Several economic indicators painted a sobering picture of the global
economy. U.S. manufacturing closed out its weakest quarter in three years this
month, and the number of Americans filing new claims for jobless benefits held
near two-month highs last week. The U.S. data followed disappointing
manufacturing reports from Europe and China.
The benchmark Standard &
Poor’s 500 Index has gained 5.9 percent since the beginning of August, driven
higher mostly by expectations of more stimulus from central banks. A week ago,
the Federal Reserve announced its third round of stimulus or quantitative
easing, known as QE3, helping push stocks up last Friday within reach of
five-year highs.
In a sign of bullishness, UBS
raised its target level for the S&P 500 by the end of 2012 to 1,525 from
1,375 on Thursday, saying equity markets will climb after aggressive monetary
easing by central banks.
“Over the short run, we believe
that the ‘risk on’ trade will continue, with a rotation into the most volatile
and economically sensitive stocks,” UBS’ chief U.S. equity strategist Jonathan
Golub wrote in a research note.
Singapore
lam International, a global
integrated supply chain manager of agricultural products and food ingredients,
is pleased to announce that it has won the 2012 Asian Human Capital Award, at
the Singapore Human Capital Summit in Sentosa, Singapore on 19 September 2012.
The first of its kind in Asia,
the Asian Human Capital Award honours innovative and impactful people practices
adopted by Asia-based organisations. Jointly sponsored by the Singapore
Ministry of Manpower, INSEAD, CNBC Asia and Human Capital Leadership Institute,
the Award showcases useful case studies and generates practical insights to
address human capital challenges in the region.
Since its inception in 2009, more
than 100 organisations from nine countries in Asia have participated in the
Award. The 2011 version of the Award saw prestigious companies like Manila
Water, HCL Technologies and Unilever Asia clinch its top prizes.
Accepting the award, Sunny
Verghese, Group Managing Director and CEO of Olam, commented: “At Olam we
believe that ultimately, our people are our true source of competitive
advantage. We today employ over 17000 people worldwide of which 690 are part of
our Global Assignee Talent Pool (GATP). These GATPs are managers and leaders
that we recruit, develop, career path, deploy, reward and motivate on a
centralised basis. We invest in developing them by putting them through a
common rite-of-passage and providing them certain critical experiences that
allows them to imbibe our DNA and culture.”
“As CEO, while I focus on
monitoring the key financial outcomes including Economic Profit, Return on
Invested Capital, Return on Equity, Intrinsic Value etc., I focus even more on
understanding the quality of our new hires, engagement scores, attrition rates,
alignment within the organisation and our capacity to operate as One-Company
because this will determine the financial and strategic outcomes that we will
generate in the future.”
Thailand
The floods that have hit some
northern and central provinces of Thailand are unlikely to have any impact on
the country’s overall economic situation, Deputy Prime Minister and Finance
Minister Kittiratt Na-Ranong said Wednesday.
The floods have affected only a
limited area and were caused mainly by recent heavy rain, he told reporters
after a meeting of economic ministers. In any case, many of the industrial
estates that were hit by devastating floods late last year have prepared flood
walls, which should prevent a repeat of last year’s inundation.
In 2011, Thailand’s industrial
output was badly hit by flooding, with the economy barely registering any
growth, and manufacturing around the world was disrupted after production of
vital components from hard-disk drives to electronic car components ground to a
halt.
Malaysia
Global Islamic financing is set
to double in size between 2011 and 2015 with the sector increasingly viewed as
a credible alternative to conventional finance following the global financial
meltdown.
Hence, Standard & Poor’s
(S&P) expects the US$1 trillion global Islamic finance industry to grow 20
per cent over 2011-2015, doubling in size over the period.
“Issuers and investors have
realised that the risk-reward balance in both conventional and Islamic finance
are not fundamentally different,” Standard & Poor’s (S&P) Managing
Director & Regional Head, Middle East Stuart Anderson said in a statement.
The global prospects for the
Islamic finance industry will be the subject of a conference to be hosted by
S&P in Dubai on Sept 25, 2012.
Titled “The Globalisation of
Islamic Finance: Connecting the GCC with Asia and Beyond”, S&P’s Islamic
finance conference will explore how enhanced links between the member countries
of the Gulf Cooperation Council (GCC) and Asia can drive greater convergence
and globalisation in the industry.
According to S&P, Islamic
finance growth is currently led by member countries of the GCC region
comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab
Emirates as well as Asia.
Young, fast-growing Muslim
populations; robust macroeconomic environments; and large infrastructure
projects that require financing are the main drivers of this increasing growth.
