MOP 6.00 Closing editor: Joanne Kuai
China arrests two executives for irregular trading in futures
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Year IV
Number 911 Tuesday November 3, 2015
Publisher: Paulo A. Azevedo
Samsonite sales in SARs up 4.2 pct in Q3 Page 2
People’s Bank of China raises central rate by largest amount in decade
Landlocked
No plots of idle land yet reclaimed. So says the Secretary for Transport and Public Works, Raimundo Arrais do Rosário in an exclusive interview with De Ficção Multimedia Projects. Despite the revocation of grants, cases await final resolution by the courts. One knock-on effect has been the disruption of providing locals with more public housing. Because there’s just not enough land. The Secretary will toughen car emission standards to keep jalopies off the roads. And dispose of more junk and waste in neighbouring Guangdong Province per jurisdictional agreements Pages 6&7
Gaming referendum revisited They’ve been here before. Another referendum has been proposed for residents of Penghu. Taiwan’s outlying island could vote again next year on allowing casinos to operate there. The local govt’s Referendum Screening Committee passed the referendum proposal on Friday. Residents are expected to cast ballots following Taiwan’s presidential elections on January 16
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Fantasy Island
Entertainment centres in Hengqin. Hong Kong-based property conglomerate Lai Sun Group is developing a ‘Creative Culture City’ on the neighbouring island. Teaming up with Hollywood’s Lionsgate LBE, Inc. to build an ‘Immersive Experience Centre’. And family oriented iP2 Entertainment
www.macaubusinessdaily.com
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Air Macau pax up Q3 Air Macau Co. Ltd. received 610 mln passengers during Q3. Representing an increase of 6.67 pct Y-o-Y for the local flag carrier. Passenger load factor was 68.5 pct, down 3.35 pct from a year ago. Revenue passenger kilometres reached 989.4 mln yuan (MOP1.24 bln/US$155 mln), up 5.3 pct Y-o-Y
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The long march The PMI moved to 48.3 in October. The highest level since June. Adding a fillip to evaluations of the economy. The Caixin General China Manufacturing Purchasing Managers’ Index indicates manufacturing activity
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HSI - Movers November 2
Name
Gaming
Litmus test October marks the 17th consecutive month. Of the longest slump in the city’s gaming revenue. It was, however, the first month since January that gaming revenue fell less than 30 pct Y-o-Y. Green shoots? Deutsche Bank analysts are wary. Saying Studio City, which opened last week, may be a final test of the ‘if you build it they will come’ mantra
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%Day
China Resources Land L
+2.96
China Overseas Land &
+2.58
Link REIT
+1.18
Tencent Holdings Ltd
+0.61
Lenovo Group Ltd
+0.28
Sun Hung Kai Propertie
-3.18
Cheung Kong Property
-3.58
China Resources Powe
-3.97
Tingyi Cayman Islands
-4.65
China Mengniu Dairy C
-8.50
Source: Bloomberg
I SSN 2226-8294
2015-11-3
2015-11-4
2015-11-5
19˚ 25˚
21˚ 26˚
22˚ 27˚
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November 3, 2015
Macau
Lai Sun Group teams with Lionsgate and iP2 Ent. to spice up Hengqin project The co-operation with Lionsgate and iP2 Entertainment will feature entertainment centres making use of the two companies’ intellectual properties in the group’s Hengqin ‘Creative Culture City’ project Stephanie Lai
sw.lai@macaubusinessdaily.com
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ai Fung Holdings Ltd. and eSun Holdings Ltd., both part of the Hong Kong-based property conglomerate Lai Sun Group, jointly announced yesterday that they have agreed to join hands with Lionsgate and iP2 Entertainment to develop attractions for the first phase of the cultural-cum-commercial project in Hengqin titled ‘Creative Culture City’. Lai Fung and eSun have entered into a licence agreement with Hollywood film and entertainment producer Lionsgate LBE, Inc. for the development and operation of an ‘Immersive Experience Centre’ project in Phase 1 of the Hengqin project, according to the joint announcement filed with the Hong Kong Stock Exchange yesterday. The Centre, occupying about 22,000 square metres, is said to contain multiple ‘interactive experiences’ with at least 10 to 15 attractions developed from six of Lionsgate’s intellectual properties, plus food and beverage facilities and retail concessions, the filing said.
Lionsgate owns a series of blockbuster hits such the ‘The Hunger Game’ series, ‘The Divergent’ series and ‘Now You See Me’. These intellectual properties owned by Lionsgate will be developed and applied for use in the Immersive Experience Centre. Pursuant to the agreement, Lionsgate will license various intellectual property rights to Lai Fung and eSun and provide various support services, largely in the form of royalties payable on a periodic basis. The term of the licence is for 10 years with an option to extend for another 10 years.
Edutainment
Family entertainment and media company iP2 Entertainment is another new partner for Lai Fung and eSun to develop attractions at Creative Culture City. According to a separate announcement filed yesterday, Lai Fung and eSun have reached an agreement with iP2 Entertainment to
develop a family edutainment centre in Phase I of the Creative Culture City project. The edutainment centre, occupying about 4,500 square metres, will contain no less than five individual attractions including rides, food and beverage facilities, retail premises, virtual reality and/or 4-D interactive experiences, and other types of entertainment or education attractions, the filing noted. According to the agreements, iP2 Entertainment will sub-license its National Geographic Society-licensed intellectual property rights to the Hong Kong developer in return for royalties charged against admission tickets, concessionary and other revenue. iP2 Entertainment Asia Ltd., an arm of iP2 Entertainment, will provide management and creative design services in exchange for management and other incentive fees. The terms of the agreement with iP2 Entertainment will be for 10 years from the initial commercial launch of
the family edutainment centre with an option to extend for another 5 years.
Entertainment destination
Lai Fung and eSun jointly told the Hong Kong Stock Exchange in late April last year of their plan to cooperate with the U.S. Company Major League Gaming (MLG) and build an e-sports gaming arena in the ‘V-Zone’, a video game destination that is part of the first phase of the group’s 18 billion yuan Creative and Culture City. Phase 1 of the project, occupying a total of gross floor area of 2.8 million square feet, includes a hotel, a workshop, performance halls, ‘cultural studios’ and other ancillary facilities, according to Lai Fung’s latest filing of its results for the year ended July 31, 2015. Chairman of Lai Fung, Chew Fook Aun, told media last month that the first phase of the Creative Culture City project is only expected to be completed in the first half of 2018.
Samsonite sales in Macau Bauhaus expects and Hong Kong up 4.2 per cent to dip into red in H1
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he net sales of luggage manufacturer and retailer Samsonite increased 4.2 per cent during the third quarter in Macau and Hong Kong, according to a filing of the group yesterday with the Hong Kong Stock Exchange. While the document does not name Macau, the territory is included in the Hong Kong segment. The
translation of this increase in terms of the amount of sales was not disclosed. During the third quarter, net sales of the American company for the Asian region increased 1.1 per cent, or US$2.7 million (MOP21.55 million), to US$245.06 million from US$242.39 million. In terms of the first three quarters of the year, net sales from Hong Kong and Macau
were up 6.7 per cent yearon-year, while net sales in the Asian region increased 14.6 per cent to US$716.49 million from US$663.77 million. In terms of all markets where the group is operating, during the third quarter net sales increased 9.3 per cent to US$627.36 million from US$623.68 million. Considering the first three quarters of this year, the overall net sales of Samsonite jumped 13.9 per cent to US$1.82 billion from US$1.73 billion. The American company has a total of six stores in Macau, with one in NAPE and five in Cotai.
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lothing retailer Bauhaus International (Holdings) Ltd. expects its interim results to slip into the red for the six months ended September 30 following a drop in sales in its major markets. The company told the Hong Kong Stock Exchange last week that a net loss of between HK$24 million and HK$31 million would be registered for its interim results, compared to a net profit totalling HK$20.9 million for the same period of last year. ‘The unfavourable results were primarily caused by the sluggish retail consumption
in major markets where the Group operates, particularly in Hong Kong and Taiwan, leading to a decline in sales and gross profit and coupled with an increase in operating costs,’ the company explained In fact, the company had revealed in a filing at the beginning of last month that its same-store sales growth had dropped 8 per cent year-on-year for the period, of which those in the Hong Kong and Macau market was also down 7 per cent year-onyear. The company’s interim results will be published by the end of this month. K.L.
Business Daily | 3
November 3, 2015
Macau
Air Macau serves 6.7 pct more passengers in Q3 Passenger numbers of the city’s flag carrier jumped nearly 6.7 per cent in the previous quarter although its used capacity was slightly down Kam Leong
kamleong@macaubusinessdaily.com
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ocal flag carrier Air Macau Co. Ltd. has registered a year-onyear increase of 6.67 per cent in its passenger volume for the third quarter of the year, whilst its used passenger carry capacity has slightly decreased. The latest operating results of the airline’s parent company Air China Ltd. show that the city’s flag carrier received a total of 610 million passengers during the third quarter of the year. For the first nine months of the year, the passenger volume of Air Macau also increased 6.56 per cent year-on-year to nearly 1.7 billion. Nevertheless, the airline’s passenger load factor, which indicates an airline’s used passenger carrying capacity, reached only 68.5 per cent during the quarter, down
3.35 percentage points from one year ago. For the first nine months of the year, the used passenger carry capacity of Air Macau also fell 2.16 percentage points to 67.1 per cent.
