Macau business daily, 2015 July 17 by Business Daily

MOP 6.00 Closing editor: Luís Gonçalves

Markets scapegoat The futures market in China. In everyone’s sights. A useful resource for hedging. But a den for short sellers. And epitome of the negative mood that reversed the over-optimistic stock market

Year IV

Number 837 Friday July 17, 2015

Publisher: Paulo A. Azevedo

Page 9

Too soon to celebrate

Last Monday, casino stocks climbed. On news the Macau Gov’t had conceded the possibility of allowing smoking lounges to remain in casinos. Sterne Agee CRT says investors are overreacting. Their optimism is misplaced, they claim. Citing a member of the Macau Assembly, the brokerage says a universal smoking ban is far more likely. Political heavyweights on both sides of the border are aligned against any such reprieve Page

Hengqin Headstart

James Packer and Steve Wynn vie for talent in Las Vegas Page 7 Government to recruit Portuguese medical specialists Page 2 Tigerair Taiwan offers egg tarts on board to promote Macau Page 3

Construction started this week. On a Macau firm’s shopping mallcum-hotel project called ‘Sportland’. Headed by local prominent businessman Lou Wai Sek. A hotel, theatre, four-storey mall and sports facilities will occupy a gross floor area of 145,000 square metres on Hengqin.

MOP175 mln paid for enterprises’ bank loan interest in H1 Page 4

Page 2

Industrial properties still pricey The Cinderella of real estate. Industrial property prices are now falling. Plunging 20 pct y-o-y in 1H. This has not, however, translated into transactions. Market prices need to drop another 15 pct say realtors

Page 5

HSI - Movers July 16

Name

Shaking the money tree

Gov’t subsidies. In the 1H, more than MOP140.7 million helped shore up the city’s SMEs. Retailers benefited most with 38.5 pct of total loans granted. Followed by construction & infrastructure, wholesale, hotels and F&B. Since 2003, the gov’t has subsidised 8,795 local SMEs to the tune of MOP2.09 billion

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www.macaubusinessdaily.com

Budget Framework

%Day

China Overseas Land &

+4.33

China Resources Land

+4.30

Sino Land Co Ltd

+1.96

Hong Kong Exchanges

+1.75

China Resources Powe

+1.70

China Mengniu Dairy C

-1.06

Lenovo Group Ltd

-1.07

Li & Fung Ltd

-1.33

China Unicom Hong Ko

-1.81

Galaxy Entertainment

-1.97

Source: Bloomberg

Paper Trail

I SSN 2226-8294

Not as simple as it seems. The Financial Services Bureau (DSF) said yesterday that public departments now have to submit a quarterly and half-yearly budget execution report. This to the Legislative Assembly, on top of the usual annual budget execution report. But bankers and auditing associations doubt the efficacy of the initiative. Especially on infrastructure projects involving multiple years of investment

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July 17, 2015

Macau Government to recruit Portuguese medical specialists The government is to recruit more Portuguese medical specialists, such as language and vocational therapists, to meet the increasing needs of society and facilitate the training of local personnel. This is according to a meeting between Secretary for Social Affairs and Culture Tam Chon Weng and Minister of Education and Technology of Portugal Nuno Crato, held in Lisbon, Portugal on 14 July. Mr Tam and Mr Crato exchanged views on issues of mutual interest, such as a strategy to transform Macao into a training base for the Portuguese language in AsiaPacific regions, and support for the Portuguese school of Macau (Escola Portuguesa de Macau).

Budget law changes propose more frequent reports of finance plan execution But delegates of local banking and auditing associations express doubt about what can be done to ensure greater accuracy in the compilation of a public investment plan Stephanie Lai

sw.lai@macaubusinessdaily.com

“By the time it [the budget plan] is delivered to the Assembly, the construction has not even started,” Mr. Ip said on the occasion, which is part of the government’s ongoing consultation on the legal amendment. “The situation can be, for these public works projects, that there is no ceiling cost set for it. We have the budget plan, and we have the [amended] law but how can we [guarantee] that the budget can be reflected accurately?” the banker asked.

hile the proposed amendment to the law governing public budget making is to stipulate higher frequencies of the public investment plan being submitted by civic departments to the Legislative Assembly, representatives from local banks and auditors’ associations remain doubtful about how the government is to secure a more accurate making of the budget plan. As part of the amendment to the budget framework law, aside from submitting a yearly budget execution report for the

Assembly to deliberate on by November or before annually, the public departments here also have to submit a report of their quarterly and half-yearly budget execution and related accounting information to the Legislative Assembly, the Financial Services Bureau (DSF) delegates explained in a seminar held yesterday. For any increases that occur in overall budgeted expenditure for a fiscal year, such changes will have to be deliberated upon by the Assembly, according to the amendment. Another major

proposed change is the listing of all budgeted expenditure on major investment plans here, especially infrastructure projects involving multiple years of investment. At the seminar, the chairman of Macau Association of Banks, Ip Sio Kai, shared doubts with a few other accounting and audit association delegates on how the government is going to secure the accuracy of the budget making, especially for public infrastructure projects accounting for multiple years of investment.

Doubts

Addressing these doubts, the deputy director of the Financial Services Bureau, Daisy Ho In Mui, stressed that the proposed legal changes already strictly governed the civic departments’ expenditure, and a reinforced role for the public and Assembly monitor any further expenditure changes. “The amended law allows us to focus on monitoring public finance, and enhance transparency on how public money is used. We hope that for the departments here they can be scientific and detailed

Macau-invested Hengqin mall project ‘Sportland’ underway

onstruction on a Macau firm’s shopping mall-cum-hotel project called ‘Sportland’ started on Tuesday, Chineselanguage newspaper Macao Daily News reported yesterday. The project, headed by local prominent businessman Lou Wai

Sek, will feature a hotel, a theatre, a four-storey mall and sports faciities on a site occupying a gross floor area of 145,000 square metres in Hengqin. The project is expected to see principal construction completed by the end of next year, the newspaper reported.

Mr. Lou’s ‘Sportland’ project is one of the 33 local investment projects the Macau government recommended to Hengqin authorities last year, which are all to be rooted in the GuangdongMacau Co-operation Industrial Park on the island – referring to the 4.5 square kilometers of land parcels

in making their budget plan,” said Ms. Ho, “This could be difficult, as the longer a public works project takes, the more complex the budget making.” “But with the law, when the departments foresee that they need more money, they have to account for the addition to their budget for the Assembly and public to know,” the official said. “This is a mechanism to alleviate the [over-budget] issue here.” Speaking at the seminar, Bureau Director Stephen Iong Kong Leong acknowledged that a “long-term” goal for the government is to adopt an accrual basis accounting rule when making the public budget balance, while this is not included in the proposed changes to the budget law. “Our long-term goal is to adopt an accrual basis accounting rule for budget making, but to realise that it involves some more training and software to support it,” the Director said, adding that more time is needed for the city to study the adoption of such a system. The city is still using cash basis accounting rules to balance the public budget.

scattered throughout Hengqin and designated for different business sectors, including tourism and leisure and businesses, cultural and creative businesses, information technology and other trade services. The 33 recommended projects also include Hong Kong-listed restaurant operator Future Bright’s food plaza project; the group has already won the land bid to develop the project. The ‘Sportland’ project started to recruit businesses to settle in the commercial complex earlier this year, in which 1.35 billion yuan has been invested, the newspaper reported. S.L.

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July 17, 2015

Macau Tigerair Taiwan offers egg tarts on board to promote Macau Taiwanese low-cost carrier Tigerair Taiwan said it has reached co-operation with Macau Government Tourist Office (MGTO) on a two-month campaign to promote Macau. During the promotional period – until August 31 this year - the budget airline will serve the city’s famous pastry pastel de nata (Portuguese egg tart) to its passengers. In addition, the covers of the headrests in the cabins will feature Macanese cuisine and tourist sites printed on them. Currently, the airline provides flights from Macau to Taipei and Kaohsiung in Taiwan.

Gov’t grants MOP141 mln to SMEs in H1

he government granted more than MOP140.7 million (US$17.6 million) during the first half of the year in support of the city’s small and mediumsized enterprises (SME) via two of its financial aid schemes, the latest data released by the Macau Economic Services (DSE) reveals. According to the official data, the government allocated some MOP103.1 million during the first six months for the SME Aid Scheme granting loans of up to MOP600,000 per applicant for different finance purposes such as the purchase of equipment, renovation, advertising, etc, while enterprises have as many as 8 years for repayment. During the period, the government received applications for the scheme from 327 companies; however, it only approved 267 to share this MOP100million aid. In all, the government has granted MOP2.09 billion to 8,795 local SMEs through this SME aid scheme since its establishment in May 2003. Local retailers have been the

biggest beneficiaries in the first half. Companies from the retail sector were allocated a total of MOP39.7 million, accounting for 38.5 per cent of total loans granted. Other major beneficiaries are those engaged in construction & infrastructure, wholesale, and hotels and food & beverage, which were

each given some MOP11 million, accounting for around 10 per cent of the total each.

Aiding regime

Meanwhile, the official data indicated that MOP37.6 million was allocated to another official aid regime – the SME Credit Guarantee Scheme - providing

each beneficiary with credit guarantee equal to 70% of the loan approved by the participating banks, up to MOP 3.5 million. The government received a total of 26 applications for the scheme during the first half of the year, without rejecting any application. Most of the applicants are from the retail sector, as well. The aid that they received from the government reached MOP10.6 million, accounting for 28.8 per cent of the total. Other main beneficiaries, meanwhile, are from the wholesale sector. They received a total of MOP7 million from the government, or 18.8 per cent of the total amount that the government granted for the scheme, followed by the transport sector and travel agencies, which together were given MOP5.6 million, accounting for 15.4 per cent of the total. Since the establishment of this scheme in August 2003, MOP792.3 million has been granted to 455 companies in the territory, according to DSE data. K.L.

