MOP 6.00
Unemployment stable at 1.8 pct during Q2
Closing editor: Luís Gonçalves
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Emperor Watch & Jewellery expects H1 loss Page 6
ACE Seguradora doubles profits in one year
Echo using Chow Tai Fook to track down world’s top gamblers Page 7
Year IV
Number 844 Tuesday July 28, 2015
Publisher: Paulo A. Azevedo
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War of the Worlds Wimbledon might have finished but not the tennis. Sands boss Sheldon Adelson’s jibe at his competitors has invited a return volley. Galaxy founder and chairman Lui Che-woo said a person of high status should not “offend others by words”. “Being big-hearted is a blessing for a human being”, he advised. The Galaxy chairman said clear targets were his focus. With GEG continuing to help Macau develop into a World Centre of Tourism and Leisure Page
5
Fashionable Macau
Bourse vertigo
Shares tumbled more than 8 pct yesterday. Courtesy of an unprecedented gov’t rescue plan to prop up valuations which abruptly ran out of steam. Major indexes suffered their largest one-day drop since 2007
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Despite all the headwinds and downturns. The world’s famous high-end fashion brands continue to bet on Macau. As a gateway to China. The most recent is Milan-based Italian luxury brand Antonia. The first Macau store will open in Sands China’s Parisian property. Via a franchise agreement with the Chinese Canudilo Group
Brought to you by
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Booming insurance sector 2014 was a good year. For the Macau branch of China Taiping Insurance. Which generated a profit of MOP77.2 million - up 68.2 pct y-o-y. In Macau, the Hong Kongbased insurance company is only involved in non-life insurance. As market leader it also outperformed its rivals here
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HSI - Movers July 27
Budget Tour
Name
MERS has largely stabilised in S. Korea. With some travel agencies already promoting South Korea tours at cheaper rates from midAugust onwards. The Macau branches of Hong Kong tour agencies Hong Thai and EGL Tours are currently negotiating deals. HK$6,000 to HK$7,000 tours are expected to come in at below HK$5,000
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www.macaubusinessdaily.com
Property
Border Business Look north. That’s the new mantra of local real estate companies. Zhuhai City centre, Hengqin and Wanzai are all in the investment frame for Macau residents. Macau General Association of Real Estate has advised its membership to “go out” and explore the Zhuhai market. Although investors in Hengqin should adopt a long-term view
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%Day
Cheung Kong Property
-0.70
Hong Kong & China Ga
-0.88
CLP Holdings Ltd
-0.99
Hang Seng Bank Ltd
-1.22
Link REIT/The
-1.32
China Resources Land
-4.97
China Mengniu Dairy c
-5.39
China Life Insurance C
-5.53
China Unicom Hong Ko
-5.88
China Resources Powe
-6.28
Source: Bloomberg
I SSN 2226-8294
2015-7-28
2015-7-29
2015-7-30
26˚ 31˚
25˚ 30˚
25˚ 30˚
2 | Business Daily
July 28, 2015
Macau Corrupt Chinese official arrested in Macau A Chinese economic fugitive, who was among Interpol’s 100 most-wanted fugitives, suspected of corruption was arrested in Macau on Thursday and escorted back to Mainland China, according to an announcement by the Guangdong Provincial Commission for Discipline and Supervision. Wu Quanshen, aged 59, was former party secretary of Dadun Village in Guangzhou, capital of neighbouring Guangdong Province. According to Guangdong authorities, he is suspected of making use of his position to accept massive bribes for village projects.
Unemployment stable at 1.8 pct during second quarter When judged on a yearly basis, the major industries of gaming and construction have still hired more people in the period
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he city's unemployment rate for April to June matches that of the previous period of March to May at 1.8 per cent, when gaming, construction and hotels still hired more people when judged on an annual basis, the latest data released by the Statistics and Census Service (DSEC) shows.
Of the April-June period, the city had an unemployed population of 7,200 – the same level as the previous period but 700 more than a year ago. The unemployment rate of residents in the period was 2.5 per cent. The sectors of gaming and VIP
gaming promotion activities, which by the survey is the biggest employer in Macau, hired 83,800 people in the aApril to June period, some 800 people fewer than the March-May period. But when measured against the same period last year this sector still posted a growth of about 4.6
per cent or 3,700 more people in the number of hired workers. Another principal industry here, the construction sector, employed 57,500 people from April to June, some 1,500 fewer than the March-May period but up by 6,600 workers or 13 per cent more when compared to a year ago. The hotels hired 28,400 workers in the April to June period, up 3.3 per cent when compared to the previous period and also a rise of 7.6 per cent when compared to a year ago. The total labour force of Macau in the April-June period stood at 405,400, with the labour force participation rate at 73.9 per cent. The underemployment rate was 0.4 per cent in the period, up 0.1 percentage points when compared to the previous period but at the same level as a year ago. Meanwhile, DSEC data reveals that the median monthly earnings of the employed population here stood at MOP15,000 (US$1,921) in the April to June period, as the previous quarter but 15.4 per cent more than the level of MOP13,000 a year ago. Of the employed residents here, median monthly earnings stood at MOP17,500 as of the April to June period, which was MOP500 less than the previous period due to the seasonal factor of the receding effect of the thirteenth month salary and bonuses received in the previous quarter. Nevertheless, when compared to a year ago, residents here have seen a 16.7 per cent rise in median monthly earnings gained in the April to June period, according to DSEC data.
Italian luxury fashion brand Antonia entering Macau The Milan-based luxury brand has signed a franchise agreement with the Chinese Canudilo Group, with the first shop in Macau to be in the Parisian
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talian luxury fashion brand Antonia is planning to enter Mainland China’s high-end clothing market. However, before executing this phase, the brand, which will operate under a franchise agreement with the Chinese Canudilo Group, will first set up shop in Macau. In fact, the Milan-based company has already applied to register its brand in the territory, according to the Macau Economic Services. The ongoing process started in April and the request was published in the Official Gazette in July. According to ChinaRetailNews.com the Macau store will open in the Sands China Parisian property. But this also means that Antonia’s shop in the territory will not be operational before the Summer of next year, as last week the Chairman and CEO of Sands China, Sheldon Adelson, said that the resort will take another year to
officially open. According to the same website, the store will occupy an area of 3,000 square metres. The arrival of the brand in Macau is part of a larger plan to open five shops in China up to 2020, according to Lin Yongfei, the Chairman of the Canudilo Group. The strategy of the Milanbased brand to expand into China through a franchise agreement with Canudilo Group is in line with the option taken before by other high-end fashion brands. At this moment, the Guangzhou Group already has franchise agreements for China with other famous brands such as Saltatore Ferragamo, Bally, Samsonite, and Calvin Klein, which included the opening of about 100 stores. The Canudilo Group has also secured cosmetics franchise agreements for China with such brands as Hugo Boss, Burberry and Giorgio Armani. J.S.F.
Business Daily | 3
July 28, 2015
Macau
Agencies striving to sell cheaper S. Korea tour packages amid waning MERS With the MERS outbreak largely stabilising, travel agencies are already promoting South Korea-bound tours at cheaper rates from mid-August onwards Stephanie Lai
sw.lai@macaubusinessdaily.com
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ocal travel agencies will sell package tours destined for South Korea at cheaper rates from August onwards in a bid to pull in more visitors with cases of Middle East Respiratory Syndrome (MERS) gradually waning in the country. The Macau branches of Hong Kong tour agencies Hong Thai and EGL Tours told Business Daily that they are currently negotiating with flight companies and hotel operators to lower their fares for South Koreabound package tours to below HK$5,000 (US$645) from the HK$6,000 to HK$7,000 set prior to the MERS outbreak. These tours are set to depart Macau for South Korea starting from mid-August and September. The agencies hope to resume sales of South Korea-bound package tours with cheaper fares as they anticipate the Hong Kong authorities will remove the red travel alert in early August, following the South Korean Government’s announcement that no additional cases of MERS have been reported for more than three weeks. “We hope that after a few days when the red travel alert is taken down, we can resume sales of the South Koreabound package tours that will depart from Macau in midAugust and in September,” EGL Tours (Macau) Co. Ltd.’s general manager
Sabrina Iong told us, “We would like to sell these [5day] package tours at below HK$5,000, where the lowest can be HK$3,000 during this peak travel season.” “Actually, from what we see for the individual travel packages that depart here from now until mid-October, the hotel operators in South Korea have already offered cheaper hotel room rates that are 10 per cent to 20 per cent cheaper than the level prior to the MERS outbreak,” Ms. Iong said. Another local tour agency operator, managing director of Hou Mei Tour and Travel Company Ltd. Ben Leng, however, believes that a big
discount in the South-Korea bound package tours that are scheduled to depart Macau in August is not likely as the flight companies have not yet announced a big discount in flight fares.
Confidence
With the number of South Korea-bound package tours and individual travel packages plunging by more than half in the past few weeks this month, the general manager of Hong Thai Travel Services (Macau) Ltd., Paul Siu, expects local visitors’ confidence in travelling to the country will resume quickly if no new cases of MERS are reported in the coming month.
South Korea reported its first MERS case on May 20, with some 16,700 people since subject to isolation as suspected infection cases, Yonhap news agency reported. All of them were released as of Monday as they showed no symptoms of the disease for more than the known maximum incubation period of 14 days, according to South Korea’s Ministry of Health and Welfare, Yonhap reported. The news agency also reported that the number of people diagnosed with MERS has remained flat at 186 for the past 22 days. In June, the inbound tourism number for South Korea reached 750,925
arrivals, which is 41 per cent lower than the 1.27 million arrivals in the same period last year, according to data released by the Korea Tourism Organisation. The data also shows that the biggest source of South Korea’s visitors, China, dropped 45.1 percent year-on-year to 315,095 arrivals in June. The fall is even steeper for Hong Kong, which saw only 13,949 visitors enter the country in the month representing an annual fall of 74.6 per cent when the red travel alert was in effect. The number of Macau visitors travelling to the country in the month is not available in the organisation’s data set.
