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Asia Pacific Financial News from John Lothian News – October 16, 2017

Lead Stories

September 2017 ETD Volume and Open Interest
FIA
Worldwide volume of exchange-traded derivatives was 2.234 billion contracts in the month of September, nearly unchanged from the previous month and up 8.1% from September 2016. Regional trends in trading volume are shown in the table below. Total open interest was 874.4 million contracts at the end of September, up 5.4% from a year ago..

Two Chinese Bidders for Chicago Exchange Drop Out
By Nick Baker and Brian Louis – Bloomberg
SEC stalled a decision on whether to approve the deal; Trump, some lawmakers have blasted the sale to Chinese firms
Two of the three China-based bidders for the Chicago Stock Exchange have withdrawn from the group trying to acquire the market, according to a person familiar with the matter.
https://goo.gl/ddKntR

Two Chinese Firms Bidding for Chicago Exchange Withdraw From Controversial Deal; Chongqing Jintian Industrial Co., Ltd. and Chongqing Longshang Decoration Co., Ltd. exited after SEC sought more details about bid
By Dave Michaels – WSJ
Several Chinese investors vying for a piece of the U.S.’s last regional stock exchange have dropped out of the deal, people familiar with the matter said, after the deal weathered intense political criticism of their bid.
https://goo.gl/gUHffz

Asian hedge funds: the happy medium Premium; It is probably a good thing that new entrants can only launch selectively
Lex – FT
Hedge funds often launch when markets are high, like butterflies hatching on a warm day. But despite buoyant stocks, Asia has produced the smallest number of new openings in the year to date for 17 years, according to data from Eurekahedge.
https://goo.gl/68G4cs

In China, Trading Begins on WeChat
By Lianting Tu and Carrie Hong – Bloomberg
Personal messaging apps used to solicit offers, share intel; Ubiquitous WeChat use raises questions about record keeping
In China, bankers and traders don’t just hit the phones or send an email when they have a deal to sell. They take to WeChat.
https://goo.gl/PL2Tvc

We may be sleepwalking into another financial crisis; Time to shine some light on side effects of easy money
MAKOTO KAJIWARA, Nikkei
Indonesian conglomerate Santini Group has an important unwritten rule rooted in its experiences during the Asian currency crisis of 1997: No borrowing money.
https://goo.gl/bTH9oq

Exchange News

SGX expects to be among first wave of Mifid II equivalence; EC approval would mark a major acceleration in process of allowing trading on non-EU venues
Afiq Isa – Risk.net
The Singapore Stock Exchange (SGX) expects to be among the first non-European trading venues accessible to European Union firms when a key regulation goes live in January 2018, and Hong Kong may also be deemed eligible in time for next year.
https://goo.gl/a5spdZ

FinTech News

Information and Cyber Security for the Futures Industry; A Perspective by VSEC, LLC
By John Lothian – JLN
The founders of a information and cyber security advisory firm have written a must read white paper for the futures industry about the business and regulatory challenges of cyber security and how to manage them.
https://goo.gl/BywqQZ

Hackers beginning to target financial institutions in the Asia Pacific region: Kaspersky Lab
First Post
Cyber espionage groups that were into data hacking are now attacking financial institutions in the Asia Pacific (APAC) region, a new Kaspersky Lab report said on Monday.
https://goo.gl/CSSH6U

Regulatory News

Japan Regulator May Include Exchange Rates Under Fair Disclosure-Sources
NY Times
Japan’s financial regulator is likely to include exchange rates in forward contracts under fair disclosure rules for listed companies, according to two sources with direct knowledge of matter and a draft of guidelines seen by Reuters.
https://goo.gl/PjTz6z

Investing News

Southeast Asia’s Worst Stock Market May Be Buoyed by Najib Budget
By En Han Choong
October 15, 2017, 11:00 AM CDT
Government spending could boost consumer stocks, builders; Gains in personal spending to signal opportunity: Eastspring
Malaysia’s government spending could revive gains in the stock market that is Southeast Asia’s worst performer despite receiving the most foreign investment in the region.
https://goo.gl/Rko9bk