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July 17, 2015

Macau opinion

Macau’s got talent

Pedro Cortés

Lawyer* cortes@macau.ctm.net

ast week’s behaviour of the retailers of tobacco seems to reveal that the strong efforts of the talent campaigns in Macau are gaining traction. We now have international chains like 7-11 demonstrating commercial behaviour that collides with the fair rules of the commercial code and of an advanced civilization. We have legislators who pass a bill to increase the price for the coming Monday. We have consumers that have a vice – oh well, even Pope Francis liked it! – who try to buy cigarettes and cannot. We have the market working in a way that only shows that the lack of civilized behaviour still resides within the brittle bones of the population and of their political representatives. There is an expression in Portuguese that is almost impossible to translate into any other language that goes like this: “Xicos Espertos”. To assist my editor and dear readers Macau is full of smarty-pants that do not really understand the society they are living in but pretend to know it scientifically. We have seen it in the past with milk powder and other essential goods. Tomorrow it will be frozen meat or flowers or even fireworks. This time it happens to be tobacco. Instead of acting in the interests of society, some of our legislators prefer to know better. The so-called free market economy that some defend with gritted teeth in some areas – real estate, for instance – is now replaced by market regulation. Hopefully, we will not need to have our food rationed in the future. Hopefully, we will still have polluted air to breathe in the near future. Or even oil to put in our cars to go to the casino-free oasis of Coloane. Recent happenings may lead us to conclude that the ‘Macau’s got talent’ show really needs to be renamed and upgraded to ‘Macau’s got smarty-pants’. What some may not have understood is that 2014’s May demonstrations may be just around the corner as people know what their priorities are much better than those who do not know their people’s needs, such as sufficient and affordable housing, high quality public health services, traffic control, unpolluted air to breathe - or even professional opportunities other than the easygoing gaming, gaming and gaming option. We all know our politicians are very keen on improving the quality of life of the Macau population but it seems that recent priorities give us a contrary answer. Hopefully, they have talent enough to make Macau an even better place to raise our kids. *Part-time Lecturer at the Chinese University of Hong Kong

Xiao Nan Guo interim profits to grow 10 million yuan

hanghai-based caterer Xiao Nan Guo Restaurants Holdings Ltd. is expecting its net profits for the six months ended June 30 will increase by at least 10 million yuan (MOP13 million/US$1.63 million) year-on-year, it told Hong Kong Stock Exchange. ‘It is expected that the unaudited consolidated management accounts of the Group for the six months ended 30 June 2015 will record a significant increase of no less than RMB10,000,000 in consolidated net profit attributable

to the owners of the Company as compared to that of RMB578,000 for the corresponding period in 2014,’ the company wrote in the filing. The Shanghai caterer said the increase in net profit is attributable to a significant increase it had recorded for its revenues, driven by the improved same-store sales growth. In addition, it said the reduction of its operating costs had also helped it to archive improved year-on-year interim results. Moreover, Xiao Nan Guo noted that

the significant increase in net profit was also due to the net profit contributed by Pokka Corporation HK Ltd. that it had acquired at the end of last year. Currently, the caterer has two restaurants in the city, located in City of Dreams and Altira, respectively, in addition to one Pokka Café in AIA Tower. During the first quarter of this year, the company said it saw same store sales grow 5.2 per cent year-on-year for the three months ended March 31. K.L.

Chief Executive: MOP175 mln paid for Prioritising heritage enterprises’ bank conservation loan interest in H1 and quality of life S

hief Executive Chui Sai On says conserving cultural heritage and improving people’s quality of life were the government’s major considerations in planning new urban reclamation areas. He stressed that to act in line with the laws on heritage conservation was a common purpose of all public departments: the government would take into consideration public opinion and the advice of experts when making its policy. Mr. Chui also encouraged the public to contribute their opinions on the planning of the five plots of reclaimed land during the consultation period, which will end on 8 August. He said he would keep in close touch with his Secretaries and would

ask the departments of public works and cultural affairs to study the city’s development and heritage conservation to ensure the landscape is not affected. In views of Zone A and Zone B, Mr Chui said the two of the five reclaimed areas would have to sustain the city’s development, especially the planning of housing and public infrastructure, in order to fulfil the government’s goal of continuously enhancing people’s quality of life. The government’s efforts in heritage conservation had achieved primary results but there was room for improvement in revitalising heritage attractions, he said, adding that the government would look into the experience of other areas to improve the work in this aspect.

ome 41 enterprises in the city were subsidised in the amount of nearly MOP175 million (US$21.9 million) to pay the interest on their bank loans by the government during the first half of this year, according to official data released by Macau Economic Services (DSE). The Enterprise Financing Loan Interest Subsidy, launched by the government in 2009 as an investment incentive plans for local enterprises, aims to subsidise loan interest payments of private companies with a bank loan of between MOP300,000 and MOP10 million. The reference interest subsidy rate of the enterprise financing loan is 4 per cent per year, for a maximum period of 4 years from the date of the repayment of the first instalment by the companies, while the total annual amount of loans for the government to provide

subsidy is MOP600 million. In the first half of this year, beneficiaries are primarily those engaging in transport and warehousing, construction and infrastructure, real estate activities and wholesale, amounting to 9, 9, 7 and 6 of the total. The 7 companies from the real estate sector, meanwhile, received the biggest proportion of subsidy - MOP46.3 million - accounting for 26.5 per cent of the total. Transport and warehouserelated enterprises, and wholesale business were subsidised by some MOP23.7 million and MOP22.7 million from the government during the first half, accounting for 13.6 per cent and 13 per cent of the total, respectively. The government has granted MOP1.8 billion to 518 companies for their bank loan interest payments since 2009. K.L.

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July 17, 2015

Macau Toyota recalls 583 Prius hybrids in Macau, Hong Kong Toyota Motor Corporation is recalling over 625,000 Prius hybrids worldwide due to software problems that can cause the engines to suddenly cut out. Hong Kong-based Toyota distributor Crown Motors Ltd. has released a statement announcing that there are 583 affected vehicles in Macau and Hong Kong; notably, Prius V vehicles (produced between March 2012 and November 2014) and Auris vehicles (produced between May 2012 and September 2012) that need to be recalled. Announcing the global recall on Wednesday, the Japanese automaker added that no accidents or injuries had been reported.

Industrial unit prices slashed 20 pct in H1 “The number of transactions in the first half of the year is the worst on record for the industrial sector since the financial tsunami of 2008. The sector has not yet found its support as some unit owners are lowering their sale price Roy Ho Siu Hang, regional sales director of Centaline

ales prices for the city’s industrial property plunged 20 per cent year-on-year during the first half of the year. The decrease in prices, however, did not boost transactions, local realtor Centaline Macau Property Agency Ltd. said, predicting the market will only be active again if prices drop at least 15 per cent further. The real estate agency said that the average cost of an industrial unit was around some MOP3,671(US$459) per square foot during the first half of the year, a decline of MOP929 compared to MOP4,600 per square foot one year ago, based on the agency’s previous data.

Nevertheless, the number of transactions did not benefit from the fall in sales price, with only 40 transactions inked in the first six months of the year - a drop of 82 per cent compared to 225 transactions during the same period one year ago. “The number of transactions in the first half of the year is the worst on record for the industrial sector since the financial tsunami of 2008. The sector has not yet found its support as some unit owners are lowering their sale price. As such, we estimate that sale prices for industrial units will still have room to decrease in the future,”

Corporate

Still Popular

“[However], we expect that the number of transactions in the sector will only increase again if the prices of these units fall by more 15 to 20 per cent,” the property agent noted. Nevertheless, the rental market for industrial units remained buoyant during the first half of the year, as they can be subleased and suit young people establishing their own businesses, according to Mr. Ho.

MGM Macau’s Grand imperial court brings fresh wild mushroom

MOME TV First Year Anniversary O2O WeChat Campaign In celebration of the first year anniversary of MOME TV, MOME is launching an O2O interactive game platform with prizes worth more than MOP150,000. From July 17th to August 7th, 2015, on the Transmac buses with MOME TV installed, participants can link to MOMEplay interactive game platform

the senior regional sales director of Centaline, Roy Ho Siu Hang, said on Wednesday.

with their smartphones via Bluetooth and WeChat ‘Shake’ function. By playing in the game ‘Shout Out Loud’ and filling in the survey, participants will have a chance to win amazing prizes, including a cash prize of MOP8,888, five-star hotel packages, tablet PCs, smartphones, and bank gift cards.

MGM Macau is presenting a scrumptious Yunnan Mushroom feast to all gourmands at Grand Imperial Court in July. The seasonal fungi are flown in fresh from Yunnan, China, perfect to refresh the appetite in the hot summer days. Using fresh wild mushrooms from Yunnan, Grand Imperial Court is presenting sumptuous dishes including the Pan Fried Dace Fish Patty with Termite Mushroom where the fresh taste of this mushroom blends perfectly with seafood. Matsutake is a precious wild mushroom with high nutritional value. Its unique woody aroma and fresh flavor makes it ideal even with simple cooking methods. The conventional Marinated Matsutake Mushrooms with Fresh Cordycep Flower in Scallion Oil is a must-try. The Cordycep Flowers are rich in nutrients and blend well with Matsutake, offering a refreshing taste. The feast is available at the Grand Imperial Court for a limited period from July 20 to August 23

The rental for industrial units reached MOP9 per square foot in the second quarter, an increase of 6 per cent from the first quarter. Mr. Ho expects that the leasing prices for such industrial units will keep growing stably. “After all, the old-style industrial units averagely occupy thousands of square feet, making the cost [for purchase] tens of millions, which is not affordable for every company or investor. That is also the reason why the [sales] of the sector are so quiet,” the agent explained. K.L.

