Macau Business Daily August 5, 2015

MOP 6.00

Airport passenger volume up 3.6 pct in July

Closing editor: Luís Gonçalves

Local gaming market is glass half-empty, says GMA

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John Au: Review tourism capacity amid gaming downturn

MGM China profit down 37 percent in 1H Page 7

Year IV

Number 850 Wednesday August 5, 2015

Publisher: Paulo A. Azevedo

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Financial Intelligence Office Clamping Down

Suspicious Transaction Reports. Macau’s gaming sector submitted 1,370 STRs last year. Representing 20 pct y-o-y increase due to the adoption of a new policy by casino operators. Due diligence and better control of funds transfers is highlighted by the Financial Intelligence Office in its 2014 annual report. The gaming sector accounted for over 75 pct of all suspicious transactions last year.

Chips conversion triggered most STRs

Name

%Day +4.70

China Life Insurance C

+3.44

Sino Land Co Ltd

+2.39

Belle International Ho

+2.04

Banks charging ahead

China Shenhua Energy

+1.93

Li & Fung Ltd

-1.01

PetroChina Co Ltd

-1.47

HSBC Holdings PLC

-1.55

Two foreign banks. With local operations performing better than the rest of the economy. Bank of East Asia’s net profit declined 6 pct y-o-y to HK$3.42 billion during the first half.

Meanwhile, Hang Seng Bank more than doubled its profit. Aided by the sale of its stake in Industrial Bank

Tingyi Cayman Islands

-2.96

China Mengniu Dairy C

-4.17

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Limiting short-selling China’s two stock exchanges. Both have announced new rules effectively restricting short-selling. A practice already at the centre of a regulatory and law enforcement investigation following a market rout

3

Source: Bloomberg

I SSN 2226-8294

In denial

Society wants answers. And so do legislators Ng Kuok Cheong and Au Kam San. The gov’t has a case to answer on its opaque land dealings, all say. A lack of grounds to proceed, says Legislative Assembly president Ho Iat Seng (pictured). Both parties cite the Basic Law

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Tourism www.macaubusinessdaily.com

August 4

China Resources Powe

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HSI - Movers

Short-haul shot in the arm Despite everything. Macau remains one of the most popular short-haul destinations for Mainland Chinese. According to a report commissioned by international tourism trade fair ITB Berlin. Macau Hoteliers and Innkeepers Association, however, says the hotel occupancy rate for August may still post 5-10 pct fall

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2 | Business Daily

August 5, 2015

Macau

Outbound Chinese still favour HK, Macau & luxury hotels More than half of Chinese outbound tourists choose to stay in luxury hotels when abroad. Last year, Macau and Hong Kong were the destinations for 65 per cent of the total foreign trips made by Mainland Chinese, an ITB Berlin report says Kam Leong

kamleong@macaubusinessdaily.com

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ith retail sales of luxury goods affected by China’s anti-graft policy, Chinese outbound tourists still preferred luxury hotels for their travels last year, the latest report commissioned by international tourism trade fair ITB Berlin says, which also suggests Macau and Hong Kong are still the most popular short-haul destinations for Mainland Chinese.

The report, conducted by tourism research firm IPK International and released on Monday, says the significant growth of the Chinese outbound tourism market in recent years has purely been generated by short-haul trips, of which the two Special Administrative Regions of the country are the leading destinations.

The firm cited official figures indicating a total of 105 million foreign trips

by Mainland Chinese were recorded last year, of which 41 million were day-trips of Southern Chinese travelling to Macau and Hong Kong.

In addition, 27.4 million of the remaining 64 million foreign trips with an overnight stay also included the two cities as their destinations, suggesting trips to the two Special Administrative Regions accounted for 65 per cent of the total outbound foreign trips in 2014, whilst the number of international trips amounted only to some 36.6 million.

Luxury hotels preferred

The research firm also noted that Chinese tourists’ choice of accommodation had experienced dramatic changes, claiming the proportion of Chinese staying in first- class hotels for their foreign trips has been increasing by 28 per cent annually since 2007, reaching 55 per cent of the total last year at the expense of budget hotels.

However, the report did not elaborate upon the definition of ‘luxury hotel’.

‘The proportion of Chinese with higher education and high income represents a customer segment for international trips that is growing much more

strongly than average. The increasing number of trips with children is also remarkable.

These have risen tenfold over the last seven years and now comprise one third of all foreign trips,’ it wrote.

Length of international trips halved

Claiming Chinese are more in favour of short-haul international trips, the researcher says ‘a dramatic reduction’ in the length of foreign trips drove growth in the number of nights Chinese spend aboard, underperforming the growth in the number of foreign trips, which increased by 27 per cent and 168 per cent from 2007 to 2014, respectively.

According to the report, the 36.6 million international trips, excluding trips to the two Special Administrative Regions, generated 171 million overnight stays last year. However, the average length of a foreign trip of Chinese outbound tourists halved to 5.5 nights in 2014, compared to 10 nights on average in 2007.

‘The reason for this is the explosive growth of 444 per cent in short international trips of up to three nights, which amounts to a 27 per cent increase per year. In general, the strong growth in the last seven years was purely due to short trips of up to one week, while the number of longer trips has actually declined,’ it said.

Primarily holiday trips

Meanwhile, 80 per cent of the international trips are holiday trips driven by the growth of city trips, tours and event visits, the report said.

In addition, business trips made by Chinese outbound tourists also increased by 5 per cent per year from 2007 to 2014, reaching 16 per cent of the total.

On the other hand, 68 per cent of the international trips that Chinese made were within Asia in the past seven years, while another 18 per cent of trips were to Europe, and 9 per cent to Australia or Oceania.

Despite 80 per cent of Chinese tourists taking flights

for their trips, the report noted that cruise trips had registered an ‘extremely high growth’ by soaring 1,300 per cent last year compared to 7 years ago. Nevertheless, this way of travelling accounted for only one per cent of the total.

The researcher also indicated that although Chinese outbound tourists use online bookings more often four out of five still tend to select packages offered by travel agents and tour operators online.

“Although experienced Chinese travellers are increasingly planning and travelling on an individual basis, the majority still overwhelmingly book through tour operators.

Security is the most important factor for the Chinese when planning their travel, and that is what package trips offer. Foreign languages and the lack of multilingual signs in destinations still comprise a barrier that can be overcome with tour guides,” said Martin Buck, the senior vice president of IBT Berlin organiser Messe Berlin.

Business Daily | 3

August 5, 2015

Macau Junket operator Jimei issues positive profit alert for H1, 2015 Jimei International Entertainment Group Ltd. told the Hong Kong Stock Exchange on Monday that it expected to record a profit for the six months ended June 30, as compared to the loss registered in the same period last year. The positive profit alert was issued ‘mainly attributable to the profit contributions from the group’s newly established gaming and entertainment business since February, 2015’, the filing noted. Jimei said in February that it had reached an arrangement deal with Australia’s Crown Perth for its junket patrons or players to conduct gaming at the Crown Perth Casino.

Gaming sector-related suspicious transaction reports up 20 pct in 2014 The Financial Intelligence Office said the increment was due to better control of funds transfers, and the continual improvement of anti-money laundering awareness Stephanie Lai

sw.lai@macaubusinessdaily.com

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acau's gaming sector submitted 1,370 suspicious transaction reports (STR) last year, representing about a 20 per cent year-on-year increase due to the adoption of a new policy by casino operators on customer due diligence and better control of funds transfers, the Financial Intelligence Office says in its 2014 annual report.

The Office received 1,812 suspicious transaction reports for the whole of last year, an increase of 14 per cent compared to 2013. Of the reports received, those from the gaming sector accounted for over 75 per cent.

‘The increment of STRs reflects the continual improvement of AML/CFT (anti-money laundering and counterfinancing of terrorism) awareness

among industries, in particular the gaming sector,’ Financial Intelligence Office remarked in the annual report.

Noting the 20.4 per cent increase seen in the number of STRs related to the gaming sector in 2014, the Office said it was due to the adoption of a new policy by several gaming concessionaires on customer due diligence as well as a better control of funds transfers.

Chips conversion with or without minimal gambling activities remained the most common trigger of gamingrelated suspicious transaction reports, of which the Office identified 766 last year.

But currency exchanges and cash conversion, which used to be a trigger for an STR related to the gaming

sector, has dropped out of the top ten common typologies identified by the Office last year (see table) as there have been more stringent controls of cash exchange activities, the report noted.

The Office also said the submission of STRs without identity details of subjects continued to decline in 2014, consistent with the tendency of the previous year.

Suspicious

The Office received 441 suspicious transaction reports from the finance sector last year, decreasing 3.5 per cent compared to 2013.

Of these reports received from the finance sector, ‘suspicious wire transfers’ and ‘use of cheques/ promissory notes/account transfer to transfer funds’ are the most common types of cases marked by the authorities for closer oversight.

1 2 3 4 5 6 7 8 9 10

During 2014, the Office submitted 163 STRs to the Public Prosecutor’s Office, an increase of 10.9 per cent vis-a-vis the 147 STRs submitted in 2013.

The rise was caused by the increased reporting of supplementary information to the Public Prosecutor’s Office, although the number of new cases reported to the prosecutor decreased moderately, the Office noted in the report.

For this year, the authorities will continue to work on the revision of the city's anti-money laundering law and the drafting of a special law on the implementation of freezing measures required under United Nations Security Council Resolution sanctions, the Financial Intelligence Office said of its antimoney laundering works in the report.

Top ten typologies of suspicious transaction reports (STRs) Typologies Chips conversion without/with minimal gambling activities Suspicious wire transfers Use of cheques/promissory notes/account transfer to transfer funds Suspected underground banking/alternative remittance services Unable to provide ID/important personal information Irregular large cash withdrawals Significant cash deposit with non-verifiable source of funds Suspected politically exposed person (PEP) related transaction Possible match with international watch-list or other black list Counterfeit currency

Source: Annual Report 2014 of Financial Intelligence Office

4 | Business Daily

August 5, 2015

Macau opinion

A good sign?

