Closing editor: Luís Gonçalves
MOP 6.00
Walking on air A record year is on the cards. Local airport operator Macau International Airport Company Limited (CAM) forecasts 5.73 million pax for 2015. Driven by a sterling first half performance. More than 55,000 flight movements are predicted, according to CAM chairman Ma Iao Hang
Year IV
Number 843 Monday July 27, 2015
Publisher: Paulo A. Azevedo
Page 5
Mid-teen crisis Economic uncertainty continues. With the city’s downturn expected to extend to 2H 2015. GDP is forecast to decline about 15 pct for the year, the Monetary Authority of Macau predicts. The anticipated slower 10-13 pct from now until the end of the year is largely dependent upon the future performance of the gaming industry. Which is expected to post a milder y-o-y dip due to lower comps and increased promotional efforts Page
5
AIA profit surges 41 pct, AXA suffers losses Page 4
Traffic congestion. The fourth connection between the Peninsula and Taipa. And floodgates for reclaimed areas. These were the interconnected hot topics of last Friday’s session of the Legislative Assembly. A restructuring of Macau’s road network and the creation of an Outer Circular are part of the Master Plan
Steady job The Mainland job market remained stable. While an industry poll returned weak figures again. Unemployment in urban areas stood at 4.04 pct at the end of June
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HSI - Movers July 24
Down to the wire
Name
It’s not academic anymore. The Secretary for Economy and Finance warned that July gaming revenues may dip below the MOP18.35 billion gov’t redline. Consequently, authorities may start tightening expenses and subsidies from August. Social benefits will remain unaffected. But austerity measures will bite deep into government departments
Page 5
Interview www.macaubusinessdaily.com
Macau nabs 332 illegal workers as at June Page 3 Galaxy buys stake in Monaco casinos operator as Macau slumps Page 8
Master Plan, Perhaps
Page 2
Gov’t to abolish IACM’s culture, leisure & sports functions Page 4
%Day
Sands China Ltd
+1.50
China Resources Enter
+0.62
Li & Fung Ltd
+0.33
CLP Holdings Ltd
+0.31
Galaxy Entertainment
+0.29
Tingyi Cayman Islands
-1.92
Tencent Holdings Ltd
-1.94
Want Want China Hol
-2.15
China Merchants Hold
-2.88
China Life Insurance C
-3.00
Source: Bloomberg
Finance Central There are opportunities galore. And local banks should profit from them. The regional market awaits the bold, says the Chairman of the Macau Association of Banks. Ip Sio Kai stresses to Business Daily that the city’s banks could credibly evolve as a regional financial centre. Participating in crossborder financing Sino-Portuguese businesses. And tapping into China’s Free Trade Zones
Pages 6&7
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2015-7-27
2015-7-28
2015-7-29
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2 | Business Daily
July 27, 2015
Macau
Reclaimed land: Traffic and fourth Macau/Taipa connection dominate AL discussion The session to introduce to Legislative Assembly members the master plan for newly reclaimed land was dominated by queries about traffic and the fourth means of connection between Macau and Taipa João Santos Filipe
jsfilipe@macaubusinessdaily.com
of a tunnel near Governador Nobre de Carvalho Bridge. However the option was later dismissed by the Secretary for Transport and Public Works, Raimundo Rosário. “To be very clear, at this stage it is not being considered. It is worth being considered, as I said previously, but we do not have the means to consider everything”, he said.
Floodgates between Peninsula and Zone A
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he traffic in Macau following the completion of newly reclaimed land, the fourth means of connection between the Peninsula and Taipa, and the introduction of floodgates in the water area between Macau Peninsula and Zone A were the hot topics of last Friday’s meeting of the Legislative Assembly (AL). The meeting was organised in order to introduce the master plan for the reclaimed land to the members of the AL.
During the session Li Can Feng, director of the Land, Public Works and Transport Bureau (DSSOPT), explained that the creation of the reclaimed areas will also include the restructuring of Macau’s road network and the creation of an Outer Circular to ease traffic congestion. The director of DSSOPT was also frequently asked by the members of the AL about the existing congested connections between the Peninsula and Taipa and consequently added
more details about the fourth connection, which will link the two zones but will also go through Zone A. “The result of our first study that dates back to 2011 suggested a tunnel would be the best option due to safety. However, our latest study from 2013 is not so clear, raising questions about the quality of the air and the security of a route designated for motorcycles”, Mr. Li explained. The DSSOPT director also said that the best solution may be the adoption
Reclaimed land may solve land swap compensation issue
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he newly reclaimed land may present the solution the government is searching for to compensate the third party private landowners whose land parcels on the Macau Peninsula and Cotai were swapped by the government and later granted to Wynn Macau, MGM China and Galaxy Macau for the
development of the resortcasinos. While acknowledging that these landowners have not yet been compensated for the swap, the Secretary for Transport and Public Works, Raimundo Rosário, said that this will only be considered later. “We are in the very early stages regarding the reclaimed
land. This question is going to be considered in the future, when we will focus on the details. At this moment, we are only defining the purpose of the different areas and as such it is too soon to solve this problem”, Mr. Rosário said. “I believe this land will have to be compensated but I’m not in a position to tell you where
The creation of Zone A will create a channel between the reclaimed land and Macau Peninsula; members of the AL showed their concern about the odour that may arise from the mud in the channel. With regard to this topic, Li Can Feng said that the government will introduce floodgates to address the issue, after being questioned by Melinda Chan. He also explained that this would be built after the reclamation of Zone A was completed. Following the meeting, it was also revealed that the government had decided to extend public consultation on the master plan for the new reclaimed land for another twenty days. Initially, the process was to end by 8 August. The newly reclaimed land will be divided into six zones, named A,B,C,D, E1 and E2, adding an extra 350 hectares to Macau’s area. This land will be used not only for residential purposes but to diversify the economy of the region.
it will be compensated”, he added after being asked if there was an alternative to granting land parcels in Macau besides the reclaimed territories. On Friday it was also revealed that the Court of Second Instance has ruled that the 379 square metre land parcel abutting the Red Market in Rua do Padre João Clímaco, also known as Tou Fa Gong, should be repossessed by the government. The decision was justified by the allegedly false testimony of Teng Man Lai, a local businessman who claimed to own the land.
Despite the ruling, the Secretary stressed that it is still too early to comment because the decision can be appealed by the Court of Final Appeal. “We received the news that the Court of Second Instance ruled that the Tou Fa Gong plot of land shall be returned to the government. However, we haven’t yet read the documents from the court because the judicial process is still ongoing”, he said. “The other party involved has the right to appeal the decision so I cannot really comment on this situation”, he added.
Business Daily | 3
July 27, 2015
Macau Macau nabs 332 illegal workers as at June The Macau authorities detected 332 illegal workers between January and June; an average of more than 55 per month, announced the Public Security Police (PSP). The illegal workers were detected in operations carried out by PSP and the Labour Affairs Bureau (DSAL), and focused on construction works, homes and commercial and industrial establishments. Macau had, in late May, 179,416 non-resident workers, the vast majority of whom (117,148) are from the interior of China. The imported labour universe represented 44.2 per cent of Macau’s active population, according to estimates for the period between March and May released by the Statistics and Census Service.
GDP to drop to mid-teens this year The Monetary Authority said the economic contraction is likely to continue for the second half but at a slower pace
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he city’s economic downturn may extend to the second half of 2015, causing real gross domestic product (GDP) to decline by some 15 per cent for the whole year, the Monetary Authority of Macau (AMCM) predicts. In the Authority’s latest quarterly study report, it anticipates that the economic challenges that the city is facing will linger during the second half, estimating that the real GDP during the period may decrease around 11 per cent year-on-year (‘low teens’ or mid point between 13-10 per cent ). Claiming the exact drop rate will depend upon the performance of the gaming
industry, the Authority, however, perceives that the gaming sector will post a milder year-on-year dip in gaming revenues during the second half than the first due to the low base of the second half in 2014, as well as the stepping up of promotional efforts by the government and the city’s gaming operators. ‘The deterioration in gaming revenue has dragged the economy into the contraction zone given that service exports’ contribution to overall growth is significant. Nevertheless…there has been a weakening sign of yearon-year contraction in gross gaming revenues since March 2015,’ AMCM wrote in the study.
In addition, AMCM believes that the gaming operators can accomplish their ongoing investment activities in the territory amid the downturn. ‘With strong balance sheets and low gearing ratios, the well-capitalised gaming operators would be able to actualise their large-scale facilities investment in the SAR despite the heightened volatility in major capital markets around the world,’ it said. On the other hand, the Authority noted that the government’s balance sheet is still resilient against external shocks brought to the local economy.
‘The SAR Government’s sturdy public finances, together with its strong external financial position, continues to thicken fiscal and foreign exchange reserves. These large reserve buffers help limit the vulnerability of Macau’s small open economy to external shocks,’ it wrote in the study.
Inflation rate above 4 per cent
Meanwhile, the Authority predicts that the city’s inflation will stay relatively high for 2015 - above 4 per cent, due to imbalances between demand and supply in the non-tradable sector.
‘There have been signs of imported deflation counteracting domestic inflation, leading to a lower consumer price indexinflation rate over the last six months. However, the inflation rate is expected to be above 4 per cent for 2015,’ AMCM wrote. In addition, AMCM forecasts that the city’s unemployment rate will not be higher than 2 per cent from the current 1.8 per cent throughout the current year. It claimed that the tradeoff between inflation and the expected low unemployment rate for the year suggests that inflation may only slow slightly but will not decrease sharply. K.L.
