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Asia Pacific Financial News from John Lothian News – October 23, 2017

Lead Stories

Banks plan to shift Asian trading from London to HK; Regulator gears up to handle moves in a blow to UK capital on managing Asia risk
Laura Noonan in Hong Kong – FT
Major investment banks are talking to regulators about routing their Asia-Pacific trading activities through Hong Kong instead of London, in a move that would have limited effect on jobs but would shift global finance’s centre of gravity further away from the UK capital after Brexit.
https://goo.gl/Fw6Znk

China sees long battle ahead for blue skies, clean water;Challenges persist while policymakers emphasize progress
KENJI KAWASE, Nikkei
Two high-ranking Chinese officials boasted to the media Monday of the country’s progress toward cleaner air and water after years of efforts, but they did not shy away from acknowledging that serious challenges remain.
https://goo.gl/FpXTWF

Japan warned on race to the bottom in bank profits; Nation is nearly three times as overbanked as Germany, BOJ report says
Nikkei
Japan has too many banks in urban centers and rural areas, forcing them to eke out far skimpier profits than their Western peers, the Bank of Japan writes in a paper published Monday.
https://goo.gl/deduV6

China Won’t Have a Typical ‘Minsky Moment’; The threat of a financial crisis is lower than the general risks facing economic growth.
By Mohamed A. El-Erian – Bloomberg
Zhou Xiaochuan, the long-serving and respected governor of the People’s Bank of China, raised eyebrows last week when he cautioned that the country could have a “Minsky Moment” if “we are too optimistic when things go smoothly.”
https://goo.gl/LAqtFj

Nike’s focus on robotics threatens Asia’s low-cost workforce; Developing countries at risk of losing cheap manufacturing if leisurewear companies accelerate automation
Jennifer Bissell-Linsk in New York – FT
An avid marathon runner, Knox Robinson can wear through a dozen pairs of trainers a year. Yet when it comes to racing, he has one go-to shoe — the Nike Flyknit Racer.
https://goo.gl/e6cSq4

China’s Pursuit of Fugitive Businessman Guo Wengui Kicks Off Manhattan Caper Worthy of Spy Thriller; Pressure from Beijing officials seeking Mr. Guo’s return sparks frantic response from Trump administration—and Pennsylvania Station, JFK airport standoffs
By Kate O’Keeffe, Aruna Viswanatha and Cezary Podkul – WSJ
Guo Wengui, a wealthy Chinese businessman, sat in the sun room of his apartment on the 18th-floor of the Sherry-Netherland Hotel on New York’s Fifth Avenue. With him were four officials from China’s Ministry of State Security, whom Mr. Guo had agreed to meet.
https://goo.gl/dLfh8h

Crisis, What Crisis? Banks Pile Back Into China; Growth has picked up, but there’s still plenty for lenders to worry about.
By Mark Whitehouse – Bloomberg
China has been working hard to convince the world that it’s not a financial crisis waiting to happen. Judging from the latest data on cross-border lending, banks are buying it.
https://goo.gl/Ju4XQb

Asia’s Most-Shorted Stocks Beat the Broader Market This Year
By Fox Hu – Bloomberg
Bears beware: the 100 most-shorted stocks on Asia’s benchmark index have surged an average 35 percent this year, according to data compiled by Bloomberg. China Evergrande Group has soared about 550 percent, leading gains among MSCI Asia Pacific Index members which had the highest short interest as a percentage of free-float shares at the start of 2017. The gauge has climbed 24% this year on a weighted basis, while its 1032 members have averaged a 20% gain.
https://goo.gl/Hn8NQg

Exchange News

Calcutta Stock Exchange seeks Sebi approval to set up clearing corporation; The CSE meets the criteria for the formation of the clearing corporation in terms of net worth
Business Standard
The Calcutta Stock Exchange (CSE), which had seen a halt in its trading activity since 2013, was striving to restore its glory by setting up a clearing corporation as a separate legal entity.
https://goo.gl/dTwDYq

FinTech News

Swiss fintech company Avaloq eyes Asia, global expansion
South China Morning Post
Francisco Fernandez, founder and group chief executive of Zurich-based Avaloq, says the company has global expansion plans and hopes for a stock market listing, possibly in Hong Kong
https://goo.gl/HXiJ8R