Revenue passenger kilometres
Meanwhile, the local airline’s revenue passenger kilometres (RPK), a measure of sales volume of passenger traffic, totalled 989.4 million yuan (MOP1.24 billion/US$155 million) for the third quarter, or 2.82 billion yuan for the nine months, increasing 5.3 per cent and 6.8 per cent year-on-year, respectively. Air China did not disclose the profit or revenues of its subsidiary in the city for the respective periods. For cargo traffic, Air Macau registered a year-on-year
increase of 5.58 per cent for the quarter in its revenue tonne kilometres (RTK), totalling 105.2 million yuan. RTK measures revenue generated by tonnes of cargo carried multiplied by distance flown. However, the available tonnes kilometre (ATK) load factor of the airline decreased 3.09 percentage points to
62.8 per cent between July and September this year. Cumulatively, Air Macau’s RTK totalled 300.1 million yuan for the first nine months of the year, jumping nearly 7 per cent from the same period last year, while the ATK Load Factor for the nine months declined 2.06 percentage points to 61.7 per cent.
Air Macau is 66.9 per cent owned by the Chinese national carrier, according to Air China’s recent interim report. For the first half of the year, Air Macau’s profit after tax plunged 93.61per cent year-on-year to 1 million yuan, with a year-on-year decline of 9.35 per cent in turnover to 1.21 billion yuan.
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November 3, 2015
Macau
Taiwan’s Penghu could vote again on opening casino The outlying island of Penghu could vote again on whether they want casinos on their island following Taiwan’s presidential election on January 16 Stephanie Lai
sw.lai@macaubusinessdaily.com
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esidents of Taiwan’s outlying island of Penghu could vote again next year on whether to allow casinos to operate there, Taiwan’s Central News Agency has reported. The news follows the local government’s Referendum Screening Committee having
passed a proposal on Friday to hold a referendum. The residents are expected to cast ballots some time after Taiwan’s presidential election on January 16 and before the May 20 presidential inauguration in 2016, the news agency reported. The proposal to hold a
referendum on Penghu will be sent to Taiwan’s Cabinet the Executive Yuan for screening. If the proposal is approved, the groups pushing for legalisation for gaming in Penghu have to collect signatures amounting to 5 per cent (or 4,113 people) of 82,269 eligible voters in
Casino shares advance as gambling revenue slump eases
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asino shares rose in Hong Kong trading after Macau reported gaming revenue that fell at the slowest pace since January, giving hope the 17-month long slump in the world’s largest center of gambling may be starting to ease. “The figure can be viewed as the beginning of a ‘less bad environment’, ” Vitaly Umansky, a gaming analyst at Sanford C. Bernstein, wrote in a note after the data was released. October was also the first month since January where the gaming revenue fell at a rate below 30 per cent, he added. Gross gaming revenue fell 28.4 per cent year on year to MOP20.1 billion (US$2.5 billion) in October, according to data released by Macau’s Gaming Inspection and Coordination Bureau (DICJ). The decline was at the slowest
Penghu, to allow it to be sent to the election committee to prepare for a referendum.
Mainland impact
In January 2009, Taiwan lifted the prohibition on gambling on its outlying islands of Kinmen, Matsu and Penghu. Direct ferry services
are available between each of these islands and the coast of China’s Fujian Province. The island of Penghu first held a referendum in September 2009 on whether to allow gaming, in which more than 17,000 votes – or 56.4 per cent of valid ballots – were cast against the proposition of allowing a casino resort to operate on the island. Following the referendum held in Penghu, the residents of Matsu Island also held a referendum, in July 2012, in which the majority of voters favoured casinos on the island as an element to attract tourists. Taiwan’s Parliament, however, has yet to approve the draft casino and gaming bill, which regulates the establishment and management of casinos. Beijing officials have expressed before that they would not like to see Chinese tourists participate in gaming when travelling in Taiwan. On a visit to Kinmen Island in late May this year, the Director of China’s Taiwan Affairs Office, Zhang Zhijun, said if the island developed gaming its open transport and trade links with Mainland China would be severed. Ms. Fan Liqing, the Spokesperson of Taiwan’s Affairs Office, also said in late February 2013 that tourism agencies should not lead or organise any gaming activities for their clients, which is part of the cross-straits tourism co-operation agreement. Fan made the remark when asked about Beijing’s response to the gaming development policy for Matsu Island.
Corporate CTM host SEA-ME-WE3 O&MSC Meeting
pace since January, when revenue fell 17.4 per cent, and compared with the median estimate of a 28 per cent decline from nine analysts surveyed by Bloomberg. Gaming revenue has fallen 35.5 per cent so far this year. Wynn Macau Ltd. rose 3.2 per cent to HK$11.06 as of 10:25 a.m. in Hong Kong trading. MGM China Holdings Ltd. rose 2.5 per cent, Sands China Ltd. was up 1.1 per cent, and Galaxy Entertainment Group Ltd. advanced 1.7 per cent. The benchmark Hang Seng Index fell 0.8 per cent. Bernstein expects Macau’s average daily revenue from the mass market segment to begin rising on a marketing push by Studio City, after the casino resort “opened to great fanfare” last week, according to Umansky. Bloomberg
Organized by SEA-ME-WE3 Management Committee, and hosted by CTM, the No. 22 SEA-ME-WE 3 Operations & Maintenance Subcommittee Meeting was held in Macau between 27th and 30th October. Some 41 delegates from over 10 countries in four
continents attended the 4-day meeting with the objective of discussing various issues for the future development of the SEA-ME-WE3 submarine cable system, in addition to signing several co-operation agreements.
Business Daily | 5
November 3, 2015
Macau Dynam Japan completes pachinko hall operator acquisition Hong Kong-listed pachinko hall operator Dynam Japan Holdings Ltd. says that it has already completed the full acquisition of Japan-based pachinko and slot hall operator Yume Corp Co. Ltd. on November 1. Dynam Japan has acquired the entire issued share capital of Yume Corp by the allotment and issue of 38.81 million consideration shares, which were multiplied by a closing price of HK$9.54 (US$1.23) per share as of October 30 amounting to HK$370.2 million. Yume Corp runs 39 pachinko halls in Japan.
Deutsche Bank: October 2-year stack decline worst so far The mild decline of gaming revenues during last month hides a two-year stack decline of 52 per cent, according to the bank João Santos Filipe
jsfilipe@macaubusinessdaily.com
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n October, the rate of decline of gaming revenues was the mildest since January, with a drop of 28.4 per cent year-onyear to MOP20.06 billion (US$2.51 billion) from MOP28.03 billion. However, for Deutsche Bank analysts this does not mean that the worst is over yet. “While the -28.4 per cent result was better than the -30 per cent we have seen in each month since February, the two-year stack, which was down 52 per cent in October, was by far the worst of the year (September two-year -45 per cent)’, the report, signed by Carlo Santarelli and Danny Valoy, highlighted. ‘On a sequential basis, October grew 17.1 per cent from September, versus a 4-year average sequential change of +19.5 per cent”, they added.
Final test
In the last week of October, gaming operator Melco Crown Entertainment opened the mass market oriented casino Studio City. While the opening is not considered relevant in terms of gaming revenue for October, Deutsche Bank expects the new property to be a final test of the supply driving demand thesis. “With hotel occupancies continuing to decline, we
don’t think there are many left who subscribe to the ‘if you build it they will come’ mantra as it pertains to Macau these days. While some loosening visitation policies could provide a bit of support, we think gaming revenue checks will take on added meaning this month as investors track Studio City’s contribution to the market”, they explained. During the first three quarters, hotel occupancy declined 5.5 percentage points, to 81.8 per cent, for 5-star resorts and 8.9
percentage points, to 78.8 per cent, for 4-star hotels.
November revenue to decline 29 per cent
Regarding this month, the forecast of the investment bank is for gross gaming revenue to decline 29 per cent, while in November of the previous year it declined 19.6 per cent. However, the calculations of the German bank may be changed by the effect of Studio City. “Over the last four years, November, on average, has been down roughly 10.9 per
cent from October on a win per day basis. Should the average sequential trend hold firm, which would imply no market growth from Studio City, November would fall around 29 per cent year-onyear”, the reports reads.
Unrealistic growth
In the same report, Carlo Santarelli and Danny Valoy also contend that the expected growth during the previous year is “unrealistic”, according to their calculations. “Since July, and including the October holiday period,
the average USD win per day in the market was approximately US$76 mln. To put this in context, the average win per day in 1Q15 was US$90 mln with 2Q15 coming in at US$78 mln. Assuming limited aggregate incremental demand from Studio City and barring an unforeseen turnaround in the market, we believe 1Q16 is poised to start the year with, at minimum, a high teens yearon-year decline and hence we continue to find expectations for growth in 2016 to be unrealistic”, they said.
Emperor Entertainment anticipates net profit drop
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mperor Entertainment Hotel Ltd. expects its net profit to register ‘a significant decrease’ for the first half of its fiscal year ended September 30 this year from one year ago, it told the Hong Kong Stock Exchange last week. ‘Such decline in consolidated net profit was mainly attributable to a net loss on the hotel property valuation due to the downturn of the Macau property market,’ the company said in the filing. The company owns two hotels in the territory, namely, Grand Emperor Hotel and Inn Hotel Macau (previously known as Best Western
Hotel Taipa). In addition, it is the operator of the casino inside Grand Emperor under the gaming licence of Sociedade de Jogos de Macau, S.A (SJM).The hotel operator said its net profit for the period was also dragged down by ‘an exchange loss on offshore traded Renminibi deposits held by the Group due to the abrupt devaluation of the Renminbi in August 2015’, as well as ‘a moderate decline of revenue due to the economic downturn.’ The company’s net profit for the same period of last year amounted to HK$263.7 million (nearly US$33 million), which is a decline of 5.3
per cent year-on-year, according to its previous interim report.
