Chinaâs great bond market opening leap forward

Chinaâs great bond market opening leap forward

On: May 16, 2023

In: Asia

Beijing regulators are leaning into a seven-week rally in China’s sovereign bond market by widening access to onshore interest-rate swaps. Yet what sounds like a rather technical turn of the screw is a huge and timely reform win for institutional investors keen on trading Asia’s biggest economy.

“Timely,” because it coincides with Group of Seven (G7) members heading to Hiroshima, Japan to contain any number of financial troubles. They include runaway inflation, failing Western banks, the specter of a US default and desperate attempts to woo Global South countries.

In China, though, the vibe is more about opening a recovering financial system to global investors hungry for growth and higher-yielding assets as the post-Covid-19 trade gains momentum.

Here, the new “Swap Connect” program between China and Hong Kong is wisely timed. It opens the way for overseas funds to access derivatives vital to hedging bets in China’s bond market. The dearth of hedging tools has long turned off the biggest of the big money.

The swap scheme will enable punters to deal in key money-market rates tied closely to People’s Bank of China (PBoC) policies. This will likely deepen institutional investors’ involvement in China markets, building on the existing Bond Connect plan. The move dovetails with a powerful bond rally driven by expectations that the central bank will add more liquidity this year.

For Chinese leader Xi Jinping, Swap Connect helps fulfill a pledge to open mainland capital markets to international funds. It turns the page, to some extent, from the regulatory crackdowns of 2020 and 2021. It also reminds top investment banks that geopolitical turbulence between Beijing and Washington isn’t getting in the way of market reforms.

The program “will be a huge leap forward in developing the domestic derivatives and bond markets,” says Rose Zhu, chief China country officer at Deutsche Bank, which Beijing named as a key market maker for Swap Connect.

“Leveraging our cross-border strengths, we look forward to playing an active role in helping international investors get a head start via Swap Connect” and “helping accelerate the opening up of China’s financial markets and RMB internationalization.”

Monish Tahilramani, head of Asia Pacific markets at HSBC, says the hedging tool marks “an important complement to Bond Connect and a positive sign that onshore markets continue to open up.”

It’s not that simple, of course. Nicolas Aguzin, CEO of Hong Kong Exchanges and Clearing Limited, is absolutely right to call Swap Connect “the latest chapter in our ‘connect’ story.”

The reference here is to Xi’s habit of connecting markets to Hong Kong’s first-world system to increase China’s financial street cred. First it was Stock Connect, then Bond Connect. Now, Swap Connect rounds out Xi’s regional ambitions.

Yet the question is whether this time financial reforms will keep pace with rising investor optimism? Or will this be another episode of China over-promising and under-delivering?

Li Qiang is promising big market reforms. Image: Screengrab / NDTV

New Premier Li Qiang has signaled the former. Since March, when he formally took over as Xi’s No 2, Li seems to have hit the brakes on the tech company crackdown that in recent years has sent foreign capital fleeing.

In March, for example, Li said that “for a period of time last year, there were some incorrect discussions and comments in the society, which made some private entrepreneurs feel worried.

“From a new starting point, we will create a market-oriented, legalized and internationalized business environment, treat enterprises of all types of ownership equally, protect the property rights of enterprises and the rights and interests of entrepreneurs.”

The plan, Li explained, is to “promote fair competition among various business entities and support the development and growth of private enterprises” and to “shore up” investor confidence.

Hence the importance of Swap Connect. It’s equally important, though, that Li’s reform team ensures that China follows through this time.

Earlier episodes of market opening saw Xi’s government putting the proverbial cart before the horse. In 2014, for example, the Stock Connect program lured tidal waves of capital but steps lagged to increase transparency, level playing fields and reduce limits on yuan convertibility.

The same with Bond Connect in 2017. Regulatory upgrades lagged as capital zoomed in. In between there, in 2016, China gained access to the International Monetary Fund’s “special drawing-rights” program.

That came after years of lobbying by former PBoC Governor Zhou Xiaochuan. The yuan’s inclusion in the IMF’s club of reserve currencies along with the dollar, euro, yen and the pound signaled China was achieving prime-time status.

Unfortunately, seven years on, the yuan still isn’t fully convertible. That’s limiting the yuan’s appeal as a rival to the dollar — even as the US government does its worst to damage the reserve currency’s credibility.

Part of the problem, though, is what this state of affairs says about Xi’s first 10 years in power: China doesn’t trust markets to decide the yuan’s value. If so, the thinking goes, why would investors trust Team Xi?

Still, the Swap Connect narrative is a powerful one if Li can reinvigorate the reform process as Xi’s third term heats up. It’s a “northbound” trading system enabling dealing in mainland yuan-denominated contracts with a net cap of 20 billion yuan (US$2.9 billion) per day. Next, a “southbound” channel might be added from China to Hong Kong.

As Hong Kong’s Chief Executive John Lee said this week: “The new scheme will strengthen Hong Kong’s role as an offshore yuan trading center and as a risk-management center.”

Julia Leung, CEO of the Securities and Futures Commission, added that Swap Connect “deepens connectivity between mainland and overseas capital markets and bolsters Hong Kong’s position as a risk-management hub.”

In a note to clients, HSBC argued that “compared to offshore interest-rate swaps, onshore interest-rate swaps are less volatile and correlate better with onshore bond yields. This makes onshore interest rate swaps more efficient interest rate hedges of onshore bonds. The other benefit of entering the onshore swap market is having access to SHIBOR interest rate swaps, which are rarely quoted in the offshore market.”

China has big plans to rein in local government debt. Image: Screengrab / CNBC

HSBC analyst Candy Ho notes that “Swap Connect has immediate value for global investors and is a timely move in China’s ongoing commitment to its markets opening up.” She adds it will make “participating in the world’s second-largest fixed-income market more attractive by introducing a central clearing model and providing better access to the deep onshore liquidity in financial derivatives markets.”

A deep and vibrant bond market is needed to finance everything from the growth of the private sector to adjust to an aging and shrinking population to funding bigger social safety nets so China can pivot to a consumption-led growth model. Beijing is expected to rack up a record 3.88 trillion yuan ($557 billion) deficit this year.

A more resilient debt market would help PBoC Governor Yi Gang’s team gain greater traction when it tweaks monetary policy. The odds of more assertive PBoC easing may have increased Tuesday with news that retail sales, industrial output and fixed investment expanded much less than hoped in April. The youth unemployment rate meanwhile hit a record high of 20.4%.

