Hong Kong and Thailand link rapid payment systems

From this week consumers from Hong Kong and Thailand travelling between the two destinations will now be able to use their domestic real-time settlement payment systems to pay for their purchases, as authorities seek to speed up digital transformation and increase business opportunities for local vendors.

From December 4, Hongkongers travelling to Thailand will be able to use their smartphones to make payments for shopping and food through the Faster Payment System (FPS) up to a daily limit of HK$10,000 (US$1,280). Hong Kong’s FPS, launched by the Hong Kong Monetary Authority (HKMA) in 2018, enables registered users to transfer money between different banks with the use of a simple identifier, such as a phone number.

In conjunction, Thais travelling to the city state will be able to use PromptPay, at merchants that accept QR code payments, with a 500,000 baht (US$14,200) daily limit under an agreement between the HKMA and the Bank of Thailand. PromptPay covers 8.5 million merchants in Thailand, with a daily average of 55 million transactions registered in 2022.

These systems, linking traditional banks and electronic payment and digital wallet operators, will allow visitors to make cross-border retail payments in a quick and user-friendly way, bankers said.

“Our well-established payment infrastructure will facilitate the end-to-end experience of this milestone expansion of FPS beyond Hong Kong,” said HSBC Hong Kong CEO, Luanne Lim. “Since the launch of FPS five years ago, HSBC has been promoting the wider adoption of this payment infrastructure. In the first half of 2023, we have witnessed over 40% growth year-on-year in merchant transaction volume through FPS".

“Connecting the two systems will not only provide more convenient cross-border payment methods for customers in the region, but will also accelerate digital transformation in the consumer sector and create new business opportunities for local merchants,” added Bank of China (BOC) Hong Kong Deputy CEO, Stephen Chan.

There are plans to raise the maximum daily limit in future depending on the utilisation situation, according to Howard Lee, deputy chief executive of the HKMA. Thailand is among the most popular tourist destinations for Hong Kong residents, and has extensive experience in cross-border linkages of faster payment systems, Lee said.

HSBC and Bangkok Bank are the settlement banks for linkage between the cross-border payment systems.

Seven banks and two stored value facility (SVF) operators will be served under the agreement on the Hong Kong side, including HSBC, Bank of China Hong Kong, Hang Seng Bank, Bank of East Asia, Citibank Hong Kong, Bank of Communications Hong Kong, Fubon Bank, Octopus Cards Limited and HKT Payment.

 

Gold forecast to stay at record highs in 2024

Gold prices have begun the week at new record levels with spot prices touching US$2,100 an ounce as the global rush for bullion appears set to continue. They will continue to set new all-time highs in 2024 as the “safe haven” precious metal is boosted by a weakening U.S. dollar and Fed rate cuts, according to Ewa Manthey, Commodities Strategist at ING.

“Gold has rallied in the last quarter of the year as demand for safe-haven assets has increased and amid bets that the Federal Reserve will cut rates next year,” Manthey wrote in an article for the Dutch banking group.

“Although concerns over a wider Middle East c conflict have now eased, gold has held up well, gaining support from a softer US dollar and US Treasury yields on the US interest rate outlook, with prices reaching a new record high in early December,” she said. “We expect prices to remain above the US$2,000 level next year as the global rush for gold continues.”

Manthey said that even with the strong safe-haven bid, the US Federal Reserve remains the largest single driver for gold prices.

“We believe Fed policy will remain key to the outlook for gold prices in the months ahead,” she said, noting that the strength of the dollar and historically high rates have weighed on gold throughout much of the year.

“The latest US data showed inflation and the labour market are cooling, with markets now pricing in a 50% chance of a rate cut in March and fully pricing in a cut in May,” she said. “Our US economist expects the starting point for Fed rate cuts to be in May and is forecasting 150 basis points (bps) of rate cuts next year in total, with a further 100bps in early 2025. This should support gold’s move higher.”

But not everything is supportive of gold prices, as some areas of gold demand are still lagging, notably exchange traded funds (ETFs), which continue to record outflows.

“Total holdings in bullion-backed ETFs have continued to decline this year despite rising spot prices,” Manthey wrote. “Although global gold ETF outflows continued in October, they were at a slower pace than in September. Year-to-date, global outflows totalled US$13 billion, equivalent to a 225-tonne fall in holdings.”

