The Jakarta Globe RSS: Business http://www.thejakartaglobe.com 2013 The Jakarta Globe Your City, Your World Fri, 31 Jul 2015 10:22:45 +0000 en-US hourly 1 http://www.thejakartaglobe.com/images/jakarta-globe.gif http://www.thejakartaglobe.com Oil Falls After OPEC Comments Imply No Supply Cut http://thejakartaglobe.beritasatu.com/?p=428594 Fri, 31 Jul 2015 15:54:58 +0700 An oil well is seen near Denver, Colorado on Feb. 2, 2015. (Reuters Photo/Rick Wilking) An oil well is seen near Denver, Colorado on Feb. 2, 2015. (Reuters Photo/Rick Wilking)[/caption]
London. Oil prices fell on Friday as concern over global oversupply intensified after the head of oil producers' cartel OPEC indicated there would be no cuts in production despite a huge global oversupply. Benchmark North Sea Brent crude headed for its fifth consecutive weekly fall after comments on Thursday in Moscow by Abdullah al-Badri, secretary-general of the Organization of the Petroleum Exporting Countries. Badri said rising demand would prevent a further fall in oil prices and suggested cuts in OPEC output would not have much impact on the market. Brent was down 50 cents at $52.81 a barrel by 0825 GMT after settling 7 cents lower in the previous session. US light crude was 60 cents lower at $47.92 a barrel. OPEC members produced around 31.25 million barrels per day (bpd) in the second quarter, about 3 million bpd more than daily demand, a Reuters survey showed this week. The surplus oil has gone into stockpiles around the world, filling storage depots from China to Chile, and driving prices down sharply. Both major crude oil benchmarks are down more than 50 percent from a year ago. Figures from the US Energy Information Administration (EIA) this week showed total US oil stocks hit a third successive week of all-time highs at 1.969 billion barrels. Overall, US stocks are up 145 million barrels from a year ago. Tamas Varga, analyst at London brokerage PVM Oil Associates, said a brief pause in the downtrend appeared to be over and it might be time for investors to sell into the market. "It is now not unreasonable to be short," Varga said. "Today hopefully will (tell us) if the relatively stable performance of the last two days is a correction, or the market actually is about to bottom out. From the technical perspective it is probably the former." Investors awaited the release of US employment data later on Friday for indications on the direction of the dollar. Dollar strength has also weighed on oil prices in recent weeks as a higher US currency makes fuel more expensive for oil importers who earn euros, pounds and other currencies. The US data could provide further indication of whether the Federal Reserve will raise interest rates in September. Additional reporting by Keith Wallis Reuters
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An oil well is seen near Denver, Colorado on Feb. 2, 2015. (Reuters Photo/Rick Wilking) An oil well is seen near Denver, Colorado on Feb. 2, 2015. (Reuters Photo/Rick Wilking)[/caption]
London. Oil prices fell on Friday as concern over global oversupply intensified after the head of oil producers' cartel OPEC indicated there would be no cuts in production despite a huge global oversupply. Benchmark North Sea Brent crude headed for its fifth consecutive weekly fall after comments on Thursday in Moscow by Abdullah al-Badri, secretary-general of the Organization of the Petroleum Exporting Countries. Badri said rising demand would prevent a further fall in oil prices and suggested cuts in OPEC output would not have much impact on the market. Brent was down 50 cents at $52.81 a barrel by 0825 GMT after settling 7 cents lower in the previous session. US light crude was 60 cents lower at $47.92 a barrel. OPEC members produced around 31.25 million barrels per day (bpd) in the second quarter, about 3 million bpd more than daily demand, a Reuters survey showed this week. The surplus oil has gone into stockpiles around the world, filling storage depots from China to Chile, and driving prices down sharply. Both major crude oil benchmarks are down more than 50 percent from a year ago. Figures from the US Energy Information Administration (EIA) this week showed total US oil stocks hit a third successive week of all-time highs at 1.969 billion barrels. Overall, US stocks are up 145 million barrels from a year ago. Tamas Varga, analyst at London brokerage PVM Oil Associates, said a brief pause in the downtrend appeared to be over and it might be time for investors to sell into the market. "It is now not unreasonable to be short," Varga said. "Today hopefully will (tell us) if the relatively stable performance of the last two days is a correction, or the market actually is about to bottom out. From the technical perspective it is probably the former." Investors awaited the release of US employment data later on Friday for indications on the direction of the dollar. Dollar strength has also weighed on oil prices in recent weeks as a higher US currency makes fuel more expensive for oil importers who earn euros, pounds and other currencies. The US data could provide further indication of whether the Federal Reserve will raise interest rates in September. Additional reporting by Keith Wallis Reuters
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Uber to Invest $1b in India to Expand Services http://thejakartaglobe.beritasatu.com/?p=428592 Fri, 31 Jul 2015 15:46:31 +0700 The Uber smartphone app, used to book taxis using its service, is pictured over a parking lot as auto-rickshaws, background, ply a road in the Indian capital New Delhi on Dec. 7, 2014. (AFP Photo/Tengku Bahar) The Uber smartphone app, used to book taxis using its service, is pictured over a parking lot as auto-rickshaws, background, ply a road in the Indian capital New Delhi on Dec. 7, 2014. (AFP Photo/Tengku Bahar)[/caption]
Uber Technologies will invest $1 billion in India in the next nine months, as the online taxi-hailing company looks to expand its services in its biggest market outside the United States. Uber said it would use the additional investment to improve operations, expand beyond the 18 Indian cities where it now operates, and develop new products and payment solutions. "We are extremely bullish on the Indian market and see tremendous potential here," Amit Jain, president of Uber India said in a statement on Friday. "Uber has grown exponentially in India." Uber said India and China are its priority markets. It had said last month that it would invest more than $1 billion in China this year as it looks to rev up growth in the world's second largest economy. Uber operates in 57 countries, with an estimated value of more than $40 billion. But it has tangled with transport authorities across the globe, along with attorneys seeking to deem Uber drivers as employees entitled to benefits. In India, Uber has been at odds with authorities in the capital, New Delhi, where the government banned its services after an Uber driver was accused of rape in December. But a court revoked the ban this month. After the incident, Uber tightened its driver screening and in-app safety features. It has also modified its global business model to accept cash payment in some Indian cities. The company on Friday said it aimed to attain 1 million rides daily in India within six to nine months. An industry source said Uber now records 200,000 trips daily. Reuters
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The Uber smartphone app, used to book taxis using its service, is pictured over a parking lot as auto-rickshaws, background, ply a road in the Indian capital New Delhi on Dec. 7, 2014. (AFP Photo/Tengku Bahar) The Uber smartphone app, used to book taxis using its service, is pictured over a parking lot as auto-rickshaws, background, ply a road in the Indian capital New Delhi on Dec. 7, 2014. (AFP Photo/Tengku Bahar)[/caption]
Uber Technologies will invest $1 billion in India in the next nine months, as the online taxi-hailing company looks to expand its services in its biggest market outside the United States. Uber said it would use the additional investment to improve operations, expand beyond the 18 Indian cities where it now operates, and develop new products and payment solutions. "We are extremely bullish on the Indian market and see tremendous potential here," Amit Jain, president of Uber India said in a statement on Friday. "Uber has grown exponentially in India." Uber said India and China are its priority markets. It had said last month that it would invest more than $1 billion in China this year as it looks to rev up growth in the world's second largest economy. Uber operates in 57 countries, with an estimated value of more than $40 billion. But it has tangled with transport authorities across the globe, along with attorneys seeking to deem Uber drivers as employees entitled to benefits. In India, Uber has been at odds with authorities in the capital, New Delhi, where the government banned its services after an Uber driver was accused of rape in December. But a court revoked the ban this month. After the incident, Uber tightened its driver screening and in-app safety features. It has also modified its global business model to accept cash payment in some Indian cities. The company on Friday said it aimed to attain 1 million rides daily in India within six to nine months. An industry source said Uber now records 200,000 trips daily. Reuters
