MOP 6.00 Year III
Number 751 Wednesday March 18, 2015
Publisher: Paulo A. Azevedo
Closing editor: Luís Gonçalves
Illegal betting websites exploiting Galaxy brands PAGE 6 | Future Bright profits slump 35 pct PAGE 6
New Kid in Town E
conomic diversification and non-gaming. Hangzhou-based Lander Real Estate Co., Ltd. seeks to invest MOP100 million in the city. By setting up a sports games broadcasting company. The goal is to develop and reform the sports industry. Lander intends to learn the local events ropes, too. By collaborating with cultural and sports enterprises. Thus laying a solid foundation for the company’s sports business development in Mainland China PAGE
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Aerial dogfight
HSI - Movers March 17
A “satisfactory” profit for 2014 is expected. So said Air Macau chairman Zheng Yan yesterday. Increasing competition from Zhuhai, Guangzhou, Shenzhen and Hong Kong Airport and other modes of travel are making an impact, though. The city’s flag carrier resolves to keep fares “competitive”. Whilst working to expand flights to Southeast and Northeast Asia
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Step by step
Name
%Day
China Merchants Hold
4.27
China Resources Powe
3.06
China Resources Land
2.36
Cathay Pacific Airwa
2.16
China Shenhua Energy
1.56
Tencent Holdings Ltd
-1.33
Henderson Land Devel
-1.76
Wharf Holdings Ltd/T
-1.97
Sino Land Co Ltd
-2.36
Sands China Ltd
-2.92
Source: Bloomberg
It was the hot topic of the week. Now, finally, a time frame. The very first minimum wage bill in the city for cleaning and security workers. It may pass by August. Whilst legislation may be enacted early 2016. The plan is to apply the principle to the whole economy. But three years to wait
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Alternative diplomacy Lots of U.S. pressure. But its allies are mulling signing up for the China-backed Asia Infrastructure Investment Bank. The U.K., France and Germany, among others, have declared their intention to get on board www.macaubusinessdaily.com
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MassMutual Asia to hire 200 in Macau PAGE 4
Certified shops in Hengqin awarded PAGE 5
Profits of doom? Now more the rule than the exception. The prophets of doom. First Deutsche Bank, and yesterday Macquarie. The Aussie bank savagely slashed gaming revenue forecasts for the year. Predicting a swingeing 24 pct drop. Or three times its previous forecast. All eyes now on the new Cotai casinos but Macquarie isn’t holding its breath
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March 18, 2015
Macau
Air Macau’s “satisfactory” profit pressured by neighbouring airports The city’s flag carrier says it resolves to keep its flight fares “competitive” while it’s working to expand its overseas flights to Southeast and Northeast Asia Stephanie Lai
sw.lai@macaubusinessdaily.com
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he rising competition among the airports operating in the Pearl River Delta in an improved land and sea transport network in the region has pressured the profits of the city’s flag carrier Air Macau Co. Ltd. in the past year. The carrier has resolved to reduce fares and expand its overseas flight network in order to attract more passengers. Legacy carrier Air Macau, a subsidiary of state-owned Mainland China operator Air China Ltd., has seen net profits for the first half of last year plummet 74.4 per cent to 21 million yuan (US$3.4 million, or MOP27.2 million). The carrier’s chairman, Mr. Zheng Yan, told reporters yesterday, however, that he believed the carrier could still see a “satisfactory” profit figure for the whole of last year. “The results did improve in the second half of last year. And 2014 is still a profitable year for us, although this profit level is not as high as previous years,” Mr. Zheng Yan said on the sidelines of a ‘blessing’ ceremony of a new Air
Mainland Chinese passengers] won’t create a big impact on us.”
Fleet expansion
Macau aircraft named ‘Flourish’, which is soon to enter into service. Air Macau and its parent Air China are due to announce their final results for 2014 next week. Accounting for the plunge in profits in the first half of last year, Mr. Zheng attributed it to intensifying competition with airlines, citing the airports of the city’s neighbouring Zhuhai, Guangzhou, Shenzhen and Hong Kong as the main reason.
“Now everyone is taking the transport tools that ease their trips, like the metro, the GuangzhouZhuhai Intercity Railway and ferries. And in future, we’ll also have the Hong Kong-Zhuhai-Macau Bridge,” said Mr. Zheng. “This convenience for passengers means that there is a competition amongst the five airports in the Delta region, as well as amongst the airlines that operate in these places . . . For us, we’re not only facing competition from legacy carriers operating in the city but also budget carriers from Southeast Asia and Northeast Asia.” The increasing competition from airlines working in the city’s neighbouring regions has pressured fares; as a consequence, Mr. Zheng noted, the carrier is reducing its flight fares to a “competitive” level”. The declining VIP gaming revenue seen in the city in recent months also means a cut in fare revenue from highend Mainland Chinese passengers but Mr. Zheng noted that it had not overly impacted the company’s earnings. “The changes seen in Mainland China’s economic structure as well as the anti-graft measures seen did affect our business segment derived from VIP passengers,” Mr. Zheng said, “but I believe that through our expanding into other markets, and also the complement of more leisure travellers, it [the fall in high-end
While flights between here and Mainland China comprise the majority of Air Macau’s routes, the carrier plans to enhance its overseas flight frequency. “Before, we mainly expanded flight routes to Mainland China. But starting from this year, Air Macau is adjusting its flight network following the change in the economy of China and that of Macau,” he said. “Now we are aiming at local passengers, and as the 24-hour border crossing is happening we also want to attract more passengers from the west of Guangdong Province,” he added. “This means we have to develop more regional routes; for example, to Bangkok and Vietnam, as well as to South Korea and Japan.” Air Macau is planning to launch a daily flight to Osaka in Japan soon as well as a daily flight to Tokyo by the end of this year. The flag carrier also floated the possibility of increasing flight frequency to South Korea, which currently sees two daily flights to the city. With the intended increase in flight frequency in its existing overseas flight network, the carrier is also adding more aircraft to the fleet – the latest is a A321 Airbus named ‘Flourish’, which had its ‘blessing’ ceremony yesterday. The new addition of ‘Flourish’ has boosted the number of Air Macau’s aircraft to 15. “This year, we’ll try to have another two aircraft join the fleet, which means we’ll have 17 aircraft by then,” Mr. Zheng said. “By 2018, we expect that we will have 24 aircraft.” Air Macau is currently replacing its old aircraft, whereby one to two aging aircrafts are replaced each year, Mr. Zheng noted. The replacement plan would last until 2020, he added.
DSAT head Wong Wan submits resignation
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he Director of the Transport Bureau, Wong Wan, has handed in his resignation letter and requested not to act as Bureau Director any more. The information was confirmed by the Secretary for Transport and Public Office. Wong Wan submitted his resignation based on personal reasons. He will leave the post on May 12. Wong Wan has served as Director since the Bureau’s establishment in 2008. In recent years, DSAT has been blamed for numerous major transport issues in the SAR. Residents routinely complain about public buses, taxi services, road conditions and traffic jams in the city.
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March 18, 2015
Macau
Macquarie expects gaming revenues to plunge 24 per cent this year VIP and premium gamblers are fading away from Macau and the fear is that they will not show up after the opening of the new casinos in Cotai for the ‘biggest test’. The Australian bank forecasts a fall in 2015 revenues three times greater than the previous prediction João Santos Filipe
jsfilipe@macaubusinessdaily.com
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acquarie Research has cut gaming revenue forecast from a drop of 8 per cent year-on-year (US$40.4 billion) to a drop of 24 per cent year-on-year (US$33.2 billion) for this year. The report by analysts Jamie Zhou and Marcus Qi justifies the changes via the cut in gaming revenues and decrease in number of Chinese visitors. In relation to revenues, despite the fact that the first two months of 2015 were the worst since January-February 2011, Macquarie Research considers more worrying ‘the sequential drop in GGR [Gross Gaming Revenue] daily run-rate showing a sharp downward trend’. While the previous forecast assumed revenues from the VIP segment would drop 14 per cent year-on-year to US$22.6 billion, now it assumes the segment will
drop during the year a swingeing 34 per cent year-on-year to US$17.3 billion because ‘the sequential pace of decline appears to be more punishing’. The scenario is not much better when it comes to the mass segment with ‘premium mass experiencing a similar structural trend to VIP’. However, in this segment grind mass is considered to be ‘holding up healthily’. In its previous report Macquarie forecast the mass segment would grow 2 per cent year-on-year to US$16.2 billion. However, due to the slower pace of premium mass the forecast is for a cut of 9 per cent year-on-year to US$14.4 billion. As for visitation, the report stresses it dropped 2 per cent yearon-year overall in January and 1 per cent in relation to Mainland Chinese visitors. The trend is said
to have continued during Chinese New Year. ‘This might have been attributable to ongoing visa restrictions, border congestion and weakening of regional currencies prompting leisure Chinese travellers to head elsewhere’, it is explained.
‘Tuhaos many not come this time’ The report stresses that the ‘biggest test’ for the sector is about the capacity for the new resorts to ‘drive revenue for the whole gaming industry, as opposed to only taking market share away from other operators’. While it is assumed that grind mass will benefit from the increase in the number of rooms, the analysts are concerned about the capacity to attract ‘Tuhao’ gamblers of the
premium mass market. Tuhao is a term used to define Mainland people who can be defined as nouveau riche and uncultured. ‘We are cautious that high-roller Tuhaos in the premium mass segment are experiencing a similar structural decline trend as VIP players and that operators will have no choice but to bring ‘less premium’ players to fill up the new capacity’, it is explained. ‘This is a trend already evident among existing properties since mid-2014; operators need to source premium mass players from more distant provinces who have smaller gambling budgets than other players did previously’. However, in terms of revenues, Macquarie expects an overall growth of 7 per cent year-on-year in 2016 (US$35.5 billion) and a growth of 5 per cent year-on-year in 2017 to US$37.3 billion.
