Almost two years ago, a little-known Sheffield-based maker of garden spades and lawn rakes made financial history.
Neill Tools was the first UK company to make a cross-border payment in the Chinese currency, with the help of banking giant HSBC.
"The volume of yuan-denominated trade in the UK will inevitably increase," the HSBC banker in charge of the deal said at the time.
The transaction was an unlikely harbinger of a shift in the global financial system, and the prediction about the importance of the Chinese currency in trade proved prescient.
Today, UK banks hold 35 billion yuan ($5.5bn;£3.5bn) worth of deposits in the Chinese currency, also known as the renminbi.
Most comes from companies, like Neill Tools, that now pay their Chinese suppliers and business partners in the yuan rather than in dollars and pounds - something that was impossible less than three years ago.
"I receive phone calls on a daily basis from companies wanting to know about the process of using the renminbi," says Janet Ming, head of the Royal Bank of Scotland's London China desk.
Growing trade
How the City's banks and financial institutions capture this growing trade will be key to securing London's future as a global financial centre.
However, London's financial activity in the yuan is still relatively limited, especially when compared to Hong Kong, which has been the main winner in China's push to extend its currency's global reach.
This week UK banking executives, along with officials from the Treasury and the City of London, meet in Hong Kong to discuss what they can learn from their former colony.
According to an April report by the City Of London Corporation, London's banks already hold more than 109 billion yuan worth of deposits, with 35 billion yuan estimated to be held in customer accounts.
The remainder are made up of institutional and interbank deposits - held by one bank on behalf of another.
While this is much less than the 554 billion yuan held in Hong Kong bank accounts, the emergence of another pool of yuan outside Hong Kong is important, says Kelvin Lau, an economist at Standard Chartered.
"It not only illustrates London's inherent strength as an international financial centre and its geographical and time-zone advantages in serving Western customers; more importantly it reflects growing (yuan) demand on an international scale," he says.
London also accounts for a quarter of foreign exchange trading in the yuan and last month, HSBC became the first company to issue debt denominated in the Chinese currency in London.
"London's strength is its institutional investor base; it is anticipated that as corporate and institutional deposits grow, so too will the liquidity of the London market," the report said.
Clear rationaleLondon's rationale in seeking to develop its role as an offshore centre for trading in the yuan is easy to understand. It is keen to boost trade with China, and the City is angling for new avenues of business.
And unlike their counterparts in New York, UK government officials have been particularly active in promoting London's financial strengths to China.
"As the world's leading financial centre, London is uniquely well placed to assist China in its goal of further expanding the international use of the renminbi," UK Chancellor George Osborne said last month at the launch of a City initiative designed to strengthen London's position as a hub for renminbi business.
Beijing, meanwhile, wants the yuan to play a bigger role in the global financial system and reduce its reliance on the dollar. A push to make it internationalise its currency, which began in earnest in 2009, has taken on more urgency in recent months.
As such, "it makes sense to promote a new offshore centre, located in a different time zone to Hong Kong, which would appeal to businesses in Europe," says Dariusz Kowalczyk, senior economist at Credit Agricole.
Until the last decade, the renminbi was rarely seen beyond China's borders and Beijing still controls the flow of money in and out of the country.
ConstraintsLondon's bid to take its slice of international trade and investment in the yuan is constrained by two main factors.
Firstly, London lacks a natural customer base for many yuan financial products and services.
Retail investors or individual savers in the UK have less incentive to hold the yuan compared to their counterparts in Hong Kong, where the yuan is an accepted method of payment and mainland China a short bus or train ride away.
Appetite for yuan products is likely to be stronger among the London's army of institutional investors. However, waning expectations for appreciation in China's currency as its economy slows could diminish the market's appeal.
“Start Quote
End Quote Janet Ming Royal Bank of ScotlandSome companies are concerned because they are not sure how to get the currency converted”
And many European companies are still nervous about making and receiving payments in the yuan despite suppliers offering discounts of up to 10% for those willing to take the risk.
"Some companies are concerned because they are not sure how to hedge the transaction or how to get the currency converted," says Ms Ming.
"But Chinese suppliers are increasingly favouring payment in renminbi."
The second obstacle is London's lack of direct access to market infrastructure like settlement and clearing - only Hong Kong and Macau have clearing banks outside of mainland China.
This reinforces Hong Kong's position as the most obvious place to settle transactions and make deals in the yuan.
