Bitcoin (BTC/USD) Price Technical Analysis for February 17, 2017

Investors are still generally cautious about putting funds back in bitcoin after all the goings-on in China. This is the largest bitcoin market in the world so anything that happens locally would have repercussions on global bitcoin activity. Earlier in the year, government authorities stepped up their efforts to curb bitcoin activity as part of their goal to reduce offshore investments and speculative yuan positioning.

This forced bitcoin to return a lot of its recent gains throughout January, although a rebound occurred when authorities seemed to ease up on their regulatory moves. However, bitcoin price tanked once more when a couple of major exchanges in the mainland were prompted to halt client withdrawals in compliance with ongoing investigations. This led traders to liquidate their holdings and be extra cautious when going long.

With that, liquidity has been significantly weighed down in the past few weeks so this low volatility environment could be the norm for bitcoin, unless any major industry updates pop up. So far, the industry has been showing positive developments in terms of bitcoin acceptance in the mainstream and on Wall Street. Aside from that, geopolitical risks in the West stemming from the Trump administration and the upcoming French elections are also keeping bitcoin supported. Foreseen financial troubles in Greece and Italy could also shore up demand for the cryptocurrency in the coming weeks.

On the flip side, factors that dampen bitcoin gains are that of Fed rate hike expectations for March which would boost dollar demand and anticipation for Trump’s tax reform plan which would encourage traders to put money in US assets instead. Of course there’s also the threat of Chinese regulation on bitcoin or penalties on clients that could further undo bitcoin gains.

Trump Administration’s Perception in the UK

It’s fair to say that Donald Trump’s surprise victory in the US Election in November was not universally welcomed. In the UK, it was widely reported that as the result unfolded, the Canadian immigration website crashed because of high levels of traffic. The UK immigration website stayed active, but we are seeing increased numbers of enquiries from US residents about coming to the UK.

Speaking alongside Google boss Sundar Pichai in November, London Mayor Sadiq Khan said

If talented people based in the US want to come here to London, my message is simple – London is open.

And despite Brexit uncertainties, the UK has a strong economy; a stable government; world class financial and judicial systems and is well located for easy access to east and west. Coupled with a strong real estate market and a vibrant cultural scene, it’s an attractive place to live.

So, whether you are considering a first-time move to the UK or if you’re an ex-pat thinking of returning, here are top ten legal and tax tips to bear in mind:

  1. If you don’t have a UK domicile of origin, the UK tax regime can be friendly (for 15 years at least), and foreign assets can be excluded from tax here if the structuring is correct.
  2. Becoming UK tax resident can result in family trusts becoming UK tax resident for income tax and capital gains tax due to residence rules for trusts being based on the residence of individual trustees. ‘Living Trusts’ are popular in the US, but inadvertently importing such a trust by moving here can trigger adverse tax consequences. It may be enough to appoint new non-UK trustees, but care should be taken to avoid unforeseen consequences.
  3. If you are a US-dwelling Brit, you may immediately re-acquire UK domicile on your return to the UK, rendering your worldwide assets subject to inheritance tax, income tax and capital gains tax in the UK. Further, if you were UK tax resident and have spent less than 5 years outside of the UK, you can find income and gains arising during that period of non-residence can become subject to UK tax on your return to the UK.
  4. Complexity (and a tax charge) can arise on death where one spouse is UK domiciled, but the other is not. There are some solutions, but these need careful planning.
  5. Acquiring a UK home through a company (which has long been favoured by non-domiciled individuals) now carries a high tax cost – extra taxes arise in the form of the Annual Tax on Enveloped Dwellings, additional Stamp Duty Land Tax – and no longer removes it from the scope of Inheritance Tax on death. Make sure you look into the true tax cost of acquiring property in advance.
  6. Timing is important. There are new rules on the tax treatment of individuals arriving in the UK part way through a tax year (our tax year runs from 6 April in one year to 5 April the next). Mostly this can be managed, but it is a trap for the unwary.
  7. If you are a US resident with offshore investments, you should check that your investments are structured to ensure clean capital, income and capital gains are segregated into identifiable accounts, before arriving in the UK. This is important for non UK-domiciled individuals who are taxed on the remittance basis in the UK and may need to bring non-UK funds into the UK. This forward planning can result in a much lower UK tax outcome on remitted funds.
  8. Subject to local tax issues, it may be advisable to realise income and latent gains before you become resident in the UK, to secure optimum tax treatment between the two jurisdictions.
  9. If you are acquiring assets in England, particularly real estate, you should make an English Will. If you’re retaining assets in the US, it’s sensible to have a separate US Will.
  10. If you’ve entered into a pre- or post-nuptial agreement, have it reviewed by a UK lawyer. Although these arrangements can be binding in the UK, they need to follow strict criteria to carry any weight.