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July 28, 2015
Macau
Real estate: Hengqin investors should take the long view Local realtors seeking co-operation opportunities with real estate developers in Hengqin and Zhuhai Joanne Kuai
joannekuai@macaubusinessdaily.com
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epresentatives from the Macau General Association of Real Estate said properties in Zhuhai City centre, Hengqin and Wanzai can be good investment opportunities for Macau residents. The rental market in Zhuhai near the border gates has been boosted since the extension of operating hours at the borders. Meanwhile, investors in Hengqin should adopt a long-term view. The Macau General Association of Real Estate paid a visit to properties in Zhuhai on Sunday. The 50-strong delegation visited 3 properties located in Zhuhai City centre, Hengqin, and near the border. Association Director Nestor Ng told Business Daily that many of its members enquire about properties in Zhuhai. Due to the lower transaction numbers in Macau, the Association intends to encourage its members, who are mainly real estate agencies, to “go out” and explore the Zhuhai market. Mr. Ng, also the president of Anzac Realty (Macau), said housing prices in Zhuhai had increased 15 to 20 per cent last year. The market was mainly driven by midrange price units, especially near the borders due to the extended operating hours
of the border crossing. The realtor has received clients of companies that purchase units for its management as dormitories and more requests of this kind of investment are in the pipeline. The company’s Zhuhai branch also indicated that the number of transactions of real estate in Zhuhai is about 1,200 to 1,800 units every
month, with the market relatively stable.
Cautious approach
Nestor Ng indicated that the last round of heated interest in Zhuhai property was fuelled by the policy of dual-licence car plates, which was later cancelled and resulted in less enthusiasm in the market. However, since the concept of the Free Trade Zone has
become more popular in the region, Hengqin has been regarded as the backyard of Macau with more Macau residents mulling the possibility of investing in the neighbouring island. Nevertheless, Mr. Ng stressed that investors in Hengqin should adopt a longterm view as the properties there have great potential to increase in value. Due to the
recent turbulence of Macau’s economy, investors themselves have been adopting a more cautious approach. Positive aspects include the nearing completion of the Hong Kong-Zhuhai-Macau Bridge, and the possibility of Macau licensed vehicles entering the island. Mr. Ng expects the Hengqin property market to enjoy a steady growth of 10 per cent this year. Currently, the average price of Zhuhai City centre housing units stands at 20,000 yuan per square metre, while some luxury units can reach 40,000 to 50,000 yuan. Units in Hengqin that are new to the market transact at around 38,000 yuan per square metre, whilst Wanzai is relatively cheaper at 25,000 to 30,000 yuan. Mr. Ng also appeals to Macau residents to pay attention to taxation policies and purchasing procedures when investing in Zhuhai, which are different to those of Macau.
Market leader China Taiping’s ACE Seguradora doubles profits profit surges 68 per cent in one year
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he Macau branch of China Taiping Insurance generated a profit of MOP77.2 million in 2014, the company announced in its official results. In the territory, the Hong Kong-based insurance company is only involved in non-life insurance policies, where it is the market leader. The result represents an increase of 68.2 per cent yearon-year net profit of MOP77.2 million from MOP45.9 million in 2013. This was achieved during a time when the Macau economy is going through a slowdown period, as the report of the company stresses. “In comparison with 2013, the growth of gross premiums in 2014 also went through an adjustment as the speed of growth was slower than in the past. Gross premiums
accounted for MOP2 billion and in relation to 2013 they increased 5 per cent”, the company said of the overall market. Last year, China Taiping Insurance managed to outperform the overall market, with revenues from gross premiums increasing to MOP592.9 million in 2014 from MOP500.2 million in 2013. This is an 18.5 per cent increase year-on-year for the insurance company, against a 5 per cent increase in the market. In terms of market share, the company managed to grab 30.3 per cent, with MOP592.9 million, while the total market amounted to MOP1,956 million, which, according to the company, grants them the leadership of the non-life insurance sector. In comparison with 2013,
the share of China Taiping increased 3.5 percentage points from 26.8 per cent, when it had MOP500.2 million gross premiums of a market that amounted to MOP1,863 million. In spite of expecting troubling times in the near future, there is an optimistic view for the long-term. ‘Taking into account the restructure and diversification of the economy, the benefits arising from the economic growth of Mainland China, the construction of the Hong Kong-Zhuhai-Macau Bridge and the development of Hengqin Island, it is true that the economy of Macau is under short term constraints but in the long term there are good prospects’, the company claimed. J.S.F.
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nsurance company ACE Seguradora, based in Macau, almost doubled (92.3 per cent) its net profit in one year to MOP2.5 million in 2014 from MOP1.3 million in 2013. These results were mainly driven by the increase in gross premium values which went up MOP4.1 million (17.2 per cent year-on-year) to MOP27.9 million during last year in comparison to MOP23.8 million in 23.8 million. In relation to this, the company growth outperformed the non-life insurance market, which expanded 5 per cent to MOP1.96 billion in 2014 from MOP1.86 in the previous year.
During the same time the expenses of the company also went up but at a slower pace. In 2014, expenses increased by MOP100,000, to MOP1.8 million from MOP1.7 million in 2013. While the company managed to return a good performance in terms of gross premiums, in terms of market share it achieved 1.43 per cent in 2014. In 2013, the market share of ACE Seguradora amounted to 1.28 per cent. ACE Seguradora operates in Macau’s non-life insurance field and is controlled by the Swiss-based group ACE INA International, which holds a 99.94 per cent stake in the insurance company. J.S.F.
Business Daily | 5
July 28, 2015
Macau Gov’t introduces 10-minute parking meters The government has announced the introduction of 10-minute parking meters for light motor vehicles from September, the Official Gazette announced yesterday. The new type of parking meters will charge one pataca per 10 minutes, allowing a maximum parking period of one hour. The Transport Bureau said the new parking meters will initially be installed in busy districts, such as NAPE, Nam Van and Taipa. Currently, the city has two kinds of parking meters for light cars, charging one pataca per 30 minutes and one pataca per one hour, with a maximum parking period of two hours and five hours, respectively.
Lui Che-woo asks Adelson to be “big-hearted” “Don’t hold your head high; don’t offend others by words; be big-hearted.” These are Galaxy chairman Lui Che-woo’s messages to Sands boss Sheldon Adelson, after the American gaming entrepreneur said last week that Galaxy had made a huge mistake
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ollowing Sands boss Sheldon Adelson’s jibe that gaming operator Galaxy Entertainment Group had made “an enormous mistake” in the handling of its business, Galaxy founder and chairman Lui Che-woo (pictured) responded on Sunday saying that a person of high social status should not “offend others by words.” Last week, Mr. Adelson claimed in a conference call announcing Sands’ second quarter results that his gaming competitors in Macau had made mistakes, particularly identifying Galaxy. In addition, he said the other gaming operators lack the experience and ability to face the current intensive competition in Macau. ‘”Holding his head high to other operators in the same industry and
offending others by words should not be the acts of a high-status person. Being big-hearted is a blessing for a human being,” Mr. Lui said on Sunday through his public relations office. Claiming he would not comment on others’ opinions, the Galaxy chairman also said in the statement that his company has been focusing on operating its business with clear targets and it would continue to help Macau to develop into a World Centre of Tourism and Leisure.
Big mistake
“Galaxy made an enormous mistake. The other companies will make big mistakes. They’re already making big mistakes. Now don’t ask me what they are doing”, the Sands boss said last week during the conference call.
He did not expand on the nature or gravity of the mistakes, only claiming “because I don’t want to stop them from making mistakes in the future; after all, we are competitors”. Mr. Adelson also indicated that his competitors do not have the experience of selling hotel rooms. “All they did was give them all away. We have this experience. I’m sorry to sound boastful like this but we have to look at reality,” he said. Sands China saw its adjusted property earnings before interest, tax, depreciation and amortisation plunge by 30 per cent year-on-year to US$564.5 million (MOP4.52 billio) for the second quarter, although higher than the stock analysts’ expected median of US$508.5 million. K.L.
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July 28, 2015
Macau Brands
Trends
Hugo Boss Raquel Dias newsdesk@macaubusinessdaily.com
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ugo Boss, the former uniform maker, has long conquered the fashion world. It wasn’t that long ago that the brand introduced female wear, but when it did it was almost as successful as the male apparel. For this Winter, the brand’s suggestions are all straight and hard lines, sexy greys and blacks with hints of orange. Call that a contrast! Jason Wu, the brand’s designer, was inspired by the architectural beauty of the city he lives in, New York. Strong tailoring, streamlined shapes and graphic uses of colour combined to create a collection of both structure and substance. This industrial chic show reworked menswear staples into fine daywear options for the fairer sex. And the introduction of some equestrian-inspired crossfronted jackets and coats added a pleasant sense of rigour to the work. However, it really was those pieces that most closely echoed architectural concepts that were this collection’s standout designs. The shift dresses that came meticulously sliced into sections at a diagonal across the torso were gorgeous. The reflective beaded bib front on a dress was noteworthy, and the final three dresses, which were crafted into three-dimensional grid patterns, were sartorial feats of wonder. It seems that Hugo Boss has finally found a strong lead for its female apparel collection - and that with Wu at the wheel Hugo Boss women will be as strong (who knows, even stronger) than Hugo Boss Men.
