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News Summary

The highlight of the weekend news goes to Barclays. The
Financial Times reported that Barclays plans to accelerate the
shrinkage of its investment bank by exiting trading operations
in continental Europe, Asia and Latin America in a plan
supported by incoming chief executive Jes Staley. His
orientation is to focus on New York and London, the main
financial centres, and almost everything else will be
representative offices. The retrenchment will mostly hit
trading and securities operations in countries including
Singapore, Hong Kong, India, Russia, France, Italy, Spain,
Brazil and Mexico (page 2).
Sunday Telegraph revealed that Volkswagen is set to be
pushed deeper into crisis after it emerged that the carmaker is
facing a record-breaking €40bn legal attack spearheaded by
one of the world’s top law firms. Funding group Bentham as
approached Quinn Emanuel to prepare a case for VW
shareholders over the diesel emissions scandal. Quinn
Emanuel and Bentham are also contacting VW’s biggest
investors – which include sovereign wealth funds of Qatar and
Norway – to ask them to join the claim (page 7).
During an interview with public broadcaster NHK, Japan
Finance Minister Taro Aso said the BOJ may not ease policy
further any time soon, adding that the government is not
considering a supplementary budget this fiscal year (page 16).
Taiwan’s ruling party took the unusual step on Saturday of
ousting its pro-Beiing presidential nominee less than three
months before the election, reflecting pessimism about her
chances amid increasing wariness of Mainland China. 812
members voted to repeal the candidacy of Hung Hsiu-chiu
who is known for being strongly in favor of stronger ties with
China, trailing far behind Democratic Progressive Party
candidate Tsai Ing-wen. Kuomintang voted for Eric Chu, its
chairman, to replace her on its ticket in the election set for Jan
16 (page 15).

In The Nikkei, Joe Zhang, chairman of China Smartpay, said
growth in China is certainly slowing. But if the country has to
endure a recession or depression, the best possible time is
now. At the moment the government still commands popular
support and is in good control of the economy. Moreover, the
pressure of joblessness has eased considerably thanks to a
major demographic shift. It is also worth noting that the
central government's budget is still broadly balanced. This is a
big luxury that most governments around the world can only
envy (page 14-15).
Kathryn Cooper from The Sunday Times said ECB President
Mario Draghi is expected to signal this week that he is ready to
launch another wave of monetary stimulus to boost the
Eurozone economy. ECB meets in Malta; rates unchanged but
think it will signal another phase of quantitative easing, or
QE2, before the end of the year. Analysts say Draghi could
increase the amount of asset purchases from the current
€60bn a month, or extend the programme into 2017 (page 6).
Commodities trading giant Noble Group Ltd, is winding down
its exposure to some metals and focusing on what it says is a
profitable energy business (page 3).
U.S. automated teller machine maker Diebold Inc. is in talks
to buy Germany’s Wincor Nixdorf AG in a deal that would
value the German company at more than €1.7bn (page 11).
Malaysia’s 1MDB has received three bids from domestic and
international companies, including Tenaga Nasional Bhd.
1MDB, said that it had received “binding and fully funded
offers from three strategic investors.” 1MDB didn’t mention
the names of the bidders for the assets, which are owned by a
unit called Edra Global Energy Bhd (page 16).
Keep note there are several Fed speakers this week. Brainard
kicks off on Monday, followed by Lacker, Powell, Dudley and
then Yellen. Have a great week ahead.

On Friday, US government put a final block on the prospect of
oil exploration in the country’s Arctic in the foreseeable
future, cancelling plans to sell more drilling leases in the
region, and refusing to extend leases previously sold to Royal
Dutch Shell and Statoil. The decisions by President Barack
Obama’s administration set the seal on that position, and
could block further development in the Arctic for decades
(page 8).
Chinese President Xi Jinping visits London this week Oct 2023. Financial Times said it expects BP to sign an agreement
with China’s CNPC, the country’s state-owned oil group, to
jointly develop new projects in China and elsewhere. The
accord paves the way for investment in West Africa, Iraq or
other areas of the Middle East, though the collapse in crude
prices is likely to make any sizeable spending a more distant
prospect. No production targets or investment figures will be
announced (page 3).
China will release the third quarter GDP numbers on Monday.
Economists expect the rate of growth to dip to 6.7-6.8% versus
previous 7%, which would be the slowest since the depths of
the financial crisis. The government has in recent years
attempted to keep expansion running at a rapid pace, with
gross domestic product growth of 7% a year considered a
minimum acceptable rate. The risk is that China’s slowdown
drags the rest of the emerging world with it. As the largest
consumer of commodities, flagging demand has hit resourcesrich developing nations (page 12-13),
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

UK News
Cameron braced for mutiny over EU wish
list
Taken from the FT Saturday, 17 October 2015

David Cameron is braced for a mutiny from Tory eurosceptic
MPs when he publishes his long-awaited EU negotiating wish
list next month, amid signs it will not satisfy his critics.
The prime minister’s demands are not expected to include
three of the main eurosceptic demands: ending the supremacy
of EU law, allowing Britain to limit EU migration and
permitting Britain to strike its own trade deals.
Some Tory MPs are expected to announce immediately that
they will campaign for a Brexit, but Mr Cameron is revealing
more of his hand as he attempts to push for a possible deal at
a European summit in December.
Bernard Jenkin, a senior MP, said he and other colleagues
would “despair of the negotiation”, while Steve Baker, leader
of the Conservatives for Britain group, which is likely to
campaign to leave the EU in the referendum, said: “This
moment is likely to crystallise people’s decisions.”
Mr Cameron bowed to pressure from EU leaders on Thursday
at a summit in Brussels and agreed to set out a list of
demands, paving the way for a possible deal in December or
early in 2016.
The prime minister believes his proposals are realistic and will
change Britain’s EU relationship. He has cleared his diary this
autumn for a major diplomatic push, including a tour of many
European capitals.
Sir Jeremy Heywood, cabinet secretary, told senior business
figures on the boards of government departments this week
that Mr Cameron would be spending more time on the EU
than on the government’s other priority this autumn: the
spending review.
One of those in the meeting said: “Heywood told us that the
spending review isn’t the big thing this parliament — Europe
is the big thing this parliament, and Europe is what Downing
Street and the Cabinet Office is most worried about. They’re
rattled because the renegotiation isn’t convincing anybody.”
However, others at the meeting insist that Sir Jeremy made
the point that the spending review and Europe were both
priorities and that it was simply that the prime minister was
personally more engaged for now on the latter.
Mr Cameron’s aides said the decision to publish his list of
demands represented “a change of gear”.
The demands will include protecting the interests of noneurozone countries in the single market, restricting welfare for
migrants, deregulation and economic reform, giving national
parliaments more power over EU law and withdrawing Britain
from “ever closer union”.
Meanwhile, Tory officials are discreetly speaking to party
donors and other business leaders about them dropping their
support for Business for Britain, a lobby group which has
joined the Brexit campaign.
Ian Cheshire, former chief executive of Kingfisher, is among a
number of disaffected former supporters of Business for
Britain, which was initially set up to promote EU economic
reform.
Mr Cheshire told the FT that BfB had “gone on a journey” and
had left behind a number of business leaders who favoured
Britain staying in a reformed Europe.
He said he would “absolutely sign up” to any deal secured by
Mr Cameron creating a “good two-speed Europe” in which
British interests in the single market were secured while the
eurozone continued to integrate.
Dominic Cummings, director of the Vote Leave campaign and
a former adviser to Michael Gove, justice secretary, said:
“Cameron has given up asking for treaty changes. He doesn’t

have a credible renegotiation strategy and his team is starting
to panic.”
(Full article click - FT)
---

Barclays pushes to shrink investment bank
Taken from the FT Saturday, 17 October 2015

Barclays plans to accelerate the shrinkage of its investment
bank by exiting trading operations in continental Europe, Asia
and Latin America in a plan supported by incoming chief
executive Jes Staley, say two people familiar with the strategy.
Mr Staley, the former head of JPMorgan Chase’s investment
bank, is expected to take over early next year, though he is still
awaiting regulatory approval.
Some investors and politicians have interpreted the veteran
American financier’s impending arrival as a sign that Barclays
is preparing a bullish strategic shift to rebuild its investment
bank.
However, people familiar with the bank’s strategy said the 58year-old had already backed the plan to refocus Barclays’
trading operations on its core US and UK markets, with
smaller presences in South Africa, Japan and one other Asian
centre.
“He will be quite economically rational,” said a person familiar
with Mr Staley’s thinking. “His orientation is to focus on New
York and London, the main financial centres, and [almost]
everything else will be representative offices.”
The retrenchment will mostly hit trading and securities
operations in countries including Singapore, Hong Kong,
India, Russia, France, Italy, Spain, Brazil and Mexico.
Barclays declined to comment.
News of Mr Staley’s planned arrival from hedge fund
BlueMountain Capital has lifted spirits in Barclays’ US
investment bank, which was built on the acquisition of
Lehman Brothers’ American operation but which has suffered
several big name defections in recent years.
“It’d be great to have a CEO,” said a US banker at Barclays.
“We’d obviously be delighted to have someone with an
investment banking background and strong understanding of
an investment bank.”
Antony Jenkins, who was fired after three years as chief
executive in July, took two shots at restructuring the
investment bank, promising to cut a quarter of the unit’s
28,000 jobs and shrink its share of group capital from half to
a third.
Mr Staley has seen first-hand how UBS won plaudits from
investors for slashing the capital-intensive trading operations
of its investment bank even more aggressively. He joined the
Swiss bank’s board earlier this year, but will step down if he is
approved to join Barclays.
“He has got used to the capital-light model of investment
banking and is quite admiring of the UBS model,” said the
person familiar with Mr Staley’s thinking.
Meanwhile, Barclays has been approached with an offer for its
Italian retail banking network by Mediobanca, the Milanbased investment bank.
(Full article click - FT)
---

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

Noble Group Winding Down Copper, Zinc
Trading
Taken from the WSJ Saturday, 17 October 2015

Commodities trader’s share price down more than 50% this
year
Commodities trading giant Noble Group Ltd is winding down
its exposure to some metals and focusing on what it says is a
profitable energy business as it addresses the global resources
rout that has made the Singapore-listed firm a big focus for
investors looking for casualties amid the carnage.
Noble’s share price has fallen more than 50% this year amid
the declines in the metals, coal and energy markets it trades
in, and as analysts criticize its accounting practices. This is
making the banks that finance Noble increasingly nervous
about their exposure to the firm, people familiar with the
matter say. As Noble looks to adapt to weaker markets, the
firm is winding down its trading in copper and zinc, according
to other people familiar with matter.
Noble’s troubles come as shares in the other large commodity
trading groups fall and their credit strength is questioned after
a yearlong bear market in commodities ranging from copper
to cotton and oil. Last month, Glencore PLC’s share price fell
nearly 50% at one point, causing the Swiss-based trading and
mining firm to announce plans to close and sell mines in a bid
to shore up confidence in its balance sheet.
Noble’s chief executive, Yusuf Alireza, said in an interview
Friday that “we are making some tough decisions and
relocating capital from metals to energy.“
“We’re having a record year and, by a long way, a record year
in our oil businesses,” he said.
Around 2000, the growth of China prompted a decade-long
commodities boom in which such large trading groups as
Noble and rivals Glencore, Vitol Group and Trafigura Beheer
BV grew rapidly. The companies generated billions of dollars
in revenue a year, moving vast shipments of crude oil, coal,
copper and other commodities around the world and profiting
from price discrepancies in how they were traded at different
times and places.
By the time that boom peaked in 2011, Noble, which was
founded in the mid-1980s by British-born scrap-metal trader
Richard Elman, was worth nearly $12 billion. The company
now has a market value of around $2.4 billion.
Metals markets have taken a particular toll, as prices fall on
worries over both future demand from China and increased
supply.
The profit for Noble’s metal division was all but wiped out in
the first half of this year amid a sharp slide in the premiums
paid for aluminum deliveries, its results show.
Three years ago the company said it wanted to take advantage
of market weakness to expand this business. Now Noble is
winding down some of its newer markets like copper and zinc,
according to people familiar with the situation.
Mr. Alireza said Noble is scaling back in metals but declined to
say which ones.
“Our cuts in metals are 100% consistent with what I said in
the second quarter results…moving capital from businesses
that give low return on capital to those that give high return
on capital,” he said.
Among investors, key concerns have been whether these
trading groups will be able to access the short-term loans that
are essential to finance their business.
Many of the banks that Noble has used are standing by the
company, according to people at the banks. As are its largest
shareholders, including China Investment Corp. and
Eastspring Investments (Singapore) Ltd., part of Prudential
PLC, which have maintained or increased their stakes.
Bankers in Singapore and Hong Kong, where Noble has its
head office, say they won’t yet pull out of loans they have
already made to the company, but if the noise around the

company continues, that may change. One banker described
the situation as “delicate.” Some banks that have participated
in revolving credit facilities for Noble have recently been
trying to sell parts of their exposure at “a steep discount,”
according to two bankers familiar with the situation.
Mr. Alireza said on Friday that talk about the firm having
difficulties raising cash is “entirely untrue.” Noble is set to
announce that it has increased a $450 million credit facility in
the U.S. to $1.1 billion after a recent round of funding was
oversubscribed, he said.
But earlier this week Mr. Alireza said that Noble has had some
difficulty with its banking relationships since analysts began
questioning the company’s accounting practices.
“We’ve lost some employees, we’ve lost some counterparties,
we’ve lost some marginal banks,” he said.
Earlier this year, Iceberg Research accused Noble of inflating
gains on some of the derivative and long-term contracts it
holds. Noble denies the accusations and said in August that an
independent review carried out by PwC had found its way of
valuing contracts was in line with industry norms.
Rival traders said there are also concerns about the company
as a counterparty in metals trading. One Noble trader
described the company’s London office as “dead,” with little
business and staff making informal bets among themselves to
pass the time.
Some employees have started asking for performance rewards
to be paid in cash rather than in share options because they
are worried about the long-term value of the company’s stock,
according to one person at the firm. Mr. Alireza denied this.
Several senior employees have recently left the company,
according to people familiar with the matter.
Mr. Alireza said that the firm’s London office had been the
target of cost-cutting, as Noble shrinks its metals business and
cuts back on expensive support roles in the city, which is a
global commodities trading center.
“London has been an office that has been challenged from a
profitability perspective,” the CEO said.
(Full article click - WSJ)
---

