Category: Finance

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  • OCBC rallies on earnings surprise as Singapore bank rivals fall

    OCBC rallies on earnings surprise as Singapore bank rivals fall

    Oversea-Chinese Banking Corp.rallied after fourth-quarter profit rose more than analysts anticipated. Shares of its two large Singapore rivals fell.

    The bank’s stock surged Wednesday by the most in almost six months following the release of an exchange statement showing net income climbed 21% on higher interest and trading income as well as gains from life insurance.

    Chief Executive Officer Samuel Tsien signalled confidence in the bank’s ability to continue growing as Singapore’s lenders face pressure from their exposure to a commodity price slump and an economic slowdown in China and Southeast Asia. OCBC doesn’t face issues with its Greater China loan portfolio, he said in a briefing. Smaller competitor United Overseas Bank Ltd.reported barely improved quarterly net income Tuesday as rising expenses and provisions for bad loans restrained earnings growth.

    “Against the massively negative sentiments against banks in general and fears of oil and gas impact, OCBC indeed saw higher provisions but nowhere near levels justifying” downgrades for the stock, Kevin Kwek, an analyst at Sanford C. Bernstein & Co. in Singapore, said in an e-mail. “The positives of gains in net interest and fee income in this environment should also reassure investors.”

    Analysts had cut their consensus 12-month target price for OCBC’s shares to $9.67 from a peak of $11.76 last August, according to estimates compiled by Bloomberg.

    The lender’s stock jumped as much as 4%, the largest intraday gain since Aug. 25. The shares were up 1.8% at $7.91 as of 1:33 p.m. in Singapore. United Overseas Bank fell 3.2% and DBS Group Holdings Ltd. declined 0.2%. The benchmark Straits Times Index dropped 0.9%. The rally in OCBC stock pared its loss this year to 10%, exceeding a 9% decline in the Straits Times Index.

    OCBC, Singapore’s second-biggest bank by assets, said net income climbed to $960 million in the three months ended Dec. 31 from $791 million a year earlier. That exceeded the $877 million average of seven analysts’ estimates compiled by Bloomberg.

    OCBC’s net interest margin, a measure of lending profitability, rose to 1.74% in the fourth quarter, a seven basis-point increase from a year earlier. That helped net interest income climb 5% to S$1.34 billion, the statement showed. Non-interest income advanced 26% to $960 million as the life-insurance unit’s profit jumped 24%. Net trading income soared nine times to $163 million from $18 million a year earlier.

    Bad loans

    Non-performing loans rose 54% to $1.97 billion in 2015, mostly because of “a few large corporate accounts associated with the oil and gas services sector,” the bank said. Its bad-loan ratio climbed to 0.9% as of Dec. 31 from 0.6% a year earlier. The loan portfolio remained “sound” with a “comfortable” allowance coverage, the bank said.

    At a briefing for media and analysts Wednesday, CEO Tsien said that while he expects an increase in non-performing loans, it’s unlikely the bank’s NPL ratio will exceed levels during the global financial crisis that started in 2008. In that period, OCBC’s soured credit ratio reached 1.7% of total loans. NPLs tied to the oil and gas industry represented 0.39% of the bank’s loan book of $211 billion, he said.

    Tsien said pillars of Singapore’s economy — such as real estate, retail and oil and gas — have weakened, and that a “challenging operating environment” will continue this year.

    “The past year has been a challenging one for most industries,” he said in the statement, citing the economic downturn, volatility in financial markets and higher regulatory requirements for capital.

    OCBC spent US$5 billion buying Hong Kong-based Wing Hang Bank in 2014. The acquisition helped the bank rely less on revenue from Southeast Asia as China including Hong Kong became its largest source of income after Singapore. Greater China accounted for 20% of pretax profit in 2015, up from 12% in 2014, it said.

  • BitMEX Launches Leveraged China A50 Stcok Index Trading with Bitcoin

    BitMEX Launches Leveraged China A50 Stcok Index Trading with Bitcoin

    BitMEX (Bitcoin Mercantile Exchange) has announced this week they are launching the world’s first bitcoin denominated futures contract on a Chinese A Share index. The new instrument from the bitcoin derivatives focused venue allows cryptocurrency investors to access the walled-off equity market in China and trade with up to 25 to 1 leverage.

    The China A50 Equity Index is comprised of the fifty biggest public companies in China and priced in Chinese yuan (CNY). However, investors using the BitMEX product will receive 0.0001 Bitcoin (XBT) per 1 CNY move in the index. Additionally, unlike the Chinese stock exchanges that only open Monday to Friday, the BitMEX contract trades 24/7. The new contract has monthly expiries based on the closing price of the FTSE CHINA A50 Index to two decimal places.

