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Asia Pacific Financial News from John Lothian News – October 12, 2017

Lead Stories

Japan’s Abe Headed for Big Election Win, Polls Say; Five polls forecast ruling Liberal Democratic Party would win more than half of the 465 seats in lower house
By Peter Landers and Megumi Fujikawa – WSJ
Prime Minister Shinzo Abe is poised for a big victory in Oct. 22 parliamentary elections, according to five polls published Thursday by major Japanese news organizations that forecast trouble for a challenge by Tokyo Gov. Yuriko Koike.
https://goo.gl/ChUKik

Oil Futures in China Would Be Transformational; It could be the first step in removing capital controls on remittance of foreign investors’ profits.
By David Millhouse – Bloomberg
People’s Bank of China Governor Zhou Xiaochuan made comments this week that suggest some imminent reform announcements are on the agenda. There are two potential policies to look for in the near term: the loosening of foreign investment restrictions and the launch of domestic oil futures.
https://goo.gl/fCBPBf

Masayoshi Son Says Robots Won’t Be the Death to Humanity
Bloomberg
SoftBank Group Corp. Chairman and CEO Masayoshi Son says robots will help people achieve more harmony. He speaks with David Rubenstein for “The David Rubenstein Show: Peer-to-Peer Conversations” in a conversation recorded Sept. 19. (Source: Bloomberg)
https://goo.gl/RdZopn

Is Xi a Threat to Foreign Businesses in China?; Multinationals say they feel less welcome in the world’s second-biggest economy.
Peter Martin and Keith Zhai – Bloomberg
Chinese President Xi Jinping. PHOTOGRAPHER: FENG LI/GETTY IMAGES
On Oct. 18, 2,300 hand-picked delegates from China’s ministries, provinces, the military, and state-owned and private companies will file into Beijing’s Great Hall of the People for the start of the 19th National Congress of the Communist Party. The weeklong event is a highly choreographed, twice-in-a decade shuffling of China’s political deck. More than half of the top leadership is likely to be replaced, including as many as five of the seven members of the all-powerful Politburo Standing Committee—a subject of furious speculation in the runup to the Congress. What’s already a foregone conclusion is that President Xi Jinping will go on to serve a second five-year term and will in all likelihood emerge from the ritual even more powerful than he already is.
https://goo.gl/ohSQ5X

Exchange News

HKEX to Start its After-Hours Trading Enhancements on 6 November
HKEX
From 6 November, trading of four most active equity index futures contracts to be extended by more than an hour to end at 1 am the following day; Second and third phases of enhancements scheduled for next year
Hong Kong Exchanges and Clearing Limited (HKEX) will introduce the first phase of its after-hours trading (AHT) enhancements on Monday, 6 November 2017, when AHT of Hang Seng Index (HSI), Hang Seng China Enterprises Index (HHI), Mini-HSI and Mini-HHI futures will be extended to 5:15 pm to 1 am the following day (the revised T+1 session) from the current T+1 Session of 5:15 pm to 11:45 pm.
https://goo.gl/b1Scoj

FinTech News

Japan looks to jump-start fintech with legal overhaul; Sparking creativity by having similar businesses live under the same laws
Nikkei
The Japanese government aims to make it easier for businesses to partner up in financial technology by leveling the regulatory playing field for different industries, hoping to prompt innovation that helps make financial services less costly.
https://goo.gl/yhn9Vi

British minister keen to pursue fintech “opportunities” in Japan
KYODO NEWS KYODO NEWS
Britain’s digital minister expressed his eagerness to pursue collaboration between his country and Japan in “fintech,” an emerging industry combining financial services and information technology, to capitalize on the future’s many opportunities.
https://goo.gl/op2rBZ

Regulatory News

Hong Kong Slaps Banker With Ban for Mobile Phone, WeChat Use
By Carrie Hong – Bloomberg
Hong Kong’s securities watchdog banned a brokerage employee from the industry for four months for the manner in which he used his mobile phone and
https://goo.gl/qvHwQd

Former executive chairman of Healthzone found guilty of fraud
ASIC
Mr Peter David Roach, of Prestons, NSW, has been found guilty of fraud and other related offences in the Sydney District Court today. Mr Roach was the former executive chairman and director of health food chain Healthzone Limited (currently under external administration).
https://goo.gl/G8msyx

