Macau Business Daily October 8, 2015

MOP 6.00

Iao Kun chip turnover down 66 per cent last month Page 5

Closing editor: Joanne Kuai

China’s current economic policy tries to avoid past mistakes Page 10

Year IV

Number 894 Thursday October 8, 2015

Publisher: Paulo A. Azevedo

Local residents’ renminbi deposits decline 9.5 per cent in August Page 4

Taiwan’s lower exports confirm generalised trade weakness Page 16

Typhoon Washes Out Golden Week Hopes

Typhoon Mujigae. Relatively mild but nevertheless damaging. Local retailers claim sales expectations were dashed by the bad weather. Visitor arrivals increased around 1.8 pct but jewellery chain sales dropped 20 to 30 pct. While food retailers and restaurants felt the pinch as well, in varying degrees. With enterprises mostly blaming the weather for raining on their National Day holiday parade rather than the slowing economy Page 2

Forex Fall China’s foreign exchange reserves fell to US$3.51 tln in September. The country’s central bank made the announcement yesterday. The reserves decreased by US$43.26 bln in the month defending the yuan

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Brought to you by

UNESCO status threatened A former president of the UN General Assembly has been charged by U.S. authorities. With billionaire Macau real estate developer Ng Lap Seng and four others allegedly implicated in a wide-ranging corruption scheme.

Media reports say Macau’s UNESCO World Heritage Site status may be a further casualty

Pages 6&7

HSI - Movers October 7

More land-use ‘victims’ unearthed Three more projects may have fallen foul of tough new land laws. Facing a similar quandary as luxury residence Pearl Horizon. The core issue revolves around uncompleted development plans. And imminent expiry of granted land use. The three plots are in Taipa

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www.macaubusinessdaily.com

62nd Macau Grand Prix

City gearing up for Grand Prix

Name

%Day

CNOOC Ltd

+13.74

China Shenhua Energy

+9.25

PetroChina Co Ltd

+9.20

Kunlun Energy Co Ltd

+8.46

Tingyi Cayman Islands

+8.03

CK Hutchison Holdings

+0.19

Cathay Pacific Airways

-0.13

Power Assets Holding

-0.14

CLP Holdings Ltd

-0.45

Sands China Ltd

-0.54

Source: Bloomberg

Counting down to the 62nd Macau Grand Prix in November. Revenue is expected to increase to MOP53m, up 3.48 pct.

Meanwhile, the event budget remains stable at MOP200m. And João Costa Antunes, head of the Organizing Committee since 1988, steps down after this year’s edition

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23˚ 28˚

2 | Business Daily

October 8, 2015

Macau

Golden Week: Typhoon Mujigae dampens local tourism businesses The performance of local businesses for Golden Week were worse than expected due to the bad weather ushered in by Typhoon Mujigae over the weekend Kam Leong

kamleong@macaubusinessdaily.com

D

espite a slight increase registered in visitor arrivals during the National Day Golden Week, local retailers and restaurant operators, whose business focus is primarily on tourists, said sales did not meet expectations for the week-long holiday ending today, due to the unexpected appearance of Typhoon Mujigae (Rainbow in Korean) over the weekend.

According to the official data released by Macau Government Tourist Office (MGTO) yesterday, the city received a total of 938,197 visitors between October 1 and 6, the first six days of the National Day holiday.

The number is nevertheless up 1.8 per cent year-on-year.

Meanwhile, 85.2 per cent of total tourists were primarily from the Mainland, a rise of 6.3 per cent year-on-year.

Severe weather

“In fact, we didn’t have high expectations for sales for this Golden Week given the current [economic] situation. We just hoped sales could be stable.

But the typhoon disappointed us,” the general manager of local jewellery chain Seng Fung Jewellery Co., Lee Koi Ian, told Business Daily in a phone interview yesterday.

Mr. Lei said the number of customers seen in the company’s chain stores did not decrease much during the six days from the same period of last year. “However, as we have fewer high-spending customers now, our overall sales dropped by between 20 and 30 per cent year-onyear,” he claimed.

Since last Friday, the city’s weather has been affected by

Typhoon Mujigae. Typhoon signal number 3 was hoisted on Saturday at 6.30 p.m. until Sunday morning. The typhoon also brought heavy rains to the city.

The general manager said the sales registered on typhoon days - October 2 to 4 – were down more than 30 per cent, although declining to reveal the exact figure.

Nevertheless, he expects sales for the remainder of the year to improve. “After all, the second half of the year is the hot season for jewellery retail until the Chinese New Year of the following year.

As such, our expectations are higher than for the first half of the year,” he said.

shopping malls in Cotai, said the typhoon prevented the retailer from reaching its sales target for the Chinese national holiday. Its sales representative preferred not to be named.

“Due to the typhoon, sales were not as good as expected.

Before the start of the holiday, the mall was very calm. We really looked forward to the holiday, hoping [the holiday] could boost sales,” the sales representative said.

“We have no consolidated data on that yet but we estimate sales [for the first six days] plunged by at least 20 per cent on average from our expectation,” the sales person claimed.

Expectations end in disappointment

Restaurant business halved

Meanwhile, a food retailer, which operates in casino

On the other hand, a Portuguese restaurant located

in the heart of Old Taipa Village told Business Daily yesterday that its business during this Golden Week, compared to the previous ones, was halved, with customers put off their bookings on the typhoon days.

“We had many reservations [for Golden Week] but due to the typhoon many called to cancel their bookings,” Antonio Coelho, the general manager and chef of António Restaurant, told Business Daily yesterday.

Mr. Coelho estimated that the restaurant’s sales may have plunged 50 per cent compared to the same period in the past few years.

“Of course, there were many other reasons. For example, due to the economy fewer people go to restaurants to eat and drink, and customers don’t spend as

much as before. However, the chief reason was due to the weather,” he stated.

“Especially for those from Hong Kong; they were worried whether the typhoon signal would be changed to no.8. So they cancelled their trips,” he said.

The Portuguese chef also said the restaurant has not seen as many Chinese customers, who account for around 40 per cent of its total customer source. But he noted that the number of international customers, such as South Koreans and Japanese, remained stable.

“The business between August and September was quite good. And we’ve already received many reservations up to December,” said the restaurant manager, claiming he is confident despite the economic slowdown.

Business Daily | 3

October 8, 2015

Macau

Gov’t: Three others like Pearl Horizon

T

hree projects in the territory are facing a similar problem to the high-end residence Pearl Horizon on the Peninsula – whereby the developer has not yet completed its development plan on the granted land plots although their land-use terms are to expire, the head of Land Management Department of the Land, Public Works and Transport Bureau (DSSOPT), Teresa Mourato Lopes, revealed to reporters yesterday morning.

The construction sites of the three projects, according to the Official Gazette, are all located in Taipa; namely, Victory Real Estate Development’s luxury residential complex Star River - Windsor Arch opposite the Jockey Club; a residential project near Estrada de Sete Tanques granted to Sociedade Hotelpor Hotelaria, Importação e Exportação, Limitda; as well as a 3-star hotel project near the local airport granted to The Macau International Airport Company Ltd (CAM).

The three land plots were all granted in 1990, despite amendments being made after.

Asked by reporters on the current status of the three projects, Ms. Lopes declined to comment except to say that the construction progress of the three projects was going well.

The manager director of Victory Real Estate Development, William Kuan Vai Lam, said in July that the company’s residential project would be ready for occupation this year,

while 500-odd units in six blocks of the complex had all been purchased over the past two to three years.

But the entire Windsor Arch project - comprising 10 blocks and occupying a total area of 18,530 square metres (199,455 square feet) - was originally slated to be completed and ready for occupation in 2010.

Secretary of Transport and Public Works Raimundo Rosário has said all developers will have to finish projects before their permission to use the land for their projects expires, with no exceptions.

The DSSOPT official also told reporters yesterday that the government would only prolong developers’ landuse terms if the delays in projects are not their responsibility based on the new Land Law. Nevertheless, asked by reporters whether the government would extend the land-use term for Pearl Horizon, the official said it would depend upon the study of the three Secretaries.

She suggested that the land premium for the extension may exceed MOP1 billion.

On Monday evening, the Office of the Secretary for Administration

and Justice said its Secretary, the Secretary for Economy and Finance and the Secretary for Transport and Public Works had initiated a study on the issue of the expiration of land-use terms, as this may affect the rights and benefits of off-plan buyers of the projects.

Pearl Horizon developer Polytex Corporation Ltd. told property owners last month that the company’s 25year land use term on the project site expires on December 26 this year, although the project has only finished its foundation works.

K.L.

4 | Business Daily

October 8, 2015

Macau

Local residents’ renminbi deposits down 9.5 pct in August During August, with the remnibi depreciating, residents’ deposits of US dollars increased 4.7 per cent, while deposits in CNY plunged 9.5 per cent João Santos Filipe

jsfilipe@macaubusinessdaily.com

Letter to the editor In Tuesday’s edition of Business Daily, we mistakenly reported information regarding the shareholding of Macau’s greyhound racing track operator Macau (Yat Yuen) Canidrome Co. Ltd. It has now come to our attention that STDM does not currently hold any interest in Macau (Yat Yuen) Canidrome.

Business Daily apologizes to the relevant parties and to our readers for any inconvenience caused.

Here is the letter to the Editor for your reference.

Dear Editor,

L

ocal residents’ renminbi deposits declined 9.5 per cent in August, according to the Monetary and Financial Statistics of the Monetary Authority of Macau.

Overall, locals’ deposits declined 2.5 per cent year-on-year during August, to MOP466.99 billion (US$58.5 billion) from 479.06 billion.

