MOP 6.00 Closing editor: Joanne Kuai
Chinese bank debt management increasingly in trouble
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Year IV
Number 924 Friday November 20, 2015
Publisher: Paulo A. Azevedo
Alipay QR code payment available in 107 stores in Macau Page 2
Taiwan President conditions corporate tax breaks to wages rise
Visitors reining in spending
Mainland Chinese are spending less in Macau. Meaning the total spending of visitors is down 19.5 pct in Q3. To MOP12.47 bln. Visitor spending decreased 18 pct y-o-y, or 7.7 pct q-o-q, amounting to MOP1,540 per capita. International visitors also spent less. Spending by Australians, in particular, declined 12.4 pct y-o-y to MOP1,312 per capita. Most visitors splurged on shopping, accounting for 43.6 pct of the total. Followed by accommodation and F&B, occupying 25.7 pct and 21.9 pct, respectively Pages
3
Bank business bulletin
International banking business retreated during Q3. International assets dropped to 86.1 pct, compared to 86.6 pct posted at the end of June. The share of international liabilities to total banking liabilities fell to 82.3 pct from 83 pct q-o-q. Although the value of total international assets advanced
Gap year Early next year. That, says a Hong Kong exchange official, is when they will start offering a futures contract. On the price gap between stocks that trade in both the city and Mainland China
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www.macaubusinessdaily.com
Downtime for profits Luxury is losing out. Oriental Watch Holdings Ltd. said net profit attributable to owners of the company had plunged 77 pct for the six months ended September 30. Amounting to just HK$2.65 million. Slowing demand for high-end consumer goods and a ‘high level of operating costs’ are cited
Roll up!
A good investment. Returning an average of 21 pct in three years. So says brokerage CLSA Ltd. re. gaming operators’ new projects in Cotai 02. Payback on Macau casinos might stretch out to a little over five years, they say. Or about double the 20132014 peak
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Brought to you by
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HSI - Movers November 19
Name
%Day
Belle International Ho
+3.32
China Shenhua Energy
+3.22
Tingyi Cayman Islands
+3.09
China Resources Powe
+2.85
China Construction Ba
+2.59
Sands China Ltd
0.00
Power Assets Holdings
-0.14
Sun Hung Kai Propertie
-0.31
China Mengniu Dairy C
-0.44
China Overseas Land &
-1.69
Source: Bloomberg
I SSN 2226-8294
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2 | Business Daily
November 20, 2015
Macau Alipay QR code payment available in city’s 107 stores Chinese online payment company Alipay’s QR code payment is now available in 107 stores in the city, its parent company Ant Financial has announced. According to the company, more than 51 local brands and companies have introduced the payment method in their stores, including local restaurant chain operator Future Bright, electrical appliances retailer Royal Electronics Square and local shopping mall New Yaohan. The payment method allows transactions by scanning the QR code in users’ Alipay. The company is the first third-party payment platform to offer such a payment method in the city.
Oriental Watch net profits shrink 77 pct in H1 The retailer said it is driven by ‘the overall slackening landscapes in the luxury sector’
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uxury watch retailer Oriental Watch Holdings Ltd. said its net profit attributable to owners of the company had plunged 77 per cent for the six months ended September 30, amounting to only some HK$2.65 million (US$330,875) from HK$11 million one year ago due to lower demand for luxury products. The company told Hong Kong Stock Exchange on Wednesday that the notable decline is due to ‘the slowdown of demand in the competitive high-end consumer goods market’, as well as a ‘high level of operating costs’ of which rental accounted for 43 per cent. ‘Recent RMB depreciation and relaxations of visa
policies in foreign countries have encouraged Chinese outbound travellers to visit foreign countries. Favourable exchange rates have also made Chinese visitors more inclined to spend money and purchase luxury goods abroad. Furthermore, the increasing social tensions between Hong Kong and Mainland China have deflated Chinese travellers’ sentiment to visit Hong Kong,’ the retailer explained in its filing. As at the end of September, Oriental Watch owned a total of 81 stores, of which 13 were in Hong Kong, 62 in Mainland China, three in Taiwan and another three in Macau. In fact, the retailer’s turnover during the half year
registered a slight increase of 2.5 per cent to HK$1.57 billion from HK$1.53 billion during the same period of last year despite gross profit dropping 5.6 per cent to HK$241 million from HK$255 million. The company’s turnover generated by Hong Kong increased to HK$1.2 billion compared to HK$1.06 billion during the same period of last year, up 13.2 per cent. Nevertheless, its turnover in other markets plunged to HK$409 million from HK$463.1 million one year ago, down 11.7 per cent yearon-year. The company proposed distributing an interim dividend of HK$0.1 cent per share for the period, compared to HK$0.5 cent per share one year ago. ‘Oriental Watch, as a traditional trading of luxury watches company that operates in the Greater China area, will strike to achieve business stability through improving store efficiency as well as employing effective inventory and cost control in order to serve the best interests of its shareholders,’ the company stated. K.L.
Perfect Shape businesses soar in SARs The beauty centre’s revenues generated by Hong Kong and Macau surged nearly 86 per cent year-on-year for the six months ended September 30
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ong Kong-listed slimming and beauty parlour chain Perfect Shape (PRC) Holdings Ltd. saw its earnings before interest, tax, depreciation and amortisation
(EBITDA) jump nearly 17 per cent year-on-year for the first half of its fiscal year ended September 30, driven by its revenue surge in Hong Kong and Macau.
According to the company’s filing with Hong Kong Stock Exchange on Wednesday, EBITDA totalled HK$123.9 million (US$15.4 million) for the six months, compared to HK$105.9 million one year ago. Meanwhile, its profit attributable to equity holders of the company increased slightly by 5.5 per cent year-on-year to HK$75.1 million. The company primarily provides beauty services in Hong Kong. Macau and Mainland China. For the six months, the beauty centre said its revenue generated by Hong Kong and Macau soared 85.9 per cent year-on-year to HK$309 million from HK$166.2 million for the same period last year. ‘Such stellar performance can be attributed to the Group’s strong capability of answering customers’ needs on a physical and psychological level, and also allows the Group to benefit from higher efficiency and economies of scale,’ the company claimed. For Macau alone, the company saw revenue from the city surge 134 per cent year-on-year. ‘We believe there is more potential to be unleashed from the market. With a rich medical background, our management team will continue to bring professional high technology
beauty treatments to capture the increasing demand,’ it said. However, the company’s business in Mainland China posted a drop of 6.5 per cent year-on-year in revenues, amounting to HK$148.1 million. ‘With the government’s selfimposed macro-economic discipline that led to softness in both domestic and external economies, the Group faced challenges in the [Mainland Chinese] retail market,’ the beauty centre claimed. In general, the Hong Konglisted company generated a total of HK$457.1 million in revenues during the first half of the fiscal year, soaring 40.8 per cent year-on-year from HK$324.6 million one year ago. It claimed in the filing that growth was driven by the increased average spending per customer. ‘Moving forward, the management remains optimistic about the Group’s prospects in the principal markets of Hong Kong and the PRC, despite modest economic growth anticipated on both sides of the border,’ the company claimed. The beauty centre also announced an interim dividend of HK6.7 cents in the filing, an increase of 15.5 per cent compared to HK$5.8 cents for the same period last year.
Business Daily | 3
November 20, 2015
Macau
Visitor expenditure International business shrinks 20 pct in Q3 of local banks reduced On average, each of the tourists visiting the city spent 18 pct less in the third quarter compared to one year ago
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otal spending of visitors in the territory amounted to MOP12.47 billion (US$1.56 billion) during the third quarter of the year, down 19.5 per cent year-onyear due to tourists from Mainland China spending less than they used to, according to the latest official data released by the Statistics and Census Service (DSEC). Compared to MOP12.25 billion in the second quarter, the total amount that visitors spent in the city is actually some 1.8 per cent higher. Nevertheless, per capita spending of visitors decreased 18 per cent year-on-year, or 7.7 per cent quarter-on-quarter, amounting to MOP1,540. The DSEC data does not include visitors’ gaming expenses. In terms of visitor type, those staying overnight spent 23.8 per cent less in the three months than one year ago, totalling MOP9.81 billion while the total spending of same-day visitors jumped 2 per cent to MOP2.66 billion. In terms of region, Mainland Chinese tourists, the city’s biggest source of visitors, spent only some MOP1,776 per person on average during the quarter, down 20 per cent year-on-year. In addition, per capita spending of those travelling under the Individual Visit Scheme (IVS) declined by 25.4 per cent year-onyear to MOP2,057. However, per capita spending of visitors from Guangdong Province rose 2.9 per cent to MOP1,440 in general, while those under the IVS scheme also spent 5.3 per cent more
compared to the same period of last year. Meanwhile, per capita spending of visitors from Hong Kong, the second biggest group of tourists for the Macau Special Administrative Region, registered a slight decrease to MOP913 from MOP919 one year ago.
