|Bid||622.80 x 0|
|Ask||623.20 x 0|
|Day's Range||616.00 - 626.00|
|52 Week Range||514.20 - 742.60|
|Beta (3Y Monthly)||0.82|
|PE Ratio (TTM)||39.18|
|Forward Dividend & Yield||0.24 (3.91%)|
|1y Target Est||N/A|
Aug.11 -- Samir Subberwal, managing director and regional head of retail banking for Greater China and North Asia at Standard Chartered Bank, talks about the virtual banking business it plans to start in Hong Kong. He speaks with David Ingles and Yvonne Man on "Bloomberg Markets: Asia."
Aug.05 -- Suki Cooper, precious metals analyst at Standard Chartered Bank, discusses gold prices and her outlook for the metal. She speaks on “Bloomberg Markets: Asia.”
Some of Hong Kong's biggest banks published full-page newspaper advertisements on Thursday calling for the preservation of law and order in the Chinese territory and condemning violence, as weeks of pro-democracy protests show no sign of abating. HSBC, Standard Chartered and Bank of East Asia, which published the advertisements in major newspapers in the Asian financial hub, all urged the restoration of social order. Thousands of Hong Kong residents held an anti-government protest on Wednesday at a suburban subway station where demonstrators were attacked by a mob of white-shirted men last month.
(Bloomberg) -- Huawei Technologies Co. used code names and secret subsidiaries to conduct business in Syria, Sudan and Iran, the U.S. alleged in the extradition case related to sanctions violations against the company’s chief financial officer.The Chinese networking giant allegedly operated a de facto unit called DirectPoint in Sudan and Canicula in Syria, according to documents released this week by a Canadian court. In internal spreadsheets, Huawei also used the code “A5” to refer to Sudan and “A7” to Syria, the U.S. said in the documents submitted to the Canadian government in support of its request for the extradition of company CFO Meng Wanzhou.Huawei operated those units just as it controlled a subsidiary in Iran that obtained American goods, technologies and services in violation of U.S. sanctions, according to the allegations.The U.S. is seeking to extradite Meng -- daughter of Huawei’s billionaire founder Ren Zhengfei -- after accusing her and others at the company of conspiring to trick banks into conducting more than $100 million worth of transactions that may have violated U.S. sanctions. The company has denied it committed any violations. It didn’t respond Wednesday to requests for comment on the allegations in the court documents.“The motivation for these misrepresentations stemmed from Huawei’s need to move money out of countries that are subject to U.S. or EU sanctions -- such as Iran, Syria, or Sudan -- through the international banking system,” the Justice Department said in its request for Canada to arrest Meng as she arrived at Vancouver’s airport last December.The court on Tuesday released hundreds of pages of documents and video footage submitted by Meng’s defense to back its arguments that Canadian authorities deceived her about the true nature of her detention in order to collect evidence for the U.S. FBI.In those documents, the U.S. outlined its case against Meng and its plans for witnesses in the case against her if she is successfully extradited. Among those witness are unnamed executives from HSBC Holdings Plc, Standard Chartered Plc, BNP Paribas SA and Citigroup Inc. that allegedly were misled by Meng and her colleagues into continuing business with Huawei at the time despite the risk of sanctions violations.To contact the reporter on this story: Natalie Obiko Pearson in Vancouver at firstname.lastname@example.orgTo contact the editors responsible for this story: David Scanlan at email@example.com, Andrew Pollack, Peter BlumbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- It’s hard not to see HSBC Holdings Plc’s exclusion from China’s interest-rate reform as a snub.Hong Kong’s biggest bank wasn’t included in a list of 18 lenders that will participate in pricing for a new loan prime rate that the People’s Bank of China will start releasing Tuesday. The roster includes foreign lenders Standard Chartered Plc and Citigroup Inc., which have smaller China businesses than HSBC.It’s the latest sign that all may not be well in HSBC’s relations with Beijing, after a turbulent period that has seen the departures this month of Chief Executive Officer John Flint and the bank’s Greater China head, Helen Wong. HSBC shares fell 13% in Hong Kong this year through last Friday, compared with a decline of less than 1% in the benchmark Hang Seng Index.London-based HSBC, which is also Europe’s biggest bank, has made China a key plank of its growth strategy. The lender is the third-largest corporate bank in the country by market penetration, according to data provider Greenwich Associates LLC. That places it ahead even of China Construction Bank Corp. and Agricultural Bank of China Ltd., two of the nation’s big four state-owned lenders. Standard Chartered and Citigroup don’t rank among the top five, according Gaurav Arora, head of Asia Pacific at Greenwich.It could be argued that HSBC’s focus on big corporate clients means it’s less attuned to the loan market for small and medium-size enterprises that are the focus of China’s changes to its interest-rate regime. That would be a stretch, though. Corporate banking is a scale game. And even though