The fact that deposits in RMB decreased at a faster pace than deposits in Hong Kong dollars (-0.2 per cent) and the Macanese pataca (-2.6 per cent) and other currencies (-2.1 per cent) was related to the deflation of the Chinese currency, which occurred during the middle of August.

As the US dollar strengthened in relation to the renmimbi, deposits in the American currency increased by 4.7 per cent. This also underlines the concerns

local residents have about the further devaluation of the Chinese currency.

Deposits by non-residents grew 10.3 per cent year-on-year in August, to MOP256.06 billion from MOP232.19 billion, while deposits of the public sector in banks increased 38.6 per cent year-on-year to MOP125.55 billion from MOP90.59 billion. As a result, deposits with the banking sector increased in the eighth month of the year by 5.8 per cent to MOP848.58 billion from MOP801.84 billion.

More loans

Still in August, domestic loans to the private sector increased yearon-year 19.6 per cent to MOP389.1 billion from MOP311.86 billion. Of the MOP389.13 billion, MOP103.61 billion was MOP-denominated,

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MOP252.93 billion was denominated in HKD, MOP3.11 billion was denominated in CNY and MOP23.88 billion was denominated in USD, representing 26.8 per cent, 65.5 per cent, 0.8 per cent and 6.2 per cent of the total, respectively.

At the same time, external loans grew 19.6 per cent year-on-year to MOP395.18 billion from MOP342.87 billion. Of these, loans denominated in MOP, HKD, CNY and USD accounted for 1.5 per cent (MOP5.80 billion), 23.7 per cent (MOP93.88 billion), 19.4 per cent (MOP76.72 billion) and 49.9 per cent (MOP197.05 billion), respectively.

As at the end of August, the loan-todeposit ratio both for residents and nonresident sectors stood at 92.1 per cent, which was an increase of 9.1 percentage points from 83.0 per cent in August 2014.

It has come to our attention that an article published in Macau Business Daily today (Tuesday) on the subject of ‘Angela Leong: Canidrome used to be diversified’ has mistakenly [reported] ‘Sociedade de Turismo e Diversoes de Macau SA, a private company founded by SJM Holdings’ chairman Stanley Ho Hung Sun, is understood to be the biggest shareholder in Macau (Yat Yuen) Canidrome’.

Please note that STDM once held a minority shareholding in the project but has already sold all its interests in 2012. […]

Thank you very much for your help and please reply to this email to acknowledge receipt of this request.

Yours faithfully, Michael Chan Corporate Communications Department Shun Tak Holdings Limited

Business Daily | 5

October 8, 2015

Macau

Grand Prix revenue expected to increase by MOP2 million The Macau Grand Prix Committee has a budget of MOP200 million, with revenue forecast at MOP53 million João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

he Macau Grand Prix Committee is expecting the revenue for this year’s edition to increase some 3.48 per cent, which represents a further MOP2 million (US$250,544) to approximately MOP53 million. The forecast was announced yesterday during a press conference introducing the event at Macau Fisherman’s Wharf.

“This year’s sponsorship revenue is similar to that of last year’s, and along with the tickets and other income, the total revenue is expected be in the region of MOP53 million, representing an increase of approximately MOP2 million or 3.48 per cent”, the Co-ordinator of the Marketing Subcommittee of Macau Grand Prix, Charles Lo Keng Chio, said during the press conference.

Meanwhile, the Coordinator of the Macau Grand Prix Committee, João Costa Antunes, said that the budget for the 62nd edition is around MOP200 million, which is similar to the budget for the past edition. This means that the races will involve a cost of

around MOP147 million for the government.

The event is said to have attracted a large audience with more than 10,000 of the existing tickets sold to places other than Macau.

“According to statistics, more than half of the tickets – from a total of 20,000 available – have been sold to purchasers from Macau, Hong Kong,

Mainland China, Taiwan, Japan, Malaysia, Australia and Europe”, Mr. Lo said.

“Last year, tickets for the Grand Prix were sold out completely, and we are optimistic for this year”.

Autonomy to remain

The Co-ordinator of the Macau Grand Prix Committee also commented on the integration of the

João Costa Antunes to step down João Costa Antunes has headed up the Committee since 1988 but after this year’s edition retires from the position. However, he will be working as advisor to the Secretary for Social Affairs and Culture, Alexis Tam. “I am very pleased because we’re living in a very important moment, with the local community supporting the Grand Prix. Many people, including the younger generations, are assuming their

responsibilities and taking part in the organisation of the race”, he said.

“I feel very satisfied. I believe that our missions are never completed and that we can always improve. This is what we are doing. We are working to make sure that this event will be the best so far. But people will continue to work to make the event of next year even better than this edition”, he added.

Committee into the Macau Sports Development Board, which takes effect next year.

“This organising structure and the Grand Prix Committee has been integrated in different departments throughout the years. Now, to optimise the existing resources, it was decided it should be integrated into the Sports Development Board. I do not

believe this will result in a loss of autonomy”, he said.

Concerning the 62nd edition of the Macau Grand Prix, Antunes highlighted the new competitions being introduced this year: the TCR race and the FIA GT World Cup. “This year we have two new competitions, debuting not only in Macau but worldwide. The TCR Series will host the final round here. These cars are more accessible for Asian and Macau drivers and this competition is important to develop their skills to step into another level”, he said. “The GT World Cup race is the consequence of the project started back in 2008 with the GT Macau races, which managed to attract the attention of the manufacturers and also the drivers. This shows how much drivers recognise the value of the Guia Circuit”.

Iao Kun Chip Turnover down 66 per cent last month

J

unket company Iao Kun recorded a decline of 66 per cent yearon-year in rolling chip turnover for last month, to US$0.40 billion (MOP3.19 billion) from US$1.18 billion (MOP9.42 billion), according to a company filing with Nasdaq Stock Exchange.

Regarding the first three quarters of the year, rolling chip turnover went down 62 per cent year-on-year to US$5.20 billion, an average of US$0.58 billion per month. During the first nine months of 2014, the company had generated a chip turnover of US$13.77 billion, for an average of US$1.53 billion per month.

The turnover of the company follows the general decline of the VIP segment, which has been driven by the decline of revenues from VIP baccarat. According to the data of the Gaming Inspection and Co-ordination Bureau (DICJ), during the first half of the year the total revenue from VIP baccarat declined 42.2 per cent yearon-year to around US$8.67 billion from around US$15.05 billion.

Iao Kun is operating in Macau, where it has five VIP gaming rooms in Galaxy, StarWorld, Sands Cotai Central, City of Dreams and Le Royal Arc, and is also currently conducting ‘trial operations’ in Perth and Melbourne in Australia.

6 | Business Daily

October 8, 2015

Macau

Ng’s alleged bribery triggers ex-UN General Assembly president’s arrest According to the complaint, Macau businessman Ng Lap Seng, through intermediaries, paid the UN official more than US$500,000 to submit a document telling the U.N. Secretary General that a yet-to-be built multibillion-dollar U.N.-sponsored conference centre in Macau was necessary Newsdesk *

newsdesk@macaubusinessdaily.com

A

former president of the United Nations General Assembly and Macau billionaire real estate developer Ng Lap Seng were part of a group arrested on bribery charges in what U.S. officials call the early stages of a probe into corruption at the organisation.

Preet Bharara, the U.S. attorney in Manhattan, issued a warning to officials at the UN Tuesday as he announced the charges against John Ashe, who’s accused of taking US$1.3 million in bribes, and Francis Lorenzo, the ambassador to the UN for the Dominican Republic, who’s accused of helping developer Ng Lap Seng pay bribes to Ashe and others.

According to the complaint, Ng, through intermediaries, paid Ashe more than US$500,000 to submit a document telling the U.N. Secretary General that a yet-to-be built multibillion-dollar U.N.-sponsored conference centre in Macau was necessary.

The intermediaries included Francis Lorenzo, 48, a deputy U.N. ambassador from the Dominican Republic whom prosecutors say Ng paid US$20,000 to monthly as ‘honorary president’ of one of his

organisations, South-South News.

The other was Yin, who authorities said after his arrest had disclosed that Ng viewed the conference centre as his ‘legacy’ and made payments to get action on it.

Ashe, 61, also received more than $800,000 from Chinese businessmen to support their interests within the U.N. and Antigua, and passed some of the money to Antigua’s then-prime minister, who was not named, the complaint said.

Prosecutors said these bribes were arranged through Sheri Yan, chief executive officer of a New Yorkbased organisation, and Heidi Park, its finance director, who were also arrested.

The organisation was unnamed, but the Global Sustainability Foundation website lists Yan and Park as holding those positions.

The foundation did not respond to requests for comment. Baldwin Spencer, who held the prime minister’s post at the time, could not be reached for comment.

“There is a lot more work to do,” Bharara, the U.S. attorney in Manhattan, said at a press conference, adding his team had only scratched

the surface. “Is bribery business as usual at the UN?”

Other connections

The new charges may be connected to other cases, with Ng last year having failed to comply with a request from U.S. prosecutors to answer questions before a Nevada grand jury in an overseas bribery investigation.

Ng, also known as David Ng, heads Macau-based Sun Kian Ip Group, whose foundation arm lists several ambassadors to the U.N., including Ashe and Lorenzo, as holding leadership positions.

In China, Ng sits on several government committees and belongs to the Chinese People’s Political Consultative Conference, an advisory body to the government.

Ng’s name previously surfaced in U.S. investigations into how foreign money might have been funnelled into the Democratic National Committee before the 1996 elections, when it was working to re-elect President Bill Clinton.

Ng, who was never charged, ceased travelling to the United States from 1996 to 2000 during the probe, prosecutors have said.

More recently, in 2014, Ng was subpoenaed in a U.S. foreign bribery investigation, a source has said, after his name surfaced in litigation involving billionaire Sheldon Adelson’s Las Vegas Sands Corp. Adelson said he didn’t know Ng in testimony at a May hearing in Las Vegas.

