MOP 6.00 Closing editor: Joanne Kuai
Experts say IMF would grant the yuan an initial 14 pct in currency basket
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Year IV
Number 919 Friday November 13, 2015
Publisher: Paulo A. Azevedo
China’s October new loans don’t match expectations Page 9
Icahn hires property broker CBRE to sell Fontainebleau Las Vegas
Rental cap
A bill designed to cap rental increases. Approved on its first reading at the Legislative Assembly yesterday. With an arbitration body to mediate conflicts between landlords and tenants. Some legislators criticized on the grounds of harming the principle of the free market. Some said landlords should also be better protected Page
2
Casino workers favour full ban
Brought to you by
HSI - Movers November 12
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SmarTone has officially launched its 4G mobile network. Entering into a 5-year contract with Nokia Networks. Nokia will supply its radio and core network infrastructure for the LTE rollout
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Name
Developers dig in on land retrieval The Court of Second Instance. It has rejected applications of preventive proceedings from developers whose land leases were previously declared invalid by the Chief Executive. Nevertheless, the court stresses that the hearings of judicial appeals to annul the CE’s declaration of the expiry of these land concessions are still pending
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Alibaba’s Tmall online marketplace. Reporting dazzling sales of 91.2 bln yuan (US$14.3 bln) from yesterday’s Singles’ Day shopping spree. Representing 60 pct rise from last year’s 51.7 bln yuan
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Casino workers are in favour of a universal smoking ban on gaming floors. Representatives from four gaming labour associations told legislators as much. And want the bill to pass into law as soon as possible. Saying the downturn in revenues is unrelated to the issue of a full smoking ban. Some representatives do accept the concept of smoking lounges
Another 4G entrant
Singles’ Day slam dunk
%Day
Lenovo Group Ltd
+5.77
Belle International Ho
+5.09
Link REIT
+4.53
China Unicom Hong Ko
+4.52
Sino Land Co Ltd
+4.39
Ping An Insurance Gro
+1.00
Kunlun Energy Co Ltd
+0.99
Hong Kong & China Gas
+0.64
Power Assets Holdings
-0.20
Li & Fung Ltd
-1.90
Source: Bloomberg
Gaming
I SSN 2226-8294
Halved revenues Macau Legend reported a y-o-y decline of 55 pct. This for adjusted EBITDA in Q3, at HK$74.6 mln. However, self-run VIP operation New Legend has seen junket business gain nearly HK$53 mln, up 64.5 pct. The non-
gaming sector posted a y-o-y decline of 10 pct to HK$140.9 mln. With hotel occupancy rates at The Landmark and Rocks falling to 68 pct and 79.9 pct, respectively
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2 | Business Daily
November 13, 2015
Macau Ip Peng Kin to be Alexis Tam’s chief of staff There will be some personnel changes in the team of Alexis Tam, Secretary for Social Affairs and Culture. The current Chief of Office Lai Ieng Kit is going to retire and will be replaced by Ip Peng Kin (pictured), the incumbent President of the Administrative committee of the Social Security Fund (FSS), according to local Portuguese media Radio Macau. Chinese newspaper Macau Daily also reported that the President of the Social Welfare Bureau (IAS), Iong Kong Io, will replace Mr. Ip. Meanwhile, current vice-present of IAS, Vong Yim Mui, will be promoted to president.
Cap on rental increase approved on first reading A new bill which caps the increase in rentals was approved on its first reading yesterday. The cap did generate criticism, however, from some legislators João Santos Filipe
jsfilipe@macaubusinessdaily.com
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esterday, the Legislative Assembly approved the new rental regimes with 29 votes for and one abstention on the first reading. The bill approved such measures as capping the increase in rents, defined by a coefficient published by the Chief Executive, and the introduction of an arbitration body to mediate conflicts between landlords and tenants. The draft bill, however, met with strong criticism from some legislators because of its anticipated effects on the property market in the city. “Controlling the increase of rentals can affect the development of the city, cut investment and reduce the number of buildings constructed and renovated. As a landlord I want to rent my properties at the price I define. I can reach an agreement with the tenants for that”, Chan Chak Mo said. “A study of OECD [Organisation for Economic Co-operation and Development] including 32 countries has concluded that limiting the rental increase creates more problems than benefits for the population”, he added. Legislator Melinda Chan also stressed the importance of protecting the rights of landlords in Macau, mentioning the spirit of the law, which in her view puts into question the free market
principle. She also voiced that with the new law the landlord is not allowed to terminate a rent contract for two years, for residential units, and three years for commercial properties.
Starting point for discussion
“We are following the principle that both parties are free to discuss the increases in rental but there is a cap to
Song Pek Kei says education subsidies only a slogan Legislative Assembly (AL) member Song Pek Kei yesterday urged the government to properly monitor the financial subsidies attributed to private schools and the risk of such aid becoming a façade without the desired results becoming reality. The AL member addressed these questions after it was revealed by the Commission of Audit that the Education and Youth Affairs Bureau (DSEJ) was unable to verify the destination of MOP32.46 million (US$4.07 million) in subsidies handed out to private schools. “The government has announced that even with the decline in gaming revenues, it will not stop injecting financial resources into the education system. However, if these resources are not used properly, injecting more resources will only be a slogan”, she said.
this increase. In Macau, there are cases where landlords throw poor families out of the properties because they aren’t able to pay for rent. Taking into account this situation, we determined a cap on rental increase”, Song Pek Kei said, one of the signatories of the proposed bill. “However, we are open to change and improving some points of the law during the second reading”. “We cannot accept increases of rental of 100 per cent or in some cases 200 per cent. This is not normal. I had to support increases in rental values of 60 per cent. These increases disrupt businesses and the life of local families”, Leonel Alves said. “The coefficient to be published by the Chief Executive to cap the limit on rentals is not the best solution because it brings extra responsibilities to the leader of the Government. But this coefficient will take into account not only inflation but also the property and rental market. This is the solution we are proposing. But as a co-signer of the draft bill, I
Lei Cheng I urges legalisation of Uber service Legislative Assembly member Lei Cheng I said yesterday that the special taxi licences should include the possibility of using mobile applications to call for the services, as it happens with the Uber application. At this moment, there is an ongoing public tender for more than 100 special taxi licences. “The government must adjust the requirements for exploiting the special taxi licences for it to include the possibility of calling the service through mobile applications. The majority of the population support this model to call for taxis and it wants the government to legalise the service provided by Uber”, Lei Cheng I said.
ask for legislators to see it as a starting point for discussion”, he added. The coefficient defined by the Chief Executive was one of the points criticised by legislator Fong Chi Keong, who mentioned Fernando Chui Sai On’s difficulties in walking caused by gout. “How can a coefficient be defined and take into account that all properties are different and that their value depends on the area of location, view of the house and
so on? I consider this is a bad solution with good intention. It will only cause more work for the Chief Executive and he is already too busy to the point he cannot walk well”, he said, before abstaining from voting. Still yesterday the Secretary for Economy and Finances Lionel Leong presented a report on the central account of 2014, which recorded a surplus of MOP94.78 billion, to the Legislative Assembly.
Business Daily | 3
November 13, 2015
Macau
Court rejects preventive proceedings from developers deprived of land grants However, the court has stressed that the hearings of judicial appeals to annul the CE’s declaration of the expiry of these land concessions are still pending Joanne Kuai
joannekuai@macaubusinessdaily.com
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inally, some news from the courts. The progress of some judicial proceedings regarding land disputes between the government and developers was disclosed in an announcement released by the Office of the President of the Court of Final Appeal yesterday. The Court of Second Instance has rejected applications of preventive proceedings from five developers whose land leases were previously declared invalid by the Chief Executive. The developers have filed for judiciary proceeding to recall the declaration. Meanwhile, the developers applied for the court’s injunction to void the decision made by the CE of declaring the termination of the concessions during the hearings, which can take a longer time. However, all five applications have been rejected.
No grounds
The court gave one example of an applicant, developer Sinca - Sociedade de Indústrias Cerâmicas, Limitada, whose land concession of a plot on Pac On reclamation Zone D in Taipa, occupying 7,000 square metres, was declared
rejecting the requests to suspend the effectiveness of the executive order. The cases on the appeals to cancel such land grant invalidity are still ongoing.
Vacate land now
expired by the Chief Executive in a dispatch issued on March 30 this year. The developer filed for an injunction saying that if they vacate the land plot in accordance with the executive order, the land can be developed by the authorities immediately and even if they won the final hearing in the future they will suffer irreparable losses. However, the court says it’s just the applicant’s assumption and that he has no proof and even if the applicant wins in the final ruling another plot of land can substitute. The developer also raised the argument that the location
of the plot is significant as it’s close to the airport and the Pac On Ferry Terminal in Taipa that is being built, hence it is crucial for the company to develop industrial activities in the future. However, the court pointed out that the developer applied long ago to change the land use from industrial to residential, in 2008. Hence, the reason cannot be established.
Final ruling pending
The court also disclosed that there are four other similar requests that have all been rejected. The other four developers are Sociedade Fomento Predial Predific,
SmarTone launches 4G service
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ocal telecommunication operator SmarTone Macau officially put its 4G mobile communication (LTE) network into service in the territory on Wednesday. Upgrading its current 3G network, the company announced it had signed a five-year contract with Nokia Networks for supplying its radio and core network infrastructure for the LTE rollout. "As a customer-centric company, we have been delivering outstanding experiences to our customers in 3G and will do the same in 4G LTE,” the Chief Executive Officer of SmarTone Macau, Patrick Chan, said in a statement. “As we are evolving our network infrastructure to address future capacity requirements, our longstanding partner Nokia Networks helps us seamlessly migrate to a 4G LTE network to
provide our customers in Macau with an enhanced mobile broadband experience,” he added. SmarTone is the second of the city’s four 4G licence holders to launch their LTE service. Companhia de Telecomunicações de Macau SARL (CTM) launched its 4G service on October 20 while China Telecom (Macau) Company Ltd. will launch its new service on November 25. However, Hutchison Telephone (Macau) Company Ltd., also known as 3 Macau, has not yet announced the launch date of its 4G service. The government requires all the operators to achieve half of the city’s network coverage for 4G services within this year, with 100 per cent coverage in 2016. K.L.