Industrial Bank stake sale boosts Hang Seng Bank profits

José I. Duarte Economist

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t is a piece of news that few have possibly noticed. It was likely overlooked by many of those who noticed it. The government has stated its intention to allow contracts with domestic workers to become automatically renewable. One may think, at first, that the fact is a relatively minor issue – which it is – and has, therefore, no relevance. There’s where I beg to disagree.

In general, allowing contracts with workers to be renewable, if that is what was agreed to start with and is congruent with the nature of the job, is the natural thing to do. It should not require any further administrative interference. In fact, the question one could raise is what is the need or the purpose of the existing system, under which the renewal has to be requested and justified again and again. As with any other administrative procedure, it should be clear what kind of good or interest, presumably public, is protected or promoted by it. The request of authorisation for continuation of the contract, addressed to and processed by the Office of Human Resources, fails that test.

Leaving the initial hiring aside, if a nonresident worker is involved, why would anyone have to ask that department for approval? Why would anyone have to justify, year after year, why he or she needed a domestic worker? The decision to hire – or continue to hire – a domestic worker, except under exceptional conditions, should be outside the remit of any public service. It is a matter of personal circumstances. That is hardly a subject where we would expect or want to see the government sticking its nose. These are private matters and choices where the administration should be kept at a healthy distance.

It also happens that is good for the economy. I, for one, am better at teaching and writing than at ironing and performing other domestic chores (or so I presume). My maid, or so I like to think, is comparatively better than me at those jobs. Economics showed it definitely some two centuries ago: the economy benefits (and we all do, actually) when each one of us concentrates on the things one does better. What better justification?

Ill conceived, that half-baked procedure achieved no more than asserting a meaningless power and annoying residents with a useless procedure, creating a pointless tension. That someone has, internally and at this juncture, asked the obvious – what is the use of this? – deserves to be noted; and then, presumably not getting any decent explanation, decided to change it, is something that we should salute. Maybe it is a good omen. Perchance common sense and a yearning for simplicity and transparency will lead other departments to ask the same question about their procedures and, hopefully, reach similar conclusions.

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he sale of its shareholding in Industrial Bank boosted profits of Hang Seng Bank during the first quarter of the year by HK$10.6 billion to HK$20 billion, the Hong Kong-based company announced in a filing with the Hong Kong Stock Exchange. According to the data, the bank more than doubled its profit in year-on-year terms during the first half of the year from HK$8.47 billion, which is a 136 per cent increase.

However, if the sale of the shareholding in Industrial Bank is excluded, profits of the bank still followed an upward trend increasing to HK$9.41 billion, representing an increase of 11.1 per cent from HK$8.47 billion.

In spite of the increased profits, Vice-Chairman and Chief Executive Rose Lee is expecting uncertainty ahead. Meanwhile the Pearl River Delta, which includes Macau where the bank has a branch, will be one of the regions the bank focuses on for the long-term.

“In a competitive market environment, the economic slowdown on the Mainland, ongoing uncertainty in the eurozone and the normalisation of monetary policy in the US will render operating conditions very challenging for the rest of the year”, Rose Lee said in the company report.

“We will continue to leverage our trusted brand and our competitive advantages as Hong Kong’s leading domestic bank to drive cross-border

business, particularly in the Yangtze River Delta and Pearl River Delta regions”.

In terms of profit by segment, the bank generated HK$5.45 billion (25.1 per cent) from retail banking and wealth management, HK$2.72 billion (12.5 per cent) from commercial banking, and HK$2.25 billion (10.4 per cent) from global banking and markets. The other segments, including the sale of the shares in Industrial Bank, resulted in HK$11.3 billion of the profit (52 per cent).

The Hang Seng Bank entered Macau in 2003 and is controlled by HSBC Group, which owns a 62.14 per cent interest in the Hong Kongbased bank.

Bank of East Asia profit declines 6 pct in first half

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he net profit of Bank East of Asia went down 6 per cent year-on-year to HK$3.42 billion during the first half of this year from HK$3.63 during the first half of 2014, the bank announced in a filing with the Hong Kong Stock Exchange.

During the same period the net interest income of the group also decreased by HK$62 million, representing 1 per cent, to HK$6.19 billion from around HK$6.25 billion,

due to the ‘narrowing of net interest margins’.

Total deposits of customers increased 0.6 per cent to HK$551.4 billion in comparison to the balance at the end of 2014. Savings deposits also went up by 6.2 per cent to HK$107.1 billion. In the opposite direction, time deposits declined 3.5 per cent by HK$13.4 billion in comparison to the end of 2014.

In relation to the future, the bank, also represented in Macau, will target

the Mainland market as its priority.

‘The Mainland will remain a clear strategic investment priority and a principal engine of growth for BEA [Bank of East Asia] in the long run although the Chinese economy is experiencing short-term adjustments’, the report says. ‘BEA will also enhance its product range to meet the demands of high net worth and corporate clients in China seeking to expand their businesses in Hong Kong and overseas’.

Business Daily | 5

August 5, 2015

Macau

Hearing motion denied on idle land, legislators appeal Legislative Assembly President Ho Iat Seng denied legislators Ng Kuok Cheong and Au Kam San’s request to summon persons concerned to testify or give evidence on the growing idle land controversy Joanne Kuai

joannekuai@macaubusinessdaily.com

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egislators Ng Kuok Cheong and Au Kam San recently submitted a request to the Legislative Assembly to set up a special committee on how the government is handling the issue of idle land. They demanded details of all 113 plots of land and proposed summoning persons concerned to testify or give evidence to the Legislative Assembly (AL).

However, the request made on July 15 - was denied

by Legislative Assembly president Ho Iat Seng. In a letter dated July 30, he said the requests made by the legislators lacks [sufficient] grounds to use such rights according to the Basic Law or the Rules of Procedure of the Legislative Council.

On Monday, Mr. Ng and Mr. Au submitted another appeal to justify their motion on the hearing. They argue that they have received many complaints from Macau residents, and should be able to exercise their power and functions as the city’s lawmakers.

Concerns

The legislators said that when the government decided to ‘let go’ the 16 plots of land once deemed reclaimable from 48 plots, society voiced many concerns.

Even when the government released relevant information about the 16 plots, the public was still not given the standards determining what land could be reclaimed. The public has demanded detailed

information on the idle plots of land, including 65 that the government says cannot be reclaimed and 48 that the government had targeted taking back.

Hoteliers' association: August hotel occupancy rate could fall 5-10 pct Despite discounted room rates, the hotel occupancy rate for August may still post 5-10 pct fall, Macau Hoteliers and Innkeepers Association said

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he city will see continual improvement in the hotel occupancy rate in August, although the rate could still show a year-on-year drop of 5 to 10 per cent in this peak travel month, Macau Hoteliers and Innkeepers Association forecast.

This, according to trade chamber president Chan Chi Kit in speaking to Chinese-language media outlet Macao Daily News, which cited him as saying that the increased hotel room inventory accounted for the expected fall in occupancy rate.

In August last year, when the city had 27,900 rooms in hotels and guesthouses in operation, the occupancy rate hit a high 90.1 per cent, led by 5-star hotels at 91 per cent and 4-star properties at 92.3 per cent, the Statistics and Census Service data shows.

Mr. Chan also noted that the average occupancy rate for the city's 3-star to 5-star hotels exceeded 80 per cent from mid-July to the present.

In July last year the occupancy rate of 3-star to 5-star hotels exceeded 84 per cent, data from the Statistics and Census Service indicates.

Summer

By the end of June this year, there were a total of 29,900 rooms from the 102

hotels and guesthouses in operation, representing a year-on-year increase of 7.2 per cent. The growth has been led by more 5-star and 4-star hotel rooms available in the market, the data from the census Service shows.

Macau has seen new additions to its hotel room inventory following the opening of Galaxy Macau Phase II on May 27. The new hotel complexes at the casino-resort site include the 1,000-plus rooms and suites at JW Marriott Hotel Macau, and over 250 suites at the Ritz-Carlton Macau, and 320 hotel rooms at Broadway Macau.

The president of the hoteliers' association remarked that full bookings for hotel rooms here may not be seen in August, as many clients immediately move on when they do not see their desired room rate for staying here over weekends.

Mr. Chan was also quoted as saying that the average hotel room rate for summer this year shows a year-onyear drop of 15 per cent to 20 per cent, as the casino operators here have continued to offer discount packages for attracting guests. The average room rate of 3-star to 5-star hotels here was MOP1,611.5 (US$206) in August last year, and that of a 5-star even reached MOP1,902, according to data from Macau Hotel Association.

S.L.

The legislators pointed out that according to the Basic Law of Macau Article 71, the Legislative Council shall exercise their rights when ‘to receive and handle

complaints from Macau residents’ (item 6) and that they have the power ‘to summon, as required when exercising the above mentioned powers and functions, persons concerned to testify or give evidence’ (item 8).

Last month, Au Kam San pointed out that according to AL records of the 48 plots of idle land 12 were located on Macau Peninsula and 36 on Taipa or Coloane.

However, the government’s latest claim indicates that 14 are on Macau Peninsula and 34 on the islands. The legislator questions if the government has changed the information of related plots, secretly substituting one plot for another and cheating the public.

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August 5, 2015

Macau

John Au: Review tourism capacity amid gaming downturn

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he director of business development of Galaxy Entertainment Group Ltd. (GEG), John Au, perceives that the city’s gaming industry is not shrinking despite gaming revenues having continuously dropped. In addition, he agrees that it is now good timing for the Special Administrative Region to review its tourism capacity.

Mr. Au, who is also the director of operations of Broadway Macau, said in an interview with Chineselanguage newspaper Hong Kong Economic Times that the city should add more nongaming elements in order to attract more tourists, in addition to reviewing its tourism capacity and the affordability of infrastructure to enhance its tourism competitiveness.