Federal prosecutors in Brooklyn have also brought sealed charges against another individual linked to Ng, Yin’s lawyer Sabrina Shroff said at a September 29 hearing. The status of any Brooklyn-based investigation was unclear on Tuesday.

Ng, 68, who has a personal net worth of some US$1.8 billion, has been held in a federal jail in Manhattan since being arrested on September 19 in a separate case, in which he was accused of bringing US$4.5 million into the country and lying about its purpose to U.S. authorities. Bharara said prosecutors were investigating what Ng did with the cash.

“We’re looking at all the money,” Bharara said. “We follow the money.”

Ashe, the former ambassador to the UN for Antigua and Barbuda, was also accused of sharing some of the bribe money with the Caribbean nation’s prime minister as he lobbied for Chinese interests, the U.S. said.

Business Daily | 7

October 8, 2015

Macau

If proven, today’s charges will confirm that the cancer of corruption that plagues so many state and local governments infects the United Nations as well Preet Bharara, Manhattan U.S. Attorney

John William Ashe, former President of the United Nations General Assembly

“Going to Antigua on Thursday to vote and would need to take something for the PM,” Ashe wrote to Lorenzo in a June 8, 2014 e-mail, according to the U.S. “Hope I can have the US$26 K in cash before then.”

According to the complaint, Ashe sent US$100,000 to the prime minister in a series of US$20,000 cheques and sent about US$13,000 to the prime minister’s political party. That was part of the US$170,000 in total the prime minister received from one of Ashe’s bank accounts, the U.S. said.

The Antigua mission to the UN didn’t respond to multiple requests for comment.

Five of the six defendants named in the criminal complaint unsealed in Manhattan federal court were arrested and held without bail after appearing in court, said Kelly Langmesser, a spokeswoman for the FBI’s New York office.

Ambassador ‘trusted’

Lorenzo was arrested outside the midtown Manhattan offices of the

South-South News. He’s the president of the news organisation, which covers global development issues as well as the United Nations.

“Ambassador Lorenzo acted in good faith at all times,” said his lawyer, Brian Bieber. “He trusted the people he associated with and relied upon their integrity in all business dealings. He had no knowledge of any of their criminal actions.”

U.S. Magistrate Judge James Francis agreed to release Ashe on US$1 million bond secured by his property and directed that he remain under house arrest with electronic monitoring.

Robert Van Lierop, Ashe’s lawyer, said his client had a “sterling reputation” and wouldn’t leave the U.S. because his family lives here.

“We will fight the charges and he will be acquitted,” Van Lierop said after court.

Shiwei Yan and Heidi Hong Piao, whom the U.S. accused of arranging bribes for Ashe, were both arrested at a Manhattan residence near the UN’s Manhattan headquarters, Langmesser said.

Lawyers for the other four defendants declined to comment on the charges.

One of Ng’s lawyers is Guy David Singer, a partner at Orrick Herrington & Sutcliffe who specialises in foreign bribery cases.

Singer was also the lead prosecutor of the government’s case against lobbyist Jack Abramoff, who went to prison after bilking Indian tribes.

The UN wasn’t told about the U.S. investigation and SecretaryGeneral Ban ki-Moon learned of the allegations Tuesday morning, Stephane Dujarric, a spokesman for Ban, told reporters at a daily briefing.

Ban “was shocked and deeply troubled to learn of the allegations, which go to the heart of the integrity of the UN,” Dujarric said.

“Corruption is not business as usual at the UN.” The organisation will co-operate with U.S. authorities, he said.

In February 2012, Ashe submitted a document to the UN supporting Ng’s Macau Conference Centre, the U.S. said. Lorenzo used the document in promotional materials with other officials and an investment bank to imply the centre was likely to be supported by the UN, the U.S. said.

MSAR: No comment Investigations into Ng’s alleged bribery racket could place the city’s status as a UNESCO World Heritage Site under threat, according to a report written by Niall Fraser published in yesterday’s South China Morning Post (SCMP).

According to SCMP, federal agents are understood to be investigating possible bribes linked to development projects on UNESCO heritage sites near the historic Guia Lighthouse with details of the latest twist in the probe into Ng ‘confirmed by sources in Macau’.

Ng, whose interests straddle casinos and apparel, sits on government advisory body the Chinese People’s Political Consultative Conference. Mr. Ng heads local real estate developer Sun Kian Yip Group, and he was also one of the major investors and prime movers behind the Nam Van Lakes project in the 1990s.

Currently, Shun Tak is still waiting for the government to approve a project to develop high-end housing units in land near Nam Van Lake, said the company’s CEO Pansy Ho last month. A skyscraper near Nam Van lake could block views from Penha Church, a world heritage site.

Sun Kian Yip is also finishing its high-end residential project Star River • Windsor Arch opposite Macau Jockey Club abutting Small Taipa Hill. The project sparked

controversy when a group of house owners on the hill petitioned and questioned how the height limit of Windsor Arch has trebly exceeded - at around 47 storeys or 160 metres - the urban plan-mandated regulation 50 metres.

Yesterday afternoon, the MSAR Spokesperson’s Office headed by Victor Chan Chi Ping issued a statement in response to reporters’ enquiries regarding the case, saying “since the case has entered judiciary procedure, the SAR Government will not comment.

Regarding the project to be built in the reports, the SAR Government has no information at all.”

A business partner of Ng, William Kuan Vai Lam, an executive at Sun Kian Yip, told reporters yesterday morning when attending a TDM radio talk show discussing a separate matter that there is no information of such conference centre project heard internally at Sun Kian Yin group. He added he believes that Macau’s MICE (Meetings, Incentives, Conferencing and Exhibitions) industry development doesn’t have much to do with the United Nations but rather land resources. Mr. Kuan added that he has been unable to reach Ng since the arrest, although he believed the incident would not impact the property group’s investments here.

Ban’s staff “have no recollection of any discussion between John Ashe and the Secretary-General relating to a centre in Macau,” Dujarric said.

Diplomatic immunity

Ashe was also charged with failing to report US$1.2 million in income, including the bribes, to the Internal Revenue Service. It’s the only charge which wouldn’t be covered by diplomatic immunity, although he waived that privilege when he applied to be a permanent resident in the U.S. in 2000, according to the complaint.

After his arrest, Ashe told investigators he had accepted bribes, prosecutor Daniel Richenthal said in court. “Over the course of years he accepted millions of dollars in bribes in various forms, some of which he admitted after he was arrested today,” Richenthal said.

He may have residual immunity for acts that were done within the scope of his official positions, the U.S. said.

Ashe received money for a family vacation and the construction of a basketball court at his house in Dobbs Ferry, New York, prosecutors said. Some of the bribes went to bank accounts Ashe set up to fund his presidency, according to the complaint. Money from those accounts also went to pay his mortgage and other items such as a US$40,000 lease on a new BMW, US$54,000 for a pair of Rolex watches and US$59,000 for a single order of custom-tailored suits, Bharara said.

“For Rolexes, bespoke suits and a private basketball court, John Ashe, the 68th President of the UN General Assembly, sold himself and the global institution he led,” said Preet Bharara, the U.S. Attorney in Manhattan.

Ashe steered a Chinese technology executive to a Kenyan UN official in order to facilitate meetings between the Chinese and government officials in Nairobi, according to the complaint. The meetings took place and the U.S. suggests, but doesn’t state explicitly, that similar bribes were paid.

Bharara’s corruption allegations at the UN follow his pursuit of similar crimes in New York’s state capital of Albany and come several months after Loretta Lynch, the U.S. Attorney General, announced charges against officials from the international soccer federation.

“If proven, today’s charges will confirm that the cancer of corruption that plagues so many state and local governments infects the United Nations as well,” Bharara said.

The case is U.S. v. Ashe, 15-mag3562, U.S. District Court, Southern District of New York (Manhattan). *with Reuters & Bloomberg

8 | Business Daily

October 8, 2015

Greater China IMF confident about GDP expectations The International Monetary Fund (IMF) is confident about its GDP growth expectations for China in the range of 6.5 percent to 7.5 percent in 2015, according to the organization’s latest World Economic Outlook released here Tuesday. China having unrolled fiscal measures and its infrastructure investments are the main reasons for the economic growth this year, according to the report. China’s economic transformation, the fall in commodity prices and the approaching U.S. monetary policy changes are the three main forces currently impact the global economy.

Yum Q3 restaurant sales up far less than expected Yum Brands Inc on Tuesday said sales at established restaurants in China rose far less than expected for the third quarter, sending shares down nearly 17 percent in extended trading. Sales at China KFC and Pizza Hut restaurants open at least one year rose 2 percent, less than the 9.6 percent jump analysts had expected, according to research firm Consensus Metrix. Yum’s same-store sales in China took a dive after a television news story in July 2014 alleged that one of its suppliers was using meat that was past its expiration date.

Beijing and Africa issue health principles declaration Chinese and African health officials on Tuesday adopted the Cape Town Declaration which outlines the objectives for future cooperation in health development. This emerged after the ministers in charge of health affairs in China and African countries, met in Cape Town for the 2nd Ministerial Forum of China-Africa Health Development. The declaration affirms that China-Africa health collaboration should be guided by African countries’ action programmes/strategies, the WHO action programmes, the AU Agenda 2063 and the UN Sustainable Development Goals. The document acknowledges that the focus of China-Africa health collaboration is saving lives and improving the wellbeing of people.

Hong Kong’s chief executive to visit Israel, Britain

Leung Chun-ying will depart for Israel on Monday for a visit, the Hong Kong Special Administrative Region government news website said yesterday. Industry leaders and academics from Hong Kong will join the visit to Israel, following which Leung will visit Britain. On Tuesday, Leung will tour Jerusalem and call on Israeli President Reuven Rivlin and Prime Minister Benjamin Netanyahu.

