Macau Business Daily September 22, 2015 by Business Daily

MOP 6.00

Optimism Prevails

Closing editor: Joanne Kuai

Ascott Macau opened yesterday. And hotel management has high expectations. Saying trials have gone well. With average occupancy rate at over 60 pct. Independent travellers and business travellers are on the radar. With the upcoming National Day Golden Week the first big test

Year IV

Number 884 Tuesday September 22, 2015

Publisher: Paulo A. Azevedo

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Inflation Posts 4-month Fade

Inflation slowed to 4.64 pct in August. A drop of 0.12 pct versus July. And the fourth consecutive Tam: Macau ticks boxes as y-o-y decrease since May. Cheaper gas and fuel products plus cheaper package tours is helping. world tourism training centre Page 2 Inflation was primarily stoked by higher residential rentals and rising charges for eating out Page

Gaming analysts capitulate on second-half recovery

Page 6

Closing the barn door

Taiwan exports impacted again by global weakness

Page 11

Galvanised into action. The gaming watchdog vows to follow up on the Dore case. Involving the theft of over HK$100m from the junket operator. Secretary for Economy and Finance Lionel Leong pledges law enforcement, supervision and legislation of gaming industry will be improved

U.K. and China to study Shanghai-London stock connect

Page 16

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Robustly Resilient A quarterly survey of over 2,100 businesses. By China Beige Book International. Revealing that Chinese entrepreneurial networking remains healthy and in a transitional phase

Pages 8&9

HSI - Movers

CEPA Successful

September 21

Name

More Macau exports to Mainland China. Courtesy of the Closer Economic Partnership Arrangement (CEPA). Up 7.21 pct in August, reaching MOP6.81 million (US$830,779). Trade activities with the Mainland surged 73.1 pct y-o-y in July

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www.macaubusinessdaily.com

Gaming

Heng Sheng in Cambodia

%Day

Power Assets Holding

+2.14

Belle International Ho

+1.49

China Resources Land

+1.48

Link REIT

+1.06

China Mobile Ltd

+1.03

Kunlun Energy Co Ltd

-2.55

Cheung Kong Property

-2.96

CNOOC Ltd

-3.46

China Resources Powe

-3.79

Galaxy Entertainment

-3.91

Source: Bloomberg

Local junket group Heng Sheng is expanding. And is now in Cambodia. Signing a threeyear agreement with Star Vegas casino owner Donaco International. Which seeks to expand its client base to Mainland Chinese. The new 30-gaming table VIP club welcomed 400 players on its opening day

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September 22, 2015

Macau Renovation of DSE offices to cost MOP10.23 million The government is to pay MOP10.23 million over two years to Companhia de Construção Urbana J&T Limitada for the renovation of the offices of Macau Economic Service (DSE) in Luso International building. The construction works are slated to last 180 days, with the company paid MOP4.03 million this year and MOP6.14 million next year for the service, according to the Official Gazette. Companhia de Construção Urbana J&T was awarded the contract after an open tender with 19 accepted bids. Prices proposed for the works ranged from MOP9.32 million to MOP11.06 million.

Tak Fat Kin Ip wins Zone E1 contract Tak Fat Kin Ip Engineering Limited has been awarded the contract to build the provisional street layout and drainage system of Zone E1 in the reclaimed territories. The works will cost MOP22.75 million, according to the Official Gazette. The company has around 10 months to complete the constructions and the payments will be divided into two installments. The first will total MOP10 million and will be paid this year, while the second amounts to MOP12.75 million and is to be paid next year. Of the 13 total bids accepted in the open tender, the Macau-based company had the eighth highest bid. The value of the other bids which were not selected ranged between MOP19.83 million and MOP35.05 million.

Tam: Macau ticks boxes as world tourism training centre Secretary for Social Affairs and Culture Alexis Tam Chon Weng said the government is to announce a plan to build the city into a World Tourism Training Centre next month. The Secretary told reporters yesterday that the Special Administrative Region is totally qualified to co-operate with the World Tourism Organization to turn itself into a tourism training centre. He believes that local campuses and teaching qualities of the city’s higher education institutions can attract both foreign and Mainland students to Macau, especially to study Portuguese, tourism and law courses.

Directors of Louis XIII granted 40.91 million shares Louis XIII Holding Limited granted 40.91 million share options to its directors from the total 62 million option share scheme launched in August that runs until September 2019, the company announced yesterday in a filing with the Hong Kong Stock Exchange. Of the 40.91 million share options granted to directors, Joint Chairman Stephen Hung and Peter Lee Coker Jr. were each awarded around 9.21 million, the same amount that was received by Tom Lau Ko Yuen, Deputy Chairman, and Walter Craig Power, CEO. Louis XIII is building a hotel on the Cotai Strip, which is expected to open by mid-2016, according to the last interim report of the company.

CEPA exports jump 7.2 pct in August Meanwhile, the Chinese Ministry of Commerce said the city’s trade value with the country had soared 73.1 per cent year-on-year in July Kam Leong

kamleong@macaubusinessdaily.com

he city saw its exports of goods to Mainland China under the Closer Economic Partnership Arrangement (CEPA) rise by 7.21 per cent last month as compared to July this year, the latest official data released by the Economic Service Bureau (DSE) reveals. In August, the city’s exports of CEPA goods to the Mainland reached MOP6.81 million (US$830,779), an increase of MOP457,877 from some MOP6.35 million in July, boosting the total value during the first eight months of the year to MOP64.8 million. The accumulative value of such export activity has totalled MOP630.4 million since the establishment of the system in January 2004 to August this year. In terms of trade in services, DSE approved one new certificate for ‘Macau Service Supplier’ for local firms to operate their businesses in the country last month. The government had issued a total of 491 certificates to local companies as at August this year. According to official data, most of these local companies that were issued certificates engaged in transportation services, such as freight forwarding, logistics, storage and warehousing as well as transport, accounting for 61 per cent, or 298 of the total.

Trade values with China jump

On the other hand, the latest official statistics of the Chinese Ministry of Commerce indicated that the city’s value of trade activities with the Mainland had surged by 73.1 per cent year-onyear during July this year, driven by

the country’s exports to Macau jumping 78.6 per cent year-on-year. In July, the total trade value between the two parties reached US$520 million, representing a jump of 33.7 per cent year-on-year compared to the month before. US$500 million of the total values were China’s exports to the Special Administrative Region, an increase of 34.9 per cent month-on-month. On the contrary, the city’s exports to the country dropped 11.9 per cent year-on-year; on a month-on-month comparison, it means a lift of 4.2 per cent in July. Cumulatively, the trade value between the regions totalled US$2.66 billion during the first seven months of the year, a year-on-year rise of 35.7 per cent. Meanwhile, China’s exports to Macau accounted for US$2.54 billion of the total, increasing 38.3 per cent year-on-year whilst Macau’s exports to China dropped 4.4 per cent year-on-year to US$120 million.

More capital invested

In terms of investment, Chinese authorities gave a green light to some 27 projects invested in by Macau firms on the Mainland. Although the number of projects registered a month-on-month decrease of 20.6 per cent, the actual capital used by the local companies soared 92.4 per cent month-on-month to US$120 million. The total number of local projects that China approved was 239 during the first seven months of the year, a lift of 22.6 per cent year-on-year, while the capital used during the seven months on projects surged 80.5 per cent year-on-year to US$650 million.

Macau value of trade activities with the Mainland had surged by 73.1 per cent year-onyear during July this year, driven by the country’s exports to Macau jumping 78.6 per cent year-on-year

Although the cumulative amount of capital used by local firms totalled US$12.6 billion as at the end of July this year, the Ministry said it only accounted for 0.8 per cent of the total foreign investment it had attracted during the period. The Ministry’s data also indicated that Mainland firms had been contracted for a total of 21 projects in Macau during the first seven months, worth US$1.29 billion. Sales accomplished by these projects totalled US$630 million. In addition, as at the end of July, some 118,866 Mainland Chinese residents were working in the Special Administrative Region.

Business Daily | 3

September 22, 2015

Macau

Inflation slows to 4.64 pct in August Cheaper costs for gas and fuel products, as well as lower charges for package tours meant the city’s inflation continued to ease for the fourth consecutive month Kam Leong

kamleong@macaubusinessdaily.com

charges for eating out, DSEC said. Meanwhile, the city’s CPI-A and CPI-B increased 4.97 per cent and 3.6 per cent year-on-year to 106.55 and 104.56, respectively. CPI-A covers almost half of the households in the city that spend between MOP10,000 to MOP29,999 monthly, while CPI-B refers to 30 per cent of the households that spend MOP30,000 to MOP54,999 per month on average.

Breakdown

he city’s composite consumer price index (CPI) rose by 4.64 per cent year-on-year to 106.34 last month. Nevertheless, the inflation rate, compared to 4.76 per cent in July, dropped by 0.12 percentage points,

representing the fourth consecutive decrease since May this year. The Statistics and Census Service (DSEC) said in its latest data released yesterday that the continuous easing of CPI growth rate last month

is due to the cheaper prices of gasoline and liquefied petroleum gas, as well as lower charges for package tours. In general, inflation was primarily stoked by higher residential rentals and rising

In terms of sector, the city saw the price index of Alcoholic Beverages & Tobacco post the most notable increase, with prices jumping 36.62 per cent year-on-year following the government’s increase in local tobacco tax. The rising rental for dwellings and higher charges for out-patient services also drove the Housing & Fuels and Health sectors to experience inflation of 7.1 per cent and

6.45 per cent from one year ago. Nevertheless, the price index of Communication services decreased slightly by 0.86 per cent year-on-year last month. On a month-on-month basis, prices of Alcoholic Beverages & Tobacco inflated significantly by 6.68 per cent from July, while costs for household goods and furnishings rose 0.95 per cent in the month. Price index of Clothing & Footwear, on the contrary, decreased 1.98 per cent month-on-month due to the seasonal sale of summer clothing and footwear. Cumulatively, the average CPI for the first eight months of the year increased 4.86 per cent from the same period of last year, driven by the increasing costs of Housing & Fuels, Alcoholic Beverages & Tobacco and Health, which inflated by 9.68 per cent, 7.39 per cent and 5.81 per cent, respectively.

