussions. I would advise more towards caution and a steady-hand policy." Nowotny dismissed suggestions that quantitative easing had flopped. "We would be in significantly more difficulties without this programme. It has kept the euro zone from slipping more deeply into deflation and thus an economic crisis," he said.
Euro zone countries needed to support this effort with expansive fiscal policies and structural reforms, he added.
REUTERS

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