Posts Tagged ‘South Africa’

IPCC 1.5 degree report points to high stakes of climate inaction

October 8, 2018

The UN’s scientific body on climate change says the world could still stay below 1.5 degrees of warming. Although impacts at 2 degrees are likely to be more serious than anticipated, political action remains elusive.

A gentoo penguin stands before a glacial face on Trinity Island, Antarctica

The Intergovernmental Panel on Climate Change (IPCC) has released a highly anticipated report that reveals a glimpse of Earth half a degree Celsius warmer than it is today; and outlines what we must do to keep the global temperature from rising any higher.

With the 2015 Paris Agreement, the word committed to keeping global warming below 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, and preferably below 1.5 degrees.

According to the report released early Monday, the difference between these two goals is far more profound than the diminutive difference suggests, and would potentially spare hundreds of millions of people from poverty.

At 1.5 degrees we can expect to see an ice-free Arctic summer once a century, according to the report. At 2 degrees, that risk shoots up to once every decade.

Under the 2-degree scenario, sea level rise is expected to be 10 centimeters (4 inches) higher than under the 1.5-degree scenario.

Human-caused climate change has already warmed the world by around 1 degree Celsius, and the IPCC stresses how we are already seeing devastating consequences, particularly in the form of extreme weather.

And then there are the coral reefs. Over past years, global warming has ravaged the oceans’ richest ecosystems, with bleaching events across the tropics. At 1.5 degrees, the IPCC reports says, we can expect to lose between 70 and 90 percent of our reefs. But 2 degrees of warming would see them virtually wiped out — a loss of at least 99 percent.

Time to adapt

“Even at 1.5 global warming, the poorest people in the Global South will be impacted heavily. Sea level rise and the dying of corals have a huge impact on food security,” Sabine Minninger of aid organization Bread for the World told DW.

Read more: Sea level rise is real and accelerating

Minninger has seen first-hand the impacts of climate change on some of the most vulnerable places in the world, including on low-lying island nations like Fiji and Tuvalu, where communities are already being forced to take drastic action — reinforcing coastlines, changing how they grow food and relocating entire villages.

The IPCC report stresses that while global warming of 1.5 degrees will still entail huge risks, particularly to the world’s poorest people, such communities would have a better opportunity to adapt than under 2-degree warming.

“The difference of this half degree will make a huge difference for whether people can keep their home or not,” Minninger said. “Whether they lose their livelihoods, their land rights, their home, their identity, their culture — or not.”

Call to action

Currently, commitments made by countries under the Paris Agreement are expected to increase global temperatures by around 3 degrees Celsius.

The report says that in order to limit global warming to 1.5 degrees, we would need to cut global emissions 45 percent by 2030 (compared to 2010 levels), and bring them to net zero by 2050.

For climate action groups, the implications are clear.

“We still can attain 1.5, but the window is closing,” Hoda Baraka of told DW. “To get there, we must keep all fossil fuels in the ground.”

Read more: 1.5C degree goal ‘extremely unlikely’ – IPCC

IPCC scientists are also explicit that we will need to do much, much more on climate protection to attain the 1.5-degree limit.

“Limiting global warming to 1.5 degrees Celsius would require rapid, far-reaching and unprecedented changes in all aspects of society,” the IPCC said in a press release.

The report details such changes in energy production, land use, building, transport, industry, and cities, as well as how we produce and consume food.

Old-growth tree is cut down in Hambach ForestReforestation has vast potential to store atmospheric carbon

Technical challenges

The scenarios set out in the report also rely on so-called “negative emissions” to achieve both the 1.5- and 2-degree goals.

This means removing carbon dioxide from the atmosphere, using technology such as carbon capture and storage (CCS) — which has so far only been used on a small scale and with mixed results — and by restoring forests, which naturally absorb CO2, over immense areas of the planet.

Glen Peters, research director at the Center for International Climate Research, points out that even the 2-degree goal has been controversial due to its heavy reliance on removing carbon dioxide from the atmosphere.

“In a 2-degree scenario, in many cases you’re already hitting land constraints,” Peters told DW. With limited room to upscale negative emissions, the IPCC’s strategies for the tougher target of 1.5 degrees focus more on emitting fewer greenhouse gases in the first place.

1.5 degrees infographic

Yet Peters says the technical challenges pale in comparison with the political task ahead, particularly when you look at the current political landscape, with leaders like US President Donald Trump in office.

Read more: Nations backslide on climate protection promises

Political will

Engineers can figure out how to remove carbon dioxide from the atmosphere, Peters said. “It’s a lot harder to get rid of Trump — or to get India or Brazil, say, to prioritize climate over everything else.”

