MOP 6.00 Closing editor: Joanne Kuai
PetroChina mulls selling pipelines and refinery business
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Year IV
Number 926 Tuesday November 24, 2015
Publisher: Paulo A. Azevedo
Greyhound racing track concession extended to end of next year Page 6
Cabinet announces new measures to nurture services economy
Overnight Visitors Increasing
Visitor arrivals dropped 0.6 pct y-o-y last month to 2.64 mln. The number of same-day visitors decreased 3.8 pct to 1.41 mln. But overnight visitors increased 3.3 pct y-o-y to 1.22 mln. Macau welcomed some 25.49 mln visitors from January to October, a decrease of 2.6 pct y-o-y from around 26.17 mln. The Mainland market represented 68.9 pct of the total number of tourists in October. With most coming from Guangdong. Followed by visitors from Fujian and Hunan Page
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Status quo
Record high Local residents’ investment in securities. Reaching a record high of MOP439 bln (US$54.9 bln) as at the end of H1. And representing an increase of 10 pct from end-December. Geographically speaking, local residents favour investments in Asia. Meanwhile, local residents’ portfolio investments in the N. Atlantic and Caribbean rose 31.6 pct period-on-period to MOP54.2 bln
Streamlining but stable. The Secretary for Administration and Justice confirms that the axe will continue to be swung in the culling of administrative departments. And has pointed the way for Macau’s political development. Sonia Chan Hoi Fan indicated no major changes will be introduced to the city’s electoral law
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www.macaubusinessdaily.com
Gaming
Shanghai goes IT
The Shanghai Equity Exchange. Ready to launch a hi-tech board for innovative start-ups after getting the regulator’s approval. The operator expects to list the first firms by the end of this year
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Brought to you by
HSI - Movers November 23
Name
%Day
Bank of East Asia Ltd/T
+1.23
BOC Hong Kong Holdin
+0.61
Hengan International
+0.44
PetroChina Co Ltd
+0.36
MTR Corp Ltd
+0.27
China Unicom Hong Ko
-1.19
China Merchants Holdi
-2.26
China Resources Powe
-2.31
Sands China Ltd
-3.31
Galaxy Entertainment
-3.95
Source: Bloomberg
Déjà vu Have we been here before? Union Gaming analysts say local authorities’ blessing of China’s Alipay could fuel the gaming industry. The country’s largest online payment service may serve UnionPay’s erstwhile function. That is, as a dispenser of cash for gamblers
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November 24, 2015
Macau
Secretary stresses status quo for city’s political system Secretary for Administration and Justice Sonia Chan Hoi Fan stressed that the MSAR does not intend to introduce further political reform for the 2017 Legislative Assembly election Stephanie Lai
sw.lai@macaubusinessdaily.com
S
ecretary for Administration and Justice Sonia Chan Hoi Fan has indicated that no major changes will be introduced to the city’s electoral law, saying that the government sought to maintain a “stable” political system whilst streamlining the administration as the main directions for executing the 2016 Policy Address. The government is to consult the public on the amendment of the electoral laws for Macau’s Legislative Assembly and Chief Executive at the beginning of next year, Ms. Chan said during the debate session of the Policy Address yesterday. She added that the amendment process will be completed before the Legislative Assembly election for 2017 takes place. The amendment will centre on introducing more competition to the indirect election system for the
Assembly and make the election process “fairer”, which meant curbing vote-buying activities, the Secretary noted. But pro-democracy legislator New Macau Association representative Au Kam San says such a change to the electoral law lacks making the political system here more democratic. “Our main task now is to achieve economic diversification [while] sustaining the city’s development,” the Secretary told Mr. Au. “With this aim it’s very important to maintain the stability of the political system here.” Mr. Au did not agree with the Secretary, arguing that even Beijing would allow the Assembly election to be more democratic without affecting the economic stability of the city. The political reform conducted in 2012 enlarged the number of seats of the committee electing Macau’s Chief Executive from the original 300 to
澳 門 特 別 行 政 區 政 府 Governo da Região Administrativa Especial de Macau 澳 門 格 蘭 披 治 大 賽 車 委 員 會 Comissão do Grande Prémio de Macau
Barrier Gates Removal Schedule for the 62nd Macau Grand Prix The Macau Grand Prix Committee will begin removal of the barrier gates immediately after the end of the event. The first stage of deconstruction has been completed early the next morning. We hope to minimize any inconvenience caused to the public. It is expected the entire circuit will re-open on 3rd December.
Date
Hour
Area
23-26/11/2015
08:00 to 20:00
(1) To remove all barrier gates (2) To remove all barriers along the barrier gates
23-28/11/2015
08:00 to 20:00
To remove all barrier gates from Avenida da Amizade to Reservoir Bend
26/11 – 3/12/2015
08:00 to 20:00
To remove all barrier gates from Rua dos Pescadores to Reservoir Bend
28/11 – 3/12/2015
08:00 to 20:00
To remove all barrier gates at the upper part of the Guia Hill
The Committee seeks the understanding of motorists for the inconvenience caused by
the construction, as well as to respect the temporary signage and instructions from the Traffic Authorities. For further information, please call 2872 8482.
400. The reform also provided more seats for directly elected legislators and indirectly elected legislators – although the outcome remains that the proportion of the directly elected legislators does not exceed half of the Assembly. “If we’re to have a change every time [before] an election is held, it doesn’t really bring a stable political system,” Ms. Chan told the Assembly.
Not firing civil servants
The MSAR is to maintain the goal of streamlining its administration for 2016, a move that the government said has started already this year with the restructuring of 15 departments. This includes the merging of the Legal Affairs Bureau and Law Reform and International Law Bureau, as well as the Civic and Municipal Affairs Bureau (IACM) being stripped of its functions in the fields of culture, leisure and sport – functions which will be given to the Cultural Affairs Bureau and the Sports Development Board. “This transfer of the functions [ f r o m IA C M ] t o t h e S p o r t s Development Board and Cultural
Affairs Bureau will be realised fully on January 1 2016, according to our plan,” said Ms. Chan, noting that the government is folding six departments in 2016. The government also aims to create a municipal organ without any political power by 2017 for the handling of recreation and environmental hygiene, the Secretary said. But the government has not decided whether that move will mean replacing the existing Civic and Municipal Affairs Bureau. “We will keep the civil servants horizontally mobile – they will be moved to the other departments that need them [during the process of streamlining administration]”, said Ms. Chan, “So we think that we don’t need to lay off staff.” Legislator and local businessman Chan Meng Kam has expressed doubts about the government’s plan to increase the budget to enlarge the civil service whilst seeking to streamline its departments. For 2016, the government intends to employ 2,770 more people, taking the total number of civil servants here to over 36,000. The expenses for the Civil Service is also set to increase 6.3 per cent to MOP19.67 billion for next year, the legislator said, citing official statistics. Nevertheless, the Secretary for Administration argued that the government is hiring to meet the public demand for more new functions needed in the Civil Service. “For instance, next year we have to have new people to handle Macau’s management of its surrounding waters; the Housing Bureau also needs to handle the property management committees of the residences here,” Ms. Chan said. “We’re controlling the growth of civil servants but at the same time we also have to ensure that the service they render meets the public demand here,” the Secretary added.
Inflation increased to 4.16 pct in October The increase of the price index was mainly caused by higher rentals and rising prices for eating outside
H
igher rentals and rising prices for eating out prompted inflation to hit 4.16 per cent year-on-year in October, according to information released yesterday by the Statistics and Census Service (DSEC). The increase recorded in October 2015 is the lowest since 2011, when in October of that year inflation hit 6.71 per cent. In comparison with previous years, the price index of Alcoholic Beverages and Tobacco jumped 34.29 per cent, costs for Education and Household Goods and Furnishings increased 8.96 per cent and 6.96 per cent, respectively, on account of higher tuition fees and rising wages of domestic helpers. Housing and fuels index prices also exceeded 5 per cent, recording a 5.13 per cent year-on-year increase in relation to October 2014. On the other hand, Clothing and Footwear declined 1.89 per cent and Communication prices decreased 0.16 per cent.
In relation to September, October recorded an increase of 0.42 per cent month-to-month. Higher rental for parking spaces, new arrival of winter clothing and rising wages of domestic helpers drove up the price index of Transport, Clothing and Footwear and Household Goods and Furnishings by 1.72 per cent, 1.50 per cent and 1.11 per cent, respectively. The price index of Food & Non-Alcoholic Beverages also went up, increasing 0.27 per cent owing to dearer charges for eating out and the higher prices of vegetables. Recording a different trend in September, the price index of Alcoholic Beverages & Tobacco decreased 3.84 per cent due to the adjustment of tobacco prices by some retailers. In the past four years, inflation constantly hovered above 5 per cent, at 5.81 per cent in 2011, 6.11 per cent in 2012, 5.50 per cent in 2013 and 6.05 per cent last year. J.S.F.
Business Daily | 3
November 24, 2015
Macau Subsistence index up 3.3pct in January According to a dispatch from Chief Executive Fernando Chui Sai On issued in yesterday’s Official Gazette, the government’s minimum subsistence index will increase by 3.3 per cent effective January 1 2016. The new adjustment states that the index for an individual is MOP4,050 (US$507.35) while a household of eight or more reaches MOP18,870. Poverty allowances are distributed based on the minimum subsistence index, which serves as an indicator of amount of total income to maintain the minimum standard of living. The last adjustment was made in November last year.
