Macau Business Daily November 10, 2015

MOP 6.00 Closing editor: Joanne Kuai

Taiwan exports continue shrinking

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Year IV

Number 916 Tuesday November 10, 2015

Publisher: Paulo A. Azevedo

Alexis Tam labels Hotel Estoril “useless” Page 2

China’s growth floor set at 6.5 pct

Gov’t to Reclaim 26 Plots of Land Fourteen plots of land in Nam Van area. Plus 12 in Seac Pai Van. All deemed as not being developed on time, in accordance with the land concession. Secretary for Transport and Public Works Raimundo Rosário said the gov’t is determined to retrieve these idle plots. Including those where the developers were delayed by gov’t bureaucracy. Because there was still plenty of time to develop the land, he claims. Legislators support the gov’t initiatives but are concerned such action will result in multiple lawsuits Page 2

Inflowing capital The monetary base rose MOP5.1 bln.

From end-2014 to MOP38.5 bln at end-June. While total MOP liquidity stood at MOP49.6 bln or MOP9.1 bln up from end-2014. Implying funds were flowing into the SAR

Return of the IPO

China’s markets climbed yesterday. On news that authorities would permit the resumption of IPO activity. This, following months of protective blockage. The China Securities Regulatory Commission (CSRC) said on Friday that IPOs will be relaunched. With 28 companies allowed to go public by year-end

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Software for hardware A tie-up is announced. Between hotel chain Marriott International Inc. and Alibaba online travel booking platform. The commission-based agreement allows customers to book rooms with their mobile phones. The Marriott Asia Pacific head said the growing middle class in China was substantial.

Making it the most important market for the company outside of the U.S.

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www.macaubusinessdaily.com

Cloudy present A rough nine months. Future Bright Holdings Limited has sustained an unaudited loss attributable to owners of some HK$29.8 mln (US$3.84 mln).

Attributed to high operating costs of its food souvenir business. Plus poor performance of its restaurants in Zhuhai and Macau. The company has closed one high rental street shop and opened more kiosks in Macau.

While shutting down its 19 food court counters in Zhuhai Huafa Mall

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Forehap Mishap Ho Yin Garden public car park inadvertently blew the whistle on themselves. And are suspected of issuing 390 unauthorised monthly parking passes. Macau Forehap Parking Management Ltd. has apparently conducted illicit parking rental business since 2012. The Transport Bureau said it was required to halt the use of such passes effective next month. In addition to meeting the losses of parking users. Hefty fines may be levied if the gov’t determines that the company violated current regulations

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Gaming

Poker player

HSI - Movers November 9

Name

%Day

Tingyi Cayman Islands

+2.18

HSBC Holdings PLC

+1.56

AIA Group Ltd

+1.05

Belle International Ho

+0.95

Hong Kong & China Gas

+0.64

Link REIT

-2.47

China Resources Beer H

-2.52

Cheung Kong Property

-2.84

China Merchants Holdi

-3.07

Wharf Holdings Ltd/T

-3.38

Source: Bloomberg

Football legend Ronaldo Nazário de Lima is in Macau. Promoting the Asia Championship of Poker. Praising poker as a mind game demanding strategy. And thus a wider popularity. Here for the first time, the ‘Phenomenon’ will compete in the HK$100,000 (US$13,000) main event. And spoke of the football academies carrying his name

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November 10, 2015

Macau

Raimundo: 26 undeveloped plots to be reclaimed

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ecretary for Transport and Public Works Raimundo Rosário told legislators the government is going to reclaim plots of land that are not developed in due time in accordance with the new Land Law, including those ones where the developers are not held accountable, reported local media TDM Radio.

A list revealed by the government names 14 plots in Nam Van Lake Zone C and Zone D for which the concessions are going to expire in July next year, plus another 12 plots in Seac Pai Van for which the concessions have already expired.

The government said that once the plots in Seac Pai Van are reclaimed the awardees will not be granted

land even if they submit another application.

The Secretary attended a meeting with the follow-up committee for land and public concession affairs of the Legislative Assembly. Committee President Ho Ion Sang told reporters after the meeting that Raimundo Rosário said the government is certainly going to recover the land plots that are not developed when the land grant expires in accordance with the law, but that the grantees can take legal action.

It is the government’s point of view that even though some development projects for the land plots were delayed due to changes in government planning, some concessions have a time span of 25 years which should have given grantees ample time to develop relevant projects.

Legislator Ho Ion Sang said most of the legislators support the government in recovering the 26 plots in Nam Van and Seac Pai Van, but voiced concerns that the market value of those plots exceed hundreds of billions of patacas, and will result in many lawsuits.

Hotel Estoril “useless”, says Alexis Tam

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he Secretary for Social Affairs and Culture considers that Hotel Estoril cannot be used at this moment because of the condition of the infrastructure. Alexis Tam Chong Veng was replying to the architect José Manuel Fernandes, who said that the building should be preserved because it is part of the collective memory of Macau.

“The Zone of Hotel Estoril is useless. He [José Manuel Fernandes] was one of the few people to consider that the hotel should be preserved.

But I have to ask why? What would be its use? We have to think about the future. Macau is not like Portugal where you have a lot of space and land”, Alexis Tam said yesterday as quoted by TDM Portuguese Radio Macau.

However, Alexis Tam stressed that all opinions must be respected.

The Secretary for Social Affairs and Culture also said that no date has been set for the Portuguese architect Siza Vieira to come to Macau. Siza Vieira will design the revamp of Hotel Estoril.

Government to axe five departments in near future The SAFP director has indicated the central recruitment system reform will be concluded this year, with advisory bodies and their members better regulated

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he government is to gradually wind down five official departments and restructure some ten others in the coming two years, the head of the Public Administration and Civil Service Bureau (SAFP), Kou Peng Kuan, told reporters yesterday. However, Mr. Kou did not disclose which departments are on the list for closure or restructuring.

Earlier this year, Secretary for Transport and

Public Works Raimundo Rosário announced the merger of the Bureau of Telecommunications Regulation (DSRT) with Macau Post within this year.

He added then a further plan to merge four of his subordinate departments would be unveiled next year, involving more than 500 public servants.

Kou Peng Kuan added that every year in the policy address, each task will be

monitored by different levels of supervision and evaluation by a third party. However, Mr. Kou said that the purpose of performance evaluation is to improve the work. He said that rewards should be granted if a good job is done, while punishment should be meted out when work is not well done. But the relationship between work performance and incentives and censure is complicated. He pointed out that from a human resources

management point of view, evaluation is primarily conducted to improve the work. He added that public opinions will be adopted and that hopefully a third party evaluation mechanism will be more scientific.

Food safety

During the local radio show TDM Forum yesterday the president of the Administrative Committee of the Civic and Municipal Affairs Bureau (IACM), Vong Iao Lek, said that food safety officers have conducted 9,000 inspections on food production and business operation sites in Macau this year. Some 67 cases of violation have been determined in accordance with the Food Safety law.

More than seven tons of questionable food were seized.

Mr. Vong added that illegal food smuggling via the Border Gate has been constrained.

Some residents called in criticising the government’s

intention of banning livestock animals and only importing frozen meat. However, the president of IACM says that the priority concern would be public health and cited examples of neighbouring regions only importing frozen meat but no livestock. He said that the current sales model still cannot prevent the public from being exposed to livestock which cannot exclude the possibility of bird flu infection.

He added that frozen livestock imports has been in place in the SAR for more than 10 years and have been supervised and monitored in a more efficient way, and is thus more trustworthy. Nevertheless, he appealed to residents to voice more opinions during the consultation period on this intended policy.

Enhancing efficiency

Another guest speaker on the talk show, Deputy Director of the Legal Affairs Bureau Diana Maria Vital Costa, indicated that the Bureau is planning a centralized legislation mechanism in a bid to enhance the quality and efficiency of legislation.

The plan seeks to bring the legal departments into an earlier stage of law-drafting to provide professional legal advice to the Executive. The Legal Affairs Bureau is also working on a guideline on law-drafting, which has entered the final stage, Ms. Costa added.

Business Daily | 3

November 10, 2015

Macau

Unauthorised monthly parking pass issued by Ho Yin Garden car park The government only realised the management company of the public parking lot had been issuing monthly parking passes for three years without authorisation after the company submitted a report on the issue itself Kam Leong

kamleong@macaubusinessdaily.com

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he Transport Bureau (DSAT) said yesterday that the management company of Ho Yin Garden public car park is suspected of having issued 390 unauthorised monthly parking passes in a parking lot where the government had not leased out any spaces for monthly rental.

According to DSAT, Macau Forehap Parking Management Ltd., which currently manages 15 local public car parks in the city, had issued 122 monthly non-reserved car parking passes, 28 reserved car parking passes and 240 monthly tickets for motorbikes in the public parking lot since May 2012.

The transport department claimed that it had only received a report from Macau Forehap on the issue following the government announcement on October 30 about cancelling the regulations of the monthly parking rental system in car parks where

monthly rentals of parking spaces are not available.

The director of the Bureau, Lam Hin San, stressed in a press briefing yesterday that the government would not recognise the validity of the batch of monthly parking passes issued by the management company. He added that Macau Forehap was required to halt the use of these passes from next month, and would need to meet the losses of the users.

The company charged between MOP1,000 and MOP1,200 for a monthly parking pass for cars and MOP200 for motorbikes, according to DSAT. The company could be fined as much as MOP250,000 if the government proves that the company did violate the current regulations.

In addition, DSAT claimed that the company’s contract for the car park would be withdrawn if it is fined more than MOP1 million.

