MOP 6.00
Border Crossing preparations underway
Number 645 Wednesday October 15, 2014
Publisher: Paulo A. Azevedo
Closing editor: Luis Gonçalves
Macau Esprit turnover up 5pct | Foreign reserves drop in September > PAGE 5
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Year III
4-hour border crossing is nearing reality. Zhuhai is expanding passport control channels on the mainland side of the Cross Border Industrial Zone. Works preparing for the 24-hour crossing are scheduled to finish mid-December. Zhuhai authorities concede that midnight to early morning crossings may be available to mainland tourists as well PAGE
Juicy Apples The waiting is over. Well, almost. Apple announced yesterday the much-anticipated iPhone 6 and iPhone 6 Plus will go on sale in Macau on October 31. CTM confirmed the smartphones will be available that day and online reservations start today. In two days, Hutchinson (3 Macau) will also reveal sale details of the iPhone 6 here
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Doomsayers predict meltdown
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The line is drawn in the sand. If you believe everything you read. If gaming revenues drop below MOP22 billion per month, a wave of dismissals will follow, says the Chinese media. Academics dismiss the unsupported proposition as scaremongering. Experts tell Business Daily that the scenario is unlikely. Right now, we’re down to our last MOP25 billion/month
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HSI - Movers October 14
Name
%Day
China Resources Powe
3.23
China Resources Land
2.41
HSBC Holdings PLC
0.51
China Mengniu Dairy
0.30
China Overseas Land
0.24
AIA Group Ltd
-1.31
Galaxy Entertainment
-1.93
Cathay Pacific Airwa
-1.97
CNOOC Ltd
-3.10
Tingyi Cayman Island
-4.72
Source: Bloomberg
I SSN 2226-8294
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PAGE 6
Escape velocity
www.macaubusinessdaily.com
Thailand to attract Macau visitors The Tourism Authority of Thailand (TAT) is embarking on a raft of marketing strategies. The Land of Smiles is linking up with local tour operators to arrange special packages. Social media activities and a new app are just some of the tools, TAT told Business Daily. Young tourists - and weddings - are a starting point despite post-coup concerns
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A series of infrastructure projects are in the works. And may provide the Chinese economy with the required momentum to reach the annual target. Refurbishing shanty towns, building rail networks and water facilities should boost the economy by 7.5 percent
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HK, Macau firms in Guangdong with a maximum stake of 55 pct PAGE
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October 15, 2014
Macau
Zhuhai authorities expanding checkpoints for Cross Border Industrial Zone Zhuhai authorities are expanding checkpoints at the Cross Border Industrial Zone, although they have yet to confirm when the late night crossings can commence Stephanie Lai
sw.lai@macaubusinessdaily.com
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huhai immigration authorities are currently expanding passport control channels on the mainland side of the Cross Border Industrial Zone ahead of anticipated increased visitor traffic in future when the border crossing opens from midnight to 7:00 am for Macau residents and mainland Chinese employees working in the city. At the Cross Border Industrial Zone there will be at least three e-channels and one traditional passport control lane to be established for departure and entry areas on the mainland side, local Chinese-language newspaper Macao Daily News reported yesterday quoting official Zhuhai immigration sources. Currently, two checkpoints serve the departure and entry sections, respectively, on the mainland side of the Cross Border Industrial Zone. The expansion of checkpoints is now underway, with authorities expecting works to be finished by mid-December, the news outlet noted. The expansion is expected to enable
the checkpoints at the industrial zone to handle about 12,000 people between midnight and 7:00 am, Zhuhai officials told the newspaper. The expansion of the checkpoints come as a preparation for both local and Zhuhai Government making the Cross Border Industrial Zone immigration points available to mainland Chinese labour working
in the city and Macau residents from midnight to 7:00 am, the time when the busy Gongbei border is closed for crossing. According to Macao Daily News, Zhuhai immigration authorities are also inclined to make the late night to early morning crossing at the industrial zone available for mainland tourists as well. Business Daily approached the Zhuhai Port Bureau for confirmation of the said policy direction, and when it can put into practice, but had not received a reply by the time the story went to press. Of all the border portals neighbouring Zhuhai in the city, the one at the Zhuhai-Macao Cross Border Industrial Zone – straddling northwest Ilha Verde and Zhuhai’s Maoshengwei - is the only 24-hour crossing immigration point at the moment but it is only open to business owners or company staff working in the Zone. Immigration authorities here, meanwhile, have already added 10
e-channels on the Macau side of the Cross-Border Industrial Zone, Secretary for Security Cheong Kuoc Va told media on October 1. The Secretary also noted at the time that more security forces were to be assigned to work at the checkpoints at the industrial zone by early December. The central government has approved the late night crossing at the Cross-Border Industrial Zone as the new Guangdong-Macau border crossing in Ilha Verde is still pending an operational date, the General Administration of Customs said in response to a suggestion letter sent in March by Chan Meng Kam, a local businessman and one of the China People’s Political Consultative Conference members here. The new Ilha Verde border crossing, proposed in 2012 to ease the strain on nearby Gongbei crossing, awaits an uncertain operational date. The Secretary for Transport and Public Works, Lau Si Io, told media before that this new checkpoint is designed to open around the clock.
HK, Macau firms ownership threshold relaxed for e-commerce
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he shareholding of Hong Kong and Macau firms that set up joint ventures in Guangdong Province providing online data processing and transaction processing services can reach up to 55 percent, according to the State Council, which published its approval of this slightly relaxed ownership threshold on its official website yesterday. Under the terms of the tenth Closer Economic Partnership Agreement (CEPA) signed with Hong Kong and Macau in late August last year, firms from both SARs that establish joint venture companies in Guangdong providing online data processing and transaction processing services should not have a shareholding that exceeds 55 percent. The said services are restricted to those that are running e-commerce business websites, the
CEPA terms state. The transaction processing services referred to include online payment, all kinds of banking businesses and trading of stocks. The tenth CEPA terms have been in effect since the signing of the agreement between the mainland Chinese and SAR governments. The latest approval by the State Council as published yesterday came in reply to the Ministry of Industry and Information Technology of China, which requested relaxing the ownership threshold of the Hong Kong and Macau firms participating in e-commerce joint ventures in neighbouring Guangdong Province when the tenth CEPA terms have been put into practice for more than a year. SL.
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October 15, 2014
Macau
iPhone 6 arrives in Macau on October 31 After all the waiting, Apple’s smartphone reaches local stores on Halloween Kam Leong
kamleong@macaubusinessdaily.com
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pple Inc. announced yesterday that IPhone 6 and iPhone 6 Plus officially go on sale in the city on the last day of the month; meanwhile, these two new smartphone models will be available in mainland China from Friday. The third wave of markets - in which the iPhone 6 and iPhone 6 plus go on sale between October 17 and 31 - will include a basket of 36 countries or cities, including Mainland China, India, South Korea, Thailand and Macau. Local telecommunications operators Companhia de Telecomu-
nicações de Macau SARL (CTM) confirmed to Business Daily yesterday that the company will start selling the new models on October 31, the day Apple has fixed on for the roll-out in Macau. In addition, CTM said that online reservations for these new iPhones will be available from 10:00 am today via its official website. Meanwhile, rival telecom operator Hutchison Telephone (Macau) Co Ltd, also known as 3 Macau, told us that the company will release sales details of iPhones 6 and iPhone 6 Plus in the next two days. Missing the first two waves of
Thailand reaching out to Macau tourists The Tourism Authority of Thailand (TAT) is embarking on a raft of tactical marketing strategies to stimulate travel to the Land of Smiles from Macau Joanne Kuai
joannekuai@macaubusinessdaily.com
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o stimulate bookings and interest in Thailand, the Tourism Authority of Thailand (TAT) is to provide support for tour operators in Macau to help arrange special packages, including highlighting the destination online via social media activities and its newly launched mobile app, said Wanna Tonak, the representative of TAT Hong Kong office. Tonak told Business Daily that following the sister cities’ agreement signed by Macau SAR and Phuket, authorities from both sides are working to boost cooperation in promoting tourism. “With more frequent charter flights to various destinations in Thailand - including Chiang Mai, Bangkok, Phuket and many other islands - Macau is a market with great potential,” Tonak said. “We also intend to target young tourists, including introducing wedding packages.” TAT plans to launch an Amazing Thailand Presentation in Macau on Thursday, in cooperation with the Travel industry Council of Macau, Thai Smile and Air Macau. The airlines are also slated to introduce new products during the presentation.
Murder fans fresh safety fears in post-coup era On Tuesday, Thai Prime Minister Prayuth Chan-ocha dismissed growing diplomatic concerns about a police investigation into the murder of two British tourists in Thailand as a pre-trial witness hearing began, according to a Reuters report.
