News Summary

Hello again from Hong Kong. Kicking off with the Chinese
National Peoples Congress parliament, Premier Li Keqiang
laid out policies and goals for the year that aim to stimulate
growth and encourage restructuring of industries afflicted
with overcapacity.
Premier Li set the growth target range 6.5-7% this year. For
the first time in two decades, Beijing adopted a range for its
growth target rather than a specific number, giving itself
more flexibility in a system where hitting stated goals
remains politically important.
The government will address issues of zombie enterprises
and Li said 10 million jobs would be generated in urban
areas and unemployment would be kept below 4.5% in cities.
He also said to leave room for more spending; the targeted
budget deficit will be 3% of gross domestic product this year,
up from 2.3% in 2015.
China plans to ease controls on overseas investment and
access for foreigners to Chinas capital markets and pledged
that the Yuan, would become fully convertible by 2020.
China will cap annual energy consumption at 5 billion metric
tons of coal equivalent by 2020.
The reaction? FT thinks China set its fiscal deficit target far
below expectations, highlighting governments reluctance to
expand fiscal stimulus aggressively even as it seeks to
cushion an ongoing slowdown that has already prompted
monetary easing. Analysts still expect a budget shortfall of
3.5 per cent, noting that Chinas actual fiscal deficit is
generally larger than the headline figure, since some
spending occurs through off-budget channels. The official
target however is a potent signal of the overall fiscal stance.
WSJ also put out a piece - China has tweaked its economic
blueprint, but the results should be more of the same: debtfuelled, sluggish growth.
In my opinion, this is a strong message from China. First of
all, the authorities are aware of the jobs losses as they
tackle the overcapacity and those zombie enterprises. Last
week, we read that China government will lay off 5-6 million
workers in next few years. There will be ripple effects, thus
Premier Li said 10 million jobs will be created. Local
governments have eased the property curbs, which is a good
sign. As reported, money is already flowing into property in
major cities such as Beijing and Shanghai.

point to weaker growth and a return to deflation. ECB is

widely expected to cut overnight deposit rate to -0.4% from0.3%; Draghi is to announce a 10bn monthly boost to the
existing 60bn-a-month QE (page 8).
In the FT, Norway is considering ploughing billions of dollars
on Arctic installation to replace aging fields but the country,
which isnt part of the EU, would like to receive assurances
that the bloc will continue to take its gas. Norways
marketing push illustrate the challenges facing Europes only
petrostate at a time when moribund energy prices are
threatening the underpinnings of a welfare society largely
built on sharing hefty oil windfall (page 6).
Spain's Socialists leader Pedro Sanchez failed to win the
confidence of parliament to become PM, opening a new
round of talks between parties who now have just two
months to break a 10-week deadlock and avoid a fresh
election. In the wake of Mr. Sanchezs failed bid, the four
main parties and six smaller ones will have until May 2 to
negotiate alternative power-sharing arrangements. If they
fail, Spanish law requires that parliament be dissolved and a
new election held on June 26 (page 6).
Canadas largest pension fund, the Canada Pension Plan
Investment Board said it would support Corus Entertainment
2.65 billion Canadian dollar bid to acquire the broadcasting
unit of its sister company Shaw Communications (page 9).
Nikkei on Sunday reported that Key iPhone assembler Hon
Hai Precision Industry will sign an agreement to acquire
Sharp, perhaps only by Wednesday. The two sides had agreed
to try to wrap up a deal by Monday, but according to the
source, Wednesday is now the earliest the acquisition could
be made (page 10).
In Avery Shenfelds The Week Ahead, on March 9 Bank of
Canada should talk dovishly to lean against the strengthening
C$, but a rate move seems unlikely as it waits to hear how
much stimulus is delivered in the federal budget later in the
month. Housing starts could see a big jump to put them
better in line with what permits have been suggesting is the
underlying trend. Although recent growth data have
improved, employment has some catching up to do to earlier
economic weakness, increasing the odds of a negative
headline print in Fridays report.
http://research.cibcwm.com/economic_public/download/m
ar04_16.pdf

Reports on China from page 2-5.

China will publish their FX reserves on Monday March 7.
Previously at $3.23 trillion, market is look for small down to
$3.16 trillion. On Tuesday March 8, Chinese trade balance
followed by CPI and PPI on March 10.
Fridays NFP - US payrolls increased by 242,000 in February,
pretty strong number but average hourly earnings dropped
0.1%. Jon Hilsenrath in WSJ wrote that Fridays jobs report
likely leaves Federal Reserve officials in a watchful
waiting mode. Meantime, policy divergence as ECB meets
this week to slash interest rates again. Sunday Times said
Mario Draghi is tipped to push the button on a new stimulus
package as economic indicators for the troubled eurozone
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.

News China
China Lowers Growth Target to 6.5%-7% Range
This Year
Taken from the WSJ Saturday, 5 March 2016

Goal acknowledges slowing momentum in worlds secondlargest economy but still could be difficult to reach
China gave itself wiggle room in lowering its economic
growth target this year, though it still set the pace at a
relatively high 6.5% to 7%, suggesting the government
prefers buoying the slowing economy to more painful
retrenchment.
In opening the National Peoples Congress on Saturday,
Premier Li Keqiang laid out policies and goals for the year
that aim to stimulate growth and encourage restructuring
of industries afflicted with overcapacity.
This years policy plan, however, left unclear how Beijing
would balance its growth objectives and its reform goals.
Economists said it would be hard to achieve both.
We believe the top priority of the policy makers has turned
to growth, wrote Mizuho Securities Asia Ltd. economist
Jianguang Shen in a research note. It is intrinsically
difficult to consolidate production capacity while carrying
out stimulus.
Mr. Li acknowledged the dilemma. Pursuing development is
like sailing against the current: You either forge ahead or
drift downstream, he said in one of the notes of urgency in
his nearly two-hour speech.
He told the roughly 3,000 delegates at this years annual
legislative sessions: This is the crucial period in which China
currently finds itself and during which we must build up
powerful new drivers in order to accelerate the development
of the new economy.
For the first time in two decades, Beijing adopted a range
for its growth target rather than a specific number, giving
itself more flexibility in a system where hitting stated
goals remains politically important. Mr. Li said growth over
the next five years should average at least 6.5%.
The growth goal posts, above expectations for Chinese
expansion from Western economists and the International
Monetary Fund, send a signal to ordinary Chinese that raising
their living standards remains a priority and to the world
that China will continue to be a global economic engine.
But it also could exacerbate imbalances in an economy with
too much debt, industrial capacity and housing.
Money is already flowing into property in major cities such
as Beijing and Shanghai, while most other urban areas
have a glut of apartments. The divergence between
housing marketsis getting more and more severe,
Cheng Zhenggao, the housing minister, told reporters
Saturday.
Mr. Li said: We will address the issue of zombie
enterprises proactively yet prudently by using measures
such as mergers, reorganizations, debt restructuring and
bankruptcy liquidations. Zombie enterprises, a term that
Chinese officials have embraced recently, are unproductive
businesses kept alive by debt and subsidies.
He said 10 million jobs would be generated in urban areas
and unemployment would be kept below 4.5% in cities.
Among the job-creation initiatives were an 800 billion yuan
($122.9 billion) investment for railway construction and 1.65
trillion yuan to build roads.
To leave room for more spending, the targeted budget
deficit will be 3% of gross domestic product this year, up
from 2.3% in 2015, according to Mr. Lis report.
The report didnt give a specific target for Chinas foreign
trade, a departure from past years, reflecting both weaker