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Elnusa's Profit Declines 25.6% in H1 http://thejakartaglobe.beritasatu.com/?p=428544 Fri, 31 Jul 2015 14:52:47 +0700 Jakarta. Listed local oil and gas company Elnusa posted a 25.6 percent decline in profit in the first half of this year on the back of flagging prospects of the petroleum industry following the decline of global oil prices, the company said in a statement on Friday. Elnusa reported Rp 132.7 billion ($9.82 million) in net income in the first six months of this year compared to Rp 178.3 billion it posted in the same period last year. The company's revenues also fell 10.4 percent to Rp 1.8 trillion from Rp 2 trillion in the same period a year before. However, Elnusa managed to decrease costs by 11.2 percent to Rp 1.5 trillion as part of the company's efficiency efforts. "The achievement in the first half of 2015 showed that amid the pressure on revenues the company keeps performing well. Project and financial management and also efficiency are all in line to maintain performance," Budi Raharjo, Elnusa's financial director, said in the statement. Budi remained optimistic as he claimed that the profit in the first half last year had contributed to Rp 87 billion in asset sales. Thus, he applauded the company's performance this year, citing that if the profit from the asset sales had been scrapped, the first semester's profit this year would have grown by 46.2 percent. "The performance result this semester is the outcome of hard work from all company's lines to bolster the profit in the middle of a weakening oil and gas industry," he said. Elnusa's big projects like seismic surveys in Cirebon, West Java and Langkat, North Sumatra and the HWU-Snubbing project in Kalimantan are expected to boost the company's performance in the future. The company, through its geosciences unit, secured seismic survey projects in West Java, North Sumatra and North Kalimantan worth $84 million in late June for varying periods from eight to 21 months. GlobeAsia]]> Jakarta. Listed local oil and gas company Elnusa posted a 25.6 percent decline in profit in the first half of this year on the back of flagging prospects of the petroleum industry following the decline of global oil prices, the company said in a statement on Friday. Elnusa reported Rp 132.7 billion ($9.82 million) in net income in the first six months of this year compared to Rp 178.3 billion it posted in the same period last year. The company's revenues also fell 10.4 percent to Rp 1.8 trillion from Rp 2 trillion in the same period a year before. However, Elnusa managed to decrease costs by 11.2 percent to Rp 1.5 trillion as part of the company's efficiency efforts. "The achievement in the first half of 2015 showed that amid the pressure on revenues the company keeps performing well. Project and financial management and also efficiency are all in line to maintain performance," Budi Raharjo, Elnusa's financial director, said in the statement. Budi remained optimistic as he claimed that the profit in the first half last year had contributed to Rp 87 billion in asset sales. Thus, he applauded the company's performance this year, citing that if the profit from the asset sales had been scrapped, the first semester's profit this year would have grown by 46.2 percent. "The performance result this semester is the outcome of hard work from all company's lines to bolster the profit in the middle of a weakening oil and gas industry," he said. Elnusa's big projects like seismic surveys in Cirebon, West Java and Langkat, North Sumatra and the HWU-Snubbing project in Kalimantan are expected to boost the company's performance in the future. The company, through its geosciences unit, secured seismic survey projects in West Java, North Sumatra and North Kalimantan worth $84 million in late June for varying periods from eight to 21 months. GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=428544 JCI Picks Up on Friday Despite Poor Results From Consumer Giants http://thejakartaglobe.beritasatu.com/?p=428549 Fri, 31 Jul 2015 17:22:08 +0700 [Updated at 05:15 p.m. on Friday, Jul. 31 , 2015 to add the closing prices] Jakarta. Indonesia's main stock index climbed more than 1 percent in the morning trading session on Friday, seemingly unmoved by the plethora of disappointing first-half earnings results as investors picked up cheap stocks in anticipation of recovering economy in the second half. The Jakarta Composite Index (JCI) rose 1.3 percent to 4,775.1 by the end of the first trading session. The index has been on a declining trend, with Friday's point at 13 percent lower than its record high in April. The index went on gaining 1.9 percent to 4,802.53 at the end of the trading day, recovering some of its 3 percent loss earlier this week. "The investors have priced in that there would be a slowdown, so they've anticipated by selling the stock before the financial results were released and when prices have almost reached its bottom limit, investors start collecting again," said Reza Priyambada, head of research at NH Korindo Securities, on Friday. "Investors are also realizing that the company's financial results are not all that bad. It's weakening and that's just the condition today. So, investors are not panicking as much," he added. Consumer goods giant Indofood Sukses Makmur, which reported its first-half financial result on Friday, is among the stocks on the local bourse that booked bullish growth in the first trading session, despite the company's sharp decline in profit. The company's shares, listed under INDF, closed 3.4 percent higher to Rp 6,100 on Friday. In a statement published on Bisnis Indonesia on Friday, profit at the world's largest instant noodle producer fell by 26 percent to Rp 1.7 trillion ($111 million) in the first half of the year, worsened by ballooning expenses. The cost of goods sold at Indofood rose 4 percent to Rp 24 trillion and selling expenses to Rp 3.5 trillion. In comparison, sales eked out a 4 percent growth to Rp 32.6 trillion during the six-month period. Aside from Indofood, shares of Gudang Garam, a leading clove cigarette maker in Indonesia listed under GGRM, climbed 5.3 percent to Rp 49,500 as of the first trading session on Friday, although the company struggled to boost profit in the first six months of the year. Gudang Garam's profits slid 11 percent to Rp 2.4 trillion in the first half the year as sales moved by a meager 1.6 percent to Rp 33.2 trillion. Shares of Unilever Indonesia, a leading domestic goods producer in Indonesia, also enjoyed a big jump during the first trading session on Friday as it surged by 3 percent to Rp 39,674. The company's shares fell by 3 percent on the day before, after Unilever Indonesia reported meager profit growth of 2 percent to Rp 2.9 trillion in the first half of the year. According to Reza, much of the bullish sentiment pushing consumer goods stocks like Gudang Garam and Indofood is due to the high-demand nature of the products from the companies. "For the remainder of the year, we're still hoping for a potential pick-up in purchasing power in the third and fourth quarter, especially with the upcoming regional elections," Reza said. "If that happens, the condition should improve." GlobeAsia]]> [Updated at 05:15 p.m. on Friday, Jul. 31 , 2015 to add the closing prices] Jakarta. Indonesia's main stock index climbed more than 1 percent in the morning trading session on Friday, seemingly unmoved by the plethora of disappointing first-half earnings results as investors picked up cheap stocks in anticipation of recovering economy in the second half. The Jakarta Composite Index (JCI) rose 1.3 percent to 4,775.1 by the end of the first trading session. The index has been on a declining trend, with Friday's point at 13 percent lower than its record high in April. The index went on gaining 1.9 percent to 4,802.53 at the end of the trading day, recovering some of its 3 percent loss earlier this week. "The investors have priced in that there would be a slowdown, so they've anticipated by selling the stock before the financial results were released and when prices have almost reached its bottom limit, investors start collecting again," said Reza Priyambada, head of research at NH Korindo Securities, on Friday. "Investors are also realizing that the company's financial results are not all that bad. It's weakening and that's just the condition today. So, investors are not panicking as much," he added. Consumer goods giant Indofood Sukses Makmur, which reported its first-half financial result on Friday, is among the stocks on the local bourse that booked bullish growth in the first trading session, despite the company's sharp decline in profit. The company's shares, listed under INDF, closed 3.4 percent higher to Rp 6,100 on Friday. In a statement published on Bisnis Indonesia on Friday, profit at the world's largest instant noodle producer fell by 26 percent to Rp 1.7 trillion ($111 million) in the first half of the year, worsened by ballooning expenses. The cost of goods sold at Indofood rose 4 percent to Rp 24 trillion and selling expenses to Rp 3.5 trillion. In comparison, sales eked out a 4 percent growth to Rp 32.6 trillion during the six-month period. Aside from Indofood, shares of Gudang Garam, a leading clove cigarette maker in Indonesia listed under GGRM, climbed 5.3 percent to Rp 49,500 as of the first trading session on Friday, although the company struggled to boost profit in the first six months of the year. Gudang Garam's profits slid 11 percent to Rp 2.4 trillion in the first half the year as sales moved by a meager 1.6 percent to Rp 33.2 trillion. Shares of Unilever Indonesia, a leading domestic goods producer in Indonesia, also enjoyed a big jump during the first trading session on Friday as it surged by 3 percent to Rp 39,674. The company's shares fell by 3 percent on the day before, after Unilever Indonesia reported meager profit growth of 2 percent to Rp 2.9 trillion in the first half of the year. According to Reza, much of the bullish sentiment pushing consumer goods stocks like Gudang Garam and Indofood is due to the high-demand nature of the products from the companies. "For the remainder of the year, we're still hoping for a potential pick-up in purchasing power in the third and fourth quarter, especially with the upcoming regional elections," Reza said. "If that happens, the condition should improve." GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=428549 Pacific Trade Negotiators Chase Elusive Final Deal in Tough Talks http://thejakartaglobe.beritasatu.com/?p=428561 Fri, 31 Jul 2015 14:10:46 +0700 Lahaina, Hawaii. Pacific Rim trade ministers neared the final spurt of negotiations on an ambitious free trade pact on Thursday, but differences over farm exports and monopoly periods for next-generation drugs kept them short of an elusive final deal. Ministers from the 12 countries negotiating the Trans-Pacific Partnership (TPP), which would cut trade barriers and set common standards for 40 percent of the world economy, are meeting in Hawaii to try to hammer out a deal. But major issues are still unresolved, including dairy exports and exclusivity periods for biologic drugs. The United States is pushing for 12 years but Australia and other countries worried about the impact on medicine prices want five. "They are few but very contested," Mexican Trade Minister Ildefonso Guajardo