Thailand’s tourism minister said earlier that identification wristbands would be distributed to tourists following a case that has raised fresh concerns about tourist safety. According to Macau Statistics and Census Service Bureau’s latest data, Macau posted a sharp drop of 54.6 percent in outbound travel to Thailand in the first eight months compared to the same period last year. While some 610,000 Macau residents travelled to Mainland China and 134,200 to Hong Kong, only 26,900 visited Thailand during the period. The negative impact of Thailand’s latest coup d’etat on the country’s tourism sector has been widely documented. According to the Ministry of Tourism and Sports, international tourist arrivals to Thailand posted a decline of 10.66 percent, January to August, this year. The ministry reported 15,703,373 visits to the country during the first eight months, down from 17,576,342 over the same period last year. The industry has yet to recover from a slump in visitors due to months of sometimes violent street protests that left nearly 30 people dead. Tourists arriving in Thailand fell 11.9 percent in August from a year earlier after a 10.9 percent drop in July. In 2014, TAT expects tourist arrivals to reach 28.01 million. Authorities have expressed concern over the murders’ impact on tourism, an industry which accounts for nearly 10 percent of GDP. Thailand is still under martial law following a coup on May 22, something that has made many tourists think twice about travelling to the country.
the launch, the mainland market is finally listed in the third batch of sales, meaning that the technology giant was eventually given the green light by China to sell its latest hot items in the homeland. The Ministry of Industry and Information Technology of China announced in late September that the iPhones had passed tests and been given a telecoms network access licence a few hours after Apple had announced its launch in the mainland market. In fact, the delayed launch of the
new models on the mainland has led to rampant speculation in Hong Kong, one of the cities in the first wave of the launch on September 19. During the first two weeks of the debut of the new models, Hong Kong mobile phone retailers nearly doubled the original price of the iPhone 6 and iPhone 6 for mainland Chinese buyers eager to acquire them. Including the countries on the list for the third batch of sales in October, iPhones 6 and iPhones 6 Plus will be available in a total of 69 markets all over the world.
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October 15, 2014
Macau
The new frenzy
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Macau’s new shopping area’s turning heads
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HOSPITALITY Home and away The length of stay of hotel guests has been among the most difficult tourism indicators to change. Most other indicators have increased noticeably. The number of nights that guests stay in hotels, on average, however, has been slow to change, and not always for the better. Those visitors coming in greater numbers are also those usually staying for the shortest periods. In the last 24 full months ending in August, the average number of nights for all visitors has been oscillating between 1.3 to 1.4 nights. That represents a slight decrease in the extension of hotel stays compared to the first 24 months of the period starting in January 2010. The length of stay of visitors from China, representing by far the biggest contingent, have always been one or two decimal points below the overall average and has recently evolved to even bigger differences. Since mid-2012 the typical figures have been 1.0 and 1.1 nights: very few Chinese hotel guests stay more than one night.
e it Spanish tapas and wine or just home decoration, shopping enthusiasts are looking to Hac Sa Wan as the new go-to place to find that must-have item. Where once it was fashionable to shop and dine in Taipa, now Areia Preta is up and coming. Businesses that had been running for 10 years and more in Taipa have seen rents increase to up to HK$300,000 a month, thus City Square Home, like others, has been forced to move to Areia Preta, where rent is HK$100,000. After more than a decade of expanding successfully in Taipa, storeowner Bela Iong is not very happy with how the business is running in the new environment, however. She’s even looking for a new outlet across the river. “People here are different. We mostly target expats and people more interested in interior design,” she says. Nevertheless, she says Areia Preta is a developing commercial area and she believes it will take time for people to get used to the new location. Jones Lang LaSalle’s managing director in Macau, Gregory Ku, says
that businesses are decentralising because it is getting more expensive. Monthly rental prices for a store in prime areas downtown range from HK$4,000 to HK$5,000 per square foot. As for secondary tier locations in central areas, prices drop to around HK$1,200 per square foot. In northern district areas like Areia Preta prices range between HK$50 and HK$60 per square foot, and sometimes even
less. Property experts predict that rent increases are more stable in areas far from the city centre, where rents can increase anywhere between 6 and 8 percent – a range deemed “not crazy” by property experts. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.
A pile of rubbish Cotai not only houses casinos and new development projects but a landfill where solid waste is being dumped
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As result, in the period from August 2010 to the same month this year the number of nights for Chinese guests has risen slower than the corresponding number of guests. For Hong Kong, the growth was negative in both cases. Guests were down 25 percent, with the nights spent in hotels down 30 percent. But evolution was different for Taiwan and Macau. In the first case, that was mainly due to the drop in same-day visitors as a result of the opening of direct flights to the mainland. By definition, overnighters stay in hotels, same-day visitors don’t. Local residents, on the other hand, seem to be enjoying more frequent and longer stays away from home. J.I.D.
69.8%
rise in hotel nights by local residents, Aug 10-14
t was before 2006 that an idea percolated for Macau to have its own solid waste plant. But in December that year, then-Secretary for Public Works and Transport Ao Man Long was arrested for corruption and the idea never came to fruition. Had the plan gone ahead, the disposal of solid waste would not potentially have damaged the land. There would also be a strategic plan conceived to serve as a guide for all agents related to the construction work activities regarding collection, transportation and treatment of solid waste. Figures from the Environmental
Protection Bureau show that in 2002 the construction industry generated 205,000 cubic metres of debris in the territory, while in 2007 3.12 million cubic metres was dumped. The sanitary landfill south of MIA was built in 2006; since 2007, about 3 million cubic metres of waste has been spewed from construction works on an annual basis. The plan starts off by saying that construction work solid waste was deposited in Seac Pai Van without prior selection or treatment. ‘The landfill possesses deficient characteristics for construction, as wood, large concrete
[items] and metal are deposited there’, the plan reads, adding that as a result in order to build on that land, ‘special techniques must be adopted.’ The Environmental Protection Bureau has said that considering the increase in construction work over recent years the amount of waste has been increasing exponentially and as such constitutes ‘an enormous pressure’ on the current sanitary landfill. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands and online at www.magzter.com.
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October 15, 2014
Macau Five request information on Mainland property purchases Since the beginning of the year, five persons have contacted the Consumer Council requesting advice and information about the legislation in Mainland China for pre-sale and sale of residential properties, the Council informed Business Daily yesterday. This number represents a new trend, as from 2010 to 2013 the Consumer Council did not receive any request of this nature. Last Monday, the Council issued a warning to prospective buyers of real estate on the Mainland counseling them to ensure they understood the rules before committing to purchase. As for complaints about closed deals related to residential property in Mainland China, there has been only one complaint since the beginning of the year. The Consumer Council told Business Daily that the complaint involved RMB100,000 (MOP130,000).
Esprit posts HK$123mln Macau foreign reserves drop to MOP129.2bln Macau retail turnover
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sprit, the clothing retail empire that last year started reconstructing its brand, reported an increase of 4.9 percent in turnover to HK$123 million for the 12 months ended June 30 in Macau. According to a company filing with the Hong Kong Stock Exchange, this figure also represents a 0.8 percent increase in retail turnover for the same period in its stores here. In the Asia Pacific region, Esprit’s retail turnover was HK$3.16 billion for the full year as at end-June, up 20.8 percent from the previous 12 months. Overall, the clothing retail company posted HK$15.2 billion in retail turnover, with overall store sales growth down 4.1 percent from the corresponding period a year
earlier. ‘The group is pleased to report that we are beginning to see some encouraging results, both in terms of profitability improvements and good progress made in implementing strategic initiative to fundamentally change the way we manage our business,’ the filing reads. Esprit also chose to close ‘unprofitable’ retail stores, which in turn led to an overall decline in the group’s turnover of 9.9 percent to HK$24.2 billion. ‘The close correlation between the development of the group’s top line with its total controlled space is largely in line with our guidance,’ the filing reads. At the end of October last year, the company’s stock jumped the most in almost a year in Hong Kong
trading following the hiring of a former Zara executive to manage product creation and design. A month earlier, the company predicted a return to profitability in the fiscal year ending June, after reporting its first annual loss since a 1993 listing amid a revenue slump and competition from Inditex SA (ITX)’s Zara and Hennes & Mauritz AB. (HMB). Pastor worked for 18 years at Zara. He joined Jose Manuel Martinez Gutierrez, who also worked at Zara before becoming Esprit’s chief executive officer. The Hong Kong company that makes 79 percent of its sales in Europe lost two top executives within 48 hours in June last year. S.F. with Bloomberg
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oreign exchange reserves decreased slightly by 0.8 percent to MOP129.2 billion (US$16.2 billion) at the end of September over that of the previous month. The latest figures released by the Monetary Authority of Macau show that the preliminary estimate is slightly lower than the MOP130.2 billion recorded the previous month. Macau’s foreign exchange reserves represented 13 times the currency in circulation at the end of September or the equivalent of 106.5 percent of the patacas-M2 recorded at the end of August. ‘M1’ refers to that part of the money supply that includes physical coins and currency, as well as
readily liquid assets such as on-demand bank deposits, and money held in cheque accounts. ‘M2’ is M1 plus all time-related deposits, savings deposits, and non-institutional money market funds. Compared to a year ago, ‘M1’ rose 12.2 percent and ‘M2’ rose 19.2 percent in July. The share of patacas in ‘M2’ stood at 24.6 percent, up slightly by 0.5 percentage points from that of a year ago but down 0.4 percentage points when compared to the same month a year earlier. Meanwhile, the share of Hong Kong dollars in ‘M2’ was 49.9 percent, up 0.6 percentage points month-on-month but down 2.8 percentage points year-on-year. S.F.
