MOP 6.00
Disappointing Golden Week
Closing editor: Joanne Kuai
A slight increase in tourist arrivals during National Day Golden Week. But this failed to translate into better business for cosmetics retailer Sa Sa International Holdings Ltd. Sales in the SARs dropped 10.4 pct. Fewer Mainland Chinese consumers plus weakened purchasing power provoked a drop of some 12 pct in average spend
Year IV
Number 897 Tuesday October 13, 2015
Publisher: Paulo A. Azevedo
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Age of Travel
1.1 billion people are travelling the world. With tourism directly responsible for 1 of every 10 jobs. This, Roger Dubuis eyes according to Secretary-General of the United Nations World Tourism Organization Taleb Rifai. The Global two more stores in Macau by 2016 Tourism Economy Forum (GTEF) 2015 was held in Macau. Identifying Macau as the second top tourism Page 4 earner in Asia and the Pacific. Generating US$51 billion in 2014. Chief Executive Chui Sai On appeals to Building Maintenance Fund the territory to adopt a strategic vision Page 2
Allergy to algorithms A recent painful rout in the Chinese stock markets. Prompting regulators to mull increase of supervision on algorithmic traders. Who are taking the heat for shrinking volumes. And an exodus of foreign investors
www.macaubusinessdaily.com
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Customised Commune
Good quality furniture. In increasing demand says Singapore furniture company Commune. The franchise has opened its first retail branch in Macau. Operations director Sunny Chang Chio Kit says the local store is smaller than its Mainland counterparts. But customers can request custom-made sofas for prompt delivery. A sales outlet in Hengqin is on the agenda for next year
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covers industrial buildings
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Golden Week shows the power of Chinese consumers
Page 9
Opening onshore yuan debt market shadows offshore appeal
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Property
HSI - Movers
Increasing Loans
October 12
New residential mortgage loans increased 10.7 per cent y-o-y in August. To MOP5.56 billion (US$669.68 million) from MOP5.05 billion. Mainly driven by loans granted to non-residents. At end-August the delinquency ratio for residential mortgage loans touched 0.09 per cent. Up 0.02 percentage points from a month ago and from endAugust 2014
Page 3
Name
%Day
Lenovo Group Ltd
+7.69
China Unicom Hong Ko
+5.50
China Resources Enter
+4.05
Hang Lung Properties
+3.97
China Overseas Land &
+3.61
China Mengniu Dairy C
-0.67
Tingyi Cayman Islands
-1.81
Cheung Kong Property
-1.83
Galaxy Entertainment
-2.94
Sands China Ltd
-3.35
Source: Bloomberg
I SSN 2226-8294
2015-10-13
2015-10-14
2015-10-15
20˚ 27˚
21˚ 28˚
22˚ 29˚
2 | Business Daily
October 13, 2015
Macau Government increases disability subsidies The government has increased the amount of two disability subsidies for eligible permanent residents, the Official Gazette announced yesterday. According to the dispatch by Chief Executive Fernando Chui Sai On the amount of the regular disability subsidy has been lifted to MOP7,500 from MOP7,000, which is an increase of 6.67 per cent. Meanwhile, the amount of special disability subsidy rose by 7.14 per cent to MOP15,000 from MOP14,000. Both subsidies are issued to the eligible once a year.
CE appeals to territory to adopt strategic vision The head of the Macau Government officiated at the opening ceremony of the Global Tourism Economy Forum, where the territory was named the ‘darling of the success stories of the 21st century’ João Santos Filipe
jsfilipe@macaubusinessdaily.com
The report on Asia tourism trends also pointed out that Asia has performed better than international arrivals at 5 per cent representing 268 million or 23 per cent of the global market share. Trends indicate that this market share will increase to 30 per cent in 2030 to reach 535 million from Asia and the Pacific.
Darling Macau
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he territory needs to adopt a strategic vision for the future that takes into account synergies from different cultures, sectors and regions in order to be ready to face the new opportunities emerging in the tourism industry. This was the main message delivered by Chief Executive Fernando Chui Sai On yesterday at the opening ceremony of the Global Tourism Economy Forum (GTEF) 2015, at The Venetian. “Starting from our reality, we need to adopt a strategic vision, gather synergies from the different cultures, sectors and regions, in order to face the opportunities being created by the development”, the Chief Executive of Macau said during a forum titled ‘Belt and Road Initiative: Unleashing the New Dynamics of Cultural Tourism’. Hosted by the Macau Government and organised in collaboration with the United Nations World Tourism Organization (UNTWO), the opening ceremony was also attended by Forum chairman and former MSAR Chief Executive Edmund Ho Hau Wah, the Prime Minister of Cambodia, Hun Sen, the Secretary-General of UNWTO, Taleb Rifai, and the Chairman of the China National Tourism Administration (CNTA), Li Jinzao.
“We will continue to work to boost the development of the emerging industries, giving special emphasis to the promotion of cultural integration and tourism, which will allow [us] to conquer a larger space for the development of Macau”, Mr. Chui said. “The purpose of the Macau Government is always to pursue economic development and provide citizens with a better life”, he added.
Macau posts classy performance
The event was also the opportunity for UNTWO and the Global Tourism Economy Research Centre to present the annual report for 2015 on Asia Tourism Trends. According to the study, in 2014, Macau was the second top tourism earner in Asia and the Pacific generating US$51 billion (MOP408 billion), just behind Mainland China with US$57 billion. While addressing City Tourism, a trend that started in 1980 in the United States, the study says that Macau ranks 6th worldwide. In the Asia region, the territory is second only to Hong Kong. The MSAR has also been recognised as an ‘excellent reference’ where a city with a population of 500,000 caters to
more than 5 times its populace in visitors. The report says diversification of city tourism development has facilitated the emphasis on culture, family-oriented products, sport and entertainment.
In addressing the audience, the Secretary-General of UNWTO, Taleb Rifai, said: “There are three reasons to support this event. First, it is in Asia, which is the future. Asia is the engine driving the world’s development. Second, we are in China, and the success of the world at this moment depends upon the success of China. Third, we are in Macau which is the darling of the success stories of the 21st century”, he said, stressing as well the importance of cultural integration and proximity between different nations. In this respect, tourism is expected to be one of the leading forces creating peace and stability. “These days, 1.1 billion people are travelling around. We are living a revolution, the travel revolution. Today, every single day, US$4 billion is spent in one country coming from another. Tourism is directly responsible for 1 out of every 10 jobs. This is the Age of Travel”, he said.
Business Daily | 3
October 13, 2015
Macau
New residential mortgage loans increase 10.7 pct in August The number of residential mortgages approved by Macau banks increased mainly due to requests from non-local residents JoĂŁo Santos Filipe
jsfilipe@macaubusinessdaily.com
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he number of new residential mortgage loans increased 10.7 per cent year-onyear during August to MOP5.56 billion (US$669.68 million) from MOP5.05 billion, according to the Monetary Authority of Macau (AMCM). The largest share of the new mortgage loans was approved by Macau banks to local residents, in the amount of MOP3.59 billion, some 64.6 per cent of the total amount of new loans. Nevertheless, new mortgage loans to residents decreased 23.1 per cent year-onyear from MOP4.66 billion. Residential loans to nonresidents expanded 421.5 per cent year-on-year rate to around MOP2 billion from MOP383.02 million. New residential mortgage loans collateralised by uncompleted units also decreased but at a 14.7 per cent year-on-year rate. While in August 2014 it amounted to MOP1.37 billion, in last August it totalled MOP1.17 billion. The territory’s residents were responsible for MOP1.09 billion of mortgage loans collateralised by uncompleted units, a decrease of 14.6 per cent year-on-year from MOP1.27 billion. Nonresidents took MOP81.05 million of collateralised loans by uncompleted units, down 16.3 per cent in comparison to August last year when it amounted to MOP96.82 million.
Commercial real estate loans
During the eighth month of the year, new commercial real estate
loans approved by banks operating in the territory declined 11.8 per cent year-on-year to MOP9.72 billion from MOP11.03 billion in August 2014. Again, Macau residents were responsible for the largest share of commercial real estate loans, accounting for 99.2 per cent, at MOP9.64 billion. Still, in relation to the previous year there was a decline of 10.7 per cent from MOP9.64 billion. At the same time, non-residents were responsible for MOP80.94 million of commercial real estate loans. This is a value 65.4 per cent down year-on-year from MOP234.14 million. At the end of August 2015, the delinquency ratio for residential
IFT unveils new Taipa campus
Y
esterday, the Institute for Tourism Studies (IFT) unveiled its new Taipa campus, which is located on the old campus of the University of Macau. The Institute was granted the East Asia college, library, staff quarters and two laboratories of the previous UM campus following the University move to its new campus on Hengqin Island.
The president of IFT, Fanny Vong, said during a speech that the new campus would allow the institution to enhance its teaching facilities and provide more courses and professional training. Meanwhile, IFT also held an international symposium on the past and future of tourism yesterday. During the symposium, IFT signed a joint statement with nine countries.
mortgage loans was 0.09 per cent, up 0.02 percentage points from a month ago and from end-August 2014. The ratio for commercial
real estate loans remained virtually unchanged from a month ago at 0.04 per cent or down 0.03 percentage points from a year ago.