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March 18, 2015
Macau opinion
Visa policies
José I. Duarte Economist
Chinese real estate developer to establish sports broadcasting company in Macau Hangzhou-based Lander Real Estate Co., Ltd. has announced it is going to invest MOP100 million to set up a sports games broadcasting company in the SAR Joanne Kuai
joannekuai@macaubusinessdaily.com
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ncertainty about how far and how long this ‘losing’ streak in Gross Domestic Product figures will last is testing the mettle of many operators in and around the casino sector. This seems an odd time to be discussing with the Mainland authorities restrictions on travel to Macau, following a period of huge congestion during the Chinese New Year - which may indeed compound worries and contribute to deepening the revenue slump. It doesn’t have to be that way, however.To start with, there is a common, widespread misconception about the relationship between the number of visitors and economic growth. The main driver of the latter are, indeed, gambling revenues; and there is certainly some relationship between the number of visitors and those revenues. But this relationship is not as strong as many people seem to think. The number of visitors is actually a weak driver of casino revenue. In fact, a plot of both variables over time suggests that the relationship is quite feeble. Moreover, we have had, at various times in the past, increasing restrictions imposed on visas without any clear and sustained impact on the revenue growth rate. To be sure, if any doubts subsisted, the running revenue crash happened without any decrease in the number of visitors; in fact, quite the contrary. The main drivers of growth are to be found elsewhere. That does not mean, however, that a revision in the visa policies will have no impact at all. But again, the issue is not the total number of visitors as such. The same total figure may result from various profiles of visitors and not all kinds of visitors are the same, when their impact on the region’s income and wellbeing is accounted for. We should certainly strive to limit the number of short-time visitors; that is, those the Statistics Department assures us spend just a few hours in Macau and spend a few hundred patacas. They tend to concentrate around the same locations during the same periods; they are arguably the main source of congestion, imposing serious strains on traffic and infrastructure; and, except for limited types of commercial activity, they contribute little to the local economy. Conversely, we should strive to encourage long-staying visitors. The issue is: how can this be done? Any such policy measures will have to focus primarily on China, from where most of our visitors come. An important matter here, which is seldom if ever equated, is the issuance of the visas, both individual and group visas. Macau – and Hong Kong for that matter – faces a unique situation. Usually, the receiving territory, not the place of origin, issues visas. Besides, for the common resident, if not also for the Administration, the issuing criteria have been totally or mostly opaque. The current arrangement may itself be an obstacle to more flexible and adaptable tourism policies – other than a blunt and arbitrary cap on the number of visitors – and it is possibly time to re-assess it.
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henzhen Stock Exchange listed company Lander Real Estate Co., Ltd. is going to establish a wholly owned subsidiary company for sports broadcasting in Macau with registered capital of MOP100 million, the company said in a filing with the bourse on Monday night. Of the registered capital, the mother company Lander Real Estate will invest 70 per cent which amounts to MOP70 million, while the remaining 30 per cent, amounting to MOP30 million, will be paid by its wholly owned subsidiary Hengqin Lander Energy Fund Management Co., Ltd. The company to be built in Macau is temporarily titled Lander (Macau) Culture Sports Broadcasting Co., Ltd. Lander says this plan is in accord with the group’s purpose of capturing the opportunities of the developing and reforming sports industry and to further participate in the booming business. The decision to set up the company outside Mainland China was unanimously approved by the board of directors on Monday, March 16, the notice reads. ‘The company wants to invest in the Macau Special Administrative Region where the cultural and sports industry is more international and the commercial operation is more advanced,’ the notice reads. ‘We aim to use the platform and further develop the international market of sports games and broadcasting.’
The company adds that it has the intention of collaborating with good cultural and sports enterprises and will learn the techniques and experience of running major sports events in order to bring international games to the Mainland and lay a solid foundation for the company’s sports business development in Mainland China. In addition to enhancing its own brand awareness in the international market and expanding its business overseas, Lander says they want to help Macau with its local sports games operation and general public sports industry development. The company also acknowledges the potential risks, including the difference between the SAR and Mainland China in terms of legislative and regulatory issues, policy system and business environment. It says in order to establish the new company the team has to familiarise itself with
local law, commerce, and cultural environment as soon as possible. The other concern in establishing a subsidiary in the SAR is the need for approvals from the foreign currency management authorities and commerce management authorities and other state departments. Approval would not necessarily be granted, the notice reads. Based in Hangzhou, Lander Real Estate Co., Ltd. is involved in real estate development, property management, appliances and construction materials, wholesale and retail, and investment in other businesses. Business Daily approached the company for further details regarding its development plan in the SAR but the interview request was declined. The company said they would not agree to any interview regarding the matter for the time being.
MassMutual Asia to hire 200 in Macau
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nsurance company MassMutual Asia Ltd. plans to hire 1,000 people this year, 800 from Hong Kong and 200 from Macau in order to increase the number of financial consultants of the company to 3,500, according to Hong Kong media Next’s report. The Managing Director and Chief Executive Officer of MassMutual Asia Ltd., Tay Keng Puang, said that as currently Macau has been suffering consecutive monthly gaming slumps the insurance company is even targeting talent from the gaming
industry including dealers to be their insurance agents. Mr. Tay said that casino workers’ salary increase potential is limited and that there is not much opportunity for promotion. He commented that the gaming industry of Macau has now entered a phase of adjustment due to all kinds of factors, and MassMutual Asia has the intention of absorbing talent from the gaming industry – engaging those who have lost their job or are trying to search for a better career. MassMutual Asia Ltd. is a
member of the US-based MassMutual Financial Group and a company for the group’s development of risk and wealth-management businesses in the Asia region. Currently, MassMutual Asia is headquartered in Hong Kong and operates a branch office in Macau. MassMutual Asia also operates several subsidiaries in Hong Kong, including MassMutual Trustees Ltd., which focuses on the MPF business, and MassMutual Insurance Consultants Ltd., which handles general insurance business.
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March 18, 2015
Macau 156 illegal gaming ads processed by DSE The government had handled 156 illegal advertisements promoting gambling from the beginning of this year to February 9, Director of Macau Economic Services Bureau (DSE) Sou Tim Peng wrote in a reply to an interpellation by legislator Melinda Chan Mei Yi. He said that the Bureau is processing administrative procedures to penalize the perpetrators of these ads. According to Mr. So, the illegal ads, primarily promoting online gambling platforms and VIP clubs, were posted on buses, tour buses, taxis and outdoors. The DSE head also said that the government is collecting opinions regarding amending the current law regulating advertising.
Minimum wage bill: Final approval by mid-August The very first minimum wage bill in the city for cleaning and security workers may be passed no later than August, while legislation may come into effect at the beginning of 2016 Kam Leong
kamleong@macaubusinessdaily.com
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he minimum wage bill for the city’s cleaning and security workers will be passed to the Legislative Assembly (AL) for final approval before the end of this session, which is on August 15, legislator Cheang Chi Keong revealed yesterday. The legislator, who also chaired the third standing committee of AL in charge
of the bill, said that he had already written to AL president Ho Iat Seng that the sub-committee is ready to submit the bill for final reading before May 31 this year. Meanwhile, the AL head told reporters yesterday that he believed the final discussion for the first-ever minimum wage bill can even be finished by June this year,
claiming the bill may come into force at the beginning of next year if it is passed by the legislators. The minimum wage bill, proposed by the government in June 2014, suggested cleaners and security workers in Macau should earn no less than MOP30 per hour or MOP240 per day. The bill passed its first reading in AL last July.
Certified shops in Hengqin awarded Macau and Zhuhai authorities have launched a campaign on Hengqin Island to promote honest trade Joanne Kuai
joannekuai@macaubusinessdaily.com
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wo Macau-invested enterprises on Hengqin Island have been awarded the Certified Brand, along with a Zhuhai brand, marking the first batch of brands on Hengqin Island to be thus certified. Zhuhai Hengqin New Area Consumers’ Association and the Macau Consumer Council signed a cooperation agreement over the weekend aimed at promoting the collaboration by both sides to build certified shops on Hengqin Isand. The agreement also covers areas such as customers’ rights’ protection when consuming in the jointly developed island, product quality control and information sharing in terms of safeguarding the legal rights of consumers. Zhuhai’s Municipal People’s Congress recently authorised the city to pass several government regulations, such as the Zhuahi Special Economic Zone Hengqin New Area Honest Island Building Guidelines, Evaluation Criteria of Certified Shops and Brands and Temporary Measures in Certified Shop and Brands Appraisal and Management on Hengqin Island.
“Hengqin has now launched this internationally acclaimed system of ‘certified brands’. This is in a bid to build a similar business environment here in Hengqin as the ones in Hong Kong and Macau,” said Liu Jia, a member of the Standing Committee of the Zhuhai Municipal People’s Congress, and acting Party Chief of Hengqin New Area. According to the Vice Party Chief of Hengqin New Area and the region’s Consumers’ Association president, Ye Zhen, Hengqin has mandated a series of measures with regard to recognising certified shops, brand management and rules of review and appraisal. Currently, the island is trying to find out more ways to encourage more companies to join the campaign and promote the culture of honest trade in order to build a system that better safeguards consumers’ rights. Two Macau-invested shops - Seng Fun Jewellery Hengqin Branch, and Zhuhai Hengqin Candy Land – and one Zhuhai company – Hengqin Town Bank – are the first ones to be awarded certified shop status.
On Monday, the city’s Secretary for Economy and Finance Lionel Leong Vai Tac said the government plans to ibtrosuce a citywide minimum wage policy within three years following the implementation of the minimum wage bill for cleaners and security workers. Union legislator Kwan Tsui Hang indicated
yesterday, however, that the government should draft a more detailed proposal on how to implement such a citywide bill, or it will be empty talk. “[The government should] show its determination [to implement the citywide policy] by deciding the direction and scheduling the timetable,” Ms. Kwan said. In addition, she expressed her dissatisfaction with the current standard of minimum wage set for cleaning and security workers. “The current standard set for the minimum wage is far behind the median income of Macau [residents], which is not even equivalent to half of [the median income],” she said. “If Macau is not able to set a standard for minimum wage reaching [half of the] median income, it should not be considered that its economy has developed to a quite high level,” the union legislator added.
