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Asia Pacific Financial News from John Lothian News – December 4, 2017

Lead Stories

Asia To Stay World’s Fastest-Growing Region Through 2030; Asia should remain the world’s economic heavyweight for another 10 years.
By Anthony Fensom – The Diplomat
The global economy is continuing its gradual recovery from the financial crisis, with the latest data pointing to a broad-based pickup. However, longer term Asia is seen maintaining its position as the fastest-growing region, with China and India leading the charge.

China Likely to Overtake U.S. as Largest Importer Within 5 Years; Shift to a more consumer-focused economy causing the change, CICC researchers say
Bloomberg News
From iron ore to baby formula, electronic parts to durian that smells like gym socks, China is buying everything you can think of, and that will soon make the world’s biggest exporter the top importer in the next few years.

Asian economic integration
By Mercedes B. Suleik – Business Mirror
On October 25 the Asian Development Bank (ADB) released a report on Asian Economic Integration and commented on the lessons learned after the Asian financial crisis 20 years ago.

North Korea missile tests are ‘imminent threat’: Japan
Financial Express
North Korea’s missile tests are an “imminent threat” to Japan, the Japanese parliament declared today, as Prime Minister Shinzo Abe said talking to the reclusive state was meaningless.

Trudeau’s Beijing Scramble Marks Another Canadian Trade Stumble
By Chris Fournier and Josh Wingrove – Bloomberg
Canada teed up ‘objective’ of China trade talks to no avail; leaders downplay tensions on first day of PM’s state visit
Monday could have been a turning point in China-Canada relations. Instead, it was a false start.

Citi’s Bullish on Commodities While Warning of Risk in China
By Pratish Narayanan – Bloomberg
Global growth to buttress raw material demand gains in 2018
China may slow, but capacity cuts and pollution curbs positive
There’s much to encourage commodity investors in 2018, if they can keep a wary eye out for wildcards including China, according to Citigroup Inc.

Exchange News

HKEX and SZSE Hold Seminar to Celebrate the 1st Anniversary of Shenzhen Connect
Hong Kong Exchanges and Clearing Limited (HKEX), the Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Co Ltd (CSDC) co-hosted a seminar in Shenzhen on 2 December to celebrate the first anniversary of Shenzhen-Hong Kong Stock Connect and explore ways to further improve the Connect programme.

FinTech News

Citi poaches eBay’s chief data officer in Asian retail push; Banks push back against tech groups’ raiding of their digital talent
Don Weinland in Hong Kong
Citigroup has poached eBay’s chief data officer to head up data and analytics for its retail operations in Asia, a sign that banks are pushing back against a trend that is sapping their talent to feed a boom in financial services at competing tech companies.

Japanese Financial Regulator Legalizes Four New Cryptocurrency Exchanges
Joshua Althauser –
Japan’s Financial Services Agency (FSA) has authorized the operation of four new virtual currency exchanges in the country as of early December 2017. The approved exchanges are already the second batch of companies authorized by the FSA. In late September, the agency has okayed the applications of the first batch of applicants consisting of 11 exchanges.

BOJ’s Kuroda calls for reforms to better use fintech
Reuters Staff
Bank of Japan Governor Haruhiko Kuroda on Monday urged financial institutions to reform their business structures to make effective use of financial technology, which is triggering big changes to global financial markets.

Regulatory News

Merrill Lynch Equities (Australia) Ltd pays $140,000 in infringement notice penalty
Merrill Lynch Equities (Australia) Limited (‘MLEA’) has paid a total penalty of $140,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (‘the MDP’).

Jersey Joins Asian Regulators in ICO Warning
The Jersey Financial Services Commission joined the likes of Hong Kong and Singaporean regulators in issuing a warning on initial coin offerings.

Securities Commission Malaysia Reprimands And Fines Five Directors Of Trive For Furnishing False Statements
Securities Commission Malaysia (SC) today reprimanded and fined five directors of TRIVE Property Group Bhd (Trive) for knowingly furnishing false or misleading statements in the 2014 audited financial statements of the company to SC and Bursa Malaysia.