4 | Business Daily
July 27, 2015
Macau AXA posts MOP103.5 mln loss in Macau for 2014
T AIA net profit surges 41 pct in first half of the year
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an-Asian life insurer AIA Group Limited - which saw its interim net profit soar by 41 per cent year-on-year to US$2.18 billion (MOP17.44 billion) for the six months ended May 31 this year - has proposed an interim dividend of 18.72 HK cents (MOP19.3 cents) per share, a jump of 17 per cent compared to one year ago. The insurer filed its interim report with the Hong Kong Stock Exchange on Friday, indicating that the value of new business, a key measure of insurers' profitability, had soared 21 per cent year-on-year during the six months
or 25 per cent at constant exchange rates, for US$959 million. In addition, the annualized new premiums of the company reached US$1.88 million, representing a yearon-year jump of 11 per cent, or 15 per cent at constant exchange rates. In the company’s Hong Kong market - which includes Macau - the value of new business that the insurer achieved during the period totalled US$335 million, accounting for 35 per cent of the total. The value also represents a year-on-year increase of 29 per cent.
Meanwhile, AIA saw its performance in the Mainland market post the most notable growth, with a 56 per cent year-on-year jump in the value of new business to US$187 million. “The power of AIA’s franchise, the breadth of our product range, our trusted brand and unrivalled financial strength will enable us to continue to generate sustainable value for our customers and shareholders,” said the chief executive and president of the company, Mark Tucker. K.L.
Government to abolish IACM’s culture, leisure & sports functions
Macau GP: 800 residents sign up for track training programmes
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ast Friday, the Executive Council proposed abolishing the administrative functions of the Civic and Municipal Affairs Bureau (IACM) for culture, leisure and sports, whilst giving the Bureau new powers to help other government departments on public services. According to the Council spokesperson, Leong Heng Teng, the government will establish a cross-
departmental working group to streamline the administrative functions of IACM, the Cultural Affairs Bureau and Sport Development Bureau. The original functions of IACM regarding culture, leisure and sports, meanwhile, will be transferred to these two Bureaus. This functionional transfer will affect some 200 public servants currently working for IACM, Mr. Leong
he Macau Brach of AXA posted losses of MOP103.5 million during 2014, the company has announced in its official results. The results generated last year for the Macanese branch of Frenchbased AXA contrasts severely with 2013, when the company achieved a positive result of MOP102.8 million. However, during the same time the gross premium amount generated by AXA in Macau increased 3 per cent to MOP489.3 million from MOP475 million in 2013. In Macau, AXA is only involved in life insurance. Still the performance of the company in the territory lagged behind the overall market, as total gross premiums increased from 2013 to 2014 39.4 per cent to MOP6.93 billion from MOP4.97 billion, according to Monetary Authority (AMCM) data. While in Macau AXA returned negative results, overall the AXA Group increased its profits by 12 per cent in 2014 to 5.02 billion euro (MOP44 billion) from 4.48 billion euros (MOP39.2 billion) in the previous year.
said, indicating the contracts of these civil workers will also be transferred to the two Bureaus. Meanwhile, the bill proposes allowing IACM to handle public services for other departments once it reaches agreement with these bodies, suggesting residents will be able to go to IACM’s offices for services of other departments in the future. K.L.
ecretary for Social Affairs and Culture Alexis Tam recently presided over the third meeting of the Macau Grand Prix Committee. Mr. Tam, President of the Committee, met the leaders of each subcommittee, who reported on preparations for this year's Grand Prix. Mr. Tam provided guidance and direction with regard to preparations for the second half of the year, and encouraged members to work together to ensure the smooth running of the event. More than 800 Macau residents have signed up for the track personnel training programmes. The theoretical courses are divided into six classes whilst practical exercises are held at karting events on Coloane.
For medical and rescue personnel, training of the local teams was conducted in June, with further courses scheduled for July and September. Last month, almost 50 medical and fire department staff completed training courses. In October, the international medical delegate will visit Macau to give local doctors and firefighters medical and rescue training The training of personnel continues, while the Macau Grand Prix Committee, through the Automobile General Association MacaoChina (AAMC), has invited members of the Federation Internationale de Motocyclisme (FIM) and Federation Internationale de L’Automobile (FIA) to conduct seminars.
Business Daily | 5
July 27, 2015
Macau
Lionel Leong prepares for austerity The Secretary for Economy and Finance predicts that the gaming revenues of July may not meet the target of MOP18.35 billion that the government has set. Consequently, the government may start tightening expenses from August Kam Leong
kamleong@macaubusinessdaily.com
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ecretary for Economy and Finance Lionel Leong Vai Tac (pictured) expects the city’s gaming revenues will be lower than MOP18 billion (US$2.25 billion) in July, meaning the government may need to consider austerity measures for August. “We expect this month’s gaming revenues will be lower than MOP18 billion, meaning gaming revenues may not meet the target of MOP18.35 billion. Consequently, after closing the account for July, it will be necessary for us to conduct austerity measures if gaming revenues cannot really reach MOP18.35 billion,” the Secretary said on Saturday. According to the Secretary, if the gaming sector fails to meet its revenues target, he will report to the Chief Executive, and initiate a meeting to implement tightening measures at the beginning of August. Mr. Leong perceives that this possible failure of meeting the target is due to gaming revenues in July not increasing from the previous month as it has regularly done every year. The Secretary claimed that the city’s gaming revenues in every previous July were always some MOP1 billion higher than those of June, indicating that the pattern did not recur this July based on
before, which is also reflected in the adjustment of gross domestic product and consumer price index,” Mr. Leong said on the sidelines of the Youth Career Expo 2015 on Saturday. “However, we can see that many corporations are still offering different types of job position in the expo for young people. Hence, we are still optimistic that the local employment environment is healthy,” the Secretary added.
Employment safe
current gaming revenues generated during the first 20 or so days of the month.
Possible turnaround
Nevertheless, Mr. Leong maintains that there is still a possibility for the situation to turn around if the start of summer vacations at the end of the month can encourage visitor arrivals or change the consumption model of tourists. He claimed that the government is still observing whether these factors can boost gaming revenues to MOP18.35 billion by the end of the month.
In fact, the government claimed before that the city’s social benefits will not be affected by the austerity measures, which will primarily be introduced to control the expenses or subsidies incurred by government departments. Meanwhile, the Secretary claimed that the government is still optimistic about the city’s employment environment despite the unemployment rate increasing to 1.8 per cent from 1.7 per cent in May. “Affected by internal and external factors, it is true that our economic environment is not as good as
Claiming the current unemployment rate of Macau is still rather low as compared to other regions, Secretary Leong said he hopes the jobless rate can hover at a low rate in the future. In addition, he believes that the increase in non-gaming elements will vary the job opportunities for young locals, saying the government will closely monitor the employment environment of Macau. Meanwhile, the Secretary said the Labour Affairs Bureau, Human Resources Office and Macau Productivity and Technology Transfer Centre will study the employment environment of the city through the positions offered in career expos, in order to gauge supply and demand.
Cultural Affairs Local airport to welcome Bureau partners HK 5.73 mln passengers this year company to expand L sales abroad
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n order to expand the sales channels for its publications and take them beyond the territory’s borders the Cultural Affairs Bureau of the Macau SAR Government has appointed Sup Publishing Logistics (HK) Limited as IC distributor. Through the company’s webpage, the publications can be sold in Hong Kong and abroad, allowing readers from all over the world to acquire IC publications. Sup Publishing Logistics (HK) Limited is a subsidiary
of Sino United Publishing (Holdings) Limited, which has business relations with over 400 publishing houses and close to 1,000 bookstores in Hong Kong and all over the world. This alliance of publishing houses launches every day close to 200,000 volumes. As the biggest online publishing house in Hong Kong, it has a vast sales network, including business links to convenience store chains, online bookstores, department stores chains and cross sector industries.
ocal airport operator Macau International Airport Company Limited (CAM) expects that the total passenger volume of the city’s airport will reach 5.73 million this year, driven by the growth of passenger movements recorded during the first half of the year. The chairman of CAM, Ma Iao Hang, predicted recently that some 55,000 flight movements, including 2,958 general aviation aircraft movements, will be recorded at the local airport this year, carrying 29,343 tonnes of cargo in addition to the 5.73 million passengers. During the first half of the year, passenger volume reached 2.78 million, a year-
on-year growth of 6.6 per cent. In addition, 27,000 flights were recorded using the local airport during the six months, a jump of 6.8 per cent year-on-year. In all, some 1,300 general aviation flights departed and landed during the first half, which is a year-onyear increase of 14 per cent.
The airport operator noted that such strong growth in the sector had boosted the income of the airport by 19 per cent year-on-year. Some 13,970 tonnes of cargo were recorded in the six months, representing a year-on-year increase of 7.7 per cent, according to CAM. K.L.
6 | Business Daily
July 27, 2015
Macau
Macau banks should establish themselves as regional finance centre Well capitalized and profitable, the city’s banks should devote more to developing themselves as a regional financial centre participating in the cross-border financing businesses of Sino-Portuguese trade. In an interview with Business Daily, the Chairman of the Macau Association of Banks, Ip Sio Kai, also says local financial institutions should tap into the opportunities presented by the rise of the Free Trade Zones in China Stephanie Lai
sw.lai@macaubusinessdaily.com
The banks here have kept their development healthy and rapid with sufficient liquidity and profitability
only 0.11 per cent, which is a very low level internationally speaking and shows that the operation of Macau’s banks is very stable and sound. In terms of liquidity, the liquidity ratio (the ratio of current assets over current debts) of the banking industry here is 54.6 per cent for a month, which is way over the international level of 25 per cent. For profitability, the local banks’ return on equity here was 13.1 per cent as at the end of last year, which again fits the common level at 10 – 15 per cent internationally.