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March 18, 2015
Macau Success Universe and China Star hit the jackpot Success Universe Group, which operates Casino Ponte 16, and the entertainment group China Star announced yesterday to the Hong Kong Stock Exchange that they will increase their profits significantly in relation to the last fiscal year. Concerning the Macau group, it is expecting an increase of ‘around 3 to 5 times in the consolidated profit’ in relation to the year ended December 2013, when it recorded approximately HK$18.6 million. The entertainment group, meanwhile, will record an increase of ‘120 per cent to 140 per cent as compared to HK$91.3 million for the year ended 31 December 2013’.
Galaxy: Beware illegal betting websites exploiting our brands The gaming operator has issued a notice that its brands have been used by illegal websites in order to mislead and defraud online gamblers João Santos Filipe
jsfilipe@macaubusinessdaily.com
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alaxy Entertainment Group has issued a warning that illegal betting websites are using the group’s name, mark, images and hotline in order to mislead or defraud the public. ‘Galaxy Entertainment Group Limited and its subsidiaries and all of our properties, including Galaxy Macau, StarWorld Macau Hotel and Broadway Macau have no affiliation with any online gambling and betting site nor have we authorised any website, company or person of any origin to solicit, carry out or promote any form of online gambling and betting activities for and on behalf of the Group’, it was explained. In a note released on Monday, the group that is set to open Phase II of the Galaxy Macau resort and Broadway Macau resort in May stressed that online gambling is illegal in the former Portuguese enclave.
It is not the first time that Galaxy has issued a warning related to the illegal exploitation of its brand. In August last year, a similar warning was released to the public. The company founded by Lui Che Woo is not the first gaming operator to have its brand used by illegal online websites. The group founded by the casino tycoon Stanley Ho Hung Sun, SJM Holdings, issued a warning of this kind last year, as well. Early this month the American-based Sands Corp., which is the parent company of Sands China, won a US$2.2 million judgment against Asia-based trademark infringers. The judge ruled that the infringers pay US$2 million (MOP16 million) for using the Sands trademarks and another US$150,000 (MOP1.6 million) for violating copyright.
Future Bright profits slump 35 pct, affected by food souvenir business The HK$28 million investment to promote new brand Macau Yeng Kee has weighed on Future Bright’s profits Kam Leong
kamleong@macaubusinessdaily.com
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estaurant operator Future Bright Holdings Ltd. saw profits for 2014 plunge 35.3 per cent year-on-year due to its newly launched food souvenir business ‘Macau Yeng Kee Bakery’, which registered a net loss of nearly HK$40 million, the company informed the Hong Kong Stock Exchange yesterday. According to its filing, the profit attributable to owners of the Hong Kong listed company had sharply decreased to HK$168.8 million from HK$260.9 million in 2013, despite turnover enjoying an increase of 15.1
per cent year-on-year to HK$858.9 million. In addition, its operating profits fell 10.5 per cent year-on-year, amounting to HK$243.2 million. In fact, on February 9 the restaurant operator had already issued a profit alert warning that the company would record a ‘considerable decrease’. The ‘considerable decrease’ was eventually registered following its food souvenir business Yeng Kee losing some HK$39.4 million despite HK$28 million spent on advertising the new brand during the second half of 2014.
Claiming that the business of the Yeng Kee stores has been improving monthly, Future Bright is still planning to open three more Yeng Kee bakery shops and one bakery kiosk in Macau this year in addition to the current six stores, as well as another bakery shop in Zhuhai. ‘Management hopes that with more Yeng Kee bakery shops, the Group shall build up a critical mass of its food souvenir shop networks to reach customers and enhance sales volume,’ the company explained. In fact, Future Bright claimed that its profit only turned south in the
second half of 2014, due to declining gaming revenues in Macau, apart from the openings of Yeng Kee. ‘The Group experienced a volatile year in 2014 where the year of 2014 kicked off with a strong performance in the first half but a drastic decline in its performance in the second half… Declines in Macau Gross Gaming Revenue and visitors’ consumption spending mainly in the second half of 2014 have in turn affected the Group’s business with a decline in revenue from the Group’s restaurants.’ the company wrote. Meanwhile, according to the filing, the restaurant operator paid HK$260.2 million last month for the whole acquisition of a plot of land occupying 49,850 square metres in Hengin Island that it plans to develop as an international food plaza. ‘The Group intends to build the food plaza into a key tourist attraction for visitors to Macau, Hengqin Island and Zhuhai City,’ it wrote, adding that the foundation works will start in November this year. The project is expected to be completed in three years. The food plaza that the operator proposes will be a building complex housing a maximum of 50 restaurants and food souvenir shops, an exhibition hall and related logistics facilities plus offices, warehouses and car parks.
Business Daily | 7
March 18, 2015
Macau Elaine Wynn campaigns for board seat touting independence
Melco drops as Morgan Stanley lowers to ‘hold’ on Macau gaming outlook
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elco Crown Entertainment Ltd. fell for the first time in three days in New York as Morgan Stanley cut the Macau casino operator to ‘hold’, saying revenue will probably keep dropping in the gaming enclave. The American depositary receipts fell 1.7 per cent to US$21.03. Shenzhen-based iDreamsky
Technology Co., a mobile-game publishing platform, plunged 33 per cent, the most since it debuted in August, to US$7.22. The Bloomberg China-US Equity Index rose 0.2 per cent to 109.13. Gambling in Macau has slumped as high rollers, who account for about two-thirds of revenue, have been dissuaded from playing there amid
concerns President Xi Jinping’s antigraft campaign will attract scrutiny and after the government tightened visa rules. Chinese consumers also cut spending as the economy expands at the slowest pace in 24 years. Morgan Stanley reduced Melco Crown from the equivalent of ‘buy’, projecting a 25 per cent drop in gaming sales in Macau this year. “The primary drivers have been the government crackdown and tighter credit,” Matthew Jacob, a director at ITG Investment Research in New York, said by phone. “Trends aren’t getting any better. The rhetoric we have seen is that the government will get even more strict.” Visitor arrivals in Macau, the only place in China where casino gambling is legal, fell 1.5 per cent in January, according to data released by the Macau Statistics and Census Service.
Smoking Ban Traffic into Macau may dwindle further as the government said in January it intends to impose a full smoking ban on all areas of casinos. A VIP-room smoking ban this year would further weaken gaming profits in Macau, Jacob said. Private high-roller rooms are currently exempted from a smoking ban already implemented in other casino areas. Melco Crown, controlled by Lawrence Ho and Australian billionaire James Packer, has declined 17 per cent this year in New York, compared with a 0.1 per cent drop in the Bloomberg index of mostactively traded Chinese companies in the U.S.
Philippine billionaire Razon to buy Korean island in casino push Asian casino operators including Bloomberry are capitalising on a downturn in the gambling industry of Macau as China’s corruption crackdown scares many away from the world’s biggest gambling hub
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laine Wynn, the third-largest shareholder of Wynn Resorts Ltd., has urged investors to reelect her to the board next month after the company declined to nominate her. “No-one at the company, other than our chairman and CEO, is more knowledgeable about its history, its operations, its customers or its awardwinning staff,” she said in a letter to shareholders released today. Wynn, 72, has been fighting her ex-husband, Wynn Resorts’ Chairman and Chief Executive Officer Steve Wynn, in court over control of her 9.4 per cent stake in the Las Vegasbased casino operator. The pair have an agreement dating back to their 2010 divorce that allows him to vote the shares. The company’s board said last month it wouldn’t seek her re-election at the April 24 annual meeting, citing her lack of independence under Nasdaq rules and the impact of her court fight on the ‘atmosphere in and effectiveness’ of the board. In her letter to investors, Wynn said she was the last woman on the board, “an appalling lack of diversity” for a global consumer-oriented company. Given her large stake, she said her interests and those of investors are aligned. “My unique history with Wynn Resorts has afforded me a strong, independent voice on the board,” she said. “I do not simply toe the party line and instead hold our management team, including our chairman and CEO, accountable to our stockholders.” The company responded by saying 38 per cent of the people in senior leadership roles are women, including General Counsel Kim Sinatra and Linda Chen, president of Wynn’s international marketing.
Board Size
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hilippine billionaire Enrique Razon will buy an island in South Korea to develop a leisure and tourism complex, as he taps the country’s growth in gambling on rising tourist arrivals from China. Bloomberry Resorts Corp., controlled by Razon and operator of a casino in Manila, will buy the 21-hectare (52-acre) Silmi Island through unit Solaire Korea Co., according to a Philippine Stock Exchange filing yesterday. It’s Bloomberry’s second announcement of a property purchase in the country this year after the company signed in January four deals with landowners on Korea’s Muui Island, which is adjacent to Silmi Island. Asian casino operators including Bloomberry are capitalising on a downturn in the gambling industry
of Macau as China’s corruption crackdown scares many away from the world’s biggest gambling hub. Macau casino revenue fell last year for the first time and may decline another 8 per cent this year, according to analysts surveyed by Bloomberg. By contrast, gambling revenue in South Korea and the Philippines will grow 16 per cent and 33 per cent, respectively this year, gaining from the spillover of Chinese gamblers, Deutsche Bank analyst Karen Tang wrote in a note in January. About 6.1 million Mainland travellers went to South Korea last year, an increase of 42 per cent, according to data from the Korea Tourism Organization. Solaire Korea also signed a deal with shareholders of Golden & Luxury Co. to buy as much as 92 per cent of
the company, which owns and operates T.H.E. Hotel & Vegas Casino on Korea’s Jeju Island, Bloomberry said in a separate statement on Tuesday. “We are excited at the prospect of Solaire setting up a base in Korea,” Razon said in the statement. “This is our first venture outside of the Philippines, and the possibilities for expansion in this country are promising.” The company said Silmi Island is adjacent to the 12.2- hectare property that it agreed to buy on Muui Island, and both are within the Incheon Free Economic Zone. Bloomberry will disclose details of the transactions when certain conditions are met, it said. The company said on January 27 that it will develop the land on Muui into a leisure and tourism complex.
Wynn Resorts’ board will shrink to seven members, according to a regulatory filing Monday. The company said it intends to search for new independent director candidates that will increase the board size and reflect a diversity of backgrounds. Elaine Wynn has never had an operating role in the company with responsibility for lines of business or corporate functions, Wynn Resorts said. If she were to regain voting control of her shares, it could trigger a change of control provision that could force the company to make an offer to repurchase debt at a premium, according to Wynn Resorts. ‘Ms. Wynn has placed her individual interests ahead of her duties as a director,’ the company said in the filing.