StanChart may have a greater preponderance of smaller clients, HSBC surely has many similar customers. Citigroup’s inclusion makes more sense: It’s the only U.S. bank in China with a consumer-lending business that spans credit cards to SME loans. The list also includes less influential domestic lenders such as Bank of Xian Co. Those searching for reasons why HSBC may have fallen into China’s bad books may point to Huawei Technologies Co. Liu Xiaoming, China’s ambassador to the U.K., summoned Flint to the embassy earlier this year to interrogate him over the bank’s role in the arrest and prosecution of Meng Wanzhou, the chief financial officer of Huawei, the Financial Times reported Monday. The then-CEO told him HSBC had no option but to turn over information that helped U.S. prosecutors build a case against Meng, the FT said. On Aug. 9, an HSBC spokeswoman denied that Wong’s departure as Greater China head was linked to any issue involving Huawei, pointing out that she announced her resignation before Flint’s departure. Still, the bank has faced criticism in China’s state-owned media over its role in the case. The way HSBC helped the U.S. Department of Justice acquire documents concerning Huawei was unethical, the Global Times reported previously, citing a source close to the matter. The bank was likely to be included in China’s first “unreliable entity” list of companies that have jeopardized the interests of Chinese firms, it said.The timing of China’s interest-rate snub won’t do anything to quell jitters, coming a day after Cathay Pacific Airways Ltd. CEO Rupert Hogg resigned amid criticism from Chinese regulators over its stance on employee participation in Hong Kong’s protests. Beijing is becoming more muscular in its attitude to the city’s unrest and foreign-owned businesses aren’t being spared. In an increasingly politicized environment, even a business that’s been around for 154 years will have to tread carefully. To contact the author of this story: Nisha Gopalan at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Britain's Office of Financial Sanctions Implementation, which includes police and intelligence officers as well as finance ministry officials, has notified the lender that it aims to impose a penalty of more than 10 million pounds ($12 million) on the bank in coming weeks, Sky News said. Sky News provided no further details. The bank agreed in April to pay $1.1 billion to U.S. and British authorities for conducting illegal financial transactions that violated sanctions against Iran and other countries.
(Bloomberg Opinion) -- “Do you have Jakarta’s blessing?” That’s the first question Oversea-Chinese Banking Corp. CEO Samuel Tsien will be asked by investors about his plan to buy Indonesia’s PT Bank Permata.OCBC is weighing a bid for Standard Chartered Plc’s Indonesian bank, Bloomberg News has reported, citing people with knowledge of the matter. Deliberations are still at an early stage and may not result in a deal. And even if they do, there’s the government to consider.OCBC is one of Singapore’s three homegrown banks and Indonesia has been touchy in the past about ceding control of its lenders to the neighboring city-state. Just ask DBS Group Holdings Ltd. The larger rival to OCBC had to walk away from a $6.5 billion acquisition of PT Bank Danamon Indonesia in 2013 after Jakarta kicked up a fuss about lack of reciprocity for Indonesian banks getting licensed in Singapore. The central bank curbed the DBS plan for full ownership to a minority stake.Will Jakarta be more comfortable six years later? The afterglow of the China commodity boom still-prevalent back then is long gone, and Susilo Bambang Yudhoyono’s sclerotic late presidency has been replaced by a possibly re-energized Joko Widodo beginning his second term. Tsien’s overture for 90% of Permata will show how much has really changed.Like Danamon, Permata is a mid-tier Indonesian bank. Standard Chartered has a near 45% stake, though most of the value in the franchise comes from equal partner PT Astra International. Southeast Asia’s largest independent automotive group controls half of Indonesia’s car market thanks to partnerships with Toyota Motor Corp. and Daihatsu Motor Co. No wonder auto financing is Permata’s core competence.The bank’s 4.2% return on tangible common equity last year may be unappetizing for StanChart CEO Bill Winters, who has promised to deliver 10% to his own investors by 2021, a goal the U.K.-based specialist lender to emerging markets hasn’t hit in several years. StanChart, which has a separate wholly owned operation in Indonesia, said in February that it no longer considers Permata to be a core investment.But things may look very different from Tsien’s perspective. OCBC faces the prospect of a trade war-induced slowdown in its home market. Singapore recently slashed its GDP growth estimate for 2019 to between zero and 1%. The bleak outlook is a “bad omen for bank lending,” according to Bloomberg Intelligence. Mind you, Indonesia won’t be a perfect sanctuary: the rupiah could wobble as global risk aversion takes hold and capital rushes into dollar assets. Still, Bank Indonesia has done a good job of anchoring inflation expectations. Aided by higher fiscal spending, domestic demand should hold up even as the global economy sputters.It was poor luck for the news to break on the day the U.S. yield curve