Stephen Cornelius, chief advisor on climate change for WWF, says the difference between the possible and the impossible boils down to political will.

“We need to push governments, so they know this is important, so that they have that mandate to act,” he told DW.

Read more: Global day of protests over climate change

The IPCC policy summary also examines to what extent the changes we need to make come in conflict with development and poverty eradication. It admits there are some possible trade-offs, but stresses that for the most part, what’s good for the planet is also good for people.

“Limiting global warming to 1.5 degrees Celsius compared to 2 degrees Celsius could go hand in hand with ensuring a more sustainable and equitable society,” the IPCC wrote.



UN warns paradigm shift needed to avert global climate chaos

October 8, 2018

Avoiding global climate chaos will require a major transformation of society and the world economy that is “unprecedented in scale,” the UN said Monday in a landmark report that warns time is running out to avert disaster.

Earth’s surface has warmed one degree Celsius (1.8 degrees Fahrenheit) — enough to lift oceans and unleash a crescendo of deadly storms, floods and droughts — and is on track toward an unliveable 3C or 4C rise.

At current levels of greenhouse gas emissions, we could pass the 1.5C marker as early as 2030, and no later than mid-century, the Intergovernmental Panel for Climate Change (IPCC) reported with “high confidence”.

“The next few years are probably the most important in human history,” Debra Roberts, head of the Environmental Planning and Climate Protection Department in Durban, South Africa, and an IPCC co-chair, told AFP.

© AFP | UN experts warn time is running out to stave off climate disaster

A Summary for Policymakers of the 400-page tome underscores how quickly global warming has outstripped humanity’s attempt to tame it, and outlines paradigm-shift options for avoiding the worst ravages of a climate-addled future.

Before the Paris Agreement was inked in 2015, nearly a decade of scientific research rested on the assumption that 2C was the guardrail for a climate-safe world.

The IPCC report, however, shows that global warming impacts have come sooner and hit harder than predicted.

– Pay now or pay later –

“Things that scientists have been saying would happen further in the future are happening now,” Jennifer Morgan, Executive Director of Greenpeace International, told AFP.

To have at least a 50/50 chance of staying under the 1.5C cap without overshooting the mark, the world must, by 2050, become “carbon neutral,” according to the report.

“That means every tonne of CO2 we put into the atmosphere will have to be balanced by a tonne of CO2 taken out,” said lead coordinating author Myles Allen, head of the University of Oxford’s Climate Research Programme.

Drawing from more than 6,000 recent scientific studies, the report laid out four “illustrative” pathways to that goal.

The most ambitious would see a radical drawdown in energy consumption coupled with a rapid shift away from fossil fuels and a swift decline in CO2 emissions starting in 2020. It would also avoid an “overshoot” of the 1.5C threshold.

A contrasting “pay later” scenario compensates for a high-consumption lifestyles and continued use of fossil fuels with a temporary breaching of the 1.5C ceiling.

It depends heavily on the use of biofuels. But the scheme would need to plant an area twice the size of India in biofuel crops, and assumes that some 1,200 billion tonnes of CO2 — 30 years’ worth of emissions at current rates — can be safely socked away underground.

“Is it fair for the next generation to pay to take the CO2 out of the atmosphere that we are now putting into it?”, asked Allen. “We have to start having that debate.”

– ‘Hail of silver bullets’ –

The stakes are especially high for small island states, developing nations in the tropics, and countries with densely-populated delta regions already suffering from rising seas.

“We have only the slimmest of opportunities remaining to avoid unthinkable damage to the climate system that supports life as we know it,” said Amjad Abdulla, chief negotiator at UN climate talks for the Alliance of Small Island States (AOSIS).

“Historians will look back at these findings as one of the defining moments in the course of human affairs.”

Limiting global warming to 1.5C comes with a hefty price tag: some $2.4 trillion (2.1 trillion euros) of investments in the global energy system every year between 2016 and 2035, or about 2.5 percent of world GDP.

That amount, however, must be weighed against the even steeper cost of inaction, the report says.

The path to a climate-safe world has become a tightrope, and will require an unprecedented marshalling of human ingenuity, the authors said.

“The problem isn’t going to be solved with a silver bullet,” Ove Hoegh-Guldberg, director of the University of Queensland’s Global Change Institute, told AFP.

“We need a hail of silver bullets.”

The IPCC report was timed to feed into the December UN climate summit in Katowice, Poland, where world leaders will be under pressure to ramp up national carbon-cutting pledges which — even if fulfilled — would yield and 3C world.

The week-long meeting in Incheon, South Korea — already deep into overtime — deadlocked on Saturday when oil giant Saudi Arabia demanded the deletion of a passage noting the need for global CO2 emissions to decline “well before 2030”.