Ongoing inspection

Meanwhile, the transport department said it had inspected two other public parking lots managed by the company - namely, Jardim Iao Hon and Alameda Dutor Carlos d'Assumpção - but no violations had been found. The other 12 public car parks under the company’s management are still under inspection.

The city has a total of 38 public car parks, of which 16 had leased out 4,692 parking lots via the payment of a monthly parking fee.

Recently, legislator Si Ka Long and Song Pek Kei initiated a motion of debate in the Legislative Assembly on whether the monthly parking rental system in public car parks should be abolished as their rental rates differ from private rates.

Secretary for Transport and Public Works Raimundo Arrais do Rosário stressed during the debate that although the government did not intend to review the public car parking regulations in the coming six months it would not renew the current parking passes and issue new passes.

Dispatches released in the Official Gazette yesterday also regulate the public parking lots to reduce the percentage of monthly parking passes once current holders finish their rentals.

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November 10, 2015

Macau

Future Bright sustains HK$29.08 mln loss in first three quarters The company says the loss is attributable to the poor performance of its restaurants and a food court in Zhuhai plus the slowdown in performance of its restaurants in Macau

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uture Bright Holdings Limited has sustained an unaudited loss attributable to owners of the Group of some HK$29.8 million (US$3.84 million) for the nine months ended September 30 this year, according to the profit warning the company filed with the Hong Kong Stock Exchange yesterday.

The company says it will most likely post a material loss attributable to owners of the Group for the whole of 2015, as compared to a profit attributable to owners of some HK$168.8 million for the whole of 2014.

The company cited several reasons for the losses, such as the high cost of operating its food souvenir business, the loss attributable to the Group’s three restaurants and a food court in Huafa Mall, Zhuhai which included an impairment loss of HK$30.5 million incurred for the closure of the 19 food court counters at Huafa Mall by end-August 2015, the relative decrease in fair value gains of the Group’s investment properties, and the slowdown in the performance of the Group’s restaurants in Macau.

kiosks and setting up more consignment arrangements at airports.

In Zhuhai, the company has also reduced its operating losses for the restaurant business in Huafa Mall by the closure of the 19 food court counters there at the end of August 2015.

The Group opened its first Japanese ramen shop under the brand name of ‘Bari Uma’ in Causeway Bay in Hong Kong in July 2015 and a new Shiki Hot Pot Restaurant in Studio City, Cotai at the end of October 2015.

Macau slowdown

Solutions

In face of such challenging times, the company believes it has remained competitive whilst the Group’s food and catering business in Macau has continued to slow down;

its Yeng Kee food souvenir business and its new restaurants business in Huafa Mall have continued to improve although still at a loss.

Future Bright said its management has taken steps to restructure the Group’s food souvenir business – for Yeng Kee Bakery it has enhanced

operating cost efficiency and opened more sales channels. Initiatives include closing down a high rental street shop, opening more

The Macau-rooted company says its overall performance for the third quarter has been in line with the inflow of visitors to Macau and the slowdown in Macau’s gross gaming revenue ‘…The slowdown in Macau Gross Gaming Revenue has in turn negatively affected the Group’s business especially with a decline in revenue of the Group’s high end restaurants,’ the filing reads.

The company anticipates that the new policies relaxing the stay duration and visit frequency of Mainland visitors to Macau should improve the Group’s operating environment in 2016, admitting its impact has yet to be apparent despite the local police recently denying such developments.

Marriott, Alitrip tie-up to let Chinese travellers book online The commission-based tie-up allows customers to book rooms with their mobile phones. It follows a September deal with an Alibaba affiliate allowing Marriott customers to settle their bills with Alipay, a Paypal-like payments service

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.S.-based hotel chain Marriott International Inc and Alibaba Group’s online travel booking platform announced a tie-up on Monday, joining a flurry of rivals expanding their presence in China

KEY POINTS Marriott signs second Alibaba deal in as many months APAC head Craig Smith sees “land grab” for Chinese travellers Outbound Chinese travellers to hit 200 mln by decade-end - CLSA

to cater to the country’s growing upper-middle class.

China’s economy is forecast to slow to roughly 6.5 per cent growth in coming years, but companies such as Alibaba Group Holding Ltd and Tencent Holdings Ltd promise direct access to the country’s middle class and what Marriott Asia Pacific head Craig Smith is calling a “land grab” for Chinese travellers.

“People talk about China slowing down but there is a growing middle class and that creates opportunities for companies like us,” Smith said.

“It is the most important market for us outside of the United States and it will continue to be.”

Growing middle class

China’s growing middle class is boosting domestic and outbound travel and sparking a spate of travelrelated deals.

Marriott’s deal announced on Monday is a commission-based tieup with Alitrip that allows customers to book rooms with their mobile phones. It follows a September deal with an Alibaba affiliate allowing Marriott customers to settle their bills with Alipay, a Paypal-like payments service.

Smith declined to say how much the hotel chain will save on Alitrip bookings compared with online travel agents such as Expedia Inc, but said Alitrip is “a very lucrative channel”.

The number of outbound Chinese tourists is expected to double to 200 million by the end of this decade, according to a study by Hong Kongbased brokerage CLSA. The study forecast domestic tourism would decline slightly in the coming years, but it is still booming.

China’s National Bureau of Statistics showed a rise of 72 per

cent in domestic tourism in the five years to 2013, the most recent data available. Earnings from domestic tourism rose even more dramatically during that period, up 158 per cent to 2.6 trillion yuan (US$409 billion).

Marriott is not alone in trying to take advantage of online platforms to capitalize on Chinese travellers.

In August, Chinese vacation rental company Tujia raised $300 million to expand its business overseas and Chinese developer Fantasia Holdings Group launched its own vacation rental business similar to Airbnb Inc and HomeAway Inc. Airbnb, which said the number of outbound Chinese travellers using its service grew 700 per cent in the past year, said it was partnering with China Broadband Capital and Sequoia China to build its China business.

Reuters

Business Daily | 5

November 10, 2015

Macau

AMCM: Capital flowing into territory in H1 According to a report by the local monetary authority, the liquidity of local currency increased by MOP9.1 billion as at the end of the first half vis-a-vis the end of last year, suggesting capital was flowing into the city in the first six months Kam Leong

kamleong@macaubusinessdaily.com

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uring the first half of this year, the city saw funds flowing in as the total liquidity of patacas rose MOP9.1 billion (US$1.1 billion) to MOP49.6 billion in the six months from end-2014, according to a statistical report on crossborder capital flows released yesterday by the Monetary Authority of Macau (AMCM).

According to AMCM, the city’s monetary base reached MOP38.5 billion as at the end of June, which is an increase of MOP5.1 billion from the end of last year. The authority analysed the cross-border capital flows by evaluating the local money market, the banking sector, the real estate market, and official reserve assets.

recorded for the same period of last year.

Official foreign exchange reserve assets held by the monetary authority, meanwhile, also increased MOP12.7 billion from end2014. Moreover, foreign assets held by the local government in the provisional account of the AMCM and the Fiscal Reserve continued to accumulate, increasing by MOP3 billion in six months to MOP385.6 billion at the end of the first half of 2015.

Higher capital inflow to the city is attributable to the local bank sector, which saw its net foreign assets fall MOP15.3 billion during the period.

The decrease in such assets means a net inflow of funds valued at MOP15.3 billon was registered compared to a net outflow of MOP17.5 billion

Outflow

However, capital outflow was registered in the local non-bank sector. Quoting data provided by the Bank for International Settlements

(BIS), AMCM said local residents’ deposits with external banks had increased MOP5.3 billion during the first six months of the year, which led to a net capital outflow of MOP2.6 billion from the city to external banks.

In addition, foreign investment in local real estate impinges on cross-border capital flows in the territory as there was a continued outflow of external funds from the local real estate market during the period, the Authority claimed.

Official data indicated that the total net amount of local properties disposed by non-residents reached MOP2.8 billion during the first half of the year compared to MOP7.7 billion disposed of one year ago. In addition, for residential properties, non-residents’ sales to local residents reached MOP2.7 billion in the six months, although their purchases from residents here only amounted to MOP0.2 billion.

According to the report, for the whole of 2014, the Special Administrative Region registered a net capital outflow of MOP97.1 billion, which was the result of a net inflow of MOP7.5 billion in direct investment, a net outflow of MOP44.8 billion of portfolio investment, a net outflow of MOP62.2 billion in other investments and a net inflow of MOP2.3 billion of financial derivatives.

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November 10, 2015

Macau

Ronaldo hopes poker becomes more popular here than baccarat The ‘phenomenon’ is visiting Macau to play and promote poker but he hopes in the future to open a football academy in the region João Santos Filipe

jsfilipe@macaubusinessdaily.com

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accarat is the most popular game in Macau casinos, generating more revenues alone than any other game. However, former football star Ronaldo Nazário de Lima was in the territory promoting a poker tournament and hopes that in the future this can change.

“For many years poker was discriminated against because it was associated with illegal gambling, closed-space meetings and heavy alcohol and tobacco consumption.

However, the entire world is accepting poker as a mind sport and I hope this will in the future make poker more popular than baccarat in Macau”, ‘the phenomenon’ said yesterday in

a press conference to promote the Macau round of Asia Championship of Poker.

As a player, Ronaldo was considered three times FIFA World Player of the year. However, the Brazilian says he has a lot to learn when it comes to life and that poker has been teaching him a lot.

“People just love poker and more and more are becoming interested in it. The fact that it is a mind game and that you have to define your strategy, learn not to bluff or count your possibilities is very important.