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4 | Business Daily

September 22, 2015

Macau

Ascott Macau expresses confidence in local hospitality market The newly opened Ascott Macau, which started trial operations in September, has posted an average occupancy rate of over 60 per cent Stephanie Lai

sw.lai@macaubusinessdaily.com

hile the city has been experiencing a decline in visitor arrivals and a drop in hotel occupancy rate, the city manager for Hong Kong and Macau at Ascott China Mr. Chew Hang Song said the company was still optimistic about the hospitality business here with Ascott Macau positioned to attract both business travellers and family guests. Ascott Macau, a 110-suite hotel situated in the heart of ZAPE district on the Macau Peninsula, started trial operations in September, holding its grand opening ceremony yesterday. “The market competition here is definitely getting more intense. And the tourists decline does impose a certain impact,” Mr. Chew told media at the ceremony when asked

about Ascott Macau’s prospects given the imminent Cotai casino-resort openings and tourist arrivals decline. “For the long term we are still confident about the economic outlook of China,” Mr. Chew said. “We don’t only rely on free independent travellers [FIT] but will also develop the segment of business travellers, which represents a good prospect for Ascott Macau.” Ascott China’s city manager for Hong Kong and Macau also believes that Ascott Macau’s comprehensive facilities will help attract family guests. Ascott Macau has had an occupancy rate of above 60 per cent since its trial operation in September. For the holiday period for Mainland

Chinese travellers in the first week of the month – the ‘70th Anniversary of the Chinese People’s Anti-Japanese War and World Anti-Fascist War Victory Commemoration Day’ on September 3 and the weekend that followed - Ascott Macau had an occupancy rate of 100 per cent, Mr. Chew said. “For the occupancy rate for the National Day Golden Week, we also see it above 60 per cent,” he said when asked about the bookings for Ascott Macau in the upcoming week-long holiday for Chinese guests.

Against the tide

The hotel Ascott Macau has actually undergone a brand name change from the original ‘Ascott Paragon Macau’.

Movie trade fair to be held in SAR

nvestors and film industry professionals are gathering in Macau to attend the 2015 Guangdong-Hong Kong-Macau Film Production Investment and Trade Fair. This year’s edition is jointly hosted by the Cultural Affairs Bureau, the Hong Kong Film Development Council and the Guangdong Administration of Press, Publication, Radio, Film and Television. A seminar titled ‘Distribution and Promotion in New Media Markets’ will be held on Thursday. Fung Wing, Assistant Head of Create HK, has been invited to host the seminar, Terence P.T. Wong, Head of the Department of Communication Design and

Digital Media at the Hong Kong Design Institute and Zheng Dawei, Secretarygeneral of the Guangdong Motion Picture Industry Association, will join to discuss ‘Distribution and Promotion in New Media Markets’. They will talk about the opportunities uncovered by the development of new media, and discuss the similarities and differences of the promotion and distribution methods of the traditional market and the new media market. This seminar is anticipated to give further insights into the application of new media in the film industry. Following the first Fair held last year in Macau, this

year’s event will take place on Wednesday and Thursday. Invited industry practitioners and investors from the three regions of Guangdong, Hong Kong and Macao will attend various activities, including the opening ceremony, networking meal, presentation of film projects, producerto-investor meetings and seminar, etc. The seminar ‘Distribution and Promotion in New Media Markets’ is open to the public. Registration is free and there will be Chinese to Portuguese simultaneous interpretation services available onsite. All parties interested in film distribution and promotion and the study of new media are welcome.

Singaporean real estate giant CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited, inked a contract with China Overseas Property Ltd. in 2011 to manage the brand of serviced residences in Macau as ‘Ascott Paragon Macau’. But later the brand was changed to ‘Ascott Macau’, now a full-service hotel. The owner of the Macau property, China Overseas, develops and operates the high-end residence Paragon adjoining Ascott Macau. Ascott Macau has opened at a time when the city’s hotel occupancy rate has been declining: the occupancy rate for the hotels and guesthouses here for the first seven months of this year have dropped 7.5 percentage points year-on-year to 78.5 per cent, official data shows. As at July-end, the city’s hotel and guestroom inventory amounted to 29,900. At the same time, Macau’s visitor arrivals have also dropped 3.5 per cent year-on-year to 17.4 million for the first seven months of this year. Macau Government Tourist Office (MGTO) Director Maria Helena de Senna Fernandes told media at the ceremony that the government has been working on marketing efforts with the hospitality sector here in a bid to attract more overnight visitors and increase their length of stay. As at July, the average stay of overnight visitors was 2.2 days.

Business Daily | 5

September 22, 2015

Macau

Leong: Regulator to follow Dore case based on law The city’s gaming watchdog vows to improve law enforcement, supervision and legislation of gaming industry cage manager Mimi Chow is suspected of having stolen over HK$100 million from the company’s cage whilst depositors and investors in the junket firm told media that they were not able to withdraw their deposits from the junket since the cage capital theft case broke two weeks ago.

Ongoing investigation

ecretary for Economy and Finance Lionel Leong Vai Tac (pictured) said the government will follow up the Dore case in accordance with the law. The Secretary told reporters yesterday in Mainland China that the SAR Government will evaluate its enforcement and supervision of the city’s gaming industry

and will make improvements. Lionel Leong added that the summer holiday had just passed and September is not a traditionally hot season for tourism, hence the government would pay further attention to the changes of the tourism and gaming revenues, as well as the economy slowdown and

the consolidation of local gaming industry in general. However, the Secretary stressed the government’s confidence in the SAR’s longterm future, in line with its positioning as a centre of world tourism and leisure. Last week, local junket operator Dore Entertainment Co. Ltd. said its former

Macau police are investigating alleged fraud involving one of the gambling hub’s biggest junket operators after the company said an ex-employee had stolen money from investors, the latest incident to hit an industry reeling from a slump in revenues. The crime, which involved junket operator Dore Holdings, has triggered daily protests by its investors and calls by lawmakers for increased scrutiny of the opaque junket system amid a wider crackdown on corruption and illicit transactions.

The junket system lets companies or individuals loan credit to gamblers, mainly VIPs, on behalf of Macau’s casinos. These VIP gamblers accounted for over 70 per cent of monthly gaming revenues at the start of 2014, an amount that has now slipped to around half, with several junket businesses shutting down. Analysts estimate the number of junket tables has fallen by some 20 per cent since the start of this year. Dore Holdings operates three rooms for VIP gamblers in the Wynn Macau casino. The company has said it was a victim of fraud, after the former employee raised funds from investors in its name, and then stole the money. Dore has refused to pay back investors and frozen its accounts to prevent them from withdrawing funds from the company. Police say that based on investors’ claims, the fraud involved at least HK$300 million (US$39 million). A spokesman said the investigation was ongoing. Legislator Jose Coutinho told Reuters the crimes related to junkets were damaging Macau’s reputation, particularly as other Asian casino hubs pull out all the stops to attract wealthy gamblers. “The government needs to oversee the system better, there is a lack of supervision on the issue,” he told Reuters. K.L. with Reuters

6 | Business Daily

September 22, 2015

Macau

Analysts capitulate on second-half recovery Analysts have given up on the idea of a second-half recovery of Macau’s gaming industry, now assuming a US$14 billion revenue decline in one year

or Macau casinos analysts, this is what capitulation looks like. As revenue declined month after month this year, they have steadily cut their estimates for how the year will turn out. In January, they forecast a slight increase in overall casino revenue after the 2.6 per cent decline in 2014, the first drop in the city’s history. That estimate kept sliding throughout the year until the median estimate from 12 analysts surveyed by Bloomberg is now for a 32 per cent slump.

The mass segment by default takes time to build because you rely on word of mouth to spread reputation and create desirability to come to Macau Richard Huang, analyst at Nomura Holdings Inc

They have given up on the idea of a second-half recovery, now assuming a US$14 billion revenue decline in one year. China’s relentless crackdown on graft and the slowing economy have forced high rollers to lay low. Looser travel restrictions on Chinese nationals and a possible easing of a proposed smoking ban might have boosted optimism. That didn’t last long. A yuan devaluation, stock rout, government clampdown on money flows and the latest scandal of alleged fraud committed by a junket operator employee added concerns to the hardluck industry. The scandal “gives an additional reason to dislike the overall Macau gaming space because of the potential

overhang,” said Richard Huang, an analyst at Nomura Holdings Inc. “I’m not optimistic about the future of the VIP business.” Huang forecast a 31 per cent decline this year and a 5 per cent growth in 2016. Gross gaming revenue could fall to about US$30 billion this year, US$14 billion shy of the US$44 billion posted in 2014. Casino shares fell, with Galaxy Entertainment Group Ltd. dropping 3.9 per cent and Sands China Ltd. down 2.5 per cent by the close of trading in Hong Kong. The Bloomberg Intelligence Macau Gaming Index has fallen 40 per cent year to date, against the Hang Seng Index’s 8 per cent decline.