inverted, signaling a high possibility of an imminent recession. Sure enough, the fall in OCBC’s share price Thursday seems to suggest that the bank’s dividend-loving investors would rather that Tsien returned more cash than go on a shopping spree in these uncertain times. They should at least be grateful that OCBC is not doubling down on its 20% ownership of China’s Bank of Ningbo Co. Besides, strategic considerations may be more important than tactical ones. Mitsubishi UFJ Financial Group now owns 94% of Danamon.That highlights a problem for the Singaporeans: Their Japanese rivals are looking to offer multinational clients access to the local-currency balance sheets of their Southeast Asian affiliates, in addition to cheap yen financing arranged by headquarters in Tokyo. Both OCBC and DBS want a share of this corporate banking pie.OCBC already has a presence in Indonesia, where it owns 85% of Bank OCBC NISP. Given Indonesia’s juicy net interest margins, owning another lender there can’t hurt, provided two conditions are met. One, Astra’s departure from Permata shouldn’t mean the end of car-financing. Two, Indonesia shouldn’t make this a repeat of the 2013 nationalistic drama. A distracting, long-drawn transaction that eventually gets scuttled would be the worst possible outcome for OCBC shareholders. They’ll be watching for Jakarta’s answer.To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Oversea-Chinese Banking Corp. is weighing a bid for Standard Chartered Plc’s Indonesian bank, people with knowledge of the matter said, a move that may create the country’s fifth-largest lender.The Singaporean bank is considering an offer for almost 90% of PT Bank Permata, which has a market value of about $1.9 billion, said the people, asking not to be named as the deliberations are private. OCBC is interested in the stakes held equally by Standard Chartered and PT Astra International, the people said.Shares of Permata jumped, while OCBC fell. Buying Permata would add to OCBC’s presence in Southeast Asia’s largest economy, where it already owns about 85% of Bank OCBC NISP, according to data compiled by Bloomberg. Under Indonesia’s single-presence rule, the two banks may have to merge, although regulators recently signaled intentions to relax that requirement.Speculation that OCBC is getting ready for another acquisition has been fueled by its less generous dividend policy when compared with Singapore’s two other major banks. Permata and Bank OCBC NISP have combined assets of 326 trillion rupiah ($23 billion), the fifth highest in Indonesia, data compiled by Bloomberg show.Permata surged as much as 11% in Jakarta on Thursday morning, the most in a month. OCBC fell as much as 3% in Singapore, more than the benchmark Straits Times Index’s 1.1% decline.StanChart TurnaroundLondon-based Standard Chartered said in February that its Permata investment is no longer considered core, signaling it may be getting ready to sell the stake. It also named Indonesia among four countries where the bank is focused on reducing costs and engineering a long-awaited turnaround.Standard Chartered and Jakarta-listed Astra each own about 44.6% of Permata, data compiled by Bloomberg show.OCBC’s deliberations are still at an early stage and may not result in a deal, the people said. Representatives for OCBC, Bank Permata, Astra and Standard Chartered declined to comment.OCBC has also been looking at expanding its presence in China. Chief Executive Officer Samuel Tsien said in April he will look at increasing the bank’s 20% ownership of China’s Bank of Ningbo Co. once regulators allow foreign banks to hold larger stake in local lenders.Acquiring Permata would probably be a better deal, according to Bloomberg Intelligence analyst Diksha Gera. Buying the Indonesian lender at current prices would be “more accretive” than raising its stake in Bank of Ningbo at a “significant premium,” she wrote in a note.Permata reported net income of 711.4 billion rupiah for the first half of this year, up from 288.8 billion rupiah a year earlier.OCBC purchased Wing Hang Bank in Hong Kong for $5 billion in 2014, and in 2016 it paid $227.5 million for the wealth assets of Barclays Plc in Singapore and Hong Kong.(Updates with Permata shares in the third and fifth paragraphs)To contact the reporters on this story: Fathiya Dahrul in Jakarta at firstname.lastname@example.org;Elffie Chew in Kuala Lumpur at email@example.com;Chanyaporn Chanjaroen in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Fion Li at email@example.com, Marcus Wright, Russell WardFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Standard Chartered is targeting growing its private banking assets by 50% to about $100 billion in three to five years and will hire dozens of bankers in Hong Kong and Singapore towards that goal, a senior executive of the lender said. The moves show StanChart has big growth ambitions for the private banking unit that had until recently weighed on the lender's earnings, with its small size stoking speculation it would be put under review for possible divestment. The lender will recruit 30-40 private bankers every year in the next two to three years to add to its roughly 300 existing relationship managers, and the bulk of the additions will be in Hong Kong and Singapore, StanChart's global head for private banking and wealth management Didier von Daeniken told Reuters.