Bloomberg
Bloomberg
8 | Business Daily
March 18, 2015
Greater China
Major U.S. allies to join China-backed bank France, Germany and Italy have agreed to follow Britain’s lead and join the Asian Infrastructure Investment Bank
Asian Development Bank, the top rival to China’s AIIB, is headed by Japan and United States, and based in Philippines
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senior U.S. diplomat said it was up to individual countries to decide on joining a new China-led international development bank, as media reports said a growing number of close U.S. allies were ignoring Washington’s pressure to stay out of the institution. France, Germany and Italy have agreed to follow Britain’s lead and join the Asian Infrastructure Investment Bank (AIIB), a major setback for Washington, the Financial Times reported. In China, the state-owned Xinhua news agency said South Korea, Switzerland and Luxembourg were also considering joining. The Financial Times, quoting
in Asia in transportation, energy, telecommunications and other infrastructure. It was seen as a rival to the Western-dominated World Bank and the Asian Development Bank. China said earlier this year a total of 26 countries had been included as founder members, mostly from Asia and the Middle East. It plans to finalise the articles of agreement by the end of the year. Japan, Australia and South Korea remain notable absentees in the region, though Australian Prime Minister Tony Abbott said at the weekend he would make a final decision on AIIB membership soon. South Korea has said it is still in discussions with China and other countries about its possible participation. Japan, China’s main regional rival, has the biggest shareholding in the Asian Development Bank (ADB) along with the United States and the Manila-based bank is headed by a Japanese, by convention. Japan is unlikely to join the Chinabacked bank, but the head of the ADB, Takehiko Nakao, told the Nikkei Asian Review that the two institutions were in discussions and could cooperate. “We’ve begun sharing our experience and know-how,” Nakao was quoted as saying. “Once the AIIB has actually been established, it’s conceivable that we would cooperate,” he said. China has said nations could join as founder-members of the AIIB until March 31, and that Japan was included in the invitation. Reuters
European officials, said the decision by the four countries to become members of the AIIB was a blow for Washington, which has questioned if the new bank will have high standards of governance and environmental and social safeguards. The bank is also seen as contributing to the spread of China’s “soft power” in the region, possibly at the expense of the United States. Yesterday, Washington’s top diplomat for east Asia signalled that the concerns about the AIIB remained, but the decision on whether to join was up to individual nations. “Our messaging to the Chinese consistently has been to welcome
investment in infrastructure but to seek unmistakable evidence that this bank...takes as its starting point the high watermark of what other multilateral development banks have done in terms of governance,” U.S. Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel said in Seoul. “Every government can make its own decision about whether the way to achieve that goal is by joining before the articles of agreement are clarified or by waiting to see what the evidence looks like as the bank starts to operate,” he told reporters. The AIIB was launched in Beijing last year to spur investment
Once the AIIB has actually been established, it’s conceivable that we would cooperate Takehiko Nakao head of the Asian Development Bank
Brokerages allowed expanding wealth management business Currently, brokerages and securities investment advisers may only provide consulting services
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China is planning to open up the brokerage industry to non-traditional players
hina plans to allow brokerages and securities investment advisers to expand their wealth management business, three sources with direct knowledge of the matter said yesterday. The move is the latest in a series of steps taken to liberalise the country’s finance sector. Under the new rules drafted by the Securities Association of China, qualified consultants may step into the shoes of investors and invest or trade in shares, funds or futures, among other things, on their behalf, they said.
The sources declined to be identified because they are not allowed to speak to the media. Currently, brokerages and securities investment advisers may only provide consulting services, but only investors can make the decision to buy or sell assets. In order to reduce risk, the proposed rules include certain conditions to trade such as the need for an appraisal of investor appetite for risk and the requirement to match that with appropriate asset allocation, the sources said. The rules also call for good risk disclosure, good
account security management to prevent the transfer of assets, while prohibiting misrepresentative marketing, they said. A spokesman at the Securities Association of China confirmed that draft rules had been sent to brokerages and securities investment advisers, but declined to provide further details. China is planning to open up the brokerage industry to non-traditional players, as securities firms profits have soared off a bull run on mainland bourses. Reuters
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March 18, 2015
Greater China Shanghai to try QDII2 this year Shanghai hopes to allow individuals to invest in overseas markets this year through a trial scheme to be launched in its free trade zone, a city government website said. The new Qualified Domestic Individual Investor programme, or QDII2, is part of a package of 51 measures jointly proposed by the municipal government, the central bank and government regulators which would promote capital account yuan convertibility and international use of the yuan. The long-expected QDII2 promises to give Chinese individuals greater options to diversify investments.
U.S. Treasuries holdings cut China’s holdings of U.S. government bonds fell for the fifth consecutive month in January, showed data released by the U.S. Treasury Department. China, the largest foreign holder of the Treasuries, cut its holdings by US$5.2 billion to 1.2391 trillion dollars in January. Japan, the second largest holder, raised its holdings of U.S. Treasury bonds by US$7.7 billion to 1.2386 trillion dollars. Japan last surpassed China as top holder of the U.S. Treasuries in 2008. China’s capital account deficit widened sharply in the last quarter of 2014 to 91.2 billion dollars, compared with the third quarter’s 9 billion dollars.
Drought, flood threaten granary China’s largest grain producer, Heilongjiang province, is facing dual drought and flood challenges during this year’s spring harvest, according to experts. Ten counties and cities in the province’s west are suffering a lack of rain, while 29 others in the east and north are threatened by flood, meteorology experts said at a consultation meeting on flood control and drought relief held by the provincial government. Experts predicted the spring drought in the west may become the worst for the region in the past five years.
China calls Sri Lanka to protect investors China yesterday urged Sri Lanka to protect the interests of Chinese investors and promote bilateral economic ties following the suspension of a Chinafunded port project in Colombo. “We hope the Sri Lankan government will resolve the issue and protect the legitimate interests of Chinese investors according to law for the healthy development of economic and trade ties,” said Ministry of Commerce spokesperson Shen Danyang.
HK chief calls for forbearance Hong Kong Chief Executive Leung Chunying yesterday called for patience with the growing number of tourists coming from the Chinese mainland. Speaking ahead of an Executive Council meeting yesterday morning, Leung said the rising number of tourists has added pressure to certain districts. However, Leung stressed that Hong Kong is a peaceful society where the law is upheld and no one would like to see the commotions happened in the past few weeks in the New Territories. This will not do any good to the society’s image and economy, he added.
New Year makes FDI growth slower
Outbound investment for January and February combined rose 51 percent
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oreign direct investment (FDI) in China grew 0.9 percent yearon-year in February, slowing sharply from January’s surge, but analysts caution that seasonality may explain the swings even as a weakening economy continues to dent investor confidence. The investment figures add to mostly weak February data, which has raised expectations of further policy steps from Beijing to spur growth. “We expect FDI to maintain slow growth this year, probably similar to last year,” said Zhao Hao, China economist at ANZ in Shanghai. “China’s manufacturing sector faces overcapacity and foreign investment into some other sectors is subject to high barriers.” FDI into China grew at its strongest pace in nearly four years in January, surging 29.4 percent from a year earlier to US$13.9 billion. Analysts, however, caution not to read too much into the weak February FDI numbers as seasonality could cause swings. China’s Lunar New Year holiday, which causes strong seasonal distortions, began on January 31 last year but started on February
874 %
FDI inflows from Saudi Arabia
19 this year. For January and February combined, inbound FDI rose 17.0 percent from a year earlier, to US$22.5 billion, the Commerce Ministry said yesterday. Exceptionally strong rises in FDI inflows in the first two months of the year, including a nearly 874-percent jump for Saudi Arabia and a 367-percent gain for France, were due to one-off deals, commerce ministry spokesman Shen Danyang said. Investment from the United States fell 31.8 percent from a year earlier, while that from Japan slumped 15.9 percent. China’s pledge to shift away from manufacturing and heavy industry and find new growth drivers in services and consumption was evident in the inbound investment flows: In the first two months of the year FDI into the service sector shot up 30 percent,
while investment into manufacturing grew only 7.1 percent. FDI in China rose just 1.7 percent in 2014, the slackest pace since 2012. The weak performance underscored a cooling economy which is spurring more Chinese firms to plough money into assets overseas in a trend that is soon set to overtake inbound investment. Indeed, China’s non-financial outbound direct investment surged 68 percent in February from a year ago, the ministry said. Outbound investment for January and February combined rose 51 percent to US$17.4 billion. The government has been encouraging Chinese firms to invest abroad to help them become more competitive internationally, utilise their surplus capacity, and help slow down the rapid build-up of foreign exchange reserves. Reuters
Huatai files for HK stock offer Huatai said it plans to use part of the proceeds to support its trading, asset management and private equity businesses
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uatai Securities Co Ltd , China’s largest stock brokerage, filed yesterday for a Hong Kong share offering, which a person with knowledge of the matter said could raise more than US$2 billion. The state-owned firm hired its unit, Huatai Financial Holdings (Hong Kong) Ltd, JPMorgan and UBS as sponsors of the share offering, according to the filing, which did not disclose the size or timing of the deal. Thomson Reuters publication IFR had previously reported the deal could be as large as US$2 billion, but the source said it could be even larger due to the recent gains in financial services stocks and soaring trading volumes. Stock trading volumes rose to an all time in China last year as local investors flocked to equities after the central bank’s surprise interest rate cut in November. Volumes have also been boosted by the Stock Connect scheme, which opened the same month, allowing direct trading of Hong Kong and Shanghai stocks on each other’s bourses. The Hang Seng China H-Financials index has rallied more than 42 percent in the past year.