There is clearly going to be complexity in switching between two sophisticated jurisdictions such as the US and UK. But it’s a well-trodden path, and much of the complexity can be managed. Most important of all is to take advice early and to ensure your advisers in both countries talk to each other and understand what matters most to you.

China Regulator Urges Insurers to Avoid ‘Reckless’ Offshore Investments: Report

A senior Chineseinsuranceregulator warned against the industry’s reckless overseas investment, saying some insurers behaved recklessly when it came to offshore acquisitions, the official Securities Times reported on Thursday.

Chen Wenhui, vice chairman of the ChinaInsuranceRegulatory Commission (CIRC) urged insurers to take a cautious approach when investing overseas, the newspaper said.

UK tax reforms make Bermuda trusts appealing

The Bermuda trust is a popular estate planning vehicle for private clients wishing to structure their affairs in a tax efficient manner. There are a whole host of reasons why this is so, including asset protection, preservation of wealth for future generations, confidentiality, settlor reservation of control, ensuring business continuity, protection of vulnerable heirs and prudent succession planning.

Now, there is another reason.

On April 6 2017 widespread reforms to UK tax rules for UK resident but non-domiciled individuals and their property holding structures are scheduled to take effect. From April 6 (the beginning of the new UK tax year), individuals who have been resident in the UK for 15 of the previous 20 tax years will become “deemed domiciled” for all UK tax purposes under the proposed changes. These individuals will become subject to UK tax on their worldwide personal income and gains. In addition their worldwide personal assets will become subject to UK inheritance tax on their death.

An individual wishing to break the deeming provisions will need to leave the UK for six complete tax years before returning to the UK and restarting the clock, or three years (for inheritance tax purpose only) where there is no intention to return to the UK.

Many UK advisors are recommending the use of offshore trusts settled with suitable assets before an individual becomes UK deemed domiciled on April 6 under the so called “protected trust” rules. A Bermuda trust is one such example.

The settlor of a protected trust will generally be exempt from UK income tax (on the trust’s foreign income) and UK capital gains tax (on the trust’s UK or non-UK gains). This benefit can be incredibly attractive to a non-UK domiciliary who subsequently acquires UK deemed domicile status and wishes to protect assets from UK tax.

However, the key proviso in order to benefit from these tax exemptions is that the settlor may not subsequently add property or income to the trust (‘tainting’ rules), with some very limited exceptions. The settlor will be subject to tax if they receive amounts from the trust as will other beneficiaries. Care needs to be taken if there have been capital distributions prior to April 6 2017 as these can come into charge in certain circumstances. Anti-avoidance measures are being introduced to tax the settlor on distributions to ‘close family members’ (essentially minor children and spouse/civil partner/cohabitee) if the amount does not come into charge because, say, the recipient is non-UK resident.

Trusts established by an individual before becoming UK deemed domiciled also provide UK inheritance tax savings. Generally the settlor will not be subject to UK inheritance tax on the non-UK assets of the trust provided that no funds are added to the trust by the settlor (after becoming deemed domiciled) in any way. UK assets will be protected if held via a non-UK company except for UK residential property, which will always be subject to UK inheritance tax under new rules to be introduced in April.