Visitor arrivals down 2.6 per cent since January During last month, overnight visitors increased 3.3 per cent year-on-year but still tourist arrivals dipped 0.6 per cent João Santos Filipe
jsfilipe@macaubusinessdaily.com
V
isitor arrivals dropped 0.6 per cent year-on-year last month to 2.64 million, from 2.65 million, according to data released yesterday by the Statistics and Census Service (DSEC). There were 25.49 million visitors from January to October, a decrease of 2.6 per cent year-on-year from around 26.17 million. During October, the number of overnight visitors increased 3.3 per cent year-on-year to 1.22 million from 1.18 million. However, for the first ten
months of the year, a decline of 3.5 per cent was posted to 14.06 million from 14.57 million. The number of same-day visitors decreased 3.8 per cent on the tenth month of the year to 1.41 million from 1.47 million. This decline is softer if the past ten months of the year are considered, as the decrease in the number of same-day visitors remains at 1.9 per cent for 13.76 million, while in the previous year it accounted for 14.03 million.
The reduction in the number of visitors to the Special Administrative Region has primarily been led by a decline in the number of Mainland tourists. While the decline was mild in October, only 0.6 per cent yearon-year to 1.82 million, taking into consideration the fist ten months of the year, it accounts for 3.5 per cent to 17.03 million from 17.65 million. While the Mainland market represented 68.9 per cent of the total number of tourists in October,
most Mainland visitors came from Guangdong. Fujian and Hunan were the second most popular provinces in terms of inbound visitors. After the Mainland market, Hong Kong (504,981; down 0.7 per cent), and Taiwan (83,462; up 5.6 per cent) are the most popular, representing a market share in October of 19.1 per cent and 3.2 per cent, respectively.
4 | Business Daily
November 24, 2015
Macau
Local life insurance market grows 82 pct this year The strong growth in the sector boosted the whole market to register a year-on-year hike of 65 per cent in total gross premium for the first three quarters of the year Kam Leong
kamleong@macaubusinessdaily.com
T
he local insurance market enjoyed a year-on-year growth of 65 per cent in gross premium for the first nine months of the year, which totalled MOP10.9 billion (US$1.36 billion). The notable increase is driven by the life insurance sector expanding by more than 82 per cent year-on-year, according to the latest statistics of insurance operations by the Monetary Authority of Macau (AMCM). During the first three quarters of the year, the life insurance segment generated MOP9.17 billion in gross premiums from the local market, up MOP4.13 billion from the same period of last year. The total claims of the sector, compared with the strong growth in gross premium amount, is up some 22 per cent year-on-year to MOP1.95 billion from MOP1.58 billion one year ago, of which maturity values to policy holders, death and dividends to policyholders accounted for 31.7 per cent, 27 per cent and 23.6 per cent of the total, respectively. The non-life insurance market also registered a year-on-year growth of 8.33 per cent in gross premium during the three quarters, totalling MOP1.71 billion from MOP1.58 billion one year ago. Total claims in the sector, meanwhile, rose 14 per cent yearon-year to MOP552 million. In terms of type, most of the sector’s gross premiums were generated by insurance for property risks, accounting for nearly 40 per cent of the total, followed by employees’ compensation, occupying about 22 per cent of the total.
China Life leads life insurance market
According to AMCM, China Life Insurance (Overseas) Co. Ltd. raked in some MOP5.5 billion in gross premiums for the first nine months, which means nearly 60 per cent of the total of the life insurance market for the same period.
On a year-on-year comparison, the company’s gross premiums surged almost 180 per cent year-on-year from MOP1.97 billion. Meanwhile, the company’s total claims only accounted for some 23 per cent of the total, amounting to MOP448 million. The second biggest player in the market for the period was AIA International Ltd, of which gross premiums reached MOP1.97 billion in the nine months but the company’s
claims reached some MOP883.6 million, accounting for 45.4 per cent of the total. On the other hand, the non-life insurance market was dominated by China Taiping Insurance (Macau) Company, of which gross premiums totalled MOP488.9 million for the three quarters, accounting for 28.5 per cent of the total. Nevertheless, the company disbursed some MOP129 million in claims, meaning 23 per cent of the sector total.
Manulife: Double-digit growth for past 5 years
Meanwhile, Manulife (International) Ltd. saw its life insurance businesses in the local market jump 18 per cent year-on-year, generating MOP213.5 million in gross premium for the first nine months of the year, according to AMCM. “In fact, our Macau operations have been posting double-digit growth for the past five years. Macau is one of our focused markets and we have put in different resources and introduced different products to develop the local market,” the company’s vice president and chief agency officer, Kareen Chow, told reporters at a Manulife event yesterday. According to Ms. Chow, who is also the general manager of the company’s Macau Operations, growth was attributable to the increased number of the company’s agents. As at the end of September this year, more than 300 agents were working for the insurer.
“We believe our business in the market will continue expanding for the future,” the general manager said. In 2013, the insurer posted a loss of MOP26.6 billion in the city, according to the Official Gazette. But the company had already turned the loss into profit in 2014, taking in some MOP39 million.
Manulife launches healthcare application ManulifeMOVE The company has launched its ManulifeMOVE mobile application in the city. The application, connected to wearable fitness trackers keeps tabs on the number of steps its wearer walks or runs each day while the insurer will offer premium discounts based on the average number of steps recorded. According to the company, it will offer a 5 per cent premium discount for the next year of an eligible policy if customers can reach 5,000 steps per day on average, while 7 per cent and a 10 per cent discounts will be provided if customers reach 7,000 steps and 10,000 steps or above per day, respectively. The programme will be applicable to customers purchasing their selected critical illness or medical plans before December 31 this year, the insurer said.
Business Daily | 5
November 24, 2015
Macau
Local residents’ investments in securities breaks record in H1 Local investment in equity securities, long-term securities and short-term securities all registered increases from the end of last year Kam Leong
kamleong@macaubusinessdaily.com
T
he city’s investment in securities reached a record high of MOP439 billion (US$54.9 billion) as at the end of the first half of the year, an increase of 10 per cent from the end of December, or year-on-year growth of 5.5 per cent. According to a co-ordinated portfolio investment analysis jointly conducted by the Monetary Authority of Macao (AMCM) and the Statistics and Census Service (DSEC), the latest amount includes all the investment of local residents, government and other legal entities in securities issued by unrelated non-residents, but excluding the government’s foreign exchange reserves. In terms of instruments, local investment in equity securities jumped 11.5 per cent as at the end of June from the previous six months, amounting to MOP172.7 billion. Of the total, some MOP39.9 billion were residents’ investments in mutual funds and investment trust units. In addition, residents’ investments in short-term debt securities surged 117.4 per cent from the end of 2014, reaching MOP33.1 billion, while investment in long-term debt securities registered a slight increase of 1.8 per cent period-on-period to MOP233.1 billion.
Asian securities preferred
Geographically speaking, local residents favoured more investments in Asia. The total external portfolio investment in the region accounted for 66 per cent of the total, while investment in the North Atlantic and Caribbean overtook that of Europe for the first time, occupying 12.3 per cent of the total. Investment
in Europe, North America and Oceania occupy 10.4 per cent, 8 per cent and 2.7 per cent of the total, respectively. For the Asian region, investment in securities issued by Mainland Chinese entities assumed the leading position as at the end of June, accounting for 44.3 per cent of local residents’ portfolio investment outside the city. The value amounted to MOP194.6 billion, which is a slight increase of 0.9 per cent from the end of December last year. On the other hand, the share of investment in securities issued by Hong Kong entities edged up 0.1 percentage points from end-2014 to 18.4 per cent, of which the amount
totalled MOP80.6 billion, jumping 10.3 per cent period-on-period.
International investment
Meanwhile, local residents’ portfolio investment in the North Atlantic and Caribbean rose 31.6 per cent period-on-period to MOP54.2 billion. In particular, the market value of portfolio investment in the Cayman Islands, the British Virgin Islands and Bermuda grew 23 per cent, 42.1 per cent and 49.1 per cent to MOP30.8 billion, MOP13.8 billion and MOP9.6 billion, respectively. In addition, the market value of local residents’ investments in US securities soared 42.2 per cent to MOP32.1 billion period-on-period,
accounting for 7.3 per cent of residents’ total portfolio investment aboard. According to the survey, the significant increase is driven by the market value of investment in longterm US debt securities surging 90.4 per cent to MOP16.9 billion. Furthermore, the city’s investment in European securities registered a period-on-period increase of 8.3 per cent, totalling MOP45.8 billion. Of European countries, Luxembourg took the largest share with a market value of MOP14.2 billion. Australian entities also saw investment in securities from the Special Administrative Region jump - by 30.7 per cent period-on-period to MOP11.8 billion.
6 | Business Daily
November 24, 2015
Macau Union Gaming: Alipay positive for gaming
G
aming analysts say that with Alipay approved by local authorities it could have positive longer term implications for the gaming industry, including the potential use of Alipay by mass market customers as an alternative to UnionPay or in addition to UnionPay, as it relates to getting cash. Last week, the Monetary Authority of Macau (AMCM) backed up Alipay’s legitimacy to operate in the SAR after the Chinese online payment company’s parent company Ant Financial announced that mobile payments using QR codes – aka Alipay Wallet - is now available in 107 stores in the city. As for the gaming industry, Union Gaming analyst Grant Govertsen said they would not expect them to offer Alipay Wallet in-person payments on casino floors “given how contentious that would be – not to mention the potential legal ramifications”. However, the analyst said they would expect Alipay to be added to the growing list of settlement options for non-gaming amenities like hotel rooms, restaurants, and entertainment venues, pointing out examples that restaurants like KFC and McDonald's in Mainland China have rolled out or are rolling out Alipay mobile payment.