“Have the customers already found Macau boring?

We think that the city needs an adjustment period… We don’t think it’s healthy to attract tourists coming here by solely gaming elements,” he told the newspaper.

Meanwhile, although the city’s gaming revenues have been dropping for 14 consecutive months, the GEG business development director indicated that the

downturn in revenues does not mean the industry is also dwindling.

Ups and Downs

“Every industry has its highs and lows. Especially since [the economy] of Macau has been rapidly surging for the last 8 to 10 years; it’s impossible for it to continue posting growth of some 20 per cent and 40 per cent [in gaming revenues],”

the newspaper quoted the Galaxy executive as saying.

Nevertheless, the gaming executive stressed that Galaxy still emphasises its gaming business, claiming the company is trying to seek a balance between gaming and non-gaming elements.

According to Mr. Au, the completion of Galaxy Phase II and Broadway Macau had enlarged the gaming

operator’s total size of nongaming elements to 95 per cent of the total.

In addition, the gaming executive deduced that the change in the local gaming market was also driven by the changes in the type of tourists.

Mr. Au indicated that the rapid growth in the Chinese economy and its gross domestic product per capita had cultivated a new group

of middle-class customers seeking recreation in Macau.

However, at the same time, nearby countries such as Singapore, South Korea and Malaysia are attracting some of the city’s high-rollers, Mr. Au said, who believes the number of high-rollers tend to grow in the opposite direction of the new middle-class tourists and family visitors.

K.L.

Local gaming market a glass half-empty Global Market Advisors (GMA) consultant Jonathan Galaviz is pessimistic about the market but believes the opening of Wynn Palace in March next year will herald recovery

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he Chinese stock market volatility and the macroeconomic situation on the Mainland are among the factors influencing the gaming market that have made Global Market Advisors (GMA) consultant Jonathan Galaviz say that Macau is a glass half-empty for the time being. GMA is a consultant firm specialising in the casino gaming, hospitality and airline industries.

“We see some volatility coming out because of the recent stock market volatility, the macroeconomic situation in Mainland China and some regulatory issues that are occurring in Macau related to a smoking ban proposal and other elements”, Jonathan Galaviz said in an interview

with American Broadcaster CNBC. “If you take all these factors together I think you tend to have a view that the glass is half-empty at this point”, he added.

Galaviz also rejects the idea that the decrease in gaming revenue could be associated with the fact that some gamblers may be tired of coming to Macau, as put forward by some gaming analysts.

“There are some analysts coming out with analysis around the edges… Some analysts are looking at what I would call minimal factors that contribute to the overall macroeconomic environment in Macau”, he said.

“But if we take a look from a very

Corporate Wynn Resorts makes donation to University of Macau Wynn Macau believes that there is no commitment more valuable and inspiring than education and the preparation of young people for a successful life in a changing world. As one of its most far-reaching corporate social responsibility initiatives, Wynn Macau sponsors annual scholarships and donations to local schools and

universities in a bid to accelerate the nurturing of local talent. Therefore, to support the long-term development of the University of Macau (UM) and its Asia-Pacific Academy of Economics and Management (APAEM), Wynn Resorts (Macau) S.A. recently donated MOP 80 million to the University of Macau Development Foundation (UMDF).

high level, ultimately Macau’s situation is a function of public policy, government relations and activity coming out of Beijing”.

Pessimistic

Earlier this week, the Gaming Inspection and Co-ordination Bureau of the Macau Government revealed that during July gaming revenues went down 34.5 year-on-year to MOP18.6 billion from MOP28.4 billion.

A fter fo u r teen m o n t h s o f consecutive decline, some analysts believe that the market can recover with the opening of Melco Crown’s Studio City integrated resort. The date of the opening of this project

will be announced today but it is expected to be operational in the third quarter of this year. However, the consultant from Global Market Advisors predicts that recovery will happen with the opening in March 2016 of Wynn Palace.

“I’m still pessimistic about the Macau gaming market and I don’t see any real indicators showing that any significant upswing should be expected in the second half of 2015.

I could be wrong on that but that is my projection. However, I think that in the first quarter of 2016 the major inflection point is going to be Wynn’s new property opening up in Macau”, he stated.

J.S.F.

Business Daily | 7

August 5, 2015

Macau MGM China profit Airport passenger volume up 3.6 pct in July down 36.8 pct in first half of the year

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GMChinaannounced yesterday a profit (adjusted EBITDA) of HK$2.4 billion regarding the first half of the year.

That’s a 36.8 per cent drop compared to the same period in 2014 (HK$3.8 billion). The gaming operator recorded total gaming revenues of HK$9.2 billion, a decline of 33 per cent, but still better than the overall Macau market (a 37 per cent fall).

In a statement, Grant Bowie, Chief Executive Officer and Executive Director of MGM China, said: “MGM China continues to compete with a focus on precision of marketing efforts, high quality offerings and best in class service standards. Our implementation of targeted marketing initiatives is expected to drive existing customer share of wallet while seeking opportunity for new player acquisition.

Expanding and yielding the database are always our key priorities.

During the six-month period, revenues from the mass floor dropped 19 per cent, while slots generated 26 per cent less revenues. VIP gains were down 46 per cent.

The operator noted that despite the opening of a new property by one of its competitors (Galaxy) MGM’s market share in Macau in June actually increased over April and May. In the second quarter, the profit margin (adjusted EBITDA margin) was 26.6 per cent, a 30 basis points sequential improvement compared to the first quarter.

Still, regarding the second quarter, mass revenues declined by 5 per cent from the previous quarter - still better than the overall market here (decline of 7.5 per cent ).

VIP revenues were down 21 per cent against a 17 per cent decrease of local market. ‘As a result, we shifted tables to the main floor which has a higher margin’, MGM China said.

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he city’s local airport posted a year-on-year increase of 3.6 per cent last month for passenger volume, while aircraft movements jumped 10.7 per cent compared to the same period last year, the airport operator Macau International Airport Company Ltd (CAM) announced yesterday.

Last month, the local airport welcomed more than 510,000 passengers and managed over 4,800 aircraft movements, according to CAM.

The notable jump in aircraft movements was due to some airlines increasing flight frequency for the summer holidays, as well as offering more seasonal charter flights.

The airport operator indicated that Macau-East Asia routes had dominated the overall market last month, as 40 per cent of total passengers boarded flights connecting the city to East Asian countries, such as Japan.

Meanwhile, passengers travelling between the city and Mainland China, as well as Taiwan, accounted for 34 per cent and 26 per cent of the total passenger volume, respectively.

In addition, the airport operator revealed that Jetstar Parcific Airline is planning to launch a new route between the Special Administrative Region and Hai Phong in Vietnam, in addition to a new Macau-Ho Chi Minh route announced last month.

K.L.

8 | Business Daily

August 5, 2015

Greater China

Authorities

Fund managers say that holdings, they are inadve Nathaniel Taplin and Saikat Chatterjee

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hina stepped up its crackdown on short-selling of shares yesterday, unveiling rules that make it harder for speculators to profit from hourly price changes, as some of the nation’s major brokerages suspended their shortselling businesses.

China’s stock exchanges and market watchdogs are cracking down on short-selling as part of a broad government-orchestrated effort to prevent a collapse in the country’s markets, which have lost about 30 percent of their value since peaking in June.

The sell-off, which followed a dizzying rally, has shattered investor confidence in Chinese stocks and shaken the faith of some foreign investors in the ability of the ruling Communist Party to maintain stability of the financial system.

The Shanghai and Shenzhen exchanges said in separate statements on Monday night that new rules, effective immediately, banned traders from borrowing and repaying stocks on the same day - a step that raises risks for short-sellers.

Yesterday, as the markets regained ground, major brokerages Citic Securities and Huatai Securities said they would temporarily halt their short-selling services. They

Six stimuli options for fighting sluggish economy After months of monetary easing, China’s economy is still growing at its slowest pace in 25 years with little sign of an immediate turnaround

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hat spells more stimulus from policy makers, and unlike many of its peers, China holds significant firepower that it could unleash to boost the world’s second-largest economy.

The central bank has room to cut interest rates further and has an ever-expanding tool kit to stoke demand. The country’s US$3.69 trillion of foreign-exchange reserves and relatively low national government debt levels mean it has the ammunition for fiscal stimulus.

Here are some of the options China can choose from:

1. Rate cuts:

The People’s Bank of China (PBOC) has cut its benchmark lending rate to a record low after reducing interest rates four times since the start of November. They have room to move further. The PBOC’s one-year deposit rate is at 2 percent and one-year lending rate is 4.85 percent, compared with near-zero benchmark rates in the U.S. and Europe.

It could also pump liquidity

into the money markets in order to push down interbank lending rates. The 7-day repo rate, the benchmark rate of interbank funds, has fallen to less than 2.5 percent from 3.5 percent in mid-June.

2. Required-reserve-ratio cuts:

The PBOC has significant room to lower required reserve ratios on banks to encourage lending. Even after a series of cuts, the RRR remains at 18.5 percent for major banks, among the world’s highest.

Reducing the ratio by 10 percentage points would free up 13 trillion yuan (US$2.1 trillion) of additional capacity for banks to lend, according to Bloomberg estimates.

3. Direct lending:

China has been experimenting with targeted lending efforts since last year when the central bank extended 1 trillion yuan in lending support to China Development Bank Corp., or CDB, to fund the clearing of shanty towns.

In recent weeks the PBOC has injected capital into the so-called policy banks to stoke lending. The central

bank has put US$48 billion into CDB, people familiar with the matter said last month. Export-Import Bank of China got US$45 billion, and 100 billion yuan from the Ministry of Finance went to the Agricultural Development Bank of China, Caixin magazine reported.