She said that data from the World Gold Council (WGC) showed the lion’s share of these outflows came from European and North American funds, while investment demand in other parts of the world was stronger.

 

Chase tipped as new partner for Apple Card

Chase could be the best replacement partner for Apple Card, a report proposes, with previous history between the bank and the iPhone maker seemingly making it the best possible successor to Goldman Sachs for Apple's credit-based service.

According to weekend reports “Apple and Goldman Sachs are on the verge of splitting up, and Chase is the ideal partner to step in” as the new partner for Apple Card

In the Power On newsletter for Bloomberg, commentator Mark Gurman writes that Chase already has a "significant relationship" with Apple, including holding some of Apple's US$60 billion cash war chest. Chase was also one of the earliest partners of Apple pay, and worked with Apple on its Ultimate Rewards programme with discounts on Apple products.

Reports state that Apple has given Goldman Sachs a proposal to end its credit card and savings account partnership within the next 12 to 15 months. The move, iwere it to happen, would effectively end one of the highest-profile partnerships between a bank and a tech company.

It would also mean that Apple would need to find a new financial partner for its popular credit card, Apple Card, and its high-yield savings accounts under the Apple brand. While Apple offers both its credit card and savings account through the wallet app on iPhones, the banking back end is handled by Goldman Sachs.

When Apple,launched the Apple pay card in 2019, Goldman Sachs CEO David Solomon attended a a glitzy Apple launch event at its California campus. But the partnership has subsequently been strained as Goldman Sachs, under Solomon, has retreated from its previous consumer banking ambitions as costs mounted. Goldman has also faced scrutiny from regulators into how it handles refunds, and over alleged gender discrimination when determining credit limits.

Earlier this year Goldman Sachs said it would “consider strategic alternatives” for its consumer banking business.

For Apple, the credit card and savings accounts are a means to add value and additional features to its iPhone, as well as bolster its quickly growing services business with fees. It is not clear whether Apple has found a new partner or would consider bigger changes to its financial products if it were to exit the agreement with Goldman Sachs.

“Apple and Goldman Sachs are focused on providing an incredible experience for our customers to help them lead healthier financial lives,” an Apple representative told CNBC. “The award-winning Apple Card has seen a great reception from consumers, and we will continue to innovate and deliver the best tools and services for them.”

 

SEC’s top accountant calls on companies to improve cash flow accuracy

Companies and their auditors need to prioritise accuracy in cash flow statements and consider adding more details, so investors get a better view of a company’s financial health, says the top accountant of the US Securities and Exchange Commission (SEC).

Paul Munter, who was appointed the SEC’s Chief Accountant in June, said that cash flow errors are common, but companies tend to downplay them. He also encouraged companies to revamp the way they tally their cash flows, encouraging the use of ‘direct method’ and calling on them to move away from the more common — and complex — method.

US accounting rules, as outlined in ASC 230, lay out how companies classify and present cash receipts and cash payments.

As Deloitte notes: “ASC 230 requires entities to classify cash receipts and cash payments as operating, investing, or financing activities on the basis of the nature of the cash flow. Many of the SEC staff’s comments are related to understanding the classification or potential misclassification among these three cash flow categories. In some cases, the SEC staff has raised questions about the presentation of cash inflows resulting from a transaction in a manner inconsistent with the underlying balance sheet classification.”

Munter also said that investors should expect more reliable vetting of Chinese corporate accounts as US regulators continue to scrutinize the work of audit firms in the lucrative Asian market, but it “won’t happen overnight.”

However, he agreed that auditing has steadily improved in countries where the Public Company Accounting Oversight Board (PCAOB) has been able to routinely check the work of auditors, said that is hopeful that will prove true in China too. Munter was speaking on the sidelines of the American Institute of Certified Public Accountants (AICPA) conference in Washington, DC.

Last week, the PCAOB announced that PricewaterhouseCoopers (PwC) affiliates in Hong Kong and China and a Chinese audit firm had agreed to pay a total of US$7.9 million to the US accounting watchdog over failures in their audits of US-listed companies. The firms were ruled to have violated quality control standards after they failed to detect or prevent extensive answer-sharing on mandatory training courses.