The report was approved by consensus as soon as the Saudis backed down, participants to the meeting told AFP.

Concerns that the United States would seek to obstruct the process proved unfounded.

The Trump administration has dismantled emissions reduction policies domestically, and vowed to ditch the Paris treaty.


Asia shares hobbled by trade strain, pound up on Brexit talk

September 11, 2018

Asian shares were struggling to avoid a ninth straight session of losses on Tuesday as the specter of a further escalation in the Sino-U.S. trade war haunted investors, while the pound perched at a five-week top on hints a Brexit deal might be nearer.

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FILE PHOTO: A pedestrian holding an umbrella walks past an electronic board showing the graphs of the recent fluctuations of Japan’s Nikkei average outside a brokerage in Tokyo, Japan, January 18, 2016. REUTERS/Yuya Shino/File Photo

EMini futures for the S&P 500 edged up 0.15 percent, while financial spreadbetters pointed to small opening gains for the major European bourses.

Japan’s Nikkei fared better on the back of a softer yen and rallied 1.3 percent.

Weighing on the yen was news Japanese chipmaker Renesas was buying U.S. peer Integrated Device Technology for about $6.7 billion in cash.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.05 percent, but did hold above lows last visited in July last year.

Shanghai blue chips dipped 0.2 percent while South Korea fell 0.2 percent as investors awaited the next round of trade hostilities.

Having warned last week that he was ready to levy additional taxes on practically all Chinese imports, U.S. President Donald Trump was uncharacteristically quiet on trade on Monday.

China has cautioned it will respond if the United States takes any new steps on trade.

Canadian Foreign Minister Chrystia Freeland will meet the U.S. Trade Representative in Washington on Tuesday for another round of talks to renew the NAFTA trade pact.

On Wall Street, the Nasdaq eked out gains to end four sessions of losses but stocks of insurers slipped as Hurricane Florence barreled toward the U.S. east coast.

The Dow fell 0.23 percent, while the S&P 500 gained 0.19 percent and the Nasdaq 0.27 percent.


In currency markets, sterling stood out after the European Union’s top negotiator said an agreement for Britain to leave the economic bloc might be reached in the coming weeks.

The pound has been under pressure on anxiety that Britain would exit from the EU without any formal trading arrangement.

Sterling clambered up to $1.3050, after firming 0.8 percent overnight.

The euro inched ahead to $1.1610, but faces resistance at $1.1659. It was aided by an easing in concerns over Italian debt which left the gap between yields on Italian and more creditworthy German bonds at the narrowest in a month.

Against a basket of major currencies the dollar was 0.1 percent lower at 95.054. It did gain on the yen to 111.44, but remained within recent ranges.

Emerging market currencies remained under pressure with a broad index down near 16-month lows and the Indian rupee near a record trough of 72.675 per dollar,

“Weakness is set to remain a recurring theme amid global trade tensions, a broadly stronger dollar and prospects of higher U.S. interest rates,” said Lukman Otunuga, a research analyst at broker FXTM.

“With turmoil in Turkey and Argentina triggering contagion fears, appetite for emerging market assets and currencies is likely to continue diminishing.”

In commodity markets, gold was stuck at $1,194.90 an ounce and continues to move in the opposite direction to the dollar.

Oil prices found support from looming U.S. sanctions against Iran’s petroleum industry.

Brent was 25 cents firmer at $77.62 a barrel, while U.S. crude inched up 10 cents to $67.64.


Asian stocks mixed on fears of more US tariffs on China

September 10, 2018

Asian shares were mostly lower on Monday after US President Donald Trump declared he was considering tariffs on an additional $267 billion in Chinese goods, ratcheting up tensions between the world’s two biggest economies. It overshadowed a strong US jobs report that kept the Fed on track to raise interest rates.

People walk past an electronic board showing Hong Kong share index outside a local bank in Hong Kong, Monday, Sept. 10, 2018. Asian shares are mixed after U.S. President Donald Trump declared he was considering tariffs on an additional $267 billion in Chinese goods, ratcheting up tensions between the world’s two biggest economies. (AP Photo/Vincent Yu)

People walk past an electronic board showing Hong Kong share index outside a local bank in Hong Kong, Monday, Sept. 10, 2018. (AP Photo/Vincent Yu/MANILA BULLETIN)

KEEPING SCORE: Japan’s benchmark Nikkei 225 climbed 0.3 percent to 22,370.01 after the country’s gross domestic product surpassed expectations by growing at a 3.0 percent annual rate in the April-June quarter. The Kospi in South Korea gained 0.3 percent to 2,288.51. But Hong Kong’s Hang Seng index tumbled 0.9 percent to 26,736.22. The Shanghai Composite index fell 0.6 percent to 2,685.30. Australia’s S&P/ASX 200 was flat at 6,144.90.