    Speaking with Finance Magnates Arthur Hayes, co-founder and CEO of BitMEX, explains the rationale for the new product: “Trading the China A share market for most investors is quite difficult. Due to various restrictions, obtaining long and especially short exposure with leverage is almost impossible. For retail investors without large brokerage accounts, it is even more difficult.

    BitMEX aims to provide retail investors globally access to the China A share market using a Bitcoin denominated futures contract (commonly referred to as a quanto futures contract). Investors with only a few hundred USD of Bitcoin can now trade the China stock market. As long as an investor can exchange his or her domestic currency for Bitcoin, he or she can trade the BitMEX China A50 Index Futures contract.”

  • Game changer for Maybank Islamic

    Game changer for Maybank Islamic

    Malaysia’s biggest Islamic lender, Maybank Islamic Bhd, says the investment account (IA) business is set to be a game changer for the group in its effort to boost earnings growth amid the subdued banking landscape.

    The Islamic lender, which has total assets worth close to RM147bil, will focus on its new mudarabah (profit-sharing) investment fund launched in July last year in view of the Islamic Financial Services Act (IFSA) 2013.

    Describing the IA business as “the evolution of the next phase of growth”, Maybank Islamic chief executive officer Datuk Muzaffar Hisham told StarBiz that demand for the IA business has shot up significantly, as the value of its mudarabah fund rose to RM18bil in the last six months of 2015.

    “Judging from this figure, we are confident that the fund will continue to grow, underpinned by strong demand from the Muslim and non-Muslim population as well as the benefits it offers.

    “We have a customer base of about 4.5 million, of which 50% comprises non-Muslims,” explained Muzaffar.

    The value proposition offered by the mudarabah IA is that MayBank Islamic could provide steady returns of between 4% and 5% per year to its customers.

    “We are confident that this fund will be a growth driver for us, moving forward,” he added.

    He pointed out that “the bank has put in place an effective and robust risk management framework for all of its products, including the new IA, which aims to provide capital preservation, financial security and steady returns through low risk and low to medium-risk investments.”

    Under the IFSA 2013, all banks are required to distinguish IA and Islamic deposit. This means that products with mudarabah (profit sharing) or wakalah (agency) features are considered IAs and are not-principal guaranteed and hence not protected by the Malaysia Deposit Insurance Corp.

    The classification aims to provide greater legal clarity on the types of syariah financial contracts. Customers will have a choice and will be able to differentiate between products that are principal guaranteed and those which are not that provide potentially higher risk returns like mudarabah.

    Besides garnering a pole position in terms of asset size, Maybank Islamic’s market share in the country is also the biggest in terms of financing at 33.6% and deposit at 27.9%.

    At group level, Maybank Islamic’s contribution to the Maybank Group is also significant, accounting for close to 30% in revenue and 48.7% in total loans and financing.

    All these figures were for the third quarter ended Sept 30, 2015 (Q3’15).

    Muzaffar said the bank is also looking to grow its Islamic banking business in the region, adding that the business in Singapore and Indonesia each accounted for about 5% of Maybank Islamic’s revenue.

    Although Indonesia has the highest Muslim population in the world, he noted that syariah banking was relatively still at its infancy stage unlike commercial banking.

    “The Islamic banking business in Indonesia accounts for close to 9% of the total banking business there.

    “In Malaysia, it is 25%. Hence, there is plenty of room for growth and we intend to grow and take advantage of this situation,” he added.

    According to Muzaffar, the challenge for the bank in venturing overseas will be the regulatory framework, in which Maybank Islamic has to operate in, as well as the uncertainties in the Basel III rules pertaining to its implementation in Islamic finance.

    On the corporate investment business, he said it would be dependent on the country’s economic growth, adding that the bank would continue to look at opportunities in the debt and initial public offering markets.

    As for its fourth-quarter results, he said Maybank Islamic hopes to maintain its performance in the preceding quarter, although much will be dictated by the external economic environment and market conditions.

    For Q3’15, the bank recorded a 13.2% year-on-year growth in pre-tax profit to RM1.23bil from RM1.09bil. The growth in earnings was on the back of strong financing growth, which grew by 23% to RM127bil.

    Total income for the period stood at RM2.98bil as opposed to RM2.46bil. Total capital ratio and return on equity for the period stood at 15.18% and 16.14%, respectively.

  • HSBC to stop retail banking in Maldives

    HSBC to stop retail banking in Maldives

    Banking giant Hong Kong and Shanghai Banking Corporation (HSBC) is to cease retail banking services in Maldives from April. We understand that the Male branch of HSBC had decided to cease retail banking operations from April 28 and is now informing its customers.