global demand and the diminishing importance of exports as

a growth driver. Last year, Beijing set a goal for a 6%
increase in trade; instead both exports and imports fell.
A five-year economic blueprint also released Saturday set
plans to ease controls on overseas investment and access
for foreigners to Chinas capital markets and pledged that
its currency, the yuan, would become fully convertible by
2020. Confidence in Chinas markets among global investors
was rattled last year by a poorly signaled yuan devaluation
and by botched efforts to salvage a cratering stock market.
Private-sector delegates at the meeting were heartened by
Mr. Lis pledge to reduce corporate taxes and fees this year.
We just want to be treated equally, alongside state-owned
enterprises, said Chen Zhilie, executive chairman of EVOC
Intelligent Technology Co.
Beijing also said it plans to raise military spending in 2016 by
7.6%. This would be the slowest pace in six years but still
larger in percentage terms than the 7% increase for the
overall budget, suggesting the military still gets an outsize
share of government resources.
The lowered targets for overall growth released Saturday
werent a surprise given that senior officials from President
Xi Jinping on down had flagged them in recent months.
Last year, China grew 6.9%, its slowest pace in 25 years,
compared with a 2015 target of about 7%. This years target
sets the stage for a new quarter-century low.
The government pledged to continue retooling the economy
toward consumption and services as it tries to wean itself
from its decadeslong dependence on investment and
manufacturing.
China has outlined plans to pare jobs and cut excess
production by about 10% over the next several years in the
steel industry. But economists question whether this goes far
enough given that excess capacity in the steel industry is
currently around 30%, according to industry figures.
The critical issue for me is how deep and aggressive this
restructuring process will be and how quickly it will be
implemented, said Adam Slater, economist with Oxford
Economics.
Chinas leaders have said that part of the difficulty in letting
zombie factories fail is resistance from local governments.
After a three-year campaign against corruption, Mr. Xi has
recently stepped up efforts to get officials to fall in line with
party directives. Mr. Li also appeared to take a stab at
bureaucratic foot dragging, saying Beijing will punish all
types of behavior that constitute flagrant violations of
discipline.
China is banking on new sources of growth, including
deregulation, innovation and larger city groupings, to pick
up the slack left by falling productivity, weak property
investment and a maturing economy.
However, some of the newer plans to promote services and
higher-tech industries also came with echoes of big state
planning: The government says it will establish
demonstration centers for startups and provide support
for projects in high-performance microchips, biomedicine
and advanced displays.
Mr. Li, who has championed urbanization as a way to build a
consumer society, said building up cities is the most
powerful force for sustaining economic development.
So far, these new drivers havent kicked in enough to
counter the economys many downdrafts. That has added to
concerns that China will put reform on the back burner in
favor of excessive fiscal and monetary stimulus to reach its
targets through 2020.
(Full article click - WSJ)
---

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

China Resources Chairman Sounds Cautious

Note on Countrys Credit Boom
Taken from the WSJ Saturday, 5 March 2016

Chairman Fu Yuning says he is closely watching financial risks

tied to Chinas surging money-supply
State-owned diversified conglomerate China Resources
Holdings Ltd. is closely watching the financial risks
accompanying the recent boom in Chinas money supply, part
of a sharp surge in credit, company Chairman Fu Yuning said
Saturday.
Mr. Fu, also the former chairman of China Merchants Bank
Co., Chinas sixth-largest commercial lender by assets, said
the sharp rise in M2, the broadest measure of cash and
deposits in the financial system, in recent months enlivens
capital markets.
But we are closely watching the financial risks that come
from the increase in monetary supply, he said on the
sidelines of Chinas annual National Peoples Congress.
New credit extended by Chinese banks hit a monthly high in
January, as M2 outperformed analyst expectations to rise
14% last month from a year earlier.
The government is encouraging more local assetmanagement companies, also known as bad banks, to be
set up to absorb the rising volume of bad loans in Chinas
banking system, Mr. Fu said. China has four major national
bad banks.
The reduction of debt, inventory overhang and productive
capacity in obsolete industries remains a top priority for
state economic policy this year, he said.
(Full article click - WSJ)
---

China Includes Green Cap in Economic Blueprint

Taken from the WSJ Saturday, 5 March 2016

Beijing enshrines energy-consumption limit in five-year plan

for the first time
China will cap annual energy consumption at 5 billion
metric tons of coal equivalent by 2020, as Beijing pushes
to control the use of resources and curb greenhouse-gas
emissions.
The cap, detailed Saturday in a draft of the governments
13th Five Year Plan economic blueprint, comes as Chinese
leaders seek to tackle wasteful resource usage and industrial
overcapacity in the worlds second-largest economy.
It marks the first time a hard energy-consumption cap has
been enshrined in a five-year plan, underscoring the
increasing importance Beijing places on the efficient use of
resources. The government has previously given energyconsumption targets in other, less official, forms.
In 2015, total energy consumption hit 4.3 billion metric tons
of standard coal equivalent, up 0.9% from a year earlier. The
new consumption cap will increase slightly each year, rising
to a maximum of 5 billion metric tons by 2020.
Limiting overall energy consumption is key to Beijing
meeting its pledge to stop increases in carbon-dioxide
emissions by 2030 or earlier as part of a global climatechange pact.
In part, the Chinese government hopes a liberalization of
pricing over more natural resources will encourage efficient
consumption. A separate report from the National
Development and Reform CommissionChinas top economic
planning agencyreleased Saturday identified reforms to
resource pricing as a priority for 2016.
We will work to lift pricing controls over competitive areas
in the power, petroleum, natural gas, and transportation
industries, the NDRC report said, without providing details.
The energy-consumption cap also reflects Chinas slowing
growth. Chinese resource consumption once seemed
insatiable, as the economy grew at double digits. Today,

however, global energy markets are grappling with weakerthan-expected Chinese demand for key commodities such as
coal.
Chinas government has set an overall economic growth
target of between 6.5% and 7% for 2016, and an average of
at least 6.5% over the next five years. At the opening of the
National Peoples Congress on Saturday, Premier Li Keqiang
acknowledged that downward pressure on the economy is
growing, which could help crimp energy demands. A greater
focus on boosting services in the economy, over
manufacturing and industry, would also help make China less
energy intensive.
As part of its clean-energy push, the government Saturday
pledged to raise its supply of natural gas after domestic
production missed its growth target last year. Companies
produced 134.6 billion cubic meters of natural gas last year,
according to the government, compared with a target 140
billion cubic meters.
The mismatch reflects ongoing difficulties by China to
replicate the explosion in unconventional shale-gas
production seen in the U.S. and elsewhere. Moreover,
industry analysts say natural-gas prices have been too high,
which has curtailed domestic demand from manufacturing
and other sectors.
(Full article click - WSJ)
---

