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13 - 20 May 2014
| Issue 204
The global rise of China's
yuan currency is 'inevitable' but will have to be accompanied by serious
reforms, according to ASIFMA CEO Mark Austen's 'road map' for yuan
internationalization.
The Modi sarkar could start
working from this Saturday, which, if it happens, will be in keeping with
the PM-designate's reputation of being someone who makes no distinction
between weekdays and weekends. Narendra Modi and a few key cabinet
ministers are most likely to take oath on May 24, which is the auspicious
day of Ekadashi as per the Hindu calendar, a senior BJP leader told ET on
Monday, ending the suspense over the date of the BJP government's
constitution. (Economic Times)
CHINA
The financial regulator in
China has issued rules to enhance and improve interbank business in order
to contain financial risks and to direct more capital into real economy.
The regular, the central People's Bank of China, issued 18 rules this time.
In a separate statement, the central bank said: "In recent years, the
interbank business of commercial banks has grown quickly, and some banks
are conducting their businesses in ways that do not conform to
standards." (Xinhua)
China will continue striving
for capital market reform to preserve the rights of medium and small
investors and pursue sound development, a senior securities official said
Monday. Xiao Gang, chairman of the China Securities Regulatory Commission
(CSRC), said that a multi-level equity market should be established as soon
as possible. Xiao said that about 100 new shares will be issued from June
to the end of this year, with strict supervision and severe punishment for
accounts manipulation or false disclosure. (Xinhua)
The country's weakening
property market poses risks to the banking system, an official with the
China Banking Regulatory Commission (CBRC) recently said at a meeting of
the regulator. The overall quality of property loans has remained stable,
but a few risks have appeared and require close attention, the official
said. One risk stemmed from mounting oversupply, as some cities have built
more homes than people can buy in a short period, he said. (Caixin)
A ministerial meeting of
Asia-Pacific Economic Cooperation (APEC) has reiterated the resolution to draft
a roadmap concerning the establishment of a Free Trade Area of the
Asia-Pacific (FTAAP). The annual APEC Ministers Responsible for Trade
Meeting, which wrapped up Sunday in China's eastern city of Qingdao,
released a statement saying the move formed part of "concrete steps
towards eventual realization of an FTAAP." (Xinhua)
HONG
KONG
The Hong Kong Financial
Services and the Treasury Bureau (FSTB) has announced that the Hong Kong
and Chinese Mainland regulatory authorities will form a regime under the
Shanghai-Hong Kong Stock Connect to address misconduct. The Hong Kong and
Shanghai stock exchanges will each establish a subsidiary in the other
market to receive orders from their participants to trade eligible shares
and route them onto the trading platforms of the other exchange for
execution.
HKEx to Host RMB
FIC Market Strategy Forum on 22 May
Hong Kong Exchanges and Clearing Limited (HKEx) is hosting a renminbi (RMB)
fixed income and currency (FIC) market strategy forum on Thursday, 22 May
2014 in Hong Kong. Market leaders, including senior executives from banks,
product providers and institutional investors, will discuss the latest
trends in RMB-denominated fixed income products, the RMB's value versus
other currencies, global regulatory policy and its impact on Hong Kong, and
developments in over-the-counter market clearing, or OTC clearing.
SINGAPORE
The Singapore economy grew by
4.9 per cent on a year-on-year basis in the first quarter, similar to the
rate of growth achieved in the previous quarter.
INDIA
The Reserve Bank of India
(RBI) on Monday said banks could offer structured derivatives through
foreign branches even if these products weren't allowed in India. The
central bank, however, added these products could only be sold in
established financial markets. (Business Standard)
The paper focuses on the
impact of exchange rate volatility on industrial growth in the context of
the increasing integration of India's industrial sector with global economy
through higher export and import intensity. The paper also explores the
implications of exchange rate volatility on the use based components of the
index of industrial production (IIP) using EGARCH methodology for
calculating volatility of real effective exchange rate (REER).
The SEBI (Foreign Portfolio
Investors) Regulations, 2014 were notified on January 07, 2014 and shall
commence with effect from June 01, 2014.
