MOP 6.00 Closing editor: Joanne Kuai
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ull up. That’s the basic message from an IFT study. The Institute for Tourism Studies says Macau’s capacity to absorb visitors probably reached saturation point in 2014. Some 90,000 visitors a day descend on the territory. With both visitors and tourists now expressing negative sentiments. Diversifying the source of tourists, staggering visitation throughout the year, and visa controls are primary options. Replacing Golden Week with paid leave, as mulled by the central government, would almost automatically lead to more even distribution, it is mooted Page 2
Year III
Number 758 Friday March 27, 2015
Publisher: Paulo A. Azevedo
Standing room only
Clean air pledge
Proactive Macau Pass Prospering
Clean air. It was the major topic at the 2015 Macau International Environmental Co-operation Forum and Exhibition. This year, the event is themed ‘Green Economy - Solutions for Clean Air’. MSAR CE Chui Sai On pledged to strengthen the control of urban pollution. And increase relevant measures to improve the city’s air quality
Sonia Chan: Evaluation of officials’ performances to be conducted Page 2
China Star’s HK$2.23 billion land deal terminated Page 6 Brought to you by
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It’s not just Macau. VIP gamblers are spending less everywhere. A Morgan Stanley report says junkets are getting better commissions in other Asian markets. While competition from Australia and Korea is diverting high rollers. But the figures are residual. Macau still owns more than 60 pct of the global VIP market Macau Pass has floated several ideas. It aims to enable its smartphone application users to pay for utility bills next month. The stored-value card issuer is also talking with Tradelink to develop platforms for online shopping. And is in negotiations with China’s online shopping giant Alibaba Group. Regarding top-up value functions, “our goal is to collaborate with all the major banks here,” says management
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%Day
China Mengniu Dairy
9.79
Kunlun Energy Co Ltd
2.58
CNOOC Ltd
1.54
Want Want China Hol
1.52
BOC Hong Kong Holdin
1.46
China Life Insurance
-1.07
China Unicom Hong Ko
-1.20
Tencent Holdings Ltd
-1.33
Li & Fung Ltd
-2.00
Lenovo Group Ltd
-2.08
Source: Bloomberg
I SSN 2226-8294
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First Chinese private bank Minshang Bank opened its doors yesterday. Becoming the first private entity in China to play such a role. The business pioneer city of Wenzhou houses HQ and is targeting SMEs
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2 | Business Daily
March 27, 2015
Macau
Residents and visitors reporting negative experiences The Study on Tourism Carrying Capacity of Macau points for the first time in many years to the reluctance of residents and tourists to increase the number of visitors, as the saturation point may have been reached João Santos Filipe
jsfilipe@macaubusinessdaily.com
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he capacity of Macau to receive tourists may have been surpassed last year, according to the Study on Tourism Carrying Capacity of Macau 2013 and 2014 of the Institute for Tourism Studies (IFT). ‘Macau’s capacity to absorb visitors may have reached a saturation point in 2014 because continued tourism growth affects quality of life and travel experience issues such as deteriorating experiences with public transport and perceived crowdedness.’ This was one of the topics that the conclusion of the study brought up for discussion yesterday during a press conference at IFT. ‘Over the years, we have observed that the capacity to receive more tourists has been slowing and it seems that we have reached the saturation point. It seems that both residents and visitors are starting to live negative experiences’, Prof. Leonardo Dioko said of the study results. According to the findings of the research, the estimated optimum visitor carrying capacity for 2013 ranged from 31.96 million to 34.66 million visitors, meaning 87,573 to 94,956 visitors per day. However, for last year, the amount – which is
calculated based on the perception and experience of both residents and tourists – ranged from 32.62 million to 33.70 million, accounting for 89,374 to 92,325 visitors per day. This was the first time that the tourism carrying capacity decreased after recent years when it increased in a stable manner. ‘This is likely due to residents’ beginning to grow weary of the effects of continued tourism growth on important quality of life issues such as deteriorating experiences with public transport and perceived crowding in the streets as well as deterioration in visitors’ travel experiences caused by over-crowdedness and possible decline in tourism service quality’, the study points out in explaining the new phenomenon. It is also argued in the study that the improvements in ‘the critical measures in 2014 to augment capacity in several areas’ as well as the ‘crowd control measures during peak periods’ did not have proportional effects on the ‘continued increase in the number of visitors’. “We have to start to think about other strategies like diversifying the
source of visitors, think about how we can make visitors flow smoothly throughout the calendar year and in different areas of the city”, the President of IFT, Fanny Vong, told journalists. “Visa policy is one way to do this. But there are other ways, with some of the factors dependent upon the Macau SAR Government, while others will have to be handled by the Central Government”, she said. “On the Macau Government side we
Assessing scheme to supervise officials’ performance It is not exactly an accountability system as Secretary Sonia Chan said the system is only one of the elements in the new scheme that will also include independent evaluations Kam Leong
kamleong@macaubusinessdaily.com
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he government is to conduct a scheme for overseeing the performances of officials in the Special Administrative Region, which will include an accountability system and third-party evaluations, the Secretary for Administration and Justice Sonia Chan Hoi Van said yesterday. Attending the Legislative Assembly to present the major works of the Secretary Office in the year, Secretary Chan told legislators that a scheme assessing the performance of officials will be established, claiming that the accountability system is one of the elements in the new scheme. “The purpose of establishing such a scheme of assessing performances is to enhance the administrative ability of the government, to increase its managing ability, and to improve the relationship between the government and the public,” Ms. Chan said. “When officials make mistakes, we
will request corrections. If they are found to have violated the law, we will also pursue the legal responsibilities.” Claiming such assessment had reached the basis of law, the Secretary said government officials will also receive evaluations by an independent third party every year, which will be
one of the factors deciding whether their contracts should be renewed or terminated. “[The] third-party evaluations will allow the public to supervise the quality of public services, and to provide objective information for the whole performance assessing scheme,” she added. There is no timeframe for when the whole scheme will be fully established. Nevertheless, the third-party evaluations may be unveiled within this year, according to Ms. Chan. Acting director of the Public Administration and Civil Service Bureau (SAFP) Kou Peng Kuan added that the third-party evaluations, aiming at assessing different public services, will be based on current evaluations of higher education institutes, stressing that evaluations will not be conducted by any government personnel.
can promote different events. The business tourist sectors can create events with worldwide appeal to bring tourists during periods that are not so popular”, she added. She also said that if the Central Government decides to replace the Golden Week with paid leave then the inbound flux of tourists would almost automatically be more evenly distributed, which would benefit both residents and tourists.
ICBC total assets increased 26.31 pct in 2014
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ndustrial and Commercial Bank of China (Macau) Limited (ICBC Macau) Chief Executive Officer Jiang Yisheng revealed that by the end of 2014 the total assets of the bank increased 26.31 per cent year-on-year. Mr. Jiang was speaking on the sidelines of a media gala yesterday evening. He also indicated that deposits and loans had increased 23.32 per cent and 33.31 per cent, respectively. The ratio of nonperforming loans maintained the excellent level of 0.05 per cent. By the end of 2014, ICBC Macau had 16 branches, 244 ATMs and 27 24-hour self-service centres, and aims to further expand its network, while improving service quality. In addition, the CEO of ICBC (Macau) said that they have been working with governments to deal with new ways of thwarting financial crime and that it will continue to optimise its anti-money laundering system to ensure the healthy and stable development of the business.
Business Daily | 3
March 27, 2015
Macau
Macau Pass expanding mobile application uses soonest next month Macau Pass aims to enable users to pay for their water and power bills via smartphone app by April, and in the longer term to shop online Stephanie Lai
sw.lai@macaubusinessdaily.com
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he city’s stored-value card issuer Macau Pass SA aims to enable its smartphone application users to pay for their water supply and power bills by next month, an extension of functions following the company’s enabling their value top-up functions for the Macau Pass cards since December last year. “Through our mobile phone application, we hope that by next month users can use it to pay for their water and power bills, as well as making donations to charity units like Caritas and Orbis,” deputy general manager of Macau Pass David Lao told Business Daily. “For these new functions now we’re undergoing some internal testing.” Macau Pass announced in mid-December the launch of a new mobile phone application for users of smartphones running on Android systems and a near field communication (NFC) function, which allows them to top up their
value, read their remaining balance as well as transaction records by a simple scanning of the card. So far, however, the top-up value function via the smartphone application is only applicable to those who have bought the Macau Pass chip cards for which they can add value to their cards from payments made off their credit card accounts. This function is now only ready for holders of credit cards issued by OCBC Wing Hang Ltd (Macau) and Bank of China Credit Card (International) Ltd. “We hope that after two to three months, we’ll be announcing a second batch of co-operating banks that support our top-up value functions,” Mr. Lao said. “Our goal is to collaborate with all the major banks here.”
