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Tuesday, November 12, 2019

Team Macron Ready to Ride Out Anything French Unions Throw at It

(Bloomberg) -- Emmanuel Macron and his team are digging in for another harsh winter.

Train drivers, hospital porters and civil servants are planning strikes in France’s major cities in protest at the president’s plans to change the pension system. Teachers, firefighters and even some police are considering their own action. And the Yellow Vest activists are urging, well, basically anyone with an ax to grind to join in.

But the government is determined that it won’t back down, according to Prime Minister Edouard Philippe.

“Every time we touch the pension system, there are strikes,” Philippe, 48, who is in charge of steering the president’s domestic agenda, said in an interview Tuesday. “I’m not saying we will avoid strikes -- even long-running ones -- but my aim is to show the French people that the future system is more advantageous, fairer, and more solid for them.”

Philippe’s ability to push through his boss’s pension policy -- dubbed “the mother of all reforms” by some in France -- will be closely watched by investors asking whether Macron will make good on his vows to turn around the French state. Or whether he’ll be thwarted by the familiar backlash on the streets that ultimately defeated the bold intentions of many of his predecessors.

The stakes are high for the 41-year-old president.

Global Protests

From Iraq to Chile, a rash of protests has shaken governments around the globe. Macron himself watched last winter as the Yellow Vest protests gave way to rioting that trashed the boutiques and cafes in the heart of Paris.

Why Yellow Vests Remain Thorn in Macron Presidency: QuickTake

After months of violence, Macron abandoned his budget commitments to Germany and unleashed 17 billion euros ($18.7 billion) of extra public spending to appease the protesters.

But the danger isn’t over.

Philippe Martinez, the head of France’s most disruptive union, the CGT, is calling on anyone with a grudge against the government to take advantage of the Dec. 5 strikes to air their grievances. The risk for Macron and his premier is that a protest against pensions sucks in a broad spectrum of malcontents to become a broader movement that would be far more difficult to contain.

Jacques Chirac’s attempt to fix the French pension system in 1995 backfired so spectacularly that he eventually had to ditch his prime minister, Alain Juppe, in order to save his job. Francois Fillon survived his attempt to deliver a similar change -- but only for the pension system for civil servants -- for then-President Nicolas Sarkozy in 2010, but he failed to overcome the opposition of the unions all the same.

Startup Nation

Macron has made it a badge of honor to contain the benefits system as he aims to make France the most attractive destination in Europe for investors. On the tech front, the French government’s aggressive push to develop its economy is paying off with the number of startups continuing to soar, Roland Berger, a global consulting firm, said this month.

Corporate-tax cuts and labor-law reform, the core of Macron’s economic doctrine, have also helped drive a surge in employment. Bank of France chief economist Olivier Garnier has described the pace of job creation as “remarkable.”

While some of that performance is down to the spending boost triggered by the Yellow Vests, it also suggests that Macron’s efforts to raise French growth in the long run are starting to bear fruit.

Yet the president is walking a fine line.

Rising Inequality

Inequality is rising as well as output, and cuts in public services help fuel a narrative that this is a government out-of-touch with the concerns of ordinary folk outside of the big cities. His unpopular pension plans are another focus of resentment.

The national statistics office says that inequality registered its sharpest increase since 2010 last year after Macron introduced a tax break for investors. The poverty rate rose to 14.7% from 14.1% in 2017, it calculated.

“We want to hold negotiations in order to convince people,” Philippe said, suggesting that the government may still be prepared to sweeten the deal for unions.

“Beyond demonstrations and the opposition, I hope we’ll manage to show that the future system is better adapted” to the needs of the country, he said. “But I do expect a passionate French debate.”

Original Article

Alibaba Reportedly Wins Approval for $10B Hong Kong Listing

© Reuters.  © Reuters. - Alibaba Group Holdings (NYSE:BABA) has won approval from the Hong Kong Exchanges & Clearing for a mega listing in Hong Kong that could raise at least $10 billion for the company, Bloomberg reported on Wednesday citing people familiar with the matter.

The person said Alibaba is aiming to raise as much as $15 billion in a listing that would become the largest issuance of stock in Hong Kong since 2010.

A representative for Alibaba didn’t immediately respond to requests for comment.

In 2018, Hong Kong introduced new listing rules that allow tech companies with dual-class shares structures to issues shares in the city after resisting such a change for a decade.

Alibaba was said to be already considering a listing in Hong Kong over the summer. The plan was suspended due to the pro-democracy protests that rocked the financial hub, reports suggested back then.

Original Article

Singapore Aims to Carve Out Niche in AI Race Led by U.S., China

(Bloomberg) -- Singapore has unveiled an ambitious strategy to become a global leader in artificial intelligence by 2030, attempting to carve out a niche for itself in an increasingly politicized technology.

Deputy Prime Minister Heng Swee Keat outlined five key areas the island nation is targeting for AI applications including in transport and logistics planning, provision of municipal services, detection and management of chronic diseases, personalized education and border control. The country is planning to eventually fully automate immigration clearance for all travelers.