Hong Kong Stock Exchange facilities
Huatai will join a group of Chinese banks, brokerages and insurers planning to raise at least US$30 billion in new funds through equity offerings in the next few months in Hong Kong, making 2015 the busiest year for the sector since 2010. Huatai said it plans to use part of the proceeds to support its trading, asset management and private equity businesses as well as increase its lending to clients, the filing said. The Nanjing-based company,
controlled by the Jiangsu Province government, ranked first in brokerage trading volumes of stocks and funds in China in 2014, Huatai said in the filing, citing data from research firm Wind Info. It was the fifth-largest securities firm in China by net assets. Huatai posted a 4.49 billion yuan (US$718 million) net profit in 2014, double the previous year, as revenue grew to 15.7 billion yuan from 8.92 billion yuan over the same period. Reuters
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Greater China
Anti-corruption agents knock again on PetroChina’s door
The anti-graft drive championed by President Xi Jinping has snared more than a dozen senior officials at CNPC and PetroChina since August 2013
Aibing Guo
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nti-corruption agents have paid another visit to the executive suite at China National Petroleum Corp., the nation’s top oil and gas producer. The official being investigated this time is Liao Yongyuan, vice chairman at listed unit PetroChina Co. Liao is “currently under investigation by the competent authorities for suspected severe violation of relevant discipline and laws,” PetroChina said in a Hong Kong stock exchange filing. No further details were given. The investigation hasn’t affected operations and production, the filing said. Liao is the highest-ranking executive to be investigated since former Chairman Jiang Jiemin was pulled in in September 2013. Jiang was expelled from the party last year and is awaiting trial. “It shows in the near term PetroChina is still under pressure from corruption investigations and clearly the house-cleaning campaign may not end any time soon,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein. “It’s a positive development for PetroChina in the long term as
the campaign can help build a better management team that PetroChina definitely needs to turn the corner.”
Big targets China has identified 26 state-owned enterprises as targets for graft inspections in 2015, after similar probes last year found corruption and abuse of power. CNPC, China National Offshore Oil Corp., the country’s biggest offshore oil and gas explorer, and State Grid Corp. of China are all on the list, according to a statement released last month. China’s anti-corruption office, known as the Central Commission for Discipline Inspection or CCDI, said in a statement on Monday that it was investigating Liao. The CCDI, doesn’t have formal power to arrest or press charges, but in practice is among the most powerful and feared organizations. It’s able to detain indefinitely and investigate any one of China’s roughly 87 million Communist Party members -- effectively every government official or executive at the state- owned enterprises that dominate China’s economy in key
Liao is the highest-ranking executive to be investigated since former Chairman Jiang Jiemin (pictured) was pulled in in September 2013
sectors such as finance, energy and transportation.
‘Actively cooperate’ President Xi unleashed the CCDI as he warned that corruption was a threat to the ruling Communist Party’s survival. His unprecedented anti-graft campaign has snared about 100,000
officials at various levels in the past two years. CNPC “firmly supports” the central government’s decision to investigate Liao and will ’’actively cooperate’’ with the probe, China Petroleum Daily, CNPC’s official newspaper, reported yesterday on its front page. Liao spent a long period of his CNPC career in China’s
northwest, especially in Xinjiang in the 1990s, according to news website Caixin.com. He was named general manager of the Tarim oilfield in Xinjiang in 1999, and promoted to vice-president of PetroChina in 2005, according to his resume, posted on CNPC’s website. He was born in 1962. Bloomberg News
Billionaire Guo considering Cushman & Wakefield bid Guo’s Fosun and partners have announced US$21.1 billion of acquisitions over the past year Vinicy Chan and Dan Liefgreen
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hinese billionaire Guo Guangchang’s Fosun International Ltd. is weighing a bid for commercial property broker Cushman & Wakefield Inc., people with knowledge of the matter said. The Shanghai-based investment firm is among several companies that have expressed interest in Cushman, whose owners are seeking about US$2 billion, according to the people. The process is at an early stage and any deal would be several months away, one of the people said, asking not to be identified as the information is private. Cushman, the largest closely-held provider of commercial property services, offers a footprint in 60 countries employing about 16,000, according to its website. The New York-based firm, majority owned by the Agnelli family’s Italian holding company Exor SpA, hired Goldman Sachs Group Inc. and Morgan Stanley to sell the company and prefers a
buyer that isn’t a direct competitor, people with knowledge of the plan said last month. Fosun, which has holdings as varied as a Chinese drug maker and a stake in Italian suit maker Raffaele Caruso SpA, has been acquiring overseas property as it seeks to boost returns from its insurance operations. Last year it agreed to buy office buildings in Tokyo and Sydney, including Citigroup Centre in the Japanese capital, after purchasing New York’s One Chase Manhattan Plaza for US$750 million in 2013. Representatives for Fosun, Exor and Cushman declined to comment.
Club Med An acquisition of Cushman would bring Fosun industry expertise that could help the Chinese company manage its global real-estate investments and source new deals, one of the people said. Chinese
Cushman is the largest closelyheld provider of commercial property services offering a footprint in 60 countries
buyers spent US$39 billion on global real estate in the six years ended in 2014, up from US$92 million in 2008, according to Real Capital Analytics Inc. The property broker’s net income excluding some items rose 33 percent last year to US$61.6 million. Sales
rose 14 percent to US$2.85 billion, driven by a 25 percent increase in fee and service revenue from the AsiaPacific region. Fosun and partners have announced US$21.1 billion of acquisitions over the past year, including the takeover of French resort operator Club Mediterranee SA and the purchase of a minority stake in U.K. tour operator Thomas Cook Group, data compiled by Bloomberg show. In May, it bought Tokyo-based real estate management company Idera Capital Management Ltd. from Japanese private equity firm Unison Capital for an undisclosed sum. Cushman & Wakefield, founded in 1917, competes with publicly-traded CBRE Group Inc. and Jones Lang LaSalle Inc., as well as Wells Fargo & Co. unit Eastdil Secured LLC. Guo has a net worth of US$5.4 billion, according to the Bloomberg Billionaires Index. Bloomberg New
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Asia
Bank of Japan maintains aggressive stimulus Private consumption remains soft as households continue to curb spending Leika Kihara and Stanley White
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he Bank of Japan maintained its massive stimulus programme yesterday and signalled its conviction that a steady economic recovery will help achieve its ambitious price target without immediate, additional monetary easing. The central bank, however, offered a slightly more downbeat view on the price outlook, though it stressed the slowdown in inflation was due to temporary declines in oil prices. As widely expected, the BOJ maintained its stimulus programme that pledges to print money at an annual pace of 80 trillion yen (US$659 billion). “Japan’s economy is expected to continue recovering moderately as a trend,” the BOJ said in a statement issued after the decision. BOJ policymakers have sent a concerted signal to investors that while they expect inflation to grind to a halt in coming months, they see no need to respond unless the price weakness hits inflation expectations. “Annual consumer inflation is seen moving around zero percent for the time being on declines in energy prices,” the BOJ said. That was a slightly less optimistic view than last month, when it said inflation will “slow for the time being.” A slump in oil prices has slowed annual core consumer inflation to
0.2 percent in January, well below the BOJ’s 2 percent target, keeping alive expectations the central bank will top up its already aggressive asset-buying programme this year. “For the time being, the BOJ can continue to argue that the slowdown in inflation is due to supply-side problems in the oil market. Given that Japanese stocks are doing well, there’s no need to ease policy now,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management. “However, the BOJ will probably have to push back its two-year
KEY POINTS BOJ offers slightly downbeat view on inflation BOJ says expects core CPI to hover around zero pct Sticks to forecast of moderate economic recovery
timeframe (for hitting its price target) when it updates its forecasts in October, which will raise questions about monetary easing.” At his post-meeting briefing, Governor Haruhiko Kuroda is likely to reiterate that continued improvements in the economy will nudge companies into raising wages and capital expenditure, helping Japan hit its 2 percent inflation target in the year beginning in April. Japan’s economy is emerging from last year’s recession thanks to a much-awaited rebound in exports and factory output. But private consumption remains soft as households continue to curb spending after being hit by last year’s tax hike and the rising cost of living from a weak yen. On Wednesday, Japan’s biggest firms will announce wage plans following annual talks with labour unions, the results of which will be key to the success of premier Shinzo Abe’s push to drive Japan sustainably out of deflation. The BOJ has stood pat on policy since expanding its massive stimulus programme in October last year to prevent slumping oil prices, and a subsequent slowdown in inflation, from delaying a sustained end to deflation. Reuters
Bank of Japan headquarters
Australian regulator cracks down on micro loan industry Since 2010, ASIC has forced close to A$2 million in refunds to more than 10,000 consumers
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arkets regulator has warned the country’s micro-loans industry to improve their lending practices or face action after it found that some lenders were engaging in risky conduct. Australian Securities & Investment Commission said in a statement yesterday that a review of payday loans had found some lenders breaching lending obligations, and systemic weaknesses in documentation and record keeping. A payday loan is typically unsecured with a credit limit of A$2,000 (US$1,529) or less, has a term of 16 days to one year and is provided by non-bank financial institutions. “ASIC will use its powers to reduce the risk of payday lenders providing unsuitable loans and to reduce the risk that financially vulnerable consumers get caught in a debt spiral, where new loans are effectively used to pay back old loans,” ASIC Deputy Chairman Peter Kell said in the statement. Since 2010, ASIC has forced close to A$2 million in refunds to more than 10,000 consumers who were overcharged when taking out a payday loan. Similar penalties could be imposed for breaches of lending obligations. The regulator said its review also discovered compliance risks around tests for loan suitability, which must be considered when a consumer has multiple payday loans or is already in default. In addition, ASIC found lenders set longer tenure loans to charge higher fees. Payday loans written for the year to June 2014 are estimated to be around A$400 million, up 125 percent since 2008. They represent about 0.4 percent of the total consumer credit market in Australia. In comparison, the payday lending industry in the United Kingdom is estimated to be writing 2.5 billion pounds worth of loans, making up about 1.2 percent of the total consumer credit market, ASIC said. ASCI’s review covered 288 consumer files for 13 payday lenders who account for over three quarters of the industry. Reuters
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Asia Rakuten begins accepting Bitcoin Japanese e-commerce firm Rakuten Inc has begun accepting payments in virtual currency Bitcoin on its U.S. online shopping site, a spokeswoman said yesterday. The move means Rakuten, seeking to expand overseas, is joining a growing number of online retail leaders, like Amazon.com Inc and travel agency Expedia Inc, in accepting the currency. Rakuten sites in Germany and Austria will follow suit, the company said in a statement announcing the U.S. launch. The spokeswoman said no decision had been taken on whether Rakuten plans to accept Bitcoin on its Japanese e-commerce site.