Online shopping The stored-value card issuer has also confirmed that they had had “preliminary talks” with Hong Kong-
Shop rents in tourism districts to plunge 30 pct, realtor says
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entals for shops in tourism districts may drop by between 20 and 30 per cent by the end of this year, as the operational difficulties of retail businesses worsen in the wake of gaming VIP business going through hard times, real estate agency Midland Macau predicts. The agency’s director for the commercial and industrial sector wrote in a column in Chinese newspaper Macao Daily yesterday that there are more than 30 empty shops to be rented out in the central district, which may signal the beginning of a vacated-shop trend in tourism districts. “Following the number of highend consumers and their expenditure
decreasing, it is estimated that the sales of high-end retail business will continue dropping in the year. To deal with declining revenues, many tenants have requested their landlords to lower the rent despite their contracts not yet expiring, as this will lower their operation costs,” the property agent wrote. “Only a minority of landlords is willing to decrease the rent… Some perceive that the prospects of retail sales will not worsen and thus did not reduce the rent,” Mr. Li added. Nevertheless, he foresees that more landlords will compromise by the end of this year, with the number of transactions remaining low. K.L.
listed Tradelink Electronic Commerce Ltd. on its newly developed businessto-consumer (B2C) e-commerce platform known as ‘iTeM’ - a mobile phone application-based shopping platform that allows consumers to purchase cosmetics, electronic products and other health products. In its annual results filed with the stock exchange earlier this week, Tradelink said that they were currently in the phase of recruiting merchants for the e-commerce platform. “We did explore the issue [of cooperating with Tradelink] but it’s just some initial talks on the technical aspects only,” said Lao. “We did not make an official promise on that or ink any deals but definitely there’s always a chance of co-operation.” Macau Pass is in negotiations with China’s online shopping giant Alibaba Group regarding the provision of a mobile payment solution that allows users to shop on Taobao.com using their stored-value cards to make payments. “The scenario will be similar to
Hong Kong’s Octopus online payment service, which is a mobile payment service that allows stored-value card users to shop on Taobao,” Mr. Lao told us, “That is our desired picture for consumers here to use our card to pay for the online shopping website. But the key issue now is the settling of cross-border payments.” While Macau Pass has yet to complete talks on online shopping cooperation, the company has recently announced its collaboration with the city’s major telco Companhia de Telecomunicacoes de Macau SARL (CTM) to launch a mobile payment service by integrating Macau Pass IC card with the smartphone SIM cards. This service, as yet unnamed, is expected to come online by the third quarter of this year when CTM launches its 4G service. Through CTM’s mobile network, customers are able to make payment simply by touching the smartphone on Macau Pass readers as if using an IC card, according to the telco and Macau Pass.
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March 27, 2015
Macau Poker King Club relocated to permanent location in The Venetian Poker King Club has moved to the Phoenix Hall at The Venetian Macao, next to Bellini Lounge. The move was mulled since the poker club moved to The Venetian last September. Before, Poker King Club was situated in Galaxy’s StarWorld Hotel property. Inside the new room the club hosts around seven cash tables and approximately 26 tournament tables. The move to The Venetian is seen by the Poker King Club management team as possibly increasing the number of people that will play poker.
Chui Sai On pledges to tackle urban pollution The Chief Executive of the Macau Government yesterday officiated the opening of the 2015 Macau International Environmental Co-operation Forum, setting the goal to meet the national targets of carbon dioxide reduction João Santos Filipe
jsfilipe@macaubusinessdaily.com
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he Chief Executive of the Macau Government promised yesterday at the opening ceremony of the 2015 Macau International Environmental Cooperation Forum and Exhibition (MIECF) to control the air pollution in Macau and take the necessary measures to meet the national targets of carbon dioxide reduction.
“The Macau Special Administrative Region Government will strengthen the control of urban pollution, increase relevant measures to improve the urban air quality to meet with our national target of carbon dioxide reduction”, he said during his speech at The Venetian Macau, where the Forum takes places until tomorrow. “The government will also promote the construction of a low-
carbon and livable city by cleaning the air of the region”, he added. This year, the theme for the forum is ‘Green Economy – Solutions for Clean Air’ and in his opening speech Chui Sai On stressed the importance of a green economy. “We all live under the same sky, facing the climate change and air quality issues that no country or
region can [avoid]. Just in time, the green economy aims to improve human wellbeing whilst reducing environmental risks”, he stated. “Therefore, through our collective expertise and experiences, we hope to promote a green economy, reduce pollution, and improve energy and resource efficiency to explore sound, clean and fresh air strategies.” The session was closed with a speech by the former Prime Minister of Norway and Special Envoy on Climate Change from the United Nations Gro Harlem Brundtland. In her speech Dr. Brundtland stressed that the effects of pollution are mainly felt by poor nations and that they have been the most affected by climate changes over the last 25 years with droughts and floods. She also said that in economic terms, pollution will have an impact on business because by affecting poor people first it must be perceived as a source of social instability that in turn will bring instability to businesses. Dr. Brundtland also stated that countries have been thinking too much at the “national level and should think more on a global scale” as pollution transcends national borders.
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March 27, 2015
Macau
VIP woes and myths Despite their growing fortunes, VIP gamblers are spending less everywhere, not only in Macau, a Morgan Stanley report says. Junkets are also moving away because they get better commissions in other Asian markets, while competition from Australia and Korea is diverting high rollers although the figures are residual Luís Gonçalves
Down under
Luis.goncalves@macaubusinessdaily.com
Is the overall VIP market shrinking and is some other country gaining market share from Macau? The answer to both questions is yes Morgan Stanley
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t’s one of the heated debates raging in the gaming industry, especially here. Just what is driving the VIP plunge? Is it a structural trend or a temporary one? What role does the anti-graft campaign launched by Beijing authorities play in the diminishing revenues coming from high rollers? Do the new Asian gaming destinations represent real competition for Macau? According to the most recent report on the VIP market, released this week by Morgan Stanley, two major conclusions assert themselves. First, the high roller segment is shrinking globally and not only in Macau. Second, some VIP gamblers are, in fact, sidestepping Macau to play elsewhere but their numbers are still residual. Macau is not only the world’s gaming mecca, it’s also the world’s biggest VIP market: It generated a remarkable US$30 billion in revenues in 2013 and today still owns more than 60 per cent of the global market. The high roller freefall of last year was spectacular. Last month, gaming revenues from the VIP segment dropped more than 50 per cent and this month it’s likely to decrease 40 to 50 per
global VIP market is not in much better shape, posting a drop of 20 percent, the report said. But it’s not only gamblers that are avoiding Macau. Junkets, the providers of credit to high rollers, are also moving away from Macau to avoid both scrutiny and to search for higher commission rates in other destinations with improving gaming facilities. Morgan Stanley says that Suncity, the largest junket operator here, has already reassigned hundreds of staff to Manila, in the Philippines, while other Macau junkets are operating in Australia and Cambodia.
cent, according to the latest forecasts from Wells Fargo and Deutsche Bank. Morgan Stanley estimates that this year alone revenues from high rollers will diminish by 35 per cent. The US bank gives an example of how big the VIP crisis is in Macau, a segment that is still responsible for more than 60 per cent of all money casinos make here. In the good old days, like 2013 and early 2014, the VIP rolling chip volume here was MOP745 billion per month. In February 2015, volumes were running below the MOP300 billion mark.
Shrinking ‘While Macau is the largest VIP market in the world, many other markets have identified these drivers and do not face issues currently faced by Macau – anti-corruption campaign, regulatory pressure and slow infrastructure improvement’, Morgan Stanley wrote. ‘Is the overall VIP market shrinking and is some other country gaining market share from Macau? The answer to both questions is yes’, the report said.
The first problem is that the VIP gaming market is declining globally. Not because rich individuals are getting poorer – in fact, the number of millionaires and their combined wealth is expanding – but the ones that gamble are spending less on baccarat tables. The anti-money laundering movement across the globe has been particularly strong in China and the US, encouraging high-end customers to adopt a lower profile, Morgan Stanley notes. Junkets are also getting more conservative in extending credit, while casinos have stopped doing so unless they are assured the customer has assets outside of China and Singapore, where junkets are not allowed. If the Macau VIP market shrinks 35 per cent this year, the
The US bank stresses that Macau casinos are losing high-end customers to gaming facilities in Korea, the Philippines and Australia, the most developed gaming markets in Asia Pacific. The impact in overall figures, however, is quite residual. ‘It appears as if Macau and Singapore lost these customers to Korea, the Philippines and Australia in terms of percentages but in terms of dollar amounts the gains by these regional markets have been less than 10 per cent of losses by Macau and Singapore in 2H14’. The bank noted that VIP revenues in the second half of 2014 in Australia grew an average of 80 per cent: Echo saw high roller revenues double, with SkyCity and Melco also increasing 84 per cent and 61 per cent, respectively. These are the three biggest gaming operators in the country. In Korea, VIP revenues went up 20 to 30 per cent in the same period. Despite the impressive growth rates, the fact is that when compared to Macau the overall figures are just a drop in the ocean. The Macau VIP market is 15 times larger than Australia’s, 20 times Korea’s, and ten times larger than Singapore. For a market still so dependent upon VIP gamblers, the cautious attitude among these customers means tons of money cascading away from casinos here. Accordingly, VIP woes are likely to last. ‘We think the measures and tone set by the government have already caused many VIP patrons to stay below the radar. Even if the intensity slows, we do not expect the impact to go away in the short to medium term’. Morgan Stanley says that according to Suncity, an upper-end VIP client in Macau used to spend between HK$10million to HK$20 million. In the last six months, this amount dropped to a ‘couple of million’. Sing Hou Entertainment, who manages VIP rooms at Galaxy, reported an average spend of HK$1.4 million per player between 2011 and 2014 and around 6 to 8 visits annually.
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March 27, 2015
Macau Vivid Games inks distribution for Greater China Vivid Games has signed deal with Chinese games distributor Beijing Autothink Technology for the distribution of its Real Boxing game. Real Boxing game will be distributed in China, Taiwan, Hong Kong and Macau via, among others, the XiaoAo platform, Quinhoo 360 Internet shop and Chinese mobile operators China Telecom, China Mobile, and China Unicom.