BP to strengthen China ties
Taken from the FT Sunday, 18 October 2015

BP is to strengthen its links with China’s CNPC, the country’s
state-owned oil group, under an agreement that could see
them jointly develop new projects in China and elsewhere.
The co-operation deal, expected to be unveiled next week
during president Xi Jinping’s state visit to London, will
include a broad commitment to establish new joint ventures,
according to industry insiders.
It could pave the way for investment in West Africa, Iraq or
other areas of the Middle East, though the collapse in crude
prices is likely to make any sizeable spending a more distant
prospect. No production targets or investment figures will be
announced.
BP could use the partnership to expand its operations in
China, where its main upstream asset is one of the country’s
biggest offshore gas fields – the Yacheng 13-1 field in the
South China Sea.
It also operates in China’s aviation fuels market and is one of
the biggest foreign investors in the country’s network of retail
service stations. The company runs around 700 joint venture
sites across the country.
In Iraq, BP and China National Petroleum Corp already cooperate in oil and gas production. In 2009, the UK-based
energy major and PetroChina, owned by CNPC, won a service
contract to boost output at Iraq’s giant Rumaila field — the
world’s second biggest with an estimated 20bn barrels of
recoverable oil remaining.
Average daily production at Rumaila was 1.34m barrels a day
last year.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

The agreement is likely to be one of several deals signed next
week as the UK and China look to cement closer economic
ties.
Talks are continuing between French energy group EDF and
Chinese nuclear power investors to try to agree a commercial
pact on the construction of the first in a new generation of
British nuclear plants in time for next week’s visit.
The two sides have been trying to strike a deal on their share
of investment in the £24bn Hinkley Point project, in
Somerset, with a team led by China General Nuclear Power
Group reluctant to raise its interest beyond 30 per cent.
Ministers are hopeful that a “heads of agreement” will be
signed with a final investment decision to follow. Beijing
would be involved in the construction of a second power
station at Sizewell in Suffolk and take a majority stake in a
third plant at Bradwell, in Essex, using its own design.
However, China’s ambassador to the UK said this week that,
while “substantial progress” had been made, “I can’t say 100
per cent whether there will be a signing on this visit.”
(Full article click - FT)
---

City grandees throw weight behind Brexit
Taken from the Sunday Times 18 October 2015

Bosses join Eurosceptic camp as Hargreaves Lansdown tycoon
seeks to unite ‘out’ campaigns
SOME of the biggest names in the City have lined up behind a
Eurosceptic group that is backing the campaign to leave the
European Union.
Business for Britain, which has signed up to the Vote Leave
campaign, has a raft of grandees from banking and fund
management among its 1,400 supporters — nearly three times
the number it had at launch two years ago.
This growing support is at odds with the stance of trade bodies
such as The City UK, which have claimed most of their
members back Britain’s continued EU membership.
It comes as billionaire Peter Hargreaves, co-founder of the
financial adviser Hargreaves Lansdown, has revealed he is
trying to broker a deal between the two “out” campaigns —
Vote Leave and Leave EU, run by Bristol entrepreneur Arron
Banks.
Business for Britain has announced it had signed up to the
Vote Leave campaign with the support of prominent figures
such as John Caudwell, the mobile phones billionaire; Oliver
Hemsley, chief executive of the stockbroker Numis, and
Crispin Odey, founder of Odey Asset Management.
The group claims to speak for the “silent” majority in
business, such as stockbrokers, private bankers and wealth
managers, including Michel de Carvalho, who chairs Citi
Private Bank in Europe, the Middle East and Africa; Paul
Killik, founder of the stockbroker Killik & Co; Gavin
Rochussen, chief executive of JO Hambro Capital
Management, and Mark Tyndall, co-founder of Artemis
Investment Management.
Britain’s asset managers and investment-trust companies
have been hit hard by EU regulation over the past five years,
which may have prompted many to support the Eurosceptics.
Other City supporters of Business for Britain include Fred
Carr, chairman of the M&G High Income Trust; Lucy Allan,
former head of investment trusts at Gartmore Investment
Management, owned by Henderson; and Alexander Darwall,
head of European equities at Jupiter, the fund manager.
Business for Britain was launched to push for EU reform, but
said it took the decision to join Vote Leave in the summer
when it became clear that the bloc would not renegotiate its
treaties. It informed supporters by letter and email, but said
“only a handful” — including Charlie Mullins of Pimlico
Plumbers — had left as a result. All the supporters contacted
last week declined to comment.

Hargreaves, worth £1.89bn in The Sunday Times Rich List,
said he had offered his support to both “out” campaigns, but
hoped to see them work together before declaring his hand.
Only one group will be selected as the official “out” campaign.
“I am a great fan of both teams and I think they do a great job,
but they would do a better job together,” he said.
Lord Rose, the former M&S boss, was previously a supporter
of Business for Britain but now heads the Britain Stronger in
Europe campaign.
The CBI, the business lobby group, said the majority of its
members still supported Britain’s membership of the EU.
(Full article click - Times)
---

Britain has 'nothing to fear' from EU exit
Taken from the Sunday Telegraph 18 October 2015

Boris Johnson's chief economic adviser describes Europe's
economic model as "backward looking" as UK faces choice
between between being a "Little European or a Global Britain"
without EU reform
Britain has "nothing to fear" if it leaves the European Union,
Boris Johnson's chief economic adviser will say this week.
Gerard Lyons will tell the British Bankers' Association annual
conference that the UK faces becoming a "little European" in a
bloc that will see its presence diminish on the world stage if
the EU does not embrace reform.
The former chief economist of Standard Chartered, who
currently advises the Mayor, believes Britain would be better
off inside a reformed EU, but will argue that the current
economic model has left the bloc "unfit to position Europe
well in a changing global economy".
Speaking ahead of Thursday's event, which also features Lord
Mandelson, Mr Lyons said it was crucial that the Government
pushed for "significant" reform, including safeguards for noneurozone economies such as the UK as the single currency
bloc moves towards ever closer union.
"If the EU does not reform significantly then the choice is
between being a Little European or a Global Britain - a choice
between a Little Europe that is inward looking, insular as the
EU's share of the world economy shrinks or a Global Britain,
trading with the whole world including Europe, negotiating
our own, better suited, trade deals with a focus on what the
UK is good at," he said.
"Europe's economic model is backward looking, with high
rates of unemployment. That is why it must reform. The UK
needs to pursue a global agenda - and the issue is whether it is
able to do that in a reformed EU or whether it needs to pursue
that approach outside."
Mr Lyons comments follow a report backed by the Mayor last
year that showed the City of London would continue to thrive
outside the 28-nation bloc.
London's value to the UK economy - currently £350bn - would
rise to £640bn by 2034 if Britain stayed in a reformed EU and
adopted policies encouraging more trade with fast-growing
markets, the report showed.
But if the UK left the EU but continued to pursue its own
trade-friendly, London would still grow to £615bn over the
next two decades, it found.
David Cameron has outlined four key demands to keep Britain
within the bloc, including a “red card” system to bring powers
back from Brussels and fresh safeguards for the City.
The Prime Minister has pledged to deliver a written list of his
renegotiation demands within weeks.
(Full article click - Telegraph)

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

European News
EU sidelines critical Turkey report as it
seeks migration deal
Taken from the FT Saturday, 17 October 2015

Brussels has privately signalled that it will shunt publication
of a highly critical report on Turkey’s free speech record until
after its election in November, as the EU scrambles to keep
Ankara on-board with a plan to stem migration.
The move has been hotly debated for weeks because a delay
appears to favour the party of Recep Tayyip Erdogan, Turkey’s
president, whose authoritarian tendencies were a deep
concern for the EU until the migration crisis blew up.
With the active support of Germany, the commission has since
sought to overcome longstanding political obstacles in EUTurkey ties — including on human rights — and bring the
migrant exodus to Europe under control.
While a Turkey-EU “action plan” is in principle agreed,
Ankara’s co-operation comes at a price: a €3bn funding
package to help it cope with 2m Syrian refugees, tangible
progress on stalled EU membership talks, and visa-free travel
in Europe for its citizens.
The deal’s fragility was underlined when on Friday morning
Feridun Sinirlioglu, Turkey’s foreign minister, warned EU
officials that a summit of EU leaders had not met its side of
the bargain, according to people familiar with the talks.
The provisional accord was salvaged during a conversation
with Frans Timmermans, the commission vice-president, who
promised to start unfreezing some chapters of EU
membership negotiations and tangible advances on financing.
According to one diplomat, Ankara was also reassured that the
contentious “progress report” on its membership bid — which
contains critical sections on free speech and has already been
delayed by a week — had yet not begun the commission’s
internal approval process and would take time.
It effectively means it will emerge after the November 1
parliamentary election, as publication is politically unrealistic
in the week before the November vote.
One EU ambassador quipped that it had been delayed “at the
whim of the Sultan” — Mr Erdogan. “This is not healthy,” he
said.
Although the chances of its emerging next week are negligible,
Jean-Claude Juncker, the commission president, has yet to
take a final decision. A commission spokesperson said Mr
Juncker would judge when the moment was best to “get the
full media and public attention that these reports merit”.
Delayed publication was one of Ankara’s demands in the
migration negotiations.
Philip Hammond, Britain’s foreign secretary, last month
pushed EU officials to defer publication.
A visit to Turkey by Angela Merkel tomorrow will highlight
Europe’s desire to engage Mr Erdogan on migration, even
amid a fraught election campaign that has seen increasing
intimidation of media.
Ms Merkel asked that her visit be to Istanbul rather than
Ankara, in part to avoid an awkward photo op with Mr
Erdogan at his 1,100-room presidential palace. It is yet to be
decided whether the two leaders will hold a joint press
conference.
She has been more forthcoming on policy. Ms Merkel has
backed a multi-billion-euro refugee aid package to Turkey.
She has softened Berlin’s objections to Turkey’s inclusion on a
“safe list” of countries, which means Turkish asylum seekers
are be more easily rejected in Europe, even as violence has
flared up with Kurdish separatists in Turkey’s south east.
The chancellor’s visit at such a sensitive political moment
underlines her view of Turkey’s crucial role in tackling the
migration crisis. Ankara will seek reassurance from her that
the EU has the political will to deliver money, revived

membership talks and visa rights to Turkey — and that Berlin
will step up bilateral support if Europe proves to be divided.
“Turkey is not a country that you just remember in a crisis,”
Mr Sinirlioglu said on Friday. “It won’t be enough to give us
worthless sums of money like in the past. It will have to be an
amount that shows the EU’s hand is under the rock [so it is
feels the weight of responsibility]”.
(Full article click - FT)
---