NZ mulls rental car code Visitors to New Zealand might be questioned on their driving experience before they can get behind the wheel of a rental car in future, according to proposals released yesterday. A Code of Best Practice regarding foreign travellers has been agreed by the leaders of 25 of the country’s rental vehicle firms in response to a series of fatal crashes and other incidents on New Zealand’s scenic roads. The Tourism Industry Association New Zealand (TIA) and the Rental Vehicle Association New Zealand, which organized the agreement, said the code would be developed as a matter of urgency.
Singapore exports hit by China slowdown Shipments to the European Union eased 2.8 percent after an 11.9 percent expansion in the previous month Jongwoo Cheon
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ingapore’s exports in February fell more than expected as momentum in the global economy remained modest and as a slowdown in China took a heavy toll, adding to expectations that the central bank may ease monetary policy next month. Non-oil domestic exports (NODX) slid 9.7 percent in February from a year earlier, trade agency International Enterprise Singapore said yesterday in a statement. That compared with a 0.4 percent contraction forecast in a Reuters poll, and 4.3 percent growth in January. The disappointing performance in February was partially due to the Lunar New Year holidays, which fell in January in 2014. On a month-on-month seasonally adjusted basis, NODX declined 9.4 percent in February, again missing a forecast of 0.7 percent slide. “This is in line with other disappointing data outcomes and continues to suggest Singapore is running at below trend growth,” said Jonathan Cavenagh, senior FX strategist with Westpac in Singapore.
That raises the risk of further monetary easing by the central bank in April, Cavenagh said. A Reuters poll taken earlier this month showed the Monetary Authority of Singapore is expected to ease policy at its semi-annual meeting in April to tackle a slowing economy and inflation. The Singapore dollar pulled back
after the data, giving up all of its earlier gains. Non-oil domestic exports to China fell 22.7 percent in February from a year earlier, compared to 4.5 percent growth in January. Shipments to China were hit by falls in petrochemicals, primary chemicals and disk media products, the trade agency said. Imports of the world’s second-
Australian consumer confidence rises Consumer confidence rose this week in response to a fall in the unemployment rate, according to a new report released yesterday. The ANZ-Roy Morgan weekly barometer of consumer sentiment rose by half a percentage point to 110.8 points, however, those surveyed had concerns for the year ahead. “While rising house prices, relatively low petrol prices and low interest rates may be helping consumers feel more positive about their own finances, households remain concerned with the economic outlook in an environment of low wage growth, government budgetary strains and a soft labour market,” ANZ chief economist Warren Hogan said.
Japan wage hikes not enough Companies tend to be cautious about spending plans at the beginning of a new fiscal year, revising up as the year progresses
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ost Japanese firms plan to raise salaries by at least the same degree as last year, but even two years of wage hikes will not be enough to compensate workers
for increases in the cost of living, a Reuters poll showed. The Reuters Corporate Survey showed 55 percent of firms plan to lift wages by the same extent as last
Aquino’s approval at lowest level Philippine President Benigno S. Aquino III has received the lowest trust and approval ratings since he took office in 2010, according to Philippine survey and ratings pollster Pulse Asia yesterday. Aquino’s approval ratings plunged from 59 percent last November to 38 percent this March, a month after the botched Mamasapano operation which left 44 Elite Philippine Special Action Force (SAF) commandos and 18 Moro Islamic Liberation Front (MILF) Islamist rebels dead.
Toyota’s factory
year. Another 14 percent say they are set to boost wages more than they did last year. The increases will not be enough to offset a 3 percentage point increase in the national sales tax that went into effect last. When asked how much they expect wages to have increased since the tax hike if plans for this year were included, three quarters of firms expected rises of between zero and 2 percent. Another 17 percent said they expected rises of 2-3 percent. The results underscore the divide between some of Japan’s strongest firms like Toyota which are expected to agree to significant wage increases and the rest of the corporate sector. The poll of 483 companies was conducted for Reuters by Nikkei Research between March 3 and March 16. Respondents reply anonymously to the survey and around 230 firms
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Luis Gonçalves, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Brands & Trends Raquel Dias Creative Director José Manuel Cardoso Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Asia KEY POINTS Feb exports -9.7 pct y/y vs -0.4 pct forecast Feb exports -9.4 pct m/m sadj vs -0.7 pct forecast NODX to China down 23 pct y/y; electronics exports down 13 pct
largest economy fell more than 20 percent in the first two months of the year, indicating persistent weakness in the Asian giant - Singapore’s top export market - is hurting the city state. Shipments to the European Union eased 2.8 percent after an 11.9 percent expansion in the previous month. Sales to the United States gained 7.5 percent, from a 3.9 percent increase in January. Exports of electronics in February fell 12.5 percent from a year earlier, after increasing 5.0 percent in January. The sector is a key driver of Singapore exports, but it has been lagging regional competitors such as South Korea and Taiwan due to stiff competition and a lack of popular high-tech products including smartphones. Singapore’s manufacturing activity contracted for the third straight month in February with the key electronics index shrinking for the first time in more than two years. Reuters
Remittances make life tough for Philippine exporters Barclays reckons it is the most overvalued of the world’s widely traded currencies
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early US$40 billion a year piles into the Philippines, thanks to work its citizens do abroad or for outsourcing firms, but the windfall also brings pain through an overvalued currency and the risk of catching the “Dutch disease”. Economists gave that name to an ailment which hit the Netherlands long ago after it discovered large gas reserves, which spurred big cash inflows. These made the guilder strengthen so much that Dutch-made products became uncompetitive, and the country’s manufacturing exports plummeted. In the Philippines, inflows from outsourcing contracts and millions of citizens working overseas lift incomes yet also have made the peso appreciate sharply, to the point where Barclays reckons it is the most overvalued of the world’s widely traded currencies. A strong currency could derail expansion for Philippine manufacturers. The sector, disappointing for decades, grew 8.1 percent last year, and the Philippines despite poor infrastructure and rolling power-cuts - seems well placed to grab some production leaving China because of rising costs. But too strong a currency means
“we will be left behind,” says Sergio Ortiz-Luis, who heads the Philippine Exporters’ Confederation. JP Morgan says that from June to February, the peso’s trade-weighted exchange rate appreciated about 15 percent after accounting for inflation. Since mid-2014, the peso has depreciated about 1.4 percent against the rallying dollar, while the rupiah has tumbled more than 10 percent. The peso’s relative strength worries Obra Cebuana Inc., which makes fancy furniture in Cebu from bamboo, sea-grasses and other natural materials - and which competes with Indonesian firms. Edwin Rivera, general manager, frets that the company’s export business, which climbed to US$500,000 a year, is imperilled. “Definitely it will curtail growth if the peso strengthens further,” he said, adding that some of the 50 employees might be laid off.
Make or break Lorenza Boquiren, marketing director at Castilex Industrial Corp., another Cebu furniture maker, says the peso is “make or break” for it. “We are at a losing end” as some
Southeast Asian competitors have weaker exchange rates that boost exports, she said. Analyst Aditya Srinath at JP Morgan is worried the Philippines is vulnerable to Dutch disease. Huge dollar remittances have an impact similar to the windfall from finding a natural resource, he said, adding that “the strong peso would deter exportorientated manufacturing” and could make imported goods cheaper than locally produced ones. To be sure, a strong currency isn’t altogether bad. Steady, hefty inflows mean the Philippines has left behind its balance of payments crises of the 1980s. There are chronic trade deficits, but the current account has been in surplus every year for more than a decade. Indeed, Manila has largely avoided the volatility and disruption seen in many emerging markets ahead of higher U.S. interest rates. The Philippine central bank, which hiked its policy rate in July and September, is not expected to join multiple Asian peers in cutting the benchmark, because the country is in a sweet spot with low inflation and strong growth. Reuters
Singapore Air in talks over stake in Jeju Air
KEY POINTS Japan businesses under pressure from PM to raise wages Most plan to raise salaries by at least same degree as last year Japan’s biggest firms to announce wage plans today answered questions on wages. Last year, the biggest of Japan’s big firms agreed to an average wage hike of 2.19 percent - a 15-year high. Around 0.4 percentage point of that was an increase in closely watched base salaries for all employees, with the rest given over to pay raises that workers get depending on their length of service. This year, Toyota is expected to agree to a 4,000 yen (US$33) base salary hike, equivalent to a rise of 1.1 percent. Including automatic seniority-based rises, salaries for Toyota employees would climb 3.2 percent. But the survey showed that this year 39 percent of firms do not plan to raise base pay at all. Another 39 percent are planning base pay increases of under 1 percent while 19 percent are planning increases of between 1 percent and 2 percent. The survey also found that 55 percent of Japanese companies plan to keep capital spending flat in the year from April. Around a quarter expect to boost capital spending to some extent while 9 percent say they plan big increases. Reuters
Jeju Air is seeking capital to help expand its routes to China and other northeast Asian destinations
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ingapore Airlines Ltd is in talks to buy a stake in South Korea’s largest low-cost carrier Jeju Air Co Ltd, a deal that would be the flag carrier’s first foray into North Asia where rising demand from Chinese passengers is fuelling growth. Singapore Airlines (SIA) and Jeju Air said yesterday they were in talks about a possible investment, but that nothing had been decided. A deal with Jeju would fit SIA’s push to diversify away from its mainstay full-service business and increase exposure to high growth regions, after two consecutive years of falling profits amid high oil prices and intense competition. Jeju aims to roughly triple sales to 1.5 trillion won (US$1.3 billion) by 2020, driven by demand from Northeast Asia including China. The airline is currently valued at about 700 billion won in over-the countertrading and plans to launch an initial public offering in the fourth quarter. Singapore Airlines has been broadsided by competition from low-cost carriers in Southeast Asia as well as full-service Asian and Gulf airlines such as Hong Kong’s Cathay Pacific Airways Ltd, Emirates and Qatar Airways. While Southeast Asia’s budget travel market is highly competitive, industry experts say the potential for low-cost carriers in northeast Asia is vast, as full service carriers still dominate in China, Japan and
South Korea. Since Goh Choon Phong became SIA chief executive in 2011, it launched Singapore-based long-haul low-cost carrier Scoot, which then set up an affiliate in Thailand, as well as Vistara, an Indian full-service airline with conglomerate Tata Sons. SIA also increased its stake in Australian full-service carrier Virgin Australia Holdings and troubled shorthaul low-cost carrier Tiger Airways, a key defence against Southeast Asian rivals such as AirAsia and Qantas Airways Ltd affiliate Jetstar Asia. Singapore Airlines, Jeju Air and Jeju parent Aekyung Group have been in talks since late last year over a possible stake sale, a Jeju Air spokesman said. Reuters
KEY POINTS Details of the possible sale not decided-Jeju spokesman Jeju’s OTC market cap around US$619 mln yesterday Jeju plans Q4 IPO to be first listed Korean LCC
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International Turkey holds the G20’s presidency this year (Istanbul skyline pictured)
Dementia research gets US$100 mln The world’s first venture capital fund dedicated to finding new ways to prevent and treat dementia has raised more than US$100 million with the backing of the British government and several of the world’s leading drug makers. The global Dementia Discovery Fund is unique in focusing on a single difficult to treat disorder and in bringing together industry and government. Drug companies involved include GlaxoSmithKline, Johnson & Johnson, Eli Lilly, Pfizer and Biogen Idec. The new fund is the first to focus solely on dementia.
