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Asia Pacific Financial News from John Lothian News – October 24, 2017

Lead Stories

China’s Entrepreneurs Squirm Under Xi Jinping’s Tightening Grip
Guo Junwen was a successful property developer in southwestern China when the authorities threw him behind bars three years ago on charges involving land use and seized his business.

As ‘New Era’ Dawns, Xi’s Party Stays Out of the Sun; China’s growing influence confronts the world with a secrecy seen as a fact of life at home
By Andrew Browne – WSJ
The most important moment in the life of China’s Communist Party, the coming-out parade of its top leaders, is the culmination of a process steeped in mystery.

Green investment bank must for Hong Kong to maintain status as premier financial centre: European Chamber of Commerce
South China Morning Post
Emerging Asia needs US$26 trillion up to 2030 for climate friendly infrastructure projects, which a specialist institution based in the city could easily take advantage of

Exchange News

The shouting is over at HK exchange
Shanghai Daily
HONG Kong’s last remaining stock market floor traders are taking their final orders as the exchange prepares to shut its trading hall.

FinTech News

China’s Latest Fintech Offering Looks Overpriced; Alibaba-backed Qudian has been on a wild ride; investors should shop elsewhere
By Anjani Trivedi – WSJ
An Alibaba BABA -2.36% -backed fintech company that services young, Chinese consumers? Looks like a buy.

Tradency Expands Client-Base in Asia, Signs Additional m-FINANCE Brokers
Finance Magnates
The partnership with Tradency offers traders of m-FINANCE brokers access to RoboX and Mirror Trader.

Yes, More Regulation Is Probably Coming to the Bitcoin World; Bitcoin has faced a host of scrutiny this year due to its rapid ascent in price. With bitcoin prices still doing well, many are calling for greater regulation of the cryptocurrency.
The Street
Cryptocurrency communities in Hong Kong and around the world will have to brace for greater regulation, as governments monitor the impact of digital currencies on the stability of financial systems, according to Bart Chilton, the former commissioner of the US Commodity Futures Trading Commission.

Regulatory News

China’s securities regulator fast tracks rented-flat-backed securities
South China Morning Post
Poly Real Estate granted US$754 million quota for the sale of securities backed by its rented flats portfolio, by Shanghai Stock Exchange

HSBC’s ex-head of FX cash trading found guilty of fraud; Former senior FX trader at HSBC defrauded one client out of more than $7 million.
By Hayley McDowell – The Trade
The former head of global FX cash trading at HSBC has been found guilty of fraud following his role in a multi-million dollar front running scheme.

Ex-HSBC Trader’s Guilt Casts Shadow Over Colleague’s Extradition
By Suzi Ring – Bloomberg
Mark Johnson front-running conviction pressures Stuart Scott; Scott awaiting judgment Thursday on extradition to U.S.
The fraud conviction of a former HSBC Holdings Plc executive by a U.S. jury may be a harbinger of what’s to come for London colleague Stuart Scott, as a judge prepares to rule on his extradition to face the same charges this week.

HSBC Trader’s Conviction Will Echo Through $5 Trillion FX Market
By Lananh Nguyen and Patricia Hurtado – Bloomberg
‘Lesson to senior executives:’ invest in more ethics training; Mark Johnson found guilty of fraud after four-week trial
Global currency traders and compliance officers who monitor them were put on high alert after a New York jury convicted a former HSBC Holdings Plc executive of fraud for front-running a large client order.

Investing News

U.K. Investor Calls for Tokyo Broadcaster to Trim Its Bloated Stock Portfolio; Japan’s cross-shareholding structures have prevented necessary restructurings and contributed low productivity levels
By Kosaku Narioka – WSJ
A London-based money manager is launching an activist campaign against a major Japanese television network, taking aim at an entrenched practice in Japan that has many listed companies holding stock in one another.


Japan is betting future cars will use hydrogen fuel cells; Honda and Toyota think the technology’s superior energy density will triumph over batteries
Robin Harding in Tokyo – FT
Japan wants the Tokyo Olympics of 2020 to run on hydrogen. Planners envisage fleets of hydrogen-fuelled cars whisking athletes from the village to the venues. They are even pondering the practicalities of a hydrogen-burning Olympic flame to promote one of Japan Inc’s boldest gambles: that hydrogen, not batteries, will become the automotive power source of the future.

Japan flash manufacturing PMI edges lower
Alice Woodhouse – FT
Japan’s manufacturing sector expanded at a slower pace in October but maintained solid growth, according to a preliminary gauge tracking the sector.

Japanese now hold 1,000tn yen worth of foreign assets; Bank of Japan’s hyper-easy monetary policy is chasing cash overseas
Foreign assets held by Japanese institutional and individual investors appear to have topped 1,000 trillion yen ($8.79 trillion) for the first time, according to Nikkei estimates. The amount has increased roughly 50% during the past five years and now is more than twice as much as the country’s gross domestic product.

Nikkei 225’s winning streak reaches record 16 sessions
Japan Times
The Nikkei 225 average rose Tuesday for a record 16th straight session and marked its highest closing level in 21 years and three months, reflecting brisk corporate earnings.