Emperor Watch & Jewellery expects H1 loss
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ong Kong-listed Emperor Watch & Jewellery Ltd. said a loss is anticipated for its interim result for the six months ended June 30 this year, due to declines in revenues given the worsening tourism environment in Hong Kong. ‘Based on the information currently available and preliminary review in the unaudited consolidated management accounts, the Group is expected to record a consolidated loss for the six months ended 30 June 2015
as compared with a consolidated profit for the corresponding six months ended 30 June 2014,’ the retailer told the Hong Kong Stock Exchange in its latest filing. According to the filing, the company indicated that the possible loss is due to the declines in the revenues following Hong Kong’s tourism environment turning ‘unfavourable’ following the Occupy Central protest in 2014. In addition, the decrease in foot traffic due to the strong Hong Kong
dollar, and the increase in rental costs were other factors driving revenues down, the retailer said. In 2014, the company, although posting a net profit of HK$233 million (US$29 million), saw its revenues decrease by 10.6 per cent year-on-year to HK$5.92 billion due to revenues generated by the watch and jewellery segments slumping 6.2 per cent and 25.7 per cent year-onyear, amounting to HK$4.82 billion and HK$1.1 billion, respectively. K.L.
Imperial Pacific’s ‘temporary casino’ in Saipan has soft opening The company said after reviewing legal opinions that the casino project is operating within the confines of Saipan Casino Law
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mperial Pacific International Holdings Ltd. informed the Hong Kong Stock Exchange on Sunday that it has launched a soft opening of its ‘temporary casino’ on 26 July in Garapan, on the Island of Saipan. The company, also known as an investor in the profit stream of Macau junket operator Hengsheng Group, noted in the Sunday filing that it had obtained the updated legal opinion of the Commonwealth of the Northern Mariana Islands (CNMI) and of Hong Kong. The company indicated that it is operating the casino project within the confines of Saipan Casino Law, federal law to the extent applicable, and the regulations established by the Commonwealth Casino Commission. It further stressed that the gambling activities will not contravene
any applicable laws of Hong Kong (including the Gambling Ordinance) providing that neither the company nor any of its subsidiaries conduct any activities pertaining to the administration or management in Hong Kong which would involve gambling or bookmaking activity in Hong Kong.
Investment
‘The Company shall ensure that the Gambling Activities at all times comply with the applicable laws in the CNMI and do not contravene the Gambling Ordinance,’ said Imperial Pacific in its Sunday filing. ‘The Company will, as and when appropriate, comply with all relevant requirements, and where necessary, make further announcement(s) in accordance with the Listing Rules.’
In a circular filed with the stock exchange in late November, Imperial Pacific announced its business plan to construct and operate a casino-resort project on the Island of Saipan, comprising a town hotel plus integrated resort with gaming facilities in five phases. The company said in the circular that it would invest US$7.1 billion (HK$55.1 billion) in the casino-resort project, whereby the first phase could be ready by 2016. The last phase of the project is expected to be ready by 2020, along with the eventual completion of 4,252 rooms, 300 villas and 1,600 gaming tables, according to the circular. In August last year, Imperial Pacific was granted a 25-year licence to build and operate a casino on Saipan, with an option to extend the licence for a further 15 years. J.K.
Business Daily | 7
July 28, 2015
Macau Wynn Resorts announces second quarter earnings tomorrow Wynn Resorts, Limited announced yesterday that it will release the company’s financial results for the second quarter ended June 30, 2015 after the market closes tomorrow, followed by a conference call at 1:30 p.m. Pacific Time ( 4:30 am on Thursday in Macau). The financial results of the group will include local parent company, Wynn Macau. In the conference call, Steve Wynn is likely to address hot topics here such as the full smoking ban, the gaming revenues slump and some additional information on the upcoming Wynn Palace project
Echo using jewellery partner to track down world’s top gamblers A loyalty programme that offers yacht cruises and truffle tastings to people who spend more than HK$1 million (US$129,000) a year at Chow Tai Fook stores will help bring in high-rollers to Echo’s new casino resort in downtown Brisbane
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cho Entertainment Group Ltd. needs a way to penetrate the exclusive community of the world’s top gamblers and lure them to its Brisbane casino. Thus, it’s partnering with the world’s largest jeweller to get a foot in the door. A loyalty programme that offers yacht cruises and truffle tastings to people who spend more than HK$1 million ($129,000) a year at Chow Tai Fook Jewellery Group Ltd. stores will help bring in high-rollers to Echo’s new casino resort in downtown Brisbane, according to its Chief Executive Officer Matt Bekier. “The universe of very, very serious VIPs is probably 1,500 to 2,000 players,” he said in an interview on Thursday, referring to gamblers who typically bet more than $2,000 an hour on games of high-stakes baccarat. “We can de-risk the project by building a pipeline of visitors back into China.” Echo will partner with the jewellery chain’s sister company Chow Tai Took Enterprises Ltd. and with property developer Far East Consortium International Ltd. to build the 1,100room hotel and casino that will open on the shores of the Brisbane river in 2022. The Hong Kong-based companies, which will each take a 25 per cent stake in the resort, will win fees for each VIP customer they refer to the new property. “They have a very large customer base in Asia,” Bekier said. “If they bring them in they want to be able to generate an extra fee for that.”
Chinese consumers
Cheng Yu-tung, the Hong Kong billionaire whose family
controls the Chow Tai Fook group, owns a stake in closely held Sociedade de Turismo & Diversoes de Macau SA (STDM), founded by his longtime friend Stanley Ho. The stake in STDM gives him control of 293 million shares of SJM Holdings Ltd., Asia’s largest casino operator by revenue. Chow Tai Fook Enterprises is also linked to Suncity Group, Macau’s largest junket operator, and the duo will develop a casino project in Vietnam, according to Macau Business. Cheng’s and Far East’s connections will help “add value to the Brisbane VIP business, given their relationships and deep knowledge of the highend consumer in China,” Sam Theodore, a Sydney-based
analyst at UBS AG, wrote in a July 20 note. It’ll cost about A$2 billion ($1.5 billion) to build the resort and the casino could see A$22 billion a year being wagered in its VIP rooms by 2023, Theodore said. More money needs to be spent on new hotels and resorts if Australia wants to stop Chinese tourists losing interest and going elsewhere, according to the country’s former Prime Minister Paul Keating. Chinese tourists spent A$5.7 billion in the country last year and make up the biggest group of visitors after New Zealanders, according to government data.
Best image
The country has the best image among Chinese
The universe of very, very serious VIPs is probably 1,500 to 2,000 players Matt Bekier, Chief Executive Officer of Echo Entertainment Group
consumers but only comes 14th in terms of destinations they actually visit, Bekier said, citing Echo’s internal research. Australia’s natural environment and clean air are the top attractions for Chinese tourists, he said. Echo hopes to capitalise on this by offering speed ferries to dolphin-petting sessions on the islands off Brisbane’s Moreton Bay. “You’re looking at a massive trend where as people become wealthier they seek to have more experiences,” he said. “There’s a lot of investment flying out of China right now, so that group of customers is growing very quickly.” Bloomberg
8 | Business Daily
July 28, 2015
Greater China
Shanghai stocks plunge 8.48% on economy worries The drop was the biggest since February 2007, Bloomberg News reported
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hanghai stocks plummeted 8.48 percent yesterday, their biggest fall for more than eight years and defying government efforts to prop up the market. The Shanghai Composite Index closed down 345.35 points to 3,725.56 on turnover of 721.3 billion yuan (US$117.9 billion), on worries the world’s second largest economy is heading for a sharp slowdown, dealers said. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, slid 7.00 percent, or 162.62 points, to 2,160.09 on turnover of 667.7 billion yuan.
The falls came as economic data caused sentiment to turn, despite government efforts to prop up the stock market following a rout that began last month. “Investors are not confident that the bull market will return any time soon,” Jimmy Zuo, a trader at Guosen Securities, told Bloomberg. “People want to pocket profits after the benchmark index rose past the 4,000 mark.” Yesterday, the government said that profits of major industrial firms slipped 0.3 percent year-on-year in June to 588.57 billion yuan.
On Friday, the preliminary reading of Caixin’s Purchasing Managers’ Index (PMI) -- an independent survey of manufacturing activity -- came in at 48.2 for July, the weakest reading since 48.1 in April 2014. Officials have unveiled a slew of measures, including a police crackdown on short-selling and a ban on big shareholders selling stock for six months, to avert a slump which began in mid-June.
And there is also uncertainty about how the government support measures will exit the market Zhang Qi, analyst, Haitong Securities
But Shanghai stocks sank 1.29 percent on Friday, ending a six-day rally, after the PMI figures. Yesterday, securities firms lost ground in Shanghai. Industrial Securities plunged by its 10 percent daily limit to 10.38 yuan and Dongxing Securities also slumped 10 percent to 21.92 yuan. Toll road-related shares fell. In Shanghai, Hubei Chutian Expressway dropped by its 10 percent daily limit to 6.26 yuan and Shandong Hi-speed lost 10 percent to 7.49 yuan. Despite official denials, investors are also worried over whether the government will exit the market by removing the support funds which have propped up prices. “The rise during the past two to three weeks was too big, so the market needs to correct itself,” Zhang Qi, an analyst from Haitong Securities, told AFP. Nonetheless he expects the Shanghai index to continue to move around the 4,000-point level. China’s securities regulator last week denied studying an exit plan for market-stabilisation funds. The state-backed China Securities Finance Corp., tasked with restoring market stability, also denied reducing its holdings in listed companies, state media reported on Wednesday. AFP
Gome to buy company owned by jailed founder The deal is not expected to result in any meaningful changes as Gome already provides management and purchasing services to Artway Lianting Tu and Annie Lee
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ome Electrical Appliances Holding Ltd. plunged in Hong Kong after it announced plans to buy a company owned by Wong Kwong Yu, in a deal that will give the founder and largest shareholder majority control. Gome, China’s secondbiggest electronics retailer,
has signed an agreement to buy Artway Development Ltd. for HK$11.3 billion (US$1.46 billion) from Gome Management Ltd. Artway, wholly owned by Wong who’s currently in jail for bribery, is a retailer of electrical appliances under the Gome brand name.