That requires a lot of strategy that can be useful in your everyday life”, Ronaldo explained.

Regarding the gaming industry in Asia, while Ronaldo did not address the matter directly he supports gaming in Japan, saying he hopes to play poker there one day.

“I’ve been to Japan many times but I’ve never played there. I hope they manage to legislate on poker so more people will play it. It’s a new era for poker and I hope they can legalise it in Japan”, he said.

Macau a City of Dreams

Ronaldo is visiting Macau for the first time to promote the Asia Championship of Poker, sponsored by Pokerstars.net. The former Barcelona, Inter Milan and Real Madrid player

will compete in the HK$100,000 (US$13,000) main event, which features a HK$15 million prize pool.

“It’s a pleasure to be here. It’s my first time in Macau. It’s my second big tournament and I’m very excited about the tournament. My best performance in a big tournament was 26th position in the Bahamas and I hope I can do better”, he told reporters at City of Dreams.

Regarding his visit here, Ronaldo said it is a very beautiful city but that he did not find many people speaking Portuguese.

“The road signs reflect the proximity between the Chinese and Portuguese cultures. But I did not find many people speaking Portuguese here”, he noted. “In spite of that, Macau is a very beautiful city and its planning is impressive. It really is a City of Dreams”.

In terms of his personal business, Ronaldo started his own football academy to train youngsters aiming to be football players. At the moment, only three academies are operating in Brazil but he hopes to open at least 30 in China in the coming years.

“I’ve just launched the Ronaldo Academy and I hope to teach kids around the world how to play football.

We have 10 contracts signed with different academies. We have three working in Brazil, and we’re hoping to have 30 in China. I hope one of them is here in Macau”, he said.

The Season 9 Finale of the Asia Championship of Poker will take place in City of Dreams until Friday.

Angela Leong: No VIP rooms in Lisboa Palace for now

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aming operator SJM Holdings Ltd. does not plan to establish VIP gaming rooms in its new Cotai project Lisboa Palace for now, the company’s executive director Angela Leong On Kei said.

The businesswoman told reporters on Sunday that the establishment of VIP rooms in the new casinoresort would be dependent upon market development and demand, according to Chinese language newspaper Macao Daily.

Previous filings of SJM with Hong Kong Stock

Exchange indicated that its new Cotai project is expected to accommodate some 700 gaming tables and 1,000 slot machines.

Claiming gaming elements will only occupy some 10 per cent of area inside the new casino-resort project, the SJM executive director also told reporters the company is observing the non-gaming elements that other gaming operators have developed as SJM hopes to introduce new non-gaming elements in its new project.

Meanwhile, commenting upon the upcoming policy

address of Chief Executive Fernando Chui Sai On Ms. Leong said she hopes the government can conduct more measures to support and diversify the development of the local gaming industry.

Lisboa Palace, the construction of which was started in February 2014 at an estimated cost of HK$30 billion, is expected to open in 2017. The new casinoresort will have three hotels, including a Karl Lagerfeld Hotel and a Palazzo Versace Macau, offering some 2,000 rooms.

K.L.

Business Daily | 7

November 10, 2015

Gaming

Caesars creditors seek answers cloaked by attorney privilege The company denies any wrongdoing and guaranteed debt owed by its operating division, but says it was entitled to cancel that repayment promise once it sold a small stake

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reditors want a Caesars Entertainment Corp. attorney to explain why the company abandoned a US$7 billion debt guarantee at the heart of a court battle that may land the casino giant in bankruptcy.

Noteholders said their unusual request is justified, in part, because a top official for Caesars and its coowner, Apollo Global Management LLC, waived the right to keep the information secret under the attorneyclient privilege.

Attorney Gregory Ezring should be forced to testify because Caesars’ lead witness in a lawsuit invoked the lawyer’s name repeatedly to avoid answering questions, noteholders said in Delaware Chancery Court papers.

The noteholders want details about an April 2014 presentation made to the Caesars board by an attorney who worked with Ezring, a partner at law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP who represents asset managers including Apollo.

“Time and again, CEC witnesses who were present for that presentation would not provide any information regarding what transpired,” the noteholders’ trustee said in the filing, which was unsealed at the request of Bloomberg News. The papers were filed Oct. 23 but not made public until Thursday.

Last year, noteholders sued Caesars and top executives of Apollo in New York and Delaware, claiming their actions made it impossible for creditors to collect what they are owed. The noteholders want the Caesars parent to be responsible for debt owed by its bankrupt unit, Caesars Entertainment Operating Co.

Sold stake

Caesars denies wrongdoing. The company guaranteed debt owed by its operating division, but was entitled to cancel that repayment promise once it sold a small stake, Caesars claims. Las Vegas-based Caesars has said that if it’s ordered to honor the guarantee, it would be forced to join its operating unit in bankruptcy.

A trustee for second-tier noteholders asked a Delaware judge to force Caesars to produce documents currently protected from disclosure under the attorney-client privilege. The privilege shields most conversations a company has with its lawyers as well as documents those lawyers produce on a client’s behalf.

Main witness

The main witness defending Caesars’ actions is Apollo executive David Sambur. He joined the Caesars board after Apollo and TPG Capital took control of the company in a US$30.7 billion leveraged buyout in 2008.

When Sambur testified, Caesars warned him not to reveal any information he learned about the debt guarantee from company lawyers, according to court papers. Caesars invoked the same privilege in shielding Ezring from questions about the debt guarantee.

Noteholders want access to Ezring and his work on the debt guarantee. They said Caesars sacrificed its attorney-client privilege when Sambur filed a declaration in court papers using protected information to defend the guarantee cancellation.

Caesars’ operating unit filed for bankruptcy in January, after the parent transferred some of the unit’s most valuable assets away and dropped its guarantee to repay some of the unit’s debts. Sambur has been negotiating with creditors of the bankrupt unit.

Bolster claims

The documents and witness interviews could bolster noteholder claims, the trustee, Wilmington Savings Fund Society, said in court filings. Citing previous submissions in the case, noteholders claimed that most of what Sambur knows about the debt guarantee came from lawyers, especially Ezring.

“Mr. Sambur does not clearly recall ever reading the parent guarantee, nor discussing its termination provisions with anyone except counsel,” according to court papers.

The two sides will be in Delaware Chancery Court this month to argue over whether the information can be kept secret.

Caesars denies that anything it filed in the case, including Sambur’s written testimony, was covered by the attorney-client rule. Delaware courts have ruled that the entire privilege is lost if a defendant makes some attorney-client information public for its own benefit.

Stephen Cohen, a Caesars spokesman, said he couldn’t immediately comment on the Delaware filing. Sambur didn’t immediately respond to a phone call and e-mails seeking comment. Ezring and Charles Zehren, a spokesman for Apollo, didn’t immediately return e-mails seeking comment.

The Delaware suit is Wilmington Savings Fund Society FSB v. Caesars Entertainment Corp., CA NO. 10004, Delaware Chancery Court (Wilmington). The bankruptcy is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).

Bloomberg

8 | Business Daily

November 10, 2015

Greater China Policymaker says 6.5 pct a floor for 2016-2020 annual growth The National People's Congress holds an annual meeting of policymakers in March, which sets key economic targets for the year

Xi presses reform, innovation President Xi Jinping called for more reforms and innovation yesterday as the country is entering its 13th FiveYear-Plan period. “Reform and development have achieved a high degree of integration. Further development needs to be based on reforms while progress in reforms gives a strong impetus for development,” Xi said during the 18th meeting of the central leading group for comprehensively deepening reform. The spirit of reform and innovation must be strengthened and the country’s governance system shall be modernized, Xi said.

Investment bank CICC jumps in HK trading debut China International Capital Corp (CICC) shares jumped up to 11 percent in their Hong Kong debut yesterday, as investors snapped up China’s oldest domestic investment bank. CICC’s strong start was helped by China’s decision on Friday to resume IPOs after a four-month halt, a move likely to boost investment banks’ revenues, and sets a positive benchmark for a host of other companies queued up to list. CICC will use the funds raised from the IPO to expand equity sales and its trading and wealth management businesses, as well as international subsidiaries.

Inner Mongolia bond yield above lower limit China’s Inner Mongolia Autonomous Region auctioned five-year municipal bonds at 44 basis points above the auction’s lower limit set by auction rules, traders said yesterday, a new high for China’s nascent municipal debt market.

On October 27, Anhui province auctioned 10-year bonds at 40 basis points above the auction’s lower limit, marking the previous high. China’s municipal bond market has expanded massively in 2015 following a large-scale debt swap program launched by the Ministry of Finance aimed at helping local governments refinance expensive debt.

China-Australia FTA closer to passing Legislation surrounding the China-Australia Free Trade Agreement (ChAFTA) is expected to be fast-tracked through the senate this week, after Opposition Trade Minister endorsed the deal as a step towards “prosperity”. Speaking in the Senate yesterday, Shadow Trade Minister Penny Wong said legislation required in order for the deal to be approved in Australia would simultaneously protect Australian workers and conditions, while also “delivering jobs” and scope for businesses to grow in the future. Wong said Labor’s repeals did not affect the broader details of the agreement with China, but merely ensures a safeguard for Australian workers.

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hina is making 6.5 percent a floor or minimum level for annual economic growth in 2016 through 2020, a senior Chinese policymaker said yesterday, adding that the figure would be a base for setting a target for the five-year period.

The economic growth target has not been fixed yet, as that is an objective that needs to be approved by the National People's Congress, Yang Weimin, Vice Minister of the Office of the Central Leading Group on Financial and Economic Affairs, told a news conference in Beijing.