4 | Business Daily
October 13, 2015
Macau
Sa Sa’s Golden Week sales slump
I
ncreased visitations by Mainland Chinese tourists during the National Day Golden Week did not help cosmetics retailer Sa Sa International Holdings Ltd., which saw its retail sales in Hong Kong and Macau decline some 10.4 per cent year-on-year in the period, according to the company’s latest filing on their unaudited sales operation data. While the sales revenue figure is not mentioned in the filing, Sa Sa
said its retail sales in both cities had dropped 10.4 per cent in the weeklong holiday for Mainland Chinese visitors, and that its same store sales had declined 8.7 per cent. Sa Sa said that the decreased traffic of Mainland Chinese consumers at the stores and their weakened purchasing power has contributed to a drop of about 12 per cent in their average spending – the exact average transaction figure is not disclosed in the filing.
Chow Tai Fook sales weaken in SARs
H
ong Kong-listed Chow Tai Fook Jewellery Group Ltd. has seen its overall retail sales value turn around in the three months ended September 30 this year, although the jeweller’s same store sales in Hong Kong and Macau remained weak in the quarter, according to the company’s latest filing. The overall retail sales value Chow Tai Fook
registered for the quarter ended September is up by 4 per cent year-on-year, a turnaround from the decrease seen in the retail sales value for the previous quarter as well as the fiscal year ended March 31. But the latest filing released by Chow Tai Fook does not detail sales revenue figures. But for Hong Kong and Macau stores, the retail sales value in the two cities
‘The group expects that tourism and retail industries in Hong Kong would no longer be driven by long holidays in China unless there are substantial measures taken to improve the competitiveness of tourism in Hong Kong,’ Sa Sa remarked in the filing, adding the company would continue to optimise its product offerings. During the October 1-7 vacation, Hong Kong authorities
registered a fall of 5 per cent in the quarter ended September; while the same store sales in these two cities was also down by 13 per cent in the period, according to Chow Tai Fook’s latest filing. ‘Compared to the same period last year, the retail sales value of the group increased 4 per cent, attributable mainly to a surge of demand for gold products as gold prices tumbled since mid-July. Nevertheless, the effect faded as the gold price stabilised in September,’ Chow Tai Fook said of its unaudited sales data in the filing. ‘Despite an increase in the sales of gold products in Hong Kong and Macau markets during the period, same store sales performance remained weak amid the continuing lacklustre retail market sentiment,’ Chow Tai Fook stated. The company opened a net 16 point-of-sales during the quarter ended September, which included a net opening of 14 jewellery point-of-sales in Mainland China and a net opening of 2 point-of-sales in Hong Kong, Macau and other markets, bringing the total sales points number to 2,286 as at the close of the quarter. S.L.
announced a slight year-on-year increase of 2.3 per cent in the number of Mainland Chinese tourists for the period; for Macau, the number of Mainland Chinese visitors (inclusive of labour working here and students) that came here during the vacation was 906,652, some 7.1 per cent more than a year before, according to official data. S.L.
Roger Dubuis eyes two more stores here by 2016
S
wiss luxury watch brand Roger Dubuis is planning to open two more stores in Macau next year despite the city’s shrinking sales of watches and jewellery since last year. Jean-Marc Pontroué, chief executive of Roger Dubuis, told Hong Kong’s Chinese language newspaper Hong Kong Economic Journal that the watch brand is optimistic about the long-term outlook for China, given the expected rise in the ranks of well-heeled shoppers in the country. Roger Dubuis currently has four namesake stores in Hong Kong and three in Macau located in casino resorts; namely, in Wynn Macau, Galaxy Macau and Four Seasons. The company’s products are priced between HK$150,000 (US$19,355) and HK$10 million. The expansion move planned by Roger Dubuis
has come at a time when Macau has been experiencing declining sales in watches and jewellery since last year and the first half of this year following the gaming downturn in the city. The value of retail sales of watches and jewellery has plunged some 30 per cent year-on-year to MOP6.7 billion for the first half of this year, after the segment had already contracted 11 per cent in 2014, according to data from the Statistics and Census Service (DSEC). Per capita spending of Mainland Chinese visitors, the highest among visitors here, plunged 24.3 per cent year-on-year to MOP2,012 on average as at the second quarter of this year when a fall trend was also registered in the spending by visitors from overseas, the latest data from DSEC reveals. S.L.
Business Daily | 5
October 13, 2015
Macau
Singapore furniture firm Commune branches out to Macau The Singapore furniture manufacturer and seller is looking to tap into the demand from affluent buyers here, and is mulling opening another store in Hengqin next year Stephanie Lai
sw.lai@macaubusinessdaily.com
S
ingapore furniture company Commune witnessed the opening of its first retail branch in Macau over the weekend, a move that taps into the city’s demand for mid to high-end home furniture. Another Commune sales outlet is to be established in Hengqin, Business Daily has learned. “We’ve noticed that many people here who are looking for good quality furniture, especially wooden furniture, have usually turned to Hong Kong and Mainland China to make the purchase,” Commune Macau’s operation director Sunny Chang Chio Kit told Business Daily. “So we thought that Commune could fill the demand gap here, which mainly targets clients searching for mid to high-end home furniture products.”
the Commune Macau operation director said. “This service is not available in most of the city’s furniture stores as they only offer products off their catalogues.” The home furniture in Commune Macau is imported from Singapore via warehouses in Dongguan and Shanghai in China, a big market for the Singapore furniture manufacturer and retailer where it now has 15 stores. The Macau franchise holder of the Singapore design furniture company is situated across Ponte 16 in the Inner Harbour district on the Macau Peninsula in a 1,000 square foot store about one-third smaller than the Commune branches in Mainland China.
“Commune’s stores on the Mainland are usually 2,500 square feet to 3,000 square feet, so the selections available here are not as extensive as in China”, Mr. Chang told us. “But our advantage is that clients can request custommade sofas at our store, which take 30 working days from placing the order to delivery,”
Building Maintenance Fund covers industrial buildings
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he government has included industrial buildings in the coverage scope of the Building Maintenance Fund as from today, the Official Gazette announced yesterday. Six dispatches by Chief Executive Fernando Chui Sai On released yesterday announce that industrial building owners now qualify to apply for the Fund that includes six programmes, such as interest-free loan, subsidy schemes for maintenance and supporting schemes for building inspections. The Housing Bureau said in a press release yesterday that the expansion of scope is due to ‘some industrial buildings [aging] with their exterior, elevators and other shared areas lacking maintenance, which may harm the safety and health of other residents’. The Fund, established in 2007, also seeks to help the unit owners of local private buildings establish
their own management committee. According to the Housing Bureau, the government has granted subsidies to 2,800 applicants for the Fund as at the end of September this year, involving more than MOP300 million (US$37.5 million). Subsidised buildings must be 10 years old or more, while the government will grant no more than 30 per cent of the total maintenance cost, or MOP5,000 for each individual unit per application. Meanwhile, the interest-free loan scheme of the Fund lends a maximum MOP50,000 per unit. The Bureau also announced in the press release that the application period for the scheme subsidising the maintenance of low-rise residential buildings aged 30 years or more with a maximum of seven storeys, would be extended for one more year to February 2017. K.L.
Hengqin branch
Commune is now mulling the opening of another branch in Macau’s neighbouring Hengqin Island by the third quarter of next year, Mr. Chang said. “The retail store in Hengqin will have around 2,000 square feet, and it will be located in the shopping centre of ‘Sea of Dreams’. The
shop will be ready at a time when the island sees more and more residential units available for occupation,” according to Mr. Chang. Before Commune’s Hengqin shop is to open, Commune Macau’s boss Sunny Chang said he would like to see the online purchase platform ready to accommodate local client demand. ‘Sea of Dreams’ is a residential project in Hengqin of some 1,800 units, of which the majority of buyers are from Macau. The three-storey shopping centre at ‘Sea of Dreams’, occupying 130,000 square feet, will have a soft opening by September next year, the shopping centre’s management firm Land Master Group told Business Daily.
6 | Business Daily
October 13, 2015
Macau
Mixed opinions on real estate market There are many forecasts for the home market but none are set in stone
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ragged down by the territory’s plunging gaming revenue, home prices have so far nosedived by some 35.6 per cent from last year’s peak. The latest figures from the Financial Services Bureau
reveal that the average home price in Macau stood at MOP84,753 (US$10,594.1) a square metre in July, compared to the historic high of MOP131,589 a square metre in April last year. Several property brokers
and observers predicted earlier this year that the home market could start recovering in the second half of 2015, forecasts now consigned to the dustbin by the relentless buffeting of casino headwinds.
As the real estate industry continues to call on the government to relax property curbs amid the current economic woes, it has differing outlooks on how the home market will fare, subject to numerous internal and external factors. Compared to the past few years when the home market had no other direction to go but up, Jane Liu Zee Ka finds the current market baffling. “The market slightly recovered a little last month [in August] but it’s headed downward again this month [in September] following the junket theft incident at a casino,” says the managing director of Ricacorp (Macau) Properties Ltd. “There are always new incidents making it difficult to foresee [how the market will perform in the long run].”
Junket offload
In the past few years “quite a lot of junket investors” bought several unfinished flats in one go for investment, he says, but as these homes near completion they will have to set up a sale and purchase
New legislative year to open with a potpourri of problems Foremost in a wide range of issues legislators will discuss in the new legislative year is how the government will respond to declining gaming revenue and a spluttering economy
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he property market, land rights, the relationship between employees and employers, property management, social security - these are among a laundry list of issues that the Legislative Assembly aims to discuss and process in the new legislative session starting October 15. But one topic will surely recur throughout the next 12 months as the 33 legislators debate how the city and government can cope with the relentless slump in gaming revenue. “With the current economic environment, not only we but
everyone is concerned about how the government uses taxpayers’ money,” said legislator Ella Lei Cheng I. “Although the government has announced cuts for some expenses we definitely need a thorough review of government expenditure; namely, the rent it pays each month for offices in private buildings.”