WALL STREET: US stock indexes fell on Friday after President Donald Trump said he’s ready to impose tariffs on essentially every good that’s imported from China. The S&P 500 index fell 0.2 percent to 2,871.68, ending the day with its fourth straight loss. The Dow Jones industrial average shed 0.3 percent to 25,916.54. The Nasdaq composite was 0.3 percent lower at 7,902.54.

US-CHINA TRADE: Trump told reporters on Air Force One that the potential tariffs were “ready to go on short notice if I want”. Such a step would significantly escalate his trade war with Beijing and would likely increase costs for a broad range of US businesses and consumers. The Trump administration is already poised to slap tariffs on $200 billion worth of goods from China, such as handbags and bicycle tires The US has already imposed tariffs on $50 billion in Chinese imports, for which Beijing has retaliated with an equal amount of import taxes on US goods.

STRONG JOBS REPORT: The pace of hiring in the US quickened in August and wages grew at their fastest pace in nine years. The economy added a strong 201,000 jobs and the unemployment rate stayed at 3.9 percent, near an 18-year low, the government said Friday in its monthly jobs report. The data points to a job market that remains resilient after nearly a decade of economic growth, and even with tariffs and counter-tariffs on imports and exports looming over US employers that rely on global trade.

ANALYST’S TAKE: “Dark clouds continue to gather on markets with the latest threats regarding further tariffs on Chinese goods dominating sentiment, making for a weak start to the week,” Jingyi Pan of IG said in a commentary. “With any updates detailing the implementation based on President Donald Trump’s suggestion, that would most certainly be negative for equity markets, one to watch in the week,” she said.

ENERGY: Benchmark US crude added 45 cents to $68.20 a barrel. The contract lost 2 cents to settle at $67.75 per barrel in New York. Brent crude, used to price international oils, gained 49 cents to $77.32 a barrel. It rose 33 cents to $76.83 a barrel in London on Friday.

CURRENCIES: The dollar fell to 110.96 yen from 111.06 yen. The euro eased to $1.1544 from $1.1566.

Tencent, Alibaba Declines Add to Pressure on Emerging-Market Index

September 7, 2018

Asian stocks were mostly lower Friday. Benchmark Chinese indexes in Shenzhen and Shanghai fell less than half a percent, after dropping for the previous two days on trade worries. Indexes in Japan, South Korea and Hong Kong also declined.

Friday’s Big Theme

Asian technology stocks sold off, with Chinese heavyweight Tencent Holdings Ltd.TCEHY 0.24% following rival Alibaba Group Holding Ltd. BABA -2.65% in hitting a fresh one-year low. Alibaba’s drop was part of a broader overnight decline in the U.S., where tech shares were hit by trade concerns and worries about slowing demand for semiconductors.

What’s Happening

The tech trouble adds to pressure on MSCI ’s widely followed gauge of emerging markets, which has already been hit by a strong dollar and trade friction. The index hit a 13-month low Thursday. That put it into bear-market territory, with a loss of more than 20% from its record high in January.

Tencent, Alibaba and South Korea’s Samsung Electronics Co. are among the largest constituents in MSCI’s flagship emerging markets index.

An investor sits in front of an electronic board showing stock prices at a securities brokerage house in Beijing, China, earlier this year.
An investor sits in front of an electronic board showing stock prices at a securities brokerage house in Beijing, China, earlier this year. PHOTO:WU HONG/EPA/SHUTTERSTOCK

American depositary receipts for Alibaba, the Chinese e-commerce giant, fell 2.7% in New York trading Thursday to a nearly one-year low. By midday Friday in Seoul, Samsung had fallen 2.7%. That put the world’s biggest smartphone maker, which also produces memory chips, on track for a weekly loss of more than 7%—which would be its biggest since January. Rival chip maker SK Hynix Inc. pulled back 4%.

Meanwhile, Beijing’s closer scrutiny of videogames has buffeted Tencent. The videogames and social-media giant fell 1.2% Friday morning to hit a fresh 13-month low. It has shed about 23% this year.

The weak sentiment makes it a difficult time for Tencent-backed Meituan Dianping to attempt an initial public offering of up to $4.5 billion in Hong Kong. The Chinese startup offers services from food delivery to movie tickets and hotel bookings.

Market Reaction

Jingyi Pan, a Singapore-based market strategist at IG Group, said the emerging-market selloff was a result of a strong dollar, worries about trade and jitters about contagion—or strains spreading across markets.

