The Jakarta Globe RSS: Business http://www.thejakartaglobe.com 2013 The Jakarta Globe Your City, Your World Sat, 4 Jul 2015 23:42:32 +0000 en-US hourly 1 http://www.thejakartaglobe.com/images/jakarta-globe.gif http://www.thejakartaglobe.com Minister: Indonesia Expects Total to Decide on Mahakam Within Days http://thejakartaglobe.beritasatu.com/?p=422004 Sat, 4 Jul 2015 10:44:59 +0700 Jakarta. French oil firm Total will decide how large a stake it will retain from 2018 in Indonesia's offshore Mahakam oil and gas block within days, the country's energy minister said on Friday. From Jan. 1, 2018, state energy company Pertamina will take over as operator of Indonesia's top gas producing field from Total. But it is not yet clear how Total and other partner Japan's Inpex, will split the 30 percent stake that Indonesia has proposed they share. "Inpex has said they are ready to continue no matter what portion [they get]," Energy Minister Sudirman Said told reporters. There may be no decision until the middle of next week at the earliest, according to Joko Siswanto, upstream oil and gas director at the energy ministry, who said Total would meet the other firms on Wednesday. "They will sit together with Pertamina and Inpex ...If it's economic for them, they will join," Siswanto told reporters, referring to Total's interest in Mahakam. He added that his office would give Total and Inpex until the end of July to decide the size of stake each would take. Siswanto noted that as well as their operating interest, the split — the percentage of oil and gas production firms take in a production sharing contract with the government — could change to give contractors a greater portion of production. Siswanto said the move was justified given Pertamina is a state-owned enterprise and its share was essentially going to the state as well. Where previously Total and Inpex handed 70 percent of gas and 85 percent of oil and condensate output to the government, the split could change to 60-40, he said, so Pertamina, Inpex and Total would share 40 percent of output between them from 2018. A spokesman for Total's Indonesian unit was not immediately available to comment on the matter. Earlier, Total's Indonesian unit said the firm is in the process of scaling back drilling operations at Mahakam and expects to reduce the number of operating rigs from seven to three by the end of 2016. "In terms of number of wells to be drilled this year it is around 107 and next year is around 70," Total Indonesie spokesman Arividya Noviyanto told Reuters via e-mail. Gas output from Mahakam could decline 9 percent to an estimated 1,494 million standard cubic feet per day (mmscfd) in 2016 from a targeted 1,645 mmscfd this year, Noviyanto said, noting that these figures were subject to change. Reuters]]> Jakarta. French oil firm Total will decide how large a stake it will retain from 2018 in Indonesia's offshore Mahakam oil and gas block within days, the country's energy minister said on Friday. From Jan. 1, 2018, state energy company Pertamina will take over as operator of Indonesia's top gas producing field from Total. But it is not yet clear how Total and other partner Japan's Inpex, will split the 30 percent stake that Indonesia has proposed they share. "Inpex has said they are ready to continue no matter what portion [they get]," Energy Minister Sudirman Said told reporters. There may be no decision until the middle of next week at the earliest, according to Joko Siswanto, upstream oil and gas director at the energy ministry, who said Total would meet the other firms on Wednesday. "They will sit together with Pertamina and Inpex ...If it's economic for them, they will join," Siswanto told reporters, referring to Total's interest in Mahakam. He added that his office would give Total and Inpex until the end of July to decide the size of stake each would take. Siswanto noted that as well as their operating interest, the split — the percentage of oil and gas production firms take in a production sharing contract with the government — could change to give contractors a greater portion of production. Siswanto said the move was justified given Pertamina is a state-owned enterprise and its share was essentially going to the state as well. Where previously Total and Inpex handed 70 percent of gas and 85 percent of oil and condensate output to the government, the split could change to 60-40, he said, so Pertamina, Inpex and Total would share 40 percent of output between them from 2018. A spokesman for Total's Indonesian unit was not immediately available to comment on the matter. Earlier, Total's Indonesian unit said the firm is in the process of scaling back drilling operations at Mahakam and expects to reduce the number of operating rigs from seven to three by the end of 2016. "In terms of number of wells to be drilled this year it is around 107 and next year is around 70," Total Indonesie spokesman Arividya Noviyanto told Reuters via e-mail. Gas output from Mahakam could decline 9 percent to an estimated 1,494 million standard cubic feet per day (mmscfd) in 2016 from a targeted 1,645 mmscfd this year, Noviyanto said, noting that these figures were subject to change. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=422004 Britain to Cut Bank Deposit Protection by 10,000 Pounds http://thejakartaglobe.beritasatu.com/?p=421970 Fri, 3 Jul 2015 19:56:01 +0700 Mark Carney, Governor of the Bank of England, speaks during the bank's Financial Stability Report news conference at the Bank of England in London, Britain July 1, 2015. The Bank of England said it stands ready to "take any actions required" after Greece's rapid economic slide in just the past few days. (Reuters Photo/Ben Stansall) Mark Carney, Governor of the Bank of England, speaks during the bank's Financial Stability Report news conference at the Bank of England in London, Britain July 1, 2015. (Reuters Photo/Ben Stansall)[/caption] London. Britain is reducing the maximum bank deposit it will protect if a lender fails by 10,000 pounds to 75,000 pounds ($117,255) from the end of this year, the Bank of England said on Friday. European Union law requires member states to protect no more and no less than 100,000 euros ($111,130) of deposits. Countries such as Britain which do not use the euro must adjust the local-currency amount once every five years. “The process and timing is specified by the Directive and is not at the Prudential Regulation Authority’s discretion,” the BoE’s regulatory arm said in a statement. Sterling has strengthened by around 20 percent against the euro since 2010, obliging Britain to cut the previous 85,000 pounds of protection. Britain’s finance ministry said less than 5 percent of customers of banks, building societies and credit unions would be affected by the lower limit. Britain’s deposit protection scheme has paid out more than 26 billion pounds to 4.5 million people since it was established in 2001. Major claims include Northern Rock, which suffered a bank run at the start of the financial crisis in 2007. The change will take effect at the end of 2015, except for some new depositors such as larger companies and small local authorities which are being protected by the rules for the first time and will get 75,000 pounds of protection immediately. Under a new rule, deposits of up to 1 million pounds will have temporary protection for six months from the date of deposit, in a change aimed at helping people who are hit by a bank collapse while moving house or receiving an inheritance. The PRA said it was considering allowing people who had deposits of more than 75,000 pounds in long-term savings accounts to move their money without a penalty, and would consult on this until July 24. Reuters]]> Mark Carney, Governor of the Bank of England, speaks during the bank's Financial Stability Report news conference at the Bank of England in London, Britain July 1, 2015. The Bank of England said it stands ready to "take any actions required" after Greece's rapid economic slide in just the past few days. (Reuters Photo/Ben Stansall) Mark Carney, Governor of the Bank of England, speaks during the bank's Financial Stability Report news conference at the Bank of England in London, Britain July 1, 2015. (Reuters Photo/Ben Stansall)[/caption] London. Britain is reducing the maximum bank deposit it will protect if a lender fails by 10,000 pounds to 75,000 pounds ($117,255) from the end of this year, the Bank of England said on Friday. European Union law requires member states to protect no more and no less than 100,000 euros ($111,130) of deposits. Countries such as Britain which do not use the euro must adjust the local-currency amount once every five years. “The process and timing is specified by the Directive and is not at the Prudential Regulation Authority’s discretion,” the BoE’s regulatory arm said in a statement. Sterling has strengthened by around 20 percent against the euro since 2010, obliging Britain to cut the previous 85,000 pounds of protection. Britain’s finance ministry said less than 5 percent of customers of banks, building societies and credit unions would be affected by the lower limit. Britain’s deposit protection scheme has paid out more than 26 billion pounds to 4.5 million people since it was established in 2001. Major claims include Northern Rock, which suffered a bank run at the start of the financial crisis in 2007. The change will take effect at the end of 2015, except for some new depositors such as larger companies and small local authorities which are being protected by the rules for the first time and will get 75,000 pounds of protection immediately. Under a new rule, deposits of up to 1 million pounds will have temporary protection for six months from the date of deposit, in a change aimed at helping people who are hit by a bank collapse while moving house or receiving an inheritance. The PRA said it was considering allowing people who had deposits of more than 75,000 pounds in long-term savings accounts to move their money without a penalty, and would consult on this until July 24. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421970 Trada Maritime Mulls 5:1 Reverse Stock Split http://thejakartaglobe.beritasatu.com/?p=421929 Fri, 3 Jul 2015 20:07:36 +0700 Jakarta. Publicly-listed Indonesian shipping firm Trada Maritime plans to hold a 5-to-1 reverse stock split next month in order to increase the company’s liquidity in the stock market, according to a listing on the Indonesia Stock Exchange (IDX) on Thursday. The company will increase the nominal value of its shares five-fold to Rp 500 apiece from Rp 100 apiece, awaiting approval of Trada Maritime’s extraordinary shareholders meeting that’s scheduled to take place on Aug. 5, according to the statement. The reverse stock split is scheduled for Aug. 26, the statement said. A reverse stock split reduces the number of a company’s outstanding shares and increases its share price. However, the market capitalization of the company will stay the same. Trada Maritime has appointed Jasa Utama Capital to acquire shares that are less than one lot after the reverse stock split at Rp 61 per share, the statement said. “The composition of Trada Maritime’s shareholders will remain unchanged after the reverse stock split,” Trada Maritime management said in the statement. Aside from the reserve stock split, the listed shipping company is planning to increase its base capital to Rp 3.89 trillion ($291 million), according to the statement. Trada Maritime’s number of floating shares currently stands at 9.7 billion — valued at Rp 973 billion. After the reverse stock split Trada Maritime would have 1.9 billion shares, according to the statement. In the statement, Trada Maritime management also said that the company is holding the reserve stock split in hopes to “theoretically improve the share price.” “The reserve stock split and the increase in capital is also a way for the company to anticipate future corporate actions in order to strengthen the company’s capital structure and increase performance,” Trada Maritime management said. Shares of Trada Maritime, which are listed under TRAM on the stock exchange, closed unchanged at Rp 50 per share on Friday. GlobeAsia]]> Jakarta. Publicly-listed Indonesian shipping firm Trada Maritime plans to hold a 5-to-1 reverse stock split next month in order to increase the company’s liquidity in the stock market, according to a listing on the Indonesia Stock Exchange (IDX) on Thursday. The company will increase the nominal value of its shares five-fold to Rp 500 apiece from Rp 100 apiece, awaiting approval of Trada Maritime’s