Removing U.S. oil ban would create jobs
G20 sets sights on sukuk for infrastructure financing The Islamic Development Bank said it would coordinate with Turkey, Indonesia and Saudi Arabia, another G20 member, to give greater prominence to Islamic finance during the G20’s discussions Bernardo Vizcaino
Lifting a 40-year-old U.S. ban on crude exports would create a wide range of jobs in the oil drilling supply chain and broader economy even in states that produce little or no oil, according to a report released yesterday. Some 394,000 to 859,000 U.S. jobs could be created annually from 2016 to 2030 by lifting the ban, according to the IHS report, titled: “Unleashing the Supply Chain: Assessing the Economic Impact of a U.S. crude oil free trade policy.” Only 10 percent of the jobs would be created in actual oil production.
Venezuela to keep servicing debt Venezuela said it has paid off its 1 billion euro Global 2015 bond, the first foreign debt maturity in a year of heavy bond payments that have stretched the OPEC nation’s coffers amid a period of low oil prices. President Nicolas Maduro vowed the South American nation would continue to service its debt, and slammed default concerns that have pushed yields to the second highest of any emerging market nation. Venezuela also paid 70 million in interest on the bond on Monday, Finance Minister Rodolfo Marco said earlier on Twitter.
Apple in talks to launch online TV Apple Inc’s much-hinted-at TV service may soon become a reality as the iPhone maker is in talks with programmers to offer a slimmed-down bundle of TV networks this fall, the Wall Street Journal reported, citing people familiar with the matter. The service would have about 25 channels, anchored by broadcasters such as ABC, CBS and Fox, and be available across all devices powered by Apple’s iOS operating system, including iPhones, iPads and Apple TV set-top boxes, the newspaper said.
Ukraine receiving Russian gas yesterday Ukraine was receiving Russian gas as usual early yesterday, its transport monopoly said, a week after Russian gas company Gazprom said Kiev would have used up all pre-paid volumes of Russian gas by March 15. Ukraine’s Ukrtransgaz said state energy firm Naftogaz had requested 10 million cubic metres from Russia yesterday.
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he G20 group of major nations has included discussion of Islamic bonds as an infrastructure financing tool in its annual agenda, a move that could potentially spur the use of project-based sukuk. Developing countries spend about US$1 trillion a year on infrastructure and an additional US$1-1.5 trillion will be needed through 2020 in areas such as water, power and transportation projects, according to the World Bank. That need could be filled in part by sukuk, which are gaining prominence beyond the industry’s core markets of the Middle East and southeast Asia; Britain and Hong Kong made debut sukuk issues last year. Several Muslim-majority countries now have important economic policy positions at the G20. Turkey holds the group’s presidency this year, Indonesia co-chairs the G20 investment and infrastructure working group, and Malaysia is a guest representing the ASEAN group of countries. A meeting of G20 ministers and central bank governors last month discussed ways for sukuk to be used more widely as a financing tool, Turkey’s Deputy Prime Minister Ali Babacan told a press briefing in Istanbul. “We also had an extensive
discussion on equity-based financing, asset-based instruments like sukuk,” he added. The G20 has called on regulators to study ways to include sukuk in their monetary policy frameworks and for the International Monetary Fund to include sukuk in an upcoming paper on asset-based financing. “This could be good news for the sukuk market,” said Paris-based Mohamed Damak, global head of Islamic finance at credit rating agency Standard & Poor’s. The asset-backed nature of Islamic finance makes sukuk ideal for infrastructure financing in some ways, but until now the sector has been confined mostly to handling mid-sized deals with shorter tenors. Traditionally, conventional bonds, often designed and marketed by Western banks, have been the default option for infrastructure-related debt deals. The balance sheets of Islamic banks have generally been too small to cope with very large sukuk issues with long tenors. So far, the lion’s share of Islamic infrastructure financing has been handled by the Jeddah-based Islamic Development Bank, a multilateral body which represents 56 Muslim countries. However, a growing and much
Currency swings cost U.S. corporates US$18.66 bln A strong U.S. dollar is hurting multiple sectors, including industrial companies
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oreign exchange swings cost North American corporates US$18.66 billion in revenue in the fourth quarter, according to a report by currency risk management consulting firm FiREapps. Total negative currency impact rose more than four-fold in the fourth quarter from the previous quarter, and was the biggest since the height of the euro crisis, according to the report.
FiREapps analyses currency effects on quarterly earnings of 846 North American companies, a subset of the Fortune 2000 companies that generate at least 15 percent of international revenue in two or more currencies. Earnings per share of North American corporates were hurt by US$0.06 on an average, nearly double the 2013-2014 average and the highest since FiREapps began measuring the
deeper pool of capital is in the hand of private-sector Islamic investors, and the IDB is trying along with the G20 to help unlock such capital. Last week, the IDB said it would coordinate with Turkey, Indonesia and Saudi Arabia, another G20 member, to give greater prominence to Islamic finance during the G20’s discussions. The IDB is also drafting a cooperation agreement with the IMF, aiming to provide technical assistance to countries that want to develop Islamic financial services. Sukuk may be discussed in the context of the new China-backed Asian Infrastructure Investment Bank (AIIB). “We are in the middle of proposing it for the G20. For AIIB, although the discussion has not reached that yet, basically we will push for it,” said Andin Hadiyanto, an Indonesian assistant finance minister. The AIIB has yet to start operating, but it is designed to cater to Asia’s growing appetite for infrastructure. Besides the three Muslim-majority G20 members and Malaysia, the AIIB counts other Muslim countries such as Kazakhstan, Pakistan, Qatar, Jordan and Oman as founding members. All have issued or have plans to issue sovereign sukuk. Reuters
impact of currency swings. A slew of U.S. multinational companies, from DuPont to Procter & Gamble, have showed that a strong U.S. dollar hurt their earnings, and several blue-chip exporters said the situation will get worse if the greenback holds its strength. The number of companies reporting a negative impact was 6.4 percent higher in the fourth quarter than in the third quarter, according to FiREapps. A strong U.S. dollar is hurting multiple sectors, including industrial companies such as 3M Co, technology companies like Microsoft Corp and Apple, airlines such as American Airlines Group, healthcare companies, including Bristol-Myers Squibb Co and Pfizer, and consumer firms like Procter & Gamble - which all garner a large portion of their sales from outside the United States. Reuters
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Opinion Business
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Leading reports from Asia’s best business newspapers
The messy politics of economic divergence
TAIPEI TIMES The central bank welcomed positive remarks by its Chinese counterpart last week to consider removing the daily yuan conversion limit, as demand for the Chinese currency is flourishing. Taiwan has been seeking the removal of the daily 20,000 yuan (US$3,193) conversion cap, in line with its bid to develop the nation into a regional offshore yuan market after Hong Kong. The special administrative region scrapped the limit in November last year. Yuan deposits in domestic banking units grew 3.46 percent to 266 billion yuan last month.
THE KOREA HERALD The South Korean business community yesterday called for easing the tax audit burden and more deductions for corporate entertainment outlays to better reflect the rise in overall expenses. In a meeting with National Tax Service Commissioner Lim Hwan-soo in Seoul, companies belonging to the Korea Chamber of Commerce and Industry said there is a pressing need for the government to buoy corporate investments and fine-tune the way it conducts audits to not interfere with legitimate business activities. Audits require top management and employees to focus on providing documents to tax officials that divert them from their work.
VIETNAM NEWS Garment exports in January and February posted an 18 per cent year-on-year increase to US$3.4 billion, the Ministry of Industry and Trade (MoIT) said. The surge has made the achievement of this year’s export target of US$28 to 28.4 billion a strong possibility. The United States remained the largest export market for the Vietnamese garments and textiles industry, accounting for 8.4 per cent of the country’s market share. It was followed by Japan and South Korea. This year’s exports to the US market are forecast to reach US$11 billion.
THE TIMES OF INDIA India’s luxury car market has grown eight times in the last seven years from 4,000 units in 2007 to 33,000 units in 2014. But, say top luxury car experts, the number is expected to hit 100,000 units by 2020. Like other high-growth emerging markets such as Brazil, Mexico and Russia, the luxury car market in India too has shown stronger growth than the mass market segment, which has been buffeted by the slowdown in 2012 and 2013. Top luxury brands like Audi and Mercedes Benz have grown at double-digit pace.