International visitors
For other international visitors, per capita spending of those from Singapore, Malaysia and Japan dropped respectively to some MOP1,632, MOP1,611 and MOP1,620 for the quarter. Particularly, that from Australia declined 12.4 per cent year-on-year to MOP1,312. However, per capita spending from the United States grew 16.7 per cent year-onyear to MOP1,353. Most of the visitors spent their money shopping in the city, accounting for 43.6 per cent of the total, followed by accommodation and food & beverage, occupying some 25.7 per cent and 21.9 per cent of the total, respectively. Per capita shopping spending in general, however, plunged 27.2 per cent year-on-year to MOP671 in the three months, and was mostly spent on local food products. According to DSEC, visitors from Mainland China spent an average of MOP907 on shopping, with IVS visitors spending MOP1,274, down 28.0 per cent and 26.2 per cent, respectively. Meanwhile, long-haul visitors spent primarily on accommodation and food & beverage. K.L.
in third quarter
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he local banking sector saw the proportion of its international business retreat slightly during the third quarter of the year, although values registered slight increases, the latest statistics released yesterday by the Monetary Authority of Macau (AMCM) reveals. As at the end of September, the banking sector’s share of international assets of total banking assets dropped to 86.1 per cent, compared to 86.6 per cent posted for the end of June. In addition, the share of international liabilities in total banking liabilities fell to 82.3 per cent from 83 per cent quarter-on-quarter. Most of the international banking transactions were denominated in non-local currencies. According to AMCM, the shares of the pataca in total international assets and total international liabilities accounted for only some 0.6 per cent and 1.7 per cent, respectively. The Hong Kong dollar (HKD), US dollar (USD) and renminbi (RMB) accounted for some 37 per cent, 37.4 per cent and 19.3 per cent of total international assets, and 39.5 per cent, 37.8 per cent and 16.7 per cent of total international liabilities during the three months, respectively. Nevertheless, in terms of value, total international assets advanced 1.9 per cent quarter-on-quarter to MOP1,199.6 billion (US$150.3 billion) as at the end of the third quarter. On a year-on-year comparison, the amount represents a jump of 18.9 per cent. Of the total, external assets registered a year-on-year increase of 19.3 per cent to MOP899.5 billion. In addition, local assets in foreign currencies grew 17.9 per cent to MOP300.1 billion. External interbank
loans, meanwhile, rose 19.6 per cent year-on-year to MOP424.4 billion as at the end of the quarter.
Liabilities
In addition, the value of total international liabilities jumped 1.5 per cent quarter-on-quarter, or 19.6 per cent year-on-year in the three months, amounting to MOP1,146 billion. External liabilities expanded yearon-year by 35.9 per cent to MOP672.7 billion, while local liabilities grew 2.2 per cent to MOP473.3 billion. Moreover, foreign currency deposits held by local residents and the Macau Government in local banks occupy the highest proportion of international liabilities. According to AMCM, such deposits grew 3 per cent to MOP436.7 billion as at the end of September, compared to MOP423.9 billion one year ago. In terms of region, the majority of external assets and liabilities were related to the regions of Asia and Europe, the Authority said. As at the end of the quarter, claims on Hong Kong, Mainland China and Singapore occupied 32.6 per cent, 28.5 per cent and 3.4 per cent of total external assets, respectively. Meanwhile, European countries such as Portugal, the United Kingdom and Germany accounted for some 3.7 per cent, 2.1 per cent and 0.9 per cent of the total, respectively. For external liabilities, the share of Hong Kong reached 42.2 per cent of the total, while Mainland China and Taiwan occupied some 26 per cent and 4.8 per cent of the total, respectively. In addition, France, Portugal and Luxembourg accounted for some 1.5 per cent, 1.1 per cent and 0.6 per cent of the total, respectively. K.L.
4 | Business Daily
November 20, 2015
Macau opinion
Why do we still fly exclusively?
Manulife to issue CAD$1 bln subordinated debentures Manulife (International) Limited (MIL), a member of the Manulife Financial group, intends to launch a new product called ManulifeMOVE in Macau this month part, on or after November 22, 2022 at a redemption price equal to par, together with accrued and unpaid interest to the date fixed for redemption. The debentures will constitute subordinated indebtedness, ranking equally and rateably with all other subordinated indebtedness of MLI from time to time issued and outstanding. The offering is expected to close on November 20, 2015.
Pedro Cortés
Lawyer* cortes@macau.ctm.net
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ir Macau’s concession was awarded almost 20 years ago. At that time, Macau was different. The economic environment in China and in Asia was different. Macau infrastructure was certainly different. Even the Lisboa Hotel rings were different. An exclusive concession for the routes was the correct decision to be taken at that time. It would assure that investors would have a return at least at the end of 20 years. Nothing that was predicted happened. The Asian crisis detonated in 1997. The Handover occurred in 1999. The gaming industry was liberalised in 2002. The boom erupted soon after. SARS arrived in 2003, with Avian Flu following in 2005. The big casinos went ballistic. The financial tsunami appeared in 2008. And the recovery after that. Millions upon millions of tourists and dollars flooded the Macau Special Administrative Region. Viva Macau started and ended. Air Asia increased its flights to and from Macau. A new goldmine was discovered in the Macau-Danang route. Well, I guess since 1995 not even the tarmac on the airstrip is the same. But the concession is. Same exclusive routes that are not used by the flag carrier. I guess that there is also something else different from 1995: at that time surely the delays Air Macau flights constantly have were not the same. They occur, unfortunately, more often and are worsening. So, why do we still have the exclusivity rights? Why do we not change once and for all the air industry to and from Macau International Airport, cancelling the concession – with compensation, of course – and have an open air policy that would benefit the population and the tourists? Well, every day I know less about what happens in my current home, but, finally, after many years, we have public officials stating that Air Macau might not be complying with the concession. I will not use the conditional tense but the sure thing: Air Macau is not only not complying but also violating the concession contract. This would all be great if we were talking about a private company without exclusive rights. It is not exactly a private company and, therefore, there should be a strong sgift towards the benefit of Macau residents and non-residents. A strong move towards the benefit of Macau, instead of to the benefit of some exclusive pockets. If our politicians change the status quo we will all get the best of it and we will surely have a better future in the city we all love and intend to keep loving. Otherwise, some of us will start wondering whether the city deserves to continue having these politicians or even us. * Lecturer at the Chinese University of Hong Kong
Macau Market
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ong Kong-listed Manufacturers Life Insurance Company (MLI), the Canadian insurance company subsidiary of Manulife Financial Corporation, announced yesterday that it intends to issue a CAD$1 billion principal amount of 3.181 per cent fixed/floating subordinated debentures due November 22, 2027 In a filing with the Hong Kong
Stock Exchange, the company says the debentures will bear interest at a fixed rate of 3.181 per cent until November 22, 2022 and thereafter at a rate of 1.57 per cent over the three-month CDOR [Canadian Dollar Offered Rate]. The debentures mature on November 22, 2027. The company added that subject to prior regulatory approval, MLI may redeem the debentures, in whole or in
Manulife (International) Limited (MIL), a member of the Manulife Financial group of companies, intends to launch a new product called ManulifeMOVE on the Macau market this month. Ms. Kareen Chow, Vice President & Head of Agency Sales, Hong Kong, is expected to be in Macau next week to present the details of the product’s launch in the city. According to the company, ManulifeMOVE is a first-of-its-kind concept tracking your every move with a fitness tracker that is linked to the ManulifeMOVE mobile app and rewards members with premium discounts. With a fitness tracker recording your number of steps, members can sync it to the ManulifeMOVE mobile app and monitor average daily steps. After meeting the requirement of MOVE Reward Level, members can enjoy premium discounts on your coverage of eligible plan upon renewal in the next membership year. J.K.
Wynn Resorts says opening of new casino delayed 3 months
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ynn Resorts Ltd. said the opening of its newest casino in Macau will be postponed by three months, until June 25, 2016, because of construction delays. The general contractor, Leighton Holdings Ltd., notified Wynn that it couldn’t complete the Wynn Palace by the previously announced March date, according to a statement Wednesday from the Las Vegas-based company. The US$4.1 billion resort is one of several set to open next year. The Chinese territory, the world’s largest gambling market, has suffered a steep decline in betting amid a crackdown on corruption in the country. Wynn
generated 70 per cent of its 2014 revenue in Macau and has fallen the most among U.S. companies operating there, with the stock down almost 60 per cent this year. The Wynn Palace will feature 1,700 hotel rooms, a lake with gondolas and fountains, meeting space, a casino, a spa, stores and food-and-beverage outlets. It is the first for the company in the Cotai area of Macau. Two major new resorts that opened this year, from Melco Crown Entertainment Ltd. and Galaxy Entertainment Group Ltd., haven’t stemmed Macau’s 17-month betting
slump. Casino revenue fell 28 per cent year-over-year in October and Macau Chief Executive Fernando Chui Sai On said Tuesday the government has forecast revenue of MOP200 billion (US$25 billion) for 2016, the lowest since 2010. Wynn Resorts founder and Chief Executive Officer Steve Wynn criticized Macau authorities last month for not telling casino operators until just before their opening dates how many table games they will be allowed to offer. Limits on the number of table games endanger the profitability of the projects, he said. Bloomberg
Business Daily | 5
November 20, 2015
Macau
What Macau slump? Casino returns to top 20 pct on tourist shift Analysts at CLSA believe gaming sector is a good long-term investment as they estimate new projects will deliver an average return of 21 pct three years after opening
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ambling at casinos is risky. But even after a 17-month slump, building casinos in Macau still looks like one of the best investments around. Operators including Sands China Ltd. and Galaxy Entertainment Group Ltd. have earmarked US$28 billion in spending over the next three years, with new projects that integrate casinos with hotels and entertainment complexes. The aim is to broaden Macau’s appeal beyond hard-core gamblers to families and tourists, and placate a government in China intent on reining in the corruption and graft associated with high-rolling visitors to the city. While the extra expenditure will slow the return on invested capital, or ROIC, the new projects will hand back an average return of 21 per cent three years after opening, according to brokerage CLSA Ltd. That compares with about 50 per cent at the peak in Macau two years ago and returns of less than 10 per cent forecast for hotel groups in Hong Kong. “We think the gaming sector is a good long-term investment as the industry generates high cash returns and the companies have a track record of paying high dividends,” said Aaron Fischer, head of consumer and gaming research at CLSA, one of the most experienced analysts who cover the casino industry.