“China’s activity indicators missed expectations by a wide margin even with a favorable base,” says economist Xiangrong Yu at Citigroup. “With China now out of the sweet spot of reopening, hope of further sentiment repair could be diminishing in the absence of decisive government actions.”

Such trends may be more positive for Chinese bonds than stocks in the short-to-medium term. And here, news that Beijing is stepping up efforts to develop a more developed bond market to provide the economy with a bigger shock absorber if global markets go awry will bolster confidence. The ability to hedge is an important step in that direction.

The new risk-hedging instrument is being introduced just as rising US interest rates put foreign outflow pressure on China’s bond market, with overseas funds cutting their holdings by $169 billion over the past five quarters. At the same time, global investors still own 10 times as many of the securities as they did a decade ago.

Before May 15, Beijing only allowed foreign funds to access onshore interest-rate swaps via the China Interbank Bond Market framework. Swap Connect vastly broadens access at a moment when G7 members are giving investors reasons to seek opportunities elsewhere – not least China.

Follow William Pesek on Twitter at @WilliamPesek

China expands economic reach in USâ backyard

By: Bolen C

On: May 16, 2023

In: Asia, Business

In early March 2023, General Laura Richardson, head of the United States Southern Command, told a US congressional hearing that Chinese actions in South America posed a threat to US safety. According to General Richardson, China is on a relentless march to replace the United States as the leader in the region.

While China’s presence in the region has grown substantially in the past decade, it is unlikely that China will replace the United States as the dominant political, economic and military power in Latin America for the foreseeable future.

On the economic front, China has made inroads into South America and the Caribbean, a region where US power once went unchallenged. Starting in the late 1990s, Chinese interest in South America and the Caribbean began to grow.

In order to sustain its unprecedented economic growth China began to search the globe for oil and other raw materials. In 2000, Chinese trade with the region totalled US$12 billion, reaching $314.8 billion in 2021. In 2023, China is the largest trading partner of nine countries in the region: Argentina, Brazil, Bolivia, Cuba, Chile, Peru, Paraguay, Uruguay and Venezuela.

While the growth in trade between China and the region is impressive, the United States remains Latin America and the Caribbean’s largest trading partner. In 2020, US trade with the region was $758.2 billion. But 71 per cent of this trade was with Mexico. In 2021, Chinese foreign direct investment in the region totalled $130 billion.

Before the Covid-19 pandemic, China was the biggest lender to the region, with Chinese development banks having issued $66.5 billion in loans — mostly for infrastructure projects that offer Chinese companies better access to the region’s rich natural resources. A small portion of these loans were provided under China’s Belt and Road Initiative (BRI).

While China’s economic footprint in the region has increased significantly, the United States and the European Union remain the largest foreign investors, accounting for 36 per cent and 34% of total investment respectively.

As China faces an economic slowdown due to the Covid-19 pandemic, Chinese loans have dried up. When countries in the region fall into financial crisis, Western institutions such as the International Monetary Fund have provided the lion’s share of structural adjustment loans, not China.

The extent to which China’s economic gains in the region have resulted in political and diplomatic influence is unclear. While China has been Brazil’s largest trading partner for over a decade, tensions have arisen under both left- and right-wing Brazilian governments.

Chinese President Xi Jinping and Brazilian leader Luiz Inácio Lula da Silva in a state of embrace. Image: Twitter

In Panama, after relentless US pressure, several multibillion dollar infrastructure contracts initially awarded to Chinese companies were cancelled and given to South Korean and Japanese companies.

During her testimony to Congress, General Richardson also warned that China has increased its support for anti-US regimes in the region including Venezuela, Cuba and Nicaragua.

But with the exception of Venezuela, Chinese investment and trade with these countries is minimal compared with its presence in most other countries in the region. In the cases of Cuba and Nicaragua, their desperate economic situations and US sanctions render them less attractive to China.

In the defence and security sector, China has made modest inroads into the region. While the number of South American and Caribbean military and security officers going to China for training has increased, the United States remains the primary destination for training thousands of officers from the region. The United States has dozens of bases and other installations throughout the region and is the region’s ultimate guarantor of security.

While the power of the United States in the region remains solid, challenges on the economic front are increasing. No other power — not even the Soviet Union — has been able to challenge US economic dominance of the region.

Apart from in Cuba, Soviet trade and aid to the region was negligible and its diplomatic influence limited. While most countries in the region want to maintain close ties with the United States, they also want the benefits of China’s massive trade and investment flows.

On the eve of the pandemic, total trade between China and Latin America had hit $314.8 billion. Chinese foreign direct investment in Latin America was about $130 billion and net development lending by the China Development Bank and Export–Import Bank of China was about $66.5 billion. Taking 2000 as the baseline, the figures in all three categories have grown exponentially.

China is taking many steps to improve its economy and its currency. Photo: Facebook

While trade and FDI inflows dipped slightly during the pandemic, Chinese development lending to the region dropped to zero in 2020. With just two years of operation in Latin America and the Caribbean, the BRI accounts for only a few million of the $43.5 billion disbursed to the region by Chinese policy banks between 2015 and 2019.

China’s growing presence and rising economic importance to the Global South should be expected. But China was able to build such a strong presence in Latin America and the Caribbean in large part due to US neglect of the region.

The United States can no longer take the region for granted. Perhaps Washington should start treating Latin America as its front yard rather than its backyard.

Loro Horta is a diplomat and scholar from Timor-Leste. He has served as Timor-Leste’s ambassador to Cuba and counselor at the Timor-Leste embassy in Beijing.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

Exchanging views on crypto: Exclusive interview with Coinhakoâs co-founder and CEO, Yusho Liu | cryptocurrency, crypto, coinhako, founder, exclusive interview, yusho liu, singapore, digital assets | FinanceAsia

By: Marcus Ching

On: May 16, 2023

In: Asia, Finance, South-East Asia

From the fallout of FTX in November 2022, to the collapse of Silicon Valley Bank (SVB) and other US lenders associated with start-up clients, the last few months have been challenging for the crypto industry.

Singapore-based cryptocurrency exchange, Coinhako, however, remains optimistic in terms of its industry outlook as sector participants focus on “rebuilding trust and faith” across the digital asset universe.

Coinhako was conceptualised in 2014 and started off as a bitcoin wallet service for Singaporeans. Today, it is a multi-currency trading platform for cryptocurrencies and is licensed, regulated and headquartered in the city-state.

