MOP 6.00 Closing editor: Joanne Kuai Publisher: Paulo A. Azevedo Number 762 Thursday April 2, 2015 Year IV
Gaming revenue plunges further Beware the Ides of March. Macau’s gross gaming revenue fell 39.4 pct in the month Y-o-Y. The second worst decline on record - to MOP21.5 billion (US$2.7 billion). And its worst Q1 results since 2011. It also represents the 10th consecutive month of decline. The bright side is that investors are taking heart. BNP Paribas sense the market stabilising. And investors have pushed up stock on the HKSE. Nevertheless, “It’s going to be a long time before any upside catalyst,” says the bank Page 5
Optimistic realtor
Cambodian gaming operator NagaCorp’s VIP revenues double in Q1
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It’s crystal ball gazing time. Local real estate agency RicaCorp (Macau) Properties Ltd., predicts housing transactions may start increasing this month. In the first two months of this year, they dropped more than 46 pct to 649 cases. Low-end and high-end investors, however, are waiting on the sidelines, it is claimed. With the arrival of mid to senior resort management expected to galvanise the market
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Alvin Chau appointed Cultural Industry Committee member
Page 7 Two more surveys confirm stabilization of Chinese house prices
Page 9 U.S. Treasury Secretary: Yuan not ready to join IMF basket
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Prudent planning critical
HSI - Movers March 1
Name
Better safe than sorry? The gov’t has down-adjusted its forecast for gaming tax revenue. To MOP84 billion (US$10.5 billion) for 2015. Down 27.3 pct from the initial estimate of MOP115.5 billion. Secretary for Economy and Finance Lionel Leong Vai Tac warns that funding for a basket of funds and social welfare-related items will be affected
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%Day
China Unicom Hong Ko
5.59
Want Want China Hol
3.52
Cathay Pacific Airwa
3.34
China Overseas Land
3.19
China Resources Powe
3.03
Belle International
-0.78
Power Assets Holding
-1.01
China Mengniu Dairy
-1.58
Tingyi Cayman Island
-2.04
CLP Holdings Ltd
-2.44
Source: Bloomberg
www.macaubusinessdaily.com
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Grounded in law
On tenterhooks
Not taking off after all. A Macau court has rejected Australian carrier Qantas Airways request to register budget brand Jetstar. Indonesian tobacco trading company N.V. Sumatra forestalled it on name registration. The airline claims Jetstar is a prestigious brand and that the Indonesian company performed an act of ‘bad faith’
Yet more stimuli on the horizon. If economic figures from China’s factory and service engines continue to disappoint. And especially if quarterly growth sinks below 7 pct - the official red line
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2 | Business Daily
April 2, 2015
Macau
Leong: Less money for public funds as gaming tax income shrinks Cuts in estimated income for several public funds follows as gov’t announces bleaker outlook for revenue derived from gaming tax Stephanie Lai sw.lai@macaubusinessdaily.com
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he government has downadjusted its estimated income for a basket of funds and social welfare-related items following its amended forecast for gaming tax revenue, which is now estimated at MOP84 billion (US$10.5 billion) for 2015, Secretary for Economy and Finance Lionel Leong Vai Tac told legislators yesterday. Speaking to the Legislative
Assembly approves compensation for unreasonable layoffs The Legislative Assembly also passed the final reading yesterday of the amended compensation to employees who are unreasonably laid off, which should now be calculated at the maximum of a monthly MOP20,000 instead of the MOP14,000 as stated in the existing version of the Labour Relations Law. This compensation amount will be reviewed every two years. Although the bill has obtained unanimous approval from the Assembly, legislators from the Federation of Trade Unions and prodemocracy New Macau Association have voiced discontent that the maximum compensation to be paid to employees - which is capped at 12 times his or her basic salary earned before the layoff - still remains in the law.
Assembly on the amended budget for 2015, Mr. Leong noted that the government now forecasts that the income derived from the special gaming tax at MOP84 billion is down 27.3 per cent from the initially estimated MOP115.5 billion. The adjusted estimation for the gaming tax revenue follows a bleaker outlook that the Macau government has on the city’s average gross monthly gaming revenue this year, which is 20 billion patacas versus the earlier estimate of 27.5 billion patacas, Chief Executive Fernando Chui Sai On said when delivering the 2015 Policy Address on March 23. Following the adjustment in estimated income from gaming tax, the Secretary announced yesterday that the government’s estimated total revenue for this year is in the region of MOP119.9 billion, down 22.4 percent from the initially estimated MOP154.6 billion. The city’s two major public funds that are largely supported by gaming revenue - the Social Security Fund and the Macau Foundation - will see nearly MOP1.68 billion less in estimated income, Mr. Leong noted of the adjusted figure yesterday. The Social Security Fund, which supports the city’s pension and several allowances, will see 27.2 per cent less allotted from gaming income, which is now estimated at MOP3.6 billion. This allotment accounts for 74 per cent of the total estimated income for the fund at MOP4.87 billion for this year, Business Daily has calculated using official data for the adjusted budget. The Secretary has also announced the estimated cut in income of three other autonomous government organs, which are the Industrial
and Commercial Development Fund, Tourism Fund and Macau Trade and Promotion Institute: each of these entities will receive MOP17.95 million less in income vis-a-vis the initial estimate. This means that their combined estimated income now stands at MOP157 million, some 25.5 per cent less than the initial government estimate following the down-adjustment in gaming revenue. The local government levies a special gaming tax on the city’s casino gross gaming revenue of 35 per cent. It also collects about 4 per cent in indirect taxes on the gross gaming revenue for different promotional and social causes, as well as a special levy on each slot machine, live dealer gaming table and VIP room. Aside from the social welfare items, the government expects to derive less income from stamp duty imposed on local housing transactions as well as vehicle tax, Mr. Leong told legislators. This year, the government estimates taking in MOP1.789 billion from stamp duty imposed on housing transactions, which is nearly 20 per
cent less than the initial estimate of over MOP2.2 billion. Forecasting that there will be fewer transactions of high-priced cars, the government also expects to receive a total of MOP1.19 billion in vehicle tax revenue this year, which is 13.9 per cent less than the originally estimated MOP1.38 billion. While the government has announced cuts in its estimate for several income items, it has only slightly up-adjusted its public expenditure figures for this year. The government’s total expenditure estimated for this year is MOP83.76 billion, up by only 0.05 per cent when compared to the previous estimate of nearly MOP83.72 billion. The additional budget is due to an allotment for a water supply infrastructure project in Zhuhai, which requires the government put in MOP200 million. The adjusted budget plan obtained the unanimous approval of legislators yesterday upon its first reading, and will now be deliberated by the Legislative Assembly’s permanent committee.
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April 2, 2015
Macau Cash handout scheme may be changed Secretary for Economy and Finance Lionel Leong Vai Tac said on Tuesday that the city’s cash handout scheme may be adjusted in 2016, following a possible decrease in the fiscal surplus. Nevertheless, he indicated that he and Chief Executive Fernando Chui Sai On still maintain a positive attitude to the distribution scheme. In addition, he said that the government might study the establishment of a system for the cash handout. This year, every permanent resident in the Special Administrative Region can get MOP9,000 (US$1,125) through the scheme, while non-permanent residents will receive MOP5,400.
Home market pick-up from Q2, says veteran realtor Although the number of property transaction decreased by nearly half year-on-year during the first two months of this year, a real estate agency believes sales will pick up from the second quarter
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he city’s real estate market remained becalmed during the first quarter of this year mirroring the slowdown of the economy and declining gaming revenues, the veteran managing director of RicaCorp (Macau) Properties Ltd., Jane Liu, said, predicting, however, that the number of property transactions may start increasing from this month. “With the quiet atmosphere of the real estate market, the asking prices of landlords have eased, [which has triggered] two extreme types of investors - those investing in very low quality products and very high
quality properties, respectively. As such, most of the users are observing the market, hoping housing prices will drop further, which has led to the number of transactions not being high [in the first quarter],” Ms. Liu wrote in a press release summarising the real estate market for March. Nevertheless, according to Ms. Liu, the number of clients viewing flats has increased substantially compared to the end of last year. In fact, according to the latest official data of the Financial Services Bureau (DSF), the city’s transactions for residential flats amounted to 649 during the first two months of this
year, which, compared to the 1,215 transactions in the same period of 2013, represents a decrease of 46.6 per cent. The MD of RicaCorp. said that it remained quiet in the first week of March, later heating up with a new property project in Taipa – Nova Park - that launched sales mid-March. “With Nova Park releasing studios to excite the transactions, as well as Hengqin continuing to release high quality residential [units], the real estate market will gradually show signs of a turnaround,” Ms. Liu forecast. Expecting the number of transactions in April to be greater than the first quarter, the property agent
claimed that many users and longterm investors are being attracted to the property market, due to bank valuations close to market price, low interest rate sustained for real estate mortgages and loans, as well as rental support. On the other hand, she indicated that the rental market in Cotai is becoming active following more non-residential middle or high management of gaming corporations arriving in Macau for the opening of new casino projects, such as Galaxy Phase II and Melco Crown Entertainment Ltd.’s Studio City. K.L.