Investing News

Asian banks see funding costs rise, making 2018 challenging
Business Times
It’s been a borrower’s market for a long time, in Asian syndicated loans as in the rest of the dollar universe. But Asia-Pacific lenders are facing increasing funding pressures, and a handful are aiming to pass those costs along – in another sign that the beginning of the end of ultra-easy money may be coming. Half of the 50 banks in a Bloomberg News survey have experienced an increase in funding cost of as much as 20 basis points over the past few months.

Foreign Investors Find a Handful of Gems Among Shenzhen Stocks
By Kana Nishizawa – Bloomberg
Exchange link providing access to market opened a year ago; Opportunities seen within index that’s fallen 8% in past year
Foreign investors are sticking with their favorite Shenzhen stocks even as the exchange they trade on has been left in the dust by the global equity rally.

Xiaomi Seeks Valuation of at Least $50 Billion in IPO
By Lulu Yilun Chen and Peter Elstrom – Bloomberg
Bankers are pitching Xiaomi management, despite some concerns; Xiaomi is said to consider an IPO in Hong Kong as soon as 2018
Xiaomi Corp., the Chinese smartphone maker that was once the most valuable startup in the world, is in talks with investment banks about a possible initial public offering and seeking a valuation of at least $50 billion, according to people familiar with the matter.


Japanese banks paying most for dollars since 2008; With rate gap set to widen, deposits and bonds can soften the blow
Expectations of a rise in U.S. interest rates have pushed the cost of buying dollars with yen to a nine-year high, a potential blow to Japanese banks seeking more business abroad as ultra-low rates squeeze domestic returns.

BOJ’s trim of bond purchases hints at ‘stealth tapering’; Central bank shifts to waiting game, looking out for financial institutions
The Bank of Japan is slowing the supply of money, arousing speculation that it is paving the way for a trimming of its ultra-easy monetary policy.

City of London signs agreement with Tokyo to boost collaboration
Helen Cahill – City AM
The City today committed to closer cooperation with Tokyo in a bid to boost trade between the financial services sectors in the UK and Japan.

Mainland China

Stop worrying about Chinese debt, a crisis is not brewing; Worries about credit expansion and a looming ‘Minsky moment’ are overblown
Chen Zhao – FT
Are rising debt-to-gross domestic product ratios around the world a sign that another financial crisis is looming? At a recent investment conference, I had a heated debate with an economist who claimed that rising indebtedness across the globe was a sure sign of renewed economic sickness and deterioration. “The Minsky moment will return,” he declared, pounding the table. He singled out China as the place where the next financial collapse would occur. Credit expansion there, he said, had grown “too much, too fast”.

Lexinfintech delays US IPO pricing as China reins in micro-loan sector: source
Business Times
Chinese consumer lending firm Lexinfintech will delay the pricing of its planned Nasdaq IPO to conduct more due diligence, a source with direct knowledge of the situation said – a move that comes after Beijing issued new rules to tighten control of the micro-loan sector.

China’s central bank believes bitcoin will die
Zheping Huang – Quartz
China once dominated the bitcoin markets, accounting for over 90% of global trading. But in September, its central bank banned initial coin offerings (ICOs) and stopped cryptocurrency exchanges from serving local customers. Looking back at the crackdowns, Pan Gongsheng, a deputy governor of the People’s Bank of China, believes Beijing made the right decisions.

China’s A.I. Advances Help Its Tech Industry, and State Security
During President Trump’s visit to Beijing, he appeared on screen for a special address at a tech conference. First he spoke in English. Then he switched to Mandarin Chinese.

China ‘zombie’ debt accounts for small slice of total, IMF says; Resolving lossmaking groups in overcapacity sectors will not solve broader debt problem
Gabriel Wildau in Shanghai – FT
Lossmaking “zombie” companies comprise a smaller share of China’s overall corporate debt than widely assumed, according to new International Monetary Fund research highlighting the broad challenge facing policymakers as they seek to control rising debt.

China hit by gas shortages as it moves away from coal; Small businesses and homes left in the cold as north of country targets pollution
Lucy Hornby and Archie Zhang in Beijing – FT
Gas-supply shortages are hitting north and central China as Beijing tries to accelerate a shift away from coal rather than miss environmental targets this year.