China Star’s HK$2.23 billion land deal terminated The Hong Kong-listed firm said proposed disposals of the four plots of land near hotel Lan Kwai Fong, and the hotel itself, have been terminated Stephanie Lai
sw.lai@macaubusinessdaily.com
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ong Kong-listed China Star Entertainment Ltd. has announced that the proposed disposal of rights of four plots of land near Lan Kwai Fong Hotel, valued at
HK$2.23 billion (US$288 million), has been terminated. In a Wednesday filing, China Star Entertainment noted that the parties have agreed the proposed disposal
Cambodia to open three new casinos this year
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sia’s regional gaming race is on. Yesterday, Cambodia’s government said that three new casinos will open next month in the southern Cambodian province of Takeo, with the goal of attracting a new wave of Vietnamese gamblers. To Phnom Pehn Post, Ros Phearun, deputy director of the ministry’s Finance Industry department, declined to disclose the name of the owners or capital investment, only saying that they were locally owned. The properties will be located along the Vietnamese border in Takeo Province’s Kiri Vong district in Phnom Den village. Gambling is still illegal in Vietnam but the government is set to pass a bill to give a green light to allow gaming in the country in order to capture foreign investment, a move that could affect markets like Cambodia. Phearun said that two of the
casinos have completed construction and are awaiting their operating licences, while the third has not yet started construction. The border province of Takeo already has two licensed casinos. While it is illegal for Cambodians to gamble in the country, Vietnamese gamblers from across the border are known to frequent these casinos. No official figures on the number of gamblers in Cambodia are available but Vietnam is the largest source of visitors, with around 900,000 Vietnamese visiting in 2014, according to data from the Tourism Ministry. Cambodia, Vietnam and other Southeast Asia markets are new targets for some Macau casinos and junket operators seeking to diversify investments now that the anti-graft campaign and the smoking ban is eroding revenues in the MSAR. L.G.
be ‘terminated’ and ‘cease to have any effect’. The proposed disposal was first announced by the Hong Kong-listed gaming services firm in November
last year, by which the company said it was selling the four plots of land adjacent to hotel Lan Kwai Fong, Macau Polytechnic Institute, Forum de Macao and Golden Lotus Square. The property leasehold rights of the four plots are held by a British Virgin Island-incorporated company called Triumph Top Ltd., a subsidiary of China Star Entertainment. Accounting for the termination of the proposed disposals, China Star Entertainment said the reason was the ‘anticipated inability of the entering into of the Supplemental Property Leasehold Right Agreement by March 31, 2015’. The property leasehold right referred to has to be enacted by Sociedade de Turismo e Diversões de Macau SA (STDM), China Star Entertainment and the target firm in the disposal deal, which is Triumph Top. Through a subsidiary, China Star Entertainment had acquired the four plots of land from Sociedade de Turismo e Diversoes de Macau, S.A. (STDM) in 2010 for HK$550 million. The casino services firm originally intended to develop the four plots as a single parcel for building a luxury residential and commercial complex but a lack of government approval has resulted in the land remaining undeveloped. In the Wednesday filing, China Star Entertainment also noted that negotiations to dispose of Lan Kwai Fong had ceased, and that the transaction would not proceed. Hotel Lan Kwai Fong houses gaming facilities that operate under the licence of Sociedade de Jogos de Macau S.A. (SJM). China Star Entertainment noted in November last year that the agreed price to dispose of Lan Kwai Fong to an independent third party was HK$3.75 billion.
Shun Tak profits more than triple to HK$4.45 billion for 2014
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ong Kong-listed conglomerate Shun Tak Holdings Ltd., steered by Pansy Ho Chiu King, saw its profit attributable to owners more than triple to HK$4.45billion (US$574.58 million) for last year as the company’s property segment registered strong earnings. According to Shun Tak results filed yesterday, the company’s turnover climbed 167 per cent year-on-year to HK$9.54 billion, with its property business accounting for about 62 per cent of turnover. The property and shipping conglomerate saw its profit from property segment register at nearly HK$2.49 billion, a staggering rise when compared to only HK$80 million in 2013. Shun Tak’s revaluation gain on
investment properties surged 63 per cent to HK$941 million for 2014, a result that the company said was underscored by accrual of profits from the popular sales of Nova City Phase 4 in Taipa and a ‘successful’ re-launch of remaining units at Chatham Gate in Hong Kong. The monetisation of assets from disposal of the Taipa Hills Memorial Garden on July 31 last year also contributed to earnings. Shun Tak gained HK$18 million from the disposal of the columbarium, according to the filing. The company recommended a final dividend of HK2.0 cents per share and a special dividend of HK14.5 cents per share last year, which is yet to obtain shareholders’ approval and is expected to be payable by July 10. S.L.
Business Daily | 7
March 27, 2015
Macau H&M invests in new markets like Macau to invert decreasing global revenues Just like its competitor Zara, H&M is investing in online sales and new markets such as Macau this year to boost revenues
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ennes & Mauritz AB’s slowing sales growth unnerved investors in Europe’s No. 2 clothing retailer, sending the shares lower even as first-quarter profit beat estimates. Revenue in the first three weeks of March rose 9 per cent in local currency terms, the Stockholm-based company said Tuesday, slowing from 15 per cent growth in February and headed for the weakest monthly performance since September. The slowdown may be weather-related and implies unchanged same-store sales, Anne Critchlow, an analyst at Societe Generale, said in a note. H&M’s revenue growth has been below 10 per cent in only one of the past 17 months. “Often following a strong month, there is something of a hangover month as appears to be in March,” Richard Chamberlain, an analyst at RBC Capital Markets, said in a note. H&M fell as much as 3.1 per cent in Stockholm trading, reversing an initial gain of as much as 2.2 percent. The
stock was down 2.6 per cent at 344.20 kronor at 1:25 p.m. “It’s been a slow market,” Chief Executive Officer KarlJohan Persson said of March in an interview at H&M’s headquarters. “But it’s just three weeks and one should view March, April and May together, it usually evens out.” The slow start to the second
quarter is weighing on the shares, as well as increasing cost pressure caused by the strength of the U.S. dollar, Jamie Merriman, an analyst at Sanford C Bernstein, said in a note.
Dollar Battle H&M is battling the
strength of the dollar, which it has said will add to purchasing costs this year, particularly in the second half. The retailer said Tuesday that the rising greenback will lead to “gradually increased purchasing costs when sourcing for the coming quarters of 2015.” The gross margin, a
measure of profitability, unexpectedly widened in the three months ended Feb. 28 as markdowns in relation to sales decreased by 0.3 percentage points compared with a year earlier. The gross margin expanded to 55.2 per cent in the quarter from 54.9 per cent a year earlier. Analysts had anticipated that the measure would narrow to 54.6 percent. Net income rose 36 per cent to 3.61 billion kronor (US$423 million). The average of 16 analyst estimates compiled by Bloomberg was for 3.32 billion kronor. H&M is investing in online sales and new markets while broadening its range with an extended offering of sportswear, shoes and beauty products. The vendor of US$12.95 silk handkerchiefs and US$24.95 platform sneakers opened a first store in Taiwan in February and will expand to Peru, Macau, South Africa and India later in the year. Bloomberg
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March 27, 2015
Greater China Boosting gold reserves recommended
Watch-list for financial reforms
China should increase its gold holdings to around 5 percent of its total foreign exchange reserves to help diversify currency risks, the World Gold Council (WGC) said. China currently holds about 1.6 percent of its foreign exchange reserves in gold, which is relatively low compared with developed countries and some developing countries, WGC China managing director Roland Wang said. China last raised its gold holdings in April 2009, when reserves rose to 33,890,000 troy ounces (about 1,054 tonnes), from 19,290,000 troy ounces, according to central bank data.
Rail merger under market rules The merger of China’s top train makers, China CNR Corp Ltd and CSR Corp Ltd , should follow market rules and ensure stable operations, a government report on a cabinet meeting said. Wednesday’s executive meeting of the State Council, or cabinet, discussed progress toward the merger, which would create a train giant able to compete globally with the likes of Siemens and Bombardier, but there were no details about when the companies might link. China built the world’s longest high-speed train network in less than a decade and has expressed its desire to export its technology.
U.S. treasurer to visit China U.S. Treasury Secretary Jack Lew will travel to China on Friday to meet Chinese officials next week, the U.S. Treasury said in a statement on Wednesday. It said Lew would travel from March 28 to 31 “to hold discussions with senior Chinese officials on the U.S., Chinese, and global economies.” Lew will meet Chinese officials on Monday and then leave for San Francisco on Tuesday.
Taiwan investigates Fukushima food imports Health authorities in Taiwan are investigating how food products made near Japan’s Fukushima nuclear power plant have illegally entered the island with false origin labels. The labels might have been changed in Japan, Taiwan’s health chief Chiang Been-huang said, according to media reports yesterday. Anger has been growing in Taiwan after about 300 food products were found to have been imported and sold there with falsified Chinese-language labels. Taiwan has banned food imports from Japan’s Fukushima, Ibaraki, Tochigi, Gunma and Chiba prefectures since March 2011.
Xi justice problems must be tackled properly Miscarriages of justice must be properly tackled or it will damage the country’s efforts to boost the rule of law, state media quoted Chinese President Xi Jinping as saying, following a series of embarrassing cases that have incited public anger. China’s ruling Communist Party is trying to boost confidence in the country’s legal system, a move Xi says is a crucial part of the country’s on-going economic reform efforts.
President and Premier are promoting deep reforms in several aspects of Chinese society
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his month in China, the Premier pledged to press on with “wrist slashing” reforms, while the central bank governor has promised to further open financial borders in the quest to gain reserve status for the nation’s currency. As the final year in China’s 12th Five-Year Plan, deadline pressure looms for many proposals outlined back in 2011. Also upcoming later in 2015 is the International Monetary Fund’s once-in-five-year review of whether to include the yuan in the Special Drawing Rights basket. Here are the banking changes to watch out for in the alphabet-soup of China’s regulatory regime as the government pushes for a more open, market-driven economy:
1. Foreign cash Chinese individuals are allowed to buy the equivalent of US$50,000 in foreign currency for travel, shopping
and study each year. More than that, and it’s off to the foreign exchange regulator for approval. That could change this year. “If it happens, it shows authorities are confident that capital outflow risks are under control,” said Li Liuyang, the Shanghai-based chief financial market analyst at Bank of TokyoMitsubishi UFJ (China) Ltd.