The National People's Congress holds an annual meeting of policymakers in March, which sets key economic targets for the year.

"The 6.5 percent itself is not a target. We still need to wait till next March to determine the final target," Yang said.

China's President Xi Jinping said last week that China needed to maintain annual economic growth of at least 6.5 percent over the next five years to realise the country's goal of doubling 2010 GDP and per capita income by 2020.

The economy grew 6.9 percent between July and September from a year earlier, dipping below 7 percent for the first time since the global financial crisis, though some market watchers believe real growth rates are much weaker than government figures suggest.

China's fiscal reform plans will also be adjusted according to conditions in the next five years, including letting the central government have more spending obligations, reducing the need for local governments to borrow heavily or to sell land to raise revenues for key social services, Yang added.

Reuters

KEY POINTS Five-year GDP target not fixed yet, needs approval from NPC-Yang Must wait till next March for final target Fiscal reforms to be adjusted with conditions in next 5 years

Tencent uses free HBO shows, games to bea

While game success has made it less vulnerable to an advertising sl Lulu Yilun Chen

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n China’s slowing economy, billionaire Ma Huateng is finding growth by supplying cheap entertainment to the masses.

Smartphone games for the billion users of the WeChat and QQ messaging applications and free streaming of HBO’s ‘Game of Thrones’ are expected to drive a 28 percent surge in sales for Ma’s Tencent Holdings Ltd. That’s four times faster than the rate of domestic economic expansion as China grows at the slowest pace in 25 years.

While WeChat was once just for instant messages, Ma has made the app part of everyday life for millions in China by adding the features of a microblog, social network and e-commerce platform. Along with streaming of HBO shows and NBA games, Tencent is finding content a durable source of revenue as it competes for Internet users with Alibaba Group Holding Ltd. and Baidu Inc. “The mobile gaming sector has been an area of fast growth,” said Michelle Ma, an analyst at Bloomberg Intelligence in Hong Kong. “Games are low-cost entertainment, so even in recessions people will continue to spend money on this sector.”

Share rally

Shares of Tencent fell 1.6 percent to HK$152 in Hong Kong trade.

Business Daily | 9

November 10, 2015

Greater China

Why Singles' Day is bigger than cyber Monday Alibaba estimates that 760 million packages will be shipped by various Chinese e-shopping sites to customers on the day

S

ingles’ Day, a twist on Valentine’s Day, started in China in the 1990s as an obscure holiday but has snowballed into a consumer phenomenon thanks largely to Alibaba Group Holding Ltd., founded by Jack Ma and which runs China’s largest online marketplace.

Singles’ Day is celebrated on November 11 because the date— 11/11—is reminiscent of “bare branches,” the Chinese expression for bachelors and spinsters.

In 2009, Alibaba sparked the flame that turned it into what it is today—a massive marketing event selling everything from electronics and clothing to cosmetics and food at big discounts. It sells through Tmall, AliExpress and Taobao Marketplace platforms, and through merchants’ brick-and-mortar stores.

Here are five points that illustrate just how big the phenomenon is:

The sales

Analysts expect sales to surge to a new record. Last year, Alibaba sold more than US$1 billion worth of products in the first three minutes of the sales. Total sales on Singles’ Day zoomed up to 57.1 billion yuan (US$9 billion) within 24 hours, or four times bigger than the U.S.’s

Cyber Monday, named after the rise in online retail sales the Monday after Thanksgiving. Forty-three percent of transactions were done on mobile devices.

The goods

More than 1 million products were placed on sale last year, according to Comscore. Customers this year will be able to choose from more than 6 million products from around 40,000 merchants and 30,000 brands.

Consumers are expected to spend an average of 1,761 yuan (US$277) per person, up 22 percent year on year, according to a Nielsen survey of more than 1,000 Chinese Internet users.

using online-to- offline channels, according to Bloomberg Intelligence.

The brands

Singles’ Day has become more globalized. Alibaba says Costco Wholesale Corp., LG Electronics Inc., Walt Disney Co., Fisher-Price Inc., Lego AS, Metro AG and J Sainsbury PLC will be among the global brands participating this year. Apple Inc., Calvin Klein Inc., Macy’s Inc. and Burberry Group PLC have participated in recent years. Major retailers and

brands are using Singles’ Day as an opportunity to introduce themselves to the Chinese consumer, said Brian Buchwald, chief executive officer of New York-based consumer intelligence company Bomoda.

Offline brands involved in Singles’ Day promotions include Shanghai Jahwa United Co. Ltd., Suning Commerce Group Ltd., Intime Retail Group Co. Ltd., Estee Lauder Companies Inc. and BAIC Motor Corp. Ltd., according to a Barclays PLC note on November 4.

The stars

Alibaba is adding some star power to the event, with a guest list that includes U.S. singer Adam Lambert and Chinese film director Feng Xiaogang, known for his top-grossing comedy films. Celebrities from Taiwan and China including pop singer Jolin Tsai, actress Vicki Zhao, Mandopop singers Jane Zhang and Amber Kuo, and boy band TFBOYS were also invited to a November 10 gala ahead of the sales rush, according to a Barclays report.

Bloomberg News

The logistics

Alibaba estimates that 1.7 million deliverymen, 400,000 delivery vehicles, 5,000 warehouses and 200 airplanes will be deployed by its partners to handle the deliveries.

China Post, the country’s postal service, estimates that 760 million packages will be shipped by various Chinese e-shopping sites to customers on the day. That’s up significantly from 540 million packages produced last year, according to a post office quote by Alibaba’s news site Alizila.

Retailers will be offering more perks such as free refunds and delivery when

at slowdown

lowdown, it’s still working to boost revenue

The stock has surged 35 percent in 2015, compared with a 20 percent slump by Alibaba and a 12 percent drop for Baidu.

Tencent briefly passed Alibaba in September to become Asia’s biggest Internet company by market value before falling back into second place last month.

Based in the industrial city of Shenzhen, Tencent is the only one of China’s three Internet giants to have its shares traded in Asia. Baidu and Alibaba are listed in New York.

When it reports results today, Tencent is expected to post revenue of 25.4 billion yuan (US$4 billion) in the three months ended September, according to analyst estimates. The projected jump is faster than a year earlier and would make it the only one of China’s three Internet giants to accelerate growth in the September quarter.

Tencent net income will probably jump 32 percent to 7.5 billion yuan, according to estimates, as it invests in more games to build on its strength.

New games

Beyond instant messages and video calls, WeChat works like a portal. By tapping on the ‘discover’ button at the bottom of the screen, users are brought to a page with games, shopping services and a function similar to Facebook.

Tap on the ‘Me’ button, and customers find a digital wallet where they can invest their spare savings and transfer money to friends.

25.4 bln yuan Tencent expected quarterly revenue

It’s the games that are delivering growth with attractions including battle title CQB. Already a shareholder in South Korea’s CJ Games Corp. and Activision Blizzard Inc., Tencent in April said it would invest US$126 million in Glu Mobile Inc., the creator of an app featuring reality TV star Kim Kardashian as it tries to meet the market’s growing appetite for content.

Tencent’s mobile games are free to download and play, with users buying skills and powers.

“Tencent has great channels for distributing games with WeChat, QQ and its app store,” said Jeff Hao, a Hong Kong-based analyst at China Merchants Securities Holdings. “As a result, it’s also easier for Tencent to get better-quality games.”

NBA broadcasts

While Tencent’s game success has made it less vulnerable to an advertising slowdown, it’s still working to boost revenue.

That includes selling ads on WeChat, QQ and its video streaming sites. The company’s advertising sales almost doubled in the June quarter, and Tencent is building on that with ads linked to popular shows like The Voice of China and National Basketball Association games. WeChat has added more ad space in its “Moments” section, a Facebook-like feature where users post photos and status updates.

Tencent pays studios for the rights to stream programs online in China and gains revenue from advertising.

The business model is popular in the country as subscription TV isn’t as widespread as in the U.S. and Europe.

The company bolstered its content further on Friday, adding the exclusive online rights in China for the complete James Bond franchise from MetroGoldwyn-Mayer Studios Inc. Bloomberg News

10 | Business Daily

November 10, 2015

Greater China

The date that triggered the rally

Mainland markets to resume IPOs by year-end Ten of the 28 companies that were in the process of listing when the freeze began will restart the process after November 20

C

hina’s plan to lift a fivemonth freeze on initial public offerings by the end of the year removes one of its key measures of support for the stock market as equities recover from a US$5 trillion rout.

New share offerings will restart after improvements to the listing system, Deng Ge, a China Securities Regulatory Commission spokesman, said at a briefing in Beijing. Investors will no longer be required to deposit funds when applying for new share subscriptions, according to a statement posted on CRSC Weibo account.

The resumption suggests authorities are becoming more confident the stock market can stand on its own after the Shanghai Composite Index rallied back into a bull market last week. The move will also help Chinese companies tap into an important source of financing as they seek to cut debt levels from near record highs.

“There will be short-term damage to sentiment in the market," said Ronald Wan, Hong Kong-based chief executive officer at Partners Capital International. "But the government has to proceed with market reform and the timing for IPOs will be better now than next year as the market seems to have some strength.”

Rescue measures

Unlike in most major stock markets, Chinese regulators control the timing

It is natural that the CSRC would want to re-open the pipeline.

There is a long queue Tony Hann, head of equities, Blackfriars Asset Management

and pricing of new listings. While policy makers have pledged to loosen their grip on the process, almost all of this year’s deals have been priced at levels below 23 times earnings.