4 | Business Daily
April 2, 2015
Macau opinion
Conflicting calls
Qantas appeal to register Jetstar in Macau denied The Australian carrier sought to register the name of its low budget company but the intention was denied, because in 2009 N.V. Sumatra Tobacco Trading Company had already applied to register the brand
José I. Duarte Economist
João Santos Filipe
jsfilipe@macaubusinessdaily.com
I
t’s difficult not to feel some empathy for the Secretary for the Economy as he faces some (severely) conflicting interests and trends related to his portfolio. Some require careful balancing. However, the pressure from some vocal sectors - and to be seen dealing with their demands, which may be a short term imperative - may contribute to making some of the issues more intractable in the future. The labour market is a good example of this. The current economic prosperity could not have been achieved without the significant contribution of non-resident workers. In some cases, the required qualifications and expertise are not available in Macau. Should we discard the hiring of external workers then those skills would not be available at all, period. The effect would obviously be that some goods and services would not be provided and the community, as a whole, would be the poorer for it. But the problem goes beyond the issue of qualifications alone; it’s also a matter of absolute figures. The number of residents would not be sufficient, even if the qualification pool was adequate, to sustain the current levels of activity – and, again, we would all be poorer for that. If anything, the labour market conditions can be a major block to further growth, not to mention the diversification we keep fancying about. In this context, with virtual full employment, to claim that non-residents are stealing the ‘rice bowl’ of the locals is a patent misrepresentation. If anything, we could claim that they are helping to increase everyone’s rice portion. (There may be exceptions but these can be attributed to other factors). I want to believe those who make these claims are aware that their case does not stand up to the cold light of reason. But, then, it is not reason these claims appeal to. Such statements, in fact, are instrumental in justifying the need to ‘protect’ the locals and grant them special privileges. That is, they seek to pressure the political and economic operators to provide some kind of ‘affirmative action’ that further discriminates in favour of those who are already the most privileged. In some respects, the government has in the past felt the need to give a nod to these sorts of claims. The problem with such an approach, no matter how much it may seem expedient today, is that it tends to store up further troubles down the road. Multiplying entitlements that are not linked to merit and skills does not really resolve any structural problem – and there are several, well-identified and stubborn ones. Increasing the bias of public policies against non-resident workers may mute some voices now but will only increase the sense of entitlement of some. Demands will keep coming again and again, and satisfaction will only be achieved by more and more benefits and privileges. That does not pave the way to a fair and harmonious society.
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he Court of Second Instance has denied Qantas Airways Limited the request to register the brand Jetstar. The decision of the court found that the brand was already registered by N.V. Sumatra Tobacco Trading Company and that allowing another brand to run the same type of products or services would be allowing an ‘imitation’. This case started in 2009 when Indonesian company N.V. Sumatra applied to register the brand Jetstar in order to provide services related to cafés, bar, hotels and restaurants. At the time, Qantas Airways Limited, which runs the budget carrier company named Jetstar, appealed against the registration to Macau Economic Services (DSE). The Australian carrier also applied to register the Jetstar brand for the same type of products but with extended areas of operations that would include, for
example, catering for travellers. Initially, DSE accepted the registration from N.V. Sumatra and refused the request from Qantas to stop the process of registration asked for by the Indonesian company. The DSE decisions also denied the process of registering Jetstar by Qantas based on the justification that after accepting the first registration authorising another registration of the same brand for similar services would be an imitation, which would breach Article 214 of the Law on Industrial Property and could confuse clients. Following the decision by DSE, Qantas took the issue to court, where the previous decisions were confirmed based on the assumptions that the Australian company had failed to prove that the carrier Jetstar was a prestigious brand. As Qantas was not satisfied with the base court decisions it appealed to the Court of Second Instance. The
Beijing official asks Macau to join crackdown on corruption A Mainland official has asked the Commission Against Corruption to help in pursuing corrupt officials
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he Minister of Supervision and Deputy Chief of the Central Commission for Discipline Inspection, Huang Shuxian, asked Macau on Monday to co-operate with the anti-graft campaign of the Central Government by hunting down fugitives. “We hope to pragmatically cooperate with Macau’s Commission Against Corruption to strengthen the tracking down of fugitives and proceeds”, Huang Shuxian said on Monday, as quoted by South China Morning Post, during a meeting in Beijing with the Director of the Commission Against Corruption
André Cheong Weng Chon. The Mainland-Macau co-operation would strengthen the implementation of the United Nations Convention Against Corruption, Huang stressed, according to the Hong Kong-based newspaper. At the moment, there is no law in Macau that opens the door for the transfer of fugitives to and from the Mainland. However, Professor Simon Young Ngai Man of the University of Hong Kong’s faculty of law explained to South China Morning Post that the absence of a transfer agreement would not be a block to
Australian company argued that its registration for the Jetstar brand would include more and different services that would differentiate the brands and avoid imitation. It also argued that the Jetstar carrier is a prestigious brand and that the registration of N.V. Sumatra was an act of ‘bad faith’. In relation to the claims that the carrier Jetstar is a prestigious brand and that the Indonesian company performed an action of ‘bad faith’, the Court of Second Instance refused to analyse them because it considered the base court decision to be final. Concerning the non-imitation and breach of Article 214 of the Law on Industrial Property claims, the appeal court ruled that allowing Qantas to register Jetstar would be an imitation and thus it confirmed the registration of N.V. Sumatra and refused the intention of the carrier.
co-operation because the handing over of fugitives is only one way to enforce the law. “Sometimes, through the sharing of information, the Macau authorities may learn enough to undertake their own investigations for purposes of enforcing Macau law; for example, money laundering laws,” Prof.Young said. The request of Huang Shuxian comes a few days after it was announced that Operation Skynet will go further in the international scene in order to capture corrupt officials taking refuge abroad. This operation builds on Operation Foxhunt, China’s initial global fugitive search, which caught more than 500 officials living abroad last year. Since taking office in 2012, President Xi Jinping has relentlessly fought corruption, implementing a campaign against corrupt party officials. In Macau, this campaign has been linked to the decline in gaming revenues, as VIP gamblers are said to now sidestep the Special Administrative Region. J.S.F.
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April 2, 2015
Macau Ambrose So’s remuneration reaches HK$16mln Gaming operator SJM Holdings Ltd. increased the annual salary of its chief executive officer, Ambrose So Shu Fai, by 13 per cent in 2014, Hong Kong Chinese-language newspaper Apple Daily has reported. According to the newspaper, the annual wage for the SJM CEO exceeded HK$16 million last year, while the salary of its executive director, Angela Leong On Kei, was around HK$13.3 million. In fact, according to the annual results of SJM released in February, SJM increased its directors’ remuneration by 18 per cent, paying its management a total of HK$102 million in 2014, despite its gaming revenue posting a year-on-year decline of 8.8 per cent to HK$79.3 billion.
Worst quarter for gaming industry since 2011 Revenues from gaming have shrunk for the tenth consecutive month although analysts sense the market stabilising
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aming revenue dropped 39.4 per cent year-on-year in March from MOP35.5 billion to MOP21.5 billion (US$2.7 billion) putting the industry through its worst quarter since January-March 2011, according to data published yesterday by the Gaming Inspection and Coordination Bureau (DICJ). During the first three months of 2015, gaming revenues accounted for MOP64.8 billion, which
represents a decrease of 36.6 per cent year-on-year from MOP102.2 billion. The worst record since January-March 2011, gaming revenues in that period amounted to MOP58.8 billion. The drop in gaming revenues in March was still the second worst to date, after revenues were cut 48.6 per cent year-on-year in February 2015 to MOP19.5 billion from MOP38 billion. The fact revenues have been declining for another
month adds to the agony of Macau’s industry that has seen revenues plummet since June. In the sector and among analysts, the central government’s crackdown on corruption, the slowdown of Mainland China’s economy, the smoking ban and stricter visa rules for Mainlanders visiting the Special Administrative Region have been blamed for the declining revenues. However, the Hong Kong-
based gaming analyst at BNP Paribas, Shengyong Goh, told Bloomberg that the bright side of the numbers revealed yesterday by the DICJ is that the market is stabilising. “The in-line result is just showing that the market is stable. I would think that the worst dip is over,” Shengyong Goh told the news agency. “It’s going to be a long time before any upside catalyst”. The opinion of the BNP Paribas analyst appears
to chime with investors in the Hong Kong Stock Exchange as the stocks of casino operators all went up yesterday. SJM Holdings stocks increased 2.761 per cent to HK$10.42, MGM China 2.329 per cent (HK$14.94), Melco Crown 2.262 per cent (HK$56.5), Sands China 1.713 (HK$32.65), Galaxy 1.841 (HK$35.95) and Wynn Macau 0.715 per cent (HK$16.9). J.F.S.
6 | Business Daily
April 2, 2015
Macau Brands
Trends
Fendi’s 7 theories Raquel Dias newsdesk@macaubusinessdaily.com
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n what surely deserves to be called a piece of really good advertising, Fendi has launched its Micro bags. The miniaturised version of the brand’s iconic Peekaboo and Baguette bags is creating something of a stir. Relying once more upon social media, the Italian fashion house shared its video on different platforms and via email, telling newsletter subscribers: ‘Make a big splash with the Fendi Micro Bags, the explosive hit of the new season,’ and asking, ‘Which theory do you believe in?’ The funny and creative campaign introduces seven possible theories for the creation of the new micro bags. From the ‘Big Bang Theory’ to the ‘Matryoshka Theory’. The one minute, twenty second video, along with the whimsical little bags it advertises, suggests a shift in the brand’s corporate image and target market. Traditionally, Fendi has a strong tradition in the luxury market and has targeted a more mature purchaser. The new campaign methods and the adorable Micro Bags suggest a shift. The brand is not alone in this. We’ve seen similar moves from most luxury brands, from Chanel to Louis Vuitton. Products and collections are becoming younger in nature as is their clientele. A good 15 years ago a young girl would not be seen with her mother’s Louis Vuitton (let alone purchase one) and the traditional Chanel tailleur was suitable only for a working, sophisticated lady. The current market trend, however, begs the question: ‘Is the 1% getting younger?’