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October 15, 2014
Macau
Closer to the tipping point? If gaming revenues drop below MOP22 billion per month - they’re now at MOP25 billion - a wave of dismissals in casinos will start, predicts the Chinese media. However, experts contacted by Business Daily claim that such pessimism is not warranted, claiming the situation is not that dire Kam Leong
kamleong@macaubusinessdaily.com
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hinese media reported yesterday that the city labour market would be directly affected once gaming revenues slump to a monthly MOP22 billion. Business Daily talked with several academics yesterday who, by contrast, do not see declining revenues as a harbinger of doom for employment or the overall economy in the near future. In September, gaming revenues reached an historic low of MOP25 billion and are likely to drop a further 20 percent this month. “In terms of the public finances of Macau, the gaming revenue of Macau actually amounts to a lot although it’s been dropping,” said Carlos Siu, Associate Professor for the Gaming Teaching and Research Centre at the Macao Polytechnic Institute (IPM). Local Chinese news outlet Macao Daily reported yesterday: ‘When gaming revenue declines to MOP22 billion monthly, [society] will need to be cautious, especially that employment will be affected.’ No source was quoted for the analysis. The IPM professor does not currently foresee any impact on employment resulting from the deceleration of gaming profits, saying, “In terms of the global [economic] environment, Macau is still having a rather good one.” He believes that the city need not worry if staying alert. Likewise, Davis Fong Ka Chio, director of the Institute for the study of Commercial Gaming at the University of Macau (UM), agreed that there is no direct correlation so far. “It’s still too early to say what effects decelerating profit will bring to the city,” he said. Ricardo Siu Chi Sen, Associate Professor in Business Economics at UM, said that employment would only be affected by gaming revenue decline if it dropped to a level
‘below the reasonable one’. Saying he is not able to predict at what exact levels the gaming revenue decrease would employment problems, Mr. Siu perceives that companies may consider reducing headcount when gaming revenues decrease to a level that cannot sustain non-gaming revenue.
Not so bad However, Mr. Fong is still optimistic about the gaming industry, predicting that October’s gaming revenue might slightly increase after four consecutive months of decline; meanwhile, he reckons that September will already be the lowest month of the year. “Generally speaking, the estimated annual profit of 34.6 billion patacas still tops the high position through the years,” Mr. Fong said, saying big changes in the economy might not occur in the near future. Mr. Siu also indicated that profits from the mass gaming floors are increasing despite those of the VIP gaming rooms decreasing. He believes that although it will be difficult for the profits of the mass gaming floors to compensate for the ‘losses’ of the VIP gaming rooms the gaming corporations still have room to develop their non-gaming business. In September, gaming gross revenue (GGR) dropped by nearly 12 percent year-on-year, Accumulative GGR, however, still recorded a 5 percent increase yearon-year in the same month, official data from the Gaming Inspection and Coordination Bureau shows. Meanwhile, the unemployment rate in Macau, up to August, has remained at 1.7 percent since last November, the lowest recorded in Macau, according to the Statistics and Census Services Department.
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October 15, 2014
Macau
Trump Taj Mahal stakes survival on union acquiescence
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rump Entertainment Resorts has staked the survival of its Taj Mahal casino on a bid for concessions from union members who have so far resisted proposed cuts to their health and pension benefits. The company is set to ask U.S. bankruptcy Judge Kevin Gross at a hearing today in Wilmington, Delaware, to allow it to terminate its contract with Unite Here Local 54, which represents about 1,100 employees at the Atlantic City, New Jersey casino. Trump Entertainment argues that the current union contract imposes an unsustainable cost of about US$20 million a year and that cuts are necessary to induce lenders controlled by billionaire Carl Icahn to invest US$100 million, according to court documents. Management is seeking to shift workers from a traditional pension to a 401(k) programme, end the healthcare plan and move employees to an Affordable Care Act-sponsored programme. Union members have taken to the streets to protest the move. Trump Entertainment said in a court filing that Unite Here is ‘willing to sacrifice the jobs of the workers at the Taj Mahal’ in an effort to ‘protect other members of the union working at other casinos.’ If Trump Entertainment succeeds in winning the cuts, it could allow most other Atlantic City casinos
Another Trump Entertainment property, the Plaza, closed last month as Atlantic City loses gambling business to nearby states. The union has said that the bankruptcy judge doesn’t have the authority to decide whether Trump Entertainment can cancel the contract, and that federal law requires the dispute to go before the National Labour Relations Board. Last week, union members rallied against the proposed cuts, protesting in front of Icahn’s Tropicana in Atlantic City. Several hundred casino workers - some chanting “no healthcare, no peace” - blocked a highway in the city to protest the proposed concessions.
Total Contract
to seek the same concessions from Unite Here under a so-called mostfavoured-nation clause in their labour agreements, according to court documents. The benefit cuts alone won’t save
the Taj Mahal, which the company has warned may close as soon as next month. Trump Entertainment said it also needs property tax concessions from local and state governments to achieve its restructuring plan.
THERE ARE THINGS WE DON’T DO BUT WE DO • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design
At an October 3 hearing, Gross denied the casino owner’s request to stop funding union pensions, ruling that bankruptcy law prohibits rejecting only a portion of a contract. The judge said he would consider the matter as part of today’s bid to terminate the entire collective bargaining agreement. Donald Trump, the real estate tycoon and reality TV star who founded the company, began investing in Atlantic City in the early 1980s. He has no involvement in Trump Entertainment now and has been seeking to have his name removed from both of its properties. Bloomberg
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October 15, 2014
Greater China More easing investment measures passed The central government’s investment project approvals will go down by 40 percent if an updated catalogue is put into practice, an official said yesterday. The catalogue, based on the 2013 edition, incorporates two major changes. The first change by the country’s top economic planner will see 15 types of projects delisted from the catalogue. Most will be delisted because they will no longer need government approvals. Second, the central government will delegate approvals to local governments, including 23 kinds of projects such as construction of electricity grid within province.
Logistics growth further slows China’s logistics sector showed slower expansion in the first eight months due to shrinking demand amid economic slowdown, new data showed yesterday. The total value of goods transported by logistics services increased 8.4 percent year on year to 138.1 trillion yuan (US$22.5 trillion), according to the National Development and Reform Commission. The growth rate was 0.3 percentage point lower than the first seven months and 1.1 percentage points lower compared to the same period last year. The average logistics cost for transporting goods worth 100 yuan stood at 4.59 yuan in the first eight months.
High-tech parks with Russia China and Russia have signed a memorandum to jointly build a high-tech park in each country as the two look to further innovation in science and technology, authorities said yesterday. The park in China will be located in the new town of Xixian Fendong in Shaanxi and will initially occupy four square kilometers. In Russia, 200,000 square meters of buildings will be built in the Skolkovo Innovation Center in Moscow, the Russian Direct Investment Fund said in a press release yesterday.
US$33 bln wasted on food annually Senior officials warn of the toll excessive food consumption is taking on the nation’s scarce water and farm resources as they reveal almost 200 billion yuan worth of food (US$32.6 billion) is discarded from Chinese dining tables every year. The wasted food could potentially feed more than 200 million people, said Wu Zidan, deputy director of the State Administration of Grain, citing industry expert estimates. In addition to the wasted food, roughly 35 billion kilograms of grain is wasted each year in storage, transportation and processing.
China Southern acquires smaller rival China Southern Airlines, the country’s largest airline by fleet size, announced its subsidiary Xiamen Airlines has signed an deal to take a 95.4-percent stake in smaller rival Hebei Airlines. In a filing to the Shanghai Stock Exchange yesterday, China Southern said the deal with the Hebei Aviation Investment Group Co. Ltd. values 680 million yuan (US$111 million). China Southern said its board of directors believed the acquisition will help Xiamen Airlines consolidate its market share in north China and optimize its air routes nationwide.
Premier Li Keqiang recently promised to launch major investment projects in information networks, water conservancy and environmental protection to support the economy
Investment pick up can lead to growth target Analysts expect China’s investment growth to hit a near 13‑year low of 16.3 percent between January and September
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hina’s investment growth should pick up in the coming months as authorities hasten construction of water conservancy and other infrastructure projects to support growth, a senior official at the country’s powerful economic planner said yesterday.
Quickening investment in projects such as refurbishing shanty towns and building rail networks and water facilities should boost the broader economy, said Li Pumin, general secretary of the National Development and Reform Commision (NDRC).
Li said he was confident that China can achieve its full-year economic growth target of around 7.5 percent, though many private economists think that goal is in doubt unless the government rolls out more measures to stimulate activity and offset the drag from a cooling property market.
DBS seeks new insurance tie-up The new deal could cover DBS’s more than 260 branches in Singapore, Hong Kong, Indonesia, Taiwan, China and India
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ingapore’s DBS Group Holdings has hired Morgan Stanley to find a partner to sell life insurance products in Asia under a new deal, after its pact with Aviva Plc ends in 2015, people with direct knowledge of the matter said. Singapore and Hong Kong - two of DBS’s strongest markets - are seen as profitable for insurers due to their status as Asia’s main wealth management centres and an ageing population. According to Swiss Re research, Singapore is an under-penetrated market, with per capita life insurance premiums significantly lower than many other developed economies. The so-called “bancassurance” model - as opposed to the traditional agency model - is lucrative for commercial banks in Asia because global insurers are willing to pay hefty fees for access to lenders’ branch networks. DBS plans to finalise the new arrangement in the first half of next year, the sources said. The people did not want to be identified because DBS’s plans are not public. “If you compare with precedence this deal could be quite valuable for DBS,” one of the sources said. DBS and Morgan Stanley declined to comment.