Gome shares, which were suspended from trading on July 20, tumbled as much as 10.3 percent, the most since July 8. Its larger competitor Suning Commerce Group Co. fell as much as 4.4 percent in Shenzhen. Hong Kong’s Hang Seng Index fell as much as 2.3 percent. The cost of the acquisition is too high, and its synergy effect is unclear, according to Huang Yaoxin and Guo Haiyan, analysts at China International Capital Corp.
Wong’s return
As part of the transaction, Gome will issue Gome Management 6.2 billion new shares, and 2.5 billion warrants that can be converted into new shares, the Beijingbased company said in a stock exchange filing on Sunday. The issuance could push the shareholding of Wong and his associates in Gome as high as 55.3 percent, from 32.4 percent at present.
“The acquisition simplifies the management and financial structure of all Gome stores, which paves the way for Mr Wong’s takeover upon his potential return,” Anita Chu, an analyst at Bank of Communications Co., wrote yesterday. Gome’s founder Wong, who is also known by his Chinese name Huang Guangyu, was sentenced to 14 years in prison in 2010 for bribery and insider trading. Barclays Plc is the financial adviser for Gome. Artway has outlets located in regions that Gome doesn’t already have and the deal will allow the Beijing-based company to increase the number of its outlets by 50 percent to 1,714 in 436 cities, according to the statement. This would exceed those owned by Suning which has 1,628 stores in more than 290 cities.
’Whitewash waiver’
Gome announced on June 23 it will pay 3.83 billion
yuan to buy all of Beijing Dazhong Home Appliances Retail Co., an operator of appliances and electronics stores in the Chinese capital. The latest transaction would help Gome benefit from “enhanced economies of scale and bargaining power,” it said in the statement. Gome, which sells TVs, washing machines and other appliances, said an application will be made to the regulator in Hong Kong for a so-called whitewash waiver, intended to exempt Wong and Gome Management from making a mandatory general offer for the shares they don’t already own in the company. The waiver, if granted, would be subject to the approval of Gome’s independent shareholders, the filing said. Artway’s net income fell 20 percent to 284.7 million yuan (US$46 million) in 2014, with sales up 7 percent to 21 billion yuan. Bloomberg News
Business Daily | 9
July 28, 2015
Greater China
June industrial profits fall
Recycling project targets industrial waste around Beijing
For the first six months of 2015, industrial profits were 0.7 percent lower than a year earlier
Six provincial regions have jointly launched a resource recycling project to handle industrial waste in areas surrounding the Chinese capital. By 2017, 400 million tonnes of industrial solid waste will be disposed of annually after the implementation of the project. The project was initiated by Beijing and its surrounding municipalities and provinces, including Tianjin, Hebei, Shanxi and Shandong, as well as the Inner Mongolian Autonomous Region. Under the project, planners aim to develop an industry able to recycle 20 million tonnes of resources each year and with its output value reaching 220 billion yuan (US$35.4 billion) by 2017.
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hinese industrial profits, which rose on an annual basis in April and May, dropped in June, adding to pressures on an economy that is struggling to regain momentum. Profit at China’s industrial firms dropped 0.3 percent in June from a year earlier, the National Bureau of Statistics (NBS) said yesterday. That reversed a 0.6 percent rise in May and 2.6 percent gain in April, the first month since September 2014 in which industrial profits were higher than a year earlier. The bureau said falling prices pulled down firms’ profit margins in June even though recent interest rate cuts were lowering companies’ financial costs. In June, China’s producer price index (PPI) fell 4.8 percent on an annual basis, its 39th straight month of declines, official data showed. For the first six months of 2015, industrial profits were 0.7 percent lower than a year earlier, the bureau said. Among 41 industrial sectors, 30 sectors had year-on-year growth in the first half of this year, while 11 recorded drops. Profits in mining sector fell 58.8 percent in the first six months from a year earlier, while earnings of crude oil and natural gas producers tumbled 68.4 percent. On the upside, oil processing, coking coal and nuclear fuel processing industries combined saw profits jumping 78.7 percent in January-
Emergency funds to quake-hit Xinjiang
KEY POINTS June profits -0.3 pct y/y, vs +0.6 pct in May H1 profits -0.7 pct y/y, vs -0.8 pct in Jan-May Interest rate cuts lower firms’ financial costs
June while the bureau said computers, telecommunications and electronics firms together had a 19 percent increase. According to the bureau, interest payments by industrial firms in June were 6.2 percent less than a year earlier, the biggest drop this year. China’s central bank has cut interest rates for three times this year, in a bid to support an economy headed for its poorest performance in a quarter of a century. For the first six months, China has reported a growth rate of 7 percent, in line with Beijing’s full-year target. Reuters
Mainland fund plans US$10 billion European deals The firm will be branching out into biotechnology and health care
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Coal producer plans wind farm IPO in HK China’s biggest coal producer, Shenhua Group, plans to list its wind farm assets in an initial public offering in Hong Kong valued at up to US$1 billion, IFR reported on Monday, citing people familiar with the plans. The IPO is expected for the first half of 2016, according to IFR, a Thomson Reuters publication. The company has invited banks to pitch for the deal, though no mandates have yet been assigned, it reported. A Shenhua spokesman did not return calls for comment.
Six workers rescued from flooded mine
Jonathan Browning
he Chinese investment firm buying Royal Philips NV’s lighting components arm is targeting more European acquisitions as large as US$10 billion. GSR Capital will pursue overseas deals in technology, clean energy and pharmaceuticals, as well as online finance, Chairman Sonny Wu said. The firm, which said yesterday it plans to raise a US$5 billion global acquisition fund, will target Europe where valuations are more reasonable than in the U.S., according to Wu. “We’re looking at the top one or two companies in the world in their sectors,” Wu said in an interview yesterday in Hong Kong. “They may not be growing fast, but they will with the China angle.” Wu, a former Nortel Networks Corp. executive with backing from a Hong Kong solar-power magnate, is raising a buyout fund to source larger acquisitions of technologyheavy companies with the potential to grow in China. He’s seeking to add to the US$28.1 billion of crossborder deals by Chinese privateequity firms this year, up from
China’s top economic planner yesterday allocated 50 million yuan (US$8.2 million) of emergency funds to an quake-stricken county in Xinjiang Uygur Autonomous Region. The National Development and Reform Commission said the funds will be used to support infrastructure restoration work. The 6.5-magnitude quake shook Pishan County, inhabited largely by people of Uygur ethnicity, on July 3 and left three dead and 263 others injured. The quake damaged 12,000 houses. More than 66,000 people have been evacuated. The Xinjiang regional government has earmarked 20 million yuan (US43.2 million) for disaster relief.
US$10.2 billion during the same period in 2014, data compiled by Bloomberg show. GSR, which has offices in Beijing,
Hong Kong and Palo Alto, California, also runs venture and growth capital funds. The firm will be branching out into biotechnology and health care, according to Wu. “Pharmaceuticals is huge in China. Other guys are setting up hospitals, or helping restructure state-owned enterprises. We don’t do that,” he said. “We want to acquire pharmaceuticals companies -- we’re scanning the world -- and bring them to China.” A GSR-backed fund is leading a group of investors that agreed in March to acquire control of the Philips Lumileds business for US$2.8 billion. The buyers have received U.S. antitrust approval for the deal and aim to complete the purchase by October, Wu said. Wu’s funds, whose executives have worked at companies including Samsung Electronics Co., will partner with entrepreneurs to enter areas where GSR doesn’t have its own expertise, he said. In China, “the people who will make money have to compete globally,” Wu said. Bloomberg News
Six workers were rescued from a flooded colliery in northeast China’s Heilongjiang Province yesterday morning, local authorities said. The six were lifted to the ground at about 5:30 a.m., said the emergency rescue headquarters at Xuxiang Colliery in Hegang. The death toll stood at four by Monday morning and rescuers are racing to search for the other five workers who have been trapped in the pit for about seven days. The six workers were in stable condition and had no obvious injuries on the body, said Wang Falun, vice president of the Hegang Municipal People’s Hospital.
Cattle anthrax outbreak reported in NE China An outbreak of anthrax in livestock has been put under control in northeast China’s Liaoning Province, said the provincial animal authorities yesterday. Five cattle and one mule died from the disease on July 21 in Xifeng county, Tieling city, said the Liaoning Provincial Bureau of Animal Health and Production. An emergency response was immediately activated and five other cattle were killed, it added in a brief statement. The area was disinfected and the dead livestock were properly disposed of. Anthrax commonly infects all warm-blooded animals, in particular cattle.