Limitada, Sociedade Fomento Predial Socipré, Limitada, Companhia de Investimento Predial Pak Lok Mun, Limitada, and Companhia de Investimento Predial Hoi Sun, Limitada. The four plots of commercial/residential land involved are located at section BT9, BT8, BT11 and BT12 on Avenida de Kwong Tung in Taipa, occupying 7,731, 2,209, 2,510 and 3,177 square metres, respectively. In total, the five plots mentioned in the court’s statement occupy an area of 22,000 square metres. However, the court stressed the decision is merely
In a separate announcement released by the Office yesterday, it revealed that another developer’s application has been denied. It filed for the court’s injunction to consider the Secretary for Transport and Public Works Raimundo Rosário’s order to vacant the land as void. The Secretary’s order was made following the Chief Executive’s dispatch announcing the expiry of land concession. The land lease to the company Fábrica de Isqueiro Chong Loi (Macau), Limitada of 4,392 square metre plot O1 at the conjunction of Estrada de Pac On and Rua da Felicidade in Taipa was announced as invalid by the Chief Executive in a March 23 dispatch. Despite that, the other two hearings filed by developers to recall the CE and the Secretary’s decision are still pending; the application for the court’s injunction was denied.
4 | Business Daily
November 13, 2015
Macau opinion
The bumbler hymn
Pedro Cortés
Lawyer* cortes@macau.ctm.net
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his week, the Secretary for Public Works initiated, with his speech at one of the Commissions of the Legislative Assembly, the final curtain on Nam Van Lakes, as was once conceived by some visionaries in the late 80’s and the beginning of the last decade of the XX Century, when Macau was not what it is today and the government did not have its same current resources. But, more than that, in my view, he has issued a certificate of incompetence to all the governors in charge of land issues since the Ao Man Long case. There are cases in which the concessionaires of the lands have fulfilled all their obligations but the government remained inactive, for one reason or another, for about seven years, delaying, delaying and delaying a decision for the tier one area. Why is this? No-one knows. But this may cost the Macau exchequer a huge amount of money. Taxpayers’ contributions that will need to be used to eventually compensate those who invested in Macau and have seen their plans killed off by the inaction of people who don’t want to decide or, quite frankly, don’t know how to be efficient and take care of our land. Mr. Rosário may well only be doing what is stated in the law for cases in which land is not developed. And he is doing his job very well. Unless there is sleight of hand, by mid-2016 we will have huge compensation requests in the Macau Courts. The politicians will not be liable for anything because when the decisions are taken they will already be laughing in retirement. There are two important heritages in Macau: UNESCO World Heritage and our current Secretary for Public Works and Transportation heritage, served to him on a silver platter by his not so efficient predecessors. Hopefully, he is strong enough and has the fibre to not abandon the office before the end of this term due to the various headaches he is experiencing. The LTR, undeveloped plots of lands, etc, make his job very difficult to handle and only someone with his temperament and his sense of public interest would accept to continue doing so. At least, and in stark contrast to other highly responsible entities, he does not peremptorily consider that the services of an international company that is trying to help residents and non-residents to move from one place to another are illegal. He is surely well advised by the members of his cabinet that the illegality can only be finally decided by the courts and not by the administrative bodies. The same administrative bodies who continue to close their eyes to the actions of the taxi drivers around the city. PS: Pursuant to last week’s column on my love of Macau taxis, I start to think whether one should continue writing this type of thing as I don’t want to have people thinking too much. I am not alone in this sarcastic occupation. *Lecturer at the Chinese University of Hong Kong
Gaming labour groups support full smoking ban Four local gaming worker associations told legislators yesterday that they hope the bill calling for a universal smoking ban in casinos can be implemented as soon as possible Kam Leong
Kamleong@macaubusinessdaily.com
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our local gaming labour associations insist the government implement a full smoking ban in the city’s casinos, according to legislator Chan Chak Mo, who chaired the second standing committee of the Legislative Assembly (AL). The AL sub-committee, which is discussing the details of the bill, met with the associations for their opinions yesterday, including active groups Forefront of Macau Gaming (FMG) and the Macau Gaming Enterprises Staff Association of the Federation of Trade Unions. The local gaming associations said they were not confident about the enforcement of the government and the effectiveness of conducting smoking controls if the government does not implement a universal smoking ban in gaming venues, the committee chairman told reporters following their closed-door meeting yesterday morning. According to Mr. Chan, the associations perceive that the
downturn in gaming revenues is not directly related to [the threat of] a universal smoking ban. They hope the government can implement a full smoking law as soon as possible. Director-general of Macau Gaming Enterprises Staff Association, Choi Kam Fu, told reporters after the meeting that he reckons local gaming operators did not put the health of employees as a priority, saying Wynn Macau recently illegally converted part of its mass gaming area to a VIP area to facilitate smoking. In addition, the president of FMG, Ieong Man Teng, claimed that his group hopes the full smoking ban can quickly be implemented. However, the legislator also said an association representative had actually suggested in the meeting that the smoking lounges could be acceptable. According to Mr. Chan, the representative said an oral survey at the beginning of the year indicated that some 80 per cent of Wynn Macau gaming workers would accept the establishment of high-standard
smoking lounges in casinos as they are worried that a full smoking ban may not be viable. On Tuesday, the AL sub-committee met with representatives of casino operators and gaming promoters, who expressed to the legislators that the industry is against a universal smoking ban in casinos and hopes the government allows high-standard smoking lounges. Currently, smoking is prohibited on the mass gaming floors of local casinos, and is only permitted in smoking lounges and VIP rooms. The full smoking ban bill, which passed its first reading at the AL in July this year, proposes to cancel the establishment of smoking lounges, in addition to prohibiting smoking in the indoor area of gaming venues. Secretary for Social Affairs and Culture Alexis Tam Chon Weng said recently that maintaining smoking lounges in casinos would depend upon the proposals of the gaming operators as well as the opinions of the gaming workers.
Business Daily | 5
November 13, 2015
Macau
Macau Legend’s adjusted EBITDA halved in Q3 The company’s total gaming revenues are down nearly 60 per cent year‑on‑year although its VIP operation was up 64.5 per cent during the period Kam Leong
kamleong@macaubusinessdaily.com
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acau Legend Development Ltd. registered a year-onyear decline of 55 per cent in its adjusted EBITDA for the third quarter of the year, dragged down by the continuous drop in its gaming revenues for the period, the casino and hotel operator told Hong Kong Stock Exchange on Wednesday night. For the three months, Macau Legend’s adjusted earnings before interest, tax, depreciation and amortisation reached some HK$74.6 million (US$9.6 million), a sharp decline of HK$91.1 million from HK$165.7 million during the same period of last year. Meanwhile, total reported revenues in the quarter decreased by some 18 per cent yearon-year to HK$370.5 million. Total gross gaming revenue plunged 59.1 per cent year-on-year to HK$665.1 million for the quarter, compared to HK$1.62 billion one year ago. The dropping gaming revenue also led the operator’s adjusted EBITDA from gaming services to decrease by approximately 49.6 per cent to some HK$94.0 million in the quarter. According to the company filing, revenues generated from outsourced VIP tables at Pharaoh’s Palace Casino, located in The Landmark Macau, plunged 75 per cent yearon-year to some HK$264.5 million. In addition, mass market revenues of the casino dived 41.5 per cent year-on-year to HK$245.7 million from HK$419.8 million one year ago, while those at Babylon Casino in Macau Fisherman’s Wharf declined 8.9 per cent year-on-year to HK$61.5 million. However, Macau Legend actually saw significant improvement from its self-run VIP operation – New Legend. The junket business raked in nearly HK$53 million at the group’s two
casinos during the period, jumping 64.5 per cent year-on-year from HK$32.2 million despite the turnover of the sector dropping 4 per cent year-on-year to HK$1.97 billion. The company said in the filing that it had a total of 185 gaming tables as at the end of September, yet those in operation only amounted to some 139, including 93 mass gaming tables and 46 VIP tables.
澳 門 特 別 行 政 區 政 府 Governo da Região Administrativa Especial de Macau 澳 門 格 蘭 披 治 大 賽 車 委 員 會 Comissão do Grande Prémio de Macau
Barrier Gates Closing Schedule for the Macau Grand Prix The 62nd Macau Grand Prix will be held from November 19 to 22 this year. This major international motorsport event attracts thousands of visitors to Macau each year. The event plays an important role in the promotion of the local tourism industry, as well as enhancing the image of Macau as an international city. To a great extent, the success of the Grand Prix depends on the support and cooperation of the local residents. To minimize disruption to traffic due to the closure of some roads, the Macau Grand Prix Committee has increased the number of the barrier gates along the circuit this year, to a total of 123. However, due to certain constraints, some roads will remain closed throughout the event. The Committee seeks the understanding of motorists and asks for attention to be given the closing schedule for all barrier gates, as well as to respect the temporary signage and instructions from the Traffic Authorities. 16th November (Mon) Time
Av. da Amizade
Non-gaming up; occupancy down
Meanwhile, the company’s nongaming revenue posted a year-onyear increase of 10 per cent for the three months, reaching HK$140.9 million from HK$128.1 million. However, the occupancy rates of its two hotels – The Landmark Macau and Rocks Hotel – fell to 68 per cent and 79.9 per cent for the quarter, compared to 77.5 per cent and 87.1 per cent one year ago, respectively. Harbourview Hotel, which was opened in February, posted an occupancy rate of 73.1 per cent for the three months. On the other hand, the casino and hotel operator noted in the filing that it had conducted a manpower review during the period, claiming a total of 132 employees, accounting for 3.9 per cent of the total, had retired or would retire between October and November. The company said it would pay some HK$8.7 million in one-off compensation for these employees, whose monthly salary totalled some HK$2.2 million. For the first nine months of the year, the company’s adjusted EBITDA, excluding profit of New Legend, plummeted about 66.1 per cent to HK$203.1 million, compared to HK$599.2 million during the same period last year.