He will also visit technology enterprises and the technology transfer company of the Hebrew University of Jerusalem.

Leung will also meet members of the parliament of Israel and members of the Israel-Asia Chamber of Commerce.

FX reserves post record quarterly fall Although the Peoples’ Bank of China has said it sees no need for further falls in the yuan, markets expect the currency to decline more over the coming year to reflect a faltering economy

C

hina’s foreign exchange reserves posted their biggest quarterly decline on record in July-September, as the central bank stepped up intervention to stabilise the yuan and calm sentiment after an unexpected devaluation of its currency had jolted global markets.

China’s reserves, the world’s largest, dropped US$43.3 billion to US$3.514 trillion last month, central bank data showed yesterday, and were down by about US$180 billion in the third quarter in their largest ever quarterly fall, according to Reuters data going back to 1980.

The devaluation of the yuan on August 11, and the consequent fall in reserves have raised questions about how sustainable China’s efforts to support the yuan are, as capital trickles out of the country due to fears of a deepening economic slowdown and prospects of rising U.S. interest rates.

Analysts expect the reserves to fall further.

“The decline in China’s foreign reserves, while less than market expected, still shows that China’s

central bank continued the market intervention in the past month,” said Singapore-based Zhou Hao, senior economist in Asia at Commerzbank.

“As PBoC also intervened into the forward market in the past month, the foreign reserves will likely plunge again when these forward contracts mature,” he said.

Policy makers have been determined to calm sentiment after a summer rout in stocks, the yuan devaluation and a series of clumsy attempts by authorities to stabilise equities spread turmoil in global financial markets.

Beijing is also pressing on with attempts to ease concerns about a cooling economy, which is growing at its slowest pace in decades.

The yuan devaluation had sparked worries of a global currency war and raised doubts about Beijing’s ability to manage an economy transitioning from an investment- and exports-led model to one driven by domestic demand.

Indeed, policy insiders have told Reuters that China was so surprised by the reaction to the devaluation that it is likely to keep the yuan

Mainland gold reserves increased 0.9% last month China announced increases of about 19 tons for July and 16 tons for August

C

hina may have further increased central bank gold holdings in September, raising them by about 15 metric tons to 1,709 tons, as it seeks to diversify its foreign exchange reserves.

The value of gold assets was US$61.2 billion at the end of last month from US$61.8 billion at endAugust, data from the People’s Bank of China website released yesterday show. That works out to about 54.94 million troy ounces or 1,709 tons,

Their reserves are still way off what they are in the U.S. or Germany so even at this rate, it will still take a while for them to go near what these super powers have Howie Lee, analyst, Phillip Futures

based on the London Bullion Market Association afternoon price auction on September 30, Bloomberg calculations show. The hoard was 54.45 million troy ounces a month earlier.

China announced increases of about 19 tons for July and 16 tons for August after disclosing July 17 that holdings had jumped 57 percent since 2009, ending six years of mystery.

While China has overtaken Russia to become the country with the fifthlargest stash, it still has only about

on a tight leash in the near-term.

Although the Peoples’ Bank of China has said it sees no need for further falls in the yuan, markets expect the currency to decline more over the coming year to reflect a faltering economy.

In the short term, however, analysts say Beijing is keen to restore investor confidence even as a rapid volley of economic and market support measures has produced mixed results so far.

Tim Condon, Singapore-based head of research for Asia at ING Bank, believes Beijing is pushing for the onshore and offshore yuan forward curves to converge again, a situation that prevailed just before the currency was devalued.

“I think their strategy to bring that about is to stabilize the spot rate, intervene in the offshore and the onshore spot markets and hope that the economic data kind of portrays a recovering economy and confidence comes back a bit more,” he said.

“And I think that strategy’s working.”

Reuters

1.6 percent of its reserves in gold, compared with 73 percent for the U.S. and 67 percent for Germany, World Gold Council data show.

“Their reserves are still way off what they are in the U.S. or Germany so even at this rate, it will still take a while for them to go near what these super powers have,” Howie Lee, an analyst at Phillip Futures Pte in Singapore, said by phone. “If they want to be on a comparable footing with these countries, I assume that they have to build their reserves to somewhere near that level.”

Global bullion prices fell 1.8 percent in September and declined 5.9 percent in the first nine months as investors expected the U.S. Federal Reserve to increase interest rates for the first time since 2006 amid an economic recovery. Bullion has climbed 3 percent in October after poor payrolls data reduced expectations of a rise. Higher interest rates hurt gold as the metal doesn’t pay interest like bonds.

Bloomberg News

Business Daily | 9

October 8, 2015

Greater China

Stocks in Hong Kong surge before mainland markets open Almost half the top 10 gains on the Hang Seng Index were oil companies Kana Nishizawa

Holdings Ltd. gained 9.4 percent to HK$10.24.

Carmakers surged over the past week after a tax cut on passenger-vehicle purchases.

Brokerages also rallied, with Citic Securities Ltd. soaring 11 percent to HK$16.56 and Guotai Junan International Holdings Ltd. rising 9.8 percent to HK$2.68.

IMF Forecast

C

hinese stocks in Hong Kong jumped to an almost seven-week high as investors wait for mainland markets to open today after a week-long holiday. Energy companies surged on higher oil prices while automakers continued their rally.

The Hang Seng China Enterprises Index added 4.7 percent to 10,394.79, its highest close since August 20.

Cnooc Ltd. and PetroChina Co. posted some of the biggest gains on the benchmark Hang Seng Index after crude extended its advance from a one- month high. Great Wall Motor Co. soared 15 percent after trailing increases by other automakers on Tuesday.

The Hang Seng Index rose 3.1 percent to 22,515.76, with volume 31 percent higher than its 30-day average.

Mainland markets have been shut since October 1 for

People may be optimistic that supportive policies will come out.”

The Communist Party Plenum scheduled for this month is set to chart the path for China’s development.

Energy shares

National Day holidays. The Hang Seng China Enterprises Index traded at 7.7 times estimated earnings, less than half the global average. The gauge tumbled as much as 39 percent from this year’s peak as multiple cuts to interest rates and the reserve requirement ratio failed to

revive the nation’s economy.

“H shares are being driven by oil stocks as oil prices surged last night,” said Daniel So, a strategist at CMB International Securities Ltd. “Over the next week, H shares will stay strong ahead of the fifth plenary session of the Communist Party of China.

Almost half the top 10 gains on the Hang Seng Index were oil companies. Cnooc, China’s biggest offshore crude and gas explorer, surged 14 percent, while PetroChina and Kunlun Energy Co. jumped at least 8.5 percent. Oil futures rose as much as 2.4 percent in New York as U.S. industry data showed crude stockpiles fell in the world’s biggest consumer. The Energy Information Administration increased its forecast for 2015 global oil demand, according to a monthly report Tuesday.

Great Wall jumped 15 percent to HK$10.74, while Brilliance China Automotive

The International Monetary Fund cut its global growth outlook for this year to 3.1 percent from a July forecast of 3.3 percent amid a slowdown in emerging markets driven by weak commodity prices.

The fund left its outlook for China’s growth this year at 6.8 percent and 6.3 percent for next year. Still, the IMF said the “cross-border repercussions”of slowing Chinese growth “appear greater than previously envisaged.”

China’s foreign-exchange reserves fell by a record last quarter as the central bank sold dollars to support the yuan after a surprise devaluation spurred bearish bets on the currency. The stockpile plunged by US$180 billion in the three months through September, the most in data going back to 1995, to US$3.51 trillion, according to Bloomberg calculations based on data released by the People’s Bank of China yesterday.

Bloomberg News

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October 8, 2015

Greater China

Targeted stimuli against uncontrolled wild injection China has plenty of room to ramp up fiscal spending if needed, with a central government debt-to-GDP ratio below 30 percent Enda Curran

owned policy banks such as China Development Bank are being used to target lending to specific infrastructure projects, while other banks are being encouraged to boost lending to small and medium-sized private firms.

‘Major mistake’

The Chinese President and Prime Minister’s strategy differs from previous administration tactics

A

s China’s leadership steps on the economic-stimulus gas pedal, there’s one image in the rear-view mirror that looms large.

Then-Premier Wen Jiabao’s cabinet unveiled a US$586 billion program to boost growth in the depths of the 2008 global credit turmoil, a move that opened the floodgates for a record debt surge that current Premier Li Keqiang and President Xi Jinping have had to cope with.

Unlike that binge, Li and Xi are opting for targeted measures, more of which were unveiled last week. They included a tax cut for vehicle purchases, a reduction in the minimum down payments for firsttime home buyers and a pledge of support for electric-car sales.

While, like last time, much of this year’s growth campaign is dedicated to new infrastructure including roads and rail, the financing and approval has greater input from the central government. Much of the funding stems from new construction bonds backed by central authorities, rather than bank borrowing by local government financing vehicles -- a difference that may help restrain the build-up of further bad debt.

"The more cautious approach towards stimulus reflects concerns among Chinese policymakers about the massive expansion in credit that occurred in China during 2009-2010, which has created significant new imbalances and problem loans in the Chinese financial system," said Rajiv

Biswas, Asia-Pacific chief economist at IHS Global Insight in Singapore.

For the world, China’s acceptance of a more moderate expansion pace-- this year’s is set to be the slowest in 25 years -- is having spill overs as commodity prices tumble and exports to the world’s second-biggest economy stall. Federal Reserve Chair Janet Yellen mentioned concerns over China’s outlook when explaining reasons behind the decision not to raise interest rates at last month’s meeting.