told Reuters of the outstanding issues. "I think that the negotiators will have to work through the night," Japanese Economy Minister Akira Amari said. A final news conference is scheduled for 1:30 p.m. on Friday (23:30 GMT). Ministers appeared relaxed as they were garlanded with leis for an official photo. "It's tough," said one official involved in the talks, who declined to be identified because of the sensitivity of the discussions, which seek to meld one-on-one negotiations over market access with a one-size-fits-all approach to rules. "There are issues on dairy, on intellectual property, but it's not always clear where things stand. I know about my issues but I don't always know what's happening with other countries." About 650 officials from 12 nations are taking part in the negotiations on the Hawaiian island of Maui, with numerous lobby groups and stakeholders also attending. Negotiators have stressed they are doing their utmost to close the deal this week but also warned that not all industries will get what they want, amid a flurry of last-minute appeals. Tobacco talks US lawmakers, including from tobacco-growing states such as North Carolina, renewed warnings against excluding tobacco from rules allowing foreign companies to sue a host government. An official briefed on the talks said there was discussion of a US-initiated exception in Maui. It would be narrower than the broad exclusion for health and environmental policy sought by Australia, which is being sued by Marlboro maker Philip Morris over tobacco plain packaging laws. Australian Trade Minister Andrew Robb said on Tuesday that countries were "well down the track" on securing protection from litigation over health and environment policy. He said on Thursday investment rules and sugar remained open. Australia's bid to export more sugar to the United States has the backing of US confectioners and beverage companies. "The United States needs to grant Australia commercially meaningful access," Sweetener Users Association chairman Perry Cerminara, who also handles sugar for chocolate maker The Hershey, wrote in a letter to US Trade Representative Michael Froman. U.S. canegrowers oppose more imports, and Mexico is keen to safeguard its preferential access to the US sugar market. "Of course we all have to make an effort, but the effort has to be in line with the principle ... that the very, very, very sensitive products are subject to a less aggressive schedule of market opening," Guajardo said when asked about sugar. Dairy is another tricky issue, with New Zealand, Australia and the United States frustrated with Canada, and New Zealand and Australia also looking for more access to US and Japanese markets. Robb said dairy was moving in "very tiny steps." Australian Dairy Industry Council chairman Noel Campbell said discussions had gone backwards in some cases and he had hoped for more progress. Canada hit back at complaints that it is holding up a deal. "To say that one particular issue is a sticking point to a potential deal just isn't based in reality. A number of very serious issues remain for countries to negotiate," said Rick Roth, spokesman for Trade Minister Ed Fast. Reuters]]> Lahaina, Hawaii. Pacific Rim trade ministers neared the final spurt of negotiations on an ambitious free trade pact on Thursday, but differences over farm exports and monopoly periods for next-generation drugs kept them short of an elusive final deal. Ministers from the 12 countries negotiating the Trans-Pacific Partnership (TPP), which would cut trade barriers and set common standards for 40 percent of the world economy, are meeting in Hawaii to try to hammer out a deal. But major issues are still unresolved, including dairy exports and exclusivity periods for biologic drugs. The United States is pushing for 12 years but Australia and other countries worried about the impact on medicine prices want five. "They are few but very contested," Mexican Trade Minister Ildefonso Guajardo told Reuters of the outstanding issues. "I think that the negotiators will have to work through the night," Japanese Economy Minister Akira Amari said. A final news conference is scheduled for 1:30 p.m. on Friday (23:30 GMT). Ministers appeared relaxed as they were garlanded with leis for an official photo. "It's tough," said one official involved in the talks, who declined to be identified because of the sensitivity of the discussions, which seek to meld one-on-one negotiations over market access with a one-size-fits-all approach to rules. "There are issues on dairy, on intellectual property, but it's not always clear where things stand. I know about my issues but I don't always know what's happening with other countries." About 650 officials from 12 nations are taking part in the negotiations on the Hawaiian island of Maui, with numerous lobby groups and stakeholders also attending. Negotiators have stressed they are doing their utmost to close the deal this week but also warned that not all industries will get what they want, amid a flurry of last-minute appeals. Tobacco talks US lawmakers, including from tobacco-growing states such as North Carolina, renewed warnings against excluding tobacco from rules allowing foreign companies to sue a host government. An official briefed on the talks said there was discussion of a US-initiated exception in Maui. It would be narrower than the broad exclusion for health and environmental policy sought by Australia, which is being sued by Marlboro maker Philip Morris over tobacco plain packaging laws. Australian Trade Minister Andrew Robb said on Tuesday that countries were "well down the track" on securing protection from litigation over health and environment policy. He said on Thursday investment rules and sugar remained open. Australia's bid to export more sugar to the United States has the backing of US confectioners and beverage companies. "The United States needs to grant Australia commercially meaningful access," Sweetener Users Association chairman Perry Cerminara, who also handles sugar for chocolate maker The Hershey, wrote in a letter to US Trade Representative Michael Froman. U.S. canegrowers oppose more imports, and Mexico is keen to safeguard its preferential access to the US sugar market. "Of course we all have to make an effort, but the effort has to be in line with the principle ... that the very, very, very sensitive products are subject to a less aggressive schedule of market opening," Guajardo said when asked about sugar. Dairy is another tricky issue, with New Zealand, Australia and the United States frustrated with Canada, and New Zealand and Australia also looking for more access to US and Japanese markets. Robb said dairy was moving in "very tiny steps." Australian Dairy Industry Council chairman Noel Campbell said discussions had gone backwards in some cases and he had hoped for more progress. Canada hit back at complaints that it is holding up a deal. "To say that one particular issue is a sticking point to a potential deal just isn't based in reality. A number of very serious issues remain for countries to negotiate," said Rick Roth, spokesman for Trade Minister Ed Fast. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=428561 China Stock Regulator Probes Market Impact of Automated Trading http://thejakartaglobe.beritasatu.com/?p=428529 Fri, 31 Jul 2015 11:29:09 +0700 Shanghai. China's securities regulator on Friday said it is investigating the impact of automated trading on the market, as Beijing intensifies pressure on its financial industry in the wake of a share-price plunge. The China Securities Regulatory Commission (CSRC), in an announcement on its official microblog, also said it had restricted 24 stock trading accounts for suspected irregularities, including abnormal bids for shares and bid cancellations that might have impacted wider market performance. The Chinese government has massively intervened on multiple fronts to rescue its stock market after it slumped over 30 percent in less than four weeks following June 12. But it has struggled to produce a sustainable turnaround. It appears Beijing is trying to reinforce the "national team" of brokerages and banks that have pledged to buy and hold shares until markets recover. The effort could be sabotaged if sophisticated investors use fancy trading techniques to profit from volatility or manipulate prices. In addition to moving more state and private money into the stock market to stem a panic, Beijing has also campaigned against "malicious short selling", which some have blamed for the precipitous slide. Heavy regulator pressure has been applied to trading in derivatives, especially index futures, and now regulators appears to be concerned about the impact of automated trading strategies. Wang Feng, CEO of Alpha Squared Capital, a Chinese hedge fund that uses such strategies, said his business is unlikely to be affected. "The CSRC is only targeting those who use program trading to frequently submit and then cancel bids, thus disturbing the market and manipulating prices," he said. Seeking a scapegoat?  "Such a practice is closely watched by regulators in the US as well." However, many Chinese professional investors have accused Beijing of making derivatives and other trading strategies a scapegoat, which they fear is hobbling efforts to upgrade China's financial industry. As Chinese stock markets are still up about 50 percent in the past 12 months, many investors say Beijing is overreacting, although others contend the rally's highly leveraged nature implies a wider economic risk if indexes collapse. Many funds management companies have invested heavily in staff and technology to profit from China's recently developed derivatives markets and from using high frequency or algorithmic trade to make money from small movements in stock prices, as in the US. "How do you define what is malicious?" said one hedge fund manager. "The changing rules have a big impact on hedge funds' businesses, preventing them from executing their strategies properly." Reuters]]> Shanghai. China's securities regulator on Friday said it is investigating the impact of automated trading on the market, as Beijing intensifies pressure on its financial industry in the wake of a share-price plunge. The China Securities Regulatory Commission (CSRC), in an announcement on its official microblog, also said it had restricted 24 stock trading accounts for suspected irregularities, including abnormal bids for shares and bid cancellations that might have impacted wider market performance. The Chinese government has massively intervened on multiple fronts to rescue its stock market after it slumped over 30 percent in less than four weeks following June 12. But it has struggled to produce a sustainable turnaround. It appears Beijing is trying to reinforce the "national team" of brokerages and banks that have pledged to buy and hold shares until markets recover. The effort could be sabotaged if sophisticated investors use fancy trading techniques to profit from volatility or manipulate prices. In addition to moving more state and private money into the stock market to stem a panic, Beijing has also campaigned against "malicious short selling", which some have blamed for the precipitous slide. Heavy regulator pressure has been applied to trading in derivatives, especially index futures, and now regulators appears to be concerned about the impact of automated trading strategies. Wang Feng, CEO of Alpha Squared Capital, a Chinese hedge fund that uses such strategies, said his business is unlikely to be affected. "The CSRC is only targeting those who use program trading to frequently submit and then cancel bids, thus disturbing the market and manipulating prices," he said. Seeking a scapegoat?  "Such a practice is closely watched by regulators in the US as well." However, many Chinese professional investors have accused Beijing of making derivatives and other trading strategies a scapegoat, which they fear is hobbling efforts to upgrade China's financial industry. As Chinese stock markets are still up about 50 percent in the past 12 months, many investors say Beijing is overreacting, although others contend the rally's highly leveraged nature implies a wider economic risk if indexes collapse. Many funds management companies have invested heavily in staff and technology to profit from China's recently developed derivatives markets and from using high frequency or algorithmic trade to make money from small movements in stock prices, as in the US. "How do you define what is malicious?" said one hedge fund manager. "The changing rules have a big impact on hedge funds' businesses, preventing them from executing their strategies properly." Reuters]]> http://thejakartaglobe.beritasatu.com/?p=428529 BRI Profits Up 2% Amid Slow Lending Growth http://thejakartaglobe.beritasatu.com/?p=428510 Fri, 31 Jul 2015 10:13:39 +0700 Jakarta. Profits at Bank Rakyat Indonesia and its subsidiaries inched up less than 2 percent in the first half this year, as rising overhead and interest costs took their toll amid slowing loan growth. BRI's net income rose to Rp 11.9 trillion ($883 million) in the first six months this year, up from Rp 11.7 trillion  in the same period last year, according to a statement from the lender published in Investor Daily on Friday. Without the earnings of its subsidiaries, BRI's profit rose 1.5 percent from the same period a year ago. The lender's net interest income -- derived from interest gained from loans given to customers -- increased 2.8 percent to Rp 25.8 trillion. However, net overhead costs rose at a much greater pace: 19 percent, to Rp 13.6 trillion. Wage costs rose 17 percent to Rp 7.6 trillion, in line with the lender's expansion. BRI's total outstanding loans expanded to Rp 509 trillion, up 2.8 percent from a year ago. Just last year, however, the lender was registering double-digit growth figures. The lender's third party fund -- customers' savings, time deposits and current accounts -- stood at Rp 579 trillion, down 4.4 percent from a year ago. As a result, BRI's assets contracted 3.6 percent to Rp 773 trillion. GlobeAsia  ]]> Jakarta. Profits at Bank Rakyat Indonesia and its subsidiaries inched up less than 2 percent in the first half this year, as rising overhead and interest costs took their toll amid slowing loan growth. BRI's net income rose to Rp 11.9 trillion ($883 million) in the first six months this year, up from Rp 11.7 trillion  in the same period last year, according to a statement from the lender published in Investor Daily on Friday. Without the earnings of its subsidiaries, BRI's profit rose 1.5 percent from the same period a year ago. The lender's net interest income -- derived from interest gained from loans given to customers -- increased 2.8 percent to Rp 25.8 trillion. However, net overhead costs rose at a much greater pace: 19 percent, to Rp 13.6 trillion. Wage costs rose 17 percent to Rp 7.6 trillion, in line with the lender's expansion. BRI's total outstanding loans expanded to Rp 509 trillion, up 2.8 percent from a year ago. Just last year, however, the lender was registering double-digit growth figures. The lender's third party fund -- customers' savings, time deposits and current accounts -- stood at Rp 579 trillion, down 4.4 percent from a year ago. As a result, BRI's assets contracted 3.6 percent to Rp 773 trillion. GlobeAsia  ]]> http://thejakartaglobe.beritasatu.com/?p=428510 Japan Spending Slump Heightens Chance of Q2 Contraction http://thejakartaglobe.beritasatu.com/?p=428502 Fri, 31 Jul 2015 10:06:36 +0700 A shopper looks at items inside a discount store at a shopping district in Tokyo, Japan,  on July 29, 2015. Japanese retail sales rose 0.9 percent in the year to June but the pace of growth slowed for a second straight month, a sign consumer spending has yet to build enough momentum to be a key driver of economic growth. (Reuters Photo/Yuya Shino) A shopper looks at items inside a discount store at a shopping district in Tokyo, Japan, on July 29, 2015. Japanese retail sales rose 0.9 percent in the year to June but the pace of growth slowed for a second straight month, a sign consumer spending has yet to build enough momentum to be a key driver of economic growth. (Reuters Photo/Yuya Shino)[/caption]
Tokyo.  Japan's household spending unexpectedly fell and inflation stalled in June, heightening the chance the economy may have contracted in April-June and casting doubt on the central bank's view growth will rebound solidly in the current quarter. Friday's batch of soft data underscores the challenges the Bank of Japan faces in reflating the economy to meet its ambitious 2 percent price target, and may re-kindle expectations of additional monetary stimulus later this year, analysts say. The BOJ has signalled it feels no need to expand stimulus now, stressing that it will look through the effect of last year's oil rout that is mainly behind the slowdown in inflation. But some analysts warn it may be forced to act later this year if consumption fails to pick up, prolonging the soft patch and discouraging companies from raising prices. "If the BOJ were to ease this year, it will probably be in response to weakness in the economy than to inflation figures," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. "Risks to the economic outlook are clearly tilted to the downside and with consumption so weak, we may not see a clear rebound in growth in July-September as the BOJ projects." Outlook murkier Annual core consumer inflation, which includes oil products but excludes volatile fresh food prices, rose 0.1 percent in June, government data showed, slightly exceeding market expectations of no change. But core consumer prices in Tokyo, a leading indicator of nationwide inflation, fell 0.1 percent in July, marking the first annual decline since April 2013. More worryingly, household spending fell 2.0 percent in the year to June after rising 4.8 percent in the previous month, confounding market expectations for a 1.7 percent increase. While the government blamed rainy weather for deterring shoppers, weak demand for cars and housing suggest the rising cost of living is denting appetite for big-ticket items. The soft spending figures, used to calculate GDP, reinforced views the economy probably contracted in the second quarter. It also cast doubt on the BOJ's rosy scenario betting that a tightening job market will nudge up wages and boost consumption, helping achieve its price target by around September next year. Many analysts agree with the BOJ's view that growth will rebound in the third quarter. But there is uncertainty on how strong the pick-up will be given soft global demand, particularly in Asia, that is weighing on exports and output. Even some within the BOJ, such as board member Koji Ishida, acknowledge uncertainties surrounding the bank's rosy forecast. "There's a risk the recent softness in exports and output may hurt corporate sentiment just when companies were beginning to turn more aggressive on investment," he said on Thursday. Reuters
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A shopper looks at items inside a discount store at a shopping district in Tokyo, Japan,  on July 29, 2015. Japanese retail sales rose 0.9 percent in the year to June but the pace of growth slowed for a second straight month, a sign consumer spending has yet to build enough momentum to be a key driver of economic growth. (Reuters Photo/Yuya Shino) A shopper looks at items inside a discount store at a shopping district in Tokyo, Japan, on July 29, 2015. Japanese retail sales rose 0.9 percent in the year to June but the pace of growth slowed for a second straight month, a sign consumer spending has yet to build enough momentum to be a key driver of economic growth. (Reuters Photo/Yuya Shino)[/caption]