Opportunities to be explored
Greyhound racing track concession extended to end of next year
T
he concession for Macau’s greyhound racing track operator Macau (Yat Yuen) Canidrome Co. is to be extended until December 31 2016, according to an executive order issued in the government’s Official Gazette yesterday. The order, signed by Chief Executive Chui Sai On, indicated that the Secretary for Economy and Finance, Lionel Leong Vai Tac, is authorised to represent the SAR government to sign the revised contract. The concession was set to expire by the end of this year.
Previously, Secretary Lionel Leong had stated that the government would wait for the results of a study requested from a third party, later revealed as the University of Macau, to decide whether to renew or scrap the existing concession for Macau (Yat Yuen) Canidrome. The study which was said to have begun last month was expected to be finished in one year and will ‘focus on the importance and influence of the Canidrome on the territory as a World Centre for Tourism and Leisure’. Local concern group ANIMA
(Society for the Protection of Animals) has constantly urged the government to shut down the greyhound racing track and make other use of the land to the benefit of the local community. In 2014, the Canidrome generated MOP145 million in revenues out of the MOP352.71 billion generated by the whole of the gaming industry in Macau, which represents less than 1 per cent. Legislator and Executive Director of SJM Holdings Angela Leon On Kei is the managing director of the company exploiting the Canidrome.
“We don’t believe any pawn shops have begun to offer Alipay (yet),” wrote Govertsen in a note released on Sunday. “We would, however, expect pawn shops to explore the Alipay option over time especially if any further UnionPay restrictions are put in place.” Business Daily recently reported that 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. While pointing out that the widespread usage and acceptance of Alipay as a positive factor of the news, citing nearly 200 million Alipay mobile payment users using Alipay Wallet by late 2014, up from 100 million in late 2013, the Union Gaming analyst also indicated that they suspect the people most comfortable with using Alipay are generally younger, and “therefore not necessarily high value potential visitors to Macau”. J.K.
Corporate
Grand Lisboa restaurants awarded Michelin stars Melco Crown Entertainment’s extensive wine cellar Three restaurants in SJM’s Hotel Grand Lisboa have been awarded coveted star ratings by the Michelin Guide for 2016. Chinese fine dining restaurant The Eight and French restaurant Robuchon au Dôme continue to be the only restaurants in Macau receiving the top 3-star rating from Michelin, whilst Grand Lisboa’s modern steakhouse
The Kitchen was awarded one Michelin star. The ratings appeared in the new edition of the Michelin Guide Hong Kong Macau 2016 released this month. The Grand Lisboa is the only hotel in Hong Kong and Macau with two 3-star restaurants, while The Eight is one of only three Chinese restaurants in the world with three stars.
Melco Crown Entertainment Limited has its exclusive wine collection enriched again following the unveiling of the world’s last remaining Penfolds Ampoule at City of Dreams in July. The company has now secured the only four bottles in Macau of limited edition Chapters of Ampersand Et No 1 Cognac in its luxury wine cellar, a splendid cognac that unites the very best of
the art and craftsmanship of fine spirits and the Swedish tradition of glassmaking. Two of the artistic masterpieces will be on display in the newly-elevated two Michelin-starred restaurants Jade Dragon and The Tasting Room at City of Dreams, while the remaining two bottles will be in the Pearl Dragon restaurant and Premiere Bar of Studio City.
Business Daily | 7
November 24, 2015
Macau Iao Kun revenue plunges 57 per cent year-on-year Iao Kun Group Holdings recorded a revenue decline of 57 per cent to US$22.4 million (MOP178.81 million) for the three months from July to September, the gaming promoter company announced in a filing last week. The Macau junket explained the results by a decrease in players for VIP baccarat in the territory’s market, the economic slowdown caused by the anti-corruption campaign and ‘the continued tightening of government policies in Mainland China . . . With the macro environment in Macau still being difficult, we continue to be on the lookout for additional VIP opportunities in overseas markets’, group Chairman Lam Man Pou stated.
KPMG: GDP will decline 16 per cent with full smoking ban The study, commissioned by the gaming operators, says government tax revenue and salary loss will account for the largest part of the decline in Gross Domestic Product João Santos Filipe
jsfilipe@macaubusinessdaily.com
T
he territory’s Gross Domestic Product (GDP) will decrease 16 per cent if a full smoking ban is implemented in casinos, according to a study by KPMG consultancy commissioned by the six gaming operators The results of the study were presented to the Second Standing Committee of the Legislative Assembly on 11th November but were only revealed to the general public last week. According to the information released, from breakdown by sector of the GDP loss breakdown, 11 per cent would result from losses of gaming and related tax revenue, 1.3 per cent from accommodation, 0.8 per cent from Food and Beverage, 0.1 per cent from Transportation and 2.7 per cent from other sectors. Considering the breakdown by direct and indirect loss of GDP, direct losses would amount to 11.5 per cent, with gaming tax loss alone contributing 5.4 per cent. Likewise, indirect loss would amount to 4.5 per cent, mainly driven by reduced profit, which would record a loss of 2.7 per cent. In relation to salary
loss, it would amount to 2.0 per cent of direct loss and 1.4 per cent of indirect loss. ‘Of the loss, government tax revenue loss and salary loss represented an aggregated loss of 9.7 per cent, contributing to 60.6 per cent of GDP loss. This could affect the ability of job creation for Macau businesses’, the study read. With a full smoking ban, tax revenues are expected to dip 20 per cent, 17 per cent coming from Gaming Tax and 3 per cent from Corporate Profit Tax. At the same time, gaming revenues are expected to dip 18 per cent, with 16 per cent related to the VIP segment and the remaining 2 per cent to the mass market.
VIPs to visit Macau less frequently
The implementation of the full smoking ban would also result in a decline in the frequency of visits to Macau by VIP gamblers. According to the results, with the new policy, high-rollers would visit the territory only five times per year, while now they do so on average six times.
In relation to the length of stay, the change to the smoking policy would mean that VIPs would stay on average less than half a day in Macau (0.56 days). This means that the average stay would be cut from 2.48 days to 1.92 days. Regarding the mass market, the average frequency would decline 0.06
Singapore most attractive alternative to Macau Of the 134 VIP players surveyed, 32 per cent said they would go to other destinations that accommodate smoking. Of these, 32 per cent said they would go to Singapore, 26 per cent to the Republic of Korea and 19 per cent to the Philippines. Vietnam was considered the fourth most popular alternative (14 per cent), while Australia was mentioned by 7 per cent of the high rollers. The remaining 2 per cent favoured other destinations.
times from 4.30 times to 4.24 and the length of stay would decrease 0.06 days, from 1.76 days to 1.70 days. ‘The impact of the change in spending behaviour of mass customers is enlarged due to the fact that the number of mass customers is 15 times more than that of the VIP customers’, the study stresses. The analysis of the consultant firm included approximately 34,000 surveys of employees directly linked to the gaming operators, of whom 66 per cent were said to be supportive of the retention of smoking lounges (59 per cent) or against the smoking ban (6 per cent). Around 35 per cent supported full smoking in casinos. Of the 542 casino customers surveyed, 407 were from the mass market and 135 from the VIP segment. Regarding the mass market, 50 per cent were in favour of retaining smoking lounges and 19 per cent were against smoking ban, while 31 per cent supported it. In the VIP segment, 24 per cent supported the full smoking ban, 35 per cent were in favour of retaining the smoking lounges, while 41 per cent opposed the new law.
8 | Business Daily
November 24, 2015
Greater China
New high-tech board to launch in Shanghai this year Shanghai will also launch an equivalent of Shenzhen’s ChiNext board on its own exchange
The new board should allow Shanghai to better compete with the popular ChiNext small-cap growth board in Shenzhen
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he Shanghai Equity Exchange (SEE), operator of the city’s over-the-counter equity market, said yesterday it has received regulatory approval to launch a hi-tech board for innovative start-ups, and plans to list the first firms by the end of this year. Launch of the so-called “technology innovation” board is
part of China’s efforts to build a multi-layered capital system, and is aimed at easing funding shortages for small-and-medium sized firms in the technology and innovation sectors, the exchange said on its website. China has been counting on innovation and consumption to revive its slowing economy.
The Shanghai Equity Exchange is an OTC market similar to the U.S. OTC Bulletin Board which caters to nonpublic companies that lack the collateral for bank loans and do not have the scale or the motivation to join the long queue to list on the main bourses. It competes with a similar board in Beijing, the “New Third Board” over-the-counter market that has been favoured with policy advantages over other OTC rivals. The new board should also allow Shanghai to better compete with the popular ChiNext small-cap growth board in Shenzhen.