2. Bigger QFII Quota, easier rules China’s Qualified Foreign Institutional Investor program, a more than 10-year-old scheme licensing “qualified” overseas investors to buy into China’s mainland securities under a given quota, imposes three-month lock-up periods and repatriation restrictions, preventing investors from making frequent transactions. The quota was US$70 billion as of February, a mere 1.1 percent of China’s US$6.3 trillion stock market.
It’s “not convenient or flexible,” according to People’s Bank of China Governor Zhou Xiaochuan. “Quotas will be raised,” said Chen Xingdong, the Beijing-based chief China economist at BNP Paribas SA. “But more importantly, the whole thing will be easier.”
3. QDII and QDII2 Chinese citizens are currently allowed to invest abroad through funds that are licensed under the Qualified Domestic Institutional Investor program. For a nation with a household savings pool of about US$8 trillion, the US$88 billion QDII quota at the end of February appears on the small side. When asked whether China will relax limits on outbound investment by individuals, Yi Gang, the head of the State Administration of Foreign Exchange, said this month that China will consider a “QDII2,” or direct overseas investments by qualified
More control risks as yuan becomes more
Chinese officials have not given a firm timetable for making the yua
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hina will control economic risks as the country pushes reforms to make the yuan convertible on the capital account, the foreign exchange regulator said yesterday. “It’s viable for China to steadily achieve capital account convertibility, but controlling risks remains the top priority,” Wang Yungui, head of policy and regulations for the State Administration of Foreign Exchange (SAFE) told a news conference. Wang said China has “the last one kilometre” to go before achieving full yuan convertibility, but he did not elaborate. China has pledged to move towards making the yuan convertible on the
capital account, amid hopes that the International Monetary Fund could include the yuan in its special drawing rights (SDR) basket during a five-year review due to be conducted this year. Central bank governor Zhou Xiaochuan said on Sunday that China will take more steps this year to smooth the way for citizens to invest in overseas financial markets, and reform the Qualified Foreign Institutional Investors (QFII) scheme, which is “not convenient and flexible enough”. While the yuan is already convertible under China’s current account, the broadest measure of trade in goods and services, the capital account, which covers portfolio
investment and borrowing, is still subject to restrictions due to worries about abrupt capital flight and hot money inflows. Chinese officials have not given a firm timetable for making the yuan freely tradable, although the central bank has outlined the task of making it “basically” convertible by 2015. Wang said China had net capital inflows in the first two months of 2015, but no figures were provided. China has suffered a wave of capital outflows in recent months amid jitters about a protracted economic slowdown in China and expectations for the U.S. Federal Reserve to raise interest rates this year. Reuters
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Greater China
in market-opening campaign individuals, “in the near future.”
4. RQFII and RQDII China is widening the channels for onshore and offshore yuan markets via two programs, Renminbi QFII and Renminbi QDII. SAFE has been accelerating quotas of RQFII to accommodate overseas yuan holders’ demand for the nation’s equities and bonds. Further expansion is likely to boost the connection between the onshore and offshore yuan markets.
5. Bigger Hong Kong-Shanghai stock link? The link started last year has many restrictions, including investment quotas and the assets on offer. Investment targets in the program may be widened to exchange-traded funds and small- cap stocks, while increased quotas is a more remote possibility.
6. Hong Kong-Shenzhen stock link Chinese Premier Li Keqiang said in his government work report this month that the scheme will be started at an appropriate time. Xiao Gang, the chairman of China Securities Regulatory Commission, said it will start within 2015.
7. Easier bond and stock sales
It shows authorities are confident that capital outflow risks are under control Li Liuyang chief financial market analyst Bank of Tokyo-Mitsubishi
According to the PBOC’s Zhou, rules will be relaxed for Chinese companies to sell bonds and stocks in overseas markets, and overseas companies will be allowed to sell stocks or bonds in domestic markets. Fundraising both ways can be in yuan or dollars. No timing has been provided by the PBOC. “The direction is clear -- the opening will happen eventually, although the timetable is hard to predict,” Zhuang Juzhong, the deputy chief economist of Asian Development Bank, said at a briefing in Beijing Tuesday. Another development could be further opening of the interbank bond market to more overseas institutions.
8. Deposit insurance system and free deposit rates China’s deposit insurance system will be launched this year, a step needed to allow true bank competition, the government has said. Meantime, limits on what banks can pay depositors are likely to be scrapped.
9. New private banks China may issue dozens more licenses to privately-owned lenders in 2015, inserting new competition for the state- dominated banking sector. According to Nicholas Lardy, who’s studied China for more than three decades and is a senior fellow at the Peterson Institute for International Economics, China may have one new private bank for each of its 32 provinces and territories. “They will be very small to begin with, but the competition on the margin makes a difference,” said Lardy.
10. Free-trade zone trials China on Tuesday approved another three free-trade zones, in Tianjin, Guangdong and Fujian, in addition to the existing zone in Shanghai. The government may become bolder in testing new openings in these designated areas, where there are fewer restrictions on moving money in and out of the country. “The PBOC will probably use free trade zones to conduct trials on further opening in the capital account,” said Yan Hong, professor of finance at Shanghai Jiaotong University.
11. Freer yuan? China currently limits yuan movements against the dollar in onshore markets to 2 percent either way from a central point it fixes each day. That may be widened to make the yuan exchange rate more flexible and win over IMF approval for its SDR push. A more radical, and more unlikely option, would be to scrap the range altogether. If China’s capital account becomes completely open and the yuan is freely usable, then the existing qualified investor schemes will become unnecessary. Bloomberg News
e convertible
China’s yuan has already broken into the top five as an international payments currency
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ross-border trade settlement denominated in China’s yuan currency is expected to climb to over 50 percent of China’s total trade by 2020, more than doubling the current level, Stuart Gulliver, HSBC’s Group Chief Executive, said yesterday. A scheme launched in 2009 and initially in five Chinese cities to encourage cross-border trade settlement in yuan rather than U.S. dollars has seen rapid growth in the past few years, with yuan settlement of trade debts rising from 1 percent of transactions in 2010 to 22 percent last year. This robust momentum was not affected by the quick depreciation of the yuan earlier this year, showing the yuan’s use in trade settlement is rooted in genuine need and supported by confidence in the fundamental and relative stability of the currency, Gulliver told a forum in Hong Kong. The yuan, nicknamed the “redback”, fell 2.4 percent against the dollar in 2014 and that weakness remained until earlier this month when suspected intervention by China’s central bank helped it recover some ground. So far, the geographical spread of China’s trading partners denominating trade in the yuan remains very narrow, with the lion’s share taking place in Hong Kong and most of the rest happening elsewhere in Asia. “In this sense, the renminbi (yuan) is not yet as integrated as a trade currency as it both could be and will be. We do expect this to change,” said Gulliver. China’s yuan has already broken into the top five as an international payments currency, overtaking the Canadian dollar and the Australian dollar, said global transaction services organisation SWIFT. Gulliver expected the yuan to increasingly represent a viable alternative to the U.S. dollar and to finally become a main reserve currency alongside with the U.S. dollar and the euro. Reuters
an freely tradable
Wang Yungui, head of policy and regulations for the State Administration of Foreign Exchange, said China has “the last one kilometre” to go before achieving full yuan convertibility
Half of China’s total trade to be settled in yuan by 2020
The renminbi (yuan) is not yet as integrated as a trade currency as it both could be and will be. We do expect this to change Central bank governor Zhou Xiaochuan said that China will take more steps this year to smooth the way for citizens to invest overseas
Stuart Gulliver HSBC’s Group Chief Executive
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Greater China
First private bank begins lending Two more banks are preparing to open
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he first private bank in China’s mainland opened for business in coastal Wenzhou City, east China’s Zhejiang Province yesterday. The Wenzhou Minshang Bank announced its ambition to target niche markets to offer inclusive financial services for small businesses, the selfemployed, community residents, and county-level rural sector. The bank completed its first credit service yesterday, issuing a 300,000 yuan (US$48,289) loan to Jiangda Electronic Co. Ltd., a small electronics and aluminium foil producer. Ma Ziguang, general manager of Jiangda Electric Co. Ltd.,told Xinhua his company, which focuses on export, often lacks capital. “The bank’s easily-applied loan service is swift and handy,” he said adding the loan was given without any mortgage as the lender values the company’s production performance and reputation. The bank’s main sponsors are electronic equipment producer Chint Group, industrial chemical maker Huafon Group as well 11 other large share holders, which include industrial firms, clothing manufacturers, real estate and high-tech firms. It was among the first three private banks approved by the China Banking Regulatory Commission (CBRC) in July last year. According to the Wenzhou subsidiary of CBRC, the government has set up a very high “threshold” for approving the first private banks, taking in full consideration for share holders’ competitiveness, brand image and credit. All the share holders are leaders in their respective fields and have corporate assets worth tens of billions of yuan. Nan Cunhui, chairman of the bank’s biggest share holder Chint, acts as the bank’s chairman. “Banks carry more social responsibility than other businesses. Facing competition from heavy-
