'Pink yuan' economy grows to $500 billion as China warms up to LGBT+

KUALA LUMPUR -- The growing popularity of online gay-friendly adverts in China shows business is waking up to the 'pink yuan' and more liberal attitudes among young people but the government remains unmoved.

China's gay economy is worth $300 billion to $500 billion annually, reaching some 70 million people, according to Daxue Consulting, a market research firm - making it the biggest gay and transgender market in the world in terms of population.

"Young Chinese people do appear to be opening up and accepting LGBT+ culture," Allison Malmsten, China analyst at the Shanghai-based company, told the Thomson Reuters Foundation.

"The LGBT+ market in China has a lot of untapped potential."

Homosexuality has been legal in China since 1997 and the country's largest organization for psychiatrists stopped classifying it as a mental disorder in 2001.

But same-sex marriage is not recognized and most LGBT+ people fear coming out to their families because of stigma.

An online advert showing a man bringing his partner home to celebrate the Lunar New Year with his family went viral across China last month, sparking positive responses among the LGBT+ community for helping break taboos in the conservative country.

The video by China's Alibaba Group, which specializes in e-commerce sites, is part of a growing trend, largely led by technology firms targeting millennials aged 23 to 38 and gay and trans consumers, said industry and LGBT+ analysts.

"Many of these companies have young consumers and showing inclusivity simply makes an ad memorable," said Malmsten.

"Look at the buzz created from the Alibaba advert - netizens and media spreading the advertisement all over, and at no extra cost for the company."

Chinese internet search giant Baidu, e-commerce company Dangdang, and ride-hailing giant Didi Chuxing have also promoted LGBT+ friendly adverts in recent years.

BANNED

The government often censors news, television shows and films that touch on LGBT+ issues in the name of "family values" while media companies self-censor, gay rights activists say.

China scrubbed at least 10 scenes with gay references from 2018's Oscar-winning biopic "Bohemian Rhapsody" about British musician Freddie Mercury.

"If we want to achieve a friendly and inclusive social environment, we need much more LGBTQ images on TV and in newspapers for (help) changing the law and social norms," said Yang Yi of the China Rainbow Media Awards.

"LGBTQ+ issues are becoming more and more invisible," said Yi, whose organisation works to improve gay and trans coverage.

But companies looking to carve out a slice of the country's pink economy must tread carefully. Subtlety is key.

"These ads, for the most part, do not outright voice support for same-sex couples, rather include them as an element in advertisements being accepted by others," said Daxue Consulting's Malmsten.

A Cathay Pacific Airways advert that showed a same-sex couple holding hands on a beach was banned in a government-run airport and metro stations last year in Chinese-controlled Hong Kong, which has been rocked by months of pro-democracy protests.

The ban was later reversed after an online backlash by LGBT+ activists, according to local media reports.

Social media is harder to police, leading to a trickle of gay-friendly online adverts that target a specific audience.

China banned online content showing "abnormal" behaviors - including homosexuality - in 2017 in a bid to promote "socialist values" and to assert Communist Party control over online discussions in the traditionally Confucian society.

But when China's Twitter-equivalent Weibo banned gay content in 2018, it was forced to reverse its decision within days after an outcry among pro-LGBT+ Chinese, using hashtags, open letters and even calling on people to dump shares in the company.

'PRIDE BANDWAGON'

In a sign of changing attitudes, China's top legislative body, the National People's Congress, last year said that introducing same-sex marriage was one of the most popular requests made by people.

While no new legislation was outlined, the statement raised hopes of reform among LGBT+ Chinese in a year when Taiwan became the first place in Asia to allow same-sex marriage.

Popo Fan, a Chinese filmmaker and LGBT+ activist based in Berlin, said the impact of pro-gay online content was limited in China as it often only reached young, well-educated, tech-savvy people on high incomes.

"Those advertisements are only targeting people who can buy or use the internet and smartphones," he said.

"A lot of people don't have this access and they have no opportunity to get any (LGBT+) information."

While pro-gay adverts can help to challenge taboos, China is far from accepting or legalizing same-sex relationships, said Suki Chung, an LGBT+ rights campaigner at Amnesty International.

And many companies were simply riding the "pride bandwagon" of LGBT+ marketing, without having genuinely inclusive policies towards sexual and gender minorities, she said from Hong Kong.

"LGBTI marketing ads will become a growing trend in the greater China region, given the lucrative pink dollars and the look-good image of being a 'social change maker' or pioneer," she said.

"Real change is still far away given that the Chinese government still imposes tight controls ... but the power of online netizens and LGBTI communities in fighting back against the government propaganda is strong."

source: news.abs-cbn.com

China to destroy banknotes from coronavirus-hit sectors

The Guangzhou branch of China’s central bank said it would destroy all banknotes collected by hospitals, wet markets and buses to ensure the safety of cash transactions as the country battles a coronavirus epidemic.

Financial news outlet Caixin reported on Saturday that officials at the People’s Bank of China’s (PBOC) branch in the southern city ordered that all paper currency from sectors with high exposure to the coronavirus be withdrawn for destruction.

Commercial banks in the province should put banknotes from these sectors aside, disinfect them and hand them in to the PBOC.

The order comes after Fan Yifei, deputy governor of the central bank, said on Saturday that 600 billion yuan ($85.6 billion) of new banknotes had been distributed throughout the country since Jan. 17, including 4 billion yuan in fresh notes sent to Wuhan at the center of the outbreak before the Lunar New Year.

The central bank said that in general it would use high temperatures or ultraviolet light to disinfect cash, and store the currency for more than 14 days before putting it back in circulation.

Nearly 3 billion yuan in new banknotes was injected into the southern province of Guangdong, excluding Shenzhen, between Feb. 3 and 13, while 7.8 billion yuan was withdrawn from circulation, the PBOC said.