Shanghai-based Chinese business daily China Business News, quoting the SEE’s director of innovation Chen Yanyan, said more than 50 companies are already queued up to list on the so-called Tech Innovation Board when it launches. China has established three layers of share trading systems in the primary Shanghai and Shenzhen stock exchanges -- the main board for mature companies, the SME board for small- and mediumsized enterprises and another board, or ChiNext, for start-ups. However, Shanghai was widely seen as losing competitiveness due to its focus on massive listings by stateowned companies at the expense of smaller “new economy” stocks, which are mostly listed in Shenzhen. It has also built up a series of OTC markets where ownership in non-public companies can change hands, but until recently they were regionalised in nature, lacked clearing mechanisms or attractive companies, and thus failed to attract trade. China’s securities regulator on Friday said it would release measures to further promote the development of the New Third Board. Shanghai will also launch an equivalent of Shenzhen’s ChiNext board on its own exchange. Reuters
PetroChina said to consider pipeline, refinery sales PetroChina is 86.5 percent owned by CNPC and accounts for about 90 percent of the parent company’s proven oil and gas reserves Aibing Guo
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etroChina Co. and its state-owned parent are planning to sell assets before the end of the year that may include stakes in pipelines and refineries as the country’s biggest oil and gas producers seek to shore up their balance sheets, according to people with knowledge of the situation. PetroChina and China National Petroleum Corp. may announce the stake sales as early as this week, said the people, who declined to provide details and asked not to be identified because the information isn’t public. CNPC is seeking to use proceeds from the sale to meet annual income growth targets set by China’s state asset regulators, according to the people. “Many investors would prefer they cash in on some assets rather than running the assets themselves,” Laban Yu, head of Asia oil and gas equities at Jefferies Group LLC in Hong Kong, said by phone. “Investors have given almost zero valuation
to PetroChina’s assets such as pipelines. Any asset sales right now are good news for the company and could help its share price.”
‘Dramatic’ Drop
The slump in energy prices has pushed energy companies to shed assets and cut staff to survive the downturn. PetroChina’s
third-quarter profit fell 81 percent to the lowest since Bloomberg started compiling the data in 2007. China Petroleum and Chemical Corp., the country’s No. 2 producer known as Sinopec, posted a 92 percent decline in profit. CNPC’s press office in Beijing wasn’t able to immediately respond to an
e-mail seeking comment. Mao Zefeng, PetroChina’s Beijingbased spokesman, said he was unable to immediately provide comment. The sale would be the first major divestment by either company since PetroChina sold a 20 billion (US$3.1 billion) yuan pipeline stake to institutional investors in 2013. Saudi Arabian Oil
Co., the world’s largest oil exporter, hired Deutsche Bank AG to advise on the potential acquisition of some marketing, retail and refining assets from CNPC that could be worth several billion dollars, Bloomberg reported in October. Income at both companies has dropped “dramatically” this year, adding pressure to meet growth targets, Wang Dongjin, a deputy general manager at CNPC and president of PetroChina, said in a statement posted on CNPC’s website this month. CNPC will try to raise profit through an “asset-light” strategy, Wang said, without elaborating. PetroChina is 86.5 percent owned by CNPC and accounts for about 90 percent of the parent company’s proven oil and gas reserves, according to the Fitch report. PetroChina’s 2015 profit is expected to drop about 55 percent from a year ago to 47.9 billion yuan, according to estimates compiled by Bloomberg. Bloomberg News
Business Daily | 9
November 24, 2015
Greater China
Premier Li announces Malaysian bonds purchase
Li, Abe’s “brief” talk in Malaysia
China will buy more treasury bonds to help stabilise its financial markets
Premier Li Keqiang (C) is escorted to the event room during the ASEAN summit in Kuala Lumpur, Malaysia, 22 November 2015
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hina will buy more Malaysian government bonds and give the country a 50 billion yuan (US$7.83 billion) quota to invest in Chinese stocks and bonds as it looks to strengthen ties with Southeast Asia. Premier Li Keqiang announced the moves at a business forum in Kuala Lumpur, state news agency Xinhua reported yesterday. No further details
were immediately available. China said on Sunday it is offering US$10 billion in infrastructure loans to Southeast Asian countries along with aid to the region’s underdeveloped states, as it seeks to expand its influence in the developing world. China is Malaysia’s largest trade partner and they have close diplomatic ties.
Li said China will buy more Malaysian treasury bonds to help stabilise its financial markets. “Inflation is peaking and currencies depreciate. It is imperative to stabilise the financial market. So, we want assume a market role by purchasing your treasury bonds,” he said at the Malaysia-China economic forum. Investor confidence in the country has faltered as weak commodity prices take a toll on the economy and a scandal at an indebted state fund raises questions over Prime Minister Najib Razak’s leadership. The ringgit is the worst-performing emerging market currency in Asia so far this year, having lost 19 percent of its value against the U.S. dollar, while the country’s benchmark stock index is down about 6 percent. Malaysia posted its slowest economic growth and smallest current account surplus in over two years in the third quarter. Malaysia will also be allowed to invest in China’s capital markets through its new quota in the Renminbi Qualified Foreign Institutional Investors (RQFII) plan, Li said. Neighbouring Singapore said earlier this month that China had doubled its quota to 100 billion yuan (US$15.72 billion). Reuters
Bank of Jinzhou halves Hanergy exposure ahead of IPO It had tried to list in Shanghai in 2011, but gave up on the plan after waiting for approval for almost three years
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ank of Jinzhou Co Ltd launched an up to US$943 million Hong Kong IPO yesterday to bolster its balance sheet after the Chinese lender halved its exposure to Hanergy Group, the parent of troubled solar equipment maker Hanergy Thin Film Power Group Ltd. The 1.32 billion shares in the initial public offering are being offered in an indicative range of HK$4.64 (US$0.5987) to HK$5.54 each, Thomson Reuters publication IFR reported, citing a term sheet for the transaction. The shares represent 23.6 percent of the bank’s enlarged capital. The Liaoning province-based city commercial bank had applied for a listing in Hong Kong in April but the application stalled in June after the stock exchange questioned the bank’s exposure to Hanergy, IFR previously reported, citing people close to the situation. It had tried to list in Shanghai in 2011, but gave up on the plan after waiting for approval for almost three years, according to its Hong Kong listing documents. Bank of Jinzhou didn’t immediately reply to a Reuters request for comment on the IPO. The lender makes no mention of Hanergy’s name in its filings with the Hong Kong stock exchange, instead
disclosing it had exposure “to one particular ultimate group borrower, who was subject to negative media reports on its business and financial position”. Bank of Jinzhou also said the borrower has a unit listed in Hong Kong that had trading of its shares suspended and has been under investigation by the Securities and Futures Commission since May 2015. The exposure, which came through investments in debt instruments and securities classified as receivables, totalled 9.46 billion (US$1.5 billion) yuan at the end of June, according to the filings. But in August Bank
of Jinzhou slashed it by 50 percent to 4.69 billion yuan through several different transactions. The bank sold down a combined 1.97 billion yuan of investments to two unnamed financial institutions in mainland China and it also entered into an agreement with the borrower to receive an early repayment of 2.6 billion yuan. About 90 percent of the IPO will be new shares from the bank, and the remainder stock sold on behalf of China’s National Council for Social Security Fund (NSSF). Reuters
China yesterday confirmed a “brief” talk between Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe in Kuala Lumpur during the East Asia Summit. “Premier Li and Prime Minister Abe had a brief conversation on the sidelines of a series of leaders’ meetings on East Asian cooperation in Kuala Lumpur,” said Chinese Foreign Ministry spokesperson Hong Lei in a press release. Li said the two countries had witnessed improvement of ties recently, adding that the improved momentum is still fragile, according to Hong.
Economists urge tax reductions Chinese economists are calling for the government to cut taxes for enterprises and reduce their lending costs, deepening supply-side structural reforms. Hundreds of billions of yuan of taxes could be saved in targeted areas next year through various favourable tax policies, experts have predicted. China has been adjusting its tax policies to encourage small businesses and the service sector. Value-added tax reforms, begun in 2012 to eliminate double taxation for service businesses, have saved firms in sectors including transportation and telecoms 480 billion yuan (US$75.16 billion).
Forum with CEE countries kicks off The fourth leaders’ meeting between China and 16 CEE countries opens today in Suzhou, being the first time for China to host such a meeting. Chinese Premier Li Keqiang and leaders from the CEE countries will attend the two-day meeting, the most important schedule within the framework of China-CEE cooperation this year. At the meeting, Li and leaders of CEE countries are expected to discuss how to further promote common development and all-win cooperation. According to the Chinese Foreign Ministry, Li will attend a “16+1” round-table meeting and a trade and economic forum.
State planner approves high-speed rail project China’s state planner approved a 80.51 billion yuan (US$12.60 billion) high-speed rail project, according to a statement posted on its website yesterday. The 618-kilometre rail link will run between Yinchuan in Ningxia to Xi’an in neighbouring Shaanxi province, according to the announcement from the National Development and Reform Commission (NDRC).
Evergrande strikes US$617 mln life insurance deal Chinese property developer Evergrande Real Estate Group Ltd will pay US$617 million for a 50 percent stake in a joint-venture life insurer, it said in a stock exchange filing on Sunday. The deal was approved by China’s insurance regulator on Friday. Evergrande Nanchang, an indirect wholly owned subsidiary, will pay 3,939,110,600 yuan (US$617.08 million) for a 50 percent stake in Great Eastern Life Assurance (China) Co Ltd. After the transaction the insurer will be called Evergrande Life. Evergrande said it will promote its insurance services in its more than 300 new housing developments.
10 | Business Daily
November 24, 2015
Greater China
This could be the last decent shot at making 680 pct on domestic IPOs China is switching to a new IPO system, in part because the pre-funding requirement has been wreaking havoc on liquidity conditions in the nation’s financial system
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hat once looked like long odds of securing shares in Chinese initial public offerings now look too good to pass up. The final 28 IPOs under China’s existing online lottery system will start taking orders as soon as this month. While chances of getting an allocation have never been stellar at about 0.6 percent, a requirement for prospective investors to pre-fund their bids kept a cap on competition. After this batch of deals is completed, authorities will scrap the upfront payment rule, prompting a surge in investor participation that China International Capital Corp. says will slash the odds of a winning bid to about 0.01 percent. Getting out in front of that flood of new orders is one reason why Pan Weiting, a 31-year-old accountant in Shanghai, is stockpiling as much as 400,000 yuan (US$62,651) to bid on the final batch of 28. “I sold some shares to get ready,” Pan said. “IPOs are still the best bet, guaranteeing you pretty high returns.” Thanks in large part to a regulatory ceiling on valuations, the average Chinese IPO tracked by CICC in the 18 months through June surged 681 percent from its offering price. The prospect of that kind of return-- with no upfront cost -- is expected to lure millions of new bidders at a time when slowing economic growth, falling interest rates and a volatile property market dampen the appeal of other investments.