Greek banks: avalanche risk
Taken from the FT Saturday, 17 October 2015

Deciding recapitalisation levels for lenders will be no mean
feat
You are standing at the foot of a mountain. The snow-capped
peak is some way off. Your task is to gauge the risk of an
avalanche — any time in the next year. That is the scale of the
challenge facing European regulators as they assess the latest
Greek bank recapitalisation. Up to €25bn is available under
the August bailout. The question is how much of it the banks
need, which depends on the size of the capital hole and the
ability of the private sector to fill it.
It would be tempting for regulators to pitch the capital needs
high. Such a strategy could severely dilute or wipe out existing
shareholders and some bondholders, but depositors would be
safe. It should at least solve the Greek bank capital question
with finality. Yes, it might leave the banks controlled by the
government for a period, but banks elsewhere have survived
such control.
There are big risks in doing this. First, wiping out the
investors who recapitalised the banks last year would not send
an encouraging signal to the financial markets. Regulators
may not care much about those who put money in last year,
but at some point the banks will need access to private capital
again. And how would a Syriza-controlled, well-capitalised
banking system act? A tough attitude to bad debts is unlikely
to be on the agenda, so balance sheet weakness could persist
well into the future.
The right answer depends on facts that the regulators cannot
possibly know yet. The banks were given a clean bill of health
last year, so this recapitalisation only needs to cover the
damage from this year’s shenanigans. But how painful were
the capital controls? How did the economy cope with the
three-week bank holiday? The banks themselves are upbeat.
Second-quarter numbers from Piraeus and Eurobank
suggested encouraging trends in bad loans. But the IMF
expects the Greek economy to contract 2.3 per cent this year
and 1.3 per cent next. Best err on the side of caution.
(Full article click - FT)
---

Greece Approves First Austerity Bill
Taken from the WSJ Saturday, 17 October 2015

Lawmakers pass first bill containing economic overhauls
agreed in new bailout program
Greece’s lawmakers approved Friday the first bill containing
tough austerity measures and economic overhauls agreed
under its new bailout program.
After a week-long debate, the bill, which includes stricter
pension rules, tax hikes and tougher fines for tax evasion, was
passed by the majority of Greece’s 300 lawmakers.
Under the deal Greece struck with its international creditors,
which foresees up to €86 billion ($97.6 billion) in fresh loans,
the omnibus bill—so-called because it wraps a number of
proposed reforms into one bill—will pave the way for the
disbursement of the next €2 billion in bailout funds.
Despite the harsh austerity measures included in this set of
proposed measures, the bill was supported by the country’s
coalition government.
The ruling coalition, elected late September, is made up of the
left-wing Syriza party and its junior coalition partner, the

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

right-wing nationalist Independent Greeks. It holds a slim
majority of 155 seats in the 300-seat legislature.
Greek Prime Minister Alexis Tsipras, first elected in January,
dropped his ardent opposition to further austerity in July and
agreed to a tough third bailout deal, a move seen as necessary
to avoid a chaotic exit from the eurozone. He called snap
elections in a successful bid to jettison doubters in his party,
securing a comfortable win and a mandate to push through
the deal.
Since returning to the premier’s seat, the 41-year-old leader
has affirmed his commitment to the new bailout program,
despite its tough austerity requirements.
The law includes a gradual increase of the retirement age and
higher penalties for those granting early retirements. It also
includes a tighter legal framework for tax evasion, changes in
the legal framework for the settlement of tax arrears and
foresees the facilitation of the gas market’s liberalization.
A second, more difficult, set of economic and financial
overhauls is expected to be tabled and voted on in parliament
by mid-November to unlock a €1 billion second tranche of
funding.
This is expected to include more painful measures including
increasing taxation for farmers, further pension reductions
and arrangements for privatizations.
Last week, Greece’s Prime Minister Alexis Tsipras said the
government aims to achieve a swift and successful conclusion
of the first review of the country’s bailout program by the end
of November. This will pave the way for the recapitalization of
Greek banks to be concluded by the end of the year, before the
deposit bail-in instrument becomes effective at the beginning
of 2016.
By clearing these difficult hurdles in the next couple of
months, the government hopes that it will be able to begin
talks on Greece’s debt restructuring with its euro area
partners.
Data released by the Finance Ministry earlier this week
showed that Greece’s budget revenue fell 18% short of the
mark in September, contributing to a widening deficit for the
first nine months of the year.
In what could be a further blow to Greece’s tax collection
efforts, Mr. Tsipras demanded Friday the resignation of the
country’s top tax official, Katerina Savvaidou.
The call for Ms Savvaidou to step down came a day after she
was charged with breach of duty by a prosecutor for
attempting to defer tax collections from the country’s TV
stations by a year, in violation of a law, a Greek government
official said.
Ms. Savvaidou wasn’t immediately available for comment.
(Full article click - WSJ)
---

ECB wants recap funds paid by Nov 15
Taken from the Kathimerini Saturday, 17 October 2015

The European Central Bank is seeking to disconnect the issue
of the Greek bank recapitalization from that of the bailout
program review by the country’s creditors, according to a
report in a German magazine.
Weekly business news magazine Wirtschaftswoche reported
on Friday that Frankfurt wants the 15 billion euros set aside
for the capital strengthening of the Greek lenders to be
disbursed faster, to make sure the recap is completed by the
end of this year.
The report stated that ECB President Mario Draghi put
pressure on eurozone finance ministers during last week’s
Eurogroup meeting for the recap funds to be disbursed by
November 15, and not after the first review of the program.
Bank sources say the ECB is worried that if the recap is
allowed to become dependent on the review there will be a
serious risk that the process will not be completed by the end
of 2015. The same sources add that the ECB is insisting on

having the recap completed by year-end so as not to run the
risk of a haircut on deposits, which the law will allow for as of
January 1, 2016.
The magazine said that Frankfurt is not insisting on the major
reforms set as conditions for the loan of the funds for the
banks’ share capital increases, such as the restructuring of the
social security system. Instead it appears satisfied with the
reforms to the credit system, such as the establishment of a
rescue fund for Greek lenders and changes to the banks’
corporate governance strategy. However, the report stressed
that several member-states have reacted angrily to that
prospect.
Bank officials estimate that if the recap money is disbursed
after the first review, it will be very hard to complete the
process within the year as there won’t be enough time left. It is
impossible, they say, for a serious effort to begin to find
investors unless banks issue their financial results and it is
certain the stability of the credit system will remain secure in
any case.
They also consider the disconnection of the recap fund
disbursement issue from that of the bailout program review a
positive step as it would accelerate the procedure, adding that
if the government gets locked in long negotiations again,
creating uncertainty and concerns, it will be unlikely that
investors will want to participate in the recap process even if
the terms are favorable.
(Full article click - Kathimerini)
---

Kathryn Cooper: Draghi to signal further
QE
Taken from the Sunday Times 18 October 2015

MARIO DRAGHI, president of the European Central Bank, is
expected to signal this week that he is ready to launch another
wave of monetary stimulus to boost the eurozone economy.
European rate-setters meet on Thursday in Malta to decide
whether the economy needs another shot in the arm. Analysts
expect the ECB to keep rates on hold, but think it will signal
another phase of quantitative easing, or QE2, before the end
of the year.
Despite initial hopes that QE1 had boosted the euro area,
policymakers fear it has not done enough to banish the threat
of deflation. Eurozone inflation dipped 0.1% in September
following a 0.1% rise in August, according to data released last
week. This was its lowest level since March.
The euro is also 1% higher than at the last ECB meeting in
September, which could weigh on exports and therefore
inflation. German exports and industrial production both fell
sharply in August.
Analysts say Draghi could increase the amount of asset
purchases from the current €60bn a month, or extend the
programme into 2017.
“Without a quick response from the ECB, we think the new
configuration for world demand combined with tightened
financial conditions could cost the euro area’s GDP growth 0.2
to 0.3 percentage points,” said Gilles Moëc at Bank of America
Merrill Lynch.
(Full article click - Times)
---

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

Greece to sell bad loans to investors
Taken from the Sunday Times 18 October 2015

GREECE is poised to give the green light to the sale of a huge
pile of soured loans.
Athens is said to have ditched plans for a “bad bank” to house
its estimated €100bn (£75bn) portfolio of bad loans. Instead,
it is expected to be sold to a clutch of investment funds
including the private equity giants Bain Capital and KKR and
Spain’s Aktua.
“A bad bank is too complex at this stage because of the variety
of asset classes involved,” said a source close to the plans. “It
could still happen further down the line.”
The expected sale comes as the European Central Bank
completes its health check of Greece’s four largest banks —
National Bank of Greece, Piraeus, Eurobank and Alpha — to
determine how much capital each needs from the €25bn set
aside to recapitalise the sector. The Greek prime minister,
Alexis Tsipras, is keen to conclude the review by the end of
October and open discussions with creditors on relief for the
country’s €320bn of debt.
In August, Tsipras clinched an €86bn austerity package, the
country’s third since 2010, after months of turbulent talks that
threatened its membership of the single currency.
He has since been forced to pass several controversial
measures, including tax increases, pension reforms, a rise in
the retirement age and further spending cuts in return for the
release of cash.
(Full article click - Times)
---

Volkswagen
investors

faces

€40bn

lawsuit

firm will argue that VW’s failure to reveal its use of defeat
devices to shareholders constituted gross negligence by
management.
Mr East added that damages could be calculated from 2009 –
when VW started fitting the devices to its engines – and that if
investors had known about them they would not have held or
traded in VW shares. “We don’t think it will be very hard to
find shareholders who have suffered because of it,” he said.
“Institutional investors will be under pressure from their own
shareholders to act after the fall in VW shares.”
Jeremy Marshall, chief investment officer at Bentham, said
that bringing a joint action by institutional investors is a more
effective way of suing VW.
“We have been in touch with a tremendous number of VW
shareholders. We would not be able to get it up and running
unless there was sufficient investor appetite,” he said.
Mr Marshall said to fund the case, Bentham would look to get
between 20pc and 25pc of any damages paid, adding that it
would probably cost between €6m and €7m, before it went
anywhere near a courtroom.
VW is largely controlled by two major investors, with Porsche
holding 50pc and the German state of Lower Saxony
controlling 20pc, and it is thought they are unlikely to sue
over losses, with their own interests closely linked to VW’s
health.
The next-biggest shareholder is Qatar’s state investment fund
at 17pc, then stakes drop down to 2pc or below, among them
Norway’s sovereign wealth fund, Suzuki, Axa and Blackrock.
(Full article click - Telegraph)

from

Taken from the Sunday Telegraph 18 October 2015

Legal firms trying to gather investors to sue Volkswagen for
€40bn over losses suffered as result of emissions scandal
Volkswagen is set to be pushed deeper into crisis after it
emerged that the carmaker is facing a record-breaking €40bn
(£30bn) legal attack spearheaded by one of the world’s top
law firms.
Quinn Emanuel, which has won almost $50bn (£32bn) for
clients and represented Google, Sony and Fifa, has been
retained by claim funding group Bentham to prepare a case
for VW shareholders over the diesel emissions scandal, The
Sunday Telegraph can reveal. Bentham has recently backed an
action by Tesco shareholders over the retailer’s overstating of
profits.
The pair are attempting to assemble a huge class action
following what they call “fundamental dishonesty” at the
German auto giant, which plunged the carmaker into crisis
after it admitted using “defeat devices” to cheat pollution
tests.
The admission has been hugely costly for shareholders after it
wiped more than €25bn off VW’s stock market value. Recalls
and fines worth tens of billions of euros more are also
expected.
Now Quinn Emanuel and Bentham are contacting VW’s
biggest investors – which include sovereign wealth funds of
Qatar and Norway – to ask them to join the claim.
VW has admitted that it fitted “defeat devices” to 11m cars that
allowed them to fraudulently pass pollution controls, though
the company’s senior management has insisted it was
unaware of the practices.
Richard East, co-managing partner of Quinn Emanuel in
London, said: “We estimate shareholders’ losses could be
€40bn as a result of VW’s failure to provide relevant
disclosure [about defeat devices] to the market and gives rise
to questions about fundamental dishonesty.”
Legal action would be pursued in Germany under its
Securities Trading Act, according to Quinn Emanuel, which
hopes to file the first wave of actions by February. The law
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

News Americas
US puts a plug on Arctic oil exploration
Taken from the FT Saturday, 17 October 2015