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July 17, 2015

Macau

Investors overly optimistic about smoking lounge chances Last Monday, casino stocks climbed after the Macau Government conceded the possibility of allowing smoking lounges in casinos. Sterne Agee CRT says investors are overreacting João Santos Filipe

jsfilipe@macaubusinessdaily.com

nvestors are too optimistic about the chances of smoking lounges being allowed inside casinos following the approval of changes to the existing smoking law proposed by the Macau Government. Last Friday, during the second day of the first reading session of the changes to the smoking law, the Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, said smoking lounges could still be a possibility if gaming operators could scientifically prove that the establishment of the installations could effectively prevent tobacco harm. Consequently, on Monday casino operators’ stocks went up on the Hong Kong Stock Exchange, Wynn Macau stocks, for instance, hit a two-month high. However the equity research firm says that investors are overreacting to this possibility, and that according to its sources the chances of smoking lounges remaining in casinos are not as high as the stock market believes. “Our latest contact with a Macau Assembly member suggests a full smoking ban is more likely than the allowance for smoking lounges both on mass floors and VIP areas”, David Bain, an analyst from Sterne Agee CRT, said. “He believes the timing of implementation will offer the most wiggle room, and while smoking lounges have a chance, our own view after our discussions is that the chance is not to the extent reflected by recent investor optimism”.

Gaming operators make a stand

Among the reasons for limiting the possibility of having smoking lounges operating in gaming venues is the support of the top figures of Macau’s Government against it and

the assumption that this anti-smoking policy is being pushed by the Central Government. “The two areas of focus in subcommittee, in his view [Sterne Agee CRT’s source], are the potential allowance of smoking cabins and

implementation date of the new law. He believes the ‘higher-ups’ (Chief Executive, etc) within the Macau Government are pushing for a full ban and that this direction was ‘likely’ a foundation laid by Mainland China”, he explained.

Wells Fargo predicts gaming revenue drop of 31 to 33 per cent In July, gaming revenue is expected to drop between 31 and 33 per cent year-on-year, according to Wells Fargo’s latest research note on the Macau market. This means that the prediction of the investment bank for the sector has been downgraded from the previous expectation of 30 to 32 per cent decline. According to Wells Fargo’s latest the checks on the sector average daily revenues (ADR) were MOP567 million last week, while previous daily revenues were MOP630 million. “This assumes July same store ADR will trend in line with historical seasonality and takes into account the ramp of Galaxy Phase II”, analyst Cameron McKnight explains.

Concerning the smoking ban and the possibility of allowing smoking lounges, the American institution say this could “partially mitigate the effect of the ban on VIP revenues, and would mean mass revenues don’t get worse (all else remaining equal) as smoking lounges are already on mass floors”. However, the report mentions the existence of ‘conflicting views’ regarding the authorisation of smoking lounges to continue to operate in casinos and that operators ‘would need empirical proof that smoking rooms protect employees and customers from the effects of secondhand smoke’.

Focusing on the reasons for investors to be optimist, Sterne Agee CRT highlights the union of the gaming operators, which is said to be very rare in Macau, to prove that smoking lounges are effective in avoiding the harm of passive smokers. “In our discussions with Macau operators, we understand that concessionaires have come tightly together on this issue [rare occurrence] and we anticipate full studies will be done with regard to the safety of smoking lounges and a united front against a new full smoking ban”, they explain. “Our Assembly member contact notes an August recess and his view is that a final bill may not be passed until September.” In terms of the forecast for July, Sterne Agee predicts a drop in gaming revenue ranging from 30 to 34 per cent year-on-year to an amount close to MOP18.6 billion (US$2.3 billion).

Business Daily | 7

July 17, 2015

Macau

Birmingham Int’l sues Carson Yeung for HK$121.8 million The former chairman of the company is accused of claiming wrongful expenses alone of HK$76.4 million from the company João Santos Filipe

jsfilipe@macaubusinessdaily.com

irmingham International is suing Carson Yeung (pictured), the former chairman of the company and executive director of subsidiary Birmingham City, for HK$121.8 million because of ‘alleged breaches of fiduciary duties’. The intention of the board of the company was announced in a filing with the Hong Kong Stock Exchange ‘following an investigation over the past 5 months’. The compensation being asked for by Birmingham International is considered a return of funds taken from the company and its subsidiary by Carson Yeung for personal use plus compound interest and costs. While the legal proceedings primarily involve Carson Yeung, the claims are also made against the companies Amazing Top and Asia Rays. The first is allegedly held by Peter Pannu – former Director at Birmingham International and Birmingham City – in trust for Carson. The second is controlled by Pannu,

who signed a consultancy deal with Carson – without the approval of the board of directors – on behalf of Birmingham International, which involved the company lending Pannu HK$2 million to buy property in England to oversee Birmingham City’s operations and a monthly payment for six months of HK$310,000.

Wrongful Payments

In the filing, the board accuses Carson Yeung of ‘causing funds of the company to be used for reasons other than for proper and legitimate purposes’, entering into agreements with Asia Rays ‘without authority from the board’, making ‘wrongful payments’ to Asia Rays and Amazing Top on behalf of Birmingham International and the English football club. Carson is also accused of failing to disclose ‘his interest in Amazing Top’. Birmingham International is asking HK$101.3 million from Carson for such reasons as payments

to Asia Rays, remuneration to Peter Pannu, expenses wrongfully claimed and recovery of all amounts paid to him as director’s emoluments. On wrongfully claimed expenses alone the mother company is asking for HK$76.4 million. As for the British football club, it is asking for £1.9 million (HK$20.5 million) in claims from Carson Yeung for payments under the agreement signed with Asia Rays, including commissions, and Amazing Top. Birmingham International Holdings Limited has been in

receivership since February due to internal disputes that have made it impossible for the group to be managed. However, the problems started at the beginning of 2014 when former chairman and executive director Carson Yeung Ka Si was convicted on five counts of money laundering and sentenced to six years imprisonment. As the fight for power unfolded inside the company the trading in shares of the group was halted in December, and in February receivers were called in to try to manage the group.

James Packer and Steve Wynn vie for talent in Las Vegas The Australian has decided to invest US$4 billion in Las Vegas and already ‘poached’ two former executives from Wynn Resorts for his project

ames Packer and Steve Wynn are involved in a war for talent in Las Vegas and the Australian billionaire has managed to ‘poach’ from his American counterpart socalled nightclub kingpin Jesse Waits, according to the newspaper Financial Review. The chairman of Crown Resorts, James Packer, has an empire in the casinos sector spanning from Australia to London. In Macau he is involved in a joint venture with Lawrence Ho, through Melco Crown Resorts, which controls City of Dreams and Altira Macau. However, the company run by Packer was lacking a casino in Las Vegas. As Crown Resorts decided to invest around US$4 billion (MOP319.3 billion) in an 1,100-room integrated resort named Alon in the American city (scheduled to open in 2018) the company has been in the market trying to hire the best executives.

And Wynn Resorts, which controls Wynn Macau, has already seen two top executives leave the company to work with James Packer. First was Andrew Pascal, who used to run Wynn’s Vegas operations, to join James Packer’s team for the new project. Pascal is a nephew of Steven Wynn’s former wife and Wynn Resorts shareholder Elaine Wynn. Now, and according to the Australian newspaper, Crown has lured the ultra successful American nightclub manager Jesse Waits. James Packer is said to have secured the man behind Wynn’s XS (top grossing club in the US, generating US$105 million per year) and Tryst nightclubs during a visit to Las Vegas early this month. Still according to the Financial Review, Waits managed to generate profit margins of 70 per cent, when the average industry margin stands at 30 per cent. J.S.F.

8 | Business Daily

July 17, 2015

Gaming

MGM Resorts to take steps to stop tribal casino in Connecticut Connecticut has signed a bill that permits the Mashantucket Pequot and the Mohegan tribes to start talking to municipalities about a third casino in the state. MGM wants to build an US$800 million facility in Springfield in 2018

GM Resorts International will try to prevent the construction of a tribal casino in Connecticut that would compete with MGM’s own resort being built in Springfield, Massachusetts. Connecticut Governor Dan Malloy signed a bill last month that permits the Mashantucket Pequot and Mohegan tribes to begin talking to municipalities about a third casino in the state. The legislature would still need to amend state law to approve the casino. “We’re not going to go peacefully,” William Hornbuckle, president of MGM, said in an interview on Wednesday. Hornbuckle wouldn’t say what steps are planned. MGM is “contemplating our options,” he said. The fight in Connecticut illustrates the competitive strains on the casino business as more states add betting and the overall market grows only modestly. The Pequots operate the Foxwoods Resort Casino in Mashantucket, while

We’re not going to go peacefully William Hornbuckle, president of MGM

the Mohegans own the Mohegan Sun in nearby Uncasville. Las Vegasbased MGM won a multiyear contest to build a casino in Springfield. The company has asked the Massachusetts Gaming Commission for permission

to open the US$800 million facility in 2018. Connecticut’s two casinos, among the largest in the nation, have lost business with the expansion of gambling in New York and other

states. The opportunity to build the state’s third casino was only made available to the two tribes, Hornbuckle said. Robert Soper, president of the Mohegan Tribal Gaming Authority, said in a July 1 interview that the Connecticut casino expansion law was “defensive” in nature and that he believed the new resort could open before MGM’s Springfield property. Bloomberg