    An official from the Maldives Monetary Authority (MMA) also confirmed the plans by HSBC’s Male branch to shift to corporate-only operations. The official, however, did not give details.

    HSBC was not available for comment.

    HSBC operates in Maldives as a trading desk of the HSBC branch in Sri Lanka.

    An account in HSBC has to be opened with an initial deposit of MVR 50,000; the highest initial deposit required of any bank that operates in Maldives. The bank also pays the lowest deposit interest rate at 1 – 1.75 percent. Deposit interest rate on US Dollar accounts is 0.10 percent.

    As the bank charges a high amount in fees, the bank mainly hosts Maldivian businesses.

    In May 2014, complaints mounted over the bank’s decision to close down accounts held by many small and medium businesses citing administrative reasons. The businesses had complained that the move was made without prior notice.

    The decision by one of the biggest banks in the world comes a week after it was revealed that the Maldives had lost a major international banker.

    President Abdulla Yameen Abdul Gayoom told residents of Gaafu Dhaal atoll Gadhdhoo on February 15 that one of the major correspondent banks had dropped Maldives from its client list, while another one is considering a similar move. The reason, according to the president, is false claims made about Maldives, including threats posed by home-grown jihadists.

    “When we make such claims without considering the repercussions, it’s the people of Maldives that has to suffer,” he said, after inaugurating a project to establish a clean water system in the island.

    The president did not identify the bank that had dropped the Maldives. Haveeru, however, understands that US-based JPMorgan Chase had terminated its dealings with Maldivian banks in 2013.

    A correspondent bank is a financial institution that provides services on behalf of another, equal or unequal, financial institution. It can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution.

  • UnionBank taps Lendr to boost retail loans

    UnionBank taps Lendr to boost retail loans

    UnionBank of the Philippines (UnionBank) has tapped a multi-channel, telco- and bank-agnostic platform to boost retail loan growth.

    Salary, personal, automotive, housing, and other customer loan availments will soon be within reach through mobile devices as UnionBank and Voyager Innovations, Inc. (Voyager) collaborated to offer the bank’s retail loans portfolio through Lendr.

    Lendr is a fully digital, multi-channel, telco- and bank-agnostic platform that financial institutions and credit providers can use to reach consumers planning to avail themselves of loans through a single online “marketplace.”

    “In the fast-growing digital economy, innovation is the name of the game, and we are glad that UnionBank is seeing the vast opportunity for growth through digital lending with the help of Lendr,” Manuel V. Pangilinan, Voyager chairman, said.

    Voyager is the digital innovations arm of Philippines Long Distance Telephone Co. (PLDT) and Smart Telecom.

    “We are excited to work hand in hand to bring the best of Voyager’s FinTech innovations and UnionBank’s robust lending portfolio together for the benefit of Filipino consumers nationwide,” Pangilinan added.

    Through Lendr, UnionBank  expects to boost its retail loans portfolio and further extend its margins in consumer lending.

    “Technology, innovation and partnering have always been at the heart of UnionBank’s DNA,” Justo A. Ortiz, UnionBank chairman and chief executive said.

    “Banks need to compete with FinTechs but also need to collaborate with FinTechs, think and act like a FinTech and even transform into a FinTech in order to make a difference for our customers and other stakeholders,” he added.

    Considered a “blue ocean” opportunity for the banking sector, digital lending through online loans marketplaces like Lendr is fast becoming a priority as banks look for new opportunities.

    In an increasingly digital and mobile-driven banking landscape, partnership with financial technology or “FinTech” innovations is the key to successfully transitioning to digital banking.

    Through Lendr, UnionBank will be able to reach untapped markets without having to set aside huge capital outlays or undergo mergers and acquisitions.

    Customers will now be able to see and sign up for the bank’s various loan offerings  via SMS, the mobile app, and online with the help ofLendr.

    “We are excited to be working with Voyager, one of the best FinTechs in town. Collaborating with FinTechs is a key pillar of Unionbank’s digital transformation strategy,”said Unionbank President and COO Edwin R. Bautista.

    Lendr is expected to change the landscape for consumer loan lending not only in the Philippines but also in key growth and emerging markets through this marketplace approach.

    According to the Bangko Sentral ng Pilipinas, consumer lending has grown 20 percent year-on-year to reach P959.2 billion in the second quarter of 2015.

    “We expect more bank and financial institution partners to come on board for Lendr as we get ready to offer the service to consumers this year. Lendr is making consumer lending ‘always-on’ and ‘always-connected,” concluded Villanueva.

  • Standard Chartered hires Capital One’s James Dolphin as retail CIO

    Standard Chartered hires Capital One’s James Dolphin as retail CIO

    Standard Chartered has hired James Dolphin from Capital One as chief information officer, retail banking, to help kickstart the bank’s digital transformation initiative.