Payback time
While hoteliers can wait as long as 20 years to get their money back on major investments, the payback on Macau casinos might stretch out to a little over five years, from two years during the 2013-2014 peak. “It’s still very short,” Fischer said. The risks remain high for casinos. China’s economy could continue to slow and yuan devaluation could curb tourism as it makes traveling outside the mainland more expensive for price- sensitive lower-tier customers gambling operators are trying to
attract, said Richard Huang, an analyst at Nomura Holdings Inc. It would take time to draw enough vacationers to make up for the high rollers the industry has lost, he said. “Casino resorts have always been high risk, high return,” Huang said. “There’s no guarantee for casinos. One day you have a lot of customers and the next day you have no customers, like this year.” The average return of some shops in Hong Kong’s busiest shopping districts of Causeway Bay and Mongkok is 3 per cent after rents plunged at least 40 per cent from a peak in 2011, according to Raiky Wong, director of the retail department at Centaline Property Agency Ltd. Rents are set to drop another 10 per cent next year, he said. Returns on hotels in the former British colony aren’t much better.
Single-digit returns
“The average level of ROIC for hotels in Hong Kong for the following few years may remain at single-digit level,” even for the best-performing hotel groups, such as Shangri-La Asia Ltd., said Zhao Huanyan, a Shanghai-based economist at Huamei Consulting Firm Ltd. that specializes in the hotel industry. Shangri-La Asia’s average return was 2.1 per cent from 2010 to 2014, according to data compiled by Bloomberg. Galaxy Entertainment’s StarWorld casino, which opened on Macau’s peninsula in 2006, was one of the mostprofitable projects in the 2013-2014 peak of the city’s gaming industry, according to CLSA. Boasting almost 250 tables and more than 240 slot machines, StarWorld had an annual return of 115 per cent in 2013. That was the highest in Macau’s history and more than double the 47 per cent average for existing properties in the former Portuguese colony at the time, CLSA said. Currently, Melco Crown Entertainment Ltd.’s Studio City,
the US$3.2 billion resort that opened last month with a giant Ferris wheel and Batman ride, will probably return 20 per cent of invested capital in 2019, according to the brokerage. It predicts a 23 return on Wynn Palace, the US$4.1 billion resort being built on Macau’s Cotai Strip.
Lakes, gondalas
The opening of the project, which features a casino, 1,700 hotel rooms, and a lake with gondolas and fountains, will be postponed by three months, until June 25, 2016, because of construction delays, Las Vegas-based Wynn Resorts Ltd. said in a statement Wednesday. While the payback on commercial properties may be slower than casinos in Macau, investing in retail and office space does offer some advantages, including greater stability and lower risk because of the recurring incomes provided by long-term rental
We think the gaming sector is a good longterm investment as the industry generates high cash returns and the companies have a track record of paying high dividends Aaron Fischer, head of consumer and gaming research at CLSA
agreements, said Christopher Yip, a property analyst at Standard & Poor’s Ratings Services. Income and cash flow can be “quite volatile” for casinos because of their sensitivity to changes in government policies, said Lillian Chiou, a credit analyst at S&P. The specter of a blanket smoking ban at Macau casinos, travel restrictions, government’s limit on gaming tables, as well as crackdowns on gambling promoters and illegal use of debit card machines have hurt the share prices and earnings of casino operators.
No more heyday
Macau Chief Executive Fernando Chui Sai On said Tuesday the government forecast an annual revenue of MOP200 billion for 2016, the lowest level since 2010. Takings at the city’s casinos could fall 32 per cent this year before rebounding with a 10 per cent gain in 2017, according to a Bloomberg survey. With revenue remaining weak in the short term, Fischer of CLSA said he recommends investors to buy stocks on two out of Macau’s six operators and to hold for the rest of the four. Even after the slump, Macau remains the biggest casino gaming market in Asia and the largest single market globally, with turnover about five times the size of the Las Vegas Strip. Returns on invested capital in Macau also remain the highest in the casino world, thanks to the “exceptionally high” amount spent per customer there, CLSA said in a 200-page report on the industry in September. “Expectations went from overly optimistic to now being much more conservative,” said Tim Craighead, a gaming analyst with Bloomberg Intelligence in Hong Kong. “We’re still upbeat longer- term on the growing base of middle-class Chinese traveling more, and Macau and its casino resorts are a natural beneficiary.” Bloomberg
Special
62 MACAU GRAND PRIX ND
Massive pile-ups, cars on fire, speed and a lot of emotion - just some of the action which unfolded during the Grand Prix in front of the 8,000 spectators who went to see the first day of the mega event Jo達o Santos Filipe
jsfilipe@macaubusinessdaily.com
8 | Business Daily
November 20, 2015
Rosenqvist takes provisional pole
The Formula 3 practice started yesterday and Intercontinental Cup will be decided on Sunday.
The winner of last year’s F3 race has his eye on another victory
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ast year’s winner of the Formula 3 headline race, Felix Rosenqvist (Theodore Racing), has taken provisional pole position at the end of the first qualifying session. The Swede is
confirmed to be the favourite contender to win the race, setting a lap time of 2:11.841 yesterday. “It was more a practice session number 2 than a qualifying because people
are still adapting to the cars and track. But I am the most experienced and if anyone can win, it should be me”, he said. The Dallara-Mercedes driver, however, will not have an easy task, especially with Italian Antonio Giovinazzi (Carlin) to contend with. The driver of the DallaraVolkswagen took second position in the European F3 Championship and set the
FORMULA 3 - QUALIFYING 1 POSITION 1 2 3 28
DRIVER FELIX ROSENQVIST CALLUM ILOTT ANTONIO GIOVINAZZI ANDY CHANG WING CHUNG
CAR DALLARA-MERCEDES DALLARA-VOLKSWAGEN DALLARA-VOLKSWAGEN DALLARA-MERCEDES
02:11.841 02:12.663 02:12.824 02:21.501
third fastest lap (2:12.824). Second was Briton Callum Ilott (2:12.663). The other drivers expected to be contenders for the victory include Alexander Sims, who ranked 10th (2:13.950), Nick Cassidy at 20th (2:14.631) and Daniel Juncadella at 5th (2:13.412). Juncadella won the race in 2011, and Sims is readapting to single-seater cars after spending the year driving Tourism and GT cars. Local driver Andy Chang Wing Chung had a gearbox problem that started in the morning and was not solved in time for the first qualifying session, which prevented him from racking up precious track time.
“I had this gearbox problem which did not make it possible for me to have any fast lap, which is essential to getting used to the car and track. The team will try to change the gearbox for tomorrow [today]”, he told Business Daily. Not surprisingly, given his technical problems, Chang took the last provisional place on the grid at a lap time of 2:21.501. Today, the drivers have the second qualifying session at 3:55pm, while the qualifying race is scheduled for tomorrow at 1:45pm. Finally, on Sunday, contenders for the Formula 3 Intercontinental Cup will gun their engines for glory at the start of the race at 3:30pm.
German manufacturers Robert Huff favourite battle it out in GT Cup to win guia race A battle between two German manufacturers in Asia. This is the scenario of the FIA GT World Cup. On one side, Mercedes is represented by last year´s winner, Maro Engel, and Renger Van Der Zande; on the other, Audi is competing with Mr. Macau, Edoardo Mortara, and German driver René Rast. Yesterday, the practice sessions served as a warm-up for this duel, in which Mercedes demonstrated its best performance with the two fastest drivers on the track. Van Der Zande was first (2:20.796) and Maro Engel (2:21.038) was second. “It’s very challenging and I’m enjoying every metre of the track. This practice was
just about gathering the information”, Renger Van Der Zande explained. “We already have a good base and it can only get better now”, he added. On the Audi side, the main concern for yesterday was to get adapted to the new car and collect data to find the perfect setup. Macau driver André Couto came in seventh but was on the track trying to improve his times when the session was interrupted with less than one minute to go because of a crash involving Dylan Derdaele. The local hero managed to stay ahead of his teammates, who are the Portuguese Álvaro Parente, placing 11th, and Frenchman Kevin Estre at 15th.
Stefano Comini (Seat Léon) and Pepe Oriola (Seat Léon) are fighting this year for the TCR International Series Championship - but the favourite to win the Guia Race this year is Briton Robert Huff. The Honda Civic driver comes to Macau to achieve glory for the eighth time and during the first practice session displayed a world class performance putting in a time of 2:35.036. “There’s a reason why Macau is a gambling capital and it’s the same with the track. I have the record in Macau for the most amount of wins [7 wins in WTCC] and I want to make it a lifetime untouchable goal
for someone else”, Robert Huff said at the end of the session. The second place was occupied by Jordi Gené (Seat Léon) with a lap time of 2:36.870. The Spaniard was followed by countryman and teammate Pepe Oriola (2:37.874). Stefano Comini is in the lead for the championship with an advantage of two points to Oriola but yesterday the Swiss could not do better than fourth (2:38.768). During the first practice session, the Macau drivers were involved in a battle of their own, as Henry Ho (Honda Civic) and Rodolfo Ávila (Seat Léon) took 5th and 6th places, respectively.
Business Daily | 9
November 20, 2015
McGuiness sets fastest lap in first qualifying session
Paul Poon fastest in Touring Car Cup Paul Poon Tak Chun (Peugeot RCZ) took first place during the practice session of the Touring Car Cup yesterday, with an advantage of over two seconds (2:47.826) over Andy Yan Cheuk Wai (Peugeot RCZ), who was second fastest (2:50.613). Kenneth Look (Peugeot RCZ) took third position, taking 2:50.742 to complete his fastest lap, in a session that was dominated by the Hong Kong drivers. Macau’s best representative was Chao Chong In (Mni Cooper S), who took fourth position (2:51.235) in front of local driver Filipe C. de Souza (Chevrolet Cruze) who completed his best lap with a time of 2:51.334. The qualifying session for this competition will take place tomorrow at 1:55pm, while the race will be fought out on Sunday at 8:30am.