Mainland China


Everything You Think You Know About Chinese Finances Is Wrong
Christopher Balding – Seeking Alpha
PBOC revealed off-balance sheet assets equal to 109% of on-balance sheet banking system assets; Financial system assets second highest among major economies; Implies significantly higher leverage.
China has long faced doubts about the veracity of its economic data and concerns about its rapidly rising level of indebtedness. While defaults and individual incidents raised questions about debt discrepancies, there was no systematic evidence that the financial system faced systemic misstatement. The People’s Bank of China changed that with a few sentences.

China Signals Steady Economic Policy as Liu Keeps Party Role
Bloomberg News
Xi Jinping’s top economic adviser remains on central committee; PBOC Deputy Governor Yi Gang was named as an alternate member
China re-named Liu He, one of President Xi Jinping’s closest financial and economic advisers, to the Communist Party’s Central Committee, a signal the country’s leaders aren’t looking to make significant changes to economic policy as they begin a new five-year term.

The shadowy office at centre of China’s economic policymaking
Sidney Leng, Frank Tang – South China Morning Post
The presence of Yang Weimin, a deputy director at the Office of the Central Leading Group on Financial and Economic Affairs, at a press conference on Tuesday themed on the environment displayed the power of his shadowy office.

Central banks alone cannot deliver stable finance; Government policy must counter the growing risk of a crash in asset valuations
Martin Wolf – FT
Favourable global economic prospects, particularly strong momentum in the euro area and in emerging markets led by China and India, continue to serve as a strong foundation for global financial stability.” This statement opened the International Monetary Fund’s April 2007 Global Financial Stability Report. Since this benign view was published on the eve of the most devastating financial crisis in nearly eight decades, it has to be viewed, in hindsight, as a spectacular misjudgment.

Hong Kong

Hong Kong investment firm squares off against ETF groups; Minnow launches two China A-share funds charging half the typical fees
Henny Sender – FT
A small Hong Kong investment firm is taking on BlackRock and other giants of the asset management industry, listing two China A-share “smart beta” exchange traded funds on the local stock exchange for which it will charge half the usual fees.

Hong Kong signals may drop plan for third board for new economy firms
Donny Kwok – Reuters
A cloud of uncertainty hangs over Hong Kong’s plan to float a new listing board to lure technology startups, with the government asking regulators to review their plans and put in place “adequate safeguards” for investors first.

WeChat taps Hong Kong’s community of 170,000 Filipinos to help them remit funds home
South China Morning Post
‘We Remit’ function in Tencent’s popular mobile app provides an alternative way for 170,000 overseas Filipinos in the city to send money home

Brexit to be Hong Kong’s Gain
Major financial institutions are not just looking at Frankfurt and Paris, Asian financial hubs are now gaining traction as relocation options.

Cashing out: The end of Hong Kong’s trading floor
The Japan News
In its heyday in the 1980s, more than a thousand brokers dressed in signature red blazers made deals on the trading floor of the Hong Kong Stock Exchange, in what was a raucous, competitive bear pit.


Data Protection in Indonesia’s Financial Services Sector
The Indonesian Minister of Communication and Informatics (“MOCI”) issued Regulation No. 20 of 2016 regarding the Protection of Personal Data in Electronic Systems (“MOCI Reg. 20”) to regulate the protection of personal data by electronic system providers in Indonesia. This regulation strengthens existing data protection obligations (e.g., data on-shoring for electronic system providers for public purposes, consent of personal data owners), and makes a point to clarify previously grey or unregulated areas (e.g., cross-border transfer requirements, data storing requirements).

Indonesian companies likely to drive boom in sukuk issuance; Palm oil producers likely to join telecoms, food and utilities as market leaders
Although not widely noted, the global Islamic finance market marked a significant shift last year: For the first time, companies and financial institutions issued a greater volume of Islamic debt securities, or sukuk, than governments. Indonesia could become a key engine of this growth, given the huge need for funding for its corporate sector.

Indonesian Bitcoin Payment Processors Shut Down, Exchanges Unaffected
Reports indicate that Indonesian bitcoin payment platforms Toko Bitcoin and Bitbayer have ceased operations in response to recent announcements that the Bank of Indonesia will not recognize bitcoin as a means of payment. Although the position of Indonesia’s central bank renders the business model of cryptocurrency payment processors unviable, Indonesian bitcoin exchanges are continuing to operate freely.


U.S., China Open to Sea Drills With Asean, Singapore Says
By Andreo Calonzo and Ditas B Lopez – Bloomberg
Singapore to take over as Asean chair from Philippines in 2018; Ng says Asean maritime exercises to help “turn a new page”
The U.S. and China are open to joining separate maritime drills with Southeast Asian nations, Singapore Defense Minister Ng Eng Hen said.

Almost 7 in 10 Singapore financial services CFOs are finding it hard to keep up with digitisation, survey finds
Business Insider
Introducing digitisation is no longer a choice for the financial services sector, especially in Singapore, and it seems firms are feeling the strain of needing to adapt to technological change.