Mediarex receives US$4.9 mln Negreanu eliminated in funding to ‘sportify’ poker as World Series of Poker final table set

ediarex Sports & Entertainment, the parent company behind the Global Poker Index, Poker’s ranking authority, has secured US$4.9 Million in Series A funding from a round of private investors including a 1st tier private equity fund in Beijing, and angel investors from telecom, sports marketing and financial sectors in Asia and Europe in its bid to sportify poker. The investment will enable MSE to lay down the framework to develop the sport of Poker by aggregating

the game’s currently fragmented audience - which number 100 million around the world. MSE CEO Alex Dreyfus explains, “Poker is an old game, but a young industry. It’s a game that continues to grow, too. Poker’s global growth from 2012 and 2013 was 17 per cent, as well as a 9.4 per cent increase in 2014 live competition entries. Digital interest in the game continues to grow as well up 12 per cent in 2013, 25 per cent in 2014 and 31 per cent in the first half of 2015. It’s a large audience and the

best way to aggregate it is to promote Poker like a sport.” GPI will launch the Global Poker League (GPL), labelled Poker’s first professional league, in early 2016 in the U.S. and European markets. One of MSE’s most important developing assets, GPL builds on the success of GPI’s first ever live Poker competition, the Global Poker Masters (GPM) - Poker’s World Cup - which enjoyed a successful rollout to nearly 1 million unique viewers in March 2015. Reuters

Daniel Negreanu, poker’s alltime tournament money leader, exited the World Series of Poker’s main event in 11th place as the final table was set

oe McKeehen, a 24-yearold from the Philadelphia suburb of North Wales, has 63.1 million chips in the no-limit Texas hold ’em world championship - more than twice his nearest competitor - with nine men remaining. The event, the last of 68 in the annual World Series of Poker, began July 5 and will now pause until the final table is played out in November. The tournament is being held at the Rio All-Suite Hotel & Casino in Las Vegas. Negreanu’s 11th-place finish matched his career best in the event, which began with 6,420 entrants. Facing McKeehen on his final hand after a flop of ace-king-10, Negreanu moved all in for 5.8 million chips with ace-4. McKeehen called, showing jack-3. The river card was a queen, giving McKeehen a straight and sending Negreanu home with $526,778. “Knocked out Negreanu and made 500 new enemies here at Rio,” McKeehen said

on Twitter after ousting his opponent, one of poker’s top ambassadors. A 40-year-old who has six gold bracelets for winning WSOP events, Negreanu has earned $30.6 million in poker tournaments to lead the all-time ranking, according to the Hendon Mob poker database. McKeehen has won about $2 million, and the remaining nine players are now guaranteed at least a million-dollar payday. The champion will win $7.68 million. McKeehen is joined by five other Americans among the group known as the November Nine. In second place, with 29.8 million chips, is Israeli Zvi Stern. Belgian Pierre Neuville has 21.1 million chips and at 72 is the oldest person ever to make the November Nine. Italian Federico Butteroni is ninth with 6.2 million. The final table will play out from November 8-10. Bloomberg

Business Daily | 9

July 17, 2015

Greater China

Beijing's battle with bears moves into futures

ADB trims China growth forecasts

The market is betting against the government, which is trying to push indexes back up after a near one-third drop Pete Sweeney and Samuel Shen

The Asian Development Bank yesterday trimmed its growth forecasts for China and developing Asia this year and next owing to weakness the world’s number two economy. However, it said a pick-up in investment and the removal of red tape in India’s economy would continue to boost growth in the country but urged New Delhi must continue with its reforms. After a slow first half, full-year gross domestic product (GDP) growth in China is now estimated at 7.0 percent this year and 6.8 percent next year, the Manila-based lender said in a statement.

Hundsun halts new account openings Hundsun Technologies, which is controlled by Alibaba founder Jack Ma and operates a trading platform for asset managers, said it will halt the opening of new accounts and ban new money flows into existing accounts, days after regulators launched a probe into its role in grey-market margin financing. In an exchange filing, Hundsun said it acted in response to a regulatory crackdown targeting illegal margin lending - the practice of borrowing money to buy stocks. Unregulated margin financing outside China’s brokerage system is widely seen as the root of the China markets’ boom and bust. An investor (R) keeps watch while another (L) bows to rest as an electronic screen shows market movement information at a securities brokerage house in Beijing

hina's index futures traders are still betting jittery markets will fall further even as Beijing tries to prop them up, making the futures markets a key battleground in Beijing's campaign to restore market confidence. Index futures, established in China in 2010, give investors a way to hedge risk, and also provide short-sellers another way to make money in a falling market. They are also closely watched by investors as an indicator of sentiment, and that has become a major problem for Beijing this week. Traders note that China's major future contracts, in particular the CSI300 contract maturing on Friday afternoon, are pricing at a discount to current market levels, which implies those investors will need to pull down the index further or face losses. And none of the futures contracts, which go as far forward as December, are pricing the CSI300 index close to where it would be if the Shanghai Composite Index, which shares many component stocks with the CSI300, recovered to 4,500 points, which is seen as the target level for when government intervention will cease. That means the market is betting against the government, which is trying to push indexes back up after a near one-third drop, and has begun cracking down on futures markets and futures traders, accusing some of "maliciously shorting the market". "If you look at today's performance, the bears have not admitted defeat," an official at CITIC Futures said late on Wednesday. "If they can influence retail investors and trigger another round of panic selling, knocking indexes below key support levels, there's still a chance of a comeback." "Ultimately, it's a matter of which side has more money." Beijing, however, is not relying on money alone, preferring to suppress futures trade through regulatory measures. It has made it more difficult to borrow for trading futures, limited trading in some contracts, and has sent the police to investigate individuals and institutions accused of illegal

trading behaviour, which some see as a way to intimidate short sellers. Yet futures for the CSI300 index all closed lower on Wednesday, with the contract maturing on Friday pricing at 2.7 percent below the index's latest level. Many contracts on the more volatile small cap CSI500 index dropped by their 10 percent daily limit.

"Critical moment"

The struggle highlights Beijing's difficulty in wooing investors back into a battered stock market. A multi-pronged effort - easing monetary policy, adding liquidity, freezing initial public offerings, and imploring investors through state media campaigns to "defend the stock market" against short-sellers - stemmed precipitous stock market losses late last week. That puts Beijing's credibility on the line, along with the savings of those who rallied to the patriotic call. But shares closed down on Tuesday and again on Wednesday. A trader at one major Chinese bank said Friday would be critical for the "national team" trying to prop up the market - including banks, brokerages and mutual funds that have committed to buy until the Shanghai index hits 4,500, a level last seen around June 25. Wang Feng, CEO and founder of hedge fund firm Alpha Squared Capital, said futures pricing reflected enduring bearish sentiment on stocks. "Index futures are being used mainly as a risk-hedging tool now. People who have stocks on hand are shorting index futures to hedge their risks. Many investors are waiting for a rebound to sell their shares. So there's still a lot of selling pressure in stocks."

State-backed 'longs'?

The irony is that the futures market, and other derivatives, are supposed to play a key role in market reforms, alleviating the volatility Chinese markets have seen in the last six months.

KEY POINTS Chinese futures markets betting against rally CSI300 contract maturing Friday seen as key battleground Regulators have cracked down on futures trading, short selling Traders suspect regulators may begin buying futures shares

By allowing investors to insure against sharp downward moves, it can encourage them to take more aggressive long positions, and indeed the CSI futures markets have proven extremely popular, with CSI300 futures seeing more turnover than U.S. S&P 500 futures in May. However, Beijing may be sacrificing the futures market to save the wider market. Some traders think the next step might be regulators buying and selling futures to influence prices more directly, given the failure of administrative means. That would further expand the scope of China's market intervention, which began by targeting blue chip shares, then spread to buying small caps. Some think it has already started. Last week, there were significant orders - more than 30,000 long contracts were opened - at CITIC Futures, countering bearish market bets worth over 40 billion yuan (US$6.44 billion), the unnamed brokerage official said, adding the money seemed to be coming from state-backed investors. Reuters

“Peak coal” by 2020 could save thousands of lives Bringing coal use to a peak by 2020 could save China billions of dollars in environmental costs, slash water consumption by nearly 30 percent and prevent tens of thousands of deaths from coal-related illnesses, a study released yesterday said. China’s coal demand fell for the first time in over a decade in 2014, and production also dipped 5.8 percent in the first half of this year, largely as a result of a slowdown in major downstream sectors like power, steel and cement.

Commerce Ministry objects to U.S. tires ruling China’s Ministry of Commerce (MOC) yesterday expressed strong discontent to a final U.S. ruling against certain imported tires of passenger vehicles and trucks from China. The U.S. International Trade Commission dismissed the objective fact that the U.S. tire industry is in sound condition and made the affirmative determination to impose punitive duties, the MOC said in an statement on its website. In June, the U.S. Department of Commerce adopted multiple unfair and discriminating methods to calculate exorbitant dumping margins and subsidies, which seriously injured the interests of involved Chinese enterprises, the MOC said.

Audi said to revise Mainland target Audi AG has abandoned a target to sell 600,000 cars this year in China, its biggest market, as the country’s stock market rout sapped demand for luxury cars, two people familiar with the company’s plans said. The German carmaker will provide an update on the market situation when it announces first-half results on July 30, said the people, who asked not to be named because the information isn’t public. Audi’s Chinese sales rose 1.9 percent to 273,853 cars in the first half.

10 | Business Daily

July 17, 2015

Greater China

Meat smuggling crackdown stokes risky underground trade Demand has run ahead of domestic production, creating an opportunity for smugglers Adam Jourdan and Clare Baldwin

n a dusty industrial lot in northern Hong Kong, a group of travellers sheltered in the shade away from the pressing July heat, packing old cloth bags and backpacks with Styrofoam to protect a more precious cargo: smuggled meat. Crowded amid the warehouses of Sheung Shui, a remote suburb near the mainland border, the group of around 40 are about to take frozen Brazilian beef into China to feed a growing demand for meat that is unsatisfied by local produce or approved imports. The part-time smugglers, known as “feet” within the trade, are part of an underground industry that has boomed since Beijing launched a crackdown on meat smuggling last year.