How about the supervision of the institutions? Banking supervision here is also internationally recognised because regarding the 25 core principles the Basel Committee on Banking Supervision has issued, Macau banks have also met these principles – this is what the International Monetary Authority concluded in an assessment report in 2011. So, with these performances, we think the banks here have adequate capital and their assets are of good quality. The banks have developed healthily and rapidly with sufficient liquidity and profitability.
What are the prospects of the banks here in the coming five years?
Could you share with us your perspective on how the local banks in Macau have been performing?
During these years, with the goal of fostering economic diversification in Macau, the banking industry here has achieved satisfying progress in innovating and diversifying their businesses, providing more e-services as well as having their operations go more global.
As at the end of the first quarter in 2015, the deposits of the local banks neared MOP820 billion, while loans amounted to about MOP710 billion, which is up yearon-year 15 per cent and 22 per cent, respectively. The profit of the banks has also increased 15 per cent year-on-year to approximately MOP2.7 billion. So the banking industry here has already become an important element of the city’s diversifying sectors.
With such growth, how have banks managed risk?
While the banks here have seen rapid growth in their development, they have also enhanced their risk management level. By the end of the first quarter the capital adequacy ratio of Macau banks reached 14.43 per cent, a level exceeding Basel III’s request for ratios at 10.5 per cent to 13 per cent of total capital. While the bad loan ratio of the local banks is
In the coming five years, Macau banks should actively participate in the opportunities presented under China’s ‘One Belt, One Road’ strategy and the development of the Free Trade Zones on the Mainland. The industry here has the regional advantage of being a ‘natural Free Trade Zone’ [with low tax rates and economic freedoms]. And while enhancing their own capacity to manage risk and innovate services, the banks can provide a comprehensive cross-border financing services for the Mainland Chinese banks ‘going global’.
Business Daily | 7
July 27, 2015
Macau At the same time, as the MSAR is positioned to be both a world centre of tourism and leisure as well as a service platform for trade co-operation between the Mainland and Portuguese-speaking countries, the banks should improve their financing services for Sino-Portuguese trade and continue to explore and expand the market. So that the banks can contribute more to diversifying the local economy and help build the city as a unique regional financial centre.
How would you comment on the co-operation potential between the banks here and their counterparts in the Portuguesespeaking countries, especially in encouraging the use of the yuan? Macau banks do have a huge co-operation potential with those from the Portuguesespeaking countries following the increasing investments between them and China. Figures show that the bilateral trade value between China and Portuguesespeaking countries has shown obvious increase in recent years. Meanwhile, China has also been increasing its investment in the infrastructure construction and energy businesses in these countries. For instance, of the recent co-operation agreements signed between China and Brazil for 35 projects that involve eight sectors, the investment amount of these agreements reached US$53 billion. While Chinese companies are speeding up to expand their business beyond their country and invest in the Portuguesespeaking countries, this will not only stimulate market demand for the cross-border use of the yuan but also for financial services, such as the financing of cross-border mergers and acquisitions.
How does Macau fit into this strategy?
China has given Macau the role of service platform for trade cooperation between the Mainland and Portuguese-speaking countries. And Macau has a unique advantage with its similarity in language, culture and laws to the Portuguese-speaking countries that make it an important service platform between both parties. So there’s huge potential for cooperation between banks here and the counterparts of the Portugesespeaking countries in the area of payment and clearing system and cross-border financing. In fact, the local banks have already gradually started some strategic co-operation with the mainstream banks in the
Portuguese-speaking countries, and both parties have built a network for funds clearing. In future, the Macau banks will continue to work on the goal of being a service platform between China and the Portuguesespeaking countries, and reinforce co-operation with the banks from these countries to provide a comprehensive yuan trade settlement service as well as other financial services.
What are the opportunities that the banks can seize from the rise of the Free Trade Zones on the Mainland?
Firstly, there is a huge demand for financial services in the four established Free Trade Zones on the Mainland as much capital is needed for the large number of infrastructure projects and supporting public facilities being built there. Also, each Free Trade Zone has already attracted many renowned Chinese and foreign companies stationed there, and that will speed up the development of the small and medium companies that are providing related services and several industry chains. That also adds to the demand for financial services. Secondly, the economic reform policies applied in the Free Trade Zones are meant to facilitate trade and investment activities as well as aiding Chinese companies to ‘go global’. So, aside from the large demand for traditional financial services, there is increasing demand for overseas funding and financial services like mergers and acquisitions, overseas listings and bond sales.
Ip Sio Kai and Bank of China Macau Mr. Ip Sio Kai, chairman of the Macau Association of Banks, is also deputy general manager of the biggest bank in the city, Bank of China Macau Branch. The branch was formally approved as the yuan clearing bank in 2004. The state-owned bank’s Macau branch is now running international settlement business, remittance services and yuan clearing in co-operation with financial institutions from Portuguese-speaking countries. The Bank of China Macau branch has been active in cross-border financing activities since last year.
Macau has a unique advantage with its similarity in language, culture and laws to the Portuguesespeaking countries that makes it an important service platform between both parties
How can you meet these demands?
In the coming five years, Macau banks should actively take part in the opportunities presented by China’s ‘One Belt, One Road’ strategy and the development of the Free Trade Zones on the Mainland
To meet these demands from the Mainland’s Free Trade Zones, Macau banks can seek to provide the firms there with services such as cross-border yuan loans [whereby firms in the zones can take out yuan loans from Macau banks, with tenors and interest rates to be set independently], credit asset transfer, cross-border two-way yuan capital pool business and cross-border yuan settlement for e-commerce and other financial management services. What the banks here can do is to provide a one-stop financing solution for Mainland firms expanding overseas. Take Hengqin, for example. Part of Guangdong Free Trade Zone, it now sees more rapid concentration of institutions like
financial leasing services, private equities and e-payment platforms. Macau banks actually have a very good innovation platform there to co-develop some cross-border financial products with these institutions.
Have Macau banks benefited much from the editions of Closer Economic Partnership Arrangement (CEPA) that the local authorities have signed with the Mainland so far?
CEPA and its supplementary agreements have allowed easier access for Macau banks to enter the Mainland market, and a greater flexibility for them to provide financial services there. CEPA has lowered the minimum
In February last year, the Macau Branch of Bank of China, along with the bank’s Shanghai branch and Singapore branch, completed cross-border financing worth 100 million yuan for the Shanghai Free Trade Zone United Development Co., Ltd. During 2014, the Macau branch of the state-owned bank provided financing solutions for the share acquisitions and stock incentive compensation for several Chinese companies, as well as leading the formation of several syndicated loans with local and international banks, the bank noted in its gazetted results.
assets a Macau bank must have before it may open a Hengqin branch - to US$4 billion from US$6 billion; it’s a policy support for the banks here to innovate their products and services and help them grasp the opportunities arising from Guangdong-Macau economic co-operation. At the same time, CEPA has enabled qualified Macau financial institutions to establish consumer finance companies in Guangdong Province. Secondly, the CEPA VIII supplement has allowed Macau to invest in the securities market on the Mainland through the RQFII (Renminbi Qualified Foreign Institutional Investor) programme.
What kind of investments benefit the most?
This has facilitated the banks to develop more Mainlandrelated investment products, and expanded investment channels for Macau residents. The programme has been a better investment channel for the city’s foreign exchange reserves and fiscal reserves, and at the same time promotes the yuan businesses of Macau banks. Also, the trade and investment between here and the Mainland have been largely stimulated by the relaxed trade and investment conditions set by CEPA on local exports to China as well as local service operators setting up business there. This actually has pushed the local banking industry to upgrade its cross-border yuan settlement and other financial services, and it has extended the market of the city’s banks into the Mainland as well.
8 | Business Daily
July 27, 2015
Gaming
Galaxy buys stake in Monaco casinos operator as Macau slumps The gaming operator is buying 5 per cent of the shares of Societe des Bains de Mer et du Cercle des Etrangers a Monaco (SBM) which owns Casino de Monte-Carlo and the Casino Café de Paris, as well as luxury hotels, restaurants and nightclubs
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alaxy Entertainment Group Ltd. is taking a stake in a Monaco casinos and hotels operator, as the company controlled by billionaire Lui Che-Woo (pictured)expands beyond Macau amid a gambling downturn in the Chinese city. Galaxy is buying 5 per cent of the shares of Societe des Bains de Mer et du Cercle des Etrangers a Monaco (SBM) from an independent third party, the company said in an e-mailed statement this weekend. It didn’t name the seller or the sale price. “We see it as a potential to develop a strategic longterm partnership with them,” Galaxy spokesman Peter Caveny said by telephone. Separately, LVMH Moet Hennessy Louis Vuitton SE, the world’s largest luxurygoods maker, also said it would take 5 per cent in the Monte-Carlo based company.