The valuation cap has led to nearly guaranteed gains once new shares start trading, spurring investors to place bids worth hundreds of billions of dollars during each round of new listings.

Ten of the 28 companies that were in the process of listing when the

freeze began will restart the process after November 20, said another CSRC official at the same briefing, who asked not to be identified because of agency rules. It will take two weeks for the 10 to complete the process, while the remaining 18 will sell shares by the end of the year, Deng said.

Separately, the CSRC suspended Shenwan Hongyuan Group and China Galaxy Securities Co. from opening new investor accounts.

Illusion of confidence

The resumption of IPOs will help the government reinforce the idea that the stock market has recovered from its rout, according to Robbert van Batenburg, director of market strategy at Societe Generale SA. “It’s a bit of make-believe effort for China to give an impression that we are in a more normalized situation after what happened in August," Batenburg said in New York. "It definitely creates an illusion that at the government is more confident that the market is going to absorb these IPOs. But I don’t know how it’s going to evolve after that. The headwinds are not out of the way yet.”

While the Shanghai Composite has rallied 23 percent from its August low, foreign investors don’t appear to be convinced about the rebound: they’ve been selling mainland equities through the Shanghai-Hong Kong exchange link for four straight weeks, cutting holdings by the most in two

months on Thursday. Third-quarter profits trailed analyst estimates at 68 percent of companies in the index, the eighth straight quarter of disappointing results, while data over the weekend showed exports fell more than expected in the October.

Valuations levels

"It will be interesting to see what sort of valuation levels are achievable for the new IPOs and what, if any, foreign participation there is," Tony Hann, head of equities at Blackfriars Asset Management Ltd. in London, said by e-mail. “It is natural that the CSRC would want to re-open the pipeline.

There is a long queue."

Before the stock market started tumbling in June, Chinese authorities had endorsed the use of equity financing as an alternative to debt, which becomes more difficult for many companies to repay as economic growth slows. The aggregate debtto-equity ratio for companies in the Shanghai Composite rose to the highest level since 2005 in January, while the McKinsey Global Institute estimates corporate liabilities reached 125 percent of gross domestic product in 2014.

"IPOs have to be resumed given that the stock market should be functioning for companies to raise capital and that should help the economy," Wenjie Lu, a Shanghaibased strategist at UBS Group AG. Bloomberg News

Business Daily | 11

November 10, 2015

Asia

Japanese wages up modestly, summer bonuses slump Policymakers are putting pressure on Japanese firms to use their record cash piles to boost wages and capital expenditure Tetsushi Kajimoto

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apanese summer bonuses fell the most since the global financial crisis partly due to the effects of sampling, while monthly pay rose at a modest pace for a third straight month in September, underlining concerns about tepid wages and private consumption.

Real wages, adjusted for inflation, rose 0.5 percent year-on-year in September, up three months in a row, as nominal wages outpaced tame inflation, the labour ministry data showed yesterday.

Policymakers are putting pressure on Japanese firms to use their record cash piles to boost wages and capital expenditure in a bid to generate private sectorled growth and accelerate inflation to the central bank's ambitious 2 percent target.

"Disregarding effects of data sampling, summer bonuses probably grew slightly and winter payment is likely to rise as well. But wages are not strong enough to accelerate the private consumption," said Makoto Watanabe, senior economist at BNP Paribas Securities.

Summer bonuses paid during the June-August period came to 356,791 yen (US$2,897.68) on average, down 2.8 percent from the same period last year, the biggest drop since 2009.

Labour ministry officials attributed the decline in summer bonuses to the change in data sampling adopted in January, the retirement of well-paid elder workers, and a rise in part-timers who now account for 30 percent of wage earners.

"Wages are increasing moderately as a trend due to the tight labour market," said a ministry official.

Still, wage gains have been far below an ambitious 3 percent annual rate Prime Minister Shinzo Abe's government is aiming for in order to raise Japan's gross domestic product (GDP) by a fifth to 600 trillion yen over the next five years.

Total cash earnings rose 0.6 percent year-on-year in September to 265,527 yen, up for three straight months.

Many companies, particularly small firms, have been hesitant to boost wages as they want to avoid marked increases in fixed labour costs.

R egu lar p a y , wh i ch determines base salaries, rose an annual 0.4 percent, up for the seventh straight month.

Overtime pay, a barometer of strength in corporate activity, rose an annual 1.4 percent.

Makoto Watanabe, senior economist at BNP Paribas Securities, said wages are not strong enough to accelerate private consumption

Reuters

Australia's Santos reboots with A$3.5 bln in assets, share sales The planned share sales will increase the company's issued capital by 70 percent Sonali Paul

A

ustralia’s Santos Ltd revealed plans yesterday to raise A$3.5 billion (US$2.5 billion), mainly from a massive share sale, thumbing its nose at a full takeover as the indebted oil and gas firm tries to shore up its funding.

Santos, which also named a new chief executive, has been assessing a takeover bid and offers for individual assets over the past month as it scrambles to pay down US$8.8 billion in net debt, but previously ruled out an equity raising.

Under the plan, one of China’s most successful private equity funds, Hony Capital, whose backers include state-sponsored Legend Holdings,

Singapore’s Temasek, Abu Dhabi Investment Authority and Canada Pension Plan Investment Board, will become Santos’s top shareholder with a 7.9 percent stake.

“The initiatives announced today put Santos’s balance sheet beyond question,” Santos executive chairman Peter Coates said yesterday on a conference call.

The planned share sales will increase the company’s issued capital by 70 percent.

Santos’s jilted suitor, Scepter, a fund backed by Brunei and United Arab Emirates royals, saw the share sale to Hony for what was effectively a 17 percent discount to the proposed

offer of A$6.88 a share as a snub and was set to walk away.

“They’re going to get the hint ... they’re not wanted. They’ll move on,” said a person familiar with Scepter’s thinking.

Santos has been saddled with debt tied to its biggest project, the US$18.5 billion Gladstone Liquefied Natural Gas (LNG) plant off Australia’s east coast, just as oil prices collapsed.

In August it effectively put all its assets up for sale, looking for the best way to beef up its balance sheet.

It will sell A$3 billion in new stock, mainly to existing shareholders at A$3.85 a share, a hefty 35 percent

discount to its last trade and below a 15-year-low hit in September.

“They are addressing, albeit very late, the concerns,” said Paul Xiradis, chief executive of fund manager Ausbil Dexia, which has a small stake in Santos.

Rating agency Standard & Poor’s said it would maintain a negative outlook on Santos’s ‘BBB/A-2’ credit rating.

Hony, which already owns a tiny stake in Santos, will receive a share placement at a premium and will then exercise the rights to existing shareholders for a total investment of A$700 million at a blended value of A$5.71 a share.

It has agreed to hold its stake below 10 percent for at least three months. A Hony spokesman declined to comment on the proposal.

Santos also agreed to sell its stake in the Kipper gas field to Japan’s Mitsui & Co Ltd for A$520 million, which Coates said beat most analysts’ estimates on the stake.

All the funds raised will be used to pay down debt.

Santos named another Scot, Kevin Gallagher, to replace CEO David Knox yesterday. The industry veteran, 50, was poached from the top job at engineering services firm Clough Ltd and will join Santos in early 2016.

Reuters

12 | Business Daily

November 10, 2015

Asia

Banks’ dollar borrowing adds layer of risk to Malaysia’s creeping crisis The simmering policy uncertainty, market volatility and intervention by the central bank have meanwhile led to a fall in ringgit deposits in the banking system Vidya Ranganathan

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o get an idea of how fragile Malaysia’s external account is, consider this: the amount of foreign money invested in ringgit bonds and the dollar borrowings of its banks will together more than wipe out the country’s currency reserves.

Eighteen years after being battered by the Asian financial crisis, Malaysia is once again facing a perilous combination of heavy short-term overseas borrowings by banks and scarce foreign exchange reserves.

Add in a festering political scandal and looming interest rate rises in the United States and the country is showing many of the symptoms that could presage another currency crisis.

The ringgit has plummeted and credit markets are pricing in deep concern over Malaysia’s external finances. Richer Malaysians are slowly shifting money abroad.

“It depends on what will be the catalyst that turns the worry into a crisis,” said Patrick Yau, an equity analyst with Citi in Singapore. “The big question is whether there is enough funding to prevent a crisis. The system

Soul searching for India’s Modi after humiliating Bihar defeat The Bihar loss may hamper Modi’s reform agenda because he needs to win most state elections in the next three years to gain full control of parliament Rupam Jain Nair and Andrew MacAskill

I

ndian financial markets took fright yesterday at the humiliating defeat suffered in a pivotal state election by Prime Minister Narendra Modi and his party, whose leaders are expected to meet amid calls for a rethink of policies and priorities.

Modi was due to huddle later with a dozen senior colleagues of his Hindu nationalist party, including its president Amit Shah, Finance Minister Arun Jaitley and Home Minister Rajnath Singh, party and

government officials said.

The loss in Bihar, India’s third most-populous and poorest state, is the most significant setback for Modi since he won a crushing victory in a general election last year.

“We have to identify what went wrong,” said Ram Madhav, a Bharatiya Janata Party (BJP) general secretary.

The BJP office in New Delhi was deserted yesterday with workers compiling newspaper clippings on the election defeat in Bihar. Security guards

turned away offerings of sweets and gifts for Diwali, a Hindu festival being celebrated this week.

Indian shares, bonds and the rupee fell to six-week lows as investors who had backed Modi fretted that he would struggle to push economic reforms through the parliament against an emboldened opposition.