Emperor International
Meanwhile, the hotel operator’s parent company - Emperor International Holdings Ltd. - also issued a profit alert last week, warning the company might post a net loss for the six months ended September 30, due to fair value change in its investment properties as well. ‘Due to the recent downtrend of rental reversion of investment properties in prime locations, a significant net loss of fair value change in the Group’s investment properties is
expected. Hence, the Group expects to record a consolidated net loss during the Period,’ the company said in the filing, without disclosing the expected amount of loss. But the company also said in the same filing that its turnover would record a notable growth, which is attributable to the sale of properties. Moreover, its net profit is estimated to ‘increase significantly’ if the effect of the fair value adjustment is excluded. During the same period of last year, the parent company’s net profit totalled HK$775.5 million. K.L.
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November 3, 2015
Macau
Rosário: “As at this moment, we haven’t recovered any idle plots of land” In an exclusive interview, Secretary for Transport and Public Works Raimundo Arrais do Rosário says government policy on public housing is moving at a slow pace due to the lack of available land for construction. He also revealed that details of all the plots of land that the government wants to recover have been sent to the courts by the parties holding the concessions João Santos Filipe and Paulo A. Azevedo jsfilpe@macaubusinessdaily.com Photos: Gonçalo Lobo Pinheiro
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he Secretary for Transport and Public Works has no illusions about the approaching years in terms of public housing. The government does not have free land to build houses on, which in turn is delaying the construction of economic and social housing for local residents. In an exclusive interview with De Ficção Multimedia Projects (which owns Business Daily, Macau Business and Business Intelligence) Raimundo Arrais do Rosário revealed that all the idle plots of land that the government intends to recover will go through legal battles, which will further delay implementation of the housing policy. “I don’t know how many plots of land we are going to recover until the end of this year,” he said quite frankly. “As at now, eighteen cases of expired concessions were published in the Official Gazette. All these cases are going to be settled in court. Every case is different and the court will have to decide them. But as at this moment we haven’t recovered any idle plots of land. The people that held the temporary concessions took the issue to court. Now we have to wait for the decisions of the courts, as the judicial processes are ongoing”. On the day of this interview, the government had already declared the expiry of a total of 18 land concessions. On the week following the interview, however, it was published in the territory’s Official Gazette that a further four plots of land were to be
recovered. Extenuating circumstances related to these four plots can also be argued in court by the parties holding the concessions.
Balance of interests
In a territory limited to just 11.6 square kilometres but which accommodates a population of some 642,900 representing a population density of 21,218 per square kilometer - land resources are inevitably a problem. While on the one hand there are many pressures from real estate
Inspection of vehicles every 8 years With the new inspection centre for vehicles in Cotai to become operational by the second quarter of next year, the government will change the required inspection frequency. “The period for cars to be inspected will change from ten to eight years”, the Secretary said. Raimundo Arrais do Rosário also explained that shorter periods for inspections are not likely to be implemented because of the constraints caused by the shortage of land in Macau. “We cannot forget that land is a problem in Macau. We have to keep in mind that if we shorten the period for inspections, the number of vehicles to be inspected will also increase. A larger number of vehicles to be inspected will require more space for the inspection operation”, he explained.
investors and developers, on the other civil society demands more public housing. This makes the management of land resources a difficult and arduous challenge. “It’s extremely hard to reach a balance because we don’t have free plots of land ready to be developed. To build houses, we need buildings and to construct buildings we need plots of land. But at this moment we almost have no free plots of land to develop”, he said.
Last month, the government clarified that it will build 4,600 public housing units in Macau and Taipa. But a timeframe for the development of these units was never published. The reason behind this is the complications related to these plots, which are currently legally occupied. “We’re saying that we are going to build public housing on certain plots. But we’re still waiting for them to be free. Now they are legally occupied with services, people and constructions. All this process to have
The construction of the new inspection centre for vehicles has already been completed, and is now being equipped with the necessary machines.
workers and tourists, we have many people every day in the territory. These people generate liquid garbage”, he explained. The Secretary also commented on how exponential development created many challenges for the territory, and how he had to make many choices in terms of prioritising his agenda. “Macau went through a fast and steep development and there wasn’t enough time to predict it or to plan for it. It ended up creating some problems, which were not expected”, he said. “After ten months in office, there were so many things that there was not enough time to give an answer to all of them. If you ask me if this problem with the water treatment plants should have been addressed before, I say yes. But there was not enough time”.
Water treatment plants capacity to be expanded In recent years, the growing population in Macau and the increasing number of tourists have led to an increase in the number of residues to be handled by Macau’s water treatment plants. As a result, plants are working very close to maximum capacity. “We don’t have plans to move our water treatment plants to Guangdong. We want to increase the capacity of these services because of the exponential growth of the population. Considering residents, non-resident
Business Daily | 7
November 3, 2015
Macau A career in the Civil Service Raimundo Arrais do Rosário, 59 years old, was born in August 1956 in Macau. He has a Bachelor’s degree in Civil Engineering and embarked upon a postgraduate programme on soil mechanics. The Secretary for Transport and Public Works is currently on his second stint in the civil service, his first being in 1979, when he served as technician, department head, deputy secretary and secretary of the Secretariat for Transport and Public Works. He was also the chairman of the Land Committee and Traffic Committee, as well as a member of the Sports
the land free takes time. In the short term we do not have free land to build on. If there was free land, I think no-one would have any doubts that the government would build public housing”.
Speeding up the process
The Secretary also commented on the recent changes to the process of allocating social and economic housing. The goal was to speed up the process so that people could receive their designated housing units in a speedier fashion thus avoiding unnecessary work for the Housing Bureau. “When I arrived in this Office, there had been a tender to allocate around 1,900 economic housing units, and there were around 41,000 applications. Before the law was amended, it defined that we had first to analyse all the applications,
Committee, and the assistant to the board of directors of the Macau International Airport Company Ltd. Absent from the civil service from 1990 to 1999, he returned in December 1999, after the handover, as director of the Macau Economic and Trade Office in Lisbon, the Macau Economic and Trade Office to the European Union in Brussels, and the Macau Economic and Trade Office to the World Trade Organization. Last year, he returned to Macau after being appointed by Chief Executive Fernando Chui Sai On as Secretary for Transport and Public Works.
then order them and do all the other work, before the houses were handed [to them]”, he said. “But why would we analyse 41,000 applications, if there were only 1,900 housing units? These changes were implemented for us to analyse only the successful applications”.
Co-operation with Guangdong
The lack of land in Macau has made co-operation with the Mainland province of Guangdong one of the priorities of Raimundo do Rosário with regard to two festering topics: the disposal of junked cars and certain construction waste. The first agreement will open the door for the government to adopt stricter measures for engine emissions by cars. Until now, one of the reasons for the government to have in force the Euro 4 standards was the lack of space to send scrapped vehicles. This
agreement and the new inspection centre that will be working by the second quarter of next year will change this. “The co-operation agreement was not started by me but has been one of my priorities. When we adopt stricter regulations, more cars will fail the tests. So we will have to find a place to scrap them. This is the reason why this agreement is a priority. Once it is completed, we will conduct an initial scrapping of the cars and then send them to Guangdong”, he said. “We want to adopt the stricter Euro 6 standard for engine emissions but not in the short term”.
Problems to incinerate garbage
In his conversation with De Ficção Multimedia Projects, the Secretary for Transport and Public Works also revealed a problem in Macau related
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to the amount of liquids residing in solid waste. “We also have a problem with our garbage that is not very common. The percentage of food and liquids in garbage is above the average compared with other countries. If we have many buffet restaurants trashing large quantities of food, all this will go to the incinerator. The problem is that we cannot easily burn food and sauces. In the end this makes us waste much more energy and time to incinerate it”, he explained. According to the Secretary the solution to this problem has to be a change of mentality of the people via simple actions. “For example, after eating the food, instead of throwing the sauce into the garbage, the sauce should be poured down the sink of the house”, he said.
There are men and women who give human kind their perseverance, their genius, their generosity and, in some cases, their own life. Those people and their actions are our inspiration.
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8 | Business Daily
November 3, 2015
Gretare China
Beijing arrests HK-owned fund executives for futures manipulation They were arrested for allegedly buying and selling futures at prices that deviated from market standards and illegally made more than 2 billion yuan
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remier Li Keqiang (pictured) highlighted a minimum growth estimate for China in the coming five years that could indicate the leadership’s readiness to accept the weakest period of expansion since the economy was opened up three decades ago. The nation needs annual growth of at least 6.53 percent in the next five years to meet the government’s goal of establishing a “moderately prosperous society,” Li said in an October 23 speech to Communist Party members, according to people familiar with the matter who asked not to be named as the remarks weren’t public. Communist Party leaders today conclude a four-day gathering to discuss their 2016-20 five-year plan for the nation, the first since President Xi Jinping and Premier Li took office. “It seems that Premier Li is sending a signal through his speech that China’s government is likely to lower their growth target to 6.5 percent in the 13th five-year plan,” said Le Xia, a Hong Kong-based economist at Banco Bilbao Vizcaya Argentaria SA. Private economists have predicted a lowering in the fiveyear growth target to 6.5 percent, down from 7 percent in the current plan -- a reflection of the Communist
leadership’s continuing attempts to move away from debt-fuelled expansion. China’s central bank shouldn’t adopt quantitative easing to flood the economy with too much money, Li said, according to the people. The comment underscores how the People’s Bank of China has opposed U.S. and Japan-style direct purchases of assets in its campaign to ease
liquidity and shore up the weakest expansion in a quarter century. The State Council didn’t immediately respond to a faxed request for comment on Li’s remarks. Li, speaking to the Communist Party Central Committee’s Party School, underscored China’s avowal to avoid cheapening the yuan as a tool to stoke exports. Recent depreciation
Caixin gauge shows factory activity shrinks at slower pace Many economists have expected that economic growth would bottom out in the third quarter
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hina’s factory activity fell for an eighth straight month in October but at a slower pace as export orders flickered into life, a private survey showed yesterday, pointing to continued sluggishness in the world’s second-largest economy.