Estimates vary on the total value of this year’s stimulus, partly because of the difficulties in netting out new spending versus funds that had already been assigned, and adding up the cost of measures to stabilize the stock market and currency. State-

"This is much, much smaller," said Stephen Jen, co-founder of Londonbased hedge fund SLJ Macro Partners LLP and a former economist at the International Monetary Fund. "The 2009 stimulus is widely seen as a major policy mistake. There is no way the Xi-Li Administration will repeat that mistake."

Still, if growth slows too much, "Beijing will ‘give a bit more gas’ to prevent a rise in the risk of a hard landing," Jen said.

More tax breaks and new spending are likely, said Le Xia, a Hong Kongbased economist at Banco Bilbao Vizcaya Argentaria SA. They’ll join monetary measures that include five benchmark interest-rate reductions since November and cuts to the amount of cash banks must lock away as deposits.

China has plenty of room to ramp up fiscal spending if needed, with a central government debt-to-GDP ratio below 30 percent. The question for China watchers is whether policy makers are prepared to unleash that firepower.

"Beijing does not want to go back to the old model of massive economic bailout by throwing good money after bad," said Chi Lo, greater China senior economist at BNP Paribas Investment Partners. "It is trying to strike a balance between growth and reform, so it has not been opening the monetary and fiscal spigot like it did in the past."

Bloomberg News

IMAX China’s US$248m IPO receives lukewarm reception The IMAX Corp China unit debuts on the Hong Kong Stock Exchange today

A

US$248 million Hong Kong IPO from IMAX China Holding Inc, majority-owned by the namesake giant screen movie theatre equipment maker, saw particularly weak demand from retail investors, a filing showed on Wednesday.

Demand for new listings in Asia Pacific has been hurt by a steep slide in Chinese stock markets earlier in the year as well as increased volatility in other global equity markets.

While there have been some signs of improving confidence in the market, with China Huarong Asset Management Co Ltd and China Reinsurance (Group) starting pitches for their Hong Kong IPOs worth up to a combined US$5 billion

this week, market players said it was too early to call a recovery.

"Sentiment has not recovered, it's not that strong yet because the market remains volatile recently,"

said Jasper Chan, corporate finance officer at Hong Kong brokerage Phillip Securities.

In the IMAX China IPO, which priced near bottom of its marketed range at HK$31 per share last week,

Hong Kong Stock Exchange trading floor

demand from retail investors accounted for only 70 percent of the shares on offer for that portion of the deal, the filing showed.

By comparison, a similarsized listing by Yunnan Water

Investment Co Ltd in May saw demand worth more than 354 times the number of retail shares offered and an April listing by Shanghai Haohai Biological Technology Co Ltd was oversubscribed nearly 180 times.

I M AX C h i n a s a i d , however, that the institutional tranche of the deal was well oversubscribed.

The IMAX Corp China unit debuts on the Hong Kong stock exchange today.

The listing will be the first by a major global brand in Hong Kong since 2011, when companies such as Prada Spa, Samsonite International SA and MGM China Holdings went public in the city.

Reuters

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October 8, 2015

Asia

BOJ keeps policy steady despite signs of recession Central bank remains optimistic about Japan’s economy continuing moderate recovery Leika Kihara and Stanley White

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he Bank of Japan (BOJ) held off on expanding stimulus yesterday, even as slumping exports and falling oil prices threaten its rosy projection that the economy is on track to hit the bank’s ambitious 2 percent inflation target next year.

But lingering fears of recession will keep the central bank under pressure to ease at a more crucial meeting on October 30, when it is expected to cut its long-term economic and price forecasts, analysts say.

BOJ Governor Haruhiko Kuroda remained bullish that the bank’s massive moneyprinting will eventually lift the world’s third-biggest economy decisively out of nearly two decades of deflation.

“The trend of consumer rises is rising steadily,” he told a news conference after the BOJ maintained its pledge to increase base money at an annual pace of 80 trillion yen (US$700 billion) through aggressive purchases of assets such as government bonds.

“There is absolutely no change to our stance that we will steadily implement quantitative and qualitative easing to achieve the 2 percent

inflation target at the earliest possible time.”

Kuroda said he expects to hit the inflation target around the six months from next April but that this could depend on oil prices, which have slumped sharply since mid-2014.

The BOJ maintained its optimistic view that while

exports and output have been hurt by slowing emerging market growth, Japan’s economy continues to recover moderately.

“The decision came as expected. I still expect the BOJ will ease policy further later this month,” said Yasunari Ueno, chief market economist at Mizuho Securities.

“If the BOJ stands pat later this month even as cuts its bullish forecasts, investors would take it as a sign its commitment to hit 2 percent inflation has weakened,” he said.

Japan’s economy shrank in April-June and some analysts expect another contraction in July-September on slumping

Reuters

Bank of Japan Governor Haruhiko Kuroda remains bullish

Australia faces tougher bond rules as Asia tightens standards If Australia were to take the same regulatory path it would lose its status as one of the world’s easiest and quickest markets for companies to raise credit Cecile Lefort

A

global demand and weak consumption.

Core consumer prices slid in August from a year earlier, the first drop since the BOJ deployed its massive stimulus programme more than two years ago, casting doubt on whether heavy money printing alone can accelerate inflation to 2 percent.

In a semi-annual review of its forecasts on October 30, the BOJ is set to slash its economic growth forecasts and push back the timing for achieving its price target, sources say.

The BOJ now expects inflation to hit 2 percent by around September next year, a forecast many analysts criticise as too ambitious.

A Reuters poll in early September, before the recent spate of weak data, showed most economists did not expect further easing until 2016.

ustralia may come under increasing pressure to tighten regulation in its A$413 billion (US$296 billion) bond market as Asian peers adopt stricter international standards, making Australia’s requirements look lax by global norms.

Regulators in Singapore, Thailand and Malaysia in September adopted common disclosure standards for companies seeking to sell securities, matching their regulatory requirements more closely to U.S. and European norms.

With more Asian countries expected to follow suit, lawyers warn that Australia could be forced to embrace

similar changes as international borrowers and investors get used to, or require, the new standards.

“It would be a dissuading factor, particularly for non-Australian corporate borrowers, as the genuine speed to market and short, but effective, offering documents are part of what makes Australia attractive,” said John Eagleton, a senior associate at law firm King & Wood Mallesons.

If Australia were to take the same regulatory path, however, it would lose its status as one of the world’s easiest and quickest market for companies to raise debt.

Maintaining international competitiveness is vital for Australia’s

bond market as it strives to make up for its small domestic market by attracting frequent issuers.

Setting up a corporate debt issue in Australia can usually be completed in less than six weeks for A$60,000 in administrative costs and with fewer than 50 pages of information and documentation. In Europe and the U.S., by contrast, the process takes three months, costs more than A$350,000 and requires hundreds of pages of documentation.

Since the global financial crisis of 2008, regulators internationally have pushed for tighter standards and more standardisation across markets.

Those standards demand thorough

historical financial statements, and the statutory descriptions of borrowers’ business divisions and operations required are far more onerous than Australia’s requirements.

Currently, Australian regulation favours borrowers over investors.

Opponents say adopting tighter global standards without a real justification to do so could make Australia’s small corporate bond market unnecessarily uncompetitive.

In overseas markets many issuers are high-yield or unrated borrowers, where the additional documentation is more relevant.

Another major difference is that professional investors buy most Australian-issued bonds, whereas retail investors dominate in some European bond markets, for example.

While acknowledging the pressure to follow international norms, many Australian debt financiers argue a stricter regime is unnecessary because most borrowers in the Australian market are publicly listed and/or have an investment grade debt rating.

“We get the same information under the continuous disclosure regime if the issuer is listed. If it’s a private company, we demand it from borrowers,” said Phil Strano, a portfolio manager at Victorian Funds Management Corporation which has A$50 billion of assets under management.

Reuters

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October 8, 2015

Asia

Where boring is beautiful: Australia’s central bank succession Governor Glenn Stevens is scheduled to retire in September 2016 Michael Heath

S

uccessful central banks should be boring, the Bank of England’s Mervyn King used to say. At least when it comes to selecting the Reserve Bank of Australia (RBA) governor, Australia’s new prime minister and treasurer are poised to meet the “boring” criterion next year, according to a survey of economists.

For the third straight time, in a stretch going back 20 years, Australia’s government will tap the central bank’s No. 2 to become its No. 1 official, all 21 respondents in a Bloomberg survey say.

Governor Glenn Stevens is scheduled to retire in September 2016, when Philip Lowe, his deputy who is highly regarded by private economists, would take the helm.

The ousting last month of Prime Minister Tony Abbott, who had a record of making “captain’s pick” decisions on his own, means it’s now unlikely that an outsider will get the job. There’s also little pressure to opt for someone beyond central banking as the RBA hasn’t had to follow counterparts from the U.S. to Europe into the politically volatile areas of quantitative easing.

New Prime Minister Malcolm Turnbull, and his Treasurer Scott Morrison, will be looking for maximum

Current RBA Governor Glenn Stevens

Samsung flags nearly 80% jump in Q3 operating profit A recent weakening of the won helped boost profits Jung Ha-Won

S

amsung flagged a nearly 80 percent jump in quarterly profit yesterday, as sales of chips and displays offset stiff competition in smartphones from Apple and cheaper Chinese rivals.

The stellar earnings forecast sent shares in the South Korean company soaring more than five percent in mid-morning trade.

The f ir m ’s flagsh ip smartphone business is struggling against fierce competition, sandwiched between top-end rivals like

Apple’s iPhone and lower-end devices from fast-growing Chinese outfits including Xiaomi.

Sales of the Galaxy S6 -the latest edition of Samsung’s top-of-the-range handset, launched in April -- failed to generate much excitement among consumers.

But brisk businesses in chips and displays has largely compensated for these difficulties, analysts said.