Receiving its Major Payment Institution licence from the Monetary Authority of Singapore (MAS) in May 2022, the firm is one of nine financial institutions in the market permitted to provide Digital Payment Token (DPT) services.

Confident about Singapore’s future as a Web3 hub, its team wants to play a part in growing the market’s ecosystem. To do so, the company founders recently launched Berru.co, a separate entity that seeks to support Web3 start-ups as they navigate setting up in the city.

In this interview, Coinhako’s co-founder and CEO, Yusho Liu speaks to FinanceAsia about the challenges faced by the crypto industry; the future of Singapore as a digital asset hub; and where exactly the company has its sights set on next.

Excerpts from the interview have been edited for clarity and brevity.

FA: What’s your take on the cryptocurrency market and what developments are you focussed on?

2023 is the year of reset. With the developments of the last few months and bad actors bringing the industry back several steps, we need to rebuild trust and faith in the sector.

Beyond this, we are seeing more regulatory clarity from the likes of the Hong Kong and EU authorities, which paves the way for Asia and Europe to lead when it comes to innovation in the space.

Given that Washington’s current regulatory environment is less hospitable – coupled with the issues faced by the wider US tech industry, it will be challenging for innovation to emerge from the market.

FA: Was Coinhako exposed to any of the US banks that recently collapsed?

We had zero exposure to Silvergate and SVB. We did have some exposure to Signature Bank, but no money parked there. The collapse of these banks has affected many companies but thankfully, our strongest banking relationships are based in Asia.

FA: Is Coinhako looking to raise funds to expand further? How do you view the fundraising environment?

Overall, global and regional venture capital (VC) firms have poured record amounts of money into Southeast Asian technology companies because they consider them to be at the next frontier of growth and these countries have shown very high rates of adoption and interest in digital assets. They have focussed less on companies based in more mature, traditional markets, such as the US, Europe, China, South Korea or Japan.

However, it is currently a challenging climate and investments into crypto start-ups or in the broader technology space have slowed down. While we are continuing conversations with investors, we do not think this is the right timing or environment in which to be actively fundraising.

FA: Do you have any expansion plans?

We do have plans to expand, but this year our focus is on embedding deeper into Singapore, because we think the city-state is going to be a relevant crypto hub, regardless of what the rest of the world is doing.

We see a lot of Web3 founders building a nexus in the market. There is an influx of start-ups looking to establish their presence in Singapore and we’ve set up a separate, professional advisory entity, Berru.co, to support them. Since inception this year, we’ve connected with 10 or more clients and hope to grow this multi-fold further down the road.

Drawing on Coinhako’s experience since entering the market in 2014, we want to help founders navigate the crypto landscape. We’ve done the legwork and we know what works and what doesn’t – whether that be related to finance, accounting, tax or legal considerations. This is in line with Singapore’s status as a hub, and as such, we want to make sure that companies can develop easily. A bad user experience would likely make these founders consider going elsewhere.

FA: Where else in Asia do you see opportunity?

We are watching developments in Hong Kong, with the government having recently come up with a crypto framework to foster growth in the industry. But Hong Kong is just one of the markets we’re looking at for expansion, alongside other countries in Southeast Asian and the broader Asia region.

Coinhako has a domicile-registered licence in Singapore and the beauty of being based here, is that we can use it as a centre from which to reach the rest of the region.

FA: What’s your view on Singapore’s future as a crypto hub, given that many peers have relocated to Dubai?

I’ve always said that time will tell the story.

Dubai was a hot spot when its authorities announced updated licensing frameworks. But I think that, to date, we haven’t really seen or heard much about crypto exchanges moving to the market, except for Bybit, that is trying to establish global headquarters there.

The reality is that Dubai is a regional hub for the Middle East and North Africa (MENA), but if you’re trying to establish a global or Asian base, Singapore might be more suitable.

FA: Is Dubai perceived to be friendlier from a regulatory perspective, compared to Singapore?

I think it’s important to differentiate between what people say, versus what people do.

From our perspective, we don’t see many licensed entities going to Dubai, but we’re seeing unlicensed entities go there to try to obtain a licence.

FA: How optimistic are you about the growth of the Web3 and crypto industries in Asia?

We remain optimistic about the growth of the Web3 sector, in general. Yes, the industry is volatile, but most nascent industries are.

Of course, where money is involved, so too will there be bad actors. And indeed, we are seeing more overlap between the tech and finance industries.

However, as long as builders continue to come in to develop purposeful technology and applications – and good people enter the space, we remain positive.

Singapore digital banks behind the regulatory times

By: Bolen C

On: May 15, 2023

In: Asia, Business, Finance

The digital banking ecosystem among Southeast Asia’s approximately 687 million inhabitants is diverse.

Some ASEAN members, including the more developed ASEAN-5 economies and Brunei, have well-consolidated financial services sectors, while others — especially in their rural areas — have large unbanked populations. Traditional banks and fintech start-ups have increasingly turned to digital banking to solve this problem but various issues demand greater regulatory oversight.

Digital banks have proliferated across Southeast Asia and financial authorities in Singapore, Malaysia and the Philippines are seeking to incentivize financial innovation by supporting fintech growth without compromising financial stability. Some of these initiatives include rules for digital wallets, peer-to-peer lending, application programming interfaces, licensing frameworks for digital banks and regulatory sandboxes.

Digital banking adoption is influenced by numerous factors including unmet customer needs, technology adoption, talent and national identification tech systems. The World Bank estimated that the region’s connectivity rate of 133% contrasts with only 27% of the population having a bank account. It is estimated that 80% of Indonesia, the Philippines and Vietnam, and 30% of Malaysia and Thailand are unbanked.

Traditional banks such as the United Overseas Bank and Commerce International Merchant Banks have increasingly leveraged technology to compete with online-only banks and fintech start–ups. But with increasing mobile connectivity, monetary authorities — including the Monetary Authority in Singapore — have leaned towards licensing digital-only banks and nurturing fintech start-ups to compete with traditional banks.

The number of fintechs in Southeast Asia increased from 34 to 1,254 between 2000-2022. Southeast Asian fintechs have a cumulative total of US$4.8 billion of equity funding — the largest share of these start-ups located in Singapore.

Singapore’s position as a financial hub and the region’s leading digital economy for tech-driven innovation makes it an ideal choice to observe the motivations and challenges for technological transformation in financial services.