Rent control
Apart from gaming regulations, another issue that the Legislative Assembly will tackle in the new
Corporate Madonna’s ‘Rebel Heart Tour’ at Studio City tickets to go on sale Friday The global pop icon Madonna is set to excite and delight Asia’s music fans at Studio City’s awe-inspiring Studio City Event Center (“SCEC”) when she brings her ‘Rebel Heart Tour’ to Macau on February 20 and 21 2016 as part of a thrilling line-up of international concerts. Tickets for both performances go on sale Friday, October 16, 2015 at 11am. SCEC is a 5,000-seat
multi-purpose entertainment complex, with a state-of-the-art infrastructure designed to host exciting world-class live concerts, theatrical and top sports events, in addition to award shows and other special gatherings. It represents just one facet of a host of world-class entertainment offerings to be found at Hollywood-themed Studio City, which will open on October 27, 2015.
legislative year is a property rental law. “It’s undeniable that home rental has adjusted downward a bit alongside gaming revenue but it’s still beyond the affordability of many people here,” said egislator José Pereira Coutinho. In June, nine legislators, including Mr. Coutinho, initiated a bill to revise the current rental regulations in the Civil Code, seeking to introduce an arbitration system in the event of rental disputes as well as a statutory mechanism for rent adjustment. The legislators are
deed with the developers at the notary offices, as well as settling their transactions. “So, many investors now offer steep discounts to sell the flats for cash, given the weak gaming market,” Leong Keng Seng, founding president of the Macau Property Evaluation Association noted, believing the slump could continue into the fourth quarter and next year when more unfinished residential projects are completed. Mr. Leong says home prices in the third quarter dropped 15 per cent quarteron-quarter, according to figures provided by his property appraiser members, in part because some junket investors offered steep discounts on home sales in order to cash in. The quarteron-quarter decline in secondhand homes was about 10 per cent while the fall was greater for unfinished flats or new homes at up to 20 per cent, he maintains. The full story can be read in this month’s issue of Macau Business magazine, available at newsstands or online at www.magzter.com
set to deliberate on the bill in the new legislative session once Chief Executive Fernando Chui Sai On gives the green light.
Land rights
Another matter at the top of Chief Executive-appointed legislator and legal scholar Gabriel Tong Io Cheng’s agenda is the amendment to the Land Law, which became effective on March 1, 2014. Together with legislators-cum-legal-scholars Vong Hin Fai and Leonel Alves, Mr. Tong has highlighted in the past few months “loopholes” in the land law, which could lead to “social turmoil”. Under the new land law, a land concession will only become permanent once the land is fully utilised - meaning landowners have to complete their project and acquire an occupation permit from the authorities. Any non-permanent land concession would not be up for renewal after the end of the lease, according to the trio. The full story can be read in this month's issue of Macau Business magazine, available at newsstands or online at www.magzter.com
Business Daily | 7
October 13, 2015
Macau
MUST: Consumers pessimistic about economy and employment Local consumers have lost even more confidence in the local economy and employment during the third quarter of the year, says the latest consumer confidence survey by the Macau University of Science and Technology (MUST) Kam Leong
kamleong@macaubusinessdaily.com
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ocal consumers were more pessimistic about the local economy and employment but were much more confident about housing purchase during the third quarter of the year, the latest Consumer Confidence Index released yesterday by the Macau University of Science and Technology (MUST) reveals. The survey finds that the consumer confidence index had dropped by 5.09 per cent quarter-on-quarter to 81.57 during the three months. According to MUST, the index is calculated based on six indicators; namely ‘local economy’, ‘employment’, ‘price levels’, ‘living standards’, ‘housing purchase’ and ‘stock investment’. Index scores below 100 suggest a lack of confidence while scores over 100 imply a degree of positive outlook. Of the six sub-indices, consumers’ confidence in the local economy dropped significantly by 13.86 per
cent to 82.84 from the previous quarter. Compared to the same period of last year, it represents a decrease of 23.87 per cent. In fact, the surveyor claimed that this is the fourth consecutive quarter that consumers have lost confidence in the local economy. ‘It means that consumers have started to be pessimistic about the local economy rather than being cautiously optimistic,’ the report concluded.
consumers’ confidence in living standards had also dropped, by 3.06 per cent quarter-on-quarter to 93.91, while their confidence in investing in the stock market had plunged14.35 per cent quarter-on-quarter to 78.07. “This shows that the economic downturn has brought a certain level of pressure to consumers’ lives and they are less willing to invest in the fluctuating market in the quarter,’ MUST said.
Confidence ebbing
Relaxed pressure
In addition, consumers revealed that they lacked confidence in employment prospects in the city for the first time since the third quarter of 2010. According to the survey, the subindex declined to 96.87 in the third quarter, a quarter-on-quarter drop of 12.04 per cent or decrease of 22 per cent year-on-year. Following the local economic downturn, the report indicated that
On the contrary, consumers are getting more confident about buying property, for which the index surged 17.44 per cent quarter-on-quarter or 64.45 per cent year-on-year. The survey stated that the surge in confidence showed that the negative sentiment of consumers purchasing properties had been greatly relaxed. Nevertheless, the sub-index still scored lowest overall.
Moreover, consumers were less concerned about inflation during the third quarter, as the sub-index confidence in price levels had jumped 10.47 per cent quarter-on-quarter. In fact, the report noted that consumers higher education have tended to be more confident since the survey was first conducted in the fourth quarter of 2008. Survey personnel interviewed a total of 1,015 residents aged 18 or above.
8 | Business Daily
October 13, 2015
Greater China
Regulators to increase control over algorithmic trades The plan is China’s latest effort to crack down on strategies blamed by authorities for exacerbating a US$5 trillion stock-market rout Fox Hu
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hinese regulators are planning to increase their oversight of algorithmic traders, extending a campaign to stabilize the equity market that some analysts have blamed for shrinking volumes and an exodus by foreign investors. Under draft rules released by China’s securities regulator on Friday, traders who use automated orders to buy and sell stocks would need to report certain information and wait for a review before they’re allowed to execute their strategies. Orders shouldn’t originate from offshore computers or domestic systems that are remotely controlled from overseas, according to the China Securities Regulatory Commission’s proposal. The plan is China’s latest effort to crack down on strategies blamed by authorities for exacerbating
a US$5 trillion stock-market rout. The CSRC’s proposal on algorithmic trades would further weigh on volumes, said Wen Zhimin, the Shenzhenbased chief strategy officer at Dacheng Fund Management Co. “Algo traders often have a very small time window to
execute their strategies,” said Wen, whose firm’s algorithmic unit has been trading for more than three years. “They can’t do anything if approvals take too long.”
‘Double-edged sword’
Program trading is aimed at making money through arbitrage opportunities and it had an impact on destabilizing the market during the rout… The policy is now to rectify that Zhang Haidong, chief strategist, Jinkuang Investment Management
China froze more than 30 trading accounts in August suspected of fuelling
volatility by using automated trading strategies. One of the accounts was owned by Citadel Securities, the U.S. trading firm started by Ken Griffin. Price swings on the Shanghai Composite Index have eased from their peak in August, with 10-day volatility plunging by more than half as turnover dried up. Algorithmic trading is a “double-edged sword” and needs to be “strictly managed and limited,” the CSRC said in a statement on the draft rules. Brokerages would be required to carry out regular inspections to make sure clients are complying with the new regulations, with industry groups given the power to “blacklist” traders who violate the rules, the CSRC said. The Shanghai Stock Exchange published detailed draft rules on algorithmic trading on October 9. That proposal said traders would need to report their personal details, strategies, server location and source of funding three days before executing trades. The exchange would also introduce daily net buying quotas. Foreign investors have been withdrawing funds from China amid increased government intervention. They’ve sold a net US$4 billion of mainland shares through the Shanghai-Hong Kong exchange link since early July, according to data compiled by Bloomberg. Bloomberg News
Finance minister says Fed should not raise interest rates yet Asked about the global economic situation, he said the problem was not with developing countries
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China’s Finance Minister Lou Jiwei
ow is not the right time for the United States to raise interest rates, given the global economic situation, China’s Finance Minister Lou Jiwei said in an interview published in the China Business News yesterday. Speaking on the side-lines of the annual meeting of the World Bank and International Monetary Fund in Lima, Lou said developed economies were to blame for the global economic malaise because their slow recoveries were not creating enough demand. “The United States isn’t at the point of raising interest rates yet and under its global responsibilities it can’t raise rates,” Lou was quoted as saying. The finance minister said the United States “should assume global responsibilities” because of the dollar’s status as a global currency. Lou’s comments were published hours after U.S. Federal Reserve Vice Chairman Stanley Fischer said policymakers were likely to raise interest rates this year, but that that was “an expectation, not a commitment”.