5 Takeaways from Chinas New Policy Programs

Taken from the WSJ Saturday, 5 March 2016

Chinas national legislature opened its annual session in

Beijings Great Hall of the People on Saturday with the usual
fanfare: a military band playing the national anthem and a
nearly two-hour speech by Premier Li Keqiang outlining
government priorities for the year. One addition this year is
the release of the latest five-year plan laying out economic
and other goals for 2016-2020. The thicket of policies lands
at a pivotal moment. Chinese leaders are confronting a
stubbornly slowing economy in need of an overhaul for more
sustainable long-term growth. Here are five takeaways from
their plans.
#1 Not either/or but both
In picking whether to stimulate the economy to boost growth
or allowing a painful slowdown so that businesses can
retrench, Beijing is trying to do both. Its economic growth
target for this year is set at 6.5% to 7%, a rate many
economists say will require bigger government spending and
easier credit to achieve. To that end, this years government
deficit is being enlarged to 3% of the economy, from 2.3%.
The plan also promises big outlays for laid-off workers,
especially those in coal, steel and other sectors laden with
overcapacity.
#2 Stability reins
Chinese leaders prefer incrementalism to big policy shifts,
and the latest raft of policies is true to form. In setting the
relatively high growth target, the leadership signaled to the
Chinese people that it knows that meeting their
expectations for higher standards of living remains the top
priority. Its also shows Beijing remains worried about worker
unrest. The growth rate, Premier Li said, is meant to ensure
that China becomes a moderately prosperous society and
that enough jobs are created for relatively full
employment.
#3 The new economy
In shifting the economy toward services and consumption
and away from investment in smokestack industries, the
government envisions a future powered by innovation and
the Internet. Priorities for this year include tax deductions
for research, more autonomy for universities and setting up
demonstration centers for startups. Crowdfunding and the

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

sharing economy both get mentions, as do e-commerce

and express delivery.
#4 The old economy
When it comes to restructuring the old economy, policies
look less forceful. Premier Lis policy program promises to
take a whack at zombie enterprises unproductive
businesses kept alive by debt and subsidies but to do so
proactively yet prudently. State-owned enterprises, a
politically influential grouping whose leaders have opposed
reforms meant to open them up to more competition, are
targeted for structural adjustments, including mergers and
reorganizations, though some will exit the market.
#5 Falling in line
While rooting out corruption has been a key goal since
President Xi Jinping came to power three years ago, the
campaign has morphed to take on bureaucratic footdragging. Premier Lis report calls for punishing all types of
behavior that constitute flagrant violations of discipline. On
the firing line: incompetence, inertia and negligence. The
emphasis shows the difficulties the government faces in
getting officials to go along with policy changes.
(Full article click - WSJ)
---

China fiscal stimulus falls short of estimates

Taken from the FT Saturday, 5 March 2016

China set its fiscal deficit target far below expectations,

highlighting governments reluctance to expand fiscal
stimulus aggressively even as it seeks to cushion an ongoing
slowdown that has already prompted monetary easing.
At the opening of the National Peoples Congress, Premier Li
Keqiang also reiterated previous pledges to hold the
currency basically stable and maintain a basic balance
in Chinas balance of payments. His speech struck an
optimistic tone while acknowledging the difficulties facing
an economy that is slowing rapidly and struggling to
transition away from an outdated growth model.
Pursuing development is like sailing against the current:
you either forge ahead or drift downstream, he said, adding
that the government must ensure that Chinas economy,
like a gigantic ship, breaks the waves and goes the
distance.
China aims to run a fiscal deficit at Rmb560bn in 2016, or 3
per cent of gross domestic product, Mr Li told an annual
parliament meeting on Saturday. That is still the highest
since 1979 and sharply up from last years Rmb1.62tn, or 2.3
per cent, target.
Analysts still expect a budget shortfall of 3.5 per cent,
noting that Chinas actual fiscal deficit is generally larger
than the headline figure, since some spending occurs
through off-budget channels. The official target however
is a potent signal of the overall fiscal stance.
Mr Li also announced a lower target for economic growth,
calling for an expansion of 6.5 to 7 per cent compared to
last years target of around 7 per cent and actual growth
of 6.9 per cent.
Some analysts had expected the 2016 target to be set lower
at around 6.5 per cent. The broader range suggests the
government is still prioritising growth, even as they seek a
balance between short-term stimulus and long-term
structural reform. Mr Li acknowledged the economic
challenges, noting that downward pressure was increasing.
Development is of primary importance to China and is the
key to solving every problem we face, Mr Li told the
parliament.
We must take particular care to avoid falling into the
middle-income trap, and we need to address an increasing
number of problems and risks.

The higher deficit target follows calls by the International

Monetary Fund and OECD for countries to boost fiscal
support to buffer a projected slowdown in global growth this
year. At a meeting in Shanghai in late February, the G20
declined to explicitly endorse fiscal stimulus, but
compromise language advocated a balance between fiscal,
monetary, and structural measures, a nod to concerns about
over-reliance on central banks to drive growth.
China has traditionally shied away from large fiscal deficits
to avoid the appearance of public profligacy. But
policymakers had recently signalled their intention to boost
deficit spending, since the government balance sheet
remains relatively healthy compared to the highly leveraged
corporate sector.
Mr Li also promised to deal with zombie enterprises, a
campaign that could result in millions of layoffs if fully
implemented. China said last week it would shed 1.8m coal
and steel jobs in the next five years. Mr Li said the
government would address the issues proactively yet
prudently, a signal that social stability is still a top
concern.
Chinas leaders have made supply-side reform the policy
theme for 2016, to tackle rampant overcapacity in broad
swathes of the manufacturing sector. Fiscal stimulus will
largely focus on tax cuts for small businesses, especially in
the fast-growing services sector.
Monetary policy targets laid out on Saturday underline the
desire to avoid a rapid slowdown in short-term growth. Mr Li
assured parliament the central bank will maintain adequate
liquidity, including a target for 13 per cent growth of broad
money (M2) and credit growth. That is above the 12 per cent
M2 target for 2015, though below actual money growth of
13.3 per cent.
More competition is also on the agenda. Mr Li said
government will significantly relax market-entry in
electricity, telecommunications, transport, petroleum and
natural gas, including removal of hidden barriers.
On foreign trade, the government aims for a steady rise in
import and export volumes, a tacit acknowledgement that
trade values are likely to continue falling on the back of
weak commodity prices and deflation in the manufacturing
sector.
The parliament will formally approve at Mr Lis work report,
along with the finance ministrys budget proposal and
reports from other agencies, at the conclusion of the
parliament meeting later this month.
(Full article click - FT)
---