That is because as well as providing the chips for the company’s own handsets, Samsung’s semiconductor

unit also makes the processors for a number of other companies -- including Apple.

The firm’s TV business -- the world’s largest -- also helped shore up the balance sheet in the third quarter, said Lee Seung-Woo, analyst at IBK Securities.

A recent weakening of the won -- down 12 percent yearon-year against the dollar by the end of the third quarter -- helped boost profits as most sales of semiconductors and display panels to emerging markets are settled in US dollars, he added.

A weaker won makes South Korean exports more competitive overseas and boosts earnings when repatriated.

“With sluggish sales of Galaxy S6... the (semiconductor and TV) businesses were a major factor behind the surprise earnings,” Lee said.

The semiconductor unit posted record sales of 11.2 trillion won (US$9.6 billion) in the second quarter, with operating profit soaring more than 50 percent onyear.

Third-quarter operating profit from the two business units are expected to increase by 500 billion won from the second quarter, said Choi Do-Yeon, an analyst at Kyobo Securities.

Overall, Samsung predicted an operating profit of around 7.3 trillion won for the July-September period, up from 4.1 trillion a year earlier.

The prediction beats the estimate of 6.7 trillion won given by analysts surveyed

by Bloomberg News.

Sales for the third quarter are expected to reach 51 trillion won, up 7.5 percent from a year ago, the company said in a statement.

Yesterday’s estimate, which comes ahead of audited results to be released later this month, did not provide a net income figure or breakdown of divisional earnings.

After peaking at 10.1 trillion won in the third quarter of 2013, Samsung’s operating profit hit a bottom of 4.6 trillion won in the corresponding period of 2014 before climbing back up gradually.

As Samsung’s reliance on the chip making business grew, the firm in May began building a new US$14.3 billion chip plant in Pyeongtaek, 65 kilometres south of Seoul.

This investment in the factory, which is to begin production in 2017, is the largest the firm has ever committed to a single plant.

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October 8, 2015

Asia market stability in the run-up to the election due late next year. That desire may outweigh any lingering grievance their Liberal-National coalition government has dating from Stevens’s 2007 interest-rate increase amid an election campaign.

Lowe likely

Lowe, 54, was appointed deputy governor in February 2012, when Stevens described him as an “exceptional” economist. He joined the RBA in 1980 and since then has obtained a PhD from Massachusetts Institute of Technology and had a stint at the Bank for International Settlements.

He studied at MIT, which fellow central bankers Ben S. Bernanke and Mario Draghi also attended and where others like Federal Reserve Vice Chairman Stanley Fischer and Mervyn King taught. Lowe’s main macro-economic professors were Olivier Blanchard, who was chief economist at the International Monetary Fund until last month, and Rudiger Dornbusch, who pioneered the theory that currencies overshoot in either direction in the short run before correcting over time.

Macfarlane, who served one seven-year term and then a further three years before handing over to his deputy, Stevens.

Abbott had shown a willingness to appoint outsiders, naming former UBS Global Asset management chief executive officer John Fraser as Treasury secretary in December 2014.

Market economists had speculated that one of their own had put up their hand to replace Stevens while Abbott was still in charge.

Outside candidates

David Bassanese, chief economist at BetaShares Pty, said the only outside candidates he could think of were Adrian Blundell-Wignall from the Organization for Economic Cooperation and Development, and David Gruen, a former senior Treasury official who is now in the Department of Prime Minister and Cabinet.

Aside from a new governor, other changes to the RBA’s policy setting board could also occur in the next 12 months as the five-year terms of three of the six independent directors come to an end. Roger Corbett’s term ends on Dec. 1 - his second on the board. Catherine

Exceptional brain

“He is an extraordinary brain with deep experience both here and offshore,” said Bill Evans, chief economist at Westpac Banking Corp. in Sydney, whose praise echoed that of many survey participants. Lowe is “quite the most outstanding executive that I have dealt with at the RBA going back 35 years.”

In the past 26 years, only one governor has come from outside the RBA’s ranks: Bernie Fraser moved from Treasury secretary to the role in 1989 and held the post until 1996.

He was succeeded by his deputy, Ian

It’s much more likely that Phil Lowe will succeed Glenn Stevens Saul Eslake, independent economist

Tanna’s ends on March 29 after five years and John Edwards’s term finishes on July 30, 2016, also after five years.

Board members generally don’t serve more than 10 years and some are replaced after five.

Bloomberg sought access to the list of potential appointees to the independent directors’ positions in a Freedom of Information request and to a list of any candidates who had applied to succeed Stevens. The Treasury last month refused to release 12 documents containing information on the subjects.

Flagging growth

Stevens and his board, who kept the cash rate steady at their October meeting Tuesday, cut the benchmark to a record-low 2 percent this year to try to support flagging growth and policy makers have made it clear that the capacity of monetary policy to boost the economy is waning.

The governor stepped up his criticism of government inaction under Abbott in recent months as lawmakers showed few signs of tackling tax reform, freeing up the labour market and intensifying competition to improve productivity and increase national wealth. Lowe said in August that the country needed to raise returns from investment in new assets and added the problem wasn’t due to a shortage of “sensible” proposals to cut regulation and increase efficiency. The implication was government impediments.

When Turnbull ousted Abbott on September 14, he said Australia needed “economic vision, a leadership that explains the great challenges and opportunities” the country faces. “The Australia of the future has to be a nation that is agile, that is innovative, that is creative, we cannot be defensive,” he said.

Bloomberg News

Thailand denies labour abuses after IndustriALL Union complaint Since 2014, the United States has put Thailand on the bottom-ranked Tier 3 in its annual Trafficking in Persons (TIP) report

T

hailand’s military government yesterday defended its labour record after a global labour union with 50 million members filed a complaint against the country.

The complaint by the union IndustriALL was filed at the International Labour Organization in Geneva on Tuesday, with details of 18 cases of worker and labour abuses.

It also accused the Thai government of failing to protect its workforce of 39 million people.

Sansern Kaewkamnerd, a spokesman for the prime minister’s office, said the complaint was not true.

“The Thai government has always given importance to the country’s workforce. We’ve organised the foreign and local workforce to ensure equal rights so that there are no abuses,” Sansern told Reuters.

“The complaint by IndustriALL is not true,” he added. “This government is very serious about not abusing the workforce especially in terms of the fisheries industry.”

Labour abuses in the Thai fishing industry are well-documented.

Since 2014, the United States has put Thailand on the bottom-ranked Tier 3 in its annual Trafficking in Persons (TIP) report.

The U.S. State Department said in its 2015 TIP report some Thai and migrant workers were subjected to forced labour on Thai fishing boats with some remaining at sea for several years or paid very little, or they were threatened or beaten.

The environmental group Greenpeace on Monday urged Thai Union Group Pcl, the world’s largest manufacturer of canned tuna, to rid its supply chains of destructive fishing practices.

More than 200 people submitted a letter to Prime Minister Prayuth

Malaysia’s August exports rise better than forecast Exports in August rose 4.1 percent from a year earlier thanks to rising shipments to Singapore, China and the United States.

The August figures were up from July’s 3.5 percent increase, supported by higher exports of electrical and electronic products, and beat economists forecast of a 2.0 percent rise. Imports, however, declined 6.1 percent on slowing demand for intermediate and capital goods, and undershot economists’ expectations of a 1.6 percent increase. Malaysia’s imports have slowed since the government implemented a consumption-based Goods and Services Tax in April, despite a jump of 5.9 percent in July.

Japan Post sets nearUS$12 bln IPO price Japan Post Holdings Co yesterday set an indicative price range of 1,100-1,400 yen per share in an initial public offering, one of a trio of listings by the state-owned post office that make up a privatisation worth close to US$12 billion in total, Japan’s biggest in three decades. The Japan Post holding company and two financial units - an insurer and a bank plan to raise as much as a combined 1.4 trillion yen (US$11.6 billion), with shares set for a November 4 trading debut.

Retailer pulls Indonesia’s products on smog concerns Singapore’s largest supermarket chain has temporarily banned paper products from Asia Pulp & Paper Group (APP), saying the firm had failed to show it was not linked to the forest fires in Indonesia that have blanketed the city state in a thick smog. NTUC FairPrice, run by the local trade union, said it had made its decision after the Singapore Environment Council (SEC) decided to suspended its green certification for APP’s paper products.

The non-governmental group is running a campaign to raise consumer awareness about the causes of the smog.

Bangladesh revised exports fall 7 percent

Chan-ocha outside his Bangkok offices yesterday demanding stricter labour laws and better compensation.

IndustriALL helped create the landmark Accord on Fire and Building Safety after Bangladesh’s Rana Plaza garment factory complex collapsed in April 2013, killing at least 1,130 people.

The legally binding accord, signed by more than 150 apparel companies and trade unions, requires factories to have independent safety inspections with the results made public.

Reuters

Bangladesh’s exports fell 7 percent to US$2.37 billion in September from a year earlier, revised government data showed on Tuesday. For the first quarter of the 2015-16 financial year, exports rose nearly 1 percent to US$7.76 billion from the previous year, the Export Promotion Bureau said. Sales of ready-made garments, comprising knitwear and woven items, totalled US$6.44 billion in the July-September period, up 3.3 percent from the year-earlier period. Earlier data had indicated exports rose 2.5 percent in September.

Yingluck to appeal against court’s rejection Former Thai prime minister Yingluck Shinawatra will appeal against the Criminal Court’s decision to dismiss her lawsuit against the attorney-general and three other prosecutors for alleged malfeasance, Yingluck’s lawyer Norrawit Larlaeng said yesterday. The Criminal Court on Tuesday rejected the lawsuit in which Yingluck accused the prosecutors of violating the Criminal Code when dealing with a case related to her government’s controversial rice-pledging scheme.