Asked about the global economic situation, Lou said the problem was not with developing countries. “Rather, it is the continued weak recovery of developed countries” that’s hindering the global economy, he said. “Developed countries should now have faster recoveries to give developing countries some external demand.” Lou welcomed the structural reforms in Europe as a positive development, but said geopolitics and the Syrian refugee crisis would have an impact on its economy. He described the slowdown in China’s economy as a healthy process, but said policy makers need to manage it carefully. “The slowing of China’s economic growth is a healthy process, but it is a sensitive period. The Chinese government must make accurate adjustments, keeping the economy within a predictable space while continuing to promote internal structural reforms,” he said. Reuters
Business Daily | 9
October 13, 2015
Greater China
‘Golden Week’ sales reveal consumer spending strength
Former PetroChina chairman sentenced to 16 years
More than 4 million tourists travelled abroad in the period
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hina’s restaurant, cinema and travel sales surged in the ‘Golden Week’ national holiday, an indication that robust household spending remains a prop for a slowing economy. The October 1 to 7 holiday to celebrate the Communist Party’s founding of the People’s Republic in 1949 came this year after a period of historic volatility in China’s financial markets that rattled global confidence in the world’s secondbiggest economy. While economists fretted, China’s workers splurged.
Great beep forward
More than 750 million trips were taken in the seven days according to the official Xinhua News Agency’s website, citing estimates from various government ministries. Traffic gridlock and a cacophony of car horns marked the period as 639 million of the trips were on the road, according to the Ministry of Transport. In Beijing, which received 11.5 million tourists during the week, more than 400 portable toilets were installed in Tiananmen Square. In the city of Xiamen on the southeast coast, boat tickets for a ride to a nearby island that usually cost 8 yuan (US$1.3) were fetching 250 yuan on the black market after selling out. More than 4 million tourists travelled abroad in the period, according to
estimates gathered by Xinhua. Japan, South Korea and Thailand were the top three destinations, according to a report from online travel company Tuniu Corp.
Great mall of China
Sales at restaurants and retailers amounted to 1.082 trillion yuan -that’s about equivalent to Kuwait’s total economic output in the whole of 2014 -- during the seven days, according to the Ministry of Commerce. That was an 11 percent jump from a year earlier. About 70,000 couples in Jiangsu province (just one of China’s 31 regions) got married during the week, a favourite time to tie the knot in China because family and friends are off work and can travel to ceremonies. And 2 billion yuan was spent on the banquets. In neighbouring Shandong province, newlyweds snapped up televisions and fridges for their new apartments, with major home appliance retailers registering a 53 percent sales surge from 2014, according to the commerce ministry.
Blockbusters bloom
The week’s box office take exceeded 1.85 billion yuan, a 70 percent jump from a year earlier. And in contrast with past cinematic surges spurred by the release of new Fast and Furious or Transformers instalments, the top three
Sales at restaurants and retailers amounted to 1.082 trillion yuan
Ford to expand R&D in China performers in China’s national holidays were, rather aptly, all home grown. The low-budget comedy Goodbye Mr Loser about a poor, clumsy and depressed middle-aged man who magically travels back to his highschool years took in 593 million yuan. Second was Lost in Hong Kong, featuring mainlanders’ nostalgia for 20th century Hong Kong popular culture. Worryingly for the former British colony, that infatuation with Hong Kong may be fading: growth in mainland arrivals slowed and early data from a retailers’ association suggests sales struggled in the week. But for the nation as a whole, Golden Week spending provides further evidence that the transition to a more consumer-led economy is holding up. Bloomberg News
Poverty relief high on 2016-2020 government agenda An official said it will be challenging for China to achieve its goal of lifting all people out of poverty by 2020
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overty alleviation will be a major task in China’s 20162020 development plan, an official said at a press conference ahead of the 23rd International Day for the Eradication of Poverty on Saturday, which also marked China’s second National Poverty Relief Day. Poverty relief remains a top priority for China and related work will be a major issue for a key meeting later this month to set the course for China’s development over the
next five years (2016-2020), said Hong Tianyun, deputy director of the State Council Leading Group Office of Poverty Alleviation and Development of China. Beijing will host the Global Poverty Reduction and Development Forum on Friday, during which around 300 representatives will gather to share their experience in combating poverty. President Xi Jinping will deliver a keynote speech at the forum, Hong said.
Speaking to a United Nations summit last month, President Xi pledged an initial US$2 billion to establish an assistance fund to help developing nations reach the target
Jiang Jiemin, former chairman of China National Petroleum Corporation and its listed firm PetroChina has been sentenced to 16 years in prison for graft, Chinese state television said yesterday. Jiang was a close associate of Zhou Yongkang, the once-powerful domestic security chief and member of the elite Politburo Standing Committee, the most senior person to have been charged with corruption.
China was the first developing country to meet the Millennium Development Goals (MDGs) target of reducing the population living in poverty by half ahead of the 2015 deadline. In the past 15 years, China has lifted more than 600 million people out of poverty, accounting for about 70 percent of those brought out of poverty worldwide. Despite this, China still had 70.17 million people in the countryside living below the country’s poverty line of 2,300 yuan (US$376) in annual income at the end of last year. Hong said it will be challenging for China to achieve its goal of lifting all people out of poverty by 2020. He said the government will come up with a string of more effective and targeted measures to achieve the goal, including launching education campaigns, encouraging financial support and building public platforms to mobilize more people to join the fight. Speaking to a United Nations summit last month, President Xi pledged an initial US$2 billion to establish an assistance fund to help developing nations reach the target. Xinhua
Ford Motor Co said yesterday it will invest 11.4 billion yuan (US$1.8 billion) over the next five years to expand research and development in China, the latest effort by the U.S. carmaker to secure a larger slice of the world’s biggest auto market. Ford has rapidly gained market share over the past few years at mainly the expense of Japanese rivals, helped by its efforts to incorporate Chinese consumer tastes in its cars sold in the country. The Dearborn, Michigan-based carmaker is the fifth-biggest foreign automaker in China, after General Motors, Volkswagen, Hyundai Motor Co and Nissan Motor Co.
International forum on “Silk Road” opens in Hangzhou More than 120 experts from 20 countries gathered at a forum in east China’s Hangzhou City yesterday to discuss the Silk Road, an ancient trade route between East Asia and Europe. The three-day forum was organized by the China National Silk Museum and has attracted scholars of archaeology, linguistics, anthropology, ethnography and art history from home and abroad. At the conference, participants shared their latest research on silk trade-related topics. China National Silk Museum and Chengdu Museum also jointly published research findings on the reconstruction of pattern looms from the Han Dynasty.
State councillor to visit Japan Chinese State Councilor Yang Jiechi and Head of the Japanese national security council Yachi Shotaro will co-chair the second China-Japan high-level political dialogue, slated for today and tomorrow in Tokyo. Foreign Ministry spokesperson Hua Chunying told a regular press briefing that Yang had been invited by Yachi. The first high-level political dialogue was held in July this year in Beijing.
Annual affordable housing target closer China has almost realized the annual target for its affordable housing program, data from the Ministry of Housing and Urban-Rural Development shows. The construction of 6.85 million units of affordable housing has already begun this year, accounting for around 92 percent of the 7.4 million units planned for the whole year, according to the ministry. As of the end of September, construction of 6.25 million units was “nearly completed,” far more than the 4.8 million target. Approved in 1999, the program will provide cheaper housing to low-income families who have been priced out of the housing market.
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October 13, 2015
Greater China
Record redemptions for offshore yuan debt as Beijing opens onshore door wider Net outflows from dim-sum funds totalled US$800 mln in Aug and Sep combined Saikat Chatterjee
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hinese measures to steady its rocky markets are putting the future of the offshore yuan bond market at risk, prompting record redemptions from so-called dim-sum debt funds and choking new issuance. Just a few years ago investors were lining up to buy these offshore bonds denominated in a currency that was uniformly expected to rise, underlining the impact of its tumultuous summer on the financial infrastructure built up around the yuan. Beijing is making it easier for institutional investors to raise debt onshore, rather than offshore. The shock devaluation of the yuan in August also punctured the belief the currency is a one-way appreciation bet, reducing the attraction of holding yuan assets. “Keep in mind, the offshore market exists because of the capital account restrictions that existed earlier,” said Aidan Yao, senior emerging Asia economist at AXA Investment Managers Asia, in Hong Kong. “As more reforms are taken, such as allowing greater access to the onshore bond markets, questions around the long-term viability of the offshore market grows.”
