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AseanTuesday
East Timor plans to restart border talks with Australia
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ast Timor plans to negotiate a larger share of the oil and gas wealth in the seabed between the impoverished Southeast Asian nation and Australia by restarting talks on a maritime boundary. East Timor and Australia said in a joint statement on Monday the tiny half-island country plans to give its wealthy neighbor three months’ notice that a bilateral treaty on sharing Timor Sea oil and gas will be terminated. That 2006 treaty also suspended negotiations on a maritime boundary for 50 years. By reverting to a 2002 treaty, East Timor plans to restart negotiations and hopes to persuade Australia to accept a boundary midway between the countries, Deakin University expert on Southeast Asia Damien Kingsbury said. Australia has long maintained that the border should extend beyond it large continental shelf and much closer to the East Timorese shore, but has failed to reach agreement on the subject with East Timor or with Indonesia, which controlled the province before the East Timorese voted for independence in 1999. Instead, Australia has shared the energy wealth of the disputed seabed within an area known as the Joint Petroleum Development Area. East Timor currently collects 90 percent of royalties from the area, which go into a national fund. Kingsbury said East Timor stood to gain 100 percent of those royalties, as the oil and gas fields in the Timor Sea were drying up over the next decade. Australia confirmed its commitment to negotiate a maritime boundary and said in the joint statement that it recognized East Timor’s right to terminate the 2006 treaty. East Timor Ambassador to Aus-
It’s quite welcome for Australia to take this step and for us to deal with this issue once and for all. It’s very important for both countries in our bilateral relations, as well as regional stability and security.”—Guterres
tralia Abel Guterres said he expected Australia to accept international law in deciding where the boundary should lie. “It’s quite welcome for Australia to take this step and for us to deal with this issue once and for all,” Guterres said. “It’s very important for both countries in our bilateral relations, as well as regional stability and security.” East Timor and Australia opened conciliation on the maritime boundary last year before a panel of five experts at a conciliation commission in The Hague convened under an international treaty governing the laws of the sea. The acrimonious dispute has long soured relations between East Timor and Australia, which played a pivotal role in helping East Timor gain independence after a long occupation by Indonesia. AP
BusinessMirror
Editor: Max V. de Leon • Tuesday, January 10, 2017 A9
Resurgent Asean stocks may weather Trump-China spat
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rally in Southeast Asian stocks may persist even if a Trump-induced trade spat with China erupts, as strategists see the region offering shelter from any global fallout.
After taking a dive as expectations for faster US interest-rate hikes damped their appeal, Asean’s emerging share markets have rebounded sharply in the past couple of weeks. The Philippine Stock Exchange index has led the way, surging 10 percent since December 23, 2016, followed by a 6.1-percent increase in the Jakarta Composite Index. Thailand’s benchmark gauge rose to the highest since March 2015, while Malaysian shares reached a two-month high. President-elect Donald J. Trump’s appointment of China hawks to key positions in his administration has investors bracing for rising trade tension between the world’s two biggest economies. With large domestic markets and less reliance on exports, strategists and fund managers see Southeast Asian economies and companies as better placed to cope than their north Asian counterparts. “The tension between China and the new US administration should benefit Southeast Asian countries,” said Win Phromphaet, the Bangkokbased chief investment officer at CIMB-Principal Asset Management Co., which oversees around $3 billion of Thai assets. “Foreign investors may choose to shift their investments in the region from China to avoid trade barriers.” Win said he had been advising
clients to add to equity holdings in Southeast Asia because of the region’s strong economies and corporate earnings growth. Indonesia, which has a population of 258 million, looks like a good place to take shelter from the turbulence, according to Clive McDonnell, the Singapore-based head of emergingmarkets equity strategy at Standard Chartered Plc. “Given the uncertainties over President-elect Trump’s policies on trade, we would like to be in markets that are more defensive,” he said. Indonesia stands out as it has a lower export-to-GDP ratio and a higher weight toward domestic-oriented industries in its stock market, he said. McDonnell said he was most positive on the country, along with India, in developing Asia.
Fed minutes
The MSCI South East Asia Index, which also includes Singaporean stocks, fell more than 6 percent in the four sessions after Trump’s shock victory last November 8. It then recouped around half of those losses before dropping again in the two weeks through December 23. The gauge has rebounded 5.5 percent since then. US Federal Reserve (the Fed) minutes released last week showing the US central bank may be
The tension between China and the new US administration should benefit Southeast Asian countries. Foreign investors may choose to shift their investments in the region from China to avoid trade barriers.”—CIMBPrincipal Asset Management Co.