She said there was were “enormous event risks ahead” given the prospect of new U.S. tariffs targeting an additional $200 billion of Chinese goods, and uncertainty about potential Chinese retaliation.

Technology hardware companies rely heavily on global supply chains, and often especially on China. Memory-chip makers also face their own particular difficulties. This week, analysts at Morgan Stanley warned of weakening demand for these chips, rising pricing pressure and higher inventories.


China held the yuan roughly steady against the dollar at 6.8212 in its daily fix, which sets a midpoint for currency trading onshore.

Write to Joanne Chiu at


Asia-Pacific stocks post new declines over emerging markets, trade

September 7, 2018

Philippine peso edges above 13-year low in wake of record-setting inflation data

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Weakness overnight in New York weighs on Asian equities © AP

By Hudson Lockett in Hong Kong

–Stock benchmarks down across the board in Asia
–Brent crude headed for weekly loss
–Energy equities drop on overnight fall for oil benchmarks
–Australian dollar loses ground as proxy for Asia risk

Asia-Pacific equities fell again on Friday following a discouraging lead-in from Wall Street, and as concerns over emerging markets and US-China tariffs lingered. Energy stocks took a hit from overnight oil price moves while trade war worries weighed on the Australian dollar.

Asia stocks put in a poor performance on Friday after a choppy session on Wall Street left the S&P 500 down 0.4 per cent. Investors once again proved unable to shrug off concerns over trade tariffs and emerging markets.

That sentiment was evident in Tokyo, where losses across the board pushed the benchmark Topix index down 0.8 per cent. Energy stocks were down 2.2 per cent following oil price falls during the previous session, prompted by a rise in US gasoline reserves. The key industrials segment also suffered a drop of 0.9 per cent.

Sydney’s S&P/ASX 200 was down 0.6 per cent as well, also with a drop of 1.8 per cent from energy stocks. Mining stocks and financials were down 0.3 per cent and 0.4 per cent, respectively.

Hong Kong stocks gave up early gains to trade lower in the afternoon, with the Hang Seng off 0.9 per cent and heading for its worst week since February. Chinese tech conglomerate Tencent fell another 1 per cent, compounding losses from Thursday prompted by an announcement that it would introduce a new system to limit minors’ playing time on its most popular game. The company’s shares are down by a third for the year to date.

Stocks took a similar turn in China, where the CSI 300 index of stocks listed in Shanghai and Shenzhen reversed an initial climb to fall 0.1 per cent.

Currency markets started out stable in Asia and the dollar index, measuring the greenback against a basket of international peers, was steady at 94.989 in afternoon trading.

But as trade war worries lingered the Australian dollar took a turn for the worse ahead of the European open, weakening 0.6 per cent to $0.7159.

Meanwhile, the Philippine peso was off 0.3 per cent at 53.955 per dollar, just shy of an almost 13-year low it touched on Thursday in the wake of a record high inflation reading for August.

Sovereign bond markets were steady, with 10-year US Treasury yields basically unchanged at 2.873 per cent.

Oil prices were headed for a weekly loss following drops on Thursday on news of an unexpected rise in US gasoline inventories. Brent crude was off 0.1 per cent on the day at $76.39 a barrel, while US marker West Texas Intermediate held at $67.75.

Gold was up 0.1 per cent at $1,200.46 per ounce.


Asian markets mostly down on China tariff fears

September 7, 2018

Most Asian equities sank on Friday as investors fret that the US will ramp up its trade war with China by imposing fresh tariffs, while chip-makers were among the biggest losers following a sharp sell-off in New York.

While emerging market contagion fears continue to stalk trading floors, Donald Trump’s protectionist drive returned to the fore following an indication Japan was next in the firing line, while NAFTA talks with Canada amble along.

Eyes are now on the deadline for a public consultation being carried out on Trump’s plan to hit $200 billion of Chinese goods with levies, adding to the $50 billion already targeted and marking a major step up in a battle between the world’s top two economies.

07 September 2018 – 05H01

© AFP | Chip-makers have taken a battering on concerns about the demand outlook

Beijing has warned it will immediately retaliate against any measures, fuelling fears of an all-out trade war that is already showing signs of causing a drag on the global economy.

The president also appeared to be preparing to set his sights on Japan, with an opinion piece in the Wall Street Journal saying his good relationship with Tokyo “will end as soon as I tell them how much they have to pay”.

While Trump has mostly taken out his anger with China and Europe, he has often in the past complained of an uneven trade relationship with Japan.

Japan’s Nikkei led losses, ending the morning one percent lower with exporters hurt by a stronger yen as dealers ran to the safe-haven unit for shelter from market turmoil.

