ANALISYS - Khoon Goh
December 12, 2017

Bank of Korea and Bank Negara Malaysia have turned hawkish in recent statements, laying the groundwork for interest rate increases . . .

AFTER FOUR YEARS of depreciation, Asian currencies put in a much stronger performance in 2017. Our Asian currency index shows a gain of 4.6% year-to-date against the U.S. dollar. 

How Asian currencies fare in 2018 will depend on which of two contrasting forces dominates: (i) the effect of policy normalisation in the major advanced economies on capital flows to emerging markets; or (ii) a strengthening and broadening of Asian economic growth with export recovery spilling over into domestic demand.

November 24, 2017

HSBC has taken digital trade a step further with the introduction of its Trade Transaction Tracker - an app providing instant access to trade transactions 24/7.

Trade Tracker is available to HSBC trade customers through the HSBCnet Mobile app facility for either Apple or android phones. The solution has been built to provide the customers with easy self-onboarding processes using their details registered with HSBC.

It also provides –

  • An overview of documentary credits, collections and payments;
  • Access to export and import documentary credits and collection transactions status; and
  • Real-time trade transaction status detail.

October 25, 2017

AGRICULTURE, aviation, marine, defence, e-commerce, cybersecurity, fintech, vocational education and training, future cities and health are among emerging growth sectors in Indonesia . . .

INDONESIA’s economy, currently the world’s 16th largest, is forecast to be the world’s fourth largest individual economy by 2050 – a compelling reason why Australian businesses should enhance engagement, says by Sally-Ann Watts, Austrade’s Jakarta-based Senior Trade Commissioner for Indonesia.

Addressing a series of seminars in Australia, she said three main changes have occurred in the Indonesian market - digital transformation of the economy; the emerging middle class; and opportunity for Australia to help improve living standards and close the skills gap.

The seminars outlined opportunities for Australia in key areas of agriculture (including goods, technology and services), aviation, marine, defence, e-commerce, cybersecurity and fintech, education (transnational vocational education and training), future cities and health.

Watts said Indonesia is now Australia’s 13th largest trading partner, and that, economically, it represents almost 40 per cent of the ASEAN region’s output. It is home to 255 million people.

Along with her team of in-market Trade Commissioners, Watts presented the following summary of industry sectors in Indonesia -  

Agrifood and agtech

Indonesia is an important market for Australia, taking agricultural exports valued at AUD3.2 billion in 2016.

Indonesia’s agricultural sector is undergoing a transformation as the next generation of farmers look to new technologies to increase productivity. Farm and processing enterprises are seeking new technologies to maximise acreage usage and reduce waste.

October 4, 2017

ONE of Germany’s largest real estate asset managers is making a bid to attract Asian investors into the real estate market of Germany’s regional cities . . .
German manufacturers of trusted brands, whether cars or sophisticated machinery and equipment, need little or no introduction to their products.
 Asian consumers know them well.
 But when it comes to real estate investment, Germany is off the radar - because Asians are not familiar with, or often even aware of the opportunities that exist there.
 The Asian predilection for luxury brands is second only to a partiality for real estate, and when it comes to investing in offshore real estate, London traditionally has been the city of choice.
 Stefan Kalmund, managing director of Accom, one of Germany’s largest real estate asset managers, says Asian investment in the UK obviously comes from familiarity with that country.
 Now launching Accom’s first real estate fund targetting Asian capital, Kalmund has made several trips to Asia, hoping to raise the awareness of institutional investors to opportunities outside the three German entry cities of Berlin, Munich and Frankfurt.
 These cities offer trophy assets, he says, but it is the regional cities that are the hidden champions of German real estate.

October 18, 2017

Governments led by those in Singapore and Hong Kong are helping drive widespread support for a global move towards digital trade . . . 

In May this year, Singapore-based fintech company CCRManager Pte Ltd, launched an innovative new electronic platform developed for the distribution of trade finance, supply chain finance and working capital assets.