Chinas Soft Economic

Decision Makers

Growth

Challenges

Taken from the WSJ China Real Times Sunday, 6 March 2016

As Chinas leaders and policymakers gather for the annual

parliament meetings, they are facing some harsh economic
challenges: sluggish industrial growth, weak foreign trade
and four full years of industrial deflation.
Growth in industrial output, fixed-asset investment and
retail sales likely all slowed further at the beginning of the
year from late last year, according to a poll of economists by
The Wall Street Journal. That, along with a few other
recently released economic indicators, suggests that the
governments efforts to spur economic growth have yet to
show notable effects.
In order to minimize data distortions from the shifting timing
of the long Lunar New Year holiday, the government releases
combined indicators measuring activity in the real economy
for January and February. The on-year increase of valueadded industrial production likely moderated to 5.6% over

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

the first two months, from 5.9% in December, according to

the median forecast of 17 economists.
Fixed-asset investment outside rural households likely
climbed 9.5% for the January-February period, down from an
increase of 10.0% for all of 2015. Retail sales growth
probably slowed slightly to 11.0%, from an increase of 11.1%
in December.
UBS Group AG economists said in a research note that
production of power and steel moderated in the first two
months, in a sign that industrial production overall softened,
and fixed asset investment remained weak, owing to
continued deceleration in property investment.
At Saturdays opening of the National Peoples Congress, the
government unveiled policy programs for this year and the
next five years that attempt to balance policies to stimulate
growth with restructuring measures that tend to undermine
momentum.
In a sign of policymakers shift to bolster growth, the central
bank last week cut the portion of deposits banks must set
aside as reserves to release more funds for lending.
The nations muted consumer inflation and prolonged
industrial deflation could give the central bank more room
to further loosen monetary policy, according to economists.
The consumer-price index, a main gauge of inflation, likely
rose 1.9% from a year earlier, the survey showed. That would
be slightly higher than an increase of 1.8% in January.
The producer-price index, which tracks prices paid at the
factory gate, probably fell 4.8% year-on-year in February,
following a 5.3% decline in January. That would mean China
has seen four full years of falling industrial prices.
Chinas trade with the rest of the world likely remained
downbeat, reflecting sluggish external and domestic
demand.
Outbound shipments in February likely slipped 15.0% year on
year, extending Januarys drop of 11.2%. Imports likely fell
15.0% improving slightly from Januarys 18.8% decline, the
same poll shows. Chinas trade surplus is expected to narrow
to $51.25 billion in February, from $63.29 billion in January.
Although the smaller trade surplus means overall less
inbound capital, outflows may have eased. Chinas foreignexchange reserves likely declined at a notably slower pace in
February as a stabilizing yuan rate helped to ease pressures
to move money offshore, economists say.
The nations stockpile of reserves likely dropped by $31
billion last month to $3.2 trillion, according to the poll. That
would be much smaller than a $99.5 billion fall in January. A
weaker dollar against other major currencies would have
also provided a favorable valuation effect, economists say.
The current weak dollar environment is benign for China
and its currency, Macquarie Group Ltd. economists said.
New bank lending also likely retreated from a record
monthly high in January, which fanned concerns over Chinas
renewed efforts spur economic growth with excessive easing
measures.
Chinese banks likely issued 1.1 trillion yuan ($168.9 billion)
worth of new yuan loans in February, less than half of the
2.51 trillion yuan in January, the same survey of economists
showed.
As Beijing continues stepping up its efforts to bolster
economic growth, economic conditions might improve, some
economists say.
As the impact of government-driven stimulus, such as
monetary easing and the easing of restrictions in the real
estate sector, becomes more noticeable, we expect the
economy to improve in the coming months, Mizuho
Financial Group economists said in a note.
(Full article click - WSJ)
---

Chinas Lowered Growth Target: What the

World Can Expect
Taken from the WSJ Sunday, 6 March 2016

Even if China hits its inflation and growth targets, lending

growth is going much faster, so debts overall will continue to
rise
China has tweaked its economic blueprint, but the results
should be more of the same: debt-fuelled, sluggish growth.
In his annual work report Saturday, Premier Li Keqiang
officially lowered the governments growth targetto a
range of 6.5% to 7%and issued its plan for how it will get
there. If anything, this target remains too high, and China
will do things it shouldnt, especially pumping lending into
the economy, to get there.
The main takeaways: Money supply and lending growth are
forecast to increase 13%, a percentage point faster than last
years target. Then again, last years lending was above
target and increased 13.5% anyway, so this seems hardly a
change from Chinas long-standing addiction to credit.
The target for consumer-price inflation remained steady at
3%. But last years 1.4% rate shows China is having as much
trouble as the rest of the world in targeting a modest level
of inflation.
This matters because without a requisite dose of inflation,
debts will just get harder and harder to pay back in real
terms. Even if China did hit its inflation and growth targets,
this implies nominal GDP of 9.5%, while lending growth is
going much faster, so debts overall will continue to rise.
Deleveraging in Chinas case is simply not happening.
The governments deficit will swell to around 3% of gross
domestic product, from 2.4% last year. The speech says much
of this will come from tax cuts rather than more spending.
That could conceivably be good news in terms of corporate
profitability.
There was also talk of winding up zombie state-owned
companies in industries burdened by overcapacity such as
raw materials and steel. While the rhetoric has sounded
more sincere lately, promises to reform these sectors aren't
new. Proof will come in actual bankruptcies, restructurings
and mergers.
Investors will comb over Mr. Lis speech and accompanying
documents that come out of the annual government
meetings for other goodies. A line about stimulating the
second-hand car market could have implications for auto
makers. A promise to reduce land devoted to growing corn
should make Iowan and Brazilian farmers smile, since corn
prices have plummeted the past two years.
The big picture for China remains the same: Growth is
slowing and debt is high. Beijings plan to deal with the
situation is hardly reassuring.
(Full article click - WSJ)

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

European News
Norway Seeks EU Assurances Amid Gas-Supply
Concerns
Taken from the WSJ Saturday, 5 March 2016