Regulatory News

Exiger Names Daniel Banes Managing Director and Asia Pacific Regional Chair Based in Hong Kong
PR Newswire
Exiger, the global regulatory, financial crime, risk and compliance company, announced the appointment of Daniel Banes to the post of Managing Director and Asia Pacific Regional Chair based in Exiger’s Hong Kong office.
https://goo.gl/8voEPL

Ex-HSBC Currency Trader Convicted of Fraud for Front-Running
By Patricia Hurtado and Lananh Nguyen – Bloomberg
U.S. says Johnson took advantage of $3.5 billion client order; Defense lawyer says Brooklyn jury ‘convicted an innocent man’
Former HSBC Holdings Plc currency trader Mark Johnson was found guilty of fraud for front-running a $3.5 billion client order, a victory for U.S. prosecutors as they seek to root out misconduct in global financial markets.
https://goo.gl/EESNAw

Investing News

Nikkei rises on Japanese ruling party win, most of Asia up
Financial Post
Asian stocks were mostly higher Monday, with Japan’s benchmark rising on the back of an election victory by the prime minister’s ruling party, which had promised stability and growth.
https://goo.gl/dy7sLc

No future(s): Asian financial coal trading dries up as Noble declines, Glencore rules
Henning Gloystein, Vera Eckert – Reuters
Financial trading of thermal coal has virtually ceased in Asia as a result of the woes at one major trading house and the growing dominance of another, despite the region being by far the world’s biggest consumer of the fuel.
https://goo.gl/BXPdGv

In Japan’s Record Stock Rally, the BOJ Is Sitting on Its Hands
By Min Jeong Lee – Bloomberg
Nikkei 225 rose for 15th day on Monday, longest run ever; Central bank dramatically reduced ETF buying in October
Japanese stocks’ record rally is so powerful that one of their most prominent buyers is sitting on the sidelines.
https://goo.gl/rjDCmJ

Seen From Space, China’s Oil Demand Looks Stronger Than Expected
By Aaron Clark – Bloomberg
Satellite data implies refinery use, consumption understated; China’s year-to-date oil inventory build at 87m bbls: Barclays
The crude market may be underestimating China’s oil demand.
https://goo.gl/AxksH7

Japan

As scandal widens, Japan’s Kobe Steel faces key debt test
Sumeet Chatterjee, Umesh Desai – Reuters
As Kobe Steel Ltd becomes increasingly embroiled in a data falsification scandal, concerns are growing about its outstanding liabilities despite the Japanese company’s sizable cash reserves.
https://goo.gl/LAQhgX

Japan faces financial crisis with banks struggling to eke out profit
LEIKA KIHARA – BusinessDay
Japanese banks lag behind their global counterparts in boosting profitability as they compete for dwindling lending opportunities in a shrinking market, the country’s central bank said on Monday.
https://goo.gl/qjg5SU

Japan’s Still Behind in Electing Women as Abe Wins Landslide
By Isabel Reynolds – Bloomberg
Japanese Prime Minister Shinzo Abe has made empowering women a pillar of his economic policy amid labor market shortages and as his country ages. His decisive victory in Sunday’s election failed however to see a significant rise in their ranks in parliament.
https://goo.gl/1gCjt5

BOJ Suggests Japanese Banks Have Too Many Employees, Branches
By Gareth Allan and Yuki Hagiwara – Bloomberg
Says low profitability ‘striking’ compared with global peers; Financial system at risk if banks don’t adjust to stresses
Japanese banks may have too many employees and branches, and the overcapacity is contributing to a drop in earnings power that may hurt the financial system, according to the nation’s central bank.
https://goo.gl/UH7KGd

Mainland China

China bank governor talks bluntly as retirement looms; Zhou’s candour over ‘Minsky moment’ warning highlights concern for his legacy
Gabriel Wildau and Tom Mitchell in Beijing – FT
When Zhou Xiaochuan last week used the phrase “Minsky moment” to warn against complacency during the current period of unexpectedly strong Chinese growth, it was not the first time the central bank chief had highlighted risks from excessive debt and speculative investment.
https://goo.gl/28FUYu