Asia Better Equipped to Weather Financial Storms
Financial Tribune
Asia, the fastest-growing region in the world, has become much more resilient to weather financial storms with lessons learned from the Asian financial crisis 20 years ago, said a senior official at the International Monetary Fund.
https://goo.gl/5fnqJc

Death And Taxes: How To Effectively Transfer Wealth Amidst Asia’s Aging Population
Berry Wong – Forbes
People sit and chat at Fuxing Park in Shanghai, China, on Sunday, April 10, 2016. Photographer: Qilai Shen/Bloomberg
Much has been said about the massive wave of wealth transfer expected in the next decade. According to the Wealth-X report published earlier this year, $4 trillion will be redistributed in the next decade and $30 trillion over the next 30 years.
https://goo.gl/1Cn5qP

Japan

Mizuho Financial Group says it retains lifetime honorary advisers; Japanese financial giant to disclose information about adviser system early
Nikkei
In a move to increase corporate transparency, Mizuho Financial Group revealed in an outline of its adviser system released on Monday that it currently retains seven lifetime honorary advisers.
https://goo.gl/GDpwY9

Kobe Steel scandal strikes another blow to Japan Inc; While each corporate scandal has been unique, governance problems are not
Leo Lewis and Emiko Terazono in Tokyo – FT
The most unsettling aspect of Kobe Steel’s data falsification scandal is not the scale of wrongdoing — more than 500 customers globally have so far been affected and the risk of litigation could crush the company’s finances — but the problem of familiarity, according to legal and academic experts.
https://goo.gl/2hm5R1

Scandals May Lead To Reform In Stagnant Corporate Japan, Economists Say
Pymnts.com
Japanese corporations have been hit with a slew of scandals as of late, from accounting schemes to coverups and falsified data. Some experts believe these troubles are ready to culminate in Japanese corporate reform.
https://goo.gl/rY8TZ4

Mainland China

Bank of China connects to Thomson Reuters’ FX trading platform; Bank of China in Hong Kong will use Thomson Reuters for electronic and FX trading activities.
By Hayley McDowell – The Trade
Bank of China in Hong Kong (BOCHK) has adopted Thomson Reuters electronic trading and FXall through the firm’s platform FXT.
https://goo.gl/vUtr29

Why Beijing Won’t Just Let the Yuan Go; The real direction of yuan ‘reform’ will be sideways, not forward, over the next half decade
By Nathaniel Taplin – WSJ
China has always been a pressure cooker—too many people, not enough land, and a long tradition of authoritarian governments with a flexible approach to the rule of law that depends on who you are and who you know.
https://goo.gl/bwUDy7

China’s party congress will matter for investors this time; Xi is turning his focus to the economy just as the $10tn equity market enters the MSCI
George Magnus – FT
It is a sign of the times when markets have China’s 19th Party Congress in their sights. This highly scripted but opaque gathering, held every five years, is not typically a market-moving event. This time, though, President Xi Jinping’s position at home, and China’s on the world stage, make for a more intriguing congress, and investors should keep a close eye on what transpires.
https://goo.gl/TMxJdn

China Plots What’s Next as Influence on Global Markets Grows
By Emma O’Brien, Garfield Reynolds and Adrian Leung – Bloomberg
China’s ascension as an economic superstar over the past three-plus decades is out of sync with its heft in global financial markets. But things are starting to change, and investors around the world will feel the difference.
https://goo.gl/gFa86v

China seeks dominance of global AI industry; Beijing challenges US with plan to create $150bn artificial intelligence sector
Louise Lucas in Hong Kong – FT
If the development of artificial intelligence is an arms race, then China wants to become the world’s unchallenged AI superpower. While the National Science Foundation in the US has no increase in funding this year, China has promised to “vigorously use governmental and social capital” to dominate the industry.
https://goo.gl/S3Nq9y