The Caixin/Markit China Manufacturing Purchasing Managers’ Index(PMI) edged up to 48.3 in October from 47.2 in September. The highest reading since June 2015 will likely fuel hopes that the industry’s long slump may be bottoming out. But it remained well below the 50 mark, signifying a
KEY POINTS CHINA FACTORY PMI 48.3 VS SEPT 47.2 ACTIVITY CONTRACTS FOR 8TH MONTH BUT AT SLOWER RATE EXPORTS ORDERS GROW FOR FIRST TIME SINCE JUNE DOMESTIC DEMAND REMAINS WEAK
further contraction that will raise doubts about whether China’s economy could see a modest pick-up in the fourth quarter. Taken together with official factory and services sector surveys released on Sunday, the readings reinforced most economists’ views that business conditions
in the currency has been a “market action,” he said, according to the account. The program to bolster international use of the yuan will continue to advance, he said. The premier said that fiscal and financial risks are increasing, and that the stock-market rout suffered earlier this year was caused by leverage, such as a surge in margin financing. Growth cannot return to the days in excess of 10 percent, though it can stay in a reasonable range, Li said. Officials have worked hard to achieve the current target of 7 percent, the premier said. Some private estimates of the economy indicate that the expansion may be weaker than officially reported, as gains among new services and consumerled businesses aren’t yet sufficient to offset a contraction among old-line industries. “In the next five years if China can grow between 6 percent and 6.5 percent that will be a very good number,” said Liu Li- Gang, the chief Greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. China’s goal of a “moderately prosperous society” refers to policy makers’ plan to double per-capita income by 2020 from 2010 levels.
in China are continuing to cool at a gradual albeit uneven rate, with no signs of a hard landing which recently spooked global investors. Suggesting some improvement in soft global demand, the Caixin survey showed new export orders expanded for the first time since June, albeit marginally. The sub-index rose to 50.7 from 44.6 in September. Demand at home remained sluggish, however. The overall new orders subindex, which covers domestic and export orders, shrank for the fourth month in a row in October, though the contraction was more modest than in September. “The slight upswing shows the manufacturing industry’s overall weakening has slowed down, indicating that
Bloomberg News
previous stimulus measures have begun to take effect,” said He Fan, Chief Economist at Caixin Insight Group. Manufacturers shed jobs for the 24th straight month on weakening sales, but again the rate of reduction was the weakest in three months. The private survey focuses on small and mid-sized companies, which are facing greater strains from the economic slowdown, while the official gauge looks more at larger, state firms.
More policy support expected
“The data reinforce our view that the last PBOC interest rate cut (announced on Oct 23) was to pre-empt weak October activity data,” ING economists said in a note. “In addition to setting global investor sentiment to risk-off, we think they will raise the consensus forecast for PBOC rate cuts.” Beijing has rolled out a flurry of support steps since last year to avert a sharper slowdown, including slashing interest rates six times since November. But such measures have been slower to take effect than in the past, and economists remain wary about the outlook. “Weak aggregate demand remained the biggest obstacle to economic growth, and the risk of deflation resulting from the continued fall in the prices of bulk commodities needs attention,” said He. Reuters
Business Daily | 9
November 3, 2015
Gretare China Yuan gets largest boost in a decade
HK’s Exchange Found records loss in Q3
China now allows the currency to trade up or down two percent from the centrally set daily rate on the domestic foreign exchange market
Hong Kong’s Exchange Fund, which is used to defend the Hong Kong dollar, has recorded an investment loss of HK$63.8 dollars for the third quarter of this year, Hong Kong Monetary Authority’s chief executive Norman Chan said yesterday. It is the biggest quarterly loss in history, according to the Monetary Authority. The quarterly loss has completely wiped out gains in previous two quarters. For the first nine months of this year, the Fund lost HK$36.8 billion. The Fund’s investment income suffered a loss in the past quarter, compared with a gain of HK$18.7 billion in the second quarter, said Chan.
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hina raised the central rate for its yuan currency by the largest amount in a decade yesterday, officials and reports said, just three months after a surprise devaluation sent shockwaves through global markets. The world’s second largest economy adjusted the yuan’s mid-rate upwards by 0.54 percent against the US dollar, according to an announcement by the central People’s Bank of China (PBOC). Bloomberg News reported that the increase was the largest since 2005, when Beijing unpegged the yuan from the dollar. China now allows the currency to trade up or down two percent from the centrally set daily rate on the domestic foreign exchange market. Authorities moved the yuan almost five percent lower in one week in August, saying it was part of broader reforms aimed at shifting towards a more flexible exchange rate. But the move raised concerns abroad that the Chinese economy was performing worse than had been acknowledged, and fears that Beijing was trying to make its exports cheaper to give it a boost. China has pledged that it would not engage in competitive devaluations. The move also comes as the country seeks to promote the yuan
MediaTek open to cooperation with mainland
as a global reserve currency alongside the dollar, an ambition that depends on its willingness and ability to loosen tight restrictions on the currency’s trade. But authorities fear that losing control of the yuan’s value will mean giving up a powerful tool for managing the economy, which last quarter experienced its slowest growth in six years. One major step towards achieving Beijing’s goal is convincing the International Monetary Fund to include the yuan in its internal
“special drawing rights” reserve currency basket. The global banking institution updates the components -- currently made up of the dollar, yuan, euro and pound -- every five years, with the next change due to be decided this month. Liu Jian, an analyst from Bank of Communications, told AFP: “The economy is stabilising, so the expectation of further depreciation has weakened both at home and abroad.” AFP
Chinese citizens are now only allowed to convert the equivalent of US$50,000 from the domestic yuan currency under an annual quota
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individuals invest abroad in industry, property and financial products through the Shanghai Free Trade Zone, according to a statement released Friday. “These policy initiatives are another important step toward complete capital account liberalisation,” Zhou Hao, a senior economist at Commerzbank in Singapore, was quoted by Bloomberg News as saying. China’s premier free trade zone in the commercial hub Shanghai was set up in 2013 with the promise of a
China’s premier free trade zone in the commercial hub Shanghai was set up in 2013 with the promise of a range of financial reforms
PBOC injected 70.5 bln yuan in pledged loans China’s central bank said it injected 70.5 billion yuan (US$11.13 billion) worth of pledged supplementary loans in October. The total outstanding PSL amounted 1.03 trillion yuan at end-October, the central bank said in a statement on its website. The PSL comprises of loans extended by the central bank to commercial banks behind closed doors to manage liquidity and medium-term lending rates. The latest PSL exercise was aimed at supporting China’s urbanisation with an interest rate of 2.85 percent.
Government mulls allowing individuals to invest more abroad
hina is considering relaxing limits to allow individuals to invest overseas in stocks and property, the central bank said, which would potentially unleash a flood of money if the government loosens strict capital controls. The country keeps a tight grip on outflows of funds due to worries capital flight could disrupt the economy and weaken its control. The People’s Bank of China said it was studying letting “qualified”
Taiwan and China should cooperate in the semiconductor sector, Taiwan chip designer MediaTek Inc said yesterday, in response to media reports that said China’s state-backed tech conglomerate Tsinghua Unigroup Ltd was interested in the firm. Taiwan’s government heavily regulates investments related to China and the island’s semiconductor industry, which is a mainstay for the economy and one of the world’s largest. China is trying to develop its own fledgling chip industry and on Friday, Tsinghua Unigroup said it was buying a 25 percent stake in Powertech Technology Inc for US$600 million.
range of financial reforms, but foreign investors especially have expressed disappointment over the pace of change. Chinese citizens are now only allowed to convert the equivalent of US$50,000 from the domestic yuan currency under an annual quota, state media said, which creates a limit on overseas investment though many evade the barrier. Individuals are allowed to legally invest in stocks in Hong Kong, a special administrative region of China, through a special link with accounts on the Shanghai stock exchange. The central bank announcement, which gave no timetable for the move, followed a top-level Communist Party meeting which discussed the country’s development plans for the next five years. China also wants the yuan to join the International Monetary Fund’s “special drawing rights” basket of currencies and is pursuing reforms to help gain the coveted status. In August, the central bank suddenly devalued the yuan, allowing it to lose nearly five percent of its value over a week, in a move which raised alarm over the state of the world’s second largest economy. AFP
Beijing approves US$6.7 bln highspeed railway project China has approved construction plans for a high-speed railway project worth 42.7 billion yuan (US$6.7 billion), the country’s top economic planner said in a statement yesterday. The high-speed railway will run through central Henan province and eastern Anhui province. Beijing has approved billions of dollars in infrastructure projects in recent months to stem a sharp economic slowdown. The government has been particularly keen to promote projects in the less-developed western part of the country.
C.bank lends 105.5 bln yuan to financial firms China’s central bank said yesterday it had extended 105.5 billion yuan (US$16.66 billion) of loans to 11 financial institutions under a medium-term lending facility in October. The new loans, with a maturity of six months at an interest rate of 3.35 percent, are intended to ensure liquidity in the banking system. The total outstanding amount of such lending facility loans was 595.5 billion yuan at end-October, the central bank said.
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November 3, 2015
Greater China
Corked? Fine wines languish in warehouses as consumers cool Even China’s biggest wine importer has trimmed prices and taken a hit to its margins Adam Jourdan
T
he crates of Chateau Brehat wine from Bordeaux had gathered dust for three years in a bonded warehouse on the outskirts of Shanghai before the owners cut their losses in July, slashing threequarters off the US$50 price tag. The fire sale was prompted by a huge oversupply of wine that had built up after a swarm of importers jumped at seemingly stellar growth from 2010. China wine consumption - which had been rising in double digits - dropped last year and is set to inch up just over 1 percent annually until 2020. The striking slowdown is a headache for a global wine industry pinning hopes on fast China growth, and a further sign that Chinese consumers are reining in spending even as Beijing hopes they will pick up the slack from falling exports.