Tokyo.  Japan's household spending unexpectedly fell and inflation stalled in June, heightening the chance the economy may have contracted in April-June and casting doubt on the central bank's view growth will rebound solidly in the current quarter. Friday's batch of soft data underscores the challenges the Bank of Japan faces in reflating the economy to meet its ambitious 2 percent price target, and may re-kindle expectations of additional monetary stimulus later this year, analysts say. The BOJ has signalled it feels no need to expand stimulus now, stressing that it will look through the effect of last year's oil rout that is mainly behind the slowdown in inflation. But some analysts warn it may be forced to act later this year if consumption fails to pick up, prolonging the soft patch and discouraging companies from raising prices. "If the BOJ were to ease this year, it will probably be in response to weakness in the economy than to inflation figures," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. "Risks to the economic outlook are clearly tilted to the downside and with consumption so weak, we may not see a clear rebound in growth in July-September as the BOJ projects." Outlook murkier Annual core consumer inflation, which includes oil products but excludes volatile fresh food prices, rose 0.1 percent in June, government data showed, slightly exceeding market expectations of no change. But core consumer prices in Tokyo, a leading indicator of nationwide inflation, fell 0.1 percent in July, marking the first annual decline since April 2013. More worryingly, household spending fell 2.0 percent in the year to June after rising 4.8 percent in the previous month, confounding market expectations for a 1.7 percent increase. While the government blamed rainy weather for deterring shoppers, weak demand for cars and housing suggest the rising cost of living is denting appetite for big-ticket items. The soft spending figures, used to calculate GDP, reinforced views the economy probably contracted in the second quarter. It also cast doubt on the BOJ's rosy scenario betting that a tightening job market will nudge up wages and boost consumption, helping achieve its price target by around September next year. Many analysts agree with the BOJ's view that growth will rebound in the third quarter. But there is uncertainty on how strong the pick-up will be given soft global demand, particularly in Asia, that is weighing on exports and output. Even some within the BOJ, such as board member Koji Ishida, acknowledge uncertainties surrounding the bank's rosy forecast. "There's a risk the recent softness in exports and output may hurt corporate sentiment just when companies were beginning to turn more aggressive on investment," he said on Thursday. Reuters
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Wealthy Thais Keep Property Developers Busy in Slow Economy http://thejakartaglobe.beritasatu.com/?p=428498 Fri, 31 Jul 2015 09:28:04 +0700 Chao Praya river and central Bangkok are seen from a popular rooftop bar on May 20, 2015. (Reuters Photo/Damir Sagolj) Chao Praya river and central Bangkok are seen from a popular rooftop bar on May 20, 2015. (Reuters Photo/Damir Sagolj)[/caption]
Bangkok. Thai property developers are raising record funds in the domestic bond market to finance high-end residential projects in a stumbling economy that appears to have hurt all but the affluent. Developers issued 54.2 billion baht ($1.55 billion) of bonds in the first half of this year - a record for a six-month period and equal to 74 percent of the debt sold by developers for the whole of 2014, according to the Thai Bond Market Association. Raising funds from the debt market is much cheaper than bank loans despite the two cuts in the central bank's policy rate so far this year. A sluggish economy has turned banks cautious about lending. Prime lending rates are at least 6.5 percent, compared with the 3.31 percent coupon on five-year bonds issued this year by Land & Houses, Thailand's largest home builder. Real estate developers are also loath to raise funds in a weak stock market. But wealthy Thais seem to be unperturbed by the economic woes, playing the role of white knight in an uncertain property market. Their purchases in Bangkok have gravitated towards developments near future transport nodes and hubs. Skytrain operator BTS Group and developer Sansiri said this month they would jointly develop 25 condominium projects worth 100 billion baht along mass transit lines over the next five years. In Greater Bangkok, the value of new housing projects rose 64 percent in January-to-June to 227 billion baht from a year earlier, and is expected to climb to 449 billion baht for the full 2015, according to the Agency for Real Estate Affairs. The agency expects the market value of new premium units to surge 281 percent this year versus zero growth for cheaper units. "We have also switched to the high-end market," said Kessara Thanyalakpark, director of Thai property firm Sena Development . "Others probably think the same, as household debt is quite a problem for the lower segment of the market," she said. Additional reporting by Pairat Temphairojana Reuters
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Chao Praya river and central Bangkok are seen from a popular rooftop bar on May 20, 2015. (Reuters Photo/Damir Sagolj) Chao Praya river and central Bangkok are seen from a popular rooftop bar on May 20, 2015. (Reuters Photo/Damir Sagolj)[/caption]
Bangkok. Thai property developers are raising record funds in the domestic bond market to finance high-end residential projects in a stumbling economy that appears to have hurt all but the affluent. Developers issued 54.2 billion baht ($1.55 billion) of bonds in the first half of this year - a record for a six-month period and equal to 74 percent of the debt sold by developers for the whole of 2014, according to the Thai Bond Market Association. Raising funds from the debt market is much cheaper than bank loans despite the two cuts in the central bank's policy rate so far this year. A sluggish economy has turned banks cautious about lending. Prime lending rates are at least 6.5 percent, compared with the 3.31 percent coupon on five-year bonds issued this year by Land & Houses, Thailand's largest home builder. Real estate developers are also loath to raise funds in a weak stock market. But wealthy Thais seem to be unperturbed by the economic woes, playing the role of white knight in an uncertain property market. Their purchases in Bangkok have gravitated towards developments near future transport nodes and hubs. Skytrain operator BTS Group and developer Sansiri said this month they would jointly develop 25 condominium projects worth 100 billion baht along mass transit lines over the next five years. In Greater Bangkok, the value of new housing projects rose 64 percent in January-to-June to 227 billion baht from a year earlier, and is expected to climb to 449 billion baht for the full 2015, according to the Agency for Real Estate Affairs. The agency expects the market value of new premium units to surge 281 percent this year versus zero growth for cheaper units. "We have also switched to the high-end market," said Kessara Thanyalakpark, director of Thai property firm Sena Development . "Others probably think the same, as household debt is quite a problem for the lower segment of the market," she said. Additional reporting by Pairat Temphairojana Reuters
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Bank Mandiri, BII Maintain Sound Profitability Amid Economic Slowdown http://thejakartaglobe.beritasatu.com/?p=428368 Thu, 30 Jul 2015 21:26:42 +0700 Jakarta. Amid the economic slowdown, two major lenders in Indonesia, Bank Mandiri and Bank Internasional Indonesia, managed to maintain sound profitability in the first half of 2015, with the first reporting a modest net income growth and the latter enjoying strong earning growth. On Thursday, Bank Mandiri, the country’s biggest lender by assets, booked Rp 9.9 trillion ($734 million) in net income between this January and June, up by 3.5 percent in comparison to the corresponding period last year. That compares well to rival BII, the eight biggest lender by assets, which posted Rp 388 billion in net income in the period, which represents a 13.9 percent rise in year-on-year calculation. Some other major lenders, including Bank Central Asia and Bank Negara Indonesia, saw their profit growth slow in the same period. In a press conference on Thursday, executives from Bank Mandiri explained the low profit growth was attributed to the efforts by the lender, which had sought to bulk up provisions in anticipation of rising bad loans, amid the slow growth environment. “We’ve directed most of our earnings to provisions. It’s like our savings,” Budi Gunadi Sadikin, president director of Bank Mandiri, told a press conference in Jakarta on Thursday. “We’re not aggressively chasing profit. We’d rather put it into our provision … so if our portfolio take a turn for the worse, we would still have some cushion,” he added. Bank Mandiri set aside nearly Rp 4 trillion in provisions as of June this year, up 40.7 percent from Rp 2.8 trillion in the same period last year. Meanwhile, net non-performing loans ratio at the state lender rose to 1.01 percent, compared to 0.81 percent. Despite rising bad loans, the company was still able to book a resilient loan growth during the six-month period, which boosted the company’s net interest income by 18 percent to Rp 35 trillion. Total outstanding loans at Bank Mandiri stood at Rp 552.7 trillion up to June this year, up 14 percent from Rp 486 trillion in the same period last year. The increase in provision, according to Budi, would place Bank Mandiri’s coverage ratio — a measure of protection against bad loans — at 168 percent as of June this year. “Our coverage ratio has fallen by 20 basis percentage points every quarter. We’ll likely see that trend continue to the end of the year,” he said. Kartiko Wirjoatmodjo, an executive staff at Bank Mandiri, added that the lender would attempt to keep its coverage ratio by no less than 120 percent by the end of the year. BII Bank Mandiri is not the only lender on the block that’s keeping a watchful eye on rising bad loans among businesses in the country. BII — majority-controlled by Malaysia’s Maybank — although it reported sound profit growth, also reported an increase in bad loans this year as it feels the impact of the economic slowdown, the lender said an official statement on Thursday. BII recorded a modest loan growth of 2.4 percent to Rp 108.5 trillion as of June this year as net non-performing loan (NPL) ratio at the lender increased to 2.35 percent. “We maintain the view of continued challenging market condition for the rest of 2015, and will be selective in growing the bank’s portfolio while exercising strict pricing discipline for both loan and liquidity,” said Taswin Zakaria, president director at BII, in a statement on Thursday. “While remain cautious in provisioning, I am pleased that we continue to demonstrate a better operating performance in the first six months,” he added. Increase in Net Interest Income (NII) contributed to the improved performance and was achieved through the bank’s discipline in loan pricing, active liability management and an intensive bankwide implementation of strategic cost management program. On