Developer to spend US$200 million to finish biggest Bahamas casino resort Baha Mar, which will feature a Las Vegas-style casino and more than 2,000 hotel rooms, is nearly complete but construction stopped several months ago because of a dispute between the developer and the main contractor, Chinese State Construction Engineering Corp. Ltd.’s China Construction America
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he developer of the $US3.5 billion Baha Mar mega-resort is willing to commit up to US$200 million to jumpstart the stalled Bahamas project, lawyers told a U.S. bankruptcy judge on Thursday. Baha Mar, which will feature a Las Vegas-style casino and more than 2,000 hotel rooms, is nearly complete but construction stopped several months ago because of a dispute between the developer and the main contractor, Chinese State Construction Engineering Corp. Ltd.’s China Construction America. The developer of the project is Sarkis Izmirlian, whose Baha Mar Ltd. filed for bankruptcy protection in Delaware last month. He is the son of Armenian peanut and real estate tycoon Dikran Izmirlian. The Izmirlians have invested more than US$900 million in the project. Izmirlian has been negotiating with China’s Export Import Bank, which bankrolled most of the project
with a US$2.45 billion loan. No deal has been struck, however. During the bankruptcy court hearing on Thursday in Wilmington, Delaware, lawyers for Baha Mar Ltd did not provide details of the terms necessary for Izmirlian’s commitment for the US$200 million. Other parties did not respond to the comment from the Baha Mar attorney during the hearing, which lasted less than 10 minutes. Izmirlian has blamed the Chinese construction company for the delays that forced the resort to miss its opening in late March. CCA says his development team mismanaged the project. A completed resort would employ more than 5,000 people in the Bahamas, where the unemployment rate is 16 per cent, and boost its gross domestic product by about 12 per cent, according to estimates by the government and Baha Mar Ltd. Reuters
SBM, 34 per cent-owned by the state of Monaco, has properties including the Casino de Monte-Carlo and the Casino Café de Paris, as well as luxury hotels, restaurants and nightclubs, according to its website. Macau’s casino revenue fell in June to the lowest in more than four years as the world’s biggest gambling hub was hurt by China’s slowing economy and a graft crackdown that deterred high rollers. Galaxy opened two new casinos in the Chinese city in May, including a major expansion to an older project which Chairman Lui said has performed weaker than expected. Macau’s gross gaming revenue is expected to plunge 30 per cent this year, according to the median estimate of 11 analysts surveyed by Bloomberg, before rebounding next year. Bloomberg
Business Daily | 9
July 27, 2015
Greater China
Job market stable despite economic headwinds This year, an estimated 7.5 million college graduates will fight for positions in the toughest job market ever
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hina's job market has remained stable despite prolonged weakness in economic growth, the latest data showed on Friday.
China's registered unemployment rate in urban areas stood at 4.04 percent at the end of June, edging down from the 4.05 percent seen in March, the Ministry of Human
Resources and Social Security (MHRSS) said on Friday. A total of 7.18 million new jobs were created in urban areas in the first half of the year, ministry spokesman
Li Zhong said at a press conference. "Given the statistics and information, our conclusion is that the job market is generally stable," Li noted.
The data followed the release of the surveyed unemployment rate compiled by the National Bureau of Statistics, which showed the jobless rate in 31 major Chinese cities fell to 5.06 percent in June after rising to 5.19 percent in March. The rate was first introduced in 2014 to better reflect the job market and serve as a supplement to the MHRSS registered urban unemployment rate after critics questioned the accuracy of the latter for its limited sample. Creating enough jobs and keeping the job market steady is one of the major priorities for the Chinese government. It aims to create at least 10 million new jobs in 2015 and keep the urban jobless rate below 4.5 percent. China's economic growth held steady at 7 percent in the first half of the year, but authorities have underscored continued downward pressure, though some nascent signs of recovery have started to emerge. A preliminary survey released by Caixin Media Co. on Friday showed China's manufacturing activity retreated to a 15-month low in July, with the index falling to 48.2 from 49.4 in June. Li said downward pressure on economic growth, together with the country's on-going economic restructuring, would create difficulties for the job market. Xinhua
Factory survey dents hopes of early economic recovery Additional policy support would make it the most aggressive easing cycle overseen by the central bank since the height of the 2008/09 global financial crisis Winni Zhou and Pete Sweeney
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hina’s factory sector contracted by the most in 15 months in July as shrinking orders depressed output, a preliminary private survey showed on Friday, a worse-than-expected result that comes on the heels of a stock market crash which began in June. The flash Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) dropped to 48.2, the lowest reading since April last year and a fifth straight month below 50, the level which separates contraction from expansion. Economists polled by Reuters had forecast a reading of 49.7, slightly stronger than June’s final reading of 49.4. Output in July was 47.3, its lowest since March 2014. New orders and new export orders, both of which expanded in June, fell this month, according to the survey, while prices of outputs and inputs tumbled. “Today’s PMI reading suggests that recent improvements in economic momentum may have been derailed this month by weaker foreign demand,” Julian Evans-Pritchard, China Economist for Capital Economics in Singapore, wrote in a note.
In fact, all the major survey indicators were downbeat except for employment, which was slightly stronger than in June but still showed a contraction. “Given the survey-based nature of the PMI, it cannot be ruled out
KEY POINTS July flash PMI falls to lowest level in 15 months Nearly all indicators worsen from previous month Poll had expected a rise from June, not a fall Economy improvements ‘may have been derailed’ -analyst New export orders, which expanded in June, contract Output sub-index at 16-month low
that today’s number may have been disproportionately impacted by the weakened sentiment following the equity market correction since June,” HSBC economists Qu Hongbin and Julia Wang wrote.
Contrasting pictures
The poor PMI results contrasted with June data, much of which surprised on the upside and suggested that the world’s second-largest economy was stabilizing more quickly than expected. China reported annual growth of 7.0 percent in the second quarter, slightly above economists’ expectations. But there were wide doubts about whether there could be a sustainable recovery. For one thing, the June indicators largely reflected economic conditions before a massive stock market crash wiped out trillions of dollars of market capitalisation on Chinese exchanges, forcing the central bank to adapt its monetary policy and causing Beijing to roll out a massive policy support package to get indexes to stop plummeting. Some economists had warned that the crash could have a wider
impact on corporate performance and confidence, given some companies had derived a substantial chunk of their profits from investment income as opposed to core business activity. Also, there were worries many had borrowed heavily to play stocks. “Recent signs of economic stability were mainly the result of a rebound in infrastructure investment and the real estate market, but it’s hard to judge if the rebound is sustainable or not,” said Hu Jiani, analyst at Cinda Securities in Beijing.
More easing ahead?
The continuing factory output contraction seen in Friday’s survey is likely to fuel speculation that China will accelerate the pace of loosening monetary policy to try to stoke activity. Economists polled by Reuters this month said they expect China to reduce interest rates by 25 basis points before the year-end. The amount of cash that Chinese banks must hold as reserves was also expected to be reduced to keep the Chinese economy growing at 7 percent this year, the slowest pace in a quarter of a century. Reuters
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July 27, 2015
Greater China
Central bank considering an “HK Connect” for foreigners A Hong Kong connect-style program could, in theory, allow for much larger unrestricted capital flows Zheng Li and Nathaniel Taplin
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hina’s central bank is considering widening access to the country’s onshore interbank bond market through a program modelled on the Shanghai Hong Kong stock connect scheme, two sources with
direct knowledge of the matter told Reuters on Friday. The Shanghai-Hong Kong Stock connect, which was launched in 2014, allows limited two-way capital flows between the bourses,
and foreign investors have hoped that the programme would be widened to include access to China’s onshore bond market. Expanding access to the onshore bond market would help to maintain
overall market liquidity in the Chinese yuan, and bolster Beijing’s case for the currency to be included in the International Monetary Fund’s currency basket. Given the very large size of the onshore market and
Wider yuan trading range coming soon The country will study the starting of more hedging tools for companies to deal with currency risks Fion Li
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hina will allow the yuan to trade in a wider range against the dollar, the State Council said, without giving a timing or scope for the potential adjustment. Flexibility will be increased, the cabinet said in a statement that focuses on supporting the nation’s trade after an index of factory activity fell to a 15-month low. The exchange rate will be kept at a basically stable level, the State Council said. The yuan traded in Hong Kong fell the most in almost three weeks on Friday, and its one-month implied volatility surged to the highest since July 14. The onshore yuan in Shanghai, where moves are limited to 2 percent on either side of a daily fixing, weakened the least in emerging markets this year as the People’s Bank of China seeks global reservecurrency status at an IMF review in November. While a wider trading range would
The authorities may allow the yuan to weaken to boost China’s exports, if the PBOC reduces its intervention in the existing band allow market forces a bigger role, it could provide room for depreciation and help exports. “The State Council is implying that the PBOC should widen the trading band,” said Andy Ji, a Singapore-based strategist at the Commonwealth Bank of Australia. “The authorities
may allow the yuan to weaken to boost China’s exports, if the PBOC reduces its intervention in the existing band.”