    Dolphin’s appointment comes after the bank announced plans to cut 15,000 jobs and accelerate its retail transformation strategy after reporting an unexpected $139 million loss for the third quarter, 2015. The updated strategy entails an investment of more than $3 billion in strengthening its technology and compliance and risk functions and a stated objective to reach 30% of sales and 40% of payments online by 2018.Dolphin joins Standard Chartered from Capital One where he has been CIO for retail and direct banking since 2012. In this role, he was instrumental in instilling a software development culture as the platform for change in the company’s retail business.

    Based in Singapore, Dolphin will report directly to Group CIO, Dr Michael Gorriz, a former aerospace engineer who joined the bank from Daimler last year.

    Gorriz says: “James brings with him a strong reputation as a technology leader and innovator. He is highly experienced in leading large teams and driving an agile culture that is innovative and customer-centric.”

  • Why there is no need to wait for a stable market before launching Shenzhen-Hong Kong stock

    Why there is no need to wait for a stable market before launching Shenzhen-Hong Kong stock

    Beijing should not wait for the market to stabilise to launch the Shenzhen-Hong Kong stock connect scheme and should introduce it as soon as possible to help attract more capital inflow to the mainland China.

    Hong Kong Exchanges and Clearing chairman Chow Chung-kong said last Thursday, on the first trading day of the Year of the Monkey, that the long-awaited stock connect scheme between the Hong Kong and Shenzhen stock markets would definitely be launched but it would need to wait for the stock market to stabilise.

    After the Hang Seng Index lost more than 700 points on Thursday in the biggest fall on the first trading day of a Lunar New Year since 1994, brokers interpreted his remarks as meaning the scheme would be launched in the second half of this year at the earliest.

    But that would not be appropriate because any broker will tell you investors like to trade when the markets have big movements instead of in quiet markets. Even in a falling market, people like to buy when the share prices drop to more reasonable levels.

    It should be left to investors and not the regulators to decide when it is appropriate to enter the market

    As such, the mainland regulator should launch the new scheme whenever the platform and regulatory measures are ready and not when the market is stable. It should be left to investors and not the regulators to decide when it is appropriate to enter the market.

    Then there’s the capital flow issue. The depreciation of the yuan, which dropped more than 5 per cent against the US dollar last year and is expected to fall further this year, has led to many mainlanders rushing to buy US dollar or Hong Kong dollar investment products and life insurance policies to hedge their risks.

    The launch of the Shenzhen-Hong Kong stock connect would not worsen the situation because most mainland investors have accounts in both the Shanghai and Shenzhen stock markets. Investors who want to trade Hong Kong stocks could already have done so by trading via the Shanghai-Hong Kong stock connect.

    The launch of the Shenzhen-Hong Kong stock connect would, however, open a new leg and new market for northbound trading – with international investors able to trade Shenzhen-listed companies in addition to Shanghai A shares.

    A recent survey by the Hong Kong Investment Funds Association found international investors were interested in the Shenzhen stock markets because it is home to many potential high growth companies. Retail brokers in Hong Kong would also like to see Hong Kong investors allowed to trade Shenzhen stocks because it would boost their commission income.

    That means the launch of the Shenzhen-Hong Kong stock connect is likely to result in new capital inflow to mainland China from both international fund houses and Hong Kong retail investors.

    More importantly, many fund managers believe that a precondition for A shares to be added to MSCI’s benchmark emerging markets index is giving them the ability to trade in the Shenzhen stock market.

    MSCI said in June last year that its decision to defer the inclusion of A shares in its global emerging market benchmarks for a second year reflected lingering investor concerns over market accessibility.

    If Beijing allows the Shenzhen-Hong Kong stock connect to be launched soon, it would boost the chances of A shares being included in MSCI indices. And that would lead to more exchange traded funds buying A shares, further boosting capital inflow.

    There is really no need to wait for the market to stabilize before launching the Shenzhen-Hong Kong stock connect.

  • China’s Central Bank says no reason for yuan to slide further

    China’s Central Bank says no reason for yuan to slide further

    China’s central bank governor said there was no basis for continued depreciation of the yuan as the balance of payments is good, capital outflows are normal and the exchange rate is basically stable against a basket of currencies, according to an interview published Saturday in Caixin magazine.

    Zhou Xiaochuan dismissed speculation that China planned to tighten capital controls and said there was no need to worry about a short-term decline in foreign-exchange reserves, adding that the country had ample holdings for payments and to defend stability.

    The comments come as Chinese financial markets prepare to reopen Monday after the week-long Lunar New Year holiday.