Europes only petrostate is considering spending billions on

Arctic installation to replace aging fields
For three hours on a recent Thursday, Norways state-owned
oil-and-gas company Statoil ASA transformed these offshore
rigs into a marketing platform for a special guest: the
European Unions energy czar, Maros Sefcovic.
Natural-gas fields like Sleipner have helped cook meals and
heat homes in Europe for several decades, but their output
will gradually fade away. To replace those aging North Sea
fields, Norway is considering plowing billions of dollars into
similar installations 1,000 miles to the north, in the Barents
Sea.
Before going ahead with this Arctic bet, however, the
country, which isnt part of the EU, would like to receive
assurances that the bloc will continue to take its gas.
Hopping off a helicopter and touring the Sleipner platform in
yellow overalls and a hard hat, Mr. Sefcovic expressed awe
at what he called a huge factory in the middle of the sea.
But the EU Commission vice president, who leads the EUs
effort to reduce dependence on energy imports, stopped
short of committing to buying more Norwegian gas in the
future.
What we want is to have enough gas at a good price, he
said.
Norways marketing pushand its limited resultsillustrate
the challenges facing Europes only petrostate at a time
when moribund energy prices are threatening the
underpinnings of a welfare society largely built on sharing
hefty oil windfall.
Bargaining between Norway and its dithering European
customers also highlights a new dynamic at play on
international gas markets. Since the 1970s, the Nordic nation
has built a gigantic gas infrastructure, with nearly 5,000
miles of pipelines, largely aimed at feeding European
households and industries. Diplomatic tensions between the
EU and Russia, also a big exporter of gas to Europe via
pipeline, have reinforced Norways status as a core, reliable
energy partner.
But the EU has also been tapping remote sources of liquefied
natural gas, which can be shipped in from around the globe.
Although LNG is traditionally more expensive than piped gas,
the technology has brought additional flexibility and
security, EU officials say.
The EUs diversification effort has left Norwegian authorities
wondering whether the country might be better off building
up its own LNG export capabilities rather than another steel
umbilical that would connect the frontier Barents Sea to
Europe.
Gas supply requires large upfront investments, Tord Lien,
Norways minister of petroleum and energy, told a European
Commission event in Brussels last month. The likelihood
that Norwegian gas producers invest in transport
infrastructure to expand gas exports to the European market
is increased if they believe there is a demand to be met.
Norways sprawling network of gas pipelines was built largely
by Statoil. From 2002, the infrastructure was transferred to
a state-owned company, Gassco AS, which began working on
long-term plans to maintain Norways gas supply into the
2020s.
In 2014, Gassco presented plans for a nearly $3 billion
pipeline to connect its existing export network to future gas
fields in the Barents Sea. But Statoil and other energy

companies have showed little interest. In fact, Gassco has

stopped working on the project, a spokesman said.
Statoil said a possible alternative to the pipeline plan would
be to increase the size of its existing gas liquefying unit in
Hammerfest, a coastal town on the Barents Sea.
The problem, however, is that Statoil and other energy
companies have yet to make a big discovery that would
justify building large-scale gas export infrastructure, be it a
pipeline or LNG facilities, says Kjell Giaever, director of
PetroArctic, which provides services to oil companies in the
far north.
This is a chicken-and-egg-situation: nobody wants to
explore for gas if they dont have anywhere to sell it, and
nobody wants to invest in infrastructure if they dont have
any gas to put into it, he said.
Projections by the Norwegian Petroleum Directorate show
that Norways gas output will drop off in the 2020s unless
new discoveries are made, potentially falling to about 80
billion cubic meters in the early 2030s, from well north of
100 billion cubic meters last year.
Preparing to board the helicopter back to the mainland after
showing off the Sleipner platform to his EU visitor, Mr. Lien,
the Norwegian minister, said he had been assured of
Europes continued interest in buying gas from Norway. As
for building a pipeline, he was more evasive.
I cant guarantee anything, he said.
(Full article click - WSJ)
---

Spain Set for Stalemate as Proposed Coalition

Government Gets No-Confidence Vote
Taken from the WSJ Saturday, 5 March 2016

Parliaments failure to choose a prime minister sets stage for

weak caretaker leadership
The Spanish parliaments failure to choose a prime minister
sets the stage for an extended stalemate that will keep the
country under weak caretaker leadership with limited
leeway to consolidate an economic recovery or parry a
secessionist movement brewing in the wealthy Catalonia
region.
On Friday, Socialist leader Pedro Sanchezs proposed
coalition government with the centrist Ciudadanos party lost
a decisive confidence vote 219 to 131. As in Wednesdays
first-round vote, incumbent Prime Minister Mariano Rajoys
conservative Popular Party and far-left Podemos ganged up
to block Mr. Snchez. The Popular Party had finished first
and the Socialists second in an inconclusive election on Dec.
20.
In the wake of Mr. Sanchezs failed bid, the four main
parties and six smaller ones will have until May 2 to
negotiate alternative power-sharing arrangements. If they
fail, Spanish law requires that parliament be dissolved and
a new election held on June 26.
Until there is a new government, Mr. Rajoy remains prime
minister, weakened by his poor electoral performance and a
host of corruption scandals tainting his party.
Spanish voters in December rebelled against established
political parties and a litany of ills common elsewhere in
Europeofficial corruption, failing state institutions, and
income inequality that widened during the Continents worst
recession in decades.
But instead of a fresh era of multiparty compromise,
Spaniards got a fragmented parliament paralyzed by
mistrust, with no clear path to power for any alliance on the
right or left.
The newly empowered upstarts, Podemos and Ciudadanos,
refuse to work together. The Socialists are wary of being
overtaken by Podemos as the standard-bearer of the left.
The Popular Party, which finished first in December but lost

