China manufacturing contraction eases: HSBC

BEIJING: China's manufacturing activity contracted in October but at a slower pace than in previous months, HSBC said Wednesday, a sign the slowdown in the world's number two economy is bottoming out.

The preliminary purchasing mangers' index (PMI) released by the British banking giant hit 49.1 this month, the highest level in three months and up from 47.9 in September.

A reading above 50 indicates growth in the key sector, while one below signals contraction.

While the figure marks the 12th straight month of contraction, it is also the second consecutive month of improvement and adds to recent indications that China's economy is on the mend after a slowdown that began early last year.

The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.

China's official PMI figure was 49.8 for September, a second straight contraction. October's official figures are expected on November 1, the same day HSBC will release its final result.

HSBC economists Sun Junwei and Qu Hongbin said in a report that October's reading came as total new orders picked up to a six-month high, while new export orders had their best showing in five months.

They also noted that the PMI result "reflected the filtering through of earlier easing measures" introduced by policymakers this year to boost growth.

Those include two interest rate cuts in quick succession as well as the loosening of restrictions on how much money banks must keep on hand in an effort to boost lending.

China last week said the economy grew 7.4 per cent in the three months through September, slowing for the seventh straight three-month period and its worst performance since the first quarter of 2009.

Improvements in September for exports, industrial production and retail sales spurred optimism that the worst may be over for the Asian giant, although Sun and Qu warned that problems in overseas economies and China's job market continued to weigh.

"Growth has likely bottomed out and is headed for a gradual recovery into 4Q (the fourth quarter)," they said, referring to the current final quarter of this year until December.

"With inflation still under control and downside risks to growth lingering, China should continue with its current easing efforts to secure a firmer growth recovery," they wrote.

China's consumer price index slowed in September, rising 1.9 percent year-on-year, slightly down from the 2.0 percent recorded in August.

Inflation plagued China's economy in much of 2010 and 2011, with CPI peaking in July last year at 6.5 percent.

China is preparing for a once-a-decade leadership change at a Communist Party meeting that starts November 8.

4 banking giants "under spotlight" in Libor scandal

LONDON: Regulators are investigating Credit Agricole, HSBC, Deutsche Bank and Societe Generale over the Libor manipulation scandal that claimed the boss of British bank Barclays, the Financial Times reported Thursday.

Citing sources close to the probes, the FT said regulators were examining evidence of links between traders at all four banks and Barclays' former trader Philippe Moryoussef.

US futures regulator, the Commodity Futures Trading Commission, recently accused an unnamed trader of having "orchestrated an effort to align trading strategies among traders at multiple banks".

According to the business publication, this trader was former euro-swaps trader Moryoussef.

Britain's financial regulator, the Financial Services Authority (FSA), is investigating seven institutions over the scandal, a senior official told lawmakers on Monday.

Tracey McDermott said the probe involved "not only British banks".

Barclays was fined £290 million ($452 million, 360 million euros) after admitting attempting to manipulate the Libor and Euribor rates between 2005 and 2009.

Libor (London Interbank Offered Rate) is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent.

The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.

HSBC shares dive in Hong Kong after apology

HONG KONG - Shares in global banking giant HSBC fell more than two percent in Hong Kong on Wednesday after a top executive resigned over the lender’s failure to control money laundering and terrorist financing.

London-based HSBC apologised Tuesday for failing to apply anti-laundering rules as US lawmakers accused it of giving Iran, terrorists and drug dealers access to the US financial system.

Its shares listed on the Hong Kong stock exchange fell 2.06 percent to close at HK$66.55, while the Hang Seng index slipped 1.11 percent.

“We deeply regret and apologise for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public,” HSBC Bank USA (HBUS) President Irene Dorner told a hearing of the Senate Homeland Security Subcommittee on Investigations.

“HSBC’s compliance history, as examined today, is unacceptable.”

Before reading his own testimony, David Bagley, the head of group compliance for HSBC, stepped down from his post in the wake of the subcommittee’s report on the bank’s operations.

“I recognise that there have been some significant areas of failure,” he said. “This clearly took far too long to resolve.”

The Senate report found that HSBC had allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

Lawmakers said money laundered through HSBC-linked accounts benefited Mexican drug lords and terrorist networks, and skirted US sanctions on Iran. “It’s pretty shocking stuff,” subcommittee chairman Senator Carl Levin said.

Among the findings was the revelation that HSBC and its US affiliate concealed more than $16 billion in sensitive transactions to Iran.

Banks in Singapore scramble for share of deposit pie

Banks here, especially foreign ones, are getting into the seasonal spirit by offering higher interest rates on deposits as they usher in Chinese New Year.

But some market watchers say the banks' motives for handing out 'red packets', to gain a share of the deposit pie after bonus season, may be far from festive.

They say some banks may be scrambling to stockpile cash just in case the global banking system seizes up again as it did in 2008 and 2009.

Banking analyst and head of research at CIMB, Mr Kenneth Ng, said: 'There is an aggressive hunt for deposits. Banks are offering rates considerably higher than the Singapore Interbank Offered Rate (Sibor), especially the foreign banks.'

What some banks are offering

• HSBC

Enjoy 0.8 per cent and 1 per cent per annum on eight- and 12-month Singdollar and US dollar term deposits.
Fresh funds of at least $25,000 and up to $5 million in either currency, deposited from now until Feb 29, will qualify for the promotion.

• UOB

Customers who place an additional sum of $10,000 from now till Feb 29, can enjoy an interest rate of 0.628 per cent a year. The $10,000 can be deposited incrementally throughout the promotional period.

• ANZ

Interest rates that increase at the end of every three-month cycle, starting at 0.7 per cent for the first three months, and up to 1.5 per cent for the fourth quarter, if at least $150,000 is held for a 12-month tenor.
Different rates apply for amounts less than $150,000.

• OCBC

The first 1,000 customers who deposit at least $68,000 will receive a two-piece abalone gift set. The first 380 who deposit $368,000 or more, will receive a six-piece abalone set.