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July 28, 2015
Greater China
Funds switch focus to agriculture China is the world's biggest consumer of copper and a slowing economy helped drive London Metal Exchange prices to a six-year low last week at US$5,191.50 a tonne Polly Yam and Niu Shuping
Overall farm prices are moving upward, because an El Niño weather pattern may cause a shortfall of supplies Shi Yan, chief agriculture analyst at Xinhu Futures
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hinese funds are considering taking long positions in agricultural products such as corn, soy and palm oil in the next few months, aiming to benefit from any weather-related crop damage caused by an El Niño weather pattern, fund sources said. Some funds have increased
their exposure to commodities after moving cash out of China’s tumbling equity markets. Chinese funds were also said by traders to be behind big falls in copper, one in March last year when the metal fell more than 8 percent in three days, and again in January this year when copper slid almost 8 percent
in two days. They are, however, becoming more cautious about taking new short positions in copper with prices already low and due to the possibility that the metal could get a lift if Beijing increases economic stimulus. “The Chinese economic outlook is unclear. Now is not
the time to put on large shorts because the economy may be heated up,” said a portfolio manager at a Chinese fund, who declined to be named due to rules on speaking to the media. China is the world’s biggest consumer of copper and a slowing economy has helped drive London Metal
Exchange prices to a six-year low last week at US$5,191.50 a tonne. The portfolio manager said his fund would only open big new short positions if the price rebounded to around US$6,000. The fund was looking at taking long positions in some agricultural products given they were less sensitive to economic growth and because of the risks of an El Niño hitting crops such as corn. “Many people are keen to bet longs of agricultural products because the weather this year has not been normal,” an analyst at another fund said. Weather bureaus say there is a risk of a strong El Niño this year, which can cause scorching heat in Asia and east Africa and heavy rains in South America. A Chinese hedge fund executive said agricultural products were also attractive because prices were not too high, adding that his firm was looking at soy beans and palm oil and could trade on the Chicago Board of Trade or China’s Dalian exchange. Dry weather has been affecting China’s northeast corn belt, although the government has record stocks. Reuters
IT firms face new horizons now tariffs lifted It is the first major tariff-cutting deal by the WTO in 18 years and analysts say it will benefit China’s IT producers
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hinese IT producers are expected to benefit from an upcoming expansion of a tariff elimination agreement, but analysts also warn cheaper imports could come as a blow. Members of the World Trade Organization (WTO) clinched a deal in Geneva on Friday to expand the Information Technology Agreement (ITA) struck in 1996, by eliminating tariffs on 201 IT products. New-generation semiconductors, GPS navigation systems, medical products which include magnetic resonance imaging (MRI) machines, machine tools for manufacturing printed circuits, telecommunications satellites and touch screens are covered in the new accord. WTO data showed annual trade of the 201 products is valued at more than US$1.3 trillion every year, accounting for roughly seven percent of total global trade. WTO Director-General Roberto Azevedo hailed the ITA expansion as “a landmark”, saying it will
create jobs, help boost GDP growth around the world and support lower prices across several sectors that use IT products. Friday’s agreement on ITA expansion cleared the way for negotiators to hammer out an implementation plan in Nairobi in December, when the WTO will hold its 10th ministerial conference. The new ITA is expected to enter into force on July 1, 2016.
Yao Jin’an, chairman of Shenzhenbased intelligent home service provider i-Tone, said many domestic firms rely heavily on imported semiconductors and rising prices squeeze their profit margins. A wide range of IT product components are included in the new agreement and tariff elimination will likely lower costs for Chinese manufacturers. “I hope the new deal will come to the rescue,” said Yao.
The inflow of key components will make it easier and cheaper for Chinese companies to access stateof-the-art technologies in the world, said He Weiwen, a researcher with the China WTO Research Institute. He predicted the market position of China’s competent IT companies, especially smartphone makers like Xiaomi, Huawei, ZTE with a global vision, will be further consolidated. However, analysts also warned that the updated ITA could come as “a double-edged sword” and hurt less competitive Chinese firms. Cheng Shuaihua, a board member of the Geneva-based International Centre for Trade and Sustainable Development, said the tariff expansion will cover many competitive items made in western countries. To cushion the impact, Liang Jia, an analyst with Citi Bank, said domestic firms need to hike expenditures on research and development, and increase the quality of their products, rather than resorting to an old solution of a price war. Xinhua
Business Daily | 11
July 28, 2015
Asia
Thai June exports tumble most since 2011 In June, exports to the U.S. slipped 0.1 per cent from a year earlier, while those to China dipped 0.8 per cent Orathai Sriring and Kitiphong Thaichareon
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hailand's exports tumbled more than expected in June, indicating the country's weaker currency is not yet helping fire up the country's traditional long-stalled growth engine. Exports, which equal more than 60 percent of the economy, dropped 7.87 percent in June from a year earlier, the Commerce Ministry said yesterday. That was the biggest drop since late 2011 and more than the 5.0 percent decline seen in a Reuters poll. Trade is the first of piece of June data. Others due this week are also expected to show Thailand continues to struggle to raise growth. The ministry maintains that exports
can expand 1.2 percent this year. The central bank sees a 1.5 percent fall. Exports fell in 2013 and 2014. Charnon Boonnuch, economist at Tisco Securities, said while June exports fell more than expected, "exchange rates will be a positive factor helping them in the second half." The baht has lost about 5.5 percent against the dollar this year. A weaker baht will help exports and provide more of a boost to the economy than a rate cut, Deputy Prime Minister Pridiyathorn Devakula said this month. In June, exports to the U.S. slipped 0.1 percent from a year earlier, while
ones to China were down 0.8 percent. Shipments to Japan were down 4.2 percent and to Europe by 7.1 percent.
Poor auto sector number
Shipments of key industrial goods fell 7.7 percent in June from a year earlier, with vehicles and parts down 17.7 percent. Imports in June slipped 0.21 percent from a year earlier, against the 7.7 percent fall in the poll. In May, imports collapsed 19.97 percent, their biggest fall on an annual basis since August 2009. Many of Thailand's imported materials are assembled into completed goods and shipped out again.
Imports of fuel fell 7.1 percent due to lower oil prices, and while those of capital goods rose 2.65 percent. The central bank next reviews monetary policy on August 5. Most economists expect no change in the policy rate, now 1.50 percent. The army took power in May 2014 to end political unrest but has been unable to revive Southeast Asia's second-largest economy. Growth last year was just 0.9 percent. Last month, the central bank cut its 2015 forecast to 3.0 percent from 3.8 percent, with a downside risk.
South Korea unveils plans to avert youth employment 'cliff' The unemployment rate among those aged between 15 and 29 rose to 10.1 percent for the first half of this year
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outh Korea said yesterday the government and major local industry associations have agreed to create some 200,000 jobs for young people until 2017, ahead of an expected temporary rise in job shortages. Big companies and public organisations are required by law to set the retirement age at 60 or older from next year whereas the number of people in their 20s is due to increase
sharply over the next several years, the finance ministry said. There is no legal retirement age in South Korea at present and the actual retirement age stood at 58 years as of 2014 among big companies, according to an analysis of collective bargaining agreements, a labour ministry official said. "Implementation of the compulsory retirement age next year is feared to lead
to an 'employment cliff' situation among the young people over the next three to four years," the finance ministry said in a statement, referring to a temporary but severe decline in employment. The finance ministry said the government aims to create some 40,000 new jobs mainly for young people until 2017, while private-sector organisations have agreed to try to offer some 160,000 more jobs than usual over the period.
Big manufacturing companies have been expanding more in countries with cheap labour than in South Korea, while the domestic services sector is not growing fast enough to absorb the still rising numbers of young people entering the workforce. "The college enrolment rate has been too high for a while in this country and this was a main source of the problem," said John Park,
Reuters
29, who is still looking for a job since graduating from a prestigious university in Seoul early this year. As employment opportunities grew scarcer, an increasing number of young South Koreans spend more time on the campus while preparing for employment or resort to taking up part-time work on extremely low wages. The unemployment rate among those aged between 15 and 29 rose to 10.1 percent for the first half of this year, the highest since the 1997/98 Asia financial crisis, from an average of 9.0 percent for the whole of last year. While the rate is much lower than in many other advanced countries, the continued rise in the rate in South Korea has been posing an additional threat to Asia's fourth-largest economy already faced with slowing growth. Reuters
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Asia
Pacific trade negotiators face high-wire act in Hawaii Workers’ rights in TPP countries, especially Vietnam, have been a key concern for U.S. Democratic lawmakers
This meeting will be extremely important to decide the fate of the TPP negotiations Akira Amari, Japanese Economy Minister New Zealand’s Prime Minister, John Key (L), U.S. Secretary of State, John Kerry (C) and Michael Froman (R), U.S. Trade Representative, in a TPP session
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acific Rim officials meet in Hawaii this week for talks that could make or break an ambitious trade deal that aims to boost growth and set common standards across a dozen economies ranging from the United States to Brunei. Trade ministers go into the talks, which run from July 28 to 31 on the island of Maui, with high hopes of a pact to conclude the TransPacific Partnership (TPP), the most sweeping trade deal in a generation and a legacy-defining achievement for U.S. President Barack Obama.
But although officials in Maui said the mood was optimistic, the toughest issues have been left until last, including monopoly periods for new life-saving medicines and preferential treatment for state-owned companies, besides more traditional issues such as allowing more competition in protected markets. “This meeting will be extremely important to decide the fate of the TPP negotiations,” Japanese Economy Minister Akira Amari told reporters on Friday. “I believe all the nations will come to the meeting with their strong
determination that it has to be the last one.” Canadian Trade Minister Ed Fast was more cautious, warning last week that there was a lot of hard work still to be done. Canada’s refusal so far to accept more dairy imports is a major sticking point in the talks, infuriating the United States as well as New Zealand, which has said it will not sign a deal that fails to open new dairy markets. Mexico, which buys half its imports from Canada and the United States and very few from other TPP countries, was also falling short in
opening its markets, a source close to the talks said. Failure to agree this week will endanger an already tight timeline to get a deal through the divided U.S. Congress this year, before the 2016 presidential campaign dominates the agenda. A six-week battle over U.S. legislation to streamline the passage of trade deals through Congress finally ended in late June, sparking a rush of negotiations to ready ministers to take the tough decisions needed to wrap up the talks. Tami Overby, senior vice president for Asia with the U.S. Chamber of Commerce, said it would be very difficult to keep the momentum going if ministers failed to reach agreement this week, although she added that she was optimistic of success. A U.S. official said talks would continue if there was no finalized agreement in Maui. Peruvian unions, however, recently filed a complaint with the U.S. Department of Labour, saying their government was falling short of standards in a 2009 U.S.-Peru trade deal, which, like the TPP, is supposed to ensure internationally-recognized labour benchmarks. Workers’ rights in TPP countries, especially Vietnam, have been a key concern for U.S. Democratic lawmakers, many of whom fear the trade deal will eliminate U.S. jobs partly because of lower labour standards overseas. Some trade diplomats from TPP nations doubted whether ministers could produce a detailed agreement by Friday. One option would be to reach an in-principle deal and then finalize details later, one official said.