The Motorcycle Grand Prix is set to be one of the most competitive for a long time as four participating riders together have 15 victories chalked up here
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ichael Rutter (BMW), Stuart Easton (Yamaha), Ian Hutchinson (Kawasaki) and John McGuiness (Honda) have 15 victories in the Macau Motorcycle Grand Prix between them and this year each is here to increase his personal tally. Following the first qualifying session, John McGuiness (2:27.246) captured provisional pole by setting the fastest time. However, this could change today during the second session. “I will try to win. Honestly, I’m not too bothered about it, I just want to enjoy, have fun and be safe. It is a very dangerous race but definitely I’d like to stand on the podium”, the Briton - who won in 2001 - said after the session. “I feel that tomorrow the other boys will be faster because many of them are still adapting to the bikes, while I don’t think I will improve that much. I’m older”, the 43-year old added about his 18th visit to Macau. For his part, Rutter (also 43 years old) has eight victories on the Guia
Liu Chan Ki tops celebrity practice session John McGuiness (left) overtakes Michael Rutter (right) and goes to top the time sheet
Circuit under his belt and yesterday ranked second (2:27.476), after spending much of the qualifying session in a close fight with Martin Jessopp (BMW), who secured third position (2:27.711). “The main problem during the qualifying session was the sun that was blinding me in some fast corners. It really required hard work”, he said of his performance. “Tomorrow [today] is really going to be the day when we can understand where we stand in comparison to the other guys. But I don’t know if I have the pace, I’m getting old”.
Ian Hutchinson (2:28.776) took fourth position, while the winner of last year’s edition, Stuart Easton, could not better 15th fastest time (2:33.607). The qualifying session was suspended, in fact, for some time because of a crash involving Russell Mountford (VRS Racing), who is out of contention. In his first visit to Macau, he crashed into the wall at Faraway. The rider had to be transported by ambulance to hospital where he underwent surgery for multiple fractures to his tibia, pelvis and sternum.
MOTORCYCLE GRAND PRIX - QUALIFYING 1 POSITION 1 2 3
RIDER JOHN MCGUINNESS MICHAEL RUTTER MARTIN JESSOPP
BIKE HONDA BMW BMW
BEST LAP 2:27.246 2:27.476 2:27.711
Grand Prix disburses around MOP1.5 million in prize money Winning the Formula 3 International Cup is all about prestige and visibility but it is the newly created FIA GT World Cup that is delivering the biggest payday
The Macau Grand Prix will disburse around MOP1.528 million (US$191,450) in prize moneys during the racing weekend, which is an increase from around MOP861,000 in the previous edition. The newly created FIA GT World Cup will be the kindest to its participants, handing out some MOP626,000 to be paid in US dollars. The largest prize of the competition - awarded to the winning manufacturer of the GT race - amounts to around MOP240,000. The driver picking up the international trophy will pocket MOP96,000. Right after the FIA GT World Cup, the FIA Formula 3 International Cup race is the one disbursing the largest amount of money. All in
all, the competition for the drivers chasing a future in Formula One will be handed MOP550,820. For Formula 3 drivers, the most important part of winning the Macau Grand Prix is the visibility obtained. It is common for racers to see the Guia race as an opportunity to save an otherwise failed season. And by winning the main race they can take home MOP96,000.
Motorcycle winner takes MOP33,000
While the winners of the international races receive their rewards in US dollars, the competitors of the other races are paid in Hong Kong dollars. With respect to the remaining categories, the Motorcycle Grand Prix awards the
largest prizes in the amount of MOP230,000. The first rider to complete the main race, which will take place on Saturday, will take home around MOP33,000. At the same time, the winning team, which is decided based upon the results of its two best placed riders, is awarded MOP22,700. For the TCR International Series, Touring Car Cup and Road Sport Challenge, each competition disburses some MOP34,000, with financial prizes for the first three drivers. The winners are awarded around MOP16,500.. The Celebrity Race and Chinese Racing Cup do not award any prize money, only the trophy at the podium ceremony.
Liu Chan Ki was the fastest driver yesterday during the first practice session of the Lotus Celebrity Cup. The Hong Kong driver took 3:09:437 to complete one lap of the Guia Circuit and was followed by Yu Kam Cheong (3:10.147) and Vicent Chao Wai Yew (3:10.712). The only drivers participating in the Lotus Elise celebrity trophy with a Macau licence are Mak Ka Lok, who placed 4th (3:11.938) and Chan Ieng Wa, who finished the session in 9th position (3:20.506). Macau-born singer and actor Fong Lik Sun, racing on a Hong Kong licence, took 12th position (3:31.099). The qualifying session of the Lotus Celebrity race is scheduled for today at 8:40am, with the 10-lap race getting off the grid tomorrow at 10:10am.
Leong Ian Veng secures first place for Mistubishi Leong Ian Veng (Mitsubishi Lancer Evo 9) was the fastest driver in the Macau Road Sport Challenge during the first day, setting the best time of the practice session (2:37.908). The Macau driver stayed ahead of Lo Kai Fung (Mitsubishi Lancer Evo 7) and Lei Kit Meng (Nissan GTR34), placing second (2:38.072) and third (2:38.301), respectively. The first non-local driver was the Thai Charoen Nattavude in the Lotus Evora, placing 6th during the session with a time of 2:42.022. Qualifying for the Macau Road Challenge is today at 11:35am, with the starter’s flag for the race dropping tomorrow at 8:40am.
Ho Hong Keong on top of Chinese Racing Cup Macanese driver Ho Hon Keong was the fastest of the Chinese Racing Cup contenders spending 2:59.711 to complete his quickest lap. Hong Kong racer William Lok (3:01.890) took second position, while Chinese Carlos Zhu Juan was third (3:02.917). The Chinese Racing Cup is a trophy race in which all drives compete with the Senova D70 model of BAIC Motor. The main race of the trophy event will take place tomorrow at 4:35pm.
10 | Business Daily
November 20, 2015
Theodore Racing back in Macau: Like father, like son
The son of the late businessman and team owner Teddy Yip brings the revived Theodore Racing back to the city with the goal of achieving an eighth victory for the team
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ooking at the grid of the Formula 3 International Cup, it is difficult to find a team more related to Macau than Theodore Racing. The team was founded in 1976 by Hong Kongbased businessman Teddy Yip, who also raced on the Guia track himself. However, the connection of Mr. Yip with Macau happened before, as he was one of the co-founders, along with Stanley Ho, of the local Sociedade de Turismo e Diversões de Macau (STDM). Two years ago, the son of Mr. Yip, Teddy Yip Junior, revived the team, which had disbanded in 1992, to compete in the Formula 3 race in Macau. The goal was to celebrate the 30th anniversary of Ayrton Senna’s triumph in Macau with the colours of Theodore Racing. At the end of the event, driver Alex Lynn won the race, making it a perfect comeback. “I grew up around this team. In
Jake Dennis: Records there to be broken “The first time in Macau is always difficult but I have done as much preparation as I can. I’m very excited about finally racing here. No rookies ever win at the first attempt but records are there to be broken and I’m here to try to win”, the British drivers of Theodore Racing, Jake Dennis, told Business Daily. “Felix [Rosenqvist] is very talented and it took him five times to win, which means experience makes a massive difference here. But I’m going to try to qualify in the first three rows and from that point we’ll see what it’s possible to achieve”.
2013, it was the year of the 30th anniversary of Ayrton Senna’s victory with my father and I felt it was the perfect time to revive”, Teddy Yip Jr. told Business Daily. “Our entire weekend was a fairytale. You couldn’t have written it any better. Everything was so perfect. Winning during our first year back was unbelievable. It was really special.” However, the victory is already behind the team, and after failing to win the previous edition of the race, Theodore Racing, which since its revival has been racing in a partnership with Italian team Prema Powerteam, is chasing its eighth triumph in Macau. “I do feel the relationship between Macau and our team very much. I remember last year, when we did not win… I was walking around the streets and people were coming up
to me to tell me that I would get it this next year. That support is very good”, Yip Jr. said. “Actually, some people stop me in the streets and tell me they still have Theodore Racing badges from the 80’s. There’s really a lot of support. People that knew my father approach me and tell old stories. It’s a great feeling and I really feel at home racing here”, he added.
Feeling at home
The connection of Theodore Racing with Macau is reinforced by the sponsorship contract with SJM Holdings, the gaming operator founded by Stanley Ho that runs some of the casinos that used to be under STDM’s control. In spite of being born in Hong Kong, Teddy Yip Jnr. has spent most of his time in the United Kingdom and Canada, where he currently lives. However, his name and the connections to Hong Kong and Macau are still very present in his life. “Besides the racing weekend, I always try to come to Macau two or three times a year. I love Macau and walking around in the old Portuguese streets, the casino venues and so on”, he told Business Daily.
Rosenqvist hired to win
For this year’s edition, the goal of the team is to achieve its eighth victory in Macau. In order to achieve that Felix Rosenqvist, the winner of last year’s Formula 3 race, was brought to Macau, Felix Rosenqvist. “We are here to win and Felix was an obvious choice having in mind our goal. We believe the victory is perfectly achievable but it will require great luck, bravery and skill during all the weekend”, he explained.
While in November Teddy Yip Jr. is mainly involved with Theodore Racing, during the rest of the season he is focused in Status Grand Prix, where he is Team Principal. The sister team of Theodore Racing competes in the Series GP2 and GP3 and in both championships it is placed at 8th position, with two rounds to go. “We’re currently racing GP3 Series but we’re going to stop it at the end of the year. We want to focus on the GP2 championship”, he said of the future of the team. However, the dream is to follow in his father’s footsteps and have a team racing in Formula One. “We’re aiming for Formula One. Now, it requires a lot of pieces to come together to take that step, so in this way this goal is pretty much a dream. But down the line, and step by step, I hope we can build that project. That’s why I think it’s a dream worth talking about”, he explained. Beside Felix Rosenqvist, Theodore Racing has two rookies, Briton Jake Dennis and Canadian Lance Stroll.