Protected status is only available to offshore trusts and not to directly-held investments or offshore companies. This creates a planning opportunity for non-domiciled individuals who risk becoming deemed domiciled in April. Where they hold offshore investments, either directly or through an offshore company, they could consider settling these assets into a Bermuda trust prior to April 6 in order to benefit from prudent tax planning.

Unfortunately, returning former domiciliaries (that is, individuals born in the UK with a UK domicile of origin) will be treated as domiciled in the UK for all tax purposes on their return to the UK, although there will be a short grace period with respect to inheritance tax exposure on their worldwide assets. These individuals will also not be able to benefit from the new protected trust regime — and worse, trusts of which they are settlor effectively fall into the UK tax net, including for inheritance tax.

The upcoming rules are creating quite a stir in the private client and trust community. Advisors and trustees are busy restructuring existing trusts with a view to benefiting different family beneficiaries who may be materially affected as a result of the April tax changes. Splitting of existing trusts may also be desirable in order to separate trust portfolios with different investment strategies. It may be prudent to review whether past income should remain in or be distributed out of existing trust structures before the April tax changes. If UK tax is a concern then these changes should all be implemented prior to April 6 2017.

Time is fast running out for individuals who will soon become deemed domiciled under the April deeming provisions to get their affairs in order. If appropriate, and subject to receiving suitable UK tax and Bermuda legal advice, a Bermuda trust to hold non-UK assets settled prior to an individual becoming UK deemed domiciled, can be incredibly attractive in light of the looming UK tax changes.

Lawyer Vanessa Schrum is a Partner and Local Group Head of the Private Client and Trusts Practice Group at Appleby. A copy of Mrs Schrum’s column can be obtained on the Appleby website at www.applebyglobal.com.

The author would like to thank Gill Smith of Moore Stephens LLP for her contribution.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.

Xurpas buys into HK-based HR solutions firm

MB China’s current roster of clients includes Fortune 500 firms engaged in technology and consumer electronics, athletic footwear and sports equipment and other large companies with manufacturing facilities in China.

This investment is seen unlocking synergies with a local Xurpas subsidiary engaged in a similar business. Xurpas controls majority of Storm Flex Systems Inc., whose platform allows employees to exchange their standard employee benefits into a wide range of products and services, ranging from gadgets, travel packages and insurance.

“Combining the platforms of Micro Benefits and Storm Flex Systems Inc. creates a more compelling business solution fully intended to optimize their HR technology platforms which they could both offer to their clients,” said Nix Nolledo, CEO of Xurpas.

“Expansion is one of our continuing priorities, and this is a strategic move that establishes China as a new and hugely lucrative frontier for our growing enterprise business, while simultaneously allowing us to offer new solutions to companies here in Asia.”

Storm Flex Systems Inc.’s current roster of clients include the Philippines’ leading local conglomerates, financial services firms, business process outsourcing and fast-moving consumer good companies.

Xurpas has so far invested $14 million in six offshore technology companies, Nolledo said.  The investment in Micro Benefits was the fifth since Xurpas debuted on the local stock exchange on Dec. 2, 2014, then raising P1.36 billion in fresh capital.

The string of overseas buy-in deals made by Xurpas is seen part of its diversification program.

“The offshore investments represent product and territory expansion opportunities.  Most of our revenues at present come from the Philippines still but moving forward, we expect to see more and more of our growth coming from overseas,” Nolledo said. Doris Dumlao-Abadilla

RL360° Quantum Backs Elite Athlete in 2016 Rio Olympics

ISLE OF MAN, United Kingdom–(BUSINESS WIRE)–RL360°
Quantum has announced a sponsorship agreement with double trap
shooter and current World Record Holder Tim Kneale.

The international offshore investments and savings provider will provide
financial backing for Kneale as he prepares for the Games, to be held in
Rio, Brazil, in August 2016.