The US government has put a final block on the prospect of oil
exploration in the country’s Arctic in the foreseeable future,
cancelling plans to sell more drilling leases in the region, and
refusing to extend leases previously sold to Royal Dutch Shell
and Statoil.
The decision was welcomed as a victory by environmental
campaigners, and attacked by the industry and politicians in
Alaska as a blow to US energy security.
The possibility that any oil companies would want to explore
in the Arctic seas off the north coast of Alaska was already
remote following Shell’s announcement that it was ending its
drilling campaign in the region having found only traces of oil
with its first well this summer.
The decisions by President Barack Obama’s administration set
the seal on that position, and could block further development
in the Arctic for decades.
Lisa Murkowski, a Republican senator for Alaska, described
the administration’s move as “stunning”, saying it betrayed
the interests of US energy security.
She added that it was the latest move in “a destructive pattern
of hostility towards energy production in our state that began
the first day this administration took office, and continued
ever since”.
Susan Murray of Oceana, an environmental group, thanked
the administration for the decision. “As Shell found out, the
Arctic Ocean is unique and unforgiving,” she said. “Especially
in light of economic, technological and environmental
realities, there is no reason to extend leases or hold new
sales.”
The US Department of the Interior had planned two sales of
offshore Arctic drilling leases, in 2016 and 2017, but the slump
in oil prices and the resulting pressure on oil companies’
finances meant they might not have attracted much interest
anyway.
The department’s Bureau of Ocean Energy Management is
now deciding whether to include any Arctic leases in its next
five-year
programme
of
sales,
covering
2017-22.
Environmental campaigners are urging it to keep the region
off limits.
The challenging conditions in the Arctic, including ice cover
for most of the year which means that wells can be drilled only
in the summer, mean that any oil discovered there would be
relatively expensive to produce. Shell, which was the only
company still exploring off the north coast of Alaska, had
argued that Arctic oil could be financially viable at a price of
$70 per barrel, but only if sufficient quantities were found.
The company’s failed attempt to find oil in the Arctic Chukchi
and Beaufort seas is thought to have cost it about $8bn,
including about $2.2bn in 10-year leases that are now likely to
lapse after the administration said it would not extend them.
Shell said in a statement: “When it comes to frontier
exploration in Alaska, one size does not fit all. We continue to
believe the 10-year primary lease term needs to be extended.”
Most of the leases in the Beaufort Sea expire in 2017, and
most of those in the Chukchi Sea in 2020, according to
Oceana.
A future administration could reverse Friday’s decisions, but it
is not clear whether it would do so.
Hillary Clinton, the frontrunner for the Democratic
presidential nomination, has said she is opposed to allowing
oil exploration in the Arctic. Although several of the
contenders for the Republican nomination are supportive,
they are also backing drilling in more easily accessible areas
such as the Arctic National Wildlife Refuge, onshore in Alaska.

The American Petroleum Institute, the oil industry group, said
oil development had long been obstructed by “the system of
regulatory and permitting unpredictability and uncertainty”
implemented by the administration.
Erik Milito of the API said: “While it is not surprising that
Interior cancelled the remaining lease sales because there was
an absence of nominations, it is the significant regulatory
uncertainty that has created the reluctance on the part of our
industry.”
(Full article click - FT)
---

Brazil Bet Burned Fortress Investment
Group
Taken from the WSJ Saturday, 17 October 2015

Hedge fund run by Michael Novogratz lost $100 million from
investments in South American country
The smart money is having a hard time navigating global
markets.
Michael Novogratz, one of Wall Street’s most famous
investors, recently decided to leave Fortress Investment
Group LP and close his macro hedge fund after it lost about
$100 million over the past two months from investments in
Brazil, according to people familiar with the matter. Earlier
this year, the fund lost $150 million in a single day from
wagers placed by a different Fortress trader against the Swiss
franc, the people said. The latest losses left the fund down
17.5% for the year through September, according to a
regulatory filing.
The gaffes at Fortress highlight the deep challenges some bigname hedge funds are facing. In recent years, many hedge
funds blamed their poor performance on unusually placid
global markets. But the long-awaited arrival of volatility hasn’t
paid off as some firms that bet on global economic trends
seem to be struggling to profit from recent swings in the U.S.,
China and elsewhere.
The flagship funds of Moore Capital Management LP and
Brevan Howard Asset Management LLP were up 1.8% and
roughly flat for the year through September, respectively,
according to people familiar with the matter.
Macro funds on average have lost 0.6% this year through
September, according to research firm HFR. Other types of
funds that have made large bets on individual companies have
fared even worse.
Widely held stocks including Valeant Pharmaceuticals
International Inc. and SunEdison Co. have plunged in recent
months, contributing to steep losses for some of the industry’s
biggest names. William Ackman’s Pershing Square Capital
Management LP, a big Valeant holder, dropped 12.5% in
September alone. David Einhorn’s Greenlight Capital Inc. is
down 17% for the year through September, hit by losses on
SunEdison, whose stock has declined 61% since August.
Overall, hedge funds are down an average 1.4% in 2015,
through September. That beats the 5.3% total loss by the S&P
500 in that time frame, but is worse than the 1.1% total return
of the Barclays U.S. Aggregate Bond Index.
At Fortress, Mr. Novogratz managed about $2 billion of
investments, including about $1 billion in the macro fund.
Earlier this year, the fund suffered steep losses on a bearish
position on the Swiss franc after the Swiss central bank ended
the currency’s peg to the euro. That trade had been led by Jeff
Feig, then co-chief investment officer of the macro group with
Mr. Novogratz.
When Mr. Novogratz assumed full control of the macro fund
in July, he and other Fortress executives were confident he
could engineer a recovery from year-to-date losses of 10% at
that point, including the Swiss positions and a number of
other losers.
Instead, Mr. Novogratz compounded the losses with mistakes
in Brazil that brought his tenure at Fortress to an end.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

Mr. Novogratz placed an outsize bet that Brazilian rates would
fall as the nation’s central bank moved to aid the struggling
economy. But in late September, investors—concerned that
the Brazilian central bank might be forced to raise rates again
to defend the weakening Brazilian real—pushed yields on
Brazilian debt higher, hurting the Fortress fund.
On Sept. 23, the yield on 10-year Brazilian local debt soared
by 0.65 percentage points to 16.88%, according to FactSet, a
huge move for that market. Yields on futures also jumped.
That day alone cost Fortress about $12 million, according to
an investor.
Mr. Novogratz has a history of investing in Brazil and
investments focused on the nation have long been a big piece
of the fund, according to people familiar with the matter. He
has visited the country a few times a year, was in Brazil for the
most recent World Cup and last year made a high-profile
speech predicting “major rallies” for Brazilian investments.
Some of the past bets worked out, but his track record in the
country was mixed. In 2014, for example, the fund incorrectly
bet that Brazilian President Dilma Rousseff would lose her reelection bid and that investments in the country would climb.
That hasn’t happened.
Though traders say some of Mr. Novogratz’s moves may pay
off long-term, in the hedge-fund world investors often don’t
have patience for investment volatility or steep short-term
losses. And the Fortress fund also suffered recently from
falling Chinese markets, among other areas. It lost 4.7% in
September and 4.4% in August.
Over the past 10 days, Mr. Novogratz realized his fund would
soon face client redemptions and decided to pull the plug on
the fund, according to a person familiar the matter. Other
Fortress executives agreed with the decision.
“This was a difficult decision given my confidence in both the
research positions we hold and the talent of our team,” Mr.
Novogratz said in a statement earlier this week through
Fortress about his fund’s closure. “But we have had an
extremely challenging two years, and I do not believe the
current environment is conducive to achieving our best
results.”
The Fortress fund, which managed more than $8 billion at its
peak in 2007, is expected to close before the end of the year.
(Full article click - WSJ)
---

Irwin Stelzer
American Account: Next president will have
to navigate a sea of troubles
Taken from the Sunday Times 18 October 2015

THE next president of the United States will likely wish he or
she weren’t. Barack Obama will have willed his successor a
Middle East dominated by a coalition of Russia, Syria, Iraq
and a nuclear-arming Iran. China will have ramped up its
military to make our aircraft carriers vulnerable to its missiles.
Vladimir Putin will have proved Nato to be incapable of
coping with Russia’s expansion. And the price of oil will be
rising as Russia and Saudi Arabia realise that despite
differences that lead them to kill each other’s allies, they have
a common interest in cutting production to drive prices back
up to $100 a barrel.
Great Britain, under prime minister George Osborne, will
have aligned itself with China, among other things, in
supporting the replacement of the dollar with the renminbi as
the world’s reserve currency. America will stand alone. Well,
not quite alone: it will be a member of what the previous US
president called “the international community”.
On the domestic front, the president will face a world
economy bereft of growth drivers. A sample of the headlines
that could await the new leader’s daily arrival in the Oval
Office:

■ Policy Makers Skeptical on Ability to Prevent Another
Financial Crisis — The New York Times.
■ Gloomy global outlook stalks finance ministers — Financial
Times.
■ Global Economy Yields Few Bright Spots — The Wall Street
Journal.
Then there is the domestic news: “As US Infrastructure
Creaks, Congress Dithers”. And “Consumers Shutting Down as
US Economy Deflates”, with many telling pollsters they are
planning to rein in their inner spender during the coming
holiday season.
Just as Obama blamed George W Bush for the economy’s poor
performance during his eight years in office, the next
president will complain that Obama passed on a poisoned
chalice, which includes continued brawls over the debt ceiling,
the inability of the top brass of the Federal Reserve Board to
agree on monetary policy, and an economy that continues to
travel in the slow lane.
Which some economists contend is an inevitable consequence
of excessive debt, and that until that burden is eased rapid
growth is out of reach. One example: many wealthy Americans
have decided to pay down debt rather than spend their rising
incomes — ill-gotten gains, according to Bernie Sanders and
Hillary Clinton — to stimulate the economy. The University of
Michigan’s Surveys of Consumers reveals that 15% of highincome households — the one-third of all households with
annual incomes of $90,000 or more — reduced their
outstanding debt last month. After all, the volatile stock
market is not exactly an inviting place to put money: witness
the lack of investor interest in some planned initial public
offerings and cancellation of others (the grocer Albertsons).
Which leaves it to the business community to step up its
spending if the economy is to grow at more than an annual
rate of 2%. But businesses are reluctant to do that. They are
facing:
■ Higher taxes as a result of a co-ordinated international
crackdown on tax avoidance programmes that enable major
corporations (Apple, Google et al) to find congenial havens for
their profits;
■ Rising labour costs due to increased legal minimum wages
(Wal-Mart profits to fall 12%), pressure to provide less
stressful work schedules (Amazon, fast food franchisees) and
skills shortages (homebuilders, trucking companies); and
■ Demand too weak to justify building new plants and buying
equipment.
Instead, companies are using their cash piles to finance a new
wave of corporate mergers in the media, beer, equipment,
healthcare and software sectors, and elsewhere. These
aggregations, if they succeed, are more likely in the near term
to result in layoffs than in new construction and jobs.
Economists are of little help. Monetary policy is neutered: the
economy too weak for a rate rise, deflation threatening to turn
the US into Japan, and use of negative interest rates to force
consumers into the malls and businesses to the new-plant
drawing boards too risky. Fiscal policy is neutered: even
Keynes might baulk at an increase in deficit spending by a
country so deeply in hock that the rating agencies might
downgrade its debt, pushing up the interest rates investors
will demand of an already profligate borrower.
Quite respectable economists on the left propose to reduce
income inequality and stimulate growth by transferring still
more income from the low-spending rich to the higherspending middle class and the poor, and to increase
government borrowing and infrastructure spending, current
debt levels notwithstanding.
As they see it, we have entered an era of secular stagnation,
with private sector demand insufficient to induce the higher
rate of investment and job creation needed for rapid growth.
Just the policy to drive private sector investors deeper into

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

their shells, respond those who favour a cleansing dose of
austerity and higher interest rates to avoid the alternative — a
wild inflationary spiral, or another collapse as investors take
on excessive risk. President whoever will have to decide which
advice to follow.
So, President Trump will be wishing he could escape the
grotty White House for the glitter of Trump Tower, where he
could plan more of the bankruptcies that he claims
demonstrate the exquisite timing that contributed to his
success. President Fiorina could be rounding out her business
career by sending other companies down the disastrous path
she blazed for Lucent and Hewlett-Packard.
President Clinton could be swanning around the world with
her Wall Street friends, courtesy of donors to the Clinton
Foundation. President Carson might have returned to doing
real good for real people by curing what ails them. President
Bush III could be in the private sector, where his family’s
backing is an asset rather than a liability. President Sanders, a
socialist, could have sufficient free time to meet Jeremy
Corbyn for a lusty singing of The Internationale. And young
President Rubio could be coaching his children’s sports teams.
All pursuits more gratifying than coping with the Obama
foreign policy legacy, a global recession and slow growth.
There are times when what appears to be winners are in fact
losers.
(Full article click - Times)
---