Amid a weak market, revenue per available room in some of the hotels has dropped in the second quarter according to Bloomberg Intelligence data, and hotels are offering steep discounts to draw more customers. Sands China, which has the most rooms in Macau among six operators, took out advertisements in Hong Kong newspapers offering rooms costing as low as HK$788 (US$102) until February next year. Galaxy Hotel has discounts as low as 30 per cent. Casino bosses are betting new resorts will help turn around the industry by luring more customers with their family-friendly attractions, such as Melco Crown Entertainment Ltd.’s Batman ride, Asia’s tallest Ferris wheel and Madonna concerts among other non-gaming features at its resort due to open in October. The market may grow 5 per cent next year, followed by another 10 per cent gain in 2017, according to the Bloomberg survey. While VIP revenue continues to slump, the massgambling market has shown signs of growth, partly helped by the resort expansion of Galaxy, said Nomura’s Huang. One major test for the former Portuguese colony would be visitation during the weeklong China National Day holiday which lasts from Oct. 1-7 this year. Major hotels including those at Galaxy hotels, Melco Crown, Wynn Macau Ltd. and MGM China Holdings Ltd. are fully booked, according to calls to the properties. Still, gambling houses need the big spenders for now to generate revenue. Though Macau government wants to draw more tourists, those patrons who make lower bets won’t immediately provide significant growth, said Huang of Nomura. “The mass segment by default takes time to build because you rely on word of mouth to spread reputation and create desirability to come to Macau,” he said. Bloomberg

Corporate

CEM promotes renewable energy

GEG invited Caritas to lantern decoration workshop

In the past two years CEM successfully held at Coloane Power Station a ‘Solar & Capacitance Model Car Race’ in collaboration with Macau Youth Federation, the General Association of Chinese Students of Macau and the Youth Center of Macau Federation of Trade Unions, and the technical support of Hong Kong Technology & Renewable Energy Events (HK TREE). This year, a record of 600

With the approaching Mid-Autumn Festival, GEG invited members from Caritas Macau to Broadway Macau™ for a private lantern decoration workshop. Entertained by a professional body paint artist and performers, forty single families spent the afternoon creating and decorating lanterns with GEG volunteers. In the evening, the participants further took part in a cheerful lantern parade with their self-decorated

students and teachers forming almost 100 teams in representation of 23 local schools are expected to participate in the event, which aims at enhancing Macau students’ consciousness and recognition of the usage of renewable energy, and improving their scientific and technical knowledge and interest in the field, thus understanding the important role that renewable energy plays in our daily lives.

lanterns that drew the attention and admiration of many onlookers. During the workshop, GEG volunteers assisted the participants in decorating their unique lanterns and in incorporating watercolor tools with their creativity and teamwork. GEG invited the participants to dinner at Broadway Macau to continue sharing happiness and warmth during the festive season.

Business Daily | 7

September 22, 2015

Macau

Heng Sheng Group enters Cambodia After Macau, Vietnam and the United Kingdom, Heng Sheng now enters another market in a partnership with Australian casino operator Donaco International João Santos Filipe

jsfilipe@macaubusinessdaily.com

aming promoter Heng Sheng Group started operating on Sunday in the Cambodian casino Star Vegas, in Poipet, the owner of the property, Donaco International Limited, announced yesterday in a filing with the Australian Securities Exchange. The agreement signed by the Macau-based junket and the Australian company has a duration of three years and is seen as an opportunity by the local casino to expand its client base to reach Mainland Chinese customers. ‘Heng Sheng Group is one of Macau's leading VIP gaming promoters. Under the three-year deal, Heng Sheng will bring their VIP players to a new dedicated gaming facility at the Star Vegas Resort & Club. This has expanded the customer base of the Star Vegas beyond its current patronage by Thai customers’, the casino operators said. “Today marks the beginning of our exciting new partnership with the Heng Sheng Group. I am pleased to witness the commencement of the

weeks. This is a testament to the quality and capacity of the Star Vegas property, and the professionalism and dedication of our team”.

Party for 400 VIP gamblers

next phase of growth for Donaco, and for the Star Vegas in particular”, the Managing Director and Chief Executive Officer (CEO) of Donaco, Joey Lim, stated.

“Further, I am very proud of the efforts made by our team at the Star Vegas, who have essentially fitted out and prepared an entirely new VIP casino within a matter of

THERE ARE THINGS WE DON’T DO BUT WE DO • Advertising • Branding & marketing consulting • Marketing strategy • Creativity • Design

The opening ceremony of the Heng Sheng VIP club was attended by 400 VIP players and included dragon and lion daces and Chinese food, according to Donaco International. The new gaming facility has its own separate grand entrance. On the day of the opening Donaco said that the VIP room had a total of 30 VIP gaming tables, which may be expanded in the future to 50 gaming tables. The agreement guarantees that Heng Sheng will pay a minimum turnover of THB3 billion (MOP669.2 million) per month to the Australian casino company. However, Heng Sheng, which will also pay all junket commissions, will receive a large share of the profits from the joint venture. The Macau-based Heng Sheng Group was established in 2011 and besides Cambodia provides VIP gaming services in Macau, Vietnam and the United Kingdom.

There are men and women who give human kind their perseverance, their genius, their generosity and, in some cases, their own life. Those people and their actions are our inspiration.

•••

info@goldfishmacau.com +853 2833 1258

8 | Business Daily

September 22, 2015

Greater China

Companies show resilience in

Revenue rose at 59 percent of service sector firms surveyed in the third quarter, up six pe

rofit margins at Chinese firms improved in the third quarter while loan demand remained weak, a private survey showed, with the overall results suggesting the stock market crash would have minimal impact on the broader economy. The quarterly survey of over 2,100 businesses by China Beige Book International (CBB) showed continued robust growth in the service sector but persistent weakness in manufacturing. Still, while revenue growth slowed quarter-on-quarter, and only 38 percent of firms surveyed planned to hire more staff in the fourth quarter

KEY POINTS China Beige Book quarterly survey shows relative stability despite market crash Revenue growth slows slightly but capex rises Manufacturing weakens but services still vigorous Loan demand weakens sharply from Q2

- down 4 percent on the year - the authors emphasised the relative resilience of the corporate sector heading into year-end. “Q3-15 was hardly a game changer...the broader collapse assumed by disciples of the PMI has strikingly little basis,” report authors Leland Miller and Craig Charney wrote, noting that firms also reported falling real interest rates. “In fact, there is very little to distinguish Q3’s revenue performance from many previous quarters, calling into question August’s global market sell-off that most attributed to China’s sudden ‘fragility’,” they said. The relatively sanguine views of the Beige Book report contrasts with the recent string of weak economic indicators, which have raised fears of a deepening economic slowdown in China and in part prompted the U.S. Federal Reserve last week to hold off from delivering its first rate hike in almost a decade. A stock market crash has further dimmed investor sentiment, which remains fragile despite a flurry of stimulus measures including several interest rate cuts as Beijing stepped up efforts to support an economy growing at its slowest pace in decades.

Hopeful signs

But the report pointed to some hopeful signs, with hiring steady in the third quarter and the economy

Revenue rose at 59 percent of service sector firms surveyed in the third quarter

continuing to draw support from a healthy services sector where many of China’s more productive private enterprises lie. Revenue rose at 59 percent of service sector firms surveyed in the third quarter, up six percent on the quarter. Across all firms, profit margins were up at 47 percent of the companies

Warner Bros joins wave of Hollywood tie-ups in mainland For Hollywood studios, the allure of the Chinese box office has become increasingly difficult to resist Denny Thomas and Adam Jourdan

Research Group, adding it also opened up channels to Chinese facilities and funding. Studios such as Paramount Pictures, DreamWorks Animation SKG Inc, Lions Gate Entertainment Corp and Walt Disney Co have all hooked up with local groups. Films that qualify as co-productions and meet various criteria are exempt from China’s current quota of 34 imported films each year, and have an easier time navigating censorship issues with notoriously picky industry watchdogs. “The country’s incredibly rich history and culture provide a huge trove of great stories, and we want to help tell those stories for new generations of filmgoers, in China and around the world,” Kevin Tsujihara, chairman and chief executive of Warner Bros, said in a statement announcing the venture. Warner Bros is part of Time Warner Inc.

The China attraction

arner Brothers and investment firm China Media Capital (CMC) are forming a joint venture to develop Chinese-language movies, adding to a wave of tie-ups between Hollywood studios and Chinese partners to tap China’s fast-growing box office. The joint venture, Flagship

Entertainment Group Ltd, is being launched ahead of Chinese President Xi Jinping’s official visit to the United States next week and underscores the growing influence of Chinese movies around the world. China’s box office takings, set to hit US$8.9 billion in 2019 from US$5 billion this year, according to PwC, are fast catching up with the

United States, but global studios have a tough time keeping on the right side of the censors and getting around a strict quota system for imported films. “The subtext is all these studios are looking at how they can get better access to the China market,” said Ben Cavender, Shanghai-based principal of China Market

surveyed, 2 percent higher than the second quarter. Capital expenditure was another bright spot, rising for the second quarter in a row, with 48 percent of firms surveyed reporting increases in capex, up 3 percent on the second quarter. Loan demand, however, was extremely weak, continuing a

For Hollywood studios, the allure of the Chinese box office has become increasingly difficult to resist, which has at times led to concerns about self-censorship to gain access to the market. While box office receipts in the United States and Canada combined fell 5 percent last year to US$10.4 billion, box office receipts in China jumped around a third to US$4.8 billion, according to the Motion Picture Association of America Inc.