other aspects, BII’s strong profit growth was supported by a strong growth in its net interest income, or income a lender gets from interest charges minus the cost of paying depositors. NII rose 10.9 percent to Rp 3.1 trillion and its Net Interest Margin (NIM) — margins from lending money to customers — improved to 4.73 percent from 4.48 percent. On funding side, BII reported a modest 1.1 percent growth in third party funds, which include savings, current account and term deposits. Third party funds rose to Rp 107.1 trillion from Rp 105.9 trillion. Other operating revenues, or fee-based income, rose by 8.5 percent to Rp 1.1 trillion. It said the lender’s higher focus on advisory activities, insurance and credit card related fees has contributed to higher fee income for the period. GlobeAsia]]> Jakarta. Amid the economic slowdown, two major lenders in Indonesia, Bank Mandiri and Bank Internasional Indonesia, managed to maintain sound profitability in the first half of 2015, with the first reporting a modest net income growth and the latter enjoying strong earning growth. On Thursday, Bank Mandiri, the country’s biggest lender by assets, booked Rp 9.9 trillion ($734 million) in net income between this January and June, up by 3.5 percent in comparison to the corresponding period last year. That compares well to rival BII, the eight biggest lender by assets, which posted Rp 388 billion in net income in the period, which represents a 13.9 percent rise in year-on-year calculation. Some other major lenders, including Bank Central Asia and Bank Negara Indonesia, saw their profit growth slow in the same period. In a press conference on Thursday, executives from Bank Mandiri explained the low profit growth was attributed to the efforts by the lender, which had sought to bulk up provisions in anticipation of rising bad loans, amid the slow growth environment. “We’ve directed most of our earnings to provisions. It’s like our savings,” Budi Gunadi Sadikin, president director of Bank Mandiri, told a press conference in Jakarta on Thursday. “We’re not aggressively chasing profit. We’d rather put it into our provision … so if our portfolio take a turn for the worse, we would still have some cushion,” he added. Bank Mandiri set aside nearly Rp 4 trillion in provisions as of June this year, up 40.7 percent from Rp 2.8 trillion in the same period last year. Meanwhile, net non-performing loans ratio at the state lender rose to 1.01 percent, compared to 0.81 percent. Despite rising bad loans, the company was still able to book a resilient loan growth during the six-month period, which boosted the company’s net interest income by 18 percent to Rp 35 trillion. Total outstanding loans at Bank Mandiri stood at Rp 552.7 trillion up to June this year, up 14 percent from Rp 486 trillion in the same period last year. The increase in provision, according to Budi, would place Bank Mandiri’s coverage ratio — a measure of protection against bad loans — at 168 percent as of June this year. “Our coverage ratio has fallen by 20 basis percentage points every quarter. We’ll likely see that trend continue to the end of the year,” he said. Kartiko Wirjoatmodjo, an executive staff at Bank Mandiri, added that the lender would attempt to keep its coverage ratio by no less than 120 percent by the end of the year. BII Bank Mandiri is not the only lender on the block that’s keeping a watchful eye on rising bad loans among businesses in the country. BII — majority-controlled by Malaysia’s Maybank — although it reported sound profit growth, also reported an increase in bad loans this year as it feels the impact of the economic slowdown, the lender said an official statement on Thursday. BII recorded a modest loan growth of 2.4 percent to Rp 108.5 trillion as of June this year as net non-performing loan (NPL) ratio at the lender increased to 2.35 percent. “We maintain the view of continued challenging market condition for the rest of 2015, and will be selective in growing the bank’s portfolio while exercising strict pricing discipline for both loan and liquidity,” said Taswin Zakaria, president director at BII, in a statement on Thursday. “While remain cautious in provisioning, I am pleased that we continue to demonstrate a better operating performance in the first six months,” he added. Increase in Net Interest Income (NII) contributed to the improved performance and was achieved through the bank’s discipline in loan pricing, active liability management and an intensive bankwide implementation of strategic cost management program. On other aspects, BII’s strong profit growth was supported by a strong growth in its net interest income, or income a lender gets from interest charges minus the cost of paying depositors. NII rose 10.9 percent to Rp 3.1 trillion and its Net Interest Margin (NIM) — margins from lending money to customers — improved to 4.73 percent from 4.48 percent. On funding side, BII reported a modest 1.1 percent growth in third party funds, which include savings, current account and term deposits. Third party funds rose to Rp 107.1 trillion from Rp 105.9 trillion. Other operating revenues, or fee-based income, rose by 8.5 percent to Rp 1.1 trillion. It said the lender’s higher focus on advisory activities, insurance and credit card related fees has contributed to higher fee income for the period. GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=428368 Indonesia Raises Non-Tariff Barrier to Protect Local Batik Against Imports http://thejakartaglobe.beritasatu.com/?p=428388 Thu, 30 Jul 2015 21:18:07 +0700 Jakarta. The Trade Ministry issued on Thursday a regulation requiring all importers who bring in batik-patterned fabrics to register with the ministry and secure a special permit to import the textile. Domestic producers have long complained of a shrinking market share as cheaper fabrics from Malaysia and China flood in thanks to a free-trade agreement that has slashed import duties on the product. Meanwhile, red tape, poor infrastructure, rising wages and a weakening rupiah continue to push up local companies' costs, driving up their prices. “Domestic-made batik has to be protected from the competition from imported ones,” Trade Minister Rahmat Gobel said on Thursday. “Batik has to be the host in its own home.” Under the regulation, which takes effect as of Oct. 25, importers must sign up with the Trade Ministry to secure a permit to import any kind of fabric with a batik pattern. The regulation also restricts the number of ports through which the companies may ship in the textiles. These are Belawan in Medan, North Sumatra; Tanjung Perak in Surabaya, East Java; Soekarno-Hatta in Makassar, South Sulawesi; and Soekarno-Hatta International Airport outside Jakarta. The ministry will also require a report from an independent surveyor to verify the origin of the batik. Indonesia imported $87 million worth of batik last year – mostly from Malaysia and China – up 15 percent from 2012, when the country began cutting the textile import duty under the Asean-China Free Trade Agreement. Under the free-trade pact, Indonesia agreed to slash the textile import duty to between 0 and 5 percent by 2018, from a maximum 20 percent in 2012. Current duties range from 0 to 15 percent. Indonesia's batik exports during that same period jumped 22 percent to $340 million, according to Trade Ministry data, with main destinations including the United States, Germany and South Korea. Indonesian batik was recognized in 2009 by Unesco as a world intangible heritage item. Investor Daily]]> Jakarta. The Trade Ministry issued on Thursday a regulation requiring all importers who bring in batik-patterned fabrics to register with the ministry and secure a special permit to import the textile. Domestic producers have long complained of a shrinking market share as cheaper fabrics from Malaysia and China flood in thanks to a free-trade agreement that has slashed import duties on the product. Meanwhile, red tape, poor infrastructure, rising wages and a weakening rupiah continue to push up local companies' costs, driving up their prices. “Domestic-made batik has to be protected from the competition from imported ones,” Trade Minister Rahmat Gobel said on Thursday. “Batik has to be the host in its own home.” Under the regulation, which takes effect as of Oct. 25, importers must sign up with the Trade Ministry to secure a permit to import any kind of fabric with a batik pattern. The regulation also restricts the number of ports through which the companies may ship in the textiles. These are Belawan in Medan, North Sumatra; Tanjung Perak in Surabaya, East Java; Soekarno-Hatta in Makassar, South Sulawesi; and Soekarno-Hatta International Airport outside Jakarta. The ministry will also require a report from an independent surveyor to verify the origin of the batik. Indonesia imported $87 million worth of batik last year – mostly from Malaysia and China – up 15 percent from 2012, when the country began cutting the textile import duty under the Asean-China Free Trade Agreement. Under the free-trade pact, Indonesia agreed to slash the textile import duty to between 0 and 5 percent by 2018, from a maximum 20 percent in 2012. Current duties range from 0 to 15 percent. Indonesia's batik exports during that same period jumped 22 percent to $340 million, according to Trade Ministry data, with main destinations including the United States, Germany and South Korea. Indonesian batik was recognized in 2009 by Unesco as a world intangible heritage item. Investor Daily]]> http://thejakartaglobe.beritasatu.com/?p=428388 Astra International's Profit Declines 18% in H1 http://thejakartaglobe.beritasatu.com/?p=428278 Thu, 30 Jul 2015 20:30:23 +0700 Jakarta. Astra International, a diversified conglomerate, posted an 18 percent decline in profit in the first half of this year, following weaker earnings from its automotive and commodity-related business, the company said in a statement on Thursday. Astra, Indonesia's largest car distributor, posted Rp 8.05 trillion ($597 million) in net income in the January-to-June period compared to Rp 9.82 trillion in the same period last year. "Astra's net income in the first semester declined following the weaker consumption, competition in the automotive sector and lower commodity prices in Indonesia. Amid the uncertainty of economic recovery, our business is prepared to take on opportunity when the recovery takes place