ATI Newswire - Subscriber Only

CHINA PROMOTES FURTHER CAPITAL ACCOUNT CONVERTIBILITY

July 10, 2013

BEIJING - The People’s Bank of Chine has issued a detailed notification to simplify the rules on RMB cross-border settlement business to promote RMB cross-border transactions. The notification broadly covers five major areas - RMB cross border settlement under the current account; Bank card RMB account clearing business; Onshore non-financial institution outbound RMB lending; Onshore non-financial institutions issuance of offshore RMB denominated bonds; and Onshore agency banks’ RMB account management with offshore participation banks.

TAIWAN, NEW ZEALAND SIGN OFF ON ECONOMIC CO-OPERATION PACT

July 10, 2013

WELLINGTON – Taiwan and New Zealand today signed an Economic Co-operation Agreement (ECA) providing general market access and issues such as e-commerce, competition policy and the environment. It aims to eliminate tariffs altogether. Two-way trade in 2012 between Taiwan and New Zealand totalled US1.21 billion. Taiwan is New Zealand’s 10th-largest export market (primarily agricultural products) and ranked 13th as an import supplier (mainly electronic and electrical good, refined petroleum products and metals). (ATI).

MOST JAPANESE BANKS COULD TOLERATE 3% INTEREST RATE RISE: S&P

July 9, 2013

TOKYO - Most Japanese financial institutions could meet required capital levels even if interest rates rise three percentage points from 2012 levels, Standard & Poor's Ratings Services says in a report published today. S&P points out that the bank of Japan (BOJ) aims to defeat deflation within the next two years or so. “If realising this target becomes highly likely, Standard & Poor's expects long-term interest rates in Japan to rise,” the report says.

CHINA SIGNS OFF ON FTA WITH SWITZERLAND

July 9, 2013

BEIJING - China and Switzerland have formalised a free trade agreement (FTA) amid a trade dispute between China and the EU over Chinese exports of solar panels (Switzerland is not a member of the EU, so is not restricted by Brussels in terms of trade regulations). Once the FTA is ratified, Switzerland will remove tariffs on up to 99.7% of Chinese exports and China will exempt tariffs on 84.2% of Swiss exports. The FTA will also provide a platform for the two countries to enhance co-operation in industries including watch-making and traditional Chinese medicine.

TAIWAN EXPORT NUMBERS SURPRISE ON THE UPSIDE

July 9, 2013

TAIPEI - Taiwan’s exports grew 8.6% y/y in June, beating market expectations of a 1.2% gain and compared with a 0.9% gain in May. However, on a sequential basis, exports rose by only 0.5%, while imports rose by 6.1%. Electronics continued to buffer Taiwan’s trade performance. Exports to China continued to improve in June, mainly driven by electronics. The outlook for the second half is expected to continue to improve as demand from the US is likely to pick up. ANZ Bank says US manufacturing activity appears to be rebounding, and that this will help lift the entire global supply chain.

GLOBAL INFRASTRUCTURE SECURITIES SECTOR TO GROW, SAYS LONSEC

July 8, 2013

SYDNEY - Investment research house Lonsec Research says global infrastructure securities has delivered equity-like returns with lower volatility over recent years, and global investor demand for yield saw the sector outperform the majority of major asset classes over the year to March 2013. The Lonsec Infrastructure Securities Sector Review, which covered nine infrastructure securities funds, found the sector has recovered from losses experienced during the global financial crisis, with the majority of funds providing solid single digit returns over the five years to March 2013.

INDIA’S NEW FOOD SUBSIDIES WILL MEAN LOWER SUBSIDIES ELSEWHERE

July 5, 2013

NEW DELHI – India’s Government this week issued an Executive Order approving its Food Security Bill – a framework that assures subsidised food grains to eligible citizens, covering around two-thirds of the population. The Order awaits passage into law at the Parliament’s upcoming session beginning July 26. Once passed, addressing infrastructure bottlenecks will be a key for successful implementation of the Bill. It is currently budgeted at 0.8% of GDP for FY14 (year ending March 2014).

CHINA PUBLISHES GUIDELINES TO FACILITATE GROWTH, RESTRUCTURING

July 5, 2013

HONG KONG – China’s State Council has published financial sector guidelines for public sector agencies on ways to bolster growth and facilitate economic restructuring. The guidelines come against concerns about slowing growth and the productivity of credit flows.  The Government is re-emphasising its “prudent” monetary policy stance - i.e., expect no change in the policy stance.