    The country’s foreign-exchange reserves shrank to the smallest since 2012 in January, signalling that the central bank sold dollars as the yuan fell to a five-year low. The weakening exchange rate and declining share markets in China have fuelled global turmoil and helped send world stocks to their lowest level in more than two years.

    The bank will not let “speculative forces dominate market sentiment,” Zhou said, adding that a flexible exchange rate should help efforts to combat speculation by effectively using “our ammunition while minimising costs.”

    Policy makers seeking to support the yuan amid slower growth and increasing outflows have been using up reserves. The draw-down has continued since the devaluation of the currency in August and holdings fell by $US99.5 billion in January to $US3.23 trillion, according to the central bank on February 7. The stockpile slumped by more than half a trillion US dollars in 2015.

    China has no incentive to depreciate the currency to boost net exports and there’s no direct link between the nation’s gross domestic product and its exchange rate, Zhou said. Capital outflows need not be capital flight and tighter controls would be hard to implement because of the size of global trade, the movement of people and the number of Chinese living abroad, he added.

    The country will not peg the yuan to a basket of currencies but rather seek to rely more on a basket for reference and try to manage daily volatility versus the dollar, Zhou said. The bank will also use a wider range of macro-economic data to determine the exchange rate, he said.

    Meanwhile China’s retail sales grew 11.2 per cent during the week-long Lunar New Year vacation compared with the same holiday period last year, Ministry of Commerce data showed on Saturday.

    Revenues of retailers and catering firms grew to about 754 billion yuan ($US115 billion) during the Feb 7-13 “Golden Week” holiday, a ministry statement said.

    The holiday is especially important for retailers, which vie for customers by launching promotions and discounts. Millions of people take time off work to travel and generally spend more than usual during the break.

  • First Metro Securities sees mobile technology driving up retail investing in the Philippines

    First Metro Securities sees mobile technology driving up retail investing in the Philippines

    Stock broker First Metro Securities Brokerage Corp. said the number of individual investors will increase on rising income of Filipinos, growing awareness of opportunities in the stock market and the emergence of online and mobile platforms that make investing easier and more convenient.

    Gonzalo Ordoñez, the company’s president, said the market for retail investing is still young as the Philippine economy is only starting to expand.

    “As we see the growing trend of more retail investors participating in the stock market, we also see the volume increasing over the coming years. With this in mind, we will continue to move forward to help change the way people invest and save money,” Ordoñez said.

    According to the 2014 data of the Philippine Stock Exchange (PSE), less than 1 percent of the estimated 100 million Filipinos invested in the stock market.

    The Philippines still has a long way to go before achieving widespread domestic investor participation in the stock market, the broker said.

    It said, however, the number of online investor accounts, which are mainly individuals, are increasing.

    Based on the PSE’s 2014 Stock Market Investor Profile reports, online investor accounts registered a five-year compounded annual growth rate of 44 percent, compared to the overall investor base, which grew by an average of 6 percent in the past five years.

    Online investors already constitute 27 percent of the total investor accounts base, coming from just 7 percent in 2010.

    With the trend of more retail investors participating in the stock market, the broker earlier launched a service that enables clients to borrow funds to buy stocks online using eligible securities as collateral. This provides clients with the ability to take on more risk in order to take advantage of emerging trends or build a larger portfolio.

    In 2013 the company launched the country’s first exchange-traded fund (ETF), which acts as a mutual fund that mirrors the performance of the benchmark Philippine Stock Exchange index and trades like a stock on the PSE.

    First Metro Securities is the market maker and an authorized participant of the said ETF.

  • Goldman Sachs enters Singapore retail fund market

    Goldman Sachs enters Singapore retail fund market

    Goldman Sachs Asset Management (GSAM), the asset management arm of Goldman Sachs Group Inc, is making its foray into the local unit trust industry with the launch of 13 retail funds in 1Q 2016.

    The new GSAM unit trusts, previously available only to private banking and institutional clients, will consist of fundamental and quantitative equity funds as well as those that invest in fixed income and multi-assets, according to the fund house which manages assets in excess of US$1 trillion ($1.4 trillion).

    These 13 Goldman Sachs funds approved for retail sales in Singapore include the Goldman Sachs Asia High Yield Bond Portfolio, Asia Portfolio, European Equity Partners Portfolio, European High Yield Bond Portfolio, Global Core Equity Portfolio, Global Equity Partners Portfolio, Global High Yield Portfolio,

    Global Income Builder Portfolio, Growth & Emerging Markets Broad Equity Portfolio, Growth & Emerging Markets Corporate Bond Portfolio, India Equity Portfolio, Japan Portfolio and US Real Estate Balanced Portfolio.