“Malaysia leads the global
industry while Saudi Arabia leads in the GCC,” it said.
Over the last few years, the
industry has taken major strides to achieve a broader consensus on Islamic
banking structures.
“We have also seen stronger and
more active support from domestic authorities, particularly through the
creation of regulatory and tax frameworks, ensuring a level playing field
between conventional and Islamic instruments,” said Anderson.
A key development expected to
drive globalisation and expansion of Islamic banking outside Asia and the GCC
is the increasing attractiveness of sukuk among global investors.
At a time when conventional
banks’ appetite for term loans is declining, S&P believes that sukuk could
become a key-funding source.
Sukuk issuance looks set to cross
the US$100 billion threshold in September 2012, and is projected by S&P to
grow 25 per cent over 2012-2015 to reach about US$200 billion a year in 2015.
Malaysia, Indonesia, and the GCC
are expected to account for a combined 85 to 90 per cent of issuances mainly to
finance infrastructure-related projects.
As of September 17 this year, new
GCC issuances had totalled US$19.9 billion across all asset classes compared
with US$19.4 billion of new issuances in all of 2011.
Asia, meanwhile, has seen sukuk
issuance worth US$57.9 billion year-to-date, compared with US$64.9 billion in
2011.
In terms of number of issuances,
the GCC accounted for about 50 issuances and Asia for 430 issuances so far this
year compared with 44 and 437 respectively in 2011.
A recent S&P report sees
growing infrastructure Sukuk issuances by GCC companies in Malaysian Ringgit
providing a significant impetus to the development and globalisation of the
Sukuk market, it added.
Indonesia
Shares of Bank Tabungan Negara, a
state mortgage lender, rose 4.7 percent to the highest in more than three weeks
on Wednesday, after the House of Representatives approved the lender’s plan to
raise Rp 2.25 trillion ($236 million) from selling shares in a rights offer.
The approval would allow the
lender to boost its lending while reducing its taxes.
“We agreed on the BTN rights
issue,” said Emir Moeis, chairman of House Commission XI, which oversees fiscal
and financial affairs. “This would be good way for BTN to improve its service
to the public.”
Shares of BTN rose to Rp 1,350,
the highest since Aug. 28, on the Indonesia Stock Exchange.
BTN, Indonesia’s largest mortgage
lender, plans to sell more than 1.5 billion new shares, or 14.6 percent of the
extended total shares, with proceeds from the sales estimated to be at Rp 1.76
trillion to Rp 2.25 trillion, Finance Minister Agus Martowardojo said on
Wednesday.
The proceeds from the sale would
help BTN increase its capital adequacy ratio — a bank health measure that
reflects the extent of the bank’s capital that can cover its total loans — to
19 percent by 2016, Agus said.
BTN’s CAR stood at 15.6 percent
as the first half ended, higher than the central bank’s minimum requirement of
8 percent. The ratio dropped from 15.9 percent in the same period a year
earlie, as bank loans grew to Rp 72.1 trillion in the six-month period. That
was an increase of 28 percent from Rp 56.5 trillion in the same period last
year. Housing makes up 86 percent of the bank’s loans.
Agus said that the agreement
could dilute the government’s stake in the lender to just 60 percent, from the
current 71.9 percent. The rest is held by private shareholders.
“That will reduce the amount of
[income] tax that BTN has to pay,” Agus said.
A company that sells at least 40
percent of its shares to the public gets a 20-percent income tax rate, lower
than the normal rate of 25 percent, according to the 2008 tax law. That law
encourages companies to sell their shares in the bourse.
BTN will offer the shares from
the fourth week of October until the first week of November to gauge demand by
investors.
The lender plans to set the final
price by the end of November, so as to have the funds by December.
Philippines
Manila Electric Co., the
country’s biggest power distributor, has urged the Energy Regulatory Commission
to allow the use of short messaging service (SMS) as primary mode for customer
notifications under the prepaid retail electricity scheme.
In a filing with the ERC, Meralco
argued that using SMS would be a more viable alternative than installing an
in-home display (IHD), which would entail more costs on the part of Meralco and
its customers.
In particular, the SMS may be
used for registration, loading of prepaid electricity credits, threshold
warning, advice of disconnection and reconnection, balance inquiry, and remote
disconnection and reconnection.
According to Meralco,
incorporating IHD in the prepaid retail electricity scheme will require a
modification of the system, which would entail additional capital and operating
costs. Simply adding IHD devices would entail an estimated additional upfront cost
of P170 million and IHD operating expenditures of P22 million.