Before it was mostly the luxury end of the business - upmarket wines from Bordeaux. Now it’s the entry-level market Guillaume Deglise, CEO, Vinexpo
“When we started there was huge demand so we could control prices, big margins no problem,” said Xavier Grangier, sales director at logistics firm Europasia, which runs the 4,000 sq metre Shanghai warehouse storing 250,000 bottles of mostly European wine. Now, his firm has had to lower some prices and been stuck with some wine it is unlikely to sell. “In Shanghai alone, 2,000 firms in the wine business just vanished over the last couple of years,” he added. China’s retail wine market is worth around 78 billion yuan (US$12.3 billion), with imports making up around a third, according to a 2015 report from wine data analytics firm IWSR.
High price tags
While official retail sales figures have been a rare bright spot amid a stream of economic data showing China’s economy faltering, private sector surveys have shown consumer sentiment plumbing record lows in recent months. A crackdown on corruption now in its third year has also discouraged conspicuous consumption, hitting not just wine but also sellers of other luxury goods from LVMH and Burberry to global auto makers. “In 2010 everyone was screaming from the rooftops that China was the El Dorado for wine and you could become a millionaire by jumping into the business,” said Pierrick Fayoux, Shanghai-based marketing manager at French wine importer VGF China Ltd.
“Now wine is being sold below cost, some is going bad sitting for long periods in poorly maintained warehouses and decent Bordeaux wines are going for 15 yuan a bottle.” To be sure, China’s wine industry has long-term potential: the market is already the world’s fifth largest, but with only 38 million wine drinkers - mostly in big cities such as Shanghai, Beijing and Tianjin among a population of 1.4 billion, annual consumption per capita is only 5.8 litres, a fraction of the 50 litres consumed in France. For now though, the inventory overhang and the downward pressure on prices is making it hard to turn a profit. Even China’s biggest wine importer, ASC Fine Wines, has trimmed prices and taken a hit to its margins, a person with direct knowledge of the firm’s operations told Reuters. ASC, owned by Japan’s Suntory Beverage & Food Ltd, said the wine market was in a new slower stage of growth and that consumers were increasingly “price-conscious”. “We are expanding our entry-level wine selections to meet the changes in consumer demand,” said ASC’s chief executive officer Bruno Baudry in emailed comments to Reuters.
New world order?
The squeeze on prices could be better news for more affordable New World wines, with countries such as Chile and South Africa already taking more market share with wines under 100 yuan (US$15).
“There is still demand for imported wine, but not the same wines,” said Guillaume Deglise, CEO of Vinexpo, which organises wine fairs to help introduce producers to China buyers. “Before it was mostly the luxury end of the business - up-market wines from Bordeaux. Now it’s the entrylevel market.” Import volumes have started to pick up in 2015, but average price are still falling as consumers tighten their belts. In response, Australia’s Treasury Wine Estates Ltd has lowered prices and trimmed inventories, helping revive profits in the market. “We now track our inventory by partner and by customer monthly, so we know if their inventory is too high,” Robert Foye, Treasury Wine’s managing director for Asia and other regions told Reuters in an interview in Shanghai. The firm owns brands such as Penfolds, Lindeman’s and Wolf Blass. With the world’s largest middleclass, he said China would become an increasingly key market for the firm, even though the culture of wine drinking is still relatively new. “Normally I drink beer or baijiu, it’s very rare that I’d have a glass of wine,” said Xu Fengqi, 50, who lives in the northeastern port city of Dalian. Friends sometimes gave him wine as a gift, he added, but he rarely bought it himself. “Even then, we often find we haven’t actually got a bottle opener, and one time when I tried to open the bottle I pushed too hard and the cork ended up floating in the wine.” Reuters
Business Daily | 11
November 3, 2015
Asia
Indonesia’s inflation eases
The central bank has said there is a big possibility the annual inflation rate will be near 3 percent at year-end, although it has maintained its baseline scenario at 3.6 percent.
While declining inflation is helpful, most analysts say there isn’t room for central bank to cut
Political pressure to cut
Nilufar Rizki and Gayatri Suroyo
I
ndonesia’s inflation rate dropped to its lowest in nearly a year in October, but most analysts say the central bank still lacks room to ease policy due to concern about the rupiah and the impact whenever United States interest rates begin to rise. October’s annual inflation rate was 6.25 percent, the statistics bureau said yesterday, continuing a slide since a July peak of 7.26 percent. The October rate is the lowest since November 2014, when President Joko Widodo raised subsidised fuel prices by more than 30 percent. Many Indonesians hope Bank Indonesia (BI) will soon start reducing the policy rate, kept at 7.50 percent since a 25 basis point cut in February, to boost weak economic growth. While declining inflation is helpful, most analysts say there isn’t room for BI to cut at a November 17 policy meeting because the rupiah remains fragile ahead of a Federal Reserve decision
Many Indonesians hope Bank Indonesia (BI) will soon start reducing the policy rate
to finally start raising U.S. interest rates. “We have pencilled in a 25 basis points cut in December. Not this month, because BI
will be eyeing employment data in the U.S.,” Fakhrul Fulvian, an analyst at Bahana Securities in Jakarta said. In its last policy statement
on October 15, BI said it saw domestic economic pressures receding, indicating hope for room to cut the benchmark rate.
In November 2014, the fuel-price rise sent the inflation rate to 8.36 percent in December, and from January the subsidies were slashed. The late-2014 developments mean beginning this month, the base for calculating annual inflation rates will be high, so the number should decline significantly. BI’s main worry, analysts say, is still the rupiah, which has weakened more than 9 percent this year against the dollar. There remains concern that whenever the Fed raises rates, there will be renewed pressure on the rupiah. There is political pressure on BI to cut rates to spur annual economic growth, which in the second quarter was 4.67 percent, the slowest pace in six years. On Thursday, Indonesia will announce third-quarter growth data. OCBC, in a note ahead of the October inflation data, said “the magnitude of currency volatility and the lingering uncertainty over Fed fund rate hike potential will most likely keep BI’s hands tied”. Reuters
Australian banks in record profit but outlook downbeat Four biggest banks delivered combined annual cash earnings of US$21.4 billion Swati Pandey
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estpac Banking Corp rounded off a sixth straight year of record profits for Australia’s major banks, although rising bad debt charges and margin pressure are clouding the outlook for one of the world’s most profitable banking sectors. Australia’s four big banks delivered combined annual cash earnings of A$30 billion (US$21.4 billion) after Westpac, the No.3 lender by assets, yesterday posted a 3 percent rise in annual cash profit to a record A$7.8 billion helped by mortgage growth. But Westpac, National Australia Bank, ANZ Banking Corp and Commonwealth Bank of Australia are now preparing for their slowest earnings growth since the global financial crisis amid record low interest rates, a cooling economy and stifling competition that sent lending margins to an all-time low of 2.02 percent.
“Slowing growth and declining returns are a clear signal that we’ve reached the end of the banks’ golden era,” said Tim Dring, accounting firm EY’s Oceania Banking and Capital Markets Leader, in a report on Monday. Westpac CEO Brian Hartzer warned of a “lower-for-longer environment with modest credit growth, intense competition and ongoing regulatory uncertainty. Return on equity at the “Big Four” has dropped to 15 percent from 15.5 percent, consultancy KPMG said in a report on Monday, as regulators demand more cash be set aside against loan books amid fears of a housing bubble in Sydney and Melbourne. NAB and ANZ both missed expectations when they posted record cash profits last month. CBA follows a June-ending calendar year.
KEY POINTS WESTPAC CASH PROFIT UP 3 PCT AT A$7.8 BLN MAJOR BANKS POST SIXTH STRAIGHT YEAR OF RECORD PROFIT BAD DEBT CHARGES RISE 16 PCT FOR FY15 GOLDEN ERA IS OVER - EY
The four have together raised over A$20 billion since May to comply with tough new capital rules. Last month, Westpac said it would raise A$3.5 billion and became the first lender to push home loan rates higher to protect profits and shareholder value. Other banks followed suit, sparking anger from borrowers and prompting Prime Minister Malcolm Turnbull to warn in a radio interview last week that the banks had “overdone it”. Bank shares have underperformed the broader market so far this year. Westpac shares are down about 5 percent this year to Friday’s close compared with a 3 percent drop in the benchmark index. Yetserday, they were off 2.2 percent while S&P/ASX 200 fell 1.2 percent. Other banks were down 1.5-2 percent Reuters
12 | Business Daily
November 3, 2015
Asia
Kuroda sows doubts among some BOJ watchers he will ease again Central bank said in a report that the slide in oil prices was to blame for reduced consumer-price forecasts Toru Fujioka, Keiko Ujikane and Tomoko Sato
A
fter twice this year putting off his inflation target yet declining to step up monetary stimulus, Bank of Japan (BOJ) Governor Haruhiko Kuroda has discouraged some analysts from thinking he’ll ever boost policy again. Forty-four percent of economists surveyed by Bloomberg had expected a move by Kuroda at the October 30 meeting, with a further 22 percent projecting action sometime between December and April. With policy unchanged even as the central bank cut forecasts for growth and prices, some observers are now struggling to determine what it would take for the governor to pull the trigger for more asset purchases. “The possibility of further easing is highly unpredictable,” said Kyohei Morita, the chief Japan economist for Barclays Plc. “The BOJ has become something I don’t really understand,” said Morita, who’s been analyzing the Japanese economy for more than two decades. Kuroda and his fellow board members said in their report Friday
detailing updated economic projections that the slide in oil prices was to blame for reduced consumer-price forecasts for the coming two years. The bank now sees its inflation target reached around the six-month period through March 2017. It had originally forecast about two years when Kuroda launched his program in April 2013.