“Singapore is ready to deploy artificial intelligence at a national scale,” Heng, who also serves as finance minister, said in a speech at the annual Singapore Fintech Festival. “We aim to be a leader in developing and deploying AI solutions by 2030.”

Heng said the first step in health care is to deploy SELENA+, an AI system that is able to detect three major eye conditions, including diabetic eye disease, from retina photographs. “These solutions can be applied beyond Singapore, to the region and the world,” he said.

China and the U.S. are two AI superpowers that have dominated research but ongoing trade tensions between them is cooling the international collaboration that underpins technological innovation. Their AI dominance has also raised questions about how smaller countries like Singapore can influence and participate in emerging technologies.

Singapore’s approach is to target specific AI applications for development and deployment at scale in specific industries. It’s investing S$500 million ($368 million) on AI research through 2020 and has attracted U.S. and Chinese companies with policies that support AI research.

Tang Xiao’ou, co-founder of China’s SenseTime Group Ltd., said in a statement Singapore’s national AI strategy will help “establish our Singapore base as a living lab” for research.

“Silicon Valley and Beijing have been global leaders in AI research and developing AI-first startups,” said Andrew Ng, founder and chief executive officer of Landing AI. “Singapore has all the pieces needed to become a regional AI hub.”

Other key details of Singapore’s national AI strategy and Heng’s speech:

  • Singapore will create a new National AI Office to set the agenda for AI and bring together efforts across research, industry and government.
  • Singapore will launch AI Marketplace, a new platform to support small and medium enterprises and startups.
  • The Monetary Authority of Singapore will introduce “Veritas,” a framework for AI governance in the financial industry.
  • The Infocomm Media Development Authority and the Singapore University of Technology and Design will start a new research-industry-government collaboration to leverage AI applications for smart estates.
Original Article

Views shift sharply on whether BOJ's next move will be easing or tapering

Views shift sharply on whether BOJ's next move will be easing or taperingViews shift sharply on whether BOJ's next move will be easing or tapering

By Kaori Kaneko

TOKYO (Reuters) - Economists are largely split on the Bank of Japan's next move, according to a Reuters poll, with a growing number saying the central bank would unwind stimulus as its next course of action.

While a narrow majority of analysts still expect the BOJ to ease further, the sharp rise in the opposing camp - tripling from a month earlier - comes even after the central bank gave its strongest signal to date at its end-October meeting that it may cut interest rates in the near future.

Signs of an easing in the U.S.-China trade war and a reversal of the yen's recent strengthening are prompting some economists to shift their forecasts.

"There are hopes for progress in the U.S.-China trade talks and the deterioration in the global economy has also relatively eased," said Hiroaki Mutou, chief economist at Tokai Tokyo Research Institute.

"The risk of excessive yen appreciation has also receded. There is no need for the BOJ to ease policy proactively."

The survey, taken Nov. 6-12, found that 23 of 41 economists, or 56%, expect the BOJ's next step will be further easing, down sharply from 85% in last month's poll.

By contrast, 18 economists, or 44%, believe unwinding stimulus will be the BOJ's next course of action, a dramatic jump from just six economists in the previous survey. All 18 said the BOJ's unwinding of stimulus would come in 2021 or later.

The central bank kept policy steady at its Oct. 30-31 review but tweaked its forward guidance to say it would maintain ultra-low rates or even cut them for as long as needed to gauge overseas risks.

Moreover, Governor Haruhiko Kuroda has long pledged to ease further without hesitation if momentum towards the BOJ's 2% inflation target is lost.

Although the bank maintains that momentum remains intact, core inflation running around 0.3% means the BOJ still has its work cut out, keeping expectations skewed towards the easing side for now.

"The BOJ clearly showed its bias for further easing by tweaking its forward guidance," said Kazuma Maeda, economist at Barclays (LON:BARC) Securities Japan.

"We believe the BOJ is still looking for the timing to cut its minus interest rate in the future."

Those who expect further easing forecast a wide range of timelines, including four saying said it could happen as early as December and seven saying not until at least 2021.

Asked what dollar/yen level would prompt the BOJ to ease further, about 67% of the economists said when the yen strengthened beyond 100 yen against the dollar.

The yen stood around 109.00 yen per dollar on Wednesday.

The economy is expected to shrink an annualized 2.5% in the current quarter, with consumer spending hit by an increase in the sales tax, but it will likely grow 0.7% this fiscal year to March, the poll found.

Economic growth is expected to slow to 0.4% in the following year.

The core consumer price index, which includes oil products but not fresh foods, will grow 0.7% this fiscal year and 0.6% next year, according to the poll.

Japan rolled out a twice-delayed increase in the sales tax to 10% from 8% on Oct. 1, a move that is seen as critical for fixing the country's tattered finances.

Although the government has already taken steps to mitigate the impact on consumption, there are worries the higher levy could hit the economy.

Underscoring the pressure on growth, Prime Minister Shinzo Abe asked his cabinet last week to compile a package of stimulus measures and build infrastructure to cope with large natural disasters.