4. Weaken the yuan:

Oxford Economics estimates that a currency depreciation of 10 percent to 15 percent would be needed to return monetary conditions to where they were six to 12 months ago. The yuan is up about

13 percent on a real trade weighted basis over the past year.

The challenge for China is that it wants the yuan to be accepted by the International Monetary Fund into its basket of reserve currencies, so it must avoid intervening too aggressively. A weakening currency could also trigger capital outflows.

5. Buyer of last resort:

If push comes to shove, the PBOC could buy local or central government debt directly, just like some developed-economy central

banks have done since the global financial crisis. China’s central bank already plays a role in keeping credit flowing to cash-strapped local governments by accepting collateral from banks in return for fresh money that can be used for new borrowing.

But China’s total debt, including companies, household and governments is at 282 percent of GDP, according to McKinsey Global Institute, meaning this is an option policy makers may not want to take in a hurry.

6. Fiscal spend:

China’s government could ramp up infrastructure spending on everything from underground urban pipes to new ports and roads. It’s unlikely the government would unleash the scale of stimulus that it did after the 2008 financial crisis, but a still-strong central government balance sheet means authorities have wriggle room. The Communist Party’s Politburo pledged last week to make “pre-emptive” policy adjustments in the second half.

Bloomberg News

Business Daily | 9

August 5, 2015

Greater China

corner short-selling

Commerce ministry: Pork price surge not due to shortages

denying investors tools with which they hedge their share ertently encouraging them to sell those stocks

KEY POINTS Shanghai and Shenzhen exchanges unveil short-selling rules New rules prevent borrowing and repaying shares on same day Market regulator focusing on hedge fund strategies State margin lender injects massive funds

The CSI300 index of blue chip Shanghai and Shenzhen stocks rose 1.2 percent at the end of the morning session. The Shanghai Composite Index gained 1.3 percent to 3,671.49 points - still well off the 4,500 target set by Beijing as its benchmark for a return of market confidence.

The China Securities Regulatory Commission (CSRC) has declared war on “malicious” short-sellers and is also scrutinizing the use of automated trading strategies favoured by hedge funds to profit from market volatility.

On Monday, it froze a trading account linked to Citadel Securities, a unit of the U.S. group that also owns hedge fund Citadel LLC - the first time in the crackdown that a foreign firm confirmed one of its Chinese accounts had been suspended.

Citadel said it complied with all local laws and regulations.

Crackdown risks backfiring

were joined by smaller rival Great Wall Securities.

“In order to comply with urgent changes in exchange rules and control business risks, as of today we are temporarily halting our short selling business,” Citic said in a statement.

“This is apparently aimed at increasing the cost of shorting and easing selling pressure on the market,” Samuel Chien, a partner of Shanghai-based hedge fund manager BoomTrend Investment Management Co, said about the new rules.

He added, though, that shortselling was already difficult, referring to other efforts to limit the practice.

Apart from Citic, other brokerages have limited short-selling.

Many fund managers say the campaign against shorting has decayed into a general crackdown on risk management strategies, which could backfire.

“In recent days we have been often asked by mainland regulators not to hold short positions in index futures,” said a Chinese derivatives trader at a European bank in Hong Kong.

He said regulators insisted these short positions be closed even if they were covered by corresponding long positions.

“If we tell them that if we do that, we will have to sell our cash holdings, thus exacerbating the very volatility they want to prevent, they don’t seem to understand.”

The CSRC did not immediately respond to a request for comment.

China’s state margin-lending agency, tasked with stabilizing the stock market, has injected 200 billion yuan (US$32.21 billion) since July into five newly launched mutual funds, the official China Securities Journal said yesterday.

The China Securities Finance Corp is also managing a 120 billion yuan bailout fund formed by 21 brokerages, and last month provided 260 billion yuan in credit lines to brokerages to help them buy stocks via proprietary trading.

Reuters

New bond program planning for construction stimulus China Development Bank Corp. and the Agricultural Development Bank of China will issue bonds to fund construction

C

hina is planning at least 1 trillion yuan (US$161 billion) in bonds, and potentially a multiple of that, to fund construction projects that can help address a struggling economy, according to people familiar with the matter.

Unlike the previous leadership’s reliance on a record surge in local government debt to fund the post2008 stimulus, President Xi Jinping and Premier Li Keqiang’s team will use arms of the central government to raise the money. Local authorities are in the midst of a restructuring of their debt, and their constricted financing has seen infrastructure spending slow.

The construction-bond program is taking shape amid fresh signs that growth is running at less than an official target of about 7 percent for this year. A weakening in manufacturing could be countered by some of the infrastructure projects now envisioned, including shanty town redevelopment.

“We believe the government is preparing a large fiscal stimulus package, without which the economy

could be heading for a hard landing worse than that experienced in 2008,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, who previously served as a consultant to the central bank, wrote in a note on Monday.

China Development Bank Corp. and the Agricultural Development Bank of China, which are referred to as policy banks because they carry out government objectives, will issue bonds to fund construction, the people said, asking not to be identified because they weren’t authorized to speak publicly about the plan. The Postal Savings Bank of China will buy the debt, aided by liquidity from the central bank, according to one of the people.

Interest payments

Reuters previously reported the construction-bond plans. A faxed request for comment to the People’s Bank of China wasn’t responded to.

The central government will subsidize most of the interest on the securities, the people said.

The roundabout means of financing underscores China’s

continued reticence to sell central government bonds to finance spending. The strategy helps keep China’s official debt-to-gross domestic product ratio low, while adding to the burden of the central bank. The PBOC has already been tapped to help with a stock-market bailout to address the equities rout and the restructuring of localauthority borrowing.

Four interest-rate cuts by the PBOC since the start of November, along with reductions to commercial banks’ required reserve ratios, have yet to bolster industries contending with a property-market slowdown.

Manufacturing purchasing manager indexes in recent days showed slippage in July.

“Traditional tools are proving to be not so effective,” Huang Wentao, a Beijing-based analyst at China Securities Co., wrote in a note yesterday. “Commercial banks are reluctant to lend, so policy banks will have to play the role. The arrangement of targeted issuance is aimed at alleviating pressure on the bond market.”

Bloomberg News

The recent surge in pork prices in China is not a result of shortages on the market but represents a natural rebound following a two-year decline that began in 2013, the country’s commerce ministry said yesterday. “Overall, this round of pork price rises represents a recovery following a decline of more than two years, and is a kind of self-recovery by the market,” the Ministry of Commerce said in a statement. Live hog and pork prices began to recover in March this year.

Import growth to remain sluggish China’s import growth is likely to remain at a low level, the Commerce Ministry said yesterday. Shen Danyang, the ministry’s spokesman, made the comment at a regular briefing but he did not give an exact timeframe. China’s export sales unexpectedly rose for the first time in four months in June and imports fell again but posted their best performance this year, causing some optimism that tepid trade flows.

State margin lender injects US$32 bln into new mutual funds China Securities Finance Corp, the state margin lender tasked with stabilizing the stock market, has injected 200 billion yuan (US$32.21 billion) since July into five newly-launched mutual funds, the official China Securities Journal reported yesterday. The five funds, managed respectively by China Asset Management Co, Harvest Fund Management Co, China Southern Asset Management Co, China Merchants Fund Management Co and E Fund Management Co, each raised 40 billion yuan from CSFC, according to the newspaper.

First Heavy chairman commits suicide amid anti-graft probe The chairman of China First Heavy Industries committed suicide while the heavy machine maker was under investigation by the country’s anti-graft watchdog, the official Xinhua news agency said yesterday. Wu Fusheng, 51, was found hanging in his office in Qiqihar city in the north-eastern province of Heilongjiang around midnight on Sunday, the news agency said, citing police. First Heavy announced Wu’s “sudden death” in a brief statement to the Shanghai Stock Exchange on Monday, without providing details. The Communist Party’s graft watchdog sent inspectors to First Heavy’s parent company on July 6.

China-Australia FTA to create local jobs The Chinese Ministry of Commerce (MOC) said the China-Australia Free Trade Agreement (FTA) will create, not take, jobs in Australia. MOC spokesman Shen Danyang said in a news conference yesterday that increasing Chinese investment following the FTA will help improve transport, telecommunication, tourism, environment, electricity infrastructures in Australia. “Chinese investment will not take local jobs. Rather, it will create more,” said Shen. He made the remarks after Australian media reported that thousands of union workers rallied in Sydney last week against the FTA, which would threaten their jobs.

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Asia

India’s central bank keeps policy steady The benefits for the broader economy have been limited because of commercial banks’ reluctance to lower their lending rates Suvashree Choudhury and Rafael Nam

KEY POINTS RBI says policy stance will be ‘accommodative’ Watching inflation, bank lending rates, reforms, Fed RBI decision. The broader NSE index was down 0.5 percent.

Inflation risks broadly balanced”

I

ndia’s central bank kept its policy rate on hold at 7.25 percent yesterday, as widely expected, while leaving the door open to ease further depending on the inflation outlook and how swiftly banks lower their lending rates.

The Reserve Bank of India (RBI) also said government economic reforms and the timing of any increase in U.S. interest rates would be key factors that will determine whether the central bank cuts rates for a fourth time this year.

“It is prudent to keep the policy rate unchanged at the current juncture while maintaining the accommodative

stance of the monetary policy,” the RBI said in its statement.

“As the Reserve Bank awaits greater transmission of its frontloaded past actions, it will monitor developments for emerging room for accommodation.”

The next policy review is set for September 29. Any increase in U.S. rates decided at a Federal Reserve meeting earlier that month is expected to suck money out of emerging markets.

The RBI has reduced its policy rate by three-quarters of a percentage point since embarking on an easing cycle in January. The last cut lowered the repo rate to 7.25 percent on June 2.

Whereas the decision to leave rates unchanged this time was widely expected, economists polled by Reuters before the review were evenly split over chances for reduction by the end of the year.