Snap poll
Eight of the 15 economists who responded to a snap poll by Bloomberg on Friday afternoon said they now see no further monetary easing from the central bank. One forecast a change in November, another projected December and five pointed to January as the next likely time for a move. “What we learned is that the BOJ won’t apply monetary policy to meet its time-frame commitment,” said Morita, who had forecast an increase in purchases of government bonds and exchange-traded funds. He now sees no likelihood of a change in policy in the foreseeable future and added that “it’s almost meaningless to predict it on the premise of the BOJ’s new
commitment on the time-frame.” Kuroda defended the decision to keep policy unchanged, saying that the central bank isn’t losing credibility and that its actions so far -- implementing an unprecedentedly large monetary stimulus program -- are having the intended effects. The timing of reaching the inflation target depends on oil, he said. Kuroda, 71, reiterated that the BOJ won’t hesitate to adjust policy if necessary.
Kuroda’s message
Hideo Kumano, the chief economist at Dai-ichi Life Research Institute, also switched from projecting a boost last week to now seeing no further stimulus. “Kuroda delivered the message that he won’t move until a huge shock takes place in Japan’s economy,” said Kumano, who is a former BOJ official. Despite standing pat, Kuroda said at a briefing after the policy decision that he didn’t see limits to any further policy steps and that he didn’t think a limit on buying Japanese government bonds would come soon.
Daiju Aoki, an economist at UBS Securities Japan Co. who had forecast more stimulus on October 30, pushed his forecast out to November.
BOJ’s forecasts
“I don’t think this is the end expectations for easing will be carried over to coming months,” said Aoki. He added that the BOJ has risked “putting itself behind the curve” and are becoming “reactive” to events. The central bank board now sees prices rising 0.1 percent this fiscal year, down from 0.7 percent before, and 1.4 percent next year. The bank also said that risks to the outlook for the economy and prices are skewed to the downside. The board voted 8-1 to continue expanding the monetary base at an annual pace of 80 trillion yen (US$664 billion). Government officials and the finance minister had talked down the need for more stimulus in the run-up to the meeting. The BOJ board next meets November 18 and 19.
DBS third quarter profit beats estimates Singapore banks are benefiting from a steady rise in key short-term interest rates due to a weakening of the local currency
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BS Group Holdings, Singapore’s biggest bank, yesterday posted a 6 percent rise in third-quarter net profit, beating expectations as net interest rate margins hit a four-year high.
Net profit came to S$1.07 billion (US$761.48 million) for the July-September period versus S$1.01 billion a year earlier, and above an average forecast of S$994 million from six analysts polled by Reuters.
While Singapore banks have beaten earnings’ forecasts largely due to higher interbank rates, a sluggish economy and weakness in China-related trade finance business have slowed loan growth, increasing the risk of an earnings slowdown ahead.
DBS’s interest rate margin the difference between income from lending and cost of funding - rose 10 basis points to 1.78 percent in the third quarter. Singapore-dollar loans were re-priced higher in line with an increase in interbank and swap offer rates, DBS said, boosting net interest income by 13 percent in July-September from a year earlier. The bank took steps to further reduce higher cost deposits in Singapore and Hong Kong - the two main profit centres for Southeast Asia’s biggest bank. Rival United Overseas Bank (UOB) also reported a higher margin figure last week. Singapore banks are benefiting from a steady rise in key short-term interest rates
Bloomberg News
due to a weakening of the local currency. A softer Singapore dollar puts upward pressure on local interest rates as investors seek higher yields as compensation for holding the weakening currency. Singapore’s No. 2 lender, Oversea-Chinese Banking Corp (UOB), however reported a drop in margins due to a decline in the loan-to-deposit ratio and a drop in gains from money market operations. In the third quarter, DBS booked charges of S$50 million to its trading income due to what it called “funding valuation adjustments” to the fair value of over-the-counter derivatives. Earnings are slowing for Singapore banks as loan growth decelerates due to a sluggish economy, a weak property market and the lacklustre trade finance business. UOB last week posted a 1 percent drop in quarterly net profit, while OCBC saw a 7 percent increase in core third-quarter net profit, but also showed a spike in bad loans. Reuters
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Business Daily | 13
November 3, 2015
Asia
Australian home price growth cools
Kazakh president names aide
A poll showed yesterday October’s inflation remains low
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rowth in home prices across Australia’s capital cities slowed in October as tightened rules on investment lending and rising mortgage rates let the steam out of the Sydney market. Yesterday’s figures from property consultant CoreLogic RP Data showed dwelling prices across the major cities edged up 0.2 percent in October, from September when they climbed 0.9 percent. Annual growth in home values dipped to 10.1 percent, from 11.0 percent in September. Again, the headline numbers masked wide divisions between cities. For October alone, Sydney prices nudged up by 0.3 percent, while Melbourne rose 0.6 percent after a big increase the month before. Prices fell in Brisbane and Perth, while Adelaide enjoyed an unusually strong month with a gain of 1.5 percent. Annual price growth in Sydney stood at 15.6 percent, with Melbourne just behind at 12.8 percent. Sydney had the highest median dwelling price of A$800,000 (US$570,000), followed by Melbourne’s A$600,000. Regulators have reacted to the bullish conditions in Sydney and Melbourne by tightening lending standards for property investment with the aim of keeping annual growth in investment lending at 10 percent or less. The major Australian banks also announced increases in mortgage rates last month both for investors and home owners, blaming higher regulatory costs. “It’s not just the fact that mortgage rates have recently risen outside of any lift in the cash rate,” said RPData head of research Tim Lawless. “We are also seeing approximately a 30 per cent premium on investment
related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit.” Home prices have come a long way, with median values in Sydney up 77 percent since the end of 2008, and policymakers are keen to see a slowdown in price growth. Lawless also noted that gross rental yields had fallen to record lows of 3.4 percent for houses and 4.3 percent for apartments.
Tamed inflation
Data adds up to a private-sector gauge of Australian inflation that showed price pressures stayed muted in October, echoing a surprisingly soft outcome from official figures and underlining the scope available for cuts in interest rates. Yesterday’s survey from TD Securities and the Melbourne
We see the Reserve Bank of Australia as reluctant cutters, questioning the firepower of even lower borrowing rates Annette Beacher, chief Asia-Pacific macro strategist, TD Securities
Institute showed consumer prices were unchanged in October, from September when they rose 0.3 percent. The annual pace ticked down to 1.8 percent, from 1.9 percent, still below the Reserve Bank of Australia’s (RBA) target band of 2 to 3 percent. Government data out last week showed underlying inflation slowed to around 2.15 percent in the third quarter, less than what analysts and the RBA had expected. The benign report added to speculation the central bank might choose to cut rates at its November 3 policy meeting, though the vast majority of analysts in a Reuters poll doubted it would move so soon. The RBA last cut the cash rate to a record low 2.0 percent in May and has since sounded wary of easing further, in part for fear of inflating a debt-driven bubble in property prices. The TD-MI survey showed price rises for tobacco, newspaper, books and stationery and utilities added most to inflation in October. Those were offset by price falls in fruit and vegetables, holiday travel and accommodation and bread and cereal products. Measures of core inflation were also subdued. The trimmed mean measure of the CPI was flat in the month, nudging the annual rate up to 1.7 percent. Inflation excluding fuel, fruit and vegetables rose 0.1 percent in October, while the annual pace slowed a tick to 2.2 percent. Non-tradables inflation, covering the prices of goods and services not determined by international competition, picked up to 2.4 percent, from 2.1 percent. Yet, tradable inflation slowed to 0.9 percent, from 1.7 percent. Reuters
Kazakhstan’s president appointed his aide, Daniyar Akishev, as central bank chairman yesterday, telling him to rebuild trust in the national tenge currency which has lost a third of its value against the dollar in less than three months. The reshuffle, quickly approved by the Senate upper chamber, replaced Kairat Kelimbetov, who was only in the job for two years. The tenge started sliding after the central bank abandoned its pegged exchange rate policy on August 20 - a response to the sharp drop in the price of oil, Kazakhstan’s main export, and devaluations carried out by the Central Asian state’s major trading partners Russia and China.
NZ stock exchange rethinks corporate governance rules New Zealand’s stock exchange is reviewing its corporate governance requirements, which have not been updated in more than a decade. “NZX recognises that regulation has an important role to play in improving corporate governance standards and is reviewing its corporate governance reporting requirements to ensure they remain fit for purpose,” said NZX head of policy Hamish Macdonald in a statement. The NZX said in a paper on the review that it wanted to address the fact that its current corporate governance rules lacked clarity and that New Zealand’s reporting regimes were fragmented.
News Corp property website to buy out rival Asia presence News Corp’s Australian real estate website company REA Group Ltd said it plans to buy out smaller rival iProperty Group Ltd for A$580 million (US$414 million), seizing on the target company’s footprint in Southeast Asia. The deal would give News Corp exposure to property markets of Thailand, Indonesia, Malaysia and Hong Kong just as Australian real estate advertisers like REA brace for a downturn at home following several years of double-digit growth. REA Group said it plans to pay A$4 per share for the 77.3 percent of iProperty that it does not already own.