Street
15:00
Location Exit from the garage of Hotel Grand Lapa Entrance and exit from the World Trade Center
Est. de Cacilhas
Depósito de Pólvora
Est. D. Maria II
Exit from the garage of Correios de Macau
Rua dos Pescadores
Exit from Macau Water
Av. da Amizade
Corner near the Casino Oceanus (Av. da Amizade - Avenida do Dr. Rodrigo Rodrigues) Exit from former Casino Macau Palace
Est. de Cacilhas
Access
Exit from the garage of the Chong Tou San Chong Garden
No Access
Limited Access
From the flyover near the Reservoir to Hoi Fu Garden
17th November (Tue) Time
Street
Location
Est. de Cacilhas
Exit from the garage of the Cheng Pek Kok (Approx.60m)
Av. da Amizade
Exit from the garage of Edifício Seng Vo and Edifício Jubilee Court (Approx.110m)
Limited Access
Est. dos Parses
Exit from the garage of the Monetary Authority of Macao
No Access
10:00
Access
Rua de Nagasaki (PJ) Av. da Amizade 15:00
Av. Ramal dos Mouros
Corner next to the Hotel Landmark Plaza (Av. da Amizade- Alameda Dr. Carlos d'Assumpção)
Limited Access
Est. de Fereira do Amaral (upper top of the pavement behind Hou Kong School) Exit from work shop
No Access
Street
Location
Access
Av. da Amizade
Amizade Bridge– exit to Av. de Amizade (100m)
Est. de S. Francisco
Exit from the garage of the Public Security Forces Affairs Bureau
Av. Ramal dos Mouros
Exit of the Reservoir overpass to Baguio Court
Est. de Cacilhas
Entrance to the opening of Seaview Garden
Est. D. Maria II
Main entrance of CEM
18th November (Wed) Time
10:00
15:00
19:00
No Access Limited Access No Access
Closing times and locations of the barrier gates on 19th - 22nd November: All barrier gates installed at the access to any public road will be closed from 00:00 until the end of the races every day.
David Chow, co-chairman and CEO of Macau Legend Development Ltd.
The Committee seeks the understanding of motorists for the inconvenience caused by the construction, as well as to respect the temporary signage and instructions from the Traffic Authorities. For further information, please call: 2872 8482.
Business Daily | 7
November 13, 2015
Gaming NagaCorp gives up on casino licence in South Korea Gaming operator NagaCorp will not bid for a casino licence in Incheon in South Korea, the company announced yesterday in a filing with the Hong Kong Stock Exchange. ‘The Company is of the view that the expected economic returns of such an investment do not meet the Company’s benchmark in evaluating return on investments and is therefore not in line with its policy of selective expansion’, it explained. NagaCorp runs the largest integrated gaming and entertainment hotel in Cambodia, called NagaWorld, which is the only licensed casino in the capital city of Phnom Penh.
Pinnacle casino sale challenged by union at Indiana hearing The union considers that deal may set a dangerous precedent just as other national gaming companies are considering creating their own Icahn hires REITs and leasing their properties to captive or third-party operators
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innacle Entertainment Inc.’s proposed sale of its casinos to Gaming & Leisure Properties Inc. is being opposed by a union that will ask the Indiana Gaming Commission to reject the plan, saying the deal would give the company more than state law allows. Gaming & Leisure owns a casino in Lawrenceburg, and Pinnacle owns two, in East Chicago and Florence, according to a copy of prepared remarks to be given by Unite Here research analyst Noah Carson-Nelson and provided by the union. Indiana law limits casino owners to two properties in the state. Las Vegas-based Pinnacle said in July it would sell its 14 casinos to Gaming & Leisure in a transaction valued at US$4.75 billion, including debt. The deal is one of several in which casino operators sell properties or convert them into real estate investment trusts, which can trade at higher stock market values because the don’t pay federal income taxes. Neither Pinnacle, nor a spokeswoman for the commission, returned calls and e-mails seeking comment. The commission meets Thursday at 1 p.m. local time. Unite Here is involved in a
property broker CBRE to sell Fontainebleau Las Vegas
Ameristar Casino Resort Spa in Black Hawk, Colorado. Pinnacle Entertainment acquired Ameristar Casinos, Inc. in 2013.
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long-running contract dispute at Pinnacle’s East Chicago casino, according to a union website. Gaming & Leisure, as a REIT, serves as landlord for casinos that are operated by others. The union said Gaming & Leisure in Indiana received a “suppliers license,” normally reserved for companies that provide goods and services to casinos, when it was spun off from Penn National Gaming Inc. in 2013. That may be the basis for the company’s argument to be exempt from the two-casino limit. “Given its level of control,
licensing GLPI as a supplier is not just an absurdity,” the union said in its testimony. “It also sets a dangerous precedent just as other national gaming companies are considering creating their own REITs and leasing their properties to captive or thirdparty operators.” Gaming & Leisure responded by saying the deals with Penn National and Pinnacle keep the casino operator as the license holder. “Unite Here is simply trying to manufacture obstacles with complete disregard for the facts or clear interpretation of
applicable law,” Bill Clifford, Gaming & Leisure’s chief financial officer, said in an e-mail. Unite Here represents about 275,000 hospitality workers nationally, about a third of them in casinos. It has also opposed the merger with Missouri regulators and with the U.S. Federal Trade Commission. Pinnacle said on Oct. 15 that it received approval for the transaction from authorities in Mississippi and had applications on file with six remaining state regulators.
BRE Group Inc said it has been hired by billionaire investor Carl Icahn to sell Fontainebleau Resort Las Vegas, five years after taking control of the property. The Wall Street Journal reported the sale earlier on Wednesday and pegged the deal value at about US$650 million. Icahn, one of the industry's most closely watched activist investors, took ownership of the property in February 2010 after paying its bankrupt owner about US$104.6 million in cash. Fontainebleau, which was planned as a US$3 billion project, filed for bankruptcy protection in June 2009 after lenders cut off access to nearly US$800 million of construction funds. Located on the north end of the Las Vegas Strip, Fontainebleau was meant to include a 63-story glass skyscraper and feature a casino, a convention center, restaurants and bars, and more than 3,800 guest rooms.
Bloomberg
Reuters
Corporate
GEG Youth Achievement Programme
City of Dreams awarded OHSAS 18001
Attracting over 1,400 participants until now, the ‘GEG Youth Achievement Programme’ aims to help youngsters build up their confidence and explore their leadership skills through a wide range of activities. Co-organized by the Macau Management Association (‘MMA’) and Galaxy Entertainment Group (‘GEG’), the new ‘GEG Youth Achievement Programme’ has started accepting applications, with an opening ceremony
Melco Crown Entertainment Limited has announced its flagship integrated resort, City of Dreams, is the first hotel and integrated resort in Macau to be awarded the OHSAS 18001 Occupational Health and Safety Management Certification by the worldwide international certification body – British Standards Institute (BSI Hong Kong). This is another proud milestone for the Company’s steadfast effort in the adoption of the
held in the Grand Ballroom of StarWorld Hotel on Wednesday. The theme of the Programme focuses on further enhancing youngsters’ awareness of the needs of the community. The winning teammates of the previous Programme will also serve as ambassadors in the new Programme to lead the new participants in organizing community events and pass on their experiences, working hand in hand to serve society.
internationally recognized management standard. City of Dreams was also the first in Macau to have received the HACCP food safety certification in 2011 and the ISO 14064 Greenhouse Gas (GHG) Emissions Inventories and Verification in 2014. And Melco Crown Entertainment is the first resort-hotel company in Macau to receive the ISO14001:2004 Environmental Management Certification and Indoor Environmental Quality Certificate in 2012.