“Unlike the last policy, where they sounded very hawkish and the market construed it as the end of the cutting cycle, this was clear affirmation they are not at the end and they would look for an opportunity to give growth a boost,” said Abheek Barua, chief economist of HDFC Bank in New Delhi.

India’s benchmark 10-year bond yield was largely unchanged after the

Higher food prices pushed India’s annualised consumer inflation up to an eight month high of 5.4 percent in June, nearing the RBI’s target of 6 percent by January.

The RBI said risks to its January target were “broadly balanced”, a change from its statement on June 2 when it said risks “were tilted to the upside.”

It also noted “a sustained hardening” of inflation outside of food and fuel was “most worrisome”, and households’ near-term inflation expectations had returned to double digits.

The RBI said the outlook for economic growth was “improving gradually” and maintained its 7.6 percent target for 2015-16.

South Korean prices fuel deflationary pressure As consumers refrained from outside activity, such as leisure and shopping, due to MERS outbreak

S

outh Korea’s consumer price inflation stayed at a zero-percent level for eight months in a row, boosting worries that the economy may fall into deflation amid an economic slump.

Consumer prices rose 0.7 percent in July from a year earlier, posting an identical increase with the previous month, according to Statistics Korea.

The headline inflation fell below 1 percent in December 2014 and declined to 0.4 percent in March before gaining to 0.5 percent in May and 0.7 percent in June and July.

The prolonged trend of low inflation bolstered concerns over a possible slip into deflation, or a negative headline inflation along with an economic downturn.

After the outbreak of Middle East Respiratory Syndrome (MERS), Bank of Korea (BOK) lowered its policy rate by a quarter percentage point to an all-

time low of 1.5 percent in June. The finance ministry unveiled a supplementary budget plan worth about 11.6 trillion won (US$1 billion) for the second half.

The MERS contagion fears led the economy to weaken further, with the real GDP in

the second quarter growing 0.3 percent compared with the previous quarter.

The economic slowdown put a downward pressure on the demand- side inflation, but farm goods prices gained at a relatively fast pace due to the effect from dry weather.

Core consumer prices, which exclude agricultural and oil products, gained 2 percent on-year in July, staying above 2 percent for the seventh consecutive month.

The OECD-method core prices, excluding food and energy costs, increased 2.5

Reuters

percent last month, keeping the 2-percent level for the past seven months.

The so-called livelihood prices, which reflect daily necessities, slid 0.1 percent in July from a year earlier, but fresh food prices, which gauge fruits and vegetables, advanced 6 percent, keeping an upward trend for three months in a row.

Prices for agricultural, livestock and fisheries products climbed 3.7 percent in July from a year earlier due to the effect of drought, but the farm goods prices slid 0.3 percent compared with the previous month after the shower eased the dry weather last month.

Industrial goods prices, which reflect the demandside inflationary pressures, slid 0.2 percent in July from a year ago.

Prices for electricity, tap water and natural gas tumbled 11.3 percent on-year in July as the government lowered utility costs to reduce household burden for daily livelihood.

Public service prices increased 1.6 percent in July from a year earlier, with fares for public transportation, such as subway and intra-city bus, rising sharply. Private service prices gained 1.9 percent due to higher school meal price and higher tuition fees for private educational institutions for middle-school students.

Xinhua

Business Daily | 11

August 5, 2015

Asia Australia’s central bank holds rates

India’s central bank, government reach consensus

The central bank has already eased twice this year as the unwinding of a once-in-a-century mining boom hammered business investment and national income Wayne Cole

A

ustralia’s central bank held interest rates at record lows yesterday in a widely expected decision, but surprised markets by toning down calls for a further fall in the local dollar.

The currency jumped half a U.S. cent to US$0.7348 after the Reserve Bank of Australia (RBA) dropped a reference to a further decline being necessary, saying only that the Aussie was adjusting to weak commodity prices.

The statement following its monthly policy meeting seemed to mark a new phase in a long campaign to talk down the currency, which hit a six-year low last week.

Investors reacted by lengthening the odds of a further cut in the 2

percent cash rate with interbank futures now implying a 60 percent chance of a move by December, from 72 percent earlier in the day.

A Reuters poll of 21 analysts had found all but one expected a steady outcome this week and only six looked for another easing over time.

The baleful impact of falling commodity prices was all too evident in monthly trade figures out yesterday.

The deficit widened to A$2.9 billion in June, bringing the shortfall for the whole second quarter to an eyepopping A$9.9 billion.

Housing drives demand

Yet the lowest rates in memory have been supporting consumer demand

for goods, services and housing.

Figures form the Australian Bureau of Statistics out yesterday showed retail sales outpaced forecasts with a rise of 0.7 percent in June.

Sales for the second quarter also beat expectations with an inflationadjusted increase of 0.8 percent, thanks in large part to the spill overs from a booming housing market.

Home building has been on a tear for months and looks set to remain strong for some time to come with approvals to build new property near all-time highs.

Red-hot demand has sent home prices through the roof with Sydney boasting annual gains of more than 18 percent and Melbourne over 11 percent.

The total value of housing has climbed half a trillion dollars in the past 12 months to reach A$6 trillion, making home owners feel wealthier.

However, a sustained surge in borrowing for property investment has not been nearly so welcome.

Regulators have clamped down on lending by banks forcing them to jack up mortgage rates for investment properties while increasing the required deposits for loans.

Reuters

The framework will have to be approved by the central bank’s policy-making Monetary Board

T

Monetary policy does not need to move in sync and in the same magnitude as the U.S. Fed unless external adjustments impact domestic liquidity, foreign exchange, and affect the inflation outlook and financial stability adversely Diwa Guinigundo, Deputy Governor, Philippines’ Bangko Sentral

Indonesia’s court rejects challenge to financial regulator Constitutional court threw out a legal challenge to the role of the financial services authority (OJK) in supervising lenders, the court’s chief said yesterday. One of the plaintiffs, researcher Salamuddin Daeng, had said earlier this year that the central bank, not the OJK, should supervise the banking industry. The constitutional court chief, Arief Hidayat, rejected the challenge yesterday, saying that “both macro and micro supervision that is currently done by the two institutions, the central bank and the OJK, is an open legal policy”.

Vietnam weighing Phu Quoc economic zone plan The plan on establishing Phu Quoc Special Economic Zone in Vietnam’s southern Kien Giang province is being considered by the government, before being submitted to the National Assembly and the Political Bureau, local newspaper Thanh Nien (Young People) reported yesterday. To date, 164 investment projects, including 21 overseas-invested ones, with combined capital of nearly 169 trillion Vietnamese dong (US$7.5 billion) have been licensed to operate in Phu Quoc, Vietnam’s largest island. The government has recently approved a mechanism for construction of an entertainment complex with a casino on the island.

Philippines to adopt interest-rate corridor framework next year

he Philippine central bank plans to use an interest-rate corridor framework in setting monetary policy starting next year to better manage liquidity in the financial system, a central bank official said yesterday.

Describing it as a “major reform” in policy setting, Bangko Sentral Deputy Governor Diwa Guinigundo told a business forum the interest rate corridor system will “align our open market operations with liquidity needs of the market and further strengthen the transmission channels of monetary policy.”

The system will make use of three separate interest rates to give the central bank greater flexibility in responding to the needs of the domestic economy.

The overnight lending or repurchase window, currently at 6 percent, will serve as the ceiling and the special deposit account rate (SDA), currently at 2.5 percent, will serve as the floor.

The overnight borrowing or policy rate in the middle is currently at 4 percent.

The central bank and Indian government has reached a “broad consensus” on the composition of a rate-setting panel, the Reserve Bank Of India governor said yesterday, without specifying any details. The Indian government last month unveiled a much-criticised draft law that reduces the central bank’s independence to set interest rates, by delegating rate-setting to a Monetary Policy Committee (MPC) - the majority of whose members will be appointed by New Delhi. Based on the draft proposal, the governor would have no veto power over panel’s decisions, though he did under an earlier version of the plan.

BSP Governor Amando Tetangco in an interview with Reuters on July 22 said authorities were discussing the operational aspects of the interest rate corridor framework, which he said will “guide money market rates closer to the policy rate.”

“All these processes will take time to complete and therefore next year might be a good time to start implementing the interest rate corridor,” Guinigundo said in a separate mobile text message.

The central bank, which next meets on August 13, is expected to keep its benchmark interest rate steady, mindful of risks posed by El Nino and market volatility driven by concerns over the external effects of any U.S. Federal Reserve policy moves.

“Monetary policy does not need to move in sync and in the same magnitude as the U.S. Fed unless external adjustments impact domestic liquidity, foreign exchange, and affect the inflation outlook and financial stability adversely,” Guinigundo said.

Reuters

ASEAN on course to be world’s fourth largest economy Malaysian Prime Minister Najib Razak (pictured) said yesterday that an increasing integrated ASEAN is on course to be the world’s fourth largest economy by 2050. “Some even estimate that we could be the fourth-largest market after the EU, U.S. and China by 2030 - only 15 years from now,” Najib said when addressing the 48th ASEAN Foreign Ministers’ Meeting. The prime minister said that ASEAN has the third biggest workforce, only after India and China, and it is realistic for ASEAN to see itself as a “Third Force” in Asia.

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Asia

Kerry sees good progress on Pacific trade deal despite failure Trade ministers remained confident that an agreement was within reach too David Brunnstrom

U

.S. Secretary of State John Kerry said yesterday “good progress” was made towards a 12-nation Trans-Pacific trade deal last week, even though negotiators failed to reach an accord in marathon talks in Hawaii.

“As with any complex negotiation ... there remain details to be hashed out,” Kerry said in a speech during a stop in Singapore on his way to meetings of the 10 nation Association of South East Asian Nations (ASEAN) in Malaysia today.

“Last week in Hawaii, we made good progress in our negotiations,” he said adding that countries negotiating the 12-nation Trans-Pacific Partnership (TPP) were “pressing on to work through tough negotiations on even the most sensitive issues.”