The banking industry extended 270 million yuan in cash through 1,249 transactions to government agencies, epidemic prevention and control related enterprises and other frontline units, Caixin reported. Cash withdrawals amounted to 800 million yuan through 6,186 transactions.


Central banks routinely collect and destroy old coins and banknotes in exchange for new ones. This does not affect the money supply, and is done to maintain a healthy amount of usable currency.

Caixin cited an unnamed deputy chief at a large joint stock bank in Guangzhou as saying that customers would be required to confirm the origin of the banknotes being deposited at their branches but in reality, “it would be difficult for such a measure to be completely effective”.

Fan also said that China had pledged extra funds to banks, prodding them to help manufacturers and businesses pull through headwinds from the China-US trade war and the nation’s worst health crisis in nearly two decades.

Economic growth, which already slowed to 6 percent in the fourth quarter, is likely to sputter further in the three months ending in March, with an estimated 50 million workers forced to stay home since late January, disrupting production of everything from clothing to toys and crucial components.

The State Administration of Foreign Exchange said it had help fast-track 1,370 foreign exchange transactions in China between January 27 and February 12, including 70 for imports into Hubei, mainly for the purchase of masks, protective gear and production materials.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

China cleans, locks away banknotes to stop virus spread

BEIJING - China is disinfecting and isolating used banknotes as part of efforts to stop the spread of the new coronavirus that has killed more than 1,500 people, officials said Saturday.

Banks use ultraviolet light or high temperatures to disinfect yuan bills, then seal and store the cash for 7 to 14 days -- depending on the severity of the outbreak in a particular region -- before recirculating them, China's central bank said at a press conference.

The virus, which has infected more than 66,000 people in China and spread to more than 2 dozen other countries, has sparked a rush to disinfect public places and minimize contact between people.


Pharmacies across the country sold out of disinfectants and surgical masks in just days after a lockdown was announced in late January on Wuhan city, where the COVID-19 illness is believed to have emerged.

Office buildings have installed packets of tissue in elevators that tenants are encouraged to use when pressing buttons, while ride-hailing company Didi exhorts drivers to disinfect their cars daily.

'EMERGENCY ISSUANCE'

Fan Yifei, deputy governor of China's central bank, said Saturday that banks have been urged to provide new banknotes to customers whenever possible.

The central bank made an "emergency issuance" of 4 billion yuan in new notes to Hubei province, the epicenter of the outbreak, prior to the recent Lunar New Year holiday, Fan added.

The measures are intended to "secure the public's safety and health when using cash," Fan said.

But it is unclear how wide an impact the central bank's disinfection work will have, with increasing numbers of Chinese people preferring mobile payments over cash in recent years.

In 2017, nearly three-quarters of Chinese respondents told an Ipsos survey they could survive a whole month without using more than 100 yuan in cash.

According to the World Health Organization, COVID-19 can be spread through contaminated objects in addition to droplets and direct contact with infected patients.

source: news.abs-cbn.com

World stocks tread water as easing US-China tensions boost yuan

NEW YORK -- Global stocks were range-bound on Tuesday while the yuan advanced against the dollar after Washington said it no longer considered China a currency manipulator and tensions eased between the economic titans.

New York was also rattled by news reports on Tuesday that US President Donald Trump intended to keep most punitive US tariffs on Chinese imports until after the 2020 presidential election.

US stocks finished lower, pulling back from Monday's records, while London rose and Europe edged downward.

The US Treasury announcement on the Chinese currency late Monday came as the two countries prepare to sign the first part of a wider trade agreement that has helped fan a rally in world equity markets.

Washington's decision triggered a sell-off in haven assets, including the yen and gold.

In August, Trump accused Beijing of weakening its currency "to steal our business and factories," re-stating a long-standing grievance.

The dollar slumped to 6.8670 yuan at one point, the lowest level since July, before rebounding somewhat.

"The yuan is the purest and best barometer to gauge the market's view on US-China trade tension," said AxiTrader's Stephen Innes.

"With the yuan strengthening ahead of the 'phase one' deal signing, it's indicating the potential for further improvement in trade relations."

The US reversal of China's status as a manipulator "is a most precise and definitive de-escalation of trade tension to date and provides a less congested road as we pivot to phase two of the broader trade agreement," Innes added.

Still, equity markets were a bit edgy ahead of Wednesday's expected signing of the US-China agreement.

Some investors have been expecting a pullback following the surge in recent weeks that have left the market in what analysts have called an "overbought" condition.

Earlier, Tokyo's main stocks index rose 0.7 percent as the dollar advanced against the yen owing to a rush out of safety -- giving a boost to Japan's exporters.

However, profit-taking saw Hong Kong drop 0.2 percent and Shanghai slip 0.3 percent following recent advances.

KEY FIGURES AT 2145 GMT (5:45 a.m. in Manila)

New York - Dow: UP 0.1 percent at 28,939.67 (close)

New York - S&P 500: DOWN 0.2 percent at 3,283.15 (close)

New York - Nasdaq: DOWN 0.2 percent at 9.251.33 (close)

London - FTSE 100: UP 0.1 percent at 7,622.35 (close)

Frankfurt - DAX 30: FLAT at 13,456.49 (close)

Paris - CAC 40: UP 0.1 percent at 6,040.89 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,774.88 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 24,025.17 (close)

Hong Kong - Hang Seng: DOWN 0.2 percent at 28,885.14 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,106.82 (close)

Dollar/yuan: DOWN at 6.8836 yuan from 6.8938 yuan

Pound/dollar: UP at $1.3019 from $1.2989

Euro/pound: DOWN at 85.46 pence from 85.72 pence

Euro/dollar: DOWN at $1.1126 from $1.1134

Dollar/yen: UP at 109.98 yen from 109.95

Brent Crude: UP 0.5 percent at $64.49 per barrel

West Texas Intermediate: UP 0.3 percent at $58.23 per barrel

Agence France-Presse

Facing US sanctions, Venezuela offers suppliers payment in Chinese yuan: sources

CARACAS - Venezuela's government and its oil company PDVSA have offered to pay suppliers and contractors into accounts in China using the yuan currency, five people familiar with the matter said.