and we remain solid as we are supported by strong financial balance sheet,"  Prijono Sugiarto, Astra International's president director, said in the statement. The company's net sales also fell to Rp 92.5 trillion, down nearly 9 percent, in the first six months of this year from Rp 101.53 trillion it posted last year. Astra's business activities are comprised of six lines: automotive, financial service, heavy equipment and mining, agriculture, infrastructure, logistics and information technology. All lines suffered a decline in profit in the January to June period except for its heavy equipment and mining sector, which rose to Rp 2.05 trillion, up 3 percent, from Rp 1.98 trillion it posted a year before. Astra's automotive business, the biggest contributor in the company, fell 14.6 percent to Rp 3.42 trillion in the first semester of this year, "economic slowdown caused the weak demand along with fewer new products launched. Moreover, discount competitions in the automotive markets due to over capacity also produced a negative impact to the profits in the [automotive] segment," the company said in the statement. Automotive components business also contributed to the low earnings following rupiah depreciation against the US dollar. Astra's car sales declined 21 percent to 263,000 units. That compared to the national car sales, which dropped 18 percent to 525,000 units. Meanwhile, motorcycle sales also fell 24 percent nationally to 3.2 million. Astra Honda Motor, a sole distributor of Honda motorcycle in Indonesia, partly owned by Astra, reported a 19 percent decline in motorcycle sales to 2.1 million units. Astra's agribusiness line suffered the worst decline in profit. Net income from the sector slipped to Rp 354 billion, or down 67.6 percent, from Rp 1.09 trillion in the same period a year earlier. Palm oil plantation company Astra Agro Lestari, of which Astra owns 79.7 percent stakes, booked Rp 444 billion in profit or down 68 percent from the same period a year before. Despite posting a weaker earning, Astra's stock rose 2.33 percent to be sold at Rp 6,575 on Thursday closing at the Indonesia Stock Exchange (IDX). GlobeAsia  ]]> Jakarta. Astra International, a diversified conglomerate, posted an 18 percent decline in profit in the first half of this year, following weaker earnings from its automotive and commodity-related business, the company said in a statement on Thursday. Astra, Indonesia's largest car distributor, posted Rp 8.05 trillion ($597 million) in net income in the January-to-June period compared to Rp 9.82 trillion in the same period last year. "Astra's net income in the first semester declined following the weaker consumption, competition in the automotive sector and lower commodity prices in Indonesia. Amid the uncertainty of economic recovery, our business is prepared to take on opportunity when the recovery takes place and we remain solid as we are supported by strong financial balance sheet,"  Prijono Sugiarto, Astra International's president director, said in the statement. The company's net sales also fell to Rp 92.5 trillion, down nearly 9 percent, in the first six months of this year from Rp 101.53 trillion it posted last year. Astra's business activities are comprised of six lines: automotive, financial service, heavy equipment and mining, agriculture, infrastructure, logistics and information technology. All lines suffered a decline in profit in the January to June period except for its heavy equipment and mining sector, which rose to Rp 2.05 trillion, up 3 percent, from Rp 1.98 trillion it posted a year before. Astra's automotive business, the biggest contributor in the company, fell 14.6 percent to Rp 3.42 trillion in the first semester of this year, "economic slowdown caused the weak demand along with fewer new products launched. Moreover, discount competitions in the automotive markets due to over capacity also produced a negative impact to the profits in the [automotive] segment," the company said in the statement. Automotive components business also contributed to the low earnings following rupiah depreciation against the US dollar. Astra's car sales declined 21 percent to 263,000 units. That compared to the national car sales, which dropped 18 percent to 525,000 units. Meanwhile, motorcycle sales also fell 24 percent nationally to 3.2 million. Astra Honda Motor, a sole distributor of Honda motorcycle in Indonesia, partly owned by Astra, reported a 19 percent decline in motorcycle sales to 2.1 million units. Astra's agribusiness line suffered the worst decline in profit. Net income from the sector slipped to Rp 354 billion, or down 67.6 percent, from Rp 1.09 trillion in the same period a year earlier. Palm oil plantation company Astra Agro Lestari, of which Astra owns 79.7 percent stakes, booked Rp 444 billion in profit or down 68 percent from the same period a year before. Despite posting a weaker earning, Astra's stock rose 2.33 percent to be sold at Rp 6,575 on Thursday closing at the Indonesia Stock Exchange (IDX). GlobeAsia  ]]> http://thejakartaglobe.beritasatu.com/?p=428278 Malaysian Central Bank Grips Ringgit Tightly as Troubles Mount http://thejakartaglobe.beritasatu.com/?p=428354 Thu, 30 Jul 2015 19:28:22 +0700 Singapore. Protecting the ringgit from political fallout out may end up costing Malaysia more than any bailout for the debt-ridden 1MDB state fund, given the rate at which the central bank has been using its reserves in recent weeks. Bank Negara Malaysia (BNM) has taken an iron-fisted approach, barely allowing the ringgit to move since early July as investors became increasingly unnerved by the deepening scandal over how 1 Malaysia Development Berhad got into $11 billion of debt. On Tuesday, Prime Minister Najib Razak sacked his deputy, who had called on him to give Malaysians a better explanation of where 1MDB’s money went. Three other ministers were also shunted in the reshuffle. Najib also replaced the attorney-general. On Thursday, the rumour mill went into overdrive forcing the central bank to deny that Governor Zeti Akhtar Aziz was resigning. Financial markets were understandably nervous at the prospect of the well regarded Zeti, who has headed the central bank since 2000, becoming another casualty of the affair. Since early July, even as foreign investors pulled out of Malaysian markets and risk metrics spiked, the ringgit has remained close to 3.8 to the dollar. That is the same level the ringgit was pegged at during the Asian financial crisis by the then-Prime Minister Mahathir Mohamad, when he sacked his deputy Anwar Ibrahim in 1998 and imposed capital controls that lasted seven years. Currency reserves fell $5 billion in the two weeks to July 5 as the central bank defended the ringgit and analysts estimate a lot more could have been spent since as the political storm around Najib intensified. “We’ve crossed the Rubicon on a couple of politically sensitive levels and clearly there is some heavy smoothing operation going on,” said Claudio Piron, head of rates and currency strategy at BofA Merrill Lynch in Singapore. “That is evident in the FX reserves numbers and the behaviour of the ringgit that is holding around the 3.8 levels.” The ringgit is Asia’s weakest currency this year, having shed nearly 9 percent of its value against the dollar. The decline largely reflected concerns over its vulnerability to rising U.S. interest rates and the halving in the price of oil in the past year, which has dragged down the price of gas, though not by as much. Malaysia is the world’s second largest exporter of liquefied natural gas. Foreigners own $48 billion of Malaysian government bonds - equivalent to half the country’s reserves. As of June they weren’t big sellers and fund managers with a longer horizon tend not to sell this investment grade market too impulsively. Asian Crisis Lesson Still, the BNM is sparing no effort to keep the ringgit in a narrow range. Zeti has also fended off criticism that the currency’s drop to levels unseen since the Asian financial crisis were reflective of the economy’s poor fundamentals, while simultaneously trying to dissociate the central bank from the political fracas. “The Central Bank has never been and will not be drawn into any political agenda but will remain accountable for delivering its mandates to the people of this country,” BNM said in a statement in June, as the sniping between Najib’s loyalists and critics became fiercer. Still, the psychological significance to Malaysians of having a currency that is now at the floor Mahathir put under it during the Asian crisis goes some way to explaining why the central bank has shown so much resolve this month holding the ringgit between 3.80 and 3.8175 per dollar. Other Asian countries, such as Thailand, Indonesia and South Korea, went through turbulent political change in the aftermath of that crisis. “Because the last serious bout of currency upheaval in this region, which was in 1997/98, was followed by significant political change in many countries, political leaders would be understandably reluctant to allow a sense of crisis to build up again,” said Siddharth Mathur, head of emerging Asia currency and rates strategy at Citi in Singapore. “That may partly explain the unwillingness to tolerate rapid currency depreciation. “If that is true, perhaps a fairly large chunk of reserves could be earmarked for the defence of the currency. It is very tricky to forecast how this situation evolves.” Reuters]]> Singapore. Protecting the ringgit from political fallout out may end up costing Malaysia more than any bailout for the debt-ridden 1MDB state fund, given the rate at which the central bank has been using its reserves in recent weeks. Bank Negara Malaysia (BNM) has taken an iron-fisted approach, barely allowing the ringgit to move since early July as investors became increasingly unnerved by the deepening scandal over how 1 Malaysia Development Berhad got into $11 billion of debt. On Tuesday, Prime Minister Najib Razak sacked his deputy, who had called on him to give Malaysians a better explanation of where 1MDB’s money went. Three other ministers were also shunted in the reshuffle. Najib also replaced the attorney-general. On Thursday, the rumour mill went into overdrive forcing the central bank to deny that Governor Zeti Akhtar Aziz was resigning. Financial markets were understandably nervous at the prospect of the well regarded