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

Lead Stories

The Force Behind Bitcoin’s Meteoric Rise: Millions of Asian Investors; Retail investors, mostly in Asia, are pushing the price of bitcoin to new heights
By Steven Russolillo in Hong Kong and Eun-Young Jeong in Seoul – WSJ
Behind the stunning rise of bitcoin lies a new force in global financial markets: millions of individual Asian investors.
https://goo.gl/aYsvDC

Bitcoin surge prompts legal bid to remove Mt Gox from bankruptcy; Creditors say 40-fold rise in value means exchange’s assets now dwarf its liabilities
Leo Lewis in Tokyo – FT
A group of creditors pursuing a potentially vast bitcoin fortune from the imploded Mt Gox exchange have begun a legal action in Tokyo that would, if successful, remove the company from bankruptcy, disburse more than $3bn worth of coins among depositors and stop its former chief executive emerging from the debacle as a multibillionaire.
https://goo.gl/E7p4Rg

In Asia, investors are embracing bitcoin, though regulators are wary
KELVIN CHAN – Associated Press
The weekend launch of a U.S. futures contract for bitcoin reflects widespread acceptance of the virtual currency, especially among investors in Asia, though regulators are wary.
https://goo.gl/J7kShV

Cross-border electricity trading in South Asia, Myanmar, and Southeast Asia – 2017
Power-Technology.com
The South Asian economy continues its optimistic growth trend projected at 6.8% in 2017 and an average growth of 7.2% in 2018–2019 which is likely to increase the power demand of the region in the coming years (World Bank, 2017). But lack of adequate and reliable energy, seasonal hydro availability, stagnant natural gas production, and expensive oil imports act as roadblocks in the region’s economic growth. Furthermore, the power demand in the region is expected to rise from 1,111 terawatt hours (TWh) in 2017 to 3,012 TWh in 2030 at a compound annual growth rate (CAGR) of 8%; in India alone, demand is expected to reach 2,765 TWh by 2030.
https://goo.gl/jX56bs

Financial Fads That Give Bitcoin a Run For Its Money
BY BECKY LITTLE
Bitcoins, the first international digital currency, were kind of a joke when they debuted in 2009. But just eight years later, they’ve grown so lucrative that historian Niall Ferguson is mad at himself for not buying them sooner.
https://goo.gl/mj97rh

In Asia, Fiscal Credibility Gains Sway Over Push for Stimulus
By Enda Curran – Bloomberg
Governments are watching spending as debt levels climb; Fiscal caution comes as central banks tipped to tighten policy
Governments across Asia are keeping a wary eye on fiscal deficits and surging debt, providing only a modest cushion as central banks slowly begin raising interest rates.
https://goo.gl/azrVBW

Exchange News

Singapore exchange to increase members’ derivatives fees; Annual levies to rise as much as 10-fold to S$25,000 from next year
Emma Dunkley in Hong Kong – FT
The Singapore Exchange is to increase fees as much as 10-fold for derivative trading members next year, following a recent large technology upgrade.
https://goo.gl/ibJLT3

FinTech News

ASIC broadens fintech cooperation with Canadian regulators
ASIC
ASIC has today announced a Cooperation Agreement with Canadian regulators on fintech cooperation. This agreement expands the existing framework for information sharing and also allows the referral of innovative fintech businesses to and from Canada
https://goo.gl/RZLJSG

Thomson Reuters partner Hong Kong science institute on fintech innovation
Thomson Reuters
Thomson Reuters is partnering with the Hong Kong Applied Science and Technology Research Institute (ASTRI) to help accelerate the development of FinTech innovation by bringing technology, tools and content to the Innovation Hub launched jointly by ASTRI and the Hong Kong Monetary Authority (HKMA).
https://goo.gl/gXUkLs

Regulatory News

ASIC’s regulatory sandbox proposal to remain unchanged
ASIC
ASIC has today released a review of its regulatory sandbox, introduced in December 2016. In the review ASIC proposes to retain class waivers known as the fintech licensing exemption, that allow eligible financial technology (fintech) businesses to test certain specified services without holding an Australian financial services or credit licence. ASIC had committed to reviewing its fintech licensing exemption following 12-18 months’ operation.
https://goo.gl/5Qzgyw

