Sunday, October 23, 2016

In global iron ore, Singapore bosses China in setting prices


October 21, 2016

SINGAPORE — In the US$7 billion (S$9.8 billlion) a day global iron ore futures market, size doesn’t matter when it comes to clout. Contracts in Singapore have greater pricing power than those traded in China even though the volumes in the city-state are more than 20 times smaller, according to Goldman Sachs Group.

Although investors may assume that it’s the Dalian Commodity Exchange, or DCE, that sets the global price given the high volumes, it’s the contract on the Singapore Exchange, or SGX, that drives the market, the bank said in a report. The reason may be that institutional investors account for a greater share of trade in Singapore, it said in the Oct 20 note.

While China’s policy makers have said they want to develop its raw material futures markets as hubs for setting prices — seeking to marry the country’s commercial heft with a greater say in determining how much commodities cost — Goldman’s finding suggests that goal remains a distant one. In iron ore, the country is the world’s largest buyer, accounting for more than two-thirds of the seaborne market. Most cargoes come from miners in Australia and Brazil.

“Size doesn’t matter,” analysts including Amber Cai wrote after crunching the numbers. The bank’s analysis revealed that the SGX has more pricing power than the DCE, with daily changes in Singapore consistently leading daily changes in Dalian, they wrote.

Saturday, October 22, 2016

What is behind Duterte’s move away from the US?

Absent an official explanation, the announced decision by the Philippines to tilt away from the US would appear to be purely the product of President Rodrigo Duterte’s personal pique.


OCTOBER 18, 2016

Like a play looking for a plot, Philippine President Rodrigo Duterte’s “diplomatic war” with the United States is one in search of a valid reason and a just cause. We are dumbfounded by its sheer opacity, and the prospect that we will ever see the real reason and cause for it seems rather remote. It is beginning to look like a border war between two states that have no common border to begin with.

The Philippines’ relations with China, on the other hand, appear to be warming up after six years of lying inside the freezer during the watch of Mr Duterte’s predecessor, Mr Benigno Aquino. Mr Duterte, better known as DU30 on social media, is visiting China this week, accompanied by a large business delegation, to explore trade, investment and other opportunities.

This portends seismic effects upon the politics of Asia-Pacific. Amid statements that the Philippines can stand without foreign aid (from the West), one Cabinet secretary says the China trip will bring in some US$3 billion (S$4.17 billion) in “funding aid”.

An article in The Diplomat describes DU30’s visit as a “splash of cold water” on Philippine-US relations. This is an interesting turn in a century of Philippine-Chinese and Philippine-American relations. In the US debates on the merits of acquiring the Philippines after the Spanish-American war, the US minister to China Charles Denby saw the Philippines as America’s “gateway” to the vast Chinese market.

Friday, October 21, 2016

China's perception of Singapore: 4 areas of misunderstanding

Tommy Koh
For The Straits Times

21 Oct 2016

What China misunderstands about Singapore is that: Singapore is not a Chinese country despite having a majority-Chinese population; Singapore values a united Asean; Singapore is not a US ally but wants to be friends with all major powers; and Singapore has the world view of a small country.

Relations between Singapore and China are unique. There is no other country in the world with a population in which the majority are ethnic Chinese. Taiwan is not comparable because it is not a sovereign and independent country. Hong Kong is legally part of the People's Republic of China.

Thursday, October 20, 2016

Final US presidential debate overshadowed by one shocking moment from Donald Trump

Jeremy Au Yong
US Bureau Chief

20 Oct 2016

LAS VEGAS - While the two previous clashes between Republican Donald Trump and Democrat Hillary Clinton have been eventful, the final presidential debate produced by far the most jaw-dropping moment of what has already been an unprecedented campaign.

Roughly an hour into the 90-minute debate in Las Vegas, Nevada, moderator Chris Wallace asked the billionaire if he would commit to accepting the result of the election on Nov 8, even if it turns out to not be in his favour.

Mr Trump, who had in past week been telling supporters that the election is rigged against him, shocked with his answer.

"I will look at it at the time. I'm not looking at anything now. I'll look at it at the time," he said, to exclamations from some in the debate hall as well as gasps throughout the media centre.

Mr Wallace even had to repeat the question to make sure Mr Trump was indeed questioning the integrity of US democracy.

"Sir, there is a tradition in this country - in fact, one of the prides of this country - is the peaceful transition of power and that no matter how hard-fought a campaign is, that at the end of the campaign that the loser concedes to the winner...  Are you saying you're not prepared now to commit to that principle?" he asked.

Mr Trump doubled down: "What I'm saying is that I will tell you at the time. I'll keep you in suspense. Okay?"

That single answer overshadowed what had been Mr Trump's best debate performance and one of the more substantial clashes between the two major party candidates.

Trump supporters are talking about civil war. Could a loss provide the spark?

By Dana Milbank 
Opinion writer
Washington Post

October 18


We are three weeks from the election, and very close to the edge.

Retiree Gerald Miller, a volunteer at Donald Trump’s rally here, is confident his man will win on Nov. 8 — unless there’s foul play.

Miller, wearing an NRA pin and a tea party cap over his long hair, shares Trump’s concern that the election may be “rigged” by the Clinton campaign. “It is enough to skew the election. They can swing it either way,” he said, particularly because Hillary Clinton may have “the FBI working for her” in committing the fraud.

So what happens if Clinton is declared the winner? “Donald Trump is going to holler fraud if he doesn’t win,” figured Miller, who is white and says he has PTSD from “racial violence” he suffered in the military. “I think we’re on the verge of a civil war, a racial war. This could be the spark that sets it off.”

Tuesday, October 18, 2016

The skills delusion

Adair Turner

18 Oct 2016

LONDON • Everybody agrees that better education and improved skills, for as many people as possible, are crucial to increasing productivity and living standards and to tackling rising inequality.

But what if everybody is wrong?

Most economists are sure that human capital is as important to productivity growth as physical capital. And, to some degree, that's obviously true. Modern economies would not be possible without widespread literacy and numeracy: Many emerging economies are held back by inadequate skills.

But one striking feature of the modern economy is how few skilled people are needed to drive crucial areas of economic activity.

Facebook has a market value of US$374 billion (S$520 billion) but only 14,500 employees. Microsoft, with a market value of US$400 billion, employs just 114,000 people. GlaxoSmithKline, valued at more than US$100 billion, has a headcount of just 96,000.

Monday, October 17, 2016

US and Russia headed for new cold war

Jonathan Eyal
Europe Correspondent

17 Oct 2016

The United States and Russia are locked in a grim state of relations, thanks to the current US presidential campaign and Russian cyber-spying on America's political parties.

LONDON • Since the 1940s, every newly elected United States president has been confronted with the same foreign policy predicament: how to deal with a Russia which on some subjects could be a partner, but in almost all others remained an unbending strategic competitor.

And so will be the case with whoever takes over the White House from Jan 20 next year: she or he will grapple with the same problem no fewer than 13 previous US leaders faced.

But this time, the stakes are higher than they have been in decades. For Russia's unprecedented meddling in the US electoral process presents the American authorities with an immediate challenge to which they have to provide a robust riposte. And there are few viable options apart from greater confrontation between Russia and the US. The future relationship between the two powers looks grim, the grimmest it has been in almost half a century.