China is on course to set a new record this year with box office receipts having already overtaken last year’s total. Warner and CMC said the Chinese box office could surpass US$10 billion annually in the next four years. A boom of online platforms is also driving a home video market for digital content. “With the proliferation of platforms available to consumers, premium content is more valuable than ever,” CMC founder and Chairman Ruigang Li said, adding the deal would mix Warner Bros’ storytelling expertise with CMC’s on-the-ground savvy. Hollywood movies typically top China’s box office charts, but local films are gaining strength. Partanimation “Monster Hunt” recently toppled Hollywood blockbuster “Furious 7” as the country’s biggest-ever grossing film. Flagship will be owned 51 percent by CMC and 49 percent by Warner Bros. Hong Kong broadcaster TVB, as part of the CMCled consortium, will have a 10 percent stake in the venture. The JV plans to develop and produce films for distribution throughout China and around the world, utilising Warner Bros’ global film distribution network. The first titles could be released as early as 2016. Raine Group was a financial adviser to Warner Bros on the deal. Reuters

Business Daily | 9

September 22, 2015

Greater China State planner says oil, rail sectors next in reform line

ercent on the quarter

Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms

pattern evident for much of the year. Of bankers surveyed, only 36 percent reported a rise in applications, down 11 percent from the second quarter. Moreover, the modest rebound in the real estate and construction sector evident earlier in 2015 also appeared to be losing steam. Reuters

hina’s top economic planner will implement mixed ownership reforms in electricity, oil, rail and airlines sectors as part of Beijing’s overhaul of its inefficient state-owned enterprises, state media reported. The comments were made by the National Development and Reform Commission’s (NDRC) assistant director, Liu He, at a recent state planner meeting, the China Securities Journal newspaper reported on Monday. On September 13, China issued details of plans to further reform its bloated and underperforming stateowned enterprise (SOE) sector in what is expected to be its biggest overhaul in two decades. A “mixed ownership” model, intended to bring in private investors as stakeholders is one main emphasis of the plan. The government has said it expected decisive results by 2020. Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms, according to the plan. Reform guidelines have also emphasized continued party control

over key sectors and the need to balance national and commercial interests. Many of China’s major centrally owned state-owned enterprises already have part-private ownership, including the nation’s largest oil producer, China National Petroleum, and the bigger refiner, Sinopec. Analysts have questioned whether further minority stakes by the private sector will give investors sufficient leverage to impose change in China’s powerful state enterprises. In September, state-controlled Sinopec Corp sold 30 percent of its retail business to 25 big financial firms for US$17.5 billion, while China’s two largest train makers were merged earlier this year into rail giant CRRC Corp Yesterday, state rail builder China Railway Group said it would inject equity interests in some of its industrial manufacturing subsidiaries into its unit, China Railway Erju, in exchange for the latter’s existing assets and businesses as part of a restructuring. Reuters

Taiwan’s Hon Hai offers to buy Sharp’s LCD business

Tianjin to check companies handling dangerous materials The Binhai New Area in Tianjin has launched safety inspections on companies that handle dangerous chemicals or goods following warehouse blasts that caused grave casualties in mid-August. The safety checks, which started Sunday and will continue until the end of this year, target enterprises that produce, store or use dangerous chemicals, as well as companies that transport dangerous goods, a spokesman with the area’s government told Xinhua yesterday. Binhai New Area has set up a leadership office of nearly 100 officials to carry out the operation.

Premier urges “urgent” state firms reform Chinese Premier Li Keqiang has called for state-owned enterprises (SOEs) to press ahead with mergers and acquisitions to improve their competitiveness and for the disposal of “zombie” enterprises, the official Xinhua news agency said late on Sunday. State-owned enterprises are “in urgent need of reforms as languid mechanism and poor management have resulted in declining profits”, Xinhua quoted Li as saying at a meeting on SOE reform last Friday. China unveiled earlier this month details of how it would restructure its SOEs.

Mainland crucial for Chilean mining sector “For Chile, China is a very important market as it absorbs between 47 and 50 percent of Chile’s copper production,” Chilean Minister of Mining Aurora Williams told Xinhua in a recent interview. China needs Chilean copper for numerous works, including the building of new cities and the extension of existing cities, the minister said. “The growth of the Chinese economy influences the price of copper around the world, and the slightest change in its economy will affect Chile as a commodities exporter,” she added.

Sharps’s Chief Executive Kozo Takahashi had initially resisted calls from investors, but in July, he told reporters that Australia’s Victorian Sharp’s losses, meant it needed to consider more options premier on trade visit

aiwan’s Hon Hai Precision Industry Co offered to buy Sharp Corp’s struggling liquid panel display business and plans to seek funding from Apple Inc, the Nikkei business daily reported on Monday. The report did not specify how much Hon Hai, also known as Foxconn, was willing to pay for the loss-making operations, but said it would seek funding from Apple, a key Sharp customer. Sharp said it could not yet comment on the report except to say it was “considering various options for the restructuring of the LCD business”. Hon Hai, which goes by the trade name Foxconn, also declined to comment, saying it was company policy not to comment on speculation. Osaka-based Sharp was once a highly profitable manufacturer of premium TVs and a favoured screen supplier to Apple and others, but it has come under heavy pricing pressure from Asian rivals. In May, it sought a bailout of roughly US$1.9 billion from banks and promised to cut 5,000 jobs, or 10 percent of its staff. Chief Executive Kozo Takahashi had initially resisted calls from

investors for a more drastic overhaul of the LCD business, saying he was not considering a spin-off. But in July, he told reporters that Sharp’s losses, totalling 28.8 billion yen (US$240.42 million) on an operating basis in April-June, meant it needed to consider more options. Sources told Reuters last month that Sharp was considering a tieup with Hon Hai as well as cash injections from other entities including the state-backed Innovation

Network Corporation of Japan, a top shareholder in Sharp rival Japan Display. Tie-up talks between Hon Hai and Sharp fell through in 2012 after the Japanese company baulked at demands that it said would have given the Taiwanese firm too much control. The two corporations remained in contact and jointly operate a plant in Osaka, western Japan, that makes large LCD panels. Reuters

Premier Daniel Andrews has started a seven-day tour to China to boost relations and trade with the Asian country. Making his first international trip as premier since coming to power in November, 2014, Andrews said he chose China as it is Victoria’s largest international trading partner, with trade between the two parties worth US$14.7 billion in 2014/15. The premier said in a statement that China is “most important” for the state’s economy, noting the visit, made by a delegation of seven, would boost relations between the two parties.

Malware hits Chinese apps in Apple App Store Some of the most popular Chinese names in Apple Inc’s App Store were infected with malicious software, cyber security company Palo Alto Networks said in a blog on September 18. Palo Alto Networks said the XcodeGhost malware infected several popular Apple iOS apps, including Tencent Holdings Ltd’s mobile chat app WeChat, car-hailing app Didi Kuaidi, and a music app from Internet portal NetEase Inc. The Wall Street Journal said in an article on Sunday that the applications were infected after software developers were lured into using a compromised version of Apple’s developer tool kit.

10 | Business Daily

September 22, 2015

Greater China

Citic Securities bulls seen capitulating Declines in Citic Securities’ shares have made valuations the cheapest on record Fox Hu and Kana Nishizawa

nalysts are too optimistic on Citic Securities Co. That’s the view of Hong Kong traders at Changjiang Securities Holdings (HK) Ltd. and Geo Securities Ltd., who predict analysts will cut their recommendations as a government campaign to stop the equity rout-- from a crackdown on speculative trading to suspending initial public offerings -- reduces profits across the industry. Brokerages are also being compelled to foot a 220 billion yuan (US$35 billion) rescue bill for the stock market, while an investigation into the turmoil has ensnared Citic Securities’ president. So far, ratings on Citic Securities have been resistant to bad news. As shares at China’s largest brokerage tumbled 56 percent in Hong Kong in the past five months, analysts increased their bullish recommendations, with the consensus call rising to 4.2 from 3.9 on a scale where five equates to a unanimous buy ranking. And it’s not just Citic that’s favoured. The average rating of the next four largest Chinese securities firms listed in Hong Kong is 4.6, higher than the 3.8 for the five biggest in the U.S. “Many of the target prices are too high because they are based on firsthalf numbers with little foresight,” said Nelson Yan, the Hong Kong-based chief investment officer of Changjiang Securities. “The brokerage sector is facing problems such as smaller stock turnover, lower trading profit and curbs on margin financing and futures trading. The government’s probe is causing concerns in addition to all these problems.” Citic Securities’ net income tripled

in the first six months of the year after turnover in Shanghai reached the highest ever and fees from margin lending surged. That’s a feat it’s unlikely to repeat: the value of shares traded on the Shanghai Composite Index has tumbled more than 80 percent from its peak, the futures market’s on life support and margin loans tracked by Chinese exchanges have declined by more than half. A regulatory probe of activities by the firm’s president, Cheng Boming, and two other senior executives comes after police questioning of Citic Securities’ executives in recent weeks. The official Xinhua News Agency reported last month that eight people at the company were suspected of illegal securities trading. All the “negative news” is “affecting investor sentiment on the shares,” said Ben Kwong, a director at brokerage KGI Asia Ltd. in Hong Kong. “It seems all the effort in past years has evaporated.” Just eight months ago, booming trading revenue pushed the market value of Citic Securities to levels almost on par with UBS Group AG, the Swiss investment bank. The firm is part of Citic Group, the nation’s first state-owned investment corporation, which was set up in 1979 as part of leader Deng Xiaoping’s push to modernize the country.

