Taiwan quake likely to disrupt chip output and supply chain

Taiwan's most severe earthquake for at least 25 years is likely to impact on the supply of tech components such as display panels and semiconductors, analysts said, as the island’s manufacturers restore operations at affected facilities.

The 7.2-magnitude earthquake struck the eastern coast near Hualien County on Wednesday morning, killing nine people and injuring more than 1,000.

Taiwan plays a leading role in the global chip supply chain as it is home to the world's largest chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), which supplies chips to Apple and Nvidia. Work was suspended at TSMC’s facility, although eports suggest that its manufacturing capacity was relatively unscathed.

It also has smaller chipmakers, including UMC, Vanguard International Semiconductor, and Powerchip Semiconductor Manufacturing.

Manufacturers in Taiwan have been adapting their factories to minimise the impact of earthquakes for decades and many use automatic shutdown systems to minimise damage to their production and tools, analysts said.

“For a lot of the tools that go into automatic shutdown, it can take you no more than 36 or 48 hours to bring them back up and re-qualify them,” said Dan Hutcheson, vice chair at Canadian research firm TechInsights.

“When you look at the business side of it - will this affect quarterly revenues? - the odds are it won’t. But it's going to be a real headache for everyone involved to get this stuff back up and running."

While most of their facilities are away from the earthquake’s epicentre, many firms said they had evacuated some of their manufacturing plants and shut down some facilities for inspections.

TSMC said that work at its construction sites will resume after inspections, while impacted facilities are expected to restart production throughout the night.

It said overall tool recovery of its chip fabrication facilities reached more than 70% within 10 hours of the earthquake, with new fabs reaching more than 80%.

Nvidia, whose popular AI chips are manufactured by TSMC, said it had consulted with its manufacturing partners and the firm does not expect supply chain disruptions from the earthquake.

TSMC, whose facilities in Hsinchu, Tainan and Taichung have experienced varying degrees of disruptions, may have to delay some shipments and increase wafer input to compensate for this, consultancy Isaiah Research said in a note.

“Mitigating the impacts of the earthquake necessitates careful measures and time to restore production and uphold quality standards, presenting additional implications and obstacles,” they said.

 

BIS’s Project Agorá aims to tokenise cross border payments

The Bank for International Settlements (BIS) and seven central banks have launched a project that aims for a major overhaul of global payments infrastructure.

Project Agorá plans to develop a platform designed to overcome the shortcomings of existing cross-border payments. The concept is built around the BIS’s 2023 proposal for a “unified ledger” that would bring together tokenised forms of central bank and commercial bank money on a single platform.

The project will encompass most of the major currencies, including the US dollar, euro, pound sterling and the yen, with the participating central banks the Bank of France (for the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and the Federal Reserve Bank of New York.

Partnering with a large group of private financial companies, they will explore combining wholesale versions of tokenised central bank money and commercial bank deposits on a unified, programmable platform.

Project Agorá is envisioned as a public-private partnership and a call for private sector participation is imminent, with the Institute of International Finance (IIF) orchestrating the collaboration.

“We believe that tokenisation represents the next frontier in the digitalisation of money and payments. Agorá stands out as the most ambitious project undertaken by the BIS Innovation Hub to date,” said Cecilia Skingsley, Head of the BIS Innovation Hub. Unlike other BIS Innovation Hub initiatives, which are considered exploratory, this one is on another level.

The BIS explains tokenisation as the integration of records with the rules and logic governing them through smart contracts. From another perspective, for payments it merges the transaction message with the actual movement of funds. This approach significantly reduces the time and resources spent on back-office reconciliations.

The G20 has thoroughly examined the factors contributing to the high costs of cross-border payments, such as the reliance on correspondent banks, compliance expenses, regulatory differences and operating hours.

A press briefing highlighted the potential for compliance cost reductions on a shared infrastructure, where activities like know-your-customer (KYC) and anti-money laundering (AML) checks could be streamlined. The burden of AML compliance is a significant, albeit necessary, expense for banks, suggesting that efficiency gains here could be impactful.