Oil nations feel the strain of
continuing price war

 Opec’s

Taken from the Sunday Telegraph 18 October 2015

Crisis-hit Venezuela to press for change in policy
Almost a year ago Rafael Ramirez, Venezuela’s long-serving
former oil minister, emerged from a tense meeting of the
Organisation of the Petroleum Exporting Countries (Opec)
looking red faced and furious.
Within the privacy of Opec’s steel-clad secretariat building in
Vienna’s quiet Helferstorferstrasse,
Ramirez had remonstrated angrily with his counterpart from
Saudi Arabia, Ali al-Naimi, about the urgent need for the
group of major oil producers to push up the price of crude
back to a level around $100 per barrel.
The two men couldn’t be more different in appearance or
world view. The diminutive Al-Naimi is a rarity in Saudi
Arabia, having risen to arguably the country’s most important
job from humble origins as a Bedouin shepherd boy.
However, Al-Naimi stands as a titan in the global oil industry
and wields the real power within Opec, a group that controls
60pc of the world’s oil.
Standing well over six feet tall, Ramirez towers over his Saudi
counterpart but that is where his advantage ends. Although it
sits on vast oil reserves estimated to exceed 290bn barrels,
Venezuela has been marginalised within the group of 12 oil
producers. Although still close to the country’s oil sector,
Ramirez – who was close to the country’s late Marxist leader
Hugo Chavez – is no longer officially part of its Opec
delegation.
In contrast, Al-Naimi is the main architect for Opec’s current
policy of allowing oil prices to weaken naturally to win back
market share from US shale oil producers and its other major
rival Russia.
With the support of a close network of Arab Gulf allies in
Qatar, the United Arab Emirates and Kuwait, Al-Naimi
convinced Opec last November that it could no longer afford
to surrender market share to its rivals by cutting its own
production to defend higher prices.
So far the strategy has held together even though it has failed
to significantly reduce oil production outside Opec member
countries. However, that uneasy consensus within Opec will

be put under severe test when the group meets for its final
gathering of the year in December.
Heading into the meeting in Vienna, Ramirez, who is now
Venezuela’s ambassador to the United Nations, has already
signalled his country’s intention to press for a change in
policy. Lower oil prices have crippled Venezuela’s economy,
where a 22pc spike in food price inflation in August has meant
the country is even struggling to feed itself.
Blackmarket soap, sugar and baby food for sale at over five
times the government regulated prices
In a recent interview with Reuters, Ramirez said he wants
Opec to cut production by introducing a series of price bands
starting at $70 per barrel. The proposals he said would be
formally presented for discussion at a meeting of “technical
experts” which Opec is convening on October 21. This has
potentially put Venezuela and its close allies within Opec,
including Algeria, Nigeria and Iran, on a collision course with
Al-Naimi and his Gulf Arab clique who still appear
determined to maintain their current strategy.
According to Opec’s former president, Abdullah bin Hamad
al-Attiyah, a change in policy is unlikely without any cuts in
production being matched by countries outside the group such
as Russia and Mexico.
“Opec has no choice because they no longer have the tools to
be a global “swing producer” anymore,” Al-Attiyah said. The
former Qatari energy minister points to Opec’s falling share of
the world market, down to just over 30pc from almost 60pc
20 years ago.
Saudi Arabia’s power within Opec comes from its vast oil
reserves and production, which it has increased significantly
since last November. It pumps around 10.5m barrels per day
(bpd) of crude and has the capacity to increase output by
12.5m bpd if it so chooses, which gives it tremendous power
alone to influence world oil markets.
“Even Saudi Arabia cannot play as the ‘swing producer’
anymore as they used to and we cannot always ask Saudi
Arabia to make the sacrifice, and they won’t, because they will
lose more of their market share,” said Al-Attiyah.
However, Al-Naimi’s hand in the forthcoming Opec meeting
has been significantly weakened by the political turmoil now
engulfing the kingdom. The succession of King Salman bin
Abdulaziz al-Saud has arguably seen Al-Naimi lose influence
within the corridors of power in Riyadh. The kingdom’s
current strategy at Opec was endorsed by the country’s
previous ruler, the late King Abdullah, who was a key
supporter of Al-Naimi.
On taking power, King Salman elevated his son Prince
Abdulaziz bin Salman to the role of deputy oil minister and
replaced Al-Naimi as chairman of Saudi Aramco, the stateowned, oil-producing monopoly.
The oil price war, which Al-Naimi effectively started, has also
put the kingdom’s finances under severe strain at a time when
it is fighting a full scale war in Yemen and funding moderate
opposition groups fighting Bashar Assad’s regime in Syria.
King Salman’s government is now being openly criticised
internally after 1,400 pilgrims were killed in a stampede
outside Mecca last month, and the weak oil price is only
adding to the political pressure that is building in Riyadh.
The presence of Russia’s military in Syria essentially
supporting the Assad regime will test Al-Naimi’s nerve even
further. Russia is the world’s biggest oil producer just ahead of
Saudi Arabia and neither side is willing to surrender market
share to the other. The sight of Russian jets bombing Islamic
State targets in Syria adds a worrying new dimension for
Riyadh to consider when formulating its oil strategy.
To complicate December’s meeting even further, there is the
issue of how to allow for increased production from Iran and
the return of Indonesia as a member country.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

The historic deal reached this summer to rein in Tehran’s
nuclear programme has brought the lifting of economic
sanctions tantalisingly close for the Islamic republic.
Freed from the shackles of embargoes, Iran’s oil ministry
predicts the country could increase exports by around 1m bpd
by the middle of next year.
Sanctions had reduced Iran’s influence in Opec but this will
change in December with the country’s experienced oil
minister, Bijan Zanganeh, likely to challenge Al-Naimi’s
authority within the cartel. Relations between Saudi Arabia
and Iran are now at boiling point due to Tehran’s support of
rebels in Yemen and the Assad regime in Syria.
Oil is arguably Saudi Arabia’s best weapon against both Russia
and Iran. Although the kingdom’s finances are under severe
strain from the collapse in export revenues it can still fall back
on its $655bn (£423bn) of foreign assets while Russia and
Iran will feel the impact of another year of weak oil prices
more acutely.
After a year of carnage in the oil industry, it is now clear that it
will take more time for Al-Naimi’s strategy of allowing weaker
prices to do the job of totally shutting down higher cost
producers.
A 60pc slump in oil prices since last November has caused
havoc but the main target of Opec ‘s campaign, shale oil in the
US, has so far proved to be remarkably resilient.
Hardest hit have been the high cost producers in areas such as
the North Sea where prices below $50 per barrel have placed
the entire offshore industry at risk.
Energy consultant Wood Mackenzie now fears that 140 fields
in the waters off north-east Scotland, where oil has been
pumped since the 1970s, could be closed down over the next
five years if oil prices remain so low.
(Full article click - Telegraph)
---

opening up opportunities for growth at Wincor Nixdorf,”
Wincor Chief Executive Eckard Heidloff said in April.
The rise of mobile payments has raised questions over the
future of cash usage and the ATM-making industry. “The
market seems to be afraid of structural challenges from
cashless payments,” UBS analyst Sven Weier said earlier this
month.
Nevertheless, Diebold said recently that it expects cash usage
to continue to grow 3% a year through 2020.
Mr. Weier even sees a silver lining on the horizon for Wincor,
referring to “pent-up demand in Western European banking,
as the installed ATM base is over 10 years old, [coinciding]
with the need to spend on branch transformation,” he wrote.
He added that demand for Wincor’s checkout machines for
retailers, a very sluggish business recently, may rise as UBS
expects European retailers to increase investments in the near
term.
Such a transaction is still subject to material conditions and
analyses, in particular the completion of mutual due
diligences, Wincor said.
Credit Suisse and J.P. Morgan are advising Diebold, while
Goldman Sachs is advising Wincor.
(Full article click - WSJ)

Diebold in Talks to Buy German ATM
Maker Wincor for Nearly $2 Billion
Taken from the WSJ Sunday, 18 October 2015

Deal could enable increased investments into digital services
U.S. automated teller machine maker Diebold Inc. is in talks
to buy Wincor Nixdorf AG in a deal that would value the
German company at more than €1.7 billion ($1.9 billion),
Wincor said Saturday.
Diebold and Wincor—the industry’s No. 2 and No. 3
companies by revenue, respectively—entered into a
nonbinding agreement on the key parameters of a cash-andshare deal valuing Wincor at €52.50 a share on Sept. 24, the
German company said.
Such a deal would enable both companies to sharpen their
focus on the growing digital-payments segment and move
away from ATMs, for which prices are declining. By joining
forces, they could boost investment into the development of
software and IT services, which is costly.
A deal would also boost Diebold’s European presence, having
previously concentrated on North America.
Diebold, led by former Hewlett-Packard Co. executive Andy
W. Mattes, is in the midst of a cost-cutting drive, with revenue
having stagnated over the past eight years. It is aiming to cut
annual costs by $200 million, while investing $100 million
into electronic security, software and IT services through
2017.
Wincor is in a similar position. After issuing a profit warning
in April, the company said it would cut its ATM-making
capacity amid declining revenue, while boosting revenue from
its software and IT services activities, which currently account
for 59% of sales.
“The trend towards digitization embraced by both banks and
retailers has added to the momentum of change, with software
and high-end service solutions playing a prominent role and
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

News Asia
Investors play Chinese numbers game
Taken from the FT Saturday, 17 October 2015

China is the topic that global investors and markets cannot
ignore.
The country’s rate of growth is equivalent to adding an
economy the size of Italy’s to the world each year, and signs of
a slowdown have transfixed central bankers, businesses and
investors everywhere.
Case in point is economic data due on Monday, including
growth figures for the Chinese economy in July, August and
September. This latest snapshot of the economy will be heavily
scrutinised both for what it says about the state of domestic
demand and the ability of the one party state to control its
direction.
At a time when the global economy is being challenged by
weaker activity and low inflation pressures, China matters
greatly for investors well beyond its borders.
Economists expect the rate of growth in gross domestic
product to dip to 6.7 per cent in the third quarter, which
would be the slowest since the depths of the financial crisis.
“Clearly China has slowed, and slowed considerably,” says
Tony James, head of the alternative asset manager
Blackstone, which has direct investment in Chinese assets.
“The economy needs to pivot from industry to consumer,” he
continues. “They’ve been talking about it for 10 years now . . . 
China is going through a transition, but they have a lot of
control over the economy and institutions that we can only
dream of, and I think they’ll be fine.”
The government has in recent years attempted to keep
expansion running at a rapid pace, with gross domestic
product growth of 7 per cent a year considered a minimum
acceptable rate.
Haphazard attempts to prop up local stock markets in
Shanghai and Shenzhen this summer suggested the
authorities have a less than perfect grip on the economy,
however. A surprise devaluation of the renminbi in August
further sapped confidence.
As tumbling prices for raw materials suggested China’s need
for commodities was diminishing, the central bank spent
more than $200bn defending the currency. In turn that
helped trigger a strong reaction across global equity markets
during the third quarter, with share prices for western
companies exposed to China and sectors such as commodities,
luxury goods makers, materials and industrials all hit hard.
George Magnus, senior economic adviser at UBS, and
associate at Oxford university’s China Centre, like many
observers, will not believe a 7 per cent growth rate if it is
announced on Monday.
“People question the competence of the Chinese government,
in terms of do they really mean what they say when they want
to introduce more market mechanisms into the working of the
economy, and do they really want to reorient the balance of
the economy,” he says.
The question is whether a growth rate of 5–6 per cent would
be a worse outcome than a number so big as to be
unbelievable.
Ajay Rajadhyaksha, head of macro research for Barclays, says
trade figures already show the economy is slowing. “What we
are really looking for is the policy reaction.”
“Investors are looking for China not veering away from their
reform path. That does not mean more pump-priming, as
that’s what got them into this trouble in the first place,” says
Mr Rajadhyaksha.
China has attempted to stimulate the economy by cutting
interest rates and reducing the amount of capital banks are
required to hold, to encourage lending. There have also been

spending programmes, with many expecting further stimulus
from the government.
After years of huge investment programmes focused on
building roads, airports, office blocks and housing — which
bolstered stimulus at home and abroad — the country faces
the challenge of shifting activity towards more personal
consumption and fewer grand projects.
Venture to Hong Kong or Singapore and ask the employees of
western companies what their colleagues elsewhere think
about the outlook, and eyes roll. Interest in the world’s
second-largest economy is understandable, but those closest
to it are often frustrated by assumptions that disaster is both
inevitable and imminent.
“If you get good news, people think it’s fake, and if it’s bad, it
just goes to show China is in trouble,” says Michael Spencer,
chief economist and head of research for Asia Pacific at
Deutsche Bank.
Others point to a pick-up in land sales, and a stabilisation in
some data, while Mr Spencer adds: “Ten to 20 basis points
over or under in GDP growth shouldn’t really be a market
mover given the difficulties everywhere of calculating it.”
The conclusion may well be one that China does not have to
slow for it to be bad news for the parts of the world that
benefited from the past decade of growth. A reordering of the
economy could have a similar effect on demand for raw
materials as a recession would, only on a permanent basis.
“Commodity producers have lost that prop from China,
because the bull market was about a quite extraordinary
surge. The share of housing in the economy doubled from 8
per cent to 16 per cent in that bull market. It’s now in the
process of going back,” says Mr Magnus.
(Full article click - FT)
---