 

China's state banks seen supporting yuan as outlook downgraded

China’s major state-owned banks are busy buying the yuan (CNY) in currency markets to prevent it from weakening too much, according to reports reporting two inside sources, with buying intensifying after rating agency Moody’s cut China's outlook to negative.

State banks were spotted swapping CNY for US dollars in the onshore swap market and quickly selling those dollars in the spot market to support the yuan throughout the whole trading session, the sources said.

But the banks' dollar selling became very forceful after the Moody's statement, one source claimed.

China state banks have in the past year often sold dollars to slow the yuan's decline against the dollar. Markets have often seen the moves as a sign of official attempts to relieve pressure on the currency, though banks could also be trading for their own accounts.

Meanwhile, Moody's has cut its outlook on China's government credit ratings to negative from stable, citing expectations of lower medium-term economic growth and risks from a deep correction in the country's vast property sector.

With China's economy sputtering and the U.S. dollar surging until recently, the CNY has had a volatile year, having weakened 6.14% to the dollar at one point before giving back much of the losses on recent views that US interest rates have peaked.

The yuan strengthened 2.55% in November, its best month this year, but it is still down 3% year-to-date.

However, some analysts said the impact on the yuan from the Moody's decision will not be sustainable. “The issues plaguing the property sector are not new," said Khoon Goh, head of Asia research at ANZ.

“The steps taken by the authorities recently should see a bottom soon. The upcoming US data will be more important for the near-term direction of the yuan," he added, referring to a spate of government measures to revive the real estate market.

 

Qatari Investment Authority halves stake in Barclays

Shares in Barclays opened 4.5% lower on Tuesday on news that Qatar Investment Authority (QIA), the UK ‘Big Four’ bank’s second largest shareholder, had launched plans to raise £510 million (US$644.3 million) through the sale of shares, reducing its stake by half from 5% to around 2.4%.

The Qatari wealth fund disposed of 361.7 million shares in the bank after Monday night’s close. “With an upcoming strategy report due from Barclays, many in the markets found the timing of the deal a little odd. and suggested the Qataris are not optimistic about the bank’s plans,” said Steve Clayton, head of equity funds at UK financial services group Hargreaves Lansdown.

“The deal represents about half of the position Qatar had remaining in Barclay after originally pouring in billions of pounds to support the bank during the financial crisis.”

Qatar has been a cornerstone investor in Barclays since 2008 when the Gulf Kingdom injected £4bn into the bank to help it avoid a state bailout. The bank’s share price has halved since then.  

At its peak, Qatar owned over one billion shares in the bank. This week’s sale is the largest straightforward share offload since the Gulf nation first invested. In 2012, Qatar sold around 300 million warrants, which allow investors to buy Barclays shares at a certain price, worth about £740 million to investment banks.

Investment bankers at Citi and Bank of America are handling the Barclays share sale, according to Bloomberg which first reported the news.

The stock was being marketed at 141 pence, a small discount to the 142.98 pence at which they closed on Monday.

Qatar is likely to remain Barclays’s second largest shareholder even after the sale as passive fund giants Blackrock and Vanguard are the bank’s first and third largest shareholders respectively.

 

ICC update principles for sustainable trade

The International Chamber of Commerce has published “Wave 2” of its Principles for Sustainable Trade, an initiative with partner Boston Consulting Group (BCG) and contributors from global financial institutions and corporates,

The newly updated Principles - which follow last year's Wave 1 - are the latest deliverable from ICC’s ongoing work with banks, businesses, governments, non-government organisations ( NGOs and regulators to deliver a consensus view on how to define sustainable trade and trade finance. The Principles expand the sectoral coverage of the standardised sustainability methodology and incorporate a number of enhancements to improve its robustness and usability.

With international trade representing as much as 30% of all carbon emissions, enabling and accelerating sustainable trade and supply chains is critical to help the global economy deliver on the Paris Agreement. However, to date, there is no consensus definition on what constitutes sustainable trade or sustainable trade finance – nor a means of assessing transactions to determine whether they meet such practices.

Commenting on the launch of the Principles at COP28 in Dubai, ICC Secretary-General John W.H. Denton AO said: “Trade must transform itself into an engine for the implementation of the Paris Agreement and for sustainable development. It must also become a facilitator of sustainable practices across international, sectoral and enterprise levels.