Bank of China, DBS Bank, ICICI Bank, Swiss Re Corporate Solutions, and UniCredit have signed up as pioneer members of the platform to support their trade risk distribution business globally.
In addition, ANZ Bank, Bank of America Merrill Lynch, BBVA, Bank of East Asia, BNP Paribas, HSBC, Industrial and Commercial Bank of China, Mitsubishi UFJ Financial Group, Mizuho Bank, Standard Chartered Bank and Sumitomo Mitsui Banking Corporation have signed a Letter of Intent to become members of CCRManager within the next few months.
The platform has been developed with the support of the Monetary Authority of Singapore (MAS) and major global financial institutions.
CCRManager will provide the global financial sector with infrastructure designed to enhance capital, credit, and liquidity management.
In launching the platform, Tan Kah Chye, Chairman of CCRManager, described it as “truly a collaborative effort” which had taken more than 1,000 man hours to help design and refine the platform. “This is our contribution to development of the global financial ecosystem as a group,” Tan said.
The platform is web-based, and will enable banks to manage the entire process of distributing trade finance internationally to other banks, credit insurers, and fund managers.
Users of CCRManager will be able to list assets for distribution, negotiate deals, and manage supporting documentation in a secure environment. They will also have access to tools for data analytics, market benchmarking, and pricing indices.
Man Ka Kit, CEO of CCRManager, said: “We estimate the secondary market for trade finance assets, at approximately US$1.7 trillion, is roughly 10% of global cross-border trade. As an infrastructure platform, we believe CCRManager will address this entire market, help unlock more capital and increase the supply of trade finance globally.”

October 13, 2017

SUCCESSFUL Chinese investors in Australia retain Australian management – and strive for meaningful engagement with their local community, says a new report on the angst that can be caused by wrong decisions  . . .

SOCIAL LICENCE, or the lack of, is the reason that Chinese investments in Australia, especially in agriculture, a sector keenly sought-after by Chinese investors, fail.
 Quite apart from needing official approvals, says a report jointly produced jointly by Powell Tate’s Sydney office and Weber Shandwick’s Beijing office, Chinese investors must have social licence — meaning engagement with the Australian community — from the grassroots level upwards, together with respect for the rules and regulations in Australia, including local industrial laws.
 To have a social licence is therefore to have acceptance of the local community, including local businesses, says the report, The Licence That Matters: Beyond Foreign Investment Review Board Approval.
 The report points to successful Chinese investments in Australia, all of which retain Australian management, engage Australian employees and contract local suppliers.
 The biggest mistake made by the Chinese investor is a belief that FIRB approval translates to having a licence to do as they wish with their investment.
 The report cites the celebrated failure of Ningbo Dairy in Gippsland, Victoria, a tale of naivety, ignorance, or, at worse, arrogance on the part of the Chinese investor.
 Ningbo Dairy acquired five farms in Gippsland, and planned major expansion —without first doing its homework.

October 5, 2017

GOVERNMENTS led by those in Singapore and Hong Kong are helping drive widespread support for a global move towards digital trade. And that will help, because it is not technology that has been slowing progress, says Michael Lim, ANZ’s Head of Trade and Supply Chain. Agreements on the commercial issues of digital trade need to be forged across all participants in the supply chain process.
In future trade, Lim sees distributed ledger technology (DLT), a key component of Blockchain, helping reduce fraud and creating  new efficiencies, with artificial intelligence playing an increasing role in the process . . .

September 22, 2017

HONG KONG — S&P Global Ratings has affirmed its ‘AAA’ long-term and ‘A-1+’ short-term issuer credit ratings on Hong Kong, but said the rating outlook remains negative, mirroring S&P’s long-term rating on China (AA-/Negative/A-1+; cnAAA/cnA-1+).

September 22, 2017

THE REAL BENEFITS of Artificial Intelligence will come when as much of the trade environment as possible is digitised, says HSBC’s Andrew Speers...

August 31, 2017

Donald Trump may be an advocate of the “madman school of diplomacy”, but might Kim Jong-eun be using the same strategy . . .  

SEOUL – With Kim Jong-eun threatening to launch missiles in the direction of - if not directly at - the U.S. island of Guam in response to Trump’s “Fire and Fury” speech aimed at rattling the DPRK into getting “its act together,” is the world about to witness its first actual bilateral nuclear war (assuming China and India hold off just long enough)?

Is your correspondent finally going to get the message and bail out before this corner of the world blows up along with an uncertain chunk of U.S. real estate? 

As both Kim Jong-eun and Donald Trump seemingly careen headlong into a potential no-nuclear-punches-barred confrontation that would undo both of them -- the former physically and the latter politically -- there is some basis for remaining sanguine in the expectation that neither will actually go over the brink and take the other with him.