China sneezed, will the West catch cold?
Taken from the Times Saturday, 17 October 2015

When President Xi Jinping rolls into town on Tuesday, the
Chinese president will be treated to the best pageantry that
Britain has to offer: a state banquet with the Queen at
Buckingham Palace, a ride in the royal carriage, an
opportunity to address parliament and visits to No 10 and
Chequers.
The government will not miss a trick to win over the world’s
second-largest economy and “make Britain China’s best
partner in the west”, as George Osborne promised in Shanghai
last month.
When Li Keqiang, the Chinese premier, came last year, Britain
signed trade deals worth £14 billion. The bar this time, for the
first state visit by a Chinese president since Hu Jintao a
decade ago, will be set even higher.
Yet the backdrop could not be worse. Last month Daiwa
Capital Markets’ chief economist warned that China was
facing a “meltdown” that would “send the world economy into
a tailspin”.
Nor was he alone. Willem Buiter, a former Bank of England
rate-setter now the chief economist at Citi, predicted a “hard
landing” and a “likely recession” that would tip the world back
into crisis.
In many ways, China has had a year to forget. This summer,
the Shanghai stock market crashed by 40 per cent in two
months, erasing $7 trillion in company valuations. Beijing
intervened with heavy-handed measures, including an attack
on short-sellers, blanket bans on big-investor share sales, a
suspension of public listings and a $480 billion injection to
prop up prices. Unsettling markets further, it devalued the
yuan in August in a surprise move.
The government’s mishandling of the markets triggered talk
that Beijing was not competent enough to manage its planned
economic liberalisation. That, in turn, compounded fears that
growth was coming off the rails. A succession of bad industrial

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

and trade data had already provided compelling evidence that
the state would miss its 7 per cent growth target. Even the
official figures were branded “mendacious” by Mr Buiter, who
estimated the true rate of growth at 4.5 per cent.
Official numbers on Monday are expected to confirm that the
economy is slowing. Growth in both the first and second
quarters was 7 per cent, but economists are forecasting 6.8 per
cent for the three months to September, which would be the
weakest since the first quarter of 2009, in the teeth of the
financial crisis. The International Monetary Fund has
pencilled in 6.8 per cent for the whole year.
The risk is that China’s slowdown drags the rest of the
emerging world with it. As the largest consumer of
commodities, flagging demand has hit resources-rich
developing nations. The IMF has estimated that every one
percentage point drop in Chinese GDP growth wipes 0.3
percentage points from states in southeast Asia. As emerging
markets power 70 per cent of global growth, if China sneezes,
the rest of the world may now catch a cold.
China’s sympathisers are not convinced by the Armageddon
scenario. Beijing is attempting what few countries have
achieved, to bridge the middle income trap. Japan, Taiwan
and South Korea made the leap to advanced economy status,
but many more got stuck in transition.
To get there, China is transforming its economy. Until now,
Beijing has enjoyed the “easy growth” of state investment,
Jinny Yan, senior economist at Standard Chartered, said.
About ten trillion yuan (£1 trillion) was spent through the
state in the past five years building the cities for the
urbanising workforce. Unsurprisingly, investment accounted
for 90 per cent of GDP at its peak in 2009.
China now wants consumption and services to drive growth,
in common with almost all the main advanced economies —
and the transition is happening. In the latest GDP data,
investment accounted for 36 per cent of the growth and
consumption 60 per cent. The services sector was 42 per cent
of the economy in 2009 and is 50 per cent today.
At the same time, Beijing is trying to rein in the rapid
expansion of debt, a hangover from the financial crisis
stimulus programme, which last year finally held steady at 140
per cent of GDP.
A key part of the transformation is liberalisation of its
markets, from currency to government debt, not an easy
process for a country that has run a controlled economy for
generations.
“As you liberalise markets, there can be accidents in between,”
Changyong Rhee, head of the IMF’s Asian department, said.
Britain is hoping that they will be slip-ups rather than
calamities.
(Full article click - Times)
---

Seven trillion yuan in QE … it's all in the
policy tea leaves
Taken from the SCMP Saturday, 17 October 2015

Is it or is it not quantitative easing?
Mainland investors have been debating it this week. Never
mind the verdict, the debate itself has proven to be good
enough to fuel a week-long rally in the share market.
The trigger did not come from a big gun, but a little-known
blogger, Huang Sheng.
On October 11, Huang posted a commentary with an eyebrowraising title: "Here comes seven trillion yuan! Here comes the
Chinese QE!"
He was alluding to two policy announcements by the People's
Bank of China on October 10.
One, the removal of the loan-deposit ratio that limited a
bank's lending capacity to 75 per cent of its deposit. Two, the
expansion of a lending programme that allows banks to use

qualified loans as collateral to borrow from the central bank to
11 provinces from two.
Both moves were largely ignored by market watchers. After
all, the central bank has announced half a dozen schemes with
strange names in the past few months.
Yet, Huang said: "This is QE in disguise." He pointed out that
under the scheme, banks could invest in local government
bonds, pledge the paper to the central bank, and get more
money for lending.
"There is no information on the size, maturity, rate and
criteria of the lending scheme. The central bank has started
the money printer," he said.
Huang is a nobody in China's finance world. The 37-year-old
founded an online lending platform last year, pitching loans as
small as 30,000 yuan with double-digit returns.
This, however, did not stop social media from swooping on his
unusual take of what would otherwise have gone unnoticed as
an usual policy manoeuvre. Overnight, 7 trillion yuan became
the buzzword.
Analysts called it illogical and factually incorrect.
"The so-called Chinese QE does not exist," said Mingsheng
Securities, noting that slow loan growth was not caused by the
shortage in liquidity but demand.
AXA Investment Managers noted the central bank had lent
900 billion yuan to banks in Shandong province, while the
amount to those in Guangdong was expected to reach 5 billion
yuan by the end of this year. These numbers are nowhere near
the 7 trillion yuan that "some have speculated", it said.
Huang retorted in his blog: "When 4 trillion yuan liquidity
and 10 trillion yuan lending were introduced [in 2008], didn't
the government insist that its monetary policy was prudent?
We all know what happened after that."
The debate went on. The PBOC said nothing. Investors pushed
the Shanghai Composite Index up by almost 4.5 per cent on
Monday. Two days later, the central bank broke its silence, not
with an official statement but with an interview with Ma Jun,
the chief economist of its research centre.
Ma called Huang's argument "unfounded". He said there was
no change in the country's liquidity target and lending by the
central bank was only one of the factors affecting liquidity
growth.
The market still went up 2.3 per cent. It is not because
investors find Huang the blogger more credible than Ma the
banker, nor is it because they are positive that a QE is on the
cards. It is because mainland investors are masters of reading
policy tea leaves.
First, Huang's articles survived the state censors despite the
central bank's criticism. So have most related comments made
by the netizens. That would not have been possible without a
nod from the top. It would be far-fetched to call Huang's
comments planted, but it is obviously tolerated.
Second, the central bank's belated rebuttal is considered
academic. To protect the currency, it is bound to deny any QE.
Liquidity easing will exert new depreciation pressures on the
yuan and weigh on its chances of making it into the
International Monetary Fund's exclusive club of reserve
currencies.
Third, the clock is clicking. The leaders of the Communist
Party will meet from October 26 to 29 to discuss the country's
development plan for the next five years. It is a time for the
report card.
There is no quick fix to the economy. In the meantime, it does
not hurt to have people thinking of the possibility of a QE, if
all it takes is a little ambiguity.
(Full article click - SCMP)
---

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

Top Chinese General Says Country Won’t
Resort to Military Force ‘Recklessly’
Taken from the WSJ Saturday, 17 October 2015

Gen. Fan Changlong says China advocates peaceful resolution
of territorial issues, as U.S. prepares to send ships or planes to
South China Sea
China won't resort to military force “recklessly,” even on
territorial issues, and will do its utmost to avoid unexpected
conflicts, one of the country’s top military commanders said
Saturday.
Gen. Fan Changlong, vice chairman of the Central Military
Commission, which controls China’s armed forces, made the
remarks following indications from U.S. officials that the U.S.
Navy will soon send ships or planes to patrol near China’s
artificial islands in the disputed South China Sea.
In his opening address to a security conference in Beijing,
attended by defense officials and experts from around the
world, Gen. Fan appeared to be trying to ease regional
concerns that China plans to assert its claims in the area by
force.
Gen. Fan said China advocated peaceful resolution of
territorial issues and had resolved border disputes with
several neighbors through negotiations, according to state
media reports.
He also repeated China’s assertion that the islands are mainly
for civilian purposes, citing the recent start of operations of
two new lighthouses there, those reports said.
“We will never recklessly resort to the use of force, even if it
comes to issues relating to territory and sovereignty, and will
do our utmost to avoid unexpected conflicts,” the state media
reports quoted Gen. Fan as saying.
He also said China would pursue expanded military
cooperation with the 10 members of the Association of
Southeast Asian Nations, or Asean, whose defense ministers it
hosted at a forum in Beijing on Friday, according to the
Associated Press.
That includes exploring the possibility of establishing hotlines
and exchanging liaison officers between their militaries, the
AP quoted Gen. Fan as saying.
In another apparent effort to address regional concerns,
China’s defense minister, Gen. Chang Wanquan, proposed on
Friday conducting joint maritime drills in the South China Sea
with Asean members—including some with rival territorial
claims there.
Gen. Chang said China was willing to hold joint drills with
Asean in 2016 on accidental encounters, search and rescue
and disaster relief, according to a statement from the Defense
Ministry.
China’s President Xi Jinping pledged during his visit to the
U.S. last month that Beijing didn't intended to “militarize” the
islands it has built in the past year on reclaimed land around
rocks and reefs in the Spratlys chain in the South China Sea.
Chinese officials haven't publicly clarified exactly what was
meant by “militarize.”
The U.S., while seeking clarification on that point, is pressing
ahead with plans to send U.S. Navy ships or planes on
“freedom of navigation” patrols within 12 nautical miles of
China’s artificial islands, according to U.S. officials.
Under the United Nations Convention on the Law of the Sea,
or Unclos, countries can claim territorial waters stretching up
to 12 nautical miles from their coastline, including from
naturally formed islands and rocks over which they have
sovereignty.
But they can make no such claims around most submerged or
semi-submerged reefs, even if they have been expanded into
artificial islands through reclamation, according to Unclos.
China claims “indisputable sovereignty” over all the islands of
the South China Sea and their adjacent waters. It says it

guarantees freedom of navigation but is opposed to any
country using that as an excuse to violate its sovereignty.
“What on earth makes the United States think China should
and will tolerate it when U.S. surface ships trespass on
Chinese territory in the South China Sea?” said a commentary
published by the official Xinhua News Agency on Saturday.
The U.S. says China’s activity threatens freedom of navigation
in one of the world’s busiest shipping routes and is
intimidating rival claimants Vietnam, Malaysia, Taiwan,
Brunei and the Philippines, a U.S. treaty ally.
(Full article click - WSJ)
---

Joe Zhang: A new formula for China's next
5-year plan
Taken from the Nikkei Saturday, 17 October 2015

Last month, I took a business partner to visit a relative who
runs a small business in Shenzhen. My relative had been
written about in the local media as a successful entrepreneur.
But candid discussions quickly revealed that he is struggling:
profits are elusive, debts are piling up and the outlook for his
business is dire.
He works 365 days a year, spending valuable time on each one
entertaining bankers and officials. Due to a lack of sleep and
exercise, he has gained a lot of weight and looked exhausted.
He invited us to meet in the private dining room of a
restaurant, but we were not the only group he was
entertaining that night. He was first dining in an adjacent
room with some public officials. Toward the end of our meal,
he came back into our room to apologize: "These officials
inspected my company today," he said, explaining that he was
hoping they would grant him a certain categorization that
would enable him to get a government subsidy.
Whatever the original intention of China's many subsidy
programs, in practice they distort corporate behavior. They
are also fertile ground for corruption. Across China, millions
of businesspeople work tirelessly under an inefficient system
marked by a tedious approvals process, favoritism and
corruption.
Need for deregulation
With the Chinese Communist Party Central Committee's Fifth
Plenum convening on Oct. 26, politicians would do well to
consider ways to make life easier for millions of small
businessmen like my kinsman.
In the past few decades, small businesses have made a major
contribution to the country's job growth, and their role will
become more important in the future as the inefficient state
sector faces up to its inevitable need to downsize. As Premier
Li Keqiang ponders government priorities for the next fiveyear plan, which will be discussed at the plenum, nothing
should stand out as much as deregulation and liberalization.
The typical Chinese response to worries about an economic
slowdown has been to cut interest rates and reduce banks'
reserve requirements. Alternatively, the central bank
announces plans to lend more to commercial banks in a
Chinese form of quantitative easing, or the government boosts
spending on infrastructure.
These are only pragmatic responses because certainly it would
be a much harder task to cut taxes, reduce red tape or
minimize official harassment of business.
In many cities in China, it takes months to have a business
registered. I experienced this firsthand in Guangzhou and
Chongqing a couple years ago. An endless series of hoops
makes you want to give up halfway through the process, which
I did. Doing almost anything requires official approval, and it
is difficult to get straight answers. This endless ambiguity is a
major killer of business appetite and efficiency.
In a widely publicized incident in April, Premier Li ridiculed a
police department's demand that a man prove his mother was
indeed his mother when listing her as an emergency contact