HSBC trader defends Cairn currency deal in ‘front-running’ trial; Mark Johnson tells New York court profit from $3.5bn transaction was ‘fair all round’
Alistair Gray in New York – FT
The top HSBC trader accused of turning an illicit profit from a $3.5bn currency deal has acknowledged he was “surprised” by how well the bank did from the transaction — but argued it was “fair all round”.
https://goo.gl/bVKWCd

Investing News

HSBC picks insider John Flint as chief executive; Retail bank head was preferred candidate of outgoing Stuart Gulliver
Martin Arnold in London – FT
HSBC has announced the appointment of John Flint as chief executive, sticking with the bank’s tradition of promoting from within for the top job in a signal that its new chairman Mark Tucker will opt for more continuity than upheaval.
https://goo.gl/BWLrqi

Japan

Kobe Scandal Shows Cost of Race to Keep Improving Metals
By Kevin Buckland and Masumi Suga – Bloomberg
Automakers and other customers want lighter, stronger products; Steelmakers trying to mix plastics and steel to stay ahead
Behind the scandal engulfing Kobe Steel Ltd. over the falsification of data for some of the materials it supplied is a harsh reality for Japanese steel companies: the need to provide higher and higher quality metals to compete.
https://goo.gl/NTyrdj

Kobe Steel chief says trust in company has ‘fallen to zero’; Group warns of increase in affected products in latest scandal over falsified data
Emiko Terazono in Tokyo – FT
The head of Kobe Steel, the Japanese metals conglomerate embroiled in the country’s latest data falsification case, on Thursday warned that the number of affected products could increase as the company continues its audit.
https://goo.gl/9ML8J4

MUFG Seeks to Spend $900 Million on Acquisitions in U.S, Asia
By Gareth Allan and Yuki Hagiwara – Bloomberg
First time banking unit CEO has said how much he may spend; Wants bigger scale in U.S.; also eyeing India, Indonesia
Mitsubishi UFJ Financial Group Inc.’s lending arm is seeking acquisitions of about 100 billion yen ($890 million) in Asia and the U.S. to bolster its global operations, its top executive said.
https://goo.gl/3dWr9e

Global banks are after Japan’s cash; Nation’s savings prove a strong lure as Saudi Arabia and China close the spigots
JUN TAMAKI and SHOTARO TANI, Nikkei
It was late September when Toronto-Dominion Bank, one of Canada’s largest financial institutions, held a lavish party at a hotel overlooking Tokyo’s Imperial Palace. The event, which drew some 200 of the city’s financial insiders, celebrated the reopening of TD’s securities business in Japan.
https://goo.gl/LNqqT3

Public mood turns against Japan’s Party of Hope; Yuriko Koike’s move to exclude former Democrats from her new party alienates voters
Robin Harding in Tokyo – FT
Deep in the heart of Tokyo, a political assassination has gone awry. The 8th district, a dense residential swath of Suginami ward, is home to Nobuteru Ishihara: ruling party kingpin, eldest son of the city’s former governor and one of Yuriko Koike’s arch-enemies.
https://goo.gl/xdnW4P

Higher Tax Hasn’t Curbed Japan’s Appetite for American Beef
By Connor Cislo and Maiko Takahashi – Bloomberg
Sales of fresh, chilled beef rise after curb on frozen meat; The net gain for U.S. ranchers may soothe American concerns
U.S. and Japanese officials may avoid trading barbs over beef at the U.S.-Japan economic dialogue on Oct. 16, despite Donald Trump’s preoccupation with trade deficits and a recently raised tariff in Japan.
https://goo.gl/ANsTNp

Mainland China

Chinese Trading Muddles a Popular Signal of Global Growth; Shanghai’s growth as a hub of the metals trading world threatens to erode the market’s reliability as a global economic indicator
By Amrith Ramkumar – WSJ
Shanghai is encroaching on London as the hub of the metals trading world—a shift that investors say threatens to erode the reliability of copper, zinc and aluminum prices as a read on the health of the global economy.
https://goo.gl/Mx5m1s

China’s Pintec launches Singapore robo-adviser to tap growth in Southeast Asia
Amanda Lee – South China Morning Post
Beijing-based financial technology company Pintech has launched a venture in Singapore, its first office outside China, tapping the growing demand for automated investment advice in Southeast Asian countries.
https://goo.gl/ZiLGXp