The move made in recent months is the latest example of how Caracas has sought new ways of making international payments since sweeping sanctions by Washington, intended to force out socialist President Nicolas Maduro, cut off the country's access to the U.S. financial system.

Officials have made the proposal verbally to at least four companies that provide services to the public sector, said the people, including two government officials and three sources from private companies in the financial or oil sectors. The individuals declined to disclose which companies have been approached.

The companies are evaluating the proposal, the sources said. Reuters could not determine whether any such payments in yuan have been made.

China's central bank, the Peoples' Bank of China, did not respond to a faxed request for comment. PDVSA, Venezuela's central bank, and Venezuela's information ministry did not respond to requests for comment.

Venezuelan public entities have traditionally paid private sector partners in the local bolivar currency or U.S. dollars. But hyperinflation and U.S. sanctions, which prohibit American companies from doing business with Venezuela's public sector, are complicating those methods.

The offer comes after Venezuela's government and PDVSA have paid some suppliers and contractors with euros in cash, which they have received from some oil and gold sales, in response to the loss of access to the U.S. financial system due to the sanctions.

Paying suppliers in yuan would allow Venezuela to take advantage of funds it has available in China, without touching the U.S. financial system. However, two of the sources said the process of opening accounts at Chinese banks was proving complicated.

PDVSA and Venezuela's central bank have long maintained accounts in China, in part thanks to a financing deal inked more than a decade ago that saw China lend some $50 billion to the OPEC nation in exchange for crude shipments.

Venezuela's central bank has at least $700 million in yuan in an account at China's central bank, which it received earlier this year as compensation for an oil shipment, according to two people with knowledge of the Venezuelan central bank's operations. Reuters could not independently confirm this.

Receiving payments in foreign currency, or overseas banks, are "the kind of setup that some contractors now have to engage in to get paid," said Raul Gallegos, consultancy Control Risks' director for the Andean region. "This will become standard operating procedure as long as Maduro and U.S. sanctions remain in place."

Venezuela's offer to pay in yuan comes even as some Chinese entities have taken steps to try to distance themselves from the sanctioned country.

China National Petroleum Corp, one of the largest foreign investors in Venezuela's oil sector, in August stopped lifting crude from Venezuelan ports due to worries about sanctions.

Analysts said they expect China's imports of Venezuelan crude to have fallen to zero last month. But China is importing more and more crude blends from Malaysia, which include some Venezuelan oil. (Additional reporting by Stella Qiu in Beijing; Writing by Luc Cohen; Editing by Marguerita Choy)

source: news.ab s-cbn.com

PayPal to enter China market through local acquisition

HONG KONG -- US digital money transfer platform PayPal Holdings Inc has obtained Beijing's approval to buy a controlling stake in a domestic payments firm, which would make PayPal the first foreign firm to enter China's payment services market.

Gopay Information Technology, PayPal's acquisition target, has received approval from China's central bank to sell a 70 percent stake to PayPal, both companies said on Monday.

Gopay has licenses for mobile, online and cross-border yuan payment services, the Chinese company said in its statement.

PayPal will make the acquisition through a subsidiary in Shanghai. No financial terms were disclosed.

The transaction is expected to close in the fourth quarter of 2019 and is subject to customary closing conditions, PayPal said.

Early last year, China's central bank announced that it was opening the country's domestic market to foreign third-party electronic payment firms, a move intended to promote competition in the retail payments industry. 

source: news.abs-cbn.com

China scraps foreign investment cap in stocks, bonds

BEIJING - China on Tuesday removed limits on foreign institutions wanting to invest in its stocks and bond markets, as it seeks to attract overseas investment amid a slowing economy and a trade spat with the United States.

Foreign individuals are barred from investing directly in China's markets, but the country allows certain institutions to buy shares under the so-called Qualified Foreign Institutional Investor (QFII) scheme.

The State Administration of Foreign Exchange (SAFE) said Tuesday it has removed the overall ceiling of $300bn on total asset purchases under this scheme, offering unfettered access to the world's second-largest capital market.

A cap on a yuan-denominated sister scheme -- the Renminbi Qualified Foreign Institutional Investor (RQFII) program, which allowed overseas institutions to invest in Chinese securities using the offshore yuan -- was also removed on Tuesday.

"Foreign institutional investors with the relevant qualifications can remit funds to carry out investment in securities in compliance with regulations, greatly enhancing the convenience for foreign investors participating in the onshore financial market," the regulator said in a statement.

The regulator said it was also seeking permission from China's cabinet to scrap administrative licenses needed by foreign investors to purchase stocks and bonds.

The moves aim to "facilitate foreign investors to invest in the domestic securities market and enhance the depth and breadth of China's financial market opening," said Wang Chunying, a spokeswoman for SAFE.

Just over one-third of the $300 billion QFII investments quota had been used by end-August, according to SAFE data.

Wang said that a yuan-denominated investment scheme, or RQFII program, will now be open to all overseas institutional investors that meet certain requirements. Earlier it was only available to investors from certain countries or regions on a pilot basis. 

China has recently eased restrictions on foreign investment in the financial sector, as the world's second-largest economy fights slowing growth at home and a damaging trade war with the United States.

China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020, one year earlier than originally planned, the Financial Stability and Development Committee said in July.

Foreign investors will also be encouraged to set up wealth management firms, currency brokerages and pension management companies, the committee said.