The new rules will turn China’s IPO subscriptions into a mega lottery… It shows the government’s intention to share IPO gains with more people Zhang Gang, strategist, Central China Securities
China is switching to a new IPO system in part because the pre-funding requirement has been wreaking havoc on liquidity conditions in the nation’s financial system. Nearly every time a new batch of companies took orders over the past year, market rates climbed and the Shanghai Composite Index slumped as investors hoarded cash for their bids. The last batch of 28 will probably tie up 3.4 trillion yuan, according to the median of six analyst estimates compiled by Bloomberg. The new rules will also provide a more level playing field for China’s 96 million individual investors, who are less likely to have money at hand
for every round of bidding. Under the existing system, institutional funds that invested in a mix of IPOs and short-term debt have been able to generate annualized returns of about 10 percent, according to Hua Chuang Securities Co.
Valuation confusion
“The new rules will turn China’s IPO subscriptions into a mega lottery,” said Zhang Gang, a strategist at Central China Securities in Shanghai. “It shows the government’s intention to share IPO gains with more people.’’ The upcoming 28 offerings will be completed under the existing system because they were approved before authorities put a freeze on IPOs in the midst of China’s stock-market crash in July. Unlike counterparts in the U.S. and Europe, Chinese regulators can control both the timing and pricing of deals. While most analysts predict the odds of winning an allocation will tumble under the new rules, there’s less consensus on what will happen to post-IPO returns. A lot will depend on prevailing investor sentiment when the deals price, but another big factor is whether authorities will keep enforcing a valuation ceiling of 23 times earnings. Regulators, who never explicitly acknowledged the valuation cap, have given mixed signals on whether it will remain. While the new rules suggest companies selling fewer than 20 million shares will be allowed to “directly’’ set their offering prices, a spokesman for the China Securities
Regulatory Commission said this month that firms should stick to a “low valuation” pricing principle.
Registration system
Post-IPO gains are likely to shrink to an average 300 percent, CICC analysts wrote in a November 12 report, in what they called a “conservative’’ estimate. The investment bank cited the valuation cap as one of the key details regulators still need to clarify for investors. “Pricing has been the part that the market is most concerned about,’’ the CICC analysts wrote. “Considering regulators’ emphasis on the protection of small and medium-sized investors, we think that the pricing will not be completely liberalized.’’ Chinese authorities have pledged to eventually adopt a “registration’’ system for IPOs like that of the U.S., where regulators focus primarily on enforcing disclosure requirements, without meddling in the timing or valuation of deals. While that leaves investors more vulnerable to buying overpriced offerings, it also helps companies fund growth more efficiently by maximizing their proceeds from share sales. In the meantime, Chinese IPOs are likely to retain their status as can’tlose bets, said Kay Van-Petersen, a strategist at Saxo Capital Markets in Singapore. “If you know the price is artificially pressed down, of course you’d buy,’’ Van-Petersen said. “You don’t even have to know the company.’’ Bloomberg News
Business Daily | 11
November 24, 2015
Greater China
Japanese Government plans to raise minimum wage The minimum wage has been rising for the past few years, but Japan's rates are only slightly above the average for OECD members Takashi Umekawa and Stanley White
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apan's government plans to raise the minimum wage and introduce other steps to revitalise the economy, but the draft of stimulus measures seen by Reuters yesterday appeared to break no new ground on reforms that analysts say are needed to end decades of stagnation. Prime Minister Shinzo Abe's government will also offer some financial support to people living off their pensions to bolster consumer spending, a copy of the draft obtained by Reuters showed. Citing unnamed sources, the Nikkei newspaper said yesterday that the government is planning to raise the minimum wage by 3 percent. But the draft didn't provide any specifics and analysts say the government will need to do more to foster durable growth. Raising wages is an urgent task for policymakers as Tokyo is keen to ramp up consumer spending, which is seen as crucial to boosting domestic demand and pulling the economy out of 15 years of deflation. However, some economists remained sceptical of the plans because they do not do enough to address Japan's rigid labour market and low worker productivity.
Japanese Government team
"This sounds like shortterm stimulus, but Japan needs structural reforms more than stimulus measures," said Marcel Thieliant, Japan economist at Capital Economics in Singapore. "We might get a growth spurt for the next one to two years, but this will not lead to stronger growth in the long term."
Bowl of ramen
The economy has fallen into recession twice since Abe took
office in late 2012, and his government is under pressure to show that it can improve the economy with a package of steps due this week. The national average of Japan's minimum wage was at 780 yen (US$6.33) per hour in the last fiscal year, so a 3 percent increase would still not buy more than a bowl of ramen noodles - an illustration of the daunting task policy makers face in boosting consumption and growth.
The minimum wage has been rising for the past few years, but Japan's rates are only slightly above the average for OECD members, and labour unions have argued for bigger increases. The government will also loosen regulations to encourage capital expenditure by small firms, and provide a time frame for lowering the corporate tax rate below 30 percent to improve competitiveness, the draft showed.
The government has already committed to lowering the corporate tax rate to around 31 percent next fiscal year, but companies have been asking for bigger tax cuts. Economics Minister Akira Amari will present the draft at a meeting of the government's top advisory panel today. Abe's government is due to finalise the economic stimulus measures by the end of this month. Reuters
Singapore's consumer prices fall 0.8 pct in October The overall price of retail items was 0.1 percent lower
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ingapore's CPIAll Items inflation declined 0.8 percent in October on a year-onyear basis, following a 0.6 percent fall in September, announced the Ministry of Trade and Industry (MTI) and Monetary Authority of Singapore (MAS) in a joint press release yesterday. The authorities said the falling inflation was mainly due to the lower costs of oilrelated and retail items. According to the release, the cost of oil-related items fell by 10.1 percent, extending the 8.4 percent decline in the preceding month, as electricity tariffs were reduced further on the back of softer global oil prices. The overall price of retail items was 0.1 percent lower, a reversal from the 0.6 percent rise a month earlier, because of a smaller increase in the
price of clothing and footwear and cheaper personal care products. Food inflation remained unchanged at 1.8 percent, as the stronger pickup in the prices of non-cooked food and hawker food was offset by a more modest rise in the cost of restaurant meals, said MTI and MAS. Services inflation was stable at 0.8 percent. While the fall in telecommunication services fees moderated, this was offset by a sharper decrease in air fares and a smaller increase in the cost of holiday travel. Accommodation cost was 3.0 percent lower, extending the 2.9 percent decline in the previous month, mainly reflecting the soft housing rental market, said the joint release. Private road transport cost fell by a more moderate 2.3 percent, compared to the 3.2
percent drop in September, owing to a smaller decrease in petrol pump prices and higher electronic road pricing (ERP) charges.
MAS Core inflation, which excludes the cost of accommodation and private road transport, moderated to 0.3 percent in October from
0.6 percent in the previous month, which mostly reflected the impact of lower electricity tariffs and prices of retail items. Xinhua
12 | Business Daily
November 24, 2015
Asia
Fitch sees proposed India’s salary boost squeezing bonds The pay increases also threaten to fuel inflation, limiting room for central bank Governor Raghuram Rajan to add to this year’s four interest-rate cuts
Modi’s government faces a higher wage bill just as a sluggish economy and dwindling asset sales are weighing on revenue. Indian Prime Minister Narendra Modi (L) accompanied by his Malaysian counterpart Najib Razak (R) are seen during the unveiling ceremony of the Torana Gate at Little India, Kuala Lumpur last weekend.
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proposal to increase the salaries of millions of Indian civil servants risks derailing the government’s budget deficit goal, adding to pressure on bonds suffering the biggest outflows since May. The 23.55 percent overall boost recommended by a governmentappointed panel on November 19 would cost the exchequer 1.02 trillion rupees (US$15.4 billion) in the year starting April 1, Finance Minister Arun Jaitley estimates. Such a raise, along with increased economic stimulus spending, would make it harder to meet fiscal targets, Fitch Ratings said. Prime Minister Narendra Modi’s government, which in February pushed back its deadline for fiscal consolidation by a year to March 2018, faces a higher wage bill just as a sluggish economy and dwindling asset sales are weighing on revenue. The pay increases also threaten to fuel inflation, limiting room for central bank Governor Raghuram Rajan to add to this year’s four interest-rate cuts. Government bonds fell after the pay panel’s proposals were announced Thursday, pushing up the benchmark 10-year yield by three basis points the following day. The yield rose one basis point yesterday to 7.71 percent, set for its highest close since Nov. 9. Societe Generale expects it to climb
I don’t feel confident that the government will succeed in meeting its deficit target Kunal Kundu, economist, Societe Generale
to 7.75 percent by the end of March, according to Kundu, compared with an earlier forecast of 7.25 percent and the 7.33 percent median estimate of analysts surveyed by Bloomberg. The yield on notes maturing May 2025 has risen seven basis points this month as foreign holdings of rupee-denominated notes fell by 30.5 billion rupees through November 20, the most since May, according to the National Securities Depository Ltd. Overseas ownership reached a record 3.56 trillion rupees on October 26. Jaitley said in February the goal
of reducing the deficit to 3 percent of gross domestic product will be reached in the year ending March 2018, instead of March 2017. The government aims to narrow the shortfall to 3.9 percent by March 2016 and to 3.5 percent the following year.