Yingluck’s lawsuit was dropped on the ground that the prosecutors’ actions were legitimate. The Criminal Court did not consider the evidence submitted by Yingluck’s lawyers, Norrawit said.

14 | Business Daily

October 8, 2015

International AB InBev sweetens bid for rival brewer SABMiller Anheuser-Busch InBev, the world’s largest brewer, launched an improved offer for SABMiller yesterday, offering just over 68 billion pounds (US$104 billion) for its largest rival to extend its reach into Africa and other markets. The company said in a statement it was offering 42.15 pounds per SABMiller share, having already made two prior offers at 38 and 40 pounds. AB InBev said it believed the offer would be attractive to SABMiller shareholders, adding it was disappointed the UK-based company’s board had rejected both previous approaches.

Rio 2016 cuts budget amid economic crisis Rio 2016 organizers have outlined plans to slash spending by about 10% to prevent next year’s Olympic Games from running over budget. Brazil is in a deepening economic crisis as it grapples with rising unemployment, stagnant growth and soaring inflation. A Rio 2016 budget review has called for cuts of up to 30% in some departments of the organizing committee. “We need to organize the Games to be economically sustainable,” Rio 2016 communications director Mario Andrada said. “There’s no more space for lavish overspending.”

German industrial output posts steepest drop in a year The Economy Ministry said the late start to the summer holidays had contributed significantly to the fall

G

erman industrial output fell in August at its fastest pace in a year, data from the Economy Ministry showed yesterday, suggesting Europe’s largest economy may have lost momentum in the third quarter.

Factories produced 1.2 percent fewer goods than in the previous month, the ministry said, blaming some of the weakness on the large number of summer holiday days in the month.

It was the strongest fall since August 2014 and missed the Reuters consensus forecast for a rise of 0.2 percent. The output drop followed a sharp decline in August industrial orders data on Tuesday.

On a positive note, the July figure was revised up to a 1.2 percent increase

from a previously reported rise of 0.7 percent.

“German industry is still struggling to gain momentum. Yesterday’s drop in new orders already signalled a note of caution,” said ING economist Carsten Brzeski.

“Today’s weak industrial production data will again give rise to speculation that the German economy is suffering from the Chinese slowdown. In our view, however, there is no need to panic,” he said, noting that industry had also posted disappointing numbers last summer.

The Economy Ministry said the late start to the summer holidays had contributed significantly to the fall.

“The on-going positive mood among companies and good export

development suggests a continuation of moderately positive industrial activity despite weaker incoming orders in July and August,” the ministry said in a statement.

Recent data has painted a picture of waning demand from abroad, especially China and other emerging markets, with orders falling 1.8 percent in August.

This suggests that strong exports, which supported growth in the first half, could be losing steam.

But other economic indicators have been broadly encouraging with retail sales posting their strongest increase from January to August in more than 20 years, and business morale rising for the third month in a row in September.

Reuters

EU improves transparency rules on cross-border tax The Economic and Financial Affairs ministers of the European Union (EU) member states reached a political agreement on the automatic exchange of information on cross-border tax rulings on Tuesday. The ministers’ meeting in Luxembourg unanimously agreed on a directive aimed at improving transparency in the assurances given by member states to companies about how their taxes are calculated, an EU statement said. The directive is one of a number of EU initiatives aimed at preventing corporate tax avoidance. It will require member states to exchange information automatically on advance cross-border tax rulings, as well as advance pricing arrangements.

Alcatel’s undersea cables unit to be swallowed by Nokia

Factories produced 1.2 percent fewer goods than in the previous month

U.S. trade deficit widens as exports sag, imports from China surge Trades made in futures markets now imply that investors are betting the Fed will hold off on hikes until at least March Jason Lange

U Alcatel-Lucent said on Tuesday it will not sell its undersea cables unit, meaning the strategic business which underpins the global Internet will be taken over

by Nokia once it completes its acquisition of the Franco-American group. The Finnish firm unveiled in April the 15.6 billion euro (US$17 billion) acquisition of network gear maker Alcatel-Lucent as they aim to better compete with market leader Ericsson and low-cost Chinese powerhouse Huawei. Asked about possible government concerns, a spokesman for Alcatel-Lucent said France was not opposed to the submarine cable unit being bought by Nokia.

.S. exports took a hit from an ailing global economy in August and imports from China surged, fuelling the largest expansion of America’s trade deficit in five months.

The data released by the Commerce Department illustrates the U.S. economy’s vulnerabilities to a strong dollar and weak demand in foreign markets, which could impose further caution on the Federal Reserve’s plans to hike interest rates.

The trade deficit swelled by 15.6 percent to US$48.3 billion in August, according to data that is adjusted for seasonal factors.

The scope of the increase was accentuated by the unusually narrow trade deficit registered in July. Also,

imports likely got a temporary boost from inflows of cell phones ahead of the release of Apple’s new iPhone model.

But the size of the trade gap has risen far above the average levels seen in recent years and the onus for stronger U.S. economic growth is now falling squarely on consumers.

Sales of U.S. goods and services abroad fell 2 percent to their lowest level since October 2012. Exports to Mexico fell by US$1.5 billion in August and the European Union bought US$500 million less from America than it did in July, according to data on bilateral trade which is not seasonally adjusted.

The declines are partly due to expectations of higher interest rates in the United States that have pushed the

value of the dollar higher, reflecting the strength of America’s economy relative to its trading partners. A stronger dollar makes U.S. goods less competitive abroad.

Weaker demand abroad is also playing a role, and U.S. Treasury Secretary Jack Lew will ask policymakers from other countries gathering in Lima, Peru this week to stimulate their economies to kickstart global growth.

A 3 percent increase in U.S. imports from China also factored into the widening of the trade deficit.

The widening of the U.S. trade deficit surpassed the US$47.4 billion median forecast for the deficit in a Reuters poll of economists.

Yields on U.S. government debt initially declined after the report was released, before later turning higher as U.S. stock prices were little changed.

Until recently it appeared that the U.S. economy was largely shrugging off weakness abroad. But last week new data showed a sharp slowdown in employment growth in August and September. This has fuelled doubts on Wall Street over Fed Chair Janet Yellen’s assertion two weeks ago that the economy would be strong enough to warrant an interest rate hike this year.

In August, imports rose 1.2 percent, even though America bought the least petroleum from abroad since September 2004.

Imports of consumer goods rose

by US$4 billion, of which slightly more than half the rise was due to increased purchases of cell phones and other household goods.

Reuters

Business Daily | 15

October 8, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

The Fed and its fear of financial analysis James Saft

Reuters columnist

THE PHNOM PENH POST The conclusion of the TransPacific Partnership agreement has industry insiders in Cambodia split over whether or not the new pact will limit the Kingdom’s trade growth potential in the US market and see future investments diverted to Vietnam. Ken Loo, secretary-general of the Garment Manufacturers Association of Cambodia, said that while the agreement was expected, it could eat into the Kingdom’s already dwindling economic competitiveness, which is plagued by rising labour costs and logistical deficiencies. “We’re not competitive, that’s why exports to the US have been declining every year, because we’re losing market share,” he said.

THE AGE The share market valuations of the big banks (in Australia) are looking attractive after the recent sell-off and the usual buying that occurs before their dividend pay-outs could drive their share prices higher, Macquarie says. The S&P/ASX 200 banks index tumbled to its lowest point since July 2013 at the end of a dismal third quarter for the share market. The index has fallen 20 per cent since the market rout began in April, fuelled by volatility on macro concerns and industry-specific capital raising requirements directed by the Australian Prudential Regulatory Authority.

THE STRAITS TIMES With the increasing popularity of online grocery shopping, lugging home heavy bags on public transport or making an after-work dash to the supermarket could soon become a thing of the past.

The number of such online purchases looks “set to soar”, said Dr Brian Lee, head of the communication programme at SIM University’s School of Arts and Social Sciences. Dr Lee pointed to research by PayPal that showed that online shopping revenue in Singapore will be worth S$4.4 billion this year. More established supermarket chains are also looking to carve themselves a slice of the online shopping pie.

TAIPEI TIMES China Development Financial Holding Corp plans to continue capital restructuring efforts at its two banking subsidiaries, top executives said. The company’s main subsidiary, China Development Industrial Bank, which used to focus on industrial banking, in May transferred most of its businesses — including corporate banking and treasury marketing units (TMUs) — to KGI Bank. At the end of June, capital re-allocation in the financial group was changed to a more even 30 percent, 34 percent and 36 percent split for China Development Industrial Bank, KGI Securities Co and KGI Bank respectively.

The study also bears out the Fed’s regrettable tendency to clean up after financial bubbles but not stop them

T

he Federal Reserve isn’t just afraid of financial instability, it appears to fear financial analysis too.

How else do you explain the strong relationship between the appearance of words like “equity values”, “froth”, and “lending standards” in interestrate setting discussions and the Fed cutting interest rates?

If you made this stuff up, they wouldn’t believe you.

There is a stronger relationship, in fact, between discussions around the basics of financial analysis and financial distress and easing than the ones found between inflation and unemployment and monetary policy.

A paper co-authored by Boston Fed President Eric Rosengren makes the case that the Fed does manage the economy to a third mandate of financial stability to go along with its congressionally mandated ones on inflation and employment.

“The Federal Open Market Committee appears to be reacting after adverse shocks hit rather than proactively reacting to mitigate the buildup of financial imbalances that could cause an asset price bubble, the subsequent bursting of which could have severe adverse effects on the economy,” Rosengren and colleagues write.

That’s Fed-speak for: “we don’t pull the punch bowl when the party gets good, but we mop up after financial markets have knocked it drunkenly to the floor.”