Net outflows from dimsum funds totalled US$800 million in August and September combined, the biggest two-month loss on record, preliminary data estimates by Thomson Reuters Lipper show. Several funds have yet to report monthly data. That’s the first decline in assets under management for a sector which had grown every year since 2010. At
the end of August, assets under management totalled US$5.8 billion, compared with US$8.4 billion at their peak in October 2014, Lipper data showed. “There is no solid catalyst on the horizon for a turnaround in the fortunes of dim-sum bonds and as a result we may see more outflows soon,” said a credit strategist at a bond fund in Hong Kong, declining to be
identified because he is not authorised to speak with the media. Under particular pressure has been the high-yield sector, dominated by Chinese property companies. Their bonds have fallen the most this year compared with other high-yield debt. Two indexes measuring the yield performance of yuan-denominated bonds in the offshore market compiled
Quality watchdog says "highly concerned" about VW emissions issue Regulator said Volkswagen would recall 1,950 imported cars in China, predominantly imported Tiguan SUVs
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hina’s quality watchdog said yesterday it was “highly concerned” about the mechanism in Volkswagen AG’s diesel cars designed to trick emissions tests and would take appropriate followup measures. The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) did not specify what action it would
take beyond demanding that the problem be addressed as soon as possible. In a separate statement, the environment ministry also said it would launch an investigation into VW vehicles, without giving details. China is the world’s largest auto market, and even though few diesel passenger cars are sold there, analysts said the scandal may impact
the purchasing decisions of Chinese consumers. “I have so far seen little impact on consumers’ confidence and trust in the VW brand (in China), but we need to continue to monitor that,” said Yale Zhang, head of Shanghaibased consulting firm Automotive Foresight. “Their sales are already weak this year thanks to the slowdown
by HSBC and Deutsche Bank are trading near their highest levels, indicating investors were demanding higher risk premiums for holding the debt. Total issuance to the end of September stood at 138 billion yuan, less than half that of the same year-earlier period, Thomson Reuters data shows. For all of 2014, issuance was a record 337 billion yuan. “Where we have suffered is more on the investor side because for years now the market has been a stable appreciating one-way bet on the currency,” said a credit analyst at a hedge fund. “Now, we don’t know if we can trust the government not to devalue more.” China’s authorities are also taking big steps to allow greater and more flexible access for institutional investors to its US$6 trillion mainland bond market, where funding costs are also cheaper, two people with direct knowledge said. Late last month, Bank of China (Hong Kong) and HSBC became the first overseas commercial banks to issue yuan bonds on the mainland. Previous issuance had been rare and essentially restricted to global development institutions. Reuters
in China’s general economy. If VW sales took a further beating from the current emissions scandal, that would further complicate their position globally following the scandal,” he added. AQSIQ said Volkswagen would recall 1,950 imported cars in China, predominantly imported Tiguan SUVs, with the software that gives misleading emissions results in laboratory tests. Volkswagen set aside 6.5 billion euros (US$7.4 billion) in the third quarter to cover servicing and marketing outlays related to the scandal, which could contribute to an annual loss for the VW brand this year. Volkswagen’s two Chinese joint ventures that produce cars domestically said last month the software that skirts emissions tests does not affect their cars. Reuters
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October 13, 2015
Asia
IMF urges Japan to proceed with second sales tax hike PM Shinzo Abe delayed a second sales tax hike by 18 months to April 2017 Leika Kihara
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senior International Monetary Fund official has urged Japan to go ahead with a sales tax hike scheduled for April 2017 to maintain its long-term fiscal credibility. Mitsuhiro Furusawa, the IMF’s deputy managing director, warned on Sunday that flexible fiscal policy and structural reforms must accompany ultra-loose monetary policy for Japan to achieve a sustained economic recovery. “If you keep missing your mediumto long-term fiscal target, people will start having doubts” on whether Japan is serious about reining its burgeoning public debt, Furusawa said. “Delaying the tax hike just because you don’t like it won’t be too convincing,” he told Reuters at the World Bank and International Monetary Fund meetings. Prime Minister Shinzo Abe delayed a second sales tax hike by 18 months to April 2017, after the first one pushed Japan into a recession last year. He has pledged not to delay it again, but some lawmakers fret that the economy may not have revived enough to weather the pain from the higher levy. Furusawa said Japan should proceed with the second hike, which
KEY POINTS Weak yen has both good and bad effects - IMF’s Furusawa Adds excessive yen volatility undesirable Excluding oil effect, Japan prices gradually rising
will bring the tax rate to 10 percent, unless the economy is hit by an external shock of the scale of the collapse of Lehman Brothers in 2008. On the yen, the former top Japanese currency diplomat said that while its declines had both advantages and disadvantages for the economy, it was important to avoid extreme fluctuation. “Some companies may benefit from a weak yen, while others may not. But for companies to have enough time to adjust their business plans, it’s important that the yen doesn’t move too rapidly,” he said. “Policymakers would need to
Mitsuhiro Furusawa, IMF’s deputy managing director
respond to excessive volatility or disorderly currency moves. Otherwise, currency rates should basically be determined by markets,” he said. Furusawa declined to comment on whether the Bank of Japan should ease policy further at its next meeting on Oct. 30, when it is set to cut its longterm economic and price forecasts. But he said that inflation has gradually accelerated when excluding the effect of slumping energy costs. “There’s not much the BOJ can
Malaysian central bank’s governor says 1MDB move vital for integrity Malaysian policy makers have struggled to boost confidence in the economy and its finances since oil prices started slumping late last year and as allegations of financial irregularities at 1MDB hurt sentiment Bonnie Cao and Chong Pooi Koon
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alaysia’s central bank had to take action against a debt-ridden state investment company to protect the integrity of the financial system, according to Governor Zeti Akhtar Aziz, who said an improvement in the country’s political situation would help the ringgit. The attorney general’s office earlier this month dismissed the central bank’s second request for criminal proceedings against 1Malaysia Development Bhd. for breaching the Exchange Control Act. Bank Negara Malaysia revoked three permissions given to 1MDB for investments abroad totalling US$1.83 billion, and instructed it to repatriate the amount.
“He has the right to make that assessment,” Zeti said, referring to the attorney general. “But for the central bank we believe it is very, very important to comply with our rules and regulations that we have in place. This is vital, it’s critical for the functioning of the financial system” and its integrity, she said. While growth could ease to as little as 4.8 percent this year and the risk of a slowdown because of the global economy is bigger than the threat of inflation, Malaysia has a “high degree of resilience,” Zeti, 68, said. The central bank doesn’t see the risk of faster inflation after the first quarter of 2016 and interest rates at current levels are supportive of growth,
Malaysia’s central bank Governor Zeti Akhtar Aziz
do about external factors, so it will probably guide policy looking at many other things.” Japan’s economy shrank in April-June and may suffer another contraction in July-September on weak exports and consumption. Consumer prices slid in the year to August on slumping energy costs, keeping the BOJ under pressure to expand its massive stimulus to meet its 2 percent inflation target. Reuters
Zeti said. Malaysia forecasts growth of 4.5 percent to 5.5 percent this year.
Confidence struggle
Malaysian policy makers have struggled to boost confidence in the economy and its finances since oil prices started slumping late last year and as allegations of financial irregularities at 1MDB hurt sentiment. Tensions in the Southeast Asian nation have also increased as Prime Minister Najib Razak battled accusations of impropriety over political donations that ended up in his private accounts. “People are distracted now” because the country rarely has political developments of this nature, Zeti said. “Everyone wants these domestic issues to be resolved quickly, because as and when they are resolved, we expect the currency to recover even further,” after gains in recent days. The debacle surrounding 1MDB has contributed to the ringgit performing the worst among major Asian currencies this year, while foreign investors have pulled more than US$4 billion from Malaysian stocks in 2015. The central bank anticipated outflows would happen when Western counterparts reversed quantitative easing, Zeti said. Bloomberg News
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October 13, 2015
Asia
Singapore to react as shadow of recession appears A median in a separate Reuters poll forecast third-quarter GDP to have shrunk 0.1 percent from the previous quarter
KEY POINTS Singapore c.bank decision, Q3 GDP due Oct. 14 (0000 GMT) MAS seen likely to ease its FX-based monetary policy 15 of 25 analysts expect MAS to ease policy
Masayuki Kitano
10 expect no easing, including 1 who expects only band widening
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ingapore’s central bank is expected to ease monetary policy this week to support an economy that may have slipped into a recession in the third quarter for the first time since the global financial crisis. As in much of the rest of Asia, the city state’s trade-dependent economy has been knocked by a slowdown in China as factories have cut output in the face of a collapse in exports, forcing policy makers from South Korea to Taiwan to India to ramp up stimulus to restore momentum. The Monetary Authority of Singapore (MAS) is expected to follow the easing-club and loosen policy for the second time this year at its semi-annual review on Wednesday, according to the majority of 25 analysts polled by Reuters. With inflation running low and signs the economy may have slipped into a recession, most analysts see little reason for the central bank not to ease policy. “Given risks of a technical recession...we expect that the MAS will
opt for more policy easing,” Vishnu Varathan, senior economist for Mizuho Bank said in a research note. A median in a separate Reuters poll forecast third-quarter GDP to have shrunk 0.1 percent from the previous quarter on an annualised and seasonally adjusted basis, after a 4.0 percent contraction in April-June. That would meet the definition of a technical recession, the first for Singapore since the depths of the financial crisis in 2008-early 2009 when GDP contracted for four consecutive quarters. The government will announce its advance estimate of third quarter gross domestic product on the same day as the MAS decision. The MAS manages monetary policy by letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band based on its nominal effective exchange rate (NEER). Of the 25 analysts surveyed by Reuters, 15 expect MAS to loosen policy.
Reuters poll: Q3 GDP -0.1 pct qtr/qtr, +1.3 pct y/y
Among those who predict an easing, seven expect the slope to be reduced to zero and four see a lower mid-point. Three others expect a slope reduction and re-centring, while one analyst expects a zero slope and band widening. According to MAS data, the Singapore dollar NEER averaged 122.71 in the week ended September 25, down 0.2 percent from the end
of 2014. A further loosening of policy would support Singapore’s exports, which is a key driver of economic growth. Reducing the slope could mean changing to a neutral stance, and away from the current policy of allowing a “modest and gradual” appreciation of the Singapore dollar NEER policy band. Some economists, who point to MAS’s last review in which it emphasised the risks of a tight labour market driving up inflation, predict no policy easing. “There is a chance that it will retreat from that view at this meeting, given that the economy is having a poor run,” said Daniel Martin, senior economist at Capital Economics in a note to clients, who expects no monetary easing.
Indian companies’ revenues could slump The expected revenue fall of 8.2 percent would be the worst since at least the April-June quarter of 2011, Thomson Reuters says
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evenues at India’s top companies are expected to fall 8.2 percent in the July-September quarter, the biggest decline in at least four years, according to Thomson Reuters data, highlighting the precarious health of the corporate sector.