Investing News

US company sues China’s HNA over failed deal; Complaint alleges group intentionally misled American authorities and disguised ownership
Don Weinland in Hong Kong – FT
HNA Group is facing a lawsuit in the US over a failed acquisition, with its takeover target alleging the Chinese conglomerate intentionally gave false information to US authorities and disguised its true ownership structure.
https://goo.gl/fxDcV6

Japan

Two decades after Japan’s financial crisis
The Japan Times
Twenty years after the financial system crisis that saw the collapse of major institutions such as Yamaichi Securities and Hokkaido Takushoku Bank, the nation’s big banking groups are moving to substantially reduce their workforce and domestic outlets in response to the changing business environment. The massive nonperforming loan woes that disrupted the banking sector in the 1990s have been mostly resolved after an injection of taxpayer money and a temporary nationalization of some banks. Major banks have been consolidated into three megabank groups, and the financial system seems to be much more stable. But the streamlining efforts by the big banks reflect their sense of crisis over the industry’s future. They should consider whether streamlining alone is enough to survive the tightening industry climate.
https://goo.gl/Qcsys6

Conventional wisdom on Japan is wrong; Solving its economic problems means doing something about private sector surpluses
Martin Wolf – FT
Why is Japan finding it so difficult to raise inflation to its 2 per cent target? Why has its monetary policy become so extreme? Why is Japan’s public debt so remarkably high? The answer is that the country shares challenges confronted by other high-income economies, but in extreme form. This does not mean its situation is disastrous. It means that conventional wisdom is misleading.
https://goo.gl/e8cfyL

Japan says its CO2 emissions inched to 6-year low in last financial year
Reuters Staff
Japan’s greenhouse gas emissions fell 0.2 percent to a six-year low in the financial year that ended last March, government figures showed on Tuesday, amid growing use of renewable energy and the gradual return of nuclear power.
https://goo.gl/pdXJov

Fed’s failure to tighten financial conditions a cause for concern; Neither the ECB nor the BoJ look set to tighten measurably, blunting US efforts
Michael Heise – FT
The Federal Reserve has raised interest rates three times since the end of 2016, and in September announced a reduction of its $4.5tn balance sheet. Despite the Fed’s gradual removal of monetary accommodation, monetary conditions have not tightened — they have become looser. Corporate credit spreads have declined, long-term interest rates have hardly changed, stock markets keep going up and the dollar has not appreciated markedly. What explains this apparent paradox? There are three possible reasons.
https://goo.gl/3erkk3

Japan-South Korea blockchain payments enter trials Friday; Banks hope Ripple tech slashes costs 30%, allows same-day funds transfer
Nikkei
Banks in Japan and South Korea begin tests Friday of blockchain technology from U.S. developer Ripple, aiming to achieve same-day international funds transfer while cutting costs by nearly 30%.
https://goo.gl/nm9kfu

Odds are against pachinko to steer clear of gambling rules; Japan no longer seems willing to overlook truth about vertical pinball and slot-machine
Leo Lewis – FT
Hiding a garish, blaring $200bn gambling industry in plain sight for half a century is a brilliant strategy as long as it works. When it does not, as Japan is now discovering, you cannot help but see an addictive legal anomaly that elicits a sum larger than the GDP of Portugal from its devotees every year.
https://goo.gl/BgDV5C

The Rich Are Getting Richer in Abe’s Japan
By James Mayger and Hannah Dormido – Bloomberg
Japan has an income-inequality problem, and it’s getting worse. While the country is enjoying its best stretch of growth since the mid 1990s, many are missing out.
https://goo.gl/UyHHx3

Mainland China

China Influence Fears Cost a Rising Political Star His Job; Australian lawmaker Sam Dastyari had taken donations from a billionaire Chinese businessman
By Rob Taylor – WSJ
The downfall of a prominent lawmaker is fueling a growing sense of unease in Australia about Chinese influence in the country’s domestic affairs, and raising tensions with its most important trading partner.
https://goo.gl/J3NtwF