NagaCorp’s VIP gaming revenues double in Q1
While plunging in Macau, the gaming industry is flying in Cambodia
Kam Leong
kamleong@macaubusinessdaily.com
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ith gaming revenues in the Special Administrative Region dropping by 36.6 per cent in the first three months of the year, those of Cambodian gaming operator NagaCorp Ltd. soared 48 per cent year-on-year during the same period, with the VIP market even surging 101 per cent year-on-year. Owning casino NagaWorld in Cambodia, the gaming operator told Hong Kong Stock Exchange yesterday that its gross gaming revenues generated during the first quarter of the year reached US$113.5 million, compared to the US$76.8 million during the same period of last year. The sharp increase in the total gaming revenues of the Group was contributed to by its VIP business. According to the filing, the VIP rollings of NagaCorp totalled more than US$1.69 billion in the three months, which represents a year-
on-year increase of 79 per cent from US$946 million. The growth of the VIP rollings also doubled the company’s VIP gaming revenues, which amounted to US$65.6 million, compared to
the US$32.5 million during the first quarter of 2013. However, the mass market of the Cambodian gaming operator did not post as significant growth as the VIP market in the first three months. NagaCorp’s gaming revenues gained from the mass gaming floor increased by only 8 per cent year-onyear to nearly US$48 million from US$44.2 million. Mass Tables Buy-ins, experiencing a year-on-year growth of 12 per cent, reached US$129.9 million. Meanwhile, bills-in from electronic gaming machines amounted to US$289.6 million, up 6 per cent from the US$273.2 million from the same quarter in 2013. In fact, NagaCorp did not announce its profits for the first quarter of the year in yesterday’s filing, saying the figures will only be released in its interim and annual reports.
Milan Station posts loss of HK$53mln
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ong Kong handbag retailer Milan Station registered a loss of HK$53 million (US$6.6 million) in its annual results for 2014,claiming it was due to the ‘Occupy Central’ movement in Hong Kong, as well as the slowdown of the gaming industry in Macau. According to the company’s filing with the Hong Kong Stock Exchange yesterday, the annual net loss of Milan Station represents an increase of 41 per cent year-on-year from HK$38 million in 2013. ‘Changes initiated by the Chinese government to its tourism policy and the political movement of ‘Occupy Central’ in Hong Kong in the fourth quarter substantially dampened consumer sentiment in both Mainland
China and Hong Kong, especially the demand for luxury items. The Group’s retail handbag business in Mainland China, Hong Kong and Macau was deeply affected,’ the company wrote. In fact, Milan Station had generated a total of HK$616 million in terms of revenue, which, however, still represents a year-on-year drop of 11.8 per cent. The drop in revenues was worsened by the company’s Hong Kong market, with revenues down 16.7 per cent year-on-year to HK$452.1 million from HK$543 million in 2013. Meanwhile, the handbag retailer claimed that revenues gained from the Macau market were ‘seriously affected’ by declining gaming revenues in the Special Administrative
Corporate GEG spreads care to underprivileged As Easter is fast approaching, GEG warmly visited Associação dos Familiares Encarregados dos Deficientes Mentais de Macau and donated MOP100,000 in support of its charitable work. During the visit, the GEG volunteer team specially hosted a festive ‘Easter Bunny Cookies Decoration Workshop’ for the members of the Association to create their very own Easter cookies. Mr. Buddy Lam, Vice President of Public Relations of GEG, said: “GEG has always been an active participant in local community services and takes pride in its commitment to making valuable contributions to Macau. I hope the workshop brings festive joy to the members of the Association and shows our support for the community.”
Region, although the amount only decreased by 0.8 per cent year-onyear to HK$81.4 million. ‘The overall revenue from the city’s gaming industry was approximately MOP351,500 million, down 2.6 per cent. It put the retail industry under pressure, especially the luxury goods retail sector,’ it wrote, adding ‘therefore, the operation of the Group’s retail shops and points of sale in exclusive clubhouses in the city was seriously affected.’ Nevertheless, the Group’s revenues gained from Mainland China and Singapore increased 8.2 per cent and 2 per cent year-on-year, to HK$69.9 million and HK$12 million, respectively. K.L.
Business Daily | 7
April 2, 2015
Macau Alvin Chau joins Cultural Industry Committee Alvin Chau Cheok Wa, boss and chairman of the city’s largest junket operator, Suncity Group, has been appointed by the Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, as a member of the Cultural Industry Committee (CIC), according to the Official Gazette released yesterday. Replacing architect Carlos Alberto dos Santos Merreiros on the Committee, Mr. Chau’s term will last for two years. In fact, Secretary Tam told local broadcaster TDM Radio that Mr. Chau is an appropriate candidate for the Committee due to his experiences in the film industry. The Suncity boss runs production company Sun Entertainment Culture Limited in Hong Kong.
Macao Water profit up 9.4 per cent for 2014
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he city’s sole water distributor, Macao Water Supply Co. Ltd., said its profit after tax for last year was MOP58.62 million (US$734 million), representing a further profit growth pace when compared to the previous year. Macao Water’s profit after tax for 2014 represented a 9.4 per cent increase from the MOP53.56 million in 2013, when the water distributor registered a 8.4 per cent profit growth in the year, according to the annual profit figures published by
the company. The improved profit is due to the rise in water consumption and the government approval for the hike in payment for the water supply service provided by the company. Macau’s local water consumption reached 83.49 million cubic metres last year, of which commercial and industrial water use accounted for about half, increasing 6.42 per cent year-on-year. Starting from late August last year, the government has also started to pay Macao Water 4.91 patacas per cubic metre of water supplied to users, which represents a hike of 5.59 per cent versus the previous 4.65 patacas rate. This approved hike, which the government said mainly considered factors such as the company’s profit, changes in the composite price index (CPI) as well as in water supply cost, was much lower than the 16 per cent hike requested by Macao Water – which explained at the time that the hike was needed to help ease the financial pressure of investing in large-scale water supply infrastructure in the next few years. Macao Water asked for another hike of 11.8 per cent in its service fees last month, which is two times the expected rate of inflation here in 2015. The hike has yet to be approved by the government. The company plans to start the construction of a new water treatment plant in Seac Pai Van by the end of this year, for which a confirmed investment budget has yet to be announced.
Congratulations on the 3rd Anniversary of Business Daily
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8 | Business Daily
April 2, 2015
Greater China Apple supplier becomes China’s richest woman Zhou Qunfei, chairwoman of Lens Technology, has been crowned as China’s richest woman with a total share holding value of 46.22 billion yuan (US$7.58 billion) as of Tuesday afternoon. Her company’s share value surged to 78.08 yuan per share on Tuesday, jumping by the daily limit for 10 straight days since it debuted on the Growth Enterprise Market board in Shenzhen on March 18. Zhou has ousted Chan Laiwa, founder of Beijing Red Sandalwood Cultural Foundation, who was previously named China’s richest woman with total assets of US$6.1 billion.
Strategist upbeat about China’s economy China’s economy is well positioned to maintain good growth and a number of Chinese companies are becoming ready to be leaders instead of followers in high-tech sectors, a U.S. veteran expert on China’s industry and economy said. Handel Jones, founder, chairman and CEO of US-based International Business Strategies, Inc, made the remarks in an interview with Xinhua. “I’m confident that China, based on how things are going on, what the government is doing and what the companies are doing, is well positioned to have good growth in the next ten years,” Jones told Xinhua.
Fishing ban starts on major rivers A three-month fishing ban on the southern Pearl River and a section of the Yangtze River took effect yesterday, in an effort to protect fishery resources and maintain ecological balance. The banned section of the Yangtze is located between Gezhou Dam in central China’s Hubei Province and the estuary in Shanghai. Another fishing ban was imposed on the rest of the river in February. The annual fishing ban was initiated in the Yangtze River in 2002, while it was initiated in the Pearl River in 2011.
Three or four more BeiDou satellites this year
Feeble demand hits firms in March
Even the services sector appears to be finally succumbing to the broader economic downdraft
Koh Gui Qing and Pete Sweeney
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urveys of China’s factory and services sectors showed stubborn weakness in the world’s second-biggest economy in March, adding to bets that Beijing will have to roll out more policy support to avert a sharper slowdown. Three separate surveys showed Chinese companies shed jobs last month as they struggled with soft demand and deflationary pressures, suggesting that economic growth may have slipped below 7 percent in the first quarter of 2015, which would be the weakest in six years. “We expect first-quarter growth to drop to 6.8 percent and the government might start easing policies significantly in the second quarter,” said Zhang Zhiwei, an economist at Deutsche Bank in Hong Kong, adding that the central bank may relax banks’ reserve requirement ratio (RRR) as early as this week or next. “Growth faces headwinds from the property slowdown and a fiscal slide,” said Zhang, referring to a falloff in government revenues that many worry could further dampen economic growth by crimping investment. Many economists also see further interest rate cuts later this year and additional measures to help the weakest sectors such as the housing market. Regulators on Monday cut downpayment requirements for home buyers for the second time in six months. The last time China reduced the amount of deposits that banks must hold as reserves was on February 4, three days after an official survey of the factory sector showed activity unexpectedly shrank to a 2-1/2-year low. The official Purchasing Managers’ Index (PMI) released yesterday was not as dire, but indicated that activity was tepid at best. It edged up to 50.1 in March from February’s 49.9, the National Bureau of Statistics said, stronger than a Reuters poll forecast of 49.7, but barely above the 50-point level that separates an expansion in activity from a contraction.