Major players The new DBS tie-up is expected to be the last major bancassurance deal
Li Ka-Shing could enter the business
by an Asian bank until HSBC renews its existing Asia arrangement in 2022. Allianz paid only US$100.5 million in upfront fees to HSBC in late 2012 for a 10-year pact. The DBS deal is likely to attract major insurance companies such as Asia’s second-largest insurer by market capitalisation, AIA Group, Canada’s
No. 1 insurer Manulife and Europe’s second-biggest insurer, French group AXA It could also draw in new players such FWD, the insurance firm backed by Hong Kong businessman Richard Li, the youngest son of Asia’s richest man Li Ka-shing, banking sources said. Reuters
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Greater China “Economic growth will remain within a reasonable range in the fourth quarter and we are confident of achieving the full-year economic growth target,” Li told a news conference. Fixed-asset investment, a crucial driver of the world’s second-biggest economy that contributed to half of last year’s growth, has sagged this year as a cooling manufacturing sector and the softening housing market discouraged spending. Analysts expect China’s investment growth to hit a near 13-year low of 16.3 percent between January and September. The latest investment data will be released along with September industrial output and retail sales readings and third-quarter gross domestic product on October 21. Annual economic growth likely slowed to 7.3 percent in the third quarter - the weakest pace in more than five years - as the property downturn weighed on demand for everything from glass to cement and steel, a Reuters poll showed. “We expect the pace of slowdown in investment to ease in coming
KEY POINTS China to lift investment by speeding up construction Water conservancy works worth 600 bln yuan already underway China to have 172 water conservancy projects in coming years
months, as policy gradually produces results,” Li told reporters at a briefing. China will launch 172 key water conservancy projects in the coming years, officials at the briefing said. They said work on some projects worth around 600 billion yuan (US$98 billion) was already under way, but did not give a total investment figure for all 172 projects. Most new projects were still in the preparatory stage that involved environmental impact assessment and studies on how to resettle people that could be affected, officials said. The government hopes to attract private investors into some water projects, allowing them to participate via equity investment or buildoperate-transfer (BOT) arrangements, they said. “The NDRC conference will not have too much impact on the market, as it is not a brand new policy,” said Xiao Shijun, an analyst at Guodu Securities in Beijing. Premier Li Keqiang recently promised to launch major investment projects in information networks, water conservancy and environmental protection to support the economy. Beijing has encouraged local governments to fast-track spending on projects this year along with a host of other stimulus measures aimed at more vulnerable sectors of the economy, such as lowering mortgage rates for some home buyers in late September. China’s central bank moved again on Tuesday as part of its on-going efforts to keep market interest rates relatively low to encourage more borrowing. The People’s Bank of China lowered the yield at its bond repurchase agreement auctions for the second time since July. Reuters
PBOC lowers rate on 14-day repos again The monetary authority last cut the rate on September 18 from 3.7 percent
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hina’s central bank cut the interest rate it pays lenders for 14-day repurchase agreements for the second time in a month, spurring a bond rally on bets the move will lower borrowing costs and help the economy. The People’s Bank of China sold 20 billion yuan (US$3.3 billion) of the contracts at 3.4 percent today, according to a statement on its website. That compares with 3.5 percent in a similar auction on October 9. The monetary authority last cut the rate on September 18 from 3.7 percent. With the interbank 14-day repo rate around 3.3 percent, it’s time for the PBOC to lower the yield again, Shenyin Wanguo analysts led by Shanghai-based Chen Kang wrote in a note before the bi-weekly operations yesterday. “This is another step to cutting overall financing costs,” Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd., said in a phone interview. “The PBOC wants to use this to guide commercial bank lending rates lower as they are still relatively high on a historical basis.” Premier Li Keqiang has accelerated reforms as a borrowing spree which started after the 2008 financial crisis prompted economists including those at JPMorgan Chase & Co. to compare it to debt surges that tipped Asian nations into repayment troubles in the 1990s. The PBOC provided 100 billion
There’s room for a further cut in the rate for 14-day repo agreements if the economy continues to be on a downward trajectory Guan Qingyou, economist, Minsheng Securities Co.
yuan to each of the nation’s five biggest lenders last month, after cutting reserve requirements for some banks in the second quarter. New local currency loans dropped to 385.2 billion yuan in July, the least since December 2009, while aggregate financing plunged to 273.7 billion, the lowest since 2008. The two measures will rebound to 750 billion yuan and 1.15 trillion yuan, respectively, in September, according to the median estimates in a Bloomberg survey before reports due as early as today. Bloomberg News
CICC’s CEO resigns He is the son of former Chinese Premier Zhu Rongji Cathy Chan
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evin Zhu, the son of a former Chinese premier, resigned as chief executive officer of China International Capital Corp., the investment bank that he wrested from the control of Morgan Stanley 14 years ago. Zhu, 56, left to seek other opportunities, according to an internal memo obtained by Bloomberg News. Lin Shoukang, a managing director of the firm, will act as CEO while the board searches globally for a replacement, it said. The departure of Zhu, Zhu Rongji’s son, may delay an initial public offering by CICC, a person with knowledge of the matter said. The share sale in Hong Kong may value Beijingbased CICC at more than US$3 billion, people with knowledge of the matter said previously. It also comes after the firm started losing market share in overseas Chinese stock underwriting, its biggest source of fees, from 2012, data compiled by Bloomberg show. CICC was ranked 13th in arranging domestic stock sales this
year, slumping from third in 2013, as it lost market share to domestic rivals including Citic Securities Co. and Haitong Securities Co. Zhu, also known as Zhu Yunlai in Chinese, joined CICC in 1998, the year his father became China’s premier, and began to exert control in 2000. Morgan Stanley sold its 34 percent stake in CICC around December 2010, ending its 15-year involvement in the investment bank and later set up its own joint venture.
Father’s sway Zhu Rongji, who stepped down in 2003 at the age of 74, shaped the nation’s economic policies for almost two decades. A former mayor of Shanghai and central bank governor, he oversaw China’s entry into the World Trade Organization in 2001 and approved international share sales by state-owned companies. At CICC, his son forged personal ties with executives to win underwriting assignments from stateowned companies, including China Life Insurance Co. and
Levin Zhu at a World Economic Forum session
China Petroleum & Chemical Corp., Asia’s largest oil refiner. Zhu took a circuitous route to investment banking. After studying at Nanjing Institute of Meteorology in eastern China from 1977 to 1981, he spent two
years in Beijing, analysing global weather patterns at the China Meteorological Administration. He then moved to the U.S. and received a doctorate from the University of Wisconsin-Madison in 1993. His Ph.D. thesis related to
the Indian Ocean’s surface temperature. In 1996, Zhu received a master’s degree in accounting from Chicago’s DePaul University and later that year joined Credit Suisse First Boston as an associate in New York. Bloomberg News
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October 15, 2014
Greater China
Intel gains a new ally in China’s chip wars It also coincides with a year-long Chinese anti-monopoly investigation into Qualcomm
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ntel’s investment of up to US$1.5 billion in two fast-growing Chinese mobile chipmakers has effectively aligned the U.S. giant with a third party - a Beijing government intent on producing a viable domestic challenger to the likes of Qualcomm and Samsung. For more than a decade, China has targeted semiconductor design and manufacture as a major focus of its industrial policy. Activity has picked up markedly over the past year with a spate of cross-border mergers and cooperation deals. The deal hashed out by Intel Corp Chief Executive Brian Krzanich over 24 hours in Beijing in early August extends Intel’s beachhead in China, the biggest battleground in the smartphone industry, and boosts the company’s years-long effort to catch up to leading mobile chipmaker Qualcomm Inc. A key visit during the trip was to Yang Xueshan, the deputy chief of China’s Ministry of Industry and Information Technology (MIIT), who gave his blessing for the deal. The agreement, unveiled on September 26, gives Intel a 20 percent stake in Spreadtrum Communications and RDA Microelectronics through shares in a Tsinghua University holding company, with the aim of jointly developing and marketing smartphone chips. China is the world’s largest consumer
and manufacturer of smartphones yet relies heavily on imported chips - particularly the processors that power the latest devices - made by San Diego-based Qualcomm, South Korea’s Samsung Electronics Co, or MediaTek Inc of Taiwan. China’s ramped-up activity also arrives on the heels of revelations about the U.S. surveillance programme PRISM, which has prompted Beijing to undertake a slew of actions to enhance the security of its information technology industry. For Intel, the world’s leading manufacturer of chips for personal computers, the Tsinghua deal offers an additional path into the world’s
biggest chip market after it was slow to recognize the mobile revolution and design new processors for smartphones and tablets.
National targets The China Semiconductor Industry Association estimates that revenue from China’s chip industry reached 251 billion yuan (US$40.98 billion) in 2013, while domestic demand for chips amounted to 917 billion yuan, representing more than half of global semiconductor consumption. Deng Zhonghan, a member of the Chinese Academy of Engineering and National People’s Congress, said in
March that China’s US$210 billion worth of annual chip imports exceeds the value of the country’s entire yearly petroleum imports. In June, the State Council offered the country’s most comprehensive guidelines for the development of the semiconductor industry, outlining specific revenue targets for 2015 and 2020, with chip revenue set to grow at a better-than 20 percent annual clip, to reach 350 billion yuan by 2020. An important part of Beijing’s effort, analysts and industry insiders say, was consolidation of Spreadtrum and RDA, two companies formerly trading independently on Nasdaq. The two companies were acquired a year ago for US$1.7 billion and US$900 million respectively by Tsinghua Unigroup, governmentaffiliated private equity group controlled by Tsinghua University in Beijing. As part of its recent deal, which is expected to close early next year, Intel and Unigroup will form a new holding company that contains Spreadtrum and RDA. Beijing wants the Unigroup companies to become competitive with Taiwan’s MediaTek within five years and overtake Qualcomm within 10 years, according to a person familiar with Unigroup. Reuters
Comcast will develop a Universal Park in Beijing Further details on the Beijing park including its opening timeframe will be provided at a later date, Comcast said
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omcast Corp. will team up with Chinese investors to spend more than 20 billion yuan (US$3.3 billion) to build one of its Universal theme parks in Beijing. The Chinese government has approved the development of the theme park, which will be built on a 120-hectare (300-acre) site and eventually expand to 400 hectares, Comcast said in a statement yesterday. It will include new attractions specific to the Beijing park as well as the first Universal-theme hotel, the Philadelphia-based company said. Comcast, the media and entertainment company with businesses spanning cable television, film and Internet services, is expanding in China to tap the growing middle class in the world’s second-biggest economy. The Beijing attraction will compete with a Walt Disney Co. theme park in Shanghai that is scheduled to open next year. Universal Parks will own the Beijing park jointly with Beijing Shouhuan Cultural Tourism Investment Co., a consortium of four state-owned companies that was founded in November 2013 to support the Beijing attraction, Comcast said. It operates theme parks including Universal Studios Hollywood and Universal Studios Orlando, with attractions including The Wizarding World of Harry Potter and Jurassic Park River Adventure.