The Bihar loss may hamper Modi’s reform agenda because he needs to win most state elections in the next three

years to gain full control of parliament. India’s states are represented in the upper house, where the BJP lacks a majority.

The election came against a background of concerns in India at incidents in which Muslims have been targeted

by Hindu zealots. There have been protests by prominent intellectuals at what they call a climate of rising intolerance.

Some BJP lawmakers called for the party to refocus on a more unifying agenda focusing on economic development after

a campaign that used rhetoric in Bihar and sought to polarise voters along caste and religious lines.

During the election rally, Modi accused rival parties of snatching economic benefits from lower-caste Hindus and handing them over to a religious minority, a comment interpreted as veiled reference to Muslims.

The election commission banned several party posters they said could incite hatred.

One banned poster showed a young Hindu woman embracing a garlanded cow, an animal sacred to Hindus.

The BJP president was also criticised for comments suggesting that if his party lost, the result would be celebrated in arch-rival Muslim-majority Pakistan.

Arun Shourie, a minister in the last BJP government, called for a change in course.

“We should be grateful to the people of Bihar because the direction has been halted,” he told NDTV. Asked what went wrong with the party’s Bihar campaign, he said “everything”.

Reuters

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Business Daily | 13

November 10, 2015

Asia was over-reliant on foreign funding in the previous crisis.”

The foreign currency liabilities of Malaysian banks alone account for nearly half of the country’s US$98 billion overseas borrowings. Overseas investor holdings of Malaysian central bank and government debt are US$47 billion and the country’s total shortterm debt has doubled since 2009 to US$79 billion.

Bankers in Kuala Lumpur say they have learnt their lesson from the 1997 crisis, and thus their foreign currency borrowings are mostly offset by matching dollar lending.

“I think the risk is from the currency volatility,” Nazir Razak, chairman of Malaysia’s second-largest bank CIMB, told Reuters in an interview.

“The risk would be if the currency depreciation results in a credit event where borrowers really suffer as a result of the drop in currency, wherein they actually have dollar cost basis.

That is when, on a second order basis, banks will get affected.”

Creeping crisis

Such heavy overseas borrowing still carries two potential risks, however, according to some analysts.

First, offshore banks or even retail investors could unexpectedly pull back their deposits or funding. At risk would be the US$30 billion of deposits placed by foreigners with Malaysian banks.

Second, the assets could turn bad if the businesses that have borrowed the foreign currency cannot repay them.

Either could trigger a vicious downward spiral for the ringgit, which is already down 19 percent against the dollar this year.

In a worst-case scenario, Malaysia’s US$94 billion foreign currency reserves would fall far short of covering the resulting funding flows.

KEY POINTS Ringgit down around 20 pct against dollar this year Malaysia overseas borrowings US$98 bln, currency reserves US$94 bln Bankers say foreign borrowings mostly offset by dollar lending Current account surplus shrinking, forecast US$2.6 bln in 2016 Back in 1997, the external borrowing binge was led by corporates.

Short-term debt was 33 percent of total borrowings of US$43.9 billion, while currency reserves were less than US$22 billion. The ringgit was overvalued, and Malaysia ran a current account deficit so was hugely dependent on foreign funding.

Now most analysts assume the resource-rich country’s current account surplus - its earnings from exports of manufactured goods and liquefied natural gas - indemnify it against a balance of payments crunch.

“If it turns into a run, then they don’t have enough reserves,” said Tim Condon, ING’s chief Asia economist.

“Still, they don’t have to raise money.

It’s hard to get a balance of payments crisis in a country running a current account surplus.”

Political dimension

That surplus has nonetheless shrunk rapidly as global oil prices have

tumbled. It is forecast to be just US$2.6 billion in 2016, the lowest since Malaysia started running surpluses in 1998.

Meanwhile the on-going investigations into allegations of corruption and mismanagement at state fund 1Malaysia Development Berhad (1MDB), which has racked up debts of US$11 billion, have raised questions around Prime Minister Najib Razak’s political future and the stability the country has long been known for.

“Malaysia is facing a number of issues. Individually they are all manageable, but it’s a question of how they interact,” said Elaine Koh, a director at Fitch Ratings in Singapore.

Koh thinks the banking system is at an inflection point, but says it’s difficult to tell whether the situation will worsen.

The simmering policy uncertainty, market volatility and intervention by the central bank have meanwhile led to a fall in ringgit deposits in the banking system.

As businesses and individuals moved out of ringgit, foreign currency deposits at local banks rose US$3 billion in the third quarter of this year and US$5.7 billion so far this year.

“Fund managers and other institutional investors have been moving funds away from Malaysia,” said Simon Chen, a senior analyst at rating agency Moody’s in Singapore.

Retail deposits however were still growing at a stable pace and the banking system wasn’t showing any signs of funding stress, Chen said.

“If the deposit outflows persist and to the extent that we see retail deposits grow at a smaller pace or even contract, that’s when the excess liquidity in the banking system will decline and funding will become tighter.”

Reuters

Indonesian fragility shown by drop in reserves They are now at the lowest level since January 2014 and are near the US$100 billion

A

Japan will set new goals for tourism after an increase in foreign visitors put it ahead of schedule to achieve 20 million a year by 2020, the government said yesterday.

Prime Minister Shinzo Abe is relying heavily on spending by visitors to drive the economy, but the government still does not know what new goals it will set, a Cabinet Office official said. “It could be a new target for the number of foreign visitors or something else,” he said, adding that Japan would present a set of new goals by March.

Australian job advertisements increase Australian job advertisements in newspapers and on the Internet posted a third month of growth in October, an encouraging sign that the demand for labour is holding up. A monthly survey by Australia and New Zealand Banking Group showed total job advertisements rose 0.4 percent to 154,358 per week on average in October, from September when they rose 3.9 percent. Ads were 12.1 percent higher on October last year. Internet ads edged up 0.3 percent in October, while newspaper ads rose 3 percent.

Singapore’s RQFII China investment quota to be doubled Singapore’s RMB Qualified Foreign Institutional Investor (RQFII) quota for investment in Chinese financial markets will be doubled, Singapore’s central bank said yesterday. The Monetary Authority of Singapore said the city-state’s quota under the RQFII scheme would be increased to 100 billion yuan (US$15.72 billion) from 50 billion yuan previously. “This is in response to the strong interest by Singapore-based asset managers and investors to invest in China,” the MAS said in a statement.

The RQFII programme is the yuan-denominated version of the Qualified Foreign Institutional Investor scheme, which was created by China to allow foreigners to invest in Chinese capital markets.

Adani says coal mine “sound” despite green challenge

Lilian Karunungan

drop in Bank Indonesia’s foreign-exchange reserves last month even as the rupiah led emerging markets to surge 7 percent highlights the nation’s vulnerability to an increase in U.S. borrowing costs.

The Indonesian central bank’s stockpile fell for an eight month, by US$1 billion to US$100.7 billion, according to figures released late on Friday. The decline was due to rising costs to service the government’s foreign debt and the use of reserves to stabilize the rupiah, the monetary authority said in a statement. That suggests Bank Indonesia intervened to help its currency hold onto gains after it jumped 9.1 percent in the week through October 9.

Reserves are now at the lowest level since January 2014 and are near the US$100 billion level that’s often cited as a key psychological threshold, reducing Bank Indonesia’s buffer for when the Federal Reserve starts raising interest rates. The odds of that happening this year have risen to 68 percent, futures contracts show, after U.S. jobs data released Friday boosted the case for an increase.

There were net outflows of US$1.7 billion from the Indonesian economy

Japan on track to hit tourism target early

India’s Adani Enterprises yesterday said it was confident a proposed coal mine in Australia was environmentally sound after a green group lodged a fresh legal challenge on the grounds it would threaten the Great Barrier Reef and stoke climate change.

Adani is aiming to ship 40 million tonnes of coal a year in the Carmichael mine’s first phase to coal-fired power stations in India.

But it has battled environmental opposition since work on the project started in east Australia five years ago.

in October, according to an estimate from Macquarie Bank Ltd. “There were still capital outflows amid the dollar weakness,” said Nizam Idris, head of currencies and fixed-income strategy at Macquarie in Singapore. “The appreciation in October was a one-off rather than a new trend.”

Hedges unwound

The rupiah lost 3.2 percent since its intraday peak last month of 13,228 on October 15. The currency will weaken to 14,034 by the end of this year and to 14,500 by mid-2016, according to the median estimates in Bloomberg surveys.

The rupiah’s rally in October was aided by overseas funds unwinding hedges to take advantage of the reduced cost of protecting their currency exposure, Nizam said. The rupiah’s one-month onshore implied yield, a gauge of expected interest rates and fluctuations used to price forwards that are used to hedge against exchangerate losses, was 9.35 percent yesterday, down from 15.98 on September 30, data compiled by Bloomberg show.

Bloomberg News

GE in deal to sell commercial lending, leasing portfolios

Indonesia’s central bank HQ

GE said yesterday it had reached an agreement to sell its finance unit GE Capital’s commercial lending and leasing portfolios in Australia and New Zealand to Sankaty Advisors, the global credit affiliate of Bain Capital. GE said in a statement the deal completes GE Capital’s exit from Australia and New Zealand as part of a previously announced strategy to reduce the size of its financial businesses by selling most of GE Capital assets and focusing on investment and growth in industrial businesses. The terms of the transaction were not disclosed.