8 | Business Daily
November 13, 2015
Greater China
Foreign funds to follow IMF lead with yuan bond holdings Analysts forecast the IMF would give the yuan an initial weighting of around 14 percent in the basket Michelle Chen
KEY POINTS IMF forecast to add US$40 bln yuan to its currency basket That is likely to prompt central banks to follow suit Foreign fund managers say will re-allocate to yuan bonds AXA estimates US$600 bln inflow into yuan assets over 5 years
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oreign asset managers are preparing to increase their exposure to yuan-denominated bonds, as the International Monetary Fund (IMF) looks likely this month to approve the inclusion of China’s “redback” into its currency basket. A decision by the IMF to add the currency, also known as the renminbi (RMB), to its US$280 billion basket of reserves would prompt central banks to follow suit, and fund managers say they, too, would make similar adjustments to their portfolios. “The endorsement from the IMF raises the RMB’s profile as an international reserve currency. We
think many official investors will start to allocate to RMB assets,” AXA Investment Managers said in a report. Analysts forecast the IMF would give the yuan an initial weighting of around 14 percent in the basket, which goes by the official title Special Drawing Rights (SDR), bringing about US$40 billion direct inflows in the next few years. “Most central banks we’ve spoken to are supportive of the inclusion and are preparing for it. Several central banks are considering their first allocation and some considering increasing their existing ones,” said
Jukka Pihlman, head of central banks and sovereign wealth funds at Standard Chartered. But central bank holdings would be the tip of the iceberg. “That will trigger a lot of FX reserve managers to rebalance,” said Stephen Chang, head of Asian fixed income at J.P. Morgan Asset Management. “Global investors are certainly under-invested in Chinese bonds as they just started from pretty much zero,” he added. Together with other reserve managers and investors, a reallocation annually of about 1 percent
Beijing warns WTO its cheap exports will soon be harder to resist All WTO members would have to stop using their own “dumping” calculations with China next year Tom Miles
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hina has served notice to World Trade Organization (WTO) members including the European Union and United States that complaints about its cheap exports will need to meet a higher standard from December 2016, a Beijing envoy said at a WTO meeting. Ever since it joined the WTO in 2001, China has frequently attracted complaints that its exports are being "dumped", or sold at unfairly cheap prices on foreign markets. Under world trade rules, importing countries can slap punitive tariffs on goods that are suspected of being dumped. Normally such claims are based on a comparison with domestic prices in the exporting country. But the terms of China's membership stated that -- because it was not a "market economy" --
other countries did not need to use China's domestic prices to justify their accusations of Chinese dumping, but could use other arguments. China's representative at a WTO meeting on Tuesday said the practice was "outdated, unfair and discriminatory" and under its membership terms, it would automatically be treated as a "market economy" after 15 years, which meant December 11, 2016. All WTO members would have to stop using their own calculations from that date, said the Chinese envoy, whose name was not given by a WTO official who spoke to reporters about the meeting. Dumping complaints are a frequent cause of trade disputes at the WTO, and dumping duties are even more frequently levied on Chinese products.
In September alone, the WTO said it had been notified of EU antidumping actions on 22 categories of Chinese exports, from solar power components to various types of steel products and metals, as well as food ingredients such as aspartame, citric acid and monosodium glutamate. The EU was also slapping duties on Chinese bicycles, ring binder mechanisms and rainbow trout. From the end of next year, such lists would need to be based on China's domestic prices "to avoid any unnecessary WTO disputes", the Chinese representative said. More than 20 percent of the 500 disputes brought to the WTO in its 20 year history have involved dumping, including several between China and the EU or the United States in the last few years. Reuters
of global FX reserves outside of China to yuan assets is expected in the short term. AXA estimates total inflows to be around US$600 billion over the next five years. That would, however, require Beijing to lift or relax existing programmes limiting foreign inward investment - and foreign investors have not yet even used up the quotas allowed to them. Fund managers and analysts say the vast bulk of any new flow will target fixed-income products, especially high-grade bonds issued by the Chinese government and policy banks, which offer high returns at low risk. “We are progressively increasing our exposure to yuan bonds, and we are more interested in onshore government bonds compared to (offshore) ‘dim sum’ bonds,” said Bryan Collins, a portfolio manager at Fidelity Worldwide Investment. Foreign participation in China’s US$7 trillion onshore bond market is a meagre 2 percent at present, and Beijing is keen to broaden the sources of funding as the economy slows. Bankers say that what the government has done to meet the technical criteria to get included in the SDR should in itself lead to an increase in foreign holdings of yuan assets. China has scrapped quota limits for foreign central banks and sovereign wealth funds to buy bonds in its interbank market and is planning to extend yuan trading hours to cover the European trading session to attract more investors beyond Asia. As more investors start to trade yuan bonds, improving market liquidity, that will further boost the appeal, said Sanjiv Shah, Chief Investment Officer at Sun Global Investments in London. “It will make it easier for us to invest and will definitely lead to an increase of our investment in yuan bonds,” said Shah, whose firm has assets under management of around US$500 million, of which about US$12 million is invested in offshore yuan bonds. Reuters
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November 13, 2015
Greater China Yuan loans frustrate Gov’t measures
Fiscal revenue grows Some analysts and market participants expect additional cuts at slower pace in interest rates and bank reserve requirements to encourage China’s fiscal revenue grew by 8.7 percent year on year to 1.44 trillion yuan (227 billion bank lending U.S. dollars) in October, the Ministry of Finance (MOF) said yesterday. The pace slowed from 9.4 percent for September, according to a statement on the ministry’s website. “There will be great pressure on the government revenue to grow in the last two months,” the ministry said, citing a slowing economy, structural tax reduction and fee cuts. Revenue in the first 10 months reached 12.88 trillion yuan, up 7.7 percent year on year.
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hinese banks extended 513.6 billion yuan (US$80.66 billion) in net new yuan loans in October, disappointing analyst expectations and coming in lower than the previous month’s lending of 1.05 trillion yuan. The central bank has embarked on its most aggressive policy easing campaign since the 2008/09 global financial crisis, as annual economic growth looks set to slip to a 25-yearlow of under 7 percent. Economists polled by Reuters had expected new yuan loans would fall to 798.2 billion yuan in October from 1.05 trillion yuan in September. The broad M2 money supply grew 13.5 percent from a year earlier, the People’s Bank of China (PBOC) said in a statement on its website. Outstanding loan growth was 15.4 percent in October. A Reuters poll forecast that outstanding loans would rise by 15.5 percent and money supply by 13.2 percent.
KEY POINTS Oct new loans at 513.6 bln yuan, vs f’cast 798.2 bln yuan Jan-Oct new yuan loans rise 15.4 pct yr/yr Oct M2 money supply up 13.5 pct, vs f’cast 13.2 pct Oct TSF at 476.7 bln yuan from 1.3 trln in Sept
Lenovo loss slimmer than expected
China’s economy grew 6.9 percent in the third quarter from a year earlier, the weakest pace since the global crisis, hurt partly by cooling investment and prompting the central bank to cut interest rates for the sixth time in less than a year. Some analysts and market participants expect additional cuts in interest rates and bank reserve requirements to encourage bank lending. In order to cushion a slowing economy, the National Development and Reform Commission, the top economic planner, has approved billions of dollars in infrastructure projects in recent months. Premier Li Keqiang said in an editorial in a state paper last week that China would continue to pursue effective investment, and plans are
afoot to increase spending in the west of the country. The central bank will keep monetary policy neither too loose nor too tight to prevent aggregate demand from shrinking while also avoiding flooding the economy with easy cash, it said in its third quarter policy implementation report. China’s total social financing (TSF), a broad measure of overall liquidity in the economy, fell to 476.7 billion yuan in October from 1.3 trillion yuan in September, the central bank said. The figure marked the lowest level since July 2014. China’s foreign exchange reserves, the world’s largest, rose by US$11.5 billion in October to US$3.5255 trillion, central bank data showed on Saturday. Reuters
Lenovo posted a second-quarter loss that was narrower than estimates amid stronger sales growth and an improvement in its smartphone business. Net loss for the fiscal second-quarter ended September was US$714 million compared with the US$803 million average expected by analysts. Sales climbed 16 percent and also beat estimates. Last year’s acquisition of server and smartphone units is dragging down Lenovo’s slowing, yet profitable, PC business. Job cuts and a shift away from aggressive competition in China will help the company meet its stated timeline to turn the smartphone unit profitable, Chairman and CEO Yang Yuanqing said.
Postal Savings Bank nears stake sale ahead of IPO State-owned Postal Savings Bank of China (PSBC) is expected to soon close the sale of a 15 percent stake mainly to foreign investors ahead of a planned up to US$20 billion IPO in Hong Kong in 2016, people with knowledge of the matter said. The stake sale, which the sources said was worth $8 billion, indicates foreign demand for Chinese financial stocks remains resilient even as the economy slows. It also comes after the triple listing of Japan Post Holdings and its two financial units, which raised $12 billion for the Japanese government.
Jinchuan unit seeks copper, nickel assets A Hong Kong-based unit of China’s Jinchuan Group is hunting globally for quality copper and nickel assets, leveraging its access to capital at a time when Western rivals are finding it hard to secure finance, its chief executive said. “People are running out of money. Whether it’s their balance sheets or they just can’t fund their operations, or their projects,” Peter Albert, CEO of Jinchuan Group International Resources (JGI), told Reuters yesterday. “Companies like ours, who do have access to capital, it’s an opportunity for us.”
237 fixed-asset investment projects approved in 2015 China’s top economic planner approved 237 fixed asset investment projects with total investment reaching 1.89 trillion yuan (US$298 billion) in the first 10 months of this year, an official said yesterday. The amount represented 4.25 percent of the country’s total fixed asset investment in the same period. In October, the National Development and Reform Commission (NDRC) approved 19 projects with an investment of 86.4 billion yuan, covering water conservancy, transportation, technology and energy sectors, Shi Zihai, head of the NDRC’s policy research office said at a press conference.
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November 13, 2015
Greater China
Alibaba Singles’ Day draws record sales A third of buyers made purchases from merchants and brands outside of China during the one-day promotional event
A woman views her smartphone as she walks past a Singles’ Day advertisement
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libaba Group Holding Ltd. flexed its e-commerce muscle by logging a record 91.2 billion yuan (US$14.3 billion) in sales during its Singles’ Day promotion, providing a bright spot for the company’s prospects amid concern about Chinese consumer spending. The event, which generated a 60 percent sales increase from a year earlier, was part of Chairman Jack Ma’s strategy to transform Alibaba’s online marketplaces into platforms for international trade. A third of buyers made purchases from merchants and brands outside of China during the one-day promotional event. Ma has set a goal of getting 50 percent of the company’s revenue from beyond China. The success of Singles’ Day demonstrated how e-commerce companies can manufacture consumer demand through promotion, a strategy Amazon.com Inc. used in July with its first “Prime Day.” It also highlighted how U.S. companies can pursue growth in China, said Keith Anderson, vice president of strategy and insights at the Boston research firm Profitero. “Alibaba is a pathway for growth for American and European brands,” Anderson said. Nike sneakers and Levi’s jeans were among the topselling items, according to Alibaba. The company’s shares failed to get a boost in the U.S. as some investors stayed focused on the health of the Chinese economy and the strength of the country’s consumers, who remain Alibaba’s lifeblood. Shares declined 1.9 percent to US$79.85 at the close Wednesday in New York.