Universal Studio in Hollywood
The attraction is expected to begin operating in 2019, state-run Beijing Daily reported October 13, citing China’s National Development and Reform Commission. The proportion of middle-class urban households in China, with annual income of 60,000 yuan (US$9,800) to 229,000 yuan, will jump to 76 percent by 2022 from 68 percent in 2012, according to a McKinsey & Co. estimate last year. The Shanghai Disney Resort, with investment totalling more than US$5 billion, includes two hotels and an outdoor recreational area and will be almost 1,000 acres in size when it opens, Chief Financial Officer Jay Rasulo said in December. That would be roughly the size of the Universal Beijing park when the final phases are completed, according to Comcast’s statement. Bloomberg News
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October 15, 2014
Asia
Indonesia loans head for record Indonesia’s biggest companies are some of the most creditworthy in the region as they hold large amounts of cash to compensate for the country’s relatively low sovereign rating companies in 2014, up from seven in 2004.
Maturing market
Agus Martowardojo (left), Governor of Bank Indonesia, speaks with Muhamad Chatib Basri, Indonesian Finance Minister, during a meeting of the G20 Finance Ministers and Central Bank Governors last weekend
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ndonesian syndicated dollar borrowing is heading for a record year as bankers proved less skittish than bond investors during an election year. Financing rose 24 percent to US$14.6 billion this year, on track to beat 2012’s high of US$17.6 billion, according to data compiled by Bloomberg. The premium Indonesian companies pay for dollar loans over the London interbank offered rate averaged 282 basis points in 2014, down from 341 last year. That reduced the need to tap the corporate bond market, where sales fell 10 percent to US$14 billion. Textile company PT Sri Rejeki Isman cited an
“unfavourable market” when scrapping a dollar bond sale in favour of a loan in September amid signs President-elect Joko Widodo will struggle to implement policies. Deutsche Bank AG, the 10th-biggest arranger of dollar financing in Indonesia this year, said lenders are more willing to join syndicates as repeat borrowers including PT Pertamina and PT Astra Sedaya Finance establish credit histories. Eighty percent of local firms that were reviewed had a “financial risk profile consistent with an investmentgrade level,” compared with 30 percent to 40 percent in Singapore, Thailand and the Philippines, S&P said in the
So there’s no more artificial barrier just because the client or the borrower is from Indonesia Amit Khattar, Deutsche Bank
report. The ratings company assigns Indonesia its top junk level, ranking the Philippines, Thailand and Malaysia two, three and four grades higher, respectively. The average cash-toliabilities ratio for Indonesia’s listed firms was 3.39, more than triple the 1.03 for AsiaPacific companies, data compiled by Bloomberg show. The interest margins that Indonesian companies pay for dollar loans are at the lowest level since 2008 and are 52 basis points higher than the average for the Asia-Pacific region excluding Japan, compared with 75 last year, data compiled by Bloomberg show. Some 59 lenders signed syndicated loans for local
State-owned oil producer Pertamina raised its five-year dollar-loan facility to US$1.8 billion from US$1 billion this year as 12 lenders including Royal Bank of Scotland Plc and Credit Agricole CIB extended credit. PT Media Nusantara Citra boosted its three-year loan to US$250 million from US$150 million with the deal attracting 18 lenders including Deutsche Bank and Standard Chartered Plc. The growing popularity of syndicated loans may make it tougher to expand Indonesia’s corporate bond market, which is the smallest in Southeast Asia as a percentage of GDP after Vietnam. Total outstanding Indonesian company debt is 2.3 percent of GDP, trailing ratios of 5.6 percent in the Philippines and 42.7 percent in Malaysia, according to an Asian Development Bank report released last month. The cost to insure Indonesian sovereign notes against non- payment has dropped this year but remains the highest among emergingmarket Asian economies. The nation’s five-year creditdefault swaps fell 57 basis points, or 0.57 percentage point, to 176, according to data provider CMA. That compares with declines of 14 basis points to 100 for the Philippines and 17 points to 92 in Malaysia. Bloomberg News
Indian watchdog bars DLF from capital markets The decision by SEBI marks its latest effort to bare its teeth, after long being criticised for failing to tackle violations by major market players
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ndia’s market regulator has barred the country’s largest listed property developer DLF Ltd from tapping capital markets for three years in one of the watchdog’s toughest punishments to date. The ban, a blow to the heavily indebted real estate firm, follows what the regulator said was DLF’s failure to provide key information on subsidiaries and pending legal cases at the time of its record-breaking 2007 initial public offering. Regulator SEBI said DLF, its billionaire founder and chairman Kushal Pal Singh and five other company executives would be barred from “buying, selling or otherwise dealing in securities”. “As far as non-disclosure cases are concerned, this is the biggest case in SEBI’s history and this is by far the biggest punishment they have imposed,” said J.N. Gupta, a former executive director at the regulator who now runs a shareholder advisory firm.
The order has come as a surprise. I think it is a bit harsh ... but the regulator is on a spree to set an example in the market
DLF IT Park in Chennai
DLF raised US$2.3 billion in 2007 at the height of the pre-financial crises euphoria, in what was then India’s biggest market debut. The property giant said its board was “guided by and acted on the advice of” its legal advisors, merchant bankers and audit firms while preparing the offer documents, and that it would defend itself against the order passed by SEBI. The ban means DLF could now struggle to pay down its debt using
equity or debt instruments regulated by SEBI. Its debt, which swelled as the firm ramped up land acquisitions before the financial crisis, stood at 191 billion rupees (US$3.13 billion) at the end of June. The company will also be barred from listing a Real Estate Investment Trust (REIT). SEBI finalised rules for REITs last month. REITs, which invest mainly in commercial property and pay rent from their property to shareholders
Anubhav Gupta, analyst, Maybank Kim Eng India
as dividends, provide developers with a new avenue for funding, allowing them to effectively sell finished commercial buildings to investors. Reuters
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October 15, 2014
Asia Australia to lift visa curb The Australian government will relax restrictions on its 457 visa program for skilled migrants, in an effort to make the country more competitive. In a statement yesterday, Prime Minister Tony Abbott, along with Trade Minister Andrew Robb, and Immigration and Border Protection Minister, Scott Morrison, announced several measures which will make it easier for Australian businesses to employ skilled migrants. In a separate development, the government will introduce a new Premium Investor Visa (PIV), which offers a faster 12-month pathway to permanent Australian residency than the existing Significant Investor Visa.
ADB pledges more aid to Vietnam The Asian Development Bank (ADB) pledged to sponsor 11 projects and programs in Vietnam in 2014, with total capital of US$1.363 billion, said the State Bank of Vietnam (SBV). Local Thoi Bao Kinh Te Vietnam (Vietnam Economic Times or VET) yesterday quoted an announcement by SBV as saying that since the beginning of 2014, ADB and SBV have completed negotiations for seven projects and programs worth US$878 million. Till the end of 2014, the two sides are expected to conclude negotiations for the rest of four projects and programs worth of US$485 million, according to the SBV.
Kiwi house prices rocketing The ability of New Zealanders to buy their own home worsened in the year to the end of August, a major housing affordability study said yesterday. Across the country, affordability fell by 11.4 percent, with the average annual weekly wage increase of 28.06 NZ dollars (US$22.19) failing to offset a rise of 30,000 NZ dollars (US$23,721) in the median house price and an average mortgage interest rise from 5.52 percent to 5.86 percent, according to the Massey University Home Affordability Report. Only three of New Zealand’s 12 regions saw an improvement in affordability.
Samsung Elec CEO hoses down chip war fears Samsung Electronics Co Ltd does not expect a price war to break out in the semiconductor industry next year even though it is ramping up capacity, the chief executive of the world’s biggest memory chip maker said yesterday. Memory chip makers have reported strong profits this year thanks to better-than-expected demand for personal computers and servers as well as careful capacity management. Analysts believe industry conditions will remain favourable in 2015, forecasting similar market dynamics. Samsung’s plan to invest 15.6 trillion won (US$14.67 billion) in a new South Korea chip plant stoked concerns about the industry’s profit outlook.