China’s Greatest Challenge
The country’s financial system has fueled its debt-driven growth and reforming it may be Xi Jinping’s toughest task
By Anjani Trivedi – WSJ
Ending China’s dependence on debt-fueled growth may be the easy part of Beijing’s financial reform. Dismantling the complex and opaque system that grew up to satisfy the country’s insatiable demand for borrowing will be harder and more dangerous.
https://goo.gl/LNVbyR

Macau bridges the gap between Chinese and Portuguese markets
Pedro Cardoso, CEO of Banco Nacional Ultramarino – World Finance
Given its Portuguese heritage, Macau acts as the perfect facilitator of cooperation between China and the Portuguese-speaking world, helping both sides to grow and develop mutually beneficial projects
https://goo.gl/kiYZX9

Hong Kong

High and Mighty Hong Kong Offices
Andy Mukherjee, Nisha Gopalan – Bloomberg
You know a property market is overripe when new supply keeps setting price benchmarks, but existing buildings find few or no takers.
https://goo.gl/gRnyMQ

China Set to Overtake Hong Kong as Thai Property Developer’s Top Foreign Market
Bloomberg News
Sansiri estimates China sales to double from a year earlier; Opens 3 new Chinese offices despite tigher capital controls
Sansiri Pcl, one of Thailand’s largest property developers by sales, sees China becoming its biggest foreign revenue source as early as this year, the latest sign that the world’s largest property-buying binge is undimmed by China’s tighter capital controls.
https://goo.gl/aEpSU4

Indonesia

Indonesia Set for Trillion-Dollar Economy in Bittersweet Triumph
By Karlis Salna – Bloomberg
Jokowi faces challenges in infrastructure, tax and poverty; Growth struggling to accelerate even after eight rate cuts
Indonesia is on track to become a trillion-dollar economy and should be the envy of Southeast Asia. Yet on some key measures, the region’s biggest economy is falling behind.
https://goo.gl/yK2AKJ

Singapore

Regulatory compliance, costs could turn firms away from SGX; Alternative platforms like crowdfunding are giving the stock exchange a run for its money
STEPHANIE LUO – Business Times
SINGAPORE is a leading financial hub, ranking third globally just behind London and New York, but its stock market is another story.
https://goo.gl/oiY9wr

Dealogic Now in Singapore!; Newly opened office shows commitment to the region
BusinessWire
Financial platform company Dealogic has opened its doors in Singapore as a sign of the company’s dedication and confidence in business opportunities in Southeast Asia. “We’ve worked with clients in Singapore for years via our Hong Kong office,” noted Romaine Jackson, Southeast Asia Head of Client Coverage at Dealogic. “We realized we could provide so much more value and deepen the relationships with a local presence.”
https://goo.gl/qbwFaj

Singapore Home Sales Drop as ‘Hungry Ghost’ Month Spooks Buyers
By Pooja Thakur Mahrotri – Bloomberg
September total apartment sales lowest since January; City’s home prices rose in 3Q for first time in four years
Singapore home sales fell in September as developers marketed fewer projects in a month considered inauspicious by Chinese homebuyers.
https://goo.gl/kfKp5U

Vietnam

Vietnam braces for typhoon Khanun after floods kill 72
Financial Express
Vietnam braced for typhoon Khanun on Monday after destructive floods battered the country’s north and centre last week, killing 72 people, the disaster prevention agency said.
https://goo.gl/vMv5Ax

Vietnamese trust content and brands
VietnamNews
Connected consumers in Việt Nam are more trusting than other countries in the region when it comes to their online activities, according to Kantar TNS’s latest Connected Life research.
https://goo.gl/MGLJXe

Can Vietnam avoid a crash this time?; Getting the basics right is the only hope to keep multinationals on board
Nikkei
Vietnam’s China-beating economic growth rate is the envy of Asia, as neighbors struggle to keep up with its 7.4% pace. That does not mean officials in Hanoi should be sleeping easy.
https://goo.gl/es28rX