Hong Kong's biggest banks are set to cut fees, boost digital services and jazz up branches with features such as touch-screen display panels to meet competition from new online-only lenders in one of the world's most profitable banking markets. As many as eight so-called virtual, or online-only, banks are set to be launched in the Chinese territory this year, posing the biggest challenge in years to a stronghold for lenders including HSBC and Standard Chartered. The expected moves show how keen traditional banks are to protect their cash cows even with a short-term hit to their profits, at a time when their growth elsewhere faces hurdles due to an intensifying U.S.-China trade war.
All it took this week was a simple rumor new OPEC action to halt the oil price slide, but OPEC’s leader, Saudi Arabia may not be able to count of support from other member states
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Even before the trade war, Xi Jinping’s plan to turn China into one of the world’s most advanced economies by 2050 was ambitious.His grand vision is now looking more aspirational by the day. As mounting pressure from Donald Trump adds to a slew of structural challenges facing China’s $14 trillion economy -- including record debt levels, rampant pollution, and an aging population -- the risk is that the country gets stuck in a “middle-income trap,’’ stagnating before it reaches rich-world levels of development.Economists say Xi’s government can avoid that fate by boosting domestic consumption, liberalizing markets and increasing the country’s technological prowess. But it won’t be easy. Only five developing countries have made the transition to advanced-nation status while maintaining high levels of growth since 1960, according to Nobel laureate Michael Spence, a professor at New York University’s Stern School of Business.“China trying to do this with active opposition from the U.S. makes the hurdle that much higher to jump over,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. “But the U.S. has clearly lit a fire under China. If it ultimately does succeed we may look back at this moment as the catalyst that really kicked their efforts into high gear.”The International Monetary Fund highlighted President Xi’s challenge on Friday, saying in its annual report on China’s economy that if a comprehensive trade agreement isn’t reached, it would damage the nation’s long-term outlook. “China’s access to foreign markets and technology may be significantly reduced,” the IMF said.Odds of a near-term deal appear low. After President Trump issued a surprise threat to apply new tariffs on $300 billion of Chinese goods two weeks ago, Beijing responded by halting purchases of U.S. crops and allowing the yuan to fall to the weakest level since 2008 on Aug. 5.Trump’s administration fired back within hours, formally labeling China a currency manipulator. The White House is also holding off on a decision about granting exemptions to U.S. companies that want to do business with Huawei Technologies Co., the Chinese tech giant that Trump placed on a blacklist in May, people familiar with the matter said.Read more: Trump Says It’s ‘Fine’ If September China Talks Are CanceledAny concessions from China are unlikely until October at the earliest, said Jeff Moon, a former assistant U.S. trade representative for China affairs. Xi faces growing internal pressure to project strength as anti-government protests in Hong Kong intensify and China prepares to celebrate the 70th anniversary of the founding of the People’s Republic on Oct. 1.“Any sign of weakness is unacceptable to Chinese leaders,’’ Moon said.Read more: U.S. Calls China ‘Thuggish Regime’ as Hong Kong Feud EscalatesIn one sign of how rapidly the Sino-U.S. relationship has deteriorated, some state media in China have raised the prospect that Beijing may consider cutting off engagement on trade entirely. Communist Party-run publications have stoked nationalism in recent weeks while exuding confidence in China’s economic system and its flexibility to cope with external challenges.“Chinese enterprises are speeding up adjustment, creating new export markets,” Hu Xijin, the editor-in-chief of China’s state-run Global Times, tweeted on Thursday, after data showing overseas shipments beat expectations in July.In the short run, China’s government has ample firepower to prevent economic growth from falling below the 6% lower bound of its annual target range. Bloomberg Economics predicts the central bank will cut interest rates this year, while Standard Chartered Plc expects fiscal stimulus to drive a moderate recovery in the second half of 2019.Xi has also made some progress in tackling China’s long-term challenges. A more than two-year deleveraging campaign has helped wring some of the worst excesses out of the country’s debt markets, while regulators have taken a much harder line on high-polluting industries in recent years. The services sector now accounts for more than half of gross domestic product.China has also poured billions into developing a homegrown high-tech industry, going head-to-head with the West in areas like artificial intelligence and electric vehicles. In an October 2017 speech that laid out his long-term vision for the Chinese economy, Xi vowed to join the most innovative countries by 2035 on the way to great-power status by 2050.Read more: A QuickTake on China’s economyYet the trade war has laid bare just how far China remains from some of Xi’s targets. The most striking example: America’s blacklisting of Huawei, which threatens to cripple the Chinese national champion because local chip designs aren’t yet sophisticated enough to replace those from the U.S.