Indonesia April-June FDI rises In April, Widodo’s administration simplified business tax arrangements, hoping the incentive would bring in more investment Nilufar Rizki and Gayatri Suroyo
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ndonesia’s foreign direct investment (FDI) grew at the fastest pace since 2013 on yearly basis in the second quarter - a bright spot in an otherwise weak economic outlook. Annual growth in Southeast Asia’s largest economy was only 4.71 percent in the first quarter, the slowest since 2009, and Bank Indonesia predicted second quarter growth to be just as weak as domestic consumption wanes and exports fall. Last year was an election year, which tended to reduce investment and consequently
its contribution to economic growth. But in April to June Indonesia recorded 92.2 trillion rupiah of realized FDI, the investment board said yesterday, up 18.2 percent from a year ago, and accelerating from 14 percent growth in the prior three months.
“Investment has kept on-going despite economic slowdown,” said Franky Sibarani, chief of the investment board. The FDI data, which excludes banking and the oil and gas sector, was reported in rupiah terms with an
exchange rate of 12,500 per dollar, 7 percent stronger than the current rate of around 13,450, which would reduce the FDI increase in dollar terms. David Sumual, Bank Central Asia’s economist in Jakarta, said previous reports of FDI had shown an uptick in rupiah terms when it actually contracted in dollar terms. But in the second quarter of this year, he said, the data looked more promising. “This looks like investment has actually risen, which is good because going forward, the only source of economic growth would be
Reuters
investment and government spending,” said Sumual, adding he expected positive results from President Joko Widodo’s multiple foreign trips to promote investment. Widodo said he wants to rely on foreign investment as a new economic growth engine to help achieve a target of 7 percent average annual economic growth in his presidential term, which ends in 2019. Indonesia’s investment board said the country needs 3,518 trillion rupiah (US$261.66 billion) of investment from both domestic and foreign sources to achieve that growth target. Malaysia was the biggest source of investment in the June quarter, expanding the network of telecommunications operator PT XL Axiata Tbk into 4G. The company is a subsidiary of Axiata Group Berhad. The transport and telecommunication, mining, and construction industries were the biggest recipients of FDI in the second quarter. Reuters
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Business Daily | 13
July 28, 2015
Asia
Asia hedge fund start-ups see record first half
Vietnam FDI inflows seen at US$12.3-13.3 bln
Nevertheless, choppy market conditions have made it difficult for many hedge funds to beat market indexes consistently
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sian hedge fund start-ups have had a bumper six months, raising a record US$5.3 billion in the first half of 2015, twice as much as in the same period last year, according to a survey. The amount raised in the first six months was roughly equivalent to the total sum raised in all of 2014, according to industry survey, highlighting the structural changes in the financial industry as more traders and bankers leave traditional financial institutions to set up their own shops. The spurt in start-ups has been fuelled by anchor investors and strategic backers that have helped these funds to lock away long-term capital. Overall, 25 new Asia-focused hedge funds were seeded, including the spinout of Graticule Asset Management from Fortress as well as a raft of new entrants, the AsiaHedge survey said. Despite the impressive headline capital raising numbers, hedge fund managers in Hong Kong were cautious about the overall capital raising environment and volatile markets, making long term calls a difficult task. “If you are below a particular assets-under-management size, many
institutional money managers typically ignore you even though it makes you faster and nimbler than the established guys,” said the chief investment officer of an Asia-focused hedge fund. Choppy market conditions have also made it difficult for many hedge funds to beat market indexes consistently, with the recent slump and spike in volatility in Chinese markets tipping many hedge funds into the red this year.
A broad Credit Suisse hedge fund index has returned about 2 percent in the first six months of the year. An MSCI index of Asian stocks exJapan is down nearly 3 percent so far this year. Macro strategy focused funds stole a march over other hedge fund strategy launches, garnering US$4.2 billion, according to the survey. Reuters
Canon cuts outlook
Exports rose at the fastest pace in five months in June due to a pick-up in sales of cars and electronics Leika Kihara
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KEY POINTS Nakaso warns of potential market volatility from Fed rate hike Japan export slowdown likely temporary, sees rebound ahead Inflation seen accelerating fairly quickly - Nakaso Adds renewed oil price falls good for Japan’s economy
Indian jeweller buys refiner Valcambi Indian jewellery firm Rajesh Exports Ltd said yesterday it has bought Valcambi, the world’s largest gold refining company, in an all-cash deal worth US$400 million as it looks to secure raw material supplies at competitive prices. After the acquisition, the world’s largest gold jewellery maker will expand capacity at it’s India-based refinery, Rajesh Mehta, the company’s chairman told Reuters. Rajesh Exports said in a statement it sealed the purchase after a global sales process conducted by Valcambi’s existing owners led by Newmont Mining Corp.
Bank of Japan’s official analyses exports risks
apanese policymakers must be mindful of the potential negative impact that China’s economic slowdown could have on Japanese exports, central bank Deputy Governor Hiroshi Nakaso said yesterday.
Vietnam could attract between US$6 billion and US$7 billion worth of foreign direct investment (FDI) in the second half of this year, bringing total 2015 FDI inflows to US$12.3 billion-US$13.3 billion, a major commercial bank said yesterday. Last year, Vietman attracted US$12.5 billion in foreign investment. Some US$6.3 billion of FDI had poured in in the first six months, Hanoi-based lender BIDV, country’s biggest partly private lender by assets, said in a report.
He also warned of the risk that an expected interest rate hike by the U.S. Federal Reserve could heighten global market volatility and hurt emerging markets vulnerable to capital outflows. While China’s economy is expected to stabilise on stimulus measures taken so far, its slowdown may be prolonged by the huge slack in output and the property market, he said. “Even if China’s economy maintained its growth rate, the main contribution would be from public investment, so the effect on Asian economies and Japan’s exports warrants due attention,” Nakaso told business leaders in Kumamoto, southern Japan. Still, Nakaso voiced confidence Japan’s economy can weather such global risks, and stressed that exports will emerge from the doldrums as global growth picks up. “The slowdown in exports and output are likely temporary,” he later told a news conference. Japan’s exports rose at the fastest pace in five months in June due to a pick-up in sales of cars and
electronics. Though shipments to China picked up, a private factory survey showed new domestic and export orders fell in July.
Japan benefits from weak oil
The BOJ trimmed its growth forecast this month as soft exports and output heightened the possibility of an economic contraction in the second quarter. It maintained its projection that inflation will hit its ambitious 2 percent target around the AprilSeptember first half of next fiscal year, signalling that it saw no need to expand monetary stimulus any time soon. Nakaso stuck to the BOJ’s upbeat view on prices, saying that while inflation will hover around zero this summer, it will accelerate at a “fairly quick pace” after that. Consumer inflation would have been 1 percentage point higher were it not for last year’s sharp oil price falls, he said, adding that the pressure from the oil rout will be the biggest this summer but dissipate thereafter. Reuters
Japan’s Canon Inc. cut its earnings outlook for the full year and reported a 16 percent fall in quarterly profit as consumers, increasingly in the habit of taking photos with their smartphones, bought fewer compact digital cameras. The world’s largest camera maker said yesterday its second-quarter net profit fell to 68 billion yen (US$552 million) compared with 81 billion yen a year earlier. Analysts on average expected 65 billion yen, according to Thomson Reuters data. The firm said it now expects full-year profit of 245 billion yen rather than the 255 billion it forecast three months ago.
Mitsubishi shifts car production The president of Mitsubishi Motors Corp said Japan, SouthEast Asia and Russia will become the automaker’s principal production hubs after it calls time on making cars in the United States later this year because of dwindling output there. “Japan, ASEAN (countries), and Russia will be the main points of production for our company,” said Tetsuro Aikawa, President and Chief Operating Officer of Japan’s sixth-biggest automaker. Aikawa was speaking at a news conference yesterday after his company confirmed plans to end output at its sole North American plant in U.S.
AirAsia to recapitalise Indonesia affiliate AirAsia CEO Tony Fernandes said yesterday the company will recapitalise its Indonesian affiliate so that the unit can meet a rule set by the country’s transport ministry. AirAsia Indonesia has submitted a plan to boost shareholders’ equity ahead of a month-end deadline, Fernandes said at a company event in Kuala Lumpur. “We’ve always said that we’re re-capitalizing the airline and we will. There’s not a second of worry that AirAsia Indonesia will close down because of equity regulations,” he said.
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July 28, 2015
International Mortgages drive pick-up in euro zone Bank lending across the euro zone improved further in June as home buyers dashed for cheap loans and brushed off uncertainty over Greece, European Central Bank data showed yesterday. The picture for credit in the bloc has been gradually improving since late 2014 after the ECB embarked on asset purchases, which it later expanded into a trillion euro plus programme that includes sovereign bonds. The quantitative easing scheme, designed to lift the economy, has fuelled demand in particular for assets that offer a high return and tend to rise in value along with inflation, such as property.
Teva to buy Allergan Teva Pharmaceutical Industries has agreed to buy Allergan Plc’s generic drugs business for US$40.5 billion in a deal that will turn Teva into one of the top 10 pharmaceutical companies. The acquisition should help Israel-based Teva, already the world’s largest generic drug maker, boost growth at a time its top drug, multiple sclerosis treatment Coxaprone, is facing competition. Allergan’s generic business is generally seen as a better fit than Teva’s previous target Mylan because it will improve Teva’s distribution channels and because Allergan is strong in so-called bio similar drugs.