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

its parliamentary majority and has no allies, threatens to

block any proposed governing coalition not led by Mr. Rajoy.
Lluis Orriols, a political scientist at Madrids Carlos III
University, said Spain is mired in a political war of attrition,
in which parties are trying to wear down the will of their
opponents, while trying to accustom their own members to
accept the need for difficult trade-offs and governing
alliances.
New elections may be the only way the parties can
convince their electorates that these pacts are necessary,
Mr. Orriols said. A grand pact among the Popular Party,
Socialists and Ciudadanos, he said, is one such alliance that
might become palatable for the parties rank-and-file voters
only after a second round of elections. Mr. Rajoy has sought
such an alliance but Mr. Snchez has rejected it.
The scathing attacks Mr. Snchez endured in parliament this
week showed how distant such a broad agreement seems.
Pablo Iglesias, the Podemos leader, denounced his program
as made to order for the oligarchs. Mr. Rajoy described Mr.
Snchezs leadership bid as a farce, a fraud, a sitcom
and Vaudeville.
Ciudadanoss president, Albert Rivera, said Mr. Rajoy had
burned all the bridges with his party.
Were now seeing the extent to which Decembers
inconclusive election result has left Spain practically
ungovernable, Nicholas Spiro, a sovereign risk consultant,
said. All the parties despise each other and there is no
guarantee whatsoever that a snap election will end the
stalemate. At some stage, Spains debilitating political crisis
is going to start to take its toll on the economy.
After spending much of the past eight years stuck in a fierce
recession, Spain was the top performer among major
European economies last year, expanding at a vigorous 3.2%
pace. A recent report by the European Commission said,
however, that growth could be slowed by a possible
deceleration in the reform agenda to tackle Spains pile of
public and private debt and 21% unemployment.
Victor Lapuente, a political scientist at Swedens University
of Gothenburg, said the political deadlock could be broken
without an election only if public opinion swings strongly for
or against some of the parties during the coming eight
weeks. That period, he said, represents a test of maturity
for Spains political culture, where coalition building is
something of a novelty.
Politicians will closely monitor opinion polls to see whether
the Socialists and Ciudadanos are rewarded for cooperating
to try to form a government or punished for compromising
their own parties programs, Mr. Lapuente said. Similarly,
polls will give an idea whether moves by the Popular Party
and Podemos to block Mr. Snchez will be viewed as
obstructionist or principled.
Some polling has shown the Socialists and Ciudadanos
benefiting from their alliancebut probably not enough, in
Mr. Lapuentes view, to coax a deal that would avoid new
elections.
Other political watchers are more hopeful about a deal. Elisa
de la Nuez Snchez-Cascado, an editor of the blog Hay
Derecho?, which promotes good-government measures, said
Podemos and Mr. Rajoys conservatives may come to regret
their opposition to Mr. Snchezs alliance because its
proposals to cut back on political patronage and privilege
play well with voters. She said the hostile rhetoric of recent
days will tone down as the May 2 deadline nears.
Everyone has more to lose than they do to gain from new
elections, she said, noting that voter abstentions and
frustration with parties could rise.
She anticipates a last-chance coalition accord such as the
one reached by parties in the Catalonia region in January,

more than three months after an inconclusive parliamentary

election there and hours before a deadline for calling a new
one.
Catalonia looms as a potential wild card in Spains leadership
struggle. The new Catalan government has pledged to turn
the wealthy industrial region into an independent republic
by mid-2017. Spains major parties have found rare
unanimity in opposing the secessionistsexcept for Podemos,
which would allow Catalonia to hold a referendum on
independence.
Lawyers for the regional and national government are
sparring over whether the Catalan parliaments recent steps
to create a commission on independence violate an
injunction by Spains Constitutional Court. Catalonias new
leader, Carles Puigdemont, has referred to Mr. Rajoy,
dismissively, as Spains acting leader, who makes acting
declarations. An escalation of tensions between the central
government and Catalonia could test how much authority Mr.
Rajoy retains during Spains prolonged leadership stalemate.
(Full article click - WSJ)
---

New steel jobs at risk as Liberty balks at high

energy costs
Taken from the Sunday Telegraph 6 March 2016

A deal to create 1,000 jobs in Britains shattered steel

industry and 3,000 more in the supply chain is under threat
because of the UKs high energy costs.
The Gupta familys Liberty Group has agreed to buy an arc
furnace and rolling mill from a disused steel plant in
Sheerness, Kent, with the aim of dismantling the equipment
and relocating it to the companys facility in Newport, south
Wales.
The equipment being purchased from Peel Group which
sources say would cost 1bn if built from scratch has the
capacity to produce 800,000 tons of steel a year, and
bringing it back on stream would be a boost to the sector.
More than 5,000 UK steel jobs have been lost in the past
year in the face of cheap imports, falling demand and high
energy costs.
While other companies such as Tata were cutting jobs and
closing facilities, Liberty reopened in October the
mothballed Newport works, providing rare good news in the
sector.
Now, however, Liberty says its plan is at risk because of
concerns about energy costs and security of supply. Sources
say Liberty is looking to the Government for an indication of
support on energy.
Sanjeev Gupta, executive chairman of Liberty, said
alternatives for the Sheerness equipment might have to
include the US and India, which offer healthy market
demand and, positive government support and energy
security.
Liberty is also looking to buy steel plants in Scotland that
have been earmarked for closure by Tata.
(Full article click - Telegraph)
---

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

'The only game in town': eurozone to step up

fight against stagnation
Taken from the Sunday Telegraph 6 March 2016

Europes financial system is braced for a fresh round of

interest rate cuts as the European Central Bank ventures
deeper into negative territory in its battle to fight off
stagnation.
In a crucial week for the future of the single currency,
policymakers are widely expected to slash already negative
rates and ramp up their bond-buying measures by at least
10bn (7.74bn) per month, as the ECB gathers for its latest
meeting on Thursday.
But economists warned European banks will need protection
from the worst effects of negative rates, which have been
described as a tax on lenders and sparked a panicked sell
off in bank shares last month.
The eurozone sent its deposit rate below zero in 2014,
effectively penalising commercial banks for parking their
money with the central bank.
Currently at -0.3pc, the rate is now set to plunge as low as
-0.5pc next week, according to economists at Socit
Gnrale and ING.
Designed to help weaken currencies and boost lending,
negative interest rates damage bank profitability by eroding
the margin on what banks charge to lend and the interest
they pay out on deposits.
Japans shock decision to become the fifth major central
bank to venture into negative territory saw global banking
shares plummet at the start of February.
But analysts expect the ECB will attempt to cushion the
worst effects of sub-zero rates by introducing a tiered
system - mimicking similar schemes in Switzerland and
Japan. This could mean larger banks being charged more
than their smaller counterparts to hold excess deposits, or
even exempting banks that lend to the real economy.
Benoit Cur, executive board member at the ECB, has
hinted policymakers are considering ways to mitigate
possible adverse consequences for the bank lending
channel.
Reinhard Cluse, economist at UBS, said further rate cuts
would increase the headwinds to the banking sector.
The key will be what, if any, offsetting measures are
announced for the banks if rates are cut further into
negative territory said Mr Cluse.
The ECB is also set to downgrade its growth and inflation
outlook after the 19-country bloc lurched back in to
deflation in February. Collapsing oil prices are set to see
consumer prices average close to 0pc in 2016 from an
estimated 1pc in the ECBs December 2015 forecast.
Inflation figures by themselves would provide enough cover
for the ECB to act further with inflation forecasts not
reaching 2pc even in 2018, said Gilles Moec, at Bank of
America Merrill Lynch.
Interest rate cuts are also set to be coupled with an
expansion of the ECBs quantitative easing programme from
60bn a month to 70bn a month. Corporate bonds could be
included in bond-buying for the first time as the central
bankers scramble to buy up assets in a bid to rejuvenate a
bloc which expanded by just 0.3pc at the end of 2015.
But more than a year since it launched its unprecedented
stimulus programme, economists have voiced doubts about
the efficacy of increasingly expansive monetary policy.
Otmar Issing, former chief economist at the ECB and
architect of monetary union, has lamented that the ECB
remains "the only game in town" when it comes to fighting
off recessionary forces in the euro.