Lance Stroll: Best foot forward “It’s very easy to crash but it is essential not to crash here. As soon as you crash you lose a lot of lap times and you lose time on the track, which is essential to gain the experience”, Lance Stroll told Business Daily. “It’s always difficult to win at the first attempt but I will try to learn as fast as possible and try my best, which is pretty much what I do in every race”, he added.
Business Daily | 11
November 20, 2015
Greater China
Taiwan’s Ma seeks corporate tax breaks
Beijing expects consensus to be reached at Paris talks
Ma recognized that domestic concern has escalated over the year that manufacturers’ shifts of factories toward mainland China had undermined jobs and incomes at home
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aiwan’s President Ma Yingjeou is seeking tax breaks for domestic companies to encourage them to boost wages, helping address income stagnation that’s undermined support for his policy of deepening economic ties with China. “Wage growth is relatively slow, so we’re trying to pass legislation and other methods to get companies to raise wages,” Ma said in an interview yesterday in the Presidential Office building in Taipei. The president, now in his final months in office after being first elected in 2008, rejected the idea of pursuing a cheaper currency as a way to support Taiwanese export competitiveness. “Of course, a lot of companies hope the government could change the exchange rate between the Taiwan dollar and the U.S. dollar in order to boost the prospects of exports,” Ma said. “If every government in the world did that, then it wouldn’t work even if we did this.” The central bank, which oversees Taiwan’s currency policy and has had a policy of stepping into the market when there’s excessive volatility, declined to comment. The bank has engaged in routine intervention in the Taiwan dollar, according to an assessment by the U.S. Treasury.
Exchange rates
The president said “the exchange rate should be determined by the market and based on supply and demand.” He also highlighted a campaign dubbed Industry 4.0 that’s designed
Premier stresses protection of nationals abroad after killing
Ma (L) considers the economic relationship with China to be essential. Some weeks ago he and President Xi made history by meeting in Singapore
to encourage innovation and bolster Taiwan’s competitiveness. Ma underscored the importance of following through on an agreement with China to open up trade in services that became a magnet for domestic opposition last year. “For our small and medium enterprises, this is especially beneficial,” Ma said, referring to the trade deal that still needs parliamentary approval. Referring to opponents including the student protesters who took control of the legislature’s building last year, he said “they don’t believe any of it.” “You may not like their rules,
you may not support some of their undemocratic practices, but in terms of economics, this is a very real and cruel reality,” Ma said in the interview in the office building built during the Japanese colonial period about a century ago. “We shouldn’t put all our eggs in one basket but we can’t not put any eggs in the biggest basket.” Some US$2 out of every US$5 of Taiwan’s exports go to China, and the slowdown in its giant neighbour has contributed to economic pain on the island in the run-up to presidential and legislative elections in January. Bloomberg News
HKEx to offer futures tool for Mainland stock valuation gap Jonathan Burgos
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managing partner for Asia at Aviate Global LLP in Hong Kong, said by phone. The premium on mainland-listed A-shares over their counterparts in Hong Kong, known as H shares, widened to the most in two months on November 16. Price gaps have persisted despite speculation the Hong Kong-Shanghai exchange link, which marked its first anniversary this week, would make the markets more closely aligned. Shares of PetroChina Co., the biggest stock in the Shanghai Composite Index, cost more than twice as much on the mainland as they do in Hong Kong. “Investors have been vigorously asking for adequate risk management tools,” Rideout said. “We’ve got good
China will strengthen protection of its citizens and organizations overseas, Premier Li Keqiang said yesterday, after the murder of a Chinese hostage by Islamic State (IS) in Syria. Earlier in the day, the Foreign Ministry confirmed the death of a man named as Fan Jinghui. “The Chinese government strongly condemns the atrocity,” Li said, expressing his deep sympathy to the victim’s family. He urged government departments to help Fan’s family after his murder. The Chinese government attaches great importance to the safety of its citizens overseas, the premier said.
Geely aims for 90 pct of ‘green’ sales by 2020 China’s Geely Automobile Holdings plans to concentrate entirely on developing green energy vehicles, eschewing traditional combustion engines and completely overhauling its product portfolio, the company said. Geely wants 90 percent of sales to be so-called new-energy vehicles by 2020, the company said in a press release. The carmaker announced the plan, dubbed “Blue Geely”, for new-energy vehicles, which in China refers primarily to battery powered and hybrid cars, ahead of the Guangzhou auto show, which opens on Friday. Geely did not disclose how much it would invest in the scheme.
High-speed train passes speed test at 385 kph
Mainland equities are currently 38 percent more expensive than their Hong Kong equivalents
ong Kong’s exchange plans to start offering a futures contract on the price gap between stocks that trade in both the city and mainland China. Hong Kong Exchanges & Clearing Ltd. will introduce the futures in the first three months of 2016, Kevin Rideout, head of business development at the bourse operator, said in Singapore yesterday. The Hang Seng China AH Premium Index, which tracks the price differences between dual-listed shares, signals mainland equities are currently 38 percent more expensive than their Hong Kong equivalents. “Given the valuation discrepancy at the moment, I’m sure there would be interest in it,” Robert Buckley, a
China expects world leaders at upcoming climate talks in Paris to be able to reach consensus, the country’s climate change special representative Xie Zhenhua said yesterday, adding Beijing wants a legally binding treaty. The November 30-December 11 Conference of the Parties (COP) in Paris will be the latest attempt by world leaders to forge a deal intended to avert more heat waves, floods and rising seas following the failure of climate talks in Copenhagen in 2009. Almost 200 nations attend the climate summit, with the legal status of a climate treaty one of the issues to be resolved.
feedback on the A-H spread futures contract. It will be available in the first quarter of 2016.” The expansion of the Shanghai bourse link to Shenzhen would make China’s equity market more appealing to global investors, according to Rideout. Foreign traders sold stocks in Shanghai for 21 straight days through Tuesday in the longest stretch of outflows since the program began. The start of the Shenzhen version is more likely next year and preparations may take another two months even after a formal announcement, Charles Li, chief executive officer of the Hong Kong Exchanges & Clearing Ltd., said in a briefing in the city on Tuesday. Bloomberg News
A Chinese electric multiple unit (EMU) train reached a speed of 385 kilometres per hour and passed a high speed test, a major step before it begins formal operations. Designed and manufactured by CSR Qingdao Sifang Co., Ltd., China owns the independent intellectual property rights to the train. The train is designed to operate at a standard speed of 350 kph. The train had excellent performance in every key technical index and meets all design standards of the test, said Liang Jianying, the chief engineer of CSR Qingdao Sifang.
Winter tourism booming in West Off-season travel to western Chinese provinces has become increasingly popular for Chinese tourists, local tourism authorities said. Starting from October, several tourist destinations in western Chinese provinces, such as the Qinghai Lake and Dunhuang Mogao Grottoes, have seen more tourists compared to before. According to the Qinghai provincial tourism bureau, Qinghai hosted 1.87 million tourists in October, up 23 percent from the last year. Similar growth is also expected in the neighboring Gansu province and Ningxia Hui Autonomous Region.
12 | Business Daily
November 20, 2015
Greater China
Banks turn blind eye to soaring overdue loans At 18 listed Chinese banks overdue loans that had not been written down jumped 57 pct Shu Zhang and Matthew Miller
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ome Chinese banks, hit by a surge of troubled borrowing in a weakening economy, are increasingly failing to recognise loans gone sour on their books to avoid having to stump up capital. Loans to borrowers that have missed a payment are growing three times faster than loans the banks recognise as non performing, according to their regulatory filings. An increasingly large chunk of these overdue loans sit on the banks’ books at their full value, even when payments have been missed for more than 90 days - the accepted international criteria for classifying loans as non-performing. This hidden build up of substandard corporate loans, spurred by China’s slowest economic growth in a quarter of a century, flatters the strength of its banks’ balance sheets and would hit earnings if the loans were declared in default and written down. “In the past, NPLs outnumbered overdue loans,” said an official at the China Banking Regulatory Commission (CBRC), who spoke on condition of anonymity. “Now overdue loans are surpassing NPLs.” At 18 listed Chinese banks, overdue loans that had not been written down jumped 57 percent to 645 billion yuan (US$101 billion) in the first half of this year from the end of 2014, while NPLs increased
17 percent to 692 billion yuan, a UBS analysis of Chinese banks’ balance sheet data show. For loans overdue for more than three months, the increase was a hefty 166 percent from the end of 2014 to 149 billion yuan (US$23.4 billion), a problem that analysts say is more widespread at mid-tier and smaller unlisted Chinese banks. “Downward pressure” in the economy was causing Chinese banks to classify loans more flexibly to avoid having to increase the amount of capital they set aside for loan defaults, the CBRC official said. “The true asset quality of Chinese banks is worse than what appears in the reported NPLs,” said Ritesh Maheshwari, a bank analyst with Standard & Poor’s in Singapore.
Domino effect
Recognising loan losses wasn’t an issue among Chinese banks prior to 2012, when the volume of loans categorised as overdue but unimpaired was negligible. As growth slowed, however, lenders have grown wary of fully declaring bad debt, senior bankers and industry players said. If they do declare a lender as delinquent, it would have a domino effect, since the information is posted on the central bank’s national credit database, prompting all banks to write down their loans to the same borrower.