KEY POINTS International gangs routing meat via Vietnam, HK Beijing crackdown means harder to use refrigerated trucks HK smugglers use backpacks, earn $30-50 per trip Vietnam smugglers using motorbikes, sampans Smuggled meat 30-60 pct cheaper - official importer

“Before they used trucks, but those were for high-quality beef from Japan and New Zealand and maybe America,” one Hong Kong smuggler Alan Wong, 36, told Reuters, explaining smugglers could earn 200-300 yuan (US$30-50) per trip. The meat now being carried across the border was of lower quality, he added. Wong’s story, along with interviews with a dozen customs agents, anti-smuggling officials and traders, paints a picture of an illegal trade along China’s borders with Hong Kong and Vietnam, where smugglers are taking bigger risks with food safety as the crackdown drives them deeper underground. The scale of the smuggling has infuriated legitimate exporters from countries such as Australia, who say black market meat is 30-60 percent cheaper due to high import duties, while the methods now being used raise consumer health concerns.

Customs officials and police told Reuters the oldest meat found this year had been 4-5 years old, but said chicken feet dating back to 1967 had been seized in 2013. The greater scrutiny means customs agents often no longer turn a blind eye to refrigerated trucks coming into China, forcing smugglers to take more hazardous routes. In Hong Kong, Reuters reporters saw people repackaging cases of meat labelled “Boi Brasil” and “Cargill”. A spokesman for Boi Brasil said the Brazilian company had no knowledge of smuggling of its produce into China and had no further comment. Cargill spokesman Mike Martin said the U.S. agribusiness giant sold beef to well-established, governmentregulated distributors in Hong Kong. “Once the beef is received by distributors, we have no control over subsequent sales and movement of the beef,” he said.

“Zombie meat”

Night raid

China is the world’s top meat consumer, but the mainland has long kept a tight grip over imports, often citing safety worries such as mad cow disease as the main reason behind bans on major producers such as the United States and India. U.S. officials said in March “huge” amounts of beef were still getting into China. Seizures of smuggled meat have jumped close to threefold this year and generated headlines that have alarmed consumers even in a country wearily familiar with food scandals. Local media reports said in June authorities had seized 100,000 tonnes of smuggled frozen meat, some of it so-called “zombie meat” up to 40 years old.

In one of a spate of recent raids, anti-smuggling agents surrounded a 20-tonne container truck in the early hours of June 1 in Changsha, in southern Hunan province. What they found churned stomachs in China and beyond - rotting, expired beef, originally from India, that had been smuggled in small batches from Vietnam. “When we opened the container it reeked because it hadn’t been put back into cold storage,” said Changsha’s Huang. The meat typically enters China through border towns like Dongxing, in coastal Guangxi province, separated from Vietnam’s Mong Cai by the narrow Ka Long River.

Smuggler gangs take the meat in container trucks from Vietnamese ports such as Haiphong to bonded warehouses in towns like Mong Cai, where shipments are broken into small parcels, breaking the “cold chain” and allowing to meat to thaw. “They then stick it onto 50 or so motorbikes which slowly drip it out along the border where it’s carried on small sampan boats to a truck waiting on the other side,” said Hanoi-based Scott Roberton, who has investigated border smuggling for the Wildlife Conservation Society.

Supply chain

Once in China, the meat is transported, often in unrefrigerated trucks, to massive wholesale markets across the country’s south, where it is finally put back in cold storage and sold on to supermarkets, processing plants and rural markets across the country. Among the biggest is the Red Star cold meat market in Hunan, site of one recent bust, whose sprawling warehouses cover an area the size of 17 football pitches. Changsha customs say around one-third of the 800,000 tonnes of meat that goes through it every year is from “unclear origins” outside mainland China. Su Weijun, the market’s deputy general manager, said that was “nonsense”. “Perhaps before a small amount of meat got through, but now we are inspecting much more strictly,” he said. But a steady stream of food scandals in recent years, from tainted infant formula to fox meat passed off as donkey, have made traders and consumers wary. Reuters

Business Daily | 11

July 17, 2015

Asia

Singapore exports rise although the trend stays soft Shipments to China - Singapore's biggest export market rose 12.2 percent in June on-year Jongwoo Cheon and Masayuki Kitano

ingapore's exports in June grew at a stronger-than-expected annual pace, although a disappointing monthly drop suggested a more sustained period of external improvement is necessary to lift the trade-reliant economy amid fitful global demand. Non-oil domestic exports (NODX) rose 4.7 percent in June from a year earlier on strong shipments to the United States and China, trade agency International Enterprise Singapore said in a statement yesterday. That compared with a 2.0 percent expansion forecast in a Reuters poll. In May, the city-state's shipments contracted a revised 0.3 percent year-on-year as sales to Europe and China declined. Exports on the month fell 2.4 percent in June on a seasonally

KEY POINTS June NODX +4.7 pct y/y vs +2.0 pct forecast June NODX -2.4 pct n/n sadj vs -1.2 pct forecast NODX to U.S. up more; NODX to China, Europe expand

adjusted basis, worse than a 1.2 percent decline forecast in the survey, and extended a 3.3 percent drop in May. "We're seeing a good stabilization, a short-term reprieve, but looking forward I think it's still a bit cloudy," said Edward Lee, regional head of research for Standard Chartered Bank in Singapore. While the trade-dependent economy's beleaguered manufacturing sector showed tentative signs of recovering last month, underlying weakness in China's economy despite betterthan-expected second quarter GDP growth has analysts taking a cautious view on Singapore's nearterm outlook. Singapore's economy contracted in the second quarter as sluggish

global demand and government restrictions on foreign labour knocked the manufacturing sector, raising the prospect of further monetary easing later this year. "I wouldn't be celebrating at the moment," said Lee, noting that shipments were down for a third consecutive month on a month-onmonth basis. Shipments to China - Singapore's biggest export market - rose 12.2 percent in June on-year, helped by strong sales of electrical machinery and specialised machinery. In May, sales to China fell 4.3 percent. "We are hopeful that we'll see some stabilisation of growth in the second half for the Chinese economy, because all the crisis policy measures they've taken should take effect over the next three to six months," said Selena Ling, an economist at Oversea-Chinese Banking Corp. Annual sales to the United States jumped 32.2 percent in June, from an 18.1 percent growth in May, thanks to surges in shipments of printed matter, non-electric engines and structures of ships. Manufacturing is a key driver of Singapore's exports, but it has been underperforming neighbours such as South Korea and Taiwan due to fierce competition and a lack of popular high-tech products such as smartphones. Erratic global growth has added to the stress on the economy. Reuters

New Zealand inflation remains below target Non-tradable inflation, a core measure of prices not influenced by the currency and fuel, rose 0.1 percent in the quarter Tracy Withers

ew Zealand inflation accelerated in the second quarter while remaining below the central bank’s target band, supporting expectations Governor Graeme Wheeler will cut interest rates again next week. The consumers price index rose 0.3 percent from a year earlier, Statistics New Zealand said in Wellington yesterday. The gain matched the median forecast of 17 economists surveyed by Bloomberg. Prices increased 0.4 percent from the first quarter. Benign inflation adds to signs Wheeler will cut the official cash rate to 3 percent on July 23 following a quarterpoint reduction last month. The Reserve Bank of New

Zealand said then that lower borrowing costs were needed to get inflation back to the middle of its 1 percent to 3 percent target. All 17 economists surveyed by Bloomberg News expect a rate cut next week while traders see a 100 percent chance of a reduction, according to swaps data compiled by Bloomberg late yesterday. The inflation gauge rose in the quarter following two successive falls. Economists expected a 0.5 percent gain. Annual inflation accelerated from a 15-year low of 0.1 percent in the first quarter and has been below the 2 percent midpoint of the central bank’s target band since late 2011. The RBNZ predicted

0.3 percent inflation in the second quarter, accelerating to 2.1 percent by the fourth quarter of 2016, according to last month’s monetary policy statement.

Lower currency

Wheeler said June 11 that inflation could have stayed below 2 percent until late 2017 or even 2018 without interest-rate cuts and a lower currency. New Zealand’s dollar has dropped about 7 percent since his statement. Prices were underpinned by a jump in gasoline prices, which gained 8.8 percent in the second quarter after an 11 percent fall in the first three months of the year. Excluding gasoline, consumer prices were unchanged in the

The Reserve Bank of New Zealand predicted 0.3 percent inflation in the second quarter

quarter and rose 0.7 percent from a year earlier, today’s report showed. Non-tradable inflation, a core measure of prices not influenced by the currency

and fuel, rose 0.1 percent in the quarter -- the smallest gain since 2009. Property rents and the cost of newly built houses led the increases while domestic airfares and telecommunication services prices fell. From a year ago, nontradables prices rose 2 percent -- the smallest gain since 2001. The RBNZ forecast a 2.2 percent gain. Tradables prices, which are influenced by currency movements, rose 1 percent from the first quarter, led by fuel and vegetables, the statistics agency said. From a year ago, tradables prices fell 2 percent. The RBNZ forecast a 2.4 percent decline. Bloomberg News

12 | Business Daily

July 17, 2015

Asia India expands medicine price control list India has extended price caps to an additional 39 drugs ranging from commonly used diabetes treatments to antibiotics, in the government’s latest effort to improve the affordability of medicines. Wide-ranging price cuts over the past year have hit several drug makers in India and have been opposed by many in the industry, who say drug prices in the country are already among the lowest in the world. The new drugs join a price control list that covers more than 500 drugs. In India, the majority of people live on less than US$2 a day.