SHANGHAI FREE TRADE ZONE CLEARED: NEW CHALLENGE FOR HONG KONG

July 5, 2013

BEIJING – China’s State Council has formally endorsed Shanghai’s plan to open the Mainland's first free-trade zone in Pudong this year. The free port will be a testing ground for major policy reforms to free up cross-border commodity and capital flows, areas in which it threatens to eclipse Hong Kong's traditional contribution to China’s national economy.

THAILAND LIFTS QUOTA LIMITS ON OFFSHORE INVESTMENT

July 5, 2013

BANGKOK - Effective June 27, the Bank of Thailand (BOT) has repealed the maximum amount (the offshore investment quota) generally allowed for portfolio investment by both Thai institutional and non-institutional investors. The main purpose of the repeal is to increase the flexibility and capacity of diversification of investments for Thai investors. Lawyers Baker & McKenzie say Thai investors can now invest in certain offshore instruments and derivatives without being subject to an umbrella maximum amount of US$50 million previously set by the BOT.

CHINA ‘BECOMING POSITIVE’ ON TPP TRADE PACT AFTER JAPAN JOINS

July 3, 2013

BEIJING – China’s Ministry of Commerce has said the Government’s opinion is becoming ‘positive' toward the US-led Asia-Pacific free trade agreement, known as the Trans-Pacific Partnership (TPP), although it will take time for China to become a member. The US launched the TPP in 2010 in an attempt to strengthen trade relations with the Asia-Pacific region, with the TPP including 11 countries including Canada, Peru Vietnam, New Zealand and Japan.

CHINA TARGETTING FOREIGN FOOD FIRMS IN LOCAL CRACKDOWN

July 3, 2013

BEIJING – The UK drug-maker GlaxoSmithKline Plc. (GSK) is being probed for alleged bribery, although with a series of investigations into foreign companies operating in China, such as Danone, which is being invested for allegedly breaking anti-monopoly laws. Large foreign companies in food, beverage or medical services (which require safety checks) are expected to continue to come under fire in the short run as the Government attempts to appear firm on improving safety standards. Apple Inc. and Yum! Brands Inc. are among foreign companies that have had to apologize this year to consumers after accusations by the Government over their operations.

INDIA STEPS UP EFFORTS TO STIMULATE GROWTH

July 3, 2013

NEW DELHI – As the Indian rupee continues to weaken – down to a near-record low 60.3 to the US dollar, a depreciation of 12% since May – and GDP growth struggles to rise from its decade lows of 4.8% y/y in Q1, the Indian Government has announced a spate of policy measures to restore investor confidence. These include measures to improve domestic energy production, including a doubling of natural gas prices and allowing greater pass-through of imported coal prices, and expansion of highway construction to alleviate infrastructure bottlenecks.

ASIA TO HOLD UP 2013 GLOBAL GROWTH TO 2.6% - COFACE

July 4, 2013

PARIS - Trade credit insurer Coface expects global growth to be almost stable in 2013 versus 2012, at 2.6%. It says GDP growth is going to be driven by emerging countries, and, more specifically, Asia. Coface has revised upwards its forecast for Japan (+1.4% this year) because of the expansionary monetary policy of Bank of Japan. Other forecasts: China, 8%; Philippines, Indonesia, 6.5%, Vietnam, 5.7%; India, 5.5%; Singapore, 3.4%; South Korea, 2.5%; Hong Kong, 2.2%; Australia, Taiwan, 2%.

CHINA’S ONGOING MANUFACTURING SLOWDOWN LIKELY TO CONTINUE: HSBC

July 1, 2013

HONG KONG - After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – has come in  at 48.2 in June, down from 49.2 in May, signalling a modest deterioration of business conditions. Operating conditions have now worsened for two successive months.

Chinese manufacturers signalled a first reduction of output for eight months in June. The rate of contraction was modest, and generally attributed to weaker client demand, as total new orders declined for the second month in a row. New business from abroad also fell in June, with the rate of contraction the fastest since last September, and the joint-sharpest in over four years. HSBC says anecdotal evidence suggested that reduced client demand, particularly from Europe and the US, led to fewer new export orders.

INDONESIA: INFLATION UP AS FUEL SUBSIDY REDUCTION IMPACTS

July 1, 2013

JAKARTA – ANZ Bank says  key trade (May), inflation and PMI (June) data released by Indonesia this morning show an economy in the initial stages of a policy-generated inflation shock, with further policy tightening expected to ensure inflation expectations remain well-anchored. Headline inflation climbed to 5.90% y/y in June as the first surge from the fuel subsidy reduction came through. Core inflation was flat at 3.98% y/y.

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