Band widening
The trading band was last expanded in March 2014 from 1 percent, and before that doubled from 0.5 percent in April 2012. It
Andy Ji, strategist, Commonwealth Bank of Australia
was 0.3 percent before an adjustment in May 2007. The PBOC could raise the limit within a month, said Zhu Haibin, Hong Kong-
investor caution following China’s recent equity meltdown, analysts view any aggregate price impact as limited, at least in the short run. Hu Jiani, a bond analyst at Cinda Securities in Beijing, said that while the short term impact is likely to be limited, things may be different in the longer run. “In terms of the long-term impact, it has much to do with the design and the openness of the program if it really works out.” In mid July, the central bank announced that foreign central banks, sovereign wealth funds and some other institutional investors would be allowed to invest directly in the interbank market subject to filing their investment plan with the People’s Bank of China. Until recently foreign investors have only been able to access China’s onshore bond markets through the quota-based Qualified Foreign Institutional Investor (QFII) and Renminbi QFII programmes, which are relatively small in scale and entail cumbersome approval and transaction processes. As a result, quotas for those programmes have yet to be exhausted. Chinese regulators often release reports that suggest aggressive capital account reforms are on the way, but the implementation process has historically been more cautious given concerns over risks such as destabilising capital flight. Reuters
based chief China economist at JPMorgan Chase & Co. It’s rare for the State Council to mention the yuan’s trading range, and the PBOC is likely to widen the band to 3 percent, he added. The International Monetary Fund’s mission to China said in a statement in May that, although the yuan is no longer undervalued, it needs to be more flexible. China should limit intervention to avoid disorderly market conditions or excessive volatility, the mission said. Of 24 analysts surveyed by Bloomberg in June, 14 forecast the yuan’s trading band will be widened in 2015, up from eight out of 22 in a January poll. In a separate survey in the June 18-24 period, 11 of 16 economists predicted the IMF will add the yuan to its Special Drawing Rights this year. China will improve the exchange rate’s mechanism and expand the scale of yuan trade settlement, the State Council said Friday.. “It doesn’t mean yuanband widening is happening soon, but that the PBOC can make a move since the State Council has cleared it,” said Li Liuyang, a Shanghaibased strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. “Yuan depreciation is positive for domestic demand as well as exports.” Bloomberg News
Business Daily | 11
July 27, 2015
Greater China Fitch says foreigners to boost local bonds
Domestic software Opening the interbank bond market to foreign investors will help industry growth diversify the investor base for the local government bond market slows in H1
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he Chinese central bank’s recent move to open the interbank bond market to certain foreign institutional investors will diversify the investor base and is likely to boost aggregate demand for local government bonds, said Fitch Ratings. This will benefit the on-going local government debt-for-bonds swap program and have significant positive implications for local government credit, said Fitch, one of the Big Three rating agencies. The central bank on July 14 allowed foreign institutional investors, including central banks, international financial institutions and sovereign wealth funds, to invest in China’s onshore interbank bond market. The onshore market is estimated at around 35.3 trillion yuan (US$5.7 trillion) by the end of May, according to the central bank, with government
bonds accounting for about 30 percent of the total outstanding. Fitch said these reforms would facilitate the swap program initiated by the Ministry of Finance (MoF), which aimed to lower the financing costs of local governments by converting high-cost debt into municipal bonds. The swap is significant for local government credit and will reduce liquidity risks by extending debt maturities and lowering financing costs. The MoF has initiated two rounds of swaps thus far, of 1 trillion yuan apiece. Fitch expects another 1-trillion-yuan debt swap in 2015, bringing the total to 3 trillion yuan. The scale of the debt swap is such that demand from onshore investors may not meet the substantial increase in government bond supply. It is notable that a large proportion of local government bonds thus far are held by big commercial banks, and the
take-up from other onshore investors has been relatively limited. Therefore, opening the interbank bond market to foreign investors will help diversify the investor base for the local government bond market at a time when significant new supply is coming, according to Fitch. Investing in local government bonds on the onshore interbank market will allow foreign institutional investors to gain quasi-sovereign mainland China exposure. Fitch maintains that Chinese local government bonds will continue to have an implicit sovereign guarantee. The agency maintains though, that the increase of aggregate demand through foreign investment is likely to be a gradual process, and the market for local government bonds will continue to be dominated by onshore investors for the short to medium term.
Japanese automaker Honda Motor Co., Ltd. will recall 742,493 vehicles in China due to airbag problems, said China’s quality watchdog. Starting from September 15, 2015, the recall involves 2007-2012 Fit cars, 2007-2008 and 2009-2012 City cars, and 2011 Everus cars, produced between January 4, 2007 and December 30, 2011, according to a statement from the General Administration of Quality Supervision, Inspection and Quarantine. Due to production faults, the airbags of the driver’s seat of the vehicles may fail to work in times of need, said Honda.
Anti-dumping duties on MMA imports
Morgan Stanley paid US$35 million when CICC was founded in 1995 and made nearly 30 times the initial investment Elzio Barreto and Denny Thomas
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will be a setback for the private equity firms’ ambitions of raising profits in China and luring more investors into their funds. “CICC was one of the leading firms in China. Their performance in recent years declined because its major business in investment banking declined,” said Xingyu Chen, an analyst at Phillip Securities in Shanghai. Government-controlled CICC was the top underwriter of equity offerings in Hong Kong and China for three years running from 20052007, but it has since slipped down the league tables, ranking eighth in 2014, Thomson Reuters data showed. KKR, TPG and CICC declined to comment. Morgan Stanley paid US$35 million when CICC was founded in 1995 and made nearly 30 times the initial investment when it sold its 34.3 percent stake in 2010 for nearly US$1 billion. KKR, TPG, Singapore wealth fund GIC and the insurance arm of Singapore’s Oversea-Chinese Banking Corporation bought the stake.
Honda recalls 742,493 vehicles in Mainland
Xinhua
CICC’s IPO to disappoint minority stakeholders
rivate equity firms KKR & Co and TPG Capital are making poor returns on their investment in China International Capital Corp (CICC), the country’s oldest investment bank that is readying an IPO but has struggled to compete with younger rivals. CICC, formerly led by Levin Zhu, the ‘princeling’ son of former Chinese premier Zhu Rongji, filed late on Wednesday for a Hong Kong initial public offering (IPO) that sources have said could raise at least US$1 billion. The IPO could value CICC at up to US$4.1 billion, Reuters calculations show, a 41 percent increase in the five years since investors including KKR and TPG bought minority stakes in the company. The two private equity firms paid a combined US$592 million for their stakes. The return would be classified as disappointing in the private equity industry, where a multiple of two times or more over five years counts as success. A hit on their CICC investments
Both revenue and profit of China’s software and information technology sector slowed in the first half of this year, latest data showed. The sector generated 219.3 billion yuan (US$35.85 billion) in profits in the first six months, up 12.6 percent year on year, the Ministry of Industry and Information Technology (MIIT) said in a statement. The pace was much slower than the 22 percent growth registered in the same period of 2014, the MIIT said. The sector’s total revenue reached 2.02 trillion yuan in the first half, up 17.1 percent from a year earlier.
That deal valued CICC at nearly US$3 billion, but intense competition from global firms such a Goldman Sachs and home-grown rivals including CITIC Securities and Haitong Securities, coupled with a decline in deals from state-owned enterprises has curbed growth in CICC’s value. CICC had 8.35 billion yuan (US$1.34 billion) in total equity at the end of March, according to its prospectus. That will grow to about US$2.3 billion with the IPO proceeds. With Hong Kong-listed brokerages trading at an average of 1.5 times book value for 2015, CICC would be valued at US$3.5 billion. Even with a valuation of 1.8 times book, the highest for Hong Konglisted brokers, CICC would be valued at most at US$4.1 billion. “CICC’s competitive advantage now is very small, that’s why the valuation, the performance is decreasing,” said Phillip Securities’ Chen. Reuters
China’s Ministry of Commerce said that it will impose provisional anti-dumping measures on methyl methacrylate (MMA) imported from Singapore, Thailand and Japan. The preliminary ruling requires importers of the product to place deposits with Chinese customs ranging from 6.8 percent to 34.6 percent of the imports starting from August 1, 2015, depending on the dumping margin, according to a statement on the ministry’s website. The ministry said companies from the above-mentioned countries had dumped the chemical into the Chinese market and such imports caused substantial damage to the domestic industry.
Beijing lauds value in concluding ITA expansion talks Ministry of Commerce lauded the value in the upcoming conclusion of negotiations on expanding the Information Technology Agreement (ITA), a tariff cutting mechanism under the World Trade Organization (WTO). WTO members representing major exporters of information technology products on Friday agreed to eliminate tariffs on 201 new products, according to WTO’s press release. This step forward cleared the way for ministers from the participants to conclude their implementation plans in Nairobi in December 2015 when the WTO holds its 10th Ministerial Conference.
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July 27, 2015
Asia
India’s reforms target labour anarchy Prime Minister’s reforms aim to help companies go up the value chain Rajesh Kumar Singh and Frank Jack Daniel
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ast month, hundreds of workers went on the rampage at a factory belonging to garment exporter Orient Craft, torching vehicles and smashing windows in the gritty industrial fringes of Gurgaon, a Delhi satellite city. Increasingly common in Indian workplaces, these violent outbursts could become a thing of the past under a bold round of labour reforms planned by Prime Minister Narendra Modi. Many businesses cheer the plans, which they say will help make India a manufacturing hub. Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, plans to set up 12 new factories in India and employ one million workers. Yet Orient Craft, which has suffered three riots in three years, fears the changes will create as many problems as they solve by making the cotton wear it exports to global brands such as GAP and Marks & Spencer less competitive. Like many other lowmargin businesses in India, garment makers will gain from increased flexibility
to hire, and fire, seasonal labour - reforms demanded by industry since India began to shift away from socialism in 1991. But to make this more palatable for unions, Modi wants to also extend the social security net. The government expects that will reduce labour volatility, but it will also raise costs for companies like Orient Craft whose chairman Sudhir Dhingra fears losing clients to lowercost rivals in Bangladesh. Dhingra said the new flexibility will enable him to hire workers according to his business requirements, but only if Indian garments remain in demand. If they are priced out of business, the net benefit evaporates, he said. “Buyers are already moving to cheaper locations,” said Virender Uppal, the head of India’s Apparel Export Promotion Council. “If labour costs go up further, it’s going to affect business.” Modi plans to take the amendments to parliament later this year.