In December 2020, the Singaporean Monetary Authority awarded digital full bank licenses to GXS Bank and Sea Limited’s Mari Bank and gave significantly rooted foreign bank privileges to Trust Bank to create competition for traditional incumbents and encourage financial innovation and digital banking.

These initiatives prompted the three biggest traditional banks in Singapore — namely the Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) — to accelerate their transformation processes. With high overheads, traditional banks must transform to compete with fintechs in terms of costs, products and services.

DBS approached this challenge in its journey toward being a tech-minded company by collaborating with cloud computing provider Amazon Web Services to retrain its staff in digital tools, artificial intelligence (AI), and machine learning. Over 3,000 DBS employees — including senior executives — were trained in innovative technologies.

DBS differentiated itself by developing 85% of its technology in-house — rather than outsourcing — during its cloud-based tech infrastructure transition. Data is used for personalized intelligence and analytics to enable a greater understanding of customers’ desires and expectations. DBS is industrializing the use of AI and machine learning to power differentiated customer experiences.

Fundamentally, DBS had to operate as a start-up and embed an appropriate organizational start-up culture — a particular challenge for incumbent banks transitioning into the tech space. Adopting a hybrid multi-cloud infrastructure, DBS aims to reduce infrastructure costs by adapting its architecture to the cloud and reimagining its processes to be customer-centric.

In this context, Singapore’s Smart Nation Initiative “Singpass”, a digital identification framework, could play a key role in enrolment and verification. DBS has become a technology company, enabling flexibility to experiment and implement changes faster, and integrate with customer systems.

For example, DBS and GovTech are teaming up to pilot Singpass face verification technology for faster digital banking sign-ups among seniors aged 62 and above.

During Singapore’s economic post-Covid-19 transition, DBS created the DBS Digital Exchange to manage its integrated digital ecosystem. Self-directed trading is possible via its digibank app. DBS and JPMorgan also co-created “Partior” as a blockchain-based cross-border clearing and settlement provider that harnesses smart contracts to transform the future of payments.

Before experimenting with intelligent banking, DBS built its proprietary AI machinery using an integrated approach. This combines predictive analytics, AI and machine learning, and customer-centric design to convert data into hyper-personalized nudges to help customers make informed decisions.

Because DBS provides “insights” and “nudges” for customers on its digibank app, the technology must be consistent and dependable. Yet despite spending billions on tech, training, contracting reputable vendors and using proven technology, DBS still encountered technical problems in its digitalization journey.

On May 5, 2023, DBS’ online banking and payment services were disrupted for the second time in two months. Previously, on March 29, 2023, DBS lost electrical power, disrupting its digital services for 10 hours. These two disruptions come 16 months after an outage in November 2021 which lasted for two days, causing access problems to the bank’s control servers.

The DBS Digital Exchange is 10% owned by Singapore’s SGX stock exchange. Image: Twitter

For the 2021 outage, the Monetary Authority required DBS to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk, amounting to US$700 million of regulatory capital to ensure sufficient liquidity.

As traditional banks like DBS digitalize and embrace technology, they must have robust business recovery and continuity capacity built into their digital frameworks. Regulatory authorities like the Monetary Authority have driven digital transformation and highlighted the need for banks to continually review their digital banking infrastructure.

But regulators also need to increase monitoring and supervision of banks’ digital processes and transformation models.

Dr Faizal Bin Yahya is Senior Research Fellow in the Governance and Economy Department of the Institute of Policy Studies, National University of Singapore.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

Winners: FinanceAsia Awards 2022-2023 Southeast Asia | awards, financeasia awards, southeast asia, sustainability, impact, esg, flagship awards, annual winners, 27th iteration | FinanceAsia

By: Marcus Ching

On: May 15, 2023

In: Asia, Finance, South-East Asia

Still reeling from the effects of last year’s supply chain woes, energy disruptions and geopolitical tensions, financial markets are now also contending with the impact of consecutive interest rate hikes and uncertainty following recent banking turmoil.

While 2023 may not deliver the capital markets rebound we were all hoping for, it is worth pausing to recognise leading financial institutions that have forged through and made waves in these volatile times.

Marked progress and innovation across deals continues to demonstrate regeneration and resilience. After all, the goal posts have not changed: each of Asia’s markets is bound by net zero commitments; and digital transformation continues to drive regulatory discourse and development around emerging sectors and virtual assets. As a result, sustainability and digitisation continue to be underlying themes shaping a new paradigm for deal-making in the region.

The FinanceAsia team invited banks, brokers and ratings agencies to showcase their capabilities to support their clients as they navigated these uncertain economic times. Our awards process celebrates those institutions that showed determination to deliver desirable outcomes, through display of commercial and technical acumen.

This year marks the 27th iteration of our FinanceAsia awards and celebrates activity that has taken place within the past year (2022).

To reflect new trends, this year we introduced an award for Biggest ESG Impact (encompassing all three elements of ESG strategy) and updated our D&I award to include equity: Most Progressive DEI Strategy.

Read on for details of the winners for Southeast Asia. Full write-ups explaining the rationale behind winner selection will be published in the summer edition of the FinanceAsia magazine, with subsequent syndication online.

Congratulations to all of our winners!

*** SOUTHEAST ASIA ***

CLM (CAMBODIA, LAOS, MYANMAR)
Domestic
Best Bank: Cambodian Public Bank
***

INDONESIA
Domestic
Best Bank: PT Bank Central Asia
Best Broker: PT Mirae Asset Sekuritas
Best DCM House: PT Mandiri Sekuritas
Best ECM House: PT Mandiri Sekuritas
Best ESG Impact: PT Bank Mandiri
Best Investment Bank: PT Mandiri Sekuritas
Best Sustainable Bank: PT Bank Mandiri
Most Innovative Use of Technology: PT Bank Mandiri
Most Progressive DEI: PT Bank Rakyat Indonesia

International
Best Bank: BNP Paribas
Best Investment Bank: BNP Paribas
Best Sustainable Bank: MUFG
***

MALAYSIA
Domestic
Best Bank: Public Bank Berhad
Best DCM House:
Winner: CIMB Investment Bank
Finalist: Maybank Investment Bank
Best ECM House: Maybank Investment Bank
Best ESG Impact: Public Bank Berhad
Best Investment Bank:
Winner: Maybank Investment Bank
Finalist: CIMB Investment Bank
Best Sustainable Bank:
Winner: Public Bank Berhad
Finalist: Maybank Investment Bank
Most Progressive DEI: CIMB Bank