Sydney lost 0.7 percent and Singapore dropped 0.4 percent. Seoul and Taipei gave up 0.2 percent and Manila was 0.5 percent off.

However, Hong Kong, which has been battered this week, edged 0.4 percent higher and Shanghai gained 1.1 percent, while Jakarta added 0.3 percent.

– Chip firms fried –

Chip firms joined their Wall Street counterparts in turning south on growing concerns about demand following a lowering of expectations by US giant KLA-Tencor.

Samsung plunged almost three percent in Seoul while SK Hynix was four percent lower. Tokyo Electron and Advantest both dived more than six percent.

The “earnings trend in (the) semiconductor sector is bound to weaken further as end-demand remains lacklustre while orders have been at very elevated levels,” Amir Anvarzadeh, senior strategist with Asymmetric Advisors in Singapore, told Bloomberg News. He called talk of a short, sharp fall over-optimistic.

In foreign exchanges, emerging markets currencies enjoyed some respite after recent losses, with the Indonesian rupiah and South African rand inching higher.

Observers have warned of further turmoil as traders fear the crises in Argentina, Turkey and South Africa could spill over into other economies.

The upheaval has revived worries of a repeat from 1997, when a collapse in the Thai baht mushroomed into a much broader Asian economic crisis.

However, Credit Suisse investment strategist Suresh Tantia said the sell-off could provide long-term benefits for dealers.

“Emerging-market equities are handcuffed by trade uncertainty and concerns around contagion risk at this point of time,” he said. “We believe they offer tremendous value as the growth outlook for EM remains healthy and valuations have become very attractive.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.0 percent at 22,264.11 (break)

Hong Kong – Hang Seng: UP 0.4 percent at 27,087.67

Shanghai – Composite: UP 1.1 percent at 2,722.23

Euro/dollar: DOWN at $1.1619 from $1.1624 at 2100 GMT

Pound/dollar: DOWN at $1.2924 from $1.2929

Dollar/yen: DOWN at 110.55 yen from 110.71 yen

Oil – West Texas Intermediate: UP four cents $67.81 per barrel

Oil – Brent Crude: DOWN two cents at $76.48 per barrel

New York – Dow: UP 0.1 percent at 25,995.87 (close)

London – FTSE 100: DOWN 0.9 percent at 7,318.96 (close)

Asian investors fight to recover after emerging market rout

September 6, 2018

Asian equities were mixed Thursday following the previous day’s rout as concerns about contagion from emerging markets fray investor nerves, while sentiment is also being dampened by the possibility of further US tariffs on China.

And while EM currencies, which have taken a battering in recent weeks, enjoyed a much-needed breather, there are warnings of further pain to come in foreign exchanges.

Worries that financial crises in Argentina, South Africa and Turkey will spill over into major economies fuelled a blood-letting across Asia on Wednesday, which filtered through to Europe.

06 September 2018 – 05H02
© AFP | There are warnings of worse to come as emerging market concerns grip traders

“Contagion is a normal reaction,” George Boubouras, director at Salter Brothers Asset Management, said on Bloomberg Television. The contagion “will get worse”, he warned.

Wall Street ended mixed with the Dow edging up but the Nasdaq took a hit from a sell-off in tech firms as top officials at Facebook and Twitter struggled in congressional testimony and the White House warned of a possible legal crackdown.

Trump “has the tech giants in his sights” following his claims of political bias against conservatives, said Greg McKenna, chief market strategist at AxiTrader.

“That’s important for global markets because the only thing between where we are today and a complete rout is the relative stability of US stocks. And we know a big chunk of the S&P’s rally has been the performance of tech stocks whose rally has been going increasingly vertical.”

– ‘Enduring storm’ –

In equity trading, Tokyo ended the morning 0.2 percent lower, while Hong Kong shed 0.4 percent in early exchanges. Sydney fell 0.9 percent and Wellington lost 1.3 percent.

Shanghai added 0.4 percent, Seoul rose 0.2 percent and Singapore was slightly higher.

Manila plunged 1.7 percent but Jakarta, which lost more than three percent Wednesday, was 0.5 percent higher.

On currency markets, the Indonesian rupiah edged up after hitting its lowest level since the Asian financial crisis 20 years ago, while the Mexican peso and South African rand also posted gains.

However, McKenna warned that pressure remains on traders and said “any hiatus in the forex universe is just a little calm in an enduring storm”.

While the emerging market sell-off is in focus, Donald Trump’s trade rows continue to play out, with a public consultation on his threatened tariffs on $200 billion of Chinese goods ending later in the day.

Investors are keeping a nervous eye on Washington after the president said last month he wanted to impose the levies as soon as the deadline passes.