But analysts say costcutting measures and a lower base effect could see companies post a slight 0.4 percent rise in net income from the previous year, the first earnings growth in four quarters. The mixed results could add to concerns about how
a weaker-than-expected economy is pressuring Indian companies. While the central bank has cut official interest rates by 125 basis points since January, banks have moved far more slowly. The broader NSE index has fallen 10 percent since its record high in early March and is down 1.1 percent so far this year, a mediocre performance for a market that in dollar terms was Asia’s second biggest gainer last year. Another disappointing earnings season would make it harder to justify even current valuations: the NSE is trading at 18.4 times forward one-year earnings, the second highest in Asia after the Philippines.
Infosys unofficially kicked off the reporting season on a weak note on Monday. Despite better-than-expected net profit, its shares fell as much as 5 percent after it lowered its dollar revenue guidance. “India has emerged as one of the bright spots among other emerging markets, so we are hoping for a decent earning season to support these valuations,” said Phani Shekar, a fund manager at financial firm Karvy. The expected revenue fall of 8.2 percent would be the worst since at least the April-June quarter of 2011, according to Thomson Reuters data tracking 126 companies with at least US$100 million in market value.
Reuters
But earnings could rise slightly, with the data showing seven out of 10 sectors are expected to have seen profit growth last quarter, led by a 98.3 percent surge in utilities. That would be followed by a 26.6 percent gain in earnings in the industrials sector, with slightly smaller gains at information technology and consumer staples companies. Still, that is giving little comfort to analysts given Indian companies have missed consensus forecasts in each of the five previous quarters. Another disappointing earnings season would likely dent confidence at a time when investors are concerned about the pace of reforms by Prime Minister Narendra Modi’s government and the prospect of a U.S. interest rate hike. Foreign institutional investors have sold US$3.28 billion in shares since the beginning of September, but remain net buyers of US$3.9 billion so far this year. Reuters
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October 13, 2015
Asia Indonesia’s rubber output to dip next year Singapore and Tokyo rubber futures have fallen to levels last seen in 2009, weighed down by slower economic growth in China, the world’s biggest rubber buyer Michael Taylor
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ndonesia’s rubber output is expected to ease next year due to the effects of an El Niño and haze from forest fires, the main rubber group in the world’s No.2 producer said yesterday, but is seen unchanged in 2015 at 3.2 million tonnes. Indonesia is expected to face moderate El Niño dry conditions which could strengthen from September to December, while fires on Sumatra and Kalimantan have shrouded large parts of Southeast Asia in so-called “haze”. While it was too early to give a production forecast for next year, haze conditions preventing farmers from tending their trees, a lack of sunshine and dry soil would all hinder production. “It will go down next year but we are still doing analysis,” Moenardji Soedargo, chairman at the Indonesian Rubber Association (GAPKINDO) told Reuters. “Compared to last year, 2015 is more or less unchanged.” Indonesia’s rubber exports were likely to fall slightly to 2.5 million tonnes this year from 2.6 million tonnes in 2014, he added, due to increased domestic demand.
The price level today doesn’t reflect the actual fundamentals - it’s been overdone Moenardji Soedargo, chairman Indonesian Rubber Association
Soedargo said Indonesian rubber farmers had been hit hard by low prices. Top rubber producing countries have previously looked to support prices by introducing floor prices, export curbs or farmer
subsidies, which have had limited success. Soedargo said farmers who sold 1 kg of rubber were currently only able to buy 0.5 kg of rice, compared with around 2 kg previously, a level that had remained stable even during other downturns. “It is devastating. It should be a concern to all stakeholders,” he said, adding that some farmers had started cutting down their rubber trees to sell the timber. The loss of trees could hold back production when global activity improved, Soedargo said, particularly as Indonesian rubber trees had a lot of room to increase yields compared with other producing countries. About 20,000 hectares of trees had been replanted this year, out of total plantings of 3.65 million hectares, as part of efforts to rejuvenate farms where trees had passed their maturity. GAPKINDO was in talks with the government about help to fund and arrange a bigger re-planting and rejuvenation rubber package for the country. Reuters
Yield-hungry Thais give central bank food for thought Minutes of a central bank policy meeting on September 16 noted speculative fund flows into the condominium market
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policy meeting on September 16 also noted speculative fund flows into the condominium market. “As interest rates have been low for awhile, we started to see a shift of deposits to other investments, especially mutual funds,” Don Nakornthab, senior director of the central bank’s Financial Institutions Strategy Department, told Reuters. “This is one reason why the MPC still keeps rates steady.”
Steel imports in South Korea dropped 9.9 percent in September from a year earlier as domestic demand weakened for steel products, an industry data showed yesterday. Steel imports fell to 1,774,000 tons in September from 1,970, 000 tons in the same month of last year, according to the Korea Iron and Steel Association. From a month earlier, the imports tumbled 10.7 percent. After sliding for three months through June, the inbound shipments of steels rebounded in July and August, but it turned downward again last month due to weak domestic demand for steel- made products.
New Zealand to push for FTA with EU New Zealand Prime Minister John Key and Trade Minister Tim Groser will travel to Brussels this month to press case for a free trade agreement (FTA) with the European Union. Key said yesterday that he will meet with President of the European Council Donald Tusk and President of the European Commission JeanClaude Juncker. Prime Minister John Key will travel to Marrakech, Brussels and London for a series of high level meetings and to chair a meeting of the International Democrat Union (IDU).
Free WiFi for major transport in Singapore by 2020 Commuters in Singapore can connect to free WiFi at 33 Mass Rapid Transit (MRT) stations, and the free WiFi service will cover all station platforms by 2020, said the country’s Land Transport Authority yesterday. Five more stations in Singapore are now WiFi-enabled, the agency said in a press release. The five stations are the final of the 33 pilot stations which are equipped with free WiFi service. There are some 700,000 logins to the free WiFi service daily in Singapore, a four-fold increase since the launch of the first three stations in August 2014, it said.
Myanmar’s first waste-powered plant ready by 2017
Orathai Sriring and Satawasin Staporncharnchai
ield-hungry Thai investors are rotating their money out of savings accounts and into investment funds and real estate, a trend that has caught the eye of a central bank concerned about shrinking bank deposits and stability in the financial system. Deposits at Thai banks fell a combined 211 billion baht (US$5.97 billion) to end-July from end-April, central bank data shows, following two surprise cuts in the central bank’s policy rate in March and April to near record lows. In the same period, inflows into mutual funds rose about 94 billion baht, including 55 billion baht in fixed-income funds, according to the Association of Investment Management Companies. Data from the association shows total return on one fixed-income fund is at 2.75 percent year-to-date, and the return on one fund investing in Japanese stocks is about 13 percent. In comparison, big banks offer savings rates at 0.5 percent and one-year deposit rates at 1.5 percent, down from 1.75 percent at the start of the year. Minutes of a central bank
S.Korea’s steel imports down
The Monetary Policy Committee (MPC) has left the policy rate unchanged in the last three reviews. Southeast Asia’s second-largest economy has been stuck in a low gear since the military seized power in May 2014, with exports and domestic demand persistently weak. Consumer confidence fell for the ninth successive month in September to a 16-month low. Reuters
Myanmar’s first waste-powered plant in Yangon will begin operation and produce electricity in March 2017, official media reported yesterday. The power plant is estimated to cost US$16.2 million to construct and will convert 60 tons of rubbish every day to generate 1,000 megawatts of electricity, said the Global New Light of Myanmar. Yangon produces 170 tons of rubbish every day so the plant will reduce emissions of methane and carbon dioxide into the atmosphere.
S.Korea, Germany to strengthen tech cooperation South Korean President Park Geun-hye and visiting German President Joachim Gauck agreed yesterday to beef up bilateral cooperation in car-used information technology (IT) and smart factory. Gauck arrived in Seoul Sunday for his four-day state visit to South Korea at the invitation of Park who travelled to the European country in March 2014, according to Park’s office. With Park and Gauck in attendance, the Korea Electronics Technology Institute and German carmaker BMW signed a memorandum of understanding to strengthen cooperation and exchanges in converging the auto technology with information technology.
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October 13, 2015
International Gazprom resumes gas supplies to Ukraine Russian natural gas exporter Gazprom has resumed supplies to Ukraine, Chief Executive Alexei Miller said in a statement yesterday, after deliveries were halted in July over a pricing dispute between Moscow and Kiev. Gazprom accounts for around a third of Europe’s gas needs and typically about half of that is pumped via Ukraine, which has had several disputes with Moscow over prices in the past decade. Miller said that gas supplies resumed after Gazprom received US$234 million out of a total of US$500 million expected in pre-payment for October gas deliveries.
World took step towards greener GDP in 2014 Britain was best of the Group of 20 nations with a steep 10.9 percent fall in its carbon intensity last year
KEY POINTS Carbon intensity fell 2.7 percent last year
Tanzania launches project to pipe natural gas to capital Tanzania has initiated a US$1.33 billion project to pipe natural gas to its commercial capital, Dar es Salaam, and help relieve chronic power shortages in the city, the president’s office said in a statement. The 532 km Mtwara-Dar es Salaam pipeline and gas processing plants, largely financed by a Chinese loan, is part of a plan to add about 2,000 megawatts of new gas-fired electricity generating power by 2018 to increase Tanzania’s generating capacity to 10,000 MW by 2025. Most new plants will be gas-fired but Tanzania also wants to use coal reserves and renewable resources such as wind and geothermal.