(For other stories from the Reuters global long-term economic outlook polls package see)

(Polling by Daniel Leussink in Tokyo and Shaloo Shrivastava in Bengaluru; Editing by Chris Gallagher) OLUSECON Reuters US Online Report Economy 20191113T041116+0000

Original Article

PBOC Wants ‘Controllable Anonymity’ in China’s Digital Currency

© Reuters.  PBOC Wants ‘Controllable Anonymity’ in China’s Digital Currency© Reuters. PBOC Wants ‘Controllable Anonymity’ in China’s Digital Currency

(Bloomberg) -- China wants to balance functionality with concerns about anonymity as it works toward launching a digital version of the yuan, according to an official from the People’s Bank of China.

“The demand from the general public is to keep anonymity by using paper money or coins,” according to Mu Changchun, the director-general of the PBOC’s Institute of Digital Currency. “We are not seeking full control of information on the general public,” rather using “controllable anonymity” for “people who demand anonymity in their transactions. At the same time it will keep the balance” to allow for things like anti-money-laundering actions and combating the financing of terrorism.

Read: Why China’s Rushing to Mint Its Own Digital Currency: QuickTake

China isn’t targeting capital markets or trade-financing centers with its digital currency plans at this time, Mu said, speaking on a panel at the Singapore FinTech Festival on Tuesday. Those things may happen some time in the future, he said, “but it’s far away from us.”

The PBOC is poised to become the first major central bank to issue a digital version of its currency. According to new patents registered by the PBOC and official speeches, it could work something like this: Consumers and businesses would download a digital wallet on their mobile phone and load the digital cash from their account at a commercial bank -- similar to going to an ATM. They then use that like cash to make and receive payments with anyone else who also has a digital wallet.

Read: From Pigs to Party Fealty, China Harnesses Blockchain Power

Original Article

Trump Threatens Substantially More Tariffs If No China Deal

© Reuters.  Trump Threatens Substantially More Tariffs If No China Deal© Reuters. Trump Threatens Substantially More Tariffs If No China Deal

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.

President Donald Trump said the U.S. will increase tariffs on China in case the first step of a broader agreement isn’t reached.

“If we don’t make a deal, we’re going to substantially raise those tariffs,” he said Tuesday in a speech to the Economic Club of New York. “They’re going to be raised very substantially. And that’s going to be true for other countries that mistreat us too.”

China is “dying” to make a trade deal with the U.S., Trump said, adding that he’d only sign it if it’s good for American companies and workers. Still, “we’re close -- a significant phase one deal could happen, could happen soon.”

Trump and Chinese President Xi Jinping had planned to sign “phase one” of the deal at an international conference this month in Chile that was canceled because of social unrest in that country.

Shanghai stocks opened lower and the yuan was weaker against the dollar on Wednesday. Other Asian markets also declined. Hong Kong’s benchmark declined 2% as the city faced heightened tensions.

A new site for the signing hasn’t been announced. U.S. locations for the meeting that had been proposed by the White House have been ruled out, according to a person familiar with the matter. Locations in Asia and Europe are now being considered instead, the person said, asking not to be identified because the discussions aren’t public.

Trump reiterated complaints about China’s ascendance in the global economy. “Nobody’s cheated better than China,” he said. “The theft of American jobs and American wealth is over.”

U.S. stocks have rallied to records in recent days partly on optimism that tensions are cooling in an 18-month dispute involving tariffs on some $500 billion in trade between the world’s two largest economies. The S&P 500 Index was up about 0.3% as Trump delivered his remarks.

The economic stakes of a prolonged trade war are rising for both countries.

China’s exports and imports continued to contract in October, though slightly less than forecast by economists. The nation’s trade surplus with the U.S. widened in the month to $26.4 billion -- heading in the opposite direction from the narrowing that Trump has called for to balance the countries’ trading relationship.

(Updates with markets in fifth paragraph.)

Original Article

Singapore Should Revise Water Deal or Risk Crisis, Malaysia Says

(Bloomberg) -- Malaysia renewed its call for neighboring Singapore to be more open to revising a water supply agreement inked in 1962 or suffer shortages as reserves shrink.

The water reserve margin in the southern state of Johor, which supplies raw water to Singapore, has dropped to 4% and will reach zero by the third quarter of 2020 if nothing is done to mitigate the decline, Xavier Jayakumar, Malaysia’s minister of water, land and natural resources, said in response to questions in parliament Tuesday.

Bringing that level up to the recommended minimum of 10% requires large investment, Xavier said. In the event of a water crisis, Malaysia will put the needs of people in Johor over those in Singapore, he said.

In April, leaders of the two countries promised to reach a friendly resolution to the long-running water spat. Singapore relies on its neighbor for nearly half of its water needs through agreements that date back to as early as 1927. Malaysia now wants to revise the prices set out in the remaining 1962 accord, which gives Singapore 250 million gallons of raw water daily at 3 sen per 1,000 gallons, with Malaysia buying back a portion of treated water at 50 sen (12 cents) per 1,000 gallons.

Original Article