International
Best Bank: Citi
***

PHILIPPINES
Domestic
Best Bank: BDO Unibank
Best DCM House:
Winner: BPI Capital Corporation
Finalist: China Bank Capital
Best ECM House:
Winner: First Metro Investment
Finalist: China Bank Capital
Best ESG Impact: Bank of the Philippines Islands
Best Investment Bank:
Winner: First Metro Investment Corporation
Finalist: SB Capital Investment Corporation
Best Sustainable Bank: Bank of the Philippine Islands

International
Best Bank: HSBC
Most Progressive DEI: Citi
***

SINGAPORE
Domestic
Best Bank: DBS Bank
Best Broker: CGS-CIMB Securities
Best DCM House: United Overseas Bank
Best ESG Impact: DBS Bank
Best Investment Bank: DBS Bank
Best Sustainable Bank: DBS Bank
Most Innovative Use of Technology: DBS Bank

International
Best Bank: Citi
Best Investment Bank: Citi
Best Sustainable Bank: MUFG
Most Progressive DEI: Citi
***

THAILAND
Domestic
Best Broker: InnovestX Securities Co., Ltd.
Best ECM House: Kiatnakin Phatra Securities PCL
Best DCM House: Kasikornbank
Best Investment Bank: Kiatnakin Phatra Securities PCL
Best Sustainable Bank: Bangkok Bank PCL
Most Innovative Use of Technology: InnovestX Securities Co., Ltd

International
Best Bank: HSBC
Best Investment Bank: Citi
Best Sustainable Bank: MUFG
Most Progressive DEI: Citi
***

VIETNAM
Domestic
Best Bank: Techcombank
Best Broker: SSI Securities Corporation
Best Investment Bank:
Winner: Viet Capital Securities Corporation
Finalist: SSI Securities Corporation
Best DCM House: SSI Securities Corporation
Best ECM House:
Winner: Viet Capital Securities JSC
Finalist: SSI Securities Corporation
Best ESG Impact: Saigon-Hanoi Commercial Bank
Most Innovative Use of Technology: TechcomSecurities

International
Best Bank: HSBC
Best ESG Impact: HSBC
Best Investment Bank: HSBC
Best Sustainable Bank: Citi
Most Innovative Use of Technology: HSBC

***

For other winners:

Click here to see the winners across North Asia.

Click here to see the winners across South Asia.

MAS unveils commemorative S$10 coin to mark Lee Kuan Yew’s 100th birth anniversary

By: Marcus Ching

On: May 15, 2023

In: South-East Asia

APPLICATION PROCESS

Applications to purchase the coins can be made from Monday until Jun 9 via a dedicated application website.

Only Singapore citizens and permanent residents can apply, and each applicant can apply for up to five coins.

“If demand is high, applicants may not be allocated the quantity of coins requested, but can be assured of being allocated at least one coin,” MAS said.

Each applicant will be required to indicate their identity number, mobile phone number and preferred bank branch for the collection of the coins.

Banks participating in the distribution of the coins include DBS and POSB, OCBC and UOB as well as the Bank of China, HSBC, Maybank and Standard Chartered.

No upfront payment will be requested. Successful applicants will pay for their coins when collecting them at their selected bank branches.

Successful applicants will receive SMS notifications from mid-August, and the coins will be available for collection from September.

Coins that are not exchanged during the collection window will be made available for exchange at banks by the general public, including non-Singaporeans.

The number of coins to be minted will be determined after applications close, MAS said.

The commemorative coin was announced earlier this year as part of a series of initiatives to mark the centenary of Mr Lee’s birth.

The late Mr Lee, who also co-founded the ruling People’s Action Party, was born on Sep 16, 1923. He died on Mar 23, 2015, at the age of 91.

Commentary: Why low inflation in China is no cause for applause

By: Jing Write

On: May 13, 2023

In: Asia

PBOC Governor Yi Gang didn’t seem too troubled during a recent speech to the Peterson Institute for International Economics in Washington. He observed that for the past decade, inflation in China has averaged 2 per cent, a level targeted in some way by most monetary authorities. “Two per cent is the central banker’s dream,” Yi quipped.

PBOC HAS TO ACT NOW

In a note this week, Bank of America assessed the prospects of deflation in China. While a sustained decline in prices is unlikely, inflation will remain very muted. The firm’s economists note Japan’s inflation is higher than its Asian neighbour, with all the attendant risks that brings:

“It almost appears that when major central banks find it hard to tame the inflation beast, the PBOC would have ranked high on the scorecard for inflation control … However, a central bank’s mandate is not likely supposed to push inflation down as much as possible.

“When inflation is too low, the lack of confidence in consumer spending and business expenditure could lead to further growth slowdown, making deflationary expectation permanent and incapacitating monetary policy intervention. Relative to the 3 per cent target set by the National People’s Congress, sub-1 per cent CPI inflation is perhaps too low.”

Haruhiko Kuroda, who retired last month after 10 years leading the Bank of Japan, might agree. Kuroda often sounded like he wasn’t trying to reflate an economy as much as change psychology. He often complained about a “deflationary mindset”. If Yi isn’t thinking about this, he should be.

Unlike his counterparts, the PBOC chief isn’t remotely master of his own destiny. The agency isn’t independent and key decisions need to be walked upstairs. It may not be enough to just signal a commitment to maintaining the recovery. Some action may be needed.

It would be too bad if China let this recovery drift. The stakes are too high.

US debt default could quickly trigger dollarâs collapse

By: Bolen C

On: May 12, 2023

In: Asia

Congressional leaders at loggerheads over a debt ceiling impasse sat down with President Joe Biden on May 9, 2023, as the clock ticks down to a potentially catastrophic default if nothing is done by the end of the month.

Republicans, who regained control of the House of Representatives in November 2022, are threatening not to allow an increase in the debt limit unless they get spending cuts and regulatory rollbacks in return, which they outlined in a bill passed in April 2023. In so doing, they risk pushing the US government into default.

It feels a lot like a case of deja vu all over again.

Brinkmanship over the debt ceiling has become a regular ritual – it happened under the Clinton administration in 1995, then again with Barack Obama as president in 2011, and more recently in 2021.

Defaulting on the national debt would have real-life consequences. Even the threat of pushing the US into default has an economic impact.