Singapore sticks to tight Economy grew by 2.4 percent on a year-on-year basis in the third
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ingapore’s central bank cut its forecasts for headline and core inflation this year but stuck to its tight monetary policy as expected yesterday, saying core inflation is likely to stay above its historical average over the next few quarters. In a widely expected decision, the Monetary Authority of Singapore (MAS) said it will maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar, with no changes to the slope, width or centre of the policy band. The central bank kept its policy unchanged, even as economic growth in the third quarter came in below market expectations, with gross domestic product expanding 1.2 percent from the previous quarter on an annualised and seasonally adjusted basis. The median forecast in a Reuters survey had been for quarter-onquarter growth of 1.8 percent. The quarter-on-quarter reading for second-quarter GDP was revised lower, to a contraction of 0.1 percent on an annualised basis, down from 0.1 percent growth previously. “The Singapore economy should expand at a moderate pace in the quarters ahead. Wage inflation is likely to remain relatively firm, and businesses in food-related and some
services sectors could further pass on cost increases,” the Monetary Authority of Singapore said in its half-yearly statement. The MAS lowered its forecast for core inflation to an average of 2-2.5 percent in 2014, down from 2-3 percent previously, and said core inflation was likely to come in at 2 percent to 3 percent next year. It also cut its 2014 all-items inflation forecast to 1 percent to 1.5 percent from 1.5 percent to 2.0 percent, adding that headline inflation is forecast at 0.5 percent to 1.5 percent in 2015.
The MAS had been widely expected to maintain its tight policy of allowing a “modest and gradual” appreciation of the Singapore dollar and to keep all policy settings unchanged as core inflation has picked up.
GDP takes off Singapore’s economy grew by 2.4 percent on a year-on-year basis in the third quarter of 2014, the same pace of growth as in the previous quarter, the Ministry of Trade and Industry (MTI) said yesterday. On a quarter-on-quarter
India’s Reliance posts profit rise The company’s upstream oil business posted its second straight quarter of double-digit revenue growth after three years of declines
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eliance Industries Ltd, a conglomerate that operates the world’s biggest refinery, reported a rise in profits that beat forecasts, helped by stronger refining margins, and said it would invest up to US$9 billion in the next two quarters. The company, controlled by India’s richest man, Mukesh Ambani, has been expanding beyond its core refining and petrochemicals business by investing in consumer-focused areas such as retail and telecoms. “We have spent 450 billion rupees in the first six months, what we can make out is that we’ll spend probably between 500 billion to 550 billion rupees (US$8.2-US$9 billion) in the next six months,” Reliance Chief Financial Officer Alok Agarwal told reporters in Mumbai. Its gross refining margin, or profit from each barrel of crude oil refined, was US$8.30 per barrel in the quarter to end-September versus US$7.70 per barrel year ago, Reliance said. Reliance reported a 1.7 percent
Mukesh Ambani (on the right side) with Hilary Clinton and Ratan Tata
rise in net profit for its fiscal second quarter to September 30. It also said it was hopeful of a decision on the price of natural gas by next month. Reliance and its partners in the Krishna Godavari (KG) D6 block off India’s east coast are in arbitration with the government over a hike in gas prices, delayed three times. Reliance has been dogged by an inability to stop a decline in its domestic oil and gas output and by investor concerns about its earmarked investment of US$11.7 billion into
fourth-generation (4G) telecoms service, which has yet to be launched. Reliance reported stand-alone profit of 57.42 billion rupees, excluding its interests in retail and some smaller businesses, exceeding an average forecast of 56.34 billion from analysts polled by Thomson Reuters I/B/E/S. Revenue from its retail business, which posted its first annual profit in the previous fiscal year after six years of losses, rose 20 percent in the quarter from a year ago. Reuters
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October 15, 2014
Asia
monetary policy Vietnam to expand
low-carbon rice farming
quarter of 2014
KEY POINTS MAS keeps “modest and gradual” appreciation of Singapore dollar Central bank keeps all settings unchanged as expected MAS trims 2014 forecasts for core and headline inflation Q3 advance GDP +1.2 pct q/q, +2.4 pct y/y, below expectations seasonally-adjusted annualized basis, the economy expanded by 1.2 percent, a reversal from the 0.1 percent contraction in the previous quarter. Construction grew by 1.4 percent on a year-on-year basis, moderating from the 4.1 percent growth in the previous quarter. The slowdown was mainly due to weaker private sector construction activities. Manufacturing grew by 1.4 percent on year, primarily supported by the biomedical manufacturing and electronics clusters. The services producing industries
grew by 2.9 percent on a year- onyear basis, slightly higher than the 2.8 percent growth in the preceding quarter. Growth was supported primarily by the finance & insurance and business services sectors. The government’s push to boost productivity while reducing reliance on foreign workers has led to a tight labour market and wage pressures that have helped push up core inflation. Analysts say such restructuring efforts have also weighed on economic growth, which is seen likely to slow this year compared to 2013. Reuters and Xinhua
Advanced farming techniques to reduce emissions in horticulture, gov’t says
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fter a four-year pilot program, the low-carbon rice farming model is being considered for expansion in Vietnam, local Vietnam News reported yesterday, quoting sources from the Ministry of Agriculture and Rural Development (MARD) as saying. Reducing greenhouse gases in agricultural production is currently a general trend in the world. In Vietnam, MARD has carried out many programs and projects on adaptation to climate change. From 2010 to 2012, a low-carbon rice farming project was implemented in southern An Giang province funded by the Environmental Defence Fund (EDF) and co-sponsored by the Institute of Mekong Delta Development Research Institute, the Hanoi Water Resources University and the Department of Agriculture and Rural Development of An Giang province. The project’s second phase (20122014) was deployed by 400 farmer households in Kien Giang and An Giang provinces, with a scale of 540 ha each crop. Results revealed that the farmers reduced seed use by 50 percent,
fertilizers by 30 percent, pesticides by 30 to 40 percent, water by 40 to 50 percent and labour by 20 to 30 percent, but the productivity was increased by 10 to 15 percent and farmers’ incomes by 5 to 10 percent. Gas emissions were reduced per hectare per year by 7.7 tons in An Giang province and by 45 tons in Kien Giang province. In addition, clean, safe and environment-friendly products were produced, which are known as bio-rice. The ministry also targeted to reduce emissions in horticulture by applying advanced farming techniques and solutions to reduce water consumption and input costs, collecting, reusing and treating straw thoroughly in order to minimize greenhouse gas (GHG) emissions and environmental pollution. The low-carbon rice farming model produced positive results and MARD would consider expanding it in Vietnam to produce prestigious and high-quality rice to meet consumer requirements and build sustainable agriculture, the report quoted MARD deputy minister Le Quoc Doanh as saying. Xinhua
Aussie banks shrug off warnings on property loans And while the average Sydney home price has jumped 14 percent in the last 12 months, they counter that this is a response to years of weakness in the market largely caused by the global financial crisis
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rothiness in Australia’s property market has triggered central bank warnings of regulatory steps to rein in loans to investors, but the nation’s banks are turning a deaf ear, sceptical that any such action is needed or imminent. Lending to investors has jumped this year to its highest since comparable records started in 1991, accounting for about half of Australia’s residential loans in value terms. Investor interest has also helped pushed housing prices in Sydney and Melbourne to the point where most first-time home buyers are widely seen as priced out of the market. For the Reserve Bank of Australia, the fear is that too much speculation will increase the risk of a sharp correction in housing prices which in turn would hit consumer confidence. It is working with other regulators and says a preliminary announcement on steps to reinforce sound lending practices could come by the end of the year. If it succeeds in quickly bringing forth regulation with bite, the nation’s big four banks - Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank - could see a sharp slowdown
For the Reserve Bank of Australia (headquarters pictured) the fear is that too much speculation will increase the risk of a sharp correction in housing prices
KEY POINTS Lending to investors accounts for half of residential loans RBA says working with regulators on potential curbs Banks highly reliant on mortgages, voluntary pullback unlikely Bank execs say central bank is mostly jawboning Even if curbs eventuate, impact seen small -bank execs in one of their biggest sources of revenue growth. Mortgage lending has been a staple and powerful diet for Australia’s major banks, accounting for 40-60 percent of their loans and helping them notch up five straight years of record profits. Without regulation, they are unlikely to voluntarily cut back on any part of that, let alone the juiciest portion.
For their part, banking executives say they simply don’t see the need for any pullback, arguing the RBA is wrong in its assessments of macro-economic risks and stressing that their lending practices are conservative by international standards. Much of the market’s problems are caused by lack of supply, they say.
Average growth for the past five years is a reasonable 3.3 percent while over the past 10 years, it is just 0.5 percent. Also proud of prudent lending practices that helped them come through the global financial crisis relatively unscathed, the banks note that loan-to-value ratios for mortgages in Australia are around 60 percent -
versus about 80 percent for comparable mortgages in the United States and more than 90 percent in the United Kingdom. Property investors also tend to be middle-aged workers with average annual income of A$80,000 and often with access to other sources of income, economists say. Reuters
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October 15, 2014
International IEA revises world oil demand The International Energy Agency said yesterday that oil prices may drop further. Brent has fallen by over 20 percent since June, when turmoil in Iraq lifted prices to US$116 per barrel. The IEA said it had cut its estimate for 2014 oil demand growth by 200,000 barrels per day (bpd) to 0.7 million bpd. In 2015, it expects demand to expand by 1.1 million bpd to 93.5 million bpd, up by 1.2 percent but 300,000 bpd less than previously forecast.
Daimler lifted by jump in Q3 earnings
German car and truck maker Daimler reported a 29-percent jump in quarterly core earnings at Mercedes-Benz Cars, its biggest business, surprising investors wary of an economic slowdown and pushing its shares higher. Mercedes posted its best-ever quarterly sales in the third quarter through September thanks to the release of new models and surging demand in China, Daimler said yesterday. Carmakers selling vehicles in the United States are also benefiting from the euro’s weakening against the dollar.