An assessment of the objectives of each and the risks to both underlies such sangfroid.

July 28, 2017

IT IS the privatisation of Australia’s critical infrastructure that has led to consideration of national security implications when foreign investors seek to acquire such assets, says David Irvine, Chair of the Foreign Investment Review Board . . .
SYDNEY — David Irvine, the former Head of Australia’s spy agencies, acceded to the Chair of the Federal Government’s Foreign Investment Review Board In the wake of a number of controversial rulings against foreign investors.
 Not unexpectedly, the commentariat in the media looked at his appointment as the Government shifting its emphasis to national security.
 But this could not be further from the truth, Irvine told an audience attending a CEDA (Committee for Economic Development of Australia) event in Sydney.
 Irvine said a lot was said at the time of his appointment suggesting that, given his background, FIRB was shifting its focus to national security to the exclusion of all other considerations.
  “Frankly, national security issues only impinge on a very, very small number of advisory notes provided by FIRB to the Treasurer (Scott Morrison),” he said.
 Indeed, the composition of the FIRB decision-making process includes people with experience on taxation issues, resource investment, agriculture investment and so on, he added.
 In recent times, national security has become an issue in a number of proposed acquisitions – more so than in the past because of privatisation and sale of public assets.

July 21, 2017

TRADE GROWTH is more promising, but it could be derailed by policy shocks and geopolitical uncertainly, warns the WTO . . .

GENEVA — With the outlook for the world economy likely to be better in coming months, international trade is also expected to rebound, with growth of 2.4 per cent for 2017, according to the World Trade Organisation’s latest forecast.

Leading indicators of real trade growth are up in the early months of 2017.

Container throughput at major ports has recovered from its 2015-16 slump to reach a record high level, with on-year growth of 5.2 per cent in January and February this year, says the Geneva-based global trade club.

A key index of world export orders also climbed to its highest level in several years in February.

Trade growth will reflect high global GDP growth, which is expected to be 2.7 per cent in 2017, inching up to  2.8 per cent next year.

There is increasingly a chorus among leading economists calling for synchronised global growth — something that has been absent for the past decade.

However, trade growth can be derailed by policy shocks and geopolitical uncertainty.

The WTO speaks of a prevailing sense of uncertainty because of unpredictable Government policies on monetary, fiscal and trade. These Government actions could stifle the promising expansion in trade, it says.

July 20, 2017

THE LAO Government has sold a majority stake in its State forest to the Australia-based New Forests, a leading global institutional investor  specialising in timberland, for an undisclosed amount.
New Forests manages committed capital of more than AUD3.6 billion globally from pension and superannuation funds and other institutional investors invested in sustainable forests across Asia Pacific.
In its latest joint venture in Laos, New Forests holds a stake of 85% in what is known as Mekong Timber Plantations, the Government retaining a residual stake of 15% in the plantation estate.
Mekong Timber Plantations will manage 22,000 hectares of leased area, mainly in Bolikhamxay and Khammouane provinces.

June 30, 2017

Barry Pearton


THE parlous state of the North Korean economy is hardly conducive to success in any open military confrontation with the United States. Kim Jong-Un’s most valuable bargaining chip would seem to be his country’s human and mineral resources . . .

OUR cover report from Korean correspondent, Peter Sylvestre (page 10), presents a grim picture of potential scenarios as the North Korean nuclear imbroglio rumbles relentlessly on, at times descending to the edge of farce. If only it was not so serious.

The mix is raw politics, the potential social and economic impact on neighbouring countries far-reaching.

In human terms, a bottom line of probably half-a-million people dead in Seoul on the first day of any military conflict, and widespread economic devastation in the immediate region. And even today, difficult times for North Korea’s own people.

There is clearly an unrelenting determination by Pyongyang’s Kim dynasty to perfect a nuclear deterrent – in its mind, the only viable option for survival.

Kim Jong-eun has wrong-footed both former U.S. President Obama and Chinese President Xi, but, after the recent bombings in Syria and Afghanistan, must be pondering the way forward with Donald Trump.

The U.S. military has spent more than 60 years peering into North Korea across the no-man’s land of Panmunjom, more closely observing from satellite and drone. Kim must realise that the U.S. knows exactly the scope of the threat he presents.