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

on an application for overseas travel. In September, Li
mocked -- and blocked -- plans by bureaucrats to establish a
government-backed association for manicures that would
require all nail shops to gain accreditation.
In the 1980s and even the 1990s, China's economy took off
mainly because of liberalization. When the shackles of
communist ideology were discarded, there was no red tape yet
in place to throttle those who were brave and daring.
Since then, however, layer upon layer of mostly unnecessary
rules have been imposed to slow things down, add costs to
doing business and create room for dangerous liaisons
between businessmen and public officials. In May, Li
lambasted junior ministry officials for erecting roadblocks to
the implementation of top-level decisions.
Every year, government departments across the country
proudly announce the annulment of thousands of rules,
policies and decrees to show that they are pro-business.
Unfortunately, a larger number of new rules quietly creeps in
to take their place. One businessman complained to me that
he much preferred working with the old rules. "I love those
because at least I am familiar with them," he said. "It is a
challenge to have to constantly learn new rules and find ways
to deal with them."
Better than it looks
Growth in China is certainly slowing. But if the country has to
endure a recession or depression, the best possible time is
now. At the moment, despite the recent market roller coaster,
the government still commands popular support and is in
good control of the economy. Moreover, the pressure of
joblessness has eased considerably thanks to a major
demographic shift: The number of new entrants to the labor
force is moderating as a result of the "one-child policy" that
started three decades ago.
After decades of credit expanding at breakneck speed, the
country is now choking on it as much as it chokes on smog. A
break for reflection is sorely needed. China's continued trade
surplus suggests that the yuan remains in a broadly fair range
and may be undervalued.
It is also worth noting that the central government's budget is
still broadly balanced. This is a big luxury that most
governments around the world can only envy. Even when it
comes to the huge debts of local governments, there is no real
cause for concern. Governments at every level have vast
business holdings and, if necessary, could divest them for
cash. At present, they are under no duress.
After all, local government debts are literally things of the
past: Whatever happened to the borrowed money has already
happened. In other words, the dilutive effect of the borrowed
money on the yuan's purchasing power, both at home and
abroad, has taken place and been absorbed by the system.
These debts will in all probability be written off in the same
way the country's banks were bailed out in 1999-2000 -eventually and gradually. Those who liken the debts to a time
bomb fail to see that in the Chinese system, there was never
any illusion that these debts would be repaid.
If the current recession drags on or gets worse, that would be
a blessing in disguise for China. The government and the
public would have to re-evaluate their ways of doing business.
In fact, they seem to be doing a bit of it already.
Without the constraints of parliamentary democracy, Beijing
is certainly capable of further priming the pumps. Many local
officials and analysts have urged stimulus. Now that equity
market manipulation and exchange rate tinkering have both
shown themselves unsuccessful, the realistic choice is between
further slowdown or structural reforms.
Fortunately, there is a lot Beijing can do. Taxes are too high
and stifling; the labor market -- at least in the vast state sector
-- is bloated; and red tape is ripe for heavy cuts. Any reforms

in these three areas will be more effective and rewarding than
tinkering with the currency, the stock market or interest rates.
The slowdown in China at present is unpleasant for the
country's major trading partners as well its own citizens. But it
may very well prove to hold a silver lining. If, as I expect,
structural reforms are phased in soon, a revitalized Chinese
economy will prove to be a more powerful engine for the
world economy in five to 10 years.
(Full article click - Nikkei)
---

Taiwan’s Ruling Kuomintang Replaces
Presidential Nominee Ahead of January
Election
Taken from the WSJ Sunday, 18 October 2015

Taiwan’s ruling party took the unusual step on Saturday of
ousting its pro-Beiing presidential nominee less than three
months before the election, reflecting pessimism about her
chances amid increasing wariness of mainland China.
Of 891 delegates to the emergency meeting of the Nationalist
Party, also known as the Kuomintang or KMT, 812 voted to
repeal the candidacy of Hung Hsiu-chiu, according to a
statement posted on the party’s website. Recent polls had
shown Ms. Hung, who is known for being strongly in favor of
stronger ties with mainland China, trailing far behind
Democratic Progressive Party candidate Tsai Ing-wen.
The resolution passed on Saturday said Ms. Hung’s candidacy
had been voided “because of severe tests to the party’s survival
and development,” according to the KMT statement. The
decision scuppers what would have been the island’s first allfemale presidential race.
“The party can abandon me, but I won’t give up on the party,”
Ms. Hung said in televised comments ahead of the vote
Saturday afternoon.
The Kuomintang voted for Eric Chu, its chairman, to replace
her on its ticket in the election set for Jan. 16, 2016.
“The party has rallied behind Chairman Chu, and we believe
that, united, we can be stronger than before,” said Eric Huang,
a spokesman for Ms. Hung. A Kuomintang spokesman didn’t
immediately respond to a request for comment.
The decision to abandon Ms. Hung is the latest sign of the
widening divide between self-governing Taiwan and mainland
China, which split following a civil war in 1949. Ties across the
Taiwan Strait had improved under the Kuomintang and
current President Ma Ying-jeou, but have recently cooled
amid concern in Taiwan over the economic and political
consequences of moving closer to the mainland.
The KMT was hammered in local elections last November
after a proposed trade accord with China sparked massive
demonstrations the previous spring. Ms. Hung, whose
confrontational style earned her the nickname “Little Pepper,”
won in a primary that many of the party’s heavyweights,
including Mr. Chu, decided to skip.
Ms. Hung’s promotion of closer ties with China has hurt the
KMT in the polls, putting the DPP in position to hold both the
presidency and a majority in the legislature for the first time
in the island’s history, analysts said.
“If that were to happen, there’s the risk the party could split,”
Wang Yeh-lih, chairman of the political science department at
National Taiwan University, said of the KMT. “I don’t think
it’s an exaggeration to say they face an existential crisis.”
Few analysts believe the moderate Mr. Chu is likely to win the
presidential election. His candidacy could nevertheless help
the KMT win local elections and maintain its majority in the
legislature, said Sean King, an Asia specialist and senior vice
president at consulting firm Park Strategies. “He’s in there to
stop the bleeding,” Mr. King said.
Ms. Tsai pushes maintaining the status quo in Taiwan’s
relations with China, meaning robust economic exchange but

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

deliberate political ambiguity. She has also said she is willing
to engage with mainland China.
“The question is whether China can deal with her,” said Mr.
King, saying that the DPP continues to advocate for Taiwan’s
independence from the mainland. “China is in a real pickle
here.”
(Full article click - WSJ)
---

Aso voices doubts on Bank of Japan
monetary easing
Taken from the Japan Today Sunday, 18 October 2015

Japan’s finance minister has voiced skepticism on whether a
fresh round of monetary easing would be launched ahead of a
Bank of Japan rate review, citing a surplus of cash in the
Japanese economy and weak domestic demand.
“The Bank of Japan may not ease policy further any time
soon,” Taro Aso said in an interview with public broadcaster
NHK, adding that the government is not considering a
supplementary budget this fiscal year.
Markets have been closely focused on whether the BOJ will
launch a fresh round of quantitative easing at its next policy
meeting on Oct 30. Some believe the central bank could ease
policy further as its strives to meet an ambitious 2 percent
inflation target next year.
(Full article click - JT)

Malaysia News
Malaysia’s 1MDB Gets Bids for Power
Assets
Taken from the WSJ Saturday, 17 October 2015

The government investment fund has received three bids from
domestic and international companies, including Tenaga
Nasional Bhd.
Malaysia’s government investment fund has received three
bids from domestic and international companies to buy its
power assets, as the embattled state-run firm tries to dig itself
out from its US$11 billion debt load.
In a statement late Friday, 1Malaysia Development Bhd., or
1MDB, said that it had received “binding and fully funded
offers from three strategic investors.” 1MDB didn’t mention
the names of the bidders for the assets, which are owned by a
unit called Edra Global Energy Bhd.
Only one of the bidders publicly said it made an offer for the
power assets. That bidder, another state-run power company
called Tenaga Nasional Bhd., which is 30% owned by
Malaysia’s sovereign-wealth fund Khazanah Nasional Bhd.,
said Friday that it had submitted a conditional offer.
Tenaga didn’t say what it bid for the assets, but added that its
bid was subject to conditions that included support from its
outside shareholders for any potential transaction and more
information from 1MDB on the power plants’ operations. It
wasn't clear why Tenaga’s description of its offer as
conditional appeared to contradict 1MDB’s characterization of
all three offers as binding.
1MDB’s travails have put Malaysian Prime Minister Najib
Razak in the spotlight, while hammering investor confidence
in the commodities-exporting Southeast Asian nation at a
time when it is suffering from fund outflows and falling oil
prices.
Though the proposed sale of 1MDB’s power plants initially
attracted several local and international players, the interest
petered out.
Last week, China’s top state nuclear firm dropped out of
bidding for 1MDB’s power assets. On Friday, Hong Konglisted CGN Meiya Power Holdings, an independent power
producer that focuses on clean and renewable powergeneration projects, said it decided not to proceed with the
proposed acquisition of certain 1MDB power assets.
1MDB appeared to overpay for the power assets when it
bought them in 2012 from two Malaysian companies. It wrote
down the value of the purchase from one of the companies,
and the seller recorded a big gain on its financial statements.
1MDB said the premium it paid reflected the experience of the
staff that ran the power plant. The fund paid roughly 12 billion
ringgit ($2.85 billion) for the plants in 2012, and valued them
at around $4 billion in a planned initial public offering earlier
this year.
After the deal, funds tied to one of the companies were
donated to a Najib-linked charity, which later donated money
to schools in a battleground state during a tightly fought
national election, according to a Wall Street Journal report in
June.
People with knowledge of the impending sale said it is
increasingly unlikely 1MDB would get back what it paid for
the power assets. One of the people said Tenaga is likely to
proceed with the deal only if it made strategic sense. Given
that Tenaga is a publicly traded company with outside
shareholders, the company wouldn’t want to be seen as bailing
out another state fund, the person said.
“Any potential transaction would need to make strong
commercial and financial sense, be value-accretive to TNB’s
shareholders, and be assessed based on the highest standards
of corporate governance,” Tenaga said in a statement on
Friday.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

People following the transaction said if 1MDB was forced to
take a loss on the transaction, the buyer would likely be
Malaysian since the government didn’t want to be seen as
giving away a bargain to foreigners.
Azman bin Mohd, Tenaga’s chief executive, said that as a
major power producer in Malaysia, the company is the “best
and most logical buyer” for the assets. “As the country’s
largest power producer, no other bidder knows these assets
better than TNB.”
However, he emphasized that a transaction can be completed
only if Tenaga’s conditions were met by 1MDB.
1MDB said in its statement that it will start evaluating the
offers in the next few weeks and will be guided by its goal to
get maximum value for its shareholders through the asset sale.
“We expect to enter into a definitive agreement with the
chosen party shortly after the evaluation and negotiation
process has been completed, before the end of 2015,” 1MDB
said.
Mr. Najib formed 1MDB in 2009 to spur growth in the
Southeast Asian country, but the fund has since rolled up over
$11 billion in debt and is the focus of a series of global
investigations. The 1MDB affair has embroiled Mr. Najib in
Malaysia’s biggest political controversy in years. Malaysian
investigators earlier this year had traced $700 million into Mr.
Najib’s alleged bank accounts through agencies, banks and
companies linked to 1MDB, The Wall Street Journal reported
in July. The fund has in the past denied wrongdoing and said
that it was cooperating with authorities.
The government investigation hasn’t detailed what happened
to the funds that went into the prime minister’s alleged
personal accounts, most of which it determined were received
ahead of national elections in 2013. Mr. Najib has denied any
wrongdoing or taking money for personal gain.
(Full article click - WSJ)
---

Inflation threatens Najib's hitherto solid
base
Taken from the Nikkei Sunday, 18 October 2015

Malaysia's Najib Razak has dug himself in well.
Suspicions of shady deals involving state-run wealth fund
1MDB have beset the prime minister and unnerved foreign
investors. Yet hardly anyone in his party, the United Malays
National Organization, is pushing for his resignation. Most of
the heat is coming from abroad rather than within Malaysia -and especially not from UMNO's base.
A report surfaced in July that nearly $700 million had made
its way from 1MDB into Najib's bank account. Other foreign
media outlets seized on this, and skittish overseas investors
voted with their feet. The ringgit sank to its lowest against the
dollar since the Asian financial crisis of the late 1990s.
Malaysian stocks tumbled.
But the prime minister's base of support remains solid, says
Saiful Jan, chief executive of the Malaysia-based Institute for
Democracy and Economic Affairs. This view prevails in the
country.
Red-shirted supporters rallied to Najib's defense in central
Kuala Lumpur in mid-September. Nearly 30,000 people
gathered for the demonstration, shouting their opposition to
his critics. At a meeting of UMNO's Supreme Council earlier
in the month, no one appears to have questioned Najib's
continued leadership.
Rural route
A look back at the 2013 general election provides insight into
how Najib has managed to keep criticism abroad from
undermining his position at home. The UMNO-led ruling
coalition won a smaller share of the overall vote than the
opposition, faring particularly badly in urban areas. That it
still came away with a majority of parliament seats owes to its
unshakable popularity in the countryside.