On Friday, Pacific Rim trade ministers failed to clinch a deal on the TPP - the key economic arm of President Barack Obama’s rebalance to Asia in the face of China’s growing influence in the region.

The talks on the TPP, which would free up trade in an area covering 40 percent of the world’s economy, stalled after a dispute flared up over auto trade between Japan and North

America, New Zealand dug in over dairy trade and no agreement was reached on monopoly periods for next-generation drugs.

Singapore and three other ASEAN countries - Brunei, Malaysia and Vietnam - are part of the TPP negotiations.

Even though the Hawaii talks were billed as the last chance to get a deal in time to pass the U.S. Congress this year before 2016 presidential elections muddy the waters, trade ministers remained confident that an agreement was within reach.

Kerry said the trade talks were “nearing completion” and called the TPP “a tangible means of demonstrating America’s firm and enduring commitment to the security and prosperity of the Asia-Pacific.”

The TPP seeks to meld bilateral questions of market access for exports with one-size-fits-all standards on issues ranging from workers’ rights to environmental protection and dispute settlement between governments and foreign investors.

The White House said on Monday U.S. negotiators were working to find common ground with other countries, but also the best deal for Americans,

Talks stalled after a dispute flared up over auto trade between Japan and North America, New Zealand dug in over dairy trade and no agreement on monopoly periods for next-generation drugs

US Secretary of State John Kerry

and any deal would have to meet Obama’s criteria.

Japan and the United States had largely agreed on the rules of origin for cars, which determine when a product is designated as coming from within the free trade zone and therefore not subject to duties. But they ran into problems trying to get buy-in from Canada and Mexico, which are closely tied in to the U.S. auto industry.

Japanese automakers source many car parts from Thailand, another ASEAN member but not a TPP participant, and strict rules would upset existing supply chains.

Reuters

Japanese June wages tumble The large fall in nominal wages and persistent declines in real wages are likely to increase concerns that consumer spending will slow

J

apan’s inflation-adjusted real wages fell in June from a year earlier at the fastest pace in seven months and nominal wages tumbled by the most in more than five years, data showed yesterday, in a warning that consumer spending could weaken.

The data highlights the challenge policymakers face in generating a virtuous cycle, under which rising revenues prompt companies to boost wages so that households increase spending.

Total cash earnings fell 2.4 percent in the year to June, falling the most since December 2009, labour ministry data showed.

Inflation-adjusted real wages fell an annual 2.9

percent in June after being unchanged in May, in a warning sign for consumption.

Total cash earnings fell because a lot of companies paid summer bonuses a few months earlier than usual, which caused bonus payments in June to fall an annual 6.5 percent, a labour ministry official said.

However, the large fall in nominal wages and persistent declines in real wages are likely to increase concerns that consumer spending will slow.

The jobless rate is near an 18-year low and job availability is near a twodecade high, but the tight labour market has so far not done much to push up wages.

Inflation-adjusted real wages fell an annual 2.9 percent in June after being unchanged in May

Japanese commuters

Many companies, particularly small firms, remain hesitant to raise wages for fear of permanent rises in labour costs.

Regular pay rose an annual 0.4 percent after a reading of unchanged in the

previous month.

Overtime pay, a barometer of strength in corporate activity, also fell an annual 0.4 percent to mark the fourth straight month of declines.

Reuters

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Business Daily | 13

August 5, 2015

Asia BOJ’s Iwata sees no risks posed

by US rate hikes Bank of Japan Deputy Governor Kikuo Iwata yesterday played down any risk that expected interest rate increases by the U.S. Federal Reserve or the Bank of England could pose to financial markets, and dismissed suggestions that the BOJ should raise rates to prevent the yen from falling too fast. Iwata, speaking at the upper house financial affairs committee, acknowledged there was a chance currencies could react to such rate hikes but noted that foreign exchange markets may ha

Thai c.bank expected to keep policy rate

Korea Inc. struggles to keep it in the family Lotte dispute is setting new standards for in-fighting and intrigue Giles Hewitt

W

ith bitterly feuding siblings, attempted boardroom coups and an act of corporate patricide, the family squabble currently engulfing one of Korea’s largest conglomerates makes for compelling drama.

And it is very much being played to an audience, with the three main protagonists issuing almost daily threats and accusations on television -- sometimes of a deeply personal nature.

In a warped interpretation of Walt Disney’s axiom that “a man should never neglect his family for business” the 92-year-old founder of the Seoul-based Lotte Group and his two sons have been tearing chunks out of each other with little or no apparent concern for the impact on the country’s largest retail giant.

Squabbles for control of South Korea’s family-run conglomerates, known as “chaebol”, have long been staple plotline fare for the country’s popular K-dramas, but the real-life Lotte dispute is setting new standards for in-fighting and intrigue.

Not since a similar clan brawl ripped through the Hyundai Group about 15 years ago, has such a significant corporate power struggle been played out in the public eye.

They are still living in the 20th century, running and fighting over their companies as if it’s their own personal property and the shareholders don’t exist Kim Woo-Chan, analyst, South Korea’s Centre for Good Corporate Governance

“It’s further evidence that these chaebol families think they can just do whatever they want,” said Kim Woo-Chan, an analyst at the watchdog, Centre for Good Corporate Governance (CGCG).

Living in the past

At stake in the Lotte feud is control of a sprawling conglomerate with 80 units across Korea -- spanning retail, amusement parks, hotels and chemicals -- and total combined assets of around US$90 billion.

The company was founded in Japan in 1948 by South Koreanborn Shin Kyuk-Ho and grew from a seller of chewing gum to become a confectionary giant.

After Tokyo and Seoul normalised relations in 1965, it expanded to South Korea where its operations now dwarf the Japanese side of the business in terms of revenue.

But the key to control of the group still lies with the Japan-based Lotte Holdings Co. At the beginning of last week, Shin and his eldest son, Shin Dong-Joo, flew to Tokyo and sought to dismiss a group of senior Lotte Holdings executive board members, including the CEO and Shin’s younger son, Shin Dong-Bin. But Dong-Bin fought back and, a day later, the board not only nullified the dismissals but also removed the father as co-CEO.

Manipulating the father?

In a statement apparently dictated by Dong-Bin, the Lotte Group suggested that the eldest son had taken advantage of his father’s frailty and advancing years to try and stage a boardroom coup.

He took the chairman “who is aged and has difficulty in making judgements, to Japan and pushed him into making the verbal dismissal announcement,” the statement said.

It is unclear exactly where the loyalties of the patriarch lies when it comes to his two sons.

After Dong-Joo was stripped of key positions with Lotte’s Japan-based affiliates back in January and Dong-Bin was appointed Lotte Holdings CEO last month, it was widely assumed that the younger son was the chosen successor.

But in a halting statement read to Korean broadcaster SBS on Sunday, Shin Kyuk-Ho insisted he had never appointed his younger son as the Lotte heir, and added that he would never forgive being ousted from the holding company.

The dispute should come to a head at a Lotte Holdings shareholder meeting expected to be held in Tokyo this week, at which the eldest son has said he will call for the sacking of the entire executive board.

Both sons claim they have the shareholder backing to swing the vote their way.

The situation is further complicated by the byzantine structure of the Lotte Group, with myriad circular shareholdings that make it difficult to decipher who exactly owns and controls what.

“That is a feature of many chaebols, but the Lotte Group’s cross-holdings dwarf the others in their number and complexity,” said CGCG’s Kim. “As far as decent corporate governance goes, the family really ought to sort things out themselves first and then win shareholder approval for whatever they decide,” Kim said.

“But in this case, it looks like they have just skipped both steps.

They failed to work things out in the family and then completely ignored shareholders as they set about ordering dismissals,” he added.

Succession politics

The Lotte drama comes at a time when the issue of dynastic corporate succession is very much in the South Korean news.

Last month, the country’s largest and wealthiest chaebol, Samsung, barely scraped through a shareholder vote on the proposed merger of two affiliates, aimed at boosting the founding Lee family’s control over the conglomerate ahead of a generational power transfer.

In a watershed moment for shareholder activism in South Korea, the US hedge fund Elliot Associates led an unprecedented -- although eventually unsuccessful -- investor revolt against the deal.

Reuters

Central bank is expected to leave its policy interest rate steady again yesterday even though the economy continues to stumble more than a year after the military took power in a bid to end political unrest. Twenty of 23 economists in a Reuters poll predict the monetary policy committee (MPC) will leave the one-day repurchase rate at 1.50 percent for a second straight meeting following surprise cuts in March and April. The other three expect a 25 basis point cut to 1.25 percent, which would match the record low set in April 2009.

Myanmar to halt rice exports until midSeptember Myanmar rice traders have agreed to suspend exports of rice until mid-September to maintain price stability and local self-sufficiency amid the country encountering severe floods, Myanmar Rice Federation said yesterday. Industry stakeholders decided one-and-a-half-month freeze to ensure an adequate supply of rice for the domestic market and suspend exports until September 15, when the harvesting of monsoon paddy is set to begin, said Dr. Soe Tun, vice president of the federation. The federation in its Sunday announcement has pledged to take steps to avoid high prices and rice shortages.

South Koreans pile into gold South Koreans are on course to buy a record amount of gold in 2015, worried that a meltdown in China’s stock markets will destabilise South Korean equities and keen to replenish a traditional store of value in an era of low interest rates.

In contrast to the weak demand in top gold buyers China and India, South Koreans are on target to buy 1 trillion won (US$860 million) in bullion for the first time this year, based on first-half sales through Korea Gold Exchange 3M Co Ltd, the country’s largest gold merchant.

New car sales level off in New Zealand New vehicle sales in New Zealand have slowed as economic growth shows signs of easing, the Motor Industry Association (MIA) said yesterday.