    “The global market volatility we are seeing right now underscores the need for world-class investment solutions that deliver highly differentiated strategies with real diversification benefits. We look forward to meeting the needs of Singapore retail investors through this range of funds,” says Sheila Patel, who is Singapore CEO of GSAM, in a statement.

    Singapore is GSAM’s Asia regional investment hub. The fund house’s team of Singapore-based investment professionals has been providing investment and advisory solutions to institutions including pension funds, sovereign wealth funds and financial intermediaries in the city state and across Asia since 1991.

  • Standard Chartered names James Dolphin as its CIO for retail banking

    Standard Chartered names James Dolphin as its CIO for retail banking

    Standard Chartered Bank has appointed James Dolphin as its Chief Information Officer (CIO) for retail banking. From March 2016, Dolphin will report directly to the bank’s Group CIO, Dr Michael Gorriz, and be based in Singapore.

    Prior to this role, Dolphin was Capital One’s CIO for retail and direct banking for since 2012. In that role, he led Capital One’s digital transformation strategy for the retail business by building strong engineering teams, and instilling a software development culture. He also redesigned and rewired Capital One’s retail channels to deliver market-leading digital experiences during his time there.

    Besides Capital One, Dolphin has held senior technology leadership roles at Bank of America too.

    “James brings with him a strong reputation as a technology leader and innovator. He is highly experienced in leading large teams and driving an agile culture that is innovative and customer-centric. I am confident that he will be a valuable addition to Standard Chartered,” said Dr Gorriz.

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  • Indonesia central bank seen cutting key rate again

    Indonesia central bank seen cutting key rate again

    Indonesia’s central bank, which kept its benchmark reference rate unchanged for nearly all of 2015, is expected to make its second cut this year on Thursday as it tries to bolster the country’s sluggish growth.

    South-East Asia’s largest economy grew 4.8% in 2015, the fifth straight year of slowing and the weakest pace since 2009. But growth picked up in the final quarter, showing some signs of recovery.

    Bank Indonesia (BI) trimmed its key rate by 25 basis points last month. Thirteen of 19 economists in a Reuters poll predict a same-size cut on Thursday, reducing the rate to 7%.

    Many economists believe BI is at the start of an easing cycle, as there’s room for monetary easing that there was not in 2015, when inflation sometimes topped 7% and anticipation of higher US interest rates pressured the fragile rupiah, which was emerging Asia’s second worst performing currency last year.

    The rupiah was not rattled by the Federal Reserve’s hike in December, and it has strengthened more than 2% against the dollar this year. BI deputy governor Perry Warjiyo said last week the rupiah is heading towards a level reflecting the country’s economic fundamentals.

    ROOM TO EASE?

    The rupiah’s appreciation gave “room for BI to ease its monetary policy even further. BI will make use of this opportunity to do just that, in a bid to help sustain the upward momentum in GDP growth,” said DBS’ economist Gundy Cahyadi.

    Low inflation and a deep slump in January exports and imports also support the argument for early rate cut, economists said.

    “Weak exports and capital goods imports mean further policy boost to aid economic recovery is warranted,” said Credit Suisse economist Santitarn Sathirathai.

    Not all agree. Six analysts surveyed by Reuters said the central bank will hold the benchmark at 7.25%.

    “BI is keen to avoid a repeat of the 2013 ‘Taper Tantrum’, which saw the central bank having to hike rates aggressively to support the struggling rupiah,” said Capital Economics in a note projecting no second rate cut until the second quarter.

    CIMB Niaga economist Winang Budoyo, who has pencilled in a hold this week, predicted that BI will lower the rate in March instead.

    BI has a policy meeting scheduled for March 17-18, right after the Fed’s next policy meeting on March 15-16.

  • Indonesian bank opens branch in Seoul

    Indonesian bank opens branch in Seoul

    An Indonesian bank, Bank Negara Indonesia (BNI) 46, opened a branch office in Seoul, South Korea, in Wise Tower, on Monday. It was inaugurated by the Ambassador of Indonesia to South Korea, John A Prasetio and Manager of BNI46 Seoul, Wan Andi Aryati. “The banking industry in South Korea is already shaken, but BNI46 still sees market potential,” Wan Andi said in a statement received by ANTARA here Monday. The BNI46 targets the domestic trade market according to her. “BNI Seoul wants to be a bridge to establish cooperation between Indonesia and South Korea by providing loans and other related banking services,” Wan Andi said.

    The BNI46 also provides services for South Korean businessmen who want to invest in Indonesia, she added.
    “We are also targeting the Indonesian labor market in South Korea, which now reaches 40 thousand people. We are committed to providing the best service for the Indonesias foreign exchange heroes,” she said.