China’s Biggest Bank Still Seen as Undervalued at $325 Billion
Bloomberg News
ICBC shares have almost doubled since early 2016 in Hong Kong; Benefits from shadow banking curbs, improving asset quality
The world’s largest lender by assets has seen a near doubling of its share price in less than two years.
https://goo.gl/dxfCf3

Wanda’s Wang Jianlin dethroned from top of China rich list; Hurun report highlights impact of Beijing crackdown on debt-fuelled foreign deals
Tom Hancock in Shanghai – FT
Real estate magnate Wang Jianlin has tumbled from his position as China’s wealthiest man, according to the country’s best known rich list, underscoring how a crackdown on leverage-fuelled companies pursuing foreign acquisitions has dented entrepreneurs’ fortunes.
https://goo.gl/FyU8bY

China’s `Financial Statecraft’ Takes Shape in Risk for Investors
By Chris Anstey – Bloomberg
Tapping Chinese demand can be great for business, but it also leaves companies and economies vulnerable if the single-party state decides it doesn’t like a country’s policies — a dynamic that global investors may not yet fully appreciate.
https://goo.gl/4UQddq

Electric cars: China’s highly charged power play; Central planners are staking a bet on the success of electric vehicles as part of its state-backed plan to transform the country into a high-tech industrial power
Charles Clover in Beijing – FT
China has numerous reasons for hating the combustion engine, and a huge incentive to hasten its demise. They are dirty, accounting for what the government says is about 30 per cent of the country’s choking air pollution; contribute massively to its oil imports, which Beijing sees as a major strategic vulnerability; and highlight a shortcoming that has been a chronic flaw in the domestic car industry — China is bad at manufacturing them.
https://goo.gl/YQAs1b

China Wants a Win Where Draghi and Carney Fell Short
Bloomberg News
Analyst says smaller companies have long been ‘undernourished’; Reserve cut ‘basically means free money’ for small banks: RHB
A blockage in credit to particular parts of China’s economy has spurred the central bank to embrace a strategy used by the European Central Bank and the Bank of England — while aiming for greater success.
https://goo.gl/EovPjE

Chinese regulator bars HNA insurance unit from funding parent; Bohai Life banned from providing capital to owner and related parties for 6 months
Don Weinland in Hong Kong – FT
Regulators in China have clamped down further on acquisitive conglomerate HNA, barring it from accessing capital or financing from an insurance unit it controls.
https://goo.gl/5b8dYW

US demands World Bank overhaul of lending to China; Resistance to capital increase for the bank creates new battle with Beijing
Shawn Donnan in Washington – FT
The Trump administration is holding out against a capital increase for the World Bank until it overhauls its lending to China and other middle income countries, creating a new source of tension between Washington and Beijing.
https://goo.gl/yAsTjq

China to invest big in ‘Made in China 2025’ strategy
Xinhua
China will step up financial support for major projects of its “Made in China 2025” strategy, a blueprint for upgrading the country’s manufacturing sector.
https://goo.gl/rpPcBg

China’s Frenzied Commodities Boom Is Over, For Now
Hellenicshippingnews.com
Investors should prepare for another downward trend in Chinese financial markets. China’s five-quarter long commodities boom is now declining, according to China Beige Book International. This is owed to more regulations to crack down on speculation particularly in steel and nonferrous metals as well as lower levels of demand, and less, it seems, to reductions in overcapacity.
https://goo.gl/Ew1ThH

Hong Kong

China Evergrande beats HSBC to top most charitable Hong Kong companies list
Alun John – South China Morning Post
The Chinese property firm gave HK$1.8 billion to good causes last year, while overall philanthropic activity by listed companies increased from the previous year
https://goo.gl/akZp8G

Hong Kong leader says Asian financial hub faces ‘grave’ challenges
ChannelNewsAsia.com
Hong Kong’s Chief Executive Carrie Lam warned in her maiden policy speech on Wednesday (Oct 11) that the city faced “grave” challenges and must develop a more diversified economy, unveiling a mix of housing and tax relief policies to raise competitiveness.
https://goo.gl/6Dsz7H

In Hong Kong, New Ways of Caving In to China
Yi-Zheng Lian – NY Times
Hong Kong’s universities reopened in September to a small on-campus fracas that soon ignited into a virulent controversy about the future of the most basic freedoms in the territory.
https://goo.gl/pYQef3