Lion Air plans to start flights to China-CEO Indonesian carrier Lion Air plans to start flights to China early next year, CEO Rudy Lumingkewas told reporters yesterday. The company is considering routes to Guangzhou, Shanghai and other areas in China, Lumingkewas said. World Bank vice president hails
Cambodia’s growth, poverty reduction
For October alone, Sydney prices nudged up by 0.3 percent
World Bank Vice President for the East Asia and the Pacific region Axel van Trotsenburg yesterday praised Cambodia for its high economic growth and rapid poverty reduction, a Cambodian senior official said. Axel expressed his appreciation during a meeting with Prime Minister Hun Sen at the Peace Palace in the Cambodian capital of Phnom Penh, according to Eang Sophalleth, an aide to the prime minister. “Axel hailed Cambodia’s high economic growth, saying that in Asia, Cambodia’s economy had rapidly grown and would continue to grow in upcoming years despite global economy’s complexity,” Sophalleth told reporters after the meeting.
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November 3, 2015
International Euro-area manufacturing picks up Manufacturing in the euro area unexpectedly accelerated in October as German companies fared better than initially reported, according to Markit Economics. A Purchasing Managers’ Index for the industry rose to 52.3 from 52.0 in September, exceeding an Oct. 23 estimate for an unchanged reading and a 50 mark that divides expansion from contraction, the London-based company said in a report on Monday. Manufacturing accelerated in Italy, Austria and the Netherlands and grew in all nations covered except Greece. Employment growth was at the weakest since February, Markit said.
Ryanair lifts profit forecast but warns of fare wars ahead Ryanair nudged up its annual profit forecast yesterday, saying fuller planes would take profits to the upper end of its previously estimated range even as winter competition pressures average ticket prices. The Irish airline, Europe’s largest by passenger numbers, raised its full-year profit forecast by 25 percent in early September as lower fuel costs and poor weather in northern Europe boosted ticket sales. Yesterday it said fewer empty seats meant it would fly 105 million passengers in the year to March 31, up from an earlier forecast of 104 million.
Commerzbank to pay first dividend in eight years
Commerzbank will pay a dividend for the first time since 2007 as its recovery gains ground, it announced yesterday, the day after its chief executive, the architect of the bank’s turnaround, said he would step down in a year’s time. Germany’s second-largest lender said it will propose a pay-out of 20 euro cents per share for 2015. Martin Blessing, the only CEO of a German state-rescued bank to remain in power, said he would leave the bank after his contract expires in October 2016 as it was time for someone else to take over the running of the bank.
U.K. manufacturing growth accelerates U.K. manufacturing growth unexpectedly accelerated to the fastest in 16 months in October as new orders surged. In a monthly report published in London, Markit Economics said factories bucked this year’s downward trend and started the fourth quarter of the year on a stronger footing. The manufacturing index rose to 55.5 from a revised 51.8 in September, beating economists’ forecast for a reading of 51.3. The report indicates the economy is defying headwinds from emerging markets and maintaining some momentum.
HSBC Q3 profit beats estimates HSBC said it was nearly 30 per cent of the way towards completing the reduction of its assets, achieving US$400 million in overall cost savings Lawrence White
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SBC reported a better than expected 32 percent rise in pre-tax profit for the third quarter, thanks to reduced costs from fines and settlements with regulators as heavy spending on compliance by Europe’s biggest bank begins to take effect. HSBC said costs from regulatory punishments fell US$1.4 billion from the third quarter of last year, showing progress on reforming its conduct at a time when the British government is keen to move on from the financial crisis to a more accommodative stance towards the industry. Recent quarterly earnings reports for the bank have been marred by provisions for regulatory investigations, including allegations that HSBC and other banks rigged foreign exchange markets worldwide and that HSBC helped Swiss clients evade taxes. The British lender said in a filing to the Hong Kong stock exchange yesterday its total spending on regulatory programmes and compliance rose to US$2.2 billion in the first nine months of the year, up 33 percent from the same period last year. Quarterly pre-tax profit was US$6.1 billion, up from US$4.6 billion in the same period a year ago, it said. That was more than the consensus estimate of US$5.2 billion, based on the average of analysts’ forecasts compiled by the bank. Underlying revenues, though, fell 4 percent to US$15.1 billion compared with the same quarter last year, hit by plunging stock markets and slowing economic growth in Asia. “HSBC management have done a very good job of trying to correct its
internal problems, but these results show no bank can improve revenues if the global economy is against it,” said Jim Antos, analyst at Mizuho Securities Asia in Hong Kong.
Progress on goals
The earnings update gave investors a first chance to check on progress on the 10 goals HSBC’s management set itself in June, including reducing riskweighted assets by 25 percent, selling operations in Turkey and Brazil and cutting US$4.5-5 billion in costs. HSBC said it was nearly 30 percent of the way towards completing the reduction in its assets, and achieved US$400 million in overall cost savings versus the second quarter of this year. Perhaps the most-watched of the ten goals by investors is the bank’s strategic review into whether it should move its headquarters out of Britain, with Hong Kong seen as the most likely destination.
Norway rates seen approaching zero as risk of recession grows Norway’s krone is suffering more than any other major currency from the collapse in the price of Brent crude
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t may have sounded far-fetched only a year ago, but today’s buzz is all about how low they can go. A 16-month oil rout and growing talk of recessionary risks have led economists tracking monetary policy in Norway to wonder whether zero -- or even negative -- rates are in store for western Europe’s biggest crude producer. Norges Bank Governor Oeystein Olsen “has to think in terms of negative rates, especially when all our neighbouring countries have it,” said Jan Ludvig Andreassen, chief economist at Eika Gruppen AS in Oslo.
With Denmark’s benchmark at minus 0.75 percent and Sweden’s at minus 0.35 percent, he sees a series of rate cuts ahead for Norway, reaching minus 0.25 percent in 2017. That’s based on an assumption that oil will rise to a modest US$60, from just below US$50 now. “We’ll probably avoid a recession if the bank makes a timely use of the tools it has available,” said Andreassen, who calls himself an “outlier” among economists in Norway. None of his counterparts at the region’s five largest bank’s see negative rates ahead.
KEY POINTS PRETAX Q3 PROFIT $6.1 BLN VS $5.2 BLN ESTIMATE COSTS FROM REGULATORY FINES, SETTLEMENTS FALL $1.4 BLN UNDERLYING REVENUES SHRINK ON TOUGH MACRO ENVIRONMENT HSBC said it had made progress on this but the decision could slip beyond the year-end deadline originally set, echoing comments made by Chief Executive Stuart Gulliver in October. HSBC’s Hong Kong shares were flat in trading after the results. Reuters
When it comes to Thursday’s rate decision, Norway is expected to keep them unchanged at 0.75 percent, according to 16 of 17 economists surveyed by Bloomberg. One sees a cut to 0.50 percent. The bank will not release any new economic forecasts. Since oil’s decline gathered pace more than a year ago, Norges Bank has eased policy three times, halving rates. Olsen signalled a more than 50 percent chance of more easing in the coming year. With oil prices still weak, the nation is facing a “clear downside risk that we could in fact be on the brink of recession,” said Marius Gonsholt Hov, an economist at Svenska Handelsbanken AB. He sees Norway rates at zero by the end of 2016. Recent economic data has provided little comfort. Retail sales fell 0.8 percent in September and unemployment rose to 4.6 percent in August, the highest level since at least 2006. A manufacturing index measuring production has remained below 50, signaling a contraction, since April. The index rose to a seasonally adjusted 48.3 in October from a revised 47.5 a month earlier. For analysts at Danske Bank A/S, the slight improvement in the manufacturing sector only adds to their prediction of unchanged rates for the “foreseeable future.” Bloomberg News
Business Daily | 15
November 3, 2015
Opinion
A special moment WIRES for Special Drawing Rights BUSINESS
Leading reports from Asia’s best business newspapers
José Antonio Ocampo
Professor at Columbia University and Chair of the Independent Commission for the Reform of International Corporate Taxation
THE KOREA HERALD The government said yesterday that it will lower credit card fees for mom-and-pop grocery stores and restaurant owners next year in a bid to ease their financial burdens. The Financial Services Commission and the ruling Saenuri party decided to set credit card commission rates imposed on small businesses with annual sales of 200 million won (US$176,000) or less at 0.8 percent from next year, down from the current 1.5 percent. Tariffs on mid-sized merchants with 2 to 3 billion won in sales will go down to 1.3 percent from 2 percent.
JAKARTA GLOBE The Trade Ministry has decided to postpone, until the beginning of next year, implementation of a regulation that would allow cosmetic imports without prior verification, after complaints from local businesses. A new ministerial regulation on the import verification process, which was supposed to take effect on Sunday, excludes cosmetics. The Indonesian Cosmetics Producers Association (PPAKI) has said that would open a loophole for illegal imports and undermine local producers. The Trade Ministry said in a statement on Friday that the regulation would now be effective on January 1, and that it would possibly be revised.
BANGKOK POST Prime Minister Prayut Chan-ocha has called the first meeting of the International Trade Development Committee to tackle tepid Thai exports. The premier will declare Thailand’s official stance on the Trans-Pacific Partnership (TPP) and the China-led Regional Comprehensive Economic Partnership (RCEP) at the meeting, scheduled for December 9. His announcement will dictate Thailand’s economic and trade development for the next five years. Deputy Commerce Minister Suvit Maesincee said the committee’s first meeting will gather information and suggestions about Thai exports raised by the private sector during the “Prime Minister Meets CEOs” series.
THANH NIEN NEWS Vietnam is expected to be the best performing real estate market in Southeast Asia in 2016 due to an easing of foreign ownership rules, experts have said. “Currently Vietnam is offering the most exciting opportunity in the region, while at the same time the regional real estate markets are suffering,” Rudolf Hever, executive director of the Ho Chi Minh City-based Alternaty Real Estate Service Company, said. Vietnam will cut single-entry visa fee for visitors from US$45 to US$25 with effect from November 23. Anyone with a valid visa or other entry documents can buy housing in Vietnam.