KEY POINTS China corporate borrowing hit by slowing economy Banks fail to fully recognise bad loans Rise in overdue loans point to build-up of bad debt Banks trying to avoid stumping up capital
Bankers are reluctant to take such a hit to profit if they believe the loan can eventually be recovered, in full or part. “If an overdue loan is classified as entirely non-performing, then we have to set aside 100 percent in provisions,” said a senior executive at a joint-stock Chinese bank. “But we may not have 100 percent of loss. So it’s not reasonable to put aside so much. It’s a waste of capital.” In September, rating agency Moody’s started calculating new overdue loans for 90 days or more to better assess asset quality at Chinese banks, since they believed NPLs did not give a full picture, Christine Kuo, a senior Moody’s analyst, told Reuters.
At Shanghai Pudong Development Bank Co, loans delinquent for more than 90 days but not written down doubled in the six months to June to 22.96 billion yuan. Hua Xia Bank, Ping An Bank, Industrial Bank and China Minsheng Bank also reported a significant rise in overdue loans in the first half of 2015. China’s big state-owned commercial banks, led by Industrial and Commercial Bank of China Ltd, are more diligent about recognising their asset quality, bankers and auditors said. More than 99 percent of loans that have missed a payment for more than three months were classed as non-performing, an ICBC executive told analysts last month on the bank’s third-quarter earnings call. But at several mid-tier banks, provisions for possible loan losses are seldom matching growth in the overdue loan book, pointing to a potential capital shortfall. At Bank of Chongqing Co, for example, long-date overdue loans more than doubled in the first half of the year, while provisions only increased by about 10 percent. “There’s a risk that provisioning coverage will be insufficient,” said Grace Wu, Fitch’s head of China bank ratings. Reuters
editorial council Paulo A. Azevedo, José I. Duarte, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Newsdesk João Santos Filipe, Michael Armstrong, Stephanie Lai, Óscar Guijarro, Kam Leong, Joanne Kuai GROUP SENIOR ANALYST José I. Duarte Designer Francisco Cordeiro WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia Assistant to the publisher Lu Yang | lu.yang@projectasiacorp.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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Business Daily | 13
November 20, 2015
Asia
Australia blocks sale of largest farm owner to Chinese investors
SGX to launch FX block futures on EBS market The Singapore stock exchange and EBS BrokerTec, ICAP plc’s electronic foreign exchange and fixed income business, agreed to launch Singapore Exchange Ltd (SGX) FX block futures on the EBS Market platform, the SGX said yesterday. The listed FX block futures will be available on EBS Market in early second quarter 2016 pending regulatory approval, SGX said. Block trades are privately negotiated futures, options or combination transactions executed confidentially off the public market. The initial offering will include SGX block futures in the Chinese yuan, the Indian rupee, the South Korean won, and the Singapore dollar.
From March 1, foreign purchases of agricultural land over US$12.5 million are subject to regulatory approval from Australia’s Foreign Investment Review Board Lincoln Feast and Colin Packham
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ustralia yesterday blocked the sale of the country’s largest landowner, private farming group S. Kidman and Co, to foreign investors, saying an agricultural area the size of South Korea should remain in Australian hands. Ownership of farmland is a sensitive political issue in Australia amid concerns that foreign buyers are snapping up properties to cash in on a boom in food demand from Asia. Kidman’s 10 cattle stations cover more than 100,000 sq km of land spread across Western Australia, the Northern Territory, Queensland and South Australia. The privately owned company said in April it was looking to sell its cattle operations, which hold an average herd of 185,000 cattle, to raise cash for other businesses and investments. Local media reported that two Chinese companies, Genius Link Asset and Shanghai Pengxin, were leading the race to secure Kidman in a deal expected to be worth about A$350 million (US$250 million). The group’s largest station, Anna Creek, is partly located on the Woomera Prohibited Area (WPA), a weapons testing range in South Australia.
Australia’s Treasurer Scott Morrison said in a statement a sale to foreign investors in the current form would be contrary to the national interest given the “size and significance” of the Kidman properties. He also cited national security issues. Greg Campbell, Kidman’s chief executive, said the company was surprised by the government’s decision. “We need to go back to discussions with the Commonwealth and find out some more specifics to see whether it is possible for our bidders to find ways around those concerns,” Campbell told Reuters. “Some of the solutions may be to take some Australian content
into their bids, basically to take in Australian partners,” he said. “It may possible to sub-divide the Woomera rocket range out and sell it separately, or it may be possible to limit the type of activities that go on with the Anna Creek facility.” Morrison said all bidders had now withdrawn their FIRB applications and it was up to the vendor to decide how to proceed with the sale of the business or parts of it. Concerned it is losing control of its food security, Australia in February slashed the amount beyond which land purchases would require regulatory approval and said a registry of foreign land ownership would be set up. Reuters
The central bank kept its pledge unchanged to increase the monetary base at an annual pace of 80 trillion yen
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Indonesia plans to require pension funds and insurance firms to keep a minimum percentage of their portfolio in government bonds to help provide stability in the debt market, the country’s financial services authority (OJK) said yesterday. Pension funds and insurance companies currently invest around 18 percent of their funds in government bonds, OJK Chairman Muliaman D. Hadad said. “This is good as a back-up, so that bonds are not too volatile, and so the domestic investor base becomes stronger,” Hadad said. He declined to say what the minimum percentage could be for pension funds and insurance companies.
Japan exports fall for 1st time in over a year
Bank of Japan keeps policy unchanged he Bank of Japan (BOJ) left its monetary stimulus unchanged yesterday, indicating that Japan’s second recession since Prime Minister Shinzo Abe took office isn’t enough to alter Governor Haruhiko Kuroda’s view that the inflationary trend is improving. The BOJ’s decision to keep already unprecedented stimulus unchanged was forecast by all 41 economists in a Bloomberg survey and comes days after a report showing Japan fell back into a recession in the six months through September. Prices fell in August and September. Kuroda has said that the inflation trend is improving while noting that he remains ready to adjust policy if needed. Economists are divided into two camps -- one expecting further easing early next year and another projecting no further action for the foreseeable future. Twenty-one of 41 economists surveyed forecast the bank will add stimulus by April 2016 while 19 don’t expect additional stimulus, according to the poll conducted from November
Indonesia sets extra requirements for funds
13-17. One foresees further stimulus in November 2016.
Monetary base
The BOJ kept its pledge unchanged to increase the monetary base at an annual pace of 80 trillion yen (US$648 billion), according to a statement released yesterday. The central bank said that “inflation expectations appear to be rising on the whole from a somewhat longer-term perspective,” adding that “some indicators have shown relatively weak developments.” Economists shifted their forecasts after the October 30 meeting when 44 percent of analysts had predicted more stimulus. Even as the bank refrained from changing policy, Kuroda postponed the timing of reaching the inflation target by about six months, undercutting the view that a delay in reaching the goal would compel the bank to ramp up asset purchases. Economists are almost unanimous in forecasting that the central bank
won’t meet the 2 percent price target in its new time frame of around six months through March 2017.
Business investment
Economists cited weak business investment as a key factor dragging down growth in the second and third quarters. The first back-to-back declines in capital spending were marked since 2011 while corporate profits rose to the highest level since 1954 in the second quarter. “The BOJ is likely to be forced to ease further early next year,” said Yuichi Kodama, an economist at Meiji Yasuda Life Insurance Co. “The BOJ must take action as there will be a change in the trend of inflation” with an anaemic recovery, he said. Some economists are taking a harder look at currency moves as they seek clues as to the timing of BOJ action. If the currency strengthens to above 110 yen per dollar, that could push the bank to change policy, according to Daisuke Karakama, an economist at Mizuho Bank Ltd. Bloomberg News
Japan’s exports fell 2.1 percent in October, posting the first year-on-year decline in more than a year, Ministry of Finance data showed yesterday, underscoring weak external demand hit by China’s slowing growth. It was the first year-onyear drop since August 2014 and followed a revised 0.5 percent rise in September. Imports fell 13.4 percent in October, versus the median estimate for a 8.6 percent decrease. The trade balance came swung to a surplus of 111.5 billion yen US($902.5 million), versus the median estimate for a 292 billion yen shortfall.
Australian watchdog clears bid for BG Group Royal Dutch Shell cleared a major hurdle to its $70 billion takeover of BG Group yesterday, winning a green light from Australia’s competition watchdog, which said the deal would not change the dynamics of the domestic market. The acquisition will make Shell the world’s top liquefied natural gas (LNG) trader, although it still needs approval from China and Australia’s Foreign Investment Review Board to go ahead as planned in early 2016. The Australian Competition and Consumer Commission (ACCC) was not convinced by concerns raised by big local gas users that the takeover would hurt competition.
Indonesia expects 2015 payments deficit around US$5 billion Central bank expects the country’s balance of payments deficit to be between US$5 billion and US$6 billion in 2015, after a surplus of around US$15 billion in 2014, Senior Deputy Governor Mirza Adityaswara said yesterday. “The overall balance of payments in 2015 will indeed (be) in deficit,” he said, without elaborating.
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November 20, 2015
International G7 plan to get tough on virtual currencies The Group of Seven industrial nations plan to tighten the regulation of digital currencies such as bitcoin, which they suspect Islamic State is using to move funds secretly, the German magazine Der Spiegel reported. Stung by last week’s Paris attacks, which Islamic State has claimed, the G7 finance ministers discussed the regulation of “fintechs” or financial technology firms on Monday at a private meeting during a Group of 20 summit in Turkey, the magazine said. The German Finance Ministry declined to comment, saying that G7 ministerial meetings were confidential.
Cooperative banks said to plan merger DZ Bank AG and WGZ Bank AG, which act as central banks to German cooperative lenders, have agreed to merge in what would be the country’s biggest financial-industry deal in five years, according to people with knowledge of the matter. The banks plan to announce their combination in Frankfurt yesterday, said the people, who asked not to be identified because the matter isn’t yet public. The companies said in a joint e-mailed statement that they will hold a press conference, without giving a reason.