New vehicles sales in the year to the end of July were up 5 percent on the same period last year to 75,928, MIA chief executive David Crawford said in a statement. “However, in recent months overall growth has slowed with registrations of new commercial vehicles plateauing,” he said. Total new vehicle registrations for July were up 1 percent year on year to 10,366, with new passenger car registrations up 2.8 percent to 7,272 vehicles.

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August 5, 2015

International Greece says expects bailout deal by Aug.18 Greece expects to conclude a bailout deal with international lenders by Aug. 18, with the drafting of the accord starting on Wednesday, government spokeswoman Olga Gerovasili said yesterday. “The first phase of negotiations ends today and the second phase starts, which really contains the details of drafting (the deal),” Gerovasili told Skai TV station. The drafting of the accord would start today, she said. “If the terms of the (EU) summit are met, I think that we will have a deal by the 18th of this month,” she said.

Ukraine sends new debt proposal to creditors Ukraine’s Finance Ministry said yesterday it had sent a fresh debt restructuring proposal to a group of its largest creditors, which it invited to a high-level meeting on Thursday for “decisive” negotiations.

Talks to restructure US$23 billion of Ukraine’s sovereign and quasi-sovereign debt have dragged on for more than four months over a disagreement over the necessity of a write-down on the principal of the bonds, but on Friday a source said Kiev saw this week as a deadline to reach a deal. A new proposal was sent to the creditor group yesterday morning.

Oil edges back up to US$50 a barrel Oil recovered to just above US$50 a barrel yesterday after touching a six-month low in the previous session, although high global production and concern over the economic outlook in China weighed on the outlook. The bounce came as a weaker dollar took the pressure off commodities which tumbled on Monday, with a global commodities price index sinking to a 12-year low. “I think we will stabilize around current levels,” said Olivier Jakob, head of Swiss oil consultancy Petromatrix. “I think we are in the last 5 dollars rather than the next 15 dollars.”

British oil firm supposedly paid Somali officials U.N. sanctions experts have accused British company Soma Oil and Gas of making large payments to Somalia’s oil ministry that created a “serious conflict of interest,” some of which appeared to have been used to pay off senior officials. In a report to a U.N. Security Council committee, the experts said Soma paid nearly US$600,000 as part of efforts to protect and expand an energy exploration contract it signed with the ministry in 2013. Experts also said Soma paid US$495,000 to a lawyer who was advising the government when it was negotiating with the company.

New C. Agricole CEO shakes up management Credit Agricole’s new chief executive made his mark yesterday with a management reshuffle, as the bank nears a settlement with U.S. authorities over possible sanctions breaches. Philippe Brassac, two months into the job, said he was reorganising business lines to report directly to top management and created new positions in charge of group-wide functions. “We want both to adapt the group and to get better performance and competitiveness,” Brassac said at his first news conference as CEO. “We take a cautious view of the economic and financial environment.”

UK takes 1 billion-pound hit in RBS sell-off Finance Minister George Osborne hailed the start of returning RBS to the private sector and said it was right to commence selling at a loss Steve Slater

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ritain took a 1.1 billion pound (US$1.7 billion) loss on its first sale of shares in Royal Bank of Scotland (RBS) yesterday, sparking accusations from opposition politicians of an unnecessarily rushed and costly disposal.

The UK government sold a 5.4 percent stake in RBS at 330 pence per share, a third below the price paid when Britain rescued the British bank with 45.8 billion pounds of taxpayer cash at the peak of the 2007/09 financial crisis.

Britain raised 2.1 billion pounds, but lost a substantial sum on the first of many blocks of shares to be sold.

Overall it is currently sitting on a 15 billion pound loss on its holding.

“While the easiest thing to do would be to duck the difficult decisions and leave RBS in state hands, the right thing to do for the economy and for taxpayers is to start selling off our stake,” Finance Minister George Osborne said.

But the opposition Labour Party slammed the sale.

“RBS had to be bailed out urgently, but it doesn’t have to be sold off at the same speed,” said Chris Leslie, shadow finance minister.

“The Chancellor needs to justify his haste in selling off a chunk of RBS while the bank is still awaiting a U.S. settlement for the mis-selling of sub-prime mortgages,” Leslie added, referring to a potentially massive fine from U.S. authorities against RBS, related to past sales of U.S. mortgages.

RBS has set aside 2.1 billion pounds for a settlement but has said the timing of a deal is uncertain. Analysts estimate it could cost as much as 9 billion pounds.

Bank’s logo

However the share sale, which cuts the taxpayers’ holding to 72.9 percent from 78.3 percent, still marks a milestone in Britain’s recovery from the financial crisis, as well as forming a plank in Osborne’s strategy to improve the country’s finances.

More power

The divestment had been on the cards since Osborne in June accelerated the timetable for selling RBS, after his Conservative Party won May’s UK national election with a surprise majority, giving his party more power in government.

He has lost no time since then in pressing on with his plans for Britain’s economy, including the sale of more shares in Lloyds Banking Group and a budget that included a shift away from welfare spending to higher wages for workers.

Pharmaceutical R&D productivity improving The CMR Factbook data shows that experimental medicines overall are winning marketing approval from regulators more rapidly than a decade ago Ben Hirschler

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rug industry productivity is continuing to improve, with a bumper haul of new products being launched and companies proving more successful in the final stages of clinical testing, according to a new analysis.

Data from Thomson Reuters published yesterday showed the number of innovative medicines, or new molecular entities, launched globally in 2014 hit a 17-year high of 46, up from 29 in 2013.

Last year’s entrants included two cancer drugs that help the body’s own immune cells fight tumours as oncology remained the top area for drug research, attracting nearly one third of all R&D spending.

Merck’s Keytruda and BristolMyers Squibb’s Opdivo are the first in a coming wave of expensive immunotherapies.

As well as launching a lot more new medicines, the industry has also been enjoying higher success

UK Financial Investments (UKFI), the body that holds the government’s stake, said it sold 630 million shares in a quick-fire sale to institutional investors after the market closed on Monday.

UKFI sold more shares than it had indicated on Monday, when it had announced plans to sell 600 million.

The 2.3 percent discount to RBS’s closing price on Monday, at which the shares were sold, was also narrower than the 3.1 percent discount on the government’s first sale of Lloyds shares in September 2013.

The RBS share sale was 2.4 times covered by investors, a person familiar with the matter said, adding about 48 percent were UK-based investors, 37 percent were from the United States and 15 percent were from elsewhere.

Reuters

rates in the costly final stage of clinical development, with the number of projects failing in Phase III falling markedly over the last six years.

Phase III terminations totalled 56 in the last three years, down from 68 in 2009-2011, according to the Thomson Reuters 2015 CMR Pharmaceutical R&D Factbook.

“Overall, based on the metrics, the industry is looking in really good shape,” said Philip Miller, senior director for clinical and regulatory affairs at Thomson Reuters.

He noted that drug companies were benefiting from a shift to specialised drugs, many for rare diseases, which tend to progress through clinical development faster than mass-market treatments.

The biggest turnaround has come in Japan, where the average approval time for a new drug dropped to 306 days in 2014, down from more than 800 days in 2006.

Japan’s Pharmaceutical and Medicines Device Agency was faster in approving new drugs last year than either the U.S. Food and Drug Administration or the European Medicines Agency, which took an average of 343 and 418 days respectively.

Reuters

Business Daily | 15

August 5, 2015

Opinion Business

wires

No agnostics in the climate foxhole

Leading reports from Asia’s best business newspapers

John Hewson

A former leader of Australia’s Liberal Party, is Chair of the Asset Owners Disclosure Project

THE JAPAN NEWS The failure to reach a broad agreement on the Trans-Pacific Partnership during ministerial talks last week could harm Japan’s efforts to create a “mega trade zone” through other major accords, such as an economic partnership agreement (EPA) with the European Union. Up until now, the momentum of TPP negotiations toward an agreement has spurred nations not participating in the talks to strengthen their free-trade frameworks. The loss of this momentum could weaken this effect. The Japanese government hopes another round of ministerial-level talks for the TPP can be held this month.

THE STAR U Mobile has sealed a partnership with ZTE Corporation to drive the development of pre-5G and future implementation of 5G mobile network technologies locally (in Malaysia). Under the partnership, U Mobile becomes the country’s first telco to enter the phase of 5G network development.

Through the agreement, U Mobile is seeking to fulfil the implementation of pre-5G connectivity and to lead the market on the adoption of 5G technologies that are able to provide ultra-fast connection speed and higher network capacity for consumer demands.

Pre-5G is an intermediate level between 4G and 5G.

THE JAKARTA GLOBE High luxury taxes have inhibited the expansion of the sedan market in Indonesia and left car makers in doubt whether it makes sense to build some of the world’s most popular car models in the country, a representative of the car industry association said. Sedans only account for less than 5 percent of car sales in Indonesia, according to data from Indonesia’s Car Manufacturers Association (Gaikindo). The sedan figure is far behind the multi-purpose vehicles (MPVs), or minivans, which are the country’s most popular model.

THE PHNOM PENH POST A report released by the Garment Manufacturers Association of Cambodia claims that the Kingdom is having difficulties competing against its neighbours due to low productivity, increasing wages and labour strife. According to GMAC’s own statistics, the Cambodian garment sector’s productivity is only 60 per cent of China’s garments sector, compared to 80 per cent for Vietnam and Indonesia. Bangladesh, at 50 per cent, scored lower. “Low productivity and ever higher wages will be a real challenge to the industry,” said GMAC’s secretary-general, Ken Loo, in a statement.

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n a recent 14.5-hour flight from Los Angeles to Sydney, I had time to read the columnist Charles Krauthammer’s collection of essays, Things that Matter. It made for a disturbing flight.

I have enjoyed Krauthammer’s writing over the years, but there was something in his book that I found deeply troubling: his description of himself as an “agnostic” on climate change.

He “believes instinctively that it can’t be very good to pump lots of carbon dioxide into the atmosphere,” and yet he “is equally convinced that those who presume to know exactly where that leads are talking through their hats.”