14 | Business Daily

November 10, 2015

International British Industry cuts 2016 UK growth forecast The Confederation of British Industry scaled back its forecast for economic growth next year, saying yesterday that resilient domestic demand would not be enough to outweigh the effects of a slowdown in emerging markets. The CBI reduced its 2015 growth forecast to 2.4 percent and its 2016 forecast to 2.6 percent, both 0.2 percentage points lower than its previous forecasts in August, though still a bit better than average for the British economy. “Manufacturers are enduring tougher conditions as a persistently strong pound is hamstringing our export competitiveness,” CBI director-general John Cridland said.

G20 finalises tools for ending “too big to fail” banks The aim is to allow a big bank to fail without creating the kind of mayhem in markets seen after Lehman Brothers bank went bust in 2008 Huw Jones

Evidence is mixed, and the baseline for comparison should not be the unsustainable excess liquidity that existed prior to the crisis

African telecoms firm MTN chief quits over huge Nigerian fine The chief executive of South Africa-based mobile phone operator MTN has resigned over a US$5.2 billion fine imposed on the company in Nigeria, the telecoms giant said in a statement yesterday. “Due to the most unfortunate prevailing circumstances occurring at MTN Nigeria, I, in the interest of the company and its shareholders, have tendered my resignation with immediate effect,” CEO Sifiso Dabengwa said. MTN has appointed non-executive chairman Phuthuma Nhleko as executive chairman for a maximum of six months while the company identifies a successor for Dabengwa, the statement said.

Havana, Washington to resume talks

Cuban and U.S. government representatives are set to resume negotiations today over normalizing ties. The second meeting of the Cuba-U.S. Bilateral Commission, created after the two nations restored diplomatic ties earlier this year, will take place in Washington. Cuba’s Foreign Ministry said last week the two delegations will review topics agreed during the commission’s first meeting in September in Havana. The delegates will discuss “results achieved over the intervening months (since September) and the complex issues between the two countries which are pending resolution, including the lifting of the blockade,” the ministry said.

Albania’s public debt hits record in September Albania’s public debt reached a record level of 73.7 percent of its GDP in September, surpassing debt limits set by the Albanian government as well as by international partners, Albanian Daily News reported yesterday. The latest statistics released by the Albanian Ministry of Finance showed that by the end of the third quarter, the country’s public debt amounted to 1.61 trillion lek (about US$12.9 billion), the highest in history and the debt-to-GDP ratio reached a staggering 73.7 percent, the highest since 2000.

Mark Carney, chairman, Financial Stability Board Mark Carney, chairman of the Financial Stability Board

Global regulators set out their “final tools” yesterday for ending the phenomenon of “too big to fail” banks, seeking to draw a line under a period of intensive rule making after a financial crisis that tarnished the sector and weighed heavily on taxpayers.

Mark Carney, chairman of the Financial Stability Board (FSB), which coordinates regulation across the Group of 20 economies (G20) to plug gaps highlighted by the 200709 financial crisis, said many of the key reforms have been implemented decisively and promptly.

“As a consequence, the financing capacity to the real economy is being rebuilt and significant retrenchment from international activity has been avoided,” Carney said in a letter to G20 leaders ahead of their summit next week.

The G20 tasked the FSB in 2009 with introducing a welter of reforms from increasing bank capital requirements to shining a light on derivatives markets and curbing bankers’ bonuses.

Carney, who is also Governor of the Bank of England, said the board has now finalised the tools needed to wind down “too big to fail” banks in an orderly way if necessary, seen as the last major financial reform of the crisis.

G20 leaders meeting next week in Turkey will be asked to endorse a reform that requires the world’s 30 top banks to issue a buffer of bonds by 2019 that can be written down to raise funds equivalent to 18 percent of risk-weighted assets, if the lender goes bust.

The buffer, known as total lossabsorbing capacity or TLAC, is in addition to the minimum core capital requirements a bank must already hold.

The aim is to allow a big bank to fail without creating the kind of mayhem in markets seen after Lehman Brothers bank went bust in 2008.

As flagged, the basis for calculating how much TLAC the big banks must hold has been scaled back. An openended exemption for the big banks from emerging markets like China has also been scrapped in favour of a longer phase-in.

“Countries must now put in place the legislative and regulatory frameworks for these tools to be used,” Carney said in a letter to G20 leaders.

Banks had warned that the new capital rules being rolled out made it too expensive in some cases to keep markets as liquid as they were before the crisis by offering to buy and sell bonds at any time.

The FSB has completed its first review of all the rules that have been introduced and said it has “not found evidence of significant unintended consequences to date”.

The FSB is still assessing the risks to financial stability from the activities of big asset managers and will publish recommendations “as necessary in the first half of 2016”.

Misconduct at banks, such as trying to rig the Libor interest rate benchmark and currency markets, can create systemic risks, and the FSB has agreed an action plan to see if additional rules are needed.

Reuters

German trade pushes up after plunging in prior month Economists polled by Reuters expect that German growth slowed to 0.3 percent in the third quarter from 0.4 percent in the second

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xports and imports bounced back in September after plunging in the prior month but failed to allay concerns that a slowdown in emerging markets will leave its mark on Europe’s largest economy.

The Federal Statistics Office reported yesterday that exports pushed up 2.6 percent in September and that imports rebounded by 3.6 percent. In August exports had plummeted 5.2 percent and imports slumped 3.2 percent, in part due to seasonal effects.

The data nudged the trade surplus for September down to 19.4 billion euros, reinforcing expectations that growth will slow slightly when third quarter gross domestic product (GDP) data is published on Friday.

“Global trade is stalling because of the weakness of many emerging markets, from Brazil to Russia and China. The German economy is feeling this,” said Rainer Sartoris of HSBC Trinkaus.

Strong demand from the United States and a modest recovery in the euro zone has helped cushion the blow to trade. And robust private consumption,

supported by strong wage gains and low unemployment, is also bolstering the German economy.

Late last month, the closely-watched Ifo business climate index showed German firms remain confident about the outlook, despite weakness is some key trading partners and the diesel emissions scandal swirling around carmaker Volkswagen.

Economists polled by Reuters expect that German growth slowed to 0.3 percent in the third quarter from 0.4 percent in the second.

Reuters

Business Daily | 15

November 10, 2015

Opinion Business

wires

China’s intervention lessons

Leading reports from Asia’s best business newspapers

Yu Yongding

Former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences

THE TIMES OF INDIA Captains of Indian industry that Times of India spoke to were unanimous in their opinion that, for growth, reforms are imperative.

Their nervousness about the loss for the NDA in Bihar stems from the fact that key bills, which could provide the much-needed boost to growth, are stuck and the government may not be in a position now to drive those initiatives with the same firmness. The BJP-led NDA government had backed several reform measures like the land bill, GST and increasing FDI in several sectors aggressively when it came to power about 15 months ago.

THE JAKARTA POST The government is expecting a bigger budget deficit than previously forecast this year as tax revenues have fallen well below target. According to Tax Office head Sigit Priadi Pramudito, the tax revenue shortfall will amount to Rp 160 trillion (US$11.81 billion) in 2015, higher than the previous estimate of Rp 150 trillion. He attributed the expanding shortfall to a slowdown in the economy and the weaker rupiah that put pressure on imports and therefore squeezed value-added tax (PPN) from imports.

THE PHNOM PENH POST More than 50,000 companies registered with the Ministry of Commerce will be required to re-register when the ministry rolls out its online registration system next month, a government official said. Om Dararith, director of the commercial registration department at the Ministry of Commerce, said the new online system will be launched on December 7, and aims to cut through the notorious red tape involved in starting a business in Cambodia. More than 40,000 companies and 10,000 small enterprises have registered in Cambodia using the existing paper-based system.

THE AGE After two years of adding jobs, Australia’s largest banks are joining global competitors and trimming staff as earnings falter following six consecutive years of record profits.

The four-largest lenders and Macquarie Group cut a combined 1475 jobs in their respective half yearly periods to reduce costs as increased competition and regulation eat into their profitability. The job reductions are the most since the lenders shed 3300 roles in the second half of 2012, according to regulatory filings. Banks worldwide are cutting positions amid a multiyear slowdown in trading revenue and increased compliance costs.

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hina’s stock market has been a hot topic since the summer, when a rapid rise gave way to a major plunge, triggering a global equities sell-off. The question now is what can be done to prevent further volatility.

To answer that question requires understanding how China got to this point. For years, with the authorities’ encouragement (or at least acquiescence), China’s securities companies spared no effort in pumping up China’s stock exchanges with fashionable financial instruments and practices, the sole aim being to realize capital gains from rising prices (dividends are rarely distributed).

As a result, after years of poor performance, the Shanghai Composite Index soared by more than 100% in less than seven months, from 2,505 points in November 2014 to over 5,178 last June – a level that was not merited by China’s economic fundamentals.

The most important instrument driving this surge was margin trading, which enabled investors to borrow heavily to purchase shares. According to Bank of America strategist David Cui, some CN¥7.5 trillion (US$1.2 trillion) in market positions are being carried on margin, “equivalent to some 13% of A-share’s market cap and 34% of its free float.”

Part of the problem was that margin trading was not limited to institutional investors. Lightly regulated “fund matching” companies, for example, would distribute margin loans to virtually anyone, resulting in about CN¥2.3 trillion in online private fund matching and CN¥1 trillion in offline private fund matching, with a leverage ratio of up to 5:1 for the latter.

In mid-June, the prolonged surge in stock prices finally drove

an unnerved China Securities Regulatory Commission (CSRC) to impose restrictions on offline private fund matching. The decision immediately triggered a sell-off, with the Shanghai Composite Index falling 2% in just one day.