Cheap valuations

Citic Securities has 18 buy ratings, six holds and two sell recommendations by analysts tracked by Bloomberg, even after the stock’s tumble from its April record wiped out US$40 billion of value, equivalent to the

total market capitalization of U.S. investment firm Charles Schwab Corp. Declines in Citic Securities’ shares have made valuations the cheapest on record, while brokerages can still deliver a 10 percent return on equity, Jefferies Group LLC said in a note last week, reiterating its buy recommendation on the stock. The stock was valued at 7.3 times reported profit on September 18, down from a high of 44 times in 2013.

Many of the target prices are too high because they are based on first-half numbers with little foresight Nelson Yan, Hong Kong-based chief investment officer Changjiang Securities

The valuation multiple fell to the lowest this month since the shares first traded in 2011. Haitong Securities Co. and China Galaxy Securities Co. trade at less than 7 times earnings after falling more than 50 percent over the past five months.

National service

There are signs analysts’ conviction in Citic Securities’ prospects is wavering. HSBC Holdings Plc cut its buy rating on the stock to hold on September 16 and reduced its target price by almost half to US$18. Bank of America Corp. lowered its recommendation to underperform from buy earlier this month, saying the size of the “national service” contributions to support the stock market was bigger than expected. Brokerages were asked by the securities regulator to contribute 100 billion yuan to the nation’s market rescue fund, people familiar with the matter said last month, adding to the 120 billion yuan pledged by a group of 21 securities firms in July. Still, analysts see Citic Securities’ shares rallying to HK$26.30 in the next 12 months, 68 percent higher than the last close. For Francis Lun, chief executive officer at Geo Securities in Hong Kong, HK$11 is closer to the mark, or 30 percent below Friday’s close, as uncertainty over what the government does next deters investors. Analysts “need to do their homework again,” said Lun. “Who will want to play the China market now? Nobody. I wouldn’t want to invest there.” Bloomberg News

Business Daily | 11

September 22, 2015

Greater China

Taiwan export orders fall for 5th month on global slowdown

China’s stock market and foreign-exchange fluctuations are short term and the country can maintain a medium to high economic growth rate, China’s Vice Finance Minister Shi Yaobin said yesterday. A string of downbeat activity data combined with wild price swings in the stock markets and a surprise currency devaluation in August have fuelled fears that the Chinese economy may be slowing more sharply than was expected earlier, putting Beijing’s 2015 growth target of 7 percent at risk.

The drag from exports on economic growth has raised the possibility the central bank may cut its policy interest rate for the first time since 2009 Faith Hung and Jeanny Kao

aiwan’s export orders contracted for a fifth month in August as demand from China and key markets continued to deteriorate, putting the economy on track for its slowest growth in six years. The bigger-than-expected order decline does not bode well for tradereliant Asian economies hoping for a recovery in exports heading into the year-end shopping season and raises the chances that Taiwan’s central bank will cut interest rates. A slowdown in China, among the two biggest markets for Taiwan, is weighing on the island’s exports and has prompted the government to slash its 2015 full-year economic growth forecast to 1.56 percent from 3.28 percent previously. Annual export orders in August declined 8.3 percent, Taiwan’s Ministry of Economic Affairs said, worse than the 4.6 percent slide forecast in a Reuters poll. U.S. order growth fell to a mere 0.6 percent in August from nearly 11 percent growth in July. Orders declined from other major markets, down 14.8 percent from China, 12.1 percent from Europe and 17.1 ercent from Japan, the ministry said. The 8.3 percent contraction in overall export orders was the worst since August 2009 when ruling out distortions from the Lunar New Year, the ministry told a news conference.

The dates of the long holiday are different in every year according to the lunar calendar. Taiwan’s export orders, which are seen as an indication of the strength of Asian exports and of global demand for technology, have been contracting after surging last year from strong demand for Apple Inc’s iPhones. The drag from exports on economic growth has raised the possibility the central bank may cut its policy interest rate for the first time since 2009 on Thursday. Economist Tim Condon of ING said in a research report ahead of the data the current gap between orders growth and shipment growth was the widest since the global financial crisis. “An obvious explanation that comes to mind is that customers cancelled orders at the last minute,” he said. On the bright side, manufacturers may get a lift from the release of new Apple products in the fourth quarter. Orders in Septembers are likely to exceed August’s $35.03 billion in August, the ministry said, though it has said that it did not rule out a fullyear drop in overall export orders. Among the seven major categories, only information and communications products posted year-on-year growth in August, up 4.7 percent. Precision equipment and basic materials both shed more than 20 percent. Reuters

Taiwan raises cap on independent Mainland tourists The cap on independent mainland tourists visiting Taiwan has been raised from 4,000 to 5,000 per day starting from this week as the island tried to recover from disappointing tourism business. Taiwanese authorities said last week they would increase the number of mainland tourists they allow to enter after Taiwan’s financial agency announced that the global spending slowdown had affected tourism revenue. Additionally, the number of visitors allowed to travel between east China’s Fujian Province and Kinmen and Matsu was increased from 500 to 1,000 per day from September 10.

KEY POINTS

Governance seminar with Lao authorities

August export orders -8.3 pct y/y vs -4.6 pct in Reuters poll U.S. orders +0.6 pct y/y; China -14.8 pct Europe orders -12.1 pct y/y; Japan orders -17.1 pct

Israel to bring in 20,000 Chinese construction workers The Chinese pace of work in building high-rise buildings was 50 per cent higher than that of Israelis, Palestinians and others

srael plans to bring in 20,000 Chinese construction workers to help build new apartments as part of efforts to lower housing costs, Prime Minister Benjamin Netanyahu said Sunday. Netanyahu announced the plan at the start of a cabinet meeting, his office said. The finance ministry later said the cabinet had approved it. Israeli attorney general Yehuda Weinstein has opposed the move because the two countries lack a formal agreement related to such cooperation. The lack of an agreement can lead to immigrant workers paying middlemen hundreds or even thousands of dollars to obtain permits. Chinese workers are currently brought into Israel under private contracts between Israeli and Chinese companies. The two countries have engaged in negotiations on working conditions, but have not yet reached an accord. A statement from the finance

ministry said that due to the urgency of the matter, the workers would be brought without a bilateral agreement, while creating mechanisms to ensure their rights were protected and prevent them from paying middlemen for permits. Netanyahu said that it was important to move forward despite "side costs," with the cost of living a major issue in Israel. "In my view, this is a necessary and important step to lower housing prices," Netanyahu said. Israel's construction sector employs 216,000 workers, including 37,000 Palestinians and 6,000 foreigners, with some 3,700 Chinese. The finance ministry said the lack of skilled Israeli and Palestinian construction workers, as well as the instability in employing Palestinians -- whose permits can be revoked due to the security situation -- have created a shortage of workers. The Chinese's pace of work in building high-risers was 50

Vice minister talks of market fluctuations

Chinese workers are currently brought into Israel under private contracts between Israeli and Chinese companies

percent higher than that of Israelis, Palestinians and others, the finance ministry said. China told Israel in June it will not allow migrant builders to work on settlements in the occupied West Bank. Construction in settlements, where some 400,000 Israelis live, accounts for about three percent of the total. AFP

The Communist Party of China (CPC) and the Lao People’s Revolutionary Party (LPRP) held a seminar in Kunming yesterday themed “Innovation in Social Development and Governance.” Liu Qibao, a member of the Political Bureau of the CPC Central Committee, and Laotian Deputy Prime Minister Somsavat Lengsavad, attended the event. China has made rapid progress in social development in recent years, Liu said. He highlighted the importance of attention to people’s livelihoods, justice, improvement of governance modes and leadership by the Party. Somsavat introduced Laos’ practices in social development and governance.

HKEx chairman backs CEO Charles Li

Hong Kong Exchanges and Clearing’s (HKEx) chairman has backed company Chief Executive Charles Li following a report in the Wall Street Journal linking Li to hiring practices at his former employer JPMorgan Chase & Co that are being investigated. In a statement issued yesterday, Chow Chung-Kong said of the report: “As far as we are aware, this story does not have any bearing on Mr Li’s role at HKEx and its business. Under Charles Li’s leadership and through a number of important and strategic initiatives, HKEx has substantially grown its business.”

12 | Business Daily

September 22, 2015

Asia

Infrastructure spending in Indonesia picking up The government has spent only 14 per cent of its US$542.80 million capital budget for the full-year, though Fransiska Nangoy and Hidayat Setiaji

President Widodo, who has made infrastructure development the centrepiece of his economic plan, yesterday urged companies not to delay infrastructure projects any further

nfrastructure spending in Indonesia is beginning to pick up after lengthy delays, a welcome relief for President Joko Widodo's

plan to jump start Southeast Asia's largest economy by building new roads, ports and bridges. In the past few weeks,

the government has sped up capital spending, leading to a surge in cement sales and imported capital goods and raw materials.

That has helped support shares of construction firm Adhi Karya Tbk, cement maker Semen Indonesia and other infrastructure-linked firms. The basic industry sector, which covers building material stocks, has risen 3.6 percent in the past month, outperforming the main index, which has fallen 2.9 percent over the same period. "With public spending gaining more momentum, we see the stage as being set for a strong rebound in the second half with a growth dividend coming through meaningfully in 2016," said Barclays economist Wai Ho Leong in a research note. Bureaucratic red-tape and a lack of policy coordination hindered capital spending in the first seven months of this year, with second-quarter economic growth falling to its slowest since 2009. The government had spent only 14 percent of its 276 trillion rupiah (US$542.80 million) capital budget for the full-year by the end of July.