Deficit projections
Taking the pay increases into account, Morgan Stanley expects the gap to be 3.9 percent by March 2017 and Deutsche Bank AG sees the following year’s deficit at 3.7 percent. The government is confident of maintaining the fiscal consolidation path, Shaktikanta Das, economic affairs secretary in the finance ministry in New Delhi, told Bloomberg TV India. India’s sovereign bonds have returned 7.8 percent this year, the most in Asia, according to indexes compiled by Bloomberg. PNB Gilts Ltd. expects the notes to extend gains as a slump in global commodities keeps inflation in check and inflows will increase when the government increases limits on foreign holdings next year. “The strain due to higher salaries will be neutralized because there will be a jump in consumer spending, which means higher GDP growth and revenue,” said Vijay Sharma, executive vice president for fixed income at PNB Gilts in New Delhi.
He predicts the 10-year yield will drop to 7.45 percent by March 31.
Pay commission
The pay changes suggested would take effect Jan. 1 and benefit as many as 4.7 million workers and about 5.2 million pensioners. While staff pay is adjusted for inflation every six months, fixed salaries are revised once in about 10 years. India spent a net 221 billion rupees when it last raised salaries following the 2008 recommendation for a raise of as much as 40 percent. “With this additional expenditure, the fiscal deficit may be larger than currently foreshadowed,” said Kyran Curry, director of sovereign ratings at Standard & Poor’s in Singapore. That may stand in the way of upgrades, he said. S&P and Fitch rate India’s debt at BBB-, the lowest investment grade, with a stable outlook. Moody’s Investors Service has a similar ranking of Baa3 with a positive outlook. “Fiscal challenges are a key constraint on India’s sovereign credit profile,” said Atsi Sheth, senior vice president for sovereign risk at Moody’s in Singapore. “Government finances are vulnerable to slowerthan-anticipated nominal growth as well as spikes in expenses, such as those related to pay adjustments.” Bloomberg News
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Business Daily | 13
November 24, 2015
Asia
Japanese central bank easing divides funds’ opinions Economists are virtually unanimous in saying the monetary authority won’t be able to achieve 2 percent inflation within its target period Kevin Buckland and Shigeki Nozawa
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CW Group Inc. says the Bank of Japan (BOJ) has made a mistake and should exit quantitative easing as soon as possible. Invesco Ltd. says the only error was not starting sooner. The split in views at the funds, which manage a combined US$971 billion, comes as BOJ Governor Haruhiko Kuroda kept monetary policy unchanged on Thursday and his board said inflation expectations seem to be rising. TCW is among critics that say easing has only served to artificially inflate asset prices above what is merited by the real economy, and the longer it continues, the bigger the eventual crash. TCW recommends buying sovereign debt as a haven, while Invesco says sell. Aggravating the divergence are mixed signals from an economy that slumped into its second recession in less than two years last quarter, even as unemployment hovers near an 18year low. Kuroda has said monetary policy is having the intended effect, while stressing that companies need to increase wages in line with the record profits that have resulted from a weaker yen. Economists say the government also needs to pull its weight. “The BOJ’s QE isn’t a mistake, but the problem is that the government is tightening fiscal health by cutting spending and raising taxes, offsetting any benefits,” said Yutaka Ban, senior credit analyst at SMBC Nikko Securities Inc. in Tokyo. Economists are virtually unanimous in saying the monetary authority won’t be able to achieve 2 percent inflation within its target period, even after extending it by six months on October 30 to the period in or around October 2016 to March 2017. An increasing number of analysts also forecast the central bank is done with expanding stimulus. While workers’ pay grew for seven consecutive months through September, the increase has averaged only about 0.3 percent over that time. BOJ board member Yutaka Harada has said 3 percent wage inflation is required to achieve its price goal. “When asset prices rise excessively relative to income or gross domestic product, that seems to be the situation that causes financial instability,” said Tad Rivelle, chief investment officer at TCW, who replaced Jeffrey Gundlach at the firm in 2009. “Once you create the leverage, and once you create the bad resource allocation, there’s no easy way out. The choice is have a recession and a bear market now, or have a worse recession and a worse bear market later.”
Shares double
Japan’s Topix index of stocks has more than doubled in the three years since Prime Minister Shinzo Abe mounted his bid for the premiership with a pledge to implement massive monetary stimulus to correct excessive strength in the yen. The currency has plunged 34 percent over the period, while bond yields on maturities as long as five years turned negative.
India unveils tax modification road map India has unveiled details of its plan to phase out some tax exemptions for companies as the government looks to simplify tax laws and make them transparent before it lowers the tax rate. Over four years, the government plans to lower the corporate tax rate to 25 percent from 30 percent, Finance Minister Arun Jaitley said in his budget speech in February. During that period, exemptions and deductions will be phased out. Profit-linked, investment-linked and area-based deductions will be phased out for both corporate and non-corporate tax payers.
Malaysia, Australia agree to elevate ties Malaysia and Australia have agreed here to elevate their bilateral relations to a strategic partnership. The move came as the year 2015 marks the 60th anniversary of Australia’s diplomatic presence in Malaysia and the year 2017 will mark the 60th anniversary of Malaysia-Australia diplomatic relations. In a joint statement issued on Sunday, the two countries agreed to strengthen political engagement through annual meetings of foreign ministers to be underpinned by senior official talks and a strategic dialogue and augmented by enhanced defence dialogue.
ADB, Japan to support ‘sustainable’ Asia infrastructure Japan’s central bank headquarters
People will criticize QE for only creating bubbles, and we will see the end of it. That is the worst-case scenario, but it may be the most likely one Yutaka Ban, senior credit analyst, SMBC Nikko Securities
Wednesday. “It’s a blunt tool, but it’s had a positive impact. The Japanese should have moved sooner.” Waldner’s optimism on the economy means he’s avoiding government bonds. “This is the investment proposition for a government-bond investor: You give me your money, and I give you back less in real terms,” he said. “The first thing we’re recommending people do is sell their sovereign debt.” The split in views over the effectiveness of QE is mirrored by a divergence in the consumer-price data itself. While the BOJ’s main measure of inflation -- which strips out fresh food and the effects of last year’s sales tax increase -- has dropped back below zero since August, another measure-which also removes energy costs -- has jumped to 1.2 percent in September from 0.4 percent in January.
‘Extreme levels’
Rivelle recommends sovereign debt because it’s one asset class where he’s not concerned about a “crash,” despite Japan having yields close to zero. The yield on 10-year Japanese government bonds was 0.3 percent Friday in Tokyo, while the two- year security yielded minus 0.025 percent. TCW’s view clashes with that of Invesco’s head of multi- sector fixed income, Rob Waldner, who sees “clear” signs that the BOJ’s stimulus is working.
‘Positive impact’
“Whether it comes through the asset markets or the currency or however it comes, it’s still been effective in helping to stabilize price pressures,” he said in an interview in Tokyo
The Invesco Core Plus Bond Fund has returned 0.7 percent this year, beating about 80 percent of its peers, according to data compiled by Bloomberg. TCW’s Metropolitan West Total Return Bond Fund is up less than 0.1 percent, putting it in the bottom 40 percent. Over a three-year horizon, both funds are within the top 15 percent. Where they also converge is on the outlook for JGBs. Invesco sees the 10-year note yield in a range from 0.3 percent to 0.5 percent next year, while TCW expects the securities to trade “mostly sideways” compared to current levels. “Sovereign bonds in Japan are already at extreme levels, and yet they survive,” said TCW’s Rivelle. “Japan seems to be ok with it.” Bloomberg News
The Asian Development Bank (ADB) and Japan on Saturday announced a five-year, US$16 billion “partnership”, including an investment fund, to support “sustainable” infrastructure development in the region. The ADB said the first activity would be establishment of a trust fund by March 2016, to be capitalized with US$1.5 billion from the Japan International Cooperation Agency (JICA). Combined with the ADB’s own capital and that of “commercial co-financing partners”, the fund should provide financing of at least US$6 billion, the ADB said. Another US$10 billion for promoting public infrastructure will be provided in co-financing to sovereign borrowers.
South Korea’s November 1-20 exports fall South Korean exports continued to fall in the first 20 days of this month on an annual basis, but at a slower pace than they declined in October, customs data showed on Saturday. During Nov. 1-20, exports dropped 7.7 percent from a year earlier, the data showed. In October, exports by Asia’s fourth-largest economy shrank by a revised 15.9 percent over a year earlier, their worst annual decline in more than six years. For the first 20 days of October, exports dropped 16.0 percent.
India backs 2 degree global warming limit Indian Prime Minister Narendra Modi clearly backs the goal of limiting global warming to no more than 2 degrees Celsius from pre-industrial levels, a source close to French Foreign Minister Laurent Fabius said on Saturday. Leaders from 195 nations will meet from November 30 to December 11 in Paris to try to nail down an agreement after the last global climate change conference in Copenhagen in 2009 collapsed. Fabius has embarked on a three-day tour to make sure big emerging nations are on board.