Taiwan

Taiwan ‘probing alleged funding of triad-linked groups by China’
Straits Times
Taiwanese authorities are investigating alleged efforts by China to destabilise the island through the funding of groups linked to Taiwanese triads, according to the Financial Times.
https://goo.gl/CWyPtm

South Korea

Regulator to check financial health of securities firms aspiring
By Yonhap – Korea Herald
The head of South Korea’s financial regulator said Monday that financial health is one of key requirements in allowing five leading securities firms to start investment banking businesses.
https://goo.gl/6Jw7xf

Free Trade With South Korea Works; Korus is a valuable agreement, even if it needs a little work.
By The Editors – Bloomberg
Thankfully, President Donald Trump’s threats to summarily “terminate” the free-trade deal between the U.S. and South Korea have so far proved empty. Now, as the two sides sit down to renegotiate, there’s a chance to make some real improvements.
https://goo.gl/pyVH3w

Philippines

Transport strike shuts Philippine financial markets
Chrisee Dela Paz – Rappler
There will be no clearing and settlement operations by the Bangko Sentral ng Pilipinas (BSP) and the Securities Clearing Corporation of the Philippines on Monday, October 16, following an order from Malacañang to suspend government work due to a two-day nationwide transport strike.
https://goo.gl/iuCGNp

SEC seeks authority to access bank records
By: Doris Dumlao-Abadilla – Inquirer.net
The Securities and Exchange Commission (SEC) has appealed to Congress for authority to access and scrutinize bank records as needed to boost investor protection, prevent scams and improve cross-border coordination on securities regulation.
https://goo.gl/tp4wo9

Malaysia

Al Rajhi Bank eyes Asean expansion
by Cecilia Kok – The Star
Al Rajhi Bank Malaysia outgoing chairman Datuk Seri Dr Nik Norzrul Thani Nik Hassan Thani said his successor would continue with the plan to expand the bank’s operation into the region, targeting neighbouring markets like Singapore and Indonesia.
https://goo.gl/oBr3yy

India

Arun Jaitley’s visit strengthened India-US economic ties, says official
Financial Express
The US-India economic ties are quite strong and diversified and were strengthened further with Finance Minister Arun Jaitley’s visit to America during which he raised some of the key issues of concern with the American leadership, a top Indian official has said.
https://goo.gl/45KUE5

Morgan Stanley bets on India, says world’s fastest growing economy to grow 10% per year for 10 years
Financial Express
Amid the euphoria of Nifty touching record highs and the ongoing festive season; Morgan Stanley’s report says that India’s economy will grow by more than 10% annually in the coming decade, buoyed by demographics, reforms and globalization.
https://goo.gl/i3wQYc

India undergoing exciting digital transformation, says IMF
Financial Express
India is currently pursuing an “exciting” route of digital transformation which can be a learning experience for everyone, according to the IMF which is featuring a case study on the country’s digital revolution in its new book.
https://goo.gl/VzNw9y

India Palm Oil Imports Climb for Eighth Month on Festive Demand
By Pratik Parija – Bloomberg
Vegetable oil purchases advance 8.5% in September, SEAI says; Soy oil imports fall 24%; sunflower oil purchases surge 90%
Palm oil imports by India, the world’s biggest buyer, climbed for an eighth straight month in September as lower international prices prompted traders and refiners to buy more to meet festival demand.
https://goo.gl/EyDQdm

Gold Gets Its Sparkle Back In Time for India’s Diwali
By Swansy Afonso – Bloomberg
Government reverses move on money-laundering act this month; Jewelers are wary of further possible official intervention
Until early this month, Indian jewelers expected the traditional surge in gold demand from the Hindu Festival of Diwali to be muted.
https://goo.gl/DcCk9W

Australia

ASIC seeking financial literacy feedback
By Darin Tyson-Chan – Financial Observer
ASIC has called for feedback from several different sectors to allow it to shape the 2018 national strategy for financial literacy.
https://goo.gl/pZoKM1

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About Author

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