In another sign that businesses were facing lacklustre demand, a survey of China’s services sector showed the official non-manufacturing PMI cooled slightly to 53.7 from February’s 53.9, hugging a one-year low. Both the factory and services PMIs showed companies continued to reduce staff last month. While the labour market remained surprisingly resilient for much of 2014, some economists believe any marked deterioration in coming months could prompt more aggressive easing measures from Beijing.
Deflation risk The surveys also suggested that deflationary pressures did not let up last month, pressuring firms’ profit margins even as sales slow and competition heats up. Producer prices in factories fell again in March for at least the 13th
We expect first-quarter growth to drop to 6.8 percent and the government might start easing policies significantly in the second quarter Zhang Zhiwei economist, Deutsche Bank Hong Kong
consecutive month, while the final prices of services charged by firms dropped last month. Wary of following in Japan’s footsteps, where two decades of falling prices have stifled economic growth, Chinese policymakers have signalled that they are ready to act to avoid a bruising deflationary cycle.
Size matters Even the services sector, which was the lone bright spot in China’s slowing economy last year, appears to be finally succumbing to the broader economic downdraft, judging by the recent patchy performance of the services PMI. Other data this year have indicated that the economy has lost momentum despite two interest rate cuts since November, a reduction in banks’ reserve requirements, and repeated attempts by the central bank to reduce financing costs. Indeed, a smaller, private survey of China’s manufacturing sector showed yesterday that it contracted in March after two months of recovery. The final HSBC/Market China Manufacturing PMI came in at 49.6, slightly higher than a preliminary “flash” reading of 49.2 but still below 50. “The latest data indicate that domestic and foreign demand remains subdued amid weaker market conditions,” said Annabel Fiddes, an economist at Markit. The official PMI looks at larger, state-owned firms, while the HSBC version focuses on small and midsized firms which are facing greater stresses such as high financing costs. True enough, the official manufacturing PMI also showed that the downturn was worst felt among the smallest factories. The PMI for big factories rose to 51.5 in March, while the index slipped to 48.3 for mid-sized manufacturers, and fell by the greatest margin to 46.9 for small workshops. Reuters
China plans to launch three or four more satellites for its indigenous global navigation and positioning network this year, the network’s chief designer said. A complete network will take shape by 2020, Yang Changfeng, chief designer of the BeiDou Navigation Satellite System (BDS), was quoted saying by the PLA Daily yesterday. The 17th satellite in the BDS global network was launched on Monday, marking the first step to expand it from a regional to global service. The BDS global network will be made up of 35 satellites, five of which will be in geostationary orbit.
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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Business Daily | 9
April 2, 2015
Greater China
Surveys confirm house price decline slowing
Compared with a year ago home prices dropped 4.35 pct
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he rate of decline in Chinese home prices slowed in March from February, two private surveys showed yesterday, adding to hopes the housing market is stabilizing as Beijing enacts policies to bolster a faltering economy. Prices of new homes in 288 cities fell 0.01 percent in March, the 12th consecutive drop on a monthly basis, a poll by property services provider Real Estate Information Corporation (CRIC) showed. The drop slowed from a 0.06 percent decline in February. But home prices were 1.71 percent lower compared to a year ago, from 1.62 percent in the previous month. “The index has been falling for one year, but the monthly drop has been narrowing for four months,” said CRIC, owned by E-House China Holdings Ltd. As stock market investors cheer China’s latest bid to boost an ailing housing sector, bankers are gritting their teeth over the risks they face in further relaxing rules on lending to home buyers. A separate survey by China Real Estate Index System (CREIS) showed average prices in 100 of the biggest cities fell 0.15 percent in March onmonth, also narrowing from a 0.24 percent fall in February.
Compared with a year ago, home prices dropped 4.35 percent, the sixth consecutive month showing an annual fall, compared to 3.84 percent fall in the previous month, said CREIS, a consultancy linked to China’s largest
property data provider, Soufun Holdings. China Vanke Co Ltd, China’s top property developer, said on Tuesday land prices in China have not yet returned to reasonable levels, suggesting limited demand.
Rating companies say risks ignored Debt rankings are becoming more important in China after a solar panel maker became the first onshore bond issuer to default in March 2014
Growing industry Small credit rating companies began to mushroom in 2009, when local governments were encouraged to issue debt to stimulate the economy, said Li Bo, Shanghai-based chief investment consultant at GF Securities. Mizuho Securities Asia Ltd. estimates regional liabilities have now reached 25 trillion yuan, bigger than Germany’s economy. Henan Xinxie Credit Rating Co., established in 2012, has five analysts and has never rated an issuer below
Reuters
Bloomberg data going back to 1998. “Credit rating companies are pressured by debt issuers instead of investors,” Lianhe wrote in an e-mailed response to questions on March 26. “This makes it difficult for rating firms to be objective and fair.”
Tighter regulation U.S. lawmakers sought to remedy some of these pitfalls with the 2010 Dodd-Frank Act, which requires more disclosure by rating companies. Standard & Poor’s ended a two-year legal battle with the U.S. Justice Department and more than a dozen states after agreeing to pay US$1.5 billion on February 3. The government should issue mandatory guidance to all grading firms, so they don’t have to “invent their own methodologies, which lead to unfair results,” said Henan Xinxie’s Mi. “The government should also announce rules on how much issuers can pay rating firms.”
D
agong Global Credit Rating Group’s chairman says some of China’s debt rankings are “useless” and pose a risk to the world’s second-largest economy. Its biggest local rivals agree the industry needs tighter regulation. Dagong has seen its market share halve in six years to 20 percent due to “irresponsible” competitors, Chairman Guan Jianzhong said in a March 24 interview in Beijing. Some companies are compromising evaluations to win business and a lack of defaults has made it hard to gauge the assessors’ trustworthiness, according to Dagong, China Lianhe Credit Rating Co. and China Chengxin International Credit Co. Premier Li Keqiang told parliament last month he is prepared to tolerate more cases of “financial risk” and bonds of 11 Chinese companies yielded more than 15 percent as of March 23, amid record maturities in the coming quarter.
The government is due to publish its March property price data for 70 of the biggest Chinese cities on April 18 after reporting its property sales and investment figures on April 15.
Bloomberg News
A, General Manager Mi Dezhong said in a March 27 phone interview from Zhengzhou, Henan province. “We do face huge pressure from issuers,” Mi said. “There are so many cases where we try to give B ratings and the companies just abandoned us and turned to other rating firms.” James Yip, a fund manager who invests overseas yuan in mainland markets at Shenyin Wanguo Asset Management (Asia) Ltd. in Hong Kong, says that while he reads analysis from Chinese rating firms, he relies less on their conclusions. The companies “are not as strict as the international ones, but this
is understandable,” Yip said in a March 27 phone interview. “Overseas agencies focus more on a bond’s creditworthiness but consider less the issuer’s background, but you know in China, there’s a lot of background behind the issuer,” such as relationships with authorities.