Madoff victims to recoup US$1.42 billion Victims of Bernard Madoff’s Ponzi scheme can expect to soon receive about US$1.42 billion to help cover their losses, after two U.S. judges on Wednesday authorized the pay-outs. In the first payout, customers who invested directly with Madoff will receive about US$1.18 billion from Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC. Separately, former customers of J. Ezra Merkin, a New York money manager who funneled their money to Madoff through his Ariel and Gabriel Capital “feeder funds,” will receive nearly US$236 million, court papers show.
Sluggish economies weaken business jet sales Weakening or sluggish economies around the globe are taking a toll on business aircraft sales and prices, forestalling an incipient recovery that had raised the hopes of plane makers and suppliers. Manufacturers attending the industry’s largest jamboree this week predicted flat or lower sales next year, and possibly in 2017, before the arrival of new models stirs interest and buying later in the decade to restart industry growth. Prices also are falling. Discounts are distorting the market and even affecting used aircraft prices, said Richard Aboulafia, an analyst at the Teal Group.
Brazil’s indicator shows GDP contraction The Brazilian economy registered a contraction of 1.4 percent in the third quarter of 2015 compared with the second, according to the Brazil central bank’s economic-activity index (IBC-Br), released on Wednesday. The IBC-Br indicator is considered a preview of the official GDP growth figures, which are released by Brazilian Institute of Geography and Statistics (IBGE), the government’s official statistics agency. The official third quarter figures are expected to be disclosed in early December. It is also used by the Central Bank’s Monetary Policy Committee to define Brazil’s annual basic interest rate.
Oil traders prepare for next big price drop in March 2016 A recent steep rise in March put option positions tied to a US$35-per-barrel strike price in Brent and West Texas Intermediate crude suggests traders agree with Goldman Sachs and expect the major benchmarks to slump in coming months Henning Gloystein and Gavin Maguire
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il traders are preparing for another downward turn in prices by March 2016, market data suggests, as what is expected to be an unusually warm winter dents demand just as Iran’s resurgent crude exports hit global markets after sanctions are ended. Crude futures have already lost around 60 percent of their value since mid-2014 as supply exceeds demand by roughly 0.7 million to 2.5 million barrels per day to create a glut that analysts say will last well into 2016. Goldman Sachs said yesterday that there was a substantial risk of a “sharp leg lower” in oil prices. “Mild winter weather over the coming months could see weak heating demand in the U.S. and Europe,” it said. This “would likely be the trigger for adjustments through the physical market, pushing oil prices down to cash costs, which we estimate are
likely around US$20 per barrel,” the bank added. A recent steep rise in March put option positions tied to a US$35per-barrel strike price in Brent and West Texas Intermediate (WTI) crude suggests traders agree with the bank and expect the major benchmarks to slump in coming months. For WTI, put positions at the US$30 strike price have more than doubled since November 10, but have stayed flat at a more modest level for Brent. This is in accord with a broadly held view that while oil prices in general will remain under pressure over the medium term, WTI prices may fall faster and further than Brent. Goldman and other analysts say persistently high U.S. shale oil output that producers aren’t allowed to export could overwhelm the country’s storage tanks, which are already filled with near-record inventories.
Compounding the production glut is an expectation of a mild winter as a result of an El Niño weather pattern, which is expected to limit heating oil demand. The market may also have to accommodate a rapid rise in Iranian oil exports if sanctions are lifted, which many analysts say could happen in the first half of 2016. One option to deal with the glut would be to use crude oil tankers for storage. But this requires a price curve in which oil is sufficiently more expensive in the future than for immediate delivery - a market structure known as contango - so that holding costs can be covered. High tanker rates and a relatively flat price curve make floating storage unattractive for now, however, so analysts say spot prices would have to drop further to make storing crude on ships a viable market strategy. Reuters
U.S. trade czar confident of 2016 Congress vote on TPP While many U.S. farm lobby groups have supported TPP, business groups are still reviewing the details Manolo Serapio Jr
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.S. Trade Representative Michael Froman said yesterday he expected Congress to vote on a 12-nation Pacific Rim free-trade deal early next year. The Trans-Pacific Partnership (TPP), which aims to liberalise trade for 40 percent of the global economy, must be ratified by U.S. Congress but opposition from many Democrats and some Republicans could mean a vote is unlikely before President Barack Obama leaves office. “We can get it done as early as we can next year,” Froman told Reuters on the sidelines of an Asia-Pacific summit in Manila. Froman said the Obama administration would consult with lawmakers “to find the best window
to move this forward but we have to get it done as quickly as possible.” Obama last week urged Congress to “move promptly” early next year to approve the trade deal, in line with his target to have it passed before the November 2016 presidential elections. While many U.S. farm lobby groups have supported TPP, business groups are still reviewing the details. Other member countries are doing the same. Canada’s new Liberal government is reviewing a C$4.3 billion (US$3.2 billion) package designed to compensate farmers for losses they might incur under TPP, Trade Minister Chrystia Freeland said on Wednesday.
Froman said the intention is for the pact to be “open for other members to join if they’re able and willing to meet the standards.” “Our focus right now is getting it ratified and implemented by the 12,” he said. China, which is not part of TPP, is pushing to begin talks on another trade pact, called the Regional Comprehensive Economic Partnership (RCEP) and wants to speed up talks on free trade agreements with Japan and South Korea. Obama and the other leaders in the Asia-Pacific Economic Cooperation group are in Manila for a summit this week, hoping to break down more trade barriers in the region. Reuters
Business Daily | 15
November 20, 2015
Opinion Business
wires
Is South Korea turning Japanese? Lee Jong-Wha
Leading reports from Asia’s best business newspapers
Professor of Economics and Director of the Asiatic Research Institute at Korea University, served as Chief Economist and Head of the Office of Regional Economic Integration at the Asian Development Bank
THE ASAHI SHIMBUN The (Japanese) economy ministry will work with computer firms and Japaneselanguage schools in attracting 1,000 information technology graduates from Asian nations annually to alleviate the shortage of IT workers in Japan. The ministry was expected to establish a council on Nov. 17 to promote the project. About 35 companies affiliated with the Computer Software Association of Japan and a group of Japaneselanguage schools will work with the council to procure IT graduates. The council will help Asian IT grads who are endorsed by their governments study at Japanese language schools or find employment at Japanese companies.
THE TIMES OF INDIA The Cabinet authorized the road ministry to clear projects up to Rs 1,000 crore on its own, besides empowering it to take appropriate measures, including compensation to developers where delay is not because of them. It also approved increased budget allocation for the Munger railroad bridge over the Ganga. The Cabinet also cleared bigticket rail projects relating to doubling and construction of new railway lines costing over Rs 8,000 crore. After the package on FDI, the focus on infrastructure was another important step taken by the government post Bihar verdict.
JAKARTA GLOBE Indonesia’s burgeoning e-commerce sector led the growth in advertising spending for television and print media, thanks to the rapid rise of tech start-ups, data from global market researcher Nielsen showed. Ad spending from e-commerce companies grew 50 percent year-on-year to Rp 2.26 trillion (US$163.88 million) in the January-September period, according to the Nielsen report released on Wednesday. In comparison, advertisements for toddler formula increased 40 percent, followed by clove cigarettes with 30 percent growth. The report analyzed ad spending on television, newspapers, tabloids and magazines, which overall increased 3.23 percent year-on-year to Rp 86.2 trillion.
THANH NIEN NEWS Vietnam has introduced a new policy that will allow local companies to bring in machinery that have been in use overseas for less than 10 years, effectively easing a restriction on machines older than five years. According to the Ministry of Science and Technology, the new rule will take effect on July 1 next year. It is the second time since 2012 that the ministry has reviewed its policy on the import of used machinery, a practice that many have warned could put the country at risk of becoming an industrial dumping ground.
Two main stock indexes from Japan and South Korea demonstrate vague similarities
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outh Korea’s recent economic performance has been disappointing. After 40 years of astonishing 7.9% annual GDP growth, the average growth rate dropped to 4.1% in 2000-2010, and has stood at a mere 3% since 2011. This has many wondering whether South Korea is headed for the kind of protracted deflation and stagnation that characterized Japan’s so-called “lost decades,” from which it is just beginning to emerge. The similarities between South Korea today and Japan 20 years ago are undeniable. And, in fact, on economic matters, South Korea has, for better or worse, often followed Japan’s example. In this case, Japan’s example can save South Korea – if, that is, South Korea’s leaders take it as a lesson in what not to do. Japan’s woes are rooted in real-estate and equity bubbles, which were fuelled by monetary expansion aimed at stimulating domestic demand after the 1985 Plaza Accord drove up the yen’s value and hurt Japan’s exports. In the early 1990s, the bubbles burst, leaving the private sector with a huge debt overhang. Add to that sluggish productivity growth, weak demand, and rapid population aging, and Japan’s situation was dire. At first, Japan’s authorities turned again to fiscal and monetary expansion. But fiscal policies often targeted unproductive projects, such as rural infrastructure construction, and weaknesses in the banking system dampened the effectiveness of monetary stimulus. As a result, the economy grew by just 1.1%, on average, in the 1990s, far below the 4.5% of the 1980s.
