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Asia Pacific Financial News from John Lothian News – November 13, 2017

Lead Stories

Iron wars break out as Hong Kong picks fight with Singapore
Call it the iron ore wars. Two of Asia’s financial heavyweights are going head-to-head as Hong Kong Exchanges & Clearing starts futures for a commodity that’s seen extraordinary volatility and been a popular way to bet on China, challenging Singapore Exchange’s leading position.

Lagarde Sees Confidence in China’s Plan to Open Financial System
By Michael Heath and Haslinda Amin – Bloomberg
IMF chief says China is taking action to rein in credit growth; Globalization, technology benefits ‘must flow to all’: Lagarde
China’s plan to ease foreign-ownership limits on financial firms drew praise from IMF chief Christine Lagarde, who described the move as a “very positive development.”

Goldman Lays Groundwork for China Future Without Ownership Curbs
By Cathy Chan – Bloomberg
China said on Friday it will relax foreign ownership limits; Goldman’s JV partner said open to selling a controlling stake
As China gets ready to allow foreign banks to take majority stakes in local securities joint ventures, Goldman Sachs Group Inc. has been quietly laying the groundwork for an onshore business in which it will have equity control.

Trump Is Ceding Global Leadership to China
Antony J. Blinken – NY Times
Amid the pomp that President Xi Jinping of China is bestowing upon his visiting American counterpart, President Trump, it’s hard not to see two leaders — and two countries — heading in very different directions.

Trump Discovers ‘Indo-Pacific’ on Asia Tour in Boost for India
Peter Martin, Justin Sink and Iain Marlow – Bloomberg
India seens as potential buffer to China in rest of region; Phrase links together China tensions over key waterways
During his first presidential trip to Asia, Donald Trump has developed a sudden affinity for a phrase that gives some insight into how the U.S. views the region.

Exchange News

SGX leads with new derivatives on MSCI Emerging Markets indices
The first multi-country, multi-currency EM derivatives in Asia, matching the growing sophistication of strategic asset allocation into the region; Home time zone edge to lead EM price formation during Asian stock and currency market hours; Collaborating with MSCI for 25 years, SGX is the main source of MSCI price formation and liquidity in Asia for global institutional investors.
Singapore Exchange (SGX) today announced that it has launched net total return and price return futures on the MSCI Emerging Markets (EM) and MSCI EM Asia indices, making it the first and only exchange in Asia to offer investors exposure to these fast-growing market segments.

Day session volume of 1,022 contracts; 11 Exchange Participants traded product in day session; Good debut for HKEX’s first ferrous metals product
Hong Kong Exchanges and Clearing Limited‘s (HKEX) first ferrous metal product, cash-settled TSI Iron Ore Fines 62% FE CFR China Futures (Iron Ore Futures) started trading today, with total volume of 1,022 contracts, equivalent to 102,200 tonnes of iron ore, during the day trading session.

FinTech News

Backing Big Brother: Chinese facial recognition firms appeal to funds
Sijia Jiang – Reuters
Buoyed by China’s plans to build a ubiquitous CCTV surveillance network, Chinese and some foreign investors are pouring money into start-up technology firms that specialize in facial recognition software.

Asia’s Agressive Pursuit of Machine Learning in the Finance
In the world of software development, machine learning and artificial intelligence is the hot subject, and might very well continue to be so even in to 2018, since the trend shows no signs of slowing down.

Regulatory News

Regulator to step up checks on struggling regional banks
Japan Today
Japan’s financial regulator will step up scrutiny of the country’s struggling regional banks, it said, as it aims to force lenders straining for profitability to shore up potentially risky business models.

Investing News

HSBC Accounts Used for Transactions Linked to Suspected South Africa Kickbacks; Transfers detailed in documents shine light on the role of global banks in a scandal that has consumed South African business and politics
By Gabriele Steinhauser in Johannesburg and Margot Patrick in London – WSJ
South Africa’s Gupta family used HSBC Holdings HSBC 0.08% PLC bank accounts in Dubai to transfer millions of dollars through companies that have been linked to suspected kickbacks for the sale of Chinese locomotives, according to documents reviewed by The Wall Street Journal.