This financial push is for real
By Jiang Xueqing – China Daily
The economic sector that produces goods and services coasts on innovative help from commercial banks, other financial institutions
https://goo.gl/WmGVAL

Xi Jinping Pushes China’s Rise Despite Friction and Fear
By JANE PERLEZ – NY Times
No part of the world seems too small, too near or too far for China’s globe-trotting president, Xi Jinping.
https://goo.gl/gQr2So

Chinese Banks in Need of a Stiff Quality Check; China’s biggest banks have been faithful executors of Beijing’s will.
By Anjani Trivedi – WSJ
Chinese bank stocks have been on a tear this year, with many now trading close to their book values—a sign that investors trust their financial reports more than they have in some time. With leading Chinese banks due to start reporting their latest earnings this week, it’s time for a more realistic assessment.
https://goo.gl/ZqrX27

China’s New Antipollution Push Could Cool Its Growth Engine
By KEITH BRADSHER – NY Times
Through the past four decades, China has achieved breathtaking economic growth at the cost of smoggy skies, fetid streams and lakes of dying fish.
https://goo.gl/xPxAGD

Pimco Sees China Refraining From Broad Deleveraging in Next Year
Bloomberg News
Total borrowing to grow faster than nominal GDP: Luke Spajic; Spajic to speak at New Renminbi Reality summit in Singapore
China’s deleveraging campaign will create pockets of pain in markets over the coming year, without curtailing borrowing to the extent that debt actually declines, according to Pimco.
https://goo.gl/9YJm99

Hong Kong

Hong Kong to drop new board plan, amend rules to let start-ups, dual-class companies raise funds
South China Morning Post
Hong Kong’s government has signalled it will abandon plans to set up a new board on the local bourse, instead asking the city’s regulators to amend existing listing rules to attract technology companies to raise capital here.
https://goo.gl/NeLz79

Hong Kong’s hawkers and fishmongers to spearhead city’s cashless push with Alipay roll out
South China Morning Post
Ant Financial will roll out its Alipay electronics payment platform to 43 hawkers at the Po Tat market in Kwun Tong, taking a major step to popularise and lead Hong Kong’s march toward a cashless economy.
https://goo.gl/i2S67w

Singapore

Singapore, Asia’s oil hub, going green with floating solar, storage systems
Financial Express
Singapore plans to develop solar power and energy-storage technologies as the oil-trading hub of Asia pushes to generate more of its power from renewable sources.
https://goo.gl/KRDPby

Singapore to Stop Adding Cars to City From February 2018
By Sebastian Tong – Bloomberg
Singapore, among the world’s most expensive places to own a vehicle, will stop increasing the total number of cars on its roads next year.
https://goo.gl/T9q6tJ

Singapore Venture Capital Surges as Startups Seek Room to Grow
By Yoolim Lee – Bloomberg
Singapore is experiencing a surge in venture capital fundraising, reflecting growing interest in Southeast Asia’s startups.
https://goo.gl/rJezGq

Vietnam

Brave new Asia-Pacific world
By Dr Alan Bollard – Vietnamnews.vn
With the dust barely settled after the International Monetary Fund and World Bank raised hopes at their annual meetings in Washington, DC that a long-awaited growth revival is materialising, the global economy received more welcome news from the other side of the world affirming a turnaround.
https://goo.gl/iPdGMB

Vietnam’s Central Bank Says It’s Able to Keep Currency Stable
By Nguyen Dieu Tu Uyen – Bloomberg
Remittances from abroad help lift foreign reserves to record; Dong has been one of most steady currencies in Asia this year
Vietnam’s central bank said record-high foreign reserves will enable it to keep the currency stable for the rest of the year as the government focuses on boosting growth in the Southeast Asian economy.
https://goo.gl/YpveAN

Taiwan

New York branches of Hua Nan, Mega banks fail U.S. inspections
FocusTaiwan
The New York branches of Taiwan’s Hua Nan Commercial Bank (華南銀行) and Mega International Commercial Bank (兆豐銀) failed to pass the latest financial examinations related to compliance with U.S. money-laundering regulations, the Financial Supervisory Commission (FSC) said Monday.
https://goo.gl/67jt21

