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RMB TRADING COMES TO SINGAPORE – MAJOR EXPANSION TIPPED

April 2, 2013

SINGAPORE – The offshore RMB market launched in Singapore today (Tuesday) with the People’s Bank of China (PBOC) announcing that it has signed an agreement allowing ICBC Singapore Branch, through both an agency bank and a clearing bank model, to provide cross-border RMB trade settlements. Commenting on the move, ANZ Bank said it expected Singapore’s RMB business will grow quickly. Earlier, the PBOC and the Monetary Authority of Singapore expanded their bilateral currency swap line to RMB300 billionn.

NOVARTIS LOSES PATENT BID IN INDIA FOR KEY CANCER DRUG

April 2, 2013

NEW DELHI – India’s Supreme Court has dismissed a bid by Swiss drugmaker Novartis AG's for patent protection for its cancer drug Glivec, in what is seen as a blow to Western pharmaceutical firms targetting India to drive sales and a victory for local makers of cheap generics. Analysts say the decision sets a benchmark for intellectual property cases in India, where many patented drugs are unaffordable for most of its 1.2 billion people, and does not bode well for foreign firms engaged in ongoing disputes there, including Pfizer Inc and Roche Holding AG.

CHINESE BANKS CAN BUY MORE EQUITY IN TAIWAN BANKS

April 1, 2013

TAIPEI - Taiwan will raise the cap on Chinese banks' holdings in domestic financial institutions to as high as 20%, following consensus reached by Taiwan’s Financial Supervisory Commission Chairman, Chen Yuh-chang, and China's Banking Regulatory Commission (CBRC) Chairman, Shang Fulin, during the third round of cross-strait banking talks in Taipei. Taiwanese banks are already allowed to acquire up to 20% stakes in Chinese banks, and the new consensus brings Mainland financial institutions closer to the threshold applying in Taiwan.

BEIJING AND SHANGHAI DETAIL NEW PROPERTY REGULATIONS

April 1, 2013

BEIJING – Both the Beijing and Shanghai governments have announced further details of their new property regulations. A 20% capital gains tax on property sellers, in comparison to previous tax rates of 1% – 2% on the final sale price, will be strictly levied in Shanghai and Beijing if the original value of the house can be verified. The 20% tax will be incurred by sellers if a house owner sells the property within five years after purchase and the apartment is not the only one owned by the family.

CHINA MANUFACTURING SECTOR CONTINUING A MODEST IMPROVEMENT

April 1, 2013

HONG KONG - After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ for China – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – posted 51.6 in March, up from 50.4 in February, signalling a modest improvement. Operating conditions in the Chinese manufacturing sector have now improved for five consecutive months. Production levels increased for the fifth month in a row in March, with the rate of expansion accelerating from February to a solid pace, the second-fastest in two years.

CHINA CURBS WEALTH MANAGEMENT PRODUCTS IN SHADOW BANKING CRACKDOWN

March 29, 2013

BEIJING - The China Banking Regulatory Commission (CBRC) has reportedly introduced new measures to rein in banks’ issuance of wealth management products (WMPs), which have fuelled the growth of lending in the non-bank financial sector. In particular, the CBRC is reported to have imposed limits on WMPs used to fund trust loans, bank acceptances, and entrust loans. For WMPs beyond the established limits (4% of total assets and 35% of total WMPs), banks are instructed to move them back onto their balance sheets by end-2013.

CHINA STATE COUNCIL SIGNALS FISCAL, TAXATION REFORMS

March 29, 2013

BEIJING – China’s State Council, chaired by Premier Li Keqiang,has stepped up its rhetoric on fiscal and taxation reforms, with State media reporting that the Council announced it would "actively advance reforms in major sectors, trying to make substantial progress". Fiscal and taxation reform are seen as central to tangible Government reform, and a rebalancing of the economy away from State investment towards the private sector.

CHINA WARNS VIETNAM OVER FISHING INCURSIONS NEAR XISHA ISLANDS

March 29, 2013

BEIJING - In a move indicative of recent military brinksmanship, China has warned Vietnam to stop vessels ‘illegally’ fishing near the Chinese-claimed Xisha Islands in the South China Sea. In the third week of March, Vietnam claimed that a fishing vessel was fired at and chased by a Chinese military vessel, a claim China has not denied and instead branded ‘necessary and legitimate’. Chinese claims to ownership of island groups in the South China Sea has led to a deterioration of relations with ASEAN, in particular with Vietnam.