Kneale, who was born and grew up in the Isle of Man, where RL360°’s head
office is based, is the current Double Trap World Record holder, and is
rated number 2 in the world in the International Shooting Sport
Federation (“ISSF”) rankings. He will represent Team GB at the Double
Trap shooting event, having previously won Individual Silver at the 2015
World Shotgun Championships and Bronze at 2010 Commonwealth Games in
Delhi.

The sponsorship agreement will allow RL360° to provide regular and
exclusive news and progress updates about his training and competition
progress, as well as host exclusive corporate shooting events for in
London and Dubai.

Now based in Somerset, England, Kneale grew up in the north of the
Island, and all his family still live on the Isle of Man. He began his
international career in 1998, representing the Isle of Man when he was
just 16, and first shot as part of the Great Britain team in 2002.

He is currently the only Manx athlete to be confirmed as a member of the
British Olympic Team, and is on the shortlist for the 2016 Manx Sports
Personality of the Year Award, to be announced this month.

In the run up to the Olympics, Kneale has a busy schedule including
World Cup events in Rio, Cyprus and San Marino, and the European
Championships in Italy in July.

RL360° offers a broad range of offshore investment, savings and tax
planning products to investors around the world via financial advisers; Quantum
is the flagship regular savings product sold by RL360 Insurance Company
Limited.

With offices in the Isle of Man, Hong Kong, Dubai and Lebanon, RL360°
helps clients in Asia, Africa, the Middle East, Latin America and the
UK. As an international business based offshore on the Isle of Man,
RL360° is able to offer clients a greater scope of tax efficiency, as an
offshore bond is not subject to any ongoing tax on the Island. An
offshore bond also allows clients to access their money relatively
easily, compared with other investment structures that may impose
restrictions.

As the Isle of Man enjoys exceptional political and economic stability
and has become one of the world’s most important financial hubs over the
last 25 years, with a reputation for investor protection and security.

On 1 December 2015, the RL360 Group completed its acquisition of CMI
Insurance Company Limited from Lloyds Banking Group plc. This created a
combined group with assets under administration in excess of $10bn.

“We are thrilled to be able to support Tim in this hugely important
year,” said RL360° Chief Executive David Kneeshaw. “The RL360° Quantum
sponsorship will help Tim to meet his travel, training and equipment
costs in the run-up to the Olympics. In return, we are able to back an
elite – and local – athlete. This is the start of an exciting
partnership.”

Tim added: Im delighted today to announce the sponsorship with RL360°
Quantum in the Isle of Man, from where my shooting journey originally
started many years ago. The support from RL360° during the months
leading up to the Rio 2016 Olympic Games this summer will be a huge
benefit and a great support during what will be one of the busiest
periods of my shooting career to date.

– ENDS –

Telstra dividend still a good call

Telstras profit result for the December half of 2015 announced last month disappointed slightly.

Its net profit of just over $2 billion for the six months to December 31 was only slightly higher than for the same period a year earlier.

The company remains a cash cow, however, and slightly increased its half-year dividend to 15.5c a share compared with the 15c it paid out a year earlier.

However, the telco faces competition on all fronts – especially from Optus and Vodafone for mobile services.

And its privileged position as the dominant owner of telecommunications infrastructure is eroding as the National Broadband Network is rolled out.

Telstra is putting some its cash towards new markets that it hopes will grow its profits into the future.

It is investing in technology start-ups and in Asia.

These ventures are riskier but necessary, says Brian Han, senior equity analyst at Morningstar.

Everything the company does is being weighed against the benefits of returning capital to shareholders, he says.

At the end of the day, you have to ask yourself do you want Telstra to just keep on returning money to you as a shareholder or do you want management to grow the company, Han says.

Telstra shareholders will also likely be asking themselves if the company is taking too many risks that could put the dividend payout under pressure.

Some will remember the disastrous forays the telco made into Asia in the early 2000s.

However, analysts say Telstra has learned lessons from the past and is applying strict disciplines to its offshore investments. Analysts say the telcos dividend is secure.