Trump has now offered to talk to Kim (a necessary first step, as Xi sees it). It is an invitation Kim has yet to accept, apparently fearing a loss of face if Trump changes his mind and does not front.

Xi, meanwhile, has not helped himself by sanctioning South Korean business in a failed bid to prevent installation of the US THAAD missile defence system on South Korean soil.

THAAD is up-and-running, even as South Korea’s chaebols look to their options for more trade and investment opportunities outside China’s orbit.

Beijing’s strategy in recent years has been to increase the reliance of the South Korean economy on China, while simultaneously squeezing the prices Taiwan could achieve for export products it manufactures in direct competition with South Korea.

At the APEC meeting it hosted in Beijing in 2014, China announced a free trade agreement which gave South Korea an immediate tariff advantage over Taiwan on exports to China. No matter that the FTA was not to be fully implemented for 20 years (something not announced at the time).

Taiwan and Korea compete directly on 80 per cent of their export products, mainly advanced electronics.

The China-Korea FTA was a calalyst in prompting Taiwan’s current Government to adopt a South-South policy — to divert trade, investment and economic dependence away from China. Will South Korea now follow suit?

 For China, the geopolitical options in Northeast Asia have seemed to fade with every new missile test into either the Yellow Sea or the Sea of Japan.

 A preferred option for China from a military and security standpoint has traditionally been to embrace North Korea as a client State. The implied political risk that such a move would enrage Japan to the point of re-arming clearly proved too great.

June 9, 2017

WITH the United States and North Korea continuing to face off over Pyongyang’s nuclear ambitions, pledges by South Korea’s incoming President,  Moon Jae-in, to bring about reconciliation by embracing a new Sunshine Policy and kick-starting the abandoned Kaesong Industrial Complex are being viewed askance – in fact, they seem already to have been disregarded by Kim Jong-Un.
North Korea has a single-minded determination to acquire ICBM capability, including the ability to strike the United States on home soil.
China’s words and actions in the imbroglio suggest frustration, while 12 current U.S. military scenarios generally assume a loss of half a million people within a day in the event of a North Korean attack on Seoul.
As the U.S. activates its THAAD missile system, neighbouring countries — including Japan, Taiwan, Russia and even the Philippines — watch with a mix of fear and trepidation . . .

The election of left-of-centre Moon Jae-in to the Korean Presidency on May 9 would elsewhere augur hopes of reconciliation — or at least a modus vivendi along the lines of détente and realpolitik.
Not on the Korean Peninsula, however.
Despite the professed intention of the new President to return to the Sunshine Policy that shone (or sunburned, depending on one’s view) across the Peninsula during the halcyon days of South Korean Presidents Kim Dae-jung and Roh Moo-hyun (1998-2008), North Korea remains defiant.
It maintains an unwavering determination, despite a number of launch failures, to acquire an intercontinental ballistic missile (ICBM) capable of striking the United States at home.

June 9, 2017

AUSTRALIAN providers of professional services – in finance, legal, accounting, civil engineering, construction and consultancy —can offer enormous experience and knowledge in the early steps required to secure major infrastructure projects associated with China’s One Belt, One Road initiative . . .

Charles Ng, Acting Director-General of InvestHK, believes Australia’s understanding of building infrastructure projects in developing countries, not to mention pioneering projects in isolated parts of Australia, is a resource that should not be under-estimated.
“You have expertise in creating the investment proposition for cross-border infrastructure,” he says, “as well as the ability to create the platforms that will drive and protect these platforms.
Hong Kong is positioning to play a key role as a financing hub for OBOR projects, in part through an Infrastructure Financing Facilitation Office (IFFO).
This has been set up by the Hong Kong Monetary Authority, which acts as Hong Kong’s central bank.
Ng says InvestHK is working closely with the IFFO to attract parties able to offer expertise in developing sound financial and legal frameworks for private sector infrastructure projects, frameworks that give comfort to investors that they can anticipate realistic financial returns over long pay-back periods.
Hong Kong, he says, also has the ability to build bridges to leverage funding for OBOR through the Hong Kong-Shanghai Connect and Hong Kong-Shenzhen Connect of the Hong Kong Stock Exchange.
IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.
“We are talking infrastructure — energy and power stations, seaports, airports, roads, railways, bridges — and as countries start developing these kinds of things they will need lawyers, accountants, different kinds of professional service providers, to help them put it all together,” Ng told ATI Magazine.