304% Gains Shows Buffett Style Now Works in China
By Justina Lee – Bloomberg
Yang Yong says his private fund shows how market has evolved; Former pharma salesman sees slow rally at least into 2018
One of Yang Yong’s stock funds surged 304 percent in a year by investing in a handful of China’s largest companies — and he says that’s a sign of how far the market has come.


How to Make Money on Japanese Stocks; Though there are reasons to be skeptical, this still looks like an investing opportunity
By James Mackintosh – WSJ
Investors who bought Japanese stocks at the peak of Japan fever in December 1989 are the closest they have been in 27 years to making their money back, at least assuming they reinvested dividends. If shares in large Japanese companies keep rallying the way they did as the ’80s were ending, investors might be back in the black in January.

Cash-hoarding companies are still a problem for Japan; Too much income is trapped in a risk averse corporate sector awash with record profits
John Plender – FT
Prime minister Shinzo Abe’s victory in the recent election in Japan opens up significant opportunities for political and economic change. But not in the case of one of the biggest structural problems facing the Japanese economy — the tendency of business to save vastly more than it invests, with deflationary consequences.

Japanese bank Mizuho Financial to shed 19,000 jobs as profit falls 12%; The lender said it would cut its current workforce of around 79,000 in Japan
Business Standard
Major Japanese bank Mizuho Financial Group said today it aimed to slash 19,000 jobs over the next decade as it announced a 12-per cent drop in its first-half profits.

Japan’s MUFG hires 180 staff in London in Europe expansion drive
Lawrence White, Anjuli Davies – Reuters
Japan’s Mitsubishi UFJ Financial Group (MUFG) (8306.T) is hiring staff in London in a drive to expand its investment banking operations across Europe, the Middle East and Africa (EMEA) and boost income outside its home market, a senior executive said.

Tokyo pushes back on ‘bizarre’ death tax that deters expats
Considering a work stint in Japan? You’d better make it short, and you’d better stay alive. That’s because the government subjects long-term foreign residents to inheritance tax of up to 55 percent on their worldwide assets — meaning heirs could be forced to give up their family homes or businesses even if they’ve never set foot in Japan.

Mainland China

China recovery pushes greenhouse emissions to global record; Paris targets under threat as forecast 2% rise follows three years of zero growth
Tobias Buck in Berlin and Lucy Hornby in Beijing – FT
Stronger Chinese economic growth will push global greenhouse gas emissions to a record high in 2017 after remaining flat for three years, dashing tentative hopes of a turning point in the world’s efforts to curb climate change.

Even China’s Debt Market Can’t Escape Alibaba Singles’ Day Mania
Bloomberg News
Ant Financial approved for shopping festival asset-backed debt; The Alibaba affiliate has become a major issuer of ABS
Alibaba Group Holding Ltd.’s Singles’ Day shopping extravaganza, which generated a record $25.3 billion in sales this year, is even affecting an obscure part of China’s debt market.

Hong Kong

Hong Kong Picks a Fight With Singapore Over Iron Ore
By Jasmine Ng and Krystal Chia – Bloomberg
HKEX introduces contract on Monday, competing with SGX product; Commodity has seen big price swings on China outlook, supplies
Call it the iron ore wars. Two of Asia’s financial heavyweights are going head-to-head as Hong Kong Exchanges & Clearing Ltd. starts futures for a commodity that’s seen extraordinary volatility and been a popular way to bet on China, challenging Singapore Exchange Ltd.’s leading position.

Hong Kong Surpasses Dot-Com Boom With Record Technology IPO Haul
By Timothy Sifert – Bloomberg
Fundraising from tech firms more than five times level in 2000; Online insurer, car-financing website sell shares in Hong Kong
Hong Kong’s red-hot market for technology listings has already surpassed the heady days of the dot-com boom.