More defaults Lianhe said rating firms cannot be properly assessed without defaults. Companies need to repay 1.5 trillion yuan (US$242 billion) of local-currency notes in the period to June 30, the most for a quarter in
Ratings that are only labels and can’t disclose risk will be a huge latent danger to China’s economy Guan Jianzhong Dagong Global Credit Rating Chairman
10 | Business Daily
April 2, 2015
Greater China
U.S. treasurer says yuan not ready for IMF basket Rory Carroll
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he United States feels China’s yuan does not yet meet the standards for inclusion in the International Monetary Fund’s basket of global currencies, Treasury Secretary Jack Lew said. The yuan’s inclusion in the basket, which defines the value of the IMF’s reserve assets, would add to China’s global status while encouraging more central banks to hold the currency. Officials at the international lender look for a currency to be used heavily in international trade as well as freely convertible. Lew said that China had more work to do. “While further liberalization and reform are needed for the (yuan) to meet this standard, we encourage the process of completing these necessary reforms,” Lew said in a speech at the
We expect China to continue to refrain from intervention across different market conditions Jack Lew U.S. Treasury Secretary
Asia Society Northern California in San Francisco. The yuan is already the world’s fifth most-used currency in trade, and Beijing has made almost weekly strides this year in introducing the infrastructure needed to float it freely on global capital markets. Lew, who was returning from a trip to Beijing where he met with Chinese officials, repeated the U.S. view that China appears to have stopped intervening to weaken its currency. But he said the true test of whether China had shifted policy would come when market pressure increased for the yuan to strengthen. “We expect China to continue to refrain from intervention across different market conditions,” he said. In a wide-ranging speech that
Lew said Washington stood ready to welcome a China-led development bank
touched on trade, regulations and international finance, Lew also warned China against blocking foreign technologies, saying this could damage U.S.-China relations. Lew said Washington stood ready to welcome a China-led development bank as long as it complemented existing institutions and adopted high governance standards. Washington would like the AIIB to partner with existing institutions such as the World Bank and Asian Development Bank, which could push the new bank to adopt existing standards. “I was encouraged by my conversations in Beijing in which China’s leaders made clear that they aspire to meet high standards and welcome partnership,” Lew said. Reuters
Mexico wants China involved in new airport Chinese companies would still have to win any tender, but Mexico could ask certain firms to participate, the source said Gabriel Stargardter
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exico is trying to get Chinese state-run companies involved in the construction of a new US$11 billion airport as it seeks to make up for a tainted rail tender that soured relations with Beijing, a source with knowledge of the government plan said. Mexico announced in September it would build the new Mexico City airport to relieve congestion and transform the capital into a major regional hub with six runways eventually serving 120 million passengers a year. The airport is Mexican President Enrique Peña Nieto’s flagship infrastructure project. The other, a high-speed train linking Mexico City with the city of Queretaro, was originally awarded to a consortium led by state-run China Railway
This is kind of paying a favour to the Chinese companies who were denied the MexicoQueretaro train Daniel Avila Mexican Senate’s Asia-Pacific committee, National Action Party
Older, sweeter times. Xi Jinping (left) and Peña Nieto
Construction Corp (CRCC). But it was later put on ice indefinitely - a move that shocked Beijing, officials say. After CRCC lost out, a delegation led by Mexican transport and communications minister Gerardo Ruiz Esparza told Chinese officials during a trip to Beijing that Mexico would welcome Chinese involvement in the airport, a source, who asked to remain anonymous because he is not authorized to speak publicly, said. The source added Mexico believes Chinese firms would make a neat fit with Norman Foster, the chosen architect for the Mexico City airport who designed Terminal 3 of Beijing’s airport. China likes the idea, he said, but no decisions have yet been made on which state-run company would be chosen to bid for the upcoming tenders. Ruiz
Esparza expects construction of the airport to get underway in September or October this year. Chinese foreign ministry spokeswoman Hua Chunying said she did not know about the airport project, but added: “We have always said that we support able Chinese companies to go out and have cooperation with other countries on infrastructure construction and building.” Several Chinese companies with experience in large infrastructure projects including China Camc Engineering Co. and China Communications Construction Co. did not reply to requests for comment. Mexico is still weighing how to divide up work for the massive project, which includes contracts of varying sizes. While some airport contracts have already been assigned, the most juicy construction tenders are still under wraps. The project, financed by public and private funds, is scheduled to have three runways and serve some 50 million passengers a year by 2020. Since taking office in 2012, Peña Nieto has sought to redraw Mexico’s relationship with China, a long-time manufacturing rival, and wean Mexico off its reliance on the U.S. market by luring much more Chinese investment. Between 2000 and 2013, according to Mexican government data, total foreign direct investment from China in Mexico was US$281 million - less than half the amount invested by Taiwan. Chinese investment in Mexico has been just a tiny part of the total for Latin America and the Caribbean, which reached US$14.4 billion in 2013, according to official Chinese data compiled by U.S.-based consultancy Rhodium Group. Reuters
Business Daily | 11
April 2, 2015
Asia
Recovery in Japan business mood stalls Leika Kihara and Tetsushi Kajimoto
A separate private survey showed that expansion in Japanese manufacturing activity slowed in March
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eakening demand at home and abroad weighed on Japanese manufacturers’ confidence in the first quarter and big companies cut spending plans, clouding the outlook for Prime Minister Shinzo Abe’s drive to reflate the economy. But the latest central bank survey showed service-sector firms saw business conditions improve to a nearly one-year high as they enjoyed lower oil costs and a surge in inbound tourism, underscoring the patchy nature of Japan’s recovery. Both manufacturers and nonmanufacturers expect conditions to worsen slightly in the coming three months, the closely-watched “tankan” survey showed yesterday. That’s a worrying sign for the Bank of Japan as it prints money aggressively in the hope of nudging companies and households to boost spending. “We can see that companies are more worried about overseas demand. At the same time, the measure of domestic demand has not improved,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. “The capital expenditure forecasts also raise doubts about the likelihood of achieving the BOJ’s inflation target,” he said. The headline index gauging big manufacturers’ sentiment was flat from three months ago at plus 12 in March, the survey showed, surprising markets that expected a 2-point improvement. Big non-manufacturers’ sentiment improved by 2 points to plus 19, beating a median forecast of plus 17 and matching a high hit in June 2014. The survey will be among data BOJ policymakers scrutinise at its rate
review next week for clues on whether their massive monetary stimulus is working its way through wider sectors of the economy. “It showed business sentiment is moving sideways at high levels. There’s nothing strange about it ... Abenomics is making steady progress,” Chief Cabinet Secretary Yoshihide Suga told reporters. Big manufacturers maintained their conservative dollar-yen forecasts and were cautious about business conditions despite projecting increases in sales and profits in the year that began on Wednesday, the survey showed. An index showed companies saw overseas demand softening with some complaining of sluggish demand in China, which may also explain the
gloomy mood among manufacturers. Adding to the murky outlook, a separate private survey showed that expansion in Japanese manufacturing activity slowed in March as domestic orders shrank for the first time in about a year.
Surging tourism Non-manufacturers, on the other hand, saw slumping fuel costs make up for rising import prices from a weak yen. A surge of Asian tourists shopping in Japan also boosted retailers’ sales, the survey showed. The outlook looks murky. The tankan showed companies were barely able to raise prices and saw job market conditions tighten to multi-year highs,
suggesting higher wages may start to squeeze their bottom lines. Reflecting cautiousness, big firms expect to cut capital expenditure by 1.2 percent in the new fiscal year, confounding market forecasts of a 0.5 percent increase. Capital expenditure is key to the BOJ’s massive stimulus deployed two years ago, which aims to change the perception deflation will persist so that companies will start spending on investment rather than hoard cash. Still, many analysts expect the BOJ to stand pat for now to gauge the effect of October’s expansion of stimulus, although slowing inflation keeps alive expectations that the BOJ will ease monetary policy again sometime in 2015. Reuters
Weak Korean figures add pressure for more rate cuts Consumer prices rose only 0.4 percent in March on-year and hit a 16-year low Christine Kim and Choonsik Yoo
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outh Korean exports fell the most in two years in March and inflation hit its lowest since 1999, weakening economic momentum and putting the central bank under pressure to cut interest rates again. The central bank has said the South Korean economy would pick up in the March quarter after suffering its worst growth in almost six years in October through December, but a recent run of data provided little evidence of a sharp rebound. “Local exporters have become daunted as global trade is weak while some countries have expanded production facilities for products we mainly export,” said Kwon Pyong-oh, head of the trade ministry’s trade and investment bureau. Exports to China and the EU fell 2.4 percent and 9.7 percent, respectively, while shipments to the
U.S. rose 17.0 percent. “South Korea’s economy needs both consumption and exports to escape this rut, and exports are more important out of the two,” said Im No-jung, chief economist at IM Investment & Securities in Seoul. Im said he sees another rate cut as soon as May this year while exports will remain depressed until the fourth quarter. Exports in March fell 4.2 percent from a year earlier, the trade ministry data showed, the sharpest fall since February 2013 while imports dropped 15.3 percent. Both were worse than median forecasts in a Reuters poll of analysts. The declines took the trade balance to a record US$8.4 billion surplus in March. The ministry blamed lower oil and oil products prices for the poor exports, but overseas sales excluding
KEY POINTS March exports -4.2 pct y/y, imports -15.3 pct y/y March inflation +0.4 pct y/y, at 16-yr low Recent data adds pressure for more rate cuts Shipments to EU, China fall in March
oil products and petrochemicals rose just 0.2 percent in March over a year earlier, worse than gains of 0.8 percent in February and 6.6 percent in January, as demand from China and Europe remained depressed. The won rose more than half a percent against the dollar by midday on a globally softer dollar and on news of the record trade surplus. The average export value per working day was US$1.96 billion in March, 10.1 percent lower than US$2.18 billion in March 2014, Thomson Reuters calculations showed. Adding to the gloom, consumer prices rose only 0.4 percent in March on-year and hit a 16-year low while a private-sector survey showed South Korea’s manufacturing activity and new export orders both contracted in March from February. Reuters
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April 2, 2015
Asia SK fin min dismisses supplementary budget South Korea’s finance minister yesterday dismissed as “premature” talk that the government may need to draw up a supplementary budget for stimulus spending to energise a weak economic recovery. “We are not at a stage to talk about it,” a spokesman quoted Minister Choi Kyung-hwan as saying in response to reporters asking if the ministry was willing to draw up a supplementary budget. The government is required to get parliamentary approval when it wants to change the annual budget plan, for either financing or spending reasons.
Indonesian manufacturing contracts Indonesia’s manufacturing activity contracted for the sixth straight month in March, with output and new orders dropping at the fastest rate on record, a private-sector survey showed yesterday. The HSBC Markit Purchasing Managers’ Index (PMI) fell to 46.4 in March from 47.5 in February. That is the lowest reading since the survey started in April 2011. New orders fell for the sixth straight month, with respondents citing softer domestic and export demand and the impact of heavy rain as the main factors behind the decline.
India’s cotton exports to slump Cotton exports from India, the world’s biggest producer and second biggest seller, are expected to fall 41 percent to a five-year low of 7 million bales this crop year ending September as top buyer China curbs purchases, a government official said. Bulging world stockpiles and waning demand from China - intent on supporting its own growers - are hurting state-run Cotton Corporation of India (CCI), which is set to suffer its steepest loss in at least six years from sales in the current season.