    Meanwhile, Ambassador Prasetio stated that the world economy is still in a state of collapse. The stock market and the value of currency in some countries against the US dollar continues to decline.

    “This shows that the global sentiment has not been encouraging. Uniquely, the Indonesian economy is relatively solid in the middle of the uncertainty shocks,” the ambassador said.

    Cooperation in trade and investment between Indonesia and South Korea are still positive. The demand for Indonesian products and South Koreas investment in the country are progressive, according to him.

    “They respond positively on the economic policies of President Jokowi (Joko Widodo). I believe that the presence of BNI46 in Korea is very important to bridge cooperation between the two countries,” the ambassador said.

    Data from the Investment Coordinating Board (BKPM) shows that South Koreas direct investment in the country in the last five years is ranked fourth with a value of more than US$7 billion. Currently, there are 2,700 South Korean companies in Indonesia.

  • How DBS Is Fronting And Doubling Down On The Push For Entrepreneurship In Singapore

    How DBS Is Fronting And Doubling Down On The Push For Entrepreneurship In Singapore

    We’ve all heard of DBS — after all, it’s the largest bank in Singapore and Southeast Asia. And, it has 280 branches all over the rest of Asia, including China, Hong Kong, Taiwan, India and Indonesia. Other than its extensive coverage, the bank recently launched a set of new initiatives to support entrepreneurs and the startup community here in Singapore.

    DBS Bay Area Series

    ernestine fu

    Venture Capitalist and DBS Advisor Ernestine Fu. Photo Credit: DBS.

    DBS kicked off their initiatives in late 2014 with a visit from Ernestine Fu, a venture capitalist and partner at Alsop Louie Partners in Silicon Valley. She has advised DBS on venture debt and their entrepreneurship programs. With her presence, DBS launched its inaugural entrepreneurship event and kicked off its prestigious “Bay Area Series” event.

    For those unfamiliar with Ernestine, she has been heralded as Silicon Valley’s youngest venture capitalist. She joined VC firm Alsop Louie Partners as a 20-year-old associate in March 2011 and has been making waves as a young VC in the bay area since.

    tim draper

    Third-Generation Venture Capitalist Tim Draper. Photo Credit: DBS.

    Tim Draper, founder and managing director at Draper Fisher Jurvetson (DFJ), joined the Bay Area Series in January of 2015. Tim Draper is a third-generation venture capitalist, and is well known for being one of the early investors in Skype, Baidu, Tesla, Theranos, Hotmail, Twitch.tv hundred of others. His grandfather co-founded one of the first venture capital firms in Silicon Valley. He shared with local entrepreneurs his visions and insights on venture investing when he was in Singapore too.

    The Bay Area Series provide an excellent opportunity for local investors and entrepreneurs to hear and learn from successful individuals from Silicon Valley.

    Disrupt @ The Bay Series

    disrupt bay

    Food & Beverage Event for Disrupt @ The Bay. Photo Credit: DBS.

    DBS also launched a series of events called “Disrupt @ The Bay” in 2015. The goal of these events is to foster relationships and synergies among local entrepreneurs and investors. We need to re-think how we “disrupt” current industry norms, and create exponential growth through new technologies and business ideas. Some of the events organized last year include the F&B Disrupt @ The Bay, Future of Retail Disrupt @ The Bay, as well as Future of Automotive Disrupt @ The Bay.

    future of retail

    Future of Retail Event for Disrupt @ The Bay. Photo Credit: DBS.

    disrupt automotive

    Future of Automotive Event for Disrupt @ The Bay. Photo Credit: DBS.

    The Disrupt @ The Bay events have attracted multiple large corporations, small businesses and startups, and venture capital firms. These organizations include: StarHub, StoreHub, Golden Gate Ventures, iChef, The French Cellar, Reimagine Food, The Oddle Company, Mobikon Technologies Pte Ltd, and Robofusion Asia Pte Ltd.

    The Disrupt @ The Bay Series is a good platform for like-minded business owners, investors, and entrepreneurs to connect. They can share information, exchange ideas, and form new partnerships.

    DBS Venture Debt

    venture debt

    DBS and Venture Debt. Image Credit: DBS.

    As part of these initiatives, DBS also introduced venture debt financing and is the first bank is Southeast Asia to do so. Venture debt is a way for the bank to financial support tech startups in the growth stage.

    Currently, venture debt applicants need to be Singapore-based, with primary operations in Singapore. The startup should have also raised at minimum of $1 million SGD in Series A funding.

    Image credit: Kauffman FellowsImage credit: Kauffman Fellows

    This initiative provides a unique later stage funding option to encourage the growth of technology startups in Singapore.