extraordinary shareholders meeting that’s scheduled to take place on Aug. 5, according to the statement. The reverse stock split is scheduled for Aug. 26, the statement said. A reverse stock split reduces the number of a company’s outstanding shares and increases its share price. However, the market capitalization of the company will stay the same. Trada Maritime has appointed Jasa Utama Capital to acquire shares that are less than one lot after the reverse stock split at Rp 61 per share, the statement said. “The composition of Trada Maritime’s shareholders will remain unchanged after the reverse stock split,” Trada Maritime management said in the statement. Aside from the reserve stock split, the listed shipping company is planning to increase its base capital to Rp 3.89 trillion ($291 million), according to the statement. Trada Maritime’s number of floating shares currently stands at 9.7 billion — valued at Rp 973 billion. After the reverse stock split Trada Maritime would have 1.9 billion shares, according to the statement. In the statement, Trada Maritime management also said that the company is holding the reserve stock split in hopes to “theoretically improve the share price.” “The reserve stock split and the increase in capital is also a way for the company to anticipate future corporate actions in order to strengthen the company’s capital structure and increase performance,” Trada Maritime management said. Shares of Trada Maritime, which are listed under TRAM on the stock exchange, closed unchanged at Rp 50 per share on Friday. GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=421929 Samsung Group Companies’ Merger Deal Runs Into Fresh Opposition http://thejakartaglobe.beritasatu.com/?p=421964 Fri, 3 Jul 2015 19:49:00 +0700 People walk past the Samsung logo at the company's headquarters in Seoul on July 1, 2015. (AFP Photo/Yonhap) People walk past the Samsung logo at the company's headquarters in Seoul on July 1, 2015. (AFP Photo/Yonhap)[/caption] Seoul. The proposed $8 billion merger of two Samsung Group companies came under attack from two directions on Friday, as an activist hedge fund filed a court action against the deal and a shareholder advisory group recommended shareholders oppose it. In a rare case of shareholder activism in South Korea, hedge fund Elliott Associates escalated its battle to block the merger, filing an appeal against a South Korean court ruling in a fresh bid to block a key shareholder vote on the deal. And advisory group Institutional Shareholder Services Inc (ISS) recommended Samsung C&T Corp investors vote against the all-stock takeover offer from sister firm Cheil Industries Inc. The Cheil-Samsung C&T merger, some investors and analysts say, is key to consolidating various stakes in top affiliates of the sprawling family-run Samsung conglomerate ahead of a looming leadership succession. But ISS said the offer from Cheil, Samsung Group’s de facto holding company, significantly undervalued Samsung C&T and that potential synergies from the merger touted by the two firms are not enough to compensate. This report, along with a recommendation from adviser Glass Lewis & Co a day earlier to reject the deal, could help Elliott line up more supporters in its quest to have the deal voted down at a July 17 Samsung C&T shareholder meeting. “This will make it a harder fight for Samsung,” said Park Ju-gun, head of research at CEO Score. Legal challenges Elliott, C&T’s third-largest shareholder with a 7.1 percent stake, has launched legal challenges and called on other investors to reject the deal. Cheil and Samsung C&T are also lobbying for investor support, promising improved shareholder returns and a better corporate governance structure for the post-merger company. “We continue to believe the merger is in the best interest of the company and our shareholders,” Samsung C&T said in a statement in response to the ISS report. An Elliott spokesman said the ISS report validated the fund’s concerns. The fund earlier on Friday appealed against a South Korean court decision to reject an injunction request to block the Samsung C&T shareholders’ July 17 vote on the deal. Elliott said C&T investors should reject the deal and afterwards consider replacing some board members for others who can better represent their interests. Samsung C&T’s biggest shareholder, South Korea’s National Pension Service (NPS), meanwhile, in June increased its holding in the company by around 1.7 percentage points to around 11.9 percent, increasing its influence on the outcome of the proposed deal. Two-thirds of those present at the meeting and one-third of all shares have to vote “yes” for it to go through. An NPS spokeswoman declined to comment on the rationale for the pension fund’s stake increase. Reuters]]> People walk past the Samsung logo at the company's headquarters in Seoul on July 1, 2015. (AFP Photo/Yonhap) People walk past the Samsung logo at the company's headquarters in Seoul on July 1, 2015. (AFP Photo/Yonhap)[/caption] Seoul. The proposed $8 billion merger of two Samsung Group companies came under attack from two directions on Friday, as an activist hedge fund filed a court action against the deal and a shareholder advisory group recommended shareholders oppose it. In a rare case of shareholder activism in South Korea, hedge fund Elliott Associates escalated its battle to block the merger, filing an appeal against a South Korean court ruling in a fresh bid to block a key shareholder vote on the deal. And advisory group Institutional Shareholder Services Inc (ISS) recommended Samsung C&T Corp investors vote against the all-stock takeover offer from sister firm Cheil Industries Inc. The Cheil-Samsung C&T merger, some investors and analysts say, is key to consolidating various stakes in top affiliates of the sprawling family-run Samsung conglomerate ahead of a looming leadership succession. But ISS said the offer from Cheil, Samsung Group’s de facto holding company, significantly undervalued Samsung C&T and that potential synergies from the merger touted by the two firms are not enough to compensate. This report, along with a recommendation from adviser Glass Lewis & Co a day earlier to reject the deal, could help Elliott line up more supporters in its quest to have the deal voted down at a July 17 Samsung C&T shareholder meeting. “This will make it a harder fight for Samsung,” said Park Ju-gun, head of research at CEO Score. Legal challenges Elliott, C&T’s third-largest shareholder with a 7.1 percent stake, has launched legal challenges and called on other investors to reject the deal. Cheil and Samsung C&T are also lobbying for investor support, promising improved shareholder returns and a better corporate governance structure for the post-merger company. “We continue to believe the merger is in the best interest of the company and our shareholders,” Samsung C&T said in a statement in response to the ISS report. An Elliott spokesman said the ISS report validated the fund’s concerns. The fund earlier on Friday appealed against a South Korean court decision to reject an injunction request to block the Samsung C&T shareholders’ July 17 vote on the deal. Elliott said C&T investors should reject the deal and afterwards consider replacing some board members for others who can better represent their interests. Samsung C&T’s biggest shareholder, South Korea’s National Pension Service (NPS), meanwhile, in June increased its holding in the company by around 1.7 percentage points to around 11.9 percent, increasing its influence on the outcome of the proposed deal. Two-thirds of those present at the meeting and one-third of all shares have to vote “yes” for it to go through. An NPS spokeswoman declined to comment on the rationale for the pension fund’s stake increase. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421964 China’s ‘Shadow Lenders’ Line Pockets Even as Bourses Bomb http://thejakartaglobe.beritasatu.com/?p=421935 Fri, 3 Jul 2015 19:13:55 +0700 An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song) An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song)[/caption] Shanghai/Beijing. China’s vast network of “grey market” lenders have reaped big profits from lending money to individuals and companies to buy stocks, but as markets slump their customers face heavy losses after borrowing up to 10 times their starting capital. Global investors are increasingly worried about the scale of leverage in China’s stock market, fearing the impact of a crash on the ordinary retail investors who dominate it could destabilize the world’s second biggest economy just as growth is slowing. The risks have been magnified by the grey or shadow market — a network of state-owned commercial banks, trust companies, fund managers, and loosely regulated grassroots finance firms. This financing, which can carry annualized interest rates of up to 17 percent, was the financial rocket fuel that powered a 110 percent gain in Shanghai stocks between November and early June, by allowing borrowers to substantially leverage their capital. These firms continue to benefit from interest payments and fees, even as more than $2.5 trillion has been wiped from China’s market capitalization over the last four weeks. Excessive leverage can be lethal in stock markets, because as overextended borrowers sell shares to meet “margin calls” they drive prices down further, creating a vicious cycle. Light regulation of shadow lending underscores Beijing’s quandary as it looks to both protect the army of mom and pop investors, who comprise 80 percent of the stock market, while supporting a rally that has helped raise more than $63 billion from primary and secondary equity sales in China and Hong Kong this year alone. “This needs to be controlled,” said Jiahe Chen, chief strategist at Cinda Securities, adding that when markets were falling high leverage could create a domino effect. Grey network China’s grey financing network involves a loose association of commercial banks, including the largest five state-owned lenders, smaller commercial banks, trust companies and an endless variety of self-styled stock matching endowment firms. These finance firms, many of which were founded in the last year, often have backing from government enterprises but operate outside the remit of China’s securities or banking regulators. Calculating the size of the market is tricky, bankers say, due to its loose regulation. Total margin debt at brokerages stood at 2.2 trillion yuan in late June, but the amount of grey market leverage may exceed that amount. For China’s trust companies alone, stock assets increased by 225 billion yuan ($36 billion) from the previous quarter in the first three months this year, reaching 777 billion yuan by March 31, according to China Trust Association data. That helped drive a 33 percent year-on-year gain in total profit for China’s 68 trust firms in the first quarter of 2015. Typically, banks cooperate with trust firms and stock matching endowment companies to raise cash by issuing wealth management products (WMPs) that are sold to banking clients. These products generate funds that are then used to finance individual and corporate stock market investors at ratios of up to 1:10, according to executives familiar with the businesses. The arrangement highlights a persistent faultline running through China’s financial system, despite Beijing’s efforts to regulate the shadow system — people buying WMPs through mainstream banks may be, knowingly or not, left highly exposed to the vagaries of the stock market. Trust companies have also used such products to back real estate loans, corporate junk bonds and short-term over-the-counter debt instruments. “Riskier clients go to trust companies because they can’t get loans from banks,” said Edmond Law, banks analyst at UOB Kay Hian (Hong Kong), adding that investors in trust products backed by lending to these clients were at higher risk. ‘Good money for nothing’ The financing firms limit their own risk by requiring investors to add cash or sell shares once their accounts lose anywhere from 50 to 70 percent of their original investment value, executives said. Two large and two smaller trust firms told Reuters that large state-owned banks such as Bank of China (BoC) and Bank of Communications Co (BoCom), as well many smaller lenders, indirectly channel money into the stock market this way. “Banks are making good money for nothing,” said an executive at a Shenzhen-based stock-matching endowment firm. His firm, a subsidiary of a central-government owned state enterprise, raises funds by selling WMPs through Bank of China. It