Financial Services Clippings | November 1 - 7, 2012

Top Story: ASEAN banking sector integration draws near
Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said central banks in the region are now in the final stages to having it launched. "Asean central banks have endorsed the Asean Financial Integration Framework in 2011 and are in the final stages to launch the framework for banking sector integration. "This will pave the way for a more meaningful presence of qualifying Asean banks within the region, while promoting regional financial stability," she said in her keynote address at the 19th Asean Banking Conference 2012 here yesterday.

LOOKING AHEAD:

  • Vietnam to hold int’l financial stability conference on November 27-28 in Hanoi - This is the first conference of its kind to be held in Vietnam. It is expected to bring together 500 domestic and foreign delegates from 14 economies in East Asia and around the world. Entitled “Financial stability frameworks and supervision in changing environment,” the event will enable the delegates to share experience, strengthen cooperation and work out joint action plans towards the stable financial market in the region. Establishment of the East Asia financial stability forum is supposed to be tabled for discussion and approval at the event. The conference is jointly organized by the National Financial Monitoring Committee, the Office of Government, the State Bank of Vietnam and the Finance Ministry.

IN THIS UPDATE:

Market Development
ASEAN currency strength reveals real QE effects
Regulation spurs innovation in PH
Exchange-traded funds make their mark
ASEAN as a single asset class proposed

Insurance
Pru strikes $590 million Thai insurance deal, turns up heat on AIA
Zeti: East Asian insurers need to respond faster to changes

Market Regulation
PH mulls liberalization of currency regulations
CFTC reg. may prompt iron ore swaps volume migration
SC M’sia hosts regulators from 21 countries in annual emerging markets program

Banking
G20 may punish bank capital reform delinquents
Bain says private-equity deals to rebound

Market Development
 
ASEAN currency strength reveals real QE effects | Seeking Alpha, Nov 5
Since the week of QE to Infinity by the major central banks back in mid-September wherein the Federal Reserve and the E.C.B. led the charge by announcing unlimited-in-duration bond and securities buying programs there has been a lot of movement in the currency markets. But, relative to the period between March and July of this year, however, where we saw 20+% moves in some of the BRICS currencies, like the Indian Rupee (which has still not recovered much of what it lost versus the U.S. Dollar ), the moves in a number of currencies have been muted but no less significant.
 
Regulation spurs innovation in PH | CGAP, Nov 5
More and more  policymakers are now recognizing that financial exclusion is a risk to political stability and impedes economic advancement, and that financial inclusion measures can complement, not undermine, financial stability, financial integrity, and consumer protection. Mindful of their responsibility to maintain the safety and soundness of the financial system, and to prevent exploitation of customers, the Philippines central bank has worked to develop appropriate regulations that conform to the principles espoused by international standards. At the same time, the central bank creates space for the private sector to develop new products that cater to the requirements of the poor.
 
Exchange-traded funds make their mark | Bangkok Post, Nov 2
Exchange-traded funds (ETFs), one of the most popular products in global markets, have become more active in Thailand five years after their introduction here. While the asset size of ETFs grew slowly over the period to 10 billion baht last year, it has shot up to 14 billion baht so far this year. Market experts say ETFs are in the early stages of being one of the most popular products.
 
ASEAN as a single asset class proposed | Saudi Gazette, Nov 2
Ranjit Ajit Singh, the new Chairman of the Securities Commission of Malaysia who assumed office in April this year, wants to see the emergence of an internationalized single Association of South East Asian Nations (ASEAN) asset class that can compete with other major regional or global asset classes. “Not only must the Malaysian capital market be internationalized, but there needs to be internationalization of ASEAN as a single asset class. The success of ASEAN as a single asset class on the global stage will also translate to better and wider access for the capital markets of each member country,” said Singh in his keynote address to the 17th Malaysian Capital Market Summit held in Kuala Lumpur recently. 
 