Kenya’s economy grows by 5.8% Kenya’s economy grew by 5.8 percent during the second quarter from April to June, compared to 7.2 percent in the same period in 2013, the national statistics bureau said. The Kenya National Bureau of Statistics (KNBS) said construction, manufacturing and financial services continue to show strong growth. “The growth was mainly supported by robust growths in construction (18.9 percent), manufacturing (9.1 percent), financial & insurance (8.3 percent), information and communication (6.4 percent), and wholesale and retail trade (6.8 percent),” the bureau said.
UK inflation slides British inflation slowed sharply in September to its lowest level in five years, further reducing pressure on the Bank of England to start raising interest rates even as the economy grows strongly. Consumer prices rose by a weaker-than-expected 1.2 percent on the year in September, down from 1.5 percent in August, the Office for National Statistics said yesterday. The ONS said food and motor fuel prices fell, helped by a supermarket price war, weaker global oil prices and a rise in sterling, which makes imports cheaper.
Lundin Petroleum makes big oil find Swedish oil firm Lundin Petroleum has made a big oil and gas discovery in the Norwegian Arctic, sending its shares more than 7 percent higher and raising hopes that more oil could be found in the remote region. Lundin Petroleum’s find in the Alta prospect contains between 125 and 400 million barrels of oil equivalent, including 85 to 310 million barrels of oil, near Statoil’s Snoehvit field and Lundin’s own Gohta find, the firm said in a statement yesterday.
The “Too-Big-to-Fail” sweat with safety costs European banks, including some second-tier lenders, will probably have to issue about 500 billion euros of senior debt through holding companies
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oo big to fail is likely to prove a costly epithet for the world’s biggest banks as regulators demand they increase debt securities to cover losses should they collapse. The shortfall facing lenders from JPMorgan Chase & Co. to HSBC Holdings Plc could be as much as US$870 billion, according to estimates from AllianceBernstein Ltd., or as little as US$237 billion forecast by Barclays Plc. The range is so wide because proposals from the Basel-based Financial Stability Board outline various possibilities for the amount lenders need to have available as a portion of risk-weighted assets. With those holdings in excess of US$21 trillion at the lenders most directly affected, small changes to assumptions translate into big numbers. The FSB wants to limit the damage the collapse of a major bank would inflict on the world economy by forcing them to hold debt that can be written down to help recapitalize an insolvent lender. For senior bonds to suffer losses under present rules the institution has to enter bankruptcy, a move that would inflict huge damage on the financial system worldwide if it happened to a global bank.
Lehman Brothers That’s what happened when Lehman Brothers Holdings Inc. collapsed in 2008, prompting governments around the world to step in with taxpayer’s money to
rescue lenders placed at risk in the turmoil that followed. The FSB, which consists of regulators and central bankers from around the world, will present its draft rules to a G-20 summit in Brisbane, Australia, next month. Its proposals call for 27 of the world’s largest banks to hold loss-absorbing debt and equity equivalent to 16 percent to 20 percent of their risk-weighted assets to take losses in a failure, ensuring investors rather than taxpayers pick up the bill should a lender collapse. Under the plans, these lenders will also have to meet buffer rules set by the Basel Committee on Banking Supervision, another group of global regulators. These can amount to a further 5 percent of risk-weighted assets, taking banks’ requirements to as much as 25 percent of holdings.
‘Significant shortfalls’ Using the 16 percent figure, the shortfall globally is about US$375 billion, according to Hussey. At 20 percent, the requirement would be US$870 billion, which he called “extreme.” He expects European lenders to have larger needs than the U.S. JPMorgan and Wells Fargo & Co., may need to raise US$127 billion to reach 18 percent of risk weighted assets, according to a note to clients from Barclays analysts, including Brian Monteleone in New York. HSBC, Europe’s biggest lender, and Spain’s Banco Santander SA and
HSBC may have shortfalls of US$50 billion to US$100 billion
Banco Bilbao Vizcaya Argentaria SA may be the only banks in the region affected, needing about US$110 billion between them, according to the report. BNP Paribas SA and HSBC may have shortfalls of US$50 billion to US$100 billion each, while Banco Santander will need as much as US$90 billion, according to Hussey. Barclays will have to cover a gap of US$25 billion to US$50 billion, he said. Bloomberg News
Jean Tirole wins 2014 Nobel Prize in Economics Tirole has brought research and theories on competition, market failures and regulations to a new level
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he 2014 Nobel Prize in Economics, or officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was awarded to French economist Jean Tirole “for his analysis of market power and regulation,” announced the Royal Swedish Academy of Sciences. When answering questions during phone interviews, Tirole said he was “so moved” upon being awarded this year’s economics prize. Commenting on international banking industry regulations, Tirole told Xinhua that governments “have to do more,” especially in terms of liquidity control. But he also emphasized that such regulations “have to be light enough so as not to thwart entrepreneurship” and that governments should “intervene only when necessary.” Being “one of the most influential economists of our time,” Tirole “has made important theoretical research contributions in a number of areas, but most of all, he has clarified how to understand and regulate industries with a few powerful firms,” the Royal Swedish Academy of Sciences said in its statement.
Tirole “has made important theoretical research contributions in a number of areas, but most of all, he has clarified how to understand and regulate industries with a few powerful firms Royal Swedish Academy of Sciences statement
Tirole has brought research and theories on competition, market failures and regulations into a new height - in that he found regulation policies cannot be applied as
general principles for all industries, and that different industries should be treated differently. Tirole’s analysis of firms with market power provides “a unified theory with a strong bearing on central policy questions: how should the government deal with mergers or cartels, and how should it regulate monopolies?” according to the statement. According to the statement, “the best regulation or competition policy should be carefully adapted to every industry’s specific conditions.” Tirole has, in a series of articles and books, presented a general framework for designing such policies and applied it to a number of industries, ranging from telecommunications to banking. Tirole was born in France in 1953. He was awarded his Ph.D. in 1981 from the Massachusetts Institute of Technology in the United States. He is now the scientific director at Institut d’Economie Industrielle at the Toulouse School of Economics, Toulouse 1 Capitole University in France. Xinhua
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October 15, 2014
Opinion Business
The age of vulnerability
Leading reports from Asia’s best business newspapers
wires
Joseph E. Stiglitz
Nobel laureate in economics, is University Professor at Columbia University
THE STAR The Court of Appeal has upheld an order to freeze the assets of six individuals and two companies with exposure to the three listed companies in Singapore, which shook the stock market there last year. It allowed an order to freeze assets worth S$79.05mil belonging to the six individuals and two companies who were purportedly involved in Singapore’s penny stock sell down last October. The panel dismissed the appeal by the eight against a Kuala Lumpur High Court decision, ruling that there was a real risk of dissipation of the assets.
THE JAKARTA POST A unit of the US oil and gas giant Chevron Corp., PT Chevron Pacific Indonesia, is delaying its US$12 billion Indonesia Deepwater Development (IDD) project in the Makassar Strait in East Kalimantan, an official has said. The program director for the Energy and Mineral Resources Ministry’s oil and gas directorate general, Naryanto Wagimin, said the company had submitted a letter to acting Energy and Mineral Resources Minister Chairul Tanjung requesting the postponement. Naryanto said Chevron required time to revise their plan of development (POD) before moving ahead with the project.
THE PHNOM PENH POST Cambodian authorities are stepping up inspection efforts of vegetable imports along the border after Vietnamese produce shipped to the European Union was found to contain harmful bacteria, an official from the Kingdoms import inspection unit said yesterday. Vietnamese media reported last week said that the European Union Consumer Protection Agency has issued a warning to the Vietnamese government that the country risked a ban on certain vegetables imported to the EU if the produce continued to violate safety standards. An official from the General Department of Camcontrol said they were now taking more precautionary measures.
THE TIMES OF INDIA Within days of Prime Minister Narendra Modi’s return from the US, the US Trade Representative (USTR) has launched a fresh offensive against India’s intellectual property rights (IPR) regime, a move that may lead to the government going slow on a bilateral dialogue with Washington. Yesterday, USTR will launch what it calls an “outof-cycle review” (OCR) of India’s IPR regime, following a report released earlier this year, where India was put on the priority watch list due to “heightened level of concern about the deterioration in India’s environment for IP protection and enforcement”.