That has risen to 25 percent in August, a near doubling of capital spending in just one month but still far off the year's goal with less than four months to go. Annual cement sales likely increased by 15 percent in August, the first increase since January, said Citi Research in a research note. Stronger sales have helped lift shares of the country's largest cement maker, Semen Indonesia, by more than 30 percent after hitting a sixyear low last month. Adhi Karya, whose shares have jumped 21 percent over the past month, started building a light rail transit project earlier this month and has signed 7.8 trillion rupiah (US$542.80 million) in construction contracts so far this year. "The increase in disbursement is starting to show, reflected by the growing number of contracts acquired by our company," Ki Syahgolang Permata, the firm's corporate secretary, told Reuters. Widodo, who has made infrastructure development the centrepiece of his economic plan, yesterday urged companies not to delay infrastructure projects any further. "We are far behind other big cities in the world. We shouldn't be late in making decisions," Widodo said at an event launching the next stage of a US$1.5 billion mass rapid transit project in Jakarta. Reuters

India's growth expected to top last year's Finance minister said India stands to benefit from cooling growth in China because it has led to weaker oil and commodity prices

ndian Finance Minister Arun Jaitley said yesterday he hopes the economy will grow faster this year than last, and expects that Asia's third-largest economy will not see a big hit from China's slowdown. Jaitley, who is on a road trip meeting foreign investors in Hong Kong and Singapore, also said his government's "ambitious" privatisation programme had been slowed by global market volatility. "We would have moved much faster but the markets have been in somewhat of a turmoil," he told reporters after giving a keynote address at an investor conference. India has already delayed share sales in state-run oil firm ONGC, hurting the chances of raising the targeted US$11 billion from privatisation efforts this financial year which ends in March 2016. "Do you hit the market when it is unpredictable or stabilised?" he said.

The government is aiming for 8-10 percent annual economic growth

While fears of a China-led global slowdown have roiled financial markets in recent weeks, Jaitley said India stands to benefit from cooling growth in China because it has led to weaker oil and commodity prices, and put India on the map as a potential alternative investment destination. While the slowdown had hurt stock markets globally, the impact on other parts of India's economy has been muted because it was not a significant part of China's supply chain. India's economy grew 7.3 percent last year. The government is aiming for 8-10 percent annual economic growth, the junior finance minister said last week. Jaitley also said that a draft of India's bankruptcy law was almost ready and he hoped to submit it to parliament in the near future, but did not specify a time frame.

India does not have formal bankruptcy legislation and banks, particularly state-owned lenders heavily exposed to infrastructure such as roads and ports, have struggled to recover much of the bad debt piling up on their balance sheets using available mechanisms. Loans classified as bad accounted for about 4.4 percent of Indian bank loans as of March, according to rating agency ICRA. However, including loans that have been restructured and problematic loans hit 10.6 percent, acting as a drag on credit growth and the overall economic recovery. Asked about why India makes it difficult for firms to access external funds compared with other countries, Jaitley said it is a sectoral issue and capital markets reforms are under way, again without disclosing specific details. Reuters

editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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Business Daily | 13

September 22, 2015

Asia

Australia pressures Indonesia on cattle imports Indonesia is the biggest market for Australia’s lucrative live export trade, which employs thousands of people Fonterra cuts more jobs New Zealand dairy exporter Fonterra said yesterday it will cut more jobs than previously flagged as the farmer-owned co-operative struggles with weak dairy prices. Chief Executive Theo Spierings said Fonterra would cut another 227 jobs, adding to about 520 it announced in July. The cuts amount to more than 4 percent of Fonterra’s 16,000 workers globally. The redundancies began in July and are expected to be completed by mid-October. Slowing economic growth in New Zealand’s top export market, China, and a global oversupply of milk products have seen dairy prices plummet after reaching record highs in 2013.

We can make sure we’ve got the supply when it’s wanted here in Indonesia Andrew Robb, Australian Trade Minister

ustralia’s trade minister called yesterday for Indonesia to set an annual quota for cattle imports to bring more certainty for Australian exporters and ease tensions between the neighbours on the issue. Indonesia is the biggest market for Australia’s lucrative live export trade, which employs thousands of people. But the issue has often been a flashpoint, most recently when Jakarta unexpectedly slashed imports of Australian cattle in the third quarter of this year by 80 percent. During a one-day visit to Jakarta, Australian Trade Minister Andrew Robb said setting an annual quota for cattle imports would be a “more stable arrangement”, instead of deciding on the figure each quarter, as Indonesia does now.

“We can make sure we’ve got the supply when it’s wanted here in Indonesia,” Robb told reporters, ahead of talks with his Indonesian counterpart Tom Lembong. He said such an arrangement would only require setting a “base level” of cattle for the year, and Indonesia could later increase the quota if needed. Indonesia insisted earlier this year its decision to slash imports was aimed at achieving selfsufficiency in beef supplies. But it sparked concerns that tensions caused by Jakarta’s execution of two Australian drug smugglers in April was affecting trade ties. However beef prices soared and butchers went on strike following the quota cut, prompting Jakarta

Philippines allows top coal producer to resume mining

to swiftly issue permits to import tens of thousands more cattle. Relations between the neighbours have historically been stormy but hit a new low following the executions, with Canberra taking the unprecedented step of recalling its ambassador from Jakarta. However Australian Foreign Minister Julie Bishop insisted this month that ties between the neighbours were back in “very good shape”. Robb’s visit came a week after Malcolm Turnbull ousted Tony Abbott in a swift internal party coup to become Australian prime minister. Turnbull made major changes to the cabinet but Robb retained his post. AFP

S. Korea’s parliamentary budget office cuts growth outlook The forecasts were more pessimistic than those most recently made by the Bank of Korea and the finance ministry

outh Korea’s National Assembly Budget Office (NABO) cut its 2016 economic growth forecast to 3.0 percent from 3.3 pct, noting it might fare better than this year, but could be curbed by offshore developments, it said yesterday. The parliamentary budget office said yesterday’s estimate was revised down from the forecast of 3.3 percent for next year it made in May. It also revised this year’s growth forecast to 2.6 percent from 3.0 percent. “Our economy in 2016 is likely to face challenges due to confusion stemming from U.S. rate hike expectations, sluggishness in the Chinese economy, and possible economic crises in emerging

economies,” said the report. NABO’s forecasts do not have a direct role in the government’s projections or policies, but are often referenced by lawmakers. The budget office is a party-neutral body that aims to help lawmakers evaluate national finances and policies. The report pointed to accumulating household debt and poor sentiment among firms and consumers as internal downside risks to growth. Domestic demand will likely show a mild improvement from this year based on capital investment, while exports are also expected to recover from this year in line with overall global demand, which will likely pick up in 2016, NABO said.

South Korea will continue to post a current account surplus in 2016, which is expected to stand at 6.8 percent of gross domestic product at year-end, it added. The forecasts were more pessimistic than those most recently made by the Bank of Korea and the finance ministry, which have both projected Asia’s fourth-largest economy will grow by 3.3 percent next year. For this year, the central bank has forecast the economy will grow 2.8 percent and the finance ministry predicted 3.1 percent. South Korea’s economy grew 3.3 percent in 2014. Reuters

Semirara Mining and Power Corp, the Philippines’ biggest coal producer, said on Monday the Department of Energy had allowed it to resume mining operations following a two-month suspension. Semirara, a unit of Philippine conglomerate DMCI Holdings Inc, was forced to halt coal exports following a suspension imposed from July 17 after a landslide at Semirara’s Panian mine in central Philippines buried nine workers alive. In a September 17 letter to Semirara President, Department of Energy OIC-Secretary said Semirara has “substantially complied with the conditions...resulting in a marked improvement in the level of safety in its mining operations.”

Thai bank boosts provisions on loans to steel firm Thailand’s Siam Commercial Bank (SCB) said it has set aside up to 11 billion baht (US$307.86 million) in additional provisions in the current quarter on loans made to loss-making Sahaviriya Steel Industries (SSI) and its subsidiaries. The disclosure yesterday by SCB, Thailand’s third-largest lender, of the new provisioning means two other major Thai banks that have extended large sums as loans to SSI could also be announcing additional provisions, analysts said. SCB, Krung Thai Bank and Tisco Bank gave syndicated loans of about 44 billion baht to SSI, Thailand’s largest steelmaker.

Record immigration hiding NZ economic reality New Zealand had a record net gain of migrants, more arrivals than departures, in the year to the end of August, driven by arrivals from Asia, the government statistics agency said yesterday. The annual net gain in migrants hit 60,300 in the August year, according to a commentary from Statistics New Zealand. The three biggest source countries in Asia: 12,700 migrants came from India, 8,400 from China and 4,500 from the Philippines. The record annual permanent and long-term net gain of migrants resulted from 117,900 arrivals, and 57,600 departures.

14 | Business Daily

September 22, 2015

International S&P upgrade, Syriza win push Portuguese yields Portuguese bond yields hit one-month lows yesterday after Standard & Poor’s lifted the country’s credit rating and an unexpectedly clear Syriza election win in Greece reassured investors that the country’s bailout will go ahead. Shorter Greek debt yields fell after the election result. A senior Syriza source said debt negotiations would top the new government’s agenda. Yields on French bonds were slightly higher after Moody’s cut the country’s rating by one notch to Aa2, citing continued weakness in the medium-term growth outlook. Spanish and Italian bond yields dipped as well.