In August 2021, the mere prospect of a potential default led to an unprecedented downgrade of the the nation’s credit rating, hurting America’s financial prestige as well as countless individuals, including retirees.

And that was caused by the mere specter of default. An actual default would be far more damaging.

Dollar’s demise

Possibly the most serious consequence would be the collapse of the US dollar and its replacement as global trade’s “unit of account.” That essentially means that it is widely used in global finance and trade.

Day to day, most Americans are likely unaware of the economic and political power that goes with being the world’s unit of account. Currently, more than half of world trade – from oil and gold to cars and smartphones – is in US dollars, with the euro accounting for around 30% and all other currencies making up the balance.

As a result of this dominance, the US is the only country on the planet that can pay its foreign debt in its own currency. This gives both the US government and American companies tremendous leeway in international trade and finance.

No matter how much debt the US government owes foreign investors, it can simply print the money needed to pay them back – although for economic reasons, it may not be wise to do so.

Other countries must buy either the dollar or the euro to pay their foreign debt. And the only way for them to do so is either to export more than they import or borrow more dollars or euros on the international market.

The US is free from such constraints and can run up large trade deficits – that is, import more than it exports – for decades without the same consequences.

For American companies, the dominance of the dollar means they’re not as subject to the exchange rate risk as are their foreign competitors. Exchange rate risk refers to how changes in the relative value of currencies may affect a company’s profitability.

Since international trade is generally denominated in dollars, US businesses can buy and sell in their own currency, something their foreign competitors cannot do as easily. As simple as this sounds, it gives American companies a tremendous competitive advantage.

If Republicans push the US into default, the dollar would likely lose its position as the international unit of account, forcing the government and companies to pay their international bills in another currency.

Kevin McCarthy., left, Chuck Schumer, right, and President Joe Biden meet at the White House on May 9, 2023. Photo: AP via The Conversation / Evan Vucci

The dollar’s dominance means trade must go through an American bank at some point. This is one important way it gives the US tremendous political power, especially to punish economic rivals and unfriendly governments.

For example, when former President Donald Trump imposed economic sanctions on Iran, he denied the country access to American banks and to the dollar. He also imposed secondary sanctions, which means that non-American companies trading with Iran were also sanctioned.

Given a choice of access to the dollar or trading with Iran, most of the world economies chose access to the dollar and complied with the sanctions. As a result, Iran entered a deep recession, and its currency plummeted about 30%.

US President Joe Biden did something similar against Russia in response to its invasion of Ukraine. Limiting Russia’s access to the dollar has helped push the country into a recession that’s bordering on a depression.

No other country today could unilaterally impose this level of economic pain on another country. And all an American president currently needs is a pen.

Rivals rewarded

Another consequence of the dollar’s collapse would be enhancing the position of the US’s top rival for global influence: China.

While the euro would likely replace the dollar as the world’s primary unit of account, the Chinese yuan would move into second place.

If the yuan were to become a significant international unit of account, this would enhance China’s international position both economically and politically.

As it is, China has been working with the other BRIC countries – Brazil, Russia and India – to accept the yuan as a unit of account. With the other three already resentful of US economic and political dominance, a US default would support that effort.

They may not be alone: Recently, Saudi Arabia suggested it was open to trading some of its oil in currencies other than the dollar – something that would change long-standing policy.

China’s yuan would gain for any collapse in the US dollar. Photo: Facebook

Beyond the impact on the dollar and the economic and political clout of the US, a default would be profoundly felt in many other ways and by countless people.

In the US, tens of millions of Americans and thousands of companies that depend on government support could suffer, and the economy would most likely sink into recession – or worse, given the US is already expected to soon suffer a downturn. In addition, retirees could see the worth of their pensions dwindle.

The truth is, we really don’t know what will happen or how bad it will get. The scale of the damage caused by a US default is hard to calculate in advance because it has never happened before.

But there’s one thing we can be certain of. If Republicans take their threat of default too far, the US and Americans will suffer tremendously.

Michael Humphries is Deputy Chair of Business Administration, Touro University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Thailand election: The party they can’t stop winning

By: Marcus Ching

On: May 11, 2023

In: Asia

By Jonathan Head

South East Asia correspondent

For the past few weeks an irresistibly catchy tune has been playing in neighbourhoods across Thailand, from campaign trucks sent out by the Pheu Thai party, the frontrunner in this Sunday’s general election.

“A landslide for Pheu Thai, in all areas, so the lives of the people can be better,” it goes, urging voters to give it a thumping victory.

That Pheu Thai (For Thais) is so far ahead of all its rivals is remarkable. This is despite all the efforts made over the past 17 years to weaken it, and to eliminate the influence of Thaksin Shinawatra, the telecoms billionaire who founded its first incarnation, Thai Rak Thai, in 1998.

Mr Thaksin’s government was deposed by a military coup in 2006, and Thai Rak Thai was dissolved. He has been living in exile since being prosecuted in what his family says are politically-motivated charges. A successor party was also dissolved by the courts in 2008, and in that year two of its prime ministers were disqualified.

After Mr Thaksin’s sister Yingluck won a landslide in the 2011 election, she too was disqualified by the courts, and her government ousted by a second coup. She is also living in exile.

At the last election in 2019 Pheu Thai won far more seats than any other party, but was prevented from forming a government.

Paetongtarn Shinawatra speaking at a recent campaign event

Now the polls show Pheu Thai on track once again for victory. The Shinawatra family has put forward Thaksin’s youngest daughter Paetongtarn to lead the campaign, which she has done even in the last stages of pregnancy, eliciting admiration and sympathy.

It has once again run a slick, well-marketed campaign, making a range of appealing offers to the electorate, from a substantial increase in the minimum wage, to a promise of a 10,000 baht ($300; £240) digital wallet for every adult to be spent locally.

“I think after eight years the people want better politics, better solutions for the country than just coup d’etats,” Paetongtarn told the BBC. “They are seeking policies that will help their lives.”

Paetongtarn Shinawatra presents her newborn son in an incubator on 3 May 2023.

“For many years no other political force has been able to offer an alternative to Pheu Thai, in terms of policy offerings, in terms of charisma, in being able to communicate directly with the people”, says Siripan Nogsuan Sawasdee, a political scientist at Chulalongkorn University, who has been making a study of the party’s appeal.

“And because the last coup d’etat resulted in two military-backed governments which failed miserably in economic performance and in dealing with the Covid pandemic, the popularity of its main opponent Pheu Thai remains high.”