The city of Wenzhou is famous for its private entrepreneurship and manufactured exports
weight state-owned banks, Wenzhou Minshang Bank must provide differentiated financial services which should be more flexible, efficient and considerate,” he said. Nan said the bank will mainly target small enterprises and community customers who need convenient and comprehensive financial services. The bank’s governor, Hou Niandong, was a former deputy governor of the Zhejiang Provincial Branch of the Industrial and Commerce Bank of China, which is China’s largest commercial bank by assets. Hou said there are 15,000 small businesses involved in the production chain of the bank’s 13 share holders. “They are our first batch of potential customers to keep deposit accounts in the bank, which could shape up the bank’s ‘capital pool’ and capital flow,” he said. CBRC’s approval of private banks, including two that are preparing to open - Shanghai Huarui Bank Co., Ltd. and the Shenzhen-based
Facing competition from heavyweight stateowned banks, Wenzhou Minshang Bank must provide differentiated financial services which should be more flexible, efficient and considerate Nan Cunhui Minshang Bank chairman
Webank, which was partly funded by Chinese Internet giant Tencent -- is seen as China’s “ice-breaking” reform set up to dismantle the defacto monopoly by state-owned banks. The city of Wenzhou is famous for its private entrepreneurship and manufactured exports. Bad loans, however, began to rise after the city’s private lending activities collapsed in 2011, forcing local businesses to go bankrupt and some entrepreneurs to commit suicide or flee. Companies here are in dire need of financial support. This has become a driving force to push the government to think of ways to pilot financing reforms and channel money back to the real economy. Miao Xinhao, deputy director of Wenzhou Financial Institute, said private banks set up with private funds are more viable in market competition and responsible for their own risks. The private sector will stimulate the state-owned banks to reform their system and services for survival. Xinhua
UBS targets Asia for wealth management growth Chinese wealth creation will drive much of the bank’s expansion in the region
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BS AG, the world’s biggest wealth manager, expects Asia Pacific assets to account for as much as 30 percent of the funds it oversees within the next 10 years, the Swiss bank’s chief executive said. UBS’s wealth management business looked after about US$2.04 trillion in invested assets at end-2014, half of which in the Americas, according to bank filings. “I wouldn’t be surprised if the Asia business is closer to 30 percent (of the bank’s total managed assets) than the 10 percent it is today,” Chief Executive Sergio Ermotti told Reuters in a recent interview. Chinese wealth creation will drive much of the bank’s
expansion in the region. Net new money from the Asia Pacific region, including Japan, amounted to 26.7 billion Swiss francs ($27.84 billion) over the last four quarters, compared with $10 billion in the Americas, the bank’s latest financial report shows. “We do expect wealth creation to be a big theme in China,” he said. “The Chinese business is a very big business and a very important business, in terms of profitability and scope and size.” According to the Boston Consultancy Group, private financial wealth in China, where the number of millionaire households reached 2.38 million in 2013, is expected to grow 84 percent
by 2018, from US$22 trillion to US$40 trillion. Ermotti, in Beijing for a forum, said it was important for China to further open up its capital markets, and particularly its debt capital markets, to reduce the economy’s reliance on banks for financing. He also said UBS, which employs about 500 people in China, plans to “substantially increase” that number over the next decade, with the majority of new hires in the wealth management business. “The story for many years was how to bring foreign investment into China,” said Ermotti. “The next step is how we can help Chinese investors go outside of China.”
UBS operates a domestically licensed bank in China, a wholly owned asset management company, and holds a 49 percent stake in UBS SDIC Fund Management Co. The bank last purchased a Shanghaibased futures operation, and is expected to open a Shanghai branch, targeting wealthy individuals, before the end of the year. Reuters
The Chinese business is a very big business and a very important business, in terms of profitability and scope and size Sergio Ermotti UBS, Chief Executive
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Sri Lanka promises port project will resume
The country aims to renegotiate terms of about US$5 billion in Chinese loans
Megha Rajagopalan
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hina said yesterday that Sri Lanka’s visiting president had promised work would resume on a controversial Chinese-backed port development in Colombo that his administration had earlier suspended. Citing a lack of government approvals, Sri Lanka halted the US$1.4 billion port city project, straining ties with its biggest investor. China defends the project, saying it is in line with local laws and any cancellation would deter foreign investors. Sri Lankan President Maithripala Sirisena told Chinese President Xi Jinping that work would resume after problems are “sorted out”, a Chinese Foreign Ministry official told reporters on the side-lines of visit. “He (Sirisena) stressed that what happened around the port city in Colombo is rather temporary, and he said the problem does not lie with the Chinese side and hopes to continue with the project after things are sorted out,” said Liu Jianchao, assistant minister of foreign affairs. China has poured millions of dollars into infrastructure in Sri Lanka since the end of a 26-year civil war in 2009, when Colombo was largely shunned by Western investors because of its human rights record. Sirisena has vowed to reconsider deals between China and his predecessor Mahinda Rajapaksa, saying they were not transparent enough. China’s ties with Sri Lanka, as well as its growing influence in the Indian Ocean, have elicited alarm from India, which has traditionally held sway with Colombo. Sirisena’s government also aims to renegotiate terms of about US$5
Chinese President Xi Jinping (R) and Sri Lankan President Maithripala Sirisena (back) attend a signing ceremony at the Great Hall of the People in Beijing
billion in Chinese loans. China has said in the past that the terms of the loans are reasonable and in line with other countries. Liu said the two presidents had not “gone that far” in discussing any potential renegotiation of interest rates on the loans. He added that China hopes to strengthen defence ties between the two countries, saying the presidents discussed cooperation in training military personnel and providing
“military equipment”. India voiced concern in November when Rajapaksa’s government allowed a Chinese submarine and warship to dock in Colombo, seven weeks after another submarine called at the same port. Sri Lanka’s Foreign Minister Mangala Samaraweera said in February he did not anticipate any more visits by Chinese submarines, leading analysts to suggest Sirisena’s administration is approaching military ties with Beijing
more warily than his predecessor. Liu added that it is possible that the China-led Asian Infrastructure Investment Bank (AIIB), which is expected to start operations by the end of the year and has drawn a growing list of countries, could be a source of funding for Sri Lankan infrastructure projects, but that the matter would have to be discussed with other members of the bank once it is established. Reuters
US stance against AIIB ‘embarrassing’: ex-Goldmans exec The US has lobbied hard against the US$50 billion infrastructure bank
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ashington’s opposition to a new China-led development bank is “embarrassing” and “idiotic”, a former top Goldman Sachs executive said yesterday, as an increasing number of US allies embrace the institution. Jim O’Neill, former chief economist at the US investment bank and chairman of Goldman Sachs Asset Management, made the comments about the Asian Infrastructure Investment Bank (AIIB) during a visit to Beijing. The US has lobbied hard against the US$50 billion project, but its efforts have not stopped powerful allies including Britain, Germany, France and Italy signing up, with Australia and South Korea considering joining. “I certainly applaud the UK authorities for the decision they’ve made. I’d call it ‘enlightened selfinterest’,” said O’Neill, who is known for having coined the BRIC acronym to refer to emerging powers Brazil, Russia, India and China. “If you are a small, open economy, and you want to do things that are right for you, why would you not do
that?” he added. “I think it’s rather embarrassing for the US that they -- for some idiotic reason -- started to complain about this.” The Obama administration has been waging an intense but low-profile lobbying campaign against the new bank, unveiled in October. Officials have insinuated that the AIIB would lower international development
standards but Washington apparently underestimated China’s appeal. Several observers have cast blame for the debacle on US lawmakers. The United States is blocking reforms of the International Monetary Fund (IMF) that would raise the voting rights of emerging powers, and sometimes is accused of neglecting the World Bank. Washington is the major stakeholder in both institutions.
