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Sunday, September 30, 2012

Palestinian authority aims to securitize $200 million of debt

KUWAIT (Reuters) - Palestinian authorities are aiming to securitize an initial $200 million of some $1.3 billion worth of government debt by the first quarter of 2013 to help reduce state borrowing from local banks, a top banker said on Sunday.

"The Ministry of Finance is much more ready for securitizing the old debt rather than creating new debt, because we are not even rated," Palestinian Monetary Authority Governor Jihad al-Wazir said ahead of a Monday meeting of Arab central bankers in Kuwait.
"This will be only to the primary market, only to the banks, not to the public and not to overseas public," he told reporters.

The Palestinian Monetary Authority (PMA), which oversees operations in both the West Bank - where the Palestinian Authority is based - and the Gaza Strip controlled by the Islamist group Hamas, will manage the securitization on behalf of the Finance Ministry.

"What is important about this is that it will transfer some of the existing debt that is direct borrowing from the government into securities which are tradable between the banks," Wazir said.

"It will add to stability, it will generate an interbank market and additionally as an incentive it will be used as daily collateral in our payment system."

The securitization would likely see the PMA convert a chunk of outstanding Palestinian debt into bonds or other tradeable securities that would then be sold to local banks, in order to cut its direct borrowing requirements.

The Palestinians, a stateless people, do not have their own currency and the Israeli shekel is used for most day-to-day cash transactions.

The PMA, which has reserves of $1 billion, regulates banks operating in the Palestinian territories, occupied by Israel in a 1967 war.

The government budget deficit was likely to be around $1.3 billion this year, up from a $950 million gap projected in the budget, Wazir also said, adding $1.36 billion was a red line for state borrowing from banks.

"The difference is likely to come from donors. There are a number of talks with Arab countries, particularly in the Gulf," he said.

"Also maybe through the World Bank, maybe through the World Bank trust fund. The situation is still in a crisis mode."

In September, the United Nations UNCTAD agency issued a gloomy outlook for the Palestinian economy, arguing that tougher Israeli policies and settlement expansion were pushing the occupied territories and Gaza deeper into poverty.

The situation had been aggravated in 2011 by a sharp drop in foreign aid, which for years provided a vital support, dimming any hope for an upswing even in the longer term, it said.
Wazir said the economy was doing "Ok" under the circumstances with inflation-adjusted gross domestic product seen growing around 5 percent this year, down from over 6 percent in 2011.

"If the Israelis lift restrictions we can grow by 14-15 percent annually for a number of years," he said. (Reporting by Martin Dokoupil and Sylvia Westall; Editing by Sophie Hares)

Monday, September 17, 2012

Japanese firms close in China due to mass protests

See more pictures here
Major Japanese brand name firms announced factory shutdowns in China yesterday and urged expatriates to stay indoors ahead of what could be more angry protests over a territorial dispute between Asia’s two biggest economies.

China’s worst outbreak of anti-Japan sentiment in decades led to weekend demonstrations and violent attacks on well-known Japanese businesses such as car makers Toyota and Honda, forcing frightened Japanese into hiding and prompting Chinese state media to warn that trade relations could now be in jeopardy.

“I’m not going out today and I’ve asked my Chinese boyfriend to be with me all day tomorrow,” said Sayo Morimoto, a 29-year-old Japanese graduate student at a university in Shenzhen.

Chinese Foreign Ministry spokesman Hong Lei (洪磊) said the government would protect Japanese firms and citizens and called for protesters to obey the law.
“The gravely destructive consequences of Japan’s illegal purchase of the Diaoyutai Islands (釣魚台) are steadily emerging, and the responsibility for this should be borne by Japan,” he told a daily news briefing.

The islands, called the Senkakus in Japan, are also claimed by Taiwan.
“The course of developments will depend on whether or not Japan faces up to China’s solemn stance and whether or not it faces up to the calls for justice from the Chinese people and adopts a correct attitude and approach,” Hong said.

China and Japan, which generated two-way trade of US$345 billion last year, are arguing over the Diaoyutais, a group of uninhabited islands in the East China Sea, which are the source of a long-standing dispute that erupted last week when the Japanese government decided to buy three of them from a private Japanese owner. The move infuriated Beijing.

Yesterday, a flotilla of about 1,000 Chinese fishing boats was sailing for the islands.
The weekend protests mainly targeted Japanese diplomatic missions, but also shops, restaurants and car dealerships in at least five cities. Toyota Motor Corp and Honda Motor Co said arsonists had badly damaged their stores in Qingdao at the weekend.

However, Toyota said its factories and offices were operating as normal yesterday and that it had not ordered home its Japanese employees in China.

Honda will suspend production in China starting today for two days. Fast Retailing Co, Asia’s largest apparel retailer, said it had closed some of its Uniqlo outlets in China and may close yet more.

Japan’s top general retailer, Seven & I Holdings, said it would close 13 Ito Yokado supermarkets and 198 7-Eleven convenience stores in China today, while Sony Corp is discouraging non-essential travel to China.

Mazda Motor Corp will halt production at its Nanjing factory, which it jointly operates with Chongqing Changan Automobile Co and Ford Motor Co, for four days.

Japanese electronics group Panasonic said one of its plants had been sabotaged by Chinese workers and would remain closed through today — the anniversary of Japan’s 1931 occupation of parts of China, a date that Tokyo fears could trigger more anti-Japan sentiment.