Tsipras gets a bigger than expected victory Greece’s left-wing prime minister-elect Alexis Tsipras won a thumping poll victory that hands him a mandate to drive through unpopular reforms agreed under an austerity deal struck with international creditors. The unexpected margin of his victory Sunday came after a mutiny within the ranks of his Syriza party over a U-turn on tough tax hikes and pension reforms felled his government, sending Greek voters to the ballot box for the third time this year. With 99 percent of votes counted Syriza secured close to an absolute majority in the country’s 300-seat parliament.

Carbon pricing schemes double since 2012 The number of carbon pricing schemes worldwide has almost doubled since 2012 but most taxes or markets have prices too low to prevent damaging global warming, the World Bank said on Sunday. Carbon pricing, including emissions trading schemes from California to China, now covers about 12 percent of all greenhouse gas emissions in a sign of momentum before a U.N. summit on climate change in Paris in December, it said. The number of carbon pricing instruments, both implemented or planned, has risen to 38 from 20 since 2012, it said.

English house prices see big jump Asking prices for houses in England and Wales saw their biggest rise in the month to mid-September for 13 years as cheap borrowing and a lack of properties on the market led to market “extremes”, property website Rightmove said yesterday. The asking price for homes rose 0.9 percent, or 2,550 pounds -- the biggest increase for the September period since 2002 -- to a new record high of 294,834 pounds (US$456,904), according to a survey by Rightmove. Prices had fallen by 0.8 percent in the month to mid-August.

Volkswagen to halt U.S. sales of some diesel cars Volkswagen told U.S. dealers to halt sales of some 2015 diesel cars after regulators found software it designed for the affected vehicles gave false emissions data, the company said, announcing it had launched an investigation. The Detroit News reported late Friday that VW dealers still had some 2015 diesel Jetta, Passat and Beetle cars for sale. A VW representative on Sunday confirmed the partial halt of sales of the affected vehicles but did not give any numbers. Winterkorn said, “We do not and will not tolerate violations of any kind of our internal rules or of the law.”

Goldman Sachs warns euro may weaken up to US$10 cents Hedge funds and other money managers boosted net bearish bets on the euro for the third week in the period ended September 15

oldman Sachs Group Inc. says the euro may fall up to 10 U.S. cents as the European Central Bank is set to increase currency-weakening stimulus to meet its inflation target. The investment bank predicts the ECB will maintain quantitative easing at its current pace of 60 billion euros (US$68 billion) a month through the end of 2016, an extension of the plan that was intended to run until September 2016, and only end it completely in mid-2017. “This represents a material upsizing of the original program and should weigh on the single currency,” Goldman Sachs analysts, including Robin Brooks, chief currency strategist in New York, wrote in a report dated Sept. 20. “Depending on how credible an upsizing to ECB QE is, we therefore see scope for euro to fall between six and 10 big figures,” they wrote, referring to a drop of six to 10 cents. Hedge funds and other money managers boosted net bearish bets on the euro for the third week in the period ended September 15 to 84,202 contracts from 81,241, according to data from the Commodity Futures Trading Commission.

‘Very different’

The euro slid on Friday as Benoit Coeure, an ECB Executive Board member, said that U.S. and Europe’s

policy trajectories will “remain very different.” The Federal Reserve kept interest rates unchanged at a policy meeting last week, though Chair Janet Yellen said most officials still expect to tighten borrowing costs this year. Fed Bank of San Francisco President John Williams said on Saturday that the decision was a close one. Coeure’s comments suggested “the Fed reaction was a tactical pause and that the ECB stands ready to

Greenpeace says fuel savings can pay for green energy shift According to Greenpeace wind industry jobs could increase tenfold to nearly eight million

aking the global switch from climate-altering fossil fuels to renewables by 2050 would require an extra US$1 trillion per year, but the bill will be covered by lower energy costs, a Greenpeace report said yesterday. On top of some 600 billion euros per year already earmarked by governments and businesses for investment in renewables, the extra funding would be needed to build enough green energy generators to replace coal-, oil- and gas-fired power stations, it said. The investment would be more than offset by annual savings of nearly US$1.1 trillion in fuel costs, said the report entitled “Energy (R) evolution”, compiled by experts from Greenpeace and the German Aerospace Centre. Wind turbines, for example, run on a “free” energy source -- the wind, while a power station has to be constantly refuelled with expensive coal or gas.

The world’s nations are seeking to curb rampant emissions of climatealtering greenhouse gas emissions in a bid to slow global warming, but the cost of the transformation is often held up as a major obstacle, especially for poor and developing countries. “The solar and wind industries have come of age, and are costcompetitive with coal,” said the report’s lead author Sven Teske of Greenpeace, and warned the fossil fuel industry was “moving rapidly into irrelevance”. “Every dollar invested in new fossil fuel projects is high risk capital which might end up as stranded investment.” The report highlighted that as many as 9.7 million people could have jobs in the solar power industry by 2030 -- more than 10 times as many as today and equivalent to the current number of jobs in the coal sector.

‘Economically favourable’

The researchers based their forecasts on UN estimations for economic

do more,” said Sam Tuck, senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. “Eurodollar will be under pressure on those sort of fundamentals.” The euro has strengthened 3.7 percent in the past three months, the third best performer of 10 developednation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen was the best, rising 6.6 percent, and the dollar appreciated 4 percent. Bloomberg News

development and population growth, and assumed the world’s energy system would be completely “decarbonised” over the next 35 years. They also considered rising energy demand in fast-growing Africa and Asia, offset by lower demand in rich nations resulting in a peak of global demand by about 2020. And the study assumed that renewable energy costs come down as the technology and availability improves. In the short term, electricity could become slightly more expensive -- by about US$0.02 per kilowatt hour, said the authors. But “as prices rise for conventional fuels, these costs will become economically favourable across all world regions by 2030, and by 2050 the fuel cost savings will be 1.7 US cents/kWh,” said the report. Last week, environmental advocates including wildlife documentary filmmaker David Attenborough and climate economist Nicholas Stern, called for investment in research and development to make renewable energy cheaper than coal within 10 years. And a recent study in the journal Science Advances warned that if mankind burns all the fossil fuel left on Earth, releasing some 10,000 billion tonnes of carbon dioxide into the atmosphere, virtually all of Antarctica’s ice would melt, sea levels would rise by tens of metres to flood entire cities, and temperatures would skyrocket to unbearable levels. AFP

Business Daily | 15

September 22, 2015

Opinion Business

wires

Fraud, fools, and financial markets

Leading reports from Asia’s best business newspapers

Robert J. Shiller

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

BANGKOK POST In the face of lacklustre economic growth, weak consumer spending and looming tax challenges, Thailand’s e-commerce market remains in expansion mode. Last month’s deadly bombing in Bangkok put nary a dent in local online shopping. Given changing urban lifestyles and the need for shopping convenience at home, aggressive promotional campaigns and new online store openings, and the proliferation of internet users and mobile devices, the e-commerce market is thriving in Thailand. The reach of online shopping in Southeast Asia is still limited, however, at less than 2% of the overall retail sector.

THE AGE A home-building frenzy that is shoring up Australia’s economy as the mining boom ends may also be what finally takes the steam out of one of the world’s most expensive property markets. Nearly 10,000 apartments will be built in one of Sydney’s newest suburbs in the next four years to satisfy investor demand, which has already sent property prices in the city to the highest ever. It will also add to the record 213,000 new home starts across the country amid slowing population and economic growth, prompting Goldman Sachs to warn of a supply glut by 2017.

JAKARTA GLOBE Bank Rabobank International Indonesia, a subsidiary of the Netherlands-based Rabobank Group, saw the number of bad loans double in the first six months of this year as its debtors took a heavy hit from the weakening economy. Debts that went unpaid for more than 90 days rose to 6.28 percent of its total loan at the end of June, compared to 2.32 percent last year, according to Rabobank’s financial report. Total loans grew 5.4 percent to Rp 12.3 trillion (US$853 million) in the same period.

THE NEW ZEALAND HERALD Economic fears has driven consumer confidence to a three year low and the Government is getting the blame, according to a Westpac survey. The Westpac McDermott Miller Consumer Confidence Index fell slightly from 113.0 in June to 106.0 for the September quarter - the lowest level since 2012. The number one reason given for pessimism was ‘ineffective government economic policy’ followed by dairy prices. Westpac senior economist Felix Delbrück said the last three months had been tough for the economy particularly with Fonterra revising its milk price forecast.