Indonesia

Indonesia bishop resigns in finance, mistress scandal
By THE ASSOCIATED PRESS
A Roman Catholic bishop in Indonesia has resigned following reports that he had a mistress and siphoned off more than $100,000 in church funds.
https://goo.gl/ccrDCf

Sunline Master International to boost digital banking in Indonesia
By Digital News Asia
SUNLINE Master International (SMI) has inaugurated its new office on Oct 12, 2017 following the signing of a joint venture agreement in July 2017 between Shenzhen Sunline Tech Co Ltd & PT Mastersystem Infotama.
https://goo.gl/CPMhc3

Singapore

Firm stance on financial crime
Rachael Boon – Straits Times
Singapore’s reputation as a financial hub remains intact, with its clear display of zero tolerance when handling matters related to money laundering and terrorism financing.
https://goo.gl/ar1PG3

Singapore Airlines to introduce ‘From Farm to Plane’ concept
Financial Express
With the “From Farm to Plane” concept, Singapore Airlines intends to use more sustainable and meatless ingredients, as well as local produce, in its in-flight meals
https://goo.gl/BN1npy

Vietnam

Floods, landslides in Vietnam kill 37 people, thousands evacuated
Financial Express
Floods caused by a tropical depression in Vietnam killed 37 people, one of the highest death tolls recorded in the country from flooding, the disaster prevention agency said on Thursday.
https://goo.gl/xGNrqR

Thailand

Thailand’s monarchy: where does love end and dread begin?; In a country where few dare to speak openly about the royals, how do Thais feel about their new ruler?
Michael Peel – FT
The funeral pyre for a man who was once the world’s longest-ruling monarch now rises high among the spires of Bangkok’s historic royal quarter. The crematorium’s 50m central tower climbs above smaller peaks in a representation of Mount Meru, the heart of the universe in Hindu and Buddhist cosmology. Scattered around are sculptures commemorating the 70-year reign of King Bhumibol Adulyadej, up to his death in October 2016. One is his favourite dog Tongdaeng — or Copper — whom he rescued as a stray and later made the subject of a best-selling book, seen as a primer to the Thai people on how to behave.
https://goo.gl/R4wDPx

Path to Thailand 4.0 is a cyber-minefield opinion October 13, 2017 01:00 By The Nation
As we head towards an online economy and society under the overarching vision of Thailand 4.0, cybersecurity has become crucial to our future stability.
https://goo.gl/SFAv9h

Thailand to use blockchain technology to boost corporate debt market
GlobalCapNews
https://goo.gl/xG8GLi

 

Taiwan

Alarm in Taiwan over triad ties to pro-China groups; Taipei probes Chinese efforts to disrupt society by allegedly funding criminal gangs
Edward White in Taipei – FT
Chang An-le is accustomed to being on the wrong side of the law. The former gangster, known as the White Wolf, spent 17 years as a fugitive from Taiwanese justice in mainland China and a decade behind bars in the US on drug-trafficking charges.
https://goo.gl/YCjfgd

Premier Lai wants integrated financial information security system
FocusTaiwan
Premier Lai Ching-te (賴清德) said Thursday that an integrated platform for information security and data protection in the finance sector must be set up in Taiwan by the end of the year.
https://goo.gl/ZpZqTb

Qualcomm slapped with record antitrust fine in Taiwan
Financial Express
Taiwanese authorities have imposed a record fine of nearly USD 800 million on Qualcomm for anti-trust violations in the latest of a string of setbacks for the US computer chip giant.
https://goo.gl/wtzsXx

South Korea

Geopolitical risks haven’t hurt foreign appetite for South Korean bonds: finance ministry official
Shinhyung, Lee, Cynthia Kim – Reuters
South Korea has seen a stable flow of foreign investment into local government bonds this week, including from central banks, even as political tensions around North Korea persist, a finance ministry official said on Thursday.
https://goo.gl/Yimw9g

S. Korea Ranks 22nd in Per Capita Net Financial Assets
Yoon Yung Sil – BusinessKorea
South Korea ranked 22nd in the per capita net financial assets among 53 major economies last year, a report said. According to a global wealth report by the German-based Allianz Group on October 10, South Korean had 28,180 euros (US$33,302 or 37.8 million won) on average in net financial assets last year.
https://goo.gl/9iVn8h