Hidden peril awaits China’s banks as property binge fuels mortgage fraud frenzy
Gravity-defying property prices in China have spawned widespread home-loan fraud as buyers fear missing out on what seems like a sure bet. Real estate agents, valuation companies and banks themselves are party to the scam.

China’s Infrastructure Binge Is Set for a Major Slowdown
Bloomberg News
Economists surveyed by Bloomberg see pace easing to 12% YoY; Goldman sees investment shifting to manufacturing gradually
China’s frenzied construction of roads, bridges and subways is set for a major slowdown, adding a headwind to economic growth in 2018.

China Banking Stress Indicator Eased for Fifth-Straight Quarter
Bloomberg News
Bloomberg Intelligence’s Francis Chan talks about the year ahead for Asia banks.
A warning indicator for banking stress in China fell for a fifth-straight quarter, signaling that the leadership’s drive to squeeze risk from the financial system is making progress.

Hong Kong

Hong Kong leader, bourse officials visit Saudi king
Top Hong Kong officials met Saudi Arabian King Salman in Riyadh on Sunday, Saudi state news agency reported, as the world’s leading stock exchanges compete to list oil giant Saudi Aramco


The Biggest Country in Southeast Asia to Ban Cryptocurrency; Indonesia passes legislation declaring all digital currency transactions illegal.
Simon Golstein – Finance Magnates
Indonesia is to ban all cryptocurrency use, according to a local media report.

Risk Mitigation and the Restructuring of Geothermal Funds in Indonesia
Dwina Soerono – ThinkGeoEnergy
In efforts to mitigate risks associated with geothermal upstream resource development phase, Indonesia is taking robust steps to establish effective de-risking mechanism for geothermal exploration activity.

Indonesia’s middle class vital for the country’s future
Expanding Indonesia’s middle class can help boost economic growth and broaden prosperity. This is a key message emerging from two new World Bank reports on the middle class in East Asia and Indonesia that were discussed on December 4 in Jakarta.

Bali volcano emits wispy plume of steam, flights resume
Gushing ash from Bali’s Mount Agung volcano has dissipated into a wispy plume of steam, and Australian airlines that cancelled some flights to the Indonesian resort island on the weekend have returned to near-normal schedules.


Branding Singapore as a talent hotbed is a passionate goal
Marcus Loh – Asia Times
Singapore’s new brand platform “Passion Made Possible” is an attempt at authenticity — taking an approach that conveys a facet of the Singapore spirit that both Singaporeans and visitors admire.

Singapore to improve price computations of SGS and MAS bills
It wants to guide primary dealers in determining the end-of-day prices. The Monetary Authority of Singapore (MAS) is proposing to strengthen the process of determining the end-of-day prices of Singapore Government Securities (SGS) and MAS bills in a consultation paper it released.


Fintech sees strong rise in Vietnam
VietNamNet Bridge – Foreign conglomerates have poured hundreds of millions of dollars into Vietnamese fintech firms, as more bank-fintech cooperation agreements have been signed recently.

Vietnam, UAE Among Countries Hoping to Dodge EU Tax Haven List
By Joe Kirwin – BNA
Fourteen countries or independent territories including the Cayman Islands, Aruba, Vietnam, Macao, the United Arab Emirates, and the Marshall Islands have made last-minute commitments to the European Union to avoid being on the bloc’s tax haven blacklist, due to be finalized Dec. 5.


Thailand moves to enhance bondholder protection
Business Recorder
Thailand is moving to beef up investor protection in the rapidly growing domestic bond market after a recent run of defaults in short-term securities. The Securities and Exchange Commission of Thailand has been meeting representatives from the bond industry over the past few weeks to sound out proposals and gather feedback. New rules are expected to be introduced next year to reduce the risks facing individual investors in both short-dated and long-dated bonds.


Taiwan and the UK agree to bolster trade relations; Trade talks held on Dec.1 yielded positive results for Taiwan-UK relations, especially in areas of agriculture and energy
By Duncan DeAeth,Taiwan News
TAIPEI (Taiwan News) – Official trade talks between the UK and Taiwan were held Dec. 1 in London, resulting in agreements to boost cooperation in agriculture, energy and the pharmaceutical industries.