Zeti, who has headed the central bank since 2000, becoming another casualty of the affair. Since early July, even as foreign investors pulled out of Malaysian markets and risk metrics spiked, the ringgit has remained close to 3.8 to the dollar. That is the same level the ringgit was pegged at during the Asian financial crisis by the then-Prime Minister Mahathir Mohamad, when he sacked his deputy Anwar Ibrahim in 1998 and imposed capital controls that lasted seven years. Currency reserves fell $5 billion in the two weeks to July 5 as the central bank defended the ringgit and analysts estimate a lot more could have been spent since as the political storm around Najib intensified. “We’ve crossed the Rubicon on a couple of politically sensitive levels and clearly there is some heavy smoothing operation going on,” said Claudio Piron, head of rates and currency strategy at BofA Merrill Lynch in Singapore. “That is evident in the FX reserves numbers and the behaviour of the ringgit that is holding around the 3.8 levels.” The ringgit is Asia’s weakest currency this year, having shed nearly 9 percent of its value against the dollar. The decline largely reflected concerns over its vulnerability to rising U.S. interest rates and the halving in the price of oil in the past year, which has dragged down the price of gas, though not by as much. Malaysia is the world’s second largest exporter of liquefied natural gas. Foreigners own $48 billion of Malaysian government bonds - equivalent to half the country’s reserves. As of June they weren’t big sellers and fund managers with a longer horizon tend not to sell this investment grade market too impulsively. Asian Crisis Lesson Still, the BNM is sparing no effort to keep the ringgit in a narrow range. Zeti has also fended off criticism that the currency’s drop to levels unseen since the Asian financial crisis were reflective of the economy’s poor fundamentals, while simultaneously trying to dissociate the central bank from the political fracas. “The Central Bank has never been and will not be drawn into any political agenda but will remain accountable for delivering its mandates to the people of this country,” BNM said in a statement in June, as the sniping between Najib’s loyalists and critics became fiercer. Still, the psychological significance to Malaysians of having a currency that is now at the floor Mahathir put under it during the Asian crisis goes some way to explaining why the central bank has shown so much resolve this month holding the ringgit between 3.80 and 3.8175 per dollar. Other Asian countries, such as Thailand, Indonesia and South Korea, went through turbulent political change in the aftermath of that crisis. “Because the last serious bout of currency upheaval in this region, which was in 1997/98, was followed by significant political change in many countries, political leaders would be understandably reluctant to allow a sense of crisis to build up again,” said Siddharth Mathur, head of emerging Asia currency and rates strategy at Citi in Singapore. “That may partly explain the unwillingness to tolerate rapid currency depreciation. “If that is true, perhaps a fairly large chunk of reserves could be earmarked for the defence of the currency. It is very tricky to forecast how this situation evolves.” Reuters]]> http://thejakartaglobe.beritasatu.com/?p=428354 Asian Airlines Hedge More Fuel to Lock in Savings From Oil Price Fall http://thejakartaglobe.beritasatu.com/?p=428348 Thu, 30 Jul 2015 20:33:30 +0700 Singapore. Asian airlines are preparing to hedge more jet fuel in a bid to lock in profits, betting that a recent slide in crude prices to five-month lows will taper off near $50 a barrel. Hedging activity is picking up after a lull in the first six months when a 50 percent jump in Brent, from a six-year low of $45.19 in January, made such purchases unattractive. An $11 drop in July to below $53 on global glut worries has revived hedging interest, traders said. “Some airlines are popping in and hedging bits and pieces daily at a Brent price of $55 and down to $50,” said a trader with a bank that handles hedging for many Asian airlines. “Most airlines think oil prices are cheap and have hit their (bottom),” he added, declining to be named due to rules on talking to media. Indonesia’s Garuda Indonesia, which has hedged 45 percent of its 2015 jet fuel needs, is now looking to raise that to at least 50 percent, versus 10 percent in 2014. Garuda’s hedging strategy, together with cost cuts, helped it swing to a first-half net profit this year. Air New Zealand too has raised its hedging ratio, to 57 percent for the fourth quarter from 10 percent a year ago. South Korea’s Asiana Airlines, which had stopped hedging at the end of 2014 to escape oil market volatility, has increased its third-quarter jet fuel hedge ratio slightly versus the previous two quarters. Jet fuel accounts for anywhere between 20 and 50 percent of an airline’s operating costs. Low oil prices have driven global airlines to forecast 2015 industry profits of $29.3 billion, almost double from last year. Some Still Wary Certain airlines, however, are cautious about hedging after a bitter experience in 2008, when carriers scrambled to lock in fuel costs as crude surged above $100 for the first time only to see prices plummet to less than $40 before year-end. With jet fuel prices down around 16 percent this month, some airlines see spot purchases as a better option. For 2015, Thai Airways International has hedged about 80 percent and plans to buy the rest from the spot market, a senior official said. The airline expects to save costs of about 16 billion baht ($455.45 million) this year due to its hedging strategy and lower oil prices, he added. Japan’s ANA Holdings Inc and Japan Airlines have hedged 40 percent and plan to keep it at that. The cost of hedging crude has dropped to the lowest in a decade, said Maybank analysts, as caution caps hedging volumes. “It is ironic that whilst the cost of protection is cheap and fuel hedging strategy is best adopted now, many airlines are choosing not do so,” they added. Additional reporting by Manunphattr Dhanananphorn in Bangkok, Cindy Silviana and Eveline Danubrata in Jakarta, Gyles Beckford in Wellington, Swati Pandey in Sydney, Joyce Lee in Seoul, Timothy Kelly in Tokyo, Siva Govindasamy and Anshuman Daga in Singapore and Aisling Curtis in New Delhi]]> Singapore. Asian airlines are preparing to hedge more jet fuel in a bid to lock in profits, betting that a recent slide in crude prices to five-month lows will taper off near $50 a barrel. Hedging activity is picking up after a lull in the first six months when a 50 percent jump in Brent, from a six-year low of $45.19 in January, made such purchases unattractive. An $11 drop in July to below $53 on global glut worries has revived hedging interest, traders said. “Some airlines are popping in and hedging bits and pieces daily at a Brent price of $55 and down to $50,” said a trader with a bank that handles hedging for many Asian airlines. “Most airlines think oil prices are cheap and have hit their (bottom),” he added, declining to be named due to rules on talking to media. Indonesia’s Garuda Indonesia, which has hedged 45 percent of its 2015 jet fuel needs, is now looking to raise that to at least 50 percent, versus 10 percent in 2014. Garuda’s hedging strategy, together with cost cuts, helped it swing to a first-half net profit this year. Air New Zealand too has raised its hedging ratio, to 57 percent for the fourth quarter from 10 percent a year ago. South Korea’s Asiana Airlines, which had stopped hedging at the end of 2014 to escape oil market volatility, has increased its third-quarter jet fuel hedge ratio slightly versus the previous two quarters. Jet fuel accounts for anywhere between 20 and 50 percent of an airline’s operating costs. Low oil prices have driven global airlines to forecast 2015 industry profits of $29.3 billion, almost double from last year. Some Still Wary Certain airlines, however, are cautious about hedging after a bitter experience in 2008, when carriers scrambled to lock in fuel costs as crude surged above $100 for the first time only to see prices plummet to less than $40 before year-end. With jet fuel prices down around 16 percent this month, some airlines see spot purchases as a better option. For 2015, Thai Airways International has hedged about 80 percent and plans to buy the rest from the spot market, a senior official said. The airline expects to save costs of about 16 billion baht ($455.45 million) this year due to its hedging strategy and lower oil prices, he added. Japan’s ANA Holdings Inc and Japan Airlines have hedged 40 percent and plan to keep it at that. The cost of hedging crude has dropped to the lowest in a decade, said Maybank analysts, as caution caps hedging volumes. “It is ironic that whilst the cost of protection is cheap and fuel hedging strategy is best adopted now, many airlines are choosing not do so,” they added. Additional reporting by Manunphattr Dhanananphorn in Bangkok, Cindy Silviana and Eveline Danubrata in Jakarta, Gyles Beckford in Wellington, Swati Pandey in Sydney, Joyce Lee in Seoul, Timothy Kelly in Tokyo, Siva Govindasamy and Anshuman Daga in Singapore and Aisling Curtis in New Delhi]]> http://thejakartaglobe.beritasatu.com/?p=428348 Cement Maker Semen Indonesia H1 2015 Profit Down to $163 Mln http://thejakartaglobe.beritasatu.com/?p=428346 Thu, 30 Jul 2015 19:12:48 +0700 Jakarta. Indonesia’s biggest cement maker, Semen Indonesia, posted a sharp drop in net profit for the first half of 2015, its corporate secretary told Reuters ahead of its earnings announcement. The company made a net profit of 2.2 trillion rupiah ($163.3 million) for the six months ended June, Agung Wiharto said in a text message. Semen Indonesia had posted a net profit of 2.8 trillion rupiah for the corresponding period a year earlier. Reuters]]> Jakarta. Indonesia’s biggest cement maker, Semen Indonesia, posted a sharp drop in net profit for the first half of 2015, its corporate secretary told Reuters ahead of its earnings announcement. The company made a net profit of 2.2 trillion rupiah ($163.3 million) for the six months ended June, Agung Wiharto said in a text message. Semen Indonesia had posted a net profit of 2.8 trillion rupiah for the corresponding period a year earlier. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=428346