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November 24, 2015
International HSBC cuts UAE retail, commercial bank jobs HSBC has cut jobs in its retail and commercial banking units in the United Arab Emirates (UAE) as the bank prepares for lower growth in the Gulf Arab state next year, a source familiar with the matter said yesterday. The bank in June announced plans to slash 50,000 jobs globally, equivalent to nearly one in five people employed by the lender, as part of a strategy aimed at combating sluggish growth across its sprawling empire and to boost dividend payments. Economic growth in the Gulf Arab region has also been stalling due to lower oil prices.
Siemens chief warns on investment Companies may put investment plans on hold in the wake of Paris attacks which have sapped investor confidence, the head of industrial giant Siemens said in remarks published yesterday. “The biggest economic damage from these attacks is on confidence, and confidence is a crucial element in this phase,” Siemens chief executive Joe Kaeser told the Financial Times. “My biggest (business) concern is the fallout of the geopolitical distress,” he said. “Investment is about believing, about the future, and (when) events like that happen, people will wait,” Kaeser warned.
ATM maker Diebold bids for German peer U.S. automated teller machine maker Diebold Inc has launched a US$1.8 billion cash and share offer for German rival Wincor Nixdorf AG to form the world’s largest ATM maker, the companies said yesterday. Diebold has offered for every Wincor Nixdorf share 38.98 euros in cash and 0.434 of a common Diebold share. Both companies said on October 17 they had entered exclusive talks. Based on Diebold’s share price before that announcement, the offer represents an implied value of 52.50 euros per Wincor share, a premium of about 35 percent.
Argentina’s Macri ousts leftist from power Conservative opposition challenger Mauricio Macri won Argentina’s presidential election on Sunday with a promise to open up the ailing economy to investors. With the count nearly completed, Macri won 51.5 percent of the vote in the run-off election to 48.5 percent for ruling party rival Daniel Scioli, a smaller margin of victory than expected. “This is the beginning of a new era that has to carry us toward the opportunities we need to grow and progress,” Macri told supporters at his headquarters.
Austria decides Facebook class action Austrian student Max Schrems’s attempt to bring a class-action lawsuit against Facebook over its privacy policies will head to Austria’s Supreme Court to determine whether such collective legal action is allowed, his group said yesterday. The law student has claimed 500 euros (US$531) in damages each for the more than 25,000 signatories to his lawsuit - the latest in a series of European challenges to U.S. technology firms and their handling of personal data. At issue is whether the claims can be combined into one in Austrian courts.
European business index points to strongest economy since 2011 A poll showed ‘ongoing deflationary pressures’ in the euro region Fergal O’Brien and Alessandro Speciale
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conomic activity in the euro area hit a 4 1/2-year high this month, according to a new report that also pointed to weak price pressures. A composite index of services and manufacturing rose to 54.4 from 53.9 in October, London-based Markit Economics said yesterday. That’s the highest reading since May 2011. The individual readings for both industries climbed, defying economists’ expectations for no change. Levels above 50 signify expansion. The survey points to continued growth in the 19-nation euro area, where European Central Bank President Mario Draghi has said more stimulus may be needed to revive inflation. Still, there’s little comfort from Markit on that aspect of the economy, with the latest report showing output prices fell for a ninth month this year. “The central bank remains disappointed with the strength of the upturn at this stage of the recovery,” said Chris Williamson, chief economist at Markit. “November’s slightly improved PMI reading will no doubt do little to dissuade policy makers that more needs to be done.”
The euro weakened to a sevenmonth low after futures traders added to bearish bets and Draghi comments on Friday encouraged speculation his board will ease policy next week. Markit said its report showed “on-going deflationary pressures” in the euro region. Average input costs barely rose, linked primarily to falling global commodity prices.
Nuclear and renewable: South Africa’s ambitious new energy mix South Africa currently has the sole nuclear power plant on the continent
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eavily reliant on coal-fired electricity, South Africa is launching ambitious new projects aimed at diversifying its energy sources and avoiding the regular power cuts that have hobbled the economy in recent years. Solar and wind energy plants are mushrooming across the country while the government is planning a huge -- and controversial -- expansion of nuclear power. But coal is not going away anytime soon. On the outskirts of Johannesburg and near the industrial town of Vereneeging, six large turbines spew white smoke above the desolate landscape. Lethabo thermal power station is generating 3,600 megawatts (MW) of electricity -- around eight percent of national production. The Lethabo plant, operated by the state-owned utility firm Eskom, is using inexpensive, poor quality coal which is found in abundance in this part of the country. “We don’t have big resources in water, solar is still expensive to build and wind isn’t 100 percent reliable
because wind can’t blow all day long,” said Thomas Conradie, the Lethabo coal power station chief. “The most affordable option to produce the majority of our energy remains coal,” which provides 85 percent of the country’s energy, he said. Two mega coal plants -- Medupi and Kusile -- are under construction and will each have the capacity to produce around 4,800 MW. But the government believes that for South Africa to cut down its excessive reliance on coal, it has to expand its nuclear power generation -- despite opposition from environmentalists and fears that the huge cost could cripple the economy. South Africa currently has the sole nuclear power plant on the continent, situated at Koeberg, north of Cape Town. The twin reactors there contribute nearly 2,000 MW, a little over four percent of the national power output. The government wants to pump an extra 9,600 MW of nuclear power into the national grid by building eight new reactors at an estimated cost of some US$50 billion.
In Germany, the euro-area’s largest economy, Markit’s composite index of activity rose to 54.9 in November, the highest since August, from 54.2. France’s gauge slipped to 51.3 from 52.6. Services growth cooled, with hotels and restaurants reporting a negative impact from the terrorist attacks in Paris. Bloomberg News
China, France, Russia, South Korea and the United States are bidding to construct the plants, with the winner expected to be announced early next year.
‘Realistic’ target
Apart from nuclear energy, South Africa is pressing ahead with renewable energy options. “Coal will continue to be one of the sources of electricity in South Africa for a foreseeable period of time in the future,” said Brian Mantlana, director of climate change issues at South Africa’s environment ministry. Eskom this year launched its first wind farm near Vredendal in the desert near Namibia. Forty-six wind turbines some 115 metres tall are generating 100 MW of electricity. Further north a solar scheme is under construction that is expected to produce an additional 100 MW. The outputs are small so far, but Eskom plans a huge expansion of energy from renewable sources. “By 2030 the aim is to almost double our capacity for electricity production in the country. And we want 42 percent of this new energy to come from renewables -- the equivalent of 17,800 MW,” said Ayanda Nakedi, director of renewable department for Eskom. The target is “realistic”, she said, because already 3,000 MW of renewable energy has been commissioned from private players that have invested millions of dollars into various projects. South Africa is also looking beyond its borders to bolster its energy security. It has pledged to buy half of the power generated from the future hydro electric Grand Inga Dam in the Democratic Republic of Congo, but the production date is uncertain. AFP
Business Daily | 15
November 24, 2015
Opinion Business
wires
Crowdfunding or crowdphishing? Robert J. Shiller
Leading reports from Asia’s best business newspapers
2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices
THE AGE A fresh wave of company earnings downgrades this annual general meeting season has led Citi to slash its 2016 target for the Australian share market, but improving economic conditions are a source of optimism, they say. Close to 90 per cent of the S&P/ASX 200 by market capitalisation has updated the market in the past six weeks, giving a clearer picture of earnings expectations for 2016. The AGM season has resulted in 42 downgrades to earnings estimates and 36 upgrades, research by Citi strategist Tony Brennan found.
BANGKOK POST The Revenue Department will soon propose to Finance Minister Apisak Tantivorawong three or four options for cutting personal income tax. They would include lowering the top tax bracket from the current 35%, raising the 150,000 baht exemption cap on taxable income, lifting the annual deduction of expenses of 40% but not more that 60,000 baht, and changing the tax bracket structure, director-general of the department Prasong Poontaneat said. All individual tax payers would benefit from the new tax structure as tax burden will decline, he said.
JAKARTA GLOBE A US$1 billion loan from the China-backed Asia Infrastructure Investment Bank will over the next four years finance development across the country, a top official said. The loan would be part of a US$39.8 billion financing plan from multilateral and bilateral foreign loans for 116 infrastructure projects across the country by 2019, Wismana Adi Suryabrata, a deputy of financing at the Development Planning Agency, said. AIIB imposes looser environmental requirement in disbursing its loans making it the preferred creditor for financing Indonesia’s coal-fired power plant projects, Robert Pakpahan, director general of debt management at the Finance Ministry, said.
THE STRAITS TIMES The c a s h i e r s ’ t ills may not be ringing as furiously as before, no thanks to a growth slowdown that has kept consumption in check, but people are still flocking to restaurants to fill their stomachs. Singapore-listed food and beverage (F&B) related stocks have not seen slower growth eating away at their earnings, going by results for the September quarter. IG market analyst Bernard Aw said firms like Japan Foods and Old Chang Kee managed to achieve good profit growth in the latest quarter, despite global headwinds and signs of Singapore’s economic slowdown, and slower retail sales.
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f one were seeking a perfect example of why it’s so hard to make financial markets work well, one would not have to look further than the difficulties and controversies surrounding crowdfunding in the United States. After deliberating for more than three years, the US Securities and Exchange Commission (SEC) last month issued a final rule that will allow true crowdfunding; and yet the new regulatory framework still falls far short of what’s needed to boost crowdfunding worldwide. True crowdfunding, or equity crowdfunding, refers to the activities of online platforms that sell shares of start-up companies directly to large numbers of small investors, bypassing traditional venture capital or investment banking. The concept is analogous to that of online auctions. But, unlike allowing individuals to offer their furniture to the whole world, crowdfunding is supposed to raise money fast, from those in the know, for businesses that bankers might not understand. It certainly sounds exciting. Regulators outside the US have often been more accommodating, and some crowdfunding platforms are already operating. For example, Symbid in the Netherlands and Crowdcube in the United Kingdom were both founded in 2011. But crowdfunding is still not a major factor in world markets. And that will not change without adequate – and innovative – financial regulation. There is a conceptual barrier to understanding the problems that officials might face in regulating crowdfunding, owing to the failure of prevailing economic models to account for the manipulative and devious aspects of human behaviour.