And talks between the Washington and Ottawa on the revised North American Free Trade Agreement are continuing, with Canada’s Foreign Minister Chrystia Freeland saying the two are making “good progress”.

Trump has repeatedly threatened to leave Canada out of a revised NAFTA, after a deal between the US and Mexico was struck early last week.

– Key figures around 0240 GMT –

Tokyo – Nikkei 225: DOWN 0.2 percent at 22,528.46 (break)

Hong Kong – Hang Seng: DOWN 0.4 percent at 27,144.05

Shanghai – Composite: UP 0.4 percent at 2,714.68

Euro/dollar: UP at $1.1647 from $1.1631 at 2100 GMT

Pound/dollar: UP at $1.2922 from $1.2907

Dollar/yen: DOWN at 111.32yen from 111.53 yen

Oil – West Texas Intermediate: DOWN 12 cents at $68.60 per barrel

Oil – Brent Crude: DOWN 10 cents at $77.17

New York – Dow: UP 0.1 percent at 25,974.99 (close)

London – FTSE 100: DOWN 1.0 percent at 7,383.28 (close)

Asian equities dive as emerging market fears add to trade woes

September 5, 2018

Asian markets tumbled Wednesday on growing concerns about emerging market economies, adding to the uncertainty stoked by Donald Trump’s trade rows with China and Canada.

After Turkey and Argentina’s recent headline-making problems, South Africa became the latest country to spark panic Tuesday with data showing a shock plunge into recession for the one-time economic starlet.

The news sent the rand plunging in a similar way to the Argentine peso and Turkish lira in recent weeks. Observers increasingly fear the problems could spread to other emerging market (EM) countries and possibly spill over into major economies.

© AFP | The Indonesian rupiah is at its lowest level since the Asian financial crisis 20 years ago

“South Africa is back in recession and that was not expected,” said Greg McKenna, chief market strategist at AxiTrader.

“The big question is whether this is a… tipping point for EM markets and if the idiosyncratic issues are now adding up to something more structurally pernicious for EM markets. My guess? Yes, it is.”

The brewing crisis has seen currencies in a number of emerging markets — mostly with deep current account deficits — take a hammering.

India’s rupee was sitting at a record low and the Indonesian rupiah at levels last seen during the 1998 Asian financial crisis.

Indonesia said it would take unspecified action against currency speculators and announced plans to delay import-heavy energy projects in order to focus efforts on reducing imports and supporting the rupiah.

Adding to selling pressure on the EM currencies is the US economy’s continuing strength, which is forcing the Federal Reserve to raise interest rates. This leads investors to seek better and safer returns in the US.

– Trade in focus –

Data showing an index of manufacturing activity hitting a 14-year high bolstered expectations the Fed will continue to increase borrowing costs. Crucial US jobs data is due out on Friday.

The EM fright is also hitting equities, with investors already on edge as a deadline approaches this week for a public consultation on Trump’s proposal to impose tariffs on $200 billion of Chinese imports, on top of the $50 billion already being hit.

While the two sides have held low-level talks there are fears the measures will be implemented, which would spark a retaliation from Beijing and push the world’s top two economies closer to an all-out trade war.

Tokyo ended 0.5 percent lower, with the closure of Kansai airport, a key cargo hub particularly for electronic parts, following a strong typhoon acting as a drag on several stocks.

Chip-making devices firm Tokyo Electron lost 1.6 percent, while cosmetics giant Fancl collapsed almost 10 percent on fears the effects of the typhoon could scare off tourists, who are major buyers of Japanese make-up.

Hong Kong shed 2.3 percent in the afternoon and Shanghai fell 1.7 percent, while Singapore gave up 1.2 percent and Seoul dipped more than one percent.

Sydney fell one percent despite news that the Australian economy expanded far more than expected in the second quarter thanks to a pick-up in exports and consumer spending. The local dollar was marginally higher.

Jakarta led a sell-off in EM equities, diving four percent, while Manila was more than two percent lower and Bangkok lost 0.8 percent.

“There seems to be no sign of halting the downtrend” for emerging-market assets, Koji Fukaya, chief executive officer at FPG Securities in Tokyo, told Bloomberg News.

“Investors have become more selective and countries with negative news such as weak economic growth, weak external balances and high inflation face stronger sell-offs.”

Eyes are also on the resumption of talks Wednesday between the US and Canada aimed at reviewing NAFTA.

Optimism sparked by Mexico’s deal last week with Washington was soon tempered by the failure to close a deal between the US and Canada, with Trump threatening to leave Ottawa out of the pact altogether.

Canadian Prime Minister Justin Trudeau stressed that no deal is better than a bad deal for his country.

London’s FTSE fell 0.3 percent at the open, while Paris and Frankfurt each shed 0.4 percent.