Nissan looks at currency to boost Japan’s output Nissan Motor Co will boost production in Japan as long as the dollar-yen exchange rate remained favourable for exports, Chief Executive Carlos Ghosn said yesterday. “What we see is a much more competitive yen that allows exports to be feasible,” Ghosn told a Japan Chamber of Commerce and Industry event, adding that output from Nissan’s Japan plants would also “increase steadily” over the next two years. Ghosn said Japanese exports can be competitive as long as the dollar was worth more than 100 yen.

Court rejects Elliott appeals on Samsung vote A South Korean court ruled against Samsung C&T Corp shareholder Elliott Associates’ appeals seeking injunctions to block the proposed US$8 billion merger with sister firm Cheil Industries Inc , a Seoul High Court official said. Elliott, C&T’s third-largest shareholder with a 7.1 percent stake, filed two injunction requests in June seeking to block a July 17 shareholder vote on the deal as well as the construction company’s sale of treasury sales to ally KCC Corp. A lower court rejected both requests earlier this month, and the fund subsequently appealed.

Japanese investors expected to help Nikkei outperform peers Japanese stocks have already outperformed the global market, with the Nikkei rising 18 percent this year Ayai Tomisawa

uying from domestic investors, including the Bank of Japan, should help Japanese stocks outperform global peers by offsetting any retreat by foreigners who could become unnerved by risks elsewhere, traders said. After hitting an 18-1/2-year high of 20,952.71 last month, the benchmark Nikkei share average fell to a near three-month low of 19,115.20 last week as worries abounded over risks spreading from China’s month long crash and fallout from the Greek debt crisis. The selling was dominated by short-term foreign investors such as hedge funds and commodity trading advisors. Since then, of course, Chinese stocks have stabilized and worries about Greece have receded after the Greek parliament approved a bailout plan. The biggest remaining uncertainty hovering over markets is now the timing of any rise in U.S. interest rates. The Japanese sectors most vulnerable to international risks are financials and exporters, though when Chinese shares dived, materials and industrial stocks with high exposures to China tumbled.

Japanese investors, including the BOJ, tend to buy aggressively on dips, however, traders said, and that should help the Nikkei outperform overseas peers when markets again come under pressure. “The stock market typically sees a sell-off by hedge funds on the first of a series of rate hikes,” said Masaru Hamasaki, head of market & investment department at Amundi Japan. “But retail investors, the Bank Of Japan and pension funds all like to buy when shares are falling. Their buying will probably offset hedge funds’ selling.”

Official encouragement

And then there is government support. To boost stocks and revive the economy, Prime Minister Shinzo Abe has urged the trillion-dollar Government Pension Investment Fund to buy Japanese shares and the BOJ is buying exchange-traded funds as part its stimulus measures. Japanese stocks have already outperformed the global market, with the Nikkei rising 18 percent this year, while the S&P index gained 2.4 percent and the FTSEurofirst 300 index advanced 16 percent. Long-term foreign investors hold Japanese stocks because they expect

Fonterra cuts dairy jobs as “white gold” rush fizzles

Analysts see the risk of prices falling further, with demand unlikely to pick Myanmar currency to up soon as Chinese processors work continue weakening through their existing stocks against dollar The Myanmar currency kyat would probably continue weakening against U.S. dollar in their exchange until the end of this year as strong demand for the dollar persists, economic analysts here predicted yesterday. Along with gold, U.S. dollar is much preferred to the kyat among investors, causing a shortage of the dollar in the market, official media, the New Light of Myanmar also said, adding that static foreign direct investment, declining export and weakening income from oil and gas sale have also contributed to the dollar strength.

ew Zealand dairy exporter Fonterra is cutting jobs in an effort to shore up its cash flows as a slump in global dairy demand, particularly from No. 1 buyer China, threatens to snuff out the country’s “white gold rush”. Dairy prices have more than halved from record highs scaled in 2013, with Chinese buying dropping off dramatically after the world’s second-biggest economy built up excess supplies of milk powder last year just as the economy began to slow.

Fonterra, the world’s largest dairy exporter, has dominated the commodity milk powder sector for years and had been rapidly expanding its business in China. But profits have been falling for nearly two years in the face of volatile dairy prices, which sank to a 12 1/2year low at the latest global auction on Wednesday. As a result, Fonterra said yesterday it would cut more than 500 of its 16,000-strong global workforce, and warned more redundancies were likely as it reviews its operations.

them rise further as valuations remain reasonable, while the corporate sector is on course to achieve double-digit profit growth this fiscal year. The biggest remaining uncertainty hovering over markets is now the timing of any rise in U.S. interest rates. The price-to-earnings ratio of the broader Topix index stood at 16.46, while the S&P is at 19.30 and FTSEurofirst 300 at 17.93, according to Thomson Reuters data. Japanese companies are also taking steps to use their capital more efficiently and improve their return on equity so are paying out record dividends. A new corporate governance code is now in effect, too. Kok Wei Yee, portfolio manager at Fidelity Worldwide Investment in Japan whose investment term is 3-5 years, said he had been reducing his cash holdings and buying more Japanese shares. “The current market correction has led to indiscriminate selling and has created mispricing opportunities for individual stock pickers,” Yee said, adding that he expected investors to come back in once external risks clear up. Reuters

New Zealand’s dairy exports to China have tumbled 69 percent since the start of the year compared with 2014, official data shows, whittling Beijing’s share of the country’s total dairy shipments to roughly 16 percent, from 37 percent last year. At the same time, a ban by Russia on foreign dairy products, imposed in response to sanctions slapped on the country over its role in the Ukraine conflict, has removed a major buyer of butter and other milk products. Meanwhile, supply has ramped up as farmers in New Zealand, Europe and the United States have set up dairy farms in hopes of cashing in on a doubling in dairy prices between 2009 and 2013. Production in New Zealand, the world’s biggest dairy exporter, has reached record highs. Industry sources say Chinese processors are still working through stockpiles of imported milk powder, prized over domestic offerings due to past safety scares, which is used in everything from confectionary to baby formula. That has kept Chinese buyers out of the market since the start of the year. Reuters

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 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 | 13

July 17, 2015

Asia

India fights illegal stock market Modelled after the “bucket shops” prevalent in the United States a century ago, dabba trading sprung up after India opened its markets in the 1990s, mainly as a way to avoid high taxes Himank Sharma and Rafael Nam

market moves. In early 2013, brokers attributed a sell-off in mid and smallcap stocks over several days in part to a major Calcutta investor liquidating actual shareholdings after losing heavily in the dabba market. “There is a significant risk of spill over in the financial system,” said a senior regulator at SEBI. SEBI, which will be overseeing commodities after a planned merger with the Forward Markets Commission, has set up a threemember team to revise its dabba policy, SEBI officials said. The regulator said in a statement to Reuters that it was also working with state police and had set up 16 regional offices, given the proportion of trades happening outside India’s main financial hubs, in regions like Gujarat.

Losing business

Indian stock market worker

crack team of regulators and specially trained state police are spearheading India’s efforts to stamp out the country’s “shadow” market in shares and commodities, turning up the heat on backstreet traders who threaten the broader financial system. So-called “dabba” trading has been a headache for regulators for years, but a government push to crack down on the black economy and clean up the Indian market for retail investors has given a fresh boost to efforts to stamp out the multibillion-dollar parallel system, which bypasses market rules and taxes. Though brushing off comparisons, regulators and brokers acknowledge China’s dramatic stock market rout of recent weeks has also served as a stark reminder of the risks -- even if troubles across the border were exacerbated by China’s far higher proportion of retail investment and margin lending. “Dabba trading and any other unlawful trading practices do present a risk in the market and need to be

curbed,” said Nirmal Jain, chairman of domestic brokerage and financial services firm IIFL. “It’s not good for anybody.” There is no reliable estimate of the size of India’s dabba markets, but the practice is widespread and brokers estimate share volumes are likely to add up to at least several hundred million dollars daily, compared to an average of 175.25 billion rupees (US$2.76 billion) on formal exchanges. In commodity markets, estimates put trade at multiples of legitimate business. A senior official at leading commodity bourse MCX said earlier this year that the dabba market could be eight to 10 times the regulated derivatives market. Commodity derivatives worth US$265.54 billion were traded on India’s exchanges in the first six months of the year, less than a third of the volumes two years ago before a new transaction tax was introduced. Market participants and traders estimate a bulk of the those trades has moved to the dabba markets.

Brokers estimate dabba share volumes are likely to add up to at least several hundred million dollars daily

Officials at the Securities and Exchange Board of India (SEBI) say they are worried about contagion if markets turn volatile, particularly if dabba traders are using both onmarket and off-market trades to hedge their exposures. Though there is rarely proof, brokers say they sometimes see instances of dabba causing unusual

Modelled after the “bucket shops” prevalent in the United States a century ago, dabba trading -- after the Hindi word for “box” -- sprung up after India opened its markets in the 1990s, mainly as a way to avoid high taxes. Although India has been steadily cutting the securities transaction tax for equities, other taxes have made trading more expensive for ordinary investors. These include taxes on short-term capital gains and a business tax. Dabba trades also allow investors to avoid SEBI registration requirements or the margin requirements set by exchanges. In a typical dabba trade, an investor places an order with a broker, who logs the trade but does not usually buy the actual security. As a result, it is a straight bet on a capital gain, without any hope of dividend income. When the investor cashes out, the broker would need to pay back the profit should that security have appreciated, or receive money should it be a losing bet. The ease of dabba trade has made it particularly difficult to root out, even though Indian laws stipulate stringent penalties of up to 10 years imprisonment as well as fines of up to 250 million rupees (US$3.94 million). Indian households own only about US$400 billion in equities, compared with US$1.1 trillion in bank fixed deposits and US$1 trillion in gold, according to Morgan Stanley. But brokers say squeezed clients mean they are losing out regardless. “Most of my clients are shifting to dabba,” said Nishant Jain, a broker in the state of Rajasthan. “They don’t want to trade officially because of the disadvantages.” Reuters

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July 17, 2015

International Carl Icahn calls BlackRock a ‘dangerous’ company Billionaire activist investor Carl Icahn lambasted BlackRock, the world’s largest asset manager, as an “extremely dangerous company” because of the prevalence of its exchange-traded fund products, which Icahn deems illiquid. “They sell liquidity,” Icahn said in reference to BlackRock’s ETF business. “There is no liquidity. That’s my point. And that’s what’s going to blow this up.” Icahn was speaking at the CNBC Institutional Investor Delivering Alpha Conference in New York, sharing the stage with Larry Fink, chief executive of BlackRock.