London is hoping to bridge this gap through an extension of the operating hours of Hong Kong's real time renminbi settlement system, which is expected to take effect at the end of June.
"The London market is still in its early stages and I think it will take some time, especially for individuals, to be comfortable holding the yuan," says Ms Ming.
"But it's not a matter of whether they should consider it, it's a matter of when."
Source: www.bbc.co.uk
London Session: Waiting for the EU summit - International Business Times
Although the EU President said that everything is on the table for discussion tomorrow, he also said that no concrete measures will be taken. Thus, the prospect for a market disappointment remains high. But how will this translate into price action? Euro shorts remain near record levels, which have led some to believe that there is enough downside priced in for a while. But if the situation in the Eurozone gets worse (think failure of EU authorities to act combined with the outcome of the Greek election) and you could see free fall. It's unlikely that an inconclusive summit tomorrow would be enough to trigger another leg lower, although we may test the air around last week's lows of 1.2650.
The risks of a pullback may actually be higher. As we have pointed out in recent days there is a chance of a pullback in risky assets. Not only is the euro looking well oversold, but the Dollar Index is approaching key resistance above 81.50, which could trigger some profit taking by the dollar bulls after it failed to get above this level last week. Added to this the SPX 500 bounced off support just below 1,300 yesterday. For a comprehensive overview and what we think could happen to risk assets post tomorrow's EU summit check out our preview video available on our website outside of the US.
Overall, today's price action shows that although the technical picture may be ripe for a pullback, it is more complicated than that as investors remain sensitive to headline risk. The fairly well received Spanish bond auction this morning, which saw the bid-to-cover ratio rise to over 4, helped spur sentiment. However, we along with equity investors remain suspicious of the bond market in Spain due to the large amount of debt being bought by Spanish banks. This is helping to support auctions and prop up bond prices, meaning that yields are not rising as high as they might without this support. A better indicator of sentiment towards Spain remains the Ibex (the Spanish stock market) and CDS contracts for Spain's largest banks including Santander and Bankia, which remain close to their highest ever levels, although 10-year bond yields are not as high as they were in November and the yield curve (10year yields- 2-yr yields) is much healthier than it was back then. So a "successful" Spanish bond auction isn't giving us the real picture of the state of things in Spain.
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The other big event was Japan's long-term credit rating downgrade to A+ from AA due to high levels of public debt and an inability for politicians to agree to double the consumption tax from 5% to 10%. The OECD, who delivered its semi-annual global economic outlook today, said that doubling this tax should be a top priority before 2014. The OECD delivered good news to the US, upping its growth forecast to 2.4% for this year and 2.6% next year and also expects the jobless rate to fall below 8% this year. Its outlook for the Eurozone was bleak. If the sovereign situation does not deteriorate then growth may contract by 0.1% this year (well below the GDP rate for the US and Japan), however it said that there was a risk of a deep recession if the sovereign crisis blows up. Since that risk is balanced on a knife edge, the risks to growth are very much present, which should be negative for the euro and European stocks in the medium-term. The OECD also said that Eurobonds could be one way to solve this crisis and also urged the ECB to cut interest rates (rates are currently at 1% and significantly higher than in the US where they are 0-0.25%).
The pound took a beating this morning after the IMF said the UK government needs to find a plan B if fiscal consolidation doesn't work and growth doesn't pick up. It also urged rate cuts and more QE, hence the negative impact on the pound.
Market moves:
After trying to break above 1.2820 for the second day, EURUSD then tumbled back below 1.2750. All these levels look a bit shaky in the short-term and before the EU summit. We continue to think that 1.2624 - the January low - will remain as key support in the medium-term.
The pound was hit hard post the IMF news, and fell sharply, although it managed to find support around 1.5820 - a cluster of daily smas. 1.5850 remains key resistance with 1.5750 on the downside. Tomorrow's MPC minutes will be vital to determine the medium-term trend for this cross as we find out just how dovish the MPC actually is. EURGBP has run into resistance just above 0.8100. This may cap the upside until we get 1, the MPC minutes and 2, the outcome of the EU summit. Support lies at 0.8050 first and then 0.8020, if the MPC minutes are deemed dovish then we may see a re-test of 0.80.
Gold has recovered this afternoon as the dollar lost some safe haven appeal after stronger than expected US existing home sales. Resistance lies at $1,595 then at $1, 1614 -the base of the Ichimoku cloud, which may cap the upside in the short-term. Gold is likely to follow market sentiment tomorrow and could break above these resistance levels if the EU summit delivers some "good news".