It has good freecash flow with more than enough of the financial buffer to cover dividends, at least over the nearer-term, says Elio DAmato, chief executive of share analyst Lincoln Indicators.

Analysts say the financial health of the telco is such that after paying dividends each year and putting aside capital expenditures to sustain the business, ithas something like $1 billion that can be invested or used to buyback shares.

BHP Billiton is a completely different type of company to Telstra, DAmato says. BHP is a cyclical commodities business whose profits are at the whims of commodities prices, he says.

Morningstars Han reckons Telstras share price, at just over $5, offers investors some potential upside.

In Hans opinion, the telcos shares are undervalued.

We think it is worth about $6, he says. It was last trading at just over $6 in the middle of last year.

Twitter: @jcollett_money

Letter: Owes no one

Robert Stabile, Bonita Springs

Owes no one

According to the Feb. 27 issue of the Wall Street Journal, Stephan Schwartzman of Blackstone made $799 million in 2015, and $689 million in 2014.

The website Vox reports that the 25 top hedge fund managers received $21 billion last year. This is more than twice the annual income of all the kindergarten teachers in the United States combined.

Through tax loopholes like carried interest and offshore investments, they pay a lower tax rate than most working Americans.

Sen. Chuck Schumer from New York, slated to be the Democratic leader, is a great friend of Wall Street. His power derives mostly from his ability to extract political contributions from the very people who benefit from these tax loopholes.

Is it any wonder that so many ordinary citizens of this country are fed up and are looking for help from such an imperfect vessel as Donald Trump?

Trump owes no one and bows to no one. Maybe he can change things.

Ayala eyes Indonesia

Elsewhere in the region, the group has existing offshore investments in Vietnam (water) and Malaysia (real estate).

In 2013, Ayala-led Manila Water Co. (MWC) planned to buy out the 51-percent stake held by French-controlled Suez Environment in PAM Lyonnase Jaya (Palyja), one of the two water utility operators in Jakarta, but the plan was foiled as the local government decided not to cede its stake to a foreign investor.

In Vietnam, MWC was contracted in the mid-2000s to plug pipeline leakages and has since found opportunity to invest in a couple of water treatment plants and water distribution. MWC has now invested $100 million in Vietnam, making it the biggest foreign direct investor in that country’s water space.

MWC likewise has a joint project with Mitsubishi Corp. of Japan and the Yangon City Development Council on a nonrevenue reduction program in Myanmar.

Property arm Ayala Land Inc., on the other hand, entered into a partnership with Myanmar’s City Mart Holdings, the leading local retailer there, to gain access to this new frontier market.

“Right now, it’s on hold because government approvals are hard to get,” Borromeo said, also pointing out to political changes in Myanmar.

During last year’s parliamentary elections, democracy icon Aung San Suu Kyis party won by a landslide in Myanmar, a country transitioning from over 50 years of military rule. But as the parliament now begins it presidential selection, Suu Kyi has been constitutionally barred from the presidency because she married a British citizen and her sons are British.

The search for investments in Indonesia is opportunistic, Borromeo said. “We want to diversify our portfolio,” he pointed out, adding that the group would enter this new market with a local partner.

It’s win-lose for Telstra chief executive Andy Penn as Philippines plan fizzles

This does not mean Penn is not under pressure to expand further into Asia. With margins under pressure in its core Australian mobile operations and competitive threats growing, Telstra needs to find new revenue streams.

The Philippines deal remains a logical deal strategically. San Miguel has the assets in the form of the spectrum band, which is the radio frequency used for 4G services, and Telstra has the expertise and the cash.

Telstra has long taken a conservative approach to offshore investments, which is what investors have wanted. Its last big Asia deal was a 76.4 per cent stake in Hong Kongs CSL, which was sold to Hong Kong Telecom as part of a $US2.4 billion deal in 2014. The stalemate highlights the challenges Australian companies face in trying to expand into Asia.

Michael.smith@fairfaxmedia.com.au

Twitter @MikeSmithAFR