IMF Warnings Of China’s Financial Fragility Come As No Surprise
Sara Hsu – Forbes
The IMF warned, in its recent Financial Sector Assessment Report, of China’s financial fragility, pointing to high levels of corporate debt and funding through wealth management products. The report found growing risks within the banking system, particularly outside of the Big Four state-owned banks. Although China’s central bank brushed aside the warning tone of the report, these cautions should ring true with analysts who have been closely monitoring the debt pileup across multiple sectors.
https://goo.gl/5Dyvzg

Why China’s Freezing; A well-meaning anti-pollution push turned into a debacle.
By Christopher Balding – Bloomberg
China is suffering from a frigid winter, but it can’t blame Mother Nature alone. Late last week, following a widespread uproar, officials reversed a policy banning some provinces from using coal for heat — which had the inadvertent but predictable effect of leaving large swathes of the country freezing cold.
https://goo.gl/LbC6qV

Hong Kong

Hong Kong investors go defensive in $3bn property auction; Link shopping-malls transaction deviates from speculative frenzy
Henny Sender – FT
When former South Korean president Park Geun-hye went to a Seoul prison cell last spring, many residents of Hong Kong could only express envy.
https://goo.gl/LP19Bc

Indonesia

Indonesia and Australia’s Foreign Policy White Paper; A shared understanding of the Indo-Pacific could form the basis of a stronger Indonesia-Australia partnership.
By Laura Allison-Reumann and Eko Saputro – The Diplomat
Australia’s new Foreign Policy White Paper, released in November – the first since 2003 – reiterated and emphasized the importance of the Australia-Indonesia relationship. This is nothing new, as the Rudd government’s “Indonesia Country Strategy” of 2013, and the Gillard government’s “Australia in the Asian Century” (2012) include Indonesia in their foreign policy focus. What is new in the latest White Paper is how closely Australia’s strategic relationship with Indonesia is placed within the context of the Indo-Pacific.
https://goo.gl/7qShjS

No escape: Climate displacement in Indonesia
Sairindri Gita Christisabrina – The Jakarta Post
As a country that is both prone to disasters and impacts of climate change, climate-induced displacement is not a new topic in Indonesia. As flooding, landslides, earthquakes, irregular droughts, and forest and peat fires become the recurrent events across the country, these events have significantly contributed to massive losses and damages, and severe impacts on human livelihoods.
https://goo.gl/j2FR2f

Eight banks appointed forex dealers
The Star
Bank Negara has appointed CIMB, Malayan Banking, Public Bank and RHB Bank to act as forex dealers under the regional settlement frameworks with Thailand and Indonesia.
https://goo.gl/FM9vT6

Singapore

Singapore drops 5 spots to rank 21st in priciest cities for expats: ECA International
Straits Times
Singapore has fallen out of the 20 priciest cities in the world for expatriates, ranking 21st out of 262 cities surveyed, the lowest it has been since 2014.
https://goo.gl/ba291o

The fall and rise of legal education in Singapore
Simon Chesterman – Straits Times
The 60th anniversary of legal education in Singapore offers a chance to look back on the history of the rule of law in Singapore – and forward to how the practice of law is changing.
https://goo.gl/aeeyxi

Vietnam

China, Vietnam vow to accelerate capital market cooperation
Xinhua
The China-Vietnam Capital Cooperation Forum was held on Tuesday, helping accelerate cooperation between the two countries’ capital markets and promoting two-way capital flow as well as supporting growth in their small and medium enterprise (SME) sectors.
https://goo.gl/gor4rc

ThaiBev Is Chief Bidder for Vietnam Beer Stake Deemed Pricey
By Giang Nguyen and Mai Ngoc Chau – Bloomberg
Company registers to buy at least 25% of Vietnam beer company; Stake in Sabeco would be valued at more than $2 billion
Vietnam’s largest stake sale is drawing tepid response as Thai Beverage Pcl emerges as the sole bidder willing to fork out more than $2 billion for a stake in Saigon Beer Alcohol Beverage Corp.
https://goo.gl/Uu2ke5