more dovish than previously thought are also improving sentiment toward the region. The Jakarta Composite Index fell 0.3 percent as of 11:07 a.m. in Jakarta, the Malaysian benchmark declined 0.2 percent, while the Philippine measure was little changed. Thailand’s SET Index lost 0.3 percent. While thin trading over the holiday period may have exacerbated the stock moves, it looks like a relief rally based on a more dovish Fed, said Sean Quek, the head of equity research at Bank of Singapore Ltd. in the city-state. The impact from USChina trade tension might be less severe on Southeast Asia but it still
wouldn’t be positive, he said. The trade issue, along with rising US borrowing costs and currency vulnerability, were the main reasons Bank of Singapore was maintaining the underweight call it put on Asia ex-Japan stocks shortly after the US election, Quek said. “If things do get very negative on the trade front, I think it’s hard to see anyone in the region not being affected,” he said. Foreign funds pulled almost $4 billion from the Indonesian, Thai, Malaysian and Philippine share markets last November and December, according to exchange data. The flows have started to reverse with $226 million of inflows so far this year, as a Bloomberg gauge of the dollar’s strength had its first backto-back weekly decline since September 2016. “It’s all about the pullback in the dollar” and robust economic growth rates in Southeast Asia, said Frederico Ocampo, the Manila-based chief investment officer at BDO Unibank Inc., the largest money manager in the Philippines. The declining share prices pushed the 12-month price-to-earnings ratio on the MSCI South East Asia Index to as low as 14.2 last December 23 from a high of 15.3 last August. The gauge is now trading at the smallest premium to the MSCI World Index since 2008. “The fundamentals of many companies in Asean remain solid and valuations are getting more attractive,” said Voravan Tarapoom, the Bangkok-based CEO at BBL Asset Management Co., which oversees around $16 billion. “If the US economy fails to meet market expectations, there would be a good chance that capital could flow back into Asean.” Bloomberg News
Latest in South China Sea dispute: China makes waves with aircraft carrier
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hina says it was routine combat drills, yet, the deployment of the aircraft carrier Liaoning’s battle group in the Western Pacific and into the South China Sea has made neighbors jittery about Beijing flexing its muscles. The Defense Ministry says J-15 fighter jets and sea-borne helicopters practiced takeoffs and landings on the carrier’s deck in “complex hydrological and meteorological conditions in the South China Sea.” It says a cold front posed some challenges but the drills provided important experience in the building of combat capability of the country’s largest warship. China’s first and only carrier, which was commissioned in 2012 and declared combat ready in November, for the first time sailed into the Western Pacific through the Miyako Strait south of Okinawa, then passed through the Bashi Channel separating Taiwan from the Philippines as it entered the South China Sea. Japanese and Taiwanese surveillance aircraft and ships closely monitored its progress. “These latest drills provide our first insights into how China will likely be using their aircraft carrier in the near future. Rather than extended power projection in far-off waters, the Chinese appear more likely to use the carrier, at least initially, as a demonstration of regional muscle—sending a message that they are willing to back up talk, policy, or rhetoric with a show of strength,” Eric Wertheim, author of Combat Fleets of the World, told the US Naval Institute News. Chinese Foreign Ministry Spokesman Hua Chunying says the Liaoning should enjoy rights in accordance with freedom of navigation as set by international law. However, Japanese officials ac-
companying Prime Minister Shinzo Abe on his trip to Hawaii for talks with President Barack Obama said the two leaders affirmed that movements by the Chinese carrier “warrant close attention from midterm and long-term perspectives.” Fox News reported this was the first time since World War II that no US aircraft carrier was at sea anywhere in the world. The USS Carl Vinson battle group began deploying in the Western Pacific last week and will relieve the USS Ronald Reagan as the only carrier in the Asia-Pacific region based at Yokosuka Naval Base in Japan. “We have a presence in the South China Sea and the Asia-Pacific, significant presence at all times,” Defense Department Spokesman Peter Cook said. “And it would not be unusual for us to have an aircraft carrier or any other kind of ship in that part of the world.”
disputed waters was a serious concern, then the United States should have led the way and stopped it “right at the beginning, when the first spade of soil was tossed out to the area that was being reclaimed.” “Why raise an issue putting the countries into distress or under stress when you are not going to do anything, when it is you who have the arms?” he said.
Gunboat diplomacy in full swing
Duterte dangles arbitration ruling before china
President Duterte, who has warmed up to Beijing away from the country’s traditional reliance on the US, says he will bring up an international arbitration ruling that invalidated most of China’s claims in the South China Sea if Beijing starts extracting oil or gas from the disputed waters. At the same time, the Philippines is studying the possibility of joint exploration of resources with China, according to Philippine Ambassador to Beijing Jose Santiago Santa Romana. Asked under what circumstances he would insist on the July tribunal ruling that China refuses to recognize, Duterte replied: “When the minerals are already being siphoned out.” If that happens, he said, he will tell China: “I thought we’re friends? We share economic bounties...so how
In the above January 6 file photo, President Duterte (center) watches as Russian navy officers show the weapons onboard the Russian antisubmarine Navy vessel Admiral Tributs in Manila. A flurry of goodwill visits by ships and submarines has marked the new year in the South China Sea. At right, in this undated file photo released by China’s Xinhua News Agency, China’s aircraft carrier Liaoning berths in China port. AP
about us? I have this title, so what do you think? Don’t you think we should talk now?” Duterte has previously said he would set aside the arbitration ruling as he seeks to mend ties with China. He also criticized Washington, telling CNN Philippines that if China’s construction of islands in the
A flurry of goodwill visits by ships and submarines has marked the new year in the South China Sea. In the Philippines two Russian warships docked in Manila for a fiveday visit in a showcase by Moscow to demonstrate what it can offer to a traditional US ally. Rear Adm. Eduard Mikhailov, deputy commander of Russia’s Pacific Fleet, said anyone can choose how to cooperate with the US or Russia. “But from our side, we can help you in every way that you need.” “We are sure that in the future we’ll have exercises with you. Maybe, just maneuvering or maybe use of combat systems and so on,” he told reporters. Meanwhile, three Japanese warships, led by the destroyer JS Inazuma, visited Subic Bay, a former US naval base near Manila. Also, Malaysia hosted two submarines from China in Sabah state facing the South China Sea. The Royal Malaysian Navy said the visits by the CNS Chang Xing Dao and the CNS Chang Cheng are part of regular navy-to-navy interactions. The Diplomat reported that last year Malaysia and China began annual military exercises and China secured access to the port of Kota Kinabalu following a visit by Chinese navy commander Adm. Wu Shengli. AP