Mohamed A. El-Erian
Chairman of President Barack Obama’s Global Development Council and author
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he world is increasingly characterized by divergence – in economic performance, monetary policy, and thus in financial markets. Global divergence has already contributed to stockmarket volatility, unprecedented declines in advanced economies’ government bond yields, and outsize currency movements. And the trend is not abating, placing increasing pressure on already-strained political systems. The world’s systemically important economies can be placed into four categories. The first group includes countries like India and the United States, where economic recovery is broadening, enabling them to overcome financial imbalances. The second group is exemplified by China, which is achieving a soft landing onto a growth path that, while lower than in recent years, remains adequate to support continued progress toward high-income status and financial stability. The third group includes economies – such as Brazil, several eurozone countries, and Japan – that are not growing fast enough, and face downside risks. And, finally, the fourth group consists of economic and financial wildcards like Greece and Russia – countries that could succeed in restoring growth and financial stability, but could just as easily implode, sending shock waves across Europe and beyond. This divergence is as much a political phenomenon as it is an economic and financial one. Overcoming it – and ensuring steady, financially stable global growth – will require responsive national policymaking and multilateral coordination. Unfortunately, today’s rather messy national and international political environments have so far precluded such an approach. Nonetheless, experimental monetary policies in advanced economies – such as the largescale asset purchases initiated this month by the European Central Bank – have slowed the vicious circle of subpar economic performance and muddled politics. But it is far from clear that this will continue, especially given the US Federal Reserve’s gradual exit from such policies, which puts America on a different path from most of the other advanced economies. Moreover, market forces have gained an ever-larger role in reconciling global economic divergence, leading to dramatic shifts in exchange rates. The list of such currency movements – which so far has included the euro’s 25% fall against the dollar, a record low for the Mexican peso, and disorderly depreciations of the Brazilian real and other emerging-economy currencies – is getting longer by the day.
On their own, currency markets will not bring about the growthenhancing global economic rebalancing that is needed
Euro and yen have the QE as a flagship
Even healthy economies like South Korea are keen to weaken their currencies, leaving the US alone in its willingness to tolerate significant currency appreciation. On their own, currency markets will not bring about the growthenhancing global economic rebalancing that is needed. Better policies at the national, regional, and global levels are also essential – and that requires better politics. Too many political leaders around the world remain unable – or unwilling – to fulfil their economicgovernance responsibilities. This is particularly regrettable, given that there is a broad consensus regarding the technical components of the required policy response: structural reforms to revamp growth engines, efforts to rebalance aggregate demand, and the elimination of debt overhangs. (The eurozone must also work to complete the essential underpinnings of its historic integration project.) What is missing is implementation. But governments seem unlikely to
overcome their dysfunction anytime soon. In the US, Congress and the executive branch are locked in a stalemate. Europe’s political systems are being shaken by the rise of populist parties, many of which are winning support with an anti-European platform. In the emerging world, Brazil’s government has faced multiple corruption scandals. And Russia’s leadership remains committed to its disruptive regional adventures, regardless of their devastating impact on its economy. In most, if not all, of these cases, we see examples of a broader phenomenon: what might be called governing by inertia – a “can’t, won’t, and shouldn’t” mentality, to paraphrase the economist Mark Blyth, that blocks effective policymaking. As policy inertia prolongs sluggish growth and impairs job creation, it becomes even more difficult to abandon. Given how hard it is for governments to initiate a shift to a new policymaking mode (that is, to disrupt themselves),
pressure will build from the outside. In a democracy, this tends to occur through the fragmentation of traditional parties and the emergence of non-traditional parties – some offering genuine alternatives, and others relying on fear and prejudice. The global economy is at a critical juncture. Most economists agree on what is needed to avoid another round of lost growth opportunities, inadequate employment, financial instability, and worsening inequality. Central banks and markets cannot achieve an orderly global rebalancing on their own. As difficult as it may be, politicians need to pursue comprehensive policy responses. The longer they delay, the less effective their efforts will be. As bad politics block economic opportunity, public trust in governments will continue to erode – with serious potential consequences for political systems, and the economies they administer, worldwide. Project Syndicate
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Closing Independent firms to audit Chinese state firms overseas PBOC expands banks’ medium-term lending facility China’s top state-assets manager plans to hire independent accounting firms to examine the overseas assets of stateowned enterprises (SOEs) administered by the central government. In a move to address growing concerns about lack of transparency regarding SOEs’ overseas assets, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) will purchase third-party services from accounting firms through a bidding process starting on April 7, it said yesterday. The firms that bid must be established in accordance with Chinese laws and be qualified to provide services to the government, according to a statement posted on the SASAC website.
The Chinese central bank has expanded its mediumterm lending facility (MLF), which is now estimated at a total 450-500 billion yuan (US$72-80 billion), banking sources said. The People’s Bank of China (PBOC) rolled over all of the around 350 billion yuan in MLF that was due to mature yesterday and added more for some banks. The PBOC created the MLF monetary tool, by which it sets aside designated amounts of money of three months in duration for individual banks to withdraw in case they need additional liquidity. The tool is similar to the U.S. Federal Reserve’s discount window.
ICBC boosts Sino-LatAm cooperation The bank has adapted to Argentinian local culture and business environment and is leading the business in several fields ICBC headquarters in Buenos Aires, Argentina
The ability to attract and retain clients is the precondition. We have to learn, to explore during the process
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wo years after opening up in Buenos Aires, the headquarters of the Industrial and Commercial Bank of China (ICBC) Argentina has become an iconic building in the city. Its symbols are also obvious in big department stores, on ATMs on main streets and in over 100 branches around the South American country. In November 2012, ICBC, China’s largest commercial bank by assets, purchased an 80-percent stake in Standard Bank Argentina, in the first merger of a Chinese bank and a Latin American financial institution. “Acquisition is an efficient way to convert financial superiority and management
expertise into market advantages. But the ability to attract and retain clients is the precondition. We have to learn, to explore during the process,” Tian Fenglin, the vice president of ICBC Argentina told Xinhua. Two years after the acquisition, the bank has adapted to local culture and business environment, and is leading the business in Argentina in several fields such as auto loans, asset custody and forward forex transaction. ICBC’s growth in Argentina is a microcosm of the expanded cooperation between China and Latin America from trade to investment and finance, as trade between the two sides
Sony confirms Q3 net profit, annual loss
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increased over 20 times during the past 15 years. ICBC also entered other major Latin American economies, such as China’s free trade partner Peru in 2012, Latin America’s biggest economy Brazil in 2013, and the second largest economy Mexico in 2014, bringing Chinese finance to the local markets. Argentina, Brazil, Peru and Mexico are important steps for ICBC’s globalization, said Jiang Jianqing, president of ICBC, noting that the fast growing economic cooperation between China and Latin American countries brings huge demand of financial service. For example, in Argentina,
Tian Fenglin, vice president, ICBC Argentina
ICBC has agreed to provide US$10 billion of loans to Chinese firms’ projects in the country, ranging from energy and electricity to transportation and telecommunication. “We entered the market through acquisition, and then we coordinate the domestic and overseas financial resources to support the cooperation between the two nations, especially the strategic joint projects,” Tian said. In addition to the rapid growing business, ICBC
Argentina shoulders its social responsibility by sponsoring soccer matches, holding concerts, donating to educational institutions and participating in charity events. Its success has also promoted the image of Chinese companies in the continent. Since 2005, China has provided more than US$119 billion in loan commitments to Latin American countries and firms, according to the latest report released by a Washington-based think tank. Among the enormous sum, US$45.7 billion went to Argentina, Brazil, Peru and Mexico, the report said. China and Latin America’s cooperation stepped into a new phase after the China-CELAC (the Community of Latin American and Caribbean States) forum’s ministerial meeting was held in Beijing in January. It defined the key areas and specific measures for the overall cooperation between the two sides from 2015 to 2019. According to the plans, China will invest at least US$250 billion and the two sides will strive to achieve a trade volume of US$500 billion within a decade, which requires the banking system to work more efficiently to facilitate bilateral cooperation.
Everbright considers wealth-management spinoff
Indonesia holds benchmark rate
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he company yesterday said its net profit for the three months to December more than tripled from a year earlier, but confirmed it was on course to incur an annual loss. The improvement stems mainly from a weak yen, increased sales of smartphones, robust PlayStation console businesses and strong demand for image sensors for cameras, the firm said. This increase was partially offset by a significant decrease in sales in other operations, it said. Sony posted a net profit of 90 billion yen (US$742 million) for the October-December term, the company said in a finalised earnings report. The 90-billion-yen profit was slightly up from the 89 billion yen the group estimated in February, and more than three times bigger than 26.4 billion yen in the same quarter of 2013. Sales grew 6.5 percent from a year earlier to 2.56 trillion yen and operating profit more than doubled to 182.1 billion yen, up from earlier estimated 2.55 trillion yen and 178.3 billion yen.
hina Everbright Bank, the banking unit of the state-owned Everbright Group, is considering spinning off its wealthmanagement business, according to people with direct knowledge of the matter. The Beijing-based bank hasn’t submitted any proposal to the regulator, the people said, asking not to be identified as they aren’t allowed to speak publicly. Everbright Bank’s wealth-management business is worth US$10.1 billion, or about 33 percent of the company’s market capitalization, China International Capital Corp. analysts said. The lender is valued at US$31.9 billion, based on yesterday’s closing price in Shanghai and Hong Kong. The stock jumped 4.3 percent in Shanghai and 5 percent in Hong Kong after CICC analysts led by Jie Huang wrote that Everbright Bank might be among Chinese lenders to lead the way in asset spinoffs. A Beijing-based investor relations official at the lender declined to comment.
AFP
Bloomberg News
Xinhua
entral bank, which last month surprisingly cut its benchmark rate, yesterday held it steady at 7.50 percent, as expected. Bank Indonesia said the level of the rate is consistent with efforts to contain inflation and the current account deficit. At the meeting, it also maintained its overnight deposit facility rate and lending facility rate, at 5.50 percent and 8.00 percent respectively. In February, annual inflation eased to 6.29 percent from a peak in December of 8.36 percent. But the currency of Southeast Asia’s largest economy has been weakening steadily since BI’s last policy meeting. The rupiah recently has been at its weakest since August 1998. It traded at 13,181 per dollar yesterday, unchanged after the announcement. Indonesia’s loan growth in January slowed slightly to 11.5 percent from a year earlier, compared with an annual change of 11.6 percent in December, the central bank said. Reuters