Beijing has long promised to further open up its economy to foreign business participation and investment but has generally dragged its feet in implementing the moves.

In November, Beijing made an exception for two European insurers, allowing Germany's Allianz to launch a 100 percent foreign-owned subsidiary, and France's Axa to take control of its joint venture.

And in December, China's securities regulator authorized Swiss bank UBS to take a controlling stake in its local business.

source: news.abs-cbn.com

Adidas fears 'everybody will lose' in US-China currency war

FRANKFURT AM MAIN - German sportswear maker Adidas warned Thursday that "everybody will lose" if a currency war ignites between China, the United States, and other countries, while reporting continued strong earnings in its second quarter.

American tariffs on Chinese goods -- with another $300 billion in imports targeted by President Donald Trump last week -- are less harmful to the brand with the three stripes than a potential exchange rate battle, chief executive Kasper Rorsted said.

"What is much more severe is that we start to have a currency war between China, the US and the rest of the world, that's going to be a situation where everybody will lose," he told journalists in a telephone conference.

Since the tariffs announcement, Beijing has allowed the yuan to sink below a seven-to-the-dollar lower bound its central bank had previously defended, prompting the US Treasury Department to cry currency manipulation.

"Currency war will over time slow the economy down," Adidas chief Rorsted predicted, as well as imposing a "severe impact" on global businesses like the shoes and sportswear maker.

Weaker exchange rates against the euro would batter Adidas' sales and profitability through the conversion into its home currency, as the US and Chinese markets combined account for 45 percent of revenue.

SPRINTING AHEAD

For now, the Bavarian group says its strong growth continued into the second quarter, seeing its biggest problems in overcoming bottlenecks in its supply chain.

Net profit at the Bavarian group added 34 percent over April-June 2018, reaching 531 million euros ($595 million) to beat analysts' forecasts.

Revenues grew by 4.7 percent to 5.5 billion euros, making for an operating profit up 8.6 percent at 643 million euros.

Sales at the flagship Adidas brand were up four percent thanks to its "sport inspired" streetwear, while its "performance" sportswear fell back in comparison with 2018's football World Cup-powered revenues.

Long-struggling American subsidiary Reebok returned to growth in sales in the second quarter, adding three percent thanks to its "classics" line.

The unit also returned to profitability, Rorsted said.

Adidas' online direct sales business grew 37 percent, while in its different regions only China saw double-digit growth.

North America picked up the pace of sales expansion as the group managed to overcome supply bottlenecks for in-demand products, while sales in Europe held steady.

Adidas' closely-watched gross margin increased 1.2 percentage points, to 53.5 percent, a slower pace than in the previous quarter.

"Higher air freight costs to mitigate the supply chain shortages and a less favorable pricing mix" weighed on profitability, the group said.

Looking ahead, the group stuck to its 2019 forecasts for sales growth between five and eight percent, adjusted for currency effects.

Its gross margin should increase to 52 percent and net profit come in between 1.88 and 1.95 billion euros.

source: news.abs-cbn.com

Fragile calm returns to stock markets as yuan steadies

TOKYO -- Asian shares steadied slightly on Wednesday as investors caught their breath from a searing week-long selloff, with steps taken by Chinese authorities to contain a sliding yuan helping calm fears of a full-blown Sino-US trade and currency war.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.05 percent in early trade after tumbling 8.26 percent in the previous eight sessions. Japan's Nikkei bucked the trend to slip 0.26 percent.

On Wall Street on Tuesday, the S&P 500 gained 1.3 percent and MSCI's broad gauge of stocks across the world rose 0.5 percent, its first gain in 7 sessions.

The rebound came as the People's Bank of China took steps on Tuesday to stabilize the yuan with a firmer-than-expected fixing and a bond sale to signal that the authorities wished to stem the rout.

Comments from Larry Kudlow, director of the White House National Economic Council, also soothed sentiment. Kudlow said on Tuesday the Trump administration wanted to continue trade talks with China and is still planning to host a Chinese delegation for talks in September.

The yuan had fallen sharply on Monday, going past the symbolic 7-per-dollar level, and prompting Washington to label Beijing a currency manipulator in a major escalation of the year-long trade dispute between the world's two largest economies.

In early Asian trade on Wednesday, the offshore yuan was flat at 7.0533 yuan per dollar, off Tuesday's low of 7.1400, its weakest level since international trading in the Chinese currency began in 2010.

Many investors believe Trump cannot afford prolonged instability in financial markets since his reputation was staked so closely on economic growth and the success of the U.S. stock market.

"Global financial markets have been shaken by concerns that escalating US-China trade tensions, which now has triggered a currency war, would cool the world economy substantially," Masahiro Fukuda, investment director at Fidelity.

"While we cannot rule out the possibility of political negotiations leading to unexpected outcomes, we think it is unnecessary to worry about recession as various fiscal and monetary stimulus should support the economy of the two courtiers," he said.

Overall, however, market sentiment remained fragile and with no clear end in the trade standoff in sight, some investors expect a rocky session ahead.

Goldman Sachs said it no longer expects a trade deal to be struck before the November 2020 US presidential election, while Morgan Stanley warned that more tit-for-tat tariffs could tip the world economy into recession by the middle of next year.

That rather grim backdrop supported safe-haven assets, with gold hitting a six-year high of $1,477 per ounce in early Wednesday trade. It last stood at $1.474.7.

US bonds have also retained much of their gains made in the past week. The 10-year Treasuries notes yielded 1.695 percent, compared to above 2 percent just a week ago, as investors bet on another rate cut by the Federal Reserve in September.

In the currency market, the dollar was traded at 106.33 yen , down 0.13 percent from late US levels, but off Tuesday's 7-month low of 105.52.

The euro stood flat at $1.1203. The Australian dollar fetched $0.67605, just a stone throw from its seven-month low of $0.6748 touched on Monday.