“Singles’ Day was a big success for Alibaba,” said Gil Luria, an analyst at Wedbush Securities in Los Angeles. “However, I do not believe we can extrapolate from that strength to the entire Chinese economy.” Ma raised the stakes this year by moving the event headquarters for Singles’ Day to Beijing, bringing in more foreign brands and enlisting Hollywood celebrities Daniel Craig and Kevin Spacey to add glamor to the shopathon. Tapping into rising disposable incomes has paid off for China’s biggest e- commerce emporium as it captures more of the country’s surging smartphone use with restaurant deliveries and video streaming. “Chinese consumers have a lot of money in their hands,” said Chen Xingdong, chief China economist at BNP Paribas SA in Beijing. “Online retailers need to customize their products to serve these increasingly savvy urban consumers. ”
Retail growth
China’s retail sales accelerated in October, overcoming the slowest economic growth in 25 years. Retail sales climbed 11 percent, the quickest gain this year and beating the median projection of economists, as the nation’s leaders seek to re-balance the economy toward consumption and services. “The consumers that can create and lead demand will survive,” Ma said Wednesday night. “In the next 15 years, China’s economy will be good.” Taking Singles’ Day festivities to China’s political, economic and media hub came after Alibaba’s roller-
coaster first year as a public company. A record offering was followed by a record fall below the initial price, allegations the company wasn’t doing enough to fight counterfeits on its platforms, and the replacement of its chief executive officer. Ma kicked off the event with a four-hour variety show that included a performance by “American Idol” finalist Adam Lambert and an appearance by Craig, star of the James Bond films. “House of Cards” star Spacey made a YouTube video. Singles’ Day, a Chinese twist on Valentine’s Day, was invented by students in the 1990s, according to People’s Daily. When written numerically, November 11 is reminiscent of “bare branches,” the Chinese expression for bachelors and spinsters. The Singles’ Day promotion was started by Alibaba in 2009 and copied by rivals, morphing into China’s version of Cyber Monday. For the first six years, results were tabulated in Alibaba’s hometown of Hangzhou, in eastern China. Alibaba estimated that 1.7 million deliverymen, 400,000 vehicles and 200 airplanes would be deployed to handle packages holding everything from iPhones to underwear. Mobile
US$14.3 bln Alababa’s Singles’ Day sales
devices accounted for 69 percent of Wednesday’s transactions, Alibaba said in a statement. “The sales on Singles’ Day shows the power of the Internet and that China still has considerable consumption potential,” said Zhu Qibing, a Beijing-based analyst at China Minzu Securities Co. “Alibaba’s success is a success of its platform, and it’s hard to replicate. ” To boost traffic on its platforms, Alibaba is focusing on attracting U.S. retailers to China. To boost traffic on its platforms, Alibaba is focusing on attracting U.S. retailers to China, President Michael Evans told Bloomberg TV. The company is opening a third U.S. office in New York to go along with those in Washington and San Francisco, he said. Ma said Alibaba is considering bringing the 24-hour November 11 event to the U.S. and the U.K. “This year’s event is more global with international players joining in,” said Fangting Sun, a senior research analyst with Euromonitor. “Alibaba aims to both attract more international players selling products to China and the domestic players to expand to the overseas markets.” The company said in September it was adding Beijing as another headquarters, with an eye toward “the globalization of Nov. 11.” “Alibaba wants this event to be high profile -- Beijing has the kind of media resources that it will need,” said Jeff Hao, a Hong Kong-based analyst at China Merchants Securities Holdings. “Gaining exposure is a means to ensure growth this year.” Bloomberg News
Business Daily | 11
November 13, 2015
Asia
Japanese machinery orders point to tepid rebound Economy probably slipped into a technical recession in July-September Stanley White
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apan's core machinery orders rose in September for the first time in four months, but companies forecast only modest gains in orders in October-December, a sign the economy's recovery from an expected recession could be slow. Core machinery orders, a leading indicator of capital expenditure, rose 7.5 percent in September versus the median estimate for a 3.3 percent increase, and followed a 5.7 percent decline in the previous month. However, companies forecast orders will rise 2.9 percent in OctoberDecember, which is a small rebound from a 10.0 percent decline in JulySeptember. A separate Reuters survey also showed companies do not expect growth to pick up until next year. Many policymakers are counting on gains in business investment to create new jobs, increase productivity and drive growth, so the machinery orders data suggest the government still faces an urgent task in convincing companies to invest. "Companies are taking a very cautious stance toward capital expenditure," said Norio Miyagawa, a senior economist, Mizuho Securities. "The health of overseas economies, particularly China, is
one factor. Also, it's difficult for companies to have the conviction that the domestic economy will grow rapidly." Core machinery orders, which exclude those for ships and power generators, rose in September due to gains in orders for equipment used in construction, chemicals and public transport sectors, Cabinet Office data showed yesterday. Japan's economy probably slipped into a technical recession in JulySeptember due to a drop in capital spending and soft external demand and private consumption, a Reuters poll showed. The economy is seen to have contracted at an annualised rate of 0.2 percent in the third quarter, following a 1.2 percent contraction in April-June, the poll of 19 economists showed. A technical recession is defined as two consecutive quarters of economic contraction. The GDP is due November 16. Most Japanese companies do not expect the flagging economy to recover until well into next year at the earliest, as a slowdown keeps overseas demand weak and consumer spending at home remains sluggish, a Reuters survey showed.
The BOJ held off from easing monetary policy at a crucial meeting last month but did delay the timing of meeting its 2 percent inflation target as wages have been slow to rise and as low oil prices put downward pressure on consumer prices.
The BOJ has argued that pessimism on the economy is unwarranted because its closely-watched Tankan corporate sentiment survey shows that capital expenditure plans are strong. Reuters
Bank of Korea holds key rate at record low The central bank said while sentiment has improved, uncertainties surrounding economic growth are high Jiyeun Lee and Cynthia Kim
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he Bank of Korea kept its benchmark interest rate unchanged for a fifth consecutive month as the economy grew at the fastest pace in more than five years while global uncertainties clouded the outlook. The decision to hold the seven-day repurchase rate at 1.5 percent was forecast by all 18 economists surveyed by Bloomberg. Analysts with Barclays, Nomura Holdings Inc. and HSBC Holdings were among those pushing to 2016 their forecast for a rate cut after the gross domestic product expanded 1.2 percent in the third quarter, supported by rising consumption and construction investment. Bank of Korea Governor Lee Ju Yeol has said he expects growth to continue its momentum in the fourth quarter. Still, exports have fallen every month in 2015, remaining a drag on the South Korean economy. And economists are monitoring
a potential shift in the U.S. Federal Reserve’s policy, which could raise capital outflow risks for emerging markets including Korea. “With GDP showing improvement, changing the key interest rate today wouldn’t have been an option for the BOK,” Yoon Yeo Sam, a Seoul-based fixed income analyst for Daewoo Securities Co., said after the decision.
Currency market
South Korea’s three-year government bond yield rose 15 basis points this month to 1.81 percent on Wednesday, as traders pared expectations for additional monetary easing. The won has weakened 0.8 percent against the dollar over the past month amid the possibility of a rate hike by the U.S. central bank. In statements yesterday, the central bank said while sentiment has improved, uncertainties surrounding economic growth are high
Bank of Korea Governor Lee Ju Yeol
and that risks to South Korea include changes in policies at the U.S. Federal Reserve, a slowdown in the Chinese economy and capital flows. It will continue to monitor domestic demand and rising household debt levels. Korea’s factory output expanded 2.4 percent in September from a year earlier, out pacing analysts’ estimates for a 0.4 percent gain. A recovery in private consumption is leading to improvement in production and investment, Finance Minister Choi Kyung Hwan said this week. Meanwhile, Korea will continue to face difficult export conditions next year because of the slow global economic recovery and low oil prices, Trade Minister Yoon Sang Jick said this week. Overseas shipments fell 15.8 percent in October from a year earlier, the biggest decline since 2009, as sales of major products were hurt. Bloomberg News
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November 13, 2015
Asia
Australian jobs blow past forecasts The annual pace of employment growth accelerated to 2.7 percent, compared to 2.0 percent for America’s much vaunted job-creating machine Wayne Cole
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ustralian jobs boasted the biggest gain in three-and-ahalf years last month while the unemployment rate dropped to a five-month low, a rousing report that lengthened the odds on a cut in interest rates and sent the local dollar flying. Yesterday’s data offered evidence that record low rates and a weak currency were lifting the labourintensive service sectors of the economy out of the hole left by a mining slump. The annual pace of employment growth even surpassed that of the
United States, where recent payrolls strength had all but assured a hike in interest rates next month. The Reserve Bank of Australia (RBA) remains a world away from tightening but the prospects of a further cut looked to have diminished greatly on Thursday. “It’s across the board, unequivocally, a strong number,” said JPMorgan’s chief economist, Stephen Walters. “Jobs are being lost in mining but we’re getting other jobs in areas like retailing and transport and tourism.