Nickel Supply Rush Seen Cooling Rally Before Batteries Boost
Bloomberg News
‘Market has been getting too excited, too soon’: UBS’s Shaw; Increased supply seen coming from Indonesia as mines ramp up
Forget electric vehicles for now. Nickel must first contend with a new wave of supply from Indonesia and the Philippines, as well as a Chinese stainless steel market that’s at risk of slowing after a two-year boom.


Singapore Traders Are About to Get Their First Lunch Break in Six Years
By Andrea Tan – Bloomberg
Imagine not having a lunch break for 6 1/2 years. For stock brokers in Singapore, that’s about to end.


Multinationals work up a thirst for Vietnam’s beer; Heineken, Carlsberg and others eye Hanoi’s sale of stakes in Habeco and Sabeco
John Reed in Hanoi and Scheherazade Daneshkhu in London – FT
Every evening, large crowds quaff lager and munch on snacks at the 1B Bac Son beer garden next to Hanoi’s Ho Chi Minh museum — one of many around Vietnam, a nation of avid beer drinkers.


Automation Reshaping Thai Economy
Financial Tribune
T he size of Thailand’s shipment of industrial robots is estimated to increase by 133% from 2,131 units in 2013 to 7,500 units in 2018, according to Duangjai Asawachin­tachit, secretary-general of Thailand Board of Investment.


Taiwan boosts cyber defences against threat from China; Hacking attacks on ruling party raise fears Beijing will seek to sway polls next year
Edward White in Taipei – FT
Taiwan’s ruling party is bolstering its cyber defences after hacking attacks that have raised fears that groups linked to the Chinese government plan to influence elections.

South Korea

5 brokerages granted licenses for investment banking
Yonhap News Agency
South Korea’s financial regulator on Monday granted licenses to five brokerages so they can engage in investment banking businesses and help local firms become global players in this critical business sector going forward.

Foreign Shareholders at Financial Businesses Retreat from S. Korean Market
Yoon Yung Sil – Business Korea
Foreign major shareholders of South Korean financial businesses are turning their backs to the domestic market due to the political authorities are shaking the management rights of chief executive officers (CEOs) stemmed from corruption. As foreign shareholders are accepting the current situation as risks of the new government, leading to a selling spree, there is growing concern over a fall in the value of companies.


Asean’s economic future takes shape: Philippine Daily Inquirer
Straits Times
While Asean has been in existence as a mainly political group since 1967, it was only on Dec. 31, 2015, that a serious economic cooperation pact was signed among its member-states.


Malaysians’ lack of retirement planning awareness worrying, financial planner says
Financial planner Dr Niki Shuhada Shukor said the level of awareness among Malaysians on retirement financial planning is still very low and worrying and this is due to the lack of public awareness.

Corporate Malaysia grapples with leadership succession; Family-owned groups YTL, Genting, Public Bank and Hong Leong among big names facing handover issues
Leslie Lopez Regional Correspondent In Kuala Lumpur – Straits Times
For much of the last two decades, Tan Sri Francis Yeoh Sock Ping, the eldest of seven children, was favoured by his father to play the lead role in the transformation of YTL Group from a mid-tier construction group into one of Malaysia’s most diversified conglomerates.


What is India, US, Japan, Australia quadrilateral?
Financial Expresss
With the aim of countering China’s aggressive behaviour in the Indo-Pacific region, India, Australia, US and Japan; that comprise the proposed “quadrilateral” coalition held their first official talks in Manila.

Indian economy to leave Japan behind in next 10 years
Financial Express
India, according to a report by BofA Merrill Lynch Global Research, stands out among the large emerging economies and most likely to achieve strong growth over the next decade, leaving Japan behind.


Amazon Australia launch ‘really, really, really close’, says country manager
by Sue Mitchell – AFR
Amazon’s Australian country manager Rocco Braeuniger has left retailers and customers guessing about the exact date of the ecommerce giant’s Australian launch, saying only that it will be “really soon”.

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