In the early 2000s, Prime Minister Junichiro Koizumi’s government took aggressive action to tackle underlying problems in the financial and corporate sectors. Despite these efforts – not to mention the boost provided by rapid GDP growth in China, Japan’s economy expanded by just 0.75% annually, on average, for the entire decade. Things have been looking up since Prime Minister Shinzo Abe took office in 2012 and launched his three-pronged recovery strategy, dubbed “Abenomics,” which entailed bold monetary easing, fiscal expansion, and structural reforms. Stock prices have climbed more than 80%. The yen’s depreciation – from ¥78 to ¥123 against the US dollar – has boosted exports of industrial products and, in turn, corporate profitability. Consequently, employment and wages have also increased. Now, Abe is preparing to augment these efforts with initiatives to address major drags on Japan’s economy. So-called “Abenomics 2.0” entails efforts to raise the fertility rate (free preschool education, support for fertility treatments, and greater assistance for single-parent families) and to mitigate problems associated with population aging (boosting social security and providing more employment opportunities for retirees). But Japan’s economy is by no means out of the woods. On the contrary, GDP contracted by 0.1% last year, and is expected to grow by just 0.6% this year. Moreover, despite continued purchases of ¥80 trillion per year in government bonds, the Bank of Japan has failed to achieve its 2% inflation target. And Japan’s public
Taking a cue from Abenomics 2.0, South Korea would do well to provide a better environment for child rearing
debt-to-GDP ratio, at 240% (and rising), remains the highest in the world. And Abenomics 2.0 may not succeed, not least because young people, unconvinced that they can support larger families, are increasingly delaying marriage and children. Against this background, many believe that preventing the current population of 127 million from falling below 100 million – Abe’s official goal – will require Japan to accept more immigrants. That is no small matter in a country that places such a high value on homogeneity.
Simply put, while Japan has some reason for hope, its position is not enviable. And, if South Korea is not careful, it could end up in much the same place. Employing many of the same development strategies – including export-oriented policies and a conglomerate-dominated industrial system – South Korea has been catching up with Japan for four decades. Its per capita income (in terms of purchasing power parity), just one-fifth of Japan’s in 1970, amounts to almost 95% of Japan’s today. Over the same period, South Korea’s share of global exports jumped from 0.3% to 3% – very close to Japan’s 3.6%. To be sure, significant differences between the two countries remain. South Korea still lags behind Japan in international influence and institutional quality. South Korea ranks 26th on the World Economic Forum’s Global Competitiveness Index, whereas Japan ranks sixth. Based on the gap in GDP per worker with that of the US, South Korea is more than 20 years behind Japan. Nonetheless, the reality is that South Korea has been experiencing many of the same problems Japan did in the early 1990s, including high levels of household and corporate debt, labour- and financial-market inefficiencies, and low productivity in the service sector. Given a fertility rate of just 1.2 births per woman – among the lowest in the world – South Korea’s labour force is set to shrink by a quarter by 2050, with people aged 65 and over accounting for 35% of the total population, up from 13% today. This will put serious strain on public budgets. If South Korea is to avoid Japan’s fate, it must take steps to reduce its household and corporate debt. It also should continue to implement structural reforms aimed at strengthening its labour and financial markets, improving institutional quality, and boosting productivity in services and small and medium-size enterprises. Taking a cue from Abenomics 2.0, South Korea would do well to provide a better environment for child rearing, including flexible working environments, affordable and high-quality childcare and after-school programs, and paid maternal and paternal leave. Financial support, such as low-interest loans for newlyweds, could also promote marriage and childbirth. Japan’s lost decades highlight the importance of treating economic ills with the right medicine, before they become chronic and difficult to cure. If South Korea takes this lesson, and implements the right policies and reforms, being like Japan won’t have to mean sharing its economic fate. Project Syndicate
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November 20, 2015
Closing Banks charge over 7 percent to transfer money internationally
Modi’s gold deposit scheme attracts only 400 grammes
U.S. and UK banks charge on average more than 7 percent for international money transfers worth US$1000, several times the average cost at a new group of web providers, the first detailed study of the market showed yesterday. The report by FXCompared.com begins a regular monthly index measuring the effective cost of shifting money through both banks and the money transfer companies that have begun to put pressure on a business previously regarded as a big cash cow for lenders. The index measures the cost for a range of transaction values and currencies. Those are gathered by shopping expeditions at dozens banks and brokers.
A gold deposit scheme launched amid fanfare by Indian Prime Minister Narendra Modi two weeks ago has so far attracted only 400 grammes, an industry official said yesterday, out of a national hoard estimated at 20,000 tonnes. Modi has urged Indians to put gold stashed in homes and temples in the bank, offering modest rates of interest that earlier schemes have lacked. His government has also launched ‘paper’ gold in the form of gold-backed bonds. A shortage of centres to assay the gold being put on deposit is a problem that the government has agreed to address, said Anil Sankhwal, the northern regional chairman of India’s Gem and Jewellery Export Promotion Council.
PBOC ready for IPO’s restart The China Securities Regulatory Commission said this month that 28 companies were in the process of holding initial public offerings
It’s a gesture from the central bank to tell the market it will smooth out any liquidity tightening Huang Hai, deputy head of research, SDIC CGOG Futures, State Development & Investment Corp
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he People’s Bank of China added cash to the financial system using a short-term lending tool and cut the rate on a funding facility for smaller banks, preempting a possible liquidity squeeze as a freeze on new share sales draws to an end. The PBOC offered 20 billion yuan (US$3.1 billion) of seven-day reverse-repurchase agreements in yesterday’s open-market operations, double the 10 billion yuan conducted at the last seven
of its twice-weekly auctions. The central bank also lowered the overnight and seven-day rates on its Standing Lending Facility for local financial institutions to 2.75 percent and 3.25 percent, respectively, according to a statement on its official microblog. The China Securities Regulatory Commission said this month that 28 companies were in the process of holding initial public offerings and that these will be allowed to proceed by year-end. The last
new share sales in June drove money-market rates higher as subscriptions tied up funds, though new rules which will take effect next year mean investors applying for stocks will no longer be required to deposit funds equivalent to the amount they are seeking. The increase in reverse repos “is a gesture from the central bank to tell the market it will smooth out any liquidity tightening,” said Huang Hai, Beijing-based deputy head of research at SDIC CGOG
Futures Co., a unit of State Development & Investment Corp. “The amount is very small and won’t bring too much difference to the interbank market, but the purpose is to send a clear message.” The seven-day repurchase rate, a gauge of interbank funding availability, closed three basis points higher at 2.30 per cent, a
Biggest diamond in more than Former ICBC head at helm a century unearthed in Botswana of China’s Minsheng Bank
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1,111 carat gem-quality diamond, second in size only to the Cullinan diamond cut into the British Crown jewels, has been unearthed by Lucara Diamond Corp. in Botswana. The Type-IIa stone, just smaller than a tennis ball, is the largest diamond discovery for more than 100 years, according to Vancouver-based Lucara. It was recovered by machines at the south lobe of Karowe mine in central Botswana, the company said in a statement. “The significance of the recovery of a gemquality stone larger than 1,000 carats, the largest for more than a century and the continued recovery of high-quality stones from the south lobe, cannot be overstated,” William Lamb, chief executive officer of Lucara, said in the statement. Lucara’s Karowe mine in Botswana is rivaling Gem Diamonds Ltd.’s Letseng mine in Lesotho as a source of the world’s biggest and best stones. Gem Diamonds previously held the record for the largest discovered this century with the 603-carat Lesotho Promise. So far, the largest diamonds are resisting a price slump that has hit the wider industry. Bloomberg News
weighted average from the National Interbank Funding Centre shows. It opened at 2.25 percent for an 18th consecutive day, matching the rate on the central bank’s reverse repos in open- market operations. The rate jumped 24 basis points in the June 2-4 period, the biggest threeday increase since February, as subscriptions for 23 IPOs boosted demand for funds. The onshore cost of oneyear interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, was little changed at 2.40 percent in Shanghai, data compiled by Bloomberg show. The yield on 10-year government bonds rose one basis point to 3.18 percent in Shanghai, data from the National Interbank Funding Centre show. The one-week Hong Kong Interbank Offered Rate for yuan fell six basis points to 4.58 percent, trimming this week’s jump to 179 basis points. China’s central bank told some onshore banks to stop offering cross-border financing to offshore lenders recently, according to people familiar with the matter. Bloomberg News
Beijing to start nationwide emissions trading market in 2017
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he former vice president of the Industrial and Commercial Bank of China Ltd (ICBC) has taken on the role of president at Minsheng Banking Corp , three people with knowledge of the matter said yesterday. In January, Minsheng, China’s largest private bank, said its president had resigned for personal reasons, hours after several Chinese media reports said he was being probed by the anti-corruption watchdog. Zheng Wanchun, the former vice president of China’s largest state-run bank ICBC, is now at the helm of Minsheng, the sources said, declining to be named as they were not authorised to speak to the media. Minsheng Bank declined to comment. “Zheng Wanchun has experience dealing with non-performing assets from his time at an asset management company,” a banker at Minsheng said, referring to the time Zheng spent at China Huarong Asset Management as a general manager. “Perhaps this will help Minsheng with its bad assets,” he added. China’s Securities Times had reported in July that Zheng would become Minsheng’s new president.
hina is striving to launch a nationwide carbon emissions trading market in 2017 to fulfil the country’s commitment of a low carbon future, said a senior official yesterday. China will start a nationwide carbon emissions trading market at a faster pace following smooth operation of seven pilot schemes across the country, Xie Zhenhua, China’s special representative on climate change, told a press conference. Transactions of the seven pilots totalled about 1.2 billion yuan (US$188.9 million), involving gas emission quotas of 40.24 million tonnes, according to an annual report released Thursday by the National Development and Reform Commission (NDRC). The core to building a national emission trading market lies in reasonable quota plans, a sound market mechanism, detailed regulations and an improved registration system, said Xie. China began piloting carbon trading in 2011 and approved seven schemes in Beijing, Tianjin, Shanghai, Chongqing, Shenzhen, Guangdong and Hubei. Under the schemes, enterprises which produce more than their share of emissions are allowed to buy unused quotas on the market from those that cause less pollution.
Reuters
Xinhua