The New Zealand dollar was little changed at $0.6527 . The Reserve Bank of New Zealand is widely expected to cut interest rates for the second time this year, by 25 basis points to all-time low of 1.25 percent on Wednesday, to counter pressure on the economy from global trade disputes.

Oil prices also weakened, with global benchmark Brent crude slipping to seven-month lows, as trade tensions between the US and China intensified worries about weakening world demand.

Brent crude futures fell 0.36 percent to $58.73 a barrel, near its low on Tuesday of $58.55, a trough last seen in early January.

source: news.abs-cbn.com

Global equities rout deepens as US sets crosshairs on yuan

TOKYO - Global stocks extended already substantial losses on Tuesday, after Washington tagged China a currency manipulator, shaking fragile investor sentiment in a rapid escalation of the US-China trade war.

Safe-haven assets, including bonds and some currencies such as the yen and Swiss franc, benefited as investors scurried to avoid risk.

In early European trade, the pan-region Euro Stoxx 50 futures were down 0.2 percent, German DAX futures slipped 0.15 percent and Britain's FTSE futures lost 0.4 percent.

US Treasury Secretary Steven Mnuchin said on Monday the government had determined that China is manipulating its currency, and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing.

"Officially labeling China a currency manipulator gives the United States a legitimate reason to take even more steps," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

"The markets are now scrambling to factor in the possibility of the United States imposing not only an additional 10 percent of tariffs on Chinese imports, but the figure being raised to 25 percent. This is likely to be a protracted trade war without a quick resolution."

US President Donald Trump vowed last week to impose a 10 percent tariff on $300 billion of Chinese imports from Sept. 1, adding that it can be raised beyond 25 percent. Some economists reckon the global economy could slip into recession in the coming months if the tariff is increased to 25 percent.

The Trump administration's dramatic move against China hastened the risk aversion seen in global markets this week. On Monday, China let the yuan slide in response to the latest US tariffs, which are expected to further aggravate trade tensions between the world's two largest economies.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.75 percent after brushing its lowest since January. It has lost 3.7 percent so far this week.

The Shanghai Composite Index retreated 1.4 percent.

Japan's Nikkei shed 0.7 percent, Australian stocks fell 2.3 percent and South Korea's KOSPI slid 0.9 percent.

"Hedge funds and other speculators who have bet on stocks have not finished closing down their positions yet. There will likely be another wave of selling in stocks," said Masanori Takada, cross asset strategist at Nomura Securities.

"The sudden surge in volatility is likely to prompt risk parity players to pull out possibly up to $20 billion from global stocks and buy bonds."

YUAN'S SLIDE STALLS

The onshore Chinese yuan fell to an 11-year low early on Tuesday, brushing 7.0699 per dollar.

In a symbolic move, Beijing let the yuan breach 7-per-dollar on Monday for the first time since late 2008. But the Chinese central bank's mid-point fixing on Tuesday of 6.9683 was firmer than market expectations, and the yuan's retreat slowed.

China's offshore yuan stretched the previous day's slide, and briefly weakened to 7.1382, the lowest since international trading in the Chinese currency began in 2010. But it pulled back to 7.0469 after Beijing's firmer-than-expected yuan fixing on Tuesday.

The Japanese yen, a perceived safe-haven in times of market turmoil and political tensions, touched a seven-month high of 105.520 per dollar before dropping back to 106.700 in volatile trade.

The Swiss franc, another currency sought in times of turmoil, has gained roughly 1 percent against the dollar this week. It set a six-week peak of 0.9700 franc per dollar.

Investor demand for other safe-havens such government bonds also remained high as risk aversion gathered momentum.

The 10-year US Treasury yield extended sharp falls overnight and declined to 1.672 percent, its lowest since October 2016.

Japan's 10-year yield fell to a three-year trough of minus 0.215 percent.

Brent crude oil futures plumbed a seven-month low of $59.07 per barrel as the trade war raised concerns about lower demand for commodities. Brent last traded at $60.41 for a gain of 1 percent as bargain hunting kicked in.

Spot gold advanced to a six-year peak of $1,474.80 an ounce as investors sought the safety of the precious metal.

source: news.abs-cbn.com

US designates China as a 'currency manipulator'

WASHINGTON - The United States on Monday formally named China a currency manipulator, accusing Beijing of weakening the yuan as the two countries' trade war escalates.

The move came as China earlier on Monday allowed its currency to fall to its weakest levels against the dollar in almost a decade, prompting irate Twitter outbursts from US President Donald Trump and sending global equities markets diving into the red.

Treasury Secretary Steven Mnuchin "under the auspices of President Trump, has today determined that China is a currency manipulator," the US Treasury Department said in a statement.

The yuan fell below 7 to the dollar on Monday, days after Trump announced plans to raise tariffs on another $300 billion in Chinese imports, while accusing Beijing of failing to live up to commitments in negotiations to end the two nation's year-long trade war.

The move marked a sudden change of US policy.

Trump had campaigned on a pledge to designate China a currency manipulator, but since he took office the Treasury had refrained from doing so -- until Monday.

As a result, Mnuchin will engage the International Monetary Fund "to eliminate the unfair competitive advantage created by China's latest actions," the Treasury said.

In its most recent report, the department had kept China on a "monitoring list" of countries subject to close scrutiny due to their currency practices.

dg/cs

source: news.abs-cbn.com

Global stocks tumble on tariff moves as Chinese yuan sinks

LONDON - World stock markets plunged Monday and the Chinese yuan fell sharply in reaction to US President Donald Trump vowing to impose fresh tariffs on Chinese goods in the latest trade war flare-up.

Europe's stocks dived about two percent, mirroring heavy falls in Asia -- where Hong Kong tumbled nearly three percent as it was hurt also by ongoing pro-democracy protests.