The word that I found most galling was “agnostic” – not only because Krauthammer is a trained scientist, but also because the word was used repeatedly by former Australian Prime Minister John Howard when he addressed a group of climate-change deniers in London in late 2103. “Part of the problem with this debate,” Howard told the assembled sceptics, “is that to some of the zealots involved their cause has become a substitute religion.”

As Howard and Krauthammer should know, the subject of climate change is not a matter of religion, but of science.

According to a 2013 survey of peer-reviewed publications on the subject, some 97% of scientists endorse the position that humans are causing global warming. Anyone familiar with the scientific process is aware that researchers are trained to disagree, to contest one

another’s hypotheses and conclusions. A consensus of such magnitude is as close as we ever get to a recognized scientific fact.

Given that even Krauthammer concedes that pumping the atmosphere full of carbon dioxide “can’t be very good,” the next logical step in the debate is to determine the best way to address the problem.

As an economist, I favour an auction-based cap-andtrade system to put a price on carbon. But I also understand the potential usefulness of regulatory measures like targets for renewable energy, bans on incandescent light bulbs, and mandates for the use of biofuels. What I cannot accept is for somebody who offers no solutions to claim that those of us who do are “talking through our hats.”

Fortunately, voices like Krauthammer’s are becoming increasingly rare. To be sure, there are still holdouts, like Australian Prime Minister Tony Abbott, who replaced a carbon tax with a plan to tax the country’s citizens in order to pay polluters to cut emissions.

As a policy, this is inequitable, inefficient, and unlikely to lower emissions at a pace that is sufficient to meet the conditions of the global climate-change agreement expected to be reached in Paris in December.

A sure sign of a shift in mentality is the growing recognition by financial institutions that loans and investments may be overexposed to the risks of climate change. These risks include natural disasters,

According to the Asset Owners Disclosure Project … the top 500 global asset owners are alarmingly exposed to the dangers of climate change

more extreme weather, efforts by governments to reduce greenhouse-gas emissions, and the knock-on effect of a technological revolution in renewables, energy efficiency, and alternative technologies.

According to the Asset Owners Disclosure Project, which I chair, the top 500 global asset owners are alarmingly exposed to the dangers of climate change. More than

half of their investments are in industries exposed to the dangers of climate change; less than 2% are in low-carbon intensive industries. As a result, there is a risk that their investments and holdings will become “stranded,” as changes in policy or market conditions cut the value of infrastructure, other property, and fossil-fuel reserves. As Hank Paulson, Secretary of the US Treasury when the global financial crisis erupted in 2008, once warned, the risks of a climate-induced financial crisis would dwarf those of the sub-prime crisis.

The price of coal, for example, has plunged to around half of its peak level, with plenty of room remaining on the downside.

Consequently, shares in coal companies have fallen by as much as 90%, leaving asset owners scrambling to divest. By contrast, investing in a company like Tesla Motors – which has now developed a rechargeable battery for home use, which could lead to a sharp increase in the number of households switching to solar power – looks far more attractive.

As this realization percolates through the market, asset owners are hedging their bets by increasing their investments in low-carbon industries and companies like Tesla. Over time, this will have a significant effect on the allocation of global investment funds. Krauthammer may think that I am talking through my hat, but I am confident that soon enough he – and those who listen to him – will be eating theirs.

Project Syndicate

16 | Business Daily

August 5, 2015

Closing Online travel market exceeds 100 bln yuan

Beijing moves to improve manufacturing competence

China’s quarterly online travel market exceeded 100 billion yuan (US$16.1 billion) for the first time in the second quarter of the year, boosted by a travel boom and more use of smartphones. Revenue for the online travel market reached 106.2 billion yuan between April and June, up 12 percent quarter on quarter and 56.7 percent year on year, Internet research agency Analysys International said in a research report yesterday. In the first half of the year, 2.02 billion tourist trips were made in China, up 9.9 percent year on year. Nationals made 61.9 million overseas trips, according to the China National Tourism Administration.

The National Development and Reform Commission (NDRC), China’s top economic planner, released an action plan yesterday to improve core competence of six manufacturing sectors from 2015 to 2017. The NDRC has several projects planned for railway transportation equipment, high-end ship making and oceanic engineering equipment, industrial robots, new energy vehicles, modern farm machinery and advanced medical devices and medicine. The NDRC counts on the projects to facilitate breakthroughs in key technologies and application, nurture leading manufacturers with global influence and create brands recognized around the world. The agency vowed to introduce private investment, increase budget and financial supports.

Economic impact of Beijing Winter Olympics Analysts say clinching the winter Olympics will provide hefty economic opportunities for Beijing and its surrounding regions

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even years after the capital successfully hosted the summer Olympics, Beijing’s victorious winter Olympic bid last Friday has triggered a string of investment in venues, transportation and environment.

According to Beijing’s bid committee, the budget for the winter games is projected at US$1.56 billion, with a further US$1.51 billion used on infrastructure renovation.

With a rich legacy left by the summer Olympics, China plans to re-use the existing 11 venues and only needs to build a new rink for speed skating.

On transportation, a highspeed railway linking Beijing and Zhangjiakou, where some of the skiing events will be held, is expected to be constructed around 2019 to cut travel time between the two cities to 50 minutes.

As air quality and snow conditions are regarded as two of the major challenges for Beijing’s Winter Olympic Games, investments will be made to address the issue.

Beijing began implementing a five-year plan from 2013

that cost US$130 billion to upgrade heating systems, cut car emissions and close heavypolluting plants. Neighbouring metropolitan Tianjin and Hebei province have adopted similar measures.

A second five-year plan to further improve air quality is being studied, according to Beijing Mayor Wang Anshun.

The policies are already producing notable effects.

Concentration of PM2.5, airborne particles measuring less than 2.5 microns, has been reduced by 15.2 percent year-on-year in the first half of the year in Beijing, according to statistics from the Beijing Municipal Environmental Protection Bureau.

According to an existing plan, the city aims to cut PM2.5 density by 20 percent by 2017, compared with 2012.

However, an environmental official of the city predicted the reduction could reach 25 percent.

In the co-host city Zhangjiakou, the State Council has approved a renewable energy demonstration zone that aims to fully rely on renewable energy to provide

Coalmine deaths on the decline

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electricity and heating for the Olympic centre and venues.

Sports industry

On the back of the Winter Olympics, the Beijing municipal government is looking at fostering sportsrelated industry as a new growth driver to power its economy.

According to the government plan, Beijing aims to bring the value of its sports industry to 300 billion yuan by 2025, and develop world-class sports enterprises.

To encourage the industry, the city government plans to set up an investment fund to guide social capital into sports.

Chen Jian, deputy head of the China Society of Economic Reform, forecast by 2025, China’s sports industry will be valued at US$800 billion, generating around 600,000 new jobs.

Chongli County under Zhangjiakou city, where about 50 gold medals will be on offer for snow events in 2022, has evolved from a small, unknown place where residents relied on mining for income into a hot tourist destination for skiing fans.

Last year, the county received more than 2 million tourists that brought related revenue to 1.41 billion yuan.

The Winter Olympic Games are expected to further bolster local tourism and the skiing industry. Zhangjiakou expects the event to generate 350 billion yuan of investment and create 200,000 jobs for the city.

Xinhua

Skiers at Zhangjiakou facilities. Zhangjiakou will co-host Winter Olympic Games in 2022

Frugality leads Dalian Wanda to close KTVs

BMW says weak China demand could hurt earnings

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eaths resulting from coal mine accidents in China dropped 30.6 percent in the first half of 2015, said the State Administration of Work Safety (SAWS) yesterday.

Li Wanchun, head of the statistics department under the SAWS, said China has not had any coal mine accidents with more than 30 deaths for 28 months, and coal mine accidents that killed 10 to 30 people declined 83.3 percent from a year ago.

Last year’s deaths represented a sharp decline from about 7,000 in 2002, the worst year on record for coal mine accidents, the administration’s director said at a press conference in March.

SAWS spokesperson Huang Yi said mines are still dangerous and need to be more strictly supervised.

China has been cutting coal production, a move mainly aimed at curbing slumping coal prices, but one which has also had the effect of reducing the labour force and making accidents less likely.

Huang called for this process to be accelerated.

China’s Cabinet has demanded that the number of coal mines nationwide be cut to less than 10,000 by the end of 2015.

hina’s Dalian Wanda Group said it was closing down the country’s largest karaoke chain Superstar, as slowing economic growth and government efforts to discourage lavish spending hit profits in the entertainment sector.

The group also said it was closing an unspecified number of department stores as a boom in e-commerce drove that business into losses. Media reports had said China’s largest property developer was shutting down nearly half of its 90 stores.

“China’s consumer behaviour is undergoing significant changes, inevitably hurting some largescale retailers,” Qu Dejun, president of Dalian Wanda Commercial Properties.

Speaking about the karaoke business, Qu said profits had become very thin due to “related national policy”. He did not specify, but karaoke parlours were popular entertainment venues for government officials and company executives.

According to Wanda Group’s English website, Superstar had around 90 outlets as of last September and had planned to run 130 outlets by 2015.

Xinhua

Reuters

erman automaker BMW said yesterday that weaker demand from China could weigh on its full-year earnings, as it reported a slight drop in its second-quarter profits.

Chief financial officer Friedrich Eichiner said the world’s most populous country, a robust source of growth for German car manufacturers in recent years, was now a riskier market.

“The second half will be more heavily burdened by investments, development costs and personnel costs,” Eichiner told a telephone conference.

“If the challenges in the Chinese market increase, we cannot rule out an impact on our forecasts.”

BMW said it had sold 230,700 cars in China during the first half, a modest increase of just 2.3 percent compared with the same period last year.

Germany’s Volkswagen, which recently piped Toyota for the world’s biggest automaker title, last week lowered its global sales forecast for 2015 citing falling demand from China and other key markets.

AFP