works like this: BoC raises 40 million yuan by selling the WMP to its clients, after a stock matching firm provides 20 million yuan in collateral. That creates a 60 million yuan pool that the stock matching firm can use to sell leverage to its customers. BoC charges 10 percent annualized interest for such products, allowing the stock matching firm the opportunity to earn as much as 5 percent, based on the 15 percent annualized interest it charges clients. Using trust firms as conduits, banks also invest money in funds that pile capital directly into stock markets, according to banking executives familiar with the situation. BoC and BoCom declined to comment when contacted by Reuters. A mid-level banker with one of the top five state-owned banks said that lending to trust companies involved very little risk to lenders themselves, as agreements were structured so banks are paid first if the markets tank. “There are things that banks can’t do directly because of risk to asset quality or reputation,” he said. “So we use trusts as channels.” Reuters]]> An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song) An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song)[/caption] Shanghai/Beijing. China’s vast network of “grey market” lenders have reaped big profits from lending money to individuals and companies to buy stocks, but as markets slump their customers face heavy losses after borrowing up to 10 times their starting capital. Global investors are increasingly worried about the scale of leverage in China’s stock market, fearing the impact of a crash on the ordinary retail investors who dominate it could destabilize the world’s second biggest economy just as growth is slowing. The risks have been magnified by the grey or shadow market — a network of state-owned commercial banks, trust companies, fund managers, and loosely regulated grassroots finance firms. This financing, which can carry annualized interest rates of up to 17 percent, was the financial rocket fuel that powered a 110 percent gain in Shanghai stocks between November and early June, by allowing borrowers to substantially leverage their capital. These firms continue to benefit from interest payments and fees, even as more than $2.5 trillion has been wiped from China’s market capitalization over the last four weeks. Excessive leverage can be lethal in stock markets, because as overextended borrowers sell shares to meet “margin calls” they drive prices down further, creating a vicious cycle. Light regulation of shadow lending underscores Beijing’s quandary as it looks to both protect the army of mom and pop investors, who comprise 80 percent of the stock market, while supporting a rally that has helped raise more than $63 billion from primary and secondary equity sales in China and Hong Kong this year alone. “This needs to be controlled,” said Jiahe Chen, chief strategist at Cinda Securities, adding that when markets were falling high leverage could create a domino effect. Grey network China’s grey financing network involves a loose association of commercial banks, including the largest five state-owned lenders, smaller commercial banks, trust companies and an endless variety of self-styled stock matching endowment firms. These finance firms, many of which were founded in the last year, often have backing from government enterprises but operate outside the remit of China’s securities or banking regulators. Calculating the size of the market is tricky, bankers say, due to its loose regulation. Total margin debt at brokerages stood at 2.2 trillion yuan in late June, but the amount of grey market leverage may exceed that amount. For China’s trust companies alone, stock assets increased by 225 billion yuan ($36 billion) from the previous quarter in the first three months this year, reaching 777 billion yuan by March 31, according to China Trust Association data. That helped drive a 33 percent year-on-year gain in total profit for China’s 68 trust firms in the first quarter of 2015. Typically, banks cooperate with trust firms and stock matching endowment companies to raise cash by issuing wealth management products (WMPs) that are sold to banking clients. These products generate funds that are then used to finance individual and corporate stock market investors at ratios of up to 1:10, according to executives familiar with the businesses. The arrangement highlights a persistent faultline running through China’s financial system, despite Beijing’s efforts to regulate the shadow system — people buying WMPs through mainstream banks may be, knowingly or not, left highly exposed to the vagaries of the stock market. Trust companies have also used such products to back real estate loans, corporate junk bonds and short-term over-the-counter debt instruments. “Riskier clients go to trust companies because they can’t get loans from banks,” said Edmond Law, banks analyst at UOB Kay Hian (Hong Kong), adding that investors in trust products backed by lending to these clients were at higher risk. ‘Good money for nothing’ The financing firms limit their own risk by requiring investors to add cash or sell shares once their accounts lose anywhere from 50 to 70 percent of their original investment value, executives said. Two large and two smaller trust firms told Reuters that large state-owned banks such as Bank of China (BoC) and Bank of Communications Co (BoCom), as well many smaller lenders, indirectly channel money into the stock market this way. “Banks are making good money for nothing,” said an executive at a Shenzhen-based stock-matching endowment firm. His firm, a subsidiary of a central-government owned state enterprise, raises funds by selling WMPs through Bank of China. It works like this: BoC raises 40 million yuan by selling the WMP to its clients, after a stock matching firm provides 20 million yuan in collateral. That creates a 60 million yuan pool that the stock matching firm can use to sell leverage to its customers. BoC charges 10 percent annualized interest for such products, allowing the stock matching firm the opportunity to earn as much as 5 percent, based on the 15 percent annualized interest it charges clients. Using trust firms as conduits, banks also invest money in funds that pile capital directly into stock markets, according to banking executives familiar with the situation. BoC and BoCom declined to comment when contacted by Reuters. A mid-level banker with one of the top five state-owned banks said that lending to trust companies involved very little risk to lenders themselves, as agreements were structured so banks are paid first if the markets tank. “There are things that banks can’t do directly because of risk to asset quality or reputation,” he said. “So we use trusts as channels.” Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421935 Uber Announces Suspension of UberPOP in France http://thejakartaglobe.beritasatu.com/?p=421925 Fri, 3 Jul 2015 18:20:32 +0700 Graffiti that reads, " Death to Uber" as taxi vehicles block Porte Maillot, west Paris, on June 26, 2015, as  drivers react furiously at what they see as unfair competition from Uber, which puts customers in touch with private drivers at prices lower than those of traditional taxis. (AFP Photo/Kenzo Tribouillard) Graffiti that reads, " Death to Uber" as taxi vehicles block Porte Maillot, west Paris, on June 26, 2015, as drivers react furiously at what they see as unfair competition from Uber, which puts customers in touch with private drivers at prices lower than those of traditional taxis. (AFP Photo/Kenzo Tribouillard)[/caption] Paris. Uber Technologies will suspend its UberPOP ride-hailing service in France, the US company said on Friday, after it faced often-violent protests and local authorities denounced it as an illegal taxi service. After fierce protests last week by licensed French taxi drivers who argue it threatens their livelihood with unfair competition, France took two executives from California-based Uber into custody and said they will face trial in September. France’s legal clampdown was the latest setback for Uber in Europe. An Italian court in May banned unlicensed car-sharing services, two months after a German court issued a similar ban and imposed stiff fines for violations of local transport laws. “We have decided to suspend UberPOP in France from 2000 (1800 GMT) this Friday evening, primarily to assure the safety of Uber drivers,” the newspaper Le Monde quoted Uber France head Thibaud Simphal as saying, adding some drivers had been targets of violence. “The second reason is that we want to create a spirit of reconciliation and dialogue with public authorities to show we are acting responsibly,” he said. In a June 25 protest in numerous French cities, cabbies blocked roads to the capital’s airports, overturned cars and burned tyres to press for the scheme to be abolished. Police said 70 cars were damaged and seven police officials injured in the protests. Ten people were arrested. The protests were among the fiercest in a series of strikes and other demonstrations across Europe against Uber, whose backers include investment bank Goldman Sachs and technology giant Google. It is valued in excess of $40 billion. Born out of the frustration of two Silicon Valley entrepreneurs trying to catch a cab in Paris, Uber’s services have mushroomed since being launched in 2010 and are offered in nearly 270 cities worldwide. Taxi drivers in France pay income tax and welfare charges and, depending on their location, sometimes have to pay hundreds of thousands of euros for an operating license. They argue they face unfair competition from unlicensed drivers who have no such outgoings and so can undercut them on price. For its part, Uber argues it is offering a much-needed service that complements licensed taxis and is offering a sideline income for some 10,000 people in France. “We understand that new technologies can be destabilizing, particularly for established companies and their employees ... But it is unacceptable to see violence come to the fore, it is up to us to better explain what we are doing and the advantages of the Uber platform.” Reuters]]> Graffiti that reads, " Death to Uber" as taxi vehicles block Porte Maillot, west Paris, on June 26, 2015, as  drivers react furiously at what they see as unfair competition from Uber, which puts customers in touch with private drivers at prices lower than those of traditional taxis. (AFP Photo/Kenzo Tribouillard) Graffiti that reads, " Death to Uber" as taxi vehicles block Porte Maillot, west Paris, on June 26, 2015, as drivers react furiously at what they see as unfair competition from Uber, which puts customers in touch with private drivers at prices lower than those of traditional taxis. (AFP Photo/Kenzo Tribouillard)[/caption] Paris. Uber Technologies will suspend its UberPOP ride-hailing service in France, the US company said on Friday, after it faced often-violent protests and local authorities denounced it as an illegal taxi service. After fierce protests last week by licensed French taxi drivers who argue it threatens their livelihood with unfair competition, France took two executives from California-based Uber into custody and said they will face trial in September. France’s legal clampdown was the latest setback for Uber in Europe. An Italian court in May banned unlicensed car-sharing services, two months after a German court issued a similar ban and imposed stiff fines for violations of local transport laws. “We have decided to suspend UberPOP in France from 2000 (1800 GMT) this Friday evening, primarily to assure the safety of Uber drivers,” the newspaper Le Monde quoted Uber France head Thibaud Simphal as saying, adding some drivers had been targets of violence. “The second reason is that we want to create a spirit of reconciliation and dialogue with public authorities to show we are acting responsibly,” he said. In a June 25 protest in numerous French cities, cabbies blocked roads to the capital’s airports, overturned cars and burned tyres to press for the scheme to be abolished. Police said 70 cars were damaged and seven police officials injured in the protests. Ten people were arrested. The protests were among the fiercest in a series of strikes and other demonstrations across Europe against Uber, whose backers include investment bank Goldman Sachs and technology giant Google. It is valued in excess of $40 billion. Born out of the frustration of two Silicon Valley entrepreneurs trying to catch a cab in Paris, Uber’s services have mushroomed since being launched in 2010 and are offered in nearly 270 cities worldwide. Taxi drivers in France pay income tax and welfare charges and, depending on their location, sometimes have to pay hundreds of thousands of euros for an operating license. They argue they face unfair competition from unlicensed drivers who have no such outgoings and so can undercut them on price. For its part, Uber argues it is offering a much-needed service that complements licensed taxis and is offering a sideline income for some 10,000 people in France. “We understand that new technologies can be destabilizing, particularly for established companies and their employees ... But it is unacceptable to see violence come to the fore, it is up to us to better explain what we are doing and the advantages of the Uber platform.” Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421925 Bank Indonesia Cuts Credit Growth Forecast for the Year http://thejakartaglobe.beritasatu.com/?p=421911 Fri, 3 Jul 2015 18:09:27 +0700 Jakarta. Bank Indonesia has cut its loan growth forecast for the year following slow loan demand in the first six months, the central bank's governor said on Friday. "It [the credit growth] may not reach 15 to 17 percent, but 11 to 13 percent for the whole year," Agus Martowardojo told reporters. "We are going to discuss this matter at the next board of governors meeting and will officially announce the change immediately," he added. The central bank's board of governors is set to meet on July 14. Lenders in Indonesia have disbursed Rp 3,792.8 trillion ($284.64 billion) in loans for the year up to May, an increase of 10.3 percent from the same period a year before. Agus said he still hoped credit growth would accelerate after the government begins disbursing funds for infrastructure projects in the second semester. The government has earmarked more than $21 billion this year for building roads, bridges, airports, sea ports and power plants, but only 8 percent was spent in the January to July period due to red tape. The central bank previously targeted 17 percent credit growth while the Financial Services Authority (OJK) aimed for 16.5 percent growth, referring to the local lenders business plan. Bank Mandiri and Bank Rakyat Indonesia, the country's first and second largest lenders by assets, targeted credit growth at 15 to 17 percent this year. Bank Central Asia, Indonesia's largest private lender, set the credit growth target at 12 percent. Bank OCBC NISP, the local unit of Singapore-based Overseas Chinese Banking Corporation, also revised down its loan growth target to 13 to 15 percent from initial target 15 to 20 percent, due to shrinking consumer loans and slowing small-medium enterprise loan growth, Parwati Surjaudaja, the president director of OCBC NISP, said on Friday. The lenders' total outstanding loans grew 13 percent to Rp 72.2 trillion, in the first five months this year, according to the latest available data. GlobeAsia

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Jakarta. Bank Indonesia has cut its loan growth forecast for the year following slow loan demand in the first six months, the central bank's governor said on Friday. "It [the credit growth] may not reach 15 to 17 percent, but 11 to 13 percent for the whole year," Agus Martowardojo told reporters. "We are going to discuss this matter at the next board of governors meeting and will officially announce the change immediately," he added. The central bank's board of governors is set to meet on July 14. Lenders in Indonesia have disbursed Rp 3,792.8 trillion ($284.64 billion) in loans for the year up to May, an increase of 10.3 percent from the same period a year before. Agus said he still hoped credit growth would accelerate after the government begins disbursing funds for infrastructure projects in the second semester. The government has earmarked more than $21 billion this year for building roads, bridges, airports, sea ports and power plants, but only 8 percent was spent in the January to July period due to red tape. The central bank previously targeted 17 percent credit growth while the Financial Services Authority (OJK) aimed for 16.5 percent growth, referring to the local lenders business plan. Bank Mandiri and Bank Rakyat Indonesia, the country's first and second largest lenders by assets, targeted credit growth at 15 to 17 percent this year. Bank Central Asia, Indonesia's largest private lender, set the credit growth target at 12 percent. Bank OCBC NISP, the local unit of Singapore-based Overseas Chinese Banking Corporation, also revised down its loan growth target to 13 to 15 percent from initial target 15 to 20 percent, due to shrinking consumer loans and slowing small-medium enterprise loan growth, Parwati Surjaudaja, the president director of OCBC NISP, said on Friday. The lenders' total outstanding loans grew 13 percent to Rp 72.2 trillion, in the first five months this year, according to the latest available data. GlobeAsia

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http://thejakartaglobe.beritasatu.com/?p=421911
ECB Signals it Could Loosen Bank Funding if Greeks Vote ‘Yes’ http://thejakartaglobe.beritasatu.com/?p=421914 Fri, 3 Jul 2015 17:58:47 +0700 Two women prepare ballot boxes ahead of a referendum at a polling station in Athens on July 3, 2015. Greece's government and international creditors raised the stakes on July 2 over a weekend referendum seen as decisive for the nearly insolvent EU country's political and financial future. (AFP Photo/Aris Messinis) Two women prepare ballot boxes ahead of a referendum at a polling station in Athens on July 3, 2015. Greece's government and international creditors raised the stakes on July 2 over a weekend referendum seen as decisive for the nearly insolvent EU country's political and financial future. (AFP Photo/Aris Messinis)[/caption] Vilnius. European Central Bank Vice President Vitor Constancio signaled on Friday that the ECB could loosen funding to Greek banks if Greeks vote ‘Yes’ in a referendum on Sunday on whether or not to accept more austerity in return for aid. Constancio said the significance of the referendum was in making it more or less likely that an agreement could be reached on providing financial assistance to Greece. “Nothing else is relevant for us,” he told a news conference following a speech. In the referendum, Greeks will say whether they are in favor of a cash-for-reforms proposal from Athens’ international creditors — now expired — which the government is urging voters to reject. “If there is a ‘No’ result, then it will be more difficult for such an agreement to be reached, Constancio said, adding that this would have consequences for ECB’s analysis and decisions. “If the result will be a ‘Yes’, then it’s the opposite: it seems it will be easier to reach an agreement,” he said. ECB policy council member Josef Bonnici on Thursday also said the ECB would take account of the referendum’s outcome in deciding on any future liquidity provisions, which Greek banks need to stay afloat because of the torrent of withdrawals of the last few weeks. Constancio made clear there were no guarantees, however, pointing out that a decision would have to be taken by the ECB’s policy-setting council as a whole, after analysis of the situation. Some members of the council, notably Germany’s Jens Weidmann, have long voiced reservations about the ECB’s aid, which they say must not be granted to insolvent banks or violate rules prohibiting monetary financing of states. The ECB’s policy council has stopped increasing its funding limit ahead of the bailout referendum, which could decide Greece’s future in the euro, but this week decided against reducing it, for fear that it would further destabilize the banks. Sources have told Reuters that the funding, called Emergency Liquidity Assistance or ELA, stands at about 89 billion euros ($99 billion). Tightening the ELA would have forced Greece to lower its 60 euros-a-day ($66) limit on cash withdrawals. That could have turned public opinion against the euro ahead of the referendum. Asked if the ECB would grant the assistance to Greek banks in the event of a ‘No’ vote, Constancio said: “I cannot in advance answer that question.” Reuters]]> Two women prepare ballot boxes ahead of a referendum at a polling station in Athens on July 3, 2015. Greece's government and international creditors raised the stakes on July 2 over a weekend referendum seen as decisive for the nearly insolvent EU country's political and financial future. (AFP Photo/Aris Messinis) Two women prepare ballot boxes ahead of a referendum at a polling station in Athens on July 3, 2015. Greece's government and international creditors raised the stakes on July 2 over a weekend referendum seen as decisive for the nearly insolvent EU country's political and financial future. (AFP Photo/Aris Messinis)[/caption] Vilnius. European Central Bank Vice President Vitor Constancio signaled on Friday that the ECB could loosen funding to Greek banks if Greeks vote ‘Yes’ in a referendum on Sunday on whether or not to accept more austerity in return for aid. Constancio said the significance of the referendum was in making it more or less likely that an agreement could be reached on providing financial assistance to Greece. “Nothing else is relevant for us,” he told a news conference following a speech. In the referendum, Greeks will say whether they are in favor of a cash-for-reforms proposal from Athens’ international creditors — now expired — which the government is urging voters to reject. “If there is a ‘No’ result, then it will be more difficult for such an agreement to be reached, Constancio said, adding that this would have consequences for ECB’s analysis and decisions. “If the result will be a ‘Yes’, then it’s the opposite: it seems it will be easier to reach an agreement,” he said. ECB policy council member Josef Bonnici on Thursday also said the ECB would take account of the referendum’s outcome in deciding on any future liquidity provisions, which Greek banks need to stay afloat because of the torrent of withdrawals of the last few weeks. Constancio made clear there were no guarantees, however, pointing out that a decision would have to be taken by the ECB’s policy-setting council as a whole, after analysis of the situation. Some members of the council, notably Germany’s Jens Weidmann, have long voiced reservations about the ECB’s aid, which they say must not be granted to insolvent banks or violate rules prohibiting monetary financing of states. The ECB’s policy council has stopped increasing its funding limit ahead of the bailout referendum, which could decide Greece’s future in the euro, but this week decided against reducing it, for fear that it would further destabilize the banks. Sources have told Reuters that the funding, called Emergency Liquidity Assistance or ELA, stands at about 89 billion euros ($99 billion). Tightening the ELA would have forced Greece to lower its 60 euros-a-day ($66) limit on cash withdrawals. That could have turned public opinion against the euro ahead of the referendum. Asked if the ECB would grant the assistance to Greek banks in the event of a ‘No’ vote, Constancio said: “I cannot in advance answer that question.” Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421914 Indonesia Needs Fiscal Stimulus to Withstand Global Slowdown: Lippo Group Founder http://thejakartaglobe.beritasatu.com/?p=421894 Fri, 3 Jul 2015 17:26:44 +0700 Jakarta. Indonesia needs fiscal stimulus to boost economic growth amid a global economic slowdown, Lippo Group executives said this week. Lippo Group chief executive James Riady said he welcomed the government’s plan to allow foreigners the right to use property in the country for as long as they live. “I am glad the government finally says it is OK [for foreigners to use property], but at the same time, there’s this property tax. If somehow there’s some fiscal easing, companies will be able to get more liquidity, the business community will be stimulated,,” James said during a gathering attended by leaders of Lippo Group companies, at Lippo Village in Karawaci, west of Jakarta. "This will also improve confidence in Indonesia’s economy." Minister for Agrarian Affairs and Spatial Planning Ferry Mursyidan Baldan revealed last month that his office had been tasked with drafting a new regulation that would pave the way for foreigners to purchase luxury apartments worth more than Rp 5 billion ($375,000). However, expatriates are still prohibited from owning landed property or low-cost apartment units. They will also be limited to hak pakai, or the "right of use" — not hak milik, or Freehold, the highest form of ownership in Indonesia. Under the current regulation, foreigners holding a right of use certificate will have to renew their permit every 25 years. The new regulation will abolish the time restriction and allow foreigners to pass the property down to their children. Lippo Group chairman Mochtar Riady acknowledged that the impact of the recent global slowdown on Indonesia's economy has been huge, particularly in the export-oriented sectors like coal mining, which have suffered a notable decline. He added that the business community was waiting for the right solution to deal with this tepid environment. “The key is confidence. If the direction of the policy is right, the market will recover at a faster pace,” Mochtar said. Despite Indonesia's slowdown, the business conglomerate has posted solid growth from its hospital, mall and retail companies, James said. These sectors are particularly resilient as they are sustained by household consumption, he explained. James said that Lippo Group, with the Jakarta Globe is affiliated, will follow through with further expansion plans outside of Java, especially in the eastern part of the archipelago, as it aims to continue to offer its best services to the public. Among the conglomerate's latest endeavors is the e-commerce platform MatahariMall.com, which is projected to be Indonesia's largest Internet-based retailer when it launches in September. Mochtar said he believes the e-commerce industry will outgrow brick-and-mortar malls and shops in the next 10 to 20 years. The businessman also told his staff that in responding to the global uncertainty, companies need to stay true to their business vision. Should they succeed in this, they will have traversed 50 percent of the road to success, he said. GlobeAsia]]> Jakarta. Indonesia needs fiscal stimulus to boost economic growth amid a global economic slowdown, Lippo Group executives said this week. Lippo Group chief executive James Riady said he welcomed the government’s plan to allow foreigners the right to use property in the country for as long as they live. “I am glad the government finally says it is OK [for foreigners to use property], but at the same time, there’s this property tax. If somehow there’s some fiscal easing, companies will be able to get more liquidity, the business community will be stimulated,,” James said during a gathering attended by leaders of Lippo Group companies, at Lippo Village in Karawaci, west of Jakarta. "This will also improve confidence in Indonesia’s economy." Minister for Agrarian Affairs and Spatial Planning Ferry Mursyidan Baldan revealed last month that his office had been tasked with drafting a new regulation that would pave the way for foreigners to purchase luxury apartments worth more than Rp 5 billion ($375,000). However, expatriates are still prohibited from owning landed property or low-cost apartment units. They will also be limited to hak pakai, or the "right of use" — not hak milik, or Freehold, the highest form of ownership in Indonesia. Under the current regulation, foreigners holding a right of use certificate will have to renew their permit every 25 years. The new regulation will abolish the time restriction and allow foreigners to pass the property down to their children. Lippo Group chairman Mochtar Riady acknowledged that the impact of the recent global slowdown on Indonesia's economy has been huge, particularly in the export-oriented sectors like coal mining, which have suffered a notable decline. He added that the business community was waiting for the right solution to deal with this tepid environment. “The key is confidence. If the direction of the policy is right, the market will recover at a faster pace,” Mochtar said. Despite Indonesia's slowdown, the business conglomerate has posted solid growth from its hospital, mall and retail companies, James said. These sectors are particularly resilient as they are sustained by household consumption, he explained. James said that Lippo Group, with the Jakarta Globe is affiliated, will follow through with further expansion plans outside of Java, especially in the eastern part of the archipelago, as it aims to continue to offer its best services to the public. Among the conglomerate's latest endeavors is the e-commerce platform MatahariMall.com, which is projected to be Indonesia's largest Internet-based retailer when it launches in September. Mochtar said he believes the e-commerce industry will outgrow brick-and-mortar malls and shops in the next 10 to 20 years. The businessman also told his staff that in responding to the global uncertainty, companies need to stay true to their business vision. Should they succeed in this, they will have traversed 50 percent of the road to success, he said. GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=421894 Miles From Athens, Greeks Overseas Buy Groceries for Family Back Home http://thejakartaglobe.beritasatu.com/?p=421908 Fri, 3 Jul 2015 17:23:30 +0700 An elderly man is crying outside a national bank branch as pensioners queue to get their pensions, with a limit of 120 euros, in Thessaloniki on 3 July, 2015. (AFP Photo/Sakis Mitrolidis) An elderly man is crying outside a national bank branch as pensioners queue to get their pensions, with a limit of 120 euros, in Thessaloniki on 3 July, 2015. (AFP Photo/Sakis Mitrolidis)[/caption] Sydney. Half a world away from the crisis unfolding in Greece, Nelly Skoufatoglou is shopping online for toilet paper, detergents, rice and olive oil to be delivered to her mother’s home near Athens. Skoufatoglou is one of tens of thousands of Greek Australians who have fled to Australia to escape the economic woes of her birthplace, making Melbourne her new home just under a year ago. She’s now finding inventive ways to support the family she left behind and to dodge the restrictions on money transfers and cash withdrawals by locals in Greece. One way is buying groceries online via the Carrefour Greece website from her desk in Melbourne for delivery to her mother. “I called my mum and asked her what she needed,”. Skoufatoglou told Reuters by phone from Melbourne. “I bought olive oil, rice, cheese, groceries, detergent, toilet paper, just basic goods.” Skoufatoglou, a journalist with Greek language publication NeosCosmos in Melbourne, had been sending money to her Australian-born mother via the banks until they restricted withdrawals. She then turned to Western Union, which this week blocked transfers to Greece. “Shopping online means that she (her mother) doesn’t have to queue up at ATMs running out of money to get basic supplies,” she said. Carrefour in Greece, which is owned by the Marinopoulos Group after the French supermarket chain sold its stake in its Greek operations in 2012, said it did not collect data on overseas sales but said general demand for its goods had increased over the past three days. In Baltimore in the United States, Nely Kostopoulou is also shopping online for family in Greece. Kostopoulou said her mother’s pension had been cut by almost 30 percent to 700 euros per month, while her sister is long-term unemployed. “A lot of relatives have to split their skinny pension with their kids and their families because none has enough to go through the month,” she told Reuters via email. “Buying the groceries every month is another way to help.” The Carrefour Greece website, which is operated by an external company, Caremarket, accepts credit cards from several other nationalities as payment, although it has barred bank transfers. Caremarket did not immediately return calls for comment. Marinopoulos spokesman said that while demand has risen, it was not experiencing any problems with its supplies. “So far when it comes to suppliers we are not having any issue,” the Marinopoulos spokesman told Reuters. “What we cannot predict in the future is what happens if the consumers’ behavior changes.” Bill Papastergiadis, president of the Greek Orthodox Community of Melbourne, said avoiding money transfers and using private business channels to support relatives makes sense. “The private sector system works very effectively in Greece and there are delivery networks around the country,” he said. Skoufatoglou’s only concern is that this most recent avenue of support will also slam shut. “Then what we do, I don’t know,” she said. Reuters]]> An elderly man is crying outside a national bank branch as pensioners queue to get their pensions, with a limit of 120 euros, in Thessaloniki on 3 July, 2015. (AFP Photo/Sakis Mitrolidis) An elderly man is crying outside a national bank branch as pensioners queue to get their pensions, with a limit of 120 euros, in Thessaloniki on 3 July, 2015. (AFP Photo/Sakis Mitrolidis)[/caption] Sydney. Half a world away from the crisis unfolding in Greece, Nelly Skoufatoglou is shopping online for toilet paper, detergents, rice and olive oil to be delivered to her mother’s home near Athens. Skoufatoglou is one of tens of thousands of Greek Australians who have fled to Australia to escape the economic woes of her birthplace, making Melbourne her new home just under a year ago. She’s now finding inventive ways to support the family she left behind and to dodge the restrictions on money transfers and cash withdrawals by locals in Greece. One way is buying groceries online via the Carrefour Greece website from her desk in Melbourne for delivery to her mother. “I called my mum and asked her what she needed,”. Skoufatoglou told Reuters by phone from Melbourne. “I bought olive oil, rice, cheese, groceries, detergent, toilet paper, just basic goods.” Skoufatoglou, a journalist with Greek language publication NeosCosmos in Melbourne, had been sending money to her Australian-born mother via the banks until they restricted withdrawals. She then turned to Western Union, which this week blocked transfers to Greece. “Shopping online means that she (her mother) doesn’t have to queue up at ATMs running out of money to get basic supplies,” she said. Carrefour in Greece, which is owned by the Marinopoulos Group after the French supermarket chain sold its stake in its Greek operations in 2012, said it did not collect data on overseas sales but said general demand for its goods had increased over the past three days. In Baltimore in the United States, Nely Kostopoulou is also shopping online for family in Greece. Kostopoulou said her mother’s pension had been cut by almost 30 percent to 700 euros per month, while her sister is long-term unemployed. “A lot of relatives have to split their skinny pension with their kids and their families because none has enough to go through the month,” she told Reuters via email. “Buying the groceries every month is another way to help.” The Carrefour Greece website, which is operated by an external company, Caremarket, accepts credit cards from several other nationalities as payment, although it has barred bank transfers. Caremarket did not immediately return calls for comment. Marinopoulos spokesman said that while demand has risen, it was not experiencing any problems with its supplies. “So far when it comes to suppliers we are not having any issue,” the Marinopoulos spokesman told Reuters. “What we cannot predict in the future is what happens if the consumers’ behavior changes.” Bill Papastergiadis, president of the Greek Orthodox Community of Melbourne, said avoiding money transfers and using private business channels to support relatives makes sense. “The private sector system works very effectively in Greece and there are delivery networks around the country,” he said. Skoufatoglou’s only concern is that this most recent avenue of support will also slam shut. “Then what we do, I don’t know,” she said. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421908 Asian Currencies to Fall Slightly With Fed Set to Raise Rates http://thejakartaglobe.beritasatu.com/?p=421902 Fri, 3 Jul 2015 16:57:15 +0700 Rupiah Melemah - Teller menghitung lembaran rupiah di kantor cabang Permata Bank, Jakarta, Senin (29/6). Nilai tukar rupiah terhadap dolar Amerika Serikat (AS) awal pekan ditutup melemah di posisi Rp 13.355 per dolar AS dibandingkan posisi pada penutupan perdagangan kemarin Rp 13.305 per dolar AS. (Investor Daily/David Gita Roza) An Indonesian woman counts the rupiah, the most vulnerable Asian currency. The rupiah has lost more than 7 percent so far this year. (Investor Daily Photo/David Gita Roza)[/caption] Emerging Asian currencies will weaken in the months ahead due to expectations the US Federal Reserve will raise interest rates soon, although foreign exchange strategists in a Reuters poll say that losses aren’t expected to be significant. That stands in contrast to the bumpy ride ahead for emerging markets outside of Asia, especially Latin America, where analysts appear fearful of the impact of higher US rates and Greece’s stand-off with its creditors. “Asian emerging currencies are likely to be more resilient than some of the emerging currencies, such as in Latin America,” said Eric Viloria, a currency strategist at Wells Fargo. In 2013, emerging market assets suffered a steep sell-off when the Fed announced it would reel in its economic stimulus. However, economic activity in some Asian countries has improved, with a few turning current account deficits into surpluses since then, making them less prone to sell-offs when the Federal Reserve raises rates. Also, a strong dollar, which has already put a dent into US company earnings and poses a risk to economic growth there, may push the Fed to tighten policy at a slow pace. “We think the Fed, when they do move initially, will take a gradual approach and pick up the pace towards the end of next year,” Viloria said. China’s yuan is the only currency in Asia expected to stay relatively strong, despite slowing economic growth twinned with a brutal 30 percent stock market crash that the authorities are trying to stabilize. The yuan is forecast to trade at 6.21 per dollar in a month and 6.22 by end-September, then strengthen to around its current trading level of 6.20. Speculative bets for the currency to strengthen were in line with those expectations, having increased to a seven-month high, according to a separate Reuters poll last week. Expectations for the currencies of Indonesia, Taiwan and Singapore stand in direct contrast to the yuan. Half the analysts polled said Indonesia’s currency was the most vulnerable to a sell-off from a Fed rate rise as the country has large amounts of dollar-denominated debt and its economic growth is softening. The rupiah will probably weaken to 13,800 a dollar over the coming year, having already lost more than 7 percent so far this year. It was trading at 13,319 on Friday. Taiwan’s dollar is expected to reach 32.1 per US dollar in a year from 30.87 now. Singapore’s dollar was forecast to fall more than 3 percent in the coming year. The Indian rupee is forecast to weaken to 64.00 per dollar in one month, 64.45 in six months and 64.80 in one year. It was last trading at 63.68. South Korea’s won, Thailand’s baht and the Philippine peso are all expected to weaken around 1 percent over the coming year. For other stories from the Reuters global poll on foreign exchange rates Reuters]]> Rupiah Melemah - Teller menghitung lembaran rupiah di kantor cabang Permata Bank, Jakarta, Senin (29/6). Nilai tukar rupiah terhadap dolar Amerika Serikat (AS) awal pekan ditutup melemah di posisi Rp 13.355 per dolar AS dibandingkan posisi pada penutupan perdagangan kemarin Rp 13.305 per dolar AS. (Investor Daily/David Gita Roza) An Indonesian woman counts the rupiah, the most vulnerable Asian currency. The rupiah has lost more than 7 percent so far this year. (Investor Daily Photo/David Gita Roza)[/caption] Emerging Asian currencies will weaken in the months ahead due to expectations the US Federal Reserve will raise interest rates soon, although foreign exchange strategists in a Reuters poll say that losses aren’t expected to be significant. That stands in contrast to the bumpy ride ahead for emerging markets outside of Asia, especially Latin America, where analysts appear fearful of the impact of higher US rates and Greece’s stand-off with its creditors. “Asian emerging currencies are likely to be more resilient than some of the emerging currencies, such as in Latin America,” said Eric Viloria, a currency strategist at Wells Fargo. In 2013, emerging market assets suffered a steep sell-off when the Fed announced it would reel in its economic stimulus. However, economic activity in some Asian countries has improved, with a few turning current account deficits into surpluses since then, making them less prone to sell-offs when the Federal Reserve raises rates. Also, a strong dollar, which has already put a dent into US company earnings and poses a risk to economic growth there, may push the Fed to tighten policy at a slow pace. “We think the Fed, when they do move initially, will take a gradual approach and pick up the pace towards the end of next year,” Viloria said. China’s yuan is the only currency in Asia expected to stay relatively strong, despite slowing economic growth twinned with a brutal 30 percent stock market crash that the authorities are trying to stabilize. The yuan is forecast to trade at 6.21 per dollar in a month and 6.22 by end-September, then strengthen to around its current trading level of 6.20. Speculative bets for the currency to strengthen were in line with those expectations, having increased to a seven-month high, according to a separate Reuters poll last week. Expectations for the currencies of Indonesia, Taiwan and Singapore stand in direct contrast to the yuan. Half the analysts polled said Indonesia’s currency was the most vulnerable to a sell-off from a Fed rate rise as the country has large amounts of dollar-denominated debt and its economic growth is softening. The rupiah will probably weaken to 13,800 a dollar over the coming year, having already lost more than 7 percent so far this year. It was trading at 13,319 on Friday. Taiwan’s dollar is expected to reach 32.1 per US dollar in a year from 30.87 now. Singapore’s dollar was forecast to fall more than 3 percent in the coming year. The Indian rupee is forecast to weaken to 64.00 per dollar in one month, 64.45 in six months and 64.80 in one year. It was last trading at 63.68. South Korea’s won, Thailand’s baht and the Philippine peso are all expected to weaken around 1 percent over the coming year. For other stories from the Reuters global poll on foreign exchange rates Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421902 China Hunts for ‘Manipulators’ as Stocks Tumble http://thejakartaglobe.beritasatu.com/?p=421883 Fri, 3 Jul 2015 16:34:45 +0700 An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song) An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song)[/caption] Shanghai. Chinese stocks tumbled again on Friday, taking the week’s losses to more than 10 percent, as the securities regulator said it was investigating suspected market manipulation amid increasingly desperate attempts by Beijing to head off a full-blown crash. After a slump of nearly 30 percent in Chinese stocks since mid-June, the China Securities Regulatory Commission (CSRC) has set up a team to look at “clues of illegal manipulation across markets”. A flurry of policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, have failed to arrest the sell-off. “The government must rescue the market, not with empty words, but with real silver and gold,” said Fu Xuejun, strategist at Huarong Securities Co, adding that a market crash would hurt banks, consumption, companies and even trigger social instability. “It’s a disaster. If it’s not, what is it?” The CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 5.4 percent to close at 3,885.92, while the Shanghai Composite Index shed 5.8 percent to 3,686.92 points. For the week, the CSI300 lost 10.4 percent and the SSEC fell 12.1 percent. The Shanghai benchmark fell below 4,000 points on Thursday for the first time since April — a key support level that analysts had expected Beijing to defend. The rout in China’s highly leveraged stock market has become a major worry for global investors, who fear a meltdown could destabilize the world’s second-largest economy at a time when growth is already slowing. Chinese stocks had more than doubled between November and mid-June, fueled in large part by retail investors using borrowed money to bet on shares. “This is happening against an (economic) growth backdrop that continues to look soft, as illustrated by the flat manufacturing survey this week,” noted analysts at Barclays. “With growth data still soft, China remains a key uncertainty for the global outlook.” Short sellers targeted The China Daily newspaper said on Friday that the CSRC was probing investors who used stock index futures to “short” the market — or bet on prices falling. Sources with direct knowledge later told Reuters that the China Financial Futures Exchange (CFFEX) had suspended 19 accounts from short-selling for a month. Much of the selling of Chinese stocks has been driven by “margin calls”, when a brokerage that has extended credit to an investor to buy stocks demands more cash or collateral because prices have fallen. If those margin calls continue, it also could affect other markets as investors need to raise cash. “Some funds have closed their copper positions to send funds back to China, in order to meet their margin payments on stock indexes,” said one metals broker in Hong Kong. Herald van der Linde, Asia equity strategist at HSBC, said there were signs that some of the money being pulled out of stocks was going into other assets, with a pick-up in physical property transactions. “It could go to Hong Kong, it could go to property, it could go to cash,” he said. “But if they have to repay debt, it’s basically deleveraging, as well.” Beijing has been struggling since the weekend to find a policy formula that would restore confidence in its stock markets. So far, rapid-fire steps including easing monetary policy, encouraging more pension funds to invest in stocks and cutting transaction costs have failed to stem the slump. The CSRC has relaxed rules on using borrowed money to speculate on stock markets, letting brokerages set their own tolerance level on margin calls and allowing the rollover of margin lending contracts. On Friday, the regulator also said it would step up its monitoring of markets to protect investors against the mis-selling of investment products. China is due to release second-quarter gross domestic product data on July 15, and many economists expect growth to dip below 7 percent, which would be the weakest performance since the global financial crisis. Reuters]]> An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song) An investor is reflected on an electronic board showing stock information at a brokerage house in Shanghai, China, July 3, 2015. China stocks slumped again on Friday, taking their three-week tumble to nearly 30 percent and wiping out most of this year's gains. (Reuters Photo/Aly Song)[/caption] Shanghai. Chinese stocks tumbled again on Friday, taking the week’s losses to more than 10 percent, as the securities regulator said it was investigating suspected market manipulation amid increasingly desperate attempts by Beijing to head off a full-blown crash. After a slump of nearly 30 percent in Chinese stocks since mid-June, the China Securities Regulatory Commission (CSRC) has set up a team to look at “clues of illegal manipulation across markets”. A flurry of policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, have failed to arrest the sell-off. “The government must rescue the market, not with empty words, but with real silver and gold,” said Fu Xuejun, strategist at Huarong Securities Co, adding that a market crash would hurt banks, consumption, companies and even trigger social instability. “It’s a disaster. If it’s not, what is it?” The CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 5.4 percent to close at 3,885.92, while the Shanghai Composite Index shed 5.8 percent to 3,686.92 points. For the week, the CSI300 lost 10.4 percent and the SSEC fell 12.1 percent. The Shanghai benchmark fell below 4,000 points on Thursday for the first time since April — a key support level that analysts had expected Beijing to defend. The rout in China’s highly leveraged stock market has become a major worry for global investors, who fear a meltdown could destabilize the world’s second-largest economy at a time when growth is already slowing. Chinese stocks had more than doubled between November and mid-June, fueled in large part by retail investors using borrowed money to bet on shares. “This is happening against an (economic) growth backdrop that continues to look soft, as illustrated by the flat manufacturing survey this week,” noted analysts at Barclays. “With growth data still soft, China remains a key uncertainty for the global outlook.” Short sellers targeted The China Daily newspaper said on Friday that the CSRC was probing investors who used stock index futures to “short” the market — or bet on prices falling. Sources with direct knowledge later told Reuters that the China Financial Futures Exchange (CFFEX) had suspended 19 accounts from short-selling for a month. Much