"European equity markets have been rocked by the rising trade tensions between the US and China," said IG analyst David Madden.

"There is a feeling that China could inflict a lot more pain on the US in terms of the trade spat, and many traders are worried the economic conflict will rumble on for some time."

Trump's announcement late last week means virtually all of the $660 billion in annual merchandise trade between the world's two biggest economies will be subject to punitive tariffs, with the latest duties to take effect September 1.

The news saw all three major Wall Street indices slump to their lowest levels since June, with the S&P 500 and Nasdaq recording their worst weekly losses of 2019 on Friday.

On Monday, the DJIA again came off to a weaker start, losing around 400 points in the first moments of trading.

"US stocks are extending last week's largest drop of the year," noted Charles Schwab analysts.

In China, the yuan dropped to its lowest level to the dollar since August 2010, fuelling speculation that Beijing was allowing its currency to decline to support exporters and offset Trump's latest threat to hit $300 billion in Chinese goods with 10 percent tariffs.

The US leader regularly accuses the Chinese central bank of artificially weakening the yuan -- charges long denied by Beijing.

CHINA'S DIG AT TRUMP?

On Monday, the dollar soared to 7.0499 onshore yuan -- the Chinese currency's weakest level since 2008.

The dollar surged to 7.1114 offshore yuan, which is more freely traded.

"The fact the Chinese central bank allowed the yuan to fall through the 7.0 mark against the US dollar without intervening is a clear indication that Beijing means business," Madden added.

"The softness in the Chinese currency should assist domestic exporters, but it could be construed as a dig at the Trump administration."

The dollar, however, weakened against other currencies, including the euro, yen and the pound.

Beijing has vowed to hit back if Washington goes ahead with its latest threat, while news that demand for US exports had weakened underscored concern that trade was becoming a trouble spot for economies worldwide.

'A LOT MESSIER'

"China is likely to drag out their response and retaliate in many ways against the US trade measures," warned analyst Edward Moya at trading firm Oanda.

Negotiators from both nations are expected to reconvene in Washington in early September for another round of talks after last week's discussions in Shanghai, but investors remain nervous, he added.

The yuan's depreciation spurred a sell-off across Asian equity markets.

source: news.abs-cbn.com

China promotes use of yuan among Southeast Asian nations

SHANGHAI—China published a five-year blueprint on Friday seeking economic and financial integration between southern Guangxi province and Southeast Asia, representing Beijing’s latest effort to promote international use of the yuan currency.

China’s state council, or cabinet, has agreed to build Guangxi, which borders Vietnam, into a financial gateway between the Association of Southeast Asian Nations (ASEAN) and China, the world’s second biggest economy, the People’s Bank of China (PBOC) said in a statement on its website.

As a key objective of the plan, China will promote the use of the yuan among ASEAN countries, with plans to facilitate cross-border trade settlement, currency transactions, investment and financing in the Chinese currency.

More specifically, China will encourage the use of yuan in its commodities trade with ASEAN, support yuan-denominated lending to projects in the region, seek to build offshore yuan markets and promote cross-border financial investments.

The plan, which spans five years until the end of 2023, was jointly published by 13 Chinese government agencies including the central bank, the foreign exchange regulator, the securities watchdog and the ministry of finance.

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Asia stocks reach 5-week high, yuan makes big weekly gains

TOKYO -- Asian stocks inched up to five-week highs on Friday, after Chairman Jerome Powell reiterated the Federal Reserve will be patient about raising interest rates and news that trade talks between Washington and Beijing are moving to higher levels.

As the Fed's dovish stance kept a lid on the dollar, China's yuan rose to its highest levels in more than 5 months and was on course for its biggest weekly gains since the 2005 revaluation in onshore trade.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent to the highest levels since Dec. 6, while Japan's benchmark Nikkei advanced 0.7 percent. Shanghai Composite Index initially rose 0.8 percent, but that was pared to just 0.1 percent.

Wall Street extended its rally into a fifth straight day on Thursday in a whipsaw trading session as investors responded to mixed comments by Powell, while a warning from Macy's pummeled retail stocks.

At the Economic Club of Washington, Powell reiterated the views of other policymakers that the Fed would be patient about interest rate hikes.

Major US stock indexes also quickly recovered from brief losses after Powell said that the Fed's balance sheet would be "substantially smaller".

"The word 'patient' is used often when the Fed's policy direction is still tightening but its next rate hike can wait for a considerable time. So risk assets now enjoy support from what we can call Powell put," said Tomoaki Shishido, economist at Nomura Securities.

"Similarly, Trump also softened his stance on China after sharp falls in stock prices. He has offered an olive branch to China and there's no reason China would not want to accept it," he said.

US and Chinese officials are working on arrangements for higher-level trade talks after mid-level officials this week discussed US demands that would require structural change in China to address issues such as IP theft, forced technology transfers and other non-tariff barriers.

US Treasury Secretary Steven Mnuchin said late on Thursday that Chinese Vice Premier Liu He will "most likely" visit Washington later in January for trade talks.

"For markets the upshot is that the outlook for 2019 is looking better as tensions de-escalate, creating the potential for a re-rating of risk assets as the tail risk of a near-term trade war is partially priced out," said Jeremy Lawson, chief economist at Aberdeen Standard Investments in Edinburgh.

"This is especially the case in Asia," he added.

Still, fundamental tensions between the US and China "are unlikely to go away and there is a high likelihood that any agreement to suspend tariffs eventually breaks down when it becomes clear that Trump’s objectives cannot really be met."

Some investors are also increasingly wary of lingering disputes in Washington over a wall Trump wants on the US-Mexico border, which has led to a weeks-long partial government shutdown.