Jim O’Neill (centre) is the father of the term BRICS as an acronym for the emerging economies of Brazil, Russia, India, China and South Africa
“I wouldn’t be surprised that if the US Treasury thought they could get it through Congress, they probably would have agreed themselves,” said O’Neill, who was in Beijing to promote a British government-commissioned review on global antibiotics resistance. “Of course, what the whole episode highlights -- in such a simplistic and clear way -- is how intransigent the US Congress is,” he added. OECD Secretary-General Angel Gurria, speaking to reporters in Beijing last week, blamed congressional “paralysis” for blocking the IMF changes. “We’re talking about a 2010 reform and then that is now being recycled and trying to be approved, and it just hasn’t happened for whatever reason,” he said, arguing that the “rather unfortunate situation” in Washington has led the US to lose global clout. China’s vice finance minister, Shi Yaobin, maintained Wednesday that Beijing “welcomes all countries” to join the AIIB “and make contributions to infrastructure improvement in Asia”. AFP
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Asia
Thai exports suffer biggest fall in 6 months
Slumping global commodity prices have hit the economy, eroding farmers’ spending power
Orathai Sriring and Kitiphong Thaichareon
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hai exports fell more than expected in February, showing that a key growth engine for the country is still sputtering, but imports surprisingly rose for the first time in five months. The military took power in a coup last May to end political unrest and get the economy going, but growth last year was just 0.7 percent. Thai exports have been weak since before political tensions began in late 2013, while domestic demand remains sluggish and big public infrastructure projects have yet to get under way. Exports, which equal more than 60 percent of the economy, declined 6.14 percent in February on the year, the Commerce Ministry said on Wednesday. That was the biggest drop in six months and nearly twice the decline projected in a Reuters poll. With disappointing exports in early 2015, “the outlook is not so good,” said Sarun Sunansathaporn, economist with Tisco Securities in Bangkok. “Thailand’s economy is facing a downside risk.” The ministry blamed slow global growth and said the baht’s strength against the currencies of trading partners was another factor. Tim Leelahaphan, economist at Maybank Kim Eng, cited low commodity prices and how trading partners “are not doing so well”. Exports to China fell 15.1 percent, while those to Japan were off 11.7 percent and ones to Europe by 4.7 percent. Shipments to the U.S. rose 5.1 percent. Agricultural exports slipped 12.5
Workers put finishing touches to a soon to open shopping mall in Bangkok. A number of agencies have lowered Thailand’s economic growth forecast for 2015
percent - led by rubber’s 39 percent plunge - and those of industrial goods dropped 3.7 percent. February imports increased 1.47 percent from a year earlier, with capital goods up 3.9 percent and consumer goods 31.6 percent. The Reuters poll had seen a 1 percent drop in imports to follow January’s
13.6 percent tumble. Exports fell in 2013 and 2014, a big drag to economic recovery. The central bank last week trimmed its 2015 export growth projection to 0.8 percent from 1.0 percent. For 2015, the government expects GDP growth of 4 percent but the central bank last week cut its estimate
Pacific trade pact draft leaked The exemptions sought in the draft would protect countries from being sued by foreign corporations
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ustralia’s medicine subsidies, Canadian films and culture plus capital controls in Chile would be carved out from investment protection rules being negotiated in a Pacific trade pact, according to a draft text released by Wikileaks. An investment chapter, dated January 20, from the 12-nation Trans-Pacific Partnership (TPP) deal was released amid controversy over rules allowing companies to sue foreign governments, which critics say should be dropped from the pact. The 55-page draft says no country can treat investors from a partner country differently to its own investors, lays out compensation to be paid if property is expropriated or
nationalized and sets out the process for resolving disputes. A footnote says that investor-state dispute settlement (ISDS) rules do not apply to Australia, which omitted them from a free trade agreement with the United States 10 years ago, although the draft includes a note saying: “deletion of footnote is subject to certain conditions.” The exemptions sought in the draft would protect countries from being sued by foreign corporations that complain they do not get the same treatment as domestic firms because of certain government policies. Countries including Canada, New Zealand and Australia want a free pass for foreign investments
requiring special approval, often for sensitive local sectors such as banking, transport or communications. Australia is seeking to exclude medical programs such as the Pharmaceutical Benefits Scheme, which provides subsidized medicines, and Canada wants to exempt cultural sectors including films, music and books. A separate annex states that Chile’s central bank should have the right to impose capital controls if needed and maintains restrictions on foreign investors’ transferring the proceeds of sales out of the country. Chile, along with other emerging markets, has seen large inflows of foreign investment, which can push up currencies and destabilize the
to 3.8 percent from 4.0 percent. With the weak data, Sarun of Tisco said there is “a very high probability” of one more rate cut this year. The Bank of Thailand’s monetary policy committee this month surprised with a 25 basis point cut in the benchmark rate, to 1.75 percent. Reuters
local economy and financial markets. The release of the text came on the day that U.S. Trade Representative Michael Froman briefed Democrats on Capitol Hill about the investment rules, which are opposed by some lawmakers. Critics of the rules argue they give companies too much power to sue governments. But business groups argue they are necessary to stop unscrupulous governments from discriminating against foreign investors. TPP countries hope to wrap up negotiations on the deal, which would cover 40 percent of the world economy, by mid-year.
Critics of the rules argue they give companies too much power to sue governments
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
S. Korea boosts SME loan facility amid mild data
Vietnam GDP growth seen faster
Central bank data yesterday shows key consumer sentiment index has slipped
Bank of Korea headquarters
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outh Korea’s central bank raised the ceiling on its key loan facility for small and medium-sized businesses by 5.0 trillion won (US$4.53 billion) yesterday as part of its push to boost the economic recovery. Once the change becomes effective on April 1, the “bank intermediated lending support facility” will stand at 20.0 trillion won, the Bank of Korea said. It said the raised ceiling, along with the three interest rate cuts it has made since August last year, should support capital investment in Asia’s fourth-largest economy. The decision was taken because the pace of economic recovery was still not satisfactory despite ample liquidity in markets, it said in a statement. Bank of Korea Governor Lee Ju-yeol said this month, after a cut in the policy rate to a record low 1.75 percent, that the central bank planned to increase loans available to small businesses.
As well as increasing the amount available for lending, the central bank said it would lower borrowing rates for some of the programmes within the facility by 0.25 percentage point to reflect the cut in the base rate. The Bank of Korea described the cut in interest rates this month as a pre-emptive move to keep the recovery from faltering as it had detected worrying signs in economic indicators released early in the year.
February 2002 when the records were started - suggesting price pressures could fade even more this year. The Bank of Korea said in a statement its composite consumer sentiment index, compiled from its monthly survey, stood at 101 in March, down from 103 in February. A reading above 100 indicates positive consumer sentiment about conditions over the coming month, compared with the long-term average sentiment accumulated from 2003 to 2014. The median expected inflation rate for the following 12 month period slipped to 2.5 percent, down from 2.6 percent in February. Expected inflation has been steadily declining since peaking at 4.3 percent in mid2011, and now remains at the bottom tier of the central bank’s 2.5 percent to 3.5 percent target band. An official at the central bank said the low expected inflation was due to actual price pressures remaining low. He did not give an outlook for expected inflation. Actual inflation in February slowed to a 16-year low, rising 0.5 percent on-year as the recent collapse in global oil undercut consumer prices. Reuters
2.5 pct
median expected inflation rate next 12-month period
Philippines holds benchmark interest rate The peso is the best performer against the dollar in the past 12 months among 24 emerging-market currencies tracked by Bloomberg Karl Lester M. Yap and Siegfrid Alegado
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he Philippines held its benchmark interest rate for a fourth straight meeting as an anticipated acceleration in economic growth reduces the need for stimulus. Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at 4 percent, it said in Manila yesterday, as predicted by all 13 economists surveyed by Bloomberg. Policy makers also held the rate on socalled special deposit accounts at 2.5 percent, as forecast by all five analysts. The Philippines is one of the few holdouts this year amid more than two dozen central banks from Canada to China that have eased monetary policy as price pressure wanes. The Southeast Asian government’s economic growth target of 7 percent to 8 percent is attainable, BSP Governor Amando Tetangco said this week.
“We’re looking at strong growth from the Philippines, one of the countries that will outperform in the region this year,” Jeff Ng, a Singapore-
We’re looking at strong growth from the Philippines, one of the countries that will outperform in the region this year Jeff Ng economist, Standard Chartered
Japan to invest US$5.6 bln in Indonesia Japanese companies will invest US$5.6 billion in Indonesia, following President Joko Widodo’s visit to Tokyo, the head of Indonesia’s investment board said. Toyota Motor will invest US$1.6 billion while Suzuki Motor will increase its planned investment by US$1 billion, Franky Sibarani, chairman of the Investment Coordinating Board, said in a press release yesterday, without giving a timeline. Southeast Asia’s largest economy also attracted US$3 billion in Japanese commitments for other industries including textiles, steel, fisheries and power, Sibarani said, adding that the commitments will be realised this year.
Lao to push special economic zones
Consumer sentiment slips On the other hand, central bank data showed yesterday key consumer sentiment index slipped to its lowest level in three months, reflecting some doubt in the economy’s recovery but remaining within the positive range of the index. The expected inflation rate for the next 12 months, which is also surveyed each month, fell to its lowest level since
Economy in the first quarter will grow an estimated 6.03 percent from a year ago, picking up from an annual expansion of 5.06 percent in the same period in 2014, the government said yesterday. The service sector contributed 42.23 percent to the first quarter’s gross domestic product (GDP), followed by the industry and construction with 34.8 percent. Agriculture, forestry and seafood provided a combined 12.35 percent, the General Statistics Office said in a report. The government has targeted its 2015 GDP growth to accelerate to 6.2 percent, from 5.98 percent last year.
based economist at Standard Chartered Plc, said before the decision. “Given growth and inflation conditions, we think the BSP is one of the few in Asia that has room to keep policy unchanged for now.” The peso is the best performer against the dollar in the past 12 months among 24 emerging-market currencies tracked by Bloomberg. The benchmark stock index surged to a record this month. Consumer prices rose 2.5 percent in February from a year earlier. President Benigno Aquino, who steps down in June 2016, said Wednesday he is confident the Philippines can withstand potential interest-rate increases by the U.S. Federal Reserve, predicting a better year for the Southeast Asian nation’s economy. Bloomberg News
Improving the planning, structure, management and legal compliance of Laos’ special economic zones is among focal points of draft and amended laws approved by the country’s cabinet, local media reported yesterday. The government also approved draft legislation on business competition and an amended law on education, state-run media Vientiane Times reported. The country currently has 10 special and specific economic zones. The moves were reportedly approved at a monthly meeting held Wednesday, chaired by Prime Minister Thongsing Thammavong and attended by fellow cabinet members.
Toyota aims to halve cost of retooling The company said yesterday it would aim to halve the investment required to retool factories for new models compared with what it was spending before the 2008 financial crisis, as part of a sweeping overhaul of the way it develops and builds cars. Under the Toyota New Global Architecture (TNGA) efficiency and costsaving initiative, driven by President Akio Toyoda, the automaker also aims to reduce the cost of developing a new car by at least a fifth. Models featuring the new TNGA platforms will feature a lower centre of gravity, giving them better handling and improved visibility.
Rio Tinto refuses output cap idea Rio Tinto Chief Executive Sam Walsh said putting a cap on iron ore production was not in Australia’s national interest, dismissing a suggestion it could help lift the traded price of the steelmaking commodity. Walsh was speaking two days after Fortescue Metals Group’s chairman and founder, Andrew Forrest, called on fellow iron ore miners to join Fortescue in capping production.