of the selling of Chinese stocks has been driven by “margin calls”, when a brokerage that has extended credit to an investor to buy stocks demands more cash or collateral because prices have fallen. If those margin calls continue, it also could affect other markets as investors need to raise cash. “Some funds have closed their copper positions to send funds back to China, in order to meet their margin payments on stock indexes,” said one metals broker in Hong Kong. Herald van der Linde, Asia equity strategist at HSBC, said there were signs that some of the money being pulled out of stocks was going into other assets, with a pick-up in physical property transactions. “It could go to Hong Kong, it could go to property, it could go to cash,” he said. “But if they have to repay debt, it’s basically deleveraging, as well.” Beijing has been struggling since the weekend to find a policy formula that would restore confidence in its stock markets. So far, rapid-fire steps including easing monetary policy, encouraging more pension funds to invest in stocks and cutting transaction costs have failed to stem the slump. The CSRC has relaxed rules on using borrowed money to speculate on stock markets, letting brokerages set their own tolerance level on margin calls and allowing the rollover of margin lending contracts. On Friday, the regulator also said it would step up its monitoring of markets to protect investors against the mis-selling of investment products. China is due to release second-quarter gross domestic product data on July 15, and many economists expect growth to dip below 7 percent, which would be the weakest performance since the global financial crisis. Reuters]]> http://thejakartaglobe.beritasatu.com/?p=421883 Singapore Bail-in Proposals Make Senior Bond Holders Breathe Easy http://thejakartaglobe.beritasatu.com/?p=421870 Fri, 3 Jul 2015 15:48:06 +0700 People walk past office buildings at the central business district in Singapore in this April 14, 2015 file photo. (Reuters Photo/Edgar Su) People walk past office buildings at the central business district in Singapore in this April 14, 2015 file photo. (Reuters Photo/Edgar Su)[/caption]
Singapore. Holders of senior debt from Singapore's banks will have reason to breathe easy if the Monetary Authority of Singapore implements proposals to limit its statutory bail-in framework to subordinated debt. The proposal, part of a set of proposed enhancements to the bank resolution regime, will turn Singapore into one of the most investor-friendly nations for senior bank debt, as opposed to the approach favoured in Europe and elsewhere. Many countries have introduced legislation that forces senior bondholders to share losses if a bank becomes no longer viable, adding another buffer to protect taxpayers and depositors. Instead, Singapore is limiting the use of bail-in powers to subordinated debt, which is already loss-absorbing under Basel III, effectively pledging to support senior bondholders if a bank fails. "In Europe and the US, where taxpayers were tapped to bail out banks during the global financial crisis, it is now the bail-in approach that is preferred in case banks run into difficulties," said Eugene Tarzimanov, Moody's vice president and senior credit officer. "In Asia, where governments are supportive of the banks, we think the bail-out approach is still preferred." Contagion The MAS is concerned that bailing in a bank's senior creditors will lead to contagion across the financial system and increase the affected bank's funding costs. On the other hand, Singapore-incorporated banks are extremely well capitalized and are already subject to very strict capital standards, which mitigate the risks of loss-absorption. The central bank currently requires Singapore lenders to maintain a common equity Tier 1 of 9.0% by 2019, which is 2.0% higher than the level that the Basel Committee requires under the new-style bank capital framework. In practice, Singapore-incorporated banks have an average common equity T1 ratio of 12%-13%, says Moody's. In view of these, the MAS is proposing that the statutory bail-in regime be applied to unsecured subordinated debt and loans issued or contracted after related laws come into force. No effective date has yet been disclosed. This means senior unsecured debt, legacy subordinated debt and deposits will be excluded from the bail-in regime. Contrast This is in contrast to other existing and planned bank resolution regimes in the rest of the world. In Hong Kong, the bail-in proposals from Hong Kong Monetary Authority are more aligned with regimes seen in Europe and the US, in that only customer deposits are immune from bail-in rules. Hong Kong, however, is mainly concerned with regulating banks with parents in developed countries that have more stringent resolution regimes, in contrast to Singapore, where three home-grown banks - DBS, OCBC and UOB - are dominant. Moody's called the Singapore plans credit positive for senior bank creditors. "The proposed bail-in regime excludes all existing and prospective senior debt, deposits, and interbank liabilities, making it one of the most investor-friendly in the world for non-subordinated debtholders," said Tarzimanov. The MAS proposals also call for bail-in to be effective only on subordinated debt issued after bail-in laws are implemented. This means all existing sub-debt instruments will be exempt from statutory bail-in powers - whether or not they already carry loss-absorbing features. That may encourage Singapore banks to issue more Basel III sub debt before funding costs increase to correspond with higher regulatory risks of a statutory bail-in. "This does provide a material incentive for banks to raise sub-debt as soon as needed to potentially benefit from the lower pricing due to the aforementioned exemption," said Deutsche Bank's research analyst Viacheslav Shilin in a credit note. Although other observers are not expecting a rush to the market under the current rules, issuing more sub debt now will also put banks in a better position to prepare for potential total loss-absorbing capacity (TLAC) requirements. "Whether there is additional issuance or not will depend on whether the MAS increases capital requirements following the current TLAC proposals for global systematically important banks (SIBs)," said Pramod Shenoi, head of Standard Chartered's capital solutions. The advent of TLAC rules in Europe for global SIBs is expected to make its way into Asia. Singapore is expected to adopt similar proposals for its domestic SIBs to align its policies with the Financial Stability Board's international standards. TLAC The FSB is calling for banks to create additional buffers of bail-in liabilities to minimise the costs of bank failures to taxpayers. Given that senior debt will not be loss-absorbing under local rules, Singapore's will have to issue more subordinated debt to maintain a TLAC buffer. There is plenty of headroom for Singapore banks to issue sub debt. According to Moody's, Singapore banks have issued around $5 billion of Basel III-compliant securities, representing just 0.6% of their consolidated assets. Bankers do not see any major challenge in selling subordinated paper. "The Basel III instruments have wide investor acceptance, but the effect of the change will be additional risks, which make the paper more expensive," said one head of DCM. "Still, I don't see any difficulty in selling it as there will be price discovery, and the market will find price equilibrium." Investors often take the view that Asian governments will make preemptive moves to save a troubled bank before it reaches the point of non-viability, the trigger event for subordinated bondholders to share losses. The MAS is the latest regulator in the Asia-Pacific region to propose a bank resolution regime. Japan, Australia and Hong Kong are among other Asian nations that have already put in place or have drawn up proposed bank resolution regimes. Reuters
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People walk past office buildings at the central business district in Singapore in this April 14, 2015 file photo. (Reuters Photo/Edgar Su) People walk past office buildings at the central business district in Singapore in this April 14, 2015 file photo. (Reuters Photo/Edgar Su)[/caption]
Singapore. Holders of senior debt from Singapore's banks will have reason to breathe easy if the Monetary Authority of Singapore implements proposals to limit its statutory bail-in framework to subordinated debt. The proposal, part of a set of proposed enhancements to the bank resolution regime, will turn Singapore into one of the most investor-friendly nations for senior bank debt, as opposed to the approach favoured in Europe and elsewhere. Many countries have introduced legislation that forces senior bondholders to share losses if a bank becomes no longer viable, adding another buffer to protect taxpayers and depositors. Instead, Singapore is limiting the use of bail-in powers to subordinated debt, which is already loss-absorbing under Basel III, effectively pledging to support senior bondholders if a bank fails. "In Europe and the US, where taxpayers were tapped to bail out banks during the global financial crisis, it is now the bail-in approach that is preferred in case banks run into difficulties," said Eugene Tarzimanov, Moody's vice president and senior credit officer. "In Asia, where governments are supportive of the banks, we think the bail-out approach is still preferred." Contagion The MAS is concerned that bailing in a bank's senior creditors will lead to contagion across the financial system and increase the affected bank's funding costs. On the other hand, Singapore-incorporated banks are extremely well capitalized and are already subject to very strict capital standards, which mitigate the risks of loss-absorption. The central bank currently requires Singapore lenders to maintain a common equity Tier 1 of 9.0% by 2019, which is 2.0% higher than the level that the Basel Committee requires under the new-style bank capital framework. In practice, Singapore-incorporated banks have an average common equity T1 ratio of 12%-13%, says Moody's. In view of these, the MAS is proposing that the statutory bail-in regime be applied to unsecured subordinated debt and loans issued or contracted after related laws come into force. No effective date has yet been disclosed. This means senior unsecured debt, legacy subordinated debt and deposits will be excluded from the bail-in regime. Contrast This is in contrast to other existing and planned bank resolution regimes in the rest of the world. In Hong Kong, the bail-in proposals from Hong Kong Monetary Authority are more aligned with regimes seen in Europe and the US, in that only customer deposits are immune from bail-in rules. Hong Kong, however, is mainly concerned with regulating banks with parents in developed countries that have more stringent resolution regimes, in contrast to Singapore, where three home-grown banks - DBS, OCBC and UOB - are dominant. Moody's called the Singapore plans credit positive for senior bank creditors. "The proposed bail-in regime excludes all existing and prospective senior debt, deposits, and interbank liabilities, making it one of the most investor-friendly in the world for non-subordinated debtholders," said Tarzimanov. The MAS proposals also call for bail-in to be effective only on subordinated debt issued after bail-in laws are implemented. This means all existing sub-debt instruments will be exempt from statutory bail-in powers - whether or not they already carry loss-absorbing features. That may encourage Singapore banks to issue more Basel III sub debt before funding costs increase to correspond with higher regulatory risks of a statutory bail-in. "This does provide a material incentive for banks to raise sub-debt as soon as needed to potentially benefit from the lower pricing due to the aforementioned exemption," said Deutsche Bank's research analyst Viacheslav Shilin in a credit note. Although other observers are not expecting a rush to the market under the current rules, issuing more sub debt now will also put banks in a better position to prepare for potential total loss-absorbing capacity (TLAC) requirements. "Whether there is additional issuance or not will depend on whether the MAS increases capital requirements following the current TLAC proposals for global systematically important banks (SIBs)," said Pramod Shenoi, head of Standard Chartered's capital solutions. The advent of TLAC rules in Europe for global SIBs is expected to make its way into Asia. Singapore is expected to adopt similar proposals for its domestic SIBs to align its policies with the Financial Stability Board's international standards. TLAC The FSB is calling for banks to create additional buffers of bail-in liabilities to minimise the costs of bank failures to taxpayers. Given that senior debt will not be loss-absorbing under local rules, Singapore's will have to issue more subordinated debt to maintain a TLAC buffer. There is plenty of headroom for Singapore banks to issue sub debt. According to Moody's, Singapore banks have issued around $5 billion of Basel III-compliant securities, representing just 0.6% of their consolidated assets. Bankers do not see any major challenge in selling subordinated paper. "The Basel III instruments have wide investor acceptance, but the effect of the change will be additional risks, which make the paper more expensive," said one head of DCM. "Still, I don't see any difficulty in selling it as there will be price discovery, and the market will find price equilibrium." Investors often take the view that Asian governments will make preemptive moves to save a troubled bank before it reaches the point of non-viability, the trigger event for subordinated bondholders to share losses. The MAS is the latest regulator in the Asia-Pacific region to propose a bank resolution regime. Japan, Australia and Hong Kong are among other Asian nations that have already put in place or have drawn up proposed bank resolution regimes. Reuters