Flanked by border agents who are going without paychecks during the shutdown, Trump again threatened on Thursday to declare a national emergency to bypass Congress to fund a wall.

In the foreign exchange markets, the dollar was broadly soft after a small rebound from three-month lows the previous day.

The dollar index, measuring it against major peers, dipped 0.1 percent to 95.38.

The euro firmed 0.2 percent to $1.1523, while the dollar dipped 0.1 percent to 108.28 yen.

The yuan, both onshore and offshore, climbed to the highest levels since late July, aided by a weaker dollar and rising hopes of progress in the US-China talks.

In onshore trade, the Chinese currency has risen 1.6 percent this week, the biggest gain since July 2005 when Beijing abandoned the yuan's peg to the dollar.

US Treasury debt prices erased early gains after a soft 30-year bond auction and in reaction to Powell's comments on the Fed "substantially" reducing the size of its balance sheet.

The 10-year U.S. Treasuries yield last stood at 2.728 percent.

Crude prices held near one-month highs, but a more than week-long in oil rally slowed as optimism surrounding US-China trade talks faded a little.

In Asian trade, West Texas Intermediate crude futures slipped 0.6 percent to $52.30 per barrel. 

source: news.abs-cbn.com

Asian stocks set to gain on US data; yuan in focus

HONG KONG - Asian stocks are poised to rise on Monday and the dollar firmed against a basket of currencies after the latest payrolls data highlighted US jobs and wages growth.

Financial markets will be carefully tuned to President-elect Donald Trump's news conference on Wednesday with his views on global trade and China under close scrutiny, although investors would be wary of chasing any big market moves higher.

MSCI's ex-Japan Asia-Pacific shares index was broadly flat, holding near one-month highs. Australia's S&P/ASX200 rose 0.5 percent. Japan is closed for a holiday.

US stocks ended at record highs fueled by optimism about Trump's plans to stimulate the economy with lower taxes and infrastructure spending. Both the Nasdaq and the S&P 500 ended at record highs.

In currencies, the dollar started the week on a firm note after Friday's data showed a rebound in US wages pointing to sustained labor market momentum and more rate increases from the US Federal Reserve.

"With expectations of more rate hikes on the horizon, we believe the dollar will resume its upward trend versus emerging market Asia currencies in the coming weeks," Gao Qi, an FX strategist at ScotiaBank in Singapore wrote in a client note.

The dollar was trading at 117.14 yen, nearly 2 percent above the Friday's lows of around 115. It was steady at 102.23 against a basket of currencies

China's yuan will be under particular scrutiny after weekend data showed foreign exchange reserves declined to near six-year lows as authorities stepped up their intervention to protect the currency.

Bonds were stung by the strong US data with both two-year and 10-year US Treasury yields inching higher as market participants pondered the probability of more rate hikes in 2017.

The yield on two-year U.S. Treasury notes was perched at 1.21 percent versus Thursday's low of 1.17 percent.

Oil prices edged lower thanks to a stronger dollar and growing concerns over whether OPEC producers would stick to an agreement to cut output. Brent crude futures were down 0.2 percent in early trade.

source: news.abs-cbn.com

Dollar resumes ascent, Asia keeps wary eye on yuan

SYDNEY - The US dollar held on to broad gains on Tuesday, resuming its ascent after last week's brief wobble as the prospect of rising US interest rates this year kept sentiment bullish on the long-run.

A holiday in Japan made for quiet early trade, leaving the dollar steady at 117.36 yen but well up on Friday's trough of 116.05.

Against a basket of currencies, the dollar was firm at 102.800 having climbed 0.6 percent overnight.

The euro was sulking at $1.0461 despite strong manufacturing data for the currency bloc, having surrendered all of Friday's brief spike to $1.0700.

A dearth of liquidity was largely behind the wild swings, though the market is now so long dollars that it is vulnerable to sudden corrections.

Data released on Friday showed speculators increasing their bets on the dollar in the week up to last Tuesday after cutting positions for the first time since October in the previous week.

The greenback had soared to 14-year highs in December on speculation the US Federal Reserve will hike rates as many as three times this year, and that President-elect Donald Trump will stoke growth and inflation with debt-funded tax cuts.

Treasury yields have jumped in anticipation while central banks in the euro zone and Japan are still working to keep their short-term yields deep in negative territory.

As a result, US two-year debt pays 200 basis points more than German debt and 138 basis points more than Japanese paper.

"Following a period of consolidation between now and late January, we believe the USD will put on another 10 percent of gains over the next eighteen months," said Richard Grace, chief currency strategist at CBA.

Grace argued Trump's proposed plans for a US company tax cut could be particularly bullish for the dollar since it would likely encourage a wave of repatriation by domestic firms and demand for US equities by foreign investors.

"We anticipate some twelve-to-eighteen months of USD strength, beginning when the Trump Administration gets its tax cuts through the Congress," he added, citing late March as likely timing for passage.

Dealers are also keeping a wary eye on the yuan as annual quotas covering how much foreign currency Chinese individuals can buy are reset this week.


China's foreign exchange regulator said on Saturday that the $50,000 annual individual quota will remain unchanged, but some banks have told customers that purchases of foreign currency for buying property, securities and life insurance were not allowed.

The new rules on overseas currency transfers are not capital controls, the official Xinhua news agency reported,

There has been talk investors could rush to sell the yuan fearing further depreciation in the currency, forcing the country's central bank to run down its reserves to head off a self-fulfilling spiral.

Some in the market have hedged that risk by shorting the Australian dollar, typically used as a liquid proxy for the yuan. The Aussie was stuck at $0.7179 on Tuesday, just above the recent seven-month trough of $0.7160.

source: news.abs-cbn.com

China expands forex basket, dilutes role of dollar

BEIJING - China said Thursday it would almost double the number of foreign currencies it uses to determine the official value of the yuan, thereby diluting the role of the dollar.