Meanwhile, software enhancements
to the system would require some additional P5 million, not to mention
additional system hardware capital expenditure and service maintenance cost of
around P848 million and P565 million, respectively, the distribution utility
explained.
“Meralco submits that SMS
implementation of sending and receiving prepaid retail electricity scheme
account information, without the IHD, would serve the best interest of the
consumers especially in terms of convenience, coverage, transparency, customer
preference and efficiency, and offers the best value for service at the lowest
cost possible,” the power firm noted.
“With Meralco’s proposed
implementation, the customers can receive timely and necessary information
without unnecessary incremental cost associated with IHD installation. Meralco
submits that SMS implementation is the most practical and consumer-friendly
solution, which is more than compliant with the … rules,” it further said.
The prepaid retail electricity
service, or PRES, is one of the innovations introduced by the ERC so that
consumers can have more power to control their electricity bills. Under the
prepaid meter scheme, subscribers can monitor their electricity consumption in
real time while their meter systems could warn them if and when the load is
nearing zero to avoid automatic disconnection.
Meralco wants to start its
technical pilot project for the prepaid retail electricity scheme by November
2012.
The technical pilot project in
Angono, Rizal, will cover only 40 households, to ensure that all systems will
be technically in order prior to the commercial pilot of the prepaid
electricity scheme early 2013.
The commercial pilot project
will, meanwhile, test the prepaid electricity scheme to cover a bigger area,
roughly around 400 households in Angono, each of which has an average
consumption of about 200 kilowatt-hours per month.
The pilot activities will also
test the viability of the existing prepaid platform, the prepaid meters and the
various vending solutions that may be deployed. More importantly, the pilot
tests will determine if the prepaid retail electricity scheme will be a good
business case for Meralco and will provide lasting benefits for its customers.
Once this scheme is proven
feasible, Meralco will launch a wide-scale prepaid electricity scheme for
40,000 of its over 5 million customers within its franchise area.
Yesterday in Asia
Shanghai led the
losses, tumbling 2.08 percent, or 42.99 points, to 2,024.84, its lowest since
February 2009, at the height of the global financial crisis. Hong Kong ended
1.20 percent lower, shedding 250.99 points to 20,590.92.
Tokyo fell 1.57 percent,
or 145.23 points, at 9,086.98, as the yen regained the ground it lost when the
Bank of Japan announced a new round of easing on Wednesday.
Seoul lost 0.87 percent,
or 17.55 points, at 1,990.33 while Sydney was 0.48 percent, or 21.1 points,
lower at 4,397.2.
Taipei fell 0.7 percent, or
54.36 points, to 7,727.55.
HTC slid 1.45 percent to Tw$306.0
while TSMC was 0.81 percent lower at Tw$85.3.
Manila closed 0.42 percent
lower, dropping 22.06 points to 5,294.97.
SM Prime Holdings shed 0.71
percent to 13.86 pesos and Philippine Long Distance Telephone inched down 0.07
percent to 2,828.0 pesos.
Wellington was up 0.56
percent, or 21.38 points, at 3,819.28.
Telecom rose 0.87 percent to
NZ$2.33.
Singapore closed down
0.42 percent, or 13.02 points, to 3,062.61.
City Developments fell 1.88
percent to Sg$11.47 and Keppel Corp shed 0.62 percent to Sg$11.29.
Kuala Lumpur dived 20.52
points, or 1.25 percent, to end at 1,625.59.
IOI Corp. Bhd lost 1.8 percent to
4.99 ringgit while Kuala Lumpur Kepong Bhd shed 0.4 percent to 22.16. YTL Corp.
Bhd gained 0.6 percent to 1.80 ringgit.
Jakarta fell 0.64 percent,
or 27.19 points, lower at 4,217.52.
Coal company Bukit Asam slid 2.1
percent to 16,300 rupiah, tin company Timah lost 2.4 percent to 1,600 rupiah,
and gold and nickel company Aneka Tambang fell 1.4 percent to 1,390 rupiah.
Bangkok fell 0.22 percent or
2.78 points to 1,282.68.
Coal producer Banpu dropped 1.34
percent to 442 baht, while supermarket firm Makro lost 0.80 percent to 370
baht.
Mumbai fell 0.79 percent,
or 146.76 points, to 18,349.25.
India’s largest private firm
Reliance Industries fell 2.70 percent to 832.15.
Pantaloon Retail, part of the
Future group, slid 2.94 percent to 174.7 rupees while cash-strapped Kingfisher
Airlines declined 7.21 percent to 12.48 rupees.
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