EU opens Qualcomm antitrust investigations The European Commission has opened two investigations into possible abuse of market dominance by chipmaker Qualcomm Inc, it said yesterday, the latest in a string of antitrust and tax inquiries into major U.S. corporations. The first investigation will examine whether Qualcomm, the market leader in chips used for voice and data transmission in smartphones, tablets and other mobile devices, offered financial incentives to customers on condition that they bought exclusively or almost exclusively from Qualcomm. The second will look at whether Qualcomm engaged in “predatory pricing” by charging at less than cost.

Brazil currency probe may grow Investigation of an alleged currency cartel formed by 15 of the world’s largest banks could expand to more financial institutions but it is unlikely to result in trading bans, the head of antitrust watchdog Cade told Reuters. Vinicius Carvalho, making his first public comments on the investigation, said the case was built around a plea deal with one of six banks that had agreed to pay US$5.8 billion in the United States to settle charges of currency rigging. The U.S. settlement came just weeks before Cade went public with its case this month. As other banks agree to cooperate, Carvalho said more names could be drawn into the investigation.

Schaeuble casts doubt on Greek bailout German Finance Minister Wolfgang Schaeuble questioned whether Greece will ever get a third bailout programme yesterday, a day after the Greek parliament passed a package of stringent measures required to open negotiations on financial aid. He said he would submit a request to Germany’s parliament to vote on opening the talks and said passing the reforms was an “important step”, but it would be hard to make Greece’s debt sustainable without writing some of it off, an idea Berlin considers to be illegal. Greece is seeking up to 86 billion euros in a third rescue package.

Sports Direct pledges deals to boost ambitions The company said it expected to seal elusive European acquisitions over the coming year to build on its dominance of the British sporting goods retail market. Founded and majority controlled by Newcastle United soccer club owner Mike Ashley, the group has grown rapidly in Britain through a mixture of M&A and cheap prices. However, a push to replicate its success across continental Europe, a market eight times the size of the UK, has proved slower going.

Organisation for Economic Co-operation and Development (OECD) will set taxes rules for developing nations

Developing nations give up on global tax plan Richer countries, led by Britain and the United States, were opposed to the plan

eveloping nations have abandoned their push to create a global tax authority during a key United Nations global development summit being held this week in Ethiopia, officials said yesterday. Poorer countries, as part of the 134-member G77 bloc, had been lobbying hard for an end to multinationals’ profit shifting, which the UN’s trade and development body UNCTAD says costs poorer countries some US$100 billion a year. They wanted a UN-managed intergovernmental body charged with overseeing a new set of global fiscal regulations to be created, replacing the current set-up where such matters are managed by the Organisation for Economic Co-operation and Development (OECD), the so-called “rich man’s club”.

Richer countries, led by Britain and the United States, were opposed to the plan. The dispute has been at the centre of the summit, which has been tackling the question of how to plug an estimated US$2.5 trillion gap in development financing. The United Nations hopes the meeting will pave the way for a fairer world of inclusive, low-carbon growth, set out in its 2015-2030 Sustainable Development Goals. The final text of the summit, obtained by AFP, shows developing nations dropped their demands for a global tax body, with the text only mentioning that a subsidiary committee of the UN’s Economic and Social Council (ECOSOC) -- which only has a consultative role -will handle the matter. It says members of this committee will in future be appointed by their

Saudi diesel triggers potential fuel price war Exports from the Gulf are expected to rise further as its own demand is set to fall at the end of summer when power generation drops Florence Tan and Jessica Jaganathan

governments and that it will be more geographically representative. “This question has become a political football,” explained Paddy Carter, a researcher at the Overseas Development Institute (ODI), a London-based development think-tank. “It’s easy to understand why developing countries need a global tax body instead of being told by OECD what they should do. But it’s harder to say how effective a UN body could be to increase tax revenues for these countries,” he said. The final text from the summit will enable the world body to push ahead with its 2015-2030 Sustainable Development Goals, which are due to be formally adopted in New York in September. There are 17 in all, ranging from ending poverty to providing universal access to sustainable energy. Reuters

“We are already seeing the impact in the Asia-Pacific,” said Suresh Sivanandam, principal analyst for refining and chemicals at Wood Mackenzie. “This year there is not a single drop of diesel exported from Singapore to the Middle East,” he added, referring to a once popular diesel export route. The ramp-up mainly of ultra low sulphur diesel to Europe sees the Saudis compete head on with big Asian diesel exporters India and South Korea and reduces Asia’s gasoil margin to the lowest in five years. The flurry of shipping activity out of Yanbu has also pushed up freight rates for long-range tankers by nearly 20 percent since last week, a shipbroker said.

Distillates monster

he world’s top crude oil exporter Saudi Arabia has turned itself into a major power of refined fuels, offering customers millions of barrels of diesel and potentially triggering a price war with Asian competitors as its exports feed into a glut. Saudi Arabia, a leading member in the Organization of Petroleum Exporting Countries (OPEC), already pledged last November to keep crude output high to defend its market share against higher-cost producers. While the strategy has kept crude markets well-supplied and prices low, the Kingdom has seen mixed

success in defending its market share as global production remains high despite low prices. Saudi Arabia is now processing more of its crude at home as its massive refineries turn it into the world’s fourth-largest refiner, in a tie with Royal Dutch Shell, that allows the Kingdom to export more fuel products than ever before. Aramco Trading Co, a subsidiary of state oil giant Saudi Aramco, offered via tenders 2.8 million barrels of ultra low sulphur diesel for loading in late July to early August, trade sources said, enough to meet Japanese demand for three-and-a-half days.

Saudi Arabia opened its newest 400,000-barrels per day refinery in Yanbu in April, reaching full capacity within two months. “Yanbu has become a distillates monster,” a shipbroker said, referring to the hike in exports from the Red Sea port. At least seven long-range vessels have been provisionally booked to load diesel from Yanbu headed for Europe, shipping fixtures showed. One of them is the 120,000-tonne Suezmax tanker Atina, carrying diesel to Europe, an unusually big ship to transport the fuel that showcases the scale of the new Saudi operations. Reuters

Business Daily | 15

July 17, 2015

Opinion Business

wires

The mirage of the financial singularity

Leading reports from Asia’s best business newspapers

Robert J. Shiller

2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices

TAIPEI TIMES Financial institutions have significantly decreased mortgage loans over the past five years, making it more difficult to own a home, the latest data compiled by the Joint Credit Information Centre showed. Mortgage loans dropped from 72 percent of residence values in the first quarter of 2010 to 65 percent in March of this year, due to the central bank’s credit controls and conservative evaluations by lenders, brokers said. The centre first published its mortgage data last month to support the Financial Supervisory Commission’s effort to provide the public with housing market data.

THE TIMES OF INDIA The government will settle for composite foreign investment limits — including foreign direct investment, foreign institutional investment, non-resident investment and venture capital — in a move that will have a bearing on several sectors ranging from e-commerce and single-brand retail to insurance, commodity exchanges and asset reconstruction. At present, in several sectors, there are sub-limits within the overall foreign investment ceiling. But, following the government go-ahead, any one set of investors can raise their stake up to the sectoral cap. The move is seen to be especially beneficial to foreign institutional investors in some of the sectors.

THE PHNOM PENH POST The UN’s Food and Agriculture Organization and the Ministry of Commerce held a workshop yesterday to garner feedback from NGOs and businesses on the draft National Food Law. The new law deals with the safety, labelling and advertising of food and agricultural products for local consumption as well as detailing standards for exports and imports of produce. It provides food supply chains with operational guidelines and lists the duties of the ministries, businesses and agencies involved. Drafting of the food law started last year when the FAO began reviewing laws and best practices in neighbouring countries.