Fintech in Taiwan: Big Bang or Slow Thaw?
BY MARINA FINLEY
Taiwan aims to pursue financial technology innovation, but over-regulation continues to block the needed experimentation and flexibility.
https://goo.gl/zsBJPc

South Korea

Worry emerges in S. Korea about higher borrowing costs on expected rate hike
Yurou – Xinhua
Worries emerged in South Korea about higher borrowing costs amid rising expectations that the country’s central bank could raise its benchmark interest rate by the end of this year, damaging economic growth and increasing debt-serving burden for households struggling with massive debts.
https://goo.gl/J13omZ

Japanese defense minister Itsunori Odonera sounds alarm on North Korea
Financial Express
Japan’s defence minister asserted today that North Korea’s nuclear and ballistic missile capabilities have grown to an “unprecedented, critical and imminent” level.
https://goo.gl/oqFkA6

Philippines

ASEAN Defence Ministers begin security talks in Philippines
Financial Express
The ASEAN Defence Ministers began their high-level security dialogue on Monday to discuss security issues, including counter-terrorism, drug trafficking and maritime conflicts, facing the region .
https://goo.gl/SWftvZ

Financial Inclusion: Do Good, Make Money
Stephanie MacConnell – Forbes
According to the World Bank, there are two billion people globally who currently have no access to banking services . There are many reasons for this: they may not have built up enough traditional credit history, they may have bad credit because of poor financial choices in the past, or they may live in an area where access to credit and other financial services are limited.
https://goo.gl/gR9HVw

Malaysia

Malaysia Asks Interpol to Trace 1MDB-Linked Financier Jho Low
By Anisah Shukry – Bloomberg
Fund at heart of probes into embezzlement, money laundering; Low has denied wrongdoing as U.S. targets his assets
Malaysia said it’s seeking Interpol’s assistance in locating financier Low Taek Jho, a central figure in global investigations linked to a troubled state investment fund.
https://goo.gl/KhdaHB

 

India

Mutual funds may get nod for trading in commodity derivatives in 6 months
Reuters
India’s capital markets regulator is likely to allow mutual funds to trade in commodity derivatives and a decision is expected within six months, a senior official said on Tuesday.
https://goo.gl/6bDw2x

India an attractive LNG spot market, say experts
Financial Express
India is an attractive market for Liquefied Natural Gas (LNG) spot trade though its power generating sector will continue to rely significantly on coal, energy industry executives said here today.
https://goo.gl/e8orYG

Indian stock market headed for 2008-like crash? 6 warning signs you must not ignore anymore
Financial Express
Despite a stellar show in 2017, India’s stock market might be on the verge of a major correction, which might be as bad as the 2008 financial crisis. We take a look at five warning signals which tell India’s stock market may be close to a 2008-like crash.
https://goo.gl/gGSWgW

HSBC appoints Jayant Rikhye as India CEO
Financial Express
British banking major HSBC today said its head of strategy for the Asia-Pacific region, Jayant Rikhye, will be taking over as the India chief executive from the incumbent Stuart Milne.
https://goo.gl/iSSDPe

Milk becomes India’s No 1 farm crop, here is how
Financial Express
Milk not only surpassed the total value of foodgrains (cereals plus pulses), but also stood way above the crop value of paddy that stood at Rs 2,26,481 crore or wheat at Rs 1,28,998 crore, according to latest figures released this month.
https://goo.gl/np3hBv

Indian techies in US seek Congressional help for green card
Financial Express
A group of more than 100 Indian IT professionals on H-1B visas today knocked on the doors of US lawmakers to get the country-specific quotas for permanent residency removed, saying the limitation resulted in massive green card backlogs for them.
https://goo.gl/EbSZRo

Australia

Australia’s ANZ settles interest-rate rigging case
Reuters
Australia and New Zealand Banking Group Ltd has reached a last-minute agreement to settle a case brought by the country’s securities regulator accusing it of manipulating the bank bill swap rate.
https://goo.gl/NQJfLa

Australia examines tougher penalties for white collar crime
Paulina Duran – Reuters
The Australian government is planning to increase penalties and lengthen prison terms for financial crimes in a bid to strengthen the enforcement powers of the corporate regulator following a series of scandals.
https://goo.gl/W9UVGd

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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.