While tokenisation often goes together with blockchain, central bank involvement implies a preference for a centralised model of consensus to maintain control over payments. Despite this, smart contracts can still operate on a centralised ledger.

 

Singapore launches AML data sharing platform

The Monetary Authority of Singapore (MAS) has launched an information-sharing platform aimed at helping banks detect illegal financial activities.

In May 2023, Singapore’s parliament passed a law authorising the MAS to set up and have ownership of the platform. It aims to combat money laundering, and the financing of terrorism or the proliferation of weapons of mass destruction.

The Cosmic platform (Collaborative Sharing of Money Laundering /TF Information & Cases) was developed as a centralised digital tool that is expected to facilitate sharing of customer information among financial institutions. The primary goal is to detect and combat money laundering (ML), terrorism financing (TF), and proliferation financing (PF) for clients and enterprises across the globe. The Financial Services and Markets (Amendment) Act 2023 and the accompanying subsidiary legislation were designed to set out the legal basis and safeguard the process of sharing data between financial institutions.

Cosmic was built by MAS with the six major banks that will be its first users - DBS, OCBC, UOB, Citibank, HSBC and Standard Chartered. Participants can only share customer information with each other if the customer profile or behaviour display “objectively defined” red flags.

Information sharing is focused on three key financial crime risks: misuse of legal persons; misuse of trade finance for illicit purposes; and proliferation financing.

Loo Siew Yee, assistant managing director, MAS, says: “This will strengthen Singapore’s capabilities to uphold our reputation as a well-regulated and trusted financial centre.”

* Separately, the MAS has announced amendments to the Payment Services Act (PS Act) and its subsidiary legislation, extending the regulatory framework to encompass a broader range of payment services and imposing enhanced requirements on digital payment token (DPT) service providers. Effective in stages from 4 April, these amendments aim to improve user protection and reinforce financial stability. 

The amendments will now regulate activities including the provision of custodial services for DPTs, facilitating DPT transmission between accounts and exchanges, and enabling cross-border money transfers across different countries, even if funds are not received in Singapore.

 

GE completes its three-way split

US industrial giant General Electric (GE) completed its breakup into three companies earlier this week, marking the end of the 132-year-old conglomerate that was once America’s most valuable corporation and a global symbol of its business power.

On Tuesday the group’s aerospace and energy businesses began trading on the New York Stock Exchange (NYSE) as separate entities more than a year after GE spun off its healthcare business. GE Aerospace retained the GE symbol, while the energy unit, GE Vernova, made its debut under the ticker symbol GEV.

The breakup was the culmination of CEO Larry Culp’s efforts to turn around the group that looked all but dead due to bad investments and the 2008 financial crisis that nearly bankrupted its most profitable business, GE Capital.

When Culp, the first outsider to run GE, took over in 2018, the group was struggling with weak profits and massive debt. Its stock had fallen nearly 80% from highs in 2000 and it lost its spot in the Dow Jones Industrial Average after more than 100 years in the blue-chip stock index, prompting GE’s board to oust two of his predecessors within two years.

Culp's task to save the struggling conglomerate became more challenging in 2020 when its lucrative jet engine business fell victim to the coronavirus pandemic as global air travel dried up. However, his focus on paying off debt by selling assets and improving cash flows by streamlining operations and cutting overhead costs ushered in a recovery.

GE has slashed more than US$100 billion of debt and quadrupled its free cash flow since 2018. Its market cap has grown by about US$100 billion to US$192 billion.

“With the successful launch of three independent, public companies now complete, today marks a historic final step in the multi-year transformation of GE,” Culp said on Tuesday as he rang the NYSE opening bell, along with Vernova CEO Scott Strazik.

GE was formed in 1892 when inventor Thomas Alva Edison merged Edison General Electric Co with a rival. In subsequent years, it has touched all parts of life - from bringing electricity to selling appliances to financing mortgages.

Following the split, the group will be left with its aerospace business, which makes engines for Boeing and Airbus jets and generates more than 70% of its revenue from services.

Analysts estimate the market value of GE Aerospace at more than US$100 billion after the spinoff. It is benefiting from a surge in demand for aftermarket services as jet delivery delays by Boeing and Aibus force airlines to fly older planes for longer.