Diesel cars could be taken out of market A rushed and overly tough change to European emissions tests in the wake of the cheating scandal at Volkswagen could make diesel vehicles so expensive that manufacturers have to stop selling them, a trade body warned yesterday. “The automobile industry agrees with the need for emissions to more closely reflect real-world conditions, and has been calling for proposals for years,” the European Automobile Manufacturers’ Association said in a statement. The European Commission has been ratcheting up pressure on carmakers to agree to faster, deeper diesel emissions cuts.
South Africa’s AMCU union votes to strike in gold sector South Africa’s Association of Mineworkers and Construction Union (AMCU) voted to strike at the operations of AngloGold Ashanti, Harmony Gold and Sibanye Gold. “The whole gold sector has voted for a strike,” AMCU President Joseph Mathunjwa said after a crowd of about 5,000 miners voted by a show of hands. AMCU, which lead a bruising five-month strike last year in the platinum sector, is known for its uncompromising stance, and has not backed down from its original demand for a more than doubling of basic wages to 12,500 rand a month.
Glencore to sell copper mines Glencore plans to sell copper mines in Australia and Chile as the mining and trading company aims to reduce a debt burden accumulated in an asset buying spree that has shaken confidence in the Swiss-based firm. Selling assets is one element of a broad plan to cut about a third of Glencore’s US$30 billion net debt and to regain the trust of investors after its shares tumbled to record lows this year amid weak global commodity prices. Glencore said it would sell its wholly-owned Cobar copper mine in Australia and Lomas Bayas copper mine in Chile.
Decline of 6.3 percent a year needed for 2C UN goal UK led G20 nations in 2014 with 10.9 pct fall
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overnments took a step towards greener economic growth in 2014 but will need to do far more to limit rising temperatures to a United Nations goal of two degrees Celsius, a study by accountancy firm PwC said yesterday. The carbon intensity of the world economy - the amount of greenhouse gases emitted per dollar of gross domestic product (GDP) - fell by 2.7 percent in 2014, the steepest decline since PwC started issuing reports seven years ago, it said. “The 2014 numbers suggest a turning point” towards making growth less dependent on fossil fuels, said PwC, a network of firms in 157 countries in assurance, advisory and tax services.
World GDP rose by 3.2 percent in 2014, while carbon emissions rose by just 0.5 percent, it said. Britain was best of the Group of 20 nations with a steep 10.9 percent fall in its carbon intensity last year, a shift PwC linked to strong economic growth, a warmer winter that reduced energy demand and lower use of coal. France, Italy and Germany also had big falls in carbon intensity last year. Almost 200 governments will meet in Paris from November 30-December 30 to agree a pact to curb greenhouse gas emissions, mainly from burning fossil fuels, that are blamed by a U.N. panel for causing downpours, heat waves and rising seas. PwC said the rate of decarbonisation
needed to more than double, to 6.3 percent a year, to get on track to limit rising temperatures to a U.N. target of 2 degrees Celsius above pre-industrial times. That would be a wrenching pace of change. Even in Germany in the 1990s, when inefficient Soviet-style factories were shut in the east after reunification, decarbonisation rates were only about 3 percent a year, the report said. “You need revolutions in the energy sector in every country, every decade,” Jonathan Grant, PwC sustainability and climate change director, told Reuters. Since the year 2000, the report said that global carbon intensity had fallen by an average 1.3 percent a year. At that rate, PwC estimated that the amount of carbon that could be emitted before exceeding 2C would run out in 2036. Reuters
OPEC chief confident of a balanced oil market in 2016 A technical meeting of OPEC and other crude-producing countries will take place on October 21
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PEC is confident that the oil market will be “more balanced” next year as nonOPEC production has contracted and global demand is increasing, the cartel’s secretary general Abdullah el-Badri said. “OPEC is confident that it will see a more balanced market in 2016,” Badri told an oil and gas conference in Kuwait City. “In recent months, there has been a contraction in production from nonOPEC producers and an increase in global demand,” he said. However, Badri also admitted that the “market remains oversupplied”, and insisted that stability is paramount to the crude market which faced “extremely challenging times”. The OPEC chief said market fundamentals did not support the sharp drop in oil prices which have fallen by almost 60 percent since June 2014. Badri said that global demand for oil is forecast to rise to 110 million barrels per day by 2040 from 93 million bpd now.
“This requires investments of US$10 trillion between now and then,” he said. Qatar’s Energy Ministry Mohammed bin Saleh al-Sada, who is acting OPEC president, said there were signs of an oil price rise next year, adding that the oil price has “bottomed out”. He said world GDP growth in 2016 is slated to be 3.4 percent as against an expected 3.1 percent in 2015, and that this would result in an increase in global oil demand by 1.3 to 1.5 million bpd. Growth in supplies from nonOPEC producers over the past five years has substantially reduced in 2015 and is likely to show zero to negative growth in 2016, the statement said. Venezuela -- which has been trying hard to persuade oil producers to cut output to boost prices -- said Thursday a technical meeting of OPEC and other crude-producing countries would take place on October 21.
Badri on Sunday confirmed the meeting would take place at an expert level and that OPEC and non-OPEC producers will attend. He said the cartel was ready to cooperate with non-OPEC producers to deal with the market glut if they show a similar desire. Therewerenospecificrecommendations or proposals for the technical meeting, Badri said, but “it will be a discussion to find a solution” for the oil market. Badri said OPEC believes the current problem in the oil market has been created by all producers, but especially by non-OPEC states which raised their production sharply. “Non-OPEC increased their output by 6.0 million barrels per day in the past six years, and OPEC believes this is the reason for the glut in the oil market,” he said. On Friday, oil edged up in New York and slipped in London as traders booked profits from the week’s rally fuelled by hopes for oversupply relief from lower US crude production. AFP
Business Daily | 15
October 13, 2015
Opinion Business
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Leading reports from Asia’s best business newspapers
LME; revamped and resurgent but with a troubled heart? Andy Home
THE AGE
Reuters columnist
Heavy household debts and softening house prices pose the greatest recession risk to the Australian economy, according to a range of a nal y s t s , o n e o f whom warns that the threat is even bigger than the slowdown in China. Bank of America Merrill Lynch Australian economist Alex Joiner says high historic indebtedness, coupled with the chance of a downturn in house-building and prices, could further crimp consumer spending and property investment once the Reserve Bank of Australia was forced to tackle inflation by lifting interest rates.
JAKARTA GLOBE Saka Energy Indonesia, the subsidiary of state gas distributor PGN, is looking to secure US$500 million in bank loans by the end of this year in order to finance its 2016 expansion plans. The loan would ease pressure on the parent company’s finances, said Devi Pradnya, Saka Energy finance director. The company plans to set aside between US$400 million and US$450 million next year for capital expenditure to expedite production in several oil and gas blocks, including Muara Bakau in East Kalimantan and Pangkah in Central Java.
THE TIMES OF INDIA Kingfisher Airlines had allegedly diverted a substantial chunk of Rs 4,000 crore in loans secured from public sector banks to tax havens which has now come under the scanner of the CBI that has expanded its probe in the matter. The material recovered indicated that the airlines, which stopped flights in October 2012, has allegedly diverted part of loans taken from 11 nationalised banks, with total exposure of Rs 4,000 crore, to tax haven countries for different purposes not specified in loan applications, sources claimed.
THE ASAHI SHIMBUN Three of Japan’s “big four” department store operators are reaping the benefits of offering duty-free goods to foreign visitors with yearon-year growth in group sales for the March-August first half of their current business year. The results reflect demand by foreign tourists, especially Chinese travellers, at store outlets in central Tokyo and Osaka, both key destinations for overseas travellers. J. Front Retailing Co., the operator of Daimaru and Matsuzakaya department stores, said its sales increased 1.4 percent from the same period a year earlier, citing brisk demand at its outlets in Tokyo and Osaka’s central Shinsaibashi district.
The LME’s ring
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t’s been three years since Hong Kong Exchanges and Clearing (HKEx) bought the London Metal Exchange (LME) and there is a sense that the makeover of the venerable old lady of metals trading is finally starting to bear fruit. The warehousing demons that have so exercised the new management team since the acquisition have been tamed, if not fully laid to rest. The infamous load-out queues that strained to the point of breaking point relations with the LME’s industrial users are steadily declining and the exchange is now embarked on an overdue root-and-branch overhaul of its physical delivery function. The LME has extended its foot-print into the precious metals world with the successful takeover of the platinum and palladium “fixes”, although in this age of heightened regulatory sensitivity, no-one calls them that any more. New steel contracts will be launched next month, a second attempt to carve out a slice of the fast-expanding ferrous trading space. And talking of second times around, the LME is once again cosying up to the Baltic Exchange, which spurned the advances of its metallic cousin a couple of years back. The LME is even starting to return some of the US$2.2 billion HKEx splashed out on its acquisition, contributing a nearby doubling of net earnings to the bottom line in the first half of the year thanks to fee hikes and the new LME clearing house. The exchange will have much to showcase this week, when the great and the good of the global metals business descend on London for LME Week. But there remains a simmering tension at the heart of this east-west marriage with parts of the old LME establishment worried that the revamp risks eroding some of the unique
characteristics that allowed the exchange to build its global franchise in the first place. And that franchise, meanwhile, is no longer undisputed as others try to muscle into a space dominated by the LME for 138 years. Heart and soul The LME has always been a curious beast in the world of commodities trading, a living throw-back to its origins in the Jerusalem coffee-house in 19th century London. The uniqueness boils down to two interconnected features, the ring, where traders still meet to engage in that archaic ritual of open outcry, and a labyrinthine prompt date structure that allows users to trade any day between cash and three months. Without the date structure, there would be no need for the ring. Without the ring, the date structure would wither and conceivably die. What’s exercising minds among the handful of brokers still trading on the ring is the LME’s drive to open up key parts of the date structure to electronic trading. The exchange calls it “enhancing liquidity”. Ring traders fear it will cannibalise liquidity. Their liquidity. Because outright trading on the LME’s benchmark three-month date has already largely migrated to the screens but no-one has yet found a way to replicate the plethora of potential spread trades in the electronic world. Emphasis on the word “yet” in that sentence because the LME is proposing to appoint electronic market-makers to trade specific dates and spreads in the cashto-three-months prompt date maze. The trial programme will cover aluminium, copper and zinc, the LME’s three highestvolume contracts. The problem for the old guard is the programme will cover the most liquid hubs of the nearby date structure, the first three
third-Wednesdays, spreads between them and spreads between them and the rolling three-month date. Such is the bread and butter of ring traders and indeed of the ring itself. Amplifying the sense of insecurity is the continued contraction in the number of brokers trading in the ring. The August departure of JPMorgan in favour of a secondtier category membership has reduced to nine the brokers who still form the spread-trading heart of the LME market. There is no finite figure for how many brokers it takes to form a liquid forum and there is no reason to believe that nine cannot do the work of 10. But the trend of falling ring membership has been running a long time now and, despite the exchange’s commitment to retaining the magic circle of red leather chairs when it moves to its new Finsbury Square home next year, if the trend continues, the ring’s capacity to handle the weight of orders flowing through it will be increasingly challenged.