The roots of a riot
The June 20 riot at the Orient Craft factory was sparked
by an unfounded rumour that a worker had died from an electric shock. A similar rumour in February led to strife at another nearby apparel exporter, Richa Global. Nobody was seriously hurt in these outbursts unlike the 2012 riot at a Maruti Suzuki plant that left one executive dead and many injured. Workers, labour officials and managers say the cost of living, low wages and conditions in slums where migrant workers stay keep Gurgaon’s labourers on edge. They can easily turn on their bosses - even at firms like Orient Craft, known for its worker care. “When your life is so stressed, any trivial reason is capable of turning you violent,” said Akshay Kumar Pal, a 42-year-old worker from Uttar Pradesh state. Pal has lived for a decade in a cramped, dirt-floored room with a leaky roof in Gurgaon. In his block, 80 people live up to six per room, sharing three toilets and a single water tap. Rents rise every year. Pal said he was a tailor at Richa Global until
April when he was sacked, accused of involvement in the February riot. He says he was not there. At Richa, Pal earned about US$200 a month after 2-3 hours overtime every day. Half of his pay went on rent and food, leaving little for his wife and two daughters back home. “There is a big mismatch between our wages and the cost of living,” he said. “You cannot survive without overtime.”
Too little, too late
Orient Craft’s bright, ventilated factories are recognised as offering better conditions than most. It’s known for taking good care of its 32,000 employees. But even Dhingra recognises that the system is not working. “We know the wages paid to workers are not good enough to secure them a decent and dignified living,” he said. “But we cannot afford to pay more, else we will lose all our business.” The failure by successive governments to overhaul one of the world’s most rigid labour markets has squeezed firms like Dhingra’s between low-cost producers
like Bangladesh and skilled and fast-moving innovators like China. Modi’s reforms aim to help companies go up the value chain, creating jobs for the 200 million Indians who will reach working age over the next two decades, and reducing labour volatility. Shankar Aggarwal, the top bureaucrat at the labour ministry, said laws had not adapted to the dynamics of mobile labour forces and industry demands. The changes under discussion will improve productivity as well as industrial relations, he said. Instead of saddling companies with additional costs, Dhingra wants the government to set up hostels for workers in industrial towns to reduce tension in the workforce. He also wants India to sign free trade agreements with the European Union and the United States to offset the cost advantage exporters from Bangladesh enjoy. “After starting so late, changes in laws alone will not be enough,” he said. 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 27, 2015
Asia
Pakistan holds key rate at 7%
South Korean Prime Minister Nawaz Sharif has been looking to boost revenue parliament passes and economic growth under the terms of a US$6.6 bln IMF loan supplementary budget Khurrum Anis and Faseeh Mangi
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akistan left its benchmark interest rate unchanged for the first time in 10 months, as floods in the country’s north threaten to push up food prices. The State Bank of Pakistan kept the discount rate at a 42- year-low of 7 percent, Governor Ashraf Mahmood Wathra said in a briefing in Karachi on Saturday. The move was predicted by all 15 economists in a Bloomberg survey. Wathra has cut the rate from 10 percent since November.
“There is the possibility of an upward tariff on power this fiscal year,” Wathra said. “The floods will have an impact on inflationary pressure.” Pakistan joined regional peer Sri Lanka in holding policy steady this past week as expectations of an increase in U.S. rates risk damping inflows. The Pakistani rupee, which outperformed Asia’s 11 most-traded currencies in 2014, has fallen 1.3 percent this year.
“The central bank will remain cautious since the recent floods may have an impact on inflation numbers,” Yawar Uz- Zaman, vice president for research at Shajar Capital Pakistan Ltd. in Karachi, said by phone before the decision. “Floods normally mean an unusual hike in commodity prices.”
Rupee under pressure
Consumer price gains will average 4.4 percent in 2015, according to the median in another Bloomberg survey, compared with 3.16 percent in June and 2014’s 7.2 percent. The rupee is also under pressure as the government prepares to begin loan repayments in the fiscal year that started July 1. The International Monetary Fund said on July 2 that Pakistan’s risks include slippages in policy implementation, as well as political and security conditions. Thousands of people were left marooned and almost 173,000 acres of agricultural land was inundated by flood waters brought on by seasonal monsoon rains in the country’s central Punjab province, Ahmed Kamal, spokesman for Pakistan’s National Disaster Management Authority, said by phone on Thursday. Bloomberg News
With no obvious successor waiting to sustain Aquino’s reforms, others note that the strong growth of recent years will not continue by itself
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“It is in a cycle of better governance right now but it has not proven its ability to make that sustainable in the long run,” he said. In 2010, the runner-up to Aquino in the presidential vote was Joseph Estrada, the former president who was forced from office in 2001 and jailed for plunder.
Whoever is going to be the next president, I think reforms will be sustained and the thrust towards more market friendly policies will continue. BSP will still be there Amando Tetangco, Bangko Sentral ng Pilipinas, Governor
World Bank to help rural Bangladesh The World Bank has signed a US$15 million grant agreement with Bangladesh to increase access to clean energy for targeted rural areas through output-based aid (OBA) subsidies. The grant is expected to benefit 1.1 million people living in poor, remote areas of Bangladesh currently lacking electricity from the power grid, a statement from the bank said on Saturday. The project will make clean energy affordable to low-income households without using the grid by bringing down the cost of 225,000 solar home systems and 2,500 mini-grid connections.
Hyundai India to raise car prices South Korea’s Hyundai will raise prices on all but one of its car models in India by up to 30,000 rupees (US$469) from August 1 as input costs rise, the company said in a statement on Saturday. The newly launched vehicle Creta was excluded from the price rise, it said. “The price increase has been necessitated by increase of input costs. We have been absorbing most of the costs but now we are constrained to consider the price increase in these challenging market environment,” said Rakesh Srivastava, senior vice president, sales and marketing, Hyundai Motor India Ltd.
Philippines lustre dims as investors look beyond Aquino
he Philippines has been a magnet for foreign investment over the past five years, pushing its stock market to record highs and lowering the cost of its debt, but next year’s change of government is reintroducing an old risk - political uncertainty. Since Benigno Aquino won the presidency in 2010 promising reform and clean government, the Philippines has outpaced its neighbours and drawn money into its markets. But with elections next year, and global volatility already pushing investors to seek safe havens, the uncertainty over his successor is a reason for caution. In the June quarter, foreign investors sold a net US$700 million of shares the most since the Asian crisis in 1998. Still, they are net buyers of more than US$4.6 billion of stocks since Aquino assumed office. But presidents are limited by law to a single six-year term, and Aquino’s final State of the Nation address today will keep the succession issue prominent. “The Philippines has, over a long period of time, suffered from cycles of better governance and poorer governance,” said John Forbes at the American Chamber of Commerce in Manila.
Parliament passed a government-proposed supplementary budget to combat the economic fallout from an outbreak of Middle East Respiratory Syndrome that dealt a blow to growth in the second quarter. The budget that was approved by lawmakers stood at a total of 11.5 trillion won (US$9.84 billion), slightly less than the 11.8 trillion won initially proposed by the government in early July. The newly passed supplementary budget includes new spending plans of about 6.2 trillion won and 5.4 trillion won to cover a tax shortfall, compared with 6.2 trillion won and 5.6 trillion won proposed before.
Freeport stock sinks
“The risk as we move forward into 2016 is that whoever takes over may not impart the same economic stability as this president,” JP Morgan economist Sin Beng Ong said.
Slowing, but strong
Sputtering global demand saw exports post their biggest annual fall in more than three years in May. Slower world growth could trim remittances from the millions of Filipinos overseas that underpin domestic demand - the main economic engine. Manufacturing output has fallen and net foreign direct investment halved to US$1.2 billion in JanuaryApril from a year earlier. “The slowdown in the Philippine economy is happening faster than we thought,” UBS bank economists wrote in a report, chopping their 2015 growth forecast to 5.7 percent from 6.5 percent. Still, the Philippines is weakening from a position of relative strength. Gross domestic product grew by an annual 5.2 percent in January-March. While down from 6.6 percent in the final quarter of 2014, it was still faster than growth in Indonesia, Singapore and Thailand. Reuters
Shares of diversified miner and energy producer Freeport-McMoRan sank for a second session on Friday, as uncertainty around Indonesian mining contracts added to worries about spending plans, high debt and falling commodity prices. The U.S. company has assured analysts it fully expects the Indonesian government to issue a six-month export renewal on Saturday, when the current permit expires. According to the Indonesian government, however, the firm still needs to show its commitment to building a second copper smelting facility by setting aside an estimated US$80 million into an escrow account.
India sets Power Finance offering base price The Indian government has set the base price for the offering of shares in state-run Power Finance Corp Ltd at 254 rupees a share, the company said on Saturday, a discount of 2.1 percent from Friday’s close. The share auction will be conducted today to sell the federal government’s 5 percent stake in the company. The Power Finance share offering is part of the government’s budget target to raise as much as US$11 billion from the divestment of its stakes in state-run companies.
14 | Business Daily
July 27, 2015
International Pearson in talks to sell its stake in The Economist Britain’s Pearson is in talks to sell its 50 percent stake in The Economist to the other shareholders of the weekly newspaper, with one, Italy’s Agnelli family, confirming it wants to increase its stake. The move comes on the heels of Pearson’s sale of the Financial Times newspaper to Japanese media group Nikkei, announced this week as its focuses on its education business. “Pearson confirms it is in discussions with The Economist Group Board and trustees regarding the potential sale of our 50 percent share in the group,” the company said in a statement on Saturday.