"Politicians rely on that - if they can't deliver the central

bank delivers", said Mr Issing.
"This is a very dangerous
development."
ECB president Mario Draghi has said monetary policy has
been responsible for half of all eurozone growth in the last
three years, with low oil prices providing the rest of the GDP
boost to the single currency.
The Italian has urged government's to use their fiscal tools to
help boost demand through spending programmes where
necessary.
The ECB is approaching the effective limit of what it can do
and other policy areas urgently need to weigh in, said
Anatoli Annenkov at Soc Gen.
(Full article click - Telegraph)
---

Draghi to slash eurozone interest rates again

Taken from the Sunday Times 6 March 2016

MARIO DRAGHI, president of the European Central Bank, is

tipped to push the button on a new stimulus package as
economic indicators for the troubled eurozone point to
weaker growth and a return to deflation.
Policymakers will meet in Frankfurt on Thursday to unveil
the details of the package. Investors hope Draghi will cut
the ECBs key overnight deposit rate, which is already
-0.3, still lower to -0.4% a big penalty for lenders parking
cash at the central bank.
Draghi is also expected to announce a 10bn (7.7bn)
monthly boost to the existing 60bn-a-month quantitative
easing (QE) programme.
The fragile eurozone economy slid back into deflation last
month, at -0.2%, amid plummeting energy prices and
sluggish growth. This dashed hopes that years of stimulus
measures were finally reviving the region, and raised the
spectre of another recession.
Draghi has said he will not hesitate to act if he believes
recent market turmoil or low oil prices will stop the bank
reaching its inflation target of close to 2%. He had been
expected to pump more money into the eurozone at the end
of last year.
The ECB failed to live up to its own hype in December, but
we doubt that it will be prepared to disappoint the markets
again, not least because of the impact this could have on the
euro exchange rate, said Jennifer McKeown at Capital
Economics.
Pressure on the central bank could intensify this week as
figures are expected to show consumer spending has slowed
and the eurozone recovery is losing steam.
Europe is not getting help from the rest of the global
economy. Yesterday, China cut its growth forecast for this
year to 6.5%-7%, down from 7%. Li Keqiang, the premier,
said:China will face more and tougher problems and
challenges in its development this year, so we must be fully
prepared to fight a difficult battle.
City sources said lenders had raised concerns with the ECB
about the impact of another rate cut. Draghi could adopt a
tiered system for deposits, so banks would be charged on
only a portion of the cash they park with the ECB.
(Full article click - Times)

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

News Americas
US riches tempt LSE investors to takeover
Taken from the Sunday Telegraph 6 March 2016

The future ownership of the London Stock Exchange hinges

on which suitor will pay the highest price, one of the British
bourses largest investors has revealed.
The leading shareholder suggested a rival offer from
Intercontinental Exchange (ICE), the Atlanta-based exchange
operator, could gazump the proposed merger between the
LSE and Deutsche Boerse.
The investor disclosed that he thought ICE would be likely to
fund a takeover offer, with two-thirds in shares and the rest
in cash, to table a price of around 31.70 an 11pc premium
to the LSEs closing price on Friday.
The LSE agreed the terms of a 20bn merger with Deutsche
Boerse last month, a decade-and-a-half after the two rivals
last tried to combine, only for US rival ICE, owner of the
New York Stock Exchange, to threaten this week to gatecrash
the deal.
Deutsche Boerse was last week said to be at an advantage in
the takeover battle, given the friendly merger-of-equals
proposals and the careful structure to ensure a balance of
power with the London exchange. It would include the
holding company being based in London, with a board split
equally between the two parties.
An ICE takeover would mean a union between the LSE and
derivatives business Liffe, which many in the City believe
has long been the London exchanges biggest missed
opportunity. The LSE lost out on buying Liffe in 2001 to
Euronext, which was bought by NYSE before it was
subsequently snapped up by ICE three years ago.
Liffe and the LSE was the deal that was always supposed to
happen, and it would be great to see them together. It
would become a global business, said the LSE shareholder.
At the end of the day, we care about the highest value for
shareholders. We know there will be synergies in the
Deutsche Boerse deal, but there will be great ones if there is
a combination with Liffe.
However, sources close to the situation have highlighted the
problems that ICE could face from politicians and regulators
if it tried to thwart the proposed German tie-up, which has
been designed to appease the nationalistic tendencies of
both sides.
Analysts have also questioned how high a price ICE would be
able to offer, having spent $5bn last year buying Interactive
Data, which led Moodys to place its credit rating on review
for a downgrade. Stock exchanges are typically restricted
from becoming overly leveraged because of fears about their
collapse.
There is a long track record of exchanges falling at other
hurdles. Deutsche Boerses own attempt to combine with
NYSE Euronext was scuttled by European Commission
objections.
Observers have suggested that an ICE takeover could reduce
the importance of London as an exchange hub, although it
has been pointed out that ICE has a current base in London
with 900 staff, signifying the US exchanges commitment to
the City.
Advisers to the LSE and Deutsche Boerse are putting the final
details to their all-share merger. Xavier Rolet, LSE chief
executive, and his management team will tour shareholders
this week following LSEs annual results, which showed
profits had risen by a third to 643.4m.
It is understood that a spin-off of the French arm of LSEs
clearing house, LCH.Clearnet, is being mulled by both
parties.
(Full article click - Telegraph)