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International France cuts 2015 deficit target France cut its budget deficit target for this year on Thursday and said economic growth could beat the government’s 1 percent forecast, after reporting a smaller-than-expected fiscal gap for 2014. Finance Minister Michel Sapin said France, which has repeatedly missed its fiscal targets, is confident it will finally bring the deficit below an EU cap of 3 percent of GDP on schedule in 2017. The budget gap dropped to 4.0 percent of economic output in 2014 from 4.1 percent in 2013, statistics office INSEE said. The government’s latest forecast had been for an increase to 4.4 percent.
US House approves balanced budget
Military allocation seizes some room from discarded social care chapter
Adidas targets faster sales German sportswear firm Adidas announced plans to revolutionise the way it manufactures goods to speed up production and allow more customisation of goods to help it accelerate sales and profit growth in the next five years. The world’s secondbiggest sportswear firm behind Nike laid out its strategy yesterday as it seeks to claw back market share from its U.S. rival. Adidas said it would focus marketing on six big cities, Los Angeles, New York, London, Paris, Shanghai and Tokyo. The firm also plans to expand sales from its own retail space.
Louis Dreyfus posts higher 2014 profit Global trading group Louis Dreyfus Commodities B.V. reported a rise in full-year profit yesterday as increased volumes and healthy processing margins helped offset lower market prices. Louis Dreyfus is one of the “ABCD” quartet of companies -alongside Archer Daniels Midland, Bunge and Cargill that dominates agricultural commodity trading. The 164-year-old family-owned firm is in the midst of a corporate shakeup and has been searching since last year for a new chief executive to lead the trading house into a potential share listing or merger deal.
Russia’s Sberbank reports profit drop Russia’s top lender Sberbank reported yesterday a 20 percent drop in profit for 2014, hurt by a jump in its funding costs and higher loan-loss provisions as an economic crisis and slide in the rouble weighed. Sberbank is one of several large Russian banks under Western sanctions over the Ukraine crisis, which drive up its cost of financing by limiting its access to international capital. Sberbank said it earned 290.3 billion roubles (US$5.14 billion) in 2014, beating analysts’ forecasts for net profit of 275.8 billion roubles.
Greece optimistic on deal with euro zone The government is optimistic about reaching a deal on economic reforms with its euro zone peers early next week, unblocking urgently needed funding, its economy minister said yesterday. After talks with EU leaders including German Chancellor Angela Merkel in the past week, Athens said it would present a package of reforms to its euro zone partners by Monday in the hope of unlocking aid and avoiding bankruptcy. The reforms are a sensitive issue for Prime Minister Alexis Tsipras’s leftwing government, which came to power in January pledging to end austerity.
US President Barack Obama delivers remarks on the 5th Anniversary of the Affordable Care Act last Wednesday
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he House of Representatives approved a US budget Wednesday that shaves US$5.5 trillion in spending over a decade, repeals the Obamacare health law and eliminates the federal deficit in nine years without raising taxes. The Republican blueprint for fiscal year 2016 is seen as a compromise between the party’s fiscal conservatives, who want to slash the debt by virtually any means possible, and defence hawks calling for increased military spending amid rising extremism and unrest worldwide. The House debated several budget proposals Wednesday, including a few Democratic alternatives and one favoured by deficit hawks, but they were voted down. The main Republican budget, which prevailed 228 to 199 with all Democrats voting no, would bring the federal deficit from 2.8 percent of gross domestic product in 2014 to zero by 2024. Aside from cutting health programs such as Medicaid and children’s insurance programs, and abolishing Obamacare, the budget would trim
US$1.1 trillion from other “mandatory programs” such as food stamps and capping Pell Grants for college students. The nearly US$3.8 trillion budget for 2016 includes an extra US$20 billion in military funding demanded by national security hawks, and with no offset requirements. Hard-core fiscal conservatives are known to balk at cooperating with mainstream Republicans on major legislation. But many remained on board with this budget, largely because passing one will allow the chambers to enter negotiations to bring the two versions into line. Though Congress could send a repeal of the Affordable Care Act to President Barack Obama’s desk, it would likely earn his veto. The Senate is expected to pass its own version of the budget this week, before Congress goes on recess for two weeks. The House version essentially transforms Medicare, the federally mandated health insurance program for the elderly, into a voucher-like system, something Obama and other
Authorities confused about shadow banking Regulators have limited themselves to tighter supervision of the sector Huw Jones
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uthorities are nowhere near to fully understanding “shadow banking” as the US$75 trillion sector morphs and grows under the influence of new technology and regulation, a top markets supervisor said. Shadow banking refers to the supply of credit outside traditional banks, such as from private equity investors, money market funds, insurers, repurchase agreements and securities lending. The Group of 20 economies (G20) agreed during the 2007-09 financial crisis that the opaque sector should be better supervised, fearing that as traditional banks become more regulated, risky lending activities would migrate there. But progress has been slow.
“After 10 years of being a hot topic there isn’t a consensus yet,” Ashley Alder, chief executive of Hong Kong’s Securities and Futures Commission, told a CityWeek conference in London. “Is it banking or is it part of market-based finance? What are we going to do about it? We are nowhere near the finishing line,” he said. So far, regulators have limited themselves to tighter supervision of the sector and rules which make it more expensive for hedge funds and insurance companies to raise funds from loaning shares from the end of 2017. But shadow banking continues to grow, as credit from traditional banks has shrunk in the face of tougher rules on lending quality and capital
Democrats have consistently opposed. It would also overhaul the tax code -- a provision that the top Democrat on the House Budget Committee, Chris Van Hollen, argued merely provides “more tax breaks to the folks at the very top end of the income scale.” But House Budget Committee chairman Tom Price, who shepherded the measure to the finish line, declared it “a budget that credibly addresses our fiscal and economic challenges.” Passing a budget resolution is crucial for Republicans, who pledged to ease Washington gridlock now that they control both chambers of Congress. Obama unveiled his 2016 budget in February, a US$4 trillion wish list that would blow through mandatory spending caps, raise taxes, and spend nearly US$500 billion on improving infrastructure. While Republicans slammed Obama’s budget as one that would never balance, it could be seen as a first draft of the Democrats’ election manifesto for the upcoming presidential campaign. AFP
requirements. The sector reached US$75 trillion in 2013, up US$5 trillion on the year before, according to G20 figures. Part of the problem is that today’s shadow banking sector is not the same as it was back during the crisis, Alder said. New players such as asset managers have become lenders, as they hunt for yield in a low interest rate environment. Advances in technology - which mean there are far more ways of linking credit with borrowers, such as the use of mobile phones in Africa - have also created a new set of financial actors in what Alder dubs “modern” shadow banking. He cited other developments such as Chinese e-commerce giant Alibaba teaming up with Lending Club to offer peer-to-peer lending for U.S. customers. The sector is also filling the credit void left by banks, particularly in financing small companies, thereby fitting in with the G20’s emphasis on economic growth, Alder said, meaning regulators are wary of introducing a slew of new rules in case they choke off funding. There was disagreement among regulators over what should be done, Alder said. “We need to properly identify what we are talking about. What do we do about big asset managers who have invested in credit markets?” he added. Reuters
Business Daily | 15
March 27, 2015
Opinion Business
wires
Is jobless growth inevitable?
Leading reports from Asia’s best business newspapers Sami Mahroum Academic Director of Innovation and Policy at INSEAD
Elif Bascavusoglu-Moreau
Senior research fellow at INSEAD’s Innovation and Policy Initiative
PHILSTAR The Philippines’ merchandise imports declined 14 percent in January this year from a year ago amid a contraction in payments for mineral fuels and lubricants, as well as capital and consumer goods. According to data from the Philippine Statistics Authority, the country’s merchandise imports fell to US$5.1 billion in January this year from US$6 billion in the same month last year. The latest result is a reversal of the 0.4-percent year-on-year growth posted in December 2014, and 24.7-percent expansion in January 2014.
THE KOREA HERALD South Korea’s antitrust watchdog said yesterday it has slapped 3.5 billion won (US$3.2 million) in fines against car parts suppliers found to have engaged in illegal cartel activities. The Fair Trade Commission said two Japanese companies and local subsidiaries, as well as a local manufacturer were found to have rigged prices in the past in violation of the country’s anti-collusion rules. The companies supplied parts to Hyundai and Kia that effectively control around 75 percent of the local car market. The carmakers are flagships of Hyundai Motor Group.
TAIPEI TIMES The on-going drought poses a serious downside risk to the economy, which has achieved stability as cheaper fuel expenses boost corporate profits and consumer spending, YuantaPolaris Research Institute said. Water rationing could affect the output of major industries by up to 20 percent, removing as much as 0.825 percentage point from GDP growth this year — if the drought persists, institute chairman Liang Kuoyuan said on the side-lines of a quarterly news conference. However, the chances of that outcome coming to pass are diminishing amid this week’s precipitation and the upcoming monsoon season, the economist said.
THE JAKARTA POST The Trade Ministry has passed import permits for sugar refiners to buy 945,643 tons of raw sugar for the second quarter of this year. The figure is much higher than the 672,000 tons allocated for the first quarter ending in March. The ministry’s import director, Thamrin Latuconsina, said that the higher amount was given to allow refiners to meet stronger demand for refined sugar from the food and beverage industry, which had geared up production ahead of Ramadhan and Idul Fitri — slated to consecutively fall in June and July.