Initially, this looked like a natural correction. But the prevalence of margin trading caused the decline to turn quickly into a rout. First, as plummeting stock prices caused the equity in investors’ accounts to fall below the maintenance margin, brokers began issuing margin calls, forcing investors to offload more assets to come up with the needed cash. When they failed to pay margin calls on time, their shares were sold by brokers, pushing stock prices down further.

The authorities scrambled to stanch the bleeding. On June 27, the People’s Bank of China lowered the reserve requirement ratio and the benchmark interest rate. But the Shanghai Composite Index kept falling, reaching 4,200 on July 1.

At that point, the CSRC launched a succession of desperate measures: it suspended initial public offerings, allowed companies to stop trading, and limited short selling. It even organized a “national team” of 21 large securities companies, led by a government-controlled financial corporation, to purchase shares to buttress the Shanghai Composite Index.

In doing so, China’s regulatory authority changed many wellestablished rules of the game virtually overnight. And, while massive official intervention may have halted the rout, it could have permanently damaged regulators’ credibility.

And it was not even merited; the banks were not overly exposed, so there were no systemic risks.

If China’s government is to prevent a debt‑deflation spiral from causing a hard landing, it should shift its focus to targeted expansionary fiscal policy

But the policy failures fuelling this stock-market fiasco go back further, to the massive government-fuelled surge in credit since the global financial crisis. Without that, brokerages would not have had all of that liquidity to lend for margin trading.

After the crisis struck, instead of recognizing the decline in potential growth and adjusting accordingly, the government remained implicitly wedded to an unrealistic target of 10% annual GDP growth.

But, while the CN¥4 trillion stimulus package propped up growth temporarily, return on

investment was deteriorating, because potential growth was already lower than actual growth. As a result, credit demand was relatively weak; in many cases, commercial banks had to persuade enterprises to accept loans, with a large proportion of the credit ultimately devoted to chasing assets in the capital market.

At first, the excess liquidity fuelled real-estate bubbles.

After the government clamped down on lending for residential and commercial projects, risky shadow banking activity surged.

After the government clamped down on that too, the liquidity was channelled toward stock exchanges; once those crashed, it sloshed into the bond market.

But the bond market is not large enough to absorb it all, so some has now returned to the stock exchanges, leading to a partial recovery in share prices, with the Shanghai index reaching 3,500.

Declining economic growth strengthens the temptation to loosen monetary policy.

But in today’s deflationary environment, typical monetary expansion alone can do little to help the real economy, because the money either remains idle or fuels asset bubbles and capital outflows.

If China’s government is to prevent a debt-deflation spiral from causing a hard landing, it should shift its focus to targeted expansionary fiscal policy.

With a budget deficit of 2.3% of GDP, China can certainly afford to increase government expenditure and reduce taxes.

Critically, the package should be financed by government bonds issued by the Ministry of Finance, not by commercial banks via local-government financing vehicles. Any loosening of monetary policy should be aimed directly at accommodating fiscal policy.

That way, financial resources would be channelled into the real economy, rather than inflating asset bubbles.

To support this effort, China’s government should loosen its grip on the exchange rate, while maintaining appropriate capital controls. Renminbi internationalization should not be a policy priority.

China’s experience in recent years holds valuable lessons for the country’s leaders. With a more balanced approach to intervention that reflects those lessons, they could put China’s economy on a much more stable path. That said, as China undergoes structural economic transition, the stabilization potential of macroeconomic policy is limited. Without more fundamental reforms, even an impeccable macroeconomic policy mix would not work.

Reforms take time, which means that China may need to brace itself for more troubles and a protracted period of slow growth.

Project Syndicate

16 | Business Daily

November 10, 2015

Closing India’s Jet Airways confirms order for 75 Boeing 737 planes

Myanmar’s election commission announces early election result

India’s Jet Airways confirmed yesterday an order for 75 Boeing 737 planes previously listed on the US manufacturer’s book as for an undisclosed client. “The order, previously attributed to an unidentified customer, includes conversions of 25 Next-Generation 737s to 737 MAX8s, as well as options and purchase rights for an additional 50 aircraft,” Boeing said in a statement released at a joint press conference at the Dubai Airshow. “The announcement marks the largest order in Jet Airways’ history and supports the airline’s replacement strategy,” the statement said.

The carrier, partly owned by Etihad Airways, has a fleet of 115 aircraft.

Union Election Commission yesterday released the first series of the result of the general election held on Sunday following the opening of the election results centre in Nay Pyi Taw. Candidates of the opposition National League for Democracy (NLD) won 12 seats with the House of Representatives from their respective constituencies in Yangon region. Besides, NLD candidates won three seats with the region parliament, while the ruling Union Solidarity and Development Party (USDP) won one seat of the same, bringing the total so far to 12 seats of the House of Representatives secured by the NLD, three seats of the Region Parliament by NLD and one seat by USDP.

Taiwan exports shrink for 9th month in October The Ministry of Finance expects the export decline in the fourth quarter to be less than 10 percent from the same quarter a year ago Roger Tung and Liang-Sa Loh

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aiwan’s exports contracted for the ninth straight month in October as global demand stayed weak, adding to difficulties for the trade-

reliant economy after a close call with recession.

Annual exports in October dropped 11 percent, data from the Ministry of Finance showed yesterday.

The outcome was in line with a Reuters poll and less than a 14.6 percent fall in September, but shipments to major markets saw a mixed performance.

Imports fell 20 percent from a year earlier, slightly more than the 18 percent fall expected in the poll.

“We expect exports to continue contracting,” said Kevin Wang, analyst with Taishin Securities. Wang said there is still downside risk for the global economy, in part due to China.

The Ministry of Finance expects the export decline in the fourth quarter to be less than 10 percent from the same quarter a year ago.

Taiwan narrowly dodged a recession in the third quarter even as the economy contracted for the first time since the global financial crisis, with exporters suffering a crippling blow from faltering global demand and a slowdown in China.

Taiwan is one of Asia’s major exporters, especially of technology goods, and its export trend is a key gauge of global demand for technology gadgets worldwide.

October exports to China fell 11.1 percent from a year earlier, a smaller fall than the 17.1 percent decline in September, while shipments to the United States and Europe worsened.

Exports to the U.S. dropped 9.1 percent in October, far worse than the 0.4 percent fall of September, while those to Europe fell nearly 12 percent, also wider than the 9.4 percent decline previously.

In October, electronics exports fell 4 percent and information and communications exports were off 14.4 percent. Both were slightly better than the respective 9.9 percent and 22.1 percent slump of September.

Taiwan’s exports only reflect a portion of what is produced on the island as many orders are farmed out to factories owned by Taiwan firms in China.

The government’s forecast is for exports to fall 7.1 percent in 2015, an estimate it gave in August and could revise later this month when it issues forecast revisions to GDP data.

The island’s worsethan-expected 1.01 percent slump in July-September gross domestic product was the first year-on-year contraction in six years, and prompted the government to announce a T$4.08 billion (US$124.6 million) stimulus package to boost domestic consumption over the short term.

OPEC’s Badri says oil market to be more balanced in 2016

China’s rural areas to benefit more from e-commerce

Nestle’s Maggi noodles back on sale in India

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he oil market is expected to become more balanced in 2016 as demand continues to grow, OPEC Secretary-General Abdullah al-Badri said yesterday ahead of the producer group’s policy meeting next month.

“The expectation is that the market will return to more balance in 2016,” he said in a speech at an Asian ministerial energy roundtable in the Qatari capital Doha.

“We see global oil demand maintaining its recent healthy growth. We see less non-OPEC supply. And we see an increase in the demand for OPEC crude,” Badri said.

Most of the oil supply increases in recent years have come from high-cost production, Badri said, in a clear reference to supply sources such as U.S. shale oil.

The Organization of the Petroleum Exporting Countries, which decided late last year to focus on maintaining market share instead of propping up oil prices, holds its next policysetting meeting at its Vienna headquarters on December 4.

Reuters

hinese rural areas will benefit from e-commerce as online businesses combine with brick-and-mortar stores in rural

areas.

The State Council, China’s cabinet, yesterday released a guideline on development of e-commerce in rural areas until 2020 to promote rural entrepreneurship, expand rural consumption and bring poor rural residents out of poverty.

A rural e-commerce system will feature openness, orderly competition, good faith, security, reliability and environmental protection. An online rural shopping platform will enable rural areas to access e-commerce.

The government will promote Internet technology in agriculture, and use big data analysis to guide production.

Better broadband access and better roads will raise the logistics capacity of rural areas.

In 2014, online retail sales rose 49.7 percent to 2.79 trillion yuan (US$439 billion), compared with a 12 percent growth for total retail sales of consumer goods.

Xinhua

Reuters

estle’s hugely popular Maggi noodles returned to shelves in India yesterday five months after the government banned them saying lead levels were too high.

“We are delighted to announce that your beloved Maggi noodles is back. The roll out has begun today,” Nestle India said in a statement to the Bombay Stock Exchange yesterday.

India’s food safety watchdog slapped a nationwide ban on the noodles in June after it said test results showed packets exceeded statutory limits of lead.

But the Bombay High Court, the highest court in the western city now known as Mumbai, overturned the ruling two months later, calling it “arbitrary” and ordered fresh tests.

Last month Nestle said the laboratory tests had found that Maggi noodles were safe to eat.

The company later announced it had restarted production at three plants in India and last week said those had also passed laboratory tests.

Nestle’s Indian arm estimates its run-in with Indian regulators has cost around 3.2 billion rupees (US$50 million).

AFP