Ms Siripan identifies what she calls the three Ps as the key to political success in Thailand; policies, personalities and patronage networks, and political values.

Pheu Thai has always been very strong on the first. Thai Rak Thai was a pioneer in this region in running a modern, manifesto-based campaign in its first election campaign in 2001. It offered policies like universal healthcare and village-based micro-credit schemes which directly benefitted rural and low-income communities. It won the Shinawatra family what has proved to be unbreakable loyalty from some of Thailand’s largest vote banks.

On the second, Pheu Thai has built up an extensive network of local power-brokers, who are very influential in maintaining its popularity and getting the vote out. By contrast the two main conservative parties, formed by the last coup-leader Prayuth Chan-ocha and his allies, are relatively new, and do not have such strong local networks.

On the third, Pheu Thai has always successfully portrayed itself both as the party which looks after little people, and which champions democracy, of governments through elections. And that is its main pitch today. If you want an end to conservative, military-backed rule, it says, we are your best choice.

But this time it is being outflanked on political values by a more radical and youthful party, Move Forward, which is calling for profound changes to Thailand’s power structures.

The young radicals shaking up the Thai election

It wants to stop the military from intervening in politics, to limit its budget, end conscription, and even talks about making the monarchy more accountable. It has pledged never to form a coalition with one of the military-aligned parties, showing up Pheu Thai’s evasiveness on this issue.

Some observers believe Move Forward’s growing popularity could eat into Pheu Thai’s votes, although the younger party’s support is spread across the country, rather than in certain areas, disadvantaging it in a system where 80% of the seats are elected on a first-past-the-post basis.

Pheu Thai is losing its policy edge too, as nearly every main party is now making a crowd-pleasing financial offering to the voters, neutralising the populist appeal that has been the key to Pheu Thai’s long run of election wins.

“Especially for the younger generation, Thaksin’s legacy of policy delivery in the past does not resonate,” says Siripan from Chulalaongkorn. “And don’t forget there will be four million first-time voters in this election. Pheu Thai’s image as the default anti-military party is facing a real challenge from Move Forward.

“But I still believe Pheu Thai will win by a large margin. It still has the second P, the patronage networks through its candidates in the north and north-east, where Move Forward, as the newer party, has not established these kinds of connections.”

If the predictions of the opinion polls hold, and both Pheu Thai and Move Forward perform well enough to ensure they have a substantial majority of the 500 seats in the lower house, the big question is whether they will be allowed to form a government.

The military-drafted constitution allows 250 senators, all appointed by the junta that seized power in 2014, to join the vote on the choice of the next prime minister. The pliant courts could once again be deployed to dissolve one or both of the reformist parties.

Thailand will then be confronted with a choice. Should it stick to the old, authoritarian playbook, which sees election results as optional, rather than essential factors in who holds power?

Or should it break out of the cycle of coups, party dissolutions and street violence which have plagued the country for two decades?

The dirty five laundering Russia’s oil

By: Bolen C

On: May 11, 2023

In: Asia

SINGAPORE – Western nations have taken major steps to cut energy ties with Russia by cracking down on imports of seaborne crude oil and refined petroleum products while imposing a US$60 price cap on sales to non-Western countries in a bid to crimp the Kremlin’s ability to finance its war in Ukraine.

At the same time, nations that sanctioned Russian oil have dramatically increased imports of refined oil products from countries that have become the largest importers of Russian crude since Moscow invaded Ukraine last February, according to a recently released report by the Finland-based Center for Research on Energy and Clean Air (CREA).

The organization tags five non-sanctioning countries – China, India, Turkey, United Arab Emirates (UAE) and Singapore – as “launderers” of Russian oil, which is blended with non-Russian origin crude and re-exported globally, including to the very nations enforcing the price cap and embargo in what CREA describes as a “major loophole” in the sanctions regime.

Isaac Levi, an energy analyst at CREA and the report’s co-author, told Asia Times that the EU’s oil ban and price cap, imposed in December and February respectively, have cost Moscow an estimated 160 million euros (US$175.3 million) per day, but were cautiously designed to allow Russian oil flows onto global markets to keep prices down and avoid supply disruptions.

“Now that the bans are in place, Russia’s revenues are starting to rebound,” he said, describing the loophole as a “legal way” for sanction-imposing countries to buy oil products previously bought directly from Russia, which are now being sold by third countries at a premium. “This process provides higher demand for Russian oil, creating higher export volumes and prices.”

In November, the International Energy Agency (IEA) projected that Russian oil output would fall by 1.4 million barrels per day (bpd) in 2023 following the EU’s ban on seaborne exports of Russian crude. But with more than 90% of Russian crude now finding buyers in Asia, exports averaged 3.76 million bpd in April, 22% above the average pre-war level of 3.1 million bpd, according to S&P Global.

CREA’s report shows seaborne imports of Russian crude oil to China, India, Turkey, UAE and Singapore increased by 140% in volume terms, or 182% in value from the year prior, since the eruption of the Ukraine war. The total value of their imports was 74.8 billion euros ($82 billion) over the 12 months, with the five countries accounting for 70% of Russia’s crude oil exports since the war began.

The line-up of traders dealing with Russian barrels has changed significantly since the war began, said Viktor Katona, lead crude analyst at commodity analytics firm Kpler. “First it was the Western majors that quit the game, then followed the global trading companies, so basically there is very little Western presence in the trading of Russian barrels right now.”

Since the invasion, the EU, G7 and Australia increased their volume of refined oil products imported from China by 94%, India by 2%, Turkey by 43%, UAE by 23%, and Singapore by 33%. The five nations’ exports of oil products increased 80% in value terms and 26% in volume terms to price-cap countries, the report states, with a rise of only 2% in volume to non-price-cap countries since February 2022.

CREA has said it is unable to verify the precise amount of oil products from Russian crude oil that passes through the five “laundromat” countries to nations that abide by the price cap, though it cites the data trends as “evidence that laundromat countries are providing funds to the Kremlin through higher imports for Russian crude on the prior year.”

The trade flows, coincident with the imposition of sanctions, have led to “the inference that the sanctions are being avoided by the export of Russian crude oil to the laundromat countries, where the crude oil is refined into products which are then sold as non-Russian origin products,” said Larry Cantú, an international oil and gas attorney with risk advisory firm Ball PLLC.