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ver since the industrial revolution, humans have been ambivalent about technological progress. While new technology has been a major source of liberation, progress, and prosperity, it has also fuelled plenty of agony – not least owing to the fear that it will render labour redundant. So far, experience has seemed to discredit this fear. Indeed, by boosting productivity and underpinning the emergence of new industries, technological progress has historically fuelled economic growth and net job creation. New innovations accelerated – rather than disrupted – this positive cycle. But some are claiming that the cycle is now broken, especially in technologically savvy countries like the United States. Indeed, machines are becoming smarter, with innovations like advanced robotics, 3D printing, and big data analytics enabling companies to save money by eliminating even highly skilled workers. As a result of this “productivity paradox” (sometimes called the “great decoupling”), jobless growth is here to stay. We can no longer take human prosperity for granted, however rosy the aggregate indicators for profitability and GDP growth may be. But are we really in the throes of a Frankenstein’s dilemma, in which our own creations come back to haunt us? Or can we beat the productivity paradox by harnessing the power of machines to support development in ways that benefit more than the bottom line? There is good reason to be optimistic. Many countries – even technologically savvy
ones – can still benefit from the self-reinforcing cycle of technological advancement, rising productivity, and employment growth. Luxembourg, Norway, and the Netherlands – three innovative and capital-intensive economies that regularly appear in the upper quartile of productivity per hour and employment, according to OECD data from 2001-2013 – are prime examples. Cynics will suspect that Luxembourg and Norway have managed to sustain this dynamic only because of their peculiar economic structures (a concentration in finance in the former, and in natural resources in the latter). So let’s consider the Netherlands, which stands out as the only country that recently has appeared in the upper quartile not only in productivity and employment, but also in labour-market participation. The Netherlands has been a champion of innovation, gaining a fifth-place ranking in the recent INSEAD Global Innovation Index. A striking 85% of large Dutch firms report innovative activities, while more than 50% of all firms are “innovation active.” Dutch firms are also world patent leaders; Eindhoven, the hometown of the electronics company Philips, is the world’s most patent-intensive city. So what is the Dutch secret for ensuring that technological progress benefits all? The Netherlands seems to be undergoing a sort of industrial revolution in reverse, with jobs moving from factories to homes. The Dutch labour market has the highest concentration of part-time and freelance workers
Can we beat the productivity paradox by harnessing the power of machines to support development in ways that benefit more than the bottom line?
in Europe, with nearly 50% of all Dutch workers, and 62% of young workers, engaged in part-time employment – a luxury afforded to them by the country’s relatively high hourly wages. Many young Dutch work part-time as schoolteachers. But a more lucrative – and common – source of part-time employment in the Netherlands is the subcontracting of “white collar” services. Highly skilled or specialized workers sell their services to a wide range of businesses, supplementing the
work of machines with human value-added activity. Another key to the Netherlands’ success is entrepreneurship. In 1990-2010, self-employment rates fell across the OECD countries, with business ownership in the US, for example, having declined rapidly since 2002. In the Netherlands, however, business ownership has grown steadily since 1992, reaching 12% of the labour force in 2012. Almost 70% of Dutch business owners were exclusively selfemployed in 2008. To be sure, rates of business ownership and self-employment are also high in low-income countries like Mexico. But the Netherlands is much wealthier, and boasts high levels of per-hour productivity, employment, and participation – largely owing to its flexible and adaptive labour market. In short, the Netherlands has restructured its economic value chain to accommodate a new division of labour between humans and machines, embracing new kinds of economic activity – especially part-time work and solo entrepreneurship – to balance human needs with technological advances. In doing so, it has highlighted the importance of “enterprising skills” – including creativity, entrepreneurship, leadership, self-management, and communications – in enabling humans to keep pace with technology. Machines may be reaching new heights of intelligence, but they are no match for human resourcefulness, imagination, and interaction. This is a lesson that countries would do well to learn from the Dutch. Project Syndicate
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March 27, 2015
Closing Bank of Communications profit rises 5 pct
Big analytics research centre established in HK
The bank said yesterday net profit rose 5.4 percent in the fourth quarter of 2014, within analyst estimates, as in common with peers it battled rising bad debt in China’s slowing economy. Profit reached 14.3 billion yuan (US$2.30 billion) in the three months through December from 13.6 billion yuan in the same period a year prior, according to a Reuters calculation from the company’s figures. The result compared with the 13.9 billion yuan average estimate of analysts polled by Thomson Reuters. For the whole of 2014, net profit rose to 65.85 billion yuan from 62.3 billion yuan a year earlier.
The Chinese University of Hong Kong (CUHK) has established the Stanley Ho Big Data Decision Analytics Research Centre, the first among all tertiary institutions in Hong Kong, it said here yesterday. The centre aims to address important issues spanning six major areas, including healthcare, environment, social networks, finance, logistics and learning. Founding director of the centre Helen Meng said it brings together faculty members and researchers from different disciplines in CUHK to address challenges posed by the unprecedented volumes of data that can be analysed to bring new insights in applications across many domains.
ICBC profit falls on bad-debt charges Bank’s nonperforming loans rose by a third last year to 124.5 billion yuan
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ndustrial & Commercial Bank of China Ltd., the world’s largest lender by assets, posted its first quarterly decline in profit since 2009 as provisions for bad loans more than doubled. Net income slipped 3.1 percent to 55.3 billion yuan (US$8.9 billion) in the three months ended December 31 from a year earlier, a Hong Kong exchange filing showed yesterday. That trailed the 58 billion yuan average estimate of 26 analyst estimates compiled by Bloomberg. A weakening Chinese economy is pushing up nonperforming loans just as interest-rate cuts threaten to pare lenders’ margins and deregulation boosts competition. ICBC joined Agricultural Bank of China Ltd. and Bank of China Ltd. in reducing its dividend pay-out ratio for 2014. Agricultural Bank on Tuesday posted an unexpected decline in profit. Bank of China reported a 4.8 percent gain. Like ICBC, both lenders boosted provisions for soured debts. The People’s Bank of China cut benchmark deposit and lending rates in November and February. The central bank will make another 25 basis-point reduction in the second quarter, according to a Bloomberg survey of analysts this month, after the government set the nation’s lowest economic growth target in more than 15 years.
Rising provisions The combined profit growth of China’s 18 listed banks may ease to
Chinese banks face rising funding costs as the government deregulates interest rates
3 percent this year from an estimated 7.3 percent in 2014 as the slowdown prompts more rate reductions, according to Deutsche Bank AG. ICBC’s nonperforming loans rose by a third last year to 124.5 billion yuan, accounting for 1.13 percent of total advances. Provision charges increased about 150 percent to 24.3 billion yuan in the fourth quarter. ICBC trimmed its full-year dividend to 0.255 yuan a share from 0.262 yuan in 2013.
Chinese banks face rising funding costs as the government deregulates interest rates and savers move money to money-market funds and wealth management products that offer higher yields than bank deposits. Still, ICBC’s net interest margin widened nine basis points to 2.66 percent in 2014. Technology companies such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd. pose another threat as they move into banking services such as wealth management
and payments. ICBC is accelerating its expansion into Internet finance, starting an online platform that integrates services from payments to financing and investments. The bank is also expanding overseas -- from Myanmar and Cambodia to Luxembourg and London -- to reduce its reliance on the domestic market. ICBC last week won a Chinese regulatory approval for the acquisition of a Turkish lender. Bloomberg News
Hong Kong government seeks Taiwan leaves rates to balance tourism unchanged
A single e-commerce platform for ASEAN countries
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he Hong Kong Special Administrative Region (HKSAR) government will strive to balance supply and demand in areas such as tourist attractions and public spaces, Chief Executive Leung Chun-Ying said yesterday. In response to a query during a Legislative Council question and answer session this morning, Leung said tourism contributed 4.7 percent of the total GDP, similar to the contribution from all professional services. He said the tourism industry also created job opportunities for the grassroots, and many people will become jobless or underemployed if the industry was to contract. Leung said people should not harm Hong Kong’s image as a tourist destination, as it would be difficult to restore its reputation. The HKSAR government and the Travel Industry Council will boost promotion, he said, adding that people should avoid radical action towards mainland visitors. Leung said there were fewer mainland visitors during this Lunar New Year compared with last year, and if it becomes a trend, the outlook for tourism and related industries will be affected. Xinhua
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aiwan left its benchmark interest rate unchanged yesterday for the fifteenth quarter in a row, confident U.S.-led demand for the latest high-tech devices will continue to support its trade-reliant economy, with inflation remaining moderate. Recovery in the United States means good business for the island’s tech companies, a vital part of the global supply chain that makes and assembles mobile gadgets. And even if the U.S. Federal Reserve raises interest rates later this year, many economists believe Taiwan should have leeway to leave its rates alone, possibly until early 2016. At its quarterly meeting, Taiwan’s central bank left its discount rate at 1.875 percent, a decision forecast by all 16 economists polled by Reuters. The rate was last changed in June 2011, when it was raised 12.5 basis points. The central bank cited mild inflation as one reason for standing pat on rates and said the recent decline in consumer prices was not indicative of deflation. The consumer price index fell for the second straight month in February. Reuters
he Philippine Department of Trade and Industry (DTI) said yesterday that it will propose a single e-commerce platform for micro, small and medium enterprises (MSMEs) within the ASEAN in the upcoming Asia-Pacific Economic Cooperation (APEC) ministerial meeting to be held in Boracay Island. The ministerial meeting dubbed as “APEC Ministers Responsible for Trade” to be held in May will discuss issues affecting MSMEs and the way they do business across the ASEAN. “We already have ideas we can agree on identifying e-commerce platform to be used by MSMEs across APEC economies,” DTI secretary Gregory L. Domingo said. The proposed platform outlines customs rules and procedures and regulations for the rules of origin (ROO). “MSMEs are having a hard time exporting. A single platform wherein they can book their sales and with links to logistics will boost MSME trade across the region,” said Domingo. The Philippines will suggest an MSME with shipments of US$2,000 or less be exempt from the ROO, since ROO rules apply to countries with existing free trade agreements. Xinhua