Egypt completes first trial run of ‘new Suez canal’
Egypt on Saturday completed the first trial run of its “new Suez canal”, officials said, ahead of the formal inauguration of the shipping route next month. Dubbed the Suez Canal Axis, the new 72-kilometre project built by the Egyptian army is aimed at speeding up traffic along the existing waterway by reducing the waiting period for vessels, as well as boosting revenues. It will run part of the way along the existing canal that connects the Red Sea to the Mediterranean. Officials said six crossed through the expanded canal as part of the trial run.
Next IMF boss likely to come from outside Europe The next managing director of the International Monetary Fund is likely to come from outside Europe when current leader Christine Lagarde eventually leaves, the deputy head of the Washington-based fund said in an interview broadcast on Saturday. IMF First Deputy Managing Director David Lipton told the BBC World Service the tradition by which a European heads the fund while an American leads the World Bank was coming under pressure and the next appointment would be “strictly merit-based”. Lipton said that when Lagarde steps down, her successor would probably come from a non-European country.
Puerto Rico seeking liquidity to make payment Puerto Rico is working on ways to increase liquidity at its Government Development Bank (GDB) to make a debt service payment due August 1, the governor’s chief of staff said. The GDB, which has reported dwindling cash reserves, faces US$169.6 million in debt service on notes on August 1. “We are taking steps to provide liquidity to the bank so it can meet these payments,” said Chief of Staff Victor Suarez. GDB President Melba Acosta has informed the government the initiatives are in a very advanced stage but need to be finalized, he said.
Fed inadvertently publishes staff forecast for rate hike Staff expected policymakers would raise their benchmark interest rate known as the Fed funds rate Jason Lange and Howard Schneider
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taff economists at the Federal Reserve expect a quarter-point U.S. interest rate increase this year, according to forecasts the Fed mistakenly published on its website in a gaffe that drew criticism about its ability to keep secrets. The rate forecast was included with a series of bearish projections on U.S. economic growth and inflation that were presented to policymakers at their June 16-17 meeting. The disclosure of the sensitive information is the latest blow to the Fed’s reputation for secrecy around policy deliberations. Later on Friday evening, the Fed said the inadvertently released document was not the correct document. It provided a new table showing slightly lower outlooks for gross domestic product and inflation in 2015, as well as other revisions. Federal prosecutors are currently probing an alleged leak at the Fed of market-sensitive information to a private financial newsletter in 2012. The Fed said in a statement that the forecasts were “inadvertently” included in a computer file posted to its website on June 29. Fed officials said the disclosure was due to procedural errors at a staff level and that the mistake was discovered on Tuesday last week. The matter has been referred to the Fed’s inspector general. The forecasts do not represent the views of the central bankers who set interest rate policy. Those policymakers, many based outside of Washington in regional Fed branches, create their own forecasts, the most recent of which were released on June 17.
Fed chair Janet Yellen
But Board of Governors’ staff views are sensitive and influential enough that the Fed normally releases them about five years after they were made.
It regrettably appears once again that proper internal controls are not in place to safeguard confidential Federal Reserve information Jeb Hensarling, U.S. Representative, chair of the House Financial Services Committee
One hike in 2015
In the projections prepared in June, and in the revised table released on Friday, the staff expected policymakers would raise their benchmark interest rate, known as the Fed funds rate, enough for it to average 0.35 percent in the fourth quarter of 2015. That implies one quarter-point hike this year, as the Fed funds rate is currently hovering around 0.13 percent. Analysts at JPMorgan and Barclays said this suggested the staff expected a rate hike before a scheduled December 15-16 policy meeting. The Fed also has policy meetings scheduled for July 28-29, September 16-17, and October 27-28. All but two of the Fed’s 17 policymakers said last month they think rates should rise in 2015. They were divided between whether it would be best to raise rates once or twice this year.
The staff views were less optimistic about the economy than several key policymaker forecasts. In the revised projections, which stretched from 2015 to 2020, the staff did not expect inflation to ever reach the Fed’s 2.0 percent target. By the fourth quarter of 2020, they saw the PCE (personal consumption expenditure) inflation index rising 1.97 percent from a year earlier. The Fed’s staff also took a dimmer view of long-run economic growth, expecting gross domestic product to expand 1.73 percent in the year through the fourth quarter of 2020. The views of Fed policymakers for long-term growth range from 1.8 percent to 2.5 percent. Reuters
Germany open to discussing euro zone budget with own tax A euro zone finance minister could get the right to put a surcharge on taxes
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ermany is willing to discuss the creation of a euro zone finance minister who would have his own budget and raise extra taxes, the German magazine Der Spiegel reported on Saturday. European Commission President Jean-Claude Juncker last month laid out a vision for tighter joint control over the currency zone’s economies, including a common euro zone treasury one day. German Finance Minister Wolfgang Schaeuble is open to the idea to transfer “substantial financial resources” from his tax revenues to a separate budget of the monetary union, sources in the finance ministry told the magazine. One option could be that the 19 euro zone member countries would transmit parts of their national revenues from income and value-added tax to such a euro zone budget, the report said.
The euro zone finance minister could also get the right to put a surcharge on taxes, which would amount to the creation of a “euro tax”, it added. “We are ready to discuss these issues seriously”, the magazine quoted a German finance ministry source as saying. A spokeswoman for Schaeuble neither confirmed nor denied the report, saying the discussion on the creation of such a separate fiscal capacity for the euro zone was just beginning. “Individual elements under discussion have to be seen in the overall context and they would also require changes to the European treaties,” the spokeswoman said. “In this regard, the talk of a ‘euro tax’ is completely misleading,” she added.
European Parliament lawmaker Elmar Brok, a leading member of German Chancellor Angela Merkel’s conservative party, told the magazine: “The euro zone has to think about its own tax.” In a report issued in cooperation with the European Central Bank and other EU bodies, Juncker last month proposed more help for states in distress, combined with tougher discipline for countries that miss fiscal targets. The so-called “Five Presidents’ Report” recommended “quick fix” steps that could be introduced in the next two years, such as setting up a common bank deposit insurance system and promoting competitiveness, as well as longer term ideas such as a common euro zone treasury. Reuters
Business Daily | 15
July 27, 2015
Opinion Business
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Leading reports from Asia’s best business newspapers
China’s rising commodity exports changing nature of trade
BANGKOK POST
Clyde Russell
Gold has fallen below 18,000 baht per baht-weight, continuing to lure bargain hunters into goldsmith shops to snap up the precious metal. Buyers are flocking to purchase gold bars on Bangkok’s Yaowarat Road, home to major goldsmiths, and transaction value reached billions of baht yesterday alone, Gold Traders Association president Jitti Tangsitpakdi said. The price of gold bullion was down by 300 baht per baht-weight early yesterday morning from Thursday’s close, sending the selling price below the 18,000-baht threshold before bounding back by 100 baht later.
Reuters columnist
VIETNAM NEWS A delegation of the (Vietnamese) Party Central Committee’s Commission for External Relations led by the commission’s chairman Hoang Binh Quan is visiting Laos to strengthen bonds with the country. The delegation was received by the Party General Secretary and President of Laos Choummaly Sayasone, who said he appreciated the co-operation between the external relations commission. Quan congratulated Laos on its achievements in internal and external policies, and expressed his belief that the Lao people would overcome all difficulties and challenges to successfully implement the 9th Lao Party Congress’s resolution.
THE KOREA HERALD Massive sale events are in swing at South Korean department stores, hypermarkets and duty-free shops in their latest attempt to win back shoppers as consumer sentiment remains dim following the Middle East Respiratory Syndrome outbreak, market watchers said yesterday. Lotte Department Store, the country’s biggest department store chain, opened the “Lotte Black Super Show” at KINTEX, a suburban exhibition centre outside of Seoul, on Thursday to slim down its stock of products. Hyundai Department Store is also running sale events for luxury brands at its key branches.
PHILSTAR Singapore-based DBS has maintained its gross domestic product growth forecast for the Philippines, banking on the government’s commitment to spend more in the second half of the year. DBS said it still expects the country’s domestic output to expand by six percent this year as spending by the Aquino administration is seen to pick up in the second half. DBS pointed out that the pace of fiscal spending has been the main drag this year as it only grew 9.2 percent yearon-year in May amid the 40 percent jump in revenues.
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he world is used to seeing China as an importer of raw materials and an exporter of manufactured goods, but a change is occurring that has global implications for commodities. While China is still the world’s biggest importer of commodities, the nature of its exports are changing. The big growth in exports this year has been in semi-finished products, most of which fit into the broad definition of commodities. While not raw materials, these include steel, aluminium products and refined fuels. What is happening in China is that as the country has overbuilt capacity in heavy industries, it is now being forced by economics to seek export markets for intermediate commodities that had previously been consumed at home. The old dynamic, where Chinese demand for raw materials forced up commodity prices while Chinese exports led to lower prices for manufactured goods, is breaking down. It now appears that Chinese exports of semi-finished commodities are driving down the price of those goods and threatening industries that produce them in other countries. At the same time Chinese demand growth for raw materials is slowing just as producers of these commodities, such as iron ore and coal, have ramped up output in the apparently mistaken belief that Chinese consumption would rise for several years to come. China’s exports of steel products
have jumped 27.8 percent this year to 52.4 million tonnes in the first six months of the year from the same period in 2014. If this pace of exports is maintained for the whole year, it means that about 12 percent of China’s total steel output will be exported. At the price received for steel exports in June of US$575 a tonne, first half steel shipments were worth about US$7.3 billion. Aluminium has also seen a massive increase in exports, with shipments of semi-finished products leaping 44.3 percent in the first six months of 2015 over the same period a year earlier. Exports totalled 2.22 million tonnes and the June customs value was US$3,364 a tonne, giving a total of around US$7.5 billion for first half exports, at June prices. The major oil products exports in the first half were jet kerosene (up 19.9 percent to 5.537 million tonnes), gasoline (up 14.6 percent to 2.544 million tonnes) and diesel (down 9.6 percent to 1.971 million tonnes). Putting the three together and using June’s customs data, the value of exports of these three refined fuels was about US$6.1 billion in the first half.
