World stocks up as Britain leans towards EU remain vote

HONG KONG — Asia led a rally in global markets Monday, building on gains at the end of last week as polls suggest Britain’s upcoming referendum will result in the country staying in the European Union.

The average of the last six British European Union referendum polls put the Remain and Leave camps neck-and-neck at 50-50, excluding undecided voters, according to the What UK Thinks website.

Markets across Asia and Europe slid early last week as polls showed the Leave side a few percentage points for the June 23 vote, but showed some improvement Friday as the Remain camp gained ground.

The upswing comes after the International Monetary Fund warned that a Brexit vote could deal a “negative and substantial” blow to the British economy, adding that the “contagion effects” of a vote to leave the bloc could hit markets worldwide.

Tokyo closed up 2.34 percent, adding to gains of one percent at the end of last week to finish at 15,965.30. Hong Kong was up 1.69 percent by close, its steepest gain in two weeks.

After ending the morning slightly down, Shanghai eked out gains to close 0.13 percent, or 3.70 points, up at 2,888.81. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, rose 0.44 percent.

European markets rose strongly at the start of trading with London’s benchmark FTSE 100 index jumping 2.10 percent, and Frankfurt and Paris up 2.30 and 2.60 percent respectively.

Gold was down 0.38 percent Monday, having hit a near two-year peak on Friday as investors sought the commodity on fears of the impact of a “leave” vote on the world economy.

‘Risk-on move’

The yen, often seen as a safe haven, eased slightly to 104.56 to the dollar in afternoon trade in Tokyo, from 104.19 yen in New York Friday as the “Stay” camp appeared to gain strength in the polls.

“We are seeing a risk-on move after the latest Brexit poll,” Niv Dagan, executive director at Peak Asset Management LLC in Melbourne, told Bloomberg.

“It may be short-lived and volatility is likely to remain high until Thursday’s vote. This really could still go either way.”

Oil prices extended gains on a weaker dollar, driving up demand for the commodity.

US benchmark West Texas Intermediate for July delivery was up 77 cents to $48.75 a barrel, while international benchmark North Sea Brent for August delivery was up 90 cents, trading at $50.07 a barrel.

Key figures around 0830 GMT

Tokyo – Nikkei 225: UP 2.34 percent at 15,965.30 (close)

Shanghai – Composite: UP 0.13 percent at 2,888.81 (close)

Hong Kong – Hang Seng: UP 1.69 percent at 20510.20 (close)

Euro/dollar: UP at $1.1342 from $1.1280 late Friday

Pound/dollar: UP at $1.4623 from $1.4348

Dollar/yen: UP at 104.56 yen from 104.19 yen

New York – DOW: DOWN 0.33 percent at 17,675.16 (close)

London – FTSE 100: UP 2.10 percent at 6,147.48

source: business.inquirer.net

IMF makes 126.3 mln euros available for Cyprus after review

WASHINGTON - The International Monetary Fund is making about 126.3 million euros available for disbursement to Cyprus after completing its review of the island's economic adjustment program, the Fund said in a statement on Friday.

The IMF, which said it still has one more review to complete, said Friday's move brings the total disbursements under the program to about 1 billion euros. — Reuters

China stocks tumble most since summer slump as brokerage probe widens

SHANGHAI - Chinese shares sank more than 5 percent on Friday in their biggest drop since this summer's rout after Reuters reported the stock regulator had widened its probe on brokerages to include the country's fourth-biggest securities firm.

The sharp drop in afternoon trade highlights the volatility of China's markets ahead of an expected decision by the International Monetary Fund (IMF) on Monday on whether to include the yuan currency in its global reserve basket.

China Haitong Securities is under investigation by the China Securities Regulatory Commission (CSRC), two people with direct knowledge of the matter told Reuters, following similar probes into two other domestic brokers.

The brokerage later confirmed the news, saying in a statement published on the Shanghai stock exchange that it is being probed for possible violation of securities regulations.

Little has emerged as to the specific reasons for the probes, but Gu Yongtao, an analyst at Cinda Securities, said the regulator could be trying to get a better grip on leveraged trading after a near full-blown market crash a few months ago.

"We think the purpose of the probes is to bring all businesses related to stock financing to the table so that regulators can have a clear picture of the leverage situation," he said, adding it is likely an extension of an ongoing clean-up in illegal margin trading.

Markets had already been jittery after Reuters reported that the regulator is urging brokerages to cease financing clients' stocks purchases through swaps and other over-the-counter contracts, a move aimed a curbing leveraged trading.

"The move towards deleveraging is certainly having a negative impact on investor sentiment," said Shen Weizheng, fund manage at Shanghai-based Ivy Capital.

At a weekly news conference in Beijing on Friday, the securities regulator confirmed that it has ordered securities firms not to finance securities trading by clients using over-the-counter derivatives.

The CSRC probe into Haitong come on the heels of investigations into CITIC Securities and Guosen Securities, two bigger rival firms.

Sliding market

Earlier selling pressure intensified late in the stock trading session, pushing the blue-chip CSI300 index down 5.4 percent and the Shanghai Composite Index 5.5 percent lower in their biggest one-day percentage loss since the nadir of the summer rout in late August.

The flagship indexes also posted their worst weekly performance since August, losing over 5 percent.

Market sentiment was already fragile as investors braced for a fresh batch of initial public offerings next week, and are cautious ahead of a possible US interest rate increase next month that would be the first in around a decade.

After the stock market slump began in mid-June, Beijing launched a massive and unprecedented rescue effort and began cracking down on insider trading and short-selling, which it said were partly to blame for volatility.

Haitong, along with Guotai Junan Securities, is also being probed by anti-corruption investigators, the official Xinhua news agency reported on Tuesday.