Thailand

Trilateral currency settlement pact agreed
PATHOM SANGWONGWANICH – BangkokPost
The Bank of Thailand together with Bank Indonesia (BI) and Bank Negara Malaysia (BNM) on Monday announced the launch of a local currency settlement framework between them to promote trade and investment…
https://goo.gl/21Gz5x

Taiwan

Huangfu, my respected Taiwan journalism professor
EJInsight.com
Three weeks ago, during a trip to Taipei, I asked Professor Huangfu Ho-Wang out to lunch. The professor, my former journalism teacher, didn’t say no, and joined me at a restaurant at a pre-arranged time.
https://goo.gl/ZbpwP3

Businessman urges Taiwanese youth to see the world
By Lin Chia-nan – Taipei Times
If Taiwan is said to be a “closed nation,” it is because it is subject to the influence of China and it overlooks its potential connections with other countries, Darwin Venture Management Co (達盈管理) cofounder Simon Fang (方頌仁) said yesterday, advising young people to broaden their horizons by visiting foreign countries.
https://goo.gl/gQS25a

South Korea

South Korea Is Not Banning Bitcoin Trade, Financial Regulators Clarify
Pamela Ambler – Forbes
Physical version of Bitcoin (new virtual money) and South Korea Flag. Conceptual image for investors in cryptocurrency and Blockchain Technology in South Korea.Shutterstock
Physical version of Bitcoin (new virtual money) and South Korea Flag. Conceptual image for investors in cryptocurrency and Blockchain Technology in South Korea.
Don’t panic just yet, South Korean regulators are putting a stop to the rumours that the government is banning all crypto transactions– they are not.
https://goo.gl/PBR2xj

South Korea to Allow Bitcoin Exchanges, Under Six Conditions
Finance Magnates
A positive step for the industry, but the punishment for illegal activity has also been strengthened.
https://goo.gl/dWsmC6

Malaysia

IMF gives thumbs up to Malaysia
FreeMalaysiaToday.com
The International Monetary Fund says Malaysia’s financial policies are sound, but can do with some adjustments, and that the economy is resilient.
https://goo.gl/LRk88T

Everything You Need to Know About Malaysia’s Election: Q&A
By Anisah Shukry – Bloomberg
Malaysia’s Prime Minister Najib Razak Photographer: Charles Pertwee/Bloomberg
Malaysia is preparing for a general election in 2018 and the outlook is promising for Prime Minister Najib Razak. It’s been an uncomfortable few years, with headlines swirling about a scandal over the finances of a state fund and unhappiness over rising living costs. But Najib is arguably in his strongest position since his narrow victory in the 2013 ballot, with the economy picking up and the opposition in disarray.
https://goo.gl/gyhpPi

India

India Not Realizing Full Potential
Financial Tribune
A new UN report flags subdued private investment in India as a major concern, which has declined as share of GDP from 40% in 2010 to 30% in 2017.
https://goo.gl/HhiHjS

Indian companies 3rd most optimistic globally on hiring plans
Financial Express
India is the third most optimistic nation in hiring intentions as 22 per cent of employers are expected to add more staff in the next three months while Taiwan topped the pack, says a survey.
https://goo.gl/qabVfL

Australia

Canada to buy used Australian jets over new Boeing aircraft
Rob Gillies – The Associated Press
Canada has ditched a plan to buy 18 Super Hornet jet fighters from U.S.-based Boeing and will instead buy 18 used F-18 fighters from Australia.
https://goo.gl/gc73Bx

Bitcoin Fascination Feels Like ‘Speculative Mania,’ RBA Says
By Michael Heath – Bloomberg
Reserve Bank of Australia chief scathing of cryptocurrencies; Lowe says Bitcoin more attractive to criminals than consumers
Australia’s central bank chief made a scathing assessment of Bitcoin, saying the cryptocurrency that’s soared above $17,000 is more likely to appeal to criminals than consumers.
https://goo.gl/iR2x9n

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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.