Commodity exports gaining Putting the value of oil, steel and aluminium exports together gives a first half total of about US$21 billion, or about 8 percent of China’s total first half trade surplus of US$263 billion. If 8 percent doesn’t sound that significant, consider that the
The trend of higher exports of semi-finished commodities may have some way to run yet, especially if domestic demand growth in China continues to disappoint
trade surplus for the first half of 2015 was almost 2.5 times the amount for the same period last year. The rise in the trade surplus was driven largely by lower imports, with the slump in commodity prices playing a large part in that. The trend of higher exports of semi-finished commodities may have some way to run yet, especially if domestic demand growth in China continues to disappoint. Already other nations are feeling the pressure of Chinese exports, with steelmakers across the globe clamouring for protection. Most at risk would be companies in developing nations close to China, such as India and countries in Southeast Asia. Many of these countries are trying to replicate the Chinese economic story by rapidly expanding their industrial bases, but they lack the economies of scale to compete with Chinese semi-finished commodities. Even developed nations, such as Australia and those in Europe, face increasing risk of further loss of industries. Australia’s remaining aluminium smelters appear at constant risk of being closed, as does its remaining steel manufacturing, especially since all vehicle production in the country will end by 2018. It’s likely that affected industries will lobby for protection from Chinese exports, but this may end up being self-defeating as protectionism is unlikely to lead to long-term economic success. Reuters
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July 27, 2015
Closing Real Madrid and Alibaba reach strategic partnership
Beijing public hospital franchised for new branch
Real Madrid football club announced that they would open the flagship store outside of Spain in Tmall.HK as the Spanish Giants established the strategic partnership with China’s online retailer Alibaba Group here yesterday. “We are the best club in the world, the establishment of strategic partnership with Alibaba will help us make a further step in business cooperation with China,” said Florentino Perez, the chairman of Real Madrid. Real Madrid, the 10-time winner of the Champions League, became the second Europe top club to open the flagship store in Tmall.HK after the German powerhouse Bayern Munich.
A public hospital in Beijing has agreed to allow a state-owned company to franchise their name and open a new hospital, local authorities said. Beijing Anzhen Hospital has signed a cooperative agreement with China Orient Asset Management Corporation to establish a comprehensive hospital, said Fang Laiying, chief of Beijing’s Commission of Health and Family Planning. Fang said it’s the first time a public hospital in Beijing franchised in order to fund a new hospital. The franchise means that China Orient Asset Management Corporation will be able to use Anzhen Hospital’s name on the new branch, while funding the new hospital.
Secrecy surrounding TPP trade deal fuels suspicions and concerns TPP’s content leaks have left a whole range of politicians, academics and civil society groups deeply worried Paul Handley
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igher costs for needed generic drugs. Longer copyright protections than the global standard. Foreign investors empowered to overrule governments. A more tightlyregulated Internet. Those are just some of the potential pitfalls from any deal that could emerge from the Trans-Pacific Partnership, the 12-country free-trade and investment pact shrouded in secrecy as negotiations head into the final stage in Hawaii next week. A handful of draft chapters of the TPP, leaked via Wikileaks, have highlighted the proposed treaty’s heavy emphasis on expanding protections for corporate rights and assets like intellectual property -- patents, copyrights and databases -- that are far more valuable to advanced economy corporations than traditional cargo trade. For critics, the proposals show a deal moving more toward protection than
free trade, one more about corporate benefits than boosting economies and development. But backers say the modern global economy needs a new framework of rules to protect intellectual property-dependent 21st century industries that aren’t covered in traditional free trade pacts like the World Trade Organization. The 12 countries involved -- Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam -- have agreed to deliberate in great secrecy, with the goal of producing a deal that can either be accepted or rejected as a whole. The leaked documents, too, show great disagreement on many issues still under negotiation.
Higher drug costs
Many public health organizations say the intellectual property
Deutsche Boerse buys forex trading platform 360T
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protections proposed would raise the costs of health care and drugs to many millions around the world. TPP drafts from last year show a proposed 12-year protection for new biologic drugs, when even the administration of President Barack Obama now wants that US standard reduced to seven years to keep prices lower and foment more competition. They also show efforts to make it harder for poorer countries to produce generic versions of other drugs, to extend patent protections to new versions of existing drugs and to force governments -particularly New Zealand -- to reveal their internal pricing data on pharmaceuticals. Critics say this will only strengthen the hand of big drug companies. “The main goal is to lengthen and strengthen current intellectual property regimes via new norms that haven’t been included in a trade agreement before,” said Judit Rius Sanjuan of Doctors
Without Borders. “As it relates to new regulatory monopolies based on exclusivity, it will delay access to generic medicines,” which her group depends on to extend health care to poor people around the world. Another TPP goal is to enshrine the US-standard of a 70-year copyright protection period, well beyond the 50 years agreed in the 1994 Agreement on TradeRelated Aspects of Intellectual Property Rights. The Electronic Frontier Foundation, a Silicon Valley lobby on technology-related rights and regulation, said copyright extension only “enriches big media corporations, not struggling artists; it impedes libraries, archives, educators and people with disabilities; and it locks away an entire corpus of works that belong in the public domain.”
More internet controls
EFF has also highlighted another problem with the
TPP drafts: an effort to make internet service providers in the 12 countries responsible for enforcing intellectual property rights with their online customers. The result will likely lead “to more Internet censorship measures... in the name of copyright enforcement,” the group said. Another TPP flashpoint is the controversial investorstate dispute settlement (ISDS), which gives foreign investors the right to sue a government in an outside tribunal over policies or actions that hurt their investment. ISDS has attracted strong criticism when used, for instance, by powerful companies like Philip Morris to sue Australia over its cigarette packaging rules, Eli Lilly to sue Canada over its drug patent standards and France’s Veolia to sue Egypt after it raised wages. Critics call it a way for foreign investors to overrule a government’s domestic policies and laws, at the possible expense of the local population, as well as local companies without the same ISDS recourse. But defenders note, as the two examples suggest, that ISDS is already widely present in bilateral trade agreements and investment contracts around the world including, for instance, the NAFTA deal covering the US, Canada and Mexico, and the TPP would not substantially change that. AFP
Iran says foreign holdings US$29bn, not US$100bn plus
Philippines, Vietnam agree to cooperate in agriculture, fisheries
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eutsche Boerse is buying German-based foreign exchange trading platform 360T for 725 million euros, the Frankfurt-based stock market operator said yesterday. 360T is one of a handful of multi-bank, multi-user platforms which have revolutionised foreign exchange trading over the past decade and Deutsche Boerse beat U.S. commodities and currency exchange operator CME Group in the auction, according to sources familiar with the deal. Deutsche Boerse said it expects significant double-digit million euro revenue synergies in the medium-term from the deal which it plans to finance via a combination of debt and equity. With volatility, volumes and resulting returns booming in the dollar’s dramatic rally over the past year, currency trading is attracting more attention and investment from banks, retail trading houses and investors. Deutsche Boerse’s Eurex and other major exchange groups have been positioning themselves to take a role in what they expect with time will be a more heavily regulated market.
ran has assets of US$29 billion in overseas banks that could be unlocked under a nuclear deal -- far less than reported estimates of over US$100 billion, the country’s central bank chief said. Valiollah Seif told state television late Saturday that the holdings comprised US$23 billion in foreign exchange belonging to the bank and another US$6 billion of the Tehran government’s money. The remarks from Seif, central bank governor since September 2013, suggest that under the nuclear deal struck on July 14, Iran stands to regain far less in fresh funds than has been stated. Seif said the figure of more than US$100 billion included “US$35 billion already allocated for oil projects and US$22 billion held on security deposit guarantee in Chinese banks” for buying goods. Opponents of the final nuclear deal agreed in Vienna, notably Israel, have cited figures of US$100 billion and more, saying access to such large sums would allow Iran to boost its support for militant groups across the Middle East.
Reuters
AFP
he Philippines and Vietnam have agreed to further cooperate on integrated pest management and exchanging information on post-harvest technologies processing in highvalue crops. The two sides will also strengthen cooperation in the fisheries sector, a senior government official said yesterday. Agriculture Secretary Proceso Alcala said both parties agreed that their respective plant protection experts will meet and identify specific fruits and vegetables for export and determine the phytosanitary requirements. The agreement was made during the recent First Meeting of the Joint Agriculture Working Group between the two countries. Alcala said the Philippines expressed interest in knowing more about the technologies on the control of the black pepper disease. He added that the Philippines and Vietnam agreed to effectively carry out the Memorandum of Agreement on Fisheries Cooperation signed by both counties in 2009. Xinhua