The move to expand the foreign exchange basket used to set a daily reference rate for the yuan, or renminbi, will help Beijing shake off the weakness of the currency against the greenback and project an image of stability in the unit.

The dollar will see its prominence in the basket dented by the newcomers, with its share falling from 26.4 percent to 22.4 percent. It is followed by the euro at 16.34 percent.

Among the 11 currencies to join the 13 existing ones are the South Korean won, the South African rand, the Hungarian forint, the Turkish lira and the Polish zloty, according to the Chinese Foreign Exchange Trade System, which is run by the central bank.

The expansion is designed to "strengthen the representativeness" of the basket and will come into force on January 1, it added.

"The move is aim (ed) to reduce the impact of dollar strength on the overall performance of the basket," said Christy Tan, head of markets strategy in Hong Kong at National Australia Bank Ltd.

China's currency has been under pressure from uncertainty over the health of the world's second largest economy, massive capital outflows and the sharp rise in the dollar following Donald Trump's election victory and anticipation of US interest rate hikes.

However, when valued against the "basket of currencies" as a whole, the yuan fares much better, even seeing a rise over the past four months.

China's communist regime likely hopes the move will project an image of stability and strengthen the international stature of the renminbi after it was welcomed by the International Monetary Fund into its elite currency basket in October.

source: news.abs-cbn.com

China forex regulator tightens controls to stem outflows: sources

SHANGHAI/HONG KONG - China is stepping up measures to stem capital outflows after the yuan currency skidded to more than eight-year lows, taking aim at outbound investment, sources said on Tuesday.

The State Administration of Foreign Exchange (SAFE) has begun vetting transfers abroad worth $5 million or more and is stepping up scrutiny of major outbound deals, including those with prior approval, sources with knowledge of the new rules said.

Capital outflows through both legal and illegal channels have added pressure to the yuan's slide. The Chinese currency has lost nearly 6 percent of its value against the dollar so far this year.

Sources said the forex regulator told banks about the new rules on Monday, the same day the government said it would stick to its "going out" strategy of encouraging outbound investment.

SAFE did not respond to a Reuters request for comment.

"Previously, only forex transfers worth $50 million or more needed to be reported to SAFE. Now, the threshold has been drastically lowered to $5 million, and covers both foreign currency and yuan," said one of the sources with direct knowledge of the rules.

"All we can do is to ask clients to be patient, and tell them that the transaction is being vetted by SAFE for authenticity and may not be approved."

The fresh restriction applies to transfers abroad under the capital account, for transactions such as portfolio or foreign direct investment.

The source said that even if an outbound investment had already obtained approval to buy foreign exchange, but the money had not been fully transferred, the remainder of the quota was now subject to further approval if it exceeds $50 million, which is regarded as a "large sum".

Two other sources confirmed the new rules.

Chinese state-owned banks were seen selling dollars in the onshore foreign exchange market for a second straight day on Tuesday, in what traders said appeared to be a bid to support the yuan.

The yuan has rebounded around 0.5 percent in the past few sessions.

source: news.abs-cbn.com

China's forex reserves fall to 5-year low in September

BEIJING - China's mountain of foreign exchange reserves dropped around $19 billion in September to a five-year low, government data showed, with the central bank spending heavily to defend its currency against capital outflows.

The world's largest currency hoard fell to under $3.17 trillion, the People's Bank of China (PBOC) said on its website Friday, below median analyst forecasts of $3.18 trillion in a Bloomberg News survey.

It was the third straight month of declines and brought China's reserves to their lowest level since April 2011, Bloomberg said.

Analysts said the decline indicated China was selling foreign exchange to buy its yuan currency amid capital flight spurred by slowing growth in the world's second largest economy.

The data came days after the yuan's official entry into the International Monetary Fund's elite SDR basket of currencies, a symbolic coup for Beijing policymakers who are seeking to expand international use of the currency.

In the months preceding the currency's formal inclusion, China's central bank spent "heavily" to keep the yuan's value stable, roughly $27 billion last month, said Julian Evans-Pritchard of Capital Economics.

But "with the inclusion of the renminbi in the SDR basket now complete, the PBOC may no longer feel the need to intervene as heavily to counter capital outflows", he said, adding that US Federal Reserve rate hikes could increase depreciation pressure on the yuan in coming months.

source: www.abs-cbnnews.com

China's yuan joins elite club of IMF reserve currencies

China's yuan joins the International Monetary Fund's basket of reserve currencies on Saturday in a milestone for the government's campaign for recognition as a global economic power.

The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.

The IMF is adding the yuan, also known as the renminbi, or "people's money", on the same day that the Communist Party celebrates the founding of the People's Republic of China in 1949.

"The inclusion into the SDR is a milestone in the internationalisation of the renminbi, and is an affirmation of the success of China's economic development and results of the reform and opening up of the financial sector," the People's Bank of China said in a statement.

China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.

The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing's often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November's election.

China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.

Some China watchers also fear that Beijing's commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

U.S. Treasury Secretary Jack Lew said on Thursday the yuan was "quite a ways" from true global reserve currency status. The new IMF status recognises the "enormous" change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said.

"Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency," he said.

Capital Economics said inclusion of the currency in the IMF's SDR basket will have minimal impact on foreign demand for yuan assets, so "offers little support" for the currency.

"If anything, the risk is that official intervention to keep the renminbi stable ahead of its inclusion will subsequently be paired back, allowing for renewed deprecation," it said in a research note.

The IMF on Friday fixed the relative amounts of the five currencies in the basket for five years, based on their average exchange rates over the past three months. (Reporting by Nathaniel Taplin; Additional reporting by Ben Blanchard; Editing by Neil Fullick)

source: www.abs-cbnnews.com