Best Regards,
Kathleen Brooks| Research Director UK EMEA | FOREX.com
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Source: www.ibtimes.com
Essex Old County Courthouse pillars could fall - Press Republican
ELIZABETHTOWN — First, Essex County lawmakers' chairs were collapsing. Now, it looks like the roof itself is in danger of coming down at the Old County Courthouse.
The County Board of Supervisors meets weekly at that building in Elizabethtown, but members were told Monday that the four pillars out front are in danger of snapping off if they're not repaired soon.
Department of Public Works Superintendent Anthony LaVigne said each pillar has an outer shell around a wooden post in the center.
"I'd like to head toward repairing these pillars. The ones in jeopardy are basically rotted through."
The County Public Works Committee unanimously approved immediate repairs to the pillars.
LaVigne said he has an estimate of about $47,000 to do the work, using treated posts and putting more vents in. Those pillars should have a 75-year life, he said.
He said the Old Courthouse is a historic building, so the State Historic Preservation Office must be consulted.
"They're (pillars) not properly vented to dry out," LaVigne said. "We're looking at it as a restoration and repair project."
The next step is the design and bid of the work, he said.
"Those are load-bearing pillars," LaVigne said. "They're not ornamental."
The courthouse was built in 1823 and has been modified several times since. It is no longer used for County Court; a new building was constructed nearby for that purpose.
Money for the work will probably come from the fund balance, supervisors said.
Supervisors previously learned their meeting-chambers chairs were breaking, and Board of Supervisors Chair Randy Douglas (D-Jay) said Monday that replacing them was a priority.
"Half these chairs are over 100 years old. It's a safety issue," he said. "The bottom line is the chairs need to be replaced. You'll fall off the chair, break your neck — that's what's going to happen."
Douglas has offered to buy new chairs so taxpayers don't have to foot the bill.
"We're not going to throw them away. I don't know about a museum, but we'll refurbish them."
At least one member of the board likes his chair, however.
"I, personally, am happy with my chair," Supervisor William Ferebee (R-Keene) said.
The pillars should be repaired as soon as possible, Supervisor Daniel Connell (D-Westport) said.
"We have a major safety issue here. We can't have the roof falling down."
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Source: pressrepublican.com
Michael Lynagh cleared to return home to London following his stroke which has damaged his eyesight - Daily Telegraph
Lynagh won 72 caps for Australia in the 1980s and 1990s as well as having a distinguished state career for Queensland.
He was part of Australia's Grand Slam-winning team during a tour of Britain and Ireland in 1984, and a key player in the country's 1991 World Cup win.
Lynagh captained Australia from 1993 to 1995 and held the world points scoring record when he retired with 911. He also held the world record for most conversions (140).
Source: www.telegraph.co.uk
London 2012 Olympics Ticket Design Revealed - huffingtonpost.co.uk
The ticket design for the London 2012 Olympics has been unveiled, the multi-coloured slips a timely taster of the rapidly approaching Games.
With the Olympic Flame making its way towards the stadium and another stock of tickets released on Wednesday, Locog chief Paul Deighton declared: "I can’t remember a more exciting week on the road to London 2012."
The bright ticket design features a pictogram of the particular sport while the trademark 2012 sloped typeface has been omitted, designers favouring a clearer font.
Information seems to be the basis of the design, with the colour scheme reflecting that of the venue, in order "to help spectators reach their destination" claims Locog.
Most celebratory is the opening ceremony ticket, coloured in gold with one design featuring trumpets.
However perhaps more importantly, each ticket bears the name of the booker, a hologram, and the price paid for the ticket, in order to reduce counterfeiting (the name is featured in the same place as 'Mrs A N Other on the picture).
Detective Superintendent Nick Downing of Operation Podium, which is dedicated to crime affecting the economy of the Olympics, delivered a stark warning regarding black market tickets.
"If you buy from an unofficial site, you risk paying over the odds for a ticket that may not exist, may not be genuine and you risk not getting to see the Games. Your personal details could even be used in other crimes," he said.
Source: www.huffingtonpost.co.uk
Essex Fire Dispute-Strike Ballot Papers Go Out - Market Wire
ESSEX, ENGLAND--(Marketwire - May 22, 2012) - Ballot papers are going out to Essex fire crews this week in a strike vote over unnecessary frontline cuts and changes imposed without agreement. The ballot starts on Wednesday 23rd May and closes on 13 June. The law then requires at least seven days notice of any strike action after that date.