Singapore to freeze number of cars on its roads
Financial Express
Singapore, one of the most expensive places in the world to buy a vehicle, has announced it will freeze the number of private cars on its roads from next year but vowed to expand public transport.

Is there a glass ceiling for women in Singapore business?
As part of BBC World News’ 100 Women Season I spent some time taking a detailed look at women in business within Singapore.

Singapore bags 6 clean energy investments, creating 400 professional jobs
A wave of clean energy investments in Singapore is set to create 400 professional jobs and generate S$500 million in business spending over the next five years, the Singapore Economic Development Board (EDB) said on Tuesday (Oct 24).


Vietnam Confident of 6.7% Growth
Financial Tribune
Vietnam is confident it will meet its goal of 6.7% economic growth this year, and forecasts the same rate of expansion in 2018. Prime Minister Nguyen Xuan Phuc gave these projections in a speech at the National Assembly’s opening session in Hanoi on Monday.


Thai households still suffer debt hangover; FTCR data show consumer debt will remain a drag on the economy; regulations will help
Looking at the headline figures, Thai consumers would appear to have reined in their addiction to credit. Household debt peaked at 81.2 per cent of GDP at the end of 2015, and has now fallen for six consecutive quarters (see chart).

South Korea

South Korea to tighten loan rules to curb household debts
Bae Hyun-jung – Korea Herals
Borrowers to be classified into four groups based on repayment ability
The South Korean government on Tuesday came up with a comprehensive scheme to curb the nation’s whopping level of household debt by tightening loan availability for multiple-home owners and categorizing borrowers’ financial capacities to encourage debt repayment.


World Bank fueling climate change, groups claim in historic complaint
More than 100 citizen groups and 19 affected communities in the Philippines have filed a historic complaint against the International Finance Corporation (IFC), the World Bank’s private-sector arm, accusing the IFC of fueling global climate change through its investments in a Philippine bank.


Malaysia’s first Seibu shop planned at finance hub; Upmarket Japanese department store brand to target high-income clientele
A four-story department store bearing the name of Seibu, a well-known chain in Japan, will open in the Malaysian capital city of Kuala Lumpur around 2019, eyeing high-income clientele.

Escaping Middle Income Trap a Challenge for Malaysia
Financial Tribune
S &P Global Ratings expects that Malaysia’s objective to escape the middle income trap will continue to be a challenge while credit risk is high because of the country’s high private-sector credit level relative to income.

Bank Islam Malaysia Berhad Signs Agreement to Implement Kamakura Corporation Suite of Solutions
Kamakura Corporation reported Wednesday that it had completed an agreement to implement the Kamakura Corporation suite of solutions for Bank Islam Malaysia Berhad, an Islamic bank based in Malaysia that has been in operation since July 1983, for its balance sheet management, funds transfer pricing, and liquidity management processes.

The Rulers’ concern and what it means
When the Conference of Rulers takes a stand on financial integrity or national unity or the role of Islam in multi-religious Malaysia, the people should come out in full support.


India approves 2.11 trillion rupees state bank recapitalization plan
Business Times
The Indian government approved on Tuesday a state bank recapitalization plan of 2.11 trillion rupees (S$44.2 billion) over the next two years, in a bid to clean banks’ books and revive investment in a slowing economy.

Crackdown on India shell companies unearths $1 billion cash
Financial Express
India is intensifying its crackdown on dubious companies after it unearthed over $1 billion in suspicious cash deposits as part of its investigations into corruption and efforts to boost foreign investment, a minister said.

India to Inject $32 Billion Into State Banks to Boost Loan Growth
By Anto Antony – Bloomberg
Proposed spending is 10-fold higher than previous pledge; India seeks to revive bank loan growth from 25-year low
India will inject 2.11 trillion rupees ($32 billion) of capital into state-controlled lenders over two years, an amount that’s ten-fold higher than the government’s previous pledge as it seeks to revive loan growth from a 25-year low.


NBN accused of using financial arguments to obscure inferior performance
Paul Smith – AFR
The government and NBN have been accused of downplaying problems with Australia’s broadband quality after insisting that no changes need to be made to the funding of its struggling $49 billion initiative.

Australia publishes draft laws for relaxed fintech regulation
Reuters Staff
The Australian government published draft laws on Tuesday that would let financial technology companies operate without a full licence, a measure it said would encourage innovation without compromising existing levels of consumer protection.

Australian Blockchain Startup Partners With HSBC Australia
Australian fintech startup Moneycatcha has partnered with HSBC Australia to trial its two proprietary blockchain platforms.

Could Australian Wages Be Headed Higher? Goldman Thinks So
By Michael Heath – Bloomberg
Aussie labor market growth equal to 379,000 U.S. jobs a month; Some warehouse workers seeking pay rise in excess of 6%
Australian warehouse workers are preparing to walk off the job to demand higher wages and greater job security, in a sign that a strengthening labor market could be emboldening employees.

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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,,, and three industry newsletters.