Rivals Without the ring and the date structure, the LME would start to look a lot like every other standardised commodity exchange. And without either, users might start using other exchanges. Such a threat hasn’t ever existed before. The LME reigned supreme over global metals trading, bar the U.S.-centric copper contract traded on CME. But CME’s ambitions are growing with a beefed-up product suite, including aluminium premium contracts, an “all-in” aluminium contract and, from an LME broker’s perspective, the somewhat ominously named “London zinc” contract. And unlike a previous failed foray into aluminium, some of the new offerings appear to be
gaining traction. Certainly, the U.S. premium contract, indexed against Platts’ assessment of the Midwest marketplace, has notched up turnover of over 700,000 tonnes so far this year with open interest steadily building. That’s still a fraction of what trades on the LME, which is launching a suite of its own aluminium premium contracts next month, but the LME’s previous dominance of nonferrous metal pricing is no longer undisputed. And then there is the enigma which is the Shanghai Futures Exchange (SHFE). It has over the last year launched tin and nickel contracts, extending its nonferrous offering to match that of the LME’s core products. SHFE is of course isolated behind the Great Capital Wall of China and would in theory be prime candidate for marrying up with HKEx in a commodities replica of the successful Stock Connect model pioneered by the Hong Kong exchange with its mainland counterparts. But will it accept being partner? Or does it have its own ambitions? SHFE has studiously kept its cards close to its chest. And while it remains so publicly ambivalent, HKEx’s greater vision of connecting China’s vast metals industries with the rest of the world remains limited to its slow-fuse yuan-denominated “mini” contracts. “A single flame” that will over time “become a fire”, according to a May blog by HKEx chief executive Charles Li. While HKEx mulls its potential eastern marriage partners, it can take a good deal of comfort that its western marriage is starting to look a lot healthier after a rocky start. The revamped LME is starting to fire on several cylinders. Just as long as the fire doesn’t burn out the old lady’s heart. Reuters
16 | Business Daily
October 13, 2015
Closing Up to 7.4 mln mainland tourists to visit Thailand this year
Air pollution dominates complaints to environmental ministry
As many as 7.4 million Chinese are expected to visit Thailand throughout this year, confirmed a high-level tourism official yesterday. According to Srisuda Wanapinyosak, a deputy governor of the Tourism Authority of Thailand, up to 7.4 million Chinese will visit varied Thai tourist spots throughout this year. That compared to some 6 million Chinese earlier forecast by the agency to visit Thailand throughout this year. Of that total, nearly 2 million Chinese are expected to come over during this year’s fourth quarter, beginning in October, which usually marks high season for Thai tourism.
The Ministry of Environmental Protection received 696 public tip-offs about pollution in the first half of the year, more than 75 percent of them about air pollution, it said yesterday. Others involved water, noise and waste pollution, according to a ministry statement. All the complaints were lodged through telephone hotline 12369. The ministry said its investigation confirmed problems in 497 of the reported cases. Companies found responsible received punishments ranging from warnings to suspension, closure and fines. The industries subject to most complaints were chemicals, non-metallic mineral processing, metal smelting and processing, the ministry said.
Driverless buses, platoons of trucks to shape Singapore’s transport future Google and a number of automotive manufacturers and suppliers have said the technology to build self-driving cars should be ready by 2020 Aradhana Aravindan
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ingapore unveiled its public transport future yesterday, and it was a vision of passengers commuting in driverless buses along roads and freeways populated by platoons of autonomous trucks following a single driver. The city state’s plans to streamline its transport future have begun with two self-driving vehicles going through their paces in a Singapore estate that is home to research facilities and educational institutes. The vehicles are the vanguard of two projects one run by the SingaporeMIT Alliance for Research and Technology (SMART) with the National University of Singapore and one by the Agency for Science, Technology and Research. Some U.S. states and countries including Germany also allow testing of driverless vehicles on public roads.
Singapore, with its limited land and workforce, is hoping that autonomous vehicles will encourage its residents to use more shared vehicles and public transport, and avoid further congestion on its roads. “Trying to look for bus drivers, truck drivers - big challenge for us,” said Pang Kin Keong, permanent secretary in the ministry of transport. “We don’t have a huge population and these are not some of the professions which Singaporeans aspire to,” Pang said after taking a ride in SMART-NUS’s driverless car - a modified Mitsubishi Motors Corp electric vehicle with a top speed of 30 km per hour. The government and port operator PSA Corp also said yesterday that they would seek proposals to design and implement autonomous truck
ECB says premature to discuss new QE programme
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Transport in Singapore on the road to innovation
platooning trials, in which a human-driven truck is followed by other driverless trucks.
Autonomous vehicles could spur the massmarket adoption of ride sharing, ultimately resulting
in a marked reduction in personally owned vehicles and in the total number of cars on the road, at least within cities, according to a Boston Consulting Group report in April. Google and a number of automotive manufacturers and suppliers have said the technology to build selfdriving cars should be ready by 2020. The Singapore government said in June that it was seeking ideas on how autonomous vehicle technology could be harnessed for more land transport options. Singapore’s Land Transport Authority said it had received proposals from eight applicants, including Uber Technologies, BMW AG and the Toyota group’s trading arm, Toyota Tsusho Corp. Reuters
China’s stocks rise to seven-week high
Indonesia to unveil 4th batch of stimulus plan on Thursday
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he European Central Bank feels it is too early to start discussing a new round of monetary policy easing, a top official said yesterday, but insisted that the ECB was still ready to act if needed. “If anything were needed, we would need to be ready,” ECB executive board member Benoit Coeure told CNBC Television in an interview. In March, the ECB launched a highly controversial programme of bond purchases, known as quantitative easing or QE, to push eurozone inflation back up to levels that are more conducive to healthy economic growth. Initially, the programme -- under which the ECB plans to buy as much as 1.1 trillion euros (US$1.3 trillion) of bonds at a rate of 60 billion euros per month until September 2016 -- appeared to work. But a renewed decline in oil prices and the economic slowdown in China has pushed area-wide inflation expectations back down, reigniting fears of a potentially dangerous downward spiral of falling prices. And that has led to speculation that the ECB might need to extend its QE programme or launch a new one. But Coeure said it was “too early to pass that kind of judgement.”
hina’s stocks rallied to the highest level in seven weeks and turnover jumped amid speculation the government will take more steps to bolster economic growth. The Shanghai Composite Index climbed 3.3 percent to 3,287.66 at the close, with trading volumes jumping to a one- month high. The stocks gauge has advanced 7.7 percent since financial markets resumed trading on Thursday after a week-long holiday. Hundsun Technologies Inc. and Shenzhen Zhongjin Lingnan Nonfemet Co. surged 10 percent to lead gains for technology and material shares. Speculation that China’s central bank will reduce interest rates or reserve-requirement ratios has increased before data this week that will likely show slowing exports and decelerating inflation. The People’s Bank of China announced over the weekend it will expand a relending trial to nine more cities and provinces, while Premier Li Keqiang said the government will increase fiscal support for shantytown redevelopment. “Given the weakness in the economy, the expectations are quite strong about a cut in interest rates and reserve-requirement ratios,” said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai, who’s adding to his holdings.
AFP
Bloomberg News
he Indonesian government is to announce the fourth batch of economic stimulus measures on Thursday to lure investment and revive economy, officials said yesterday. Indonesia has launched three stimulus packages since last month, which has boosted rupiah value against the U.S. dollar. “The package will be unveiled this week, on Thursday. Now we are preparing it,” Indonesian Economic Chief Minister Darmin Nasution said. Previously, Nasution disclosed that the fourth batch package partly aimed at improving environment for business. Manpower sector is one of the items included in the packaged, he said. The Southeast Asia’s largest economy saw the lowest growth rates in six years by 4.71 percent and 4.67 percent at the first and the second quarters respectively. Indonesian President Joko Widodo has slashed gasoline subsidies and travel budget for authorities to free up funds to support massive infrastructure projects to pursue his target of more than 7 percent GDP growth at the end of his five-year tenure ending in 2019. Xinhua