The paper examines the use in monetary policy discussions of words that denote financial instability - what it terms, revealingly, “moaning” - and changes in monetary policy.

For every 100 times the Fed, between 1987 and 2009, used “moaning” words in policy discussions we can account for a 45-basis-point drop in rates. That’s a more powerful relationship than that caused by a 1-percentage-point move in unemployment forecasts and almost double the move in rates prompted by a similarsized move in inflation.

The study also bears out the Fed’s regrettable tendency to clean up after financial bubbles but not stop them. When credit is tight and times tough, 100 words of moaning prompt 67 basis points of interest rate cuts. But if credit is easy and a boom is on, that same 100 words only get you a hike of 36 basis points.

The subtext to much of this is the push for more macroprudential management of the economy by the Fed, meaning the use of lending standards and other regulations to try to retard the growth of bubbles through behaviour modification rather than monetary policy.

Rosengren favours adding financial stability as an explicit mandate, something which, if accompanied by more macroprudential policies, might take some of the burden from interest rates as the principal tool of economic management.

Inefficient markets That the Fed is more responsive to discussions of financial instability than to its actual job of managing inflation and employment is striking. What is even more remarkable is the list of words which, when used, tend to prompt the Fed to cut rates and support markets.

Besides ones that denote turmoil, like “crash”, the study counted mostly simple terms of

Market inefficiencies and manias were not part of right-thinking policymakers’ conversations, unless and until they were causing massive problems, as they did several times in the past two decades

awareness and measurement, like “housing prices”, “liquidity issues” and “regulation”. About half the terms measured in the study are those of financial analysis or regulation, not ones which evoke distress.

It is fair to point out that the Fed is the most powerful regulator in the world, and if it needs to cut rates whenever it discusses “supervision”, something is very wrong. Many would agree, perhaps even many Fed officials, who seem both desperate for better tools and dubious of their potential utility.

Seriously though, the truly amazing thing about this list is that these “moaning” words aren’t used more frequently.

How do you manage an economy using interest rates without a debate of housing and equity valuations, much less lending standards?

Much of this reflects the longlasting impact of former Fed Chairman Alan Greenspan’s love affair with the efficient market hypothesis, which posits that markets reflect available information and thus self-correct.

As a result, market inefficiencies and manias were not part of right-thinking policymakers’ conversations, unless and until they were causing massive problems, as they did several times in the past two decades.

It may well be true that the Fed, when asked to prick bubbles, will be as bad at it as they’ve proven to be at not fomenting them. The FOMC isn’t smarter than the market and will have a tough time devising rules to make up for that.

What happens now is even worse, as investors know the market prices they create will be backstopped by the Fed. Reuters

16 | Business Daily

October 8, 2015

Closing Beijing launches commercial remote-sensing satellites

Renault and Nissan discuss structure to counter French control

China launched a group of four satellites yesterday at noon for commercial remote-sensing services, an important step in the development of remote-sensing space technology. The “Jilin-1” satellites, include one optical remote-sensing satellite, two satellites for video imaging and another for imaging technique testing, according to an announcement from the launch centre. All four satellites were developed and produced by Chang Guang Satellite Technology. The company will also take charge of commercial operations of the satellites to provide remote-sensing data and relevant products.

Companies have entered discussions to reorganise their capital alliance structure in a bid to water down Paris’s control of the French automaker, the Nikkei business daily reported yesterday. The paper said a plan being floated was for Renault to lower its stake in Nissan below 40 percent from the current 43.4 percent - a move that would, under French law, allow the Japanese partner’s stake in Renault to carry voting rights. The Nikkei did not say where it obtained the information. The 16-year-old Franco-Japanese alliance has been viewed as one of the few partnerships that worked in the auto industry. Alliance’ CEO Carlos Ghosn pictured.

Taiwan throws in towel on 2015 global export recovery The annual forecast, already cut from a high of 3.78 percent estimated earlier this year, may still be too optimistic J.R. Wu and Liang-Sa Loh

T

rade-reliant Taiwan yesterday effectively wrote off any chances of a global export recovery this year after its September shipments tumbled more than expected, with weakening in all of its major markets, particularly China.

Exports sank last month for the eighth month in a row and at the second-fastest pace in over two years, reinforcing the rationale behind the central bank’s decision to cut interest rates last month for the first time since the global crisis.

The dismal report will reinforce signs of a growing chill in global demand.

Taiwan is a major exporter of electronics and parts for gadgets like smartphones, which are usually in strong demand heading into the year-end shopping season.

September exports, however, showed a further deterioration in demand rather than any signs of a seasonal bounce, falling 14.6 percent from a year ago, worse than expectations for an 11.6 percent decline in a Reuters poll.

Taiwan’s finance ministry said it expected exports to continue to fall in the fourth quarter from a year earlier, though it predicted the rate of decline would begin to ease in October. Still, it said an expected recovery for the semiconductor industry will be delayed into early 2016.

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co, said last month fourth-quarter revenue was likely to be little changed from the third-quarter.

Former Aussie PM says agreement on climate to be reached in Paris

While a recent selloff in global financial markets was attributed largely to worries about China’s slowing economy, a breakdown of Taiwan’s sales point to weakening demand in all major markets.

Exports to China fell 17.1 percent, more than double the decline in August, with shipments to Japan sliding 15.1 percent.

August’s growth in exports to the U.S. and Europe vanished, with falls in those markets of 0.4 percent and 9.4 percent, respectively, last month.

Electronics exports and information and communication exports fell 9.9 percent and 22.1 percent, respectively, indicating weak demand for the island’s signature goods.

Taiwan’s exports only reflect a portion of what

is produced on the island because many orders are farmed out to factories owned by Taiwan firms in China. As a result, the poor readings could portend further weakness in China’s export data next week.

Import weakness as well

Taiwan’s imports also fell at a sharper-than-expected pace in September, reflecting lower global commodity prices but also softening demand at home.

Imports slumped a greater 24.4 percent last month from a year earlier, co m p a r e d t o t h e 1 6 . 7 percent drop recorded in August, pushing the trade surplus to US$5.25 billion for September, ministry data showed.

The government in August cut its growth forecast for gross domestic

Reuters

Li Ka-Shing’s CKI increases Power Assets Bid

Indonesia-Vietnam rice import deal just contingency plan

C

O

evin Rudd, former prime minister of Australia and the president of the Asia Society Policy Institute, said he was confident that countries would be able to reach an agreement to tackle climate change during their meeting in Paris late this year.

“The reason is that the world and the international community has learnt a lot since Copenhagen,” Rudd explained in a recent interview with Xinhua.

“We’ve all seen evidences of extreme weather events in the five years since Copenhagen, and I think our global public opinions, China, the United States, Europe, and elsewhere are all observing what happens when climate change starts to take hold,” he added.

Rudd anticipated that the agreement will ensure the world will not go beyond the two-degree increase of global temperature, as scientists agreed it is the threshold for catastrophic climate change.

A UN summit in Copenhagen in 2009 set a goal of keeping temperature rises at no more than two degrees Celsius from pre-industrial times. Talking about the role of the United Nations, Rudd called on the UN to be more relevant in dealing with big challenges facing the international community.

heung Kong Infrastructure Holdings Ltd. raised its offer for Power Assets Holdings Ltd. to US$12.4 billion in stock as Li Kashing seeks to combine his utility businesses for further expansion.

Cheung Kong Infrastructure is proposing 1.066 CKI shares for each Power Assets share not owned

by Li’s companies, according to a filing with the Hong Kong exchange statement yesterday. It also boosted a special dividend it will pay to the combined company’s shareholders after the deal by 50 percent to HK$7.50 per share, meaning an extra US$1.3 billion of pay-outs.

Morgan Stanley last month said that CKI, as the company is known, would need to raise its offer to attract shareholders of Power Assets after the initial proposal worth US$11.6 billion in stock. Hong Kong’s richest man is reshuffling his business empire for the second time this year as he looks for acquisitions and prepares to hand over to his elder son Victor.

The deal will give CKI access to a cash hoard held by Power Assets and bring together holdings in 11 projects globally. The combined company will own and operate utilities, waste management and transportation in China, Europe and Australia.

Xinhua

Bloomberg News

K

product (GDP) this year to 1.56 percent, which would be the slowest in six years. At the same time, it estimated the gain in the third quarter - traditionally the ramp-up to peak holiday demand would be just 0.1 percent.

The annual forecast, already cut from a high of 3.78 percent estimated earlier this year, may still be too optimistic.

Last week, Taiwan’s chief statistician said it would difficult to achieve 1 percent growth in the fullyear for 2015, when asked

by Taiwanese lawmakers if third-quarter GDP shrank.

Su-mei Shih, minister of the Directorate General of Budget, Accounting and Statistics, said the government will cut its 2015 GDP estimate again next month.

fficials at Indonesia’s state food buyer said yesterday that no plan had been made to ship rice from Vietnam and that the two countries had only agreed on a contingency plan to guard against possible shortages resulting from dry weather.

Late on Tuesday, a Vietnamese government department reported it had won a tender to supply nearly 1 million tonnes of the grain to Indonesia, as the archipelago struggles with a prolonged drought threatening crops.

The deal, along with a 450,000-tonne supply contract to the Philippines, was seen helping stabilise Vietnam’s rice industry through the first quarter of 2016, the Industry and Trade Ministry report said, without giving further detail.

Uncertainty surrounding the Indonesian deal could drag on Vietnamese rice prices, which gained around 3 percent to an 11-week high yesterday following news of the potential agreement.

“This is a supply guarantee to prepare for a (possible shortage),” Bulog CEO Djarot Kusumayakti told Reuters yesterday, noting that no plans for shipment had been made. Food buyer Bulog is the Indonesian government agency tasked with importing rice.

Reuters