Barack Obama reacts to the passing of Healthcare bill
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wo new studies show, once again, the magnitude of the inequality problem plaguing the United States. The first, the US Census Bureau’s annual income and poverty report, shows that, despite the economy’s supposed recovery from the Great Recession, ordinary Americans’ incomes continue to stagnate. Median household income, adjusted for inflation, remains below its level a quarter-century ago. It used to be thought that America’s greatest strength was not its military power, but an economic system that was the envy of the world. But why would others seek to emulate an economic model by which a large proportion – even a majority – of the population has seen their income stagnate while incomes at the top have soared? A second study, the United Nations Development Program’s Human Development Report 2014, corroborates these findings. Every year, the UNDP publishes a ranking of countries by their Human Development Index (HDI), which incorporates other dimensions of wellbeing besides income, including health and education. America ranks fifth according to HDI, below Norway, Australia, Switzerland, and the Netherlands. But when its score is adjusted for inequality, it drops 23 spots – among the largest such declines for any highly developed country. Indeed, the US falls below Greece and Slovakia, countries that people do not typically regard as role models or as competitors with the US at the top of the league tables. The UNDP report emphasizes another aspect of societal performance: vulnerability. It points out that while many countries succeeded in moving people out of poverty, the lives of many are still precarious. A small
The recent economic downturn eviscerated the wealth of many. In the US, even after the stock-market recovery, median wealth fell more than 40% from 2007 to 2013
event – say, an illness in the family – can push them back into destitution. Downward mobility is a real threat, while upward mobility is limited. In the US, upward mobility is more myth than reality, whereas downward mobility and vulnerability is a widely shared experience. This is partly because of America’s health-care system, which still leaves poor Americans in a precarious position, despite President Barack Obama’s reforms. Those at the bottom are only a short step away from bankruptcy with all that that entails. Illness, divorce, or the loss of a job often is enough to push them over the brink. The 2010 Patient Protection and Affordable Care Act (or
“Obamacare”) was intended to ameliorate these threats – and there are strong indications that it is on its way to significantly reducing the number of uninsured Americans. But, partly owing to a Supreme Court decision and the obduracy of Republican governors and legislators, who in two dozen US states have refused to expand Medicaid (insurance for the poor) – even though the federal government pays almost the entire tab – 41 million Americans remain uninsured. When economic inequality translates into political inequality – as it has in large parts of the US – governments pay little attention to the needs of those at the bottom. Neither GDP nor HDI reflects changes over time or differences across countries in vulnerability. But in America and elsewhere, there has been a marked decrease in security. Those with jobs worry whether they will be able to keep them; those without jobs worry whether they will get one. The recent economic downturn eviscerated the wealth of many. In the US, even after the stock-market recovery, median wealth fell more than 40% from 2007 to 2013. That means that many of the elderly and those approaching retirement worry about their standards of living. Millions of Americans have lost their homes; millions more face the insecurity of knowing that they may lose theirs in the future. These insecurities are in addition to those that have long confronted Americans. In the country’s inner cities, millions of young Hispanics and African-Americans face the insecurity of a dysfunctional and unfair police and judicial system; crossing the path of a policeman who has had a bad night may lead to an unwarranted prison sentence – or worse.
Europe has traditionally understood the importance of addressing vulnerability by providing a system of social protection. Europeans have recognized that good systems of social protection can even lead to improved overall economic performance, as individuals are more willing to take the risks that lead to higher economic growth. But in many parts of Europe today, high unemployment (12% on average, 25% in the worst-affected countries), combined with austerity-induced cutbacks in social protection, has resulted in unprecedented increases in vulnerability. The implication is that the decrease in societal wellbeing may be far larger than that indicated by conventional GDP measures – numbers that already are bleak enough, with most countries showing that real (inflation-adjusted) per capita income is lower today than before the crisis – a lost half-decade. The report by the International Commission on the Measurement of Economic Performance and Social Progress (which I chaired) emphasized that GDP is not a good measure of how well an economy is performing. The US Census and UNDP reports remind us of the importance of this insight. Too much has already been sacrificed on the altar of GDP fetishism. Regardless of how fast GDP grows, an economic system that fails to deliver gains for most of its citizens, and in which a rising share of the population faces increasing insecurity, is, in a fundamental sense, a failed economic system. And policies, like austerity, that increase insecurity and lead to lower incomes and standards of living for large proportions of the population are, in a fundamental sense, flawed policies. Project Syndicate
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October 15, 2014
Closing Gazprom and China ICBC discuss financing
UK to take orders for first renminbi bond
Gazprom discussed possible trade and corporate financing along with bond issues with Industrial and Commercial Bank of China Limited (HK branch entrance pictured), one of the world’s biggest, the Russian state-controlled gas company said in a statement. In May, Gazprom has signed a US$400-billion gas deal to supply China with gas over 30 years. The pipeline system is yet to be build. Gazprom added that bond issues could be carried out in offshore yuan while both firms also discussed arranging payment settlements in rouble and yuan.
Britain began to take orders for its first government bond denominated in renminbi yesterday, after finance minister George Osborne (pictured with IMF’s Lagarde) announced plans for the issuance last month. The finance ministry said in September that the three-year bond was likely to have a size of around 2 billion yuan (US$327 million), and would be used to finance Britain’s foreign reserves. An investor presentation on Monday suggested that Britain expected the bond - the first from a Western government - would offer a yield of around 2.7 percent.
India’s wholesale inflation closer to record-low
Economists say the real picture of inflation will emerge only after November
Rajesh Kumar Singh
A promise to pull the economy out of the malaise handed Prime Minister Narendra Modi the strongest electoral mandate in 30 years in May. Pictured on the left, Modi interacts with chairman Tata Group Cyrus Pallonji Mistry (2-L) chairman Reliance Industries Limited Mukesh Ambani (3-L) and chairman Adani Group Gautam Adani (2-R) during fourth Gobal Investors Summit-2014
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ndia’s wholesale price inflation eased to a near five-year low in September, helped by a moderation in food and fuel prices, but the risk of price shocks is expected to prevent the central bank from cutting interest rates soon. The wholesale price index (WPI) rose an annual 2.38 percent last month, its slowest pace since October 2009, compared with a 3.3 percent jump forecast by economists in a Reuters poll. In August, wholesale prices rose 3.74 percent.
Yesterday’s data comes a day after consumer price inflation, which the central bank tracks to set policy lending rates, dropped sharply to 6.46 percent in September, the lowest since the latest data series started in January 2012. “The sharp moderation in inflation has been a culmination of a favourable base effect, moderation in food prices, softening crude oil prices and weak growth,” said Upasna Bhardwaj, an economist at ING Vysya bank. Economists, however, say the real
Eurozone industrial production falls sharply
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picture of inflation will emerge only after November when the base effect fades out and the impact of a subnormal monsoon rains on summersown crops are more visible. “We will see the lowest reading for inflation in November due to the statistical base effect,” said Rupa Rege Nitsure, chief economist at Bank of Baroda. “So it needs to be seen postDecember how inflation pans out as the Reserve Bank of India (RBI) wants inflation to come down on durable basis.” Lower vegetable prices help drive down wholesale food inflation to a near three-year low of 3.52 percent in September. Fuel inflation hit a near five-year low of 1.33 percent on falling global crude prices. A faster-than-expected deceleration in inflation will be welcomed with relief by a country that has been struggling to overcome a prolonged spell of low growth and high inflation.
Hope & challenges A sustained fall in global oil prices, which are down more than 20 percent from the 2014 high in June, has brightened the near-term inflation outlook. Since India imports more than 70
percent of its oil, every US$10 a barrel fall in global prices should lower retail inflation by 20 basis points and wholesale inflation by 50 basis points. A relatively stable rupee, weak domestic demand and a favourable statistical base are also expected to rein in price pressures. Still, the RBI is expected to keep interest rates on hold until the AprilJune quarter on concerns that poor monsoon rains and geopolitical tensions that affect oil could drive up prices and make it tougher to reduce retail inflation to 6 percent by January 2016. “Going into next year, we expect RBI to assess the diminishing upside risks to its 6 percent target closely and press the trigger only when it is convinced of a meaningful correction in prices,” said Bhardwaj of ING Vysya bank. The RBI sent a strong signal last month that it would hold off cutting rates until it was confident that consumer inflation would hit its 2016 target. India’s benchmark 10-year bond nevertheless rose to a 13-month peak yesterday, buoyed by a faster-thanexpected cooling in retail prices. Bond traders are now pricing in a more aggressive monetary easing next year.
JPMorgan posts profit as legal costs ease
SMG, Warner Bros to launch content fund
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ndustrial output in the eurozone fell by 1.8 percent in August, official data showed yesterday, a steep drop and another sign that recession in the 18-nation currency bloc could return. The fall in factory output data was a reverse from the previous month, when an unexpected one-percent rise in industrial activity brought hope that a fragile recovery in the eurozone could be taking hold. “August’s eurozone industrial production data and October’s German ZEW survey increase the risk that the single currency area may be entering its third recession in six years,” said Jennifer McKeown, senior European economist at Capital Economics. The state of the eurozone economy has become a major source of worry, with the IMF and other economic players urging bolder action from European policymakers to revive stagnant growth. The eurozone economy posted zero growth in the second quarter and all eyes are on the first estimate for the third quarter expected later this month.
PMorgan Chase & Co reported a third-quarter profit as the biggest U.S. bank moved past the huge legal claims that caused it to book a rare loss in the same quarter last year. The bank posted net income of US$5.6 billion, or US$1.36 per share, in the three months ended September 30, compared with a loss of US$380 million in the year-earlier quarter, the document showed. Analysts had expected earnings of US$1.38 per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the reported figure was comparable. JPMorgan had missed market expectations in three of the four preceding quarters. The bank was hit last year by an after-tax expense of US$7.2 billion to settle government allegations of wrongdoing related to mortgage instruments before the financial crisis. Revenue from fixed-income, currency and commodity trading rose 2.1 percent to US$3.51 billion in the quarter compared with a year earlier, and was also slightly higher than the preceding quarter, the document showed.
AFP
Reuters
Reuters
hanghai Media Group (SMG) and CMC Capital announced yesterday plans to team up with overseas partners Warner Bros. Entertainment, RatPac Entertainment and WPP as they launch a global content investment fund. The CMC Creative Fund will invest in Chinese and international content covering film, TV, and live entertainment, the five partners said in a joint statement. Warner Bros., RatPac and WPP will work with SMG and CMC to share their production and distribution expertise with up-and-coming players in the Chinese entertainment industry through seminars, co-productions and creative partnerships. CMC Chairman Li Ruigang said he hoped the new platform will take advantage of the respective strengths and market potential of the partners. He said he hoped they could provide superior resources and full-scale support for the new generation of content creators in China. CMC is China’s leading media and entertainment investment fund. Its prominent partners include China Development Bank, one of China’s largest financial institutions. Xinhua