SOUTH KOREA LOWERS 2013 GROWTH FORECAST, ANNOUNCES STIMULUS

March 29, 2013

SEOUL – South Korea’s Ministry of Strategy and Finance has lowered its growth forecast for 2013 to 2.3%, from 3.0% previously as the new Government of President Park Guen-hye announces a stimulus package to counteract weak growth. Estimates of the size of the package are around 1% of GDP, with expectations it will focus on job growth and stimulation of the property market. www.bbva.com (ATI).

SHADOW BANKING RISK FILE BETTER THAN FORMAL BANKING IN CHINA: S&P

March 28, 2013

HONG KONG - Contrary to perceptions of high risk, ratings agency Standard & Poor's says China's shadow banking system is "yet to destabilise" China’s banking system. S&P released a report today (Thursday) showing the sector has grown to around RMB22.9 trillion yuan (US$3.7 trillion),accounting for 34% of total loans in the Chinese banking system at end-2012. The sector has enjoyed compound annual growth of 34% since end-2010 and is expected to continue to grow in coming years, according to S&P analysts.

CHINA BANKING REGULATOR WARNS OF RISKS IN NINE SECTORS

March 27, 2013

BEIJING - The China Securities Journal has published a report warning of the risks of loans to industries in sectors which are closely related to cyclical economic growth, or have struggled to deal with overcapacity issues. The sectors mentioned in the report included property, steel, and PV. The report warns the nation’s financial institutions about major industry’s exposure to excessive debts, high leverage and overcapacity.

CHINA SMART-PHONE EXPORTS TO GROW 40% IN 2013

March 27, 2013

TAIPEI - Global smartphone shipments from China in 2013 will grow by an estimated 40% to 304 million because of stronger demand, Taiwanese market research firm Digitimes Research, has forecast. The assessment is in line with an earlier prediction by the Taiwan Industrial Economics and Knowledge Research Centre. With dramatic price cuts and quality gains in white box smartphones - unbranded phones that clone more popular models - the smartphone market will continue to expand substantially, the research centre said. As for Chinese smartphone brands, shipments of Huawei Technologies Co.

VIETNAM’S DOMESTIC DEMAND WOES CONTINUE

March 27, 2013

HANOI - GDP growth for Q1 has come in at 4.9% y/y, below market expectations of 5.2% and lower than the Q4 figure of 5.5%. Industry and construction growth slowed to 4.9% in Q1 from 6.7%, while services growth fell to 5.7% from 6.9%. Agriculture, fishery and forestry grew 2.2% compared to a fall of 0.5% previously. Domestic activity continued to give weak signals, particularly retail sales, but March exports and (surprisingly) imports performed well.

CHINA, BRAZIL SIGN OFF ON CURRENCY SWAP ARRANGEMENT

March 27, 2013

BEIJING – The People’s Bank of China has announced a China-Brazil currency swap agreement worth RMB190 billion / BRL 60 billion. China is Brazil’s largest trading partner, having taken over from the US in 2009. The currency agreement is intended to enhance bilateral financial co-operation and trade flows, although in practice its significance is quite limited (in contrast to the swap arrangements for offshore RMB centres such as Hong Kong and Singapore). The latest swap arrangement adds to 19 already in existence, and is part of efforts to further RMB internationalisation.

FITCH RATINGS LIFTS PHILIPPINES TO INVESTMENT GRADE

March 27, 2013

MANILA - The Philippines’ sovereign rating has upgraded by one notch to investment grade (BBB-) by ratings agency Fitch, citing a persistent current account surplus and strong net external creditor position, the economy’s growth resilience over the past five years, and improvements in governance and fiscal management. The Philippines economy grew 6.6% in 2012, surpassing neighbouring Indonesia’s 6.2%.

RISKS BACK ON RADAR IN EMERGING COUNTRIES, SAYS COFACE

March 26, 2013

PARIS - Despite resilient growth, estimated at 5.1% in 2013, and improved sovereign and external fundamentals, emerging country risks have not disappeared altogether, but have changed form, according to credit insurer Coface. “Three major risks now weigh on emerging markets,” Coface says. “Politically, tensions have sharpened, illustrated by protests in North Africa and the Middle East, and now also in Russia and India. Economically, we are seeing a rise in protectionist measures.

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