Market Regulation
 
PH mulls liberalization of currency regulations | Manila Bulletin, Nov 3
The Philippines is assessing whether to liberalize its currency regulations and could review its ceiling on foreign-exchange purchases for outward investment as a way to encourage capital outflows, the country’s central bank governor said Friday. In an interview ahead of meetings of the Bank for International Settlements in Mexico City, Bangko Sentral ng Pilipinas Governor Amando Tetangco said the Philippines could also look at simplifying paperwork and allowing easier movement of capital between different domestic financial markets.
 
CFTC reg. may prompt iron ore swaps volume migration | Business Recorder, Nov 3
New regulation is likely to deter US investors in iron ore swaps from using the Singapore Exchange, the leading clearer of the product, scattering business to other exchanges and reducing liquidity in this fledgling market. This could be concerning for the young but fast-growing iron ore derivatives market which has only recently started to attract more US-based hedge funds.
 
SC M’sia hosts regulators from 21 countries in annual emerging markets program | Money Science, Nov 1
The Securities Commission Malaysia (SC) hosted 50 fellow regulators from 21 developed and developing countries for a three-day Emerging Markets Programme (EMP) to share regulatory actions on how to strengthen market integrity in their own jurisdictions. The annual regulator-to-regulator platform, which enters its 13th year, is organised by the Securities Industry Development Corporation (SIDC), the training and development arm of the SC. Themed “Strengthening Resilience of Emerging Markets”, the programme takes an incisive look at how the interconnectedness of the global economy brings unintended challenges to emerging markets during times of economic turbulence and explores the feasible counter-measures available to emerging market regulators to fortify their capital markets against vulnerabilities in the system caused by the global financial crisis.
 
Banking
 
G20 may punish bank capital reform delinquents | The Star, Nov 5
The world's biggest economies will soon discuss how to punish countries that fail to implement tougher new bank rules in a crucial test of their resolve to prevent another financial crisis, officials said. Countries that miss the deadline for introducing new rules -- called Basel III -- could be named and shamed as the world's top policy makers try to sew up reforms to ring-fence the global economy from problems at financial institutions.
 
Insurance
 
Pru strikes $590 million Thai insurance deal, turns up heat on AIA | Reuters, Nov 5
Prudential plc (PRU.L)(2378.HK) has agreed to buy the insurance unit of Thailand's Thanachart Bank for 368 million pounds ($590 million) in cash, turning up the heat on rival AIA Group Ltd (1299.HK) in the fast-growing Southeast Asian market. The British insurer's acquisition, which will double its market share in Thailand, is its first major attempt to buy an Asian company since Chief Executive Tidjane Thiam aborted a $35 billion bid in 2010 for AIA, the former Asian unit of American International Group Inc (AIG.N). Since then, Southeast Asia has emerged as a battleground for AIA and Prudential, the region's two dominant insurers. Prudential recently announced plans to open an office in Cambodia and AIA last month said it had agreed to buy ING's (ING.AS) Malaysian insurance unit for $1.73 billion.
 
Zeti: East Asian insurers need to respond faster to changes | The Sun Daily, Oct 31
here is an urgency for the East Asian insurance industry to respond to developments changing at a faster pace in the region, a more demanding regulatory environment in which insurers now operate and the impact of climate change, said Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz. "While trends present enormous opportunities for the insurance industry, it also presents a challenge of building the capacity to support new, larger, more complex and more concentrated risks within a much more compressed timeframe.
 
Private Equity
 
Bain says private-equity deals to rebound | Businessweek, Nov 6
Southeast Asia’s private-equity investments will pick up as early as next year, reversing a half-decade slump as the region’s improving economic outlook attracts funds, said Sebastien Lamy, a partner at Bain & Co. Private-equity deals in the region this year are expected to match 2011’s $5.3 billion or post a decline, before staging a rebound over the next two years, Lamy said, citing Bain research. The investments dropped from a peak of $12.3 billion in 2007, according to data from the corporate consulting firm.