Economists typically describe people’s rational, honest side, but ignore their duplicity. As a result, they underestimate the downside risks of crowdsourcing. The risks consist not so much in outright fraud – big lies that would be jailable offenses – as in more subtle forms of deception. It may well be open deception, with promoters steering gullible amateurs around a business plan’s fatal flaw, or disclosing it only grudgingly or in the fine print. It is not that people are completely dishonest. On the contrary, they typically pride themselves on integrity. It’s just that their integrity suffers little lapses here and there – and not always so little in aggregate. In my new book with George Akerlof, Phishing for Phools: The Economics of Manipulation and Deception, we argue that unscrupulous behaviour has to be factored into economic theory in a fundamental way. The economic equilibrium we live should be regarded, above all, as a phishing equilibrium, in which small-time individual dishonesty can morph into something more systemically important when it is carried on by business organizations under intense competitive pressure. Yes, competition rewards the sharp and hardworking. But it also often compels them to keep the frontiers of subtle deception in view. The SEC’s new rules for crowdfunding are complex, because they address a complicated problem. The concept underlying crowdfunding is the dispersal of information across millions of people. Most people, even the cleverest, cannot grasp the next breakthrough business opportunity.
There is a conceptual barrier to understanding the problems that officials might face in regulating crowdfunding, owing to the failure of prevailing economic models to account for the manipulative and devious aspects of human behaviour
Those who can are dispersed. The economist Friedrich Hayek put it well in 1945: “[T]here is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of particular circumstances and place. It is with respect to this that practically every individual has some advantage over all others in that he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.” The problem is that the promise of genuine “unique information” comes with the reality of vulnerability to deception. That’s why channelling dispersed knowledge into new businesses requires a regulatory framework that favours the genuinely enlightened and honest. Unfortunately, the SEC’s new crowdsourcing rules don’t go as far as they should. The 2012 US legislation that tasked the SEC with rulemaking for crowdfunding platforms specified that no start-up can use them to raise more than US$1 million a year. This is practically worthless in terms of limiting the scope for deception. In fact, including this provision was a serious mistake, and needs to be corrected with new legislation. A million dollars is not enough, and the cap will tend to limit crowdfunding to small ideas. Some of the SEC rules do work against deception. Notably, crowdfunding platforms must provide communication channels “through which investors can communicate with one another and with representatives of the issuer about offerings made available.” That is a good rule, fundamental to the entire idea of crowdfunding. But the SEC could do more than just avow its belief in “uncensored and transparent crowd discussions.” It should require that the intermediary sponsoring a platform install a surveillance system to guard against interference and shills offering phony comments. The SEC and other regulators could go even further. They could nudge intermediaries to create a platform that summarizes commenters’ record and reputation. Indeed, why not pay commenters who accumulate “likes” or whose comments on issuers turn out to be valuable in light of evidence of those enterprises’ subsequent success? For the financial system as a whole, success ultimately depends on trust and confidence, both of which, like suspicion and fear, are highly contagious. That’s why, if crowdfunding is to reach its global potential, crowdphishing must be prevented from the outset. Regulators need to get the rules right (and it would help if they hurried up about it). Project Syndicate
16 | Business Daily
November 24, 2015
Closing Indonesia to unveil new economic package
Animal cloning centre to be built in Tianjin
The Indonesian government will announce a new economic stimulus plan next week in a bid to lure investment and prop up economy, a senior minister said yesterday. Economic Chief Minister Darmin Nasution disclosed one of the measures was about the negative list. “The seventh economic package could be completed this week or next week, but I think it will be more in the next week,” Nasution said at the presidential palace in Bogor town near Jakarta. Minister made the remarks after a cabinet (partially pictured) meeting. The government has issued a raft of economic stimulus packages since September, including deregulation and tax incentives to investors.
Chinese scientists have signed a deal to establish a commercial animal cloning centre in the northern port city of Tianjin, edging the controversial science closer to mainstream acceptance. The plant in the Tianjin Economic and Technological Development Area, a government-sponsored business development park, will clone animals including sniffer and pet dogs, beef cattle and racehorses. Its main building is already under construction and due to be put into use in the first half of 2016, said sources yesterday. Sinica, a subsidiary of Boyalife Group, which focuses on stem cell and regenerative medicine, signed the agreement on Friday.
China pledged to boost the development of the retail, health, travel and sports sectors to lift domestic consumption
Beijing seeks to remove provincial barriers to trade The government also said it would accelerate reform of the country’s residence registration
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hina will accelerate reforms to remove internal barriers to both foreign and domestic trade, the country’s cabinet said yesterday, a move designed to bolster domestic consumption in its slowing economy. In a comprehensive statement on its website, China’s State Council outlined plans to increase economic activity across a wide range of
sectors in the world’s secondlargest economy. China is looking to give both international and domestic investors increased access to the world’s secondlargest economy in a bid to promote consumption. The statement follows the council’s October plenum, which outlined broad the state’s broad strategic objectives for the next five years.
Robotics revolution reaches Beijing
The State Council said in its statement it is seeking to “eliminate all kinds of conspicuous and hidden administrative monopolies, strengthen anti-monopoly laws” in an attempt to remove protectionist policies between various provinces. While weakening China trade comes on the back of falling commodity prices and softening global growth, analysts also blame
provincial protectionist import substitution policies for artificially suppressing Chinese demand for foreign products. Additionally, the government said it would accelerate reform of the country’s residence registration, or “hukou”, system to unleash the spending potential of China’s rural population, the document said. Rural
Alibaba’s Jack Ma negotiating to enter Hong Kong media
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residents will be supported to buy their own homes and small- and medium-sized cities will be encouraged to implement tailored policies, favourable to them. All Chinese residents have a hukou that determines their access to education and other social welfare services. University graduates who chose to settle in provincial capitals and smaller cities would be granted local residence registration, the document said. The government also pledged to improve internet infrastructure and e-commerce logistics of the “last mile” - the final portion of a package’s journey from a retailer’s warehouse or store to the customer’s front door. It also said it would expand the scope of the 72hour transit visa, improve tax rebates for tourists and attract international consumers by hosting shopping festivals, film festivals, fashion weeks and book fairs. China pledged to boost the development of the retail, health, travel and sports sectors to lift domestic consumption, China’s cabinet said on Sunday. The country’s three antimonopoly regulators - the Ministry of Commerce, the National Development and Reform Commission, and the State Administration for Industry and Commerce said in September that they would widen market access for foreign firms. Reuters
Guotai Junan International says CEO missing
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hey can help with the housework and even kick around a football, but robots aren’t coming for your jobs just yet. That was the reassurance from robot experts gathered at an international conference that kicked off in Beijing yesterday. The three-day event includes a forum, an exhibition and a robot contest for youth. According to an estimation, some 1.5 million robots are in use in factories worldwide, with the total number poised to reach 2.3 million in the next three years. As the supply of cheap labour dries up, Chinese manufacturers are gradually replacing manual labour with robots. According to IFR, a total of 57,000 industrial robots were sold in China last year, a year-onyear increase of 55 percent, and a quarter of global sales. But China still has a far lower ratio of robots to workers than other major economies -- just 36 per 10,000 manufacturing workers, versus 478 in the Republic of Korea, 315 in Japan, 292 in Germany and 164 in the United States.
libaba Group Holding Ltd.’s founder Jack Ma is in talks to buy a stake in the publisher of Hong Kong’s South China Morning Post, according to people familiar with the matter, in what could make him the latest Internet-industry tycoon to pursue the revival of a traditional newspaper. Discussions are at an advanced stage, two of the people said, asking not to be identified because the negotiations are private. A signing ceremony will be announced soon, one of the people said. Financial details of the deal weren’t available. Once the world’s most profitable newspaper, SCMP has followed the path of other mastheads with falling earnings and shrinking circulation as readers shift online. Control of the city’s premier English-language broadsheet has been unchanged since Rupert Murdoch sold most of his stake to Malaysian billionaire Robert Kuok in 1993. The SCMP and Alibaba declined to comment. When asked whether he’s interested in buying the SCMP, Ma said in an interview this month that he’s “watching a lot of companies right now.”
uotai Junan International Holdings Ltd, a Hong Kong subsidiary of one of China’s largest brokerages, said on Monday it had been unable to reach its chairman since last week, which prompted its shares to tumble more than 17 percent. It is not clear what is behind Yim Fung’s disappearance, but the news added to market concerns about China’s crackdown on alleged market irregularities following a slump in mainland stocks this year. “The news had significant impact on Guotai Junan stock as the whole event remained unclear. The chairman has been missing for almost a week, which would arouse investors’ concerns,” said Patrick Yiu, associate director at CASH Asset Management in Hong Kong. Guotai Junan said in a Hong Kong stock exchange statement that it had not been able to contact Yim - chairman of the board and chief executive officer - since Wednesday. Since he could not discharge his duties, the board had decided deputy CEO Wong Tung Ching would act as temporary chairman. The board said the operations of the company were normal and stable.
Xinhua
Bloomberg News
Reuters