Essex Fire Brigades Union is writing today directly to Councillor Tony Hedley, chair of Essex fire authority, seeking his agreement to lift the block on allowing the national fire service conciliators and ACAS to work together on a possible way forward for conciliated talks.
The union says the ballot is necessary because the fire authority is imposing changes whilst also planning further cuts. 100 full-time fire station based crews have been axed since 2008 with retained 'on call' crews cut by 60. Further cuts now being planned will bring total losses of around one in five frontline firefighters since 2008.
Backroom staffing has risen by 7.5% - from 238 in 2008 to 256 today. The latest budget review shows underspends of £1.3 million on wholetime firefighters, £206,000 on retained and £136,000 on control firefighters.
Mick Rogers FBU brigade secretary said: "Essex fire crews are furious at what is going on and will be giving their verdict on cuts and imposed changes. Managers need to get their heads out of the sand and realise the strength of feeling.
"There is still time enough to resolve the issues between us and we are now asking the Chair to the Fire Authority to use his good offices to remove the barriers to serious talks getting underway. But if there is no genuine intention or positive moves to resolve the very real concerns of the frontline professionals then strike action becomes an ever increasing prospect.
"Essex fire crews are united and very determined on this matter. This is not the small group of disgruntled militants the chief's PR team is suggesting, but a huge swell of opposition.
"No firefighter ever wants to take strike action but it will happen if things go on like this. I'd urge the Fire Authority to wake up, understand the strong views of their own crews and kick start talks to resolve this dispute."
Source: www.marketwire.com
London Metal Exchange bidders said down to two - Marketwatch
By Andrea Hotter
-- LME bids have similar business continuity assurances, but differ on price, sources say
-- CME was given option to come up with improved bid after Friday LME board meeting
-- ICE, Hong Kong Exchanges still in running to buy the LME
(Adds comment from the LME.)
LONDON -(MarketWatch)- CME Group Inc. /quotes/zigman/107063/quotes/nls/cme CME -2.25% has been eliminated from the sale process to buy the London Metal Exchange after being given more time to come up with a higher priced offer, leaving just two bidders in the frame to acquire the 135-year-old exchange, people familiar with the matter told Dow Jones Newswires Tuesday.
Rival exchanges IntercontinentalExchange Inc. /quotes/zigman/373487/quotes/nls/ice ICE -0.57% and Hong Kong Exchanges and Clearing Ltd. are the final candidates in the running to buy the world's biggest metals trading exchange, the people said. The LME eliminated NYSE Liffe, the London-based derivatives arm of NYSE Euronext /quotes/zigman/421745/quotes/nls/nyx NYX -0.67% , from the sale process May 11.
CME Group declined to comment.
The exchange's adviser, global investment bank Moelis & Co., had spent several days last week in talks with the remaining three parties. The LME board met late Friday to discuss the situation, and gave CME Group time to come back with an improved bid and put itself back in the auction process.
Discussions between Moelis and the bidders centered on the value of their bids, each of which remain unclear, although analysts have said offers could be around at least GBP1 billion. The three remaining bids were relatively similar in assurances related to continuity of the existing LME business but varied in terms of price, people familiar with the matter said, with Moelis seeking to narrow the spread between the offers.
In a statement Tuesday, the LME confirmed that only two parties remain in the bidding process. An update has been issued to shareholders, it said.
Moelis is being paid a GBP3.5 million fee on completion of the bidding process plus would earn between 0.5% and 0.7% of the final sale price if a deal goes ahead.
Firms bids were received for the LME May 7, with Moelis and the LME bid committee--Chairman Brian Bender, Chief Executive Martin Abbott and board directors David Rough and Nat le Roux--having first sight of the offers. The LME board had its first meeting to discuss the bids May 10.
The LME is central to the global trade of industrial metals, being the world's largest metals exchange and accounting for at least 80% of trade in nonferrous metals such as copper and aluminum.
A sale isn't guaranteed, however. A successful bidder would first need to allay concerns among holders of the LME's ordinary shares, who are also its members, about potential changes to exchange operations that could hurt their profitability. The deal would also need to be priced at a high enough level to entice members to part with their stakes.
The LME suspended its 2011 dividend payment while it awaits the outcome of the sale process. Any sale needs approval from 75% of shareholder votes and 50% of LME members.
The exchange reported net profit of GBP7.68 million in 2011, down 19% from GBP9.45 million in 2010.
Source: www.marketwatch.com
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