In addition to the “laundering” of Russian crude in third countries, Cantú added that the incomplete or false documentation of crude oil shipments and the manipulation of Automatic Identification Systems (AIS) to conceal that a vessel has called at a Russian port are among the suspected practices employed to evade the sanctions.

Irina Tsukerman, a US national security lawyer and the programs vice chair for the American Bar Association’s Oil and Gas Committee, told Asia Times Russia is believed to be adopting evasion schemes used by other sanctioned oil exporters such as Iran and Venezuela, such as the maritime practice of vessels transferring oil ship-to-ship in international waters.

“One of the ways Russia has been able to create an opaque market is by sending out the tankers without a precise destination. That’s how they eventually get to ship-to-ship transfers,” said Tsukerman, who is a geopolitical and business analyst and president of Scarab Rising, Inc, a strategy advisory specializing in security and market research.

“Some of the ‘disguised’ oil is even making its way into the United States as a result of the success of these measures… [Russia] has also engaged in schemes to obscure the real prices it is charging, by putting on paper lower prices that fit under the price cap, as with exports to India, but in reality, charging above the price cap to make profit,” she added.

Cantú noted that trade in products made from Russian crude has become “extremely profitable” since it is more difficult to trace the origins of refined oil products than it is to identify the source of crude oil.

“Consequently, when the sanctions against Russian oil were implemented, the price of Russian crude fell sharply but the price of refined products made from Russian crude did not.”

Tsukerman went on to identify Singapore as “one of the leading trade hubs benefiting from the Russian sanctions circumvention schemes,” with the Southeast Asian trade hub reported to be “one of the locations where that oil is blended with others to begin with, giving traders as much as a 20% profit margin from combining the Russian grade oil with other grades.”

Singapore’s refining industry is one of the largest in the world with a combined processing capacity of over 1.5 million bpd, and it plays a significant role in the global oil market. The business and financial hub is also a leading center for oil bunkering and trading, with the Singapore Exchange (SGX) offering crude oil futures and options, fuel oil derivatives and other energy products.

Singapore has been publicly critical of Russia’s invasion of Ukraine, imposing targeted sanctions and restrictions on Russia covering export controls on military and certain dual-use goods, as well as measures prohibiting financial institutions from dealing with designated Russian banks. The island nation has not, however, banned the import of Russian oil or petroleum products.

Besides refining Russian crude oil, Singapore has sharply increased its imports of refined oil products from Russia in recent months, with April seeing the highest volume since January 2019, said CREA’s Levi. “This increased inflow has not been matched by a corresponding increase in exports, so Singaporean refiners have in fact been squeezed by the inflow of refined products from Russia,” he said.

“Refineries in Singapore may be profiting from importing lower-cost Russian crude oil and refining this to then either sell the oil products domestically or exporting these oil products. Singaporean traders and refiners are not only tarnishing themselves morally but also taking a commercial risk by doing business with oil producers closely connected to the Kremlin and its war crimes,” Levi added.

Moral hazard and commercial risks aside, Singaporean businesses are conducting themselves legally and are not apparently breaking any laws in this trade. Authorities in the city-state have said local companies will have to consider and manage any potential impact on their business activities, transactions and customer relationships when dealing with Russian crude oil and refined products.

Minister of State for Trade and Industry Low Yen Ling told parliament in February that while Singapore is “not a participant of the EU ban, companies and financial institutions in Singapore have been informed of the ban imposed by the EU and other countries, via circulars issued by relevant government agencies.”

In addition to Russian diesel imports hitting their highest volume in more than a year, official data showed Singapore’s imports of Russian naphtha, which is used in gasoline blending and also a key ingredient in plastics and petrochemicals, nearly tripled in the first quarter of 2023 to 741,000 tons, up from around 261,000 tons in the fourth quarter last year.

Demand for oil storage tanks in Singapore has also reportedly increased, which analysts see as an indication that Russian fuel is being blended and re-exported globally, clearing the way for ship insurance and financing that would otherwise be banned under sanctions. “Because the whole product is no longer of Russian origin, some oil companies have accepted it,” Tsukerman said.

“The demand for Singapore’s onshore tanks as well as offshore floating storage has been on the rise. A six-month lease for Singapore fuel oil or crude oil storage rose by as much as 17-20% in costs over the course of last year,” the veteran lawyer and analyst added. “This points to the fact that Russia’s oil – and petrol blends meant to obscure its origins – are likely flooding the markets.”

Skeptics of the West’s efforts to deny the Kremlin an energy export windfall may interpret the existing loopholes and evident sustained Western demand for Russian oil as proof that Russia is, in fact, too big to sanction. CREA, however, argues that the price cap countries continue to wield strong leverage to ratchet down the price cap level and close the exploited loopholes.

Under the price cap system, companies shipping Russian oil outside of Europe are only able to access EU insurance and brokerage services if they sell the oil at or under $60. According to CREA’s report, 56% of Russian crude oil shipped to the five “laundromat” countries has been transported by vessels owned or insured by the price cap nations from December 2022 to February 2023.

The Helsinki-based research organization suggests the price cap countries use their clout in insurance and shipping industries to ban imports from refineries receiving any Russian crude, deny imports of refined oil products of Russian origin, as well as ban maritime services in perpetuity to vessels used to transport Russian crude without complying with the price cap.

An oil pump-jack at an oil and gas field in the Krasnodar region of Russia. Vitaly Timkiv / Sputnik

“The penalty for violating the price cap policy is exclusion from insurance and financial services for three months. This amounts to a slap on the wrist compared with the initial proposal, which was exclusion in perpetuity. The punishment should clearly be toughened,” said CREA’s Levi, who said he was not aware of any companies that have yet been caught in the dragnet for sanctions violations.

Mike Salthouse, head of external affairs at marine mutual liability insurer NorthStandard P&I Club, told Asia Times that the vessels which we insure “are aware of the requirement to obtain an attestation [of compliance with the price cap] from their contractual partner before lifting the cargo. Whilst it is difficult to be sure, the attestation system appears to be effective.”

Russia, which has banned deals that involve applying the price cap mechanism, and its partners are now “investing in ships, that are flagged, classed and insured in jurisdictions beyond the reach of the EU and G7 […] to avoid price cap constraints,” he added. “Of concern is that the safety and inspection regime is likely to be less rigorous and the insurance less reliable than we have been used to.”

Follow Nile Bowie on Twitter at @NileBowie

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