UBS posts 2Q earnings above expectations UBS posted a bigger-than-expected jump in second-quarter profit on Monday and chief Sergio Ermotti said the Swiss bank had “good momentum” going into the second half of 2015. Zurich-based UBS published earnings for the three months to June 30 a day earlier than scheduled to counter “incorrect and misleading information” in a report about the results in Swiss weekly Sonntagszeitung on Sunday. The bank’s results showed net profit rose 53 percent on the year to 1.2 billion Swiss francs (US$1.25 billion), much more than the 3.2 percent rise forecast in a Reuters poll of analysts.
Foreign insurers cautious of Iran deal Western and Middle East insurance specialists see Iran as an appealing US$8 billion market in the wake of its nuclear deal with world powers, though uncertainty over when sanctions on Tehran will be lifted means they are treating the country with caution. Eight out of 11 insurance and reinsurance specialists who responded to questions emailed by Reuters this week said Iran was an attractive or very attractive market, especially in the marine and energy sectors. Responses were on an anonymous basis due to the sensitivity of the issue.
Foreign investment in Arab states drops Foreign direct investment into Arab states dropped 8.0 percent last year with the United Arab Emirates and Saudi Arabia attracting close to half the total funds, a report said. Arab states attracted FDI worth US$43.9 billion in 2014 compared with US$47.5 billion the previous year, the Kuwait-based Arab Investment and Export Credit Guarantee Corp said in its report. The figure is still way below the US$66.2 billion attracted in 2010 before the start of the Arab Spring uprisings in several countries.
German business morale brightens in July The morale among companies in the manufacturing and wholesaling sectors picked up but it took a turn for a worse among retailers and construction companies Michelle Martin
B
usiness confidence in Germany improved in July after two monthly drops as an agreement between Greece and its creditors for talks on a third bailout lifted the mood at firms in Europe’s largest economy. The Munich-based Ifo institute’s business climate index, based on a monthly survey of some 7,000 firms, rose to 108.0 from a revised 107.5 in June. That beat the Reuters consensus for a drop to 107.2 and sent the euro up to a two-week high against the dollar. The Greek crisis came to a head in early July, when the Greeks rejected a cash-for-reforms deal in a referendum, but the parliament in Athens has since agreed to reforms necessary for further aid. Hans-Werner Sinn, president of Ifo think tank, said the easing of that crisis had helped boost sentiment in Germany. Another supporting factor was the nuclear deal Iran reached with world powers, Ifo economist Klaus Wohlrabe said. Last week Germany and Iran pledged to re-establish economic ties in anticipation of Western economic sanctions against Tehran being lifted. The Ifo survey showed companies facing the future with brighter
expectations than last month and they also considered their current situation to be better. Some German companies have reported strong results of late, with Daimler’s second-quarter operating profit hitting a record high while sportswear company Puma sold more than expected during that period. German economic growth weakened to 0.3 percent at the start of this year and the finance ministry said
Fed policy meeting: is Yellen turning bullish? She said prospects are for more improvement in the second half of the year Paul Handley
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ullishness is not a word much associated with Janet Yellen since she became Federal Reserve chair 18 months ago, but that could change with the Fed’s next policy meeting. With a global focus on when the US central bank will begin raising interest rates after nearly seven years locked at zero percent, analysts will be looking for a shift in how the Yellen-led Federal Open Market Committee on Wednesday describes the US economy. No decision to raise rates is expected in the end-July FOMC meeting Tuesday and Wednesday. But the language of the policy statement could point to a date, which could be as early as September. Long seen as the key voice of caution over tightening monetary policy, the 68-year-old economist in recent weeks has sounded more confident in the US economy, even as she stated publicly the risks that could challenge growth.
In two separate statements this month, Yellen triggered surprise by sticking firmly to the view that the FOMC will decide on a rate rise before the end of the year. To many analysts, spotty US economic performance data -strong hiring but weaknesses in building, consumer spending and manufacturing -- combined with generally sluggish global economic activity justified holding off on the first rate increase in nine years.
Roots of growth
Some say the Fed should wait until early 2016 to be sure the roots of US growth reach deep. And indeed, in a speech on July 10 and then a policy statement to Congress on July 15, Yellen acknowledged that the weaknesses that have nagged at the FOMC for more than two years are still there.
last week that the economy would probably expand by around the same amount between April and June, with domestic demand propelling growth while foreign trade resurged. Jennifer McKeown, senior European economist at Capital Economics, said the Ifo survey showed the recovery was continuing despite Greece’s woes, albeit without gaining much momentum. Reuters
Even as the jobless rate has fallen, to 5.3 percent in July, the labour force participation rate is still extremely low at 62.6 percent; the level of part-time employment is high at 6.5 million people, two million more than before the crisis; and wage growth has remained stubbornly slow. “Too many people are not searching for a job but would likely do so if the labour market was stronger,” Yellen said. “And, although there are tentative signs that wage growth has picked up, it continues to be relatively subdued, consistent with other indications of slack.” Even so, she said, prospects are for more improvement in the second half of the year. The economy “also might snap back more quickly” than generally expected, she allowed. Amid constant market volatility over the question, Yellen has repeatedly stressed that the first rate hike is less important than how the Fed implements subsequent increases, which at this point are expected to be slow and small. Waiting until September will give the FOMC another two months’ data on employment -- July and August -and other issues, including inflation, needed to make a rate decision. Yet any signal given on Wednesday is likely to be less than absolute. “With the on-going possibility of further Greece or China induced market volatility, the FOMC likely wants to avoid a situation in which markets become too certain of a September hike,” said Barclays in a client note. AFP
Business Daily | 15
July 28, 2015
Opinion Business
wires
The return of the ugly German
Leading reports from Asia’s best business newspapers
Joschka Fischer
Germany’s foreign minister and vice chancellor from 1998 to 2005
THE ASAHI SHIMBUN In a bid to get foreign tourists to spend more, the economy ministry is developing a smartphone scanning system that provides product information in English and other languages. The ministry said it expects the project to start next year. It is being joined by 55 domestic retailers and manufacturers. The system under consideration will enable smartphone cameras to scan QR and other codes on a product or store shelf. The government is considering providing the information in other languages, such as Chinese and Korean.
PHILSTAR Banks further tightened their lending standards for commercial real estate loans in the second quarter, a year after the Bangko Sentral ng Pilipinas (BSP) introduced stricter rules on bank’s real estate exposure. Results of the second quarter 2015 Senior Bank Loan Officers’ Survey showed a net tightening of overall credit standards for commercial real estate loans for the 12th consecutive quarter. “The net tightening of overall credit standards for commercial real estate loans was attributed by respondent banks to perceived stricter oversight of banks’ real estate exposure along with banks’ reduced tolerance for risk,” the BSP said.
THE PHNOM PENH POST Continuing its efforts to address corruption issues in Cambodia, the Anti-Corruption Unit signed memorandums of understanding on Friday with a public sector company and a business association, pledging to work with these entities to prevent the use of corrupt practices in business dealings. The MoUs, signed with state-owned energy provider Electricite du Cambodge (EdC) and the European Chamber of Commerce, takes the Anti-Corruption Unit’s MoU tally to 20 local and international businesses. EdC’s agreement will look into purchasing activities and ensure they are lawful.
THE NEW ZEALAND HERALD A second real estate boss has backed a foreign buyers’ register, after support from Barfoot & Thompson’s Peter Thompson. Geoff Barnett, the New Zealand manager of international real estate agency Century 21 with 20 offices throughout New Zealand, said such a register made perfect sense. “I would not see it as a negative. We need statistics to help manage the country. “I don’t think it would change anything. I would not be out of favour of it. There would be mixed views throughout the industry, but not a not of negatives,” Barnett said.