JAPAN
Bank of Japan Gov. Haruhiko
Kuroda sounded a more positive note than usual on further easing action,
ratcheting up his commitment to leave years of deflation behind. While Mr.
Kuroda stuck to his usual mantra of saying he won't hesitate to act if
needed, in remarks made Thursday, he went beyond previous comments by
saying there were plenty of tools available should it become necessary to
take action, prompting a slight rise in the dollar against the yen. (WSJ)
A Japanese lawmaker is
querying "unnatural movements" in Tibor, the rates that underpin
trillions of yen of loans in Japan, challenging the financial regulator to
get a better grip on the rate-submission process. Banks and brokerages have
been investigated by regulators and watchdogs around the world for
attempting to rig benchmark rates such as Libor and Euribor. Japan has
joined in too, as the Financial Services Agency has punished the local arms
of three investment banks for tampering with offshore rates, while
promising in December to award itself powers to punish attempts to
manipulate Tibor. (FT)
AUSTRALIA
The Abbott Government will
roll out the nation's biggest infrastructure program to strengthen the
economy, ease congestion, cut travel times and create thousands of new
jobs. The Abbott Government will establish an Asset Recycling Fund to build
productive infrastructure on 1 July 2014.
NEW
ZEALAND
President Obama will welcome
New Zealand Prime Minister John Key back to the White House on June 20,
2014. The meeting will highlight our increasingly close relationship with
New Zealand and our collaboration on the Trans-Pacific Partnership, climate
change, and military-to-military cooperation.
THAILAND
The Thai army says that it is
imposing martial law amid a political crisis "to preserve law and
order". The surprise announcement also granted the army wide-ranging
powers to enforce its decision. (BBC)
INDONESIA
The battle lines in
Indonesia's transformative presidential election finally became clear on
Monday after weeks of speculation and horse-trading. Voters will face a
stark choice in July between Joko Widodo, the softly spoken Jakarta
governor, and Prabowo Subianto, a former general and self-styled strongman.
(FT)
INTERNATIONAL
Global plans to prevent
taxpayers from having to pay for big bank failures are at risk because
banking supervisors in Europe and Asia do not fully support some of the
proposals aimed at drawing a line under the 2007-2008 financial crisis.
Governments have paid out billions of taxpayer dollars to bail out large
banks in trouble because of fears that the fallout from a big collapse
would be too damaging. (Reuters)
Monetary policies pursued in
response to the financial crisis have shown that changes in central bank
balance sheets have major macroeconomic consequences. The New Classical
Macroeconomics, which gained increasing sway from the late-1980s, had led
to an exclusive focus on the policy rate and a neglect of balance sheet
effects.
UNITED STATES
U.S. Treasury Secretary Jacob
Lew paid his third visit to China since taking office last year in mid-May,
two months before this year's U.S.-China Strategic and Economic Dialogue
(S&ED) in Beijing. During his 40-hour visit to the Chinese capital, Lew
met Premier Li Keqiang, Vice Premier Wang Yang and a number of other
high-level officials. At the center of discussions was the yuan exchange
rate. Before he departed for China, Lew said he would press Chinese
officials for a more market-oriented exchange rate, adding there had been
"negative movement" in recent months. (Caixin)
EUROPE
EBA publishes
opinion on measures to address macroprudential or systemic risk
The European Banking Authority (EBA) has published an opinion following the
notification by the National Bank of Belgium (NBB) of its intention to
modify capital requirements in order to address an increase in
macroprudential or systemic risk that could have a severe impact on the
financial system and the Belgian real economy.
The Bank of England has urged
clearing houses and large broker-dealers to publish their derivatives risk
calculations, warning that more transparency was necessary to avoid future
potential systemic risks. The central bank, which monitors one of the
world's largest derivatives markets, sounded its warning in a white paper
published on Friday that examined the impact of margin calls on stressed
markets. (FT)
UK housing market has 'deep,
deep structural problems', says governor, and there is little the Bank can
do. (The Guardian)
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