“For China it will be harder to access state-of-the-art technology,” said Bert Hofman, director of the East Asian Institute at the National University of Singapore. “This will make it harder for China to catch up, but at the same time it will set stronger incentives to develop their own technology ecosystem. How China does this will determine how fast they will grow.”Debt and demographics are two other big challenges. China’s debt burden has continued to rise despite the deleveraging campaign, climbing to about 303% of GDP in the first quarter, one of the highest ratios among developing nations, according to the Institute of International Finance. The country’s working-age population is forecast to shrink by more than 20% to 718 million by 2050, according to data compiled by the United Nations.While China’s per-capita GDP has jumped tenfold since 2000 to an estimated $10,000 this year, it’s still far below readings of about $65,000 in the U.S. and Singapore -- one of the five economies highlighted by Spence as having achieved advanced-country status since 1960.China’s economy is still expanding faster than its rich-world counterparts for now, but its advantage is shrinking.Growth slowed to 6.2% in the second quarter, the weakest pace in at least 27 years, and Standard Chartered estimates that if Trump’s threatened tariffs come into effect on Sept. 1, they could slice 0.3 percentage point off China’s annual rate of expansion. Xi has tried to diversify the country’s stable of overseas customers via his signature Belt & Road initiative and other trading pacts, but the U.S. still accounts for about 20% of China’s exports.“The U.S.-China trade tensions certainly make the transition harder,” said Michelle Lam, greater China economist at Societe Generale SA in Hong Kong. “China will lose some export market share and the technology spillover from the U.S. to China will slow. But the current tensions also provide the opportunity for policy makers to press harder with reform.”\--With assistance from Chloe Whiteaker, Hannah Dormido and Daniel Ten Kate.To contact Bloomberg News staff for this story: Kevin Hamlin in Beijing at firstname.lastname@example.org;Peter Martin in Beijing at email@example.comTo contact the editors responsible for this story: Jeffrey Black at firstname.lastname@example.org, Michael Patterson, Christopher AnsteyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Oil prices have been dragged down by fears of weakening demand, and future supply growth is also starting to become affected by negative sentiment
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. China’s export growth rebounded in July and imports shrank less than forecast, signaling some recovery in trade just as companies brace for the arrival of new tariffs from the U.S.Exports increased 3.3% in July from a year earlier, while imports declined 5.6%, leaving a trade surplus of $45.1 billion, the customs administration said Thursday. Economists had expected exports to drop by 1% and imports to shrink by 9%. China’s exports to the U.S. dropped 6.5% in July from a year earlier in dollar terms and its trade surplus with the U.S. for the first seven months was $27.97 billion, down from $29.92 billion in the first half.Stabilizing exports are a brighter sign for China’s slowing economy after a bruising first half, and follow indications that policy makers are willing to tolerate a weaker yuan that may help boost the nation’s external competitiveness. President Donald Trump announced last week that the U.S. will impose 10% additional tariffs on another $300 billion worth of Chinese exports starting next month, after the two sides ended their first face-to-face talks in three months without progress. Beijing said it will retaliate.“The strength in exports reflected a broad-based improvement,” said Michelle Lam, Greater China economist at Societe Generale SA in Hong Kong. “But given Trump’s latest threat, we may see some front-loaded orders again in August before more weakness in the rest of the year.”If Trump imposes the additional tariffs as scheduled Sept. 1, China’s economic growth will slow to 6% this year and 5.6% in 2020, according to estimates by Bloomberg Economics. China’s yuan slid past the key level of 7 to the dollar this week, weakening to its lowest level against a basket of peers since 2015 on Thursday.Economists interpreted the data differently. Despite export and imports beating expectations in July, the trade outlook remains bleak in the second half as purchasing managers indexes of major trading partners remain low, indicating sluggish external demand, said Ding Shuang, chief China and North Asia economist at Standard Chartered Bank Ltd. in Hong Kong.