D
uring the long night of negotiations over Greece on July 12-13, something fundamental to the European Union cracked. Since then, Europeans have been living in a different kind of EU. What changed that night was the Germany that Europeans have known since the end of World War II. On the surface, the negotiations were about averting a Greek exit from the eurozone (or “Grexit”) and the dire consequences that would follow for Greece and the monetary union. At a deeper level, however, what was at stake was the role in Europe of its most populous and economically most powerful country. Germany’s resurgence after World War II, and its reestablishment of the world’s trust (culminating in consent to German re-unification four and a half decades later), was built on sturdy domestic and foreign-policy pillars. At home, a stable democracy based on the rule of law quickly emerged. The economic success of Germany’s welfare state proved a model for Europe. And Germans’ willingness to face up to the Nazis’ crimes, without reservation, sustained a deep-rooted scepticism toward all things military. In terms of foreign policy, Germany rebuilt trust by embracing Western integration and Europeanization. The power at the centre of Europe should never again become a threat to the continent or itself. Thus, the Western Allies’ aim after 1945 – unlike after World War I – was not to isolate Germany and weaken it economically, but to protect it militarily and firmly embed it politically in the West. Indeed, Germany’s reconciliation with its archenemy, France, remains the foundation of today’s European Union, helping to incorporate
Germany into the common European market, with a view to the eventual political unification of Europe. But in today’s Germany, such ideas are considered hopelessly “Euro-romantic”; their time has passed. Where Europe is concerned, from now on Germany will primarily pursue its national interests, just like everybody else. But such thinking is based on a false premise. The path that Germany will pursue in the twenty-first century – toward a “European Germany” or a “German Europe” – has been the fundamental, historical question at the heart of German foreign policy for two centuries. And it was answered during that long night in Brussels, with German Europe prevailing over European Germany. This was a fateful decision for both Germany and Europe. One wonders whether Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble knew what they were doing. To dismiss the fierce criticism of Germany and its leading players that erupted after the diktat on Greece, as many Germans do, is to don rose-tinted glasses. Certainly, there was nonsensical propaganda about a Fourth Reich and asinine references to the Führer. But, at its core, the criticism articulates an astute awareness of Germany’s break with its entire post-WWII European policy. For the first time, Germany didn’t want more Europe; it wanted less. Germany’s stance on the night of July 12-13 announced its desire to transform the eurozone from a European project into a kind of sphere of influence. Merkel was forced to choose between Schäuble and France (and Italy). The issue was fundamental: Her finance minister wanted to compel a eurozone member to leave “voluntarily” by exerting
At its core, the criticism articulates an astute awareness of Germany’s break with its entire post-WWII European policy
massive pressure. Greece could either exit (in full knowledge of the disastrous consequences for the country and Europe) or accept a program that effectively makes it a European protectorate, without any hope of economic improvement. Greece is now subject to a cure – further austerity – that has not worked in the past and that was prescribed solely to address Germany’s domestic political needs. But the massive conflict with France and Italy, the eurozone’s second and third largest economies, is not over, because, for Schäuble, Grexit remains an option. By claiming that debt relief is
“legally” possible only outside the eurozone, he wants to turn the issue into the lever for bringing about a “voluntary” Grexit. Schäuble’s position has thrown into sharp relief the fundamental question of the relationship between Europe’s south and north, his approach threatens to stretch the eurozone to the breaking point. The belief that the euro can be used to bring about the economic “reeducation” of Europe’s south will prove a dangerous fallacy – and not just in Greece. As the French and Italians well know, such a view jeopardizes the entire European project, which has been built on diversity and solidarity. Germany has been the big winner of European unification, both economically and politically. Just compare Germany’s history in the first and second halves of the twentieth century. Bismarck’s unification of Germany in the nineteenth century occurred at the highwater mark of European nationalism. In German thinking, power became inextricably associated with nationalism and militarism. As a result, unlike France, Great Britain, or the United States, which legitimized their foreign policy in terms of a “civilizing mission,” Germany understood its power in terms of raw military force. The foundation of the second, unified German nation-state in 1989 was based on Germany’s irrevocable Western orientation and Europeanization. And the Europeanization of Germany’s politics filled – and still fills – the civilization gap embodied in German statehood. To allow this pillar to erode – or, worse, to tear it down – is a folly of the highest order. That is why, in the EU that emerged on the morning of July 13, Germany and Europe both stand to lose. Project Syndicate
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July 28, 2015
Closing S&P keeps Malaysia’s A- sovereign rating
China predicts 3 pct rise in 2015 power use
Standard & Poor’s Ratings yesterday kept Malaysia’s long-term foreign currency sovereign credit rating at A-, with a “stable” outlook, saying allegations of graft involving debt-laden state fund 1Malaysia Development Berhad (1MDB) will not impede policymaking. The agency also said it does not see the decline in energy prices affecting Malaysia’s long-term fiscal consolidation. “The country’s strong external position and fairly diverse economy can absorb some weakness in the oil and gas sector,” S&P said in a statement. The agency last revised lower Malaysia’s outlook in 2008 while the country’s rating has been kept at A- since 2003.
National Energy Administration (NEA) yesterday predicted that power use would rise 3 percent to 5.7 trillion kwh in 2015. “Judging from the economic indicators for the second quarter, the effect of growth-stabilizing policies has gradually emerged and energy demand will pick up in the latter half of the year,” NEA deputy head Liu Qi told a conference. In the first half of the year, China’s power use rose only 1.3 percent. China’s economic growth held steady at 7 percent in the first half of the year, with nascent signs of recovery fuelling hopes of growth picking up momentum in the latter half of the year.
Missiles to tourism seen in China-Turkey talks The number of Chinese visitors to Turkey in the first five months of this year rose 48 percent from a year earlier, to 106,000
S
ecurity issues are expected to overshadow trade when Chinese President Xi Jinping hosts his Turkish counterpart Recep Tayyip Erdogan on Wednesday, even though about 100 business people are
expected in the delegation. Trade between China and Turkey was US$28.6 billion last year, ranking China third behind Germany and Russia. Shipments were heavily in China’s favour, with US$24.9 billion of exports
to Turkey, mostly consisting of electronics, machinery, clothing and raw materials. The one-sided balance is built on Turkey’s need for technology and resources. The recent takeover of Tekstil Bankasi AS by Industrial & Commercial Bank of China Ltd., the world’s second-largest bank by market value, gives China an Istanbul-based financial arm to support commerce and a central-Asian asset to enhance Xi’s aim to boost international use of the yuan. China Merchants Group is among the bidders for a stake in Kumport, Turkey’s third-largest port. Fiba Holding owns 65 percent of the facility and units of the Oman finance ministry own the rest. Fiba’s billionaire founder Husnu Ozyegin will be in the delegation, according to Yuzer.
Purchasing power
Turkey’s US$800 billion gross domestic product last year ranked among the world’s top 20, just ahead of Saudi Arabia and Switzerland, though that’s less than a
President of Turkey Recep Tayyip Erdogan
10th of China’s US$10 trillion economy. The average Turkish citizen is richer than Chinese peers measured by purchasing power parity. Per-capita income in Turkey was US$19,600 last year, compared with US$12,900, according to estimates by the U.S. Central Intelligence Agency. Among Chinese companies, Huawei Technologies Co. uses its offices in Turkey as regional headquarters for 11 countries in Central Asia and the Caucasus. Haier Electronics Group sells products ranging from air conditioners to medical devices. Security is likely to overshadow business, though the biggest project at issue between the two countries -- a missile system -- is a mixture of the two. China is competing against the U.S. and a FrenchItalian partnership to supply Turkey’s military.
Missile defence
Turkey tentatively agreed in 2013 to buy a US$3.4 billion missile defence system from China Precision Machinery
India to carefully consider report on ‘black money’
China’s gold buying from HK drops to lowest in a year
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ndia’s Finance Minister Arun Jaitley said the government would take into account the impact on foreign investments should it act to prevent illegal funds or “black money” from flowing into the country through popular equity derivative products. The comments came after a Supreme Courtappointed panel said on Friday that India needed to take stronger measures to identify the owners of participatory notes (P-notes), or derivatives that track domestic equity markets. P-notes are popular with foreign funds, but regulators also suspect some of these flows are in reality illicit domestic money being repatriated back into India, taking advantage of looser registration standards for owners of these products. About 2.75 trillion rupees (US$42.9 billion) worth of P-notes were outstanding as of the end of June. India’s broader NSE index fell more than 1 percent yesterday and headed for its biggest daily decline since June 11, as investors were concerned government action against P-notes would also hit genuine foreign investments. Reuters
Import-Export Corp., but soon put off the deal amid intense pressure from fellow North Atlantic Treaty Organization members. Turkey has since said it’s considering alternatives to the HQ-9 surface-to-air missile system, including a U.S. Patriot system led by Raytheon Co. and another from French-Italian partnership Eurosam GIE, although the Chinese system is reported to be cheaper by at least US$1 billion.
Transport & tourism
Less controversial is Turkey’s use of Chinese rail technology. Locomotive maker CSR Corp. was the main foreign supplier for Turkey’s Ankara-Istanbul high-speed railway, and will likely be central to another project to link the nation’s east and west borders. Xi and Prime Minister Li Keqiang have been pushing rail technology in home-andaway meetings with leaders from Russia to India, Angola and Peru. Transport lines are a centrepiece of China’s effort to create a modern Silk Road through its so-called Belt-and-Road initiative. Meanwhile, Turkish efforts to lure more highspending Chinese tourists, which included easing visa requirements, took a hit this month after some businesses and tourists were targeted during some violent antiChinese protests in Istanbul, prompting the embassy in Turkey to issue a travel warning. Bloomberg News
Electric car sales accelerate in Beijing
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et gold imports from Hong Kong slumped to the lowest level in almost a year in a sign that demand in the world’s biggest consumer may be slowing. Purchases less sales sank to 22.1 metric tons in June from 67.9 tons in May and 36.4 tons a year earlier, according to data compiled by Bloomberg from the Hong Kong Census and Statistics Department. That’s the smallest since July 2014. Gold prices fell 1.5 percent in June as the U.S. Federal Reserve moved closer to raising borrowing costs for the first time since 2006. Higher rates cut the allure of bullion as the metal doesn’t pay interest or give returns like stocks and bonds. Swiss exports to China also sank in June, falling 26 percent from May. The start of the rout that wiped US$4 trillion from Chinese shares may have hurt demand and buyers were also concerned about prospects for more price declines. Bullion plunged the most in two years on July 20, sinking to the lowest since 2010, after the Chinese central bank announced it had purchased about 604 tons in the past six years, less than most analysts had anticipated, taking its holdings to 1,658 tons.
growing number of electric cars are running on the streets of Beijing as the Chinese capital battles air pollution that is partly caused by vehicle emissions. BAIC BJEV, which has a 66-percent of the electric vehicle market in Beijing, sold 6,223 electric cars in the first half of 2015. The company shifted 5,510 electric cars in the whole of last year. The government has made electric cars more appealing by offering subsidies. In the lotteries through which many Chinese cities allocate number plates, drivers also have a far better chance of getting a plate for an electric car than for a regular vehicle. One major electric vehicle store said customers need to wait a month after down payment to get the popular EV200 model. Tesla, which already has 10 stores in China, told Xinhua it would open at least one more before the end of this year. Regulators and carmakers are also pushing to build more charging stations for electric cars. BAIC is planning to build charging stations in SINOPEC petrol stations in Beijing. The charging process should take about three minutes, it said.
Bloomberg News
Xinhua