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Daily Dispatches – Asia slow down

South East Asia

The Asian Development Bank (ADB) believes growth in the region is slowing, dragged down by China, and has accordingly cut its forecasts for this year and next.

The Business Times reports that the ADB cut its outlook for 2013 by just under one third of one percentage point to 6.3% for 2013 and 6.4% in 2014.

The ADB has also taken half a percentage point off China’s projected growth to bring it down to 7.7% for this year and 7.5% next year.

“Data (showed) investment growth slowed in May and is expected to weaken further with financial institutions becoming more averse to risk following turbulence in its domestic interbank money market. The drop in trade and scaling back of investment are part of a more balanced growth path for (China), and the knock-on effect of its slower pace is definitely a concern for the region,” ADB chief economist Changyong Rhee said in a statement.

New man in the city

Bloomberg reports that Citigroup has named Ashish Bajaj as the head its Asia-Pacific commercial bank as it seeks more revenue from small and medium sized companies in the region.

Bajaj, 49, replaced Gaurang Hattangdi, who has become the bank’s global head of product development for commercial banking.

Citi CEO Michael Corbat said in May he would invest “meaningful” resources to expand Asia-Pacific operations.

Meanwhile Citi’s focus on emerging economies and stronger bond trading revenue helped drive profits 42% higher in the latest quarter, according to Reuters, with about one-half of its profit in the first half earned in emerging markets.

Analysts say, however, that Citi is facing profit pressure pressure from slowing growth in emerging markets.

In a negative mood

Moody’s has downgraded Singapore’s banking system outlook from stable to negative on the back of the rapid loan growth and rising real estate prices in the Lion City and regional markets where its banks are active, according to the Business Times.

Moody’s said this had increased the probability of deterioration in credit quality under potential adverse conditions for the banks in the future.

“The operating environment for Singapore’s banking system has been favourable for an extended period, with low interest rates and strong economic growth domestically and in the surrounding region. With the potential risk of a turn in the interest rate cycle, we view strong asset inflation and credit growth trends as vulnerabilities, as this combination would likely cause credit costs to rise from their current low base.”

Catch a Tiger any way you can

The Financial Times reports that Hong Kong’s market regulator will launch formal civil proceedings against Tiger Asia Management for alleged insider trading in shares of China Construction Bank and Bank of China four years ago. This means the Securities and Futures Commission can now no longer pursue criminal proceedings against Tiger.

Tiger faces a range of potential punishments from the civil Market Misconduct Tribunal. It can prohibit a person from dealing in securities, futures contracts or leveraged foreign exchange contracts in Hong Kong for up to five years.

Tiger Asia has consistently denied the allegations in Hong Kong. However, in December, it pleaded guilty to insider trading in CCB and Bank of China in a federal US court and reached a settlement with US regulators, paying USD$60 million in fines.

New China JV

Asian Investor reports that Australia’s AMP Capital and China Life, China’s largest life insurance company, have agreed to form a joint venture fund management company. The two companies have been working together for eight years.

The JV marks the first time a foreign fund house has joined forces with a Chinese insurance company and represents the latest partnership between an offshore manager and a Chinese firm, following the State Street Global Advisors and Zhongrong International Trust JV, and the partnership between Yuanta Securities Investment Trust and China Resources earlier this year.

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