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http://thejakartaglobe.beritasatu.com/?p=421870
Multipolar Sets 2016 Operations Target for $200m W. Java Data Center http://thejakartaglobe.beritasatu.com/?p=421824 Fri, 3 Jul 2015 16:08:57 +0700 Jakarta. Graha Teknologi Nusantara, the data center unit of listed information technology company Multipolar Technology, aims to start operations on its first complex in Cikarang, West Java, by April next year, in the first phase of its $200 million venture into the business. “Anticipating high demand from the market, especially in the financial and industrial sectors, we’ve prepared as much as 20,000 server racks servers, which will make us one of the biggest collocation data centers in the world,” Richard Kartawijaya, president director of GTN, said in Jakarta on Friday. He said capacity will be added gradually across three data centers, adding that the company will set up about 8,000 server racks in the first data center. The company — a joint venture between Multipolar Technology, Japanese investment firm Mitsui and Mitsui’s subsidiary Mitsui Knowledge Industry — started construction on the first data center on Thursday. The company is estimated to invest between $25 million and $30 million during the first stage of development, said Harijono Suwarno, a commissioner of GTN. “We hope to reach 20,000 racks in less than five years, but it really depends on [Indonesia's] economic growth and the demand for IT in the country. Developing countries tend to see faster growth [for IT spending],” he said, adding that the company has not yet decided when it will start building the second data center. IT companies in Indonesia have been racing into the data center business in the past year, hoping to benefit from a government regulation which may require companies that offer public services — such as banks and multifinance firms — to securely store their data locally. IT-related spending in the country is forecast to climb 18 percent to $15.6 billion with 47 percent coming from enterprises, according to IT market research firm International Data Corporation. Multipolar Technology faces direct competition from Sigma Cipta Caraka, a subsidiary of state telecommunication firm Telekomunikasi Indonesia, and Supra Primatama Nusantara, operator of the Biznet Networks service. GlobeAsia]]> Jakarta. Graha Teknologi Nusantara, the data center unit of listed information technology company Multipolar Technology, aims to start operations on its first complex in Cikarang, West Java, by April next year, in the first phase of its $200 million venture into the business. “Anticipating high demand from the market, especially in the financial and industrial sectors, we’ve prepared as much as 20,000 server racks servers, which will make us one of the biggest collocation data centers in the world,” Richard Kartawijaya, president director of GTN, said in Jakarta on Friday. He said capacity will be added gradually across three data centers, adding that the company will set up about 8,000 server racks in the first data center. The company — a joint venture between Multipolar Technology, Japanese investment firm Mitsui and Mitsui’s subsidiary Mitsui Knowledge Industry — started construction on the first data center on Thursday. The company is estimated to invest between $25 million and $30 million during the first stage of development, said Harijono Suwarno, a commissioner of GTN. “We hope to reach 20,000 racks in less than five years, but it really depends on [Indonesia's] economic growth and the demand for IT in the country. Developing countries tend to see faster growth [for IT spending],” he said, adding that the company has not yet decided when it will start building the second data center. IT companies in Indonesia have been racing into the data center business in the past year, hoping to benefit from a government regulation which may require companies that offer public services — such as banks and multifinance firms — to securely store their data locally. IT-related spending in the country is forecast to climb 18 percent to $15.6 billion with 47 percent coming from enterprises, according to IT market research firm International Data Corporation. Multipolar Technology faces direct competition from Sigma Cipta Caraka, a subsidiary of state telecommunication firm Telekomunikasi Indonesia, and Supra Primatama Nusantara, operator of the Biznet Networks service. GlobeAsia]]> http://thejakartaglobe.beritasatu.com/?p=421824 Iron Ore Price Fall a Sign China's Economic Might Waning http://thejakartaglobe.beritasatu.com/?p=421864 Fri, 3 Jul 2015 15:38:12 +0700 Sydney/Shanghai. Iron ore prices dropped to the lowest in more than two months on Friday, sending shivers through the mining industry and heightening worries that Chinese economic activity is slowing just as ore piles up at its ports. China uses more than a billion tonnes of iron ore a year to make steel - 14 times the consumption of the United States - but Beijing's efforts to shift the economy to consumer-led growth means steel consumption is peaking faster than expected. "It's clear China can no longer consume all the iron ore that's out there, so something's got to give," said James Wilson, a sector analyst for Morgans Financial in Perth Shares in Australia's biggest mining houses, including Rio Tinto , BHP Billiton and Fortescue Metals Group led the Australian bourse lower after the price of the raw material fell by 5 percent. Iron ore delivered to China stood at $55.8 a tonne, its weakest since late April, Reuters data showed. The most traded iron ore futures on the Dalian Commodity Exchange followed, slumping to the lowest since April 24 of 402.5 yuan ($64.9) a tonne. Analysts interpreted the declines as further evidence that China was awash in too much iron ore - with more on its way. Iron ore stocks at 42 Chinese ports rose 1.7 percent to 81.97 million tonnes by Friday from a week before, data from industry consultancy Umetal showed. Even as stockpiles grow, fresh cargoes of ore continue to arrive, mostly from Australia and Brazil. Shipments from Australia's Port Hedland to Chinese ports rose 3 percent to 32.61 million tonnes in June from a month earlier, the latest port data showed. The June increase at the world's biggest iron ore terminal helped sweep iron ore exports for the fiscal year to June 30 to 21 percent higher to a record 439.6 million tonnes. Of that, 373.24 million tonnes were destined for China, according to the Pilbara Ports Authority. Steel consumption Steel consumption in China from January to May tumbled an alarming 8 percent from a year before, according Zhao Chaoyue, an analyst with Merchant Futures in Guangzhou. "China's real steel consumption will fall further over the rest of this year," he said. Analysts do not expect Australian miners, or the world's top supplier, Vale of Brazil, to slow shipments to China given their low mining and freight costs, pressuring the price and spelling trouble for smaller producers struggling to stay afloat. China also said on Friday it will allow Valemax 400,000-tonne cargo ships to dock at its ports for the first time since the mega-vessels were commissioned. Australia's Department of Industry and Science is forecasting more ore and less demand will drive the price of iron ore down to an average $54 a tonne this year and $52 in 2016. "This is the downside of the $50-$60 range where iron ore belongs in this stage of the cycle," said Morgan's Wilson. Any benefits to Chinese steel mills of lower iron ore prices have been offset by softer steel demand. Reinforcing bar futures have showed little change since hitting the lowest level on record Thursday. "The industry's cycles have caught some unprepared and others looking for answers," Rio Tinto Chief Executive Sam Walsh told a London business group this week. Reuters  ]]> Sydney/Shanghai. Iron ore prices dropped to the lowest in more than two months on Friday, sending shivers through the mining industry and heightening worries that Chinese economic activity is slowing just as ore piles up at its ports. China uses more than a billion tonnes of iron ore a year to make steel - 14 times the consumption of the United States - but Beijing's efforts to shift the economy to consumer-led growth means steel consumption is peaking faster than expected. "It's clear China can no longer consume all the iron ore that's out there, so something's got to give," said James Wilson, a sector analyst for Morgans Financial in Perth Shares in Australia's biggest mining houses, including Rio Tinto , BHP Billiton and Fortescue Metals Group led the Australian bourse lower after the price of the raw material fell by 5 percent. Iron ore delivered to China stood at $55.8 a tonne, its weakest since late April, Reuters data showed. The most traded iron ore futures on the Dalian Commodity Exchange followed, slumping to the lowest since April 24 of 402.5 yuan ($64.9) a tonne. Analysts interpreted the declines as further evidence that China was awash in too much iron ore - with more on its way. Iron ore stocks at 42 Chinese ports rose 1.7 percent to 81.97 million tonnes by Friday from a week before, data from industry consultancy Umetal showed. Even as stockpiles grow, fresh cargoes of ore continue to arrive, mostly from Australia and Brazil. Shipments from Australia's Port Hedland to Chinese ports rose 3 percent to 32.61 million tonnes in June from a month earlier, the latest port data showed. The June increase at the world's biggest iron ore terminal helped sweep iron ore exports for the fiscal year to June 30 to 21 percent higher to a record 439.6 million tonnes. Of that, 373.24 million tonnes were destined for China, according to the Pilbara Ports Authority. Steel consumption Steel consumption in China from January to May tumbled an alarming 8 percent from a year before, according Zhao Chaoyue, an analyst with Merchant Futures in Guangzhou. "China's real steel consumption will fall further over the rest of this year," he said. Analysts do not expect Australian miners, or the world's top supplier, Vale of Brazil, to slow shipments to China given their low mining and freight costs, pressuring the price and spelling trouble for smaller producers struggling to stay afloat. China also said on Friday it will allow Valemax 400,000-tonne cargo ships to dock at its ports for the first time since the mega-vessels were commissioned. Australia's Department of Industry and Science is forecasting more ore and less demand will drive the price of iron ore down to an average $54 a tonne this year and $52 in 2016. "This is the downside of the $50-$60 range where iron ore belongs in this stage of the cycle," said Morgan's Wilson. Any benefits to Chinese steel mills of lower iron ore prices have been offset by softer steel demand. Reinforcing bar futures have showed little change since hitting the lowest level on record Thursday. "The industry's cycles have caught some unprepared and others looking for answers," Rio Tinto Chief Executive Sam Walsh told a London business group this week. Reuters  ]]> http://thejakartaglobe.beritasatu.com/?p=421864