IMF raises Philippine GDP forecast The International Monetary Fund yesterday slightly upgraded its forecast for Philippine economic growth to 6.7 percent this year from 6.6 percent, due in part to higher state spending and strong private construction activity. The Philippine government expects growth of 7 to 8 percent this year, after 6.1 percent expansion in 2014. Inflation is expected to stay at the lower end of the central bank’s 2-4 percent target range this year, the IMF said after the end of a staff mission to the Philippines. The IMF said risks to the outlook come from disruptive asset price shifts in financial markets due to divergent monetary policies in advanced economies.
India’s cabinet to extend land reforms India’s cabinet cleared a new ordinance on land purchases, government officials said, extending measures to make transactions easier that Prime Minister Narendra Modi has been unable to get onto the statute book. The decree, which needs the president’s signature to take effect, represents a temporary workaround after opposition parties blocked legislation to make the changes permanent in parliament’s upper house. Easing the way for investors to buy land for industrial projects in India has been a key focus of the Modi government’s reform efforts during its first year.
Shinzo Abe
‘Abenomics’ architect asks for more easing on April 30 He also said Abe should delay a second tax hike Leika Kihara and Yuko Yoshikawa
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he Bank of Japan must ease monetary policy further at its rate review on April 30 given signs of slowdown in the economy and prices, a ruling party lawmaker and one of the architects of premier Shinzo Abe’s “Abenomics” reflationary policies said. The central bank has various tools available if it were to act again, such as topping up asset purchases or scrapping a 0.1 percent floor it sets on money market rates, said Kozo Yamamoto, a leading expert on monetary policy in Abe’s ruling Liberal Democratic Party. “The economy is at a standstill and prices are seen falling ahead. To do nothing isn’t an option for the BOJ,” Yamamoto, a close aide to Abe, told Reuters yesterday. “Further monetary easing is absolutely essential to ensure that the Japanese don’t slip back to a deflationary mind-set.” A vocal advocate of aggressive monetary stimulus, Yamamoto told Reuters last October that the BOJ needed to deploy additional stimulus to ease the pain from a sales tax hike in April. He also said Abe should delay a second tax hike. Both proposals became true.
Tools still available The BOJ has stood pat since October’s action and signalled that no further stimulus is needed for now, insisting that rising wages and improvements in the economy
will accelerate inflation toward its 2 percent target around this fiscal year ending March 2016. But with inflation having ground to a halt and seen staying around that level for much of this year due to low oil prices, many analysts expect the BOJ to ease again sometime in 2015. Those predicting action in April, however, are in a minority.
KEY POINTS BOJ can buy more assets or scrap 0.1 pct floor on rates-Yamamoto Wrong for BOJ to sit idly as prices fall, economy weakens More BOJ easing won’t trigger unwelcome, sharp yen falls
Yamamoto said it would be wrong for the BOJ to sit idly if prices were to slide ahead. Recent signs of economic weakness were also a concern, he added, pointing to the BOJ’s “tankan” survey yesterday showing that a recovery in business confidence has stalled.
The BOJ should cut its bullish economic and price forecasts in new long-term estimates due on April 30, and ease further to show its determination to hit its inflation target, he said. “There are various ways the BOJ can loosen policy,” such as topping up purchases of government bonds, corporate bonds and trust funds investing in property, as well as diversifying the type of assets it targets, Yamamoto said. The BOJ can also scrap a 0.1 percent interest it pays to excess reserves financial institutions park with the central bank, which serves as a floor on money market rates, he added. Any such measures are unlikely to spur an unwelcome sharp fall in the yen, because the European Central Bank is also pumping out money aggressively and the Federal Reserve will raise interest rates only gradually, Yamamoto said. Some lawmakers and Abe’s aides have signalled the BOJ should not ease policy too soon as doing so could accelerate yen falls and boost import costs, hurting households and small firms. “There’s no need to worry about that now,” Yamamoto said. “I think the Abe administration’s top priority is to revive the economy,” he said. “Further BOJ easing will also contribute to the global economy” and so won’t raise eyebrows in the global community, he added. Reuters
Business Daily | 13
April 2, 2015
Asia
Indonesian inflation rate edges up in March
Some economists believe central bank will cut rates again this year to help support economic growth
Nilufar Rizki and Adriana Nina Kusuma
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ndonesia’s annual inflation rate accelerated slightly in March, a development that limits the central bank’s room to cut interest rates again. The statistics bureau said yesterday that March’s headline rate was 6.38 percent, compared with 6.29 percent a month earlier. The main reason for the increase was higher fuel prices. A Reuters poll expected a March rate of 6.40 percent. Bank Indonesia (BI) expects the annual inflation rate to stay around 6.3 percent until November, then drop to about 4 percent due to changes in the base for comparison. Last November, President Joko Widodo raised fuel prices by more than 30 percent, which caused the annual inflation rate to spike to 8.36 percent in December. One day after he hiked prices, BI raised its key interest rate by 25 basis points to 7.75 percent. Widodo managed to get rid of gasoline subsidies in January and also cut domestic pump prices, thanks to the massive drop in global oil prices. In February, with inflation dropping, BI surprised the market by reversing its November hike, cutting the benchmark rate to 7.50 percent. Some economists believe BI will cut rates again this year to help support
previous month. Transportation costs increased 0.77 percent from February, as fuel prices were higher. Joshua Pardede, economist at Bank Permata in Jakarta, said potentially the benchmark rate could remain 7.5 percent all year, but that depends on external factors. “If the Fed decides to postpone a rate hike to next year, there should be room to cut. But we think BI will hold if the rupiah is still volatile,” he said. BI’s next policy meeting is April 14. Reuters
President Joko Widodo (pictured) raised fuel prices by more than 30 percent, which caused the annual inflation rate to spike
economic growth, which in 2014 fell to 5.02 percent, the slowest pace in five years. But constraining BI’s ability to cut is the need to help the fragile rupiah and contain Indonesia’s current account deficit, which at times has been more than 3 percent of gross domestic product. The rupiah has weakened about 5 percent against the dollar this year
and is expected to come under fresh pressure whenever the Federal Reserve begins raising U.S. interest rates. The central bank has said inflation and the current account deficit are the main indicators it looks at when deciding the policy rate. Core inflation, which excludes administered prices and volatile food prices, accelerated to 5.04 percent in March from 4.96 percent the
KEY POINTS March rate 6.38 pct y/y, up from Feb’s 6.29 pct Core inflation in March was 5.04 pct y/y Higher inflation reduces chance for a rate cut
Malayan Banking seeks growth in Indonesia Maybank is talking with regulators to expand into banking in Thailand Chanyaporn Chanjaroen
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alayan Banking Bhd., Malaysia’s largest lender, is seeking to increase corporate lending and investment banking activities in Indonesia to help shelter it from slower economic growth in its home country. Maybank, as the company is known, will focus on lending to large companies in the transport, utilities and consumer businesses in Indonesia, Feisal Zahir, the firm’s global banking head, said in his first media interview since he assumed the position in October. He declined to provide the bank’s financial targets for Indonesia this year. Slower economic growth in Malaysia, which accounted for about 60 percent of Maybank’s 2014 loan book, augurs weaker lending for banks in that country, Feisal said. The government is forecasting growth this year to be as low as 4.5 percent, which would be the least since a contraction in 2009. “Indonesia is a key focus for us this year,” Feisal, 45, said in Singapore. “There’s a huge natural resource base,
population base and middleclass income that is growing as a consumer group. The outlook is pretty strong” for growth. The economy in Southeast Asia’s most populous country may grow 5.2 percent this year, the World Bank estimates. Maybank had 31.4 billion ringgit (US$8.5 billion) of Indonesian loans last year, or almost 8 percent of its total loan book, according to its financial statement. The bank owns 79 percent of PT Bank Internasional Indonesia. “I am sure there will be speed bumps here and there,” Feisal said. “But we want to grow the market in the long term” in Indonesia. Maybank is also positive on the economic outlook in other Southeast Asian nations including Vietnam, Thailand and the Philippines, he said. The bank is talking with regulators to expand into banking in Thailand, where it currently has a brokerage unit, Chief Executive Officer Abdul Farid Alias told reporters Tuesday in Singapore, where Maybank is hosting a two-day conference.
“We have yet to find an avenue that makes sense to us,” he said. “It’s not just M&A, it could be setting up a new license” for commercial banking, he said. The global-banking division accounted for 51 percent of Maybank’s 2014 profit before tax, Feisal said. Its operations include investment banking, asset management, global markets and corporate banking. Maybank ranked second among arrangers of Southeast Asian stock sales last year after Credit Suisse Group AG. The firm’s S$1.79 billion (US$1.3 billion) purchase of Kim Eng Holdings Ltd. in 2011 allowed it expand its operations in the rest of Southeast Asia, as well as the U.S. and the U.K. Feisal was Chemical Company of Malaysia Bhd.’s managing director until he re-joined Maybank last year. Prior to joining Chemical Company in 2010, he had worked at Maybank, which included a stint as head of investment banking. Bloomberg News
Indonesia is a key focus for us this year Feisal Zahir Maybank, Global Banking head
Maybank headquarters in Kuala Lumpur
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April 2, 2015
International Greek minister sees deal next week Greece should reach a deal with its euro zone partners and the International Monetary Fund next week on a package of reforms, which will help to unlock remaining bailout funds, the country’s economy minister said yesterday. Last week Athens presented a list of reforms to its official creditors in a bid to show it is committed to living up to pledges of financial discipline and is worthy of aid as it scrambles to meet loan payments amid a cash crunch.