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: DOWN 0.5 percent at 22,580.83 (close)

Hong Kong – Hang Seng: DOWN 2.3 percent at 27,331.66

Shanghai – Composite: DOWN 1.7 percent at 2,704.34 (close)

London – FTSE 100: DOWN 0.3 percent at 7,434.69

Euro/dollar: DOWN at $1.1573 from $1.1600 at 2100 GMT

Pound/dollar: DOWN at $1.2838 from $1.2900

Dollar/yen: UP at 111.46 yen from 111.45 yen

Oil – West Texas Intermediate: DOWN 85 cents at $69.02 per barrel

Oil – Brent Crude: DOWN 70 cents at $77.47 per barrel

New York – Dow: DOWN 0.1 percent at 25,952.48 (close)


Chinese people on social media say US$60 billion pledge to Africa is money better spent inside China — Internet censors stop discussions

September 4, 2018

“You should first raise your own children,” one commenter wrote. “My God, there have been so many natural and man-made casualties recently, can you please take a look at our low-income people?”

Internet censors shut down debate while state media talks up the tangible efforts of its economic commitment to African nations

South China Morning Post

PUBLISHED : Tuesday, 04 September, 2018, 9:31pm
UPDATED : Tuesday, 04 September, 2018, 9:34pm

China has defended its decision to pledge another US$60 billion in funding to African nations amid criticism that the money should be spent at home.

Quick-fingered internet censors suspended comments on news reports about the funding on Weibo, China’s Twitter equivalent, on Tuesday while state media outlets touted the tangible benefits of investing in Africa.

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While Beijing fended off external accusations of neocolonialism, the enormous financing promise drew ire at home over China’s expanding foreign investments, in the midst of an economic slowdown and the spectre of further battering from the escalating US-China trade war.

Chinese President Xi Jinping made the funding pledge at the start of the three-yearly Forum on China-Africa Cooperation in Beijing on Monday.

The commitment included an exemption for some nations’ existing debts and added to US$60 billion in loans and grants already promised to Africa in 2015.

In separate microblogging posts, online commenters angrily compared Monday’s pledge with domestic spending on education and the disadvantaged.

“You should first raise your own children,” one commenter wrote. “My God, there have been so many natural and man-made casualties recently, can you please take a look at our low-income people?”

“US$60 billion is money that we earned!” another wrote. “Tell me who is causing the suffering of China’s everyday people?”

In one biting meme on social media, netizens set Chinese Foreign Minister Wang Yi’s comments that China would not waver in its economic commitment to Africa alongside Education Minister Chen Baosheng’s quotes that the country had limited funds and could not “exceed its own stage of development”.

In reference to Xi, another commenter wrote: “It is better to teach a person to fish than to fish for them. What Africa is lacking most is a wise leader. Maybe we can donate this one to Africa.”

In response to the criticism, state media outlets ran commentaries focusing on the win-win benefits of China’s cooperation with Africa, noting the continent’s large market potential and abundant natural resources, such as crude oil, manganese and copper.

China is Africa’s largest trading partner, with Beijing expanding its presence on the continent in recent years beyond trade and investment to include military and political interests.

“People often ask why China wants to partner with Africa,” a post from Xiakedao, a social media platform run by the Communist Party mouthpiece People’s Daily, said on Tuesday. “China and Africa have very strong complementarity, and Africa’s development potential will bring a large market.”

Delegates listen to Xi Jinping’s speech at the Forum On China-Africa Cooperation in the Great Hall of the People in Beijing. Photo: AFP

It added that China had imported more cotton and copper from Africa than it produced domestically, and that oilfield projects by Chinese enterprises in Africa “greatly helped” China’s energy security.

People’s Daily article on Sunday said assistance to Africa “gave China concrete ‘rewards’, since even though China’s aid did not have any political preconditions, many African countries have consistently reciprocated by helping China”.

The article also referenced African aid during the devastating 2008 Wenchuan earthquake and rhetorical support to Beijing’s claims in the South China Sea, saying: “This brotherhood is not something that even money can buy. For China-Africa cooperation, one cannot just look at the financial accounts, but must look towards the future from a developmental perspective.”

But Hu Xingdou, a Beijing-based economics professor, said Beijing should at least consider the public outcry against the foreign financing, even if there were gains for China from energy cooperation and trade relations with Africa.

“Trade numbers and industrial revenues are going down, and most Chinese still cannot afford proper medical care or education,” he said.

“There are many critically ill Chinese who cannot do anything but wait for death, so the scepticism online is quite natural … Aid to Africa is necessary but needs to be done within China’s capabilities.”

Additional reporting by Jun Mai


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