“The last round of U.S. tariff increases in June -- from 10% to 25% on $200 billion of China’s goods -- will likely show its effect in the next few months,” he said. “Compared with the first half, net exports may turn from a boost to a drag on the economy.”China’s escalating trade war with the U.S. may be nudging the world economy toward its first recession in a decade, with investors demanding politicians and central bankers act fast to change course.The latest setback hit German industrial production, which in June registered its biggest annual decline in almost a decade, highlighting the severity of a manufacturing slump in Europe’s largest economy. In the Asia-Pacific region, central banks in New Zealand, India and Thailand made surprise interest-rate cuts Wednesday trying to safeguard their economies from global headwinds.What Bloomberg’s Economists SayThe upbeat data cannot obscure the gloomy external outlook. The impact of the escalating trade war between the two biggest economies will reverberate across the world at a time when major economies are showing further signs of weakness.\--Chang Shu and Qian WanFor the full note click hereBetty Wang, senior China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, said so far there is no strong evidence that manufacturers are receiving fewer orders. The downside to exports may be limited for the rest of this year even considering the 10% tariffs, though the impact may be seen on manufacturing investment, she said.Commodities imports were stronger across the board. Soy was among the standouts, with inbound shipments climbing to the highest in almost year after China boosted buying of South American supplies and before halting purchases from the U.S. Imports of coal, crude oil, iron ore and copper concentrates also rose year-on-year.Wang said the a mix of rising prices and volumes drove strong commodity imports.“Coal and crude oil volumes also held up, which could be seen as signs of rising energy demand,” she said, adding that higher iron ore prices compared to last year also boosted the value of imports.“Exports still look set to remain subdued in the coming quarters as any prop from a weaker renminbi should be overshadowed by further U.S. tariffs and broader external weakness, said Julian Evans-Pritchard, a senior China economist at Capital Economics in Singapore.To contact the reporters on this story: Sheryl Tian Tong Lee in Hong Kong at email@example.com;Miao Han in Beijing at firstname.lastname@example.org;Kevin Hamlin in Beijing at email@example.comTo contact the editors responsible for this story: Jeffrey Black at firstname.lastname@example.org, Michael S. ArnoldFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- People’s Bank of China Governor Yi Gang says the nation won’t use exchange rates as a tool in the escalating trade dispute with the U.S. But currency strategists say the Trump administration just might take that step.The risk of a U.S. move to weaken the dollar has climbed in the eyes of some analysts after the yuan’s plummet to a decade-low below 7 per dollar Monday prompted fresh criticism from U.S. President Donald Trump.The U.S. leader decried the yuan’s plunge as “currency manipulation” in a tweet and indicated he’d like the Federal Reserve to act to counter the move. The Chinese currency’s tumble came days after Trump threatened to impose 10% tariffs on another $300 billion of Chinese imports.Speculation is building among strategists that the yuan’s sharp drop could push the administration to intervene in currency markets. While White House economic adviser Larry Kudlow said Friday that there are no plans for intervention, Trump has said he hasn’t ruled out measures to counter the dollar’s strength. If U.S. authorities do step in, it could sound the death knell of the strong-dollar policy that’s been in place since the 1990s.“Given that President Trump is reportedly willing to take action without following the guidance of his advisers, it doesn’t seem like pushing such a policy through would be especially difficult,” said Shahab Jalinoos, global head of foreign-exchange trading strategy at Credit Suisse Group AG.China’s offshore yuan slumped as much as 1.9% to a record low of 7.1114 per dollar on Monday. The currency was 1.7% weaker in New York trading even after the assurances from the PBOC’s Gang.The U.S. last intervened in FX markets in 2011, along with international peers, after the yen soared in the wake of that year’s devastating earthquake in Japan. That effort buoyed the dollar. Now, Trump’s repeated complaints about the greenback’s strength have analysts contemplating the wild-card notion that the U.S. could forcibly weaken the dollar -- a step not taken since 2000. That episode was part of a joint effort to bolster the euro.Nomura sees a 20% probability that the U.S. intervenes in the next three months, analyst Jordan Rochester said in a Bloomberg Television interview Monday. He joins strategists from banks such as Barclays Plc, Goldman Sachs Group Inc. and Scotiabank in warning of a possible U.S. foray into currency markets.Uphill BattleHowever, the administration would face an uphill battle in trying to influence a market that generates over $5 trillion in daily turnover. The Treasury’s Exchange Stabilization Fund holds almost $23 billion in greenbacks and around $50 billion in special drawing rights that it could convert. China, by comparison, holds about $3.1 trillion in currency reserves.