U.S. consumers offer hope for economy
A report showed single-family home prices rose in January from a year earlier
Buhari wins Nigerian presidential election Muhammadu Buhari, candidate of Nigeria’s opposition All Progressives Congress, was officially declared president-elect yesterday, the first time in Nigeria’s history that a sitting president has been defeated at the polls. Earlier, outgoing President Goodluck Jonathan conceded defeat, saying he has kept his promise of free and fair elections in the nation. Buhari defeated Jonathan by a margin of 2.57 million votes. Buhari, who had unsuccessfully contested in three consecutive presidential elections between 2003 and 2011, was congratulated by Jonathan, who said it became rife for Buhari to win the battle.
Brazil prepared for tax hikes Brazil is prepared to raise taxes, Finance Minister Joaquim Levy said, to shore up investor confidence and preserve its investment grade credit rating as the country’s economy moves closer to recession. Brazil hiked import, fuel and financial taxes in January to raise 20.6 billion reais (US$7.7 billion) this year and balance accounts. Despite the increases, some of which took effect on February 1, tax revenues have fallen behind expectations. Brazil posted a primary budget deficit of 2.3 billion reais (US$721 million) in February, central bank data showed.
Bosch to plead guilty to price fixing German-based auto parts company Robert Bosch GmbH agreed to plead guilty to fixing the prices of spark plugs and other auto parts, the Justice Department said on Tuesday. The company agreed to pay a criminal fine of US$57.8 million. The company’s settlement is the most recent in a long list of auto parts makers - 34 total who have pleaded guilty or agreed to plead guilty to price fixing of more than 30 types of car parts, including seat belts, ball bearings, radiators, windshield wipers, air-conditioning systems, power window motors and power steering components.
Russia extends gas discounts for Ukraine Russia will extend gas price discounts for Ukraine into the second quarter, TASS news agency reported President Vladimir Putin as saying, but any further decisions would be taken in three months and depend on the price of oil. Russia’s gas monopoly Gazprom on Monday asked the government to extend a price discount for gas supplies to Ukraine for another three months. The two sides though agreed on a “winter package” of Russian gas supplies until March 31, which included a price discount of US$100 per 1,000 cubic metres.
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onsumer confidence rebounded strongly in March amid optimism over the labour market while house prices increased in January, hopeful signs that a recent sharp slowdown in economic activity was probably a blip. A combination of harsh winter weather, a now-settled labour dispute at the country’s busy West Coast ports, softer global demand and a strong dollar dampened growth early in the first quarter. The moderation in activity is a replay of early 2014, when an unseasonably cold winter caused a contraction in output, which was followed by a sharp rebound in growth. The Conference Board said its index of consumer attitudes rose to 101.3 this month from 98.8 in February. That was well above economists’ expectations for a reading of 96. While consumers were less optimistic about the short-term outlook, they had greater confidence in the labour market, with the share of those anticipating more jobs in the months ahead increasing significantly. The proportion of consumers expecting income growth also rose solidly, which should help to underpin consumer spending.
Consumption, which accounts for more than two-thirds of U.S. economic activity, has been soft in the last three months, despite households receiving a massive windfall from lower gasoline prices. Some of the weakness has been blamed on harsh weather that kept shoppers at home. First-quarter growth estimates range between a 0.8 percent and 1.2 percent annual pace. The economy expanded at a 2.2 percent rate in the fourth quarter. Some economists believe that weak first-quarter growth could cause the Federal Reserve to delay an interest rate increase to later this year. A second report showed singlefamily home prices rose in January from a year earlier, in part boosted by a shortage of properties on the market. The S&P/Case Shiller composite index of 20 metropolitan areas gained 4.6 percent in January on a year-over-year basis after rising 4.4 percent in December. Housing has been sluggish amid a dearth of properties, as insufficient equity keeps potential sellers from entering the market. The reacceleration in home prices could see more houses put up for sale. “This report signalled healthy home
price growth - strong enough to make current owners consider listing their homes, but slow enough to keep those homes within buyers’ reach,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “This is an important development ahead of the spring selling season, and should provide upside support for inventory growth in the first half of the year.” For now, the economy remains in a soft patch. In another report, the Institute for Supply Management-Chicago said its Business Barometer edged up to 46.3 from 45.8 in February. A reading below 50 indicates contraction in the region’s manufacturing sector. New orders contracted for a second straight month, while inventories rose sharply. Economists said the persistently weak readings suggested the strong dollar and weak global demand are acting as a drag on manufacturing. “The manufacturing sector is more exposed than the non-manufacturing sector to the negative effects of dollar appreciation and weaker foreign growth,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York. Reuters
Investment banking trading revenues rocketing JPMorgan’s investment banking chief said in February the first few weeks of the trading year had been “very strong”
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he return of volatility in global financial markets is expected to provide a boost to investment banking trading revenues in the first quarter after years in the doldrums. The first quarter is typically the strongest period of the year for investment bank income, and revenues for the top firms in the three months is likely to be up 7 percent from a year ago, analysts at JPMorgan said this week. Fixed income, currencies and commodities (FICC) businesses, which account for about half investment banks’ revenues, could see a 9 percent increase year-on-year, with currencies the best performer, after slumping in recent years on the back of tougher regulations and low
market volatility. Banks have been reshaping themselves to increase profitability by cutting staff and business lines as regulations brought in after the financial crisis restrict the amount of capital banks can put to work, and a decline in volatility has led to fewer trading opportunities. Since 2009 revenues in FICC have declined by about 50 percent at the top 10 investment banks globally, data from industry analytics firm Coalition shows. Shock moves by the Swiss National Bank (SNB) in January to remove its cap on the Swiss franc, the launch of the European Central Bank’s (ECB) trillion-euro quantitative easing (QE)
programme and moves by the Federal Reserve to tighten monetary policy have created price fluctuations that traders thrive off. FX volatility is up 30 percent in G7 currencies and volumes with it, and higher rates volatility is leading to higher trading volumes and margins, according to JPMorgan analysts. JPMorgan and Wells Fargo will kick off first-quarter earnings seasons for the banks on April 14. Analysts at Deutsche Bank also forecast trading income streams to rise year-on-year, strongly beating market expectations. Their top picks include UBS, Credit Suisse, Barclays and Societe Generale in Europe. Reuters
Business Daily | 15
April 2, 2015
Opinion Business
wires
China and global governance
Leading reports from Asia’s best business newspapers Javier Solana
Former EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain
THE BANGKOK POST The National Anti-Corruption Commission (NACC) is conducting a case-by-case probe into National Legislative Assembly (NLA) and National Reform Council (NRC) members who appointed their relatives as paid experts, advisers and aides. Sansern Poljiak, secretarygeneral of the NACC, said the anti-graft body examined nepotism accusations against each of the 70 NLA and 12 NRC members involved. “We are in the fact-finding phase of our investigation,” Mr Sansern said, adding that graft-busters are looking for evidence that legislators appointed family members to further their personal interests.
TAIPEI TIMES The Financial Supervisory Commission (FSC) announced it was moving up its plan to expand the daily stock trading fluctuation limit from 7 to 10 percent from August 3 to June 1. The wider limit is part of a slew of stimulus measures announced by commission Chairman William Tseng in February and is designed to raise liquidity for the nation’s equity market. Analysts have been generally positive about the move, saying the expanded daily trading range would help improve market liquidity and boost transactional volume, leading to healthy development of the nation’s stock market in the long term.
THE STRAITS TIMES As announced in this year’s Budget, about 800,000 Singaporean households in Housing Board flats will receive around US$80 million in service and conservancy charges (S&CC) rebates this year. The rebate is meant to help households cope with increases in the cost of living. Each household will get one to three months’ worth of rebates in total, depending on their flat type. Eligible households will receive a letter in April with more details, the Ministry of Finance said yesterday. The rebate will be disbursed over the months of April, July and October.
THE JAKARTA POST Publicly listed telecommunications firm PT Indosat is optimistic about its business this year, particularly after the company completed a network upgrade and debt refinancing, according to a spokesman. The company’s optimism was mainly driven by the fact that it has set aside funds for the legal case of its subsidiary PT Indosat Mega Media. Indosat spokesman said he was confident the company would be able to record a net profit this year as everything seemed to be getting better.
