Asia Pacific

Debt crises, capital flight and corruption are all familiar problems for poor countries trying to finance their development. A bulwark, say some, is remittances: money sent home by migrants, worth $580 billion in 2014, The Economist reported. Unlike portfolio flows, which tend to flee at the first sign of trouble, remittances usually increase in tough times. And unlike aid, they go directly into the pockets of ordinary people, bypassing corrupt officials. All this is true, and important. But even remittances, alas, cannot always be relied upon.

In a related story, the Financial Times reported in an insight that the volatility in China’s equity and currency markets in the first week of 2016 was reminiscent of August 2015, but more serious. Even though the Chinese equity market doesn’t actually matter that much fundamentally to China or to the global economy, financial policy and the drip-feed depreciation of the renminbi matter a lot. There is a rising anxiety about the credibility of policymakers and regulators, and also about the state of the economy, the reform agenda and now a looming credit crisis.

Dick Smith chief executive Nick Abboud has resigned a week after the failed Australian electronics retailer went into receivership with debt of A$390 million ($272.61 million), its receivers said on Tuesday, Reuters reported. Don Grover has been appointed interim CEO, receivers Ferrier Hodgson said in a statement. Gover was formerly CEO of Retail Fusion brands and has more than 30 years experience in the industry. The receivers also launched advertisements on Tuesday seeking expressions of interest for the sale of the Dick Smith and Move businesses.

China guided its yuan currency higher on Monday, and offshore it surged against the dollar, spurred by what traders called aggressive intervention by Beijing, although Chinese stocks tumbled again as doubts persisted over policymakers’ intent, the Irish Times reported on a Reuters story. Perceived mis-steps by China’s authorities have stoked concerns in global markets that Beijing might lose its grip on economic policy, even as the country looks set to post its slowest growth in 25 years.

China’s financial system is “largely stable and healthy,” the country’s foreign exchange regulator said at the weekend in an effort to reassure global markets as investors braced for a possible resumption of last week’s market turmoil, the Financial Times reported. Attention is likely to focus on China’s central bank and its management of the renminbi this week, after the markets regulator appeared to stabilise last week’s stock sell-off by scrapping a controversial “circuit breaker” mechanism and extending a ban on share sales by large shareholders.

In a related story, The Wall Street Journal reported that the convulsions in China’s stock and currency markets this past week fanned investors’ worst fears: The world’s second biggest economy is in trouble and the authorities are powerless to fix it. The truth is less frightening, but still fraught. China is trying to shift economic growth to a slower, safer path, one less dependent on capital spending and debt. Chinese technocrats know that means opening to ever more market forces, but its ruling elite is still not willing to accept that loss of control.

Clive Palmer has lashed out at the Queensland government for refusing to support his struggling Yabulu nickel refinery, as reports emerge that insolvency experts have been called in, The Guardian reported. Palmer released a statement saying the government’s recent refusal to assist Queensland Nickel by guaranteeing a $35m loan was making it “near impossible” to compete in the international marketplace.

China’s hoard of foreign-exchange reserves continued to shrink in December, recording the biggest monthly drop ever and falling overall to its lowest level in nearly three years as worries intensify over the country’s economic slowdown, The Wall Street Journal reported. With the $107.9 billion drop in December, Beijing’s foreign-exchange reserves have fallen every month but one since May. The data suggest the central bank is having to spend huge amounts of dollars to support an increasingly beleaguered yuan amid decelerating economic growth and the onset of higher U.S.

South Korea’s Hanjin Heavy Industries & Construction (HHIC) is seeking a debt restructuring with its creditors and is expecting to post its sixth consecutive year of losses in 2015, reports said. In a regulatory filing to the stock exchange, HHIC said it faces a temporary liquidity shortage and seeks to restructure its debts with creditors under a voluntary agreement. Local media reports mentioned that HHIC is requesting its major creditor Korea Development Bank (KDB) to approve the debt restructuring plan, allowing the yard to then delay debt repayments and obtain extra funding.

ASX-listed coal seam gas (CSG) drilling contractor, Titan Energy Services Ltd, has become the latest victim of the commodity downturn, being placed into voluntary administration, according to a company statement. In its 2015 annual financial statements, the group said its ability to continue in business depended on several factors, including the ability to win new work and raise additional funds.