---

Canadas Largest Pension Fund Supports CorusShaw Media Deal

Taken from the WSJ Sunday, 6 March 2016

CPPIBs support represents potential blow to efforts by

Catalyst Capital to block deal
Canadas largest pension fund said it would support Corus
Entertainment Inc.s 2.65 billion Canadian dollar ($1.99
billion) bid to acquire the broadcasting unit of its sister
company Shaw Communications Inc.
Canada Pension Plan Investment Board, which oversees total
assets of C$282.6 billion, said on its website that it will vote
for Coruss bid to acquire Shaw Media in a deal that marries
the two companies broadcasting and specialty-television
channels and gives Corus 34.5% market share of English
television viewership in Canada.
CPPIBs support represents a potential blow to efforts by
Catalyst Capital Group Inc., a Canadian private-equity firm,
to block the deal over its concerns of Corus disclosure of
the terms and its belief that Corus is paying too much for
Shaw Media.
Corus maintains that the transaction will benefit all
shareholders, and says that Catalysts statements are
misleading.
CPPIB didnt provide a reason for its decision on the website
and a spokesman declined to comment.
CPPIB owned 610,000 Corus Class B shares as of March 31,
2015, according to the latest data available from FactSet.
That would rank the pension fund among Coruss 20 biggest
holders of the Class B shares.
CPPIB is also an influential voice in Canadian markets given
its size and the emphasis it places on good corporate
governance.
Catalyst owns 321,800 Class B shares, according to a filing
with the Ontario Securities Commission.
CPPIBs decision comes after Institutional Shareholder
Services, North Americans biggest proxy-advisory firm,
recommended that Corus shareholders vote for the Shaw
Media deal.
Under terms of the transaction, which was announced in
January, Corus needs support from more than half of the
votes cast by holders of the companys Class A voting and
Class B nonvoting shares.
Shaw Communications, a Canadian telecommunications
operator, and Corus are controlled by Albertas Shaw family.
Because of that control, the familys holdings in Corus arent
counted as part of the shareholder vote to approve the
transaction.
Coruss shareholder meeting is set for Wednesday. Catalyst,
though, has asked the Ontario Securities Commission to
correct what Catalyst claims are misleading disclosure
defects about the transaction before the meeting proceeds.
A Catalyst spokesman played down the significance of
CPPIBs voting plans or that of any other individual
shareholder given the OSC application. The issue isnt how
one shareholder is going to vote; its whether shareholders
have the information they need to vote..., Daniel Tisch said
in an email.
A Corus representative couldnt immediately be reached for
comment.
(Full article click - WSJ)
---

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

News Asia
Legal cases seek to shine light on murky
Malaysia deaths
Taken from the FT Saturday, 5 March 2016

A trail of deaths claimed to be linked to controversies

swirling around Malaysian prime minister Najib Razak and his
government has returned to the spotlight thanks to two legal
cases brought by relatives of the deceased.
The body count, including one corpse found encased in
cement, is part of what some see as the deadly side of
corruption cases in Malaysia, the latest of which is the
alleged looting of billions of dollars from the 1MDB
investment fund and other state companies. Mr Najib and
1MDB deny any wrongdoing over $680m that landed in his
personal bank accounts from a mysterious foreign source.
Efforts to probe allegations of Malaysian state-connected
graft and other serious crimes have been hampered over the
years by the sudden demises of high-profile potential
witnesses and others.
Both some relatives of the deceased and critics of the
government say the facts around the grisly events, which
include at least three murders, have never been fully
established nor properly investigated.
We cant rely on the Malaysian justice system any longer,
said Pascal Najadi, a Moscow-based consultant who wants to
build international pressure on the Malaysian probe into the
shooting of his banker father, Hussain. For our family this is
the best therapy, because its about justice.
Relatives of Balasubramaniam Perumal, a late Malaysian
private investigator, are bringing a separate civil claim in
which they allege they were forced out of the country after
he made a statement linking Mr Najib to a young Mongolian
woman who was murdered. Mr Najib denies any such link.
The Balasubramaniam case is due for a hearing at the
Federal Court of Malaysia the highest in the country
later this month.
Speculation continues to swirl around the demise of Kevin
Morais, a state prosecutor and former Malaysian AntiCorruption Commission official, who was killed in September
while it is claimed working on the 1MDB case. Seven
people have been charged over his murder, after his body
was found encased in cement in an oil drum. Authorities
have denied he was involved in any 1MDB probe.
Another deadly past political controversy around Mr Najib
that has resurfaced lately is the murder of Altantuya
Shaariibuu, a young Mongolian woman whose body was blown
apart with high explosives. Activists allege a link between
her 2006 killing and a 2002 contract to buy two French
submarines, when Mr Najib was defence minister.
Ms Altantuya was in a relationship with Abdul Razak Baginda,
a defence analyst working as a consultant on the deal. He
has always denied involvement in her killing and was
acquitted at a 2008 trial. A government spokesman has said
Mr Najib never met Ms Altantuya and was not involved in her
murder.
Mr Balasubramaniam, the private investigator, claimed in a
formal 2008 legal declaration that Mr Najib did know Ms
Altantuya indeed, that he had introduced her to Mr
Baginda. The investigator, who had been hired by Mr Baginda
to provide him with security, withdrew the allegation within
days only to claim later in a video interview with his
lawyer that he rescinded it under duress.
Mr Balasubramaniam died of a heart attack in 2013 at the
age of 53. But his family are taking their case to Malaysias
top court, against a businessman they say was involved in

forcing the private investigator to retract his original

statement.
Pascal Najadi is taking the international legal route, in a
case to the UN Human Rights Council. He claims his father
was shot dead in Kuala Lumpur in July 2013 because he had
information about wrongdoing related to 1MDB, gleaned
from his position as founder of AmBank.
The bank is significant because of media claims that more
than $680m linked to 1MDB and SRC International, another
state company, was sent to Mr Najibs accounts there. The
premier has denied any wrongdoing. AmBank declined to
comment.
A hit-man was convicted of shooting Hussain Najadi and
sentenced to death in 2014.
But Pascal Najadi is unhappy that a suspected mastermind of
the plot was quietly arrested and released without charge
late last year. A Malaysian government spokesman declined
to comment.
(Full article click - FT)
---

No Foxconn-Sharp deal before Wednesday

Taken from the Nikkei Sunday, 6 March 2016

Key iPhone assembler Hon Hai Precision Industry will sign an

agreement to acquire Sharp, the embattled Japanese
electronics maker, perhaps by Wednesday, a person familiar
with the talks has told the Nikkei.
The two sides had agreed to try to wrap up a deal by
Monday, but according to the source, Wednesday is now
the earliest the acquisition could be made. The person did
not elaborate on the reasons behind the delay.
Another source said the two sides will finish their due
diligence and complete a deal before next weekend.
A spokesman for Hon Hai, also known as Foxconn Technology
Group, said on Saturday that the two companies do not have
a date in mind for concluding a deal. Sharp declined to
comment.
In a move that reflects his determination to snatch the
Japanese company and its advanced display technology,
Foxconn Chairman Terry Gou made another visit to Osaka,
western Japan, to negotiate with Sharp President Kozo
Takahashi.
Gou also toured the Japanese company's white goods
production facilities in Osaka. He arrived on Thursday and
returned to Taipei on Friday.
Initially, the companies had wanted to announce a deal by
the end of February. Foxconn, however, decided to hold off
after Sharp on Feb. 24 made known that it has as much as
350 billion yen ($3.07 billion) in contingent liabilities.
Foxconn says it was caught unaware, though Sharp says it
had made proper disclosure in its financial statements.
Takahashi has told Foxconn that probably 50 billion yen of
the contingent liabilities will become realized. JPMorgan,
Foxconn's financial adviser, seems to have concurred,
judging that a significant portion of the contingent liabilities
are of low risk.
Both sides remain eager for a deal.
Meanwhile, Foxconn on Sunday will hold a recruiting event
at Taiwan's leading National Taiwan University, where it will
be looking for new engineers and managers with Japanese
language skills to help it expand into Japan.
(Full article click - Nikkei)
---

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