China’s Direct Investment in South Korea Plunges on Restrictions
By Kyungji Cho and Jiyeun Lee – Bloomberg
Direct investment into South Korea falls 63% in 1Q-3Q; Investment from Japan increased 90% over the same time
China’s direct investment into South Korea has dropped drastically as Beijing curbs overseas investment and restricts foreign-currency transfers to maintain its reserves, according to the South Korean government.
https://goo.gl/5thwde

Philippines

Philippine stocks close above 8,400 in new milestone
Rappler.com
This is the Philippine Stock Exchange index’s 4th milestone in just 31 trading days
https://goo.gl/u2j57L

Malaysia

Can Southeast Asia save Brexit?; ‘Most Malaysian elites now regard the UK chiefly as a place to study, buy property and watch football’
Simon Kuper – FT
Malaysia is a land of driving on the left, three-point British-style plugs and an elite with plummy English accents who can discourse knowledgeably on Boris Johnson’s career plans. There’s even still an ancient concrete cricket pitch on Merdeka Square, the spot in Kuala Lumpur where the Union Jack was lowered on the night of Malaysia’s independence in 1957. And the country’s prime minister, Najib Razak, is an old boy of Britain’s Malvern College and Nottingham University.
https://goo.gl/PSXh6V

India

Slowdown Reflects an Investment in India’s Future; Tax reform is not painless, but it was needed. And it will pay off.
By Daniel Moss
India is an emerging market standout. The country was one of only a handful of large economies marked down in forecasts from the International Monetary Fund this week. India’s gross domestic product is expected to rise 6.7 percent this year, compared with a previous projection of 7.2 percent. Next year’s estimate was also lowered.
https://goo.gl/Jm1aJw

Billionaire Kumar Mangalam Birla may tap financial markets as India’s telecom wars worsen
Bhuma Shrivastava – Bloomberg
Billionaire Kumar Mangalam Birla, whose Idea Cellular LtdBSE 2.55 %. is poised to become India’s top carrier, sees only a handful of businesses surviving a price war roiling the world’s second largest telecom market.
https://goo.gl/ZftBLT

India’s TCS positive on retail business turnaround, cautious on financial services
By Sankalp Phartiyal and Tanvi Mehta – Reuters
India’s top IT services firm Tata Consultancy Services Ltd ( TCS ) said it expected an uptick in the retail business segment in the coming quarters but remained cautious about the banking and financial services segments that form the bulk of its revenues.
https://goo.gl/a2aKU7

India 100th on global hunger index, trails North Korea, Bangladesh
Financial Express
India has a “serious” hunger problem and ranks 100th out of 119 countries on the global hunger index — behind North Korea, Bangladesh and Iraq but ahead of Pakistan, according to a report.
https://goo.gl/diihY5

Australia

Macquarie trims metals finance business in turn to energy
Reuters Staff
Australia’s Macquarie Group, a rising commodities bank powerhouse due to its turn towards the energy sector, is paring back its aggressive lending against metals, three sources familiar with the matter told Reuters.
https://goo.gl/RP9WY2

Westpac ‘rips off clients’ with life insurance
ANTHONY KLAN – The Australian
Westpac has ripped off its own banking customers by selling them overpriced life insurance products identical to cheaper policies it sells to the public through independent financial advisers, a class action legal case alleges.
https://goo.gl/1tjLL8

Australia’s Magellan Financial Group Launches $8.6M Campaign To Lure Cricket Fans
SBJ
The A$50B ($39.2B) Magellan Financial Group “is turning to high-fee retail investors,” launching an A$11M ($8.6M) campaign to “lure cricket fans into the company’s funds amid market-wide pushback against active investment management,” according to Michael Roddan of THE AUSTRALIAN.
https://goo.gl/rTxWDb

Australia Becomes New Testing Ground for Riskier New Funding Tool
By Mariko Ishikawa and Ruth Liew – Bloomberg
Appetite growing from institutions for loans in Australia; Private equity looking more at using unitranches in Australia
Private equity firms doing buyouts in Australia are turning to a kind of financing used in the U.S. and Europe that gives them more flexible terms, even as it may introduce new risks for creditors.
https://goo.gl/N29iFw

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About Author

Lothian is executive chairman of John J. Lothian & Co. and editor of the John Lothian Newsletter. He publishes MarketsWiki.com, MarketsReformWiki.com, MarketsWikiEducation.com, JohnLothianNews.com and several industry newsletters.