    DBS Mobile App

    dbs business class

    Image Credit: DBS.

    DBS also launched a mobile app called “DBS BusinessClass” to provide a networking platform for local entrepreneurs, investors, and advisors in Asia. Available on both iOS and Android, members can post questions, gain advice on their businesses, and join online discussions on startups topics.

    Since launching a year ago, the app grew to over 15,000 members and over 300 discussion topics.

    Overall, these new initiatives by DBS show great promise. The bank received the Asian Banker’s Best Social Media Engagement Project Award, along with multiple other awards. DBS has taken a comprehensive approach to positively impacting the local entrepreneurship ecosystem in Singapore.

    We are optimistic that DBS has a strong platform to expand and connect entrepreneurs and investors across the rest of Asia.

     

  • Hong Kong’s Stocks Tumble to Three-Year Low After Trading Break

    Hong Kong’s Stocks Tumble to Three-Year Low After Trading Break

    Hong Kong stocks tumbled after a three-day holiday as a global equity rout deepened amid concern over the strength of the world economy.

    The Hang Seng Index plunged 4.3 percent at 9:31 a.m. in Hong Kong, heading for its lowest close since June 2012. The MSCI All-Country World Index dropped 2.1 percent since the city’s markets closed last week. Energy producers led declines after crude slumped 11 percent during the holidays. The Hang Seng China Enterprises Index retreated 5 percent, poised for its biggest loss since August.

    Hong Kong’s benchmark equity gauge tumbled 12 percent this year through Friday amid concern that capital outflows, a slumping property market and China’s economic slowdown will hurt earnings. Some speculators have been betting on an end to the city’s currency peg to the dollar. Tuesday’s riots in the shopping district of Mong Kok threatens to deter mainland visitors and worsen a drop in retail sales, according to UOB Kay Hian (Hong Kong) Ltd.

    “You can’t avoid a drop because everywhere has come down so much during this time and the same concerns are still there – oil price, global recession,” said Steven Leung, an executive director for institutional sales at UOB Kay Hian. “The image of Hong Kong as a metropolitan city has been hurt quite seriously” by the rioting, he said.

    Plunges in crude and concerns over the perceived creditworthiness of European banks has fueled uncertainty over the strength of the world economy this week. Oil fell to $26.91 a barrel in New York, compared with $31.72 a barrel at the close on Feb. 4. Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis.

    “The general tone of other markets has been quite soft,” said Tony Hann, who helps oversee about $270 million as head of equities at Blackfriars Asset Management in London. “It’s difficult to be optimistic” about Hong Kong, he said.

    The Hang Seng Index’s price-to-book ratio fell below one last month, a level unseen since the Asian financial crisis roiled regional markets and popped a domestic property bubble in 1998. All but two stocks on the 50-member gauge are down this year. Mainland financial markets remain closed for holidays until Monday.

    Police fired warning shots in Kowloon’s Mong Kok district early Tuesday after an effort by officials to clear illegal food stalls morphed into a riot. Almost 90 officers were injured, according to the police commissioner, and more than 60 people have been arrested, after protesters hurled bricks and set fire to barricades in the densely populated area. The clashes were more violent than anything seen during the “Umbrella Movement” of 2014, where protesters paralyzed downtown Hong Kong for more than two months to demand the right to pick the city’s leader.

    “This time the situation was quite different from Occupy Central: there was no peace and a lot of people were injured,”  UOB Kay Hian’s Leung said. “Overall it shouldn’t have very big impact but, of course, it will weigh on related sectors like retail, tourism.”

    Still, weaker global growth may reduce the likelihood of future interest-rate increases in the U.S., which raise borrowing costs in Hong Kong due to a currency peg, Leung said.

    While investor attention may shift toward corporate profits as companies unveil quarterly and annual results, analysts see little scope for optimism. They’re predicting a 12 percent drop in the Hang Seng index’s earnings per share over the next 12 months, according to data compiled by Bloomberg.

    The People’s Bank of China pumped four times as much cash into the financial system in the run-up to the lunar new year holidays than it did in 2015 as capital outflows added to pressure on the money market. Outflows increased to $158.7 billion in December, the most since September and were $1 trillion last year, according to estimates from Bloomberg Intelligence. That’s more than seven times the amount of cash that left in 2014.

    Should the Chinese banking system lose 10 percent of its assets because of nonperforming loans, the nation’s banks will see about $3.5 trillion in equity vanish, Bass, the founder of Dallas-based Hayman Capital Management, wrote in a letter to investors obtained by Bloomberg. The world’s second-biggest economy may end up having to print more than $10 trillion of yuan to recapitalize banks, pressuring the currency to devalue in excess of 30 percent against the dollar, according to Bass.