 

Embedded finance market to reach US$228 billion by 2028, study predicts

A study from Juniper Reseach forecasts that the embedded finance market is on course to reach at least US 228 billion by 2028.

The study predicts that embedded finance revenue will rise by 148%, from US$92 billion in 2024 to US$ 228 billion in 2028. This growth trajectory is attributed to the maturation of the market and growing consumer trust, bolstered by expanding acceptance and applications, particularly in business-to-business (B2B) contexts.

The study highlights technological advancements as key drivers of growth in specific embedded finance use cases. For instance, multi-rail payments are gaining prominence, facilitated by players such as Balance and Marqeta, which aggregate various open banking APIs to facilitate smoother and more cost-effective payments for scenarios such as bulk disbursements and cross-border transactions.

The study also identifies embedded insurance as a segment experiencing significant adoption globally, with a projected growth of 125% from 2024 to 2028. According to Juniper Research, the convenience offered by embedded insurance offerings, particularly in ecommerce platforms, is enticing consumers to opt for policies during the checkout process. Governments in the Asia-Pacific region, such as Singapore and Malaysia, are actively promoting digital insurance uptake, further driving growth in this segment across the region.

Despite the substantial growth potential, embedded insurance remains a relatively uncommon offering from many leading vendors. However, the convenience it offers is expected to fuel significant growth in the coming years. The research suite provides a comprehensive assessment of the embedded finance market, analysing over 70,200 data points across 60 countries over a five-year period. It includes a 'Competitor Leaderboard' and examines current and future market opportunities.

 

Mitsui invests in Vietnam Gas Project

Japan’s business and investment conglomerate Mitsui & Co has committed to investing in Vietnam’s second-largest gas field, with plans for the project to be up and running by the end of 2026, after facing delays.

Through its branch Mitsui Oil Exploration Company (MOECO), the group has finalised its investment in the Vietnam Gas Project – aka Project B – located in southwest Vietnam’s Malay-Tho Chu basin. The project involves developing a gas field and a pipeline system connecting it to the O Mon Power Complex in Can Tho City, the main hub in the Mekong Delta.

Mitsui, which has been exploring the field since the mid-1990s, sees natural gas and liquefied natural gas (LNG) as vital solutions during this transition period and aims to contribute to a more sustainable, decarbonised society through the project.

Total investment needed for the project is estimated to be at least US$10 billion, with MOECO’s share of the development cost coming to around US$740 million, mainly for offshore installations and pipeline construction.

The project’s production capacity is expected to reach 18.3 million cubic meters per day. In addition to developing the gas field itself, the project will also involve building infrastructure for gas transportation.

Other partners in the project include Petrovietnam Exploration Production Corporation (PVEP), Petrovietnam Gas Corporation (PV Gas), and PTT Exploration and Production Public Company from Thailand.

According to data analytics company GlobalData, peak production for Block B is forecasted to be in 2046, with operations expected to last until 2054.

The operator for Block B is Petrovietnam’s subsidiary Phu Quoc Petroleum Operation Company (Phu Quoc POC), which secured project management support services from various suppliers in May 2023.

 

Hong Kong to provide banks with DLT guidance

Raymond Chan, Director of the Hong Kong Monetary Authority (HKMA), has announced plans to provide Hong Kong banks with guidance on distributed ledger technology (DLT) in the coming weeks.

He shared the news during a speech at a DLT event for financial services, organised by the HKMA together with the Securities Futures Commission (SFC) and the Insurance Authority (IA). The three institutions also aim to publish research, training materials and videos to support DLT adoption.

Chan described DLT as a “paradigm-shifting innovation,” highlighting its potential to enhance security and introduce automation and efficiency through its programmability. He stressed the regulator’s technology-neutral stance, adhering to a “same activity, same risk, same regulation” policy.

“As a growing number of banks are approaching us to ask how this principle applies in practice to DLT, we plan to issue a set of guidelines in the coming weeks to outline the key considerations that the HKMA will take into account when reviewing banks’ DLT applications,” said Chan.