In September, Haitong was fined 86 million yuan ($13.5 million) by the regulator for breaching securities rules.

In August, state media reported that a CSRC official and four senior executives from CITIC Securities had confessed to insider dealing.

The yuan softened to a three-month low against the dollar on Friday and was set for its longest weekly losing streak in five months ahead of the IMF's decision next week.

Some traders expect Beijing may allow the currency to depreciate after it is included in the IMF's Special Drawing Rights basket, partly to reflect China's slowing economic growth. — Reuters

Behind the scenes, Greece and creditors push for breakthrough

ATHENS/BRUSSELS - Greek Prime Minister Alexis Tsipras spoke to the leaders of Germany, France and the European Commission by phone on Sunday in an attempt to break the deadlock over a cash-for-reforms deal as time runs out to save Greece from bankruptcy.

After months of wrangling and with anxious depositors pulling billions of euros out of Greek banks, Tsipras's leftist government has signaled a willingness to make concessions in order to unlock 7.2 billion euros in bailout money.

But a day before an emergency summit in Brussels, it is still unclear how far Tsipras, elected in January on a pledge to lift his people out of years of austerity, will yield.

His Syriza party plans a rally in Athens to send "a loud message of resistance" against demands for more cuts and tax hikes in a country battered by years of recession.

But the mood has also hardened in Germany, which has contributed more money than any other country to bailing out Greece. German Chancellor Angela Merkel is under pressure from within her ranks not to give in to Greek demands, even if that means contemplating Greece leaving the euro zone.

Athens urgently needs access to funds to avoid defaulting on a 1.6 billion euro IMF loan that falls due at the end of the month. But as the crisis gets pushed from one meeting to the next, each side has put the responsibility on the other's shoulder for finding a deal.

Money has drained out of Greek banks after a breakdown in talks last weekend, and Greece might have to impose capital controls within days if there is no breakthrough.

Tsipras called Merkel, French President Francois Hollande and Juncker with the latest Greek offer over the weekend.

"The prime minister presented the three leaders Greece's proposal for a mutually beneficial agreement that will give a definitive solution and not a postponement of addressing the problem," a statement from Tsipras's office said.

His government was holed up in an hours-long cabinet meeting on Sunday. Over the weekend, senior European officials have remained in close contact ahead of a meeting of finance ministers and euro zone leaders on Monday.

"Everyone's talking to everyone," an EU official said. "We're continuing to work informally on a solution."

No to blackmail

For a deal to work, Tsipras will need a solution that is acceptable to his party or else may be pushed to call a snap election or a referendum to secure a mandate for an agreement.

Under the austerity measures imposed by the IMF, the European Union and the European Central Bank in two bailouts, Greece's economic output has fallen 25 percent, wages and pensions have been slashed, and one in four Greeks is jobless.

The Greek government has resisted demands for pension cuts or tax rises, arguing that the austerity imposed on the southern European country had made the crisis worse. A senior Syriza lawmaker said on Sunday that previous ideas put forward by Juncker would have led to a "social holocaust".

"Democracy cannot be blackmailed, dignity cannot be bargained," the Syriza party said in a statement on Sunday, announcing its planned protest.

"Workers, the unemployed, young people, the Greek people and the rest of the peoples of Europe will send a loud message of resistance to the alleged one-way path of austerity, resistance to the blackmail and scare-mongering."

European ministers have played down the prospect of a final agreement on Monday but hope a political understanding can be reached in time for a full deal by the end of June.

Merkel's Bavarian allies warned against giving in to Greece, with senior Christian Social Union lawmaker Hans Michelbach saying he saw no realistic chance of an agreement on Monday.

"If the EU lets the government in Athens get away with its intransigence, we can bury the euro," Michelbach said in a statement on Sunday.

"Either Greece declares itself willing for a viable solution or the country must leave the euro. The euro zone could cope with the consequences of a Greek exit," he said. — Reuters

US urges IMF to cancel debt of Ebola-stricken countries

WASHINGTON - The United States on Tuesday proposed that the International Monetary Fund write off some $100 million in debt it is owed by Guinea, Liberia and Sierra Leone to free up more resources for those countries, the hardest hit by the Ebola outbreak.

The debt relief should enable the three impoverished West African countries to spend more on government services and to support their economies as they cope with the devastating epidemic, U.S. Treasury officials told Reuters.

The countries now owe the IMF a combined $372 million, of which $55 million comes due over the next two years, officials said on condition of anonymity.

"The International Monetary Fund has already played a critical role as a first responder, providing economic support to countries hardest hit by Ebola," US Treasury Secretary Jack Lew said in a statement issued to Reuters. "Today we are asking the IMF to expand that support by providing debt relief for Sierra Leone, Liberia, and Guinea."

The US proposal must still be approved by the IMF's other 187 member countries. Lew will recommend the move to the Group of 20 leading economies at their meeting in Brisbane, Australia this week.

The United States proposed that the money for the $100 million in IMF debt relief should come from a special trust fund set up for poor countries coping with catastrophic natural disasters, which now contains about $150 million of the IMF's own resources.

The so-called Post-Catastrophe Debt Relief Trust was first used for Haiti in the aftermath of its 2010 earthquake.

In September, the IMF approved $130 million in aid to the three countries to help them deal with the economic impact from the Ebola virus, which has sapped their growth, cut into tax revenues and affected exports and other industries.

The IMF estimated last month that the three countries faced financing gaps of about $300 million this year and could also face large financing needs in 2015 as their economic situation deteriorates.

Liberia, Sierra Leone and Guinea are among West Africa's poorest countries and the hardest hit by the worst Ebola epidemic since the disease was identified in 1976. The virus has killed at least 4,950 people out of about 13,240 cases this year, according to the World Health Organization.  — Reuters