“In theory, the U.S. could intervene on the offshore yuan, but whether they could do so effectively if China was opposed is uncertain,” said Steven Englander, global head of FX research at Standard Chartered Bank. “The rates route via pressure on the Fed still looks to be the most promising path to dollar weakness.”Traders ramped up Fed rate-cut bets Monday as global markets convulsed amid the heightened tensions.Additionally, while the Fed has been an equal participant in the last three currency interventions, the central bank can opt not to contribute its own funds. Administration officials believe that for any move on the dollar to succeed, the Fed must agree with the policy and clearly communicate its support, according to people familiar with the matter.The dollar has strengthened against most of its major peers this year as investors sought havens amid the trade war and slowing global growth. A gauge of the greenback has risen in five of the past six months, though it fell Monday along with increased expectations for lower U.S. borrowing costs.Surging YenThe risk of intervention also looms over the yen. Japan is keeping an eye on “nervous” moves in foreign-exchange markets following the threat of further U.S. tariffs on Chinese goods, and excessive moves aren’t desirable, said Yoshiki Takeuchi, the top currency official at the Ministry of Finance.The yen rallied to 105.79 to the dollar on Monday, the strongest since the so-called flash-crash in January. It has climbed about 2% in the past month, and the strength has prompted Japan’s largest automaker, Toyota Motor Corp., to cut its profit outlook.“I don’t think the Bank of Japan will do nothing if this sort of activity carries on,” said Shyam Devani, senior technical strategist at Citigroup Inc. in Singapore. “The difficulty is at what stage will they do something.”Not everyone is sure the moves on Monday herald the start of a global currency war.“I don’t think China is trying to devalue the yuan,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui DS Asset Management Co. in Tokyo. “We need to see whether the central bank will continue to set the yuan lower at its fixings in coming days.”(Updates with latest pricing.)\--With assistance from Subhadip Sircar, Michael G. Wilson, Charlotte Ryan and Nicholas Reynolds.To contact the reporters on this story: Ruth Carson in Singapore at email@example.com;Masaki Kondo in Tokyo at firstname.lastname@example.org;Katherine Greifeld in New York at email@example.comTo contact the editors responsible for this story: Tan Hwee Ann at firstname.lastname@example.org, Liau Y-Sing, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Seven of Hong Kong's biggest banks " including two note-issuing lenders " closed branches on Monday as strikes and protests brought large parts of the city to a standstill.HSBC Holdings said it had closed 10 of its branches at 2.30pm. Hang Seng Bank, a subsidiary of HSBC, said it had shut five branches for the whole day, while 15 more closed early, in the afternoon.Standard Chartered, one of the three banks that issue currency in Hong Kong, closed several branches in the afternoon, China Citic Bank International closed five out of its 30 branches, and Citibank closed two branches an hour earlier than usual.Singaporean lender DBS closed all of its branches in Hong Kong, saying it was for the safety of its staff.Most of the banks' closures were in areas including Tsuen Wan, Mong Kok, Tai Po and Admiralty.Meanwhile, ICBC Asia, the Hong Kong arm of Industrial and Commercial Bank of China, the country's largest lender, said on Monday evening it was shutting all its branches until further notice."We respect the decision of some staff if they decide to join the strike while we need to make sure the branch operation can continue," said Louisa Cheang, vice-chairman and chief executive of Hang Seng Bank."We have decided to close five small branches on Hong Kong Island for the whole day today to transfer manpower to support other branches. We also decided to close more branches in the afternoon for the safety concern of our staff. We will continue to monitor the situation."All three note-issuing banks in Hong Kong saw their shares fall to the lowest level in three months as a citywide strike disrupted travel and violent protests continued. At the same time, China's currency fell below a psychologically important level for the first time in a decade after its trade war with the US escalated again.Bank of China (Hong Kong) dropped 4.5 per cent on Monday morning to HK$27.8 before bouncing back to close at HK$28.1. Standard Chartered Bank went down 4 per cent to HK$62.3, and HSBC Holdings fell 1.8 per cent to HK$61. The wider Hang Seng Index dropped 2.9 per cent as strike action brought much of the city's transport network to a standstill.HSBC faced a double blow as its chief executive John Flint stepped down after just 18 months in office.Its subsidiary Hang Seng Bank plunged 4 per cent in the morning, also to a three-month low, to finish the morning at HK$174. It recovered slightly to close the day 3.6 per cent lower at HK$174.9. In a results announcement on Monday morning it said its expected credit losses and impairment charges had doubled to HK$510 million in the first half of this year."Banks and all sectors went down because of the slide of yuan and the strike. If [the strikes] become routine, like the protests over the past two months, it will be destructive," said Louis Tse Ming-kwong, managing director of VC Asset Management."Chief Executive Carrie Lam Cheng Yuet-ngor's speech on Monday morning provided no solution to Hong Kong's current crisis. These are all bad omen and led to the sharp fall of the market today."HSBC Group and BOCHK are the major mortgage providers in Hong Kong. The protests and strikes are going to hurt the property market in the medium term and hence may lead to more bad