“Near term, it kills off any chance of the RBA cutting interest rates, but you can’t rule it out next year.” Investors seemed to agree, virtually pricing out the chance of a cut in the 2 percent cash rate in December. The market probability of a move in February dropped to around 28 percent, from 56 percent before the data. The Aussie dollar jumped threequarters of a U.S. cent to US$0.7143 after the Australian Bureau of Statistics reported 58,600 net new jobs were created in October, almost four times market forecasts. The breakdown was upbeat with 40,000 new full-time positions while the jobless rate dropped unexpectedly to 5.9 percent, from 6.2 percent. The annual pace of employment growth accelerated to 2.7 percent, compared to 2.0 percent for America’s much vaunted job-creating machine. Likewise, growth in hours worked climbed to a seven-year high in a sign the economy was speeding up after a sluggish start to the year. Gross domestic product grew just 2.0 percent in the second quarter, from a year earlier, well below the 3 percent to 3.25 percent that used to be considered “normal”.
Malaysian central bank governor says currency undervalued Governor Zeti said the ringgit doesn’t reflect fundamentals of the nation’s account surplus Alaa Shahine
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he Malaysian ringgit remains “significantly undervalued” and risks to economic expansion are unlikely to materialize with exports still strong, central bank Governor Zeti Akhtar Aziz said. The ringgit doesn’t reflect fundamentals with the nation’s current account in surplus, unemployment at about 3 percent and inflation within Malaysia’s long-term average,
Zeti said in an interview in Kuwait City. The currency may recover when the U.S. Federal Reserve normalizes interest rates and as “domestic issues” in Malaysia are resolved, she said. Malaysian policy makers have been struggling to boost confidence in its economy and finances since oil prices started to fall last year and as allegations of financial irregularities at a state
investment company hurt sentiment. While the ringgit recovered alongside emerging market currencies in October, it’s still down about 20 percent this year, the worst performer in the Asia Pacific region. “Our export growth remains fairly strong, it has not moderated to the extent that we expected,” Zeti said. Malaysian exports and industrial production beat economists’ estimates in September.
Analysts cautioned that the jobs data were volatile and have had measurement problems in the past, but noted other indicators of labour demand had been improving for some months. “That’s also what our clients have been telling us,” said Michael Workman, a senior economist at Commonwealth Bank. “It’s a pretty darned good outcome for the RBA since they can be reassured that unemployment isn’t heading higher while also being able to keep an easing bias because inflation remains so subdued.” An extensive survey of businesses from National Australia Bank out this week showed hiring intentions at their highest since 2011, with services the star performer. Tourism has been a major winner not only from a steep decline in the local dollar in recent years, but also the expansion of the middle class across Asia. Almost 22 percent more Chinese tourists arrived in September than a year earlier, bringing the total for the year to almost a million. Arrivals from India were up 15 percent, followed by Malaysia at 10 percent.
On expectations of a Fed rate increase, “investors have already anticipated this and have already priced it in, so we have already seen, we believe, most of the outflows,” she said.
Investor withdrawal
Global funds have pulled 17.4 billion ringgit (US$4 billion) from Malaysian equities and 16.2 billion ringgit from debt in 2015. Still, sentiment may be changing with MIDF Amanah Investment Bank saying foreign funds were net buyers of Malaysian stocks for four of the last five weeks, while central bank data showed global investors raised holdings of Malaysian debt for a second month in October. “We believe investors, after they reassess their investment portfolios, will still gravitate toward growth areas and we are one of those growth areas,” Zeti said. “When all this is resolved, we believe that the currency will reflect the fundamentals,” she said, citing rate differentials with the U.S. and the perception Malaysia is primarily an
Reuters
oil producer -- even as 80 percent of its economy is manufacturing- and servicesbased -- among factors that are affecting the ringgit. The central bank left rates unchanged for an eighth meeting this month, even as Malaysia’s biggest trading partners of China and Singapore both eased monetary policy in recent weeks. While Zeti said officials have priced in the slowdown in China, Trade Minister Mustapa Mohamed said last week easing growth in the North Asian nation and the impact on orders for Malaysian goods means the government won’t be able to meet its trade targets this year. Gross domestic product probably increased 4.7 percent last quarter from a year earlier after expanding 4.9 percent in the three months through June, according to the median estimate in a Bloomberg News survey of economists before data due Friday. At that rate, it would be the slowest in more than two years. Bloomberg News
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November 13, 2015
Asia
Myanmar’s army recognizes Suu Kyi win, offers cooperation
Idemitsu Kosan, Showa Shell agree to merge
Investors are hoping that an NLD government will further open the economy Andrew Davis and Malcolm Scott
Japan’s Idemitsu Kosan Co and Showa Shell Sekiyu said they agreed to merge, sealing a combination that was mooted earlier this year to create the second-biggest operator in the crowded Japanese refinery sector. The refiners will finalise terms of the merger and expect the combined company to start operating between October next year and April 2017, they said in a statement.
Myanmar vice president re-wins Myanmar Vice President Dr. Sai Mauk Kham has re-won as a representative to the House of Representative, according to the update election result released by the Union Election Commission yesterday morning. Representing the ruling Union Solidarity and Development Party (USDP), Sai Mauk Kham ran the election in Lashio township constituency, Shan state. According to yesterday morning’s update election result, the National League for Democracy (NLD), has so far secured a total of 587 parliamentary seats at three levels in the next term of parliament.
BHP boss pledges relief fund for mine disaster
Supporters of the National League for Democracy (NLD) party celebrate in front of NLD headquarters a day after the general elections in Yangon
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rmy Chief Min Aung Hlaing respects the outcome of Myanmar’s election and is willing to work with a new government led by Aung San Suu Kyi’s National League for Democracy, a senior government official said. “The commander-in-chief of the armed forces has said that he will accept the position made by the Myanmar people and will also work with a new government,” Minister of Information Ye Htut said in an interview. In a separate written statement, the army offered its congratulations to the NLD “because it is leading in the election results” and said it was prepared for “national reconciliation talks” next week. Suu Kyi’s NLD is dominating early returns from the Sunday vote and is on track to rout the ruling Union Solidarity and Development Party, the military’s political arm. Aung Hlaing publicly bowing to the results may reassure the NLD, who fear a repeat of Myanmar’s first modern election in 1990, when the NLD also won a sweeping victory only to see the ruling generals refuse to accept the outcome. Suu Kyi won the vote even though she was under house arrest at the time.
Foreign investment
With the NLD poised to break the army’s grip on direct control of the government, the election is proving to be the biggest test yet of just how much influence the military is willing to relinquish after half a century rule that left Myanmar one of the poorest nations in Southeast Asia. The quasi-civilian USDP government
has opened Myanmar to the outside world since 2010, attracting a flood of foreign investment and fuelling some of the fastest economic growth in Southeast Asia. Even with an NLD government in place, the political system is still rigged to protect the military’s interests. Key ministries such as defence and interior are reserved for the army as well as 25 percent of the seats in each house of the legislature. The military also controls lucrative parts of the economy such as jade mining. As long as NLD sees the military as a partner, “there will be no problems,” Ye Htut said.
It is important to implement the people’s will in a peaceful manner for the sake of the country’s dignity
Chief of Australia’s mining giant BHP Billiton, Andrew Mackenzie, pledged yesterday a relief fund to help communities affected by a deadly dam burst at its Brazil joint venture that left six people dead. “We are deeply sorry, so sorry, to everyone who has, and will suffer, from this terrible tragedy,” Mackenzie said after surveying the damage with Murilo Ferreira, chief of Vale, a Brazilian multinational mining company, at the site in Minas Gerais state, Brazil. Mackenzie flew to Brazil earlier this week to inspect damage following the burst of two dams at the Somaro iron ore mine.
NZ passes legislation to join AIIB
Aung San Suu Kyi, National League for Democracy
‘People’s will’
President Thein Sein, a former general, said Wednesday his government also acknowledges the outcome and he was prepared to meet with Suu Kyi once the final results are tallied. Suu Kyi appealed for a meeting with the two men on Wednesday to ensure the “people’s will” is respected as the vote count dragged on. The election commission has released results of about two thirds of the seats in parliament being contested. The NLD has won 273 seats to about 27 for the USDP. The NLD needs about 330 seats in the two houses to be able to selected the next president without relying on any other party for support. The country’s election commission has said counting could take a week or longer. “The public has expressed their opinion,” Suu Kyi said in letters she sent to Aung Hlaing, Thein Sein and parliament Speaker Shwe Mann
asking for a meeting. “It is important to implement the people’s will in a peaceful manner for the sake of the country’s dignity.” Investors are hoping that an NLD government will further open the economy. In a bid to bring Myanmar out of economic isolation, the USDP allowed foreign participation in industries such as energy exploration, banking and telecommunications. Foreign direct investment, led by spending on infrastructure and low-cost manufacturing, surged to US$8.1 billion in the fiscal year ended in March, more than 20 times the 2010 level. That jump helped annual economic growth average more than 7 percent since that year. Bloomberg News
New Zealand’s Parliament on Thursday passed legislation enabling the country to become a founding member of the China-led Asian Infrastructure Investment Bank (AIIB). Finance Minister Bill English (pictured) welcomed the passing of the International Finance Agreements Amendment Bill, saying the decision to join would help build and consolidate New Zealand’s economic and political relationships in Asia. “Our involvement in the negotiations to establish the bank has contributed to the emergence of a genuinely multilateral 21st Century institution with New Zealand continuing to play a useful role including advocating for good governance and high lending standards,” English said in a statement.
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November 13, 2015
International Venezuela says ‘informal’ OPEC chat before meeting Oil ministers of OPEC nations will hold “candid, informal” talks on December 3, a day before the group’s formally scheduled meeting in Vienna, Venezuela’s oil minister said on Wednesday, adding the idea was suggested by Saudi Arabia. “It’s an informal meeting where we’re going to speak in a very frank way about the market situation, and we’re going to speak frankly about production levels in each country,” Venezuelan Oil Minister Eulogio del Pino told Reuters in a phone interview. The informal meeting will be held at the suggestion of Saudi Arabia’s oil minister Ali al-Naimi, del Pino said.