HKMA has previously offered guidance on structured products and tokenized commodities, carefully avoiding overlap with the SFC’s jurisdiction over securities. It has also published guidelines regarding digital asset custody. The additional guidance follows the HKMA’s recent unveiling of Project Ensemble, a project focused on wholesale central bank digital currency (wholesale CBDC) aimed at promoting tokenisation. The Authority also initiated the second phase of its retail CBDC pilot and introduced a stablecoin sandbox.

 

Tamkeen partners with Tarabut on IBAN verification

Bahrain’s Labour Fund Tamkeen has launched an International Bank Account Number (IBAN) verification service in collaboration with Tarabut Gateway, an open banking solutions platform.

A release stated that by leveraging Tarabut’s advanced technology, Tamkeen ensures a robust solution that minimises potential transaction issues. The service eliminates the need to attach certificates manually, allowing customers to effortlessly validate their IBANs, while saving time, reducing errors, and ensuring seamless payments.

Tamkeen’s Chief Technology Officer Najma Al Wadi said, “Tamkeen is constantly looking for new ways to add value to the services we offer our beneficiaries, including individuals and enterprises. Our strategic partnership with Tarabut Gateway demonstrates Tamkeen’s commitment to fostering digital transformation in government services and leveraging advanced technological know-how in delivering innovative and user-friendly solutions. This allows us to provide a more efficient and exceptional customer experience.

“We are also currently developing another initiative in partnership with Tarabut to verify wage support transfers, which will help facilitate transfers more effectively.”

This initiative is in line with Tamkeen’s 2024 strategic priorities focused on economic impact and the private sector under three pillars; increasing economic participation through employment opportunities for new entrants, expanding career development opportunities available to the Bahraini workforce, and further developing the private sector by supporting enterprises and boosting productivity and the adoption of technology.

 

Eurozone business activity revives in March

Eurozone business activity grew last month for the first time since May 2023, but the recovery was uneven with a stronger than expected upturn in the region’s dominant services industry offsetting a deeper downturn in manufacturing, a survey showed.

Hamburg Commercial Bank’s (HCOB) composite Purchasing Managers' Index (PMI) for the currency union, compiled by S&P Global and seen as a reliable gauge of overall economic health, climbed to 50.3 in March from February's 49.2, improving on a preliminary 49.9 estimate.

The rise moved the index back above the 50-mark separating growth from contraction.

"Finally, some good news again. The service sector in the euro zone is gradually finding its footing, with activity stabilising in February and showing signs of moderate growth in March," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

The services PMI jumped to 51.5 from 50.2, above the flash estimate of 51.1 and its highest reading since June.

That comes after a sister survey released on Tuesday showed the downturn in manufacturing deepened last month although it did show some tentative signs of recovery.

Demand for services increased with the new business index moving above breakeven to 51.4 from 49.8.

"It's particularly encouraging to note that new business has resumed growth after an eight-month dry spell. This favourable trend is expected to persist, fuelled by wage growth outpacing inflation, thus bolstering the purchasing power of households," de la Rubia added.

With the services industry returning to growth overall optimism about the year ahead has lifted. The composite future output index rose to 61.8 from 60.5, a level not seen in over two years.

 

HSBC “reviewing German units for possible sale”

HSBC is reported to be exploring the sale of various businesses in Germany including its wealth-management, custody and fund administration units.

According to inside sources, the bank is working with advisers on a review. The discussions are at an early stage and there’s no certainty they will lead to a sale, they said while HSBC’s corporate-banking and trading activities in the country are not affected by the review.

The disposals would add to HSBC’s list of exits from business activities and countries in recent years, including North America and its French retail operations. Most recently, the group completed the sale of its Canadian business to Royal Bank of Canada, The exits are part of a move to sharpen its focus on its core Asian operations with the bank looking to cater to German corporates with operations in Asia for instance.

Inka, HSBC’s German fund administration business, is one of the biggest in the industry with around €400 billion (US$431 billion) of assets under administration, according to its website. Fund administration firms cater to asset managers and provide services such as accounting, financial reporting and portfolio valuations.