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t is safe to say that the most consequential geostrategic development of the last two decades has been China’s rise. Yet the West has failed to accord China – not to mention the other major emerging economies – the degree of influence in today’s global governance structures that it merits. This may be about to change. As it stands, China relies on bilateral arrangements to deepen its involvement in countries across Asia, Africa, and Latin America. Backed by US$3.8 trillion in currency reserves, China has provided infrastructure investment in exchange for commodities, thereby becoming the world’s largest provider of financing for developing countries, with the China Development Bank already offering more loans than the World Bank. But, given that these bilateral arrangements are executed by state-owned corporations, they often do not adhere to international best practices. The West has therefore urged China to move toward multilateral processes that meet international standards, while doing more to provide global public goods. US President Barack Obama has gone so far as to call China a “free rider” for its failure to fulfil the responsibilities that many would expect of a global power. But, if Chinese President Xi Jinping’s recent foreign-policy initiatives are any indication, change may be imminent. Last July, China led the establishment of the New Development Bank by the five BRICS countries (Brazil, Russia, India, China, and South Africa) and contributed significantly to its US$100 billion endowment. Likewise, at the latest Asia-Pacific Economic Cooperation meeting in Beijing, China spearheaded the creation of the Asian Infrastructure Investment Bank (AIIB). And it has established a US$40 billion Silk Road Fund, to support its
ambitions to re-create the ancient overland and maritime routes connecting Asia to Europe. In implementing its so-called “one belt, one road” strategy, China will pursue investments affecting some 60 countries – including in Central Asia, where its portfolio already contains projects worth more than US$50 billion. The maritime route will include the Indian Ocean, the South China Sea, and the Mediterranean. Together, they will form not just a road, but a network to facilitate the transfer of goods and ideas across Eurasia. Europe’s role in this initiative is already emerging with the Greek port of Piraeus, operated partly by the Chinese state-owned naval company COSCO, set to be a stop on the maritime route. The Piraeus port will be connected to the rest of Europe by Chinese-financed infrastructure in the Balkans and Hungary, consolidating China’s position
The West must still do more not only to welcome China to the table of global governance, but also to accept and cooperate with the institutions that the Chinese are now creating
as the European Union’s main commercial partner. The New Silk Road initiative reaffirms China’s desire to establish itself as a Eurasian power. Not only will it connect the dynamic economic hubs of East Asia and Western Europe; it will also open access to Central Asian countries, where Russia’s influence is in decline. It could also help to ease territorial tensions between China and its immediate neighbours. So far, China’s efforts to increase its influence seem to be working – and not just in the developing world. The United Kingdom recently announced its intention to serve as a founding member of the AIIB, triggering a flood of applications from the likes of Australia, Brazil, France, Germany, Korea, Russia, Turkey, and Spain. In the US, however, such developments are perceived as geopolitical setbacks. This interpretation is fundamentally flawed. After all, China’s decision to bypass the main international financial institutions, which were created in the aftermath of World War II, has been driven by the refusal of the developed countries that lead them to give it a role commensurate with its economic might. At the Asian Development Bank, for example, Japan and the US each claim around 13% of the votes, compared to less than 6% for China, and the president is always Japanese. A similar situation prevails at the World Bank, where an American is always in charge, and the International Monetary Fund, where the managing director is always a European. Though the G-20 countries agreed in 2010 to increase China’s IMF quota from 3.65% to 6.19% – a small step in the right direction – the US Congress has refused to ratify the agreement, preventing the reforms from being implemented.
The fact is that China’s new initiatives are not revisionist, but reactive. If new powers are not given access to the existing global governance structures, they will create structures of their own. This means that the advanced countries have the power to prevent the international order’s fragmentation into ideological and economic blocs – but only if they can overcome their strategic mistrust of China. In this sense, the participation of more European countries in the AIIB is a positive development, as it helps to ensure that the new bank complements, rather than rivals, existing institutions. (In fact, Europe’s impact would be even greater if the EU, rather than individual members, was represented at the AIIB, as it is at the G-20 and the World Trade Organization.) The West must still do more not only to welcome China to the table of global governance, but also to accept and cooperate with the institutions that the Chinese are now creating. Only with an open attitude can Western leaders ensure that Chinese-led institutions adopt best practices of multilateralism and accountability, and that they adhere to international labour and environmental standards. Now is the ideal time to initiate this process. If the EU, the US, and China take this year to align their intentions, based on their shared interests, they will be prepared to make the most of the G-20 summit in China in 2016. China’s move into multilateral processes is good news for the world. Europe – and especially the US – must overcome their strategic mistrust of China. They must not squander the opportunity to participate in and shape these processes, so that the benefits are shared as widely as possible. Project Syndicate
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April 2, 2015
Closing Police bust online gambling mega-den in Guangdong
HK Customs smashes smuggled cigarettes chain
Chinese police have apprehended 1,071 people involved in an online gambling network, the public security department of south China’s Guangdong Province said yesterday. Police froze about 330 million yuan (about US$52.8 million), said Lu Feng, an official with the department. The suspects were rounded up from June to December last year and include a dozen who developed and operated gambling platforms and more than 1,000 clients who rented the platforms to run their own gambling operations, according to Lu. Over 500 of those captured are still in detention, Lu said. The group built around 200 gambling websites.
Hong Kong Customs has smashed a supply chain for telephone ordering of illicit cigarettes at Tin Shui Wai, the customs announced yesterday. About 400,000 sticks of suspected illicit cigarettes were seized on a light goods vehicle and in a storehouse. The total market value of the cigarettes was about HK$1.1 million (US$141,935) with a duty potential of about HK$800,000. In the operation, two men aged 40 and 42 were arrested and the vehicle used for distribution of suspected illicit cigarettes was seized, the customs said. Customs will continue to closely monitor the situation, the customs said.
Mainland-HK sign protocol to avoid double taxation The gains derived by a Hong Kong resident from the sale and purchase of shares in a Mainland listed company will be taxable only in Hong Kong
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ong Kong and the mainland yesterday signed the Fourth Protocol to the Arrangement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion. “We are very pleased to sign the
fourth protocol with the mainland to facilitate clear implementation of the relevant arrangement,” said Chan Kacheung, secretary for financial services and the treasury in Hong Kong. Chan said the fourth protocol
Citigroup targets 10% jump in management assets
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clarifies the conditions under which an investment fund would be qualified for Hong Kong resident status, thus giving certainty to investment funds’ application of the tax avoidance arrangements. “This will be conducive to the actively promoted asset management businesses in Hong Kong, and will in turn help strengthen Hong Kong’s status as an international financial centre,” he said. Regarding the gains derived from the sale and purchase of shares in listed companies, both sides agreed to add a new provision to clearly set out the tax liabilities of residents of both sides on the other side. According to the provision in the fourth protocol, the gains derived by a Hong Kong resident from the sales and purchase of shares in a mainland listed company shall be taxable only in Hong Kong. This is also applicable to the gains derived by a Hong Kong resident from the sale and purchase, under the Shanghai-Hong Kong Stock Connect, of A shares listed on the Shanghai Stock Exchange. Meanwhile, the provision also states that the arrangement of such a tax liability will be applicable to those investment funds complying with the requirements set out in the provision. The protocol also amends the tax
This will be conducive to the actively promoted asset management businesses in Hong Kong, and will in turn help strengthen Hong Kong’s status as an international financial centre Chan Ka-cheung Hong Kong financial services and the treasury secretary
liability of aircraft and ship leasing business receiving royalties. The mainland withholding tax on royalties paid to aircraft and ship leasing business, currently at 7 percent, will be capped at five percent. Furthermore, the protocol also expands the coverage of tax types under the exchange of information arrangement of the avoidance of double taxation arrangement, so as to fulfil Hong Kong’s international obligation to meet global standards for enhancing tax transparency. The fourth protocol will come into force after the completion of ratification procedures and notification by both sides. In the case of Hong Kong, an order is required to be made by the chief executive in council under the Inland Revenue Ordinance. The order is subject to negative vetting by the Legislative Council.
Crackdown on over-the-counter stock market
New recruits start first job day in Japan
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he firm is targeting a 10 percent increase in its Asian wealth assets under management this year as the region’s growth creates more millionaires. The trend of an “expanding middle-class and increasing concentration of wealth among affluent individuals in Asia is very much alive and continuing,” Jonathan Larsen, Asia-Pacific head of consumer banking, said. Citigroup made 20 percent of its revenue in Asia last year and manages US$250 billion of assets for wealth management clients in the region. In Hong Kong, the bank is trying to double within three years the number of clients using the Citigold Private Client service, for people with US$1 million to US$10 million of assets. Larsen didn’t give the current number using it. At least 56,000 people in Hong Kong hold more than HK$10 million (US$1.3 million) in liquid assets, Citigroup estimated in a March study. Citigroup will add to the more than 3,000 staff in Asia who deal with clients, such as relationship managers and portfolio counsellors, as the assets under management grow, Larsen said.
hina’s leading over-the-counter (OTC) equity exchange is cracking down on illegal trading, with concerns growing that the market, which is aimed at small high-growth firms and private equity investors, is overheating. The operator of Beijing’s “New Third Board” said it was investigating a series of “ultra-high” price quotations during the week of March 2327. The price of one share of Anhui Hauheng Biotechnology Co Ltd, for example, at one point cost 99999.99 yuan (US$16,145) before falling back to 1,058 yuan per share. Such high quotes can be an indication that a stock is being manipulated, with very large prices being used to entice people into the market. The National Equities Exchange and Quotations (NEEQ), which operates the exchange, said it is investigating some trading accounts, saying they had “seriously disrupted market order”. “We have zero tolerance, and will take out our sword,” it said in a statement. New Third Board last year became the only OTC platform where brokerages can make markets in selected stocks, helping to boost liquidity.
Bloomberg News
Reuters
Xinhua
housands of Japanese started their first day on the job yesterday in an annual ritual that traces back to the country’s fast-disappearing jobs-for-life work culture. April 1 is the start of Japan’s fiscal year, a day when tens of thousands of new recruits -some awkwardly struggling to get comfortable in formal attire- fan out across Tokyo and other major cities to report for their first day of work. Over at the Bank of Japan, governor Haruhiko Kuroda sternly informed about 140 aspiring central bankers what was expected of them. “As central bank employees, you must have a sense of mission,” he said. About 90 percent of new university and high school graduates start jobs at a time which was traditionally seen as the beginning of the lifetime employment that defined Japan’s post-war rise. The popular image is one of selfless employees devoting themselves to the company, working punishing hours as they toil for Japan’s future and accepting they will be moulded into the firm’s corporate culture. AFP