Greek unions in first general strike against leftist government
World powers fail to deliver on anti-graft pledges Transparency International said that of G20 countries, only Britain was “actively working to make it harder for the corrupt to hide their cash”
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20 have failed to deliver on bold pledges to close down corporate loopholes that allow the corrupt to easily hide their ill-gotten gains, Transparency International said yesterday. It said in a report that up to US$2 trillion was laundered each year, often through complex webs of anonymous entities across multiple jurisdictions, and said the Group of 20 top industrial economies must do more to eradicate the legal structures that made it possible. Transparency said that of G20 countries the United States and China were among the worst performers. Anti-graft advocates have repeatedly called for the adoption of tougher corporate disclosure requirements by G20 countries, which represent 85 percent of the global economy.
‘Gaping loophole’ Greek unions yesterday kicked off a general strike against fresh austerity cuts, the first under the leftist government of Prime Minister Alexis Tsipras. The 24-hour strike against tax hikes and an upcoming pensions overhaul has shut down public services, hit ship and train transport and forced the cancellation of dozens of domestic flights. “We are fighting against government measures that perpetuate medieval labour relations ... we react to any austerity measure that downgrades our lives,” said leading union GSEE. Journalists were also participating in the 24-hour walkout.
At the 2014 summit, G20 leaders vowed to clamp down on corruption, tax evasion and money laundering by endorsing beneficial ownership principles that Transparency said should have led to the dismantling of legal structures that allow anonymous companies or trusts
to transfer and hide money often stolen through corruption. Transparency called for governments to set up a central public register containing information on beneficial ownership and to tighten up corporate oversight on those aiding the corrupt. Currently, it said, only Britain and India now require companies to record information about their real owners, while Brazil and South Africa had not even adopted a legal definition of beneficial ownership. In eight countries, it said, including the leading financial centres of New York, Tokyo, Shanghai and Sydney, banks can complete transactions even
ECB mulls buying debt of cities and regions
Germany’s Bundesbank, which Former VW CEO quits is opposed to any extra money as Audi chair printing, may find it easier to accept Former Volkswagen Chief Executive Martin Winterkorn has stepped down the buying of municipal bonds as chairman of luxury brand Audi amid an investigation of two emissions scandals that occurred during his reign at Europe’s largest carmaker. Winterkorn quit his post at Audi on Wednesday, a spokesman at the Ingolstadt-based carmaker said on Thursday, after resigning as chief executive of family-owned Porsche SE , VW’s majority stakeholder, last month. Winterkorn was forced to resign as VW group chief executive by the carmaker’s influential labour leaders and the state of Lower Saxony, VW’s No. 2 shareholder, on September 23.
US agriculture chief in Cuba as ties warm The United States’ agriculture secretary was in Cuba on Wednesday to speed up efforts at normalizing trade ties after decades of enmity between the old Cold War foes. The neighbours agreed to right relations in December after more than 50 years of highly tense ties including the Cuban Missile Crisis, which brought the world to the brink of nuclear war. Tom Vilsack is the third member of President Barack Obama’s cabinet to visit after Secretary of State John Kerry and Commerce Secretary Penny Pritzker.
John O’Donnell
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he European Central Bank is examining whether to buy municipal bonds of cities such as Paris or regions like Bavaria, according to people with knowledge of a possible extension of its one-trillioneuro-plus money printing scheme. This regional bond buying could be one in a series of measures to be rolled out in the coming months, although one of the sources said time was short for a full launch in December and that this would likely come by March next year. The ECB declined to comment. Despite the ECB’s scheme of quantitative easing (QE) to buy chiefly state bonds, the euro zone’s economy is growing only modestly and the central bank is urgently considering what more it can do to improve it and stagnant price inflation. As part of preparations for the next rate-setting meeting of policy-setters on December 3, ECB officials are now analysing whether and how to extend
its shopping list to municipal bonds, issued by, say, Madrid or Mainz, or a federal German state. “You have big markets, such as Spain and Italy. France has a well developed market,” said one person. According to data from Thomson Reuters IFR, almost US$500 billion of bonds issued by European cities and regions are in circulation. The regions have sold more than US$76 billion of bonds over the last year. The city of Paris, for example, has borrowed 4 billion euros (US$4.3 billion) in total through such bonds. It recently sold a bond of 300 million euros. The source said that while some cities were risky, they had the support of central governments. Municipal bonds typically have a lower credit rating than governments. It is a fragmented market in Europe, with many small issues. “Some cities in Spain or Italy are bust. But a city will always be there,”
if they do not know the identity of the true person behind the funds. And it said that properties worth hundreds of billions of dollars in London and New York have secret owners, because in seven G20 nations estate agents are not required to identify the true buyers and sellers. Turkey has said that the fight against corruption in the public and private sector and tax evasion would be on the agenda at the November 15-16 summit in the Mediterranean resort of Antalya although the gathering is set to be dominated by the Syrian conflict and the migrant crisis. Reuters
said the person. “Someone will always pay back the debt. They have the backing of the government and the ability to raise taxes.”
German boost
A second person confirmed that buying municipal or regional bonds already being traded was one of the options being studied, also a testimony to the fact that the ECB’s alternatives are limited. Corporate debt, for example, is much sought after and therefore difficult to buy. Buying into stock markets would face opposition because of the risk. The ECB already buys covered bonds and asset backed securities. Any move to buy municipal debt would particularly benefit the German regions that have sold hundreds of billions of euros of bonds and dominate the market, making it even cheaper for them to borrow. But it could also help rejuvenate slack markets such as Italy or Spain although regional borrowings count in calculating a country’s overall debt pile and their size is therefore also kept in check. In the coming weeks, ECB President Mario Draghi hopes to win the backing of a majority of Governing Council, which includes national central bank chiefs, for further steps to shore up the bloc’s weak economy. Because quantitative easing is determined by the relative size of a country in the 19-member euro zone, Germany does most bond buying. Some analysts predict that it could even run out of bonds to buy, as returns dip below the ECB threshold. Putting municipal bonds in the mix could resolve that problem. Reuters
Business Daily | 15
November 13, 2015
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Confronting the coming liquidity crisis Camila Villard Duran
Oxford-Princeton global leaders fellow and a law professor at the University of São Paulo
THANH NIEN NEWS Vietnamese legislators voted in support for a government’s plan to issue US$3 billion worth of bonds in overseas markets from now to the end of next year to refinance existing loans. More than 79 percent of the National Assembly approved the plan, which previously raised concerns among several lawmakers and economists. Some believed the massive issuance could threaten the country’s debt sustainability. The bonds will be issued with maturities of 10-30 years, according to the plan, which was proposed amid a huge budget deficit and low bond sales in the local market.
TAIPEI TIMES Chinese Nationalist Party presidential candidate Eric Chu said he would attach a high priority to public health and the stances of Taiwan’s neighbouring trade partners on the issue of US pork imports. Chu made the remarks at a news conference in Los Angeles on Tuesday afternoon, the first leg of his sevenday visit to the US. “While the Taiwanese government has no preference as to which regional partnership to join first: the Trans-Pacific Partnership (TPP) or the Regional Comprehensive Economic Partnership, I personally think Taiwan’s entry to the TPP will happen sooner,” Chu said.
THE STRAITS TIMES The majority of small and medium-sized enterprises in Singapore expect flat lining or falling revenue this year amid a lacklustre global economy, according to a new survey. However, there is still scope for optimism. The survey by DP Information Group also showed companies are increasingly using automation and information technology to raise productivity. The annual SME Development Survey found 47 per cent do not expect turnover growth this year, up from 40 per cent last year. Six per cent of those polled expect to see sales decline, similar to the 7 per cent last year.
BANGKOK POST The National Broadcasting and Telecommunications Commission (NBTC) was forced to extended an auction for two 4G licences into a second day after 15 hours of fierce bidding Wednesday from four operators hit nearly 60 billion baht but failed to pick a winner. The auction is seen as a do-or-die game for the existing big three mobile operators, which could lose opportunities to others if they declined to take part in the bidding. NBTC secretarygeneral Takorn Tantasith said the outcome of the auctions was transparent and successful - although he failed to complete it.
Annual meeting of the IMF in Lima, Peru
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his month, G-20 leaders will meet in Antalya, Turkey, for their tenth summit since the 2007 global financial crisis. But, despite all of these meetings – high-profile events involving top decisionmakers from the world’s most influential economies – no real progress has been made toward reforming the international financial architecture. Indeed, the group has not seriously engaged with the subject since the 2010 summit in Seoul. Put simply, the G-20 is failing in its primary and original purpose of enhancing global financial and monetary stability. A big part of the problem is that the G-20 agenda has become increasingly congested over the years. At a time of looming financial upheaval, the G-20 must stop attempting to tackle a broad array of issues simultaneously – a goal that has proved impossible – and go back to basics. The United States Federal Reserve is now preparing to raise interest rates, which it has kept near zero since the crisis. While monetary-policy tightening may be necessary, it risks triggering a serious liquidity crisis in developing countries, with a major impact on economic growth and development. That is why, at this month’s G-20 summit, participants must focus on providing a credible institutional backstop for the difficult times ahead. Specifically, the G-20 should move to empower the International Monetary Fund, both by pushing it to do more with its existing powers and by championing institutional reform. Raghuram Rajan, the governor of India’s central bank, emphasized this at the recent annual meetings of the IMF and the World Bank in Lima, Peru, when he called for the Fund to build a sustainable global safety net to help countries in future liquidity crisis.