Rural residents of less-than-middle-class means make up the
bulk of UMNO supporters, says Ibrahim Suffian of the
Merdeka Center, an opinion research firm. UMNO has
brought jobs to these areas through public works and other
government policies, and residents have returned the favor at
the polls. The party's election strategy has seen it all but
abandon big cities to focus on farming and fishing villages.
Freedom of the press is limited in Malaysia. Critical reporting
on the government is virtually absent from major newspapers.
Internet access is low in the villages where support for UMNO
thrives, so the party faithful mostly live cut off from the
suspicions circulating online and the negative opinion of Najib
overseas.
Inflation risk
Rising consumer prices may pose the biggest threat to this
power structure. Inflation has quickened to more than 3%
from close to zero at the start of the year, mostly because a
weakening currency has made imports pricier. Unless the
government can keep it in check, cost-of-living increases may
trigger a backlash from UMNO's base. Najib must also
contend with an openly hostile Mahathir Mohamad, a popular
ex-prime minister.
Since the scandal, Najib has seemed more inclined than ever
to shower largesse on the countryside. But the threat of
sovereign debt downgrades by global credit-rating agencies
hangs over fiscally wayward Malaysia. The financial markets
may hit back harder against a government that has shown
them little regard.
(Full article click - Nikkei)
---

Slumping Malaysia at risk of being next
Brazil
Taken from the Bangkok Post Sunday, 18 October 2015

Nearly felled by the Asian financial crisis in the late 1990s, the
country recovered to become a global commodities
juggernaut, known for a stable government and investorfriendly policies. Now, with its premier enveloped by a multimillion dollar funding scandal, Malaysia risks contracting the
kind of economic malaise that has struck its emerging market
counterpart in South America.
Prime Minister Najib Razak, 62, has denied any wrongdoing.
But as investigations continue and opponents including
former premier Mahathir Mohamad call for his resignation,
the danger is that the leadership will stay in firefighting mode.
The economy has already been hard hit by a slowdown in
prices for oil and natural gas, and Najib is expected to make
bigger handouts to the poor in the budget this coming Friday.
Could Malaysia slide into a “lost decade”?
“Malaysia risks not just being left behind, but falling off the
radar all together, especially with foreign investors,” said Jim
Walker, managing director at Hong Kong-based Asianomics
Ltd and former chief economist at CLSA Asia-Pacific Markets.
“People are definitely shying away from Malaysia,” he said,
and politics is “by far the biggest threat”.
Foreign investors are noticing. They pulled US$4.6 billion
from stocks and bonds in the last quarter and sent the ringgit
to a 17-year low. While the currency has since recovered
alongside emerging market currencies, it’s still down about
16% this year, the worst performer in Asia Pacific. Approved
foreign direct investment fell about 42% in the first half of
2015 to 21.3 billion ringgit.
"The reforms are not taking place because Najib is
preoccupied," said Saifuddin Abdullah, a former deputy
minister in Najib’s government and ex-member of his United
Malays National Organisation supreme council, who has now
joined an opposition party. "It’s maintenance mode" for
companies as they wait for an end to political uncertainty, he
said.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

A decade-long commodities boom improved the budget
position and the lives of many Malaysians, with per capita
gross domestic product more than doubling and the poverty
rate falling to 1%. But as that benefit wanes — growth has
slowed from a peak of 7.4% in 2010 to about 5% now — the
government is falling back on strategies like state-led
spending as foreign companies hold back on new investments.
Half a world away, Brazil is an example of how that doesn’t
always work. President Dilma Rousseff increased spending at
the end of her first term as growth began to slow, a move that
helped fuel inflation and contributed to swelling debt.
The emerging market that was the darling of international
investors is now seeing its leader fight for her political survival
amid a graft scandal engulfing state-run oil giant Petrobras.
Latin America’s biggest economy is heading for its deepest
recession in at least a quarter century.
For Najib, shoring up the economy and confidence is key as he
also fends off criticism of his leadership amid a scandal over
nearly $700 million that appeared in his bank accounts before
the election in 2013, a ballot where his coalition lost the
popular vote for the first time while keeping power.
Najib acknowledged the money reached his accounts but said
it was a political donation from the Middle East rather than
public funds, a conclusion supported by the anti-corruption
commission.
Supoporters of the premier have consistently refused to
elaborate on the money or respond to questions about the
propriety of a leader having such a huge sum of foreign
political funding in his personal account.
The government is also embroiled in claims of financial
irregularities at the state investment company 1Malaysia
Development Bhd, whose advisory board is chaired by Najib
and which nearly defaulted this year after amassing 42 billion
ringgit in debt.
1MDB did not respond to an e-mail and calls seeking
comment. It said this month the attorney-general hadn’t
found evidence of wrongdoing.
Political pressure on Najib may increase as parliament
resumes today, with the results of more 1MDB probes
expected in the next three months. Mahathir has led the calls
for a parliamentary vote of no confidence in Najib, though the
premier has the support of many of the ruling party’s
divisional chiefs and the opposition remains fragmented after
its alliance split this year.
“It’s the uncertainty with the investigation analogous to what
we see in Brazil which adds to volatility,” said Edwin
Gutierrez, who helps oversee $13 billion as the head of
emerging-market sovereign debt at Aberdeen Asset
Management in London, comparing 1MDB to the probe at
Petrobras.
The Malay-dominated party headed by Najib has been in
power since independence in 1957, the main actor in one of
the longest-ruling coalitions in the world. Past premiers have
steered it through a series of crises — including the pegging of
the ringgit during the Mahathir era — and under Najib toward
his oft-stated goal of turning Malaysia into a developed nation
by 2020.
There are differences with Brazil: Malaysia’s estimated budget
deficit is a third of Brazil’s as a percentage of GDP, while
inflation is forecast at 2% to 3% this year compared with 9.5%
in Brazil. Standard & Poor’s ranks Malaysia at the fourthlowest investment grade, while it cut Brazilian debt to junk on
Sept 9.
Still, both leaders have become entangled in state companies.
Rousseff chaired the Petrobras board from 2003 to 2010 and
has said she was unaware of corruption while at the company,
while Najib has said he wouldn’t tolerate the misuse of 1MDB
funds.

Malaysian central bank Governor Zeti Akhtar Aziz has
acknowledged the impact of the scandals. “People are
distracted now because our country rarely has political
developments of this nature," she said in an interview.
Najib’s office did not respond to an e-mail and calls seeking
comment.
Since 2013, when ethnic Chinese voters deserted his coalition,
Najib has moved to shore up his Malay base via the retention
of socio-economic privileges for the majority group. Such
policies have led to concerns about the potential for racial
tensions in the moderate Islamic state. He’s also ordered state
investment funds to give stocks a 20 billion ringgit boost, and
get government-linked companies to build more hospitals.
“Malaysia has run out of ideas,” said William Case, who
teaches international political economy at City University of
Hong Kong. “There are state interventions when they should
be freeing up markets and embracing more openness and
transparency. I don’t see any obvious drivers at this stage to
lift it to the next stage of development.”
The scandal has overshadowed Najib’s achievements. He
fended off opposition to introduce an unpopular goods and
services levy in April in an effort to widen the tax base and
limit a reliance on oil revenue.
In 2010 he announced an economic transformation plan, and
announced key areas he would focus on to help make Malaysia
a high-income nation.
“Early in his tenure, I had great hopes with all the reforms
that looked quite promising,” Case said. “But all of that has
fallen by the way in the socio-political pressures.”
The government isn’t addressing longstanding concerns,
according to the Federation of Malaysian Manufacturers. The
Malaysian International Chamber of Commerce & Industry
said some recommendations it tabled as part of a five-year
government strategy known as the 11th Malaysia Plan were
similar to what it submitted in 2000.
"Same-old same-old works when you have high commodity
prices, if there are no overwhelming financial or political
scandals waiting to bury you in a huge tsunami,” said Lim
Guan Eng, chief minister of Penang state and an opposition
Democratic Action Party lawmaker.
Addressing investors last month in New York, Najib said
Malaysia remains a good place to do business.
Not everyone is convinced. The economy is “holed below the
waterline", said Andrew Harding, a law professor at the
National University of Singapore. “The country needs deeprooted reform,” he said. "We might be at the beginning of a
lost decade.”
(Full article click - BP)
---

BN lawmakers likely to discuss
confidence vote against Najib today

no-

Taken from the Malaysian Insider Sunday, 18 October 2015

The Barisan Nasional (BN) pre-council meeting tonight at
Datuk Seri Najib Razak’s official residence is expected to be an
important one, an Umno MP said, because of speculation over
a no-confidence vote against the prime minister during the
Dewan Rakyat sitting that begins tomorrow.
The MP, who spoke on condition of anonymity, said all BN
federal lawmakers and senators have been told to meet Najib
today at Seri Perdana in Putrajaya at 8pm.
The Malaysian Insider sighted the notice in a letter from the
BN headquarters and dated October 9, and issued to all BN
ministers, deputy ministers, members of parliament and
senators.
The Umno lawmaker who told The Malaysian Insider of
today’s meeting said it was an important one because of
speculation that there would be BN lawmakers willing to
support a no-confidence vote against Najib brought by the
opposition.

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.

“It is going to be a very important meeting, because of the
(Dewan Rakyat) sitting that will begin on Monday.
“Furthermore, there is already a move by opposition members
to file a motion for a vote of no-confidence in the Dewan
Rakyat.
“Najib would be worried about such a development, combined
with the turmoil that Umno is facing at the moment,” said the
lawmaker.
The source added that a few veteran MPs might not attend the
pre-council meeting, namely, Pagoh MP Tan Sri Muhyiddin
Yassin, Semporna MP Datuk Seri Mohd Shafie Apdal and Gua
Musang MP Tengku Razaleigh Hamzah.
Muhyiddin had been sacked as deputy prime minister and
Shafie dropped as rural and regional development minister in
a cabinet reshuffle on July 28. Both had been critical of
Najib’s handling of 1MDB.
These three leaders had also appeared in a joint press
conference with former prime minister Tun Dr Mahathir
Mohamad last week to condemn the use of a security law
against 1MDB critics.
The press conference had also touched on a no-confidence
vote against Najib.
Opposition MP Hee Loy Sian of PKR has already submitted a
notice to table a motion of no-confidence against the prime
minister, as revealed by the Dewan Rakyat order paper
available on the Parliament website.
It is uncertain, however, if the motion will be heard given its
slot near the bottom of the agenda, which typically prioritises
government matters.
The Dewan Rakyat sitting that begins tomorrow will run for
seven weeks and will be the last for the year.
It will see Najib table Budget 2016 this Friday, but is also
expected to see heated exchanges in the house as opposition
MPs are likely to raise issues stemming from the 1MDB
controversy and the RM2.6 billion.
Whether the motion of no-confidence against the prime
minister succeeds, there is also the appointment of new Public
Accounts Committee members (PAC) and the resumption of
its probe into 1MDB, as well as concerns about the scandal’s
impact on the economy and Malaysia’s global reputation.
The Umno source added that the recent statement by the
Malay rulers expressing their concerns over 1MDB could not
be ignored, and would surely influence debates in the Dewan
Rakyat.
“1MDB has become the focus because of the Conference of
Rulers’ statement on October 6 wanting the issue to be
resolved quickly.
“Inevitably, 1MDB will be discussed. The rulers’ statement is a
serious matter and if not addressed, can pose a serious
challenge to Najib.”
(Full article click - MI)

These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright © 2013 The Poon Report by Vincent Poon. All rights reserved.