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he recent annual meetings of the International Monetary Fund and the World Bank in Lima, Peru, were dominated by talk of the weakness of several emerging and developing economies. But the discussion focused very little on one key cause: the global monetary system. Much more will be said this month at the IMF board, though what the Fund will do remains an open question. The problem that emerging and developing economies are facing stems from the fact that their capital inflows follow a strongly pro-cyclical pattern. When they were growing rapidly – especially compared to the advanced economies – they attracted massive amounts of capital. But as risks multiplied, capital started to flow back toward a reserve-issuing country – namely, the United States. After all, the US is set to raise interest rates, and the dollar has appreciated against virtually all of the world’s currencies. In the past, this pattern has always ultimately led to a correction, with America’s growing current-account deficit eventually bringing about a dollar depreciation. But such corrections – in 1979-1980, 1990-1991, and 2007-2008 – have also always been associated with a global slowdown or crisis. This highlights the problem inherent in using the US dollar, a national currency, as the global economy’s primary international-reserve currency. The Belgian economist Robert Triffin first identified this
The only way to stabilize the (monetary) system would thus be to place a truly global currency at its centre
problem – dubbed the “Triffin dilemma” – in the 1960s, emphasizing the fundamental conflict between national objectives, such as limiting the size of the external deficit, and international imperatives, such as creating enough liquidity to satisfy demand for reserve assets. Moreover, this system subjects the world economy to cycles of confidence in the US dollar, while placing the world economy at the mercy of a national authority – one
that often makes decisions with scant regard for their international implications. The only way to stabilize the system would thus be to place a truly global currency at its centre. This was the idea behind John Maynard Keynes’s proposal in the 1940s to create a supranational currency, called the “bancor.” And it was the motivation behind the 1969 creation of the IMF’s Special Drawing Right (SDR), which was supposed to become “the principle reserve asset in the international monetary system.” General SDR allocations are to be based on “a long-term global need to supplement existing reserve assets,” with decisions made for successive periods of up to five years. So far, such allocations have been made only three times, in 1970-72, in 1979-81, and in 2009, with the latter allocation, amounting to US$250 billion, being part of the recovery package adopted by the G-20 to manage the global financial crisis. The SDR has been in the news again lately, owing to debate about whether the IMF should add the Chinese renminbi to the basket of currencies that determine the unit’s value. Given the renminbi’s growing international role, it seems abundantly obvious that the currency should be part of the SDR basket. Now, the discussion should focus on how to enable the SDR to reach its potential as an instrument of international cooperation. The first step toward making SDRs a more active force in global finance would be to remove the division between
SDR accounts and normal IMF operations. As long as that partition remains in place, SDRs will function, at best, like a credit line that can be used unconditionally by the holder – a kind of overdraft facility, not a true reserve asset. A better approach would be to allow countries to “deposit” unused SDRs in the Fund, so that they can be used to finance IMF lending operations. In other words, issuing more SDRs would enable the IMF to finance more lending. If those SDRs were issued during crises, like the one that emerging and developing economies are confronting today, the result would be a truly counter-cyclical global monetary policy. This could even be taken one step further, with SDRs being allocated according to a new formula that accounts not just for IMF quotas, but also for demand (or need) for foreign-exchange reserves. The current formula would have the countries most in need of foreign reserves – that is, middle- and low-income countries (excluding China) – receiving just over one-third of the total allocation. That is not enough. Even without this change, the SDR can and should gain a more prominent position in global reserves. With emerging and developing economies in deepening trouble, there is no time to waste. Some five decades after Triffin first identified the problems with the US dollar’s reserve-currency status, the SDR’s moment has, one hopes, finally arrived. Project Syndicate
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November 3, 2015
Closing 30 pct of Vietnamese to join online shopping
Global car sales of S. Korean automakers rise
The Vietnam E-commerce and Information Technology Agency (VECITA) under Vietnam’s Ministry of Industry and Trade set a goal to get 30 percent of Vietnamese people shopping online by 2020. It also aims to bring annual e-commerce sales to an average of US$350 per person, Vietnam’s staterun news agency VNA quoted the agency as saying yesterday. Tran Huu Linh, head of VECITA said on VNA that current legal frameworks and infrastructure do not meet rising demand for e-commerce growth, adding that the revenue from the field is estimated to reach US$4 billion in 2015.
Global car sales by South Korean automakers rose 8.7 percent last month as domestic car sales grew at the fastest pace in 2015, industry data showed yesterday. Global sales by Hyundai Motor, Kia Motors, GM Korea, Renault Samsung and Ssangyong reached 315,245 vehicles in October, up 8.7 percent from a year earlier. The growth was attributed to this year’s fastest increase in local car sales, which surged 20.3 percent from a year ago to 140, 106 units in October. Auto exports advanced 6.5 percent to 669,139 units in the same period.
First national passenger plane production completed China is expected to add 6,330 new aircraft worth US$950 bln to its commercial fleet by 2034, Boeing estimates
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hina’s first big passenger plane rolled off the assembly line yesterday as the Asian giant seeks to develop its own aviation sector and challenge foreign industry giants for prestige and market share. The C919, a narrowbody jet which can seat 168 passengers, has been under production at a facility in commercial hub Shanghai for over a year, as workers
assembled components under the guidance of Commercial Aircraft Corp. of China (COMAC). For China, the plane represents years of efforts in a state-mandated drive to reduce dependence on European consortium Airbus and Boeing of the United States, and even compete against them. A small truck towed the 39-metre long plane --
Beijing investigates senior Dongfeng Motor official
painted white with a green tail -- out of a cavernous building decorated with an enormous Chinese flag into the sunlight as project workers marched alongside, an AFP journalist saw. But the aircraft, which has a range of up to 5,555 kilometres, will not make its first test flight this year as originally scheduled, Jin said, with the maiden voyage planned for 2016.
The China Daily newspaper has reported it could even be put back to 2017.
500 orders
China has dreamed of building its own civil aircraft since the 1970s when Jiang Qing, leader Mao Zedong’s wife and a member of the notorious “Gang of Four”, personally backed an attempt to do so. But the Y-10’s heavy weight made it impractical and only three were ever made.
Baidu announces US$2 billion share buyback
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Although the C919 is made in China, foreign firms are playing key roles by supplying systems as well as the engines, which are made by CFM International, a joint venture between GE of the US and France’s Safran. Spending on the C919 has not been revealed. Last month, the Export-Import Bank of China said it would provide state-owned COMAC with US$7.9 billion in financing for its aircraft projects. The company already has orders for 517 of its C919 planes, according to a COMAC statement, almost all of them from domestic buyers. Among foreign customers, Thailand’s City Airways has ordered 10, according to an announcement last month. COMAC has already developed a smaller regional jet, the ARJ, in a project which is years behind schedule. The 78-90 seat ARJ is still undergoing test flights and lacks the crucial certification by the US Federal Aviation Administration, enabling it to fly in US skies. The Chinese company also plans a wide body plane, the C929, in cooperation with Russia’s United Aircraft Corp., and speculation is mounting China will create a new aero-engine entity to try to produce the powerful jets needed for large civil aircraft. The single-aisle C919 targets the lucrative segment dominated by Boeing’s 737 and the Airbus A320. AFP
S. Korea’s retail sales hit 4-month high
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hina is investigating the number two executive at China’s Dongfeng Motor Corp for suspected corruption, the country’s graft watchdog said yesterday, making him the most senior executive to be drawn into a widening probe involving the country’s second-biggest carmaker. Zhu Fushou, who is also the executive director at the firm’s Hong Kong-listed unit Dongfeng Motor Group Co Ltd, is being investigated for “suspected severe violation of discipline”, the Central Commission for Discipline Inspection (CCDI) said in a statement on its website. ‘Discipline violations’ generally refer to corruption. Zhu could not immediately be reached for comment. An official from Dongfeng Motor Corp’s publicity department confirmed the investigation is taking place, but declined to give further details. The CCDI move comes as China continues to implement a sweeping crackdown on deep-rooted graft that began when President Xi Jinping took over the Communist party’s leadership in late 2012, vowing to clean up government and business. The watchdog’s statement did not give further details about the suspected violations.
aidu Inc. reported a third-quarter profit that topped projections and announced its second buyback in three months after curbing growth in spending on services like online shopping and travel. China’s leading search provider posted adjusted earnings per ADS of US$1.43 a share, exceeding the US$1.28 average of analysts’ projections, according to data compiled by Bloomberg. Baidu may buy back as much as US$2 billion of stock over the next two years, the company said in a Friday statement outlining its largest buyback program on record. Chairman and founder Robin Li is boosting spending to compete with Alibaba Group Holding Ltd. and Tencent Holdings Ltd. in online services from restaurant bookings to movie tickets, to drive growth beyond search advertising. China’s three largest Internet companies are vying for a slice of an “O2O” or online-to-offline market expected to grow to 7.2 trillion yuan (US$1.1 trillion) by 2017, according to IResearch. On Friday, Baidu re-named its core business “search services” while rebranding the O2O unit “transaction services.”
etail sales in South Korea hit the highest in four months due to demand for consumer goods, indicating a full-fledged recovery in private consumption from a MERS outbreak, a government report showed Monday. Overall retail sales amounted to 31.13 trillion won (US$27.32 billion) in September, up 4.1 percent from a year earlier, according to Statistics Korea. It marked the largest in four months since May when the retail sales recorded 31.43 trillion won. Sales among retailers, including department stores and discount outlets, began to reduce in June when the Middle East Respiratory Syndrome (MERS) fears peaked. The figure shrank from 31.43 trillion won in May to 29.35 trillion won in June and 29.45 trillion won in August each. The September figure rebounded on the back of demand for cosmetics and clothing that gained 3.9 percent and 0.6 percent each in September from a year earlier. Food and beverage sales surged 14.5 percent and furniture sales increased 3.7 percent.
Reuters
Bloomberg News
Xinhua