dam Smith famously wrote of the “invisible hand,” by which individuals’ pursuit of selfinterest in free, competitive markets advances the interest of society as a whole. And Smith was right: Free markets have generated unprecedented prosperity for individuals and societies alike. But, because we can be manipulated or deceived or even just passively tempted, free markets also persuade us to buy things that are good neither for us nor for society. This observation represents an important codicil to Smith’s vision. And it is one that George Akerlof and I explore in our new book, Phishing for Phools: The Economics of Manipulation and Deception. Most of us have suffered “phishing”: unwanted emails and phone calls designed to defraud us. A “phool” is anyone who does not fully comprehend the ubiquity of phishing. A phool sees isolated examples of phishing, but does not appreciate the extent of professionalism devoted to it, nor how deeply this professionalism affects lives. Sadly, a lot of us have been phools – including Akerlof and me, which is why we wrote this book. Routine phishing can affect any market, but our most important observations concern financial markets – timely enough, given the massive boom in the equity and real-estate markets since 2009, and the turmoil in global asset markets since last month. As too many optimists have learned to their detriment, asset prices are highly volatile, and

a whole ocean of phishes is involved. Borrowers are lured into unsuitable mortgages; firms are stripped of their assets; accountants mislead investors; financial advisers spin narratives of riches from nowhere; and the media promote extravagant claims. But the losers in the downturns are not just those who have been duped. A chain of additional losses occurs when the inflated assets have been purchased with borrowed money. In that case, bankruptcies and fear of bankruptcy spawn an epidemic of further bankruptcies, reinforcing fear. Then credit dries up and the economy collapses. This vicious downward spiral for business confidence typically features phishes – for example, the victims of Bernard Madoff’s Ponzi scheme – discovered only after the period of irrational exuberance has ended. Epidemics, in economics as much as in medicine, call for an immediate and drastic response. The response by the authorities to the Great Crash of 1929 was small and slow, and the world economy entered a “Dark Age” that lasted through the Great Depression of the 1930s and the Second World War. The 2007-2009 financial crisis portended a similar outcome, but this time the world’s governments and central banks intervened promptly, in a coordinated fashion, and with an appropriately high volume of stimulus. The recovery has been weak; but we are nowhere near a new Dark Age. For that we should be grateful. Yet some now argue that the

Epidemics, in economics as much as in medicine, call for an immediate and drastic response

fiscal and monetary authorities should not have responded so quickly or strongly when the 2007-2009 crisis erupted. They believe that the primary cause of the crisis was what economists call moral hazard: because risk-takers expected that the authorities would intervene to protect them when their bets went awry, they took even greater risks. By contrast, our view (supported by plenty of data) is that rapidly rising prices usually reflect irrational exuberance, aided and abetted by phishes. The irrationally exuberant were not

thinking of the returns they would garner if the authorities intervened to maintain the economy and the flow of credit (or, in extreme cases, moved to bail out their bank or enterprise). Such possibilities were a marginal consideration in the euphoria preceding the 2007-2009 crisis: those selling at inflated prices were making profits; and buyers “knew” they were doing the right thing – even when they weren’t. The reluctance to acknowledge the need for immediate intervention in a financial crisis is based on a school of economics that fails to account for the irrational exuberance that I have explored elsewhere, and that ignores the aggressive marketing and other realities of digital-age markets examined in Phishing for Phools. But adhering to an approach that overlooks these factors is akin to doing away with fire departments, on the grounds that without them people would be more careful – and so there would then be no fires. We found out many years ago, to the world’s great regret, what happens when a financial epidemic is allowed to run its course. Our analysis indicates that not only are there endemic and natural forces that make the financial system highly volatile; but also that swift, effective intervention is needed in the face of financial collapse. We need to give free rein to fiscal and monetary authorities to take aggressive steps when financial turmoil turns into financial crisis. One Dark Age is one too many. Project Syndicate

16 | Business Daily

September 22, 2015

Closing ADB to identify future projects for co-financing with AIIB

APEC disaster management forum to address climate change

The Asian Development Bank (ADB) said yesterday it will identify future projects with co-financing potential with the Chinese-led international development bank, the Asian Infrastructure Investment Bank (AIIB). Both banks “agreed to start the process to identify ADB’s future projects that AIIB may be able to co-finance”, the ADB said in a statement after a meeting between its president Takehiko Nakao and Jin Liqun, president-designate of AIIB. Nakao said in the statement the ADB will be happy to share with AIIB its experience and expertise in the region, including support for regional cooperation and integration, sustainable development and climate change.

The 9th Senior Disaster Management Officials’ Forum (SDMOF) of the economies of the Asia-Pacific Economic Cooperation (APEC) opened yesterday in the central Philippine city of Iloilo. The two-day forum will discuss various Disaster Risk Reduction Management (DRRM) topics and share best practices of the 21 economies. Addressing the “new normal” is the highlight of the forum, Philippine National Disaster Risk Reduction and Management Council Executive Director and Civil Defence Administrator Alexander Pama said. This was in cognizance of the fact that climate change did not recognize national boundaries, or political or economic affiliations, he said.

Britain, China eye stock connect Finance minister announced that Britain will also provide 2 billion pounds of initial support for a new nuclear power station in U.K.

ritain and China agreed yesterday to a series of initiatives ranging from an expanded currency swap agreement, Chinese investment in British nuclear power, and a feasibility study for a scheme to connect the London and Shanghai stock markets. Speaking on the second of a five day visit to China, finance minister George Osborne said Britain would be Beijing’s “best partner in the West”. He said the recent market turmoil in China was no reason for Britain not to engage more deeply with the world’s secondlargest economy. Osborne wants more Chinese investment in Britain, and has championed London’s bid to become the dominant centre for offshore yuan trading in Europe. He said connecting the London and Shanghai stock markets would benefit Britain in the long run. “It’s in our interests that we have deeper and more mature financial markets across the world,” Osborne told reporters, when asked whether a stock market link would put Britain at risk of contagion from future bouts of volatility in China. Linking Shanghai to the London Stock Exchange would mark a further significant step

Britain should run towards China. We should be doing more business with China. We should be better connected to the Chinese economy, our financial institutions should establish stronger links George Osborne, United Kingdom’s Finance Minister

HSBC set to add 4,000 jobs in China while shrinking globally

SBC Holdings Plc plans to add 4,000 jobs in China’s Pearl River Delta region over the next three to four years, expanding operations in one of the country’s leading economic regions even as the bank shrinks its global workforce. Asia-Pacific Chief Executive Officer Peter Wong outlined the plans in an interview with the Hong Kong Economic Times, published Monday and confirmed by the bank. The hiring spree is part of a push to expand retail banking and wealth management business as Chief Executive Officer Stuart Gulliver shifts about US$100 billion of investment to the region. Gulliver, 56, said last month that about half of US$180 billion to US$230 billion of risk-weighted assets the bank plans to redeploy under a revised strategy will be invested in Asia. The 4,000 new hires would amount to a 30 percent increase from the 13,000 people now working for HSBC in the Pearl River Delta. By contrast, the bank plans to trim global headcount by some 50,000 over three years and reduce annual costs by up to US$5 billion. HSBC is shifting investment to Asia, its best-performing region, while cutting unprofitable divisions and country units such as Brazil and Turkey. Bloomberg News

British Chancellor of the Exchequer George Osborne (L) speaks with Chinese Premier Li Keqiang (R) at the Zhongnanhai Leadership Compound in Beijing yesterday

in the opening up of China’s markets, potentially allowing domestic Chinese access to a wide range of British and European stocks. Any link between the two markets would have to overcome significant hurdles, however, including differences in time-zones, and regulatory challenges. Moreover, international investors’ enthusiasm for China has fallen since the country’s share markets began to crash in June. Subsequent heavy intervention in both share and currency markets by Chinese

regulators dismayed some foreign advocates, who feared that it revealed Communist China’s lingering distrust of free markets. To enhance cooperation in global markets, China and Britain will expand a yuan/ sterling swap line, though neither provided details, and China’s central bank will issue short term yuan debt in London “in the near future”, the first outside of China. Britain wants to “continue to play our role as the world’s leading financial centre in helping with the gradual internationalisation of the

renminbi”, said Osborne, using the formal name for the Chinese currency. Osborne announced that Britain will also provide 2 billion pounds (US$3.1 billion) of initial support for a new nuclear power station at Hinkley Point in southwest England with China’s backing. Osborne said Britain welcomes “potential for majority Chinese investment in future nuclear projects in the United Kingdom” and that it sees an opportunity for Chinese investment in high-speed rail, given China’s expertise in the area. Reuters

Strike delays hit Australian airports Thai Jan-Aug domestic ravellers using Australia’s international airports auto sales fall

faced delays yesterday and were warned of more to come as immigration and border force workers went on strike over pay and conditions. Morning peak-hour travel was held up with long queues forming in Sydney, which along with airports in Perth, Melbourne, Brisbane, Adelaide, Darwin, Coolangatta and Cairns experienced twohour stoppages when staff walked out. “These workers are angry, they’re under pressure, they face major cuts to their take-home pay and workplace rights and government simply hasn’t listened,” said Nadine Flood, secretary of the Community and Public Sector Union (CPSU) representing workers. The strikes affecting those departing and arriving on international flights are set to continue until September 30. “Border Force workers feel they have no choice but to act, so they are prepared to strike every day, twice a day over peak periods, over 10 days,” Flood said. The union claims the government wants to reduce rights, conditions and allowances, cutting current annual pay for many staff by Aus$8,000 (US$5,735) and have called on new Prime Minister Malcolm Turnbull to resolve the 18-month dispute. AFP

hai domestic auto sales, falling for years, should improve from November but the annual total will be less than in 2014, the Federation of Thai Industries said yesterday. In the first eight months of this year, Thais bought 491,960 cars, or 15.1 percent fewer than a year earlier, it said. Car exports in January-August were 780,414, or 5.3 percent higher than in the same period of 2014. Southeast Asia’s second-largest economy has yet to regain traction since the military seized power in May 2014 to end political unrest, with exports and domestic demand still weak. The federation said a gauge it uses of industrial “sentiment” hit a more than six-year low in August. Last month, the FTI said auto sales were likely to miss this year’s already downgraded target of 850,000 cars. In 2014, sales totalled 881,832 cars. “This year, sales may not even reach 800,000 cars... we are now looking at 750,000-780,000 cars,” Surapong Paisitpattanapong, spokesman of the FTI’s Auto Industry Club, told a briefing. However, he said car exports were likely to exceed the target of 1.2 million this year. Reuters