debts for banks." HSBC's CEO makes surprise departure as bank seeks different approachThe yuan on Monday morning fell below 7 against the US dollar for the first time in about 10 years, and just days after the US president threatened to impose a new 10 per cent tariff on US$300 billion worth of Chinese products from September 1.Shares of the big four state-owned Chinese banks all dropped to their lowest level in recent years on Monday morning. Bank of China fell 2.6 per cent to HK$3.05 while Agricultural Bank of China lost 2.6 per cent to HK$3.02 " both down to their lowest since mid-2016.Industrial and Commercial Bank of China slid 2 per cent, while China Construction Bank lost 2.53 per cent, both trading at their lowest in two years. Bank of China Communications, another major mainland Chinese lender, lost 1.4 per cent to trade at a one-year low.Ivan Li, head of CSL Securities Research, said the yuan's weakness was a more important factor than the protests in Hong Kong as the former would have a bigger impact on banks and companies."It should be noted that the recent move by the US Fed to cut the interest rate would probably be bad for the banks' net interest margins," Li said.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
(Bloomberg Opinion) -- Extraordinary times require extraordinary measures. Just 18 months into the job, John Flint has stepped down as CEO of HSBC Holdings Plc. It may be time for this lumbering giant to turn to an outsider rather than the homegrown veterans that the bank has typically chosen as its leaders.Flint was cut from the same cloth as his predecessors, having joined the lender as a trainee from college in 1989. The London-based bank is facing hard times, and difficult decisions are necessary. While the timing of his departure is a surprise, it would be hard to argue that a low-key manager steeped in decades of HSBC’s genteel culture is best placed to tackle the challenges that lie ahead.And make no mistake: The outlook for the bank is tough, despite buoyant first-half earnings. HSBC released results as a general strike added to the disruption from nine straight weekends of unrest in Hong Kong, its biggest single market. The bank is exposed to a worsening U.S.-China trade war as well as the risk of a no-deal Brexit in the U.K. Meanwhile, it has an underperforming U.S. business and hasn’t done enough to trim its bloated workforce.Second-quarter pretax profit rose a creditable 4% from a year earlier to $6.2 billion. The bank said first-half adjusted jaws – a measure that relates the growth in revenue to the increase in costs – was a positive 4.5%. Flint failed to achieve positive jaws by the end of 2018, a key target of his first year in charge.Headwinds are mounting. Flint took over in early 2018 when global interest rates were beginning to rise; last week’s cut by the U.S. Federal Reserve heralds a return to easy, cheap money that will compress net interest margins for banks. Hong Kong’s GDP growth has been hurt by the trade war and the worsening protests, and the impending arrival of digital banks may pose an even bigger threat. The bank holds 30% of the deposits in the city, which contributed almost 60% of pretax profit last year.These problems would be more tractable if the bank had done more to slim down. It had 235,000 employees at the end of last year. Flint has pushed to cut 500 investment-banking jobs since June, though it’s unclear whether this will make much of a difference when rivals are doing the same. Investment banking, and especially trading, has been in secular decline since the global financial crisis, weighed down by slowing economies, lackluster activity and increasing automation. HSBC’s investment bank is a long-term underperformer yet still accounted for a fifth of its global workforce last year.The continued U.S. drag on profitability doesn’t help. On Monday, HSBC said its U.S. adjusted first-half pretax profit was a mere $400 million, down 36% down from a year earlier, while return on tangible equity was just 2.5%. It won’t reach a target of 6% by 2020. The bank’s stock has flagged since Flint began his tenure.Ultimately, HSBC needs fresh blood – someone from outside its silo-ridden ranks, or at the very least, an insider with chutzpah and power. Chairman Mark Tucker, the first outsider to hold that post in HSBC’s 154-year history, said in the statement that the board “believes a change is needed to meet the challenges that we face and to capture the very significant opportunities before us.” Tucker is a famously hard-charging and decisive manager, as I noted when he was selected by HSBC two years ago.Unlike the chairman, the CEO also has to be a storyteller, one that can convince investors there’s growth to be had and that challenges can be met. Standard Chartered Plc’s Bill Winters offers a useful contrast. The StanChart CEO is doing a good job convincing investors of the value of its African digital bank, and has obtained a virtual bank licence in Hong Kong. HSBC didn’t even apply. DBS Group Holdings Ltd. is also reaping success from its online forays, while Asian corporate-banking rival Citigroup Inc. has stayed on top of regional supply-chain financing.Expect HSBC’s next CEO to be more in the Tucker mold.\--With assistance from Andy Mukherjee. To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Standard Chartered Bank (Hong Kong) Limited and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.