“The growing interest in ESG provides a beacon of hope for change; yet this interest brings with it a greater demand for precision and clarity on what constitutes sustainable international trade and sustainable trade finance. We hope that the evolution of our Principles for Sustainable Trade will provide a platform to deliver on this imperative.”

 

DMALINK adds Commerzbank to FX streaming services

DMALINK, the foreign exchange electronic communication network focused on emerging markets (ECN) has added Commerzbank to its FX streaming service.

Commerzbank has officially gone live on the DMALINK platform, streaming prices electronically and “marking a significant step in DMALINK’s efforts to enhance cross-currency product support globally, particularly in non-USD currency pairs.”

Michael Siwek, Founder and Chief Revenue Officer at DMALINK, said: “When considering a market maker for our ecosystem we strive to provide tangible value for our clients in respect to geographical location, depth of book, quote and other pivotal criteria. Commerzbank strategically aligns with these prerequisites, enhancing liquidity within our ecosystem.”

As DMALINK expands its asset class offerings, the company remains committed to integrating FX within its electronic trading platforms, catering to clients who seek efficient execution across various currencies.

Tibor Gergely, Head of eFX Liquidity at Commerzbank, highlighted Commerzbank’s data-driven approach to liquidity provision and the aim to optimize the trading experience for clients, enhancing accessibility through multiple venues. “We are excited to provide our liquidity to DMALINK. Our data-driven approach to liquidity provision enables Commerzbank to constantly optimise the trading experience for our clients and we aim to offer greater accessibility via venues to support their day-to-day business.”

 

Planixs launches liquidity insights data tool

Planixs, a UK-based fintech specialising in real-time, intraday cash, collateral and liquidity management solutions, announced the launch of Realiti Insights. The new offering “is the first to provide easily accessible and actionable data and analytics, delivering unparalleled risk, revenue, regulatory and business resiliency insights. It also acts as an early warning system for financial institutions, as well as a platform to identify potential new revenue streams.  

A release continued: “Insights will enable banks, buy-side firms, and intermediaries to focus on delivering enhanced value opportunities by liberating true value from historically disparate and undervalued data sources. An intuitive UI will enable senior stakeholders, as well as wider teams, to interrogate and derive real-time insights from data that has typically resided in silos within the organisation, where its existence is often disregarded or its cumulative power left unharnessed.”

Neville Roberts, Planixs CEO says, “Not only will Insights power decision making, it can also act as an early warning system for financial institutions, highlighting credit risk and even market sentiment. How Insights is used is limited only by the imagination of the team or department accessing it. Insights turns unknowns into knowns and enables the C-suite to extract value from historically siloed, difficult-to-access data sources in real-time, on-demand, without having to depend on technical teams and resources, which are already overstretched in many banks and whose time is better spent on delivering revenue-generating initiatives.”

Insights is a standalone module and can be deployed separately to the other components of Planixs’ Realiti platform, the “pioneering intraday cash and liquidity management solution, to make value-creating business decisions in real-time and provide a scalable, high-performance architecture, deployable with minimal intrusion into a bank’s infrastructure.”

 

Wise Platform and Allica Bank partner on international payments for UK businesses

Wise Platform, a global payment infrastructure for banks and major enterprises by the UK foreign exchange tech Wise, has entered into a new partnership with the online banking platform for businesses, Allica Bank, to “provide UK businesses with a transparent and low-cost way to send money internationally.”

Allica Bank, a challenger bank that secured its UK banking licence in September 2019 and sfocuses on serving established businesses with 10 to 250 employees – entered into the partnership to enable their customers to make global payments directly and seamlessly to 160 countries supported by Wise.

The partnership, stated a release, “represents a significant step for Allica’s business customers with ambitions to expand and operate internationally, allowing them to use their current accounts to send international payments with transparent fees and no exchange rate markups.

Steve Naudé, head of Wise Platform, commented: “Our partnership with Allica Bank is a significant step forward bringing streamlined cross-border payments to more businesses across the UK. Nowadays, pace and reliability are essential for both individuals and businesses and our partnership will ensure customers have access to quick, low-cost, and secure international transactions.”

The Wise Platform integration means that Allica customers can complete the whole process of making an international payment quickly and conveniently within their banking app. Customers will know upfront the total fees for making an international payment and be able to guarantee that the exact amount is received by their recipient.

 

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