FSC eyes firms failing governance rules; BREAKING POINT?The Financial Supervisory Commission is finalizing its assessment of companies, insisting that corporate governance is a priority of the commission
By Ted Chen – TaipaiTimes
In light of a streak of banking scandals this year, Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday said that the commission intends to impose penalties next week on companies that have failed to meet corporate governance requirements.

South Korea

South Korean Financial Authorities Plan to Regulate Bitcoin Exchanges Soon
Joseph Young – CoinTelegraph
Unverified rumors on the South Korean government’s potential crackdown on cryptocurrency trading circulated around online Bitcoin communities over the past few days.

US Drills in South Korea Trigger Nuclear War Warning From North
Financial Tribune
Two dozen US stealth jets were among hundreds of aircraft involved in war games intended as a show of strength to neighboring North Korea on Monday.


Philippines raises $5 bln from retail treasury bonds
The Philippine government has raised 255.4 billion pesos ($5.05 billion) from its latest retail treasury bond (RTB) issue, which the Bureau of Treasury said was more than eight times its initial offer.

Philippines Eyes Rules for Coin Offerings as Bitcoin Use Surges
By Siegfrid Alegado – Bloomberg
Central bank, securities regulator in talks on ICO oversight; Bitcoins worth $6 million remitted each month: central bank
The Philippines is looking at regulating so-called initial coin offerings, as the use of cryptocurrencies gains ground in the Southeast Asian nation.


Domestic Demand Lifts Malaysia Growth
I n the wake of weaker business conditions and consumer sentiment, coupled with a decline in manufacturing data, there are concerns that Malaysia’s recent strong economic growth may not be sustainable.


ADIA puts $100 million in KKR’s India credit platform
By Indulal PM, ET Bureau
Abu Dhabi’s sovereign wealth fund has invested about $100 million in the lending business of US private equity giant KKR & Co L P, with the New York-based asset manager using the proceeds to expand its credit and corporate loans portfolio in India.

India, Germany sign agreement to formalise EUR 200 million for financial cooperation
India and Germany on Monday signed a Government to Government Umbrella Agreement concerning Financial Cooperation in 2016 (II) under the Indo-German Development Cooperation.

India’s Small Business Are Ready To Boom, Thanks To Fintech
Prakash Mallya – Forbes
In this picture taken on September 25, 2017, an Indian man works on a machine at a garment factory in Ludhiana. (Photo credit: MONEY SHARMA/AFP/Getty Images)
Demonetization, connecting financial services to Aadhaar cards, and the onset of GST – three recent developments in India that highlight how the country has taken advantage of the digital economy opportunity. In 2017, India ranked second in the growth rate of fintech adoption among digitally active consumers across the globe; this surge was paralleled by the rise in fintech funding — receiving over $200 million in the first half of the year.

Vijay Mallya never ‘intended to repay’ Indian bank loans; India in UK court fight to secure extradition of tycoon over collapse of Kingfisher Airlines
Jane Croft in London – FT
Flamboyant tycoon Vijay Mallya never “intended to repay” loans from a government-owned Indian bank, lawyers for the Indian government told a London court on Monday.


Australian banks must wish they had Donald Trump, the great financial deregulator
by John Kehoe – AFR
Australian banks must yearn for a political leader like Donald Trump to be running financial sector policy Down Under. As a populist candidate during last year’s election, Trump slammed Wall Street bankers. A Trump campaign advertisement depicted Goldman Sachs chief Lloyd Blankfein as part of the “corrupt establishment”.

Australia is going to investigate Facebook and Google over news disruption, advertising
Financial Post
The government ordered the probe as part of wider media reforms, amid growing concern for the future of journalism and the quality of news

Sydney and Melbourne Are Fueling Two-Thirds of Australian Growth
By Michael Heath – Bloomberg
Australia’s two largest cities now account for more than two-thirds of the nation’s economic expansion, underscoring the concentration of growth drivers in a country that occupies an entire continent.

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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.