THE KOREA HERALD The market value of tech and auto shares has sank this year as market heavyweights in the sectors have been grappling with fierce global competition and unfavourable currency exchange rates, data showed yesterday. The combined value of information technology and auto shares accounted for 37 percent of the total market capitalization on the main KOSPI market as of Monday, the lowest level since December 2011, according to the data compiled by market researcher WiseFn. The ratio rose from 41.7 percent at end-2014 to over 45 percent in mid-March.

n their new book The Incredible Shrinking Alpha, Larry E. Swedroe and Andrew L. Berkin describe an investment environment populated by increasingly sophisticated analysts who rely on big data, powerful computers, and scholarly research. With all this competition, “the hurdles to achieving alpha [returns above a risk-adjusted benchmark – and thus a measure of success in picking individual investments] are getting higher and higher.” That conclusion raises a key question: Will alpha eventually go to zero for every imaginable investment strategy? More fundamentally, is the day approaching when, thanks to so many smart people and smarter computers, financial markets really do become perfect, and we can just sit back, relax, and assume that all assets are priced correctly? This imagined state of affairs might be called the financial singularity, analogous to the hypothetical future technological singularity, when computers replace human intelligence. The financial singularity implies that all investment decisions would be better left to a computer program, because the experts with their algorithms have figured out what drives market outcomes and reduced it to a seamless system. Many believe that we are almost there. Even legendary investors like Warren Buffett, it is argued, are not really outperforming the market. In a recent paper, “Buffett’s Alpha,” Andrea Frazzini and David Kabiller of AQR Capital Management and Lasse Pedersen of Copenhagen Business School, conclude that Buffett is not generating significantly positive alpha if one takes account of certain lesser-known risk factors that

have weighed heavily in his portfolio. The implication is that Buffet’s genius could be replicated by a computer program that incorporates these factors. If that were true, investors would abandon, en masse, their efforts to ferret out mispricing in the market, because there wouldn’t be any. Market participants would rationally assume that every stock price is the true expected present value of future cash flows, with the appropriate rate of discount, and that those cash flows reflect fundamentals that everyone understands the same way. Investors’ decisions would diverge only because of differences in their personal situation. For example, an automotive engineer might not buy automotive stocks – and might even short them – as a way to hedge the risk to his or her own particular type of human capital. Indeed, according to a computer crunching big data, this would be an optimal decision. There is a long-recognized problem with such perfect markets: No one would want to expend any effort to figure out what oscillations in prices mean for the future. Thirtyfive years ago, in their classic paper, “On the Impossibility of Informationally Efficient Markets,” Sanford Grossman and Joseph Stiglitz presented this problem as a paradox: Perfectly efficient markets require the effort of smart money to make them so; but if markets were perfect, smart money would give up trying. The Grossman-Stiglitz conundrum seems less compelling in the financial singularity if we can imagine that computers direct all the investment decisions. Although

It is difficult not to think of China’s recent stockmarket plunge. News accounts depict hordes of emotional people trading on hunch and superstition

alpha may be vanishingly small, it still represents enough profit to keep the computers running. But the real problem with this vision of financial singularity is not the Grossman-Stiglitz conundrum; it is that real-world markets are nowhere close to it. Computer enthusiasts are excited by things like the blockchain used by Bitcoin (covered on an education website called Singularity University, in a section dramatically titled Exponential Finance). But the futurists’ financial world bears no resemblance to today’s financial world. After all, the financial singularity implies that all prices would be based on such things as optimally projected future corporate profits and the correlation of profits

with expected technological innovations and long-term demographic changes. But the smart money hardly ever talks in such ethereal terms. In this context, it is difficult not to think of China’s recent stock-market plunge. News accounts depict hordes of emotional people trading on hunch and superstition. That looks a lot more like reality than all the talk of impending financial singularity. Markets seem to be driven by stories, as I emphasize in my book Irrational Exuberance. There are stories of great new eras and of looming depressions. There are fundamental stories about technology and declining resources. And there are stories about politics and bizarre conspiracies. No one knows if these stories are true, but they take on a life of their own. Sometimes they go viral. When one has a heart-toheart talk with many seemingly rational people, they turn out to have crazy theories. These people influence markets, because all other investors must reckon with them; and their craziness is not going away anytime soon. Maybe Buffett’s past investing style can be captured in a trading algorithm today. But that does not necessarily detract from his genius. Indeed, the true source of his success may consist in his understanding of when to abandon one method and devise another. The idea of financial singularity may seem inspiring; but it is no less illusory than the rational Utopia that inspired generations of central planners. Human judgment, good and bad, will drive investment decisions and financial-market outcomes for the rest of our lives and beyond. Project Syndicate

16 | Business Daily

July 17, 2015

Closing S. Korea mulls declaration of end of MERS crisis

China’s publicity head calls for Marxism in social sciences

South Korea is mulling an earlier-than-anticipated announcement of the end of its Middle East Respiratory Syndrome (MERS) crisis as no infection case was added for the past 11 days. Kwon Duk-cheol, head of the central MERS management headquarters, told a press briefing Thursday that Seoul is considering the declaration of the end of the MERS crisis by downgrading its own alert level. He said South Korea will seek to persuade the World Health Organization to understand the country’s own standard, while accepting recommendations. Authorities are considering the August 2 as one of possible declaration dates.

The head of the Publicity Department of the Communist Party of China Central Committee Liu Qibao urged social scientists to stick to Marxism in their studies yesterday. Liu made the remarks during an inspection tour at the Chinese Academy of Social Sciences (CASS), saying that Marxism is the fundamental ideology of the Party and the state. Liu urged philosophers and social scientists to use the stances, viewpoints and methodologies in their academic studies, and keep the social sciences in the right direction. He urged social scientists to strengthen explanation and study of Marxism’s basic principles.

Hong Kong ivory trade ‘major threat’ to elephant survival The report described Hong Kong as the world’s third-largest ivory smuggling hub after Kenya and Tanzania Peter Martell

A mass slaughtering of African elephants is underway, yet the Hong Kong government is turning a blind eye

ampant illegal trading in ivory in Hong Kong is pushing elephants towards extinction, conservationists said yesterday, reporting more ivory items on sale there than in any other city. The sale of ivory items from government-registered stockpiles predating the 1990 ban is allowed for domestic use in Hong Kong, but the report finds tusks from recently slaughtered elephants are being passed off as old ivory on a huge scale. “Hong Kong’s ivory trade is creating a significant loophole in international efforts to end the killing

of elephants in Africa,” conservation organisation Save the Elephants said in a report released in Kenya and Hong Kong. “No other city surveyed has so many pieces of ivory on sale as Hong Kong,” co-author Esmond Martin said. The report found more than 30,800 items -- mainly jewellery and figurines -- for sale in 72 stores and estimated that over 90 percent of sales were to buyers from mainland China where demand for ivory is high. Combined with “lax” border controls with China, where some 40

India simplifies foreign investment rules

Alex Hofford, campaign group WildAid

million people cross each year, the Hong Kong trade is having a major impact on efforts to end elephant poaching in Africa. “A mass slaughtering of African elephants is underway, yet the Hong Kong government is turning a blind eye,” said Alex Hofford of campaign group WildAid.

“For 25 years since the international ban, Hong Kong’s ivory traders appear to have been laundering poached ivory from illegally-killed elephants into their stocks,” said Hofford.

Call for total ivory retail ban

Beijing has made efforts to curb the trade, stepping up prosecutions of smugglers and seizures of ivory at border posts, but campaigners say the measures have not gone far enough. Surging demand for ivory in Asia is behind an increasing death toll of African elephants, conservationists say, as authorities fail to bust international smuggling networks. “Unless the ivory trade in Hong Kong is closed down the territory will continue to represent a major threat to survival of the species,” said Iain Douglas-Hamilton, founder of Save the Elephants. More than 30,000 elephants are killed every year to satisfy demand for ivory in China and the Far East, where tusks are worth more than US$2,000 a kilogramme. In the 1960s, Hong Kong was one of the most famous and largest ivory carving centres in the world. No ivory has been legally imported to Hong Kong since 1990, with all sales since then officially coming from registered stockpiles. According to official figures, 242 tonnes of ivory were sold in Hong Kong between 1990 and 2008, an average of around 13 tonnes a year. But since 2010 recorded sales have slowed to just a tonne a year, despite soaring demand and the number of visitors from mainland China having more than doubled in the same period. “The only way to fix the problem is for the government to legislate for a commercial ivory sales ban,” Hofford said. AFP

Belt and Road information bank unveiled

TSMC outlook dragged down by macroeconomic weakness

ndia has simplified rules for foreign investment in companies by clubbing together different categories, Finance Minister Arun Jaitley said yesterday, effectively giving equal treatment to global capital entering Asia’s third largest economy. The move, flagged by Jaitley in his budget in February, will make it easier for banks like Yes Bank and Axis Bank to raise capital up to a foreign ownership limit of 74 percent, say analysts. “One of the most important decisions in relation to the investment is the introduction of composite caps for simplification of foreign direct investments,” Jaitley told reporters after a cabinet meeting. Jaitley said foreign direct investment, foreign portfolio investment and investments by nonresident Indians would be “clubbed together under a composite cap”. Previously, foreign capital had been subject to varying restrictions - a legacy of India’s socialist past and its lingering reluctance to allow capital to move freely across its borders. The Department of Industrial Policy and Promotion proposed simplifying the investment rules after Prime Minister Narendra Modi won election.

hina has debuted a package of information services that could become a key information bank helping progress the Belt and Road Initiative. The new “Xinhua Silk Road” products, designed and managed by China’s national Xinhua News Agency, were launched by the agency in Beijing yesterday. The products aim to provide a platform for commodity trade and investment cooperation for governments and companies of countries along the Belt and Road, Xinhua President Cai Mingzhao said. Xinhua also released an index on the technology, infrastructure and investment environment of Belt and Road countries yesterday. With 41 subindices, the index analyses the technology levels, economic development, as well as political, social, communication and transportation conditions of countries along the Belt and Road routes. The “Xinhua Silk Road” is Internet-based information products, currently available in Chinese and English. It includes four major products and services - the Silk Road Database, Xinhua Credit Reports, Consulting & Thinktank Services and the interactive business match-making Xinhua Silk Road IM System.

Reuters

Xinhua

aiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s No.1 contract chipmaker, said macroeconomic headwinds will dampen its prospects in the third quarter, even if its main client Apple Inc releases a new iPhone. TMSC said July-to-September revenue will rise at most by 2.2 percent from the second quarter, to T$207 billion to T$210 billion (US$6.75 billion). This is largely due to weak demand in emerging markets, particularly China, for inexpensive smartphones. “The outlook for this year has continued to deteriorate,” TSMC Chairman Morris Chang said during the company’s quarterly investor conference yesterday. Pricey new iPhones and high-end phones powered by Google Inc’s Android operating system will boost fortunes in the second half of 2015, co-Chief Executive Mark Liu said. Industry watchers expect Apple to release a new version of its wildly popular iPhone this autumn, though analyst estimates TSMC’s share of its chips vary from 30 to 60 percent. Reuters