The necessary institutional arrangement already exists: the IMF’s Special Drawing Rights (SDR) department. Within this department, official entities can exchange SDRs – the IMF’s own international reserve asset – for other currencies. Moreover, the IMF can designate a country with a strong balance-ofpayments position to provide the liquidity that another member needs. Through this so-called “designation mechanism” – which has never been used – the IMF can ensure certainty of access to global currencies in times of crisis. Of course, if the IMF’s SDR department is to become a global liquidity hub capable of mitigating future crises, reform is vital. Ideally, major powers would support efforts to strengthen the IMF. But the US has so far been unwilling to do so, with domestic partisan politics spurring Congress to block the relevant reforms. While the G-20 should not give up on IMF-strengthening reforms, it should hedge its bets. Specifically, it should work with a “coalition of the willing” – including the major emerging economies, concerned advanced countries, and other developing countries – to create an institutional mechanism with which to respond effectively to the next global liquidity crisis. One obvious option would be to replicate the institutional design of the SDR department by incorporating it in an agreement among the coalition countries. The Bank for International Settlements, which was the counterparty in currency swaps under the Bretton Woods par value system in the 1960s, could be the manager of this system. This approach undoubtedly has major shortcomings. Indeed, the key advantage of the IMF’s SDR department – that it is a quasi-universal and governmentdriven system whereby
Clearly, the world’s ever-expanding network of currencyswap arrangements is far from a reliable mechanism for responding to crisis. This is particularly problematic for the emerging economies, which are especially vulnerable now
currencies are exchanged with reliable “collateral” (the SDR) – would be lost. But the perfect should not be made the enemy of the good. As long as an ideal system is out of reach, an imperfect option will have to do. With the risk of a liquidity crisis intensifying, and the existing international financial architecture ill-equipped to respond to such a crisis, doing nothing is not an option. In recent years, the international financial system has become increasingly fragmented, exemplified in the proliferation of bilateral and multilateral currency-swap arrangements. For example, the Chiang Mai Initiative Multilateralization involves the ASEAN countries,
plus China, Japan, and South Korea. And the Contingent Reserve Arrangement (CRA) was created by the BRICS countries (Brazil, China, India, Russia, and South Africa). Swap contracts involve precommitted resources, which are not transferred to an international organization with a specific institutional mission. Instead, foreign-exchange reserves – that is, liquidity in currencies accepted for international payments – are held in national agencies until a swap’s activation. This means that there is no guarantee that, in the event of a crisis, a central bank will actually provide the swap line it has pledged, at least not without attaching political strings. In the CRA, for example, members can opt out of providing support – and can request early repayment if a balance-of-payments need arises. Clearly, the world’s everexpanding network of currencyswap arrangements is far from a reliable mechanism for responding to crisis. This is particularly problematic for the emerging economies, which are especially vulnerable now. Turkey, which currently holds the G-20 presidency, and China, which will take over next year, should have plenty of motivation to demand action to create safeguards against today’s liquidity risks. Beyond urging the US to approve IMF governance reforms, both countries should be hard at work building a coalition of the willing and designing an effective crisisresponse mechanism. So far, Turkey seems to be falling short, promoting an overcrowded and ineffective agenda. One hopes that its leaders come to their senses fast, so that the upcoming summit can produce the results that past summits have failed to provide – and that the world needs more than ever. Project Syndicate
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November 13, 2015
Closing Malaysian PM to give statement about transferred funds “soon”
China launches new ‘harder to fake’ 100 yuan note
Malaysian Prime Minister Najib Razak (pictured) said yesterday he will give a statement to the anti-graft agency soon over funds worth 2.6 billion ringgit (US$595.58 million) that were transferred into his bank accounts. The Wall Street Journal reported in July that investigators looking into debt-laden state investor 1Malaysia Development Berhad (1MDB) found that funds were moved into Najib’s accounts, sparking a political crisis for Najib and his government. Najib denies wrongdoing or taking any money for personal gain and the Malaysian Anti-Corruption Commission (MACC) said the money was a political donation from an unidentified Middle East benefactor.
Authorities yesterday put into circulation a new version of its 100-yuan banknote -- the highest denomination available in the world’s second-largest economy -- with added golden touches that the government said was harder to forge. The note, worth just under US$16, retains its overall red colour, with Communist founder Mao Zedong on one side and Beijing’s Great Hall of the People on the other. But the main “100” becomes gold, rather than red and blue, prompting some Chinese media to dub it the “tuhao jin” note, or “high-roller gold”. Counterfeiting is rampant in China despite numerous crackdowns by authorities.
Top nations spend US$452 bln a year supporting fossil fuels A report says China is by far the biggest investor in fossil fuel production, spending US$77 billion annually
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he G20 group of major econom ies sp end US$452 billion per year supporting fossil fuel industries, despite their primary role in causing climate change, according to a study released yesterday. The report, which comes ahead of a crunch UN meeting in Paris to try to forge a global deal to avoid disastrous levels of climate
change in December, accused governments of undermining their own climate change policies. “G20 governments are handing out approximately US$452 billion a year to prop up the production of fossil fuels –- despite pledges to phase out subsidies and prevent catastrophic climate change,” the study by British think tank the Overseas
Development Institute and Oil Change International found. Support for fossil fuels like oil and coal by G20 nations -- which include Australia, Brazil, the European Union and the United States -- was four times higher than the entire world’s support for renewable energy, such as solar or wind power, it found.
That included direct spending and tax breaks (US$78 billion), investments in the sector by state-owned enterprises (US$286 billion), and public finance such as loans from governmentowned banks (US$88 billion), last year and the year before. Investment continued despite diminishing returns in coal, and new oil and gas reserves being hard to reach. “G20 governments are paying fossil fuel producers to undermine their own policies on climate change,” said Shelagh Whitley, of the Overseas Development Institute. “Scrapping these subsidies would rebalance energy markets and allow a level playing field for clean and efficient alternatives.” Some 100 heads of state and government will meet in Paris to secure a deal to stave off catastrophic levels of global warming caused by greenhouse gas emissions from burning fossil fuels. It aims to seal a global deal to limit global warming to
two degrees Celsius over preIndustrial Revolution levels, although scientists say the world currently is on track to overshoot that target. The study noted that Britain was the only nation in the smaller G7 group of developed countries significantly increasing its support for the fossil fuel industry. It said China was by far the biggest investor in fossil fuel production, spending US$77 billion annually, while national subsidies in the US amounted to US$20 billion. The report recommended a strict timetable for ending fossil fuel production subsidies, increased transparency of subsidies, and more support for lowcarbon development. “Continuing to fund the fossil fuel industry today is like accelerating towards a wall that we can clearly see,” Stephen Kretzmann, director of Oil Change International, said in a statement.
Philippines keeps policy rate steady on benign inflation
China, Mekong countries launch Mild HK Q3 GDP growth seen Cooperation framework despite consumption slump
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he Philippine central bank left monetary policy settings unchanged yesterday, saying the economy is strong enough to withstand global headwinds and the inflation outlook remains benign. Risks that inflation could rise due to the prolonged El Niño weather dry pattern and possibly higher utility rates also warrant keeping the overnight borrowing rate at 4.0 percent, the central bank said. It added slower-than-expected global economic activity could offset upside price pressures. “The challenging external environment and uneven growth prospects in advanced and key emerging economies supported a steady policy setting,” Bangko Sentral ng Pilipinas Governor Amando Tetangco told reporters. The central bank also left its special deposit accounts (SDAs) rate and the reserve requirement ratio on hold at 2.5 percent and 20 percent, respectively. Policy has been unchanged since September 2014, and all 10 economists in a Reuters poll predicted no change on Thursday. The central bank cut this year’s inflation forecast to 1.4 percent from 1.6 percent and lowered its 2016 estimate to 2.3 percent from 2.6 percent. Reuters
enior foreign affairs officials from China, Cambodia, Laos, Myanmar, Thailand and Vietnam agreed on the Lancang-Mekong Cooperation (LMC) framework yesterday in Jinghong, Yunnan Province. The Lancang-Mekong River is a natural link between the six countries. At the first LMC foreign ministers’ meeting, they decided to cooperate in three priority areas, politico-security issues, economics-development, and people-to-people exchanges. At the invitation of Chinese Foreign Minister Wang Yi, Cambodian Deputy Prime Minister and Minister of Foreign Affairs Hor Nam Hong, Lao Deputy Prime Minister and Minister of Foreign Affairs Thongloun Sisoulith, Myanmar Foreign Minister U Wunna Maung Lwin, Thai Foreign Minister Don Pramudwinai, Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh attended the meeting, and Wang Yi and Don Pramudwinai co-hosted the meeting. The LMC is the first sub-region cooperation by the six countries involved, and the cooperation framework is in accord with development demands, and the fundamental, long-term interests of the six countries, Wang said. Xinhua
AFP
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ong Kong’s economy likely grew slightly in the third quarter despite a slowdown in China and weaker retail sales as fewer mainland Chinese stream across the border on shopping sprees. Gross domestic product for the July to September quarter was expected to expand 0.4 percent from the second quarter, according to the average estimate of four economists surveyed by Reuters, matching the pace of the April-June quarter. From a year earlier, the economy was estimated to grow 1.8 percent in the third quarter, down from 2.8 percent in the second quarter. As a free and open economy on China’s doorstep, Hong Kong’s economy has long been vulnerable to external headwinds that now include a slowdown in the world’s secondlargest economy and broader uncertainty over U.S. monetary policy, due to the city’s currency peg to the dollar. An interest rate hike by the U.S. Federal Reserve could trigger capital outflows, but the peg means that Hong Kong authorities tend to follow U.S. rate moves and that could pile more pressure on the strong Hong Kong dollar. Reuters